Appeal Details
Counselvise Citation
[2013] 121 COUNSELVISE.COM (IT) 9278 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
5 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
21-06-2013
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
16-05-2013
Assessment Year
2004-2005
Appeal Filed On
03-01-2013
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI D.K.TYAGI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER APPEAL(S) BY APPELLANT VS. RESPONDENT SL. NO(S). IT(SS)A NO(S) ASSESSMENT YEAR(S) APPELLANT (S) RESPONDENT(S) 1. 17/AHD/2013 2004-05 SHRI JAYENDRA N.SHAH JANOD 4, AMRAKUNJ SOCIETY ELLORA PARK VADODARA 390 007 (ASSESSEE) PAN:AJKPS 6643Q THE ASST.CIT CENTRAL CIRCLE-2 BARODA (REVENUE) 2. 18/AHD/2013 2005-06 -DO- -DO- 3. 19/AHD/2013 2006-07 -DO- -DO- 4. 20/AHD/2013 2007-08 -DO- -DO- 5. 21/AHD/2013 2008-09 -DO- -DO- 6. 22/AHD/2013 2009-10 -DO- -DO- 7. 23/AHD/2013 2010-11 -DO- -DO- 8. 27/AHD/2013 2006-07 REVENUE ASSESSEE 9. 28/AHD/2013 2007-08 REVENUE ASSESSEE 10. 29/AHD/2013 2008-09 REVENUE ASSESSEE 11. 30/AHD/2013 2009-10 REVENUE ASSESSEE 12. 31/AHD/2013 2010-11 REVENUE ASSESSEE ASSESSEE BY : SHRI MUKUND BAKSHI, A.R. REVENUE BY : SHRI SHELLEY JINDAL CIT-DR / DATE OF HEARING : 16/5/2013 / DATE OF PRONOUNCEMENT : 21/06/2013 !' / O R D E R PER BENCH: OUT OF THIS BUNCH OF 12 APPEALS, THERE ARE SEVEN APPEALS FILED BY THE ASSESSEE IN RESPECT OF AYS 200 4- 05 TO 2010-11 AND REMAINING FIVE APPEALS ARE FILED BY THE REVENUE FOR AYS 2006-07 TO 2010-11 AND ALL T HESE APPEALS ARE DIRECTED AGAINST A COMBINED ORDER OF LD .CIT(A)-IV AHMEDABAD DATED 26/10/2012. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEALS FILED BY THE ASSES SEE IN AYS 2004-05 TO 2009-10. THE FIRST GROUND RAI SED BY THE ASSESSEE IS ON TECHNICAL ISSUE AND THIS GROU ND IS IDENTICAL IN ALL THESE YEARS AND HENCE, THE S AME IS REPRODUCED FROM IT(SS)A NO.17/AHD/2013, WHICH READS AS UNDER:- IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 2 - 1. THE LD.CIT (APPEALS) IV, AHMEDABAD HAS ERRED I N LAW AND IN FACTS, IN CONFIRMING THE ADDITIONS TO THE RETURNED INCOME / DISALLOWANCES OU T OF EXPENSES, HAVING NO RELEVANCE OR CONNECTION WITH INCRIMINATING MATERIAL SEIZED DURIN G THE SEARCH, IN THE ASSESSMENT MADE U/S.153A R.W.S.143(3) OF THE I.T. ACT. THE LD. A.O . OUGHT TO HAVE APPRECIATED THAT IN THE ASSESSMENT MADE U/S.153A R.W.S. 143(3), NO ADDITION / DISALLOWANCE OF ITEMS WHICH ARE UN- CONNECTED WITH INCRIMINATING MATERIALS, CAN BE MADE . THE ADDITIONS / DISALLOWANCE MADE IN THE PRESENT ASSESSMENT ARE THUS ILLEGAL, UNJUSTIFIE D AND UNWARRANTED. THE SAID ADDITION BEING ERRONEOUS IN THE FACTS OF THE CASE AND IN LAW AND, THEREFORE, IS PRAYED TO BE DELETED. 2.1. THIS GROUND NO.1 WAS NOT PRESSED BY THE LD.AR OF THE ASSESSEE AND HENCE, GROUND NO.1 OF ASSESSEE S APPEALS IN THE AYS 2004-05 TO 2009-10 IS REJECTED A S NOT PRESSED. 3. GROUND NO.2 RAISED BY THE ASSESSEE IN AY 2004-05 IS AS UNDER:- 2. THE LD.CIT (APPEALS) IV, AHMEDABAD HAS ERRED I N LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE LD.A.O. IN THE ADDITION OF AN AMOUNT OF RS.7 0,277/- BEING AN AMOUNT OF FOREIGN TRAVEL EXPENSES INCURRED FOR PERSONAL PURPOSE AND DEBITED TO PROFIT & LOSS ACCOUNT. THE SAID EXPENSE BEING RECORDED IN THE BOOKS OF ACCOUNTS AND NO INCRIMINATING MATERIAL FOUND IN RELATION THERETO, COULD NOT HAVE BEEN DISALLOWED. THE EXPENSES AS CLAIMED ARE PRAYED TO BE ALLOWED. 3.1. BRIEF FACTS REGARDING THIS ISSUE ARE THAT IT I S NOTED BY THE AO IN PARA-5 OF ASSESSMENT ORDER THA T ON VERIFICATION OF THE P&L ACCOUNT OF M/S.VIVEK ROADWA YS, PROPRIETARY-CONCERN OF THE ASSESSEE, IT WAS NOT ICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.70,27 7/- UNDER THE HEAD FOREIGN TOUR EXPENSES. IT IS OB SERVED BY THE AO IN THE SAME PARA OF THE ASSESSMENT ORDER THAT THESE EXPENSES WERE INCURRED FOR PERSONAL FORE IGN TOUR BY THE ASSESSEE AND IT CANNOT BE ALLOWED AS BU SINESS EXPENDITURE AND ON THIS BASIS, THE SAME WAS DISALLOWED. 4. THE ASSESSEE HAD CARRIED THE MATTER IN APPEAL BE FORE THE CIT (A) BUT COULD NOT SUCCEED AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. AR OF THE ASSESSEE SUBMITTED THAT THESE EXPENSES ARE MEANT FOR BUSINESS PURPOSES BUT HE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CONTENTION. HE COULD NOT EXPLAIN AS TO WHAT WAS THE BUSINESS P URPOSE OF THE ASSESSEES FOREIGN TOUR IN CONNECTION WITH T HE BUSINESS OF M/S.VIVEK ROADWAYS. UNDER THIS FACT UAL POSITION, WE DO NOT FIND ANY REASON TO INTERFERE WI TH THE ORDER OF THE CIT (A) ON THIS ISSUE. HENCE GR OUND NO.2 OF ASSESSEES APPEAL IS HEREBY REJECTED. 6. GROUND NO.3 RAISED BY THE ASSESSEE IN AY 2004-05 IS AS UNDER:- 3. THE LD.CIT (APPEALS)- IV, AHMEDABAD HAS ERRED I N FACTS AND IN LAW IN CONFIRMING THE ADDITION OF AN AMOUNT TO AN EXTENT OF RS.3,88,306/- OUT OF THE TOTAL ADDITION OF RS.4,88,306/- ALLEGEDLY REPRESENTING UNEXPLAINED HOUSEHOLD EXPENS ES. THE ADDITION OF RS.3,88,306/- BEING HYPOTHETICAL AND ON ESTIMATION DESERVES TO BE ALLOW ED. IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 3 - 6.1. BRIEF FACTS ARE THAT IT IS NOTED BY THE AO IN THE ASSESSMENT ORDER THAT ASSESSEE HAS SHOWN TOTAL WITHDRAWAL OF RS.68,717/- AND ASSESSEES WIFE HAS S HOWN TOTAL WITHDRAWAL OF RS.42,977 TOTALING TO RS.1,11,694/- IN THIS YEAR. THE AO HAS ALSO NOTED THE WITHDRAWALS OF THE ASSESSEE AND HIS WIFE IN SU BSEQUENT YEAR ALSO, I.E. AYS 2005-06 TO 2010-11 AND AFTER DE DUCTING THE FOREIGN TRAVEL EXPENSES IN RESPECT OF P ERSONAL FOREIGN TOUR OF THE ASSESSEE AND HIS FAMILY, THE AO HAS WORKED OUT THE NET HOUSEHOLD EXPENSES SHOWN BY THE ASSESSEE BY WAY OF WITHDRAWALS INCLUDING WITHDRAWAL BY HIS WIFE. THEREAFTER, THE AO HAS NOTED ON PAGE NO.3 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT F URNISHED ANY DETAILS FOR QUANTIFYING MONTHLY HOUSEH OLD EXPENSES AND THEREFORE, THE ADEQUACY OF THE WITHDRA WALS MADE FOR THE SAME HAS NOT BEEN ESTABLISHED. T HE AO HAS ALSO REFERRED TO VARIOUS SEIZED PAPERS, AS PER WHICH THE, ASSESSEE WAS INCURRING EXPENDITURE ON HO TEL BILLS AND CATERING BILLS, ETC. ON REGULAR BASIS. ON THE BASIS OF ALL THESE EVIDENCES, THE AO HAD OBSERVED THAT THE ASSESSEE WAS IN THE HABIT OF INCURRING LAVISH PERSO NAL EXPENDITURE AND THEREFORE, THE MODEST WITHDRAWA L ON ACCOUNT OF HOUSEHOLD EXPENSES SHOWN BY THE ASSESSEE IS NOT SUFFICIENT TO TAKE CARE OF SUCH EXPENSES OF THE ASSESSEE. THE AO ESTIMATED THAT WITHDRAWAL OF RS. 50,000/- PER MONTH IN AY 2004-05, I.E. RS.6 LACS PE R ANNUM, IS JUSTIFIED IN THE FACTS OF THE PRESENT CAS E. FOR SUBSEQUENT YEARS, THE AO HAS INCREASED HIS ESTIMATION FOR HOUSEHOLD EXPENSES AND HE ESTIMATED HOUSEHOLD E XPENSES OF RS.7 LACS IN AY 2005-06, RS.8 LACS IN AY 2006-07, RS.9 LACS IN AY 2007-08, RS.10 LACS IN AY 2008-09, RS.11 LACS IN AY 2009-10 AND RS.12 LACS IN AY 2010-11. FROM THIS ESTIMATE OF HOUSEHOLD EXPEND ITURE IN EACH YEAR, THE AO REDUCED THE AMOUNT OF NE T HOUSEHOLD EXPENSES DECLARED BY THE ASSESSEE INCLUDI NG WITHDRAWAL BY HIMSELF AND HIS WIFE AFTER DEDUCTI NG FOREIGN TRAVEL EXPENSES AND HE MADE THE ADDITION TO THE EXTENT OF LESS WITHDRAWAL SHOWN BY THE ASSESSE E AGAINST HIS ESTIMATE OF HOUSEHOLD EXPENSES. IN THI S MANNER, HE MADE AN ADDITION OF RS.4,88,306/- IN A Y 2004- 05. 7. BEING AGGRIEVED, THE ASSESSEE HAS CARRIED THE MA TTER IN APPEAL BEFORE THE LD.CIT(A) WHO HAS ALLOWED A RELIEF OF RS.1 LAC IN EACH OF THE SEVEN ASSESSMEN T YEARS AND CONFIRMED THE BALANCE ADDITION OF RS.3, 88,306/- IN AY 2004-05. NOW THE ASSESSEE IS IN FURTHER APPE AL BEFORE US REGARDING PART ADDITION CONFIRMED BY T HE LD.CIT(A). 7.1. IT WAS SUBMITTED BY AR OF THE ASSESSEE THAT TH E WITHDRAWALS SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS IS SUFFICIENT TO TAKE CARE THE PERSONAL HO USEHOLD EXPENDITURE OF THE ASSESSEE AND HIS FAMILY AND THEREFORE, THE ENTIRE ADDITION MADE BY THE AO SHOUL D BE DELETED. ON THE OTHER HAND, LD.DR OF THE REVE NUE SUPPORTED THE ORDER OF THE AO. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. W E FIND THAT A CLEAR FINDING IS GIVEN BY THE AO THAT THE AS SESSEE AND HIS FAMILY WERE IN THE HABIT OF INCURRIN G LAVISH EXPENDITURE. WE ALSO FIND THAT IT IS NOTED BY THE LD.CIT(A) ON PAGE 8 OF HIS ORDER THAT THE SON OF T HE ASSESSEE WAS FOUND AS STUDYING IN LONDON WHICH FURTHER SIGNI FIES THE LIFESTYLE OF THE ASSESSEE AND THE FACT TH AT IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 4 - SUBSTANTIAL AMOUNT IS REQUIRED FOR MAINTAINING SUCH LIFE STYLE. ON THE BASIS OF THESE FACTS, IT WAS H ELD BY THE LD.CIT(A) THAT THE ESTIMATES MADE BY THE AO REGARDI NG HOUSEHOLD EXPENSES OF THE ASSESSEE IS FAIR, JUST AND REASONABLE FOR THE PRESENT YEAR AS WELL AS IN SUBSE QUENT YEARS. HE HAS ALSO RELIED UPON VARIOUS JUD GMENTS OF HONBLE DELHI HIGH COURT RENDERED N THE CASE OF MAD AN LAL VS. CIT (1984) 149 ITR 533 (DELHI) & YADU HA RI DALMIA VS. CIT (1980) 126 ITR 48 (DELHI) AS WELL A S A JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDER ED IN THE CASE OF SUSHIL KUMAR SARAD KUMAR VS. CIT 232 ITR 588 (ALL.), WHERE IT WAS HELD THAT IF THERE AR E SOME EVIDENCES SUGGESTING THAT THE DRAWING OF HOUSEHOLD EXPENSES SHOWN BY THE ASSESSEE IS NOT ADEQUATE, THE SAME CAN BE ESTIMATED BY THE AO FOR WANT OF DIRECT EVIDE NCES. STILL, IT WAS HELD BY HIM THAT THE ADDITION S MADE BY THE AO ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWAL IS MA RGINALLY ON HIGHER SIDE AND HE ALLOWED A RELIEF OF RS.1 LAC IN EACH ASSESSMENT YEAR AND CONFIRMED ONLY BALA NCE ADDITION. NOTHING CAN BE PRODUCED BY THE AR OF THE ASSESSEE BEFORE US TO SUGGEST THAT THE ESTIMATION MADE BY THE AO AND PARTLY CONFIRMED BY THE LD.CIT(A ) IS EXCESSIVE IN THE FACTS OF PRESENT CASE, WHERE IT IS FOUND THAT SON OF THE ASSESSEE IS STUDYING IN LOND ON AND ASSESSEE IS LEADING A LAVISH LIFESTYLE BY INCURRING REGULAR EXPENDITURE IN HOTELS AND CATERING, ETC. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORD ER OF THE LD.CIT(A) ON THIS ISSUE ALSO. THIS GROUN D IS ALSO REJECTED. 8.1. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I T(SS) A NO.17/AHD/2013 FOR AY 2004-05 IS DISMISSED. 9. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR A Y 2005-06, I.E. IT(SS)A NO.18/AHD/2013. 9.1. IN THIS YEAR, THERE ARE ONLY TWO GROUNDS OF AP PEAL RAISED BY THE ASSESSEE OUT OF WHICH GROUND NO .1 IS ALREADY REJECTED AS NOT PRESSED. 10. SECOND GROUND IS REGARDING CONFIRMATION OF PART ADDITION MADE BY THE AO ON ACCOUNT OF ALLEGED LOW WITHDRAWAL SHOWN BY THE ASSESSEE IN RESPECT OF HOU SEHOLD EXPENSES. BOTH THE SIDES AGREED THAT THIS I SSUE IN ALL THE YEARS IS IDENTICAL AND THE SAME CAN BE DECI DED ON SIMILAR LINE AS IN AY 2004-05. WHILE DECIDI NG THE GROUND NO.2 OF ASSESSEES APPEAL IN AY 2004-05 AT P ARAS 3 TO 5 OF THIS ORDER ABOVE, WE HAVE REJECTED T HE GROUND AND DECIDED THE ISSUE AGAINST THE ASSESSEE. SIMILARLY, IN THE PRESENT YEAR ALSO, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE ON SIMILAR LINE. GROUND NO.2 IS ALSO REJECTED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT (SS)A NO.18/AHD/2013 FOR AY 2005-06 IS ALSO DISMISSED. 12. NOW, WE TAKE UP THE ASSESSEES APPEAL FOR AY 20 06-07, I.E. IT(SS)A NO.19/AHD/2013. 12.1. IN THIS YEAR, THERE ARE THREE GROUNDS OF APP EAL RAISED BY THE ASSESSEE OUT OF WHICH GROUND NO.1 IS ALREADY REJECTED AS NOT PRESSED AND GROUND NO.2 IS ALSO REQUIRED TO BE REJECTED ON THE SAME LINE AS PE R PARA-8 OF THIS ORDER ABOVE IN WHICH WE HAVE DECIDED GROUND NO.3 OF ASSESSEES APPEAL FOR AY 2004-05. HENCE, GROUND NO.2 IS ALSO REJECTED. IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 5 - 13. GROUND NO.3 OF ASSESSEES APPEAL FOR AY 2006- 07 READS AS UNDER:- 3. THE LD.CIT(APPEALS)-IV, AHMEDABAD HAS ERRED IN FACTS AND IN LAW BY CONFIRMING THE ACTION OF THE LD.A.O. OF MAKING AN ADDITION OF RS.84,350/- BEING AN AMOUNT ALLEGED TO BE EXPENDED ON PERSONAL EXPENSES INCURRED OUT OF UNDISCLOSED SOURCES DESPIT E THE FACT THAT THE SAME IS CONSIDERED AS A BASIS FOR ESTIMATION OF THE UNDISCLOSED HOUSEHOLD EXPENSE S. HAVING CONFIRMED AN ADDITION BASED ON SUCH BASIS, ADDITION OF RS.84,350/- WAS UNJUSTIFIED AND HENCE PRAYED TO BE DELETED. 13.1. BRIEF FACTS ARE THAT IT IS NOTED BY THE AO IN PARA-5.1 OF THE ASSESSMENT ORDER THAT DURING THE C OURSE OF SEARCH, BILLS WERE FOUND FOR PURCHASE AND STITCHING OF CLOTHES AND FROM THE DETAILS OF THESE DOCUMENTS FOUND IN COURSE OF SEARCH, THE AO WORKED OUT THAT THE ASSESS EE HAS INCURRED AN EXPENDITURE OF RS.84,350/- IN AY 2006- 07 ON THIS COUNT. ON THE SAME BASIS, THE AO NOTED THAT AN AMOUNT OF RS.1,49,085/- WAS INCURRED BY TH E ASSESSEE IN AY 2007-08, AMOUNT OF RS.1,79,935/- IN AY 2008-09, RS.2,10,933/- IN AY 2009-10 AND RS.1,06,145/- IN AY 2010-11. SUBMISSION OF THE ASS ESSEE WAS THAT THESE EXPENSES ARE COVERED BY HOUSEH OLD EXPENSES SHOWN BY THE ASSESSEE IN EACH OF THESE YEA RS. THE AO WAS NOT SATISFIED. HE NOTED THAT FOR A Y 2008-09, THE TOTAL HOUSEHOLD WITHDRAWAL OF THE ASSE SSEE AND HIS WIFE IS RS.3,82,934/- AND OUT OF THIS, THE ASSESSEE HAS INCURRED RS.87,821/- ON FOREIGN TOUR A ND THEREFORE, BALANCE AMOUNT AVAILABLE WITH THE ASS ESSEE FOR HOUSEHOLD EXPENSES WAS ONLY RS.2,95,113/-. HE FURTHER NOTED THAT IN THIS YEAR, THE ASSESSEE HAS I NCURRED RS.2,10,933/- ON ACCOUNT OF PURCHASE AND STITCHING OF CLOTHES. THEN HE DRAWN A CONCLUSION THAT IF THE ASSESSEE IS BELIEVED, THEN IT HAS TO BE ACCEPTED THAT THE AS SESSEE AND HIS FAMILY MEMBERS SURVIVED ON RS.84,180 /- FOR THE WHOLE YEAR WHICH IS NOT PROBABLE SPECIALLY IN L IGHT OF THIS FACT THAT THE ASSESSEE WAS FOUND TO BE MAINTAINING A VERY LAVISH LIFE STYLE. HENCE, HE MA DE THE ADDITION OF THE ENTIRE AMOUNT OF SUCH EXPEND ITURE INCURRED BY THE ASSESSEE ON PURCHASE AND STITCHING OF CLOTHES IN EACH OF THESE YEARS, I.E. AYS 2006-07 TO 2010- 11. IN AY 2006-07, ADDITION MADE WAS OF RS.84,350/ -. 13.2. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE IN APPEAL BEFORE LD.CIT(A). LD.CIT(A) H AS CONSIDERED ALL THESE ASPECTS WHILE DECIDING THE ISS UE IN RESPECT OF ADDITION SEPARATELY MADE BY THE AO ON ACCOUNT OF LOW WITHDRAWAL SHOWN BY THE ASSESSEE FOR HOUSEHOLD EXPENSES. IN PARA-10.3 OF HIS ORDER, IT IS NOTED BY THE LD.CIT(A) THAT SINCE THE AO HAS MADE S EPARATE ADDITION IN RESPECT OF FOREIGN TRAVEL EXPEN SES AS WELL AS FOR PERSONAL EXPENSES RELATING TO CLOTHING AND STITCHING CHARGES, HE CAME TO THE CONCLUSION TH AT THE ADDITION MADE BY THE AO ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS IS MARGINALLY ON HIGHER SIDE AND HE ALLOWED A PART RELIEF OF RS.1 LAC IN EACH YEAR OUT OF ADDITION MADE BY THE AO ON ACCOUNT OF LOW WITHDR AWAL SHOWN BY THE ASSESSEE FOR HOUSEHOLD EXPENSES. SINC E THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENT TO SH OW THAT THE TOTAL ADDITION MADE BY THE AO AND PARTLY C ONFIRMED BY THE LD.CIT(A) IN RESPECT OF ALLEGED LOW WITHDRAWAL BY THE ASSESSEE FOR HOUSEHOLD EXPENSES, FOREIGN TRAVEL EXPENSES AND CLOTHING AND STITCHING IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 6 - CHARGES, ETC. IS EXCESSIVE, WE DO NOT FIND ANY REAS ON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO.3 OF THE ASSESSEES APPEAL F OR AY 2006-07 IS ALSO REJECTED. 13.3. IN THE RESULT, APPEAL OF THE ASSESSEE FOR AY 2006-07 IS ALSO DISMISSED. 14. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR AY 2007-08. IN THIS YEAR, FOUR GROUNDS ARE RAISED BY THE ASSESSEE AND OUT OF THIS, GROUND NO.1 IS ALREAD Y REJECTED BY US BEING NOT PRESSED. 15. REGARDING GROUND NOS.2 & 3, IT WAS AGREED BY BO TH THE SIDES THAT THE SAME ARE IDENTICAL AS GROUND NOS.2 & 3 RAISED BY THE ASSESSEE IN AY 2004-05. I N AY 2004-05, BOTH THESE GROUNDS WERE REJECTED BY U S AS PER PARAGRAPH NOS.5 & 8 OF THIS ORDER ABOVE. ACCO RDINGLY, IN THE PRESENT YEAR ALSO (I.E.2007-08), BO TH THESE GROUNDS ARE REJECTED. 16. REGARDING GROUND NO.4, IT WAS AGREED BY BOTH TH E SIDES THAT THE SAME IS IDENTICAL AS GROUND NO.3 RAISED IN AY 2006-07. IN AY 2006-07, THIS ISSUE HA S BEEN DECIDED AGAINST THE ASSESSEE AT PARA NO.13.2 OF THIS ORDER ABOVE. ACCORDINGLY, IN THE PRESENT YEAR ALSO , THIS ISSUE IS DECISION AGAINST THE ASSESSEE AND G ROUND NO.4 IS ALSO REJECTED. 16.1. IN THE RESULT, APPEAL OF THE ASSESSEE FOR AY 2007-08 IS ALSO DISMISSED. 17. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR AY 2008-09. 17.1. IN THIS YEAR, THE ASSESSEE HAS RAISED ONLY TH REE GROUNDS OF APPEAL AND OUT OF THIS, GROUND NO.1 IS ALREADY REJECTED BY US BEING NOT PRESSED. REGARDIN G GROUND NOS.2 & 3, IT WAS AGREED BY BOTH THE SIDES THAT THE SAME ARE IDENTICAL AS GROUND NOS.2 & 3 RAISED BY THE ASSESSEE IN AY 2006-07. IN THAT YEAR, BOTH THESE GROUNDS WERE REJECTED BY US AS PER PARAGRAPH NOS.12 .1 & 13.1 OF THIS ORDER ABOVE. ACCORDINGLY, IN TH E PRESENT YEAR ALSO (I.E.2008-09), BOTH THESE GROUNDS ARE REJECTED. 17.2. IN THE RESULT, ASSESSEES APPEAL FOR AY 2008- 09 IS ALSO DISMISSED. 18. NOW, WE TAKE UP THE ASSESSEES APPEAL FOR AY 20 09-10. IN THIS YEAR, THE ASSESSEE HAS RAISED FOUR GROUNDS OF APPEAL AND OUT OF THIS, GROUND NO.1 IS A LREADY REJECTED BY US BEING NOT PRESSED. REGARDING GROUND NOS.2 &3, IT WAS AGREED BY BOTH THE SIDES THAT THE SAME ARE IDENTICAL AS GROUND NOS.2 & 3 RAISED BY TH E ASSESSEE IN AY 2008-09. IN THAT YEAR, BOTH THESE G ROUNDS WERE REJECTED BY US AS PER PARAGRAPH NO.17.1 OF THIS ORDER ABOVE. ACCORDINGLY, IN THE PRESENT YEAR ALS O (I.E.2009-10), BOTH THESE GROUNDS ARE REJECTED. 18.1. REMAINING GROUND IN ASSESSEES APPEAL IS GROU ND NO.4 FOR AY 2009-10 WHICH READS AS UNDER:- 4. THE LD. CIT(APPEALS) IV, AHMEDABAD HAS ERRED I N FACTS AND IN LAW BY CONFIRMING THE ACTION OF THE LD.A.O. OF MAKING A DISALLOWANCE OF RS.4,96, 067/- BEING THE AMOUNT OF SALES TAX PENALTY. THE SAID EXPENSE BEING RECORDED IN THE BOOKS OF ACCOUNT S AND NO INCRIMINATING MATERIAL FOUND IN RELATION THERETO, COULD NOT HAVE BEEN DISALLOWED. THE EXPEN SES OF RS.4,96,067/- AS CLAIMED IS PRAYED TO BE ALLOWED. 18.2. WE FIND THAT THIS DISALLOWANCE WAS MADE BY TH E AO ON THE BASIS THAT THE ASSESSEE HAS DEBITED THI S AMOUNT OF RS.4,96,067/- UNDER THE HEAD SALES TAX PE NALTY WHICH AS PER PROVISIONS OF THE ACT IS NOT AN IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 7 - ADMISSIBLE EXPENDITURE. LD. CIT (A) HAS ALSO CONFI RMED THIS DISALLOWANCE ON THE BASIS THAT SUCH EXPEN DITURE IS UNQUESTIONABLY INADMISSIBLE BUSINESS EXPENDITURE . LD.AR OF THE ASSESSEE COULD NOT POINT OUT ANY S PECIFIC DEFECT IN THE ORDER OF THE CIT (A) AND, HENCE, WE F IND NO REASON TO INTERFERE WITH THE ORDER OF THE CI T (A). THEREFORE, GROUND NO.4 IS ALSO REJECTED. IN THE RE SULT, ASSESSEES APPEAL FOR AY 2009-10 IS DISMISSED . 19. NOW, WE TAKE UP THE ASSESSEES APPEAL FOR AY 20 10-11. 19.1. IN THIS YEAR, THE ASSESSEE HAS RAISED THREE G ROUNDS OF APPEAL AND IT WAS AGREED BY BOTH THE SIDE S THAT THE GROUND NOS.2 & 3 RAISED BY THE ASSESSEE ARE IDE NTICAL AS GROUND NO.2 & 3 RAISED BY THE ASSESSEE IN AYS 2006-07, 2008-09 & 2009-10. IN ALL THESE YEARS, WE HAVE REJECTED THESE TWO GROUNDS OF ASSESSEES APPE AL(S) AND ACCORDINGLY IN THE PRESENT YEAR ALSO, THESE TWO GROUNDS OF ASSESSEES APPEAL (I.E. GROUND NOS.2 & 3) ARE REJECTED ON SIMILAR LINE. 20. REMAINING GROUND NO.1 OF ASSESSEES APPEAL FOR AY 2010-11 READS AS UNDER:- 1. THE LD.CIT(APPEALS) IV, AHMEDABAD HAS ERRED I N FACTS AND IN LAW IN RETAINING AN ADDITION OF RS.15,00,000/- OUT OF A TOTAL ADDITION OF RS.60,62, 601/- MADE BY THE LD.A.O. AS REPRESENTING UNDISCLOSED INVESTMENT MADE IN THE RESIDENTIAL BUNG ALOW. THE RETENTION OF THE ADDITION OF RS.15,00,000/- BEING ERRONEOUS IN LAW AND IN FACTS IS PRAYED TO BE DELETED. 20.1. IT WAS AGREED BY BOTH THE SIDES THAT THIS ISS UE IS INTER-CONNECTED WITH GROUND NOS.1 & 2 RAISED BY THE REVENUE IN ITS APPEAL FOR AY 2008-09 AND GROUND NO. 2 OF REVENUES APPEAL IN AY 2009-10 AND GROUND NOS.1 & 2 OF REVENUES APPEAL IN AY 2010-11 AND, HE NCE, THE ENTIRE ISSUE AS PER THESE GROUNDS OF REVEN UES APPEALS AND GROUND NO.1 OF ASSESSEES APPEAL MAY BE DECIDED TOGETHER. WE ALSO FIND THAT THE ENTIRE IS SUE WAS DECIDED BY LD.CIT (A) ALSO TOGETHER AND, HENCE, WE ALSO PROCEED TO DECIDE THE ENTIRE ISSUE TOGETHER. HENCE WE REPRODUCE THE RELEVANT GROUNDS OF REVENUES APPEAL AS UNDER:- GROUND NOS.1 & 2 OF REVENUES APPEAL FOR AY 2008-09 :- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.23,28,200/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PURCHASE OF LA ND FOR CONSTRUCTION OF BUNGALOWS. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.1,71,344/- MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE CONSTRUCTI ON OF BUNGALOWS. GROUND NO 2 OF REVENUES APPEAL FOR AY 2009-10:- 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.11,06,344/- MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE CONSTRUCTI ON OF BUNGALOWS. GROUND NOS.1 & 2 OF REVENUES APPEAL FOR AY 2010-1 1:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION TO RS.15,00,000/- OUT OF TOTAL ADDITION OF RS.60,62,601/- MADE ON ACCOUNT OF PURCHASE OF VARIOUS HOUSEHOLD MOVABLE ITEMS INCLUDING GYM & KITCHEN EQUIPMENTS. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.14,90,927/- MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE CONSTRU CTION OF BUNGALOWS. IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 8 - 20.2. BRIEF FACTS ON THIS ENTIRE ISSUE ALONG WITH T HE FINDING OF THE AO AND SUBMISSIONS BEFORE THE CIT (A) ARE NOTED BY THE LD.CIT(A) IN PARA NOS.18 TO 18.5 O F HIS ORDER ON PAGES 14 TO 23 AND FOR THE SAKE OF R EADY REFERENCE, THE SAME ARE REPRODUCED BELOW:- 18. THE NEXT GROUND OF APPEAL FOR AYS 2008-09, 2 009-10 & 2010-11 IS ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE CONSTRUCTION OF BUNGALOW AMOUNTIN G TO RS.1,71,344/-, RS.11,06,928/- AND RS,14,90,92 7/- RESPECTIVELY. 18.1 THE NEXT GROUND OF APPEAL FOR AY 2010-11 IS AG AINST THE ADDITION OF RS.60,62,601/-ON ACCOUNT OF UNDISCLOSED INVESTMENT OF THE ASSESSEE IN THE VARIO US HOUSEHOLD EQUIPMENTS U/S. 69 OF THE ACT. 18.2 THE NEXT GROUND FOR AY 2008-09 IS AGAINST THE ADDITION OF RS.23,38,200/- ON ACCOUNT OF UNDISCLOS ED INVESTMENT IN THE PURCHASE OF LAND FOR CONSTRUCTION OF BUNGALOW. 18.3 ALL THESE GROUNDS OF APPEAL ARE TAKEN UP TOGET HER FOR THE SAKE OF CONVENIENCE SINCE THESE INVOLVE COMMON AND CONNECTED ISSUES. 18.4 THE RELEVANT PORTION OF SUBMISSION IN RESPECT OF THE ADDITION MADE ON ACCOUNT OF UNDISCLOSED INVE STMENT IN THE CONSTRUCTION OF BUNGALOW FOR AYS 2008-09, 20 09-10 & 2010-11 AND ADDITION ON ACCOUNT OF UNDISCLO SED INVESTMENT IN THE PURCHASE OF LAND FOR CONSTRUCTION OF BUNGALOW FOR AY 2008-09 IS REPRODUCED AS UNDER: - 'THE FACTS RELATING TO THE CASE ARE THAT IN THE COU RSE OF SEARCH PROCEEDINGS STATEMENT WAS RECORDED U/ S. 132(4) / 131 ON VARIOUS DATES. IN THE COURSE OF THE PROCEE DINGS, CERTAIN INCRIMINATING MATERIAL WITH RESPECT TO THE EXPENSES INCURRED IN THE CONSTRUCTION OF HOUSE WERE FOUND AS PER PAGE 1 TO 101 OF ANNEXURE A/2. WHERE UPON THE APPELLANT WAS REQUIRED TO CLARIFY THE SAME AND ACCORDINGLY THE STATEMENT WAS RECORDED. IN RESPONSE TO QUESTION NOS. 24 TO 36, VARIOUS CLARIFICATIONS WERE MADE IN THE STATEMENT RECORDED ON 11.02.2010 (COPY ENCLOSED AT PAGE NOS. 11 TO 17 OF THE PAPER BOOK) W HICH IS REPRODUCED FOR YOUR HONOURS IMMEDIATE REFER ENCE. 'Q .24. I AM SHOWING YOU ANNEXURE - A/2 FOUND DURING THE COUR SE OF SEARCH FROM YOUR RESIDENCE CONTAINING THE PAGE NOS. 1 TO 101, PLEASE EXPLAIN THE SAME. A.24. ANNEXURE - A/2, CONTAINING PAGE NOS. 1 TO 101 ARE PERTAINING TO MY RESIDENTIAL HOUSE SITUATE D AT BUNGALOW NO. 4 'JANOD' AMRAKUNJ SOCIETY, Q.25. PRESENTLY, YOU ARE RESIDING AT BUNGALOW N O. 4 'JANOD', AMRAKUNJ SOCIETY, IN WHOSE NAME, IT I S REGISTERED? WHETHER, IT IS SHOWN IN THE BOOKS OF AC COUNTS OR NOT? A.25. THIS RESIDENTIAL HOUSE IS IN MY NAMED, AN D MY WIFE AND THE SAME HAS BEEN SHOWN IN THE BOOKS OF ACCOUNTS. Q.26. HOW MUCH AMOUNT OF EXPENDITURE HAS BEEN INCU RRED IN CONSTRUCTION OF BUNGALOW NO.4 JANOD. AMRAKUNJ SOCIETY? PLEASE EXPLAIN THE SOURCE OF INC OME AND WHETHER SUCH EXPENDITURES ARE SHOWN IN YOUR BOOKS OF ACCOUNTS OR NOT? A.26. THE ESTIMATED COST OF CONSTRUCTION INCURRED B Y ME IS AROUND RS.3.00 CRORE, OUT OF WHICH AN AMOUN T OF RS.1.35 CRORE HAS BEEN SHOWN / REFLECTED IN BOOKS O F ACCOUNTS OF MYSELF AND MY WIFE. Q.27. PLEASE EXPLAIN THE DIFFERENCE OF COST OF CONS TRUCTION BETWEEN ACTUAL COSTS OF CONSTRUCTION AS ST ATED IN RESPONSE TO QUESTION NO.26 AND COST OF VALUE SHOWN IN THE BOOKS OF ACCOUNT. A.27. I AND MY WIFE HAVE SHOWN AROUND RS.1.35 CRORE TOWARDS COST OF CONSTRUCTION OF HOUSE IN THE BOOKS OF ACCOUNTS AGAINST THE ACTUAL EXPENDITURE INCURRED, W HICH IS RELATIVELY HIGHER. THIS DIFFERENCE AMOUNT OF EXPENDITURE HAS NOT BEEN ACCOUNTED IN THE BOOKS OF ACCOUNTS. Q.28. AS STATED ABOVE, THE ADDITIONAL EXPENDITURE H AS BEEN INCURRED IN CONSTRUCTION OF BUNGALOW NO.4 JANOD AMRAKUNJ SOCIETY. PLEASE EXPLAIN THE SAME. A.28. AN AMOUNT OF RS.1,36,37,209/- (99,71,704 + 3 6,65,505) HAS BEEN SHOWN IN THE BOOKS OF ACCOUNTS O F ME AND MY WIFE AS EXPENSES INCURRED IN BUNGLOW NO.4 JANOD, AMRAKUNJ SOCIETY, ELLORAPARK, VADODARA AND THE ADDITIONAL AMOUNT OF EXPENDITURE HAS BEEN I NCURRED BY ME ONLY. TO MAKE THIS BUNGLOW LOOK AS LUXURIOUS, I HAVE INCURRED ESTIMATED EXPENDITURE OF RS.1,50,00,000/- OUT OF MY UNDISCLOSED INCOME. IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 9 - Q.29. AS STATED BY YOU IN RESPONSE TO QUESTION NO.2 8, YOU HAVE MADE UNDISCLOSED INVESTMENT IN CONSTRUC TION OF HOUSE OF RS.1,50,00,000/-. PLEASE EXPLAIN THE S AME, WHETHER THIS ADDITIONAL AMOUNT OF EXPENDITURE HAS BEEN SHOWN IN YOUR BOOKS OF ACCOUNTS AS PER INCOME TAX RULES OR NOT? A.29. I JAYENDRA NANDLAL SHAH ACCEPT THAT THE EXPEN DITURE ON CONSTRUCTION OF HOUSE OF RS.1,36,37,209/- HAS BEEN SHOWN IN BOOKS OF ACCOUNTS, OVER AND ABOVE THI S EXPENDITURE OF RS.1,50,00,000/- HAS BEEN MADE BY ME OUT OF BOOKS. THE SAID EXPENDITURE IS NOT SHOWN IN MY BOOKS OF ACCOUNTS. THIS ADDITIONAL EXPENDITURE OF RS.1,50,00,000/- HA S NOT BEEN SHOWN IN MY BOOKS OF ACCOUNT AS PER INCOME TAX RULES. Q.30. AS MENTIONED ABOVE RS.1,50,00,000/-, YOU HAVE INCURRED ADDITIONAL EXPENDITURE ON COST OF CONSTRUCTION OF BUNGALOW NO.4 JANOD AMRAKUNJ SOCI ETY. PLEASE EXPLAIN THE SAME? A.30. THE ABOVE AMOUNT IS PERTAINS TO MY UNEXPLAIN ED EXPENDITURE/ INVESTMENT. ON OATH AND BY UNDERSTANDING; I WOULD LIKE TO STATE THAT THE ADDITIONAL EXPENDITURE OFRS. 1,50,00,000/ -FOR CONSTRUCTION OF BUNGALOW NO. 4 'JANOD', AMRAKUNJ SO CIETY, WHICH IS MY UNEXPLAINED EXPENDITURE / INVEST MENT AND INCURRED FROM MY UNDISCLOSED INCOME. THIS INCOM E OF RS.1,50,00,000/- HAS NOT BEEN OFFERED FOR TAXA TION BY ME FOREVER. ON OATH, I AM ADMITTING SUCH INCOME OFRS. 1,50,00,0 00/- AS MY UNDISCLOSED EXPENDITURE / INVESTMENT OF CURRENT YEAR AND THE SAME SHALL BE OFFERED FOR TAXA TION. I AM READY TO PAY TAX LIABILITY ON SUCH UNDIS CLOSED EXPENDITURE I INVESTMENT. Q.31. IS THERE ANY OTHER UNDISCLOSED INVESTMENT OR BUSINESS OR PROFESSIONAL INCOME OTHER THAN AS S TATED ABOVE? A.31. ON VERIFICATION OF ALL DOCUMENTS / BOOKS OF ACCOUNTS ETC., I CAME TO THE CONCLUSION THAT THE RE IS OTHER UNDISCLOSED INCOME OVER AND ABOVE RS. 1,50,00,000 / -, WHICH HAS NOT BEEN SHOWN/ ACCOUNTED TILL DATE IN MY- BOOKS OF ACCOUNT. Q.32. IN REPLY TO QUESTION NO. 31, YOU HAVE OTH ER INCOME OVER AND ABOVE RS.1,50,00,000/-, AS STATE D ABOVE, WHICH HAVE NOT BEEN ACCOUNTED IN YOUR BOOKS OF ACCO UNTS. PLEASE EXPLAIN THE SAME IN DETAIL. A.32. I MYSELF JAYENDRA NANDLAL SHAH, RESIDING AT BUNGLOW NO. 4 'JANOD', AMRAKUNJ SOCIETY, ELLORAP ARK, VADODARA, ON OATH AND BY UNDERSTANDING IN THE PRESE NCE OF WITNESS ACCEPT THAT I HAVE UNDISCLOSED INCOM E OF RS.1,60,00,000/- WHICH IS NEITHER ACCOUNTED IN MY B OOKS OF ACCOUNTS NOR OFFERED FOR TAXATION. THIS AMO UNT OFRS. 1,60,00, 000/- HAS BEEN GIVEN AS LOAN AND ADV ANCES AS ON TODAY. Q.33. IN REPLY TO QUESTION HO. 32, YOU HAVE ADM ITTED THAT YOU HAVE UNDISCLOSED INCOME OF RS.1,60,0 0,000/-. PLEASE EXPLAIN THE SAME IN DETAIL. A.33. I PROMISED TO ACCEPT THE INCOME OF RS.1,6 0,00,000/- IN ADDITION TO MY REGULAR BUSINESS INCOM E, WHICH ; HAS NOT BEEN SHOWN IN BOOKS OF ACCOUNT. DURING THE COURSE OF SEARCH, I HAVE ACCEPT AN AMOUNT OF RS.1,60,00,000/- AS MY UNDISCLOSED INCOME WITHOUT A NY THREAT AND COERCION AND OFFER THE SAME FOR TAXAT ION IN THE CURRENT YEAR. Q.34. IN RESPONSE TO QUESTION NO.30, YOU HAVE M ADE UNDISCLOSED INVESTMENT OF RS.1,50,00,000/- ON A CCOUNT OF UNEXPLAINED INVESTMENT / EXPENDITURE ON CONSTRUC TION OF BUNGALOW NO. 4 'JANOD', AMRAKUNJ SOCIETY AN D IN RESPONSE TO QUESTION NO. 33, YOU HAVE ADMITTED THE UNDISCLOSED INCOME OF RS.1,60,00,000/- ON ACCOUNT O F UNEXPLAINED LOANS & ADVANCES. PLEASE EXPLAIN THE SA ME ONCE AGAIN. A.34. I AM ONCE AGAIN BY UNDERSTANDING AND ON OATH ADMITS THAT RS.1,50,00,000/- IS UNEXPLAINED INVESTM ENT IN BUNGALOW NO. 4 'JANOD', AMRAKUNJ SOCIETY, WHICH IS NOT ACCOUNTED IN BOOKS OF ACCOUNT. I ACCEPT THIS INVESTMENT AS MY UNEXPLAINED INVESTMENT/EXPENDITURE AND OFFER FOR TAXATION IN THE CURRENT YEAR. OVER AND ABOVE THIS, THERE IS UNDISCLOSED INCOME OF RS.1,60,00,000/-, WHICH IS NOT ACCOUNTED IN THE BO OKS OF ACCOUNT AND HAS NOT BEEN OFFERED FOR TAXATION TILL DATE. THIS AMOUNT OFRS.1,60,00,000/-'IS-OVER AND AB OVE MY REGULAR BUSINESS INCOME, WHICH IS NOT ACCOUNTED IN BOOKS OF ACCOUNT AND HAS NOT BEEN OFFERED FOR TAXAT ION TILL DATE. ON OATH AND BY UNDERSTANDING AND I HAVE DISCLOSED A FORESAID INCOME FOR TAXATION AS MY CURRENT YEAR'S INCOME. IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 10 - I ONCE AGAIN ACCEPT UNEXPLAINED EXPENDITURE OF RS.1 ,50,00,000/- AND RS.1,60,00,000/- AS UNDISCLOSED IN COME AND OFFER THE SAME IN CURRENT YEAR. IN THIS WAY, I AM OFFERING A TOTAL OF RS. 3,10,00,000/- AS MY UNDI SCLOSED INCOME IN CURRENT YEAR FOR TAXATION. AS MENTIONED ABOVE DISCLOSURE INCOME OF RS.3,10,00, 000/-, I WILL NOT CLAIM ANY PEAK WORKING OR NETTING OFF OF INCOME AND WHATEVER TAX LIABILITY ON RS.3,10,00,000 /- IS ARISE, I AM READY TO PAY TAX THEREON. Q.35. AS PER ABOVE ANSWER, YOU HAVE DISCLOSED A N INCOME OF RS.3,10,00,000/- FOR THE CURRENT YEAR F OR TAXATION COMPRISING OF RS. 1,50,00,000 ON ACCOUNT O F UNEXPLAINED INVESTMENT MADE IN BUNGALOW NO. 4 'JANOD', AMRAKUNJ SOCIETY AND RS. 1,60,00, OOO/- ON ACCOUNT OF UNDISCLOSED INCOME. DO YOU WANT SAY ANYTHING ELSE EXCEPT THIS? A.35. I AM ONCE AGAIN ACCEPTING RS.1,50,00,000/- AS UNEXPLAINED INVESTMENT/EXPENDITURE MADE ON BUNGALO W; NO. 4 'JANOD', AMRAKUNJ SOCIETY AND RS.1,60,00,000/ - AS UNDISCLOSED INCOME. TOTAL OF WHICH COMES TO RS . 3,10,00,000/-, WHICH IS BEING OFFERED FOR TAXATION IN THE CURRENT YEAR. ON DISCLOSURE OF INCOME OF RS.1,50,00,000/- AND RS. 1,60,00,000/-, NO DEDUCTION SUCH AS: PEAK WORKING OR NETTING OFF OF INCOME SHALL BE CLAIMED. Q.36. PLEASE LET US KNOW, IS THERE ANY OTHER IN COME OVER AND ABOVE RS.3,10,00,000/- (1,50,00,000/- + 1,60,00,000/-)? DO YOU WANT TO SAY ANYTHING ELSE? A. 36. NO, I DON'T WANT TO SAY ANYTHING ELSE. I ONCE AGAIN DISCLOSE THE INCOME OF RS.3,10,00,000/ -. THIS DISCLOSURE IS MADE WITHOUT ANY PRESSURE AND IN THE PRESENCE OF WITNESS AND HAS BEEN OFFERED FOR TAXATI ON IN THE CURRENT YEAR.' FROM THE ABOVE STATEMENT, IT WOULD BE EVIDENT THAT THE DISCLOSURE WAS MADE WITHOUT ANY EVIDENCE OR BAS IS NOT ONLY IN RESPECT OF INVESTMENT IN THE CONSTRUCTION O F THE HOUSE AS A/SO THE AMOUNT OF RS. 1.60 CRORES. THE APPELLANT THEREAFTER REALIZED THAT THE INVESTMENT M ADE IN THE CONSTRUCTION OF RESIDENTIAL-HOUSE IS MUC H LOWER AND THEREFORE, IN ORDER TO ASCERTAIN THE COST OF CO NSTRUCTION, OBTAINED A VALUATION REPORT FROM A REGI STERED VALUER M/S. ADHARSHILA ASSOCIATES ON 30.03.2010. AS PER THE REPORT OF THE VALUERS, THE ESTIMATED CONST RUCTION COST WAS DETERMINED AT RS. 1,36,00, 000/-. COPY OF THE REPORT IS ENCLOSED AT PAGE NO. 1 8 TO 28 OF THE PAPER BOOK. THEREAFTER, IN THE RETURN FILED ON 15.10.2010, THE APPELLANT OFFERED ADDITIONAL INCOME ON ACCOUNT OF D ISCLOSURE AT RS. 1,98,30,000/- AS AGAINST DISCLOSURE OF RS. 3 .10 CRORES AND THUS THE DISCLOSED STATEMENT WAS RET RACTED. THE AMOUNT OF RS.1,98,30,000/- IS COM PRISED OF THE FOLLOWING:. A) DIFFERENCE IN THE INVESTMENT IN CONSTRUCT ION OF RESIDENTIAL BUNGALOW 'JANOD' RS.38,30,000/-. B) DISCLOSURE MADE IN THE COURSE OF STATEMEN T ON ACCOUNT OF OTHERS RS. 1,60,00, 000 /-. THE RETRACTION / WITHDRAWAL WAS IN RESPECT OF THE I NVESTMENT IN THE CONSTRUCTION OF THE RESIDENTIAL HO USE WHICH WAS QUANTIFIED AT RS. 38,30,000/- BASED ON THE FACT THAT THE APPELLANT, IN THE BOOKS OF ACCOUNTS OF SE LF AND HIS WIFE SMT. JAGRUTI HAD DEBITED THE FOLLOWING EXPENDI TURE IN THE PURCHASE OF LAND CONSTRUCTION OF THE HO USE. NAME OF THE ASSESSES COST OF LAND (RS.) COST OF CONSTRUCTION RS.) JAYENDRA SHAH, APPELLANT 21,00,000 81,48,021 SMT. JAGRUTI SHAH, WIFE OF THE APPELLANT 21,00,000 14,99,545 TOTAL 42,00,000 96,47,566 IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 11 - THE APPELLANT THUS REALIZED THAT AS AGAINST THE ACT UAL COST OF CONSTRUCTION OF RS. 136.00 LA KHS, AN AMOUNT OF RS. 96.50 LAKHS IS RECORDED IN THE BOOKS AND, THEREFORE, ONLY THE DIFFERENCE OF RS. 38,30,000/- (RS. 1,36,00,000 - RS. 97,70,000/-) COULD BE SAID TO BE UNDISCLOSED AND ACCORDINGLY SUCH AMOUNT WAS INCLUDE D IN THE TOTAL OF RS. 1,98,30, 000/- AS EXPLAINED ABOVE. THE LD. A.O. ON HIS OWN A/SO MADE A REFERENCE TO THE DEPARTMENTAL VALUATION OFFI CER, THE COPY OF WHICH WAS ALSO PROVIDED TO THE APPELLANT, A COPY OF WHICH IS PROVIDED AT PAGE NO. 29 TO 31 OF THE PAPER BOOK. TH E LD. A.O. BASED ON THE VALUATION REPORT OBTAINED FROM TH E LD. DVO NOTED THAT THE DIFFERENCE IN THE COST OF CONSTRUCTION AS A/SO THE INVESTMENT IN LAND IS AS UNDER: VALUE AS PER ASSESSEE PARTICULARS JAYENDRA SHAH RS. JAGRUTI SHAH RS. TOTAL RS. ASSESSED COST OF CONSTRUCTION AS PER DVO RS. DIFFERENCE RS. LAND 21,00,000 21,00,000 42,00,000 65,38,200 23,38,200 CONSTRUCTION A.Y.2008-09 7,02,622 NIL 7,02,622 8,73,966 1,71,344 A.Y.2009-10 29,86,929 6,58,787 *36,45,716 *47,52,644 11,06,928 A.Y.2010-11 44,23,680 8,37,748 *52,61,428 *67,52,355 14,90,927 TOTAL 1,02,13,231 35,96,535 1,38,09,766 1,89,17,165 51,07,399 'INCLUDES ENGINEER FEES OF RS. 2,00,000/- IN A.Y. 2 009-10 AND ARCHITECTURAL FEES OF RS. 1,00,000/- IN A.Y.2010-11 BASED ON THE ABOVE, THE LD. A.O. HAS MADE AN ADDITI ON OF AN AMOUNT OF RS. 23,38,200/- IN RESPECT OF AL LEGED UNDISCLOSED INVESTMENT IN THE PURCHASE OF LAND AND AN AMOUNT OF RS. 1,77,344/- IN THE, CONSTRUCTION OF THE BUNGALOW. THE APPELLANT SUBMITS THAT THE ADDITION RELATING TO THE INVESTMENT IN LAND IS WITHOUT ANY MATERIAL OR EVIDENCE AS THE APPELLANT IN THE COURSE OF SEARCH PROCEEDINGS H AD ONLY MADE DISCLOSURE WITH RESPECT TO THE AMOUNT OF INVESTMENT IN THE CONSTRUCTION OF THE BUNGALOW AND THERE WAS NO DISCLOSURE WITH RESPECT TO THE INVESTM ENT IN THE PURCHASE OF LAND. NO INCRIMINATING MATERIAL / D OCUMENT OR ANY OTHER EVIDENCE WAS EVER FOUND IN RES PECT OF THE INVESTMENT IN THE PURCHASE OF LAND AND, THEREFO RE, THERE WAS NO CAUSE OR OCCASION FOR THE LD. A.O. TO ASSUME THAT ANY UNDISCLOSED INVESTMENT WAS MADE IN THE PURCHASE OF LAND. THE APPELLANT FURTHER SUBMITS THAT THE LAND WAS PUR CHASED IN THE YEAR 2007-08 BY A DEED OF REGISTRATIO N DATED 17.05.2007 WHICH IS IN ACCORDANCE WITH THE VA LUE ADOPTED FOR THE LEVY OF STAMP, DUTY AND, THEREF ORE, IN ABSENCE OF ANY EVIDENCE THAT THE APPELLANT HAD MADE ANY FURTHER INVESTMENT OR PAID ANY FURTHER AMOUNTS , THE ADDITION MADE BY THE LD A.O. IS TO BE HELD AS UNJUSTIFIED AND ILLEGAL. YOUR APPELLANT SEEKS TO PLACE RELIANCE ON THE FOLLOWING DECISIONS IN SUPPORT OF THE ABOVE PRO POSITION: CIT \/S.ASHOKKHETRAPAI(2007)294ITR143(DEL) C/T VS. SMT. SHAKUNTALA DEVI (2009) 224 CTR 79 (DEL) CITVS. MAHESHKUMAR 196TAXMAN 415(DEL)2011 WITH RESPECT TO THE ADDITION ON ACCOUNT OF THE INVE STMENT IN CONSTRUCTION OF BUNGALOW, THE APPELLANT S UBMITS THAT THE COST OF CONSTRUCTION AS RECORDED IN THE BO OKS OF ACCOUNTS IS RS. 7,02,622/- WHEREAS AS PER TH E VALUATION OF THE LD. DVO, THE SAME IS ESTIMATED AT RS. 8,73,966/- AS RELATABLE TO THE YEAR. THE LD. DV O IN HIS REPORT HAS MENTIONED AS UNDER: IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 12 - 'AS THE ASSESSEE HAS NOT SUBMITTED BILLS I VOUCHER OF PURCHASED MATERIALS IN FALL I.E. QUANTITY WISE, AMOUNT WISE AND ITEMS WISE, ETC. ASSESSEE HAS STATED ONLY TOTAL AMOUNT. THIS OFFICE IS NOT IN A POSITION TO C HECK THE QUANTITY OF EACH MATERIALS CONSUMED HAS BEEN ACCOUN TED FOR OR NOT? ABOVE YEAR WISE BREAK UP OF ESTIMAT E COST OF CONSTRUCTION HAS BEEN WORKED OUT CONSIDERIN G THE FLOW OF EXPENDITURE STATEMENT SUBMITTED BY TH E ASSESSEE, THE SAME MAY BE REQUIRED TO BE VERIFIED A T YOUR END PLEASE. IF THE EXPENDITURE AS SHOWN BY T HE ASSESSEE VARIES FROM THE ABOVE FIGURE, THEN IT IS R EQUIRED TO REFER CASE BACK TO THIS OFFICE FOR RECAL CULATING THE ESTIMATE COST OF CONSTRUCTION BASED UPON THE REVISE D EXPENDITURE SHOWN BY THE ASSESSEE.' (REFER PAGE N O. 30 OF THE PAPER BOOK) FROM THE ABOVE, IT IS VERY DIFFICULT TO ASCERTAIN T HE BASIS OF ALLOCATION OF EXPENSES YEARWISE AS MADE BY THE LD. DVO. THE LD. DVO IN FACT HAS SUGGESTED THE LD. A.O. FOR VERIFICATION OF THE EXPENSES AT HIS END AND UP ON ANY DISCREPANCY TO REFER IT BACK TO HIM. THE LD. DVO HA S ALSO MENTIONED SOMETHING ABOUT DISCLOSED AMOUNT O F RS. 70.00 LAKHS, THE BASIS OF WHICH IS NOT KNOWN TO THE APPELLANT AND LASTLY, THE LD. DVO HAS RIGHTLY MENTIONED THAT THE APPELLANT KNOWS EXACT FACT OF TR ANSACTION. CONSIDERING THE OBSERVATIONS AND FINDINGS OF THE LD . DVO, IT IS OBVIOUS THAT THERE IS NO BASIS FOR ASCERTAINING YEARWISE COST BY HIM AND, THEREFORE, THE ADDITION MADE ON THE BASIS OF SUCH REPORT DESERVES TO BE IGNORED. ON THE CONTRARY, THE FOLLOWING NEEDS TO BE CONSIDERED: THE VALUATION OBTAINED BY THE APPELLANT FROM THE RE GISTERED VALUER IS MORE DETAILED, AUTHENTIC AND PRE PARED ON SCIENTIFIC BASIS IN THE SENSE THAT THE REGISTERE D VALUER HAS NARRATED VARIOUS FACTS WHICH ARE MISSI NG IN THE REPORT OF THE LD. DVO: (I) TOTAL AREA OF CONSTRUCTION ON EACH FLOOR AND RATE ADOPTED FOR ESTIMATING THE CONSTRUCTION, (II) THE ESTIMATE OF EXPENDITURE ON VARIOUS HERNS S UCH AS BATHROOM FITTINGS, EXTERIOR WORK OF ELEVATIO N, GLASS PANELING, COMPOUND FLOORING, BOUNDARY WALL ETC. (III) THE ANNEXURE TO THE REPORT IN FORM I, THE DET AILED MEASUREMENT, BUILT UP AREA OR EACH FLOOR AND THE PARTICULARS AND TYPE OF CONSTRUCTION IS MENTIONED AS COMPARED TO THE ABOVE, THE REPORT OF THE LD. DVO DOES NOT PROVIDE ANY DETAIL AS TO THE AREA OF CONSTRUCTION, METHOD OF VALUATION, TYPE OF CONSTRUC TION ETC. AND THE SAME APPEARS TO BE MADE ON AN ADH OC BASIS AND WITHOUT CONSIDERING THE VARIOUS FACTS AS AVAILABLE ON RECORD AS WELL AS ON SITE. THE LD. DVO HAS MENTIONED THAT THE APPELLANT HAS NOT PROVIDED THE D ETAILS OF EXPENDITURE ITEMWISE AND QUANTITY WISE WH ICH, IN THE HUMBLE SUBMISSION OF THE APPELLANT, IS CONTRARY TO THE FACTS AS CAN BE SEEN FROM THE COPY OF-LETTE R SUBMITTED TO THE LD. DVO DATED 25.08.2011 (COPY PLA CED AT PAGE NO. 32 TO 34 OF THE PAPER BOOK) WHEREIN THE APPELLANT HAS FURNISHED ALL THE BILLS AND VOUCHERS OF DIFFERENT MATERIALS PURCHASED AS PER THE PARA NO . 13 OF THE SAID LETTER. MOREOVER, IT IS TO BE APPRECIATED THAT THE REFERENC E TO THE VALUATION AUTHORITIES IS MADE ONLY IN THE CIRCUMSTANCES WHERE SUCH PARTICULARS ARE NOT AVAILA BLE AND, THEREFORE, THE OBSERVATION OF THE LD. DVO THAT SUCH DETAILS ARE NOT AVAILABLE IS IRRELEVANT. IN TH E OPINION OF THE APPELLANT, THE WHOLE PURPOSE OF TH E EXERCISE OF VALUATION IS TO DETERMINE THE QUANTITIES AS WELL AS THE RATE AND ULTIMATELY THE VALUE OF INVESTMENT OF CONSTRUCTION AND IT IS RIGHTLY ASSUMED BY THE APPEL LANT THAT IN DETERMINING THE VALUE OF CONSTRUCTION AT RS. 124.22 LAKHS BY THE LD. DVO ALL THESE ASPECTS ARE T AKEN INTO CONSIDERATION. THE APPELLANT SUBMITS THAT THE VALUE OF CONSTRUCTIO N AS OBTAINED FROM THE REGISTERED VALUER IS RS. 1,36,00,000/- WHICH INCLUDES AN AMOUNT OF RS. 8,50, 000/- TOWARDS AIR CONDITIONERS, ELECTRICAL FIXTURES , MOVABLE FURNITURE WHICH IS NOT CONSIDERED-FOR ESTIM ATION BY THE LD. DVO AND EXCLUDING THE SAME, THE VA LUE OF THE REGISTERED VALUER WOULD BE RS. 127.50 LAKHS AS- COMPARED TO RS. 124.22 LAKHS ESTIMATED BY THE LD. D VO. THE APPELLANT SUBMITS THAT THERE ARE GROSS ERRORS A ND DEFICIENCIES IN THE REPORT OF THE LD. DVO AND TH AT THE SAME CANNOT BE ACCEPTED AS BASIS FOR MAKING THE ADD ITION OF RS. 1,71,344/- FOR THE YEAR UNDER CONSIDER ATION PARTICULARLY WHEN THE BASIS OF DETERMINATION OF THE DIFFERENCE ITSELF IS NOT PROVIDED AND THAT NO DEFE CT IN THE ESTIMATION AND RECORDING OF THE COST BY THE APPELLA NT IS POINTED OUT. IN THE CIRCUMSTANCES AND FACTS OF THE APPELLANT'S CASE, THE ADDITION MADE MAY PLEASE BE DELETED. THE APPELL ANT PLACES RELIANCE ON THE FOLLOWING DECISIONS IN SUPPO RT OF THE CONTENTION THAT DEFECTIVE REPORT OF THE V ALUATION AUTHORITIES CANNOT BE MADE, A BASIS FOR ADDITION: ACITVS. VINODKUMARAGARWAL(2002)77TTJ(HYD)943 IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 13 - SMT.REKHADEVI VS.ACIT(1994)49TTJ(JP)530' 18.5 THE RELEVANT PORTION OF THE SUBMISSION IN RESP ECT OF ADDITION OF RS.60,62,601/- ON ACCOUNT OF UND ISCLOSED INVESTMENT IN HOUSEHOLD EQUIPMENTS OF THE BUNGALOW IS REPRODUCED AS UNDER: 'THE FACTS RELATING TO THE ISSUE ARE THAT ON THE BA SIS OF DISCLOSURE MADE IN THE COURSE OF STATEMENT, IN THE INVESTMENT IN THE CONSTRUCTION OF RESIDENTIAL BUNGA LOW, THE LD. A.O. REFERRED THE VALUATION TO THE LD. DVO. THE LD. DVO MADE THE VALUATION OF THE RESIDENTIAL B UNGALOW INCLUDING THE COST OF LAND AT RS. 189.17 LA KHS WHICH IS ESTIMATED TO HAVE BEEN INCURRED IN DIFFERE NT YEARS AS PER THE PARTICULARS GIVEN IN THE CHART BELOW: VALUE AS PER ASSESSEE PARTICULARS JAYENDRA SHAH RS. JAGRUTI SHAH RS. TOTAL RS. ASSESSED COST OF CONSTRUCTION AS PER DVO * RS. DIFFERENCE RS. LAND 21,00,000 21,00,000 42,00,000 65,38,200 23,38,200 CONSTRUCTION A.Y.2008-09 7,02,622 NIL 7,02,622 8,73,966 1,71,344 A.Y.2009-10 29,86,929 6,58,787 *36,45,716 *47,52,644 11,06,928 A.Y.2010-11 44,23,680 8,37,748 *52,61,428 *67,52,355 14,90,927 TOTAL 1,02,13,231 35,96,535 1,38,09,766 1,89,17,165 51,07,399 'INCLUDES ENGINEER FEES OF RS. 2,00,000/- IN A.Y. 2 009-10 AND ARCHITECTURAL FEES OF RS. 1,00,000/- IN A.Y. 2010-11 THE LD. A.O. HAS MADE THE ADDITION OF RS. 51.07 LAK HS DETERMINED ON THE BASIS OF ABOVE CHART IN RESPEC TIVE YEARS INCLUDING THE YEAR UNDER CONSIDERATION. THE LD. A. O. THEREAFTER HELD THAT THE APPELLANT HA D MADE A DISCLOSURE OF RS. 1.50 CRORES AS UNDISCLOS ED INVESTMENT IN THE CONSTRUCTION OF THE RESIDENTIAL B UNGALOW. HE HAS THEN OBSERVED AND FOUND THAT OUT OF RS. 1.50 CRORES, AN AMOUNT OF RS. 38.30 LAKHS IS OFFERE D BY THE APPELLANT IN THE RETURN VOLUNTARILY AND TH AT A FURTHER ADDITION OF RS. 51.07 LAKHS IS MADE BY HIM AS MENTIONED ABOVE, THE BALANCE AMOUNT OF RS. 60.63 LAKHS (RS. 150.00 LAKH - RS. 38.30 LAKH - RS. 51.07 LAKH) WOULD PERTAIN TO THE ESTIMATED COST OF AC, MOVABLE ITEMS I.E. ELECTRONICS AND KITCHEN EQUIPMENT AND GYM EQUI PMENTS. IN COMING TO THE ABOVE CONCLUSION, THE LD. A.O. HAS DRAWN SUPPORT FROM THE REPORT OF THE LD.. DVO WHER EIN HE HAS STATED THAT THE COST OF CONSTRUCTION ESTIMAT ED BY HIM DOES NOT INCLUDE THE ABOVE COSTS. THE LD. A.O. THEREAFTER HAS HELD THAT THE VALUE OF THESE ITEMS C ONSTITUTE A SUBSTANTIAL VALUE AND IN THE COURSE OF THE SEARCH PROCEEDINGS, THE INVENTORY OF THESE ITEMS WAS ALSO PREPARED WHICH IS ATTACHED AS ANNEXURE TO THE ASSES SMENT ORDER WHICH FORMS AN INTEGRAL PART OF THE ORDER. CO PY OF THE SAID ANNEXURE IS ENCLOSED AT PAGE NOS. 35 & 36 OF THE PAPER BOOK. YOUR APPELLANT ALSO SUBMITS THAT , NO VALUES ARE MENTIONED ON THE ANNEXURE SO PREPAR ED. FURTHER THE ITEMS LISTED IN THE ANNEXURE INCLUDE TH E FOLLOWING ITEMS: PARTICULARS NOS. AIR-CONDITIONER 6 LCDT.V. 4 T.V 2 FRIDGE 1 TOTAL 13 IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 14 - ON PERUSAL OF THE ANNEXURE AND THE SUMMARY OF ITEMS , IT CAN BE APPRECIATED THAT THE TOTAL VALUE OF THE ABOVE ITEMS CANNOT BE OF RS. 60.62 LAKHS AS ASSUMED BY THE LD. A.O. AND THAT THE VALUA TION OF THESE ITEMS IS ALREADY CONSIDERED BY THE REGISTERED VALUER IN THE TOTAL OF RS. 8.50 LAKHS (REFER PAGE NO. 26 OF THE PAPER BOO K). IT IS THUS SUBMITTED THAT THE VALUATION ESTIMATED B Y THE LD. A.O. WITH RESPECT TO THE ABOVE ITEMS AT R S. 60.62 LAKHS IS NOT ONLY EXCESSIVE, UNREASONABLE AND IN FA CT, HAS NO BASIS OTHER THAN THE PRESUMPTION AS ALSO THE STATEMENT RECORDED AT THE TIME OF SEARCH WITH RESPE CT TO THE INVESTMENT IN THE CONSTRUCTION OF HOUSE. THE VERY FACT THAT THE BASIS OF QUANTIFICATION OF T HE AMOUNT OF RS. 60.62 LAKHS COMMENCES WITH THE FIGURE OF RS, 150 LAKHS GOES TO ESTABLISH THAT THE FINDING OF THE LD. A.O. IS NOT CORROBORATED BY ANY FACTS AND, THEREFORE, THE STATEMENT RECORDED IN THE COURSE OF SEARCH REMA INS UNCORROBORATED. IT IS SETTLED PROPOSITION THAT NO ADDITION CAN BE MADE ON THE BASIS OF STATEMENT WHIC H IS RETRACTED AND IS NOT CORROBORATED. THE APPELLA NT HAD GIVEN A DETAILED EXPLANATION WITH RESPECT TO THE LE GAL PROPOSITION IN THIS RESPECT WHICH HAS BEEN INCO RPORATED IN THE ASSESSMENT BY THE LD. A.O. AND INCLUDE THE F OLLOWING: :THE ASSESSES SUBMITS THAT THE STATEMENT GIVEN IN T HE COURSE OF SEARCH PROCEEDINGS THOUGH A GOOD EVIDE NCE COULD BE RETRACTED IF AT A LATER POINT OF TIME IT W AS FOUND TO BE FALSE OR UNTRUE. IT WAS OPEN TO THE ASSESSEE TO RETRACT THE CONFESSIONAL STATEMENT GIVEN IN THE COU RSE OF SEARCH IF IT WAS FOUND TO BE MADE UNDER DURE SS OR WITHOUT ANY EVIDENCE OR BASIS. REFERENCE MAY BE MAD E TO THE DECISION IN THE CASE OF PULLULLANGODE RUBB ER PRODUCE CO. VS. STATE OF KERALA (1973) 91 ITR 181 ( SC) WHERE IT WAS OBSERVED BY THE APEX COURT THAT RETRACTION FROM ADMISSION WAS PERMISSIBLE IN LAW AN D IT WAS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT. YOUR ATTENTION IS ALSO INVITED TO THE BOARD INSTRUC TION NO. 286/2/2003 DATED 10.03.2003 WHEREIN THE CB DT HAS DIRECTED AS UNDER: 'INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHE RE ASSESSEE HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH AND SEIZURE AND SURVEY OPERATIONS. SUCH CONFESSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, A RE ALTERED RETRACTED BY THE CONCERNED ASSESSEE WHIL E FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, CONFESSI ONS DURING THE COURSE OF SEARCH AND SEIZURE AND SUR VEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS T HEREFORE ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME W HICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISC LOSED OR IS NOT LIKELY TO, BE DISCLOSED BEFORE THE IT DEP ARTMENT. SIMILARLY, WHILE RECORDING STATEMENT DURIN G THE COURSE OF SEARCH AND SEIZURES AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION CONTRARY SHALL BE VI EWED ADVERSELY.' FROM THE ABOVE INSTRUCTION, IT IS EVIDENT THAT THE BOARD ALSO DESIRES THAT MERE RELIANCE OF STATEMENT / CONFESSION WITHOUT EVIDENCE SHOULD NOT BE MADE ANY BASIS FOR ADDITION OR TAXING THE INCOME. FURTHER REFERENCE IS ALSO MADE TO THE DECISION OF N IRMAN TEXTILES PVT. LTD. VS. ACIT 284 ITR 325 (GUJ. ) WHERE THE ORDER OF THE TRIBUNAL WAS SET ASIDE IN A CASE WHERE THE ADDITION MADE BY THE ASSESSING OFFIC ER BASED ON A STATEMENT RECORDED U/S. 132(4) WAS SUBSE QUENTLY RETRACTED. THE HON'BLE HIGH COURT OBSERVED THAT THE RETRACTION WHEN MADE WITH EVIDENCES SHOULD BE N ORMALLY ACCEPTABLE, IN CIT V. K. BHUVANENDRAN & OTHERS (2008) 303 ITR 2 35 (MAD.) STATEMENT RECORDED U/S. 132(4) DURING SEARCH ADMITTING ON MONEY PAID OF RS. 23 LAKHS ON P URCHASE OF PROPERTY BY HIS WIFE AND MEMBERS OF FAMI LY WAS SUBSEQUENTLY RETRACTED. TRIBUNAL WHILE DELETING ADDITION OF RS. 23 LAKH HELD THAT- (I) NO MATERIAL WAS FOUND DURING THE COURSE OF SEAR CH AND THE REGISTERED SALE DEED DID NOT SHOW PAYMEN T MORE THAN MENTIONED IN THE DEED. THEY HELD THAT 'ADMITTEDLY, THERE IS NO EVIDENCE FO UND DURING THE COURSE OF SEARCH AND STATEMENT U/S. 132(4) WAS SUBSEQUENTLY RETRACTED AND REBUTTED. FURTHER ST ATEMENT IS NOT RELATABLE TO ANY SEIZED MATERIAL. HE LD THAT REVENUE COULD NOT BRING ON RECORD ANY MATERIAL TO S HOW THAT AMOUNT DISCLOSED IN THE SALE DEED WAS NOT CORRECT SALE CONSIDERATION. THE HIGH COURT DID NOT FIND ANY ERROR OR LEGAL INFI RMITY IN THE ORDER OF TRIBUNAL TO WARRANT INTERFERE NCE. REFERENCE IS ALSO INVITED TO THE FOLLOWING TRIBUNAL 'S ORDERS IN SUPPORT OF ASSESSEE'S CONTENTION: A) DCIT VS. PRAMUKH BUILDERS 112 ITD179 (AHD.) (TM ) IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 15 - A STATEMENT BY PARTNER UNDER S. 132(4) WAS RETRACTE D LATER BUT THE ASSESSING OFFICER ADDED RS. 10 LAK HS AS UNDISCLOSED INCOME. DELETION OF ADDITION BY C1T(A) WAS UPHELD BY MAJORITY. HELD- (I) THE STATEMENT WAS NOT SUPPORTED BY ANY MATERIAL OR EVIDENCE FOUND DURING SEARCH AND THE PARTNER WA S UNDER STATE OF CONFUSION. (II) NO SANCTITY CAN BE ATTACHED TO THE RETRACTED S TATEMENT AND SUCH A RETRACTED STATEMENT CANNOT FORM THE SOLE BASIS TO DETERMINE UNDISCLOSED INCOME -WITHOUT ANY MATERIAL OR EVIDENCE FOUND DURING SEARCH. IN COMING TO THE ABOVE CONCLUSION, THE HON'BLE TRIB UNAL RELIED UPON THE TRIBUNAL'S DECISION IN THE CAS E OF ADINATH CONSTRUCTION I.T. NOS. 1975,1976,2167 AND 2168/99 DATED21.10.2005. B) ACIT V. RAVI AGRICULTURAL INDUSTRIES (2009) 177I TD 338 (AGRA) (TM) IN MAJORITY JUDGMENT IT IS HELD THAT: .) CERTAIN LOOSE PAPERS ON WHICH SOME NUMERICAL ENT RIES HAD BEEN RECORDED WERE RECOVERED DURING SURVEY U/S. I33A. ONE OF THE PARTNERS AGREED TO SURRENDER THE AMOUNT AS UNEXPLAINED INVESTMENT. THE PARTNER RETRACTED FROM HIS STATEMENT. ADDITION WAS MADE UND ER SEC. 69B ON THE BASIS OF LOOSE PAPERS - C1T(A) DELETED ADDITION. I.) FOLLOWING PULLULLANGODE RUBBER PRODUCE CO. VS. STATE OF KERALA (1973) 91.1TR 181 (SC) [PARA 10.2 CHAPTER 5] IT WAS HELD BY MAJORITY THAT I) THE ADMISSION MADE BY ONE OF THE DIRECTORS HAD A LREADY BEEN RETRACTED. AFTER RETRACTION, IMPUGNED A DDITION WAS REQUIRED TO BE SUPPORTED BY ENOUGH MATERIAL IN THE POSSESSION OF DEPARTMENT. II) LOOKING TO THE LOOSE PAPER, IT HAD SOME NUMERICAL FIGURES BUT DID NOT, IN ANY WAY, SHOW TH AT IT HAD SOME RELATIONSHIP WITH SOME BUSINESS TRANSACTION OF THE ASSESSEE. III) THE LOOSE PAPER DID NOT ESTABLISH THAT IT PERTAINED TO THE BUSINESS TRANSACTION OF THE ASS ESSEE FIRM. IV) ADDITION MADE WAS NOT SUPPORTED BY ANY M ATERIAL WHICH COULD POINT PUT TO UNEXPLAINED INVEST MENT OUTSIDE THE BOOKS OF ASSESSEE. V) IN CIT V. MRS. DORIS S-LUIZ (1974) 96ITR 646 (KAR.) IT WAS HELD THAT EVEN WHEN THERE WAS ADM ISSION, IT IS INCUMBENT UPON REVENUE TO ESTABLISH BY RELEVA NT MATERIAL THAT INCOME IN QUESTION WAS INCOME IN T HE HANDS OF THE ASSESSEE. HELD THAT THERE WAS NO JUSTIFICATION FOR ADDITION U NDER SEC. 69B' C) IN ACIT VS. JORAWAR SINGH M. RATHOD, 94 TTJ 867 (AHD.), THE ADDITION MADE MERELY ON THE BASIS OF STATEMENT WAS DIRECTED TO BE DELETED. THE ASSESSEE FURTHER STATES THAT AS A CONSEQUENCE O F DISCLOSURE OF AN UNDISCLOSED INCOME OF RS. 1.50 C RORES, NO MATERIAL IS FOUND TO SUPPORT THE ASSESSEE MAKING SUCH INVESTMENT TO JUSTIFY THE DISCLOSURE. IN ABSE NCE OF ANY CORRESPONDING TANGIBLE ASSETS BASED ON WHICH TH E DISCLOSURE IS MADE, THE ADDITION WOULD BE UNJUSTI FIED. IT IS FURTHER SUBMITTED THAT IT IS A SETTLED PROPOS ITION OF LAW THAT THE ASSESSING AUTHORITIES CANNOT SUBJECT TO TAX AN INCOME WHICH IS OTHERWISE NOT EARNED OR LIABLE T O TAX. IN THE COURSE OF ASSESSMENT PROCEEDINGS TOO, SUCH INCOME, EVEN IF OFFERED IN THE RETURN OF INCOME CAN BE CLAIMED TO BE WITHDRAWN ON APPRECIATION OF THE CORRECT FACTS AS THE SAID INCOME WRONGLY OFFERED CAN BE SOU GHT TO BE WITHDRAWN. FOR THIS PROPOSITION, THE FOLL OWING DECISIONS ARE RELIED UPON: I) S.R. KOSHTL VS. CIT 193 CTR 518 (GUJ.) II) KRISHAN LAL SHIV CHAND RAI VS. CIT (1973) 88ITR 292 (P&H) IIII) SATINDER KUMAR VS. CIT (1977) 106 1TR 64 (H.P .) IV) GUJARAT GAS CO. LTD. VS. JCIT (ASST.) 245ITR 84 (GUJ.) V) CITVS.BAKLITE HYLAMLTD.(1992)237 ITR 392(AP) VI) PUSHPAVIHAR VS. ACIT (1994) 48 TTJ 389 (BOM.) VII) AIT VS. MRS. SUSHILADEVI S. AGARWAL (1994) 5 0 ITD 524 (AHD.) VIII) BEEPCHAND & CO, VS. ACIT (1995) 51 TTJ 421 IT IS SUBMITTED THAT IN THE CASE OF THE ASSESSEE, T HERE IS NO EVIDENCE INCRIMINATING OR OTHERWISE IN R ELATION TO THE UNDISCLOSED INVESTMENT IN EXCESS OF THE AMOUNT DISCLOSED IN THE BOOKS OF ACCOUNTS AND AS OFFERED B Y ADDITIONAL INCOME IN THE RETURNS OF INCOME FILED AN D, THEREFORE, NO ADDITION CAN BE MADE BEING WITHOUT ANY COGENT BASIS MERELY RELYING ON THE STATEMENT WHICH IS RETRACTED. IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 16 - BESIDES THE ABOVE, REFERENCE MAY-ALSO BE ADE TO THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAULIKUMAR K SHAH 307 ITR 137 WHEREIN THE HON'BLE COURT HELD THAT EVEN IN A C ASE WHERE NOTINGS OF RECEIPT OF ON-MONEY ARE FOUND TO BE RECO RDED IN THE SEIZED MATERIAL AND WHERE THE ASSESSEE DENIES OF HAVING RECEIVED SUCH ON-MONEY, THE ADDITION COUL D NOT BE MADE UNLESS CORROBORATED BY OBTAINING STATEMENTS OR CONFIRMATIONS FROM THE PARTIES WHO-HA VE ALLEGEDLY PAID THE SAME TO THE ASSESSEE. THUS, IN ABSENCE OF ANY MATERIAL TO CORROBORATE THE INVESTMENT IN THE CONSTRUCTION AS ALLEGED MERELY O N THE BASIS OF STATEMENT WHICH NO LONGER EXISTS, THE ADDI TION AS PROPOSED IS UNJUSTIFIED AND ILLEGAL AND IT IS SUBMITTED THAT SAME MAY BE REFRAINED' APPLYING THE ABOVE PRINCIPLE TO THE APPELLANT'S FAC T, IT WOULD BE EVIDENT THAT THE ADDITION MADE BY TH E LD. AO. ON ACCOUNT OF INVESTMENT IN CONSTRUCTION OF THE BUNGAL OW AS WELL AS THE ALLEGED EXPENDITURE IN HOUSEHOLD ARTICLES AMOUNTING TO RS. 60.62 LAKHS HAS NO BASIS IN FACTS AND THEREFORE, THE ENTIRE ADDITI ON DESERVES TO BE DELETED AS PRAYED.' 21. LD.CIT(A) HAS DECIDED THIS ISSUE AS PER PARA-19 TO 22.1 ON PAGES 23 TO 29 OF HIS ORDER AND HE HAS CONFIRMED AN ADDITION OF RS.15 LACS OUT OF TOTAL AD DITION OF RS.60,62,601/- MADE BY THE AO IN RESPECT OF VARIOUS HOUSEHOLD MOVABLE ITEMS AND DELETED THE BAL ANCE ADDITION MADE BY THE AO. WE REPRODUCE THE RELEVANT PARAGRAPHS OF THE ORDER OF LD. CIT (A):- 19. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND HAVE GONE THROUGH THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER. I HAVE ALSO GONE THROUGH THE VARIOUS JUDICIAL DECIS IONS RELIED UPON BY THE APPELLANT AND THE RELATED PROVIS IONS OF THE ACT. 19.1 IT IS AN UNDISPUTED FACT THAT THE APPELLANT DURING THE COURSE OF SEARCH PROCEEDINGS REPEATEDLY MADE THE ADMISSION U/S 132(4) OF THE IT ACT CONFIRMING THE F ACT THAT HE HAS INCURRED EXPENDITURE OF RS.1,50,00, 000/- OUT OF HIS UNDISCLOSED INCOME IN THE CONSTRUCTION OF B UNGALOW NO.4 'JANOD', AMRAKUNJ SOCIETY AND ACCORDIN GLY HE HAS DISCLOSED UNEXPLAINED INVESTMENT OF RS.1,50 ,00,000/- IN THE CONSTRUCTION OF BUNGALOW AS HIS UNACCOUNTED INCOME. THE RELEVANT STATEMENT HAS ALR EADY BEEN REPRODUCED BY THE APPELLANT IN HIS SUBMIS SION AND, THEREFORE, THE SAME IS NOT REPEATED FOR THE SA KE OF BREVITY. 19.2 SUBSEQUENTLY, THE APPELLANT HAS GOT THE CONSTR UCTION OF BUNGALOW DULY ESTIMATED BY THE PRIVATE REGISTERED VALUER. THE REPORT OF THE REGISTERED VAL UER IS ON RECORD. AS PER REGISTERED VALUER'S REPORT , THE TOTAL ESTIMATED COST OF CONSTRUCTION OF THE BUNGALOW IS A T RS. 1,36,00,000/-. THE COST OF CONSTRUCTION OF TH IS BUNGALOW HAS BEEN SHOWN AS PER THE BOOKS OF ACCOUNT S OF APPE1LANT AND HIS WIFE AT RS.96,47,566/-. THEREAFTER, THE APPELLANT HAS DISCLOSED RS.38,30,00 0/- IN THE RETURN OF INCOME FOR AY 2010-11 ON ACCOU NT OF UNDISCLOSED INVESTMENT IN THE CONSTRUCTION OF BUNGALOW. THUS, A S AGAINST THE DISCLOSURE OF UNDISCLOSED INVESTMENT OF RS.1,50,00,000/- MADE DURING THE COUR SE OF SEARCH PROCEEDINGS AS PER STATEMENT RECORDED U/S 132(4) OF THE ACT, ONLY RS.38,30,000/- HAS BEEN DIS CLOSED BY THE APPELLANT IN THE RETURN OF INCOME. 19.3 FOR ESTIMATING THE FAIR COST OF CONSTRUCTION, THE AO HAS ALSO REFERRED THE MATTER TO THE DVO U/S 142A OF THE ACT. THE DVO HAS ESTIMATED THE FAIR COST OF CON STRUCTION OF BUNGALOW AT RS. 1,24,22,644/-. THEREFO RE, THE COST OF CONSTRUCTION AS PER DVO AS WELL AS PRIVATE REGISTERED VALUER IS ALMOST THE SAME. THE AO HAS RE LIED ON THE DVO'S REPORT AND MADE ADDITION AMOUNTING TO RS, 1,71,344/-, RS.11,06,928/- AND RS.14,90,927/- IN A YS 2008-09, 2009-10 & 2010-11 RESPECTIVELY. THE TOTAL ADDITION MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CONSTRUCTION OF BUNGALOW FOR ALL THE ASSESSMENT YEARS IS RS.27,69,199/-. 19.4 FURTHER, THE VALUATION OF LAND FOR THE CONST RUCTION OF BUNGALOW WAS ALSO REFERRED TO THE DVO U/ S 142A OF THE ACT. THE DVO HAS, ON THE BASIS OF OTHER SALE INSTANCES, VALUED THE COST OF LAND AT RS.65,38,200 /- AS AGAINST RS.42,00,000/- SHOWN AS PER THE BOOKS OF AC COUNTS OF THE APPELLANT AND HIS WIFE. THE AO HAS MA DE THE ADDITION OF THE DIFFERENCE OF RS.23,38,200/- ON ACC OUNT OF UNDISCLOSED INVESTMENT IN PURCHASE OF LAND FOR THE CONSTRUCTION OF BUNGALOW FOR AY 2008-09, THE YEAR I N WHICH THE LAND WAS PURCHASED. 19.5 CONSIDERING THE ABOVE AS WELL AS THE ADMISSION OF THE APPELLANT REGARDING THE UNDISCLOSED INVESTM ENT IN CONSTRUCTION OF BUNGALOW AMOUNT TO RS.1,50,00,000/- , THE TOTAL ADDITION MADE BY THE AO COMES TO THE IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 17 - ADMITTED AMOUNT OF UNDISCLOSED INVESTMENT IN CONSTR UCTION OF BUNGALOW OF RS.1,50,00,000/-. THE SAME IS TABULATED AS UNDER: (A)ADDITION MADE BY THE AO ON ACCOUNT OF UNDISCLOSE D INVESTMENT IN (RS.) THE CONSTRUCTION OF BUNGALOW AY AMOUNT (RS.) 2008-09 171344 2009-10 1106928 2010-11 1490927 2769199 27,69,199 (B) ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT I N PURCHASE OF LAND 23,38,200 FOR AY 2008-09 (C) ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVEST MENT IN HOUSEHOLD LUXURIOUS ITEMS 60,62, 601 (D) DISCLOSURE MADE BY THE ASSESSEE IN AY 2010-11 BEING THE DIFFERENCE OF VALUATION OF COST OF B UNGALOW BY THE REGISTERED VALUER AND AS PER BOOKS OF A/CS 38,30,000 TOTAL 150,00,000 19.6 SECTION 142A PRESCRIBES THAT FOR MAKING AN AS SESSMENT OR RE-ASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTIONS 69 OF 69A OR 69B IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND REPORT THE S AME TO THE A.O. FURTHER IN TERMS OF SECTION 142A(3) OF TH E ACT, THE VALUATION REPORT HAS TO BE USED BY THE A O FOR MAKING ASSESSMENT OR RE-ASSESSMENT. 19.7 IT IS AN UNDISPUTED FACT THAT DURING THE COURS E OF SEARCH PROCEEDINGS, LOOSE BUNCH OF PAPERS WAS FOUND AS PER ANNEXURE A-2 HAVING PAGES 1 TO 100 CONTAINING D ETAILS OF EXPENDITURE RELATING TO PAINTING AND POLI SHING WORK ETC. CARRIED OUT IN THE RESIDENTIAL BUNGALOW O F THE APPELLANT. ON PERUSAL OF THE RELEVANT PAPERS OF THE SEIZED ANNEXURE, IT IS NOTED THAT THE TOTAL EXPENDI TURE OF PAINTING AND POLISHING OF BUNGALOW AS MENTI ONED ON PAGE 94 AS ON 12-10-2009 AMOUNTS TO RS. 13,73,110/- . THE ABOVE EXPENDITURE HAS NOT BEEN RECORDED IN TH E BOOKS OF ACCOUNT OF THE ASSESSEE. IN VIEW OF THE AB OVE DEFECTS AS WELL AS THE FACT OF DISCLOSURE OF UN DISCLOSED INVESTMENT OF RS. 1,50,00,000/- IN THE CONSTRUCTION OF BUNGALOW, THE AO HAS MADE A REFERENCE TO THE VALUATION OFFICER U/S 142A OF THE IT ACT FOR THE PU RPOSE OF MAKING ESTIMATION OF COST OF CONSTRUCTION OF RESIDENTIAL HOUSE WHICH IS PERFECTLY JUSTIFIED, SIN CE THE ABOVE DEFECTS CLEARLY SUGGEST THAT THE BOOKS OF ACCOUNT MAINTAINED IN THIS REGARD CANNOT BE RELIED UPON. 19.8 SO FAR AS ADDITION ON ACCOUNT OF UNEXPLAINED I NVESTMENT MADE IN THE CONSTRUCTION OF HOUSE ON THE BASIS OF VALUATION REPORT IS CONCERNED, IN THE CASE OF AM IT ESTATE ORGANISER [2008] 113 ITD 255 (AHD) (TM), IT HAS BEEN HELD THAT FOR MAKING ADDITION, THE DEPARTMENT CANNOT MAKE SOLE RELIANCE ON DVO'S REPORT AND MAKE ADDITION OF THE ENTIRE DIFFERENCE. IT IS NOT SACROS ANCT BUT AN ESTIMATE BY A TECHNICAL PERSON AND IS T AKEN IN ADVISORY CAPACITY. ON PERUSAL OF THE VALUATION REPO RT OF THE DVO AS WELL AS PRIVATE REGISTERED VALUER, IT IS NOTED THAT THERE IS HARDLY ANY SUBSTANTIAL DIFFEREN CE BETWEEN THESE TWO REPORTS. THE COST OF CONSTRUCT ION ESTIMATED BY THE PRIVATE REGISTERED VALUER IS AT RS .1,36,00,000/- WHEREAS IN THE CASE OF THE DVO THE E STIMATED COST OF CONSTRUCTION IS RS. 1,24,22,644/-. ON COMPA RISON OF THE REPORT, IT IS NOTED THAT THE PRIVATE R EGISTERED VALUER'S REPORT OF ESTIMATED COST OF CONSTRUCTION A LSO INCLUDES THE COST OF AIR CONDITIONERS, ELECTRIC AL FIXTURE, MOVABLE FURNITURE ETC. AMOUNTING TO RS.8,50,000/- A S WELL AS BATHROOM FITTINGS AMOUNTING TO RS.5,00,00 0/-. THE REPORT OF THE DVO CLEARLY SPECIFIES THAT THE ES TIMATED COST OF CONSTRUCTION DOES NOT INCLUDE THE C OST OF AC, MOVABLE ITEMS I.E. ELECTRICAL, KITCHEN AND GYM EQUI PMENTS. CONSIDERING THE ABOVE, THERE IS HARDLY ANY DIFFEREN CE IN THE TWO ESTIMATED VALUES OF CONSTRUCTION OF THE BUNGALOW. 19.9 THE APPELLANT HAS ALREADY DISCLOSED THE ADDITI ONAL AMOUNT OF RS.38,30,000/- ON THE BASIS OF PRIVA TE REGISTERED VALUER'S REPORT INCLUDING THE SAME IN TH E COST OF CONSTRUCTION SHOWN BY THE APPELLANT COMES TO RS.1,34,77,566/-. IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 18 - 19.10 THERE ARE A NUMBER OF DECISIONS AS RELIED UPO N BY THE APPELLANT WHEREBY IN CASE OF DIFFERENCE, I N VALUATION MADE BY THE VALUATION OFFICER AND VALUE A S DISCLOSED BY THE ASSESSEE, OF 10 TO 15% HAS BEEN IGNORED AND NO ADDITION HAS BEEN CALLED FOR. THE DI FFERENCE UPTO 15% MAY, THEREFORE, BE ATTRIBUTED TO BONAFIDE ERROR OF ESTIMATION MADE BY THE EXPERT PAR TICULARLY WHEN ESTIMATION HAS BEEN MADE ON THE BASI S OF PLINTH AREA METHOD AND IN A BEST JUDGMENT MANNER. I N THE CASE OF MAHAVIR BUILDERS [20031131 TAXMAN 442 (GUJ.), THE DIFFERENCE OF 15% HAS BEEN ACCEPTED WIT HOUT MAKING ANY ADDITION. IN VIEW OF THIS, NO ADDIT ION CAN BE MADE ON ACCOUNT OF SOLE RELIANCE ON THE VALUE RE PORTED BY THE VALUATION OFFICER WITH REFERENCE TO T HE VALUE OF COST OF CONSTRUCTION. IN THE PRESENT CASE, INCLU DING THE DISCLOSED AMOUNT OF RS.38,30,000/- BY THE APPELLANT ON ACCOUNT OF COST OF CONSTRUCTION, THE TOTAL VALUE SHOWN BY THE APPELLANT FOR COST OF CONSTRUCTION OF BUNGALOW COMES TO RS.1,34,77,566/-. HOWEVER, ADDITION ON ACC OUNT OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF THE HOUSE CAN ALWAYS BE MADE WITH REFERENCE TO THE SPEC IFIC DEFECTS AS POINTED OUT BY THE AO IN RESPECT OF CONSTRUCTION A/C WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT AS HAS BEEN HELD BY THE HON'BLE I TAT IN THE CASE OF AMIT ESTATE ORGANISER [2008] 113 ITD 25 5 (AHD) (TM). 19.11 SO FAR AS THE SPECIFIC DEFECTS IN THE BOOKS O F ACCOUNTS REGARDING COST OF CONSTRUCTION OF BUNGAL OW IS CONCERNED, THE ONLY EVIDENCE ON RECORD IS REGARDING THE PAINTING AND POLISHING EXPENSES OF THE-BUNGALO W AMOUNTING TO' RS. 13,73,110/-. THE SAID AMOUNT HAS ALREADY BEEN TAKEN CARE OF BY THE VALUER PARTICULAR LY PRIVATE REGISTERED VALUER IN HIS REPORT AND THE SAM E IS CLAIMED TO BE INCLUDED IN DISCLOSURE OF RS.38, 30,000/-. 19.12 IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINION THAT NO ADDITION IS CALLED FOR ON ACCOUNT O F SOLE RELIANCE ON THE DVO'S REPORT AS HAS BEEN MADE BY TH E AO SINCE THE VALUE OF COST OF CONSTRUCTION AS DETERMINED BY THE DVO IS ALMOST THE SAME AS HAS BEE N SHOWN BY THE APPELLANT INCLUDING DISCLOSED AMOUNT OF RS.38,30,000/-. IN VIEW OF THE ABOVE, I DO NOT FIND ANY REASON FOR ADDITION TO BE MADE ON ACCOUNT OF D VO'S REPORT WHEN THERE IS HARDLY ANY DIFFERENCE IN THE C OST OF CONSTRUCTION AS SHOWN-BY THE APPELLANT AND T HE DVO'S REPORT. ACCORDINGLY ADDITION MADE BY THE AO OF RS. 1.71.344/-, RS.11,06,928/- AND RS.14,90,927/ - FOR AYS 2008-09, 2009-10 & 2010-11 RESPECTIVELY IS DELETED SINCE THERE IS NO JUSTIFICATION IN MAKING A NY SUCH ADDITION. THIS GROUND OF APPEAL IS, ACCORDINGLY, AL LOWED FOR THE ABOVE YEARS, 20. SO FAR AS THE ADDITION OF RS. RS.60,62,601/- FO R AY 2010-11 ON ACCOUNT OF PURCHASE OF VARIOUS : HOUSEHOLD- MOVABLE ITEMS INCLUDING GYM & KITCHEN EQUIPMENTS IS CONCERNED, IT IS ALREADY NOTED THAT THE PRIVATE REGISTERED VALUER HAS ALREADY TAKEN INTO ACCOUNT TH E COST OF A.CS., MOVABLE FURNITURE, ELECTRICAL FIXT URES ETC. AMOUNTING TO RS.8,50,000/- AND BATHROOM FITTINGS AM OUNTING TO RS.5,00,000/- IN HIS REPORT. THE ITEMS W HICH ARE LEFT OUT WHICH HAVE NOT BEEN ACCOUNTED FOR ARE GYM EQUIPMENTS, KITCHEN EQUIPMENTS, 4 LCD TVS, 1 TV AND 1 REFRIGERATOR. THE GYM AND KITCHEN EQUIPMENTS HAVE NOT BEEN INVENTORIZED DURING THE COURSE OF SEA RCH PROCEEDINGS. THE REPORT OF THE DVO CERTIFYING THAT THE MOVABLE ITEMS I.E. ELECTRIC AND KITCHEN & GYM EQUIPMENTS HAVE NOT BEEN INCLUDED IN THE ESTIMATE O F COST OF CONSTRUCTION CLEARLY ESTABLISH THE EXISTE NCE OF SUCH GYM / KITCHEN EQUIPMENTS. IT IS FURTHER NOTED THAT THE GYM IS FITTED WITH 1.5 TON AIR CONDITIONER AS PER INVENTORY MADE DURING THE SEARCH PROCEEDINGS. THE R EPORT OF THE DVO AS WELL AS THE PRIVATE REGISTERED VALUER HAS NOT TAKEN INTO ACCOUNT THE COST OF THE ABOVE HO USEHOLD LUXURIOUS ITEMS. CONSIDERING THE ABOVE, THE COST OF SUCH EQUIPMENTS IS ESTIMATED AT RS,15,00,000/- WHIC H IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. ACCORDI NGLY OUT OF TOTAL ADDITION OF RS.60,62,601/- MADE BY THE AO, ADDITION OF RS.15,00,000/- IS CONFIRMED AND TH E BALANCE ADDITION IS DELETED. THIS GROUND OF APPEAL FOR. AY 2010-11 IS PARTLY ALLOWED. 21. SO FAR AS THE ADDITION MADE FOR AY 2008-09 ON A CCOUNT OF UNDISCLOSED INVESTMENT IN THE PURCHASE OF LAND FOR CONSTRUCTION OF BUNGALOW AMOUNTING TO RS.23,38, 200/- IS CONCERNED, IT IS NOTED THAT THE AO HAS MAD E THE ADDITION ON THE BASIS OF DVO'S REPORT. THE DVO HAS ESTIMATED THE COST OF LAND AT RS.65,38,200/- AS AGA INST RECORDED VALUE OF RS.42,00,000/- IN THE BOOKS OF TH E APPELLANT. 21.1 IT IS AN ADMITTED FACT THAT THERE WAS NO ADMIS SION IN RESPECT OF UNDISCLOSED INVESTMENT IN PURCHA SE OF LAND. THE DISCLOSURE WAS MADE BY THE APPELLANT ONLY IN RESPECT OF CONSTRUCTION OF BUNGALOW. NO ADVERSE MATERIAL /DOCUMENT HAS BEEN FOUND DURING THE COURSE OF SEARCH PROCEEDINGS INDICATING THAT THE INVESTME NT IN LAND IS MORE THAN WHAT HAS BEEN RECORDED IN THE BOO KS OF ACCOUNT. THE ONLY DEFECT WITH RESPECT TO THE PURCHASE OF LAND AS HAS BEEN POINTED OUT BY THE AO IS IN RESPECT OF EXPENDITURE INCURRED ON ACCOUNT OF STAMP DUTY, ADDITIONAL STAMP DUTY, REGISTRATION FEES ETC. AMOUNTING TO RS.1,25,050/-. THE SAME HAS NOT BEEN IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 19 - ACCOUNTED FOR BY THE APPELLANT FOR WHICH SEPARATE A DDITION HAS ALREADY BEEN MADE. THERE IS NO OTHER EVIDENCE POINTING OUT THE FACT THAT THE LAND HAS BEEN PURCHA SED AT HIGHER PRICE THAN THE DOCUMENTED AMOUNT. 21.2 THERE IS NO DISPUTE TO THE WELT-SETTLED LEGAL PROPOSITION THAT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF VALUATION REPORT, WHICH IS JUST AN ESTIMATE PREP ARED BY A TECHNICAL PERSON. WHENEVER THE AO WANTS T O ADOPT THE VALUATION AS MADE BY THE DVO, HE IS FIRST OF ALT REQUIRED TO POINT OUT THE DEFECTS IN THE AC COUNTS MAINTAINED BY THE ASSESSES OR TO INDICATE THAT COST SHOWN IN THE BOOKS OF ACCOUNT IS NOT CORRECT. 21.3 IN THE PRESENT CASE, THE AO HAS NOT POINTED OU T ANY DEFECT IN THE BOOKS OF ACCOUNT BASED ON WHICH REFERENCE U/S 142A CAN BE JUSTIFIED SO FAR AS COST OF LAND IS CONCERNED. THERE IS NOTHING ON RECORD TO SUGGEST THAT THERE IS ANY DEFECT IN THE BOOKS OF ACCOUNT MA INTAINED BY THE APPELLANT FIRM SO AS TO CONCLUDE TH AT BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT FIRM CANNOT BE RELIED UPON SO FAR AS THE PURCHASE PRICE OF LAND IS CONCERNED. 21.4 IN THE PRESENT CASE, THE AO HAS MADE THE ADDIT ION MAINLY ON THE BASIS OF VALUATION REPORT MADE BY THE DVO. THERE IS NOT A SINGLE STANCE TO SHOW THAT THE APPELLANT HAD ACTUALLY INCURRED THE EXPENDITURE THA T WAS MORE THAN THAT RECORDED IN THE BOOKS OF ACCOUNT. TH ERE IS NO REFERENCE TO ANY SUCH EVIDENCE FOUND EVEN DURING THE COURSE OF SEARCH PROCEEDINGS. 21.5 CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT S O FAR AS THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT M ADE IN THE PURCHASE OF LAND ON THE BASIS OF VALUATI ON REPORT IS CONCERNED, NO SOLE RELIANCE ON THE DVO'S REPORT CAN BE MADE FOR THE PURPOSE OF MAKING ADDITI ON OF ENTIRE DIFFERENCE. IN VIEW OF THE ABOVE, THE ADDIT ION MADE BY THE AO AS UNDISCLOSED INVESTMENT OF RS.23,38,200/- IN PURCHASE OF LAND ON THE BASIS OF DVO'S REPORT IS DELETED. THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 22. SO FAR AS RETRACTION OF THE STATEMENT OF THE AP PELLANT REGARDING UNDISCLOSED INVESTMENT OF RS. 1,5 0,00,000/- IN THE CONSTRUCTION OF BUNGALOW IS CONCERNED, IT IS A SETTLED PROPOSITION IN LAW THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE THOUGH IT IS NOT CONCLUSIVE. IN THIS CASE THE DISCLOSURE OF UNEX PLAINED INVESTMENT OF RS. 1,50,00,000/- IN THE CONSTRUCTION OF BUNGALOW IS NOT SUPPORTED TO THAT EXTENT BY ANY ADVERSE EVIDENCE COVERED DURING THE COURSE OF SEARCH PROCEE DINGS. THERE IS A CONCURRENT FINDING OF TWO INDEPEN DENT VALUERS ESTIMATING THE COST OF CONSTRUCTION ALMOST AT THE SAME FIGURER. THE APPELLANT HAS ALREADY DI SCLOSED THE ADDITIONAL AMOUNT OF RS,38,30,000/- TO MATCH UP THE ADDITIONAL COST OF CONSTRUCTION AS REPORTED B Y THE VALUERS. 22.1 IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED O PINION THAT THERE IS NOT ENOUGH MATERIAL ON RECORD TO JUSTIFY THE ENTIRE ADDITION OF RS.1,50,00,000/- IN RESPECT OF THE CONSTRUCTION OF THE BUNGALOW AS WAS ADMITTED BY THE APPELLANT DURING THE SEARCH PROCEEDINGS. IN VIEW OF . THE ABOVE, NO ADDITION CAN BE MADE IN RESPECT OF DISCLOSURE MADE BY THE APPELLANT AS PER THE STATEME NT RECORDED IN THE SEARCH PROCEEDINGS UNLESS THE SA ME IS BACKED UP BY ADVERSE EVIDENCE COLLECTED DURING THE COURSE OF SEARCH PROCEEDINGS. THE CRUX OF ALL THE J UDICIAL DECISIONS RELIED UPON BY THE APPELLANT AS WELL AS T HE AO IS THAT MERELY ON THE BASIS OF ADMISSION IN T HE STATEMENT RECORDED U/S 132(4), NO ADDITION CAN BE M ADE UNLESS SOME CORROBORATIVE EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. 22. NOW, ASSESSEE IS IN APPEAL FOR THE PART ADDITIO N CONFIRMED BY THE LD.CIT(A) OF RS.15 LACS AND REVENUE IS IN APPEAL FOR THE BALANCE ADDITION DELET ED BY THE CIT(A). 22.1. LD.DR HAS SUPPORTED THE ASSESSMENT ORDER, WHE REAS AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT (A) IN RESPECT OF VARIOUS ADDITIONS DELETED BY HIM AND REGARDING THE ADDITION CONFIRMED BY HIM OF RS.15 LACS, IT WAS SUBMITTED THAT THE SAME IS NOT J USTIFIED BECAUSE REGISTERED VALUER HAS ALREADY TAKE N INTO ACCOUNT THE EXPENDITURE INCURRED BY THE ASSESSEE FO R VARIOUS MOVEABLE HOUSEHOLD ITEMS OF RS.8.50 LACS AND RS.5 LACS IN RESPECT OF BATH-ROOM FITTINGS. HE SUB MITTED THAT IN THE FACTS OF THE PRESENT CASE, THIS ADDITION OF RS.15 LACS CONFIRMED BY THE LD.CIT (A) SHOULD ALSO BE DELETED. IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 20 - 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE HAD DISCLOSED AN AMOUNT OF R S.150 LACS REGARDING UNDISCLOSED INVESTMENT IN CONSTRUCTION OF BUNGALOW. SUBSEQUENTLY, THE ASSESS EE OBTAINED VALUATION REPORT FROM A REGISTERED VALU ER WHICH SHOWN VALUE OF RS.136 LACS ON ACCOUNT OF COST OF CONSTRUCTION. THIS VALUE AS PER THE REPORT OF REGISTERED VALUER INCLUDED RS.8.50 LACS ON ACCOUNT OF VARIOUS MOVABLE ASSETS SUCH AS, ACS, FURNITURE, ELECTRICAL FIXTURES, ETC. AND RS.5 LACS ON ACCOUNT OF BATH-ROOM FITTINGS. THE AO HAS ALSO OBTAINED DV OS REPORT REGARDING EXPENSES OF CONSTRUCTION AND AS PE R DVOS REPORT, THE ESTIMATED COST OF CONSTRUCTION WAS WORKED OUT AT RS.1,24,22,644/-. IT IS CLEARLY NOTED BY THE DVO IN HIS REPORT THAT THIS ESTIMATE MADE BY HIM DOES NOT INCLUDE THE COST OF MOVABLE HOUSEHOLD FURN ITURE AND BATH-ROOM FITTINGS. HENCE, IT IS NOTED B Y THE LD.CIT(A) THAT IF THIS ESTIMATED COST OF RS.8.5 LAC S AND 5 LACS TOTALING TO RS.13.5 LACS IS ADDED IN T HE ESTIMATED COST OF CONSTRUCTION AS PER DVOS REPORT IT WILL AM OUNT TO RS.137.72 LACS AS AGAINST RS.136 LACS AS PE R REGISTERED VALUERS REPORT AND BOTH ARE NOT HAVING ANY SIGNIFICANT DIFFERENCE. ON THIS BASIS, IT WAS HELD BY THE CIT(A) THAT NO ADDITION IS CALLED FOR ON THE BASIS OF SOLE RELIANCE ON THE DVOS REPORT AS HAS BEEN MA DE BY THE AO SINCE THE VALUE OF CONSTRUCTION AS DETERMINED BY THE DVO IS ALMOST THE SAME AS HAS BEEN SHOWN BY TH E ASSESSEE INCLUDING DISCLOSED AMOUNT OF RS.38.30 LAC S. ON THIS BASIS, HE DELETED THE ADDITION OF RS.1, 71,344, RS.11,06,928/- AND RS.14,90,927/- IN AYS 2008-09, 2 009-10 & 2010-11 RESPECTIVELY AND AFTER CONSIDERING ALL THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CIT(A) REGARDING HIS ORDER FOR DELETION OF THESE ADDITIONS MADE BY THE AO. 23.1. REGARDING THE ADDITION MADE BY THE AO OF RS.2 3,28,200/- IN RESPECT OF UNEXPLAINED INVESTMENT IN LAND, IT WAS HELD BY THE LD.CIT(A) THAT THE AO HAS MADE THIS ADDITION ON THE BASIS OF DVOS REPORT WHO ESTIMATED THE COST OF LAND OF RS.65,38,200/- AS AGA INST RECORDED VALUE OF RS.42 LACS IN THE BOOKS OF T HE ASSESSEE. HE ALSO STATED IN PARA 21.1 OF HIS ORDER THAT IT IS AN IDENTIFIED FACT THAT THERE WAS NO AD MISSION IN RESPECT OF UNDISCLOSED INVESTMENT IN PURCHASE OF LA ND. HE HAS ALSO NOTED THAT THE DISCLOSURE WAS MADE BY THE ASSESSEE ONLY IN RESPECT OF CONSTRUCTION OF BUNGALO W. HE HAS ALSO GIVEN A FINDING THAT NO ADVERSE MATERIAL/DOCUMENT HAS BEEN FOUND DURING THE COURSE OF SEARCH PROCEEDINGS INDICATING THAT THE INVESTMEN T IN LAND IS MORE THAN WHAT HAS BEEN RECORDED IN THE BOO KS OF ACCOUNTS. HE HAS ALSO NOTED THAT THE ONLY DE FECT REGARDING PURCHASE OF LAND AS HAS BEEN POINTED OUT BY THE AO IS IN RESPECT OF EXPENDITURE INCURRED ON ACCOUNT OF STAMP DUTY BEING ADDITIONAL STAMP DUTY, REGISTRA TION FEE, ETC. OF RS.1,25,050/- BECAUSE THE SAME HA S NOT BEEN ACCOUNTED FOR BY THE ASSESSEE FOR WHICH SEPARA TE ADDITION HAS ALREADY BEEN MADE. HE HAS GIVEN A FINDING THAT THERE IS NO OTHER EVIDENCE FOUND POINTING OUT THE FACT THAT THE LAND HAS BEEN PURCHASED ON HIGHER PRICE THAN THE DOCUMENTED AMOUNT. BEFORE US, IT WAS THE ONLY ARGUMENT OF THE DEPARTMENTAL REPRESENTATIVE TH AT THE DISCLOSURE IS FINAL UNLESS THE SAME IS REBUTTED BY THE ASSESSEE BY BRINGING COGENT EVIDENCE ON RECORD. IN SUPPORT OF HIS ARGUMENT, RELIANCE WAS PLACED ON JU DGMENT OF HONBLE KERALA HIGH COURT RENDERED IN THE CASE IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 21 - OF CIT VS. O.ABDUL RAZAK REPORTED AS (2012)20 TAXMA NN.COM 48(KER.) AND ON A DECISION OF ITAT AHMEDABAD BENCH RENDERED IN THE CASE OF KANTILAL C. SHAH VS. ASST.CIT REPORTED AS (2011) 14 TAXAMANN.COM 108 (AHD.). SO FAR THE RELIANCE OF TH E REVENUE ON THESE TWO JUDGMENTS IS CONCERNED, WE F IND THAT A CLEAR FINDING IS GIVEN BY LD.CIT (A) THAT TH E DISCLOSED AMOUNT OF RS.150 LACS BY THE ASSESSEE W AS NOT CONTAINING IN ITS DISCLOSURE ANY AMOUNT ON ACCOUNT OF UNDISCLOSED INVESTMENT IN LAND AND, HENCE, FOR T HIS ASPECT, THESE TWO JUDGMENTS ARE NOT OF ANY HELP OF THE REVENUE. CONSIDERING ALL THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CIT(A) REGARDING HIS ORDER FOR DELETION OF THE ADDITION MA DE BY THE AO IN RESPECT OF UNDISCLOSED INVESTMENT IN PURCHASE OF LAND OF RS.23,28,200/-. 24. REGARDING DELETION OF ADDITION MADE BY THE LD.C IT(A) IN RESPECT OF ADDITION ON ACCOUNT OF INVESTME NT IN CONSTRUCTION OF THE RESIDENTIAL HOUSE, WE FIND T HAT IN RESPECT OF THIS ITEM, I.E. COST OF CONSTRUCT ION OF RESIDENTIAL HOUSE, THE ASSESSEE HAS BROUGHT COGENT EVIDENCE ON RECORD IN THE FORM OF BOOKS OF ACCOUNTS SUPPORTED BY REGISTERED VALUERS REPORT AND A CLEAR FINDING IS GIVEN BY LD.CIT(A) THAT EVEN THE DVOS REPORT IS ALSO IN LINE WITH THE REPORT OF REGISTER VALUER AND, THEREFORE, NO SUCH ADDITION IS CALLED FOR EVEN AS PER DVOS REPORT AND THEREFORE, IN THE FACTS OF THE PRE SENT CASE, THESE TWO JUDGMENTS CITED BY LD.DR ARE N OT RENDERING ANY HELP OF THE REVENUE WITH REGARD TO TH E ADDITION DELETED BY LD.CIT(A) IN RESPECT OF INVES TMENT IN CONSTRUCTION OF RESIDENTIAL HOUSE. REGARDING THE A DDITION MADE BY THE AO OF RS.60,62,601/- IN RESPECT OF ALLEGED INVESTMENT IN HOUSEHOLD ITEMS, WE FIND THAT IN SPITE OF THIS FACT THAT A LIST WAS PREPARED BY THE SEARCH TEAM IN RESPECT OF VARIOUS SUCH HOUSEHOLD ITEMS FOU ND AT THE TIME OF SEARCH, THE AO HAD NOT WORKED OUT ANY VALUE THEREOF AND HE HAS MADE ADDITION OF THE BALAN CE AMOUNT OUT OF RS.150 LACS BEING THE AMOUNT OF DISCLOSURE MADE BY THE ASSESSEE LESS AMOUNT OF ADDI TION MADE BY THE AO IN RESPECT OF INVESTMENT IN LAN D AND INVESTMENT IN CONSTRUCTION OF THE RESIDENTIAL HOUSE . SUCH ADDITION WHICH IS PURELY ON THE BASIS OF A SSESSEES OWN STATEMENT ONLY IS NOT SUSTAINABLE IN THE FACTS OF THE PRESENT CASE, WHERE THE ASSESSEE HAS MADE TH E DISCLOSURE OF RS.150 LACS MAINLY IN RESPECT OF UNDI SCLOSED INVESTMENT IN CONSTRUCTION OF HOUSE AND THE SAME IS REBUTTED BY THE ASSESSEE ON THE BASIS OF BOOKS OF A CCOUNTS AND ON THE BASIS OF REGISTERED VALUERS REP ORT AND DVOS REPORT OBTAINED BY THE AO WHICH ALSO IS SUPPO RTING THE CLAIM OF THE ASSESSEE REGARDING COST OF CONSTRUCTION. REGARDING UNEXPLAINED INVESTMENT IN HOUSEHOLD ITEMS, THE REGISTERED VALUER HAS ALREADY INCLUDED RS.8.50 LACS FOR FURNITURE AND RS.5 LACS F OR BATH-ROOM FITTINGS, BUT HE HAS NOT INCLUDED ANY AMOUNT IN RESPECT OF VARIOUS EQUIPMENTS IN THE GYM AND THE AM OUNT INCLUDED BY HIM IN RESPECT OF BATHROOM FITTING S IS ALSO INADEQUATE IN OUR CONSIDERED OPINION BECAUSE IT IS AN ADMITTED POSITION THAT THERE WAS JACUZZI A LSO AND THE FITTINGS WERE ALSO EXPENSIVE FITTINGS AND ASSES SEE HAD NOT PROVIDED ANY DETAILS OF SUCH BATHROOM F ITTINGS AND HOUSEHOLD ITEMS. CIT (A) HAS ALREADY CONFIRMED AN ADDITION OF RS.15 LACS IN RESPECT OF HOUSEHOLD ITEMS, BATHROOM FITTINGS AND GYM EQUIPMENTS AND IN OUR CON SIDERED OPINION THIS ADDITION OF RS.15 LACS CONFIRM ED BY LD.CIT (A) IS REASONABLE IN THE FACTS OF THE PRESEN T CASE AND HENCE NO INTERFERENCE IS CALLED IN HIS O RDER FOR THIS IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 22 - ENTIRE ISSUE. ACCORDINGLY, GROUND NO.1 OF ASSESS EES APPEAL IS REJECTED AND GROUNDS OF APPEAL OF TH E REVENUE BEING GROUND NO.1 & 2 IN AY 2008-09, GROUND NO.2 IN AY 2009-10 AND GROUND NOS.1 & 2 IN AY 2010-11 ARE ALSO REJECTED. IN THE RESULT, THE APPE AL OF THE ASSESSEE FOR AY 2010-11 IS ALSO DISMISSED . 25. IN RESPECT OF REVENUES APPEAL FOR AYS 2006-07 TO 2010-11, THERE IS NO MORE GROUND RAISED BY THE REVENUE IN AY 2010-11, BUT IN AYS 2006-07 TO 2009-1 0, THERE IS ONE MORE GROUND RAISED BY THE REVENUE A S PER GROUND NO.3 IN AY 2008-09 AND GROUND NO.1 IN TH E REMAINING THREE YEARS. 25.1. GROUND NO.1 OF REVENUE APPEAL IN AY 2006- 07 IS AS UNDER:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.28,809/- MADE ON ACCOUNT OF DISALLOWANCE U/S.40(A)(IA) OF THE IT ACT . 25.2. IT WAS AGREED BY BOTH THE SIDES THAT THIS ISS UE IS IDENTICAL IN ALL THE FOUR YEARS AND HENCE THE SAME CAN BE DECIDED ON SIMILAR LINE. LD. DR OF THE REVENUE SUBMITTED THAT THIS ISSUE WAS DECIDED BY THE CIT(A ) BY RELYING ON A DECISION OF SPECIAL BENCH OF TRIBUNAL RENDERED IN THE CASE OF M/S.MERILYN SHIPPING & TRA NSPORTS, VISAKHAPATNAM REPORTED IN 136 ITD 23. HE SUBMITT ED THAT AS PER A RECENT JUDGMENT OF HONBLE GUJARAT HIGH COURT, IT WAS HELD THAT THIS DECISION OF SPECIAL BE NCH OF TRIBUNAL RENDERED IN THE CASE OF M/S. MERILY N SHIPPING & TRANSPORTS (SUPRA) IS NOT A GOOD LAW AND THEREFOR E, THIS ISSUE REGARDING DISALLOWANCE U/S.40(A)(IA) HAS TO BE DECIDED ON MERIT. THEREFORE, HE SUBMITTED THAT T HIS ISSUE SHOULD GO BACK TO THE FILE OF LD. CIT (A) FOR A FRESH DECISION IN THE LIGHT OF THE JUDGMENT OF HONBLE GU JARAT HIGH COURT. LD.AR HAS SUPPORTED THE ORDER O F THE LD.CIT (A). 26. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND FORCE IN THE SUBMISSION OF THE LD.DR OF THE REVENUE THAT THIS MATER SHOULD GO BACK TO THE FILE OF CIT(A) FOR A FRESH DECISION IN THE LIGHT OF THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT CITED BY HIM AND ACCO RDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) ON TH IS ISSUE IN ALL THE FOUR YEARS I.E. AY 2006-07 TO AY 2 009-10 AND RESTORE THIS MATTER BACK TO HIS FILE FOR A FRESH DECISION IN THE LIGHT OF THE JUDGMENT OF HONBLE GU JARAT HIGH COURT CITED BY DR OF THE REVENUE AS NOTE D ABOVE. ACCORDINGLY, GROUND NO.3 IN REVENUES APPEA L FOR AY 2008-09 AND GROUND NO.1 IN REVENUES APPEALS FOR AY 2006-07, 2007-08 & 2009-10 ARE ALLOW ED FOR STATISTICAL PURPOSES. 27. IN THE RESULT, FOUR APPEALS OF THE REVENUE FOR AYS 2006-07 TO 2009-10 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES, WHEREAS REVENUES APPEAL FOR AY 2010-11 IS DISMISSED. 28. AS A RESULT, ALL THE SEVEN APPEALS OF THE ASSES SEE AS WELL AS THE APPEAL OF THE REVENUE FOR AY 2010-11 ARE DISMISSED AND REMAINING FOUR APPEALS OF THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- ( D.K. TYAGI ) ( A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 21/ 06 /2013 # . . , . . ./ T.C. NAIR, SR. PS IT(SS)A NOS.17 TO 23/AHD/2013 (BY ASSESSEE) & IT(SS)A NOS.27 TO 31/AHD/2013 (BY REVENUE) SHRI JAYENDRA N.SHAH VS. THE ASST.CIT ASST.YEARS 2004-05 TO 2010-11 - 23 - !' !' !' !' $% $% $% $% &!% &!% &!% &!% / COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. $)'( / THE RESPONDENT. 3. ** + / CONCERNED CIT 4. + ( ) / THE CIT(A)-IV, AHMEDABAD 5. %,- $ , , / DR, ITAT, AHMEDABAD 6. -./ 0 / GUARD FILE. !' !' !' !' / BY ORDER, )% $ //TRUE COPY// 1 11 1 / *2 *2 *2 *2 (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION DATED 29.5.13(DICTATION PAD 48 PAGES ATTACHED WITH FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 31.5.13 & 18/19..06.2013 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 THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 21.6.13 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.6.13 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
Other Referred Cases
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Laws Referred To
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1:1 Consultation on Tax Litigation
₹1
1:1 Consultation on Startup Compliance
₹1
Tax Holiday Secrets for Startups
₹0
Memorandum Amendment Resolution
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Affidavit - Application for condonation of delay in filing the appeal before ITAT - Type 2
Mehul₹0
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