The ACIT, Central Circle-1(1), Ahmedabad V. Uma Shakti Corporation Kalol Project, Ahmedabad

ITSSA 440/AHD/2012

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3173 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 20-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA MORARI
• Keywords: Unexplained investment; Document seized; Peak credit; Date of conversion; Notional interest; Documents seized
• Section: 143(3); 153A; 69; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER SN IT(SS)A/ITA NO. AY APPELLANT RESPONDENT 1 IT(SS)A NO. 194/AHD/2013 2009 - 10 ACIT, CENTRAL CIRCLE 1(1), AHMEDABAD SHRI BHAGWANBHAI KARMANBHAI AJARA, 12, GOPALAK SOCIETY, NR. KIRAN PARK, NAVA VADAJ, AHMEDABAD-13 PAN : AGYPA 0845 K 2 IT(SS)A NO. 195/AHD/2013 2009-10 SHRI BHAGWANBHAI KARMANBHAI AJARA, PAN : AGYPA 0845 K ACIT, CENTRAL CIRCLE 1(1), AHMEDABAD 3 ITA NO. 1373/AHD/2013 2010-11 ACIT, CENTRAL CIRCLE 1(1), AHMEDABAD SHRI BHAGWANBHAI KARMANBHAI AJARA, PAN : AGYPA 0845 K 4 ITA NO. 1375/AHD/2013 2010-11 SHRI BHAGWANBHAI KARMANBHAI AJARA, PAN : AGYPA 0845 K ACIT, CENTRAL CIRCLE 1(1), AHMEDABAD 5 IT(SS)A NO. 440/AHD/2012 2008 - 09 ACIT, CENTRAL CIRCLE 1(1), AHMEDABAD UMA SHAKTI CORPORATION KALOL PROJECT, 2-KUNTA PARK SOCIETY, OPP. GANESH SCHOOL, NAVA VADAJ, AHMEDABAD -13 PAN : AACFU 2673 H 6 IT(SS)A NO. 436/AHD/2012 2008-09 UMA SHAKTI CORPORATION KALOL PROJECT, PAN : AACFU 2673 H ACIT, CENTRAL CIRCLE 1(1), AHMEDABAD 7 ITA NO. 1370/AHD/2013 2010-11 ACIT, CENTRAL CIRCLE 1(1), AHMEDABAD UMA SHAKTI CORPORATION KALOL PROJECT, AHMEDABAD -13 PAN : AACFU 2673 H 8 ITA NO. 1376/AHD/2013 2010-11 UMA SHAKTI CORPORATION KALOL PROJECT, AHMEDABAD PAN : AACFU 2673 H ACIT, CENTRAL CIRCLE 1(1), AHMEDABAD REVENUE BY : SHRI KRISHNA MORARI, CIT-DR ASSESSEE(S) BY : SHRI TUSHAR HEMANI, AR / DATE OF HEARING : 22/03/2017 / DATE OF PRONOUNCEMENT: 12/04/2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THESE ARE FOUR CROSS APPEALS, OUT OF WHICH CROSS-AP PEALS FOR AY 2008-09 & AY 2010-11 IN THE CASE OF UMA SHAKTI CORPORATION KALOL PROJECT IN IT(SS)A IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 2 NOS. 436 & 440/AHD/2012 AND ITA NOS. 1370 & 1376/AH D/2013 ARE DIRECTED AGAINST CIT(A)-I, AHMEDABAD ORDER DATED 18.07.2012 & 22.02.2013 ARISING OUT OF ORDER UNDER SECTION 143(3) R.W.S. 153A OF THE INCOM E-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 30.12.2011 (AY 2008 -09) & DATED 22.02.2013 (AY 2010-11) FRAMED BY ACIT, CENTRAL CIRCLE-1(1), AHMED ABAD AND REMAINING TWO CROSS APPEALS FOR AYS 2009-10 & 2010-11 IN THE CASE OF SHRI BHAGWANBHAI KARMANBHAI AJARA ARE DIRECTED AGAINST SEPARATE ORDE RS OF CIT(A)-I, AHMEDABAD EVEN DATED 22.02.2013, ARISING OUT OF ORDERS UNDER SECTION 143(3) R.W.S. 153A OF THE ACT DATED 30.12.2011 FRAMED BY THE ACIT, CENTRA L CIRCLE-1(1), AHMEDABAD. AS THE ISSUES RAISED IN THESE APPEALS ARE COMMON AN D RELATING TO THE SAME GROUP, THESE APPEALS WERE HEARD TOGETHER AND ARE BE ING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. IT(SS)A NOS. 436 & 440/AHD/2012ASSESSEE: UMA SHAKT I CORPORATION KALOL PROJECT 2. FIRST WE TAKE UP IT(SS)A NOS. 436 & 440/AHD/2012 IN THE CASE OF UMA SHAKTI CORPORATION KALOL PROJECT. THE ONLY ISSUE RA ISED RELATES TO THE ADDITION MADE BY THE LD. ASSESSING OFFICER UNDER SECTION 69 OF THE ACT FOR UNACCOUNTED INVESTMENT AT RS.5,27,50,000/- ON THE BASIS OF DOCU MENT SEIZED DURING THE COURSE OF SEARCH. ON APPEAL, LD. CIT(A) HAS PARTLY ALLOWED THIS GROUND AND DELETED THE ADDITION OF RS.2,72,50,000/- OUT OF TOT AL ADDITION OF RS.5,27,50,000/- MADE BY THE ASSESSING OFFICER. 3. FACTS IN BRIEF OF THIS CASE ARE THAT SEARCH WAS CONDUCTED IN THE CASE OF UMIYA GROUP ON 4.3.2010 AND DURING SEARCH AT THE RE SIDENCE OF PARTNER OF THE APPELLANT - SHRI VIKAS R. PATEL - AN UNSIGNED MEMOR ANDUM OF UNDERSTANDING (IN SHORT MOU) OF NOVEMBER 2007 WAS SEIZED FOR PURC HASE OF LAND OF 15500 SQ. YARD AT CERTAIN SURVEY NUMBERS OF KALOL @ RS. 4500 PER SQ. YARD. THIS MOU WAS AT PAGE 66 TO 72 OF ANNEXURE A/2 (SEIZED FROM THE R ESIDENCE OF THE PARTNER). THIS MOU WAS BETWEEN THE APPELLANT THROUGH PARTNER -SHRI DEEPAK G. PRAJAPATI AND THE LAND OWNERS. ON THE BASIS OF THIS MOU PRICE OF LAND IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 3 PURCHASED BY THE APPELLANT WAS WORKED OUT AT RS. 6, 97,50,000. ACCORDING TO THE AO THE REGISTERED SALE DEED DATED 13.3.2008 OF THIS LAND SHOWED PRICE OF ONLY 1,70,00,000 AND ON THE BASIS OF MOU HE CONCLUDED TH AT UNACCOUNTED / ON- MONEY ON PURCHASE OF LAND WAS PAID TO THE TUNE OF R S.5,27,50,000 (RS.6,97,50,000 - RS. 1,70,00,000) AND ADDED THE SA ME U/S. 69. THE ASSESSING OFFICER HAS ALSO MENTIONED ON PAGE 2 OF THE ORDER T HAT DURING SEARCH IN THE STATEMENT DATED 5.3.2010 RECORDED U/S. 132(4) SHRI VIKAS R. PATEL (PARTNER) ADMITTED THAT RS. 51,00,000 WAS PAID AS UNACCOUNTED PAYMENT BY UMA SHAKTI CORPORATION KALOL PROJECT FOR LAND TRANSACTION. 4. ON THE BASIS OF THESE OBSERVATIONS, LD. ASSESSIN G OFFICER WAS OF THE VIEW THAT ON THE BASIS OF IMPUGNED DOCUMENT, I.E., MOU, AS DISCUSSED ABOVE, IT IS ESTABLISHED THAT TOTAL PAYMENT OF RS.6,97,50,000/- WAS MADE FOR THE ACQUISITION OF THE LAND AT SURVEY NO. 1001/1B AND 1000 AT KALOL FOR THE PROJECT OF THE ASSESSEE-FIRM AND ACCORDINGLY ADDITION OF RS.5,27,5 0,000/- WAS MADE AFTER DEDUCTING RS.1,70,00,000/- BEING THE VALUE OF LAND SHOWN IN REGULAR BOOKS OF ACCOUNTS. ACCORDINGLY, INCOME WAS ASSESSED AT RS.5 ,23,40,065/-. 5. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE THE LD . CIT(A) AGAINST THE IMPUGNED ADDITION UNDER SECTION 69 OF THE ACT ON AC COUNT OF UNEXPLAINED INVESTMENT OF RS.5,27,50,000/- AND PARTLY SUCCEEDED AS LD. CIT(A) SUSTAINED THE ADDITION TO RS.2,55,00,000/- BY OBSERVING AS FOLLOW S:- 7. AFTER GOING THROUGH RIVAL SUBMISSIONS IT IS SEE N THAT THE MOU RELIED UPON BY THE ASSESSING OFFICER IS UNSIGNED, UNDATED, DOES NOT EVEN SPECIFY THE AREA OF LAND. THE LAND IN QUESTION WAS CONVERTED INTO NON-AGRICUL TURAL LAND 1.2.2008. THE FIRST CONDITION WAS THAT THE PAYMENTS WOULD BE MADE WITHIN 15 MONTHS FROM THE DATE OF NA ORDER, (PLEASE REFER TO PAGE 65 OF ANNEX URE A/2 ENCLOSED HERE IN ANNEXURE-1), WHEREAS THE PAYMENTS WERE MADE WITHIN 1 MONTHS OF THE NA ORDER. NO SEIZED DOCUMENT HAS BEEN FOUND TO CONFIRM THAT O N-MONEY PAYMENTS WERE ACTUALLY MADE. IN THIS BACKGROUND, THE CASE LAWS RE LIED UPON BY THE APPELLANT CITED ABOVE VIZ. SHRI RAJAT AGRAWAL VS. DCIT 68 DTK 58 (JP TRIBUNAL), CIT VS. SMT. K.C. AGNES 262 ITR 354 (KER), CIT VS. S.M. AGG ARWAL 293 ITR 43(DEL) IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 4 ALL SUPPORT THE CONTENTION THAT THE DRAFT AGREEMENT FOUND DURING SEARCH WAS NOT ACTED UPON. NOTWITHSTANDING THE ARGUMENTS OF THE AP PELLANT THIS IS ALSO A FACT OF THE CASE THAT THE PARTNER FROM WHOSE RESIDENCE THE MOU', ITS TERMS AND 'CONDITIONS ETC WERE SEIZED ADMITTED U/S. 132(4) HA VING PURCHASED THE LAND AT THE RATE OF RS. 4500 PER SQ. YARD AND PAID RS.51,00 ,000 IN CASH FOR THE KALOL PROJECT LAND. ENGLISH TRANSLATION COPY OF THE STATE MENT WITH GUJARATI VERSION FURNISHED BY THE APPELLANT IS ENCLOSED AS ANNEXURE- 2 OF THIS ORDER. IT WAS VEHEMENTLY ARGUED BY THE ID. AR THAT THE PARTNER WA S BEING ASKED QUESTIONS WITH REFERENCE TO THE MOU AND WHAT HE MEANT WAS THE RATE AGREED UPON IN THE MOU. IT WAS ARGUED THAT LAND COULD NEVER HAVE BEEN PURCHASED AT THIS RATE BY UMIYA GROUP WHEN IT HAD SUCH SMALL SHARE RATIO IN T HE APPELLANT FIRM. IT WAS ALSO PLEADED DURING APPELLATE PROCEEDINGS THAT IF T HE AO'S VERSION IS UPHELD THEN THE LAND WAS PURCHASED AT RS.6,97,50,000, OUT OF WH ICH RS.1,70,00,000 WAS THE REGISTERED DEED PRICE, WHICH BRINGS THE CHEQUE : CA SH RATIO AT 24:76 OF RS.1,70,00,000 BEING 24% OF RS.6,97,50,000 AND THE REMAINING RS.5,27,50,000 BECOMES 76% OF RS.6,97,50,000. IT WAS ARGUED THAT R EAL ESTATE NEVER WORKS IN SUCH LOPSIDED PROPORTIONS OF 24:76 OF CHEQUE:CASH P AYMENTS. HOWEVER, THIS WAS NOT CHALLENGED BY THE ID. AR THAT HUGE ON-MONEY WAS EARNED (AS DISCOVERED DURING SEARCH THROUGH SEIZED DOCUMENT - A/3 (PAGE 3 2 TO 35) ON THE RESIDENTIAL AND COMMERCIAL COMPLEX TITLED 'UMIYA TIRTH VILLE' C ONSTRUCTED BY THE APPELLANT ON THE IMPUGNED KALOL LAND. IN THE FACTS OF THE CAS E COMMON SENSE SAYS THAT SUCH LAND WOULD NOT HAVE BEEN PURCHASED JUST ON THE VALU E MENTIONED IN THE REGISTERED DEED, WHEN IT IS AN OPEN SECRET THAT PUR CHASE AND SALE OF LAND AND BUILDINGS DO NOT HAPPEN WITHOUT ON-MONEY OR UNACCOU NTED CASH PAYMENTS, WHICH NEVER APPEAR IN THE REGISTERED DOCUMENTS. NO CLUES / PROOFS ARE LEFT BY THOSE INVOLVED SO ACTUAL PRICE OF SUCH DEALS SLIPS AWAY UNCAUGHT / UNTAXED. THIS IS ALSO A FACT THAT THE PARTNER ADMITTED ON 5.3.200 9 DURING SEARCH THAT HE PAID CASH OF RS.51,00,000 WHICH IS THE SAME CASH WHICH I S MENTIONED AS LAST LINE IN THE TERMS AND CONDITIONS ON THE SEIZED PAPER (PAGE 64 OF A/2. THE LINE STATES '(AAJ ROJ RS.51,00,000/- RUPEES FIFTY ONE LACS)' TH AT RS. 51,00,000 SHALL BE PAID AS ON THE DAY OF THE MOU. AND IN THE MOU (PAGE 69 OF A/2) (PLEASE REFER TO ANNEXURE-1 OF THIS ORDER) THE SAME PAYMENT OF RS .51,00,000 IN CASH IS MENTIONED. THE MOU CANNOT BE DISMISSED TO HAVE NOT BEEN IMPLEMENTED AT ALL. IN THIS BACKGROUND IT WOULD NOT BE UNREASONABLE TO HOLD THIS RATIO AT 40:60 AS PER PREVALENT MARKET PRACTICE IN REAL ESTATE TRANSACTIO NS. IT CAN THEREFORE BE SAID THAT 40% OF THE DEAL WAS PAID IN CHEQUE AND THE REMAININ G THROUGH ON-MONEY (CASH). IN THIS CASE THE REGISTERED DOCUMENT IS OF RS.1,70, 00,000, AND IF THE RATIO WAS 40:60 THEN RS.1,70,00,000 BECOMES 40% OF RS.4,25,00 ,000. AND THE BALANCE RS.2,55,00,000 (RS. 4,25,00,000 RS. 1,70,00,000) PAID AS ON-MONEY. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.2,72,50,000 ( RS.5,27,50,000 - RS.2,55,00,000) AND RESTRICT THE ADDITION TO RS.2,5 5,00,000. 6. AGGRIEVED, BOTH ASSESSEE AND REVENUE ARE IN CROS S APPEAL BEFORE THE TRIBUNAL. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 5 7. LD. COUNSEL SUBMITTED THAT THE IMPUGNED ADDITION MADE BY LD. ASSESSING OFFICER UNDER SECTION 69 OF THE ACT WAS M ERELY BASED ON UNSIGNED, UNDATED AND ROUGH DRAFT MOU AND KACCHA CHITTHI, WHI CH WAS FOUND DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT. THI S UNSIGNED AND UNDATED MOU DOES NOT FALL UNDER THE CATEGORY OF VALID CONTR ACT AND HAVE NO LEGAL SANCTITY. FURTHER, LD. ASSESSING OFFICER HAS MEREL Y PRESUMED THAT CONTENTS OF SUCH SEIZED MATERIAL ARE CORRECT AND ASSESSEE HAS A CTUALLY PAID SUCH ON-MONEY WITHOUT APPRECIATING THE FACT THAT SUCH SEIZED MATE RIAL IS NOTHING BUT MERELY A DUMB DOCUMENT AND LD. ASSESSING OFFICER COMPLETELY FAILED TO BRING ON RECORD ANY CORROBORATIVE MATERIAL TO PROVE THAT ANY SUCH S UM HAS BEEN ACTUALLY PAID BY THE ASSESSEE. FURTHER, NO ENQUIRY WAS MADE WITH THE ALLEGED RECIPIENT OF SUCH SUM. LD. COUNSEL FURTHER ADDED THAT LD. ASSES SING OFFICER HAS ALSO MADE REFERENCE TO STATEMENT OF SHRI VIKAS PATEL, WHEREIN HE HAS ADMITTED THE FACTUM OF PAYMENT OF RS.51,00,000/- IN CASH BY THE ASSESSE E-FIRM. HOWEVER, LD. ASSESSING OFFICER FAILED TO APPRECIATE THAT SHRI VI KAS PATEL DID NOT GIVE ANY EXPLANATION FOR THE AMOUNT OF RS.51,00,000/-. FUR THER, LD. ASSESSING OFFICER DID NOT APPRECIATE THE ASSESSEES SUBMISSIONS THAT THE LAND DEAL WAS ACTUALLY CARRIED OUT THROUGH SHRI BHAGWANBHAI AJARA. 8. LD. COUNSEL ALSO SUBMITTED THE FACTS PERTAINING TO ACQUISITION OF LAND IN QUESTION THAT, INITIALLY, THE CONCERNED MOU WAS PRE PARED BY DIPAK G. PRAJAPATI (PARTNER OF ASSESSEE-FIRM) IN NOVEMBER 2007 FOR PUR CHASE OF LAND IN QUESTION. SUCH MOU WAS SHOWN BY DIPAK PRAJAPATI TO VIKAS R. P ATEL TO FIGURE OUT AS TO WHETHER VIKAS PATEL IS INTERESTED IN PURCHASING SUC H LAND. THEREAFTER, VIKAS PATEL INQUIRED WITH BRIJESH PATEL ABOUT LAND PRICES PREVAILING IN KALOL TO WHICH BRIJESH PATEL REPLIED AS FOLLOWS: LAND IN QUESTION WAS AGRICULTURAL LAND AND THERE WE RE PROBLEMS IN CONVERSION OF SUCH LAND IN NA LAND (NON-AGRICULTURA L LAND); PRICES QUOTED WERE VERY HIGH. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 6 IN VIEW OF THE ABOVE, VIKAS PATEL DISCARDED THE PR OPOSAL OF DIPAK PRAJAPATI. SOMEWHERE IN JANUARY 2008, VIKAS PATEL WAS APPROACH ED BY HIS FRIEND BHAGWANBHAI AJARA WITH A PARTNERSHIP PROPOSAL FOR A FLAT SCHEME AT KALOL SINCE HE HAD ACQUIRED SOME PIECE OF LAND AT KALOL, HAD PA ID RS.40 LAC AS TOKEN BY CHEQUE TO ORIGINAL LAND OWNERS AS IS EVIDENT FROM H IS BANK STATEMENT AND WAS TO PAY BALANCE SUM OF RS. 130 LAC. HE ALSO STATED THAT THERE WERE SOME PROBLEMS IN CONVERSION OF SUCH LAND BUT HE ASSURED THAT HE WILL GET SUCH ISSUES SORTED OUT BASED ON HIS EXPERIENCE IN LAND MATTERS. CO-INCIDENTALLY, SUCH PROPOSAL WAS W.R.T. THE LAND IN QUESTION ITSELF IN RESPECT OF WHICH PROPOSAL BY DIPAK PRAJAPATI WAS REJECTED BY VIKAS PATEL. VIKAS PATEL ACCEPTED SUCH OFFER OF BHAGWANBHAI AJARA AND IT WAS AGREED UPON THAT SUCH PROJECT SHALL BE LOOKED AFTER BY BHAGWANBHAI AJARA. THEREAFTER, LAND IN QUE STION CAME TO BE CONVERTED INTO NON-AGRICULTURAL LAND ON 01.02.08. PARTNERSHIP DEED FOR THE FIRM WAS EXECUTED ON 08.02.2008 AND THE DATE OF PARTNERSHIP WAS KEPT W.E.F. 20.01.2008 I.E. THE DATE ON WHICH ALL THE PERSONS JOINED HANDS TOGETHER. ASSESSEE-FIRM'S BANK ACCOUNT WAS OPENED WITH AXIS BANK ON 19.02.08. FINALLY, THE SALE DEED W.R.T. THE LAND IN QUESTION FOR A CONSIDERATION OF RS.1,70,00,000/- CAME TO BE EXECUTED ON 13.03.08. ALMOST TWO YEARS LATER, A SEA RCH ACTION WAS CARRIED OUT ON 04.03.10 DURING THE COURSE OF WHICH THE CONCERNED M OU AND KACCHA CHITTHI WERE SEIZED BASED ON WHICH THE IMPUGNED ADDITION CA ME TO BE MADE BY AO WITHOUT APPRECIATING THE FACTUAL AS WELL AS SETTLED LEGAL POSITION. IN LIGHT OF THE ABOVE, IMPUGNED ADDITION IN RESPECT OF ALLEGED UNAC COUNTED INVESTMENT IN UNWARRANTED. THE SAME BE HELD SO NOW. 9. LD. COUNSEL FURTHER SUMMARIZING HIS CONTENTIONS SUBMITTED THAT NO ADDITION SHOULD HAVE BEEN MADE UNDER SECTION 69 OF THE ACT FOR UNEXPLAINED INVESTMENT MERELY ON THE BASIS OF UNSIGNED, UNDATED AND ROUGH DRAFT OF MOU AND KACCHA CHITTHI AS ACTUAL TRANSACTION WAS ENTERE D SEPARATELY THROUGH SHRI BHAGWANBHAI AJARA, PARTNER OF THE ASSESSEE-FIRM. I N SUPPORT OF HIS CONTENTION IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 7 THAT NO ADDITION CAN BE MADE ON THE BASIS OF DUMB D OCUMENT, HE PLACED RELIANCE ON FOLLOWING DECISIONS:- I) ACIT VS. MANAV INFRASTRUCTURE P. LTD IN IT(SS)A NO. 572/AHD/2011 II) ACIT VS. DHARMENDRASINH R. WAGHELA, PROP. M/S. NARENDRA ROADLINES IN TAX APPEAL NO.1539 OF 2011 (GUJ). 10. ON THE OTHER LAND, LD. DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDER OF LD. ASSESSING OFFICER AND ADDED THAT THE ALLEGED DOCUMENT, I.E., MOU CONTAINS ALL THE NECESSARY INFORMATION INCLUDING TH E NAME OF THE PURCHASER, SELLER, DESCRIPTION OF THE PROPERTIES, RATE PER SQ. YARDS AND TOTAL AREA OF LAND ALONG WITH CONDITIONS OF PAYMENT AND THE INSTALLMEN TS TO BE PAID FOR AND MOST IMPORTANTLY, SUM OF RS.51,00,000/- WAS PAID AS PART CONSIDERATION. ALL THESE FACTS CLEARLY SHOW THAT THERE WAS A TRANSACTION OF PURCHASE BY THE ASSESSEE-FIRM AND THE COST SHOWN IN BOOKS OF ACCOUNTS WAS MUCH LE SS THAN THE ACTUAL PURCHASE CONSIDERATION PAID AND THERE WAS AN ELEMEN T OF ON-MONEY OF RS.5,27,50,000/- PAID BY THE ASSESSEE OVER AND ABOV E THE COST SHOWN IN THE BOOKS AT RS.1,70,00,000/-. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE ISSUE RAISED BY BOTH THE PARTIES RE LATES TO A MEMORANDUM OF UNDERSTANDING (MOU) WHICH WAS PERTAINING TO A PURCH ASE OF LAND OF 15,500 SQ. YARDS AT KALOL @ RS.4,500/- PER SQ. YARD. THIS ALL EGED DOCUMENT WAS SEIZED IN THE COURSE OF SEARCH CONDUCTED IN THE CASE OF UMIYA GROUP ON 04.03.2010. THIS DOCUMENT, IN WHICH MATTER WAS TYPED IN THE FORM OF MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN ASSESSEE-FIRM THROUGH I TS PARTNER DIPAK PRAJAPATI AND THE LAND OWNER FOR THE PURCHASE OF LA ND BEARING SURVEY NO. 1001/1B AND 1000 AT KALOL ADMEASURING 15,500 SQ. YA RDS AGREEING TO PURCHASE AT RS.4,500/- PER SQ. YARD. LD. ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, OBSERVED THAT THERE IS A PU RCHASE OF ALLEGED LAND ADMEASURING 15,500 SQ. YARDS AT THE COST OF RS.1,70 ,00,000/- IN THE REGULAR BOOKS OF ACCOUNTS. LD. ASSESSING OFFICER WAS CONVINCED T HAT THE ALLEGED PURCHASE OF IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 8 LAND WAS ACTUALLY PURCHASED AT RS. 6,97,50,000/- WH ICH HE CALCULATED BY APPLYING THE RATE OF RS.4,500/- PER SQ. YARD AS APP EARING IN THE SEIZED MOU. HE ACCORDINGLY MADE AN ADDITION OF RS.5,27,50,000/- AND COMPLETED THE ASSESSMENT. 12. WHEN THE ISSUE CAME UP BEFORE THE LD. CIT(A), H E TOOK A VIEW THAT, IN GENERAL PARLANCE, IN THE BUSINESS OF REAL ESTATE, T HERE IS AN ELEMENT OF ON-MONEY WHICH IS NORMALLY TO BE CARRIED OUT IN CASH. LD. C IT(A) ADOPTED A RATIO OF 40:60, WHEREIN 40% OF THE DEAL AMOUNT IS NORMALLY PAID BY CHEQUE AND REMAINING 60% BEING THE ON-MONEY IS PAID BY CASH. LD. CIT(A) ACCORDINGLY TAKING THE BASE OF COST PRICE APPEARING IN ASSESSEES BOOKS OF ACCOUNTS AT RS.1,70,00,000/- CALCULATED THE TOTAL CONSIDERATION VALUE AT RS.4,25 ,00,000/- AND THEREAFTER CALCULATED THE 60% ON-MONEY VALUE AT RS.2,55,00,000 /- AND SUSTAINED THE ADDITION TO THIS EXTENT. 13. DURING THE COURSE OF PROCEEDINGS BEFORE US, LD. COUNSEL HAS MAINLY CONTENDED THAT THE ALLEGED DOCUMENT, I.E., MOU AND KACCHA CHITTHI, ARE UNSIGNED, UNDATED AND MERE DRAFT AND IS A DUMB DOCU MENT WHICH LD. ASSESSING AUTHORITY SHOULD NOT HAVE TAKEN. WE NOTI CE THAT THE ALLEGED DOCUMENT MOU IS FILED AT PAGE NO.15-21 OF THE PAPER -BOOK AND KACCHA CHITTHI AT PAGE NOS. 22-23 AND OBSERVE THAT THE MEMORANDUM OF UNDERSTANDING IS PREPARED ON A STAMP PAPER DATED 31.10.2007 BETWEEN UMA SHAKTI CORPORATION KALOL PROJECT, BEING THE PURCHASER AND THE SELLING PARTIES AND THIS MOU IS UNDATED AND ONLY THE STAMP IS OF NOVEMBER 2007. TH ERE APPEARS NO SIGNATURE OF EITHER OF THE PARTIES ON ANY OF THE PAGES. EVEN KACCHA CHITTHI IS ALSO UNSIGNED WHICH SPEAKS ABOUT A ROUGH DRAFT SHOWING A PARTNERS HIP FIRM TO BE INCORPORATED AND THERE ARE OTHER NOTINGS ABOUT INST ALLMENTS AND AN AMOUNT OF RS.51,00,000/- IS WRITTEN ON THE LAST PAGE OF THE K ACCHA CHITTHI. LD. ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION ON THE BASIS OF THESE DOCUMENTS. NOW, THE QUESTION ARISES BEFORE US IS WHETHER THIS UNSIGNED, UNDATED MOU AND IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 9 KACHHA CHITTHI CAN BE TAKEN AS CORROBORATIVE EVIDEN CE AGAINST THE ASSESSEE IN ORDER TO MAKE AN ADDITION. 14. BEFORE ANALYZING THE FACTS, WE FIND IT NECESSAR Y TO GO THROUGH THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF ACIT VS. MA NAV INFRASTRUCTURE P. LTD. (SUPRA), WHEREIN CO-ORDINATE BENCH HAS DEALT WITH S IMILAR ISSUE RELATING TO ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF SEIZED DOCUMENTS AND WHETHER AN ADDITION CAN BE SUSTAINED IF THE ALLEGED SEIZED PAPERS ARE ROUGH WORK AND THERE IS NO CLEAR INDICATION AS TO HOW THE Y WILL LEAD AS A BASIS FOR THE ALLEGED ADDITION. THE CO-ORDINATE BENCH IN THE CAS E OF MANAV INFRASTRUCTURE P. LTD (SUPRA) HAS OBSERVED AS FOLLOWS:- 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. SECTION 132(4A) CONTEMPLATES THAT WHERE ANY BOOKS OF ACCOUNTS, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN COURS E OF A SEARCH, IT CAN BE ASSUMED THAT SUCH BOOKS OF ACCOUNTS OTHER DOCUMENTS ETC. BE LONGS TO SUCH PERSON, CONTENTS IN THE BOOKS OF ACCOUNTS OR DOCUMENTS ARE TRUE. NO DOUBT SUCH AN EVIDENCE IS AN ADMISSIBLE EVIDENCE, BUT NOT A CONCL USIVE ONE. PRESUMPTION OF BELONGING AND ITS GENUINENESS ARE REBUTTABLE ONE. H ONBLE HIGH COURT IN THE CASE OF DHARMENDRASINGH R. WAGHELA (SUPRA) HAS ALSO PROPOUNDED THAT THOUGH SECTION 132(4A) OF THE ACT USES EXPRESSION MAY PRE SUME, MEANING THEREBY THAT SUCH PRESUMPTION IS REBUTTABLE ONE. IN THE PRE SENT APPEAL, WE HAVE BEEN CALLED UPON TO CONSTRUE AND INTERPRETS THESE PAGES AND ARRIVE AT A CONCLUSION WHETHER ANY TRANSACTION HAVING NEXUS WITH THE BUSIN ESS TRANSACTION OF THE ASSESSEE CAN BE INFERRED. THE ASSESSEE HAS PLACED O N RECORD DETAILS IN TABULAR FORM EXHIBITING TOTAL SHOPS AVAILABLE IN BALAJI MALL AND HOW THESE SHOPS HAVE BEEN SOLD IN F.Y.007-08, 2008-09 AND 2009-10. THE ASSESS EE HAS ALSO COMPILED THESE DETAILS FLOOR-WISE I.E. AVAILABILITY OF SHOPS ON GR OUND FLOOR, SECOND FLOOR, THIRD FLOOR AND FOURTH FLOOR. IT HAS PLACED ON RECORD DAT E OF SALES, AREA AND THE AMOUNT FOR WHICH THESE SHOPS HAVE BEEN SOLD. THUS, COMPLET E PICTURE OF THE SHOPS, THEIR AREA, THEIR GEOGRAPHICAL LOCATION, DATE OF SALE AND THE AMOUNT FOR WHICH THEY HAVE BEEN SOLD, HAVE BEEN PLACED BY THE ASSESSEE ON PAGE NO.43 TO 49 OF THE PAPER BOOK. DURING THE COURSE OF HEARING, WE HAVE CONFRONTED TH E LD.CIT-DR TO DEMONSTRATE NEXUS BETWEEN NARRATIONS AVAILABLE ON PAGE NO.7 TO 10 OF THE PAPER BOOK I.E. SEIZED MATERIAL VIS--VIS ALLEGED BOOK RESULTS BY T HE ASSESSEE. HOWEVER, THE LD.CIT-DR COULD POINT OUT THAT ON PAGE NO.7 I.E. 2N D PAGE OF THE SEIZED PAPER, NAME OF ASHISH J. SHAH WAS MENTIONED. IT CONTEMPLAT ES BUSINESS OF BALAJI MALL. ON AN ANALYTICAL EXAMINATION OF THESE DETAILS, WE F IND THAT SOME NARRATIONS HERE AND THERE, ARE HAVING A SLIGHT CONNECTION WITH THE SHOPS, BUT IT IS DIFFICULT TO ARRIVE AT LOGICAL CONCLUSION. THE STAND OF THE ASSE SSEE BEFORE THE AO WAS THAT IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 10 THESE PAPERS CAN BE DIVIDED IN THREE PARTS VIZ. (A) TYPED DOCUMENTS, HAND WRITTEN DOCUMENTS IN GUJARATI PERTAINING TO SHREE BALAJI MA LL AND OTHER HAND WRITTEN DOCUMENTS WRITTEN IN ENGLISH WITH CERTAIN NUMBERS M ENTIONED IN IT. ACCORDING TO THE ASSESSEE THESE HAND-WRITTEN DOCUMENTS IN ENG LISH IS NEITHER OF BALAJI MALL NOR OF THE COMPANY. THESE PAPERS HAVE NEITHER BEEN DRAWN BY THE DIRECTORS OR THEIR FAMILY MEMBERS. THIS ASPECT WAS NOT ONLY EXPL AINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT EVEN DURING THE COURSE OF SEARCH ITSELF. AGAINST THIS STAND OF THE ASSESSEE, THE DEPARTMENT DID NOT TAKE ANY STEP TO INVESTIGATE THE ISSUE FURTHER. THE AO HAS ALSO NOT TRIED TO SUPPLEM ENT HIS REASONING BY INDUCTIVE METHOD I.E. HE HAS NOT MADE REFERENCE TO ANY OTHER CONNECTED MATERIAL EXHIBITING NEXUS BETWEEN THESE PAPERS WITH THAT OF THE ASSESSEES TRANSACTION. HE SIMPLY OBSERVED THAT EXPLANATION OF THE ASSESSEE IS NOT ACCEPTABLE. THE ASSESSEE HAS MADE A DISCLOSURE OF RS.3 CRORES IN REPLY TO QU ESTION NO.10 RECORDED UNDER SECTION 132(4) OF THE ACT. OUT OF THIS RS.3N CRORES , RS.2 CRORES HAS BEEN OFFERED FOR TAXATION IN THIS YEAR. WE HAVE BEEN INFORMED TH AT REST OF RS.1 CRORE WERE OFFERED IN INDIVIDUAL HANDS. WE HAVE TRIED OUR BEST TO PERSUADE BOTH THE LD.REPRESENTATIVES TO SHOW SOME NEXUS OR REASONABLE CONCLUSION FROM ALL THE FIGURES MENTIONED IN THESE PAPERS. BY ANY SCIENTIFI C MEANS THEY DID NOT GOAD ADJUDICATING AUTHORITY TO ARRIVE AT A CONCLUSION TH AT UNACCOUNTED PROFITS HAVE NOTICED IN THESE PAPERS. THE LD.CIT(A) HAS APPRECIA TED THESE PAPERS AND ARRIVED AT A CONCLUSION THAT THESE ARE ROUGH WORK WITHOUT A NY CLEAR INDICATION AS TO WHAT THE SAID NUMBERS REALLY LEAD TO OR RELATES TO. ON A N ANALYSIS OF COMPLETE MATERIAL INCLUDING STATEMENT OF DIRECTOR RECORDED UNDER SECT ION 132(4) AND THE EXPLANATION OF THE ASSESSEE EXTRACTED (SUPRA) DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS APPRECIATED THE FACTS IN RIGHT PERSPECTIVE WAY, AND DEPARTMENT IS UNABLE TO GOAD US TO ARRIVE AT ANY OTHER LOGICAL CONCLUSION. THEREFORE, WE DO NOT FIND ANY M ERIT IN THIS APPEAL OF THE REVENUE. IT IS DISMISSED. 15. WE FURTHER OBSERVE THAT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DHARMENDRASINH R WAGHELA PROP M/S. NARENDRA ROADLIN ES (SUPRA) HAS ALSO OBSERVED AS UNDER:- 2. THE ISSUE ARISES IN FOLLOWING FACTUAL BACKGROUN D. DURING THE COURSE OF SEARCH OPERATIONS CARRIED OUT AT THE RESIDENTIAL AND BUSIN ESS PREMISES OF THE RESPONDENT ASSESSEE, CERTAIN DOCUMENTS WERE SEIZED. ON THE B ASIS OF SUCH DOCUMENTS, THE ASSESSING OFFICER DESIRED TO MAKE ADDITION. THE ASS ESSEE, HOWEVER, DURING THE COURSE OF THE ASSESSMENT, CONTENDED THAT SUCH DOCUM ENTS DO NOT BELONG TO HIM. THE ASSESSEE'S BUSINESS WAS OF TRANSPORTATION. THE DOCUMENTS CONTAINED ENTRIES REGARDING THE OIL BUSINESS. IN SHORT, THE ASSESSEE TOTALLY DISOWNED SUCH DOCUMENTS. 3. THE ASSESSING OFFICER, PRINCIPALLY PLACING RELIA NCE UPON SECTION 132(4A) OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT), HOW EVER, DISCARDED SUCH OBJECTIONS AND RULED THAT THE PRESUMPTION AGAINST T HE ASSESSEE WOULD ARISE. ON SUCH BASIS, HE MADE ADDITION OF RS.30,27,987/-. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 11 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER. THE COMMISSIONER CONFIRMED THE VIEW OF THE ASSESSING OF FICER, ONCE AGAIN PLACING HEAVY RELIANCE UPON SECTION 132(4A) OF THE ACT. THE ASSESSEE CARRIED THE MATTER IN FURTHER APPEAL. THE TRIBUNAL REVERSED THE VIEW O F THE REVENUE AUTHORITIES AND ALLOWED THE APPEAL OF THE ASSESSEE, MAKING FOLLOWIN G OBSERVATIONS : 17. WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED THE MATERIAL PLACED BEFORE US. AS PER THE DOCUMENT PLACED ON PAGE NO.17 9 OF THE COMPILATION, IT HAD REFLECTED SOME BUSINESS TRANSACTION IN RESPE CT OF OIL AND KEROSENE OIL. AS PER THIS TYPED DOCUMENT, THERE WAS A MENTIO N OF PARTIES FROM WHOM A BUSINESS ACTIVITY WAS PERFORMED. THE FIGURES HAVE MENTIONED THE RATES APPLIED FOR THE SAID COMMODITY AND THE DETAIL S OF THE AMOUNT RECEIVED. THIS DOCUMENT IN FACT APPEARS TO BE IN RE SPECT OF SOME OILBUSINESS BUT THERE IS NO DENIAL OF THIS ADMITT ED FACT THAT THE ASSESSEE IS IN THE BUSINESS OF TRANSPORT. HENCE, A VEHEMENT CONTENTION IS THAT BY THE VERY NATURE OF DOCUMENT, IT DID NOT RELATE TO T HE BUSINESS ACTIVITY OF THE ASSESSEE. HOWEVER, THERE WAS NO FINDING OR EVEN AN ALLEGATION OF THE REVENUE THAT THERE WAS SUCH TYPE OF BUSINESS AT ALL RUN BY THE ASSESSEE. IT WAS NOT THE CASE OF THE REVENUE THAT AN UNDISCLOSED BUSINESS WAS UNEARTHED WHICH WAS NOT FOUND RECORDED IN THE BOOKS OF ACCOUNT. BARRING THIS PAPER, THERE IS NO MATERIAL IN POSSESSION OF T HE REVENUE TO CORROBORATE THAT THE SAID PAPER HAD ANY CONNECTION WITH THE ACC OUNTED OR UNACCOUNTED BUSINESS ACTIVITY OF THE ASSESSEE. FROM THE SIDE OF THE REVENUE EVEN NO SUCH ATTEMPT WAS EVER MADE TO MAKE AN ENQUIRY FROM THOSE PARTIES WHOSE NAMES WERE PRINTED ON THE SAID PAPER. BECAUSE OF TH ESE REASONS, LD. AR MR. MUKUND BAKSHI HAS EMPHASIZED THAT THE SAID DOCU MENT WAS NOTHING BUT A BALD DOCUMENT. FOR THIS LEGAL PROPOSITION, CA SE LAWS CITED ARE:- 1 ACIT VS. SATYAPAL VASAN 295 ITR (AT) 352 [ITAT J ABALPUR] 2 CIT VS. GIRISH CHAUDHARY (2008) 296 ITR 619 (MAD. ) 3 CIT VS. S.M. AGGARWAL (2007) 293 ITR 43 (DEL.) 4 JAYA S. SHETTY VS. ACIT (1999) 69 ITD 336 (MUM) 5 BANSAL STRIPS P. LTD. VS. ACIT (2006) 99 ITD 177 (DEL.) 18. FROM THESE DECISIONS, IT TRANSPIRES THAT IF AN ADDITION IS TO BE MADE ON THE BASIS OF A SEIZED DOCUMENT, THEN IT MUST BE SUPPORTED BY SOME IDENTIFICATION HAVING ANY NEXUS WITH THE UNACCOUNTE D BUSINESS ACTIVITY OF THE ASSESSEE. THE NATURE OF TRANSACTION SHOULD REFL ECT SOME DIRECT OR INDIRECT CONNECTION WITH THE ACCOUNTED OR UNACCOUNT ED ACTIVITY OF THE ASSESSEE. IF A DOCUMENT IS SILENT OR THE INGREDIENT S COULD NOT BE LINKED, THEN THE SAID DOCUMENT WAS CONSIDERED AS A DUMB DO CUMENT. PLACING RELIANCE ON THESE DECISIONS, INTER-ALIA WE ARE OF T HE VIEW THAT THE REVENUE DEPARTMENT HAD NOT MADE SUFFICIENT ENQUIRY SO AS TO ESTABLISH THAT IN FACT THE SAID DOCUMENT HAD UNEARTHED A CONCEALED BUSINES S ACTIVITY OF THE ASSESSEE. IN THE ABSENCE OF ANY SUCH EVIDENCE, THE ADDITION SO MADE BY THE AO REMAINED UN-CORROBORATED, HENCE, WE HEREBY REVER SE THE FINDINGS AND ALLOW THIS GROUND. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 12 5. COUNSEL FOR THE REVENUE VEHEMENTLY CONTENDED THA T THE TRIBUNAL COMMITTED AN ERROR IN INTERFERING WITH THE CONCURRENT FINDING S OF THE REVENUE AUTHORITIES. HE SUBMITTED THAT THE ASSESSEE'S EXPLANATION THAT T HE DOCUMENTS SEIZED WERE NOT FOUND SATISFACTORY. THAT PRESUMPTION UNDER SECTION 132(4A) OF THE ACT WOULD APPLY. 6. WE ARE OF THE OPINION THAT THE ENTIRE ISSUE IS B ASED ON APPRECIATION OF THE MATERIAL ON RECORD. SECTION 132(4A) OF THE ACT USES THE WORDS MAY PRESUME, MEANING THEREBY THAT SUCH PRESUMPTION IS REBUTTABLE . IN THE PRESENT CASE, DOCUMENTS FOUND PERTAIN TO ENTRIES RELATED TO OIL B USINESS. THE ASSESSEE'S BUSINESS AT LEAST ACCOUNTED WAS OF TRANSPORTATION. REVENUE COULD NOT BRING ON RECORD ANY MATERIAL TO SUGGEST THAT THE ASSESSEE WA S ALSO INVOLVED IN THE BUSINESS OF DEALING IN OIL. ADDITIONALLY, THE TRIBUNAL HAS C ORRECTLY RECORDED THAT THE DOCUMENTS WERE DUMP DOCUMENTS. REVENUE DID NOT MAKE ANY ATTEMPT TO INQUIRE INTO THE MATTER FURTHER FROM THE PERSONS WHOSE NAME S WERE REFLECTED IN SUCH ENTRIES. 7. IN SHORT, IT CANNOT BE STATED THAT THE CONCLUSIO NS ARRIVED AT BY THE TRIBUNAL ARE PERVERSE. NO ERROR IS COMMITTED BY THE TRIBUNAL. TA X APPEAL IS DISMISSED. 16. GOING THROUGH THE VIEWS EXPRESSED IN THE JUDGME NT OF HONBLE JURISDICTIONAL HIGH COURT AND DECISION OF CO-ORDINA TE BENCH WHICH GIVES FAIR VIEW THAT IF FROM THE SEIZED MATERIAL NO NEXUS OR R EASONABLE CONCLUSION CAN BE ARRIVED, THEN EVEN IF THE DOCUMENTS ARE SEIZED DURI NG THE COURSE OF SEARCH, THEY CANNOT BE USED AGAINST THE ASSESSEE. EXAMINING THE FACTS OF THE CASE BEFORE US, WE OBSERVE THAT ASSESSEE-COMPANY WAS INCORPORATED O N 28.01.2008 AND ITS FIRST BANK TRANSACTION WAS ENTERED ON 19.02.2008. ASSESS EE-FIRM IS HAVING SIX PARTNERS NAMELY S/SHRI VIKAS R. PATEL, BRIJESH S. P ATEL, DIPAK G. PRAJAPATI, KAMALBHAI J. PATEL, BHAGVANBHAI K. AAJRA AND ARVIND BHAI N. PRAJAPATI; AND THE MAJOR CAPITAL HAS COME FROM SHRI BHAGVANBHAI K. AAJ RA. ON VIEWING THE ALLEGED DOCUMENT, WE FIND THAT THE UNSIGNED MOU IS DATED 31.10.2007 WHICH IS ALMOST 4 MONTHS BEFORE THE INCORPORATION OF THE ASS ESSEE-FIRM. THE ALLEGED MOU ALSO DO NOT FULFILL THE BASIC REQUIREMENT OF TH E VALID CONTRACT WHICH NEEDS TO A WRITTEN OR EXPRESSED AGREEMENT BETWEEN TWO PAR TIES TO PROVIDE A PRODUCT OR SERVICE AND FOR A VALID CONTRACT THERE HAS TO BE AN INTENTION TO CREATE LEGAL RELATION, OFFER, ACCEPTANCE, CONSIDERATION AND CAPA CITY TO FULFILL THE CONTRACT. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 13 HOWEVER, THE ALLEGED MOU, WHICH IS UNSIGNED AND UND ATED, DO NOT STAND FOR AS A VALID CONTRACT AND THE SAME IS NOT ENFORCEABLE BY LAW. 17. IT SEEMS THAT LD. ASSESSING OFFICER HAS STRETCH ED A LINK EMANATING FROM THE SEIZED MATERIAL AND HAS FORMED UP A COMPLETE ST ORY ALONG WITH TAKING A BASIS OF IMPUGNED LAND WHICH WAS PURCHASED IN THE L ATER PART OF THE YEAR AND APPLYING THE CONDITIONS EMBEDDED IN THE ALLEGED MOU ON TO THE IMPUGNED LAND PURCHASE TRANSACTIONS THEREBY CALCULATING THE PURCHASE CONSIDERATION OF THE LAND IN QUESTION AT RS.6,97,50,000/- AS AGAINST RS.1,70,00, 000/- SHOWN IN THE BOOKS. WE NOTICE THAT LD. ASSESSING OFFICER HAS CO MPLETELY DISREGARDED RELEVANT FACTS WHICH INCLUDES THE DATE OF INCORPORA TION OF THE ASSESSEE-FIRM, ACTUAL DATE OF REGISTRATION OF THE LAND PURCHASE DO CUMENT DATED 12.03.2008 AND THE DATE OF CONVERSION OF LAND IN QUESTION, I.E., 0 1.02.2008; COUPLED WITH THAT LD. ASSESSING OFFICER ALSO HAS NOT ENQUIRED FROM THE AL LEGED SELLERS ABOUT THE VALUE OF TRANSACTIONS ENTERED INTO FOR THE SALE OF LAND. MORE SO, LD. ASSESSING OFFICER HAS ALSO IGNORED THE GLARING FACT THAT PROPOSAL FOR PURCHASING THE IMPUGNED LAND WAS BROUGHT BY SHRI BHAGVANBHAI AAJRA, WHO IS ALSO THE PARTNER OF THE ASSESSEE-FIRM. 18. WE WOULD FURTHER LIKE TO REFER THE PROVISIONS O F SECTION 132(4A) OF THE ACT WHICH READS AS FOLLOWS:- 132(4A) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENT S, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH, IT MAY BE PRESUMED (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONG S TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AN D OTHER DOCUMENTS ARE TRUE ; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SU CH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRIT ING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUME D TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PART ICULAR PERSON, ARE IN THAT PERSON'S HANDWRITING, AND IN THE CASE OF A DOC UMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXEC UTED OR ATTESTED. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 14 FROM GOING THROUGH THE ABOVE PROVISION, WE FIND TH AT IT USES THE WORD IT MAY BE PRESUMED, WHICH AS RIGHTLY HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DHARMENDRASINH WAGHELA THAT THE WORD MAY PRESUME THAT SUCH PRESUMPTION IS REBUTTABLE IN A S ITUATION IF REVENUE COULD NOT BRING ON RECORD ANY MATERIAL TO PROVE THAT THE SEIZED MATERIAL IS CORROBORATIVE FOR THE ADDITION. WE ARE, THEREFORE, RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT AND DECISION OF CO-ORDINATE BENCH DISCUSSED ABOVE IN PRECEDING PARAGRAPH, ARE O F THE CONSIDERED VIEW THAT LD. ASSESSING OFFICER ERRED IN MAKING THE ADDITION OF RS.5,27,50,000/- AND LD. CIT(A) IN RESTRICTING THE ADDITION AT RS.2,55,00,00 0/- AS IT WAS BASED ON UNDATED, UNSIGNED MEMORANDUM OF UNDERSTANDING WHICH , IN OUR VIEW, CANNOT BE CORRELATED WITH THE ASSESSEE-FIRM AS IT WAS INCO RPORATED IN THE LATTER PERIOD TO THAT OF MOU STAMP DATE NOR CAN IT BE TAKEN AS C ORROBORATIVE EVIDENCE TO MAKE ADDITION AND ALSO IN THE LIGHT OF THE FACT THA T REVENUE COULD NOT POINT OUT ANY ERROR IN THE ACTUAL REGISTERED DOCUMENT DATED 1 2.03.2008 ENTERED INTO BY THE ASSESSEE-FIRM FOR THE IMPUGNED LAND AT KALOL. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D AND THAT OF THE REVENUE IS DISMISSED. ITA NOS. 1370 & 1376/AHD/2013 CROSS APPEALS BY REV ENUE AND ASSESSEE RESPECTIVELY FOR AY 2010-11-ASSESSEE: UMA SHAKTI CO RPORATION KALOL PROJECT 20. NOW, WE TAKE UP CROSS APPEALS FOR AY 2010-11 IN THE CASE OF UMA SHAKTI CORPORATION KALOL PROJECT VIDE ITA NOS. 1370 & 1376 /AHD/2013. IN THE REVENUES APPEAL, TWO ISSUES HAVE BEEN RAISED AGAIN ST THE ORDER OF LD. CIT(A); FIRSTLY, REGARDING THE DELETION OF ADDITION OF RS.2 2,18,250/- MADE ON ACCOUNT OF UNACCOUNTED INTEREST PAYMENT AND SECONDLY, RELATING TO THE DELETION OF ADDITION OF RS.3,81,07,860/- OUT OF TOTAL ADDITION OF RS.4,3 5,39,800/-. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 15 21. AS REGARDS DELETION OF ADDITION OF RS.25,18,250 /- ON ACCOUNT OF UNACCOUNTED INTEREST PAYMENT, BRIEF FACTS ARE THAT DURING THE COURSE OF SEARCH IN THE GROUP CASES, SEARCH WAS ALSO CONDUCTED AT THE P REMISES OF ONE OF THE PARTNERS MR. BHAGWANBHAI K. AJARA, WHEREIN TWO DIAR IES WERE SEIZED WHICH WERE MARKED AS ANNEXURE A/1 AND ANNEXURE A/2. IT C ONTAINED DETAILS OF UNACCOUNTED INTEREST INCOME OF RS.3,92,750/- AND RS .25,18,250/- FROM THE ASSESSEES FIRM IN AY 2009-10 AND 2010-11 RESPECTIV ELY. HOWEVER, CASH FLOW OF UNACCOUNTED TRANSACTIONS FURNISHED BY THE ASSESSEE- FIRM DID NOT CONTAIN ENTRIES WITH RESPECT TO UNACCOUNTED INTEREST PAYMENT. LD. ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER MADE THE IMPUGNED ADDI TION OF RS.25,18,250/- TREATING IT AS UNACCOUNTED INTEREST PAYMENT. 22. IN THE APPEAL BEFORE THE LD. CIT(A), THE ADDITI ON OF RS.25,18,250/- WAS DELETED BY OBSERVING THAT THE PARTNER MR. BHAGWANBH AI K. AJARA WAS RECEIVING ON-MONEY FROM THE PROJECT OF THE ASSESSEE-FIRM AND WAS RECORDING IT PROPERLY IN THE DIARY AND WAS PUTTING NAMES OF FICTITIOUS PE RSONS TO SHOW THAT HE HAD BORROWED MONEY FROM ELSEWHERE. LD. CIT(A) FURTHER O BSERVED THAT MR. BHAGWANBHAI K. AJARA HAS ALREADY OFFERED A NOTIONAL INCOME OF RS.23 LACS IN HIS RETURN OF INCOME FOR AY 2010-11 AND THEREFORE THIS DISCLOSURE COVERS THE ENTIRE INTEREST PAID BY THE APPELLANT AND NOT RECORDED IN THE BOOKS OF ACCOUNTS. 23. AGGRIEVED, THE REVENUE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 24. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. ASSESSING OFFICER FAILED TO APPRECIATE THAT MR. BHAGWANBHAI K. AJARA WAS THE MA IN PERSON LOOKING AFTER THE FLATS/SHOPS OF THE KALOL PROJECT AND HE USED TO NOTE THE DETAILS OF FUNDS RECEIVED FROM VARIOUS MEMBERS OF KALOL PROJECT. SU CH NOTINGS WERE MADE IN THE NAME OF FICTITIOUS PERSONS JUST TO HIDE THE ACT UAL DETAILS OF ON-MONEY RECEIVED. AS THE SEIZED DIARY CONTAINED DETAILS OF THE ON-MONEY RECEIVED FROM ASSESSEE-FIRM PROJECT, THERE WAS ACTUALLY NO INTERE ST PAYMENT BECAUSE THE IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 16 TRANSACTIONS IN THE DIARY WERE OF ON-MONEY RECEIVED ON BEHALF OF ASSESSEE-FIRM AND THE SAME FUND USED TO BE DIVERTED BACK TO THE F IRM FOR PROJECT EXPENSES AND THEREFORE, THERE CANNOT BE ANY REASON TO CHARGE INT EREST ON ITS OWN FUNDS. HENCE, THE QUESTION OF MAKING THE IMPUGNED ADDITION DOES NOT ARISE AT ALL. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUP PORTED THE ORDER OF THE LD. ASSESSING OFFICER. 25. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE ISSUE RAISED BY THE REVENUE IN THIS GROUND RELATES TO DELETION OF ADDITION OF RS.25,18,250/- RELATING TO UNACCOUNTED INTEREST PAYMENT. WE NOTICE THAT IN THE SEARCH CONDUCTED IN UMIYA GROUP OF CASE S ON 04.03.2010 UNDER SECTION 132 OF THE ACT, VARIOUS DOCUMENTS WERE SEIZ ED. IT ALSO INCLUDED TWO DIARIES SEIZED FROM THE PREMISES OF PARTNER MR. BHA GWANBHAI K. AJARA, MARKED AS ANNEXURE-A/1 AND ANNEXURE A/2. IT CONTAINED DET AILS OF VARIOUS TRANSACTIONS OF FUNDS RECEIVED AND PAID FROM ASSESS EE-FIRM. IT IS NOT DISPUTED BY REVENUE THAT MR. BHAGWANBHAI K. AJARA WAS ENTERI NG THE DETAILS OF ON- MONEY TRANSACTIONS RECEIVED FROM MEMBERS OF THE KAL OL PROJECT. HOWEVER, MR. BHAGWANBHAI K. AJARA WAS ENTERING THE NAMES OF FICT ITIOUS PERSONS JUST TO CREATE A PICTURE IN THE DIARY THAT FUNDS HAVE BEEN BORROWED FROM OUTSIDE PARTIES AND ARE BEING GIVEN TO THE ASSESSEE-FIRM FO R PROJECT EXPENDITURE. THE ALLEGED INTEREST AMOUNT OF RS.25,18,250/- ONLY FIND S IT PLACE IN DIARIES, BUT THERE IS NO ACTUAL PAYMENT ON RECORD. WE FURTHER OBSERVE THAT ASSESSEE-FIRM HAD MADE A TOTAL DISCLOSURE OF RS.163 LACS TOWARDS UNAC COUNTED INCOME WHICH, INTER ALIA , INCLUDES RS.23 LACS SHOWN IN THE RETURN OF INCOME OF MR. BHAGWANBHAI K. AJARA WHICH IS CONTENDED TO HAVE COVERED THE ALLEGE D NOTIONAL INCOME ALSO. WE ARE, THEREFORE, OF THE VIEW THAT LD. CIT(A) WAS JUS TIFIED IN DELETING THE IMPUGNED ADDITION BY OBSERVING THAT THE DIARY CONTA INED THE TRANSACTIONS OF ON-MONEY OF THE PROJECT AND THE AMOUNT ADVANCED TO THE ASSESSEE-FIRM WAS ACTUALLY ITS OWN MONEY AND THERE CANNOT BE ANY REAS ON TO CHARGE INTEREST ON ITS OWN FUNDS. MORE SO EVER, MR. BHAGWANBHAI K. AJARA HAD ALREADY OFFERED A IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 17 SUM OF RS.23 LACS FOR AY 2010-11, WHICH WILL COVER UP THE ENTIRE INTEREST PAID, IF ANY, BY THE APPELLANT AND NOT RECORDED IN THE BOOKS OF ACCOUNTS. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE L D. CIT(A). IN THE RESULT, THIS GROUND OF THE REVENUE IS DISMISSED. 26. NEXT COMMON GROUND RELATES TO ADDITION OF RS.4, 35,39,800/- MADE ON ACCOUNT OF UNACCOUNTED COLLECTION/RECEIPTS BY THE A SSESSING OFFICER ON THE BASIS OF SEIZED MATERIAL WHICH WAS NOT ACCOUNTED FO R IN THE REGULAR BOOKS OF ACCOUNTS. 27. BRIEF FACTS RELATED TO THIS GROUND ARE THAT DUR ING THE COURSE OF SEARCH, CERTAIN DOCUMENTS CONTAINING RECEIPTS OF SALE PROCE EDS WERE SEIZED AND FURTHER, WHEN EXPLANATION WAS CALLED FOR BY THE ASSESSING OF FICER, THE ASSESSEE WORKED OUT UNACCOUNTED TURNOVER OF RS.5,44,39,800/- AND OF FERED INCOME OF RS.109 LACS BY CALCULATING THE EMBEDDED NET PROFIT @ 20% OF THE UNACCOUNTED TURNOVER. HOWEVER, LD. ASSESSING OFFICER MADE AN ADDITION OF RS.4,35,39,800/-, AFTER GIVING SET OFF OF RS.109 LACS OFFERED BY ASSESSEE A GAINST THE UNACCOUNTED TURNOVER OF RS.5,44,39,800/-. 28. WHEN THE ISSUE CAME UP BEFORE THE LD. CIT(A), H E WAS OF THE VIEW THAT ONLY PROFIT ELEMENT EMBEDDED IN THE UNACCOUNTED TUR NOVER CAN BE ADDED IN THE HANDS OF THE ASSESSEE; HOWEVER, THE LD. CIT(A) ADOP TED NET PROFIT RATE OF 30% AS AGAINST 20% SHOWN BY THE ASSESSEE AND SUSTAINED THE REMAINING ADDITION. 29. NOW, AGGRIEVED, BOTH ASSESSEE AND REVENUE ARE I N APPEAL BEFORE THE TRIBUNAL. 30. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE UNACCOUNTED TURNOVER OF RS.5,44,39,800 /- HAS NOT AT ALL BEEN DISPUTED BY THE ASSESSING OFFI CER. THERE ARE PLENTY OF JUDGMENTS WHICH HAVE BEEN RELIED ON BY TH E LD. CIT(A) ALSO, WHEREIN IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 18 IT HAS BEEN CONSISTENTLY HELD THAT UNACCOUNTED TURN OVER CANNOT BE ADDED TO THE INCOME BUT ONLY THE PROFIT ELEMENT EMBEDDED THEREIN CAN BE SUBJECT TO TAX. HOWEVER, LD. CIT(A) HAS APPLIED THE NET PROFIT RATE OF 30% COMPLETELY IGNORING THE FACT THAT ASSESSEES AVERAGE GROSS PROFIT RATE IS JUST 10.97% AND NET PROFIT RATE IS ALSO AROUND 9.66%; WHEREAS, INCOME OFFERED OF RS .109 LACS HAS BEEN CALCULATED BY APPLYING 20% NET PROFIT RATE ON UNACC OUNTED TURNOVER. LD. COUNSEL FURTHER SUBMITTED THAT LD. CIT(A) HAS MEREL Y MADE A GUESS WORK OF APPLYING 30% BY JUST RELYING ON THE FINDING OF THE INCOME-TAX SETTLEMENT COMMISSION, MUMBAI BENCH IN THE CASE OF M/S. SILVER SPRINGS & M/S. RUSHABH VATIKA. THE LD. COUNSEL FURTHER REQUESTED THAT AS THE ALLEGED UNACCOUNTED TURNOVER IS NOT DISPUTED, THE INCOME OF FERED BY THE ASSESSEE AT THE RATE OF 20% SHOULD BE ACCEPTED AND NO FURTHER ADDIT ION SHOULD BE MADE IN SUPPORT OF HIS CONTENTION, LD. COUNSEL PLACED RELIA NCE ON THE FOLLOWING JUDGMENTS:- I) CIT VS. RESIDENT INDUSTRIES, 258 ITR 654 (GUJ.), II) CIT VS. BALCHAND AJIT KUMAR, (2003) 263 ITR 610 (MP ), III) MAN MOHAN SADANI VS. CIT, (2008) 304 ITR 52 (MP), IV) KISHOR MOHANLAL TELWALA VS. ACIT, (1999) 64 TTR 543 (AHD) 31. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THE ISSUE RAISED IN THESE GROUNDS ARE R ELATING TO THE INCOME DETERMINED ON THE UNACCOUNTED COLLECTION/RECEIPTS. WE NOTICE THAT ASSESSEE WORKED OUT UNACCOUNTED TURNOVER FROM THE SEIZED DOC UMENTS CONTAINING RECEIPTS AND SALE PROCEEDS AT RS.5,44,39,800/-. TH E REVENUE HAS ALSO ACCEPTED THE FIGURE OF UNACCOUNTED TURNOVER AT RS.5,44,39,80 0/- AS WORKED OUT BY ASSESSEE. ASSESSEE OFFERED THE PROFIT ELEMENT EMBEDDED IN THE UNACCOUNTED TURNOVER BY APPLYING NET PROFIT RATE OF 20% AN D OFFERED RS.109 LACS AS INCOME. LD. ASSESSING OFFICER, HOWEVER, DID NO T ACCEPT THE CONTENTIONS AND AFTER GIVING SET OFF OF RS.109 LACS AGAINST THE UNACCOUNTED TURNOVER OF RS.544 LACS, MADE THE IMPUGNED ADDITION OF RS.435 L ACS. HOWEVER, LD. CIT(A), IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 19 AFTER FOLLOWING VARIOUS DECISIONS, ESPECIALLY THE J UDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PR ESIDENT INDUSTRIES (SUPRA), WHEREIN IT HAS BEEN HELD THAT ENTIRE UNDISCLOSED SALES COULD NOT BE ADDED AS INCO ME OF ASSESSEE BUT ADDITION COULD BE MADE ONLY TO THE EXTENT OF ESTIMATED PROFITS EMBEDDED IN SALES FOR WHICH NET PROFIT RATE WAS ADOPTED. THE LD. CIT(A), FOLLOWING THESE JUDGMENTS, OBSERVED THAT ONLY THE PROFIT ELEMENT SH OULD BE TAXED AND NOT THE TOTAL TURNOVER. HOWEVER, HE APPLIED THE RATE OF 30% BY FOLLOWING THE RATE ADOPTED BY INCOME-TAX SETTLEMENT COMMISSION, MUMBAI BENCH IN THE CASE OF M/S. SILVER SPRINGS AND M/S. RUSHABH VATIKA. WE FU RTHER OBSERVE THAT DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), ASSESSEE HAS GIVEN FIVE COMPARABLE CASES WHEREIN JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT, CO-ORDINATE BENCH OF AHMEDABAD WERE TAKEN THE BASIS WHICH RELATED TO SIMILAR TYPE OF BUSINESS ACTIVITIES CARRIED ON BY THE ASSES SEE AND THE PERCENTAGE OF THE NET PROFIT RATE WERE RANGING BETWEEN 1.31% TO 20%. A SUMMARY OF PROFIT ESTIMATED ON ON-MONEY IN THESE CASES IS REPRODUCED BELOW:- 2.5 A SUMMARY OF PROFITS ESTIMATED ON ON-MONEY IN THE VARIOUS CASES IS AS UNDER: NO. DETAIL OF THE CASE % OF NET PROFIT REMARKS 1. NARESH B. AGANVAL (HUF) MAGATULAL HARLALKA (HUF) - GUJARAT HIGH COURT ORDER DATED 3/5/00 15% CONSTRUCTION OF COMMERCIAL COMPLEX. REFERENCE BY THE DEPARTMENT AGAINST THE ORDER OF ITAT REJECTED. 2. CIT V. ABHISHEK CORPORATION (2000) 158 CTR (GUJ) 374 - GUJARAT HIGH COURT REJECTED THE REFERENCE OF THE DEPARTMENT AND UPHELD THE DECISION OF ITAT, AHMEDABAD. 1.31% NP % IS NOT COMPARABLE AS THE ASSESSEE WAS DOING SUPERVISION OF CON STRUCTION WORK. 3. M/S. R. K. CORPORATION V. ACIT (ITA NO. 4940/AHD/1996) ORDER 08/02/99 20% THE DISCLOSURE MADE BY THE ASSESSEE WORKED OUT TO 20% OF 'ON MONEY ' RECEIPT. 4. KISHORE MOHAN TELWALA V.ACIT (1999) 63 TTJ (AHD.) 651 - ORDER DATED 2/9/98 8% RESIDENTIAL PROJECT TAKEN OVER FROM NARESH AGARWAL WHO TOOK UP THE WORK OF ORGANIZING AND BUILDING ACTIVITY OF HARE KRISHNA APT. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 20 5 DCIT V. S.P. ENTERPRISES (IT(SS) A NO.58/AHD/2003) ORDER DATED 24.11,2005 17% THE ASSESSEES DECLARATION WORKED OUT EQUAL TO 17% OF ON MONEY RECEIVED. 32. FROM GOING THROUGH THE TABLE, WE NOTICE THAT NE T PROFIT RATES OFFERED IS BETWEEN 1.31% TO 20%; WHEREAS ASSESSEE HAS OFFERED 20% NET PROFIT RATE. ON THE OTHER HAND, LD. CIT(A) HAS ALSO FOLLOWED THE DECISI ON OF THE INCOME-TAX SETTLEMENT COMMISSION BUT HAS NOT POINTED OUT ANY E RROR IN THE INCOME ESTIMATION BY THE ASSESSEE. EVEN BEFORE THE LD. AS SESSING OFFICER ALSO NO SUCH MATERIAL WAS FOUND TO SHOW THAT ASSESSEE HAS GIVEN A WRONG CALCULATION. IT SEEMS THAT THE LD. CIT(A) HAS JUST MADE GUESS WORK OF ESTIMATING 30% NET PROFIT RATE. WE ARE, THEREFORE, OF THE VIEW THAT EVEN IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE FACT T HAT THE NET PROFIT RATE OFFERED BY THE ASSESSEE IS MUCH MORE THAN ITS NORMAL GROSS PROFIT AND NET PROFIT RATE CONSISTENTLY OFFERED IN ITS RETURN OF INCOME AND AL SO IN THE GIVEN FACT WHEN THE UNACCOUNTED TURNOVER IS NOT DISPUTED BY THE REVENUE AUTHORITIES, WE ARE OF THE VIEW THAT INCOME OFFERED BY THE ASSESSEE AT 20% SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING AUTHORITIES AND NO FURTHER ADDITIO N WAS CALLED FOR. WE ACCORDINGLY ALLOW THE GROUND OF THE ASSESSEE AND DI SMISSED THAT OF THE REVENUE. 33. NOW, WE TAKE UP CROSS-APPEALS BY ASSESSEE AND R EVENUE FOR AYS 2009-10 AND 2010-11 IN THE CASE OF SHRI BHAGWANBHAI KARMANB HAI AJARA IN IT(SS)A NOS. 194 & 195/AHD/2013 FOR 2009-10 AND ITA NOS. 1373 & 1375/AHD/2013 FOR 2010-11 RESPECTIVELY. GROUNDS OF APPEAL RAISED IN ALL THESE FOUR APPEALS READ AS UNDER:- IT(SS)A NO.194/AHD/2013 : AY-2009-10 : REVENUES AP PEAL 1. THE LD.CIT(A) HAS ERRED IN LAW .AND ON FACTS IN DEL ETING THE ADDITION OF RS.3,92,750/- OUT OF TOTAL ADDITION OF RS.5,87,250/ - MADE ON ACCOUNT OF UNACCOUNTED INTEREST INCOME. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.46,91,750/- OUT OF TOTAL ADDITION OF RS.66,36,75 0/- MADE BY WORKING OUT IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 21 PEAK OF THE ENTRIES APPEARING THE DIARIES SEIZED FR OM THE RESIDENCE OF THE ASSESSEE. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.15,00,000/- BEING AMOUNT RECEIVED DURING THE YEA R FROM NICOL LAND TRANSACTION RECORDED IN THE DIARIES SEIZED FROM THE RESIDENCE OF THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. IT(SS)A NO.195/AHD/2013 : AY-2009-10 : ASSESSEES A PPEAL 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN LAW AND ON FACT IN CONFIRMING ADDITION OF RS. 1,94,500/- ON ALLEGED GROUND OF EARNING OF INTEREST INCOME, WHICH IS OFFERED BY THE FIRM IN TH E OVERALL DISCLOSURE OF RS. 163 LAC, MORE PRECISELY, AS PART OF RS. 23 LAC. SUC H ADDITION AMOUNTS TO DOUBLE ADDITION IN THE HANDS OF FIRM AS WELL AS PAR TNER. IT IS THEREFORE PRAYED THAT ADDITION SO MADE MAY KINDLY BE DELETED. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN LAW AND ON FACT IN CONFIRMING THE ADDITION OF RS. 19,45,000/- ON AL LEGED GROUND OF UNEXPLAINED INVESTMENT TO EARN INTEREST INCOME OF R S. 1,94,500/-, WHEREAS, THE FUNDS ARE SOURCED FROM EXTRA COLLECTION FROM ME MBERS OF UMA SHAKTI CORPORATION KALOL PROJECT I.E. FIRM. SUCH ADDITION AMOUNTS TO DOUBLE ADDITION IN THE HANDS OF FIRM AS WELL AS PARTNER. IT IS THER EFORE PRAYED THAT ADDITION SO MADE MAY KINDLY BE DELETED. 3. YOUR APPELLANT CRAVES LIBERTY TO ADD, TO ALTER, TO MODIFY, TO AMEND OR TO WITHDRAW / DELETE ANY OF THE GROUNDS OF APPEAL AT A NY TIME, ON OR BEFORE THE HEARING OF APPEAL. ITA NO.1373/AHD/2013 : AY-2010-11 : REVENUES APPEA L 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.9,00,000/- MADE U/S 69 OF THE I.T. ACT. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS. 1,42,59,250/- OUT OF TOTAL ADDITION OF RS. 1,68,34, 250/- MADE BY WORKING OUT PEAK OF THE ENTRIES APPEARING THE DIARIES SEIZED FR OM THE RESIDENCE OF THE ASSESSEE. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.26,20,000/- BEING AMOUNT RECEIVED DURING THE YEA R FROM NICOL LAND TRANSACTION RECORDED IN THE DIARIES SEIZED FROM THE RESIDENCE OF THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 22 ITA NO.1375/AHD/2013 : AY-2010-11 : ASSESSEES APPE AL 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN LAW AND ON FACT CONFIRMING ADDITION OF RS. 25,75,000/- AS PROFITS F ROM OGNAJ LAND AS UNEXPLAINED INVESTMENT, WHEREAS SUCH AMOUNTS ARE DU LY CONSIDERED IN THE INCOME OFFERED IN IT RETURN OF RS. 38 LAC. SUCH ADD ITION AMOUNTS TO DOUBLE ADDITION. IT IS THEREFORE PRAYED THAT ADDITION SO M ADE MAY KINDLY BE DELETED. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN LAW AND ON FACT CONFIRMING ADDITION OF RS. 25,75,000/- AS PROFITS F ROM OGNAJ LAND AS UNEXPLAINED INVESTMENT, WHEREAS THE APPELLANT HAS M ADE PAYMENTS FOR DALALI OF RS. 75,000/- AND REDUCED BANA AMOUNT OF RS. 150, 000/-, THUS, THERE IS NET PROFIT OF RS. 22.75 LAC, WHICH IS OFFERED IN THE IN COME OFFERED IN IT RETURN OF RS. 38 LAC. IT IS THEREFORE PRAYED THAT ADDITION SO MADE MAY KINDLY BE DELETED. 3. YOUR APPELLANT CRAVES LIBERTY TO ADD, TO ALTER, TO MODIFY, TO AMEND OR TO WITHDRAW / DELETE ANY OF THE GROUNDS OF APPEAL AT A NY TIME, ON OR BEFORE THE HEARING OF APPEAL. 34. IN APPEALS FOR AY 2009-10, FIRST COMMON ISSUE R ELATES TO ADDITION OF RS.5,87,250/- FOR UNACCOUNTED INTEREST MADE BY THE ASSESSING OFFICER OUT OF WHICH LD. CIT(A) DELETED ADDITION OF RS.3,92,750/-. NOW, ASSESSEE IS IN APPEAL AGAINST THE SUSTAINED ADDITION OF RS. 1,94,500/- AN D REVENUE AGAINST DELETION OF ADDITION OF RS.3,92,780/-. 35. BRIEF FACTS RELATED TO THIS GROUND ARE THAT A S EARCH WAS CONDUCTED ON 04.03.2010 AT UMIYA GROUP, INCLUDING ASSESSEES PRE MISES, DURING WHICH, TWO DIARIES MARKED AS ANNEXURE-A/1 AND ANNEXURE A/2 WER E SEIZED. AS PER WHICH, IT WAS ALLEGED THAT ASSESSEE HAS EARNED UNAC COUNTED INTEREST INCOME OF RS.5,87,250/- WHICH INCLUDED INTEREST FROM M/S. UMA SHAKTI CORPORATION KALOL PROJECT (IN SHORT USCKP) AT RS.3,92,750/- AND INT EREST FROM OTHERS AT RS.1,94,500/-. 36. WHILE ADJUDICATING THIS ISSUE, LD. CIT(A) PARTL Y ALLOWED ASSESSEES APPEAL BY DELETING THE ADDITION OF RS.3,92,780/- BY OBSERV ING AS FOLLOWS:- 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SU BMISSION OF THE A.R. OF THE APPELLANT CAREFULLY. IT IS SEEN THAT THE ASSESSING OFFICER IS CORRECT IN SAYING THAT THE INTEREST INCOME OF RS.5,87,250/- IF IT PERTAINS TO A.Y.2009-10 HAS TO BE TAXED IN A.Y.2010-11. HOWEVER, THE ASSESSING OFFICER HAS NOT CONSIDERED THE IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 23 SUBMISSIONS OF THE APPELLANT THAT THE ENTIRE SOURCE OF MONEY ADVANCED WAS FROM THE PROJECT CARRIED OUT BY THIS GROUP. THE FACT THA T MOST OF THE ON-MONEY COLLECTED AT KALOL WAS WITH THE APPELLANT HAS BEEN ACCEPTED BY THE ASSESSING OFFICER ALSO IN THE ASSESSMENT OF THE APPELLANT AS WELL AS IN THE CASE OF THE OTHER ENTITIES OF THIS GROUP. IT IS SEEN, HOWEVER, THAT T HE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE APPELLANT THAT THE N OTINGS IN DIARIES REPRESENTED ON-MONEY COLLECTION OF THE VARIOUS PROJECTS. IN FAC T CIT(A) IN THE CASE OF UMASHAKTI CORPORATION KALOL PROJECT IN A.Y.2009-10 IN APPEAL NO.CIT(A)- I/CC. 1(1)7308/2011-12 VIDE ORDER DATED 18.07.2012 HAS HELD THAT THE SUM OF RS.3,92,750/- ADDED BY THE ASSESSING OFFICER ON ACC OUNT OF UNDISCLOSED INTEREST PAYMENT BY THE FIRM UMASHAKTI CORPORATION KALOL PRO JECT TO THE APPELLANT WAS NOT CORRECT. THE CONTENTION THAT THE ON-MONEY COLLE CTION FROM THE PROJECTS OF THE FIRM UMASHAKTI CORPORATION KALOL PROJECT ITSELF HAD BEEN UTILIZED BY THE APPELLANT TO ADVANCE MONEY TO THE FIRM UMASHAKTI CO RPORATION KALOL PROJECT TO EARN INTEREST HAD BEEN ACCEPTED. IT WAS HELD THAT S INCE THE MONEY BELONGED TO THE FIRM UMASHAKTI CORPORATION KALOL PROJECT ITSELF HEN CE THERE WAS NO QUESTION OF PAYING INTEREST TO BHAGWANBHAI K AJARA. 6.1 IN VIEW OF THE FACT THAT THE CIT(A) HAS DELETED ADDITION OF RS.3,92,750/- MADE, IN THE CASE OF UMASHAKTI CORPORATION KALOL PR OJECT INDICATES THAT THE PRINCIPAL AMOUNT ON WHICH THIS INTEREST HAD BEEN WO RKED OUT BELONGED TO THE FIRM UMASHAKTI CORPORATION KALOL PROJECT. HOWEVER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ENTRIES MADE IN THE DIARIES DO NO T MATCH WITH THE SALE OF FLATS RECORDED BY THE ENTITIES OF THIS GROUP HENCE THE AS SESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE FUNDS RECORDED IN TH E DIARY WERE ON-MONEY RECEIPT OF PROJECTS. THIS CONTENTION OF THE ASSESSING OFFI CER HAS BEEN REJECTED BY THE CIT(A) IN THE CASE OF UMASHAKTI CORPORATION KALOL P ROJECT IN A.Y.2009-10. IT IS SEEN THAT THE APPELLANT HAD SHOWN INTEREST INCOME T O THE EXTENT OF RS.5,87,250/- OUT OF WHICH RS.3,92,750/- WAS FROM THE FIRM WHERE THE APPELLANT WAS A PARTNER. THE CIT(A) HAS HELD THAT IN A.Y.2009-10 THE AMOUNT OF RS.3,92,750/- WAS NOT UNRECORDED EXPENSES OF THE FIRM UMASHAKTI CORPORATI ON KALOL PROJECT BECAUSE THE FIRM'S OWN ON-MONEY HAD BEEN UTILISED IN GRANTI NG LOANS TO THE FIRM ITSELF BY THE APPELLANT. 6.2 IN LIGHT OF THE ABOVE, IT IS CLEAR THAT OUT OF THE INTEREST INCOME OF RS.5,87,250/- AS COMPUTED BY THE ASSESSING OFFICER A SUM OF RS.3,92,780/- WAS NOT CHARGEABLE AS INTEREST INCOME OF THE APPELLANT. IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE ASSESSING OFFICER IS REDUCED F ROM RS.5,87,250/-TO RS.1,94,500/-. 37. AGGRIEVED, BOTH REVENUE AND ASSESSEE ARE IN APP EAL BEFORE US. 38. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.3,92,780/- BY TAKING THE BASIS O F LD. CIT(A)S ORDER IN THE CASE OF UMA SHAKTI CORPORATION KALOL PROJECT (USCKP), WH EREIN IT WAS HELD THAT LD. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 24 ASSESSING OFFICER HAS WRONGLY ADDED A SUM OF RS.3,9 2,750/- AS UNDISCLOSED INTEREST PAYMENT AND ONCE THE INTEREST PAYMENT HAS BEEN HELD TO BE INCORRECT, THERE CANNOT BE A CORRESPONDING INCOME TO THE ASSES SEE. AS FAR AS BALANCE INTEREST OF RS.1,94,500/- IS CONCERNED, LD. COUNSEL SUBMITTED THAT USCKP GROUP HAS MADE A DISCLOSURE OF RS.163 LACS UNDER SECTION 132(4) OF THE ACT, OF WHICH INCOME FROM NOTINGS IN ASSESSEES DIARY BOOK WAS WO RKED OUT AT RS.23 LACS, WHICH CERTAINLY WILL TAKE CARE OF ALLEGED INTEREST INCOME OF RS.1,94,500/- AND THEREFORE, NO SEPARATE ADDITION IS CALLED FOR. LD . DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, VEHEMENTLY ARGUED SUPPORTING THE ORDER OF ASSESSING OFFICER. 39. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE ISSUE RAISED IN THIS GROUND RELATES TO THE ALLEGED UNEXPLAINED INTEREST INCOME OF RS.5,87,250/- TAKEN UP BY LD. AS SESSING OFFICER FROM THE SEIZED DIARIES MARKED AS ANNEXURE A/1 AND ANNEXURE A/2 FOUND IN THE COURSE OF SEARCH AT UMIYA GROUP. AS PER THESE DIARIES, UN ACCOUNTED INTERESTED INCOME OF RS.5,87,250/- AND RS.21,54,000/- WERE ADDED TO THE ASSESSEES INCOME FOR AYS 2009-10 AND 2010-11 RESPECTIVELY. PRESENTLY, I N THIS APPEAL, WE ARE DEALING WITH AY 2009-10 AND WE NOTICE THAT RS.5,87,250/- IN CLUDES INTEREST FROM USCKP AND INTEREST FROM OTHERS. AS FAR AS INTEREST FROM USCKP AT RS.3,92,750/- IS CONCERNED, WE OBSERVE THAT LD. CIT(A) HAS RIGHTLY D ELETED THE IMPUGNED ADDITION FOLLOWING THE ORDER OF LD. CIT(A)S ORDER IN THE CASE OF USCKP, WHEREIN IT HAS BEEN HELD THAT LD. ASSESSING OFFICER HAS WRONGLY MADE AN ADDITION OF UNACCOUNTED INTEREST PAYMENT. AS THE I MPUGNED DISALLOWANCE HAS BEEN DELETED IN THE HANDS OF PAYER, THERE CANNOT BE ANY ADDITION IN THE HANDS OF PAYEE, I.E., ASSESSEE. AS REGARD THE BALANCE AMOUN T OF INTEREST FROM OTHERS AT RS.1,94,500/- IS CONCERNED, WE ACCEPT THE CONTENTIO NS OF LD. COUNSEL THAT THE IMPUGNED AMOUNT OF RS.1,94,500/- FORMS PART OF TOTA L DISCLOSURE OF RS.163 LACS MADE BY USCKP WHICH, INTER ALIA, INCLUDES INCOME FROM NOTINGS IN ASSESSEES DIARIES AT RS.23 LACS. THEREFORE, NO SEPARATE ADDI TION IS CALLED FOR IN RESPECT OF IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 25 SUCH INTEREST. IN THE RESULT, GROUND NO.1 OF THE R EVENUES APPEAL FOR AY 2009- 10 IS DISMISSED AND THAT OF ASSESSEES IS ALLOWED. 40. REVENUES NEXT COMMON ISSUE RAISED IN GROUND NO .2 FOR AY 2009-10 AND AY 20010-11 IS AGAINST THE DELETION OF ADDITION OF RS.46,91,750/- AND RS.1,42,59,250/- OUT OF TOTAL ADDITION OF RS.66,36, 750/- AND RS.1,68,34,250/- RESPECTIVELY MADE BY LD. ASSESSING OFFICER BY WORKI NG OUT PEAK ENTRIES APPEARING IN THE SEIZED DIARIES. ASSESSEE IS ALSO IN APPEAL RAISING GROUND NO.2 FOR AY 2009-10 AND GROUND NOS. 1 & 2 IN AY 2010-11 CHALLENGING LD. CIT(A)S ORDER CONFIRMING ADDITION OF RS.19,45,000 AND RS.25 ,75,000/- RESPECTIVELY. 41. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD . ASSESSING OFFICER FOUND FROM ANNEXURE A/1 AND ANNEXURE A/2 SEIZED DURING TH E SEARCH THAT THERE WAS INFLOW AND OUTFLOW OF FUNDS IN THE NAME OF VARIOUS PERSONS WHICH APPEARED TO HAVE BEEN RECORDED BY THE ASSESSEE IN HIS PERSONAL CAPACITY WITH RESPECT TO BUSINESS OF FINANCING AND THESE TRANSACTIONS COULD NOT BE CORRELATED WITH EXTRA COLLECTION FROM THE MEMBERS OF USCKP AS SUBMITTED B Y THE ASSESSEE. LD. ASSESSING OFFICER ACCORDINGLY WORKED OUT THE PEAK O F SEIZED DIARIES AT RS.66,36,750/- FOR AY 2009-10 AND RS.1,68,34,250/- FOR AY 2010-11. IN APPEAL BEFORE THE LD.CIT(A), ASSESSEE PARTLY SUCCEEDED AS LD. CIT(A) HELD THAT THE ENTIRE PEAK CANNOT BE ADDED SINCE SUBSTANTIAL MONEY OF SUCH PEAK BELONGS TO USCKP, HOWEVER, PARTLY CONFIRMED THE ADDITION AT RS . 19,45,000/- FOR AY 2009- 10 BY CALCULATING IT AS PRINCIPAL AMOUNT ON WHICH A SSESSEE HAD EARNED INTEREST OF RS. 1,94,500/- @ 10%, AND AS REGARDS TO AY 2010 -11, LD. CIT(A) CONFIRMED ADDITION OF RS. 25,75,000/- FOR UNACCOUNTED INVESTM ENT IN OGNAJ LAND BY OBSERVING AS FOLLOWS:- AY 2009-10 8. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SU BMISSION OF THE A.R. OF THE APPELLANT CAREFULLY. IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE APPELLANT THAT THE NOTINGS IN DIA RIES REPRESENTED ON-MONEY COLLECTION OF THE VARIOUS PROJECTS. IN FACT CIT(A) IN THE CASE OF UMASHAKTI CORPORATION KALOL PROJECT IN A.Y.2009-10 IN APPEAL NO.CIT(A)- IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 26 I/CC.1(1)/308/2011-12 VIDE ORDER DATED 18.07.2012 H AS HELD THAT THE SUM OF RS.3,92,750/- ADDED BY THE ASSESSING OFFICER ON ACC OUNT OF UNDISCLOSED INTEREST PAYMENT BY THE FIRM UMASHAKTI CORPORATION KALOL PRO JECT TO THE APPELLANT WAS NOT CORRECT. THE CONTENTION THAT THE ON-MONEY COLLE CTION FROM THE PROJECTS OF THE FIRM UMASHAKTI CORPORATION KALOL PROJECT ITSELF HAD BEEN UTILIZED BY THE APPELLANT TO ADVANCE MONEY TO THE FIRM UMASHAKTI CO RPORATION KALOL PROJECT TO EARN INTEREST HAD BEEN ACCEPTED. IT WAS HELD THAT SINCE THE MONEY BELONGED TO THE FIRM UMASHAKTI CORPORATION KALOL PROJECT ITSELF HEN CE THERE WAS NO QUESTION OF PAYING INTEREST TO BHAGWANBHAI K AJARA. 8.1 IN VIEW OF THE FACT THAT THE CIT(A) HAS DELETED ADDITION OF RS.3,92,750/- MADE, IN THE CASE OF UMASHAKTI CORPORATION KALOL PR OJECT INDICATES THAT THE PRINCIPAL AMOUNT ON WHICH THIS INTEREST HAD BEEN WO RKED OUT BELONGED TO THE FIRM UMASHAKTI CORPORATION KALOL PROJECT. HOWEVER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ENTRIES MADE IN THE DIARIES DO NO T MATCH WITH THE SALE OF FLATS RECORDED BY THE ENTITIES OF THIS GROUP HENCE THE AS SESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE FUNDS RECORDED IN TH E DIARY WERE ON-MONEY RECEIPT OF PROJECTS. THIS CONTENTION OF THE ASSESSING OFFIC ER HAS BEEN REJECTED BY THE CIT(A) IN THE CASE OF UMASHAKTI CORPORATION KALOL P ROJECT IN A.Y.2009-10. IT IS SEEN THAT THE APPELLANT HAD SHOWN INTEREST INCOME T O THE EXTENT OF RS.5,87,250/- OUT OF WHICH RS.3,92,750/- WAS FROM THE FIRM WHERE THE APPELLANT WAS A PARTNER. THE CIT(A) HAS HELD THAT IN A.Y.2009-10 THE AMOUNT OF RS.3,92,750/- WAS NOT UNRECORDED EXPENSES OF THE FIRM UMASHAKTI CORPORATI ON KALOL PROJECT BECAUSE THE FIRM'S OWN ON-MONEY HAD BEEN UTILISED IN GRANTI NG LOANS TO THE FIRM ITSELF BY THE APPELLANT. 8.2 IN VIEW OF THE ABOVE, IT BECOMES CLEAR THAT THE APPELLANT WAS RECEIVING ON- MONEY FROM THE PROJECT OF THE FIRM UMASHAKTI CORPOR ATION KALOL PROJECT AND WAS NOT RECORDING IT PROPERLY IN THE DIARY AS RECEIVED ON ACCOUNT OF ON-MONEY OF THE PROJECT. THE APPELLANT WAS PUTTING NAMES OF FICTITI OUS PERSON TO SHOW THAT HE HAD BORROWED MONEY FROM ELSEWHERE AND THEN WOULD ADVANC E THE SAME TO THE FIRM AND CHARGE INTEREST ON THE SAME. THIS IS THE REASON WHY THE NOTINGS IN THE DIARY DO NOT TALLY WITH THE DETAILS OF PERSONS TO WHOM FL ATS HAVE BEEN SOLD. IN VIEW OF THE ABOVE, IT IS CLEAR THAT SUBSTANTIAL PART OF THE NOTING IN DIARY WOULD RELATE TO THE ON-MONEY COLLECTED ON BEHALF OF THE FIRM UMASHA KTI CORPORATION KALOL PROJECT FROM SALE OF FLATS OF THE PROJECT. HOWEVER, IT ALSO CANNOT BE DENIED THAT THE APPELLANT HAD OBTAINED OTHER UNEXPLAINED CASH CREDI TS ALSO BECAUSE THE INTEREST INCOME OF THE APPELLANT DURING THE A.Y.2009-10 WAS RS.5,87,250/- WHICH HAS BEEN RECORDED IN THE DIARY SEIZED. OUT OF THIS AMOU NT ONLY RS.3,92,750/- PERTAINS TO INTEREST CHARGED FROM THE FIRM UMASHAKTI CORPORA TION KALOL PROJECT. THUS, AN AMOUNT OF RS.1,94,500/- IS INTEREST CHARGED FROM OT HERS. FOR EARNING THIS AMOUNT OF INTEREST THE APPELLANT WOULD REQUIRES TO INVEST 10 TIMES THIS AMOUNT BECAUSE THE RATE OF INTEREST IS GENERALLY 10% TO 12% AND AL SO SOMETIME IS INVARIABLY LOST BETWEEN COLLECTING ON DEBT AND ADVANCING THE MONEY SO RECEIVED TO ANOTHER PERSON. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 27 8.3. IN VIEW OF THE FACT THAT IN THE EARLIER PARAGR APH IT HAS BEEN NOTED THAT PEAK WORKING CANNOT BE RESORTED TO IN THIS CASE BECAUSE SUBSTANTIAL MONEY BELONGS TO THE FIRM UMASHAKTI CORPORATION KALOL PROJECT. IN VI EW OF THE ABOVE ON THE BASIS OF THE UNACCOUNTED ENTRIES IT IS HELD THAT THE PRIN CIPAL AMOUNT ON WHICH INTEREST OF RS.1,94,5000/- HAS BEEN EARNED (10 X 1,94,500 = RS.19,45,000/-) SHOULD BE ADDED TO THE INCOME OF THE APPELLANT. THUS, THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PEAK WORKING IS REDUCED FROM RS.66,36,750/- TO RS.19,45,000/-. AY 2010-11 9. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SU BMISSION OF THE A.R. OF THE APPELLANT CAREFULLY. IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE APPELLANT THAT THE NOTINGS IN DIA RIES REPRESENTED ON-MONEY COLLECTION OF THE VARIOUS PROJECTS. IN FACT CIT(A) IN THE CASE OF UMASHAKTI CORPORATION KALOL PROJECT IN A.Y.2009-10 IN APPEAL NO.CIT(A)- I/CC.1(1)/308/2011-12 VIDE ORDER DATED 18.07.2012 H AS HELD THAT THE SUM OF RS.3,92,750/- ADDED BY THE ASSESSING OFFICER ON ACC OUNT OF UNDISCLOSED INTEREST PAYMENT BY THE FIRM UMASHAKTI CORPORATION KALOL PRO JECT TO THE APPELLANT WAS NOT CORRECT. THE CONTENTION THAT THE ON-MONEY COLLE CTION FROM THE PROJECTS OF THE FIRM UMASHAKTI CORPORATION KALOL PROJECT ITSELF HAD BEEN UTILIZED BY THE APPELLANT TO ADVANCE MONEY TO THE FIRM UMASHAKTI CO RPORATION KALOL PROJECT TO EARN INTEREST HAD BEEN ACCEPTED. IT WAS HELD THAT S INCE THE MONEY BELONGED TO THE FIRM UMASHAKTI CORPORATION KALOL PROJECT ITSELF HEN CE THERE WAS NO QUESTION OF PAYING INTEREST TO BHAGWANBHAI K AJARA. 9.1 IN VIEW OF THE FACT THAT THE CIT(A) HAS DELETED ADDITION OF RS.3,92,750/- MADE, IN THE CASE OF UMASHAKTI CORPORATION KALOL PR OJECT INDICATES THAT THE PRINCIPAL AMOUNT ON WHICH THIS HAD BEEN WORKED OUT BELONGED TO THE FIRM UMASHAKTI CORPORATION KALOL PROJECT. HOWEVER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ENTRIES MADE IN THE DIARIES DO NO T MATCH WITH THE SALE OF FLATS RECORDED BY THE ENTITIES OF THIS GROUP HENCE THE AS SESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE FUNDS RECORDED IN TH E DIARY WERE ON-MONEY RECEIPT OF PROJECTS. THIS CONTENTION OF THE ASSESSING OFFIC ER HAS BEEN REJECTED BY THE CIT(A) IN THE CASE OF UMASHAKTI CORPORATION KALOL P ROJECT IN A.Y.2009-10. IT IS SEEN THAT THE APPELLANT HAD SHOWN INTEREST INCOME T O THE EXTENT OF RS.5,87,250/- OUT OF WHICH RS.3,92,750/- WAS FROM THE FIRM WHERE THE APPELLANT WAS A PARTNER. THE CIT(A) HAS HELD THAT IN A.Y.2009-10 THE AMOUNT OF RS.3,92,750/- WAS NOT UNRECORDED EXPENSES OF THE FIRM UMASHAKTI CORPORATI ON KALOL PROJECT BECAUSE THE FIRM'S OWN ON-MONEY HAD BEEN UTILISED IN GRANTI NG LOANS TO THE FIRM ITSELF BY THE APPELLANT. 9.2 IN VIEW OF THE ABOVE, IT BECOMES CLEAR THAT THE APPELLANT WAS RECEIVING ON- MONEY FROM THE PROJECT OF THE FIRM UMASHAKTI CORPOR ATION KALOL PROJECT AND WAS NOT RECORDING IT PROPERLY IN THE DIARY AS RECEIVED ON ACCOUNT OF ON-MONEY OF THE PROJECT. THE APPELLANT WAS PUTTING NAMES OF FICTITI OUS PERSON TO SHOW THAT HE HAD BORROWED MONEY FROM ELSEWHERE AND THEN WOULD ADVANC E THE SAME TO THE FIRM IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 28 AND CHARGE INTEREST ON THE SAME. THIS IS THE REASON WHY THE NOTINGS IN THE DIARY DO NOT TALLY WITH THE DETAILS OF PERSONS TO WHOM FI ATS HAVE BEEN SOLD. IN VIEW OF THE ABOVE, IT IS CLEAR THAT SUBSTANTIAL PART OF THE NOTING IN DIARY WOULD RELATE TO THE ON-MONEY COLLECTED ON BEHALF OF THE FIRM UMASHA KTI CORPORATION KALOL PROJECT FROM SALE OF FLATS OF THE PROJECT. HOWEVER, IT ALSO CANNOT BE DENIED THAT THE APPELLANT HAD OBTAINED OTHER UNEXPLAINED CASH CREDI TS ALSO BECAUSE THE INTEREST INCOME OF THE APPELLANT DURING THE A.Y.2009-10 WAS RS.5,87,250/- WHICH HAS BEEN RECORDED IN THE DIARY SEIZED. OUT OF THIS AMOU NT ONLY RS.3,92,750/- PERTAINS TO INTEREST CHARGED FROM THE FIRM UMASHAKTI CORPORA TION KALOL PROJECT. THUS, AN AMOUNT OF RS. 1,94,500/- IS INTEREST CHARGED FROM O THERS. FOR EARNING THIS AMOUNT OF INTEREST THE APPELLANT WOULD REQUIRES TO INVEST 10 TIMES THIS AMOUNT BECAUSE THE RATE OF INTEREST IS GENERALLY 10% TO 12 % AND ALSO SOME TIME IS INVARIABLY LOST BETWEEN COLLECTING THE DEBT AND ADV ANCING THE MONEY SO RECEIVED TO ANOTHER PERSON. 9.3 IN VIEW OF THE FACT THAT IN THE EARLIER PARAGRA PH IT HAS BEEN NOTED THAT PEAK WORKING CANNOT BE RESORTED TO IN THIS CASE BECAUSE SUBSTANTIAL MONEY BELONGS TO THE FIRM UMASHAKTI CORPORATION KALOL PROJECT. 9.4 FURTHER, IT IS SEEN THAT THE APPELLANT HAD MADE UNACCOUNTED INVESTMENT IN LAND BY WAY OF BANAKHAT DATED 6.11.2009 IN PURCHASE OF LAND AT SURVEY NO.1195 OGNAJ. THE AMOUNT OF CASH PAID AT THE TIME OF BANAK HAT WASRS.25,00,000/-. NO SEPARATE ADDITION HAS BEEN MADE BY THE ASSESSING OF FICER BECAUSE THIS AMOUNT HAS BEEN INCLUDED IN THE PEAK WORKING OF RS. 1,68,3 4,250/-. IN VIEW OF THE FACT THAT IN THE EARLIER PARAGRAPH IT HAS BEEN NOTED THA T PEAK WORKING CANNOT BE RESORTED TO IN THIS CASE BECAUSE SUBSTANTIAL MONEY BELONGS TO THE FIRM UMASHAKTI CORPORATION KALOL PROJECT. HOWEVER THE INVESTMENT M ADE BY THE APPELLANT ARE NOT ASSETS OF THE FIRM UMASHAKTI CORPORATION KALOL PROJECT HENCE NO BENEFIT FOR RS.25,00,000/- CAN BE GRANTED TO THE APPELLANT. THE CONTENTION THAT THE AMOUNT OF RS. 1,50,000/- WAS RECORDED IN THE BOOKS OF ACCO UNTS WAS RECORDED IN THE DIARY SEIZED DURING SEARCH IS QUESTIONABLE BECAUSE THE AS SESSING OFFICER HAS GIVEN A CATEGORICAL FINDING THAT THE TRANSACTION WAS NOT RE CORDED IN THE BOOKS OF ACCOUNTS AND ALL THOROUGH THE ASSESSMENT PROCEEDINGS THE APP ELLANT DENIED ANY OWNERSHIP OF LANDS BASED ON THE SAID BANAKHAT. 9.5 AS FAR AS THE PAYMENT OF COMMISSION OF RS.75,00 0/- RECORDED IN THE DIARY IS CONCERNED, THE A.R. OF THE APPELLANT HAS FILED A PH OTOCOPY OF THE SEIZED DIARY IN SUPPORT OF THE SAME. HOWEVER, THIS PAYMENT IS ALSO UNACCOUNTED PAYMENT MADE BY THE APPELLANT AND THE SAME HAS TO BE ADDED TO TH E BANAKHAT AMOUNT. 9.6 IN VIEW OF THE ABOVE ON THE BASIS OF THE UNACCO UNTED ENTRIES NOTED IN THE DIARY BELONGING TO THE APPELLANT, THE APPELLANT HAD MADE UNACCOUNTED INVESTMENT IN LAND AT SURVEY NO. 1195 OGNAJ OF RS.2 5,75,000/-. 9.7 THUS, THE ADDITION MADE BY THE ASSESSING OFFICE R ON ACCOUNT OF PEAK WORKING IS REDUCED FROM RS. 1,68,34,250/- TO RS.25,75,000/- . 42. AGGRIEVED, BOTH REVENUE AND ASSESSEE ARE IN APP EAL BEFORE THE TRIBUNAL. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 29 43. LD. COUNSEL, AT THE OUTSET, SUBMITTED THAT THE IMPUGNED PEAK IS PART OF UNACCOUNTED TURNOVER OF RS.5,44,39,800/- DECLARED BY USCKP AND PROFIT ELEMENT EMBEDDED THEREIN HAS ALREADY BEEN OFFERED T O TAX BY USCKP; THEREFORE, NO SEPARATE ADDITION IS WARRANTED FOR AS THE SAME SHALL RESULT INTO DOUBLE TAXATION OF THE SAID SUM WHICH IS NOT PERMIS SIBLE UNDER THE LAW. AS REGARDS THE ADDITION CONFIRMED BY LD. CIT(A) AT RS. 19,45,000/- IS CONCERNED, HE SUBMITTED THAT IT WAS MERE GUESS WORK BY HYPOTHETIC ALLY APPLYING 10% RATE ON THE INTEREST INCOME OF RS.1,94,500/-. 44. AS REGARDS THE ADDITION SUSTAINED AT RS 25,75,0 00/- BY LD. CIT(A) FOR AY 2010-11 IS CONCERNED, IT WAS SUBMITTED THAT RS. 25 LACS RECEIVED ON OGNAJ LAND IS PROFIT OF ASSESSEE AS A MIDDLEMEN ON CANCELLATIO N OF BANAKHAT. SUCH SUM IS RECEIVED ON 06.11.2009 AGAINST WHICH ASSESSEE HAS P AID DALALI OF RS.75,000/-. AS AGAINST SUCH PROFIT, ASSESSEE HAD DECLARED INTEREST INCOME FROM USCKP AT RS.21,57,250/- AND INTEREST INCOME FROM OTHERS AT R S.5,84,000, AGGREGATING TO RS.27,41,250/- AND AGAINST THIS AMOUNT, ONLY RS.3,8 9,500/- HAS BEEN ACTUALLY RECEIVED AND BALANCE AMOUNT OF RS.23,51,750/- IS NO TIONAL INCOME, WHICH IS, OTHERWISE, NOT LIABLE TO BE TAXED IN ASSESSEES HAN DS. IN LIGHT OF THESE SUBMISSIONS, ASSESSEES PERSONAL PROFIT OF RS.22.50 LACS NEED NOT BE ADDED SEPARATELY SINCE REQUISITE DISCLOSURE HAS ALREADY B EEN MADE BY THE ASSESSEE IN THE FORM OF NOTIONAL INTEREST INCOME. 45. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDER OF THE LD. ASSESSING OFFICER. 46. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THE COMMON ISSUE RAISED BY BOTH THE REVE NUE AND ASSESSEE EMANATES OUT OF THE ADDITION MADE BY THE LD. ASSESS ING OFFICER BY CALCULATING PEAK BALANCE FROM THE TRANSACTIONS APPEARING IN THE SEIZED DIARIES AT ANNEXURE A/1 AND ANNEXURE A/2 WHICH CONTAINS ENTRIES WITH RE SPECT TO INFLOW AND OUTFLOW OF FUNDS. PEAK ADDITION OF RS.66,36,750/- AND RS.1,68,34,250/- WAS IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 30 MADE BY LD. ASSESSING OFFICER. WE OBSERVE THAT LD. CIT(A) HAS HELD THAT THE ENTIRE PEAK CANNOT BE ADDED IN THE HANDS OF ASSESSE E SINCE THE SUBSTANTIAL MONEY OF SUCH PEAK BELONGS TO USCKP, WHEREIN ASSESS EE IS A PARTNER AND PROFIT ELEMENTS EMBEDDED THEREIN HAS ALREADY BEEN OFFERED TO INCOME TAX BY USCKP IN ITS INCOME-TAX RETURNS. HOWEVER, LD. CIT(A) CON FIRMED THE ADDITION OF RS.19,45,000/- FOR AY 2009-10 BY CALCULATING THE PR INCIPAL AMOUNT OF THE ALLEGED INTEREST ADDITION SUSTAINED AT RS.1,94,500/- AND CA LCULATED THE AMOUNT AT RS.19,45,000/- BY ASSUMING THE INTEREST RATE OF 10% . FOR AY 2010-11, THE CIT(A) CONFIRMED THE ADDITION OF RS.25,75,000/- BY OBSERVI NG THAT THERE IS AN UNACCOUNTED INVESTMENT OF THE ASSESSEE IN THE OGNAJ LAND AS HE IS ENTERED INTO A BANAKHAT DATED 06.11.2009 FOR PROJECT OF LAND AT SU RVEY NO.1195, OGNAJ. 47. SO FAR AS THE ASSESSMENT YEAR 2009-10 IS CONCER NED, WE HAVE ALREADY DELETED THE IMPUGNED ADDITION OF RS.1,94,500/- ALLE GED TO BE AN INTEREST INCOME OF THE ASSESSEE BY OBSERVING THAT IT WAS PART OF TH E TOTAL DISCLOSURE OF RS.23,00,000/- MADE BY THE ASSESSEE ON THE BASIS OF HIS DIARIES. AS WE HAVE ALREADY DELETED THE ALLEGED INTEREST OF RS.1,94,500 /-, THERE REMAINS NO REASON TO SUSTAIN THE ADDITION OF RS.19,45,000/- MADE BY LD. CIT(A) BY TAKING A DEEMED INTEREST RATE OF 10%. SO FAR AS THE REMAINING AMOU NT OF PEAK ADDITION IS CONCERNED, WE AGREE WITH THE VIEW TAKEN BY THE LD C IT(A) THAT IN THE SEIZED DIARIES THE TRANSACTIONS ENTERED INTO WERE RELATED TO ON-MONEY RECEIVED FROM VARIOUS MEMBERS WHO HAVE INVESTED IN THE USCKP PROJ ECT. WE ALSO AGREE WITH THE VIEW OF THE LD. CIT(A) THAT AS SUBSTANTIAL PART OF THE NOTING IN THE DIARIES RELATES TO ON-MONEY CALCULATED ON BEHALF OF USCKP P ROJECT FOR SALE OF FLAT AND THE UNDISCLOSED INCOME INVOLVED IN THIS UNACCOUNTED TRANSACTIONS HAVE ALREADY BEEN OFFERED TO TAX BY USCKP PROJECT IN ITS DISCLOS URE OF RS.1.63 CRORES WHICH INCLUDES RS.23 LACS CALCULATED FROM THE TRANSACTION S OF SEIZED DIARIES HELD BY THE ASSESSEE. WE ARE, THEREFORE, OF THE VIEW THAT FOR AY 2009-10, LD. ASSESSING OFFICER ERRED IN MAKING AN ADDITION OF RS.66,35,750 /- BY WORKING OUT TOGETHER ALL ENTRIES APPEARING IN DIARIES SEIZED FOR THE VER Y REASON THAT SUCH PEAK WAS IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 31 PART OF THE UNACCOUNTED TURNOVER OF RS.5.44 CRORES DECLARED BY USCKP IN THE PROFIT ELEMENTS ON THIS TURNOVER HAS ALREADY BEEN O FFERED TO TAX DURING THE COURSE OF SEARCH. 48. IN THE RESULT GROUND NO.2 FOR AY 2009-10 RAISED BY THE REVENUE IS DISMISSED AND GROUND NO.2 OF ASSESSEES APPEAL FOR AY 2009-10 IS ALLOWED. 49. AS FAR AS AY 2010-11 IS CONCERNED, WHEREIN THE PEAK ADDITION OF RS.1,68,34,250/- WAS MADE BY LD. ASSESSING OFFICER, LD. CIT(A) HAS ALREADY DELETED THE ADDITION OF RS.1,42,59,250/- ON THE BAS IS OF HIS VIEWS WHICH HAS UPHELD BY US ALSO AS DISCUSSED IN THE PRECEDING PAR AGRAPH THAT THE ALLEGED PEAK IS THE PART OF TOTAL TURNOVER OF USCKP PROJECT AND INCOME ON THIS TURNOVER HAS BEEN OFFERED TO TAX. HOWEVER, WE HAVE ALSO OBSERVE D THAT LD. CIT(A) HAS CONFIRMED AN ADDITION OF RS.25,75,000/- AS PROFITS FROM OGNAJ LAND AS UNEXPLAINED INVESTMENT ON THE BASIS OF BANAKHAT DAT ED 07.01.2009 ENTERED INTO BY ASSESSEE FOR PROJECTS OF LAND AT SURVEY NO.1195 AT OGNAJ AND A CASH SUM OF RS.25 LAC WAS PAID ALONGWITH BROKERAGE OF RS.75,000 /-, TOTALING TO RS.25,75,000/-. IN THE RECORD PLACED BEFORE US, WE FIND THAT THERE WAS NO PROOF FOUND DURING THE COURSE OF SEARCH TO SHOW THAT ASSE SSEE IS OWNER OF THE SURVEY NO.1195, OGNAJ AND THERE WAS MERELY A BANAKHAT SHOW ING THE CASH PAYMENT OF RS.25 LACS PAID TOWARDS PROJECT OF LAND. LD. COUNSE L HAS CONTENDED THAT RS.25 LACS WAS ACTUALLY RECEIVED AS PROFIT FROM CANCELLAT ION OF BANAKHAT OF OGNAJ LAND BY THE ASSESSEE IN THE CAPACITY OF MIDDLEMAN. IN FA CT, SUCH SUM WAS ACTUALLY RECEIVED ON 06.11.2009 AGAINST WHICH ASSESSEE HAS P AID THE DALALI/COMMISSION OF RS.75,000/- WHICH IS EVIDENT FROM PAGE 129 OF TH E SEIZED RECORDS AT ANNEXURE A/1 AND FURTHER ASSESSEE HAS ALSO ACCOUNTED FOR RS .1,50,000/- IN BOOKS OF ACCOUNTS AGAINST THE BANAKHAT ACCOUNT GIVEN IN FY 2 007-08. IT WAS FURTHER CONTENDED THAT AS AGAINST SUCH PROFITS ASSESSEE HAS DECLARED INTEREST INCOME OF RS.21,57,250/- FOR USCKP AND RS.5,84,000/- FROM OTH ERS AGGREGATING TO RS.27,41,250/- OUT OF WHICH ONLY RS.3,89,500/- HAS BEEN ACTUALLY RECEIVED AND BALANCE SUM OF RS.23,51,750/- IS NOTIONAL INCOME NO T LIABLE TO BE TAXED IN IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 32 ASSESSEES HANDS. WE FIND FORCE IN THE ARGUMENTS O F LD. COUNSEL WHICH IS WELL SUPPORTED BY THE SEIZED MATERIAL AND WE ACCEPT THE CONTENTIONS THAT THE ALLEGED SUM OF RS.25 LACS WAS RECEIVED AS A PROFIT ON CANC ELLATION OF BANAKHAT BY THE ASSESSEE IN THE CAPACITY OF A MIDDLEMAN. WE ALSO N OTICE THAT ASSESSEE HAD ALREADY MADE DISCLOSURE OF RS.23 LACS FOR BOTH THE YEARS ON ACCOUNT OF TRANSACTIONS APPEARING IN THE SEIZED DIARIES AND TH E PROFIT FROM THE TRANSACTIONS OF THE OGNAJ LAND FORMS PART OF THE TOTAL DISCLOSUR E OF RS.23 LACS AND WE FIND NO REASON FOR A SEPARATE ADDITION OF RS.25,75,000/- SU STAINED BY THE LD. CIT(A). WE ACCORDINGLY DISMISS GROUND NO.2 OF REVENUES APPEAL FOR AY 2010-11 AND ALLOW GROUND NOS. 1 & 2 OF ASSESSEES APPEAL FOR AY 2010-11. 50. NOW WE TAKE UP GROUND NO.3 OF REVENUES APPEAL FOR AY 2009-10 AND GROUND NO.3 FOR AY 2010-11 CHALLENGING THE CIT(A)S ORDER DELETING THE ADDITION OF RS.15,00,000/- AND RS.26,20,000/- IN AY 2009-10 AND 2010-11 BEING THE AMOUNT RECEIVED DURING THE YEAR FROM NICOL LAND TRANSACTIONS RECORDED IN THE DIARIES SEIZED FROM THE RESIDENCE OF THE ASSESS EE. 51. LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE ORD ER OF THE LD. CIT(A) AND LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF ASSESSING OFFICER. 52. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THROUGH THESE GROUNDS, REVENUE IS AGGRIE VED WITH THE DELETION OF ADDITION OF RS.15,00,000/- AND RS.26,20,000/- RECEI VED FROM NICOL LAND TRANSACTIONS. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, LD. ASSESSING OFFICER FOUND THAT ASSESSEE HAS RECEIVED A SUM AGGR EGATING TO RS.11,60,000/- (RS.10,00,000/- + RS.60,000/-) FROM JAYESH PATEL ON SALE OF LAND AT NICOL. FURTHER ON PAGE 13 OF ANNEXURE A/1 OF THE SEIZED DI ARY, THERE WAS NOTING OF THE WORD NICOL AND DALALI AND CERTAIN ENTRIES A GGREGATING TO RS.52,20,000/- WERE FOUND AGAINST SPECIFIC DATES SPREAD OVER THE A SSESSMENT YEAR 2009-10 AND 2010-11 AND A SUM OF RS.11,60,000/- WAS FOUND PART OF THE SAME. ON THE BASIS OF THESE DETAILS, LD. ASSESSING OFFICER CONCLUDED THAT SUCH SUM REPRESENTED MONEY IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 33 RECEIVED BY THE ASSESSEE ON SALE OF NICOL LAND AND MADE ADDITION OF RS.15,00,000/- AND RS.26,20,000/- FOR AY 2009-10 AN D AY 2010-11, TOTALING TO RS.45,25,000/- AFTER EXCLUDING RS.11,60,000/- FROM THE SUM OF RS.52,20,000/-. WE FURTHER OBSERVE THAT IT IS NOT THE CASE OF THE R EVENUE THAT ASSESSEE IS OWNER OF THE LAND AT NICOL WHICH IS ALSO EVIDENT FROM THE FACT THAT DURING THE COURSE OF EXTENSIVE SEARCH, NO PURCHASE DEED WITH RESPECT TO PURCHASE OF LAND AT NICOL BY ASSESSEE WAS FOUND AND THERE CANNOT BE A QUESTION O F SELLING THE IMPUGNED LAND AND RECEIVING THE SALE CONSIDERATION IF THERE WAS NO PURCAHSE. WE ALSO OBSERVE THAT IN THE ALLEGED SEIZED MATERIAL THE WOR D DALALI IS APPEARING WHICH IS A HINDI VERSION OF THE ENGLISH WORD COMMISSION/ BROKERAGE AND WHICH MEANS THAT ASSESSEE WAS ALSO EARNING BROKERAGE FROM VARIOUS LAND DEALINGS. THE ALLEGED TRANSACTIONS OF VALUE OF LAND ARE ONLY THE BASIS FOR CALCULATING BROKERAGE INCOME. IT IS ALSO NOT DISPUTED THAT ASS ESSEE HAS SHOWN A BROKERAGE INCOME OF RS.5,44,656/- OUT OF SUCH DEAL OF SALE OF LAND AT NICOL AND THIS INCOME HAS BEEN OFFERED TO TAX FOR AY 2010-11. WE FURTHER OBSERVE THAT LD. CIT(A) HAS DELETED THE IMPUGNED ADDITION BY GIVING COMMON OBSE RVATION FOR AYS 2009-10 AND 2010-11 WHICH READS AS FOLLOWS:- 10. I HAVE GONE THROUGH THE ORDERS OF THE AO AND S UBMISSIONS OF THE AR OF THE APPELLANT CAREFULLY. IT IS SEEN THAT THE AO HAS REL IED ON THE ENTRIES IN THE DIARY ALONE TO MAKE THE ENTIRE ADDITION. THE TRANSACTION IN NICOL LAND SPREADS OVER 2 ASSESSMENT YEARS IE A.Y. 2009-10 AND A.Y.2010-11. P ART OF THE CONSIDERATION IS RECEIVED IN A.Y. 2009-10 AND PART OF THE CONSIDERAT ION IS RECEIVED IN A.Y.2010- 11. THE AO HAS NOT APPRECIATED THE FACT THAT THE DI ARY DOES NOT ONLY CONTAIN THE DETAILS OF MONEY RECEIVED BY HIM BUT ALSO HAS FICTI TIOUS ENTRIES-AND ALSO HAS THE DETAILS OF ON-MONEY COLLECTED FROM SALE OF FLATS OF UMA SHAKTI KALOL PROJECT. THE AO ALSO HAS NOT FOUND ANY SALE DEED OR PURCHASE DEE D TO ESTABLISH THE FACT THAT THE ENTIRE MONEY RECEIVED BY THE APPELLANT IN RESPE CT OF NICOL LAND BELONGED TO THE APPELLANT. THE AO HAS ALSO NOT ATTACHED ANY IMP ORTANCE TO THE WORD 'DALALI' WHICH MEANS BROKERAGE MENTIONED AGAINST TH ESE ENTRIES. THE APPELLANT IF HE IS A BROKER WOULD RECEIVE THE CONSIDERATION O N BEHALF OF THE SELLERS AND THEN PASS ON THE CONSIDERATION TO THEM AND EARN A COMMIS SION. THE AO HAS NOT EVEN FOUND THAT THE APPELLANT WAS OWNER OF THE LAND. IF THE APPELLANT WAS NOT THE OWNER OF THE LAND THEN HE COULD NEVER KEEP THE SALE PROCEEDS WITH HIMSELF. HE WOULD ONLY BE ENTITLED TO BROKERAGE. HE WOULD THEN RETAIN A PART OF THE SALE PROCEEDS BY WAY OF BROKERAGE AND PASS ON THE BALANC E TO THE OWNERS. THE FINDING BY THE AO THAT THE WORDS DALAI ARE MENTIONED IN THE DIARY ARE NOT INSIGNIFICANT. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 34 THE WORDS MEAN BROKERAGE AND CLEARLY INDICATE THAT THE APPELLANT WAS A PARTY TO TRANSACTION AS A BROKER ONLY. IT IS ALSO SEEN THAT THE APPELLANT HAS ALREADY SHOWN INCOME ON THE SAID TRANSACTION AT RS.5.45 LAKHS IN AY 2010-11. 53. WE ARE, THEREFORE, OF THE VIEW THAT IN LACK OF ANY FINDINGS OF OWNERSHIP OF LAND, WE AGREE TO THE CONTENTIONS OF THE ASSESSEE T HAT HE EARNED THE BROKERAGE INCOME FROM THE TRANSACTIONS OF PURCHASE/SALE OF LA ND AND IN VIEW OF THE FACT THAT THE IMPUGNED ADDITION HAS BEEN MADE MERELY ON THE BASIS OF ENTRIES IN SEIZED MATERIAL WITHOUT BRINING ON RECORD ANY CORRO BORATIVE EVIDENCE WHICH IS NOT TENABLE IN THE EYES OF LAW AS HELD BY THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MAULIKKUMAR K.SHAH, 304 ITR 137 (GUJ). WE ARE, THEREFORE, OF THE VIEW THAT THE IMPUGNED ADDITION F ROM SALE OF LAND AT NICOL AT RS.15,00,000/- AND RS.26,20,000/- FOR AYS 2009-10 A ND 2010-11 RESPECTIVELY HAS BEEN RIGHTLY DELETED BY LD. CIT(A). WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS GROUND WHI CH IS UPHELD. IN THE RESULT, GROUND NO.3 OF REVENUES APPEAL FOR AYS 2009-10 AND 2010-11 ARE DISMISSED. 54. NOW, WE TAKE UP GROUND NO.1 RAISED BY THE REVEN UE FOR AY 2010-11 CHALLENGING THE ORDER OF LD. CIT(A) DELETING THE AD DITION OF RS.9,00,000/-MADE UNDER SECTION 69 OF THE ACT TOWARD UNACCOUNTED INVE STMENTS IN THE SAMARPAN SCHEME. 55. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. WE NOTICE THAT DURING THE ASSESSMENT PR OCEEDINGS, LD. ASSESSING OFFICER FOUND THAT MR. VIKAS R. PATEL, PARTNER OF U SCKP MADE IN HIS STATEMENT DATED 05.03.2010 RECORDED UNDER SECTION 132(4) OF T HE ACT THAT FIVE PERSONS MENTIONED THEREIN INCLUDING THE ASSESSEE WERE SUPPO SED TO CONTRIBUTE RS.1.50 CRORES IN THE SAMARPAN SCHEME; HOWEVER, TILL THE DA TE OF SEARCH ONLY RS.45,00,000/- WAS CONTRIBUTED. FURTHER FROM PAGE NO.145 OF ANNEXURE-A/1, LD. ASSESSING OFFICER FOUND THAT THERE WAS A NOTING OF CONTRIBUTION OF RS.9,00,000/- IN THE SAMARPAN SCHEME AND MERELY ON THE BASIS OF THIS NOTING, HE MADE THE IMPUGNED ADDITION. WE FURTHER OBSERVE THAT ASSESSEE HAS IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 35 CONTENDED BEFORE THE LOWER AUTHORITIES THAT THE INV ESTMENT WAS MADE OUT OF FUNDS RECEIVED FROM MEMBERS OF USCKP AND NOT BY THE ASSESSEE. IN FACT, PROFIT OF RS.31,00,000/- ON ACCOUNT OF LAND DEAL IN THE SA MARPAN SCHEME HAS ALSO BEEN DECLARED IN THE HANDS OF USCKP IN AY 2010-11 WHICH HAS BEEN ACCEPTED BY REVENUE AUTHORITIES. CERTAINLY, WHEN PROFIT ON SUC H LAND DEAL HAS BEEN TAXED IN USCKPS HANDS, THEN THE ASSESSING OFFICER SHOUL D HAVE BELIEVED THE FACT THAT INVESTMENT IN SUCH LAND WAS MADE BY USCKP AND NOT BY ASSESSEE. WE FURTHER FIND FORCE IN THE CONTENTION OF THE ASSESSE E THAT THE THEORY OF EQUAL CONTRIBUTION BY EACH OF THE FIVE PERSONS MENTIONED BY SHRI VIKAS PATEL IS ALSO NOT ACCEPTABLE SINCE THE PROFIT ON THE SAID LAND DE AL HAS BEEN OFFERED IN USCKP, WHEREIN THERE ARE SIX PARTNERS. IT IS NOT POSSIBLE TO BELIEVE THAT FIVE PERSONS WOULD INVEST IN A LAND IN THE INDIVIDUAL CAPACITY B UT THE PROFIT ON SUCH LAND DEAL WOULD BE SHARED BY SIX PERSONS. WE ARE, THERE FORE, OF THE VIEW THAT IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND ON TH E BASIS OF SEIZED RECORDS, INVESTMENT IN SAMARPAN SCHEME WAS MADE BY USCKP F ROM THE FUNDS RECEIVED FROM ITS MEMBERS AND THEREFORE, THE IMPUGN ED ADDITION IS UNCALLED FOR IN THE ASSESSEES HANDS. IN THE RESULT, NO INTERF ERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTLY DELETED THE IMPUGNED ADDITION BY OBSERVING AS FOLLOWS:- 7. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SU BMISSION OF THE A.R. OF THE APPELLANT CAREFULLY. IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE APPELLANT THAT THE CASH AMOUNTING TO RS.9,00,000/- REPRESENTED ON MONEY COLLECTIONS OF THE FIRM FROM KALOL PROJECT . HE HAS HELD THAT THE INVESTMENT NOTED IN THE DIARY WRITTEN BY SHRI BHAGW AN K. AJARA SEIZED AT ANNEXURE-A-1 REPRESENTED UNEXPLAINED CASH DEPOSITED BY THE APPELLANT. THIS CONTENTION OF THE ASSESSING OFFICER DOES NOT APPEAR TO BE SOUND. IN VIEW OF THE FACT THAT THE INVESTMENT FOR PURCHASE OF THE LAND N AMED SAMARPAN PROJECT AMOUNTED TO RS.45,00,000/- AFTER IT. WAS SOLD TO M/ S. SHREE KRISHNA CORPORATION. THE PROFIT FROM THE TRANSACTIONS HAD BEEN DECLARED IN THE HANDS OF M/S. UMA SHAKTI CORPORATION WHICH HAS BEEN ACCEPTED BY THE A SSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS OF M/S. UMA SHAKTI CORPORATI ON. IT IS ALSO SEEN THAT THE TOTAL FUNDS CONTRIBUTED IN CASH AMOUNTED TO RS.45,0 0,000/- WAS BY FIVE PARTNERS WHO CONTRIBUTED RS.9,00,000/- EACH WHEREAS THE FIRM M/S. UMA SHAKTI CORPORATION HAS THE FOLLOWING PARTNERS : IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 36 SR.NO. NAME SHARE 1. SHRI VIKAS RAMCHANDRA PATEL 10% 2. SHIR BHAGWAN KARAMANBHAI AJARA 35% 3. SHRI BRIJ ESH SUKHDEVBHAI PATEL 10% 4. SHRI DEEPAK GOVINDBHAI PRAJAPATI 15% 5. SHRI ARVIND NATVARLAL PRAJAPATI 10% 6. SHRI KAMALBHAI JAYANTIBHAI PATEL 20% TOTAL 100% IF IT WAS A FACT THAT THE AMOUNT OF RS.45,00,000/- HAVE BEEN CONTRIBUTED BY FIVE PARTNERS @ RS.9,00,000/- EACH FROM THEIR OWN SOURCE S THEN THERE WOULD HAVE BEEN NO OCCASION TO OFFER THE PROFIT IN THE HANDS O F THE FIRM WHERE THERE WERE SIX PARTNERS. THIS IS TO SAY THAT IF FIVE PERSONS HAD C ONTRIBUTED TOWARDS COST OF LANDS THEN THERE WOULD HAVE BEEN NO REASON FOR THEM TO SH ARE THE PROFIT FROM THE TRANSACTIONS WITH THE SIXTH PERSON I.E. SHRI KAMALB HAI JAYANTIBHAI PATEL WHO HAD NOT CONTRIBUTED ANY CAPITAL. IT IS ALSO TO BE NOTED THAT THE PROFIT SHARING RATIO OF ALL THE PARTNERS IN THE FIRM IS NOT EQUAL. IF THE F IVE PERSONS HAD CONTRIBUTED RS.9,00,000/- EACH THEN THERE WOULD BE NO OCCASION TO NOT SHARE THE PROFITS FROM THE TRANSACTION EQUALLY. THUS, IT IS CLEAR THAT ONL Y THE FUNDS OF THE FIRM M/S. UMA SHAKTI CORPORATION WERE UTILISED FOR THE PURCHA SE OF LAND TITLED AS SAMARPAN PROJECT WHICH WAS LATER SOLD TO SHRI KRISH NA CORPORATION. THE REASON TO SHARE THE PROFIT BETWEEN ALL THE SIX PARTNERS OF THE FIRM WOULD ONLY ARISE IF THE FUNDS HAVE BEEN CONTRIBUTED FROM THE UNACCOUNTED CO LLECTION OF M/S. UMA SHAKTI CORPORATION, KALOL I.E. THE FIRM WHERE THERE ARE SI X PARTNERS. IT IS A FACT THAT THE FIRM M/S. UMA SHAKTI CORPORATION HAD COLLECTED ON M ONEY FROM THE KALOL PROJECT WHICH WAS KEPT WITH SHRI BHAGWANBHAI K. AJA RA AND ONLY SHRI BHAGWANBHAI K. AJARA WAS KEEPING TRACK OF THE CASH COLLECTIONS. 7.1 THE FACT THAT UNACCOUNTED CASH COLLECTION FROM THE KALOL PROJECT WAS UTILISED WAS THE ONLY REASON ONLY THE FIVE PARTNERS VIZ. SR.NO. NAME 1. VIKAS R PATEL 2. BHAGWAN K AJARA 3. BRIJESH S PATEL 4. DEEPAK G PRAJAPATI 5. ARVIND N PRAJAPATI WOULD AGREE TO SHARE THE PROFIT WITH THE SIXTH PERS ON SHRI KAMALBHAI JAYANTIBHAI PATEL. IF THE MONEY WOULD HAVE BEEN COLLECTED FROM THE FIVE INDIVIDUAL PARTNERS OUT OF THEIR OWN RESOURCES THEN THE PROFIT ARISING FROM THE SALE WOULD HAVE TO BE TAXED IN THEIR INDIVIDUAL HANDS IN NOT IN THE HANDS OF THE FIRM. IT IS A FACT THAT THE ASSESSING OFFICER HAS ASSESSED THE INCOME ON SALE O F THE LAND IN THE HANDS OF THE FIRM WHERE THE PARTNERS ARE NOT SHARING THE PROFITS EQUALLY. IT(SS)A NOS. 436 & 440 OF 2012 & 194,195 OF2013 & ITA NOS.1370, 1373,1375& 1376 OF 2013 ASSESSEE : BHAGWANBHAI K. AJARA & UMA SHAKTI CORPN KALOL PROJECT - 37 7.2 THUS, IT BECOMES CLEAR THAT THE FUNDS WERE INVE STED IN THE SAMPARPAN PROJECT OUT OF THE UNACCOUNTED FUNDS COLLECTED FROM THE KAL OL PROJECT. 7.3 IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE ASSESSING OFFICER HAS NOT ON SOUND FOOTING. THE SAME IS HENCE DELETED. 56. IN THE RESULT, THIS GROUND NO.1 OF THE REVENUE S APPEAL FOR AY 2010-11 IS DISMISSED. 57. OTHER GROUNDS ARE GENERAL IN NATURE WHICH NEEDS NO SEPARATE ADJUDICATION. 58. IN THE COMBINED RESULT, ALL APPEALS OF REVENU E ARE DISMISSED AND THAT OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12 TH APRIL 2017 AT AHMEDABAD. SD/- SD/- ( S.S. GODARA ) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED, 12/04/2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ) ( / THE CIT(A)- 5. , ( , /DR,ITAT, AHMEDABAD, 6. . / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT.REGISTRAR) ( ITAT, AHMEDABAD