M/s. Patel Babubhai Kantilal & Co., Surat V. The ACIT., Cent.Circle,3, Surat

ITSSA 203/AHD/2005

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8847 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-10-2010
• Assessment Year: misc
• Appeal Filed On: 20-07-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHELLY JINDAL
• Assessee Lawyers: S N SOPARKAR SRAR
• Keywords: Unexplained expenditure; Business income; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Retrospective amendment; Corroborative evidences; Block assessment; Onus to prove; Documents seized
• Section: 131; 145; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER IT(SS)A NO.203 & 211/AHD/2005 BLOCK ASSESSMENT :1996097 TO 20.6.2002 DATE OF HEARING:1.11.10 DRAFTED:8.11.10 M/S. PATEL BABUBHAI KANTILAL & CO., 5/663, HARIPURA, BHAVANI VAD, OPP. DHOBI SHERI, SURAT PAN NO.AAEFP7192E ASSSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-3, ROOM NO.507, AAYKAR BHAVAN, MAJAURAGATE, SURAT V/S. V/S. COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD M/S. PATEL BABULAL KANTILAL & CO. 5/663, HARIPURA, BHAVANIWAD, SURAT (APPELLANT) .. (RESPONDENT) IT(SS)A NO.233/AHD/2006 BLOCK ASSESSMENT: 1991-92 TO 20.11.2000 DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, AAYAKAR BHWAN, MAJURA GATE, SURAT V/S. M/S PATEL SOMABHAI MAGANLAL & CO., 5/687, B/HARIPURA, BHAVANI VAD, SURAT PAN NO.AADFP1184B (APPELLANT) .. (RESPONDENT) IT(SS)A NO.204 & 210/AHD/2005 BLOCK ASSM:1996-97 TO 20.06.2002 M/S. PATEL SOMABHAI MAGANLAL & CO., 5/687, HARIPURA, BHAVANI VAD, SURAT PAN NO.AADFP1184A V/S. COMMISSIONER OF INCOME-TAX (APPEALS)-II, 2 ND FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 2 ASSSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-3, ROOM NO.507, AAYKAR BHAVAN, MAJAURAGATE, SURAT V/S. M/S. PATEL SOMABHAI MAGANLAL & CO. 5/687, HARIPURA, BHAVANIWAD, SURAT (APPELLANT) .. (RESPONDENT) IT(SS)A NO.205 & 212/AHD/2005 BLOCK ASSESSMENT:1996-97 TO 20.06.2002 M/S. PATEL MADHAVLAL MAGANLAL & CO. 3/139, NAVAPURA, PARSI SHERI, SURAT PAN NO.AADFP2740F ASSSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-4, SURAT V/S. V/S. COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD M/S. PATEL MADHAVLAL MAGANLAL & CO. 3/139, NAVAPURA, PARSI SHERI, SURAT (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI S,N.SOPARKAR, SR-AR REVENUE BY:- SHRI SHELLY JINDAL, CIT-DR O R D E R PER BENCH:- OUT OF SEVEN APPEALS - 3 BY THE ASSESSEE AND FOUR BY REVENUE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX(APPEALS) -II, SURAT IN DIFFERENT APPEAL NO. CIT(A)-II/CC.3/46-47,23, 227/04-05/05-06 DIFFERENT DATES, I.E. 25-05-2005 & 06-10- 2006. THE BLOCK ASSESSMENTS WERE FRAMED BY THE ACIT , CENTRAL CIRCLE-3-4. SURAT U/S.158BC(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFT ER REFERRED TO AS THE ACT) VIDE HIS DIFFERENT ORDER DATED 31-01-2005, 18-02-2005 AN D 06-03-2006 FOR THE BLOCK ASSESSMENT 01-04-1996 TO 20-06-2002 AND 1991092 TO 20-01-2000 RESPECTIVELY. NOW WE WILL TAKE UP ASSESSEES APPEAL IN IT(SS)A 20 3/AHD/2005 & REVENUES APPEAL IN IT(SS)A NO.211/AHD/2005. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 3 2. THE FIRST COMMON ISSUE IN IT(SS)A NO. 211/AHD/2005 OF REVENUES APPEAL AND THAT OF ASSESSEE IN IT(SS)A NO.203/AHD/2005, IS AS REGARD TO THE ORDER OF CIT(A), IN RESTRICTING THE ADDITION AT RS.1,76,985/ - OUT OF THE TOTAL ADDITION MADE BY ASSESSING OFFICER AT RS.66,12,159/- ON ACCOUNT OF UNACCOUNTED COMMISSION INCOME AS UNDISCLOSED INCOME OF THE BLOCK PERIOD. FOR THIS , REVENUE HAS RAISED THE FOLLOWING GROUND NO.1 : IT(SS)A NO.211/AHD/2005 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN RES TRICTING THE ADDITION OF RS.66,12,159/- MADE ON ACCOUNT OF UNACCOUNTED COMM ISSION INCOME TO RS.1,76,985/-. AND ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1(A), 1(B) TO 2(A) 2(B) :- IT(SS)A NO.203/AHD/2005. 1(A) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD SHOULD HAVE ACCE PTED THAT IRREGULARITIES REGARDING COMMISSION INCOME OF DELHI BRANCH AS ESTI MATED BY ASSESSING OFFICER AT RS.72,112/= IS FOR THE PERIOD 01.04.2002 TO 20.06.2002(NOT FOR THE PERIOD 15.05.2002 TO 20.06.2002). 1(B) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD SHOULD HAVE ACCE PTED & REDUCED THE ESTIMATED COMMISSION INCOME OF DELHI BRANCH FOR THE PERIOD 01.04.2002 TO 20.06.2002 AT RS.72,112/= INSTEAD OF RS.1,76,985/=. 2(A) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD ERRED IN GIVING DIRECTION TO THE ASSESSING OFFICER TO ADD INCOME OF RS.1,76,985/= IN THE RETUR NED INCOME THOUGH THE ASSESSING OFFICER HIMSELF IN THE ASSESSMENT ORDER G AVE SET OFF OF COMMISSION INCOME FROM THE UNACCOUNTED CASH FOUND/SEIZED/DISCL OSED IN THE RETURN OF INCOME FOR THE BLOCK PERIOD. 2(B) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD ERRED IN DIRECTI NG THE ASSESSING OFFICER TO ADD RS.1,76,965/= OVER AND ABOVE THE RETURNED INCOM E THOUGH THE SAID ESTIMATED COMMISSION INCOME IS COVERED/INCLUDED IN THE UNACCOUNTED CASH FOUND/SEIZED/DISCLOSED IN THE RETURN OF INCOME FOR THE BLOCK PERIOD. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE-FIRM IS CA RRYING ON THE BUSINESS OF ANGADIA I.E. COURIER/CARTING AGENT WHICH COLLECTS T HE POSTS, PARCELS, PACKETS, VALUABLES LIKE CASH, BULLIONS, DIAMOND ETC. FROM CO NSTITUENTS AT ITS VARIOUS BRANCHES IN GUJARAT, MUMBAI AND DELHI AND DELIVER THE SAME A S PER THE INSTRUCTION OF THE SENDER AT BRANCHES AT RELEVANT STATIONS. THE ASSESS EE-FIRM RECEIVES SERVICE CHARGES/COMMISSION FOR RENDERING SERVICE TO THE CON STITUENTS FOR TRANSFERRING POST, IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 4 PARCELS, INSURED COVERS, CASH, VALUABLES ETC. FROM ONE STATION TO OTHER, AS PER THE INSTRUCTION OF THE CONSTITUENTS. AS THE ASSESSEE-FI RM WORKS AS A COURIER/TRANSPORT AGENT, VERY MUCH AKIN TO POSTAL SERVICES, WHATEVER CASH, VALUABLES IT RECEIVES DURING THE COURSE OF ITS BUSINESS, REMAINS IN ITS POSSESSI ON AS COURIER/BAILEY AND IT DOES NOT BECOME THE OWNER, OWNERSHIP OF THE ARTICLES REMAINS WITH SENDERS/RECEIVERS. THE ASSESSEE HAS FOLLOWING 25 BRANCHES:- SR. NO PLACE/CITY ADDRESS 1 SURAT 5/663, HARIPURA, BHAVANIWAD 2 AHMEDABAD GR FIR., GERMAL SILVER MKT. MIRCHI POLE, RATAN POLE 3 MUMBAI 18/20, GERMAN SILVER BLDG NOP.3, BHULESHWAR 4 MALAD C-2/2, RATANPURI, GAUSHALA LANE, DAFTARY ROAD, DIAMOND HALL 5 AHMEDABAD 37, VANDNA CLOTH MARKET, PANCH KUAN 6 NAVSARI CHIKUWADI, SATTAPIR, ZAVERI BAZAR 7 BHARUCH ZAVERI MOHALLO, LALUBHAI CHAKLA 8 ANKLESHWAR GAUSHALA BAZAR, NEAR POST OFFICE 9 VADODARA KANSARA POLE, M.G. ROAD 10 DAHOD OPP. SUBHADRA MKT. M.G. ROAD 11 GHODRA OPP. NUTAN SCHOOL, SAPARIA BAZAR, PATELWADA 12 LUNAWADA 12, SUPER MKT. 1 ST FLR., NR BUS STAND 13 ANAND ABAOV BANK OF MAHARASTRA, STATION ROAD 14 JUNAGADH 9, BHAGWATI COMPLEX, MADH ST. MAGNATH ROAD 15 RAJKOT 2, RAGHUVIR TOWER, MODI SHERI, SONI BAZAR 16 DHOLKA NEAR KUBER JI TEMPLE 17 DEESA GANDHI CHOWK 18 PATAN ABOVE GLASSWALA, NR SARDAR CHOWK 19 PALANPUR E-119, PANCHRATNA, AMIR ROAD 20 KALOL 18, H.M. LATIWALA, NR UCO BANK 21 NADIAD DABHAN BHAGOD, NR UCO BANK 22 EDAR BHAVNA MKT. S.T. BUS ROAD 23 HIMMATNAGAR NAZA BAZAR, TOWER RD. OPP. OLD STATE BANK 24 MEHSANA JAISHREE MKT. OPP. TALUKA PANCHAYAT 25 DELHI 321, KUCCHA GHASI RAM, CHANDNI CHOWK IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 5 A SEARCH U/S.132 OF THE ACT WAS CARRIED OUT AT DELH I BRANCH OFFICE OF THE ASSESSEE BY ADIT (INV.), UNIT-VI(2), NEW DELHI. DURING THE C OURSE OF SEARCH CASH OF RS.35,46,200/- WAS FOUND, OUT OF WHICH CASH OF RS.3 5 LAKH WAS SEIZED AND VARIOUS BOOKS OF ACCOUNT AND OTHER DOCUMENTS WERE FOUND AND SEIZED AND INVENTORIED AS ANNEXURE-A/1 TO ANNEXURE-A/8 VIDE PANCHNAMA DATED 2 0-06-2002. ACCORDING TO THE ASSESSING OFFICER, SEIZED DOCUMENTS AND BOOKS OF AC COUNT CONTAINS UNACCOUNTED TRANSACTION OF THE ASSESSEE AND ACCORDINGLY NOTICE U/S 158BC OF THE ACT WAS ISSUED ON 17-10-2002 AND IN RESPONSE TO THE SAME, ASSESSEE FILED ITS BLOCK RETURN ON 26- 11-2002 AFTER GETTING EXTENSION OF 45 DAYS, DECLARI NG UNDISCLOSED INCOME AT RS.35 LAKH. SUBSEQUENTLY, NOTICE U/S.143(2) OF THE ACT WA S ISSUED ON 03-01-2003 REQUIRING THE ASSESSEE TO EXPLAIN. THE ASSESSEE WAS REQUESTED VIDE SHOW CAUSE NOTICE DATED 03-02-2004 TO EXPLAIN HOW THE CASH FOUND AND SEIZED IS DECLARED IN THE BOOKS OF ACCOUNT. THE ASSESSEE VIDE ITS REPLY DATED 14-06-20 04 STATED THAT ASSESSEE-FIRM HAS FILED ITS RETURN INCOME FOR THE BLOCK PERIOD DI SCLOSING UNDISCLOSED INCOME AT RS.36,00,000/- COVERING THE UNACCOUNTED CASH FOUND AND SEIZED. THUS, THE ASSESSEE ADMITTED CASH FOUND AT RS.35,46,200/- AS U NDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. AS REGARDS TO BALANC E CASH AMOUNTING TO RS.1 LAKH FOUND AND SEIZED FROM THE DELHI OFFICE BUT ASSESSEE EXPLAINED THAT CASH WAS ACQUIRED BY THE ASSESSEE-FIRM DURING ORDINARY COURS E OF BUSINESS. THE ASSESSEE ADMITTED TO HAVE EARNED UNACCOUNTED COMMISSION, WHI CH IS FOUND IN THE FORM OF CASH. THE ASSESSING OFFICER CONSIDERED THE EXPLANAT ION OF THE ASSESSEE AND ACCEPTED THE CASH OF RS.33,69,250/- AS UNEXPLAINED CASH AND BALANCE RS.1,76,985/- TO BE SET OFF AGAINST THE UNACCOUNTED COMMISSION IN COME. FURTHER, THE ASSESSING OFFICER, ON THE BASIS OF SEIZED MATERIALS FOUND DUR ING THE COURSE OF SEARCH, NOTED THAT THE ASSESSEE HAS TRANSFERRED A SUM OF RS.2,40, 37,528/- AND BY WORKING OUT THE RATE OF COMMISSION @ RS.2/- PER THOUSAND IN NORMAL COURSE OF BUSINESS, ESTIMATED THE UNACCOUNTED COMMISSION AT DELHI BRANCH AT RS.72 ,112/-, IN VIEW OF EVIDENCE OF 33 DAYS FOUND AS UNDER:- 8.3 THEREFORE, IN THIS CASE, EVIDENCE OF 33 DAYS W ERE FOUND, IT WOULD BE PROPER TO TREAT THE UNDISCLOSED COMMISSION INCOME F OR THE F.Y STARTING FROM 1.4.2002 TO 20.6.2002. THEREFORE, THE ESTIMATION IS TAKEN FOR 81 DAYS. 9. UNACCOUNTED INCOME ON UNDISCLOSED TURNOVER OF DE LHI BRANCH DURING THE BLOCK PERIOD:- IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 6 THE TOTAL UNACCOUNTED TURNOVER OF THE DELHI BRANCH AS CONTAINED IN THE LOOSE PAPER OF ANNEXURES, AS WORKED OUT AND DISCUSSED ABO VE, PERTAINS TO THE 33 DAYS SIS OF RS.2,40,37,528/-. APPLYING THE RATIO OF THE COMMISSION @ RS.3/- PER RS.1000/-, THE TOTAL UNACCOUNTED COMMISSION FOR THE DELHI BRANCH COMES TO RS.72,112/-. SIMILARLY, THE ASSESSING OFFICER APPLYING SAME FORM ULA FOR OTHER 24 BRANCHES, ESTIMATED THE ASSESSEES INCOME AT RS.66,12,159/-IN PARA- 10 & 10.1 OF HIS ASSESSMENT ORDER AS UNDER:- 10. UNDISCLOSED INCOME OF THE ASSESSEE ON THE BASIS OF INCOME DERIVED IN DELHI BRANCH:- APART FROM DELHI BRANCH, THE ASSESSEE IS RUNNING IT S BUSINESS FROM 24 BRANCHES, WHICH IS LISTED IN THE EARLIER PARA OF TH E SAID ORDER. IN THE BUSINESS OF ANGADIA I.E. CASH TRANSFER FROM ONE BRANCH TO AN OTHER BRANCH AND THERE ARE ALWAYS TWO BRANCHES INVOLVE I.E. SENDER BRANCH AND RECEIVING BRANCH. THE EVIDENCE FOR UNACCOUNTED TRANSACTIONS CONTAINED IN THE ANNEXURES, AS SATED ABOVE HAVE BEEN FOUND, WHICH SHOWS THAT THERE IS TR ANSFER OF UNACCOUNTED FOUND FROM VARIOUS BRANCHES OF THE ASSESSEE FIRM. T HEREFORE, IT IS PROPER TO INFER THAT SUCH UNACCOUNTED TRANSACTIONS ARE CARRIE D OUT NOT ONLY BY DELHI BRANCH, BUT ALL THE BRANCHES OF THE ASSESSEE FIRM A ND THE UNACCOUNTED COMMISSION IS RECORDED OUTSIDE THE CASH BOOK OF THE BRANCH WHERE THE COMMISSION IS COLLECTED. IN VIEW OF THE ABOVE, THE RATIO OF REGULAR COMMISSION INCOME FOR ALL THE BRANCHES FOR PERIOD 1.4.2002 TO 20.6.2002 AND REGULAR COMMISSION INCOME OF DELHI BRANCH FOR THE SAME PERI OD IS APPLIED TO THE OTHER BRANCHES ALSO. 10.1 THE TOTAL RECORDED COMMISSION INCOME FOR THE P ERIOD 1.4.2002 TO 20.6.2002 FOR ALL THE BRANCHES OF THE ASSESSEE FIRM COMES TO RS.16,95,270/- AND SHARE OF DELHI BRANCH IS RS.45,375/-. THUS, THE RATIO OF UNDISCLOSED INCOME OF ASSESSEE VIS--VIS DELHI BRANCH FOR SAID PERIOD COMES TO 37:1. IT WOULD BE PROPER TO APPLY THE SAME RATIO FOR COMPUTI NG THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE, IF THE UNDISCLOSED INCOME O F DELHI BRANCH IS DETERMINED. ON THIS BASIS, THE TOTAL UNDISCLOSED IN COME OF ASSESSEE COMES TO RS.66,12,159/- (RS.1,76,985/- X 37). OUT OF THIS, T HE UNACCOUNTED COMMISSION OF RS.1,76,985/- IS BEING CONSIDERED AS AVAILABLE I N CASH. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 4. THE CIT(A) SUSTAINED THE ADDITION OF RS.1,76,985 /- AND DELETED THE BALANCE ADDITION BY GIVING FOLLOWING FINDING IN PARA-5 OF HIS APPELLATE ORDER:- 05. I HAVE CAREFULLY CONSIDERED THE CONTENTIONS RA ISED BY THE APPELLANT IN THE AFORESAID PARA AND HAVE GONE THROUGH THE ASSESSMENT ORDER ALSO. IN THIS REGARD IT IS OBSERVED THAT CONTROVERSY WITH REGARD TO THE PERIOD OF UNACCOUNTED COMMISSION INCOME OF DELHI BRANCH IS FU TILE SINCE THE ASSESSING OFFICER HAS WORKED OUT THE ABOVE COMMISSION ON THE BASIS OF SEIZED RECORDS AND EVIDENCES FOUND DURING THE COURSE OF SEARCH PRO CEEDINGS. THE ASSESSING IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 7 OFFICER HAS ARRIVED AT A FIGURE OF RS.1,76,982/- OF UNACCOUNTED COMMISSION INCOME OF DELHI BRANCH ON THE BASIS OF MATERIAL FOU ND DURING THE COURSE OF SEARCH PROCEEDINGS. THE ASSESSING OFFICER HAS ALLOW ED ADEQUATE OPPORTUNITY OF BEING HEARD TO THE APPELLATE DURING THE COURSE O F BLOCK ASSESSMENT PROCEEDINGS DIRECTING THEREIN TO PRODUCE THE EVIDEN CE AS TO HOW THE TRANSACTIONS RECORDED IN THE SEIZED MATERIALS WERE RECORDED IN THE REGULAR BOOKS OF ACCOUNT. IT WAS NOTED THAT THE APPELLANT H AS TRANSFERRED CASH OUTSIDE THE REGULAR BOOKS OF ACCOUNT ON WHICH COMMISSION HA S NOT BEEN RECORDED IN THE REGULAR BOOKS OF ACCOUNT. SUCH TRANSFER OF CASH IN TOTAL AMOUNTS TO RS.2,40,37,528/-. THE APPELLANT WAS ALSO ALLOWED AD EQUATE OPPORTUNITY OF BEING HEARD WITH REGARD TO THE RATE OF COMMISSION F OR WHICH SATISFACTORY EXPLANATION COULD NOT BE FURNISHED HENCE THE ASSESS ING OFFICER CONSTRAINED TO APPLY THE RATE OF RS 3 PER RS.1000/- AND COMMISSION WAS COMPUTED ACCORDINGLY. THE ASSESSING OFFICER HAS DISCUSSED AT LENGTH IN THE ASSESSMENT ORDER THE EVIDENCES ON THE BASIS OF WHICH SUCH RATE WAS APPLICABLE. THUS THE ISSUES REGARDING PERIOD OF EARNING UNACCOUNTED COMM ISSION INCOME AND THE PERCENTAGE APPLICABLE IN THE TURNOVER DETECTED DURI NG THE SEARCH PROCEEDINGS ARE SETTLED AND THE APPELLANT HAS NO GROUND OR VALI D POINT AGAINST THE SAME. THE ASSESSING OFFICERS OBSERVATIONS HAVE BEEN PERU SED BY ME AND THE SAME ARE FOUND TO BE IN ORDER AS PER FACTS OF THIS CASE. HOWEVER, LOOKING TO THE NATURE OF BUSINESS CARRIED ON BY THE APPELLANT AND ADMINISTRATION OF DELHI BRANCH THE ASSESSING OFFICER WAS NOT JUSTIFIED IN A PPLYING THE SAME RATIO OF UNACCOUNTED COMMISSION INCOME OF DELHI BRANCH TO RE ST OF THE BRANCHES WITHOUT POINTING OUT ANY EVIDENCE OR WITHOUT BRINGI NG IN RECORD ANY ADVERSE MATERIAL. IT IS ALSO TO BE APPRECIATED THAT NO SUCH OR SURVEY ACTION WAS CARRIED OUT AT SUCH BRANCHES WHICH WOULD HAVE REVEALED THE CORRECT POSITION. IT IS ALSO AN UNDISPUTED FACT THAT NO MATERIAL WHATSOEVER WAS FOUND DURING THE COURSE OF SEARCH OR PAST SEARCH INQUIRIES WHICH WOULD ENAB LE THE ASSESSING OFFICER TO ARRIVE AT UNACCOUNTED COMMISSION INCOME. THE APPELL ANTS CONTENTION THAT MANY OF ITS BRANCHES ARE SO SMALL WHICH ARE SITUATE D IN TOWNS AND VILLAGES WHERE THERE CAN NOT BE SUCH VOLUMINOUS TRANSACTIONS IS TO BE APPRECIATED. IT IS CLEAR THAT NO EVIDENCE HAS BEEN FOUND THAT THE A PPELLANT FIRM IS SUPPRESSING INCOME AT OTHER BRANCHES. THUS, IN VIEW OF THE FACT S THAT THE ASSESSING OFFICER HAS ESTIMATED THE UNACCOUNTED COMMISSION INCOME ON THE BASIS OF UNACCOUNTED COMMISSION INCOME OF DELHI BRANCH WITHO UT PLACING ON RECORD ANY EVIDENCE OR MATERIALS, THE ISSUE HAS TO BE CLIN CHED ON THE BASIS OF DOMINATING FACTS. THE INFERENCE DRAWN BY THE ASSESS ING OFFICER HAS NO LEGAL OR FACTUAL BACKING BECAUSE THAT FORMULA CAN NOT BE APPLIED SINCE THE APPELLANT HAS OTHER BRANCHES. THE ASSESSING OFFICER HAS NOT L OCATED ANY EVIDENCE OF ANY UNACCOUNTED INCOME IN RESPECT OF 37 BRANCHES PI CKED UP FOR MAKING ABOVE ADDITION. THE ESTIMATING INCOME OF OTHER BRAN CHES ON THE BASIS OF FINDINGS OF DELHI BRANCH CAN NOT BE APPROVED. THE T OTAL ADDITION COMPRISES OF UNACCOUNTED COMMISSION INCOME OF RS.1,76,985/-, THE REFORE, ADDITION TO THAT EXTENT IS SUSTAINED AND THE REMAINING ADDITION OF R S.64,35,174/- IS DELETED. SINCE THE APPELLANT HAS SUO MOTO RETURNED INCOME OF RS.36,00,000/- ON ACCOUNT OF UNEXPLAINED CASH, THE INCOME OF RS.1,76 ,985/- SUSTAINED ABOVE WILL BE ADDED TO THE RETURNED INCOME. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 8 AGGRIEVED, AGAINST THE ORDER OF CIT(A), REVENUE CAM E IN APPEAL AGAINST DELETION OF ADDITION OF RS.66,121,159/- ESTIMATED BY THE ASSESS ING OFFICER AND ASSESSEE CAME IN APPEAL AGAINST SUSTENANCE OF ADDITION OF RS.1,76 ,985/-. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE LD. COU NSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF CIT(A) THAT NO SEARCH MATERIAL WAS FOU ND RELATING TO OTHER BRANCHES EVIDENCING THAT THE ASSESSEE HAS EARNED ANY UNACCOU NTED COMMISSION INCOME. THE LD COUNSEL FOR THE ASSESSEE BEFORE US STATED THAT T HE BLOCK ASSESSMENT CAN BE FRAMED ON THE BASIS OF SEARCH MATERIAL FOUND AS A R ESULT OF SEARCH AND IN NO OTHER WAY ESTIMATED CAN BE MADE RELATING TO OTHER BRANCHE S, FROM WHERE NO SEARCH MATERIAL WAS FOUND AND NO SEARCH WAS CONDUCTED. ACC ORDING TO LD. DR THE ASSESSING OFFICER CAN ESTIMATE THE UNDISCLOSED INCO ME FROM UNACCOUNTED TRANSACTION FOUND DURING THE SEARCH FROM THE DELHI BRANCH WHICH SHOW THAT THE ASSESSEE HAS TRANSFERRED CASH AMOUNTING TO RS.2,40, 37,528/-. SIMILARLY, THE ASSESSEE MIGHT HAVE EARNED COMMISSION FROM OTHER 25 BRANCHES, WHERE HE IS CARRYING ON SIMILAR BUSINESS. IN VIEW OF THE ABOVE FACTS RECORDED BY THE ASSESSING OFFICER IN THE BLOCK ASSESSMENT ORDER, THE LD. CIT DR STATED THAT IN VIEW OF THE PROVISIONS OF THE BLOCK ASSESSMENT HAVE A MAJOR CHA NGE BY THE FINANCE ACT,2002 AND MOST OF THE AMENDED PROVISIONS HAVE BEEN GIVEN RETROSPECTIVE EFFECT W.E.F. 01.07.1995. THE DEFINITION OF UNDISCLOSED INCOME HA S BEEN SUBSTANTIALLY ENLARGED W.E.F. 01.07.1995 AND IT INCLUDES THE EXPENSES, DED UCTION OR ALLOWANCE CLAIMED UNDER THE ACT, WHICH IS FOUND TO BE FALSE. EXPLANAT ION HAS BEEN ADDED BELOW SECTION 158BA(2) SPECIFYING THE SCOPE OF BOTH TYPE OF ASSES SMENT I.E. BLOCK ASSESSMENT AND REGULAR ASSESSMENT. PROVISIONS OF SECTION 158BB(1) AND SECTION 158BC HAVE BEEN AMENDED. THESE AMENDED PROVISIONS WERE NOT BEFORE T HE CIT(A). ACCORDING TO HIM, THE LAW HAS ALSO DEVELOPED A LOT. HE REFERRED TO TH E DECISION OF THE HON,BLE GUJARAT HIGH COURT IN THE CASE OF N.R. PAPER & BOARD VS DCIT (1998) 234 ITR 733 (GUJ). IS NOT FREQUENTLY QUOTED AS AN AUTHORITY. DECISIONS HA VE COME WHERE ESTIMATION OF INCOME UNDER BLOCK ASSESSMENT HAS BEEN HELD TO BE J USTIFIED LIKEWISE THE ESTIMATION OF EXPENSES ETC. THE ADDITION MADE ON ACCOUNT OF UN EXPLAINED CASH CREDIT RECORDED IN THE REGULAR BOOKS OF ACCOUNT, BEEN HELD TO BE JU STIFIED BY THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V. AJAY KUMAR SHARMA (2003) 259 ITR 241 (RJA) AS WELL AS THE AHMEDABAD TRIBUNAL. BLOCK ASSESSMENT ON THE BASIS OF POST SEARCH IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 9 ENQUIRY HAS BEEN HELD TO BE JUSTIFIED BY THE HONBL E AHMEDABAD TRIBUNAL N.K. PROTEINS LTD. V. DCIT (2004) 83 TTJ 904 (AHD). THE ASSESSING OFFICER THOUGH NOT SPECIFICALLY APPLIED THE PROVISIONS OF SECTION 145 AS WERE NOT APPLICABLE AT THAT POINT OF TIME, HOWEVER, IN THE AMENDED PROVISIONS, THE PR OVISIONS OF SECTION 145 ARE MADE EFFECTIVE FROM 01.07.1995. THEREFORE, WHILE DECIDIN G THE CASE, IT SHOULD BE LOOKED INTO, WHETHER THE CASE REQUIRE A SECOND LOOK AT THE LEVEL OF CIT(A) OR THE ASSESSING OFFICER. THE LD. DR FURTHER ARGUED THAT THE CASE WA S TO BE DECIDED BY THE CIT(A) KEEPING IN MIND THE FINDINGS RECORDED IN THE CASE OF N. K. PROTEINS LTD. (SUPRA), WHEREIN THE HONBLE TRIBUNAL HAS DECIDED THE ISSUE OF ARRANGEMENT OF BOGUS BILLS WHERE THE BILLS WERE GIVEN BY NAME LENDERS. ACCORDI NGLY, THE LD. DR REQUIRED THE BENCH TO UPHELD THE BLOCK ASSESSMENT ORDER FRAMED B Y THE ASSESSING OFFICER. 6. WE FIND THAT DURING THE COURSE OF SEARCH, CARRI ED OUT AT DELHI BRANCH OF ASSESSEE-FIRM, FROM WHERE THE REVENUE FOUND THAT TH E ASSESSEE HAS EARNED COMMISSION INCOME ON UNACCOUNTED TRANSACTION AND AS SESSING OFFICER APPLYING THE SAME RATIO HAS ESTIMATED THE UNDISCLOSED INCOME FOR OTHER 25 BRANCHES WITHOUT ANY SEARCH MATERIAL. NOW, THE QUESTION ARISES IS, WHETH ER WITHOUT ANY SEARCH MATERIAL THE ASSESSING OFFICER DURING BLOCK ASSESSMENT PROCEEDIN GS CAN ESTIMATE UNDISCLOSED INCOME OR NOT? IN SIMILAR CIRCUMSTANCES TRIBUNAL IN THE CASE OF ACIT V. M/S. PATEL MAGANLAL SHANKERDAS & CO. IN ITT(SS)NO 220/AHD/2005 DATED 28-11-2005 HAS CONSIDERED THE FACTS AND DECIDED THE ISSUE AS UNDER :- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. I N THE INSTANT CASE, WE FIND THAT DURING THE COURSE OF SEARCH CARRIED OUT AT DEL HI BRANCH OF THE ASSESSEE FIRM, THE A.O FOUND THAT THE MATERIAL WHICH EVIDENC ED THAT THE ASSESSEE HAS MADE TRANSFER OF CASH OF RS.5,87,34,539/- AND COMMI SSION INCOME EARNED ON THIS TRANSACTION WAS NOT ACCOUNTED FOR BY THE ASSES SEE. ACCORDINGLY, THE A.O ADDED THE COMMISSION INCOME EARNED BY THE ASSESSEE WHICH WAS ESTIMATED AT RS.2,37,874/- AS UNDISCLOSED INCOME OF THE ASSES SEE. THE A.O FURTHER OBSERVED THAT THE ASSESSEE MUST HAVE CARRIED OUT SI MILAR TRANSACTIONS AT ITS OTHER 29 BRANCHES ALSO. HE ESTIMATED THAT UNACCOUNT ED COMMISSION INCOME EARNED AT OTHER BRANCHES ON THE BASIS OF UNACCOUNTE D INCOME DETERMINED FOR THE DELHI BRANCH THEREBY MAKING ADDITION OF RS.92,8 6,760/-. IN APPEAL, THE LD. CIT(A) DELETED THE ADD MADE BY THE A.O ON THE GROUN D THAT NO SEARCH MATERIAL WAS FOUND EVIDENCING THAT THE ASSESSEE HAS EARNED UNACCOUNTED COMMISSION INCOME FOR THE OTHER BRANCHES. IN THE AB OVE FACTS AND CIRCUMSTANCES OF THE CASE. WE ARE OF THE CONSIDERED OPINION THAT IN AN ASSESSMENT FRAMED UNDER THE BLOCK ASSESSMENT, ADDIT ION CAN BE MADE TO THE INCOME OF THE ASSESSEE ONLY ON THE BASIS OF MATERIA L FOUND AS A RESULT OF SEARCH OR ON THE BASIS OF INQUIRY MADE ON THE BASIS OF THE MATERIAL FOUND IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 10 DURING THE COURSE OF SEARCH. AS NO MATERIAL WAS FOU ND FROM OTHER 29 BRANCHES OF THE ASSESSEE FIRM EVIDENCING THE FACT THAT THE A SSESSMENT HAS EARNED UNACCOUNTED COMMISSION INCOME FROM TRANSACTION NOT ACCOUNTED FOR IN THE REGULARLY MAINTAINED BOOKS OF ACCOUNT OF THE ASSESS EE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITIO N OF UNACCOUNTED COMMISSION INCOME OF RS.92,86,760/-. CONSEQUENTLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 7. WE FIND FROM THE FACTS OF THE CASE THAT THE ASSE SSING OFFICER HAS MADE THE ADDITION ON THE BASIS THAT DURING THE COURSE OF SEA RCH, CERTAIN DELIVERY SLIPS, NOTINGS WERE FOUND WHICH THE ASSESSEE-FIRM COULD NOT LINK W ITH THE BHARATIAS AND COMMISSION INCOME THERE ON WITH THE CASH BOOK AND A N AMOUNT OF RS.2,40,37,528/- IS WORKED OUT AS THE AMOUNT TRANSFERRED BY THE ASSE SSEE-FIRM IN RESPECT OF WHICH COMMISSION IS NOT RECORDED IN THE BOOKS OF ACCOUNT FOR THE PERIOD FROM 17-05-2002 TO 20-06-2002 BY DELHI BRANCH. HE ESTIMATED THE COM MISSION AT RS.3/- PER THOUSAND, RS.72,112/- ON ( RS.2,40,37,528/-/1000 X 3) FOR 33 DAYS (FOR THE PERIOD FROM 17-05- 2002 TO 20-06-2002. ACCORDINGLY, HE APPLIED THE COM MISSION PER/DAY BY 81 FOR THE PERIOD FROM 01-04-2002 TO 20-06-2002 AT RS.1,76,985 /- AND SIMILARLY HE APPLIED ESTIMATE OF DELHI BRANCH FOR ALL BRANCHES AND ESTIM ATED THE UNRECORDED COMMISSION AT RS.66,12,159/-. THE ASSESSEE HAS GIVEN WORKING O F VOLUME OF TRANSACTION FROM THE SEIZED PAPER AS UNDER:- AS PER ANNEXURE-1,2,3 (FOR THE PERIOD 17.5.02 TO 20.6.02) RS.1,98,61,820/- ANNEXURE-8, PAGE-1 (FOR THE PERIOD 01.04.02 TO 08.06.02) (FOR THE PERIOD 01.4.02 TO RS. 25,93,258 OTHER AS PER ANNEXURE-A-8 RS. 15,82,450 FOR THE PERIOD 01.04.02 TO 20.06.02 RS.2,40,37,528 THE ASSESSEE CONTENDED THAT THE TRANSACTION OF RS.2 ,40,37,528/- IS FOR THE PERIOD FROM 01-04-2002 TO 20-06-2002 INCLUDING THE AMOUNT OF PAGE-1 ANNEXURE-8 AMOUNTING TO RS.25,93,258/-, BUT THE ASSESSING OFFI CER IGNORED ITS PERIOD I.E. 1-4- 2002 TO 8-6-2002 BUT IT IS CLEAR FROM THE SEIZED PA PER THAT THERE IS NOTHING ON THE SAID SEIZED PAPER FOR THE ABOVE PERIOD. ACCORDINGLY , THE COMMISSION FOR DELHI OFFICE WORKED OUT AT RS.48,075/- AND THAT ALSO IS TO BE SE T OFF AGAINST THE DISCLOSURE MADE BY THE ASSESSEE AT RS.36 LAKH IN THE BLOCK RETURN A ND THIS POSITION HAS BEEN ADMITTED BY AO IN ITS ORDER AT PARA-10.1 AS UNDER:- IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 11 10.1 THE TOTAL RECORDED COMMISSION INCOME FOR THE PERIOD 1.4.2002 TO 20.6.2002 FOR ALL THE BRANCHES OF THE ASSESSEE FIRM COMES TO RS.16,95,270/- AND SHARE OF DELHI BRANCH IS RS.45,375/-. THUS, THE RATIO OF UNDISCLOSED INCOME OF ASSESSEE VIS--VIS DELHI BRANCH FOR SAID PERIOD COMES TO 37:1. IT WOULD BE PROPER TO APPLY THE SAME RATIO FOR COMPUTI NG THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE, IF THE UNDISCLOSED INCOME O F DELHI BRANCH IS DETERMINED. ON THIS BASIS, THE TOTAL UNDISCLOSED IN COME OF ASSESSEE COMES TO RS.66,12,159/- (RS.1,76,985/- X 37). OUT OF THIS, T HE UNACCOUNTED COMMISSION OF RS.1,76,985/- IS BEING CONSIDERED AS AVAILABLE I N CASH. AS PER THE ASSESSING OFFICER, THE UNACCOUNTED COMMI SSION OF RS.1,76,985/- IS BEING CONSIDERED AS AVAILABLE IN CASH AND THIS FINDING HA S BECOME FINAL AND THIS ASPECT HAS NOT BEEN CHALLENGED BEFORE THE CIT(A) BUT CIT(A ) HAS WRONGLY SUSTAINED THIS ADDITION EVEN THOUGH THIS ISSUE WAS NOT BEFORE HIM. 8. FROM THE ABOVE FACTS, AS REGARDS TO RATIO OF UND ISCLOSED INCOME ASSESSED BY ASSESSING OFFICER VIS--VIS DELHI BRANCH FOR THE AB OVE PERIOD TO 37:1, WE FIND THAT THE ASSESSING OFFICER HAS JUST MADE AN ESTIMATE WHILE C OMPUTING UNDISCLOSED INCOME FOR THE BLOCK PERIOD. IN VIEW OF THE ABOVE FACTS RE CORDED BY THE ASSESSING OFFICER IN THE BLOCK ASSESSMENT ORDER, THE LD. CIT DR STATED T HAT IN VIEW OF THE PROVISIONS OF THE BLOCK ASSESSMENT HAVE A MAJOR CHANGE BY THE FIN ANCE ACT,2002 AND MOST OF THE AMENDED PROVISIONS HAVE BEEN GIVEN RETROSPECTIVE EF FECT W.E.F. 01.07.1995. THE DEFINITION OF UNDISCLOSED INCOME HAS BEEN SUBSTANTI ALLY ENLARGED W.E.F. 01.07.1995 AND IT INCLUDES THE EXPENSES, DEDUCTION OR ALLOWANC E CLAIMED UNDER THE ACT, WHICH IS FOUND TO BE FALSE. EXPLANATION HAS BEEN ADDED BELOW SECTION 158BA(2) SPECIFYING THE SCOPE OF BOTH TYPE OF ASSESSMENT I.E. BLOCK ASS ESSMENT AND REGULAR ASSESSMENT. PROVISIONS OF SECTION 158BB(1) AND SECT ION 158BC HAVE BEEN AMENDED. THESE AMENDED PROVISIONS WERE NOT BEFORE T HE CIT(A). ACCORDING TO HIM, THE LAW HAS ALSO DEVELOPED A LOT. HE REFERRED TO TH E DECISION OF THE HON,BLE GUJRAT HIGH COURT IN THE CASE OF N.R. PAPER & BOARD VS DCIT (1998) 234 ITR 733 (GUJ). IS NOT FREQUENTLY QUOTED AS AN AUTHORITY. DECISIONS HA VE COME WHERE ESTIMATION OF INCOME UNDER BLOCK ASSESSMENT HAS BEEN HELD TO BE J USTIFIED LIKEWISE THE ESTIMATION OF EXPENSES ETC. THE ADDITION MADE ON ACCOUNT OF UN EXPLAINED CASH CREDIT RECORDED IN THE REGULAR BOOKS OF ACCOUNT, BEEN HELD TO BE JU STIFIED BY THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V. AJAY KUMAR SHARMA (2003) 259 ITR 241 (RJA) AS WELL AS THE AHMEDABAD TRIBUNAL. BLOCK ASSESSMENT ON THE BASIS OF POST SEARCH ENQUIRY HAS BEEN HELD TO BE JUSTIFIED BY THE HONBL E AHMEDABAD TRIBUNAL N.K. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 12 PROTEINS LTD. V. DCIT (2004) 83 TTJ 904 (AHD). THE ASSESSING OFFICER THOUGH NOT SPECIFICALLY APPLIED THE PROVISIONS OF SECTION 145 AS WERE NOT APPLICABLE AT THAT POINT OF TIME, HOWEVER, IN THE AMENDED PROVISIONS, THE PR OVISIONS OF SECTION 145 ARE MADE EFFECTIVE FROM 01.07.1995. THEREFORE, WHILE DECIDIN G THE CASE, IT SHOULD BE LOOKED INTO, WHETHER THE CASE REQUIRE A SECOND LOOK AT THE LEVEL OF CIT(A) OR THE ASSESSING OFFICER. THE LD. DR FURTHER ARGUED THAT THE CASE WA S TO BE DECIDED BY THE CIT(A) KEEPING IN MIND THE FINDINGS RECORDED IN THE CASE OF N. K. PROTEINS LTD. (SUPRA), WHEREIN THE HONBLE TRIBUNAL HAS DECIDED THE ISSUE OF ARRANGEMENT OF BOGUS BILLS WHERE THE BILLS WERE GIVEN BY NAME LENDERS. ACCORDI NGLY, THE LD. DR REQUIRED THE BENCH TO UPHELD THE BLOCK ASSESSMENT ORDER FRAMED B Y THE ASSESSING OFFICER. 9. IN VIEW OF THESE FACTS AND DISCUSSIONS, THE MOOT QUESTION ARISES, WHETHER ASSESSING OFFICER CAN ESTIMATE FOR THE ENTIRE BLOCK PERIOD ON THE BASIS OF SEIZED DOCUMENTS FOR THE LIMITED PERIOD OR NOT? FOR THIS, NOW WE HAVE TO GO TO THE PROVISIONS OF THE BLOCK ASSESSMENT AS ENUMERATED IN CHAPTER XIV-B OF THE ACT. THE RELEVANT CHAPTER XIV B WHICH CONSISTS, OF SEC. 158B TO SEC 158BH WAS INTRODUCED BY THE FINANCE ACT 1995 W.E.F. 1-7-1995 TO MAKE PRO CEDURE OF ASSESSMENT OF CASES IN WHICH SEARCH IS INITIATED U/S 132 OR WHERE BOOKS OF A/C, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED U/S132A. THE CHAPTER IS TI TLED ( SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES ). THE SCHEME OF BLOCK ASSESSMENT ENACTED UNDER THI S CHAPTER LAYING DOWN PROCEDURE FOR THE BLOCK ASSESSM ENT PROCEEDINGS IS INTENDED BY THE LEGISLATURE TO OPERATE SIMULTANEOUSLY WITH THE NORMAL AND REGULAR SCHEME OF ASSESSMENT INDICATE UNDER CHAPTER XIV OF THE ACT. B OTH THE TAX SCHEMES ARE INDEPENDENT OF EACH OTHER AND THEY ARE NOT MUTUALLY EXCLUSIVE. BLOCK ASSESSMENT UNDER CHAPTER XIV B IS NOT INTENDED TO BE A SUBSTIT UTE FOR REGULAR ASSESSMENT. ITS SCOPE AND AMBIT IS LIMITED IN THAT SENSE TO MATERIA L UNEARTHED DURING SEARCH. THEREFORE, IF THE SEARCH ACTION DOES NOT DISCLOSE U NDISCLOSED INCOME, THE QUESTION OF ANY ASSESSMENT BEING FRAMED UNDER THAT CHAPTER IS S IMPLY IMPROPER AND OUTSIDE THE PURVIEW OF THAT CHAPTER. CLAUSE (B) OF SECTION 158 B CONTAINS INCLUSIVE DEFINITION OF UNDISCLOSED INCOME AND READS AS UNDER:- (B) UNDISCLOSED INCOME INCLUDES ANY MONEY, BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON AN Y ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS, WHERE S UCH MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES, THING, ENTRY IN THE B OOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 13 HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR T HE PURPOSES OF THIS ACT (OR ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER T HIS ACT WHICH IS FOUND TO BE FALSE). IF WE ANALYZE THE AFORESAID DEFINITION, IT PROVIDES THAT UNDISCLOSED INCOME INCLUDES: - (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR, (II) ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS; (III) SUCH MONEY, BULLION, JEWELLERY, VALUABLE ARTI CLE, THING, ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY; WHICH HAS NOT BEEN OR WO ULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF THIS ACT. FROM THE AFORESAID ANALYSIS OF THE DEFINITION, IT C LEARLY EMERGES THAT IF ANY ASSET OR ANY INCOME AS RECORDED IN THE BOOKS OR DOCUMENTS HA S BEEN DISCLOSED OR INTENDED TO BE DISCLOSED TO THE INCOME TAX AUTHORITIES, THIS WOULD BE OUTSIDE THE PALE OF UNDISCLOSED INCOME AS DEFINED UNDER CLAUSE (B) AS A BOVE. WE MAY NEXT REFER TO SECTION 158BB, WHICH PROVIDES FOR COMPUTATION OF UNDISCLOSED INCOME OF BLOCK PERIOD. THE SECTION EXPRESSLY AND U NEQUIVOCALLY PROVIDES THAT THE UNDISCLOSED INCOME HAS TO BE COMPUTED ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH AND SUCH OTHER MATERIALS OR INFORMATIO N AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE. THE EXPRESSION RELATABLE TO SUCH EVIDENCE HAS BEEN INSERTED BY THE FINANCE ACT, 200 2 RETROSPECTIVELY W.E.F. 1.7.1995. A BARE READING OF THIS PROVISION WOULD IN DICATE THAT UNDISCLOSED INCOME HAS TO BE COMPUTED ON THE BASIS OF EVIDENCE AND MAT ERIAL FOUND DURING SEARCH. ANY MATERIAL OR EVIDENCE, AVAILABLE TO THE AO, WHICH IS NOT RELATED TO SEARCH WOULD NOT FORM THE BASIS FOR COMPUTATION OF UNDISCLOSED INCOM E. ON THE BASIS OF THIS LEGAL PROVISION, WE ARE OF THE FIRM VIEW THAT THE INCOME WHICH THE ASSESSEE HAD DULY DISCLOSED IN THE REGULAR ASSESSMENT AND THE BOOKS R ELATING THERETO NOT SHOWING ANY UNEARTH INCOME AND THE RETURNS AND DOCUMENTS FILED BY THE ASSESSEE SUBSEQUENTLY WILL NOT ENTRUST THE JURISDICTION ON THE ASSESSING OFFICER TO MAKE ASSESSMENT UNDER CHAPTER XIV. 10. NOW WE HAVE TO CONSIDER THE CASE LAWS REFERRED BY BOTH THE SIDES. FIRST WE WILL DEAL WITH THE CASE LAW HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V. AJAY IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 14 KUMAR SHARMA (2003) 259 ITR 240 (RAJ) CAME TO BE RELIED ON BY T HE LD. DR. THE HIGH COURT HELD AS UNDER:- HOWEVER, WE ARE AGREE WITH MR. SINGH THAT MERELY B ECAUSE SOME ENTRIES IN THE BOOKS OF ACCOUNT IF SHOWN, THAT DOES NOT PROHIB IT THE ASSESSING OFFICER TO TAX THAT AMOUNT IN THE BLOCK PERIOD, IF THAT AMOUNT HAS NOT BEEN TAXED IN THE REGULAR ASSESSMENT. WHEN THE CASH CREDITS ARE NOT T AXED IN THE RELEVANT ASSESSMENT YEARS, THAT CAN BE TREATED AS UNDISCLOSE D INCOME AND CAN BE TAXED AFTER SEARCH IN THE BLOCK PERIOD. FURTHER THE AHMEDABAD TRIBUNAL IN THE CASE OF N. K. PROTEINS LIMITED V. DCIT (2004) 83 TTJ 904 (AHD) HELD AS UNDER:- (FROM HEAD NOTES, PARA 96-99 OF THE JUDGMENT) THE ADDITION IN RESPECT OF UNEXPLAINED DEPOSITS, I N THE BANK ACCOUNTS OF VARIOUS SUPPLIERS WERE MADE IN THE CASES OF NKPL AN D NKIL ON PROTECTIVE BASIS WITH THE OBSERVATION THAT FURTHER INQUIRES WI LL BE MADE FROM VARIOUS BRANCHES OF BANKS TO ASCERTAIN THAT WHICH OTHER CON CERNS HAVE GIVEN SUCH CHEQUES WHICH HAVE BEEN DEPOSITED IN THE BANK ACCOU NTS OF THESE BOGUS SUPPLIERS. THE DEPARTMENT DID NOT MAKE ANY SERIOUS EFFORTS TO MAKE EFFECTIVE INVESTIGATION OR DEEP FURTHER PROBE IN THIS REGARD AFTER COMPLETION OF THE ASSESSMENTS ON 30 TH APRIL, 2001. SOME LETTERS WERE SENT TO THE BAKERS IN THE MONTH OF MARCH TO MAY, 2001 AND THEREAFTER THE MATT ER WAS NOT PURSUED. THE DEPOSITS IN THE BANK ACCOUNTS OF THESE BOGUS SUPPLI ES CAN BE VALIDLY ADDED IN THE HANDS OF ANY OF THESE ASSESSEES ONLY IF THE DEP ARTMENT DISCHARGES THE BURDEN OF PROVING THAT THESE SUPPLIERS WERE BENAMID ARS OF ANY ONE OF THESE THREE ASSESSEES OF N.K. GROUP AND THE DEPARTMENT HA S TO FURTHER DISCHARGE THE BURDEN OF PROOF THAT THE DEPOSITS IN THESE BANK ACCOUNTS BY WAY OF CHEQUES WERE MADE OUT OF FUNDS PROVIDED BY THESE PE RSONS OR CONCERNS OF N.K. GROUP. SUCH A BURDEN HAS TO BE DISCHARGED BY THE REVENUE BY BRINGING POSITIVE AND CLINCHING EVIDENCE ON RECORD. NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE DEPARTMENT TO PROVE THAT T HE CHEQUES OF THIRD PARTIES DEPOSITED IN THE BANK ACCOUNTS OF THESE SUPPLIERS W ERE OUT OF FUNDS PROVIDED BY ANY OF THESE THREE ASSESSEES. IN ORDER TO PROVE THAT THE BANK ACCOUNTS IN THE NAMES OF THESE SUPPLIERS ARE BENAMI ACCOUNTS OR THAT THE SUPPLIERS ARE BENAMIDAR PERSONS / CONCERNS, THE FOLLOWING TESTS A RE VERY VITAL AND SIGNIFICANT; (I) WHO PROVIDED THE FUNDS FOR DEPOSIT S, (II) WHO ENJOYED THESE FUNDS, (III) WHAT IS ULTIMATE DESTINATION OF THESE FUNDS. THE DEPARTMENT HAS TO PROVE BY BRINGING ON RECORD DEFINITE, POSITIVE AND CLINCHING EVIDENCE ON ALL THESE THREE ASPECTS TO SUPPORT THEIR CONCLUSION THA T THERE THESE BANK ACCOUNTS ARE BENAMI ACCOUNTS AND DEPOSITS IN THESE BANK ACCOUNTS IN THE NAMES OF SUPPLIERS REALLY BELONG TO NKPL OR NKIL OR N AND THEY WERE THE PERSONS WHO ENJOYED THESE FUNDS AND THE ENTIRE FUND S HAVE DIRECTLY OR INDIRECTLY FLOWN BACK IN THEIR FAVOUR. THE DEGREE OF PROOF FOR PROVING THE CONCEPT OF BENAMI BANK ACCOUNTS / BENAMI PERSONS IS VERY STRONGER AND THAT HAS TO BE DISCHARGED BY BRINGING POSITIVE MATERIAL ON RECORD. SUCH CONCLUSION CANNOT BE DERIVED ON THE BASIS OF MERE SUSPICION AN D SURMISES. IT MAY BE RELEVANT HERE TO REPEAT ONCE AGAIN THAT SO FAR AS P URCHASES CLAIMED TO HAVE BEEN MADE BY NKPL AND NKIL FROM THESE CONCERNS ARE CONCERNED, THE BURDEN WAS ON THE ASSESSEES TO PROVE GENUINENESS OF PURCHASES BUT THE SAME PRINCIPLE WOULD NOT APPLY WHEN THE DEPARTMENT WANTS TO TREAT THE ENTIRE IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 15 DEPOSITS IN THESE BANK ACCOUNTS IN THE NAMES OF VAR IOUS SUPPLIERS AS BENAMI DEPOSITS / BENAMI ACCOUNTS OF THESE ASSESSEES. THE NAMES AND PARTICULARS OF PARTIES WHO DEPOSITED THE CHEQUES IN THE BANK ACCOU NT OF THESE SUPPLIERS AFTER THE SEARCH HAVE ALSO NOT BEEN BROUGHT ON RECO RD. IT WAS PRIMARY DUTY OF THE DEPARTMENT TO FIND OUT AS TO WHICH OTHER PARTIE S / CONCERNS HAVE GIVEN THESE CHEQUES WHICH HAVE BEEN DEPOSITED IN THE BANK ACCOUNTS OF THESE BOGUS PARTIES. THE DEPARTMENT HAS COMPLETELY FAILED TO DISCHARGE SUCH BURDEN, WHICH HEAVILY LIES ON THEM TO SUPPORT THEIR CONCLUSION THAT ANY OF THESE THREE ASSESSEES WERE REAL OWNERS OF CHEQUES O F ALL SUCH OTHER CONCERNS / THIRD PARTIES DEPOSITED IN THE BANK ACCO UNTS OF THESE BOGUS SUPPLIERS. THE DEPARTMENT HAS ALSO NOT MADE ANY INV ESTIGATION TO PROVE DESTINATION OF THE FUNDS WITHDRAWN BY SELF CHEQUES AND BY OTHER CHEQUES GIVEN TO OTHER PARTIES. THE DEPARTMENT HAS THUS FAI LED TO DISCHARGE THE BURDEN OF PROVING THAT THE ORIGIN AND DESTINATION O F THESE FUNDS WERE THESE ASSESSEES AND NONE ELSE. THE CIT(A) HAS RIGHTLY DEL ETED THE ADDITIONS CIT(A) VS. DAULATRAM RAWATMAL 1972 CTR (SUPREME COU RT) 411 : (1973) 87 ITR 349 (SUPREME COURT) RELIED ON SIMILARLY, THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF RAMJAS NAWAL V. CIT (2003) 183 CTR (RAJ) 144, 152, 153, IT HAS BEEN HEL D THAT WHERE PARTICULAR INCOME SHOWN IN THE NAME OF A FIRM, WHICH WAS FOUND TO BE NON-GENUINE, HAS BEEN FOUND TO BELONG TO THE ASSESSEE AND HIS TWO SONS, WHICH FACT IS ADMITTED BY THE ASSESSEE HIMSELF DURING THE SEARCH, ADDITION OF SUCH INCOME IN THE HANDS OF THE ASSESSEE AND HIS TWO SONS IN EQUAL SHARES WAS HELD JUSTIFIED NOT WITHSTANDING THE ENTRIES IN THE BOOKS OF ACCOUNT OF THE SAID FIRM. THE HON'BLE BOM BAY HIGH COURT ALSO DELIBERATED ON THE ESTIMATION IN THE CASE OF CIT V. C.J. SHAH & CO. (2000), 246 ITR 671, 672 (BOM), WHEREIN, IT IS STATED THAT, WHERE MATERIAL IS DETECTED AFTER SEARCH AND SEIZURE OPERATIONS ARE CARRIED OUT, THE ASSESSING OFFICER I S REQUIRED TO DETERMINE THE UNDISCLOSED INCOME. IN SUCH CASES ADDITIONS ARE GEN ERALLY BASED ON ESTIMATES. IN MATTERS OF ESTIMATION SOME AMOUNT OF LATITUDE IS RE QUIRED TO BE SHOWN TO THE ASSESSING OFFICER PARTICULARLY WHEN RELEVANT DOCUME NTS ARE NOT FORTHCOMING. HOWEVER, IT DOS NOT MEAN THAT THE ASSESSING OFFICER CAN ARRIVE AT ANY FIGURE WITHOUT ANY BASIS BY ADOPTING AN ARBITRARY METHOD OF CALCUL ATION. WE FIND THAT AS A RESULT OF AMENDMENT MADE (W.R.E.F. 1-7-1995) IN SECTION 158BB BY THE FINANCE ACT, 2002, THE PROVISIONS IN CHAPTER VI-A SHOULD BE TAKEN INTO CON SIDERATION IN DETERMINING THE UNDISCLOSED INCOME OF THE BLOCK PERIOD AND THE SECT ION 158BB(1) HAS BEEN AMENDED TO CLARIFY THAT THE BLOCK ASSESSMENT OF UND ISCLOSED INCOME IS BASED ON THE EVIDENCE FOUND IN THE SEARCH AND MATERIAL, OR INFOR MATION GATHERED IN POST SEARCH INQUIRIES MADE ON THE BASIS OF EVIDENCE FOUND IN TH E SEARCH. IN VIEW OF THE ABOVE IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 16 LEGAL POSITION, WHEN CO-RELATED WITH THE FACTS OF T HE PRESENT CASE, IT IS A FACT THAT THE AO FOUND FROM THE SEIZED MATERIAL THAT THE PERIOD F OR WHICH THE SEIZED MATERIAL PERTAINS TO 17-05-2002 TO 20-06-2002. THE ASSESSING OFFICER AFTER ANALYZING THE SEIZED MATERIALS FOUND FROM THE ASSESSEE RE-WORKED THE INFLATED COMMISSION FOR THE ENTIRE BLOCK PERIOD AFTER APPLYING A FORMULA AS NOT ED ABOVE. THIS IS NOT JUSTIFIED IN VIEW OF THE ABOVE LEGAL AND FACTUAL POSITION. NO DO UBT, THE ASSESSING OFFICER CAN MAKE REASONABLE ESTIMATE ON THE BASIS OF SEIZED MAT ERIAL RELATABLE TO THE EVIDENCES AND INFORMATION. ACCORDINGLY, THE ASSESSING OFFICER AT THE BEST CAN ESTIMATE THE INFLATION IN COMMISSION ON THE BASIS OF SEIZED MATE RIALS FOUND DURING THE COURSE OF SEARCH OR AS THERE IS RELATABLE MATERIAL, WHICH IS FOUND DURING THE COURSE OF SEARCH. EVEN FROM BEAR READING OF AMENDMENT MADE (W.R.E.F. 1-7-1995) IN SECTION 158BB BY THE FINANCE ACT, 2002, THE PROVISIONS IN CHAPTER VI -A IS VERY CLEAR THAT, WHILE DETERMINING THE UNDISCLOSED INCOME OF THE BLOCK PER IOD, THE PROVISIONS OF SECTION 158BB(1) HAS BEEN AMENDED TO CLARIFY THAT THE BLOCK ASSESSMENT OF UNDISCLOSED INCOME IS BASED ON THE EVIDENCE FOUND IN THE SEARCH AND MATERIAL, OR INFORMATION GATHERED IN POST SEARCH INQUIRIES MADE ON THE BASIS OF EVIDENCE FOUND IN THE SEARCH. WHEN CO-RELATED WITH THE FACTS OF THE PRESENT CASE, IT IS A FACT THAT THE AO FOUND FROM THE SEIZED MATERIAL THAT THERE IS NO MATERIAL WHICH SUGGEST ANY COMMISSION INCOME EARNED BY THE ASSESSEE IN OTHER BRANCHES. ACCORDING LY, THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED AND THAT OF THE ASSESSEE IS ALL OWED. 11. THE NEXT ISSUE IN THIS APPEAL OF THE REVENUE IN IT(SS)A NO.211/AHD/2005 IS AS REGARDS TO THE ORDER OF CIT(A) DELETING THE ADDI TION MADE ON ACCOUNT OF UNEXPLAINED CASH FOUND DURING THE COURSE OF SEARCH. FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING GROUND NO.2 :- 2. THE C.I.T.(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO DELETE THE ADDITION OF RS.33,69,215/- MADE ON ACCOUNT OF UNEX PLAINED CASH FOUND AT THE TIME OF SEARCH U/S.132 OF THE I.T. ACT, 1961 AND IN FURTHER HOLDING THAT THE ADDITION IS CLEARLY COVERED UNDER RETURNED UNDISCLO SED INCOME. 12. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT DURING THE COURSE OF SEARCH U/S.132 OF THE ACT, CARRIED OUT AT DELHI BRANCH OFF ICE OF THE ASSESSEE BY ADIT (INV.), UNIT-VI(2), NEW DELHI, CASH OF RS.35,46,200/- WAS F OUND, OUT OF WHICH CASH OF RS.35 LAKH WAS SEIZED AND VARIOUS BOOKS OF ACCOUNT AND OT HER DOCUMENTS WERE FOUND AND SEIZED AND INVENTORIED AS ANNEXURE-A/1 TO ANNEXURE- A/8 VIDE PANCHNAMA DATED 20- IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 17 06-2002. THE ASSESSEE WAS REQUESTED VIDE SHOW CAUSE NOTICE DATED 03-02-2004 TO EXPLAIN HOW THE CASH FOUND AND SEIZED IS DECLARED I N THE BOOKS OF ACCOUNT. THE ASSESSEE VIDE ITS REPLY DATED 14-06-2004 STATED THA T ASSESSEE-FIRM HAS FILED ITS RETURN INCOME FOR THE BLOCK PERIOD DISCLOSING UNDIS CLOSED INCOME AT RS.36,00,000/- COVERING THE UNACCOUNTED CASH FOUND AND SEIZED. THU S, THE ASSESSEE ADMITTED CASH FOUND AT RS.35,46,200/- AS UNDISCLOSED INCOME OF TH E ASSESSEE FOR THE BLOCK PERIOD. AS REGARDS TO BALANCE CASH AMOUNTING TO RS.1 LAKH F OUND AND SEIZED FROM THE DELHI OFFICE BUT ASSESSEE EXPLAINED THAT CASH WAS ACQUIRE D BY THE ASSESSEE-FIRM DURING ORDINARY COURSE OF BUSINESS. THE ASSESSEE ADMITTED TO HAVE EARNED UNACCOUNTED COMMISSION, WHICH IS FOUND IN THE FORM OF CASH. THE ASSESSING OFFICER CONSIDERED THE EXPLANATION OF THE ASSESSEE REJECTED THE SAME A ND THE CASH OF RS.33,69,250/- WAS TREATED AS UNEXPLAINED CASH AND BALANCE RS.1,76 ,985/- TO BE SET OFF AGAINST THE UNACCOUNTED COMMISSION INCOME. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 13. THE CIT(A) DELETED THE ADDITION OF UNEXPLAINED CASH FOUND DURING THE COURSE OF SEARCH AT RS.33,69,215/- BY GIVING FOLLOWING FIN DING IN PARA-6 OF HIS APPELLATE ORDER:- 06 THE NEXT GRIEVANCE OF THE APPELLANT IS WITH REG ARD TO ADDITION OF RS.33,69,315/- ON ACCOUNT OF UNACCOUNTED CASH. THE APPELLANT SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAK ING THE ABOVE ADDITION ON ACCOUNT OF CASH FOUND DURING THE COURSE OF SEARCH B ECAUSE THE SAME IS COVERED UNDER THE DISCLOSURE OF UNDISCLOSED INCOME OF RS.36 LAKHS IN THE BLOCK RETURN. THE ADDITION MADE BY THE ASSESSING OF FICER IS SIMPLY DOUBLE ADDITION WITHOUT APPRECIATING THE FACTS OF THIS CAS E. THE ADDITION SO MADE IS NOT IN ACCORDANCE WITH LAW AS NO FURTHER EVIDENCE H AS BEEN FOUND OR NO ADVERSE MATERIAL IS PLACED ON RECORD. THE ABOVE ADD ITION IS CLEARLY COVERED UNDER THE RETURNED UNDISCLOSED INCOME BY THE APPELL ANT. THE ASSESSING OFFICER HAS NOWHERE MADE SEPARATE CASE OR RAISED SE PARATE GROUNDS FOR MAKING ABOVE ADDITION. UNDER THESE CIRCUMSTANCES TH E AFORESAID ADDITION OF RS.33,69,315/- IS DELETED. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE THE TRIBUN AL. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSE E VIDE ITS REPLY DATED 14-06- 2004 STATED THAT ASSESSEE-FIRM HAS FILED ITS RETURN INCOME FOR THE BLOCK PERIOD DISCLOSING UNDISCLOSED INCOME AT RS.36,00,000/- COV ERING THE UNACCOUNTED CASH IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 18 FOUND AND SEIZED. THUS, THE ASSESSEE ADMITTED CASH FOUND AT RS.35,46,200/- AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PE RIOD. AS REGARDS TO BALANCE CASH AMOUNTING TO RS.1 LAKH FOUND AND SEIZED FROM THE DE LHI OFFICE BUT ASSESSEE EXPLAINED THAT CASH WAS ACQUIRED BY THE ASSESSEE-FI RM DURING ORDINARY COURSE OF BUSINESS. THE ASSESSEE ADMITTED TO HAVE EARNED UNAC COUNTED COMMISSION, WHICH IS FOUND IN THE FORM OF CASH. IT IS THE CLAIM OF THE A SSESSEE THAT THE UNDISCLOSED INCOME RETURNED IN THE BLOCK RETURN BY THE ASSESSEE WILL C OVER THE CASH FOUND AND SEIZED AT RS.35 LAKH AND THE BALANCE OF RS.1 LAKH WILL ALSO C OVER THE DISCLOSURE. THE REVENUE BEFORE US COULD NOT POINT OUT THAT IT IS NOT THE SA ME CASH, WHICH IS DISCLOSED AS UNDISCLOSED INCOME AND EVEN THE ASSESSEE HAS ENCLOS ED THE COPY OF COMPUTATION OF UNDISCLOSED INCOME AND BLOCK RETURN FILED IN FORM N O.2B AS ENCLOSED IN THE ASSESSEES PAPER BOOK. FROM THIS BLOCK RETURN, IT I S CLEAR THAT THE ASSESSEE HAS DISCLOSED THE CASH AT RS.35 LAKH AS UNDISCLOSED INC OME AND ALSO A SUM OF RS 1 LAKH. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) D ELETING THE ADDITION. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. COMING TO CROSS- APPEALS IN IT(SS)A NO.212/AHD/2005 BY REVENUE AND THAT OF ASSESSEE IN IT(SS)A NO.205/AHD/2005. 15. THE FIRST COMMON ISSUE IN THESE CROSS-APPEALS I S AS REGARDS TO THE ORDER OF CIT(A) RESTRICTING THE ADDITION AT RS.13,06,767/- A ND FURTHER DIRECTING TO ALLOW THE SET OFF OF THIS AGAINST RETURN OF INCOME OF RS.15 LAKH. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND NO.1 :- IT(SS)A NO.212/AHD/2005 1. THE CIT(A) HAS ERRED IN LAW AND DON FACTS IN RE STRICTING THE ADDITION OF RS.21,30,425/- MADE ON ACCOUNT OF UNACCOUNTED CASH FOUND AT THE TIME OF SEARCH U/S 132 OF THE IT. ACT. TO RS.13,06,767/- AN D FURTHER IN DIRECTING TO ALLOW SET OFF OF THE SAME AGAINST THE RETURNED INCO ME OF RS.15 LAC. AND ASSESSEE HAS RAISED THE FOLLOWING ADDL. GROUND :- IT(SS)A NO.205/AHD/2005 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITION IN RESPE CT OF UNEXPLAINED CASH OF RS.9,06,900/- WHEN THE ASSESSEE HAD EXPLAINED THAT OUT OF THE SAID SUM OF RS.9,06,900/-, RS.3,75,500/- AND RS.5,27,400/- WERE RECEIVED BY THE ASSESSEE IN THE COURSE OF ANGADIA BUSINESS AND BELO NGING TO THE VARIOUS PARTIES AND IT DID NOT BELONG TO THE ASSESSEE. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 19 16. THE BRIEF FACTS LEADING TO THE ABOVE COMMON ISS UE ARE THAT THE ASSESSEE-FIRM IS CARRYING ON THE BUSINESS OF ANGADIA I.E. THE SIM ILAR NATURE OF BUSINESS AS DEALT WITH IN THE ABOVE IT(SS)A NO.211/AHD/2005 AND 203/AHD/2005. A SEARCH ACTION U/S.132 OF THE ACT WAS CARRIED OUT BY THE ADIT (IND.) UNI T 2, NEW DELHI ON 20-6-2002 AT DELHI BRANCH OF ASSESSEE-FIRM. DURING THE COURSE OF SEARCH CASH OF RS.24,95,750/- WAS FOUND, OUT OF WHICH CASH OF RS.24.50 LAKH WAS S EIZED AND VARIOUS BOOKS OF ACCOUNT AND OTHER DOCUMENTS WERE FOUND AND SEIZED V IDE PANCHNAMA DATED 20-06- 2002. FURTHER, DURING THE COURSE OF REVOCATION PROC ESSING FROM ONE ALMIRAH ON 16- 08-2002, A CASH OF RS.9,27,400/- WAS FOUND & SEIZED . ALONG WITH SEARCH AT DELHI BRANCH, A CONSEQUENTIAL SURVEY U/S 133 OF THE ACT A T VARIOUS BRANCHES OF THE ASSESSEE-GROUP WAS CARRIED ON THE SAME DATE AND FOU ND THE CASH AS UNDER:- MUMBAI BRANCHES: - (CASH FOUND) (I) 102, A PANCHRATNA, 1 ST FLOOR, OPERA HOUSE, MUMBAI RS.2,14,300 (II) 46, 2 ND BHOIWADA, BHULESHWAR ROAD, MUMBAI RS. 22,320 (III) SHAK MARKET, 3 RD FOFALWADI, BHULESHWAR ROAD, MUMBAI RS. 22,500 SURAT BRANCHES:- (I) 3/139, NAVPURA, PARSI SHERI, SURA RS.23,61,700 (II) 184, KUBERNAGAR, VIBHAG-I, KATARGAM ROAD, SURA T RS.34,500 (III) 25, RATNASAGAR BUILDING, VARACHHA ROAD, SURAT RS.5,28,870 THE CASH FOUND AS ABOVE, AT MUMBAI BRANCHES AND AT SURAT BRANCHES WERE RECORDED IN THE BOOKS OF ACCOUNTS AND AVAILABLE AS CASH-IN-HAND, ACCORDINGLY THE SAME WAS TREATED AS EXPLAINED AND NOT SEIZED. ACCOR DING TO THE ASSESSING OFFICER, IN VIEW OF SEIZED DOCUMENTS AND BOOKS OF ACCOUNT CO NTAINS UNACCOUNTED TRANSACTION OF THE ASSESSEE AND ACCORDINGLY NOTICE U/S 158BC OF THE ACT WAS ISSUED ON 20-10- 2002 AND IN RESPONSE TO THE SAME, ASSESSEE FILED IT S BLOCK RETURN ON 04-03-2003 AFTER GETTING EXTENSION OF 45 DAYS, DECLARING UNDIS CLOSED INCOME AT RS.15 LAKH. SUBSEQUENTLY, NOTICE U/S.143(2) OF THE ACT WAS ISSU ED ON 28-02-2003 REQUIRING THE ASSESSEE TO EXPLAIN. THE ASSESSEE WAS REQUESTED VID E SHOW CAUSE NOTICE DATED 10- 06-2003 TO EXPLAIN THE SOURCE OF CASH FOUND AND SEI ZED AT RS.24,95,700/- AND RS.9,27,400/- ON 20-06-2002 AND 16-08-2002 RESPECTI VELY. THE ASSESSEE REPLIED VIDE LETTER DATED 08-09-2003 AS UNDER:- CASH FOUND AS PER ANN-C DTD.21.06.02 24,95,700 CASH FOUND AS PER ANN-C DTD.16.98.02 9,27,400 TOTAL 34,23,100 IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 20 CASH FOUND AS ON 21.06.2002 CASH FOUND AS PER ANNEXURE-C OF PANCHANAMA DTD.21.06.2002 24,95,700 LESS: CASH BELONGING TO FIVE PARTIES AS PER ANNEXURE- C OF PANCHANAMA DTD.21.06.02 9,14,500 CASH BALANCE OF THE FIRM 15,81,200 LESS: CASH BALANCE AS PER CASH BOOK OF THE FIRM 11, 81,333 EXCESS CASH FOUND DURING SEARCH 3,99,867 CASH FOUND AS ON 16.08.2002 CASH FOUND AS PER ANNEXURE-C OF PANCHANAMA DTD.16.08.2002 9,27,400 LESS: CASH BELONGING TO TEN PARTIES AS PER ANNEXURE - C OF PANCHANAMA DTD.16.06.02 9,27,400 17. OUT OF THE CASH AT RS.24.50 LAKH, THE ASSESSING OFFICER HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE TO THE EXTENT OF CASH A VAILABILITY AS PER THE BOOKS OF ACCOUNT AT RS.11,52,675/-, IN VIEW OF GENUINENESS O F ENTRIES FOUND IN CASH BOOK. FOR THE BALANCE CASH OF RS.13,43,025/- THE ASSESSEE CLA IMED TO HAVE BEEN BELONGING TO VARIOUS CONSTITUENTS BUT THE ASSESSING OFFICER TREA TED IT AS UNEXPLAINED. OUT OF THE CASH OF RS.13,43,025/-, THE BALANCE CASH OF RS.9,14 ,500/- THE ASSESSEE CLAIMED TO BE BELONGING TO THE FOLLOWING FIVE PARTIES:- (I) SHRI SANJAY KOHLI RS. 4,50,000/- (II) SHRI PAWAN KUMAR SHARMA RS. 80,000/- (III) SHRI CHANDER PRAKASH RS. 2,49,500/- (IV) SHRI SHAMMI SHARMA RS. 85,000/- (V) SHRI ROHIT KHANDELWAL RS. 50,000/- TOTAL RS. 9,14,500/- FURTHER, THE OTHER CASH SEIZED ON 16-08-2002 AMOUNT ING TO RS.9,27,400/- WAS STATED TO BE BELONGING TO THE FOLLOWING CONSTITUENTS:- 1. OM PRAKASH RS.1,00,000/- 2 SATISCHANDRA GUPTA RS. 17,000/- 3. SHYAM UPPAL RS.1,00,00/- 4. CHIRAG SHARMA RS.2,00,000/- 5. CHANDRA KUMAR RS.2,00,000/- 6. HARISH RS. 70,000/- 7. NAVIN JUNEJA RS. 45,000/- 8. TARUN RS. 35,000/- 9. GIRISH RS.1,40,000/- 10. BHAGVANDAS RS. 20,000/- TOTAL RS.9,27,400 IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 21 18. THE ASSESSEE BEFORE THE ASSESSING OFFICER CLAIM ED THAT THIS CASH WAS NEITHER FOUND FROM THE POSSESSION OF THE ASSESSEE NOR ITS E MPLOYEES BUT IT WAS FOUND & SEIZED FROM THE PARTIES POSSESSION DIRECTLY AT THE TIME SEARCH, WHEN THESE PARTIES ENTERED IN THE BUSINESS PREMISES OF THE ASSESSEE AN D EVEN THESE PARTIES HAVE ADMITTED THIS FACT DURING THE COURSE OF RESPONDING TO NOTICES U/S.133(6) OF THE ACT. THE ASSESSING OFFICER HAS GIVEN A FINDING TO THAT E FFECT IN RESPECT OF ABOVE PARTIES AS UNDER:- [I] SANJAY KOHLI SHRI SANJAY KOHLI IS ALLEGED TO BE OWNER OF CASH OF RS.4.50 LAKH BY THE ASSESSEE. DURING THE COURSE OF SEARCH P ROCEEDINGS, WHEN SHRI KOHLI WAS ASKED TO EXPLAIN THE SOURCE OF SAID CASH ON THE SPOT, HE CLAIMED THAT HE WAS WORKING WITH SHRI BINOD BANKA, C.A. AND THE CASH IN QUESTION BELONGED TO SHRI PAMOD KUMAR BANKA. HOWEVER, IN RES PONSE TO NOTICE U/S.133(6) OF THE ACT IT HAS BEEN NOW CLAIMED THAT CASH OF RS.4.50 LAKH BELONGS TO SHRI SAJJAN KUMAR KHEMKA WHO IS DOING AG RICULTURAL WORK IN BHAGALPUR. IT HAS BEEN FURTHER CLAIMED THAT SHRI SA JJAN KUMAR KHEMKA IS FATHER-IN-LAW OF SHRI BINOD BANKA AND HE HAD COME T O DELHI FOR BUYING CLOTH TO SET UP A SHOPS. THERE SEEMS TO BE CONTRADICTION IN THE TWO VERSION OF SHRI KOHLI, BECAUSE ON THE SPOT, AT THE TIME OF SEARCH, HE HAD CLAIMED THAT THE CASH IN QUESTION BELONGED TO SHRI PRAMOD KUMAR BANK A. HOWEVER, SUBSEQUENTLY, IT HAS BEEN HELD TO BE BELONGING TO H IS FATHER-IN-LAW, I.E. SHRI SAJJAN KUMAR KHEMKA. CONSIDERING THE CHANGE IN THE STAND, I HOLD THAT SHRI KOHLI HAS NOT FURNISHED NECESSARY EVIDENCE TO PROVE OWNERSHIP OF CASH OF RS.43.50 LAKH. IN CASE OF MAHENDRA CHIMANLAL SHAH V. ACIT (49 TTJ 677), THE MONEY DEPOSITED IN BANKS WAS SURRENDERED DURING THE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S.132(4) OF THE ACT. WHILE FILING THE RETURN, THE DEPOSITS WERE NOT SHOWN AS INCOME ON THE BELIEF THA T THEY WERE NOT OF LOANS BUT NO EVIDENCE FOR LOANS WAS PRODUCED. SUBSEQUENTL Y, THE ASSESSEE CAME OUT WITH STORY THAT THE BANK DEPOSITS WERE MADE OUT OF WITHDRAWALS FROM THE SAME BANK ACCOUNTS A FEW MONTHS AGO. IN VIEW OF SHI FTING STAND TAKEN BY THE ASSESSEE; THE HONBLE AHMEDABAD TRIBUNAL HELD THAT DEPARTMENT WAS JUSTIFIED IN RELYING UPON THE STATEMENT RECORDED U/ S.132(4) IS PREFERENCE TO THE SUBSEQUENT STATEMENTS. THE CASH OF RS.4.50 LAKH IS TREATED AS UNEXPLAINED CASH IN THE HANDS OF THE ASSESSEE. [II] SHAMMI SHARMA IN RESPONSE TO NOTICE U/S.133( 6) OF THE ACT, SHRI SHARMA, VIDE HIS REPLY HAS STATED THAT HE HAD WITHD RAWN CASH OF RS.25,000/- FROM THE BANK ACCOUNT AND CASH OF RS.60,000/- WAS A VAILABLE OUT OF CASH BALANCE. WHEN SHRI SHARMA WAS ASKED ON THE SPOT DUR ING THE COURSE OF SEARCH TO EXPLAIN THE SOURCES OF CASH OF RS.85,000/ -, HE INFORMED THAT MONEY IN QUESTION HAD BEEN RECEIVED FROM ONE SHRI BCHAN S INGH PROP OF M/S. SHRIMAN TIMES AND HIS CELL PHONE NO WAS ALSO FURNIS HED. HOWEVER, SHRI BECHAN SINGH INFORMED ON HIS CELL PHONE NUMBER TO T HE AUTHORISED OFFICER THAT HE HAD NOT GIVEN ANY MONEY TO SHRI SHAMMI SHARMA. N OW IN RESPONSE TO NOTICE U/S.133(6) OF THE ACT, IT HAS BEEN ALLEGED T HAT THE CASH OF RS.85,000/- IS AS PER THE CASH BALANCE AVAILABLE AND CASH SALES OF RS.13,500/- WAS MADE ON THE DATE OF SEARCH ITSELF. HE HAS ALSO FILED X-E ROX COPY OF HIS CASH BOOK, WHEREIN NO CASH SALES HAVE BEEN SEEN DURING THE PER IOD I.E. 1.4.2002 TO IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 22 20.6.2002. HOWEVER, CASH SALES OF RS.13,500/- HAS B EEN SHOWN ON THE DATE OF SEARCH ITSELF. THIS SHOWS THAT X-EROX COP OF CAS H BOOK FURNISHED BY SHRI SHAMMI SHARMA IS NOT A GENUINE PIECE OF EVIDENCE. I N VIEW OF THIS FACT, THE EXPLANATION OFFERED BY MR SHAMMI SHARMA IS NOT ACCE PTABLE AS THERE IS SHIFT IN HIS STAND AT THE TIME OF SEARCH AND LATER EXPLAN ATION. [III] OM PRAKASH IN RESPONSE TO NOTICE U/S.133(6) OF THE ACT, HE VIDE HIS REPLY DATED 17.1.05 HAS STATED THAT THE CASH OF RS. 1 LAKH SEIZED BELONGS TO AMAR SAI TRADES AND THE SAID CASH WAS TO BE GIVEN T O REYNOLD APPLIANCES THROUGH THE ASSESSEE FIRM. ON GONG THROUGH THE REPL Y, IT IS SEEN THAT SHRI OM PRAKASH HAS NOT FURNISHED ANY EXPLANATION READING S OURCES OF CASH, COPY OF BANK ACCOUNT, EXTRACT OF CASH BOOK OR ANY OTHER REL EVANT DOCUMENTS TO PROVE THE OWNERSHIP OF SAID CASH OF RS.1 LAKH. FURTHER FR OM THE DOCUMENTS FURNISHED BY SHRI OM PRAKASH, IT IS SEEN THAT TOTAL SALES OF M/S. AMAR SAI TRADERS, DURING THE FINANCIAL YEAR 2002-03 WAS AT R S.7 LAKH. THEREFORE, IT IS IMPROBABLE THAT THERE WOULD HAVE BEEN CASH BALANCE OF RS.1 LAKH ON THE DATE OF SEARCH. UNDER THE CIRCUMSTANCES, THE EXPLANATION OFFERED BY SAID PARTY VIDE LETTER DATED 17.1.2005 IS NOT ACCEPTABLE. [IV] SHYAM UPPAL IN RESPONSE TO NOTICES U/S.133(6 ) OF THE ACT, HE VIDE HIS REPLY DATED 19.1.2005 HAS STATED THAT HE HAS TAKEN INTEREST FREE LOANS FROM HIS WIFE AND OTHER RELATIVES. THE ASSESSEE HAS FILED AF FIDAVITS ALONG WITH HIS ABOVE REPLY. ON GOING THROUGH THE DETAILS FILED, IT IS SEEN THAT THE LOAN TAKEN FROM VARIOUS PERSONS ARE IN CASH. HE HAS NO FURNISH ED HIS PAN, COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FILED BY HIM. I F ANY, CIRCLE/WARD WHERE HE IS BEING ASSESSED TO TAX, ETC. THE EXPLANATION O FFERED BY HIM IS NOT ACCEPTABLE IN ABSENCE OF CORROBORATING EVIDENCES. [V] TARUN IN RESPONSE TO NOTICE U/S.133(6) OF THE ACT, HE VIDE HIS REPLY DATED 14.11.05 HAS STATED THAT HE HAS NOT DONE ANY TRANSA CTION WITH M/S. MADHAVLAL MAGANLAL & CO. AND DENIED OWNERSHIP OF CASH OF RS.3 5,000/-. THUS, IT IS CRYSTAL CLEAR THAT THE ASSESSEES CLAIM THAT AMOUNT OF RS.35,000/- BELONGS TO SHRI TARUN IS FALSE AND INCORRECT. [VI] GIRISH IN RESPONSE TO SUMMONS U/S. 131 OF TH E ACT, HE VIDE HIS REPLY DATED NIL HAS STATED THAT HE AS A WORKING PARTNER O F M/S. A.P. WOOLLENS HAD WITHDRAWN FROM ORIENTAL BANK OF COMMERCE, G.T. ROAD , PANIPAT CASH OF RS.90,000/- AND RS.50,000/- ON 3.8.02 AND 7.8.02. R ESPECTIVELY. IN SUPPORT OF HIS CLAIM, HE HAS FILED THE EXTRACT OF BANK STATEME NT, COPY OF ACKNOWLEDGMENT ALONG WITH PAN ETC. THE CLAIM OF SHRI GIRISH AS REG ARDS OWNERSHIP OF CASH SEEMS TO BE GENUINE AND HENCE SAME IS ACCEPTED. [VII] SHRI CHIRAG SHARMA IN RESPONSE TO NOTICE U/ S.133(6) OF THE ACT, SHRI PATARAM SHARMA, FATHER OF SHRI CHIRAG SHARMA ATTEND ED ON 19.1.2005 AND FILED THE COPY OF AFFIDAVIT DATED 24.09.2003. ON 19 .1.2005, STATEMENT U/S.131 OF THE ACT WAS RECORDED OF SHRI PATARAM SHARMA. IN HIS STATEMENT, HE STATED THAT HIS APPROXIMATE AGRICULTURAL INCOME IS RS.2 TO RS.3 LACAS. SHRI PATARAM SHARMA, INTENDED TO PURCHASE SECOND HAND TRACTOR, A S HE HAD COME TO KNOW THAT THERE ARE MANY TRACTORS FOR SALE AT SURAT. HE CAME TO SURAT AND DECIDED TO PURCHASE ONE TRACTOR FROM VILLAGE OLPAD, SURAT F OR AN AMOUNT OF RS.2 LAC. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 23 THEREFORE, HE INSTRUCTED HIS SON SHRI CHIRAG SHARMA TO SEND AN AMOUNT OF RS 2 LAC FROM HIS PAST SAVINGS TO SURAT THROUGH THE AS SESSEE-FIRM. SHRI CHIRAG SHARMA, WENT TO THE OFFICE OF THE ASSESSEE FIRM TO DELIVER THE ASH OF RS.2 LAC, AT THAT TIME THE SEARCH ACTION WAS CARRIED OUT BY T HE DEPARTMENT AND A SUM OF RS.2 LACS WAS SEIZED FROM SHRI CHIRAG SHARMA. THE P ARTY IS AGRICULTURIST AND NOT ASSESSED TO TAX. NO BOOKS OF ACCOUNTS ARE MAINT AINED. NO EVIDENCES AS REGARDS SAVINGS HAVE BEEN FURNISHED. ACCORDINGLY, C LAIM OF SHRI CHIRAG SHARMA AS REGARDS OWNERSHIP OF CASH OF RS.2 LAC IS NOT ACCEPTED. [VIII] SHRI PAWANKUMAR SHARMA IN RESPONSE TO NOTI CE U/S.133(6) OF THE ACT, SHRI PAWANKUMAR SHARMA HAS CLAIMED THAT THE CASH OF RS.80,000/- BELONGS TO HIM. IT HAS BEEN FURTHER CLAIMED THAT HE HAD REC EIVED THE SAID CASH FROM HIS FRIENDS FOR TRANSFER TO A FRIEND IN KANAPUR WHO WAS SICK. HOWEVER, HE HAS NOT FURNISHED ANY EVIDENCE IN THIS REGARD. HE HAS NO FU RNISHED HIS PAN OR THE COPY OF RETURN OF INCOME FOR A.Y 2002-03. THE NAME AND ADDRESSES OF THE FRIENDS FROM WHOM CASH WAS RECEIVED HAVE NOT BEEN D ISCLOSED TO THE DEPARTMENT. SIMILARLY, THE IDENTITY OF FRIEND IN KA NPUR TO WHOM THE SAID CASH WAS TO BE TRANSFERRED HAS NOT BEEN DISCLOSED TO THE DEPARTMENT. THEREFORE, IT IS CRYSTAL CLEAR THAT SHRI PAWANKUMAR SHARMA HAS FA ILED TO EXPLAIN THE SOURCES OF CASH OF RS.80,000/- ALLEGEDLY BELONGING TO HIM. [IX] SHRI CHANDER PRAKASH SHRI CHANDER PRAKASH HA S CLAIMED IN RESPONSE TO NOTICE U/S.133(6) OF THE ACT THAT HE HAD RECEIVED A SUM OF RS.2 LAC FROM LAXMI NARAYAN PEN STORE, SADAR BAZAR AND CASH OF RS .50,000/- WAS RECEIVED FROM M/S. SANJAY OPTICAL, FATEPURI, DELHI. HOWEVER, HE HAS NOT FURNISHED ANY CONFORMATION FROM THESE TWO PARTIES IN SUPPORT OF H IS CLAIM. FURTHER, IT IS NOT KNOWN WHETHER THESE TWO CONCERNS HAD CASH BALANCE O F RS.2.50 LAC ON THE DATE OF SEARCH OR NOT. CONSIDERING THE ABOVE FACTS, THE SUBMISSION FURNISHED BY SHRI CHANDER PRAKASH, AS REGARD THE OWNERSHIP OF CASH OF RS.2,49,500/- IS NOT FOUND ACCEPTABLE. [X] SHRI ROHIT KHANDELWAL IN RESPONSE TO NOTICE U /S.133(6) OF THE ACT HE HAS INFORMED THAT HE HAD COME TO DELHI FOR BUYING SOME ELECTRICAL GOODS FOR M/S KRISHNA UDHYOG. HOWEVER, HE HAS NOT EXPLAINED AS TO HOW HE HAD RECEIVED CASH OF RS.50,000/- FROM M/S KRISHNA UDHYOG. HE HAS NOT FIELD ANY CONFIRMATION FROM M/S KRISHNA UDHYOG. CONSIDERING T HE ABOVE FACT, I HOLD THAT HE HAS FAILED TO EXPLAIN THE SOURCES OF CASH OF RS. 50,000/-. [XI] SHRI RAJESH GUPTA SHRI RAJESH GUPTA HAS CLAI MED IN RESPONSE TO NOTICE U/S.133(6) OF THE ACT THAT AMOUNT OF RS.95,000/- BE LONGS TO PROPRIETARY CONCERN (M/S. YEZDI ELECTRICALS) OF HIS WIFE SMT. R ENU GUPTA. THE AMOUNT IN QUESTION IS CLAIMED TO HAVE BEEN SENT FOR MAKING PU RCHASES FROM M/S. AMITA ENTERPRISES, RAJKOT. THE COPY OF CASH BOOK SUBMITTE D SHOWS HARDLY ANY SALES INN THE MONTH OF APRIL AND MAY 2003. HOWEVER, IN TH E MONTH OF JUNE 2002, THERE ARE HUGE CASH SALES IN ROUND FIGURES TO INFLA TE CASH BALANCE. IN ALL PROBABILITY, THE EVIDENCE FURNISHED BY SHRI RAJESH GUPTA IS COOKED UP TO LEND CREDITABILITY TO HIS EXPLANATION AND SAME IS THEREF ORE REJECTED. 19. THE ASSESSEE BEFORE US AS WELL AS BEFORE LOWER AUTHORITIES EXPLAINED THE MANNER AND CIRCUMSTANCES IN WHICH THE ABOVE TWO CAS H OF RS.18,421,900/- WAS IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 24 FOUND AND SEIZED FROM VARIOUS CONSTITUENTS AS ABOVE . THE ASSESSEE EXPLAINED THAT AFTER COMMENCEMENT OF SEARCH AT ASSESSEES PREMISES , THE DEPARTMENT CAUGHT HOLD OF ABOVE SAID PARTIES EITHER AT THE TIME OF THEIR E NTERING IN THE ASSESSEES OFFICE OR ON FINDING THEM WITH CASH OUTSIDE ASSESSEES OFFICE, T HEY WERE TAKEN INSIDE THE OFFICE OF ASSESSEE FIRM. THEY PREPARED SEPARATE INDEPENDENT P UNCHNAMAS/INVENTORIES FOR THE CASH FOUND FROM THEM AND SEIZED THE CASH FROM EACH OF THEM AND ALSO RECORDED THEIR STATEMENTS. IT WAS EXPLAINED BY THE ASSESSEE THAT THE PARTIES FROM WHOM CASH WAS FOUND WERE NOT PRESENT IN THE OFFICE PREMISES O F THE ASSESSEE-FIRM AT THE TIME OF COMMENCEMENT OF SEARCH AND ACCORDINGLY CASH OF RS.9 ,14,500/- ON 20-06-2002 AND AMOUNT OF RS.9,27,400/- ON 16-08-2002 WERE NOT FOUN D IN THE OFFICE PREMISE OF THE ASSESSEE-FIRM AT THE TIME OF COMMENCEMENT OF THE SE ARCH OTHERWISE SEPARATE INVENTORIES WOULD NOT HAVE BEEN PREPARED. THE ASSES SEE STATED THAT THESE PERSONS, FROM WHOSE POSSESSION CASH WAS FOUND, EITHER CAME I NTO OFFICE OR WERE TAKEN TO THE OFFICE BY THE DEPARTMENT FROM OUTSIDE THE OFFICE ON FINDING THEM WITH CASH AFTER COMMENCEMENT OF THE SEARCH. AS CASH WAS FOUND FROM EACH OF THE PARTIES AT DIFFERENT TIMES AFTER THE COMMENCEMENT OF SEARCH, S EPARATE INVENTORIES WERE PREPARED AS AND WHEN THEY CAME OR WERE TAKEN INTO T HE OFFICE PREMISE OF THE ASSESSEE. AFTER MAKING THE INVENTORIES, THEIR STATE MENTS WERE ALSO RECORDED. THIS IS CLEAR FROM INVENTORIES PREPARED WHERE IN IT IS SPEC IFICALLY WRITTEN THAT THE CASH BELONG TO SO AND SO PERSON AND FOUND FROM THOSE PARTIES WA S NEITHER HANDED OVER BY THOSE PERSONS TO THE ASSESSEE-FIRM NOR WAS ACCEPTED / REC EIVED BY THE ASSESSEE-FIRM BEFORE THE SAME WAS FOUND AND SEIZED BY THE DEPARTM ENT. AS IT WAS NOT RECEIVED BY HE ASSESSEE-FIRM FROM THOSE PARTIES, NO ACKNOWLEDGE MENT RECEIPTS WERE PREPARED AND ISSUED/GIVEN TO THEM. THE DEPARTMENT DURING THE COURSE OF SEARCH AFTER SEIZING THE CASH FROM THE POSSESSION OF RESPECTIVE PARTIES, RECORDED THEIR STATEMENTS AND WERE ALLOWED TO GO. EVEN THE DEPARTMENT GOT THEIR I DENTIFICATIONS DONE BY TAKING ADDRESSES AND TELEPHONE NOS. ACCORDING TO THE ASSES SEE, WHEN DEPARTMENT CAUGHT HOLD OF THE PERSONS, TO WHOM CASH BELONGED, SEIZED CASH FROM THEM, RECORDED THEIR STATEMENTS ON OATH AND THEY WERE NEVER INTRODUCED T O THE ASSESSEE-FIRM, IT IS NOT POSSIBLE FOR ASSESSEE TO FILE EXPLANATION REGARDING :- I) WHO ARE THEY, WHAT THEY ARE DOING? II) WHETHER THE ADDRESSES GIVEN BY THEM ARE CORRECT OR NOT? III) WHAT IS SOURCE OF CASH FOUND/SEIZED FROM THEM IN THEIR HANDS? IV) WHY THEY ARE NOT COMING FORWARD TO CLAIM THE AM OUNT? IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 25 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SOME O F THE CONSTITUENTS PRESENTED THEMSELVES/FILED EVIDENCES IN RESPONSE TO LETTER IS SUED U/S.133(6) OF THE ACT ACCEPTING THE OWNERSHIP EXPLAINING THE POSSESSION A ND SOURCE OF THE CASH IN THEIR HANDS AND THIS FACT CAN BE VERIFIED FROM THE ASSESS MENT RECORDS. 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THIS IS A F ACT THAT THESE TWO AMOUNTS OF RS.9,14,500/- AND RS.9,27,400/- BELONGED TO THE CON STITUENTS AS EXPLAINED BY ASSESSEE. THIS FACT HAS NOT BEEN CONTROVERTED BY RE VENUE BEFORE US. THE EXPLANATION SUBMITTED BY ASSESSEE BEFORE US THAT AF TER COMMENCEMENT OF SEARCH AT ASSESSEES PREMISES, THE DEPARTMENT CAUGHT HOLD OF ABOVE SAID PARTIES EITHER AT THE TIME OF THEIR ENTERING IN THE ASSESSEES OFFICE OR ON FINDING THEM WITH CASH OUTSIDE ASSESSEES OFFICE, THEY WERE TAKEN INSIDE THE OFFIC E OF ASSESSEE FIRM. EVEN IT IS A FACT THAT PUNCHNAMAS/INVENTORIES FOR THE CASH FOUND FROM THEM AND SEIZED THE CASH FROM EACH OF THEM WERE PREPARED INDEPENDENTLY BY THE SEA RCH PARTY AND ALSO RECORDED THEIR STATEMENTS. IT IS ALSO A FACT THAT THE PARTIE S FROM WHOM CASH WAS FOUND WERE NOT PRESENT IN THE OFFICE PREMISES OF THE ASSESSEE-FIRM AT THE TIME OF COMMENCEMENT OF SEARCH AND ACCORDINGLY CASH OF RS.9,14,500/- ON 20- 06-2002 AND AMOUNT OF RS.9,27,400/- ON 16-08-2002 WERE NOT FOUND IN THE O FFICE PREMISE OF THE ASSESSEE- FIRM AT THE TIME OF COMMENCEMENT OF THE SEARCH OTHE RWISE SEPARATE INVENTORIES WOULD NOT HAVE BEEN PREPARED. WE FIND FROM THE EXPL ANATION, WHICH IS NOT CONTROVERTED BY THE REVENUE EVEN BEFORE US, THAT FR OM WHOSE POSSESSION CASH WAS FOUND NEITHER CAME INTO OFFICE NOR WERE TAKEN TO TH E OFFICE BY THE ASSESSEE FROM OUTSIDE BUT THE DEPARTMENT CAUGHT HOLD OF THESE PER SONS AND TAKEN IN THE OFFICE ON FINDING THEM WITH CASH AFTER COMMENCEMENT OF THE SE ARCH. AS CASH WAS FOUND FROM EACH OF THE PARTIES AT DIFFERENT TIMES AFTER THE CO MMENCEMENT OF SEARCH, SEPARATE INVENTORIES WERE PREPARED AS AND WHEN THEY CAME OR WERE TAKEN INTO THE OFFICE PREMISE OF THE ASSESSEE. AFTER MAKING THE INVENTORI ES, THEIR STATEMENTS WERE ALSO RECORDED AND THIS IS CLEAR FROM INVENTORIES PREPARE D WHEREIN IT IS SPECIFICALLY WRITTEN THAT THE CASH BELONG TO SO AND SO PERSON AND FOUND FROM THOSE PARTIES AND SEIZED BY THE DEPARTMENT. AS IT WAS NOT RECEIVED BY ASSESSEE- FIRM FROM THOSE PARTIES, NO ACKNOWLEDGEMENT RECEIPTS WERE PREPARED AND ISSUED/G IVEN TO THEM. THE DEPARTMENT DURING THE COURSE OF SEARCH AFTER SEIZIN G THE CASH FROM THE POSSESSION OF RESPECTIVE PARTIES, RECORDED THEIR STATEMENTS AN D THEY WERE ALLOWED TO GO. EVEN IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 26 THE DEPARTMENT GOT THEIR IDENTIFICATIONS DONE BY TA KING ADDRESSES AND TELEPHONE NOS. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THA T THIS CASH BELONGS TO THE CONSTITUENTS AND THE DEPARTMENT, IF AT ALL, HAS TO TAKE ANY ACTION, THE SAME SHOULD HAVE BEEN TAKEN IN THE HANDS OF CONSTITUENTS AND NO T IN THE HANDS OF ASSESSEE. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) DELETIN G THE ADDITION BUT AS REGARDS TO ADDITIONAL GROUND RAISED BY ASSESSEE, WE ARE OF THE VIEW THAT THE ADDITION CANNOT BE SUSTAINED IN RESPECT TO CONSTITUENTS CASH BUT THE I NCOME RETURNED BY THE ASSESSEE OF UNDISCLOSED INCOME IN THE BLOCK RETURN WILL NOT GO BELOW RS.15 LAKH. ACCORDINGLY, THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED AND THAT OF ASSESSEES APPEAL IS ALLOWED. 21. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IN IT(SS)A NO.212/AHD/2005 IS AS REGARDS TO THE ORDER OF CIT(A) DELETING THE ADDITIO N OF RS.19,83,315/- MADE BY ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED CASH RE CEIVED AS PER ANNEXURE-A/2 OF THE SEIZED BOOKS OF ACCOUNT. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND NO.2 :- 2. THE C.I.T(A) HAS ERRED IN LAW AND ON FACTS IN D IRECTING TO DELETE THE ADDITION OF RS.19,83,315/- MADE ON ACCOUNT OF UNAC COUNTED CASH RECEIPTS AS PER ANNEXURE A-2 OF SEIZED BOOKS OF ACCOUNTS. 22. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT DURING THE COURSE OF SEARCH ANNEXURE-A/2 TO PANCHNAMA DATED 20-06-2002 WERE FOU ND AND SEIZED, WHICH CONTAINS INCRIMINATING DOCUMENTS AND BOOKS OF ACCOU NTS. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN PAGE NO.18-20 OF ANNEXURE-A/2 AND ACCORDING TO HIM IT WORKS OUT UNACCOUNTED CASH RECEIPTS OF RS.19 ,83,315/- AS UNDISCLOSED INCOME OF THE ASSESSEE. THE RELEVANT PAGE-18-20 READ AS UN DER:- JAI MATADI 11/6 PA Y 21/6 84.81} 83.28} X 6.50 =30,723=00 307=00 ------- ------------ 168.09 31,030=00 -------- ------------- 85.86 102.72 X 10600 =5,62,102=00 188.58 --------- 5,93,132=00 TOTAL LESS PAYMENT 2,93,132=00 PAY ON 20/6 IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 27 ---------------- 3,00,000=00 BALANCE PAGE NO.19: 83917/-= 420263 ON 3/6 12 ADV 73738/- 418908 5/6 DUE 170000 2487 4095 2892 174095 5379 173738 1284 357 4095 ----- ----- PAGE NO.20: SHUBHAM 24 / 484 N 2,93,000 THE ASSESSEE EXPLAINED THAT THESE PAPERS DO NOT BEL ONG TO IT AND THESE ARE DUMP DOCUMENTS AS IT DOES NOT CONTAIN ANY NAME, DATE OR ANY SPECIFICATION WHETHER THESE RELATE TO ADVANCES, GIVING OF LOANS OR ANY OTHER DO CUMENT. ACCORDING TO ASSESSEE, AS IT IS IN THE BUSINESS OF ANGARIA SERVICES, IT MI GHT HAVE BEEN PAPER BELONGING TO SOME ONE ELSE. ACCORDING TO IT, THE NOTINGS DO NOT SHOW THE NAME OF THE PERSON WHO HAS TO RECEIVE, WHO HAS TO PAY THE AMOUNT AND THE P AGES NEITHER BEAR NAME NOR SIGNATURE AND THEREFORE THIRD PRESUMPTION THAT SIGN ATURE AND EVERY OTHER PART OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE HANDWRITING OF ANY PARTICULAR PERSON ON WHICH MAY REASONABLY ASSUMED T O HAVE BEEN SIGNED BY OR TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON ARE IN THAT PERSONS HANDWRITING DO NOT APPLY. THE ASSESSING OFFICER HAS NOT BELIEVED THE E XPLANATION OF THE ASSESSEE AND REJECTED THE CLAIM OF THE ASSESSEE IN VIEW OF THE F ACT THAT EVEN DURING SPECIAL AUDIT CARRIED OUT U/S142(2A) OF THE ACT IN THE INSTANT CA SE, NO RECORDS WERE PRODUCED FOR VERIFICATION OF THESE SEIZED DOCUMENTS. ACCORDINGLY , THE AO ASSESSED THIS AMOUNT OF RS.19,83,315/- AS UNDISCLOSED INCOME OF THE ASSESSE E FOR THE BLOCK PERIOD. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND CIT(A) DELETED THE ADDITION BY GIVING FOLLOWING FINDINGS AT PAGE-16 OF HIS APPELLATE ORDER:- I HAVE CAREFULLY PERUSED THE CONTENTIONS RAISED BY THE APPELLANT AND HAVE ALSO GONE THROUGH THE JUDICIAL PRONOUNCEMENTS RELIE D UPON. THE RATIO OF JUDGMENTS GIVEN AGAINST EACH CASE IS APPARENTLY APP LICABLE TO THE FACTS OF THIS CASE. THE SEIZED PAPER DOES NOT BEAR THE NAME OF TH E APPELLANT NOR IT IS IN THE HANDWRITING OF ANY OF THE PARTNERS. THE SEIZED PAPE R DOES NOT BEAR ANY DATE OR YEAR OR REFERENCE TO THE APPELLANT ON THE BASIS OF WHICH INFERENCE CAN BE IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 28 DRAWN AS TO MAKE ADDITION IN THE HANDS OF THE APPEL LANT. THE PAPER IS MERELY A DUMB PAPER WHERE JOLTINGS ARE MADE BY SOMEONE AND AS EXPLAINED BY THE APPELLANT SOMEONE MIGHT HAVE LEFT SUCH PAPER IN THE SHOP PREMISES OUT OF FEAR OR CONFUSION. THE ASSESSING OFFICER HAS NOT AP PRECIATED COMPLETE FACTS OF THIS CASE. THE ADDITION HAS BEEN MADE IN A MECHA NICAL MANNER I.E. TOTALING UP THE FIGURES WHATEVER ARE AVAILABLE ON THE SEIZED PAPER. THUS LOOKING TO THE FACTS OF THIS CASE, EXPLANATION GIVEN BY THE APPELL ANT AND JUDICIAL PRONOUNCEMENTS RELIED UPON. I AM OF THE VIEW THAT T HE ADDITION OF RS.19,83,315/- IS UNCALLED FOR HENCE THE SAME IS DE LETED. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 23. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THESE PAGES DO NOT RELATE TO ADVANCES OR GIVING OF LOANS AND DO NOT RELATES TO ASSESSEES OR ITS BUSINESS I.E. ANGADIA I.E. COURIERS. DURING THE COURSE OF SEARCH, NOT A SINGLE EVIDENCE WAS FOUND THAT THE ASSESSEE-FIRM IS CARRYING ON ANY OTHER BUSINESS OTH ER THAN ANGADIA I.E. COURIER BUSINESS. WE FIND THAT THE EMPLOYEES OF THE ASSESSE E-FIRM LOOK AFTER DELHI BRANCH AND NO PARTNER IS LOOKING AFTER DAY-TO-DAY BUSINESS OF THE DELHI BRANCH AND NONE OF ITS EMPLOYEE CAN EITHER READ OR WRITE ENGLISH AND T HEREFORE QUESTION OF PAGES BELONGING TO THE ASSESSEE-FIRM IS A REMOTE POSSIBIL ITY. THE NOTING DO NOT SHOW THE NAME OF THE PERSON WHO HAS TO RECEIVE WHO HAS TO PA Y THE AMOUNT AND MOREOVER THESE PAGES NEITHER BEAR NAME NOR SIGNATURE. THEREF ORE THIRD PRESUMPTION IS THAT EVERY PART OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUM ENTS WHICH PURPORT TO BE HANDWRITING OF ANY PARTICULAR PERSON ON WHICH MAY R EASONABLY ASSUMED TO HAVE BEEN SIGNED BY OR TO BE IN THE HANDWRITING OF ANY P ARTICULAR PERSON ARE IN THAT PERSONS HANDWRITING DO NOT APPLY. THIS ISSUE HAS B EEN DEALT WITH IN THE CASE OF SATNAM SINGH CHHABRA V. DCIT (2002) 74 TTJ 976 (LUC) BY ITAT LUCKNOW BENCH, WHEREIN IT IS HELD THAT, LOOSE PAPER FOUND DURING THE SEARCH OF THE ASSESSE ES PREMISES ON THE LETTER PAD OF A THIRD PARTY WITH SO ME NOTING IN UNIDENTIFIED HANDWRITING HAD NO EVIDENTIARY VALUE AND NO ADDITIO N COULD BE MADE ON THE WALE BASIS OF SAID PAPER AS THE CONTENTS OF THE DOCUMENT S COULD NOT BE LINKED OR CORRELATED WITH THE ASSESSEE . ACCORDINGLY, WE ARE OF THE VIEW THAT THESE PAGES 18- 20 OF ANNEXURE-A/2 ARE NOT RELATED TO ASSESSEE AND NO ASSESSMENT ON THE BASIS OF THESE DOCUMENTS CAN BE MADE IN THE HANDS OF THE ASS ESSEE OF UNDISCLOSED INCOME. THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 29 24. THE NEXT COMMON ISSUE IN THESE CROSS-APPEALS IS AS REGARDS TO THE ORDER OF CIT(A) RESTRICTING THE ADDITION AT RS.2.52 LAKH AS AGAINST THE ADDITION MADE BY ASSESSING OFFICER AT RS.6,79,834/- ON ACCOUNT OF U NEXPLAINED INVESTMENT OF SILVER ORNAMENTS. FOR THIS, REVENUE HAS RAISED THE FOLLOWI NG GROUND NO.3 :- IT(SS)A NO.212/AHD/2005 (REVENUES APPEAL) 3. THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN S RESTRICTING THE ADDITION OF RS.6,79,834/- MADE ON ACCOUNT OF UNEXPLAINED INVES TMENT IN SILVER ORNAMENTS TO RS.2,52,000/-. AND ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.2 & 3 :- IT(SS)A NO.205/AHD/2005 (ASSESSEES APPEAL) 2(A) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD ERRED IN CONFIRM ING THE ADDITION OF RS.2,52,000/= OF SILVER ORNAMENTS BELONGING TO VARI OUS CONSTITUENTS. 2(B) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD SHOULD HAVE DELE TED THE ADDITION OF RS.2,52,000/= AS THE SILVER ORNAMENTS WERE RECEIVED AND IN POSSESSION OF THE APPELLANT FIRM IN ORDINARY COURSE OF THE ANGADIA BU SINESS AS COURIER. 3. WITHOUT PREJUDICE TO THE ABOVE, IN THE FACTS & C IRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II , AHMEDABAD ERRED IN DIRECTING THE ASSESSING OFFICER TO ADD RS.2,52,000/ = IN RESPECT OF JEWELLERY TO RETURNED UNDISCLOSED INCOME OF THE APPELLANT FIRM I N VIEW OF THE FACT THAT THE SAID AMOUNT IS ALREADY COVERED BY THE UNDISCLOSED I NCOME OF RS.15 LACS DECLARED BY THE APPELLANT FIRM IN THE RETURN FOR TH E BLOCK PERIOD. 25. THE BRIEF FACTS LEADING TO THE ABOVE COMMON ISS UE ARE THAT DURING THE COURSE OF REVOCATION PROCEEDINGS OF SEARCH ON 16-08-2002 S ILVER ORNAMENTS VALUED AT RS.6,97,832/- WAS FOUND AND SEIZED. DURING THE COUR SE OF SEARCH, THE ASSESSEE COULD NOT EXPLAIN THE ACQUISITION OF SILVER ORNAMEN TS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE CONTENDED THAT THESE BELONG TO VARIOUS CONSTITUENTS AND THESE SILVER ORNAMENTS ARE ACCOUNT ED FOR. THE ASSESSEE REPLIED VIDE LETTER DATED 08-09-2003 AND 16-03-2003 AS UNDE R:- REPLY DT. 8.9.2003 :- ALL THE SILVER /UTENSILS FOUND DURING THE COURS E OF SEARCH IN DIFFERENT PACKETS/PARCELS BELONGS TO VARIOUS CON STITUENTS AS PER THE LIST ENCLOSED HEREWITH, RECEIVED DURING ORDINARY COURSE OF ANGADIA BUSINESS FOR TRANSFERRING THE SAME FROM ONE STATION TO ANOTHER A S PER THE INSTRUCTION OF THE CONSTITUENTS. REPLY DT. 16.10.2003 : REGARDING SEIZED JEWELLERY/SILVER UTENSILS BELONG ING TO DIFFERENT CONSTITUENTS THEIR CONFIRMATIONS IN THE F ORM OF AFFIDAVITS, IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 30 ACKNOWLEDGEMENT RECEIPTS OF RETURN OF INCOME COPY O F PURCHASE BILLS-STOCK STATEMENTS [WHERE APPLICABLE] & RECEIPT ISSUED BY T HE ASSESSEE FIRM ARE ENCLOSED HEREWITH. THE ASSESSEE FILED THE AFFIDAVITS AND SALE BILLS OF SILVER ORNAMENTS SOLD TO RESPECTIVE PARTIES BY THE CONSTITUENTS NAMELY SHRI DINESHCHAND A A ADESARA, JAYANTILAL G TUDIA, VINOD K AKBARI, SANJAY D KAPADIA, AMRITLAL L ILADHAR & SONS, UMESH JIVANLAL DHAMECHA, JADAVBHAI R AKBARI AND HIRACHAND N SHAH. BUT THE ASSESSING OFFICER SIMPLY REJECTED THE APPLICATION OF THE ASSESSEE BY STATING THAT NO EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE FOR SEIZED SILVER ORNAMENT S AT RS.6,79,834/- AND ITS OWNERSHIP. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEF ORE CIT(A) AND CIT(A) PARTLY CONFIRMED THE ADDITION AND PARTLY DELETED THE ADDIT ION AT PAGE-19 OF HIS APPELLATE ORDER:- I HAVE PERUSED THE EVIDENCES RAISED BY THE APPELLA NT AND NOTICED THE FACTS IN EACH CASE. THE AFORESAID EXPLANATION IS SELF EXPLAN ATORY HENCE FURTHER COMMENTS ARE NOT REQUIRED. CONFIRMATION IN RESPECT OF PARTIES AT NO.1 TO 4 (DINESHCHANDRA AMRUTLAL), NO.7 (AKBARI VINOD KANJIB HAI), NO.9 (SMT. AMRUTLAL LILADHAR & SON), NO.10 (UMESHKUMAR JIVANLAL) NO.11, 12 (SAVJIBHAI R AKBARI) AND NO.13, 14 (ADINATH JEWELLERS). THE TOTAL VALUE OF THE UTENSILS AND ORNAMENTS EXPLAINED IN THE ABOVE HEADS COMES TO RS. 4,27,835/= (RS.156358 + RS37580/- + RS.24242 + RS.24000 + 109605 +RS.7605 0). LOOKING TO THE NATURE OF BUSINESS OF THE APPELLANT AND EXPLANATION WITH SUPPORTING EVIDENCE FURNISHED BY THE APPELLANT DURING THE CURSE OF ASSE SSMENT PROCEEDINGS, THE ABOVE AMOUNT IS NO REQUIRED TO BE ADDED BACK TO THE INCOME OF THE APPELLANT. THUS OUT OF TOTAL ADDITION OF RS.6,79,834/- AN ADD ITION OF RS.4,27,835/- AS DISCUSSED ABOVE IS DELETED. HOWEVER, REMAINING AMOU NT OF JEWELLERY WHICH COULD NOT BE EXPLAINED AT ALL BY THE APPELLANT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS AMOUNTING TO RS.2,51,999/- (RS.1,97,965 /- + RS.15,912/- + RS.38,122/-) IS TREATED AS UNEXPLAINED AND ADDED TO THE RETURNED UNDISCLOSED INCOME OF THE APPELLANT. THE ADDITION IS ROUNDED OF F TO RS.2,52,000/- 26. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) HAS ACCEPTED THE EXPLANATION IN RESPECT OF DINESHCHANDRA A ADESARA, VINOD K AKBARI, AMRITLAL LILADHAR & SONS, UMESHKUMAR JIVALLAL DHAMECHA, SAVJIBHAI R AKBARI AN D ADINATH JEWELLERS AND FOR REST OF OTHERS THE CIT(A) IN THE ABSENCE OF ANY EVI DENCE HAS CONFIRMED THE ADDITION. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF C IT(A) AND WE CONFIRM THE SAME. THIS COMMON ISSUE OF BOTH THE APPEALS IS DISMISSED. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 31 27. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IN IT(SS)A NO.212/AHD/2005 IS AS REGARDS THE ORDER OF CIT(A) DELETING THE ADDITION O F UNEXPLAINED CASH OF RS.10,000/-. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND NO.4 :- 4. THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DIRECTING TO DELETE THE ADDITION OF RS.10,000/- MADE ON ACCOUNT OF UNEXPLA INED EXPENDITURE IN RESPECT OF PAYMENT MADE TO M/S. R.J. EXPORTS. 28. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT DURING THE COURSE OF SEARCH, A DOCUMENT IN THE SHAPE OF RECEIPT OF PAYMENT OF RS .10,000/- TO M/S R.J EXPORTS WAS FOUND AT PAGE NO.25 & 26 OF ANNEXURE-A/2 DATED 20-06-2002. THE ASSESSEE EXPLAINED THAT THIS AMOUNT OF RS.10,000/- BEING DAM AGES PAID TO M/S R.J. EXPORTS NOT DEBITED IN THE REGULAR BOOKS OF ACCOUNT. ACCORD ING TO ASSESSING OFFICER, THE ASSESSEE ITSELF HAS ADMITTED THAT THIS EXPENDITURE IS UNACCOUNTED AND ACCORDINGLY HELD THE SAME AS UNDISCLOSED INCOME OF THE BLOCK PE RIOD. THE CIT(A) DELETED THE ADDITION BY GIVING FOLLOWING FINDING AT PAGE-20 OF HIS APPELLATE ORDER:- 07.THE FOURTH GROUND OF APPEAL RELATES TO AN ADDIT ION OF RS.10,000/- IN RESPECT OF SEIZED PAPERS. SOME LOOSE PAPERS AS PER ANNEXURE A-2 PAGE NO.25 & 26 WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN RESPONSE TO SHO W CAUSE NOTICE AS TO WHY THE PAYMENTS AS PER RECEIPT NO.24949 BY THE APPELLANT SHOULD NOT BE TREATED AS ITS UNACCOUNTED EXPENDITURE. IN THIS REG ARD THE APPELLANT FIRM SUBMITTED VIDE REPLY DATED 18.02.2005 THAT THE AMOU NT OF RS.10,000/- BEING DAMAGES PAID TO R.J. EXPORTS NOT DEBITED IN THE REG ULAR BOOKS OF ACCOUNT DUE TO ACCOUNTING MISTAKE AND THEREFORE SAME WAS NOT DE BITED IN THE BOOKS OF ACCOUNT. THE APPELLANT STATED THAT THE SAID UNACCOU NTED EXPENSES ARE COVERED UNDER THE DISCLOSURE, HENCE, NO SEPARATE AD DITION IS REQUIRED TO BE MADE. THE ARGUMENT RAISED BY THE APPELLANT HAS CONS IDERABLE FORCE AND THE AMOUNT IS BACKED BY THE DISCLOSURE OF UNDISCLOSED I NCOME, HENCE, THE ABOVE ADDITION IS DELETED. 29. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) HAS DELETED THE ADDITION ON ONE PREMISE THAT THIS EXPENDITURE IS COVERED BY DISCLOS URE MADE BY THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS MADE DISCLOSURE OF RS15 LAKH AND THIS EXPENDITURE OF RS.10,000/- IS EXPLAINED TO BE COVERED BY THIS DISC LOSURE AND THIS WILL BE WITHIN THE DISCLOSED AMOUNT. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND WE CONFIRM THE SAME. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 32 30. THE NEXT ISSUE IN ASSESSEES APPEAL IT(SS) A NO.205/AHD/2005 IS AS REGARDS TO THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF R S.1.40 LAKH. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1 :- 1. IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE L EARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD ERRED IN DIRECTI NG TO ASSESSING OFFICER TO ADD RS.1,40,000/= BELONGING GAUTAM, IN SPITE OF THE FACT THAT THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN ASSESSMEN T, WITHOUT ANY REASON. 31. THE BRIEF FACTS ARE THAT ASSESSING OFFICER DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS ACCEPTED THE CASH OF RS.1.40 LAKH IS BE LONGING TO SHRI GIRISH BY GIVING FOLLOWING FINDING IN BLOCK ASSESSMENT ORDER:- [VI] GIRISH IN RESPONSE TO SUMMONS U/S 131 OF TH E ACT, HE VIDE HIS REPLY DATED NIL HAS STATED THAT HE AS A WORKING PARTNER O F M/S.A.P. WOOLLENS HAD WITHDRAWN FROM ORIENTAL BANK OF COMMERCE, G.T .ROAD . PANIPAT CASH OF RS.90,000/- AND RS.50,000/- ON 3.8.02 & 7.8.02 RESP ECTIVELY. IN SUPPORT OF HIS CLAIM, HE HAS FILED THE EXTRACT OF BANK STATEMENT, COPY OF ACKNOWLEDGEMENT ALONG WITH PAN ETC. THE CLAIM OF SHRI GIRISH AS REC ORDS OWNERSHIP OF CASH SEEMS TO BE GENUINE AND HENCE SAME IS ACCEPTED. 32. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS OF THE CASE. WE FIND THAT CIT(A) HAS CONFIRMED THIS CASH BELONGI NG TO SHRI GIRISH AS UNEXPLAINED, EVEN THOUGH BEFORE HIM THIS WAS NOT THE ISSUE. ACCO RDINGLY, WE DELETE THE ADDITION AND ALLOW THE APPEAL OF ASSESSEE. NOW COMING TO REVENUES APPEAL IN IT(SS)A NO.233/AH D/2006. 33. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AS REGARDS TO THE ORDER OF CIT(A) IN DELETING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF ESTIMATE OF INCOME AFTER INVOKING THE PROVISIONS OF SECTION 145 OF THE ACT. FOR THIS, REVENUE HAS RAISED THE FOLLOWING THREE EFFECTIVE GROUNDS :- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACT IN DIRE CTING TO DELETE THE 1ADDITION OF RS.14,75,07,176/- MADE ON ACCOUNT OF ESTIMATED INCOME OF THE ASSESSEE WHICH WAS MADE AFTER INVOKING PROVISIONS OF SECTION 145 OF THE ACT. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLD ING THAT IN ABSENCE OF ANY EVIDENCE THE A.O WAS NOT JUSTIFIED IN APPLYING THE RATIO, WHICH WAS APPLIED TO WORKOUT THE UNRECORDED INCOME OF DELHI BRANCH, FOR WORKING OUT THE UNRECORDED INCOME OF REMAINING BRANCHES WHEN HE HAD ACCEPTED THE ESTIMATION OF UNRECORDED INCOME AND MODUS OPERANDI OF THE ASSESSEE. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 33 3. THE CIT(A) OUGHT TO HAVE UPHELD THE ADDITIONS, W HICH WERE MADE AFTER REJECTING BOOKS OF ACCOUNTS, AND THAT PROVISIONS OF SECTION 145 CAN ALSO BE INVOKED IN BLOCK ASSESSMENT. 34. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ORIGINAL BLOCK ASSESSMENT FOR THE BLOCK PERIOD 1-4-1991 TO 20-11-2 000 WAS COMPLETED VIDE BLOCK ASSESSMENT ORDER DATED 29-11-2002 DETERMINING UNDIS CLOSED INCOME AT RS.23,69,26,020/-. THIS BLOCK ASSESSMENT WAS SUBJEC T TO CHALLENGE BEFORE CIT(A) WHO VIDE ORDER NO. CIT(A)-II/CC.2/03/2000-01 DATED 21-03-2003 ALLOWED RELIEF AT RS.11,62,39,540/- AND SUSTAINED THE BALANCE ADDITIO N. AGAINST THIS ORDER OF CIT(A) THE DEPARTMENT PREFERRED APPEAL BEFORE TRIBUNAL AND TRIBUNAL C BENCH OF AHMEDABAD VIDE ORDER IN IT(SS)A NO.227/AHD/2003 DATED 12-08-2004 SET ASIDE THE ORDER OF CIT(A) AND RESTORED THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR GIVING OPPORTUNITY FOR EXAMINATION AND CROSS-EXAMINATION A S WELL AS PROVIDING MATERIAL TO THE ASSESSEE. AND NOW, THE REVENUE AGGRIEVED AGAINS T THE ORDER OF CIT(A), AGAINST THE IMPUGNED ORDER, IS IN PRESENT APPEAL. A SEARCH WAS CONDUCTED BY NARCOTIC CONTROL BUREAU, DELHI ZONAL UNIT, R.K. PURAM, NEW D ELHI ON 05-07-2000 ON BRANCH OFFICE OF ASSESSEE-FIRM AT M/S. SOMA MAGANLAL PATEL , 320 KUCHA GHASIRAM, CHADNI CHOWK, DELHI FROM WHERE CERTAIN DOCUMENTS ALONG WIT H CASH OF RS.9.30 LAKH WERE TAKEN INTO POSSESSION. NARCOTIC CONTROL BUREAU (NCB FOR SHORT) SENT INFORMATION TO THE DIT (INV.), WHO IN TURN ISSUED AUTHORIZATION U/ S.132 OF THE ACT DATED 15-11-2000 AND REQUISITIONED CASH AMOUNTING TO RS.9.30 LAKH AS WELL AS BOOKS OF ACCOUNT AND OTHER DOCUMENTS SEIZED BY NCB. SUBSEQUENTLY, A NOTI CE U/S 158 BC OF THE ACT WAS ISSUED ON ASSESSEE-FIRM DATED ON 05-03-2001 AND IT FILED ITS BLOCK RETURN ON 23-04- 2001 DECLARING UNDISCLOSED INCOME AT NIL. NOTICE U/ S 143(2) WAS ISSUED ON 08-01- 2002. THE ASSESSEE-FIRM THE IS CARRYING ON THE BUSI NESS OF ANGADIA I.E. COURIER/CARTING AGENT WHICH COLLECTS THE POSTS, PAR CELS, PACKETS, VALUABLES LIKE CASH, BULLIONS, DIAMOND ETC. FROM CONSTITUENTS AT ITS VAR IOUS BRANCHES IN GUJARAT, MUMBAI AND DELHI AND DELIVER THE SAME AS PER THE INSTRUCTI ON OF THE SENDER AT BRANCHES AT RELEVANT STATIONS. THE ASSESSEE-FIRM RECEIVES SERVI CE CHARGES/COMMISSION FOR RENDERING SERVICE TO THE CONSTITUENTS FOR TRANSFERR ING POST, PARCELS, INSURED COVERS, CASH, VALUABLES ETC. FROM ONE STATION TO OTHER, AS PER THE INSTRUCTION OF THE CONSTITUENTS. AS THE ASSESSEE-FIRM WORKS AS A COURI ER/TRANSPORT AGENT, VERY MUCH AKIN TO POSTAL SERVICES, WHATEVER CASH, VALUABLES I T RECEIVES DURING THE COURSE OF ITS BUSINESS, REMAINS IN ITS POSSESSION AS COURIER/BAIL EY AND IT DOES NOT BECOME THE IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 34 OWNER, OWNERSHIP OF THE ARTICLES REMAINS WITH SENDE RS/RECEIVERS. THE ASSESSEE HAS FOLLOWING 19 BRANCHES:- 1 SURAT RATNASAGAR, GROUND FLOOR VARACHHA ROAD, SURAT 2 SURAT 1087, ADARSH MARKET, 1 ST FLOOR, RING ROAD, 3 MUMBAI 211/A, PANCHRATNA, 2 ND FLOOR, OPERAT HOUSE 4 MUMBAI 132/A, BHAGATWADI, GR. FLOOR, BHULESHWAR 5 MALAD 106,SHUKRA BUILDINGS, 1 ST FLOOR, GAUSHALA (E) 6. BHIVANDI 201/A, 2 ND , E-2, GOPAL NAGAR 7 NAVSARI LOKANDWALA BLDG. 1 ST FLOOR, SATTAPIR 8 DELHI 320, KUCHA GHASHIRAM GR. FLOOR, CHANDI CHOWK 9 AHMEDABAD 104, KNAK CHAMBERS, 1 ST FLOOR, GANDHI CHOWK 10 AHMEDABAD LODHEWALA CHAMBER, 1 ST FLOOR, REID ROAD 11 AHMEDABAD DIAMOND MARKET, 1 ST FLOOR, BAPUNAGAR 12 INDORE VENUS TOWER, GROUND FLOOR, 168 JAIL ROAD 13 BHAVNAGAR SILVER MARKET, 1 ST FLOOR, VOHRA BAZAR 14 MEHSANA JAISHREE MARKET, 1 ST FLOOR 15 UNJHA HIGH SCHOOL BUILDING, 1 ST FLOOR, SHOP NO.18, ST. RD. 16 PATAN ANUPAM BUILDING, 1 ST FLOOR, AMIR ROAD 17 VISHNAGAR 1 ST GOVIND CHAKLA, STATION ROAD 18 PALANPUR E-101, PANCHRATNA 1 ST FLOOR, AMIR ROAD 19 DISA ROOM NO.45, 1 ST FLOOR, NR. GOVT. HOSPITAL 35. THE ASSESSING OFFICER DURING THE COURSE OF BLOC K ASSESSMENT PROCEEDINGS IN VIEW OF THE SEIZED PAPERS ANNEXURE-A/49, WHICH PERT AIN TRANSACTIONS RELATING TO DELHI BRANCH FOR THE MONTH OF JUNE00, NOTED THAT THE AMO UNT RECEIVED AND SENT BY DELHI BRANCH. IN VIEW OF THESE PAPERS, WHICH ARE UNDER:- DATE RECD. BY DELHI SENT BY DELHI 1/6/2000 2780 5377 2/6/2000 1500 10661 3/6/2000 2782 46232 5/6/2000 7255 3246 6/6/2000 6778 4482 8/6/2000 2427 4004 IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 35 7/6/2000 1584 2945 9/6/2000 5154 2823 10/6/2000 3636 3390 12/6/2000 1593 6029 13/6/2000 2038 3464 14/6/2000 13836 3722 15/6/2000 1198 3920 16/6/2000 2064 3755 17/6/2000 1028 6229 19/6/2000 3845 5080 20/6/2000 13370 5372 21/6/2000 3000 4800 22/6/2000 1537 3726 23/6/2000 606 1540 24/6/2000 3249 3487 26/6/2000 17822 6861 27/6/2000 2081 8624 28/6/2000 167153 3465 29/6/2000 4993 4580 30/6/2000 1345 4596 TOTAL 124216 121809 THE ASSESSING OFFICER FURTHER NOTED THAT IN SEIZED MATERIALS THREE 000 ARE ALREADY OMITTED AS MENTIONED IN ANNEXURE-A/49 IN VIEW OF TH E STATEMENT OF SHRI JASWANTBHAI RECORDED DURING NCB SEARCH ON 05-07-2000. THEREFORE , ACCORDING TO AO, THE TOTAL INCOMING AND OUTGOING FROM DELHI BRANCH FOR THE MON TH OF JUN00 WAS RS.24,60,25,000/- CONSISTING OF INCOMING OF RS.12,4 2,16,000/- AND OUTGOING OF RS.12,18,09,000/-. THE AO ALSO NOTICED THAT THE ASS ESSEE IS CHARGING COMMISSION RANGING FROM 1 TO 6 PER THOUSAND ON THE TRANSFER OF MONEY, WHICH HAS BEEN ADMITTED BY SHRI JASWANTBHAI DURING HIS STATEMENT B EFORE NCB ON 07-07-2000. THE AO AFTER REJECTING THE BOOK RESULTS FOR THE ENTIRE BLOCK PERIOD U/S.145 OF THE ACT ESTIMATED THE UNACCOUNTED INCOME FOR THE DELHI BRAN CH FOR SEVEN MONTHS AND TWENTY DAYS I.E. FROM 01-04-2000 TO 20-11-2000 APPLYING TH E FORMULA IN THE RATIO OF 7: 67. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 36 THE AO ALSO NOTED THAT THE ASSESSEE ITSELF HAS DECL ARED RS.41 LAKH ON 16-08-2000 FOR THE FINANCIAL YEAR 2000-01. ACCORDINGLY, THE AO IN VIEW OF SEIZED LOOSE PAPERS AS ANNEXURE-A/49 ESTIMATED THE UNACCOUNTED TURNOVER OF ASSESSEE AT RS.23,95,53,000/- AND TOTAL UNACCOUNTED OUTGOING RS .12,13,42,000/- AND THE UNACCOUNTED INCOMING OF RS.11,82,11,000/- IN DELHI BRANCH AND AVERAGE PERIOD OF ESTIMATION AS DISCUSSED ABOVE OF 7.67 MONTHS IS APP LIED TO THE ABOVE UNACCOUNTED TURNOVER. THE TOTAL TURNOVER OF DELHI BRANCH COMES TO RS.183,73,71,510/- ( 7.67 X RS.23,95,53,000/-). IF THE COMMISSION @ 2/- PER THO USAND IS APPLIED THE TOTAL UNACCOUNTED COMMISSION FOR DELHI BRANCH FOR THE BLO CK PERIOD COMES TO RS.37,73,640/-. THE AO IN VIEW OF THE ABOVE FACTS, ESTIMATED THE UNDISCLOSED INCOME OF ASSESSEE AT RS.15,20,24,118/- BY ESTIMATI NG THE SAME AS COMMISSION RECEIPT FOR ALL BRANCHES BY RELYING THE PAPERS FOUN D FOR DELHI BRANCH BY GIVING FOLLOWING FINDING IN PARA-9.8 OF HIS BLOCK ASSESSMENT ORDER:- 9.8 THE TOTAL RECEIPT OF THE ASSESSEE FOR F.Y 2000 -01 OF ALL THE BRANCHES COMES TO RS.50,22,402/-. THE ASSESSEE HAS SATED THA T OUT OF THIS RECEIPT OF RS.50,22,402/-, RS.32,44,019/- ARE RELATED TO COMMI SSION EARNED ON CASH TRANSACTION DURING THE YEAR AND RS.17,8,383/- ARE R ELATED TO PARCEL. AS NO EVIDENCE RELATING TO UNACCOUNTED COMMISSION ON PARC EL WAS FOUND. WHILE WORKING OUT THE RATIO, ONLY COMMISSION EARNED ON CA SH TRANSFERRED OF RS.32,44,019/- SHOULD BE CONSIDERED. THEREFORE, THE FACTS ARE ACCEPTED AND THE RATIO IS WORKED OUT ON COMMISSION OF RS.32,44,0 19/-. THE CASH COMMISSION FOR ALL BRACHES IS RS.32,44,019/- AND DE LHI SHARE OF SUCH SURPLUS IS RS.76,412/- AS PER P & L A/C. FIELD WITH THE RE TURN OF INCOME FOR A.Y 2001- 02. THUS THE TOTAL RATIO OF TOTAL CASH COMMISSION I NCOME OF DELHI BRANCH RATIO COMES TO 31: 1. ACCORDINGLY, IT WOULD BE PROPER TO APPLY THE SAME RATIO IS APPLIED WHILE COMPUTING THE UNACCOUNTED INCOME OF T HE AS. IF THE ABOVE RATIO OF 41:1 IS APPLIED THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE COMES TO RS.15,20,24,118/- [3244019 X 41]. THE ASSESSING OFFICER OUT OF THIS UNDISCLOSED INCOM E ALLOWED THE AMOUNT DECLARED BY ASSESSEE IN THE REGULAR RETURN AT RS.45,16,942/- AND COMPUTED UNDISCLOSED INCOME AT RS.14,75,00,796/-. AGGRIEVED, ASSESSEE PR EFERRED APPEAL BEFORE CIT(A). 36. THE CIT(A) DELETED THE ADDITION BY GIVING FIND ING IN PARA-8 OF HIS APPELLATE ORDER. 8. THE APPELLANT HAS FILED PAPER BOOK CONTAINING 2 36 PAGES. I HAVE CONSIDERED THE ASSESSMENT ORDER, THE SUBMISSION OF THE APPELLANT AND THE PAPER BOOK SUBMITTED BY THE APPELLANT. ON CONSIDERA TION OF THE ENTIRE FACTS IT IS NOTICED THAT THE INCOME ASSESSED BY THE ASSESSIN G OFFICER IS BASED ON SEIZED MATERIAL CONTAINED IN ANNEXURE-A-49 WHEREIN UNACCOUNTED IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 37 COMMISSIONS INCOME FOR THE TRANSFER OF UNACCOUNTED CASH IS WORKED OUT AT RS.4,16,942/-. THE ANNEXURE-A-49 IS CONTAINING THE DETAILS OF TRANSFER OF CASH FROM DELHI BRANCH TO DIFFERENT OTHER BRANCHES AND F ROM DIFFERENT BRANCHES TO DELHI BRANCH. IT IS AN ACCEPTED FACT THAT THE TRANS FERS AS PER ANNEXURE-A-49 ARE UNRECORDED TRANSFERS. THE PERIOD COVERED BY THI S ANNEXURE IS JUNE, 2000. THERE IS NO OTHER SEIZED MATERIAL REFERRED TO REGAR DING TRANSFER IN SIMILAR WAY FOR OTHER PERIOD. THERE IS NO OTHER SEIZED MATERIAL OR ANY EVIDENCE TO SHOW THAT THERE WHERE SIMILAR CASH TRANSFERS BETWEEN OTH ER BRANCHES INTERESSE. CONSIDERING THE PROVISIONS OF SECTION 1598B(B) AND 158BA(3), I APPRECIATE THE ARGUMENTS OF THE APPELLANT THAT THE INCOME FOR THE BLOCK PERIOD IS TO BE CONSIDERED BASED DON THE DOCUMENTS AND EVIDENCE FOU ND AS A RESULT OF SEARCH. AS THE SEIZED DOCUMENTS RELATE TO CASH TRAN SFER BY DELHI BRANCH FOR THE MONTH OF JUNE, 2000 BASED ON SAME SEIZED MATERI AL THE ASSESSING OFFICER HAS APPLIED THE ANALOGY THAT SIMILAR TRANSF ERS ARE CARRIED OUT IN THE ENTIRE BROKEN PERIOD. IN VIEW OF THIS POSITION I HO LD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN ESTIMATING THE UNRECORDED INCOME F OR THE ENTIRE BROKEN PERIOD BASED ON THE SEIZED MATERIAL ANNEXURE-A-49. HOWEVER , HAVING REGARD TO THE NATURE OF BUSINESS OF THE APPELLANT AND THE FACT TH AT THE MATERIAL WAS FOUND ONLY IN RESPECT OF THE DELHI BRANCH. I AM OF THE OP INION THAT THERE WAS NO JUSTIFICATION FOR THE ASSESSING OFFICER IN APPLYING THE SAME RATIO FOR WORKING OUT THE UNACCOUNTED COMMISSION INCOME OF THE REMAIN ING BRANCHES, WITHOUT ANY EVIDENCE ON RECORD THAT THERE WERE SIMILAR TRAN SFERS AT THE OTHER BRANCHES. NO SEARCH OR SURVEY WAS CARRIED OUT AT OT HER BRANCHES AND NO MATERIAL WAS AVAILABLE ON RECORD TO ESTABLISHES THA T SIMILAR TRANSFERS WERE CARRIED OUT AT OTHER BRANCHES. THE DEPARTMENT HAS A LSO NOT CARRIED OUT ANY SUCH REQUIRES WHICH WOULD SUPPORT TO ARRIVE AT THE CONCLUSION THAT UNACCOUNTED INCOME FOR SIMILAR TRANSACTION IS EARNE D BY OTHER BRANCHES. IN THE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE APPEL LANT EARNED UNACCOUNTED COMMISSION INCOME FOR SIMILAR TRANSACTIONS AT OTHER BRANCHES. THE ASSESSING OFFICER WAS THEREFORE NOT JUSTIFIED I N APPLYING THE RATIO OF UNACCOUNTED COMMISSION INCOME OF DELHI BRANCHES TO THE COMMISSION INCOME FOR OTHER BRANCHES. A SIMILAR SITUATION HAD ARISEN IN THE CASE OF M/S. PATEL BHAGVANDAS & CO. WHO WERE ALSO DOING ANGADIA BUSINESS. IN THE APPELLATE ORDER DATED 18.05.2006 THEIR CASE PASSED BY THE CIT(A)., AHMEDABAD WHILE DEALING WITH SIMILAR SITUATION OBSE RVED AS UNDER:- HOWEVER, LOOKING TO THE NATURE OF BUSINESS CARRIED ON BY THE APPELLANT AND ADMINISTRATION OF DELHI BRANCH THE ASSESSING OF FICER WAS NOT JUSTIFIED IN APPLYING THE SAME RATIO OF UNACCOUNTED COMMISSION INCOME OF DELHI BRANCH TO REST OF THE BRANCHES WITHOUT POI NTING OUT ANY EVIDENCE OR WITHOUT BRINGING ON RECORD ANY ADVERSE MATERIAL. IT IS ALSO TO BE APPRECIATED THAT NO SEARCH OR SURVEY ACTION W AS CARRIED OUT AT SUCH BRANCHES WHICH WOULD HAVE REVELED THE CORRECT POSITION. IT IS ALSO UNDISPUTED FACT THAT NO MATERIAL WHATSOEVER WAS FUN D DURING THE COURSE OF SEARCH OR PAST SEARCH INQUIRIES WHICH WOU LD ENABLE THE ASSESSING OFFICER TO ARRIVE AT UNACCOUNTED COMMISSI ON INCOME. THE APPELLANTS CONTENTION THAT MANY OF ITS BRANCHES AR E SO SMALL WHICH ARE SITUATED IN TOWNS AND VILLAGES WHERE THERE CANNOT B E SUCH VOLUMINOUS TRANSACTIONS IS TO BE APPRECIATED. IT IS CLEAR THAT NO EVIDENCE HAS BEEN IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 38 FOUND THAT THE APPELLANT FIRM IS SUPPRESSING INCOME AT OTHER BRANCHES. THUS, IN VIEW OF THE FACTS THAT THE ASSESSING OFFIC ER HAS ESTIMATED THE UNACCOUNTED COMMISSION INCOME ON THE BASIS OF UNACC OUNTED COMMISSION INCOME OF DELHI BRANCH WITHOUT PLACING O N RECORD ANY EVIDENCE OR MATERIALS, THE ISSUE HAS TO BE CLINCHED ON THE BASIS OF DOMINATING FACTS. THE INFERENCE DRAWN BY THE ASSESS ING OFFICER HAS NO LEGAL OR FACTUAL BACKING BECAUSE THAT FORMULA CANNO T BE APPLIED SINCE THE APPELLANT HAS OTHER BRANCHES. THE ASSESSING OFF ICER HAS NOT LOCATED ANY EVIDENCE OF ANY UNACCOUNTED INCOME IN R ESPECT OF 37 BRANCHES PICKED UP FOR MAKING ABOVE ADDITION. THUS, ESTIMATING INCOME OF OTHER BRANCHES ON THE BASIS OF FINDING OF DELHI BRANCH CANNOT BE APPROVED. THE TOTAL ADDITION COMPRISES OF UNACCO UNTED COMMISSION INCOME OF RRS.1,76,985/-, THEREFORE, ADDITION TO TH AT EXTENT IS SUSTAINED AND THE REMAINING ADDITION OF RS.6435,174/- IS DELE TED. SINCE THE APPELLANT HAS SUO MOTO RETURNED INCOME OF RS.36,00, 000/- ON ACCOUNT OF UNEXPLAINED CASH, THE INCOME OF RS.1,76,985/- SU STAINED ABOVE WILL BE ADDED TO THE RETURNED INCOME. THE FINDINGS GIVEN BY ME ARE THUS SUPPORTED BY THE DECISIONS OF MY PREDECESSORS IN A SIMILAR SITUATION. ACCORDINGLY, I HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ESTIMATING THE INCOME OF THE OTHER BRANCHES BY APPLYING RATIO OF UNACCOUNTED INCOME OF THE DELHI B RANCH. IN VIEW OF THE ABOVE POSITION, THE ESTIMATE OF INCOME OF DELHI BRA NCHES MADE BY THE ASSESSING OFFICER ONLY IS SUSTAINED WHICH IS RS.37, 73,640/-. HOWEVER, THE APPELLANT ITSELF HAS DISCLOSED INCOME OF RS.45,16,9 42/- AS DISCUSSED IN PARA 9.9 OF THE ASSESSMENT ORDER. ACCORDINGLY, THE INCOME E STIMATE BY THE ASSESSING OFFICER IS COVERED BY THE INCOME SO ACCOU NTED FOR BY THE APPELLANT. CONSIDERING THESE FACT, THE AMOUNT DECLARED BY THE APPELLANT HAS TO BE ADJUSTED AGAINST THE INCOME WORKED OUT BY THE ASSES SING OFFICER. THE UNACCOUNTED INCOME FOR THE LOCK PERIOD WOULD BE RS. NIL. THE RESULTANT ESTIMATED INCOME AT RS.14,75,07,176/- ( RS.15,20,24 ,118 RS.45,16,942/-) IS ACCORDINGLY DELETED. AGGRIEVED, AGAINST DELETION OF THIS ADDITION, REVEN UE CAME IN APPEAL BEFORE THE TRIBUNAL. 37. BEFORE US THE LD. CIT-DR STATED THAT THE FACTS ARE EXACTLY IDENTICAL IN THE PRESENT CASE WHAT WAS BEFORE US IN IT(SS)A NO.211/AHD/2005 OF REVENUES APPEAL, WHEREIN WE HAVE DECIDED THIS ISSUE IN PARA-2-10 OF THIS ORDER. LD COUNSEL FOR THE ASSESSEE FAIRLY STATED THAT THIS ISSUE IS EXACTLY S AME AND FACTS ARE EXACTLY IDENTICAL. ON IDENTICAL FACTS THE LOWER AUTHORITIES HAVE MADE ADDITION BY APPLYING A FORMULA. 38. AFTER GOING THROUGH THE FACTS OF THE PRESENT CA SE AND FACTS IN IT(SS)A NO.211/AHD/2005 OF THE REVENUES APPEAL, WE FIND THAT THE ISSUE IS SQUARELY IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 39 COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE. FOLLOWING THE SAME, WE DISMISS THIS ISSUE OF THE REVENUES APPEAL. 39. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AS REGARDS TO DELETING THE LEVY OF SURCHARGE IN THE BLOCK ASSESSMENT. FOR THIS, REVENU E HAS RAISED THE FOLLOWING GROUND NO.4 :- 4. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO DELETE THE SURCHARGE LEVIED U/S.113 OF THE ACT OF RS.1,93,86,2 48/- HOLDING THAT SURCHARGE WAS LEVIABLE ONLY IN RESPECT OF SEARCH CARRIED OUT AFTER 01.06.2002. 40. AT THE OUTSET, LD. CIT-DR STATED THAT THIS ISSU E IS COVERED IN FAVOUR OF REVENUE AND AGAINST THE ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. SURESH N GUPTA (2008) 297 ITR 322 (SC), WHEREIN IT IS HELD THAT O NCE SECTION 158BB IS TO BE READ WITH SECTION 4 THEN THE RELEVANT FINANCE ACT OF THE CONCERNED YEAR WOULD AUTOMATICALLY STAND ATTRACTED TO THE COMPUTATION UNDER CHAPTER-XIV-B SECTION 158BB LOOKS TO SECTION 113. T HE PROVISION WAS INSERTED IN SECTION 113 TO INDICATE THAT THE FINANCE ACT OF THE YEAR IN WHICH THE SEARCH WAS INITIATED WOULD APPLY. THE PROVISION WAS ONLY CLARI FICATORY IN NATURE. THERE IS NO QUESTION OF RETROSPECTIVE EFFECT. THE PROVISO HAS T O BE READ AS IT STANDS PRIOR TO JUNE, 1,2002, IN SEVERAL CASES, TAX WAS PRESCRIBED SOMETIMES IN THE INCOME-TAX ACT AND SOMETIMES IN THE FINANCE ACT AND SOMETIMES IN B OTH. THIS MADE LIABILITY UNCERTAIN. THEREFORE, CLARIFICATION WAS NEEDED. THE PROVISO IS CURATIVE IN NATURE. THE PROVISO ONLY CLARIFIES THAT OUT OF THE FOUR DATES, PARLIAMENT HAS OPTED THE DATE, NAMELY, THE YEAR IN WHICH THE SEARCH UNDER SECTION 158BC IS INITIATED, WHICH DATE WOULD BE RELEVANT FOR APPLICABILITY OF A PARTICULAR FINANCE ACT. LD. COUNSEL FOR THE ASSESSEE ALSO CONCEDED THE POSITION. AS THE ISSUE I S SQUARELY COVERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE, WE ALLOW THIS ISSUE OF THE REVENUES APPEAL. COMING TO CROSS-APPEALS IN IT(SS)A NO.204/AHD/2005 BY ASSESSEE AND THAT OF REVENUES IN IT(SS)A NO.210/AHD/2005. 41. THE FIRST COMMON ISSUE IN THESE CROSS-APPEALS I S AS REGARDS TO THE ORDER OF CIT(A) RESTRICTING THE ADDITION OF UNACCOUNTED CASH FOUND AT THE TIME OF SEARCH AMOUNTING TO RS.10 LAKH AS AGAINST THE ADDITION MAD E BY ASSESSING OFFICER AT RS.40,28,450/-. FOR THIS, ASSESSEE HAS RAISED THE F OLLOWING GROUND NO.1(A) & 1(B) :- IT(SS)A NO.204/AHD/2005 (FOR ASSESSEE) IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 40 1(A) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD ERRED IN CONFIRM ING THE ADDITION OF RS.10 LACS AND SHOULD HAVE ACCEPTED THE SAME AS RECEIVED BY DELHI BRANCH FROM PARTNER SHRI CHINUBHAI MOHANLAL PATEL. 1(B) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD SHOULD HAVE DELE TED THE ADDITION OF RS.10 LACS. AND REVENUE HAS RAISED THE FOLLOWING GROUND NO.1 :- IT(SS)A NO.210/AHD/2005 (FOR REVENUE) 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN RES TRICTING THE ADDITION OF RS.40,28,450/- MADE ON ACCOUNT OF UNACCOUNTED CASH FOUND AT THE TIME OF SEARCH U/S.132 OF THE ACT TO RS.10,00,000/-. 42. THE BRIEF FACTS ARE THAT THE ASSESSEE-FIRM IS C ARRYING ON THE BUSINESS OF ANGADIA I.E. COURIER/CARTING AGENT WHICH COLLECTS T HE POSTS, PARCELS, PACKETS, VALUABLES LIKE CASH, BULLIONS, DIAMOND ETC. FROM CO NSTITUENTS AT ITS VARIOUS BRANCHES IN GUJARAT, MUMBAI AND DELHI AND DELIVER THE SAME A S PER THE INSTRUCTION OF THE SENDER AT BRANCHES AT RELEVANT STATIONS. THE ASSESS EE-FIRM RECEIVES SERVICE CHARGES/COMMISSION FOR RENDERING SERVICE TO THE CON STITUENTS FOR TRANSFERRING POST, PARCELS, INSURED COVERS, CASH, VALUABLES ETC. FROM ONE STATION TO OTHER, AS PER THE INSTRUCTION OF THE CONSTITUENTS. AS THE ASSESSEE-FI RM WORKS AS A COURIER/TRANSPORT AGENT, VERY MUCH AKIN TO POSTAL SERVICES, WHATEVER CASH, VALUABLES IT RECEIVES DURING THE COURSE OF ITS BUSINESS, REMAINS IN ITS POSSESSI ON AS COURIER/BAILEY AND IT DOES NOT BECOME THE OWNER, OWNERSHIP OF THE ARTICLES REMAINS WITH SENDERS/RECEIVERS. A SEARCH U/S.132 OF THE ACT WAS CARRIED OUT AT DELHI BRANCH OFFICE OF THE ASSESSEE BY ADIT (INV.), UNIT-VI(2), NEW DELHI. DURING THE COUR SE OF SEARCH CASH OF RS.88,56,090/- WAS FOUND, OUT OF WHICH CASH OF RS.8 7 LAKH WAS SEIZED AND VARIOUS BOOKS OF ACCOUNT AND OTHER DOCUMENTS WERE FOUND AND SEIZED AND INVENTORIED VIDE PANCHNAMA DATED 20-06-2002. ACCORDING TO THE ASSESS ING OFFICER, SEIZED DOCUMENTS AND BOOKS OF ACCOUNT CONTAINS UNACCOUNTED TRANSACTION OF THE ASSESSEE AND ACCORDINGLY NOTICE U/S 158BC OF THE ACT WAS ISS UED ON 03-02-2004 AND DULY SERVED UPON THE ASSESSEE ON 09-02-2004 AND IN RESPO NSE TO THE SAME, ASSESSEE FILED ON 03-01-2005 AND 24-01-2005 AFTER GETTING EX TENSION OF 45 DAYS DECLARING NIL INCOME. SUBSEQUENTLY, NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 01-08-2003 REQUIRING THE ASSESSEE TO EXPLAIN. THE ASSESSEE WAS REQUESTED VIDE SHOW CAUSE IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 41 NOTICE DATED 03-02-2004 TO EXPLAIN THE SOURCE OF CA SH FOUND AND EVIDENCE HOW THE SAME IS SHOWN IN THE REGULAR BOOKS OF ACCOUNT. THE ASSESSEE FURNISHED THE EXPLANATION OF THE CASH, WHICH IS REPRODUCED AS UND ER:- DURING THE COURSE OF THE SEARCH AT DELHI BRANCH ON 20.06.2002, CASH WAS FOUND AS UNDER: (A) CASH FOUND AT THE COMMENCEMENT OF SEARCH BELONGING TO RS.43,49,240 (A) ASSESSEE FIRM CASH BALANCE AS PER CASH BOOK RS.40,28,450 (B) CONSTITUENTS IN RESPECT OF WHICH PRIMARY EVIDENCES FOUND DURING THE COURSE OF SEARCH RS. 3,20,790 RS.43,49,240 (B) CASH FOUND ON VARIOUS PERSONS AS THEY HAD ENTERED INTO ASSESSEE FIRMS OFFICE OR WERE DRAGGED INTO ASSESSEES OFFICE BY THE AUTHORIZED OFFICERS AFTER COMMENCEMENT OF SEARCH RS.45,06,850 THE ASSESSEE EXPLAINED THE CASH OF RS.40,28,450/- A S CASH AVAILABLE IN THE BOOKS OF ACCOUNT AS ON 20-06-2002 OF RS.40,47,417/-. THE ASS ESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE BY STATING THAT THE CASH BOOK ON THE DATE OF SEARCH WAS WRITTEN UP TO 16-06-2002. IT WAS STAT ED THAT CASH BOOK OF DELHI BRANCH HAVING CASH BALANCE INCLUDING CASH OF RS.10 LAKH RE CEIVED FROM CHINUBHAI M PATEL, THE PARTNER AT DELHI OFFICE ON 18-06-2002, WHICH WA S SENT BY HIM ON 17-06-2002 FROM SURAT FOR PURCHASE OF IMMOVABLE PROPERTY AT DELHI. THE AO NOTED THAT THE CASH BOOK WRITTEN UP TO 16-06-2002 WAS HAVING CASH BALANCE OF RS.30,44,007/- AND ASSESSEE IS REGULARLY TRANSFERRING THE CASH TO ITS HEAD OFFI CE AND THERE WAS NO INDEPENDENT EVIDENCE TO SHOW THAT THE PAYMENT AS WELL AS RECEIP T OF CASH WAS THERE DURING 17- 06-2002 TO 20-06-2002. ACCORDINGLY, THE CASH BOOK W RITTEN UP TO 16-06-2002 WAS NOT HAD RELIABLE AND ADDITION OF UNDISCLOSED INCOME IN RESPECT TO CASH OF RS.40,28,450/- WAS MADE TO THE BLOCK RETURN FOR THE BLOCK PERIOD. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 43. THE CIT(A) DELETED THE ADDITION IN RESPECT TO C ASH AVAILABLE IN THE BOOKS AT RS.30,44,007/- TO THE EXTENT OF RS.30,28,450/- AND THE BALANCE RS.10 LAKH WAS SUSTAINED BY GIVING FOLLOWING FINDING IN PARA-6 OF HIS APPELLATE ORDER:- 06 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE APPELLANT IN THE AFORESAID PARAS AND FACTS OF THE CASE. SO FAR AS TH E ENTRIES RECORDED IN THE CASH BOOK UP TO THE DATE OF SEARCH ARE CONCERNED, I T IS AN UNDISPUTED FACT THAT IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 42 CASH OF RS.30,44,007/- WAS AVAILABLE AS ON 16.06.20 02. THE REASONS GIVEN BY THE ASSESSING OFFICER FOR MAKING ADDITIONS ARE TOTA LLY IRRELEVANT AND AGAINST FACTS OF THE CASE AND MODUS OPERANDI OF THE APPELLA NTS BUSINESS. IN FACT THE TRANSACTIONS RELATING TO CASH BELONGING TO CONSTITU ENTS IS NEVER CREDITED OR DEBITED IN THE CASH BOOK. PAYMENTS MADE TO THE CONS TITUENTS IN RESPECT OF AMOUNT RECEIVED BY THEIR RESPECTIVE CORRESPONDING P ARTIES AT BRANCHES IS NEITHER CREDITED IN THE CASH BOOK OF THE RECEIVING BRANCH, TRANSFERRED TO THE DELIVERING BRANCHES NOR IS DEBITED IN THE CASH BOOK OF THE DELIVERY BRANCH AT THE TIME OF PAYMENT. THE CASH RECEIVED FROM THE CON STITUENTS FOR TRANSFERRING THE OTHER BRANCHES IS TREATED JUST LIKE COMMODITY. THE APPELLANT FIRM NEVER UTILIZES IS OWN CASH AS PER THE CASH BOOK FOR MAKIN G THE DELIVERIES. THERE IS NO QUESTION OF MAKING PAYMENT TO THE CONSTITUENTS O UT OF THE CASH BALANCE OF THE APPELLANT FIRM. IN THE LIGHT OF THESE FACTS AND CIRCUMSTANCES THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE APPELLANT READING CASH OF RS.30,44,007/- WHICH WAS AVAILABLE ON 16.06.2005 I. E. PRIOR TO THE SEARCH. THE ARGUMENT OF THE ASSESSING OFFICER THAT CASH BOOK IS NOT RELIABLE IS NOT VALID. IT IS ONLY A SWEEPING ALLEGATION SO FAR AS THE ABOVE C ASH AS ON 16.06.2002 IS CONCERNED. THIS ENTRY CAN NOT BE MADE IN ANTICIPATI ON OF SEARCH AT ALL. THE INTRODUCTION OF CASH OF RS.10,00,000/- RECEIVED FRO M THE PARTNER AS ON 18.06.2002 IS AN AFTERTHOUGHT SINCE NO DOCUMENTARY EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH. THE STATEMENT OF ANY E MPLOYEE WITHOUT A SUPPORTING EVIDENCE CAN NOT BE RELIED UPON. THE AMO UNT BEING QUITE HUGE, A NOTE MUST HAVE BEEN KEPT OR ENTRY SHOULD HAVE BEEN MADE PRIOR TO THE SEARCH WHICH TOOK PLACE ON 20.06.2002. UNDER THESE CIRCUMS TANCES ADDITION OF RS.30,28,450/- REPRESENTING THE CASH N HAND IN THE CASH BOOK PRIOR TO THE DATE OF SEARCH IS DELETED BUT ADDITION OF RS.10,000 /- STATED TO BE RECEIVED FROM ONE OF THE PARTNERS BEING AN AFTER THOUGHT IS CONFIRMED. 44. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSE E HAS EXPLAINED THAT CASH BOOK IS REGULARLY MAINTAINED BY THE ASSESSEE-FIRM AT DEL HI BRANCH AND WAS WRITTEN UP TO 16-06-2002 AT THE TIME OF SEARCH AND CLOSING BALANC E AS ON 16-06-2002 WAS AT RS.30,44,007/-. WE FIND FROM RECORDS THAT THE ASSES SEE HAS COMPLETED CASH BOOK ON THE BASIS OF SEIZED RECORDS FROM 16-06-2002 TILL TH E DATE OF SEARCH I.E. UPTO 20-06- 2002, SHOWING THEREIN MAINLY AND ONLY THE COMMISSIO N INCOME RECEIVED BY DELHI BRANCH DURING THE ORDINARY COURSE OF ANGADIA BUSINE SS ON THE BASIS OF SEIZED BHARATIAS AND RECORDS. THE AMOUNT OF RS.10 LAKH REC EIVED FROM SHRI CHINUBHAI M PATEL, PARTNER OF THE ASSESSEE-FIRM ON 18-06-2002 F OR WHICH THE EMPLOYEE OF THE ASSESSEE-FIRM, SHRI JASHWANTBHAI STATED IN HIS STAT EMENT RECORDED DURING THE COURSE OF THE SEARCH THE FACT OF RECEIPT OF THE SAME AND T O SUBSTANTIATE THIS FACT AN AFFIDAVIT OF SHRI CHINUBHAI M PATEL AND XEROX COPIES OF RELEV ANT PAGES OF CASH BOOK AND COPY OF ACCOUNT FROM THE BOOKS OF THE SURAT HEAD OFFICE AND XEROX COPY OF RELEVANT PAGES OF CASH BOOK OF DELHI BRANCH WERE FILED BEFORE THE AUTHORIZED OFFICERS AS WELL AS IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 43 DURING THE COURSE OF THE BLOCK ASSESSMENT PROCEEDIN GS. EVEN NOW BEFORE US THE ASSESSEE HAS FILED COPIES OF THE SAME IN PAPER BOOK AT PAGE NOS.1 TO 4 . WE FURTHER FIND THAT EVEN THE AUDITOR DURING THE COURSE OF SPE CIAL AUDIT HAS OBSERVED AS UNDER:- AN AMOUNT OF RS.10,00,000/ RECEIVED FROM SHRI CHIN UBHAI MOHANLAL CREDITED IN BOOKS OF ACCOUNT ON 18.06.2002. FROM THE ABOVE FACTS, IT IS CLEAR THAT RS.10 LAKH I S SENT BY SHRI CHINUBHAI M PATEL DURING THE COURSE OF SEARCH ITSELF, WHICH WAS ADMIT TED BY SHRI JASWANTBHAI EMPLOYEE OF THE FIRM ON THE SPOT DURING THE COURSE OF RECORD ING OF STATEMENT. TAKING INTO CONSIDERATION, IN TOTALITY THE FACTS OF THE CASE, W E ARE OF THE VIEW THAT CASH BALANCE AS PER BOOKS OF ACCOUNT AS ON 20-06-2002 WAS RS.41, 93,150/- AND THE ASSESSEE HAS PRODUCED SUFFICIENT EVIDENCES TO PROVE THE SAME . ACCORDINGLY, WE FEEL THAT THIS CASH OF RS.40,28,950/- IS EXPLAINED AND NO ADDITION ON THIS ACCOUNT CAN BE SUSTAINED. ACCORDINGLY, THIS COMMON ISSUE OF THE RE VENUES APPEAL IS DISMISSED AND THAT OF THE ASSESSEE IS ALLOWED. 45. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IN IT(SS)A NO.210/AHD/2005 IS AS REGARDS TO THE ORDER OF CIT(A) DELETING THE ADDITIO N OF UNACCOUNTED CASH FOUND AT THE TIME OF SEARCH. FOR THIS, REVENUE HAS RAISED THE FO LLOWING GROUND NO.2 :- 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DI RECTING TO DELETE THE ADDITION OF RS.320,790/- MADE ON ACCOUNT OF UNACCOUNTED CAS H FOUND AT THE TIME OF SEARCH U/S.132 OF THE ACT. 46. THE BRIEF FACTS LEADING TO THE ABOVE FACTS ARE THAT THIS CASH OF RS.3,20,790/- WAS FOUND AND SEIZED FROM THE ASSESSEE IN DIFFERENT PACKETS, BUNDLES WHICH WERE RECEIVED BY DELHI BRANCH FROM OTHER BRANCHES TO BE DELIVERED TO THE PARTIES. THE ASSESSEE WAS REQUIRED TO EXPLAIN AND ACCORDINGLY AS SESSEE STATED THAT ALL THE ITEMS WERE TAGGED WITH THE LABELS SHOWING THE NAME AND AD DRESSES OF THE SENDER & RECEIVERS. THE SEARCH PARTY REMOVED THE LABELS FROM EACH BUNDLES AND MIXED ALL THE CASH WITH CASH OF THE ASSESSEE-FIRM. THE RESPECTIVE BRANCHES ISSUED ACKNOWLEDGMENT RECEIPTS TO THE SENDERS OF THE CASH AFTER TAGGING CASH WITH LABELS & ENTRIES ARE MADE IN THE BHARATIAS AND ASSESSEE KEEP S THE XEROX COPIES OF THE ACKNOWLEDGMENT. FURTHER THE ASSESSEE HAS STATED THA T THE CASH HAS BEEN DELIVERED TO THE PARTIES AND COPY OF STATEMENT SHOWING NAME A ND ADDRESS, TELEPHONE NOS. HAVE BEEN ETC. FILED. THE ASSESSING OFFICER HAS NOT ACCEPTED THE STATEMENT MADE BY IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 44 ASSESSEE AND CASH WAS FOUND FROM THE POSSESSION OF THE ASSESSEE. THE ASSESSEE FURTHER REQUESTED TO PRODUCE THE PARTIES OR TO FILE THE CONFORMATION OF ALL THE PARTIES BUT COULD NOT PRODUCE EITHER THE PARTY OR THE CONFI RMATION. THE ASSESSEE HAS NOT FURNISHED THE DETAILED ADDRESSES OF THE PARTIES AND WHETHER THE PARTIES ARE ASSESSED TO TAX OR NOT AND THE CASH FOUND IS THEIR ACCOUNTED CASH OR NOT, SOURCE OF CASH OF RS.3,20,790/- ALLEGEDLY BELONGED TO THE CONSTITUENT S REMAIN UNEXPLAINED. IN VIEW OF THE POSITION, THE CASH OF RS.3,20,790/- IS TREATED AS UNEXPLAINED CASH AND ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE. AGGRIEVED, ASSE SSEE PREFERRED APPEAL BEFORE CIT(A). 47. THE CIT(A) DELETED THE ADDITION MADE BY ASSESSI NG BY GIVING FOLLOWING FINDINGS AT PAGE-9 OF HIS APPELLATE ORDER:- .. I HAVE CAREFULLY PERUSED THE SUBMISSIONS OF THE APPELLANT WITH REGARD TO ADDITION OF RS.3,20,790/- ON ACCOUNT OF UNACCOUNTED CASH. THE AO HAS IGNORED THE PRIMAR8Y EVIDENCE FILED B THE APPELLANT ON THE GROUND THAT PARTIES WERE NOT PRODUCED. THE ASSESSING OFFICER ALLEGED TH AT IT WAS NOT KNOWN WHETHER THESE PARTIES ARE ASSESSED TO TAX OR NOT AN D THE CASH FOND IS THEIR ACCOUNTED CASH OR NOT. IN THIS REGARD IT IS OBSERVE D THAT THE BUSINESS OF THE APPELLANT IS ANGADIA I.E. COURIER/POSTAL SERVICE. IN THIS LINE OF BUSINESS IT IS NEITHER THE PRACTICE TO VERIFY THE CORRECTNESS OF N AMES AND ADDRESSES GIVEN BY THE CONSTITUENTS NOR TO VERIFY THE CONTENTS OF T HE ARTICLES. THE PRACTICE BEING FOLLOWED IS THAT AFTER RECEIVING THE ARTICLES FROM THE CONSTITUENTS, RECEIPTS ARE ISSUED TO THEM AND AFTER RECORDING THEM IN BHARTIA S I.E. THE DAILY SHEETS, THEY ARE SENT TO VARIOUS BRANCHES THROUGH THEIR DAILY SE RVICE AND DELIVERED. IT IS SEEN THAT THE APPELLANT DURING THE COURSE OF ASSESS MENT PROCEEDINGS, HAD FILED DETAILED STATEMENTS SHOWING NAMES AND ADDRESS ES, TELEPHONE NO. AND THEIR CONFIRMATORY SIGNATURES AS TO CASH RECEIVED B Y THEM. IN MY OPINION THE ASSESSING OFFICER WAS NOT JUSTIFIED IN SUSPECTING T HE CASH WHEN SO MUCH EVIDENCE WAS FURNISHED BEFORE HIM. THUS LOOKING TO THE AFORESAID DISCUSSION THE ADDITION OF RS.3,20,790/- IS DELETED. 48. BEFORE US THE LD. CIT-DR STATED THAT THE FACTS ARE EXACTLY IDENTICAL IN THE PRESENT CASE WHAT WAS BEFORE US IN IT(SS)A NO.205/AHD/2005 OF ASSESSEES APPEAL, WHEREIN WE HAVE DECIDED THIS ISSUE IN PARA-16-20 OF THIS ORDER. LD COUNSEL FOR THE ASSESSEE FAIRLY STATED THAT THIS ISSUE IS E XACTLY SAME AND FACTS ARE EXACTLY IDENTICAL. ON IDENTICAL FACTS THE LOWER AUTHORITIES HAVE MADE ADDITION BY APPLYING A FORMULA. 49. AFTER GOING THROUGH THE FACTS OF THE PRESENT CA SE AND FACTS IN IT(SS)A NO.205/AHD/2005 OF THE ASSESSEES APPEAL, WE FIND THAT THE ISSUE IS SQUARELY IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 45 COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE. FOLLOWING THE SAME, WE DISMISS THIS ISSUE OF THE REVENUES APPEAL. 50. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IN IT(SS)A NO.204/AHD/2005 IS AS REGARDS TO THE ORDER OF CIT(A) IN CONFIRMING THE AD DITION OF RS.44,11,850/- BELONGING TO THE VARIOUS CONSTITUENTS. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.2(A) TO 2(C) :- 2(A) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD ERRED IN CONFIRM ING THE ADDITION OF RS.44,11,850/= BELONGING TO VARIOUS CONSTITUENTS. 2(B) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD ERRED IN CONFIRM ING THE ADDITION OF RS.44,11,850/= BELONGING TO VARIOUS CONSTITUENTS PA RTICULARLY IN VIEW OF THE FACT THAT THE SAID AMOUNT WAS DIRECTLY TAKEN IN TO CUSTODY AND SEIZED BY THE AUTHORIZED OFFICERS FROM THE CONSTITUENTS AFTER THE COMMENCEMENT OF SEARCH AND IT IS PROVED BEYOND DOUBT THAT THE AMOUNT WAS N OT POSSESSED/OWNED BY THE APPELLANT FIRM. 2(C) IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD SHOULD HAVE DELE TED THE ADDITION OF RS.44,211,850/=. 51. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSEE EXPLAINED THE CASH OF RS.45,06,850/- TO BE BELONGING TO CONSTITUE NTS. THE ASSESSEE STATED THAT THIS CASH WAS NEITHER FOUND IN THE POSSESSION OF THE ASS ESSEE NOR ITS EMPLOYEES BUT WAS FOUND AND SEIZED FROM THE PARTIES DIRECTLY EITHER A T THE TIME OF SEARCH OR WHILE ENTERING THE BUSINESS PREMISES OF THE ASSESSEE BY A UTHORIZED OFFICERS. THE ASSESSEE STATED THAT THE CASH WAS NOT BELONGING TO THE ASSESSEE-FIRM AND IN ORDER TO VERIFY THE FACTS OF THE CASH, DURING THE COURSE OF SEARCH ACTION, THE FOLLOWING PARTIES WERE ISSUED SUMMONS BY THE ADIT (INV.) NEW DELHI BU T EITHER THE LETTER WERE NOT SERVED OR THE PARTIES DID NOT ATTEND FOR THE CLAIM OF CASH/JEWELLERY. AS NONE OF THE PARTY CLAIMED OWNERSHIP OR CASH/JEWELLERY BEFORE TH E ADIT (INV.) NEW DELHI. FURTHER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TO EXA MINE THE SOURCE OF ACQUISITION OF CASH, THE PARTIES WERE ISSUED LETTER U/S.133(6) BUT NONE OF THE PARTIES EXPECT FEW RESPONDED TO THE SUMMONS AND THEY DID NOT MAKE ANY APPLICATION FOR CLAIMING THE SAID CASH AND DETAILS OF THE PARTIES WHO RESPONDED TO THE LETTER ISSUED U/S.133(6) OF THE ACT ARE [A] DEPAK SON [B] JAMNADAS [C] MADANLAL & [D] SHRI GIRISH B PARMAR. ACCORDINGLY, THE ASSESSING OFFICER ACCEPTED THE OWN ERSHIP OF CASH IS IN RESPECT OF IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 46 SHRI DEPAK SONI AND SHRI GIRISH B PARMAR AS EXPLAIN ED AND THE BALANCE CASH OF RS.44,11,850/- WAS ADDED AS UNDISCLOSED INCOME OF T HE ASSESSEE FOR THE BLOCK PERIOD. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER. AGGRIEVED, ASSESSE E CAME IN SECOND APPEAL BEFORE US. 52. BEFORE US LD. COUNSEL FOR THE ASSESSEE STATED T HE FACT THAT DURING THE COURSE OF SEARCH THE AUTHORIZED OFFICER HAVE FOUND & SEIZE D THE CASH FROM EACH OF THEM PREPARED SEPARATE INDEPENDENT INVENTORIES AND ALSO RECORDED THEIR STATEMENTS. IN THE INVENTORIES PREPARED, IT IS SPECIFICALLY WRITTE N THAT THE CASH BELONG TO SO AND SO PERSON. HE STATED THAT XEROX COPIES OF INVENTORIES AND STATEMENTS ARE AVAILABLE ON THE RECORDS OF THE DEPARTMENT AND THE ASSESSEE HAS ALSO TAKEN PHOTO COPIES, WHICH ARE PART OF ASSESSEES PAPER BOOK. HE ARGUED THAT T HE PARTIES FROM WHOM CASH WAS FOUND WERE NOT PRESENT IN THE OFFICE PREMISE OF THE ASSESSEE-FIRM AT THE TIME OF COMMENCEMENT OF SEARCH OTHERWISE SEPARATE INVENTORI ES WOULD NOT HAVE BEEN PREPARED. HE ARGUED THAT THE PERSONS FROM WHOSE POS SESSION CASH WERE FOUND EITHER CAME INTO OFFICE OR WERE TAKEN IN THE OFFICE BY THE AUTHORISED OFFICERS FROM OUTSIDE THE OFFICE ON FINDING CASH WITH THEM AFTER COMMENCEMENT OF THE SEARCH. HE ARGUED THAT FROM THOSE PARTIES, NEITHER ACKNOWLEDGM ENT RECEIPTS WERE ISSUED NOR ANY DOCUMENT WAS FOUND. HE ARGUED THAT AUTHORIZED O FFICERS RECORDED STATEMENTS OF THOSE PERSONS ON OATH WHEREIN VARIOUS INFORMATION L IKE NAMES, ADDRESSES OF POSSESSORS, NAME ADDRESSES AND TELEPHONE NOS. OF OW NERS OF THE CASH, PURPOSES OF POSSESSING CASH BY THOSE PERSONS ARE ALSO RECORDED AND THE DEPARTMENT IS HAVING FULL FIRST HAND INFORMATION. HE ARGUED THAT ASSESSI NG OFFICER HAS WITHOUT CONSIDERING THE EXPLANATION FILED BY THE ASSESSEE-FIRM ADDED RS .44,11,850/- ON THE GROUND THAT IT IS NOT PROVED BY THE ASSESSEE THAT THE CASH BELONGE D TO THE OTHER PARTIES. HE ARGUED THAT THE FINDINGS OF ASSESSING OFFICER IS NOT PROPE R AS CASH WAS SEIZED FROM THE CONSTITUENTS, THEIR STATEMENTS WERE ALSO RECORDED B Y THE AUTHORIZED OFFICERS AND THEY WERE ALLOWED TO GO BY THE AUTHORIZED OFFICERS BEFO RE INTRODUCING THEM TO THE ASSESSEE-FIRM. THE IDENTIFICATION, ADDRESSES AND TE LEPHONE NOS. WERE WITH THE AUTHORIZED OFFICERS AND DEPARTMENT AND THESE WERE G IVEN TO THE ASSESSEE-FIRM WHEN THE BLOCK ASSESSMENT PROCEEDINGS WERE IN PROGRESS. IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 47 53. ON THE OTHER HAND LD. CIT-DR ARGUED THAT THE AS SESSEES ARGUMENTS THAT CASH BELONGED TO OTHER PERSONS WHICH WAS REQUIRED T O BE TRANSFERRED TO THE RESPECTIVE ADDRESSES ARE NOT APPRECIABLE BECAUSE TH E ASSESSING OFFICER HAS MADE ADDITION AFTER CONDUCTING NECESSARY ENQUIRIES U/S.1 33(6) OF THE ACT. ACCORDING TO HIM, THE CASH WAS FOUND AT THE PREMISES OF ASSESSEE . HENCE ONUS TO PROVE THAT THE SAME RIGHTFULLY BELONGED TO SOMEONE ELSE IS UPON IT ONLY. HE FURTHER ARGUED THAT THESE PERSONS INVOLVED DID NOT TURN UP TO CLAIM THE RESPECTIVE AMOUNTS AS PLEADED BY THE ASSESSEE AND POSSESSION IS THE ONLY CRITERIA FOR MAKING THE ADDITION. LD. CIT- DR STATED THAT THIS AMOUNT BELONGING TO 12 PERSONS AS DISCUSSED ABOVE WERE NOT CLAIMED BY THEM, AND THIS SHOWS THAT THE AMOUNT MUS T BE TAXED AND SHOULD NOT BE LEFT OUT. FURTHER HE STATED THAT THE OWNERSHIP OF C ASH IN THE HANDS OF RESPECTIVE PERSONS SHOULD HAVE BEEN ESTABLISHED AND GENUINENES S OF THE AMOUNT IS REQUIRED TO BE ESTABLISHED BUT THE ASSESSEE FAILED TO DO SO. AC CORDINGLY, HE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 54. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACT AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THIS CASH W AS FOUND FROM THE 12 PERSONS ENTERING WITH CASH IN THE PREMISES OF THE ASSESSEE DURING THE CONTINUATION OF SEARCH PROCEEDINGS. WE FIND FROM THE RECORDS THAT THE AUTH ORIZED OFFICER FOUND & SEIZED THE CASH FROM EACH OF THEM AND PREPARED SEPARATE INDEPE NDENT INVENTORIES AND ALSO RECORDED THEIR STATEMENTS. IN THE INVENTORIES PREPA RED, IT IS SPECIFICALLY WRITTEN THAT THE CASH BELONG TO SO AND SO PERSON. WE FIND THAT X EROX COPIES OF INVENTORIES AND STATEMENTS ARE AVAILABLE ON THE RECORDS OF THE DEPA RTMENT AND THE ASSESSEE HAS ALSO TAKEN PHOTO COPIES, WHICH ARE PART OF ASSESSEE S PAPER BOOK. IT IS ALSO A FACT THAT THE PARTIES FROM WHOM CASH WAS FOUND WERE PRES ENT IN THE OFFICE PREMISE OF THE ASSESSEE-FIRM AT THE TIME OF COMMENCEMENT OF SEARCH OTHERWISE SEPARATE INVENTORIES WOULD NOT HAVE BEEN PREPARED AND PERSON S FROM WHOSE POSSESSION CASH WERE FOUND EITHER CAME INTO OFFICE OR WERE TAKEN IN THE OFFICE BY THE AUTHORISED OFFICERS FROM OUTSIDE THE OFFICE ON FINDING CASH WI TH THEM AFTER COMMENCEMENT OF THE SEARCH. IT IS ALSO A FACT THAT NO ACKNOWLEDGMENT RE CEIPTS WERE ISSUED TO THESE PARTIES BY THE ASSESSEE. IT IS ALSO A FACT THAT THE AUTHORI ZED OFFICERS RECORDED STATEMENTS OF THOSE PERSONS ON OATH WHEREIN VARIOUS INFORMATION L IKE NAMES, ADDRESSES OF POSSESSORS, NAME ADDRESSES AND TELEPHONE NOS. OF OW NERS OF THE CASH, PURPOSES OF POSSESSING CASH BY THOSE PERSONS ARE ALSO RECORDED AND THE DEPARTMENT IS HAVING IT(SS)A NO.203-05/AHD/05, 210-12/AHD/05 & 233/AHD/06 B.P. 1/ 4/96 TO 20.6.02, 91-92 TO 20.1.00 ACIT, CENTRAL CIRCLE 3 SRT V. PATEL GROUP PAGE 48 FULL FIRST HAND INFORMATION. IN VIEW OF THE ABOVE I NFORMATION AND FACTS AVAILABLE ON RECORDS, WE ARE OF THE VIEW THAT THE LOWER AUTHORIT IES WITHOUT CONSIDERING THE EXPLANATION FILED BY THE ASSESSEE-FIRM ADDED RS.44, 11,850/- ON THE GROUND THAT IT IS NOT PROVED BY THE ASSESSEE THAT THE CASH BELONGED T O THE OTHER PARTIES, WHEREAS IT IS A FACT THAT THIS CASH WAS SEIZED FROM THE CONSTITUE NTS, THEIR STATEMENTS WERE ALSO RECORDED BY THE AUTHORIZED OFFICERS AND THEY WERE A LLOWED TO GO BY THE AUTHORIZED OFFICERS BEFORE INTRODUCING THEM TO THE ASSESSEE-FI RM. THE IDENTIFICATION, ADDRESSES AND TELEPHONE NOS. WERE WITH THE AUTHORIZED OFFICER S AND DEPARTMENT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSID ERED VIEW THAT THIS CASH OF RS.44,11,850/- BELONGS TO 12 CONSTITUENTS AS NAMED IN THE BLOCK ASSESSMENT ORDER IN VIEW OF THE ABOVE REASONS. ACCORDINGLY, WE ALLOW THIS ISSUE OF ASSESSEES APPEAL. 55. HOWEVER, INCOME DETERMINED IN PURSUANCE TO OUR AFORESAID DIRECTION IN THE CASE OF THESE ASSESSEES SHALL NOT GO BELOW THE RET URNED INCOME. 55. IN THE RESULT, REVENUES APPEAL IN IT(SS)A NO.233/AHD/2006 IS PARTLY ALLOWED, REVENUES APPEALS IN IT(SS)A NO.210-212/AHD/2005 ARE DISMISSED, ASSESSEES APPEALS IN IT(SS)A NO.203-204/AHD/2005 A RE ALLOWED AND IN IT(SS)A NO.205/AHD/2005 IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/11/2010 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 30/11/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD