Kailash Chandra Trivedi, Kanpur V. DY. Commissioner of Income Tax, Kanpur

ITSSA 297/LKW/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3843 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-07-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 03-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAKESH GARG DR A K SINGH
• Keywords: Unexplained investment; Loose papers; Document seized; Documents seized
• Section: 153A

Judgement Text

I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER I.T.(SS)A.NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 SHRI KAILASH CHANDRA TRIVEDI, 65/32, MOTI MOHAL, KANPUR. PAN:ACCPT 8154 G VS. THE DY.C.I.T., CENTRAL CIRCLE-1, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER PARTHA SARATHI CHAUDHURY: THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FRO M THE ORDER OF LEARNED CIT(A)-IV, KANPUR DATED 31/03/2017 AS PER T HE GROUNDS OF APPEAL ON RECORD. 2. THE BRIEF FACTS IN THIS CASE ARE THAT A SEARCH & SEIZURE OPERATION WAS CONDUCTED ON 17/09/2008. SUBSEQUENTLY, ASSESSMENT U /S 153A WAS COMPLETED AT RS.12,59,130/- AS AGAINST RETURN FILED TO NOTICE U/S 153A AT RS.2,12,650/-. FURTHER THE ASSESSEE WENT IN APPEAL BEFORE LEARNED CIT(A)-I, KANPUR AGAINST THE ADDITION MADE ON ACCOUNT OF UNEX PLAINED INVESTMENT OF RS.8,67,369/-, ON ACCOUNT OF GROSS PROFIT OF RS.1,3 0,105/-, ON ACCOUNT OF LOW WITHDRAWAL OF RS.49,000/- AND ON ACCOUNT OF DISALLO WANCE OF CREDIT OF TDS OF RS.3044/- IN THE ASSESSMENT ORDER. THE LEARNED CIT(A), KANPUR VIDE ORDER DATED 25/09/2014 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY DR. A. K. SINGH, CIT, (D.R.) DATE OF HEARING 23/07/2018 DATE OF PRONOUNCEMENT 27/07/2018 I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 2 CONFIRMED ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT OF RS.8,67,369/- AND ON ACCOUNT OF GROSS PROFIT OF RS.1,30,105/-. FURTHER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE I.T.A.T., LUCKNOW AGAINST THE ORDER OF LEARNED CIT(A), KANPUR. THE I .T.A.T. LUCKNOW VIDE ORDER DATED 31/03/2015 IN I.T.A. NO.820/LKW/2014 HA S RESTORED THE ISSUE FOR FRESH ADJUDICATION TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER VIDE HIS ORDER DATED 28/01/2016 HAS AGAIN M ADE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT TO THE TUNE OF RS.8,67,36 9/- AND ALSO ADDITION MADE ON ACCOUNT OF GROSS PROFIT OF RS.1,30,105/-. 3. BEFORE LEARNED CIT(A) THE ASSESSEE HAD FILED DET AILED WRITTEN SUBMISSIONS, THE RELEVANT PART IS AS FOLLOWS: THIS IS THE SECOND ROUND OF APPEAL. IN THE FIRST R OUND, THE ADDITION OF RS.8,67,369/- AND RS.1,30,105/- WAS MAD E. THE MATTER TRAVELLED UPTO THE INCOME-TAX APPELLATE TRIB UNAL, AND THE TRIBUNAL HAS SET ASIDE THE ADDITIONS BACK TO TH E FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. THE AO HAS AGAIN MADE THE ADDITIONS, WITHOUT APPREC IATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS ARE THAT A SEARCH HAD TAKEN PLACE AT THE RESIDENTIAL PREMISES OF THE ASSESSEE SHRI KAILASH CHANDRA TRIVE DI ON 17.09.2008. AT THE TIME OF SEARCH SHRI KAILASH CHAN DRA TRIVEDI WAS NOT AVAILABLE. HE WAS OUT OF TOWN. DURING THE C OURSE OF SEARCH, BUNDLES OF PAPERS WERE FOUND WHICH WERE KEP T IN A BAG, WHICH DID NOT RELATE TO THE ASSESSEE. AT THE T IME OF SEARCH, THE ASSESSEE'S SON SHRI SUDESH TRIVEDI WAS PRESENT. IN HIS STATEMENT, RECORDED AT THE TIME OF SEARCH, THE SON OF THE ASSESSEE SPECIFICALLY INFORMED THE SEARCH PARTY THA T THESE PAPERS, SO FOUND, RELATED AND BELONGED TO ONE SHRI PRIYA DARSHAN AGNIHOTRI, A CLOSE FRIEND OF HIS FATHER SHR I KAILASH CHANDRA TRIVEDI, WHO HAD LEFT BEHIND THESE PAPERS O N HIS ONWARD JOURNEY. SHRI PRIYA DARSHAN AGNIHOTRI DID NO T RETURN FOR HE BREATHED HIS LAST ON 06.11.2006. THE PAPERS BEIN G LP-J & 2 AND BK-1 TO 6 FOUND AT THE TIME OF SEARCH -WERE TRE ATED AS THOSE BELONGING TO THE ASSESSEE. I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 3 IN THE FIRST ROUND OF ASSESSMENT, THE STATEMENT OF SHRI KAILASH CHANDRA TRIVEDI WAS ALSO NOT RECORDED NEITHER AT TH E TIME OF SEARCH NOR AT THE TIME OF ASSESSMENT. THE ASSESSEE KAILASH CHANDRA TRIVEDI IN THE FIRST ROUND OF APPEAL IN SUP PORT OF THE CONTENTION THAT THE PAPERS DID NOT BELONG TO HIM AN D BELONGED TO SHRI PRIYA DARSHAN AGNIHOTRI. HE FILED THE DEATH CERTIFICATE AND ALSO THE AFFIDAVITS OF THE LEGAL HEIRS OF SHRI PRIYA DARSHAN AGNIHOTRI. THE LEGAL HEIRS IN THEIR AFFIDAVITS HAD ASSERTED THAT THE PAPERS BELONG TO THEIR FATHER. THE HON'BLE TRIBUNAL HAD SET ASIDE THE MATTER TO TH E FILE OF THE AO TO RE-EXAMINE THE SAME FACTS AFTER PROVIDING AN OPPORTUNITY TO THE ASSESSEE. THE AO HAS NOT APPRECIATED THE FAC TS AND HAS HELD THAT THE ASSESSEE HAS NOT PLACED ANY EVIDENCE ON RECORD IN REFERENCE TO THE FACT THAT THE PAPERS DO NOT BELONG TO HIM. IT HAS BEEN MENTIONED IN THE ASSESSMENT ORDER THAT THE LEGAL HEIRS OF SHRI PRIYA DARSHAN AGNIHOTRI WERE SUMMONED AND THEIR STATEMENTS ON OATH WERE RECORDED SEPARATELY AND IT HAS BEEN MENTIONED BY THE AO THAT LEGAL HEIRS HAVE DENIED AB OUT ANY KNOWLEDGE OF THE PAPERS AND THEIR MAINTENANCE, IF A NY, BY THEIR FATHER. THE AO RELYING ON THEIR STATEMENTS HAS AGAI N MADE THE ADDITIONS. NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO CROSS E XAMINE THE LEGAL HEIRS. THE AO IN THE ORDER HAS MENTIONED THAT THE STATEMENTS OF THE LEGAL HEIRS AS RECORDED BY THE AO WAS SHOWN TO THE ASSESSEE AND HE HAS NOTHING TO COMMENT ON TH E SAME. BE IT MAY, IT IS A TRITE LAW THAT WHEN ANY STATEMEN T OF ANY PERSON IS RECORDED, WHICH IS TO BE USED AGAINST ANO THER PERSON, THE STATEMENT SHOULD OUGHT TO BE RECORDED IN THE PR ESENCE OF THE PERSONS AGAINST WHOM IT IS TO BE USED. FURTHER, BE IT MAY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS EMPLOYED WITH ALLAHABAD BANK AND HE RETIRED IN THE YEAR 30.06.2001 AFTER PUTTING 40 YEARS OF SERVICE. THE A SSESSEE HAS NO AGRICULTURAL LAND NOR ANY BUSINESS ACUMEN NOR AN Y KNOWLEDGE OF THE BUSINESS CARRIED ON IN THOSE LOOSE PAPERS. THUS, THE LOOSE PAPERS AS MENTIONED BY THE AO ARE W ITH RESPECT TO SOME FLOWER BUSINESS. THE ASSESSEE HAS N O KNOWLEDGE OF THE SAME. COPIES OF THE PAPERS AS FILE D AT THE TIME OF ORIGINAL PROCEEDINGS ARE AGAIN BEING SUBMIT TED. I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 4 THE ASSESSEE HAD ALSO MOVED A PETITION DATED 08.02. 20 J 6 TO THE DCIT WITH THE REQUEST THAT SUCH STATEMENTS OF T HE LEGAL HEIRS OF SHRI PRIYA DARSHAN AGNIHOTRI AS RECORDED M AY KINDLY BE PROVIDED. TILL DATE COPIES OF THE STATEMENTS, AS RE CORDED, HAVE NOT BEEN PROVIDED. THE ASSESSEE IS ALSO FILING AN A FFIDAVIT AS HANDED OVER TO THE JCIT, STATING THE FACTS THAT NEI THER THE COPY OF THE STATEMENTS OF THE LEGAL HEIRS AS RECORDED WA S PROVIDED NOR THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE SAME. THE AO HAS IGNORED THE AFFIDAVITS OF THE LEGA L HEIRS AS WELL AS THE EVIDENCES FILED BY THE LEGAL HAIRS AT T HE TIME OF ORIGINAL ASSESSMENT. THE AO SHOULD OUGHT TO HAVE CO NFRONTED THE LEGAL HEIRS WITH THEIR EARLIER AFFIDAVITS AND S TATEMENTS AS GIVEN BY THEM BEFORE THE THEN AO. IN ABSENCE OF CON TRADICTORY STATEMENTS OF THE LEGAL HEIRS, IT WAS ALL THE MORE NECESSARY IN THE INTEREST OF JUSTICE. THE APPELLANT HAS FILED ANOTHER WRITTEN SUBMISSI ON ON 27.09.2016 WHICH IS REPRODUCED AS UNDER: THAT THE PHOTOCOPIES OF THE PAPERS SEIZED AT THE TI ME OF SEARCH HAVE ALREADY BEEN FILED ALONG WITH OUR SUBMISSIONS. IN THE STATEMENT OF SHRI SUDESH TRIVEDI, RECORDED AT THE T IME OF SEARCH ON 17.09.2008, IT WAS STATED IN QUESTION Q. 1 BY SHRI SUDESH TRIVEDI THAT THE PAPERS FOUND BELONGED TO SH RI PRIYADARSHAN AGNIHOTRI, RESIDENT OF HASAYAN, DISTT. ETAH AND PART OF THE PAPERS BELONGED TO SHRI MOHIT JAIN. ACC ORDINGLY AT THE VERY FIRST OCCASION IT WAS BROUGHT TO THE NOTIC E OF THE DEPARTMENT THAT THE PAPERS DID NOT BELONG TO THE AS SESSEE AND HAD NOTHING TO DO WITH HIM. THE REBUTTAL WAS MADE A S PER LAW. LATER ON IT WAS AGAIN SUBSTANTIATED BY PLACING EVID ENCES IN THE SHAPE OF AFFIDAVITS OF THE LEGAL HEIR AND STATEMENT S OF ALL THE THREE LEGAL HEIRS (SONS) AND OTHER DOCUMENTARY PAPE RS. THE ADI/AO ON RECORDING THE STATEMENT PROMPTLY JUMP ED INTO ACTION AND TOOK ACTION U/S.133 BY SURVEYING THE PRE MISES OF SHRI MOHIT JAIN AT NAYAGANJ, KANPUR AND BEING SATIS FIED DID NOT TAKE ANY FURTHER ACTION. IN LIKE MANNER IT WAS FOR THE ADI/AO TO TAKE ACTION AGAINST SHRI PRIYADARSHAN AGNIHOTRI, AT THE TIME OF SEARCH ITSELF WHEN HIS NAME WAS FIRST MENTIONED BY SHRI SUDESH TRIVEDI, AS WAS DONE IN THE CASE OF SHRI MOHIT JAIN . NOTHING PREVENTED THE ADI/AO FROM TAKING ACTION AGAINST SHR I PRIYADARSHAN AGNIHOTRI INSTANTLY. NOT TAKING ACTION IMPROMPTU AGAINST SHRI PRIYADARSHAN AGNIHOTRI, ITSELF SUGGEST THAT THE I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 5 ADI/AO WAS SATISFIED WITH STATEMENT AS GIVEN AND RE CORDED OF SHRI SUDESH TRIVEDI. HOWEVER, WITHOUT PREJUDICE, THE AO HIMSELF HAS HELD IN THE ASSESSMENT ORDER, THAT THE BK-1 TO BK-4 (SEIZED PAP ERS) SPEAK OF SOME 'FLOWER BUSINESS'. IF THAT BE SO, THEN ALSO THE INCOME FROM FLOWER BUSINESS WOULD FALL WITHIN THE DEFINITI ON OF AGRICULTURAL INCOME. THE AGRICULTURAL HOLDINGS OF S HRI PRIYADARSHAN AGNIHOTRI ARE NOT IN DISPUTE. THE FACT THAT SHRI PRIYADARSHAN AGNIHOTRI WAS HOLDING AGRICULTURAL LAN D AND DOING FLOWER BUSINESS IS SUPPORTED BY THE CERTIFICATE OF GRAM PRADHAN FILED IN THE FIRST AROUND ITSELF. THUS AS FAR AS THE ASSESSEE IS CONCERNED THE ASSESS EE AT THE VERY FIRST INSTANCE REBUTTED THE 'MATERIAL' (BK-1 T O BK-4) FOUND AT THE TIME OF SEARCH BY STATING THE SAME DOES NOT BELONG TO HIM AND HE CATEGORICALLY TOLD THE NAMES AND ADDRESS OF THE PERSONS TO WHOM IT BELONGED. FROM PERUSAL OF ABOVE SUBMISSIONS IT WILL BE FOUND THAT OUR BASIC AND PRIMARY SUBMISSION IS THAT THE 'ANNEXURES ' (BK 1 TO BK-4 AND LP-1) FOUND AT THE TIME OF SEARCH AS DETAI LED ABOVE DO NOT BELONG TO THE ASSESSEE. FOR THIS PURPOSE, RE FERENCE BE MADE TO OUR SUBMISSION AND EVIDENCES FILED BY US EA RLIER VIDE PAPER BOOK DATED 14.09.2016. IT IS THEREFORE SUBMIT TED THAT THE ADDITION MADE IN RESPECT OF THE AFOREMENTIONED ANNE XURES AMOUNTING TO RS.8,37,369/-PLUS RS.1,30,105/-BE DELE TED. FURTHER WITHOUT PREJUDICE TO ABOVE SUBMISSION AND T AKING WORST OF ALL THE SCENARIOS AND IF AT ALL IN ANY CIRCUMSTA NCE THE 'ANNEXURES ' ARE DEEMED TO BE AS BELONGING TO THE A SSESSEE (THOUGH IN FACT THEY DON'T) THE 'ANNEXURES' WHEN LE DGERISED (COPY ATTACHED), THEN ALSO NO PART OF THE INCOME CA N BE SAID TO OCCUR TO THE ASSESSEE. THE 'ANNEXREWS' ARE FOR THE PERIOD 20.08.2006 TO 19.10.2006. ON LEDGERISATION, THE PURCHASE LEDGER, PARTY LEDGER AND CASH BOOK HAVE BEEN PREPARED. ON PERUSAL OF THE SAME, IT -WOULD BE FOUND THAT THE SAME CONSISTS OF PURCHASE OF FLOWERS FOR RS.3,82,668/-. THERE IS NO SAFES FIGURE OR REGISTER . FLOWERS ARE PERISHABLE ITEM AND CANNOT BE HELD FOR LONG. PART O F THE PURCHASES IS ON CREDIT AND PART AGAINST CASH PAYMEN T. THE CAPITAL ACCOUNT AS EMERGING FROM THESE 'ANNEXURES ' HAS ALSO BEEN PREPARED AND A TOTAL CAPITAL OF RS.2,46,000/-H AS BEEN INTRODUCED. I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 6 IT IS NOT KNOWN AS TO HOW THE AO HAS MADE THE ADDIT ION OF RS.8,67,369/- OUT OF UNEXPLAINED INVESTMENT IN PURC HASE OF FLOWERS, WHEN THE TOTAL PURCHASE IS OF RS.3,82,668/ -. AT THE SAME TIME, THE AO HAS ALSO ADDED AN AMOUNT OF RS.1, 30,105/- BEING GROSS PROFIT, WHICH IS ALSO NOT KNOWN AS TO H OW IT HAS BEEN COMPUTED. IN ANY CASE THERE CAN BE NO ADDITION OF GROSS PROFIT. ONLY NET PROFIT IS TO BE COMPUTED. THUS BOT H THE ADDITION I.E. RS.8,67,369/- AND RS. 1,30,105/- ARE WITHOUT A NY BASIS. IN VIEW OF THE ABOVE, IT IS ONCE AGAIN SUBMITTED, F IRSTLY THE SEIZED PAPERS I.E. THE 'ANNEXURES' DO NOT BELONG TO THE ASSESSEE, THE SAME SHOULD BE EXCLUDED AND BE NOT CO NSIDERED IN HANDS OF ASSESSEE. THE ASSESSEE HAS BEEN DENYING THE SAME SINCE DAY ONE AND HAS FILED AMPLE EVIDENCES BEFORE THE AO AS WELL AS -DURING THE APPELLATE PROCEEDINGS WHICH DEM ONSTRATES THAT SAID 'ANNEXURES' DO NOT BELONG TO THE ASSESSEE AND NO ADDITION OUGHT TO BE MADE IN THE HANDS OF THE ASSES SEE. THE ASSESSEE HAS EXPLAINED THE CIRCUMSTANCES UNDER WHIC H THE 'ANNEXURES' CAME TO BE FOUND AT THE TIME OF SEARCH. THE ASSESSEE HAS FURNISHED COMPLETE WHEREABOUTS OF THE PERSON TO WHOM THE PAPERS BELONGED. THE PERSON TO WHOM THE PA PERS BELONG HAS DIED, ASSESSEE EVEN BROUGHT HIS LEGAL HE IRS ON RECORD WHO EVEN ACCEPTED THAT THE 'ANNEXURES' BELON GED TO THEIR DECEASED FATHER. THE EVIDENCES HAVE BEEN SUPP ORTED BY THE AFFIDAVIT OF LEGAL HEIR. THE LEGAL HEIR HAS ACC EPTED IN THE AFFIDAVIT THAT THE 'ANNEXURES ' BELONGED TO THEIR F ATHER. THE ASSESSEE HAS REBUTTED THE PRESUMPTION DRAWN AGA INST HIM BY FILING NECESSARY EVIDENCES. NONE OF THE EVIDENCE S FILED HAVE BEEN FOUND TO BE FALSE OR UNTRUE. THE EXPLANATION F URNISHED BY THE ASSESSEE HAS NOT BEEN DOUBTED. THEY HAVE BEEN M ERELY DISBELIEVED. THE AO AT THE TIME OF SEARCH DID NOT I NVESTIGATE OR LOOK INTO THE EVIDENCES OR SURVEYED THE PREMISES/PE RSON TO WHOM THE SAID 'ANNEXURES' BELONGED, AS WAS DONE BY ASSESSING OFFICER/SEARCH PARTY IN OTHER CASES. FAIL URE ON THE PART OF AO TO CARRY OUT NECESSARY SPOT INVESTIGATIO N AT THE TIME OF OCCURRENCE OF EVENT SHOULD NOT BE SADDLED UPON T HE ASSESSEE, AS HIS FAILURE. A BALANCE SHEET 1 APR-2006 TO 19 OCT 2006 LIABILITIES AS AT 19 OCT 2006 ASSETS AS AT 19 OCT 2 006 CAPITAL ACCOUNT 2,46,000.00 CAPITAL A/C 2,46,000 CURRENT ASSETS 3,82,910. 45 CLOSING STOCK 3,82,668.45 I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 7 LOANS(LIABILITY) CURRENT LIABILITIES 2,27,402.50 SUNDRY CREDITORS 1,77,402.50 SUDHIR GUPTA 50,000.00 CASH-IN-HAND 242.00 PROFIT & LOSS A/C 90,492. 05 OPENING BALANCE CURRENT PERIOD 90,492.05 TOTAL 4,73,402. 50 TOTAL 4,73, 402.50 THE WRITTEN SUBMISSIONS OF THE ASSESSEE WAS SENT TO ASSESSING OFFICER FOR HIS REMAND REPORT AND THE ASSESSING OFFICER HAD FUR NISHED THE REMAND REPORT ON 02/03/2017. THE REMAND REPORT WAS ALSO S ENT TO THE ASSESSEE FOR HIS COMMENTS AND THE ASSESSEE HAD FURNISHED THE COM MENTS ON 20/03/2017. THE LEARNED CIT(A), AFTER CONSIDERING THE FACTS OF THE CASE, ASSESSMENT ORDER, THE SUBMISSIONS OF THE ASSESSEE, THE REMAND REPORT AND THE COMMENTS OF THE ASSESSEE, OBSERVED AND HELD AS FOLLOWS: 5.1 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER, WRITTEN SUBMISSION OF THE APPELLANT AND AS WELL AS VERBAL ARGUMENTS OF THE LD. A.R.. THE APPELLANT HAS ARGUED THAT THE DIARY DOES NOT BELONG TO HIM BUT IT BELONGS TO HIS FRIEND SHRI PRIYADARSHAN AGNIHOTRI WHO HAS LEFT THE PREMISES OF APPELLANT AND DID NOT RETURN. THE SUBMISSION OF APPELLANT IS NOT CONVINCING. FIRSTLY, BECAUSE THE SEIZED DOCUMENT WA S FOUND AT THE PREMISES OF APPELLANT DURING COURSE OF SEARC H ACTION. SECONDLY, THE AO HAS ALSO RECORDED THE STATEMENT OF SONS OF SHRI PRIYADARSHAN AGNIHOTRI. THE SONS OF SHRI PRIYA DARSHAN AGNIHOTRI CATEGORICALLY DENIED TO HAVE ANY KNOWLEDG E ABOUT THE SEIZED PAPERS. IN VIEW OF THIS, THE CONTENTION OF APPELLANT LACK MERIT. HOWEVER, IT HAS TO BE SEEN AS TO WHETHER TOTAL VALU E OF PURCHASE OF FLOWER AS PER THESE PAPERS SHOULD BE SU BJECT MATTER OF ADDITION OR NOT. THE APPELLANT HAS FURNIS HED THE DETAILS OF PURCHASE OF THESE FLOWERS, BALANCE SHEET AND P&L ACCOUNT REDRAWN AS PER THESE SEIZED DOCUMENTS AND W HICH WAS SENT TO THE AO FOR REMAND REPORT. THE COPY OF REMAND REPORT HAS ALREADY BEEN REPRODUCED ABOVE. HOWEVER, IT IS SEEN THAT AG-HAS NOT MADE ANY ENQUIRY ON THE ACCOUN TS FURNISHED BY THE APPELLANT WHICH IS RELEVANT IN THI S PROCEEDING. IT IS AMPLY CLEAR FROM THE SEIZED DOCUMENTS THAT TH ERE IS PURCHASE OF FLOWERS. AS PER THESE SEIZED DOCUMENTS, THERE CAN BE ADDITION OF ONLY INVESTMENT MADE BY APPELLAN T IN THE PURCHASE OF FLOWERS. AS PER THESE DOCUMENTS, THE CAPITAL EMPLOYED BY APPELLANT IS ONLY RS.2,46,000/-. THUS, THE ADDITION TO THE EXTENT OF RS.2,46,000/- OUT OF RS.8 ,35,000/- IS I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 8 SUSTAINED. THE BALANCE ADDITION OF RS.5,89,000/- IS HEREBY DELETED. SO FAR AS, ADDITION ON ACCOUNT OF GROSS PROFIT, AS PER GROUND NO. 2, IS CONCERNED, IT IS IMPORTANT TO MENT ION HERE THAT THERE IS NO DOUBT THAT, AS PER SEIZED MATERIAL, THE APPELLANT IS IN BUSINESS OF TRADING OF FLOWERS. THEREFORE, THE A O HAS RIGHTLY ASSESSED GROSS PROFIT ON THE SALE OF FLOWERS. THE C ASES RELIED UPON BY THE APPELLANT ARE ON THEIR OWN FOOTING AND DISTINGUISHABLE ON FACTS AND SAME ARE NOT APPLICABL E TO THE PRESENT CASE. THUS, GROSS PROFIT ADDITION OF RS.1,3 0,000/- IS HEREBY CONFIRMED. 4. LEARNED A. R. AT THE TIME OF HEARING VEHEMENTLY ARGUED THAT THE SEIZED DOCUMENTS RELATING TO FLOWER BUSINESS DOES N OT BELONG TO ASSESSEE AND REPEATEDLY TIME AND AGAIN THE ASSESSEE HAS PROV ED BEFORE THE REVENUE AUTHORITIES THAT THOSE SEIZED DOCUMENTS AND PAPERS, WHICH WERE FOUND AT THE RESIDENTIAL PREMISES OF THE ASSESSEE, BELONG TO ONE SHRI PRIYA DARSHAN AGNIHOTRI WHO IS THE FRIEND OF THE ASSESSEE AND WHO HAD LEFT THESE PAPERS ON HIS ONWARD JOURNEY. THE LEARNED A. R. FURTHER A RGUED THAT THE ASSESSEE WAS ACTUALLY EMPLOYED WITH ALLAHABAD BANK AND RETIR ED IN THE YEAR 30/06/2001 AFTER PUTTING 40 YEARS OF SERVICE. THE ASSESSEE HAS NO AGRICULTURAL LAND NOR ANY BUSINESS ACUMEN OR KNOWLE DGE OF BUSINESS CARRIED ON AS PER THOSE LOOSE PAPERS. LEARNED A. R. FURTHE R STATED THAT THOSE SEIZED PAPERS BELONG TO SHRI PRIYA DARSHAN AGNIHOTRI HAS B EEN CORROBORATED BY THE AFFIDAVITS OF THE LEGAL HEIRS FILED BEFORE THE DEPA RTMENT AND THAT SHRI PRIYA DARSHAN AGNIHOTRI BREATHED HIS LAST ON 06/11/2006 A ND THE SEARCH HAD TAKEN PLACED ON 17/09/2008 THEREFORE, EVEN BEFORE T HE SEARCH HAD TAKEN PLACE, SHRI PRIYA DARSHAN AGNIHOTRI HAD ALREADY LEF T FOR HIS HEAVENLY ABODE. LEARNED A. R. FURTHER INVITED OUR ATTENTION TO THE REMAND REPORT WHERE THE LEGAL HEIRS OF SHRI PRIYA DARSHAN AGNIHOTRI WERE CA LLED UPON AND WERE ASKED TO IDENTIFY THOSE SEIZED PAPERS FOUND IN THE PREMIS ES OF THE ASSESSEE. ALL THE LEGAL HEIRS STATED THAT IT SEEMS THOSE PAPERS B ELONG TO THEIR FATHER I.E. SHRI PRIYA DARSHAN AGNIHOTRI HOWEVER, THEY DO NOT H AVE ANY IDEA OF BOOKS OF I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 9 ACCOUNT NOR THEY WERE AWARE OF ANY DETAILS OF FLOUR BUSINESS. LEARNED A. R. FURTHER ARGUED THAT JUST BECAUSE THERE WAS SOME DIF FERENCE AS TO THE FILING OF AFFIDAVITS BY THE LEGAL HERIS OF SHRI PRIYA DARS HAN AGNIHOTRI AND THE STATEMENTS RECORDED BEFORE THE ASSESSING OFFICER TH AT WOULD NOT BE A GROUND TO ADD THE AMOUNT IN THE HANDS OF THE ASSESS EE WITH WHOM THERE IS NO CONNECTION OF THE SEIZED PAPERS FROM ANY SENSE O F WISDOM. 5. LEARNED D.R., ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE PERUSED THE CASE RECORD, HEARD THE RIVAL CONTENTIONS AND WE FIND THAT ALL THROUGHOUT EVEN IN THE FIRST ROUND OF APPEAL AND EVEN IN THE SECOND ROUND THE ASSESSEE HAS CATEGORICALLY DENIED THAT THE PAPERS FOUND DURING THE TIME OF SEARCH BELONG TO HIM AND RATHER IT BELONG TO SHRI PRIYA DARSHAN AGNIHOTRI. ON PERUSAL OF REMAND REPORT, IT IS CLEAR THAT THE SUMMONS WERE ISSUED TO THE SONS OF SHRI PRIYA DARSH AN AGNIHOTRI. THE STATEMENTS OF SONS OF LATE SHRI PRIYA DARSHAN AGNIH OTRI NAMELY ALOK AGNIHOTRI, ASHISH AGNIHOTRI AND ADITYA AGNIHOTRI WE RE RECORDED AND THEY HAVE STATED THAT THEY DO NOT HAVE ANY KNOWLEDGE WIT H THE BOOKS OF ACCOUNT MAINTAINED BY THEIR FATHER AND THEY CANNOT EXPLAIN AND PROVIDE THE DOCUMENTS RELATING TO LOOSE PAPERS-I AND II AND BC- 1 TO 6 SEIZED FROM THE PREMISES OF SHRI KAILASH CHANDRA TRIVEDI (THE A SSESSEE). THE SONS OF SHRI PRIYA DARSHAN AGNIHOTRI HOWEVER, STATED THAT I T SEEMS THAT THE PAPERS BELONG TO THEIR FATHER. THAT AGAIN IN THE FINDINGS OF LEARNED CIT(A) HE HAS ADMITTED THAT THE ASSESSING OFFICER HAS NOT MADE AN Y INQUIRY AS REGARDS THE ACCOUNT FURNISHED BY THE ASSESSEE. FURTHERMORE, WE DO NOT FIND THAT LEARNED CIT(A) HAS REBUTTED THE CONTENTIONS OF THE ASSESSEE THAT THE ASSESSEE HAS NOTHING TO DO WITH FLOWER BUSINESS NOR ANY INDEPENDENT INQUIRY HAS BEEN CONDUCTED BY LEARNED CIT(A) ON THI S GROUND AND AT THE SAME TIME FROM HIS ORDER IT IS CLEAR THAT THE ASSES SING OFFICER HAS ALSO NOT I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 10 MADE ANY INQUIRY ON THE ACCOUNTS FURNISHED BY THE A SSESSEE WHICH IS RELEVANT IN THIS PROCEEDINGS. SO IN TOTALITY THE E NTIRE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF THE FACT THAT IN THE SEAR CH CONDUCTED, CERTAIN ANONYMOUS PAPERS WERE FOUND IN THE PREMISES OF THE ASSESSEE. NOW WHEN THE ASSESSEE HAS REBUTTED THAT THESE PAPERS DO NOT BELONG TO HIM BUT BELONG TO LATE SHRI PRIYA DARSHAN AGNIHOTRI, THE AS SESSING OFFICER NOR THE LEARNED CIT(A) HAS COME OUT WITH ANY INDEPENDENT FI NDING OR CATEGORICAL REBUTTAL IN THIS ASPECT. MOREOVER, IF THERE IS ANY CONTRADICTORY STATEMENT AS RECORDED BEFORE THE ASSESSING OFFICER AND AS PER TH E AFFIDAVITS FILED BY THE LEGAL HEIRS OF SHRI PRIYA DARSHAN AGNIHOTRI, THAT W AS ALSO NOT DISCUSSED BY THE REVENUE AUTHORITIES. THAT MOST IMPORTANT FACTS AS COMING OUT FROM THE ORDER OF LEARNED CIT(A) THAT THE ASSESSING OFFICER ALSO DID NOT CONDUCT ANY INQUIRY AS TO THE ACCOUNTS FURNISHED BY THE ASSESSE E. IN ABSENCE OF ALL THESE, THE ADDITIONS MADE ARE IN CHARACTER OF AD HO C ADDITIONS. THESE ADDITIONS HAVE BEEN SUSTAINED BY THE LEARNED CIT(A) WITHOUT GOING INTO GRASS ROOT LEVEL INQUIRY AND THEREFORE, THESE ADDIT IONS ACQUIRE THE NATURE WHICH IS ARBITRARY, UNJUDICIOUS AND LIABLE TO BE QU ASHED. WE ARE THEREFORE, OF THE CONSIDERED VIEW THAT FOR THE FACTS AND CIRCU MSTANCES AND THE OBSERVATIONS RECORDED HEREIN ABOVE, WE DO NOT FIND ANY JUSTIFICATION FOR ADDITION OF RS.2,46,000/- AND RS.1,30,000/- IN THE HANDS OF THE ASSESSEE AND ACCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT(A) AND DIRECT DELETION OF THESE ADDITIONS FROM THE HANDS OF THE A SSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27/07 /2018) SD/. SD/. ( T. S. KAPOOR ) (PART HA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:27/07/2018 *SINGH I.T.(SS)A. NO.297/LKW/2017 ASSESSMENT YEAR:2007-08 11 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW