Sejal Gopalbhai Shah, Ahmedabad V. The ACIT.,Cent.Circle-2(4), Ahmedabad

ITSSA 386/AHD/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1549 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 06-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS VIBHA BHALLA
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Principle of natural justice; Peak credit; Additional evidence; Corroborative evidences; Deemed dividend; Assessment record; Documents seized
• Section: 143(3); 142(1); 153A; 132

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ IT(SS)A NO.386/AHD/2011 /BLOCK ASSTT. YEAR: 2005-06 SEJAL GOPALBHAI SHAH 11, CHANDRAKRUPA SOCIETY NR. SHIVRANJANI CROSS ROADS SATELLITE, AHMEDABAD. PAN : AGDPS 3217 Q VS ACIT, CENT.CIR.2(4) AHMEDABAD. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI SAKAR SHARMA REVENUE BY : MRS.VIBHA BHALLA, CIT-DR / DATE OF HEARING : 08/12/2015 / DATE OF PRONOUNCEMENT: 08/02/2016 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE LD.CIT(A)-III, AHMEDABAD DATED 31.3.2011 PASSED FOR THE ASSTT.YEAR 2005-2006. THE ASSESSEE HAS TAKEN FOLLOWING GROUND S OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN DISMISSING THE ADDITIONAL GROUND RAISED BY THE APPELLANT STATING THAT THE ASSESSING OFFICER HAS ERRED IN PAS SING AN ORDER U/S.153A RWS. 143(3) OF THE INCOME TAX ACT, 1961 WH ICH IS TIME BARRED AND HENCE THE SAME IS ILLEGAL AND BAD IN LAW . IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 2 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ORDER PASSED BY THE ASSESSING OFF ICER WHICH IS BARRED BY LIMITATIONS PRESCRIBED UNDER THE I.T. ACT , 1961 HENCE THE SAME IS VOID AND ILLEGAL. THEREFORE, THE ASSESS MENT SO MADE SHOULD BE CANCELLED. 3. THE LD. CIT(A) HAS ERRED IN SETTING ASIDE THE ORDER OF THE AO FOR RE-VERIFICATION OF THE ISSUES WHICH IS IN VIOLA TIONS OF THE PROVISIONS OF SEC. 251(L)(A) OF THE ACT. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ADDITION OF RS.27,75,000/- MADE B Y THE ASSESSING OFFICER FOR THE ALLEGED ON MONEY PAID TO BHAGYODAY OWNERS ASSOCIATION. 4.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OF FICER WITHOUT ISSUING ANY SHOW CAUSE NOTICE FOR MAKING SUCH ADDIT ION ON THE BASIS OF LOOSE PAPERS. HENCE THE ADDITION SO MADE W ITHOUT GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELL ANT, IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE SHOULD BE CANCELL ED. 4.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE SAID ADDITION OF RS.27,75,000/- I N RESPECT OF THE SAID PROPERTY EVEN THOUGH NO ACTUAL TRANSACTION HAS BEEN TAKEN PLACE. 4.3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN NOT ADMITTING THE ADDITIONAL EVIDENCE PRODUCED B Y THE APPELLANT FOR THE ADDITION OF RS.27,75,000/- MADE BY THE A.O. IN RESPECT OF BHAGYODAYA PLAZA BUILDING. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OF FICER EVEN THOUGH THE APPELLANT HAS DISCLOSED AN INCOME OF RS. 10 CRORES FROM A.YRS. 2002-03 TO 2008-09 WORKED OUT BY HER ON THE BASIS OF PEAK CREDIT STATEMENT PREPARED ON THE BASIS OF THE BOOKS & DOCUMENTS SEIZED BY THE DEPARTMENT AND FROM THE BAN K ACCOUNTS MAINTAINED BY HER. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ADDITION OF RS.39,06,870/- MADE B Y THE ASSESSING OFFICER FOR THE ALLEGED UNACCOUNTED INVES TMENT IN THE PURCHASE OF PROPERTY AT 20, CHARANKRUPA SOCIETY, SA TELLITE, AHMEDABAD. IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 3 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ADDITION OF RS.4,24,75,000/- MADE BY THE ASSESSING OFFICER FOR THE PAYMENTS MADE TO GANESH H OUSING CORPORATION FOR THE ALLEGED UNACCOUNTED INVESTMENT IN LAND NR. STAR BAZAR, AHMEDABAD. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 15,48,242/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIMATION OF INVES TMENT ONLY ON THE BASIS OF DEMAT ACCOUNTS STATEMENT WITHOUT CONSI DERING THE PEAK CREDIT STATEMENT WORKED OUT BY THE APPELLANT A ND WITHOUT GRANTING TELESCOPING AGAINST INVESTMENTS. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ADDITION OF RS.81,50,000/- MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF TRANSACTION WITH RE SPECT TO TAKEOVER OF JINDAL ONLINE ONLY ON SURMISES AND CONJ ECTURES. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ADDITION IN RESPECT OF JINDAL ONL INE ONLY ON THE BASIS OF MATERIAL FOUND FROM THE RESIDENCE OF SANJI V SHAH WITHOUT GIVING COPY OF THE SAID MATERIAL AND ALSO ANY OPPOR TUNITY OF REBUTTAL TO THE APPELLANT. HE OUGHT TO HAVE CONSIDE RED THE FACT WHILE MAKING THIS ADDITION THE ASSESSING OFFICER HA S FAILED TO GRANT AN OPPORTUNITY TO CROSS EXAMINE SHRI RASHMIKA NT C. SHAH. HENCE THE ADDITION SO MADE BEING AGAINST THE PRINCI PLES OF NATURAL JUSTICE AND LAW REQUIRES TO BE CANCELLED. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ADDITION OF RS.3,80,7057- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEEMED DIVIDEND U/S .2(22)(E) OF THE INCOME TAX ACT, 1961. 12. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN NOT ACCEPTING THE CONTENTION THAT THE ASSESSMENT SUFFERS FROM MULTIPLE ADDITIONS & THE ADDITIONS ON ACCOUNT OF PE AK CREDIT AS WELL AS INVESTMENT IN ASSETS/EXPENDITURE HAVE BEEN SEPARATELY ADDED. 12.1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ADOPTED CONTRADICTORY STAND WHILE ADJUDICATING THE APPEAL . HE HAS STATED THAT INCOME IS BEING COMPUTED ON INVESTM ENT BASIS & THEREAFTER PROCEEDED TO CONFIRM ADDITIONS OF INCOME SEPARATELY. IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 4 13. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF H EARING OF APPEAL. 2. BEFORE ADVERTING TO THE SPECIFIC GROUNDS OF APPE AL, WE DEEM IT APPROPRIATE TO MAKE REFERENCE TO CERTAIN FUNDAMENTA L FACTS. A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT WAS CARRIED OUT IN SEJAL MAHINDRA GROUP OF CASES ON 25.7.2007. THE LD.AO HAS ISSUED NOTICE UNDER SECTION 153A OF THE ACT DATED 7 .2.2008 REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME WITHIN 30 DAY S FROM THE RECEIPT OF THE NOTICE. HOWEVER, THE ASSESSEE DID NOT FILE RET URN AS REQUIRED IN THE NOTICE. IN ORDER TO SET THE ASSESSMENT MACHINERY I N MOTION, THE LD.AO HAS ISSUED NOTICE UNDER SECTION 142(1) ALONGWITH QU ESTIONNAIRE ON 20.8.2009. THE ASSESSMENT WAS GOING TO BE TIME BAR RED ON 31.12.2009. THE ASSESSEE HAS FILED HER RETURN OF I NCOME ON 17.12.2009. ALONG WITH RETURN, THE ASSESSEE HAS FI LED A NOTE WHICH HAS BEEN REPRODUCED BY THE AO AS WELL AS THE LD.CIT(A) IN THE IMPUGNED ORDERS. IN THIS NOTE, THE ASSESSEE HAS DISCLOSED H ER MODUS OPERANDI OF DOING THE BUSINESS IN SHARE TRADING, COMMODITIES, S PECULATION BUSINESS, REAL ESTATE TRANSACTIONS ETC. ACCORDING TO THE ASS ESSEE FOR CARRYING OUT THESE BUSINESS ACTIVITIES, SHE WAS OPERATING BANK A CCOUNT IN HER NAME, IN THE NAME OF HER FATHER, LATE SHRI GOPALBHAI SHAH , MOTHER SMT. PARESHABEN G. SHAH, BROTHER SHRI MIT G. SHAH, HER F RIEND MS. RAJVI SHAH AS WELL AS IN THE DIFFERENT TRADE NAME ENTITIE S, PROPRIETORSHIP CONCERNS ETC. WE DEEM IT APPROPRIATE TO TAKE COGNI ZANCE OF THIS NOTE. IT READS AS UNDER: 5. IN THE RETURNS OF INCOME, THE ASSESSEE ATTACHED NOTES AS UNDER: (I) THAT DURING THE PREVIOUS YEAR'S RELEVANT TO ASSESSM ENT YEARS 2002- 2003 TO 2008-2009. I HAVE CARRIED OUT THE BUSINESS ACTIVITIES OF TRADING IN SHARES AND COMMODITIES, SPECULATION BUSI NESS, REAL ESTATE TRANSACTIONS, INVESTMENT IN SHARES FOR SHORT TERM AND LONG IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 5 TERM GAIN AND BROKERAGE / COMMISSION BUSINESS. FOR CARRYING OUT THE AFORESAID BUSINESS ACTIVITIES, I HAVE OPERATED THE BANK ACCOUNTS IN MY NAME, IN THE NAME OF MY FATHER LATE SHRI GOPALBH AI SHAH, MOTHER SMT. PARESHABEN G. SHAH, BROTHER MR. MIT G. SHAH, M Y FRIEND MISS RAJVI SHAH AS WELL AS IN THE DIFFERENT TRADE NAME E NTITIES AS MY PROPRIETARY ENTITY. THE PARTICULARS OF THE SAID BAN K ACCOUNTS OPERATED AND CONTROLLED BY ME IS ATTACHED HEREWITH AS PER EX HIBIT-1. I AM A/SO A PARTNER IN M/S SHAAN INFRASTRUCTURE A PARTNE RSHIP FIRM. I AM ALSO A DIRECTOR IN VARIOUS COMPANIES AND THE PARTIC ULARS OF DIRECTORSHIP IN VARIOUS COMPANIES ARE ATTACHED HERE WITH AS PER EXHIBIT-11. (II) THAT AS PER DETAILED DISCUSSION IN PARA 1, I HAVE O PERATED VARIOUS BANK ACCOUNTS AND OWN UP THE TRANSACTIONS IN THE SA ID BANK ACCOUNTS AS PERTAINING TO ME. THE UNEXPLAINED FUNDS IN THE SAID- .BANK ACCOUNTS ARE ALREADY BEEN CONSIDERED BY ME IN THE PEAK THEORY WORKING FOR DETERMINATION OF INCOME OFFERED IN THE RETURN OF INCOME FILED BY FOR A.Y.2002-03 F? 2008-09. IN RESP ECT OF PARTICULARS OF BANK ACCOUNTS PLEASE REFER EXHIBIT-L. (III) THAT I HAVE INSTRUCTED AND DIRECTED TO MY MOTHER SM T. PARESHABEN GOPALBHAI SHAH, MY BROTHER MIT GOPALBHAI SHAH, MY F RIEND RAJVI SHAH, TO OPEN THE BANK ACCOUNTS / DEMAT ACCOUNTS IN THEIR NAME FOR MYSELF AND THE TRANSACTIONS CARRIED OUT IN THE BANK ACCOUNTS / DEMAT ACCOUNTS OF THE AFORESAID PERSONS ARE BELONGING TO MYSELF AND THE INCOME / LOSS ARISING OUT OF THE SAME IS ALSO PERTA INING TO ME. MY FATHER LATE SHRI GOPALBHAI SHAH HAD ALSO OPERATED V ARIOUS BANK ACCOUNTS AS PER MY DIRECTIONS AND ALL THE TRANSACTI ONS IN THE BANK ACCOUNTS / DEMAT ACCOUNTS OPERATED BY HIM AND INCOM E / LOSS ARISING FROM THE TRANSACTIONS OF THE SAID BANK ACCO UNTS IS ALSO PERTAINING TO ME AND IT HAS ALREADY BEEN CONSIDERED IN WORKING OUT PEAK BALANCE, AS PER PRINCIPLE OF PEAK THEORY. IN T HIS REGARD, I AM ATTACHING HEREWITH AFFIDAVIT OF MYSELF, MY BROTHER MIT G. SHAH, MY MOTHER PARESHABEN G. SHAH, PARESHABEN LEGAL HEIR OF GOPALBHAI SHAH AND MY FRIEND RAJVI SHAH AS PER EXHIBIT-ILL. (IV) THAT DURING THE COURSE OF SEARCH PROCEEDINGS, VOLUM INOUS SEIZED MATERIAL HAVE BEEN FOUND FROM MY RESIDENTIAL PREMIS ES AS WELL AS FROM OFFICE PREMISES INCLUDING ANNEXURE A/17 & A/57 FOUND FROM MY RESIDENTIAL PREMISES AND ANNEXURE A/45 FOUND FROM O FFICE PREMISES WHICH WERE IN THE NATURE OF COMMON CASH BOOK WRITTE N BY MY LATE FATHER SHRI GOPALBHAI SHAH AND ALSO COMPUTER PRINT OF COMMON CASH BOOK WAS A/SO FOUND AND SEIZED. THAT THE BANK ACCOU NT OWNED UP BY ME BEING OPERATED AND CONTROLLED BY ME FOR ITS T RANSACTIONS AS PER THE PARTICULARS GIVEN IN EXHIBIT - I AND THE CO MMON CASH BOOK, OTHER COMPUTER DATA AND OTHER SEIZED RECORDS ARE HA VING VARIOUS ENTRIES WHICH ARE IN THE NATURE OF ROTATION OF CASH FUNDS BELONGING TO ME WHICH ARE INTERMINGLED AND INTER-RELATED AS WELL AS HAVING IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 6 DUPLICATION ALSO AND ACCORDINGLY, THE CASH ROTATION OF FUNDS IN THE BANK ACCOUNT AS WELL AS IN THE COMMON CASH BOOK AS WELL AS IN THE COMPUTER DATA WHICH WERE STANDING IN, THE NAME OF V ARIOUS FICTITIOUS PERSONS ARE ACTUALLY BELONGING TO ME BEING CASH ROT ATION AND THE SAME HAS BEEN CONSIDERED BY ME FOR WORKING OUT THE PEAK WORKING AS PER THE PRINCIPLE OF PEAK THEORY AFTER ELIMINATI NG ROTATION OF FUNDS. (V) THAT THE INCOME OFFERED IN THE RETURN OF IN COME IS OUT OF THE SOURCE OF INCOME IN THE NATURE OF PROFIT FROM SHARE TRADING, INVESTMENT IN SHARES THROUGH DEMAT ACCOUNT GENERATING SHORT TERM GAIN AND LONG TERM GAIN, TRADING IN COMMODITIES AND SPECULATION B USINESS, REAL ESTATE TRANSACTIONS AND BROKERAGE / COMMISSION BUSI NESS ACTIVITIES. AS I HAVE NOT MAINTAINED COMPLETE BOOKS OF ACCOUNTS , I HAVE CONSIDERED THE PRINCIPLE OF PEAK THEORY AS WELL AS PRINCIPLE OF REAL INCOME VIS-A-VIS UNEXPLAINED ASSETS FOUND DURING TH E COURSE OF SEARCH PROCEEDINGS AND THE INCOME HAS BEEN OFFERED ON THE BASIS OF THE SOURCE OF INCOME OR UNEXPLAINED ASSETS WHICHEVE R IS HIGHER. (VI) THAT THE INVESTMENT IN SHARES AS AN INVESTOR HAS GENERATED THE INCOME IN THE NATURE OF LONG TERM .CAPITAL GAIN, WH ICH IS EXEMPT FROM TAX AND SHORT TERM CAPITAL GAIN WHICH IS SUBJECT TO LOWER TAX RATE OF 10%, HOWEVER, AS THE FUNDS OF THE SAID CAPITAL GAIN PROFIT HAS GOT MERGED IN ROTATION OF FUNDS, THE NET INCOME DETERMI NED AFTER CLAIMING EXPENDITURE INCURRED FOR EARNING THE SAID INCOME HA S BEEN OFFERED FOR TAXATION IN THE RETURN OF INCOME ON THE BASIS O F PRINCIPLE OF REAL INCOME WHICH IS ACCEPTED AS FUNDAMENTAL RULES FOR T AXABILITY OF INCOME IN THE CASE OF ANY ASSESSEE AS PER PROVISION S OF I.T. ACT AND JUDICIAL PRONOUNCEMENTS OF HON'BLE SUPREME COURT. (VII) ------ ALONGWITH THIS DECLARATION THE COPIES OF AFFIDAVIT OF ASSESSEE SEJAL G SHAH HER MOTHER PARESH G SHAH, BROTHER MIT G SHAH AND HE R FRIEND RAJVEE P SHAH WERE SUBMITTED. THE CONTENTS OF THE AFFIDAVIT WERE SAME AS PARA (I) OF THE NOTES ATTACHED WITH THE RETURN. 3. THE STAND OF THE ASSESSEE BEFORE THE AO WAS THAT THE TRANSACTIONS IN THE BANK ACCOUNT AND CASH BOOK WERE INTERMINGLED IN SUCH A MANNER THAT THERE WERE OVERLAPPING OF FUNDS. SHE HAS ROTA TED CASH AVAILABLE WITH HER. THUS, THERE MAY BE DUPLICATION OF CERTAI N ENTRIES. SHE HAS OFFERED INCOME OF RS.10.00 CORES IN THE ASSTT.YEARS 2002-03 TO 2008- 09. THIS INCOME HAS BEEN WORKED OUT ON THE BASIS O F PEAK LEVEL IN THE CASH BOOK SEIZED BY THE DEPARTMENT AND FROM THE BAN K ACCOUNT IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 7 MAINTAINED BY THE ASSESSEE, AND OTHER FAMILY MEMBER S AND CONCERNS, WHOSE NAMES HAVE BEEN GIVEN IN EXHIBIT-I APPENDED W ITH THE RETURN. THE ASSESSEE HAS COMPILED THE DETAILS IN TABULAR FO RM EXHIBITING THE PARTICULARS OF ASSETS/INVESTMENTS IDENTIFIED AGAINS T THE AMOUNT OF ADDITIONAL INCOME OFFERED IN THE RETURN FOR EACH AS SESSMENT YEAR. THIS PAPER HAS BEEN REPRODUCED BY THE LD.CIT(A) AT PAGE NOS.6 AND 7 OF THE IMPUGNED. IT READS AS UNDER: PARTICULARS OF ASSETS/INVESTMENTS INDENTIFIED AGAINST THE AMOUNT OF ADDITIONAL INCOME OFFERED IN THE ROI 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 TOTAL RS. PURCHASE OF COMPUTER 127000 127000 INVESTMENT IN FLAT AT PANCHVIHAR 989000 225000 49050 79153 170786 1512989 FLAT AT RATNMANI/JODHPUR CROSS ROAD SATELITE 1710000 1710000 FDR'S WITH HDFC BANK IN THE NAME OF PARESHA G SHAH( 5 FOR OF RS. 2 LACS EACH) 1000000 1000000 EQUITY SHARES IN SHAAN LEISURE LTD (SELF + RAJVI SHAH) 418000 418000 EQUITY SHARES IN SHAAN ENERGY LTD (MGS+GNS+PGS) 490000 490000 EQUITY SHARES IN MANIBHADRA TRADELINK LTD(SELF+ MGS) 100000 100000 EQUITY SHARES IN PRATHNA FARMING PVT LTD(SELF+ MGS) 485200 485200 SHARE APPLICATION MONEY (PRATHANA FARMING PVT LTD) 5T5000 515000 SHARE APPLICATION MONEY (MANIBHADRA PERTO-CHEM PVT LTD) 315000 315000 INVESTMENT IN GOLD ORNAMENTS & JEWELLARIES 800000 2700000 3500000 IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 8 BUNGLOW NO. 12 AT CHARANKRUPA SOC, OPP. JAI SHEFALI ROW HOUSE, SATELLITE, AHMEDABAD 1180000 1180000 MARRIAGE EXPENSES 350616 1020854 1371470 CREDIT CARD EXPENSES 657346 999083 77290 1733719 PERSONAL EXPENSES 3083912 3594969 1105255 7784136 FILM EXPENSES 650000 400000 1050000 CASH GIVEN BY GOPALBHAI N SHAH TO MANIBHADRA TRADELINK PVT LTD FOR EXPENSES (NET OF CASH RETURN BACK BY THE COMPANY) 250000 58300 308300 CASH GIVEN BY MIT G SHAH TO MANIBHADRA TRADELINK PVT LTD FOR EXPENSES (NET OF CASH RETURN BACK BY THE COMPANY) 18000 18000 CASH GIVEN BY MIT G SHAH TO MANIBHADRA PERTO CHEM PVT LTD FOR EXPENSES (NET OF CASH RETURN BACK BY THE COMPANY). 17600 17600 CASH GIVEN BY MIT G SHAH TO SHAAN ENERGY PVT LTD FOR EXPENSES (NET OF CASH RETURN BACK BY THE COMPANY) 15000 15000 CASH GIVEN BY SEJAL G SHAH TO PRATHANA FARMING . PVT LTD FOR EXPENSES (NET OF CASH RETURN BACK BY THE COMPANY) 10500 10500 CASH GIVEN BY SEJAL G SHAH TO MANIBHADRA TRADELINK PVT LTD FOR EXPENSES (NET OF CASH RETURN BACK-BY THE COMPANY) 40000 40000 1180000 0 1256000 1160600 7731008 6300121 6074185 2370191 4 4. THE LD.AO HAS PASSED THE ASSESSMENT ORDER ON 31. 12.2009. HE DETERMINED THE TAXABLE INCOME OF THE ASSESSEE FOR T HE YEAR UNDER CONSIDERATION AT RS.6,04,29,234/-. THE AO HAS COMP UTED THE INCOME FOR VARIOUS YEARS IN PARA-18 OF THE ASSESSMENT ORDE R. THE WORKING MADE BY THE AO READ AS UNDER: IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 9 18. TO SUM UP THE CASE, AS DISCUSSED ABOVE, THE U NDISCLOSED INCOME OF EACH ASSESSMENT YEAR OF ASSESSEE IS COMPU TED AS UNDER: PARTICULARS OF ASSETS / INVESTMENTS INDENTIFIED AY 2002-03 AY 2003-04 AY 2004-05 AY 2005-06 AY 2006-07 AY 2007-08 AY 2008-09 TOTAL RS. TOTAL FROM TABLE IN POINT NO 15 1180000 0 1256000 1160600 7731008 6300121 6074185 23701914 MANDAVA LAND 30716220 1372857 32089077 PLOT NO 17 & 18 NEAR VAISHNO DEVI, AHMEDABAD 43700000 51200000 94900000 INVESTMENT IN VILLAGES NEAR AHMEDABAD 3125999 69989153 Z0366276 93481428 PLOT NO 6, KAUSHAL CO- OP 1500000 950000 1550000 4000000 BHAGYODAYA PLAZA 1225000 2775000 4000000 LAND AT MADHYA PRADESH 25000 25000 20, CHARAN KRUPA SOCIETY 3906870 3906870 LAND NEAR STAR BAZAAR 42475000 42475000 INVESTMENT IN SHARES AS DISCUSSED IN PARA 2405389 1548242 6691534 21554300 32199465 PROFIT FROM SHARE TRADING WITH AARP, JITU, ETC 13385314 13385314 SHARE PROFIT AS PER PARA 1736841 1736841 SHARE PROFIT OTHER THAN AARP, ETC 12508542 12508542 JINDAL ONLINE INVESTMENT 8150000 8150000 FIXED DEPOSITS WITH IDB BANK 2000000 2000000 INVESTMENTS IN SWAAN- LEISURE LTD 17380000 17380000 IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 10 INVESTMENT IN SWAN MILLS BY WAY OF UNEXPLAINED LOAN 1600000 1600000 DEEMED DIVIDEND U/S 2(22)(E) 145293 180372 380705 706370 TOTAL 2680000 950000 6581682 60196084 49864761 145686120 122287174 388245821 5. WITH THIS BACKGROUND WE TAKE THE GROUNDS IN SERI ATIM. IN GROUND NO.1 AND 2 THE ASSESSEE HAS PLEADED THAT THE ASSESS MENT ORDERS HAVE BEEN PASSED BY THE AO AFTER 12 O CLOCK IN THE MID-NIGHT OF THE 31-12- 2012, THEREFORE, THE ASSESSMENT ORDER IS TIME BARRE D. 6. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE LD.COUNSEL FOR T HE ASSESSEE CONCEDED THAT SIMILAR ISSUE WAS RAISED BY THE ASSESSEE IN TH E ASSTT.YEARS 2002- 03, 2003-04 AND 2004-05. THE TRIBUNAL HAS ALREADY DECIDED THIS AGAINST THE ASSESSEE IN IT(SS)A.NO.378/AHD/2011 PAS SED ON 7.8.2015 IN THE ASSTT.YEARS 2002-03 TO 2004-05. THE DISCUSS ION MADE BY THE TRIBUNAL ON THIS ISSUE READ AS UNDER: 5. THE GROUND NOS.1 AND 2 ARE COMMON IN ALL THE AS SESSMENT YEARS. IN THESE GROUNDS, THE ASSESSEE HAS PLEADED THAT THE ASSESSMENT ORDERS HAVE BEEN PASSED BY THE AO AFTER 12 O CLOCK IN THE MID-NIGHT OF 31-12-2009. THEREFORE, THE ASSESS MENT ORDERS ARE TIME BARRED, AND CONSEQUENTLY BE QUASHED. THE ADDITIONAL GROUND OF APPEAL TO THIS EFFECT WAS RAISED BY THE A SSESSEE IN ALL THESE THREE YEARS BEFORE THE LD.FIRST APPELLATE AUT HORITY ALSO. 6. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV ES, WE HAVE GONE THROUGH THE RECORD. THE LD.COUNSEL FOR THE AS SESSEE HAS DREW OUR ATTENTION TOWARDS PAGE NO.5 OF THE ASSESSM ENT ORDER PASSED IN THE ASSTT.YEAR 2002-03 AND TOOK US THROUG H THE FOLLOWING PARAGRAPHS: THE REPLY OF QUERIES ASKED VIDE FIRST QUESTIONNAIR E DTD 20.08.2009 WAS ALSO FILED IN PIECEMEAL MANNER START ING FROM 16.12.2009. IN LAST TWO DAYS AS MANY AS 9 DIFFEREN T REPLIES WERE SUBMITTED IN THE CASE OF THE ASSESSEE. SIMILAR WAS THE POSITION IN OTHER GROUP CASES. EVEN AT 12.15 AM OF NIGHT OF 31 ST DECEMBER, IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 11 2009, FOUR REPLIES WERE RECEIVED FROM THE ASSESSEE. DESPITE THE ODD HOUR MUCH AFTER OFFICE TIME, ALL THE REPLIES WE RE DULY RECEIVED BY THE ASSESSEE. 7. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT T HE CONTENTIONS OF THE AO AVAILABLE, IN THIS PARAGRAPH INDICATES THAT HE HAS PASSED THE ASSESSMENT ORDER AT 12:15 OF 31 ST DECEMBER, 2009, MEANING THEREBY, THE ASSESSMENT ORDER WAS NOT PASSED BEFORE THE 31-12-2009. HENCE, IT IS TIME BARRED. 8. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E FINDINGS OF THE CIT(A) WHO HAS SPECIFICALLY DEALT WITH THIS ISSUE AFTER PERUSING THE ORDER SHEET ENTRIES IN THE ASSESSMENT RECORD. IT IS PERTINENT TO TAKE NOTE OF THE FINDINGS RECORDED BY THE CIT(A) ON THIS ISSUE. 4. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT REGARDING THE ADDITIONAL GROUND RAISED BY THE APPEL LANT ON THE PERUSAL OF THE CASE RECORDS, IT IS SEEN THAT TH E ASSESSMENT ORDER HAS BEEN SERVED ON THE BROTHER OF THE APPELLANT SHRI MIT SHAH ON 31.12.009. THE FACT THA T THE ASSESSMENT ORDER HAS BEEN SERVED UPON THE APPELLANT ON 31.12.2009 WAS ALSO ACCEPTED BY THE AR OF THE APPEL LANT BEFORE ME IF THE ORDER WAS NOT PASSED BY THE AO PR IOR TO 31.12.2009, THEN THE SAME COULD NOT HAVE BEEN SERVE D UPON THE APPELLANT ON 31.12.2009 THIS CLEARLY SHOW S THAT THERE IS A MISTAKE IN THE ASSESSMENT ORDER. 4.1 FOR THIS PURPOSE, THE ORDER SHEET OF THE AS SESSMENT RECORDS WAS VERIFIED BY ME. FROM THE PERUSAL OF THE ORDER SHEET, IT IS SEEN THAT ON30/12/2009 THE AO HAS MADE TWO NOTINGS PRIOR TO THIS NOTING OF 31/12/2009 IN THE O RDER SHEET REGARDING THE RECEIPT OF TWO REPLIES FROM THE APPEL LANT. THE FIRST NOTING ON 31/12/2009 AT 12.15 A.M. IS R EGARDING THE RECEIPT OF THE SUBMISSIONS DATED 28/12/2009, 29/12/2009 AND 30/12/2009. IT IS SEEN THAT THE REPRESENTATIVE OF THE APPELLANT SHRI C.P. RAWAL HAS ALSO SIGNED THIS ORDER SHEET ENTRY BY MENTIONING THE DAT E AS 31/12/2009 AT 12.15. IT IS THUS CLEAR THAT THE ASSE SSMENT PROCEEDINGS CONTINUED THROUGHOUT THE DAY OF 30/12/2 009 BEYOND 12.15 O'CLOCK IN THE NIGHT. THIS IS PROVED B Y THE SIGNATURE OF THE REPRESENTATIVE OF THE APPELLANT SH RI C P RAWAL, WHO HAS ALSO, MENTIONED THE TIME AT 12.15 A. M. ON 31/12/2009. PRIOR TO THIS ORDER SHEET ENTRY, NO HEA RING HAS TAKEN PLACE ON 31/12/2009! IT IS NOT EXPECTED THAT THE AO IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 12 HAS STARTED THE HEARING IN THIS CASE ON 31/12/2009 IN MIDNIGHT. FURTHER AFTER THIS ENTRY IN THE NOTE SHEE T, THERE IS ANOTHER ENTRY ON 31/12/2009 AT 3 PM AS PER WHICH THE ASSESSMENT ORDER UNDER SECTION 153A/143 (3) FOR ASSESSMENT YEAR 2002-2003 TO 2008-2009 ARE PASSED B Y THE AO. THE ACKNOWLEDGEMENT SLIP ALSO SHOWS THE SIG NATURE OF SHRI MIT SHAH, THE BROTHER OF THE APPELLANT AS O N 31/12/2009. THE DATE OF SERVICE OF ASSESSMENT ORDER , DEMAND NOTICE AND PENALTY NOTICES-IS SHOWN AS 31/12 /2009. THEREFORE, THERE IS AN APPARENT MISTAKE IN THE ORDE R PASSED BY THE AO AS MENTIONED ABOVE. EITHER INSTEAD OF THE WORD 'MORNING',' THE AO WRONGLY USED THE WORD 'NIGHT' AS IT IS A COMMON MISTAKE COMMITTED BY MANY PERSONS UNDER THE BELIEF THAT AFTER 12 O'CLOCK IN THE NIGHT, THE PER IOD IS TREATED AS NIGHT TILL THE MORNING OR INSTEAD OF 30/ 12/2009 THE AO HAS WRONGLY MENTIONED AS 31/12/2009. THE COR RECT SENTENCE SHOULD HAVE BEEN AS EVEN AT 12.15 A.M. OF MORNING (AND NOT NIGHT AS MEN TIONED BY THE AO) OF 31 ST DECEMBER, 2009 FOUR REPLIES WERE RECEIVED FROM THE ASSESSEE. DESPITE THE ODD HOUR MUCH AFTER THE OFFICE TIME ALL THE REPLIES WERE DULY RECEIVED FROM THE ASSESSEE O R EVEN AT 12.15 O CLOCK OF NIGHT OF 30 TH DECEMBER, 2009 FOUR REPLIES WERE RECEIVED FROM THE ASSESSEE. DESPITE T HE ODD HOUR MUCH AFTER THE OFFICE TIME ALL THE REPLIES WERE DUL Y RECEIVED FROM THE ASSESSEE. 4.2 IN VIEW OF THE ABOVE DISCUSSION, THE ADDITIONAL GROUND RAISED BY THE APPELLANT IS FACTUALLY INCORRECT AND HAS BEEN RAISED WITH AN INTENTION TO MISLEAD THE APPELLATE A UTHORITIES. THE SAME IS THEREFORE, DISMISSED. 9. THE LD.COUNSEL FOR THE ASSESSEE FURTHER CONTENDE D THAT THE ASSESSMENT ORDER HAS BEEN SERVED UPON THE ASSESSEE ON 1 ST JANUARY, WHICH INDICATES THAT THE ASSESSMENT ORDER WAS PROCESSED BY THE AO UPTO 1 ST JANUARY, AND IT WAS NOT RELEASED BY HIM. THEREFORE, IT BECOMES CLEAR THAT THE ASSESSMENT ORD ER WAS PASSED BY THE AO ON 1 ST JANUARY, 2010 AFTER EXPIRY OF LIMITATION. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSES SEE. FIRSTLY, THE LD. AO HAS MENTIONED A TIME AT 12:15 AM, MEANING TH EREBY, IT IS MORNING OF 31-12-2009. RATHER, THE CIT(A) HAS RIGH TLY POINTED OUT THAT INSTEAD OF EXPRESSION NIGHT, THE LD.AO S HOULD HAVE IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 13 RECORDED MORNING. IT IS ONLY INCORRECT USE OF WO RD AT THE END OF THE AO. OTHERWISE, HE HAS PASSED THE ASSESSMENT OR DER ON 31.12.2009 AFTER 12 O CLOCK NEXT DAY WOULD BEGIN. HAD IT BEEN 12:15AM AFTER 31 ST JANUARY, THEN THE AO WOULD NOT HAVE MENTIONED 31.12.2009, RATHER IT WOULD HAVE BEEN 1 ST JANUARY, 2010. THE LEARNED FIRST APPELLATE AUTHORITY HAS MA DE ELABORATE DISCUSSIONS ON THIS POINT IN THE FINDINGS EXTRACTED (SUPRA), AND WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE LEA RNED COUNSEL FOR INTERFERING IN THE ABOVE FINDINGS OF THE CIT(A). T HIS GROUND OF APPEAL IS REJECTED IN ALL THREE YEARS. 7. WE DO NOT FIND ANY DISPARITY ON FACTS IN THESE A SSESSMENT YEARS. THEREFORE, FOLLOWING OUR ORDER IN THE ASSTT.YEARS 2 002-03 TO 2004-05, WE DO NOT FIND ANY MERIT IN THE GROUND NOS.1 AND 2. THEY ARE REJECTED. 8. IN GROUND NO.3, THE ASSESSEE HAS PLEADED THAT TH E LD.CIT(A) HAS ERRED IN SETTING ASIDE THE ORDER OF THE AO FOR RE-V ERIFICATION OF THE ISSUE. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT BY W AY OF FINANCE ACT (2001) W.E.F. 1-6-2001, THE POWER OF THE CIT(A) TO SET ASIDE ANY ISSUE TO THE AO HAS BEEN TAKEN AWAY BY AMENDMENT IN SECTI ON 251(1) OF THE INCOME TAX ACT. THEREFORE, AFTER THIS, THE LD.CIT( A) HAS NO POWER TO SET ASIDE ANY ISSUE FOR RE-VERIFICATION OR RE-ADJUD ICATION AT THE LEVEL OF THE AO. THE LD.CIT-DR DID NOT DISPUTE THIS CONTENT ION OF THE LD.COUNSEL FOR THE ASSESSEE. 9. ON DUE CONSIDERATIONS OF ALL THE FACTS AND CIRCU MSTANCES, WE ARE OF THE VIEW THAT PRIOR TO 1.6.2001, THE LD.FIRST AP PELLATE AUTHORITY HAS POWER TO SET ASIDE ANY ISSUE TO THE FILE OF THE AO FOR RE-ADJUDICATION. THIS POWER HAS BEEN OMITTED FROM SUB-CLAUSE (A) OF SECTION 251(1) OF THE INCOME TAX ACT. THEREAFTER, THE CIT(A) HAS TO ADJUDICATE THE ISSUE ON MERIT AND NO ISSUE CAN BE SET ASIDE TO THE FILE OF THE AO. THE LD.CIT(A) CAN EXERCISE THE POWER OF THE AO AND CALL FOR ANY INFORMATION WHICH REQUIRES FOR ADJUDICATION OF AN ISSUE. AS FA R AS THIS CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS CONCERNED, WE DO NOT HAVE ANY IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 14 HESITATION IN ACCEPTING IT, BUT, WE WOULD EVALUATE IN THE SUBSEQUENT PART OF THE ORDER, THE ISSUE WHICH ALLEGED TO HAVE BEEN SET ASIDE. WE WOULD FIND OUT WHETHER SUCH AN ACTION AT THE END OF THE C IT(A) AMOUNTS TO EXERCISE OF POWERS BEYOND THE ONE CONTEMPLATED IN S ECTION 251(1)(A) OF THE ACT. FOR STATISTICAL PURPOSE, THIS GROUND IS B EING TREATED AS ALLOWED. 10. IN GROUND NO.4, THE ASSESSEE HAS TAKEN SUB GROU NDS I.E. GROUND NOS.4.1 TO 4.3. IN ALL THESE GROUNDS OF THE APPEAL , THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRM ING THE ADDITION OF RS.27,75,000/-. 11. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OU TSET, SUBMITTED THAT THOUGH THIS ISSUE IS COVERED AGAINST THE ASSES SEE ON MERIT BY THE ORDER OF THE ITAT PASSED IN THE ASSTT.YEAR 2004-05 IN IT(SS)A.NO.380/AHD/2011, BUT, SINCE IN THIS YEAR, T HE ASSESSEE HAS OFFERED AN ADDITIONAL INCOME OF RS.2.45 CRORES, ANY ADDITION CONFIRMED SHOULD BE SET OFF AGAINST THE ADDITIONAL INCOME DEC LARED BY THE ASSESSEE. 12. ON THE OTHER HAND, THE LD.CIT-DR RELIED UPON TH E ORDER OF THE TRIBUNAL FOR THE ASSTT.YEARS 2003-03 AND 2004-05. THE DISCUSSION MADE BY THE TRIBUNAL IN THE ASSTT.YEAR 2004-05 ON T HIS ISSUE READ AS UNDER: 18. IN THE ASSTT.YEAR 2004-05, NEXT GROUND OF APPE AL IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF R S.12.25 LAKHS. 19. BRIEF FACTS OF THE CASE ARE THAT DURING THE COU RSE OF SEARCH, PAPERS INVENTORISED AS IN ANNEXURE A/73 WERE FOUND AND SEIZED. A PERUSAL OF PAGE NO.97 OF THIS ANNEXURE A/73, INDI CATES THAT IT IS AN ALLOTMENT LETTER DATED 21.10.2004 OF 1 ST FLOOR OF BHAGYODAYA PLAZA BY BHAGYODAYA OWNERS ASSOCIATION. IT IS MEN TIONED THAT 1350 SQ.FT AREA AT 1 ST FLOOR EXCLUDING LIFT AND STAIRS IS ALLOTTED TO SHRI GOPALBHAI N. SHAH & OTHER MEMBERS OF HIS FAMIL Y FOR A IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 15 CONSIDERATION OF RS.40 LAKHS. THE PAYMENTS HAVE BE EN MADE DURING THE PERIOD OF 1.1.2004 TO 21.10.2004 IN CASH . THE POSSESSION LETTER OF THIS PROPERTY TO THE FATHER AN D MOTHER OF THE ASSESSEE WAS GIVEN ON 21.10.2004. THIS DOCUMENT WA S AT PAGE NO.98 OF THE ANNEXURE A/73. APART FROM THESE DOCUM ENTS, PAGE NOS.1 TO 22 INVENTORISED AS ANNEXURE A/73 WERE ALSO FOUND. THESE PAGES ARE COPIES OF RECEIPTS ISSUED BY BHAGYO DAYA OWNERS ASSOCIATION TO SHRI GOPALBHAI SHAH. THE TOTAL RECE IPTS ARE FOR RS.40 LAKHS, OUT OF THE ABOVE, PAYMENT OF RS.12.25 LAKHS WAS MADE IN F.Y.2003-04 AND RS.27.75 LAKHS IN THE F.Y.2 004-05. THE AO HAS MADE AN ADDITION OF RS.12.25 LAKHS IN THE AS STT.YEAR 2004-05 AND RS.27.75 LAKHS IN THE ASSTT.YEAR 2005-0 6. 20. DISSATISFIED WITH THESE ADDITIONS, THE ASSESSE E TOOK THE MATTER WITH THE LD.CIT(A). IT WAS CONTENDED BEFORE THE CIT(A) THAT SHRI HASUBHAI THAKKAR IS THE CHAIRMAN OF BHAGY ODAYA OWNERS ASSOCIATION. HE HAD ISSUED ALLEGED ALLOTME NT AND POSSESSION LETTER ALONG WITH RECEIPT OF PAYMENT. I N FACT, THIS PERSON, ALONG WITH HIS FAMILY MEMBERS TOOK LOAN OF RS.40 LAKHS. HE EXECUTED PROMISSORY NOTE, ISSUED UNDATED CHEQUES AND AN AGREEMENT VIDE WHICH IT WAS INTENDED THAT IN CASE H E FAILED TO REPAY THE AMOUNT, THEN THE PLOT NO.6, KAUSHAL CO-OP . HSG. SOCIETY WOULD BE TRANSFERRED IN THE NAME OF ASSESSE E AT THE MARKET RATE. FOR THIS PURPOSE, HE HAS EXECUTED AN IRREVOCABLE POWER OF ATTORNEY IN FAVOUR OF THE ASSESSEES FATHE R, SHRI GOPAL SHAH ON 29.6.2004. BEFORE, THE FATHER OF THE ASSES SEE GOT THE SALE DEED EXECUTED IN THE NAME OF ASSESSEES MOTHER , SMT. PARESHABEN SHAH BY EXECUTING THE POWER OF ATTORNEY ON 11.11.2005, THE SAID PLOT WAS SOLD BY OWNER TO ONE SHRI KISOHOREBHAI V. THAKKAR ON 7.2.2005 FOR CONSIDERATI ON OF RS.13 LAKHS. FACED WITH THIS DEVELOPMENT, SHRI HASUBHAI THAKKAR HAS ISSUED THIS DOCUMENT IN RESPECT OF BHAGYODAYA PLAZA . IN OTHER WORDS, THE EXPLANATION OF THE ASSESSEE IS THAT THES E DOCUMENTS WERE ISSUED IN LIEU OF SECURITY OF THE LOAN EARLIER ADVANCED BY THE ASSESSEE TO HASUBHAI THAKKAR. ACCORDING TO THE AS SESSEE, SHRI HASUBHAI THAKKAR HAS GIVEN A DECLARATION THAT BHAGY ODAYA PLAZA WAS NEVER CONSTRUCTED AND NO POSSESSION WAS GIVEN T O THE ASSESSEE. 21. THE LD. FIRST APPELLATE AUTHORITY HAS GONE THRO UGH ALL THESE ASPECTS, BUT REJECTED THE CONTENTIONS OF THE ASSESS EE. ACCORDING TO THE LD.CIT(A) LOAN OF RS.40 LAKHS WAS ADVANCED B Y THE ASSESSEE DURING THE FINANCIAL YEARS 2001-02, 2002-0 3 AND 2003- 04. THE FIRST LOAN ADVANCED BY THE FAMILY MEMBERS WAS PROMISED TO BE REPAID BY 28.2.2004 AND NOT LATTER BY 31.5.20 04. THE IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 16 IRRECOVERABLE POWER OF ATTORNEY FOR PLOT NO.6, KAUS HAL CO-OP. HSG. SOCIETY WAS EXECUTED ON 29.6.2004, MEANING THEREBY, THE FIRST LOAN REMAINED UNPAID. THE LD.FIRST APPELLATE AUTH ORITY FURTHER OBSERVED THAT THE LOAN APPEARING IN THE RECEIPTS WA S GIVEN, STARTED FROM 1.1.2004 TO 21.10.2004. THIS IS A DIF FERENT TRANSACTION AND THE PAYMENT IS ESTABLISHED. THUS, FORTY LAKHS WERE ADVANCED FOR A PROPOSED AREA IN BHAGYODAYA PLA ZA. ACCORDING TO THE LD.CIT(A) BOTH THESE TRANSACTIONS ARE SEPARATE TRANSACTIONS AND ASSESSEE FAILED TO EXPLAIN THE SOU RCE OF PAYMENTS. IN THIS WAY, THE LD.CIT() HAS CONFIRMED THE ADDITIONS. 22. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVE, WE HAVE GONE THROUGH THE RECORD CAREFULLY. COPIES OF THE RECEIP TS FROM PAGES 1 TO 22 INVENTORISED AS ANNEXURE-A/73 ARE AVAILABLE A T PAGE NOS.101 TO 118 OF THE PAPER BOOK. THE ASSESSEE HAS COMPILED THE DETAILS AVAILABLE IN THESE RECEIPTS IN TABULAR FORM AND PLACED THESE DETAILS AT PAGE NO.100 OF THE PAPER BOOK. WE HAVE GONE THROUGH THESE DETAILS. A PERUSAL OF THE DETAILS WOULD INDI CATE THAT SHRI GOPALBHAI SHAH HAS MADE PAYMENT OF RS.40 LAKHS TO S HRI HASUBHAI THAKKAR, WHO HAD ISSUED THE RECEIPT. THE CHARGE AGAINST THE ASSESSEE IS THAT SHE HAS TO EXPLAIN THE SOURCE OF THIS PAYMENT. THE EXPLANATION OF THE ASSESSEE IS TWO FO LDS, VIZ. IT IS THE SECOND ALTERNATIVE SECURITY FOR THE LOAN AMOUNT WHICH WAS GIVEN FROM FINANCIAL YEAR 2001. THE NEED FOR EXECU TION OF THESE PAPERS WAS FELT BECAUSE, PLOT NO.6, KAUSHAL CO-OP. HSG. SOCIETY, THOUGH TRANSFERRED BY WAY OF REGISTERED SALE DEED I N THE NAME OF HER MOTHER, BY HER FATHER, ON THE BASIS OF IRRECOVE RABLE POWER OF ATTORNEY, BUT IN FACT, THIS PLOT WAS ALREADY TRANSF ERRED BY THE OWNER TO ONE SHRI KISHOREBHAI ON 7.2.2005 FOR CONSI DERATION OF RS.13 LAKHS. IN ORDER TO BUTTRESS THIS ARGUMENT, I T WAS CONTENDED THAT BHAGHYODAYA PLAZA WAS NEVER CONSTRUCTED, AND S HRI HASMUKH THAKKAR HAS FILED A LETTER DEPOSING THEREIN THAT HE HAD NEVER RECEIVED ANY SUM FROM SHRI GOPALBHAI SHAH AND SMT.PARESHABEN SHAH. ON DUE CONSIDERATION OF THESE CONTENTIONS, WE ARE OF THE VIEW THAT AS FAR THIS LE TTER FROM SHRI HASUBHAI THAKKAR IS CONCERNED, IT WAS NOT TAKEN ON RECORD BY THE LD.CIT(A). THE ASSESSEE SOUGHT TO PRODUCE THIS LET TER BY WAY OF ADDITIONAL EVIDENCE. BUT PRAYER OF THE ASSESSEE WA S REJECTED. THE COPIES OF THE RECEIPTS INDICATE THAT THE PAYMEN T OF RS.12.25 LAKHS IN THE ACCOUNTING YEAR RELEVANT TO THE ASSTT. YEAR 2004-05. HAD THE AMOUNT WAS NOT GIVEN, THEN IT WAS FOR THE A SSESSEE TO DEMONSTRATE, AS TO WHY THE NECESSITY TO EXECUTE SUC H TYPE OF RECEIPTS, IN THIS METHODICAL WAY, WAS FELT. AS FAR AS SECURITY OF THE FIRST LOAN AMOUNT IS CONCERNED, THE ASSESSEE HA S TAKEN UNDATED CHEQUES FROM SHRI HASUBHAI THAKKAR. SHE HA D ALSO GOT IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 17 EXECUTED PROMISSORY NOTES. THESE TWO SURETIES WERE ALSO THERE IN EXISTENCE. THEREFORE, IN OUR OPINION, THE FIRST AP PELLATE AUTHORITY HAS RIGHTLY CONCLUDED THAT PAYMENT OF RS.40 LAKHS W AS MADE BY THE ASSESSEE TO SHRI HASUBHAI THAKKAR OR HIS CONCER N. THIS PAYMENT WAS MADE DURING THE ACCOUNTING YEAR RELEVAN T TO THE ASSTT.YEAR 2004-05 AND 2005-06. IT IS A SEPARATE A MOUNT THAN THE ONE GIVEN IN FINANCIAL YEAR 2001-02 OR 2002-03. WE DO NOT FIND ANY MERIT IN THIS CONTENTION OF THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS DISMISSED. 13. THE TOTAL INVESTMENT MADE BY THE ASSESSEE WAS O F RS.40 LAKHS, A SUM OF RS.12.25 LACS WAS INVESTED IN ACCOUNTING PER IOD FOR ASSTT.YEAR 2004-05 AND IT WAS ADDED IN THAT YEAR. THE BALANCE PAID IN ASSTT.YEAR 2005-06, THEREFORE, THE ADDITION OF RS.27.75 LAKHS HAS BEEN MADE IN THIS YEAR. ON THE BASIS OF OUR FINDING IN ASSTT.YE AR 2004-05, IT IS TO BE CONFIRMED IN THIS YEAR ALSO. 14. THE GROUND NO.5, IS A GENERAL GROUND OF APPEAL, WHEREIN THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) ERRED IN CO NFIRMING THE ADDITION MADE BY THE AO, EVEN THOUGH, THE ASSESSEE HAS DISCL OSED AN INCOME OF RS.10 CRORES FOR THE ASSTT.YEAR 2002-03 TO 2008-09, WHICH HAS BEEN WORKED BY HER ON THE BASIS OF PEAK CREDIT PREPARED ON THE BASIS OF CASH BOOK, LOOSE PAPER SEIZED BY THE DEPARTMENT AND FROM VARIOUS BANK ACCOUNTS MAINTAINED BY HER. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT IN PRINCIPLE, THE AO AS WELL AS THE CIT(A) HAS AGREED THAT INCOME OF THE ASSESSEE HAS TO BE DETERMINED ON THE BASIS OF P EAK THEORY. THE CONCLUSION MADE BY THE AO IN PARA -18 OF HIS ORDER IS ALSO BASED ON THIS THEORY. BUT THE AO FAILED TO STRICTLY ADHERE TO TH IS METHOD. THE AO HAS ALSO FAILED TO GIVE SET OFF OF THE INCOME OFFERED B Y THE ASSESSEE FOR TAXATION AGAINST VARIOUS ADDITIONS. 15. ON PERUSAL OF THE RECORD, WE FIND THAT FACTS AR E INTERMINGLED IN SUCH A WAY THAT THERE IS QUITE DIFFICULT TO DRAW AN Y STRAIGHT INFERENCE OR ARRIVE AT ANY FIRM CONCLUSION, BECAUSE, THE ENTRIES OF FUNDS IN THE LOOSE IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 18 VIZ-A-VIZ BANK ACCOUNTS AND OTHER SEIZED ARE OVERLA PPING. THE INCOME OF AN ASSESSEE IS TO BE DETERMINED EITHER ON THE BA SIS OF ASSETS POSSESSED BY AN ASSESSEE OR ON THE BASIS OF EVIDENC E SHOWING EXPENDITURE INCURRED BY AN ASSESSEE. IN THE PRESEN T CASE, THESE ARE INVESTMENTS IN REAL ESTATE REPRESENTING ASSETS BUT EXPENDITURE ARE ALSO THERE. SOME OF THE ASSETS WERE LIQUIDATED AND INVE STMENTS WERE RECOVERED. THE LD.CIT(A) HAS MADE REFERENCE TO A L ARGE NUMBER OF ACCOUNTING ENTRIES FROM CASH BOOK AS WELL AS FROM B ANK ACCOUNTS ETC. BOTH THE AUTHORITIES HAVE AGREED THAT INCOME OF THE ASSESSEE WOULD BE COMPUTED ON THE BASIS OF PEAK INVESTMENTS AT A GIVE N POINT DURING THE YEAR. BUT AGAIN THE AO HAD MADE SEPARATE ADDITION ALSO ON THE BASIS OF ALLEGED SEIZED MATERIAL. IN OUR OPINION, NOTHING S UBSTANTIAL WOULD TURN UNDER THIS GROUND, BECAUSE THE GRIEVANCE OF THE ASS ESSEE IS THAT PEAK THEORY HAS NOT BEEN APPLIED PROPERLY. WE WILL EXAM INE THIS ASPECT WHILE TAKING SPECIFIC GRIEVANCE OF THE ASSESSEE IN OTHER GROUND. THEREFORE, THIS GROUND IS DISPOSED OFF AS ALLOWED FOR STATISTI CAL PURPOSE. 16. IN GROUND NO.6, THE ASSESSEE HAS PLEADED THAT T HE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.39,06,870/- WHICH WAS ADDED BY THE AO ON ACCOUNT OF ALLEGED UNACCOUNTED INVESTMENT IN PURCHASE OF PROPERTY AT 20, CHARANKRUPA SOCIETY, SATELLITE, AHM EDABAD. 17. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF SEARCH, A REGISTERED SALE DEED INVENTORISED AS PAGE NOS. 378 TO 389 OF ANNEXURE A/78 WAS SEIZED FROM THE RESIDENCE OF THE ASSESSEE. THIS DOCUMENT PERTAINS TO PURCHASE OF LAND AT 20, CHARANKRUPA SOC IETY, SATELLITE, AHMEDABAD. AS PER THIS DOCUMENT, THE VENDEE IS SMT . PARESHABEN GOPALBHAI SHAH AND THE SELLER IS ONE MITABEN TUSHAR BHAI PARIKH. THE TOTAL CONSIDERATION INVOLVED IS RS.36.50 LACS. THE ASSESSEE HAS DISCLOSED AN EXPENSE OF RS.3,06,870/- ON ACCOUNT OF REGISTRATION AND OTHER INCIDENTAL CHARGES. THE PAYMENTS OF RS.36.50 LACS WAS MADE IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 19 THROUGH TWO CHEQUES OF RS.18.25 LACS EACH. THIS PA YMENT WAS MADE ON 24 TH APRIL, 2004. ACCORDING TO THE A.O., WHEN ASSESSEE WAS CONFRONTED WITH THESE EVIDENCES, SHE CONTENDED THAT THE LAND W AS PURCHASED BY HER MOTHER AND PAYMENTS WERE MADE THROUGH ACCOUNT P AYEE CHEQUES. THEREFORE, IT WAS ACQUIRED THROUGH EXPLAINED SOURCE S AND NO ADDITION OUGHT TO BE MADE. THE LD. A.O. HAS REJECTED THE CO NTENTIONS OF ASSESSEE ON THE GROUND THAT ASSESSEE FAILED TO PROD UCE THE COPY OF RELEVANT BANK ACCOUNT OF PARESHABEN G SHAH FROM WH ERE TWO CHEQUES OF RS.18.25 LACS EACH WERE ISSUED BY HER. THE ASSE SSEE HAS FURTHER ADMITTED THAT AMOUNT OF RS.18.25 LACS HAS BEEN CONS IDERED BY HER WHILE WORKING OUT THE UNDISCLOSED INCOME ON THE BAS IS OF PEAK THEORY. ACCORDING TO THE A.O., THE ASSESSEE HAS TAKEN RESPO NSIBILITY OF THE ACCOUNTS MAINTAINED IN THE NAME OF HER MOTHER. THE REFORE, THE ASSESSEE HAS TO EXPLAIN THE SOURCE OF THE INVESTMEN T IN THIS PROPERTY. ACCORDINGLY, LD. A.O. HAS MADE ADDITION. 18. ON APPEAL, LD. CIT(A) CONFIRMED THE ADDITION FO R THE REASONS THAT OUT OF TWO PAYMENTS AMOUNTING TO RS.18.25 LACS AND RS.18.25 LACS EACH MADE ON 24.04.2004. THE ASSESSEE HERSELF INCLUDED A SUM OF RS.18.25 LACS IN WORKING OUT THE UNDISCLOSED INCOME ON THE B ASIS OF PEAK THEORY, MEANING THEREBY THAT ASSESSEE FAILED TO EXPLAIN THE SOURCE OF PAYMENTS. 19. BEFORE US, LD. COUNSEL FOR THE ASSESSEE CONTEND ED THAT PAYMENTS WERE MADE BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHE QUE IN THE ACCOUNT OF HER MOTHER AND OUT OF THAT ACCOUNT FINAL LY PAYMENTS WERE MADE TO THE VENDOR. HOWEVER, WHEN WE CONFRONTED TH E LD. COUNSEL FOR THE ASSESSEE TO SHOW US THE BANKS STATEMENTS EXHIB ITING DEBIT OF MONEY FROM HER ACCOUNTS AND CREDITING IN THE ACCOUN T OF HER MOTHER. HE FAILED TO SHOW ANY SUCH DOCUMENT TO US. HE ALTE RNATIVELY CONTENDED THAT SINCE THE ASSESSEE HAS DISCLOSED AN INCOME OF RS.2.45 CRORE IN THIS IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 20 YEAR. THEREFORE, EVEN IF THIS AMOUNT IS ADDED, THE N BENEFIT OF TELESCOPING TO BE GRANTED TO THE ASSESSEE. 20. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES, WE ARE OF THE VIEW THAT ASSESSEE FAILED TO EXPLAIN THE SOURCE OF INVESTMENT WITH SUPPORTING EVIDENCES, BUT SINCE ASSESSEE HAS ALREAD Y DISCLOSED THE ADDITIONAL INCOME, THEREFORE, ADDITION EVEN IF CONF IRMED UNDER THIS HEAD, IT WILL BE SET OFF AGAINST THE ADDITIONAL INC OME. TO BE MORE SPECIFIC, THIS ADDITION OF RS.39,06,870/- IS CONFIR MED BUT THE A.O. IS DIRECTED TO GRANT TELESCOPING BENEFIT OF THIS ADDIT ION QUA THE ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE. THIS GROUND OF AP PEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 21. IN GROUND NO.7, THE ASSESSEE HAS PLEADED THAT T HE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.4,27,75,000/ - WHICH HAS BEEN MADE BY THE AO ON THE GROUND THAT DURING THE COURSE OF SEARCH, THE DOCUMENTARY EVIDENCE FOUND AND SEIZED EXHIBITS THAT THE ASSESSEE HAS MADE PAYMENT TO GANESH HOUSING CORPORATION FOR THE ALLEGED UNACCOUNTED INVESTMENT IN THE LAND NEAR STAR BAZAR, AHMEDABAD. 22. THE DISCUSSION WITH REGARD TO THIS ADDITION HAS BEEN MADE BY THE AO IN PARA-10 ON PAGE NO.33 OF THE IMPUGNED ORDER. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF SEARCH, CERT AIN LOOSE PAPERS, AGREEMENTS WERE FOUND AND SEIZED. THESE DOCUMENTS HAVE BEEN INVENTORISED IN ANNEXURE A/77. PAGE NO.98 OF THIS D OCUMENT, WAS SEIZED FROM THE RESIDENCE OF THE ASSESSEE, IT INDIC ATES THAT AN INVESTMENT WAS MADE IN LAND NEAR START BAZAR, NALSA ROVAR AND SANAND. THIS INVESTMENT WAS ALLEGED TO HAVE BEEN MADE DURIN G THE ACCOUNTING PERIOD RELEVANT TO THIS ASSESSMENT YEAR AND CONTINU ED IN SUBSEQUENT YEARS ALSO. ACCORDING TO THE AO, THIS PAGE HAS BEE N DISCUSSED AT VARIOUS PLACES OF THE ASSESSMENT ORDER. THE AO HAS REPRODUCED THIS PAGE ON PAGE NO.34 OF THE ASSESSMENT ORDER. IT READ AS UNDER: IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 21 SR.NO. PARTICULARS 1. A/C NO.(1) SEJAL SHAHS CREDIT RS.1,01,56,000) AGAINST WELWORTH SHARES BOTH A/C SETTLED BY MAS WITHIN 2 MONTHS) 2. A/C NO.(2) 1,28,00,000/- SEJALBENS CREDIT 3. A/C.NO.3 1 LAC TO ALCHEMIST AT FINAL SETTLEMENT (2 MONTHS) 4. (1) CR RS.V.V.S IN THE POSSESSION OF SEJALBEN CREDIT 5. ALCHEMIST NEW PURCHASE A/C AS PER LIST. 6. HOUSE INTERFACE A/C 50/50% TO TREAT AS OUTSTANDING / TOTAL INV. BY MAS. 7. JINDAL ONLINE TOTAL INV. BY MAS PERCENTAGE 60/40% 8. SWAN MILLS INV. BY S.S. 3/30 INV. BY MAS 2/10 WIFE MARKET PURCHASE 9. STAR BAZAR A/C MASS CREDIT 3/47 ALONG WITH FLAT PAYMENT 3=12 + 35 = 3/47 LAND FLAT 10. NALSAROVAR MAS CREDIT 27,00,000 11. SANANDS LAND MASS CREDIT 18,30,000 AS A DATE ON 25/05/06 23. FOR THE PURPOSE OF ADDITION AGITATED IN THIS GR OUND, ENTRY AT SR.NO.9 IS RELEVANT. THE LD.AO MADE DETAILED ANALY SIS OF THE SEIZED MATERIAL AND HELD THAT THE PAYMENT OF RS.4,24,75,00 0/- HAS BEEN MADE TO GANESH HOUSING CORPORATION TILL 31.3.2005 WHICH REQUIRED TO BE ADDED IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, T HE AO MADE AN ADDITION OF RS.4,24,75,000/-. IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 22 24. ON APPEAL, THE LD.CIT(A) CONFIRMED THE CONCLUSI ONS OF THE AO. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUTSET , SUBMITTED THAT SINCE THE ASSESSEE HAS OFFERED ADDITIONAL INCOME OF RS.2. 45 CRORES IN THIS YEAR, IT CAN TAKE CARE OF ANY ADDITIONS MADE TO THE INCOME OF THE ASSESSEE BELOW RS.2.45 CRORES. THIS ADDITIONAL INCO ME WAS OFFERED WITH AN IDEA THAT EVEN IF SOME ADDITION HAS BEEN MADE BY THE AO THEN, THAT ADDITION CAN BE SET OFF AGAINST THE ADDITIONAL INCO ME. WITH THIS BACKGROUND IN MIND, HE TOOK US THROUGH THE SEIZED P APER AND POINTED THAT A PERUSAL OF THE SEIZED PAPER WOULD SUGGEST TH AT RS.3.47 CRORES HAS BEEN CONTRIBUTED BY SHRI MAHENDRABHAI AMRUTLAL SHAH (MAS FOR SHORT). HE FURTHER CONTENDED THAT ADDITION OF RS.3 .47 CRORES HAS BEEN MADE IN THE HANDS OF MAS ALSO. HE PLACED ON RECO RD COPY OF THE ASSESSMENT ORDER DATED 29.12.2009 PASSED IN THE CAS E OF MAS HAVING PAN AMDPS 8299 N. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, WITHOUT GOING INTO THE MERITS OF THE ADDITION, IF A MOUNTS WHICH STANDS AGAINST THE NAME OF MAS AND WHICH HAS ALREADY BEE N ADDED IN THE HANDS OF MAS, IS EXCLUDED FROM THE TOTAL ADDITION MADE BY THE AO UNDER THIS HEAD, THEN, THE TOTAL INCOME ASSESSED IN THE HANDS OF THE ASSESSEE IN THIS YEAR WOULD FALL BELOW THE ADDITION AL INCOME DISCLOSED BY THE ASSESSEE. ASSESSEE WILL HAVE NO GRIEVANCE, IF AFTER CONFIRMING THE PART ADDITION ALLEGED TO HAVE BEEN PAID BY THE ASSE SSEE IN STAR BAZAR LAND, AND THEREAFTER, SET OFF THAT ADDITION AGAINST THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE. THE LD.CIT(A)-DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE AO. HOWEVER, SHE COULD NOT C ONTROVERT AS TO HOW THE SAME AMOUNT CAN BE ADDED IN THE HANDS OF THE TW O ASSESSEES INDEPENDENTLY. 25. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. WE FIND THAT IN PARA-10 ON PAGE NO.28, THE LD.AO HAS MADE DISCUSSION ON THIS ISSUE IN THE CASE OF MAS. AFTER REPRODUCING THE REPLY OF THE ASSESSEE, HE MADE AN ADDITION OF R S.3.47 CRORES ON THE IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 23 BASIS OF NARRATIONS FOUND ON PAGE NO.98 OF THE ANNE XURE A/77. HE MADE IDENTICAL DISCUSSION IN THE CASE OF MAS ALSO. O NLY VARIATION IS THAT IN THE REPLY DATED 21.12.2009, MAS HAS OBSERVED THAT IF IT BE HELD THAT HE HAD MADE INVESTMENT IN STAR BAZARLAND, THEN, THE AMOUNT INVESTED HAD BEEN RECOVERED BY SEJAL SHAH AND BY EXERCISING THE POWER UNDER SECTION 226(3), THE TAXES SHOULD BE RECOVERED FROM HER. THE DISCUSSION MADE BY THE AO ON PAGE NO.32 READ AS UNDER: THE REPLY OF ASSESSEE IS CAREFULLY CONSIDERED. THE SUBMISSION OF ASSESSEE ARE NOT TRUE, DUE TO FOLLOWING REASONS: (I) THE DOCUMENT AT PAGE NO.98 OF ANNEXURE A-77 S EIZED FROM THE RESIDENCE OF SEJAL SHAH IS SIGNED BY BOTH THE P ARTIES, THEREFORE, IT IS AS PER THEIR UNDERSTANDING OF THEI R JOINT INVESTMENT AS ON DATE OF DOCUMENT I.E. 25.05.2006. (II) AS DISCUSSED, IN EARLIER PARAS THAT AS PER MOU BETWEEN SEJAL SHAH GROUP AND MAHENDRA SHAH, SHRI MAHESH SHAH IS T HE FINANCIER FOR THE PROJECT. (III) MAHENDRA SHAH & MAHESH SHAH THEMSELVES ADMITT ED PART INVESTMENT OF RS.25.50 LACS IN LAND AND INVESTMENT OF RS.35.00 LACS IN RATNAMANI FLATS. THE INVESTMENT IN RATNAMAN I FLATS WAS PART & PARTIAL OF DEVELOPMENT OF LAND NEAR STAR BAZ AR AND ONLY FOR THE PURPOSE OF THIS, THESE FLATS WERE ACQUIRED BY T HE GROUPS. IN VIEW OF DISCUSSION HELD ABOVE, IT IS PROVED THAT THE AMOUNT OF RS.3.47 CRORES AS MENTIONED IN THE PAGE NO.98 OF AN NEXURE A-77, AS INVESTED BY MAHENDRA SHAH IN STAR BAZAR LAND IS INDEED THE INVESTMENT MADE MAHENDRA SHAH. IT IS IMMATERIAL WHE THER SHRI MAHENDRA SHAH TRANSFERRED THE FUND TO SEJAL SHAH OR THE FIGURE OF RS.3.47 CRORES AS HIS INVESTMENT IS ARRIVED AFTER W ORKING OUT ANY MUTUAL ADJUSTMENT OF FUND BY BOTH GROUPS. IT WAS OBSERVED THAT RATNA MANI FLATS WERE PURCHASE D BY TIE GROUP IN THE YEAR 2005-06 AND THE AGREEMENT BETWEEN MANIBHADRA TRADELINK PVT LTD AND MAFIESH SHAH FOR T HE PURPOSE OF LAND NER STAR BAZAR WAS EXECUTED ON 29.04.2005, THEREFORE, T HE TOTAL INVESTMENT OF SHRI MAHENDRA SHAH IN STAR BAZAR LAND AND RATNAMANI FLATS IS CONSIDERED IN THE YEAR 2005-06 I .E. A.Y.2006- IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 24 07. THEREFORE, THE AMOUNT OF RS.3.47 CRORES IS ADDE D TO THE TO THE INCOME OF ASSESSMENT YEAR 2006-07. 26. WE FURTHER FIND THAT IN PARA 18 THE AO HAS MADE AN ADDITION OF RS.3.47 CRORES WHILE WORKING OUT THE TOTAL INCOME O F MAS AT RS.3,63,34,380/-. THE AO HAS DETERMINED TAXABLE IN COME OF MAS AT RS.1,58,14,700/-. THIS INCOME HAS BEEN DETERMINED HERE AT THIS FIGURE, BECAUSE IN PARA 18.1, THE LD.AO HAS OBSERVED THAT I N VIEW OF INTERMINGLING OF VARIOUS ACCOUNTS, INVESTMENTS AND TRANSACTIONS IN VARIOUS BENAMI NAMES INCLUDING THE NAMES OF COMPANIES BY THE ASSESSEE, THE NET ADDITIONAL INCOME IS TO BE COMPUT ED ON THE BASIS OF PEAK THEORY AND TELESCOPING EFFECT OF ASSETS/INVEST MENT/EXPENSES IS GIVEN FOR UTILIZATION OF PEAK FOR THE SAME. THEREF ORE, IF THE AMOUNTS ROUTED THROUGH KARNAVATI DYECHEM PVT. LTD. AND REKM O DYES PVT.LTD. IS FOUND IN EXCESS OF AMOUNT INVESTED/EXPENDITURE INCU RRED BY HIM, THE SAME IS ADDED TO RESPECTIVE ASSESSMENT YEARS. IN O THER WORDS, IN THE COMPUTATION OF INCOME, HE MADE ADDITION OF RS.3.47 CRORES ON ACCOUNT OF INVESTMENT IN STAR BAZAR LAND AND RATNAMANI FLAT S. THIS ADDITION HAS BEEN MADE ON THE BASIS OF NARRATIONS AVAILABLE AT SERIAL NO.9 OF PAGE NO.98 OF ANNEXURE A/77. THE SAME AMOUNT HAS B EEN ADDED IN THE CASE OF ASSESSEE - SEJAL SHAH WHILE WORKING OUT THE TOTAL AMOUNT OF RS.4,24,75,000/-. WE HAVE ALSO BEEN INFORMED THAT MAS HAS NOT FILED APPEAL AGAINST ASSESSMENT ORDER DATED 29.12.2009. THUS, THAT ADDITION, AS ON TODAY - ALMOST AFTER SEVEN YEARS - STANDS CONFIRMED. THE STAND OF THE ASSESSEE IS THAT THE ALLEGED INVES TMENT IN STAR BAZAR LAND WAS BEING MADE BY MAS TO THE EXTENT OF RS.3. 47 CRORES. THIS STAND GETS FORTIFIED WITH THE STAND OF AO TAKEN IN THE CASE OF MAS. APART FROM THE ABOVE PERUSAL OF SR.NO.9 OF THE SEIZ ED PAPER ALSO INDICATE THAT CONTRIBUTION WAS MADE BY SOME MAS, THEREFORE, THERE IS NO JUSTIFICATION FOR ADDING THIS AMOUNT OF RS.3.47 CRORES AGAIN IN THE IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 25 HANDS OF THE ASSESSEE. WE DELETE AN AMOUNT OF RS.3. 47 CRORES OUT OF THE TOTAL ADDITION OF RS.4,24,75,000/-. 27. APART FROM THE ABOVE, LD. COUNSEL FOR THE ASSES SEE HAS PLACED ON RECORD THE FOLLOWING DETAILS EXHIBITING THE NET INV ESTMENT REQUIRED TO BE CONSIDERED AS UNEXPLAINED INVESTMENT IN HANDS OF TH E ASSESSEE QUA STAR BAZAR LAND. THE DETAILS SUBMITTED BY THE LD C OUNSEL FOR THE ASSESSEE READ AS UNDER: INVESTMENT POSITION OF APPELLANT AND SHRI MAHENDRA SHA H IN STAR BAZAR PROPERTY TOTAL INVESTMENT IN STAR BAZAR IN A.Y. 2005-06 [CIT (A) ORDER PAGE NO. 31-32)] 42475000 TOTAL INVESTMENT IN STAR BAZAR IN A.Y. 2006-07 [CIT (A) ORDER PAGE NO. 79-80)] 9000000 TOTAL INVESTMENT IN STAR BAZAR IN A.Y. 2007-08 [CIT (A) ORDER PAGE NO. 30)] 150000 51625000 LESS: AMOUNT RECEIVED BACK: AMOUNT RECEIVED BACK IN A.Y. 2005-06 [CIT(A) ORDER PAGE NO. 29)] 0 AMOUNT RECEIVED BACK IN A.Y. 2006-07 [CIT(A) ORDER PAGE NO. 29-30)] 11000000 AMOUNT RECEIVED BACK IN A.Y. 2007-08 [CIT(A) ORDER PAGE NO. 30)] 2500000 13500000 NET INVESTMENT IN STAR BAZAR 381250000 LESS: AMOUNT INVESTED BY SHRI MAHENDRA SHAH [AO PAG E NO.34] 34700000 NET INVESTMENT BY MS SEJAL SHAH 3425000 TOTAL INVESTMENT IN STAR BAZAR UPTO 25/05/2006 404 75000 INVESTMENT BY SHRI MAHENDRA SHAH AS PER SEIZED DOCUMENT [AO PAGE NO.34] 34700000 NET INVESTMENT BY MS SEJAL SHAH AS ON 25/05/2006 5775000 28. SINCE, ALL THE APPEALS WERE LISTED BEFORE US WH EN WE HEARD THIS APPEAL, THE HEARING IN A.Y. 2006-07 AND 2007-08 COU LD NOT TAKE PLACE ON ACCOUNT OF NON-AVAILABILITY OF THE COMPLETE WORK ING OF PEAK INVESTMENT AT THE END OF ASSESSEE IN RESPECT OF OTH ER ISSUES. THE IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 26 ADDITION ON ACCOUNT OF INVESTMENT IN STAR BAZAR LAN D HAS ONLY BEEN MADE IN A.Y. 2005-06. IN OTHER YEARS, SUCH ADDITIO N IS NOT DISCERNIBLE AS CAN BE SEEN FROM THE TOTAL INCOME COMPUTED BY TH E A.O. EXTRACTED FROM PAGE 9 OF THIS ORDER. HOWEVER, FROM THE WORKI NG GIVEN BY THE LD. COUNSEL FOR THE ASSESSEE, IT REVEALS THAT A SUM OF RS.90 LACS WAS ALLEGED TO HAVE BEEN MADE IN A.Y. 2006-07 AND RS.15 LACS IN A.Y. 2007-08, AGAINST THESE INVESTMENT SHE HAS RECOVERED RS.1.11 CRORE IN A.Y. 2006- 07 AND RS.25LACS IN A.Y. 2007-08. THAT IS THE REAS ON LD. A.O. HAS NOT MADE ANY ADDITION QUA INVESTMENT IN STAR BAZAR LAND IN THESE TWO YEARS. BECAUSE IN NET THERE WAS NO INVESTMENT IN T HESE TWO YEARS. THESE ARE THE WORKINGS REFERRED BY THE ASSESSEE IN ORDER TO DEMONSTRATE PEAK THEORY. THEREFORE, TAKING INTO CO NSIDERATION THE TOTAL INVESTMENT MADE BY THE ASSESSEE AND SHRI MAHENDRA S HAH VIS--VIS THE INVESTMENT RECEIVED BACK BY THE ASSESSEE FOR ROTATI ON OF FUNDS. THE NET AMOUNT WORKED OUT TO BE RS.57,75,000/- WHICH IS TO BE ADDED IN THE HANDS OF THE ASSESSEE ULTIMATELY. ACCORDINGLY, THE ADDITION TO THIS EXTENT IS CONFIRMED AS AGAINST THE ADDITION OF RS.4 ,24,75,000/- MADE BY THE A.O. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 29. IN THE NEXT GROUND OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITIO N OF RS.15,48,242/-. LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUB MITTED THAT IN A.Y. 2004-05 AN ADDITION OF RS.20,05,384/- WAS MADE BY T HE A.O. THE ADDITION WAS MADE ON THE GROUND THAT ASSESSEE HAS M ADE INVESTMENT IN SHARES. THE LD. A.O. HAS MADE ANALYSIS OF THE DEMA T ACCOUNT OF THE ASSESSEE. THE TRIBUNAL HAS MADE FOLLOWING DISCUSSI ON ON THIS ISSUE IN A.Y. 04-05: 23. IN THE NEXT GROUND OF APPEAL, THE ASSESSEE HAS CONTENDED THAT THE LD.FIRST APPELLATE AUTHORITY HAS ERRED IN CONFIRMING THE ADDITION OF RS.24,05,384/-. IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 27 24. BRIEF FACTS OF THE CASE ARE THAT ON ANALYSIS OF DEMAT ACCOUNT IT REVEALED TO THE AO THAT THE ASSESSEE HAD MADE INVESTMENT IN SHARES OF LIMITED COMPANIES LISTED WI TH BSE AND NSE. THE AO ON THE BASIS OF DETAILS AVAILABLE IN D EMAT ACCOUNT, PREPARED A STATEMENT OF THE ASSESSEES INVESTMENT O F LAST DAY OF EACH YEAR. HE HAS ANNEXED THIS STATEMENT ALONG WIT H ASSESSMENT ORDER. ACCORDING TO THE AO, THE ASSESSEE DID NOT S UBMIT ANY DETAILS OF PURCHASE VALUE OF THESE SHARES, THEREFOR E, HE ADOPTED THE VALUE OF THE SHARES ON THE BASIS OF LAST DAY TR ANSACTION, AS AVAILABLE IN BSE/NSE DATA, AND WORKED OUT THE VALUE OF THE INVESTMENT MADE BY THE ASSESSEE. THE WORKING MADE BY THE AO READS AS UNDER: DATE FINANCIAL YEAR TO WHICH IT PERTAINS ASSESSMENT YEAR VALUE UNDISCLOSED INVESTMENT FOR THE YEAR A B C D E 31.03.2004 2003-04 2004-05 2405384 2405384 31.03.2005 2004-05 2005-06 3953619 1548235 31.03.2006 2005-06 2006-07 10645153 6691534 31.03.2007 2006-07 2007-08 32100453 21554300 25. THE LD.AO IN THIS WAY MADE ADDITION OF RS.24,05 ,384/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARES. 26. ON APPEAL, THE LD.CIT(A) HAS CONFIRMED THE ADDI TION. THE FINDINGS OF THE LD.CIT(A) IS WORTH TO NOTE IN THIS CONNECTION. 6.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT. AS PER THE ANNEXURE ATTACHED TO THE ASSESSMENT ORDER, THE AO HAS WORKED OUT THE TOTAL INVESTMENT OF RS.24,05,384 /- IN SHARES IN THE NAME OF THE APPELLANT, HER BROTHER MI T SHAH, HER FATHER GOPALBHAI SHAH, HER MOTHER MRS.PARESHABE N SHAH. IN THE ABSENCE OF ANY DETAILS WHATSOEVER GIV EN BY THE APPELLANT BEFORE THE AO, THE AO WORKED OUT THE' INVESTMENT IN SHARES FROM THE DMAT ACCOUNT OF THE A BOVE MENTIONED PERSONS AS ON 3173/2004 BY TAKING THE MAR KET RATE OF THE SHARES AS ON 31/3/2004. THE CASE OF THE APPELLANT IS THAT THE AO SHOULD HAVE ADOPTED THE CO ST OR THE MARKET RATE WHICHEVER IS LOWER FOR THE PURPOSE OF V ALUATION OF THE SHARES. ANOTHER CONTENTION OF THE APPELLANT IS THAT SINCE THE APPELLANT HAS WORKED OUT HER INCOME ON TH E BASIS IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 28 OF PEAK THEORY, THE AO SHOULD HAVE NOT MADE SEPARAT E ADDITION ON ACCOUNT OF THE INVESTMENT IN SHARES. AS REGARDS THE INVESTMENT IN SHARES AS ON 31/3/2004, THE APPEL LANT HAS NOT DISPUTED THE FINDING OF THE AO REGARDING TH E NUMBER OF SHARES HELD AS ON 31/3/2004. FOR THE PURPOSE OF UNACCOUNTED INVESTMENT IN THE SHARES ON THE BASIS O F DMAT ACCOUNT, THE AO HAS TAKEN THE CLOSING BALANCE OF TH E SHARES AS ON 31/3/2004 AND SUBTRACTED THE OPENING BALANCE OF SHARES AS ON 1/4/2003. IN THE ABSENCE OF THE DETAIL S OF PURCHASE AND SALE OF SHARES GIVEN BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION, THE AO HAD NO OPTION BUT TO TAKE THE MARKET VALUE OF THE SHARES AS ON 31/3/2004 . EVEN BEFORE ME, NO SUCH DETAILS OF PURCHASE AND SALE OF SHARES WAS FURNISHED. THEREFORE, THE AO WAS JUSTIFIED TO A DOPT THE MARKET VALUE OF THE SHARES AS ON 31/3/2004 AS THE C OST OF THE SHARES WAS NOT KNOWN TO THE AO, NOR WAS SUCH DE TAILS PROVIDED BY THE APPELLANT EITHER BEFORE ME OR BEFOR E THE AO. AS REGARDS THE SECOND CONTENTION OF THE APPELLA NT THAT SINCE THE APPELLANT HAS WORKED OUT THE ADDITIONAL I NCOME ON THE BASIS OF THE PEAK THEORY, NO SEPARATE ADDITION ON ACCOUNT OF INVESTMENT IN SHARES SHOULD HAVE BEEN MA DE BY THE AO, IT IS TO BE STATED THAT IN THE RETURN OF IN COME THE APPELLANT HAS DISCLOSED TOTAL ADDITIONAL INCOME OF RS. 12.16 LACS BUT IN THE CHART OF THE UNACCOUNTED INCOME ATT ACHED WITH THE RETURN OF INCOME, THE -APPELLANT HAS SHOWN THE IDENTIFICATION OF ASSETS AGAINST THE' SAID ADDITION AL INCOME AS UNDER: PURCHASE OF COMPUTER RS.1,27,000 INVESTMENT IN FLAT AT PANCHVIHAR RS.9,89,000 EQUITY SHARES IN MANIBHADRA TRADELINK PVT. LTD. RS.1,00,000 CASH GIVEN BY SEJAL SHAH TO MANIBHADRA TRADELINK PVT.LTD. RS.40,000 TOTAL RS.12,56,00 6.3. IN OTHER WORDS, FROM THE STATEMENT OF ADDITIO NAL INCOME DISCLOSED BY THE APPELLANT, IT IS SEEN THAT, THE APPELLANT HAS ONLY DISCLOSED THE INVESTMENT OF RS. ONE LAKH IN THE EQUITY SHARES OF MANIBHADRA TRADELINK PVT LT D, A PRIVATE LIMITED COMPANY OF THE APPELLANT. NO OTHER INVESTMENT IN OTHER SHARES OF LIMITED COMPANIES WHI CH ARE LISTED WITH THE BSE AND NSE IS DISCLOSED IN THE SAI D DISCLOSURE. IN OTHER WORDS, EVEN ON THE BASIS OF PE AK IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 29 THEORY, THE INVESTMENT IN LIMITED COMPANY'S SHARES SHOULD ALSO HAVE BEEN INCLUDED IN THE TOTAL UNACCOUNTED IN COME OF THE APPELLANT. AS THE APPELLANT HAS WORKED OUT THE ADDITIONAL INCOME ON THE BASIS OF THE INCOME OR THE INVESTMENTS, WHICHEVER IS HIGHER, AND FOR ASSESSMEN T YEAR 2004-2005, THE ADDITIONAL INCOME HAS BEEN WORKED OU T ON THE BASIS OF INVESTMENTS, THE INVESTMENT OF RS. 24,06,389/- SHOULD HAVE FORMED PART OF THE TOTAL INVESTMENTS AS ON 31/3/2004. THIS MEANS THAT, THE P EAK THEORY ADOPTED BY THE APPELLANT HAS NOT CONSIDERED THE INVESTMENT IN THE LISTED COMPANIES WHICH HAS BEEN W ORKED OUT BY THE AO AT RS. 24,06,389/- IN ASSESSMENT YEAR 2004- 2005. IN FACT, THE APPELLANT HAS NOT INCLUDED ANY I NVESTMENT IN THE SHARES OF LIMITED COMPANIES IN ANY OF THE AS SESSMENT YEARS. I HAVE, THEREFORE, NO HESITATION IN HOLDING THAT THE AMOUNT OF RS. 24,06,389/- REPRESENT THE UNACCOUNTED INVESTMENT OF THE APPELLANT IN THE VARIOUS SHARES O F LIMITED COMPANIES. IN OTHER WORDS, THE AO WAS JUSTIFIED IN MAKING ADDITION OF RS. 24,06,389/- ON ACCOUNT OF UNDISCLOS ED INVESTMENT IN THE SHARES OF LISTED COMPANIES IN ASS ESSMENT YEAR 2004-2005. THE ADDITION MADE BY THE AO IS THER EFORE CONFIRMED. 27. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS MADE ADDITIONS OF THE SHARES WHICH WERE HELD BY THE ASSESSEE PRIOR TO THE YEAR UNDER CONSIDERATION. IN OTHER WO RDS, THE INVESTMENT MADE IN EARLIER YEARS HAS ALSO BEEN INCL UDED IN THE ADDITION. ACCORDING TO HIM, THERE IS A VARIATION I N THE QUANTITY APPEARING IN THE DEMAT ACCOUNT AND QUANTITY FOR WHI CH THE ADDITION HAS BEEN MADE. 28. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDE R OF THE CIT(A). 29. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND G ONE THROUGH THE RECORD CAREFULLY. THE LD.AO HAS ANNEXE D A LIST OF SHARES WHICH HAVE BEEN CONSIDERED BY HIM AS UNEXPLA INED INVESTMENT OF THE ASSESSEE. THE MAJOR ITEM OF INVE STMENT WORKED OUT BY HIM IS WITH REGARD TO SMT.PARESHABEN SHAH. THE CLIENT ID IS 10735254. THE BALANCE HAS BEEN SHOWN AT RS.13,90,888/-. AGAINST THIS ID, 56 SCRIPS HAVE BE EN NOTICED BY THE AO, IN THE ANNEXURE APPENDED WITH THE ASSESSMEN T ORDER. ALL THESE SHARES HAVE BEEN SHOWN PERTAINED TO F.Y.2003- 04. THE LD. COUNSEL FOR THE ASSESSEE FAILED TO PIN POINT, OUT O F THESE 56 SCRIPS, WHICH WERE PURCHASED BY THIS PERSON IN EARL IER YEARS. HE IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 30 MERELY STATED THAT SOME OF THE SHARES WHICH HAVE BE EN INCLUDED WERE PURCHASED IN EARLIER YEARS, BUT AFTER THIS LIS T, AT LEAST THE ASSESSEE SHOULD IDENTIFY, WHICH ARE THOSE SCRIPS DE SERVE TO BE EXCLUDED ON THE GROUND THAT THE INVESTMENT DOES NOT PERTAIN TO THIS YEAR. NO SUCH EFFORTS HAVE BEEN MADE. THE AO HAS, ACCORDINGLY, RECORDED A FINDING THAT THE ASSESSEE D ID NOT SUBMIT ANY DETAIL. HE HAS WORKED OUT THE DETAILS ON ANALY SIS OF DEMAT ACCOUNT. THE LD.CIT(A) HAS ALSO CONSIDERED THIS AS PECT IN THE FINDINGS EXTRACTED (SUPRA). NO MATERIAL HAS BEEN B ROUGHT TO OUR NOTICE WHICH CAN SUGGEST THIS ERRONEOUS APPROACH AD OPTED BY THE REVENUE AUTHORITIES. WE, THEREFORE, DO NOT FIND AN Y MERIT IN THIS GROUND OF APPEAL. IT IS REJECTED. IN THE PRESENT ASSESSMENT YEAR, LD. CIT(A) HAS NOT RECORDED ANY INDEPENDENT FINDING RATHER CONFIRMED THE ADDITION O F RS.15,48,242/- BY FOLLOWING HIS FINDING RECORDED IN A.Y. 2004-05. WH EN WE CONFRONTED THE LD. COUNSEL ABOUT THE FINDING OF LD. CIT(A) RECORDE D IN THE IMPUGNED ORDER, HE AGREED THAT ISSUE IN DISPUTE IS COVERED A GAINST THE ASSESSEE. HE MADE ALTERNATIVE PRAYER SUBMITTING THEREIN THAT TELESCOPING OF THIS ADDITION BE GRANTED TO THE ASSESSEE AGAINST THE ADD ITIONAL INCOME DISCLOSED BY HER. WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL, BUT, WE ACCEPT THE ALTERNATIVE SUBMISSION OF THE AS SESSEE. THE ADDITION OF RS.15,48,242/- WILL BE SET OFF AGAINST THE ADDIT IONAL INCOME DISCLOSED BY THE ASSESSEE. 30. IN THE NEXT GROUND OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITIO N OF RS.81,50,000/-. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COU RSE OF SEARCH A DRAFT MEMORANDUM OF UNDERSTANDING DATED 08 TH JANUARY, 2005 BETWEEN YAMUNADUTT AGARWAL AND MIT G. SHAH WAS FOUND AT THE RESIDENCE OF MS. SEJAL G SHAH. THIS DOCUMENT WAS INVENTORISED AS AN NEXURE A-4 PAGE NO. 25 & 26. ON PERUSAL OF THIS DOCUMENT SHOWED TH AT MR. MIT G. SHAH AND HIS ASSOCIATE AGREED TO TAKE OVER THE BUSINESS OF JINDAL ONLINE AS GOING CONCERN BY BUYING 3,00,73,651 SHARES BELONGIN G TO AMIT AGARWAL AND HIS FAMILY MEMBERS FOR A CONSIDERATION OF RS.1, 72,00,000/-. OVER IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 31 AND ABOVE THIS AMOUNT, RS.22,44,000/- IS TO BE PAID FOR BANK BALANCES AND DEPOSITS AND AMOUNT OF RS.27 LACS WAS TO BE PAI D FOR VALUE OF PLANT AND MACHINERY. LD. A.O. FURTHER OBSERVED THAT PAGE NO.97 OF ANNEXURE A-77 SEIZED FROM THE RESIDENCE OF SEJAL G SHAH INDI CATE THAT A SUM OF RS.1,73,73,132/- WAS RECEIVED FROM MAHENDRABHAI AND THE BALANCE DUE WAS RS.9,68,482/-. THE LD. A.O. THEREAFTER MADE RE FERENCE TO A REGISTER WHICH WAS INVENTORISED AS ANNEXURE BS-10, SEIZED FR OM THE RESIDENCE OF SHRI RASHMI KANT SHAH, WHO IS MATERNAL UNCLE OF THE ASSESSEE. PAGE NO.40 OF THIS ANNEXURE CONTAINS DETAILS OF TRANSACT ION WITH AMIT YAMUNADUTT AGARWAL IN RESPECT OF JINDAL ONLINE. SI MILARLY, HE MADE DISCUSSION OF THE DOCUMENTS RECOVERED FROM THE PREM ISES OF SANJIV P. SHAH WHICH CONTAINS THE HEADING JINDAL ONLINE / KD PL / RDPL. THE KDPL & RDPL ARE SHORT FORM OF KARNAVATI DYECHEM PVT . LTD. & REKMO DYES PVT. LTD. THESE COMPANIES WERE ACQUIRED BY SE JAL & MAHENDRA GROUP FOR THE PURPOSE OF ACQUIRING JINAL ONLINE. T HE A.O. THEREAFTER ULTIMATELY ARRIVED AT A CONCLUSION THAT CASH PAYMEN T SHOWN BY HER ON PAGE NO.40 OF ANNEXURE BS-10 IS THE ROTATION OF CAS H, WAS NOT ACCEPTABLE. LD. A.O. WORKED OUT THE PAYMENT OF RS. 81,50,000/- BY THE ASSESSEE AND ACCORDINGLY MADE ADDITION. 31. APPEAL TO THE LD. CIT(A) DID NOT BRING ANY RELI EF TO THE ASSESSEE. 32. BEFORE US, LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT STAND OF THE ASSESSEE FROM THE VERY BEGINNING WAS THAT DOCUMENT FOUND AT THE RESIDENCE INVENTORISED AS PAG E NOS. 25 & 26 OF ANNEXURE A-4 WAS A DRAFT MEMORANDUM OF UNDERSTANDIN G. THE JINDAL ONLINE WAS NOT ULTIMATELY ACQUIRED BY THE ASSESSEE. THEREFORE, THE ALLEGED PAYMENT IN CASH HAS NOT BEEN ACTUALLY GIVEN EFFECT AND NO ADDITION OUGHT TO BE MADE. HE MADE REFERENCE TO TH E REPLY OF ASSESSEE REPRODUCED ON PAGE NO.49 OF THE ASSESSMENT ORDER. APART FROM THIS, LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT AS DISCERNABLE FROM THE IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 32 SEIZED DOCUMENTS, 60% OF THE STAKE IN THE ALLEGED J INDAL ONLINE COMPANY WAS OF SHRI MAHENDRA SHAH AND THEREFORE THE ADDITION TO THE EXTENT OF 60% OF RS.81,50,000/- OUT TO BE MADE IN T HE HANDS OF SHRI MAHENDRA SHAH AND THE 40% ATTRIBUTABLE IN THE HANDS OF ASSESSEE WHICH COME OUT TO RS.36,10,000/-. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE IF THESE ADDITIONS HAVE BEEN CONFIRMED, TH EN BENEFIT OF TELESCOPING AGAINST ADDITIONAL INCOME BE GRANTED TO THE ASSESSEE. 33. THE LD. D.R. ON THE OTHER HAND RELIED UPON THE ORDER OF LD. CIT(A). 34. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORD CAREFULLY. IN ORDER TO MAKE AN ADDITION OF RS.81,50,000/-, LD. A.O. HAS MADE REFERENCE TO THREE DOCUMENTS, NAM ELY, PAGE NOS. 25 & 26 OF ANNEXURE A-4, PAGE NO.97 OF ANNEXURE A-77 A ND PAGE NO.40 OF ANNEXURE BS-10. ON THE STRENGTH OF ENTRY FOUND IN THESE DOCUMENTS, LD. A.O. HAS HELD THAT ASSESSEE HAS MADE INVESTMENT FOR ACQUIRING JINDAL ONLINE. AS FAR AS PAGE NOS.25 & 26 OF ANNEX URE A-4 ARE CONCERNED, THIS DOCUMENT IS A DRAFT MOU DATED 08.01 .2005 BETWEEN YAMUNADUTT AGARWAL AND MIT G. SHAH FOR A DEAL OF EQ UITY SHARE OF JINDAL ONLINE. THIS DOCUMENT WAS NOT SIGNED BY THE PARTIE S AND UNDATED. THE DATE REFERRED AS 0801.2005 IS REFERENCE IN THE OPEN ING LINE. THUS, ON THE STRENGTH OF THIS DOCUMENT, IT CANNOT BE HELD TH AT ASSESSEE HAS ACTUALLY ACQUIRED JINDAL ONLINE. THE SECOND DOCUME NT REFERRED BY THE A.O. IS PAGE NO.97 OF ANNEXURE A-77. THIS DOCUMENT DOES NOT CONTAIN THE COMPLETE PRINT OUT OF THE PAYMENTS, SO, THIS WA S AN INCOMPLETE DOCUMENT AND LD. A.O. IN ORDER TO COMPLETE THIS DOC UMENT MADE REFERENCE TO PAGE NO.5 OF ANNEXURE A-1 WHICH WAS SE IZED FROM THE RESIDENCE OF ONE SANJIV P. SHAH. THE A.O. NEVER DI SCLOSED THE PREMISES FROM WHERE THIS DOCUMENT WAS SEIZED. HE NEVER SUPP LIED THE COPY OF THE DOCUMENT OR COPY OF THE HARD DISC FROM WHERE TH IS DOCUMENT WAS SAID TO BE RECOVERED. THE LD. A.O. ONLY MADE REFER ENCE, THAT THE ENTRY IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 33 AVAILABLE IN THE DOCUMENT ARE TALLING WITH THE ENTR IES IN ANNEXURE A-77 AND THEREFORE THE ENTRIES WHICH ARE NOT ELIGIBLE IN THE A-77 CAN BE TAKEN FROM THIS DOCUMENT. TO OUR MIND, THE REVENUE AUTHO RITIES HAVE FAILED TO ESTABLISH THE LIVE LINK BETWEEN THESE DOCUMENTS. A.O. COULD NOT ESTABLISH THE SOURCE OF THE DOCUMENT AND HOW SANJIV P. SHAH WAS SUPPOSED TO KEEP A DOCUMENT SIMILAR TO ANNEXURE A-7 7. THUS, THIS DOCUMENT CANNOT BE USED FOR CORROBORATIVE PURPOSES. THE OTHER DOCUMENT IS PAGE NO.40 OF ANNEXURE BS-10. THIS DOC UMENT WAS SEIZED FROM THE RESIDENCE OF SHRI RASHMIKAN C. SHAH. ACC ORDING TO A.O., THIS DOCUMENT CONTAINS THE DETAILS OF RECEIPT OF MONEY B ETWEEN 21.11.2005 & 07.02.2006 AMOUNTING TO RS.36,10,000/- AS AGAINST WHICH TOTAL PAYMENTS ON VARIOUS DATES BETWEEN 08.11.2004 TO 04. 02.2005 COMES TO RS.81,50,000/-. ON THE BASIS OF NEWSPAPERS, THE A.O. HAS PROCEEDED TO ADD RS.81,50,000/-. THIS PAGE WAS NOT FOUND FRO M THE RESIDENCE OF THE ASSESSEE. IT WAS NOT IN THE HANDWRITING OF ASS ESSEE OR ANY OF HER EMPLOYEES OR BY ANY FAMILY MEMBERS. THE PAPERS HAV E BEEN FOUND FROM SHRI RASHMIKANT C. SHAH WHO IS A THIRD PARTY. THE A.O. HAS DRAWN INFERENCE THAT ENTRIES AVAILABLE IN THESE PAGES ARE BELONGING TO THE ASSESSEE BUT HE FAILED TO BRING CONCLUSIVE EVIDENCE IN SUPPORT OF HIS CONCLUSIONS. IF ALL THESE EVIDENCES ARE LOOKED WIT H THE ANGLE THAT ULTIMATELY JINDAL ONLINE WAS NOT ACQUIRED BY THE AS SESSEE, THEN WHAT IS THE RELEVANCY OF THE PAYMENT WHICH IS TO BE INCLUDE D IN THE PEAK INVESTMENT. THE LD. FIRST APPELLATE AUTHORITY INST EAD OF INDEPENDENTLY DECIDING THIS ISSUE PROCEEDED TO MAKE AN OBSERVATIO N THAT SINCE ASSESSEE HAS TAKEN A SUM OF RS.81,50,000/- WHILE WO RKING OUT THE PEAK INVESTMENT DURING THE YEAR, THEREFORE, SHE HAS ACCE PTED THE WORKING MADE BY THE A.O. THIS WAS AN ALTERNATIVE CONTENTIO N OF THE ASSESSEE. THE FIRST ISSUE IS WHETHER THE DEPARTMENT WAS POSSE SSING CONCLUSIVE EVIDENCE SHOWING INVESTMENT MADE BY THE ASSESSEE IN ACQUIRING JINDAL ONLINE. THE LD. CIT(A) MADE REFERENCE TO THE MOVEM ENT OF PRICE OF THE IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 34 SHARES OF JINDAL ONLINE.COM LTD. FROM THE WEBSITE O F BOMBAY STOCK EXCHANGE BUT THAT WAS NOT A RELEVANT EVIDENCE. REV ENUE OUGHT TO HAVE COLLECTED THE EVIDENCE FROM THE REGISTRAR OF THE CO MPANIES, STOCK EXCHANGE ETC. WHICH COULD DEMONSTRATE THE ACTUAL AC QUISITION OF JINDAL ONLINE.COM LTD. BY THE ASSESSEE. AS FAR AS CHEQUE PAYMENTS ARE CONCERNED IN RESPECT OF THESE TRANSACTIONS, THE CAS E OF THE ASSESSEE WAS THAT IT WAS NEGOTIATED BUT IT WAS NOT MATERIALI ZED. THE PAYMENTS MADE THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN DULY SHO WN IN THE BOOKS OF ACCOUNT, THEY HAVE BEEN ACCOUNTED. THE A.O. HAS NOT MADE THE ADDITION OF THESE AMOUNTS RATHER HE CALCULATED THE ADDITION OF RS.81,50,000/- AS CASH PAYMENT BUT TO OUR MIND, THE RE IS NO CONCLUSIVE EVIDENCE TO THIS EFFECT. APART FROM THE ABOVE, THE CONTRIBUTION OF THE ASSESSEE AT THE MOST CAN BE OF RS.36,10,000/- BECAU SE SHE HAS ONLY 40% STAKE REST OF THE STAKE WAS OF MAHENDRA SHAH. THUS, ADDITION OF MORE THAN RS.36.10LACS CANNOT BE MADE EVEN AS PER T HE STAND OF A.O. HIMSELF. THAT ASPECT HAS ALSO NOT BEEN CONSIDERED BY THE REVENUE AUTHORITIES. WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE AND DELETE THE ADDITION OF RS.81,10,000/-. 35. IN THE NEXT GROUND OF APPEAL, GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3,80, 705/- WHICH WAS ADDED BY THE A.O. WITH THE AID OF SECTION 2(22)(E) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE PRAYED THAT THIS GROUND HA S BEEN RAISED ERRONEOUSLY, IT PERTAINS TO A.Y. 2007-08 AS PER ASS ESSMENT ORDER. THEREFORE, HE MADE A PRAYER TO WITHDRAW THIS GROUND OF APPEAL. THE PRAYER OF THE LD. COUNSEL FOR THE ASSESSEE IS ACCEP TED AND THIS GROUND IS REJECTED AS WITHDRAWN. 36. BEFORE WE PART WITH THE ORDER, WE WOULD LIKE TO MAKE AN OBSERVATION THAT WE HAVE MADE A DETAILED ANALYSIS O F THE RECORD. WE FIND THAT THERE IS OVERLAPPING OF FUNDS BETWEEN DIF FERENT DOCUMENTS I.E. IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 35 LOOSE PAPERS, CASH BOOK, BANK STATEMENTS IN THE NAM E OF ASSESSEE AND OTHER FAMILY MEMBERS WHICH HAVE BEEN OWNED UP BY HE R. THE INVESTMENTS MADE BY THE ASSESSEE WERE PARTLY RECOVE RED IN SUBSEQUENT YEARS. THEREFORE, THE LD. A.O. HAS ACCEPTED IN PRI NCIPLE THAT INCOME OF THE ASSESSEE IS TO BE ASSESSED ON PEAK INVESTMENT T HEORY IN A PARTICULAR YEAR. THOUGH IN THE COMPUTATION OF INCOME ASSESSEE HAS IDENTIFIED THE ASSETS AT RS.11,60,600/- ONLY, BUT AFTER VARIOUS AD DITIONS, WE FIND THAT IN THIS YEAR ON ACCOUNT OF DIFFERENT ASSETS POSSESS ED BY THE ASSESSEE, THE PEAK INVESTMENT IS TO BE WORKED OUT AS UNDER: INVESTMENT IN BHAGYODAY OWNERS ASSOCIATION 2775000 INVESTMENT IN 20, CHARANKRUPA SOCIETY PRESUMING CHEQUE PAYMENTS WERE ALSO UNEXPLAINED 3650000 INVESTMENT IN STAR BAZAR 5775000 INVESTMENT IN SHARES HELD IN DEMAND ACCOUNTS EVEN IF ACTION OF ASSESSING OFFICER IS HELD TO BE JUSTIF IED 1548242 TOTAL 13748242 AS AGAINST THIS ADDITION, WE FIND THAT ASSESSEE HAS DECLARED AN ADDITIONAL INCOME OF RS.2,45,00,000/- IN THIS YEAR. THEREFORE, WE DIRECT THE A.O. TO GRANT A TELESCOPING BENEFIT TO THE ASSE SSEE WITH REGARD TO THESE ADDITIONS VIS--VIS THE ADDITIONAL INCOME DIS CLOSED BY THE ASSESSEE. THE BALANCE UNUTILIZED ADDITIONAL INCOME SHALL BE CARRIED FORWARD TO THE NEXT YEAR FOR GRANT OF TELESCOPING B ENEFIT. THE ASSESSEE HAS OFFERED A CONSOLIDATED FIGURE OF RS.10 CRORE IN ALL THESE YEARS AND ALLOCATED ACCORDING TO THE NATURE OF INVESTMENT MAD E IN A PARTICULAR YEAR. INVESTMENT IN SOME OF THE ASSETS MIGHT B E CONTINUED IN ONE OR TWO YEARS LIKE THE INVESTMENT IN STAR BAZAR. WE HAVE WORKED OUT THE NET INVESTMENT IN THE STAR BAZAR LAND OTHER WISE FROM THE DETAILS IT(SS)A NO.386/AHD/2011 ASSTT.YEAR 2005-2006 36 EXTRACTED (SUPRA), IT REVEALED THAT IN A.Y. 2006-07 ASSESSEE MADE FURTHER INVESTMENT OF RS.90LACS AND IN A.Y. 2007-08 RS.15,00,000/-. THE ADDITIONS QUA THESE AMOUNTS IN A.Y. 2006-07 AND 2007-08 HAD NOT BEEN MADE BY THE A.O. BECAUSE IN THESE YEARS ASSESS EE HAS RECEIVED BACK A SUM OF RS.1.35 CRORE OUT OF THAT INVESTMENT AND THEREFORE, THE NET INVESTMENT CONSIDERED IS OF RS.57,75,000/- IN T HE HANDS OF THE ASSESSEE AS AGAINST THE TOTAL INVESTMENT WORKED OUT BY THE A.O. AT RS.4,24,75,000/-. KEEPING IN MIND THIS BACKGROUND, WE OBSERVE THAT UNUTILIZED PORTION OF ADDITIONAL INCOME IN THIS YEA R WOULD BE AVAILABLE TO THE ASSESSEE AS AN OPENING AMOUNT FOR INVESTMENT IN THE SUBSEQUENT YEAR. WITH THE ABOVE OBSERVATION, THE APPEAL OF TH E ASSESSEE IS PARTLY ALLOWED. 37. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 8 TH FEBRUARY, 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER TRUE COPY AHMEDABAD; DATED 08/02/2016 )* + ',-. /)., / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A) 5. $%& '' , / DR, ITAT, 6. &)* + / GUARD FILE. )* 0 / BY ORDER, 1/ 2 ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD