Smt. Dipika Pankaj Shah, Surat V. The DY. CIT., Cent. Circle 1, Surat

ITSSA 263/AHD/2013

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2071 (ITAT-SURAT)
• Duration Of Justice: 8 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-05-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 22-02-2022
• Assessment Year: misc
• Appeal Filed On: 10-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Document seized; Question of law; Block assessment; Tax effect
• Section: 148; 132; 139; 150(1); 139(1); 158BC(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER IT(SS)A No(s). 262 & 263/AHD/2013 (Assessment Year: F.Y. 1990-91 to 1999-2000 And up to date of search i.e. 17.08.2000) (Virtual Court Hearing) Pankaj P. Shah, 3, Sweet Home Apartment, Opp. Nariswarkshan Gruh, Ghod Doad Road, Surat-395007. PAN: AKIPS8900K Vs The DCIT, Central Circle-1, Surat. Assessee/ appellant Revenue/ respondent Dipika Pankaj Shah, No.3, Sweet Home Apartment, Opp. Nariswarhwan Kendra, Ghod Doad Road, Surat-395007. PAN: AKIPS8899M Vs. The DCIT, Central Circle-1, Surat. Assessee/ appellant Revenue/ respondent Assessee by Shri Parimal Sinh B. Parmar, Advocate Revenue by Shri Ritesh Mishra, CIT-DR Date of hearing 23/02/2022 Date of pronouncement 17/05/2022 Order under section 254(1) of Income-tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by two assessee’s (husband & wife) are directed against the common order of learned Commissioner of Income Tax (Appeals)-1, Surat [in short “the ld. CIT(A)”] dated 05.03.2013, which in turn arises against separate block assessment orders passed by Assessing Officer under section 158BC(c) r.w.s 254 of the Act both dated 29.12.2011. In both IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 2 the appeals, the assessee(s) have raised certain common grounds of appeal, facts in both the appeals are common, except variation of figure of addition on account of undisclosed income, therefore, with the consent of parties, both the appeal are heard together and are decided by a common order. 2. The assessee in IT(SS)A No.262/AHD/2013 has raised following grounds of appeals: “1. The Ld. CIT(A) has erred in law and in facts in confirming an amount of Rs.19,74,000/- (Rs.42,71,000 – Rs.22,97,000) as undisclosed income of the appellant. 2. The Ld. CIT(A) has erred in rejecting source based computation of income offered by Appellant and erred in accepting asset based computation of income. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing.” 3. The other assessee namely Dipika Shah in IT(SS)A No.263 /AHD/2013 has raised following grounds of appeals: “1. The Ld. CIT(A) has erred in law and in facts in confirming an amount of Rs.1,18,000/- (Rs.13,40,000 – Rs.12,22,000) as undisclosed income of the appellant. 2. The Ld. CIT(A) has erred in estimating personal expenses of appellant at Rs.5,00,000/- for block period by presuming that personal expenses have been met out of undisclosed income of appellant and thus erred in taking undisclosed income at Rs.6,18,000/-. 3. The Ld. CIT(A) erred in rejecting source based computation of income offered by Appellant and erred in accepting asset based computation of income. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing.” IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 3 4. On perusal of records, we find that both the appeals were filed after forty three (43) days of prescribed period of limitation period for filing appeal before Tribunal. In both appeals, they have filed with their respective affidavit for condonation of delay. Both the assessee’s have pleaded common contention for condonation of delay. In the affidavit of Pankaj Shah, it is stated that the impugned order dated 05.03.2013 passed by the ld. CIT(A) was received on 30.03.2013. He had to hand over same to his Chartered Accountant (CA) for filing appeal before Tribunal. However, he inadvertently forgot to forward the copy of order to his CA. On enquiry by concern CA, the assessee realized his mistake that impugned order was not handed over to ld. CA for filing appeal. On coming to know about non- handing over the impugned order, the assessee immediately forwarded the same and appeal was prepared and filed immediately. 5. The Ld. Authorized Representative (ld. AR) of the assessee submits that non-filing of appeal in time was neither intentional nor deliberate. The assessee was prosecuting his case diligently and the assessee will not get any benefit by filing appeal in delay. The assessee has a good case on merit and is likely to succeed. The ld. AR of the assessee prayed for IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 4 condonation of delay and to consider both the appeals on merit. 6. On the other hand, Ld. CIT-DR for the Revenue submits that the assessee has not explained the delay in proper manner. The explanation offered by the assessee seems to be self made story however; he left the issue of condonation of delay at the discretion of the bench. 7. We have considered the contentions of both the parties and perused the affidavits of both the assessee’s. Considering the explanation and the submissions that non-filing of appeals in tome was not intentional or deliberate. We find that this is the second round of appeal by the assessee and no such delay was ever reported in filing appeal either at first or second appellate stage. It has been held by superior court that when the technicalities and substantial justice is pitted against each other, substantial justice must prevail. We also agree with the submissions of ld AR for the assessee that the assessee will not get any benefit in making delay in filing appeal. We find that there is not inordinate delay in filing the appeals. Thus, considering the contents of affidavit and submission of the ld. AR of the assessee, the delaying in filing appeals in both the matters are condoned. Now adverting to the merit of the cases. IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 5 8. Brief facts of the case are that a search action under section 132 of the Act was carried out by Investigation Wing on 17.08.2000 on the premises of Pankaj P. Shah. During the course of search, Pankaj P. Shah admitted undisclosed income of the block period at Rs.21,00,000/-. The disclosure was further confirmed by Pankaj P. Shah in his statement on 06.09.2000. The Assessing Officer recorded that while filing return of income, the assessee declared Nil income. The return of income was filed only on 19.08.2002 that is just twelve days before the time barring period of the assessment. During the course of search, the books of account were seized in which the details of investments in shares and fixed deposits by Pankaj P Shah and his wife Dipikaben P Shah were found. Both the assessee never filed regular return of income as required under section 139 of the Act, in previous years. On the basis of document seized and inventorised as Annexure BS-1, BS-2 & BS-10 and various register of Sweet Home Lease & Hire Purchase P Ltd wherein assessee’s were shareholders, Fourteen fixed deposits for a sum of Rs.30,00000/- were detected in various names, while the investment in shares of Sweet Home Lease & Hire Purchase Pvt. Ltd were detected for Rs.26,11,000/- in the name of both the assessee(s). The IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 6 Assessing Officer prepared the following summary of fixed deposits and investment in shares: Name of assessee Investment in FDs Rs. Investment in shares Rs. Total investment Pnakaj P Shah 26,00,00/- 16,71,000/- 42,71,000/ Dipika Shah 4,00,000/- 9,40,000/- 13,40,000/- 9. In the block return of income filed, the assessee(s) claimed that there income as per regular income under section 139(1) in the following manner; Dipika Shah Previous year (Chronologically Asstt Year Total amount (Rs.) 1 st (earliest 1991-92 21000 2 nd 1992-93 21000 3 rd 1993-94 26400 4 th 1994-95 28800 5 th 1995-96 33600 6 th 1996-97 38400 7 th 1997-98 38,400 8 th 1998-99 33,643 9 th 1999-2000 41,292 10 th 2000-2001 47,720 11 th latest 2001-02 NIL Pankaj P Shah Previous year (Chronologically Asstt Year Total amount (Rs.) 1 st (earliest 1991-92 21000 2 nd 1992-93 21000 3 rd 1993-94 26400 4 th 1994-95 28800 5 th 1995-96 33600 6 th 1996-97 38400 7 th 1997-98 39941 8 th 1998-99 39941 9 th 1999-2000 48373 10 th 2000-2001 30194 11 th latest 2001-02 NIL IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 7 10. As such, both the assessee have not filed their regular return of income, the computation of each year have been worked out after search by showing income under the head ‘income from house property’, ‘other sources’ and ‘capital gains’. The assessee also claimed deduction under section 80L etc. Since, no return of income was filed, the Assessing Officer did not take any cognizance of return of income as above and assessed the undisclosed income of Rs.42,71,000/- in the hands of Pankaj P Shah and Rs.27,16,438/- in the hands of Dipikaben P Shah in the assessment order passed under section 158BC(c) on 31.08.2002. 11. On filing appeal before ld CIT(A), the additions in case of Pankaj P Shah were confirmed, however in case of Dipikaben P shah, the additions were reduced to Rs.13.40.000/- vide order dated 05.09.2003. Dipikaben P Shah was allowed relief on the ground that disclosed income was to be assessed on the basis of assets detected during the course of search and not on receipt basis. As assets in the hands of Dipikaben P Shah was only to the extent of Rs.13,40,000/-. 12. Aggrieved by the order of ld. CIT(A) dated 05.09.2003, both the assessee filed appeal further before the Tribunal vide IT(SS)A Nos.425 & 426/AHD/2003. The Tribunal restored the matter back to the file of the Assessing Officer with the direction to IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 8 examine the claim of assessee of utilization of sale proceeds of certain flats for impugned undisclosed investment. In the order giving effects/ de-novo assessment, the Assessing Officer maintained the addition of Rs.42,71,000/- in case of Pankaj P Shah and Rs.13,40,000/- in case of Dipikaben P Shah by taking view that they failed to establish the nexus between the sale proceeds of the flats and investments. The Assessing Officer recorded that assessee’s were granted opportunity on 13.03.2011, 22.07.2011 and 22.08.2011 and the assessee failed to furnish any details. The Assessing Officer recorded that a final show cause notice dated 31.10.201 was issued. The assessee filed its reply vide letter dated 23.11.2011 and 28.11.2011 and furnished various documents and correspondences made during the course of original block assessment proceedings. The Assessing Officer recorded that assessee produced copy of purchase documents of thirteen flats at Takshashila Apartment bearing flats No(s). 105, 204, 205, 404, 405, 601, 703, 705, 905, 1001, 1002, 1003 & 1005. The Assessing Officer recorded that assessee got possession of flats on 13.08.1988. Pankaj P. Shah produced copy of sale deed of these flats. On verification of sale deed, it was found that assessee has given transfer certificate of the society on plain papers. No registration was made before stamp authority. The IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 9 assessee claimed that all receipts are in the form of cash as far as the sale of properties. There is no transaction which would be verified. Thus, the Assessing Officer took his view that it is difficult to verify whether assessee actually received money from the sales of these flats which were invested in fixed deposits or shares. Thereafter, the assessee vide letter sheet entry dated 28.11.2011 was asked to produce confirmation of all the parties to whom flats were sold. The assessee could not produce a single party or confirmation. The Assessing Officer noted that despite granted opportunity, the assessee failed to discharge his onus to establish the nexus between sale proceeds from flat and investment made in fixed deposits and shares. The Assessing Officer after detailed discussion as recorded in para 4.3 to 5 of the assessment order maintained the addition of Rs.22,71,000/-. 13. In case of Dipikaben P Shah, the Assessing Officer was recorded that in response to various show cause notices, the assessee vide her reply dated 15.12.2011 submitted that she was already submitted the details from time to time. And all the evidence and documents were filed and reiterated that relevant documents of purchase and sales of flats, details of financial transactions have been furnished. The Assessing Officer recorded that during the original block assessment IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 10 proceedings, the assessee/Dipikaben P Shah produced copy of purchase documents of eight flats in Takshashila Apartment bearing No(s).101, 102, 403, 404, 902, 903, 904 & 1001. The Assessing Officer noted that the assessee produced only possession certificate from society which is unregistered document which is not even on judicial stamp paper. The Assessing Officer further recorded that no documents have been produced. The assessee simply treating to camouflage the issue by furnishing various irrelevant documents from which it was already examined. On perusal of those documents, ledger, far flung statement that those documents were prepared after search action and cannot be relied and the assessee was not filing return of search action. She was asked to furnish the confirmation of parties but she failed to produce in a single party for confirmation. Thus, on the basis of aforesaid fact, the Assessing Officer held that assessee failed to substantive, the investment of Rs.13,40,000/- in fixed deposits and source of investment. 14. On appeal before the ld. CIT(A), the ld. CIT(A) considered the facts of both the cases of altogether. The ld. CIT(A) recorded that as per the detail furnished by assessee, thirteen flats were purchased in the name of Pankaj P Shah and eight flats were purchased in the name of Dipika P Shah, possession of those IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 11 flats were taken (shown) on 13.08.1988. The total purchase consideration of thirteen flats were shown by Pankaj Shah at Rs.22,97,000/- while purchase consideration for eight flats by wife Dipika Shah claimed at Rs.12,22,000/-. Further, the Assessing Officer has not disputed the claim of purchases. These flats were claimed to have been shown during the block period and sale proceeds thereof were claimed to have been utilized for investment in fixed deposits and shares. The assessee has claimed that investments in share were on the basis of overdraft account against fixed deposits of the bank. None of the purchaser was produced before the Assessing Officer nor was any confirmation was filed. The sale deeds in respect of these persons were not executed. The sale proceeds in respect of these sale transaction are claimed at Rs.51,08,753/-( Rs. 34,46,903/- by Pankaj P Shah and Rs.16,61,850/- of Dipikaben P Shah). The ld. CIT(A) further recorded that no regular return of income was filed by both the assessee(s) though they have claimed ‘long term capital gain’ on sale of these flats. The ld CIT(A) after working out of the profit on the sales of flats held that it is a clear case of tax evasion. Not only for block period but even prior thereto. The ld CIT(A) recorded that the following investment was made by the assessee’s in AY 1989-90. IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 12 1 Pankaj P shah Rs. 22,97,000/- 2 Dipika Shah Rs. 12,22,000/- Total Rs. 35,19,000/- 15. Both the assessee’s made investment in flats in 1989-90 of Rs.35,19,000/-, which apparently relates to AY.1988-90. The assessment for block period was completed on 31.08.2002 and the Assessing Officer could not have issued notice under section 148 for AY.1989-90. Accordingly, the direction under section 150(1) cannot be issued for reopening of those cases. The ld. CIT(A) held that so far as present block assessment proceedings are concerned, if the claims of assessee on sales of flats are accepted, the price of sale proceeds and the nexus of sale proceed with the investment made cannot be verified. However, in nature of transaction and the income thereof that is from sale of flat is assessable under the head ‘business or profession’ and not under ‘capital gain’. Therefore, sale price may have been of these flats, the difference between the sale price and cost would be assessable as business income and not under the head capital income. 16. The ld. CIT(A) further held that even it was presumed that all these flats as claimed by assessee and their entire sale proceeds have been invested for investments detected at the time of search. Without consumption of single penny out of sale proceeds for personal expenses, the undisclosed income of the IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 13 block period cannot be less than the total value of investment found at the time of search less(-) cost price of investments in flats for AY.1989-90. Thus, the ld. CIT(A) worked out the undisclosed income of Pankaj Shah at Rs.19,74,000 (Rs.42,71,000 – Rs.22,97,000). And in case of Dipikaben P Shah, the undisclosed income is worked out at Rs.1,18,000/- (Rs.13,40,000 – Rs.12,22,000). 17. The ld. CIT(A) further held that the computation does not taken into account the expenditure for personal expenses which were estimated at Rs.5,00,000/- for the block period and added to the income of Dipikaben P Shah by taking view that proportionately much lower and presumed that personal expenses has been made out of her undisclosed income. Thereby may further addition of Rs.5,00,000/- in the income of Dipikaben P Shah. Further aggrieved both the assessee’s have filed their respective appeal before the Tribunal. 18. We have heard the submissions of ld. AR of the assessee and the ld. CIT-DR for the Revenue and perused the order of lower authority. Ground No.1 relates to confirming the addition of Rs.19,74,000/- as undisclosed income in case of Pankaj P Shah. Similarly the ground No. 1 in Dipika Shah relates to upholding additions to the extent of Rs. 1.18 Lakhs. The ld. AR of the assessee submits that search action was carried out at IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 14 the residential premises of the assessee on 17.08.2000. During the course of which various documents were found and seized. Such document revealed investment in FDRs as well as investments in shares in Sweet Homes Lease & Hire Purchase Pvt. Ltd. by Pankaj Shah. Pankaj Shah made FDR’s of Rs.26,00,000/- and investments in share of Rs.16,71,000/-, thus total investment of Rs. 42,71,000/-. In case of Dipika Shah similar FDR’s of Rs.4,00,000/- and investment of share of Rs.9.40 lakhs, thus total of Rs. 13,40,000/- was revealed. The Assessing Officer while passing the assessment order on 31.08.2002 made addition of Rs.42.70 lakhs (26 + 16.70 lakhs) in the hands of Pankaj P Shah. 19. On appeal before the CIT(A), the entire addition was upheld. Further, on appeal the Tribunal vide IT(SS)A No. 425 & 426 and the case was set-aside to the file of Assessing Officer with the direction to allow sufficient opportunity to assessee to establish the nexus of sale proceeds of various flats with respective investments. In the set-aside proceeding, the Assessing Officer again made the addition on account of unaccounted investment. On appeal before the ld. CIT(A), it was held that that even it was presumed that all the flats have been sold by assessee and entire proceeds have been invested in investments in question, undisclosed income of block period IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 15 cannot be less than total value of investments found during search less cost price of investments in flats in AY.1989-90. Thus, undisclosed income was worked out at Rs.19,74,000/- (Rs.42,71,000 – Rs.22,97,000). The ld. AR submits that as per the direction of Tribunal in first ground of litigation from the assessee vide its letter dated 23.11.2011 and 28.11.2011 placed on record various documentary evidences before the Assessing Officer. Consistent correspondence made during the original assessment proceeding, computation of income, balance sheet and profit and loss account, ledgers, cash book, purchase documents of flats, sale deeds, fund flow statement. The assessee also provided details of purchase and sale of thirteen flats. The assessee purchased flats on 13.08.1988 and sold in the block periods which are evident from the details of flats at (Page no.214-215 of PB). The ld. AR submits that ready reference, the details of flats purchase by assessee and details of sale are provided as per details in Annexure-A with his written submission. The ld. AR submits that he has also prepared the detailed of investment in FDR and source thereof, details of which is provided in ready reference as per Annexure- B with his written submission. The assessee also provided fund flow statement for the year in which statement was made. From the details provided it is clear that assessee made investment IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 16 out of sale proceeds of sale of flats and overdraft facility against FDR. Fund flow statement takes into account all such income, receipts, expenses and investments. No fault has been found in fund flow statement and in other documentary evidences furnished by assessee. The Assessing Officer and ld. CIT(A) merely held that it is difficult to verify all the details. 20. The ld AR for the assessee submits that once the Tribunal set aside the matter for verify such details, the Assessing Officer was duty bound to comply with direction of Tribunal. If it was difficult to verify all such auspect and details, then the assessing officer ought to have accepted the same. So far as sale of flat during the block period is concerned, the Assessing Officer is factually incorrect in stating that all the receipts with regard to sale of flats were made in cash. As a matter of fact, there were many receipts by cheque. The ld. AR submits that cheques details are provided. The Assessing Officer has not made effort to verify all such details. The flats were sold in FY 1996-97, 1998-99 and it is not possible for the assessee to furnish confirmation of buyers or to produce them as the assessment was being carried out in the year 2011 i.e. after 12 years. The lower authorities simply brushed aside all the evidence furnished by assessee. The ld. CIT(A) simply focus what could not be placed on record and held that even it is IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 17 presumed that all flats have been sold by assessee and entire sale proceeding have been invested in the investment in question, undisclosed income cannot be less than total value of investment found during the search minus cost price of investment made in AY.1989-90. Thus, the undisclosed income of assessee were/Pankaj P Shah was worked out at Rs.19,74,000/-. 21. The ld AR for the assessee submits that once the source of investment duly explained in view of the humongous evidences placed on record. The ld. CIT(A) failed to appreciate that nature of asset was undergone a change that prior to block period, the investments were the form of flats, whereas investments were in the form of ‘FDRs’ and ‘shares’. Hence, the logic applied by ld. CIT(A) would not hold good in such scenario. 22. The ld. AR for the assessee by summarizing his submission submitted that flats in question were acquired on 13.08.1988, which is undisputed fact, whereas flats were sold during the block period. The sale consideration was received in cash as well as by cheques; fund flow was prepared comprising of all such receipts, investment in question were also part of such fund flow. No fault worth the name has been found in fund flow statement. The assessee very well had the funds of sale proceed of flats as well as overdraft against the FDRs of such fund IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 18 utilized for making the investment in question. The ld. AR prayed for deleting the entire addition. 23. In case of Dipikaben P Shah, the ld. AR made almost similar submission and submitted that details of purchase as well as of flat is provided in a summary as Annexure-A and details of investment in FDRs and source thereof in Annexure-B in his written submissions. In addition, the ld. AR submits that no addition was made by Assessing Officer in respect of personal expenses vide framing assessment for block period. The ld. CIT(A) not issued show cause notice nor offered opportunity to assessee before making the addition in respect of estimated personal expenses. The household expenses have been duly accounted in the fund flow statement and cash flow. The ld. AR for the assessee submits that fund flow statement of Pankaj P Shah reveals that he has withdrawn Rs.20,000/- in 1991, Rs.21,000/- in 1991-92, Rs.22,500/- in 1992-93, Rs.23,000/- in 1993-94 as so on by increasing Rs.1,000/- in every successive year. The ld. AR for the assessee submits that no addition is called for on account of household expenses. The ld AR for the assessee prayed for deleting all the additions against the assessee. The ld AR for the assessee also relied on the case law in CIT Vs Standard Tea Processing Co. Ltd (2013) 34 taxmann.com 31 (Gujarat) on the ratio that addition for IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 19 undisclosed income on account of inflated purchase price can be made only for period to which document found during search is related and not for entire period. 24. On the other hand, the ld. CIT-DR for the Revenue supported the order of ld. CIT(A). The ld. CIT-DR for the revenue further submitted that the Assessing Officer in assessment has clearly recorded that both the assessee has not furnished sufficient documentary evidences despite granting full opportunity. Both the assessee filed similar document which was filed in the original block assessment proceeding. No confirmation of the parties was filed nor was any of the party produced by the assessee for confirming the transactions of flat. No registered documents were registered for purchasing such flats was executed. During the search action, or post search inquiries no cash flow statement or any such documentary evidences which were filed by assessee were not found. All the documents are prepared by assessee at later stages and are fabricated subsequently. Both the assessee were not filed their return of income under section 139(1). The ld. CIT(A) having perused on the details and has reasonably worked out the income for block period for both the assessee’s. 25. The ld. CIT-DR for the revenue submits that although, the Revenue filed their cross appeal, however the same were IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 20 dismissed due to low tax effect. The ld. CIT-DR for the revenue prayed that no further interference in the order of ld. CIT(A) in both the appeals is called for and prayed for dismissal of both the appeals. 26. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. We have also deliberated on the various documents filed the assessee(s) in the form of paper book (PB). We find that the assessing officer made addition on account of unaccounted investment by taking view that the assessee(s) have failed to discharge his onus in establishing the nexus between the sale proceeds from flats and in making investment in fixed deposits and shares. All the transaction of purchase of flats was shown in cash. The flats were purchased in cash and again sold in cash. There is no registered document of either of purchase or sale, thus, it is difficult to verify that actual money received on sale of flats was invested in the fixed deposit and shares. The ld CIT(A) recorded that as per details furnished Pankaj Shah purchased 13 flats and Dipika purchased 8 flats. Possession of all the flats was obtained on 13.08.1998. The total investment in flats by Pankaj Shah was shown at Rs. 22,97,000/- and by Dipikaben Shah at Rs. 12,22,000/-. The sale deeds of all the flats were not executed by both the assessee’s. Both the assessee’s made IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 21 investment in flats in FY-1988-89 of Rs.35,19,000/-, which apparently relates to AY.1989-90. The assessment for block period was completed on 31.08.2002 and the Assessing Officer could not have issued notice under section 148 for AY.1989-90. Accordingly, the direction under section 150(1) cannot be issued for reopening of those cases. The ld. CIT(A) further held that if the claims of assessee(s) on sales of flats are accepted, the price of sale proceeds and the nexus of sale proceed with the investment made cannot be verified. However, in nature of transaction and the income thereof that is from sale of flat is assessable under the head ‘business or profession’ and not under ‘capital gain’. And the receipt of sale price may have been of these flats, the difference between the sale price and cost would be assessable as business income and not under the head capital income. The ld CIT(A) took his view that if it is presumed that all these flats as claimed by assessee and their entire sale proceeds have been invested for investments detected at the time of search. Without consumption of single penny out of sale proceeds for personal expenses, the undisclosed income of the block period cannot be less than the total value of investment found at the time of search less (-) cost price of investments in flats for AY.1989-90. Accordingly the ld. CIT(A) worked out the undisclosed income of Pankaj IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 22 Shah at Rs.19,74,000 (Rs.42,71,000 – Rs.22,97,000). And in case of Dipikaben P Shah, the undisclosed income is worked out at Rs.1,18,000/- (Rs.13,40,000 – Rs.12,22,000). 27. The ld. CIT(A) find that in the computation of their income does not taken into account the expenditure for personal expenses which were estimated at Rs.5,00,000/- for the block period and added to the income of Dipikaben P Shah. We find that the ld CIT(A) made addition/ enhanced the income without issuing any show cause notice to the assessee, which is not as per mandate of the provisions of section 251(2) of the Act. Section 251(2) mandates that Commissioner (Appeals) shall not enhance an assessment or penalty or reduce the amount of refund unless the appellant has had an opportunity of showing cause against such enhancement. Therefore, the addition of Rs. 5.00 lakhs made in case of Dipika Shah is deleted. 28. Now adverting to other additions in both the appeals. The ld. AR for the assessee vehemently submitted that once the matter was set-aside by the Tribunal to the file of assessing officer to examine and verify the nexus of sale proceeds of the flats and the investments in Fixed deposits and shares, the assessing officer was duty bound to verify all such auspect, if it was difficult, he ought to have accept the same. And that the observation of the assessing officer that all the receipt of sale of IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 23 flats were in cash, as a matter of fact there were many receipts in cheques. 29. We find that a search under section 132 was carried out at the premises of Pankaj Shah on 17.08.2000. Dipikaben Shah is wife of Pankaj Shah. During the search action Pankaj Shah admitted undisclosed income of Rs. 21.00 Lakhs, which was again confirmed in the statement recorded on 06.09.200. There is no material on record that the discloser made by Pankaj Shah for admissions of undisclosed income of Rs. 21.00 lakhs was ever retracted by Pankaj Shah. We also noted that treatment of income from ‘capital gain’ to ‘business income’ is also not challenged by the both the assessee in the present appeals. While filing return of income Pankaj Shah declared Nill income. The case of both the assessee throughout the proceedings is that they invested in 21 (13+8) flats on 13.08.1988. All the amounts were invested in cash. There is no registered document of acquiring those flats, except possession letter on simple paper and share certificates. The assessee’s have claimed that all the flats were sold subsequently on different dates and sale proceeds and on the overdraft facilities availed by them, were invested in the FDs in the names of various family members and in Shares. To substantiate their claim they have filed details of various sale transactions of all IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 24 the flats. On perusal of these sales instances, we find that none of the documents is either executed in favour of assessee in accordance with the provisions of Registration Act or Transfer of Property Act. No doubt that the assessing officer has accepted that claim of purchase of flats. Thus, certainly the receipt of the sales cannot be doubted at this stage. We are conscious of the fact and keeping in our mind that the transactions of all the flats were not in accordance with the provisions of Transfer of Property Act and in violation of Registration Act. However, the question before us is the taxability of the income earned on the transaction and the investment made in FDs and Shares. Both the assessee in their grounds of appeal have raised grounds that the ld CIT(A) erred in rejecting source based computation of income offered by them and erred in making asset based computation. Considering the finding of the lower authorities that the sources of the funds are not verifiable and the asset are not in dispute, therefore the ld CIT(A) was justified in making addition on the basis of asset. Thus, in view of the aforesaid discussion, we affirm the order of ld CIT(A) in making (sustaining ) addition of Rs. 19,74,000/- in case of Pankaj Shah and Rs. 1,18,000/- in case of Dipika Shah. The ratio of case law in CIT Vs Standard Tea Processing Co. Ltd (supra) relied by ld AR for the IT(SS)A Nos.262 & 263/AHD/2013 Block period .1990-91 & 1999-2000 Pankaj P Shah & Dipika P Shah 25 assessee is not applicable on the facts of the present case. The question of law involved in that case was on account of inflated purchases, which is quite different from the fact of present case. 30. In the result, ground No. 2 in appeal of Dipika is allowed and other grounds of appeal are dismissed. In case of Pankaj Shah, all the grounds of appeal are dismissed. 31. In the result, appeal of Pankaj Shah is dismissed and the appeal of Dipika Shah is partly allowed. The registry is directed to place one copy of this order in respective file. Files be consigned to record room as per Rules and practice. Order announced in Court on 17/05/2022 in open Court and the result was also placed on the notice board. Sd/- Sd/- (Dr. A. L. SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 17/05/2022 Self/ Ranjan Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. Pr.CIT 5. DR 6. Guard File /True copy/ By order Assistant Registrar/Sr. PS/PS ITAT, Surat