The ACIT, Circle-10, Ahmedabad V. Shri Manoj B. Vadodariya, Ahmedabad

ITSSA 191/AHD/2006

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9656 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-12-2012
• Assessment Year: misc
• Appeal Filed On: 12-07-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C PATWARI; SHANKARLAL MEENA
• Assessee Lawyers: P M MEHTA; S N SOPARKAR
• Keywords: Unexplained investment; Loose papers; Document seized; Principle of natural justice; Period of limitation; Block assessment; Documents seized
• Section: 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER IT(SS)A NO. 191/AHD/2006 THE ACIT, CENTRAL CIRCLE- 10, AHMEDABAD. V/S. SHRI MANOJ B. VADODARIYA, 61 ADARSH BUILDING SWASTIK CHAR RASTA NAVRANPURA AHMEDABAD. PAN: AALPV 5038N (APPELLANT) (RESPONDENT) CO NO. 216/AHD/2006 SHRI MANOJ B. VADODARIYA, 61 ADARSH BUILDING SWASTIK CHAR RASTA NAVRANPURA AHMEDABAD. PAN: AALPV 5038N V/S. THE ACIT, CENTRAL CIRCLE-10, AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI D.C. PATWARI AND SHANKARLAL MEENA, D.R. ASSESSEE(S) BY : S/SHRI S.N. SOPARKAR AND P.M. MEHTA, A.R. / DATE OF HEARING : 19/09/2013 / DATE OF PRONOUNCEMENT: 13/12/2013 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : REVENUE IS IN APPEAL, HOWEVER, ASSESSEE IS IN CROSS OBJECTION EMANATING FROM THE ORDER OF LEARNED CIT(A )-III, AHMEDABAD, DATED 30 TH OF MARCH, 2006. FOR THE SAKE OF IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 2 - CONVENIENCE BOTH ARE CLUBBED AND HEREBY DECIDED BY THIS COMMON ORDER:- A. IT(SS) A NO.191/AHD/2006 (REVENUES APPEAL) 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS, CONNEC TED WITH EACH OTHER, REPRODUCED BELOW: THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.72,62,215/- ON ACCOUNT OF UNDISCLOSE D PROFIT EARNED BY THE ASSESSEE IN RELEASING THE RIGHT IN LAND. 2.1 FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDIN G ASSESSMENT ORDER PASSED U/S. 158 BD R.W.S. 158BC, DATED 29.12. 2004 ARE THAT THE PROCEEDINGS IN THE PRESENT CASE WAS IN CONSEQUE NCE OF A SEARCH U/S. 132 CARRIED OUT IN THE CASE KNOWN AS MASTER G ROUP. THE SEARCH WAS CONDUCTED ON 20 TH OF OCTOBER, 2000. IT WAS NOTED IN THE ASSESSMENT ORDER THAT THE SEARCH WAS ALSO CARRIED O UT ON THE RESIDENTIAL PREMISES OF ONE SRI ARVINDBHAI A. SHAH, AN ACCOUNTANT, AND A DIARY WAS SEIZED WHICH WAS MARKED AS ANNEXURE A-1. CERTAIN OTHER MATERIALS HAVE ALSO BEEN SEIZED. ON T HE BASIS OF THE JOTTINGS ON THE DIARY ETC., IT WAS FOUND THAT THE N AME OF THE ASSESSEE WAS MENTIONED; HENCE, THE PROCEEDINGS WERE STARTED. IN COMPLIANCE OF THE NOTICE, THE ASSESSEE HAS FILED A RETURN AT RS.NIL. IN THE DIARY A-1, IT WAS FOUND AT PAGES 134 TO 137 THAT THERE WAS AN ACCOUNT OF THE ASSESSEE. THE AO HAS REPRODUCED T HE CONTENTS OF THE ACCOUNTS. APART FROM THE ABOVE ACCOUNTS, SOME J OTTINGS ON THE CHITS HAVE ALSO BEEN NOTICED BY THE AO. ALL THOSE S EIZED MATERIALS WERE CONFRONTED TO THE ASSESSEE. THE ASSESSEES ARG UMENT WAS THAT THE DIARY AS MAINTAINED BY MR. SHAH WAS AS PER THE INSTRUCTIONS OF IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 3 - OTHERS; HENCE, THE CONTENTS OF THE SAID DIARY DID N OT BELONG TO THE ASSESSEE. ON THE OTHER HAND, THE AO HAS PLACED RELI ANCE ON THE REPLY OF SRI JIVRAJ V. DESAI WHEREIN HE HAS SHIFTED THE BURDEN ON THIS ASSESSEE. THOSE REPLIES WERE ALSO CONFRONTED T O THIS ASSESSEE. THE ASSESSEE WAS ALSO PROVIDED THE COPIES OF THE ST ATEMENT OF SRI ARVIND A. SHAH AND JIVRAJ V. DESAI. THE ASSESSEES MAIN CONTENTION WAS THAT IN THE STATEMENT GIVEN BY SRI A RVIND A. SHAH HE HAS CLEARLY STATED THAT THE SAID DIARY WAS WRITT EN UNDER THE INSTRUCTIONS OF J.V. DESAI. THE ASSESSEE HAS ALSO C ONTESTED THAT NONE OF THE PAPERS WERE FOUND IN HIS HAND WRITING. IT WAS ALSO CONTESTED THAT NONE OF THE PAPERS OR THE DIARY WERE EITHER FOUND FROM HIS PREMISES OR POSSESSION. THE ASSESSEE HAS A LSO DRAWN ATTENTION ON A STATEMENT RECORDED ON 3 RD OCTOBER, 2002 OF J.V. DESAI WHERE HE HAD ADMITTED THAT THE DIARY WAS WRIT TEN BY MR. SHAH IN RESPECT OF HIS SHARAFI BUSINESS. IN RESPECT OF THE LAND TRANSACTION AND THE ENTRIES RECORDED IN THE DIARY, THE ASSESSEE HAS EXPLAINED THAT HIS ACCOUNT WAS DEBITED AND THERE WA S AN OPENING DEBIT BALANCE WHICH WAS NOTHING BUT A HAWALA ENTRY ABOUT SOME LAND TRANSACTION. ACCORDING TO ASSESSEE, IT WAS REC ORDED ONLY AS A HAWALA ENTRY HENCE THERE WAS NO ACTUAL MONEY TRANSA CTION. THE ASSESSEE HAS ALSO PLEADED THAT SRI J.V. DESAI HAD T AKEN A DIFFERENT VIEW DURING THE APPELLATE PROCEEDINGS AND CONTENTED THAT THE FINANCIAL TRANSACTIONS RECORDED IN THE SAID DIARY W ERE NOT CONNECTED WITH THE SHARAFI BUSINESS BUT PERTAINED T O THE THALTEJ LAND TRANSACTION. THE ASSESSEE HAD OBJECTED BEFORE THE AO THAT THE SAID CHANGE IN THE STAND OF J.V. DESAI WAS INCORREC T. THEREAFTER THE AO HAS DISCUSSED THE DETAILS OF THE LAND TRANSACTIO N AND THE IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 4 - STATEMENTS RECORDED. AT ONE PLACE IT WAS INFORMED B Y THE ASSESSEE TO AO THAT J.V. DESAI HAD SPENT THE MONEY AND DEBIT ED THE ACCOUNT OF THE ASSESSEE BUT LATER ON THE SAID ACCOUNT WAS S QUARED UP BY CREDITING THE ACCOUNT OF THE ASSESSEE ON 1.12.1999 AFTER THE SETTLEMENT OF THE LAND DEAL. ON 1.12.1999, THE TRAN SACTION RELATED TO THE LAND WAS OVER, THE SAME AMOUNT OF RS.28,440/ - (WITHOUT THREE ZEROES) WAS CREDITED TO THE ACCOUNTS OF THE A SSESSEE. HOWEVER, THE AO HAD DISCUSSED THE ENTRIES OF THE SA ID DIARY PERTAINING TO THE ASSESSEE IN DETAIL. ACCORDING TO AO, THE IMPUGNED OPENING BALANCE OF RS.23,43,08,700/- AS ON 1.11.1999 WAS NOTHING BUT IN THE NATURE OF FINANCE. AS FAR AS THIS ASSESSEE WAS CONCERNED, ACCORDING TO AO, THE FINANCE HAD BEE N EXTENDED TO THE ASSESSEE FROM THREE SOURCES, FIRST IS THE ACCOU NT OF THE ASSESSEE HIMSELF WHICH WAS NOT RELATED TO VITHOBA LAND, SECO ND FINANCE IS EMANATING FROM THE HAWALA ENTRIES GIVEN TO THE ASSE SSEE FROM THE ACCOUNTANT AND THIRD THE J.V. DESAI HAS FINANCED TH E ASSESSEE ON BEHALF OF THE ONE NATUBHAI POPULAR. ON THE OTHER HA ND, THE ASSESSEE HAS STRONGLY CONTESTED THAT HE HAD NO ROLE TO PLAY IN THE SAID LAND DEAL. THE AO HAS DISCUSSED THE DETAILS OF THE LAND TRANSACTION AND THEREUPON ARRIVED AT THE CONCLUSION THAT ON RELEASE OF THE LAND THE ASSESSEE HAD EARNED PROFIT. THE PRO FIT IN ASSESSEES HAND WAS COMPUTED BY THE AO IN THE FOLLOWING MANNER :- IT IS RELEVANT TO MENTION HERE THAT FROM THE NARRA TION GIVEN IN PAGE- 134 OF ANNEX. A-1 ALONG WITH THIS CREDIT ENTRY OF R S.2,84,40,000/-, IT IS FOUND THAT THE AREA OF THIS LAND IS 25280 SQ. YARD WHICH IS ALSO EQUAL WITH THE AREA SHOWN IN THE BOOKS OF ACCOUNTS OF THE SE FOUR PERSONS. FROM THE BLOCK ASSESSMENT ORDER IN CASE OF ABOVE FO UR PERSONS, IT HAS BEEN FOUND THAT TRUE MARKET VALUE OF THESE PLOTS HA S BEEN COMPUTED AS PRODUCED ABOVE, THE SAME IS AGAIN PRODUCED AS UNDER : IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 5 - DOCUMENT PRICE TRUE MARKET VALUE UNDISCLOSED INVESTMENT PLOT NO.292/1, RS.1058925 RS.10133912 RS.9074987 PLOT NO.292/2, RS. 783475 RS. 7497855 RS.6714390 PLOT NO.293/1, RS.2138628 RS.2046669 RS.18328041 PLOT NO.293/2 RS.444850 RS.4257214 RS.3812364 FROM THE ABOVE TABLE, IT IS FOUND THAT THE AO HAS M ADE ADDITION OF RS.3,79,29,782/- CONSIDERING THE SAME AS UNDISCLOSE D INVESTMENTS. WHEREAS HE HAS CONSIDERED THE TOTAL MARKET VALUE OF THE ABOVE PLOTS OF THE LANDS AT RS.4,23,55,650/-. NOW SINCE THE ASSESS EE HAS HALF OF THE INTEREST ON THE ABOVE PLOTS OF THE LAND, THE INVEST MENT ON THE SAME BY THE ASSESSEE MAY BE CONSIDERED AT RS.2,11,77,825/- AS PER THE WORKING OF THE AO IN CASE OF SHRI JIVRAJ V. DESAI, SHRI RAJ ESH J. DESAI, SHRI RAMESH DESAI, AND SHRI RAJNI DESAI. THIS AMOUNT HAS ALREADY BEEN ADDED IN THE HANDS OF SHRI JIVRAJ V. DESAI AND HIS THREE SONS AS 50% OF THE TOTAL AMOUNT INVESTMENT OF RS.4,23,55,650/-. EVEN IF IT IS CONSIDERED THAT THE 50% OF THIS AMOUNT, I.E. RS.2,1 1,77,785/- WAS INVESTED BY THE ASSESSEE THEN ALSO THE SOURCE OF TH IS INVESTMENT IS AVAILABLE FROM MORE THAN RS.23 CR. DEBIT BALANCE IN THE ACCOUNT OF THE ASSESSEE REFLECTING IN PAGES 134-137 OF ANNEX. A-1. THEREFORE, THE INVESTMENT HAS BEEN MADE BY OR OUT OF THE FUNDS OF JIVRAJ V. DESAI IN THE ABOVE MENTIONED LAND. THE SHARE OF THE ASSESSEE IS TO THE EXTENT OF RS.2,11,77,785/- BUT THE INVESTMENT HAS BEEN MADE B Y SHRI JIVRAJ V. DESAI AND HIS THREE SONS OR OUT OF FUNDS GIVEN BY S HRI JIVRAJ V. DESAI AND HIS THREE SONS TO THE ASSESSEE AS IS EVIDENT FR OM THE SEIZED RECORDS. THE ENTRY OF RS.2,84,40,000/- APPEARING ON PAGE 134 OF ANNEX. A-1 AND PAGE 96 OF ANNEX. A-3 CLEARLY INDICATES THAT TH E ASSESSEE HAS RECEIVED THIS MUCH CREDIT ON ACCOUNT OF THE SALE OF LAND AS STATED ABOVE. FROM THE MEANING THE PHRASE 28440-HAWALO JA MIN MALYE MAJRE AAPYA DATE 1.12.1999 JAMIN 25280 VAR X 1125 WHICH MEANS AFTER SETTLEMENT OF LAND DEAL A HAWALA CREDIT OF RS .2,84,40,000 HAS BEEN GIVEN TO THE ASSESSEE, IT IS CLEAR THAT THIS M UCH BALANCE CREDIT HAS BEEN GIVEN TO THE ASSESSEE. THEREFORE, THE UNDISCLO SED PROFIT EARNED IN RELEASING THE RIGHT IN THE ABOVE SAID LAND BY THE A SSESSEE IS CALCULATED AS RS.72,62,215 (RS.2,84,40,000-RS.2,11,77,785). SU BSTANTIVE ADDITION RS.72,62,215/- 3. THIS ADDITION WAS CHALLENGED BEFORE CIT(A). WE H AVE NOTED THAT LEARNED CIT(A) HAS GIVEN A GENERAL OBSERVATION ABOUT THE CONTROVERSY AS UNDER: I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. I FIND THAT THE ACTION AGAINST THE IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 6 - APPELLANT HAS BEEN INITIATED ON THE STRENGTH OF DOC UMENTS RECOVERED FROM 3 RD PARTY, I.E. MR. JIVRAJ V. DESAI AND HIS ACCOUNTANT , SHRI ARVINDBHAI A. SHAH. THE SEARCH ACTION TOOK PLACE ON 20.10.2000. THE RELEVANT DOCUMENTS ARE A SEIZED DIARY ANNEXURE A-1, LOOSE PAPERS CONTAINED IN ANNEXURE A-2, A-3 & A-4. THE NORMAL PR ESUMPTION U/S. 132(4A) IS THAT THE DOCUMENTS WERE BELONGING TO SHR I JIVRAJ V. DESAI AND THAT ITS CONTENTS WERE TRUE. WITH REGARD TO FA STENING OF LIABILITY OF A 3 RD PARTY ON THE BASIS OF THESE SEIZED DOCUMENTS, THES E DOCUMENTS MAY PROVIDE A GOOD LEAD FOR FURTHER INVESTIGATIONS. HOWEVER, IT WAS A BASIC PRINCIPLE OF NATURAL JUSTICE THAT ON THE BASI S OF THESE DOCUMENTS ALONE, NO LIABILITY CAN BE FIXED ON THE 3 RD PARTY UNLESS SUCH 3 RD PARTY OWNS UP THE TRANSACTION OR THE DOCUMENTS THEMSELVES WERE IN THE HANDWRITING OF SUCH 3 RD PARTY OR THE NOTINGS OR TRANSACTIONS RECORDED IN THESE DOCUMENTS ARE DULY AUTHENTICATED WITH THE SIGNATURES OF SUCH 3 RD PARY. DURING THE COURSE OF SEARCH ACTION ON 20.10. 00, AN EXHAUSTIVE STATEMENT OF SHRI JIVRAJ V. DESAI WAS RE CORDED. A STATEMENT FROM SHRI ARVINDBHAI A. SHAH, ACCOUNTANT OF SHRI JI VRAJ V. DESAI WAS ALSO RECORDED. BUT NONE OF THEM INDICATED TO BE REC ORDING ANY TRANSACTIONS IN APPELLANT. EVEN SHRI ARVINDBHAI A. SHAH ON 24.9.2002, HE STATED THAT THE DOCUMENTS WERE IN HIS HANDWRITIN G. HE HAD WRITTEN THESE DOCUMENTS FOR MR. JIVRAJ V. DESAI AND THAT TH ESE DOCUMENTS INDICATED SARAFI LOAN TRANSACTIONS AND CONSEQUENTIA L UNACCOUNTED INVESTMENTS OF SHRI JIVRAJ V. DESAI. IT IS AT A VER Y LATE STAGE THAT SHRI JIVRAJ V. DESAI CAME FORWARD WITH THE THEORY THAT T HE DIARY MARKED ANNEXURE A-1 WAS MAINTAINED BY SHRI ARVINDBHAI A. S HAH AT THE INSTANCE OF SOME OTHER PERSON. SUCH CLAIM OF SHRI J IVRAJ V. DESAI WAS IN ITSELF NOT SUFFICIENT TO FIX UP A LIABILITY ON T HE APPELLANT. THIS IS PARTICULARLY SO BECAUSE NONE OF THE TRANSACTIONS BE ING ASSIGNED TO THE APPELLANT ARE AUTHENTICATED BY THE APPELLANT IN ANY MANNER. THE APPELLANT HAS NOT BEEN ALLOWED CROSS EXAMINATION OF SHRI JIVRAJ V. DESAI AND HIS ACCOUNTANT, SHRI ARVINDBHAI A. SHAH W HO COME UP WITH SUCH A THEORY TO SHIFT A PART OF THEIR TAX LIABILIT Y TOWARDS THE APPELLANT. THERE ARE NO INSTANCES OR COGENT EVIDENCES WHICH SU PPORT SUCH CONTENTIONS OF SHRI JIVRAJ V. DESAI. IT IS IN THE L IGHT OF THESE FACTS THAT VARIOUS GROUNDS OF APPEAL TAKEN UP BY THE APPELLANT IN THIS APPEAL ARE REQUIRED TO BE ADJUDICATED UPON. THE PLEA OF THE AP PELLANT IN THIS REGARD FINDS DUE SUPPORT FROM TH LANDMARK JUDGEMENT OF HONBLE SUPREMEM COURT IN THE CASE OF CBI VS. V.C. SHUKLA & OTHERS REPORTED IN 3-SC CASES- 410, WHEREIN THE APEX COURT CLEARLY LAID DOWN THAT ENTRIES IN THE DOCUMENTS MAINTAINED BY A 3 RD PARTY HAD ONLY PROBATIVE VALUE AND SUCH ENTIRE SALON WERE NOT SUFFICIENT TO CHARGE ANY PERSON WITH A LIABILITY. CORROBORATIVE INDEPENDENT EVIDENC ES WERE ESSENTIAL TO ESTABLISH TRUST WORTHINESS OF SUCH ENTRIES IN ORDER TO FASTEN A LIBALITY ON A PERSON. THE CASE OF THE APPELLANT ALSO FINDS S UPPORT FROM THE DECISION OF HONBLE MUMBAI HIGH COURT IN THE CASE O F ADDL. CIT VS. LATA MANGESHWAR 97 ITR 696(MUMBAI). I, THEREFORE, H OLD THAT THE ENTRIES IN THE DOCUMENTS RECOVERED FROM SHRI JIVRAJ V. DESAI AND HIS ACCOUNTANT SHRI ARVINDBHAI A. SHAH IN THEMSELVES WE RE NOT SUFFICIENT IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 7 - TO FASTEN A LIABILITY ON THE APPELLANT. THE VARIOUS GROUNDS OF APPEAL RAISED BY THE APPELLANT ARE THEREFORE, DECIDED ON T HE BASIS OF ABOVE ADJUDICATION. 3.1. ABOUT THE IMPUGNED ADDITION, IT WAS REITERATED BY LEARNED CIT(A) THAT THE AO HAS HELD THAT THE PROPERTIES IN QUESTION BEARING SURVEY NO.292/1; 292/2; 293/1; 293/2 WERE PURCHASED BY SRI JIVRAJ V. DESAI JOINTLY WITH THE ASSESSEE, I.E., SR I MANOJ B. VADODARIA; BECAUSE THE ASSESSEES NAME WAS APPEARIN G AS A SECOND NAME ON THOSE DOCUMENTS. THERE WAS ALSO A REFERENCE OF A RELEASE DOCUMENT BY THE AO. THE AO HAS THEREAFTER REFERRED THE ENTRY MADE IN THE DIARY. THE NARRATION OF THE CREDIT ENTR Y IN THE NAME OF THE ASSESSEE WAS AN AMOUNT OF RS.28440 ON 1.12.1999 AS HAWALA FOR LAND. SO THE AO HAD DECODED AND ADDED THREE ZE ROES 000. IN THE CASE OF SRI J.V. DESAI, THE AO HAD WORKED OU T THE MARKET VALUE OF THE SOLA LAND AT RS.4,23,00,000/-; AND THE ASSESSEES SHARE WAS ALLEGEDLY HELD AT 50% AT RS.2,11,77,825/- THEN THE AO HAD SAID THAT BY CREDITING THE ASSESSEES ACCOUNT BY AN AMOUNT OF RS.2,84,40,000/-; BECAUSE THAT AMOUNT WAS RECEIVED BY THE ASSESSEE FOR SURRENDERING THE RIGHT OF SALE OF LAND PIECES. THE UNDISCLOSED PROFIT WAS THUS COMPUTED AT RS.72,62,21 5/- (RS.2,84,40,000/ - RS.2,11,77,785/-). AGAINST TH E SAID ADDITION THE ASSESSEE HAD CONTESTED BEFORE THE LEARNED CIT(A ) AS FOLLOWS:- 27.2 ALONG WITH THE FIVE SALE DEEDS AFORESAID, THE SEARCH PARTY HAD ALSO FOUND FIVE ORIGINAL RELEASE DEEDS (XEROX COMPI ES ATTACHED AT ANNEXURES-H-1 TO H-5) DATED 25.8.2000 EXECUTED BY ME IN FAVOUR OF THE RESPECTIVE OTHER PURCHASERS VIZ., SHRI JIVRAJ D ESAI AND THE OTHER THREE MEMBERS OF HIS FAMILY, THEREBY UNDOING MY HAV ING BEEN JOINED IN THE EXECUTION OF THE AFORESAID SALE DEEDS EVEN THOU GH I HAD NOT PAID ANY PURCHASE CONSIDERATION TO THE SELLERS OF THE LA NDS. AT THE TIME OF EXECUTING THESE RELEASE DEEDS. I HAD BEEN PAID AN A MOUNT OF RS.25,000 EACH UNDER EACH OF THE FIVE RELEASE DEEDS BY MEANS OF IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 8 - CHEQUES DRAWN BY SHRI JIVRAJ DESAI AND THE OTHER TH REE MEMBERS OF HIS FAMILY ON THEIR RESPECTIVE BANK ACCOUNTS. 27.3 AMONG THE PAPERS SEIZED ALONG WITH THE AFORESA ID SALE DEEDS AND RELEASE DEEDS, THE SEARCH PARTY ALSO FOUND AND SEIZED A LETTER DATED 24.8.2000 ADDRESSED BY SHRI RAJESH J. DESAI ( ONE OF THE PURCHASERS OF THE LAND IN QUESTION) TO THE SARVODAY A CO-OPERATIVE BANK LTD. WHEREAS I HAVE NOT BEEN PROVIDED WITH ANY COPY OF THIS LETTER, IT IS CLEAR FROM THE RELEVANT PORTION OF TH E IMPUGNED BLOCK ASSESSMENT ORDER THAT LETTER WAS ADDRESSED BY SHRI RAJESH J. DESAI TO THE BANK IN CONNECTION WITH A BORROWING FACILITY AG AINST THE SECURITY OF THE LAND IN QUESTION. HE HAS INDICATED IN THAT LETT ER THAT THE VALUE OF ONE OF THE PLOTS ( WHICH WERE THE SUBJECT MATTER OF PURCHASE UNDER THE FIVE SALE DEEDS IN QUESTION) VIZ., 292/2, WAS ABOUT RS.75 LACS. IT IS THE STAND OF THE ASSESSING OFFICER MAKING ASSESSMENT OF SHRI JIVRAJ DESAI AND HIS AFORESAID FAMILY MEMBERS AS ALSO OF THE LEA RNED ASSESSING OFFICER MAKING MY ASSESSMENT VIDE THE IMPUGNED ORDE R, THAT SINCE THE AFORESAID PLOT NO.292/2 MEASURED ABOUT 4477 SQ. YDS , ITS VALUE OF RS.75 LACS INDICATED IN THE AFORESAID LETTER TO THE BANK MUST BE REPRESENTING ITS MARKET VALUE WHICH WORKED OUT TO R S.1675 (RS.75 LACS / 4477) .............. 31.1 IN MY HUMBLE SUBMISSION, WHEN IT IS THE ADMIT TED POSITION THAT THE ENTIRE PURCHASE CONSIDERATION THAT WAS PAYABLE FOR THE PURCHASE OF THE LANDS IN QUESTION VIDE THE FIVE SALE DEEDS, HAD ACTUALLY BEEN PAID BY SHRI JIVRAJ DESAI AND THREE MEMBERS OF HIS FAMIL Y, THERE CAN BE NO QUESTION FOR SUGGESTING THAT MERELY BECAUSE I HAD J OINED IN THE EXECUTION OF THE SALE DEEDS AS ONE OF THE PURCHASIN G PARTIES (PLEASE NOT THAT MY NAME HAS BEEN MENTIONED AS THE SECOND P ARTY IN ALL THE CASES), ANY BENEFICIAL RIGHTS IN THE LANDS HAD VEST ED IN ME. IN MY HUMBLE SUBMISSION, THEREFORE, ANY SUGGESTION THAT I HAD RECEIVED ANY CONSIDERATION FOR EXECUTING THE RELEASE DEEDS BEYON D THE AMOUNTS ACTUALLY PAID TO ME VIZ. RS.25,000 EACH AT THE TIME OF (AND NOT IN CONSIDERATION OF) EXECUTION OF THE RELEASE DEEDS, I S ENTIRELY MISPLACED. IN MY FURTHER SUBMISSION, THERE REALLY I S NO BASIS OR EVIDENCE FOR MAKING THE SUGGESTION THAT I HAD RECEI VED ANY SUCH CONSIDERATION AND THAT THE AMOUNT OF SUCH CONSIDERA TION WAS RS.2,84,40,000 AS INDICATED BY THE CREDIT ENTRY IN THE ACCOUNT APPEARING ON PAGES 134-137 OF THE SEIZED DIARY AT A NNEXURE-A/1. AS ELABORATELY POINTED OUT WHILE NARRATING THE FUNDAME NTAL FACTS OF MY PRESENT CASE, ESPECIALLY CONSIDERING THAT I HAD MYS ELF NOTING TO DO WITH THE MAINTENANCE OF THE RECORD CONTAINED THE SAID DI ARY, A CREDIT ENTRY IN AN ACCOUNT APPEARING THEREIN ADMITTEDLY MADE BY THE ACCOUNTANT OF SHRI JIVRAJ DESAI, PRESUMABLY AT HIS INSTANCE, CANN OT FORM ANY BASIS FOR MAKING AN ADDITION OF SUCH A HUGE AMOUNT IN MY HANDS I MAY ALSO POINT OUT THAT THE SUGGESTION, MADE BY THE LEARNED ASSESSING OFFICER MAKING ASSESSMENTS OF SHRI JIVRAJ DESAI AND THE MEM BERS OF HIS FAMILY, THAT THE AFORESAID CREDIT ENTRY OF RS.2,84, 40,000/- INDICATED IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 9 - CONSIDERATION PAYABLE TO ME FOR EXECUTION OF THE RE LEASE DEEDS IN RESPECT OF SOLA LANDS, HAS BEEN DISMISSED BY SHRI J IVRAJ DESAI AND HIS FAMILY MEMBERS OUT OF HAND (NOT THAT THEIR STAND WO ULD HAVE BOUND ME IF IT HAD BEEN IN AGREEMENT WITH THE STAND OF THE D EPARTMENT. IN ANY CASE, IT BEING THE WELL SETTLED LEGAL POSITION THAT AN ASSESSEE CAN BE SUBJECTED TO TAX IN RESPECT OF ONLY THAT INCOME WHI CH HE HAS RECEIVED, AND THE EXISTENCE OF INCOME MUST BE PROVED BY THE D EPARTMENT ALLEGING IT WITH THE HELP OF COGENT EVIDENCE, THERE CAN BE NO QUESTION FOR MAKING ANY ADDITION IN MY HANDS, EITHER PROTECT IVE OR SUBSTANTIVE, ON THE ASSUMPTION THAT THE AFORESAID CREDIT ENTRY O F RS.2,84,40,000 REPRESENTED CONSIDERATION FOR EXECUTING RELEASE DEE DS. IN THIS CONNECTION, I BEG TO RELY, INTER ALIA, ON THE AUTHO RITIES FORM WHICH RELEVANT EXTRACTS ARE GIVEN AT ANENXURE-I HEREOF. 4. AFTER CONSIDERING THE AFOREMENTIONED EXPLANATION LEARNED CIT(A) HAD DELETED THE ADDITION AFTER ASSIGNING FOL LOWING REASONS; RELEVANT PORTION REPRODUCED: I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISION OF LAW WITH REGARD TO THE TWO ADDITIONS MADE BY THE AO WHI CH HAVE BEEN DISPUTED BY THE APPELLANT THROUGH SECOND AND THIRD GROUNDS OF APPEAL. THE BASIC DOCUMENTS LEADING TO THESE ADDITIONS ARE ANNEXURE A-31 AND A-62. THE SALE DEEDS DATED 22.10.1999 INDICATED PURCHASE OF FIVE IDENTIFIED LAND PIECES BY SHRI JIVRAJ DESAI AND HIS FAMILY MEMBERS. IN ALL THESE DOCUMENTS, THE NAME OF THE APPELLANT APPE ARED AS SECOND NAME. THESE PIECES OF LAND HAVE BEEN REFERRED TO BY THE AO AS SOLA LAND. THE EVIDENCES ON RECORD CLEARLY INDICATE THAT ALL PURCHASE CONSIDERATION AS APPEARING IN THESE FIVE SALE DEEDS DATED 22.10.99 WAS PAID BY SHRI JIVRAJ DESAI AND HIS FAMILY MEMBERS. I T WAS THUS, APPARENT FROM THE EVIDENCES ON RECORD THAT THERE WA S NO INVESTMENT BY THE APPELLANT IN PURCHASE OF SOLA LAND. NO SUCH EVI DENCE WAS ALSO RECOVERED DURING THE COURSE OF SEARCH ACTION WHICH COULD IN ANY MANNER SUGGESTS THAT THERE WAS INVESTMENT BY APPELL ANT IN SOLA LAND. THE CLAIM OF THE APPELLANT IS THAT HIS NAME WAS INC LUDED AS SECOND NAME IN THESE SALE DEEDS DATED 22.10.99 WITH THE SO LE PURPOSE OF PROCURING PROFESSIONAL SERVICES OF THE APPELLANT FO R APPROACHING VARIOUS AUTHORITIES FOR OBTAINING CLEARANCE FOR DEV ELOPMENT OF LAND IN QUESTION. THIS PLEA OF THE APPELLANT PRIMA FACIE HA S SUBSTANCE BECAUSE AS PER THE CONVEYANCE DEED ITSELF, THOUGH THE APPEL LANTS NAME APPEARED AS SECOND NAME, THE WHOLE PAYMENT MENTIONE D IN THE CONVEYANCE DEED HAS BEEN MADE BY SHRI JIVRAJ DESAI AND HIS FAMILY MEMBERS. OTHER DOCUMENTS, IDENTIFIED AS ANNEXURE A- 62 ARE RELEASE DEEDS THROUGH WHICH THE APPELLANT RELEASED HIS RIGH TS CREATED THROUGH THE SALE DEEDS DATED 22.10.99 IN LIEU OF RECEIPT OF HIS PROFESSION FEES OF RS.25,000/- PER PIECE OF LAND IN LIEU OF THE SERVIC ES RENDERED BY HIM. THIS AMOUNT TOTALING TO RS.1,25,000/- IS RECEIVED B Y THE APPELLANT IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 10 - THROUGH BANKING CHANNEL AND HAS BEEN ALSO DULY DISC LOSED IN HIS RETURN OF INCOME. THE AO WHILE FRAMING THE ASSESSME NT IN THE CASE OF SHRI JIVRAJ DESAI MADE AN ADDITION OF RS.1,83,28,04 1/-. THIS WAS DONE BY THE AO ON THE BASIS OF A DOCUMENT OF A BANK WHER EIN THE MARKET VALUE OF PLOT NO.292/2 WAS INDICATED TO BE RS.75 LA KHS AS AGAINST THE DOCUMENT VALUE OF RS.7,83,475/-. THE WHOLE INVESTME NT IN SOLA LAND HAS BEEN TREATED BY THE AO ALSO TO BE BY MR. JIVRAJ DESAI AND HIS FAMILY MEMBERS. THIS ADDITION WAS HOWEVER DELETED A T FIRST APPELLATE LEVEL IN THE HANDS OF SHRI JIVRAJ V. DESAI ON THE G ROUND THAT HERE WAS NO EVIDENCE OF UNACCOUNTED INVESTMENT IN SOLD LAND. THE TOTAL ADDITION MADE BY THE AO IN THE CASE OF SHRI JIVRAJ DESAI & H IS FAMILY MEMBERS WAS OF RS.3,79,29,782/- BY CONSIDERING THE TOTAL MA RKET VALUE OF SOLA LAND PLOTS TO BE RS.4,23,55,650/-. ON THE PRESUMPTI ON THAT THE APPELLANT HAD HALF INTEREST IN THE ABOVE PLOTS OF L AND, THE INVESTMENT OF THE APPELLANT HAS BEEN WORKED OUT TO RS.2,11,77,785 /-. AS THIS INVESTMENT OF RS.2,11,77,785/- ALSO CAME FROM SUBST ANTIAL DEBIT BALANCE OF OVER RS.23CRORES IN APPELLANTS ACCOUNT ON PAGE NO.134 TO 137 OF ANNEXURE A-1, THE AO HELD THAT THERE WAS NO INVESTMENT BY THE APPELLANT. HOWEVER, AS THE ADDITION MADE IN THE CAS E OF SHRI JIVRAJ DESAI AND HIS FAMILY MEMBERS WAS DELETED, THE AO BR OUGHT OT TAX THIS ESTIMATED INVESTMENT OF RS.2,11,77,785/- ON PROTECT IVE BASIS IN THE HANDS OF THE APPELLANT. THIS ACTION OF THE AO IS CO NTRARY TO FINDINGS IN THE ASSTT. ORDER OF SHRI JIVRAJ DESAI AND HIS FAMIL Y MEMBERS WHEREIN IT WAS HELD THAT THE WHOLE OF INVESTMENT IN SOLA LAND WAS OF SHRI JIVRAJ DESAI AND HIS FAMILY MEMBERS IS DELETED BY THE CIT( A) NOT ON THE GROUND THAT A PART OF THE INVESTMENT WAS OF THE APP ELLANT BUT ON THE GROUND THAT THERE WAS NO UNACCOUNTED INVESTMENT IN PURCHASE OF SOLA LAND. THE DOCUMENTS SEIZED DURING THE COURSE OF SEA RCH ACTION CLEARLY ESTABLISHED THAT THERE WAS NO INVESTMENT BY THE APP ELLANT IN SOLA LAND AND THEREFORE THERE WAS NO JUSTIFICATION OF BRINING TO TAX UNACCOUNTED INVESTMENT, IF ANY, IN THE HANDS OF THE APPELLANT E VEN ON PROTECTIVE BASIS. THIS IS IN TOTAL CONTRAST TO A.OS FINDING T HAT EVEN IF THERE WAS ANY INVESTMENT, IT CAME FROM DEBIT BALANCE OF ABOUT 23 CRS. IN THE APPELLANTS ACCOUNT. THE NEXUS PROPOSED BY THE AO W ITH THE ADDITION MADE IN THE CASE OF SHRI JIVRAJ DESAI AND HIS FAMIL Y MEMBERS AND THE DELETION OF THE SAME ON TOTALLY DIFFERENT GROUND IS TOTALLY ILLOGICAL. ON THE CONTRARY ADJUDICATION OF CIT(A) IN THE CASE OF JIVRAJ DESAI IS THAT THERE WAS NO UNACCOUNTED INVESTMENT IN SOLA LAND AN D EVEN IF SAME IS FOLLOWED NO ADDITION CAN BE MADE IN APPELLANTS HAN D. AS NO EVIDENCE OF ANY INVESTMENT BY THE APPELLANT IS AVAILABLE ON RECORD, THE ADDITION OF RS.2,11,77,785/- MADE BY THE AO ON PROTECTIVE BA SIS IN THE HANDS OF THE APPELLANT IS DELETED. IN A SIMILAR MANNER, THE CALCULATION OF SUBSTANTIVE ADDITION OF RS.72,62,215/- BY THE AO IS WITH THE THEORY THAT THERE WAS A CREDIT OF RS.2,84,40,000/- IN THE ACCOU NT OF THE APPELLANT ON 1.12.99 ON PAGE 134 OF ANNEXURE A-1. MY OBSERVAT IONS IN PARA 14 ABOVE WITH REFERENCE TO EVIDENTIAL VALUE OF THIS DO CUMENTS ARE SQUARELY APPLICABLE HERE. THE THEORY PUT UP BY THE AO THAT THIS CREDIT ENTRY WAS WITH REFERENCE TO RELEASE OF HIS RIGHTS B Y THE APPELLANT IN IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 11 - SOLA LAND IS NOT SUPPORTED BY ANY DOCUMENT. FURTHER TO ABOVE, THE APPELLANT RELINQUISHED HIS RIGHTS IN SOLA LAND ON 2 8.5.2000 AND THEREFORE, THE QUESTION OF GIVING ANY CREDIT TO THE APPELLANT ON 1.12.99, I.E. BEFORE 8 MONTHS OF THE RELEASE DEED DOES NOT A RISE. I, THEREFORE, FIND THAT AS PER EVIDENCES ON RECORD, THE APPELLANT RECEIVED RS.1,25,000/- FOR RENDERING PROFESSIONAL SERVICES T HROUGH BANKING CHANNEL AND THE SAME WAS DISCLOSED IN THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. THE TRANSACTION WAS DULY COMPLETED IN THE ABOVE MANNER BEFORE DAY OF SEARCH AND THEREFORE THE RE WAS NO BASIS OR JUSTIFICATION IN BRINGING TO TAX IN THE APPELLAN TS HAND ANY FURTHER PROFIT ON SUBSTANTIVE BASIS WITH REFERENCE TO RELEA SE OF HIS RIGHTS OF THE SOLA LAND. THE ADDITION OF RS.72,62,215/- MADE BY T HE AO ON SUBSTANTIVE BASIS IN THE HANDS OF THE APPELLANT WAS NOT SUPPORTED BY ANY EVIDENCE AND THUS NOT JUSTIFIED. THE SAME IS, T HEREFORE, DELETED. THESE TWO GROUNDS OF APPEAL ARE, THEREFORE, TREATED AS FOLLOWS. 5. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. FROM T HE SIDE OF THE REVENUE, LEARNED D.R., SHRI D.C. PATWARI AND SRI SHANKARLAL MEENA AND FROM THE SIDE OF THE ASSESSEE, LEARNED A.R., SRI S.N. SOPARKAR AND SRI P.M. MEHTA HAVE APPEARED AND ADVANCED LENGTHY ARGUMENTS. WE SHALL DISCUSS THE FA CTS AND THE RESPECTIVE ARGUMENTS IN BRIEF HEREINUNDER. 5.1 WE HAVE BEEN INFORMED THAT A SEARCH WAS CONDUCT ED AT THE PREMISES OF VISHRUT SOCIETY IN CONSEQUENCE OF THE S EARCH PROCEEDINGS CONDUCTED IN THE CASE OF MASTER GROUP ON 20 TH OF OCTOBER, 2000. THE IMPUGNED ADDITION IS ON THE BASI S OF CERTAIN DOCUMENTS WHICH WERE FOUND FROM THE SAID PREMISES B EARING SURVEY NO.292/1, 292/2, 293/1, 293/2 OF SOLA LAND. THE AO HAS OBSERVED THAT THE SAID SOLA LAND WAS SOLD TO SRI JI VRAJ V. DESAI AND THE FAMILY MEMBERS AS FOLLOWS: SR. NO. SURVEY NO. PERSONS TO WHOM THE LAND BELONGS VALUE OF THE LAND AS PER LEGAL DOCUMENT 1. 292/1 RAJNIBHAI J. DESAI AND 10,58,925 IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 12 - MANOJ B. VADODARIYA 2. 292/2 RAJESH J. DESAI AND MANOJ B. VADODARIYA 07,83,475 3. 293/1 JIVRAJ V. DESAI AND MANOJ B. VADODARIYA 21,38,628 4. 293/2 RAMESH J. DESAI AND MANOJ B. VADODARIYA 04,44,850 5.2 AS PER DOCUMENT, THE SOLA LAND WAS STATED TO BE SOLD ON 22.10.1999. THE SAID DOCUMENT WAS MARKED AS ANNEXUR E A-62. FURTHER IT WAS ALSO NOTED BY THE AO THAT SRI MANOJ VADODARIA, I.E., THE ASSESSEE, RELEASE HIS RIGHTS AND INTEREST OVER THE SAID LAND IN FAVOUR OF J.V. DESAI, RAJESH J. DESAI, SRI RAMESH J . DESAI AND SRI RAJNI DESAI. IT WAS NOTED BY THE AO THAT THE SAID DOCUMENT WAS A NOTARIZED DOCUMENT DATED 28.5.2000 THROUGH WHICH TH E ASSESSEE HAD RELEASED HIS INTEREST IN RESPECT OF SOLA LAND I N FAVOUR OF J.V. DESAI AND OTHERS. AS PER THE SAID DOCUMENT, THE ASS ESSEE HAD RECEIVED A TOTAL SUM OF RS.1,25,000/- FOR THOSE FIV E PLOTS. THE SAID SUM OF RS.1,25,000/- HAS ALSO APPEARED IN THE ACCOU NT OF THE ASSESSEE IN THE DIARY MARKED AS ANNEXURE A-1, WRITT EN BY THE ACCOUNTANT SRI ARVIND SHAH. THE AMOUNT WRITTEN IN T HE DIARY TOWARDS DEBIT SIDE WAS AS, QUOTE 125 4-9-00 CHEQUE 4 DASTAVEJ UNQUOTE. IT WAS INFORMED TO THE AO THAT IN THE RETU RN OF INCOME THE ASSESSEE HAD DISCLOSED THE SAID AMOUNT OF RS.1, 25,000/- IN RESPECT OF THE RELEASE OF HIS RIGHTS PERTAINING TO THOSE PLOTS. ON THE OTHER HAND, THE AO HAS NOTED THAT ON THE SAID DIARY THERE WAS A CREDIT ENTRY IN THE ACCOUNT OF SRI MANOJ VADODARIA, I.E., THE ASSESSEE AS UNDER:- 28444-HAWALA JAMINNO MAJRE APYO 1-12-1999 JAMIN 25280 VARX 1125 (PAGE 89 AO) IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 13 - 5.3 AT THIS JUNCTURE, IT IS WORTH TO MENTION THAT T HE AREA OF THE LAND AS ALLEGED BY AO IN THE DIARY WAS 25280 SQ. YD ., HOWEVER, AS PER THE COMMENT OF THE AO IT WAS APPROXIMATELY EQUA L TO THE AREA OF THOSE PLOTS. IT IS ALSO WORTH TO MENTION THAT IN RESPECT OF THOSE PLOTS AN ADDITION OF RS.1,83,28,041/- WAS MADE IN T HE HANDS OF THE SRI J.V. DESAI. WHILE DECIDING THE SAID APPEAL IN I T(SS)A NO.106/AHD/2004 AND IT(SS)A NO.99/AHD/2004 ORDER OF EVEN DATE BY US WE DEALT WITH THIS ISSUE IN GROUND NO.4 OF TH E REVENUES APPEAL ARE HELD AS UNDER: HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT LEARNED CIT(A) HAD GRANTED RELIEF BY REFERRING HER DECISION TAKEN IN THE CASE OF SRI RAMESH J. DESAI. NOW BEFORE US A CO NSOLIDATED ORDER OF ITAT C BENCH AHMEDABAD DATED 27.06.2008 IS PLA CED; WHEREIN IN APPEAL IT(SS)A NOS.54, 55 & 56/AHD/2004 FOR THE BLO CK PERIOD 91-92 TO 2001-02 IN THE CASE OF SRI REMESH J. DESAI, SRI RAJNI J. DESAI AND SRI RAJESH J. DESAI IT WAS HELD THAT A LETTER DATED 24.08.2000 WAS WRITTEN BY SRI RAJESH J. DESAI TO THE SARVODAY COMM ERCIAL CO- OPERATIVE BANK, WHICH WAS APPLIED TO AVAIL THE LOAN FACILITY. IT WAS ALSO NOTED BY THE RESPECTED CO-ORDINATE BENCH THAT THE INVESTMENT HAD ALREADY BEEN DISCLOSED IN REGULAR BOOKS HENCE O UT OF THE AMBITS OF BLOCK ASSESSMENT. SINCE ON THOSE VERY FACTS THE RES PECTED CO-ORDINATE BENCH HAD TAKEN A VIEW AND CONFIRMED THE RELIEF GRA NTED BY LEARNED CIT(A), THEREFORE, ON THE SAME LINES WE HEREBY CONF IRM THE RELIEF GIVEN BY LEARNED CIT(A). HENCE, THIS GROUND OF THE REVENU E IS HEREBY DISMISSED. 5.4 FURTHER OUR ATTENTION HAS ALSO BEEN DRAWN IN OT HER GROUP CASES, NAMELY, SRI RAJNI J. DESAI, RAMESH J. DESAI, RAJESH J. DESAI BEARING IT(SS)A NO.51, 52, 53, 54/AHD/2004 ORDER DA TED 27 TH OF JUNE, 2008 PASSED BY ITAT C BENCH AHMEDABAD, WHER EIN IN RESPECT OF THIS LAND A VIEW WAS EXPRESSED THAT MERE LY ON THE BASIS OF THE LOAN APPLICATION THE IMPUGNED INVESTMENT SHO ULD NOT BE ASSESSED AT THE HIGHER VALUE WHILE PASSING THE ORDE R UNDER CHAPTER XIVB OF THE ACT FOR THE BLOCK PERIOD. IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 14 - 5.6 APART FROM THESE TWO AFORE-CITED DECISIONS OF T HE CO- ORDINATE BENCHES CERTAIN FACTS HAVE ALSO BEEN BROUG HT TO OUR NOTICE. WE HAVE BEEN INFORMED THAT THE SOLA LAND WA S PURCHASED BY THE FOLLOWING PERSONS AND THE AREA OF THE PLOT W AS AS UNDER: 1. A-31 SEIZED FROM VISHRUT SOCIETY CONTAINS PAPERS RELATED TO SALE DEED DTD. 22.10.1999 IN RESPECT OF LAND AT SOLA VIL LAGE SURVEY NOS. 292/1, 292/2, 293/1 & 293/2, THE DETAILS THEREOF AR E AS UNDER: S.NO. 292/1 5059 SQ. MTRS. RAJNIBHAI J. DESAI & M.B. VADODARIA S.NO.292/2 3743 SQ. MTRS. RAJESHBHAI J. DESAI & M.B. VADOARIA S.NO.293/1 10218 SQ. MTRS. JIVRAJBHAI V. DESAI & M .B. VADODARIA S.NO.293/2 2125 SQ. MTRS . RAMESHBHAI J. DESAI & M.B. VADODARIA TOTAL 21,145 SQ. MTRS . 5.7 HOWEVER, THE AREA AS NOTED IN THE DIARY AS WELL AS IN THE ANNEXURE A-3, PAGE 96 WAS 25280 VAR. IT WAS STRON GLY CONTESTED BEFORE US THAT THE AO HAS WRONGLY PRESUME D THAT THE ENTRY IN THE SAID DIARY WAS IN RESPECT OF SOLA LAND ALTHOUGH THE AREA DID NOT MATCH AT ALL. RATHER, WE HAVE NOTED THAT TH E AO HIMSELF HAS DOUBTED ABOUT THE AREA, THEREFORE, HE HAS MENTIONED THAT THE AREA AS PER THE DIARY WAS APPROXIMATELY EQUAL TO THE AREA OF THE PLOTS. RELEVANT OBSERVATION OF THE AO FROM PAGE 89 OF THE ORDER IS REPRODUCED BELOW: IT IS RELEVANT TO MENTION HERE THAT THIS CODED ENTR Y OF 28440 CONNOTES THE AMOUNT OF RS.2,84,40,000 BECAUSE IT HAS BEEN WR ITTEN IN THE CODED FORM AFTER REMOVING 000. THE AREA OF THIS LAND IS 25280 SQ. YDS. WHICH IS APPROXIMATELY EQUAL TO THE AREA OF THESE P LOTS SHOWN IN THE BOOKS OF ACCOUNTS OF SHRI JIVRAJ V. DESAI, SHRI RAJ ESH J. DESAI, SHRI RAMESH DESAI, AND SHRI RAJNI DESAI. IN CASE OF BLOC K ASSESSMENT ORDER OF THESE FOUR PERSONS, THE AO HAS ADDED UNDIS CLOSED INCOME IN THIS REGARD. IN CASE OF SHRI JIVRAJ V. DESAI, THE A DDITION OF RS.1,83,28,041/- HAS BEEN MADE. 5.8 THE ABOVE CONTENTION OF THE ASSESSEE APPEARS TO BE CORRECT THAT MERELY ON AN IMAGINATION AND HYPOTHESIS THE AO HAS PRESUMED THAT THE IMPUGNED CREDIT ENTRY IN DIARY PE RTAINED TO THE IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 15 - SOLA LAND TRANSACTION. WE HAVE ALSO NOTED THAT WHIL E SURRENDERING THE RIGHTS, THIS ASSESSEE HAS BEEN PAID RS.25,000/- BY EACH OF THE MEMBERS OF THE FAMILY THROUGH CHEQUE AS A COMMISSIO N AND THE PAYMENT WAS AS UNDER:- DATE CHEQUE NO. OF RS. 25.8.2000 005893 RAJNIBHAI DESAI 25000 25.8.2000 003320 RAMESH DESAI 25000 25.8.2000 005200 RAJESH DESAI 25000 25.8.2000 000617 JIVRAJ DESAI 25000 25.8.2000 000618 JIVRAJ DESAI 25000 5.9 IN THE LIGHT OF THE ABOVE DETAILS OF THE PAYMEN TS, THE CONTENTION OF THE ASSESSEE IS THAT HIS NAME WAS ADD ED IN THE DOCUMENT MERELY FOR THE PURPOSE TO ASSIST IN DOCUME NTATION AND CLEARANCES FROM CERTAIN OFFICES BUT IN FACT THE PRO PERTY WAS PURCHASED BY THE FAMILY MEMBERS OF J.V. DESAI. THE INITIAL CONSIDERATION PAID AT THE TIME OF PURCHASE OF SOLA LAND WAS ALSO DULY REFLECTED IN THEIR RESPECTIVE ACCOUNTS. THE DE TAILS OF EACH PERSON HAVE ALREADY BEEN REPRODUCED ABOVE. UNDER TH E TOTALITY OF THE FACTS, CIRCUMSTANCES AND THE NATURE OF EVIDENCE PLACED ON RECORD, WE ARE OF THE CONSIDERED OPINION THAT LEARN ED CIT(A) HAS RIGHTLY HELD THAT NO PROFIT WAS EARNED BY THE ASSES SEE ON RELEASE OF HIS RIGHTS IN RESPECT OF SOLA LAND. WE HEREBY RESPE CTFULLY FOLLOW THE DECISION OF THE CO-ORDINATE BENCHES IN THE LIGH T OF OTHER DETAILS AS DISCUSSED SUPRA AND DISMISS THIS GROUND OF THE R EVENUE. 6. GROUND NO.3 OF THE REVENUES APPEAL IS REPRODUCE D BELOW: THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE PROTECTIVE ADDITION OF RS.2,11,77,785/- ON ACCOUNT OF UNACCOUNTED INVESTMENT IN LAND. IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 16 - 7. IN THE LIGHT OF THE ADDITION MADE IN RESPECT OF SOLA LAND BY THE AO, AS DISCUSSED ABOVE, HE HAD AN APPREHENSION ABOUT THE OUTCOME OF THE APPEALS, THEREFORE, TO PROTECT THE I NTEREST OF THE REVENUE HE HAD MAD A PROTECTIVE ADDITION IN THE FOL LOWING MANNER. AS HAS BEEN PRODUCED BEFORE, THE LD. CIT(A) HAS RED UCED THE UNACCOUNTED INVESTMENT IN THE ABOVE MENTIONED LAND TO NIL IN ALL THE FOUR CASES I.E. SHRI JIVRAJ V DESAI AND HIS THREE S ONS. DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE CIT(A). MOREOVER, IF THE VIEW OF THE CIT(A) IS HELD TO BE CORRECT BY FINAL FACT FINDING AUTHORITY I.E. HONBLE ITAT THEN IT WOULD AUTOMATICALLY MEAN THAT ASSESSEE ALSO HAD INVESTED NIL UNACCOUNTED MONEY IN THIS LAND AND IN THAT CASE THE PROFIT EARNED IN RELEASING THE RIGHT ON THE ABOVE SAID LAND WOULD BE ENTIRE CREDITED AMOUNT OF RS.2,84,40,000/-. AS RS.72,62,215/- HAS A LREADY BEEN ADDED ON SUBSTANTIVE BASIS, THE REMAINING AMOUNT OF RS.2, 11,77,785/- (RS.2,84,40,000 RS.72,62,215) IS ADDED ON PROTECT IVE BASIS. 8. BEING AGGRIEVED, THE MATTER WAS CARRIED BEFORE L EARNED CIT(A). HE HAS NOTED THAT THE 50% INVESTMENT IN THE HANDS OF THE ASSESSEE WAS MADE BY THE AO MERELY ON PRESUMPTION A ND THAT TOO ON PROTECTIVE BASIS. ACCORDING TO HIM, THE AO HAS G IVEN CONTRADICTORY VERSION. ON ONE HAND, IT WAS HELD BY THE AO THAT WHOLE OF THE INVESTMENT IN SOLA LAND WAS MADE BY SR I JIVRAJ DESAI AND HIS FAMILY MEMBERS AND THE APPELLANT HAD NOT MA DE ANY INVESTMENT. BUT ON THE OTHER HAND, THE ESTIMATED IN VESTMENT WAS ASSESSED MERELY ON THE PROTECTIVE BASIS IN THE HAND S OF THE ASSESSEE. LEARNED CIT(A) HAS OPINED THAT AS FAR AS THE CASE OF SRI JIVRAJ DESAI IS CONCERNED, WHILE ADJUDICATING THIS CONTROVERSY, LEARNED CIT(A) HAD GRANTED RELIEF ON THE GROUND THA T THERE WAS NO EVIDENCE OF UNACCOUNTED INVESTMENT IN SOLA LAND. ON THAT BASIS IN THE PRESENT CASE, LEARNED CIT(A) HAD HELD THAT THER E WAS NO IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 17 - EVIDENCE OF INVESTMENT OF THE ASSESSEE ON RECORD, T HE PROTECTIVE ADDITION WAS DELETED. 9. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES A ND IN THE LIGHT OF THE DISCUSSION MADE HEREINABOVE, WE HEREBY AFFIRM THE FINDINGS OF LEARNED CIT(A) DUE TO MAIN REASON THAT THE AO HAD ENHANCED THE VALUE OF THE LAND MERELY ON THE BASIS OF A LETTER ISSUED BY ONE OF THE FAMILY MEMBER OF J.V. DESAI TO OBTAIN LOAN FROM THE BANK. THAT BASIS OF ENHANCEMENT IN THE VAL UE OF THE LAND HAD ALREADY BEEN REJECTED BY US. IN CONSEQUENCE THE REUPON, THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE ASSESS EE DOES NOT SURVIVE. WE, THEREFORE, CONCLUD THAT IN THE LIGHT O F THE EVIDENCES PLACED ON RECORD AND THE VIEW EXPRESSED BY THE RESP ECTED CO- ORDINATE BENCHES, LEARNED CIT(A) HAS RIGHTLY DELETE D THE ADDITION. WE FIND NO FORCE IN THIS GROUND, HENCE DISMISSED. 10. GROUND NO.2 OF THE REVENUES APPEAL IS REPRODUCED B ELOW: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE PROTECTIVE ADDITION OF RS.6,10,86,200/- ON ACCOUNT OF HAWALA INTEREST. 11. IN THIS REGARD, THE AO HAD MADE AN ELABORATE ST ATEMENT TO ESTABLISH THAT THE ASSESSEE HAD EARNED INTEREST ON FINANCE BUSINESS. IN HIS OPINION, THE OPENING BALANCE OF RS.23,43,08, 700/- WAS NOTHING BUT RELATED TO THE FINANCE TRANSACTION. THE RELEVANT OBSERVATION OF THE AO IS REPRODUCED BELOW: FROM THE ABOVE OBSERVATIONS, IT IS VERY CLEAR THAT THE OPENING BALANCE OF RS.23,43,08,700 AS ON 1.11.99 IS NOTHING BUT THE FINANCE. THIS FINANCE HAS BEEN EXTENDED TO THE ASSESSEE FROM THE THREE SOURCES, FIRST IS IN THE ACCOUNT OF THE ASSESSEE ITSELF APPE ARING IN PAGE 98-100 OF ANNEX. A-3 AND THIS IS NOT RELATING TO ANY TRANS ACTION FO VITHOBA LAND. SECOND FINANCE IS EMANATING FROM THE HAWALA E NTRY GIVEN TO THE IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 18 - ASSESSEE FROM THE ACCOUNT OF NATUBHAI POPULAR AND F ROM THE ACCOUNT OF NATUBHAI POPULAR HIMSELF APPEARING IN PAGE 90-93 OF ANNEX. A-3, IT IS CLEAR THAT THIS HAWALA IS ALSO A FINANCE HAWALA. FROM THE ACCOUNT OF NTUBHAI POPULAR IT CAN BE SEEN THAT JIVRAJ V. DESAI HAS GIVEN HIM THE FINANCE. AND THEREAFTER THE AMOUNT OF RS.8 CRORE HA S BEEN TRANSFERRED TO SHRI MANOJ VADODARIYA AS FINANCE HAWALA AND NOT AS LAND HAWALA. THOUGH IT IS A FACT THAT THERE IS AN ENTRY IN THIS ACCOUNT DATED 01.08.98 OF RS.2.5 CRORES WITH THE NARRATION HAWALO V.V. B UT IT DOES NOT MAKE IT CLEAR AS TO HOW THIS A LAND HAWALA. THIS ENTRY O NLY INDICDATES THAT SHRI JIVRAJ HAS GIVEN THIS AMOUNT TO V.V. RABARI AS LOAN ON BEHALF OF NATUBHAI POPULAR. IN THE CASE OF VITHOBA TRUST HAS NOT FINALIZED, THEREFORE ALSO THIS AMOUNT AUTOMATICALLY BECOMES FI NACE. THIRDLY SINCE SHRI JIVRAJ V. DESAI IS NOT THE PURCHASER AS PER HI S OWN SUBMISSION AND AS PER MATERIAL FACTS FOUND SO FAR, THEREFORE A LSO HE HAS ONLY FINANCED THIS SUM ON BEHALF OF NATUBHAI POPULAR TO SHRI V.V. RABARI. IT IS ALSO VERY RELEVANT TO MENTION THERE THAT AT T HE TOP RIGHT CORNER OF THE ACCOUNT OF NATUBHAI POPULAR APPEARING AT PAGE 9 6 OF ANN. A-3, 2.6 IS WRITTEN, THIS CLEARLY INDICATES THE RATE OF INTEREST CHARGED BY SHRI JIVRAJ V. DESAI. THIRD FINANCE IS EMANATING FROM PAGE-96 OF ANNEX. A -3 WHICH IS STARTS WITH HAWALA ENTRY OF RS.10,00,000 IN THE NAME OF HE MENDRABHAI SINGH DATED 1.7.99. IN THIS REGARD, THE SUMMONS U/S . 131 WAS ISSUED TO SHRI JIVRAJ V. DESAI DATED 23.12.2004 TO IDENTIFY T HIS PERSON SHRI HEMENDRABHAI SHAH AND ALSO TO EXPLAIN IF AT ALL, TH IS PERSON IS RELATED WITH THE LAND DEAL OF VITHOBHA TRUST. BUT IN HIS SU BMISSION DATED 27- 12-2004 HE HAS NOT GIVEN ANY INDICATION IN THIS REG ARD. IT IS ALSO RELEVANT TO MENTION HERE THAT AT ANY STAGE FROM THE ASSESSMENT PROCEEDINGS, TILL APPELLATE PROCEEDINGS AND IN THE SUMMONS ISSUED U/S. 131 OF THE ACT SHRI JIVRAJ V. DESAI HAS NOT GIVEN A NY LINK OF HEMENDRABHAI SHAH WITH THE VITHOBHA LAND DEAL. ALSO FROM THE NATURE OF THE ACCOUNTS FOUND IN THE SEIZED MATERIAL AS ANN EX. A-1 TO A-6, IT HAS BEEN FOUND THAT SHRI JIVRAJ V. DESAI HAS MOSTLY DONE THE BUSINESS OF FINANCE. SPECIAL IN THE CASE OF THE ASSESSEE, IT HAS BEEN FOUND THAT THE INTEREST HAS BEEN APPLIED @ 3% WHICH IS WRITTEN IN TOP RIGHT CORNER OF PAGE-34 OF ANNEX. A-1, THEREFORE, IT IS V ERY CLEAR THAT THIS ACCOUNT IS ONLY FINANCE ACCOUNT. THE NATURE OF FINA NCE OF THIS ACCOUNT IS ALSO WELL PROVED FROM THE FACT THAT THE INTEREST HAS BEEN APPLIED BY SHRI JIVRAJ V. DESAI ON EVERY MONTH. FROM THE WORKI NG GIVEN TO THE ASSESSEE IN THE FINAL SHOW CAUSE NOTICE DATED 27-12 -204 IT IS CLEAT THAT THE ASSESSEE HAD MADE PAYMENT IF INTEREST ONLY. THE REFORE, IT IS CONCLUDED THAT THIS ACCOUNT OF SHRI MANOJ B. VADODA RIYA APPEARING IN PAGE-134-137 IS NOTHING A FINANCE ACCOUNT. 11.1 THE AO HAS ALSO FURNISHED A WORKING OF THE INT EREST. THEREAFTER, IT WAS ALSO OBSERVED BY THE AO THAT IN THE CASE OF J.V. IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 19 - DESAI, CIT(A) HAD DELETED THE ADDITION MADE ON ACCO UNT OF RECEIPT OF INTEREST IN THE HANDS OF J.V. DESAI. THE SAID DE LETION OF INTEREST CONTAIN AN AMOUNT OF RS.6,10,86,200/- WHICH WAS HA WALA INTEREST IN THE ACCOUNT OF SRI MANOJ VADODARIA. AC CORDING TO AO, IF THE AFORESAID DELETION IS FOUND CORRECT BY THE H ONBLE ITAT IN PENDING APPEAL IN THE CASE OF J.V. DESAI THAT THE S AID ACCOUNT PERTAINED TO LAND DEAL OF VITHOBHA TRUST THEN THE A UTOMATIC CONCLUSION SHOULD BE THAT THE OPENING BALANCE WAS T HE LAND HAWALA AMOUNT AND ON THE AMOUNT THE INTEREST WAS EARNED BY THE ASSESSEE FROM UNDISCLOSED SOURCES. THE RELEVANT OBSERVATION OF THE AO FOR READY REFERENCE IS REPRODUCED BELOW: THE OBSERVATION OF LD. CIT(A IN CASE OF APPELLATE ORDER OF SHRI JIVRAJ V. DESAI HAS BEEN PRODUCED IN THE BODY OF THIS ASSE SSMENT ORDER. FROM THIS OBSERVATION, IT EMANATES THAT THE ACCOUNT OF SHRI MANOJ VADODARIYA APPEARINJG IN PAGE134-137 OF ANNEX. A-1 IS PERTAINING TO LAND DEAL OF VITHOBHA TRUST. WITH THIS OBSERVATION, LD. CIT(A) HAS DELETED THE ADDITION MADE ON ACCOUNT OF RECEIPT OF INTEREST IN THE HANDS OF SHRI JIVRAJ V. DESAI. THIS DELETION OF INT EREST CONTAINS THE AMOUNT OF RS. 6,10,86,200 APPEARING AS HAWALA INTER EST IN THIS ACCOUNT OF SHRI MANOJ VADODARIYA. THE FINAL SHOW CA USE NOTICE GIVEN TO THE ASSESSEE DATED 27-12-2004 HAS BEEN PRODUCED IN THE BODY OF THIS ASSESSMENT ORDER, THIS CONTAINS THE WORKING OF HAWALA INTEREST OF RS. 6,10,86,200 WORKED OUT IN THIS ACCOUNT AND PAYM ENT MADE BY THE ASSESSEE TO SHRI JIVRAJ V. DESAI OF RS. 6,92,26,900 AND RECEIPT OF RS. 1,22,35,000 FROM JUVRAJ V. DESAI. IF THIS OBSERVATI ON OF LD. CIT(A) IS FOUND CORRECT IN THE APPELLATE PROCEEDINGS PENDING BEFORE HONBLE ITAT IN CASE OF SHRI JIVRAJ V. DESAI THAT THIS ACCO UNT PERTAINS TO LAND DEALING OF VITHOBHA TRUST, THE IT WILL BE AUTOMATIC TO CONCLUDE THAT THE OPENING BALANCE OF THIS ACCOUNT IS A LAND HAWALA AM OUNT. IN THAT CASE THE INTEREST AMOUNT OF RS. 6,10,86,200 WOULD BE CON SIDERED AS INCOME OF THE ASSESSEE EARNED FROM UNDISCLOSED SOURCES. TH EREFORE, THE ADDITION OF RS. 6,10,86,200 IS MADE IN THE HANDS OF THE ASSESSEE ON THE PROTECTIVE BASIS. THE ADDITION IS MADE ON PROTECTIV E BASIS BECAUSE THE TRANSACTION HAVE ALREADY BEEN TREATED ASFINANCE TRA NSACTIONS WHILE MAKING SUBSTANTIVE ADDITION IN THE HANDS OF JIVRAJ V. DESAI. THIS ADDITION IN THE HANDS OF THE ASSESSEE CAN BE MADE I F THESE TRANSACTIONS ARE CONSIDERED AS LAND TRANSACTIONS IN THE APPELLAT E PROCEEDINGS. [PROTECTIVE ADDITION RS. 6,10,86,200] IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 20 - 12. BEING AGGRIEVED THE MATTER WAS CARRIED BEFORE T HE FIRST APPELLATE AUTHORITY. IT WAS CONTESTED BEFORE LEARNE D CIT(A) THAT WHILE DECIDING THE CASE OF SRI J. V. DESAI, THE AO HAD GIVEN A CLEAR FINDING THAT THE ACCOUNT OF THE ASSESSEE, SRI MANOJ VADODARIA HAS NO RELEVANCE WITH THE TRANSACTION OF VITHOBHA L AND. THE AO HAS HELD IN THAT CASE THAT APPARENTLY IT WAS A FINA NCING ACCOUNT IN THE BOOKS OF SRI J.V. DESAI, WHEREIN HE HAD ADVANCE D SUBSTANTIAL FUNDS TO THE ASSESSEE ON AN INTEREST RATE OF 3%. IN TEREST WAS ALSO WORKED OUT BY SRI J.V. DESAI EVERY MONTH. THEREFORE PLACING RELIANCE ON THE OBSERVATION OF THE AO IN THE ASSESS MENT ORDER, THE ASSESSEE HAD FURTHER CONTENDED THAT THE DOCUMENT DI D NOT INDICATE THAT SRI MANOJ VADODARIA HAD PLAYED ANY ROLE IN THE SAID LAND DEAL. IN THAT CASE OF MR. DESAI, IT WAS HELD AS A LOAN TR ANSACTION AND THE ENTRY WAS TREATED AS INTEREST OF RS.6,10,86,200/- P AYABLE BY SRI MANOJ VADODARIA TO SRI DESAI. HENCE, THE ARGUMENT O F THE ASSESS IS THAT NO ADDITION COULD BE MADE IN THE HANDS OF T HE ASSESSEE BECAUSE ALL ALONG THERE WAS A HEAVY DEBIT BALANCE A ND THE IMPUGNED INTEREST WAS INTEREST EXPENDITURE. ACCORDI NG TO ARGUMENT OF THE ASSESSEE, THERE WAS NO ELEMENT OF INCOME TO BE TAXED IN THE HANDS OF THE ASSESSEE. IN SUPPORT OF THIS CONTENTIO N, THE RELEVANT DISCUSSION WAS MADE BY LEARNED CIT(A) ON THE BASIS OF THE SAID DIARY AND CONNECTED ACCOUNTS. FINALLY, THE DECISION OF THE LEARNED CIT(A) WAS THAT THERE WAS NO AUTHENTICATION THAT TH E ALLEGED TRANSACTION OF THE LAND BELONGED TO THE ASSESSEE. I N HIS OPINION THE WHOLE EXERCISE OF SRI J.V. DESAI WAS TO EXCLUDE THE INTEREST INCOME FROM HIS HAND. THE AO HAD BROUGHT ON RECORD ENOUGH MATERIAL TO ESTABLISH THAT THE FIRST ENTRY OF RS.23 CRORE WAS N OTHING BUT A IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 21 - BROUGHT FORWARD BALANCE. THEREAFTER, THERE WAS A CA LCULATION OF PERIODICAL INTEREST @ 3% PER MONTH. ON THE BASIS OF THE SAID CALCULATION THE AGGREGATE INTEREST OF OVER RS.6 CRO RES HAD BEEN WORKED OUT. LEARNED CIT(A) HAS GIVEN A FINDING AS F OLLOWS: I, THEREFORE, UPHOLD THE OBSERVATION OF THE AO THAT THE EVIDENCE ON RECORD CLEARLY ESTABLISHED THAT THE ACCOUNT MAINTAI NED IN THE NAME OF APPELLANT ON PAGE 134 TO 137 OF ANNEXURE A-1 REPRES ENTED FINANCIAL TRANSACTIONS OF SHRI JIVRAJ DESAI AND THE PERIODICA L INTEREST CALCULATED IN THIS ACCOUNT REPRESENTS INTEREST INCOME OF SHRI JIVRAJ DESAI. THE QUESTION OF BRINGING TO TAX THE SAME IN THE HANDS O F THE APPELLANT WAS THUS IN TOTAL CONTRAST TO THE ABOVE CONCLUSION REAC HED BY THE AO. 12.1 LEARNED CIT(A) HAS HELD THAT ON THE BASIS OF T HE DOCUMENTS, IT WAS NOT JUSTIFIED EVEN TO ASSESS THE AMOUNT ON P ROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE, RELEVANT PORTION IS REPR ODUCED BELOW: THE AO HAS ALSO RIGHTLY OBSERVED THAT THERE WAS A H EAVY DEBIT BALANCE IN THE ACCOUNT MAINTAINED IN THE NAME OF TH E APPELLANT ON PAGE 134 TO 137 OF ANNEXURE A-1. IT IS OBVIOUS THAT WHEN THERE WAS A CONTINUOUS DEBIT BALANCE IN THE LEDGER ACCOUNT OF A PARTICULAR PERSON, THE INTEREST PERIODICALLY DEBITED ON SUCH DEBIT BAL ANCES CAN NEVER REPRESENT INTEREST INCOME OF THE PERSON IN WHOSE NA ME THE ACCOUNT IS MAINTAINED BECAUSE SUCH INTEREST IS ONLY INCREASING HIS ABILITY WHEREAS INCOME WOULD APPEAR ON CREDIT SIDE OF SUCH LEDGER ACCOUNT AND WILL RESULT IN REDUCTION OF LIABILITY. I, THERE FORE, FIND THAT THE QUESTION OF BRINGING TO TAX ANY INCOME IN THE HANDS OF THE APPELLANT ON THE BASIS OF THESE DOCUMENTS WAS NOT JUSTIFIED EVEN ON PROTECTIVE BASIS AND EVEN WHEN IT IS PRESUMED THAT THIS ACCOUNT WAS PERTAINING TO THE APPELLANT. THE ASSESSMENT ON PROTECTIVE BASIS IS NO RMALLY FRAMED ONLY WHEN THERE WAS A PRIMA FACIE CASE THAT CERTAIN INCO ME WAS EITHER BELONGING TO ONE OR THE OTHER PERSON. IN THE APPELL ANTS CASE, HOWEVER, THERE WAS ONLY A BORROWING AND NOT INCOME AND, THER EFORE, LIABILITY CANNOT BE FIXED ON THE APPELLANT SOLELY IN AN EVENT UALITY OF SUCH INTEREST INCOME ASSESSED IN THE HANDS OF SHRI JIVRA J DESAI ON ACCOUNT OF FINANCING BUSINESS, REPRESENTED BY THE DOCUMENTS AT PAGE 134 TO 137, GETTING DELETED AT APPELLATE LEVEL. IN FACT, T HESE DOCUMENTS THEMSELVES INDICATED THAT SUCH INCOME OF SHRI JIVRA J DESAI WOULD BE IN FACT LOSS OF THE APPELLANT AND THE QUESTION OF BRIN GING TO TAX SUCH LOSS AS INCOME IN THE HANDS OF THE APPELLANT WAS NOT JUS TIFIED BY ANY LOGIC. I, THEREFORE, HOLD THAT THE CONCLUSION DRAWN BY THE AO TO BRING TO TAX RS.6,10,86,200/- EVEN ON PROTECTIVE BASIS WAS CONTR ARY TO THE CONCLUSIONS DRAWN BY HIM IN THE ASSESSMENT ORDER AN D EVIDENCES ON IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 22 - RECORD IN THE FORM OF RELEVANT SEIZED MATERIAL. THE ADDITION OF RS.6,10,86,200/- MADE BY THE AO ON PROTECTIVE BASIS IN THE HANDS OF THE APPELLANT IS, THEREFORE, DELETED. THIS GROUND O F APPEAL, IS THEREFORE, TREATED AS ALLOWED. 13. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. A T THE OUTSET, IT IS WORTH TO MENTION THE WHILE DECIDING THE APPEA L OF SRI J.V. DESAI, WE HAVE ALSO TAKEN A VIEW THAT TRANSACTION I N QUESTION WAS NOTHING BUT SHARAFI BUSINESS OF SRI DESAI. THERE WERE SEVERAL EVIDENCES AS WELL AS THE STATEMENTS THROUGH WHICH W E HAVE ARRIVED AT THAT CONCLUSION. EVEN, THE AO HAD MADE THE IMPUG NED ADDITION MERELY ON PROTECTIVE BASIS TO OVERCOME AN APPREHENS ION THAT IN CASE THE ITAT DELETE THE ADDITION OF J.V. DESAI AND HOLD THAT THE IMPUGNED TRANSACTIONS WERE NOT THE FINANCE TRANSACT ION BUT RELATED TO THE LAND DEAL THEN IN THAT EVENTUALITY IT IS TO BE HELD AS AN ALTERNATE, TO ASSESSEES AMOUNT AS A FINANCE TRANSAC TION IN THE HANDS OF THE ASSESSEE. NOW THE PRESENT POSITION IN VIEW O F OUR DECISION IN THE CASE OF J.V. DESAI, IS THAT THE SAID APPREHENSI ON OF THE AO GET RESOLVED; HENCE, THERE WAS NO NECESSITY OF ANY PROT ECTIVE ADDITION. RESULTANTLY, WE HEREBY CONFIRM THE FINDINGS OF LEAR NED CIT(A) AND THIS GROUND OF THE REVENUE IS HEREBY DELETED. B. CO NO.216/AHD/2006 14. THROUGH THIS CROSS OBJECTION, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN NOT UPHOLDING THE ASSESSEES FIRST GROUND OF APPEAL BEFORE HIM (WHICH IS REPRODUCED IN PARA-6 ON PAGE-6 OF THE APP ELLATE ORDER DATED 30.3.2006) URGING IN EFFECT THAT THE ASSESSMENT ORD ER DATED 29.12.2004 WAS BARRED BY LIMITATION AND DESERVES TO BE QUASHED . IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 23 - 15. OUR ATTENTION HAS BEEN DRAWN THAT THE IMPUGNED ORDER PASSED U/S. 158BD WAS DATED 29.12.2004. THE CONTENT ION IS THAT THE SAID ORDER IS TIME BARRED. IT IS STATED THAT A NOTICE U/S.158BD WAS ISSUED ON 23.10.2002 AND ON THE BASIS OF THE SA ID NOTICE THE PERIOD OF LIMITATION FOR PASSING AN ORDER U/S. 158B D HAD EXPIRED ON 31.10.2004. ALTHOUGH, THE LEARNED CIT(A) HAD HEL D THAT THERE WAS NO BAR IN LAW FOR ISSUING ANOTHER NOTICE U/S.15 8BD, BUT BEFORE US IT WAS FAIRLY INFORMED BY LEARNED AR THAT THE IM PUGNED NOTICE WAS CANCELLED AND A NEW NOTICE WAS ISSUED ON 29.12. 2004. BE THAT AS IT WAS, WITHOUT ENTERING INTO THE LEGAL CONTROVE RSY AS RAISED BY THE ASSESSEE, WE HEREBY HOLD THAT IN A SITUATION WH EN ON MERITS THE ASSESSEE HAD ALREADY SUCCEEDED, THEREFORE, THIS LEG AL GROUND HAS BECOME REDUNDANT. BECAUSE OF THE OUTCOME OF OUR DEC ISION ON MERITS, WE ARE OF THE VIEW THAT THE CROSS OBJECTOR SHOULD NOT HAVE ANY GRIEVANCE. WE, THEREFORE, DISMISS THIS GROUND O F THE CROSS OBJECTION BEING REDUNDANT IN NATURE. 16. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 13/12/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT IT(SS) NO.191/AHD/2006 & CO NO.216/AHD/2006 ACIT AHMEDABAD VS. SHRI MANOJ B. VADODARIA - 24 - 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD