Marwar Hotels Ltd., Ahmedabad V. The Dy.CIT.,Cent.Circle-1(3), Ahmedabad

ITSSA 18/AHD/2008

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8327 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-06-2011
• Assessment Year: misc
• Appeal Filed On: 21-01-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KARTAR SINGH
• Assessee Lawyers: S N SOPARKAR
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Capital asset; Document seized; Block assessment; Documents seized; Revenue expenditure
• Section: 69C; 131; 68; 69; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD (BEFORE SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI, JM) IT (SS) A NO.17/AHD/2008 BLOCK PERIOD: 01-04-1985 TO 31-03-1995 AND UP TO 05 -09-1995 RATHORE LEASING & FINANCE CO. PVT. LTD., AIR PORT CROSS ROAD,HANSOLM AHMEDABAD V/S THE D. C.I. T., CENTRAL CIRCLE- 1(3), AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD PAN NO. NO.AAACF 2642 F (APPELLANT) (RESPONDENT) IT (SS) A NO.18/AHD/2008 BLOCK PERIOD: 01-04-1985 TO 31-03-1995 AND UP TO 05 -09-1995 MARWAR HOTELS LTD., AIRPORT CROSS ROAD, HANSOL, AHMEDABAD V/S THE D. C.I. T., CENTRAL CIRCLE- 1(3), AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD PAN NO. AAACM 8009 N (APPLICANT) (RESPONDENT) FOR ASSESSEE: SHRI S. N. SOPARKAR, AR FOR DEPARTMENT: SHRI KARTAR SINGH, DR O R D E R PER SHRI BHAVNESH SAINI, JM: BOTH THE FIRST APPEALS BY DIFFERENT ASSESSEES ARE DIRECTED AGAINST DIFFERENT ASSESSMENT ORDERS OF DCI T, CENTRAL CIRCLE-1 (3), AHMEDABAD DATED 26 TH DECEMBER, 2007 PASSED UNDER SECTION 158 BC READ WITH SECTION 254 OF THE IT ACT. 2 2. BRIEFLY, THE COMMON FACTS IN BOTH THE APPEALS AR E THAT BOTH THE ASSESSEES FILED THEIR RETURN OF INCOME DIS CLOSING INCOME AT RS. NIL. ORIGINAL ASSESSMENTS WERE FRAMED U/S 158 BC VIDE ORDER DATED 30-09-1996. THE TRIBUNAL SE T ASIDE THE MATTER TO THE FILE OF THE AO. THE ASSESSM ENTS WERE REFRAMED VIDE ORDER DATED 27-03-2002. THE MATT ER AGAIN REACHED BEFORE THE TRIBUNAL. THE ITAT DECIDED THE APPEALS OF BOTH THE ASSESSEES AND SET ASIDE THE ORD ERS OF THE AO AND RESTORED THE SAME BACK TO THE AO FOR FRE SH ADJUDICATION AS PER DIRECTIONS GIVEN IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT FOR THE BLOCK PERIOD. IN TH E BACKGROUND OF THESE FACTS THE MATTER WAS AGAIN TAKE N UP FOR HEARING BY THE AO. THE ASSESSEES FILED WRITTEN SUBMISSION. IT IS NOTED IN THE ASSESSMENT ORDERS UN DER APPEALS THAT THE SET ASIDE BLOCK ASSESSMENT ORDER I N THE CASE OF SHRI UMED SINGH P. CHAMPAVAT HAS BEEN FINAL IZED VIDE ORDER DATED 29-12-2006 WHEREIN THE CASH CREDITS/INVESTMENTS IN THE NAME OF 67 PERSONS HAS B EEN DEALT WITH IN DETAIL. THE AO REPRODUCED THE SAME IN THE ASSESSMENTS ORDERS SHOWING THE BREAK-UP OF THE ADDI TION MADE IN THAT CASE IN A SUM OF RS.2,27,02,400/-. ON EXAMINATION OF THE FACTS, THE INVESTMENTS IN THE NA ME OF 41 PERSONS WERE TREATED AS ASSESSEES OWN INVESTMENT I N A SUM OF RS.1,17,12,060/-. BRIEF REASONS ARE ALSO REC ORDED FOR MAKING THE ADDITION IN THE CASE OF SHRI UMED SI NGH P. CHAMPAVHAT. IT IS ALSO NOTED IN THE ASSESSMENT ORDE RS THAT ALTHOUGH ADDITION OF RS.1,17,12,060/- WAS MADE IN T HE CASE OF UMED SINGH P. CHAMPAVAT ON ACCOUNT OF UNEXPLAINE D INVESTMENTS IN THE NAMES OF THESE MENTIONED 41 BOGUS/NON-GENUINE PERSONS, BUT CREDITS IN THE NAMES OF 3 SOME OF THE PERSONS OUT OF ABOVE PERSONS WERE APPEA RING IN THE BOOKS OF ASSESSEES AND HENCE SAME WERE REQUI RED TO BE ADDED IN THE CASES OF BOTH THE ASSESSEES ALSO U/S 68 OF THE IT ACT. THE AO IN BOTH THE CASES THEREAFTER PROCEEDED TO CONSIDER THE ISSUES INVOLVED IN THE CA SE OF BOTH THE ASSESSEES AND COMPLETED THE BLOCK ASSESSME NT ORDER DATED 26-12-2007. BOTH THE ASSESSEES HAVE CHALLENGED BOTH THE BLOCK ASSESSMENT ORDERS CHALLEN GING THE DIFFERENT ADDITIONS WHICH WILL BE DEALT WITH SE PARATELY IN THIS ORDER. 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE ASSESSMENT ORDERS AND CONS IDERED THE MATERIAL AVAILABLE ON RECORD. IT (SS) NO.17/AHD/2008 4. GROUND NO.1 IS GENERAL AND IS REJECTED. ON GROUN D NO.2 OF THE APPEAL, THE ASSESSEE CHALLENGED THE BLO CK ASSESSMENT ORDER CHALLENGING THE ADDITION OF RS.14,00,000/- AS UNDISCLOSED INCOME FOR THE ALLEGE D UNEXPLAINED INVESTMENT IN THE SHARE CAPITAL OF THE ASSESSEE. THE AO NOTED THAT IN THE REASSESSMENT ORD ER RECTIFIED U/S 154 DATED 07-10-2002, THE AO MADE ADD ITION OF RS.18,64,000/- ON ACCOUNT OF UNEXPLAINED CREDITS U/S 68 OF THE IT ACT IN THE CASE OF THE SAME ASSESSEE. THE SE AMOUNTS PERTAIN TO SHARE CAPITAL / SHARE APPLICATIO N MONEY RECEIVED IN ASSESSMENT YEAR 1993-94 AND 1994-95 IN RESPECT OF 32 PERSONS, BREAK-UP OF THE SAME IS NOTE D IN PARA 3 OF THE ASSESSMENT ORDER. OUT OF 32 PERSONS I N WHOSE NAMES RS.18,64,000/- HAS BEEN ADDED, THERE WE RE 4 8 PERSONS WHOSE STATEMENTS HAVE BEEN RECORDED U/S 1 31 (1) OF THE IT ACT AND HAVE ALSO FILED DOCUMENTARY E VIDENCES TO PROVE THEIR INVESTMENTS IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT IN A SUM OF RS.4,64,000/-, BREAK-UP O F THE SAME IS GIVEN IN PARA 3.1 OF THE ASSESSMENT ORDER. THUS, THE INVESTMENTS IN THE NAME OF 8 PERSONS IN A SUM O F RS.4,64,000/- HAS BEEN ACCEPTED AS GENUINE IN THE C ASE OF SHRI UMED SINGH P. CHAMPAVAT. 4.1 THE AO FURTHER NOTED IN THE BLOCK ASSESSMENT OR DER THAT IN RESPECT OF REMAINING 24 PERSONS, AS NO EVID ENCES WERE FILED EXPLAINING THEIR INVESTMENTS, THE AO HAS TREATED INVESTMENTS AS UNEXPLAINED IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT FOR THE BLOCK PERIOD. THE DETAIL S OF THE SAME ARE NOTED IN THE TABLE IN PARA 3.1 OF THE ASSE SSMENT ORDER FOR A SUM OF RS.14,00,000/- (SAME IS NOT REPR ODUCED FOR THE SAKE OF BREVITY). THE AO FURTHER NOTED THAT AS THE AMOUNT OF RS.14,00,000/- HAS BEEN ADDED ON SUBSTANT IVE BASIS IN THE CASE OF SHRI UMED SINGH P.. CHAMPAVAT, THE SAME WAS PROPOSED TO BE ADDED IN THE CASE OF THE ASSESSEE ON PROTECTIVE BASIS BECAUSE THE CASH CREDI TS ARE APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN THE NAME OF SUCH PERSONS. THE ASSESSEE OBJECTED TO THE PROPOSED ADDITION AND EXPLAINED THAT NO PROTECTIVE ADDITION CAN BE MADE. THE AO HOWEVER, REJECTED THE CONTENTIO N OF THE ASSESSEE AND NOTED THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE CASH CREDIT ON ACCOUNT OF SHARE APPLICATION MONEY EITHER IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT OR DURING THE ASSESSMENT PROCEEDINGS OF THE PRESENT ASSESSEE. THEREFORE, ADD ITION 5 OF RS.14,00,000/- WAS MADE U/S 68 OF THE IT ACT ON PROTECTIVE BASIS IN THE CASE OF THE ASSESSEE. THE A SSESSEE IS IN APPEAL CHALLENGING THE ADDITION OF RS.14,00,0 00/- ON PROTECTIVE BASIS. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT SINCE SUBSTANTIVE ASSESSMENT OF UNDISCLOSED INCOME OF THE SAME AMOUNT AND SAME PERSONS HAVE BEEN MADE IN THE CASE OF UMED SINGH P. CHAMPAVAT, THEREFORE, ADDITIO N IS CLEARLY UNJUSTIFIED. HE HAS FILED ORDER OF ITAT A BENCH, AHMEDABAD IN THE CASE OF SHRI UMED SINGH P. CHAMPAV AT IN IT(SS)A NO. 18/AHED/2007 DATED 29-02-2008. HE HA S SUBMITTED THAT SINCE THE SUBSTANTIVE ADDITION IS MA DE IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT HAS BEEN DELET ED BY THE TRIBUNAL; THEREFORE, NO ADDITION SHOULD BE M ADE ON PROTECTIVE BASIS IN THE CASE OF THE ASSESSEE. HE HA S FURTHER SUBMITTED THAT IN THE CONNECTED CASE OF ROYAL MANOR HOTELS & IND. LTD. VS DCIT IN IT (SS) A NO.7/AHD/20 08, THE TRIBUNAL VIDE ORDER DATED 28-02-2011 DIRECTED TO DE LETE THE SIMILAR ADDITION ON SIMILAR FACTS. COPY OF THE ORDE R IS PLACED ON RECORD. ON THE OTHER HAND, THE LEARNED DR DID NO T DISPUTE ABOVE ORDERS OF THE TRIBUNAL, HOWEVER, RELI ED UPON THE ORDER OF THE AO AND SUBMITTED THAT CASH CREDITS ARE NOT DISPUTED AND ASSESSEE FAILED TO EXPLAIN THE IDENTIT Y, THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION , THEREFORE, ADDITION WAS RIGHTLY MADE BY THE AO. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE ABOVE ORDERS OF THE TRIBUNAL. IT IS NOT IN DISPUTE THAT THE TRIBUNAL HAS EARLIER SET ASIDE THE ORDER O F THE AO 6 AND RESTORED THE MATTER IN ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION AS PER DIRECTIONS GIVEN IN THE C ASE OF SHRI UMED SINGH P. CHAMPAVAT. THE AO EXAMINED THE CASE OF THE ASSESSEE IN THE LIGHT OF ORDER IN THE C ASE OF UMED SINGH P. CHAMPAVAT. IT WAS FOUND THAT THE AO I N THE CASE OF SHRI UMED SINGH P. CHAMPAVAT TREATED THE ADDITION OF RS.14,00,000/- AS UNEXPLAINED INVESTMEN TS IN THE NAMES OF 24 PERSONS AND ADDITION WAS MADE ON SUBSTANTIVE BASIS. THEREFORE, PROTECTIVE ASSESSMENT WAS MADE IN THE CASE OF THE ASSESSEE BECAUSE BOTH THE ASSESSEES HAVE FAILED TO PROVE GENUINENESS OF THE S HARE APPLICATION MONEY. THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT DATED 29-02-2008 (SUPR A) IS FILED ON RECORD IN WHICH THE IDENTICAL ADDITION IN RESPECT OF 41 PERSONS IN A SUM OF RS.1,17,12,060/- WAS CONSIDE RED. THE LEARNED COUNSEL FOR THE ASSESSEE HIGHLIGHTED TH E NAMES OF 24 PERSONS APPEARING IN THE CASE OF THE ASSESSEE OUT OF THE SAME LIST OF 41 PERSONS IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT. THE TRIBUNAL CONSIDER ING THE EXPLANATION OF THE ASSESSEE AND MATERIAL ON REC ORD DELETED THE ADDITION OF RS.1,17,12,060/-. IT WAS AL SO NOTED IN THE ORDER THAT ADDITION CANNOT BE MADE ON MERE ADMISSION OF THE PERSONS AND THAT NO ADVERSE MATERI AL HAS BEEN BROUGHT ON RECORD. IT WAS ALSO NOTED THAT CERT AIN PERSONS DENIED THEIR TRANSACTIONS WITH THE ASSESSEE AS THEY HAVE INVESTED IN VARIOUS GROUP CONCERN OF THE ASSESSEES AND DID NOT HAVE ANY TRANSACTIONS WITH TH E ASSESSEE AS INDIVIDUAL. IT WOULD, THEREFORE, PROVE THAT THE SUBSTANTIVE ADDITION IN RESPECT OF THE SAME 24 PERS ONS CONSIDERED IN THE CASE OF THE ASSESSEE HAVE BEEN DE LETED 7 IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT ON SUBSTANTIVE BASIS. THE AO MADE THE PROTECTIVE ASSES SMENT IN THE CASE OF THE ASSESSEE BECAUSE THE SAME INVEST MENT WAS CONSIDERED AS UNEXPLAINED IN THE CASE OF SHRI U MED SINGH P. CHAMPAVAT. SINCE THE TRANSACTIONS WITH THE SAME PARTIES HAVE BEEN HELD TO BE GENUINE BY THE TRIBUNA L IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT, THEREFORE, NO PROTECTIVE ASSESSMENT IN RESPECT OF THE SAME PARTIE S COULD BE MADE IN THE CASE OF THE ASSESSEE. LEARNED COUNSE L FOR THE ASSESSEE REFERRED TO THE NAMES OF SAME 24 PERSO NS FROM THE LIST APPEARING IN THE CASE OF SHRI UMED SI NGH P. CHAMPAVAT. FURTHER, ON THE IDENTICAL FACTS THE TRIB UNAL IN THE CASE OF ROYAL MANOR HOTELS &IND. LTD. (SUPRA) G RANTED RELIEF TO THE ASSESSEE. WE MAY ALSO NOTE THAT THE A O IN THE ASSESSMENT ORDER ALSO NOTED IN PARA 3.1 THAT THE EV IDENCES AND DETAILS WERE FILED IN RESPECT OF 8 PERSONS IN T HE CASE OF SHRI UMED SINGH P. CHAMPAVAT WHICH HAVE BEEN ACCEPT ED AS GENUINE. THE AO, THEREFORE, OUT OF RS.18,64,000/ - DELETED THE ADDITION OF RS.4,64,000/- IN THE ASSESS MENT ORDER ITSELF. THEREFORE, ON THE SAME REASONS WHEN T HE ENTIRE ADDITION HAS BEEN DELETED IN THE CASE OF SHR I UMED SINGH P. CHAMPAVAT, THE ORDER OF THE AO MAKING PART ADDITION ON THE SAME REASON WOULD NOT SURVIVE. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , PARTICULARLY PROTECTIVE ASSESSMENT IS MADE IN THE C ASE OF THE ASSESEE ONLY ON THE BASIS OF FINDINGS GIVEN IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT, WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. CONSIDERING THE ABOVE DISCUSSIONS AND BY FOLLOWING THE ORDERS OF THE CO-O RDINATE BENCHES OF THE TRIBUNAL IN THE CASES OF SHRI UMED S INGH P. 8 CHAMPAVAT (SUPRA) AND ROYAL MANOR HOTELS & IND. LT D. (SUPRA), WE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.14,00,000/-. IN THE RESUL T, APPEAL OF THE ASSESSEE ON GROUND NO.2 IS ALLOWED. 7. ON GROUND NO.3, THE ASSESSEE FURTHER CHALLENGED CHARGING OF SURCHARGE U/S 113 OF THE IT ACT. LEARNE D COUNSEL FOR THE ASSESSEE DID NOT ARGUE THIS GROUND. MOREOVER, AS PER DECISION OF HONBLE SUPREME COURT IN THE CASE OF SURESH N. GUPTA, 297 ITR 322 THE PROVISO TO SECTION 113 IS CLARIFICATORY IN NATURE AND SURCHARG E IS LEVIALBE. THIS GROUND IS ACCORDINGLY DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. IT(SS) A NO.18/AHD/2008 9. GROUND NO.1 IS GENERAL AND IS REJECTED. ON GROUN D NO.2, ASSESSEE CHALLENGED THE ADDITION OF RS.1,94,0 00/- AS UNDISCLOSED INCOME FOR ALLEGED UNEXPLAINED INVESTME NT IN THE SHARE CAPITAL OF THE ASSESSEE COMPANY. THE AO N OTED THAT ADDITION WAS MADE IN THE ASSESSMENT ORDER DATE D 27- 03-2002 IN A SUM OF RS.3,77,000/- IN RESPECT OF 12 PERSONS, BREAK-UP OF THE SAME IS GIVEN IN PARA 3 OF THE ASSE SSMENT ORDER. IT IS FURTHER NOTED THAT OUT OF THESE 12 PER SONS, THE STATEMENTS OF 4 PERSONS WERE RECORDED U/S 131 (1) O F THE IT ACT AND DOCUMENTARY EVIDENCES WERE FILED TO PROVE T HEIR INVESTMENTS IN THE CASE OF SHRI UMED SINGH P. CHAMP AVAT, THEREFORE, INVESTMENTS IN THE NAME OF 4 PERSONS WER E FOUND GENUINE AND ACCEPTABLE. THE ADDITION OF RS.1,43,000/- WAS ACCORDINGLY DELETED. THE AO FURT HER NOTED THAT SINCE NO EVIDENCE WAS FILED EXPLAINING T HE 9 INVESTMENT IN A SUM OF RS.2,34,000/- IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT IN RESPECT OF REMAINING 8 PERSONS, THEREFORE, SUBSTANTIVE ASSESSMENT IS MADE IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT AND PROTECTIVE ASSESSMENT WOULD BE MADE IN THE CASE OF THE PRESENT ASSESSEE. ADDITION WAS ACCORDINGLY MADE. THE LEARNE D COUNSEL FOR THE ASSESSEE SUBMITTED THAT ULTIMATELY THE ADDITION IS REDUCED TO RS.1,94,000/- IN RESPECT OF 7 PERSONS ONLY BECAUSE ADDITION OF RS.40,000/- HAS BEEN DELET ED IN THE CASE OF LAXMI KUMAR CHAMPAVAT, THEREFORE, ASSES SEE WOULD CHALLENGE ADDITION OF RS.1,94,000/-. 10. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE SUBSTANTIVE ASSESSMENT OF UNDISCLOSED INCOME OF THE SAME AMOUNT AND SAME PERSONS HAVE BEEN MADE IN THE CASE OF UMED SINGH P. CHAMPAVAT, THEREFORE, ADDITIO N IS CLEARLY UNJUSTIFIED. HE HAS FILED ORDER OF ITAT A BENCH, AHMEDABAD IN THE CASE OF SHRI UMED SINGH P. CHAMPAV AT IN IT(SS)A NO. 18/AHD/2007 DATED 29-02-2008(PB-55). HE HAS SUBMITTED THAT SINCE THE SUBSTANTIVE ADDITION I S MADE IN THE CASE OF SHRI UMED SINGH P. CHAMPAVAT HAS BEE N DELETED BY THE TRIBUNAL; THEREFORE, NO ADDITION SHO ULD BE MADE ON PROTECTIVE BASIS IN THE CASE OF THE ASSESSE E. HE HAS FURTHER SUBMITTED THAT IN THE CONNECTED CASE OF ROYAL MANOR HOTELS & IND. LTD. VS DCIT IN IT(SS)A NO.7/AHD/2008, THE TRIBUNAL VIDE ORDER DATED 28-02- 2011 DIRECTED TO DELETE THE SIMILAR ADDITION ON SIMILAR FACTS. COPY OF THE ORDER IS PLACED ON RECORD. HE HAS REFERRED T O PB-97 WHICH IS THE DETAILS OF THE SAME 7 INVESTORS AND SU BMITTED THAT THE INVESTMENTS HAVE BEEN MADE THROUGH CHEQUES . HE 10 HAS REFERRED TO PB-100 WHICH IS NOTICE BY THE DEPAR TMENT, PB-101 REPLY OF THE CREDITORS AND PB-102 IS AFFIDAV IT OF THE CREDITOR AND SUBMITTED THAT EVIDENCES OF THEIR CREDITWORTHINESS HAVE BEEN FILED ON RECORD, COPIES OF WHICH ARE FILED IN THE PAPER BOOK. HE HAS SUBMITTED THAT THE SAME EVIDENCES HAVE BEEN ACCEPTED IN THE CASE OF SHRI UM ED SINGH P. CHAMPAVAT, THEREFORE, ADDITION IS CLEARLY UNJUSTIFIED. ON THE OTHER HAND, THE LEARNED DR DID NOT DISPUTE ABOVE ORDERS OF THE TRIBUNAL, HOWEVER, RELI ED UPON THE ORDER OF THE AO AND SUBMITTED THAT CASH CREDITS ARE NOT DISPUTED AND ASSESSEE FAILED TO EXPLAIN THE IDENTIT Y, THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION , THEREFORE, ADDITION WAS RIGHTLY MADE BY THE AO. 11. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS ON RECORD AND FIND THAT THE ISSUE IS SAME AS IS CONSIDERED IN THE CASE OF RATHORE LEASING & FINANCE CO. PVT. LTD. IN IT(SS)A NO.17/AHD/2008. SINCE, THE EVI DENCES ON RECORD HAVE BEEN ACCEPTED IN THE CASE OF SAME PE RSONS IN THE CASE OF SHRI UMED SIGH P. CHAMPAVAT AND OTHE RS AND ONLY PROTECTIVE ASSESSMENT IS MADE IN THE CASE OF THE PRESENT ASSESSEE ON SUCH BASIS, THEREFORE, ADDITION CANNOT BE SUSTAINED IN THE CASE OF THE PRESENT ASSESSEE. T HE DOCUMENTS ON RECORD ARE SUFFICIENT TO EXPLAIN THE INVESTMENTS WHICH ARE MADE THROUGH BANKING CHANNELS AS PER THE DETAILS FILED IN THE PAPER BOOK. SINCE, THE ISSUE IS SAME AS IS CONSIDERED IN IT(SS) A NO.17/AHD/2008, THEREFORE, BY FOLLOWING THE SAME REASONS FOR DECISI ON, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D ELETE THE 11 ADDITION OF RS.1,94,000/-. GROUND NO.2 OF THE APPEA L OF THE ASSESSEE IS ALLOWED. 12. ON GROUND NO.3 OF THE APPEAL, THE ASSESSEE CHALLENGED THE ADDITION OF RS.30,00,000/- (RS.10,00 ,000/- + RS.20,00,000/-) ON ACCOUNT OF UNACCOUNTED PAYMENT A S UNDISCLOSED INCOME OF ASSESSEE U/S 69 C OF THE IT A CT. 12.1 IN RESPECT OF ADDITION OF RS.10,00,000/- MADE ON ACCOUNT OF COMMISSION PAID TO SHRI P. G. PARIKH, TH E AO RECORDED THE REASONS FOR MAKING THE ADDITION IN THE ORIGINAL ASSESSMENT WHICH ARE SUMMARIZED AS UNDER: (I) CASH PAYMENT OF RS.10,00,000/- MADE TO SHRI P. G. PARIKH HAS BEEN RECORDED ON PAGE 7 AND 9 OF ANNEXURE A-1/3 WHICH WAS SEIZED FROM THE RESIDENTIAL PREMISES OF SHRI UMED SINGH P. CHAMPAVAT DURING THE COURSE OF SEARCH. (II) SHRI UMED SINGH P. CHAMPAVAT IN HIS STATEMENT RECORDED U/S 132(4) AT THE TIME OF SEARCH ADMITTED THAT PAYMENT OF RS.10,00,000/- HAS BEEN MADE TO SHRI P. G. PARIKH AS BROKERAGE FOR ARRANGING NRI FUNDS IN THE MONTH OF FEBRUARY, 1995 AND NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY. (III) THE ASSESSEE VIDE LETTER DATED 16-07-1996 I.E . AFTER LONG PERIOD FROM THE DATE OF SEARCH, CONTENDED THAT PROVISION FOR MAKING PAYMENT OF RS.9,00,000/- TO SHRI P. G. PARIKH WAS MADE ON 30-03-1996. THE AO HOWEVER, DID NOT ACCEPT THE CONTENTION OF TH E ASSESSEE AND MADE THE ADDITION BECAUSE IN THE SEIZE D DOCUMENT IT WAS ADMITTED AS PAYMENT. THE EXPLANATIO N OF THE ASSESSEE WAS CALLED FOR IN THE SET ASIDE PROCEE DINGS 12 AND THE ASSESSEE REITERATED THE SAME SUBMISSIONS WH ICH WERE MADE INITIALLY IN THE ORIGINAL ASSESSMENT PROC EEDINGS. THE AO AGAIN DID NOT ACCEPT CONTENTION OF THE ASSES SEE BECAUSE THE DOCUMENTS SEIZED INDICATED THAT RS.10,00,000/- WAS PAID TO SHRI P. G. PARIKH AS COMMISSION FOR MANAGING NRI FUNDS AND THAT SHRI UME D SINGH P. CHAMPAVAT ADMITTED IN HIS STATEMENT THAT S UCH COMMISSION WAS PAID WHICH WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. 12.2 THE LEARNED COUNSEL FOR THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO THE WRITTEN SUBMISSION OF THE ASSESSEE FILED BEFORE AO IN WHICH THE NARRATION OF THE SEIZED DOCU MENTS IS MADE. THE LEARNED COUNSEL FOR THE ASSESSEE REFER RED TO PB-85 WHICH IS THE DETAILS OF SEIZED PAPERS ANNEXUR E A-1/3 AND SUBMITTED THAT THE AMOUNT OF RS.10,00,000/- HAS NOT BEEN PAID AND THE SAME IS MENTIONED BELOW LOANS AND ADVANCES, THE SAID AMOUNT WAS PAYABLE TO SHRI P. G. PARIKH OUT OF THE AMOUNT RECEIVABLE BY SHRI CHAMPAV AT FROM LOANS AND ADVANCES. THE WORD PAID HAS BEEN INADVERTENTLY RECORDED. THE CORRECT WRITING SHOULD HAVE BEEN PAYABLE. THEREFORE, MUCH WEIGHTAGE SHOULD NO T BE GIVEN TO THE WORD. BEFORE THE SET ASIDE ASSESSMENT WAS FINALIZED THE CONFIRMATION FROM SHRI P. G. PARIKH D ATED 16- 03-2002 (PB-212) WAS FILED BUT IT WAS NOT TAKEN NOT E OF BY THE AO WHILE PASSING THE EARLIER ASSESSMENT ORDER O N 27- 03-2002. SHRI P. G. PARIKH CONFIRMED IN HIS LETTER TO THE AO THAT HE HAS NOT RECEIVED RS.10,00,000/-. IT IS ALSO EXPLAINED THAT HE HAS ATTENDED PERSONALLY BEFORE THE AO ON 27 -03- 13 2002 FOR CROSS EXAMINATION AND AWAITED OUTSIDE THE OFFICE OF THE AO FROM 3 PM TO 5.30 PM. BUT HE WAS NOT CALL ED FOR EXAMINATION. THEREFORE, LETTER WAS GIVEN TO THE AO ON 28- 03-2002 IN THIS REGARD (PB-214). IT WAS, THEREFORE, SUBMITTED THAT SHRI P. G. PARIKH WAS PRODUCED BEFOR E THE AO. CONSIDERING THESE FACTS AND THE FACT THAT RS.9, 00,000/- HAS BEEN PAID IN THE YEAR 1996, THE ADDITION OF RS.10,00,000/- IS UNJUSTIFIED. IT IS SUBMITTED THAT SINCE NO PAYMENT WAS MADE TO SHRI P. G. PARIKH, THEREFORE, A DDITION IS UNJUSTIFIED. IT IS FURTHER EXPLAINED THAT AS PER THE PRACTICE SHRI P. G. PARIKH HAD TO OBTAIN PERMISSION FROM RBI AND UNDER FERA. THE PERMISSION FOR RS.78,00,000/- WAS OBTAINED ON 25-06-1996, THEREFORE, NOTHING WAS PAID AS PER THE ABOVE SEIZED DOCUMENTS. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO PLACED ON RECORD STATEMENT OF SHRI UM ED SINGH P. CHAMPAVAT RECORDED ON THE DATE OF SEARCH I N WHICH HE HAS EXPLAINED THAT RS.48,00,000/- PAID BY HIM AS PER THE SEIZED PAPERS AND WHAT IS STATED OF PAYMENT OF RS.10,00,000/- MADE FOR BRINGING NRI FUNDS WAS IN F ACT NO AMOUNT OF RS.48,00,000/- WAS PAID IN CASH AND THE A MOUNT WAS TO BE PAID (PAYABLE). THE LEARNED COUNSEL FOR T HE ASSESSEE, THEREFORE SUBMITTED THAT AS PER THE ORDER OF THE TRIBUNAL DATED 30-11-2000 IN THE FIRST ROUND PROCEE DINGS, THE ASSESSEE PRODUCED SHRI P. G. PARIKH BEFORE THE AO FOR EXAMINATION BUT HIS STATEMENT WAS NOT RECORDED BY T HE AO. HE HAS SUBMITTED THAT ADDITION WAS, THEREFORE, UNJU STIFIED. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE O RDER OF THE AO AND SUBMITTED THAT ASSESSEE FAILED TO EXPLAI N THE ISSUE BEFORE THE AO. SHRI UMED SINGH P. CHAMPAVAT ADMITTED IN HIS STATEMENT THAT AMOUNT WAS PAID TO S HRI P. 14 G. PARIKH WHO WAS CONNECTED WITH THE ASSESSEE. SINC E THE AMOUNT WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS, THEREFORE, ADDITION WAS RIGHTLY MADE BY THE AO. 12.3 WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATER IAL ON RECORD. THE ASSESSEE IN THE WRITTEN SUBMISSION B EFORE THE AO (PB-83) REPRODUCED THE ORDER OF THE TRIBUNAL DATED 30-11-2000 IN WHICH IT IS NOTED THAT THAT AS PER TH E SEIZED PAPER THE AO HAS NOT MADE ANY ADDITION IN RESPECT O F CASH PAYMENT OF RS.48,00,000/-. THE AO HAS MADE ADDITION IN RESPECT OF PAYMENT OF RS.10,00,000/- PAID TO SHRI P . G. PARIKH AND RS.20,00,000/- AS REVENUE EXPENDITURE. S INCE, THE ISSUE OF BENAMIDAR OF LAND WAS CONSIDERED; THER EFORE, MATTER WAS REMANDED TO THE AO FOR RECONSIDERATION. IT WAS ALSO DIRECTED IF NEED BE, ASSESSEE MAY BE ASKED TO PRODUCE SHRI P. G. PARIKH FOR EXAMINATION BEFORE TH E AO. THE ASSESSEE FILED A LETTER DATED 28-03-2002 BEFORE THE AO (PB-214) IN WHICH IT WAS EXPLAINED THAT SHRI P. G. PARIKH APPEARED ON 27-03-2002 IN THE OFFICE OF THE AO AS P ER DIRECTION OF THE AO. THE AO WAS ALSO INFORMED ABOUT APPEARANCE OF SHRI P. G. PARIKH FOR EXAMINATION BUT AO WAS BUSY IN TIME BARING CASES, THEREFORE, HIS STATE MENT COULD NOT BE RECORDED. THE ASSESSEE, THEREFORE, STA TED IN THE LETTER ADDRESSED TO THE AO THAT FRESH DATE MAY BE GIVEN FOR HIS EXAMINATION BEFORE THE AO. THUS, THE ASSESS EE PRODUCED SHRI P. G. PARIKH BEFORE THE AO FOR EXAMIN ATION, BUT HIS STATEMENT COULD NOT BE RECORDED BY THE AO D UE TO THE REASONS BEST KNOWN TO HIM. NOTHING IS STATED IN THE ASSESSMENT ORDER IF THE AO CALLED FOR SHRI P. G. PA RIKH ON ANY SUBSEQUENT DATE. THE CONFIRMATION OF SHRI P. G. PARIKH 15 DATED 16-03-2002 WAS FILED BEFORE THE AO IN RESPONS E TO THE LETTER OF THE AO(PB-212). IT SHOWS THAT THIS LE TTER OF CONFIRMATION WAS FILED DIRECTLY BY SHRI P. G. PARIK H TO THE AO IN RESPONSE TO THE NOTICE OF THE AO. IN THIS CON FIRMATION LETTER SHRI P. G. PARIKH CONFIRMED THAT NEITHER HE HAS RECEIVED ANY AMOUNT OF RS.10,00,000/- IN CASH NOR H E KNEW ANY MATTER PERTAINING TO PAYMENT OF RS.10,00,0 00/- IN CASH BY THE ASSESSEE. IT WAS ALSO EXPLAINED THAT TH E COMPANY OF SHRI P. G. PARIKH (SUSHIL FINANCE CONSUL TANT LTD.) RECEIVED THE AMOUNT OF RS.9,00,000/- AS BROKE RAGE AFTER DEDUCTION OF TDS IN THE YEAR 1995-96 AND 1996 -97. HE HAS ALSO DISCLOSED HIS PA NUMBER IN THE CONFIRMA TION. THUS, IT WAS PROVED ON RECORD THAT THE ASSESSEE DID NOT MAKE ANY PAYMENT OF RS.10,00,000/- TO SHRI P. G. PA RIKH. WE FIND FROM NOTING OF THE SEIZED PAPER (PB-85) THA T RS.10,00,000/- IS MENTIONED UNDER THE HEAD LOAN AN D ADVANCE WHICH WOULD SUPPORT THE CONTENTION OF THE ASSESSEE THAT INSTEAD OF PAID AMOUNT THE SAME SHO ULD HAVE BEEN PAYABLE. THE COPY OF THE STATEMENT OF S HRI UMED SINGH P. CHAMPAVAT RECORDED ON THE DATE OF SEA RCH IS PLACED ON RECORD BY LEARNED COUNSEL FOR THE ASSE SSEE IN WHICH SHRI UMED SINGH P. CHAMPAVAT REFERRED TO THE AMOUNT OF RS.48,00,000/- WHICH IS ALSO REFERRED TO IN THE ORDER OF THE TRIBUNAL DATED 30-11-2000. THE OTHER D ETAILS MENTIONED IN THE SEIZED PAPER OF RS.1 CRORES AND FU RTHER RS.68 LACS OF REGISTRATION CHARGES ARE ALSO MENTION ED IN THE STATEMENT OF SHRI UMED SINGH P. CHAMPAVAT IN WHICH HE HAS GIVEN HIS EXPLANATION THAT WHAT IS STATED THAT RS.48,00,000/- IS PAID AND FURTHER WHAT IS STATED T HAT RS.10,00,000/- IS PAID TO SHRI P. G. PARIKH FOR AR RANGING 16 NRI FUNDS, IN FACT NO CASH IS PAID AND THE AMOUNT I S YET TO BE PAID (PAYABLE). THUS, THE SEIZED PAPER IS EXPLAI NED BY SHRI UMED SINGH P. CHAMPAVAT IN HIS STATEMENT RECOR DED ON THE DATE OF THE SEARCH IN WHICH HE HAS DENIED TO HAVE PAID ANY AMOUNT OF RS.10,00,000/- IN CASH TO SHRI P . G. PARIKH. SINCE, SHRI P. G. PARIKH IN HIS CONFIRMATIO N DENIED TO HAVE RECEIVED ANY AMOUNT AND SHRI UMED SINGH P. CHAMPAVAT ALSO DENIED TO HAVE MADE ANY PAYMENT TO S HRI P. G. PARIKH, WE ARE OF THE VIEW THAT THE AO HAS FA ILED TO PROVE THAT UNACCOUNTED PAYMENT IS MADE BY THE ASSES SEE. THE ADDITION OF RS.10,00,000/- IS, THEREFORE, UNJUS TIFIED. WE ACCORDINGLY SET ASIDE THE ORDER OF THE AO AND DELET E THE ADDITION OF RS.10,00,000/-. THIS GROUND OF APPEAL O F THE ASSESSEE IS ALLOWED. 12.4 AS REGARDS ADDITION OF RS.20,00,000/- MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE INCURRED ON PURC HASE OF LAND AT JODHPUR FOR MARWAR HOTELS PROJECT, THE R EASONS FOR MAKING ADDITION IN THE ORIGINAL ASSESSMENT ORDE R ARE SUMMARIZED AS UNDER IN THE IMPUGNED ORDER: (I) DURING THE COURSE OF SEARCH, A COPY OF PROPOSED AGREEMENT DULY SIGNED WAS FOUND WHICH CLEARLY INDICATED THAT AN AMOUNT RS.24,50,000/- WAS RECEIVED BY SHRI CHANDANMAL AND OTHERS FROM SHRI UMED SINGH P. CHAMPAVAT BEFORE SIGNING THE SAID AGREEMENT. (II) THE REPRESENTATIVE OF THE ASSESSEE IN THE REPL Y DATED 16-07-1996 HAS ACCEPTED EXISTENCE OF 17 THE DRAFT AGREEMENT AND PAYMENT OF RS.20,00,000/-. (III) THE CONTENTION OF THE ASSESSEE THAT SHRI DILI P K. BHATTI, BROTHER-IN-LAW OF SHRI UMED SINGH P. CHAMPAVAT HAD IN FACT ENTERED INTO AN AGREEMENT FOR PURCHASE OF SAID LAND, HAVE BEEN REJECTED BY THE AO RELYING UPON STATEMENT DATED 6-09-1996 OF SHRI UMED SINGH P. CHAMPAVAT THAT SHRI DILIP K. BHATTI IS HIS BENAMIDAR. MOREOVER, SHRI DILIP K. BHATTI HAS NO EXPLAINED SOURCE OF INCOME. THE AO DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND NOTED THAT SHRI DILIP K. BHATTI CANNOT RETRACT ON THE BASIS OF MAKE-BELIEF ARGUMENTS. THE SUBMISSION OF T HE ASSESSEE WAS AGAIN CALLED FOR IN WHICH ASSESSEE REI TERATED THE SUBMISSIONS MADE AT THE TIME OF ORIGINAL ASSESS MENT PROCEEDINGS. 12.5 THE AO BEFORE COMING TO THE CONCLUSION REGARDI NG GENUINENESS OF INVESTMENT IN PURCHASE OF LAND NOTED THAT THE DOCUMENTS INDICATING THE PAYMENT OF RS.20,00,00 0/- MADE TOWARDS PURCHASE OF LAND AT JODHPUR WERE SEIZE D DURING THE COURSE OF SEARCH FROM THE RESIDENTIAL PR EMISES OF SHRI UMED SINGH P. CHAMPAVAT MAIN PERSON OF THE GRO UP. SHRI UMED SINGH P. CHAMPAVAT IN HIS STATEMENT AND T HE ACCOUNTANT SHRI CHHAGANLAL IN HIS STATEMENT HAVE AD MITTED THE ADVANCE PAYMENT MADE FOR PURCHASE OF LAND AT JODHPUR. THE AO RELIED UPON THEIR STATEMENTS AND AG AIN MADE THE ADDITION OF RS.20,00,000/-. 18 13. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE H AS SUBMITTED THAT THERE WAS NO AGREEMENT BETWEEN THE ASSESSEE AND THE LANDOWNERS, BUT DURING THE SEARCH DRAFT UNSIGNED AGREEMENT BETWEEN SHRI UMED SINGH P. CHAMPAVAT AND CHANDMAL KUNDANMAL OSWAL AND OTHERS WAS SEIZED WHICH WAS NEVER ACTED UPON. THE ASSESSEE DID NOT DISCLOSED DATE OF CASH PAYMENT OF RS.20,00,000/ -. IN FACT, NO CASH PAYMENT OF RS.20,00,000/- WAS MADE. SIMILARLY, IN THE SEIZED PAPERS RS.20,00,000/- WAS SHOWN AS PAYABLE BELOW LOAN AND ADVANCES TOWARDS REVENUE EXPENSES AND NOT TOWARDS PURCHASE OF CAPITAL ASSET. THEREFORE, ADDITION IS UNJUSTIFIED. SINCE NO CASH P AYMENT IS MADE BY THE ASSESSEE, THEREFORE, NO SUCH ENTRY WAS RECORDED IN THE BOOKS OF ACCOUNTS; THEREFORE, PROVI SIONS OF SECTION 69C OF THE IT ACT WOULD NOT APPLY IN THIS C ASE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THE PROV ISO TO SECTION 69C OF THE IT ACT HAS BEEN INSERTED IN THE INCOME TAX ACT WITH EFFECT FROM 01-04-1999 WHICH READS PROVIDED THAT, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE INCOME OF THE ASSESSEE, SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BLOCK ASSESSMENT PERIOD IS PRIOR TO THE AMENDMENT IN SECTION 69C OF THE IT ACT ; THEREFORE, PROVISO TO SECTION 69C OF THE IT ACT WOU LD NOT APPLY IN THE CASE OF THE ASSESSEE. HE HAS RELIED UP ON 19 DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF KRISHNA TEXTILES VS CIT 310 ITR 227 IN WHICH IT WAS HELD: DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1987- 88, THE ASSESSING OFFICER CALLED FOR THE COPY OF THE ACCOUNT OF THE ASSESSEE AS APPEARING IN THE BOOKS OF GMDC AND COMPARED IT WITH THE COPY OF THE ACCOUNTS OF THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT CERTAIN DRAFTS ALLEGEDLY SENT TO GMDC BY THE ASSESSEE TOTALING RS.1,92,161 HAD NOT BEEN ACCOUNTED FOR IN THE BOOKS OF THE ASSESSEE BUT THE ENTRIES IN RESPECT THEREOF APPEARED IN THE ACCOUNT OF THE ASSESSEE IN THE BOOKS OF GMDC. THE ASSESSEE REPLIED THAT THE ACCOUNTS OF GMDC COULD NOT BE RELIABLE AND THE ASSESSEE HAD NOT SENT THE ABOVE DRAFTS. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE AND MADE THE ADDITION OF RS.1,92,161. THIS WAS UPHELD BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL. ON A REFERENCE: HELD, THAT SINCE IT WAS AN ADMITTED POSITION THAT THE ASSESSEE WAS CARRYING ON BUSINESS IN COAL AND LIGNITE AND PURCHASES WERE MADE FROM TIME TO TIME FROM GMDC, EVEN IF ANY ADDITION WAS REQUIRED TO BE MADE UNDER SECTION 69C, THE ENTIRE EXPENDITURE TOWARDS IT HAD TO BE ALLOWED AS DEDUCTION UNDER SECTION 37(1). THE ASSESSMENT YEAR UNDER CONSIDERATION WAS ADMITTEDLY 1987-88 TO WHICH THE AMENDMENT OF SECTION 69C WOULD NOT BE APPLICABLE. THUS, TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE REVENUE AUTHORITIES WERE NOT JUSTIFIED IN MAKING AND/OR CONFIRMING THE DISPUTED ADDITION INASMUCH AS EVEN IF THE ASSESSEE DID INCUR EXPENDITURE OF RS.1,92,261 IN PURCHASING COAL, LIGNITE, ETC. FROM GMDC, THE EQUIVALENT DEBIT IN THE PROFIT AND LOSS 20 ACCOUNT WOULD NEUTRALIZE EACH OTHER AND NO ADDITION COULD BE MADE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE IN THE SEIZED PAPER, THE AMOUNT IS SHOWN AS REVENUE EXPENDITURE AGAINST RS.20,00,000/-, THEREFORE, PART OF THE SEIZED PAPERS CANNOT BE CONSIDERED IN ISOLATION AND ADDITION IS UNJUSTIFIED. ON THE OTHER HAND, THE LEA RNED DR RELIED UPON THE ORDER OF THE AO. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. IT IS SETTLED LAW THAT IN THE BLOCK ASSESSMENT ADDITION COULD BE MADE ON THE BASIS OF MATERIAL OR EVIDENCE FOUND DURING THE COUR SE OF SEARCH OR OTHER DOCUMENTS OR MATERIAL OR INFORMATIO N AVAILABLE WITH THE AO AND WAS RELATABLE TO SUCH EVI DENCE BEFORE MAKING ADDITION WHICH IS PROPOSED TO BE MADE . THE AO NOTED IN THE ASSESSMENT ORDER THAT PROPOSED/DRAF T AGREEMENT WAS FOUND IN THE SEARCH THROUGH WHICH PAY MENT OF RS.20,00,000/- WAS ADMITTED. THE EXPLANATION OF THE ASSESSEE WOULD SHOW THAT SUCH PROPOSED/DRAFT AGREEM ENT WAS NOT ENTERED INTO BETWEEN THE ASSESSEE AND THE LANDOWNERS. IT IS ALSO NOT CLARIFIED BY THE AO WHET HER SUCH PROPOSED AGREEMENT WAS ACTED UPON BY THE PARTIES. THEREFORE, THE SEIZED PAPER WOULD NOT INDICATE THAT THE ASSESSEE ENTERED INTO ANY AGREEMENT OR MADE UNACCOUNTED PAYMENT. THE STATEMENT OF SHRI UMED SIN GH P. CHAMPAVAT ALONE CANNOT PUT LIABILITY UPON THE AS SESSEE IN THIS CASE. MOREOVER, THE DETAILS CONTAINED IN TH E SEIZED PAPER SHOWS THAT IT WAS RECORDED BELOW LOANS AND ADVANCES UNDER THE HEAD REVENUE EXPENSES- 21 RS.20,00,000/-. THE BLOCK ASSESSMENT ENDED ON 05-0 9- 1995 AND THE PROVISO TO SECTION 69C HAS BEEN ADDED IN THE INCOME TAX ACT WITH EFFECT FROM 01-04-1999. THEREFO RE, FOR THE CASE OF THE ASSESSEE THE AMENDMENT OF SECTION 6 9C WOULD NOT BE APPLICABLE. THE DECISION OF THE HONBL E GUJARAT HIGH COURT IN THE CASE OF KRISHNA TEXTILES (SUPRA) WOULD DIRECTLY APPLY TO THE FACTS AND CIRCUMSTANCES OF THIS CASE. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF T HE VIEW THAT NO ADDITION CAN BE MADE OF RS.20,00,000/- AGAI NST THE ASSESSEE. WE ACCORDINGLY, SET ASIDE THE ORDERS OF T HE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.20, 00,000/-. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. I N THE RESULT, GROUND NO.3 OF THE APPEAL OF THE ASSESSEE I S ALLOWED. 15. ON GROUND NO.4, THE ASSESSEE FURTHER CHALLENGED CHARGING OF SURCHARGE U/S 113 OF THE IT ACT. LEARNE D COUNSEL FOR THE ASSESSEE DID NOT ARGUED THIS GROUND . MOREOVER, AS PER DECISION OF HONBLE SUPREME COURT IN THE CASE OF SURESH N. GUPTA, 297 ITR 322 THE PROVISO TO SECTION 113 IS CLARIFICATORY IN NATURE AND SURCHARG E IS LEVIALBE. THIS GROUND IS ACCORDINGLY DISMISSED. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 22 17. IN VIEW OF THE ABOVE, BOTH THE APPEALS OF DIFFE RENT ASSESSEES ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2011. SD/ SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 30-06-2011 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE DR, ITAT, 5. GUARD FILE BY ORDER, //TRUE COPY// DY.R/AR, ITAT, AHMEDABAD