M/s. Shyam Builders, Ahmedabad V. The Dy.CIT.,(OSD) Circle-9, Ahmedabad

ITSSA 16/AHD/2010

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2095 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-05-2016
• Assessment Year: misc
• Appeal Filed On: 08-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Keywords: Unexplained cash credit; Unexplained investment; Business expenditure; Search and seizure; Loose papers; Opportunity of being heard; Principle of natural justice; Peak credit; Additional evidence; Corroborative evidences; Block assessment
• Section: 40A(3); 143(3); 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER IT(SS)A NO. 16/AHD/2010 ( / ASSESSMENT YEAR: BLOCK PERIOD: 01.04.1989 TO 21.01.1997) M/S. SHYAM BUILDERS G-8, S.K. COMPLEX, THAKKARBAPA NAGAR ROAD, BAPUNAGAR, AHMEDABAD .. APPE LLANT VS THE DY. COMM. OF INCOME TAX (OSD), CIRCLE 9, AHMEDABAD .. RESPONDENT & IT(SS)A NO. 62/AHD/2010 ( / ASSESSMENT YEAR: BLOCK PERIOD: 01.04.1989 TO 21.01.1997) ASST. CIT(OSD), CIRCLE 9, AHMEDABAD .. APPELLANT VS M/S. SHYAM BUILDERS G-8, S.K. COMPLEX, BAPUNAGAR, AHMEDABAD .. RESPONDENT PAN : AALFS0056R & IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 2 - IT(SS)A NO. 17/AHD/2010 ( / ASSESSMENT YEAR: BLOCK PERIOD: 01.04.1989 TO 21.01.1997) M/S. SHYAM CONSTRUCTION COMPANY 57, MAYUR PARK, OPP: KRISHNA VIDHYALAY, BAPUNAGAR, AHMEDABAD .. APPE LLANT VS THE DY. COMM. OF INCOME TAX (OSD), CIRCLE 9, AHMEDABAD .. RESPONDENT & IT(SS)A NO. 42/AHD/2010 ( / ASSESSMENT YEAR: BLOCK PERIOD: 01.04.1989 TO 21.01.1997) ASST. CIT(OSD), CIRCLE 9, AHMEDABAD .. APPELLANT VS M/S. SHYAM CONSTRUCTION COMPANY, 1/1, SATHADHAR NAGAR, NATIONAL HIGHWAY, NO.8, BAPUNAGAR CHAR RASTA, AHMEDABAD .. RESPONDENT PAN : ABFFS2373C ASSESSEE(S) BY : SHRI ASEEM THAKKAR , AR REVENUE BY : S MT. VIBHA BHALLA , CIT - DR / DATE OF HEARING 13/05/2016 /DATE OF PRONOUNCEMENT 29/07/2016 / O R D E R IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 3 - PER BENCH: THESE TWO SET OF CROSS APPEALS BY DIFFERENT ASSESSE ES OF SAME GROUP AND DEPARTMENT ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)- XV, AHMEDABAD FOR BLOCK PERIOD 01.04.1989 TO 21.01.1997 . SINCE ALL THESE APPEALS PERTAIN TO SAME GROUP AND ALMOST IDENTICAL ISSUES WERE RAISED IN THESE APPEALS; THEREFORE, THE SE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN IT(SS)A NO.16/AHD/2010, IN CASE OF M/S. SHYA M BUILDERS, THE ASSESSEE HAS TAKEN THE FOLLOWING GROU NDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN PASSING AN ORDER WITHOUT GIVING A REASONABLE OPPORT UNITY OF BEING HEARD TO THE APPELLANT BEFORE ISSUING DIRE CTIONS IN RESPECT OF SPECIAL AUDIT U/S. 142(2A) OF THE INCOME TAX ACT, 1961. THE ORDER PASSED BY THE A.O. IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, HENCE THE SAME IS BA D IN LAW AND LIABLE TO BE CANCELLED. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESS ING OFFICER FOR ALLEGED PEAK CASH CREDITS EVEN THOUGH T HE APPELLANT HAS FURNISHED THE CONFIRMATIONS AND OTHER EVIDENCES BEFORE HER AS ADDITIONAL EVIDENCES. THE Y EAR WISE DETAILS OF ADDITIONS CONFIRMED ARE AS UNDER: A. YR. AMOUNT IN RS. 1995-96 24,05,000/- 1996-97 31,98,000/- IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 4 - BROKEN PERIOD 18,94,000/- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE GIVEN CONSEQUENTIAL SET OFF IN RESPECT OF D IFFERENCE BETWEEN THE AMOUNT OF PEAK CASH CREDITS DISCLOSED B Y THE APPELLANT BEFORE THE SETTLEMENT COMMISSION AND THE AMOUNT OF ADDITION FOR THE SAME MADE BY THE ASSESSI NG OFFICER FOR THE BROKEN PERIOD (I.E. RS. 22,50,000 - RS.18,94,000 = 3,56,000) AGAINST THE OTHER ADDITION S CONFIRMED BY HER. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING AN ADDITION MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF ON-MONEY RECEIPTS YEAR WISE D ETAILS OF WHICH ARE AS UNDER :- A. YR. AMOUNT IN RS. 1995-96 20,98,734/- 1996-97 51,54,914/- 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ALLEGED NET ON MONEY RECEIP TS OF RS.50,56,433/- BEING THE INCOME OFFERED BEFORE THE HON'BLE INCOME TAX SETTLEMENT COMMISSION WHEN THE N ET RECEIPTS AS PER THE SPECIAL AUDIT REPORT AMOUNTS TO RS.39,90,580/- ONLY. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE FOLLOWING ADDITIONS EVEN TH OUGH THE SAME HAS BEEN DECLARED BY THE APPELLANT BEFORE THE SETTLEMENT COMMISSION DETAILS OF WHICH ARE AS UNDER : - A. YR.1996-97 TOTAL IN RS. I. DONATION 56,001 PERIOD FROM 1.4.96 TO 21.1.97 TOTAL IN RS. I. DONATION 77,475 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISMISSING THE GROUND RELATING TO NOT GRANTING T HE IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 5 - DEDUCTION OF THE CLAIM OF EXPENSES IN THE BOOKS OF ACCOUNTS SEIZED DURING THE SEARCH PROCEEDINGS ON TH E GROUND THAT THE SAME ARE NOT VERIFIABLE, EVEN THOUG H THE A.O. HIMSELF HAS PLACED RELIANCE ON THE SAME BOOKS, DOCUMENTS AND MATERIAL WHILE CALCULATING THE RECEIP TS AND TREATING THE SAME AS UNDISCLOSED INCOME. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DISMISSING THE GROUND RELATING TO IGNORING THE NOTINGS AND CLAIMS IN SEIZED MATERIAL BY THE ASSESS ING OFFICER ON WHICH RELIANCE HAS BEEN PLACED WHILE COMPUTING THE ALLEGED UNDISCLOSED INCOME OF THE APPELLANT. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ADDITIONS WITH REGARDS TO T HE TRANSACTIONS WHICH ARE REFLECTED IN THE REGULAR BOO KS OF ACCOUNTS AND FOR WHICH INDEPENDENT AND DISTINCT ASSESSMENTS HAVE BEEN MADE. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN NOT GRANTING DEDUCTION OF LAND AND OTHER EXPENDITUR E RELATED TO BUSINESS ACTIVITIES WHEN IT HAS BEEN ADM ITTED BY HIM THAT THERE IS UNACCOUNTED INVESTMENT THEREIN . 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN PLACING RELIANCE ON THE ALLEGED PROFIT/SUR PLUS AS INDICATED IN THE PROFIT & LOSS A/C. OF THE DUPLICAT E BOOKS OF ACCOUNT AS PER SPECIAL AUDITOR'S REPORT IN SPITE OF SPECIFIC SHORTCOMINGS & DEFICIENCIES POINTED OUT TH EREIN. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) OUGHT TO HAVE CONSIDERED THE FACT THAT BOOKING MONEY IN T HE DUPLICATE BOOKS OF ACCOUNT ALSO INCLUDES BOOKING MO NEY SHOWN IN THE REGULAR BOOKS OF ACCOUNTS. 3. IN IT(SS)A NO.62/AHD/2010, IN CASE OF M/S. SHYAM BUILDERS, THE REVENUE HAS TAKEN THE FOLLOWING GROUN DS OF APPEAL:- IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 6 - 1) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.200975/- MADE BY THE ASSESSING OFFICER ACCOUNT O F 'ON MONEY' RECEIPTS FOR A.Y.: 1995-96. 2) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE OF RS.2706214/- MADE BY THE ASSESSING OFFICER ON ACCOU NT OF 'ON MONEY' RECEIPTS FOR A.Y.:1996-97. 3) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.3990586/- MADE BY THE ASSESSING OFFICER ON ACCOU NT OF 'ON MONEY' RECEIPTS FOR A.Y.:BLOCK PERIOD FROM 01/04/1996 TO 21/01/1997. 4) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.19038203/- MADE ON ACCOUNT OF DISALLOWANCE IN VIOLATION OF PROVISIONS U/S.40(A)(3). 5) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.11425002/-MADE ON ACCOUNT OF DISALLOWANCE OF CLA IM OF NON-VERIFIABLE EXPENSES. 6) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.1375000/- [RS.1345000/- FOR THE A.Y.:1996-97 +(P LUS) RS.30000/- FOR BROKEN PERIOD 01/04/1996 TO 21/01/1997] MADE ON ACCOUNT OF SALE OF TABELA LAND AT NIKOL. 7) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.262000/- MADE ON ACCOUNT OF UNACCOUNTED BOOKING RECEIPTS FOR A.Y.: 1996-97. 8) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.800000/- MADE ON ACCOUNT OF CASH RECEIPTS. 9) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 7 - RS.300000/- MADE ON ACCOUNT OF NON-BUSINESS EXPENSE (PURCHASE OF GOLD). 10) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.1929000/-[RS.240000/-+RS.673000/-+RS. 1016000 IN THE BROKEN PERIOD] MADE ON ACCOUNT OF UNACCOUNTED RECEIPT 'OF SALE OF LAND. ASSESSEES CASE IN IT(SS)A NO.16/AHD/2010 (IN CASE OF SHYAM BUILDERS) 4. AT THE OUTSET OF HEARING, LD. AUTHORIZED REPRESE NTATIVE DID NOT PRESS GROUND NOS. 1 & 5. SO, SAME ARE DISMISSE D AS NOT PRESSED. GENERAL GROUNDS RAISED BY ASSESSEE WILL B E TAKEN CARE AT RELEVANT PLACE. 5. ASSESSEE FIRM DEVELOPED RESIDENTIAL PROJECT NAME LY SHYAM DHAM. THE FIRM CONSISTS OF FOLLOWING PARTNERS: 1. PATEL JASWANTBHAI KALYANBHAI 35% 2. PATEL KALYANBHAI KHODABHAI 20% 3. PATEL GIRISHBHAI KALYANBHAI 30% 4. PATEL NATNABEN JAWANTBHAI 15% IN SHYAM GROUP SEARCH AND SEIZURE OPERATION WAS CON DUCTED ON 21.01.97. THE SEARCH ACTION REVEALED THAT THE G ROUP ENTITIES WERE: I. NOT ACCOUNTING FOR SUBSTANTIAL PART OF THE RECEI PTS ON ACCOUNT OF SALE OF HOUSES / SHOPS II. WERE HEAVILY INDULGING INTO UNACCOUNTED SALE AN D PURCHASE OF LAND, FOR WHICH TRANSACTIONS WERE CARRI ED OUT MOSTLY IN CASH. III. WERE MAINTAINING SEPARATE SET OF BOOKS OF ACCO UNTS (HEREINAFTER REFERRED TO AS NO.II BOOKS) IN RESPECT OF IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 8 - TRANSACTIONS NOT INCORPORATED IN THE REGULAR BOOKS OF ACCOUNTS (HEREINAFTER REFERRED TO AS NO.1 BOOKS). THESE DUPLICATE SET OF BOOKS I.E. NO.II BOOKS SEIZE D REVEALED AMONG OTHER THINGS, THE DETAILS OF ON MONEY RECEIVE D ON ACCOUNT OF SALE OF HOUSES / SNOGS AND HUGE UNACCOUN TED CASH WITHDRAWALS MADE BY THE PARTNERS. 5.1 IT HAS BEEN STATED BY THE ASSESSING OFFICER IN PARA 2 THAT SEARCH RESULTED INTO SEIZURE OF VARIOUS DOCUMENTS W HICH GAVE DETAILS OF BUSINESS CARRIED ON BY THE ASSESSEE IN R EAL ESTATE, HUGE AMOUNT OF CASH INVESTED AND UNACCOUNTED PROFITS MADE IN THE LAND BUSINESS. IT HAS BEEN CLAIMED THAT ALL THESE EVIDENCES WERE CONFRONTED WITH THE ASSESSEE AND THE MAIN PERSONS OF THE ASSESSEE GROUP WHO CLAIMED TO HAVE A DMITTED ALL THE SEIZED BOOKS OF ACCOUNTS AND DOCUMENTS AND CONTENTS THEREIN. 5.2 CHRONOLOGY OF EVENTS SUBSEQUENT TO THE SEARCH H AVE BEEN SUMMARIZED BY THE AO GIST OF WHICH IS GIVEN BELOW: A. NOTICE U/S.158BC ISSUED ON 27.2.97 ASKING THE ASSESSEE TO FILE RETURN FOR THE BLOCK PERIOD WITHIN 16 DAYS OF RECEIPT OF NOTICE. B. NOTICE RECEIVED BY THE ASSESSEE 28.2.97 C. BLOCK RETURN FILED LATE AFTER SEVERAL REMINDERS ON 17.1.99 DECLARING UNDISCLOSED NIL INCOME. BLOCK RETURN FILED AFTER 1/1/2 YEAR OF NOTICE. D. ASSESSEE DIRECTED BY THE THEN AO DCIT.CENTRAL CIRCLE 2(3) VIDE LETTER DATED 5.10.98 TO GET ITS BOOKS OF ACCOUNTS AUDITED U/S.142(2A) BY NOMINATED AUDITORS VIZ. P.K.AJMERA AND COMPANY CAS. AND TO SUBMIT AUDIT REPORT BY 7.12.98. IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 9 - E. AUDIT REPORT U/S.142(2A) DATED 14.3.2000 WAS FILED BY THE ASSESSEE FOR VARIOUS AYS. 94-95, 95-96 FILED BEFORE THE AO ON 31.3.2000. F. ASSESSEE FILED APPLICATION BEFORE SETTLEMENT COMMISSION, MUMBAI VIDE DATED 16.3.1999 G. SETTLEMENT COMMISSION ADMITTED APPLICATION OF THE ASSESSEE 14TH MAY 1999 H. SETTLEMENT COMMISSION U/S. 245HA ABATED THE SETTLEMENT APPLICATION FILED BY THE ASSESSEE BACK TO THE AO BECAUSE THE ASSESSEE FAILED TO MAKE PAYMENT OF THE ENTIRE TAX LIABILITY AND INTEREST THEREON ARISING FROM THE INCOME ADMITTED BEFORE THE COMMISSION ON OR BEFORE 31ST JULY 2007. AS PER THE ASSESSEE IT FAILED TO PAY INTEREST ON THE TAX LIABILITY. VIDE ORDER PASSE D U/S. 245HA DATED 22ND OCTOBER 2007. I. THE SAID ORDER OF HON'BLE ITSC DT. WAS RECEIVED IN THE OFFICE OF CIT IV, AHMEDABAD ON 5TH NOVEMBER 2007 J. BLOCK ASSESSMENT WAS PASSED BY DCIT (OSD) CIRCLE-9, AHMEDABAD ON 31.12.2007. VARIOUS ADDITIONS WERE MADE IN THE BLOCK ASSESSMENT ORDER WHICH HAVE BEEN DISPUTED BEFORE FIRST APPELLATE AUT HORITY. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS, ASSE SSEE FILED WRITTEN SUBMISSIONS FROM TIME TO TIME AND ARGUED TH E CASE. REMAND REPORT OF THE ASSESSING OFFICER WAS ALSO REC EIVED ON THE SUBMISSIONS AND WAS MADE AVAILABLE TO THE APPEL LANT. COUNTER COMMENTS OF THE APPELLANT WERE ALSO RECEIVE D IN RESPONSE. CIT(A) HAVING CONSIDERED THE SAME HAS GR ANTED PARTIAL RELIEF. BOTH PARTIES ARE BEFORE US AS EVID ENT FROM THESE GROUNDS OF APPEAL BEFORE US. 7. FIRST ISSUE AS RAISED BY ASSESSEE BEFORE US IS W ITH REGARD TO INCOME OFFERED BEFORE SETTLEMENT COMMISSION AND ADDITION IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 10 - ON ACCOUNT OF PEAK CREDITS. THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.79,71,722 (RS.2,00,975 +RS.27, 06,214 + RS.50,56,433) AS PER PARA 7 OF THE ASSESSMENT ORDER INTER ALIA STATING THAT THE FOLLOWING INCOME OFFERED BEFORE TH E SETTLEMENT COMMISSION WAS NOT DECLARED IN THE BLOCK RETURN BY THE APPELLANT. AY 1995-96 2,00,975 AY 1996-97 27,06,214 BROKEN PERIOD COMPRISING FROM 01/04/1996 TO 21/01/1997 50,56,433 IN THE COUNTER COMMENTS DATED 20.07.2009 GIVEN ON T HE REMAND REPORT OF THE ASSESSING OFFICER WHICH WAS MA DE AVAILABLE TO ASSESSEE, IT WAS STATED ON BEHALF OF T HAT ASSESSING OFFICER HAD MADE MULTIPLE ADDITIONS. ' THE ATTITUDE OF THE AO IS THAT HE SHALL BE ADOPTI NG AS UDI THE AMOUNT ALREADY OFFERED BY THE APPELLANT BEF ORE THE HON'BLE SETTLEMENT COMMISSION. HE THEREAFTER WA NTS TO FURTHER IMPROVE UPON THE INCOME OFFERED BY MAKIN G A SEPARATE ADDITION OF SUCH ITEMS WHICH SHOULD BE CONSIDERED UDI BY HIM. ' 7.1 THE ASSESSEE CLAIMED TO HAVE OFFERED FOLLOWING INCOME BEFORE SETTLEMENT COMMISSION: AY 1995-96 I) NET PROFIT AS PER BOOKS OF ACCOUNT OF RS,2,00,97 5 II) PEAK CASH CREDIT RS. 14,00,000 III) INTEREST ON PEAK CASH CREDIT RS.2,04,500 AY 1996-97 I) NET PROFIT AS PER BOOKS OF ACCOUNT OF RS.27,06,2 14 II) DONATION RS.56,001 III) PEAK CASH CREDIT RS.10,00,000 PERIOD FROM 1996 TO 21.1.97 IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 11 - I) NET PROFIT AS PER BOOKS OF ACCOUNT OF RS.50,56,4 33 II) DONATION RS.77,475 II) PEAK OF CASH CREDIT RS.22,50,000 7.2 THE ASSESSING OFFICER MADE THE ADDITION OF FOLL OWING AMOUNTS FROM THE ABOVE: AY 1995-96 I) NET PROFIT AS PER BOOKS OF ACCOUNT OF RS,2,00,97 5 II) INTEREST ON PEAK CASH CREDIT RS.2,04,500 AY 1996-97 I) NET PROFIT AS PER BOOKS OF ACCOUNT OF RS.27,06,2 14 II) DONATION RS.56,001 PERIOD FROM 1.4.96 TO 21.1.97 I) NET PROFIT AS PER BOOKS BF ACCOUNT OF RS.50,56,4 33 II) DONATION RS.77,475 7.3 THE ASSESSING OFFICER MADE THE ADDITION BECAUSE THE AMOUNTS MENTIONED ABOVE WERE OFFERED BEFORE THE SET TLEMENT COMMISSION AS TRUE DISCLOSURE OF UNDISCLOSED INCOME BUT WERE NOT DECLARED IN THE BLOCK RETURN. ASSESSING OFFICER 'S POINT WAS THAT THESE AMOUNTS SHOULD HAVE BEEN DECLARED IN THE BLOCK RETURN BECAUSE THE SAME HAD BY THE APPELLANT HIMSEL F BEEN DECLARED BEFORE THE SETTLEMENT COMMISSION. 7.4 IT IS STRANGE TO NOTE THAT ASSESSING OFFICER WI THOUT MENTIONING ANYTHING IN PARA 7 OF THE BLOCK ASSESSME NT ORDER DID NOT MAKE ADDITION OF THE AMOUNTS OFFERED BY THE APPELLANT BEFORE THE SETTLEMENT COMMISSION AS PEAK CASH CREDI TS, RATHER HE PROCEEDED WITH ADDITIONS OF DIFFERENT AMOUNTS WO RKED OUT BY THE DEPARTMENT IN DIFFERENT AYS AS PEAK CASH CRE DITS AND THIS ADDITION HE MADE UNDER THE HEADING PEAK OF CAS H CREDITS IN PARA 9 OF THE BLOCK ASSESSMENT ORDER. THESE ADDI TIONS HAVE IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 12 - BEEN DISPUTED IN THE GROUNDS OF APPEAL BEFORE CIT(A ) AS UNDER BY THE APPELLANT: AY 1995-96 (PEAK CASH CREDIT) 24,05,000 AY 1996-97 (PEAK CASH CREDIT) 31,98,800 BROKEN PERIOD COMPRISING FROM 01/04/1996 TO 21/01/1997 18,94,000 7.5 ASSESSING OFFICER FINALLY MADE THE ADDITION OF INCOME DECLARED BY ASSESSEE BEFORE SETTLEMENT COMMISSION O F RS. 1,29,51,598/-. 7.6 DURING THE COURSE OF APPELLATE PROCEEDINGS WITH RESPECT TO ADDITION ON PEAK CASH CREDITS WORKED OUT BY THE DEP ARTMENT IT WAS ARGUED THAT IT IS NOT KNOWN HOW THE AMOUNTS HAV E BEEN WORKED OUT OR DERIVED. AFTER PERUSING RIVAL SUBMISS IONS SPECIALLY THE REMAND REPORT OF THE ASSESSING OFFICE R IT WAS FOUND BY CIT(A) THAT PEAK CASH CREDITS HAVE BEEN EN CLOSED AS ANNEXURE A OF THE BLOCK ORDER. THIS ANNEXURE GIVES NAMES AND AMOUNTS WHICH HAVE BEEN TAKEN FROM THE SPECIAL AUDI T REPORT. DURING THE COURSE OF APPELLATE PROCEEDINGS IT WAS C ONFIRMED BY THE AUTHORIZED REPRESENTATIVE THAT THESE AMOUNTS W ERE CASH LOANS OBTAINED FOR CONSTRUCTION BUSINESS, IN SUPPOR T CONFIRMATIONS FOR SEVERAL NAMES WERE FILED. THESE C ONFIRMATIONS WERE NOT PRODUCED IN ORIGINAL AND WERE ONLY XEROX C OPIES IN GUJARATI, CONTAINING ILLEGIBLE DETAILS/SIGNATURES, AT THIS STAGE IN MY VIEW THIS HALF BAKED INCOMPLETE ADDITIONAL EVIDE NCE CANNOT BE RELIED UPON FOR GIVING ANY RELIEF TO THE APPELLA NT, THEREFORE BALANCE PEAK CREDIT ADDITION AFTER SETTING OFF THE AMOUNTS DISCLOSED BEFORE THE SETTLEMENT COMMISSION WORKS OU T AS UNDER: IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 13 - ADDITION BY AO DISCLOSED BEFORE SETTLEMENT ADDITION UPHELD COMMISSION AY 1995-96 RS.24,05,000 RS.14,00,000 RS.10,05,000 AY 1996-97 RS.31,98,800 RS.10,00,000 RS.21,98,800 BROKEN PERIOD RS. 18,94,000 RS.22,50,000 NO ADDITION REQUIRED THUS WITH RESPECT TO PEAK CASH CREDITS ADDITION BY THE ASSESSING OFFICER RS.10,05,000/- WAS UPHELD FOR A.Y . 1995-96 AND RS.21,98,800/- WAS UPHELD FOR A.Y. 1996-97. CI T(A) CLARIFIED THAT IN THE BROKEN PERIOD ALREADY RS.22,5 0,000/- THE AMOUNT DISCLOSED BY THE APPELLANT BEFORE THE SETTLE MENT COMMISSION AS PEAK CASH CREDIT, HAS BEEN ADDED BY T HE ASSESSING OFFICER AND CONFIRMED IN THIS ORDER ABOVE , THEREFORE NO FURTHER ADDITION IS REQUIRED BECAUSE THE AMOUNT ADDED BY THE ASSESSING OFFICER IS LESS THAN RS.22,50,000/- A ND THE ADDITION BY THE ASSESSING OFFICER GETS MERGED IN RS.22,50,000/-. 7.7 THE ASSESSING OFFICER HAS STATED THAT THE APPEL LANT HAS OFFERED PEAK CASH CREDITS AS ADDITIONAL INCOME BEFO RE THE INCOME TAX SETTLEMENT COMMISSION . HOWEVER, AS PER THE ASSESSING OFFICER AS PER THE CASH BOOK INVENTORISED AS ANNEXURE-A-13, A-15 THE PEAK CASH CREDIT WORKED OUT WAS AT A HIGHER AMOUNT. THE DIFFERENTIAL AMOUNT HAS BEEN TRE ATED AS UNDISCLOSED INCOME. WORKING OF THE ASSESSING OFFICE R WITH REGARDS THE PEAK CASH CREDIT WORKING IS CONTAINED I N THE ANNEXURE TO THE BLOCK ASSESSMENT ORDER. ASSESSING OFFICER HAS INCLUDED VARIOUS NAMES AS CASH CREDITORS COMPLETELY IGNORING THE FACT THAT THE CONFIRMATIONS OF ALL THOSE VERY P ARTIES HAVE IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 14 - BEEN FURNISHED DURING THE COURSE OF APPELLATE PROCE EDINGS. THESE ADDITIONAL EVIDENCES HAVE BEEN CONFRONTED TO THE ASSESSING OFFICER AND THE REMAND REPORT HAVE BEEN C ALLED FOR WHICH WAS PLACED ON PAGE NOS.163 TO 203 OF THE PAPE R BOOK BEFORE CIT(A). PARTICULAR ATTENTION IS INVITED TO T HE PAGE NO.184 OF THE PAPER BOOK WHEREIN THE ASSESSING OFFICER HAS OPPOSED ADMISSION OF ADDITIONAL EVIDENCE. 7.8 CIT(A) OBSERVED THAT ASSESSING OFFICER HAS FURN ISHED HIS REMAND REPORT ON 23RD JANUARY 2009 I.E. NEARLY 4 M ONTHS AFTER A DATE OF FURNISHING SUBMISSIONS. THEREFORE, THE ADDITIONS CANNOT BE CONFIRMED MERELY BECAUSE OF NON - VERIFICATION OF THE EVIDENCES DETAILS FURNISHED BEF ORE ASSESSING OFFICER AND PARTICULARLY WHERE THE DUPLICATE BOOKS OF ACCOUNTS, IT CONTENTS AND GENUINENESS HAS NOT BEEN DOUBTED. IN VIEW OF THE COMPLETE EVIDENCES HAVING BEEN FURNISHED TO EST ABLISH THE GENUINENESS OF THE CASH CREDITS AND WHICH HAS NOT B EEN DISPROVED AT ANY STAGE CONFIRMING THE ADDITION ON S UCH GROUNDS WOULD NOT BE JUSTIFIED. THE CIT(A) IN PARA 13 AND PAGE 7 HAS MERELY STATED THAT AFTER THE PERUSAL OF THE S UBMISSION AND IN PARTICULAR THE REMAND REPORT THE PEAK CASH C REDIT STATEMENT HAD BEEN ENCLOSED AS ANNEXURE-A OF THE BL OCK ASSESSMENT ORDER. THIS ANNEXURE GIVES NAME AND AMOU NT AS OBTAINED FROM THE SPECIAL AUDIT REPORT. IT WAS ALSO CONFIRMED THESE CASH LOANS WERE OBTAINED FOR CONSTRUCTION BUS INESS. SINCE, THE CONFIRMATIONS COULD NOT BE PRODUCED IN O RIGINAL AND XEROX COPIES WERE IN GUAJARATI LANGUAGE CONTAINING ALLEGEDLY INELIGIBLE DETAILS/SIGNATURE, THE SAME COULD NOT BE RELIED UPON FOR GIVING RELIEF TO ASSESSEE. IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 15 - 7.9 WE FIND THAT CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCES SINCE THE SAME HAVE ALREADY BEEN FORWARDED TO THE A SSESSING OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER AFT ER FOUR MONTHS PERIOD HAS NOT MADE ANY EFFORTS TO VERIFY GE NUINENESS OF THE CASH CREDITS. HOWEVER, CIT(A) ONLY ON DOUBT S AND SUSPICIONS WITHOUT DISCREDITING THE EVIDENCES HAS Q UESTIONED THE RELIABILITY AND CONFIRMED THE ADDITION. FURTHE RMORE, THE SEIZED BOOKS OF ACCOUNTS HAVE TO BE ACCEPTED IN ENT IRETY AND NOT PIECE MEAL. THE CASH CREDITS AS APPEARING IN D UPLICATE BOOKS OF ACCOUNTS HAVE TO BE ACCEPTED AS GENUINE SI NCE THESE BOOKS WERE FOR PERSONAL CONSUMPTION. IN VIEW OF TH ESE ADDITIONS MADE FOR ALLEGED PEAK CASH CREDIT ARE NOT JUSTIFIED. SAME ARE DIRECTED TO BE DELETED. 8. NEXT ISSUE RAISED BY ASSESSEE WITH REGARD TO ADD ITION ON ACCOUNT OF ON-MONEY RECEIPTS. THIS ADDITION HAS BE EN MADE AS PER PARA 8 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS OBSERVED THAT THE CASH RECEIPTS RECORDED IN NO.1 AN D NO.II BOOKS WERE MATCHED BY THE AUDITORS, AND THE DIFFERE NCE IN AMOUNTS WAS NOT EXPLAINED SATISFACTORILY BY THE ASS ESSEE TO THE AUDITORS AND NEITHER TO THE ASSESSING OFFICER, WHIC H WAS ADDED IN THE BLOCK ASSESSMENT ORDER. THE AMOUNTS ADDED IN THE COMPUTATION OF INCOME WAS CHALLENGED BEFORE CIT(A). DETAILS OF SAME ARE AS UNDER: AY 1995-96 27,41,728 AY 1996-97 47,46,013 BROKEN PERIOD COMPRISING FROM 01/04/1996 TO 21/01/1997 61,42,586 8.1 STAND OF ASSESSEE BEFORE CIT(A) WAS THAT IN AY 1995-96 ON-MONEY RECEIPTS HAVE BEEN POINTED OUT OF RS.19,14 ,735/-, IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 16 - BUT THE ADDITION IN THE COMPUTATION HAS BEEN MADE O F RS,27,41,728/-, THAT THE ORDER SUFFERS FROM ARITHME TICAL INACCURACIES. THAT THE ASSESSING OFFICER DID NOT TA KE INTO ACCOUNT THE METHOD OF ACCOUNTING FOLLOWED BY THE AP PELLANT AND PROCEEDED TO CONSIDER ENTIRE RECEIPTS AS INCOME COMPLETELY IGNORING THE MANNER OF ACCOUNTING SALES ON THE BASI S OF THE POSSESSION GRANTED. IT WAS OBSERVED BY CIT(A) THAT CASH PAYMENT RECEIPTS FOR FLATS/TENEMENTS WERE FOUND REC ORDED IN NO.II CASH BOOKS, AND THESE RECEIPTS WERE NOT REFLE CTED IN REGULAR BOOKS OF ACCOUNTS. DIFFERENCE OF THE RECEI PTS REFLECTED IN NO.II AND NO.1 BOOKS WAS TAKEN OUT WITH NAMES AS PER ANNEXURE 5 OF THE SPECIAL AUDIT REPORT, TOTAL OF WH ICH CAME TO RS.20,96,734/- [(RS.42,62,238/- (NO.II BOOKS CASH R ECEIPTS) - RS.21,63,504/-(NO.1 BOOKS CASH RECEIPTS )]. THE PER USAL OF ANNEXURE 5 OF AUDIT REPORT REVEALS THE NAMES AND AM OUNTS BOTH OF CASH BOOK NO.I AND CASH BOOK NO.II. BUT CI T(A) GRANTED SET OFF TO ASSESSEE WITH RESPECT TO THE INCOME DISC LOSED BEFORE SETTLEMENT COMMISSION AS NET PROFIT OF AY 1995-96 W HICH IS RS.2,00,975/- ACCORDINGLY THIS AMOUNT SHOULD BE RED UCED FROM RS. 20,98,734/-, THE RESULTANT ADDITION WORKS OUT T O RS.18,97,759/- (20,98,734 2,00,975). 8.2 IN A.Y. 1996-97, IN THE COUNTER COMMENTS, SAME ARGUMENTS WERE GIVEN AS GIVEN FOR AY 1995-96. IT H AS BEEN POINTED OUT THAT HOW THE AMOUNT IN QUESTION HAS BEE N DERIVED FROM THE SEIZED BOOKS OF ACCOUNTS IS NOT CLEAR. CI T(A) OBSERVED THAT THE TOTAL OF ON-MONEY RECEIPTS HAS BEEN TAKEN OUT AS PER NO.II CASH BOOK SEIZED AS ANNEXURE A/14 MENTIONED I N THE SHOW CAUSE NOTICE DATED 30.11.2007 OF THE ASSESSING OFFICER REPRODUCED IN THE BLOCK ASSESSMENT ORDER. AS PER A NNEXURE 6 IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 17 - OF THE SPECIAL AUDIT REPORT OF AY 1996-97 WHICH GIV ES NAMES OF PERSONS WITH AMOUNTS RECORDED IN CASH BOOK NO. I AN D CASH BOOK NO.II THE TOTAL OF THE DIFFERENCE COMES TO RS. 51,54,914/- [(RS.1,10,96,714/- (ON-MONEY RECEIPTS AS PER NO.II BOOKS) - RS.59,41,800/- (AS PER NO.I BOOKS)]. CIT(A) FINALL Y OBSERVED THAT IN THE INTEREST OF JUSTICE SET-OFF SHOULD BE G RANTED TO ASSESSEE WITH RESPECT TO THE INCOME DISCLOSED BEFOR E SETTLEMENT COMMISSION AS NET PROFIT OF AY 1996-97 WHICH IS RS. 27,06,214/-, ACCORDINGLY THIS AMOUNT SHOULD BE REDU CED FROM RS.51,54,914/-, THE RESULTANT ADDITION WORKS OUT TO RS. 24,48,700/- (51,54,914 27,06,214) AND WAS UPHELD. 8.3 BROKEN PERIOD FROM 01.04.96 TO 21.01.1997: THE ARGUMENTS GIVEN ABOVE WITH RESPECT TO A.Y. 1995-96 AND A.Y. 1996-97 WERE ASKED TO BE REFERRED TO BY THE AUTHORI ZED REPRESENTATIVE BEFORE CIT(A). CIT(A) OBSERVED THAT THE SEARCH OPERATION REVEALED THAT THE APPELLANT WAS ENGAGED I N RECEIVING ON-MONEY CASH RECEIPTS ON SALE OF HOUSES, SHOPS ETC . WHICH WERE NOT REFLECTED BY IT IN THE REGULAR BOOKS. THE SPECIAL AUDIT REPORT FOR THE PERIOD MENTIONS IN ANNEXURE 4 THIS F ACT ALONG WITH THE NAMES OF PERSONS, AMOUNTS RECORDED IN NO.I AND NO. II BOOKS AND THE TOTAL OF DIFFERENCE COMES TO RS.39,90 ,586/-. [(RS.72,14,696 (ON-MONEY RECEIPTS AS PER NO.II BOOK S) - RS.32,24,110 (AS PER NO.I BOOKS)]. THUS, THE AMOUN T OF ON- MONEY RECEIPTS OF RS.39,90,586/- WORKS OUT FOR THE BROKEN PERIOD. HOWEVER, RS. 39,90,586/- WAS TO BE TELESCOP ED IN THE AMOUNT OF RS.50,56,433/- WHICH IS THE NET PROFIT OF THE BROKEN PERIOD DISCLOSED BY THE APPELLANT BEFORE SETTLEMENT COMMISSION. IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 18 - 8.4 WE FIND THAT FOR A.Y. 1995-96 THE ASSESSING OFF ICER HAS STATED THAT AS PER THE CASH BOOK FOUND IN AS PER AN NEXURE-A- 13 TO A-15, THE SAME CONTAINED CASH RECEIPT FOR THE PURCHASE AND SALES OF ROW-HOUSE, TENAMENTS, ETC. COMPARISON OF THE CASH RECEIPTS ACCOUNTED FOR IN THE DUPLICATE BOOK A ND REGULAR BOOK WAS MADE AND THE BALANCE WAS WORKED OUT. ACCOR DINGLY, THE ASSESSING OFFICER MADE ADDITION OF RS.27,14,728 /- IN A.Y.1995-96 WHICH WAS REDUCED TO RS.20,98,734/- BY THE CIT(A) ON ACCOUNT OF THE ARITHMETICAL INACCURACY. ASSESSEE EXPLAINED THAT THE SALES ARE RECORDED IN THE REGULA R BOOKS OF ACCOUNT ON THE BASIS OF POSSESSION GRANTED. IN FAC T, THE SPECIAL AUDITOR HAS ALSO RECOGNIZED SALES ON THE BASIS OF T HE POSSESSION GRANTED WITH RESPECT TO THE REGULAR BOOKS OF ACCOUN TS MAINTAINED. ACCORDINGLY, TRADING AND P & L A/C WER E RECASTED FOR THE REGULAR AND NO.2 BOOKS WHICH INCLUDED RECOG NITION OF SALES ON THE BASIS OF POSSESSION GRANTED AND WHICH HAS BEEN PLACED ON PAGE-1 OF THE PAPER BOOK FILED BY ASSESSE E. THE DETAILS OF SALES RECOGNIZED, NAME OF MEMBER AND DAT E OF POSSESSION AS PER REGULAR BOOKS OF ACCOUNTS HAS BEE N PLACED ON PAGE NO.3 OF THE PAPER BOOK WHICH IS AMOUNTING T O RS.18,93,004/-. THIS APPEARS IN THE CONSOLIDATED TR ADING ACCOUNT IN THE COLUMN (REGULAR ACCOUNTS). THE TOTAL AMOUNT RECOVERED FROM THE MEMBER IS PLACED ON PAGE NO.2 OF THE PAPER BOOK. THE TOTAL AMOUNT RECOVERED IS RS.34,29,751/- OUT OF WHICH RS.18,93,004/- IS DECLARED IN THE REGULAR BOO KS OF ACCOUNTS AND ALSO ACCEPTED BY THE AUDITOR ON PAGE N O.71 OF THE PAPER BOOK. THEREFORE, THE DIFFERENTIAL AMOUNT IS RS.15,36,747/- (34,29,751-18,93,004) WHICH IS RECOG NIZED AS REVENUE ON THE PRINCIPLE OF POSSESSION GRANTED AND DULY ACCEPTED BY THE REVENUE AND SPECIAL AUDITOR IN THE SPECIAL IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 19 - AUDIT REPORT. THE PROFITS HAVE THEREAFTER BEEN WORK ED OUT AND OFFERED AS ADDITIONAL INCOME BEFORE THE INCOME TAX SETTLEMENT COMMISSION. THIS FACT HAS ALSO BEEN CLARIFIED AT TH E ASSESSMENT STAGE. FOR THIS, ATTENTION WAS INVITED TO PAGE NO.20 OF THE PAPER BOOK WHICH CONTAINS THE LETTER DATED 0 6.12.2007 ADDRESSED TO THE ASSESSING OFFICER AND PARTICULAR A TTENTION WAS INVITED TO PAGE NO.22 OF THE PAPER BOOK WHICH CONTA INS THE NECESSARY CLARIFICATIONS. 8.5 WITH REGARDS A.Y. 1996-97, CIT(A) OBSERVED THAT ANNEXURE-6 OF THE SPECIAL AUDIT REPORT PLACED ON PA GE NO.67 TO 71 REVEAL A DIFFERENCE OF RS.51,54,941/- (1,10,96,7 41- 59,41,800). THE CONSOLIDATED TRADING ACCOUNTS HAVE BEEN PLACED ON PAGE NO.4 OF THE PAPER BOOK. THE SALES O N THE BASIS OF THE POSSESSION GRANTED IN THE REGULAR BOOKS OF A CCOUNTS HAS BEEN SHOWN AT RS.51,94,646/-. THE SAME WAS ALSO ADM ITTED BY THE SPECIAL AUDIT REPORT ON PAGE NO.59 OF THE PAPER BOOK. FURTHER ATTENTION IS INVITED TO PAGE NO.4 WHICH CON TAINS THE CONSOLIDATED P & L ACCOUNTS ON THE BASIS OF WHICH T HE NET PROFIT HAS BEEN DERIVED AND OFFERED BY WAY OF ADDIT IONAL INCOME BEFORE THE SETTLEMENT COMMISSION. THE PERUSAL OF TH E SAME REVEALS THAT THE RECEIPTS AS PER THE DUPLICATE BOOK S OF ACCOUNTS HAD BEEN ADOPTED AT RS.62,61,347/-. THE TOTAL ACCOU NTED AND UNACCOUNTED RECEIPTS ARE AMOUNTING TO RS.1,14,55,99 3/- (51,94,646+62,61,347) WHICH ON THE BASIS OF THE POS SESSION GRANTED HAS BEEN WORKED OUT FOR COMPUTING THE TOTAL INCOME. THE DETAILS OF POSSESSION GRANTED IS PLACED ON PAGE NO.7 & 8 OF THE PAPER BOOK. THE UNDISCLOSED INCOME HAS BEEN WO RKED OUT ON THE BASIS OF THE SALES RECORDED WHICH IS ON POSS ESSION BASIS AND ACCEPTED IN REGULAR ASSESSMENTS. THIS METHOD A ND IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 20 - MANNER HAS ALSO BEEN REVEALED THE MANNER OF RECOGNI TION REVENUE IN REGULAR AND DUPLICATE BOOKS CANNOT BE DI FFERENT. FURTHERMORE, THE RECEIPTS RECOGNIZED AS INCOME FOR THE BLOCK PERIOD ON POSSESSION BASIS WOULD BE RS.2,20,70,464/ - AND THAT AS PER THE ASSESSMENT ORDER IS RS.22,57,648/-. THE REFORE, THERE IS MARGINAL DIFFERENCE IN SALES. FURTHERMORE, THE EXPENSES AS NOTED IN THE DUPLICATE BOOKS OF ACCOUNT S HAVE NOT BEEN GRANTED WHICH IS LEADING TO ASTRONOMICAL DETER MINATION OF INCOME WHICH AS PER THE ASSESSING OFFICER IS RS.2,1 5,93,949/-. THIS WOULD LEAD TO 95.66% WHICH IS ABNORMAL. THE ASSESSEE HAS ALREADY OFFERED NET PROFIT WHICH IS RS.79,63,62 2/- WHICH IS 36.08%. 8.6 THE SPECIAL AUDIT REPORT HAS BEEN PLACED ON PAG E NOS.74 TO 89 OF THE PAPER BOOK. THE CASH RECEIVED FROM THE MEMBERS INCLUDED IN THE REGULAR AND DUPLICATE BOOKS OF ACCO UNTS IS PLACED ON PAGE NOS. 87 & 88 OF THE PAPER BOOK. IT H AS BEEN STATED THAT RS.72,14,696/- HAS BEEN RECEIVED IN D UPLICATE BOOKS AND RS.32,24,110/- IN THE REGULAR BOOKS OF AC COUNTS. ACCORDINGLY, DIFFERENCE WORKS OUT TO RS.39,90,586/- . SINCE THE ASSESSEE HAS DISCLOSED RS.50,56,433/- THE DIFFEREN CE STANDS COVERED AND NO SEPARATE ADDITION IS REQUIRED. ASSE SSING OFFICER IS DIRECTED ACCORDINGLY. 9. IN RESULT, ASSESSEES APPEAL IN ITA NO.16/AHD/20 10 IS PARTLY ALLOWED. IT(SS)A NO.62/AHD/2010 (REVENUES APPEAL), IN CASE OF M/S. SHYAM BUILDERS 10. GROUND NO.1 OF REVENUES APPEAL IS WITH REGARD TO DELETING THE ADDITION OF RS.2,00,975/- MADE ON ACCO UNT OF ON IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 21 - MONEY RECEIPTS FOR A.Y. 1995-96. THE STAND OF ASS ESSEE IS THAT SINCE THE DIFFERENCE IN RECEIPTS HAS BEEN TAXED SEP ARATELY THE INCOME OFFERED BY ASSESSEE HAS BEEN TELESCOPED IN T HE SAME. THIS ISSUE HAS BEEN TAKEN CARE WHILE DEALING CORRES PONDING ISSUE IN ASSESSEES APPEAL. ACCORDINGLY, NO INTERF ERENCE IS CALLED FOR FROM OUR SIDE ON THIS ISSUE. SAME IS UP HELD. 11. GROUND NO.2 OF REVENUES APPEAL IS WITH REGARD TO DELETING THE ADDITION OF RS.27,06,214/- MADE ON ACC OUNT OF ON MONEY RECEIPTS FOR A.Y. 1996-97. THE STAND OF ASS ESSEE IS THAT SINCE THE DIFFERENCE IN RECEIPTS HAS BEEN TAXED SEP ARATELY THE INCOME OFFERED BY ASSESSEE HAS BEEN TELESCOPED IN T HE SAME. AGAIN THIS ISSUE HAS BEEN DEALT BY US IN ASSESSEES APPEAL, WHICH TAKES CARE OF THIS. ACCORDINGLY, NO INTERFER ENCE IS CALLED FOR FROM OUR SIDE ON THIS ISSUE OF REVENUES APPEAL . SAME IS UPHELD. 12. GROUND NO.3 OF REVENUES APPEAL IS WITH REGARD TO DELETING THE ADDITION OF RS.39,90,586/- MADE ON ACC OUNT OF ON MONEY RECEIPTS FOR A.Y. BLOCK PERIOD FROM 01.04.19 96 TO 21.01.1997. THE STAND OF ASSESSEE IS THAT SINCE AS SESSEE HAS DISCLOSED A HIGHER AMOUNT IN THE INCOME BEFORE OFFE RED BEFORE INCOME TAX SETTLEMENT COMMISSION INCOME OFFERED BY THE ASSESSEE HAS BEEN TELESCOPED IN THE SAME. AGAIN TH IS ISSUE HAS BEEN TAKEN CARE WHILE DEALING CORRESPONDING ISS UE. IN VIEW OF THIS, ORDER OF CIT(A) ON THIS ISSUE NEEDS NO INT ERFERENCE FROM OUR SIDE. SAME IS UPHELD. 13. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD T O DELETING THE ADDITION OF RS.1,90,38,203/- MADE ON ACCOUNT OF DISALLOWANCE IN VIOLATION PROVISIONS OF SEC.40A(3) OF THE ACT. IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 22 - THE STAND OF ASSESSEE IS THAT ASSESSING OFFICER HAS MERELY MADE ADDITIONS ON THE BASIS OF THE OBSERVATIONS MAD E IN THE SPECIAL AUDIT REPORT. THE ASSESSING OFFICER HAS NO T GRANTED DEDUCTION OF THE EXPENSES AND THEREFORE THE MAK ING OF DISALLOWANCE DOES NOT ARISE. SECONDLY, IN A. Y. 1995-96, THERE IS A CALCULATION MISTAKE AND THE DISALLOWANCE SHOULD BE RS.36,75,051/- INSTEAD OF RS.73,50,102/- MADE BY THE ASSESSING OFFICER. THIRDLY, THE PROVISIONS OF SECTION 40A(3) DOES NOT APPLY TO BLOCK ASSESSMENT PROCEEDINGS. 13.1 IN VIEW OF ABOVE, CIT(A) WAS RIGHT IN DELETING DISALLOWANCES IN QUESTION BECAUSE SAME WERE MADE WI THOUT ANY BASIS. SAME IS UPHELD. 14. NEXT ISSUE OF REVENUES APPEAL IS WITH REGARD T O DELETING THE ADDITION OF RS.1,14,25,002/- MADE ON ACCOUNT OF DISALLOWANCE OF CLAIM OF NON VERIFIABLE EXPENSES. THE STAND OF ASSESSEE IS THAT THE ASSESSING OFFICER HAS STATED T HAT THE SPECIAL AUDIT REPORT REVEALS THAT FURTHER SUBSTANTI AL AMOUNT OF EXPENSES HAD BEEN CREDITED IN NO.II CASH BOOK FOR W HICH NO SUPPORTING EVIDENCE/VOUCHER WERE FOUND OR PROVIDED BY THE ASSESSEE AND, HENCE, THE SAME ARE NOT VERIFIABLE. E VEN AT THE STAGE OF SPECIAL AUDIT REPORT VOUCHERS WERE FURNISH ED IN SUPPORT OF THE CLAIM OF SUCH EXPENSES. SINCE, ASSES SEE COULD NOT PRODUCE THE VOUCHERS AS PER THE OBSERVATIONS MA DE OF THE SPECIAL AUDIT REPORT, ADDITIONS HAVE COME TO BE MAD E. THEREAFTER, THE ASSESSING OFFICER HAS REFERRED TO T HE REGULAR BOOKS OF ACCOUNT AND DUPLICATE BOOKS OF ACCOUNTS WH EREIN CERTAIN EXPENSES HAVE BEEN NOTED WHICH AREA ALLEGED TO HAVE BEEN NON-VERIFIABLE. IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 23 - 14.1 DURING THE COURSE OF APPELLATE PROCEEDINGS IT WAS SUBMITTED ON BEHALF OF ASSESSEE THAT THE EXPENDITUR E IN QUESTION HAS BEEN RECORDED IN THE DUPLICATE BOOKS O F ACCOUNTS. THE ASSESSING OFFICER WAS ADOPTED DOUBLE STANDARD W HEREIN HE WAS RELATING TO THE DUPLICATE BOOKS WITH REGARDS RECEIPTS/INCOME AND NOT RELATING ON THE SAME BOOKS WHERE CLAIM OF EXPENSES/DEDUCTION WERE MADE. THEREFORE, T HERE WAS PARTIAL RELIANCE PLACED ON THE SEIZED RECORD WHICH IS NOT CORRECT AND THEY HAVE EITHER TO BE ACCEPTED IN TOTALITY OR REJECTED IN TOTALITY. IN VIEW OF ABOVE, CIT(A) RIGHTLY DELETE D THE ADDITION IN QUESTION WHICH NEEDS NO INTERFERENCE FROM OUR SIDE. SAME IS UPHELD. 15. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD T O DELETING THE ADDITION OF RS.13,75,000/- MADE ON ACCOUNT OF S ALE OF TABELA LAND OF NIKOL. THE STAND OF ASSESSEE IS THA T ASSESSING OFFICER HAS STATED THAT NO.II CASH BOOK OF ACCOUNTS REVEALED AN AMOUNT OF RS.13,45,000/-RECEIVED ON SALE OF TABELA IN CASH FOR A.Y.I996-97. HE HAS ALSO STATED THAT RS.30,000/- HA S BEEN RECEIVED IN THE BROKEN PERIOD. IT HAS ALSO BEEN ST ATED THAT THESE OBSERVATIONS HAVE BEEN MADE IN THE SPECIAL AU DIT REPORT. 15.1 ASSESSEE HAS FURNISHED HIS WRITTEN SUBMISSION BEFORE CIT(A) AND WITH RESPECT TO THIS ISSUE INTER ALIA ST ATED THAT THIS AMOUNT HAS ALREADY BEEN TAKEN IN TO CONSIDERATION B Y THE ASSESSING OFFICER WHILE MAKING ADDITION OF RS.27,06 ,214/-. THE AMOUNT IN QUESTION HAS ALSO BEEN TAKEN IN TO COGNIZ ANCE BY ASSESSEE WHILE FILING THE RETURN. ATTENTION WAS IN VITED TO PAGE NO.4 OF THE PAPER BOOK FILED BEFORE CIT(A) WHICH CO NTAINS CONSOLIDATED P & L A/C FOR A.Y.I996-97. THE PROFIT IN QUESTION IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 24 - HAS BEEN COMPUTED AFTER TAKING INTO CONSIDERATION T HE SALE CONSIDERATION OF TABELA. THEREFORE THIS AMOUNT WAS DOUBLE ADDITION SINCE THE SAME HAS ALREADY BEEN OFFER TO T AX. ASSESSING OFFICER IN THE REMAND REPORT HAS BEEN MER ELY REITERATED WHAT HAS BEEN DONE IN THE BLOCK ASSESSME NT ORDER. HE HAS NOT BEEN ABLE TO REFUSE THE FACT THAT THIS A MOUNT HAS ALREADY BEEN TAKEN IN TO CONSIDERATION WHILE COMPUT ING UNDISCLOSED INCOME. THE COUNTER COMMENTS OF ASSESS EE HAVE BEEN PLACED ON PAGE 134 TO 235 OF THE PAPER BOOK, W HEREIN IT WAS ALSO POINTED OUT THAT NO SUCH ADDITIONS WERE PR OPOSED BY THE ASSESSING OFFICER DURING THE ORIGINAL BLOCK ASS ESSMENT PROCEEDINGS. THE CIT(A) HAS RIGHTLY ACCEPTED THE CO NTENTION OF ASSESSEE AFTER VERIFYING THE P & L A/C AND DELETED THE ADDITION IN QUESTION BY PROPER REASONING. SO, THE ORDER OF CIT(A) ON THIS ISSUE IS UPHELD. 16. NEXT GROUND IN REVENUES APPEAL IS WITH REGARD TO DELETING THE ADDITION OF RS.2,62,000/- MADE ON ACCOUNT OF UN ACCOUNTED BOOKING RECEIPTS FOR A.Y. 1996-97. THE STAND OF AS SESSEE HAS BEEN THAT THE ASSESSING OFFICER HAS STATED THAT NO. II CASH BOOK OF ACCOUNTS REVEAL AN AMOUNT OF RS.2,62,000/-RECEIV ED ON SALE OF SHOP AT JIVRAJ IN CASH FOR A. Y. 1996-97. THESE OBSERVATIONS HAVE BEEN MADE IN THE SPECIAL AUDIT REPORT. THIS A MOUNT HAS ALREADY BEEN TAKEN IN TO CONSIDERATION BY THE ASSES SING OFFICER WHILE MAKING ADDITION OF RS.27,06,214/-. THE AMOUNT IN QUESTION HAS ALSO BEEN TAKEN IN TO COGNIZANCE BY AS SESSEE WHILE FILING THE RETURN. THE PROFIT IN QUESTION HAS BEEN COMPUTED AFTER TAKING INTO CONSIDERATION THE SALE C ONSIDERATION OF SHOP AT JIVRAJ. THEREFORE THIS AMOUNT IS DOUBLE ADDITION SINCE THE SAME HAS ALREADY BEEN OFFER TO TAX. THE ASSESSING IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 25 - OFFICER IN THE REMAND REPORT HAS BEEN MERELY REITER ATED WHAT HAS BEEN DONE IN THE BLOCK ASSESSMENT ORDER. HE HAS NOT BEEN ABLE TO REFUSE THE FACT THAT THIS AMOUNT HAS ALREAD Y BEEN TAKEN IN TO CONSIDERATION WHILE COMPUTING UNDISCLOSED INC OME. NO SUCH ADDITIONS WERE PROPOSED BY THE ASSESSING OFFIC ER DURING THE ORIGINAL BLOCK ASSESSMENT PROCEEDINGS. IN VIEW OF ABOVE, CIT(A) HAS RIGHTLY ACCEPTED THE CONTENTION OF ASSES SEE AFTER VERIFYING THE P & L A/C AND DELETED THE ADDITION IN QUESTION. THIS REASONED FACTUAL FINDING OF CIT(A) NEEDS NO IN TERFERENCE FROM OUR SIDE. SAME IS UPHELD. 17. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD T O DELETING THE ADDITION OF RS.8,00,000/- MADE ON ACCOUNT OF CA SH RECEIPTS. THE STAND OF ASSESSEE IS THAT ASSESSING OFFICER HAS STATED THAT AN AMOUNT OF RS.8,00,000/- IN CASH FROM BHARATBHAI PATEL WAS RETURNED WHICH WAS PREVIOUSLY PAID FOR PLOT OF MUKTIDHAM ON VARIOUS DATES DURING THE PERIO D 01.04.1996 TO 21.01.1997. IT HAS BEEN STATED THAT N O EXPLANATION HAS BEEN FURNISHED WITH REGARDS THIS TR ANSACTION BEFORE SPECIAL AUDITORS ORDER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 17.1 ASSESSEE HAD FILED DETAILED CLARIFICATION IN T HE APPELLATE PROCEEDINGS INTER ALIA CLARIFIED THAT THIS WAS ONLY RETURN OF THE INVESTMENT MADE EARLIER AND THEREFORE, COULD NOT BE CONCEAL AS UNDISCLOSED INCOME. IT IS NOT THE PROFIT OF SALE O F LAND WHICH IS ARISEN TO ASSESSEE. EVEN IN REMAND REPORT, ASSESSI NG OFFICER SIMPLY REITERATED CONTENTION OF THE ASSESSMENT PROC EEDINGS. IT HAS BEEN CONTENDED BY ASSESSEE THAT WHERE THE INCOM E HAS BEEN COMPUTED ON THE BASIS OF THE RECEIPTS NOTED IN THE IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 26 - DUPLICATE BOOKS OF ACCOUNTED RETURN OF INCOME WOULD NOT QUALIFIED AS INCOME. IT WAS ALSO POINTED THAT THERE WAS NO SUCH INTENTION OF ASSESSING OFFICER AS EVIDENT FROM THE SHOW CAUSE NOTICE. IN VIEW OF ABOVE, CIT(A) HAS RIGHTLY ACCEP TED THAT ONCE THE INCOME HAS BEEN TREATED AS UNDISCLOSED INCOME I N INVESTMENTS THEREON COULD NOT BE SEPARATELY ADDED S INE THAT WOULD TANTAMOUNT TO DOUBLE ADDITION. ACCORDINGLY, SAME WAS RIGHTLY DELETED BY CIT(A). THIS REASONED AND FACTU AL FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. SAME I S UPHELD. 18. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD T O DELETING THE ADDITION OF RS.3,00,000/- MADE ON ACCOUNT OF NO N BUSINESS EXPENSE (PURCHASE OF GOLD). THE STAND OF ASSESSEE IS THAT THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE FIRM HAD PAID CASH TO KANUBHAI SONI (HARIKRUPA JEWELERS) FOR PURC HASE OF GOLF OF RS.3,00,000/-REFERRED TO THE OBSERVATION OF THE SPECIAL AUDITORS NO EXPLANATION WITH REGARDS THE TRANSACTIO N WAS FURNISHED. 18.1 THE CLARIFICATION WAS NOT GIVEN AT THE ASSESSM ENT STAGE ONLY ON ACCOUNT OF THE FACT THAT NO EXPLANATION WAS CALLED FOR WHICH IS EVIDENT FROM THE PERUSAL OF THE RELEVANT S HOW-CAUSE NOTICE. DURING THE APPELLATE PROCEEDINGS, IT HAS B EEN STATED THAT THE EXPENSES ARE PERSONAL IN NATURE AND HAVE B EEN TREATED AS WITHDRAWAL IN THE DUPLICATE BOOKS OF ACCOUNTS. T HE PAYMENTS HAVE NEVER CLAIMED AS EXPENSES AND THEREFO RE, THE QUESTION OF DISALLOWING DOES NOT ARISE. EVEN, THE ASSESSING OFFICER IN HIS REMAND REPORT HAS MERELY REITERATED HIS CONTENTION AT THE ASSESSMENT STAGE. IN THE COUNTER COMMENTS PLACED ON PAGE 241 TO 243 OF THE PAPER BOOK., IT WA S POINTED IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 27 - OUT THAT THE WITHDRAWALS IN THE REGULAR AS WELL AS DUPLICATE BOOKS OF ACCOUNT OF RS.611334/-. FURTHER WHERE THE ENTIRE RECEIPTS HAVE BEEN TAKEN IN TO COGNIZANCE FOR COMPU TING UNDISCLOSED INCOME THE SEPARATE ADDITION OF INVESTM ENT THERE FROM IS NOT WARRANTED. IN VIEW OF ABOVE, CIT(A) RI GHTLY ACCEPTED THE CONTENTION AND DELETED THE ADDITION ON THE GROU ND THAT THE UNDISCLOSED INCOME SURRENDERED BEFORE THE INCOME TA X SETTLEMENT COMMISSION AND FURTHER ADDITION MADE BY ASSESSING OFFICER FURTHER OF WHICH HAS BEEN SUSTAIN ED SUFFICIENT TO COVER THIS EXPENDITURE. IN VIEW OF ABOVE, ORDER OF CIT(A) ON THIS ISSUE NEEDS NO INTERFERENCE. SAME IS UPHELD. 19. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD T O DELETING THE ADDITION OF RS.19,29,000/- MADE ON ACCOUNT OF UNACCOUNTED RECEIPT OF SALE OF LAND. THE STAND OF ASSESSEE IS THAT THE ASSESSING OFFICER HAS STATED THAT THE ASSE SSEE FIRM HAS RECEIVED RS.2.40 LACS, RS.6.73 LACS AND RS.10.16 LA CS FOR PLOT OF JYOTI SOCIETY, LAND AT NIKOL FROM MAGANBHAI MARVADI AND LAND AT NIKOL FROM RAJUBHAI MARVADI. THESE RECEIPTS HAVE NOT BEEN INCORPORATED IN THE REGULAR BOOKS AND THEREFORE, CO NSTITUTE AS UNACCOUNTED RECEIPTS. 19.1 THE ASSESSING OFFICER HAD NEVER PROPOSED TO MA KE AS IS EVIDENCED FROM THE SHOW CAUSE NOTICE. DURING THE CO URSE OF APPELLATE PROCEEDINGS, IT WAS POINTED OUT THAT THIS AMOUNT IS CONSIDERED AS UNDISCLOSED INCOME IN THE HANDS OF JA SWANTLAL K. PATEL. COPY OF THE BLOCK ASSESSMENT ORDER OF JA SWANTLAL K. PATEL WAS ALSO FURNISHED AND PLACED ON PAGE-252 TO 266 OF THE PAPER BOOK. THE ASSESSING OFFICER HAS GIVEN HIS C OMMENTS IN THE REMAND REPORT PLACED ON PAGE 183 AND 184 OF THE PAPER IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 28 - BOOK. HE HAS MERELY STATED THAT THIS PLEA WAS NEVER TAKEN DURING THE BLOCK ASSESSMENT PROCEEDINGS AS IS POINT ED OUT THIS ISSUE WAS NEVER RAISED BY THE ASSESSING OFFICER AND HAS BEEN DIRECTLY ADDED WHILE COMPLETING THE ASSESSME NT. IN FACT, ASSESSEE WAS DEPRIVED OF THE OPPORTUNITY TO MAKE TH IS REPRESENTATION AT THE ASSESSMENT STAGE. IN VIEW OF ABOVE, CIT(A) RIGHTLY DIRECTED TO TELESCOPE THESE ADDITION S IN THE INCOME OFFERED BY ASSESSEE BEFORE THE INCOME TAX SETTLEMENT COMMISSION. SAME IS UPHELD. 20. AS A RESULT, THIS APPEAL OF REVENUE IN ITA NO.62/AHD/2010 IS DISMISSED. GROUNDS OF IT(SS)A NOS. 17/AHD/2010 & 42/AHD/2010 21. IN IT(SS)A NO.17/AHD/2010, IN CASE OF M/S. SHY AM CONSTRUCTION COMPANY, THE ASSESSEE HAS TAKEN THE FO LLOWING GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN PASSING AN ORDER WITHOUT GIVING A REASONABLE OPPORT UNITY OF BEING HEARD TO THE APPELLANT BEFORE ISSUING DIRE CTIONS IN RESPECT OF SPECIAL AUDIT U/S. 142(2A) OF THE INCOME TAX ACT, 1961. THE ORDER PASSED BY THE A.O. IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, HENCE THE SAME IS BA D IN LAW AND LIABLE TO BE CANCELLED. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING AN ADDITION OF RS. 1,07,60,682/ - BEING AN AMOUNT FOR THE INCOME DECLARED BEFORE THE HON'BL E INCOME TAX SETTLEMENT COMMISSION BY THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING AN ADDITION MADE BY THE ASSESSI NG OFFICER BY MAKING DISALLOWANCE U/S.40A(3) OF THE IN COME TAX ACT, 1961 YEAR WISE DETAILS OF WHICH ARE AS UND ER: IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 29 - A. YR. AMOUNT IN RS. 1993-94 3,58,404/- 1994-95 14,01,668/- 1995-96 9,05,164/- 1996-97 5,80,550/- BROKEN PERIOD 1,56,000/- 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING AND ENHANCING THE ADDITION MADE BY THE ASSESSING OFFICER U/S.40A(3) OF THE ACT OF RS.3 1,200/- TO RS.1,56,000/- IN THE BROKEN PERIOD WITHOUT AFFOR DING A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST SUC H ENHANCEMENT & THEREFORE, ENHANCING IS IN CONTRAVENT ION OF PROVISIONS OF SEC.251(2) OF THE I.T. ACT, 1961. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN MAKING ENHANCEMENT BY CALCULATING THE ALLE GED UNDISCLOSED INCOME HIMSELF FOR WHICH NO ADDITION HA S BEEN MADE BY THE ASSESSING OFFICER. A. YRS AMOUNT IN RS. 1993-94 16,33,931 (26,45,402-10,11,971) 1994-95 48,75,110 (68,11,110-19,36,000) 1995-96 56,41,999 (1,14,53,421- 58,11,422) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN MAKING AN ENHANCEMENT WITHOUT AFFORDING A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST SUC H ENHANCEMENT & THEREFORE, ENHANCING IS IN CONTRAVENT ION OF PROVISIONS OF SEC.251(2) OF THE I.T. ACT, 1961. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING AN ADDITION OF RS.92,990/- (2,5 3,000- 1,60,010) - AS ALLEGED UNDISCLOSED INCOME FOR BROKE N PERIOD 01.04.1996 TO 21.01.1997 OUT OF AN ADDITION FOR ON MONEY RECEIPTS MADE BY THE A.O. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING AN ADDITION OF RS.10,75,215/- [20,60,114 (27,50,100 - 6,89,986) - 9,84,899] AS A LLEGED IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 30 - UNDISCLOSED INCOME FOR A.YR. 1996-97 OUT OF AN ADDI TION FOR ON MONEY RECEIPTS MADE BY THE A.O. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN HOLDING THAT NO SEPARATE ADJUDICATION REQU IRED IN RESPECT OF THE GROUND THAT THE A.O. HAS ERRED-IN MA KING MULTIPLE ADDITIONS OF THE VARIOUS AMOUNTS OF SIMILA R NATURE SUCH AS INCOME OFFERED BY THE APPELLANT ETC. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN HOLDING THAT NO SEPARATE ADJUDICATION REQUIRED IN RESPECT OF THE GROUND THAT THE A.O. HAS ERRED IN NO T CONSIDERING THE MATERIAL OR OTHER DOCUMENTS FOUND D URING THE COURSE OF SEARCH PROCEEDINGS IN ENTIRETY AND TH EREBY NOT GRANTED DEDUCTIONS FROM THE INCOME SO COMPUTED. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN PLACING RELIANCE ON THE ALLEGED PROFIT/SUR PLUS AS INDICATED IN THE PROFIT & LOSS A/C. OF THE DUPLICAT E BOOKS OF ACCOUNT AS PER SPECIAL AUDITOR'S REPORT IN SPITE OF SPECIFIC SHORTCOMINGS & DEFICIENCIES POINTED OUT TH EREIN. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) OUGHT TO HAVE CONSIDERED THE FACT THAT BOOKING MONEY IN T HE DUPLICATE BOOKS OF ACCOUNT ALSO INCLUDES BOOKING MO NEY SHOWN IN THE REGULAR BOOKS OF ACCOUNTS. 22. IN IT(SS)A NO.42/AHD/2010, IN CASE OF M/S. SHY AM CONSTRUCTION COMPANY, THE REVENUE HAS TAKEN THE FOL LOWING GROUNDS OF APPEAL:- 1) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.1936000/- OUT OF TOTAL ADDITION OF RS.12996677/- MADE BY THE ASSESSING OFFICER ONLY ON THE BASIS OF STATEMENT OF FACTS (SOF) FILED BEFORE THE HON'BLE SETTLEMENT COMMISSION. 2) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.165000/- MADE U/S.40A(3) FOR MADE BY THE ASSESSI NG OFFICER FOR MAKING CASH PAYMENTS IN EXCESS OF THE L IMIT PRESCRIBED, IN F.Y. RELEVANT TO A.Y.1990-91. IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 31 - 3) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.155310/- MADE U/S.40A(3) BY THE ASSESSING OFFICE R FOR MAKING CASH PAYMENTS IN EXCESS OF THE LIMIT PRESCRI BED, IN F.Y.RELEVANT TO A.Y.1992-93. 4) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.376420/- MADE U/S.40A(3) BY THE ASSESSING OFFICE R FOR MAKING CASH PAYMENTS IN EXCESS OF THE LIMIT PRESCRI BED, IN F.Y. RELEVANT TO A.Y.1994-95. 5) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING SET OFF O F RS.1674885/- OUT OF 'ON MONEY' RECEIPTS OF RS.27500 00/- TOWARDS CASH EXPENSES OF RS.689968/-AND INCOME OFFE RED BEFORE THE ITSC OF RS.984899/-. 6) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING A DEDUCTI ON OF RS.160010/- OUT OF 'ON MONEY' RECEIPTS RECORDED IN SPECIAL AUDIT REPORT- ON ACCOUNT OF UNRECORDED CASH PAYMENTS. 7) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.28852462/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNEXPLAINED CREDIT / DEBIT ENTRIES, AS THE SAME WERE NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS AND ALSO BECAUSE THE ASSESSEE HAD FAILED TO FURNISH ANY DOCUMENTARY EVIDENCES IN SUPPORT OF ITS CLAIM. 8) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.590396/- MADE ON ACCOUNT OF NON-BUSINESS EXPENSES. ASSESSEES APPEAL IN IT(SS)A NO.17/AHD/2010 (IN CAS E OF SHYAM CONSTRUCTION CO.) 23. THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTING O F THE FOLLOWING PARTNERS: IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 32 - SR. NO. NAME SHARE OF PROFIT 1 PATEL ARVINDKUMAR PRAGJIBHAI 16% 2 PATEL SHANTABEN KALYANBHAI 25% 3 PATEL MANGUBEN BHAGWANBHAI 33% 4 PATEL PRAGJIBHAI BHAGWANBHAI 12% 5 PATEL JITENDRAKUMAR PRAGJIBHAI 14% THE FIRM CAME INTO EXISTENCE VIDE ITS PARTNERSHIP D EED DATED 05.04.1989. THE APPELLANT FIRM IS IN THE BUSINESS O F DEVELOPMENT AND CONSTRUCTION ACTIVITIES. THE APPELL ANT FIRM HAS UNDERTAKEN ORGANIZING, DEVELOPING AND CONSTRUCT ION OF SCHEME BY NAME 'JIVRAJ PARK' & 'SHYAM PARK'. 'JIVRA J PARK' WAS THE EARLIER SCHEME. IN THE SCHEME 'SHYAM PARK' THE FOLLOWING UNITS HAVE BEEN CONSTRUCTED: SR NO DESCRIPTION AREA (SQ. YD) NO. 1 TENEMENTS 94 78 2 TENEMENTS 6 0 36 3 TENEMENTS 53 112 4 SHOPS 25 (APP) 20 24. A SEARCH U/S. 132 OF THE IT ACT TOOK PLACE AT T HE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF THE PARTNERS ON 21.1.1997. DURING THE COURSE OF SEARCH, DUPLICATE BOOKS OF ACC OUNTS, DIARIES AND OTHER BOOKS, LOOSE PAPERS/INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED BY THE DEPARTMENT. NOTICE U/S . 158BC OF THE ACT WAS ISSUED AND THE APPELLANT HAD FILED THE RETURN IN RESPONSE TO THERETO ON 25.01.1999 DECLARING TOTAL U NDISCLOSED INCOME AT NIL. IN THE MEANTIME THE DEPARTMENT HAS O RDERED THE CONDUCTING OF SPECIAL AUDIT U/S. 142(2A) OF THE ACT . THE SPECIAL AUDIT REPORT (SAR) DATED 14.03.2000 FOR AY 1994-94, 1995-96 IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 33 - AND 1996-97 WAS FILED BY THE APPELLANT ON 3.3.2000. THE APPELLANT IN THE MEANTIME, FILED AN APPLICATION TO HON. INCOME TAX SETTLEMENT COMMISSION FOR THE SETTLEMENT OF THE IR TAX LIABILITIES. THE SAME CAME TO BE ADMITTED BY THE HO N. INCOME TAX SETTLEMENT COMMISSION VIDE ORDER 14.05.1999 PAS SED U/S 245D(1) OF THE ACT. HOWEVER ON ACCOUNT OF NON PAYME NT OF TAXES/INTEREST, THE MATTER CAME TO BE ABATED BY THE HON. INCOME TAX SETTLEMENT COMMISSION AND ORDER U/S 245H A DATED 22.10.2007 WAS PASSED TO THAT EFFECT. AS A CO NSEQUENCE TO THE ABATEMENT OF THE PROCEEDING PROCEEDINGS BEFO RE THE ASSESSING OFFICER GOT REVIVED WHO COMPLETED THE ASS ESSMENT ORDER U/S. 158BC RWS 143(3) AND 245 HA DATED 31.12. 1007. AN APPEAL HAD BEEN FILED AGAINST THE AFORESAID ORDE R WITH CIT(A)-XV, AHMEDABAD WHO DECIDED THE MATTER VIDE OR DER DATED 09.11.2009. 24.1 DURING THE COURSE OF SEARCH PROCEEDINGS DUPLI CATE BOOKS OF ACCOUNTS HAS BEEN FOUND WHICH INDICATED TH E ACTUAL AMOUNT COLLECTED FROM THE MEMBERS IN RESPECT OF CON STRUCTION ACTIVITY UNDERTAKEN. THE ON MONEY COLLECTED FROM TH E MEMBERS WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. SIMILARLY THE DUPLICATE BOOKS OF ACCOUNTS ALSO CONTAINED DETA ILS OF SUCH EXPENDITURE INCURRED WHICH WAS IN ADDITION TO THE E XPENDITURE DEBITED TO IN REGULAR BOOKS OF ACCOUNTS MAINTAINED. SUBSTANTIAL PAYMENTS WERE ALSO MADE WITH REFERENCE TO THE ON MONEY FOR THE PURCHASE OF LAND. SINCE THE SCHEMES O RGANIZED BY THE APPLICANT FIRM HAD ALREADY BEEN COMPLETED AN D THERE WAS NO FURTHER WORK EXECUTED THEREIN ON ACCOUNT OF THE SPLIT IN THE GROUP, THE DUPLICATE BOOKS OF ACCOUNTS OF THE A PPLICANT FIRM WHICH WERE FOUND I.E. DUPLICATE CASH BOOK INCLUDED SUBSTANTIAL IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 34 - WITHDRAWALS MADE BY THE PARTNERS SINCE THE ACTIVITY WAS SUSPENDED AND BOTH THE GROUPS HAD DECIDED TO GO THE IR INDEPENDENT WAY. THE APPLICANT FIRM HAS WORKED OUT THE TOTAL WITHDRAWALS MADE BY THE 3 GROUPS. THESE WITHDRAWALS HAVE BEEN NOTED IN THE DUPLICATE BOOKS OF ACCOUNTS AND N OT DISPUTED OR CHALLENGED BY THE DEPARTMENT AT ANY STA GE. THE TOTAL OF THE WITHDRAWALS MADE BY THE PARTNERS CLAIM ED TO HAVE BEEN OFFERED BY WAY OF ADDITIONAL INCOME BEFORE THE INCOME TAX SETTLEMENT COMMISSION. THE MATTER HAS BEEN ABATED ON ACCOUNT OF NON PAYMENT OF TAXES/INTEREST ON THE INC OME DECLARED BY THE ASSESSEE FIRM. 24.2 THE DETAILS OF THE ADDITIONAL INCOME OFFERED BEFORE THE INCOME TAX SETTLEMENT COMMISSION HAS BEEN FURN ISHED IN THE PB DATED 22.09.2015 CONSISTING OF 22 PAGES WHIC H INCLUDES THE STATEMENT OF FACTS FILED BEFORE THE INCOME TAX SETTLEMENT COMMISSION . THE DISCLOSURE OF ADDITIONAL INCOME MA DE BY THE APPELLANT FIRM COMPRISES OF THE WITHDRAWALS NOTED I N THE DUPLICATE CASH BOOK OF THE FIRM. FROM THE AFORESAID AMOUNTS THE INCOME AS DECLARED IN THE REGULAR RETURN OF INC OME HAS BEEN DEDUCTED. FURTHERMORE, LAND PAYMENTS MADE IN C ASH HAVE ALSO BEEN REDUCED TO ARRIVE AT THE ADDITIONAL INCOME. NATURE OF INCOME/DEDUCTION A.Y.1994-95 A.Y.1995-96 A.Y.1996-97 WITHDRAWALS IN THE DUPLICATE BOOKS OF ACCOUNTS 6394413 6118916 1508707 LESS: WITHDRAWALS DECLARED IN THE REGULAR BOOKS OF ACCOUNTS 316122 209044 304528 LESS: INCOME DECLARED IN THE 177930 98450 219280 IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 35 - REGULAR RETURN OF INCOME TOTAL 5900361 5811422 984899 FROM THE TOTAL INCOME AS PER THE TABLE ABOVE THE UN ACCOUNTED LAND EXPENSES HAVE BEEN DEDUCTED TO DERIVE AT THE U NDISCLOSED INCOME. THEREFORE, THE UNDISCLOSED INCOME OFFERED B EFORE THE INCOME TAX SETTLEMENT COMMISSION COMPRISES OF THE F OLLOWING: TOTAL UNDISCLOSED INCOME A.Y.1994-95 59,00,361 A.Y.1995-96 58,11,422 A.Y.1996-97 9,84,899 1,26,96,682 LESS: LAND PAYMENTS 19,36,000 1,07,60,682 IT IS IN THIS BACKGROUND THAT THE VARIOUS GROUNDS O F APPEAL ARE BEING DISCUSSED. 25. THE 1 ST ISSUE OF ASSESSEES APPEAL DEALS WITH THE DIRECTIO NS THAT SPECIAL AUDIT REPORT U/S. 142(2A) OF THE ACT W ITHOUT GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELL ANT. ACCORDINGLY IT HAS BEEN CONTENDED THAT THE ORDER PA SSED BY THE ASSESSING OFFICER IS IN VIOLATION OF PRINCIPLE OF N ATURAL JUSTICE AND THEREFORE THE SAME IS BAD IN LAW AND THE ASSESS MENT SHOULD BE CANCELLED. 25.1 THIS GROUND OF APPEAL IS NOT PRESSED BY THE AS SESSEE. 26. THE NEXT ISSUE OF ASSESSEES APPEAL IS REL ATING TO THE CONFIRMING THE ADDITION OF RS.1,07,60,682/- BEI NG THE INCOME DECLARED BEFORE THE INCOME TAX SETTLEMENT CO MMISSION IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 36 - 26.1 THIS INCOME HAS ALREADY BEEN OFFERED BEFORE TH E INCOME TAX SETTLEMENT COMMISSION AND HENCE THIS GROUND OF APPEAL IS NOT PRESSED. 27. THE NEXT ISSUE OF ASSESSEES APPEAL IS CONFIRMI NG THE ADDITION OF MAKING DISALLOWANCE U/S. 40A(3), THE YE ARWISE DETAILS BEING AS UNDER: ASST. YEAR AMOUNT RS. 1993 - 94 358404 1994 - 95 1401668 1995 - 96 905164 1996 - 97 580550 BROKEN PERIOD 156000 27.1 THE ASSESSING OFFICER HAS PROCEEDED TO MAKE T HIS ADDITION ON THE BASIS OF BOOKS OF ACCOUNTS PREPARED U/S. 142 (2A) OF THE ACT BY SPECIAL AUDITOR. AS PER THE ASSESSING OFFICE R, THERE IS VIOLATION OF THE PAYMENTS IN CASH HAVING BEEN MADE IN EXCESS OF RS.20,000/-. 27.2 IN THE WRITTEN SUBMISSION FURNISHED DURING TH E APPELLATE PROCEEDING WHICH HAVE BEEN PLACED ON PAGE 23 OF THE PAPER BOOK IT WAS POINTED OUT THAT THERE ARE NO BOOKS PRE PARED BY THE SPECIAL AUDITOR AS ALLEGED BY THE ASSESSING OFF ICER. EVEN IF SUCH BOOKS HAVE BEEN PREPARED ASSESSEE HAS NOT BEEN CONFRONTED WITH THE COPIES OF THE SAME. IT IS SETTL ED POSITION OF LAW THAT ANY MATERIAL RELIED UPON BY THE ASSESSING OFFICER SHOULD BE CONFRONTED TO THE APPELLANT. IT WAS ALSO POINTED OUT THAT FOR AY 1993-94 THE AMOUNT IN QUESTION WAS RS.2 ,37,/- AND NOT RS.3,58,404/-. IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 37 - 27.3 IT WAS ALSO CONTENDED THAT THE PROVISIONS OF SECTION 40A(3) DO NOT APPLY TO BLOCK ASSESSMENT PROCEEDINGS . IT WAS ALSO CONTENDED THAT PROVISIONS OF SECTION 40A(3) AR E NOT APPLICABLE IF THE PAYMENTS ARE MADE OUTSIDE THE BOO KS OF ACCOUNTS AS IN THE CASE OF BLOCK ASSESSMENT PROCEED INGS. IT WAS FURTHER CONTENDED THAT THE DISALLOWANCE WAS MAD E OF ALLEGED SUCH EXPENSES WHICH WERE NOT CLAIMED BY THE APPELLANT BY WAY OF DEDUCTION. THIS IS BECAUSE THE APPELLANT HAD OFFERED ADDITIONAL INCOME BEFORE THE INCOME TAX SETTLEMENT COMMISSION ON THE BASIS OF THE WITHDRAWALS MADE IN THE DUPLICATE BOOKS OF ACCOUNTS. IT WAS THEREFORE EXTEN SIVELY ARGUED THAT WHERE THERE IS NO CLAIM / DEDUCTION BY THE APPELLANT, THE QUESTION OF ANY DISALLOWANCE DOES NO T ARISE. 27.4 THE ASSESSING OFFICER HAS FURNISHED HIS COMM ENTS IN THE REMAND REPORT AND ATTENTION IN PARTICULAR IS DR AWN TO PAGE 166 OF THE PAPER BOOK. PERUSAL OF THE SAME WOULD RE VEAL THAT HE HAS MERELY RELIED UPON THE PROVISIONS OF SECTION 158BH OF THE ACT AND STATED VARIOUS DECISIONS OF THE APPELLA NT ARE NOT APPLICABLE IN THE CASE OF ASSESSEE WITHOUT COMMENTI NG ON THEM. THE CIT(A) HAS MERELY CONFIRMED IN HIS ORDER ON THE GROUND THAT THE ARGUMENTS OF EXPENSES NOT HAVING BE EN GRANTED DEDUCTION IS NOT ACCEPTABLE SINCE THE SAME HAVE BEEN REDUCED FROM THE ON MONEY RECEIPTS AND THE ADDITION S HAVE BEEN MADE THEREAFTER. AS PER THE CIT(A) IN THE CASE OF THE APPELLANT THE EXPENSES ARE NOT CLAIMED IN THE REGUL AR RETURN OF INCOME AND THE DEDUCTION HAS BEEN GRANTED IN THE NO . II BOOKS AND UNDISCLOSED INCOME HAS BEEN WORKED OUT. THE NO TINGS IN THE SEIZED RECORDS HAVE TO BE CONSIDERED IN ENTIRET Y AND NOT PIECEMEAL BASIS. THIS APPROACH OF AUTHORITIES BELO W IS NOT IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 38 - JUSTIFIED. IN VIEW OF ABOVE LEGAL DISCUSSION, ADDI TION SUSTAINED BY CIT(A) U/S.40A(3) OF THE ACT ARE DIRECTED IN ALL THESE YEARS. 28. THE 4 TH GROUND IS IN RESPECT OF CONFIRMATION AND ENHANCEMENT OF THE ADDITION U/S. 40A(3) OF RS.31200 /- AND RS.1,56,0007- FOR THE BROKEN PERIOD IN CONTRAVENTIO N OF THE PROVISIONS OF SECTION 251(2) OF THE ACT. 28.1 THE CIT(A) HAS IN FACT CONFIRMED THE ADDITION OF RS.1,56,000/- BY WAY OF DISALLOWANCE U/S. 40A(3) IN GROUND NO. 2. THEREFORE, RECONFIRMING THE SAME WOULD TANTA MOUNT TO DOUBLE ADDITION OF THE SAME AMOUNT. AS REGARDS DIS ALLOWANCE OF RS.31,200/- U/S. 40A(3), AS PER THE PROVISIONS A PPLICABLE FOR THE AFORESAID YEAR THE DISALLOWANCE WAS RESTRICTED TO 20% OF THE PAYMENT MADE. THEREFORE, THE ADDITION IN ANY CASE C AN BE MADE ONLY TO THE EXTENT OF RS.31,200/- BEING 20% OF RS.1,56,000/-. THAT THE DISALLOWANCE U/S 40A(3) IS NOT JUSTIFIED IN VIEW OF THE DISCUSSION MADE IN PARA 9 OF THE ORD ER. 29. NEXT ISSUE OF ASSESSEES APPEAL RELATES TO CONF IRMING AND ENHANCING THE UNDISCLOSED INCOME FOR WHICH NO ADDIT ION HAS BEEN MADE AND IN CONTRAVENTION OF THE PROVISIONS OF SECTION 251(2) OF THE ACT. THE YEAR WISE CONFIRMATIONS ARE AS UNDER: ASST. YEAR AMOUNT 1993 - 94 16,33,931 1994 - 95 48,75,110 1995 - 96 56,41,999 IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 39 - THE CIT(A) HAS DEALT WITH THIS ISSUE IN PARA 8 AND PAGE 16 OF HIS ORDER. ISSUE OF CONTRAVENTION U/S.251(12) OF T HE ACT WAS NOT PRESSED BEFORE HIM. SO, MATTER IS BEING DECIDE D ON MERIT. 29.1 THE CIT(A) HAS STATED THAT THE ON MONEY RE CEIPTS AND THE EXPENSES ARE NOTED BY THE AUDITOR IN THE SPECIA L AUDIT REPORT. THE DIFFERENCE BETWEEN THE TWO HAS BEEN TRE ATED AS NET SURPLUS AND ENHANCEMENT OF INCOME HAS BEEN MADE TO THAT EXTENT. IN THIS REGARD, IT WAS ON BEHALF OF ASSESS EE SUBMITTED THAT THE CIT(A) HAS MADE THE ADDITION ON THE OBSERV ATIONS IN THE SPECIAL AUDIT REPORT. HOWEVER, THE OFFER OF THE ADDITIONAL INCOME BEFORE THE INCOME TAX SETTLEMENT COMMISSION WAS ON THE BASIS OF THE DISTRIBUTION OF THE PROFIT AMONGST THE PARTNERS AND THE OFFER COULD BE CROSS VERIFIED WITH THE SEIZ ED WHICH WERE STILL LYING IN THE CUSTODY OF THE DEPARTMENT. PERUS AL OF SAME WOULD REVEAL THAT THE DISTRIBUTION OF PROFIT IS AFT ER MEETING ALL THE EXPENSES. THE CIT(A) HAS COMPLETELY IGNORED THI S DISTRIBUTION OF PROFIT WHICH HAS BEEN OFFERED AS AD DITIONAL INCOME OFFERED TO TAX BEFORE THE INCOME TAX SETTLEM ENT COMMISSION AND FURTHER MADE ADDITIONS ON THE BASIS OF THE NOTINGS AND JOTTINGS AS PER THE SPECIAL AUDIT REPOR T. ACCORDING TO US, ADDITION HAS THEREFORE RESULTED IN DOUBLE AD DITION. SAME IS DIRECTED TO BE DELETED. 30. NEXT ISSUE OF ASSESSEES APPEAL IS IN RELATION TO CONFIRMING THE ADDITION OF ALLEGED UNDISCLOSED INCOME ON ACCOU NT OF ADDITION FOR ON MONEY RECEIPTS FOR THE BROKEN PERIO D 1.4.1996 TO 21.1.1997 RS.92,990/-. THIS ISSUE HAS BEEN DEALT WITH THE CIT(A) IN PARA 18 AND PAGE 26 OF HIS ORDER. THE CI T(A) HAS STATED THAT AS PER THE SPECIAL AUDIT REPORT THE REC EIPTS ARE AMOUNTING TO RS.2,53,000/- AND THERE ARE NOTINGS OF EXPENSES IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 40 - OF RS.1,60,100/- WHICH HAVE BEEN GRANTED BY WAY OF DEDUCTION AND THE BALANCE AMOUNT HAS BEEN TREATED AS UNDISCLO SED INCOME. 30.1 AS DISCUSSED EARLIER, THE OFFER OF THE ADDITI ONAL INCOME BEFORE THE INCOME TAX SETTLEMENT COMMISSION WAS ON THE BASIS OF THE DISTRIBUTION OF THE PROFIT AMONGST THE PARTNERS AND THE OFFER CAN BE CROSS VERIFIED WITH THE SEIZED WHICH WERE STILL LYING IN THE CUSTODY OF THE DEPARTMENT. PERUS AL OF SAME WOULD REVEAL THAT THE DISTRIBUTION OF PROFIT IS AFT ER MEETING ALL THE EXPENSES. THE CIT(A) HAS COMPLETELY IGNORED THI S DISTRIBUTION OF PROFIT WHICH HAS BEEN OFFERED AS AD DITIONAL INCOME OFFERED TO TAX BEFORE THE INCOME TAX SETTLEM ENT COMMISSION AND FURTHER MADE ADDITIONS ON THE BASIS OF THE NOTINGS AND JOTTINGS AS PER THE SPECIAL AUDIT REPOR T. THIS ADDITION HAS THEREFORE RESULTED IN DOUBLE ADDITION WHICH IS NOT JUSTIFIED. SAME IS DIRECTED TO BE DELETED. 31. NEXT ISSUE OF ASSESSEES APPEAL RELATES TO CONF IRMING THE ADDITION AS ALLEGED UNDISCLOSED INCOME ON ACCOUNT O F ADDITION FOR ON MONEY RECEIPTS OF RS.L0,75,215/- FOR AY 1996 -97. THE RELEVANT DISCUSSION HAS BEEN MADE IN PARA 18 AND PA GE 25 OF THE ORDER OF THE CIT(A). THE CIT(A) HAS STATED THA T AS PER THE SPECIAL AUDIT REPORT THE RECEIPTS ARE AMOUNTING TO RS.27,50,100/- AND THERE ARE NOTINGS OF EXPENSES OF RS.6,89,986/- WHICH HAVE BEEN GRANTED BY WAY OF DED UCTION. FURTHERMORE, SET OFF OF THE INCOME OF RS.9,84,899/- HAS BEEN GIVEN. THEREFORE, THE NET SURPLUS OF RS.L0,75,215/- (27,50,100- 6,86,986-9,84,899) HAS BEEN TREATED AS UNDISCLOSED INCOME. IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 41 - 31.1 AS DISCUSSED EARLIER, THE OFFER OF THE ADDIT IONAL INCOME BEFORE THE INCOME TAX SETTLEMENT COMMISSION IS ON T HE BASIS OF THE DISTRIBUTION OF THE PROFIT AMONGST THE PARTN ERS AND THE OFFER CAN BE CROSS VERIFIED WITH THE SEIZED. PERUS AL OF SAME WOULD REVEAL THAT THE DISTRIBUTION OF PROFIT IS AFT ER MEETING ALL THE EXPENSES. THE CIT(A) HAS COMPLETELY IGNORED THI S DISTRIBUTION OF PROFIT WHICH HAS BEEN OFFERED AS AD DITIONAL INCOME OFFERED TO TAX BEFORE THE INCOME TAX SETTLEM ENT COMMISSION AND FURTHER MADE ADDITIONS ON THE BASIS OF THE NOTINGS AND JOTTINGS AS PER THE SPECIAL AUDIT REPOR T. THIS ADDITION HAS THEREFORE RESULTED IN DOUBLE ADDITION OF WHICH IS NOT JUSTIFIED. SO, THIS ADDITION IS DIRECTED TO BE DELETED. 31.2 IN RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWE D. REVENUES APPEAL IN IT(SS)A NO.42/AHD/2010 (IN CASE OF SHAYM CONSTRUCTION COMPANY) 32. THE 1 ST ISSUE OF REVENUES APPEAL RELATES TO THE DELETION OF ADDITION OF RS. 19,36,000/- OUT OF TOTAL ADDITION O F RS.1,29,96,671/- MADE ON THE BASIS OF STATEMENT OF FACTS FILED BEFORE THE INCOME TAX SETTLEMENT COMMISSION. RELEVA NT DISCUSSION IS IN PAGE 9 AND PARA 10 OF THE ASSESSME NT ORDER. THE CIT(A) HAS DEALT WITH THIS ISSUE IN PARA 7 AND PAGE 4 OF HIS ORDER. 32.1 ASSESSEE HAS CLAIMED SET OFF OF THE LAND C OST. THE DETAILS OF THE EXPENDITURE ARE AVAILABLE IN THE SEI ZED RECORDS. THIS CLAIM OF SET OFF OF THE LAND EXPENSES HAD BEEN CLAIMED IN THE ADDITIONAL INCOME OFFERED BEFORE THE INCOME TAX SETTLEMENT COMMISSION. SINCE THE DETAILS OF PAYMENTS ARE AVAI LABLE IN THE SEIZED RECORDS THE DEDUCTION HAS BEEN GRANTED. IT W AS CONTENDED THAT THE NOTINGS IN THE SEIZED RECORDS HA VE TO BE IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 42 - CONSIDERED IN ENTIRETY AND NOT PIECEMEAL AND THIS H AS BEEN ACCEPTED BY THE CIT(A) WHILE GRANTING RELIEF. IN V IEW OF THE ABOVE FACTS AND CIRCUMSTANCES THE ADDITIONS HAVE RI GHTLY BEEN DELETED BY CIT(A). WE UPHOLD THE SAME. 33. NEXT ISSUE OF REVENUES APPEAL RELATES TO THE DELETING OF THE ADDITION OF RS.165000/- U/S. 40A(3) FOR AY 1996 -97. THE ASSESSING OFFICER HAS MADE DISCUSSION ON THE ISSUE IN PARA 11 AND PAGE 11 OF THE ASSESSMENT ORDER. THE CIT(A) HAS DEALT WITH THIS ISSUE IN PARA L0 AND 18 AND PAGE 6 AND 14 OF H IS ORDER. 33.1 THE CIT(A) HAS OBSERVED THAT THE TRANSACTIONS WERE CONFINED TO THE REGULAR BOOKS OF ACCOUNTS AND THERE FORE WOULD NOT QUALIFY AS UNDISCLOSED INCOME. SINCE THE BLOCKS ASSESSMENT PROCEEDINGS AND REGULAR PROCEEDINGS OPER ATE IN A DIFFERENT FIELD THE ADDITIONS HAVE RIGHTLY BEEN DEL ETED BY CIT(A) BY REASONED FINDING. SAME IS UPHELD. 34. THE NEXT ISSUE OF REVENUES APPEAL IS IN RESPEC T OF DELETING THE ADDITION OF RS.1,53,310/- U/S. 40A(3) FOR AY 1992- 93. RELEVANT DISCUSSION HAD BEEN MADE ON THE ISSUE ON PARA 11 AND PAGE 11 OF THE ASSESSMENT ORDER. THE CIT(A) HAS DEALT WITH THIS ISSUE ON PARA 10 AND 18 & PAGE 6 AND 15 O F HIS ORDER. THE CIT(A) HAS DELETED THE ADDITION ON THE GROUND T HAT THE EXPENSES HAVE NOT BEEN CLAIMED BY WAY OF DEDUCTION AND THEREFORE QUESTION OF MAKING ANY DISALLOWANCE U/S. 40A(3) DOES NOT ARISE. THIS REASONED FINDING OF CIT(A) NEEDS N O INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 35. THE NEXT ISSUE OF REVENUES APPEAL IS IN RESPEC T OF DELETING THE ADDITION OF RS.3,76,420/- U/S. 40A(3) FOR AY 1994- IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 43 - 95. RELEVANT DISCUSSION HAD BEEN MADE ON THE ISSUE ON PARA 11 AND PAGE 11 OF THE ASSESSMENT ORDER. THE CIT(A) HAS DEALT WITH THIS ISSUE ON PARA 10 AND 18 AND PAGE 6 AND 21 OF HIS ORDER. RELIEF HAS BEEN GRANTED ONLY ON ACCOUNT OF A TYPOGRAPHICAL ERROR IN THE BLOCK ASSESSMENT ORDER. IN FACT THE EXPENSES IN VIOLATION OF SECTION 40A(3) OF THE ACT HAVE BEEN WRONGLY MENTIONED AT RS.17,78,088/- INSTEAD OF RS.14,01,668/- AND THEREFORE CONSEQUENTIAL RELIEF O F RS.3,76,420/- HAS BEEN GRANTED. CIT(A) WAS JUSTIFI ED IN GIVING THIS RELIEF FOR REASONS DISCUSSED ABOVE. SAME IS U PHELD. 36. THE NEXT ISSUE OF REVENUES APPEAL RELATES T O PERMITTING THE SET OFF AGAINST MONEY RECEIPTS TOWARDS CASH EXP ENSES AND INCOME OFFERED FOR TAX BEFORE THE INCOME TAX SETTLE MENT COMMISSION FOR AY 1996-97 AMOUNTING TO RS.1674885/- . RELEVANT DISCUSSION HAS BEEN MADE IN PARA 18 AND PA GE 23 OF THE CIT(A). THE CIT(A) HAS GRANTED RELIEF ON THE G ROUND THAT THE SEIZED RECORDS HAVE TO BE CONSIDERED IN ENTIRET Y AND NOT PIECEMEAL. THIS FACTUAL AND LEGAL DISCUSSION NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 37. THE NEXT ISSUE OF REVNUES APPEAL IS WITH REGARDS THE GRANTING OF DEDUCTION OF CASH PAYMENTS OUT OF MONEY RECEIPTS FOR THE BROKEN PERIOD AMOUNTING TO RS.1,60,010/-. T HE CIT(A) HAS DEALT WITH ISSUE IN PARA 18 & PG.25 OF HIS ORDE R. THE CIT(A) HAS ON THE BASIS OF THE OBSERVATIONS IN THE SPECIAL AUDIT REPORT CONSIDERED THE RECEIPTS THEREIN AND ALSO THE NOTINGS OF EXPENSES. HE HAS THEREAFTER CONSIDERED THE NET INCO ME AND TREATED THE SAME AS UNDISCLOSED INCOME INSPITE OF T HE DISTRIBUTION OF PROFITS ALREADY OFFERED AS ADDITION AL INCOME BY IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 44 - THE APPELLANT FIRM BEFORE INCOME TAX SETTLEMENT COM MISSION . SINCE THE RECEIPTS HAS BEEN CONSIDERED AS UNDISCLOS ED INCOME THE PERMITTING OF EXPENSES AS DEDUCTION IS ON THE B ASIS OF NOT PLACING PIECEMEAL RELIANCE ON THE SPECIAL AUDIT REP ORT. AGAIN THIS REASONED FACTUAL FINDING OF CIT(A) NEEDS NO IN TERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 38. THE NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD TO THE DELETION OF ADDITION OF RS.2,88,52,462/- ON ACCOUNT OF UNEXPLAINED CREDIT / DEBIT ENTRIES AS THE SAME WERE NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS. THE REL EVANT DISCUSSION HAS BEEN MADE ON PAGE 15 AND PARA 13 OF THE ASSESSMENT ORDER. THE CIT(A) HAS DEALT WITH THIS IS SUE ON PARA 19 AND PAGE 27 OF HIS ORDER. THE CREDIT ENTRIES AR E THE BOOKING MONEY OF THE MEMBERS AND WHICH HAVE BEEN SEPARATELY ADDED. SIMILARLY THE DEBIT ENTRIES ARE THE EXPENSES / WITH DRAWALS CLAIMED IN THE NO. II BOOKS OF ACCOUNTS. THESE HAVE BEEN DULY CONSIDERED AND SEPARATELY ADDED BY THE ASSESSING OF FICER AND ENHANCED BY CIT(A). THIS ISSUE IS AGITATED IN GROUN D NO.5 OF THE APPELLANT FIRMS APPEAL. THEREFORE, TAXING THE S AME ONCE AGAIN AS DEBIT/CREDIT ENTRIES WOULD TANTAMOUNT TO D OUBLE ADDITION. IT WAS ONLY BECAUSE THE RECEIPTS HAVE BEE N SEPARATELY ADDED AND CONFIRMED BY THE CIT(A) EARLIER WITH APPR OPRIATE RELIEF HAS BEEN GRANTED BY DELETING THE AFORESAID A DDITION. THIS REASONED FACTUAL FINDING OF CIT(A) NEEDS NO INTERFE RENCE FROM OUR SIDE. WE UPHOLD THE SAME. 39. THE NEXT ISSUE OF REVENUES APPEAL RELATES TO T HE DELETION OF ADDITION MADE ON ACCOUNT OF NON BUSINESS EXPENSE S. RELEVANT DISCUSSION HAS BEEN MADE IN PARA 14 AND PA GE 18 OF IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 45 - THE ASSESSMENT ORDER. THE CIT(A) HAS DEALT WITH THI S ISSUE ON PARA 20 AND PAGE 28 OF HIS ORDER. 39.1 IT WAS ADMITTED IN THE SPECIAL AUDIT REPOR T THAT THE EXPENDITURE IN QUESTION IS PERTAINING TO REGULAR BO OKS OF ACCOUNTS MAINTAINED BY THE APPELLANT. REFERENCE WAS INVITED TO THE NOTING MADE BY THE AUDITOR IN PAGE 112 OF THE P APER BOOK. THIS ADDITION HAS COME TO BE DELETED ON THE GROUND THAT BLOCK AND REGULAR ASSESSMENT PROCEEDINGS ARE SEPARATE AND DISTINCT AND ANY ALLEGED VIOLATION IN THE REGULAR BOOKS OF A CCOUNTS WOULD NOT BE TREATED AS UNDISCLOSED INCOME IN THE B LOCK ASSESSMENT PROCEEDINGS. IN VIEW OF LEGAL AND FACTU AL DISCUSSION, CIT(A) WAS JUSTIFIED IN GRANTING RELIEF TO ASSESSEE. SAME IS UPHELD. 40. AS A RESULT, BOTH APPEALS OF ASSESSEE ARE PARTL Y ALLOWED WHILE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 29/07/ 2016 AT AHMEDABA D. D/- SD/- SD/- MANISH BORAD SHAILENDRA KUMAR YAD AV (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD; DATED 29/07/2016 S. K. SINHA ! '! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A), 5. '#$ %% , , &'(( / DR, ITAT, AHMEDABAD 6. $)* + / GUARD FILE. # / BY ORDER, $ / %& (DY./ASSTT.REGISTRAR) IT(SS)A NOS. 16 & 62, 17 & 42/AHD/2010 M/S.SHYAM BUILDERS & SHYAM CONSTRUCTION CO. - 46 - , / ITAT, AHMEDABAD 1. DATE OF DICTATION- ON COMPUTER 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER.. OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.-. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER COMES BACK TO SR. PS/PS. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1/8/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER