Shri Ashokbhai Jariwal, Surat V. The ACIT.,Cent.Circle-4, Surat

ITSSA 165/AHD/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2321 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-06-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 22-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR BANWARI LAL
• Assessee Lawyers: PROF SAMPATH
• Keywords: Unexplained investment; Unexplained expenditure; Business income; Income from undisclosed sources; Search and seizure; Source of fund; Deemed to accrue or arise in india; Additional evidence; Deemed dividend; Retraction; Revised return
• Section: 69C; 143(3); 139(5); 69; 132; 12; 11

Judgement Text

IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 1 OF 17 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 446 / AHD /201 0 ASSESSMENT YEAR : 20 0 6 - 07 ASHOKBHAI H. JARIWALA VS. ASSTT. COMMISSIONER OF INCO ME TAX, (PROP. HARI OM JARI INDUSTRIES) , CENTRAL CIRCLE - 4 , SURAT . 3/1800, GHAMLAWAD, SHERI NO.1, GHAMLAWAD, SURAT. [PAN A A LPJ 9582 H ] IT (SS) A NO S . 164 , 165, 166, 167, 168 & 169/ AHD/201 1 ASSESSMENT YEAR S : 200 0 - 01, 2001 - 02, 2002 - 03, 2003 - 04, 2004 - 05 & 2 005 - 06 RESPECTIVELY ASHOKBHAI H. JARIWALA VS. ASSTT. COMMISSIONER OF INCOME TAX, (PROP. HARI OM JARI INDUSTRIES), CENTRAL CIRCLE - 4, SURAT. 3/1800, GHAMLAWAD, SHERI NO.1, GHAMLAWAD, SURAT. [PAN A ALPJ 9582 H ] ITA NO. 301 /AHD/201 3 ASSESSMENT YEAR : 200 6 - 07 INCOME TAX OFFICER, VS. AS HOK H. JARIWALA , WARD 2(2), SURAT . 3/1800, GHAMLAWAD, SALABATPURA, SURAT 395 002. [PAN A A LPJ 9582 H ] (APPELLANT S ) (RESPONDENT S ) A PPELLANT S BY : S HRI RAJESH C. SHAH & PROF. SAMPATH, AR RE SPONDENT S BY : DR. BANWARI LAL, CIT(D.R.) DATE OF HEARING : 29 .0 6 . 20 16 DATE OF PRONOUNCEMENT : 22 . 0 8 .2016 O R D E R PER BENCH: IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 2 OF 17 1. THIS IS A BATCH OF EIGHT APPEALS. THE ASSESSEE HAS FILED IT(SS)A NOS.164 TO 169/AHD/2011 IN ASSE SSMENT YEARS 2000 - 01 TO 2005 - 06 AGAINST A COMMON ORDER OF THE CIT(A) - II, AHMEDABAD DATED 13.12.2010 IN APPEAL NOS .CIT(A) - II/CC.4/387 TO 392/2007 - 08 IN PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 143A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ). 2. LAST ASSESSMENT YEAR 2006 - 07 INVOLVES ASSESSEE S APPEAL ITA NO.446/AHD/2010 AGAINST ORDER DATED 27.11.2009 PASSED BY THE CIT(A) - II, AHMEDABAD IN CASE NO .CIT(A) - II/CC.4/393/2007 - 08 IN PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. THE REVENUE HAS FILED ITS APPEAL ITA NO.301/AHD/2013 AGAINST ORDER DATED 27.11.2012 PASSED BY THE CIT(A) - II AHMEDABAD IN CASE NO . CIT(A) - II/CC - 4/35/2011 - 12 DELETING SECTION 271(1)(C) PENALTY OF RS.10,40,070/ - . 3. WE COME TO RIVAL PLEADINGS FIRST. THE ASSESSEE S SOLE SUBSTAN TIVE GRIEVANCE IN ASSESSMENT YEARS 2000 - 01 TO 2005 - 06 INVOLVING SIX CORRESPONDING APPEAL CHALLENGES ACTION OF BOTH THE LOWER AUTHORITIES IN ADDING ACCRUED INTEREST SUMS OF RS.11,35,158/ - , RS.12,31,127, RS.15,44,925/ - , RS.16,35,907/ - , RS.11,88.292/ - & RS.1 1,39,572/ - ; RESPECTIVELY THEREBY TREATING FDRS OF RS.1,76,46,465/ - FOUND/SEIZED IN THE COURSE OF SEARCH TO BE HIS INVESTMENT S . LAST ASSESSMENT YEAR 2006 - 07 INVOLVES TWO APPEALS. THE ASSESSEE RAISE FOUR SUBSTANTIVE GROUNDS IN ITS QUANTUM APPEAL ITA NO.446 /AHD/2010 IN ASSAILING FOUR ADDITIONS OF UNEXPLAINED CASH AND INTEREST INCOME ON FIXED DEPOSITS HEREINABOVE, UN - RECONCILED EXPENSES AND THE ONE PERTAINING TO CONDITIONAL DISCLOSURE AMOUNTING TO RS.9,48,000, RS.9,56,181/ - , RS.11,85,758/ - AND RS.67,80,000; R ESPECTIVELY. THE REVENUE S PENALTY APPEAL ON THE OTHER HAND SEEKS TO REVIVE PENAL TY AMOUNT OF RS.10,40,700/ - IMPOSED BY THE ASSESSING OFFICER AND DELETED IN THE LOWER APPELLATE ORDER. IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 3 OF 17 4. THE REVENUE RAISES A PRELIMINARY OBJECTION THAT THE ASSESSEE HAD H IMSELF OFFERED FOR TAX A SUM OF RS.67.80 LAKHS AS HIS UNACCOUNTED INCOME IN THE COURSE OF SEARCH IN QUESTION. IT SUBMITS THAT THE ASSESSING OFFICER HAS ADDED ONLY THE EXCESS AMOUNT OF RS.36,31,261/ - INSTEAD OF MAKING SEPARATE ADDITION S . IT RELIES UPON TH E CASE LAW (2012) 343 ITR 313 (ORISSA) IN THE CASE OF ORISSA RURAL HOUSING DEVELOPMENT CORPORATION VS. ACIT IN SUPPORT. 4.1 WE PROCEED TO ADJUDICATE THIS PRELIMINARY OBJECTION FIRST. 5. THIS ASSESSEE IS AN INDIVIDUAL MANUFACTURING AND SELLING ZARI (MET ALLIC THREAD) AND WOVEN ZARI FABRICS. HE IS STATED TO BE ONE OF THE KEY PERSONS OF KAPADIAS AND ZARIWALA FAMILIES IN THE VERY BUSINESS. THE DEPARTMENT CARRIED OUT A SEARCH/SURVEY IN HIS CASE ON 14.12.2005. IT CAME ACROSS THE ALLEGED INCRIMINATING EVIDEN CE RUNNING INTO VARIOUS ANNEXURES. THE DEPARTMENT WAS OF THE VIEW THAT ASSESSEE S GROUP CONCERNS HAD INDULGED IN UNACCOUNTED PRODUCTION AND SALE OF ZARI AND ZARI WOVEN FABRICS FOLLOWED BY SUBSTANTIAL UNACCOUNTED INVESTMENTS IN HIGH VALUE MACHINERY IMPORTE D BY UNDERVALUING PRICE THEREOF FOLLOWED BY DERIVING UNDECLARED RENTAL INCOME THEREFROM. 6. WE COME TO THE RELEVANT PAPER BOOK FILED BEFORE US. THERE IS NO DISPUTE THAT THIS ASSESSEE SUBMITTED HIS RETURN DECLARING ADDITIONAL INCOME OF RS.67,80,000/ - . THIS DECLARATION CAME WITH A CAVEAT READING AS UNDER : - II. INCOME FROM O T HER SOU R CES : INTEREST ON NSC ON RS.60,000/ - FOR 6 TH YEAR 11,586 ON RS.40,000/ - FOR 5 TH YEAR 5,640 ON RS.35,000/ - FOR 4 TH YEAR 4,193 ON RS.30,000/ - FOR 2 ND YEAR 2,649 24,068 INTEREST ON BOND 4,128 IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 4 OF 17 INTER E ST ON F.D. 99,312 SAVING BANK INTEREST 22,652 THE AMOUNT OF DISCLOSURE REMAINING SPECIFICALLY U NIDENTIFIED, TO BE CONSIDERED TO COVER ANY ERRORS, O MISSION DISCREPANCIES OF ANY NATURE THAT MAY BE F OUND IN T HE HANDS OF THE ASSESSEE AND /OR HIS F AMILY MEMBERS, IN THE COURSE OF ASSESSMENT P ROCEEDINGS OR TO BE TREATED AS UNDISCLOSED AS PER NOTE NO.2 HEREIN BELOW. 6,780,000 6,930,160 GROSS TOTAL INCOME 7,328,689 7. THIS WAS FOLLOWED BY ASSESSEE S NOT ES TO RETURN AS FOLLOWS : - HOWEVER, IF DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PROCEEDINGS IF ADDITION IS MADE TO THE RETURNED INCOME WITHOUT TAKING INTO ACCOUNT THE DISCLOSURE MADE BY THE ASSESSEE , EITHER DUE TO DISALLOWANCE OF EXPENSES OR DEDUCTION OTHERWISE THEN TO THE EXTENT OF DISCLOSURE MADE BY THE ASSESSEE, THE ADDITION BE TELESCOPED AGAINST THE TOTAL DISCLOSURE AND NO SEPARATE ADDITION BE MADE AGAIN. FURTHER, THE TAX REMAINING IF ANY IN RELATION TO THE AMOUNT NOT SPECIF ICALLY IDENTIFIED AGAINST THE AMOUNT OF DISCLOSURE THEN SUCH SURPLUS AMOUNT OF DISCLOSURE MAY KINDLE BE TREATED AS RETRACTED AND TAX PAID THEREON MAY BE REFUNDED TO THE ASSESSEE AND ACCORDINGLY, THE TAX PAID AT THIS STAGE BY THE ASSESSEE MAY BE TREATED A S UNDER PROTEST AND IN ANTICIPATION OF IDENTIFYING UNACCOUNTED A SSET IN ITS PRESENT FORM BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE ABOVE D I SCLOSUR E MAY KINDLY BE CONSIDERED ON LOGICAL AND JUDICIAL INTERPRETATION OF THE DEFINITION OF INCOME UNDER THE ACT AND AS PER THE NORMALLY ACCEPTED, INTERPRETED, IMPLEMENTED AND UNDERSTOOD PRINCIPALS OF INCOME IN COMMERCIAL PARLANCE AS ALSO BASED ON THE JUDICIAL PRONOUNCEMENTS OF VARIOUS AUTHORITIES ON THE SUBJECT MATTER. 8. THE REVENUE SEEK S TO TAKE ADVANTAGE OF THE ASSESSEE S ADDITIONAL INCOME OFFERED WITHOUT EVEN CONSIDERING THE ABOVE EXTRACTED CONDITIONAL DISCLOSURE. IT IS CLEAR FROM A PERUSAL THEREOF THAT THE SAME CONTAINED THE ABOVE REFERRED STIPULATIONS AND THEY WERE NOT UNCONDITIONAL . WE FIND IN THESE FACTUAL BACKDROP THAT A CO - ORDINATE BENCH OF THIS TRIBUNAL IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 5 OF 17 IN ITA NO.78/AHD/2012 IN THE CASE OF MANISH PACKAGING PVT. LTD. VS. ACIT DEALT WITH A CASE OF SIMILAR CONDITIONAL DISCLOSURE THEREBY ADJUDICATING THE ISSUE AGAINST THE REVENUE A S UNDER : - 13. WE HAVE HEARD BOTH THE PARTIES. CASE RECORDS AND JUDICIAL PRECEDENTS STAND PERUSED. WE COME TO ADMITTED FACTS FIRST. THE DEPARTMENT COMMENCED THE IMPUGNED SEARCH OPERATION IN ASSESSEE S BUSINESS PREEMIES. AND CONCLUDED THE SAME ON 03 - 10 - 2 008. THIS TIME SPAN OF 10 DAYS INVOLVES FOUR STATEMENTS BEING OBTAINED FROM SHRI PATEL (SUPRA) INTER ALIA DISCLOSING UNACCOUNTED BUSINESS INCOME OF RS. 2.25 CRORES ALONG WITH DEEMED DIVIDEND OF RS. 4 CRORES. WE HAVE EXTRACTED RELEVANT PORTIONS THEREOF IN P RECEDING PARAGRAPHS. THE SAME DO NOT REVEAL ANY SPECIFIC INCRIMINATING MATERIAL UNEARTHED IN THE COURSE OF SEARCH OR THEREAFTER HIGHLIGHTING UNACCOUNTED BUSINESS INCOME. THE ABOVE STATED DISCLOSURE STATEMENTS ARE VERY MUCH VAGUE ONES AND CONDITIONAL AS WEL L WITHOUT VERIFYING NECESSARY BOOKS AND RECORDS. THE RELEVANT ARRAY OF QUESTIONS FORMING PART OF THE PAPER BOOK ARE FOUND TO BE NOT THROWING LIGHT ON ANY SPECIFIC MATERIAL WITH CONTENTS THEREOF; WHATSOEVER. THE SAME FACTUAL POSITION CONTINUES IN ASSESSMENT , LOWER APPELLATE ORDER AND IN THE COURSE OF ARGUMENTS BEFORE US. IT IS NOT OUT OF PLACE TO REITERATE THAT WE ARE DEALING WITH THE ISSUE OF IMPUGNED UNACCOUNTED BUSINESS INCOME OF RS. 1,48,00,000/ - . WE OBSERVE IN THESE PECULIAR CIRCUMSTANCES THAT THERE IS NO SPECIFIC INCRIMINATING MATERIAL SUPPORTIVE OF THE ABOVE STATED ADDITION RIGHT FROM SEARCH TILL DATE. WE QUOTE BOARD S CIRCULAR (SUPRA) ISSUED MUCH PRIOR TO THE SEARCH IN QUESTION DIRECTING THE INVESTIGATING OFFICERS TO FOCUS ON COLLECTION OF EVIDENCE PO INTING TOWARDS UNACCOUNTED INCOME RATHER THAN REQUESTING SUCH CONFESSIONAL DISCLOSURE STATEMENTS. WE ACCORDINGLY HOLD THAT THE REVENUE HAS NOT COLLECTED ANY SPECIFIC MATERIAL SUPPORTING THE IMPUGNED ADDITION. 14. NOW WE COME TO RELEVANT CASE LAW QUOTED. THE FIRST ONE (2010) 328 ITR 411 (GUJ) KAILASHBEN MANOHAR CHOKSI VS. CIT. THE DEPARTMENT HAD RECORDED DISCLOSURE STATEMENT AT MIDNIGHT HOURS. THE SAME STOOD RETRACTED AFTER TWO MONTHS. THERE WAS NO EVIDENCE COLLECTED IN SUPPORT OF THE SAID DISCLOSURES. WE FIND THAT THEIR LORDSHIPS ACCEPTED RETRACTION SINCE THE STATEMENT WAS RECORDED IN VERY MUCH ODD HOURS. IT HAS BEEN HELD THEREAFTER THAT THE ADDITIONS IN QUESTION ARE NOT SUSTAINABLE SINCE NO MATERIAL EVIDENCE SUPPORTING THE SAME ARE FORTHCOMING. IT IS FURT HER EVIDENT THAT THIS CASE LAW PERTAINS TO A SEARCH CONDUCTED WELL BEFORE THE BOARD S CIRCULAR (SUPRA) QUOTED THEREIN. WHEN WE APPLY THIS RATIO VIS - - VIS FACTS BEFORE US, IT IS APPARENT THAT THERE IS NO INCRIMINATING MATERIAL OR EVIDENCE AVAILABLE WITH THE REVENUE WHICH COULD SUPPORT THE IMPUGNED ADDITION. 15. THE NEXT CASE LAW IS DCIT VS. SHRI VIVEKANAND SHARMA ITA 1748/KOL/2012 DECIDED ON 01 - 08 - 2014. THIS SEARCH IS DATED 26 - 023 - 2010 FOLLOWED A DISCLOSURE STATEMENT U/S. 132(4) ON 06 - 05 - 2010 SUBSEQUENTLY RETRACTED ON 02 - 09 - 2011 I.E. ALMOST ONE AND HALF YEARS THEREAFTER. THE LEARNED CO - ORDINATE BENCH QUOTES ABSENCE OF SPECIFIC MATERIAL EVIDENCE SUPPORTING THE DISCLOSURE STATEMENT FOR DECIDING THE ISSUE AGAINST THE REVENUE. WE HAVE AFFORDED THE REVENUE DUE OPPORTUNITY TO POINT OUT ANY DISTINCTION ON FACTS OR LAW. IT IS UNABLE TO DO SO. IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 6 OF 17 16. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO ABOVE STATED FACTS, LOWER AUTHORITIES FINDINGS, RIVAL CONTENTIONS AND OUR DISCUSSION KEEPING IN MIND THE RELEVANT CASE LAWS. W E ARE OF THE OPINION ACCORDINGLY THE REVENUE HAS FAILED TO PRODUCE ANY MATERIAL EVIDENCE SUPPORTING THE IMPUGNED ADDITION AMOUNT OF RS. 1.48 CRORES ADDED MERELY ON THE BASIS OF A VERY MUCH VAGUE AND CONDITIONAL DISCLOSURE STATEMENT OF SHRI PATEL WHICH STAN DS RETRACTED LATER ON. WE HOLD IN THESE FACTS THE ASSESSING OFFICER AND THE CIT(A) HAVE ERRED IN MAKING THE ABOVE STATED ADDITIONS IN ASSESSEE S AS ITS UNACCOUNTED INCOME. THE SAME STANDS DELETED. OTHER ARGUMENTS NARRATED IN PRECEDING PARAGRAPHS HAVE BEEN RENDERED INFRUCTUOUS. ITA 78/AHD/2012 SUCCEEDS. 9. IT TRANSPIRES THAT ANOTHER CO - ORDINATE BENCH OF THIS TRIBUNAL IN SUZLON INFRASTRUCTURE LIMITED VS. ACIT ITA NO.3761/AHD/2008 DECIDED ON 17.04.2009 ALSO ADOPTED THE SIMILAR VIEW. WE COME TO REVENUE S CASE LAW NOW (SUPRA). HON BLE ORISSA HIGH COURT THEREIN DEALT WITH THE ISSUE OF REVISION OF RETURN BY WAY OF A REVISED STATEMENT RATHER THAN A REVISED RETURN UNDER SECTION 139(5) OF THE ACT AFTER FILING OF THE ORIGINAL RETURN. THE SAME IS FOUND AS NOT G ERMAN E TO THE INSTANT ISSUE. 10. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE REVENUE S PRELIMINARY OBJECTION. IT HAS COME ON RECORD THAT ASSESSEE S DISCLOSURE HEREINABOVE SOUGHT TO BE RELIED UPON AT REVENUE S BEHEST INTENDS TO COVER ALL POSSIBLE ERRORS /OMISSIONS AND ALSO SEEKS REFUND OF ANY EXCESS SUM (SUPRA). WE FURTHER TAKE INTO ACCOUNT CBDT CIRCULAR ITSELF DATED 10.03.2003 AS WELL AS PRECEDENTS HEREINABOVE TO REJECT THE REVENUE S PRELIMINARY OBJECTION IN QUESTION. WE ACCORDINGLY PROCEED TO ADJUDICA TE UPON THE ASSESSEE S GROUNDS ON MERITS. 11. BOTH THE LEARNED REPRESENTATIVES POINT OUT AT THE OUTSET THAT ASSESSEE S SEVEN QUANTUM APPEAL S RAISE AN IDENTICAL ISSUE OF ACCRUED INTEREST INCOME ADDITION FROM FDRS INVESTMENT OF RS.1,76,46,465/ - AS INDICATE D HEREINABOVE. THIS IS FOLLOWED BY THREE OTHER QUANTUM ISSUES (SUPRA) IN LAST ASSESSMENT YEAR 2006 - 07. WE PROCEED TO TREAT ASSESSEE S APPEAL ITA NO.446/AHD/2010 AS THE LEAD CASE IN THESE FACTS AND CIRCUMSTANCES. IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 7 OF 17 12. WE COME TO THE FIRST ISSUE OF SECTION 69A UNEXPLAINED CASH ADDITION OF RS.9,48,000/ - AS FOUND DURING THE SEARCH IN QUESTION. THERE IS NO DISPUTE THAT THIS VERY SUM WAS FOUND IN THE COURSE OF SEARCH DATED 14.12.2005. THE ASSESSEE GOT RECORDED HIS STATEMENT UNDER SECTION 132(4) OF THE ACT. TH E SEARCH PARTY SEIZED ONLY A PART OF THE ABOVE CASH SUM AMOUNTING TO RS.3,09,200/ - . THE ASSESSING OFFICER SOUGHT TO ADD THE ENTIRE AMOUNT IN ASSESSEE S HANDS. THE ASSESSEE ON THE OTHER HAND STATED THAT HIS SISTER MS. REKHABEN ZARIWALA WAS THE ACTUAL OWNE R THEREO F QUA THE ABOVE RETURNED SUM IN COURSE OF SEARCH ITSELF AMOUNTING TO RS.6,38,800/ - . THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 31.12.2007 INVOKED SECTION 69A OF THE ACT FOR THE FOLLOWING REASONS: - A. THESE CASH WERE FOUND FROM ONE PLACE OF R ESIDENCE, THUS ESTABLISHING THAT THESE CASH DID NOT BELONG TO DIFFERENT PERSONS/CONCERNS, BUT ONE PERSON/ENTITY. IF THE CASH BELONGED TO SEPARATE CONCERNS, THESE WOULD HAVE BEEN KEPT IN SEPARATE PLACES FOR IDENTIFICATION AND CONVENIENCE. B. HUGE CA SH BALANCES ARE KEPT AT BANKS AND NOT PARTNERS/DIRECTORS' RESIDENCE, AS THAT CREATES UNSAFE ATMOSPHERE AT THE RESIDENCES ALSO. ONLY UNACCOUNTED CASH ARE KEPT AT RESIDENCE, ON ACCOUNT OF NON - DEPOSITION IN BANKS. C. IT IS NOT ACCEPTABLE THAT THE SISTE R OF THE ASSESSEE, A LADY WOULD BE IN POSSESSION OF HUGE AMOUNT OF CASH OF RS.6,38,800/ - . THE SAID LADY DOES NOT HAVE ANY INDEPENDENT SOURCE OF INCOME AND IS NOT ASSESSED TO TAX. THUS, SUCH HUGE CASH CANNOT BE EXPLAINED IN HER HANDS. THE EXPLANATION OF TH E ASSESSEE IS DEVOID OF BASIS. D. NO CASH BOOK WAS MAINTAINED BY THE CONCERNS FOR THE PERIOD FROM 01.04.2005 TILL THE DATE OF SEARCH, AS STATED AND ADMITTED. THUS THE CASH - BOOKS EXPLAINING THE CASH BALANCE WITH THE ASSESSEE HAVE BEEN CAST AND P REPARED AT WILL TO SUIT CONVENIENCE. SU CH A MANUFACTURED CASH BOOK CAN NOT BE ACCEPTED AS AN EXPLANATION. E. THE CASH BOOK CREATED AFTER THE SEARCH AND SEIZURE OPERATIONS FOR THE ASSESSMENT DOES NOT MENTION THE NAME OF THE PARTY TO WHOM SALES HAVE B EEN MADE. THUS, THE ENTRIES IN THE CASH BOOK ARE NOT VERIFIABLE. THEREFORE, THE CASH BOOK CANNOT BE ACCEPTED AS A PROPER AND GENUINE DOCUMENT IN THE CASE OF THE ASSESSEE. . . F. THE ASSESSEE HAS FAILED TO FURNISH HIS OWN CASH - FLOW STATEMENT SHOWING THE CASH IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 8 OF 17 HELD IN HIS OWN HANDS. FROM THE SUBMISSION OF THE ASSESSEE, IT IS APPARENT THAT THE ASSESSEE HAS FAILED TO PRODUCE THE PERSONAL CASH BALANCE. THUS, THE EXPLANATION OFFERED BY THE ASSESSEE IS A CONSIDERED AND ADVISED AFT ER - THOUGHT AND IS LIABLE TO BE REJECTED. G. THE ASSESSEE HAS ADMITTED OF HAVING MADE UNRECORDED SALES. CIRCUMSTANTIAL EVIDENCES INDICATE THAT THE FOUND AND SEIZED CASH PERTAINS TO THESE UNACCOUNTED SALES MADE OUTSIDE THE BOOK S. THE CASH HAS BEEN DRAWN FROM UNDISCLOSED SOURCES. H. THE RELIED CASES OF KASTURCHAND SAID VS. ACIT (1997) 58 TTJ (NAG) 253, AND JOINT COMMISSIONER OF INCOME TAX VS. BUDH KISHORE (2004) 90 TTJ (DEL) 410, ARE DISTINCT BECAUSE PROPER, ACCEPTABLE AND VERIFIABLE CASH BOOKS EXISTED IN THAT CASE, UNLIKE THE INSTANT CASE. THEREFORE, SINCE THE BASIC PREMISE OF EXISTENCE OF CASH BOOK DIFFERS, THE CASE ARE DISTINCT AND RATIO INAPPLICABLE. I. IN THE PRESENT CASE, CASH BOOK HAS BEEN FURNISHED IN WHICH THE NAMES OF PARTIES TO WHOM THE S E CASH SALES HAVE BEEN MADE ARE NOT MENTIONED. ON ACCOUNT OF THIS DEFECT AND LACUNAE IN THE CASH BOOK, IT HAS NOT BEEN POSSIBLE TO VERIFY THE FACT WHETHER THE CASH AS SHOWN IN THE CASH BOOK HAS BEEN OBTAIN E D ACTUALLY FROM ACCOUNTED SALES OR FROM UNACCOUNTED SOURCES. ON ACCOUNT OF ABSENCE OF VERIFIABILITY, THE C AS H BOOK IS NOT RELIABLE. 13. ALL THIS RESULTED IN THE IMPUGNED ADDITION OF RS.9.48 LAKHS. THE CIT(A) HAS CONFIRMED THE SAME. 14. THE ASSESSEE REITERATES ITS ST AND AS ADOPTED THROUGHOUT THAT HIS SISTER MS. REKHABEN OWNED THE CASH RETU R NED OF RS.6,38,800/ - . HE BUILDS UP HIS CASE AS PER PANCHNAMA ENTRIES AT PAGE NO.106 OF THE PAPER BOOK TO THIS EFFECT. THE ASSESSEE TAKES US TO MS. REKHABEN S AFFIDAVIT AT PAGE NO. 31 OF THE PAPER BOOK. HE THEREAFTER FILES A RECONCILIATION CHART QUA BALANCE SUM OF RS.3,10,000/ - AS UNDER : - NAME OF CONCERN OP. BAL. AS ON 01.04.05 CASH TRANSACTIONS IN BANK CASH SALES OR RECEIPTS FROM DEBTORS UP TO 13.12.05 EXPENSES & WITHDRAWALS (NET ) UPTO 13.12.2005 CLOSING BALANCE AS ON 13.12.2005 WITHDRAWALS DEPOSITS IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 9 OF 17 HARIOM JARI IND. 3,47,415 3,16,000 4,240 4,240 4,10,176 _________ 2,53,239 VIGNESHWAR FABRICS 1,47 , 790 2,92,000 0 0 3,85,330 54,460 TOTAL 4,95,205 6,08,000 4,240 4,240 7,95, 506 3,07,6 99 1 4 .1 THE ASSESSEE PLEADS IN THE COURSE OF HEARING THAT HIS DATE - WISE DETAILS OF BANK WITHDRAWALS, CORRESPONDING RECEIPTS FOLLOWED BY RELEVANT BANK STATEMENTS MAKE IT CLEAR THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN ADDING THE IMPUGNED SUM OF RS.9,48,000/ - IN IS HANDS. 1 5 . THE REVENUE STRONGLY SUPPORTS THE IMPUGNED ADDITION TO SEEK CONFIRMATION THEREOF. 16 . WE HAVE HEARD RIVAL SUBMISSIONS. THE ASSESSEE STRONGLY RELIES UPON THE SEARCH PARTIES ACTION RETURNING AN AMOUNT OF RS.6,38,800/ - IN SEEKING TO SHIFT OWNERSHIP OF THE SAME ON HIS SISTER SMT. REKHABEN. HE SUBMITS THAT HIS IS A JOINT FAMILY RESIDING IN THE SAME HOUSE; ALTHOUGH ON DIFFERENT FLOORS. SMT. REKHABEN IS STATED TO BE A MARRIED LADY. WE PUT A SPECIFIC QUESTION IN THE COURS E OF PROCEEDINGS TO LEARNED AUTHORISED REPRESENTATIVE AS TO WHETHER SMT. REKHABEN IS ASSESSED TO TAX, ANY EVIDENCE OF HER SEPARATION OR RECEIVING PERMANENT ALIMONY PAID BY HER HUSBAND OR ANY OTHER MATERIAL TO PROVE HER EXCLUSIVE POSSESSION OVER THE HOUSE P ORTION IN QUESTION. HE FAILS TO POINT OUT ANY RELEVANT MATERIAL ON RECORD OR SATISFY ANY OF THESE QUERIES. IT IS EVIDENT FROM PANCHNAMA FORMING PART OF THE CASE FILE THAT THE SEARCH PARTY OBSERVED THE SUM IN QUESTION OF RS.6,38,800/ - TO BE CLAIMED BY SM T. REKHABEN SINCE FOUND FROM HER BEDROOM. TH ERE IS NO FINDING IN THIS REGARD APART FROM THIS MERE CLAIM. WE FIND NO IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 10 OF 17 REASON TO INTERFERE WITH THE IMPUGNED ADDITION SO FAR AS THIS SUM OF RS.6,38,800/ - IS CONCERNED. THE SAME STANDS CONFIRMED. 1 7 . WE COME T O THE REMAINING AMOUNT OF SECTION 69A ADDITION OF RS.3,09,200/ - . THE ASSESSEE SEEKS TO RECONCILE THIS DIFFERENCE WITH THE CHART REPRODUCED HEREINABOVE. LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY OBJECTS TO THE SAME BY STATING IT AS A CASE OF ADMISSION OF ADDITIONAL EVIDENCE. WE FIND THAT THE RELEVANT BOOKS OF ACCOUNT HAVE NOWHERE BEING REJECTED. LEARNED DEPARTMENTAL REPRESENTATIVE ALSO FAILS TO REBUT THIS FACT THAT THE TWO CONCERNS IN QUESTION AS STATED IN THE ABOVE RECONCILIATION CHART OF M/S. HARIOM ZARI INDUSTRIES AND VIGNESHWARA FABRICS HAVE MADE AVAILABLE THEIR RESPECTIVE CASH BOOK, CASH BALANCE AS ON 31.03.2005 TALLYING WITH THE COMPUTERISED BOOKS AS SEIZED IN THE COURSE OF SEARCH. WE OBSERVE IN THESE PECULIAR FACTS THAT THIS REMAINING SUM ADDIT ION OF RS.3,02,800/ - IS MORE A RECONCILIATION ISSUE. WE ARE ACCORDINGLY OF THE OPINION THAT LARGER INTEREST OF JUSTICE WOULD MEET IN CASE THE ASSESSING OFFICER RE - EXAMINES IT AFRESH AS PER LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSE E. THIS FIRST SUBSTANTIVE GROUND IS PARTLY ACCEPTED FOR STATISTICAL PURPOSE S . 1 8 . NEXT ISSUE IS THAT OF ACCRUED INTEREST ADDITION OF RS.9,56,181/ - ARISING ON UNEXPLAINED INVESTMENT IN FDRS OF R S.1,76,46,465/ - HELD IN BENAMI M ANNER AS FOUND AND SEIZED FROM ASSESSEE S RESIDENCE DURING SEARCH. THESE FDRS PERTAIN TO ASSESSMENT YEARS 1997 - 98 AND 1998 - 99. THERE IS NO DISPUTE THAT 128 DIFFERENT PERSONS ARE THE ACTUAL INVESTORS THEREIN. THE ASSESSEE SUCCEEDED IN PRODUCING 42 OF THEM IN THE COURSE OF ASSESSMENT. THEY ALL SUPPORTED HIS CASE THEREBY CLAIMING THEMSELVES TO BE THE ACTUAL OWNERS OF THE FDRS IN QUESTION. ASSESSING OFFICER TREATED ALL OF THEM AS ASSESSEE S BENAMIDARS ON THE FOLLOWING COUNTS: - FROM THE ABOVE DISCUSSION, THE FOLLOWING POINTS EMERGE: IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 11 OF 17 1. FDRS WERE FOUND AND SEIZED DURING THE SEARCH AND SEIZURE OPERATIONS IN THE CONSTRUCTIVE POSSESSION AND CONTROL OF THE ASSESSEE; 2. IN THE STATEMENT RECORDED DURING THE SEARCH AND SEIZURE OPERATIONS AND IN POST - SEARCH PROCEEDINGS, THE ASSESSEE FAILE D TO EXPLAIN THE SOURCE OF ACQUISITION OF THE FDRS AND ADMITTED THAT THESE ARE HELD IN AN UNACCOUNTED MANNER; 3. NO PERSON APPROACHED THE DEPARTMENT FOR RELEASE OF THE FDRS DURING THE INTERVENING PERIOD OF 2 YEARS (DECEMBER 2005 TO DECEMBER 2007), THERE BY CONCLUSIVELY ESTABLISHING THAT THE FDRS DO NOT BELONG TO ANYONE ELSE; 4. THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF FDRS DURING THE COURSE OF SEARCH ASSESSMENT PROCEEDINGS AND KEPT SILENT ON THE ISSUE FOR A PERIOD OF MORE THAN 4 MONTHS; 5. DESPIT E BEING SERVED WITH INNUMERABLE LETTERS AND NOTICES, THE ASSESSEE DID NOT REPLY AND MAINTAINED A DILATORY APPROACH; 6. THE ASSESSEE KEPT THE DEPARTMENT IN DARK FOR MORE THAN 4 MONTHS AND OBSTRUCTED ANY INQUIRIES INTO THE GENUINENESS AND ACCOUNTABILITY OF FDRS WORTH RS.1.76 CRORES; 7. AT THE FAG - END OF ASSESSMENT PROCEEDINGS, WITH LESS THAN 15 DAYS LEFT AT THE DISPOSAL OF A.O., THE ASSESSEE CLAIMED THAT THE FDRS DID NOT BELONG TO HIM, BUT TO 128 DIFFERENT PERSONS; 8. FOR THE SAKE OF FAIRNESS AND IN INTEREST OF JUSTICE, THE ASSESSEE WAS REQUESTED TO PRODUCE CERTAIN PERSONS FROM THE LONG - LIST OF 128 PERSONS ; 9. THE PERSONS PRESENTED BY TH E ASSESSEE HAVE BEEN FOUND TO BE DAILY WAGE LABOURERS AND PERSONS OF NO MEANS , EARNING NEAR ABOUT RS.2,000 TO RS.3,000 PR MONTH. IT CANNOT BE ACCEPTED THAT 128 SUCH SMALL PERSONS WHO FIND IT DIFFICULT TO ME E T BOTH EN D S MEET, MADE INVESTMENTS IN FDRS TO THE TUNE OF RS.1.7 6 CRORES. I N OTHER WORD S , 42 POOR DAILY LABOURER FAMILIES OF SURAT HAVE A CAPITAL BASE WORTH RS.1.76 CRORES I.E. WORTH OF RS.41.9 LAKHS PER FAMILY. 1 0. THE PERSONS DID NOT KNOW THE FD RECEIPT NUMBERS HELD IN THEIR NAMES. SOME ALSO DID NOT PROPERLY KNOW THE NAME OF BANK WITH WHICH THESE ACCOUNTS HAVE BEEN HELD. TH ESE PERSONS ALSO WERE NOT SURE OF THE DATE/YEAR IN WHICH THE FD RECEIPTS WERE CREATED. PERSONS WHO HAVE INVESTED THE SAVINGS OF THEIR ENTIRE LIFE IN THESE FDS MUST HAVE KEPT THE DETAILS LIKE ACCOUNT NUMBER, AMOUNT ETC. THIS IGNORANCE INDICATES THAT THOSE F D RECEIPTS DID NOT BELONG TO THOSE PERSONS PRODUCED BY THE ASSESSEE. 11. THE PERSONS HAVE CLAIMED TO HAVE DEALT WITH SH. NAGINDAS T. KAPADIA AND NOT THE ASSESSEE. WHILE THE ASSESSEE HAS MAINTAINED THAT THESE PERSONS ENTRUSTED THEIR FDRS WITH HIMSELF. TH IS CONTRADICTION IN THE STATEMENT CLEARLY BRINGS OUT THE FALSITY OF CLAIM OF THE ASSESSEE THAT THESE FDRS WERE NOT HIS OWN BUT KEPT IN HIS CUSTODY ON BEHALF OF THE OTHERS. IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 12 OF 17 12. LOGICALLY, THE PERSONS WHO HAVE OPENED FD ACCOUNTS WITH BANKS ON THEIR OWN COU LD HAVE MADE THE WITHDRAWALS INDEPENDENTLY ALSO. THUS, THE EXPLANATION GIVEN BY THE ASSESSEE THAT THOSE PERSONS APPROACHED HIM FOR ENCASHMENT OF FDRS IS A FICTION AND NOT ACCEPTABLE. 13. THERE ARE NO DATES ON THE FORMS OF FDR OPENING, THUS THE SOURCE IS TAKEN TO BE INSTANT YEAR. 14. THUS, IN LIGHT OF THE INITIAL VOLUNTARY ADMISSION OF OWNERSHIP OF THE FDRS WORTH RS.1.76 CRORES AND FAILURE TO REBUT THE STATUTORY PRESUMPTION UNDER SECTION 292C AND 132(4A) OF THE ACT OF OWNERSHIP, IT IS TAKEN THAT THE FD R ECEIPTS AMOUNTING TO RS.1.76 CRORES BELONG TO THE ASSESSEE, AND ARE LIABLE TO BE ADDED U/SECTION 69 OF THE INCOME TAX ACT, 1961 AS DEEMED INCOME OF THE ASSESSEE. 1 9 . THE ASSESSING OFFICER OBSERVED IN ASSESSMENT ORDER THAT SOURCE ASSESSMENT YEAR OF ALL T HESE FDR INVESTMENT FELL BEYOND THE PURVIEW OF SEARCH ASSESSMENT PERIODS ASSESSMENT YEAR 2000 - 01 ONWARDS. HE ACCORDINGLY ADDED INTEREST ACCRUED THEREUPON IN ASSESSEE S HANDS IN ALL THE SEVEN IMPUGNED ASSESSMENT YEAS FROM 2000 - 01 TO 2006 - 07 IN QUESTION. T HE CIT(A) AFFIRMS THE SAME. 20 . WE HAVE HEARD RIVAL SUBMISSIONS. RELEVANT RECORDS AS WELL AS LOWER AUTHORITIES FINDINGS STAND PERUSED. THERE IS NO DISPUTE SO FAR AS THE RELEVANT FACTS ARE CONCERNED. THESE FDRS ARE IN THE NAMES OF 128 INVESTORS. THE RELEVANT ASSESSMENT YEARS THERETO FELL BEYOND THE SEARCH ASSESSMENT SCOPE. THE SEARCH PARTY FOUND AND SEIZED ALL THE RELEVANT DOCUMENTS FROM THE ASSESSEE S RESIDENCE. BOTH THE LOWER AUTHORITIES TREATED THE SAME AS ASSESSEE S UNEXPLAINED INVESTMENT FOR TH E REASONS EXTRACTED HEREINABOVE. WE SEE NO REASON TO AGREE WITH THIS COURSE OF ACTION IN VIEW OF SPECIFIC PROVISION IN THE BENAMI TRANSACTIONS (PROHIBITION) ACT 1988 SPECIFICALLY ENVISAGING PROHIBITION OF THE RIGHT TO RECOVER OR DEFEND ANY BENAMI PROPERT Y AS THE FINDING SECTION 2(C) THEREIN TO BE A PROPERTY OF ANY CLIENT; MOVEABLE OR IMMOVABLE, TANGIBLE OR INTANGIBLE INCLUDING ANY RIGHT OR INTEREST IN SUCH PROPERTY. BOTH THE LOWER AUTHORITIES IGNORED OPERATION OF THIS SPECIFIC LEGISLATION. THE ASSESSING OFFICER ADMITTEDLY TREATS THE ACTUAL INVESTORS TO BE ASSESSEE S BENAMIDARS. HE ALSO RELIES UPON IN A CATENA OF CASE LAW. WE FIND THAT NONE OF THEM IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 13 OF 17 DEALS WITH THE ABOVE STATED B ENAMI ACT HEREINABOVE. WE ACCORDINGLY HOLD THAT THE REVENUE S ARGUMENTS SUP PORTING THE IMPUGNED ADDITION ON THE BASIS OF THE LOWER APPELLATE AUTHORITIES FINDING, ASSESSEE S SEARCH STATEMENT AND THE FACT THAT SOME OF THE IMPUGNED DEMAND STANDS RECOVERED FROM THE FDRS IN QUESTION DOES NOT FORM REASON TO DEVIATE FROM THE SPECIFIC LE GISLATION HEREINABOVE. WE ARE FURTHER OF THE OPINION THAT THESE FDRS IN QUESTION HAVE TO BE TREATED IN THE NAMES OF THE SPECIFIC INVESTORS THEREIN WHO HAVE ALREADY SUPPORTED THE IMPUGNED STAND INSTEAD OF HOLDING THE ASSESSEE AS THE REAL OWNER THEREOF MER ELY BECAUSE OF THE FACT THAT THE SAME HAVE BEEN FOUND/SEIZED FROM HIS PREMISES IN THE COURSE OF SEARCH. WE DELETE THE IMPUGNED ADDITION OF RS.9,56,181/ - FORMING SUBJECT MATTER OF SECOND SUBSTANTIVE GROUND. 20 .1 WE FURTHER DEEM IT APPROPRIATE TO REVERT BAC K TO THE FIRST SIX ASSESSMENT YEARS 2000 - 01 TO 2005 - 06 CHALLENGING SIMILAR INTEREST ADDITIONS ON THESE VERY FDRS AS INDICATED IN THE BEGINNING OF THE ORDER. BOTH PARTIES HAVE ALREADY CLARIFIED THAT THE SAID ISSUE IS IDENTICAL TO OUR INSTANT ADJUDICATION. WE ADOPT THE SAME REASONING TO DELETE THE SAID CORRESPONDING ADDITIONS AS WELL. ASSESSEE S APPEALS IT(SS)A NO.164 TO 169/AHD/2011 FOR ASSESSMENT YEARS 2000 - 01 TO 2005 - 06 ARE ACCORDINGLY ACCEPTED. 2 1 . WE COME TO THE THIRD ISSUE OF UN - RECONCILED EXPENSES O F RS.11,85,758/ - ADDED UNDER SECTION 69C OF THE ACT AS OBSERVED IN THE ASSESSMENT ORDER AS FOLLOWS : - AS PER AS PER PAGE NO.S 108 - 110 IN LOOSE PAPER FILE INVENTORISED VIDE ANNEXURE A/2, BILLS OF RS.55,000/ - PERTAINING TO SUPERVISOR/ARCHITECT FEES ETC MADE TO SH. MAHENDRA GOTAWALA HAVE BEEN FOUND. THE SAME HAVE BEEN ADMITTED TO BE UNACCOUNTED AND UNEXPLAINED. FURTHER, AS PER AS PER PAGE NO.4 AND 5 - 21 AND 22 - 23 AND 24, IN LOOSE PAPER FILE INVENTORISED VIDE ANNEXURE A/3, EXPENSES OF RS.1,57,069/ - AND RS.68,0 00/ - AND 52,302/ - RESPECTIVELY, HAVE BEEN FOUND. THE SAME AGGREGATING TO RS.2,77,371/ - HAVE BEEN ADMITTED TO BE UNACCOUNTED AND UNEXPLAINED. IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 14 OF 17 AS PER AS PER PAGE NO. 46 IN LOOSE PAPER FILE INVENTORISED VIDE ANNEXURE A/3, UNACCOUNTED PURCHASES OF RS .55,720/ - HAVE BEEN MADE. AS PER AS PER PAGE NO. 137 IN LOOSE PAPER FILE INVENTORISED VIDE ANNEXURE A/3, UNACCOUNTED PURCHASES OF RS.11,500/ - HAVE BEEN MADE. AS PER AS PER PAGE NO.96 - 97, 141 - 144 IN LOOSE PAPER FILE INVENTORISED VIDE ANNEXURE A/3, EXPEN SES OF RS.34,225/ - , RS.78.430/ - AND RS.2,43,942/ - AND RS.2,91,550/ - HAVE BEEN MADE ON LABOUR CHARGES FOR CONSTRUCTION EXPENDITURE ON DAMWALA COMPOUND IN UNACCOUNTED MANNER. AS PER AS PER PAGE NO.47 IN LOOSE PAPER FILE INVENTORISED VIDE ANNEXURE A/3, UNAC COUNTED EXPENSES OF RS.1,38,020/ - HAVE BEEN MADE ON CONSTRUCTION AND REPAIRING. 2 2 . THE ASSESSEE CLAIMED THAT THE SAID PURCHASES WERE MADE BY SHRI NAGINDAS LAPADIA BEING AT THE HELM OF AFFAIRS USING THE FIRM S NAMES. THE ASSESSING OFFICER REJECTED THI S EXPLANATION INTER ALIA BY HOLDING THAT THE SAID FIRM STOOD DIRECTLY BENEFITED BY THE RELEVANT TRANSACTIONS, THE ABOVE STATED PLEA WAS NOT SUPPORTED BY ANY MATERIAL ON RECORD AND THE SEIZED MATERIAL PROVED AGGREGATE UNRECORDED SALES OF RS.11,85,758/ - TO H AVE BEEN UNDERTAKEN. THIS MADE THE ASSESSING OFFICER TO INVOKE SECTION 69C OF THE ACT FOR ADDING THE IMPUGNED SUM HEREINABOVE. THE CIT(A) CONFIRMS THE SAME. 2 3 . LEARNED COUNSEL REPRESENTING THE ASSESSEE HIMSELF CONCEDES THAT THE IMPUGNED ADDITION AMOUN T OF RS.6,93,045/ - STOOD UNEXPLAINED AS EXPENDITURE IN THE COURSE OF HEARING BEFORE US. HE CONFINES HIS CHALLENGE TO THE REMAINING SUM OF RS.4,92,713/ - BY TAKING US TO PAGE NO.541 OF THE PAPER BOOK STATING THAT THE RELEVANT FIGURE THEREIN AMOUNTING TO RS. 1,57,069/ - IS IN THE NATURE OF SALES AND GROSS PROFIT @ 5% COULD BE ESTIMATED THERE UPON. HE SEEKS TO MAKE OUT A CASE OF UNRECORDED SALES BEING TREATED AS EXPENSES. WE ARE TAKEN TO PAGE NOS.22 TO 23 OF THE WRITTEN SUBMISSION COMPRISING OF A COMPARATIVE CHART. LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY ARGUES THAT ALL THESE CHART AND OTHER EVIDENCES OUGHT TO HAVE BEEN FILED BEFORE THE LOWER AUTHORITIES. WE FIND FORCE IN THIS CONTENTION. WE FURTHER NOTICE THAT THIS ISSUE OF REMAINING SECTION 69 ADDITIO NS IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 15 OF 17 CORRECTNESS REQUIRES ONE MORE RECONCILIATION EXERCISE IN VIEW OF THE ASSESSEE S PLEA THAT THE SAME ARE IN THE NATURE OF SALES AND NOT EXPENSES. WE FURTHER TAKE INTO ACCOUNT THAT THE ASSESSING OFFICER HAS TO UNDERTAKE A SIMILAR RECONCILIATION QUA FIRST ISSUE ADJUDICATED HEREINABOVE. WE ARE THEREFORE OF THE OPINION THAT LARGER INTEREST OF JUSTICE WOULD BE MET IN CASE THIS ISSUE IS ALSO RE - EXAMINED QUA THE REMAINING SUM IN QUESTION OF RS.4,92,713/ - AS PER LAW. THIS THIRD SUBSTANTIAL GROUND PARTLY SUCCEEDS ACCORDINGLY. 2 4 . THIS LEAVES US WITH THE LAST ISSUE OF ADDITION OF RS.67.80 LAKHS MADE BY THE LOWER APPELLATE AUTHORITIES SOLELY BASED ON ASSESSEE S DISCLOSURE. WE FIND THAT THE SAME ALREADY STAND ADJUDICATED IN PRECEDING PARAGRAPHS WHILE DEALING WITH REVENUE S PRELIMINARY OBJECTIONS. WE ADOPT THE SAME REASONING TO FURTHER STRENGTHEN OUR OBSERVATIONS AND OBSERVE THAT THE ASSESSEE S ADDITIONAL DISCLOSURE IN QUESTION IS WITHOUT ANY SUPPORTIVE MATERIAL. IT MAY NEED MUCH LENGTH DISCUSSIONS TO REITERATE TH AT PURPOSE OF SCRUTINY ASSESSMENT UNDER THE PROVISIONS OF THE ACT IS TO ASSESS THE CORRECT TAXABLE INCOME AND NOT TO PLACE RELIANCE UPON TECHNICAL OBJECTIONS AND ADMISSIONS. THE CENTRAL BOARD OF DIRECT TAXES I.E. THE CBDT HAS ALREADY ISSUED A CIRCULAR DAT ED 10.03.2003 TO THIS EFFECT. WE ACCORDINGLY ACCEPT ASSESSEE S CONTENTION WITH A CAVEAT THAT THIS ADDITIONAL INCOME DISCLOSURE OF RS.67.80 LAKHS IS TO BE SIMULTANEOUSLY READ ALONG WITH OTHER NOTES TO THE ACCOUNTS IN THE RETURNED AS EXTRACTED AS ABOVE AND THIS SUM IS TO BE ADJUSTED AGAINST THE FINAL TAXABLE INCOME TO BE COMPUTED AS PER LAW. THIS FOURTH SUBSTANTIVE GROUND IS ACCEPTED FOR STATISTICAL PURPOSES. THE ASSESSING OFFICER IS DIRECTED TO ADJUST THIS AMOUNT AGAINST THE TOTAL TAXABLE INCOME DETERMINE D AFTER FINALISING CONSEQUENTIAL PROCEEDINGS. 2 5 . THIS APPEAL ITA NO.446/AHD/2010 IS PARTLY ALLOWED. IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 16 OF 17 2 6 . NOW WE COME TO THE REMAINING REVENUE S APPEAL ITA NO. 301/AHD/2013 SEEKING TO REVIVE SECTION 271(1)(C) PENALTY OF RS.10,40,070/ - AS IMPOSED BY T HE ASSESSING OFFICER IN A.Y. 2006 - 07 ON ACCOUNT OF VARIOUS ADDITIONS I.E. ACCRUED INTEREST ON FDRS OF RS.9,56,181/ - , CASH SUM ADDITION OF RS.9,48,000/ - AND RS.11,85,758/ - ; RESPECTIVELY. THE AO TREATED ALL THESE ADDITIONS AS AN ACT OF CONCEALMENT OF TAXABL E INCOME UNDER THE ABOVE STATED STATUTORY PROVISIONS. 2 7 . THE CIT(A) RELIES ON HON BLE HIGH COURT S DECISION IN BHAGWAN DAS NARAINDAS., 98 ITR 194 (GUJARAT) HOLDING THAT FDRS ARE NOT ASSETS BEING VALUABLE THINGS UNDER SECTION 132 OF THE ACT. IT HAS FURT HER COME ON RECORD THAT WE HAVE ALREADY DELETED THIS CORRESPONDING QUANTUM ADDITION. THE IMPUGNED PENALTY QUA THE SAME THEREFORE HAS NO LEGS TO STAND. 2 8 . WE COME TO THE REMAINING ISSUES OF UNEXPLAINED CASH OF RS.9,48,000 AND RS.11,85,758/ - UNDER UNEXPLAI NED EXPENDITURE RESPECTIVELY. IT HAS COME ON RECORD THAT THE ASSESSEE HAS LEAD SUFFICIENT EVIDENCE IN SUPPORT OF HIS CLAIM WHICH ULTIMATELY COULD NOT BE ACCEPTED BECAUSE OF THE FACT THAT HIS SISTER MS. REKHABEN COULD NOT PROVE TO BE OWNER OF THE CASH COMP ONENT AMOUNTING TO RS.6,38,800/ - . REMAINING SUM ISSUE STANDS REMITTED BACK TO THE ASSESSING AUTHORITY FOR RECONCILIATION. THE LAW IS VERY WELL SETTLED NOW THAT EACH AND EVERY DISALLOWANCE/ADDITION MADE IN QUANTUM PROCEEDING DOES NOT AUTOMATICALLY RESULT IN IMPOSITION OF SECTION 271(1)() PENALTY SINCE BOTH ARE SEPARATE PROCEEDINGS. WE DRAW THIS FINE DISTINCTION TO OBSERVE THAT IT IS AT THE BEST A CASE WHERE ASSESSEE S EXPLANATION SUBMITTED ALONG WITH RELEVANT EVIDENCE HAS NOT BEEN ACCEPTED AND NOT THAT OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 2 9 . COMING TO THE THIRD ISSUE OF UNEXPLAINED EXPENDITURE ADDITION OF RS.11,85,758/ - AS WELL, IT IS EVIDENT TO US THAT ADMITTEDLY, THE ASSESSEE S TRANSACTION WERE CARRIED OUT BY SHRI IT ( SS) A NO S . 164, 165, 166, 167, 168 & 169 / AHD/20 1 1 ( A.Y S . 2000 - 01 TO 2005 - 06) ITA NOS.446/AHD/2010 & 301/AHD/2013 (A.YS. 2006 - 07) PAGE 17 OF 17 NA G IN CH AND (SUPRA). IT HAS BEEN ASSESSEE S CASE THROUGHOUT THAT HIS SALES HAVE BEEN TAKEN AS EXPENDITURE (SUPRA). THERE IS FURTHER NO DISPUTE THAT WE HAVE REMITTED A PORTION OF THE QUANTUM ADDITION BACK TO THE ASSESSING OFFICER FOR RECONCILIATION OF THE RELEVAN T FIGURES. IT IS FURTHER TO BE SEEN THAT THE ASSESSEE HAS ALREADY EXPLAINED ITS SOURCES OF INCOME AND PROVED THE SAME IN THE COURSE OF SEARCH STATEMENT/REGULAR ASSESSMENT. WE FIND NO REASON TO DEVIATE FROM CIT(A) S FINDING IN THESE FACTS AND CIRCUMSTANCES . THE SAME STANDS CONFIRMED. THE REVENUE LO S ES ITS APPEAL ITA NO.301/AHD/2013. 30 . WE SUM UP OUR DISCUSSION HEREINABOVE TO ALLOW ASSESSEE S 6 APPEALS IT(SS)A NOS.164 TO 169/AHD/2011 FOR FIRST 6 ASSESSMENT YEARS 2000 - 01 TO 2005 - 06, PARTLY ALLOW HIS QUANTU M APPEAL ITA NO.446/AHD/2010 FOR ASSESSMENT YEAR 2006 - 07 AND DISMISS REVENUE S APPEAL ITA NO. 301/AHD/2013 FOR ASSESSMENT YEAR 2006 - 07 . ORDERED ACCORDINGLY. P RONOUNCED IN THE OPEN COURT TODAY ON THE 22 ND DAY OF AUGUST 2016. SD/ - S D/ - MANISH BORAD S.S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 22 ND DAY OF AUGUST , 2016 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL R EPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD