Shri Narender Kumar Paraswani, Agra V. ACIT, Agra

ITSSA 21/AGR/2005

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8755 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-02-2013
• Assessment Year: misc
• Appeal Filed On: 28-12-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P N AGARWAL
• Keywords: Unexplained investment; Gift; Business income; Depreciation; Search and seizure; Loose papers; Opportunity of being heard; Cost of acquisition; Valuation report; Block assessment; Documents seized; Unabsorbed depreciation
• Section: 69C; 143(3); 32; 147; 132; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER IT(SS) A NO. 21/AGRA/2005 BLOCK PERIOD : 01.04.1996 TO 22.02.2003 NARENDRA KUMAR PARASWANI, VS. A.C.I.T., CENTRAL CIRCLE, 4/A, LAJPAT KUNJ, AGRA. AGRA. (PAN : ABKPP 9267 F). IT(SS) A NO. 02/AGRA/2006 BLOCK PERIOD : 01.04.1996 TO 22.02.2003 A.C.I.T., CENTRAL CIRCLE, VS. NARENDRA KUMAR PAR ASWANI, AGRA. 4/A, LAJPAT KUNJ, AGRA. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI WASEEM ARSHAD, JR. D.R. ASSESSEE BY : SHRI P.N. AGARWAL, ADVOCATE DATE OF HEARING : 11.02.2013 DATE OF PRONOUNCEMENT OF ORDER : 15.02.2013 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE CROSS APPEALS ABOVE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A)-I, AGRA DATED 07.11.2005 FOR THE ABOVE BLOCK PERIOD. 2. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS G ROUND NO. 1 & 2 IN APPEAL OF THE ASSESSEE AND ALSO STATED THAT GROUND NO. 4 & 5 IN THE APPEAL OF THE ASSESSEE ARE GENERAL IN NATURE. IN VIEW OF THE STATEMENT OF THE LD. COUNSEL FOR THE ASSESSEE, IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 2 GROUND NO. 1 & 2 ARE DISMISSED AS NOT PRESSED AND G ROUND NO. 4 & 5 BEING GENERAL IN NATURE NEED NO FINDING AND ARE ACCORDINGLY REJEC TED. 3. THE REVENUE FILED THE DEPARTMENTAL APPEAL ON THE FOLLOWING GROUNDS : 1(A). THE LD. CIT(APPEALS)-I, AGRA HAS ERRED IN LA W AND ON FACTS IN RESTRICTING THE ADDITION OF RS.10,24,234/- MADE BY THE A.O. ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PROPERTY TO RS .5,00,000/- WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE AO. 1(B). IN DOING SO, THE LD. CIT(APPEALS)-I, AGRA HA S ERRED IN LAW AND ON FACTS IN DIS-REGARDING THE DETAILS CONTA INED IN SEIZED ANNEXURE A-2 TO A-9 WHICH SHOWED THE DETAILS OF INV ESTMENT / EXPENDITURE MADE BY THE ASSESSEE IN CONSTRUCTION OF THE HOUSE PROPERTY SITUATED AT 4A, LAJPAT KUNJ, AGRA. 1(C). IN DOING SO, THE LD. CIT(APPEALS)-I, AGRA HA S ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE REPET ITIVE CHALLANS, INVOICES, BILLS ETC. INCLUDED IN THE SAID SEIZED AN NEXURES A-2 TO A-9 WERE ALREADY EXCLUDED BY THE AO WHILE DETERMINING T HE TOTAL INVESTMENT IN THE SAID PROPERTY AS PER THE SEIZED P APERS AT RS.29,93,335/- AND, THEREFORE, THE AO WAS JUSTIFIED IN MAKING THE ADDITION OF RS.10,24,234/- ON ACCOUNT OF UNEXPLAINE D INVESTMENT AS THE ASSESSEE HAD DISCLOSED TOTAL INVESTMENT IN THE SAID PROPERTY AT RS.19,69,101/- ONLY. 2. THAT THE ORDER OF THE LD. CIT(APPEALS)-I, AGRA BEING ERRONEOUS IN LAW AND ON FACTS BE VACATED AND THE OR DER OF THE AO BE RESTORED. 4. THE ASSESSEES APPEAL IS LEFT WITH CONSIDERATION OF GROUND NO. 3 ONLY WHICH READS AS UNDER : 3. THAT THE AUTHORITIES BELOW HAVE BEEN WRONG AND ILLEGAL IN ESTIMATING THE PURCHASE VALUE OF OLD MARUTI ZEN CAR NO. HR 51 H IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 3 6641 IN THE NAME OF CHIRAG PARASWANI AT RS.3,00,000 AS AGAINST ACTUAL PURCHASE PRICE OF RS.1,75,000/-. THE ADDITIO N OF RS.1,25,000/- IS LIABLE TO BE DELETED. 5. BRIEFLY, THE FACTS OF THE CASE ARE THAT A SEARCH U/S. 132 OF THE IT ACT WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSE SSEE ON 22.02.2003. THE LOCKER OF THE ASSESSEE WITH PUNJAB NATIONAL BANK WAS ALSO SUB JECTED TO SEARCH. DURING THE COURSE OF SEARCH, INCRIMINATING DOCUMENTS, BOOKS OF ACCOUNT, JEWELLERY AND CASH ETC. WERE FOUND. THE ASSESSEE FILED RETURN FOR THE BLOCK PERIOD IN PURSUANCE OF THE NOTICE U/S. 158 BC AND AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, BLOCK ASSESSMENT ORDER WAS PASSED U/S. 158BC/143(3) OF THE IT ACT MAKING CERTAIN ADDITIONS AGAINST THE ASSESSEE, WHICH REMAINED SUBJ ECT MATTER OF APPEAL BEFORE THE LD. CIT(A), WHO HAS ALLOWED THE APPEAL OF THE ASSES SEE PARTLY. THE REVENUE AND THE ASSESSEE FEELING DISSATISFIED WITH THE IMPUGNED ORDER OF LD. CIT(A) PREFERRED THE ABOVE CROSS APPEALS ON THE ABOVE GROUNDS OF APP EALS. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIALS AVAI LABLE ON RECORD. BEFORE PROCEEDING FURTHER TO DECIDE THE RESPECTIVE GROUNDS OF APPEALS ON MERITS, IT WOULD BE RELEVANT TO DISCUSS THE PROVISIONS CONTAINED UND ER CHAPTER XIV-B OF THE IT ACT FOR THE PURPOSE OF COMPUTING UNDISCLOSED INCOME DUR ING THE BLOCK PERIOD. IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 4 6.1 CHAPTER XIV-B STARTS WITH SEC. 158B AND PROVID ES THE DEFINITION OF BLOCK PERIOD AND UNDISCLOSED INCOME. UNDISCLOSED INCO ME IS RELEVANT IN THIS CASE, WHICH IS REPRODUCED BELOW AS AMENDED BY FINANCE ACT , 2002 W.E.F. 1.7.1995: S.158B(B) UNDISCLOSED INCOME INCLUDES ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT S OR TRANSACTIONS, WHERE SUCH MONEY, BULLION, JEWELLERY, VALUABLE ARTI CLE, THING, ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTI ON REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT B EEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT, OR ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE. THIS SECTION SHOWS THAT THE FOLLOWING CONDITIONS MU ST BE SATISFIED TO TREAT THE INCOME AS UNDISCLOSED INCOME I.E.: (I) IT MUST BE IN THE FORM OF MONEY, BULLION, JEWELLERY , OTHER VALUABLE ARTICLE OR THING OR SHOULD CONSTITUTE INCO ME OR PROPERTY BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT S OR OTHER DOCUMENT OR TRANSACTION; (II) IT SHOULD BE AVERRED THAT THE ASSETS OR ENTRY IN TH E BOOKS REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHIC H HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPO SE OF THIS ACT . (III) OR ANY EXPENSES, DEDUCTION OR ALLOWANCE CLAIMED UND ER THIS HEAD, WHICH IS FOUND TO BE FALSE. SECTION 158BB (1) PROVIDES FOR COMPUTATION OF UNDIS CLOSED INCOME OF THE BLOCK PERIOD AND IS REPRODUCED AS UNDER: IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 5 (1) THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL BE THE AGGREGATE OF THE TOTAL INCOME OF THE PREVIOUS YEARS FALLING WITHIN THE BLOCK PERIOD COMPUTED, IN ACCORDANCE WITH THE PROVI SIONS OF THIS ACT, ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARC H OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE AO AND RELATA BLE TO SUCH EVIDENCE AS REDUCED BY THE AGGREGATE OF THE TOTAL I NCOME, OR AS THE CASE MAY BE, AS INCREASED BY THE AGGREGATE OF THE L OSSES OF SUCH PREVIOUS YEARS, DETERMINED,- (A) WHERE ASSESSMENTS U/S 143 OR SEC. 144 OR SEC. 1 47 HAVE BEEN CONCLUDED [PRIOR TO THE DATE OF COMMENCEMENT OF THE SEARCH OR THE DATE OF REQUISITION], ON THE BASIS OF SUCH ASSE SSMENTS; (B) WHERE RETURNS OF INCOME HAVE BEEN FILED U/S 139 [OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SEC. 14 2 OR SECTION 148] BUT ASSESSMENTS HAVE NOT BEEN MADE TILL THE DA TE OF SEARCH OR REQUISITION, ON THE BASIS OF THE INCOME DISCLOSE D IN SUCH RETURNS; [(C) WHERE THE DUE DATE FOR FILING A RETURN OF INCO ME HAS EXPIRED, BUT NO RETURN OF INCOME HAS BEEN FILED,- (A) ON THE BASIS OF ENTRIES AS RECORDED IN THE BOOK S OF ACCOUNT AND OTHER DOCUMENTS MAINTAINED IN THE NORMA L COURSE ON OR BEFORE THE DATE OF THE SEARCH OR REQUI SITION WHERE SUCH ENTRIES RESULT IN COMPUTATION OF LOSS FO R ANY PREVIOUS YEAR FALLING IN THE BLOCK PERIOD; OR (B) ON THE BASIS OF ENTRIES AS RECORDED IN THE BOOK S OF ACCOUNT AND OTHER DOCUMENTS MAINTAINED IN THE NORMA L COURSE ON OR BEFORE THE DATE OF THE SEARCH OR REQUI SITION WHERE SUCH INCOME DOES NOT EXCEED THE MAXIMUM AMOUN T NOT CHARGEABLE TO TAX FOR ANY PREVIOUS YEAR FALLING IN THE BLOCK PERIOD; (CA) WHERE THE DUE DATE FOR FILING A RETURN OF INCO ME HAS EXPIRED, BUT NO RETURN OF INCOME HAS BEEN FILED, AS NIL, IN CASE S NOT FALLING UNDER CLAUSE (C);] IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 6 (D) WHERE THE PREVIOUS YEAR HAS NOT ENDED OR THE DATE O F FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SEC. 139 HAS NOT EXPIRED, ON THE BASIS OF ENTRIES RELATING TO SUCH INCOME OR TRANSACTIONS AS RECORDED IN THE BOOKS OF ACCOUNT AND OTHER DOCUMENT S MAINTAINED IN THE NORMAL COURSE ON OR BEFORE THE DATE OF THE S EARCH OR REQUISITION RELATING TO SUCH PREVIOUS YEARS; (E) WHERE ANY ORDER OF SETTLEMENT HAS BEEN MADE UNDER S UB-SECTION(4) OF SEC. 245D, ON THE BASIS OF SUCH ORDER; (F) WHERE AN ASSESSMENT OF UNDISCLOSED INCOME HAD BEEN MADE EARLIER UNDER CLAUSE (C) OF SEC. 158BC, ON THE BASIS OF SUC H ASSESSMENT. EXPLANATION.-FOR THE PURPOSE OF DETERMINATION OF UN DISCLOSED INCOME, - (A) THE TOTAL INCOME OR LOSS OF EACH PREVIOUS YEAR SHAL L, FOR THE PURPOSE OF AGGREGATION, BE TAKEN AS THE TOTAL INCOM E OR LOSS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF [THIS ACT] WITHOUT GIVING EFFECT TO SET OFF OF BROUGHT FORWARD LOSSES UNDER CHAPTER VI OR UNABSORBED DEPRECIATION UNDER SUB-SEC TION (2) OF SECTION 32; [PROVIDED THAT IN COMPUTING DEDUCTIONS UNDER CHAPTE R VI-A FOR THE PURPOSES OF THE SAID AGGREGATION, EFFECT SHALL BE GIVEN TO SET OFF OF BROUGHT FORWARD LOSSES UNDER CHAPTER VI OR U NABSORBED DEPRECIATION UNDER SUB-SECTION (2) OF SEC. 32;] (B) OF A FIRM, RETURNED INCOME AND TOTAL INCOME ASSESSE D FOR EACH OF THE PREVIOUS YEARS FALLING WITHIN THE BLOCK PERI OD SHALL BE THE INCOME DETERMINED BEFORE ALLOWING DEDUCTION OF SALA RY, INTEREST, COMMISSION, BONUS OR REMUNERATION BY WHAT EVER NAME CALLED [TO ANY PARTNER NOT BEING A WORKING PARTNER] ; PROVIDED THAT UNDISCLOSED INCOME OF THE FIRM SO DET ERMINED SHALL NOT BE CHARGEABLE TO TAX IN THE HANDS OF THE PARTNERS, WHETHER ON ALLOCATION OR ON ACCOUNT OF ENHANCEMENT; ] (C) ASSESSMENT UNDER SECTION 143 INCLUDES DETERMINATION OF INCOME UNDER SUB-SECTION (1) OR SUB-SECTION (1B) OF SEC. 1 43. IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 7 (2) IN COMPUTING THE UNDISCLOSED INCOME OF THE BLOC K PERIOD, THE PROVISIONS OF SECTIONS 68, 69, 69A, 69B AND 69C SHA LL, SO FAR AS MAY BE, APPLY AND REFERENCES TO FINANCIAL YEAR IN THO SE SECTIONS SHALL BE CONSTRUED AS REFERENCES TO THE RELEVANT PREVIOUS YE AR FALLING IN THE BLOCK PERIOD INCLUDING THE PREVIOUS YEAR ENDING WIT H THE DATE OF SEARCH OR OF THE REQUISITION. (3) THE BURDEN OF PROVING TO THE SATISFACTION OF TH E AO THAT ANY UNDISCLOSED INCOME HAD ALREADY BEEN DISCLOSED IN AN Y RETURN OF INCOME FILED BY THE ASSESSEE BEFORE THE COMMENCEMEN T OF SEARCH OR THE REQUISITION, AS THE CASE MAY BE, SHALL BE ON TH E ASSESSEE. (4) FOR THE PURPOSE OF ASSESSMENT UNDER THIS CHAPTE R, LOSSES BROUGHT FORWARD FROM THE PREVIOUS YEAR UNDER CHAPTE R VI OR UNABSORBED DEPRECIATION UNDER SUB-SECTION (2) OF SE CTION 32 SHALL NOT BE SET OFF AGAINST THE UNDISCLOSED INCOME DETERMINE D IN THE BLOCK ASSESSMENT UNDER THIS CHAPTER, BUT MAY BE CARRIED F ORWARD FOR BEING SET OFF IN THE REGULAR ASSESSMENTS. 6.2 WE, AFTER CONSIDERING THE ABOVE PROVISIONS, AR E OF THE OPINION THAT EVEN IF THERE IS AN AMENDMENT IN THE ABOVE SECTIONS, THE SC HEME OR PURPOSE OF ENACTING CHAPTER XIV-B HAS NOT UNDERGONE A MAJOR CHANGE IN T HE SENSE THAT THE BLOCK ASSESSMENT PERTAINING TO A NUMBER OF YEARS REMAINS DISTINCT FROM ASSESSMENT U/S 143(3) PERTAINING TO A SINGLE ASSESSMENT YEAR. THE BLOCK ASSESSMENT COULD BE MADE IN RESPECT OF UNDISCLOSED INCOME IF DURING THE BLOC K PERIOD UNDISCLOSED INCOME IS RECOVERED AS A RESULT OF EVIDENCE FOUND DURING THE COURSE OF SEARCH AND NOT AS A RESULT OF OTHER DOCUMENTS OR MATERIAL WHICH CAME TO THE POSSESSION OF THE AO SUBSEQUENT TO THE CONCLUSION OF SEARCH OPERATION UN LESS AND UNTIL SUCH MATERIAL OR DOCUMENT IS RELATABLE TO SUCH EVIDENCE RECOVERED DU RING THE COURSE OF THE SEARCH. THE AMENDED DEFINITION OF SEC. 158BB AS MENTIONED A BOVE CLEARLY SUGGESTS THAT IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 8 SOME EVIDENCE IS TO BE FOUND AS A RESULT OF SEARCH OPERATION AND IT IS ONLY THEREAFTER THAT THE REMAINING PART OF THE PROVISIONS COME INTO PLAY AND THAT TOO THE REMAINING EVIDENCE MUST BE RELATABLE TO THE EVIDENCE RECOVERE D DURING THE COURSE OF THE SEARCH. THE OTHER AMENDMENT IN SEC. 158B(B) WHICH I S REPRODUCED ABOVE HAS ENLARGED THE MEANING OF THE TERM UNDISCLOSED INCOM E BY INCLUDING THEREIN ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE. WHAT HAS TO BE SEEN IS THAT THE VALUABLE AR TICLES, DOCUMENTS OR TRANSACTIONS WHICH REPRESENT WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT . THEREFORE, BEFORE COMING TO ANALYZE WHAT IS UNDISCLOSED INCOME, IT IS NECESSARY TO BE SEEN THAT SUCH INCOME HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE P URPOSE OF THIS ACT. IF ANY SUCH ARTICLE OR THING OR INCOME HAS ALREADY BEEN DISCLOS ED TO THE DEPARTMENT PRIOR TO THE SEARCH, IT CANNOT BE TERMED THAT THE SAME HAS NOT B EEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT. THEREFORE, W HATEVER ITEMS OR ARTICLES HAVE BEEN SHOWN TO THE DEPARTMENT PRIOR TO THE SEARCH CA NNOT BE TREATED AS UNDISCLOSED INCOME. 6.3 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. VINOD DANCHAND GHODAWAT, 247 ITR 448 (BOM.) OBSERVED: IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 9 WHERE THE VALUE OF THE GOLD AND SILVER ARTICLES AND JEWELLERY HAD BEEN DISCLOSED IN THE ASSESSEES WEALTH-TAX RETURN WHICH WAS ACCEPTED BY THE DEPARTMENT. HELD, THAT CHAPTER XIV-B OF THE IT ACT, 1961 HAD N OT APPLICATION TO THE FACTS OF THE CASE AND THE ADDITI ON MADE BY THE DEPARTMENT ON THE GROUND OF UNDISCLOSED INCOME WAS ERRONEOUS. 6.4 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF BHAGWATI PD. KEDIA VS. CIT, 248 ITR 562 (CAL.) OBSERVED THE EXPLANATION TO SEC. 158BA OF THE IT ACT, 1961 M AKES IT CLEAR THAT THE LEGISLATURE THOUGHT IT FIT TO MAKE A DISTINCTIO N BETWEEN THE BLOCK ASSESSMENT AND THE REGULAR ASSESSMENT. IN THE CASE OF REGULAR ASSESSMENT, THE AO IS FREE TO EXAMINE THE VERACITY OF THE RETURN AS WELL AS THE CLAIMS MADE BY THE ASSESSEE, WHEREAS TH E UNDISCLOSED INCOME IS TAXED BY WAY OF BLOCK ASSESSMENT AS A RES ULT OF SEARCH AND SEIZURE. THE LOGIC BEHIND THE TWO DIFFERENT MODES O F ASSESSMENT IS THAT CONCEALMENT OF INCOME AND CLAIMING DEDUCTION OR EXE MPTION IN RESPECT OF A DISCLOSED INCOME CANNOT BE TREATED AT PAR. THE FORMER IS AN OFFENCE WHICH GOES TO THE ROOT OF THE MATTER AND THE OTHER IS ON THE BASIS OF THE CAUSES SHOWN BY THE ASSESSEE WHERE THE AO IS FREE TO ACCEPT THE JUSTIFICATION SHOWN OR REJECT THE SAME. THERE WAS A SEARCH AND SEIZURE RESULTING IN BLOCK ASSESSMENT OF THE ASSESSEE. DURING THE BLOCK ASSESSMENT, THE ASSE SSEE WAS CALLED UPON TO EXPLAIN THE ADVANCE TAKEN FROM A COMPANY. T HE ASSESSEE HAD FILED THE CONFIRMATION LETTER OF LOAN FROM THE COMP ANY INCLUDING INCOME TAX FILE NUMBERS OF THE CREDITOR. THE INCOME -TAX AUTHORITY HELD THAT THE SAID LOAN WAS A FICTITIOUS ONE AND WAS TO BE CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE DURING THE PERIO D UNDER CONSIDERATION. ON THE QUESTION WHETHER THE AO WAS E NTITLED TO QUESTION THE LOAN AMOUNT WHICH WAS THE SUBJECT MATT ER OF REGULAR ASSESSMENT, WHILE MAKING BLOCK ASSESSMENT. HELD, THAT THE AO WAS NOT ENTITLED TO QUESTION IN BLOCK ASSESSMENT THE LOAN WHICH WAS A SUBJECT MATTER OF T HE REGULAR ASSESSMENT. THE AO WAS WRONG IN HOLDING THAT THE SA ID SUM COULD BE TAXED IN BLOCK ASSESSMENT ALTHOUGH THE SAME FEATURE D IN THE REGULAR BOOKS OF ACCOUNT. WHEN THE LOAN CREDITOR WAS AN ASS ESSEE AND IN IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 10 WHOSE ASSESSMENT THE LOAN ADVANCED HAD BEEN ACCEPTE D BY THE REVENUE, THE AO WAS WRONG IN HOLDING THAT THE ASSES SEE WAS LIABLE TO PAY TAX ON THAT LOAN MONEY TAKEN FROM THE ASSESSEE. 6.5. IN CASE OF CIT VS. RAVI KANT JAIN, 250 ITR 14 1 (DEL.), THE HONBLE DELHI HIGH COURT OBSERVED: BLOCK ASSESSMENT UNDER CHAPTER XIV-B OF THE IT ACT, 1961, IS NOT INTENDED TO BE A SUBSTITUTE FOR REGULAR ASSESSMENT. ITS SCOPE AND AMBIT IS LIMITED IN THAT SENSE TO MATERIALS UNEARTHED DUR ING SEARCH. IT IS IN ADDITION TO THE REGULAR ASSESSMENT ALREADY DONE OR TO BE DONE. THE ASSESSMENT FOR THE BLOCK PERIOD CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATIO N AS ARE AVAILABLE WITH THE AO. EVIDENCE FOUND AS A RESULT O F SEARCH IS RELATABLE TO SECTIONS 132 AND 132A. HELD, THAT, ADMITTEDLY THE UNDISCLOSED INCOME WAS N OT DETERMINED ON THE BASIS OF ANY SEARCH MATERIAL AND THE AO WAS PROCEEDING WITHIN THE SCOPE OF THE ASSESSMENT AND N OT WITHIN THE SCOPE OF EXERCISING JURISDICTION UNDER CHAPTER XIV- B AND SEC. 158BA. THEREFORE, SEC. 158BA OF THE ACT HAD NO APPLICATION TO THE FACTS OF THE CASE. 6.6. IN THE CASE OF SUNDER AGENCIES VS. DCIT, 63 I TD 245, ITAT, MUMBAI BENCH B HELD AS UNDER: SEC. 158BA OF THE IT ACT, 1961 SEARCH AND SEIZURE BLOCK PERIOD 1.4.1985 TO 16.11.1995 WHETHER WITHIN PALE OF CHA PTER XIVB ASSESSMENT COULD BE MADE ONLY IN RESPECT OF UNDISCL OSED INCOME AND SUCH UNDISCLOSED INCOME MUST COME AS A RESULT OF SE ARCH HELD, YES WHETHER SEC. 158BA DOES NOT PROVIDE A LICENSE TO RE VENUE FOR MAKING ROVING ENQUIRIES CONNECTED WITH COMPLETED ASSESSMEN T AND IS BEYOND POWER OF AO TO REVIEW ASSESSMENTS COMPLETED UNLESS SOME DIRECT EVIDENCE COMES TO KNOWLEDGE OF DEPARTMENT AS A RESU LT OF SEARCH WHICH INDICATES CLEARLY FACTUM OF UNDISCLOSED INCOM E HELD, YES WHETHER SCHEME OF CHAPTER XIVB GIVES POWER TO REVEN UE TO DRAW IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 11 PRESUMPTION IN REGARD TO UNDISCLOSED INCOME HELD, NO ASSESSEE CLAIMED 1 TO 1.5 PER CENT OUT OF TOTAL SALES AS SA LES PROMOTION EXPENSES DURING SEARCH PROCEEDINGS A BOOK CALLED GIFT REGISTER WAS SEIZED FROM ASSESSEES BUSINESS PREMISES GIFT REGISTER RELATED TO SALE PROMOTION EXPENSES IN EARLIER ASSESSMENT PRO CEEDINGS COVERING BLOCK PERIOD IN QUESTION, SUCH EXPENSES WERE DISCLO SED AND DISALLOWANCES WERE MADE NEITHER ANY INCRIMINATING MATERIAL REVEALING UNDISCLOSED INCOME CAME TO LIGHT NOR ENQU IRY REGARDING SALES PROMOTION EXPENSES IN PROCEEDING U/S 132(1) W AS MADE. WHETHER ADDITION ON ACCOUNT OF SALES PROMOTION EXPE NSES ON ESTIMATE BASIS COULD BE JUSTIFIED HELD NO. 6.7. IN THE CASE OF DIGVIJAY CHEMICAL LTD. VS. ACI T, 68 TTJ 280, ITAT, DELHI BENCH E HELD THAT ADDITION BASED ON SUSPICION AND SURMISES ARE NOT CO VERED U/S 158B(B). IT WAS FURTHER HELD THAT THE ADDITION U/S 158B(B) MUST BE MADE ON CONCRETE MATERIAL. 6.8. IN THE CASE OF P.K. GANESHWAR VS. DCIT, 80 IT D 429 (CHENNAI), ITAT, CHENNAI BENCH C HELD SEC. 158BA OF THE IT ACT, 1961 BLOCK ASSESSMENT S EARCH CASES ASSESSMENT OF UNDISCLOSED INCOME AS A RESULT OF SEA RCH WHETHER, WHERE UNDISCLOSED INCOME IS FOUND NOT ON BASIS OF E VIDENCE FOUND AS A RESULT OF SEARCH BUT ON INVESTIGATION AND INQUIRIES MADE FOLLOWING SEARCH, SUCH INCOME COULD BE INCLUDED AS UNDISCLOSE D INCOME OF BLOCK PERIOD COMPUTED UNDER CHAPTER IV HELD, NO WHETH ER CHAPTER XIV-B IS A SPECIAL PROVISION FOR ASSESSMENT OF UNDI SCLOSED INCOME FOUND AS A RESULT OF SEARCH ONLY AND THERE IS NO SC OPE FOR CONSIDERING ITEMS THAT COULD BE CONSIDERED UNDER REGULAR ASSESS MENT HELD, YES. 6.9. HONBLE CALCUTTA HIGH COURT IN THE CASE OF CI T VS. ASHIM KRISHNA MONDAL, 270 ITR 160 AT PAGES 163 AND 164 OBSERVED: IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 12 THE PRINCIPLE THAT HAS BEEN LAID DOWN FOR THE PURPO SE OF MAKING ASSESSMENT ARE SETTLED PROPOSITION AS WAS REFERRED TO BY THE LD. TRIBUNAL IN THE CASE OF SUNDER AGENCIES VS. DCIT [1 997] 63 ITD 245 (MUMBAI); T.S. KUMARASAMY VS. ACIT [1998] 65 ITD 18 8 (MAD), AT PAGE 206 AND INDORE CONSTRUCTION (P) LTD. VS. ACIT [1999] 71 ITD 128 (INDORE) WHEREIN THE MUMBAI BENCH OF THE ITAT, THE MADRAS BENCH OF THE ITAT AND THE INDORE BENCH OF THE ITAT, RESPECTIVELY, HAD HELD THAT THE INCOME FOR BLOCK ASSESSMENT UNDER SEA RCH AND SEIZURE PROCEDURE IS TO BE COMPUTED STRICTLY ON THE BASIS O F THE DOCUMENTS SEIZED; AND IT CANNOT PROCEED ON CONJECTURES AND/OR SURMISES AND ARRIVE AT AN ESTIMATION INSTEAD OF COMPUTATION. THE WORD COMPUTATION CONNOTES A DIFFERENT MEANING THAN EST IMATION OR APPRAISAL. COMPUTATION PRESUPPOSES A CALCULATION ON THE BASIS OF THE MATERIALS, WHICH IS SOMETHING DIFFERENT FROM ESTIMA TION OR APPRAISAL AND IT MUST BE BASED ON METHODICAL CALCULATION WITH SOME AMOUNT OF APPROXIMITY TO MATHEMATICAL PROCESS ON THE MATERIAL S AVAILABLE ON SEARCH AND SEIZURE. 6.10. ITAT, DELHI BENCH (TM) IN THE CASE OF DANG & CO. PVT. LTD. VS. DCIT, 277 ITR (AT) 190 HELD: THE ASSESSEE EXPLAINED THAT IT WAS AN ESTATE AGENT AND THE AMOUNT RECEIVED BY THE ASSESSEE WAS AN ADVANCE RECEIVED TO WARDS PURCHASE OF CERTAIN PROPERTIES. ASSUMING IT WAS A LOAN RECEI VED BY THE ASSESSEE, IT WAS NOT IN DISPUTE THAT THE ASSESSEE HAD FILED I TS REGULAR RETURN OF INCOME FOR THE AY 1994-95 DISCLOSING THE AMOUNT IN THE BALANCE- SHEET. IF IT WAS A LOAN, THE AMOUNT THEREOF COULD H AVE BEEN ADDED TO THE TOTAL INCOME U/S 68 ONLY IF IT WAS HELD TO BE A NON-GENUINE LOAN. THE GENUINENESS COULD HAVE BEEN GONE INTO ONLY IN T HE COURSE OF REGULAR ASSESSMENT WHEN THE ASSESSEE HAD DULY DISCL OSED THE AMOUNT IN ITS BALANCE-SHEET. THE ASSESSEE HAD DISCHARGED I TS PART OF THE OBLIGATION BY DISCLOSING THE AMOUNT IN THE BALANCE- SHEET AND BY FILING THE RETURN. IT WAS NOT THE ASSESSEES FAULT THAT NO ASSESSMENT WAS MADE. IT WAS OF NO CONSEQUENCE UNDER WHICH HEAD THE AMOUNT WAS DISCLOSED IN THE BALANCE-SHEET. IF IT WAS AN ADVANC E FROM A CUSTOMER FOR PURCHASE OF PROPERTY, IT COULD NOT BE TREATED A S INCOME BECAUSE IT WAS MERELY AN ADVANCE TOWARDS PURCHASE OF PROPERTY AND IN NO WAY IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 13 THE INCOME OF THE ASSESSEE. WHEN THE AMOUNT STOOD D ULY DISCLOSED IN THE REGULAR RETURN OF INCOME, THE AO COULD NOT RESO RT TO BLOCK ASSESSMENT PROCEEDINGS TO GO INTO ITS GENUINENESS A ND SUBJECT IT TO A HIGHER RATE OF TAX. THE ADDITION OF RS.55 LAKHS WAS NOT JUSTIFIED. 6.11. HONBLE MP HIGH COURT IN THE CASE OF CIT VS . KHUSHLAL CHAND NIRMAL KUMAR, 263 ITR 77 HELD: HELD, THAT A PERUSAL OF THE UNAMENDED AND AMENDED PROVISIONS AND THE CIRCULAR OF THE CENTRAL BOARD OF DIRECT TAXES W OULD MAKE IT CLEAR THAT THERE HAD BEEN NO SPECIFIC EFFECT THAT THE AME NDMENT EFFECTED TO SEC. 158BB IN THE FINANCE ACT, 2002, WITH EFFECT FR OM JULY 1, 1995, WOULD BE APPLICABLE TO THE INSTANT CASE AS THE BLOC K PERIOD COVERED TEN YEARS COMMENCING 1986 TO 1996. EMPHASIS HAD BEE N GIVEN TO THE FACT THAT THE EVIDENCE MUST HAVE BEEN FOUND DURING SEARCH AND ONLY THEREAFTER THE QUESTION OF GATHERING ANY MATERIAL I NFORMATION WOULD ARISE BASED ON THE SEARCH INQUIRY. ADMITTEDLY, DURI NG THE SEARCH IN THE PREMISES OF THE ASSESSEE NOTHING WAS FOUND WITH REG ARD TO THE INVESTMENT IN THE HOUSE. THE CONTENTION THAT THE VA LUATION REPORT OF THE DEPARTMENT VALUATION OFFICER WAS OBTAINED AND W AS CONFRONTED TO THE ASSESSEE BUT HE WAS NOT ABLE TO GIVE ANY EXPLAN ATION AND THEREFORE IT SHOULD BE ACCEPTED AS EVIDENCE COULD NOT BE ACCE PTED IN VIEW OF THE PROVISIONS OF SEC. 158BB AND THE LAW LAID DOWN BY T HE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VINOD DANCHAND GHODAWA T [2001] 247 ITR 448. 6.12. HONBLE GAUHATI HIGH COURT IN THE CASE OF C IT VS. ARMAN SHEIKH, 293 ITR 266 HELD: DISMISSING THE APPEAL, THAT THE TWO AMOUNTS WERE R ECEIVED BY THE ASSESSEE FROM A GOVT. AGENCY BY CHEQUES AND THEY WE RE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AND DULY REFLECTED IN THE REGULAR BOOKS OF ACCOUNT. THE AO RELIED UPON A PART OF THE ENTRIES IN THE BOOKS OF ACCOUNT AND REJECTED THE OTHER PART. SINCE THE ENTRIES MADE IN THE BOOKS OF ACCOUNT BEFORE THE DATE OF SEARCH A ND SEIZURE HAD BEEN ACCEPTED, THE AMOUNT IN QUESTION OUGHT NOT TO HAVE BEEN TREATED AS IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 14 UNDISCLOSED. THE SEARCH TOOK PLACE ON JULY 20, 2000 , AND AUGUST 9, 2000, ON WHICH DATES THE RETURN FOR THE AYS 2000-01 AND 2001-02 HAD NOT FALLEN DUE. THE RETURNS FOR THE AYS BASED ON RE GULAR BOOKS OF ACCOUNT WERE FILED AFTER SEARCH DISCLOSING THE BANK DEPOSITS. THERE WAS NO MATERIAL TO SHOW THAT THE ASSESSEE INTENDED TO HIDE ANY PART OF HIS INCOME FOR THE ASSESSMENTS UNDER APPEAL. THUS, THE BANK ACCOUNTS OUGHT NOT TO HAVE BEEN TREATED AS UNDISCLOSED BANK ACCOUNTS AND COULD NOT BE THE SUBJECT MATTER OF BLOCK ASSESSMENT PROCEEDINGS. 6.13. HONBLE DELHI HIGH COURT IN THE CASE OF GIRI SH CHOUDHARY, 163 TAXMAN 608 HELD THERE IS NO BASIS AS TO HOW, AO CAME TO CONCLUSIO N THAT 48 WAS RS.48 LAKHS. NO MATERIAL IS THERE TO SUPPORT SUCH F INDING OF THE AO. IT IS DUMB DOCUMENT. ADDITIONS DELETED. 7. THE REVENUE IN ITS APPEAL CHALLENGED THE ORDER O F THE LD. CIT(A) IN RESTRICTING THE ADDITION OF RS.10,24,234/- ON ACCOU NT OF UNDISCLOSED INVESTMENT IN PROPERTY OF RS.5,00,000/- ONLY. ANNEXURE A-2 TO A-9 OF PANCHNAMA DATED 22.02.2003 ARE THE BUNCH OF LOOSE PAPERS. IT WAS SE EN FROM THE PERUSAL OF THESE PAPERS THAT THE ASSESSEE HAD CONSTRUCTED A HOUSE PR OPERTY AT 4-A, LAJPAT KUNJ, AGRA. TOTAL INVESTMENT/EXPENDITURE ON THE BASIS OF LOOSE PAPERS / BILLS ETC. FOUND AT THE TIME OF SEARCH COMES TO RS.60,24,516/-. DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS, THE ASSESSEE ADMITTED THAT HE HAS CONS TRUCTED A HOUSE PROPERTY AND EXPLAINED THAT VARIOUS PAPERS FOUND IN SEARCH IN TH E FORM OF CHALLANS OF MATERIAL RECEIVED, INVOICES, REPEATED BILLS AND CONSOLIDATED BILLS HAVE BEEN TOTALED. IN FACT, MOST OF THEM ARE REPEATED BILLS NOT ONCE BUT AT TIM ES EVEN FIVE TIMES. OUT OF TOTAL BILLS OF AGGREGATE VALUE OF RS.47,46,459/-, THE ACT UAL AMOUNT OF MATERIAL AND LABOUR IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 15 USED IN THE CONSTRUCTION WORKS OUT TO RS.16,95,278/ - ONLY. THUS, THERE WAS A CLEAR DIFFERENCE OF RS.30,31,181/-. IT WAS, THEREFORE, EX PLAINED THAT THE FIGURE ARRIVED AT FROM THE SEIZED PAPER SHOULD BE MODIFIED TO THE ACT UAL FIGURE. THE AO EXAMINED THE SEIZED MATERIAL IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE AND REPETITIONS OF BILLS AND INVOICES ETC. AND GAVE BENEFIT OF RS.30,3 1,181/- AND BALANCE OF RS.29,93,335/- WAS CONSIDERED FOR THE PURPOSE OF AD DITION. SINCE THE ASSESSEE HAS DISCLOSED INVESTMENT IN PROPERTY AT RS.19,69,101/-, THEREFORE, BALANCE OF RS.10,24,234/- WAS CONSIDERED AS UNEXPLAINED INVEST MENT IN THE PROPERTY AND ADDITION WAS ACCORDINGLY MADE. THE ASSESSEE CHALLEN GED THE ADDITION BEFORE THE LD. CIT(A) AND THE SUBMISSIONS WERE REITERATED WHICH HA VE BEEN NOTED IN THE APPELLATE ORDER. IT WAS SUBMITTED THAT THERE IS NO INVESTMENT IN THE PROPERTY AS COMPUTED BY THE AO. IN FACT FIGURE HAS BEEN ARRIVED AT BY THE A O AFTER MODIFYING THE SAME. IT WAS ALSO EXPLAINED THAT IN ORDER TO ARRIVE AT THE A CTUAL INVESTMENT BEING MADE IN THE CONSTRUCTION OF THE SAID RESIDENTIAL HOUSE, A REFER ENCE WAS MADE TO THE VALUATION OFFICER OF THE INCOME-TAX DEPARTMENT ON 22.05.2003. THE VALUATION OFFICER HAD INSPECTED THE SAID RESIDENTIAL HOUSE ON 28.05.2003 AND HAS ESTIMATED COST OF CONSTRUCTION AT RS.22,03,000/-. IT WAS, THEREFORE, SUBMITTED THAT EVEN THE VALUATION REPORT CLEARLY DISPROVES THE VAGUE LOOSE PAPERS. TH E SAME LOOSE PAPERS ARE THEREFORE, UNAUTHENTICATED AND UNRELIABLE. THE ASSE SSEE FURTHER CLAIMED DEDUCTION OF 10% FOR SELF SUPERVISION ETC. THE AO WAS REQUIRE D TO GIVE BREAK UP OF VALUATION AS PER SEIZED PAPERS AND THE ASSESSEE IN SUPPORT OF THE SUBMISSIONS ALREADY MADE, IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 16 ALSO MADE COMMENTED ON THE WORKING DONE BY THE AO. THE DETAILED WORKING OF THE ASSESSEE IS MENTIONED AT PAGE 12 TO 14 OF THE I MPUGNED ORDER IN WHICH THE ASSESSEE HAS EXPLAINED EACH AND EVERY LOOSE PAPER T O SHOW THAT FIGURES ARRIVED AT BY THE AO AS PER SEIZED PAPERS ARE INCORRECT. THE D ETAILS CONTAINED IN THE LOOSE PAPERS INDICATED THE MEASUREMENT ETC. AND THE WORK NOT DONE THROUGH ESTIMATED CHALLANS. THE SEIZED PAPERS DID NOT REFER THE CONST RUCTION OF PROPERTY. THE CHALLANS MENTIONED THE QUALITY OF GOODS AND DID NOT MENTION ANY AMOUNT AS IT MENTIONED ONLY THE MEASUREMENT AND THE ACTUAL PURCHASES MADE BY THE ASSESSEE AT LOWER PRICE. IT WAS, THEREFORE, CLAIMED BEFORE THE LD. CI T(A) THAT THERE WAS NO BASIS TO ARRIVE AT THE TOTAL MADE BY THE AO CONSIDERING IT T O BE UNEXPLAINED INVESTMENT IN THE PROPERTY. THE LD. CIT(A), CONSIDERING THE SEIZE D PAPERS IN THE LIGHT OF SUBMISSIONS OF THE ASSESSEE RESTRICTED THE ADDITION OF RS.5,00,000/- AND ACCORDINGLY PARTLY ALLOWED THE APPEAL OF THE ASSESSEE ON THIS I SSUE. HIS FINDINGS IN PARA 5.1 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 5.1. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCE S OF THE CASE AND THE ARGUMENTS OF THE LD. REPRESENTATIVE OF THE APPELLANT. IT IS MENTIONED IN THE BLOCK ASSESSMENT ORDER THAT IT WAS NOTICED FROM THE PERUSAL OF LOOSE PAPERS AVAILABLE IN ANNEXURE A-2 T O ANNEXURE A-9 OF PANCHNAMA DATED 22.02.2003 THAT TOTAL INVESTMENT / EXPENDITURE ON THE BASIS OF LOOSE PAPERS CAME TO RS.60,24,516/-. H OWEVER, IT IS NOT CLEAR AS TO HOW THIS FIGURE HAS BEEN ARRIVED AT. TH E WORKING GIVEN BY THE AO AS PER HIS REPORT DATED 10.10.2005 SHOWS ONL Y A TOTAL OF RS.52,63,166/-. THE LD. REPRESENTATIVE OF THE APPEL LANT HAS POINTED OUT VARIOUS IMPORTANT FACTS WHICH CLEARLY PUT IN DOUBT EVEN THE ACCURACY OF THIS FIGURE. I WILL DISCUSS ABOUT THIS ASPECT A LITTLE WHILE LATER. AT THIS POINT OF TIME, I MAY LIKE TO HIGHLIGHT THE FAC T THAT EVEN AFTER EFFORTS PUT IN BY THE AO., HE HAD TO TAKE A BALANCING FIGUR E OF RS.7,61,350/- TO IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 17 ARRIVE AT THE AGGREGATE FIGURE OF RS.60,24,516/-. T HE FIGURE OF RS.7,61,350/- IS NOT TOTAL OF ANY FIGURES ACTUALLY FOUND OR WRITTEN ON SEIZED LOOSE PAPERS. THIS IS NOTHING BUT A BALANCIN G FIGURE FOR WHICH A DESCRIPTION HAS BEEN PROVIDED BY THE AO SAYING THAT IT WAS IN RESPECT OF BRICKS CEMENT, LABOURT ETC. THUS, ONE THING IS C LEAR THAT THERE WAS NO BASE OF AGGREGATE FIGURE OF RS.60,24,516/- MENTI ONED IN THE BLOCK ASSESSMENT ORDER. I WILL NOW CONSIDER THE OTHER FAC TS POINTED OUT BY THE LD. REPRESENTATIVE OF THE APPELLANT. THE LD. RE PRESENTATIVE OF THE APPELLANT HAS POINTED OUT THAT SOME OF THE PAPERS D ID NOT MENTION ANY AMOUNT BUT WERE MENTIONING SOME MEASUREMENTS. AN AM OUNT OF RS.1,42,057/- MENTIONED ON PAPER NO. 55(III) WAS IN RESPECT OF DETAILS OF MATURITY AMOUNT OF NSC AND HAD NOTHING TO DO WIT H CONSTRUCTION OF PROPERTY. IT HAS BEEN ALSO POINTED OUT THAT CERTAIN PAPERS WERE REPRESENTING CHALLANS OF GOODS WITHOUT MENTIONING O F ANY AMOUNT. THE PAPER NO. 73 OF ANNEXURE A-4 WAS RELATING TO TH E SALES TAX PERMISSION OF GOODS TO BE PURCHASED FROM OUTSIDE UP TO THE VALUE OF RS.1,50,000/-. IT HAS BEEN ALSO POINTED OUT THAT SO ME OF THE AMOUNTS WERE CONSIDERED MORE THAN ONCE. THE FACTS POINTED O UT BY THE LD. REPRESENTATIVE OF THE APPELLANT HAVE NOT BEEN DENIE D BY THE AO. IT IS, THEREFORE, CLEAR THAT EVEN IN RESPECT OF THE AGGREG ATE OF RS.52,63,166/- THERE IS NO PROPER BASIS THE LD. REPRESENTATIVE OF THE APPELLANT HAS ALSO POINTED OUT ABOUT VALUATION DONE OF THE PROPER TY BY THE VALUATION OFFICER AT A FIGURE OF RS.22,03,000/-. IN VIEW OF T HE FACTS POINTED OUT BY THE LD. REPRESENTATIVE OF THE APPELLANT IT IS CL EAR THAT THERE IS NO BASIS TO ARRIVE AT THE FIGURE OF RS.60,24,516/-. NO ADDITION TO THE UNDISCLOSED INCOME COULD BE MADE ON THE BASIS OF TH ESE LOOSE PAPERS. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE IT WI LL BE PROPER TO ACCEPT THE SURRENDER OF RS.5 LAKHS MADE BY THE APPE LLANT AS PER THE AFFIDAVIT FILED BEFORE THE ADDL. DIT(INV.) DATED 07 .05.2003. THE APPELLANT HAD DISCLOSED AN AMOUNT OF RS.5,00,000/- AS PER THIS AFFIDAVIT WHICH HAVE BEEN SIGNED ON 18.06.2003. THE ADDITION BY THE AO OF RS.10,24,234/- IS THEREFORE, RESTRICTED TO RS .5 LAKH. 8. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT THE REPETITIVE CHALLANS, INVOICES, BILLS ETC. INCLUDED IN THE SEIZ ED PAPER HAVE ALREADY BEEN EXCLUDED BY THE AO. THEREFORE, THERE WAS NO JUSTIFI CATION TO DELETE FURTHER ADDITION IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 18 ON THE ISSUE. ON THE OTHER HAND, THE LD. COUNSEL FO R THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE REVENUE. THOUGH THE REPORT OF THE DVO OBTAINED IN THIS CASE CANNOT BE CONSIDERED AS EVIDENCE FOUND AS A RESULT OF SEAR CH IN THE CASE OF THE ASSESSEE, BUT THE SAME WOULD SUPPORT THE CONTENTION OF THE AS SESSEE THAT THERE WAS NO BASIS TO COMPUTE THE UNDISCLOSED INVESTMENT AS MADE BY TH E AO. THE AO ON THE BASIS OF SEIZED PAPERS OBSERVED THAT THERE WAS INVESTMENT IN THE PROPERTY IN A SUM OF RS.60,24,516/-. THE ASSESSEE EXPLAINED BEFORE THE A O THAT THE LOOSE PAPER CONTAINED THE CHALLAN FOR MATERIAL RECEIVED, REPEAT ED BILLS AND INVOICES ADDED SEVERAL TIMES AND MEASUREMENT ETC. THE AO ACCEPTED THE CONTENTION OF THE ASSESSEE ON THE BASIS OF RE-VERIFICATION OF SEIZED MATERIAL AND FOUND THE CONTENTION OF THE ASSESSEE TO BE CORRECT AND REDUCED ABOUT 50% OF THE AMOUNT FROM THE VALUATION OF THE INVESTMENT / EXPENDITURE AS PER TH E LOOSE PAPERS. BEFORE THE LD. CIT(A), THE ASSESSEE FILED DETAILED SUBMISSIONS, WH ICH IS REPRODUCED AT PAGES 12 TO 14 OF THE APPELLATE ORDER IN WHICH THE ASSESSEE EXP LAINED THE LOOSE PAPERS BY EXPLAINING THAT THE LOOSE PAPERS DID NOT CONTAIN EX ACT VALUE OF INVESTMENT MADE IN THE PROPERTY, BUT THE SAME INDICATE THE MEASUREMENT ETC., WORK NOT DONE ON THE BASIS OF ESTIMATED FIGURE, SEIZED PAPERS DID NOT RE FER TO CONSTRUCTION OF PROPERTY, THE FIGURES ARE INCORRECT, THERE IS NO MENTION OF T HE AMOUNT IN THE CHALLANS AND IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 19 ULTIMATELY, THE ASSESSEE THROUGH DETAILED SUBMISSIO NS EXPLAINED THAT THE FIGURE ARRIVED AT BY THE AO ON THE BASIS OF LOOSE PAPERS I S WHOLLY INCORRECT. THE CLAIM OF THE ASSESSEE SHOULD HAVE BEEN ACCEPTED BY THE AO BE CAUSE THE AO AT THE ASSESSMENT STAGE REFERRED THE MATTER TO THE DEPARTM ENTAL VALUATION OFFICER ON 22.05.2003 FOR ESTIMATING THE INVESTMENT IN THE CON STRUCTION OF SUCH PROPERTY AND THE DVO HAS GIVEN VALUATION OF THE COST OF CONSTRUC TION AT RS.22,03,000/- AGAINST THE INVESTMENT MADE BY THE ASSESSEE IN THE PROPERTY AT RS.19,69,101/-. THOUGH THE REPORT OF THE DVO IS NOT A MATERIAL RECOVERED DURIN G THE COURSE OF SEARCH AND CANNOT BE READ AGAINST THE ASSESSEE, BUT IT WAS A D OCUMENT AVAILABLE ON RECORD AGAINST THE FINDING OF THE AO AND CLEARLY SUPPORTS THE FINDINGS OF THE LD. CIT(A) THAT THERE WAS NO BASIS FOR THE AO TO CONCLUDE THAT THE ASSESSEE MADE INVESTMENT IN THE COST OF CONSTRUCTION OF PROPERTY AT RS.29,93,33 5/- ON THE BASIS OF LOOSE PAPERS. THUS, THE LD. CIT(A) ON PROPER APPRECIATION OF LOOS E PAPERS AND MATERIAL ON RECORD RIGHTLY CAME TO THE CONCLUSION THAT THERE WAS NO BA SIS AS TO HOW THE FIGURES HAVE BEEN ARRIVED AT BY THE AO TO MAKE ADDITION AGAINST THE ASSESSEE. THERE WAS A DOUBT ABOUT THE ACCURACY OF THE FIGURE OF THE AO, WHICH I S ALSO SUPPORTED BY THE REPORT OF THE DVO. THE LD. CIT(A), THEREFORE, RIGHTLY HELD TH AT NO ADDITION TO THE UNDISCLOSED INCOME COULD BE MADE ON THE BASIS OF TH ESE LOOSE PAPERS. THE FINDING OF FACT RECORDED BY THE LD. CIT(A) HAVE NOT BEEN CH ALLENGED IN THE GROUNDS OF APPEAL AND NO MATERIAL IS PRODUCED BEFORE US TO CON TRADICT THE FINDINGS OF THE LD. CIT(A). THUS, THERE IS NO BASIS TO MAKE ADDITION AG AINST THE ASSESSEE. HOWEVER, THE IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 20 LD. CIT(A) ACCEPTED THE SURRENDER OF RS.5,00,000/- MADE BY THE ASSESSEE BEFORE THE ADIT (INVESTIGATION) ON THIS ISSUE AND CONFIRMED TH E ADDITION AT RS.5,00,000/-. THUS, WHEN SURRENDER OF RS.5,00,000/- IS ADDED TO T HE TOTAL DISCLOSED INVESTMENT OF RS.19,69,101/-, THE TOTAL INVESTMENT MADE BY THE AS SESSEE WOULD COME TO RS.24,69,101/-, WHICH IS MORE THAN THE FIGURE ADOPT ED BY THE DVO AT RS.22,03,000/- ON REFERENCE MADE BY THE AO. THE AO MADE REFERENCE ONLY ON THE REASONS THAT THERE WAS NO DEFINITE FIGURE ARRIVED A T THROUGH THE LOOSE PAPERS. THEREFORE, IN OUR VIEW, THE LD. CIT(A) ON PROPER AP PRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY ALLOWED THE APPEAL OF THE ASSESSE E PARTLY. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE SAME IS ACCORDINGLY DISMISSED. 10. THE ASSESSEE IN HIS APPEAL ON GROUND NO. 3 CHAL LENGED THE ADDITION ON ACCOUNT OF PURCHASE OF OLD MARUTI ZEN CAR. PAGE 2 T O 6 OF ANNEXURE A TO THE PANCHNAMA DRAWN AT THE RESIDENTIAL PREMISES OF SHRI BHUPENDRA PARASWANI ARE INSURANCE PAPERS IN RESPECT OF MARUTI ZEN CAR NO. H R 51 H-6641 IN THE NAME OF SHRI CHIRAG PARASWANI. THE ASSESSEE HAS EXPLAINED T HAT ABOVE ZEN CAR WAS ORIGINALLY PURCHASED BY SHRI SUBHASH CHAND OF FARID ABAD ON 03.05.2001 FROM THE SHOW ROOM OF THE COMPANY, BUT ON 08.10.2001, THIS C AR WAS PURCHASED BY SHRI CHIRAG PARASWANI (ASSESSEES BROTHERS SON) FOR RS. 1,75,000/- FROM SHRI SUBHASH CHAND, THE ORIGINAL OWNER. THE ASSESSEE EXPLAINED T HAT THIS CAR WAS ACCIDENTAL CAR DUE TO WHICH IT WAS PURCHASED FOR RS.1,75,000/-. TH IS CONTENTION WAS SUPPORTED BY IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 21 THE SURVEYOR CERTIFICATE, IN WHICH IT WAS CERTIFIED THAT THE CAR IS ACCIDENTAL CAR AND ITS VALUE IS NOT MORE THAN RS.1,75,000/-. THE ASSES SEE, THEREFORE, EXPLAINED THAT SINCE IT WAS ACCIDENTAL CAR, WHICH WAS PURCHASED FR OM THE ORIGINAL OWNER, THEREFORE, NO ADDITION BE MADE. THE AO, HOWEVER, NO TED THAT NO CONFIRMATION REGARDING SALE AMOUNT OF CAR HAS BEEN FILED AND GEN ERALLY INSURANCE COMPANIES DO NOT GIVE CLAIM OF DAMAGES TO THE OWNERS OF VEHICLE RATHER THEY PAY THE AMOUNT OF INSURANCE TO THE DEALER WHO WOULD REPAIR THE ACCIDE NTAL CAR. THE AO, THEREFORE, ESTIMATED THE VALUE OF CAR AT RS.3,00,000/- AND MAD E THE ADDITION OF RS.3,00,000/- AGAINST THE ASSESSEE CONSIDERING THE SAME AS UNDISC LOSED INCOME OF ASSESSEE. THE ASSESSEE CHALLENGED ADDITION BEFORE THE LD. CIT(A) AND SAME SUBMISSIONS WERE REITERATED. THE LD. CIT(A), HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND REJECTED THIS GROUND OF APPEAL OF THE ASSESSEE AND CONFIRMED THE ADDITION. 11. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. ON THE OTHER HAND, THE LD. DR RE LIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ORDERS OF THE AUTHORITIES BELOW IN MAKING AND CONFIRMING THE ADDITION OF RS.3,00,000/-. IT IS WELL SETTLED LAW AS NOTED ABOVE THAT THE ADDITION COULD BE MADE IN THE BLOCK ASSESS MENT ON THE BASIS OF EVIDENCES IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 22 FOUND AS A RESULT OF SEARCH FROM THE POSSESSION OF THE ASSESSEE. ON THIS ISSUE, THE SEIZED MATERIALS WERE RECOVERED FROM THE RESIDENTIA L PREMISES OF SHRI BHUPENDRA PARASWANI. THE SEIZED PAPER CONTAINED INSURANCE PAP ERS OF THE CAR IN QUESTION IN THE NAME OF SHRI CHIRAG PARASWANI. THE DOCUMENTS ON RECORD FILED AT PAPER BOOK PAGE 84 TO 90 CONTAINED THE REPORT OF THE SURVEYOR AND THE REGISTRATION CERTIFICATE THROUGH WHICH THE ORIGINAL CAR WAS REGISTERED IN TH E NAME OF SUBHASH CHAND OF FARIDABAD AND LATER ON TRANSFERRED IN THE NAME OF C HIRAG PARASWANI. THUS, THE SEIZED PAPERS WERE NOT FOUND FROM THE POSSESSION OF THE ASSESSEE AND EVEN THE SEIZED PAPER DID NOT REFER TO ANY UNDISCLOSED INVES TMENT MADE BY THE ASSESSEE IN PURCHASE OF ABOVE CAR. NO MATERIAL OR EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH TO INDICATE THAT THE ASSESSEE MADE ANY UNDIS CLOSED INVESTMENT IN THE PURCHASE OF ABOVE CAR. SINCE THE REGISTRATION CERTI FICATE PRIOR TO SEARCH WAS FOUND IN THE NAME OF CHIRAG PARASWANI, THEREFORE, THERE W AS NO JUSTIFICATION TO MAKE ADDITION ON ACCOUNT OF INVESTMENT MADE IN PURCHASE OF CAR AGAINST THE ASSESSEE. FURTHER, NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH TO PROVE THAT THE VALUE OF THE CAR IN QUESTION WAS RS.3,00,000/-. THE AO WI THOUT ANY EVIDENCE OR MATERIAL ESTIMATED THE COST OF ACQUISITION OF CAR AT RS.3,00 ,000/-, WHICH IS HIGHLY UNJUSTIFIED FOR ESTIMATING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD. SUCH AN ESTIMATED FIGURE CANNOT BE ALLOWED TO BE DONE IN THE BLOCK AS SESSMENTS. THUS, THERE WAS NO BASIS, WHATSOEVER, FOR THE AUTHORITIES BELOW TO MAK E OR CONFIRM THIS TYPE OF ADDITION AGAINST THE ASSESSEE. WE, ACCORDINGLY, DO NOT APPROVE THE ORDERS OF THE IT(SS)A NO.21/AGRA/2005 & 02/AGRA/2006 23 AUTHORITIES BELOW IN MAKING ESTIMATED ADDITION OF R S.3,00,000/-. THE ORDERS OF THE AUTHORITIES BELOW ARE, THEREFORE, SET ASIDE AND ADD ITION OF RS.3,00,000/- IS ACCORDINGLY DELETED. IN THE RESULT, GROUND NO. 3 OF APPEAL OF THE ASSESSEE IS ALLOWED. 13. NO OTHER GROUND IS ARGUED OR PRESSED. 14. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMI SSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY