ACIT, Patiala V. M/s Ram Singh Manmohan Singh, Patiala

ITSSA 25/CHANDI/2004

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1486 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-01-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-11-2015
• Assessment Year: misc
• Appeal Filed On: 26-04-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH JAIN
• Keywords: Unexplained investment; Gift; Search and seizure; Document seized; Opportunity of being heard; Block assessment; Documents seized
• Section: 142(1); 132; 90

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. RANO JAIN, ACCOUNTANT MEMBER IT(SS)A NO. 25/CHD/2004 BLOCK PERIOD 1.4.1990 TO 14.3.2001 THE ACIT, VS. M/S RAM SINGH MANMOHAN SINGH, CENTRAL CIRCLE, PATIALA PATIALA PAN NO. AACFR1897Q IT(SS)A NO. 26/CHD/2004 BLOCK PERIOD 1.4.1990 TO 14.3.2001 THE ACIT, VS. SH. MANMOHAN SINGH, CENTRAL CIRCLE, PATIALA PATIALA PAN NO. AKBPS8081Q & C.O. NO. 73/CHD/2004 (IN IT(SS)A NO. 26/CHD/2004) BLOCK PERIOD 1.4.1990 TO 14.3.2001 SH. MANMOHAN SINGH, VS. THE ACIT, CENTRAL CIRCLE, PATIALA PATIALA PAN NO. AKBPS8081Q (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANOJ MISHRA RESPONDENT BY : SH. RAKESH JAIN DATE OF HEARING : 5.11.2015 DATE OF PRONOUNCEMENT : 7.01.2016 ORDER PER H.L.KARWA, VP THESE TWO APPEALS BY THE REVENUE AND CROSS OBJECTI ONS BY THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 2. FIRSTLY, WE WILL TAKE UP IT(SS)A NO. 25/CHD/2004 . GROUND NO.1 OF THE APPEAL READS AS UNDER:- (I) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DELETING THE ADDITION OF RS. 12,80,969/- ON ACCO UNT OF UNACCOUNTED SALES. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT AS SESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE MANUFACTURING AND TRADING OF GOL D AND DIAMOND JEWELLERY. SEARCH IN THIS CASE WAS CONDUCTED ON 14.3.2001. DU RING THE COURSE OF WHICH CERTAIN INCRIMINATING DOCUMENTS WERE SEIZED. NOTICE U/S 158 BC OF THE ACT READ WITH SECTION 142(1) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') DATED 8.4.2002 WAS ISSUED TO THE ASSESSEE CALLING FOR THE RETURN FOR BLOCK PERIOD ON 26.4.2002. THE RETURN WAS SUBMITTED ON 26.4.2002 I. E. WITHIN TIME LIMIT ALLOWED IN THE NOTICE DECLARING NET INCOME OF RS. 2,23,220/ -. NOTICES OF HEARING WERE ISSUED FROM TIME TO TIME AND THE INFORMATION CALLED FOR BY THE ASSESSING OFFICER WAS FURNISHED BY THE ASSESSEE. THE ASSESSING OFFICE R COMPLETED THE ASSESSMENT VIDE HIS ORDER DATED 31.3.2003 ON NET INCOME OF RS. 47,04,860/-. THE ASSESSING OFFICER MADE CERTAIN ADDITIONS / DISALLOWANCE. THE FIRST ADDITION OF RS. 12,65,938/- WAS MADE BY THE ASSESSING OFFICER ON AC COUNT OF UNACCOUNTED SALES. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN P ARA 2 TO 2.5 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS DISCUSSED THE NATU RE OF THE INCRIMINATING DOCUMENTS SEIZED FROM THE ASSESSEES RESIDENCE AND THE SHOP. THE RECORD SEIZED FROM THE RESIDENCE INTER ALIA INCLUDED LOOSE SLIPS AND SHEETS NUMBERING TO 1213 (APPROXIMATELY) ALONG WITH REPAIR REGISTRARS AND RE GULAR BOOKS OF ACCOUNT. THIS WAS SEIZED IN 9 BUNDLES MARKED AS ANNEXURE A-1 TO A -9. A PERUSAL OF THOSE LOOSE SLIPS, IT WAS NOTICED THAT THE SAME WERE THE RECORD OF THE PURCHASES AND ALSO THE ARTICLES GOT MANUFACTURED FROM VARIOUS ART ISANS DURING THE PERIOD OF FIVE MONTHS FROM MAY 2000 TO OCTOBER 2000. THE ASS ESSING OFFICER HAS GIVEN 3 THE DETAILS OF THE LOOSE SLIPS FOUND FROM THE RESID ENCE AND SHOP OF THE ASSESSEE. FROM THE ASSESSEES SHOP, LOOSE SLIPS NO. 1450 (APP ROXIMATELY WERE SEIZED IN 13 BUNDLES MARKED AS LA 01 TO LA 13. THESE ARE TWO TYP E OF SLIPS, THAT IS (I) JEWELLERY SOLD TO CUSTOMERS DIRECTLY OUT OF MANUFAC TURED JEWELLERY AND (II) JEWELLERY SOLD AFTER MANUFACTURING THE SAME AS ORDE R AGAINST THE ADVANCE MONEY RECEIVED. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE WAS UNABLE TO EXPLAIN THE UNACCOUNTED SALES DURING THE PERIOD 200 0-01 REGARDING 12905.39 GMS JEWELLERY VALUED AT RS. 54,20,264/- @ RS. 420/- PER GM. THE ASSESSING OFFICER ALSO OBSERVED THAT DURING THE COURSE OF SEA RCH KARIGARS RECORD WAS ALSO FOUND AND SEIZED. ACCORDING TO ASSESSING OFFICER, THESE ARE WEEKLY SHEETS CONTAINING ARTISAN-WISE RECORD OF VARIOUS ITEMS DEL IVERED BY THAT ARTISAN TO THE ASSESSEE. FURTHER THE WEIGHTS OF THESE ARTICLES H AVE BEEN SUMMED UP AFTER WHICH THE MAKING CHARGES WHICH VARIED FROM ARTISAN TO ARTISAN HAVE BEEN DEBITED. THE ASSESSING OFFICER HAS MENTIONED THE NA MES OF SIX ARTISIANS VIZ. S/SH. AMAR NATH, BENGALI, KISHAN LAL, KULWANT SINGH , BABA AND VIJAY FROM WHOM THE ASSESSEE REGULARLY USED TO MAKE THE ARTIC LES. THE ASSESSING OFFICER FURTHER OBSERVED THAT WEEKLY STATEMENT PERTAINED TO THE PERIOD 24.6.2000 TO 2.10.2000. BESIDES THE ABOVE, THE REMAINING QUALIT Y OF GOLD LYING WITH EACH OF THE ARTISAN HAS ALSO BEEN SEPARATELY MENTIONED IN A SHEET. ACCORDING TO ASSESSING OFFICER, ON EXAMINATION OF ALL THE DOCUME NTS, IT WAS NOTICED THAT ALL THE ABOVE SIX ARTISANS HAVE DELIVERED THE GOODS WEI GHING 14.475 KILOGRAMS. THE ASSESSING OFFICER CONCLUDED THAT ON THE BASIS OF S LIPS AND DOCUMENTS FOUND FROM THE RESIDENCE, THE TOTAL JEWELLERY MANUFACTURE D / SOLD WAS 9483.66 GMS OUT OF WHICH 3140.8 GMS WAS SHOWN AS SALES UPTO 30.9.20 00. WHILE WORKING OUT THE ADDITION, THE MANUFACTURED / SOLD JEWELLERY WAS CON SIDERED AT 9483.66 GMS BY THE ASSESSING OFFICER. THE ASSESSING OFFICER AFTER TAKING INTO CONSIDERATION THE KARIGARS RECORDS REACHED AT THE CONCLUSION THAT B ALANCE OF RS. 4991.30 GMS OF JEWELLERY MANUFACTURED / SOLD HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT. 4 THE ASSESSING OFFICER WORKED OUT THE TOTAL UNACCOU NTED SALES PERTAINING TO THE PERIOD 2000-01 AS UNDER:- THE UNACCOUNTED SALES FOR THE PERIOD FROM MAY, 2000 RS. 47,60,944/- TO SEPTEMBER, 2001 THE UNACCOUNTED SALES FOR THE PERIOD FROM OCTOBER, 2000 RS. 27,55,961/- TO 14-3-2001. I.E DATE OF SEARCH THE TOTAL UNACCOUNTED SALES FOR THE PERIOD FROM MAY , 2000 RS. 75,16,905/- TO MARCH, 2001 (11 MONTHS) THE TOTAL GROSSED UP UNACCOUNTED SALES FOR 12 MONTH S RS. 82,00,260/- (AS DISCUSSED ABOVE). THE UNACCOUNTED SALE FOR THE F. YEAR 1998-99 RS. 8,24,892/- TOTAL UNACCOUNTED SALES IN RESPECT OF F. YEAR 1998- 99 RS. 90,25,152/- AND 2000-01 IN VIEW OF THE ABOVE, THE ASSESSING OFFICER HAS TAK EN THE INCOME AT RS. 14,89,150./- BY APPLYING THE RATE OF GROSS PROFIT @ RS. 16.5%. ACCORDINGLY, THE ASSESSING OFFICER ADDED A SUM OF RS. 14,89,150/- A S UNDISCLOSED INCOME OF THE ASSESSEE FOR THE RELEVANT BLOCK PERIOD. 4. ON APPEAL, THE CIT(A) ALLOWED THE RELIEF OF RS. 12,80,969/-, OBSERVING AS UNDER:- I HAVE EXAMINED THE ISSUE, AND I FIND FORCE IN THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE FOLLOWING REASONS:- FROM THE ABOVE FACTS; IT TRANSPIRES THAT SOME SLIPS (ON WHICH GOLD HAD BEEN WRITTEN) WERE FOUND AT THE TIME OF SE ARCH. ACCORDING TO THE A.O., THESE SLIPS WERE THE RECORDS OF THE SALES EFFECTED BY THE APPELLANT WHEREAS THE APPELLANT HAS BEEN MAINTAINING THAT THE SLIPS REPRESENTED NOT JUST SAL ES; BUT ALSO ORNAMENTS HAVING BEEN RECEIVED FOR REPAIRS, OLD GOL D, 5 OBTAINED FOR MELTING; GOLD GIVEN BY THE CUSTOMERS; ADVANCES RECEIVED, RETURN OF ADVANCES, ROUGH ESTIMATES AND S LIPS WHICH DID NOT MAKE ANY SENSE. THE ISSUES WHICH CALL FOR A DJUDICATION THEREFORE, ON THIS ASPECT ARE ENLISTED AS UNDER:- I) WHETHER STOCK WITH THE VARIOUS ARTISANS WAS E XPLICABLE WITH THE HELP OF STOCK REGISTER AND REPAIR REGISTER WHICH ARE IN THE POSSESSION OF THE DEPARTMENT ? II) WHETHER ANY DUPLICATION WAS POSSIBLE OR NOT ? AND III) WHETHER THE ENTIRE QUANTITY COVERED BY SLIPS COULD BE TREATED AS SALES OF THE APPELLANT FIRM ? SO FAR AS THE FIRST CONTROVERSY IS CONCERNED, THE A PPELLANT HAS FILED A DETAILED CHART ALONG WITH WRITTEN SUBMISSIO N SHOWING THE STOCK AVAILABLE WITH THEM BOTH IN THE STOCK REG ISTER AS WELL AS IN THE REPAIR REGISTER. THE EXAMINATION OF THE D ETAILS PROFFERED REVEALS THAT THE QUANTITY AVAILABLE IN TH E STOCK AND THAT ENTERED IN THE REPAIR REGISTER WAS AT NO POINT OF TIME HIGHER. UNDER SUCH CIRCUMSTANCES, IT IS DIFFICULT T O PRESUME THAT THE ENTIRE STOCK LYING WITH THE ARTISANS WAS I NEXPLICABLE. I FIND THAT NO EXERCISE IN THIS REGARD, HAS BEEN DONE BY THE A.O. AT THE TIME OF FRAMING THE ASSESSMENT ALSO. IN THES E CIRCUMSTANCES, I AM OF THE OPINION THAT IN THE ABSE NCE OF THERE BEING EXCESS STOCK LYING WITH THE ARTISANS, NO PART THEREOF COULD HAVE BEEN TREATED AS UNEXPLAINED. COMING TO THE SECOND ISSUE, IT IS A FACT THAT IN TH E JEWELLERY TRADE, THE ITEMS OF JEWELLERY ARE WEIGHED NOT ONCE BUT MANY ITEMS. THIS WEIGHMENT TAKES PLACE WHEN THE GOODS AR E DELIVERED BY THE CUSTOMERS TO THE JEWELLERY WHEN TH E SAME ARE SENT FOR MAKING OR REMAKING; WHEN THE SAME ARE RECE IVED FROM THE ARTISAN; AND, FINALLY WHEN THEY ARE DELIVERED B ACK TO THE CUSTOMERS. THERE IS EVERY POSSIBILITY OF WEIGHMENT OF THE GOODS AT MANY STAGES. THIS CONTROVERSY IS INEX TRICABLY LINKED WITH THE THIRD CONTROVERSY ENLISTED ABOVE. IT HAS BEEN CONTENDED VEHEMENTLY BY THE LEARNED COUNSEL THAT THE SLIPS FOUND AT THE PREMISES OF THE APPELLANT COULD NOT BE SAID TO BE 6 CONTAINING DETAILS PERTAINING TO SALES ONLY. IF A S ALE IS TO BE MADE, IT HAS TO BE BACKED UP BY PURCHASE. THIS CON TENTION OF THE LEARNED COUNSEL DOES MAKE SENSE AS TO HOW THERE CAN BE SALES WITHOUT PURCHASE? OUT OF THE TOTAL SLIPS FOUN D, THE A.O. HAS NOT CONNECTED AND CO-RELATED THE SLIPS WITH PUR CHASES, GOLD RECEIVED AS PER SLIPS OF ADVANCES FROM THE CUS TOMERS, ROUGH SLIPS, DUPLICATE SLIPS, THE SLIPS WHICH HAD B EEN ENTERED IN THE BOOKS OF ACCOUNT; AND THE SLIPS CONTAINING M ELTED GOLD REPRESENTED BY WORK TUKRA. THE ASSESSING OFFICER HAS JUST TREATED THE SLIPS RELATABLE TO THE STOCK WITH THE A RTISANS AS SALES OF THE APPELLANT. THE CASE OF CS VS. H.M. ES UFLI ABDULALI 90 ITR 271 SC RELIED UPON BY THE ASSESSING OFFICER HAS BEEN DISTINGUISHED BY THE LD. COUNSEL BY PLACIN G RELIANCE ON THE CASE OF RML MEHTROTRA VS. ACIT 68 ITD 288 (A LL), AND CIT V M.K.E. MEMON 248 ITR 310 (BOM), BECAUSE T HE JUDGMENT OF H.M.ESUFALI WAS W.R.T. A SALES TAX MATT ER, AND THAT TOO, A BEST JUDGMENT, WHEREAS THE ASSESSMENT U NDER CONSIDERATION IS IN RESPECT OF A LOCK PERIOD SPANNI NG TEN YEARS. SUCH AN APPROACH WOULD SEEM LOPSIDED AND IMP RACTICAL BECAUSE IF THE APPELLANT FIRM HAS TO MAKE ORNAMENTS ON ORDER OF THE CUSTOMER, SOME ADVANCE IS ALWAYS TAKEN TO SA FEGUARD THE INTEREST OF THE APPELLANT (JUST IN CASE THE PRO SPECTIVE BUYER DOES NOT TURN UP AT ALL). THE APPELLANT HAS FILED HEAD-WISE DETAILS OF THE SL IPS. THE SLIPS CONTAINING INFORMATION AS TO THE ITEMS SOLD, RECEIVED FOR REPAIR, ENTERED IN THE BOOKS OF ACCOUNTS, TUKRA, DU PLICATE ITEMS, ROUGH ESTIMATES, ADVANCES RECEIVED, AND REMA INING WITH THE APPELLANT, AND THE ADVANCES RETURNED. FROM THES E, IN MY OPINION, ITEMS ENLISTED UNDER THE HEAD 'SALES', ADV ANCES REMAINING WITH THE APPELLANT, AND ADVANCES RETURNED CAN BE TAKEN TO BE THE SALES OF THE APPELLANT. AS FAR AS T HE SALES AS PER SLIPS ARE CONCERNED, THE FACT HAS NOT BEEN DENI ED BY THE APPELLANT, AND WHILE WORKING OUT THE INCOME FOR THE BLOCK PERIOD, SUCH ITEMS HAVE BEEN TAKEN INTO ACCOUNT. IN RESPECT OF THE ADVANCES RECEIVED, WHILE A PART OF IT HAS BEEN ADOPTED IN THE SALES, A PART HAS BEEN SHOWN AS ADVANCES RETURN ED, AND 7 ADVANCES REMAINING WITH THE THERE SEEMS LITTLE JUST IFICATION IN THE CLAIM THAT THE ADVANCES GIVEN BY THE CUSTOMERS ARE STILL REMAINING WITH THE APPELLANT, I DO FEEL THAT THE ORNAMENTS COVERED BY SLIPS OF ADVANCES ARE TO BE CONSIDERED A S SALES OF THE APPELLANT. AS PER THE DETAILS AVAILABLE FROM THE RECORDS, THE QUANTITY COVERED BY THE SLIPS WORKS OUT TO 6225.170 GMS. (SA LES 1903.670 GMS, ADVANCES REFUNDED 2361.500 GMS., AND ADVANCES FORFEITED 1960.000 GMS). THE ASSESSING OFF ICER HAS ADOPTED THE RATE OF GOLD AT RS. 42007- PER 10 GMS. ON THIS BASIS, THE VALUE OF THE SALES AGGREGATING TO 6225.1 70 GMS WOULD WORK OUT TO RS. 26,14,500/-. THE RATE OF PROF IT APPLIED BY THE ASSESSING OFFICER @ 16.5% IS ALSO HELD TO BE QUITE REASONABLE. BY APPLYING THE SAID RATIO, THE PROFIT ON UNACCOUNTED SALES WOULD WORK OUT TO RS. 4,31,393/-, AS AGAINST WHICH THE INCOME REFLECTED IN THE BLOCK RET URN IS RS. 2,23,212/-. THE BALANCE AMOUNT OF RS. 2,08,181/- IS , THEREFORE, REQUIRED TO BE SUSTAINED. IN SUM WHEREAS THE APPEL LANT GETS A RELIEF OF RS. 12,80,969,/- ON THIS ISSUE AN ADDITIO N TO THE EXTENT OF RS. 2,08,181/- IS CONFIRMED HEREBY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI MANOJ MISHRA, LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER IN SUPPORT OF REVENUES CASE. ON THE OTHER HAND SHRI RAKESH JAIN LD. COUNSEL FOR THE ASSESSEE STRONGLY R EITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND AT THE SAME T IME, HE HAS ALSO SUPPORTED THE ORDER OF CIT(A). SHRI RAKESH JAIN, LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE DOCUMENTS MARKED AS A-1 TO A-9 CONTAINED I NFORMATION AS TO JOB DONE BY ARTISANS WHICH RELATED TO REPAIR / SALES, WEIGHT OF GOLD, ROUGH ESTIMATES AND THERE WERE FEW SLIPS, NARRATION OF WHICH DID NOT MA KE ANY SENSE. IN CERTAIN SLIPS ON WHICH ADVANCE RECEIPTS HAVE BEEN NOTED REPRESENT ED SALES. SHRI RAKESH JAIN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AT THE TIME OF FILING HIS RETURN FOR 8 THE BLOCK PERIOD SEPARATE LIST IN RESPECT OF DOCUME NTS MARKED AS LA' WERE GIVEN TO THE ASSESSING OFFICER. IN FACT, THOSE DOC UMENTS CONTAINED ADVANCES RECEIVED, ADVANCES RETURNED, ADVANCES FORFEITED AND SALES EFFECTED. HOWEVER, THE ASSESSING OFFICER HAS COMPLETELY IGNORED THE ABOVE FACTS AND HAD TREATED THE FIGURES MENTIONED IN LA' AS SALES MADE BY THE ASSE SSEE. SHRI RAKESH JAIN LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INFEREN CE DRAWN BY THE ASSESSING OFFICER IS NOT CORRECT. ACCORDING TO HIM, IF ALL TH E SLIPS CONTAINED SALES, THERE WAS NO NEED TO KEEP SEPARATE RECORDS IN A DIFFERENT SHAPE REPRESENTING ADVANCES RECEIVED FOR SALE OF ORNAMENTS. HE FURTHER POINTED OUT THAT THE QUANTITY HANDLED / REMAINING WITH THE ARTISANS AS PER DOCUMENTS MARK ED AS A-1 TO A-9 REPRESENTED STOCK REMAINING WITH SUCH ARTISANS AT THE GIVEN POI NT OF TIME. SHRI RAKESH JAIN, LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE D OCUMENTS MENTIONED IN CHART AT PAGE 6 OF THE ASSESSMENT ORDER SHOWED THE TOTAL QUANTITY OF GOLD WITH VARIOUS ARTISANS ON GIVEN DATES. IT WAS EXPLAINED BEFORE TH E ASSESSING OFFICER THAT THE QUANTITY COVERED BY THESE SLIPS REPRESENTED ORNAMEN TS RECEIVED FROM VARIOUS CUSTOMERS. IT WAS ALSO EXPLAINED TO THE ASSESSING O FFICER THAT SOME QUANTITY ALSO REPRESENTED STOCK OF THE SHOP WHICH WAS GIVEN TO TH E ARTISANS FOR REPAIR AND CARRYING OUT MINOR ALTERATIONS AS PER THE REQUIREME NT OF THE CUSTOMERS. IT ALSO STATED BEFORE US THAT THE ASSESSEE IS MAINTAINING S TOCK REGISTER AND REPAIR REGISTER AND QUANTITY OF GOLD WITH THE ARTISANS, SO FAR AS THE UNEXPLAINED PART IS CONCERNED CAN BE SEEN WITH REFERENCE TO THE STOCK R EGISTER AND REPAIR REGISTER MAINTAINED BY THE ASSESSEE. SHRI RAKESH JAIN LD. CO UNSEL FOR THE ASSESSEE SUBMITTED THAT TO EXPLAIN THE QUANTITY OF GOLD AS P ER STOCK REGISTER AND REPAIR REGISTER WAS SUBMITTED FOR THE CIT(A) WHICH HAS BEE N REPRODUCED AT PAGE 9 OF THE IMPUGNED ORDER. WE FIND THAT THE LD. CIT(A) HA S THOROUGHLY EXAMINED THE ISSUE. IT IS APPARENT FROM HIS ORDER THAT THE ASSES SEE HAD SUBMITTED THE DETAILS OF THE SLIPS. THE LD. CIT(A) HAS CATEGORICALLY STATED THAT THESE SLIPS CONTAINED INFORMATION REGARDING ITEMS SOLD, RECEIVED FOR REPA IRS, ENTERED INTO BOOKS OF ACCOUNT, TUKRAS (SOLID GOLD AFTER MELTING THE GOLD BELONGS TO THE CUSTOMERS), 9 DUPLICATE ITEMS, ROUGH ESTIMATES, ADVANCES RECEIVED AND REMAINING WITH THE ASSESSEE AND THE ADVANCES RETURNED. IN OUR CONSIDER ED VIEW, THE LD. COMMISSIONER HAS CORRECTLY OBSERVED THAT THE ITEMS LISTED UNDER THE HEAD SALES / ADVANCES, REMAINING WITH THE ASSESSEE, AND ADVANCES RETURNED CAN BE TAKEN TO BE SALES OF THE ASSESSEE. HE HAS CORRECTLY HELD THAT T HE ORNAMENTS GATHERED BY SLIPS OF ADVANCES HAVE TO BE CONSIDERED AS SALES OF THE A SSESSEE. THERE IS NO MATERIAL ON RECORD TO CONTROVERT THE WORKING OF CIT(A) REGAR DING THE QUANTITY BY THE SLIPS AS WORKED OUT TO 6225.170 GMS. WE MAY ALSO O BSERVE HERE THAT THE ASSESSING OFFICER HAS FRAMED THE ASSESSMENT ORDER I N HASTE. THE DRAFT ORDER FRAMED BY THE ASSESSING OFFICER WAS GIVEN ON 31.3.2 003 AND THE CASE WAS FIXED ON THAT VERY DAY AND THE ASSESSMENT ORDER U/S 158BC OF THE ACT WAS ALSO PASSED ON THE SAME DATE. THUS, IT IS CLEAR THAT THE ASSESS ING OFFICER HAS NOT OFFERED AN ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE PASSING THE ASSESSMENT ORDER AS A RESULT OF WHICH HE MADE UNWAR RANTED ADDITIONS. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THI S ISSUE AND ACCORDINGLY WE UPHOLD THE SAME. CONSEQUENTLY, WE REJECT GROUND NO . (I) OF THE APPEAL. 6. GROUND NO.(II) OF THE APPEAL READS AS UNDER:- (II) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DELETING THE ADDITION OF RS. 15,03,400/- ON ACCO UNT OF UNEXPLAINED INVESTMENT IN STOCK. 7. THE ASSESSING OFFICER MADE AN ADDITION OF RS. 15 ,03,400/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PURCHASE OF GOLD FOR THE PURPOSE OF MAKING THE UNEXPLAINED SALES. THE ASSESSING OFFICER HAS WORKED OUT THE TOTAL UNACCOUNTED SALES FOR THE FINANCIAL YEAR 2000-10 AT RS. 82,00,2 60/- AS MENTIONED IN THE PRECEDING PARAGRAPHS. THE ASSESSING OFFICER PRESUME D THAT THE ASSESSEE FIRM ON AN AVERAGE WAS CARRYING OUT SALES AMOUNTING TO RS. 6,83,000/- PER MONTH OUTSIDE 10 THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAS ALS O POINTED OUT THAT FOR THE FINANCIAL YEAR 1998-99, HE HAS COMPUTED THE UNACCOU NTED SALES AT RS. 8,24,829/- THE ASSESSING OFFICER COMPUTED THE UNDISCLOSED INC OME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED INVESTMENT FOR THE FINANCIAL YEAR 1998-99 AT RS. 1,37,400/- AND RS. 13,66,400/- FOR THE FINANCIAL YE AR 2000-01 TOTALING TO RS. 15,03,400/-. 8. ON APPEAL, THE CIT(A) DELETED THE ADDITION STATI NG THAT NO ADDITION IS CALLED FOR ON ACCOUNT OF UNEXPLAINED INVESTMENT BEC AUSE THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS MADE ANY UNEXPLAINED INVESTMENT. THE LD. CIT(A) HAS FURTHER POINTED OUT THAT AT THE TIME OF SEARCH, NO DIFFERENCE IN STOCK WAS FOUND. ACCOR DINGLY, THE CIT(A) DELETED THE ADDITION. 9 WE HAVE HEARD THE RIVAL SUBMISSIONS. IT APPEARS THAT THE ASSESSING OFFICER MADE THE ADDITION PURELY ON THE BASIS OF SURMISES A ND CONJECTURE. AT THE TIME OF SEARCH, NO INCRIMINATING DOCUMENTS WERE FOUND TO SU GGEST THAT ANY UNACCOUNTED INVESTMENT HAS BEEN MADE IN STOCK BY THE ASSESSEE. EVEN AT THE TIME OF SEARCH, NO DIFFERENCE IN THE STOCK WAS NOTICED. IT IS ALSO RELEVANT TO OBSERVE HERE THAT WHILE DECIDING GROUND NO. (I) OF THE APPEAL, WE HAD UPHOLD THE ORDER OF CIT(A) IN HOLDING THAT THE SALES TO THE TUNE OF RS. 90,25, 152/- COULD NOT BE TAKEN ON THE BASIS OF LOOSE SLIPS FOUND AND SEIZED DURING THE CO URSE OF SEARCH. IT IS ALSO ONE OF THE CONTENTIONS OF THE ASSESSEE THAT FOR THE SAK E OF ARGUMENT IT IS ADMITTED THAT A FRACTION OF THE SLIPS CONTAIN SALES, THERE W AS NO NEED TO MAKE ANY INVESTMENT, WHAT TO TALK OF UNEXPLAINED INVESTMENT WHEN HUGE STOCKS WERE ALREADY AVAILABLE IN THE STOCK REGISTER ITSELF. THE BUSINESS PRUDENCE NEVER 11 REQUIRES INVESTMENT IN GOODS AND STOCK ALREADY AVAI LABLE WITH THE ASSESSEE. IN VIEW OF THE ABOVE, WE REJECT THIS GROUND OF APPEAL. 10. GROUND NO.(III) OF THE APPEAL READS AS UNDER:- (III) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DELETING THE ADDITION OF RS. 8,05,175/- ON ACCOU NT OF RECOVERABLE DEBTS. 11. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN PARA 4 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS NOTED THAT AS PER PAGE NO. 107 TO 111 ANNEXURE LA-11, SHRI MANMOHAN SINGH C/O M/S RAM SINGH MANMO HGAN SINGH JEWELLERS HAD SOLD DIFFERENT WEIGHTS OF JEWELLERY DURING THE PERIOD NOVEMBER, 1998 TO FEBRUARY 1999. ACCORDING TO ASSESSING OFFICER, A S UMMARY OF THIS SALES HAS BEEN MADE ON PAGE 106 OF THE SAID DOCUMENT. ON THE SUMMARY, INTEREST OF EACH RECOVERABLE AMOUNT OF SALE HAS BEEN WORKED OUT UPTO 31.3.2000 AND THE BALANCE AS ON 31.3.22000 HAS BEEN WORKED OUT TO RS. 3,74,50 0/- INCLUDING INTEREST. THE ASSESSING OFFICER CALCULATED INTEREST @ 10% ON THE ABOVE AMOUNT WHICH CAME TO RS. 4,30,675/-. THUS, THE TOTAL AMOUNT RECOVERABLE WAS WORKED OUT AT RS. 8,05,175/- UPTO 31.3.2001 INCLUDING THE AMOUNT OF I NTEREST. ON APPEAL, THE CIT(A) DELETION THE ADDITION FOR THE FOLLOWING REAS ONS:- I HAVE EXAMINED THE RIVAL SUBMISSIONS, AND I FIND FORCE IN THE CONTENTIONS OF THE LEARNED COUNSEL. THE EXPLANA TION OFFERED BY THE APPELLANT IS NOT ONLY SUPPORTED BY T HE FACTS ON RECORD BUT ALSO DERIVE SUPPORT FROM THE BOOKS OF ACCOUNTS OF M/S ARORA JEWELLERS. BEFORE ME, THE LEA RNED COUNSEL HAS GIVEN A CHART OF THE AMOUNT OUTSTANDING AS WELL AS THE INTEREST ACCRUED THEREON FROM TIME TO T IME WHICH IS ALSO SUPPORTED BY THE INTEREST ACCOUNT AND PAWNING ACCOUNT IN THE BOOKS OF M/S ARORA JEWELLERS , PATIALA. SINCE THE BOOKS OF ACCOUNT OF THAT CONCERN ARE 12 LYING WITH THE DEPARTMENT ONLY, THESE ENTRIES COULD EASILY BE VERIFIED FROM THE COPIES OF THE PAWNING ACCOUNT ALONG WITH WRITTEN SUBMISSIONS (WHICH ARE ALSO REPORTEDLY AVAILABLE IN THE SEIZED RECORDS). AS PER THE LEARNE D COUNSEL, THE FIGURE OF PAWNING DEBTS FROM 3.12.98 T O 7.12.98 WAS RS. 28,500A AS AGAINST WHICH THE FIGURE IN THE SEIZED PAPERS WAS RS. 28,0007- ONLY. THE FIGURE FRO M 18.12.97 TO 3.2.98, THE FIGURE IS RS. 50,4007- IN T HE BOOKS OF ACCOUNTS, WHILE AS PER THE SEIZED RECORD, IT WAS RS. 40,0007- ONLY. FURTHER, THE LEARNED COUNSEL, FOR TH E PERIOD 3.12.98 TO 31.3.99, WHILE THE FIGURE AS PER THE BOO KS OF ACCOUNTS WAS RS. 1,85,6007-, THE SAME FIGURE AS PER THE SEIZED RECORD WAS ESTIMATED AT RS. 2,00,000/-. LIKE WISE, AS STATED BY THE LEARNED COUNSEL, THE FIGURES OF INTER EST AS PER BOOKS OF ACCOUNTS FOR THE ABOVE PERIODS ARE RS. 23, 1687- AND RS. 81,8897- AS AGAINST THE FIGURE OF RS.24,500 /- AND RS. 80,000/- IN THE SEIZED RECORDS. THE LEARNED C OUNSEL HAS MADE THE SUBMISSIONS TO DRIVE HOME THE POINT TH AT THE PAPERS IN THE SEIZED RECORDS PERTAIN TO ROUGH CALCU LATIONS ONLY, WHEREAS THE FIGURES OF LOANS AND INTEREST ACC RUED THEREON ARE PROPERLY RECORDED AND REFLECTED IN THE BOOKS OF ACCOUNTS OF M7S ARORA JEWELLERS, OUR SISTER CONCERN . AFTER GOING THROUGH THE GAMUT OF THE VARIOUS SUBMIS SIONS OF THE LEARNED COUNSEL ON THIS ISSUE, I AM UNABLE TO S USTAIN THE ADDITION OF RS. 8,05,175/- ON THIS ACCOUNT, I, THEREFORE, DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE UNDER THIS HEAD. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE OPINION THAT THE LD. CIT(A) HAS CORRECTLY APPRECIATED THE EXPLANATION OF THE ASSESSEE WHICH WAS DULY SUPPORTED BY THE FACTS ON RECORD AND FROM THE BOOKS OF ACCOUNT OF M/S ARORA JEWELLERS. THE ASSESSEE HAS EXPLAINED BEFORE THE CIT(A) THAT ALL THE DETAILS IN THE BOOKS OF ARORA JEWELLERS WERE SUPPLIED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER WITHOUT VERIFYING FROM THE SEIZED DOCUMENTS, DREW AN ADVERSE 13 INFERENCE AGAINST THE ASSESSEE WHEREIN THE AMOUNT O UTSTANDING AS WELL AS INTEREST ACCRUED THEREON FROM TIME TO TIME WHICH WA S DULLY SUPPORTED BY THE INTEREST ACCOUNT AND PAWNING ACCOUNT IN THE BOOKS O F ACCOUNT OF M/S ARORA JEWELLERS, PATIALA. IT IS ALSO APPARENT FROM THE RE CORDS THAT THE BOOKS OF ACCOUNT OF THAT CONCERN WERE LYING WITH THE DEPARTMENT AND THE ASSESSING OFFICER HAS NOT VERIFIED THE SAME FROM THE PAWNING ACCOUNT. AS WE HAVE ALREADY OBSERVED HEREINABOVE THAT THE ASSESSING OFFICER HAS PASSED T HE ASSESSMENT ORDER, IN HASTE, AND THEREFORE, HE HAS NOT VERIFIED THE CONTENTION O F THE ASSESSEE FROM THE BOOKS OF ACCOUNT OF M/S ARORA JEWELLERS, PATIALA. ON THE OTHER HAND, LD. CIT(A) HAS CORRECTLY ACCEPTED THE EXPLANATION OF THE ASSESSEE AFTER VERIFYING THE SAME FROM THE BOOKS OF ACCOUNT OF M/S ARORA JEWELLERS. CONSEQUENTLY, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL AND ACCORDI NGLY THE SAME IS DISMISSED. 13. GROUND NO.(IV) OF THE APPEAL READS AS UNDER:- (IV) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DELETING THE ADDITION OF RS. 9,07,135/- ON ACCOU NT OF UNACCOUNTED JEWELLERY. 14. THE ASSESSING OFFICER NOTED THAT DURING THE COU RSE OF SEARCH AT THE BUSINESS PREMISES OF M/S RAM SINGH MANMOHAN SINGH, PHYSICAL VERIFICATION OF THE STOCK OF JEWELLERY LYING THERE WAS UNDERTAKEN. AS PER PHYSICAL VERIFICATION, THE ASSESSEE WAS FOUND IN POSSESSION OF JEWELLERY W EIGHTING 9840.274 GMS AS AGAINST JEWELLERY WEIGHING 7453.580 GMS SHOWN IN TH E BOOKS OF ACCOUNT. THEREFORE, THE JEWELLERY WEIGHING 2386.693 GMS WAS FOUND IN EXCESS AND, HENCE, THE SAME WAS SEIZED. DURING THE COURSE OF SEARCH, S HRI MANMOHAN SINGH, PARTNER OF THE ASSESSEE FIRM WAS CONFRONTED WITH TH ESE FACTS. SHRI MANMOHAN SINGH STATED THAT HE WAS NOT IN A POSITION TO RECON CILE THE STOCK OF GOLD ORNAMENTS AND NO FURTHER EXPLANATION WAS GIVEN. DUR ING THE COURSE OF 14 ASSESSMENT PROCEEDINGS THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE OF INVESTMENT IN EXCESS JEWELLERY WEIGHTING 2683.60 GM S FOUND FROM THE BUSINESS PREMISES. IN RESPONSE TO THE ABOVE QUERIES, THE ASS ESSEE SUBMITTED ITS REPLY ON 23.12.2002 STATING THAT AT THE TIME OF SEARCH JEWEL LERY WEIGHTING 9840.274 WAS FOUND. THE CLOSING STOCK AS ON THAT DATE AS PER BOO KS OF ACCOUNT WAS 7453.580 GMS AND THAT AS PER THE REPAIR REGISTER 2391 GMS. THUS AGGREGATE GOLD AVAILABLE AS PER THE BOOKS OF ACCOUNT CAME TO RS. 9844.580 G MS AND HENCE THERE WAS NO DIFFERENCE IN STOCK AS PER BOOKS OF ACCOUNT AND ON PHYSICAL VERIFICATION. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE FOR THE REASONS GIVEN IN PARAS 5.3 AND 5.4 OF THE ASSESSMENT ORDER AND MADE THE ADDITION OF RS. 9,07,135/- BEING THE VALUE OF ALLEGED EXCESS JEWELL ERY WEIGHTING 2159.843 GMS. 15. ON APPEAL, THE CIT(A) DELETED THE ADDITION STAT ING THAT THE ASSESSING OFFICER HAS NOT REJECTED THE REGISTERS VIZ STOCK RE GISTER AND REPAIR REGISTER MAINTAINED BY THE ASSESSEE BY BRINING ANY EVIDENCE ON RECORD. ACCORDING TO CIT(A), THE STOCK IN PHYSICAL ACCOUNTING WAS 9840.2 73 GMS, THE STOCK AS PER STOCK REGISTER WAS 7453.580 GMS AND AS PER THE REPA IR REGISTER IT WAS 2383.410 GMS. THE AGGREGATE STOCK CAME TO 9836.990 GMS AS PE R SEIZED RECORDS. THE LD. CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION MERELY ON THE GROUNDS OF PRESUMPTIONS AND SUSPICION. ACCORDING TO HIM, THE ASSESSING OFFICER HAS MADE ADDITION ON THE GROUND THAT THE ASSESSEE C OULD NOT ADDUCE ANY EVIDENCE THAT THE ORNAMENTS ENTERED IN THE REPAIR R EGISTER BELONGED TO THE VARIOUS CUSTOMERS; THAT THE ADDRESSES GIVEN WERE IN COMPLETE IN RESPECT OF SOME CUSTOMERS AND THAT SHRI MAN MOHAN SINGH (PARTNER) C OULD NOT IDENTIFY THE ITEMS RECEIVED FOR REPAIRS. THE LD. CIT(A) HAS REJECTED T HE CONTENTION OF THE ASSESSING OFFICER STATING THAT IF THE ADDRESSES OF THE SOME OF THE CUSTOMERS WERE NOT COMPLETE, THE SAME COULD HAVE BEEN CLARIFIED FR OM THE ASSESSEE. HE FURTHER OBSERVED THAT THE INABILITY OF THE PARTNERS TO IDEN TIFY THE ITEMS ON THE SPUR OF THE 15 MOMENT ALSO DO NOT ENTITLE THE ASSESSING OFFICER TO IGNORE THE EVIDENCE IN THE SHAPE OF REPAIR REGISTER UNTIL AND UNLESS SOME OTHE R EVIDENCE IS BROUGHT ON RECORD TO PROVE THAT THE ENTRIES IN THE STOCK REGI STER ARE NOT CORRECT. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN OUR VI EW THE LD. CIT(A) HAS CORRECTLY APPRECIATED THE FACTS OF THE PRESENT CASE AS WELL AS THE LEGAL POSITION. THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE ENTRIES APPEARED IN THE STOCK REGISTER AND REPAIR REGISTER ARE NOT CORRECT. THE A GGREGATE STOCK AS PER THESE TWO REGISTERS COMES TO RS. 9836.990 GMS WHILE THE STOCK FOUND DURING THE COURSE OF SEARCH WAS 9840.273 GMS, THUS, THERE IS NOT JUSTIFI CATION IN MAKING THE IMPUGNED ADDITION. WE FULLY ENDORSE THE VIEW TAKEN BY THE CIT(A) ON THIS ISSUE. ACCORDINGLY, WE UPHOLD HIS ORDER AND REJECT GROUND NO. (IV) OF THE APPEAL. 17. GROUND NO.5 OF THE APPEAL READS ASUNDER:- (V) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DIRECTING NOT TO LEVY SURCHARGE ON THE TAX WORKE D OUT ON THE UNDISCLOSED INCOME AS THE CASE PERTAINS TO SEAR CH CONDUCTED PRIOR TO 1.6.2002. 18. THIS ISSUE RELATES TO LEVY OF SURCHARGE ON THE TAXES. IT IS STATED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF CIT V VATIKA TOWNSHIP PRIVATE LIMITED (2014 ) 109 DTR (SC) 33. IN OUR OPINION, THE ISSUE NEEDS TO BE VERIFIED AND DEC IDED AT THE LEVEL OF ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT (A) ON THIS ISSUE AND REMAND THE MATTER TO THE ASSESSING OFFICER TO DECIDE THE I SSUE AFRESH IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT REFERRED TO A BOVE. THE ASSESSING OFFICER SHOULD GIVE AN OPPORTUNITY OF BEING HEARD TO THE AS SESSEE. 16 19.. IN THE ABOVE TERMS, THE APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ITA NO. 26/CHD/2004 20. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF CIT(A)-I, LUDHIANA DATED 12.1.2004 RELATING TO BLOCK PERIOD 1 .4.1990 TO 14.3.2001. GROUND NO.1 OF THE APPEAL READS AS UNDER:- (I) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DELETING ADDITION OF RS. 7,29,132/- ON ACCOUNT O F UNACCOUNTED MARRIAGE EXPENDITURE. 21. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNER IN FIRM NAMELY M/S RAM SINGH MANMOHAN SINGH, PATIALA W HICH IS ENGAGED IN MANUFACTURING AND TRADING OF GOLD AND DIAMOND JEWE LLERY. A SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE INCOME-TAX ACT , 1961 (IN SHORT 'THE ACT') WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE AS SESSEE ON 14.3.2001. DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING PAPERS WERE FOUND AND SEIZED. THE ASSESSEE SUBMITTED HIS RETURN OF INCOME ON 26.4.20 02 FOR THE BLOCK PERIOD ENDING ON 14.3.2001 DECLARING UNDISCLOSED INCOME AT RS. 2,87,085/-. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF S EARCH THE ASSESSEE STATED THAT HE HAD SOLEMNIZED THE MARRIAGE OF HIS SON IN THE MO NTH OF JANUARY 2001. DURING THE COURSE OF SEARCH OPERATION AT THE PREMISES OF T HE ASSESSEE, CERTAIN LOOSE DOCUMENTS WERE FOUND WHICH PROVED THAT THE ASSESSEE HAS INCURRED HUGE EXPENDITURE ON THE MARRIAGE OF THE SON. THESE DOCUM ENTS MAINLY RELATED TO EATABLE ITEMS AND HOUSEHOLD REPAIRS. THE DETAILS O F THE EXPENSES HAVE BEEN MENTIONED AT PAGE 5 OF THE ASSESSMENT ORDER. THE AS SESSING OFFICER OBSERVED THAT THERE WAS NO MENTION OF ANY EXPENDITURE INCURR ED ON BANQUET HALL, GIFTS TO THE BRIDE AND BRIDEGROOM, AND OTHER MISC. ITEMS WHI CH ARE AS ESSENTIAL PART OF THE MARRIAGE CEREMONY AS EATABLES AND OTHERS. ACCO RDINGLY, THE ASSESSING 17 OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF OTHER EXPENSES INCURRED ON HIS SONS MARRIAGE. THE EXPLANATION GIVEN BY THE AS SESSEE WAS REJECTED BY THE ASSESSING OFFICER AND HE MADE AN ADDITION OF RS. 7, 79,732/-. 22. ON APPEAL, THE CIT(A) ALLOWED A RELIEF OF RS. 7,29,132/- TO THE ASSESSEE FOR THE FOLLOWING REASONS I HAVE EXAMINED THE MATTER, AND I FIND FORCE IN TH E SUBMISSION OF THE LEARNED COUNSEL. IN THE EXPLANATI ON FILED BEFORE THE ASSESSING OFFICER, A COPY WHEREOF HAS AL SO BEEN PLACED BEFORE ME, IT WAS EXPLAINED THE ITEMS AS PER LA-15 AGGREGATING TO RS. 4,16,332/- DID BELONG TO THE APP ELLANT BUT PERTAINED TO THE AMOUNT SPENT ON THE CONSTRUCTI ON OF THE HOUSE HIS BROTHER, SHRI JASPAL SINGH. IT WAS ALSO E XPLAINED THAT CERTAIN ITEMS HAD BEEN RECKONED TWICE, THRICE, AND MANY TIMES OVER. ALTHOUGH THE ASSESSING OFFICER AGR EED WITH THE VERSION OF THE APPELLANT THAT THE EXPENDIT URE AMOUNTING TO RS. 4,16,332/- DID NOT PERTAIN TO HIM, BUT HE WORKED OUT THE MARRIAGE EXPENSES AT RS. 9,71,932/- TO WHICH WAS FURTHER ADDED AN AMOUNT OF RS. 3,50,000/- BEING THE COST OF GOLD ORNAMENTS; THE COST OF CLOTHING; EXPENDITURE ON CEREMONIES; AND, BARAT EXPENSES. THE EXPENDITURE AS PER THE SEIZED RECORDS CAME TO RS. (4,07,192/-,/ BUT THE EXPENDITURE ON OTHER ITEMS WA S ADOPTED ON ESTIMATED BASIS. THE EXPENDITURE ESTIMAT ED BY THE APPELLANT WORKED OUT TO RS. 3,50,0007-, WHEREAS THE ESTIMATE OF THE ASSESSING OFFICER CAME TO RS. 4,92, 800/- (1,62,800 + 2,50,000+ 50,000 + 30,000). THE CONTENT ION OF THE LEARNED COUNSEL THAT IN THE ABSENCE OF ANY DOCU MENT (EVIDENCING THE EXTRA EXPENDITURE ME ASSESSING OFFI CER COULD NOT HAVE RESORTED TO ESTIMATION AS HAS BEEN H ELD IN A NUMBER OF CASES, AS UNDER:- A) CIT VS SMT. USHA TRIPATHI 249-ITR-4 (ALL) B) HOTEL VRINDVAN VS. ACIT 67 TTJ 193 (PUNE) 18 C) D.N.KAMANI VS. DCIT 241 -ITR-85 (PATNA) D) SMT. RAJRANI GUPTA VS. DCIT 72 ITD 155 (MU M) E) SMT. PURNIMA BERI VS. DCIT 82 ITR 137 ( ASR ) WHICH THE JURISDICTIONAL TRIBUNAL FOR THE APPELLANT. F) K. GANESHWARE VS. DCIT 80-ITD-429 (CHENNA I) G) CIT VS. RAVIKANT JAIN 250-ITR-141 (DEL) IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS, IT WO ULD BE DIFFICULT TO UPHOLD THE ACTION OF THE A.O. IN ESTIM ATING SUCH EXPENDITURE DURING THE BLOCK ASSESSMENT PROCEEDINGS . AS REGARDS THE WITHDRAWAL MADE FROM DAVINDERPAL SINGH S/O THE APPELLANT, THE A.O'S ACTION IS PRESUMPTUOUS IN NATURE ESPECIALLY WHEN THE DESTINATION OF THE WITHDRAWAL W AS SHOWN TO BE ?* MARRIAGE EXPENSES ONLY. IN THE SAME WAY, THE EXTENT/ADEQUACY OF THE SHAGANS RECEIVED; AND AR BITRARY RESTRICTION THEREOF, IS ALSO NOT A SUBJECT MATTER O F BLOCK ASSESSMENT WHERE NO SUCH ESTIMATION, CONJECTURE AND SURMISES ARE ALLOWED. IF THE ADDRESSES OF THE PERSO NS WHO HAD GIVEN THE SHAGANS WERE NOT AVAILABLE, THE SAME COULD HAVE BEEN CALLED FOR FROM THE APPELLANT. TO SUM UP, IN THE ABSENCE OF ANY ADVERSE EVIDENCE OR ANY MATERIAL HAV ING BEEN FOUND DURING THE COURSE OF SEARCH, THE A.O. WAS NOT JUSTIFIED IN REJECTING THE VERSION OF THE APPELLANT WHEN COMPLETE LISTS OF SHAGANS HAD BEEN FILED. IN VIEW OF THE ABOVE DISCUSSION, THE MARRIAGE EXPEN SES CAN BE WORKED OUT AS UNDER:- EXPENSES AS PER LA-15 AS PER EXPLANATION OF THE ASSESSEE, 4,07,192 COST OF GOLD ORNAMENTS AS PER VOUCHER. 1,0 0,000/- COST OF CLOTHING 1,00,000/ - EXPENDITURE ON VARIOUS CEREMONIES. 150,0 00/- 7,57,192/- 19 THE APPELLANT HAS EXPLAINED THE SOURCE OF GOLD ORNA MENTS AT RS. 1,00,000/-DEBITED IN THE BOOKS OF ACCOUNT; R S. 1,15,000/- AS CASH WITHDRAWN; AND RS. 2,75,000/- AS SHAGANS RECEIVED FROM RELATIVES AND FRIENDS. THE BA LANCE RS, 2,35,000/- HAS BEEN TAKEN TO BE THE UNEXPLAINED INVESTMENT, OUT OF WHICH AN AMOUNT OF RS. 2,23,0007 - SOUGHT TO BE ADJUSTED AGAINST THE INCOME OFFERED IN THE BLOCK RETURN OF THE FIRM, AND RS. 12,000/- OFFERED IN THE BLOCK RETURN OF THE APPELLANT. ON CLOSER EXAMINATIO N, IT IS FOUND THAT THE APPELLANT HAS SOUGHT CREDIT FOR WITH DRAWALS OF RS. 1,00,000/- ON ACCOUNT OF MARRIAGE EXPENSES. THEREFORE, THE CREDIT OF RS. 1,15,000/- CANNOT BE A LLOWED AS DURING THE COURSE OF THE SEARCH, THE AMOUNT OF RS. 50,000/- WAS DEPOSED TO BE FOR THE RENOVATION OF THE HOUSE. IN THE RESULT, THE ADDITION OF RS. 50,000/- IS UPHELD , AND THE NET UNEXPLAINED INVESTMENT ON MARRIAGE OF HIS SON IS TA KEN AT RS. 62,000/-, INSTEAD OF RS. 12,000/- AS OFFERED IN THE BLOCK RETURN. 23. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH T HE PARTIES WE ARE OF THE VIEW THAT THE CONTENTION OF THE ASSESSEE IS THAT IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE REGARDING THE EXPENDITURE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN RESTORING TO ESTIMATION OF MARRIAGE EX PENSES, PARTICULARLY IN THE BLOCK ASSESSMENT PROCEEDINGS. THE HON'BLE SUPREME C OURT IN THE CASE OF ACIT AND ANOTHER V HOTEL BLUE MOON (2010) 321 ITR 362 ( SC) OBSERVED THAT THE ASSESSMENT FOR THE BLOCK PERIOD CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF AC COUNT OR DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WIT H THE ASSESSING OFFICER. THE HON'BLE SUPREME COURT CONCLUDED THAT THE INCOME ASS ESSABLE IN BLOCK ASSESSMENT UNDER CHAPTER XIV-B IS THE INCOME NOT DI SCLOSED BUT FOUND AND DETERMINED AS THE RESULT OF SEARCH UNDER SECTION 13 2 OR REQUISITION UNDER SECTION 132A OF THE ACT. IN THE INSTANT CASE, OUT OF TOTAL EXPENDITURE OF RS. 12,64,732/- 20 THE ASSESSING OFFICER HAVE GIVEN CREDIT FOR SOURCE EXPLAINED AMOUNTING TO RS. 4,83,000/- TO THE ASSESSEE, WHILE THE ASSESSEE EXPL AINED THE SOURCE OF EXPENDITURE AMOUNTING TO RS. 7,48,000/-. THE ASSESS ING OFFICER HAS NOT ACCEPTED THE CLAIM OF SHAGUN RECEIVED FULLY AND ALLOWED ONL Y RS. 1,50,000/- INSTEAD OF RS. 2,75,000/- PARTICULARLY WHEN THE ASSESSEE HAS S UBMITTED THE LIST OF FRIENDS AND RELATIVES WHO GAVE SHAGUNS TO THE ASSESSEE. IN CASE OF ANY DOUBT, THE ASSESSING OFFICER COULD HAVE VERIFIED FROM THE ASSE SSEE, BUT IT APPEARS THAT ASSESSING OFFICER HAS NOT CARRIED OUT ANY SUCH EXER CISE. IT IS ALSO OBSERVED THAT CIT(A) HAS ALLOWED A BENEFIT OF RS. 50,000/- OUT OF CASH WITHDRAWALS OF RS. 1,15,000/-. CONSIDERING THE ENTIRE FACTS AND CIRCU MSTANCES OF THE PRESENT CASE, WE DECLINE TO INTERFERE WITH THE ORDER OF CIT(A) ON THIS ISSUE AND ACCORDINGLY WE UPHOLD THE SAME. 24. GROUND NO.(II) OF THE APPEAL READS AS UNDER:- (II) THE LD. CIT HAS ERRED BOTH IN LAW AND ON FACTS OF T HE CASE IN DELETING ADDITION OF RS. 1,68,000/- ON ACCOUNT OF U NACCOUNTED HOUSEHOLD EXPENDITURE. 25. THE ASSESSING OFFICER ESTIMATED THE HOUSEHOLD E XPENSES FOR THE PERIOD 1.4.2000 TO 31.1.2000 AND MADE AN ADDITION OF RS. 1 ,68,000/-. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN PARA 4 OF THE A SSESSMENT ORDER. ON APPEAL, THE CIT(A) DELETED THE ADDITION AND HENCE THE REVENUES IN APPEAL BEFORE THE TRIBUNAL. 26. BEFORE US, SHRI RAKESH JAIN, LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE TELEPHONE AND ELECTRICITY EXPENSES HAVE BEEN DE BITED IN THE BOOKS OF THE FIRM AND DO NOT FORM PART OF HOUSEHOLD EXPENSES. HE FURTHER POINTED OUT THAT THERE IS NO BASIS FOR ESTIMATING OF GROSS RECEIPTS AND PAYMENTS MADE TO THE 21 DOMESTIC SERVANTS. SHRI RAKESH JAIN, LD. COUNSEL F OR THE ASSESSEE, VEHEMENTLY ARGUED THAT NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH REGARDING HOUSEHOLD EXPENSES, HENCE, NO ESTIMATION / ADDITION ON ACCOUNT OF UNACCOUNTED HOUSE HOLD EXPENSES CAN BE MADE IN BLOC K ASSESSMENT U/S 158BC. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ACIT AND ANOTHER V HOTEL BLUE MOON (SUPRA). WE FULLY AGREE WITH THE ABOVE CONTENTIONS MADE ON BEHALF OF THE ASSESSEE. IT IS ALSO EVIDENT FROM THE RECORDS THAT THE ADDITIONS HAVE BEEN MADE BY THE AS SESSING OFFICER WITHOUT CONFRONTING THE MATERIAL TO THE ASSESSEE AND THERE WAS NO BASIS FOR THE ESTIMATE OF HOUSEHOLD EXPENSES. IN FACT, THE ADDITION HAS BE EN MADE PURELY ON GUESS WORK AND WITHOUT ANY BASIS. ACCORDINGLY WE HOLD THAT THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. ACCORDINGLY, WE REJECT GROUN D NO. (II) OF APPEAL. 27. GROUND NO. (III) OF THE APPEAL READS AS UNDER:- (III) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DIRECTING NOT TO LEVY SURCHARGE ON THE TAX WORKE D OUT ON THE UNDISCLOSED INCOME AS THE CASE PERTAINS TO SEAR CH CONDUCTED PRIOR TO 1.6.2002. 28. THIS ISSUE RELATES TO LEVY OF SURCHARGE ON THE TAXES. IT IS STATED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF CIT V VATIKA TOWNSHIP PRIVATE LIMITED (2014 ) 109 DTR (SC) 33. IN OUR OPINION, THE ISSUE NEEDS TO BE VERIFIED AND DECIDED AT THE LEVEL OF ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE OR DER OF CIT(A) ON THIS ISSUE AND REMAND THE MATTER TO THE ASSESSING OFFICER TO D ECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT REFERRED TO ABOVE. THE ASSESSING OFFICER SHOULD GIVE AN OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. 22 29. IN THE ABOVE TERMS, GROUND NO. (III) IS ALLOWED FOR STATISTICAL PURPOSES. 30. GROUND OF (IV) OF THE APPEAL READS AS UNDER:- A. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DIRECTING TO ADJUST ADDITION OF RS. 2,08,1 51/- SUSTAINED IN THE HANDS OF THE FIRM TELESCOPICALLY F OR DETERMINING ASSESSEES INCOME. 31. THE LD. CIT(A) OBSERVED THAT THE INCOME OF RS. 2,23,000/- DECLARED IN THE RETURN FOR THE BLOCK PERIOD IN THE HANDS OF THE FIR M M/S RAM SIGH MANMOHAN SINGH, PATIALA, PATIALA HAS BEEN TELESCOPED BY THE ASSESSING OFFICER HIMSELF. THE COMMISSIONER FURTHER OBSERVED THAT IN THE INSTANT C ASE, HE HAS WORKED OUT UNEXPLAINED INVESTMENT AT RS. 2,70,500/- (RS. 2,20, 500 + RS. 50,000/-). HE FURTHER STATED THAT IN THE CASE OF ABOVE FIRM AN AD DITION OF RS. 2,08,181/- HAS BEEN SUSTAINED AS UNEXPLAINED INVESTMENT. ACCORDING LY, THE CIT(A) UPHELD THE ADDITION OF RS. 62,319/- (RS. 2,70,500 RS. 2,08,1 81/-) 32. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI RAKES H JAIN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INCOME OF RS. 2,23, 000/- DECLARED IN THE RETURN FOR THE BLOCK PERIOD IN THE HANDS OF THE FIRM M/S R AM SINGH MANMOHAN SINGH, PATIALA HAS BEEN TELESCOPED BY THE ASSESSING OFFICE R HIMSELF. HE THEREFORE, SUBMITTED THAT ADDITION OF RS. 2,08,181/- SUSTAINED IN THE HANDS OF THE FIRM IN BLOCK ASSESSMENT SHOULD BE TELESCOPED TOO. RELIANCE WAS PLACED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PREM CHAND JAIN (1998) 189 ITR 320 (P&H). CONSIDERING T HE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE DO NOT SEE AN Y VALID GROUND IN INTERFERING WITH THE ORDER OF CIT(A) ON THIS ISSUE. ACCORDINGLY , WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE . 23 33. IN THE ABOVE TERMS, THE APPEAL IS ALLOWED PARTL Y FOR STATISTICAL PURPOSES. C.O. NO. 73/CHD/2004 - [IN IT(SS)A NO. 26/CHD/2004 ] 34. AT THE TIME OF HEARING, SHRI RAKESH JAIN, LD. C OUNSEL FOR THE ASSESSEE DID NOT PRESS THE GROUNDS RAISED IN THE CROSS OBJECTION S. HE HAS ALSO GIVEN A WRITTEN NOTE TO THIS EFFECT. ACCORDINGLY, WE DISMISS THE CR OSS OBJECTIONS FILED BY THE ASSESSEE. 35. IN THE RESULT, THE CROSS OBJECTION IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 07.01.2016 SD/- SD/- (RANO JAIN) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 7 TH JANUARY, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR