THE Dy. CIT, CEN. Circle-1(2), Ahmedabad V. SHRI NARENDRA G. SOMANI, Ahmedabad

ITSSA 233/AHD/2003

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8611 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-11-2012
• Assessment Year: misc
• Appeal Filed On: 30-05-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Document seized; Principle of natural justice; Opportunity of cross examination; Block assessment; Documents seized
• Section: 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.(SS)A. NO.200 / AHD/2003 (BLOCK PERIOD 01.04.1989 TO 31.03.1999 & 01.04.1999 TO 15.02.2000) SATBIRSINGH H BHUSARI, 21/487, SATYAGRAH CHHAVANI, SATELLITE ROAD, AHMEDABAD-380015 VS. DCIT, CC-1(2), AHMEDABAD PAN/GIR NO. : AFVPB3970Q ASSESSEE BY : SHRI M K PATEL, AR DEPARTMENT BY: SHRI SH ELLEY JINDAL, CIT DR I.T.(SS)A. NO. 234/AHD/2003 (BLOCK PERIOD 01.04.1989 TO 15.02.2000) DCIT, CC-1(2), VS. SHRI SATBIRSINGH H BHUSARI, AHMEDABAD 21/487, SATYAGRAH CHHAVNI SATELLITE ROAD, AHMEDABAD- 3800015 ASSESSEE BY: SHRI M K PATEL, AR DEPARTMENT BY: SHRI SH ELLEY JINDAL, CIT DR I.T. (SS) A. NO. 233/AHD/2003 (BLOCK PERIOD 01.04.1989 TO 15.02.2000) DCIT, CC-1(2), VS. SHRI NARENDRA G SOMANI, AHMEDABAD 73, WHITE HOUSE, PANCHWATI, AHMEDABAD-380006 PAN: AGSPS6052Q DEPARTMENT BY: MR. SHELLEY JINDAL, CIT DR ASSESSEE BY: SHRI S N DEVATIA, AR I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 2 I.T.A.NO. 3151/AHD/2004 (ASSESSMENT YEAR 2001-02) DCIT, CC-1(2), VS. BHAGWATI BANQUETS & HOTELS LTD . AHMEDABAD 73, WHITE HOUSE, PANCHWATI, AHMEDABAD PAN NO.AABCB6178L DEPARTMENT BY: SHRI RAHUL KUMAR, DR ASSESSEE BY: SHRI S N DEVATIA, AR (APPELLANT) .. (RESPONDENT) DATE OF HEARING: 01.11.2012 DATE OF PRONOUNCEMENT: 22.01.2013 O R D E R PER SHRI A. K. GARODIA, AM:- OUT OF THIS BUNCH OF FOUR APPEALS, TWO CROSS APPEA L ARE FILED BY THE ASSESSEE AND THE REVENUE IN THE CASE OF SHRI SATBIR SINGH H BHUSARI FOR THE BLOCK PERIOD 01.04.1989 TO 15.02.2000 AND THESE APPEALS A RE DIRECTED AGAINST THE ORDER OF LD. CIT(A) I, AHMEDABAD DATED 12.03.2003 A S PER I.T.(SS)A.NO. 200/AHD/2003 (ASSESSEES APPEAL) AND I.T. (SS) A. N O. 234/AHD/2003 (REVENUES APPEAL). THE 3RD APPEAL IN I.T. (SS) A. NO. 233/AHD/2003 IS REVENUES APPEAL FILED IN THE CASE OF SHRI NARENDRA G SOMANI FOR THE SAME BLOCK PERIOD AND THIS IS ALSO DIRECTED AGAINST THE ORDER OF LD. CIT (A) I, AHMEDABAD DATED 28.03.2003. THE REMAINING ONE APPEAL I.E. I. T.A.3151/AHD/2004 IS REVENUES APPEAL IN THE CASE OF M/S. BHAGWATI BANQU ETS AND HOTELS LTD., WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT (A) I, AHM EDABAD, DATED 05.08.2004 FOR THE ASSESSMENT YEAR 2001-02. SINCE CONNECTED ISSUE S ARE INVOLVED IN ALL THESE APPEALS, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 3 2. FIRST, WE TAKE UP THE APPEAL IN I.T.A.NO. 200/AH D/2003 IN THE CASE OF SHRI SATBIRSINGH H BHUSANI. GROUNDS NO.1-8 ARE INTERCON NECTED, WHICH ARE AS UNDER: 1. THE LEARNED CIT (A) HAS ERRED IN LAW 'AND ON FA CTS IN REJECTING THE GROUND OF APPEAL CHALLENGING THE ASSESSMENT ORDER A S BAD IN LAW IN VIEW OF THE FACT THAT THE A.O. HAD NOT CONFRONTED THE AP PELLANT WITH THE OUTCOME OF THE ENQUIRIES CARRIED OUT BY HIM AND CROSS EXAMINATION OF THE PARTIES 'WHOSE STATEMENTS WERE RECORDED AND RELIED UPON BY HIM, THE LD. CIT(A) OUGHT TO HAVE QU ASHED THE ASSESSMENT ORDER AS BAD IN LAW AS WELL AS IN GROSS VIOLATION O F THE PRINCIPLES OF NATURAL JUSTICE AND EQUITY. 2. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE FINDINGS OF THE A.O. THAT THE APPELLANT HAD CONTRIB UTED 50% OF TOTAL INVESTMENT IN LAND OF BHAGWATI BANQUET PVT. LTD. IN VIEW OF THE FACT HAT THE APPELLANT WAS NEITHER A 50% PARTNER NOR HAVING CONTRIBUTED TO THE EXTENT OF 50% OF INVESTMENT IN LAND AT POINT OF TIM E AS WRONGLY PRESUMED BY THE A.O., THE FINDINGS OF THE A.O. BASED ON SUCH PRESUMPTION AND CONFIRMATION OF THE SAME BY THE LD. CIT (A) REQUIRE D TO BE QUASHED. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN RELYING UPON THE STATEMENTS OF THE 2 ARBITRATORS AS RECORDED BY HIM DURING THE COURSE OF APPEAL PROCEEDINGS FOR ARRIVING AT THE CONCLUSION T HAT THE APPELLANT WAS A 50% PARTNER AND HAD CONTRIBUTED AN AMOUNT EQUAL TO 50% OF THE INVESTMENT IN LAND. IN VIEW OF THE FACT THAT THE AR BITRATION AGREEMENT ITSELF HAVING NOTHING TO DO WITH EITHER THE INVESTMENT IN LAND OF BHAGWATI BANQUET PVT. LTD. OR THE SOURCE OF SUCH INVESTMENT, THE RELIANCE PLACED BY THE LD. CIT (A) ON THE STATEMENTS OF THE ARBITRATOR S WHO HAVE CLAIMED IGNORANCE ABOUT THE BASIS OF DETERMINATION OR THE P URPOSE OF THE AMOUNT, RECEIVABLE BY THE APPELLANT IS HIGHLY MISPLACED AND OUGHT TO HAVE BEEN' IGNORED AS IRRELEVANT. 4. THE LEARNED CIT (A) HAS ALSO ERRED IN LAW AND ON FACTS IN NOT GRANTING CROSS EXAMINATION OF THE ARBITRATORS WHOSE STATEMEN TS HAVE, BEEN HEAVILY RELIED UPON BY HIM FOR ARRIVING AT THE CONCLUSION T HAT THE APPELLANT WAS A 50% PARTNER AND-HAD CONTRIBUTED AN AMOUNT EQUAL TO 50% OF THE INVESTMENT IN LAND. THUS, IN ABSENCE OF ANY, CROSS EXAMINATION HAVING BEEN GRANTED, EVEN OTHERWISE THE STATEMENT OF THE A RBITRATORS REQUIRES TO BE IGNORED AS HAVING NO EVIDENTIARY VALUE IN THE EY ES OF LAW. 5. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION OF RS.1,09,58,250/- MADE BY THE AO. ON ACC OUNT OF ALLEGED INVESTMENT IN LAND OF BHAGWATI PVT LTD. IN VIEW OF THE FACTS AND ELABORATE SUBMISSIONS FILED COUPLED WITH THE FACT T HAT NO EVIDENCE HAS BEEN FOUND AND SEIZED FROM THE POSSESSION OF THE AP PELLANT AS A SEARCH LEADING TO ANY SUCH INVESTMENT, THE ACTUAL INVESTME NT MADE AND OFFERED BY THE APPELLANT REQUIRES TO BE ACCEPTED. I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 4 6. THE LEARNED CTT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN ENHANCING THE ADDITION ON ACCOUNT OF INVESTMENT IN LAND AS MADE BY THE A.O. BY A FURTHER AMOUNT OF RS.10,00,000/- WITHOUT PROPER CONSIDERATION AND APPRECIATION OF THE FACTS AND SUBMISSION PLACED BEFORE HIM. IN VIEW OF TINE FACTS AND SUBMISSIONS MADE, THE SAME ALSO R EQUIRES TO BE DELETED. 7. THE LEARNED CTT(A) HAS ERRED IN LAW IN CONFIRMIN G ADDITIONS WITHOUT ANY MATERIAL/CORROBORATIVE EVIDENCE FOUND AND SEIZE D DURING THE COURSE OF SEARCH AND ON THE RECORD THEREOF LD. CIT(A) HAS CONFIRMED THE ADDITIONS WHICH WERE DULY REFLECTED IN BOOKS OF ACC OUNT WHICH IS WHOLLY UNJUSTIFIED, PREMATURE AND BAD IN LAW AS WELL AS WI THOUT JURISDICTION AND AGAINST THE PROVISIONS OF CHAPTER XIVB. LD, CIT(A) HAS GRAVELY ERRED IN GROSSLY IGNORING THE PROVISIONS OF CHAPTER XIV-B OF THE ACT. 8. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN NOT GIVING PROPER OPPORTUNITY TO THE APPELLANT TO PLACE ON REC ORD VARIOUS EXPLANATIONS, SUBMISSIONS AND EVIDENCES AND FURTHER ERRED IN LAW IN NOT CONSIDERING EXPLANATION PLACED ON RECORD. THIS ACTI ON OF BOTH THE LOWER AUTHORITIES IS CLEAR BREACH OF PRINCIPLES OF NATURA L JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 2.1 IT WAS SUBMITTED BY THE LD. A.R. THAT GROUND NO .9 REGARDING CONFIRMATION OF ADDITION OF RS.15,000/- ON ACCOUNT OF PURCHASE O F MUSIC SYSTEM IS NOT PRESSED. REGARDING GROUND NO.10, IT WAS SUBMITTED THAT THIS GROUND IS NOW COVERED AGAINST THE ASSESSEE REGARDING LEVY OF SURC HARGE AND REGARDING GROUND NO.11, WHICH IS REGARDING CHARGING OF INTEREST U/S 158BFA, IT WAS SUBMITTED THAT THE SAME IS CONSEQUENTIAL. ACCORDINGLY, GROUND NO.9 IS REJECTED AS NOT PRESSED AND GROUND NO.10 IS ALSO REJECTED BECAUSE I T IS NOW COVERED AGAINST THE ASSESSEE AND GROUND NO.11 IS ALSO REJECTED AS BEING CONSEQUENTIAL IN NATURE. 2.2 REGARDING GROUNDS NO.1 TO 8, BRIEF FACTS OF THI S ISSUE TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 5 (PAGES 3-14 ) OF HIS ORDER, WHICH READS AS UNDER: 5. THE SECOND GROUND OF APPEAL PERTAINS TO ADDITIO N OF RS. 1,09,58,250/- ON ACCOUNT OF INVESTMENT IN LAND OF BHAGWATI BANQUE T PVT. LTD. THE ISSUE HAS BEEN DISCUSSED BY THE A.O. ON PAGES 9 LO 39 OF THE ASSESSMENT ORDER WHEREIN INTERALIA, THE A.O. HAS LARGELY REPRO DUCED THE FINDINGS AND OBSERVATIONS ARRIVED AT BY HIM IN THE CASE OF SHRI NARENDRA SOMANI, THE MAIN PROMOTER OF THE COMPANY BHAGWATI BANQUET PVT. LTD. AND WHO IS I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 5 ALSO ASSESSED BY HIM. THE OBSERVATIONS OF THE A.O. ARE SUMMARISED AS UNDER:- A)THE PROMOTERS OF THE COMPANY NAMELY BHAGWATI BANQ UET PVT. LTD. IN RESPECT OF WHICH THE INVESTMENT IN LAND HAS BEEN MA DE ARE SHRI NARENDRA SOMANI MID SHRI SATBIRSINGH BHUSARI. THE ESTIMATED COST OF THE LAND IS RS. 3.20 CRORES. B}THE A.O. WHILE RELYING UPON THE STATEMENTS OF SHR I NARENDRA SOMANI RECORDED U/S. 132(4) OF THE ACT HAS OBSERVED THAT T HE LAND ORIGINALLY BELONGING TO SHRI RAMESH PATEL AND HARSHAD PATE I A ND THE SAME HAD BEEN DECIDED TO BE PURCHASED BY SHRI NARENDRA SOMAN I JOINTLY WITH THE APPELLANT I.E. SHRI SATBIRSINGH BHUSARI. C) ON THE BASIS OF MEMORANDUM OF UNDERSTANDING SEIZ ED IN THE CASE OF THE APPELLANT AS PER ATMEXURE-A-20, BOTH THE PROMOTERS HAVE TO INVEST IN THE RATIO OF 50:50. D) THAT BOTH SHRI NARENDRA SOMANI AND SHRI SATBIRSI NGH BHUSARI HAVE STATED IN THEIR STATEMENTS THAT THE NOTING ON PAGE- 20 TO 23 OF ARMEXURE- A-10 SEIZED FROM SHRI NARENDRA SOMANI PERTAINS TO E STIMATE OF PROJECT AND THAT THE FIGURE 239.165 IS RS.2,39,16 , 500/-. E} THAT FOR THE PURPOSE OF INVESTMENT IN PURCHAS E OF LAND FOR THE COMPANY BBPL, 'BHAGWATI GROUP ' MEANS SHRI NARENDRA SOMANI AND SHRI SATBIRSINGH BHUSARI I.E. PROMOTERS OF THE SAID COMPANY. F) THAT THE ACTUAL PAYMENT TILL THE DATE OF SEARCH AS PER NOTINGS ON PAGE-20 TO 23 OF SEIZED ANNEXURE-A-10 IS RS.2.30 CR ORES TOWARDS LAND PLUS RS.0.0916 CRORES FOR EXPENSES I.E. TOTAL RS.2, 39,16,500/- AND THAT SHRI NARENDRA SOMANI AND SHRI SATBIRSINGH BHUSARI W ERE JOINTLY BEHIND THIS INVESTMENT . G) THAT PAGE-20 OF ANNEXURE-A-L0 SEIZED FROM SHRI N ARENDRA SOMANI CONFIRMS THE PAYMENT OF RS.2,39, I6,500/-. THIS PAG E ALSO CONTAINS THE SIGNATURE OF SHRI SATBIRSINGH BHUSARI AND THUS, PRO VEN HIS AGREEMENT AND INVOLVEMENT FOR THIS EXTENT OF PAYMENT. H) IT IS CLEAR THAT THE TOTAL INVESTMENT IN LAND PURCHASED (ILL (HE DATE OF SEARCH IS RS.2,39, 16,500.'-. AS AGAINST IT, SHRI N ARENDRA SOMANI HAD ACCEPTED IN HIS STATEMENT U/S. 132(4) THAT THE AMOU NT PAID FOR PURCHASE OF LAND WAS TO THE EXTENT OF RS.115 LACS. SHRI SATBIRS INGH BHUSARI ACCEPTED IN HIS STATEMENT U/S. 132(4) THAT HE HAD INVESTED R S.8.00 LACS IN CASH TOWARDS PURCHASE OF THIS LAND. I) IT IS CLEAR THAT STATEMENTS OF BOTH ARE FAR AWAY FROM TRUTH AND THE TRUTH IS CLEARLY REFLECTED IN THE SEIZED PAPERS ACC ORDING TO WHICH THE TOTAL INVESTMENT IN LAND IS RS.2.39 CRORES WHICH IS INCLU SIVE OF PAYMENT OF PAYMENT OF RS.20 LACS BY CHEQUE. THUS, RS.2,19,16,5 00/- IS THE AMOUNT OF CASK/UNACCOUNTED INVESTMENT IN THE PURCHASE OF L AND BECAUSE NO ACCOUNTED SOURCE FOR THIS EXTENT OF FUNDS HAS BEEN EXPLAINED EITHER BY SHRI NARENDRA SOMANI OR SHRI SATBIRSINGH BHUSARI OR BOTH. AS BOTH SHRI I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 6 NARENDRA SOMANI AND SHRI SATBIRSINGH ARE THE 2 PROM OTERS OF THE PROJECT AND HAD THE ARRANGEMENT OF 50:50 INVESTMENT M THE C ONCERNED PROJECT, IT CAN BE INFERRED THAT BOTH HAD MADE UNACCOUNTED INVE STMENT IN THE LAND FOR RRPL PROJECT TO THE EXTENT OF RS.1,09,58,250/- EACH (HALF OF RS.2,19,16,500/-). J) ANNEXURE-A-10 PAGE-20 WHICH CONTAINS THE SIGNATU RE OF SHRI SATBIRSINGH BHUSARI READ WITH MEMORANDUM OF UNDERST ANDING SEIZED FROM THE RESIDENCE OF SHRI SATBIRSINGH BHUSARI SHOW S THAT FUNDS (CASH LOANS) RAISED AND NOTED ON PAGE- 1 TO 19 OF THE SAI D ANNEXURE ARE RAISED BY BOTH SHRI NARENDRA SOMANI AND SHRI SATBIRSINGH B HUSARI. K) THAT THE DIARY IN THE FORM OF ANNEXURE-A-10 CONT AINS PARTICULARS OF CASH LOANS RAISED AND THE PAYMENTS MADE TO OWNERS F OR THE PURCHASE OF LAND. THE SAID DIARY IS WRITTEN IN CODE IN THE HAND WRITING OF SHRI NARENDRA SOMANI AND THE CORRECT FIGURES ARE TO BE R EAD BY ADDING '000'. L) THE UNEXPLAINED CASH CREDIT AS PER SEIZED AMIEXU RE-A-L0, A-13 & A-16 AMOUNTING TO RS.132 CRORES ARE TAXABLE U/S. 68 IN THE HANDS OF BOTH THE PROMOTERS I.E. SHRI NARENDRA SOMANI & SHRI SATB IRSINGH BHUSARI. HOWEVER, SEPARATE ADDITION OF RS.1.32 CRORES ON THE BASIS OF DEEMING INCOME PROVISION IS NOT REQUIRED BECAUSE, THE ADDIT ION OF RS.2.19 CRORES ON THE BASIS OF UNEXPLAINED INVESTMENT WILL CAVER THE ANNUAL REQUIRED TO BE ADDED W/.V. 68 CONSIDERING THAT THE UNEXPLAINED LOANS HAVE BEEN USED FOR INVESTMENT IN PURCHASE OF LAND. M) THE FUNDS FOR INVESTMENT IN LAND CAME ORIGINALLY FROM UNACCOUNTED CASH INCOME GENERATED AND CONTRIBUTED BY SHRI NAREN DRA SOMANI FROM CATERING ACTIVITIES (RS.58.00 LACS), FROM CASH LOAN S RECEIVED BY BOTH PROMOTERS (RS. 124.00 LACS) AND UNACCOUNTED FUNDS G ENERATED AND CONTRIBUTED BY SHRI. SATBIRSINGH BHUSARI (RS.8.00LA CS). N) SHRI SATBIRSINGH BHUSARI IS ALSO INVOLVED IN UNA CCOUNTED SALES AND EARNED HUGE UNACCOUNTED INCOME. THAT DURING THE COU RSE OF SEARCH IN CASE OF SHRI SATBIRSINGH BHUSARI ANNEXURE-A-16, A-1 7 & A-18 CONTAINING OCTROI RECEIPTS SHOWING AMOUNT OF PURCHA SE OF AUTO PARTS AND THE PAYMENT OF OCTROI ON THE SAME WERE FOUND AND SE IZED. THE APPELLANT OFFERED INCOME AT 5% GP ON SUCH PURCHASES 'WHICH CO MES TO RS.4,29,786/-. SINCE THE APPELLANT'S UNACCOUNTED IN VESTMENT IS HIGH, THE UNDISCLOSED INCOME IS DETERMINED ON THE BASIS OF UN ACCOUNTED INVESTMENT AND NO SEPARATE ADDITION IS MADE ON THE BASIS OF UNACCOUNTED SALES BECAUSE BY CONSIDERING EVEN 10% G.P., THE INC OME WILL BE MUCH LESS THAN THE AMOUNT OF UNEXPLAINED INVESTMENT OF R S.1.09 CRORES IN LAND FOR BEPL PROJECT. O) THAT BOTH SHRI NARENDRA SOMANI & SHRI SATBIRSING H BHUSARI HAVE NOT SPOKEN THE TRUTH. SHRI NARENDRA SOMANI IN HI S STATEMENT U/S. 132 (4) ADMITS TO HAVE PAID RS.95.00 LACS IN CASH TOWARDS P URCHASE OF LAND OUT OF TOTAL OF RS.115 LACS AND THAT RS.2,39,16,500/- IS T HE ROUGH ESTIMATE OF I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 7 TOTAL COST OF LAND. SHRI SATBIRSINGH BHUSARI HAS AL SO NOT ACCEPTED THE EXTENT OF HIS INVOLVEMENT IN THE BBPL PROJECT ALTHO UGH SEIZED PAPERS DO INDICATE HIS SHARE INVESTMENT AS BEING 50%. ON THE BASIS OF THE ABOVE OBSERVATION, THE A.O. HAS OBSERVED THAT ACTUAL PAYMENT TILL DATE OF SEARCH IS RS.230 LACS. HE HAS FURTHER OBSERVED THAT EXPENSES INCURRED FOR THE LAND TRANSACTION ARC RS.9.165 LACS AND ACCORDINGLY, A.Q. HAS OBSERVED THAT TOTAL AMOUNT PA ID FOR THE SAID LAND IS RS.2,39,16,500/-. AS AGAINST THIS, SHRI NARENDRA SO MANI HAS ADMITTED IN HIS STATEMENT U/S.L32(4) AN AMOUNT OF RS.115 LACS A ND SHRI SATBIRSINGH HAS ADMITTED AN INVESTMENT OF RS.8 LACS, AND A.O. H AS FURTHER OBSERVED THAT THE SAID STATEMENTS ARE NOT CORRECT AND AS PER THE SEIZED DOCUMENTS, THE TOTAL INVESTMENT IN THE LAND IS RS.2,39,16,500/ -. CONSIDERING THE PAYMENT OF RS.20 LACS MADE BY CHEQUE, BALANCE AMOUN T OF RS.2,19,16,500/-HAS BEEN CONSIDERED AS UNACCOUNTED INVESTMENT IN THE PURCHASES OF LAND AND THIS INVESTMENT HAS BEEN CONS IDERED BY THE A.O. IN THE HANDS OF APPELLANT AND NARENDRA SOMANI IN EQUAL RATIO AND ACCORDINGLY, HALF OF THE AMOUNT BEING RS.1,09,58,25 0/- HAS BEEN ADDED IN THE HANDS OF APPELLANT. BESIDES THIS AMOUNT ADDED IN THE HANDS OF THE APPELLANT WAS ALSO ADDED IN THE HANDS OF SHRI N. G. SOMANI ON PROTECTIVE BASIS AS UNDER- ADDITION OF RS. 1,09,58,250/- IN HANDS OF SHRI SATB IRSINGH BHUSARI ON SUBSTANTIVE BASIS AND IN THE HANDS OF SHRI NARENDRA SOMANI ON PROTECTIVE BASIS:- THE FOLLOWING IMPORTANT FUELS AND FACTORS ARE IMPOR TANT FOR DECIDING THE SHARE OF ADDITIONS IN THE HANDS OF THE TWO PROMOTER S: HAVE NOT SPOKEN TRUTH. SHRI NARENDRA SOMANI HAS ACC EPTED THE ENTRIES OF CASH LOANS TAKEN BUT DOES NOT ADMIT THE ENTIRE EXTE NT OF FUNDS RAISED BY WAY OF CASH LOANS. SHRI NARENDRA SOMANI, IN HIS STA TEMENT U/S. 132(4), ADMITS TO HAVE PAID RS. 95 LACS IN CASH TOWARDS PUR CHASES OF LAND AND A TOTAL OF RS. 1.15 CRORES. HE TRIES TO DESCRIBE THE FIGURES OFRS.2,39,16,500/' AS BEING THE ROUGH ESTIMATE OF T OTAL COST OF LAND, WHILE IT LS CLEAR FROM THE SEIZED MATERIAL ITSELF THAT ES TIMATED COST OF LAND ISRS.3.20 CRORES, OUT OF WHICH ACTUAL PAYMENTS MADE NIL DATE OF THE SEARCH IS RS.2.39 CRORES. ON THE OTHER HAND, EVEN S HRI SATBIRSINGH DOES NOT ACCEPT THE EXTENT OF HIS TRUE INVOLVEMENT AS BE ING 50%. B) THE INCRIMINATING DOCUMENTS ANNEXURE A-10, ON WH ICH ENTRIES OF CASH LOANS RAISED FROM MARKET ARE FOUND, HAVE BEEN SEIZED FROM THE POSSESSION OF SHRI NARENDRA SOMANI. THE ENTRIES ARE IN HIS HANDWRITING ALSO. BUT NEITHER HE HAS CORRECTLY STATED THE TRUE EXTENT OF LOANS RAISED, NOR HE HAS UNEQUIVOCALLY STATED THAT SHRI SATBIRSIN GH IS/MIL BE CONTRIBUTORY TOWARDS COST OF LAND TO THE EXTENT OF 50%. C)ALTHOUGH THE FUND HAVE BEEN MANAGED AND RAISED BY SHRI NARENDRA G. SOMANI; THE INVOLVEMENT OF SHRI SATBIRSINGH IS WELL INDICATED BY HIS I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 8 SIGNATURE ON THE CRUCIAL PAGE-20 OF ANNEXURE-A 10 W HERE TOTAL INVESTMENT TILL THE DATE OF THE SEARCH IS WORKED OU T. IT IS IN THE BACKDROP OF ALL THE ABOVE FACTS THAT T HE SCOPE OF PROTECTIVE ASSESSMENT COMES INTO PICTURE. JUSTIFICATION OF APPLYING PROTECTIVE ASSESSMENT THE VIEW ON THIS ISSUE ARE AVAILABLE IN RECOGNIZED COMMENTARY ON I.T. LAW IN CHATURVEDI & PITHISARIA. IT IS MENTIONE D THAT- 'THOUGH THERE IS NO PROVISION IN THE ACT AUTHORISIN G THE LEVY OF INCOME-TAX ON A PERSON OTHER THAN 'THE ASSESSEE ', I.E. THE PERSON BY WHOM THE INCOME-TAX IS PAYABLE, ETC., IT IS OPEN TO THE INCOME-LAX AUTHORITIES TO MAKE A PROTECTIVE OR ALTERNATIVE ASS ESSMENT WHERE, OWING TO LITIGATION BETWEEN THE PARTIES CONCERNED IN CIVIL C OURT OR FOR OTHER REASONS, THE PERSON WHO IS REALTY LIABLE TO PAY THE TAX CANNOT BE FINALLY DETERMINED BY THE INCOME-TAX AUTHORITY. (JAGANNATH HANUMANBUX V. ITO (1957) 311TR 603 (CAL). IN CASES WHERE IT APPEARS TO THE INCOME-TAX AUTHORI TY THAT CERTAIN INCOME HAS BEEN RECEIVED DURING THE RELEVANT ASSESSMENT YE AR BUT IT IS NOT CLEAR WHO HAS RECEIVED THAT INCOME AND PRIMA FACIE IT APP EARS THAT THE INCOME MAY HAVE BEEN RECEIVED EITHER BY A OR B OR BY BOTH TOGETHER, IT WOULD BE OPEN TO THE RELEVANT INCOME-TAX AUTHORITY TO DETERM INE THE SAID QUESTION BY TAKING APPROPRIATE PROCEEDINGS BOTH AGAINST A AN D B [LALIT HARIDAS V. ITO (1961) 43 ITR 387, 392 (SC). ALSO SEE, G. TOPI SAHEB V. CIT(19S8) 170 ITR IS I (AP). EXPLAINING THE AFORESAID TWO DECISIONS THE SUPREME COURT IN ITO V. BACHU LAL KAPOOR (1966) 60 ITR 74] OBSERVED AT PAGE S 82-3 THUS :- 'IN THE FORMER, THE VALIDITY OF PROTECTIVE ASSESSMENT W AS APPROVED; AND IN THE LATTER, THIS COURT, THOUGH THE QUESTION OF ASSESSME NT WAS RAISED DID NOT EXPRESS ITS FINAL OPINION THEREON. THIS COURT HELD THAT WHEN THERE WAX A DOUBT US TO WHICH PERSON AMONG TWO WAS LIABLE TO BE ASSESSED, PARALLEL PROCEEDINGS MIGHT HE STARTED AGAINST BOTH AND IT AL SO LAID DOWN AN EQUITABLE PROCEDURE TO BE FOLLOWED IN THAT SITUATIO N.' RECENTLY ALSO IN THE CASE OF T.S.SUJATHA V. UNION I NDIA (1999) 238 1TR 599 (KER), SUCH A PROTECTIVE ASSESSMENT WAS HELD TO BE VALID BY THE KERALA HIGH COURT. IN THE SAID KERALA CASE, DURING THE SEARCH OF THE P ETITIONER'S HUSBAND, LARGE BANK DEPOSITS AMOUNTING TO RS.1,15,23,005/- W AS FOUND IN THE NAME OF THE WIFE (PETITIONER). THE PETITIONER'S HUSBAND SHRI THANKACHAN COULD NOT EXPLAIN THE SOURCES OF THE BATIK DEPOSITS IN TH E NAME OF PETITIONER AND MINOR CHILDREN. HOWEVER, IT WAS TREATED AS THE UNDI SCLOSED INCOME OF THE HUSBAND AND ASSESSMENT COMPLETED IN THE LIGHT OF TH E SPECIFIC STAND OF THE DEPARTMENT THAT THE IMPUTED DEPOSITS ARE OUT OF (HU SBAND) THANKACHAN'S UNDISCLOSED INCOME. THE PETITIONER'S CONTENTION WAS THAT NOTICE UNDER I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 9 SECTION 158BD COULD NOT HAVE BEEN ISSUED AGAINST TH E PETITIONER. AS THE DEPOSITS WERE IN THE NAME OF THE PETITIONER. THE DE PARTMENT APPARENTLY ISSUED NOTICE UNDER SECTION 158BD TO MAKE A PROTECT IVE ASSESSMENT. SINCE THE HUSBAND HAD NOT ACCEPTED THE DEPOSITS AND THE DEPARTMENT'S STAND WAS THAT IT WAS HIS INCOME THE MATTER WENT ON APPEAL. ON A COURT PETITION THE HIGH COURT WHICH APPROVED OF SUCH A PR OTECTIVE ASSESSMENT AND UPHELD THE NOTICE IT'S. 158RD ON THE PETITIONER IN THE LIGHT OF GENERAL PRACTICE OF THE DEPARTMENT APPROVED IN THE DECISION OF THE SUPREME COURT IN 1TO V. BACHULAL KAPOOR (1966) 60 1TR 74 (SC). 'F LIE DIVISION BENCH ACCORDINGLY UPHELD THE DECISION OF THE SINGLE JUDGE REPORTED IN (1999) 239 JTR 488 (KER.) ' APPLICABILITY IN THIS CASE : IN THIS CASE DURING THE COURSE OF SEARCH, DIARY AFM EXJI-10 WAS SEIZED FROM THE RESIDENCE OF SHRI NARENDRA G. SOMANI. ON P AGE NO. 20 OF THIS DIARY SHOWS THE TOTAL PAYMENT FOR THE PURCHASE OF L AND. ON THIS PAGE, SHRI SATBIRSINGH H. BHUSARI, THE PARTNER OF THE ASSESSEE AND CO-PROMOTER OF BBPL HAS ALSO SIGNED. THIS DIARY IS WRITTEN BY SHRI NARENDRA G. SOTNANI. IT IS OBSERVED FROM THIS PAGE, SHRI NARENDRA G. SOM ANI AND SHRI SATBIRSINGH H. BHUSARI HAD MADE THE PAYMENTS OF RS. 2.39 CRORES FOR THE PURCHASES OF LAND AT BODAKDEV. IT IS WORTHWHILE TO MENTION HERE THAT SHRI NARENDRA G. SOMANI AND SHRI SATBIRSINGH ARE EQUAL P ARTNERS I.E., IN THE RATIO OF 50:50 IN INVESTMENT OF THIS PROJECT AND HI S SIGNATURE ON THIS PAGE ALSO PROVES THIS. THIS STATEMENT RECORDED DURING TH E COURSE OF SEARCH AND U/S.131 RECORDED IN THE ASSESSMENT PROCEEDINGS ON 1 2.2.2002 & 27.2.2002 ALSO PROVES THIS FACT WHERE BOTH HAVE ASS ESSED TO THE SHARE OF 50:50 FOR THE INVESTMENT OF THIS PROJECT. IT IS TO BE ALSO NOTED THAT THE MEMORANDUM OF UNDERSTANDING SEIZED ALONG WITH 7/12 UTARA, NAMUNO 6 IIAKK PAIRAK ANNEX.A-20, PAGE-42 TO 85 SEIZED FROM THE RESIDENCE OF SHRI SATBIRSINGH II. BHUSARI AT ANNEX.A-20 PAGE. 75 TO 79 ALSO ADMITTEDLY PROVES THE SAME. AS FOR POINT NO .C OF THE M.O.U. F OUND FROM THE RESIDENCE OF SHRI SATBIRSINGH, IT IS VERY CLEAR THA T THE INVESTMENT IN THE PROJECT WAS TO BE MADE IN THE RATION OF 50:50. ON C LOSE PERUSAL OF PAGE. I TO 19 OF AMIEX.A-10 INDICATES THAT THE NOTING ON PA GE. 20 IS NOTHING BUT THE SUMMARY OF THE AFFAIRS NOTED ON PAGE. 1 TO 19. IT IS ALSO OBSERVED THAT PAGE, I TO 19 IS THE FUND RAISED BY THE BOTH PERSON S, FOR MAKING REMAINING PAYMENTS, SINCE THEIR OWN FUND IS OFRS.115 LACS AND SHRI SATBIRSINGH HAS SIGNED ON PAGE. 20 SHOWS THAT HE KNOWS THE CORRECT FACT AND HE WAS EQUALLY INVOLVED AND AGREED FOR THE TRANSACTION REC ORDED ON THESE PAGES. FROM THE ABOVE FACTS, IT IS WELL ESTABLISHED THAT S HRI SATBIRSINGH'S CONTRIBUTION WAS ALSO TO THE EXTENT OF 50%. I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 10 2.3 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE LD. CIT(A) BUT LD. CIT(A) DID NOT FIND ANY MERIT IN THE CONTENTION RAISED BY THE ASSESSEE BEFORE HIM AND HE HAD NOT ONLY CONFIRMED T HE ADDITION OF RS.1,09,58,250/- MADE BY THE A.O. BUT IN FACT, HE H AS ENHANCED THE ADDITION BY RS.10 LACS. SINCE THE ADDITION OF RS.1,09,58,250/- WAS MADE BY THE A.O. ON SUBSTANTIVE BASIS IN THE ANDS OF THIS ASSESSEE AND ON PROTECTIVE BASIS IN THE HANDS OF SHRI N G SOMANI, LD. CIT(A) ALSO VACATED THIS AD DITION OF RS.1,09,58,250/- MADE BY THE A.O. ON PROTECTIVE BASIS IN THE HANDS O F SHRI N G SOMANI. NOW, THIS ASSESSEE IS IN APPEAL BEFORE US AGAINST THE CO NFIRMATION OF ADDITION BY LD. CIT(A) OF RS.1,09,58,250/- AND ALSO FOR ENHANCEMENT MADE BY LD. CIT(A) OF RS.10 LACS. 2.4 IT WAS SUBMITTED BY THE LD. A.R. OF MR. SATBIRS INGH H BHUSARI THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 5.5 OF HIS ORDER FROM PAGES 63-74 OF HIS ORDER. HE ALSO SUBMITTED THAT MUCH RELIANCE HAS BEEN PLACED ON LOOSE PAGES NO.97-99 OF ANNEXURE A-1 AND LOOSE PAGES NO.2 0-23 OF ANNEXURE A-10. IT IS ALSO SUBMITTED THAT AS PER THE NOTING ON PAGE 97 OF ANNEXURE A-1, IT WAS NOTED THAT TOTAL AMOUNT PAYABLE TO MR. HARSHADBHAI WAS RS.125 LACS BUT PAYMENT MADE WAS OF RS.30 LACS ONLY AND THERE IS PR OPOSED SCHEDULE OF PAYMENT OF THE BALANCE AMOUNT OF RS.95 LACS. HE FU RTHER SUBMITTED THAT SIMILARLY ON PAGE 98, IT IS SHOWN THAT AN AMOUNT OF RS.195 LACS WAS PAYABLE TO ASHISHBHAI OUT OF WHICH RS.85 LACS WAS PAID AND THE RE IS A SCHEDULE OF PROPOSED PAYMENT OF THE BALANCE AMOUNT OF RS.110 LACS AS PRO POSED BY MR. SOMANI AND ALSO AS PROPOSED BY ASHISHBHAI AND HENCE, AS PER TH ESE TWO PAGES, THE ACTUAL PAYMENT WAS MADE OF R.115 LACS ONLY AND NOT MORE TH AN THIS. HE ALSO SUBMITTED THAT ON PAGE 99 OF ANNEXURE A-1, IS THE C OMBINED PROPOSED SCHEDULE OF PAYMENT TO MR. ASHISHBHAI OF RS.110 LACS AND HAR SHADBHAI OF RS.95 LACS. HE FURTHER SUBMITTED THAT ON PAGE 79 OF DISPUTED PA PER BOOK IS THE COPY OF UNSIGNED MOU BUT THIS IS A DUMB DOCUMENT BECAUSE IT IS NOT SIGNED BY ANY OF THE PARTIES AND HENCE, NO RELIANCE CAN BE PLACED ON THIS MOU. HE ALSO I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 11 SUBMITTED THAT THE ORIGINAL BALANCE SHEET OF M/S. B HAGWATI BANQUETS PVT. LTD. AS ON 31.03.2000 IS AVAILABLE ON PAGE 88 OF THE PAPER BOOK FILED BY SHRI N G SOMANI OF BHAGWATI BANQUETS PVT. LTD. AND AS PER TH E SAME, THE PAID UP CAPITAL OF THE COMPANY WAS RS.2000 ONLY AS ON 31.03.2000 I. E. MUCH AFTER THE DATE OF SEARCH AS ON 15.02.2000. HE ALSO SUBMITTED THAT ON PAGE 81 OF THE PAPER BOOK IS THE RELEVANT PAGE OF MEMORANDUM OF ARTICLES AND ASS OCIATION OF THIS COMPANY I.E. BHAGWATI BANQUETS PVT. LTD. AND AS PER THE SAM E, 100 SHARES WERE TAKEN BY SHRI N G SOMANI AND BALANCE 100 SHARES WERE TAKEN B Y THIS ASSESSEE I.E. SHRI SATBIRSINGH H BHUSARI, WHO WERE THE DIRECTORS OF TH IS COMPANY AT THE RELEVANT POINT OF TIME. IT WAS ALSO SUBMITTED THAT ON PAGES 172-178 OF THE PAPER BOOK SUBMITTED BY SHRI N G SOMANI IS THE COPY OF THE ARB ITRATION AGREEMENT DATED 03.09.2002 BETWEEN THE COMPANY M/S. BHAGWATI BANQUE TS PVT. LTD. AND THIS ASSESSEE SHRI SATBIRSINGH H. BHUSARI AND AS PER THI S AGREEMENT, IT WAS AGREED THAT AN AMOUNT OF RS.140 LACS WAS TO BE PAID BY THE COMPANY OF MR. SOMANI TO THIS ASSESSEE I.E. MR. SATBIRSINGH H. BHUSARI ON AC COUNT OF RESIGNING FROM THE DIRECTORSHIP OF THE COMPANY AS WELL AS FOR TRANSFER OF SHARES HELD BY MR. SATBIRSINGH H BHUSARI TO MR. SOMANI AND HIS FAMILY MEMBERS. IT WAS ALSO SUBMITTED THAT THIS MONEY WAS GIVEN ON ACCOUNT OF B UNGALOW OF THIS ASSESSEE WHICH WAS MORTGAGED TO GUJARAT STATE FINANCIAL CORP ORATION TOWARDS SECURITY FOR A LOAN OF RS.490 LACS SANCTIONED BY IT TO THE C OMPANY M/S. BHAGWATI BANQUETS AND HOTELS LTD. THE BENCH ASKED THE LD. A .R. TO FURNISH THE DETAILS AND EVIDENCES REGARDING THE DATE AND AMOUNT RECEIVE D BY MR. BHUSARI AS PER THIS ARBITRATION AGREEMENT AND HOW THE SAME WAS ACC OUNTED FOR BY MR. BHUSARI AND IF THE ASSESSEE CAN SHOW THAT NO PAYMENT WAS IN FACT MADE BY MR. BHUSARI THEN, THE SAME IS REQUIRED TO BE DECLARED AS INCOME ON RECEIPT BUT IN SPITE OF A LONG WAIT BY THE BENCH, NO SUCH DETAIL OR EVIDENCE WAS FURNISHED BY THE LD. A.R. AND IT HAS ONLY FURNISHED A LETTER DATED 20.09 .2001 OF GUJARAT STATE FINANCIAL CORPORATION WRITTEN TO THE CHAIRMAN/SECRE TARY, SATYAGRAH CHHAVNI COOPERATIVE SOCIETY INTIMATING ABOUT THIS FACT TO T HE SOCIETY THAT SHRI I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 12 SATBIRSINGH H BHUSARI HAS MORTGAGED HIS BUNGALOW IN LANE NO.21 PLOT 47 OF THE SOCIETY AGAINST THE LOAN OF RS.490 LACS SANCTIO NED BY THEM TO M/S. BHAGWATI BANQUETS AND HOTELS LTD. RELIANCE WAS PLACED ON T HE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF LEGAL HE IRS OF LATE LAXMANBHAI S PATEL VS CIT AS REPORTED IN 12 DTR 108 (GUJ.). 2.5 IN REPLY, IT WAS SUBMITED BY THE LD. D.R. THAT THE FIGURE OF RS.239 LACS IS CORRECT AND IT IS THE ACTUAL PAYMENT AND NOT SCHEDU LE OF PAYMENT. REGARDING 50:50 RATIO AS PER MOU, IT WAS SUBMITTED THAT THE S AME RATIO IS AS PER MEMORANDUM & ARTICLES OF THE COMPANY AND TILL THE D ATE OF SEARCH, SHAREHOLDING OF MR. BHUSARI AND MR. SOMANI WAS EQUA L AND THE PAYMENT NOTED IN THE SEIZED DOCUMENTS ARE AFTER COMPANYS INCORPO RATION AND HENCE, THERE IS NO REASON TO SUGGEST THAT 50% PAYMENT WAS NOT MADE BY MR. BHUSARI. AT THIS STAGE, THE LD. A.R. OF MR. N G SOMANI ALSO INTERVEN ED AND HE SUBMITTED THAT ALTHOUGH THE MOU WAS UNSIGNED BUT THE SAME WAS FOUN D AT THE RESIDENCE OF MR. BHUSARI AND, THEREFORE, HE WAS TO EXPLAIN THIS UNSI GNED MOU. HE ALSO SUBMITTED THAT MOU IS DATED 18.10.1999 AND THE MEMO RANDUM OF ASSOCIATION OF THE COMPANY IS OF A SUBSEQUENT DATE I.E. 22.10.1 999. HE ALSO SUBMITTED THAT HIS OWN RESIDENTIAL BUNGALOW WAS MORTGAGED BY MR. B HUSARI TO GSFC IN RESPECT OF LOAN OF RS.490 LACS SANCTIONED BY GSFC T O THE COMPANY M/S. BHAGWATI BANQUETS AND HOTELS LTD. AND THIS ALSO GOE S TO SHOW THAT MR. BHUSARI WAS HAVING 50% INTEREST IN THE COMPANY AS PER THE M OU AND MOA BECAUSE IF A PERSON IS NOT HAVING ANY INTEREST IN THE AFFAIRS OF THE COMPANY, WHY HE WILL MORTGAGE HIS OWN RESIDENTIAL HOUSE TO BANK OR FINAN CIAL INSTITUTION. IN REPLY, IT WAS SUBMITTED BY THE LD. A.R. OF MR. BHUSARI THAT T HIS UNSIGNED MOU IS A DUMB DOCUMENT BECAUSE IT IS UNSIGNED AND IT IS ALSO SUBMITTED THAT IN BLOCK ASSESSMENT PROCEEDINGS, NO OTHER EVIDENCE EXCEPT TH E SEIZED PAPER IS RELEVANT. HE ALSO SUBMITTED THAT ON PAGE 176 OF THE PAPER BOO K FILED BY MR. BHUSARI IS ARBITRATION AWARD AS PER WHICH SHRI N G SOMANI HAS TO RELEASE MR. BHUSARIS ALL I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 13 BANK GUARANTEE IN SIX MONTHS FROM THE DATE OF THIS AGREEMENT DATED 03.09.2002. HE ALSO SUBMITTED THAT THERE IS NO MENTION OF 50% S HARE IN THE STATEMENT OF MR. SOMANI. 2.5 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND ALSO THE SUBMISSIONS OF THE LD. A.R. OF MR. SOMANI BECAUSE T HE ISSUE INVOLVED IS INTERCONNECTED. WE FIND THAT THE ISSUE IN DISPUTE IS REGARDING ON MONEY PAYMENT IN RESPECT OF LAND PURCHASED FOR THE COMPAN Y M/S. BHAGWATI BANQUETS PVT. LTD., WHICH WAS INCORPORATED ON 01.11.1999 AND THEREAFTER ,THE COMPANY WAS RENAMED AS BHAGWATI BANQUETS AND HOTEL LTD. ON 13.04.2000. THE PROMOTER OF THIS COMPANY WERE SHRI N G SOMANI AND S HRI SATBIRSINGH H BHUSARI AND AS PER TWO SETS OF SEIZED PAPERS, IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT AS PER PAGES 97-99 OF ANNEXUR E A-1, IT COMES OUT THAT THE TOTAL PAYMENT OF RS.320 LACS WAS TO BE MADE IN RESP ECT OF THIS LAND PURCHASED OUT OF WHICH AN AMOUNT OF RS.115 LACS WAS ALREADY P AID AND THERE IS A SCHEDULE FOR PAYMENT OF BALANCE AMOUNT BETWEEN DECEMBER 1999 TO MARCH 2000. IT IS NOTED BY THE A.O. ON PAGE 16 OF THE ASSESSMENT ORDE R THAT AGAINST THIS SCHEDULE OF PAYMENT PROPOSED BY SHRI N G SOMANI AND HARSHADB HAI AND ASHISHBHAI, THE ENTIRE PAYMENT WAS MADE EXCEPT RS.15 LACS BECAUSE A GAINST ONE SCHEDULED PAYMENT OF RS.20 LACS, THIS AMOUNT IS BRACKETED AND 5 WAS WRITTEN WHICH MEANS THAT AGAINST SCHEDULED PAYMENT OF RS.20 LACS, PAYME NT OF RS.5 LACS WAS MADE. ON THIS BASIS, HE ALSO WORKED OUT THAT TOTAL ACTUAL PAYMENT WAS RS.230 LACS (I.E.RS.90+155-15 LACS). HE HAS ALSO NOTED THAT THIS FINDING GOT CONFIRMED BY ENTRY IN SEIZED MATERIAL AS PER ANNEXURE A-10 ON PA GE 20-23. HE ALSO REPRODUCED THE CONTENTS OF THESE PAGES ON PAGES 17- 18 OF THE ASSESSMENT ORDER. ON PAGE 20, 150 IS NOTED AGAINST PAYMENT TO ASHISHB HAI AND 80 IS NOTED AGAINST PAYMENT TO HARSHADBHAI WHICH IS TALLYING WITH THE N OTING ON PAGE 99 (RS.90+155-15=230 LACS). FOUR OTHER AMOUNTS ARE AL SO NOTED ON PAGE 20 OF ANNEXURE A-10 AGAINST VARIOUS DIFFERENT NAMES AND T HE TOTAL HAS BEEN NOTED AT RS.239.165 LACS ON PAGE 21 AND DATE IS WRITTEN 31.1 2.1999 AND BELOW THIS DATE, I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 14 TWO AMOUNTS ARE NOTED I.E. 64.50 LACS AND 94.66 LAC S TOTAL RS.159.16 LACS AND APART FROM THIS, THERE ARE VARIOUS AMOUNTS NOTED ON VARIOUS DATES I.E. 10.1.2000, 13.1/2000, 14.1.2000, 27.1.2000 AND 4.2.2000. THES E NOTINGS ALONG WITH DATES SHOW THAT THE A.O.S FINDING THAT TOTAL PAYMENT WAS OF R.239.165 LACS IS NOT ON THE BASIS OF ONLY 3 PAGES I.E. PAGES 97-99 OF ANNEX URE A-1 BUT WHEN THESE PAGES ARE CONSIDERED ALONG WITH PAGES 20-23 OF ANNE XURE A-10, IT BECOMES CLEAR THAT PAYMENT WAS MADE AS PER SCHEDULE AND THE ACTUAL PAYMENT WAS CORRECTLY WORKED OUT BY THE A.O. HENCE, ON THIS AS PECT, WE DO NOT FIND ANY MERIT IN THE CONTENTION RAISED BY THE LD. A.R. OF T HE ASSESSEE MR. BHUSARI THAT TILL THE DATE OF SEARCH, TOTAL PAYMENT WAS ONLY RS. 115 LACS AND NOT OF RS.239.165 LACS. IT IS ALSO NOTED BY THE A.O. THAT OUT OF TOT AL PAYMENT OF RS.239 LACS, PAYMENT OF RS.20 LACS IS BY WAY OF CHEQUE AND HENCE , THE BALANCE PAYMENT OF RS.219.165 LACS IS THE AMOUNT OF CASH/ UNACCOUNTED INVESTMENT FOR THE PURCHASE OF LAND. WE ALSO FIND THAT IN FACT, MR. N G SOMANI HAS ACCEPTED THE PAYMENT OF 50% OF THIS AMOUNT AND HAS TRIED TO EXPLAIN THE SOU RCE THEREOF ALSO. THE A.O. HAS ALSO ACCEPTED SUCH EXPLANATION ABUT SOURCE IN H IS CASE TO THE EXTENT OF RS.50 LACS AND RS.8 LACS BEING UNACCOUNTED INCOME FROM BH AGWATI CATERING, BHAGWATI CHAAT AND ICE CREAM PARLORS. RS.20 LACS W AS PAID BY CHEQUE AND HENCE, ACCEPTED AS EXPLAINED. BALANCE AMOUNT OF RS .27 LACS WAS EXPLAINED BY SHRI SOMANI OUT OF WITHDRAWAL FROM BHAGWATI MARKETI NG. BE AS IT MAY BUT IT COMES OUT THAT THE PAYMENT O RS.239.165 LACS ON ACC OUNT OF PURCHASE OF LAND INCLUDING CHEQUE PAYMENT OF RS.20 LACS WAS OBVIOUSL Y ACCEPTED BY MR. SOMANI AND ALTHOUGH MR. BHUSARI HAS NOT ACCEPTED THE SAME BUT IN THE LIGHT OF THE SEIZED MATERIAL, IT COMES OUT THAT THE A.O. WAS JUS TIFIED IN COMING TO THE CONCLUSION THAT THE TOTAL UNACCOUNTED PAYMENT FOR P URCHASE OF LAND WAS MADE TO THE EXTENT OF RS.219.165 LACS. 2.6 NOW, THE QUESTION IS, AS TO WHETHER THE ENTIRE SUCH CASH PAYMENT WAS MADE BY MR. SOMANI OR HE HAD MADE ONLY 50% PAYMENT AND 50% PAYMENT WAS MADE BY MR. BHUSARI. THE CONTENTION OF THE LD. A. R. OF THE ASSESSEE MR. I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 15 BHUSARI IS THIS THAT NO PAYMENT WAS MADE BY HIS CLI ENT MR. BHUSARI AND THE ENTIRE PAYMENT WAS MADE, EVEN IF MADE, BY MR. SOMA NI ONLY. REGARDING THE UNSIGNED MOU, IT IS THE SUBMISSIONS OF THE LD. A.R. OF MR. BHUSARI THAT SINCE THE MOU IS UNSIGNED, IT IS A DUMB DOCUMENT. EVEN I F WE ACCEPT THIS CONTENTION, WE FIND THAT THIS FACT IS NOT SUPPORTED BY THIS MOU ONLY THAT BOTH THESE PERSONS; MR. BHUSARI AND MR. SOMANI WERE HAVI NG 50% SHARES OF THE COMPANY M/S. BHAGWATI BANQUETS AND HOTELS LTD. BECA USE AS PER THE MOA OF THIS COMPANY, THESE TWO PERSONS ARE THE ONLY DIRECT ORS OF THIS COMPANY AND THEY WERE HOLDING EQUAL SHARES IN THIS COMPANY AT THE TI ME OF FORMATION OF THE COMPANY AND EVEN ON 31.03.2000, THE PAID UP CAPITAL WAS ONLY RS.2000 I.E. 200 SHARES OF RS.10 EACH WHICH WERE SUBSCRIBED BY MR. B HUSARI AND MR. SOMANI EQUALLY BEING 100 SHARES EACH. AS PER THE COPY OF A NNUAL RETURN DATED 28.09.2000 FILED WITH REGISTRAR OF COMPANIES ON27.1 2.2000, COPY AVAILABLE ON PAGES 102 TO 114 OF THE PAPER BOOK, EVEN ON 28.09.2 000, THESE TWO PERSONS WERE EQUALLY HOLDING 100 SHARES EACH OF THE COMPANY BHAGWATI BANQUETS PRIVATE LIMITED. HENCE, IT IS CLEAR THAT EVEN ON TH E DATE OF THE SEARCH MR. BHUSARI WAS HOLDING 50% SHARES OF THE COMPANY. HEN CE, EVEN IF THE MOU WAS UNSIGNED, IT WAS FOUND FROM THE RESIDENCE OF MR. BH USARI AND MOREOVER, SUBSEQUENT EVENT AND EVIDENCE ESTABLISH THAT EVEN T HIS UNSIGNED MOU WAS ACCEPTED UPON BY FORMING THE COMPANY IN WHICH THESE TWO PERSONS WERE ONLY DIRECTORS AND THEY WERE HOLDING 50% SHARES EACH OF THIS COMPANY AND EVEN ON THE DATE OF SEARCH, THE POSITION REMAINED SAME. OT HER EVIDENCES ALSO SUPPORT THIS VIEW BECAUSE THIS IS AN ADMITTED POSITION OF F ACT THAT MR. BHUSARI HAS MORTGAGED HIS RESIDENTIAL HOUSE IN SATYAGRAH CHHAVN I COOPERATIVE HOUSING SOCIETY IN LANE NO.21, PLOT NO.87 TO GSFC AGAINST A LOAN OF RS.490 LACS SANCTIONED BY GSFC TO THE COMPANY M/S. BHAGWATI BAN QUET & HOTELS LTD. IF MR. BHUSARI WAS NOT HAVING 50% INTEREST IN THE COMP ANY, IT DOE NOT STAND TO LOGIC THAT HE WILL MORTGAGE HIS OWN RESIDENTIAL HOU SE TO GSFC AGAINST THE LOAN FOR THE COMPANY. HENCE, WHEN WE CONSIDER THESE FAC TS WHICH COULD NOT BE I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 16 CONTROVERTED OR DISPUTED BY THE LD. A.R. OF MR. BHU SARI, IT COMES OUT THAT MR. BHUSARI WAS HAVING 50% SHARE IN THE COMPANY M/S. BH AGWATI BANQUETS AND HOTELS LTD. TILL THE DATE OF SEARCH AND THIS IS ALS O LOGICAL THAT IF SOME UNACCOUNTED CASH PAYMENT IS MADE FOR A COMPANY, THE SAME IS TO BE ACCEPTED AS HAVE BEEN MADE BY VARIOUS PERSONS IN THE RATIO OF T HEIR SHAREHOLDINGS IN THAT COMPANY. SINCE IN THE PRESENT CASE, THE RATIO OF S HAREHOLDING IN THE COMPANY M/S. BHAGWATI BANQUETS AND HOTELS LTD. BY MR. BHJUS ARI AND MR. SOMANI WAS EQUAL TILL THE DATE OF SEARCH FROM THE DATE OF INCO RPORATION, IT HAS TO BE ACCEPTED THAT BOTH HAVE MADE THESE CASH PAYMENTS IN EQUAL PR OPORTION BECAUSE NO EVIDENCE HAS BEEN BROUGHT OUT ON RECORD BY THE LD. A.R. OF M. BHUSARI TO SUPPORT HIS ARGUMENT THAT NO INVESTMENT WAS MADE BY HIS CLIENT MR. BHUSARI. WE, THEREFORE, DO NOT FIND ANY MERIT IN THESE CONTE NTIONS OF THE LD. A.R. OF MR. BHUSARI THAT ACTUAL CASH PAYMENT WAS ONLY OF RS.115 LACS AND NO INVESTMENT WAS MADE BY MR. BHUSARI IN RESPECT OF CASH PAYMENT ON THIS ACCOUNT. HENCE, GROUNDS NO.1-5 OF THIS APPEAL OF THE ASSESSEE ARE R EJECTED. 2.7 REGARDING GROUND NO.6, I.E. REGARDING ENHANCEME NT MADE BY LD. CIT(A) OF RS.10 LACS IN THE HANDS OF MR. BHUSARI, WE FIND THAT THIS ENHANCEMENT WAS MADE BY HIM ON HIS BASIS THAT TOTAL PAYMENT WAS OF RS.239.165 LACS AND 50% OF THE SAME COMES OUT TO RS.1,19,58,250/- AND ADDITION MADE BY THE A.O. WAS ONLY RS.1,09,58,250/- AND THEREFORE, HE MADE ENHANCEMENT OF RS.10 LACS. WE DO NOT FIND ANY INFIRMITY IN THIS ENHANCEMENT MADE BY LD. CIT(A) BECAUSE ADMITTEDLY, OUT OF TOTAL PAYMENT OF RS.239.165 LACS, PAYMENT OF RS.20 LACS WAS MADE BY WAY OF CHEQUE BY MR. SOMANY AND HENCE, THE SHARE OF MR. BHUSARI AND MR. SOMANY HAS TO BE WORKED OUT ON THE BASIS OF TOTAL P AYMENT AND THEN FROM THE 50% SHARE OF MR. SOMANY, RS. 20 LACS IS TO BE REDUC ED BEING PAYMENT MADE BY HIM BY CHEQUE TO WORK OUT HIS CASH PAYMENT AND THE CASH PAYMENT BY MR. BHUSARI IS THE 50 % AMOUNT IN FULL BECAUSE NO CHEQU E PAYMENT IS MADE BY MR. BHUSARI. SUCH 50% OF TOTAL PAYMENT WORKS OUT TO RS. 1,19,58,250/-. SINCE THE A.O. HAD MADE ADDITION OF ONLY RS. 109,58,250/- IN THE HANDS OF MR. BHUSARI, I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 17 THIS ENHANCEMENT OF RS.10 LACS MADE BY LD. CIT(A) I S ALSO JUSTIFIED AND THE SAME IS CONFIRMED. GROUND NO.6 IS ALSO REJECTED. 2.8 REGARDING OTHER GROUNDS I.E. GROUNDS NO.7-8 ALL EGING VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND NOT GIVING PROPER OPPORTUNITY ETC, WE FIND THAT THE ADDITION IS MADE ON THE BASIS OF SEIZED DOCUMEN TS AND OTHER RELATED EVIDENCES SUCH AS HOLDING OF 50% SHARES BY MR. BHUS ARI IN THE COMPANY BHAGWATI BANQUETS AND HOTELS LTD. AND MORTGAGE OF H IS OWN RESIDENTIAL HOUSE AND EVEN BEFORE US, NOTHING COULD BE PRODUCED BY TH E LD. A.R. OF MR. BHUSARI TO MAKE OUT ANY CASE IN FAVOUR OF THE ASSESSEE AND HENCE, THESE GROUNDS NO.7 & 8 ARE ALSO REJECTED. 2.9 REGARDING RELIANCE PLACED BY THE LD. A.R. OF TH E ASSESSEE ON THE JUDGMENT RENDERED IN THE CASE OF HEIRS AND LRS OF L ATE LAXMANBHAI S PATEL VS CIT AS REPORTED IN 12 DTR 108 (GUJ.), WE FIND THAT THIS JUDGEMENT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE RATIO OF THIS JUDGEMENT IS THIS THAT LEGAL EFFECT OF THE STATEMENT RECORDED BEHIND THE B ACK OF THE ASSESSEE WITHOUT FURNISHING A COPY THEREOF TO THE ASSESSEE WITHOUT G IVING OPPORTUNITY OF CROSS EXAMINATION, IS THAT IF THE ADDITION IS MADE, THE S AME IS REQUIRED TO BE DELETED ON THE GROUND OF VIOLATION OF PRINCIPLES OF NATURAL JU STICE. IN THE PRESENT CASE, WE HAVE CONFIRMED THE ADDITION IN THE CASE OF SHRI SAT BIRSINGH H BHUSARI ON THE BASIS OF SEIZED DOCUMENTS AND ADDITION IN BOTH THE CASES WAS MADE BY THE A.O. ON THE BASIS OF SEIZED DOCUMENTS AND IN NONE OF THE CASES, ADDITION IS ON THE BASIS OF THE STATEMENT RECORDED BEHIND THE BACK OF THE ASSESSEE AND THEREFORE, THIS JUDGEMENT OF HONBLE GUJARAT HIGH COURT IS NOT RELEVANT IN THE PRESENT CASE. 2.10 IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS DISMISSED. 3. NOW, WE TAKE UP THE REVENUES APPEAL IN I.T.A.NO . 234/AHD/2003 IN THE CASE OF MR. SATBIRSINGH H BHUSARI. THE GROUNDS RAI SED BY THE REVENUE IN THIS APPEAL ARE AS UNDER: I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 18 1. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DE LETING ADDITION OF RS.L,84,000/- MADE ON ACCOUNT OF UNEXPLAINED INVEST MENT IN STOLEN JEWELLERY. 2. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN D ELETING ADDITION OF RS.1,98,220/- MADE ON ACCOUNT OF UNEXPLAINED INVEST MENT IN JEWELLERY. 3: THE CIT (A) HAS ERRED IN FACTS AND ON FACTS IN DELETING ADDITION OF RS. 61, 680/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HOUSE HOLD ARTICLES. 4. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING ADDITION OF RS.25,000/- MADE ON ACCOUNT OF UNEXPLAINED TOUR EXP ENSES. 5. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING ADDITION OF RS. 66, 000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE IN BUNGLOW. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 7. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT (A) BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE EXTENT. 3.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A) IN RESPECT OF THE ISSUES RA ISED IN THIS APPEAL OF THE REVENUE. 3.1.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. REGARDING GROUND NO.1 , OF THE REVENUES APPEAL, WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 6.2 OF HIS ORDER WHICH IS AVAILABLE ON PAGE 76 AND THE SAME IS REPRO DUCED BELOW: 6.2. I HAVE CONSIDERED THE ISSUE AT LENGTH. THE EVIDENCE S PLACED BY THE APPELLANT BEFORE THE A.O., THE COPIES OF WHICH HAVE BEEN FILED BEFORE ME WITH THE WRITTEN SUBMISSIONS HAVE ALSO BEEN PERUSED . I FIND THAT THE OBSERVATIONS OF THE A.O. ARE VERY GENERAL IN NATURE AND HE HAS NOT COMMENTED UPON THE SUBMISSIONS AND EVIDENCES FILED BY THE APPELLANT BEFORE HIM DURING THE COURSE OF THE ASSESSMENT PROC EEDINGS IN FORM OF BALANCE SHEET OF APPELLANT'S HUF AND THE EXPLANATIO N FOR THE SOURCE OF ACQUISITION OF THE SAID JEWELLERY. IT. IS NOT THE C ASE OF THE A.O. THAT THE JEWELLER}' REFLECTED IN THE BALANCE SHEET IS NOT CO RRECT. IT IS ALSO NOT THE CASE OF THE A.O. THAT THE CLAIM OF THEFT IS INCORRE CT RATHER, THE REASON GIVEN BY THE A.O. FOR MAKING THE IMPUGNED ADDITION IS THAT THE SAME IS NOT SHOWN IN THE WORKING OF THE JEWELLERY. HOWEVER, ON PERUSAL OF THE DETAILS AND EXPLANATION FILED BY THE APPELLANT BEFO RE THE A.O.., I FIND THAT IT WAS CLEARLY STATED THAT THE JEWELLERY IN QUESTIO N WAS REFLECTED IN THE BALANCE SHEET OF APPELLANT'S HUF AND THAT THE CLAIM RECEIVED FROM THE I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 19 INSURANCE COMPANY HAS ALSO BEEN CREDITED IN THE BOO KS OF ACCOUNTS. ON THE FACTS OF THE CASE, I FIND THAT THE ADDITION IS UNWARRANTED MORE PARTICULARLY SINCE THE FACTS STATED BY THE APPELLAN T HAVE NOT BEEN CONTROVERTED BY THE A.O. THE ADDITION OF RS. 1,84,0 00/- IS HENCE DELETED. 3.1.2 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT HIS ADDITION WAS DELETED BY LD. CIT(A) ON THIS BASIS THAT JEWELL ERY IN QUESTION WAS REFLECTED IN THE BALANCE SHEET OF THE ASSESSEES HUF. THIS F INDING OF LD. CIT(A) COULD NOT BE CONTROVERTED BY HE LD. D.R. AND HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO.1 OF THE REVENUES APPEAL IS REJECTED. 3.2 REGARDING GROUND NO.2, WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 7.2 OF HIS ORDER WHICH IS AVAILA BLE ON PAGES 80-81 OF HIS ORDER. THIS PARA IS ALSO REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 7.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, A.O.S OBSERVATIONS AND THE ARGUMENTS AND SUBMISSIONS OF T HE APPELLANT ALONG WITH EVIDENCES IN SUPPORT THEREOF FILED BEFORE THE A.O., THE COPIES OF WHICH FORMS PART OF THE WRITTEN SUBMISSIONS. IT IS AN UNDISPUTED FACT THAT THE PERSON WISE JEWELLERY CLAIMED IN THE CHART FURN ISHED TO THE A.U. HAVE BEEN DULY REFLECTED IN THE BALANCE SHEET OF THE RES PECTIVE PERSON FILED WITH THE INCOME-TAX ARID/OR WEALTH-TAX RETURNS AND THE A.O. HAS NOT DISPUTED THE SAID FACT IN THE ASSESSMENT ORDER. THI S BEING THE CASE., 1 AGREE WITH THE ARGUMENTS OF THE APPELLANT THAT THE A.O, WAS NOT JUSTIFIED IN TREATING THE JEWELLERY OF APPELLANT'S HUF AS APP ELLANT'S JEWELLERY IN INDIVIDUAL CAPACITY FOR THE PURPOSE OF DETERMINING THE EXCESS JEWELLERY, KEEPING IN VIEW THE FACT THAT THE A.O. AT NO STAGE OF ASSESSMENT PROCEEDINGS HAS EITHER ESTABLISHED THAT THE APPELLA NT'S HUF IS NOT GENUINE OR THAT THE JEWELLERY REFLECTED IN THE BALANCE SHEE T OF APPELLANT'S IIU1 1 ' IS UNEXPLAINED. FURTHER, ON COMPARISON OF THE TOTAL GO LD ORNAMENTS AND JEWELLERY SHOWN IN THE BALANCE SHEET OF ALL THE FAM ILY MEMBERS VIS-A-VIS THE GOLD ORNAMENTS AND JEWELLERY FOUND DURING THE C OURSE OF SEARCH, IT IS SEEN THAT AS AGAINST TOTAL JEWELLERY FOUND WEIGHING 2301.850 GMS. TOTAL JEWELLERY REFLECTED IN THE BALANCE SHEETS OF THE FA MILY MEMBERS WEIGH 2295.980 GMS. THUS, THERE IS A SMALL DISCREPANCY OF 5.870 GMS. WHICH IS EXPLAINED TO BE ON ACCOUNT OF RECEIPT BY CHILDREN O N AUSPICIOUS OCCASIONS. ON PERUSAL OF THE BLOCK RETURN, IT IS FO UND THAT THE DISCLOSURE OF RS. 2.00 LACS WAS AN OVERALL DISCLOSURE ON ACCOU NT OF JEWELLERY I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 20 REMAKING, PURCHASE OF JEWELLERY AND CERTAIN EXPENDI TURE AND IT IS NOWHERE ADMITTED THAT IT IS ON ACCOUNT OF DISCREPAN CY IN JEWELLERY FOUND VIS-A-VIS REFLECTED IN THE BALANCE SHEETS. KEEPING IN VIEW THE FACTS IN TOTALITY, 1 FIND NO JUSTIFICATION FOR MAKING THE AD DITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY IN THE MANNER W ORKED OUT BY THE A.O. THE SAID ADDITION IS ACCORDINGLY DELETED AND T HIS GROUND OF APPEAL IS HENCE ALLOWED. 3.2.1 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT THIS IS NOTED BY LD. CIT(A) THAT WHEN THE TOTAL JEWELLERY FOUND I N THE COURSE OF SEARCH AND THE TOTAL JEWELLERY REFLECTED IN THE BALANCE SHEET AND FAMILY MEMBERS OF THE ASSESSEE IS COMPARED, THERE IS A SMALL DISCREPANCY OF 5.870 GMS ONLY. IT IS ALSO NOTED BY HIM THAT THERE IS AN EXPLANATION IN THIS R EGARD THAT THESE WERE RECEIVED BY CHILDREN ON VARIOUS AUSPICIOUS OCCASIONS. HE AL SO NOTED THAT ON PERUSAL OF FACTS, IT IS FOUND THAT THE DISCLOSURE OF RS.2 LACS WAS AN OVERALL DISCLOSURE ON ACCOUNT OF JEWELLERY REMAKING, PURCHASE OF JEWELLER Y AND EXPENDITURE AND IT IS NOWHERE ADMITTED THAT IT IS ON ACCOUNT OF DISCREPAN CY IN JEWELLERY FOUND. THIS FINDING OF LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D.R. AND HENCE, ON THIS ISSUE ALSO, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). THIS GROUND OF THE REVENUE IS ALSO REJECTED. 3.3 REGARDING GROUND NO.3 OF THE REVENUES APPEAL, WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 8.2 OF HIS OR DER ON PAGE 84 OF HIS ORDER AND THE SAME IS ALSO REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 8.2. 1 HAVE CONSIDERED THE RIVAL CONTENTIONS AND I HAVE ALSO PERUSED THE EVIDENCES AND EXPLANATION FILED BEFORE THE A.O. IN RESPECT OF HOUSEHOLD VALUABLES. IT IS SEEN THAT THE ITEMS HELD BY THE A. O. AS UNEXPLAINED HAVE BEEN DULY REFLECTED IN THE PERSONAL BALANCE SHEET O F APPELLANT'S WIFE AND HIS DAUGHTER AS CLAIMED IN THE DETAILED CHART SUBMI TTED VIDE LETTER DATED 8/2/02, EXPLAINING THE SOURCE OF EACH HOUSEHOLD VAL UABLES FOUND DURING THE COURSE OF SEARCH. THE A.O. HAS ALSO NOT BROUGHT ON RECORD ANY EVIDENCE TO ESTABLISH THAT THE INVESTMENT IN THE SA ID ITEMS HAS BEEN MADE BY THE APPELLANT AND NOT THE PERSON TO WHOM THE SAM E BELONGS TO. IN VIEW OF THE ABOVE FACTS, THE ADDITION OF RS.61,680/- IS DELETED. I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 21 3.3.1 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ) WE FIND THAT A CLEAR FINDING IS GIVEN BY HIM THAT ALL THE ITEMS HELD BY THE A.O. AS UNEXPLAINED HAVE BEEN DULY REFLECTED IN THE PERSONAL BALANCE SHEET O F THE ASSESSEES WIFE AND HIS DAUGHTER. THIS FINDING OF LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D.R. AND HENCE, ON THIS ISSUE ALSO ,WE DO NOT FIND ANY R EASON TO INTERFERE IN HE ORDER OF LD. CIT(A). GROUND NO.3 IS ALSO REJECTED. 3.4 REGARDING GROUND NO.4, WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) IN PARA 9.2 OF HIS ORDER ON PAGES 87-88 OF T HE ORDER OF LD. CIT(A) AND THE SAME IS ALSO REPRODUCED HEREIN BELOW FOR THE SA KE OF READY REFERENCE: 9.2. 1 HAVE CAREFULLY CONSIDERED THE FINDINGS OF T HE A.O AND THE ARGUMENTS AND THE SUBMISSIONS OF THE APPELLANT. ON PERUSAL OF YEAR-WISE DETAILS OF HOUSE HOLD WITHDRAWALS FURNISHED BY THE APPELLANT VIDE BITER DATED 8/2/2002 FILED BEFORE THE A.O. THE CLAIM OF T HE APPELLANT THAT THE EXPENDITURE ON ESSEL WORLD TOUR WAS ONLY RS.10,000/ - TO RS.12,000/- SINCE THE TOTAL EXPENDITURE OF RS.63,390/- WAS PERT AINING TO A GROUP OF ABOUT 15 PERSONS INCLUDING HIS FAMILY AND OTHER FRI ENDS APPEARS TO BE REASONABLE. NEVERTHELESS, KEEPING IN VIEW THE YEAR- WISE HOUSEHOLD WITHDRAWALS, I DISAGREE WITH THE ARGUMENT THAT THE SAID EXPENDITURE WAS MET OUT OF THE SAME. HOWEVER, 1 AGREE WITH THE CLAI M OF THE APPELLANT THAT THE SAID EXPENDITURE REQUIRES TO BE TREATED AS MADE OUT OF THE AMOUNT OF RS.2 LACS DISCLOSED IN THE BLOCK RETURN. ACCORDI NGLY, NO SEPARATE ADDITION IS WARRANTED AND HENCE, THE ESTIMATED ADDI TION TO THE EXTENT OF RS.25,000/- MADE BY THE A.O. ON ACCOUNT OF ESSEL WO RLD TOUR IS DELETED. IN SO FAR AS THE ADDITION OF RS.15,000/- ON ACCOUNT OF MUSIC SYSTEM BROUGHT BY APPELLANT'S SON FROM SINGAPORE DURING HI S SCHOOL TOUR IS CONCERNED, THE SAME IS CONFIRMED AS THE OBSERVATION OF THE A.O. COULD NOT BE CONTROVERTED BY THE APPELLANT. ACCORDINGLY, ADDITION TO THE EXTENT OF RS.15,000/- IS CONFIRMED AND THE BALANCE IS DELE TED. 3.4.1 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT THIS ADDITION WAS DELETED BY LD. CIT(A) ON THIS BASIS THAT THE SA ID EXPENDITURE WERE MET OUT OF RS.2 LACS DISCLOSED BY THE ASSESSEE IN THE BLOCK RETURN. THIS FINDING OF FACT GIVEN BY LD. CIT(A) COULD NOT BE CONTROVERTED BY TH E LD. D.R. AND HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. GROUND NO.4 IS REJECTED. I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 22 3.5 REGARDING GROUND NO.5, WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PAR 10.2 ON PAGE 89 OF HIS ORDER WHIC H IS REPRODUCED BELOW: I HAVE CONSIDERED THE FACTS AND THE RIVAL CONTENTI ONS AND FIND THAT COMPLETE ACCOUNTS REGARDING CONSTRUCTION EXPENDITUR E OF BUNGALOW WERE FOUND NOTED IN SEIZED ANNEXURE A-9 TO A-11 AND THE AMOUNT OF RS.66,000/- WAS A TEMPORARY ADVANCE GIVE TO LABOUR CONTRACTOR JASUBHAI FOR DAILY PAYMENT AND IN THE FINAL AMOUNT SHOWN IN THE BOOKS OF ACCOUNTS THIS AMOUNT OF RS.66,000/- IS INCLUDED. HENCE, THI S ADDITION OF RS.66,000/- IS DELETED. 3.5.1 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ) WE FIND THAT THIS NOTING WAS REGARDING TEMPORARY ADVANCE GIVEN TO LABOUR CON TRACTOR JASUBHAI FOR DAILY PAYMENT AND IN THE FINAL AMOUNT SHOWN IN THE BOOKS OF ACCOUNTS, THIS AMOUNT OF RS.66,000/- IS ALSO INCLUDED AND, THEREFORE, NO ADD ITION IS JUSTIFIED. CONSIDERING THE FACTS OF THE PRESENT CASE, WE DO NOT FIND ANY G OOD REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO AND HENCE, T HIS GROUND OF THE REVENUES APPEAL IS ALSO REJECTED. 3.6 IN THE RESULT, THIS APPEAL OF THE REVENUE IN I. T.A.NO. 234/AHD/2003 IS DISMISSED. 4. NOW, WE TAKE UP THE APPEAL OF THE REVENUE IN TH E CASE OF SHRI N G SOMANI IN I.T.A.NO. 233/AHD/2003. 4.1 GROUND NO.1 IS AS UNDER: 1. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN RE STRICTING ADDITION OF RS.51,58,250/- MADE OIL ACCOUNT OF UNEXPLAINED INVE STMENT IN LAND FOR THE HOTEL PROJECT TO RS.14,58,250/-. 4.1.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 4.1.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. WE FIND THAT SHRI SOMANIS TOTAL UNACCOUNTED INVESTMENT IN LAND WAS W ORKED OUT BY THE A.O. AT RS.1,09,58,250/-, OUT OF WHICH HE HAS ACCEPTED EXPL ANATION OF THE ASSESSEE I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 23 REGARDING SOURCE OF THIS INVESTMENT TO THE EXTENT O F RS.58 LACS BEING INCOME FROM M/S. BHAGWATI CATERERS AND BHAGWATI FOODS. HE MADE ADDITION OF THE BALANCE AMOUNT OF RS.51,58,250/- BY REJECTING THE A SSESSEES EXPLANATION REGARDING SOURCES OF BALANCE INVESTMENT. LD. CIT(A ) HAS DELETED THIS ADDITION AS PER PARA 5.4 OF HIS ORDER ON PAGE 7 AND THE SAME IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: PERUSAL OF CASE RECORDS OR REGULAR ASSESSMENT .SHO W THAT UNSECURED LOANS OF OVER RS.82 LAKHS ARE APPEARING IN THE BALANCE SH EET AND THESE LOANS WERE DEPOSITED IN THE BANK ACCOUNT FROM WHERE THE W ITHDRAWALS WERE MADE. AS ALL SUCH LOANS AND THE BANK ACCOUNT ARE AP PEARING IN THE BALANCE SHOOT OF REGULAR RETURN ON WHICH ASSESSMENT UP TO A SSESSMENT YEAR 1999- 2000 HAS BEEN COMPLETED, THIS ISSUE IS BEYOND THE P URVIEW OF BLOCK ASSESSMENT AS THE ASSESSING OFFICER HAS NOWHERE QU ESTIONED THE GENUINENESS OF DEPOSITS IN SHE BANK ACCOUNT. APPELL ANT HAS WITHDRAWN A SUM OF RS.27,00,000/- OUT OF THESE BANK WITHDRAWALS ON VARIOUS DATES. HENCE, THERE IS NO REASON FOR NOT ACCEPTING THESE W ITHDRAWALS IN BLOCK ASSESSMENT, WHEN IT IS APPARENT THAT THE CASH BALAN CES HAVE BEEN BUILT UP BY WITHDRAWING VARIOUS AMOUNTS IN CASH FROM THE BAN K ACCOUNT. HENCE, ASSESSING OFFICERS ACTION IN NOT ACCEPTING THE SUM OF RS.27,00 .000/- IS NOT CORRECT. IN VIEW OF THIS, APPELLANTS EXPLANATION O F : INVESTMENT OF RS.1,05,00,000/- IS EXPLAINED. HOWEVER, FOR THE REM AINING AMOUNT NO EXPLANATION AT ALL COULD BE FURNISHED BY THE APPELL ANT. HENCE OUT OF THE ADDITION OF RS.52,58,250/-, ADDITION OFRS.14,58,250 /- IS CONFIRMED AND THE BALANCE AMOUNT IS DELETED' 4.1.3 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT HE HAS GIVEN GOOD AND COGENT REASONS FOR ACCEPTING THE CLAIM OF THE ASSESSEE TOWARDS EXPLANATION OF THE SOURCE OF THIS CASH PAYMENT FOR PURCHASE OF LAND TO THE EXTENT OF RS.27 LACS. BECAUSE THE SAME IS OUT OF WITHDRAWA L FROM THE BANK ACCOUNT IN WHICH UNSECURED LOAN OF OVER RS.82 LACS WAS DEPOSIT ED AND THE SAME IS APPEARING IN THE BALANCE SHEET BEING PART OF REGULA R RETURN OF ASSESSMENT YEAR 1999-2000 AND, THEREFORE, IT WAS HELD THAT THIS ISS UE IS BEYOND THE PURVIEW OF BLOCK ASSESSMENT. HE HAS ALSO ALLOWED RELIEF OF RS .10 LACS BEING 50% AMOUNT OF RS.20 LACS PAID BY CHEQUE IN RESPECT OF THIS TRA NSACTION OF LAND PURCHASE AND CONFIRMED THE BALANCE ADDITION OFRS.14.58.250/-. WE FIND THAT THE TOTAL I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 24 UNACCOUNTED INVESTMENT IN LAND BEING SHARE OF MR. N G SOMANI WAS WORKED OUT BY THE A.O. ALSO AT RS.1,09,58,250/-. OUT OF THIS, A.O. HAS ACCEPTED THE EXPLANATION TO THE EXTENT OF RS.58 LACS AND RS.27 L AC IS EXPLAINED OUT OF CASH WITHDRAWAL FORM BANK AND HENCE, THE TOTAL COMES OUT TO RS.85 LACS LEAVING A BALANCE OF RS.24,58,250/-. IN WORKING OUT THE TOTA L CASH PAYMENT BY MR. SOMANI, THE A.O. HAS FIRST REDUCED THE AMOUNT OF CH EQUE PAYMENT OF RS. 20 LACS FROM TOTAL PAYMENT AND ONLY OF THE BALANCE AMO UNT, HE ADDED 50% IN THE HANDS OF MR. BHUSARI AND MR. SOMANI EACH. BUT THIS CHEQUE PAYMENT OF RS. 20 LACS WAS NOT MADE BY THESE TWO PERSONS IN EQUAL RAT ION BUT THE ENTIRE CHEQUE PAYMENT WAS MADE BY MR. SOMANY. HENCE, THE AMOUNT O F CASH PAYMENT BY MR. SOMANI IS NOT RS.1,09,58,250/- BUT ONLY RS.99,58,25 0/- ( 50% OF RS. 239,16,500/- = RS. 119,58,250/- MINUS RS. 20,00,000 /-). OUT OF THIS AMOUNT OF CASH PAYMENT OF RS. 99,58,250/-, THE ASSESSEE HAS E XPLAINED THE SOURCE OF RS. 85 LACS AND HENCE THE ADDITION CONFIRMED BY LEARNED CI T (A) OF ONLY RS. 14,58,250/- IS CORRECT AND HENCE WE FIND NO INFIRMI TY IN THE ORDER OF LEARNED CIT (A) FOR GRANTING RELIEF OF RS.37 LACS AS HAS BEEN DONE BY LD. CIT(A). GROUND NO.1 OF THE REVENUES APPEAL IS REJECTED. 4.2 GROUND NO.2 IS AS UNDER: 2. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DE LETING ADDITION OF RS.3,40,000/- MADE-ON ACCOUNT OF UNEXPLAINED CASH F OUND AT THE TIME OF SEARCH. 4.2.1 REGARDING THIS GROUND ALSO, LD. D.R. SUPPORTE D THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT (A). WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 7.2 OF HIS O RDER WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE. 7.2 AFTER THE CONSIDERATION, I FIND THAT AT THE TI ME OF SEARCH, IT WAS STATED BY THE APPELLANT THAT CASH WAS OF M/S. BHAGW ATI MARKETING. THE BUILD UP OF CASH BALANCE OF M/S. BHAGWATI MARKETING HAS ALREADY BEEN DISCUSSED EARLIER IN THIS ORDER. BESIDES THIS, A.O .S FINDING THAT IT WAS NOT DISCLOSED IN STATEMENT IS ALSO NOT CORRECT. HENCE, THERE IS NO JUSTIFICATION OF THIS ADDITION AND THE SAME IS DELETED. I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 25 4.2.2 FROM THE ABOVE PARA OF LD. CIT(A)S ORDER, WE FIND THAT HE HAS DELETED THIS ADDITION ON THIS BASIS THAT AT THE TIME OF SEA RCH ITSELF, IT WAS STATED BY THE ASSESSEE THAT THE CASH FOUND WAS OF M/S. BHAGWATI M ARKETING AND BUILDUP OF CASH BALANCE OF BHAGWATI MARKETING IS ALREADY DISCU SSED BY LD. CIT(A) AND THE LD. D.R. COULD NOT POINT OUT ANY DEFECT IN THESE FI NDINGS OF LD. CIT(A) AND HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. GROUND NO.2 IS ALSO REJECTED. 4.3 GROUND NO.3 IS AS UNDER: 3. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DE LETING ADDITION OF RS.4.00.000/- MADE ON ACCOUNT OF THE UNEXPLAINED AM OUNT PAID BY THE ASSESSEE FOR VISHI ACCOUNT. 4.3.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 4.3.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 8.2 OF HIS ORDER WHICH IS REPRODUCED BELOW: I HAVE CAREFULLY CONSIDERED THE ISSUE, ARGUMENTS O F THE LD. A.R. APPEARS TO REASON THAT FROM TIME TO TIME INVESTMENT WAS MAD E IN VISHI OUT O AMOUNT DISCLOSED AND FINALLY ON CLOSURE OF VISHI AC COUNT, THE ENTIRE AMOUNT WAS UTILIZED TOWARDS THE LAND DEAL. HENCE, THIS AMOUNT IS CLEARLY COVERED OUT OF DISCLOSURE IN THE CASE OF M/S. BHAGW ATI CHAT AND NO SEPARATE ADDITION IS REQUIRED TO BE MADE. THIS ADD ITION IS, THEREFORE, DELETED. 4.3.2 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT THIS ADDITION WAS DELETED BY LD. CIT(A) ON THIS BASIS THAT INVEST MENT IN VISHI WAS MADE FROM TIME TO TIME AND OUT OF THE AMOUNT DISCLOSED AND FI NALLY ON CLOSURE OF VISHI ACCOUNT, THE ENTIRE AMOUNT WAS UTILIZED TOWARDS THE LAND DEAL. THIS FINDING OF LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D.R . BY SHOWING THAT VISHI ACCOUNT WAS CLOSED AFTER THE PAYMENTS MADE BY THE ASSESSEE FOR LAND DEAL. HE ALSO COULD NOT SHOW THAT THE AMOUNT PAID FOR VISHI ACCOUNT WAS NOT OUT OF I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 26 VARIOUS AMOUNTS DISCLOSED AND HENCE, ON THIS ISSUE ALSO, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). TH IS GROUND IS ALSO REJECTED. 4.4 GROUND NO.4 IS AS UNDER: 4. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DE LETING ADDITION OF RS.58,428/- MADE ON ACCOUNT OF UNEXPLAINED INVESTME NT IN DIAMOND JEWELLERY. 4.4.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 4.4.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PAR 9.1 OF HIS ORD ER WHICH IS REPRODUCED BELOW: I FIND MERIT IN THE SUBMISSION. I ALSO FIND THAT THE A.O. HAS NOT DISCUSSED HOW AND WHY THIS AMOUNT WAS TREATED AS UNEXPLAINED, WHEN THE A.O. HAS HIMSELF ACCEPTED THAT DIAMOND RING WORTH OVER RS.1 LAC BELONGING TO THE APPELLANT WAS EXPLAINED, THERE WAS NO REASON TO HO LD THAT DIAMOND JEWELLERY WORTH RS.58,428/- ONLY COULD NOT BELONG T O OTHER LADY MEMBERS OF THE HOUSE. IT IS ALSO SEEN THAT AT THE TIME OF SEARCH, IT WAS STATED THAT JEWELLERY KEPT IN LOCKER BELONGED TO LADY FAMILY ME MBERS. HENCE, THIS ADDITION IS NOT AT ALL JUSTIFIED AND IS DELETED. 4.4.3 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ) WE FIND THAT THIS ADDITION WAS DELETED BY LD. CIT(A) ON THIS BASIS THAT WHEN T HE A.O. HAS ACCEPTED THAT DIAMOND RING OF RS.1 LAC BELONGING TO THE ASSESSEE WAS EXPLAINED, THERE WAS NO REASON TO HOLD THAT DIAMOND JEWELLERY WORTH RS.58,4 28/- ONLY COULD NOT BELONG TO OTHER LADY MEMBER OF THE HOUSE. HE HAS ALSO GIV EN A FINDING THAT AT THE TIME OF SEARCH, IT WAS STATED THAT JEWELLERY KEPT IN LOC KER BELONGED TO LADY FAMILY MEMBERS. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) ON THIS ISSUE AND HENCE, WE DECLINE TO INTERFERE IN HIS ORDER ON THIS ISSUE. GROUND NO.4 IS ALSO REJECTED. 4.5 GROUND NO.5 IS AS UNDER: I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 27 5. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DE LETING ADDITION OF RS.5,88,840/- ON ACCOUNT OF UNACCOUNTED PAYMENT OF INTEREST. 4.5.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 4.5.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 10.2 OF HIS O RDER WHICH IS REPRODUCED BELOW: I HAVE CAREFULLY CONSIDERED THE ISSUE AND I HAVE A LSO GONE THROUGH THE COPIES OF SEIZED PAPERS, SUBMISSIONS OF THE APPELLA NT WERE EXAMINED VIS- -VIS COPIES OF ACCOUNTS OF VARIOUS CREDITORS. IT WAS ALSO SEEN THAT IN REGULAR RETURN FOR ASSESSMENT YEAR 2000-01, UNSECUR ED LOANS OVER RS.82 LACS ARE APPEARING IN THE BALANCE SHEET AND IT IS S EEN THAT AMOUNT OF INTEREST IS RECORDED IN REGULAR BOOKS OF ACCOUNTS. THE A.O. HAS NOT BEEN ABLE TO REBUT APPELLANTS SUBMISSIONS THAT WORKING OF INTEREST PERTAINED TO LOAN TAKEN FORM SHRI B D CHAVLA, REKHA WADHWANI, MU KESH TEXTILES AND OTHERS AS STATED IN THE SUBMISSIONS. ALL THESE LOANS AND INTEREST ARE RECORDED IN REGULAR BOOKS OF ACCOUNTS. BESIDES THI S, FROM THE SEIZED DOCUMENTS IT CANNOT BE SAID THAT INTEREST HAS ACTUA LLY BEEN PAID AND UNLESS THE AMOUNT IS ACTUALLY PAID, AND WHICH IS NOT RECOD ED IN REGULAR BOOKS OF ACCOUNTS, NO ADDITION CAN BE MADE. PERUSAL OF SEIZ ED PAGE 152, 151 ETC. ALSO SHOWS THAT INTEREST HAS BEEN WORKED OUT UP TO 31.03.2000, I.E. FOR THE POSTS SEARCH PERIOD. THIS ALSO PROVES APPELLANTS ASSERTION THAT THE DOCUMENTS SHOW ONLY CALCULATIONS OF INTEREST AND NO T ACTUAL PAYMENT. IN VIEW OF THIS, I FIND NO JUSTIFICATION FOR ADDITION OF RS.58,88,340/- AND THE SAME IS DELETED. 4.5.3 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A ), WE FIND THAT THIS FINDING IS GIVEN BY LD. CIT(A) THAT ALL THESE LOANS AND INT EREST ARE RECORDED IN REGULAR BOOKS OF ACCOUNTS AND FROM THE SEIZED DOCUMENTS ,IT DOES NOT COME OUT THAT INTEREST HAS ACTUALLY BEEN PAID AND UNLESS THE AMOU NT HAS ACTUALLY BEEN PAID AND NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS, NO A DDITION COULD BE MADE. WE ALSO NOTED THAT PERUSAL OF SEIZED PAGES 152 AND 151 ETC. SHOW THAT INTEREST HAS BEEN WORKED OUT UP TO 31.03.2000 I.E. FOR THE POSTS SEARCH PERIOD AND HENCE, THERE IS FORCE IN THE ASSESSEES ASSERTION THAT THE DOCUMENTS SHOW ONLY I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 28 CALCULATION OF INTEREST AND NOT ACTUAL PAYMENT. TH ESE FINDINGS OF LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D.R. AND HENCE , WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. GROUND NO.5 OF REVENUES APPEAL IS REJECTED. 4.5.4 IN THE RESULT, APPEAL OF THE REVENUE IN I.T.A .NO. 233/AHD/2003 IS DISMISSED. 5. NOW, WE TAKE UP THE APPEAL OF THE REVENUE IN THE CASE OF M/S. BHAGWATI BANQUETS AND HOTELS LTD. IN I.T.A.NO. 3151/AHD/2004 . THE GROUND RAISED BY THE REVENUE IS AS UNDER: 1. THE CIT(A) HA ERRED IN LAW AND ON FACTS IN DIRE CTING TO DELETE THE ADDITION OF RS.34,00,000/- MADE ON ACCOUNT OF ON MO NEY PAID FOR THE PURCHASE OF LAND. ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF T HE A.O. IT IS THEREFORE, PRAYED THAT THE ORDER OF CIT(A) BE SET A SIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 5.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 5.2 WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT( A) ON PAGES 10-11 OF HIS ORDER AND THE RELEVANT PARAS FROM HIS ORDER ARE REP RODUCED BELOW: I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE ID. AUTHORIZED REPRESENTATIVE AND I HAVE ALSO GONE THROUGH THE BLO CK ASSESSMENT ORDER IN THE CASE OF THE APPELLANT'S COMPANY AND ITS DIRECTO RS SHRI N G SOMANI AND SHRI SATBIRSINGH BHUSARI. PERUSAL OF THESE ORDE RS SHOWS THAT THE SEIZED DOCUMENTS INDICATED THAT WHATEVER 'ON MONEY' WAS PAID, WAS IN (ACT PAID BY THE DIRECTORS AND NOT BY THE APPELLANT COMPANY FOR THE SAME REASON IN APPELLANT'S CASE BLOCK ASSESSMENT WAS COM PLETED AL NIL, INCOME AND ENTIRE ADDITIONS ON ACCOUNT OF 'ON MONEY' PAYME NT WAS MADE IN THE HANDS OF THE TWO DIRECTORS SUCH ACTION HAS ALSO BEE N CONFIRMED BY THE CIT(A). EVEN DURING THE COURSE OF APPELLATE PROCEED INGS IN THE CASE OF DIRECTORS IT WAS SLATED DIAL THE PAYMENTS WERE MADE BY THE DIRECTORS INDIVIDUALLY. IN SUCH CIRCUMSTANCES THERE WAS NO RE ASON TO ADD THIS AMOUNT IN THE HANDS OF THE COMPANY ESPECIALLY WHEN NO BUSINESS ACTIVITY HAD STARTED. EVEN THE SEIZED PAPER EXTRACTS TO WHIC H HAS BEEN REPRODUCED AT PAGES 1 TO 5 OF THE ASSESSMENT ORDER CLEARLY SHO WS THAT SCHEDULE OF PAYMENTS INDICATES AMOUNTS PROPOSED TO BE PAID BY NARENDRABHAI I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 29 WHO HAPPENS TO BE THE DIRECTOR THE SEIZED DOCUME NTS NOWHERE INDICATE THAT ANY PAYMENT HAS BEEN PAID BY THE APPELLANT CO MPANY. IN VIEW OF THESE LADS AND THE FINDINGS GIVEN IN THE BLOCK ASSE SSMENT ORDERS IN THE CASE OF DIRECTORS I FIND NO REASON FOR MAKING T HIS ADDITION IN THE HANDS OF THE COMPANY NOW. APART FROM THIS THE ASSESSING OFFICER HAS MADE ADDI TIONS FOR PAYMENTS WINCH HAVE BEEN ALLEGEDLY MADE DURING THE PERIOD 16 /2/2000 TO 1/7/2000. THIS J PERIOD FALLS DURING, ASSESSMENT YE ARS 2000-01 AND 2001- 02. AS THE PERIOD IS I OVERLAPPING WITHOUT ANY ENQU IRY IS NOT KNOWN HOW ASSESSING OFFICER CARNE LO I THE CONCLUSION THAT TH E PAYMENTS PERTAIN LO A Y 2001-02 ONLY IN VIEW OF THESE J FACTS AND THE FIN DING IN THE BLOCK ASSESSMENT ORDER AS WELL AS IN APPELLATE ORDERS AGA INST BLOCK ASSESSMENT IT IS VERY MUCH CLEAR THAT IF AT ALL ANY ADDITIONS ARE REQUIRED TO BE MADE THE SAME WOULD PERTAINS TO THE DIRECTORS ARID NOT L O THE APPELLANT COMPANY THE ADDITION IS THEREFORE DELETED. 5.3 FROM THE ABOVE PARAS OF THE ORDER OF LD. CIT(A) , WE FIND THAT THIS ADDITION WAS DELETED BY LD. CIT(A) ON THIS BASIS TH AT IN THE COURSE OF APPELLATE PROCEEDINGS IN THE CASE OF A DIRECTOR, IT WAS STATE D THAT PAYMENT WAS MADE BY THE DIRECTOR INDIVIDUALLY AND, THEREFORE, THERE IS NO REASON TO HOLD THIS AMOUNT IN THE HANDS OF THE COMPANY. WE HAVE ALREADY SEEN THA T 50% ADDITION ON ACCOUNT OF ON PAYMENT FOR PURCHASE OF LAND HAS BEEN MADE IN THE HANDS OF ONE OF THE DIRECTORS SHRI SATBIRSINGH H BHUSARI AND WE HAVE AL READY CONFIRMED THAT ADDITION AND OUT OF BALANCE50% AMOUNT, ADDITION OF RS.51,58,250/- WAS MADE IN THE HANDS OF MR. N G SOMANI BY THE A. O. BY ACCE PTING THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURCE OF INVESTMENT OF RS.58 LACS. OUT OF THIS ADDITION OF RS.51,58,250/-, LD. CIT(A) HAD ALLOWED RELIEF OF RS.37 LACS WHICH HAD BEEN CONFIRMED BY US WHILE DECIDING THE APPEAL OF THE REVENUE IN THE CASE OF SHRI N G SOMANI AND HENCE, WE FIND THAT ENTIRE C ASH PAYMENT FOR PURCHASE OF THIS LAND HAS BEEN EITHER EXPLAINED OR ADDITION WAS MADE IN THE HANDS OF THE DIRECTORS AND, THEREFORE, NO SEPARATE ADDITION IN T HE HANDS OF THE COMPANY IS JUSTIFIED FOR THE SAME CASH PAYMENT. WE, THEREFO RE, DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A). 5.4 IN THE RESULT, THIS APPEAL OF THE REVENUE IS DI SMISSED. I.T.A.NO.200,233,234 /AHD/2003 I.T.A.NO. 3151/AHD/2004 30 6. IN THE COMBINED RESULT, THE ASSESSEES APPEAL IN THE CASE OF SHRI SATBIRSINGH H BHUSARI IN I.T.A.NO. 200/AHD/2003 IS DISMISSED AND ALL THREE APPEALS OF THE REVENUE IN THE CASE OF SHRI BHUSARI, SHRI N G SOMANI AND THE COMPANY M/S. BHAGWATI BANQUETS AND HOTELS LTD. ARE ALSO DISMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 01/01/2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04-01-2013.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 22/01/2013 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.22/1 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 22/01/2013 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .