Sonal Construction, V. DCIT, Circle-23(1),

ITSSA 518/DEL/2003

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3804 (ITAT-DELHI)
• Duration Of Justice: 14 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 26-04-2017
• Assessment Year: misc
• Appeal Filed On: 10-11-2003
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: P N MONGA ADV SHRI MANU MO NGA
• Keywords: Unexplained investment; Search and seizure; Loose papers; Document seized; Principle of natural justice; Peak credit; Period of limitation; Retrospective amendment; Additional evidence; Question of law; Procedural lapse; Block assessment; Documents seized
• Section: 133A; 131; 132

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE MS SUCHITRA KAMBLE , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER IT (SS) A NO. 518/DEL/2003 ( BLOCK PERIOD : 01.04.1989 TO 17.12.1999 ) M/S. SONAL CONSTRUCTIONS, F - 20, EAST OF KAILASH, NEW DELHI VS. DCIT, CIRCLE - 23(1), NEW DELHI (APPELLANT) (RESPONDENT) IT (SS) A NO. 522/DEL/2003 ( BLOCK PERIOD : 01.04.1989 TO 17.12.1999 ) DCIT, CIRCLE - 23(1), NEW DELHI VS. M/S. SONAL CONSTRUCTIONS, F - 20, EAST OF KAILASH, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P . N . MONGA, ADV SHRI MANU MO NGA, ADV REVENUE BY: SHRI S . S . RANA, CIT DR DATE OF HEARING 09/03/ 2018 DATE OF PRONOUNCEMENT 0 7 / 06 / 2018 O R D E R PER BENCH 1 . THESE ARE THE TWO APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - XVI, NEW DELHI DATED 22.08.2003 FOR THE BLOCK PERIOD 01.04.1989 TO 17.12.1999. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. 1(A) THA T , THE LEARNED CIT ( A) HAS ERRED IN HOLDING THAT THE ISSUE REGARDING THE INVALIDITY/ ILLEGALITY OF SEARCH RAISED BY THE ASSESSEE WAS BEYOND THE SCOPE OF CONSIDERATION BY THE AO. HIS RELIANCE ON THE ORDER OF THE TRIBUNAL PASSED IN THE CASE OF VIRENDRA BH ATIA & OTHERS WITH A VIEW TO DISMISS THE APPELLANT'S CONTENTION IS UNTENABLE. (B) THAT THEE BEING NO VALID SEARCH CONDUCTED IN THIS CASE., THE CONDITIONS LAID DOWN IN SECTION. 132(1) OF THE 1T.ACT HAVING NOT M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 2 BEEN COMPLIED WITH, THE SEARCH BEING ILLEGAL,, CONSEQUENT ACTION OF THE AO UNDER CHAPTER XI VP,, MORE PARTICULARLY PROCEEDING'S TAKEN FOR' THE PURPOSE OF ASSESSMENT TO TAX THE ASSESSEE U/S 1.58B0 READ WITH SECTION 159B(B) OF THE I.T.ACT WERE ILLEGAL. THE ASSESSMENT., THEREFORE, DESERVED TO BE ANNULLED. (C) THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE, SUPPORTED BY THE MATERIAL ON RECORD,, HAVE NOT BEEN PROPERLY APPRECIATED, LEADING TO ERRONEOUS CONCLUSION. 2(A) THAT THE ASSESSEE HAVING DENIED TO HAVE EARNED ANY UNDISCLOSED INCOME IN THE BLOCK PERIOD A ND IN THE ABSENCE OF THERE BEING ANY COGENT, AND RELEVANT MATERIAL TO THAT EFFECT, NO LEGALLY VALID PROCEEDINGS COULD BE TAKEN U/S 158BC OF THE ITACT. THE ASSESSMENT TO TAX THE ALLEGED UNDISCLOSED INCOME IN THE BLOCK PERIOD AT IFS ., 369 27587/ WAS , THEREFORE, ILLEGAL THE ORDER OF THE LEARNED AO DESERVES TO BE ABASHED HAVING REGARD TO THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE SUPPORTED BY THE RELEVANT, DOCUMENTARY EVIDENCE. 3(A) THE APPELLANT HAVING DEALT WITH EACH ONE OF TFIE PROPERTY TAKEN INTO CONSIDERATION BY THE LEARNED AO FOR THE PURPOSE OF MAKING ADDITION WITH A VIEW TO ESTABLISH THAT NO INCOME WAS EARNED DURING THE BLOCK, PERIOD AND THE LEARNED CIT(A) HAVING REFERRED TO SOME OF THE ASPECTS RELATING THERETO IN THE IMPUGNED ORDER, WENT WRONG IN HOLDING THAT THE APPELLANT FAILED TO OFFER ANY SATISFACTORY EXPLANATION IN RESPECT, OF THE ALLEGED UNEXPLAINED INVESTMENT/ PROFIT AND THAT THE AO WAS JUSTIFIED IN MAKING ADDITIONS OF RS. 8269600, RS. 82,69,600/ - ; RS. 1,82,13,900/ - , RS. 43,35,237/ AND RS . 61,09,858/ WHICH AMOUNTS HAVE BEEN ERRONEOUSLY CONFIRMED BY HIM. (B) THAT IN UPHOLDING THE ILLEGAL ORDER OF THE LEARNED A0 WITH REFERENCE TO THE AMOUNTS REFERRED TO ABOVE, THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE ASSESSEE'S CASE AND THE SUPPORT ING MATERIAL. ON THE CONTRARY THERE WAS NO SUPPORTING MATERIAL AVAILABLE ON RECORD OF THE LEARNED A0. THE IMPUGNED ADDITIONS MADE WERE BASED ON CONJECTURES AND SURMISES, THE IMPUGNED ORDER OF THE LEARNED CIT(A) ALSO SUFFERS FROM THE SAME INFIRMITY AND THE ADDITIONS DESERVED TO BE DELETED. 4(A) THAT, WHILE DEALING WITH THE ALTERNATE GROUND OF THE PEAK AMOUNT WHILE THE LEARNED CIT(A) HAS GRANTED RELIEF TAKING THE PEAK AS ALLEGED UNEXPLAINED AT. RS. 2,67,87,137/ - IN PLACE OFTHE A SSESSED UNDISCLOSED INC OME A T RS. 3 69 , 27,087/ - THE LD CIT(A) STILL COMMITTED AN ERROR IN FAILING TO APPRECIATE THAT IF AT ALL IT WAS NTO THE PEAK AMOUNT OF RS. 26787137/ - BUT MUCH LESSOR THAN THAT. THE ALTERNATE PLEA RAISED BEFORE THE LD CIT(A) WAS WITHOUT PREJUDICE TO THE MAIN CONT ENTIONS OF THE ASSESSEE FOR SEEKING M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 3 RELIEF OF THE ENTIRE ADDITIONS BY WAY OF UNDISCLOSED INCOME TO THE DELETED. 5. THAT THE CIT(A) HAS FURTHER GONE WRONG IN HOLDING THAT THE ASSESSMENT WAS FRAMED WITHIN THE PERIOD OF LIMITATION. 6. THAT THE LD CIT(A) HAS FURTHER GONE WRONG IN HOLDING THAT THE ASSESSMENT ORDER DID NOT SUFFER FROM LEGAL DEFECT IN SO FAR AS THE APPROVAL OF THE LD JCIT HAD ALSO BEEN VALIDLY GRANTED, WHICH IS FACTUALLY INCORRECT AND MISPLACED. 7. THAT THE ORDER OF THE LD CIT(A) CONFIRMING TH E CHARGE OF INTEREST U/S 158BFA AND ALSO THE LEVY OF SURCHARGE IS ALSO INVALID AND IN UNTENABLE. 8. THAT THE OBSERVATION OF THE LD CIT(A) WITH REFERENCE TO GROUND NO. 12 RAISED BY THE ASSESSEE IN THE MEMO OF THE APPEAL ARE TOTALLY MISPLACED AND WITHOUT TA KING INTO CONSIDERATION THE RELEVANT FACTS. THE ORDER OF THE LD AO WAS TOTALLY VITIATED IN THE LIGHT OF THE ASSESSEES CONTENTIONS WHICH HAVE NOT BEEN PROPERLY APPRECIATED LEADING TO ERRONEOUS CONCLUSION. 9. THAT THE ORDER OF THE LD AO BEING SKETCHY, NON SPEAKING, PASSED IN HASTE AND IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, FIXING THE ALLEGED UNDISCLOSED INCOME OF RS. 36927087/ - FOR THE BLOCK PERIOD IN THE ABSENCE OF THERE BEING ANY MATERIAL TO RELATED THE SAID AMOUNT BY ANY SUPPORTING MATERIAL, THE ORDER OF THE LD AO REQUIRED TO BE ANNULLED BY THE CIT(A) WHO HAS WRONGLY CONFIRMED THE SAME, KEEPING IN VIEW THE STATUTORY CONSTRAINTS OF THIS POWERS FOR SETTING ASIDE THE MATTER. (B) THE LEARNED C1T(A) SHOULD HAVE REALIZED THAT THE MATERIAL, PERHAPS BE FORE THE LEARNED AO WAS THE APPRAISAL REPORT WHICH COULD NOT BE MADE THE BASIS FOR ANY VALID ASSESSMENT U/S 158 BC OF THE ACT. THE 10. THAT THE ORDER PASSED BY THE LD CIT(A) IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 3 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT ASSESSMENT HAS BEEN COMPLETED IN THIS CASE ON UNIFORM BASIS I.E. THE PROJECT WISE DETERMINATION OF UNDISCLOSED INVESTMENT/ INCOME. 2. THAT AT THE TIME OF ASSESSMENT , THE ASSESSEE DID NOT QUESTION THE ACCURACY OF THE AMOUNT OF UNDISCLOSED INCOME/ INVESTMENT ARRIVED AT BY THE AO. THUS, LD CIT(A) HAS ERRED IN ADMITTING FRESH PIECE OF EVIDENCE/ GROUNDS OF APPEAL THAT THE ADDITION SHOULD BE MADE ON PEAK INVESTMENT. M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 4 4 . BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PARTNERSHIP FIRM . SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT ON 17/12/1999. BASED ON CERTAIN DOCUMENTS FOUND AND SEIZED DURING THE SEARCH, NOTICE UNDER SECTION 158BC OF THE ACT WAS ISSUED ON 5/7/ 2001 FOR THE B LOCK PERIOD FROM 1/4/1989 TO 17/12/1999. THE ASSESSEE FILED THE BLOCK RETURN ON 27/8/2001. FROM THE SEARCHED DOCUMENTS THE LD AO FOUND THAT THE ASSESSEE HAS DEALT WITH SEVERAL PROPERTIES AND ALSO DEVELOPED THEM. IN THOSE PAPERS THE PURCHASE PRICE OF THE PR OPERTY, COST OF CONSTRUCTION, SALES VALUE OF THE PROPERTY AND RESULTANT PROFIT WERE ALSO MENTIONED. FURTHER, 10% OF THE CONSTRUCTION COST WAS ALSO REDUCED FROM THE PROFIT TO ARRIVE AT THE NET PROFIT. FURTHER, THE PROFIT SO ARRIVED WAS DIVIDED AMONGST THE V ARIOUS PARTIES WHO WERE THE DEVELOPERS. THESE PAPERS WERE FOUND AT ANNEXURE J1 PAGES 1 TO 33 AND SPECIFICALLY PAGE NO. 21 TO 2 9 OF THE SEIZED MATERIAL. THE LD. ASSESSING OFFICER COMPUTED THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD V IDE O RDER DATED 31/12/2001 AT RS. 3, 69,27,587/ . THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A) WHO RE STRICTED THE ADDITION TO RS. 2, 67,87,137/ ON THE PEAK INVESTMENT MADE BY THE ASSESSEE IN DIFFERENT CONSTRUCTION PROJECTS UNDERTAKEN BY IT. AGAINST THE ORDER OF TH E LD. CIT (A) , THE ASSESSEE AND THE LD. AO PREFERRED AN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. THE COORDINATE BENCH V IDE ORDER DATED 2/3/2007 ALLOWED THE APPEAL OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE REVENUE. THE COORDINATE BENCH DECIDE D THE ISSUE IN FAVOUR OF THE ASSESSEE. THE REVENUE CHALLENGED THE ABOVE ORDER OF THE COORDINATE BEFORE THE HONBLE DELHI HIGH COURT. THE HONORABLE HIGH COURT WAS PLEASED TO REVERSE THE FINDING OF THE COORDINATE BENCH IN 2012] 28 TAXMANN.COM 127 (DEL HI)/[2012] 211 TAXMAN 167 (DELHI)(MAG.)/[2013] 359 ITR 532 (DELHI)/[2013] 260 CTR 377 (DELHI) AND AFTER POINTING OUT MANY INFIRMITIES IN THE ORDER OF THE COORDINATE BENCH HAS SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER HOLDING AS UNDER : - M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 5 2. WE MAY FIRST TAKE UP ITA NO.1132/2007 FOR DISPOSAL. THE ASSESSEE IS A PARTNERSHIP FIRM. THERE WAS A SEARCH OF ITS PREMISES UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (ACT, FOR SHORT), ON 17.12.1999 AND ON THE BASIS OF THE MATERIALS FOUND AND SEIZED, NOTICE UNDER SECTION 158 BC OF THE ACT WAS ISSUED ON 05.07.2001 CALLING UPON THE ASSESSEE TO FURNISH A RETURN OF INCOME IN THE PRESCRIBED FORM, FOR THE BLOCK PERIOD FROM 01.04.1989 TO 17.12.199 9. THE ASSESSEE FILED THE BLOCK RETURN ON 27.08.2001. THEREAFTER SEVERAL HEARINGS TOOK PLACE AND EVENTUALLY BY BLOCK ASSESSMENT ORDER DATED 31.12.2001, THE ASSESSEES TOTAL UNDISCLOSED INCOME WAS COMPUTED AT `3,69,27,587/ - . THIS CONSISTED OF SEVERAL ADDITI ONS AS UNDISCLOSED INCOME AS FOLLOWS: - S.NO. DETAILS OF ADDITIONS AS PER AMOUNT ASSTT. YEAR ANNEXURES 1 1 OF ANNEXURE 8,269,600 94 - 95 2 AS PER PARA 2 ' 18 ,213,900 96 - 97 3 AS PER PARA 3 ' 4,335,737 97 - 98 4 AS PER PARA 4 ' 6,108,350 97 - 98 TOTAL 36,927,587 3. THE ASSESSMENT ORDER ITSELF DOES NOT CONTAIN THE BREAK - UP OR OTHER DETAILS OF THE ADDITIONS AND THESE ARE ALL APPENDED TO THE ASSESSMENT ORDER AS ANNEXURE. THE ASSESSEE FILED AN APPEAL TO THE CIT (APPEALS) WHO RESTRICTED THE ADDITION TO `2,67,87,137/ - ON THE BASIS THAT THIS AM OUNT REPRESENTED THE PEAK INVESTMENT MADE BY THE ASSESSEE IN DIFFERENT CONSTRUCTION PROJECTS UNDERTAKEN BY IT. THE BENEFIT OF TELESCOPING WAS GIVEN TO THE ASSESSEE, WHICH RESULTED IN A RELIEF OF `1,01,39,950/ - . 4. THE ASSESSEE AND THE REVENUE FILED CROSS A PPEALS TO THE INCOME TAX TRIBUNAL (TRIBUNAL, FOR SHORT) AND BY ORDER DATED 2.3.2007, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE DEPARTMENT, WITH THE RESULT THAT THE ENTIRE ADDITION OF `3,69,27,587/ - STOOD. IT IS THE C ORRECTNESS OF THE ORDER OF THE TRIBUNAL THAT IS CALLED IN QUESTION IN THE APPEAL BY THE REVENUE, WHICH WAS ADMITTED ON 5.3.2008 AND THE FOLLOWING SUBSTANTIAL QUESTION OF LAW WAS FRAMED: - 'WHETHER THE INCOME TAX APPELLATE TRIBUNAL WAS CORRECT IN LAW IN DELETING THE ADDITION OF `3,69,27,587/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INCOME IN A BLOCK PERIOD?' M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 6 5. WE HAVE EXAMINED THE FACTS AND THE RIVAL CONTENTIONS. THE REVENUE ARGUES THAT THE DOCUMENTS SEIZED DURING THE SEARCH DISCLOSED SEV ERAL INVESTMENTS BY THE FIRM IN PROPERTIES, WHICH WERE NOT FULLY DISCLOSED TO THE REVENUE; THE PROFITS FROM THESE PROPERTIES WERE ALSO NOT FULLY DISCLOSED, ACCORDING TO THE REVENUE. THE GENERAL BASIS ADOPTED BY THE ASSESSING OFFICER, AS PER THE ANNEXURE TO THE ASSESSMENT ORDER WAS TO ARRIVE AT THE UNDISCLOSED INCOME IN THE FOLLOWING MANNER. THE SALE CONSIDERATION WAS REDUCED BY THE COST OF THE PLOT AND THE CONSTRUCTION COST TO ARRIVE AT THE ACTUAL PROFIT. IN DOING SO, THE SALE CONSIDERATION WAS TAKEN AS PER THE SEIZED MATERIAL, WHICH WAS REDUCED BY THE CONSIDERATION DECLARED IN THE INCOME TAX RETURNS, SO AS TO ARRIVE AT THE UNDISCLOSED CONSIDERATION. FROM THIS FIGURE, SUPERVISION CHARGES OF 10% WAS REDUCED. THE BALANCE OF UNDISCLOSED INVESTMENT AND PROFIT WA S PROPORTIONATELY WORKED OUT AS PER THE SHARES OF THE PARTNERS AS SPECIFIED IN THE PARTNERSHIP DEEDS. IN THIS WAY, THE UNDISCLOSED INCOME WAS ARRIVED AT IN RESPECT OF 20 PROPERTIES, THE DETAILS OF WHICH ARE GIVEN IN THE ANNEXURE TO THE ASSESSMENT ORDER. 6. BEFORE THE CIT (APPEALS), SEVERAL OBJECTIONS TO THE BLOCK ASSESSMENT ORDER APPEAR TO HAVE BEEN TAKEN BY THE ASSESSEE, INCLUDING THE PRELIMINARY OBJECTION THAT THE ASSESSMENT ORDER WAS MADE BEYOND THE PERIOD OF LIMITATION, THAT THE SEARCH UNDER SECTION 132 WAS ITSELF INVALID, AND SO ON AND SO FORTH. THESE OBJECTIONS WERE REJECTED BY THE CIT (APPEALS) AND THOSE ISSUES HAVE BECOME FINAL. AN OBJECTION TO THE EFFECT THAT SECTION 158 BC WAS WRONGLY INVOKED WAS ALSO DEALT WITH BY THE CIT (APPEALS) WHO REJECTED THE SAME. AS REGARDS THE MERITS OF THE ADDITIONS OF THE INVESTMENT IN AND PROFITS FROM VARIOUS PROPERTIES AND PROJECTS, THE CIT (APPEALS) DEALT WITH EACH OF THEM IN SOME DETAIL. THE SUBMISSIONS WERE FORWARD ED BY HIM TO THE ASSESSING OFFICER FOR FURNISHING A REMAND REPORT. WHEN THE REMAND REPORT WAS FILED, THE ASSESSEE TOO FILED A REJOINDER. THE SUM AND SUBSTANCE OF THE ASSESSEES OBJECTIONS WERE THAT THERE WAS NO INDEPENDENT EVIDENCE OR MATERIAL ON THE BASIS OF WHICH ADDITIONS COULD BE MADE IN RESPECT OF EACH OF THE PROPERTIES. IT WAS SUBMITTED FURTHER THAT THE ASSESSING OFFICER HAD FAILED TO APPRECIATE THE EFFECT OF ALL THE DOCUMENTS FOUND DURING THE SEARCH. ACCORDING TO THE ASSESSEE, THE UNDISCLOSED INCOME WAS COMPUTED BY THE ASSESSING OFFICER BY MERELY LOOKING INTO THE DOCUMENTS AND THE ENTRIES THEREIN ON SELECTIVE BASIS AND BY IGNORING THOSE ENTRIES WHICH WERE IN FAVOUR OF THE ASSESSEE. IT WAS THUS CONTENDED THAT RELEVANT MATERIAL WHICH WAS GATHERED DURING THE SEARCH ITSELF WAS IGNORED, WHICH VITIATED THE ENTIRE BLOCK ASSESSMENT ORDER. M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 7 7. THIS SUBMISSION WAS CONSIDERED BY THE CIT (APPEALS) AND DEALT WITH IN THE FOLLOWING MANNER BY HIM: - '7.10 I HAVE EXAMINED THE REPLY OF THE APPELLANT AND SUBMISSIONS OF THE AO AND FACTS OF THE CASE CAREFULLY. I FIND THAT THE ADDITIONS HAVE BEEN MADE BY THE AO ON THE BASIS OF VARIOUS DOCUMENTS WHICH WERE SEIZED FROM THE RESIDENT AND PREMISES OF THE APPELLA NT FIRM. THEREFORE, THESE ARE IMPORTANT DOCUMENTS WHICH HAVE BEEN WRITTEN BY THE PARTNER IN HIS OWN HAND WRITING AND ALL THE ENTRIES REGARDING THE VARIOUS PROPERTIES HAVE BEEN WRITTEN CLEARLY INDICATING THE VARIOUS PROPERTIES. AS THESE DOCUMENTS HAVE BEEN WRITTEN BY THE PARTNER IN HIS OWN HAND WRITING AND WHICH HAVE BEEN SEIZED FROM THE RESIDENT OF THE PARTNER WHICH DEPICT TRUE PROFIT AND INVESTMENTS WHICH WERE NOT HITHERTO DISCLOSED TO THE DEPARTMENT. THEREFORE, ANY EXTRA INVESTMENT OR EXTRA PROFIT WHICH W AS NOT SHOWN TO THE DEPARTMENT IS LIABLE TO BE TAXED AS UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 158B(B) OF THE I.T. ACT, 1961. 7.11 THE APPELLANT HAS SUBMITTED THAT THE SUBMISSIONS MADE BY IT WER E NOT INCORPORATED IN THE ASSESSMENT ORDER WHICH CLEARLY SHOWS HASTE ON THE PART OF THE AO IN PASSING THE BLOCK ASSESSMENT ORDER. NEVERTHELESS, THE APPELLANT WAS GIVEN OPPORTUNITY BY THE AO AND HE WAS ALSO GIVEN VARIOUS OPPORTUNITIES AT THE APPELLATE STAGE TO EXPLAIN THE NATURE OF THE TRANSACTIONS WHICH HAVE BEEN RECORDED IN THE SEIZED PAPERS FOUND AT THE TIME OF SEARCH. THE ASSESSMENT HAS BEEN FRAMED ON THE BASIS OF DOCUMENTS WHICH ARE RELATED TO THE PROPERTIES AND WHICH DISCLOSE THE EXTRA PROFIT AND INVES TMENT. THE ONUS WAS ON THE APPELLANT TO EXPLAIN THE NATURE AND SOURCE OF INVESTMENT RECORDED ON THE VARIOUS SEIZED DOCUMENTS WHICH HE FAILED TO DO SO. THE UNDISCLOSED INVESTMENT AND UNDISCLOSED PROFIT ARE CLEARLY MENTIONED IN VARIOUS DOCUMENTS MENTIONED BY THE AO IN THE ORDER. ON THE BASIS OF THESE DOCUMENTS, THE AO FOUND OUT THAT THERE WAS AN EXTRA PROFIT AND UNDISCLOSED INVESTMENT IN RESPECT OF AFORESAID PROPERTIES. IN VIEW OF THE THESE FACTS AND CIRCUMSTANCES, AND THE FACT THAT THE APPELLANT HAS FAILED T O OFFER ANY SATISFACTORY EXPLANATION IN RESPECT OF THESE UNEXPLAINED INVESTMENT/PROFIT, THE AO WAS JUSTIFIED IN MAKING THE ADDITIONS OF `82,69,600/ - , `1,82,13,900/ - `43,35,237/ - AND `61,08,358/ - WHICH ARE HEREBY CONFIRMED. THE APPELLANT FAILS IN RESPECT OF GROUNDS OF APPEAL NOS.5 TO 8.' M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 8 8. THE ASSESSEE HAD ARGUED BEFORE THE CIT (APPEALS) THAT THERE WAS DOUBLE ADDITION INASMUCH AS BOTH THE UNDISCLOSED INCOME AND THE INVESTMENT MADE OUT OF SUCH INCOME WERE BOTH BROUGHT TO TAX WHICH WAS CONTRARY TO THE BASIC P RINCIPLES OF ASSESSMENT. IT WAS CONTENDED, WITHOUT PREJUDICE, THAT THE UNDISCLOSED INCOME AND THE UNDISCLOSED INVESTMENT WERE TO BE SET OFF AGAINST EACH OTHER, THUS GIVING BENEFIT OF TELESCOPING TO THE ASSESSEE. IT WAS ALSO SUBMITTED THAT BY APPLYING THE R ULE OF TELESCOPING THE ASSESSING OFFICER OUGHT TO HAVE ASSESSED ONLY THE PEAK AMOUNT OF UNDISCLOSED INCOME. THE ASSESSEE EVEN CALCULATED THE PEAK PROFIT/INVESTMENT, AGAIN WITHOUT PREJUDICE, AT `2,11,40,737/ - . THIS ASPECT OF THE MATTER WAS ALSO SENT TO THE ASSESSING OFFICER FOR HIS RESPONSE WITH A DIRECTION TO HIM TO COMMENT ON THE ACCURACY OF THE PEAK AMOUNT AS WORKED OUT BY THE ASSESSEE. THE ASSESSING OFFICER IN HIS REPORT DATED 17.7.2003 STATED THAT THE PLEA OF TELESCOPING OR THE PEAK THEORY WAS PUT FORTH BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE CIT (APPEALS) AND IT WOULD AMOUNT TO A FRESH PIECE OF EVIDENCE WHICH SHOULD NOT BE ADMITTED. THE ASSESSEE DISPUTED THE COMMENT OF THE ASSESSING OFFICER BY POINTING OUT TO THE CIT (APPEALS) THAT IT IS ONLY ON T HE BASIS OF THE MATERIALS BROUGHT ON RECORD THAT THE ALTERNATIVE PLEA OF TELESCOPING OR PEAK INVESTMENT WAS BEING PROJECTED BEFORE THE CIT (APPEALS) WHICH WAS NOT A FRESH PIECE OF EVIDENCE, BUT WAS ONLY AN ALTERNATIVE PLEA ON THE BASIS OF MATERIALS ALREADY ON RECORD. 9. THE CIT (APPEALS) REJECTED THE OBJECTION OF THE ASSESSING OFFICER THAT THE PLEA BASED ON THE PEAK THEORY WAS AN ADDITIONAL EVIDENCE. ACCORDING TO HIM, THERE WAS NO ADDITIONAL EVIDENCE INVOLVED AND IT WAS ONLY AN ALTERNATIVE PLEA OF THE ASSES SEE ON THE BASIS OF THE VERY SAME MATERIALS WHICH WERE ALREADY ON RECORD; NO NEW FACT OR EVIDENCE WAS SOUGHT TO BE INTRODUCED. HE NOTICED THAT THE ASSESSEE HAD WORKED OUT THE PEAK AMOUNT, EVEN AS PER THE ASSESSMENT ORDER, AT `1,73,34,387/ - AND THUS THE EXC ESS ADDITION AMOUNTED TO `1,95,92,700/ - . HE REFERRED TO THE WELL SETTLED PROPOSITION LAID DOWN BY THE ANDHRA PRADESH HIGH COURT IN LAGADAPATI SUBBA RAMAIAH V. CIT , (1956) 30 ITR 593 AND BY THE MADRAS HIGH COURT IN S. KUPUSWAMI MUDALIAR V. CIT , (1964) 51 ITR 757 AS ALSO THE JUDGMENT OF THE SUPREME COURT IN CIT V. S. NELLIAPPAN , (1967) 66 ITR 722 AND HELD THAT IF THERE WAS A CONNECTION BETWEEN THE PROFITS WITHHELD FROM THE BOOKS AND THE AMOUNTS ENTERED AS CASH CREDITS, IT IS POSSIBLE TO HOLD THAT THE FORMER CONSTITUTED THE SOURCE FOR THE LATTER AND IF SUCH A FINDING IS ENTERED ON THE BASIS OF THE FACTS, THE COURT WILL BE RELUCTANT TO DISTURB THE FINDING. CONSIDERING THE LEGAL POSITION LAID DOWN IN THE AFORESAID DECISIONS, THE CIT (APPEALS) ACCEPTED THE ALTERNATIVE PLEA BASED ON THE PEAK THEORY AND GAVE THE BENEFIT OF TELESCOPIC ADJUSTMENT TO THE ASSESSEE. HE ACCORDINGLY HELD THAT THE UNDISCLOSED PROFITS WOULD BE AVAILABLE TO THE ASSESSEE M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 9 FOR MAKING THE UNEXPLAINED INVESTMENT. HE CALCULATED THE PEAK PROFIT/INVESTMENT AT `2,67,87,137/ - , ON WHICH ADDITION WAS SUSTAINED AND GRANTED A RELIEF OF `1,01,39,950/ - . THE SE CALCULATIONS ARE GIVEN IN PARAGRAPH 9.6 OF HIS ORDER. 10. BOTH THE ASSESSEE AND THE REVENUE PREFERRED CROSS APPEALS BEFORE THE TRIBUNAL. A PERUSAL OF THE ORDER OF THE TRIBUNAL SHOWS THAT IT HAS EXAMINED THE CASE IN CONSIDERABLE DETAIL AND HAS REFERRED T O THE VARIOUS SEIZED DOCUMENTS, THE MANNER IN WHICH THE ENTRIES WERE MADE THEREIN, THE STATEMENTS OF THE PARTNERS OF THE ASSESSEE FIRM ETC. AND ULTIMATELY RECORDED ITS FINDINGS IN PARAGRAPH 22 OF ITS ORDER, WHICH CAN BE SUMMARIZED AS FOLLOWS: - A) THE DOCUM ENTS SEIZED DURING THE SEARCH (ANNEXURE - A1, PAGES 21 AND 29) ARE LOOSE PAPERS AND NOT BOOKS OF ACCOUNTS. IN THESE DOCUMENTS, THE BREAK - UP OF ALL THE ALLEGED PAYMENTS MADE OR THE ALLEGED SALE PROCEEDS RECEIVED ARE NOT RECORDED. B) FROM THE SEIZED DOCUMENTS IT CANNOT BE SAID THAT THE FIGURES STATED THEREIN WERE THE ACTUAL INVESTMENT MADE BY THE ASSESSEE AND THE ACTUAL SALE PROCEEDS RECEIVED BY THE ASSESSEE. C) NO CORROBORATIVE EVIDENCE OF THE WRITINGS OR NOTINGS FOUND IN THE LOOSE PAPERS WAS FOUND DURING THE SEARCH. D) THERE WAS NO DOUBT THAT THE SEIZED DOCUMENTS DID CONTAIN CERTAIN FIGURES PERTAINING TO THE FOUR HOUSING PROJECTS UNDERTAKEN BY THE ASSESSEE IN THE COURSE OF ITS BUSINESS. E) THE REVENUE HAS MERELY RELIED UPON THE CORRELATION BETWEEN THE PROJECTS EXECUTED BY THE ASSESSEE AND THE DIFFERENCE IN THE COST OF LAND AND INVESTMENT IN CONSTRUCTION AND THE PRICE AT WHICH THE PROPERTIES WERE SOLD AS REVEALED IN THE SEIZED DOCUMENT ON THE ONE HAND AND AS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, ON THE OTHER. THIS CORRELATION ALONE IS NOT SUFFICIENT TO JUSTIFY THE IMPUGNED ADDITION. 11. FOR THE CONCLUSION THAT THE CORRELATION ESTABLISHED BY THE REVENUE BETWEEN THE SEIZED MATERIAL AND THE BOOKS OF ACCOUNTS ALONE WAS NOT SUFFICIENT TO JUSTIFY THE ADDIT IONS, THE TRIBUNAL GAVE THE FOLLOWING REASONS: - I) FIRSTLY, THE DOCUMENTS IN QUESTION WERE SEIZED FROM THE RESIDENTIAL PREMISES OF ONE OF THE PARTNERS (V.K. NARANG) OF THE ASSESSEE FIRM. WHEN HIS STATEMENT WAS RECORDED M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 10 AT THE TIME OF THE SEARCH, HE DISOWNE D ANY KNOWLEDGE ABOUT THE SEIZED DOCUMENTS. II) THOUGH THE PARTNER WAS EXAMINED AT THE TIME OF THE SEARCH, HE WAS NOT EXAMINED DURING THE ASSESSMENT PROCEEDINGS WITH REFERENCE TO THE DOCUMENTS. III) THE OTHER PARTNER, S.S. SODHI, WHO HAD ADMITTED IN THE ST ATEMENT RECORDED FROM HIM AT THE TIME OF THE SEARCH THAT PAGES 21 AND 29 OF ANNEXURE - A1 WERE IN THE HANDWRITING OF V.K. NARANG, WAS ALSO NOT EXAMINED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS OF THE ASSESSEE - FIRM. THESE ARE FATAL OMISSIONS, NOTWITHSTAN DING THAT THE RECOVERY OF DOCUMENTS PERTAINING TO THE FIRM FROM THE POSSESSION OF THE PARTNER IS A VITAL PIECE OF EVIDENCE AGAINST THE FIRM. IV) WHILE MAKING THE ADDITIONS, THE ASSESSING OFFICER HAD MERELY RELIED UPON THE PRESUMPTION ABOUT THE GENUINENESS AND THE TRUTH OF THE CONTENTS OF THE DOCUMENTS FOUND IN THE COURSE OF THE SEARCH AS PROVIDED IN SECTION 132(4A) OF THE ACT. THIS IS NOT PERMISSIBLE. AS HELD BY THE SUPREME COURT IN THE CASE OF P.R. METRANI V. CIT , 287 ITR 209, THE PRESUMPTION CANNOT BE USED IN THE ASSESSMENT PROCEEDINGS AND IT WAS LIMITED TO THE SEARCH PROCEEDINGS ONLY. EVEN THE GENERAL RULE IN LAW THAT IT IS FOR THE PERSON FROM WHOSE POSSE SSION THE DOCUMENT IS RECOVERED TO EXPLAIN ITS CONTENTS CANNOT AID THE DEPARTMENT BECAUSE NARANG, FROM WHOSE POSSESSION THE DOCUMENT WAS RECOVERED, DISOWNED ANY KNOWLEDGE ABOUT ITS CONTENTS AND IF THE ASSESSING OFFICER WANTED TO CONTRADICT HIS STATEMENT, T HE BEST OCCASION TO DO SO WAS TO CALL UPON HIM IN THE COURSE OF THE ASSESSMENT PROCEEDINGS TO EXPLAIN THE CONTENTS OF THE DOCUMENT. IT WAS NOT KNOWN AS TO WHY THE ASSESSING OFFICER DID NOT THINK FIT TO EXAMINE NARANG DURING THE ASSESSMENT PROCEEDINGS. V) T HE NON - EXAMINATION OF THE OTHER PARTNER S.S. SODHI IN THE COURSE OF THE ASSESSMENT PROCEEDINGS WAS EQUALLY FATAL TO THE CASE OF THE REVENUE. 12. FOR THE ABOVE REASONS, THE TRIBUNAL HELD THAT THE SEIZED DOCUMENTS ALONE WERE NOT SUFFICIENT TO DRAW ANY DEFINI TE CONCLUSION REGARDING THE EXISTENCE OF UNDISCLOSED INCOME. IT WAS THEREFORE, NOT POSSIBLE, ACCORDING TO THE TRIBUNAL TO DRAW ANY INFERENCE ON THE BASIS OF THE SEIZED DOCUMENTS. M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 11 13. IN ADDITION TO THE ABOVE REASONING THE TRIBUNAL ALSO OPINED THAT THE OMIS SION ON THE PART OF THE ASSESSING OFFICER TO GET THE PROPERTY VALUED BY THE DEPARTMENTAL VALUATION OFFICER TO FIND OUT THE REAL INVESTMENT AND THE FAILURE TO EXAMINE THE PURCHASERS OF THE PROPERTY TO FIND OUT IF THEY HAD PAID ANY CONSIDERATION OVER AND ABO VE WHAT WAS RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS ETC., WERE FATAL TO THE MERITS OF THE REVENUES STAND IN THE BLOCK ASSESSMENT PROCEEDINGS. IN THIS VIEW OF THE MATTER, THE TRIBUNAL CANCELLED THE ENTIRE ADDITION OF `3,69,27,587/ - . 14. ON A CARE FUL CONSIDERATION OF THE RIVAL CONTENTIONS AND ON A FAIR READING OF THE ORDER OF THE TRIBUNAL, WE ARE OF THE VIEW THAT ITS ORDER CANNOT BE SUSTAINED. WHILE CANCELLING THE ENTIRE ADDITION OF `3,69,27,587/ - THE TRIBUNAL FOUND FAULT WITH THE ASSESSING OFFICER FOR NOT CARRYING OUT CERTAIN PROCEDURAL STEPS WHICH ACCORDING TO THE TRIBUNAL WERE VITAL FOR VALIDITY OF THE ADDITIONS. FURTHER, THE TRIBUNAL HAS ALSO HELD THAT THE PRESUMPTION ABOUT THE GENUINENESS AND TRUTH OF THE CONTENTS OF THE DOCUMENTS SEIZED, AS PROVIDED IN SECTION 132(4A) , WAS NOT AVAILABLE TO THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS. THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF P.R. METRANI (SUPRA), NO DOUBT HELD THAT THE PRESUMPT ION WAS NOT AVAILABLE TO THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT AND THAT IT WAS LIMITED TO THE PRIOR PROCEEDINGS IN CONNECTION WITH THE SEARCH. HOWEVER, THERE WAS A LATER STATUTORY AMENDMENT; SECTION 292C WAS INTRODUCED BY THE FINANCE ACT , 2007 WITH RETROSPECTIVE EFFECT FROM 1.10.1975. SUB - SECTION (1), WHICH IS RELEVANT FOR OUR PURPOSE, READS AS FOLLOWS: - '292C. PRESUMPTION AS TO ASSETS, BOOKS OF ACCOUNT, ETC. - (1) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, 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 UNDER SECTION 132 OR SURVEY UNDER SECTION 133A , IT MAY, IN ANY PROCEEDING UNDER THIS ACT, BE PRESUMED -- (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VA LUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN TH E HANDWRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE BEEN SIGNED BY, OR M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 12 TO BE IN THE HANDWRITING OF, ANY PARTICULAR PERSON, ARE IN THAT PERSON'S HANDWRITING, AND IN THE CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED.' 15. THE PHRASE 'IN ANY PROCEEDING UNDER THIS ACT' ARE IMPORTANT. THEY PERMIT THE ASSESSING OFFICER TO INVOKE THE PRESUMPTION THAT THE SEIZED DOCUMENTS BELONGED TO THE PERSON SEARCHED, THAT THE CONTENTS OF THE SEIZED DOCUMENTS/BOOKS OF ACCOUNTS ARE TRUE AND THAT THE SIGNATURE OF EVERY OTHER PART OF THE BOOKS OF ACCOUNTS OR DOCUMENTS WHICH PURPORTS TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSO N ARE IN THAT PERSONS HANDWRITING ETC., EVEN IN THE ASSESSMENT PROCEEDINGS.AFTER THE INSERTION OF THE SECTION, THE JUDGMENT OF THE SUPREME COURT CITED ABOVE CAN NO LONGER BE CALLED IN AID TO HOLD THAT THE PRESUMPTION IS NOT AVAILABLE TO THE ASSESSING OFFI CER IN MAKING THE ASSESSMENT. 16. THE TRIBUNAL HAS REASONED THAT THE SEIZED PAPERS ARE LOOSE PAPERS AND NOT BOOKS OF ACCOUNTS. WE ARE UNABLE TO APPRECIATE THE SIGNIFICANCE OR SEQUITUR OF THE STATEMENT MADE BY THE TRIBUNAL. IT IS NOT NECESSARY THAT THE SEIZ ED DOCUMENTS SHOULD BE IN THE FORM OF PROPER BOOKS OF ACCOUNTS SO THAT THEY CAN BE RELIED UPON FOR THE PURPOSE OF MAKING ADDITIONS. THEY COULD BE IN ANY FORM, INCLUDING LOOSE PAPERS ON WHICH NOTINGS OR SCRIBBLINGS HAVE BEEN MADE. WHILE COMMENTING ON THE SE IZED DOCUMENTS, THE TRIBUNAL CONTRADICTED ITSELF BY FIRST OBSERVING THAT IT CANNOT BE STATED THAT THE FIGURES IN THE PAPERS WERE THE ACTUAL INVESTMENT OR THE ACTUAL SALE PROCEEDS AND THEREAFTER, IN THE VERY NEXT SENTENCE, STATING THAT THE SEIZED DOCUMENTS 'DID GIVE OUT CERTAIN FIGURES REGARDING THE FOUR PROJECTS THAT THE ASSESSEE HAD UNDERTAKEN IN THE COURSE OF HIS BUSINESS.' IF THE SEIZED PAPERS DID IN FACT CONTAIN FIGURES RELATING TO THE FOUR PROJECTS WHICH WERE ADMITTEDLY UNDERTAKEN BY THE ASSESSEE, WE D O NOT SEE HOW THE TRIBUNAL COULD HOLD THAT THE REVENUE COULD NOT RELY ON THE CORRELATION BETWEEN THE POSITION SHOWN BY THE SEIZED DOCUMENTS AND WHAT HAS BEEN RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. THE TRIBUNAL DOES NOT DISPUTE THAT THERE EXISTED A CORRELATION; BUT IT YET HELD THAT THE CORRELATION ALONE WAS NOT SUFFICIENT TO MAKE THE IMPUGNED ADDITIONS. THIS OBSERVATION WAS SOUGHT TO BE SUPPORTED BY SOME REASONS. WE HAVE ALREADY SUMMARIZED THEM. AN EXAMINATION OF THOSE REASONS SHOWS THAT THEY ARE FAR FROM CONVINCING. THE TRIBUNAL HELD ON THE BASIS OF THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF P.R. METRANI (SUPRA) THAT THE PRESUMPTION ABOUT THE TRUTH AND GENUINENESS OF THE CONTENTS OF THE SEIZED DOCUMENTS AND ITS HANDWRITING WAS NOT AVAILABLE TO THE ASSESSING OFFICER IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THIS POSITION HAS NOW BEEN NULLIFIED BY THE M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 13 RETROSPECTIVE AMENDMENT WHICH WE HAVE ALREADY REFERRED TO. EVEN OTHERWISE, WE DO NOT FIND ANY MERIT IN THE CONCLUSION OF THE TRIBUNAL THAT THE CORRELATION BETWEEN THE SEIZED MATERIAL AND THE BOOKS OF ACCOUNT, ON WHICH RELIANCE WAS PLACED BY THE ASSESSING OFFICER, WAS NOT SUFFICIENT FOR THE PURPOSE OF MAKING THE ADDITIONS. V.K. NARANG, FROM WHOSE POSSESSION THE DOCUMENTS WERE RECOVERED, WAS A PAR TNER OF THE ASSESSEE - FIRM AND THE TRIBUNAL ITSELF OBSERVES IN PARAGRAPH 22 OF ITS ORDER THAT 'IT IS NO DOUBT TRUE THAT RECOVERY OF DOCUMENT PERTAINING TO THE FIRM FROM THE POSSESSION OF THE PARTNER OF A FIRM IS A VITAL PIECE OF EVIDENCE AGAINST THE FIRM' . NOTWITHSTANDING THIS OBSERVATION, THE TRIBUNAL PROCEEDED TO ATTACH WEIGHT TO THE DENIAL BY NARANG ABOUT ANY KNOWLEDGE OF THE SEIZED DOCUMENTS. IT IS STRANGE THAT THE TRIBUNAL ACCEPTED NARANGS DENIAL AS CREDIBLE, OBSERVING AT THE SAME TIME THAT RECOVERY OF DOCUMENTS PERTAINING TO THE FIRM FROM THE POSSESSION OF THE PARTNER OF THE FIRM IS A VITAL PIECE OF EVIDENCE AGAINST THE FIRM. A FIRM IS MERELY A COMPENDIOUS NAME GIVEN TO THE PARTNERS COLLECTIVELY AND WHEN WE SAY THAT THE FIRM IS CARRYING ON THE BUSINE SS, WHAT WE REALLY MEAN IS THAT THE PARTNERS ARE CARRYING ON THE BUSINESS. THE FIRM AND THE PARTNERS ARE ONE AND THE FIRM DOES NOT HAVE A SEPARATE OR A DISTINCT PERSONALITY OR EXISTENCE APART FROM ITS PARTNERS, EXCEPT FOR CERTAIN VERY LIMITED PURPOSES, SUC H AS AN ASSESSMENT TO INCOME TAX OR FOR THE PURPOSES OF ORDER XXX RULE 1 OF THE CODE OF CIVIL PROCEDURE. SIMILARLY, THE TRIBUNAL HAS FOUND FAULT WITH THE ASSESSING OFFICER FOR NOT EXAMINING THE OTHER PARTNER S.S. SODHI IN THE COURSE OF THE ASSESSMENT PROCE EDINGS OF THE FIRM, THOUGH HE WAS EXAMINED BY THE INVESTIGATING AUTHORITIES WITH REFERENCE TO THE SEIZED DOCUMENTS. SODHI HAD EVEN STATED THAT THE DOCUMENTS WERE IN THE HANDWRITING OF THE OTHER PARTNER NARANG. IN ANY CASE, WE ARE UNABLE TO APPROVE THE APPR OACH OF THE TRIBUNAL TO THE EXTENT THAT IT HAS BEEN HELD BY IT THAT THE STATEMENTS MADE DURING THE SEARCH ARE OF NO USE IN THE ASSESSMENT PROCEEDINGS. WHAT CAN AT BEST BE STATED IS THAT THE PRESUMPTION UNDER SECTION 132(4A) WAS NOT AVAILABLE TO THE ASSESSING OFFICER ON THE BASIS OF THE SEIZED DOCUMENTS, BUT MERELY BECAUSE THE PARTNERS WERE NOT EXAMINED BY THE ASSESSING OFFICER AT THE TIME OF THE ASSESSMENT, IT CANNOT BE STATED THAT NO RELIANCE CAN BE PLACED ON THEM FOR THE PURPOSE OF MAKING ADDITIONS. 17. AS TO THE CORROBORATION SOUGHT BY THE TRIBUNAL IN SUPPORT OF THE SEIZED DOCUMENTS, IT IS NOT AN INVIOLABLE RULE APPLICABLE TO ALL SITUATIONS AND TO ALL CASES THAT EVERY SEIZED DOCUMENT SHOULD BE CORROBORATE D BEFORE ANY ADDITION CAN BE MADE BASED ON IT. IF CALCULATIONS AND COMPUTATIONS HAVE BEEN MADE IN THE SEIZED DOCUMENTS IN SUCH A MANNER THAT ITS PROBATIVE VALUE AND M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 14 GENUINENESS CANNOT BE DOUBTED, NOTHING PREVENTS THE ASSESSING OFFICER FROM MAKING ADDITIONS ON THE BASIS OF SUCH DOCUMENTS DESPITE THE ABSENCE OF ANY CORROBORATION. IT MUST BE REMEMBERED THAT IN SUCH CASES IT IS DIFFICULT TO OBTAIN CORROBORATION, PARTICULARLY OF THE TYPE CONTEMPLATED BY THE TRIBUNAL. THE TRIBUNAL OBSERVED THAT CORROBORATION COUL D HAVE COME IN THE FORM OF A VALUATION OF THE PROPERTY BY THE DEPARTMENTAL VALUATION OFFICER OR FROM THE PURCHASERS OF THE PROPERTY WHO COULD HAVE SAID THAT THEY DID PAY CONSIDERATION OVER AND ABOVE WHAT HAS BEEN RECORDED BY THE ASSESSEE IN THE BOOKS OF AC COUNTS. THE VALUATION OF PROPERTIES CAN AT BEST BE ONLY AN ESTIMATE. IT MAY NOT BE PRACTICAL TO EXPECT THE PURCHASERS OF THE PROPERTY TO DEPOSE AGAINST THE SELLER SINCE BOTH OF THEM ARE PARTY TO THE SAME TRANSACTION IN WHICH ON - MONEY IS ALLEGEDLY INVOLVED . WHEN DOCUMENTS WHICH ARE NOT MEANT FOR THE EYES OF THE REVENUE ARE UNEARTHED AFTER UNDERTAKING AN EXERCISE WHICH INVOLVES AN INTRUSION INTO THE PRIVACY OF THE ASSESSEE, IT IS NOT PERMISSIBLE TO DISCOUNT THE VERACITY, GENUINENESS AND TRUTHFULNESS OF THE C ONTENTS THEREIN FOR THE FLIMSIEST OF REASONS. IT WOULD BE PROPER TO INSIST UPON STRONG EVIDENCE IN REBUTTAL OF THE CONTENTS OF THE DOCUMENTS, PARTICULARLY AFTER THE INTRODUCTION OF SECTION 292C WITH RETROSPECTIVE EFFECT FROM 1.10.1975. 18. FOR THE ABOVE REASONS, WE ARE UNABLE TO APPROVE THE APPROACH ADOPTED BY THE TRIBUNAL. IF IT HAD FOUND THAT THERE WERE PROCEDURAL LAPSES ON THE PART OF THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT, THE PROPER CO URSE FOR IT WOULD BE TO NOT TO INVALIDATE THE ASSESSMENT OR DELETE THE ADDITIONS BUT TO REMAND THE ASSESSMENT TO THE ASSESSING OFFICER SO THAT THE PROCEDURAL LAPSES WHICH HAD PREJUDICIALLY AFFECTED THE ASSESSEE CAN BE SET RIGHT AND THE ASSESSMENT BE COMPLE TED AFTER DULY COMPLYING WITH THE RULES OF NATURAL JUSTICE. REFERENCE MAY BE MADE TO THE RECENT DECISION OF THE SUPREME COURT IN THE CASE OF ITO V. PIRAI CHOODI, (2011) 334 ITR 262. 19. COUNSEL FOR THE ASSESSEE STRONGLY OBJECTED TO THE REMAND, THOUGH HE WO ULD CONTEND THAT NEITHER NARANG NOR SODHI WAS EXAMINED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AND ASKED TO EXPLAIN THE SEIZED DOCUMENTS AND THAT NO CROSS - EXAMINATION OF SODHI WAS AFFORDED TO NARANG. HE WOULD ALSO SUBMIT THAT THE FINDINGS RECORDED BY T HE TRIBUNAL ARE PURE FINDINGS OF FACT AND IT IS NOT OPEN TO THIS COURT TO INTERFERE WITH THEM LIGHTLY. WE DO AGREE THAT THIS COURT HAS LIMITED JURISDICTION TO INTERFERE WITH FINDINGS OF FACT RECORDED BY THE TRIBUNAL. INTERFERENCE WOULD BE JUSTIFIED ONLY IF SUCH FINDINGS ARE IRRATIONAL, PERVERSE OR UNREASONABLE. IT WOULD ALSO BE JUSTIFIED IF A FINDING OF FACT IS ARRIVED AT BY THE TRIBUNAL WITHOUT ANY EVIDENCE. IT IS EQUALLY TRUE THAT WHILE EXAMINING THE EVIDENCE, M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 15 THE TRIBUNAL IS NOTEXPECTED TO PUT ON BLINKER S; WHEREVER NECESSARY, IT SHOULD SCRATCH THE SURFACE, PROBE DEEPER AND DRAW THE APPROPRIATE INFERENCES WHICH ACCORD WITH THE NORMAL COURSE OF HUMAN CONDUCT AND PROBABILITIES. IT IS AGAIN TRUE THAT MERELY BECAUSE THE APPELLATE COURT WOULD HAVE REACHED A DIF FERENT CONCLUSION ON THE SAME EVIDENCE, INTERFERENCE WITH THE FINDINGS OF THE FACT OF THE LOWER COURT WOULD NOT BE JUSTIFIED. EVEN IF WE APPROACH THE IMPUGNED ORDER OF THE TRIBUNAL KEEPING IN MIND THE ABOVE WELL SETTLED PRINCIPLES, WE ARE AFRAID WE CANNOT RESIST THE NEED TO REMAND THE MATTER TO THE ASSESSING OFFICER FOR A DENOVO CONSIDERATION OF THE ASSESSMENT. 20. COUNSEL FOR THE ASSESSEE SUBMITTED THAT A PAPER BOOK WAS SUBMITTED TO THE TRIBUNAL ALONG WITH DETAILED WRITTEN SUBMISSIONS ON THE BASIS OF WHICH THE TRIBUNAL HAD ARRIVED AT ITS DECISION AND THEREFORE, NO USEFUL PURPOSE WOULD BE SERVED BY REMANDING THE PROCEEDINGS OVER AGAIN. THE PROBLEM LIES IN THE APPROACH OF THE TRIBUNAL, AS WE HAVE POINTED OUT, TO THE EVIDENCE UNEARTHED DURING THE SEARCH. IT FA ILED TO NOTE WHILE ARRIVING AT ITS DECISION THAT PROCEDURAL IRREGULARITIES COMMITTED BY THE ASSESSING OFFICER DO NOT INVALIDATE THE ADDITIONS; IF NECESSARY, THE PROCEEDINGS HAVE TO BE DIRECTED TO BE COMPLETED OVER AGAIN AFTER CURING THE LAPSES, PROVIDED TH EY ARE NOT LAPSES OF JURISDICTION. NON - EXAMINATION OF SODHI OR NARANG DURING THE ASSESSMENT PROCEEDINGS, OR LACK OF OPPORTUNITY GIVEN TO NARANG TO CROSS - EXAMINE SODHI ARE ALL PROCEDURAL IRREGULARITIES WHICH CAN BE CURED BY REMITTING THE MATTER OVER AGAIN T O THE ASSESSING OFFICER, A STEP WHICH THE TRIBUNAL OUGHT TO HAVE TAKEN. THE TRIBUNAL HAS FOUND FAULT WITH THE ASSESSING OFFICER FOR HAVING MADE THE ADDITIONS ON THE BASIS OF THE STATEMENTS MADE BY SODHI AND NARANG IN PRE - ASSESSMENT PROCEEDINGS I.E. DURING THE SEARCH AND THE CONSEQUENT INVESTIGATION PROCEEDINGS, WITHOUT ASKING THEM TO EXPLAIN THOSE STATEMENTS DURING THE ASSESSMENT PROCEEDINGS. IF THE TRIBUNAL WAS OF THE VIEW THAT THIS WAS A SERIOUS LAPSE ON THE PART OF THE ASSESSING OFFICER, IT WOULD HAVE BE EN WELL - ADVISED TO REMIT THE MATTER TO THE ASSESSING OFFICER TO ENABLE HIM TO EXAMINE THOSE PERSONS WITH REFERENCE TO THEIR STATEMENTS MADE PRIOR TO THE ASSESSMENT PROCEEDINGS IN AN ATTEMPT TO ELICIT THE TRUTH. IT WAS NOT OPEN TO THE TRIBUNAL TO CANCEL THE ADDITIONS IN SUCH CIRCUMSTANCES. WE HAVE ALSO REFERRED TO CERTAIN STATEMENTS MADE BY THE TRIBUNAL IN PARAGRAPH 22 OF ITS ORDER TO THE EFFECT THAT THERE WAS A CORRELATION ESTABLISHED BY THE REVENUE BETWEEN THE SEIZED MATERIAL AND THE REGULAR BOOKS OF ACCOU NTS OF THE ASSESSEE AND TO THE EFFECT THAT RECOVERY OF DOCUMENTS PERTAINING TO THE ASSESSEE - FIRM FROM THE POSSESSION OF NARANG IS A VITAL PIECE OF EVIDENCE AGAINST THE FIRM. IN THE LIGHT OF THESE TWO OBSERVATIONS IT WAS FOR THE ASSESSEE TO FIRMLY REBUT T HE M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 16 SEIZED MATERIAL WITH ACCEPTABLE OR CREDIBLE EVIDENCE. IF THE TRIBUNAL THOUGHT THAT THE ASSESSEE HAD NOT BEEN GIVEN AN OPPORTUNITY TO DO SO, IT OUGHT TO HAVE REMANDED THE MATTER TO THE ASSESSING OFFICER AND NOT CANCELLED THE ADDITIONS AS BEING WITHOUT AN Y BASIS. 21. IN THE ABOVE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER OF THE TRIBUNAL AS IT STANDS CANNOT BE COUNTENANCED. WE VACATE THE SAME AND REMAND THE MATTER TO THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL AFFORD ADEQUATE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE AND COMPLETE THE ASSESSMENT AFRESH IN ACCORDANCE WITH LAW. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN THE NEGATIVE, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE, SUBJECT TO THE ORDER OF REMIT TO THE ASSESSING O FFICER. THE APPEAL FILED BY THE REVENUE IS ALLOWED IN THE ABOVE TERMS, WITH NO ORDER AS TO COSTS. 5 . THE ABOVE ORDER OF THE HON'BLE HIGH COURT IS CHALLENGED BY THE ASSESSEE BEFORE THE HON'BLE SUPREME COURT IN CIVIL APPEAL NO. 10741 - 10742 OF 2013. THE HON'BL E SUPREME COURT WAS PLEASED TO MODIFY THE ORDER OF THE HON'BLE DELHI HIGH COURT VIDE ORDER PASSED ON 29.11.2013 AS UNDER: - 3. HAVING CONSIDERED THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, WE AGREED WITH THE HIGH COURT THAT THE MATTER WAS REQUIRED TO BE REMANDED BUT, IN OUR VIEW, THE INTEREST OF JUSTICE SHALL BE SUB - SERVED IF THE MATTER IS REMANDED TO THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI (FOR SHORT THE TRIBUNAL) INSTEAD OF THE ASSESSING OFFICER. 4. WE, ACCORDINGLY MODIFY THE ORDER DATED 04.1 0.2012 PASSED BY THE HIGH COURT AND REMAND ITA NO. 1132 OF 2007, TITLED AS COMMISSIONER OF INCOME TAX, DELHI - VIII, NEW DELHI VS. SONAL CONSTRUCTION FOR FRESH HEARING AND CONSIDERATION BY THE TRIBUNAL. WE MAKE IT CLEAR THAT IF AT THE TIME OF CONSIDERATION OF THE APPEAL, THE TRIBUNAL FEES THAT THE MATTER NEEDS CROSS - EXAMINATION OF CERTAIN WITNESSES OR FURTHER EVIDENCE, IT WILL BE OPEN TO THE TRIBUNAL TO SEND THE MATTER BACK TO THE ASSESSING OFFICER. 6 . THEREFORE, FOR THE ABOVE DIRECTION OF THE HON'BLE SUPREME COURT THE MATTER HAS BEEN SET ASIDE TO THE FILE OF THE TRIBUNAL AND THEREFORE, THESE APPEALS. 7 . BEFORE US THE LD AUTHORISED REPRESENTATIVE VEHEMENTLY CONTESTED THAT THE ADDITION MADE BY THE LD ASSESSING OFFICER AND THE PEAK ADDITION M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 17 WORKED BY THE LD CIT(A) ARE WITHOUT MERIT . THE LD AUTHORISED REPRESENTATIVE REFERRED TO THE PARTNERSHIP DEED OF THE FIRM WHICH IS PLACED AT PAGE NO. 89 TO 94 OF THE PAPER BOOK WHEREIN, THE ASSESSEE FIRM HAS TWO PARTNERS NAMELY SHRI. V . K . NARANG AND SHRI SARANJEET SINGH SODHI. HE FURTHER REFERRED TO THE FACT THAT THE SEARCH TOOK PLACE ON 17.12.1999 AND ON THIS DATE THE ABOVE PARTNERS WERE EXISTING. HE FURTHER REFERRED THE PANCHNAMA PLACED AT PAGE NO. 30 OF THE PAPER BOOK TO SHOW THAT THERE WERE NO UNACCOUNTED CASH ETC WAS FOUND. HE FURTHER REFERRED TO THE PAPER BOOK OF THE REVENUE AND SUBMITTED THAT AT PAGE NO. 64 TO 79 WHICH IS STATEMENT RECORDED OF SHRI V . K . NARANG HE SPECIFICALLY REFERRED TO THE STATEMENT Q UESTION NO. 18 ONWARDS WHERE HE STATED THAT HE COULD NOT REPLY THE EXACT NATURE OF THE DOCUMENTS FOUND. HE FURTHER REFERRED TO PAGE NO. 60 TO 63 OF THE PAPER BOOK TO SHOW THAT AT THE TIME OF SEARCH WHATEVER DOCUMENT WERE FOUND , BASED ON WHICH ADDITION IS PROPOSED TO BE MADE IN THE HANDS OF THE FIRM , WERE SCRIBBLING AND ARE NOT IN THE HANDWRITING OF ANY OF THE PARTNERS OF THE FIRM. IT WAS FURTHER STATED BY HIM THAT THE DOCUMENTS ARE MERELY LOOSE SHEETS SHOWING ROUGH CALCULATIONS AND ARE UNSIGNED, UNDATED AND DUMB DOCUMENTS. IT WAS FURTHER STATED BY HIM THAT THESE DOCUMENTS COULD NOT BE RELIED UPON TO MAKE ANY ADDITION OF UNDISCLOSED INCOME IN THE HANDS OF THE APPELLANT FIRM MERELY BECAUSE THEY HAVE BEEN FOUND FROM THE RESIDENCE OF ONE OF THE PARTNERS OF THE FIRM , SHRI V . K . NARANG. IT WAS F URTHER S TATED THAT ANOTHER PARTNER SHRI S . S . SODHI HAS NOT ACKNOWLEDGED ANY SUCH DOCUMENT. HE FURTHER SUBMITTED A PAPER BOOK CONTAINING 13 DECISIONS AS UNDER: - SL NO. PARTICULARS 1 CIT VS. BABU MOHAN LAL ARYA SMARAK EDU. TRUST (2014) 42 TAXMANN.COM 225 2. NIRAML FASHION (P) LTD VS. DCIT (2008) 25 SOT 387 (KOL) M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 18 3. ACIT VS. VATIKA GREEN FIELD 121 TTJ 208 4. CIT VS SM AGGARWAL 293 ITR 43 5. CIT VS. ASHWANI GUPTA 322 ITR 396 ( DEL ) 6. CIT VS. DK GUPTA 174 ITR 476 (DEL) 7. CIT VS. GIRISH CHAUDHARY 8. CIT VS. SHANTI DEVI DATED 03.04.2008 9. CIT VS. KULWANT RAI 163 TAXMAN 585 ( DEL ) 10. ACIT VS/ SHARAD CHAUDHARY ITA NO. 933/DEL/2012 11 ACIT VS. PUNEET BERIWALA (2016) INDLAW ITAT 4481 12. CIT VS. ANIL BHALLA 322 ITR 191 (DEL) 13. CIT VS. VIVEK AGARWAL DATED 09.02.2015 8 . THE LD AR MAINLY CONTENDED THAT THERE IS NO CORROBORATION BY REVENUE OF THE SEIZED DOCUMENTS AND THEREFORE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. HE FURTHER STATED THAT THOUGH THE STATEMENT OF SHRI V . K . NARANG WAS RECORDED DURING THE COURSE OF SEARCH U/S 132(4) OF THE ACT ON 17.12.1999 AND FURTHER MR. S . S . SODHI WAS ISSUED SUMMONS U/S 131 ON 31.08.2000 AND HIS STATEMENT WAS ALSO RECORDED . HOWEVER, PARTNERS WERE NOT EXAMINED BY THE LD AO DURING THE COURSE OF ASSESSMENT. IT WAS FURTHER STATED THAT IN ABSENCE OF THEIR EXAMINATION THE PAPER REMAINED UNEXPLAINED AND THE ASSESSEE DID NOT HAVE OPPORTUNITY TO GIVE ITS OWN VERSION. IT WAS FURTHER STATED THAT THE LOOSE PAPERS BASED ON WHICH THE LD AO HAS MADE THE ADDITION ARE MERELY PROJECTIONS AND CANNOT PARTAKE THE CHARACTE R OF UNDISCLOSED INCOME OF THE ASSESSEE WITHOUT ANY FURTHER EVIDENCES. HE FURTHER STATED THAT ALL THE PROPERTIES FOR WHICH THE ADDITIONS HAVE BEEN MADE BY THE LD ASSESSING OFFICER ARE ALL RECORDED IN THE BOOKS OF ACCOUNTS. THESE PROPERTIES HAVE BEEN EITHER PURCHASED FROM SOMEBODY OR SOLD TO SOMEBODY. THE CONSIDERATION RECEIVED OR PAID HAS BEEN DULY DISCLOSED IN THE BOOKS OF ACCOUNTS. EVEN THOSE FIGURES HAVE BEEN DISTURBED BY THE LD M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 19 AO WITHOUT ANY CORROBORATIVE MATERIAL. EVEN THE PURCHASER OR SELLER OF THE P ROPERTIES HAVE NOT BEEN EXAMINED BY THE LD AO BEFORE MAKING ADDITIONS. IN THE END HE SUBMITTED THAT FAIR OPPORTUNITY TO THE ASSESSEE HAS BEEN DENIED AND FURTHER THE ADDITIONS HAVE BEEN MADE BY THE LD AO WITHOUT ANY BASIS. HE FURTHER STATED THAT LD CIT(A) H AS ALSO CONFIRMED THE ADDITION WITHOUT CORROBORATIVE MATERIAL. 9 . THE LD CIT DR VEHEMENTLY CONTESTED THE REQUEST FOR SETTING ASIDE THE ORDER OF THE ASSESSEE. HE SUBMITTED THAT THERE IS NO REASON THAT THIS MATTER SHOULD GO BACK TO THE LD ASSESSING OFFICER. HE FURTHER STATED THAT IN SO MANY DECISIONS THE SECOND INNINGS TO THE ASSESSING OFFICER ARE DENIED AND THERE IS NO JUSTIFICATION FOR DOING SO IN FAVOUR OF THE ASSESSEE. HE VEHEMENTLY READ LINE BY LINE THE ORDER OF THE HON'BLE HIGH COURT AND SUBMITTED THAT THE HON'BLE HIGH COURT HAS GIVEN ALL THE ANSWERS TO THE ARGUMENTS OF THE LD AUTHORISED REPRESENTATIVE. HE FURTHER STATED THAT ONLY MINOR MODIFICATION HAS BEEN MADE BY THE HON'BLE SUPREME COURT TO THE ORDER OF THE HON'BLE HIGH COURT BY SETTING ASIDE TO TH E FILE OF THE TRIBUNAL FROM DIRECTION OF TO AO . 10 . HE FURTHER STATED THAT THE PROVISIONS OF SECTION 292C GIVES THE PRESUMPTION TO THE DOCUMENTS SEIZED FOR ALL THE PURPOSES. HE SUBMITTED THAT THOUGH THESE PRESUMPTION IS REBUTTABLE , HOWEVER, THE ASSESSEE HAS NOT MADE ANY ATTEMPT TO CLARIFY AT ANY STAGE WHAT THESE PAPERS ARE. HE FURTHER REFERRED TO THE STATEMENT OF SHRI V . K . NARANG WHICH SHOWS THAT ASSESSEE HAS NOT MADE ANY ATTEMPT TO EXPLAIN ANY OF THE PAPERS AT ANY TIME DURING THE COURSE OF SEARCH. HE FURTHER REFERRED TO STATEMENT OF SHRI S.S. SODHI AND SUBMITTED THAT HE HAS ALSO NOT EXPLAINED THE PAPERS. HE SUBMITTED THAT ASSESSEE HAS FAILED TO REBUT THE STRONG EVIDENCES FOUND IN SEARCH. NONE OF THE PARTNERS HAVE EXPLAINED THOSE PAPERS BEFORE THE L D ASSESSING OFFICER OR BEFORE THE LD CIT(A) DESPITE HAVING ADEQUATE OPPORTUNITIES. HE THEREFORE, SUBMITTED THAT NOW THE PROVISIONS OF SECTION 292C APPLIES AND SUCH ARGUMENT THAT THE DOCUMENT DOES NOT BELONG TO THE FIRM OR THE CONTENTS ARE JUST SCRIBBLES M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 20 AN D THEY ARE NOT IN THE HANDWRITING OF ANY OF THE PARTNERS. HE STATED THAT IN VIEW OF THE PROVISIONS OF SECTION 292C OF THE ACT ALL THESE ARGUMENTS OF THE ASSESSEE ARE NEGATED. 11 . WITH RESPECT TO THE CORROBORATION , HE SUBMITTED THAT THESE DOCUMENTS SPEAKS LOUD ER THAN THE DUMB DOCUMENTS. HE REFERRED TO PAGE NO. 91 TO 130 OF THE PAPER BOOK OF THE REVENUE TO SHOW THAT THESE PAPERS SHOWS THE TRANSACTION IN EACH OF THE PROPERTY AS WELL AS THE SHARING BETWEEN THE TWO PARTNERS AND OTHER PART IES ALSO. HE FURTHER STATED THAT PARTNER - WISE PROFIT IS BEING SHOWN IN THE BUSINESS. HE SPECIFICALLY REFERRED TO PAGE NO. 21 TO 29 OF THE PAPER BOOK AND SUBMITTED THAT WITH RESPECT TO EACH AND EVERY PROPERTY THE SALE PRICE, THE CONSTRUCTION COST, 10% SUPERVISION CHARGES OF THE SALE PRICE, RESULT AND PROFIT, SHARE OF EACH OF THE PARTNERS ALONG WITH THE ADDRESS OF THE PROPERTY ARE MENTIONED. THE COMPLETE DOCUMENT IS IN THE FORM OF COMPLETE ACCOUNT OF THE TRANSACTION AND RESULTANT PROFITS EARNED BY THE ASSESSEE ARE SHOWN. HE STATED THAT CORROBORATION OF THE SEIZED MATERIAL IS NOT ALWAYS NECESSARY WHEN THE DOCUMENT ITSELF ARE SO CLEAR AND PRECISE. HE REFERRED TO THE DECISION OF THE HON'BLE HIGH COURT. 12 . HE FURTHER STATED THAT THE LD CIT(A) HAS CONSIDERED THE PEAK INVESTMENT. HE SUBMITTED T HAT UNLESS THE ASSESSEE CONFIRMS EACH AND EVERY TRANSACTION THE ASSESSEE CANNOT BE GRANTED THE BENEFIT OF PEAK CREDIT. HE SUBMITTED THAT THE PEAK CREDIT IS AN EXERCISE TO OFFSET VARIOUS ADDITIONS OF THE SOURCE AND APPLICATION OF THE FUNDS. HE REFERRED TO T HE DECISION OF THE HON'BLE DELHI HIGH COURT IN CASE OF SHRI D . K . GARG 84 TAXMANN.COM 257 AND SUBMITTED THAT WHEN ASSESSEE IS UNABLE TO EXPLAIN ALL SOURCES OF DEPOSITS AND CORRESPONDING PAYMENT , ASSESSEE CANNOT BE ALLOWED THE BENEFIT OF PEAK CREDIT. HE THER EFORE, SUBMITTED THAT THE LD CIT(A) HAS ERRED IN GRANTING THE PEAK CREDIT. HE FURTHER STATED THAT THE PEAK CREDIT HAS BEEN ALLOWED BY THE LD CIT(A) MERELY ON THE BASIS OF ACCOUNTING CONCEPT OVERLOOKING THE SETTLED LEGAL POSITION. M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 21 HE FURTHER RELIED UPON THE DECISION OF 34 TAXMANN.COM 5 (MUMBAI) IN CASE OF MH RANEY VS. ITO. 13 . IN THE REJOINDER THE LD AUTHORISED REPRESENTATIVE SUBMITTED THAT PRESUMPTION U/S 292C OF THE ACT IS LIMITED TO THE OWNERSHIP OF THE DOCUMENT AND DOES NOT EXTEND TO INCOME CHARGEABILITY. H E SUBMITTED THAT THE DOCUMENTS ARE DUMB AND ARE NOT IN THE HANDWRITING OF ANY OF THE PARTNER OF THE FIRM AND THEREFORE, SAME CANNOT BE RELIED UPON WITHOUT CORROBORATION MATERIAL PRODUCED BY REVENUE. 14 . WITH RESPECT TO THE DECISION OF THE HON'BLE HIGH COURT IN CASE OF THE ASSESSEE , HE SUBMITTED THAT ABOVE DECISION HAS ITSELF SET ASIDE THE ISSUE TO THE FILE OF THE LD ASSESSING OFFICER. THE HON'BLE HIGH COURT HAS GIVEN AMPLE REASONS. HE EMPHATICALLY READ PARA NO. 20 OF THAT DECISION AND STATED THAT NON EXAMINAT ION OF THE PARTNERS OF THE ASSESSEE FIRM OR LACK OF OPPORTUNITY TO THE SHIR V . K . NARANG TO CROSS EXAMINATION OF MR. SODHI ARE ALL PROCEDURAL IRREGULARITIES WHICH CAN BE CURED BY REMITTING THE MATTER TO THE LD AO. THE HON'BLE HIGH COURT FURTHER STATED THAT THESE STEPS OUGHT TO HAVE BEEN TAKEN BY THE TRIBUNAL. IN VIEW OF THIS HE STATED THAT TO ELICIT THE TRUTH THE MATTER MUST GO BACK TO THE LD AO. 15 . WITH RESPECT TO THE PEAK CREDIT HE REFERRED TO PARA NO. 9.5 OF THE ORDER OF THE LD CIT(A) AND VEHEMENTLY RELIED ON THAT. IN THE END HE SUBMITTED THAT EVEN OTHERWISE NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE FIRM ON ACCOUNT OF THE DUMB DOCUMENT. 16 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LD ASSESSING OFFICER AND LD CIT(A). WE HAVE ALSO METICULOUSLY READ THE ORDER S OF THE HON'BLE HIGH COURT AND HON'BLE SUPREME COURT FOR FOLLOWING GUIDANCE PROVIDED BY THEM TO DECIDE THE APPEAL. APPARENTLY IN THIS CASE SEARCH U/S 132 OF THE ACT WAS CARRIED OUT IN THE RESIDENTIAL PREM ISES V - 38, PANCHSHEEL, NEW DELHI OF SHRI V . K . NARANG WHO IS ONE OF THE PARTNER OF THE ASSESSEE. THEREFORE, THE LD ASSESSING OFFICER ISSUED NOTICE U/S 158BC OF THE ACT TO APPELLANT TO SUBMIT ITS RETURN OF INCOME FOR THE BLOCK PERIOD 01.04.1989 TO M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 22 17.12.1999 I . E. DATE OF THE SEARCH. THE ASSESSMENT WAS MADE BY THE LD ASSESSING OFFICER MAKING THE ADDITION ON ACCOUNT OF PROFIT EARNED ON SOME OF THE PROPERTIES AND PASSED ASSESSMENT ORDER ON 31.12.2001 COMPUTING THE UNDISCLOSED INCOME AT RS. 36937587/ - . ON APPEAL BEFORE THE LD CIT(A) THE ADDITION WAS RESTRICTED AT RS. 26787137/ - ON PEAK BASIS. THE MATTER WAS CARRIED BY THE ASSESSEE AND REVENUE BEFORE THE COORDINATE BENCH , WHO VIDE ORDER DATED 02.03.2007 DISMISSED THE APPEAL OF THE REVENUE A ND DELETED THE ENTIRE ADD ITION HOLDING THAT THE ADDITION MADE BY THE LD ASSESSING OFFICER IS NOT SUSTAINABLE IN LAW. THE REVENUE AGGRIEVED WITH THE ORDER OF THE COORDINATE BENCH PREFERRED APPEAL BEFORE THE HON'BLE DELHI HIGH COURT WHEREIN THE ORDER OF THE COORDINATE BENCH WAS VACA TED AND WHOLE ISSUE WAS SET ASIDE TO THE FILE OF THE LD ASSESSING OFFICER TO MAKE A FRESH ASSESSMENT IN ACCORDANCE WITH THE LAW. THE ASSESSEE CHALLENGED THE ORDER OF THE HON'BLE HIGH COURT BE FORE THE HON'BLE SUPREME COURT WHEREIN, THE HON'BLE COURT WAS PLE ASED TO SET ASIDE THE ISSUE BEFORE THE COORDINATE BENCH FOR FRESH HEARING AND CONSIDERATION. THE HON'BLE SUPREME COURT ALSO MADE IT ABSOLUTELY CLEAR THAT IF AT THE TIME OF CONSIDERATION OF THE APPEAL , THE TRIBUNAL FEELS THAT THE MATTER NEEDS CROSS EXAMINAT ION OF CERTAIN WITNESS AND FURTHER EVID ENCE THEN THE MATTER MAY BE SENT BACK TO THE FILE OF THE LD ASSESSING OFFICER. IN THE BACKDROP OF ABOVE FACTS , THE ABOVE APPEALS NEED TO BE DECIDED. THE LD ASSESSING OFFICER HAS MADE THE ADDITION TO THE TOTAL INCOME O F THE ASSESSEE WITH RESPECT TO THE FOUR PROPERTIES. THESE PROPERTIES AND THE RELEVANT TRANSACTIONS CONTAINED IN THE SEIZED PAPER ARE EXPLAINED AS UNDER: - (I) IN RESPECT OF PROPERTY NO. J - 12, SAKET, N. DELHI IT WAS FOUND BY THE AO FROM THE DOCUMENTS SEIZED DURING THE SEARCH THAT THERE WAS UNDISCLOSED NET PROFIT OF RS. 40,21,600 WHICH WAS HELD AS UNDISCLOSED INCOME OF RELEVANT AND RS. 42.48,000 WAS HELD AS UNDISCLOSED INVESTMENT IN THE SAID PROPERTY BY THE APPELLANT CO. THE INFERENCE WAS DRAWN BY THE AO ON TH E BASIS OF DOCUMENTS M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 23 WHICH HAVE BEEN REFERRED IN ANNEXURE A - 1 PAGE 21 AND 29 & WHICH HAVE ALSO BEEN MENTIONED IN ANNEXURE TO THE ASSESSMENT ORDER. THEREBY, ADDITION OF RS. 8269600/ - FOR THIS PROPOSAL. (II) PROPERTY NO. C - 40, ANAND NIKETAN, N EW DELHI IT WAS OBSERVED BY THE AO THAT AN AGREEMENT WAS EXECUTED BETWEEN THE APPELLANT WITH THE OWNER OF THE PROPERTY WHEREIN THE OWNER WAS TO GET RS. 70 LACS AND FIRST FLOOR OF CONSTRUCTED PROPERTY IN THE A.Y. 96 - 97. THE TOTAL COST WAS RS. 1,43,42,000 / - AND OUT OF T HE PROFIT DERIVED, 10% SUPERVISION CHARGES AT RS. 14,87,100/ - WAS TAXED AS UNDISCLOSED INCOME OF SH. VIRENDER NARANG AND THE TOTAL UNDISCLOSED PROFIT OF RS. 1,33,74,900/ - WAS HELD BY THE AO AS UNDISCLOSED INCOME OUT OF WHICH RS. 48,39,000/ - WAS HELD AS UN DISCLOSED INVESTMENT OF THE APPELLANT FIRM. THEREBY ADDITION OF RS. 18213900/ - WAS MADE. (III) PROPERTY NO. X - 14, HAUZ KHAS, N. DELHI IS CONCERNED; IT WAS NOTICED BY THE AO THAT THIS PROPERTY WAS PURCHASED BY SH. VIRENDER NARANG IN FOUR NAMES JOINTLY WIT H HIM, WIFE NEERA NARANG, M/S SONAL CONSTRUCTIONS, SH. S.S.SODHI (I.E. 25% SHARE EACH) IN THE A.Y. 97 - 98 FOR A DECLARED CONSIDERATION OF RS. 32 LACS FROM SH. R.L. SACHDEV, R/O REGENCY COURT, SOI - 20, SIKHMIT ROAD, BANGKOK. THE TOTAL COST WORKED OUT TO RS. 2 ,52,04,518/, THE AO AFTER CONSIDERING ALL THE MATERIAL, EVIDENCES AVAILABLE IN THE SEIZED DOCUMENTS AND CONSIDERING TIRE REGULAR' BOOKS OF ACCOUNTS TO BE THE VALUE OF THE PROPERTY AT RS. 1,92,69,942/ - AND CALCULATED THE APPELLANTS SHARE ON THE UNDISCLOSED INVESTMENT IN THE PROPERTY NO. X - 14, HAUZ KHAS AT RS. 43,35,737/. (IV) IN RESPECT OF PROPERTY NO. D - 16. PAMPOSH ENCLAVE. N. DELHI, THE AO NOTED THAT THE PROPERTY WAS PURCHASED BY THE APPELLANT AND DEVELOPED INTO A THREE STOREYED HOUSE IN THE A.Y. 97 - 98. TH E AO ALTER CONSIDERING THE SEIZED DOCUMENTS AND ON THE BASIS OF M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 24 MATERIAL AVAILABLE ON RECORD, COMPUTED THE UNDISCLOSED INCOME AND UNDISCLOSED PROFIT IN RESPECT OF THE APPELLANT AT RS. 61,08,350/ - 17 . THEREFORE, IT IS APPARENT THAT LD AO BASED ON HIS READING OF LOOSE PAPERS HAS FIXED UNDISCLOSED INCOME AS WELL AS UNDISCLOSED INVESTMENT BOTH WITH RESPECT TO THESE PROPOSALS. 18 . NOW WE COME TO THE DECISION OF THE HON'BLE HIGH COURT WITH RESPECT TO SEVERAL OBSERVATIONS MADE THEREIN. I . THE PRESUMPTION U/S 292C OF THE AC T PERMITS THE LD AO TO INVOKE THE PRESUMPTION THAT THE SEIZED DOCUMENTS BELONG TO THE ASSESSEE AND THE CONTENTS OF THESE DOCUMENTS ARE TRUE. THEREFORE, NOW THE ASSESSEE CANNOT SAY THAT THE DOCUMENTS ARE MERELY SCRIBBLES AND CANNOT BE USED TO DETERMINE THE INCOME OF THE ASSESSEE. II . THAT THE CORRELATION BETWEEN THE SEIZED MATERIAL AND THE BOOKS OF ACCOUNTS WAS SUFFICIENT FOR THE PURPOSE OF MAKING ADDITION. III . REGARDING DENIAL BY MR. NARANG OR NON EXAMINATION OF THE PARTNER BY THE ASSESSING OFFICER AT THE TIME OF THE ASSESSMENT IT CANNOT BE STATED THAT NO RELIANCE CAN BE PLACED ON THEM FOR THE PURPOSE OF MAKING ADDITION. IV . THE CORROBORATION OF THE MATERIAL FOUND IS NOT AN INVIOLABLE RULE. MANY A TIMES CORROBORATION IS DIFFICULT TO OBTAIN. IT IS FURTHER STATED THAT I F THE CALCULATION AND THE COMPUTATION HAVE BEEN MADE IN SUCH A MANNER THEN ITS PROBATIVE VALUE AND GENUINENESS CANNOT BE DOUBTED, THE AO MAKE AN ADDITION ON THE BASIS OF SUCH DOCUMENTS IN ABSENCE OF CORROBORATION. V . THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH CANNOT BE DISCOUNTED FOR THE FLIMSY REASONS. TO REBUT SUCH DOCUMENTS, STRONG EVIDENCE IN REBUTTAL ARE REQUIRED. M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 25 VI . THE MERE PROCEDURAL REQUIREMENT DOES NOT INVALIDATE OR GIVE POWER TO DELETE THE ADDITION BUT THE PROPER COURSE WOULD BE TO REMAND THE MA TTER TO CORRECT THE ERRORS PROVIDED THERE ARE NO LAPSES OF JURISDICTION. VII . THE TRIBUNAL IS NOT EXPECTED TO PUT ON BLINKERS WHILE EXAMINING THE EVIDENCE, WHENEVER NECESSARY, IT SHOULD SCRATCH THE SURFACE PROBE DIPPER AND DRAW THE APPROPRIATE INFERENCE WHICH ACCORD WITH NORMAL COURSE OF HUMAN CONDUCT AND PROBABILITIES. VIII . THE NON EXAMINATION OF MR. SODHI OR MR. NARANG DURING ASSESSMENT PROCEEDINGS OR LACK OF OPPORTUNITY TO MR. NARANG TO CROSS EXAMINE MR. SODHI ARE ALL PROCEDURAL IRREGULARITIES WHICH CAN BE CURE D BY REMITTING THE MATTER TO THE AO WHICH STEP THE COORDINATE BENCH OUGHT TO HAVE TAKEN. THE DOCUMENT SEIZED FROM THE PLACE OF MR. NARANG IS A VITAL PIECE OF EVIDENCE AGAINST THE ASSESSEE FIRM. 19 . HONORABLE HIGH COURT IN PARA NO 11 HAS HELD WHERE THE COORDINATE BENCH HAS FAULTED. WE HAVE CAREFULLY ANALYZED THE WHOLE ISSUE AGAIN I N VIEW OF THE ABOVE DIRECTION OF THE HON'BLE SUPREME COURT AND HIGH COURT. 20 . COMING TO THE DOCUMENTS SEIZED WE FOUND TH AT RUPEE WISE ANALYSIS GIVEN IN THOSE PAPERS AND ANALYZED BY THE LD AO CLEARLY SHOWS THAT THOSE DOCUMENTS ARE NOT DUMB DOCUMENTS AND EVEN WITHOUT CORROBORATION THEY CAN BE USED TO DETERMINE THE UNDISCLOSED INCOME OF THE ASSESSEE. WE HAVE GIVEN THE DETAILED ANALYSIS OF EACH PROPERTY IN EARLIER PART OF THIS ORDER. 21 . NOW COMING TO THE SPECIFIC ARGUMENT OF THE LD AUTHORISED REPRESENTATIVE THAT THE LD AO HAS NOT EXAMINED THE PERSON SUCH AS MR. NARAG AND MR. SODHI DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTH ER, IT IS THE CLAIM OF THE LD AR THAT MR. NARANG IS NOT GIVEN AN OPPORTUNITY TO CROSS EXAMINE MR. S . S . SODHI. WE HAVE CAREFULLY PERUSED M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 26 THE STATEMENT RECORDED OF SHRI VIRENDRA NARANG ON 17.12.1999. WITH RESPECT TO THE SEIZED PAPERS HE WAS ASKED THE SPECIFI C QUESTION VIDE Q NO. 19 WHEREIN, THE DETAILS OF FIVE PROPERTIES WERE GIVEN AND THE ACCOUNT OF MR. SODHI WAS MENTIONED. SHRI NARANG REPLIED THAT HE IS NOT ABLE TO GIVE REPLY OF THIS QUESTION PRESENTLY. WITH RESPECT TO Q NO. 20 THE OTHER PAPER TO THAT ANNEX URE TO PAGE NO. 28 WAS ALSO SHOWN TO WHICH HE EXPRESSED HIS INABILITY TO EXPLAIN; TO OTHER LOOSE PAPER ALSO VIDE Q NO. 21 AND 22 HIS REPLY WAS SIMILAR. THEREFORE, DESPITE ADEQUATE OPPORTUNITY AVAILABLE TO MR. NARANG HE DID NOT EXPLAIN ANYTHING ABOUT THOSE PAPERS. ONLY WITH RESPECT TO Q NO. 22 SOME SMALL NOTE BOOK PREPARED ON MONTHLY BASIS WERE SHOWN TO HIM AND ONLY FOR THAT DOCUMENT HE STATED THAT HE WILL EXPLAIN THE DETAILS OF SUCH TRANSACTION LATER ON. WE ARE NOT CONCERNED WITH THAT PAPER IN THIS APPEAL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND EVEN THE APPELLATE PROCEEDINGS AND FURTHER, EVEN BEFORE US THE ASSESSEE DID NOT MAKE ANY ATTEMPT TO EXPLAIN THOSE PAPERS. COMING TO THE STATEMENT OF MR. SODHI RECORDED ON 31.08.2000 DURING THE COURSE OF ASSES SMENT HE HAS SPECIFICALLY IN ANSWER TO Q NO. 8 STATED THAT THESE DOCUMENTS BELONG TO THE FIRM. MR. SODHI HAS STATED IN ANS TO SO MANY QUESTION THAT HE IS JUST A SLEEPING PARTNER AND HE DOES NOT KNOW ANYTHING ABOUT THE PROFITS EARNED BY THE FIRM. HE FURTHER STATED THAT HE WAS MEDICALLY NOT FIT. HE ALSO DENIED KNOWING MR. RK DHAWAN WHOSE NAME WAS MENTIONED IN THOSE PAPERS. THEREFORE, ON WHOLESOME READING OF THE STATEMENT OF MR. SODHI NO EXPLANATION WITH RESPECT TO THE SEIZED DOCUMENTS WAS FORTHCOMING. THEREFO RE, IT IS APPARENT THAT BOTH THE PARTNERS OF THE ASSESSEE FIRM DID NOT MAKE ANY ATTEMPT TO EXPLAIN THOSE PAPERS FOUND FROM THE RESIDENCE OF MR. NARANG. IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD ASSESSING OFFICER INFERRING THAT THO SE DOCUMENTS SHOW THE UNDISCLOSED INCOME OF THE ASSESSEE . 22 . FURTHER, THE CLAIM OF THE LD AR THAT ALL THESE PROPERTIES ARE PROPERLY DISCLOSED IN THE BOOKS OF ACCOUNTS AND THE LD ASSESSING OFFICER HAS NOT M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 27 EXAMINED THE PERSONS WHO HAVE PURCHASED FROM OR SOLD T O THESE PROPERTIES. THESE ARGUMENTS DESERVES TO BE REJECTED AT THE THRESHOLD ITSELF FOR THE SIMPLE REASON THAT THE DOCUMENT SHOWS THAT THE SALE, PURCHASE PRICE AND THE CONSTRUCTION EXPENDITURE SHOWN IN THE BOOKS OF ACCOUNT ARE FAR LESS THAN THE AMOUNT SHOW N IN A METHODICAL MANNER IN THE SEIZED DOCUMENTS. FURTHER, NO FRUITFUL PURPOSE WOULD HAVE BEEN SERVED BY CALL ING INFORMATION OR EXAMINING THOSE PERSONS , WHO HAVE EITHER PAID OR RECEIVED UNACCOUNTED MONEY WITH RESPECT TO THE TRANSACTION OF THESE PROPERTIES. NATURALLY, THOSE PARTIES WOULD HAVE CONFIRMED ONLY THE TRANSACTIONS ENTERED INTO IN THEIR BOOKS OF ACCOUNTS. IN FACT , IT SHOULD HAVE BEEN THE ASSESSEE WHO SHOULD HAVE PRODUCED THEM BEFORE THE LD ASSESSING OFFICER TO SHOW THAT THERE IS NO UNACCOUNTED TRANS ACTIONS WITH THOSE PERSONS. THE ASSESSEE COULD HAVE PRODUCED SUCH AN ACTION OF THE ASSESSEE WITH OTHER STRONG EVIDENCES REBUTTING THE SEIZED PAPER . THEREFORE, NO FAULT OR IRREGULARITY CAN BE SAID TO HAVE BEEN COMMITTED BY THE ASSESSING OFFICER BY NOT CALLING THE PURCHASER OR SELLER OR EXAMINING THEM. WHAT IS TO BE DONE BY THE ASSESSEE TO PROVE ITS CASE, THE LD AO CANNOT BE ASKED TO DO SO. 23 . NOW COMING TO THE STRONG OBJECTION OF THE REVENUE AGAINST THE SETTING ASIDE THE ORDER BACK TO THE FILE OF THE LD ASSESSING OFFICER WE ARE GUIDED BY PARA NO. 21 OF THE ORDER OF THE HON'BLE HIGH COURT AS WELL AS PARA NO. 4 OF THE HON'BLE SUPREME COURT . THE H ON'BLE SUPREME COURT HAS HELD THAT ONLY IF THE MATTER NEEDS CROSS EXAMINATION OF CERTAIN WITNESSES OR FURTHER EVIDENCES ARE REQUIRED , THAN ONLY TRIBUNAL IS ALLOWED TO SET ASIDE THE MATTER BACK TO THE LD ASSESSING OFFICER. THEREFORE, IT IS OUR BOUNDE N DUTY TO SEE WHETHER THERE IS ANY NEED FOR CROSS EXAMINATION OF CERTAIN WITNESSES OR FURNISHING OF FURTHER EVIDENCE. HON'BLE HIGH COURT HAS HELD THAT IN VIEW OF THE PROVISION OF SECTION 292C OF THE ACT STRONG EVIDENCE ARE REQUIRED TO REBUT THE INFORMATION CON TAINED IN THOSE DOCUMENTS . THE APPELLANT FIRM AND ITS PARTNERS MR. V.K. NARANG AND MR S.S. SODHI CAN PLACE THAT STRONG M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 28 EVIDENCE IN REBUTTAL . BOTH OF THEM , INITIALLY , MR NARANG DURING THE SEARCH AND LATER ON MR. SODHI D URING THE ASSESS MENT PROCEEDINGS H AVE NOT GIVEN ANY EXPLANATION TO THE INCOME TAX AUTHORITIES. IN FACT LOOKING TO THEIR STATEMENTS, IT IS APPARENT THAT THEY HAVE TRIED TO DODGE THE INCOME TAX AUTHORITIES AND AVOIDED IN SUBMITTING ANYTHING ON THOSE PAPERS. NEITHER BEFORE THE LD AO NOR BE FORE THE LD CIT (A) THOSE PERSONS APPEARED AND SUBMITTED THEIR VERSION OF THOSE PAPERS. IT SEEMS THAT THEY WERE UNDER THE IMPRESSION THAT PRESUMPTION U/S 132 (4) OF THE ACT DOES NOT EXTEND TO THE ASSESSMENT PROCEEDINGS AND THEREFORE HEAVY BURDEN LIED A T THAT TIME ON REVENUE TO PROVE THE CONTENTS OF THE PAPER. ACCORDING TO PROVISIONS OF SUB - SECTION (4A) OF SECTION 132 , IT PROVIDES THAT THE BOOKS OF ACCOUNT, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH UNDER SECTION 132 WILL BE PRESUMED TO BELONG TO THE SAID PERSON. IT IS FURTHER PROVIDED THAT IT WILL BE PRESUMED THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE; AND THAT THE SIGNATURE AND EV ERY OTHER PART OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN HANDWRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PARTICULAR PERSON, ARE IN THAT PERSON'S H ANDWRITING, AND IN THE CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED. BY THE FINANCE ACT 2007 WITH RETROSPECTIVE EFFECT FROM 1/10/ 1975, A NEW SECTION 292C WAS INSERTED TO CLARIFY THOSE PRESUMPTIONS PROVIDED IN SUB - SECTION (4A) OF SECTION 132 CAN BE MADE IN ANY PROCEEDINGS UNDER THIS ACT. SECTION 292C OF THE INCOME - TAX ACT PROVIDES FOR A REBUTTABLE PRESUMPTION WITH RESPECT TO BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH UNDER SECTION 132 AS STATED IN CIRCULAR NO . 1/2009 DATED M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 29 27/3/2009 . THEREFORE, ON THE CONJO INT READING OF ALL THE AMENDMENTS MADE IN THIS SECTION IT IS OBVIOUS THAT SUCH PRESUMPTION PROVIDE D U/S 292 C OF THE ACT IS REBUTTABLE . THEREFORE, IT IS APPARENT THAT SUCH AN OPPORTUNITY OF REBUTTAL WAS NOT AVAILABLE TO THE APPELLANT. SUCH FURTHER EV IDENCES NEEDS TO BE LEAD BY THE ASSESSEE TO REBUT THE PRESUMPTION AVAILABLE WITH THE LD AO FOR MAKING ASSESSMENT ON THE BASIS OF THE SEIZED PAPERS. HIGHER BURDEN NOW LIES ON THE ASSESSEE BY PRODUCING THE EVIDENCES. THE ONLY ROLE OF THE AO LEFT IS TO APPREC IATE THOSE EVIDENCES, EXAMINE THEM AND PASS THE FRESH ASSESSMENT. 24 . REPEATEDLY THE LD AR HAS HARPED UP ON GRANTING AN OPPORTUNITY TO CROSS EXAMINE MR S . S . S ODHI TO THE APPELLANT. IT IS REQUIRED TO BE APPRECIATED THAT MR S . S . SODHI IS ONE OF THE PARTNE R OF THE APPELLANT FIRM, HE HAS ALSO DEALT WITH IN ALL SUCH PRO PERTIES , THE SEIZED DOCUMENTS FOUND ALSO SHOWS THE DETAILS OF HIS PROFIT SHARING, IN HIS STATEMENT HE HAS NOT DENIED RECEIVING SUCH PROFITS, THEREFORE NOW THE REQUEST OF THE ASSESSEE TO ASK ITS OWN PARTNER TO BE CROSS EXAMINED BY THE APPELLANT IS MERELY AN ATTEMPT BY THE ASSESSEE TO SCUTTLE THE VARIOUS ISSUES. AS MR. S . S . SODHI IS THE PARTNER OF THE APPELLANT FIRM, IT IS THE DUTY OF THE APPELLANT FIRM TO PRODUCE MR S S SODHI AND MR V . K . NARANG BEFORE THE LD AO TO GIVE ANY EVIDENCES IN REBUTTING THE DOCUMENTS SEIZED. HENCE, WE DO N OT FIND ANY REASON TO DIRECT THE LD AO TO GRANT OPPORTUNITY TO APPELLANT TO CROSS EXAMINE MR. S. S. SODHI. WE HAVE ON PERUSAL OF STATEMENT OF SHRI S. S. SODHI ARE ALSO NOT CONVINCED THAT HE HAS STATED SOMETHING WHICH IS INCRIMINATING AGAINST THE ASSESSEE. FURTHER, THE LD AO HAS NOT USED STATEMENT OF MR. S.S. SODHI FOR MAKING ADDITION OF UNDISCLOSED INCOME BUT SEIZED PAPERS FOUND FROM SHRI V.K. NARANG. 25 . ONE OF THE ARGUMENTS OF THE LD AR IS THAT PROVISIONS OF SECTION 292C DOES NOT EXTEND TO CHARGEABILITY OF I NCOME. WE AGREE WITH ABOVE VIEW BUT WE ALSO HURRIEDLY ADD THAT WHEN THE DOCUMENTS ARE SO EMPHATIC THAT THEY SPEAK LOUDER THAN THE REAL BOOKS OF ACCOUNTS, THE ONUS IS ON THE ASSESSEE TO SHOW THAT THEY DO NOT SHOW THE UNDISCLOSED INCOME M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 30 EARNED BY THE ASSESSE E. IT IS ALWAYS THE MATTER OF FACTS THAT WHETHER THE DOCUMENT SHOWS THE INCOME OR NOT. IT DEPENDS ON THE NATURE OF DOCUMENT AND WHAT IT DESCRIBES. THERE IS NO UNIVERSALLY APPLICABLE LAW EVEN PRONOUNCED THAT WHAT ARE THE DUMB DOCUMENTS AND WHAT ARE NOT. IN THE PRESENT CASE, ON THE DOCUMENTS, HON'BLE HIGH COURT HAS SAID IN SO MANY WORDS THAT THESE DOCUMENTS PRIMA FACIE SHOWS THE INCOME EARNED BY THE ASSESSEE. 26 . FURTHER, THE LD AR HAS RELIED ON SEVERAL DECISIONS COVERED IN THE PAPER BOOK. WE HAVE ALSO CONSIDERE D ALL OF THEM FOR DECIDING THE APPEAL, HOWEVER, WHEN IN THE CASE OF THE APPELLANT THE MATTER HAS REACHED UP TO HON'BLE SUPREME COURT , WE DO NOT FIND ANY REASON TO DEVIATE FROM THE GUIDANCE PROVIDED BY THE HON'BLE SUPREME COURT AND HON'BLE DELHI HIGH COUR T IN ASSESSEES OWN CASE ON THE SAME FACTS. 27 . WITH RESPECT TO THE APPEAL OF THE REVENUE THAT THE LD CIT(A) HAS ALLOWED THE ASSESSEE BENEFIT OF PEAK INVESTMENT, WE FIND NO INFIRMITY IN THAT. AS STATED EARLIER THE ASSESSEE HAS EARNED UNDISCLOSED INCOME IN BL OCK PERIOD AND HAS ALSO MADE UNDISCLOSED INVESTMENT IN THOSE PROPERTIES, THEREFORE, NATURALLY THE ASSESSEE WAS HAVING UNDISCLOSED INCOME WHICH COULD HAVE BEEN INVESTED IN THOSE UNDISCLOSED INVESTMENT MADE BY THE FIRM. REVENUE COULD NOT SHOW US ANY EVIDENCE FOUND DURING THE COURSE OF HEARING THAT UNDISCLOSED INCOME EARNED BY THE ASSESSEE IS INVESTED SOMEWHERE ELSE . FURTHER, WE HAVE ALSO ANALYZED THE WORKING GIVEN BY THE LD CIT (A) IN HIS ORDER WHERE THE PEAK INVESTMENT IS WORKED OUT. WE HAVE OUR RESERVATION ABOUT THE WORKING OF THE PEAK INVESTMENTS. IN FACT, THE AMOUNT OF INCOME I.E. EARNED BY THE ASSESSEE CAN BE USED FOR APPLICATION FOR MAKING INVESTMENT. THEREFORE, IF THE ASSESSEE HAS MADE UNDISCLOSED PROFIT IN EARLIER YEARS THEN NATURALLY THE ASSESSEE WOUL D BE ENTITLED TO SET OFF OF THE SALE WHILE WORKING OUT UNDISCLOSED INVESTMENT IN SUBSEQUENT YEARS. THE DECISIONS RELIED UPON BY THE LD CIT DR DOES NOT APPLY TO THE FACTS OF THE CASE BECAUSE THE HON'BLE DELHI HIGH COURT WAS CONCERNED WITH A CASE OF THE ENT RY OPERATOR WHO COULD NOT EXPLAIN M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 31 THAT WHO HAS GIVEN HIM THE CASE WHICH WERE DEPOSITED IN THE BANK ACCOUNT. SUCH ARE NOT THE FACTS HERE. IN THE CASE BEFORE US THERE ARE CLEAR CUT DETAILS AVAILABLE THAT HERE THERE ARE KNOWN UNDISCLOSED INCOME WHICH CAN BE U TILIZED FOR THE PURPOSES OF SUBSEQUENT PURCHASE OF PROPERTIES. HENCE, THE RELIANCE PLACED UPON CIT VS. D.K. GARG (SUPRA) CANNOT BE USED TO DENY THE BENEFIT OF PEAK CREDIT TO THE ASSESSEE. FURTHER, RELIANCE PLACED ON 34 TAXMANN.COM 5 IS ALSO PERTAINING TO T HE CASH DEPOSIT. IN THAT CASE TOO THERE WERE CASH DEPOSITS AND CASH WITHDRAWALS AND THE EXPLANATION OF THE ASSESSEE WAS FOUND TO BE VAGUE AND UNSUBSTANTIATED . THE ASSESSEE ALSO COULD NOT EXPLAIN THE QUANTUM OF THE CASH DEPOSIT WITH RESPECT TO THE PATTERN O F WITHDRAWAL. SAME IS ALSO DISTINGUISHABLE ON THE FACTS. IN THE PRESENT CASE ASSESSEE HAS EARNED UNDISCLOSED PROFIT IN AY 1994 - 95 OF RS. 4021600/ - WHICH HAS BEEN GRANTED AS SET OFF BY THE LD CIT(A) FOR AY 1996 - 97. HOWEVER, LOOKING AT THE WHOLE STATEMENT PREPARED BY HIM AT PARA NO. 9.6 IT IS APPARENT THAT UNDISCL OSED PROFIT EARNED BY THE ASSESSEE FOR AY 1997 - 98 REMAINED UNTAXED BY ADOPTING THE METHOD EMPLOYED BY THE LD CIT(A). BECAUSE IF THE PEAK IS TAXED WHICH IS THE PEAK BALANCE FOR AY 1997 - 98 BUT THE INCOME EARNED OF UNDISCLOSED PROFIT FOR AY 1997 - 98 CAN NO CAS E BE SET OFF AGAINST THIS PEAK. THEREFORE, THE PEAK WORKED BY THE LD CIT(A) FOR AY 1997 - 98 OF RS. 26787137/ - IS FURTHER REQUIRED TO BE INCREASED BY RS. 11.51 LAKHS, HENCE, THE PEAK WOULD BE RS. 27938137/ - . IN ANY CASE WE FIND ERROR IN THE COMPUTATION MADE BY THE LD CIT(A) TO THAT EXTENT. IN VIEW OF THIS WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING OF THE LD CIT( A) IN GRANTING BENEFIT OF SET OFF OF UNDISCLOSED INCOME FOR UTILIZING IN UNDISCLOSED INVESTMENT EXCEPT TO THE EXTENT OF THE COMPUTATION ERR OR. 28 . IN VIEW OF THE ABOVE FINDINGS, WE SET ASIDE BOTH THE APPEALS FOR BLOCK PERIOD BACK TO THE FILE OF THE LD AO WITH A DIRECTION TO THE ASSESSEE TO REBUT THE EVIDENCE FOUND DURING THE COURSE OF SEARCH BY EXPLAINING THE CONTENTS OF THOSE PAPERS WITH STRONG , COGENT AND RELIABLE EVIDENCES. M/S. SONAL CONSTRUCTIONS VS. DCIT, IT(SS)A NO. 518/DEL/2003 IT(SS) A NO. 522/DEL/2003 (BLOCK PERIOD: 01.04.1989 TO 17.12.1999) PAGE | 32 ASSESSEE MAY PRODUCE MR. V.K. NARANG AND M.R S. S. SODHI BEFORE THE LD AO TO GIVE REBUTTAL ABOUT THE SEIZED DOCUMENTS. THE LD AO MAY EXAMINE THEM, IF PRODUCED BY ASSESSEE, AND ALSO APPRECIATE OTHER EVIDENCE SO PRODUCED BEFO RE HIM, AND DECIDE THE ISSUE AFRESH. THE LD AO MAY ALSO MAKE ANY ENQUIRY HE DEEMS FIT BEFORE DECIDING THE ISSUE. 29 . IN THE RESULT APPEAL OF THE ASSESSEE WELL AS REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 0 7 / 0 6 / 201 8 . - S D / - - S D / - ( SUCHITRA KAMBLE ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 7 / 0 6 / 2018 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI