Shri Uday Bhatt, Ahmedabad V. The Dy. Commissioner of Income Tax, Central Circle-1(4), Ahmedabad

ITSSA 204/AHD/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0972 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 18-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Capital asset; Loose papers; Document seized; Principle of natural justice; Peak credit; Cost of acquisition; Accommodation entries; Retraction; Documents seized
• Section: 142(1); 153A; 250; 143(2); 264; 139(1); 13; 22; 131; 68; 132; 15

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ IT(SS)A NO. 264 TO 267 /AHD/2016 WITH CROSS OBJECTION NOS.39 TO 42/AHD/2018 / ASSESSMENT YEAR: 2008-09 TO 2011-12 AND ITA NO.2326/AHD/2016 WITH CO NO.43/AHD/2018 [ASSTT.YEAR 2012-13] DCIT, CENT.CIR.1(4) AHMEDABAD. VS M/S.GALAXY DEVELOPERS D-4, GALAXY AVENUE, OPP: GALAXY CINEMA NR.N.H.NO.8, NARODA AHMEDABAD 382 330 PAN : AAHFG 3294 M [IN IT(SS)A.NO.268 TO 271/AHD/2016] WITH CROSS OBJECTION NOS.200 TO 203/AHD/2016 / ASSESSMENT YEAR: 2008-09 TO 2011-12 AND ITA NO.2327/AHD/2016 WITH CO NO.204/AHD/2016 [ASSTT.YEAR 2012-13] DCIT, CENT.CIR.1(4) AHMEDABAD. VS SHRI UDAY BHATT 75, NANDABAUG DEHGAM ROAD NARODA, AHMEDABAD IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 2 - IT(SS)A NO.204/AHD/2016 [ASSTT.YEAR 2010-11] SHRI UDAY BHATT 75, NANDABAUG DEHGAM ROAD NARODA, AHMEDABAD VS DCIT, CENT.CIR.1(4) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SMT.NUPUR SHAH, AR REVENUE BY : SHRI SUBHASH BAINS, CIT-DR / DATE OF HEARING : 01/12/2020 /DATE OF PRONOUNCEMENT : 17/ 12/2020 O R D E R PER RAJPAL YADAV, VICE-PRESIDENT: THE LD.CIT(A) HAS DECIDED TEN APPEALS OF THE ASSESSEES BY WAY OF COMMON IMPUG NED ORDER DATED 14.6.2016 FOR THE ASSESSMENT YEARS 2008-09 TO 2012- 13. DISSATISFIED WITH ORDERS OF THE LD.CIT(A), REVENUE IS IN APPEAL. ON RECEIPT OF NOTICES, BOTH THE ASSESSEES HAVE FILED CROSS-OBJECTION IN EACH AP PEAL OF THE REVENUE. SIMILARLY, IN THE ASSESSMENT YEAR 2010-11, SHRI UDA Y DINESCHANDRA BHATT IS IN CROSS APPEAL VIDE IT(SS)A.NO.204/AHD/2016. TH US, BY WAY OF THIS COMMON ORDER, WE ARE GOING TO DISPOSE OF 21 APPEALS I.E. ELEVEN APPEALS AND TEN CROSS-APPEALS. 2. FIRST WE TAKE APPEALS OF THE REVENUE. THOUGH R EVENUE HAS TAKEN THREE GROUNDS OF APPEAL IN EACH ASSESSMENT YEAR, WH ICH CONTAINED SIX SUB-GROUNDS IN GROUND NO.1, BUT A PERUSAL OF ALL TH ESE GROUNDS WOULD INDICATE THAT SOLITARY GRIEVANCE OF THE REVENUE REV OLVES AROUND ONE ISSUE THAT THE LD.CIT(A) HAS ERRED IN DELETING ADDI TIONS MADE BY THE AO IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 3 - ON ACCOUNT OF UNEXPLAINED INVESTMENT BY THE ASSESSE E IN THESE ASSESSMENT YEARS. THESE ADDITIONS HAVE BEEN MADE B Y THE AO WITH AID OF SECTION 69/69B OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT SEARCH UNDER SE CTION 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT ON 21.7.2011 A T THE PREMISES OF BOTH THE ASSESSEES, AND CERTAIN OTHER PERSONS OF TH E GROUP. NOTICES UNDER SECTION 153A WERE ISSUED UPON BOTH THE ASSESS EE, AND THEY HAVE FILED THEIR RETURNS OF INCOME. AT THE TIME OF HEAR ING, THE PARTIES HAVE MAINLY MADE REFERENCE TO THE ASSESSMENT YEAR 2008-0 9 IN THE CASE OF GALAXY DEVELOPERS. THEREFORE, FOR FACILITY OF REFE RENCE, WE TAKE UP THE FACTS FROM IT(SS)A.NO.264/AHD/2016 FOR THE ASSTT.YE AR 2008-09 IN THE CASE OF GALAXY DEVELOPERS. 4. THE ASSESSEE IN THIS YEAR HAD FILED ITS RETURN O F INCOME ON 29.9.2008 UNDER SECTION 139(1) OF THE ACT DECLARING TOTAL INC OME AT RS.54,19,480/-. IN RESPONSE TO THE NOTICE RECEIVED UNDER SECTION 15 3A, IT HAS FILED ITS RETURN OF INCOME ON 16.7.2012 DECLARING THE SAME IN COME, WHICH WAS ORIGINALLY FILED UNDER SECTION 139(1) OF THE ACT. THE LD.AO THEREAFTER ISSUED NOTICE UNDER SECTION 143(2) ON 5.9.2012 AND ALSO ISSUED NOTICE UNDER SECTION 142(1) ALONG WITH DETAILED QUESTIONNA IRE. THE AO HAS PASSED THE ASSESSMENT ORDERS ON 28.3.2014. THE FAC TS WITH REGARD TO THE ISSUE OF NOTICE AND FINALIZATION OF ASSESSMENTS ARE CONCERNED, THEY ARE IDENTICAL IN OTHER YEARS. ALL ASSESSMENTS HAVE BEE N MADE ON 28.3.2014 IN THE CASE OF BOTH THE ASSESSEES. 5. BEFORE EMBARKING UPON AN INQUIRY ON THE FACTS IN DETAILS, WE WOULD LIKE TO TAKE COGNIZANCE OF DETAILS COMPILED I N TABULAR FORM AND IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 4 - NOTICED BY THE LD.CIT(A) ON PAGE NO.78 OF THE IMPUG NED ORDER. THIS TABLE READS AS UNDER: ASSESSMENT YEAR ADDITIONS BY THE A.O. REFERENCE TO SEIZED MATERIAL UDAY D. BHATT GALAXY DEVELOPERS 2008 - 09 RS. 2,35,00000 A2 - PAGE - 88, 77 & 76. A2 - PAGE - 88, 77 & 76. / 2009 - 10 RS. 796,00,000 A2 - PAGE - 76, 75, 6, 10, 9, 80, 81 & 83. A99 - PAGE - 2, 4. A2 - PAGE - 76, 75, 6, 10, 9, 80, 82, 81 & 83. A99 - PAGE - 2, 4. 2010 - 11 RS. 1,41,75,000 A2 - PAGE - 69, 66, 59 & 54. A2 - PAGE - 69, 66, 59 & 54. 2011 - 12 RS. 6,74,440,70 A2 - PAGE - 49, 37, 35, 34/41, 32, 40, 29, 28, 22, 21, 20. A2 - PAGE - 49, 37, 35, 34, 41, 32, 40, 29, 28, 22, 21, 20. 2012 - 13 RS.6,97,25,646 DIFFERENCE FIGURE AS PER AO DIFFERENCE FIGURE AS PER AO 6. A PERUSAL OF THE ABOVE TABLE WOULD INDICATE THAT ON THE BASIS OF ANNNEXURE-A/2 AND ANNEXURE-A/89 FOUND AT THE PREMIS ES OF SHRI MAHESHSINGH R. KHUSHWAH (MRK FOR SHORT), THE AO S OUGHT TO MAKE ADDITION OF THE AMOUNT STATED IN THE COLUMN NO.2 IN EACH ASSESSMENT YEAR SUBSTANTIALLY IN THE HANDS OF BOTH THE ASSESSE ES. HE MADE THESE ADDITIONS IN THE HANDS OF BOTH THE ASSESSEES AND TH ESE ADDITIONS HAVE BEEN DELETED BY THE LD.CIT(A). THUS, THE REVENUE I S IMPUGNING THE DELETION OF THESE ADDITIONS IN EACH ASSESSMENT YEAR FROM ASSTT.YEAR 2008-09 TO 12-12 FROM THE HANDS OF EACH ASSESSEE I. E. GALAXY DEVELOPERS AND SHRI UDAY BHATT (UB FOR SHORT). IN OTHER WOR DS, IN THE ASSTT.YEAR 2008-09 ON THE BASIS OF PAGES NO.88, 77, 76 OF ANNE XURE-A/2, THE LD.AO HAS MADE ADDITION OF RS.2,35,00,000/- IN THE HANDS OF GALAXY DEVELOPERS AND SIMILARLY HE ADDED THIS VERY AMOUNT IN THE HAND S OF UDAY BHATT. IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 5 - THUS, THERE IS A DUPLICATION OF ADDITION ON SUBSTAN TIVE BASIS IN THE HANDS OF BOTH THE ASSESSEES ON THE BASIS OF A COMMON PAPE R. 7. THE LD.CIT-DR WHILE TAKING US THROUGH THE ASSESS MENT ORDER SUBMITTED THAT DURING THE COURSE OF SEARCH AT THE R ESIDENTIAL/OFFICE PREMISES OF MRK DIARY AND LOOSE PAPERS WERE FOUND AND SEIZED WHICH WERE INVENTORISED AS ANNEXURE-A/2 AND A/89. THESE DOCUMENTS WERE WRITTEN BY MRK AND IT CONTAINED INFLOW/OUTFL OW OF MONEY BOTH IN CHEQUE AS WELL AS CASH. WHEN THESE PAPERS WERE CONFRONTED TO HIM, HE DISCLOSED THAT HE HAS TAKEN ON-MONEY FROM GALAXY DEVELOPERS FOR SALE OF LAND TO THEM. THUS, ON THE STRENGTH OF REC OVERY OF MATERIAL EXHIBITING RECEIPT OF ON-MONEY IN CASH FROM THE ASS ESSEES COUPLED WITH STATEMENT OF THE AUTHOR OF THE PAGE, THE AO HAS MAD E ADDITION IN THE HANDS OF THESE ASSESSEES ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PURCHASE OF LAND. 8. THE LD.CIT-DR THEREAFTER TOOK US THROUGH ORDER O F THE LD.CIT(A) AND SUBMITTED THAT BASICALLY MRK WAS A BROKER IN LAND. HE WAS NOT ABSOLUTE OWNER OF THE LAND WHICH IS SUBJECT MATTER OF TRANSACTION ENTERED BY THESE ASSESSEES. HE MADE AVAILABLE TO THEM THE LANDS FROM OTHER PERSONS ALSO, AND THEREFORE HE TOOK CASH ALSO FOR M AKING AVAILABLE THE LAND TO THE ASSESSEES. THE LD.CIT(A) FAILED TO APP RECIATE THIS ROLE OF MRK BEFORE BELIEVING THAT NO CASH WAS PAID BY THE ASSESSEES. HE FURTHER TOOK US THROUGH PAGE NO.27 OF THE ASSESSMEN T ORDER WHEREIN, THE LD.AO HAS SUMMARIZED THE ROLE OF MRK. ACCORDING TO THE LD.CIT-DR SHRI MRK HAS PERFORMED VARIOUS ROLES VIZ. PURCHASE OF LAND, ACQUISITION OF LAND, EXECUTING DOCUMENTS FOR PAYMENTS TO FARMER S AND THEIR IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 6 - RELATIVES TO CLEAR BANA CHITTIS AND COURT CASES, TO TAKE POSSESSION FROM GANOTIAS AND SETTLEMENT WITH OTHER PERSONS OF THE AREA. 9. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESS EE RELIED UPON ORDER OF THE LD.CIT(A). SHE FURTHER SUBMITTED THAT THE AO HAS BEEN HARPING UPON TWO PIECES OF EVIDENCES. FIRST PIECE OF EVIDENCE IS ANNEXURE A/2 AND ANNEXURE-A/89. THESE DOCUMENTS WE RE SEIZED FROM THE PREMISES OF MRK AND THESE PAGES WERE IN HAND WRITING OF SHRI MRK. THE SETTLED POSITION OF THE LAW IS THA T WHENEVER ANY PAPER IS FOUND FROM THE PREMISES OF ANY PERSON DURING ANY INVESTIGATION OR SEARCH, THEN THE FIRST DUTY TO EXPLAIN CONTENTS OF PAPERS IS UPON THE PERSON FROM WHOSE PREMISES THEY WERE FOUND. SIMILA RLY PRESUMPTION OF TRUTH ATTACHED TO THE PAPERS FOUND DURING THE CO URSE OF SEARCH UNDER SECTION 132A ALSO APPLICABLE QUA PERSON FROM WHOSE PREMISES THOSE PAPER WERE FOUND AND IN WHOSE WRITING THESE PAPERS WERE FOUND. 10. OTHER PIECE OF EVIDENCE IS ALLEGED ADMISSION OF MRK THAT THE CASH AND CHEQUE TRANSACTIONS REFLECTED IN THESE PAG ES BELONGED TO GALAXY GROUP AND UB. SHE POINTED OUT THAT THE ST ATEMENT OF SHRI MRK WAS RECORDED ON THREE OCCASIONS VIZ. A) U/S.132(4) DATED 21.7.2011 (PAGE NO.1814 TO 1830 OF PAPER-BOOK) B) UNDER SECTION 131 DATED 27.7.2011 (COPIES AVAILABLE ON PAGE NO.1831 TO 1838 OF THE PAPER BOOK) C) UNDER SECTION 131 DATED 2.9.2011 D) CROSS-EXAMINATION DATED 10.3.2014 E) RETRACTION AFFIDAVIT OF MRK (COPIES AVAILABLE FRO M PAGE NO.880 TO 882 OF PB) IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 7 - 11. SHE SUBMITTED THAT COPIES OF ALL THESE STATEMEN TS ARE AVAILABLE IN THE PB AND MADE REFERENCE TO THE RELEVANT PAGES. O N THE STRENGTH OF HONBLE SUPREME COURTS DECISION IN THE CASE OF CBI VS. VC SHUKLA & OTHERS, (1998) 3 SC CASES 410 AND ON THE JUDGMENT O F HONBLE BOMBAY HIGH COURT IN THE CASE OF ACIT VS. LATA MANGESHKAR, 97 ITR 696, SHE CONTENDED THAT THE ASSESSEE CANNOT BE BURDENED WITH THE TAX LIABILITY MERELY ON THE BASIS OF NOTING AND JOTTING RECORDED BY A THIRD PERSON IN HIS DIARY AT HIS PREMISES, AND MORE SO, WHEN SUCH P ERSON WHO MADE SUCH ENTRIES GAVE CONFLICTING STATEMENT AT DIFFEREN T STAGES. IN OTHER WORDS, IF A THIRD-PERSON AUTHORED DOCUMENT FOUND AT HIS PREMISES GIVES CONFLICTING STATEMENT, THEN THERE COULD NOT BE ANY EVIDENTIARY VALUE TO SUCH A STATEMENT AS WELL AS TO THE NOTING MADE BY H IM. SHE ALSO MADE REFERENCE TO LARGE NUMBER OF OTHER DECISIONS FOR TH IS PROPOSITION, BUT WE NEED NOT TO RECITE AND RECAPITULATE THESE DECISIONS FOR THE ABOVE PROPOSITION. 12. IN HER NEXT FOLD OF SUBMISSIONS, SHE CONTENDED THAT SHRI MRK AND HARILAL VALJIBHAI THAKKAR (HVT FOR SHORT) HAV E FILED AN APPLICATION BEFORE THE SETTLEMENT COMMISSION FOR SE TTLEMENT OF THEIR TAX DISPUTES. SUCH APPLICATION WAS FILED ON 11.3.2014. IN THIS APPLICATION WITH REGARD TO THE NOTING ON ANNEXURE A/2 AND A/89, THEY TOOK THE STAND THAT IT IS INTERNAL ROTATION OF CASH OF THEIR OWN, AND THEY OFFERED FOR TAXATION ON THE BASIS OF PEAK CREDIT AVAILABLE AT A NY POINT OF TIME IN THESE PAGES. THE LD.SETTLEMENT COMMISSION HAS DIRECTED T HE INVESTIGATING AGENCY TO WORK THE EXACT PEAK AVAILABLE IN THAT FUN D FLOW STATEMENT IN ANNEXURE A/2 AND ANNEXURE A/89. AN OPPORTUNITY TO THAT EFFECT WAS GIVEN TO THE AO OF THE PRESENT ASSESSEES ALSO. AFT ER WORKING OF PEAK CREDIT, WHICH HAS DULY BEEN GOT VERIFIED FROM THE D EPARTMENT, THE IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 8 - SETTLEMENT COMMISSION HAS ACCEPTED APPLICATIONS OF BOTH THESE ASSESSEES I.E. MRK AND HVT AND ALSO ACCEPTED TH EIR STAND THAT AMOUNTS NARRATED ON THESE PAGES OF A/2 AND A/89 ARE THEIR INTERNAL ACCRUAL AND ROTATION OF FUNDS. THUS, THE LD.COUNSE L FOR THE ASSESSEE CONTENDS THAT IF IN THEIR ASSESSMENT IT WAS ACCEPTE D AS A FACT THAT IT WAS THEIR INTERNAL ACCRUAL AND ROTATION OF FUNDS, THEN HOW A DIFFERENT TREATMENT CAN BE GIVEN TO THESE VERY DOCUMENTS WHIL E ASSESSING THE INCOME OF THESE TWO ASSESSEES. SHE ALSO POINTED OU T THAT PEAK AMOUNT WORKED OUT BY THE SETTLEMENT COMMISSION IS FAR LESS THAN THE ULTIMATE AMOUNT ASSESSED ON THE STRENGTH OF THESE PAGES IN T HE HANDS OF THESE ASSESSEES. SHE TOOK US THROUGH THE FINDING OF THE LD.CIT(A) IN THIS REGARD AND ALSO MADE REFERENCE TO THE PEAK WORKING NOTICED BY THE CIT(A) IN THE IMPUGNED ORDER, WHICH IS AVAILABLE IN THE PB ALSO. 13. IN HER THIRD FOLD OF CONTENTION, SHE CONTENDED THAT IF A COMPARATIVE STUDY IS BEING MADE OF NON-AGRICULTURE LAND PURCHAS ED BY GALAXY DEVELOPERS DURING THE PERIOD 2007 TO 2009 WITH HELP OF THESE PERSONS QUA THE LAND TRANSACTION TAKEN PLACE IN THESE AREAS I. E. VASTRAL GAM, THEN IT WOULD REVEAL THAT RATES MENTIONED BY THE ASSESSE E IN THE SALE DEED WERE FAR MORE THAN THEN PREVAILING RATE IN THE MARK ET, RATHER THE RATES PAID BY THE ASSESSEES WERE HIGHER THAN THE JANTRI VALUE. FOR THIS PURPOSE, SHE TOOK US THROUGH THE SUBMISSIONS MADE B Y THESE ASSESSEES BEFORE THE LD.CIT(A) AND PARTICULAR PARAGRAPH-20 TO 23 ON PAGE NO.43 OF THE IMPUGNED ORDER, WHICH READS AS UNDER: 20. THAT THE APPELLANT FIRM WOULD LIKE TO SUBMIT T HAT THE NON-AGRICULTURAL LAND PURCHASED BY THE APPELLANT FIRM M/S. GALAXY DE VELOPERS, WAS AT A RATE MORE THAN THE PREVAILING MARKET RATE (JANTRI RATE) . IN SUPPORT OF THE SAID CONTENTION, THE APPELLANT FIRM HAS ALREADY PLACED O N RECORD THE COMPARATIVE SALES INSTANCES OF DIFFERENT SURVEY NUMBERS NON-AGR ICULTURAL LAND WHICH IS IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 9 - FALLING INTO THE VASTRAL GAM (SIM) FOR THE YEAR 2007 TO 2009 IN EXHIBIT - III TO APPELLANT FIRM'S LETTER DATED 9-1-2014 (REFER PAGE NO. 406 TO 428 OF PAPER BOOK) . FROM VERIFICATION OF THE SAID COMPARATIVE SA LES INSTANCES CHART, IT CAN BE NOTICED THAT THE NON-AGRICULTURAL LAND SALES CONSID ERATION RATE AS PER THE EXECUTED CONVEYANCE DEED IN THE PERIOD 2007 TO 2009 FROM THE LAND REVENUE RECORDS WORKS OUT TO RS. 100/- PER SQ. MTR TO RS. 2 00/- PER SQ. MTR AND UPTO MAXIMUM OF RS. 800/- PER SQ. MTR. WHEREAS, NON-AGRI CULTURAL LAND PURCHASED BY THE APPELLANT FIRM M/S. GALAXY DEVELOPERS AT VAS TRAL GAM (SIM), THE PURCHASE COST BY APPELLANT FIRM M/S. GALAXY DEVELOP ERS IS ALSO A MORE PRICE / RATE PER SQ. MTR I.E. MORE THAN RS. 2300/- PER SQ. MTR WHICH IS NEARLY MORE THAN 3 TIMES THAN THE HIGHEST RATE IN COMPARATIVE SALES INSTANCES RATE ATTACHED HAS BEEN PROVIDED .TO THE LD. AS PER EXHIBIT - III TO A PPELLANT FIRM'S LETTER DATED 9-1- 2014. 21. SIMILARLY, IN RESPECT OF VARIOUS BANAKHAT AGREE MENT ENTERED BY THE APPELLANT FIRM M/S. GALAXY DEVELOPERS, IN RESPECT O F VARIOUS SURVEY NUMBERS NEW TENURE (NEW CONDITION) AGRICULTURE LAND AT VASTR AL, WHEREIN, SHRI MAHESHSINGH R. KHUSHWAH HAS ENTERED INTO A BANAKHAT AGREEMENT WITH APPELLANT FIRM ON BEHALF OF THE LAND OWNER AS A POW ER OF ATTORNEY HOLDER. THE APPELLANT FIRM HAS TO SUBMIT THAT ALL THE DIFFERENT SURVEY NOS LAND AT VASTRAL IN RESPECT WHICH BANAKHATS WERE FOUND FROM THE RESIDEN CE OF SHRI PURSHOTTAMBHAI P. PATEL WHICH WAS ENTERED INTO BETWEEN M/S. GALAXY DEVELOPERS AND LAND OWNER THROUGH POWER OF ATTORNEY HOLDER SHRI MAHESHSI NGH R. KHUSHWAH ARE THE NEW TENURE AGRICULTURE LANDS (NEW CONDITION LAN D). THE SALE OF NEW TENURE AGRICULTURE LAND (NEW CONDITION LAND) CAN TAK E PLACE ONLY AFTER THE GOVERNMENT OF GUJARAT GRANT THE PERMISSION FOR SALE OF LAND AND AS PER THE PROVISIONS OF LAND REVENUE LAW, THE GOVERNMENT OF G UJARAT GRANTS THE PERMISSION FOR SALE OF NEW TENURE AGRICULTURE LAND (NEW CONDITION LAND) ONLY AFTER DETERMINING THE PREMIUM PAYABLE FOR CONV ERTING THE LAND TO OLD TENURE AGRICULTURE LAND (OLD CONDITION LAND) FOR MAK ING IT SELLABLE AND THE LAND OWNER OR THE PROPOSED PURCHASER OF THE NEW TEN URE (NEW CONDITION) LAND PAYS THE PREMIUM AMOUNT TO THE GOVERNMENT OF G UJARAT. ONCE THE RATE PER SQUARE METER AS PER THE BANAKHAT IN RESPECT OF NEW TENURE LAND HAS BEEN TAKEN INTO CONSIDERATION, WHICH IS IN THE RANGE OF RS. 530/- TO RS. 540/- PER SQ. MTR + 80% OF THE JANTRI RATE PREVAILING ON 1-4-2008 IS TAKEN INTO CONSIDERATION, WHICH IS REQUIRED TO BE PAID BY APPE LLANT FIRM M/S. GALAXY DEVELOPERS AS PREMIUM AMOUNT TO THE GOVERNMENT OF G UJARAT, IF THE PERMISSION IS GRANTED BY THE GOVERNMENT OF GUJARAT, THEN THE COST OF LAND TO BE PAID BY THE APPELLANT FIRM M/S. GALAXY DEVELOPERS I N RESPECT OF SAID DIFFERENT SURVEY NOS LAND AT VASTRAL, WHICH ARE NEW TENURE AG RICULTURE LAND( NEW CONDITION LAND), WILL WORK SUBSTANTIALLY HIGHER THA N THE RATE FOUND TO BE NOTED IN THE BANACHITTHI OF RS. 2600/- PER SQ.YD. THE APP ELLANT FIRM HAS ALSO PROVIDED TO THE LD. A.O VIDE HIS SUBMISSION DATED 09-01-2014 (REFER PAGE NO. 406 TO 428 OF PAPER BOOK), A CHART SHOWING THE COST OF ACQ UISITION OF THE SAID NEW TENURE (NEW CONDITION) AGRICULTURE LAND BEARING DIFF ERENT SURVEY NOS LAND IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 10 - AT VASTRAL, FOR WHICH BANAKHATS WERE FOUND AND SEIZ ED FROM THE RESIDENCE OF P.P. PATEL AS PER ANNEXURE -A/2, AFTER TAKING INTO CONSIDERATION THE PREMIUM TO BE PAID TO THE GOVERNMENT OF GUJARAT AS PER THE PREVAILING JANTRI RATE. FURTHER, THE COST OF ACQUISITION OF SAID NEW TENURE (NEW CONDITION) AGRICULTURE LAND AT VASTRAL WORKS OUT MORE THAN RS. 4000/- PER SQ. MTS AND WHICH IS SUBSTANTIALLY HIGHER THAN OLD TENURE AGRIC ULTURE LAND AND/OR N.A LAND SOLD IN VASTRAL IN THE SAME YEAR AND /OR PERIO D OF 2007 TO 2009. ON VERIFICATION OF THE COMPARATIVE SALES INSTANCES CHA RT, WHEREIN ALL THE AGRICULTURAL LANDS WHICH WERE OLD TENURE AGRICULTUR E (OLD CONDITION) LAND NOT SUBJECT TO PREMIUM PAYABLE TO GOVERNMENT OF GUJ ARAT AND NOT SUBJECT TO GRANTING THE PERMISSION OF GOVERNMENT OF GUJARAT, T HE SALES CONSIDERATION WHICH TOOK PLACE BETWEEN THE PURCHASER AND SELLER I N RESPECT OF ALL COMPARATIVE SALES INSTANCES AT VASTRAL GAM (SIM) ARE IN THE RANG E OF RS. 50/- TO RS. 100/- PER SQ. MTR. 22. THAT THE LD. A.O HAS NOT BROUGHT ON RECORD ANY - COMPARATIVE SALES INSTANCES OF THE ADJACENT AND VICINITY AREA OF THE NON-AGRICULTURAL LAND, OLD TENURE (OLD CONDITION) AGRICULTURAL LAND AND NEW TEN URE (NEW CONDITION) AGRICULTURAL LAND AT VILLAGE VASTRAL TO SUBSTANTIAT E THE ALLEGATIONS MADE BY SHRI MAHESHSINGH R, KHUSHWAH IN HIS ORAL STATEMENT AND THE ALLEGATION MADE BY THE LD. A.O. THE LD. A.O HAS ALSO NOT REFERRED THE MATTER TO THE DVO FOR THE VALUATION OF THE SAID NON-AGRICULTURAL LAND PUR CHASED BY APPELLANT FIRM M/S. GALAXY DEVELOPERS AS WELL AS FOR THE BANAKHAT AGREEMENT ENTERED INTO BY THE APPELLANT FIRM M/S. GALAXY DEVELOPERS IN RESPEC T OF THE NEW TENURE (NEW CONDITION) AGRICULTURAL LAND TO SUBSTANTIATE THE AL LEGATION MADE BY THE LD. A.O IN THE ASSESSMENT PROCEEDINGS VIDE SHOW CAUSE NO TICE DATED 10-10-2013 WHILE RELYING ON THE SO-CALLED ORAL STATEMENT OF SH RI MAHESHSINGH R. KHUSHWAH AND THE SEIZED MATERIAL AND RECORDS FOUND AND SEIZED FROM THE POSSESSION OF SHRI MAHESHSINGH R. KHUSHWAH. 23. THE LD. A.O HAS FAILED TO CONSIDER / APPRECIATE THE FACT THAT IN THE PRESENT CASE ONCE THE APPELLANT FIRM HAS ALREADY SUBMITTED THE COMPARATIVE SALES INSTANCES FROM THE LAND REVENUE RECORDS OF THE GOVE RNMENT OF GUJARAT OF THE ADJACENT AND VICINITY AREA IN RESPECT OF THE NON-AG RICULTURAL LAND, AGRICULTURAL LAND AND OF THE OTHER SURVEY NOS WHOSE DOCUMENTS HA VE BEEN REGISTERED IN THE SAME YEAR WITH THE SUB-REGISTRAR IN ORDER TO SUBSTA NTIATE THE CONTENTION OF THE APPELLANT FIRM THAT THE SAID NON-AGRICULTURAL LAND PURCHASED BY THE APPELLANT FIRM GALAXY DEVELOPERS AND THE BANAKHAT AGREEMENT E NTERED INTO BY APPELLANT FIRM M/S. GALAXY DEVELOPERS IN RESPECT OF NEW TENUR E ( . NEW CONDITION) AGRICULTURAL LAND BY THE SAID APPELLANT FIRM HAS BE EN AT THE PREVAILING MARKET RATE WHICH IS NOT BELOW CIRCLE RATE ( JANTRI VALUE ) AND LOOKING TO THE FACTS OF THE SAID NEW TENURE ( CONDITION) AGRICULTURE LAND BE LONGING TO THE GOVERNMENT OF GUJARAT, NOT PERMISSIBLE FOR THE SALE OF LAND / TRANSFER OF LAND BY THE SELLER TO THE BUYER WITHOUT GRANTING THE PERMIS SION BY THE GOVERNMENT OF GUJARAT THAT TOO SUBJECT TO PREMIUM TO BE PAID FOR CONVERTING THE SAID NEW IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 11 - TENURE (NEW CONDITION) AGRICULTURAL LAND, THE QUESTI ON OF MAKING THE PAYMENT OF ALLEGED *ON-MONEY* PAYMENT AS STATED BY SHRI MAH ESHSINGH R. KHUSHWAH IN HIS ORAL STATEMENT AS WELL AS THE ALLEGATION MADE B Y THE LD. A.O IN HIS SHOW- CAUSE NOTICE DATED 21-03-2014 (REFER PAGE NO. 429 T O 448 OF PAPER BOOK) ON THE BASIS OF THE ORAL STATEMENT OF SHRI MAHESHSINGH R. KHUSHWAH AND THE MATERIAL FOUND AND SEIZED FROM THE POSSESSION OF SH RI MAHESHSINGH R. KHUSHWAH DOES NOT ARISE AT ALL AND HENCE, THE HUGE CAPRICIOUS ADDITION MADE BY THE LD. A.O IN THE CASE OF THE APPELLANT FIRM IS UNSUSTAINABLE AND BAD IN LAW. 14. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND G ONE THROUGH THE RECORD CAREFULLY. THE LD.CIT(A) HAS EXAMINED ALL T HE FACTS AND CIRCUMSTANCES LUCIDLY IN THE IMPUGNED ORDER. THERE FORE, WE DEEM IT APPROPRIATE TO TAKE NOTE OF RELEVANT FINDING OF THE LD.CIT(A) FROM VOLUMINOUS ORDER RUNNING INTO 107 PAGES. THESE FIN DINGS ARE AS UNDER: 13. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER, THE DETAILED WRITTEN SUBMISSIONS MADE IN THIS REGARD, ALONG WITH PAPER B OOK NO. A TO D (IDENTICAL PAPER BOOKS FILED IN RESPECT OF SH UDAY BHAT). I HAVE ALS O CONSIDERED THE STATEMENTS & LETTER DATED 05-03-2014 BEFORE AO, THE COPIES OF SEIZED MA TERIAL PLACED IN THE PAPER BOOK AND VARIOUS LEGAL CITATIONS MADE IN THIS REGARD. MY OBSERVATIONS WITH RESPECT TO THE DECISION TAKEN BY THE TAKEN BY THE A.O. ARE AS UNDE R. 13.1 AT THE OUTSET, I AM VIEW THE AO IS NOT JUSTIFI ED IN MAKING AND SUBSTANTIVE ADDITION ON THE BASIS OF IDENTICAL SEIZED MATERIAL IN CASE OF 2 ASSESSEE, I.E IN THE HAND SO APPELLANT AND UDAY BHAT. IT CAN BE SEEN THAT GRO UND 1 IN BOTH APPELLANTS ARE EXACTLY IDENTICAL AND ADDITIONS ARE ALSO BASED ON T HE SAME SEIZED MATERIAL. THIS CAN ALSO BE SEEN FROM THE TABLE BELOW (COMPILED FROM RE SPECTIVE ASSESSMENT ORDERS) ASSESSMENT YEAR ADDITIONS BY THE A.O. REFERENCE TO SEIZED MATERIAL UDAY D. BHATT GALAXY DEVELOPERS 2008 - 09 RS. 2,35,00000 A2 - PAGE - 88, 77 & 76. A2 - PAGE - 88, 77 & 76. / 2009 - 10 RS. 796,00,000 A2 - PAGE - 76, 75, 6, 10, 9, 80, 81 & 83. A99 - PAGE - 2, 4. A2 - PAGE - 76, 75, 6, 10, 9, 80, 82, 81 & 83. A99 - PAGE - 2, 4. 2010 - 11 RS. 1,41,75,000 A2 - PAGE - 69, 66, 59 & 54. A2 - PAGE - 69, 66, 59 & 54. IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 12 - 2011 - 12 RS. 6,74,440,70 A2 - PAGE - 49, 37, 35, 34/41, 32, 40, 29, 28, 22, 21, 20. A2 - PAGE - 49, 37, 35, 34, 41, 32, 40, 29, 28, 22, 21, 20. 2012 - 13 RS.6,97,25,646 DIFFERENCE FIGURE AS PER AO DIFFERENCE FIGURE AS PER AO THUS IT CAN BE SEEN THAT ON THE BASIS OF IDENTICAL SEIZED MATERIAL IDENTICAL ADDITIONS ARE MADE BY THE AO. IN MY VIEW .SUBSTANTIVE ADDITIONS M ADE IN THE CASE OF TWO ASSESSEES IS NOT JUSTIFIED 14. IT IS AN UNDISPUTED FACT THAT DURING THE COURSE OF SEARCH, INCRIMINATING MATERIAL WAS SEIZED FROM THE RESIDENTIAL/OFFICE PREMISES OF MRK. THE MAIN SEIZED MATERIAL RELIED UPON BY THE A.O. ARE A/2 AND A/89. THIS SEIZ ED BUNCH WAS WRITTEN BY MRK AND IT CONTAINED IN FLOW AND OUT FLOW OF MONEY BOTH IN CHEQUE AS WELL AS CASH. DURING THE COURSE OF SEARCH ON 21/0.7/2011 MRK SUBMITTED V IDE QUESTION NO. 14 TO QUESTION NO. 20 THAT SUCH TRANSACTIONS BELONGS TO T HE APPELLANT AND SHRI UDAY BHATT. IT WAS ALSO SUBMITTED THAT BY MRK ON 27/07/2011 U/S . 131 AND IN RESPONSE TO QUESTION NO. 6, HE SUBMITTED THAT HE HAS SOLD VARIO US LAND TO APPELLANT AND ITS PARTNER SHRI UDAY BHATT AND HAD APPROXIMATELY RECEI VED RS. 35 CRORES OVER AND ABOVE TO THE AMOUNT STATED IN THE DOCUMENT. THIS FACT IS EVIDENT FROM HIS WRITTEN SUBMISSIONS DATED 05/03/2014 MADE BEFORE THE A.O. A ND THE SAME IS ALSO REPRODUCED IN THE ASSESSMENT ORDER FROM PAGE-12 TO PAGE-19 OF THE ASSESSMENT ORDER. SUCH WRITTEN SUBMISSION IS ALSO REPRODUCED IN THIS ORDER ON PAGE 11 TO 17. ONE NOTICEABLE FEATURE OF THIS WRITTEN SUBMISSION MADE BEFORE THE A.O. IS THE FOOTNOTE WRITTEN BY MRK, WHICH IS REPRODUCED HEREIN AS UNDER: 'IN VIEW OF THE ABOVE, WE HAVE RECEIVED PAYMENTS OF RS.28.02 CRORES AND AS SOME PAGES ARE MISSING I.E. NOT IN SEIZURE, THEREFO RE, AS PER OUR KNOWLEDGE AND SHRI MAHESHSINGH R. KHUSHWAH WE HAVE RECEIVED APPRO XIMATELY RS.35 CRORES AS STATED IN THE STATEMENT DATED 27/07/2011.' MY FIRST OBSERVATION IN THIS REGARD IS THAT MRK HAS ORALLY INDICATED AN APPROXIMATE RECEIPT OF RS.35 CRORES EVEN THOUGH THE SEIZED MATE RIAL WRITTEN BY HIM INDICATES RECEIPT OF ABOUT OF RS.28.02 CRORES. 15. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E APPELLANT REQUESTED THE CROSS EXAMINATION, WHICH WAS CARRIED OUT ON 10/03/2014. T HE RELEVANT PORTION OF THE CROSS EXAMINATION HAVE ALREADY BEEN REPRODUCED ABOVE ON P AGE NO. 18 AND 19. DURING THE COURSE OF CROSS EXAMINATION, A SERIES OF QUESTIONS WERE ASKED FROM QUESTION NO. 1 TO QUESTION NO. 11, WHEREIN THE APPELLANT OR IT'S A.R. REPEATEDLY ASKED FOR PROOF OR EVIDENCE TO SUBSTANTIATE THE RECEIPT OF CASH FROM T HE APPELLANT AND SHRI UDAY BHATT. IN ANSWERS TO ALL THE QUESTIONS, MRK HAD STATED THA T HE DID NOT HAVE ANY PROOF/EVIDENCE TO SUBSTANTIATE THAT HE HAS RECEIVED CASH OF DIFFERENT AMOUNTS FROM THE APPELLANT - SHRI UDAY BHATT. FURTHER, IT WOULD BE W ORTHWHILE TO REPEAT QUESTION/ANSWER NO. 11 RECORDED DURING THE COURSE O F CROSS EXAMINATION, WHICH IS AS UNDER:- 'Q.11 I AM SHOWING YOU ANNEXURE A/2 & A/89. PLEASE GO THROUGH PAGE NOS. 88,82,81,80, 76, 75,66 OF ANNEXURE A/2 AND ALL OTHE R PAGES OF ANNEXURE A/2 IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 13 - & A/89. MOSTLY ON ALL PAGES ON CREDIT SIDE AND DEBI T SIDE, SOME NAME HAS BEEN WRITTEN AND SOME FIGURES HAVE BEEN NOTED. DO YOU HA VE ANY PROOF/EVIDENCE TO SUBSTANTIATE ABOUT CREDIT ENTRIES THAT THE FIGURES NOTED AGAINST THE NAMES ARE BEING THE AMOUNT RECEIVED FROM RESPECTIVE NAMED PER SONS AND ALSO DO YOU HAVE ANY PROOF/EVIDENCE TO SUBSTANTIATE ABOUT DEBIT ENTRIES THAT THE FIGURES NOTED AGAINST THE NAMES ARE THE AMOUNTS SPENT OR GI VEN TO NAMED PERSONS? A.11 NO, I DO NOT HAVE ANY PROOF/EVIDENCE IN RESPEC T OF CREDIT ENTRIES NOTED AGAINST THE NAMED PERSONS THAT THE AMOUNT HAS BEEN RECEIVED FROM THE NAMED PERSONS NOTED IN ANNEXURE A/2 AND A/89 AND SIMILARL Y, I DO NOT HAVE ANY PROOF/EVIDENCE IN RESPECT OF DEBIT ENTRIES NOTED AG AINST THE NAMED PERSONS IN ANNEXURE A/2 & A/89 THAT THE AMOUNT HAS BEEN SPENT/ GIVEN TO THE NAMED PERSONS. THE CREDIT & DEBIT ENTRIES IN THE ANNEXURE A/2 & A/89 ARE THE ROTATION OF CASH FUNDS OF MYSELF AND SHRI HARIBHAI THAKKAR, AS AN INTERNAL ROTATION IN OUR GROUP.' (EMPHASIS ADDED) AS PER EVIDENCE ACT, THE TRANSACTIONS CONTAINED IN A/2 AND A/89, FOUND FROM THE PREMISES OF MRK AND ARE WRITTEN BY MRK, IF MRK ASCERTAINS THAT S.UCH CASH TRANSACTIONS BELONG TO A THIRD PERSON, THEN THE ONU S IS ON MRK TO PROVE IT BY PROVIDING SOME EVIDENCES. PERUSAL OF CROSS EXAMINAT ION SHOWS THAT MRK HAS NOT BEEN ABLE TO SUBSTANTIATE THAT THE CASH ENTRIES CON TAINED IN A/2 AND A/89 BELONGS TO THE APPELLANT FIRM OR SHRI UDAY BHATT. IT MAY ALSO BE NOTED THAT SEARCH OPERATION ON APPELLANT FIRM OR ITS PARTNERS HAS NOT YIELDED ANY CORROBORATIVE INCRIMINATING MATERIAL IN THE FORM OF LOOSE DOCUMENTS OR STATEMEN T RECORDED WHICH WOULD CORROBORATE THE CASH TRANSACTIONS CONTAINED IN THE LOOSE SHEETS WRITTEN BY MRK. I AM CONSTRAINED TO NOTE THAT NO SUCH CORROBORATIVE MATE RIAL IS EVIDENT FROM THE ASSESSMENT ORDERS IN THE CASE OF THE APPELLANT OR SHRI UDAY BH ATT. 16. IT WOULD BE WORTHWHILE TO NOTE THAT MRK HAS FIL ED A RETRACTION AFFIDAVIT DATED 07/03/2014 BEFORE SETTLEMENT COMMISSION, WHEREIN HE HAS RETRACTED HIS INITIAL STATEMENTS RECORDED DURING & SUBSEQUENT TO COURSE O F SEARCH. IT MAY AGAIN BE POINTED OUT THAT IN ANSWER TO QUESTION NO. 11 OF CROSS EXAM INATION MRK HAS ADMITTED THAT CREDIT AND DEBIT ENTRIES IN A/2 AND A/89 ARE THE RO TATION OF CASH FUNDS OF MYSELF AND SHRI HARIBHAI THAKKAR AS AN INTERNAL ROTATION IN OU R GROUP. 6.1 AT THIS JUNCTURE I MAY POINT OUT VARIOUS JUDGEM ENTS OF THE COURTS THAT NO OR LITTLE RELIANCE CAN BE PLACED ON STATEMENTS OF THE WITNESS WHICH ARE CONFLICTING IN NATURE. IN THE PRESENT CASE SH MRK HAS GIVEN CONFLICTING STATE MENTS ON VARIOUS OCCASIONS, ON 22-07-2011 DATE OF SEARCH, ON 27-07-2011, LETTER BE FORE THE AO DATED 05-03-2014, RETRACTION AFFIDAVIT BEFORE SETTLEMENT COMMISSION D ATED 07-03-2014, WITH RESPECT TO THE CASH ENTRIES IN THE SEIZED DOCUMENTS A2 AND A89 . SOME OF THE IMPORTANT JUDGEMENTS WHICH CAN BE CITED ARE *** *** *** *** *** *** *** *** *** *** *** *** IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 14 - ACCORDINGLY, THE COURTS, INCLUDING THE APEX COURT A RE OF THE VIEW THAT IF THE WITNESS GIVES CONFLICTING STATEMENT THEN ITS EVIDENTIARY VA LUE IS OF GREAT DOUBT. IN THE PRESENT CASE ALSO, DISCLOSURE AND RETRACTION AFFIDAVIT ARE CONFLICTING IN NATURE. IT IS ALSO NOTICEABLE FROM THE JUDGMENT THAT THE AO HAS TO' CO NDUCT INDEPENDENT INQUIRY DRAW A DIRECT NEXUS OR LINK BETWEEN CASH TRANSACTIONS WI TH THE APPELLANTS. IT MAY BE FURTHER BE POINTED THAT BEFORE THE SETTLEMENT COMMISSION SH MRK & HBT HAS FINALLY OWNED UP ALL THE MONEY IN SEIZED DOCUMENT AS THEIR OWN AN D PAID TAXES. FINAL ORDER OF SETTLEMENT COMMISSION IS ALSO PASSED TO THIS EFFECT AS IS DISCUSSED IN SUBSEQUENT PARAS. PROCEEDINGS BEFORE SETTLEMNT COMMISSION 17. ANOTHER FACT WHICH NEEDS TO BE MENTIONED HERE I S THAT MRK AND SHRI HARIBHAI THAKKAR HAVE FILED AN APPLICATION BEFORE THE SETTLE MENT COMMISSION ON 11/03/2014. THIS APPLICATION WAS ADMITTED BY HON'BLE SETTLEMENT COMMISSION, MUMBAI VIDE ORDER U/S. 245D(1) DATED 14/03/2014 AND TREATED THE SAID ADMISSION OF APPLICATION AS. VALID. WHILE RENDERING THE ORDER U/S. 245D(2C) DATE D 06/05/2014 SUBSEQUENTLY, ON 11.03.2014, MR. MAHESHSINGH RAJENDRASINGH KHUSHWAH AND HARIBHAI THAKKAR FILED APPLICATIONS BEFORE THE HON'BLE SETTLEMENT COMMISSI ON U/S.245C(L) OF THE ACT AND THE SAME WAS ADMITTED BY THE HON'BLE SETTLEMENT COMMISS ION, ADDITIONAL BENCH, MUMBAI VIDE ORDER U/S. 245D(1) DATED 14.03.2014 AND TREATED THE SAID ADMISSION OF THE APPLICATION AS VALID WHILE RENDERING THE ORDER U/S. 245D(2C) OF THE ACT DATED 06.05.2014. THE AUTHORIZED REPRESENTATIVE MR. DHIRE N SHAH, CA WHO IS ALSO THE AUTHORIZED REPRESENTATIVE OF MR. MAHESHSINGH RAJEND RASINGH KHUSHWAH AND MR. HARIBHAI THAKKAR IN RESPECT OF THE SETTLEMENT APPLI CATION FILED BY THEM BEFORE THE HON'BLE SETTLEMENT COMMISSION HAS PLACED ON RECORD THE COPY OF THE SETTLEMENT APPLICATION FILED BY MR. MAHESHSINGH RAJENDRASIN H KHUSHWAH AND MR. HARIBHAI V. THAKKAR ALONG WITH STATEMENT OF FACTS AND , THE SUBMISSION MADE BY MR. MAHESHSINGH RAJENDRASINGH KHUSHWAH AND MR. HARIBHAI V. THAKKAR IN THE PROCEEDINGS U/S. 245D(4) OF THE ACT BEFORE THE HON' BLE SETTLEMENT COMMISSION, ADDITIONAL BENCH, MUMBAI. DURING THE COURSE OF HEA RING, MR.DHIREN SHAH, CA AUTHORIZED REPRESENTATIVE BROUGHT TO MY NOTICE THAT MR. MAHESHSINGH RAJENDRASINGH KHUSHWAH HAS DULY CONSIDERED THE NOT INGS MADE IN SEIZED MATERIAL ANNEXURE A/2& (A/89)AS ROTATION OF CASH FUNDS OF MR. MAHESHSINGH RAJENDRASINGH KHUSHWAH AND MR. HARIBHAI V. THAKKAR OF THEIR OWN FUNDS AND BOTH THE AFORESAID APPLICANTS HAVE CONSIDERED THE PEAK WORKING OF NOTINGS FOUND IN ANN EXURE A/2 & (A/89)AND WORKED OUT THE PEAK OUT THE PEAK BALANCE OF RS. 17.91 CROR ES AS PER PEAK WORKING THEORY. THE AUTHORIZED REPRESENTATIVE HAS ALSO DRAWN MY ATTENTI ON THAT THE HON'BLE SETTLEMENT COMMISSION DIRECTED THE DIRECTOR OF INVESTIGATION, SETTLEMENT COMMISSION AND THE ASSESSING OFFICER TO VERIFY THE WORKING SUBMITTED B Y MR. MAHESHSINGH RAJENDRASINGH KHUSHWAH AND MR. HARIBHAI V. THAKKAR ON THE BASIS OF SEIZED ANNEXURE (A/2)& (A/89) AND OTHER SEIZED MATERIAL OF . MR. MAHESHSINGN RAJENDRASINH KHUSHWAH AND MR. HARIBHAI V. THAKKAR A ND THE ASSESSING OFFICER THROUGH DIRECTOR OF INVESTIGATION, SETTLEMENT COMMI SSION SUBMITTED THE REPORT TO THE HON'BLE SETTLEMENT COMMISSION AND THE PEAK WORKING SUBMITTED BY BOTH THE AFORESAID PERSONS MR.MAHESHSINGH RAJENDRASINGH KHUS HWAH AND MR.HARIBHAI V.THAKKAR WERE FOUND TO BE IN ORDER EXCEPT ONLY ONE MISTAKE OF RS.12.12 1ACS, FOR WHICH THE DIRECTOR OF INVESTIGATION, SETTLEMENT COM MISSION RECOMMENDED TO THE HON'BLE SETTLEMENT COMMISSION, ADDITIONAL BENCH, MU MBAI TO MAKE AN ADDITION IN THE CASE OF MR. MAHESHSINGH RAJENDRASINGH KHUSHWAH AND MR. HARIBHAI V. THAKKAR IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 15 - AT THE TIME OF DISPOSING OF THEIR APPLICATIONS BY R ENDERING THE ORDER U/S.245D(4) OF THE ACT DATED 24.08.2015. 18. EVEN THOUGH AO IS PARTY TO ENTIRE SETTLEMENT CO MMISSION PROCEEDING (REFER PARA 4.11.11.1 OF ASSMT ORDER), AS THE FINAL ORDER OF SETTLEMENT COMMISSION WAS RECEIVED AFTER THE FINALISATION OF ASSESSMENT ORDER S IT WAS SENT TO THE AO FOR COMMENTS VIDE THIS OFFICE OFFICER LETTER DATED 13-05-2016. T HE AO HAS SENT HIS COMMENTS VIDE LETTER DATED 27-05-2016. THE COMMENTS OFFERED ARE: '2. IN THIS CONNECTION, IT IS SUBMITTED THAT ORDER OF HON'BLE SETTLEMENT COMMISSION IN THE CASES OF SHRI HARILAL VALJIBHAI T HAKKAR AND SHRI MAHESH R. KUSHWAHA IS SELF EXPLANATORY, DETAILED AND SPEAK ING. HOWEVER, THE UNDERSIGNED HAS NO CAPACITY TO OFFER ANY COMMENTS O N THE ORDER OF HON'BLE SETTLEMENT COMMISSION. FURTHER THE UNDERSIGNED RELY UPON CONCLUSIONS AS WELL AS ADDITIONS MADE BY THE ASSESSING OFFICER IN THE CASE OF M/S. GALAXY DEVELOPERS AND SHRI UDAY D. BHATT FOR A.Y. 2008-09 TO A.Y. 2012-13. 3. FURTHER, IT IS CLEAR FROM THE ORDER OF HON'BLE S ETTLEMENT COMMISSION THAT SHRI HARILAL VALJIBHAI THAKKAR AND SHRI MAHESH R. K USHWAHA ARE BROKERS/ AGENTS AND REAL INVESTMENTS HAVE BEEN MADE BY M/S. GALAXY DEVELOPER AND SHRI UDAY D. BHATT.' *** *** *** *** *** *** *** *** 20 I HAVE PERUSED THE FINAL ORDER OF SETTLEMENT COM MISSION, AO COMMENTS AND REJOINDER MADE IN THIS REGARD. BEFORE WE DRAWN SOME INFERENCE FROM THE ORDER OF HON'BLE SETTLEMENT COMMISSION IT IS APPROPRIATE TO REPRODUCE THE FINDINGS OF THE HON'BLE SETTLEMENT COMMISSION ORDER CONTAINED IN PA RA 14 AND 14.1. THE PARA ARE REPRODUCED AS UNDER: 14. WE HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS OF THE APPLICANT, THE REPORT OF THE CIT UNDER RULE 9, THE REJOINDER OF TH E APPLICANTS AND THE RIVAL ARGUMENTS OF THE DEPARTMENT AS WELL AS THE AR DURIN G THE COURSE OF PROCEEDINGS. IT IS SEEN THAT THE SEIZED MATERIAL CO NTAINS PAYMENT IN RESPECT-OF PIECE OF LAND AFTER THE DATE OF REGISTRATION. IT IS WELL KNOWN FACT THAT 'ON- MONEY IS TAKEN ON OR BEFORE THE DATE OF REGISTRATI ON. THIS GIVES CREDENCE TO THE APPLICANTS' CLAIM THAT MONEYS PAID AFTER THE DATE O F REGISTRATION WERE PAID TO SELLERS/LEGAL HEIRS TO SETTLE DISPUTES. THEREFORE W E ARE OF THE VIEW THAT ALL SUCH PAYMENTS (AFTER DATE OF REGISTRATION) DONOT REFLECT ON-MONEY. 14.1 THE APPLICANTS HAVE DISCLOSED ADDITIONAL INCOM E OF RS.24,28,46,200 IN THE SETTLEMENT APPLICATION WHICH WAS EXAMINED BY THE DE PARTMENT AS WELL AS THE COMMISSION. THE OBJECTIONS RAISED BY THE DEPARTMENT AS WELL AS THE REPORT OF DIT(INV.) ON CORRECTNESS OF THE WORKING 'PEAK CASH CREDIT' HAVE BEEN SATISFACTORILY RESPONDED BY THE APPLICANTS. IN THE SETTLEMENT APPLICATION, THE APPLICANTS ADOPTED THE METHOD OF APPLICATION OF INC OME WHICH WAS MORE THAN THE INCOME METHOD ARRIVED AT ON THE BASIS OF PEAK C REDIT. HOWEVER, AS DISCUSSED ABOVE, KEEPING THE SPIRIT OF SETTLEMENT H I VIEW, THE APPLICANTS HAVE IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 16 - OFFERED FURTHER UNACCOUNTED INVESTMENT FOR THE ASSE SSMENT YEARS 2008-09 TO 2012-13 REVISING THEIR EARLIER OFFER OF RS. 24.28 C RORES TO RS.32 CRORES. AVERAGE PURCHASE RATE FOR WORKING OUT THE UNACCOUNT ED INVESTMENT HI LAND TRANSACTIONS HAS BEEN ENHANCED KEEPING HI VIEW THE DISCREPANCIES POINTED OUT DURING THE COURSE OF THE PROCEEDINGS. IN THE PROCES S FURTHER ADDITIONAL INCOME OF RS.7,72,19,950/-HAS BEEN OFFERED RAISING THE EAR LIER OFFER TO RS. 32,00,66,150/- WHICH, WE FEEL, MEETS THE ENDS OF JU STICE. FURTHER OFFER OF RS.7,72,19,950/- HAS BEEN VOLUNTARILY MADE TO SETTL E THE ISSUE HI A PEACEFUL MANNER WITHOUT FURTHER LITIGATION. THIS ACT OF THE APPLICANTS, HI OUR VIEW, DOES NOT ATTRACT ANY ADVERSE INFERENCE. THE TOTAL OFFER OF RS.32 CRORES OF ADDITIONAL INCOME IS, THEREFORE, TREATED AS TRUE AND FULL AND THE ISSUE IS SETTLED. 21 I HAVE PERUSED THE FINAL ORDER OF HON'BLE SETTLE MENT COMMISSION THE COMMENTS OFFERED BY THE A.O. VIDE LETTER DATED 27/0 5/2016 AND THE REBUTTAL COMMENTS OFFERED BY THE APPELLANT. THE FINDINGS OF HON'BLE SETTLEMENT COMMISSION ARE VERY CLEAR IN THIS REGARD VIDE PARA- 14 AND 14.1 THAT CASH TRANSACTIONS WHICH ARE OWNED BY SHRI MRK AND SHRI H VT, ARE NOT OF THE NATURE OF ON-MONEY. HON'BLE SETTLEMENT COMMISSION HAS UPHELD THE APPLICANTS' CLAIM THAT THE MONEY PAID AFTER THE DAT E OF REGISTRATION WERE PAID TO SETTLE THE DISPUTES AND SUCH PAYMENTS, DO NOT RE FLECT ON-MONEY. FURTHER, HON'BLE SETTLEMENT COMMISSION HAS ACCEPTED THE PEAK INCOME OFFERED ON THE BASIS OF PEAK CREDIT, THE COPY OF WHICH IS PLACED O N PAGE NO. 348 TO 417 OF THE PAPER-BOOK B'. THIS WORKING OF PEAK CREDIT WAS VER IFIED BY THE A.O./PR. CIT (CENTRAL), AHMEDABAD. SUBJECT TO CERTAIN CORRECTION S WHICH WERE POINTED OUT BY THE A.O. BEFORE THE HON'BLE SETTLEMENT COMMISSIO N. THE APPLICANTS HAD REVISED AN EARLIER OFFER OF RS.24.28 CRORES TO RS.3 2 CRORES, WHICH WAS ACCEPTED BY THE HON'BLE SETTLEMENT COMMISSION. FURTHER, I HAVE VERIFIED THE PEAK WORKING WHICH IS PLACED ON NO. 348 TO 417 OF THE PAPER-BOOK-B AND HAVE CHEC KED EACH AND EVERY ENTRY OF CASH WHICH IS REPRODUCED BY THE A.O. IN THE ASSE SSMENT ORDER FOR THE RESPECTIVE ASSESSMENT YEAR, IS INCORPORATED IN SUCH PEAK WORKING AND IS OFFERED FOR TAXATION BY THE APPLICANTS. A DETAILED SUBMISSI ON IS PLACED ON RECORD VIDE SUBMISSION DATED 04/06/2016. IT IS POINTED OUT THAT ALL ALLEGED CASH PAYMENTS POINTED OUT BY THE A.O. ARE REFLECTED IN THE PEAK W ORKING SUBMITTED BEFORE THE HON'BLE SETTLEMENT COMMISSION. FOR READY REFERENCE, SUCH VERIFICATION IS REPRODUCED HEREIN AS UNDER, A.Y. 2008-09 DATE AS PER PEAK DATE AS PER ASST ORDER VCH NO. AMOUNT PAPER BOOK NO - B (PAGE NO.) 05/03/2008 05/03/2008 A2P88 1000000.00 361 05/03/2008 05/03/2008 A2P88 7500000.00 361 13/03/2008 13/03/2008 A2P88 2500000.00 362 IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 17 - 15/03/2008 15/03/2008 A2P88 2500000.00 362 17/03/2008 17/03/2008 A2P77 2500000.00 362 21/03/2008 21/03/2008 A2P77 5000000.00 363 29/03/2008 27/03/2008 A2P76 2500000.00 363 TOTA L 23500000.00 * INCLUDED IN RS.50,000,00/- A.Y. 2009-10 DATE AS PER PEAK DATE AS PER ASST ORDER VCH NO. AMOUNT PAPER BOOK NO - B (PAGE NO.) 01/04/2008 01/04/2008 A2P76 2500000.00 363 04/04/2008 04/04/2008 A2P76 2500000.00 363 08/04/2008 08/04/2008 A2P75 2500000.00 364 09/04/2008 09/04/2008 A2P75 5000000.00 364 10/04/2008 10/04/2008 A2P75 2500000.00 364 11/08/2008 11/08/2008 A2P6 5000000.00 371 18/08/2008 18/08/2008 A2P6 2500000.00 371 20/08/2008 20/08/2008 A2P6 1000000.00 371 23/08/2008 23/08/2008 A2P6 2500000.00 371 26/08/2008 26/08/2008 A2P6 2500000.00 371 30/08/2008 30/08/2008 A2P7 2500000.00 372 01/09/2008 01/09/2008 DA99 2500000.00 372 02/09/2008 02/09/2008 DA99 2500000.00 372 03/09/2008 03/09/2008 DA99 2500000.00 372 IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 18 - 05/09/2008 05/09/2008 DA99 2500000.00 372 06/09/2008 06/09/2008 DA99 2500000.00 372 07/09/2008 07/09/2008 DA99 2500000.00 372 09/09/2008 09/09/2008 DA99 2500000.00 372 10/09/2008 10/09/2008 DA99 2500000.00 372 12/09/2008 12/09/2008 A2P10 2500000.00 372 16/09/2008 16/09/2008 A2P9 2500000.00 373 18/09/2008 18/09/2008 A2P80 2500000.00 373 20/09/2008 20/09/2008 A2P80 2500000.00 373 23/09/2008 23/09/2008 A2P80 2500000.00 373 25/09/2008 25/09/2008 A2P80 2500000.00 374 30/09/2008 30/09/2008 A80P1 2500000.00 374 03/10/2008 03/10/2008 A89P2 2500000.00 374 07/10/2008 07/10/2008 A89P2 2500000.00 374 30/11/2008 20/11/2008 A89P7 1500000.00 376 30/11/2008 26/11/2008 A89P7 2000000.00 376 25/12/2008 16/12/2008 A89 P10 1000000.00 377 25/12/2008 17/12/2008 A89 P10 1000000.00 377 29/12/2008 20/12/2008 A89 P10 600000.00 377 TOTAL 79600000.00 - IN PEAK WORKING RS.700000/- ,AS PER SEIZED ANNEXURE RS.600000/- A.Y. 2010-11 IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 19 - DATE AS PER PEAK DATE AS PER ASST ORDER VCH NO. AMOUNT PAPER BOOK NO - B (PAGE NO.) 30/04/2009 22/04/2009 A89 P18 1000000.00 381 08/06/2009 08/06/2009 A2P66 500000.00 383 28/06/2009 28/06/2009 A2P66 4300000.00 384 15/02/2010 15/02/2010 A2P59 2500000.00 391 06/03/2010 06/03/2010 A2P54 - 4000000.00 392 09/03/2010 10/03/2010 A2P54 1875000.00 392 TOTAL 14175000.00 A.Y. 2011-12 DATE AS PER PEAK DATE AS PER ASST ORDER VCH NO. AMOUNT PAPER BOOK NO - B (PAGE NO.) 24/07/2010 24/06/2010 A2P49 10000000.00 399 24/07/2010 24/06/2010 A2P49 2500000.00 399 05/08/2010 05/08/2010 A2P37 5000000.00 399 14/08/2010 14/08/2010 A2P37 1000000.00 400 25/08/2010 25/08/2010 A2P35 5000000.00 401 25/08/2010 25/08/2010 A2P35 4444070.00 401 29/08/2010 29/08/2010 A2P34 5000000.00 401 07/09/2010 07/09/2010 A2P41 5000000.00 402 10/09/2010 10/09/2010 A2P32 5000000.00 402 04/10/2010 04/10/2010 A2P40 3500000.00 404 25/10/2010 25/10/2010 - A2P29 2500000.00 406 IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 20 - 02/11/2010 02/11/2010 A2P28 2500000.00 406 03/11/2010 03/11/2010 A2P28 1000000.00 407 07/01/2011 07/01/2011 A2P22 2000000.00 409 10/01/2011 10/01/2011 A2P22 2000000.00 409 23/01/2011 23/01/2011 A2P21 1000000.00 409 06/02/2011 06/02/2011 A2P20 5000000.00 410 11/02/2011 11/02/2011 A2P20 5000000.00 411 TOTAL 67444070.00 IT CAN THUS BE SEEN THAT FACTUALLY ALL THE CASH ENT RIES CONSIDERED BY AO FOR MAKING ADDITIONS U/S 69/69B FOR GALAXY DEVELOPERS A ND SHRI UDAY D. BHATT WERE A PART OF THE PEAK WORKING AND WAS OFFERED FOR TAXATION BY THE APPLICANT AS THEIR OWN MONEY. I AM ALSO IN AGREEMENT WITH THE CONTENTION OF THE A .R. THAT NOWHERE THE ORDER OF HON'BLE SETTLEMENT COMMISSION GIVES A FINDING TH AT REAL INVESTMENT HAVE GALAXY DEVELOPERS _ AND SHRI UDAY D. BHATT. IN FACT , THE HON'BLE SETTLEMENT COMMISSION HAS, AFTER VERIFYING THE PEAK WORKING, H AS ENHANCED THE INCOME OF THE APPLICANTS ON THE BASIS OF ASSETS APPLICATION T HEORY. THE DETAILED WORKING OF APPLICATION OF ASSETS IS AVAILABLE ON PA GE NO.418 OF PAPER-BOOK B, WHEREIN THE GRAND TOTAL OF INVESTMENTS ASSETS IS IN DICATED, AT RS.20, 27,46,500/-. THE HON'BLE SETTLEMENT COMMISSION HAS ALSO ACCEPTED THE ARGUMENT OF THE APPELLANT THAT HE HAS ENTERED INTO AN AGREEMENT TO SALE IN RESPECT OF NEW TENURE AGRICULTURAL LAND, FOR WHICH THE RATE PER SQ. MTR. WORKS OUT TO RS.530/TO RS.540/- PER SQ. MTR. AND, IF THE COST OF PREMIUM, WHICH IS TO BE PAYABLE, AS WHEN TO THE GOVT. OF GUJARAT IS CONS IDERED, THEN THE RATE PER SQ. MTR. COMES OUT TO RS.4,000/- PER SQ. MTR., WHICH IS MUCH HIGHER THAN THE OLD TENURE AGRICULTURAL LAND ACQUIRED BY SHRI MRK, AND SHRI HVT, EVEN AFTER THE ENHANCED RATE OF RS.250/- PER SQ. MTR, AS COST OF I NVESTMENT IN LAND AT VASTRAL AND RAMOL. IT IS NOTICEABLE THAT TILL DATE, THE AG REEMENT TO SALE IN RESPECT OF NEW TENURE LAND, WHICH IS BELONGING TO THE GOVT. OF GUJARAT, THE SALE DEED HAS NOT BEEN EXECUTED AS NO PERMISSION OF GOVT. OF GUJA RAT HAS BEEN RECEIVED YET, ALSO CONCEDED BY THE AO IN PARA 4.11.10 OF HIS ORDE R. THERE IS LOT OF FORCE IN THE SUBMISSIONS THAT THE APPELLANT FIRM DOES NOT HA VE THE RIGHT TO SPECIFIC PERFORMANCE OF CONTRACT BECAUSE NOBODY CAN ACQUIRE THE NEW TENURE AGRICULTURAL LAND UNLESS THE GOVT. OF GUJARAT GRANT S PERMISSION. IT WAS FURTHER POINTED OUT THAT EVEN IF THE RATE PER SQ. M TR. FOR THE NEW TENURE AGRICULTURAL LAND, WHICH IS APPROXIMATELY RS.530-54 0/- PER SQ. MTR. FOR THE IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 21 - LAND AT VASTRAL, FOR WHICH THE APPELLANT FIRM ENTER ED INTO AN AGREEMENT TO SELL, IS COMPARED WITH THE OLD TENURE AGRICULT URAL LAND AT VASTRAL AND RAMOL WHICH SHRI MRK AND SHRI HVT HAVE ACQUIRED BY EXECUTING CONVEYANCE DEED AND HOLDING THE POSSESSION OF SUCH LAND FOR APPROXIMATELY RS.90 PER SQ. MTR. SHRI MRK AND SHRI HVT AGREED BEF ORE THE HON'BLE SETTLEMENT COMMISSION FOR ENHANCING ADDITIONAL INCO ME AT THE RATE OF RS.250/- PER SQ. MTR. IN RESPECT OF OLD TENURE AGRI CULTURAL LAND, WHICH HON'BLE SETTLEMENT COMMISSION HAS ACCEPTED AS A REASONABLE MARKET RATE OF OLD TENURE AGRICULTURAL LAND. THUS, AS FINAL COST FOR NEW TENU RE LAND COMES MUCH HIGHER THAN THE ENHANCED COST OF OLD TENURE LAND (RS 250 P ER SQ MTR) ACQUIRED BY MRK & HVT THERE IS NO POSSIBILITY OF ON MONEY, IT WAS FORCEFULLY CONTENDED. TO SUMMARIZE, I AM OF THE VIEW THAT ADDITIONS SOLEL Y ON THE BASIS OF STATEMENTS OF MRK RELATING TO CASH TRANSACTIONS IN ANNXURE-A-2 AND ANNEXUR-A-89 CANNOT BE MADE, THERE ARE CONFLICTING STATEMENTS OF SHRI MRK ON DIFFERENT POINT OF TIME. IN VIEW OF THE CONFLICT ING STATEMENTS AND ALSO THE ABSENCE OF ANY CORROBORATIVE EVIDENCE OR AN INDEPEN DENT INQUIRY, WHICH MAY LINK CASH TRANSACTIONS IN ANNEXURIE-A-2 AND A-89 TO BE BELONGING TO THE APPELLANT, I AM OF THE VIEW THAT SUCH CASH TRANSACT IONS IN THE SAID ANNEXURES CANNOT BE ADDED IN THE HANDS OF THE APPELLANT. ALSO IT IS SEEN FROM THE ORDER OF HON'BLE SETTLEMEN T COMMISSION THAT ALL THE CASH TRANSACTIONS IN ANNEXURE-A-2 AND ANNEX URE-A-89, INCLUDING OTHER SEIZED MATERIAL ALSO, HAVE BEEN OFFERED FOR T AXATION AND TAXES PAID THEREON AS PER THE TERMS AND- CONDITIONS SET BY THE HON'BLE SETTLEMENT COMMISSION. THE AR ALSO POINTED OUT THAT THE FINAL ORDER OF THE SETTLEMENT COMMISSION WAS ALSO NOT CHALLENGED BEFORE THE HIGH COURT. I AM, THUS, OF THE VIEW THAT THE ADDITIONS MADE BY THE A.O. IN THE CASE OF BOTH THE APPELLANTS ARE NOT SUSTAINABLE. THE ADD ITIONS MADE U/S. 69/69B FOR A.Y. 2008-09 TO 2012-13 DESERVES TO BE DELETED IN T HE CASE OF M/S. GALAXY DEVELOPERS & SH UDAY BHAT. THE AO IS DIRECTED TO DO THE SAME. GROUND 1 FOR BOTH THE APPELLANTS IS ALLOWED FOR GALAXY DEVELOPER AND UDAY BHAT. 15. AN ANALYSIS OF COMPLETE RECORD WOULD SHOW THAT THE AO HAS BASICALLY POSSESSED TWO PIECES OF EVIDENCE. THE FI RST PIECE OF EVIDENCE IS LOOSE PAPERS INVENTORISED AS A/2 AND A/89 FOUND AT THE PREMISES OF MRK. ACCORDING TO HIM, READING OF THESE PAPERS WOU LD INDICATE THAT THERE ARE CREDIT AND DEBIT SIDES ON THESE PAGES ALO NG WITH NAMES OF CERTAIN PERSONS. HE FOUND THAT NAMES OF BOTH THE A SSESSEES HAVE BEEN RECORDED IN THESE PAGES. THUS, ACCORDING TO THE AO , THE CREDIT AND DEBIT ENTRIES APPEARING AGAINST NAMES OF THESE ASSESSEES ARE TO BE READ AS IF IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 22 - AMOUNTS HAVE BEEN TAKEN FROM THE ASSESSEES AND THEY HAVE BEEN SPENT ON BEHALF OF THE ASSESSEES. HE BUTTRESSED THIS CON CLUSION FURTHER WITH THE STATEMENT OF MRK RECORDED AT THE TIME OF SEARCH . WHEREAS THE DEFENCE OF BOTH THESE ASSESSES IS THAT THESE PAGES WERE NOT FOUND FROM THE PREMISES OF THE ASSESSEE. THEY WERE FOUND AT T HE PREMISES OF A THIRD PERSON. PRESUMPTION OF TRUTH ATTACHED TO THESE PAG ES CANNOT BE INVOKED AGAINST THESE ASSESSEES, RATHER SUCH PRESUMPTION CA N BE DRAWN ONLY QUA AUTHOR OF THESE PAGES I.E. MRK. SHRI MRK COULD BE BOUND DOWN WITH REGARD TO THE AUTHENTICITY IN HIS CASE, AND NOT A T HIRD PERSON. SIMILARLY, SHRI MRK HAS GIVEN THREE STATEMENTS, AND ONE AFFIDA VIT WHEREBY HE HAS RETRACTED THE DISCLOSURE MADE AT THE POINT OF TIME EARLIER. ALL THESE STATEMENTS ARE CONTRADICTORY AND CONFLICTING TO EAC H OTHER. THE LD.CIT(A) HAS MADE REFERENCE TO THE QUESTION AND RE PLY OF SHRI MRK ON PAGE NO.79 OF THE IMPUGNED ORDER. HE MADE REFERENC E TO THE QUESTION NO.1 WHICH WE HAVE NOTICED WHILE EXTRACTING THE FIN DING OF THE LD.CIT(A) IN UPPER PART OF THIS ORDER. THUS, QUALITY OF THI S EVIDENCE REQUIRES CORROBORATION FOR FORMING A FIRM OPINION AGAINST RE SPONDENTS. 16. NEXT ASPECT FOR APPRECIATING THE WHOLE CONTROVE RSY IS THAT AUTHOR OF THESE PAGES MRK AND HVT WENT BEFORE THE SETTLEME NT COMMISSION. THEY HAVE OWNED UP OF THE NARRATIONS MENTIONED IN T HESE PAGES. THEY HAVE SPECIFICALLY ALLEGED THAT THESE ARE THEIR OWN FUNDS AND IN ORDER TO KEEP A TRACK, THEY HAVE NOTED DOWN THE ROTATION OF THESE FUNDS. THEY OFFERED PEAK AMOUNT AVAILABLE IN THESE PAGES FOR TA XATION IN THEIR CASES. THUS, BEFORE THE SETTLEMENT COMMISSION, THERE WERE TWO ISSUES VIZ. AUTHENTICITY OF THE CLAIM MADE BY THESE TWO PERSONS THAT IT IS THEIR OWN FUNDS, AND THEREAFTER QUANTIFICATION OF THE AMOUNT WHICH IS BROUGHT TO TAX. THE SETTLEMENT COMMISSION CALLED FOR A REPORT FROM ITS IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 23 - INVESTIGATION WING AS WELL AS COMMENTS OF THE AO. AFTER ACCEPTING THE VERACITY OF THE CLAIM MADE BY THESE TWO PERSONS WOR KING OF PEAK WAS ALSO VERIFIED. THE SETTLEMENT COMMISSION THEREAFTE R ACCEPTED THE STAND OF THE AUTHOR OF THESE PAGES. IF THAT BE SO, THEN HOW A DIFFERENT INFERENCE CAN BE DRAWN IN THE CASES OF THE PRESENT ASSESSEES. THE LD.CIT(A) HAS GONE THROUGH BOTH THESE CIRCUMSTANCES, AND THEREAFT ER ARRIVED AT A CONCLUSION THAT THE DEPARTMENT IS NOT POSSESSING CL INCHING EVIDENCE TO SHOW THAT ASSESSEES HAVE PAID ON-MONEY. APART FROM THE ABOVE, RESPONDENTS IN ORDER TO REBUT BELIEF OF THE AO THAT THESE ASSESSEES HAVE GIVEN ON-MONEY OVER AND ABOVE CONSIDERATION STATED IN THE AGREEMENT TO SALE, THEY HAVE SUBMITTED THAT TWO TYPES OF TRAN SACTIONS AT THE MOST COULD BE ALLEGED AS DONE BY THESE ASSESSEES VIZ. (A ) PURCHASE OF NON- AGRICULTURE LAND/AGRICULTURE LAND, (B) PURCHASE OF OLD TENURE LAND/NEW TENURE LAND. RESPONDENTS HAVE COMPILED DETAILS IN T ABULAR FORM. THEY HAVE PUT THE RATES ON WHICH THEY HAVE ENTERED INTO AGREEMENT FOR PURCHASE VIZ. BANAKHAT . THEREAFTER THEY HAVE APPRAISED THE AO CIRCLE RATE/JANTRI AVAILABLE FOR SIMILARLY SITUATED LAND I N THESE YEARS. THE ASSESSEES THEREAFTER COMPILED DETAILS OF OTHER SALE DEEDS WHICH HAS TAKEN PLACE IN THESE YEARS DURING THAT VERY PERIOD, AND D EMONSTRATED THAT THE RATES AT WHICH THEY ENTERED INTO AN AGREEMENT ARE HIGHER THAN THE JANTRI RATE AS WELL AS THE RATES AT WHICH TRANSACTIONS HAV E TAKEN PLACE. SIMILARLY, WITH REGARD TO NEW TENURE LAND IS CONCER NED, THEY HAVE DEMONSTRATED THAT UNLESS GOVERNMENT GIVES PERMISSIO N FOR CHANGE OF CHARACTER OF THE LAND I.E. UNLESS THE LAND IS MADE FREEHOLD, IT CANNOT BE TRANSACTED. FOR GETTING THE LAND FREEHOLD I.E. NEW TENURE LAND, THE LAND OWNERS ARE REQUIRED TO PAY PREMIUM AMOUNT TO THE GO VERNMENT OF GUJARAT. ONCE THE ALLEGED PREMIUM/FEE IS PAID ONL Y THEN THIS LAND IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 24 - COULD BE TRANSACTED. AT THE TIME OF HEARING, IT WA S BROUGHT TO OUR NOTICE THAT THE LAND AT VASTRAL HAD NOT BEEN PURCHASED EVE N TILL TODAY; BECAUSE IT HAS NOT BEEN CONVERTED INTO NEW TENURE LAND. TH US, THE TRANSACTION IN THIS LAND WAS SUBJECT TO CLEARANCE FROM THE GOVERNM ENT I.E. CONVERSION OF OLD TENURE LAND TO NEW TENURE LAND. IF THAT BE SO, HOW AN ASSESSEE COULD BE PRESUMED TO PAY CASH OVER AND ABOVE THE AM OUNTS STATED IN THE ALLEGED AGREEMENT. AN AGREEMENT EVEN ITSELF WI LL NOT BE ENFORCEABLE IN THE EYES OF LAW UNLESS CHARACTER OF THE LAND IS CHANGED VIZ. IT IS BEING CONVERTED INTO NEW TENURE AND SUCH CONVERSION IS DE PENDED UPON THE PAYMENT OF PREMIUM TO THE GOVERNMENT, AND SANCTION FROM THE GOVERNMENT. IN THESE SITUATIONS, IT IS DIFFICULT T O INFER THAT THE ASSESSEE WOULD PAY ON-MONEY BEFORE SUCH INCIDENT OF CONVERSI ON HAPPEN. THIS WAS THE POSITIVE EVIDENCE PRODUCED BY THE ASSESSEES FOR REBUTTING THE BELIEF FORMED BY THE AO ON THE BASIS OF ANNEXURE A/ 2 AND A/89 AND THE ALLEGED DISCLOSURE OF THE MRK. IF WE HAVE A GL ANCE ON ALL THESE FACTORS IN THEIR TOTALITY, THEN IT CAN SAFELY BE CO NCLUDED THAT THE LD.CIT(A) HAS RIGHTLY DELETED THE ADDITIONS. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A) ON THIS POINT IN ALL THESE APPEALS , AND ACCORDINGLY, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. 17. AS FAR AS CROSS OBJECTIONS FILED BY THE ASSESSE E IN APPEALS OF THE REVENUE ARE CONCERNED, THE LD.COUNSEL FOR THE ASSES SEE DID NOT PRESS THESE COS.; THEY ARE IN SUPPORT OF THE CIT(A)S OR DER EXCEPT IN THE ASSTT.YEAR 2010-11 IN THE CASE OF SHRI UDAY BHATT. SHE POINTED OUT THAT IN THE ASSTT.YEAR 2010-11, THE ASSESSEE HAS ALSO FI LED AN APPEAL WHEREIN HE HAS CHALLENGED CONFIRMATION OF ADDITION OF RS.3, 40,20,000/- AND RS.3,40,000/- WHICH WAS ADDED BY THE LD.AO ON ACCOU NT OF UNEXPLAINED CASH CREDIT AND ESTIMATED THE EXPENSES AT THE RATE OF 1% FOR ARRANGING IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 25 - THIS ACCOMMODATION ENTRY. WE FIND THAT IN THE ASST T.YEAR 2010-11, SHRI UDAY BHATT HAS CHALLENGED THESE TWO ADDITIONS IN HI S APPEAL. WE HAVE DISMISSED ALL THE COS. EXCEPT FOR ASSTT.YEAR 2010-1 1 IN THE CASE OF SHRI UDAY BHATT AS WITHDRAWN AND PROCEED TO DECIDE THE A PPEAL OF SHRI UDAY BHAT FOR THE ASSTT.YEAR 2010-11 ALONG WITH ITS CO F ILED IN THE APPEAL OF THE REVENUE FOR THE ASSTT.YEAR 2010-11. 18. BRIEF FACTS OF THE CASE ARE THAT A SUM OF RS.3, 40,20,000/- WAS NOTICED BY THE AO AS RECEIVED FROM M/S.SARANG CHEMI CALS LTD. HE FURTHER FOUND THAT M/S.SARANG CHEMICALS LTD. WAS MA INTAINING A BANK ACCOUNT BEARING NO.0009-0-140-082068 WITH BHUJ MERC ANTILE CO-OP BANK. THIS CONCERN HAS RECEIVED A CASH DEPOSIT OF RS.5.02 CRORES ON 26TH AND 27TH JUNE, 2009. ACCORDING TO THE AO A SUM OF RS.3, 40,20,000/- WAS TRANSFERRED BY THIS CONCERN TO THE ACCOUNT OF THE A SSESSEE THROUGH ACCOUNT PAYEE. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE LD.AO HAS DOWN-LOADED BANK STATEMENT, BALANCE SHEET & AUD ITED ACCOUNTS OF M/S.SARANG CHEMICALS LTD FROM THE SITE OF REGISTRAR OF COMPANIES. HE CALLED FOR THE DIRECTOR OF COMPANY, SHRI LALIT KANT ILAL RATHOD AND HIS STATEMENT WAS RECORDED BY HIM ON OATH ON 21.3.2014. ACCORDING TO THE AO, THIS MAN DEPOSED THAT HE WAS PROVIDING ENTRIES. THEREFORE, ON THE BASIS OF INFORMATION COLLECTED FROM THIS PERSON, TH E LD.AO TREATED THE AMOUNT RECEIVED BY THE ASSESSEE AS UNEXPLAINED CASH CREDIT. HE BRIEFLY SUMMARIZED THE REASON FOR HIS ABOVE BELIEF IN PARA 5.9.1 AND THEY READ AS UNDER: 5.9.1 THUS, THE AMOUNT RECEIVED BY THE ASSESSEE IS CLEARLY UNEXPLAINED CASH CREDIT DUE TO THE FOLLOWING REASONS: IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 26 - A) CASH WAS DEPOSITED BY M/S.SARANG CHEMICALS LTD. IN ITS ACCOUNT MAINTAINED WITH BHUJ MERC. CO-OP. BANK LTD. AND MAT CHING CHEQUES WERE ISSUED TO THE ASSESSEE. B) THE ASSESSEE HAS SHOWN THIS AMOUNT RECEIVED FROM SARANG CHEMICALS LTD. AS LOAN BUT HAS NOT PAID ANY INTERES T ON THE SAME. C) THE AUDFIED ACCOUNTS OF M/S.SARANG CHEMICALS CLE ARLY SHOW THAT THE COMPANY IS A PAPER COMPANY AND DOES NOT HAVE TH E CAPABILITY OF ITS OWN TO GIVE SUCH HUGE LOANS TO ANYONE. D) THE DIRECTOR OF THE COMPANY HAS ADMITTED UNDER O ATH THAT HE HAS RECEIVED MONEY FROM THE ASSESSEE IN CASH WHICH WAS DEPOSITED IN THE BANK AND CHEQUES WERE ISSUED TO THE ASSESSEE. E) THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE GENUIN ENESS OF THE TRANSACTION. F) M/S.SARANG CHEMICAL LTD. IS A PROVEN PAPER ENTITY W HICH IS INVOLVED IN SYSTEMATIC ENTRY PROVIDING BUSINESS FOR COMMISSION. THE PROMOTERS AND DIRECTORS OF SARANG CHEMICALS ON NUMEROUS OCCASION HAVE GIVEN STATEMENTS U/S.132(4) AND 131(1 ) IN THE CASE OF ASSESSEE'S ASSESSED IN THIS VERY RANGE THAT THEY PROVIDE ENTRIES BY CHEQUE AFTER RECEIVING CASH FROM THE SAM E PARTY AND CHARGES COMMISSION ON THE SAME. IN THIS WAY, THE LD.AO HAS MADE ADDITION OF RS.3,40 ,20,000/-. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE . 19. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT THE ASSESSEE HAS DISCHARGED ONUS CAST UPON HIM BY S ECTION 68 OF THE ACT. THE AO HAS RELIED UPON THE STATEMENT OF SHRI LALIT KANTILAL RATHOD; BUT NEITHER COPY OF THE STATEMENT WAS GIVEN TO THE ASSE SSEE NOR AN OPPORTUNITY TO CROSS- EXAMINE WAS GIVEN. THE ASSES SEE HAS SPECIFICALLY MADE A PRAYER BEFORE THE LD.CIT(A) ALSO. SHE RELIE D UPON HE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIM BER INDUSTRIES VS. COMM. OF CENTRAL EXCISE, KOLKATA (2015) 62 TAXM ANN.COM 3 (SC) AND ON THE STRENGTH OF THIS DECISION SUBMITTED THAT STA TEMENT OF SHRI LALIT KANTILAL RATHOD DESERVES TO BE EXCLUDED FROM RELYIN G UPON ON THIS ISSUE. 20. ON THE OTHER HAND, THE LD.DR RELIED UPON ORDERS OF THE REVENUE AUTHORITIES. HE SUBMITTED THAT THE AO HAS CALLED F OR DIRECTOR OF THE IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 27 - CREDITOR COMPANY AND HE DEPOSED BEFORE HIM THAT IT WAS AN ACCOMMODATION ENTRY. IN THIS SITUATION, THE LD.CIT (A) HAS RIGHTLY CONFIRMED THE ADDITION. 21. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND G ONE THROUGH THE RECORD CAREFULLY. SECTION 68 OF THE INCOME TAX ACT CONTEMPLATES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF, OR THE EXPLANATION OFFER ED BY THE ASSESSEE IS NOT, IN THE OPINION OF THE AO SATISFACTORY, THEN TH E SUM SO CREDITED IN THE ACCOUNTS MAY BE TREATED AS INCOME OF THE ASSESSEE O F THAT PREVIOUS YEAR.THE ASSESSEE HAS SUBMITTED BANK STATEMENT, COP Y OF PAN, BALANE SHEET, COPY OF CONFIRMATION FROM M/S.SARANG CHEMICA LS LTD. ONLY EVIDENCE POSSESSED BY THE AO TO DOUBT THIS TRANSACT ION IS ALLEGED DISCLOSURE MADE BY THE DIRECTOR OF M/S.SARANG CHEMI CALS LTD. THE LD.AO UNDER SERIAL NO.(D) OF HIS SUMMARIZED REASONI NG EXTRACTED (SUPRA) HAS OBSERVED THAT DIRECTOR OF THE COMPANY HAS ADMIT TED UNDER OATH THAT HE HAS RECEIVED MONEY FROM THE ASSESSEE IN CASH, WH ICH WERE DEPOSITED IN THE BANK, AND CHEQUES WERE ISSUED TO THE ASSESSE E. DURING THE COURSE OF HEARING, WE HAVE GONE THROUGH THE RECORD WITH TH E ASSISTANCE OF THE LD.REPRESENTATIVES TO VERIFY VERACITY OF THIS CLAIM MADE BY THE AO. THE AO HAS REPRODUCED THE STATEMENT OF SHRI LALIT KANTI LAL RATHOD. WE DEEM IT APPROPRIATE TO TAKE NOTE OF QUESTIONNAIRE N OS.8 AND 9 ALONG WITH THEIR ANSWERS, WHICH READ AS UNDER: Q8. I AM SHOWING YOU BANK STATEMENT OF M/S.SARANG CHEMICALS LTD. W.R.T. ITS BANK ACCOUNT NO.00090140082068 HELD WITH BHUJ M ERCANTILE CO-OPERATIVE BANK FOR THE PERIOD JUNE 2009 TO SEPTEMBER 2009. O N PERUSAL OF THIS ACCOUNT IT HAS BEEN FOUND THAT ON 26.06.2009 CASH AGGREGATI NG TO RS.1.62 CRORES HAS BEEN DEPOSITED IN THE SAID ACCOUNT AND THE SAME HAS BEEN TRANSFERRED THROUGH CHEQUES. SIMILARLY, ON 27.06.2009 CASH AGGREGATING TO RS.3,40,20,000/- WAS IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 28 - DEPOSITED AND THE SAME HAS ALSO BEEN TRANSFERRED TH ROUGH CHEQUES. PLEASE EXPLAIN THE SOURCE OF CASH DEPOSITED IN THE SAID AC COUNT AND ALSO EXPLAIN THE NATURE OF WITHDRAWALS MADE. ANS: SIR, AS I HAVE ALREADY STATED ABOVE THAT THE COMPANY M/S.SARANG CHEMICALS LIMITED IS ENGAGED IN BUSINESS OF PROVIDI NG ACCOMMODATION ENTRIES AGAINST RECEIPT OF CASH. I HAVE ALSO STATED THAT FOR PROVING ACCOMMODATION ENTRIES CASH WAS DEPOSITED IN THE BAN K ACCOUNTS OF THE COMPANY HELD WITH VARIOUS COOPERATIVE BANKS. IN TH IS CASE ALSO THE CASH WAS DEPOSITED AND UNSECURED LOANS HAVE BEEN PAID AGAINS T THE RECEIPT OF CASH FROM THESE PERSONS. Q.9 PLEASE PROVIDE THE DETAIL OF THE PERSONS FROM W HOM CASH WAS RECEIVED AND DEPOSITED IN THE BANK ACCOUNT OF M/S.SARANG CHE MICALS LIMITED HELD WITH BHUJ MERCANTILE BANK AND TO WHOM THE CHEQUE PA YMENTS WERE MADE AS RECORDED IN THE BANK STATEMENT OF M/S.SARANG CHEMIC ALS LIMITED SHOWN TO YOU. ANS. SIR, I WILL BE ONLY ABLE TO REPLY AFTER SEEIN G THE BOOKS OF ACCOUNTS OF M/S.SARANG CHEMICALS LTD IF YOU PERMIT ME 2-3 HOUR S OF TIME I CAN PERUSE THE SAME AND PROVIDE YOU THE NAMES OF THE PERSONS F ROM WHOM CASH WAS RECEIVED OR TO WHOM THE CHEQUES HAVE BEEN ISSUED AG AINST THE CASH RECEIVED FROM THEM WHICH WAS DEPOSITED IN THE BANK ACCOUNT O F M/S.SARANG CHEMICALS LTD. ON THE REQUEST OF THE DEPONENT THE STATEMENT IS ADJ OURNED TO BE RESUMED AT 5.00 PM ON 21.03.2014 TO STATE THAT I HAVE STATED T HESE FACTS BEFORE ALSO IN MY STATEMENT TAKEN DURING THE COURSE OF SEARCH IN CASE OF M/S.SARANG CHEMICALS LTD IN 2012. THE ABOVE STAMEN IS GIVEN IN SOUND STATE OF HEALTH AND MIND, WITHOUT ANY THREAT, FEAR, COERCION, INDUCEMENT OR PROMISE. 22. A PERUSAL OF THE ABOVE STATEMENT WOULD INDICATE THAT DIRECTOR, SHRI LALIT KANTILAL RATHOD HAS NOWHERE TAKEN NAME OF THE ASSESSEE. HE TOOK TIME OF 2-3 HOURS TO PERUSE THE RECORD, BUT THEREAF TER, THE LD.AO NEITHER ASKED ANY QUESTION NOR CONDUCTED FURTHER INQUIRY. WE HAVE EXTRACTED THE ABOVE PORTION FROM PAGE NOS.37 & 38 OF THE ASSE SSMENT ORDER. THERE IS AN ABRUPT END TO THE RECORDING OF THE STATEMENT. THIS IS ONE FACTOR TO DISBELIEVE THE VERSION OF THE AO. THE OTHER FACT I S THAT THE ASSESSEE HAS BEEN EMPHASIZING FOR PROVIDING AN OPPORTUNITY TO CR OSS-EXAMINE THE IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 29 - ALLEGED DIRECTOR SHRI LALIT KANTILAL RATHOD, BUT TH E AO DID NOT ALLOW CROSS-EXAMINATION OF THIS PERSON. THEREFORE, BEFOR E APPRECIATING RELIABILITY AND VERACITY OF THIS PIECE OF EVIDENCE, I.E. STATEMENT OF SHRI LALIT K. RATHOD, WE WOULD LIKE TO MAKE REFERENCE TO THE DECISION OF HONBLE SUPREME COURT THE CASE OF ANDAMAN TIMBER IN DUSTRIES VS. COMM. OF CENTRAL EXCISE, KOLKATA (SUPRA) HONBLE SU PREME COURT HAS CATEGORICALLY OBSERVED THAT IF SOME STATEMENT WAS T AKEN FROM THE BACK OF AN ASSESSEE WITHOUT CONFRONTING THE ASSESSEE OR GIV ING OPPORTUNITY TO CROSS-EXAMINE, THEN SUCH STATEMENT IS TO BE EXCLUDE D FROM THE EVIDENCE. IN OTHER WORDS, IT CANNOT BE READ INTO EVIDENCE. C ONSEQUENTLY THER CANNOT BE ESTIMATION OF EXPENSES AT 1% FOR EACH ONE LAKH. FOLLOWING OBSERVATION OF THE HONBLE SUPREME COURT IS WORTH T O NOTE: . ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS -EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNT ED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TW O WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE S TATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NO T GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID P LEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE T RIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTE NABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DE ALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSS ESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX- FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS W ORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOS E DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. IT(SS)A NO.264 /AHD/2016 AND 20 OTHERS - 30 - 23. IF THIS STATEMENT IS EXCLUDED THEN THERE IS NOT HING WITH THE AO. ON THE BASIS OF WHICH, HE CAN DOUBT EVIDENCE SUBMIT TED BY THE ASSESSEE IN THE SHAPE OF CONFIRMATION, BANK STATEMENT, PAN E TC. THOUGH THE AO HAS CREATED A SUSPICION BY RECORDING HALF-STATEMENT , THEREAFTER INFERRING THAT DIRECTOR HAS DEPOSED THAT HE HAS RECEIVED MONE Y FROM THE ASSESSEE IN CASH WHICH WAS DEPOSITED IN THE BANK ACCOUNT, AN D CHEQUES WERE ISSUED TO THE ASSESSEE, THERE IS NO SUCH DISCLOSURE BY THE LALIT K. RATHOD QUA THE ASSESSEE. THEREFORE, TAKING INTO CONSIDERATIO N ALL THE MATERIAL FACTS AND CIRCUMSTANCES, THERE IS NO JUSTIFICATION TO ADD THIS AMOUNT AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSE E. WE ALLOW THIS GROUND AND DELETE BOTH THE ADDITIONS I.E. RS.3,40,2 0,000/-AND RS.3,40,000/- 24. IN THE RESULT, THIS APPEAL IS ALLOWED. 25. IN THE COMBINED RESULT, ALL THE APPEALS AND CRO SS OBJECTIONS ARE DISMISSED EXCEPT IT(SS)A.NO.204/AHD/2016 OF SHRI UD AY BHATT FOR THE ASSTT.YEAR 2010-11; IT IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 17 TH DECEMBER, 2020. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED, 17/12/2020