Inderjit Singh Sabarwal, V. ACIT, Range-II,

ITSSA 239/DEL/2005

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 7887 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 19-09-2011
• Assessment Year: misc
• Appeal Filed On: 05-05-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHANISH VERMA
• Assessee Lawyers: DR RAKESH GUPTA; ASHWANI TANEJA S
• Keywords: Unexplained investment; Search and seizure; Opportunity of cross examination; Source of fund; Third party statement; Retraction; Documents seized
• Section: 143(3); 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I : NEW DELHI) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER IT(SS)A.NO.239/DEL./2005 (BLOCK PERIOD : 01.04.1988 TO 12.03.1999) MR. INDERJIT SINGH SABARWAL, VS. ACIT, RANGE II, 1 J/6, NIT, FARIDABAD. FARIDABAD. (PAN : AECPS1055F) IT(ASSESSEE) A.NO.296/DEL./2005 (BLOCK PERIOD : 01.04.1988 TO 12.03.1999) ACIT, RANGE II, VS. MR. INDERJIT SINGH SABARWAL, FARIDABAD. 1 J/6, NIT, FARIDABAD. (PAN : AECPS1055F) (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA & SHRI ASHWANI TANE JA, ADVOCATES REVENUE BY : SHRI MOHANISH VERMA, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : BOTH THESE APPEALS ARE CROSS APPEALS. IT(SS)A.NO. 239/DEL/2005 FILED BY ASSESSEE AND IT(SS)A.NO.296/DEL/2005 FILED BY RE VENUE ARISE OUT OF THE ORDER OF CIT (APPEALS), FARIDABAD U/S 158BC DATED 2 8.3.2005. ITA NO.239 & 296/DEL./2005 2 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE OPERATION TOOK PLACE U/S 132 AT THE BUSINESS AND RESIDENTIAL PREMI SES OF THE APPELLANT ON 12.3.1999. THE ASSESSEE WAS A MUNICIPAL CORPORATOR AT FARIDABAD. STATEMENTS OF THE ASSESSEE AND SOME OTHER PERSONS WERE RECORDE D. THE FIRST ASSESSMENT WAS COMPLETED U/S 143(3) READ WITH SECTION 158BC ON 31.3.2001. THIS ASSESSMENT ORDER WAS SET ASIDE BY CIT, FARIDABAD U/ S 263 VIDE HIS ORDER DATED 2.11.2001 WITH THE DIRECTION TO PASS FRESH ASSESSME NT ORDER. PURSUANT TO THE DIRECTIONS OF CIT, ASSESSMENT ORDER WAS AGAIN PASSE D ON 31.3.2003 ASSESSING THE SAME INCOME WHICH WAS DETERMINED IN EARLIER ASS ESSMENT ORDER. ASSESSING OFFICER PASSED ALMOST SAME ORDER BY REPRODUCING THE EARLIER ORDER. THE ADDITIONS WERE MADE ON ACCOUNT OF UNDISCLOSED INVES TMENT, COMMISSION FROM CHIT BUSINESS AND INCOME FROM LUCKY CAR DRAW SCHEME . THE ORDER WAS CHALLENGED BEFORE CIT(A). CIT (A) DISPOSED OF THE APPEAL BY ORDER DATED 28.3.2005. PART RELIEF WAS GRANTED. AGAINST THIS ORDER, BOTH SIDES ARE IN APPEAL BEFORE US. 3. ALONG WITH ASSESSEE, SEARCH ALSO TOOK PLACE AT T HE PREMISES OF HIS BROTHER, SHRI BAHADUR SINGH SABHARWAL. IN THAT CASE ADDITIONS MADE ON ACCOUNT OF COMMISSION FROM CHIT BUSINESS AND INCOME FROM LUCKY CAR DRAW SCHEME. IN THAT CASE , APPEAL REACHED UP TO ITAT. A COPY OF THE ORDER WAS SUPPLIED BY LD. AR FOR THE ASSESSEE DURING THE COUR SE OF HEARING. WE HAVE PERUSED THE SAME. ITA NO.239 & 296/DEL./2005 3 4. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY REVENUE IN ITA NO.296/DEL/2005 :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHE R THE COMMISSIONER OF INCOME TAX (APPEALS) WAS RIGHT IN L AW: 1. IN DELETING THE ADDITION OF RS. 6,00,000/- OUT TO T OTAL ADDITION OF RS. 10,51,153/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PURCHASE OF FLAT AT MUMBA I. THIS GROUND WAS REVISED AND THE REVISED GROUND REA DS AS UNDER :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETH ER THE COMMISSIONER OF INCOME TAX (APPEALS) WAS RIGHT IN DELETING THE ADDITION OF RS.6,20,000/- OUT OF TOTAL ADDITION OF RS.10,51,153/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PURCHASE OF FLAT AT MUMBAI. 2. IN DELETING THE ADDITION OF RS. 60,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PURCHASE OF LA ND AT VILLAGE BAJRI FROM SH. SOM NATH & HIS FOUR BROTHERS . 3. IN DELETING THE ADDITION OF RS. 15,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PLOT NO. 108, SECTOR-14, FARIDABAD. 4. IN DELETING THE ADDITION OF RS. 5,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PURCHASE OF LAND IN DA BUA VILLAGE. 5. IN DELETING THE ADDITION OF RS. 6,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN 21/2 ACRE LAND AT VILL AGE BHAKRI. 6. IN DELETING THE ADDITION OF RS. 3,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SHOP NO. 2 AT H.NO. 2/ IF/34, NIT FARIDABAD. ITA NO.239 & 296/DEL./2005 4 7. IN DELETING THE ADDITION OF RS. 1,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PLOT AT DABUA PALI ROA D MEASURING 100 SQ. YARDS. 8. IN DELETING THE ADDITION OF RS. 21,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PLOT AT 1-2 CH OWK NEAR HOTEL GAZAL. 9. IN DELETING THE ADDITION OF RS. 10,70,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT AS 50% SHARE IN PROPERTY NO. 1D/14B, NIT, FARIDABAD 10. IN DELETING THE ADDITION OF RS. 6,66,666/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PLOT AT MUJESAR PHATAK . 11. IN DELETING THE ADDITION OF RS. 8,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SHOPS AT BADHKAL ROAD. 12. IN DELETING THE ADDITION OF RS. 3,35,928/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PURCHASE OF MARUTI ZEN CAR. 13. IN DELETING THE ADDITION OF RS. 25,00,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN FILM HAMARA KANOON. 14. IN DELETING THE ADDITION OF RS. 8,56,931/- MADE ON ACCOUNT OF DEPOSITS IN BANK ACCOUNT FROM APRIL, 98 TO FEB., 99 IN THE NAME OF SH. ASHOK KUMAR BENAMI. 15. IN DELETING THE ADDITION OF RS. 3,36,749/- MADE ON ACCOUNT OF UNDISCLOSED INCOME FROM REPAIR OF ELECTRONIC GOO DS AND INTEREST INCOME ON GOODS SOLD ON CREDIT. 16. IN DELETING THE ADDITION OF RS. 1,0,7,89,800/- MADE ON ACCOUNT OF UNDISCLOSED INCOME FROM LUCKY CAR DRAW SCHEME. 17. IN DELETING THE ADDITION OF RS.7,87,000/- MADE ON A CCOUNT OF UNDISCLOSED COMMISSION INCOME FROM AUCTION OF CH IT BUSINESS. ITA NO.239 & 296/DEL./2005 5 THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD , DELETE OR AMEND THE GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED B Y ASSESSEE IN ITA NO.239/DEL/2005 :- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS. 1,72,000/- OUT OF TO TAL ADDITION OF RS. 10,51,153/- MADE BY LD. A.O. AS UNDISCLOSED INVESTMENT IN PLOT NO. 702, STARSHIP CO - OPERATIVE HOUSING SOCIETY BOMBAY. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT DELETING AN ADDITION OF RS. 2,79,153/- OUT OF TOTAL ADDITION OF RS. 10,51,153/- MADE BY LD. A.O. AS UNDISCLOSED INVESTMENT IN PLOT NO. 702, STARSHIP CO - OPERATIVE HOUSING SOCIETY BOMBAY, MORE SO WHEN NOTHING WAS PAID BY THE APPELLANT TO THAT EXTENT. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 5,25,060/- AS ALLEGE D UNDISCLOSED INVESTMENT IN CEILO CAR WITHOUT ANY BAS IS, EVIDENCE, MATERIAL ON THE BASIS OF SURMISES AND CONJECTURES AND THAT TOO BY REJECTING THE OVERWHELM ING THE EVIDENCES FILED BY THE APPELLANT. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. A.O. IN FRAMING THE IMPUGNED ASSESSMENT WITHOUT ASSUMPTION VALID JURISDICTION AND AS SUCH IMPUGNED ASSESSMENT WAS LI ABLE TO BE DECLARED NULL AND VOID, MORE SO WHEN NOTICE U /S 158BC WAS VOID. 5. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, AMEND, MODIFY, DELETE ANY OF THE GROUNDS OF APPEAL BEFORE OR AT ITA NO.239 & 296/DEL./2005 6 THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 5. BOTH SIDES HAVE FILED THE PAPER BOOKS AND ALSO S YNOPSIS DURING APPELLATE PROCEEDINGS. BOTH SIDES HAVE ALSO ARGUE D THE ISSUES. WE HAVE HEARD BOTH THE PARTIES AT LENGTH. WE HAVE ALSO GON E THROUGH THE ORDERS PASSED BY THE AUTHORITIES BELOW, PAPER BOOKS AND SYNOPSIS FILED BY BOTH SIDES. AFTER CONSIDERING ALL THESE, WE DECIDE THE GROUNDS INVOLV ED IN BOTH THE APPEALS AS UNDER:- 6. GROUND NO. 1 OF THE REVENUES APPEAL AND GROUND NOS.1 &2 OF THE ASSESSEES APPEAL ARE RELATED TO THE SAME ISSUE AND HENCE THESE ARE BEING DISPOSED CONSOLIDATEDLY. THESE GROUNDS RELATE TO TH E ADDITION OF RS.10,51,153/- MADE ON ACCOUNT OF UNDISCLOSED INVES TMENT IN FLAT NO.702, STARSHIP CO. OP. HOUSING SOCIETY AT MUMBAI. 7. THE AO HAS HELD THAT THE ASSESSEE MADE UNDISCLOS ED INVESTMENT OF RS.10,51,153/- IN THE PURCHASE OF THE FLAT AT MUMBA I. HE REJECTED THE EXPLANATION THAT LOANS HAD BEEN RECEIVED FROM SH. S ANJAY CHANDAK AND M/S APS TRADE SERVICES P. LTD. STATING THAT THE TWO ALL EGED DEMAND DRAFTS WERE DATED 22.08.1998 AND 27.08.1998 BUT WERE CREDITED O N 07.081998 WHICH WAS NOT POSSIBLE. HE ALSO REJECTED THE CASH FLOW STATEM ENT WHICH HAD BEEN SUBMITTED TO EXPLAIN THE INVESTMENT TO THE TUNE OF RS. 2,00,000/-. HE ALSO HELD THAT THE SOURCE OF INSTALLMENT PAID AMOUNTING TO RS . 2,79,153/- WAS ALSO NOT EXPLAINED. ITA NO.239 & 296/DEL./2005 7 8. LD. AR FOR THE ASSESSEE SUBMITTED BEFORE US THAT ASSESSEE HAS THOUGH PURCHASED FLAT NO. 702, STARSHIP CO-OPERATIVE HOUSI NG SOCIETY, BOMBAY, BUT HAS PAID ONLY TOTAL AMOUNT TO THE TUNE OF RS. 7,72, 000/- AND ASSESSEE HAS NOT PAID ANY INSTALLMENT AS MENTIONED BY LD. A.O. AGGRE GATING TO RS. 2,79,153/-. LD. AR FURTHER SUBMITTED THAT LD. CIT(A) HAS DELETE D THE ADDITION OF RS 6,72,000/- CORRECTLY. BUT CIT (A) HAS ERRED IN NOT DELETING THE WHOLE ADDITION. LD. AR FOR THE ASSESSEE MADE LEGAL SUBMIS SION THAT THE ADDITION COULD NOT BE MADE UNDER CHAPTER XIV-B AS THE ADDITI ONS ARE NOT BASED ON ANY EVIDENCE FOUND AS A RESULT OF SEARCH. HE ALSO SUBM ITTED THAT THIS LEGAL PLEA IS ALSO RELEVANT TO OTHER ADDITIONS MADE BY AO. LD. A R FOR THE ASSESSEE RELIED UPON MANY DECISIONS OF COURTS ONE REPORTED AT 287 I TR 287 (DEL) IN THE CASE OF JUPITER BUILDERS P LTD. AND RAVI KANT JAIN 250 I TR 141 (DEL). 9. ON THE OTHER HAND, LD. CIT (DR) RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 10. AFTER CONSIDERING THE SUBMISSIONS MADE BEFORE U S, WE FIND THAT LD. CIT (A) HAS RECORDED THE FACTUAL FINDINGS IN THIS REGAR D WHICH COULD NOT BE DISPLACED BY LD. CIT (DR). LD. CIT (A) HAS RECORDED THE FOLLOWING FACTUAL FINDINGS AND HELD AS UNDER:- THE ISSUE HAS BEEN EXAMINED. REGARDING THE LOAN FO RM SH. SANJAY CHANDAK AND M/S APS TRADERS SERVICES P. LTD. THE STAND OF THE AO CANNOT BE ACCEPTED. DOCUMENTS CLEAR LY SHOW THAT THIS WAS TYPOGRAPHICAL ERROR IN THE BANK ACCOU NT ONLY BECAUSE THE PHOTOCOPY OF THE BANK ACCOUNT DID NOT P ROPERLY SHOW THE DATES. PB 138 IS THE BANK ACCOUNT OF PUNJA B & ITA NO.239 & 296/DEL./2005 8 MAHARASHTRA CO-OPERATIVE BANK, BOMBAY WHICH SHOWS T HREE ENTRIES OF RS. 2,00,000/-, RS. 4,00,000/- AND RS. 1 ,00,000/- ALL ON 8/98 WITHOUT MENTIONING THE DAY. HOWEVER, PB 90 WHICH IS THE CONFIRMATION FROM M/S APS TRADE SERVICES P. LTD . AND PB 173, WHICH IS THE COPY OF THE DRAFT APPLICATION WIT H THE INDIAN OVERSEAS BANK CLEARLY SHOWS THAT THESE DRAFTS HAS B EEN CREDITED BY THE BANK ONLY ON 27.08.1998. THE DD DRA FTS MATCH WITH THE PUNJAB & MAHARASHTRA CO-OPERATIVE BANK. IN VIEW OF THESE FACTS IT IS APPARENT THAT THE AO COMMITTED AN ERROR IN COMING TO THE CONCLUSION THAT THE BANK DRAFTS WERE DEPOSITED ON A LATER DATE THAN WHAT HAS BEEN REFLECTED. THIS ERROR IT APPEARS HOWEVER HAS OCCURRED ONLY BECAUSE THE PHOTO COPY OF THE BANK ACCOUNT WAS NOT LEGIBLE. UNDER THE CIRCUMS TANCES THE AO COMMITTED AN ERROR IN NOT BELIEVING THE EXPLANAT ION REGARDING THE LOANS FROM M/S APS TRADE SERVICES P. LTD. AND SH. SANJAY CHANDAK. UNDER THE CIRCUMSTANCES THE TRE ATMENT OF THESE LOANS AS UNDISCLOSED INCOME FORMING A PART OF THE INVESTMENT IN THE FLAT IS DELETED. REGARDING THE CASH FLOW STATEMENT TO EXPLAIN THE IN VESTMENT TO THE TUNE OF RS. 2,72,000/- PB 91 TO 93 HAS BEEN EXA MINED. THE EXPLANATION OF THE APPELLANT CAN ONLY BE ACCEPTED I N PART, THOUGH THE APPELLANT HAS TIRED TO EXPLAIN THE ENTIR E INVESTMENT OF RS. 2,72,000/- OUT OF THE VARIOUS RECEIPTS. IT I S APPARENT FROM THE CASH FLOW THAT VARIOUS AMOUNTS PRIOR TO 17.08.1 998 HAD ALSO BEEN WITHDRAW E.G. A SUM OF RS. 1,00,000 ON 3 .08.1998 AND A SUM OF RS. 10,000 ON 23006.1998. IT IS ONLY O N 14.08.1998 THAT CASH HAS BEEN DEPOSITED OUT OF THE SALE OF PROPERTY. UNDER THE CIRCUMSTANCES THE APPELLANT CAN GET CREDIT ONLY TO THE EXTENT OF RS. 1,20,000/- AND THE BALANC E OF RS. 1,72,000 IS UPHELD AS UNDISCLOSED INCOME FOR THE BL OCK PERIOD. REGARDING THE INSTALLMENT PAID OF RS. 2,79,153/- TH E AO SHALL TREAT THE ABOVE SUM AS INCOME FROM UNDISCLOSED SOUR CES, ONLY AFTER EXAMINING THE RECORD, AS THE LD. AR FOR THE A PPELLANT HAS PLEADED THAT THESE INSTALLMENTS PAID FOR THE FLAT A RE REFLECTED IN THE ACCOUNTS MAINTAINED BY THE APPELLANT AND AO HAS ERRED BY NOT TAKING THE RECORDS INTO CONSIDERATION. 10.1 AFTER TAKING INTO ACCOUNT ALL THE RELEVANT MAT ERIAL ON RECORD, WE FIND THAT ASSESSEE HAS PAID AN AGGREGATE AMOUNT OF RS. 6 ,72,000/- AND HAS NOT PAID ITA NO.239 & 296/DEL./2005 9 THE INSTALLMENTS OF RS. 2,79,153/-. THIS HAS ALSO B EEN CONFIRMED BY THE INVESTIGATION WING AT MUMBAI, WHICH IS EVIDENT FROM DEPARTMENTAL PAPER BOOK. THUS THERE WAS NO BASIS WITH AO TO ALLEGE THA T ANY INSTALMENTS WERE PAID BY THE ASSESSEE. AS FAR AS THE SOURCE OF FUND IS CONCERNED, THERE ARE ADEQUATE EVIDENCES ON RECORD WHICH HAD BEEN CONSIDE RED BY CIT (A) WHICH ESTABLISHES THE SOURCE OF THE INVESTMENT. IN VIEW OF THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A) FOR GRAN TING THE RELIEF. WE ARE ALSO NOT CONVINCED WITH THE PART OF ADDITION SUSTAINED B Y CIT (A). WHEN AVAILABILITY OF CASH IS EXPLAINED BY ASSESSEE WITH THE HELP OF CASH FLOW STATEMENT. THERE IS NO JUSTIFICATION TO SUSTAIN PA RT OF THE ADDITION. THUS, WE HOLD THAT THERE WAS NO JUSTIFICATION FOR ANY ADDITI ON MADE IN THE HANDS OF THE ASSESSEE IN RESPECT OF FLAT AT MUMABI. HENCE GROUN D NO.1 OF THE DEPARTMENTAL APPEAL IS DISMISSED. GROUND NOS.1 & 2 OF THE ASSESSEES APPEAL ARE ALLOWED. 11. GROUND NO. 3 OF THE ASSESSEES APPEAL IS REGARDING THE UNDISCLOSED INVESTMENT MADE IN THE PURCHASE OF ONE CEILO CAR, I T WAS SUBMITTED BY LD. AR THAT PUNCHANAMA SHOWS THAT NO CAR WAS FOUND AT THE RESIDENCE OF THE ASSESSEE AND IT WAS SUBMITTED TO LD. A.O. THAT NO CEILO CAR WAS FOUND PARKED WITH THE ASSESSEE. THE CEILO CAR FOR WHICH ADDITION MADE WA S BELONGING TO ONE MR. GURINDER SINGH WHO GOT IT FINANCED FROM CITI BANK. LD. AR FOR THE ASSESSED ALSO DREW OUR ATTENTION TO THE AFFIDAVIT OF MR. GUR INDER SINGH AND BANK ITA NO.239 & 296/DEL./2005 10 STATEMENT OF MR. GURINDER SINGH FILED BEFORE LD. CI T(A) ACCORDING TO WHICH MR. GURINDER SINGH OWNED THE CAR AND THE BANK STATE MENT REVEALED THAT THE CAR WAS FINANCED FROM CITI BANK. LD. AR CONTENTED T HAT SINCE THESE EVIDENCES WERE NOT BEFORE LD. A.O., THE MATTER MAY BE SENT BACK TO THE FILE OF LD. A.O. FOR AFRESH DECISION. ON THE OTHER HAND LD. CIT (DR) COULD NOT CONTROVERT THE CONTENTION OF LD. AR THAT THE CAR WA S NOT FOUND PARKED AT THE RESIDENCE OF THE ASSESSEE. HE HOWEVER, FAIRLY AGREE D THAT THE ISSUE MAY BE CONSIDERED BY LD. A.O. AGAIN. 12. HAVING HEARD THE RIVAL SUBMISSIONS, WE FIND THA T PUNCHNAMA PLACED AT PAGE 1-20 OF THE ASSESSEES PAPER BOOK FILED BY THE ASSESSEE DOES NOT SHOW THAT ANY CEILO CAR WAS FOUND AT THE RESIDENCE OF TH E ASSESSEE. CONSISTENT CLAIM OF THE ASSESSEE WAS THAT THE SAID CAR DID NOT BELON G TO THE ASSESSEE BUT BELONGED TO ONE MR. GURINDER SINGH. HOWEVER, IN THE INTEREST OF JUSTICE THE ISSUE OF THE ADDITION OF RS. 5,25,060/- ON ACCOUNT OF CELIO CAR IS REMITTED BACK TO THE FILE OF ASSESSING OFFICER FOR DECISION AFRES H WITH THE DIRECTION THAT IT IS FOR AO TO PROVE THE CELIO CAR BELONGED TO THE ASSES SEE AND IN CASE SUCH EVIDENCE IS NOT BROUGHT ON RECORD, QUESTION OF ADDI TION IN THE HANDS OF THE ASSESSEE DOES NOT ARISE. HOWEVER, ASSESSEE WILL ALS O BE ENTITLED TO LEAD EVIDENCE IN SUPPORT OF HIS CASE AND WILL BE GIVEN O PPORTUNITY OF HEARING BY THE AO. THEREFORE, THIS GROUND OF APPEAL OF THE ASS ESSEE IS ALLOWED TO STATISTICAL PURPOSE. ITA NO.239 & 296/DEL./2005 11 13. GROUND NO 4 AND 5 IN ASSESSEES APPEAL WERE NO T PRESSED HENCE SAME ARE DISMISSED FOR THE WANT OF PROSECUTION. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. APPEAL NO 296/DEL/2005 15. GROUND NO. 1 HAS BEEN DEALT ALONG WITH GROUND N OS.1 & 2 OF ASSESSEES APPEAL ABOVE. THEREIN WE HAVE HELD THAT THERE IS N O INFIRMITY IN THE ORDER OF THE CIT(A). WE HAVE UPHELD THE ORDER OF CIT(A) ON T HIS ISSUE WHILE DEALING THE ASSESSEES APPEAL. THUS, THIS GROUND OF REVENU ES APPEAL STANDS DISMISSED. 16. GROUND NO. 2 OF THE REVENUES APPEAL IS REGARDING THE UNDISCLOSED INVESTMENT OF RS. 60 LACS IN PURCHASE OF LAND AT VI LLAGE BAJRI FROM SHRI SOM NATH AND HIS FOUR BROTHERS. 17. THE AO HAS IN HIS ORDER ON PAGE 4 AND 5 DEALT W ITH THE ADDITION OF RS. 60,00,000. THE AO IN HIS ORDER HAS REFERRED TO THE STATEMENT OF ONE SH. SOM NATH RECORDED BY THE DDIT ON 27.08.1989 AND THE AO HAS STATED IN THE ORDER THAT IN THIS STATEMENT SH. SOM NATH CONFIRMED THAT A SUM OF RS. 60,00,000/- HAD BEEN RECEIVED BY THE BROTHERS FROM SH. INDERJEE T SINGH. THE AO ACCORDINGLY HELD THAT THE APPELLANT MADE AN UNDISCL OSED INVESTMENT OF RS. 60,00,000/- IN THE PURCHASE OF 20 CANALS AND 12 MAR LAS. ITA NO.239 & 296/DEL./2005 12 18. LD. CIT (DR) PLACED RELIANCE ON THE ASSESSMENT ORDER AND CONTENDED THAT ASSESSEE MADE UNDISCLOSED INVESTMENT IN THE PU RCHASE OF LAND AT VILLAGE BAJARI FROM SH. SOM NATH AND HIS FOUR BROTHERS. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE READ OUT BEFORE US THE CONSISTENT REPLY FIELD BEFORE AO SUBMITTING THAT NO SUCH INVESTMENT WAS MADE BY THE ASSESSEE AND THERE IS NO EVIDENCE TO THAT EFFECT FOUND AS A RESULT OF SEARCH OR THEREAFTER. THEREFORE LD. AR SUBMITTED THAT ADDITION COULD NOT BE MADE IN LAW AND ON FACTS. 19. LD. CIT(A) HAS DELETED THE SAID ADDITION BY OBS ERVING AS UNDER:- TO DECIDE THE ABOVE ISSUE IT IS IMPORTANT TO STRAI GHT AWAY PERUSE THE STATEMENT OF MR. SOM NATH, A COPY OF WHI CH WAS MADE AVAILABLE BY THE AO ON THE LAST DATE OF HEARIN G. IN THIS STATEMENT SH. SOM NATH HAS STATED THAT HE ALONG WIT H HIS BROTHER RECEIVED RS. 12,00,000/- EACH CUMULATIVELY AMOUNTING TO RS. 60,00,000/- FROM THE SALE OF PROPERTY FROM O NE NAVEEN PROPERTY DEALER. ON PAGE 5 OF THE STATEMENT SH. SOM NATH WAS ASKED IF HE MADE ANY SALE OF LAND TO SH. SABARWAL. IN REPLY HE STATED THAT LAND WAS SOLD TO SH. SABARWAL AND HE AL SO STATED THAT HE NEVER MET SH. SABARWAL AND THAT THE ENTIRE WORK WAS DONE BY SH. NAVEEN KUMAR. IT WAS FURTHER STATED BY HIM THAT THE ENTIRE TRANSACTION WAS DONE THROUGH HIS BROTHER SH. VED PARKASH WHO KNEW ONE SH. NAVEEN KUMAR, PROPERTY DEA LER AND THAT HE DID NOT KNOW ANY SABARWAL AND IT WAS AN Y DURING THE CONVERSATION WITH SH. NAVEEN KUMAR THAT HE CAME TO KNOW THAT THIS DEAL HAS BEEN DONE WITH SOME ONE BY THE N AME OF SABARWAL. A CAREFUL PERUSAL OF THE ABOVE STATEMENT ON WHICH T HE ENTIRE CASE OF THE AO RESTS SHOWS THAT NO WHERE DOES SH. S OM NATH REFER TO THE APPELLANT SH. INDERJEET. IN FACT, SH. SOM NATH DID NOT EVER KNOW SH. INDERJEET, THE APPELLANT NOR DID HE EVER MET HIM. HE ONLY STATED THAT IT CAME TO HIS KNOWLEDGE T HROUGH A CONVERSATION THAT THE LAND WAS BEING PURCHASED BY O NE SH. SABARWAL. IT IS ALSO A FACT THAT THE APPELLANT WAS NEVER CONFRONTED WITH THE STATEMENT OF SH. SOM NATH AND T HEREFORE, ITA NO.239 & 296/DEL./2005 13 THERE WAS NO EVIDENCE WITH THE AO TO HOLD THAT THE TRANSACTION WAS DONE BY THE APPELLANT AND THAT THE APPELLANT HA D MADE A UNDISCLOSED INVESTMENT OF RS. 60,00,000/-. IT IS AL SO AN UNDISPUTED FACT THAT NO EVIDENCE OF ANY NATURE WAS FOUND DURING THE SEARCH IN THE CASE OF THE APPELLANT WHIC H COULD CORROBORATE THE STATEMENT OF SH. SOM NATH OR WHICH COULD EVEN INDICATE THE INVESTMENT OF THE APPELLANT IN TH E AFORESAID PROPERTY. THERE IS NO EVIDENCE OF ANY NATURE TO SUP PORT THE CONCLUSION DRAWN BY THE AO. IN FACT THIS RELIANCE O N THE STATEMENT OF SH. SOM NATH IS TOTALLY FRUITLESS AND BASELESS. IT WAS THE DUTY OF THE AO TO BRING ON RECORD SUCH EVID ENCE WHICH COULD ESTABLISH HIS CONCLUSION. THERE IS NO ORAL EV IDENCE OF THE APPELLANT WHICH CAN EVEN INDICATE THAT HE WAS INVOL VED IN THE TRANSACTION. THERE IS NO DOCUMENTARY EVIDENCE AS A RESULT OF THE SEARCH WHICH CAN EVEN INDICATE THE ABOVE TRANSA CTION. IT IS TO BE CARE FULLY NOTED THAT THIS IS A CASE WHERE SE ARCH HAS BEEN CARRIED OUT AND THEREFORE, ONUS SQUARELY RESTS ON A O TO BRING ON RECORD GOOD, SUBSTANTIVE, SOLID EVIDENCE TO BACK HIS CONCLUSION. WHAT WE HAVE ON RECORD, ON OTHER HAD IS , FULL AND COMPLETE RELIANCE ON THIRD PARTY STATEMENT WITHOUT ANY BASIS STATEMENTS WHICH HAVE EVEN NOT UNDERGONE THE BASIC TREATMENT REQUIRED UNDER THE LAW OF CONFRONTING THE ACCUSED O F THE ALLEGATIONS BEING LEVELED BY HIM BY THE WITNESSES O F THE DEPARTMENT. TREATMENT OF TRANSACTIONS AS UNDISCLOSE D INCOME OF THE APPELLANT BY SUCH METHODS CANNOT BE APPROVED . UNDER THE CIRCUMSTANCES, THE TREATMENT OF RS. 60,00,0000/ - AS THE UNDISCLOSED INCOME OF THE APPELLANT CANNOT BE ACCEP TED AND THE SAME IS DELETED. 20. IT IS SEEN THAT LD. CIT(DR) COULD NOT POINT OUT BEFORE US ANY EVIDENCE TO SUGGEST THAT ANY LAND, INVOLVING RS. 60,00,000/ - WAS PURCHASED BY THE ASSESSEE, FROM MR. SOM NATH AND HIS BROTHERS. WE H AVE TAKEN OURSELVES THROUGH THE COPY OF THE SALE DEED OF LAND SOLD BY M R. SOM NATH AND HIS BROTHER TO SHANKAR FORGE PVT LTD THROUGH SHRI MR. A NIL JINDAL WHICH IS PLACED AT PAGE 245-252 OF THE DEPARTMENTAL PB. THIS DEED N O NOWHERE REFER THE ITA NO.239 & 296/DEL./2005 14 NAME OF THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE STATEMENT OF SH. SOM NATH, WHICH IS AT PAGE 293-298 OF THE DEPARTMENTAL PB WHICH ALSO DOES NOT REFER THE NAME OF THE ASSESSEE. THE STATEMENT OF SOMNATH ONLY STATES ABOUT SOME SABERWAL. NOTHING ON RECORD SHOWS THAT THE ST ATEMENT REFER TO ASSESSEE THEREFORE WE DO NOT FIND ANY JUSTIFICATION FOR MAKI NG ADDITION OF RS. 60,00,000/- IN THE HANDS OF THE ASSESSEE AND WE DO NOT FIND ANY JUSTIFICATION TO DISTURB THE FINDING OF CIT(A) IN THIS REGARD. MOREO VER, NOTHING HAS BEEN BROUGHT ON RECORD BY LD. CIT(DR) WHICH CAN SHOW TH AT ANY EVIDENCE SUGGESTING ANY INVESTMENT IN SUCH ALLEGED LAND WAS FOUND DURING THE COURSE OF SEARCH AS TO JUSTIFY THE ADDITION. THEREFORE, SU CH ADDITION COULD NOT BE MADE IN VIEW OF THE PROVISIONS OF LAW AND IN VIEW OF THE JUDICIAL DECISIONS RELIED UPON THE ASSESSEE. HENCE GROUND NO. 2 OF THE REVENUES APPEAL IS DISMISSED. 21. REGARDING GROUND NO.3 OF THE REVENUES APPEAL I S REGARDING THE ADDITION OF RS. 15 LACS ON ACCOUNT OF UNDISCLOSED I NVESTMENT IN PLOT NO. 108 SECTOR 14, FARIDABAD, LD. CIT(DR) APART FROM RELYIN G UPON THE ORDER OF ASSESSMENT, SUBMITTED THAT MR. NARINDER MALHOTRA WH O WAS AN ASSOCIATE OF THE ASSESSEE STATED ABOUT THIS INVESTMENT AT THE TI ME OF SEARCH AND THEREFORE AO WAS JUSTIFIED IN MAKING THE ADDITION OF RS. 15,0 0,000/- IN RESPECT OF SUCH UNDISCLOSED INVESTMENT IN PLOT NO. 708, SECTOR 14 , FARIDABAD. ON THE OTHER HAND LD. AR FOR THE ASSESSEE SUBMITTED THAT NO SUCH PLOT WAS EVER PURCHASED ITA NO.239 & 296/DEL./2005 15 BY THE ASSESSEE NOR ANY EVIDENCE WAS FOUND AS A RE SULT OF SEARCH OR THEREAFTER TO SUPPORT THIS ALLEGATION. IT WAS FURTHER CONTENDE D BY LD AR THAT THE SUBMISSIONS WERE MADE BEFORE LD. A.O. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THAT THE STATEMENT OF MR. NARINDER MALH OTRA WAS VERY VAGUE .THIS STATEMENT WAS NEVER CONFRONTED TO THE ASSESS EE AND STATEMENT OF MR. MALHOTRA DOES NOT REFER EVEN THIS PLOT NO. IT WAS S UBMITTED THAT NOTHING WAS FOUND DURING THE COURSE OF SEARCH WHICH COULD HAVE EVEN REMOTELY SUGGEST THAT ANY UNDISCLOSED INVESTMENT WAS MADE IN SAID PL OT NO. 708, SECTOR-14, FARIDABAD. 22. LD. CIT(A) HAS HELD AS UNDER:- THE ADDITION OF RS. 15,00,000/- IN PLOT NO. 708, SECTOR 14, FARIDABAD HAS BEEN DEALT BY THE AO ON PAGE 5 OF THE ASSESSMENT ORDER WHEREIN THE AO REFERS TO STATEMENT OF SH. NAR NDER MALHOTRA RECORDED ON 12.03.1999 WHEREIN THE AO STAT ES THAT SH. NARNDER MALHOTRA STATED THAT PLOT NO. 708, SECTOR - 14, FARIDABAD WAS PURCHASED BY SH. INDERJEET SINGH ALONG WITH SH. NARANG AND THAT PAPERS SEIZED FROM ONE SH. SUBHASH VERMA ALSO MENTIONS THIS PLOT. THE AO THEREAFTER STATES THAT ENQUIRIES REVEAL THAT THIS PLOT WAS IN THE NAME OF SH. AJAY KUMAR WHO PURCHASE D THIS PROPERTY FROM ONE SH. RAM SHARAN KAPOOR. . THE POWER OF ATTORNEY WHICH HAS BEEN MENTIONED BY THE AO HAS BEEN CAREFULLY PERUSED. THIS DOCUMENT SHOWS THA T THE TRANSACTION OF THE ABOVE PROPERTY PLOT NO. 708 TOOK PLACE BETWEEN SH. RAM SHARAN KAPOOR AND SH. AJAY KUMAR ON 15.09.1998. THIS POA DOES NOT AT ALL REFER TO THE A PPELLANT. NOW COMING TO THE STATEMENT OF SH. NARINDER MALHOTRA, A COPY OF WHICH HAS BEEN FURNISHED BY THE AO, SHOWS THAT SH. NARINDER MALHOTRA MENTIONED THE FOLLOWING PROPERTIESFLAT AT MUMBAI, 700 SQ. YARD PLOT NO DABUA ROAD, 1-J/9, NIT AND ON POINT 4 MENTIONS ONE PROPERTY PROBABLY 108, SECTOR 14, FARI DABAD IN ITA NO.239 & 296/DEL./2005 16 PARTNERSHIP WITH SH. NARANG WHEREIN IT HAS BEEN STA TED THAT THE INVESTMENT MAY BE ABOUT RS. 15,00,000/-. THUS, WHAT THE AO HAS RELIED UPON IS STATEMENT OF ONE SH. NARNDER KUM AR WHEREIN HE HAS STATED THAT THE APPELLANT MAY HAVE INVESTED A SUM OF RS. 15,00,000/- IN A PROPERTY PROBABLY AT THE ADDRESS O F 108, SECTOR - 14, FARIDABAD. IT IS DIFFICULT TO UNDERSTAND HOW TH E AO COULD PLACE COMPLETE RELIANCE ON STATEMENT MADE BY ONE SH . NARINDER KUMAR MALHOTRA TO TREAT THE SUM OF RS. 15,00,000/- AS UNDISCLOSED INCOME OF THE APPELLANT. FIRST AND FORE MOST THE STATEMENT OF SH. NARINDER KUMAR MALHOTRA WAS NEVER CONFRONTED TO THE APPELLANT SECONDLY THERE IS NO EV IDENCE WHATSOEVER FOUND DURING THE SEARCH IN THE CASE OF T HE APPELLANT WHICH COULD EVEN INDICATE INVESTMENT IN A PROPERTY EITHER 108 OR 708, SECTOR 14, FARIDABAD AND THAT UNDISCLOSED INVE STMENT OF RS. 15,00,000/- HAD BEEN MADE BY THE APPELLANT. THERE I S ABSOLUTELY NO EVIDENCE TO SUPPORT THE CONCLUSION DRAWN BY THE AO. IT WAS THE DUTY OF THE AO TO BRING ON RECORD SUCH EVIDENCE S WHICH COULD ESTABLISH HIS CONCLUSION. THERE IS NOT ORAL E VIDENCE OF THE APPELLANT WHICH CAN EVEN INDICATE THAT HE WAS INVOL VED IN THE TRANSACTION. THERE IS NO DOCUMENTARY EVIDENCE AS A RESULT OF THE SEARCH WHICH CAN EVEN INDICATE THE ABOVE TRANSACTIO N. IT IS TO BE CAREFULLY NOTED THAT THIS IS A CASE WHERE SEARCH HA S BEEN CARRIED OUT AND THEREFORE, ONUS SQUARELY RESTS ON AO TO BRI NG ON RECORD GOOD, SUBSTANTIVE SOLD EVIDENCE TO BACK HIS CONCLUS ION. WHAT WE HAVE ON RECORD, ON OTHER HAND IS, FULL AND COMPLETE RELIANCE ON THIRD PARTY STATEMENT WITHOUT ANY BASISSTATEMENTS WHICH HAVE EVEN NOT UNDERGONE THE BASIC TREATMENT REQUIRED UND ER THE LAW OF CONFRONTING THE ACCUSED OF THE ALLEGATIONS BEING LE VELED BY HIM BY THE WITNESSES OF THE DEPARTMENT. TREATMENT OF TR ANSACTIONS AS UNDISCLOSED INCOME OF THE APPELLANT BY SUCH METHODS CANNOT BE APPROVED. UNDER THE CIRCUMSTANCES THE TREATMENT OF RS. 15,00,000/- AS UNDISCLOSED INCOME CANNOT BE ACCEPTE D AND THE SAME IS THEREFORE, DELETED. 23. LD. CIT(DR) COULD NOT POINT OUT ANY EVIDENCE FO UND DURING THE COURSE OF SEARCH OR COLLECTED IN POST SEARCH INQUIRY SUGGE STING THE ALLEGED PURCHASE OF PLOT NO. 708, SECTOR--14, FARIDABAD BY THE ASSES SEE. WE HAVE GONE THROUGH THE STATEMENT OF MR. NARINDER MALHOTRA AT PAGE 200- 210 OF THE DEPARTMENTAL ITA NO.239 & 296/DEL./2005 17 PAPER BOOK IN WHICH MR. MALHOTRA HAS MENTIONED THAT INVESTMENT MAY BE ABOUT RS. 15,00,000/-. THERE IS NO OTHER EVIDENCE E XCEPT SUCH VAGUE REFERENCE OF INVESTMENT ALLEGEDLY MADE BY THE ASSESSEE. WE HA VE ALSO GONE THROUGH PAGE 291-292 OF DEPARTMENTAL PB, WHICH IS GENERAL POWER OF ATTORNEY FROM SH. RAM SHARAN KAPOOR TO SH. AJAY KUMAR WHICH DOES NOT REFER THE NAME OF THE ASSESSEE AT ALL AND WHICH HAS NOT EVEN BEEN SEI ZED DURING THE COURSE OF SEARCH AS IS EVIDENT FROM THE FACT THAT IT WAS A CO PY TAKEN OUT FROM THE OFFICE OF REGISTRATION AUTHORITY MUCH AFTER THE DATE OF S EARCH AS IS EVIDENT FROM THE STAMP EMBOSSED. WE FAIL TO UNDERSTAND AS TO HOW IS CAN BE ALLEGED ON THE BASIS OF THIS DOCUMENT THAT ASSESSEE PURCHASED THE SAID PLOT AND THAT TOO FOR RS. 15,00,000/-. REFERENCE TO PAGE NO. 253 OF DEPAR TMENTAL PB IS ALSO OF NO CONSEQUENCE AS IT IS A PAPER SEIZED FROM ANOTHER AS SESSEE MR. SUBHASH VERMA AND THERE IS NO REFERENCE OF ASSESSEES NAME AND AD MITTEDLY THIS DOCUMENT WAS NEVER CONFRONTED TO THE ASSESSEE. THEREFORE, TH ERE IS NO EVIDENCE FOUND AS A RESULT OF SEARCH OR EVEN THEREAFTER TO ESTABLISH THAT ANY PLOT BEARING NO. 708, SECTOR 14, FARIDABAD WAS PURCHASED BY THE ASSESSEE OR ANY UNDISCLOSED INVESTMENT, MUCH OF RS. 15,00,000/- WAS MADE BY THE ASSESSEE IN THE SAID PLOT. THEREFORE, WE DO NOT FIND ANY JUSTIFICATION T O DISTURB THE DECISION OF LD. CIT (A) AND WE UPHOLD THE SAME. THUS, GROUND OF APP EAL OF THE REVENUE IS DISMISSED. ITA NO.239 & 296/DEL./2005 18 24. GROUND NO. 4 OF THE REVENUE APPEAL, WHICH IS R EGARDING THE ADDITION OF RS. 5 LACS MADE ON ACCOUNT OF UNDISCLOSED INVESTMEN T IN PURCHASE OF LAND IN DABUA COLONY, FARIDABAD, LD. CIT (DR) RELIED UPON T HE ASSESSMENT ORDER AND RELIED UPON PAGE 280-285 IN THE DEPARTMENTAL PB AND IT WAS PLEADED BY LD. CIT (DR) THAT THE ADDITION WAS WRONGLY DELETED BY C IT (A). ON THE OTHER HAND LD. AR FOR THE ASSESSEE RELIED UPON THE ORDER OF CIT (A) AND IT WAS SUBMITTED THAT DOCUMENTS RELIED UPON BY CIT(DR) WER E NOT FOUND DURING THE COURSE OF SEARCH AND IN ANY CASE THESE DOCUMENTS DO NOT REFER THE SAID INVESTMENT. 25. LD. CIT(A) HAS HELD AS UNDER:- THE AO HAS ON PAGE 5 OF THE ORDER STATED THAT THE APPELLANT PURCHASED A PROPERTY IN VILLAGE DABUA FROM SH. SHIV NATH AND THEREFORE, HE TREATED A SUM OF RS. 5,00,000/- AS UN DISCLOSED INCOME OF THE APPELLANT. THOUGH THE ASSESSMENT ORDER IS COMPLETELY SILENT ON THE EVIDENCE RELIED UPON BY THE AO, THE AO, THE AO VIDE LETTER DATED 18.03.2005 REFERS TO SOME SALES DEED AND PATT A- A SALE DEED AND PATTA NOT FOUND AND SEIZED DURING THE SEAR CH AND SEIZURE OPERATION. BE THAT AS IT MAY IT WILL BE REL EVANT TO PERUSE THE SALE DEED AND PATTA TO WHICH THE ATTENTION OF T HE UNDERSIGNED HAS BEEN DRAWN. THESE DOCUMENTS SHOW TH AT IT WAS SH. JOGINDER KAUR WIFE OF SH. INDERJEET ENTERED INTO A TRANSACTION REGARDING THIS PROPERTY. NO WHERE DOES IT MENTIONS THE NAME OF THE APPELLANT. WHAT THE AO WANTS TO STA TE BY RELYING ON THIS DOCUMENT IS INDEED DIFFICULT TO UND ERSTAND. THIS DOCUMENT DOES NOT AT ALL REFER TO THE APPELLANT BUT REFERS TO SMT. JOGINDER KAUR, WIFE OF THE APPELLANT, AND THIS DOCUMENT DOEST NO AT ALL EVEN REMOTELY INDICATE THE UNDISCLO SED INVESTMENT TO THE EXTENT OF RS. 5,00,000/- EITHER N OT BY THE APPELLANT OR BY SMT. JOGINDER KAUR, WIFE OF THE SH. INDERJEET SINGH, THE APPELLANT. UNDER THE CIRCUMSTANCES THE T REATMENT OF ITA NO.239 & 296/DEL./2005 19 RS. 5,00,000/- AS UNDISCLOSED INCOME OF THE APPELLA NT CANNOT BE ACCEPTED AND THE SAME IS DELETED. 26. WE FIND THAT CIT(A) HAS GIVEN A CATEGORICAL FIN DING OF FACT WHICH COULD NOT BE DISPLACED BY LD. CIT(DR) WITH ANY EVIDENCE T HAT NO DOCUMENT WAS FOUND AND SEIZED WHICH COULD HAVE SUPPORTED THE ADD ITION IN QUESTION. IN FACT THERE IS NO ADVERSE EVIDENCE TO SUPPORT THE PRESENT ADDITION. WE HAVE ALSO SEEN DOCUMENT AT PAGE 280-285 OF THE DEPARTMENTAL P B WHICH WERE NOT SEIZED DURING THE COURSE OF SEARCH AS IS EVIDENT FROM THE DATE 21.07.1999 EMBOSSED AT THE FOOT OF EACH PAGE, WHEREAS THE SEAR CH TOOK PLACE ON 12.03.1999. MOREOVER, THESE DOCUMENTS RELATE TO SOM E PATTA OF RS. 10,000/- ONLY, AND ACCORDING TO THESE DOCUMENTS THE ASSESSEE WAS APPOINTED POWER OF ATTORNEY HOLDER. THERE IS THE ABSENCE OF ANY EVIDEN CE DISCOVERED DURING THE SEARCH OR BROUGHT ON RECORD THEREAFTER ALSO. THERE WAS NO JUSTIFICATION FOR ANY ADDITION OF RS. 5,00,000/- MADE ON ACCOUNT OF UNDI SCLOSED INVESTMENT IN PURCHASE OF LAND IN DABUA VILLAGE, AND CIT(A) WAS T HUS COMPLETELY JUSTIFIED IN DELETING THE SAID ADDITION WHICH WE UPHOLD. MORE OVER, THE ADDITION IN QUESTION COULD NOT BE MADE IN LAW ALSO U/S 158BC R. W.S. 158BB AS NOTHING WAS FOUND DURING THE COURSE OF SEARCH RELATING TO T HE SAID ADDITION AND THEREFORE IN VIEW OF THE ABOVE MENTIONED JUDICIAL D ECISIONS, ADDITION WAS NOT PERMISSIBLE IN LAW ALSO AND FOR THAT REASON ALSO, W E DELETE THE ADDITION AND UPHOLD THE ORDER OF CIT (A) AND DISMISS THIS GROUND OF REVENUES APPEAL. ITA NO.239 & 296/DEL./2005 20 27. GROUND NO.5 OF THE REVENUES APPEAL IS IN RES PECT OF ADDITION OF RS.6 LACS MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN 2 .5 ACRES OF LAND AT VILLAGE BHARKRI, LD. CIT(DR) REFERRED PAGES 243-244 WHICH IS THE STATEMENT OF SMT. INDER KAUR AND PAGE 303-306 OF THE DEPARTMENTAL PB WHICH THE STATEMENT OF MR. RAMPAL. LD. CIT(DR) ALSO REFERRED PAGE 254-276 OF THE DEPARTMENTAL PAPER BOOK AND RELIED UPON THE ORDER OF ASSESSMENT. ON THE OTHER HAND LD. AR FOR THE ASSESSEE RELIED UPON THE ORDER OF CIT(A) AND SUBMITTED THAT THERE IS NO EVIDENCE AGAINST THE ASSESSEE AND THAT THE DO CUMENTS NOW REFERRED BY CIT(DR) WERE NEVER CONFRONTED TO THE ASSESSEE AND I N ANY CASE DO NOT REFER THE NAME OF THE ASSESSEE. IT WAS FURTHER SUBMITTED BY HIM THAT PAGE 254-276 OF DEPT PB WERE NOT EVEN FOUND DURING THE COURSE OF SEARCH. 28. LD. CIT(A) HAS HELD AS UNDER:- THE AO IN THE ORDER HAS STATED THAT THE ASSESSEE E NTERED INTO AN AGREEMENT WITH SH. RAMPAL AND SH. LAKHICHAND AND LATER GOT IT REGISTERED DIRECTLY WITH APOLLO CO-OPERATIVE GROUP HOUSING SOCIETY. AND AFTER TAKING INTO ACCOUNT THE INITIAL INVESTMENT AND COMMISSION THE INCOME FROM UNDISCLOS ED SOURCES COMES TO RS. 6,00,000/-.. THE AO HAS COMPLETELY MISGUIDED HIMSELF IN TREATING A SUM OF RS. 6,00,000/- AS THE UNDISCLOSED INCOME OF THE APP ELLANT. A PERUSAL OF THE STATEMENT OF SH. RAMPAL AND SH. LAKH ICHAND IS REQUIRED. SH. RAMPAL IN HIS STATEMENT ON PAGE 3 HAS STATED THAT ONE SH. LAKHI CHAND HAD SOLD THE PROPERTY TO M/S AP OLLO CO- OPERATIVE GROUP HOUSING SOCIETY BUT BEFORE THIS DEA L THE TRANSACTION HAD BEEN DONE WITH ONE SH. INDERJEET. T HIS IS THE ONLY REFERENCE MADE BY SH. RAMPAL TO THE TRANSACTIO N. SH. LAKHI CHAND IN HIS STATEMENT STATED THAT HIS LAND W AS SOLD TO ITA NO.239 & 296/DEL./2005 21 M/S APOLLO CO-OPERATIVE GROUP HOUSING SOCIETY THROU GH SH. BAHADUR SINGH SABARWAL. THE STATEMENT OF SH. LAKHI CHAND DOES NOT REFER TO THE APPELLANT AT ALL BUT REFERS T O SH. BAHADUR SINGH SABARWAL. UNDER THE CIRCUMSTANCES THE RELIANC E OF THE STATEMENTS OF SH. RAMPAL AND SH. LAKHI CHAND DOES N OT INDICATE ANYTHING BUT FOR THE FACT THAT SOME TRANSA CTION TOOK PLACE THROUGH THE APPELLANT AND ANOTHER TRANSACTION TOOK PLACE THROUGH THE APPELLANT AND ANOTHER TRANSACTION TOOK PLACE THROUGH SH. BAHADUR SINGH SABARWAL. BUT IT IS DIFFI CULT TO UNDERSTAND HOW THESE TWO STATEMENTS CAN BE CONSTRUE D TO EVEN REMOTELY CONCLUDE THAT THE APPELLANT HAD MADE AN UN DISCLOSED INVESTMENT OF RS. 6,00,000/-. FIRST AND FOREMOST, T HESE STATEMENTS WERE NEVER CONFRONTED TO THE APPELLANT W HICH CAN CHOW IS INVOLVEMENT IN THE TRANSACTION. NO EVIDENCE HAS BEEN FOUND DURING THE SEARCH AND SEIZURE OPERATION IN TH E CASE OF THE APPELLANT WHICH CAN CORROBORATE THE AFORESAID TRANS ACTION OR WHICH CAN EVEN REMOTELY INDICATE THE INVOLVEMENT OF THE APPELLANT IN THE AFORESAID TRANSACTION LEAST THE IN COME FROM UNDISCLOSED SOURCES AMOUNTING TO RS. 6,00,000/-. TH E STAND OF THE AO CANNOT BE UPHELD AND THE UNDISCLOSED INCOME TO THE EXTENT OF RS. 6,00,000/- IS ACCORDINGLY DELETED. 29. HAVING GONE THROUGH THE FACTUAL FINDINGS RECORD ED BY CIT(A), WE FIND THAT LD. CIT(DR) COULD NOT DISPLACE THESE FACTUAL F INDINGS. WE FAIL TO UNDERSTAND THE RELEVANCE OF THE STATEMENT OF MR. RA MPAL AND SMT. INDER KAUR REFERRED BY LD. CIT (DR) AS THERE IS NO CONNECTION AT ALL OF SUCH STATEMENTS WITH THE IMPUGNED ADDITION. PAGE 254-276 OF THE DEP ARTMENTAL PAPER BOOK ARE SOME RECEIPTS WHICH DO NOT REFER THE NAME OF THE AS SESSEE AND HAVE GOT NO RELEVANCE WHATSOEVER WITH THE IMPUGNED ADDITION. TH ESE DOCUMENTS WERE NOT FOUND DURING THE COURSE OF SEARCH AND WERE NOT REFE RRED BY LD. A.O. IN THE ASSESSMENT ORDER. LD. CIT(DR) COULD NOT CONTROVERT THE CONTENTION OF LD. AR FOR THE ASSESSEE THAT THESE DOCUMENTS WERE NEVER CO NFRONTED TO THE ASSESSEE. ITA NO.239 & 296/DEL./2005 22 NO OTHER ADVERSE EVIDENCE COULD BE POINTED OUT IN S UPPORT OF THE ADDITION. THEREFORE, WE DO NOT FIND ANY JUSTIFICATION FOR THE SAID ADDITION OF RS. 6,00,000/- MADE BY AO ON ACCOUNT OF SOME UNDISCLOSE D INVESTMENT IN LAND AT VILLAGE, BHAKRI AND THEREFORE, WE UPHOLD THE ORDER OF CIT(A) WHO HAS DELETED THE SAID ADDITION. EVEN IN LAW, NOTHING HAVING BEEN FOUND DURING THE COURSE OF SEARCH, ADDITION COULD NOT HAVE BEEN MADE U/S 15 8BC R.W.S. 158BB FOR THE ABOVE MENTIONED STATED REASONS. HENCE, GROUND N. 5 OF THE APPEAL IS ALSO DISMISSED. 30. GROUND NO. 6 OF THE REVENUES APPEAL IS REGARD ING ADDITION OF RS. 3 LACS ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SHOP N O. 2 AT HOUSE NO. 2/IF/34 NIT FARIDABAD, LD. CIT(DR) RELIED UPON ASSESSMENT ORDER AND RELIED UPON FURTHER PAGE 264-267, 257-260, 268-276 OF THE DEPAR TMENTAL PAPER BOOK. IT WAS ARGUED BY LD. CIT(DR) THAT THE ADDITION WAS COR RECTLY MADE BY AO AND WAS WRONGLY DELETED BY CIT(A). ON THE OTHER HAND LD . AR FOR THE ASSESSEE RELIED UPON THE ORDER OF CIT(A) AND HAS SUBMITTED T HAT THE DOCUMENTS RELIED UPON BY CIT(DR) DO NOT REFER THE NAME OF THE ASSESS EE NOR WERE FOUND DURING THE COURSE OF SEARCH AND THEREFORE THE ADDITION WAS RIGHTLY DELETED BY CIT(A). THERE WAS NO ADVERSE EVIDENCE TO SUPPORT THE PRESEN T ADDITION. 31. LD. CITA) HAS HELD AS UNDER:- THE AO HAS REFERRED TO A POWER OF ATTORNEY IN RES PECT OF ABOVE PROPERTY, 1-F/ 34, NIT AND HAS STATED IN THE ORDER THAT TWO DIFFERENCE RECEIPTS OF RS. 96,000/- AND RS. 3,0 0,000/- HAVE BEEN ISSUED BY SH. SANJAY BHATIA ON 30.07.1998 AND THEREFORE, ITA NO.239 & 296/DEL./2005 23 THE ACTUAL CONSIDERATION WAS TO THE TUNE OF RS. 3,0 0,000/- AND WHICH IS TREATED AS UNDISCLOSED INCOME OF THE ASSES SEE. THE AO HAS STATED THAT THE DOCUMENTS ON WHICH RELIANCE HAS BEEN PLACED WAS FOUND FROM THE RESIDENCE OF SMT. INDER K AUR, MOTHER IN LAW OF SH. INDERJEET SINGH. THE STATEMENT OF SMT. INDER KAUR HAS BEEN MADE AVAI LABLE BY THE AO. HER STATEMENT WAS RECORDED ON 12.03.1999. I N THE STATEMENT SHE WAS ASKED WHAT WERE THE DOCUMENTS WHI CH HAVE BEEN KEPT WITH HER BY SH. INDERJEET AND HIS WIFE SM T. JOGINDER KAUR, THE DAUGHTER OF SMT. INDER KAUR. IN THE STATE MENT SHE SAYS THAT THE FOLLOWING DOCUMENTS HAVE BEEN KEPT WI TH ME BY SMT. JOGINDER KAUR, WIFE OF SH. INDERJEET SINGH AND SHE REFERS TO THE CASH RECEIPTS ISSUED BY SH. SANJAY BHATIA AM OUNTING TO RS. 96,000/- AND RS. 3,00,000/-. A PERUSAL OF THE A BOVE STATEMENT SHOWS THAT WHATEVER ACTION WHICH COULD BE TAKEN, IF AT ALL, WAS NOT IN THE CASE OF SH. INDERJEET SINGH BUT IN THE CASE OF HIS WIFE SMT. JOGINDER KAUR IN WHOSE SEPARATE BL OCK ASSESSMENT HAD BEEN FRAMED. IT HAS BEEN ARGUED BY T HE LD. AR THAT THERE IS NO CASE OF THE AO FOR MAKING ANY ADDI TION TO THE UNDISCLOSED INCOME ON THE BASIS OF SUCH DOCUMENTS A S IF HAS BEEN CATEGORICALLY STATED BY SMT. INDER KAUR, APPEL LANTS MOTHER-IN-LAW THAT THESE DOCUMENTS WERE KEPT WITH H E BY SMT. JOGINDER KAUR, HER DAUGHTER. IT HAS ALSO BEEN ARGUE D THAT THIS STATEMENT WAS NEVER CONFRONTED TO THE APPELLANT AND THEREFORE, THERE WAS NO QUESTION OF USING THIS STATEMENT OF TH E APPELLANTS MOTHER IN LAW AGAINST HIM MORE SO WHEN THE STATEMEN T CLEARLY SHOWS THAT THE DOCUMENTS WHICH HAVE BEEN REFERRED T O WERE KEPT BY SMT. INDER KAUR BY HER DAUGHTER SMT. JOGIND ER KAUR. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE IT IS HELD THAT THE AO ERRED IN TREATING A SUM OF RS. 3,0 0,000/- AS THE UNDISCLOSED INCOME IN THE HANDS OF THE APPELLAN T AND THE SAME IS ACCORDINGLY DELETED. 32. LD. CIT(DR) COULD NOT CONTROVERT THE FACTUAL FI NDINGS RECORDED BY CIT(A) AND ALSO THIS CONTENTION OF THE ASSESSEE THA T THE DOCUMENTS REFERRED WERE NOT FOUND DURING THE COURSE OF SEARCH. WE HAVE GONE THROUGH PAGE 264- 267 OF THE DEPARTMENTAL PAPER BOOK WHICH IS THE SAL E DEED FROM ONE MR. ITA NO.239 & 296/DEL./2005 24 SANJAY BHATIA IN FAVOUR OF MR. BHAGWAN DASS WHICH D OES NOT REFER THE NAME OF THE ASSESSEE. SIMILARLY PAGE 257-260, 268-276 OF DEPARTMENTAL PB ALSO DO NOT REFER TO THE ASSESSEE THEN HOW THE ADDITION CO ULD BE MADE BASED UPON THESE DOCUMENTS. THESE DOCUMENTS WERE NOT FOUND DUR ING THE COURSE OF SEARCH AND DO NOT REFER THE NAME OF THE ASSESSEE NO R IS THERE IS ANY REFERENCE TO ANY UNDISCLOSED INVESTMENT MADE BY THE ASSESSEE. THEREFORE, IN ABSENCE OF ANY EVIDENCE SUPPORTING THE ADDITION, WE DO NOT HAV E ANY HESITATION IN UPHOLDING THE ORDER OF CIT(A) WHO HAS DELETED THE I MPUGNED ADDITION OF RS.3,00,000/-. THEREFORE GROUND NO. 6 OF THE APPE AL IS ALSO DISMISSED. 33. GROUND NO. 7 OF THE REVENUES APPEAL IS IN RESPECT OF UNDISCLOSED INVESTMENT OF RS. 1,00,000/- IN A PLOT OF 100 SQ. Y ARDS AT DABUA PALI ROAD, LD. CIT(DR) RELIED UPON THE ORDER OF AO. ON THE OTH ER HAND LD. AR FOR THE ASSESSEE RELIED UPON THE ORDER OF CIT(A). 34. CIT(A) HAS HELD AS UNDER:- THE AO IN THE ORDER HAS STATED THAT THE SAME PURCH ASED A PLOT FROM SMT. SHASHI KALAN AND SH. RAJIV WALIA AND THAT ESTIMATED MARKET VALUE OF THIS LAND WAS RS. 1,000/- PER SQ. YARD AND THEREFORE, THE UNEXPLAINED INVESTMENT AND UNDISCLOSED INCOME WAS RS. 1,00,000/-. RELIANCE HAS AGAIN BEEN PLACED ON THE STATEMENT OF SMT. INDER KAUR. THIS ISSUE HAS BEEN EXAMINED. THE STATEMENT OF SMT. INDER KAUR DOES REFER TO THE POWER OF ATTORNEY OF SMT. SH ASHI KALAN W/O. SH. YOG RAJ BUT THERE IS ABSOLUTELY NO EVIDENC E TO SUGGEST THAT THIS PROPERTY HAD ANYTHING TO DO WITH THE APPELLANT, OR THE APPELLANT HAD MADE AN UNDISCLOSED INVESTMENT ITA NO.239 & 296/DEL./2005 25 OF RS. 1,00,000/- OR THAT THE MARKET VALUE OF THIS PROPERTY WAS RS. 1,00,000/-. THERE IS NO EVIDENCE WHATSOEVER FOR THE AO TO CONCLUDE THAT IT WAS THE APPELLANT WHO HAS MADE INV ESTMENT OF RS. 1,00,000/-. UNDER THE CIRCUMSTANCES THE TREATME NT OF RS. 1,00,000/- AS UNDISCLOSED INCOME CANNOT BE ACCEPTED AND IS ACCORDINGLY DELETED. 35. IN ABSENCE OF ANY ADVERSE EVIDENCE AGAINST THE ASSESSEE, THERE WAS NO JUSTIFICATION FOR THE ADDITION OF RS. 1,00,000/- AN D CIT(A) WAS JUSTIFIED IN DELETING THE SAME. WE UPHOLD THE ORDER OF CIT(A). T HUS GROUND NO. 7 OF THE APPEAL IS DISMISSED. 36. GROUND NO. 8 OF THE REVENUES APPEAL IS IN RESP ECT OF ADDITION OF RS. 21 LACS AS UNDISCLOSED INVESTMENT IN PLOT AT 1-2 CHOWK , NEAR HOTEL GAZAL, LD. CIT(DR) RELIED UPON THE ASSESSMENT ORDER AND THE S TATEMENT OF MR. NARENDER MALHOTRA AND ARGUED THAT ADDITION OF RS. 21,00,000/ - WAS CORRECTLY MADE BY AO. ON THE OTHER HAND LD. AR FOR THE ASSESSEE REPLI ED UPON THE ORDER OF CIT(A) AND FURTHER ARGUED THAT THERE WAS NO EVIDENC E FOUND DURING THE COURSE OF SEARCH OR EVEN THEREAFTER TO SUPPORT THE IMPUGNE D ADDITION. 37. CIT(A) HAS HELD AS UNDER:- THE AO IN THE ASSESSMENT ORDER STATES THAT ONE SH. NARINDER MALHOTRA HAD STATED AT THE TIME OF SEARCH ON 12.03. 1999 THAT PLOT AT CHOWK OF MARKET NO.1 HAD BEEN SOLD BY SH. I NDERJEET SINGH FOR A SUM OF RS. 21,00,000/-. A PERUSAL OF THE STATEMENT SHOWS THAT SH. NARINDER MALHOTRA STATED THAT THE PLOT WAS SOLD FOR RS. 21,00,000/- I N PART AND THIS WAS ALSO DONE IN A PARTNERSHIP. THE AO HOWEVER, DID NOT CONSIDERED EVEN IT FIT TO CONFRONT THE APPELLANT OF THIS ALLEGED TRANSACTION. HE STRAIGHT AWAY WENT AND MADE AND ADD ITION OF ITA NO.239 & 296/DEL./2005 26 RS. 21,00,000/- TO THE UNDISCLOSED INCOME OF THE AP PELLANT. THE LD. AR HAS VEHEMENTLY ARGUED THAT RELIANCE ON SUCH A BALD STATEMENT OF ONE SH. N.K. MALHOTRA COULD NOT AT ALL BE USED AGAINST EH APPELLANT NOT ONLY BECAUSE THE STATEMENT WAS NEVER PRODUCED FOR CROSS-EXAMINATION BUT ALSO BECAUSE THE RE WAS NOT EVIDENCE FOUND FROM THE APPELLANT WHICH COULD EVEN REMOTELY INDICATE THE AFORESAID TRANSACTION. IN FACT, THE LD . AR HAS VEHEMENTLY ARGUED AND REFERRED TO PAGE PB -62 WHEN SH. NARINDER MALHOTRA IN AN AFFIDAVIT RETRACTED HIS STA TEMENT AND STATED THAT HE WAS PRESSURIZED AND THREATENED IN MA KING THE ABOVE STATEMENT. A CAREFUL CONSIDERATION OF THE FAC TS AND CIRCUMSTANCES CLEARLY SHOWS THAT THE AO ERRED IN TR EATING A SUM OF RS. 21,00,000/- AND MADE UNDISCLOSED INCOME OF THE APPELLANT AND SOLELY RELYING ON THE STATEMENT OF SH . N.K. MALHOTRA WHO LATER RETREATED TO THE STATEMENT. EVEN IF THE RETRACTION IS NOT TAKEN INTO CONSIDERATION, THIS AC TION OF THE AO CANNOT BE UPHELD FOR THE REASON THAT THERE IS NO EV IDENCE OF ANY SORT EITHER ORAL IN THE FORM OF THE STATEMENT OF TH E APPELLANT OR DOCUMENTARY EVIDENCE SEIZED DURING THE SEARCH AND S EIZURE PROCEEDINGS WHICH CAN EVEN INDICATE TO THE AFORESAI D TRANSACTION. IN VIEW OF THE ABOVE FACTS IT IS HELD THAT THE AO ERRED IN TREATING A SUM OF RS. 21,00,000/- AS UNDIS CLOSED INCOME OF THE APPELLANT / INVESTMENT OF THE APPELLA NT. 38. WE HAVE GONE THROUGH THE STATEMENT OF MR. NAREN DER MALHOTRA AND THE REPLIES FILED BY ASSESSEE DURING ASSESSMENT. ASSESS EE HAS DENIED TO HAVE MADE ANY SUCH INVESTMENT AND THERE IS NO EVIDENCE TO PRO VE THAT ANY SUCH INVESTMENT WAS MADE BY THE ASSESSEE IN SOME PLOT AT 1-2, CHOWK NEW HOTEL GAZAL. THE ADDITION HAS BEEN MADE MERELY ON THE BAS IS OF THE STATEMENT OF MR. NARENDER MALHOTRA. THERE IS NO EVIDENCE FOUND D URING THE SEARCH OR BROUGHT ON RECORD THEREAFTER WHICH COULD EVEN REMOT ELY SUGGEST OR CORROBORATE THE ALLEGATION OF ANY INVESTMENT OF RS. 21,00,000/- MADE BY THE ASSESSEE. LD. CIT(A) HAS RIGHTLY DELETED THE ADDIT ION .FOR THE WANT OF ANY ITA NO.239 & 296/DEL./2005 27 ADVERSE MATERIAL AGAINST THE ASSESSEE, WE DO NOT HA VE ANY HESITATION IN UPHOLDING THE ORDER OF CIT(A). THUS, GROUND NO. 8 OF APPEAL IS ALSO DISMISSED. 39. GROUND NO. 9 OF THE REVENUES APPEAL IS IN RESP ECT OF ADDITION OF RS.10,70,000/- MADE ON ACCOUNT OF UNDISCLOSED INVES TMENT AS 50% SHARE IN PROPERTY NO. 1-D 14B, NIT, FARIDABAD, LD. CIT(DR) A PART FROM RELYING UPON THE ASSESSMENT ORDER REFERRED TO PAGE 286-290 WHICH IS THE COPY OF THE SALE DEED. IT WAS ARGUED BY CIT(DR) THAT INVESTMENT WAS MADE BY THE ASSESSEE IN PROPERTY NO. I-D, 14, NIT, FARIDABAD AND CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. LD. AR FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT CIT(A) WAS PERFECTLY JUSTIFIED IN DELETING THE ADDITION AS THERE WAS NO EVIDENCE OF ANY INVESTMENT IN THE IMPUGNED PROPERTY PURPORTEDLY MAD E BY THE ASSESSEE FOR ALLEGED AMOUNT OF RS. 21,00,000/- AND THE DOCUMENTS REFERRED BY CIT(DR) IS THE SALE DEED OF RS. 2,40,000/- ONLY AND DOES NOT R EFER EITHER RS. 21,00,000/- OR RS. 10,70,000/- NOR WERE THESE DOCUMENTS FOUND D URING THE COURSE OF SEARCH. 40. LD. CIT(A) HELD AS UNDER:- IN THE ASSESSMENT ORDER ON PAGE 5, THE AO STATES T HAT 50% SHARE IN PLOT, I-D/14, NIT WAS PURCHASED ALONG SH. AMARJ EET SINGH CHAWLA. AND THAT THIS PROPERTY WAS SOLD BY THE APPE LLANT TO M/S EAST BENGAL INVESTMENT P. LTD. AND THAT THE MARKET VALUE OF THIS PROPERTY WAS RS. 21,40,000/- AND THAT UNDISCLOSED I NCOME IN THE HANDS OF THE APPELLANT WAS THEREFORE RS. 10,75,000/ - ITA NO.239 & 296/DEL./2005 28 THE ASSESSMENT ORDER IS SILENT ON THE EVIDENCE RELI ED UPON EXCEPT ON PAGE 119 AND 118. A PERUSAL OF THE AFORES AID PAPERS SHOWS THAT BOTH SH. INDERJEET SINGH AND SH. AMARJEE T SINGH CHAWLA SOLD THE PROPERTY I-D/14 FOR SUM OF RS. 2,40 ,000/-. THIS MARKET VALUE OF THE PROPERTY WAS RS. 21,40,000/-. I T IS NOT UNDERSTOOD AS TO HOW THE AO CAME TO THIS FINDING TH AT THE MARKET VALUE WAS RS. 21,40,000/- AND THAT THE APPEL LANT RECEIVED A SUM OF RS. 10,70,000/- AND WHICH WAS THE UNDISCLO SED INCOME. THIS IS THE ONLY DOCUMENT ON WHICH THE AO HAD RELIE D AND THIS DOCUMENT HAS NO RELEVANCE TO THE CONCLUSION DRAWN B Y THE AO. IT MAY ADDED THAT NO OTHER ANY EVIDENCE OF ANY SORT HAS BEEN RELIED UPON BY THE AO DURING THESE PROCEEDINGS TO S UPPORT THE CONCLUSION DRAWN BY HIM. UNDER THE CIRCUMSTANCES IT IS HELD THAT THE AO ERRED IN TREATING A SUM OF RS. 10,70,000/- A S THE UNDISCLOSED INCOME OF THE APPELLANT AND THE SAME IS THEREFORE, DELETED. 41. WE ALSO FIND THAT THERE IS NO EVIDENCE WHATSOEV ER FOUND DURING THE COURSE OF SEARCH OR BROUGHT ON RECORD THEREAFTER WH ICH COULD EVEN SUGGEST THAT ANY INVESTMENT OF RS. 10,70,000/- WAS MADE BY THE ASSESSEE IN PLOT NO. 1-D, 14, NIT, FARIDAABD. THE DOCUMENTS AT PAGE 286- 290 REFERRED BY LD. CIT(DR) WERE NEITHER FOUND DURING THE COURSE OF SEA RCH NOR DO THEY INDICATE OF ANY AMOUNT OF RS. 10,70000/-. THIS IS THE COPY O F SALE DEED OF RS. 2,40,000/-. THERE IS ABSOLUTELY NO EVIDENCE ADVERSE TO THE ASSESSEE, WHICH COULD HAVE JUSTIFIED THE IMPUGNED ADDITION AND THER EFORE, WE UPHOLD THE ORDER OF CIT(A) WHO DELETED THE ADDITION OF RS. 10,70,000 /- IN THE HANDS OF THE ASSESSEE. IN THE RESULT, GROUND NO. 9 OF APPEAL IS DISMISSED. 42. GROUND NO. 10 OF THE APPEAL IS IN RESPECT OF AD DITION OF RS. 666666/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PLOT A T MUJESAR PHATAK, LD. ITA NO.239 & 296/DEL./2005 29 CIT(DR) RELIED UPON THE ASSESSMENT ORDER AND THE ST ATEMENT OF MR. NARENDER MALHOTRA AND BASED UPON THESE TWO DOCUMENT, LD. CIT (DR) PLEADED THAT ADDITION WAS RIGHTLY MADE BY AO. ON THE OTHER HAND LD. AR FOR THE ASSESSEE RELIED UPON CIT(A)S ORDER AND IT WAS SUBMITTED THA T THERE IS NO EVIDENCE BROUGHT ON RECORD, WHICH COULD EVEN REMOTELY SUGGES T THAT ANY INVESTMENT WAS BY THE ASSESSEE IN PLOT AT MUGESSAR FATAK. 43. LD. CIT(A) HAS HELD AS UNDER:- THE AO IN THE ASSESSMENT ORDER AGAIN AFTER RELYING ON THE STATEMENT OF SH. NARINDER MALHOTRA MADE AN ADDITION OF RS. 6,66,666/- ON ACCOUNT OF PROPERTY ALLEGEDLY SOLD BY THE APPELLANT AT MUJESSAR PHATAK. THE ISSUE HAS BEEN EXAMINED AND THE STAND OF THE AO CANNOT BE ACCEPTED. THIS ISSUE IS IDENTICAL WITH THE ISSUE IN GROUND 10 WHERE THE AO UTILIZED THE STATEMENT OF SH. N.K. MAL HOTRA TO MAKE AN ADDITION OF RS. 21,00,000/-. FOR SIMILAR RE ASONS THE STAND OF THE AO CANNOT BE ACCEPTED AND THE TREATMEN T OF RS. 6,66,666/- AS THE UNDISCLOSED INCOME / INVESTMENT O F THE APPELLANT IS ACCORDINGLY DELETED. 44. WE ALSO FIND THAT THERE IS NO ADVERSE EVIDENCE AGAINST THE ASSESSEE ON THE BASIS OF WHICH THE IMPUGNED ADDITION COULD BE J USTIFIED AND LD. CIT(A) COULD NOT CONTROVERT THE FACTUAL FINDINGS RECORDED BY CIT(A). WE UPHOLD THE ORDER OF CIT(A) DELETING THE SAID ADDITION. STATEME NT OF MR. NARENDER MALHOTRA WAS NEVER CONFRONTED TO THE ASSESSEE. THER EFORE, GROUND NO. 10 OF THE REVENUE APPEAL IS ALSO REJECTED. ITA NO.239 & 296/DEL./2005 30 45. GROUND NO. 11 OF THE APPEAL IS IN RESPECT OF ADDITION OF RS. 8 LACS MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SHOPS AT BADKHAL ROAD, LD. CIT(DR) RELIED UPON THE ASSESSMENT ORDER AND THE ST ATEMENT OF MR. NARENDER MALHOTRA. ON THE OTHER HAND LD. AR FOR THE ASSESSEE RELIED UPON THE ORDER OF CIT(A) 46. LD. CIT(A) HAS HELD AS UNDER:- THE AO IN HIS ORDER HAS AGAIN RELIED UPON THE STAT EMENT OF SH. N.K. MALHOTRA, WHO MADE THE ADDITION OF RS. 8,0 0,000/- IN THE PURCHASE OF TWO SHOPS AT BADKHAL ROAD. THIS ISSUE HAS BEEN EXAMINED AND THE STAND OF THE A O CANNOT BE ACCEPTED. THIS ISSUE IS IDENTICAL WITH THE ISSUE IN GROUND 10 WHERE THE AO UTILIZED THE STATEMENT OF SH. N.K. MAL HOTRA TO MAKE AN ADDITION OF RS. 21,00,000/-. FOR SIMILAR RE ASON THE STAND OF THE AO CANNOT BE ACCEPTED AND THE TREATMEN T OF RS. 8,00,000/- AS THE UNDISCLOSED INCOME / INVESTMENT O F THE APPELLANT IS ACCORDINGLY DELETED. 47. WE ALSO FIND THAT THERE IS NO EVIDENCE WHICH CO ULD ESTABLISH AND CORROBORATE ADDITION MADE BY AO. STATEMENT OF SH. M ALHOTRA WAS ALSO NEVER CONFRONTED TO THE ASSESSEE. THEREFORE, FOR WANT OF ANY EVIDENCE AGAINST THE ASSESSEE, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS GROUND NO. 11 OF THE DEPARTMENTAL APPEAL. 48. GROUND NO. 12 OF APPEAL IS IN RESPECT OF ADDITI ON OF RS. 3,35,928/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PURCHA SE OF MARUTI ZEN CAR, CIT(DR) RELIED UPON THE ASSESSMENT ORDER AND STATEM ENT OF MR. GULSHAN BHATIA. ITA NO.239 & 296/DEL./2005 31 49. ON THE OTHER HAND LD. AR FOR THE ASSESSEE PLAC ED RELIANCE ON THE ORDER OF CIT(A) AND ALSO SUBMITTED THAT INVESTMENT WAS MA DE BY MR. GULSHAN BHATIA BY TAKING FINANCE FROM M/S BTL INVESTMENT LT D. AND IN ANY CASE SUCH INVESTMENT IS OUTSIDE THE BLOCK PERIOD. LD AR FOR T HE ASSESSEE DREW OUR ATTENTION TO THE REGISTRATION DOCUMENTS WHICH WERE IN THE NAME OF MR. GULSHAN BHATIA AND THE STATEMENT OF ACCOUNT OF MR. GULSHAN BHATIA IN THE BOOKS OF M/S BTL INVESTMENT LTD. IT WAS PLEADED BY LD. AR FOR THE ASSESSEE THAT THE ADDITION WAS RIGHTLY DELETED BY CIT(A). 50. LD. CIT(A) HAS HELD AS UNDER:- THE AO IN THE ORDER HAS STATED THAT MARUTI ZEN HR5 1C-9737 WAS PURCHASED BY THE APPELLANT IN THE NAME OF THE S H. GULSHAN BHATIA AND THAT THIS CAR WAS FOUND PARKED AT THE RE SIDENCE OF THE APPELLANT. THE AO HELD THAT ALL THE PAPERS WERE FOU ND AT THE RESIDENCE OF THE APPELLANT AND THEREFORE, THE INVES TMENT HAD BEEN MADE BY THE APPELLANT AND HE TREATED A SUM OF RS. 3 ,35,928/- AS THE UNDISCLOSED INCOME OF THE APPELLANT. THE ISSUE HAS BEEN EXAMINED. THE LD. AR FOR THE APP ELLANT HAS ARGUED THAT THE AO ERRED IN MAKING THE ADDITION TO THE UNDISCLOSED INCOME IN AS MUCH AS THE ACCOUNT OF BTL INVESTMENTS LTD. (PB 54) WOULD CLEARLY SHOW THAT TH E INVESTMENT IN THE AFORESAID CARDS HAD BEEN MADE THR OUGH THE BTL INVESTMENTS LTD. WHICH HAD FINANCED THE CAR BUT ACTUALLY THE INSTALLMENTS AND INVESTMENTS BY SH. GULASHAN BH ATIA WAS ON 6 TH SEPT., 1999 AND 3 RD NOVEMBER, 1999 AMOUNTING TO RS. 2,00,000/- AND RS. 17,800/- AND THAT THIS TRANSACTI ONS WERE MADE OUTSIDE THE BLOCK PERIOD WHICH HAD EXPIRED ON THE D ATE OF SEARCH I.E. 12.03.1999. A PERUSAL OF THE PB 54 SUPPORTS TH E CLAIM MADE BY THE LD. AR. WHATEVER ACTION IS REQUIRED TO BE TA KEN CAN ONLY BE DONE EITHER IN THE NAME OF SH. GULSHAN BHATIA OR IN THE NAME OF THE APPELLANT ONLY FOR THE ASSESSMENT YEAR 2000- 01 AND ACTION TAKEN FOR TREATING THE AFORESAID SUM AS UNDISCLOSED INCOME FOR ITA NO.239 & 296/DEL./2005 32 THE BLOCK PERIOD CANNOT BE ACCEPTED. THE SAME IS AC CORDINGLY DELETED. 51. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CI T(A) AS THE CAR STANDS IN THE NAME OF MR. GULSHAN BHATIA AND NOT IN THE NAME OF ASSESSEE AS PER THE REGISTRATION DOCUMENTS PLACED AT PAGE 47-53 OF THE ASSESSEES PB. STATEMENT OF ACCOUNT OF MR. GULSHAN BHATIA IN THE BOOKS OF M/ S BTL INVESTMENT LTD., WHICH WAS BEFORE THE AO ALSO CLEARLY SHOWS THAT THE CAR WAS FINANCED TO MR. GULSHAN BHATIA BY M/S BTL INVESTMENTS LTD. THEREFOR E, THE IMPUGNED CAR CANNOT BE TREATED TO BE BELONGING TO THE ASSESSEE N OR CAN ANY ADDITION BE MADE AS UNDISCLOSED INVESTMENT IN THE HANDS OF THE ASSESSEE. MOREOVER, DOCUMENTS CLEARLY SHOW THAT THE INVESTMENT HAS BEEN MADE AFTER THE BLOCK PERIOD AND IS NOT COVERED IN THE BLOCK PERIOD AND T HEREFORE SUCH ADDITION COULD NOT BE MADE U/S 158BC FOR THAT REASON ALSO. T HEREFORE VIEWED FROM ANY ANGLE SUCH ADDITION COULD NOT BE MADE AND WAS THERE FORE RIGHTLY DELETED BY CIT(A). WE UPHOLD THE ORDER OF CIT(A). THEREFORE GR OUND NO. 12 OF THE APPEAL IS DISMISSED. 52. GROUND NO.13 OF THE APPEAL IS IN RESPECT OF TH E ADDITION OF RS. 25 LACS MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN FILM HAMARA KANOON, LD DR RELIED UPON THE ASSESSMENT ORDER. THE ASSESSEE WAS MAKING THE FILM AND SINCE ASSESSEE FAILED TO EXPLAIN THE EXPENSES INCUR RED, THE ADDITION WAS RIGHTLY MADE BY THE AO BY ESTIMATING THE INVESTMENT. ON THE OTHER HAND LD. AR FOR ITA NO.239 & 296/DEL./2005 33 THE ASSESSEE SUBMITTED THAT CIT(A) HAS RIGHTLY DELE TED THE ADDITION AS THERE WAS NO EVIDENCE TO SUPPORT THE SAME. IT WAS CONTEND ED BY LD. AR THAT PAGE 330-331 IN THE DEPARTMENTAL PAPER BOOK IS THE REPOR T OF DIT MUMBAI, ACCORDING TO WHICH ALSO THE ADDITION COULD NOT BE M ADE. 53. LD. CIT(A) HELD AS UNDER:- THE ISSUE HAS BEEN EXAMINED. THE LD. AR HAS VEHEME NTLY ARGUED THAT THERE WAS ABSOLUTELY NO EVIDENCE WITH T HE AO TO SUBSTANTIATE THE CONCLUSION DRAWN BY HIM AND THAT T HE FILM DID NOT EVEN PASS THE CENSOR BOARD AND COULD NOT EVEN B E EXHIBITED. AFTER A CAREFUL CONSIDERATION OF THE FACTS THE STAN D OF THE AO CANNOT BE UPHELD. THERE IS NO EVIDENCE, ORAL OR DOC UMENTARY, NOT EVEN IN THE FORM OF CIRCUMSTANTIAL EVIDENCE WHICH C AN SUPPORT THE CONCLUSION DRAWN BY THE AO. THE ADDITION OF RS. 25,00,000/- IS ACCORDINGLY DELETED. 54. WE HAVE OURSELVES GONE THROUGH THE REPORT OF DI T, MUMBAI DATED 17.09.1999 PLACED AT PAGE 330-331 OF DEPARTMENTAL P APER BOOK ACCORDING TO WHICH INSPECTOR WAS SENT TO ENQUIRE WITH SH. PAPPU SINGH REGARDING THE PRODUCING THE MOVIE HAMARA KANOON WHO REPORTED TH AT SH. PAPPU IS A SUPPORT BOY AND IS THE PERSONAL SERVANT OF SH. DARA SINGH AND THAT THE SAID FILM WAS LAUNCHED ON 22.12.1998 AND SHOOTING WAS DO NE FOR THREE DAYS. THE FILM WAS THEREAFTER SHELVED. THERE IS NO EVIDENCE O F RS. 25,00,000/- INVESTED BY THE ASSESSEE IN FILM HAMARA KANOON MORE PARTIC ULARLY WHEN ASSESSEE SUBMITTED TO A.O. THAT ENQUIRY MAY BE MADE FROM IMP A (INDIAN MOTIONS PICTURE ASSOCIATION) LD. A.O. FAILED TO BRING ANY E VIDENCE ON RECORD NOR WAS THERE ANY EVIDENCE FOUND DURING THE COURSE OF SEARC H, WHICH COULD HAVE ITA NO.239 & 296/DEL./2005 34 SUPPORTED THE ADDITION OF RS. 25,00,000/- AND THERE FORE CIT(A) DELETED THE ADDITION CORRECTLY. WE UPHOLD THE ORDER OF CIT(A). THEREFORE GROUND NO. 13 IS DISMISSED. 55. GROUND NO. 14 IS IN RESPECT OF ADDITION OF RS. 8,56,931/- MADE ON ACCOUNT OF DEPOSITS IN BANK ACCOUNT IN THE NAME OF SHRI ASHOK KUMAR AS BENAMI, LD. CIT(DR) RELIED UPON THE ASSESSMENT ORDE R AND IT WAS SUBMITTED THAT SINCE CHEQUE BOOK WAS FOUND IN SEARCH FROM THE POSSESSION OF THE ASSESSEE AND THEREFORE, AO RIGHTLY TREATED THE DEPO SIT IN THE BANK ACCOUNT OF. ASHOK KUMAR AS BELONGING TO THE ASSESSEE. ON THE OT HER HAND LD. AR FOR THE ASSESSEE RELIED UPON THE ORDER OF CIT(A). 56. LD. CIT(A) HELD AS UNDER:- THE ISSUE HAS BEEN CAREFULLY EXAMINED. ON PAGE 5 O F THE STATEMENT SH. N.K. MALHOTRA WAS ASKED REGARDING THR EE CHEQUES OF RS. 1,00,000/-, RS. 1,08,000/- AND RS. 6 0,000/- WHICH WAS SIGNED BY SH. ASHOK KUMAR. IN REPLY, SH. N.K. MALHOTRA STATED THAT THESE CHEQUES BELONG TO SH. AS HOK KUMAR WHO WAS THE MANAGER OF SAMRAT ELECTRONICS CO. AND T HAT HE HAD GIVEN THESE CHEQUES TO HIM TO KEEP. THIS IS THE ONLY REFERENCE TO SH. ASHOK KUMAR AS CAN BE GATHERED FRO M THE STATEMENT OF SH. N.K. MALHOTRA. HOW THE AO CAME TO THE CONCLUSION THAT SH. ASHOK KUMAR WAS THE BENAMI OF T HE APPELLANT IS IMPOSSIBLE TO COMPREHEND. THERE IS NO EVIDENCE OF SH. ASHOK KUMAR IN THE FORM OF ORAL EVIDENCE OR DOC UMENTARY EVIDENCE TO INDICATE THAT HE WAS THE BENAMI OF THE APPELLANT. SIMILARLY THERE IS NO ORAL OR DOCUMENTARY EVIDENCE OF THE APPELLANT WHICH CAN SHOW THAT HE WAS MAKING INVESTM ENTS AND INCOME THROUGH SH. ASHOK KUMAR WHO WAS ADMITTEDLY T HE MANAGER OF SAMRAT ELECTRONICS. THE AO STATES THAT M R. SH. N.K. MALHOTRA IN HIS STATEMENT STATED THAT SH. INDE RJEET SINGH WAS DEPOSITING CASH IN THE ACCOUNT OF MR. ASHOK KUM AR. TO THE BEST OF MY UNDERSTANDING NO SUCH STATEMENT APPE ARS TO ITA NO.239 & 296/DEL./2005 35 HAVE BEEN MADE BY SH. N.K. MALHOTRA AT LEAST FROM T HE STATEMENTS WHICH HAVE BEEN PROVED BY THE AO TO THE UNDERSIGNED. IN VIEW OF THE ABOVE FACTS AND CIRCUMS TANCES OF THE CASE, IT IS HELD THAT THE AO MISREAD THE ENTIRE ISSUE AND INCORRECTLY HELD THAT SH. ASHOK KUMAR WAS THE BENAM I OF THE APPELLANT. IF THE AO ALLEGES THAT ASHOK KUMAR WAS T HE BENAMI OF THE APPELLANT THE ONUS WAS ON HIM TO PROVE THE S AME. APPARENTLY HE HAS FAILED COMPLETELY TO DISCHARGE TH IS ONUS. UNDER THE CIRCUMSTANCES THE ADDITION OF RS. 8,56,93 1/- IS DELETED. 57. WE HAVE GIVEN CAREFUL CONSIDERATION TO THE ISS UE. IN OUR CONSIDERED OPINION, MERELY BECAUSE CHEQUE BOOK OF THE BANK ACC OUNT OF SH. ASHOK KUMAR WAS FOUND FROM THE POSSESSION OF THE ASSESSEE , IT DOES NOT ESTABLISH THAT THE BANK ACCOUNT OF SH. ASHOK KUMAR WAS OWNED BY THE ASSESSEE. HEAVY BURDEN IS ON THE PERSON WHO ALLEGES THAT SOME BODY IS BENAMI OF THE OTHER. REVENUE HAS FAILED TO BRING ANY MATERIAL OR EVIDENCE ON RECORD TO PROVE THIS ALLEGATION. CIT(A) HAS RIGHTLY CONCLUDED THAT THERE WAS NO EVIDENCE THAT SH. ASHOK KUMAR WAS BENAMI OF THE ASSESSEE. WE DO N OT FIND ANY JUSTIFICATION TO DEPART FROM THE FINDINGS OF CIT(A) AND WE UPHOLD THE SAME. THUS GROUND NO. 14 OF THE REVENUE APPEAL IS DISMIS SED. 58. GROUND NO. 15 OF THE REVENUES APPEAL IS IN RESPECT OF ADDITION OF RS. 3,36,749/- MADE ON ACCOUNT OF UNDISCLOSED INCOME FR OM THE REPAIR OF ELECTRONIC GOODS AND INTEREST INCOME ON GOODS SOLD ON CREDIT, CIT(DR) RELIED UPON THE ASSESSMENT ORDER. ON THE OTHER HAND LD. AR FOR THE ASSESSEE RELIED UPON THE ORDER OF CIT(A) AND FURTHER SUBMITTED THAT DOCUMENT NO. A-14 AND ITA NO.239 & 296/DEL./2005 36 A17 NO WHERE MENTION ABOUT ANY INTEREST OR ANY SUCH INCOME WHICH HAS BEEN ADDED BY LD. AO. 59. LD. CIT (A) HAS HELD AS UNDER:- DOCUMENT A-14 AND A-17 HAVE BEEN CAREFULLY EXAMINE D. NO WHERE DOES THESE DOCUMENTS MENTION THAT THE APPELLA NT EARNED ANY INTEREST MUCH LESS INTEREST AT THE RATE OF 2% P ER MONTH. NONE OF THE ENTRIES EVEN INDICATE THAT AMOUNTS HAD BEEN ADVANCED BY THE APPELLANT AND INTEREST HAD ACCORDIN GLY BEEN EARNED. THERE IS ABSOLUTELY NO EVIDENCE TO COME TO A SUCH CONCLUSION. THE ADDITION IS ACCORDINGLY DELETED. 60. THERE IS NOTHING BEFORE US WHICH COULD HAVE PER SUADED US TO RESTORE THE ORDER OF A.O. DOCUMENT NO. A-14 AND A17 NOWHERE MEN TIONED ABOUT ANY THING WHICH COULD HAVE JUSTIFIED THE IMPUGNED ADDIT ION. CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WHICH WE UPHOLD. THUS GROU ND NO.15 APPEAL IS ALSO DISMISSED. 61. GROUND NO. 16 & 17 OF THE APPEAL ARE IN RESPEC T OF ADDITIONS OF RS.1,07,89,800 AND RS.7,87,000/- MADE ON ACCOUNT OF UNDISCLOSED INCOME FROM LUCKY CAR DRAW SCHEME AND UNDISCLOSED COMMISSI ON INCOME FROM AUCTION OF CHIT BUSINESS BASED ON THE ASSESSMENT OR DER OF BROTHER OF THE ASSESSEE NAMELY SHRI BAHADUR SINGH SABHARWAL, LD. C IT(DR) RELIED UPON THE ASSESSMENT ORDER AND IT WAS SUBMITTED BY HIM THAT D OCUMENT A-4 AND A-5 SEIZED FROM THE PREMISES OF THE ASSESSEE CLEARLY PR OVE THE INCOME ON ACCOUNT OF LUCKY CAR DRAW SCHEME AND COMMISSION FROM CHIT B USINESS. ON THE OTHER HAND LD. AR FOR THE ASSESSEE SUBMITTED THAT CIT(A) HAS RELIED UPON THE ORDER ITA NO.239 & 296/DEL./2005 37 IN THE CASE OF THE BROTHER OF THE ASSESSEE NAMELY S H. BAHADUR SINGH SABARWAL IN WHICH ALSO SIMILAR ADDITIONS WERE MADE WHICH WER E DELETED BY CIT(A) AND WHEN DEPARTMENT PREFERRED APPEAL, HONBLE TRIBUNAL CONFIRMED THE ORDER OF CIT(A). A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF SH. BAHADUR SINGH SABARWAL WAS FILED BEFORE US. 62. LD. CIT(A) HAS HELD AS UNDER IN RESPECT OF BOTH THE ADDITIONS:- THE ISSUE HAS BEEN EXAMINED AND IN FACT HAS BEEN F ULLY AND COMPLETELY DEALT IN DETAIL IN THE CASE OF SH. BAHAD UR SINGH SABARWAL, THE BROTHER OF THE APPELLANT IN APPEAL NO . 138/03-04. FOR THE SAKE OF READY REFERENCE THE EXTRACT OF THE ENTIRE DISCUSSION IS PLACED BELOW: I HAVE CAREFULLY EXAMINED THE ENTIRE ISSUE AND HAV E GONE THROUGH THE WRITTEN SUBMISSIONS, THE ASSESSMENT ORD ER AND THE REPORT OF THE AO. THE VARIOUS POINTS WHICH NEED TO BE CONSIDERED ARE AS UNDER :- THE STATEMENT OF SH. SATISH CHANDER HAS BEEN CAREFU LLY PERUSED. A PERUSAL OF THE STATEMENT SHOWS THAT NO WHERE DOES SH. SATISH CHANDER MENTIONS THE NAME OF THE APPELLANT. WHAT HE DOES MENTION IS THAT THE LOTTERY WAS BEING RUN BY M/S SA BARWAL INTERNATIONAL AND ONE SH. HARJEET SINGH USED TO RUN THIS LOTTERY. A PERUSAL OF THE STATEMENT OF SH. GULSHAN BEGGA, WH ICH HAS AGAIN BEEN RELIED UPON BY THE AO, REVEALS THAT HIT STATEMENT DOES NOT AT ALL REFER TO THE APPELLANT. IT HAS BEEN STATED BY SH. GULSHAN BEGGA THAT ONE SH. HARJEET SINGH RAN A LOTT ERY SCHEME AND HE THEREAFTER GAVE THE VARIOUS DETAILS OF THE M ETHOD BY WHICH THIS TRANSACTION WAS CARRIED OUT. BEFORE ANY CONCLUSION CAN BE DRAWN IT MUST BE CATEGORICALLY BROUGHT OUT O N RECORD THAT THE STATEMENT OF SH. SATISH CHANDER AND SH. GULSHAN BEGGA, RELIED UPON BY THE AO, DOES NOT MAKE ANY REFERENCE TO THE APPELLANT SH. BAHADUR SINGH SABARWAL. AT BEST THE STATEMENT MAKES A REFERENCE TO ONE SH. HARJEET SINGH. IT MAY ALSO BE AT THIS POINT CATEGORICALLY STATED THAT THE STATEMENT OF SH. GULSHAN BEGGA AND SH. SATISH CHANDER HAVE BEEN USED AGAINST THE APPELLANT WITHOUT CONFRONTING THE SAME TO THE APPEL LANT AND ITA NO.239 & 296/DEL./2005 38 WITHOUT GIVING AN OPPORTUNITY TO THE APPELLANT TO E XPLAIN AND NOR WERE SH. GULSHAN BAGGA AND SH. SATISH CHNADER CROSS EXAMINED BY THE APPELLANT. IT HAS BEEN ARGUED BY THE LD. AR, AND CORRECTLY SO, THAT THE AO COULD NOT UNDER LAW RELY ON SUCH UN SUBSTANTIATED UNCORROBORATED STATEMENTS. THE AO HAS AGAIN REFERRE D TO THE DOCUMENTS SEIZED FROM ONE SH. M.L. SAINI. ONCE AGAI N A PERUSAL OF THESE DOCUMENTS DO NOT REFER TO THE ALLEGED LOTT ERY BUSINESS CARRIED OUT ALLEGEDLY BY THE APPELLANT EXCEPT AT ON E PLACE WHERE IT IS WRITTEN (B.S. SABARWALLOTTERY MARCH, 10 TH 97 TO APRIL, 97). IN THIS REGARD THE LD. AR HAS ARGUED THAT THIS NOTH ING IN A DOCUMENT FOUND AT THE THIRD PERSON RESIDENCE CAN N EVER BE UTILIZED FOR DETERMINING THE UNDISCLOSED INCOME OF THE APPELLANT IN AS MUCH AS THIS DOCUMENT WAS NEVER CONFRONTED AN D APPELLANT HAS NEVER EVER ADMITTED TO ANY TRANSACTIONS AS RECO RDED IN THE DOCUMENT. IT HAS BEEN ARGUED THAT THERE IS NO DOCUM ENT OR EVIDENCE AVAILABLE WITH THE AO WHICH WAS FOUND DURI NG THE SEARCH WHICH CAN CORROBORATE THE EVIDENCE FOUND FRO M THE RESIDENCE OF A THIRD PERSON NAMELY SH. M.L. SAINI W AS NEVER CONFRONTED TO THE APPELLANT AND SO THE AO COMMITTED AN ERROR IN USING THIS PIECE OF THIRD PARTS STATEMENTS OF AGAIN ST THE APPELLANT TO DETERMINE THAT THE LOTTERY SCHEME WAS BEING RUN WHICH RESULTED IN HUGE UNDISCLOSED INCOME. THE AO HAS REL IED ON THE TWO DIARIES SEIZED FROM THE RESIDENCE OF SH. BAHADU R SINGH SABARWAL TO DRAW THE CONCLUSION THAT LOTTERY BUSINE SS WAS RUN AND THAT TOTAL SURPLUS MONEY TO THE TUNE OF RS. 1,6 7,20,0000/-AND THAT THE UNDISCLOSED INTEREST INCOME ON THIS INCOME WOULD BE TO THE TUNE OF RS. 43,27,400/-. THE DOCUMENT A-4 AND A -5 HAVE BEEN CAREFULLY PERUSED AND THE ENTRIES THEREIN DO N OT AT ALL INDICATE THAT SOME SORT OF LOTTERY BUSINESS WAS CAR RIED OUT IN THE FORM OF LUCKY CAR DRAW SCHEME. THESE DOCUMENTS INDI CATE A FEW NAMES SCRIBBLED AND AGAINST WHICH PETTY AMOUNTS OF MONEY HAVE BEEN MENTIONED. IT HAS BEEN ARGUED BY THE LD. AR IT IS IMPOSSIBLE TO ARRIVE AT A CONCLUSION BASED ON SUCH ENTRIES THAT THE APPELLANT WAS CARRYING ON LOTTERY BUSINESS AND THAT HUGE AMOUNTS OF UNDISCLOSED INCOME WAS BEING GENERATED. THE LD. AR IN HIS WRITTEN SUBMISSIONS HAS ALSO CHALLENGED T HE STAND OF THE AO THAT THESE DOCUMENTS WERE RECOVERED FROM THE RESIDENCE OF SH. INDERJEET SINGH SABARWAL AND SH. BAHADUR SIN GH SABARWAL, THE APPELLANT. IT HAS BEEN VEHEMENTLY ARG UED THAT SH. INDERJEET SINGH, THE BROTHER OF SH. BAHADUR SINGH S ABARWAL HAS REFUSED TO SING THESE DOCUMENTS AND IN THIS STATEME NT ITSELF RECORDED ON THE DATE OF SEARCH AND HAD DENIED THAT THESE ITA NO.239 & 296/DEL./2005 39 DOCUMENTS HAD BEEN FOUND FROM HIS RESIDENCE. THE LD . AR HAS ALSO VEHEMENTLY ARGUED THAT THESE DOCUMENTS WERE FO UND FROM THE CHAIWALA, SH. YASHPAL, WHO WAS HAVING HIS SHOP OUTSIDE THE RESIDENCE OF THE APPELLANT AND THAT BOTH IN THE STA TEMENT AND THE AFFIDAVIT OF MR. YASHPAL THESE FACTS HAVE BEEN CONF IRMED. IT HAS ALSO VEHEMENTLY BEEN ARGUED BY THE LD. AR THAT EVEN THE TOW PANCHAS WHO WERE WITNESSED TO THE SEARCH CATEGORICA LLY DENIED THAT THESE DOCUMENTS WERE FOUND FROM THE RESIDENCE OF SH. INDERJEET SINGH AND HIS BROTHER, THE APPELLANT SH. BAHADUR SINGH SABARWAL. THE ISSUE AS DISCUSSED ABOVE CLEARLY POINTS OUT TO THE FACT THAT THE AO HAS ERRED IN HOLDING THAT THE APPELLANT WAS RUNNING THE LUCKY CAR DRAW SCHEME. NONE OF THE STATEMENTS RELIE D UPON INDICATE THE NAME OF THE APPELLANT. NONE OF THE STA TEMENTS RELIED UPON HAVE BEEN CONFRONTED. NO WHERE HAS THE APPELLA NT INDICATED THAT HE WAS RUNNING A LUCKY CAR DRAW SCHE ME. THE AO HAS NOT POINTED OUT TO ANY DOCUMENT OR EVIDENCE SEIZED FROM THE APPELLANT WHICH CAN CORROBORATE THE EVIDEN CE RELIED UPON REGARDING THE DOCUMENTS FOUND FROM THE PREMISE S OF ONE SH. M.L. SAINI. AND COMING TO THE DIARIES WHICH HAV E BEEN RELIED UPON IT CANNOT AT ALL BE UNDERSTOOD AND COMP REHENDED HOW THE AO HAS BEEN ABLE TO DECIPHER THESE DIARIES TO COME TO A CONCLUSION THAT UNDISCLOSED INTEREST INCOME AND BEE N EARNED FROM THESE LUCKY DRAW SCHEME. MOREOVER, ANY RELIANC E ON THIS EVIDENCE APPEARS TO BE GROSSLY UNJUSTIFIED SH. IND ERJEET SINGH THE BROTHER OF THE APPELLANT HAD IN HIS STATEMENT R ECORDED DURING THE SEARCH ITSELF OBJECTED TO THESE DOCUMENTS. Q. NO.21 : I AM SHOWING YOU A-4 AND A-5 A. : I WILL SIGN ON THESE DIARIES AS THESE ARE NOT MINE DOCUMENTS. THIS STATEMENT WAS RECORDED DURING THE SEARCH AND S EIZURE PROCEEDINGS AND HAS SIGNIFICANT EVIDENTIARY VALUE A ND THIS STATEMENT GETS FURTHER CEMENTED WITH THE AFFIDAVIT OF SH. HARISH RATRA AND SH. INDERPAL SINGH (PB 83-84 CASE OF SH. INDERJEET SINGH SABARWAL). IN FACT THE STATEMENT OF SH. INDER JEET SINGH THE PANCH RECORDED ON 29.03.2001 FURTHER CONFIRMS THE S TAND OF THE APPELLANT. THE EXTRACT OF THE STATEMENT IS AS UNDER :- ITA NO.239 & 296/DEL./2005 40 SH. INDERJEET SINGH SABARWAL, I-J/6, IN THE CAPACI TY OF PANCH DURING THE SEARCH TWO DOCUMENTS NOW SEEN AS A-4 AND A-5 WERE NOT FOUND FROM THE PREMISES OF SH. INDERJEET SING S ABARWAL BUT THESE WERE BROUGHT FROM OUTSIDE AND THE SAME WAS OB JECTED BY SH. INDERJEET SINGH SABHARWAL AND HIS BROTHER SH. B AHADUR SINGH SABARWAL AND THEY DID NOT SIGNED THE DIARY IN PROTEST. HOWEVER, SAME WERE SIGNED BY ME ON ALL THE PAPERS I NCLUDING THOSE DIARIES ON REQUEST OF SEARCH TEAM AND I WAS N OT KNOWN THE IMPLICATION OF THE SAME. I KNOW TO SHRI INDERJIT SI NGH SABHARWAL FROM LAST 15 YEARS. HE IS HAVING SHOP OF ELECTRONIC S GOODS AND HE WAS CONCELLOR OF OUR AREA AND IS A SOCIAL WORKER . HE USES TO COLLECT DONATION FROM DIFFERENT PERSONS FOR SOCIAL RELIGIOUS PURPOSES. AS PER MY KNOWLEDGE SH. INDERJIT SINGH SA BARWAL OR SH. BAHADUR SINGH SABARWAL WAS NOT RUNNING ANY CHIT BUSINESS OR CAR DRAW LOTTERY SCHEME. THE AO IN FACT ALSO EXAMINED SH. YASH PAL WHOSE STA TEMENT IS ONE PB 167-168 (FILE OF SH. INDERJEET SINGH SABARWA L) WHEREIN HIS AFFIDAVIT WAS EXAMINED IN THE PRESENCE OF THE A UTHORIZED REPRESENTATIVE AND IN WHICH SH. YASHPAL STATED ON O ATH THAT HE IS A OWNER OF A KABARI SHOP AND THAT THESE DIARIES DO NOT HAVE ANY RELATIONSHIP TO SH. INDERJEET SINGH SABARWAL OR TO THE APPELLANT SH. BAHADUR SINGH SABARWAL. THE AO HAS ARGUED THAT THE DIARIES WERE FOUND FROM THE PREMISES AND THAT SH. INDERJEET SINGH AND HIS BROTHER SH. BAHADUR SINGH SABARWAL HAS CONCOCTE D THE ENTIRE STORY AND THAT THE STATEMENT OF SH. N.K. MALHOTRA C LEARLY POINTED OUT TO THE CHIT AND LOTTERY BUSINESS AND TH AT HIS RETRACTION IS NOT ACCEPTABLE IN LAW. THESE ARGUMENTS OF THE AO LACK CREDENCE. WHAT IS IM PORTANT TO NOTE HERE IS THAT:- A) SH. INDERJEET SINGH, IN HIS STATEMENT RECORDED DURI NG THE SEARCH AND SEIZURE PROCEEDINGS ITSELF DENIED THAT THE DOCU MENTS PERTAINED TO HIM: B) THAT THE PANCHAS THEMSELVES WHO WERE WITNESSES TO T HE SEARCH AND SEIZURE PROCEEDINGS SUBSTANTIATED THE STATEMENT OF SH. INDERJEET SINGH. THAT THE AO HIMSELF RECORDED THE STATEMENTS OF THE PANCHAS IN WHICH IT COULD NOT BE BROUGHT OUT BY THE AO THAT TH E AFFIDAVIT SWORN BY THEM WAS FACTUALLY INCORRECT. ITA NO.239 & 296/DEL./2005 41 IN VIEW OF THE AFORESAID DISCUSSION IT IS HELD THAT THE AO COMMITTED AN ERROR IN TREATING A SUM OF RS. 1,07,89 ,800/- AS THE UNDISCLOSED INCOME OF THE APPELLANT. THE SAME IS AC CORDINGLY DELETED. THE ISSUE HAS BEEN EXAMINED AND THE STAND OF THE A PPELLANT CANNOT BE ACCEPTED. DOCUMENT A-I RECOVERED FROM THE RESIDENCE OF SH. N.K. MALHOTRA HAS BEEN PERUSED AND IT DOES N OT REFER TO ANY CHIT BUSINESS. MOREOVER, THE LIST OF PERSONS WH O HAD GIVEN SHAGUNS IN THE MARRIAGE CANNOT BE UTILIZED FOR COMP UTING THE CHIT BUSINESS AND IT IS DIFFICULT TO APPRECIATE THE FOLLOWING COMMENTS OF THE AO: IT IS QUIRE CLEAR THAT THESE 433 PERSONS WERE VERY CLOSE TO SH. INDERJIT SIGH AND IT WAS NATURAL FOR THEM TO PARTIC IPATE IN THE AUCTION CHITS AS WELL AS LUCKY CAR DRAW SCHEME AS T HEIR NAMES APPEAR IN VARIOUS PAPERS ESPECIALLY DIARY A-4 AND A -5. THE COMMISSION INCOME EARNED BY SH. INDERJIT SINGH FROM AUCTION CHITS AS PER ANNEXURE -4 @ 3% COMES TO RS. 7,87,000 /- WHICH IS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PE RIOD IS ADDED TO THE INCOME OF THE ASSESSEE. RELIANCE ON THE DIARIES A-4 AND A-5 HAS ALREADY BEE N DEALT IN DETAIL WHILE DECIDING THE GROUNDS NO. 19-20. IT HAS VEHEMENTLY BEEN ARGUED BY THE LD. AR AND CORRECTLY SO THAT THE STATEMENTS OF SH. M.L. SAINI, SH. MANOHAR LAL, SH. SHAM LAL AN D SH. KAMALJEET SINGH WAS RECORDED AT THE BACK OF THE ASS ESSEE AND THAT THE APPELLANT WAS NEVER CONFRONTED WITH THOSE STATEMENTS AND THESE PERSONS HAVE NEVER BEEN SUBJECTED TO CROS S EXAMINATION. IT HAS FURTHER BEEN ARGUED THAT UNDER SUCH CIRCUMSTANCES THEIR STATEMENTS ARE NOT ACCEPTABLE A S ANY FORM OF EVIDENCE WHICH CAN BE UTILIZED AGAINST THE APPELLAN T. AFTER HAVING CONSIDERED THE ENTIRE ISSUE INCLUDING THE FACT THAT THERE WAS NO EVIDENCE FOUND FROM THE PREMISES OF TH E APPELLANT TO CORROBORATE THE ALLEGATIONS LEVELED BY THE AO BY UTILIZING VARIOUS STATEMENTS, THE STAND OF THE AO CANNOT BE U PHELD AND THE TREATMENT OF RS. 7,87,000/- AS UNDISCLOSED INCOME I S DELETED. ITA NO.239 & 296/DEL./2005 42 63. WE FIND THAT BOTH THESE ISSUES ARE SIMILAR TO T HE ISSUES IN RESPECT OF WHICH IDENTICAL ADDITIONS WERE MADE IN THE CASE OF SH. BAHADUR SINGH SABHARWAL, BROTHER OF THE ASSESSEE. HONBLE I BENC H OF TRIBUNAL IN THE CASE OF SH. BAHADUR SINGH SABARWAL IN IT(SS) A NO. 223/ DEL. / 2005 VIDE ITS ORDER DATED 02.06.2010 HAS DISMISSED THE APPEAL OF THE REVENUE. RELYING UPON THE SAID ORDER, WE ALSO DISMISS THESE TWO GROUNDS O F THE REVENUE APPEAL. 64. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 65. TO SUM UP : THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED AND THE REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 23 RD DAY OF DECEMBER, 2011. SD/- SD/- (DIVA SINGH) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 23 RD DAY OF DECEMBER, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), FARIDABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.