Sri G Dharmichand Jain, Bangalore V. DCIT(Inv),Circle-5(1), Bangalore

ITSSA 3/BANG/2011

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3542 (ITAT-BANGALORE)
• Duration Of Justice: 6 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 27-07-2017
• Assessment Year: misc
• Appeal Filed On: 21-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR SINGH CIT I
• Keywords: Unexplained investment; Gift; Document seized; Source of fund; Block assessment; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI SUNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER I.T . (S.S) A. NO. 3 /BANG/20 11 ( BLOCK ASSESSMENT PERIOD : 1987 - 88 TO 1996 - 97 UPTO 8.1.1997 ) SRI G. DHA RMICHAND JAIN, BALAJI TEMPLE STREET, MATTADAHALLI, BANGALORE. . APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX (INV.), CIRCLE 5(1), BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI NARENDRA SHARMA, ADVOCATE. R E SPONDENT BY : SHRI SUNIL KUMAR SINGH, CIT - I (D.R) DATE OF H EARING : 07.11.2017. DATE OF P RONOUNCEMENT : 20 .12. 201 7 . O R D E R PER SHRI JASON P BOAZ, A .M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) - II , BANGALORE DT. 15.11.2010 FOR TH E BLOCK ASSESSMENT (PERIOD 1987 - 88 TO 1996 - 97 UPTO 8.1.1997). 2. BRIEFLY STATED, THE FACTS RELEVANT FOR DISPOSAL OF THIS APPEAL ARE UNDER : - 2 IT (SS) A NO. 3 /BANG/201 1 2.1 THE ASSESSEE , AN INDIVIDUAL CARRYING ON BUSINESS OF PAWN BROKING, WAS SEARCHED UND ER SECTION 132 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') ON 8.1.199 7 . IN THE COURSE OF SEARCH, CERTAIN P AWNED ARTICLES REPRESENTING GIRVI ADVANCES AND CERTAIN NSC CERTIFICATES ALONG WITH GOLD JEWELLERY WAS SEIZED. PURSUANT THERETO, A NOTICE UNDER SECTION 158BC OF THE ACT WAS ISSUED TO THE ASSESSEE REQUIRING THE ASSESSEE TO FILE A RETURN OF INCOME FOR THE BLOCK PERIOD. IN RESPONSE, THE ASSESSEE FILED THE RETURN OF INCOME IN FORM 2B ON 24.7.1997 DECLARING NIL INCOME. THE ASSESSING OFFICER CONCLUDE D THE ASSESSMENT UNDER SECTION 158B C OF THE ACT VIDE ORDER DT.29.01.1999 WHEREIN THE ASSESSEE'S INCOME FOR THE BLOCK PERIOD WAS DETERMINED AT RS. 25.68,200 IN VIEW OF THE FOLLOWING ADDITIONS / DISALLOWANCES : - RS. I) UNACCOUNTED STOCK (A.Y. 1997 - 98) (P ARA 2) 8,98,210 II) UNACCOUNTED STOCK - IN - TRADE (A.Y. 1997 - 98) (AS PER PARA 3) 4,61,000 III) IVPS (AS PER PARA4) 1,62,229 IV) MARRIAGE EXPENSES (A.Y. 1997 - 98) (AS PER PARA 5) 2,50,000 V) NSCS (A.Y. 1997 - 98) (AS PER PARA 6) 1,00,600 VI) UNACCOUNTED GIRV I ADVANCES (A.YS 95 - 96 TO 97 - 98) (AS PER PARA 7) 36,245 VII) DIFFERENCE IN INTEREST AND BATAV (A.Y. 1991 - 92) 01,626 VIII) INVESTMENT IN PROPERTY (A.Y. 1993 - 94) (PARA 9) 6,49,290 TOTAL INCOME : 25,68,200 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DT .29.1.1999, FOR THE BLOCK PERIOD (SUPRA), THE ASSESSEE FILED A FIRST APPEAL BEFORE THE TRIB UNAL IN IT(SS)A NO.4/BANG/1999 O N THE GROUND THAT THE ORDER WAS BARRED BY 3 IT (SS) A NO. 3 /BANG/201 1 LIMITATION AS PER THE PROVISIONS OF SEC. 158BE(1)(A) OF THE ACT, SINCE THE SEARCH UNDER SE CTION 132 OF THE ACT TOOK PLACE ON 8.1.1997, THEREFORE THE ASSESSMENT OUGHT TO HAVE BEEN COMPLETED ON OR BEFORE 31.1.1998, BUT WAS CONCLUDED BY ORDER DT.29.1.1999. THE CO - ORDINATE BENCH OF THIS TRIBUNAL OF THIS TRIBUNAL IN ITS ORDER IN ITS ORDER IN IT(SS) A NO.4/BANG/199 DT.31.5.2001 ALLOWED THE ASSESSEE'S APPEAL BY HOLDING THAT THE BLOCK ASSESSMENT ORDER DT.29 . 1.1999 WAS BARRED BY LIMITATION IN TERMS OF THE PROVISIONS OF SEC. 158BC(1)(A) OF THE ACT AND QUASHED. THE BLOCK ASSESSMENT ORDER WAS ALSO DECLARE D TO BE BAD IN LAW IN VIEW OF THE NON - FULFILLMENT OF THE REQUIREMENTS OF SEC. 158BC(1)(A) OF THE ACT AS PRIOR APPROVAL OF THE APPROPRIATE AUTHORITY WAS NOT OBTAINED FOR PASSING THE ORDER UNDER SECTION 158BC OF THE ACT. 2.3 REVENUE, BEING AGGRIEVED B Y THE ORDER OF THE TRIBUNAL IN IT(SS)A NO.4/BANG/199 DT.31.5.2001, FILED AN APPEAL BEFORE THE HON'BLE KARNATAKA HIGH COURT. THE HON'BLE HIGH COURT IN ITS ORDER THEREON , IN ITA NO.296/2001 AND 3214/2001 , ALLOWED REVENUE S APPEAL AND SET ASIDE THE TRIBUN AL ORDER HOLDING THAT THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT THE SEARCH WAS INITIATED PRIOR TO 31.12.1996 AND HELD THAT THE BLOCK ASSESSMENT ORDER IN THE CASE ON HAND WAS NOT BARRED BY LIMITATION. THE HON'BLE COURT ALSO HELD THAT THE TRIBUNAL WAS NOT COMPETENT TO HEAR THE APPEAL AS THE FIRST APPEAL AGAINST BLOCK ASSESSMENT ORDER OUGHT TO HAVE BEEN FILED BEFORE THE CIT (APPEALS), SINCE THE SEARCH IN THE ASSESSEE'S CASE WAS INITIATED AFTER 31.12.1996. 4 IT (SS) A NO. 3 /BANG/201 1 2.4 SUBSEQUENT TO THE ABOVE ORDER OF THE HO N'BLE HIGH COURT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (APPEALS) II, BANGALORE; ALSO PRAYING THAT THE DELAY IN FILING THE APPEAL MAY BE CONDONED AND THE APPEAL BE ADMITTED FOR DISPOSAL ON MERITS, SINCE THE DELAY OCCURRED DUE TO P URSUING OF REM EDY AGAINST THE BLOCK ASSESSMENT ORDER BEFORE THE TRIBUNAL ON THE BONA FIDE BELIEF THAT THE SAID REMEDY BEING PURSUED BY HIM WAS THE CORRECT ONE. THE LEARNED CIT (APPEALS) VIDE ORDER DT.4.11.2009 DISMISSED THE APPEAL IN LIMINE ON THE GROUND THAT NO SUFFICI ENT CAUSE WAS ESTABLISHED FOR CONDONATION OF DELAY. AGGRIEVED BY THE AFORESAID ORDER OF THE CIT (APPEALS) DT.4.11.2009, THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL, WHO BY ITS ORDER IN IT(SS)A NO.42/BANG/2009 DT.14.6.2010 CONDONED THE DELAY IN FILING THE APPEAL BEFORE THE CIT (APPEALS) AND DIRECTED THE CIT (APPEALS) TO ADMIT THE ASSESSEE'S APPEAL AND DISPOSE O F F THE APPEAL ON MERITS. THEREAFTER, THE LEARNED CIT (APPEALS) DISPOSED OFF THE ASSESSEE'S APPEAL VIDE ORDER DT.15.11.2010 BY ALLOWING THE ASSE SSEE PARTIAL RELIEF. 3. AGGRIEVED BY THE ORDER OF THE CIT (APPEALS) DT.15.11.2010, THE ASSESSEE HAS FILED THIS APPEAL WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLA NT ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE. 2. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.8,98,210/ - MADE AS UNACCOUNTED GIRVI ADVANCES BY THE APPELLANT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE. HE FAILED TO APPRECIATE THAT THE GIRVI ADVANCES TO THE EXTENT OF RS. 8,98,210/ - BELONGED 5 IT (SS) A NO. 3 /BANG/201 1 THE APPELLANT S WIFE AND SON AND THE ADDITION OF THE SAME IN THE HANDS OF THE APPELLANT IS PURELY ON SUSP ICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS AND ACCORDINGLY IS THE SAME STANDS VITIATED AND LIABLE TO BE DELETED. 3. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.4,61,000/ - CONSIDERED AS UNACCOUNTED STOCK - IN - TRADE OF JEWELLERY BUSINESS UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE. THE ADDITION MADE IS PURELY ON SUSPICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS AND ACCORDINGLY IS VITIATED AND LIABLE TO BE DELETED. 4. THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS.1,62,229/ - CONSIDERED AS THE UNEXPLAINED INVESTMENT MADE IN IVP S UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE. HE FAILED TO APPRECIATE THAT THE INVESTMENT IN IVP S ARE ALL PART OF THE PAWN BUSINESS CARRIED ON BY THE APPELLANT AND THEREFORE THE ADDITION MADE CONSIDERING THAT THE APPELLANT HAD MADE THE INVESTMENT IS OPPOSED TO LAW AND THEREFORE, LIABLE TO BE DELETED. WITHOUT PREJUDICE TO THE ABOVE WHAT IS ASSESSABLE WOULD BE THE AMOUNTS ADVANCED AGAINST THES E IVP S AND NOT THE MATURED VALUE OF THE IVP S. 5. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.1,00,000/ - CONSIDERING THAT THE APPELLANT HAS MADE INVESTMENTS IN NSC S UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CAS E. THE ADDITION IS PURELY ON SUSPICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS AND ACCORDINGLY VITIATED AND LIABLE TO BE DELETED. 6. THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS.10,626/ - AS DIFFERENCE IN INTEREST AND BATAV UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE. 7. THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINED THE ADDITION TO THE EXTENT OF RS. 4,90,000/ - OUT OF THE ADDITION OF RS. 6,49,280/ - AS INVESTMENT IN PROPERTY UNDER THE FACTS AND IN THE CIRCU MSTANCES OF THE APPELLANT S CASE. 8. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSEC UTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE COSTS. 6 IT (SS) A NO. 3 /BANG/201 1 4. GROUNDS AT S.NO.1 AND 8 . THE GROUNDS RAISED AT S.NOS.1 & 8 (SUPRA), BEING GENERAL IN NATURE AND NOT URGED BEFORE US ARE DISMISSED AS INFRUCTUOUS. 5. GROUND NO.2 - ADDITION AS UNACCOUNTED GIRVI ADVANCES RS.8,98,210 . 5.1 IN SUPPORT OF THIS GROUND NO.2 (SUPRA), THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE RELIED UPON THE WRITTEN SUBMISSIONS DT.11.5.2016, WHEREIN IT HAS BE EN CONTENDED AS UNDER : - 1. THE FIRST ADDITION CHALLENGED IN APPEAL VIDE GROUND NO.2 RELATES TO THE UNACCOUNTED GIRVI ADVANCES OF RS. 8,98,210/ - . THE IMPUGNED ADDITION WAS MADE BY THE LEARNED A.O. AFTER NOTICING THAT THE TOTAL GIRVI ADVANCES AS PER THE P HYSICAL INVENTORY OF PAWNED ARTICLES DRAWN AT THE TIME OF SEARCH WAS RS.22,48,475/ - AND THE ASSESSEE HAD REPORTED GIRVI ADVANCES OF RS.13,50,265/ - AND THE DIFFERENCE OF RS.8,98,210/ - WAS UNACCOUNTED GIRVI ADVANCES. 1.1 IT WAS CONTENDED BY THE ASSESSEE T HAT THE ASSESSEE ALONGWITH OTHER MEMBERS OF THE FAMILY WERE CARRYING ON THE BUSINESS OF PAWN BROKING AND THAT THE ADVANCES GIVEN BY OTHER FAMILY MEMBERS WERE NOT CONSIDERED WHILE WORKING OUT THE UNACCOUNTED GIRVI ADVANCES. IN SUPPORT OF THE AFORESAID CONT ENTIONS, THE ASSESSEE RELIED ON ONE OF THE SEIZED DOCUMENTS VIZ., A/SJ/1 DATED 24/01/1997 WHICH WAS THE BALANCE SHEET OF THE ASSESSEE FAMILY AS A WHOLE AS ON 28/10/1984 AND COPY OF THE SAME IS ENCLOSED HEREWITH AS ANNEXURE - 1. IN THE SAID BALANCE SHEET THE GIRVI ADVANCES OF THE ENTIRE FAMILY WAS RS.18,20,361.34 AS ON 28/10/1984 AND THE GIRVI ADVANCES GIVEN BY THE ASSESSEE AS PER THE BALANCE SHEET WAS ONLY RS.3,33,886/ - . THE DIFFERENCE OF RS.14,86,475/ - [RS.18,20,361 3,33,886] REPRESENTED THE GIRVI ADVANC ES OF 6 OTHER FAMILY MEMBERS, WHICH IS SET - OUT BY THE LEARNED CIT[A] IN PAGE [8] OF THE IMPUGNED APPELLATE ORDER. FURTHERMORE, IT WAS CONTENDED THAT THE GIRVI ADVANCES OF OTHER FAMILY MEMBERS WERE KEPT IN SEPARATE POTHALIS AND THAT THE ADVANCES OF OTHER F AMILY MEMBERS BEFORE THE COMMENCEMENT OF THE BLOCK WAS RS.14,86,475/ - , WHICH WAS FAR GREATER THAN THE ADDITION OF RS.8,98,210/ - MADE BY THE LEARNED A.O. AND HENCE, THE ADDITION SHOULD HAVE BEEN DELETED. 7 IT (SS) A NO. 3 /BANG/201 1 1.2 WHILE ON THIS POINT IT MAY BE MENTIONED THAT T HE HON BLE ITAT IN ITS ORDER IN IT[SS]A.NO.4/BANG/1999 DATED 31/05/2001 HAD DELETED THE ADDITION OBSERVING THAT THE EXCESS GIRVI ADVANCES CANNOT BE ADDED HAVING REGARD TO THE FACT THAT THEY BELONGED TO OTHER FAMILY MEMBERS AND ALSO SINCE THERE WAS A SUM OF RS.14,86,475/ - AS GIRVI ADVANCES BEFORE THE COMMENCEMENT OF THE BLOCK PERIOD AND HENCE DELETED THE ADDITION. 1.3 HOWEVER, IN THE IMPUGNED APPELLATE ORDER, THE LEARNED CIT[A] HAS SUSTAINED THE AFORESAID ADDITION OBSERVING THAT THE ASSESSEE S CLAIM THAT TH E GIRVI ADVANCES OF RS.8,98,210/ - REPRESENTED ADVANCES GIVEN BY THE ASSESSEE S WIFE SMT.SHANTHA BAI AND ASSESSEE S SON SRI NARENDRA KUMAR, COULD NOT BE ACCEPTED SINCE, THE SAID TWO ASSESSEES HAD FILED RETURNS OF INCOME FOR THE ASSESSMENT YEARS 1996 - 97 AND 1997 - 98 REFLECTING THE AFORESAID ADVANCES AFTER THE DATE OF SEARCH. HENCE, ACCORDING TO THE LEARNED CIT[A] THERE WAS EVERY CHANCE THAT THESE AMOUNTS SHOWN IN THE RETURNS OF THE SAID TWO ASSESSEES WERE ACCOMMODATING ENTRIES. THE LEARNED CIT[A] HAS ALSO OB SERVED THAT THE SEIZED MATERIAL A/SJ/1 DATED 24/01/1997 AND THE SAID DOCUMENT WAS IMPOUNDED BY THE DEPARTMENT IN COURSE OF POST - SEARCH ENQUIRIES AND THE SAME COULD NOT BE CONSIDERED AS SEIZED MATERIAL SINCE, THE SEARCH WAS CONCLUDED ON 10/01/1997 ITSELF AN D THE SAID DOCUMENT WAS IMPOUNDED ON 24/01/1997 AND NO RELIANCE COULD BE PLACED THEREON. ULTIMATELY, THE LEARNED CIT[A] SUSTAINED THE ADDITION PLACING RELIANCE ON THE STATEMENT OF THE ASSESSEE GIVEN AT THE TIME OF SEARCH THAT OTHER FAMILY MEMBERS WERE NOT CARRYING ON ANY BUSINESS. 1.4 IN THIS CONNECTION, ATTENTION IS INVITED TO THE LETTER DATED 04/01/1999 FILED IN PAPER BOOK PAGE NO.1 IN WHICH REFERENCE TO THE LETTER FILED WITH THE LEARNED ADIT IN CONNECTION WITH THE RELEASE OF PAWNED ARTICLES AND JEWEL LERY, ETC., AND THE REPLY OF THE ADIT THAT HE HAD CLOSED THE PROCEEDINGS WAS MENTIONED. THUS, THE SWORN STATEMENTS GIVEN BY THE ASSESSEE STANDS RETRACTED AND THEREAFTER NO FURTHER QUESTIONING WAS DONE. THUS, THE EARLIER STATEMENT GIVEN BY THE ASSESSEE WA S RETRACTED IN TIME AND THE LEARNED A.O. HAS NOT CONTROVERTED THIS POSITION. THEREFORE, THE LEARNED CIT[A] WAS NOT JUSTIFIED IN REFUSING TO RELY ON THE SEIZED MATERIALS ON A HYPER TECHNICAL VIEW THAT THE SAME WAS NOT A SEIZED MATERIAL. 1.5 THE FACT THAT THE ASSESSEE IS A SEMI - LITERATE PERSON AND HIS STATEMENT THAT OTHER FAMILY MEMBERS DO NOT CARRY ON BUSINESS IS PLAINLY ERRONEOUS IS CLEAR FROM THE FACT THAT IN THE DOCUMENT SEIZED AS A/SJ/1 IT HAS BEEN CLEARLY MENTIONED THAT GIRVI ADVANCES HAVE BEEN GIVEN BY DIFFERENT MEMBERS OF THE FAMILY. THAT APART, THE ASSESSEE S WIFE AND SON HAVE FILED RETURNS OF INCOME DISCLOSING THE GIRVI ADVANCES AND THE SAME HAS BEEN ACCEPTED AND NOT REJECTED. THUS, THE LEARNED CIT[A] IS NOT JUSTIFIED IN HOLDING THAT THE SEIZED D OCUMENT A/SJ/1 CANNOT BE RELIED UPON SINCE, IT WAS 8 IT (SS) A NO. 3 /BANG/201 1 SEIZED/IMPOUNDED AFTER THE CONCLUSION OF SEARCH ON 10/01/1997. INFACT, THE DEPARTMENT IS RELYING UPON THE STATEMENTS RECORDED FROM THE ASSESSEE EVEN AS LATE AS 28/01/1997 TO BUTTRESS THEIR CASE THAT THE A SSESSEE HAS STATED THAT THE OTHER FAMILY MEMBERS DO NOT CARRY ON BUSINESS. IN OTHER WORDS, THE SEIZED MATERIAL ON 24/01/1997 IS MUCH BEFORE THE STATEMENT OF 28/01/1997 AND THEREFORE, THERE IS NO JUSTIFICATION TO DISREGARD THE SAID DOCUMENT AS UNRELIABLE. THE FACT THAT THE DOCUMENT HAS BEEN SEIZED AND INVENTORISED IS NOT IN DISPUTE AND THEREFORE, THE SAID DOCUMENT CANNOT BE DISREGARDED MERELY ON THE GROUND THAT IT REVEALS A POSITION THAT IS UNFAVOURABLE TO THE REVENUE. THE FACT THAT THE SAID DOCUMENT SHOW S GIRVI ADVANCES TO THE EXTENT OF RS.14,86,475/ - CANNOT BE DOUBTED AND THE SAID ADVANCES HAVE BEEN GIVEN BEFORE THE BLOCK PERIOD AND HENCE, THE ADDITION OF RS.8,98,210/ - DESERVES TO BE DELETED. 5.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE FINDINGS RENDERED IN THE ORDERS OF THE AUTHORITIES BELOW. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE DOCUMENT RELIED UPON BY THE ASSESSEE WAS NOT A SEIZED MATERIAL. THE SAID DOCUMENT WAS ONLY IMPOUNDED AT THE TIME OF SE ARCH AND THEREFORE MUCH CREDENCE CANNOT BE PLACED ON THE SAME. 5.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. AS PER THE RECORD, IT IS AN UNDISPUTED FACT THAT AN INVENTORY OF PAWNED ARTICLES W AS PREPARED AT THE TIME OF SEARCH AND IT WAS FOUND THAT THE GROSS ADVANCE MADE BY THE ASSESSEE WAS RS.22,48,475. ACCORDING TO THE ASSESSEE, THESE ADVANCES WERE MADE NOT ONLY BY THE ASSESSEE BUT ALSO BY OTHER FAMILY MEMBERS AND WERE KEPT IN SEPARATE BAGS. THE GIRVI ADVANCES AS REFLECTED IN THE ASSESSEE'S BOOKS OF ACCOUNT, AS UPDATED ON THE DATE OF SEARCH WAS RS.13,50,265 AND THEREFORE THE DIFFERENCE OF RS.8,98,210 WAS ADDED BY THE ASSESSING 9 IT (SS) A NO. 3 /BANG/201 1 OFFICER AS UNACCOUNTED GIRVI ADVANCES. IN DOING SO, THE ASSESSIN G OFFICER RELIED ON THE STATEMENT OF THE ASSESSEE RECORDED AT THE TIME OF SEARCH W H EREIN HE HAD STATED THAT NO OTHER FAMILY MEMBER WAS ENGAGED IN ANY BUSINESS. THE ASSESSING OFFICER DISREGARDED THE EXPLANATION PUT FORTH BEFORE HIM BY THE ASSESSEE THAT THE STATEMENT GIVEN IN THE COURSE OF SEARCH WAS ERRONEOUS AND ALSO THE FACT THAT AFTER SEARCH OPERATION, THE ASSESSEE'S WIFE SMT. SHANTA BAI AND SON SRI NA RENDRA KUMAR HAD FILED RETURNS OF INCOME DISCLOSING THE SAID ADVANCES. 5.3.2 THE ALTERNATE SUBM ISSION OF THE ASSESSEE WAS THAT A BALANCE SHEET FOR ASSESSMENT YEAR 1984 - 85 WAS IMPOUNDED IN POST SEARCH OPERATION AS A/SJ/1 DT.24.1.1997 IN WHICH GIRVI ADVANCE FOR THE ENTIRE FAMILY WAS REFLECTED / SHOWN AT RS.18,20,361 AS ON 28.10.1984. ON THE VERY SA ME DAY, THE GIRVI ADVANCES OF THE ASSESSEE AS PER HIS BALANCE SHEET WAS ONLY RS.3,33,886. HENCE, IT WAS CLAIMED THAT A SUM OF RS.14,86,475 WHICH IS THE DIFFERENCE BETWEEN THE TOTAL GIRVI ADVANCES OF THE ENTIRE FAMILY AND THE ADVANCES GIVEN BY THE ASSESSEE REPRESENTED THE GIRVI ADVANCES OF OTHER FAMILY MEMBERS, WHICH WAS AVAILABLE EVEN BEFORE THE COMMENCEMENT OF THE BLOCK PERIOD. THE LEARNED CIT (APPEALS) HAS NOT GIVEN ANY CREDENCE TO THIS BALANCE SHEET AS ON 28.10.1984 BECAUSE IT WAS NOT A SEIZED MATERIAL BUT WAS IMPOUNDED AT THE TIME OF SEARCH. IN OUR CONSIDERED VIEW, MERELY BECAUSE THE SAID BALANCE SHEET AS ON 28.10.1984 WAS AN IMPOUNDED MATERIAL AND NOT SEIZED CANNOT BE A BASIS FOR DISREGARDING OR REGARDING THE SAME AS UNRELIABLE. THE VERY FACT THAT T HE DEPARTMENT IMPOUNDED THIS 10 IT (SS) A NO. 3 /BANG/201 1 DOCUMENT, WAS BECAUSE OF ITS RELEVANCE TO THE DETERMINATION OF THE INCOME OF THE ASSESSEE. TAKING INTO ACCOUNT THE FACT THAT THERE IS AN OPENING GIRVI ADVANCE OF RS.14,86,475 (I.E. THE DIFFERENCE BETWEEN THE TOTAL GIRVI ADVANC E OF THE FAMILY OF RS.18,20,361 AND THAT OF THE ASSESSEE OF RS.3,33,886 ) AS PER THE SAID BALANCE SHEET AS ON 28.10.1984, WHICH IS BEFORE THE COMMENCEMENT OF THE BLOCK PERIOD, AND ALSO CONSIDERING THE FACT THAT THE ASSESSEE'S WIFE SMT. SHANTA BAI AND THE AS SESSEE'S SON, SRI NARENDRA KUMAR HAVE FILED RETURNS OF INCOME, UPTO ASSESSMENT YEAR 1989 - 90 BEFORE DATE OF SEARCH AND SUBSEQUENTLY SMT. SHANTA BAI, AFTER SEARCH ON 20.01.1997 FILED RETURNS FOR ASSESSMENT YEAR 1990 - 91 TO 1996 - 97, REFLECTING GIRVI ADVANCE F OUND AT THE TIME OF SEA R CH IN THEIR RETURNS. WE ARE OF THE OPINION THAT THE ADDITION OF RS.8,98,210 ON ACCOUNT OF EXCESS OR UNDISCLOSED GIRVI ADVANCE OF THE ASSESSEE COULD NOT HAVE BEEN MADE AND IS THEREFORE UNSUSTAINABLE. IN THIS VIEW OF THE MATTER, TH E ADDITION OF RS.8,98,210 MADE ON ACCOUNT OF UNDISCLOSED GIRVI ADVANCE OF THE ASSESSEE IS HEREBY DELETED. CONSEQUENTLY, GROUND NO.2 OF THE ASSESSEE'S APPEAL IS ALLOWED. 6. GROUND NO.3 ADDITION MADE ON ACCOUNT OF UNACCOUNTED STOCK - IN - TRADE OF JEWELLERY BUSINESS RS.4,61,000 . 6.1 IN SUPPORT OF GROUND NO.3 (SUPRA), THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE PLACED RELIANCE ON AND REITERATED THE CONTENTIONS PUT FORTH IN WRITTEN SUBMISSIONS DT.11.5 .2016 WHICH IS EXTRACTED HEREUNDER : 11 IT (SS) A NO. 3 /BANG/201 1 2. THE SECOND ISSUE IN APPEAL VIDE GROUND NO.3 RELATES TO THE ADDITION OF RS.4,61,000/ - AS UNACCOUNTED STOCK - IN - TRADE OF JEWELLERY BUSINESS. AT THE TIME OF SEARCH GOLD JEWELLERY WEIGHING ABOUT 1435 GMS. AND SILVER ARTICLES OF ABOUT 13 KGS. WERE FOUND IN THE RESIDENTIAL PREMISES OF THE ASSESSEE AND THE SAME WAS SEIZED ON 18/01/1997. THE LEARNED A.O. HAS BROUGHT TO TAX THE AFORESAID GOLD AND SILVER BASED ON THE STATEMENTS OF THE ASSESSEE GIVEN U/S.132[4] OF THE ACT, ON 08/01/1997. THE RELEVANT PORTIONS OF THE STATEMENTS ARE REPRODUCED IN THE ASSESSMENT ORDER AT PAGE NO.4. IN TERMS OF THE AFORESAID STATEMENT THE ASSESSEE PURPORTEDLY STATED THAT THE JEWELLERY REPRESENTED STOCK - IN - TRADE OF JEWELLERY BUSINESS AND THE S AME WAS NOT DISCLOSED TO THE DEPARTMENT. 2.1 IN COURSE OF ASSESSMENT PROCEEDINGS, IT WAS CONTENDED THAT THE ASSESSEE WAS NOT CARRYING ON ANY JEWELLERY BUSINESS AND THAT THE JEWELLERY FOUND IN THE RESIDENCE BELONGED TO THE ASSESSEE S WIFE SMT.SHANTHA BAI , HIS MOTHER SMT. SIRI BAI AND HIS SISTER MS.KAMALA BAI. IT WAS CONTENDED THAT THE ASSESSEE S WIFE HAD SHOWN 664 GMS. IN THE WEALTH - TAX RETURN FOR THE ASSESSMENT YEAR 1988 - 89. HENCE, IT WAS PLEADED THAT THE EXTENT OF JEWELLERY FOUND COULD NOT BE CONSIDER ED AS UNACCOUNTED STOCK - IN - TRADE OF JEWELLERY BUSINESS, AS NO EVIDENCE OF CARRYING ON ANY SUCH BUSINESS WAS EVER FOUND AT THE TIME OF SEARCH. HOWEVER, PLACING RELIANCE ON THE DISMISSAL OF AN SLP BY THE HON BLE SUPREME COURT, THE LEARNED A.O. REJECTED THE CLAIM OF THE ASSESSEE THAT THE JEWELLERY BELONGED TO THE LADY MEMBERS AND THERE WAS NO BUSINESS OF JEWELLERY BEING CARRIED ON BY THE ASSESSEE. 2.2 IT IS SUBMITTED THAT THE AFORESAID ISSUE WAS CONSIDERED BY THE HON BLE ITAT IN ITS ORDER IN IT[SS]A.NO.4/B ANG/1999 [SUPRA]. AFTER NOTICING THAT THE FACTS OF THE ASSESSEE S CASE WERE DIFFERENT FROM THE FACTS IN THE CASE LAW RELIED UPON BY THE LEARNED A.O. THE HON BLE ITAT OBSERVED THAT THE ASSESSEE S WIFE SMT.SHANTHA BAI, HAD SHOWN JEWELLERY OF 664 GMS. IN THE WEALTH - TAX RETURNS LONG BEFORE THE DATE OF SEARCH. IT WAS DIRECTED THAT THESE MATERIALS HAVE TO BE EXAMINED TO COME TO A DEFINITE CONCLUSION AND THE MATTER WAS REMANDED. 2.3 HOWEVER, THE LEARNED CIT[A] HAS SUSTAINED THE ADDITION IN THE IMPUGNED ORDER O BSERVING THAT THE ASSESSEE HAD STATED THAT HE WAS CARRYING ON JEWELLERY BUSINESS IN THE STATEMENT RECORDED AT THE TIME OF SEARCH. FURTHER, THE LEARNED CIT[A] HAS NOTED THAT THE ASSESSEE HAD SHOWN STOCK - IN - TRADE IN THE BALANCE SHEET ON 24/10/1984 [COPY ENC LOSED AS ANNEXURE - 2], OF RS.1,596/ - , WHICH WAS INDICATIVE OF THE FACT THAT THE ASSESSEE WAS CARRYING ON JEWELLERY BUSINESS. THE LEARNED CIT[A] HAS ALSO OBSERVED THAT IN THE STATEMENT OF AFFAIRS OF THE ASSESSEE S WIFE SMT.SHANTHA BAI, JEWELLERY WAS NOT SHO WN FOR THE PERIOD 31/03/1992 TO 31/03/1997 AND HENCE, THE JEWELLERY MIGHT HAVE BEEN SOLD AWAY SINCE IT WAS NOT SHOWN IN THE BALANCE 12 IT (SS) A NO. 3 /BANG/201 1 SHEET. ON THESE GROUNDS, THE LEARNED CIT[A] SUSTAINED THE ADDITION MADE BY THE LEARNED A.O. 2.4 IT IS SUBMITTED THAT THE L EARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING THE AFORESAID ADDITION. IT IS SUBMITTED THAT THE GOLD JEWELLERY AND SILVER ARTICLES WERE SEIZED IN THE RESIDENCE OF THE ASSESSEE AND NOT IN HIS BUSINESS PREMISES. SECONDLY, THE FACT THAT THE ASSESSEE S WIFE SMT .SHANTHA BAI AND MOTHER SMT.SIRI BAI AND UNMARRIED SISTER MS. KAMAL BAI, WERE STAYING WITH THE ASSESSEE IS NOT IN DOUBT. NEITHER CAN IT BE HELD THAT THE LADY MEMBERS OF THE HOUSE DID NOT POSSESS ANY JEWELLERY AT ALL SINCE, EXCEPT THE AFORESAID JEWELLERY N O OTHER JEWELLERY WAS FOUND AT THE TIME OF SEARCH. THE MERE FACT THAT THE ASSESSEE, A SEMI - LITERATE PERSON HAD STATED THAT THE JEWELLERY WAS STOCK - IN - TRADE OF HIS BUSINESS CANNOT BE A GROUND FOR MAKING THE IMPUGNED ADDITION. NO EVIDENCE OF ANY JEWELLERY BUSINESS LIKE ANY PURCHASE BILLS, SALE BILLS, STOCK REGISTER OR OTHER DOCUMENTS TO INFER THAT THE ASSESSEE WAS CARRYING ON JEWELLERY BUSINESS WAS FOUND AT THE TIME OF SEARCH TO HOLD THAT THE AFORESAID JEWELLERY REPRESENTED THE STOCK - IN - TRADE OF THE JEWELLE RY BUSINESS. 2.5 IT IS SUBMITTED THAT THE EXTENT OF JEWELLERY FOUND IN THE RESIDENCE OF THE ASSESSEE IS MUCH LESSER THAN THE GROUND LIMITS IN TERMS OF CBDT INSTRUCTIONS DATED 11/05/1994 THAT HAS BEEN CONSIDERED BY THE HON BLE JURISDICTIONAL HIGH COURT I N THE CASE OF PATI DEVI REPORTED IN 240 ITR 727 [KAR]. FURTHERMORE, THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SUDHIR BALIGA IN ITA NO.155/2008 DATED 10/06/2014 HAS ALSO APPROVED THE EXTENSION OF THE AFORESAID INSTRUCTION OF THE CBDT FOR INCOME - TAX PURPOSES AND DELETION OF THE ADDITION MADE BY THE HON BLE ITAT. THESE JUDGEMENTS ARE PLACED IN PAGES 16 TO 25 OF THE LIST OF CITATION FILED SEPARATELY. 2.6 COMING TO THE REASONING OF THE LEARNED CIT[A] FOR SUSTAINING THE ADDITION IT IS SUBMITTED TH AT THE ASSESSEE S WIFE SMT.SHANTHA BAI, HAS NOT SHOWN THE JEWELLERY AS AN ASSET IN HER STATEMENT OF AFFAIRS FOR ANY OF THE YEARS SINCE, THE SAID JEWELLERY WAS MERELY RECEIVED BY HER AT THE TIME OF THE MARRIAGE AND IT WAS NOT AN ASSET ACQUIRED OUT OF HER CA PITAL AND FUNDS. NO INFERENCE COULD BE DRAWN THAT THE ASSESSEE HAS SOLD AWAY THE JEWELLERY MERELY BECAUSE THE JEWELLERY RECEIVED AS GIFT WAS NEVER SHOWN IN THE STATEMENT OF AFFAIRS. SECONDLY, THE FACT THAT WEALTH - TAX RETURN SHOWING 664 GMS. WAS FILED FOR THE ASSESSMENT YEAR 1985 - 86 HAS TOTALLY BEEN DISREGARDED, WHICH IS UNJUSTIFIED AND UNWARRANTED. HENCE, THE ADDITION MADE TO THE EXTENT OF 664 GMS. IS UNWARRANTED AND LIABLE TO BE DELETED. 2.7 IT IS FURTHER SUBMITTED THAT THE LEARNED CIT[A] HAS ALSO ER RED IN ASSUMING THAT THE STOCK - IN - TRADE SHOWN IN THE BALANCE SHEET AS ON 28/10/1984 WAS GOLD JEWELLERY. THERE IS NO DESCRIPTION IN THE SAID BALANCE 13 IT (SS) A NO. 3 /BANG/201 1 SHEET TO CONCLUDE THAT THE ASSESSEE WAS CARRYING ON JEWELLERY BUSINESS AND THEREFORE, THE ADDITION SUSTAINE D BASED ON THE SAID CONCLUSION IS PURELY ON SUSPICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS AND THEREFORE DESERVES TO BE DELETED. 6.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIE S BELOW AND SUBMITTED THAT THIS ADDITION HAS BEEN MADE ON THE B ASIS OF THE ASSESSEE'S STATEMENT THAT HE WAS CARRYING ON JEWELLERY BUSINESS. 6.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. AS PER THE DETAILS ON RECORD, 1435 GRAMS OF JEWELLERY AND 13 KGS. OF SILVER ARTICLES WERE SEIZED FROM THE ASSESSEE'S RESIDENTIAL PREMISES IN THE COURSE OF SEARCH ON 18.1.1997; WHICH THE ASSESSEE STATED REPRESENTED THE STOCK - IN - TRADE OF HIS JEWELLERY BUSINESS. HOWE VER, IN THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED THAT THE STATEMENT GIVEN IN THE COURSE OF SEARCH WAS ERRONEOUS AND THE ENTIRE GOLD JEWELLERY BELONGS TO HIS WIFE, SMT. SHANTA BAI, HIS MOTHER, SMT. SIRI BAI A ND SISTER KAMALA BAI. THE ASSESSEE ALSO POINTED OUT THAT HIS WIFE HAD SHOWN 664 GRAMS IN THE WEALTH TAX RETURN FOR ASSESSMENT YEAR 1988 - 89 AND THAT THERE WAS NOT EVEN AN IOTA OF EVIDENCE WITH THE DEPARTMENT TO SHOW THAT THE ASSESSEE WAS ENGAGED IN JEWELL ERY BUSINESS. WE OBSERVE THAT THIS SEIZED JEWELLERY WAS FOUND IN THE ASSESSEE'S RESIDENCE AND NOT AT HIS BUSINESS PREMISES AND ALSO THAT NO MATERIAL WAS FOUND IN THE COURSE OF SEARCH TO ESTABLISH THAT HE WAS ENGAGED IN JEWELLERY BUSINESS. THE EXTENT OF JEWELLERY FOUND IS 1435 GRAMS AND THERE ARE ONLY THREE LADIES IN THE 14 IT (SS) A NO. 3 /BANG/201 1 ASSESSEE'S RESIDENCE. WE ALSO FIND THAT THE ASSESSEE'S WIFE HAD DECLARED 664 GRAMS OF JEWELLERY IN HER WEALTH TAX RETURN FOR ASSESSMENT YEAR 1988 - 89. THE HON'BLE KARNATAKA HIGH COURT I N THE CASE OF PATI DEVI (240 ITR 727) (KAR) HAS CONSIDERED CBDT S INSTRUCTION DT.11.5.1994 REGARDING THE GROUND RULES FOR THE EXTENT OF JEWELLERY N ORMA LLY FOUND AT THE TIME OF SEARCH, WHICH CANNOT BE SEIZED. 500 GRAMS OF GOLD JEWELRY PER MARRIED LADY I S CONSIDERED ACCEPTABLE AND THE SAME CANNOT BE SEIZED AND ALSO CANNOT BE CONSIDERED AS UNEXPLAINED INVESTMENT AS HELD BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SUDHIR BALIGA IN ITA NO.155/2008 DT.10.6.2014. 6.3.2 CONSIDERING THE FACT THAT APART FROM THIS JEWELLERY OF 1435 GRAMS, WHICH IS CONSIDERED TO BE STOCK - IN - TRADE, THERE WAS NO OTHER JEWELLERY FOUND THAT WAS CONSIDERED AS PERSONAL JEWELLERY OF THE FAMILY MEMBERS, WE ARE OF THE VIEW THAT THE ADDITION MADE TOWARDS UNEXPLAINED JEWELLERY AS STOCK - IN - TRADE IS NOT JUSTIFIED. AS PER THE GROUND RULES FOR SEIZURE AS LAID DOWN BY THE COURTS AND CBDT S INSTRUCTION DT.11.5.1994, THE JEWELLERY OF 1435 GRAMS FOUND IS LESS THAN WHAT IS CONSIDERED AVAILABLE WITH REGARD TO 3 LADY MEMBERS PRESENT IN TH E ASSESSEE'S PREMISES AND THEREFORE THE ADDITION OF RS.4,61,000 MADE AS UNEXPLAINED JEWELLERY IS HEREBY DELETED. CONSEQUENTLY, GROUND N O .3 OF ASSESSEE'S APPEAL IS ALLOWED. 15 IT (SS) A NO. 3 /BANG/201 1 7. GROUND NO.4 UNEXPLAINED INVESTMENT IN IVPS RS.1,62,229. 7.1 IN RE SPECT OF THIS GROUND (SUPRA), THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE RELIED ON THE WRITTEN SUBMISSIONS DT.11.5.2016, WHEREIN IT HAS BEEN CONTENDED AS UNDER : - 3. THE NEXT ADDITION CHALLENGED VIDE GROUND NO.4 RELATES TO THE SUM OF RS.1, 62,229/ - MADE AS UNEXPLAINED INVESTMENT IN INDIRA VIKAS PATRA [IVP]. IN COURSE OF SEARCH 128 IVPS HAVING A MATURING VALUE OF RS.2,00,200/ - WAS FOUND AND SEIZED. BEFORE THE LEARNED A.O., IT WAS CONTENDED THAT THE AFORESAID IVPS OF RS.1,00,000/ - DID NOT BE LONG TO THE ASSESSEE AND THEY BELONGED TO THE ASSESSEE S SON SRI NARENDRA KUMAR, WHO WAS ADOPTED BY THE ASSESSEE S BROTHER SRI DEEPCHAND JAIN. IT WAS FURTHER SUBMITTED THAT THESE IVPS WERE TAKEN AS SECURITY FOR THE ADVANCES MADE IN THE REGULAR GIRVI BUSIN ESS CARRIED ON BY SRI NARENDRA KUMAR AND A SUM OF RS.7,63,649/ - WAS THE GIRVI ADVANCES SHOWN BY SRI NARENDRA KUMAR AS ON 31/03/1997. IT WAS CONTENDED THAT SRI NARENDRA KUMAR HAD MADE THE ADVANCES ON SECURITY OF THE AFORESAID IVPS AND A MEMORANDUM DATED 10 /03/1996 RECALLING THE EVENTS OF AN ORAL PARTITION IN THE FAMILY OF SRI DEEPCHAND JAIN WAS PRODUCED. IN TERMS OF THE AFORESAID ORAL PARTITION, SRI NARENDRA KUMAR WAS ALLOTTED A SUM OF RS.7,00,000/ - , WHICH INCLUDED ADVANCES TO THE EXTENT OF RS.3,50,000/ - A ND CASH OF RS.3,50,000/ - . IT WAS CONTENDED THAT THE ADVANCES RECEIVED AT THE TIME OF PARTITION INCLUDED THE ADVANCES MADE ON THE SECURITY OF THE AFORESAID IVPS. 3.1 IT IS SUBMITTED THAT THE HON BLE ITAT VIDE ITS ORDER IN IT[SS]A.NO.4/BANG/1999 [SUPRA] HAD REMITTED THE AFORESAID ISSUE BACK TO THE FILE OF THE A.O. OBSERVING THAT A DEFINITE CONCLUSION OF THE ISSUE IS NECESSARY AS TO WHETHER THE AFORESAID IVPS FORMED PART OF THE GIRVI ADVANCE OF RS.7,63,649/ - SHOWN BY SRI NARENDRA KUMAR IN HIS STATEMENT OF AFFAIRS AS ON 31/03/1997. 3.2 HOWEVER, IN THE IMPUGNED ORDER, THE LEARNED CIT[A] HAS SUSTAINED THE ADDITION OBSERVING THAT THE STATEMENT OF AFFAIRS OF SRI NARENDRA KUMAR, DOES NOT SHOW THE AFORESAID IVPS AND SINCE THE IVPS ARE SPECIFIC ASSETS, THEY OUGH T TO HAVE BEEN DISCLOSED SEPARATELY. THE LEARNED CIT[A] DISBELIEVED THE CONTENTIONS OF THE ASSESSEE THAT THE GIRVI ADVANCE OF RS.7,63,649/ - INCLUDED THE ADVANCES MADE IN RESPECT OF THE AFORESAID IVPS. THE LEARNED CIT[A] HAS ALSO OBSERVED THAT THE OPENING CAPITAL OF SRI NARENDRA KUMAR AS ON 01/04/1996 WAS RS.3,12,722/ - AND THERE IS NO INDICATION THAT THE CAPITAL OF SRI NARENDRA KUMAR INCLUDED THE AFORESAID IVPS. ONCE AGAIN, THE LEARNED 16 IT (SS) A NO. 3 /BANG/201 1 CIT[A] OBSERVED THAT THE RETURN OF SRI NARENDRA KUMAR WAS FILED AFTER THE DATE OF SEARCH AND THERE IS EVERY POSSIBILITY OF ACCOMMODATING THIS INVESTMENT IN THE RETURN SO FILED. HENCE, HE SUSTAINED THE ADDITION OF RS.1,62,229/ - , WHICH INCLUDES THE ACCRUED INTEREST ON THE INVESTMENT OF RS.1,00,000/ - UPTO THE DATE OF SEARCH. 3.3 IT IS SUBMITTED THAT THE AFORESAID CONCLUSION OF THE LEARNED CIT[A] ARE UNJUSTIFIED AND UNWARRANTED. IT IS SUBMITTED THAT THE LEARNED CIT[A] OUGHT TO HAVE NOTICED THAT THE DEPARTMENT HAS NOT EXAMINED SRI NARENDRA KUMAR TO ESTABLISH THAT THE IVPS DO NO T BELONG TO HIM. THE ASSESSEE HAS SUBMITTED THAT THE IVPS BELONGED TO SRI NARENDRA KUMAR AND THAT THE SAME FORMS PART OF THE GIRVI ADVANCES SHOWN IN THE BALANCE SHEET AS ON 31/03/1997. FURTHERMORE, THE ASSESSEE HAS ALSO PRODUCED MATERIALS IN SUPPORT OF T HE FINANCIAL CAPACITY OF SRI NARENDRA KUMAR, WHO RECEIVED SUBSTANTIAL FUNDS AND ADVANCES ON THE PARTITION OF HIS ADOPTED JOINT FAMILY. THE LEARNED CIT[A] OUGHT NOT TO HAVE REJECTED THE EVIDENCE TENDERED MERELY ON THE GROUND THAT THE RETURN OF INCOME WAS F ILED AFTER THE DATE OF SEARCH. THE FACT THAT SRI NARENDRA KUMAR WAS NOT EXAMINED TO SHOW THAT THE CLAIM OF THE ASSESSEE IS ERRONEOUS IS MATERIAL AND CONSEQUENTLY, IT IS SUBMITTED THAT THE IMPUGNED ADDITION IS UNWARRANTED AND LIABLE TO BE DELETED. 7 .2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 7.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. WE FIND FROM THE DETAILS ON RECORD BEFOR E US THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THE INVESTMENT IN INDIRA VIKAS PATRA ( IVP ) BELONG TO HIS SON, NARENDRA KUMAR. AS RIGHTLY HELD BY THE LEARNED CIT (APPEALS), THESE INVESTMENTS ARE NOT REFLECTED IN THE STATEMENT OF AFFAIRS OF N ARENDRA KUMAR FILED BEFORE THE DEPARTMENT. SINCE THE IVP S ARE SPECIFIC ASSETS, THEY SHOULD HAVE BEEN SEPARATELY MENTIONED THEREIN. THE PLEA OF THE ASSESSEE THAT THE ABOVE S UM FORMS PART OF THE GIRVI ADVANCE STATEMENT OF SRI NARENDRA KUMAR CANNOT BE AC CEPTED. IN THIS FACTUAL MATRIX OF THE CASE, WE ARE OF THE OPINION THAT THE ADDITION SUSTAINED BY THE LEARNED CIT (APPEALS) HAS TO BE CONFIRMED AS NO EXPLANATION OF THE SOURCE OF 17 IT (SS) A NO. 3 /BANG/201 1 INVESTMENTS THEREIN FOUND AT THE TIME OF SEARCH HAS BEEN GIVEN BY THE ASSESSE E AND WE THEREFORE UPHOLD THE ADDITION MADE BY THE ASSESSING OFFICER. CONSEQUENTLY, GROUND NO.4 OF THE ASSESSEE'S APPEAL IS DISMISSED. 8. GROUND NO.5 - UNEXPLAINED INVESTMENT IN NSCS RS.1,00,600 . 8.1 IN RESPECT OF THIS GROUND (SUPRA), THE LEA RNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE RELIED UPON THE CONTENTIONS PUT FORTH IN THE WRITTEN SUBMISSIONS DT.11.5.2016; WHICH ARE AS UNDER : 4. THE NEXT ADDITION RAISED IN GROUND NO.5 RELATES TO THE INVESTMENT IN NSCS TO THE EXTENT OF RS.1,00,600/ - . IT IS SUBMITTED THAT NSCS TO THE EXTENT OF RS.50,000/ - WERE FOUND AND SEIZED AND THESE WERE ENDORSED. HENCE, THE LEARNED A.O. CONSIDERED THAT THESE NSCS HAVING A MATURITY VALUE OF RS.1,00,000/ - WAS THE UNDISCLOSED INCOME OF THE ASSESSEE. THE HON BLE ITAT IN THE ASSESSEE S CASE IN IT[SS]A.NO.4/BANG/1999 HAD SUSTAINED THE ADDITION ON THE GROUND THAT NO EVIDENCE WAS ADDUCED IN SUPPORT OF THE PLEA THAT THE SAID NSCS BELONGED TO THE ASSESSEE S WIFE SMT.SHANTHA BAI AND SON SRI NARENDRA KUMAR. 4.1 IT IS S UBMITTED THAT IN THE IMPUGNED ORDER THE LEARNED CIT[A] HAS ONCE AGAIN SUSTAINED THE ADDITION OBSERVING THAT THERE WAS NO EVIDENCE TO SUBSTANTIATE THE CONTENTION OF THE ASSESSEE THAT THESE NSCS BELONGED TO THE ASSESSEE S WIFE AND SON. MUCH EMPHASIS HAS BEE N PLACED ON THE FACT THAT THESE NSC S FOUND AT THE TIME OF SEARCH WERE ENDORSED IN FAVOUR OF THE ASSESSEE AND THUS, THE ASSESSEE WAS REGARDED AS THE OWNER OF THE SAME. 4.2 IT IS SUBMITTED THAT THESE NSCS FOUND AT THE TIME OF SEARCH BELONGED TO THE ASSESS EE S WIFE AND SON WHO HAD ADVANCED FUNDS ON THE SECURITY OF THESE NSCS. THE FUNDS ADVANCED FORMED PART OF THE GIRVI ADVANCES DISCLOSED BY THE AFORESAID PERSONS IN THEIR STATEMENT OF AFFAIRS FILED BEFORE THE DEPARTMENT. THERE MERE FACT THAT THE NSCS WERE ENDORSED IN FAVOUR OF THE ASSESSEE TO FACILITATE ENCASHMENT OF THE SECURITY IN THE EVENT OF FAILURE TO PAY THE AMOUNT ADVANCED DOES NOT MEAN THAT THE ASSESSEE IS THE OWNER OF THE SAID NSCS. IT WAS ENDORSED IN FAVOUR OF THE ASSESSEE ONLY FOR SAKE OF CONVEN IENCE TO ENABLE THE ASSESSEE TO ENCASH THE SAME AND OBTAIN THE FUNDS FOR THE RECOVERY OF THE DEBT ADVANCED BY THE ASSESSEE S WIFE AND SON. HOWEVER, THE ADVANCES ON THE SECURITY OF THE NSCS WERE 18 IT (SS) A NO. 3 /BANG/201 1 MADE BY THE ASSESSEE S WIFE AND SON AND THEY FORMED PART OF T HE GIRVI ADVANCES SHOWN IN THEIR RESPECTIVE STATEMENT OF AFFAIRS. HENCE, THE IMPUGNED ADDITION MADE IS LIABLE TO BE DELETED. 8.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE HIS CLAIM THAT THESE NSCS FOUND AT THE TIME OF SEARCH, HAVING A MATURITY VALUE OFRS.1,00,600 BELONG TO HIS WIFE SMT. SHANTA BAI AND SON NARENDRA KUMAR. AS RIGHTLY OBSERVED BY THE LEARNED CIT (APPEALS), THESE ASSETS ARE NOT DISCLOSED SEPARATELY IN THE STATEMENT OF AFFAIRS OF BOTH THE ASSESSEE'S WIFE AND SON. WE HAVE ALREADY HELD THAT THE CLAIM OF THE ASSESSEE THAT THESE AMOUNTS FORM PART OF THE GIRVI ADVANCES IS NOT ACCEPTABLE. WE ALSO FIND THAT THESE NSCS WERE ENDORSED IN THE NA M E OF THE ASSESSEE AND THEREFORE HOLD THAT HE IS THE RIGHTFUL OWNER OF THESE INVESTMENTS. IN THE FACTUAL MATRIX OF THE CASE, AS DISCUSSED ABOVE, WE CONFIRM THE ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN NSCS IN THE HANDS OF THE ASSESSEE. CONSEQUENTLY GROUND NO.5 OF THE ASSESSEE'S APPEAL IS DISMISSED. 9. GROUND NO.6 . 9.1 THIS GROUND PERTAINS TO THE ADDITION OF RS.10,626, BEIN G THE DIFFERENCE IN INTEREST AND BATAV AS UNDISCLOSED INCOME. IN THIS REGARD, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THIS GROUND IS NOT BEING PRESSED IN THIS APPEAL. IN VIEW OF THIS GROUND NOT BEING 19 IT (SS) A NO. 3 /BANG/201 1 PRESSED / URGED BY THE ASSESSEE , THE ABOVE ADDITION OF RS.10,626 IS SUSTAINED. CONSEQUENTLY, GROUND NO.6 OF THE ASSESSEE'S APPEAL IS DISMISSED. 10. GROUND NO.7 - ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PROPERTY RS.4,90,000 . 10 .1 THIS GROUND (SUPRA) PERTAINS TO THE SUSTAINING OF ADDITION OF RS.4,90,000 BY THE LEARNED CIT (APPEALS), OUT OF ADDITION OF RS.6,49,280 MADE AS UNDISCLOSED INVESTMENT IN PROPERTY. IN RESPECT OF THIS GROUND, THE LEARNED AUTHORISED REPRESENTATIVE OF T HE ASSESSEE PLACED RELIANCE ON THE CONTENTIONS PUT FORTH IN THE WRITTEN SUBMISSIONS DT.11.56.2016 WHICH ARE AS UNDER : 6. THE LAST ISSUE IN APPEAL RAISED IN GROUND NO.7 RELATES TO THE ADDITION OF RS.4,90,000/ - MADE AS UNEXPLAINED INVESTMENT IN PROPERTY . THE LEARNED A.O. IN THE ASSESSMENT ORDER TAXED A SUM OF RS.6,49,280/ - AS UNEXPLAINED INVESTMENT IN PROPERTY BASED ON CERTAIN MATERIALS FOUND DURING THE COURSE OF SEARCH. IT WAS FOUND THAT THE ASSESSEE S WIFE SMT. SHANTHA BAI AND SON SRI HUKMICHAND HAD PURCHASED A PROPERTY IN JOGUPALYAM, ULSOOR, BANGALORE. A PORTION OF THE PROPERTY WAS PURCHASED BY SMT. SHANTHA BAI FOR RS.4,00,000/ - IN THE YEAR 1992 AND THE BALANCE PORTION OF THE PROPERTY WAS PURCHASED BY THE ASSESSEE S SON SRI HUKMICHAND. THE A.O. FOU ND THAT THE STAMP VALUATION AUTHORITIES HAD FIXED THE MARKET VALUE OF THE PROPERTY AT RS.5,10,750/ - AS AGAINST THE SUM OF RS.4,00,000/ - AND HENCE, THE A.O. ADOPTED THE SAID VALUE AND TAXED A SUM OF RS.6,49,280/ - AFTER NOTICING THAT THE ASSESSEE HAD INCURRE D EXPENSES ON STAMP DUTY, ETC. 6.1 IT WAS CONTENDED BEFORE THE AUTHORITIES BELOW THAT THE ASSESSEE S WIFE SMT. SHANTHA BAI HAD DISCLOSED THE PURCHASE OF THE PROPERTY IN HER RETURN OF INCOME FOR THE YEAR ENDED 31/03/1993 AT RS.4,90,000/ - , WHICH INCLUDES T HE PURCHASE PRICE OF RS.4,00,000/ - AND OTHER EXPENSES OF RS.90,000/ - . IT WAS POINTED OUT THAT THE PROPERTY DID NOT BELONGED TO THE ASSESSEE BUT BELONGED TO HIS WIFE SMT. SHANTHA BAI AND THE SOURCE OF FUNDS WAS EVIDENT FROM THE EXAMINATION OF HER STATEMENT OF AFFAIRS. 20 IT (SS) A NO. 3 /BANG/201 1 6.2 ON THIS ADDITION THE HON BLE ITAT VIDE ITS ORDER IN IT[SS] A.NO.4/BANG/1999, HAS REMANDED THE ISSUE BACK TO THE FILE OF THE A.O. TO EXAMINE THE MATERIAL FACTS AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 6.3 IN THE IMPUGNED ORDER, THE LE ARNED CIT[A] SUSTAINED THE ADDITION OF RS.4,90,000/ - AS AGAINST THE SUM OF RS.6,49,280/ - MADE BY THE A.O. ON THE GROUND THAT THE STAMP VALUATION CANNOT BE THE BASIS FOR THE ADDITION. THE LEARNED CIT[A] OBSERVES THAT THE ACTUAL INVESTMENT IN PROPERTY WAS R S.4,90,000/ - AND THAT SMT.SHANTHA BAI, WIFE OF THE ASSESSEE HAD NOT FILED ANY RETURNS OF INCOME AFTER ASSESSMENT YEAR 1989 - 90 AND THAT, THE RETURNS SHOWING THE INVESTMENTS WAS FILED AFTER THE DATE OF SEARCH. THE LEARNED CIT[A] HAS ALSO OBSERVED THAT THE CA PITAL OF SMT.SHANTHA BAI AS ON 31/03/1989 WAS ONLY RS.1,53,824/ - AND THERE WAS NO SOURCE OF INVESTMENT IN HER HANDS. ON THESE GROUNDS THE LEARNED CIT[A] HAS SUSTAINED THE IMPUGNED ADDITION OF RS.4,90,000/ - . 6.4 IT IS SUBMITTED THAT THE AFORESAID ADDITIO N MADE IS UNJUSTIFIED AS THE INVESTMENT IN THE AFORESAID PROPERTY DOES NOT RELATE TO THE ASSESSEE AT ALL. IT IS VERY CLEAR FROM THE ASSESSMENT ORDER THAT THE INVESTMENT IN THE PROPERTY WAS MADE BY SMT.SHANTHA BAI AND NOT BY THE ASSESSEE AND THE SAID INVES TMENT HAS BEEN DISCLOSED IN THE STATEMENT OF AFFAIRS FOR THE ASSESSMENT YEAR 1993 - 94 BY HER. AT ANY RATE, IT IS SUBMITTED THAT NO ADDITION CAN BE MADE IN RESPECT OF THE INVESTMENT MADE AND STANDING IN THE NAME OF THE ASSESSEE S WIFE HAVING REGARD TO THE J UDGEMENT OF THE HON BLE SUPREME COURT IN THE CASE OF K.INBASAGARAN REPORTED IN 282 ITR 435 [SC]. RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF S.K.BAHADUR REPORTED IN 345 ITR 95 [DEL] AND THE JUDGEMENT OF THE HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ROSHAN LAL SETH REPORTED IN 178 ITR 660 [P&H]. 6.5 IT IS SUBMITTED THAT THE ASSESSEE S WIFE SMT. SHANTA BAI, HAS OWNED UP THE AFORESAID INVESTMENT AND HAS DISCLOSED THE SAME IN HER STATEMENT OF AFFAIRS ALTH OUGH THE SAME WAS FILED AFTER THE DATE OF SEARCH. THERE IS NO MATERIAL TO SHOW THAT THE AFORESAID INVESTMENT WAS MADE BY THE ASSESSEE IN ORDER TO BRING IT TO TAX IN THE HANDS OF THE ASSESSEE. THE SUSPICION THAT THE ASSESSEE S WIFE MIGHT NOT HAVE SUFFICIEN T SOURCES TO EXPLAIN THE INVESTMENT IS NOT A GOOD GROUND TO PRESUME THAT THE INVESTMENT WAS MADE BY THE ASSESSEE AND TAX THE SAME AS UNDISCLOSED INCOME. THE ADDITION MADE IS THEREFORE IS PURELY ON SUSPICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS AND TH E SAME DESERVES TO BE DELETED. 10.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. IT WAS SUBMITTED THAT 21 IT (SS) A NO. 3 /BANG/201 1 SINCE THE ASSESSEE'S WIFE DID NOT HAVE ANY SOURCE OF INCOME, THE ADDITION OF RS.4,9 0,000 SUSTAINED BY THE LEARNED CIT (APPEALS) OUGHT TO BE UPHELD. 10.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IN THE COURSE OF SEARCH IT WAS FOUND THAT THE ASSESSEE'S WIFE SMT. SHANTA BAI AND SON, HUKM I CHAND HAD PURCHASED A PROPERTY IN JOGUPALYA, ULSOOR. A PORTION OF THE PROPERTY WAS PURCHASED BY THE ASSESSEE'S WIFE IN 1992 AND THE BALANCE WAS CLAIMED TO BE PURCHASED BY THE ASSESSEE'S SON. THE ASSESSEE'S WIFE HAD DISCLOSED THE PURCHASE OF THIS PROPERTY IN HER RETURN OF INCOME FOR THE YEAR ENDED 31.3.1993 AT RS.4,90,000. HOWEVER, THIS RETURN OF INCOME FOR ASSESSMENT YEAR 1993 - 94 WAS FILED AFTER THE DATE OF SEARCH AND THE ADDITION OF THIS INVESTMENT OF RS.4,90,000 HAS BEEN SUSTAINED BY THE L EARNED CIT (APPEALS), OBSERVING THAT THE ASSESSEE'S WIFE DID NOT HAVE ANY SOURCE OF INCOME TO PURCHASE THE SAID PROPERTY. NO MATERIAL HAS BEEN PLACED ON RECORD BEFORE US TO CONTROVERT THE ABOVE FACTUAL FINDING OF THE LEARNED CIT (APPEALS). IN THIS VIEW O F THE MATTER, WE UPHOLD THE ACTION OF THE LEARNED CIT (APPEALS) IN SUSTAINING THE ASSESSEE'S UNEXPLAINED INVESTMENT IN THE AFORESAID PROPERTY AT JOGUPALYA. CONSEQUENTLY , GROUND NO.7 OF THE ASSESSEE'S APPEAL IS DISMISSED. 10.3.2 BEFORE PARTING, WE OB SERVE TH A T , WITH DUE RESPECT , ON PERUSAL THEREOF, THE JUDICIAL PRONOUNCEMENTS RELIED ON BY THE ASSESSEE IN RESPECT OF GROUND NO.7 (SUPRA) WOULD NOT COME TO HIS RESCUE AS THE FACTS OF THE 22 IT (SS) A NO. 3 /BANG/201 1 CITED CASES ARE DIFFERENT / DISTINGUISHABLE FROM THOSE OF THE CASE ON HAND AND THEREFORE WOULD HAVE NO APPLICATION HERE. 11. IN THE RESULT, THE ASSESSEE'S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 20TH DAY OF DEC., 201 7 . SD/ - ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER SD/ - ( JASON P BOAZ ) JUDICIAL MEMBER BANGALORE, DT. 20 .12.2017. *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.