Appeal Details
Counselvise Citation
[2012] 124 COUNSELVISE.COM (IT) 7555 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
7 year(s) 5 month(s) 24 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
25-05-2012
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
C
Next Hearing Date
24-01-2012
Assessment Year
misc
Appeal Filed On
01-12-2004
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND A. MOHAN ALANKAMON Y, AM) IT(SS)A NO. 317/AHD/2004 BLOCK PERIOD: 1-04-1996 TO 06-09-2001 SHRI INDRAJITSINGH SURI, B/5, TAGORE FLATS, PALDI, AHMEDABAD PA NO. ADBPS 7511 E VS THE A. C. I. T., CENTRAL CIRCLE-1(3), AHMEDABAD (APPELLANT) (RESPONDENT) IT(SS)A NO. 331/AHD/2004 BLOCK PERIOD: 1-04-1996 TO 06-09-2001 THE A. C. I. T., CENTRAL CIRCLE-1(3), AHMEDABAD VS SHRI INDRAJITSINGH SURI, B/5, TAGORE FLATS, PALDI, AHMEDABAD PA NO. ADBPS 7511 E (APPELLANT) (RESPONDENT) IT(SS) A. NO.318/AHD/2004 BLOCK PERIOD: 01-04-1996 TO 06-09-2001 SMT. MANJEETKAUR I. SURI, B/5, TAGORE FLATS, PALDI, AHMEDABAD PA NO. ALXPS 5104 P VS THE A. C. I. T., CENTRAL CIRCLE-1(3), AHMEDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SUNIL H. TALATI, AR DEPARTRMENT BY SHRI VINOD TANWANI, SR. DR DATE OF HEARING: 18-04-2012 DATE OF PRONOUNCEMENT: 25-05-2012 2 O R D E R PER A. MOHAN ALANKAMONY: THESE THREE APPEALS TWO APPEALS BY THE ASSESSEE (HUSBAND AND WIFE) AND ANOT HER BY THE REVENUE ARE DIRECTED AGAINST THE IMPUGNED ORDERS OF THE LEARNED CIT (A)-I, AHMEDABAD IN (I) APPEAL NO. CIT (A)-I/ C C 1(3)/45/03 -04 AND (II) APPEAL NO. CIT (A)-I/ CC 1(3)/44/03 -04 DA TED 6.10.2004 AND 7.10.2004 RESPECTIVELY FOR THE BLOCK PERIOD FROM 1. 4.1996 TO 6.9.2001 IN THE CASES OF (I) SHRI INDRAJITSINGH SURI & MRS. MANJEETKAUR I SURI. I. IT (SS)A NO.317/A/2004BY INDRAJITSINGH SURI A SSESSEE: 2. THE ASSESSEE HAD RAISED NINETEEN GROUNDS IN AN ILLUSTRATIVE AND NARRATIVE MANNER. FOR THE SAKE OF CLARITY AND FOR THE APPRECIATION OF FACTS, THEY ARE REFORMULATED, IN A CONCISE MANNER, AS UNDER: THE LD. CIT (A) HAD ERRED IN SUSTAINING THE ADDITIO N OF: (1) RS.3,46,189/- BEING THE DIFFERENCE BETWEEN THE OPENING AND CLOSING CAPITAL OF AY 2000-01 AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD; (2) RS.72,956/- BEING A DIFFERENCE IN CAPITAL ACCOU NT OF NANAK CUTLERY MART WITHOUT AFFORDING AN OPPORTUNITY OF BE ING HEARD; (3) RS.2.01 LAKHS BEING GIFT RECEIVED FROM THE MOTH ER OF THE ASSESSEE AS UNDISCLOSED INCOME; 3 (4) RS.20 LAKHS BEING AN INVESTMENT IN NINAD CO-OP. HOUSING SOCIETY; (5) RS.5 LAKHS AS UNACCOUNTED INVESTMENT WITH SHRI YOGESH J RAWAL; (6) RS.1.5 LAKHS AS UNACCOUNTED SUM GIVEN TO SHRI S ANJEEV SHUKLA; (7) RS.5 LAKHS AS UNACCOUNTED INVESTMENT BY WAY OF CASH LOAN TO SHRI DINISH DHABALIA; (8) RS.7.43 LAKHS AS UNACCOUNTED INVESTMENT IN FLAT NOS. 901 & 902 IN JAY SHIVA APARTMENT; (9) RS. 2 LAKHS ALLEGEDLY MADE A DEPOSIT WITH A.D. PATEL & CO., FOR JAY SHIVA APARTMENT; (10) RS.10 LAKHS AS ALLEGED UNACCOUNTED INVESTMENT IN A LAND PURCHASED FROM BHAVYA GHANTAKARAN COTTAGE ASSOCIATI ON; (11) RS.5.51 LAKHS BEING UNACCOUNTED INVESTMENT MAD E AT 3, DHWIRUP BUNGALOW; (12) RS.3.07 LAKHS BEING RENT FROM DHWIRUP BUNGALOW PROPERTY; (13) RS.1.8 LAKHS BEING UNACCOUNTED INVESTMENT IN S ANTRO CAR; (14) RS.3 LAKHS TREATING AS FICTITIOUS ENTRIES IN T HE NAME OF BHART TEXTILES; (15) RS.1.17,900/- BEING UNACCOUNTED INVESTMENT IN SHARES; (16) RS.1.01 LAKHS BEING VARIOUS HOUSEHOLD ITEMS PU RCHASED AS UNACCOUNTED/UN-EXPLAINED; & (17) , (18) & (19) BEING GENERAL AND NO SPECIFIC IS SUES INVOLVED, THEY HAVE BECOME NON-CONSEQUENTIAL. 4 3. THE REVENUE HAD RAISED SIX GROUNDS IN AN ILLUST RATIVE AND NARRATIVE MANNER. FOR THE SAKE OF CLARITY AND FOR THE APPRECIATION OF FACTS, THEY ARE REFORMULATED, IN A CONCISE MANNER, AS UNDER: II. IT (SS)A NO.331/A/2004BY THE REVENUE: THE CIT (A) HAD ERRED IN DELETING THE ADDITION OF: (1) RS.20.7 LAKHS MADE ON ACCOUNT OF INTEREST EARNE D ON A LOAN OF RS.20 LAKHS ADVANCED TO JITENDRA GAJJAR; (2) RS.14.25 LAKHS BEING INTEREST EARNED ON A LOAN OF RS.5 LAKHS ADVANCED TO SHRI YOGISH RAVAL; (3) RS.6.5 LAKHS BEING INTEREST EARNED ON A LOAN OF RS.1.5 LAKHS ADVANCED TO SHRI SANJEEV SHUKLA; (4) RS.5 LAKHS ON ACCOUNT OF INTEREST EARNED ON A L OAN OF RS.5.51 LAKHS ADVANCE TO JAYSHEEL A PATEL; & (5) & (6) BEING GENERAL IN NATURE, THEY DO NOT SURV IVE FOR ADJUDICATION. 4. THE ASSESSEE HAD RAISED SEVEN GROUNDS IN AN ILL USTRATIVE AND NARRATIVE MANNER. FOR THE SAKE OF CLARITY AND FOR THE APPRECIATION OF FACTS, THEY ARE REFORMULATED, IN A CONCISE MANNE R, AS UNDER: III. IT (SS)A NO.318/A/2004BY SMT. MANJEETKAUR I SURI THE ASSESSEE: THE LD. CIT (A) HAD ERRED IN SUSTAINING T HE ADDITION OF: (1) RS.8,98,847/- BEING OPENING CAPITAL AS ON 1.4.9 5 WAS TREATING AS THE INCOME OF THE ASSESSEE; 5 (2) RS.5,23,221/- CONSIDERING THE DIFFERENCE BETWEE N OPENING AND CLOSING CAPITAL OF AY 2000-01 AS UNDISCLOSED IN COME FOR THE BLOCK PERIOD; (3) RS.3.35 LAKHS AS UNEXPLAINED CASH CREDITS(RS.1 LAC + RS.40,000/- + RS.1 LAC + RS.95,000/-); (4) RS.1,06,330/- TREATING AS UNDISCLOSED INCOME OF UNEXPLAINED STOCK; & (5) , (6) & (7) BEING GENERAL AND NO SPECIFIC ISSUE S INVOLVED, THEY HAVE BECOME NON-CONSEQUENTIAL. 5. AS THE ISSUES RAISED IN THESE APPEALS BEING INT ER-LINKED AND ALSO FOR THE APPRECIATION OF FACTS AND COHESION , THEY WERE HEARD, CONSIDERED TOGETHER AND DISPOSED OFF IN THIS COMMON ORDER. I. IT (SS)A NO.317/A/2004BY INDRAJITSINGH SURI B LOCK PERIOD 1.4.1996 6.9.2001: 6. THE BACKDROP OF THE ISSUES, IN BRIEF, ARE THAT THE ASSESSEE, AN INDIVIDUAL, INDULGED IN THE BUSINESS O F CUTLERY TRADING. THERE WAS AN ACTION U/S 132(1) OF THE ACT ON 6.9.20 01 IN THE CASE OF THE ASSESSEE. IN PURSUANCE OF ISSUANCE OF A NOTICE U/S 158BC OF THE ACT, THE ASSESSEE HAD FURNISHED A RETURN OF INCOME, ADMITTING NIL UNDISCLOSED INCOME FOR THE BLOCK PERIOD. AFTER DUL Y CONSIDERING THE ASSESSEES SUBMISSIONS, THE LEARNED AO HAD COMPUTED THE ASSESSEES UNDISCLOSED INCOME FOR THE BLOCK PERIOD AT RS.90,01,686/- 6 7. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUES WITH THE LEARNED CIT (A) WHO HAD SUSTAINED MOST OF THE ADDIT IONS UNDER VARIOUS HEADS AND GRANTED PARTIAL RELIEF. 8. AGITATED WITH THE PARTIAL RELIE F, THE ASSESSEE HAS COME UP WITH THE PRESENT APPEAL. 9. THE ISSUES RAISED BY THE ASSES SEE UNDER VARIOUS HEADS ARE DEALT WITH CHRONOLOGICALLY AFTER TAKING INTO AC COUNT THE REASONING OF THE AUTHORITIES BELOW AND ALSO ELABORATE SUBMISS IONS MADE BY THE LEARNED AR WHICH WERE EFFECTIVELY COUNTERED BY THE LEARNED DR. WE HAVE ALSO PERUSED THE DOCUMENTARY EVIDENCES ADVANCE D BY THE LEARNED AR AT THE TIME OF HEARING IN THE SHAPE OF V OLUMINOUS PAPER BOOKS. 10. GROUND NOS. 1 & 2: ADDITIONS OF RS.3.46 LAKHS AND RS.72,956/- OF NANK CUTLERY MART - DIFFERENCE BETWEEN OPENING & CLOSING CAPITAL OF AY 2000-01: 10.1 THE AO HAD POINTED OUT THAT THE O.B OF CAPI TAL AS ON 1.4.99 WAS RS.4,76,824/- WHEREAS THE CLOSING CAPITA L BALANCE AS ON 7 31.3.99 WAS ONLY RS.1,30,635/- AND THE DIFFERENCE O F RS.3,46,389/- REPRESENTED AN INCREASE WITHOUT APPARENT REASON. 10.2 AFTER CONSIDERING THE ASSESSE ES SUBMISSION, THE CIT (A) ACCEPTED THE ARGUMENTS OF THE ASSESSEE THAT THE RE WAS NO INCORRECTNESS IN THE COMPUTERIZED BOOKS OF ACCOUNT AND THAT THERE WAS NOTHING ADVERSE FOUND DURING THE COURSE OF SEAR CH PROCEEDINGS WHICH COULD JUSTIFY THE ADDITION MADE. FACTUALLY A LSO THE CLAIM MADE OF CAPITAL BEING LESS THAN REFLECTED IN THE BALANCE SHEETS WAS NOT CORRECT IN VIEW OF THE ADMISSION MADE THAT THE CAPI TAL OF NANAK CUTLERY MART WAS ACTUALLY HIGHER BY RS.72,956/-. S HE HAD FURTHER OBSERVED THAT: 3.3... I FIND THAT THE APPELLANT HAD FILED RETURN OF INCOM E FOR AY 1999-2000 EARLIER AND THE DEPARTMENT HAS NOT INITIATED PROCEEDINGS U/S 14 7 FOR THAT YEAR. THEREFORE, I AM OF THE OPINION THAT THE CAPITAL OF THE APPELLANT AS AN INDIVIDUAL, TOGETHER WITH THE CAPITAL OF NANAK CUTLERY MART AS REFLECTED IN T HAT RETURN OF INCOME SHOULD BE TAKEN INTO CONSIDERATION BY THE AO WHILE DETERMININ G THE DIFFERENCE BETWEEN CLOSING BALANCE FOR THE ASSESSMENT YEAR 1999-2000 A ND THE OPENING BALANCE FOR AY 2000-01 AND THE DIFFERENCE BETWEEN THE SAME WOUL D BE UPHELD AS ADDITION. HOWEVER, A FURTHER ADDITION OVER AND ABOVE THAT TO THE EXTENT OF RS.72,956/- WILL ALSO BE MADE FOR THE ADMITTED INCREASED CAPITAL BAL ANCE FOR NANAK CUTLERY MART AS PER WRITTEN SUBMISSIONS MADE ON 4.10.04. AO WIL L CALCULATE THE EFFECT ACCORDINGLY. 10.3 BEFORE US, IT WAS CONTENDED THAT ONCE THE BOOKS OF ACCOUNT WERE ACCEPTED, THERE WAS NO NEED FOR THE AO TO MAKE A COMPARISON OF BOOKS OF NANAK CUTLERY MART WHICH WAS A PROPRIETARY 8 CONCERN AND THE CAPITAL OF RS.1,30,635/- WAS IN THE PROPRIETARY CONCERN WHEREAS THE BALANCE OF RS.4,76,824/- WAS IN THE CAPITAL OF PERSONAL BALANCE SHEET OF THE ASSESSEE WHICH INCLUD ED INDIVIDUAL ASSETS PLUS NANAK CUTLERY MART, THE PROPRIETARY CON CERN AND, THUS, THE DIFFERENCE HAS SINCE BEEN EXPLAINED, THE ADDITI ON OF RS.3,46,189/- DESERVES TO BE DELETED. WITH REGARD TO THE ADDITIO N OF RS.72,956/- BEING DIFFERENCE ON CAPITAL ACCOUNT OF NANAK CUTLER Y MART, THE ASSESSEE CONCEDED THAT THE PERSONAL BOOKS THE ACCO UNT OF NANAK CUTLERY MART SHOWS BALANCE OF RS.2,03,591/- WHEREAS IN THE BOOKS OF NANAK CUTLERY MART, THE CAPITAL SHOWN WAS RS.1,30,6 35/- AND SUCH DIFFERENCE BEING NOT RECONCILABLE, THE ADDITION MAY BE SUSTAINED. HOWEVER, THIS WAS NOT ARISING FROM THE SEIZURE OF A SSETS OR RECORDS DURING SEARCH AND, THUS, IT WAS ADVOCATED, ON THAT GROUND, THE ADDITION CANNOT BE MADE IN VIEW OF THE RULINGS OF T HE JURISDICTIONAL HONBLE HIGH COURT IN THE CASES OF (I) N.R. PAPER A ND BOARD LIMITED AND OTHERS V. DICT REPORTED IN 234 ITR 733 (GUJ) AN D (II) CIT V. SHAMBHULALA C. BACHKANIWALA [245 ITR 488 (GUJ)]. 10.4 WE HAVE DULY CONSIDERED THE SUB MISSION OF THE LEARNED A R AND ALSO THE REASONING OF THE CIT (A) C ITED SUPRA. 9 10.5 WE ARE IN AGREEMENT WITH THE FINDINGS OF THE CIT (A) THAT THE ASSESSEE HAD FILED HIS RETURN OF INCOME FO R THE AY 99-00 EARLIER AND THE REVENUE HAD NOT INITIATED ANY PROCE EDINGS U/S 147 OF THE ACT FOR THAT YEAR. THEREFORE, THE CAPITAL OF T HE ASSESSEE AS AN INDIVIDUAL TOGETHER WITH THE CAPITAL OF NANAK CUTLE RY MART AS REFLECTED IN THAT RETURN OF INCOME SHOULD BE TAKEN INTO CONSI DERATION BY THE AO WHILE DETERMINING THE DIFFERENCE BETWEEN CLOSING BA LANCE FOR THE AY 1999-00 AND THE OPENING BALANCE FOR AY 2000-01 AND THE DIFFERENCE BETWEEN THE SAME WOULD BE UPHELD AS ADDITION. THOU GH THE ASSESSEE HAS AGREED IN PRINCIPLE THAT THE PERSONAL BOOKS, THE ACCOUNT OF NANAK CUTLERY MART SHOWS BALANCE OF RS.2 ,03,591/- WHEREAS IN THE BOOKS OF NCM, THE CAPITAL SHOWN WAS RS.1,30,635/-, SUCH DIFFERENCE BEING NOT RECONCILABLE, THE ADDITIO N MAY BE SUSTAINED. HOWEVER, THIS HAD NOT ARISEN FROM THE S EIZURE OF THE ASSETS/RECORDS DURING SEARCH; SUCH ADDITION CANNOT BE MADE IN VIEW OF THE RULINGS OF THE JURISDICTIONAL HONBLE HIGH C OURT CITED SUPRA. IN CONFORMITY WITH THE RULINGS OF THE HONBLE COURT, T HE ADDITION REQUIRES TO BE DELETED. HENCE, BOTH THE ADDITIONS OF RS.3,4 6,189/- AND RS.72,956/- ARE DELETED. 10 11. GROUND NO.3: ADDITION OF RS.2.01 LAKHS GIFT FROM THE ASSESSEE S MOTHER: 11.1 THE ASSESSEE HAD OBJECTED TO THE ADDITION OF RS.2.01 LAKHS BEING GIFT FROM THE ASSESSEES MOTHER AS UNDI SCLOSED INCOME OF THE ASSESSEE BY THE AO. IT WAS THE STAND OF THE AO THAT DESPITE A GIFT DEED, REFLECTION OF RS.2.01 LAKHS IN THE ASSESSEES CAPITAL ACCOUNT, THE CASH BALANCE WITH THE DONOR WAS ONLY RS.39,930/ -, BESIDES THE CASH BALANCE INCLUDED DEPOSIT OF RS.1 LAKH FROM THE ASSESSEE AND ANOTHER RS.1.5 LAKHS FROM BHARAT TEXTILE WHICH AMOU NTS HAVE ALREADY BEEN USED FOR PAYMENT OF GUNTAKARAN ASSOCIATION AND THAT HER RECEIPTS WERE ONLY RS.75,463/- IN THE AY 2000-01. THE DONOR HAD NOT REFLECTED THE CASH GIFT IN HER ORIGINAL RETURN OF I NCOME ETC., ON HER PART, THE CIT (A) HAD OBSERVED THUS: 4.2.(ON PAGE 9).IT IS AN ADMITTED FACT THAT THE B OOKS OF ACCOUNTS OF THE APPELLANTS MOTHER WERE NOT WRITTEN IN THE REGULAR COURSE OF BUSINESS AND FROM DAY-TO-DAY AND, THEREFORE, THE ENTRIES MADE THEREIN DURING THE COURSE OF THESE BLOCK PROCEEDINGS DO NOT EVIDENCE THE TRANSACTIONS ON A DAY-TO-DAY BASIS. NON- REJECTION SPECIFICALLY OF THESE COMPUTERIZED BOOKS BY THE AO DOES NOT THEREFORE MEAN THAT THEY ARE NOT DISBELIEVED OR THAT ALL ENTR IES THEREIN STAND VERIFIED. ALSO THERE IS NO DOUBT THAT THE APPELLANTS PROPRIETORSH IP CONCERN NANAK CUTLERY MART IS ALLEGED TO HAVE ADVANCED A SUM OF RS.1 LAKH AS L OAN TO APPELLANTS MOTHER WHO IS SUPPOSED TO HAVE GIVEN RS.1.5 LAKH IN CASH TO AN OTHER CONCERN. THEREFORE, AVAILABILITY OF CASH WITH APPELLANTS MOTHER IS ITS ELF DOUBTFUL AND, THEREFORE, THE ALLEGED GIFT DEED DOES NOT EVIDENCE ANY GENUINE TRA NSACTION OF THE NATURE REFERRED TO THEREIN. THE ADDITION MADE BY THE ASSE SSING OFFICER IS, THEREFORE, FOUND TO BE JUSTIFIED AND THE SAME IS SUSTAINED. 11 11.2 IT WAS CONTENDED BY THE LEARNE D AR THAT THE AO HAD HELD THAT THE DONOR WAS NOT HAVING SUFFICIENT BALAN CE AND THE AMOUNT RECEIVED FROM BHARAT TEXTILE WAS NOT PROVED AND, TH US, REJECTED THE GENUINENESS OF THE GIFT AND CASH AVAILABLE ON HAND. A GIFT DEED WAS EXECUTED ON A STAMP PAPER AUTHENTICATING THE GIFT O F RS.2.01 LAKHS WHICH HAS BEEN DULY REFLECTED IN THE CAPITAL ACCOUN T OF THE ASSESSEE. THE DONORS BOOKS OF ACCOUNT HAS NOT BEEN REJECTED BY THE AO AND, THUS, IT WAS ARGUED, THE DONOR AS WELL AS DONEE HAV ING CONFIRMED AND DULY REFLECTED IN THEIR RESPECTIVE BOOKS THE GIFT A S WELL AS THE RECEIPT, THE GENUINENESS OF THE GIFT CANNOT BE PUT UNDER THE SCANNER. 11.3 THE LEARNED D R PRESENT WAS HE ARD. 11.4 WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE DOCUMENTARY EVIDENCE PRODUCED BY T HE LEARNED AR. 11.5 AT THE OUTSET, WE WOULD LIKE TO P OINT OUT THAT THE LEARNED CIT (A) HAD FAIRLY CONCEDED THAT THE BOOKS OF ACCOU NT OF THE DONOR WERE NOT WRITTEN IN THE REGULAR COURSE OF BUSINESS FROM DAY-TO-DAY BASIS AND, THEREFORE, THE ENTRIES MADE THEREIN DURI NG THE COURSE OF BLOCK PERIOD PROCEEDINGS DO NOT EVIDENCE THE DAY-TO -DAY TRANSACTION. 12 CHIEFLY, THE COMPUTERIZED BOOKS OF ACCOUNT OF THE D ONOR AND THE DONEE HAVE NOT BEEN REJECTED BY THE AO. THIS STAND OF THE AO HAD VINDICATED THE GENUINENESS OF THE GIFT. MOREOVER, THE AO, IN OUR CONSIDERED VIEW, HAD NOT BROUGHT ANY CLINCHING DOCU MENTARY EVIDENCE ON RECORD TO REPUDIATE THE ASSESSEES CLAI M. THE LEARNED CIT (A) HAD ALSO DOUBTED THE ASSESSEES PROPRIETARY FIRM NANAK CUTLERY MART ADVANCE OF RS.1 LAKH AS LOAN TO THE DONOR WHO HAD GIVEN RS.1.5 LAKHS IN CASH TO ANOTHER CONCERN. IN ESSENCE, THE REVENUE HAD FAILED TO BRING ANY CORROBORATE DOCUMEN TARY EVIDENCE TO PIN DOWN THE ASSESSEE AND THAT THE ADDITION HAS BEEN RESORTED TO ONLY ON SURMISE AND CONJECTURE IN A FLIMSY WAY. O N A PERUSAL OF THE CASH BOOK OF THE DONOR, IT HAS BEEN OBSERVED THAT A T THAT RELEVANT POINT OF TIME, THE DONOR HAD SUFFICIENT CASH BALANC E AT HER KITTY TO GIFT A SUM OF RS.2.01 LAKH LEAVING A BALANCE OF RS.84,79 0/- ON HAND AS ON 31.8.1999 [COURTESY: P 32 34 OF PB]. MOREOVER , THE DECLARATION OF GIFT EXECUTED ON 30.8.1999 CANNOT BE BRUSHED ASI DE ON A FLIMSY GROUND. 11.6 TAKING INTO ACCOUNT THE ABOVE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE GENUINENESS OF THE GIFT BY THE DONOR AND 13 RECEIPT OF THE SAME BY THE ASSESSEE CANNOT BE DISBE LIEVED. THEREFORE, THE ADDITION MADE FOR RS.2.01 LACS IS HE REBY DELETED. 12. GROUND NO.4: ADDITION OF RS.20 LAKHS BEING ALLEGED INVESTMENT IN NINAD CO-OP HOUSING SOCIETY: 12.1 ACCORDING TO THE AO, DURING THE COUR SE OF SEARCH PROCEEDINGS, HOUSE LOAN APPLICATIONS FOR ACQUIRING OF HOUSE PROPERTIES BY FOUR EMPLOYEES OF THE ASSESSEE WERE F OUND AND THESE LOANS WERE FOR THE PURPOSE OF PURCHASE OF FLAT NOS. 202, 203, 302, 402 IN NINAD CO-OP HOUSING SOCIETY SCHEME. ALSO INFOR MATION GATHERED FROM CITY CIVIL COURT REVEALED THAT THOSE FOUR EMPL OYEES HAVE FILED CIVIL SUITS AGAINST THE SOCIETY SEEKING POSSESSION OF FLATS. THE AO HAD ALSO REFERRED THE STATEMENTS OF THOSE FOUR EMPL OYEES CLAIMING THAT THOSE SUITS WERE FILED AT THE BEHEST OF THE AS SESSEE. ON OATH, SHRI JITENDRA GAJJAR, ORGANIZER OF THE SOCIETY ALSO CLAIMED BEFORE THE AO THAT THE ASSESSEE HAD FINANCED HIM RS.20 LAKHS A T AN INTEREST RATE OF 4 TO 5% P.M. FOR WHICH HE HAD TAKEN BOOKING FOR FOUR FLATS AS SECURITY. THE AO HAD ALSO REJECTED THE EXPLANATION THAT NO AMOUNT HAD BEEN GIVEN AS LOAN OR FINANCED, INSTEAD SHRI GA JJAR WAS HELPED BY FILING THESE CASES IN THE NAME OF THE ASSESSEES EMPLOYEES TO 14 PREVENT THE GAJJARS PROFESSIONAL OPPONENT M/S. S HETH FINANCE FROM TAKING OVER THE SUBJECT PROPERTY. THE ASSESSE ES SPECIFIC REQUEST TO PROCURE THE COUNTER ENTRIES IN THE BOOKS OF GAJJAR AND THE PERSONAL ATTENDANCE OF GAJJAR FOR CROSS-EXAMINATION BY THE ASSESSEE WAS ALSO SUMMARILY REJECTED BY THE AO. 12.2 IT WAS CONTENDED BEFORE THE C IT (A) THAT AT THE BEHEST OF GAJJAR, BOGUS CASE HAD BEEN FILED AGAINST SHETH FINANCE TO SAFE GUARD THE INTEREST OF GAJJAR IN THE PROPERTY. IT W AS, FURTHER, CONTENDED THAT EVEN THEN THE CASH RECEIPTS WERE SIGNED BY SOM E PERSON OTHER THAN SHRI GAJJAR AND NO ENTRY PERTAINING TO THE ALL EGED ADVANCES OF RS.20 LAKHS WAS REFLECTED IN THE ASSESSEES BOOKS O F ACCOUNT NOR WERE SUCH ENTRIES IN THE BOOKS OF GAJJAR. IT WAS S UBMITTED THAT SHRI GAJJAR HAD FILED AN AFFIDAVIT IN THE CITY CIVIL COU RT THAT NO AMOUNTS HAD BEEN PAID FOR THESE FOUR FLATS BY THE FOUR PERSONS CONCERNED AND THAT THE CASE WAS FILED ONLY TO PROVE UNAUTHORIZED POSSE SSION OF FLATS BY SHETH FINANCE. 12.3 THE CIT (A) HAD IN HER FINDINGS RECORDED THAT THERE WAS NO DOUBT THAT DOCUMENTARY EVIDENCES FOUND DURING TH E SEARCH SHOWED THAT FOUR EMPLOYEES OF THE ASSESSEE HAD SOUG HT FOR HOUSING 15 LOANS AND THAT FOUR FLATS IN NINAD CO-OP HOUSING SO CIETY STOOD ALLOTTED IN THEIR NAMES. THOSE DOCUMENTS RELATED T O THE EMPLOYEES OF THE ASSESSEE ON WHOSE BEHALF CIVIL SUITS WERE FI LED AND PURSUED BY THE ASSESSEES OWN ADVOCATE. WHATEVER BE THE REASO N FOR FILING OF THE CIVIL SUITS, DOCUMENTARY EVIDENCES WERE AVAILAB LE THAT FOUR FLATS STOOD ALLOTTED IN THE NAMES OF THE ASSESSEES EMPLO YEES. THEREFORE, THE CONTRADICTORY STANDS TAKEN BY SHRI GAJJAR AND T HE ASSESSEE GIVE TWO SIDES OF THE STORY WHICH IN REALITY HAS TO BE U NDERSTOOD FROM THE DOCUMENTARY EVIDENCES IN THE FORM OF ALLOTMENT OF F OUR FLATS IN THE NAMES OF THE ASSESSEES EMPLOPYEES AND FILING OF CI VIL SUITS FOR POSSESSION OF FLATS ON BEHALF OF THOSE FOUR PERSONS OF NO MEANS BY THE ADVOCATE OF THE ASSESSEE. SHRI GAJJAR CAN IN F ACT ONLY DENY RECEIPT OF ANY MONEY TOWARDS FLATS IF HE HAS TO FIG HT THE CASE AND NOT TO GIVE POSSESSION OF FLATS TO THE FOUR EMPLOYEES O F THE ASSESSEE. IN CONCLUSION, THE CIT (A) HAD HELD THAT THAT THESE IN VESTMENTS IN THESE FOUR FLATS HAVE BEEN MADE BY THE ASSESSEE HIMSELF A ND THE SUM OF RS.20 LAKHS AS ADDED BY THE AO TOWARDS UNDISCLOSED INCOME REFLECTS SUCH INVESTMENT. 12.4 HOWEVER, IT WAS CONTENDED BY THE ASSESSEE THAT 16 (I) THE ASSESSEE HAD NEVER FINANCED ANY AMOUNT IN C ASH OR BY WAY OF CHEQUE TO NINAND CO-OP. HOUSING SOCIETY; (II) NO DOCUMENTARY PROOF LIKE CHIT OR LOOSE PAPER, BANK ENTRY, CASH JOTTINGS OR ANY OTHER WRITTEN PROOF WAS FOUND FROM THE PLACE OF THE ASSESSEE DURING THE TIME OF SEARCH AND , THEREFORE, THE STAND OF UNACCOUNTED MONEY/INCOME DO ESNT ARISE; (III) COUNTER EVIDENCE OF SUCH ALLEGED TRANSACTION REFLEC TING IN THE BOOKS OF GAJJAR IS NOT FORTH-COMING; (IV) THE AO HAD TOTALLY DISREGARDED ALL THESE FACTS AND MATERIALS, INSTEAD SOLELY RELIED ON THE STATEMENT OF GAJJAR BE FORE THE ADI AND THAT THE ASSESSEE WAS DENIED AN OPPORTUNITY TO CROSS-EXAMINE SHRI GAJJAR TO BRING OUT THE TRUTH. 12.5 IT WAS, FURTHER, SUBMITTED T HAT THE ASSESSEE HAD ONLY HELPED SHRI GAJJAR TO RESOLVE THE DISPUTE THAT HE H AD WITH SHETH FINANCE BY LENDING THE NAMES OF HIS FOUR EMPLOYEES, SUGGESTING THAT THEY HAVE BOOKED THE FLATS TO HELP GAJJAR TO FILE C IVIL SUITS. ALL THE FOUR EMPLOYEES HAVE ALSO DENIED FOR HAVING PAID ANY AMOU NT OR BOOKED ANY FLAT. NO MATERIALS LIKE HUNDI, CHIT, LOOSE PAP ER, JOTTINGS, DIARIES OR RECEIPTS WERE UNEARTHED DURING THE SEARCH OPERATION . IN THEIR AFFIDAVITS, THE FOUR EMPLOYEES HAVE CLEARLY CONFI RMED THAT THEY HAVE SIGNED THE PAPERS JUST TO FACILITATE SHRI GAJJAR TO FILE SUITS, HOWEVER, NOT A SINGLE PENNY WAS INVESTED EITHER BY THE EMPLO YEES OR BY THE ASSESSEE. MOREOVER, THE STATEMENT OF GAJJAR WAS RE CORDED AT THE BACK OF THE ASSESSEE BY THE ADI AND THAT THE ASSESS EES LEGITIMATE REQUEST TO AFFORD AN OPPORTUNITY TO CROSS EXAMINE S HRI GAJJAR WAS 17 VIRTUALLY TURNED DOWN BY THE AO. IN CONCLUSION, IT WAS SUBMITTED THAT IN VIEW OF THE ABOVE FACTS, THE ADDITION REQUIRES T O BE DELETED. 12.6 THE LEARNED D R PRESENT HA D SUPPORTED THE STAND OF THE AUTHORITIES BELOW AND PLEADED THAT THE ADDIT ION OF RS.20 LAKHS REQUIRES TO BE SUSTAINED. 12.7 WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS AND ATTENTIVELY PERUSED THE RELEVANT CASE RECORDS AND D OCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE. 12.8 THE AO HAD HELD THAT THE ASSESSEE MADE AN INVESTMENT OF RS.20 LAKHS IN FLAT NOS.202, 203, 302 & 402 IN NINAND CO-OP HSG. SOCIETY IN THE NAME OF HIS FOUR EMPLOYEE S AS CONDUITS. THE BACKDROP OF THE ISSUE WAS THAT DURING THE SEARC H OPERATIONS, HOUSE LOAN APPLICATIONS FOR ACQUIRING OF FLATS WERE IMPOUNDED AND THOSE LOAN APPLICATIONS WERE FOR THE PURPOSE OF PUR CHASE OF FLATS IN THE ABOVE MENTIONED SOCIETY. IT WAS ALSO GATHERED FROM CITY CIVIL COURT THAT THOSE FOUR EMPLOYEES HAVE FILED CIVIL SU ITS AGAINST THE SOCIETY SEEKING POSSESSION OF FLATS. ON THE BASIS OF THE STATEMENT OF SHRI GAJJAR, THE ORGANIZER OF THE SOCIETY WHO CLAIM ED THAT THE ASSESSEE HAD FINANCED HIM RS.20 LAKHS AT 4 5% PER MONTH FOR 18 WHICH HE HAD TAKEN BOOKING OF FOUR FLATS AS SECURIT Y. REJECTING THE ASSESSEES CONTENTION THAT NO AMOUNT HAS BEEN GIVEN AS LOAN OR FINANCE, INSTEAD, ON A SPECIFIC REQUEST FROM SHRI G AJJAR TO BAIL OUT FROM THE CLUTCHES OF HIS BUSINESS RIVAL SHETH FIN ANCE HE HAD, AT THE INSTANCE OF GAJJAR, FILED CASES IN THE NAMES OF HIS FOUR EMPLOYEES TO PREVENT SHETH FINANCE FROM TAKING OVER THE POSSE SSION OF ABOVE MENTIONED FLATS AND ALSO TURNING DOWN THE ASSESSEE S REQUEST TO MAKE AVAILABLE THE ENTRIES IN THE BOOKS OF GAJJAR T HE ALLEGED LOAN OF RS.20 LAKHS AND ALSO PERMIT HIM TO CROSS EXAMINE GA JJAR, THE AO WENT AHEAD IN ADDING RS.20 LAKHS IN THE HANDS OF TH E ASSESSEE. 12.9 THE LEARNED CIT (A) TOOK A STAND ON THE BASIS OF DOCUMENTARY EVIDENCES UNEARTHED DURING THE SEARCH T HAT THOSE FOUR FLATS HAVING BEEN ALLOTTED TO THE EMPLOYEES OF THE ASSESSEE AND THOSE DOCUMENTS RELATED TO THE ASSESSEES EMPLOYEES ON WHOSE BEHALF CIVIL SUITS WERE FILED. THEREFORE, THE CIT (A) TOOK A VIEW THAT THE CONTRADICTORY STANDS TAKEN BY GAJJAR AND THE AS SESSEE GAVE TWO SIDES OF THE STORY WHICH IN REALITY HAD TO BE UNDER STOOD FROM THE DOCUMENTARY EVIDENCES IN THE FORM OF ALLOTMENT OF F OUR FLATS IN NAMES OF FOUR EMPLOYEES. THEREFORE, SHE HELD THAT THE IN VESTMENT IN THOSE FLATS HAS BEEN MADE BY THE ASSESSEE HIMSELF AND A S UM OF RS.20 19 LAKHS AS ADDED BY THE AO TOWARDS UNDISCLOSED INCOME REFLECTS SUCH INVESTMENT. 12.10 THE INTRIGUING AND MOOT QUESTI ONS LINGERING IN OUR MINDS ARE THAT (I) THERE WAS NO TRACE OF FINANCING ANY AMOUNT IN C ASH OR BY WAY OF CHEQUE BY THE ASSESSEE TO NINAD CO-OP HOUSIN G SOCIETY; (II) THERE WAS ALSO NO ANY DOCUMENTARY PROOF TO REM OTELY SUGGEST THAT THE ASSESSEE HAD, IN FACT, RECEIVED I NTEREST FOR ALLEGED FINANCING EITHER TO SHRI GAJJAR OR NINAD CO -OP HOUSING SOCIETY; (III) NO DOCUMENTARY PROOF IN THE SHAPE OF ANY CHIT OR LOOSE PAPER, BANK ENTRIES, JOTTINGS IN A PIECE OF PAPER W AS UNEARTHED OR IMPOUNDED DURING THE COURSE OF SEARCH TO POINT A FINGER AT ASSESSEE THAT HE HAD INDULGED IN UNACCO UNTED TRANSACTIONS; (IV) NO TRACE OF ANY ENTRY THAT SUCH TRANSACTION WI TH THE ASSESSEE HAS BEEN SURFACED IN THE BOOKS OF ACCOUNT OF SHRI G AJJAR SO AS TO PIN DOWN THE ASSESSEE; (V) THE AO HAD SOLELY BANGED ON THE PURPORTED STATE MENT OF SHRI GAJJAR BEFORE THE ADI; (VI) NO OPPORTUNITY WAS EXTENDED TO THE ASSESSEE TO CROSS EXAMINE SHRI GAJJAR WHEN A SPECIFIC REQUEST WAS PUT BEFORE THE AO AND, THUS, THE PRINCIPLES OF NATURAL JUSTICE AND FAIRNESS HAS BEEN GIVEN A GOBY ; & (VII) THE ADDITION HAS BEEN MADE AT THE BACK OF THE ASSESSEE WITHOUT EXTENDING AN ELEMENTARY COURTESY AND LEGITI MATE CLAIM OF THE ASSESSEE TO SUBJECT TO SHRI GAJJAR FOR CROSS EXAMINATION; 20 12.11 WHEN THE LEARNED CIT (A) WAS MAG NANIMOUS IN POINTING OUT THAT, 5.5 (ON PAGE 13)THERE IS NO EVIDENCE, HOWEVER, OF THE INTERPRETATION BY THE AO THAT THE SUM OF RS. 20 LAKHS REPRESENTED A FINANCE LOAN BECAUSE THE STATEMENT GI VEN BY JITUBHAI GAJJAR IS NOT GOOD EVIDENCE AS HE WAS NOT MADE AVAI LABLE FOR CROSS- EXAMINATION TO THE APPELLANT. IN THE ABSENCE OF AN Y EVIDENCE RELATING TO THE AMOUNT BEING A FINANCE LOAN, THE QUESTION OF CALCULATION OF INTEREST ON THE SAID LOAN AT THE STATED RATE DOES N OT ARISE. BESIDES, IT DOES NOT APPEAL TO REASONING THAT A LOAN, IF AT ALL GIVEN, WOULD BE AT SUCH RATES AS WOULD LEAD TO MORE THAN 100% DUE ON A CCOUNT OF INTEREST. IN THE ABSENCE OF ANY POSITIVE EVIDENCE BEYOND THE STATEMENT OF SHRI GAJJAR WHICH IS NOT EVIDENCED BY ANY DOCUMENTS, THE ADDITION ON ACCOUNT OF INTEREST AT RS.20,70,000 /- IS THEREFORE, DIRECTED TO BE DELETED., THE SAME YARDSTICK SHOULD HAVE BEEN APPLIED IN RESPECT OF ADDITION OF RS.20 LAKHS BEING ALLEGED INVESTMENT IN NINAD CO-OP HOUSING SOCIETY. 12.12 IN ESSENCE, THERE WAS NO CONCLUSI VE DOCUMENTARY EVIDENCE TO LEAD THAT THE ASSESSEE HAD INVESTED RS. 20 LAKHS IN 21 NANAD CO-OP HOUSING SOCIETY BY USING HIS FOUR EMPLO YEES AS CONDUITS FOR BOOKING OF FLATS. 12.13 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE ISSUE, WE ARE OF THE FIRM VIEW THAT THE AUTHORITIES BELOW HAVE NOT BROUGHT ANY CONCLUSIVE DOCUMENTARY EVIDENCE ON RECO RD THAT THE ASSESSEE HAD, IN FACT, MADE UNACCOUNTED INVESTMENT OF RS.20 LAKHS AND, ACCORDINGLY, THE ADDITION OF RS.20 LAKHS STAND S DELETED. 13. GROUND NO.5: ADDITION OF RS.5 LAKHS AS UNACCOUNTED INVESTMENT M ADE WITH SHRI YOGESH J RAVAL: 13.1 THE AO HAD NOTED THAT A FILE SEI ZED SHOWED DOCUMENTS RELATING TO PURCHASE OF PROPERTY IN THE NAME OF THE ASSESSEE BEING CELLAR NO.3 IN NIRMAL APARTMENTS AND THERE WERE DOC UMENTS SHOWING FILING OF A CIVIL SUIT IN THE NAME OF THE WIFE OF T HE ASSESSEE FOR POSSESSION OF THIS PROPERTY. THE AO HAD, FURTHER, NOTED THAT THE ASSESSEE ACCEPTED THE FACT THAT RS.4.5 LAKHS IN CAS H AND RS.50,000/- IN CHEQUE HAVE BEEN PAID AND RECEIPTS OBTAINED FOR PURCHASE OF THIS PROPERTY WHICH HAS NOT, HOWEVER, BEEN REFLECTED IN THE BOOKS OF THE ACCOUNT AND THE SAME IS OFFERING NOW FOR TAXATION. FURTHER, THE AO HAD RELIED ON REPLY TO Q. NO. 27 OF THE ASSESSEES STATEMENT RECORDED 22 WHERE HE HAD ADMITTED THE PURCHASE OF PROPERTY IN T HE NAME OF HIS WIFE FOR WHICH PAYMENT OF RS.5 LAKHS WAS MADE WHILE RECEIPT OF RS.3.5 LAKHS ONLY RECEIVED. THE AO ALSO FOUND THAT THE SALE DEED WAS DATED 22/3/95 WHICH REFERRED TO PAYMENT BY CHEQ UE DATED 21/3/1995, SHOWING THAT THE DEED AND THE RECORDS WE RE BACK DATED. ALSO THE AO NOTED THAT THE RETURNS OF INCOME OF THE ASSESSEE AND HIS WIFE DID NOT SHOW THESE INVESTMENTS. 13.2 IT WAS CONTENDED BY THE ASSESSEE B EFORE THE FIRST APPELLATE AUTHORITY THAT EVEN FACTUALLY AND LEGALLY THE ADDITION IS STATED TO BE INCORRECT BECAUSE THE TRANSACTION WAS STATED AS BEING ADMITTED BY THE AO TO BE MADE ON 23.2.95 WHICH WAS BEYOND THE PERIOD OF BLOCK ASSESSMENT. THE STATEMENT OF RAVAL WAS NOT PERMITTED TO BE CROSS EXAMINED. IT WAS ALSO CLAIME D THAT IN FACT THE ADVANCE SHOWN IN THE BOOKS FOR PURCHASE HAD BEEN RE CEIVED BACK AFTER THE DATE OF SEARCH AND AT THE MARRIAGE OF DAU GHTER OF THE ASSESSEE. 13.3 AFTER CONSIDERING THE ASSESSEES CONTENTIONS, THE CIT (A) HAD OBSERVED THUS: 6.2. (ON PAGE 16)I FIND THAT IT IS AN ADMITTED FACT THAT AN AMOUNT OF RS.5 LAKHS WAS GIVEN BY THE APPELLANT IN THE NAME OF HIS WIFE TO YOGESH RAVAL WHICH IS 23 WITNESSED BY DOCUMENTS FOR PURCHASE OF PROPERTY. THE RECEIPTS FOR PAYMENTS WHICH ARE IN CASH ARE CLEARLY BACK DATED AND NO PRO OF OF RECEIPT BACK OF MONEY IS GIVEN NOW EVEN THE ALLEGED COPY OF UNDERSTANDING IS NOT FILED THOUGH CLAIMED TO BE SO FILED. IT WOULD IN ANY CASE HAVE BEEN IN-ADM ISSIBLE AS ADDITIONAL EVIDENCE. IT IS ALSO FOUND THAT THE RETURN OF INCOME FILED BY THE APPELLANT DID NOT SHOW ANY SUCH INVESTMENT. 6.3. ALL THIS THEREFORE, RIGHTLY LED THE AO TO CON CLUDE THAT THE AMOUNT OF RS.5 LAKH WAS UNACCOUNTED AND THAT IT DID NOT PERTAIN TO THE PERIOD BEYOND BLOCK ASSESSMENT. THE APPELLANT BEING IN CONTROL OF HIS WIFES BUSINESS AFFAIRS, THERE CAN BE NO DOUBT THAT THE AMOUNT REFLECTS UNDISCLOSE D INCOME OF THE APPELLANT. TO THE EXTENT THAT THE AO HAS HIMSELF GIVEN CREDIT FOR RS.4 LAKHS AS REFLECTED IN THE BOOKS AND MADE AN ADDITION OF RS.1 LAKH ONLY TOWARD S THE CAPITAL INVESTED, THE OBSERVATION OF THE AO IS FOUND TO BE INCORRECT IN T HE LIGHT OF EARLIER COMMENTS GIVEN IN PARA 9.5.3. OF ASSESSMENT ORDER THAT THE I NVESTMENT WAS NOT REFLECTED IN THE RETURNS OF INCOME FILED. ACCORDINGLY, THE ADDI TION OF RS.5 LAKHS REFLECTING THE AMOUNT PAID ADMITTEDLY TOWARDS PURCHASE OF THE CELL AR, AND ORIGINALLY OFFERED BY THE APPELLANT FOR TAXATION AS REFERRED TO IN PARA 9 .5.2. OF THE ASSESSMENT ORDER, IS BEING UPHELD 13.4 IT WAS CONTENDED BEFORE US THAT T HE ASSESSEE HAD BOOKED A CELLAR NO.3 IN NIRMAL APARTMENTS IN THE NA ME OF INDRAJITSINGH SURI AND THE PAYMENT OF RS.4.5 LAKHS WAS MADE IN CASH AND RS.50,000/- BY CHEQUE WHICH HAS BEEN REFLECTED IN THE COMPUTERIZED BOOK. IT WAS, FURTHER, SUBMITTED THAT THE ASSESSEE HAD PAID ONLY RS.5 LAKHS FOR BOOKING OF A CELLAR. THOU GH, THE AO HAD RECORDED THE STATEMENT OF YOGESH RAWAL, BUT, THE AS SESSEE WAS NOT ALLOWED TO CROSS EXAMINE HIM. AS THE BUILDER HAD R EFUSED TO PART WITH THE POSSESSION OF THE PROPERTY, THE ASSESSEE HAD IN ITIATED LEGAL SUIT AGAINST THE BUILDER. TO SUBSTANTIATE HIS CLAIM, TH E ASSESSEE HAD FILED A COPY OF DEED FOR BANAKHAT AGREEMENT ENTERED INTO WITH RAWAL 24 COMPANY, ACCORDING TO WHICH, RS.3.5 LAKHS WAS RECEI VED FROM THE ASSESSEE VIDE RECEIPTS NOS.124, 125, 126, 127 & 128 (RS.50,000/- WAS THROUGH CHEQUE DRAWN ON UNITED BANK OF INDIA RECEIPT NO.128) [SOURCE: P 83 OF PB ENGLISH TRANSLATION] FOR DELI VERY OF VACANT POSSESSION OF CELLAR. THIS DEED FOR BANAKHAT AGREE MENT IN ORIGINAL WAS APPARENTLY ENDORSED BY THE ITO, CIB-2, AHMEDABA D DATED 6/9/2001 (PERHAPS AT THE TIME OF SEARCH OPERATION). THIS AGREEMENT WAS, IN FACT, ENTERED INTO IN THE MONTH OF MARCH 19 95 WHEREAS THE BLOCK PERIOD WAS FROM 1.4.1996 TO 6.9.2001 I.E., TH E AMOUNT OF EITHER RS.3.5 LAKHS OR RS.5 LAKHS AS THE CASE MAY BE, DOES NOT PERTAIN TO THE BLOCK PERIOD CONTRARY TO THE STAND OF THE AUTHO RITIES BELOW. WE ARE, THEREFORE, OF THE VIEW THAT THIS TRANSACTION A LLEGED TO HAVE BEEN ENTERED INTO BY THE ASSESSEE DOESNT FALL WITHIN TH E BLOCK PERIOD UNDER CONSIDERATION. THEREFORE, WE DECIDE THE ISSUE IN FA VOUR OF THE ASSESSEE. IN ESSENCE, THE ASSESSEE GETS RELIEF OF RS.5 LAKHS. IT IS ORDERED ACCORDINGLY. 14. GROUND NO.6: ADDITION OF RS.1.5 LAKHS BEING UNACCOUNTED SUM GIVE N TO SHRI SANJEEV SHUKLA: 25 14.1 ON THE BASIS OF INFORMATION THAT THE ASSESSEES MOTHER FILED A CIVIL SUIT AGAINST NEELKANT CORPORATION INV OLVING RS.1.5 LAKHS AGAINST WHICH DOCUMENTS SHOWED THAT PLOT NO.7 AND 2 SHOPS WERE ALLOTTED TO THE ASSESSEES MOTHER AND ALSO RELIED O N THE STATEMENT OF SANJEEV SHUKLA, THE AO MADE AN ADDITION OF RS.1.5 L AKHS. THE AO HAD REJECTED THE ASSESSEES THEORY THAT NO AMOUNT W AS GIVEN AND THE DOCUMENTS WERE GOT PREPARED TO ASSIST HIS FRIEND RA JEEV SHUKLAS BROTHER SANJEEV SHUKLA JUST TO PREVENT ILLEGAL POSS ESSION OF THE PROPERTY BY THE OWNER OF THE PLOT WITHOUT AFFECTING ANY FINANCIAL TRANSACTION. THE DOCUMENT TO THIS EFFECT PRODUCED BY THE ASSESSEE WAS ALSO VIRTUALLY REJECTED BY THE AO. 14.2 CONSIDERING THE ASSESSEES SUBMIS SION AS WELL AS THE FACTS OF THE ISSUE, THE CIT (A) TOOK A VIEW THAT TH E CLAIM OF THE ASSESSEE AS WELL AS THE COUNTER CLAIM OF RAJEEV SH UKLA BEING CONTRADICTORY BASED ON THE DOCUMENTARY EVIDENCE WHI CH SHOWS THE INVESTMENT OF RS.1.5 LAKHS VIS--VIS ALLOTMENT OF P LOT AND SHOPS IN THE NAME OF THE ASSESSEES MOTHER AND THE POSSESSION OF WHICH WAS YET TO BE DECIDED BY THE COURT ETC., IT WAS REASONABLE TO BELIEVE THAT THE INVESTMENT WAS ACTUALLY MADE AT RS.1.5 LAKHS TOWARD S ALLOTMENT OF PLOT AND SHOPS. 26 14.3 BEFORE US IT WAS CONTENDED BY THE ASSESSEES A.R. THAT THE ENTIRE ADDITION WAS BASED ON THE INFORMATION RE CEIVED FROM CITY CIVIL COURT AND NOT ON ANY MATERIALS FOUND. IT WAS , FURTHER, SUBMITTED THAT THE COPY OF AGREEMENT OF UNDERSTANDING BETWEEN MAHENDRAKAUR SURI, THE ASSESSEES MOTHER AND SHRI SANJEEV SHUKLA CLEARLY ESTABLISHES THAT NO AMOUNT HAS BEEN PAID WHATSOEVER AND NO FINANCIAL TRANSACTIONS HAVE TAKEN PLACE BETWEEN THE M. IN CONCLUSION, IT WAS CLAIMED THAT NO RELIANCE CAN BE PLACED ON TH E MERE STATEMENT OF SANJEEV SHUKLA AND, THEREFORE, IT WAS PLEADED, T HE ADDITION REQUIRES TO BE DELETED. 14.4 WE HAVE DULY CONSIDERED THE ASSES SEES SUBMISSION AND ALSO REASONING OF THE AUTHORITIES BELOW IN ADDI NG/CONFIRMING THE AMOUNT OF RS.1.5 LAKHS IN THE HANDS OF THE ASSESSEE . WE HAVE ALSO CAREFULLY GONE THROUGH THE AGREEMENT OF UNDERSTANDI NG PURPORTED TO HAVE BEEN ENTERED INTO BETWEEN THE ASSESSEES MOTHE R AND SHRI SANJEEV SHUKLA. 14.5 AT THE OUTSET, WE WOULD LIKE TO R EITERATE THAT THERE IS NO SUBSTANCE IN THE SAID AGREEMENT. IT IS AN UNDISPUT ED FACT THAT A SUIT HAS BEEN FILED BY THE ASSSESSEES MOTHER IN A CIVIL COURT AGAINST 27 NEELKANT CORPORATION INVOLVING RS.1.5 LAKHS AGAINST WHICH DOCUMENTS SHOW THAT PLOT NO.7 AND TWO SHOPS WERE AL LOTTED TO ASSESSEES MOTHER. THE ISSUE IS STILL PENDING IN T HE COURT. THIS AMPLY EXHIBITS THAT THE ASSESSEES MOTHER HAD INVES TED THE SAID SUM WITH NEELKANT CORPORATION FOR ALLOTMENT OF A PLOT A ND TWO SHOPS. THUS, THE CIT (A) WAS JUSTIFIED IN CONFIRMING THE A DDITION. WE ARE, THEREFORE, DECLINED TO INTERVENE ON THIS POINT. TH IS GROUND GOES AGAINST THE ASSESSEE. 15. GROUND NO.7: ADDITION OF RS.5 LAKHS AS UNACCOUNTED INVESTMENT LOAN TO SHRI DINESH DHABALIA: 15.1 THE AO, ON THE BASIS OF INFORMATI ON GATHERED THAT A CIVIL SUIT WAS PENDING IN THE COURT OF RURAL JUDGE, AHMED ABAD THAT SHRI DINISH DHABALIA FILED A SUIT AGAINST THE ASSESSEE S EEKING ORDER TO TAKE BACK THE POSSESSION OF DOCUMENTS PERTAIN TO HI S FLAT NO.102B OF SATKAR APARTMENT, THALTEJ. RELYING ON THE STATEMEN T OF DHABALIA THAT RAISING OF A LOAN OF RS.5 LAKHS LED TO PART WITH TH E DOCUMENT OF HIS FLAT TO THE ASSESSEE WHO LENT A LOAN AND DESPITE OF THE SAME BEING RETURNED TO THE ASSESSEE, THE DOCUMENTS WERE NOT R ETURNED. 28 15.2 BRUSHING ASIDE THE ASSESSEES CONTE NTION THAT DHASBALIA WAS HIS EMPLOYEE WHO HAD TAKEN HIS SHOP OF NANAK CU TLERY MART FOR RUNNING AND IN RETURN HE HAD PLEDGED THE DOCUMENTS OF THE PROPERTY ALONG WITH POWER OF ATTORNEY TO THE ASSESSEE AS SE CURITY AND THAT NO LOAN OF RS.5 LAKHS WAS LENT AS ALLEGED AND THE SUIT CAME TO BE FILED BY DHABALIA WHEN THE ASSESSEE HAD REFUSED TO GIVE BACK THE FLAT AND THE DOCUMENTS TO DHABALIA WHO HAD RUN UP HUGE LOSS IN T HE ASSESSEES SHOP, THE AO TOOK A VIEW THAT THE ASSESSEE WAS UNAB LE TO PROVE THAT THE REALITY WAS OTHERWISE THAN STATED BY DHABALIA. 15.3 THE LEARNED CIT (A) HAD RECORDED HER FINDINGS AS UNDER: 8.2. (ON PAGE 19).IN THE LIGHT OF THE FACT THAT STATEMENT OF DINESH DHABALIA IS NOT GOOD EVIDENCE SINCE HE HAD NOT BEEN CROSS EXAMINED, THE DOCUMENTARY EVIDENCES THEMSELVES PRESENT A PICTURE WHICH SHOW THAT NANAK CUTLERY MART CONTINUED TO BE A PROPRIETORSHIP CONCE RN OF THE APPELLANT AND THERE IS NO EVIDENCE THAT IT WAS GIVEN TO SHRI DINESH DHA BALIA IN LIEU OF THE PROPERTY. THE PROPERTY ITSELF WAS ADMITTEDLY IN THE POSSESSIO N OF THE APPELLANT ALONG WITH POWER OF ATTORNEY AND AS SUCH THERE IS ENOUGH GROUN D TO HOLD THAT THE APPELLANT MADE INVESTMENT IN OBTAINING TO POWER OF ATTORNEY O F THE PROPERTY. SUCH INVESTMENT COULD REASONABLY BE EXPECTED TO BE OF TH E SUM OF RS.5 LAKHS ASS REFERRED TO BY THE AO AND ADDITION TO THIS EXTENT I S THEREFORE HELD TO BE JUSTIFIED AS THE SOURCE OF THE AMOUNT OF MONEY IS NOT PROVED .. 15.4 IT WAS THE CONTENTION OF THE AS SESSEE BEFORE US THAT NO INCRIMINATING MATERIAL WAS FOUND AND THAT THE ADDIT ION WAS PURELY BASED ON THE STATEMENT OF DHABALIA AND THE INFORMAT ION GATHERED FROM THE CITY CIVIL COURT. IT WAS, FURTHER, AFFIRM ED THAT NO LOAN OF RS.5 29 LAKHS WAS GIVEN TO SHRI DHABALIA AS ALLEGED BY THE AO AND THAT THE SUIT WAS FILED BY DHABALIA ONLY ON THE BASIS OF ASS ESSEES REFUSAL TO RETURN THE FLAT AND DOCUMENTS TO HIM ETC. IT WAS A LSO SUBMITTED THAT NO OPPORTUNITY, IN SPITE OF A STRONG PLEA, TO CROSS EXAMINE DHABLIA WAS TURNED DOWN BY THE ASSESSEE. IT WAS SUBMITTED THAT THIS ASPECT WAS ALSO HIGHLIGHTED BY THE CIT(A) IN HER IMPUGNED UNDER DISPUTE. 15.5 WE HAVE CAREFULLY CONSIDERED TH E SUBMISSION OF THE LEARNED AR AND ALSO THE VERSION OF THE LEARNED DR W HO WAS PRESENT. 15.6 ON A PERUSAL OF THE RECORDS, I T HAS BEEN OBSERVED THAT ON THE BASIS OF INFORMATION GATHERED FROM THE CIVIL COURT THAT DINESH DHABALIA HAD FILED A SUIT AGAINST THE ASSESSEE SEEK ING THE RETURN OF THE POSSESSION OF FLAT AND DOCUMENTS ETC., AND ALSO BASED ON THE STATEMENT OF DHABALIA, THE ADDITION HAS BEEN RESORT ED TO. THE LEARNED CIT (A) HAD, IN HER FINDINGS, FAIRLY CONCED ED THAT THE STATEMENT OF DINESH DHABALIA IS NOT GOOD EVIDENCE SINCE HE HAD NOT BEEN CROSS EXAMINED [REFER PARA 8.2. OF CIT (A)] 15.7 ON A CRITICAL EXAMINATION OF TH E COPY OF THE SUIT FILED IN THE COURT OF CIVIL JUDGE (C.D.), AHMEDABAD BY DHABA LIA, IT HAS BEEN OBSERVED THAT: 30 10. THE DEFENDANTS OF THIS CASE WITH THE MALAFIDE INTENTION OF EACH OTHER HAD PLOTTED THE PLAN FOR DEPRIVING THE PROPERTY. THE D EFENDANT NO.2 HAD NOT PAID ANY CONSIDERATION OF THE SO CALLED REGISTERED SALE DEED AND NOT MAKE THE PAYMENT AND ALSO NOT HANDOVER THE VACANT POSSESSION OF THE SUIT E PREMISES BY US THE PLAINTIFF AND THEREFORE SO CALLED DEED OF THE DEFENDANT NO.2 ARE AGAINST THE PROVISIONS OF TRANSFER OF PROPERTY ACT AND THEREFORE LIABLE TO BE DISMISSED.[SOURCE: PAGE 105 OF PB] 15.8 IT CAN, THEREFORE, BE SAFELY INFERR ED THAT THERE WAS NO CASH TRANSACTION AS SOLEMNIZED IN HIS PETITION BEFO RE THE COURT BY DHABALIA AND ALSO CONCEDED BY THE LEARNED CIT (A) T HAT THE ASSESSEE HAS NOT BEEN EXTENDED AN OPPORTUNITY TO CROSS EXAMI NE DHABALIA FOR HIS STATEMENT PURPORTED TO HAVE BEEN RECORDED WHICH WAS SOLELY RELIED ON BY THE AO. WE ARE ALSO IN DISAGREEMENT WI TH THE PERCEPTION OF THE CIT (A) THAT [AT THE COST OF REPETITION] 8.2 . . SUCH INVESTMENT COULD REASONABLY BE EXPECTED TO BE OF THE SUM OF RS.5 LAK HS ASS REFERRED TO BY THE AO AND ADDITION TO THIS EXTENT IS THEREFORE HELD TO BE JUS TIFIED THE PRESUMPTION OF THE AO AS WELL AS CIT (A) DOES NOT STAND THE TESTIMONY OF LAW. 15.9 IN VIEW OF THE ABOVE, WE ARE OF THE CONSID ERED VIEW THAT THE REVENUE HAS FAILED IN ITS ENDEAVOUR TO BRING ON RECORD ANY UNAMBIGUOUS DOCUMENTARY PROOF TO NAIL THE ASSESSEE ON THIS SCORE. ACCORDINGLY, WE DELETE THE ADDITION OF RS.5 LAKHS. 31 16. GROUND NOS.8 & 9: ADDITIONS OF RS.7,43,000 + RS.2 LAKHS AS UNACCOUNTE D INVESTMENTS IN JAY SHIVA APARTMENTS: 16.1 BASED ON THE STATEMENT OF ONE OF THE PARTNERS OF THE SCHEME JAY SHIVA APARTMENTS SCHEME THAT THE FLA TS IN THE SCHEME WERE SOLD AT A COST OF RS.7,04,000/- EACH AN D, ACCORDINGLY, THE AO HAD COME TO A CONCLUSION THAT THE DIFFERENCE OF RS.7,43,000/- BETWEEN COST OF RS.14,80,000/- MINUS PAYMENT OF RS. 6,65,000/- REPRESENTED PAYMENT IN CASH OUT OF UNACCOUNTED INCO ME. FURTHER, PAYMENT OF RS.2 LAKHS SAID TO BE PAID IN THE CURREN T YEAR OUT OF TOTAL OF RS.6.65 LAKHS WAS ALSO FOUND TO BE UNPROVED, AND , ACCORDINGLY, THE SAME WAS ALSO ADDED AS UNDISCLOSED INCOME OF THE AS SESSEE. 16.2 AFTER ANALYZING THE ASSESSEES CONTENTIONS, THE CIT (A) HAD OBSERVED THUS: 9.2. (ON PAGE 21).THERE IS AMPLE EVIDENCES THAT A S PER PRACTICE IN THE IMMOVABLE PROPERTY TRANSACTIONS SUBSTANTIAL SUMS OF MONEY ARE PAID IN CASH (ALMOST 50% OF THE PRICE) AND SUCH INVESTMENTS ARE KEPT OUTSIDE THE BOOKS OF ACCOUNTS. SUCH TRANSACTION WAS ADMITTED BY SHRI UP ENDRA MISTRY AND HE LATER RETRACTED HIS STATEMENT WHEN HE REALIZED ITS WIDER IMPLICATIONS. ALSO THERE IS CONTRADICTION IN THE CLAIM THAT SHRI UPENDRA MISTRY HAS DENIED RECEIPT IN CASH WHEREAS THE APPELLANT SAYS THAT HIS FAMILY PAID RS. 2 LAKHS IN CASH FOR MAINTENANCE. THEREFORE, I FIND THAT SINCE APPELLAN T HIMSELF HAS GIVEN AND IS PLACING RELIANCE ON AFFIDAVIT OF SHRI UPENDRA MISTR Y TO SUBSTANTIATE CLAIM OF THERE BEING NO CASH PAYMENT IN THE TRANSACTION, THE ORIGINAL STATEMENT GIVEN BY SHRI UPENDRA MISTRY TO THE AO ADMITTING TO RECEIVIN G PAYMENT FOR THE FLATS AT RS.7,04,000/- EACH, THE SAME IS TREATED AS RELIABLE EVIDENCE WHICH HAS NOT BEEN DISPROVED BY THE APPELLANT AND THE ADDITIONS MADE ( INCLUDING RS.2 LAKHS FOR MAINTENANCE) ARE, THEREFORE, SUSTAINED. 32 16.3 IT WAS ARGUED, DURING THE COURS E OF HEARING, BY THE LEARNED A R THAT THE ASSESSEE DOES NOT DENY THE FA CT THAT RS.3.15 LAKHS BY MANJITKAUR SURI AND RS.3.5 LAKHS BY MOTHER MAHENDRAKAUR WERE GIVEN FOR BOOKING OF FLAT NOS.901 AND 902 IN J AY SHIVA APARTMENT. NO EVIDENCE OF ANY ON MONEY PAID OR REC EIVED WAS FOUND OUT. THE AMOUNT PAID WAS REFLECTED IN THE BO OK WHICH WAS ALSO NOT DENIED EITHER BY THE AO OR CIT (A). IT WAS, FU RTHER, ARGUED THAT THE ADDITION MADE WAS ON PRESUMPTION WITHOUT ANY EV IDENCE AND, THEREFORE, REQUIRES TO BE DELETED. WITH REGARD TO ADDITION OF RS.2 LAKHS, THE ASSESSEE HAD PLACED STRONG RELIANCE ON T HE AFFIDAVIT OF SHRI UPENDRA MISTRY WHO HAD CONFIRMED THAT NO AMOUNT OTH ER THAN RS.6.65 LAKHS WERE RECEIVED FOR BOOKING OF FLATS. 16.4 WE HAVE DULY CONSIDERED THE CONTEN TIONS OF THE ASSESSEE AND ALSO PERUSED THE DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE. ON PERUSING THE FACTS IT IS APPARENT THAT THE ADDITION IS MADE BASED ON THE GENERAL PRACTICE OF CASH PAYMENTS MADE OUTSIDE THE BOOKS OF ACCOUNTS IN THE CASE OF IMMOVABLE PROP ERTY TRANSACTIONS. REVENUE WAS OF THE OPINION THAT THERE ARE AMPLE INSTANCES THAT CASH PAYMENTS ARE MADE ALMOST ABOUT 50% OUTSIDE 33 THE BOOKS OF ACCOUNTS IN EFFECTING REAL ESTATE TRAN SACTIONS AND THEREFORE, THE STATEMENT MADE BY ONE OF THE PARTNER S CAN BE RELIED AND THE ADDITION SUSTAINABLE. HOWEVER, WE DO NOT SU BSCRIBE TO THIS VIEW OF THE REVENUE. IN ORDER TO ESTABLISH THAT THE ASSESSEE HAD PAID AMOUNT OUTSIDE THE BOOKS OF ACCOUNTS FOR EFFECTING REAL ESTATE TRANSACTIONS SUBSTANTIAL EVIDENCE HAS TO BE PLACED ON RECORD WHICH IS ABSENT IN THIS CASE. IT WOULD BE UNJUST IF AN ADDIT ION IS MADE ON THE APPELLANT BASED ON A STATEMENT MADE BY ONE OF THE P ARTNERS OF THE FIRM WITHOUT FURTHER MAKING ENQUIRIES AND COLLECTIN G EVIDENCE. THEREFORE, WE HEREBY DELETE THE ADDITION OF RS.7,43 ,000/- AND RS.2,00,000/- MADE BY THE LEARNED AO AND CONFIRMED BY THE LEARNED CIT(A). 17. GROUND NO.10: ADDITION OF RS.10 LAKHS AS UNACCOUNTED INVESTMENT F ROM BHAVYA GHANTAKARAN COTTAGE ASSOCIATION: 17.1 THE AO HAD STATED THAT POST-DAT ED CHEQUES OF RS.10 LAKHS IN FAVOUR OF THE ASSESSEE AND HIS FAMILY MEMB ERS FROM BHAVYA GHANTAKARAN COTTAGE ASSOCIATION, BESIDES DOCUMENTS SHOWING INVESTMENT IN BOOKING OF 40 PLOTS IN THE SCHEME WER E UNEARTHED DURING THE SEARCH OPERATION. HOWEVER, THE CONTENTI ON OF THE 34 ASSESSEE WAS THAT HE HAD MADE AN INVESTMENT OF RS.5 LAKHS IN 1999 WHILE THE AO RELIED ON THE POST-DATED CHEQUES TO SA Y THAT INVESTMENT WAS OF RS.10 LAKHS. HOWEVER, THE ARGUMENT OF THE ASSESSEE WAS THAT THE AMOUNT GIVEN WAS ONLY RS.5 LAKHS WHICH WAS TO BE RETURNED AT RS.10 LAKHS UNLESS THE ASSESSEE CHOSE TO TAKE PO SSESSION OF 40 PLOTS OF LAND. IT WAS, FURTHER, ARGUED THAT IF THE PLOTS WERE NOT TAKEN, THEN DOUBLE THE MONEY OF RS.5 LAKHS WOULD BE RETURN ED AT FACE VALUE OF POST-DATED CHEQUES OF RS.10 LAKHS. IT WAS, FURT HER, CONTENDED THAT THE SCHEME ITSELF WAS OF THE DOUBLING OF THE INVEST MENT AND THAT THERE COULD NOT BE ANY SITUATION WHERE THE MONEY WO ULD BE RETURNED ALONG WITH 40 PLOTS AGAINST AN INVESTMENT OF RS.10 LAKHS AS ALLEGED BY THE AO. IT WAS CLAIMED THAT NO PAYMENT IN CASH WAS MADE, BUT, ONLY RS.5 LAKHS WAS PAID THROUGH CHEQUES. 17.2 HOWEVER, THE CIT(A) HAD SUSTAINE D THE ADDITION ON THE GROUND THAT: 10.2. (ON PAGE 23).THE INVESTMENT OF RS.5 LAKH BY CHEQUE IS FOUND TO BE NOT EXPLAINED FROM DISCLOSED SOURCE OF INCOME AS PR OPER EVIDENCE IN THIS REGARD HAD NOT BEEN PRODUCED. ADDITION TO THE EXTENT OF R S.5 LAKH IS THEREFORE UPHELD ON ACCOUNT OF PAYMENT ADMITTED TO BE MADE. AS REGARDS THE BALANCE ADDITION OF RS.5 LAKHS FOR ALLEGED PAYMENT IN CASH IN ASS MUCH AS PO ST-DATED CHEQUES SHOW APPELLANTS ENTITLEMENT TO RECEIVING THIS FURTHER A MOUNT, DESPITE RECEIPTS FOR CASH PAYMENT BEING NOT FOUND, I FIND THE ADDITION TO BE JUSTIFIED IN LIGHT OF PRACTICE OF UNDISCLOSED INVESTMENTS MADE IN CASH FOR IMMOVABLE PROPERTY TRANSACTION. ADDITION OF 10 LAKHS IS SUSTAINED. 35 17.3 IT WAS EXPLAINED BY THE LEARNED AR THAT THE ASSESSEE HAD MADE AN INVESTMENT OF RS.2 LAKHS BY CHEQUE NO.8 61205 DATED 7.5.1999 ON UNITED BANK OF INDIA IN BHAVYA GHANTAKA RAN COTTAGE OWNERS ASSOCIATION [BGCOA] IN ANTICIPATION OF ALLOT MENT OF PLOT OF THE SCHEME ORGANIZED BY THE ABOVE ASSOCIATION AT RA NASAN & KANBHA VILLAGEL. IF THE SAID ASSOCIATION WILL NOT ALLOT ANY PLOT IN FUTURE OR GIVE THE POSSESSION OF PLOT, THE ASSESSEE WILL B E ENTITLED TO RECEIVE DOUBLE MONEY FROM THE ASSOCIATION AFTER THE EXPIRY OF FIVE YEARS. IT WAS SUBMITTED THAT THE ASSESSEE HAD NEVER PAID TO B GCOA RS.1.5 LAKHS IN CASH AS WAS APPEARED ON PAGE 4 OF AGREEMEN T DATED 7.5.1999 THAT THE AGREEMENT WAS EXECUTED BETWEEN TH E PRESIDENT/SECRETARY OF BGCOA AND THE ASSESSEE TO SA FEGUARD THE INTEREST OF THE ASSESSEE. SUPPOSE AFTER EXPIRY OF FIVE YEARS, IF BGCOA WILL NOT REFUND DOUBLE THE AMOUNT AS AGREEMEN T UPON, THEN THE ASSESSEE MAY HAVE TO FILE CASE IN THE COURT. T HEREFORE, IT WAS CLAIMED, THE ASSESSEE HAD DEPOSITED INITIAL DEPOSIT OF RS.1 5 LAKHS AND NOT PAID IN CASH, THAT I WAS ENTITLED TO RECEIV E RS.3 LAKHS FROM BGCOA AFTER THE EXPIRY OF FIVE YEARS. THIS FACT WA S FURTHER CORROBORATED FROM THE PANCHNAMA WHEREIN TEN CHEQUES OF BGCOA WERE SEIZED. IT WAS SUBMITTED THAT THE ASSESSEE HAD MADE AN 36 INVESTMENT OF RS.1.5 LAKHS IN BGCOA BY CHEQUE ON 7. 5.1999 AND THE SAME WAS REFLECTED IN THE BALANCE SHEET OF FY 1999- 2000. IT WAS, FURTHER, SUBMITTED THAT THE ASSESSEE AND HIS FAMILY MEMBERS HAVE MADE INVESTMENT OF RS.5 LAKHS IN BGCOA FOR BOOKING OF PLOTS AND THAT THE ASSESSEE HAD NEVER ADVANCED ANY AMOUNT IN INTEREST EITHER TO SHRI KISHOREBHAI SHAH OR BGCOA. ADVANCED CHEQUE S WERE RECEIVED AND UNDATED RECEIPTS WERE FOUND BECAUSE I NVESTMENT WAS OF THE SCHEME WHEREIN INVESTORS WERE ASSURED DOUBLE THE RETURN OF AMOUNT SO INVESTED. SUCH SCHEMES WERE PREVAILING W HEN SCHEME OF INVESTMENT IN AGRICULTURAL TREES ETC., WERE PREVALE NT DURING LATE NINETIES. AVAILABILITY OF SUCH CHEQUES DO NOT PRO VE OR SUGGEST ANY UNACCOUNTED ADVANCE GIVEN OR INVESTMENT MADE BY THE ASSESSEE, PARTICULARLY WHEN NO SUCH RECEIPTS OR CONFIRMATIONS HAVE BEEN FOUND IN THE ASSESSEES RESIDENCE DURING THE COURSE OF SE ARCH OPERATION. THE AO HAD WRONGLY PRESUMED THAT THE ASSESSEE HAD F INANCED RS.10 LAKHS TO SHRI KISHORE SHAH AND TAKEN POST-DATED CHE QUES AS SECURITY. HAD THERE BEEN SUCH ADVANCE, THERE WOULD HAVE BEEN PROMISSORY NOTES EXECUTED? IF IT WAS ADVANCED, THEN NO ONE WO ULD GIVE ALLOTMENT OF 40 PLOTS AS WELL AS POST-DATED CHEQUES . IN CONCLUSION, IT WAS PLEADED THAT ONLY UNDER THE SCHEME, SHRI KISHOR E SHAH HAD 37 GIVEN POST-DATED CHEQUES AS SECURITY SO THAT AFTER THE EXPIRY OF FIVE YEARS, HE CAN TAKE BACK THE PLOT IF THE PRICES WERE INCREASED OR GIVE THE PLOT THEREBY TAKING BACK THE POST-DATED CHEQUES . IN CONCLUSION, IT WAS SUBMITTED THAT AS THIS WAS THE PREVAILING FACT AT THAT TIME, THE ASSESSEE HAD MADE SUCH INVESTMENT; AND THEREFORE, P LEADED THAT THE ADDITION MADE ON PRESUMPTION REQUIRES TO BE DELETED . 17.4 THE LENGTHY SUBMISSION OF THE LE ARNED A R WAS DULY CONSIDERED AS WELL AS THE REASONING OF THE AO AS WE LL AS THE CIT (A). 17.5 AT THE OUTSET, WE WOULD LIKE TO POINT OUT THAT THE ASSESSEE HAD CLAIMED INVESTMENT OF RS.5 LAKHS THROU GH CHEQUES WHICH HAVE BEEN DULY REFLECTED IN THE BOOKS OF THE ASSESSEE, HIS MOTHER AND NANAK CUTLERY MART [REFER: PAGES 138,139 & 140 OF PB]. WHEN THE ASSESSEE HAD VOUCHED THAT THE PAYMENTS ALL EGED TO HAVE BEEN MADE THROUGH CHEQUES WHICH CONTAINED CHEQUE NU MBERS AS WELL AS THE NAME(S) OF THE BANK ETC., THE DEBATABLE QUESTION CAME TO OUR MIND IS THAT WHAT HAD PREVENTED THE AUTHORITIES CONCERNED TO CROSS VERIFY THE SAME WITH THE BANKING AUTHORITIES TO ASCERTAIN THE VERACITY OF THE ASSESSEES CLAIM. THIS VITAL POINT HAS BEEN ALLOWED TO SLIP AWAY FROM THE HANDS OF THE REVENUE. IT WAS NO T UNCOMMON AT 38 THAT RELEVANT TIME TO LURE/DRAW THE ATTENTION OF TH E PROSPECTIVE BUYERS OF THE LAND/FLATS, THE DEVELOPERS/LAND PROMOTERS DE VISED NOVEL SCHEMES TO OFFER ALL SORTS OF ATTRACTIVE OFFERS INC LUDING ONE THAT OF DOUBLING THE MONEY SCHEME ETC. TO SUBSTANTIATE HIS CLAIM, THE ASSESSEE HAD PRODUCED XEROX COPY OF A BROCHURE FLO ATED BY BGCOA (REFER: PAGE 141 OF PB). THERE WAS ALSO A LI KELIHOOD THAT THE AGREEMENT COULD HAVE BEEN ENTERED INTO BETWEEN THE ASSESSEE AND BGCOA TO SAFEGUARD THE INTEREST OF THE ASSESSEE . THIS ARRANGEMENT, IN OUR CONSIDERED VIEW, CANNOT BE FAUL TED WITH UNLESS A DISCREET DOCUMENTARY EVIDENCE HAS BEEN BROUGHT ON R ECORD BY THE REVENUE TO SCUTTLE THE ASSESSEES ASSERTION. NO DO CUMENTARY PROOF WORTH THE NAME HAS BEEN ADDUCED TO THE ALLEGED ADVA NCEMENT OF RS.5 LAKHS EITHER TO SHRI KISHOREBHAI SHAH OR BGCO A THAT THE INTENTION OF THE ASSESSEE WAS ONLY FOR EARNING INTE REST. THE AOS PRESUMPTION THAT THE ASSESSEE FINANCED SHRI SHASH B Y GIVING HIM RS.10 LAKHS AND IN LIEU OF WHICH HE OBTAINED POST- DATED CHEQUES AS SECURITY WAS WITHOUT ANY BASIS OR WITH NO CORROBOR ATE EVIDENCE. ADMITTING THE AOS LOGIC FOR ARGUMENT SAKE, NO PRUD ENT LENDER WOULD HAVE PARTED WITH SUCH A HUGE SUM WITHOUT ANY SUBSTA NTIAL PROOF IN THE SHAPE OF A PROMISSORY NOTE AS PROOF. IF SO, WH ERE ARE THEY? 39 WITHOUT ANY DOCUMENTARY PROOF WHICH SUBJECTS TO TES TIMONY OF LAW, WE ARE OF THE CONSIDERED VIEW; THAT NO ADDITION CAN BE RESORTED TO PURELY BASED ON PRESUMPTION, ASSUMPTION AND GUESS W ORK. THE ADDITION OF RS.10 LAKHS MADE BY THE AO AND SUBSEQUE NTLY SUSTAINED BY THE CIT (A) CANNOT BE UPHELD ANY FURTHER. ACCOR DINGLY, THE ASSESSEE GETS RELIEF OF RS.10 LAKHS. 18. GROUND NO.11: ADDITION OF RS.5,51,000/- BEING UNACCOUNTED INVESTM ENT IN DHWIRUP BUNGALOW: 18.1 THE AO HAD FOUND THAT A CIVIL SUI T WAS PENDING IN A COURT WHERE THE ASSESSEE HAD CLAIMED POSSESSION OF A PROPERTY FROM SHREE JAISHEEL A PATEL AGAINST THE PAYMENT OF RS.5 LAKHS AND ANOTHER RS.50,000/- GIVEN AS REGISTRATION CHARGES. THE AO REFERRED TO THE STATEMENT OF THE FATHER OF SHRI J PATEL VIZ. , SHRI ASHOKBHAI PATEL THAT A LOAN OF RS.5 LAKHS HAD BEEN GIVEN AT T HE INTEREST RATE OF 7% PER MONTH AND THE ASSESSEE DEMANDED A FURTHER RS .9.5 LAKHS FOR THE PROPERTY OF WHICH HE HAD TAKEN POSSESSION THROU GH THE COURT. THE AO HELD THAT THE SUM OF RS.5.5 LAKHS PAID IN CA SH WAS OUT OF UNDISCLOSED INCOME OF THE ASSESSEE. THE AO HAD REJ ECTED THE EXPLANATION THAT NO SUCH AMOUNT WAS GIVEN AS LOAN A ND THAT NO 40 INTEREST WAS RECEIVED THEREON AND THAT ORIGINAL SAL E DEED WAS AVAILABLE TO SHOW THAT THIS WAS PURCHASE OF A PROP ERTY AND NO TRANSACTION OF FINANCE OF LOAN. 18.2 THE LEARNED CIT (A), AFTER DUE CO NSIDERATION OF THE ASSESSEES VERSION AS WELL AS THE REASONING OF THE AO, HAD OBSERVED THAT THERE WAS NO GOOD EVIDENCE TO SUPPORT THE AOS BELIEF THAT THE SUM OF RS.5 LAKHS WAS A LOAN GIVEN AT 7% PER MONTH INTEREST. DOCUMENTARY EVIDENCES SHOW THAT THE PROPERTY HAS BE EN TAKEN POSSESSION OF AS A SALE AND SO THE ONLY QUESTION HE RE WAS RELATING TO THE SOURCE OF THE AMOUNT OF RS.5.5 LAKHS WHICH INCL UDED REGISTRATION CHARGES. INVESTMENTS OF THOSE AMOUNTS WERE NOT OPE N TO VERIFICATION AS PER THE OBSERVATIONS OF THE AO IN HIS IMPUGNED O RDER. THE ADDITION OF RS.5.51 LAKHS WAS, THEREFORE, SUSTAINE D. 18.3 IT WAS SUBMITTED BY THE ASSESSEE THAT HE HAD ACQUIRED BUNGALOW 3, DWIRUP BUNGALOW THROUGH COMMISSION ISSU ED BY THE COURT. SHRI MAHENDRAKAUR SURI HAD PAID RS. 2 LAKHS , SMT. MANJEETKAUR SURI PAID RS.1 LAKH, BESIDES HIS CONTRI BUTION OF RS.2 LAKHS. IT WAS SUBMITTED THAT ALL THE ABOVE TRANSACT IONS WERE DULY REFLECTED IN THEIR BOOKS OF ACCOUNTS. AFTER OBTAIN ING THE POSSESSION OF 41 THE PROPERTY, THE ASSESSEE CAME TO KNOW THAT THE SA ID PROPERTY HAS BEEN MORTGAGED WITH SBI, LAGHU UDYOG BRANCH AND A C OPY OF LEGAL SUIT FILED HAS ALSO BEEN PRODUCED AS PROOF. WITH R EGARD TO PAYMENT OF RS.5 LAKHS, IT WAS CLAIMED THAT IT HAS BEEN PROPERL Y ACCOUNTED FOR AND SUPPORTED BY A SALE DEED EXECUTED BY JAISHEEL PATEL IN FAVOUR OF THE ASSESSEE DATED 15.10.1999. THE REGISTRATION CHARGE S OF RS.51,000/- HAS ALSO BEEN REFLECTED IN THE ASSESSEES BOOKS OF ACCOUNT. IT WAS, FURTHER, SUBMITTED THAT THE ASSESSEE WAS HAVING SUF FICIENT CASH BALANCE WITH HIM AND FAMILY MEMBERS AS PER THE BOOK S OF ACCOUNTS. HOWEVER, THE AO HAD REJECTED SUCH BOOKS OF ACCOUNT AND HELD THAT THE INVESTMENTS THOUGH MENTIONED IN THE BOOKS OF AC COUNTS THEY WERE FROM UNACCOUNTED INCOME. IT WAS SUBMITTED THA T THOUGH THE AO HAD NOT ACCEPTED THE CASH CREDIT, BUT, NO ADDITION OF UNEXPLAINED CASH CREDIT WAS MADE. IN CONCLUSION, IT WAS PLEADE D THAT THE ASSESSEE HAD DEBITED THE AMOUNT IN THE BOOKS OF ACC OUNTS, THE CASH BALANCE AVAILABLE WAS FULLY PROVED AND, THUS, THERE WAS NO JUSTIFICATION IN MAKING THE ADDITION OF RS.5.51 LAK HS WHICH REQUIRES TO BE DELETED. 18.4 ON A PERUSAL OF THE EVIDENCES PRO DUCED BY THE ASSESSEE, IT HAS BEEN OBSERVED THAT THE PAYMENT OF RS.3 LAKHS MADE 42 THROUGH CHEQUES HAVE BEEN DULY REFLECTED IN THE BOO KS OF ACCOUNT OF MAHENDRAKAUR N SURI AND THE ASSESSEE AND RS.2 LAKHS OF CASH WAS PAID FROM THE ACCOUNT OF NANAK CUTLERY MART [REFER: PAGES 173, 174 AND 175 OF PB]. THEY HAD SUFFICIENT CASH BALANCES TO MAKE SUCH PAYMENTS. DOCUMENT ON A STAMP PAPER [WORTH RS.50,0 00] WAS EXECUTED FOR THE PURCHASE OF THE SAID HOUSE FROM JA ISHEEL PATEL [SOURCE: P 176 180 PB] DULY ACKNOWLEDGING THE SAL E CONSIDERATION THROUGH CHEQUES FOR RS.3 LAKHS AND CASH OF RS.2 LAK HS. THE SAID DOCUMENT HAS BEEN REGISTERED AND THE STAMP AUTHORIT IES HAVE ACCEPTED THE PRICE AND, ACCORDINGLY COLLETED THE ST AMP CHARGES OF RS.51,000 [REFER: P 193-208]. THE ASSESSEE HAD PRO DUCED DOCUMENTARY PROOF TO BELIE THE ASSUMPTION OF THE AO WHO TOOK A STAND THAT THE INVESTMENT OF THESE AMOUNTS WERE NOT OPEN TO VERIFICATION ETC., WHICH IN OUR VIEW, IS QUITE CONT RARY TO THE REALITY. 18.5 TAKING ALL THE FACTS AND CIRCUMSTANCES OF THE ISSUE INTO CONSIDERATION, WE ARE OF THE CONSIDERED VIEW THAT T HE INVESTMENT MADE BY THE ASSESSEE STANDS EXPLAINED AND THEREFORE , THE ADDITION OF RS.5.51 LAKHS DESERVES TO BE DELETED. IT IS ORDERE D ACCORDINGLY. 43 19. GROUND NO.12: ADDITION OF RS.3,07,000/- [BEING RENT OF RS.72,000/ - + INVESTMENT OF RS.2.35 LAKHS IN A PROPERTY]: 19.1 THE ASSESSEES CLAIM WAS THAT THE ORIGINAL INVESTMENT WAS MADE IN A PROPERTY IN THE NAMES OF HIS MOTHER A ND WIFE THROUGH CHEQUES AND THE PAYMENTS WERE DULY ACCOUNTED FOR, B UT, DUE TO FINANCIAL CRUNCH, THE PROPOSAL WAS ABORTED AND, ACC ORDINGLY, RECEIVED BACK THE SAID AMOUNTS. HOWEVER, THE ASSESSEES SIS TER MADE AN INVESTMENT OF RS.2.35 LAKHS AND THAT NO RENT FROM T HE SUBJECT PROPERTY WAS RECEIVED BY THE ASSESSEE AS THE PROPER TY WAS NOT BELONGED TO HIM. THIS CLAIM OF THE ASSESSEE WAS RE JECTED BY THE AO FOR THE REASONS RECORDED IN HIS IMPUGNED ORDER AND, ACCORDINGLY, MADE AN ADDITION OF RS.3.07 LAKHS IN THE HANDS OF T HE ASSESSEE. 19.2 THE CIT (A) IN HER BRIEF FINDING OBSERVED THAT THE ASSESSEE HAD NOT PRODUCED ANY SPECIFIC EVIDENCE TO PROVE THAT THE INVESTMENT WAS ACTUALLY MADE BY HIS SISTER. SHE HA D, THEREFORE, CONCLUDED THAT THE MONEY PAID IN CASH WAS OUT OF HI S UNDISCLOSED INCOME AND, THEREFORE, THE FINDINGS OF THE AO ARE S USTAINED. 44 19.3 THE SUBMISSION OF THE ASSESSEE WA S THAT THE AO HELD THAT THE ASSESSEE OWNS A FLAT NO.402 AT SHALIBHADRA FLATS ACQUIRED IN THE NAME OF HIS SISTER SMT. MANVIRKAUR SURI. IN TH IS CONNECTION, IT WAS SUBMITTED THAT HE HAD ORIGINALLY DECIDED TO BUY A F LAT AND, ACCORDINGLY, BOOKED FOR A FLAT BEARING NO.401 AND, ACCORDINGLY MADE AN INITIAL PAYMENT OF RS.75,000/- FROM THE ACCOUNT OF SMT. MAHENDRAKAUR SURI AND AN EQUAL AMOUNT FROM THE ACCO UNT OF SMT MANJEETKAUR SURI THROUGH ACCOUNT PAYEE CHEQUES AND, SUBSEQUENTLY, DECIDED TO CANCEL THE BOOKING DUE TO FINANCIAL CRUN CH. ACCORDINGLY, THE ASSOCIATION WAS REQUESTED TO CANCEL THE BOOKING MADE EARLIER IN THEIR NAMES. THEREAFTER, THE ASSESSEES SISTER MRS . MANVIRKAUR SURI WHO WAS MARRIED AND STAYING WITH HER HUSBAND PURCHA SED THE A FLAT BY PAYING A SUM OF RS.2.35 LAKHS. HOWEVER, ON THE BASIS OF ALLEGED AFFIRMATION OF SHRI KAMLESH PATEL IN A STATEMENT, T HE AO ASSUMED THAT THE ASSESSEE HAD PURCHASED THE SAID FLAT CLAND ESTINELY THROUGH HIS UNKNOWN SOURCE AND, ACCORDINGLY MADE AN ADDITIO N OF RS.2.35 LAKHS. BESIDES, RS.72,000/- BEING ALLEGED RENT FOR THE SAID FLAT WAS ALSO ADDED IN HIS HANDS. IT WAS PLEADED THAT THE F LAT HAS SINCE BEEN PURCHASED BY HIS SISTER WHO WAS MARRIED AND ALSO AN ASSESSEE; THERE WAS NO JUSTIFICATION ON THE PART OF THE REVENUE TO PENALIZE THE 45 ASSESSEE FOR HIS OF NO FAULT. THE ENTIRE ADDITION OF RS.3.07 LAKHS, REQUIRES TO BE DELETED. 19.4 WE HAVE CAREFULLY EXAMINED THE SU BMISSION OF THE ASSESSEE AS WELL AS CRITICALLY PERUSED THE REASONIN G OF THE AO. 19.5 BRIEFLY, ACCORDING TO THE ASSESSE E, HE HAD ORIGINALLY BOOKED FOR A FLAT AND, ACCORDINGLY, MADE AN INITIAL PAYMENT OF RS.1.5 LAKHS THROUGH ACCOUNT PAYEE CHEQUES [THE DETAIL OF WHICH IS FINDING A PLACE IN THE ASSESSEES SUBMISSION SUPRA] AND DUE T O FINANCIAL CONSTRAINT, THE ASSOCIATION WAS REQUESTED TO CANCEL THE BOOKING AND ALSO GOT BACK THE DEPOSITS INITIALLY MADE. THE ABOV E EXERCISE HAS BEEN DULY REFLECTED IN THE RESPECTIVE BOOKS OF ACCO UNT. IN THE MEANWHILE TO PLACE ON RECORD, SMT.MAHENDRAKAUR SURI AND SMT.MANJEETKAUR SURI IN THEIR SEPARATE BUT IDENTICA L LETTERS DATED 22.6.2000 TENDERED RESIGNATIONS AND REQUESTED THE ASSOCIATION TO CANCEL THE REGISTRATION FOR HAVING BOOKED FOR A FLA T WHICH HAVE BEEN DULY ACKNOWLEDGED BY DHARNIDHAR OWNERS ASSOCIATION IN THEIR LETTER HEADS [REFER: PAGES 209 216 WITH ENGLISH TRANSLAT ION]. HOWEVER, THE ASSESSEE ADMITTED THAT THE SAID FLAT WAS PURCHA SED BY HIS SISTER 46 WHO WAS MARRIED OFF AND STAYING WITH HER HUSBAND SE PARATELY AND THAT THE ASSESSEE HAD NOTHING TO DO WITH THAT TRANS ACTION. 19.6 HOWEVER, ON THE BASIS OF THE STAT EMENTS OF THE ALLEGED TENANTS, THE AO CAME TO A CONCLUSION THAT THE PROPE RTY WAS RENTED OUT AND THAT THE ASSESSEE WAS COLLECTING RENT ETC., AND, THUS, THE ASSESSEE HAD CLANDESTINELY INVESTED RS.2.35 LAKHS F ROM HIS UNDISCLOSED SOURCE AND, ACCORDINGLY ADDED RS.2.35 L AKHS, BESIDES RENTAL INCOME OF RS.72,000/- AS THE ASSESSEES INCO ME. 19.7 AT THIS JUNCTURE, IT IS PERTINEN T TO MENTION HERE THAT IN THEIR ALLEGED STATEMENTS, THE TENANTS HAVE STATED T HAT:- 15.5.2. THE STATEMENT OF TWO TENANTS (SHRI AYAZ B ASRAI AND ABHIMANYU NOHWAR) WERE RECORDED WHO STATED VERY CLEARLY THAT THE PROPERTY WAS RENTED FROM SHRI SURI WHO WAS COLLECTING THE RENT. IT WAS ALSO STATED THAT THEY HAVE COME TO KNOW THE PROPERTY FROM EARLIER OCCUPANT. [EMPHASIS SUPPLIED] 19.8 THIS AMPLY MAKES IT CLEAR THAT T HEY HAVE COME TO KNOW THE DETAILS OF THE PROPERTY THROUGH THE PREVIOUS OC CUPANT OF THE FLAT AND AS SUCH, THE STATEMENT OF THE TENANTS DOES NOT COMMAND ANY MERIT. 19.9 AS NARRATED, MAHENDRAKAUR SURI A ND MATJITKAUR I. SURI HAVE SUBSEQUENTLY WITHDRAWN THEIR REGISTRATIONS DUE TO FINANCIAL 47 CONSTRAINT AND DULY REQUESTED THE DOA TO CANCEL THE IR BOOKINGS AND RETURN THE ADVANCES SO MADE. THE DOA, IN THEIR OFF ICIAL COMMUNICATION, ACKNOWLEDGED THEIR REQUEST IN AN IDE NTICAL BUT SEPARATE LETTERS AS UNDER: WITH REFERENCE TO THE ABOVE, IT IS HEREBY INFORM Y OU THAT YOUR RESIGNATION IS ALLOWED ACCORDING YOUR DEMAND IN REFERENCE TO THE A BOVE. FROM TO-DAY, FOR THE FLAT NO.401 YOU ARE NOT REMAINED AS MEMBER W.E.F. 2 2.6.2000. YOUR SAID RESIGNATION IS ACCEPTED BY US WHICH PLEASE NOTE. 19.10 MOREOVER, THE FLAT STOOD IN THE NAM E OF SMT. MANVIRKUMAR SURI WHO, ACCORDING TO THE ASSESSEE, AN ASSESSEE, WAS STAYING WITH HER HUSBAND SEPARATELY. SUCH BEING A SCENARIO, THE INTRIGUING QUESTION IS, AS TO WHY SMT. MANVIRKUMAR SURI WAS NOT EXAMINED TO BRING OUT THE TRUTH. WHEN THE ASSOCIATI ON ITSELF IN ITS OFFICIAL COMMUNICATION (THROUGH ITS LETTER HEADS) H AD UNAMBIGUOUSLY ACKNOWLEDGED THAT MAHENDRAKAUR SURI AND MANJITKAUR I SURI HAVE WITHDREW THEIR BOOKINGS WAY BACK IN JUNE 2000, HOW COULD HAVE THE SECRETARY OF THE SAME ASSOCIATION GIVEN A CONTRADIC TORY STATEMENT THAT THE ASSESSEE OWNS THE FLAT IN SHAILABHADRA FLA T. WHY THIS GLARING CONTRADICTORY STATEMENT HAS NOT BEEN FURTHE R PROBED INTO BY THE REVENUE? IN STEAD, THE REVENUE HAD CONVENIENTLY COME TO A CONCLUSION, PERHAPS, ON ASSUMPTION THAT THE ASSESSE E HAD INVESTED 48 IN SHALIBHADRA FLAT A SUM OF RS.2.35 LAKHS FROM HIS ALLEGED UNACCOUNTED SOURCE AND ALSO PENALIZED FOR RS.72,000 BY WAY OF RENTAL INCOME WHEN THE LEGITIMATE OWNER OF THE SAID FLAT HAS NOT BEEN CONCLUSIVELY ESTABLISHED. 19.11 IN VIEW OF THE ABOVE FACTS AND C IRCUMSTANCES OF THE ISSUE AS DELIBERATED UPON IN THE FOREGOING PARAGRAP HS, WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE HAD FAILED TO ESTA BLISH THE REAL OWNER OF THE SUBJECT FLAT. ACCORDINGLY, WE DELETE THE ENTIRE ADDITION OF RS.3,07,000/- ON THIS COUNT. 20. GROUND NO.13: ADDITION OF RS.1,80,000/- BEING INVESTMENT IN SANTR O CAR: 20.1 THE ADDITION WAS MADE BY THE AO ON THE BASIS OF ASSESSEES STATEMENT DURING THE SEARCH PROCEEDINGS. 20.2 IT WAS CONTENDED BEFORE THE CIT ( A) THAT THE CAR WAS NOT REGISTERED IN THE NAME OF THE ASSESSEE AND THAT IT WAS PRICED AT RS.1 LAKH ONLY WHICH HAS BEEN REFLECTED IN THE BOOK S OF THE ACCOUNT. SINCE THE BALANCE OF RS.80,000/- WAS NOT PAID, THE CAR WAS RETURNED BACK TO ITS OWNER. 49 20.3 HOWEVER, THE CIT (A) TOOK A DIVERG ENT VIEW THAT 13.2..I DO NOT FIND SUBSTANCE IN THE CLAIM MADE IN AS MUCH AS ONE CAR WAS FOUND AT THE PREMISES OF THE APPELLANT DURI NG THE COURSE OF SEARCH PROCEEDINGS AND HIS STATEMENT WAS DULY RECOR DED ON THE MATTER WHICH WAS THE BASIS OF ADDITION MADE BY THE AO. ALSO THE COMPUTERIZED BOOKS OF ACCOUNTS WHICH ARE BEING REFE RRED TO FOR NECESSARY ENTRY OF RS.1 LAKH ARE FOUND TO BE NOT RE LIABLE AS IS HELD BY ME IN EARLIER PARAS OF THIS ORDER. THE OBJECTIONS RAISED DO NOT CARRY WEIGHT. THE ADDITION MADE IS THEREFORE SUSTAINED. 20.4 IT WAS SUBMITTED BY THE ASSESSEE THAT OUT OF TOTAL AMOUNT OF RS.1.8 LAKHS, RS.1 LAKH WAS PAID FROM THE BOOKS OF ACCOUNT AND BALANCE OF RS.80,000/- WAS TO BE PAID A FTER OBTAINING A LOAN FROM BANK. AS THE ASSESSEE COULD NOT ARRANGE FOR THE LOAN, THE CAR WAS TAKEN BY SRI MOHANSINGH. IT WAS, FURTHER, SUBMITTED THAT THE CAR WAS NOT REGISTERED WITH THE RTO IN HIS NAME AND THE AMOUNT OF RS.1 LAKH HAS SINCE BEEN RECEIVED BACK AND CREDITED IN THE BOOKS OF ACCOUNT, THE ADDITION MADE ON THIS COUNT REQUIRES T O BE DELETED. 20.5 WE HAVE CONSIDERED THE ASSESSEE S SUBMISSION AS WELL AS PERUSED THE REASONING OF THE AUTHORITIES BELOW. THE ASSESSEE HAD 50 PRODUCED A STAMPED RECEIPT FROM SHARMA CARS PVT. LT D [REFER: PAGE 217 OF PB] AUTHENTICATING THAT HE HAD PAID AN ADVAN CE PAYMENT OF RS.1 LAKH AND SINCE HE COULD NOT ARRANGE FOR THE BA LANCE AMOUNT OF RS.80,000/- AS PROMISED, HE HAD SUBSEQUENTLY RETURN ED THE CAR TO ITS OWNER ETC., 20.6 TAKING INTO ACCOUNT THE TOTALITY OF THE ISSUE THAT HE HAD PRODUCED THE RECEIPT FOR ALLEGED TO HAVE PAID CASH OF RS.1 LAKH AND SUBSEQUENT RETURN OF THE VEHICLE WHICH APPEARED TO HAVE BEEN A USED CAR AND ALSO FOUND AT THE TIME OF SEARCH OPERA TION, THE ADDITION OF RS.1,80,000/- CANNOT BE SUSTAINED. ACCORDINGLY, WE HEREBY DELETE THE ADDITION OF RS.1,80,000/- MADE BY THE AO ON ACC OUNT OF PURCHASE OF SANTRO CAR. 21. GROUND NO.14: ADDITION OF RS.3 LAKHS BEING FICTITIOUS ENTRIES IN THE NAME OF BHARAT TEXTILE: 21.1 RS.3 LAKHS WERE MADE DEPOSITS IN CASH IN THE BANK ACCOUNTS OF THE ASSESSEES WIFE AND MOTHER OF RS.1. 5 LAKHS EACH AND ACCORDING TO THE AO, THE MONIES WERE ALLEGEDLY RECE IVED FROM BHARAT TEXTILES WHICH WERE THEN USED TO PURCHASE BANK DRAF TS IN ITS FAVOUR. 51 THE SOURCE OF MONEY WAS HELD BY THE AO TO BE THE UN EXPLAINED AFTER REJECTING THE ASSESSEES EXPLANATION THAT ENTRIES I N THE NAME OF THIS PARTY WERE REFLECTED IN THE ACCOUNTS OF THE FAMILY MEMBERS ETC. 21.2 IT WAS CONTENDED BEFORE THE CIT (A ) THAT THERE WERE ADEQUATE AND SUFFICIENT BALANCES IN THE BOOKS OF AC COUNT FROM WHERE MONEY WAS DEPOSITED AND COPIES OF CASH BOOK AS WELL AS BANK STATEMENTS WERE SHOWN TO THE AO WHO HAD VIRTUALLY R EJECTED THE ASSESSEES CLAIM. 21.3 CONSIDERING THE ASSESSEES CONTE NTIONS, THE CIT (A) HAD RECORDED HER FINDINGS THAT 14.2..SINCE IT IS ALREADY HELD BY ME IN PARAS ABOVE THAT THE BOOKS OF ACCOUNTS WRITTE N AT A LATER DATES ARE NOT RELIABLE, THE EXPLANATION GIVEN IS FOUND TO BE NOT ACCEPTABLE. WITHOUT A DIRECT LINK BETWEEN SOURCE OF MONEY AND T HE DEPOSITS IN CASH IN THE BANKS ON PARTICULAR DATES, THE INVESTED SUMS CANNOT BE HELD TO BE EXPLAINED AND ADDITION MADE FOR RS.3 LAK HS IS SUSTAINED. 21.4 BEFORE US, IT WAS CLAIMED THAT THERE WERE ADE QUATE AND SUFFICIENT CASH BALANCES AND HAVING PURCHASED DRAFT S, BANK STATEMENTS WERE ALSO PRODUCED. IT WAS, FURTHER, CL AIMED THAT THE AO WAS TOTALLY INCORRECT IN SAYING THAT THESE ENTRIES WERE NOT REFLECTED IN 52 THE BOOKS OF ACCOUNT EVEN THOUGH SUCH ENTRIES HAVE BEEN PERSONALLY SHOWN TO THE AO. IN CONCLUSION, IT WAS CONTENDED T HAT THERE WAS NO JUSTIFICATION IN MAKING THE ADDITION SINCE THERE WA S NO QUESTION OF ANY UNACCOUNTED INVESTMENTS AND DRAFTS HAVE BEEN PURCHA SED FROM THE CASH AVAILABLE AS PER CASH BOOK. 21.5 WE HAVE DULY CONSIDERED THE CONTE NTIONS OF THE ASSESSEE AND ALSO CAREFULLY EXAMINED THE ENTRIES IN THE CASH BOOK AND THE PASS BOOK OF THE PERSONS AS EXHIBITED AT PA GES 221 TO 288 OF PAPER BOOKS. WE ARE OF THE VIEW THAT SINCE THE DRA FTS HAVE BEEN PURCHASED FROM THE CASH AVAILABLE AT THE RELEVANT P ERIOD, THERE WAS NO QUESTION OF MAKING ANY ADDITION ON THIS COUNT. THE ADDITION OF RS.3 LAKHS IS, THEREFORE, DELETED. 22. GROUND NO.15: ADDITION OF RS.1,17,900/- AS UNACCOUNTED INVESTMENT IN SHARES: 22.1 REJECTING THE ASSESSEES CLAIM THAT THE SHARES BELONGED TO GAURANG MODI WHICH WERE KEPT WITH THE A SSESSEE FOR HELPING MODI TO ARRANGE FINANCE FOR ETC. THE AO NOT ED THAT THE EXPLANATION OF THE ASSESSEE WAS BASELESS FOR THE RE ASONS RECORDED IN HIS IMPUGNED ORDER AND, ACCORDINGLY, HELD THAT T HE INVESTMENT OF 53 RS.93,650/- IN THE NAME OF THE ASSESSEE, RS.21,250/ - AND RS.3,000/- IN THE NAMES OF MANJEITKAUR AND MAHENDRAKAUR RESPEC TIVELY WERE OUT OF UNDISCLOSED INCOME OF THE ASSESSEE. 22.2 THE CIT (A) TOOK A SIMILAR VIEW THAT THE APPELLANT HAD NOT MADE ANY ATTEMPT TO EXPLAIN THE ACQUISITION OF SHARES FROM AVAILABLE PROVED SOURCES OF INCOME WHILE AT THE SAM E TIME, THE CASH BALANCES ENTERED IN BOOKS OF ACCOUNTS WRITTEN LATER THAN ACTUAL EVENTS CANNOT BE TREATED AS RELIABLE BEING NOT A DA Y-TO-DAY RECORD OF TRANSACTIONS. IN FACT, THE BURDEN OF GIVING EXPLAN ATION WITH EVIDENCE IS ON THE APPELLANT IN PROCEEDINGS U/S 158BC. IN T HE ABSENCE OF PROVED EVIDENCE, THE SOURCE OF INVESTMENT BEING NOT ESTABLISHED, THE ADDITION MADE BY THE AO IS SUSTAINED. 22.3 IT WAS SUBMITTED BEFORE US THAT THIS WAS A CASE WHERE THE AO WAS MAKING ADDITION BY NOT ACCEPTING THE GEN UINENESS OF ENTRIES APPEARING IN THE COMPUTERIZED CASH BOOK. T HOUGH HE HAD VERIFIED THE ENTRIES, BUT TOOK A STAND TO REJECT TH E ASSESSEES CLAIM. IT WAS, FURTHER, CONTENDED THAT MERELY BECAUSE BOOKS W ERE WRITTEN OR RETURNS OF INCOME FILED SUBSEQUENTLY, DOES NOT CHAN GE THE CHARACTER OF GENUINENESS OF PURCHASE OF SHARES. IT WAS, THERE FORE, PLEADED THAT 54 THE ADDITION WAS MADE IN A FLIMSY MANNER WHICH REQU IRES TO BE DELETED. 22.4 WE HAVE CONSIDERED THE ASSESSEE S SUBMISSIONS AND ALSO PERUSED THE DETAILS OF INVESTMENTS MADE IN SHARES AS EXHIBITED AT PAGES 229 231 OF PAPER BOOK. MOST O F THE INVESTMENTS HAVE BEEN THROUGH CHEQUES, THE DETAILS OF WHICH WER E AVAILABLE AT PAGE 230 OF PB. 22.5 THE AO RECORDED HIS REASONING FOR REJECTING THE ASSESSEES CONTENTIONS AS UNDER: 18.3.4..THE SOURCE OF INVESTMENT IN THESE S HARES IS NOT FREE FROM DOUBT NOT EXPLAINED PROPERLY AND FOR THE REASONS DI SCUSSED IN DETAIL AT THE BEGINNING OF THIS ORDER. IT IS CLEAR THAT THE TRAN SACTIONS SHOWN IN THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ETC., OF THE INCO ME-TAX RETURN FILED AFTER SEARCH ARE NOT TO BE TAKEN UP THE FACE VALUE AND DESERVE O UTRIGHT REJECTION. 22.6 WE DO NOT AGREE WITH THE REASONING OF THE AO IN REJECTING THE ASSESSEES EXPLANATION WITHOUT ANALYZING THE SA ME AS TO WHY THE EXPLANATION CANNOT BE RELIED UPON ETC. IN THE ABSE NCE OF SUCH EXAMINATION ON THE PART OF THE REVENUE IN REJECTING THE ASSESSEES CLAIM IN A WHOLESALE MANNER, IN OUR CONSIDERED VIEW , DOESNT BRING ANY CREDIT TO THE REVENUE. 55 22.7 IN VIEW OF THE ABOVE AND IN KEE PING THE INTERESTS OF NATURAL JUSTICE AND FAIRNESS IN VIEW, THE DISALLOWA NCE IS RESTRICTED TO 65% I.E., RS.76,635/- IS SUSTAINED. THE ASSESSEE G ETS A RELIEF OF RS.41,265/-. 23. GROUND NO.16: ADDITION OF RS.1,01,000/- TREATING THE VALUE OF HOU SEHOLD ITEMS PURCHASED AS UNACCOUNTED AND UNEXPLAINED INVESTMEN T: 23.1 THE AO HAD MADE OUT A LIST, ACCO RDING TO WHICH, THE TOTAL VALUE OF HOUSEHOLD ARTICLES ARRIVED AT RS.1,0 1,000/- HAVING BEEN ACQUIRED OUT OF THE ASSESSEES UNACCOUNTED SOURCE O F INCOME DURING THE BLOCK PERIOD, THEREBY REJECTING THE ASSESSEES EXPLANATION. 23.2 THE CIT (A) HAD, AFTER CONSIDERING THE ASSESSEES CONTENTIONS, OBSERVED THAT 16.3 (ON PAGE 29) IT IS VERY APPARENT THAT THE APPELLANT HAS NOT TRIED TO EXPLAIN THE ACQUISIT ION OF THESE INDIVIDUAL ITEMS FROM AVAILABLE CASH BALANCES OR FR OM ALLEGED SAVINGS WHOSE EVIDENCE IS NOT ESTABLISHED. THEREFORE, MERE LY MAKING ENTRIES IN THE BOOKS OF ACCOUNT, WRITTEN AT A LATER DATE TH AN THE DATE OF ACTUAL TRANSACTIONS DOES (SIC) DO NOT PROVE THE ACQUISITIO N TO BE MADE FROM 56 EXPLAINED SOURCES. THE ADDITION MADE BY THE AO IS, THEREFORE, SUSTAINED. 23.3 THE ASSESSEE SUBMITTED THAT THE AO HAD NOT APPRECIATED THE ASSESSEES EXPLANATION ON THE GROUND THAT THE B OOKS WERE NOT FOUND DURING THE SEARCH AND ENTRY SHOWING ALL THE P URCHASES OF HOUSEHOLD ARTICLES FROM TIME TO TIME WAS NOT BELIEV ABLE. COPIES OF THE ENTRIES IN THE BOOKS SHOWING SUCH PURCHASES AND COPY OF BALANCE SHEET SHOWING SUCH ARTICLES WERE PRODUCED BEFORE TH E AO FOR VERIFICATION. IT WAS, FURTHER, SUBMITTED THAT NONE OF THE ARTICLES WERE PURCHASED FROM THE UNACCOUNTED INCOME AND, THEREFOR E, THE ADDITION REQUIRES TO BE DELETED. 23.4 WE HAVE CONSIDERED THE ASSESSEES CONTENTIONS AS WELL AS THE AOS STAND IN ADDING A SUM OF RS.1.01 LAKHS BEING INVESTMENTS IN HOUSEHOLD ARTICLES. A SALIENT FEATU RE WAS NOTICED IN THE PRICING OF THE ARTICLES SUCH AS TVS, FRIDGE, CA MERA, MISCELLANEOUS HOUSEHOLD ARTICLES AND THE PERIOD OF PURCHASES. HO W DID THE AO COME TO A CONCLUSION FOR EXAMPLE THAT AKAI TV 20 A ND CAMERA (JVG) WERE ACQUIRED IN THE YEARS 1996 AND 1997 AND PRICED THEM AT RS.9500/- AND RS.17000/ - RESPECTIVELY? ON THE BAS IS OF SUCH GUESS 57 WORK ADOPTED BY THE AO IN PRICING SUCH ARTICLES, TH E ASSESSEE HAD ALSO FOLLOWED THE AO IN SUIT TO PRICING SUCH IDENT ICAL FIGURES IN HIS BALANCE SHEETS [REFER: P 232 PB], APPARENTLY TO STR IKE A BALANCE. 23.5 IT IS A COMMON PHENOMENON FOR A PERSON OF APP ELLANTS STATURE TO ACCUMULATE HOUSEHOLD APPLIANCES, ENTERTA INMENT EQUIPMENTS AND OTHER ELECTRONIC ITEMS DURING A PERI OD OF TIME EITHER BY WAY OF PURCHASE, GIFTS ETC. FURTHER, THERE IS NO EVIDENCE TO ESTABLISH THAT THESE GOODS ARE PURCHASED OUT OF UNE XPLAINED SOURCE. THE AMOUNT OF RS.1,01,000/- IS ALSO QUITE NEGLIGIBL E FOR AN ADDITION TO BE MADE ON THIS COUNT. THEREFORE, WE HEREBY DELETE THE ADDITION OF RS.1,01,000/- MADE ON ACCOUNT OF UNEXPLAINED INVEST MENT. 24. LET US NOW PROCEED TO ADJUDICATE THE REVENUES APPEAL AS UNDER: II. IT (SS)A NO.331/A/2004BY THE REVENUE: (1) DELETION OF ADDITION OF INTEREST OF RS.20.7 LAKHS MADE ON ACCOUNT OF INTEREST EARNED ON A LOAN OF RS .20 LAKHS ADVANCED TO JITENDRA GAJJAR ; 24.1 AT THE OUTSET, WE WOULD LIKE TO POIN T OUT THAT THE ALLEGED LOAN AMOUNT OF RS.20 LAKHS ADVANCED BY THE ASSESSEE TO SHRI JITENDRA GAJJAR HAS SINCE BEEN DELETED BY THIS BENC H IN THE 58 ASSESSEES APPEAL (SUPRA) (GROUND NO.4) FOR THE REA SONS RECORDED THEREIN. THUS, THE REVENUES GRIEVANCE FOR HAVING DELETED RS.20,70,000/- BEING INTEREST ON THE ALLEGED LOAN B ECOMES REDUNDANT AND, ACCORDINGLY, THIS GROUND IS DISMISSE D. 25. (2) DELETION OF ADDITION OF RS.14.25 LAKHS BEING INTER EST EARNED ON A LOAN OF RS.5 LAKHS ADVANCED TO SHRI YOGISH RAVAL ; 25.1 SIMILARLY, THIS GROUND OF THE REVE NUE ALSO BECOMES SUPERFLUOUS AS THIS BENCH HAS IN ASSESSEES APPEAL (SUPRA) (GROUND NO.5) DELETED THE ADDITION OF RS.5 LAKHS MADE IN TH E HANDS OF THE ASSESSEE. THEREFORE, THIS GROUND OF THE REVENUE AL SO FAILS. 26. (3) DELETION OF ADDITION OF RS.6.5 LAKHS BEING INTEREST EARNED ON A LOAN OF RS.1.5 LAKHS ADVANCED TO SHRI SANJEEV SHUKLA ; 26.1 IN THE ASSESSEES APPEAL (SUPRA ) (GROUND NO.6) WITH REGARD TO THE ADVANCE OF RS.1.5 LAKHS TO SHRI SANJE EV SHUKLA HAS BEEN DELETED FOR THE REASONS RECORDED THEREIN. THE REFORE, THE REVENUES GROUND ON THE DELETION OF INTEREST ON THE NON-EXISTING LOAN AMOUNT BECOMES UNCALLED-FOR. IT IS ORDERED AC CORDINGLY. 59 27. (4) DELETION OF ADDITION OF RS.5 LAKHS ON ACCOUNT OF IN TEREST EARNED ON A LOAN OF RS.5.51 LAKHS ADVANCED TO JAYSHEEL A PATEL 27.1 HERE TOO, FOR THE REASONS RE CORDED IN THE ASSESSEES APPEAL REFERRED SUPRA (GROUND NO.11), THIS BENCH TO OK A DECISION TO DELETE THE ENTIRE ADDITION OF RS.5.51 LAKHS MADE IN THE HANDS OF THE ASSESSEE. ONCE THE LOAN OF RS.5.51 LAKHS HAS BEEN DELETED, THE QUESTION OF SUSTAINING THE INTEREST ON NON-EXISTING ADVANCE DOESNT ARISE. ACCORDINGLY, THIS GROUND OF THE REVENUE ALS O BECOMES REDUNDANT. IT IS ORDERED ACCORDINGLY. 28. WE SHALL NOW ADJUDICATE THE GRIEVANCES OF TH E ASSESSEE [SMT. MANJEET KAUR I SURI]. III. IT (SS)A NO.318/A/2004BY SMT. MANJEETKAUR I SURI : 28.1 GROUND NO.1: ADDITION OF RS.8,98,847/- BEING OPENING CAPITAL BAL ANCE AS ON 1.4.1995: 28.2 THE AO HAD POINTED OUT THAT T HE CLOSING CAPITAL FOR THE FY 1997-98 DOES NOT TALLY WITH THE OPENING CAPITAL OF AY 1998-99 WHILE CLOSING CAPITAL FOR FY 1999-00 DOES NOT TALLY WITH THE OPENING 60 CAPITAL FOR FY 2000-01. SIMILARLY, THERE WERE DISC REPANCIES IN THE CASH BALANCES REFLECTED IN FY 1997-98 AND FY 2000-0 1 AND IN THE INTERVENING PERIODS. THE AO ALSO FOUND THAT THE AS SESSEES ALLEGED EARNINGS FROM COOKING AND STITCHING INCOME WAS VERY LOW BEING ONLY RS.5600 IN AY 2000-01 AND THE ALLEGED INCOME FROM T UITIONS WAS ALSO VERY LOW AT RS.5,000/- ONLY IN FY 1999-2000. THE A O THEREFORE WAS OF THE VIEW THAT THE RETURNS OF INCOME FILED WERE ONLY A MAKE BELIEVE STORY AND THE ALLEGED CAPITAL BALANCE OF RS.8,98,84 7/- AT BEGINNING OF BLOCK PERIOD WAS NOT PROVED AND THE DETAILS FILED A ND RETURNS FILED WERE ONLY TO EXPLAIN INVESTMENT MADE IN PROPERTIES AND IN FACT THEY DID NOT REVEAL THE ACTUAL POSITION. 28.3 REJECTING THE ASSESSEES CONTENTION THAT THE CAPITAL ACCOUNT HAS BEEN WORKED OUT EACH YEAR BY SHOWING TH E RECEIPTS AND PAYMENTS MADE DURING THE YEAR WHICH ARE WHOLLY AND EXCLUSIVELY TALLYING WITH THE BANK BOOK. WITH REGARD TO CASH T RANSACTIONS, THEY HAVE BEEN RECORDED FROM THE NOTHINGS KEPT AS WELL A S THE RE- COLLECTION OF FACTS AND REALITIES .THE CAPITAL ACC OUNT OF THE BALANCE SHEET REPRESENT TRUE AND CORRECT STATE OF AFFAIRS A ND DO NOT MERIT ANY LOOK WITH SUSPICION OR DOUBT ETC., THE AO HAD MADE THE ADDITION, 61 HOLDING THAT THE AMOUNT REPRESENTED UNDISCLOSED INC OME, PARTICULARLY IN VIEW OF THE FACT THAT THE ASSESSEE WAS ALSO MAKI NG WITHDRAWALS FOR HOUSEHOLD EXPENSES FROM VERY NOMINAL RECEIPTS WHICH WERE NOT MORE THAN RS.2 LAKHS FOR THE LONG PERIOD FROM AY 1996-97 TO AY 2001-02. 28.4 AFTER CONSIDERING THE ASSESSEES S UBMISSION AS RECORDED IN HER IMPUGNED ORDER, THE CIT (A) HAD OBSERVED THA T: 2.3. (ON PAGE 4).I AM OF THE CONFIRMED OPINION TH AT THE FACT OF NO REGULAR BOOKS OF ACCOUNTS BEING MAINTAINED EARLIER WAS DETE CTED DURING THE COURSE OF THE SEARCH PROCEEDINGS LEADING TO NECESSARY QUERIES AND INVESTIGATION, SO ALL ADDITIONS MADE EMANATE FROM SEARCH PROCEEDINGS. IT IS AN ADMITTED FACT THAT REGULAR BOOKS OF ACCOUNTS WERE NEITHER MAINTAINED N OR WAS ANY CAPITAL BALANCE ACTUALLY DRAWN IN EARLIER YEARS SO THAT EVEN IF THE SE COMPUTERIZED BOOKS ARE NOT REJECTED, THEY CANNOT AUTOMATICALLY BE ACCEPTED AS HAVING BEING VERIFIED AND AS SUCH BEYOND DOUBT. THEREFORE, COUPLED WITH THE FAC T THAT THERE WERE NO RETURNS OF INCOME FILED UP-TO AY 1999-2000, THERE IS NO POS ITIVE EVIDENCE THAT THE APPELLANT DID HAVE ANY SUCH HEAVY CAPITAL AS IS CLA IMED AT RS.8,89,847/- AS ON 1.4.1995. IN THE ABSENCE OF ANY POSITIVE EVIDENCE AND THE FACT THAT THE CLAIMED INCOMES OVER ASSESSMENT YEAR 1996-97 TO 2000-01 ARE LESS THAN RS.2 LAKHS, THERE DOES NOT APPEAR TO BE ANY SOUND BASIS FOR THE ALLEG ED CAPITAL BALANCE. THE ADDITION MADE IS THEREFORE FOUND TO BE JUSTIFIED AN D IS SUSTAINED. 28.5 BEFORE US, IT WAS CONTENDED THAT THE ASSESSEE HAD SHOWN VARIOUS INCOME AND HAD EXPLAINED VARIOUS TRAN SACTIONS IN THE BOOKS OF ACCOUNT. NONE OF THE ENTRIES IN THE BOOKS OF ACCOUNT HAVE BEEN CHALLENGED BY THE AO OR PROVED BOGUS OR INCORR ECT. IT WAS, FURTHER, SUBMITTED THAT WHEN THE BOOKS OF ACCOUNT R EFLECT ALL THE TRANSACTIONS AND WHEN THE AO WAS NOT IN A POSITION TO DISPROVE ANY OF THE FINANCIAL TRANSACTIONS, THE OPENING CAPITAL CORRECTLY ARRIVED AT 62 CANNOT BE DISBELIEVED ON THE GROUND THAT SUCH ACCUM ULATION OF CAPITAL WAS NOT POSSIBLE. IT WAS, FURTHER, ADVOCAT ED THAT THE ASSESSEE IS A LADY OF 43 YEARS OLD FROM PUNJAB REGION AND AS PER THEIR FAMILY TRADITION AND CUSTOM SHE HAD INVOLVED IN THE ACTIVI TIES OF STITCHING, COOKING AS WELL AS GIVING TUITION TO YOUNG CHILDREN . THE INCOME BEING BELOW TAXABLE, NO RETURN OF INCOME WAS FILED. OUR ATTENTION WAS ALSO DRAWN TO THE FACT THAT DURING THE COURSE OF RECORDI NG THE STATEMENT ON OATH, SHE HAD CATEGORICALLY STATED THAT SHE HAS BEE N GIVING TUITIONS TO CHILDREN FROM 1 12 STANDARDS AND FROM SUCH ACTIVI TY ALONE SHE WAS GETTING A MINIMUM OF RS.2500/-. IT WAS, FURTHER, C ONTENDED THAT AS THE ENTIRE FINANCIAL TRANSACTIONS SHOWN IN THE CASH BOOK WERE TRUE AND GENUINE AND THE AO WAS NOT IN A POSITION TO PRO VE THE SAME BEING BOGUS OR NON-GENUINE. IN CONCLUSION, IT WAS SUBMITTED THAT THE AMOUNT SHOWN WAS OPENING CAPITAL BALANCE OF RS.8.98 LAKHS WAS FULLY EXPLAINED. 28.6 WE HAVE ATTENTIVELY CONSIDERED T HE SUBMISSION OF THE LEARNED AR AND ALSO HEARD THE VERSION OF THE LEARNE D D R PRESENT AT THE TIME OF HEARING. 63 28.7 ON A DECISIVE PERUSAL OF THE REASONI NG OF THE AO IN REJECTING THE ASSESSEES CLAIM, IT HAS BEEN OBSERVE D THAT THE COMPUTERIZED BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT REJECTED BY THE AO, SUCH AN EVENT, THE REASONS FOR REJECTING TH E ASSESSEES CLAIM OUGHT TO HAVE SPELT OUT. ON HER PART, THE LEARNED CIT (A) HAD MECHANICALLY SUSTAINED THE ADDITION WITH A SWEEPING REMARK THAT EVEN IF THESE COMPUTERIZED BOOKS ARE NOT REJECTED; THEY CANNOT AUTOMATICALLY BE ACCEPTED AS HAVING BEEN VERIFIED A ND AS SUCH BEYOND DOUBT. THIS OBSERVATION OF THE CIT (A), TO VIEW IT MILDLY, IS INTRIGUING. IT IS AN UNDISPUTED FACT THAT NO REGULAR BOOKS OF A CCOUNT HAVE BEEN MAINTAINED, CONSIDERING THE VOLUME OF TRA NSACTIONS WHICH TOOK PLACE DURING THE INTERVENING PERIOD. HOWEVER, THIS CANNOT BE A VALID REASON TO OUT-RIGHTLY REJECTING THE LEGITIMAT E CLAIM OF THE ASSESSEE IN ONE GO. 28.8 THE ASSESSEE BEING AN EDUCATED LADY C OUPLED WITH PUNJABI FAMILY TRADITION AND CUSTOM TENDS TO GET HE RSELF INVOLVED SUCH ACTIVITIES LIKE COOKING/STITCHING BESIDES GIVING TU ITION TO YOUNG CHILDREN WHEREBY SHE WOULD HAVE NETTED A SIZEABLE EARNING. T HE LEGITIMATE CONTENTIONS OF THE ASSESSEE CANNOT BE APPROACHED WI TH A PRE- DETERMINED THINKING AND A CLOSED MIND. ANY ISSUE F OR THAT MATTER 64 NEEDS TO BE ANALYZED WITH AN OPEN MIND KEEPING IN V IEW THE NATURE AND CIRCUMSTANCE UNDER WHICH SUCH MATTER SURFACES A ND THEN ONLY FORM AN OPINION AS TO WHETHER THE CONTENTION IS GEN UINE OR OTHERWISE. HOWEVER, IN THE PRESENT CASE, NO SUCH AN EXERCISE A PPEARS TO HAVE BEEN APPLIED EITHER BY THE AO OR BY THE CIT (A). 28.9 REVERTING BACK TO THE ISSUE ON HA ND, ON A CRITICAL PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.1996 (PAGE 155 OF PB), IT WAS NOTICED THAT THE ASSESSEE SHOWN A CAPITAL OF RS.898847/-. IF THE REVENUE WERE TO DISBELIEVE THE AVERMENT OF THE ASSESSEE, THE ASSESSEE SHOULD HAVE BEEN ASKED TO EX PLAIN THE STATE OF AFFAIRS; INSTEAD, IT HAD ARRIVED AT A UNILATERAL CONCLUSION THAT THE EXPLANATION OF THE ASSESSEE WAS UNBELIEVABLE. NO D OCUMENTARY PROOF HAS BEEN BROUGHT ON RECORD TO BELIE THE ASSES SEES ASSERTION. THERE WAS EVERY POSSIBILITY ON THE PART OF THE ASSE SSEE FOR MAKING SUBSTANTIAL EARNING FROM SKILLFUL WORK OF STITCHING , COOKING ETC., IT WAS ALSO NOT UNCOMMON IN THE MIDDLE CLASS FRATERNITY OF AHMEDABAD TO SEND THEIR WARDS IN LARGE NUMBERS FOR PRIVATE COACH ING BEING GIVEN BY WOMENFOLK, KEEPING THE PERSONAL SAFETY OF THEIR FEM ALE CHILDREN IN MIND. 65 28.10 TAKING INTO ACCOUNT THE ABOVE FACTS AND ALSO THE CIRCUMSTANCES OF THE ISSUE, WE ARE OF THE CONSIDERE D VIEW THAT THERE WAS NO JUSTIFICATION IN ADDING A SUM OF RS.899847/- . IT IS ACCORDINGLY DELETED. 29. GROUND NO.2: ADDITION OF RS.5,23,221/- BEING DIFFERENCE BETWEEN OPENING AND CLOSING CAPITAL OF AY 2000-01 AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD: 29.1 THE AO HAD ADDED RS.5,23,221 /- BEING DIFFERENCE BETWEEN OPENING AND CLOSING CAPITAL AS ON 31.3.2000 AT RS.5,96,949/- AND THE OPENING CAPITAL AS ON 1.4.200 0 AT RS.11,20,168/- AFTER REJECTING THE ASSESSEES CLAIM THAT THERE WAS NO MALA-FIDE INTENTION TO GIVE ANY INCORRECT OR MISLEA DING INFORMATION AND DETAILS. 29.2 AFTER DUE CONSIDERATION OF TH E ASSESSEES SUBMISSION, THE CIT (A) WAS OF THE VIEW THAT: 3.3SINCE THE BOOKS OF ACCOUNTS WERE NOT ACTU ALLY WRITTEN DURING THE PERIOD PRECEDING THE BLOCK ASSESSMENT, THE COMP UTERIZED VERSION OF THE SAME AS IS GIVEN NOW, IS NOT AUTOMATICALLY ACCEPTABLE ME RELY BECAUSE IT HAS CERTAIN RECORDING OF TRANSACTIONS REFLECTED IN BANK ACCOUNT S, SINCE THE OTHER ENTRIES MADE REGARDING RECEIPTS IN CASH AND WITHDRAWALS OF CASH ARE NOT SUPPORTED BY EVIDENCES. ONLY BECAUSE THE AO HAS NOT SPECIFICAL LY REJECTED THE BOOKS OF ACCOUNTS DOES NOT MEAN THAT THE SAME HAVE BEEN ACCE PTED OR THAT THERE ARE NO ERRORS IN THEM. THE VERY FACT THAT THE COMPUTERIZE D BOOKS ARE NOT A REGULAR 66 RECORD OF THE TRANSACTIONS SOUGHT TO BE DEPICTED TH EREIN LEADS ME TO THE CONCLUSION THAT THEY ARE NOT ACCEPTABLE. THEREFORE , AN ATTEMPT BY THE APPELLANT NOW IN APPEAL PROCEEDINGS CLAIMING THAT CERTAIN LIA BILITIES FILED IN I T RETURNS WERE TO BE IGNORED WHILE ADDING LIABILITIES OF SUCH UNRELIABLE BOOKS OF ACCOUNTS AND SIMILARLY TREATING SOME OF THE VARIOUS ASSETS I N DIFFERENT WAYS TO CALCULATE THE CAPITAL ACCOUNT RECONCILIATION IS NOT AT ALL AN ACCEPTABLE PREPOSITION. THE CLAIMS ARE NOT OPEN TO VERIFICATION FROM REGULARLY WRITTEN BOOKS OF ACCOUNT WHICH ARE MISSING AND NOT WRITTEN, AND SUCH PRESENTATION AS MADE NOW AS PER PAGE 145A INSERTED DURING THE COURSE OF APPEAL PROCEEDIN GS ON 4.10.2004 IS A MERE JUGGLERY OF FIGURES IN ORDER TO EXPLAIN THE BALANCE SHEET. 3.4. I THEREFORE, DO NOT FIND SUBSTANCE IN THE AR GUMENTS ADVANCED WHICH ARE REJECTED. HOWEVER, IN AS MUCH AS THE APPELLANT DID FILE RETURNS OF INCOME FOR A.YRS. 1999-2000 & 2000-2001 AS REFERRED TO IN THE BLOCK ASSESSMENT ORDER AND NO ACTION U/S 147 HAS BEEN TAKEN IN THOSE YEARS, TH E AO IS DIRECTED TO VERIFY THE CAPITAL ACCOUNT REFLECTED AS ON 31.3.2000 IN THE OR IGINALLY FILED RETURN OF INCOME AND TO GIVE CREDIT FOR THE SAME AND ADD ONLY THE RE SULTANT DIFFERENCE BETWEEN THAT BALANCE AND RS.11,20,168/- AS INCOME FROM UNDISCLOS ED SOURCES 29.3 DURING THE COURSE OF HEARING, IT WAS REITERATED MORE OR LESS WHAT HAS BEEN PRESENTED BEFORE THE FIRST AP PELLATE AUTHORITY. IN FURTHERANCE, IT WAS SUBMITTED THAT THE RECONCILI ATION OF BALANCE SHEET DIFFERENCE AS ON 31.3.2000 HAS NOT BEEN DULY CONSIDERED BY THE REVENUE. 29.4 THE VERSION OF THE LEARNED D R WAS HEARD. 29.5 WE HAVE DULY CONSIDERED THE RI VAL SUBMISSIONS. ON A CRITICAL PERUSAL OF THE FINDINGS OF THE CIT (A), IT HAS BEEN OBSERVED IN HER CONCLUSION THAT (AT THE COST OF REP ETITION): HOWEVER, IN AS MUCH AS THE APPELLANT DID FILE RETURNS OF INCOME FOR A.YRS. 1999-2000 & 2000- 2001 AS REFERRED TO IN THE BLOCK ASSESSMENT ORDER A ND NO ACTION U/S 147 HAS BEEN 67 TAKEN IN THOSE YEARS, THE AO IS DIRECTED TO VERIFY THE CAPITAL ACCOUNT REFLECTED AS ON 31.3.2000 IN THE ORIGINALLY FILED RETURN OF INCOME AND TO GIVE CREDIT FOR THE SAME AND ADD ONLY THE RESULTANT DIFFERENCE BETWEEN THAT BALA NCE AND RS.11,20,168/- AS INCOME FROM UNDISCLOSED SOURCES 29.6 MOREOVER, THE LEARNED AR, DURIN G THE COURSE OF HEARING, DREW THE ATTENTION OF THIS BENCH TO THE EF FECT THAT THE RECONCILIATION OF BALANCE SHEET DIFFERENCE AS ON 31 .3.2000 HAS NOT BEEN DULY CONSIDERED BY THE REVENUE. 29.7 TAKING INTO ACCOUNT THE DIREC TION OF THE CIT (A) TO THE AO AS CONTAINED IN PARA 3.4. OF HER FINDINGS (S UPRA) AND ALSO THE LEARNED A R PLEADED THAT RECONCILIATION STATEME NT OF THE ASSESSEE HAS NOT BEEN CONSIDERED WHILE DECIDING THE ISSUE, WE ARE OF THE FIRM VIEW THAT THIS ISSUE SHOULD BE LOOK ED INTO BY THE AO AFRESH AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AFTER AFFORDING ADEQUATE OPPO RTUNITY TO THE ASSESSEE OF BEING HEARD. TO FACILITATE THE AO TO D O THE ABOVE EXERCISE AS DIRECTED, THIS ISSUE IS REMITTED BACK T O THE FILE OF THE AO. IT IS ORDERED ACCORDINGLY. 68 30. GROUND NO.3: ADDITION OF RS.3,35,000/- AS UNEXPLAINED CASH CREDI TS: RS.1,00,000: 30.1 BEFORE THE CIT (A), IT WAS C ONTENDED THAT 4.1(ON PAGE 7).THE ADDITIONS MADE WERE TOTALLY UNJUSTIFIED BECAUSE THERE WAS NO DEPOSIT FROM SAGAR CONSULTANTS WHERE THE ASS ESSEE HAD PAID EARLIER RS.2,25,000/- TO SAGAR CONSULTANTS. COPY OF THE LE DGER ACCOUNT IS ON PAGE 158. AS AGAINST THIS AMOUNT GIVEN THE SAID PARTY, SAGAR CONSULTANTS ALLOTTED A FLAT ON 12 TH MARCH FOR RS.3,15,000/-, COPY OF THE PAPERS OF ALL OTMENT OF FLAT FOR RS.3,15,000/- ARE ON PAGE 159 TO 162. THE BALANCE AMOUNT OF RS.1,00,000/- TO BE PAID AGAINST THE ALLOTMENT OF SAID FLAT WAS PAID BY THE APPELLANT ON 6.1.1998 AND COPY OF RECEIPTS ARE ON PAGE 156 AND 157. THUS, TH E ENTIRE BASIS OF ADDITION OF DEPOSIT OR UNACCOUNTED CASH CREDIT IS TOTALLY WRONG . RS.40,000: PRINCY SURI BEING MINOR AND HER INCOME HAS TO BE ADDED IN THE INCOME OF FATHER OR MOTHER WHOSE INCOME IS GREATER AND IN VIE W OF THE PROVISIONS OF SEC.64, THE ASSESSING OFFICER HAD OCCASION TO ADD SUCH INCO ME IF HE WAS NOT SATISFIED ABOUT THE FINANCIAL TRANSACTIONS IN THE BOOKS. AS T HE BOOKS OF ACCOUNTS OF PRINCY SURI ARE FULLY EXAMINED AND ARE NOT REJECTED OR DISBELIEVED AND HER STATUS AND GENUINENESS BEING ACCEPTED BY THE ASSESSING OFF ICER, THERE CAN BE NO BSIS FOR ADDITION RS.1,00,000: AS REGARDS KAMLABEN SOMANI, IT WAS SUBMITTED THAT THIS DEPOSIT HAS BEEN RECEIVED PRIOR TO BLOCK PERIOD, WHICH IS BEYOND BLO CK PERIOD AS IT PERTAINS TO AY 1995-96. RS.95,000: IN FACT NO DEPOSIT IS RECEIVED FROM PARTY LIKE SHR I UPENDRA MISTRY OR ANKU TRADERS. EARLIER THE ACCOUNTANT BY MISTAKE IN THE OLD BOOK HAD SHOWN SUCH DEPOSIT. BUT NOW IN THE NEW COMPUTERIZED RE-WRITTE N BOOKS, THERE IS NO SUCH DEPOSIT. THE ASSESSING OFFICER IS RELYING HEAVILY ON THE NEW COMPUTERIZED BOOK AND WHEN THERE IS NO SUCH DEPOSIT IN THE SAME, THE ADDITION CANNOT BE MADE. NO EXPLANATION IS POSSIBLE AS TO HOW SUCH DEPOSIT WAS SHOWN BY THE ACCOUNTANT AT THAT TIME IN THE OLD HANDWRITTEN BOOK BUT THE FACT IS THAT NO SUCH DEPOSIT WAS EVER RECEIVED BY THE ASSESSEE FROM ANKU TRADERS AND WHEN THERE IS NO SUCH DEPOSIT, NO ADDITION OF UNACCOUNTED CASH CREDIT U/S 68 CAN B E MADE. THE VERY 69 REQUIREMENT FOR THE ADDITION U/S 68 IS ABSENT AND, THEREFORE, THE ADDITION BE DELETED. 30.2 AFTER DUE CONSIDERATION OF TH E ASSESSEE UNDER VARIOUS HEADS REFERRED ABOVE, THE CIT (A) HAD RECORDED HER FINDINGS THUS: 4.2. (ON PAGE 9)..IN VIEW OF THE EXPLANATION GIVEN, IT IS SEEN THAT THERE IS IN FACT NO DEPOSIT FROM SAGAR CONSULTANTS BUT THE AO HAS, HOWEVER, NOT EXAMINED THE SOURCE OF THE AMOUNT OF RS.1,00,000/- CLAIMED TO BE PAID ON 6.1.1998. SINCE IN FACT, THE APPELLANTS COMPUTERI ZED BOOKS OF ACCOUNT WERE NOT RELIABLE AND THERE IS NO APPARENT EXPLANATION FOR T HE SOURCE OF THE ALLEGED PAYMENT, THE ADDITION MADE IS SUSTAINED AS REPRESEN TING UNDISCLOSED INCOME INVESTED IN THE FLAT. AS REGARDS, PRINCY I SURI, I HAVE ALREADY HELD THAT THE SUBSEQUENTLY WRITTEN BOOKS OF ACCOUNT ARE NOT OPEN TO VERIFICATION AND THEY ARE NOT GOOD EVIDENCES BEING NOT A REGULAR RECORD OF TH E TRANSACTIONS REFERRED TO THEREIN. THEREFORE, ADDITION OF RS.40,000/- IS CON FIRMED BEING AN UNPROVED DEPOSIT FROM A MINOR DAUGHTER. AS REGARDS LOAN FRO M KAMLABEN SOMANI, THERE IS NO EVIDENCE IN THE FORM OF CONFIRMATION FROM THE CO NCERNED PARTY REGARDING THE DATE OF DEPOSIT TO ESTABLISH THAT IT WAS RECEIVED B EYOND THE BLOCK PERIOD. IN THE ABSENCE OF ANY CONFIRMATION, THE ADDITION MADE OF T HIS AMOUNT OF UNSECURED LOAN IS SUSTAINED. AS REGARDS ANKU TRADERS, THE EXPLANA TION GIVEN IS NOT FOUND TO BE SATISFACTORY. THIS DEPOSIT HAD APPARENTLY ADMITTED TO HAVE BEEN SHOWN IN THE EARLIER ACCOUNTS AND OBVIOUSLY IN THE EARLIER FILED RETURNS AND, THEREFORE, REPRESENTATION MADE AND BASED ON THE SUBSEQUENTLY W RITTEN COMPUTERIZED BOOKS OF ACCOUNT WILL NOT OVERRIDE THE DETAILS GIVEN IN T HE EARLIER RETURNS FILED. THE UNVERIFIABLE COMPUTERIZED BOOKS OF ACCOUNTS CANNOT BE MADE THE BASIS FOR EXPLANATION AS GIVEN. THE ADDITION MADE IS THEREFO RE SUSTAINED. 30.3 DURING THE COURSE OF HEARIN G, IT WAS REITERATED MORE OR LESS WHAT WAS PRESENTED BEFORE THE FIRST APPELLA TE AUTHORITY. IT WAS, FURTHER, PLEADED THAT SINCE THE ADDITIONS WERE MADE WITHOUT TAKING INTO ACCOUNT THE EXPLANATION OFFERED BY THE ASSESSEE, THE SAME MAY BE DELETED. 70 30.4 RS.1,00,000 SAGAR CONSULTANTS: 30.5 WE HAVE CONSIDERED THE ASSE SSEES SUBMISSION AS WELL AS THE REASONING OF THE AUTHORITIES BELOW. ON PERUSAL OF THE EVIDENCES PRODUCED BY THE ASSESSEE, IT HAS BEEN OBS ERVED THAT SAGAR CONSULTANTS HAD DULY ACKNOWLEDGED THE RECEIPT S OF RS.25,000/- AND RS.75,000/- VIDE ITS RECEIPTS PLACE D AT PAGES 168 & 169 OF PB. THE AMOUNTS HAVE BEEN DULY REFLECTED IN THE CASH BOOK OF THE ASSESSEE ON PAGE 97 OF THE PAPER BOOK. IT I S PERTINENT TO MENTION HERE THAT THE REVENUE HAD NEITHER REJECTED THE COMPUTERIZED BOOKS OF ACCOUNT PRODUCED AT THE TIME OF BLOCK ASSE SSMENT PROCEEDINGS NOR RELIED ON THE SAME, BUT, WITH A SWE EPING REMARK OF THE CIT (A) IN HER IMPUGNED ORDER DISPUTE THAT THE SUBSEQUENTLY WRITTEN BOOKS OF ACCOUNT ARE NOT OPEN TO VERIFICATI ON AND THEY ARE NOT GOOD EVIDENCES BEING NOT A REGULAR RECORD OF THE TR ANSACTIONS , THE ADDITION HAS BEEN RESORTED TO. HOWEVER, WE TEND TO DISAGREE WITH THEIR PERCEPTIONS. THEY OUGHT TO HAVE RECORDED WHE N THE COMPUTERIZED BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT REGECTED ALTOGETHER THEN AS TO WHY THE ASSESSEES BOOKS OF A CCOUNT CANNOT BE RELIED UPON? SINCE THE ASSESSEE HAD PRODUCED ACKN OWLEDGMENTS FOR HAVING PAID A SUM OF RS.1 LAKH WHICH HAVE ALSO BEEN DULY 71 REFLECTED IN HER BOOKS OF ACCOUNTS [ALSO HAVING SUF FICIENT FUNDS AT HER COMMAND], THERE WAS NO PLAUSIBLE CAUSE TO REJECT TH E LEGITIMATE CLAIM OF THE ASSESSEE. IN ESSENCE, THE ADDITION OF RS.1 LAKH STANDS DELETED. 30.6 RS.40,000 PRINCY I SURI: 30.7 THE AO HAD ADDED RS.40000/- O N THE PREMISE THAT THERE WAS NO CONFIRMATION LETTER FROM THE ASSESSEE IN CONNECTION WITH THE DEPOSIT AND, THEREFORE, NOT ACCEPTABLE AS GENUI NE. 30.8 AT THE OUTSET, WE WOULD LIKE T O POINT OUT THAT THE ALLEGED TRANSACTION TOOK PLACE ON 6.5.1995 WHICH WA S, IN OUR VIEW, OUTSIDE THE AMBIT OF BLOCK PERIOD [1.4.1996 TO 6.9. 2001]. IT COULD NOT ALSO BE ASCERTAINED AS TO HOW THE AO HAD VENTURED T O DISALLOW RS.40,000/- WHEN THE ALLEGED TRANSACTION TOOK PLACE WAY BACK ON 6.5.1995 [REFER: P 159 & 160 OF PB]. THUS, IN OUR CONSIDERED VIEW, THIS ADDITION DOESNT HAVE LEGS TO STAND. 30.9 RS.1,00,000 KAMLABEN SOMANI: 30.10 THIS ADDITION WAS MADE BY THE A O ON THE PREMISE THAT THERE WAS NEITHER ANY CONFIRMATION NOR DETAILS IN C ONNECTION WITH THIS ALLEGED LOAN. 72 30.11 IN SPITE OF THE ASSESSEES A SSERTION THAT THE DEPOSIT HAS BEEN RECEIVED BACK PRIOR TO BLOCK PERIOD AS IT PERTAINED TO THE AY 1995-96, THE ADDITION HAS BEEN RESORTED TO AND, SUB SEQUENTLY, SUSTAINED. 30.12 IT WAS SUBMITTED BEFORE US TH AT THE TRANSACTION TOOK PLACE PRIOR TO THE BLOCK PERIOD AND TO AUTHENTICATE IT, A COPY OF LEDGER ACCOUNT IN RESPECT OF KAMLABEN SOMANI WAS PRODUCED [REFER: P 161 OF PB]. ACCORDINGLY, THIS ADDITION ALSO FAILS. 30.13 RS.95,000 ANKU TRADERS: 30.14 THE AO HAD RESORTED TO MAKE THIS A DDITION ON THE GROUND THAT THERE BEING NO CONFIRMATION LETTER. 30.15 DURING THE COURSE OF HEARING , IT WAS PLEADED THAT NO SUCH DEPOSIT EXISTS ON THE REVISED COMPUTERIZED BOO KS OF ACCOUNT AND, THEREFORE, PLEADED THAT THIS ADDITION DESERVES DELETION. 30.16 HOWEVER, WE ARE DECLINED TO AGRE E WITH THE ASSESSEES CONTENTIONS. THE ASSESSEE HAD, IN FACT, CONCEDED B EFORE THE CIT (A) THAT HER ACCOUNTANT BY MISTAKE HAD SHOWN SUCH DEPOS IT IN THE OLD BOOK, HOWEVER, PLEADED MAGNANIMOUSLY THAT NO EXPLAN ATION COULD BE 73 POSSIBLE AS TO HOW SUCH DEPOSIT WAS SHOWN BY HER AC COUNTANT AT THAT RELEVANT TIME OF WRITING THE OLD HANDWRITTEN BOOK U NDER THE NAME OF ANKU TRADERS. THIS ARGUMENT OF THE ASSESSEES A.R DOESNT HOLD WATER. WHEN THERE WAS AN ENTRY EITHER IN THE OLD B OOK OR IN THE COMPUTERIZED BOOK, THE ASSESSEE WAS DUTY BOUND TO E XPLAIN THE CIRCUMSTANCES UNDER WHICH THE ENTRY CAME INTO BEING . IN STEAD, THE ASSESSEE CANNOT TAKE REFUGE UNDER THE FLIMSY EXCUSE . THE AO WAS JUSTIFIED IN MAKING SUCH AN ADDITION WHICH WAS SUBS EQUENTLY RATIFIED BY THE CIT (A). ACCORDINGLY, THIS ISSUE GOES AGAIN ST THE ASSESSEE. 31. GROUND NO.4: ADDITION OF RS.1,06,33000/- AS UNEXPLAINED STOCK IN THE BUSINESS OF PUNJAB EQUIPMENTS: 31.1 A SURVEY U/S 133A OF THE ACT WAS CA RRIED OUT AT THE BUSINESS PREMISES OF PUNJAB EQUIPMENTS ON 6.9.2001. THIS PROPRIETARY CONCERN OF THE ASSESSEE DEALT IN TRADIN G OF UTENSILS AND CUTLERY ITEMS. 31.2 DURING THE SURVEY, PHYSICAL STO CK WAS INVENTORIZED AND VALUED AT RS.1,06,330/-. AFTER RECORDING THE STATE MENT OF THE EMPLOYEE OF THE CONCERN, THE ASSESSEE WAS REQUIRED TO EXPLAIN THE UNEXPLAINED STOCK ETC. THE ASSESSEE, ACCORDING TO T HE AO, DURING THE 74 COURSE OF BLOCK ASSESSMENT PROCEEDINGS SUBMITTED TH AT THE STOCK WAS NOT UNACCOUNTED FOR AND THAT THERE WAS NO QUEST ION OF ANY ADDITION ON THIS SCORE. AFTER CONSIDERING THE ASSE SSEES SUBMISSION AND FOR THE REASONS RECORDED THEREIN, THE AO, THOUG H THE STOCK WAS TAKEN AS FROM OUT OF UNACCOUNTED INCOME OF THE ASSE SSEE, IN VIEW OF THE ADDITION ALREADY MADE TOWARDS UNDISCLOSED INCOM E, THIS UNACCOUNTED INVESTMENT OF RS.1,06,330/- IN THE STOC K WAS NOT ADDED SEPARATELY. 31.3 AFTER CONSIDERING THE ASSESSEES VERSI ON, THE CIT (A) SUSTAINED THE ADDITION. 31.4 THE LEARNED AR HAD REITERATED WHA T HAS BEEN PRESENTED BEFORE THE CIT (A). 31.5 WE HAVE CONSIDERED THE CONTENTION S OF THE LEARNED A R AND ALSO THE FACTS OF THE ISSUE. 31.6 AT THE OUTSET, WE WOULD LIKE TO REITERATE THAT THE AO HAD PROCEEDED TO CONSIDER THE VALUE OF STOCK AS UNACCOU NTED INCOME OF 75 THE ASSESSEE ON THE BASIS OF THE VERSIONS OF (I) O NE JAYESH R SHAH WHO, AS ADMITTED BY THE AO, AN EMPLOYEE AND (II) SH RI INDRAJIT SINGH SURI, THE HUSBAND OF THE ASSESSEE. HOWEVER, THE AS SESSEE WHO BEING THE ABSOLUTE OWNER OF THE SAID CONCERN, HAD C ATEGORICALLY ASSERTED THAT 11.3. IT WAS STATED BY THE ASSESSEE THAT THE STOCK WAS APPEARING IN THE BOOKS OF THE ASSESSEE AND, THEREFO RE, IT WAS NOT UNACCOUNTED AND SHOULD NOT BE ADDED TO THE INCOME [SOURCE: PARA 11.3 OF THE ASST. ORDER]. IN SPITE OF FIRM ASSERTI ON WITH DOCUMENTARY PROOF [REFER P 177 OF PB] OF THE ASSESSEE, THE AO, BASED ONLY ON THE STATEMENT OF THE EMPLOYEE OF THE ASSESSEE AND THE A SSESSEES HUSBAND WHO MAY BE AT THE HELM OF AFFAIRS, RESORTED TO CONCLUDE THAT THE VALUE OF STOCK WAS OUT OF UNACCOUNTED INCOME. THIS CONCLUSION OF THE AO WAS AT THE BACK OF THE ASSESSEE. 31.7 ON A PERUSAL OF THE COPY OF THE B ALANCE SHEET PRODUCED, IT IS SEEN THAT THE VALUE OF STOCK HAS BEEN DULY TA KEN CARE OF. 31.8 IN VIEW OF THE ABOVE AND ALSO THE AO HAD ARRI VED AT A CONCLUSION AT THE BACK OF THE ASSESSEE, WE ARE OF T HE CONSIDERED VIEW THAT THE AO WAS NOT JUSTIFIED IN HIS ENDEAVOUR . 76 32. IN THE RESULT: (1) THE ASSESSEES APPEAL IN IT(SS)A NO.317/A/2004 IS P ARTLY ALLOWED (ALL THE GROUNDS RAISED BY THE ASSESSEE IN HIS APPE AL ARE ALLOWED EXCEPT IN GROUND NO.6 WHEREIN ADDITION OF R S.1.5 LACS IN THE HANDS OF THE ASSESSEE IS CONFIRMED, AND IN GROUND N O.15 WHEREIN DISALLOWANCE OF RS.76,635/- IS SUSTAINED). (2) THE REVENUES APPEAL IN IT(SS)A NO.331/A/2004 IS DISMISSED; & (3) THE ASSESSEES APPEAL IN IT(SS)A NO.318/A/2004 IS P ARTLY ALLOWED FOR STATISTICAL PURPOSE. ( GROUNDS NO.1 AND 4 OF THE APPEAL ARE HELD TO BE IN FAVOUR OF THE ASSESSEE, GR OUND NO.2 OF THE APPEAL WHEREIN ADDITION IS MADE FOR RS.5,23, 221/- IS REMITTED BACK TO THE FILE OF THE LEARNED A.O. FOR D E NOVO CONSIDERATION, GROUND NO. 3 OF THE APPEAL ADDITION TO THE EXTENT OF RS.95,000/- IS SUSTAINED, AND GROUND NO.5 , 6 AND 7 BEING GENERAL ARE CONSIDERED NON-CONSEQUENTIAL). ORDER PRONOUNCED IN THE OPEN COURT ON 25-05-2012 SD/- (D. K. TYAGI) JUDICIAL MEMBER SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER 77 LAKSH LAKSH LAKSH LAKSHMIKANT DEKA/ MIKANT DEKA/ MIKANT DEKA/ MIKANT DEKA/ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: -2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: -2012 OTHER MEMBER: 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE T HE DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P. S./ P.S. : 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER:
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