ACIT, Chandigarh V. Sh. Chander Deep Jain, Chandigarh

ITSSA 18/CHANDI/2009

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9641 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-04-2013
• Assessment Year: misc
• Appeal Filed On: 02-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Rejection of books of accounts; Gift; Document seized; Principle of natural justice; Retrospective amendment; Additional evidence; Validity of assessment; Block assessment; Documents seized
• Section: 143(3); 68

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER IT(SS)A NO.20 /CHD/2009 BLOCK PERIOD 1.4.1988 TO 30.9.1998 SH.CHANDER DEEP JAIN, VS. THE A.C.I.T., H.NO.3169, SECTOR 21-D, CIRCLE 2(1), CHANDIGARH. CHANDIGARH. PAN: AND IT(SS)A NO.18 /CHD/2009 BLOCK PERIOD 1.4.1988 TO 30.9.1998 THE A.C.I.T., VS. SH.CHANDER DEEP JAIN, CIRCLE 2(1), H.NO.3169, SECTOR 21-D, CHANDIGARH. CHANDIGARH. PAN: (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI KUMAR DEPARTMENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 18.09.2013 DATE OF PRONOUNCEMENT : 06.12.2013 O R D E R PER SUSHMA CHOWLA, J.M. : THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REV ENUE ARE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S), CHANDIGARH DATED 31.3.2009 RELATING TO BLOCK PERIOD 1.4.1988 T O 30.9.1998 AGAINST THE ORDER PASSED UNDER SECTION 250(6)/143(3) OF THE INCOME TAX ACT, 1961. 2 2. THE CROSS APPEALS FILED BY THE ASSESSEE AND REVE NUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. IT(SS)A NO.20/CHD/2008 :: ASSESSEE'S APPEAL 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER PASSED U/S 250(6) BY THE LD.CIT( APPEALS), CHANDIGARH IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH HE WAS NOT JUSTIFIED TO UPHOLD THAT THE NOTICE ISSUED U/S 158B C DATED 11.06.1999 WAS VALID IN LAW. 2. THAT THE LD. CIT(APPEALS) FURTHER GRAVELY ERRED IN UPHOLDING THE ACTION OF THE LD. ASSESSING OFFICER IN MAKING THE F OLLOWING ADDITIONS. (A) A SUM OF RS.35.000/- ON ACCOUNT OF CASH FOUND AT TH E TIME OF SEARCH (B) RS. 65,000/- OUT OF TOTAL ADDITION OF RS.1,15,000/- MADE ON ACCOUNT OF ALLEGED INVESTMENT IN HOUSEHOLD GOODS (C) RS. 16,500/- ON ACCOUNT OF INVESTMENT IN SHARES OF ACC LTD. IN THE NAME OF WIFE SMT. DOLLY JAIN (D) A SUM OF RS. 4,07,000/- ON ACCOUNT OF ALLEGED INVES TMENT MADE IN THE PURCHASE OF SCO-7, SECTOR-5, PANCHKULA (E) A SUM OF RS.3,21,500/- (BEING 50% OF RS.6,43,000/-) MADE ON ACCOUNT OF ALLEGED INVESTMENT IN LIMA ENGINEERING P. LTD. (F) A SUM OF RS. 5,94,433/- ON ACCOUNT OF ALLEGED INVES TMENT IN JASMINE ENTERPRISES P. LTD. (G) A SUM OF RS. 6,50,000/- ON ACCOUNT OF ALLEGED INVES TMENT IN PROPERTY SITUATED AT 259, INDUSTRIAL AREA, CHANDIGARH WHEREAS EVEN THE P OWER OF ATTORNEY WAS IN THE NAME OF APPELLANT'S BROTHER SH. VIPIN KUMAR. (H) A SUM OF RS. 4,80,000/- (BEING 50% OF RS. 9,60,000 /-) ON ACCOUNT OF ALLEGED INVESTMENT IN SURAJ THEATRE 3. THAT THE LD. CIT(APPEALS) WAS FURTHER NOT JUSTIFIED TO UPHOLD AN ADDITION OF RS. 8,10,000/-OUT OF TOTAL ADDITION OF RS. 16,20,000/- MADE ON ACCOUNT OF ALLEGED LOW HOUSEHOLD EXPENSES. 4. THAT THE LD. CIT (A) WAS NOT JUSTIFIED TO ARBITRARI LY UPHOLD AN ADDITION OF RS.L,59,72,599/- ON ACCOUNT OF CREDITS IN THE BANK ACCOUNTS AND A SUM OF RS.13.35,000/- ON ACCOUNT OF ALLEGED INVESTMENT IN FDRS BY SIMPLY IGNORING THE EXPLANATIONS FURNISHED. 5. THAT THE LD. CIT (A) WAS NOT FURTHER JUSTIFIED TO U PHOLD THE DISALLOWANCE OF INTEREST PAID ON LOANS RAISED FOR PURCHASE OF PROPERTY. 6. THAT THE LD. CIT (A) WAS FURTHER NOT JUSTIFIED TO U PHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN TREATING THE INCOME OF A/Y 199 8-99 AS UNDISCLOSED INCOME. 3 7. THAT THE LD. CIT(APPEALS) FURTHER ERRED IN PASSING THE ORDER BY IGNORING ALL PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS THE CAS H FLOW STATEMENT FILED BY THE APPELLANT WAS ARBITRARILY REJECTED AND THE REMAND R EPORT SENT BY THE LD. ASSESSING OFFICER ON THE DIRECTIONS OF HIS PREDECES SOR WAS SIMPLY IGNORED. IT(SS)A NO.18/CHD/2009 :: REVENUES APPEAL 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C.I.T.(APPEALS) IN APPEAL NO.502/P/06-07, THROU GH ORDER DATED 31.03.2009, HAS ERRED IN DELETING THE FOLLOWI NG ADDITIONS:- 1. THE LD. CIT(APPEALS) HAS ERRED IN ALLOWING RELIE F OF RS.50,000/- BY DELETING THE ADDITION ON ACCOUNT OF HOUSE- HOLD GOODS. 2. THE LD. CIT(APPEALS) HAS ERRED IN RESTRICTING TH E ADDITION ON ACCOUNT OF LOW HOUSE HOLD EXPENSES TO RS.8,10,00 0/-. 3. THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE A DDITION OF RS.19,35,158/- OUT OF THE TOTAL ADDITION OF RS.1,79 ,07,757/- MADE ON ACCOUNT OF DEPOSITS IN BANK ACCOUNTS. 4. THE LD. CIT(APPEALS) HAS DELETED THE ADDITION OF RS.9,71,388/- MADE BY THE AO ON ACCOUNT OF RENTAL INCOME. 5. THE ASSESSEE HAS RAISED ADDITIONAL GROUND OF APP EAL, WHICH READS AS UNDER : THAT ASSESSMENT FRAMED UNDER SECTION 158BC READ WI TH SECTION 143(3) OF THE INCOME TAX ACT, 1961 IS BARRE D BY LIMITATION AS PER PROVISIONS OF SECTION 158BE IN AS MUCH AS THE ORIGINAL ASSESSMENT WAS FRAMED VIDE ORDER DATED 31.10.2000 WHEREAS THE SEARCH IN THE CASE OF THE AP PELLANT HAD CONCLUDED ON 30.09.1998. 6. THE LD. AR FOR THE ASSESSEE STRESSED FOR THE ADM ISSION OF THE ADDITIONAL GROUND OF APPEAL. HOWEVER, IT WAS ADMITT ED THAT THIS PLEA WAS NOT EARLIER RAISED. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE SAID PLEA OF THE ASSESSMENT BEING BARRED BY LIMITAT ION CANNOT BE RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL I.E. AFTER T HE MATTER WAS FIRST SET ASIDE BY THE CIT(APPEALS) AND THE PRESENT APPEAL IS FILED AGAINST THE SECOND ROUND OF APPELLATE PROCEEDINGS. RELIANCE WA S PLACED ON ARAVALI ENGINEERS (P) LTD. VS CIT 335 ITR 508 (P&H ). 4 7. WE FIND NO MERIT IN THE STAND OF THE ASSESSEE IN VIEW OF THE FACT THAT NO SUCH PLEA WAS RAISED IN ANY EARLIER PROCEED INGS AND ALSO BECAUSE OF THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN ARAVALI ENGINEERS (P) LTD. VS CIT (SUPRA), WHEREIN IT HAS BEEN HELD AS UNDER : NO DOUBT THAT AN APPELLATE AUTHORITY CAN ALLOW A Q UESTION TO BE RAISED FOR THE FIRST TIME EVEN IF SUCH A QUESTION WAS NOT RAIS ED AT A LOWER FORUM BUT THE DISCRETION TO DO SO HAS TO BE EXERCISED IN THE INTE REST OF JUSTICE IN THE FACTS AND CIRCUMSTANCES AND NOT MECHANICALLY. NORMALLY A QUESTION OF FACT MAY NOT BE ALLOWED TO BE RAISED FOR THE FIRST TIME AS I T MAY PREJUDICE THE OTHER SIDE. IF SUCH QUESTION IS RAISED AT THE EARLIEST OP PORTUNITY, THE OTHER SIDE CAN LEAD EVIDENCE WHICH IT MAY NOT BE ABLE TO DO IF SUC H A QUESTION IS RAISED FOR THE FIRST TIME BEFORE THE APPELLATE AUTHORITY. OF COURS E, THERE CAN BE NO TOTAL BAR ON SUCH QUESTION BEING ALLOWED, IF INTEREST OF JUST ICE SO REQUIRES. QUESTION OF VALIDITY OF NOTICE MAY NOT BE ALLOWED TO BE RAISED FOR THE FIRST TIME IN APPEAL. SUBSEQUENT LEGISLATIVE AMENDMENT ADDING S. 292BB SU PPORTS THIS PRINCIPLE . THE QUESTION HAS, THUS, TO BE ANSWERED AGAINST THE ASSE SSEE.CIT VS. PREMIUM CAPITAL MARKET & INVESTMENT LTD. (2005) 198 CTR (MP ) 680 : (2005) 275 ITR 260 (MP) RELIED ON. (UNDERLINE PROVIDED BY US) THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSES SEE IS THUS, DISMISSED. 8. THE LD. AR FOR THE ASSESSEE DID NOT ADDRESS THE ISSUE RAISED VIDE GROUND NO. 1 AND HENCE, THE SAME IS DISMISSED. 9. THE ASSESSEE IS AGGRIEVED BY VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER AND HAS RAISED GROUND NOS. 2(A) T O 2(H) IN RESPECT OF THE SAID ADDITIONS. THE ISSUE IN GROUND NO. 2(A) I S IN RELATION TO THE ADDITION OF RS. 35,000/- ON ACCOUNT OF CASH FOUND A T THE TIME OF SEARCH. 10. THE BRIEF FACTS RELATING TO THE CASE ARE THAT S EARCH AT THE PREMISES OF THE ASSESSEE WAS CARRIED OUT ON 30.09.1998. THE ASSESSEE FILED RETURN OF INCOME FOR THE BLOCK PERIOD DECLARING TOT AL INCOME OF RS. 1,50,000/- ON 12.10.2000. THE BLOCK ASSESSMENT IN THE CASE WAS COMPLETED ON 31.10.2000 WHICH WAS SET ASIDE BY CIT( APPEALS) VIDE ORDER DATED 19.03.2001. IN THE SET ASIDE PROCEEDIN GS, THE ASSESSEE SOUGHT ADJOURNMENT ON ONE PRETEXT OR THE OTHER AND ONLY ON 17.03.2003, THE ASSESSEE FILED THE REPLY CONTAINING EVIDENCES/D OCUMENTS WHICH WERE 5 NOT FILED AT THE TIME OF ORIGINAL ASSESSMENT. THE ASSESSEE HAD ALSO DISPUTED THE ASSESSMENT PROCEEDINGS BEING BAD IN LA W. 11. THE ASSESSING OFFICER NOTES THAT THE HON'BLE PU NJAB & HARYANA HIGH COURT HAD IN ASSESSEE'S OWN CASE, SET ASIDE T HE ASSESSMENT ON THE WRIT PETITION FILED BY THE ASSESSEE. THE REVENUE F ILED AN APPEAL BEFORE THE HON'BLE SUPREME COURT AND VIDE ORDER DATED 23.1 .2003, IN APPEAL NO. 1093 OF 2002, THE OPERATION OF THE JUDGEMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT WAS STAYED. THE OBJECTION OF THE ASSESSEE BEFORE THE HON'BLE COURTS WAS THAT THE ASSESSMENT W AS BEING FRAMED BY THE SAME PERSON WHO HAD CONDUCTED THE SEARCH ON THE PREMISES OF THE ASSESSEE. BUT AS THE SAID ASSESSING OFFICER HAD BE EN TRANSFERRED, THE OBJECTION OF THE ASSESSEE WAS FOUND TO BE INFRUCTUO US AND THE CASE OF THE ASSESSEE WAS DECIDED ON THE MERITS AND AS PER T HE DIRECTIONS OF THE CIT(APPEALS), CHANDIGARH. 12. DURING THE COURSE OF SEARCH, CASH OF RS. 3,51,6 00/- WAS FOUND FROM THE RESIDENCE OF THE ASSESSEE OUT OF WHICH, CA SH OF RS. 3 LACS WAS SEIZED. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH, THE ASSESSEE EXPLAINED THAT THE SOURCE OF THE SAID CASH WAS OUT OF RS. 3 LACS WITHDRAWN FROM STATE BANK OF PATIALA, SECTOR 1 7-C, CHANDIGARH FROM THE CURRENT ACCOUNT OF HIS WIFE SMT. DOLLY JAI N AND BALANCE WAS CLAIMED TO BE OUT OF SMALL CASH KEPT AT HOME. THE P URPOSE FOR WITHDRAWAL OF THE SAID RS. 3 LACS FROM THE BANK WAS ALSO EXPLAINED BY THE ASSESSEE, WHICH IS ENUMERATED AT PAGE 3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER ACCEPTED THE EXPLANATION OF S OURCE OF CASH OF RS. 3 LACS AND ALSO OF RS. 15,600/- BEING PAID BY W IFE OF THE ASSESSEE. THE BALANCE AMOUNT WHICH WAS HELD TO BE INCOME FROM OTHER SOURCES IN THE HAND OF THE ASSESSEE WAS RS. 35,000/-. 6 13. THE CIT(APPEALS), VIDE PARA 50 TO 53 AT PAGES 4 0 TO 43 OF THE APPELLATE ORDER, ON CONSIDERATION OF THE SUBMISSION S OF THE ASSESSEE WITH REGARD TO THE CASH FLOW STATEMENT, REJECTED TH E SAME AND UPHELD THE ADDITION OF RS. 35,000/-. 14. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT TH E SOURCE OF THE SAID CASH OF RS. 35,000/- IS EXPLAINABLE AND DULY REFLEC TED IN THE CASH FLOW STATEMENT PREPARED BY THE ASSESSEE. OUR ATTENTION WAS DRAWN TO THE CASH FLOW STATEMENT PLACED AT PAGES 346 TO 355 OF T HE PAPER BOOK. THE LD. AR FOR THE ASSESSEE WAS CONFRONTED AS TO WHETHE R ANY BOOKS OF ACCOUNT WERE BEING MAINTAINED BY THE ASSESSEE AND T HE REPLY OF THE ASSESSEE IN THIS REGARD WAS THAT NO SUCH BOOKS OF A CCOUNT WERE BEING MAINTAINED AND THE SAID CASH FLOW STATEMENT HAS BEE N PREPARED ON A LATER DATE TO EXPLAIN THE SOURCE OF VARIOUS ENTRIES . 15. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON T HE ORDER OF THE CIT(APPEALS) AND POINTED OUT THAT THE ATTITUDE OF T HE ASSESSEE WAS TOTALLY NON-COOPERATIVE. THE ASSESSEE FAILED TO FUR NISH THE REQUISITE INFORMATION DURING THE ASSESSMENT PROCEEDINGS OR EV EN BEFORE THE CIT(APPEALS) AND NOW WANTS TO RELY ON THE ALLEGED C ASH FLOW STATEMENT TO EXPLAIN THE ENTRIES IN RESPECT OF VARIOUS CREDIT S AND ALSO VARIOUS EXPENDITURES INCURRED BY THE ASSESSEE. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE ADJUDICATING THE MERITS OF THE ISSUE, IT IS NECESSARY TO REFER TO CERTAIN FACTS WHICH HAVE BEEN REFERRED TO BY THE CI T(APPEALS) IN PARAS 3 TO 20 AT PAGES 6 TO 22 OF THE APPELLATE ORDER. TH E RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROCEEDINGS BEFOR E 7 THE ASSESSING OFFICER THE CIT(APPEALS) WERE AS UNDE R : A) SEARCH UNDER SECTION 132(1) OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 30.09.1998. SIMULTANEO USLY, SEARCH WAS ALSO CARRIED OUT ON THE PREMISES OF HIS BROTHER SHRI VIPIN JAIN AND BOTH THE ASSESSEE AND HIS BROTHER WERE PAR TNERS IN M/S S.K. & COMPANY. B) NOTICE UNDER SECTION 158BC OF THE ACT WAS ISSUED O N 11.6.1999 ASKING THE ASSESSEE TO FILE RETURN OF INCOME FOR TH E BLOCK PERIOD. HOWEVER, NO RETURN OF INCOME FOR THE BLOCK PERIOD W AS FILED BY THE ASSESSEE AND ANOTHER SHOW CAUSE NOTICE WAS ISSU ED ON 16.7.1999 AS TO WHY PROSECUTION PROCEEDINGS UNDER S ECTION 276CC SHOULD NOT BE INITIATED AGAINST THE ASSESSEE FOR FAILURE TO FILE THE RETURN OF INCOME. BUT NO REPLY TO THE SAM E WAS RECEIVED BY THE ASSESSING OFFICER. A QUESTIONNAIRE WAS SENT TO THE ASSESSEE ON 22.5.2000 AND THEN ON 4/6.10.2000. RET URN OF INCOME WAS FILED ON 12.10.2000 AND THE ORIGINAL ASSESSMENT IN THE CASE WAS COMPLETED ON 30.10.2000. THE CIT(APPEALS) VIDE ORDER DATED 19.3.2001 SET ASIDE THE ASSESSMENT AND RESTOR ED THE MATTER BACK TO THE FILE OF ASSESSING OFFICER WITH DIRECTIO NS TO DECIDE THE SAME DENOVO AFTER INVESTIGATING THE ADDITIONAL EVID ENCE FILED BY THE ASSESSEE AT THE TIME OF APPELLATE PROCEEDINGS. THE CIT(APPEALS) ALSO, IN THE FIRST ROUND OF APPEAL , ADDRESSED THE ISSUE OF VALIDITY OF ASSESSMENT, LACK OF OPPORTUNITY AND DENIAL OF PRINCIPLE OF NATURAL JUST ICE AND VIDE PARA 5 HELD THAT THE PROCEEDINGS INITIATED IN THE S EARCH CASE WERE 8 VALIDLY INITIATED AND THE ASSESSING OFFICER WAS DIR ECTED TO FRAME THE ASSESSMENT. C) THE ASSESSMENT IN THE CASE WAS FRAMED BY ASSESSING OFFICER VIDE ORDER DATED 31.3.2003 AGAINST WHICH THE ASSESSEE FI LED AN APPEAL AND FILED WRITTEN SUBMISSIONS BEFORE THE CIT(APPEAL S) VIDE LETTER DATED 23.4.2005. THE ASSESSEE AGAIN CHALLENGED THE VALIDITY OF THE ASSESSMENT AND ALSO STRESSED THAT ADEQUATE OPPO RTUNITY WAS NOT AFFORDED. D) THE CIT(APPEALS) NOTED THAT THE ASSESSEE HAD FAILED TO GIVE COMPLETE FACTS BEFORE THE CIT(APPEALS) IN THE FIRST ROUND OF APPEAL AND HENCE, THE FINDING OF CIT(APPEALS) THAT ADEQUATE OPPORTUNITY WAS NOT AFFORDED TO THE ASSESSEE WAS IN CORRECT. THE CIT(APPEALS) IN THE SECOND ROUND OF APPEAL, VIDE PA RA 14 OF THE APPELLATE ORDER, ON THE PERUSAL OF THE ASSESSMENT R ECORD FOUND THAT THE ASSESSING OFFICER HAD GIVEN ATLEAST 2 YEAR S TIME TO THE ASSESSEE TO EXPLAIN ITS CASE WHEREAS THE ASSESSEE S IMPLY REMAINED SILENT ON THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER. THE CIT(APPEALS) FURTHER OBSERVED THAT THE ASSESSING OFFICER IN HIS ORDER AT PAGE 2 HAS CLEARLY GIVEN FINDING THAT ASSE SSEE WAS GIVEN PHOTO COPIES OF THE SEIZED DOCUMENTS BY THE ADIT (I NVESTIGATION) AS EARLY AS 15.11.1998, 24.11.1998, 25.11.1998 AND 27.11.1998 WHEREAS THE PLEA OF THE ASSESSEE BEFORE THE CIT(APP EALS) IN THE FIRST ROUND OF APPELLATE PROCEEDINGS WAS THAT THE P HOTO COPIES OF THE SEIZED DOCUMENTS WERE GIVEN IN OCTOBER,2000. THE CIT(APPEALS) FURTHER NOTED THAT THE ASSESSEE NEVER MADE A REQUEST FOR TAKING THE PHOTO COPIES OF THE SEIZED D OCUMENTS TILL 28.09.2000, WHICH IN TURN WERE AGAIN GIVEN TO HIM I N OCTOBER,2000. THE CIT(APPEALS) UNDER PARA 15 AT PA GES 10 TO 21 9 OF THE APPELLATE ORDER HAS TABULATED THE SEQUENCE O F EVENTS AND DETAILS OF OPPORTUNITIES AFFORDED TO THE ASSESSEE A LONGWITH THE NARRATION/REMARKS ON PROCEEDINGS OF EACH DATE, STAR TING FROM THE DATE OF CONDUCT OF SEARCH AT THE PREMISES OF THE AS SESSEE, BOTH DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND ALSO DURING THE ASSESSMENT PROCEEDINGS, RESTORED TO THE FILE OF ASS ESSING OFFICER BY THE CIT(APPEALS). THE PERUSAL OF THE SAID TABUL ATED DETAILS REFLECT THAT THE ASSESSEE FAILED TO FURNISH INFORMA TION BEFORE THE ASSESSING OFFICER EVEN IN THE SECOND ROUND OF ASSES SMENT PROCEEDINGS AND THE CASE OF THE ASSESSEE WAS TAKEN UP FROM DATE TO DATE AND THE ASSESSEE ON ONE PRETEXT OR THE OTHE R, SOUGHT ADJOURNMENTS OR FURNISHED INSUFFICIENT EVIDENCE BEF ORE THE ASSESSING OFFICER. THE ASSESSMENT ORDER WAS FRAMED ON 31.3.2003 AND THE ASSESSEE ONLY FURNISHED PART INFO RMATION IN THE MONTH OF MARCH,2003 WHEREAS SAID PROCEEDINGS WERE S TARTED ON 19.09.2001. E) THE ASSESSEE, THEREAFTER APPEALED AGAINST THE SAID ASSESSMENT ORDER DATED 31.3.2003 AND EVEN BEFORE THE CIT(APPEA LS), SOUGHT ADJOURNMENTS ON ONE PRETEXT OR THE OTHER. THE ASSE SSEE WAS ASKED TO GIVE REASONS FOR WITHDRAWAL OF CASH AND RE ASONS FOR RE- DEPOSITING THE SAME IN THE BANK ACCOUNT AND ALSO FU RNISHING THE DETAILS OF SOURCE OF INVESTMENT. THE CIT(APPEALS) VIDE ENTRY DATED 14.08.2008 NOTES THAT THE ASSESSEE SOUGHT PER MISSION TO PRODUCE BOOKS OF ACCOUNT WHICH ADMITTEDLY WERE PREP ARED AFTER THE SEARCH, FOR THE PERIOD PRIOR TO SEARCH. THE AS SESSEE WAS AGAIN DIRECTED TO EXPLAIN SOURCE OF INVESTMENT AND IN REP LY THE SIMPLE STATEMENT OF WITHDRAWAL FROM THE BANK WAS FILED, WH ICH AS PER CIT(APPEALS) WAS NOT SUFFICIENT TO EXPLAIN THE CRED IT IN THE BANK 10 ACCOUNT. EVEN IN THE CASE OF TRANSFER OF BANK ENTR Y, THE CIT(APPEALS) OBSERVED THAT THE ASSESSEE HAD TO EXPL AIN THE SOURCE OF THE AMOUNT TRANSFERRED FROM ONE BANK TO THE OTHE R. THE CIT(APPEALS) VIDE PARA 20, GIVES THE FINDING THAT W HERE IT IS FOUND THAT THE EVIDENCE HAD BEEN UNNECESSARILY DELA YED, THEN THE ASSESSING OFFICER WOULD BE JUSTIFIED IN IGNORING TH ESE EVIDENCES WHICH HAVE BEEN GIVEN IN MARCH,2003 EVEN THOUGH THE ASSESSEE WAS ASKED TO ATTEND THE HEARING RIGHT FROM SEPTEMBE R, 2001. THE CIT(APPEALS) VIDE PARA 21 AT PAGE 23 OF THE APPELLA TE ORDER, OBSERVED THAT THE ASSESSEE WAS TRYING TO PROVE EVER YTHING THROUGH AFFIDAVITS, WHICH WERE SELF-SERVING DOCUMENTS UNTIL AND UNLESS THEY ARE CORROBORATED BY CORRESPONDING EVIDENCE ON THE CONTENTS OF THE AFFIDAVIT AND ALSO THE INVESTIGATION IS TO B E DONE BY THE ASSESSING OFFICER. MERE FILING OF AFFIDAVIT IS NOT A SUFFICIENT PROOF. THE CIT(APPEALS) NOTED THAT THERE WERE VARI OUS CASH CREDITS FOUND IN THE BANK ACCOUNT OF THE ASSESSEE A ND BY WAY OF AN AFFIDAVIT PRODUCED IN THE MONTH OF MARCH,2003, T HE ASSESSEE CLAIMS TO HAVE EXPLAINED THE SOURCE OF THE SAID CAS H CREDIT. THE CIT(APPEALS) FURTHER NOTES THAT THERE WAS NO SUCH C ONTENT OF THE AFFIDAVIT, WHICH WOULD SHOW THAT THE SAME COULD NOT BE PRODUCED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND THE PRODUCTION OF THE AFFIDAVITS IN THE MONTH OF MARCH,2003 COULD NOT BE ACCEPTED IN THE ABSENCE OF THE ASSESSEE HAVING FAILED TO EXP LAIN THE CIRCUMSTANCES FOR NOT PRODUCING THE SAME EARLIER. V IDE PARA 22 AT PAGES 23 TO 25 OF THE APPELLATE ORDER, THE CIT(APPE ALS) THEREAFTER TOOK NOTE OF THE VARIOUS EVIDENCES FILED BY THE ASS ESSEE IN MARCH,2003 AND OBSERVED THAT ALL SAID DOCUMENTS EXP LAINING THE ENTRIES, COULD VERY WELL HAVE BEEN PRODUCED BY THE ASSESSEE IN 11 THE ORIGINAL ASSESSMENT PROCEEDINGS ITSELF AS THE S AME WERE COPIES OF BANK ACCOUNT OR AFFIDAVITS OF VARIOUS PER SONS WITH REGARD TO INVESTMENT IN DIFFERENT CONCERNS AND THEI R PRODUCTION AT SUCH A LATE STAGE PREVENTED CROSS VERIFICATION BY T HE ASSESSING OFFICER AND HENCE, THE SAME COULD NOT BE ADMITTED A T THE LATE STAGE. F) THE CIT(APPEALS), BEFORE ADDRESSING THE ISSUE ON M ERITS OF EACH OF THE GROUNDS OF APPEAL, FIRST ADDRESSED THE LEGAL IS SUES, WHICH WE SHALL ADDRESS AT THE APPROPRIATE TIME, AND THEREAFT ER NOTED THAT THE ASSESSEE HAD FAILED TO PRODUCE THE BOOKS OF ACCOUNT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND IT IS AN ADMITTED POSITION THAT NO BALANCE SHEETS WERE FILED ALONGWIT H THE RETURN OF INCOME. HOWEVER, DURING THE COURSE OF APPELLATE PRO CEEDINGS, ASSESSEE PREPARED CASH FLOW STATEMENT AND THE ASSES SEE SOUGHT TO EXPLAIN THE VARIOUS INVESTMENTS THROUGH THE SAID CA SH FLOW STATEMENT AND VARIOUS AFFIDAVITS. THE SAID CASH FLO W STATEMENT, FOR THE FIRST TIME WAS PLACED BEFORE THE CIT(APPEALS) I N THE MONTH OF APRIL,2005 TO EXPLAIN VARIOUS INVESTMENTS BY WAY OF INTRODUCTION OF THE AMOUNTS IN CASH, WHICH IN-TURN WERE NOT SUPPORT ED BY ANY EVIDENCE. THE RELEVANT FINDINGS OF THE CIT(APPEALS) VIDE PARAS 38- 39 OF THE APPELLATE ORDER ARE AS UNDER : 38 THE ASSESSEE HAS MADE CASH FLOW STATEMEN T AS A PANACEA FOR EXPLAINING ALL KINDS OF INVESTMENTS. THE SCRUTINY O F CASH FLOW STATEMENT REVEALS THAT THE ASSESSEE IN ORDER TO EXPLAIN THE V ARIOUS INVESTMENTS IS ATTEMPTING TO INTRODUCE THE AMOUNTS THAT TOO IN CAS H AND UNSUPPORTED BY ANY EVIDENCE. IT MAY BE REMEMBERED THAT THE SAID CA SH FLOW STATEMENT IS NEVER PRODUCED BEFORE THE ASSESSING OFFICER FOR VER IFICATION. THIS HAS BEEN PLACED BEFORE THE CIT(APPEALS) THAT TOO IN APRIL, 2 005. THE ASSESSING OFFICER NEVER HAD A CHANCE TO MAKE VERIFICATION OF THE ENTRIES OR TO MAKE FURTHER INVESTIGATION. THE ENTRIES GIVEN IN THE CAS H FLOW STATEMENT ARE RELATING TO THE CASH RECEIPTS FROM VARIOUS SOURCES. FOR EXAMPLE, ON PAGE 385, THE ASSESSEE HAS SHOWN RECEIPTS FROM M/S S.K. & COMPANY, CHANDERDEEP JAIN (HUF), CHANDERDEEP JAIN (FFUF, SAL E OF TREES). THERE IS 12 NO DOCUMENTARY EVIDENCE WHICH COULD BE BELIEVED THA T THE ASSESSEE WAS REALLY IN RECEIPT OF CASH ON ACCOUNT OF SALE OF TRE ES. THE RECEIPTS FROM M/S S.K. & COMPANY ARE ALSO NOT VERIFIABLE. THE PERUSAL OF CAPITAL ACCOUNT OF THE ASSESSEE IN M/S S.K. & COMPANY SHOWS THAT THERE IS CASH DEPOSIT OF RS.26000/-ON 6/5/93. THE GENUINENESS OF THESE CASH AMOUNTS IN THE CAPITAL ACCOUNT OF M/S S.K. & COMPANY COULD NOT BE VERIFIED AS THE ASSESSEE FAILED TO GIVE ALL SUCH INFORMATION BEFORE THE ASSESSING O FFICER. THEREFORE, THE RELIANCE OF THE ASSESSEE ON THE CASH FLOW STATEMENT IS WITHOUT ANY MERIT. THERE IS NO COGENT MATERIAL TO EXPLAIN THE SOURCE. THE CASH FLOW STATEMENT PREPARED BY THE ASSESSEE IS A SELF-SERVING DOCUMENT . IT IS SEEN THAT THE ASSESSEE HAS PREPARED A LIST OF DIFFERENT INVESTMEN TS ON VARIOUS DATES AND THEN ATTEMPTED TO SHOW VARIOUS RECEIPTS THAT TOO IN CASH CORRESPONDING TO THESE DATES. AT SUCH A LATE STAGE I.E. IN 2005, SUC H DOCUMENTS CANNOT BE IN PRINCIPLE ADMITTED. IT WAS THE DUTY OF THE ASSESSEE TO PLACE ALL MATERIAL AT THE PROPER TIME BEFORE THE ASSESSING OFFICER. IN IT S APPROACH TO DELAY THE INVESTIGATION, THE ASSESSEE CHOSE A WAY NOT TO PLAC E ANY MATERIAL BEFORE THE ASSESSING OFFICER EVEN THOUGH THE ASSESSEE COULD HA VE DONE. THE ASSESSEE HAS FAILED TO PROVE HIS BONAFIDES. 39 IT IS ALSO POINTED OUT THAT THE ASSESSEE IS NOT MAINTAINING REGULAR BOOKS OF ACCOUNTS. THERE IS NO DAY-TO-DAY CASH BOOK AND T HE LEDGER OR ANY OTHER CORRESPONDING BOOK. THIS CASH FLOW STATEMENT IS JUS T PREPARED BY THE ASSESSEE TAKING THE SAME DATES WHERE THERE WAS NEED TO EXPLAIN THE SOURCE OF INVESTMENTS IN THE VARIOUS PROPERTIES OR TO EXPLAIN THE CASH AMOUNTS DEPOSITED IN VARIOUS BANKS. IF WE ACCEPT THE THEORY PROPOUNDED BY THE ASSESSEE ON CASH FLOW STATEMENT, THEN THERE IS NO N EED FOR ANY PERSON TO MAINTAIN REGULAR BOOKS OF ACCOUNTS. THE ASSESSEE WO ULD WAIT TILL THE DEPARTMENT TAKE SOME ACTION, THEN COME OUT WITH A T HEORY OF CASH FLOW STATEMENT WHICH ABOUNDS IN ALL KINDS OF CASH RECEIP TS WITHOUT ANY CORROBORATIVE EVIDENCE. IN OTHER WORDS, THE ASSESSE E COULD NOT PROVE THE SOURCE OF CASH RECEIPTS WITH DOCUMENTARY EVIDENCE. TO REPEAT, THE ASSESSEE HAS SHOWN THE RECEIPTS ON ACCOUNT OF SALE OF TREES IN THE ACCOUNT OF CHANDERDEEP JAIN (HUF) AT SUCH A LATE STAGE. HAD TH E ASSESSEE FURNISHED THIS INFORMATION BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER WOULD HAVE MADE THE NECESSARY ENQUIRY AT THAT POINT OF TI ME TO FIND OUT THE VERACITY OF THE STATEMENT. IN THIS CASE, THE ASSESSEE IS PLA YING SMART TO PUT UP THE INFORMATION AT SUCH A LATE STAGE AND MAKING SUBMISS IONS IN SUCH A MANNER AS IF EVERYTHING IS EXPLAINED. THE OTHER SOURCE WHICH IS GENERALLY SHOWN BY THE ASSESSEE IS WITHDRAWAL FROM M/S S.K. & COMPANY. THE ASSESSEE FAILED TO GIVE ANY EVIDENCE OF DEPOSITS IN M/S S.K. & COMPANY. THE ASSESSEE WANTS THE DEPARTMENT TO BELIEVE THAT IF SOME ENTRIES HAVE BEE N WRITTEN AS WITHDRAWAL FROM M/S S.K. & COMPANY, THE SAME SHOULD BE TREATED AS EXPLAINED. THE SAID ARGUMENTS OF THE ASSESSEE ARE ERRONEOUS AS THE ASSE SSEE HAS TO FULFILL ALL THE INGREDIENTS OF SECTION 68 I.E. IDENTITY, CAPACITY A ND CREDITWORTHINESS. THE BOOKS OF ACCOUNTS MAINTAINED BY M/S S.K. & COMPANY HAVE BEEN REJECTED BY THE ASSESSING OFFICER. THE ASSESSEE FAILED TO PRODU CE BOOKS OF ACCOUNT. THE ASSESSING OFFICER IN THE ASSESSMENT OF M/S S.K. & C OMPANY HAS REJECTED THE BOOKS OF ACCOUNTS MAINTAINED BY MS S.K. : & COMPANY.B Y REJECTION OF BOOKS OF ACCOUNTS, ANY RECEIPT STATED TO BE RECEIVED FROM M/S. S.K. & COMPANY CANNOT BE TREATED TO BE EXPLAINED. THE ASSESSEE IN ORDER TO EXPLAIN THE SOURCE OF INVESTMENT IS EMPHASIZING TIME AND AGAIN ON THE CASH FLOW STATEMENT. EVEN IN CASES WHERE THE ASSESSEES ARE M AINTAINING REGULAR BOOKS OF ACCOUNT AND THE ASSESSING OFFICER FIND CERTAIN D ISCREPANCIES, THE BOOKS OF ACCOUNT ARE REJECTED. THE CASE OF THE ASSESSEE IS W ORSE WHERE THERE IS JUST CONSOLIDATION OF MANY ENTRIES ON THE RECEIPT AND P AYMENT SIDES IGNORING ALL THE PRINCIPLES OF ACCOUNTANCY OF MAINTENANCE OF DAY -TO-DAY BOOKS OF ACCOUNT. 13 THE ASSESSEE IS ATTEMPTING TO GIVE THE STATUS OF TH IS CASH FLOW STATEMENT AS THE REGULAR BOOKS OF ACCOUNT. THEREFORE, ANY RELIAN CE BY THE ASSESSEE ON THE CASH FLOW STATEMENT IS WITHOUT ANY MERIT. G) THE CIT(APPEALS) VIDE PARA 40 HELD THAT CASH FLO W STATEMENT FILED BY THE ASSESSEE WAS AN AFTER THOUGHT AND AS T HE ASSESSEE HAD FAILED TO PRODUCE THE EVIDENCE BEFORE THE ASSES SING OFFICER, AND EVEN DURING THE SECOND ROUND OF ASSESSMENT PROC EEDINGS, THE INVESTIGATIONS OR CONFIRMATIONS OF THE PLEAS RAISED BY THE ASSESSEE COULD NOT BE CARRIED ON BY THE ASSESSING O FFICER AND IN VIEW THEREOF, THE CONSEQUENCES HAD TO BE BORNE BY T HE ASSESSEE UNDER THE PROVISIONS OF THE ACT. THE CIT(APPEALS) VIDE PARA 43 CLEARLY OBSERVED THAT IT IS AN OBLIGATION ON THE DE PARTMENT TO ALLOW FAIR OPPORTUNITIES TO THE ASSESSEE. IN THE P RESENT CASE, SUFFICIENT OPPORTUNITY WAS ALLOWED TO THE ASSESSEE. HOWEVER, THE ASSESSEE PRODUCED THE MATERIAL ONLY IN OCTOBER,2000 OR MARCH,2003 SO THAT NO TIME WAS LEFT WITH THE ASSESS ING OFFICER TO MAKE ANY FURTHER ENQUIRIES AND IN SUCH CIRCUMSTA NCES, THE CASE HAD TO BE DECIDED BASED ON THE SAID PECULIAR F ACTS. H) THE ASSESSEE WAS FOUND TO BE MAINTAINING TEN BA NK ACCOUNTS AND MAJORITY OF THE TRANSACTIONS WERE IN CASH. THE CIT (APPEALS) VIDE PARA 47 HELD THAT SUCH STATE OF AFFAIRS DOES N OT INSPIRE CONFIDENCE AND CIRCUMSTANTIAL EVIDENCE WAS AGAINST THE ASSESSEE. FURTHER, THE ASSESSEE HAD FAILED TO SHOW ANY INCOME IN HIS PERSONAL RETURNS TO EXPLAIN THE LARGE AMOUNT OF CAP ITAL IN M/S S.K. & COMPANY AND THOUGH THE ASSESSEE WAS PRODUCIN G VARIOUS DOCUMENTS I.E. WITHDRAWALS FROM BANK ACCOUNTS ETC., BUT THE FACTS REVEALED THAT ULTIMATELY THE ORIGIN WAS OUT O F CASH INTRODUCED BY THE ASSESSEE WHICH IN-TURN WAS WITHOU T ANY 14 EXPLANATION. EVEN WHEN SOME EXPLANATION WAS GIVEN, IT WAS AS OF CASH GENERATION BY SALE OF TREES OR UNPROVED LOA NS AND THE REQUIREMENTS OF SECTION 68 BEING NOT SATISFIED, THE SAID AMOUNTS WERE TO BE TREATED AS INCOME OF THE ASSESSEE UNDER THE PROVISIONS OF SECTION 68 OF THE ACT. I) THE CIT(APPEALS) THEREAFTER INDIVIDUALLY REFER RED TO THE VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER AND THE EXP LANATION OF THE ASSESSEE IN ORDER TO ADJUDICATE THE ISSUE ON ME RITS OF THE ADDITION. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE RECORD. SEARCH UNDER SECTION 132(1) OF THE ACT WAS CONDUCT ED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 30.09.1998 ALONGWITH SE ARCH CONDUCTED SIMULTANEOUSLY AT THE PREMISES OF HIS BROTHER SHRI VIPIN JAIN. BOTH THE ASSESSEE AND SHRI VIPIN JAIN WERE PARTNERS IN M/S S .K. & COMPANY, 90, INDUSTRIAL AREA, CHANDIGARH. DURING THE COURSE OF SEARCH, VARIOUS DOCUMENTS WERE FOUND AND SEIZED INCLUDING DOCUMENTS RELATING TO VARIOUS INVESTMENTS MADE BY THE ASSESSEE DURING THE BLOCK PERIOD. NOTICE UNDER SECTION 158BC(A) OF THE INCOME TAX ACT WAS ISSUED TO THE ASSESSEE ON 11.6.1999 AND SERVED UPON THE ASSESSEE ON 18.06.1999. THE ASSESSEE FAILED TO FURNISH THE RETURN OF INCOME FOR THE BLOCK PERIOD BEFORE THE ASSESSING OFFICER DESPITE SHOW CAUSE NOT ICES ISSUED TO HIM AND IT WAS EVENTUALLY FILED ON 12.10.2000. IT IS T O BE NOTED THAT THE ORIGINAL ASSESSMENT WAS GETTING TIME BARRED ON 30. 10.2000 AND THE ASSESSEE HAD FURNISHED THE RETURN FOR THE BLOCK PER IOD ON 12.10.2000. THE ORIGINAL ASSESSMENT COMPLETED IN THE CASE WAS S ET ASIDE BY THE CIT(APPEALS) WITH THE DIRECTION TO THE ASSESSING OF FICER TO FRAME THE ASSESSMENT DENOVO AFTER INVESTIGATING THE ADDITIONA L EVIDENCE FILED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS. IN THE SECOND ROUND OF 15 ASSESSMENT PROCEEDINGS ALSO THE ASSESSEE SOUGHT ADJ OURNMENTS ON ONE PRETEXT OR THE OTHER AND IN THE REPLY DATED 11.03.2 003 THE ASSESSEE DISPUTED THAT THE ASSESSMENT PROCEEDINGS WERE BAD I N LAW. THEN ON 17.03.2003, THE ASSESSEE FURNISHED THE REPLY CONTAI NING EVIDENCE/DOCUMENTS WHICH WERE NOT FILED AT THE TIME OF ORIGINAL ASSESSMENT. THE INITIAL OBJECTION OF THE ASSESSEE V IS--VIS THE JURISDICTION OF THE OFFICER COMPLETING THE ASSESSME NT WERE REJECTED BY THE ASSESSING OFFICER AND THEREAFTER, THE ASSESSMEN T WAS COMPLETED ON THE BASIS OF THE DOCUMENTS AVAILABLE VIDE ORDER DAT ED 31.03.2003, UNDER WHICH THE UNDISCLOSED INCOME OF THE ASSESSEE UNDER DIFFERENT HEADS FOR DIFFERENT FINANCIAL YEARS WAS COMPUTED, RESULTING I N ADDITION OF RS. 1,89,19,124/-. THE YEAR-WISE UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD I.E. FROM 01.04.1988 TO 30.09.1988 IS TABULATED AT PAGE 15 OF THE ASSESSMENT ORDER DATED 18. THE CIT(APPEALS) AT PAGES 14 TO 17 OF THE APPELLATE ORDER HAS DATE-WISE TABULATED THE PROCEEDINGS BEFORE THE ASSE SSING OFFICER AND THE MATTER WAS RESTORED BACK TO THE ASSESSING OFFICER B Y THE CIT(APPEALS) WHEREIN THE ASSESSEE TIME AND AGAIN HAD SOUGHT ADJO URNMENT ON ONE PRETEXT OR THE OTHER. ON 17.03.2003, THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE CERTAIN EVIDENCE AND ALSO TO PR ODUCE CERTAIN PERSONS AND SOME OF THE PERSONS WERE PRODUCED ON 17.03.2003 . THEREAFTER, THE ASSESSMENT ORDER WAS PASSED ON 31.03.2003. 19. DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT (APPEALS), IN THE SECOND ROUND OF APPEAL, THE APPEAL WAS FIXED FROM O CTOBER,2003 ONWARDS AND VIDE PARA 16, THE CIT(APPEALS) NOTES THAT HIS P REDECESSORS HAD GIVEN AS MANY AS 25 OPPORTUNITIES AND THE ASSESSEE HAD AS KED FOR REPEATED ADJOURNMENTS. FURTHER, THE APPEAL WAS AGAIN FIXED BY THE INCUMBENT 16 CIT(APPEALS) AND THE DETAILS OF OPPORTUNITIES AND T HE REMARKS AS PER THE NOTING-SHEET ARE TABULATED DATE-WISE UNDER PARA 17 AT PAGES 18 TO 21 OF THE APPELLATE ORDER. THE ASSESSEE WAS ASKED TO GIV E THE DETAILS OF THE TOTAL INVESTMENT YEAR-WISE AND THEIR SOURCES AND AL SO EXPLAIN WITH THE CONDITIONS LAID DOWN UNDER RULE 46A OF IT RULES VIS --VIS THE ADDITIONAL EVIDENCES PRODUCED AND ALSO A CHART MENTIONING THE DETAILS OF EVIDENCES FILED TO EXPLAIN THE SOURCE OF EACH ITEM I.E. CONFI RMATION OF LOAN, AFFIDAVIT ETC. THE ASSESSEE ON 14.08.2008 FILED A CHART OF INVESTMENTS AND DURING THE COURSE OF HEARING ON THE SAID DATE, IT WAS ADMITTED BY THE LD. AR FOR THE ASSESSEE THAT THE BOOKS OF ACCOUNT W ERE STATED TO BE PREPARED, WERE MADE AFTER THE SEARCH. THE PLEA OF THE ASSESSEE BEFORE CIT(APPEALS) WAS THAT IT WAS NOT GIVEN SUFFICIENT O PPORTUNITY, WAS NOT ACCEPTED BY THE CIT(APPEALS) IN VIEW OF THE ISSUE S UMMARIZED UNDER PARA 19 OF THE APPELLATE ORDER. IT HAS BEEN NOTED BY THE CIT(APPEALS) THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCE EDINGS, ASSESSEE DID NOT FURNISH ANY INFORMATION TILL OCTOBER,2000 AND T HE CASE WAS GETTING TIME BARRED IN OCTOBER,2000. FURTHER, AFTER THE AP PELLATE PROCEEDINGS WERE COMPLETED IN MARCH,2001 AND ASSESSMENT PROCEED INGS WERE GETTING TIME BARRED ON 31.03.2003, THE ASSESSEE FURNISHED T HE DETAILS IN MARCH,2003. THE DELAY ON BEHALF OF THE ASSESSEE WA S FOUND TO BE UNNECESSARY AND THE CIT(APPEALS) HELD THAT THE ASSE SSING OFFICER, IN SUCH CIRCUMSTANCES, WOULD BE JUSTIFIED IN IGNORING THE EVIDENCES, WHICH WERE GIVEN IN MARCH,2003 EVEN WHEN THE ASSESSEE WAS ASKED TO ATTEND THE PROCEEDINGS RIGHT FROM SEPTEMBER,2001. THE ASS ESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT DURING THE COURSE OF O RIGINAL ASSESSMENT PROCEEDINGS, NO BALANCE-SHEETS WERE FILED ALONGWITH THE RETURN OF INCOME FILED FOR THE BLOCK PERIOD. THE ASSESSEE, THOUGH GA VE AN EXPLANATION ABOUT SOME OF THE INVESTMENTS/INVENTORIES BUT COMPL ETE INFORMATION WAS 17 NOT FILED BEFORE THE ASSESSING OFFICER IN THE ORIGI NAL ASSESSMENT PROCEEDINGS OR EVEN DURING THE SET ASIDE APPELLATE PROCEEDINGS. THE ASSESSEE, HOWEVER FURNISHED CASH FLOW STATEMENT DUR ING THE COURSE OF APPELLATE PROCEEDINGS IN THE SECOND ROUND VIDE WHIC H THE ASSESSEE SOUGHT TO EXPLAIN VARIOUS INVESTMENTS THROUGH THE S AID CASH FLOW STATEMENTS AND AFFIDAVITS. THE CIT(APPEALS) VIDE P ARA 38 AND 39, AFTER DELIBERATING UPON THE DOCUMENTS SUBMITTED BY THE AS SESSEE, VIDE PARA 40 TO 43 AT PAGE 36 OF THE APPELLATE ORDER HELD AS UND ER : 40 THE CASH FLOW STATEMENT IS AN AFTER THOUGHT. THE AS SESSEE COULD HAVE GIVEN THIS INFORMATION DURING THE COURSE OF ORIGINAL ASSE SSMENT PROCEEDINGS WHICH IS THE RIGHT STAGE AS PER PROVISIONS OF INCOME TAX ACT . IT IS NOT THE SWEET WILL OF THE ASSESSEE TO PRODUCE INFORMATION WHENEVER IT WANTS T O DO. IT IS IMPORTANT TO DELINEATE THE SCHEME OF THE ACT. 41. THE ASSESSING OFFICER ISSUES NOTICES U/S 143( 2)/142(1). AS PER NOTICE U/S 143(2), AN OPPORTUNITY IS GIVEN TO THE ASSESSEE TO PRODUCE OR CAUSE TO BE PRODUCED ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPP ORT OF THE RETURN. AS PER NOTICE U/S 142(1), THE ASSESSING OFFICER MAY : (A) ASK FOR FILING THE RETURN. (B) ASK TO PRODUCE BOOKS OF ACCOUNT, DOCUMENTS, ETC. (C) ASK FOR INFORMATION ON CERTAIN POINTS. 42. THE POINT TO BE EMPHASIZED IS THAT THE ASSES SING OFFICER CANNOT GO AHEAD WITHOUT THIS COMPLIANCE. IF THE ASSESSEE HAS SUCCEE DED IN NOT ALLOWING THE ASSESSING OFFICER TO PROCEED FURTHER, THEN THE CONS EQUENCES HAS TO BE BORNE BY THE ASSESSEE AS PER PROVISIONS OF THE ACT. 43. THE ONLY OBLIGATION OF THE DEPARTMENT IS TO A LLOW FAIR OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE SHOULD ALSO UNDERSTAND THE W ORKING OF THE DEPARTMENT IN AS MUCH AS THE ASSESSING OFFICER HAS TO GIVE FAIR OPPO RTUNITY TO EACH ASSESSEE WHOSE CASES ARE BEING SCRUTINIZED. FOR THAT PURPOSE, SLOT S OF TIME ARE FILLED UP FOR VARIOUS ASSESSEES AND OTHER WORKS RELATED TO OFFICE. IT IS QUITE POSSIBLE THAT ASSESSEE TAKES ADJOURNMENT AND THE MATTER HAS TO BE ADJOURNED. T HEN THE ASSESSEE CANNOT TAKE AS A MATTER OF RIGHT TO FILL THE SLOT ALLOTTED TO OTHE R WORK OR ALLOTTED TO SOME OTHER ASSESSEES. THE ASSESSEE HAS MADE ATTEMPTS TO ENCROA CH UPON THE TIME ALLOTTED TO OTHER ASSESSEES. IF THE ASSESSING OFFICER DOES SO, THEN NATURAL JUSTICE WOULD BE DENIED TO OTHER ASSESSEES OF HIS JURISDICTION. IN O THER WORDS, FOR THE SMOOTH FUNCTIONING OF THE OFFICE, THE ASSESSEE CANNOT ASK THE ASSESSING OFFICER TO DEVOTE TIME AS PER HIS SWEET WILL. IF SUCH A STATE OF AFFA IR IS ALLOWED TO HAPPEN, THEN NO ASSESSING AUTHORITY, NO CIT(APPEALS), OR HON'BLE IT AT OR HON'BLE COURTS CAN FUNCTION PROPERLY. THE ASSESSING OFFICER HAD TO DIS POSE OF MANY OTHER CASES APART FROM THE CASES OF THIS ASSESSEE. SUCH PERFORMANCE O F FUNCTIONS IS INHERENT IN THE SYSTEM. 18 20. IN VIEW OF THE CONDUCT OF THE ASSESSEE IN NO T FURNISHING THE INFORMATION IN TIME DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND RELYING UPON THE CASH FLOW STATEMENT WHICH HAD MANY LATCHES, THE CIT(APPEALS) DECIDED THE APPEAL AFTER REJECTING THE SAME. 21. THE LD. AR FOR THE ASSESSEE, DURING THE COURS E OF HEARING VEHEMENTLY PLACED RELIANCE ON THE SAID CASH FLOW ST ATEMENT PLACED AT PAGES 346 ONWARDS. THE PERUSAL OF THE CASH FLOW ST ATEMENT REFLECTS THAT THERE IS AN OPENING CASH OF RS.68,500/- AS ON 01.04 .1988 AND THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE IN RESP ECT THEREOF. THEREAFTER, THE ASSESSEE HAS, ON VARIOUS DATES SHOW N INTRODUCTION OF VARIOUS AMOUNTS FROM THE PARTNERSHIP CONCERN S.K. & COMPANY AND LOANS RECEIVED IN CASH ON VARIOUS DATES FROM VARIOUS PERS ONS. THE ASSESSEE CLAIMS THAT IT HAS FURNISHED ON RECORD THE AFFIDAVI TS OF ALL SUCH PERSONS WHO HAVE GIVEN THE AMOUNT IN CASH TO THE ASSESSEE A ND CONSEQUENTLY, THE SAME SHOULD HAVE BEEN ACCEPTED. ANOTHER SOURCE OF CASH INTRODUCTION IS OUT OF SALE OF TREES BY THE HUF OF THE ASSESSEE FOR WHICH THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE. ON 15.03.1995 THE ASSESSEE HAS SHOWN A SUM OF RS. 85,000/- AS INCOME FROM OTHER SO URCES. THE ASSESSEE, ON THE OTHER HAND, HAS ALSO TABULATED HIS PAYMENTS MADE ON VARIOUS DATES I.E. EXPLAINING THE SOURCE OF CASH DE POSITS IN THE VARIOUS BANK ACCOUNTS MAINTAINED BY THE ASSESSEE AND ALSO A MOUNTS UTILIZED IN INVESTMENT IN VARIOUS PROPERTIES AND THE AMOUNTS AD VANCED TO THE PARTNERSHIP CONCERN M/S S.K. & CO. THE ASSESSEE HA S ALSO PURCHASED A CAR IN CASH ON 22.04.1993 FOR RS.1,82,000/- OUT OF THE SAID CASH FLOW AND ALSO INVESTED A SUM OF RS. 6,00,000/- IN PLOT NO. 7 /5 ON 24.03.1995 BESIDES INVESTING VARIOUS AMOUNTS IN DIFFERENT BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. 19 22. DURING THE COURSE OF HEARING, LD. AR FOR THE AS SESSEE WAS ASKED TO RECONCILE THE AMOUNTS SHOWN IN THE CASH FLOW STATEM ENT WITH THE AFFIDAVITS FILED BY THE ASSESSEE AND ALSO WITH THE ENTRIES IN THE BANK ACCOUNT IN RESPECT OF THE SOURCE OF DEPOSITS IN THE SAID BANK ACCOUNTS. THE ASSESSEE HAD SHOWN TO HAVE RECEIVED RS. 18,000/ - IN CASH FROM ONE MS. NISHA JAIN ON 06.02.1989 AND THE AFFIDAVIT OF M S. NISHA JAIN WAS REFERRED AT PAGE 405 OF THE PAPER BOOK. THE PERUSA L OF THE SAID AFFIDAVIT REFLECTS THAT THE SAME IS NOT PREPARED ON STAMP PAP ER AND IS FILED ON PLAIN PAPER AND IS UN-DATED AND THE NAME OF THE PLA CE OF ISSUE IS ALSO MISSING. THERE IS NO ATTESTATION OF THE SAID AFFID AVIT AND THE SAME BEING A BLANK DOCUMENT, CANNOT BE ACCEPTED AS AN EVIDENCE OF HAVING ACCEPTED THE AMOUNT IN CASH. IN THE SAID AFFIDAVIT, THE ASSE SSEE CLAIMS TO HAVE RECEIVED RS.18,000/- IN CASH ON 06.02.1989, RS. 10, 000/- ON 04.01.1990 AND RS. 8,000/- ON 29.03.1990, IN ADDITION TO RS. 1 ,94,000/- RECEIVED BY CHEQUE ON 25.10.1989. 23. THE ASSESSEE HAS FURTHER CLAIMED TO HAVE RECEIV ED VARIOUS AMOUNTS IN CASH AS LOAN FROM ONE MS. NIRMAL JAIN AND THE AF FIDAVIT OF SMT. NIRMAL JAIN IS PLACED AT PAGES 403-404 OF THE PAPER BOOK. THE SAID AFFIDAVIT IS EXECUTED ON A STAMP PAPER AND IS ALSO ATTESTED. IN THE SAID AFFIDAVIT, SMT. NIRMAL JAIN STATES TO HAVE GIVEN RS .18,000/- IN CASH ON 08.02.1989 AND RS. 8,000/- IN CASH ON 15.07.1989. IN ADDITION, A LOAN OF RS.1,94,000/-, PAID VIDE CHEQUE ON 25.10.1989. IN THE SAID AFFIDAVIT, SMT. NIRMAL JAIN HAS ALSO STATED TO HAVE RECEIVED B ACK A SUM OF RS. 75,000/- ON 26.10.1989 AND RS. 2,70,000/- ON 22.06. 1996 I.E. ON ACCOUNT OF PRINCIPAL AND INTEREST OF RS. 144,453/- TILL 31. 03.1997. IT FURTHER STATES THAT A SUM OF RS. 19,453/- WAS STILL OUTSTAN DING. THE PERUSAL OF THE CASH FLOW STATEMENT REFLECTS THAT IN ADDITION T O RECEIVING RS. 18,000/- IN CASH ON 8.2.1989 AND RS. 8000/- ON 15.0 7.1989, THE ASSESSEE 20 HAS ALSO SHOWN RECEIPT OF RS. 8000/- IN CASH ON 29. 03.1990 WHICH HAS NOT BEEN ADMITTED TO HAVE BEEN PAID BY THE SAID SMT.NIR MAL JAIN.THE ASSESSEE HAS FAILED TO RECONCILE THE SAID RECEIPT O F RS. 8,000/- IN CASH ON 29.03.1990 FROM SMT. NIRMAL JAIN. 24. ANOTHER AFFIDAVIT REFERRED TO BY THE LD. AR F OR THE ASSESSEE IS PLACED AT PAGE 401 OF THE PAPER BOOK WHICH IS EXECU TED BY SHRI VIRENDER KUMAR JAIN ON BEHALF OF THE HIS DAUGHTER MS. SHIKHA JAIN WHO HAD ADVANCED A LOAN OF RS. 55,000/- VIDE TWO DIFFERENT CHEQUES. THE SAID AFFIDAVIT IS DATED 06.03.2001 AND THE SOURCE OF THE SAID AMOUNT IS NOT EXPLAINED. 25. THE ENTRIES IN THE CASH FLOW STATEMENT FURNISHE D BY THE ASSESSEE WERE ALSO TEST CHECKED WITH THE ENTRIES IN THE BANK ACCOUNTS, COPIES OF WHICH ARE PLACED BY THE ASSESSEE IN THE PAPER BOOK AT PAGES 420 ONWARDS. THE ASSESSEE AT PAGE 432 HAS PLACED ON RE CORD COPY OF BANK ACCOUNT OF STATE BANK OF PATIALA, HIGH COURT BRANCH , CHANDIGARH IN WHICH THERE ARE VARIOUS CASH ENTRIES. THE LD. AR F OR THE ASSESSEE WAS ASKED TO RECONCILE THE ENTRIES AND IT WAS POINTED O UT BY THE LD. AR FOR THE ASSESSEE THAT ON 25.10.1989, THERE WAS A WITHDR AWAL OF RS. 5,82,000/- WHICH WAS REFLECTED IN THE CASH FLOW STA TEMENT OUT OF WHICH RS. 75,000/- WAS RE-DEPOSITED ON 26.10.1989. THE L D. AR FOR THE ASSESSEE FURTHER POINTED OUT THAT ON 12.06.1991, TH ERE WAS A CASH WITHDRAWAL OF RS. 70,000/- AND THERE WAS RE-DEPOSIT ON 13.06.1991 OF RS.70,000/- WHICH WERE REFLECTED IN THE CASH FLOW S TATEMENT. FURTHER REFERENCE WAS MADE TO TWO CHEQUE WITHDRAWALS WHICH WERE ACTUALLY CASH WITHDRAWALS OF RS. 75,000/- EACH ON 11.11.1991 WHIC H WERE REFLECTED BOTH IN THE BANK STATEMENT AND CASH FLOW STATEMENT. DURING THE COURSE OF HEARING, IT WAS POINTED OUT TO THE LD. AR FOR TH E ASSESSEE THAT FURTHER THERE WAS A SELF-WITHDRAWAL OF RS. 65,000/- ON 28.0 3.1992 WHICH IS NOT 21 REFLECTED IN THE CASH FLOW STATEMENT. THE LD. AR F OR THE ASSESSEE SOUGHT TIME TO RECONCILE BUT ON THE NEXT DATE OF HEARING A LSO, NO RECONCILIATION OF THE SAID CASH WITHDRAWAL OF RS. 65,000/- BEING N OT REFLECTED IN THE CASH FLOW STATEMENT COULD BE FILED BY THE ASSESSEE. 26. THE ASSESSEE FURTHER CLAIMS TO HAVE RECEIVED LO AN FROM HIS HUF ON ACCOUNT OF SALE OF TREES, BUT THE ASSESSEE HAS FAIL ED TO FURNISH ON RECORD ANY EVIDENCE TO PROVE THE FACTUM OF SALE OF TREES A ND IN THE ABSENCE OF THE SAME, THE EXPLANATION OF THE ASSESSEE CANNOT BE ACCEPTED. IN ANY CASE, THE ASSESSEE IN HIS INDIVIDUAL CAPACITY RECEI VED CASH LOANS FROM HIS HUF AND THE SAME IS IN VIOLATION OF PROVISIONS OF T HE ACT, WHICH PROHIBITS BOTH ACCEPTANCE AND REPAYMENT OF CASH LOA NS OF RS. 20,000/- AND ABOVE. THE ASSESSEE HAVING FURNISHED THE EXPLA NATION AFTER SUCH A LONG GAP OF TIME, WHICH FIRST IS WITHOUT ANY CORROB ORATIVE EVIDENCE AND IF ACCEPTED AT FACE VALUE, IN TURN, WOULD NOT BE OP EN FOR FURTHER INVESTIGATION BY THE ASSESSING OFFICER AND ALSO VIO LATIONS, IF ANY, OF THE PROVISIONS OF THE ACT CANNOT BE BOOKED, BECAUSE OF LAPSE OF TIME. 27. ANOTHER BANK ACCOUNT MAINTAINED BY THE ASSESS EE WAS WITH THE UNION BANK OF INDIA, SECTOR 9-C, CHANDIGARH, COPY O F WHICH IS PLACED AT PAGES 450 ONWARDS OF THE PAPER BOOK. THE ASSESSEE HAS SHOWN INTRODUCTION OF CASH OF RS. 40,000/- ON 27.07.1994 FROM THE SAID BANK ACCOUNT I.E. BY WAY OF CASH WITHDRAWAL. HOWEVER, T HE PERUSAL OF THE BANK STATEMENT PLACED AT PAGE 451 REFLECTS THAT THE ENTRY ON 27.7.1994 IN RESPECT OF CHEQUE NO. 838 IS NOT OF CASH WITHDRAWAL , AS ANOTHER ENTRY ON THE SAID PAGE NO. 451 OF THE PAPER BOOK I.E. ON 26. 04.1995 REFLECTS A CASH INTRODUCTION OF RS.4,50,000/-, CASH WITHDRAWAL OF RS. 33,000/- ON 18.03.1996 AND THE ENTRIES MADE BY THE BANK WERE BY CASH/TO CASH RESPECTIVELY. HOWEVER, IN RESPECT OF THE ENTRY IN 27/07/1994 I.E. RS. 40,000/-, THERE IS NO MENTION OF CASH WITHDRAWAL OF RS.40,000/-. 22 28. THE LD. AR FOR THE ASSESSEE DURING THE COURSE OF HEARING WAS CONFRONTED WITH THE SAID NARRATIONS IN THE BANK STA TEMENT FILED BY THE ASSESSEE AND NO PLAUSIBLE EXPLANATION COULD BE FILE D IN THIS RESPECT. 29. ANOTHER ENTRY IN THE CASH FLOW STATEMENT IS O F INCOME FROM OTHER SOURCES OF RS. 85,000/- AS ON 15.03.1995 AND THE LD . AR FOR THE ASSESSEE WAS TIME AND AGAIN ASKED TO EXPLAIN HOW THE SAID AM OUNT HAS BEEN DECLARED BY THE ASSESSEE, IN THE RETURN OF INCOME F ILED FOR THE BLOCK PERIOD. THE PERUSAL OF THE ASSESSMENT ORDER REFLEC T THAT FOR THE FINANCIAL YEAR 1994-95, THE TOTAL RETURNED INCOME WAS RS. 59, 990/- WHEREAS THE INCOME FROM OTHER SOURCES HAS BEEN REFLECTED IN THE CASH FLOW STATEMENT OF RS. 85,000/- WHICH HAS NOT BEEN DECLARED BY THE ASSESSEE. THE SAID CASH FLOW STATEMENT HAS ADMITTEDLY BEEN FILED BY TH E ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS IN THE MONTH OF APR IL, 2005 AFTER GAP OF SEVERAL YEARS I.E. ON THE DATE WHEN NO ENQUIRIES C OULD BE CONDUCTED BY THE ASSESSING OFFICER, EITHER DURING THE ORIGINAL A SSESSMENT PROCEEDINGS OR EVEN DURING THE SET ASIDE ASSESSMENT PROCEEDINGS . 30. IN THE TOTALITY OF THE ABOVESAID FACTS AND CI RCUMSTANCES, THE SAID CASH FLOW STATEMENT FILED BY THE ASSESSEE DURING TH E ASSESSMENT PROCEEDINGS IS CLEARLY AN AFTER THOUGHT AND CANNOT BE RELIED UPON. WE FIND NO MERIT IN THE STAND OF THE ASSESSEE THAT INV ESTMENT MADE BY IT IN VARIOUS ASSETS INCLUDING THE CASH DEPOSITS IN THE B ANK STANDS EXPLAINED IN VIEW OF THE ENTRIES OF THE CASH FLOW STATEMENT. AS OBSERVED EARLIER, IF CASH FLOW STATEMENT IS ACCEPTED AT FACE VALUE, NO E NQUIRIES ARE FEASIBLE AFTER 15 YEARS AS THE SEARCH WAS FOR THE BLOCK PERI OD 01.04.1988 TO 30.09.1998 AND THE SAID CASH FLOW STATEMENT WAS FIL ED FOR THE FIRST TIME IN APRIL, 2005. ADMITTEDLY THE BOOKS OF ACCOUNT HA VE BEEN PREPARED AFTER THE DATE OF SEARCH AND EVEN AFTER COMPLETION OF ORIGINAL ASSESSMENT PROCEEDINGS, THEREFORE, IN OUR OPINION, THE SAME HA VE NO SANCTITY AND 23 CANNOT BE RELIED UPON TO CORROBORATE THE FUND FLOW. FURTHER THE CASH FLOW ADMITTEDLY FILED BEFORE THE CIT(APPEALS) IN APRIL, 2005 SUFFERS FROM SEVERAL DEFECTS AND THE ASSESSEE HAS FAILED TO PROV E HIS BONAFIDES. THE WITHDRAWALS FROM CAPITAL ACCOUNT WITH S.K. & CO. CA NNOT BE ACCEPTED AT FACE VALUE AS BOOKS OF ACCOUNT OF S.K. & CO. HAVE B EEN REJECTED AND HENCE ANY RECEIPT RECEIVED THEREFORE CANNOT BE HELD TO BE EXPLAINED. IN THE ABOVESAID FACTS AND CIRCUMSTANCES, THERE IS NO MERIT IN THE CONTENTION THAT THE MATTER SHOULD BE SET ASIDE FOR EXAMINATION OF CASH FLOW STATEMENT, WHICH SUFFERS FROM MANY DEFECTS AS POINTED OUT BY US IN PARAS HEREIN ABOVE, AS WELL AS LIMITATION OF REVENU E FOR TAKING CORRESPONDING ACTIONS/VERIFICATIONS, FOR EXAMPLE, N O ACTION CAN BE TAKEN NOW FOR VIOLATION OF SECTION 269SS & 269T OF THE AC T, WHERE CASH LOANS ARE ACCEPTED. ACCORDINGLY WE FIND NO MERIT IN THE R ELIANCE PLACED UPON THE CASH FLOW STATEMENT TO EXPLAIN THE SOURCE OF IN VESTMENT IN VARIOUS ASSETS AND THE BANK ACCOUNTS AND WE REJECT THE CAS H FLOW STATEMENT FILED BY ASSESSEE. HOWEVER, WE PROCEED TO DECIDE THE ISS UE ON MERITS IN THE PARAS HEREIN AFTER. 31. THE ASSESSEE VIDE GROUND NO. 2(A) HAS RAISED THE ISSUE AGAINST ADDITION OF RS. 35,000/-. DURING THE COURSE OF SEAR CH AT THE PREMISES OF THE ASSESSEE, TOTAL CASH OF RS. 3,51,600/- WAS FOUN D AND THE AUTHORITIES BELOW HAD ACCEPTED THE EXPLANATION IN RESPECT OF TH E BALANCE CASH AVAILABLE WITH THE ASSESSEE EXCEPT TO THE EXTENT OF RS. 35,000/-. THE PLEA OF THE ASSESSEE IN RESPECT OF THE SAID BALANCE CASH IN HAND IS WITHDRAWALS MADE OUT OF THE FIRM M/S S.K. & COMPANY WHICH IN-TURN ARE PART OF THE CASH FLOW STATEMENT PREPARED BY THE ASS ESSEE. IN VIEW OF OUR DECISION IN THE PARAS HEREIN ABOVE, WE FIND NO MERI T IN THE STAND OF THE ASSESSEE IN PLACING RELIANCE ON THE CASH FLOW STATE MENT HOWEVER IT CAN BE RULED OUT THAT ANY PERSON WOULD NOT HAVING SAVINGS OF RS. 35,000/-. THUS 24 WE DELETE THE ADDITION OF RS. 35,000/-. GROUND NO. 2(A) RAISED BY THE ASSESSEE IS, THUS ALLOWED. 32. THE ISSUE IN GROUND NO. 2(B) IS AGAINST THE ADD ITION OF RS. 65,000/- MADE ON ACCOUNT OF ALLEGED INVESTMENT IN H OUSEHOLD GOODS. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH OPERATION AT THE PREMISES OF THE ASSESSEE, VARIOUS VALUABLE ASSE TS WERE FOUND AT THE RESIDENCE OF THE ASSESSEE. THE LIST OF THE ITEMS AL ONGWITH THE YEAR OF MAKE ARE TABULATED UNDER PARA 2 AT PAGE 4 OF THE AS SESSMENT ORDER. THE ASSESSING OFFICER ESTIMATED THE VALUE OF THE SAID A SSETS ON THE BASIS OF MARKET VALUE OF THE ARTICLES IN THE YEAR OF MAKE/PU RCHASE. THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE TO JUSTIFY ITS CLAIM OF HAVING ACQUIRED THE SAID ASSETS ON VARIOUS FUNCTIONS/CEREMONIES. THE S ECOND CONTENTION OF THE ASSESSEE THAT CERTAIN UNDISCLOSED INCOMES HAD B EEN DECLARED IN THE BLOCK ASSESSMENT, SHOULD BE ACCEPTED TO HAVE BEEN U TILIZED FOR THE PURCHASE OF THE SAID ASSET, WAS ALSO NOT ACCEPTED B Y THE ASSESSING OFFICER AS THE DECLARED INCOME RELATED TO FINANCIAL YEAR 1997-98 FOR WHICH THE ASSESSEE HAD NOT FILED ANY RETURN OF INCO ME WHEREAS THE ASSETS WERE PURCHASED IN THE EARLIER FINANCIAL YEARS. THE ASSESSING OFFICER MADE AN ADDITION OF RS. 1,15,000/- AS UNDISCLOSED I NCOME OF THE ASSESSEE. 33. THE CIT(APPEALS) VIDE PARAS 54 TO 58 AT PAG ES 43 TO 45 OF THE APPELLATE ORDER DELIBERATED UPON THE SAID ISSUE AND NOTED THAT THE VALUE OF THE ASSETS ADOPTED BY THE ASSESSING OFFICER WERE VERY REASONABLE AND IN THE ABSENCE OF ANY EXPLANATION OF THE ASSESSEE, FAIR ESTIMATE HAD TO BE MADE BY THE ASSESSING OFFICER. FURTHER, THE ASSESS EE HAVING FAILED TO FURNISH ANY PROOF OF HAVING RECEIVED THE SAID ITEMS AT THE TIME OF VARIOUS CEREMONIES/MARRIAGE, EXPLANATION IN THIS REGARD COU LD NOT BE ACCEPTED. FURTHER THE CIT(APPEALS) NOTED THAT THE HOUSEHOLD W ITHDRAWALS OF THE 25 ASSESSEE WERE VERY LOW AND IN THE ABSENCE OF ANY MA TERIAL, FAIR ESTIMATE OF THE VALUE OF THE ASSETS HAD TO BE MADE. THE CIT (APPEALS) WAS OF THE VIEW THAT ADVANTAGE ON ESTIMATE OF GOODS WORTH RS. 50,000/- SHOULD BE ALLOWED TO THE ASSESSEE, HENCE THE ADDITION OF RS. 65,000/- WAS CONFIRMED BY THE CIT(APPEALS). 34. THE LD. AR FOR THE ASSESSEE BEFORE US HAS REITE RATED THE EARLIER SUBMISSION BUT HAS FAILED TO PRODUCE ANY EVIDENCE T O ESTABLISH ITS CLAIM OF HAVING RECEIVED THE SAID ITEMS ON OCCASION OF HI S MARRIAGE OR VARIOUS CEREMONIES. IN THE ABSENCE OF THE SAME AND KEEPING IN MIND THE ORDER OF CIT(APPEALS) IN REDUCING THE ADDITION TO RS. 65,000 /- AS AGAINST RS.1,15,000/- MADE BY THE ASSESSING OFFICER, WE FIN D NO MERIT IN THE GROUND NO. 2(B) RAISED BY THE ASSESSEE. UPHOLDING THE ADDITION OF RS. 65,000/-, WE DISMISS THE GROUND NO. 2(B) RAISED BY THE ASSESSEE. 35. THE GROUND NO. 2(C) RAISED BY THE ASSESSEE IS A GAINST ADDITION OF RS. 16,500/- ON ACCOUNT OF INVESTMENT IN SHARES OF M/S A.C.C. LTD. THE ASSESSING OFFICER VIDE PARA 4 AT PAGE 7 OF THE ASSE SSMENT ORDER HAS NOTED THE EXPLANATION OF THE ASSESSEE THAT VALUE OF 6 SHARES OF M/S A.C.C. LTD. WERE PURCHASED FOR RS. 16,500/- EACH BY THE ASSESSEE AND HIS WIFE MRS. DOLLY JAIN ON 15.08.1993. THE ASSESSEE C LAIMED THAT THE SAID SHARES BELONG TO MRS. DOLLY JAIN. HOWEVER, HIS SHA RE OF INVESTMENT WAS MADE OUT OF SALE PROCEEDS OF TREES ON LAND BELONGIN G TO HIS HUF. THE ASSESSING OFFICER MADE AN ADDITION OF RS. 16,500/- IN THE HANDS OF THE ASSESSEE AS ADDITION OF RS. 16,500/- HAD ALREADY BE EN MADE IN THE HANDS OF MRS. DOLLY JAIN. 36. THE CIT(APPEALS) VIDE PARA 68 TO 70 AT PAGES 49 TO 50 UPHELD THE ADDITION OF RS. 16,500/- AS THE ASSESSEE HAD ATTEMP TED TO EXPLAIN THE SOURCE OF INVESTMENT BY REFERENCE TO THE CASH FLOW STATEMENT. AS THE 26 CONCEPT OF CASH FLOW STATEMENT HAS BEEN REJECTED BY US IN THE PARAS HEREIN ABOVE, WE ARE IN CONFORMITY WITH THE ORDER O F THE CIT(APPEALS) IN UPHOLDING THE ADDITION OF RS. 16,500/-. WE FIND NO MERIT IN THE GROUND OF APPEAL RAISED BY THE ASSESSEE IN THIS REGARD WHE REIN IT HAS BEEN ALLEGED THAT THE SAID INVESTMENT IN SHARES OF M/S A .C.C.LTD. WAS IN THE NAME OF HIS WIFE, IN VIEW OF THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT INVESTMENT OF RS. 16,500/- E ACH HAS BEEN MADE BY THE ASSESSEE AND HIS WIFE AND ONLY ADDITION OF RS. 16,500/- HAS BEEN MADE IN THE HANDS OF THE ASSESSEE. THUS, THE GROUN D NO. 2(C) RAISED BY THE ASSESSEE IS DISMISSED. 37. THE ISSUE IN GROUND NO. 2(D) RAISED BY THE ASSE SSEE IS AGAINST THE ADDITION OF RS. 4,07,000/- BEING INVESTMENT MADE FO R THE PURCHASE OF SCO 7, SECTOR 5, PANCHKULA. 38. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE ALONGWITH HIS BROTHER SHRI VIPIN KUMAR JAIN PURCHASED THE PRO PERTY NO. 7, SECTOR 5, PANCHKULA IN OPEN AUCTION ON 24.03.1995. THE AS SESSEE PAID RS. 6,25,000/- BEING 10% OF THE BID MONEY IN CASH AND B ALANCE SUM OF RS. 9,37,500/- WAS DEPOSITED ON 26.04.1995. THE ASSESS ING OFFICER VIDE PARA 5 AT PAGE 7 OF THE ASSESSMENT ORDER CONSIDERED THE EXPLANATION OF THE ASSESSEE AND OBSERVED THAT AMOUNT OF RS. 9,37,5 00/- SPENT BY THE ASSESSEE HAD ALREADY BEEN ACCEPTED IN THE ORIGINAL ASSESSMENT AND INVESTMENT OF RS. 10,30,000/- IS REDUCED BY SUM OF RS. 5,30,000/- WITHDRAWN FROM THE BANKS. THE BALANCE INVESTMENT WA S EXPLAINED TO BE MADE OUT OF SALE OF CAR AND WITHDRAWAL FROM M/S S.K . & CO., AND RS. 80,000/- OUT OF UNDISCLOSED INCOME DECLARED BY THE ASSESSEE. THE ADDITION IN THE CASE WAS RESTRICTED TO RS. 4,07,000 /-. 27 39. THE CIT(APPEALS) OBSERVED THAT OUT OF INVESTMEN T OF RS. 15,62,500/-, RS. 5,32,500/- WAS PAID BY SHRI VIPIN JAIN AND RS. 10,30,000/- WAS PAID BY THE ASSESSEE. BEFORE THE CI T(APPEALS), THE ASSESSEE EXPLAINED THAT OUT OF TOTAL INVESTMENT OF RS. 10,30,000/-, SUM OF RS. 6,00,000/- WAS REFLECTED IN THE BALANCE SHEE T ENDING ON 31.3.1995 AND THE SAME WAS DULY EXPLAINED IN THE CASH FLOW ST ATEMENT. AS REGARDS THE BALANCE PAYMENT OF RS. 4,30,000/-, THE ASSESSEE EXPLAINED THAT THE SAME WAS MADE BY WAY OF BANK DRAFT FROM UBI SAVING BANK ACCOUNT NO. 5092 ON 26.04.1995. THE CIT(APPEALS) REJECTED THE EXPLANATION OF THE ASSESSEE WITH REGARD TO THE INVESTMENT THROUGH CASH FLOW STATEMENT. IN RESPECT OF THE CAR CLAIMED TO BE SOLD BY THE ASSESS EE, THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE OF OWNERSHIP OF CAR AND FUR THER, THE SAID CAR WAS SOLD ON 15.10.1994 WHEREAS THE INVESTMENT WAS MADE BY THE ASSESSEE ON 23.04.2005. IN RESPECT OF THE WITHDRAWAL FROM THE C ENTRAL BANK OF INDIA AND FROM THE CAPITAL ACCOUNT BY WAY OF ENTRIES THRO UGH THE CASH FLOW STATEMENT, BOTH WERE REJECTED BY THE CIT(APPEALS) A ND ADDITION OF RS. 4,07,000/- WAS UPHELD. 40. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ADDI TION AND THE EXPLANATION OF THE ASSESSEE WAS AS BEFORE THE AUTHO RITIES BELOW. HOWEVER, THE ASSESSEE HAS FAILED TO FURNISH ON RECO RD ANY EVIDENCE TO REBUT THE FINDINGS OF CIT(APPEALS) IN THIS REGARD. THE CIT(APPEALS) VIDE PARA 78 AT PAGES 52 AND 53 HAS OBSERVED AS UND ER : 78. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS, ME ASSESSEE HAS ATTEMPTED TO EXPLAIN THE INVE S TMENT THROUGH CASH FLOW STATEMENT. MY OBSERVATIONS ON OTH ER EVIDENCES ARE GIVEN BELOW : DELIVERY RECEIPT / UNDERTAKING DATED 15/10/94 FRO M SH. HARPAL SINGH. HOUSE NO. 1035, SECTOR 44-B, CHANDIGARH REGA RDING SALE OF AMBASSADOR CAR. HOWEVER, THE ASSESSEE EXP LAINED IT FOR RS.257000/- AS PER HIS SUBMISSIONS DATED 23/4/05. 28 REMARKS : THE DELIVERY RECEIPT/UNDERTAKING IS DATED 15/10/9 4. THE ASSESSEE COULD HAVE PRODUCED THE RECEIPT DURING THE COURSE OF ASSE SSMENT PROCEEDINGS AS THE RECEIPT IS DATED 15/10/94. THE AMOUNT SAID TO BE RE CEIVED IN CASH. NO VERIFICATION IS POSSIBLE IN MARCH, 2003, EVEN IF IT WAS POSSIBLE, T HE MATTER IS OLD AND NO ENQUIRY COULD BE TAKEN AGAINST SH, HARPAL SINGH REGARDING H IS SOURCE OF MONEY, THE EXPLANATION IS FOR RS.257000/- WHEREAS THE RECEIPT OF SALE OF CAR IS RS.237000/-. THERE IS A DIFFERENCE OF RS.20000/-. NO CORRESPONDI NG EVIDENCE IS GIVEN AS HOW SH. HARPAL SINGH SHOWS THE CAR IN HIS RETURN OF INCOME. AFFIDAVIT OF SH. CHANDERDEEP JAIN WHICH IS UNDATE D REGARDING NO OBJECTION FOR SALE OF CAR TO SH. HARPAL SINGH. REMARKS : NO EVIDENCE FILED IN RETURN OF INCOME REGARDING O WNERSHIP OF CAR BY THE ASSESSEE. WITHDRAWAL FROM CENTRAL BANK, SECTION 18, CHANDIG ARH ACCOUNT NO. 1567. REMARKS : THERE IS CREDIT ON 17/10/94. WHAT IS THE EXPLANAT ION OF THIS CREDIT. NO EXPLANATION REGARDING CREDIT OF RS. 1 LAC WAS GIVEN . HENCE SOURCE IS UNEXPLAINED. WITHDRAWAL OF RS.150000/- FROM CAPITAL ACCOUNT OF M/S S.K, & COMPANY REMARKS : WHY THERE IS A GAP IN PAYMENT I.E. FROM OCTOBER' 94 TO MARCH' 95. TO FIND OUT THE AUTHENTICITY OF THE CREDITED AMOUNT IN M/S S.K. & COMPANY. WHAT IS THE SOURCE OF CREDIT IN M/S S.K. & COMPANY. THE CREDIT SHOWN AS ON 1/4/94 IS RS. 572747/- WHERE AS THE INCOME SHOWN IN THE RETURN OF INCOME FOR ALL THE YEARS IS ABOUT RS.1500 00/-. WHAT IS THE SOURCE OF CREDIT OF M/S S.K. & COMPANY. BOOKS OF ACCOUNT OF M /S S.K. & COMPANY NOT PRODUCED BEFORE THE ASSESSING OFFICER IN THE BLOCK ASSESSMENT PROCEEDINGS OF M/S S.K. & COMPANY. VIDE EXPLANATION DATED 23/3/95, NO EVIDENCE OF RS.8 000/- WAS GIVEN. BANK STATEMENT IN RESPECT OF ACCOUNT NO. 5092 WITH OMAN BANK, WITHDRAWAL OF RS. 430000/- ON 26/4/95. REMARKS : THERE IS A CREDIT OF RS.430000/- BY CASH ON 26/4/ 95. NO EXPLANATION OF SOURCE OF CREDIT IS GIVEN. IN MY OPINION, THE ASSESSEE IS UNABLE TO EXPLAIN TH E SOURCE AND THUS THIS GROUND IS DISMISSED. 41. THE ASSESSEE HAVING FAILED TO CONTROVERT THE FI NDINGS OF CIT(APPEALS) VIS--VIS THE SOURCE OF INVESTMENT IN THE PURCHASE OF THE SAID SCO NO. 7 SECTOR 5, PANCHKULA, WE FIND NO MERI T IN THE PLEA OF THE ASSESSEE AND THE ADDITION OF RS. 4,07,000/- IS UPHE LD. 42. THE GROUND NO. 2(E) IS AGAINST ADDITION OF RS. 3,21,500/- BEING 50% SHARE IN ALLEGED INVESTMENT IN M/S LIMA ENGINEE RING PVT. LTD. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSE SSEE PURCHASED SHARES OF M/S LIMA ENGINEERING PVT.LTD. ALONGWITH HIS BROTHER SHRI VIPIN KUMAR 29 JAIN AND MRS. KASHMIR DHILLON AND SUM OF RS. 3,00,0 00/- EACH WAS CLAIMED TO HAVE BEEN PAID. HOWEVER, AN ADDITION OF RS. 3,21,500/- WAS MADE WHILE COMPLETING THE ORIGINAL ASSESSMENT. DUR ING THE SAID ASSESSMENT, THE ASSESSEE WAS ASKED TO FURNISH THE E VIDENCE IN RESPECT OF THE SAME AND THE EXPLANATION OF THE ASSESSEE WAS TH AT THE AMOUNT WAS PAID BY CHEQUE FOR RS. 1,50,000/-. FURTHER, AS PER THE SEIZED DOCUMENT NO. 22 ANNEXURE A-2, THE ASSESSEE HAD FAILED TO JUS TIFY THE ENTRIES OF RS.1,80,000/- PAID TO MR. GURPREET AND ADDITION OF RS. 3,21,500/- I.E. 50% OF SUM OF RS. 6,43,000/- WAS MADE BY THE ASSESS ING OFFICER. THE CIT(APPEALS) NOTED THAT SHRI KULJEET SINGH HAD SOLD THE COMPANY FOR RS. 8,92,000/- TO SHRI CHANDERDEEP JAIN AND SHRI VIPIN KUMAR JAIN AND THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS. 3,21, 500/- BEING 50% OF RS. 6,43,000/- HELD AS UNDISCLOSED INCOME OF THE AS SESSEE. 43. BEFORE THE CIT(APPEALS), THE ASSESSEE PLACED RE LIANCE ON THE AFFIDAVITS FILED WHICH WAS REJECTED BY THE CIT(APPE ALS) AS THE ASSESSEE HAD FAILED TO FURNISH THE SAME AT APPROPRIATE TIME BEFORE THE ASSESSING OFFICER. WITH REGARD TO THE NARRATIONS AND DOCUMEN T NO. 22 OF ANNEXURE A-2, THE CIT(APPEALS) NOTED THAT ASSESSEE AND SHRI GURPREET SINGH HAD A LINK WITH THE TRANSACTION AND CONSEQUENTLY THE ADDI TION WAS UPHELD IN THE HANDS OF THE ASSESSEE. 44. THE LD. AR FOR THE ASSESSEE DREW OUR ATTENTION TO THE DOCUMENT PLACED AT PAGE 226 OF THE PAPER BOOK AND POINTED OU T THAT THE PERUSAL OF THE SAME WOULD REFLECT IT TO BE A DUMB DOCUMENT. FU RTHER, IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE STATEME NT OF MR. KULJEET SINGH I.E. THE PERSON WHO HAD SOLD THE COMPANY, HAD CATEGORICALLY GIVEN A STATEMENT THAT NO CASH PAYMENT WAS EVER MADE TO H IM OVER AND ABOVE THE AMOUNT OF RS. 7,92,000/-. THE COPY OF THE STAT EMENT OF SHRI KULJEET SINGH IS PLACED AT PAGES 240 TO 242 OF THE PAPER BO OK. WITHOUT PREJUDICE 30 TO THE ABOVESAID SUBMISSION, LD. AR FOR THE ASSESSE E FURTHER SUBMITTED THAT 1/3 RD INVESTMENT WAS MADE BY MRS. KASHMIR DHILLON AND HE R INVESTMENT SHOULD BE EXCLUDED. HE MADE A REFERENCE TO THE AFFIDAVIT OF MRS.KASHMIR DHILLON PLACED AT PAGE 179 OF THE PAPER BOOK. FURTHER, OUR ATTENTION WAS DRAWN TO THE AFFIDAVIT OF MR. GURPREE T SINGH PLACED AT PAGE 173 OF THE PAPER BOOK IN WHICH HE STATED THAT HE HAD NOT RECEIVED ANY COMMISSION FOR SALE/TRANSFER OF SHARES OF M/S L IMA ENGINEERING PVT. LTD. FROM ASSESSEE OR FROM SHRI VIPIN KUMAR JAIN. 45. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE ALLEGED INVESTMENT MADE IN THE PURCHASE OF SHARES OF M/S LI MA ENGINEERING PVT. LTD. AND ALSO COMMISSION PAID FOR THE SAID TRANSACT ION. THE ASSESSEE ALONGWITH HIS BROTHER AND ONE MRS. KASHMIR DHILLON CLAIMS TO HAVE INVESTED SUM OF RS. 3,00,000/- EACH IN THE PURCHASE OF SHARES OF M/S LIMA ENGINEERING PVT. LTD. IN ADDITION, AS PER THE NOTINGS ON DOCUMENT NO. 22 OF ANNEXURE A-2 SEIZED DURING THE COURSE OF SEARCH, FURTHER ADDITION OF RS. 3,51,000/- HAS BEEN MADE IN THE HAN DS OF THE ASSESSEE BEING ON ACCOUNT OF THE COMMISSION PAID FOR THE SAI D TRANSACTION. THE TOTAL INVESTMENT IN THE PURCHASE OF SHARES OF M/S L IMA ENGINEERING PVT. LTD. IS RS. 9,00,000/- OUT OF WHICH, RS. 3,00,000/- IS CLAIMED BY MRS.KASHMIR DHILLON TO HAVE BEEN PAID VIDE CHEQUE D RAWN ON HER BANK ACCOUNT. NECESSARY AFFIDAVIT IN THIS REGARD IS PLA CED AT PAGE 179 OF THE PAPER BOOK. IN VIEW OF THE AMOUNT HAVING BEEN PAID VIDE CHEQUE, WHICH IN TURN WAS DEPOSITED IN THE CURRENT ACCOUNT WITH T IMES BANK, CHANDIGARH OF THE SAID COMPANY, THERE IS NO MERIT I N TREATING SAID INVESTMENT AS THE INVESTMENT MADE BY THE ASSESSEE. THE BALANCE INVESTMENT MADE BY THE ASSESSEE AND HIS BROTHER SHR I VIPIN KUMAR JAIN IS RS. 6,00,000/-. 31 46. THE ASSESSING OFFICER HAD PRESUMED THE CONSIDER ATION OF THE PROPERTY AT RS. 12,43,000/- I.E. RS. 7,92,000/- + R S. 1,00,000/- + RS. 3,51,000/-. THE EVIDENCE FOR SOURCES OF RS. 6,00,0 00/- WERE ACCEPTED AS HAVING BEEN MADE BY THE ASSESSEE AND HIS BROTHER SH RI VIPIN KUMAR JAIN AND THE BALANCE SUM OF RS. 6,43,000/- WAS ADDED AS INCOME OF THE ASSESSEE AND HIS BROTHER SHRI VIPIN KUMAR JAIN. HOW EVER, WE FIND NO MERIT IN THE ADDITION MADE BY THE AUTHORITIES BELOW ON THE BASIS OF THE NOTING ALLEGEDLY ON DOCUMENT NO. 22 OF ANNEXURE A-2 WHICH ARE SCRIBBLES OF DIFFERENT DENOMINATIONS AND AT BEST, T HE SAID PAPER COULD BE SAID TO BE A ROUGH CALCULATION ONLY.IN VIEW OF OUR ALLOWING RELIEF ON ACCOUNT OF THE INVESTMENT MADE BY MRS. KASHMIR DHIL LON AND ALSO NO ADDITION TO BE MADE ON ACCOUNT OF THE NOTINGS ON TH E LOOSE PAPER, THERE IS NO MERIT IN THE ADDITION MADE BY THE ASSESSING O FFICER AND THE SAME IS DIRECTED TO BE DELETED. GROUND NO. 2(E) RAISED BY THE ASSESSEE IS THUS, ALLOWED. 47. THE ISSUE IN GROUND NO. 2(F) RAISED BY THE ASSE SSEE IS IN RESPECT OF THE ALLEGED INVESTMENT IN M/S JASMINE ENTERPRISES P VT. LTD. AMOUNTING TO RS. 5,94,433/-. 48. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SEARCH & SEIZURE OPERATION, DOCUMENT AT PAGE NO. 23 TO 26 OF D-2 WERE SEIZED, COPIES OF WHICH ARE PLACED AT PAGES 227 TO 230 OF THE PAPER BOOK. THE EXPLANATION OF THE ASSESSEE BEFORE THE AS SESSING OFFICER WAS THAT THE ASSESSEE HAD SOUGHT TO PURCHASE THE SAID P LOT OF M/S JASMINE ENTERPRISES PVT. LTD. BUT CERTAIN DIFFERENCES AROSE BETWEEN THE PARTIES AND THE DEAL COULD NOT MATERIALIZE. REGARDING THE NOTINGS AT PAGE NO. 23 TO 26 OF D-2, IT WAS EXPLAINED BY THE ASSESSEE THAT CERTAIN PAYMENTS HAD BEEN MENTIONED ON THE SAID PAGES WITHOUT ANY SPECIF IC DETAILS. HOWEVER, IF CO-RELATION IS MADE BETWEEN PAGE NOS. 23 TO 26, THEN THE ENTRIES ON 32 PAGE 26 WAS THE SUMMARY OF ALL THE ENTRIES APPEARIN G ON THE FIRST THREE PAGES AND THE TOTAL AMOUNT OF INVESTMENT AS PER THE SAID PAGES WORKS OUT TO RS. 900,370/- AND NOT RS. 19,00,795/- AS COMPUTE D IN THE FIRST ASSESSMENT ORDER. FURTHER EXPLANATION OF THE ASSES SEE WAS THAT OUT OF THE SAID INVESTMENT OF RS. 900,370/-, SUM OF RS. 70 9,922/- WAS PAID BY SHRI VIPIN KUMAR JAIN AND BALANCE WAS PAID BY THE A SSESSEE. THE SOURCES OF THE SAID AMOUNT PAID BY BOTH THE BROTHERS WAS EX PLAINED AND THE SOURCES OF INVESTMENT AS CLAIMED BY THE ASSESSEE AR E TABULATED AT PAGE 9 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER ON THE VERIFICATION OF THE DOCUMENTS OBSERVED THAT THERE WAS NO VARIATION AND REJECTING THE EXPLANATION OF THE ASSESSEE, HELD THAT UNDISCLOSED INCOME OF THE ASSESSEE WAS RIGHTLY DETERMINED AT RS.19,00,795/- AS AGAINST RS.900,370/- WORKED OUT BY THE ASSESSEE. THE SOURCES EXPLAINED BY THE ASSESSEE WERE FOUND TO BE NOT RELATABLE TO THE AMOUNTS WITHDRAWN EARLIE R AND IN VIEW THEREOF, THE ADDITION MADE OF RS. 594,433/- WAS AGAIN MADE I N THE HANDS OF THE ASSESSEE. 49. THE CIT(APPEALS) VIDE PARAS 87 TO 92 AT PAGES 5 6 TO 58 OF THE APPELLATE ORDER CONSIDERED THE ISSUE AND UPHELD THE ADDITION OBSERVING THAT THERE WERE NUMBER OF ENTRIES AT PAGES 23 TO 26 OF D-2 AND THE ASSESSING OFFICER AS PER THE ANNEXURE ANNEXED TO TH E ASSESSMENT ORDER, HAD EXCLUDED THE ENTRIES WHICH WERE OCCURRING TWICE TO CO-RELATE, AND THE DATE-WISE DETAILS OF THE ADDITION TOTALED TO RS. 19 ,00,795/- AS WORKED OUT BY THE ASSESSING OFFICER AND WERE HELD TO BE CORREC T AND THE ADDITION WAS UPHELD. 50. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT 50 % SHARES OF INVESTMENT WAS ADDED IN THE HANDS OF THE ASSESSEE T HOUGH ON IDENTICAL POINTS, NO ADDITION WAS MADE IN THE HANDS OF HIS BR OTHER SHRI VIPIN KUMAR JAIN. IT WAS FURTHER CONTENDED BY THE LD. AR FOR THE ASSESSEE THAT 33 ENTRY OF RS. 4,00,000/- AT PAGE 24 RELATABLE TO ENT RY OF RS. 2.5 LACS AND RS.1.5 LAC ON PAGE 26 AND THE SAME SHOULD BE EXCLUD ED. THE LD. AR FAIRLY ADMITTED THAT THE BENEFIT ALLOWABLE IN THE H ANDS OF THE ASSESSEE WAS ONLY RS. 2 LACS ON THIS ACCOUNT. 51. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON T HE ORDERS OF THE AUTHORITIES BELOW. 52. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE CONTENTION OF THE ASSESSEE THAT CIT(APPEALS) IN THE CASE OF HIS BROTHER SH. VIPIN JAIN VIDE PARA 175-176 AT PAGES 106-107 O F APPELLATE ORDER HAS DELETED THE ADDITION IS CORRECT. THE ADDITION WAS M ADE AS THE ASSESSEE HAD FAILED TO EXPLAIN SOURCE OF INVESTMENT. 53. THE PLEA OF THE ASSESSEE WAS THAT THE AMOUNT WA S PAID VIDE CHEQUES FROM BANK ACCOUNT. THE CIT(APPEALS) IN THE CASE OF SH. VIPIN JAIN THUS HELD THAT AS CASH DEPOSITED IN THE BANK HAS BEEN AD DED IN THE HANDS OF THE ASSESSEE, THERE WAS NO MERIT IN FURTHER ADDITIO N. THUS GROUND NO. 2(F) RAISED BY THE ASSESSEE IS ALLOWED. 54. THE ISSUE IN GROUND NO. 2(G) IS AGAINST THE ADDITION OF RS. 6,50,000/- FOR INVESTMENT IN PROPERTY NO. 259, INDU STRIAL AREA, CHANDIGARH. 55. THE BRIEF FACTS RELATING TO THE ABOVESAID ISSUE ARE THAT DURING THE COURSE OF SEARCH, POWER OF ATTORNEY IN FAVOUR OF TH E ASSESSEE IN RESPECT OF PROPERTY NO. 259, INDUSTRIAL AREA, PHASE-I, CHAN DIGARH WAS FOUND. THE SAID PROPERTY WAS PURCHASED FOR A TOTAL CONSIDE RATION OF RS. 13,00,000/-. THE EXPLANATION OF THE ASSESSEE WAS T HAT HE WAS ONLY A GENERAL POWER OF ATTORNEY HOLDER AND NOT THE OWNER OF THE PROPERTY. HOWEVER, IN THE ABSENCE OF ANY EVIDENCE FILED BY T HE ASSESSEE TO 34 CONFIRM THAT THE PROPERTY WAS NOT TRANSACTED BY HIM AND HIS BROTHER, 50% OF THE SAID INVESTMENT OF RS.6,50,000/- WAS ADD ED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSING OFFICER DELI BERATED UPON THIS ISSUE AT PAGE 10 OF THE ASSESSMENT ORDER. 56. THE CIT(APPEALS) VIDE PARA 93 TO 95 AT PAGES 58 & 59 OF THE APPELLATE ORDER HAVE CONSIDERED THE ISSUE AND HELD THAT THE ONUS WAS UPON THE ASSESSEE TO PROVE THAT EVEN THOUGH HE WAS HOLDING THE POWER OF ATTORNEY, YET THE OWNERSHIP VESTS WITH SOME OTHE R PERSON AND IN THE ABSENCE OF ANY MATERIAL BEING BROUGHT ON RECORD, TH E ADDITION WAS UPHELD IN THE HANDS OF THE ASSESSEE. 57. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT TH E AGREEMENT TO SELL WAS BETWEEN ONE SHRI HARINDER GOYAL AND SHRI PRITAM DASS AND THE POWER OF ATTORNEY WAS IN THE NAME OF SHRI VIPIN JAI N WHICH IS PLACED AT PAGES 183 TO 185 OF THE PAPER BOOK. IT WAS FURT HER POINTED OUT THAT THERE WAS NO EVIDENCE OF THE PAYMENT BEING MADE BY THE ASSESSEE AND HENCE, NO MERIT IN THE AFORESAID ADDITION. FURTHER IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE TOTAL INVESTME NT WAS RS.13,00,000/- 58. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON T HE ORDER OF THE ASSESSING OFFICER. 59. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. DURING THE COURSE OF SEARCH, DOCUMENT MARKED AS D-1 3 TO 18 WAS FOUND AND SEIZED FROM THE POSSESSION OF THE ASSESSEE WHIC H IS THE POWER OF ATTORNEY EXECUTED BY ONE SHRI NARINDER KUMAR GOYAL IN FAVOUR OF SHRI VIPIN KUMAR JAIN AS HIS POWER OF ATTORNEY HOLDER. COPY OF THE SAID DOCUMENT IS PLACED AT PAGES 232 TO 239 OF THE PAPER BOOK. PERUSAL OF THE SAID POWER OF ATTORNEY REFLECTS THAT AS PER CLA USE-2 OF THE POWER OF ATTORNEY, THE ATTORNEY HOLDER HAS TO PAY THE BALANC E PRICE/INSTALMENTS, 35 IF ANY OF THE SAID INDUSTRIAL SHARE TO THE GOVERNME NT AND OBTAIN RECEIPT THEREOF AND AS PER CLAUSE-5, POWER IS GIVEN TO SELL/TRANSFER/GIFT/EXCHANGE/MORTGAGE THE SAID BUILD -UP INDUSTRIAL SHED TO SHRI PRITAM DASS KANSAL AND SHRI VIJAY KUMAR. A DMITTEDLY, THE SAID POWER OF ATTORNEY IS EXECUTED BY A THIRD PERSON I.E . SHRI NARINDER KUMAR GOYAL IN FAVOUR OF SHRI VIPIN KUMAR JAIN WHO IS THE BROTHER OF THE ASSESSEE AND THE SPECIFIC RECITATION IN PARA 5 IS FOR THE SPECIFIC PURPOSE TO SELL/TRANSFER/GIFT/EXCHANGE/MORTGAGE THE SAID BUILD-UP INDUSTRIAL SHED TO SHRI PRITAM DASS KANSAL AND SHRI VIJAY KUMAR. 60. DURING THE COURSE OF SEARCH OPERATIONS, VARIOUS OTHER DOCUMENTS REFLECTING THE ALLEGED INVESTMENT MADE BY THE ASSES SEE AND/OR HIS BROTHER WAS FOUND AND IN THE ABSENCE OF THE SAME AN D MERELY BECAUSE OF POWER OF ATTORNEY HAS BEEN EXECUTED IN FAVOUR OF THE BROTHER OF THE ASSESSEE AND THAT ALSO FOR A SPECIFIC PURPOSE, DOES NOT ESTABLISH THE FACTUM OF INVESTMENT BY THE ASSESSEE FOR THE PURCHA SE OF THE SAID INDUSTRIAL SHED. FURTHER THE ASSESSEE HAS ALSO FIL ED ON RECORD THE COPY OF SUIT FILED BY MR. PRITAM KANSAL AND MR. VIJAY KA NSAL AGAINST SHRI NARINDER KUMAR GOYAL FOR TRANSFER OF THE SAID PROPE RTY IN THEIR FAVOUR, COPY OF WHICH IS PLACED AT PAGES 188 AND 192 OF THE PAPER BOOK. IN VIEW OF THE ABOVESAID FACTS AND CIRCUMSTANCES, WE D O NOT FIND ANY MERIT IN THE ADDITION OF RS. 6,50,000/- ON ACCOUNT OF ALLEGED INVESTMENT IN INDUSTRIAL SHED AT 259, INDUSTRIAL AR EA, PHASE-I CHANDIGARH, IN THE HANDS OF THE ASSESSEE AND/OR HIS BROTHER. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE ADDITION OF RS.6,50,000/-. GROUND NO. 2(G) RAISED BY THE ASSES SEE IS THUS, ALLOWED. 61. THE ISSUE IN GROUND NO. 2(H) RAISED BY THE ASSE SSEE IS AGAINST THE ADDITION OF RS. 4,80,000/- BEING 50% OF INVESTMENT IN SURAJ THEATRE. IN THE FACTS OF THE ISSUE RAISED, THE ASSESSEE HAD MADE INVESTMENT IN THE 36 PURCHASE OF SURAJ THEATRE AND ALSO AMOUNT SPENT ON RENOVATION OF THE SAID THEATRE. DURING THE COURSE OF SEARCH, VARIOUS DOCUMENTS WERE SEIZED WHICH REFLECTED THE SAID INVESTMENT. THE DOC UMENTS FOUND DURING THE COURSE OF SEARCH REFLECTED THE DETAILS O F RENOVATION, ON THE BASIS OF WHICH AMOUNT OF RS. 4,60,000/- WAS DETERMI NED AS TOTAL RENOVATION AND THE COPY OF THE SAID DOCUMENT IS ENC LOSED AS ANNEXURE-C OF THE ASSESSMENT ORDER. THE ASSESSEE P ARTLY EXPLAINED THE SOURCE OF INVESTMENT IN THE PURCHASE OF THE SAID PR OPERTY TO THE EXTENT OF RS. 10 LACS AND BALANCE RS. 5 LACS WAS TREATED A S UNEXPLAINED. HOWEVER, ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF RENOVATION OF RS.4,60,000/- MADE BY THE ASSESSEE AND HIS BROTHER SHRI VIPIN KUMAR JAIN. CONSEQUENTLY, THE SUM OF RS. 4,80,000/- BEIN G 50% OF THE TOTAL INVESTMENT IN SURAJ THEATRE WAS TREATED AS INCOME O F THE ASSESSEE. THE ASSESSING OFFICER DELIBERATED UPON THIS ISSUE AT PA GE 10 OF THE ASSESSMENT ORDER. THE CIT(APPEALS) VIDE PARAS 96 T O 99 AT PAGES 59 AND 60 OBSERVED THAT THE ASSESSEE HAD FAILED TO EXP LAIN THE SOURCE OF THE SAID INVESTMENT AND THE RELIANCE ON THE CASH FL OW STATEMENT WAS REJECTED AND THE ADDITION MADE BY THE ASSESSING OFF ICER WAS UPHELD BY CIT(APPEALS). THE ASSESSEE IS IN APPEAL AGAINST THE SAID ADDITION. 62. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT TH E TOTAL INVESTMENT IN THE PURCHASE OF THE SAID ASSET WAS RS. 15 LACS A ND THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS HAD ACCEPTED THE INVESTMENT OF RS.10 LACS. HOWEVER, IN RESPECT OF CA SH PAYMENT OF RS. 5 LACS AND FURTHER RENOVATION TO THE EXTENT OFRS.4.6 LACS MADE BY THE ASSESSEE AND HIS BROTHER SHRI VIPIN JAIN, THOUGH TH E ASSESSEE FURNISHED THE CASH FLOW STATEMENT BUT THE SAME WAS REJECTED I N THE ABSENCE OF ANY DATE OF CASH PAYMENT. 37 63. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON T HE ORDERS OF THE AUTHORITIES BELOW. 64. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD MADE A TOTAL INVESTMENT OF RS. 15 LACS FOR THE PURCHASE OF SURAJ THEATRE AND THEREAFTER, HAS ADMITTEDLY INCURR ED RS.4.6 LACS ON THE RENOVATION OF THE SAID THEATRE. THE TOTAL INVESTME NT THUS, IS RS.19.60 LACS. INVESTMENT OF RS. 10 LACS HAS BEEN ACCEPTED IN THE HANDS OF THE AE AND THE ISSUE ARISING VIDE PRESENT GROUND OF APP EAL IN RESPECT OF THE BALANCE INVESTMENT OF RS. 9.60 LACS BEING MADE BY T HE ASSESSEE AND HIS BROTHER SHRI VIPIN JAIN. THE SOURCE OF INVESTMENT IN THE SAID ASSET IS CLAIMED TO BE MADE OUT OF CASH FLOW STATEMENT. NO CREDENCE CAN BE GIVEN TO THE SAID CASH FLOW STATEMENT IN VIEW OF OU R COMMENTS IN THE PARAS HEREIN ABOVE AND IN VIEW THEREOF, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE AND IN THE ABSENCE OF ANY EVIDENCE OF SOURCE OF HAVING INVESTED THE SAID AMOUNT, FOR THE PURCHASE OF SURAJ THEATRE, WE UPHOLD THE ADDITION OF RS. 4.80 LACS BEING HALF SHARE IN R S.9.60 LACS. GROUND NO. 2(H) RAISED BY THE ASSESSEE IS, THUS DISMISSED. 65. THE GROUND NO. 3 RAISED BY THE ASSESSEE IS AGAI NST THE ADDITION MADE ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS TOTALI NG RS. 8.10,000/-. THE ASSESSING OFFICER VIDE PARA 3 AT PAGES 5 & 6 NO TED THAT BOTH THE ASSESSEE AND HIS WIFE HAD DRAWN DIFFERENT AMOUNTS F OR HOUSEHOLD EXPENSES AS TABULATED AT PARA 3 PAGE 5 OF THE ASSES SMENT ORDER. THE PLEA OF THE ASSESSEE WAS THAT THE HOUSEHOLD EXPENSE S HAVE BEEN ESTIMATED BY THE ASSESSING OFFICER IN THE FIRST ROU ND OF ASSESSMENT PROCEEDINGS WHEREAS NO ADDITION COULD BE MADE DURIN G BLOCK ASSESSMENT WITHOUT BRINGING ANY EVIDENCE ON RECORD TO PROVE THAT THE HOUSEHOLD EXPENSES SHOWN BY THE ASSESSEE WERE LESS THAN THE AMOUNT ACTUALLY SPENT. THE ASSESSING OFFICER NOTES THAT D URING THE COURSE OF 38 SEARCH, DOCUMENT NO. D-5 PAGE 14 DETAILS OF HOUSEHO LD EXPENSES FOR SEPTEMBER,1998, WERE FOUND IN WHICH MONTHLY EXPENSE S ON VEGETABLES, FRUITS AND OTHER GROCERY ITEMS, MEDICINES, GIFTS ET C. WERE NOTED AND THE EXPENDITURE SHOWN BY THE ASSESSEE WAS ON THE LOWER SIDE. FURTHER DOCUMENTS WERE ALSO FOUND DURING THE COURSE OF SEAR CH WHICH INDICATED HIGH STYLE OF LIVING OF THE ASSESSEE I.E. PAGE 11 O F D-5 GAVE DETAILS OF PURCHASE OF CERTAIN GIFT ITEMS AND PAGE 12, 13 WERE RATES OF GIFT ITEMS, PAGE 22 OF D-7 WAS A BILL FROM CHANDIGARH CLUB AND PAGE 18 OF D-5 GAVE DETAILS OF CERTAIN CASH EXPENSES I.E. GIFT ON MARRIAGE OF RS. 10,000/-, GIFT OF JEWELLERY ON MARRIAGE OF RS.10,00 0/-, AMOUNT FOR TIRUPATI BALAJI OF RS. 13,000/- AND CASH FOR T.E. F OR RS. 16,000/-. FURTHER, THERE WERE CASH RECEIPTS FOUND WHICH ARE P LACED AT PAGE 15 & 16 OF D-5 FOR PURCHASE OF TWO COMPRESSORS FOR RS. 9 ,200/- EACH. IN VIEW OF THE STANDARD OF LIVING OF THE ASSESSEE AND THE VARIOUS ASSETS FOUND INSTALLED AT THE RESIDENCE OF THE ASSESSEE WH ICH WERE TABULATED BY THE ASSESSING OFFICER, THE ANNUAL HOUSEHOLD EXPE NSES OF THE ASSESSEE WERE ESTIMATED AT RS. 3,00,000/- I.E. @ RS .25,000/- PER MONTH. HOWEVER, FOR THE PERIOD 1.4.1988 TO 31.3.1993, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPENSES WOULD BE ON THE L OWER SIDE AS COMPARED TO THE LATER YEARS BECAUSE OF FIRST INFLAT ION FACTOR AND ALSO BECAUSE OF THE JOINT KITCHEN WITH HIS BROTHER SHRI VIPIN JAIN AND AN ESTIMATED ADDITION OF RS.16,20,000/- WAS MADE DURIN G THE BLOCK PERIOD, AFTER TAKING INTO ACCOUNT THE WITHDRAWALS MADE BY T HE ASSESSEE FOR HOUSEHOLD EXPENSES. THE TOTAL WITHDRAWALS BY THE A SSESSEE VARIED BETWEEN RS. 25,000/- TO RS. 40,000/- PER YEAR. 66. THE CIT(APPEALS) VIDE PARA 59 TO 67 CONSIDERED THE SUBMISSIONS OF THE ASSESSEE ELABORATELY AND ALSO THE EARLIER TW O ORDERS OF THE ASSESSING OFFICER DATED 31.10.2000 AND 31.3.2003 AN D NOTED THAT THE 39 ADDITIONS WERE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH. THE AS SESSING OFFICER IN THE ASSESSMENT ORDER HAD REFERRED TO VARIOUS ITEMS AND IT WAS OBSERVED BY THE CIT(APPEALS) THAT THE ASSESSEE WAS HAVING AT TRIBUTION OF HIGH STYLE OF LIVING BECAUSE OF THE FOLLOWING : (I) THE ASSESSEE IS HAVING THE LUXURY OF ACS, E XERCISERS, CELL- PHONES, ETC. WITHDRAWLS SHOWN BY THE ASSESSEE CANNO T SUPPORT EVEN THE DAY-TO-DAY KITCHEN EXPENSES. THE EXPENSES ARE D EPENDENT UPON THE PERSONAL LIKING OF THE ASSESSEE ALSO. (II) THE ASSESSEE IS HAVING A RENTED HOUSE, IND ULGES IN GAMBLING, MAINTAINS VEHICLES AND GIVES COSTLY GIFTS. THE SEIZ ED DOCUMENTS REVEALED THAT EXCHANGE OF GIFTS ON MARRIAGE OR TO F RIENDS IS EVEN UPTO RS.LOOOO/- EACH. AS AGAINST THE WITHDRAWAL SHOWN BY THE ASSESSEE RANGING FROM RS.25000/- TO RS.50000/- FOR THE WHOLE YEAR IN DIFFERENT FINANCIAL YEARS, THE WITHDRAWALS COME ON AN AVERAGE OF RS.3500/- PER MONTH. THE ELECTRIC BILLS ON ACCOUNT OF RUNNING ACS WOULD COME AROUND RS.3000/- TO 4000/- PER MONTH. (III) HIGHER AMOUNTS OF GIFTS EXCHANGED BETWEEN FRIENDS INDICATE THE HIGH STYLE OF LEAVING. WITH SUCH STYLE OF LEAVI NG WHICH IS EVIDENCED BY THE COSTLY ITEMS FOUND DURING THE COURSE OF SEAR CH AND ALSO THE NOTINGS FOUND IN THE SEIZED DOCUMENTS GIVES ENOUGH PROOF FOR HIGHER HOUSEHOLD EXPENSES. THIS FACT IS FURTHER ESTABLISHE D BY THE DETAILED NOTES FOUND IN ONE OF THE SEIZED DOCUMENT NO. D-5 ( PAGE-14) ; WHICH GIVES THE DETAILS OF EXPENSES. 67. THE CONCLUSION OF THE CIT(APPEALS) VIDE PARA 64 WAS THAT THE ESTIMATIONS WERE MADE ON THE BASIS OF SEIZED DOCUME NTS AND ALSO ON THE BASIS OF ASSETS FOUND DURING THE COURSE OF SEARCH A ND THERE WAS NO MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE AD DITION HAS BEEN MADE WITHOUT ANY EVIDENCE. FURTHER VIDE PARA 65, THE CI T(APPEALS) OBSERVED THAT IN VIEW OF THE AMENDMENT IN SECTION 158BC(B) O F THE ACT WITH RETROSPECTIVE EFFECT FROM 01.04.1995, THE STATUTE P ROVIDES THAT THE ASSESSING OFFICER CAN MAKE ESTIMATED ADDITIONS. THE RELEVANT PARAS READ AS UNDER : 64. THE ASSESSING OFFICER HAS BASED HIS ESTIMATES ON THE BASIS OF THE SEIZED DOCUMENTS AND ALSO ON THE ASSETS FOUND DURING THE C OURSE OF SEARCH. THERE IS NO MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE AD DITION HAS BEEN MADE WITHOUT ANY EVIDENCE. THE ASSESSING OFFICER IS DUTY BOUND TO GIVE A FAIR ESTIMATE BASED 40 ON THE MATERIAL ON RECORD. THE ONLY REQUIREMENT IS THAT THE ESTIMATION SHOULD BE FAIR HAVING NEXUS WITH THE MATERIAL FOUND DURING TH E COURSE OF SEARCH. ALL THE FACTS WHICH HAVE BEEN NARRATED BY THE ASSESSING OFF ICER DO REVEAL THAT WITHDRAWALS SHOWN BY THE ASSESSEE ARE VERY LOW. IN FACT, THERE ARE WITHDRAWALS OF CASH IN VARIOUS BANK ACCOUNTS OF THE ASSESSEE ON D IFFERENT DATES. THE ASSESSEE WOULD HAVE UTILIZED THESE WITHDRAWALS OF CASH TO SUPPORT THAT HIGH SCALE OF LIVING ALTHOUGH THE ASSESSEE SUBMITTED THAT THESE WITHDRAW ALS OF CASH ARE REINVESTED SUBSEQUENTLY ON DIFFERENT DATES IN DIFFERENT BANKS. 65 THE LD. COUNSEL HAS ALSO TAKEN AN OBJECTION THAT IN THE BOOKS OF ACCOUNTS, THERE IS NO SCOPE OF ESTIMATION. IT MAY BE POINTED OUT THAT THERE IS AN AMENDMENT IN SECTION 158BC(B) WITH RETROSPECTIVE EFFECT FROM 1/7/95 WHER EIN THE STATUTE HAS PROVIDED THAT THE ASSESSING OFFICER CAN MAKE AN ESTIMATE. IT IS THE D UTY OF THE ASSESSING OLLLEER TO MAKE A LAIR ESTIMATE WHERE NO EVIDENCE IS PROVIDED BY THE ASSESSEE. IN THIS CASE, THE ASSESSING OFFICER HAS FAIRLY MADE AN ESTIMATION OF HOUSE HOLD EXPENSES AFTER GIVING VALID REASONS. THERE IS ALWAYS AN ELEMENT OF ESTIMATION IN THESE C IRCUMSTANCES [REFER VED PARKASH VS. CIT, 265 ITR 642 (P&H)]. 68. THE CIT(APPEALS) VIDE PARA 67, HOWEVER ESTIMATE D THE HOUSEHOLD EXPENSES AT RS. 8,10,000/- I.E. 50% OF THE ADDITION MADE BY THE ASSESSING OFFICER AND GAVE A RELIEF OF RS. 8,10,000 /-. THE ASSESSEE IS IN APPEAL AGAINST THE AFORESAID ADDITION. IN THE T OTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO VARIOUS SEIZED D OCUMENTS FOUND DURING THE COURSE OF SEARCH AND ALSO THE PROVISIONS OF SECTION 158BC(B) OF THE ACT, FAIR ESTIMATE OF EXPENDITURE IS TO BE M ADE IN THE HANDS OF THE ASSESSEE. HOWEVER, WE RESTRICT THE ADDITION TO RS. 4,00,000/-. THUS, THE GROUND NO. 3 RAISED BY THE ASSESSEE IS PA RTLY ALLOWED. 69. THE ISSUE IN GROUND NO. 4 RAISED BY THE ASSESSE E IS AGAINST THE ADDITION OF RS. 1,59,72,599/- ON ACCOUNT OF CREDITS IN THE BANK ACCOUNT AND SUM OF RS. 13,35,000/- ON ACCOUNT OF ALLEGED IN VESTMENT IN FDRS. THE ASSESSING OFFICER VIDE PAGE 11 OF THE ASSESSMEN T ORDER HAS CONSIDERED THE ISSUE AND HAS OBSERVED THAT LARGE NU MBER OF BANK ACCOUNTS WERE MAINTAINED BY THE ASSESSEE, COPIES OF WHICH WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH. THERE WERE LARGE NUMBER OF CASH DEPOSITS IN THE SAID BANK ACCOUNTS AND THE ASS ESSEE WAS UNABLE TO 41 RECONCILE THE SAID CASH DEPOSITS. CONSEQUENTLY, AD DITION OF THE SAID DEPOSITS WAS MADE IN THE HANDS OF THE ASSESSEE AFTE R GIVING RELIEFS ON ACCOUNT OF CERTAIN ITEMS OF RECEIPTS. 70. BEFORE THE CIT(APPEALS), LD. AR FOR THE ASSESSE E PLACED RELIANCE ON THE CASH FLOW STATEMENT AND THE BOOKS OF ACCOUNT WHICH ADMITTEDLY WERE PREPARED AFTER THE SEARCH ACTION AND WERE PROD UCED ONLY FOR THE FIRST TIME BEFORE THE CIT(APPEALS). THE CIT(APPEAL S) OBSERVED THAT DURING THE COURSE OF SEARCH, INCRIMINATING MATERIAL WAS FOUND AND EVEN IF THE ASSESSEE WAS MAINTAINING REGULAR BOOKS OF AC COUNT, THE SAME WERE LIABLE TO BE REJECTED. HOWEVER IN THE FACTS O F THE CASE, THE ASSESSEE WAS NOT MAINTAINING REGULAR BOOKS OF ACCOU NT AND ANY DOCUMENT PREPARED AFTER THE SEARCH WAS HELD TO HAVE NO EVIDENTIARY VALUE. THE RELIANCE OF THE ASSESSEE UPON THE CASH FLOW STATEMENT WAS ALSO REJECTED AS THE SAME COULD NOT BE EQUATED WITH THE REGULAR BOOKS OF ACCOUNT AND THEREFORE, THE SAME CANNOT BE RELIED UPON. THE RELEVANT OBSERVATIONS OF THE CIT(APPEALS) ARE VIDE PARAS 100 TO 107 AT PAGES 61 TO 70 OF THE APPELLATE ORDER. THE CIT(APPEALS), HO WEVER FURTHER NOTED THAT CERTAIN MATERIAL WAS PRODUCED BEFORE THE ASSES SING OFFICER AT THE FAG END OF THE ASSESSMENT PROCEEDINGS AND ALSO STAT EMENTS OF SOME PERSONS WERE RECORDED ON 27.03.2003. AS THERE WAS NO TIME LEFT TO MAKE INVESTIGATIONS, THE ASSESSING OFFICER REJECTED THE SAME. THE PLEA OF THE ASSESSEE BEFORE THE CIT(APPEALS) WAS THAT TH E SAME SHOULD BE CONSIDERED. THE CIT(APPEALS) AFTER DELIBERATING UP ON THE ISSUE AT LENGTH ALLOWED CERTAIN RELIEFS ON ACCOUNT OF INCOME SHOWN BY THE ASSESSEE AND ON ACCOUNT OF SALE OF AGRICULTURE LAND TO THE EXTENT OF RS. 19,35,158/- AND THE BALANCE ADDITION WAS CONFIRMED IN THE HANDS OF THE ASSESSEE. THE ASSESSEE IS IN APPEAL AGAINST THE OR DER OF THE CIT(APPEALS). 42 71. THE LD. AR FOR THE ASSESSEE VEHEMENTLY PLACED R ELIANCE ON THE CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE TO EX PLAIN EACH AND EVERY ENTRY IN THE SAVING BANK ACCOUNTS. THE LD. A R FOR THE ASSESSEE POINTED OUT THAT THE DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER WHICH ARE PLACED AT PAGES 627 OF THE PAPER BOOK AND THEREAFTER REMAND REPORT WAS SENT BY THE ASSESSING OFFICER WHICH HAS NOT BEEN CONSIDERED BY THE CIT(APPEALS) AND THE ADDITION HAS BEEN UPHEL D IN TOTALITY. OUR ATTENTION WAS DRAWN TO THE EXPLANATION AT PAGE 309 AND ALSO AT PAGE 83 OF THE PAPER BOOK TO POINT OUT THAT CERTAIN ENTRIES IN THE DETAILS PREPARED BY THE ASSESSING OFFICER WERE INCORRECT. OUR ATTENTION WAS ALSO DRAWN TO THE DETAILS OF FIXED DEPOSITS PLACED AT PAGE 225 OF THE PAPER BOOK. 72. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON T HE ORDER OF THE CIT(APPEALS). 73. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING VIDE PRESENT GROUND OF APPEAL NO. 4 I S AGAINST THE ADDITION MADE ON ACCOUNT OF NON-EXPLANATION OF THE BANK CREDITS. THE ASSESSEE WAS MAINTAINING VARIOUS BANK ACCOUNTS IN W HICH THERE WERE BOTH CASH AND CHEQUE DEPOSITS. THE CASH DEPOSITS IN THE VARIOUS BANK ACCOUNTS WERE EXPLAINED THROUGH THE THEORY OF CASH FLOW STATEMENT. BEFORE THE CIT(APPEALS), THE ASSESSEE ALSO PLACED R ELIANCE ON THE BOOKS OF ACCOUNT PREPARED BY IT, ADMITTEDLY AFTER T HE DATE OF SEARCH. HOWEVER, THE SAID RELIANCE PLACED BY THE ASSESSEE B OTH ON THE BOOKS OF ACCOUNT AND CASH FLOW STATEMENTS WERE REJECTED BY T HE CIT(APPEALS). WE FIND THAT THE ASSESSEE HAD NOT FURNISHED ANY BAL ANCE SHEET ALONGWITH THE RETURN OF INCOME AND THE BALANCE SHEE TS WERE PREPARED ONLY DURING THE COURSE OF SECOND ROUND OF APPELLATE PROCEEDINGS. THE BOOKS OF ACCOUNT WERE ALSO PREPARED AFTER THE SEARC H ACTION AND WERE 43 PRODUCED FOR THE FIRST TIME DURING THE SECOND ROUND OF APPELLATE PROCEEDINGS. IN OUR VIEW, THE SAID BOOKS OF ACCOUN T AND THE BALANCE SHEETS CANNOT BE RELIED UPON AS THE SAME WERE PREPA RED AFTER SEARCH ACTION AND WERE NOT PRODUCED BEFORE THE ASSESSING O FFICER DURING TWO ROUNDS OF ASSESSMENT PROCEEDINGS BUT WERE ONLY PROD UCED BEFORE THE CIT(APPEALS) DURING THE SECOND ROUND OF ASSESSMENT PROCEEDINGS. IN ANY CASE, DURING THE COURSE OF SEARCH, INCRIMINATIN G MATERIAL WAS FOUND FROM THE POSSESSION OF THE ASSESSEE WHICH HAS BEEN SEIZED AND ON THE BASIS OF WHICH WE HAVE ALREADY UPHELD THE ADDITIONS ON VARIOUS ACCOUNTS. RELIANCE OF THE ASSESSEE ON THE SAID BAL ANCE SHEET OR THE BOOKS OF ACCOUNT IS THUS, REJECTED. 74. FURTHER IN THE PARAS ABOVE, WE HAVE ALREADY AT LENGTH ADDRESSED THE ISSUE OF ADMISSIBILITY OF THE CASH FLOW STATEME NT BECAUSE OF THE DEFECTS REFERRED TO BY US IN THE SAID CASH FLOW STA TEMENT PREPARED IN THE ASSESSEE. IN VIEW THEREOF, NO RELIANCE CAN BE PLAC ED UPON THE SAID CASH FLOW STATEMENT AND AS SUCH THE CASH DEPOSITS IN THE BANK ACCOUNTS OF THE ASSESSEE WHICH THE ASSESSEE EXPLAINED TO BE THR OUGH THE CASH FLOW STATEMENT, ARE TO BE ADDED AS INCOME FROM UNDISCLOS ED SOURCES IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAS ALSO IN TH E CASH FLOW STATEMENT, REFLECTED CASH RECEIVED ON SALE OF TREES FROM THE HUF ACCOUNT. THE ASSESSEE HAS FAILED TO PRODUCE ANY EV IDENCE OF SALE OF TREES THOUGH. THE ASSESSEE, TIME AND AGAIN HAS PRO DUCED THE EVIDENCE OF LAND HOLDING BY THE HUF OF THE ASSESSEE, THE LAN D BEING ANCESTRAL LAND. SUCH PLEA OF THE ASSESSEE, AT SUCH LATE STAG E CANNOT BE ACCEPTED AS THE ASSESSEE HAS FAILED TO PRODUCE THE EVIDENCE AT THE RELEVANT TIME OF ASSESSMENT PROCEEDINGS AND IT IS DIFFICULT TO MA KE FURTHER INVESTIGATION BECAUSE OF LAPSE OF TIME. NO BENEFIT CAN BE ALLOWED TO THE ASSESSEE ON ACCOUNT OF THE ALLEGED RECEIPTS IN CASH RECEIVED ON ACCOUNT 44 OF SALE OF TREES. THIS POINT HAS ALSO BEEN ADJUDIC ATED BY US IN THE PARAS ABOVE WHILE DISMISSING THE RELIANCE OF THE AS SESSEE ON THE CASH FLOW STATEMENT. 75. THE SECOND ASPECT OF THE BANK ENTRIES IN THE VA RIOUS BANK ACCOUNTS OF THE ASSESSEE ARE THE CREDIT ENTRIES WHI CH ARE CLAIMED TO HAVE BEEN RECEIVED THROUGH CHEQUES. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH COMP LETE INFORMATION IN RESPECT OF THE LOANS RECEIVED BY THE ASSESSEE DURIN G THE BLOCK PERIOD. THE ASSESSING OFFICER ALSO DIRECTED THE ASSESSEE TO PRODUCE THE PERSONS FROM WHOM SUCH LOANS WERE RECEIVED. AT THE FAG END OF THE ASSESSMENT PROCEEDINGS I.E. ON 27.03.2002, STATEMENTS OF CERTA IN PERSONS PRODUCED BY THE ASSESSEE WERE RECORDED BUT AS THERE WAS NO T IME TO MAKE FURTHER INVESTIGATIONS, THE ASSESSING OFFICER REJECTED THE SAID STATEMENTS AND CONFIRMED THE ADDITION IN THE HANDS OF THE ASSESSEE . THE COURTS HAVE TIME AND AGAIN HELD THAT MERE PAYMENT OF CHEQUE OR THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO DISCHARGE THE ONUS WHE RE THE ASSESSEE CLAIMS THAT IT HAD RECEIVED THE CREDITS BY WAY OF L OAN FROM VARIOUS PERSONS. FIRST ONUS IS UPON THE ASSESSEE TO ESTABLI SH THE IDENTITY AND CREDIT WORTHINESS OF THE LOAN CREDITOR AND ALSO TO ESTABLISH THE GENUINENESS OF THE LOAN. IN CASE THE INFORMATION I S FILED BY THE ASSESSEE TO ESTABLISH ITS CLAIM THEN THE ASSESSING OFFICER HAS TO MAKE INVESTIGATION IN RESPECT OF SOURCE OF VARIOUS CREDI T ENTRIES IN THE BANK ACCOUNTS. IN THE FACTS OF THE PRESENT CASE BEFORE US AND AS POINTED OUT BY US IN THE PARAS AGAIN AND AGAIN, THERE WAS TOTAL NON-COOPERATION BY THE ASSESSEE DURING THE TWO ROUNDS OF ASSESSMENT PR OCEEDINGS AND THE INFORMATION BEFORE THE CIT(APPEALS) IN THE SECOND R OUND OF APPELLATE PROCEEDINGS WAS ALSO FILED IN PIECEMEAL. THE CIT(A PPEALS) HAS RECORDED THE EXPLANATION OF THE ASSESSEE OBSERVING, THE ASSESSING 45 OFFICER HAS ALSO TO VERIFY WHETHER THAT CREDITOR IS SHOWING ITS INCOMES IN HIS RETURN OF INCOME OR NOT. THE ASSESSEE IS EX PECTED TO FURNISH THE INFORMATION AT THE PROPER TIME SO THAT THERE IS ENO UGH ROOM TO MAKE NECESSARY ENQUIRIES AND INVESTIGATIONS. IT IS AN E STABLISHED LAW THAT ONUS IS ON THE ASSESSEE TO PROVE THE CREDITS WITH C OGENT EVIDENCE. MERE FURNISHING OF AFFIDAVIT IS NOT SUFFICIENT TO D ISCHARGE THE ONUS. THE CIT(APPEALS) AT PAGE 63 OF THE APPELLATE ORDER OBSERVED THAT THOUGH THERE WAS SUFFICIENT TIME AVAILABLE WITH THE ASSESSEE FROM THE DATE OF SEARCH TO THE DATE OF ORIGINAL ASSESSMENT T O FURNISH ALL THE DOCUMENTS, BUT THE ASSESSEE FOR THE FIRST TIME FILE D THE RETURN OF INCOME ONLY IN OCTOBER,2000 AND AFTER FILING THE RETURN, T HE ASSESSEE FAILED TO APPEAR BEFORE THE ASSESSING OFFICER IN THE FIRST RO UND AND THE MATTER WAS SET ASIDE. THE MATERIAL WHICH WAS PLACED BEFOR E THE CIT(APPEALS) AS ADDITIONAL EVIDENCE WAS NOT FILED BEFORE THE ASS ESSING OFFICER. THE CIT(APPEALS), THUS HELD THAT ON THE BASIS OF THE DO CUMENTS I.E. THE AFFIDAVITS FURNISHED AT THE FAG END OF THE ASSESSME NT PROCEEDINGS, IT WAS NOT POSSIBLE TO GIVE RELIEF. WE ARE IN CONFORM ITY WITH THE OBSERVATIONS OF THE CIT(APPEALS) IN THIS REGARD THA T BECAUSE OF THE INEFFICIENCY OF THE ASSESSEE IN FURNISHING THE INFO RMATION IN TIME WHICH IN-TURN WOULD HAVE ENABLED THE ASSESSING OFFICER TO CARRY OUT THE REQUISITE INVESTIGATIONS, THE INFORMATION/EVIDENCES FILED AT A LATER DATE WHEN THE SAME COULD NOT BE PUT TO TEST OF EVIDENCE BECAUSE OF LAPSE OF TIME OR FURTHER INVESTIGATIONS, NO RELIANCE CAN BE PLACED ON THE SAID DOCUMENTS/EVIDENCES FILED BY THE ASSESSEE BEFORE TH E ASSESSING OFFICER AT THE FAG END OF THE ASSESSMENT PROCEEDINGS OR EVE N BEFORE THE CIT(APPEALS) DURING THE SECOND ROUND OF APPELLATE P ROCEEDINGS. 76. THE LD. AR FOR THE ASSESSEE HAS VEHEMENTLY POIN TED OUT BEFORE US THAT THE ORDER OF THE CIT(APPEALS) SUFFERS FROM A L EGAL ERROR AS VARIOUS 46 REMAND REPORTS REQUISITIONED DURING THE PENDENCY OF APPELLATE PROCEEDINGS HAVE NOT BEEN CONSIDERED BY THE CIT(APP EALS) BEFORE ADJUDICATING THE ISSUE VIS--VIS THE ADDITION MADE ON ACCOUNT OF THE BANK CREDITS. THE LD. AR FOR THE ASSESSEE REFERRED TO THE REMAND REPORT FILED BY THE ASSESSING OFFICER PLACED AT PAGES 627 TO 631 DATED 02.09.2005 OF THE PAPER BOOK IN WHICH VERIFICATION OF THE DEPOSITORS/CREDITORS WAS CARRIED OUT BY THE ASSESSI NG OFFICER AND THE ASSESSING OFFICER HAS REPORTED IN RESPECT OF CERTAI N DEPOSITORS THAT THE LOAN APPEARS TO BE GENUINE AND IN RESPECT OF OTHERS , IT HAS BEEN REPORTED THAT THE CREDIT ENTRIES MAY BE TREATED ON MERITS. IN THE SAID REPORT FURTHER, THERE IS SUBMISSION THAT THE AGRICU LTURE LAND IS ANCESTRAL PROPERTY AND THE HUF CREDITS MAY BE CONSIDERED ON M ERITS. THEREAFTER, ANOTHER REMAND REPORT DATED 16.11.2005 WAS SUBMITTE D BY THE ASSESSING OFFICER IN WHICH THERE IS EXPLANATION IN RESPECT OF CREDIT ENTRIES TO THE EXTENT OF RS. 45,81,251/-. THE THIR D REMAND REPORT WAS FILED BY THE LD. AR FOR THE ASSESSEE DURING THE RES UMED HEARING, WHICH IN TURN IS PLACED AT PAGES 672 TO 674 OF THE PAPER BOOK IN WHICH THERE IS BIFURCATION OF THE CASH DEPOSITS AND ENTRIES TRE ATED AS CASH BY THE ASSESSING OFFICER BUT IN ACTUAL, WHICH WERE ENTRIES OF CLEARANCE OF CHEQUES. AS PER THE LD. AR FOR THE ASSESSEE, THE A SSESSING OFFICER HAS REPORTED THAT THE ASSESSEE HAD SUFFICIENT CASH IN H AND IN HIS BOOKS OF ACCOUNT ON THE DATES WHEN CASH WAS DEPOSITED IN THE BANK ACCOUNT AND AS SUCH, HAS ACCEPTED THE EXPLANATION IN RESPECT OF THAT ENTRIES. 77. FURTHER CONTENTION OF THE LD. AR FOR THE ASSESS EE WAS THAT THE CIT(APPEALS) HAS NOT TAKEN COGNIZANCE OF THE SAID R EMAND REPORTS WHILE ADJUDICATING THE ISSUE AGAINST THE ASSESSEE. 47 78. WE FIND NO MERIT IN THE SAID STAND OF THE ASSES SEE. REFERENCE IS MADE TO PARA 107 AT PAGE 68 OF THE APPELLATE ORDER WHEREIN IT HAS BEEN HELD AS UNDER : 107 AS REGARDS OTHER ENTRIES, THE ASSESSING OFFI CER NEVER HAD ANY OCCASION DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO VERI FY, EXAMINE AND INVESTIGATE THOSE DOCUMENTS. ANY EVIDENCE OR STATEM ENT RECORDED BY THE ASSESSING OFFICER IN PURSUANCE OF THE LETTERS ISSUE D BY CIT(APPEALS) ARE NOT BEING CONSIDERED EXCEPT WHERE IT IS FELT THAT THE E VIDENCE IS SUCH THAT CLINCHES THE ISSUE. IT MAY BE POINTED OUT THAT THE CIT(APPEA LS) FORWARDED THE SUBMISSIONS OF THE ASSESSEE TO THE ASSESSING OFFICE R. SOMETIMES, A DIRECTION IS GIVEN TO VERIFY THOSE ENTRIES. THIS SHOULD NOT BE C ONSTRUED THAT THE CIT(APPEALS) HAS TAKEN A DECISION TO ENTERTAIN SUCH DOCUMENTS WHICH WERE NEVER PRODUCED BEFORE THE ASSESSING OFFICER. THE CI T(APPEALS) HAS PERHAPS DONE SO ONLY TO BE AWARE OF THE FACTS OF THE CASE I N A BETTER MANNER. THIS IS ALSO THE REASON THAT THE ASSESSEE HAS BEEN GIVEN RE LIEF IN RESPECT OF CERTAIN ENTRIES. THE ASSESSEE HAS BEEN GIVEN RELIEF ON ACCO UNT OF RENTAL INCOME RECEIVED; RECEIPTS ON ACCOUNT OF SALE OF AGRICULTUR AL LAND AND IN TURN RECEIVED LOAN FROM THE PERSONS WHO GOT THE MONEY BY WAY OF S ALE OF AGRICULTURAL LAND; PROFITS FROM M/S S,K. & COMPANY CREDITED IN THE CAP ITAL ACCOUNT OF THE ASSESSEE; INTEREST INCOME; SALARY; IT MAY BE POINTE D OUT THAT THE ASSESSING OFFICER :.N PARA-8 OF THE ORIGINAL ASSESSMENT ORDER HAS MENTIONED THAT THE ENTRIES RELATING TO TRANSFER OF ENTRIES FROM ONE AC COUNT TO ANOTHER ACCOUNT HAVE BEEN EXCLUDED IN ANNEXURE X-6 OF THE ORIGINAL ASSESSMENT ORDER. IN RESULT, THIS GROUND IS PARTLY ALLOWED. 79. THE CIT(APPEALS) HAS GIVEN A FINDING THAT WHERE THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN FORWARDED TO THE ASSESSIN G OFFICER FOR VERIFICATION OF THE ENTRIES, SHOULD NOT BE CONSTRUE D THAT THE CIT(APPEALS) HAD TAKEN A DECISION TO ENTERTAIN SUCH DOCUMENTS WHICH WERE NEVER PRODUCED BEFORE THE ASSESSING OFFICER. THE CIT(APPEALS) FURTHER OBSERVES THAT SUCH EXERCISE WAS TO BE BETTE R AWARE OF THE FACTS. FURTHER CERTAIN RELIEF WAS GIVEN BY THE CIT(APPEALS ) ON ACCOUNT OF RENTAL INCOME RECEIVED, RECEIPTS ON ACCOUNT OF SALE OF AGRICULTURE LAND AND LOAN RECEIVED FROM THE PERSONS WHO GOT THE MONE Y BY WAY OF SALE OF AGRICULTURE LAND, PROFITS FROM S.K. & COMPANY, I NTEREST INCOME AND SALARY. IN VIEW THEREOF, WE FIND NO MERIT IN THE S TAND OF THE LD. AR FOR THE ASSESSEE THAT THE REMAND REPORTS HAVE NOT BEEN CONSIDERED BY THE CIT(APPEALS) BEFORE ADJUDICATING THE ISSUE. HOWEVE R, IN ORDER TO BE FAIR AND TO ADJUDICATE THE ISSUE FURTHER, WE CONSID ER THE ABOVESAID 48 REMAND REPORTS SUBMITTED BY THE ASSESSING OFFICER. ANNEXURE X-6 ATTACHED TO THE ORIGINAL ASSESSMENT ORDER TABULATES THE ENTRIES IN THE BANK ACCOUNTS WHICH THE ASSESSEE HAD FAILED TO EXPL AIN AND ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE AFORESAID ANNEXURE X-6 TO THE ORIGINAL ASSESSMENT ORDER. THE LD. AR FOR THE ASSESSEE HAS TIME AND AGAIN POINTED OUT THAT THE AS SESSING OFFICER HAD FAILED TO GIVE CREDIT OF THE ENTRIES RELATING TO TR ANSFER OF ENTRIES FROM BANK ACCOUNT TO THE OTHER BANK ACCOUNT. HOWEVER, V IDE PARA 8 OF THE ORIGINAL ASSESSMENT ORDER, THE ASSESSING OFFICER HA S CLEARLY MENTIONED THAT THE ENTRIES RELATING TO TRANSFER OF ENTRIES FR OM ONE ACCOUNT TO ANOTHER ACCOUNT, HAVE BEEN EXCLUDED IN ANNEXURE X-6 OF THE ORIGINAL ASSESSMENT ORDER. FURTHER IN THE ABSENCE OF ASSESSE E HAVING EXPLAINED SOURCE OF AMOUNT TRANSFERRED FROM ONE BANK ACCOUNT TO ANOTHER, ADDITION OF THE SAME IS MERITED IN THE HANDS OF ASS ESSEE. 80. NOW COMING TO THE CONTENTS OF THE VARIOUS REMAN D REPORTS DELIVERED BY THE ASSESSING OFFICER, WE PROCEED TO D EAL WITH THE FINDINGS OF THE ASSESSING OFFICER IN EACH ONE OF TH E SAID REPORT. THE FIRST REMAND REPORT IS ANNEXURE-1 PLACED AT PAGES 6 27 TO 631 IS DATED 02.09.2005 IN WHICH THERE IS VERIFICATION OF VARIOU S CREDITORS AND THE ASSESSING OFFICER HAS REPORTED THAT SOME OF THE SAI D LOANS WERE TO BE TREATED AS GENUINE AND IN RESPECT OF OTHERS, THERE IS REPORT THAT THE SAME MAYBE CONSIDERED ON MERITS. IN VIEW OF EXERCI SE CARRIED OUT BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE CREDITS R EPORTED BY ASSESSING OFFICER TO BE TREATED AS GENUINE, TOTALING RS. 25,6 5,000/- MAYBE ACCEPTED IN THE HANDS OF THE ASSESSEE. HOWEVER, TH E OTHER CREDITS WHICH TOTAL TO RS. 12,21,200/- AS PER THE DETAILS F URNISHED BY THE ASSESSEE IN THIS REGARD, HAVE BEEN ACCEPTED VIDE CH EQUES AND MAJORITY OF THE SAME ARE CLAIMED TO BE REPAID DURING THE BLO CK PERIOD, BUT THE 49 ASSESSEE HAS FAILED TO COMPLETELY DISCHARGE HIS ONU S OF ESTABLISHING THE IDENTITY AND CREDIT WORTHINESS OF THE SAID CREDITOR S AND IN THE ABSENCE OF SAME, SUCH CREDITS CANNOT BE ACCEPTED AS GENUINE . 81. THE THIRD CREDITS ARE ON ACCOUNT OF THE AMOUNTS RECEIVED ON ACCOUNT OF SHARE OF AGRICULTURE LAND SOLD BY THE AS SESSEE ALONGWITH OTHER FAMILY MEMBERS, CREDIT OF WHICH HAS ALREADY B EEN ALLOWED BY THE CIT(APPEALS). FURTHER, THE INCOME FROM SALE PROCEED S OF TREES RECEIVED IN CASH CANNOT BE ACCEPTED IN THE HANDS OF THE ASSE SSEE IN VIEW OF OUR OBSERVATIONS WITH REGARD TO THE CASH FLOW STATEMENT . 82. THE NEXT REMAND REPORT IS PLACED AT PAGES 635 A ND 636 OF THE PAPER BOOK WHICH HAVE BEEN PLACED ON RECORD BY THE ASSESSEE. THE FIRST ISSUE ARISING IN THE SAID REMAND REPORT IS IN RESPE CT OF THE REFUND RECEIVED OF RS. 76,500/- WHICH MAY BE ALLOWED TO TH E ASSESSEE. THE AMOUNT RECEIVED FROM FAMILY MEMBERS AS PER ANNEXURE -B OF RS. 32,64,000/- HAS ALREADY BEEN CONSIDERED BY THE CIT( APPEALS) AND RELIEF HAS BEEN ALLOWED ON ACCOUNT OF TRANSFER OF ENTRIES ON SALE OF LAND. IN VIEW THEREOF, WE FIND NO MERIT IN FURTHER ALLOWING ANY RELIEF ON THIS ACCOUNT. 83. THE NEXT ISSUE IS ON ACCOUNT OF RENT OF HOUSE N O. 52 SECTOR 8-A, CHANDIGARH WHICH HAD BEEN RECEIVED AS PER THE SUPRE ME COURT ORDER AND THE CREDIT FOR THE SAME HAS ALREADY BEEN ALLOWE D BY THE CIT(APPEALS) AND NO FURTHER RELIEF ON THIS ACCOUNT IS MERITED. 84. THE LAST ITEM IS IN RESPECT OF THE TRANSFER FRO M ONE ACCOUNT TO OTHERS AND SUCH BANK TRANSFERS TOTALING RS. 7,46,65 6/-. THE CIT(APPEALS) HAS GIVEN A FINDING THAT ANNEXURE X-6 DID NOT CONTAIN ANY OF SUCH AMOUNTS OF INTER-BANK TRANSFERS AND THE ASSESSEE HAVING FAILED TO CONTROVERT THE SAID FINDINGS OF CIT(APPEA LS), WE FIND NO MERIT 50 IN THE CLAIM OF THE ASSESSEE AND THE SAME IS REJECT ED. IN VIEW THEREOF, THE ASSESSEE GETS FURTHER RELIEF OF RS. 76,500/- ON ACCOUNT OF REMAND REPORT DATED 16.11.2005. 85. THE LAST REMAND REPORT PLACED AT PAGES 672 TO 6 74 IS DATED 1.5.2006 IN RESPECT OF CASH AVAILABLE WITH THE ASSE SSEE AND IN VIEW OF OUR DELIBERATION ON THE ISSUE, WE FIND NO MERIT IN THE STAND OF THE LD. AR FOR THE ASSESSEE ON PLACING RELIANCE ON THE SAME , AS POINTED OUT BY THE CIT(APPEALS). FURTHER, WE FIND THAT THE CIT(AP PEALS) HAS AT PAGES 64 TO 66 CONSIDERED ANOTHER ASPECT OF THE FACTS OF THE PRESENT CASE WHEREIN AS COMPARED TO THE INCOME OF RS. 11,58,158/ - DECLARED BY THE ASSESSEE DURING THE BLOCK PERIOD VIS-A-VIS THE PROP ERTIES ACQUIRED BY THE ASSESSEE DURING BLOCK PERIOD. THE EXPLANATION O F THE ASSESSEE IN THIS REGARD DID NOT MATCH IN VIEW OF NON-AVAILABILI TY OF THE FUNDS. THE CLAIM OF THE ASSESSEE THAT IT HAD RAISED LOANS FROM SEVERAL PERSONS HAS BEEN ADDRESSED BY THE CIT(APPEALS) AT PAGE 65 OF TH E APPELLATE ORDER AND REJECTED. IN VIEW THEREOF, NO CREDIT CAN BE ALL OWED ON THE SO CALLED CASH FLOW STATEMENT. 86. ANOTHER ISSUE RAISED IS AGAINST ALLEGED INVESTM ENT IN FDRS. DURING THE COURSE OF SEARCH, DOCUMENT WAS SEIZED, O N WHICH CERTAIN NOTINGS HAD BEEN MADE. THE PLEA OF THE ASSESSEE WA S THAT THESE WERE ROUGH JOTTINGS OF SOURCES OF FUNDS/ADVANCES. THE A SSESSING OFFICER MADE THE ABOVE ADDITION, WHICH WAS CONFIRMED BY CIT (APPEALS). HOWEVER, NO EVIDENCE OF INVESTMENT IN FDRS WAS FOUN D DURING THE COURSE OF SEARCH AND IN THE ABSENCE OF SAME, NO ADD ITION IS WARRANTED. THE GROUND NO. 4 RAISED BY ASSESSEE IS THUS PARTLY ALLOWED. 87. THE GROUND NO. 5 RAISED BY THE ASSESSEE IS NOT PRESSED, HENCE THE SAME IS DISMISSED. 51 88. THE ISSUE IN GROUND NO. 6 RAISED BY THE ASSESSE E IS AGAINST THE TREATMENT OF INCOME OF ASSESSMENT YEAR 1998-99 AS U NDISCLOSED INCOME OF BLOCK PERIOD. THE PLEA OF THE LD. AR FOR THE AS SESSEE WAS THAT THE RETURN OF INCOME WAS NOT DUE TILL 31.10.1998. THE SEARCH IN THE CASE WAS CONDUCTED ON 30.09.1998 AND ADMITTEDLY TILL THE N THE RETURN OF INCOME RELATING TO ASSESSMENT YEAR 1998-99 WAS NOT FILED AND IN THE ABSENCE OF THE SAME, THE INCOME RELATING TO SUCH PE RIOD, FALLING WITHIN BLOCK PERIOD IS TO BE INCLUDED AS INCOME FROM UNDIS CLOSED SOURCES. THE GROUND NO. 6 IS THUS, DISMISSED. 89. THE ISSUE RAISED VIDE GROUND NO. 7 IS AGAINST T HE REJECTION OF CASH FLOW STATEMENT AND REMAND REPORT DOES NOT STAN D IN VIEW OF OUR OBSERVATIONS BEING PRELIMINARY ISSUE AND IN RESPECT OF GROUND NO. 4 AND HENCE, SAME IS REJECTED. ITSS NO. 18/CHD/2009 : REVENUES APPEAL 90. THE GROUND NO. 1 RAISED BY REVENUE IS LINKED TO GROUND NO. 2(B) RAISED BY THE ASSESSEE AND IN VIEW OF OUR ORDER IN RELATION TO IT, THIS GROUND OF APPEAL IS DISMISSED. 91. THE GROUND NO. 2 RAISED BY REVENUE IS LINKED TO GROUND NO. 3 RAISED BY THE ASSESSEE AND IN VIEW OF OUR ORDER IN RELATION TO IT, THIS GROUND OF APPEAL IS DISMISSED. 92. THE GROUND NO. 3 RAISED BY REVENUE IS LINKED TO GROUND NO. 4 RAISED BY THE ASSESSEE AND IN VIEW OF OUR ORDER IN RELATION TO IT, THIS GROUND OF APPEAL IS DISMISSED. 52 93. THE ISSUE IN GROUND NO. 4 IS AGAINST THE ESTIMA TION OF RENTAL VALUE FOR ALL THE ASSESSMENT YEARS AT RS. 970,443/- . THE ASSESSING OFFICER HAD ESTIMATED THE ALV AT RS. 129,283/- AND MADE THE ADDITION. THE ADDITION WAS DELETED BY CIT(APPEALS) AS THE REN T WAS FIXED BY SETTLEMENT AT THE HON'BLE SUPREME COURT LEVEL AND T HE ASSESSEE WAS IN LITIGATION. WE ARE IN CONFORMITY WITH THE ORDERS O F CIT(APPEALS) THAT NO ADDITION OF RENTAL VALUE CAN BE MADE ON ESTIMAT E BASIS. THE GROUND NO. 4 RAISED BY THE REVENUE IS DISMISSED. 94. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF DECEMBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6 TH DECEMBER, 2013 POONAM COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(APPEA LS)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH