The ACIT, Central Circle-1(1), Ahmedabad V. M/s. Sujan Infrastructure Pvt.Ltd., Ahmedabad

ITSSA 586/AHD/2011

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0774 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 24-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P B PARMAR
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained investment; Value adopted by valuation officer; Unexplained expenditure; Income from undisclosed sources; Document seized; Opportunity of being heard; Reasonable cause; Fair market value; Corroborative evidences; Valuation report; Non compliance; Block assessment; Documents seized; Set aside; CHAPTER XIVB
• Section: 69C; 143(3); 142(1); 69B; 250; 201; 64; 48; 73; 72; 13; 131; 68; 69; 145; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ACIT, CENTRAL CIRCLE - 1(1), AHMEDABAD (APPELLANT) VS SUJAN INFRASTRUCTURE PVT. LTD. 2 ND FLOOR, KAYCREST, OPP: GUJARAT GAS CO. LTD. NR. PARIMAL CROSSING ,AHMEDABAD PAN: AAHCS2546P (RESPONDENT) SUJAN INFRASTRUCTURE PVT. LTD. 2 ND FLOOR, KAYCREST, OPP: GUJARAT GAS CO. LTD. NR. PARIMAL CROSSING ,AHMEDABAD PAN: AAHCS2546P (CROSS OBJECTOR ) VS THE ACIT, CENTRAL CIRCLE - 1(1), AHMEDABAD (RESPONDENT) REVENUE BY : S H RI ALOK SINGH , CIT - D . R. ASSESSEE BY: SHRI TUSHAR HEMANI & SHRI P.B. PARMAR , A.R S . DATE OF HEARING : 14 - 11 - 2 019 DATE OF PRONOUNCEMENT : 09 - 12 - 2 019 I T (SS) A NO S . 585, 586 , 596 & 597 / A HD/20 11 A SS ESSMENT YEAR 2004 - 05 TO 2007 - 08 C. O. NOS. 61, 62, 63 & 64/AHD/2012 (IN IT (SS) A NO S . 585, 586, 596 & 597 /AHD/20 11) ASS ESSMENT YEAR 2004 - 05 TO 2007 - 08 I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 2 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THESE FOUR APPEALS FILED BY REV ENUE AND FOUR CROSS OBJECTIONS FILED BY ASSESSEE FOR A.Y. 2004 - 05 TO 2007 - 08 , ARI SE FROM ORDER OF THE CIT(A) - 1, AHMEDABAD , IN PROCEEDINGS UNDER SECTION 153A(1)(B) R.W.S. 153C R.W.S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . IT (SS) A NO. 58 6/AHD/2016 ASSESSMENT YEAR 2004 - 05 FILED BY REVENUE 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE DECISION OF AO IN REJECTING T HE BOOKS OF ACCOUNTS IS NOT SUST AINABLE. 2) ON T HE FACTS A ND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE DECISION OF AO IN R EJECTING THE BOOKS OF ACCOUNTS O F T HE ASSESSEE. 3) T HE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,82,18,340/ - OUT OF TO TAL ADDITION OF RS. L ,93,84,626/ - MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN LAND. 4) ON THE FACTS AND CIR CUMSTANCES OF THE CASE, THE L D. CIT(A) OUGHT TO HAVE UPH ELD THE ENTIRE ADDITION OF RS. 1,93,84,626/ - . 5) THE LD .CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.2,10,40,100 / - MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT(UNEXPLAINED LOANS). (6.) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD T HE ADDITION OF RS.2,10, 40,100/ - (7). THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE LING THE ADDITION OF RS.L,50,000/ - MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT (SHARE CAPITAL). (8). ON THE FACTS 'AND CIRC UMSTANCES OF THE CASE, THE LD. CI T(A) OUG HT TO HAVE UPHELD THE ADDITION OF RS.L,50,000/ - . CROSS OBJECTION NO. 61/AHD/2012 FILED BY ASSESSEE 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THE CROSS OBJECTION: - THE ASSESSEE BEING DISSATISFIED WITH THE ORDER PASSED BY THE CIT(A) PRESENTS THESE CROSS OBJEC TION AGAINST THE SAME ON THE FOLLOWING AMONGST OTHER GROUNDS. 1.0 THE ORDER FRAMED BY THE ASSESSING OFFICER IS BAD IN LAW. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE QUASHED THE ASSESSMENT ORDER. THE ASSESSEE SUBMITS THAT THE ORDER BE QUASHED NOW. 2.0 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE REPORT OF DEPARTMENTAL VALUATION OFFICER ADOPTING THE VALUATION OF THE PROPERTY AT RS. 7,20,46,864/ - . THE COMMISSIONER OF INCOME TAX (APPEALS) ACCORDINGLY ERRED IN UPHOLDING ADDITION OF RS. 11,66,286/ - AS UNEXPLAINED EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE SUBMITS THAT NO UNACCOUNTED EXPENDITURE WAS INCURRED BY IT AND FURTHER THERE IS NO EVIDENCE IN THE MATTER OF UNEXPLAINED EXPENDITURE. THE ASSESSING OFFICER HAS NOT PRODUCE D ANY MATERIAL ON BASIS OF WHICH PROVISIONS OF SECTIONS 69B AND 69C CAN BE INVOKED AND ADDITIONS CAN BE MADE. THE ADDITIONS RS. 11,66,286/ - UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) AS UNEXPLAINED EXPENDITURE BE THEREFORE QUASHED. 3.0 THE COMMISSI ONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE VALIDITY OF THE NOTICE OF DEMAND. THE APPELLANT SUBMITS THAT THE NOTICE OF DEMAND WAS INVALID AND THEREFORE OUGHT TO HAVE BEEN QUASHED BY THE I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 3 COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE SUBMITS THA T THE NOTICE OF DEMAND WAS INVALID AND IN CONSEQUENCE THEREOF THE ORDER OF ASSESSMENT IS INVALID AND BE THEREFORE QUASHED. 4. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUNDS OF APPEAL AS UNDER: - THE ASSESSEE, THROUGH OVER SITE, COULD NOT RAISE IN THE ORIGINAL APPEAL MEMO, THE FOLLOWING LEGAL GROUND OF APPEAL AND THEREFORE THE APPELLANT NOW CRAVES LEAVE TO RAISE THIS ADDITIONAL GROUND OF APPEAL BEFORE THIS HON'BLE ITAT. THIS IS A LEGAL GROUND AND THEREFORE AS PER THE DECISION OF HON'BLE THE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER (229 ITR 383), IT CAN BE RAISED BEFORE THIS HON'BLE ITAT. 1. THE ACTION OF LD. AO IN FRAMING ASSESSMENT UNDER SECTION 153C R.W.S 143(3) OF THE ACT IS NOT TENABLE IN THE EYE OF LAW SINCE SUCH ASSESSMENT HAS BEEN FRAMED WITHOUT APPRECIATING THAT NO ADDITION CAN BE MADE BEYOND THE SCOPE OF MATERIAL AND EVIDENCES FOUND DURING THE COURSE OF SEARCH ACTION CARRIED OUT UNDER SECTION 132 OF THE ACT. 5 . THERE WAS A DELAY OF 59 DAYS IN FILING CROSS OBJECTION BY THE ASSESSEE. IN THIS REGARD, THE ASSESSEE HAS FILED AFFIDAVIT DATED 11 TH MARCH, 2019 STATING THAT REVENUE HAS FILED THE INSTANT APPEAL VIDE IT(SS)A NO. 585/AHD/2011 FOR THE ASSESSMENT YEAR 2004 - 05 ON 30 TH NOV, 2011 AND THE ASSESSEE WAS REQUIRED TO FILE CROSS OBJECTION ON OR BEFORE 30 TH DECEMBER, 2011, HOWEVER THE CROSS OBJECTION HAS BEEN FILED ON 27 TH DECEMBER , 2012 . IN THE AFFIDAVIT, THE ASSESSEE EXPLAINED THAT SHRI DEEPAK SONI, CA OF T HE ASSESSEE WHO HAD BEEN HANDLING THE TAX MATTER FOR THE LAST SEVER AL YEARS WAS SUFFERING FROM HEALTH PROBLEM AND HE WAS TREATED BY NERO - PHYSICIAN AND FOR MORE THAN 2 MONTHS REMAINED COMPLETELY BED RIDDEN. IT WAS EXPLAINED THAT THE DELAY IN FILING CROSS OBJECTION WAS OCCURRED MAINLY ON ACCOUNT OF ILL HEALTH OF THE CHARTE RED ACCOUNTANT AND REQUESTED FOR CONDONATION OF THE DELAY. 6 . WE HAVE GONE THROUGH THE AFFIDAVIT FILED BY THE ASSESSEE AND CONSIDERING THE REASON NARRATED THERE IN AS BRIEFLY CITED ABOVE, WE CONSIDER THAT THERE ARE REASONABLE CAUSE FOR DELAY IN FILING O F CROSS OBJECTION BY 59 DAYS THEREFORE WE CONDONE THE ABOVE CITED DETAIL IN FILING CROSS OBJECTION. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 4 7 . THE FACT IN BRIEF IS THAT A SEARCH ACTION U/S. 132 OF THE ACT WAS CARRIED OUT IN THE CASES OF THE NAVRATNA GROUP ON 10 TH MAY, 2006 AND VARIOUS DO CUMENTS/BOOKS OF ACCOUNT WERE FOUND AND SEIZED. CERTAIN DOCUMENTS I.E. BALANCE SHEET, P & L A/C, AUDITOR S NOTE, CASH BOOK AND BANK BOOK BELONG ING TO THE ASSESSEE WAS ALSO FO U ND AND SEIZED, THEREFORE, PROCEEDINGS U/S. 153C OF THE ACT WAS INITIATED IN THE CASE OF THE ASSESSEE BY ISSUING OF NOTICE U/S. 153C OF THE ACT ON 13 TH JUNE, 2008. DURING THE COURSE OF ASSES SMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS ACQUIRED LAND UNDER THE NAME OF SUJAN INFRASTRUCTURE PVT. LTD. ON WHICH KING SQUARE PROJECT WAS DEVELOPED BY NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. THE ASSESSING OFFICER STATED THAT THE ASSESSEE COMPANY HAS NOT BOOKED EXPENSES BY WAY OF DEVELOPMENT CHARGEABLE PAYABLE BY NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD.. THE ASSESSING OFFICER H AS ALSO STATED THAT AFTER CONSTRUCTION AND DEVELOPMENT OF KING SQUARE PROJECT, THE ASSESSEE COMPANY WAS TRANSFERRED TO ANOTHER GROUP BY SALE OF SHARES OF THE PROMOTER AS WELL AS ISSUANCE OF FRESH SHARE CAPITAL. NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. HAS DISCLOSED MERELY RS. 25 LACS AS DEVELOPMENT FEES FOR THE KING SQUARE PROJECT IN ASSESSMENT YEAR 2005 - 06. THE ASSESSING OFFICER HAS REFERRED NOTINGS IN THE SEIZED DOCUMENTS AS PER ANNEXURE A - 3 SEIZED ON 10 TH MAY, 2006 FROM THE OFFICE OF NAVRATNA ORGANI ZER AND DEVELOPERS PVT. LTD. RELATING TO DEVELOPMENT OF KINGS SQUARE TO A COMMERCIAL COMPLEX LAUNCHED IN THE YEAR 2004 NEAR ELLISBRIDGE, GYM KHANA, AHMEDABAD. IT INVOLVED CONSTRUCTION AND DEVELOPMENT OF ABOUT 25,000 SQ. FT. OF COMMERCIAL SPACE. THE ENTIRE PROJECT WAS NEARING COMPLETION IN MARCH , 2006. THE GROUP HAS TARGETED TO SELL THE ENTIRE PROJECT AS A COMMERCIAL OFFICE TO ONE OR TWO LARGE CORPORATE GROUPS. THE SALEABLE VALUE OF THE PROJECT WAS IN THE REGION OF RS. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 5 1 5 CRORE AND THE ENTIRE VALUE WAS TA RGETED TO BE REALIZED IN THE YEAR 2006 - 07. THE PROJECT HAS B EEN FUNDED PARTLY THROUGH INTERNAL CASH ACCRUAL OF NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. AND PARTLY THROUGH THE REALIZATION/SURPLUS PERTAINING TO THE EARLIER PROJECT WITHOUT ANY BANK LOAN. THE ASSESSING OFFICER HAS ALSO STATED THAT AS PER PAGE 6 OF ANNEXURE A - 3 , IN THE CASE OF KING SQUARE THE MAJOR PART OF CONSTRUCTION HAS BEEN COMPLETED DURING THE YEAR 2005 - 06 . T HE ENTIRE FUNDS REQUIRED FOR THIS PROJECT INVESTED BY NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. IN THE FORM OF UNSECURED LOAN/INVESTMENT IN M/S. SUJAN INFRASTRUCTURE PVT. LTD. THE ASSESSING OFFICER HAS STATED THAT IN ASSESSMENT YEA R 2006 - 07 THE ENTIRE BUILDING WILL BE SOLD OFF WHICH W OULD IMPLY THAT THE ENTIRE AMOUNT WILL BE RE ALIZED BY NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. IN 2006 - 07. IN THE LIGHT OF THE ABOVE INFORMATION , THE ASSESSING OFFICE R HAS ASKED THE ASSESSEE THAT NEITHER PROFIT ON SALE OF PROJECT HAS BEEN OFFERED BY THE ASSESSEE NOR BY NAVRATNA ORGANIZER AND DEV ELOPERS PVT. LTD.. THE ASSESSING OFFICER HAS STATED THAT ASSESSEE HAS NOT FILED ANY REPLY TO THESE QUERIES AND STATEMENT OF SHRI PRANAV SHAH WAS RECORDED U/S. 13(1) ( 1A) OF THE ACT ON 3 RD JULY, 2008. THE CONTENT OF WHICH HAS BEEN REPRODUCED BY THE ASSESS ING OFFICER AT PAGE 6 OF THE ASSESSMENT ORDER AS UNDER: - 'Q. 75 REFER PAGE A/O.5 OF ANNEXURE A/3 IN WHICH PROFIT OF FY.04 - 05 AND 05 - 06 OF NODL IS GIVEN. HAVE YOU OFFERED THE SAME FOR TAX ? A.15 FOR FY.04 - 05, WE HAVE OFFERED THE SAME AMOUNT FOR TAX AS WRI TTEN ON PAGE NO. 5 OF ANNEXURE A/3 AND FOR FY. 05 - 06, WE HAVE OFFERED MUCH MORE AMOUNT FOR TAX THAT WHAT HAS BEEN SHOWN ON PAGE NO. 5 OF ANNEXURE A/3. Q.16 IN PAGE NO.13, INVESTMENT AMOUNT OF RS.1.50 CRORE IN AMBAWADI PROJECT IS WRITTEN. WHAT IS THE SOURCE OF THIS AMOUNT ? A.16 THIS CAN BE VERIFIED FROM THE BOOKS OF ACCOUNTS. Q.17 IN PAGE NO.24 TO 29, ACTUAL FIGURES OF FY.04 - 05 ARE GIVEN. CAN YOU TALLY THE SAME WITH BOOKS OF ACCOUNTS ? . A.17 YES. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 6 THE ASSESSING OFFICER HAS STA TED THAT THE SEIZED DOCUMENT CLEARLY POINT OUT THE INTENTION BE HIND ACQUISITION OF THE ASSESSEE COMPANY AS THE ASSESSEE COMPANY WAS CONSTRUCTING A COMMERCIAL COMPLEX WHICH WAS TARGETED TO BE SOLD AS A CORPORATE HOUSE TO ONE/TWO CORPORATE GROUP AND THE COMP ANY SHARE S HAVE ULTI MATELY BEEN SOLD IN F.Y. 2005 - 06 TO DUBEY G ROUP OF HYDERABAD AT FACE VALUE AND THEREBY CONSTRUCTE D PROPERTY HAS BEEN TRANSFERRED TO THEM. THE ASSESSING OFFICER HAS CONTENDED THAT AS PER ANNEXURE A - 3 , IT IS CLEARLY STATED THAT PROJECT HAS BEEN FUNDED PARTLY THROUGH THE INTERAL ACCRUAL OF NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. AND PARTLY THROUGH THE REALIZATION/SURPLUS PERTAINING TO THE EARLIER PROJECT WITHOUT RESORTING ANY BANK LOAN. H OWEVER, IT IS NO TICED THAT THE FOLLOWING BOOKI NG DEPOSIT IN ASSESSMENT YEAR 2005 - 06 AND 2006 - 07 WERE RECEIVED . THE BREAK UP OF THE SAME IS GIVEN AS UNDER: - BOOKING DEPOSITS: PARTICULARS AMT. DEVANG NANAVATI 1500000 JAY VIDHYUT SHAH 200000 KALPANA V. SHAH 1737200 MIHIR K. KHANDHA R 1000000 PANKAJ K. KHANDHAR 1500000 PRATIBHA V. VAKHARIA & VIJAY VAKHARL A 2330650 RAJSHREE SUDHIRBHAI NANAVATI 1500000 SEJAL P. SHAH 600 000 VIDHYUT J. SHAH (HUF) 175000 TOTAL 10542850' THE ASSESSIN G OFFICER HAS NOTICED THAT MOST OF THESE PERSONS WERE ROUTINELY GIVING UNSECURED LOAN TO NAVRATNA ORGANIZERS AND DEVELOPER PVT. LTD. IN DIFFERENT YEARS. THE ASSESSING OFFICER HAS POINTED OUT THAT FROM THE AFORESAID NAMES ONE DEPOSITOR MR. SEJAL P SHAH WAS WIFE OF PRANAV D. SHAH AND OTHER PERSONS WERE ALSO RELATED TO SHRI PRANAV D. SHAH. THE ASSESSING OFFICER HAS STATED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS NAVRATNA ORGANIZER I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 7 AND DEVELOPERS PVT. LTD. THE COMPANY WAS ASKED TO ESTABLISH THE CREDIT WORTHINE SS OF THESE PERSONS AS WELL AS GENUINENESS OF UNSECURED LOAN TRANSACTION , HOWEVER , NO EVIDENCES COULD BE FURNISHED. THE ASSESSING OFFICER HAS REPORTED THE REPORT OF THE DIRECTOR FROM THE AUDIT REPORT STATING THAT ASSESSEE COMPANY SUJAN INFRASTRUCT URE PVT. LTD. HAS REFUNDED THE BOOKING DEPOSIT RECEIVED BY IT IN THE EARLIER YEARS ON THE GROUND THAT THE BUYER OF THE UNITS COULD NOT BE FOUND DESPITE BEST OF EFFORTS. HOWEVER , THE ASSESSING OFFICER OBSERVED THAT THE SEIZED DOCUMENT S CLEARLY BRING OUT TH E PRE - MEDIATED PLAN O F THE ASSESSEE TO ULTIMATELY S E LL THE PROJECT TO ONE OR TWO CORPORATE GROUPS. THE ASSESSING OFFICER HAS STATED THAT THE BOOKING DEPOSIT RECEIVED BY THE ASSE SSEE SUJAN INFRASTRUCTURE PVT. LTD. WAS NOT INDEPENDENT BOOKING RECEIVED TOWAR DS THE PROJECT BEING CONSTRUCTED BUT WAS INTRODUCTION OF OWN CASH ACCRUAL AND SURPLUS BEING EARNED THROUGH EARLIER PROJECTS. THE ASSESSING OFFICER HAS OBSERVED THAT AS PER THE SEIZED DOCUMENTS , IT HAS BEEN STATED THAT IN 2006 - 2007 THE ENTIRE BUILDING WILL BE SOLD OFF WHICH WOULD IMPLY THAT TH E ENTIRE AMOUNT WILL BE REALIZED BY NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. IN 2006 - 07. ULTIMATELY, THE BOOKING DEPOSIT HAS BEEN RETURNED AND THE SHARE OF THE ASSESS EE COMPANY HAS BEEN SOLD OFF TO DUBEY GROUP OF H YDERABAD MEANING ENTIRE PROPERTY OF KING SQUARE PLAN TRANSFE R R ED TO THE NEW GROUP AND BY THIS DEVICE THE ASSESSEE HAS AVOIDED TAX ON T H E ENTIRE TRANSACTION. THE ASSESSING OFFICER HAS STATED T HAT THE SAID (PROJECT) MALL FOR WHICH NAVRATNA ORGANIZER AND DE VEL OPERS PVT. LTD. CLAIMED TO HAD NOT FOUND ANY BUYER WAS ULTIMATELY COMMANDING LEASE RENT PER MONTH OF RS. 14.5 LACS . O N THE BASIS OF LEASE RENT , THE ASSESSING OFFICER HAS ESTIMATED THE VALUE OF INVESTMENT @ 12% RETURN ON INVESTMENT PER I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 8 ANNUM TO THE AMOU NT OF RS. 14.50 CRORE AS AGAINST RS. 8 CRORE DISCLOSED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. 8 . FURTHER ON THE PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE SUJ AN INFRASTRUCTURE PVT. LTD. FOR ASSESSMENT YEAR 2006 - 07 AND 2007 - 08 , THE ASSESSING OFFI CER HAS NOTICED THAT COST OF LAND AS PER BALANCE SHEET AS ON 31 ST MARCH, 2006 AND 31 ST MARCH 2007 WA S RS. 33, 3 87 , 493/ - . THE COST OF MATERIAL EXPENSES AND ADVANCES WERE RS. 2 2,4 14 , 167/ - AND RS. 46 , 612 , 507/ - RESPECTIVELY AS PER BALANCE SHEET AS ON 31 ST MARC H 2006 AND 31 ST MARCH, 2007. FROM THE ABOVE BEAK - UP , THE ASSESSING OFFICER OBSERVED THAT COST OF LAND WAS RS. 33 , 387 , 493/ - AND COST OF CONSTRUCTION WAS RS. 46 , 612 ,5 07/ - 9. THE ASSESSING OFFICER HAS ALSO DISCUSSED THE DISCREPANCY IN THE FIGURE OF COST MATERIAL/EXPENSES AND ADVANCES AND DIFFERENT P & L A/C AND BALANCE SHEET FOR THE FINANCIAL YEARS DETECTED IN THE COURSE OF SEARCH. THE ASSESSING OFFICER HAS ALSO DISCUSSED THAT PAGE 21 OF ANNEXURE 1 AS ON 4 TH JUNE, 2005 ON WHICH THE FOLLOWING REMAR KS WERE WRITTEN: - B) IN PAGE NO.21 OF ANNEXURE 1, AS ON 4/6/2005, FOLLOWING COMMENTS ARE WRITTEN : - ' KING'S SQUARE OPERATI ON RECONCILIATION COMPLETED AND CONFIRMED BY PRANAVBHAI'. 05.06.05 0 17550350 INCOME 1398333 EXPENS E 3567018 BALANCE THE ASSESSING OFFICER HAS STATED THAT ON VERIFICATION OF THE BOOKS OF ACCOUNT OF M/S. SUJAN INFRASTRUCTURE PVT. LTD. DURING THE CO URS E OF POST SEARCH PROCEEDINGS ITS BALANCE SHEET AS ON 31 ST MARCH, 2006 , THE TOTAL BOOKING AMOUNT WAS FOUND TO BE SHOWN RS. 1 ,05,42,850/ - INSTEAD OF 1 , 75 , 50 , 350/ - . I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 9 10. THE ASSESSING OFFICER HAS REFERRED THE PAGE NO. 175 TO 196 OF ANNEXURE 9 SEIZED FROM THE OFFICE PREMISES FROM NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD ON 10 TH MAY, 2016 S TATING THAT THESE PAGES WERE THE BALANCE SHEET, P & L A/C. AND THE RELATED SCHEDULE OF SUJAN INFRASTRUE PVT. LTD. FOR THE PERIOD ENDED 31 ST MARCH, 2006. IN THESE PAGES, THERE WERE THREE SETS OF P & L A/C AND BALANCE SHEET. FIRST SET WAS PREPARED ON 28 TH MARCH, 2006, SECOND SET ON 30 TH APRIL, 2006 AND THIRD SET ON 10 TH MAY, 2006. 11. THE ASSESSING OFFICER HAS ALSO STATED THAT A VALUATION REPORT STATING THE COST OF ITEM CONSUMED AT KING SQUARE AMOUNTING TO RS. 866 , 93 , 142/ - WAS DETECTED DURING THE COU RSE OF SEARCH AN D THE SAID DOCUMENT WAS SEIZED AS PER PAGES NO. 61 TO 67 OF ANNEXURE 13 FROM THE OFFICE PREMISES OF NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD ON 10 TH MAY, 2006. THE ASSESSING OFFICER HAS STATED THAT THESE PAGES WERE PART OF THE CERTIFICA TE GIVEN BY SHRI NARESH K. SHAH, ARCHITECTURE E NGINEER AND REGISTERED VALUER AND FOR COSTING ITEMS OF KING SQUARE PROJECT. A CCORDING TO THIS CERTIFICATE TOTAL AMOUNT OF THE ITEM CONSUMED AT KING SQUARE PROJECT WAS TO THE COST OF RS. 8 65 , 93 , 142/ - . H OWEVER , THE ASSESSEE HAS SUBMITTED THAT THIS PROJECT COST WAS NOT THE ACTU AL COST OF ITEM S U S ED AND IT WAS MERE PROJECTION OF THE COST OF ITEM TO BE USED FOR THE CONSTRUCTION OF KING SQUARE PROJECT. THE ASSESSING OFFICER HAS ALSO REFERRED SEIZED DOCUMENTS PER TAINING TO TERM LOAN . THE ASSESSING OFFICER HAS CALLED INFORMATION FROM HUDCO, AHMEDABAD. THE ASSESSING OFFICER HAS STATED THAT AS PER THE LETTER RECEIVED FROM REGIONAL MANAGER THE EST IMATED COST OF THE PROJECT HAS BEEN ST ATED AT RS. 1380.10 LACS AND TER M LOAN SANCTION ED WAS RS. 9 CRORE. THE ASSESSEE HAS EXPLAINED THAT THE FIGURE OF R S. 1380.10 LACS WAS ESTIMATED COST OF THE PROJECT AS STATED BY THE HUDCO AND I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 10 THE REPORT WAS ONLY A COPY OF ESTIMATE AND NOT THE ACTUAL COST. THE ASSESSEE FURTHER STATED TH AT SHRI N.K. SHAH, VALUER HAD MERELY PREPARED A COST OF THE ESTIMATE WITH A VIEW TO MAKE THE APPLICATION FOR LOAN/DISBURSEMENT OF LOAN F R O M HUDCO. THE ASSESSEE HAS FURTHER SUBMITTED THAT HUDCO HAS ONLY ATTACHED THE ESTIMATE FILED BY THE BORROWER . 12. REGARDING LABOUR EXPENSES RELATED TO KING SQUARE PROJECT, T HE ASSESSING OFFICER HAS REFERRED PAGE NO S . 46 TO 49 OF ANNEXURE 12 CONTAINING DETAILS OF BILL OF CONSTRUCTION OF KING SQUARE PROJECT. THE ASSESSING OFFICER HAS REFERRED THE STATEMENT OF DIREC TOR OF UJAY BUIL DCOM PVT. LTD. WHO HAS CARRIED THE WORK PERTAINING TO LABOUR JOB. THE ASSESSING OFFICER HAS STATED THAT UDAY BUILDCON HAS NOT GIVEN ANY BASIS FOR QUANTIFICATION OF LABOUR EXPENSES. IT HAS ONLY STATED PART OF DEMOLITION AND EXCAVATION WORK AND COST QUANTUM OF WORK HAS NOT REFLECTED IN THE BOOKS OF ACCOUNT. 13. THE ASSESSING OFFICER HAS STATED THAT EXPLANATION /INFORMATION FURNISHED BY THE ASSESSEE DURING THE COURSE OF SEARCH WAS NOT CONVINCING, THEREFORE, SUBSEQUENTLY THE PROJECT WAS REFERRED TO THE VALUATION CELL OF THE INCOME TAX DEPARTMENT ON 15 TH OCTOBER, 2008 TO ASCERTAIN THE REAL COST OF LAND AND COST OF CONSTRUCTION. IN VIEW OF THE EVIDENCES POINTING T OWARDS UNACCOUNTED TRANSACTIONS, T HE VALUATION OFFICER HAS VALUED THE LAND EX CLUDING STAMP DUTY AND REGISTRATION CHARGES AT RS. 4 , 73 , 7 2 , 250/ - AND THE VALUE AS PER THE ASSESSEE S BOOKS EXCLUDING STAMP DUTY AND REGISTRATION CHARGES WAS OF RS. 2 , 79 , 87 , 624/ - . AFTER CONSIDERING THE ABOVE FACTS, THE ASSESSING OFFICER HAS STATED THAT BOO KS OF ACCOUNT OF THE ASSESSEE WAS NOT CORRECT AND COMPLETE AND VARIOUS EXPENSES RELATING TO THE PROJECTS WAS NOT RECORDED, T HEREFORE, THE I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 11 SAME WAS REJECTED. AFTER TAKING INTO CONSIDERATION THE ABOVE MENTIONED FACTS/MATERIAL, THE ASSESSING OFFICER HAS ASSE SSED THE COST OF INVESTMENT IN KING SQ UARE PROJECT AT RS. 13.80 CRORE . T HE ASSESSING OFFICER HAS WORKED OUT THE YEAR WISE UNEXPLAINED INVESTMENT IN THE LAND AND IN THE CONSTRUCTION OF THE KING SQUARE PROJECT AS UNDER: - (A) LAND AY. AMOUNT OF INVE STMENT DISCLOSED IN LAND AS PER ASSESSEE (INCLUSIVE STAMP DUTY, ETC.) AMOUNT OF INVESTMENT WORKED OUT BY DVO (AS PER DVO LAND COST IS ENHANCED) (INCLUSIVE STAMP DUTY, ETC.) DIFFERENCE 2004 - 05 RS.3, 33, 87,493 RS. 5, 27,72, 120 RS.1 ,93,8 4, 626 (B) CONSTRUCTION AS DISCUSSED ABOVE, THE TOTAL COST OF PROJECT HAS BEEN ASSESSED AT RS.13.80 CRORES, WHICH INCLUDES LAND COST OF RS.5,27,72,120/ - . THEREFORE, THE COST OF INVESTMENT IN CONSTRUCTION IS WORKED OUT TO RS.8,52,27,880/ - . SINCE THIS CONSTRUCTION HAS BEEN CARRIED OUT IN DIFFERENT ASSESSMENT YEARS, THE AMOUNT OF INVESTMENT IS BEING WORKED OUT ON PROPORTIONATE BASIS BASED ON THE FIGURES OF INVESTMENT MADE BY THE ASSESSEE IN DIFFERENT YEARS. FOR EXAMPLE IN A.Y.2005 - 06, THE PERCENTAGE O F TOTAL WORK DONE AMOUNTS TO 1,37,42,454 / 4,66,12,507 *100 I.E. 29.5%. SO THE AMOUNT OF CONSTRUCTION CARRIED OUT IN A.Y.2005 - 06 IS WORKED OUT AT 29.5%.OF RS.8,52,27,880/ - I.E. RS. RS.2,51,42,230. A.Y. AMOUNT , OF CONSTRUCTION CARRIED OUT DURING THE YEAR AS PER ASSESSEE'S BALANCE SHEET. AMOUNT OF CONSTRUCTION WORKED OUT ON PROPORTIONATE BASIS. DIFFERENCE 2004 - 05 NIL NIL NIL 2005 - 06 RS.1, 37,42,454 RS.2,51, 42,230 RS.1, 13,99,776 2006 - 07 RS. 86,71,713 RS.1, 57,67,150 RS. 70,95,437 2007 - 08 RS.2,41 ,98,340 RS.4,43,18,500 RS.2,01, 20,160 TOTAL RS.4,66,12,507 RS.8,52,27,880 RS.3,86,1 5,373 I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 12 ACCORDINGLY , AN ADDITION OF R S. 1 , 93 , 84 , 626/ - WAS MADE IN ASSESSMENT YEAR 2004 - 05 AS UNEXPLAINED INVESTMENT U/S. 69B OF THE ACT IN THE LAND. GROUND NO. 2 (UNEXPLAINED CASH CREDIT) 14 . DURING THE COURSE OF ASSES SMENT, THE ASSESSING OFFICER STATED THAT AS PER BALANCE SHEET OF THE ASSESSEE AS ON 31 ST MARCH, 2004 THE ASSESSEE HAS SHOWN TOTAL AMOUNT OF UNSECURED LOAN TO THE AMOUNT OF RS. 2 , 10 , 4 0, 100/ - . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAS CALLED VARIOUS DETAILS TO PROVE THE GENUINENESS OF THE LOAN TRANSACTION, HOWEVER , THE ASSESSEE HAS NOT MADE ANY COMPLIANCE , THEREFORE, THE ASSESSING OFFIC ER HAS TREATED THE UNSECURED LOAN OF R S. 2 , 10 , 40 , 100/ - APPEARING IN THE BALANCE SHEET OF THE ASSESSEE AS UNEXPLAINED U/S. 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. GROUND NO . 3 ( ADDITION ON CASH CREDIT) 15 . DURING THE COURSE OF ASS ESSMENT , THE ASSESSING OFFICER HAS NOTICED THAT AS PER BALANCE SHEET OF THE ASSESSEE AS ON 31 ST MARCH, 2004 THE AMOUNT OF SHARE CAPITAL WAS OF R S. 1,50,000/ - . T HE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FURNISH RELEVANT DETAIL/EVIDENCES TO PROVE THE GENUINENESS OF THE INVESTMENT MADE IN THE SHARE CAPITAL. HOWEVER, THE ASSESSEE HAS NOT MADE ANY COMPLIANCE, THEREFORE, THE ASSESSING OFFICER HAS TREATED THE AMOUNT SHOWN UNDER THE HEAD SHARE CAPITAL AS UNEXPLAINED AND ADDED TO THE TOTAL INCOME OF THE ASSE SSEE U/S. 68 OF T HE ACT. 16 . THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A). ON T HE ISSUE OF REJECTING THE BOOKS OF ACCOUNT, THE LD. CIT(A) HAS DECIDED THE ISSUE IN FAVOUR I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 13 OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION OF LD. CIT(A) IS RE PRODUCED AS UNDER: - 5.1 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER, THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT COMPANY AND ALSO CONTENTIONS RAISED BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT DURING THE COURSE OF THE APPEL LATE PROCEEDINGS ALONGWITH VARIOUS DETAILS SUBMITTED IN THE PAPER BOOK. IT IS OBSERVED THAT THE APPELLANT COMPANY HAS MAINTAINED BOOKS OF ACCOUNT FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AS REQUIRED UNDER SECTION 145 OF THE INCOME TAX ACT, 1961. VARIOUS E NTRIES IN THE BOOKS OF ACCOUNT ARE DULY SUPPORTED BY EVIDENCES ACCEPTABLE IN THE EYES OF LAW. THE BOOKS CF ACCOUNT HAVE BEEN AUDITED BY THE CHARTERED ACCOUNTANT AND TAX AUDITORS AND COPIES OF THE AUDITED ACCOUNTS HAVE BEEN PLACED ON THE RECORDS DURING THE COURSE OF THE APPELLATE PROCEEDINGS. IT IS ALSO NOTED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY DEFECT AND DEFICIENCY IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT. IT IS THEREFORE HELD THAT THE DECISION OF ASSESSING OFFICER IN REJE CTING THE BOOKS OF ACCOUNT IS NOT SUSTAINABLE. THE BOOKS OF ACCOUNT BEING COMPLETE AND CORRECT AND THERE BEING NO DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT COMPANY THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THEM. IT IS ALSO NOTED THAT THE ASSESSING OFFICER HIMSELF IN FACT HAS RELIED UPON EACH AND EVERY FIGURE APPEALING IN THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR THE PURPOSE OF ASSESSING AS PER THE ORDER OF ASSESSMENT. THIS GROUNDS OF APPEAL IS ACCORDINGLY ALLOWED AND THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT COMPANY ARE DIRECTED TO BE ACCEPTED BY THE ASSESSING OFFICER. 17 . IN RESPECT TO ADDITION OF RS. 1 , 93 , 84 , 626/ - MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE LAND, THE LD. CIT(A) HAS DELETED THE ADDITION TO THE E XTENT OF RS. 1,82,80,340/ - T HE RELEVANT PART OF THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER : - 6.4 1 HAVE VERY CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER, THE WRITTEN /SUBMISSIONS SUBMITTED BY THE APPELLANT COMPANY AND ALSO CONT ENTION OF THE AUTHORIZED REPRESENTATIVE DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE MODIFIED MIATION REPORT AND COMMENTS THEREON. IT IS NOTED THAT THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ON BASIS OF THE VALUATION STATEMENT PREPARED BY T HE DEPARTMENT AND THE VALUATION OFFICER WHEREIN MARKET VALUE OF THE PROPERTY HAS BEEN ESTIMATED. NEITHER THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS NOR THE DEPARTMENTAL VALUATION OFFICER DURING THE COURSE OF VALUATION PROCEEDINGS HAVE BROUGHT ON RECORD ANY MATERIAL ON BASIS OF WHICH IT CAN BE CONTENDED THAT THE IMPUGNED UNEXPLA INED EXPENDITURE WAS INCURRED B Y THE APPELLANT COMPANY WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAS MADE REFERENCE TO LETTER DA TED 22 ND DECEMBER, 2008 BEARING NO. HUDCO/HRO/SUJAN/18.910/2008 PREPARED BY HUDCO AND SENT TO THE ASSESSING OFFICER IN RESPONSE TO LETTER DATED 19 TH DECEMBER, 2008 WHEREIN THE HUDCO H AS STATED THE ESTIMATED COST OF THE PROJECT IS RS. 1380.10 LACS. 6.4.1 TH E .SUBMISSIONS MADE BY THE APPELLANT VIDE PARA 4.8.2 OF THE WRITTEN SUBMISSIONS HAVE BEEN CONSIDERED WHEREIN THE APPELLANT COMPANY HAS VEHEMENTLY CONTESTED THAT RS.1380 LACS WAS AN ESTIMATED COST AND FURTHER THERE WAS A REFERENCE TO THE, : 'MATERIAL, WHICH WERE PROPOSED TO BE USED. THE ASSESSING OFFICER HAS ALSO MADE A REFERENCE TO COPIES OF THE PAPER SIGNED BY SHRI N.K. SHAH WHO WAS A VALUER AND HAS PREPARED THE ESTIMATED COST IN RESPECT OF LIGHT FITTINGS ELECTRICAL EQUIPMENT ETC. IT IS CONTENTED BY THE A PPELLANT COMPANY VIDE PARA 4.8.4 OF THE WRITTEN SUBMISSIONS THAT IT WAS MERELY AN ESTIMATED COST PREPARED BY NK SHAH IN OR ABOUT LLARCH OR APRIL, 2006. COPIES OF THE PAPERS HAVEBEEN FILED AT PAGE NO. 146 - 157 OF THE PAPER BOOK. 6.4.2 THE LEARNED A.R. DREW MY ATTENTION TOWARDS UN REPORTED DECISION OF HON' - BLE TAT, AHMEDABAD IN THE CASE OF SHRI RAJNI J. DESAI, VIDE ORDER NO. I T(SS) DATE D 27.06.2008, WHEREIN THE HON'BL E ITAT OBSERVED THAT ESTIMATED VALUE OF THE PROPERTY ARRIVED AT BY I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 14 SOME FINANCIAL INSTITUTION FOR THE PURPOSE OF GRANTING LOAN CANNOT BE TAKEN AS CONCLUSIVE EVIDENCE TO MAKE ADDITION U/S.69B. THE FINDINGS, OF HON'B LE IT AT AHMEDABAD ARE AS UNDER : - '7.6 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND, PERUSED THE M ATERIAL ON RECORD ALONGWITH THE ORDER OF THE TAX AUTHORITIES. THIS IS AN UN - CONTROVERTED FACT THAT NO MATERIAL OR EVIDENCE WAS FOUND - DURING THE COURSE OF SEARCH REGARDING THE ACTUAL INVESTMENTS BEING MADE BY THE ASSESSEE MUCH MORE THAN THE INVESTMENTS ALR EADY SHOWN IN EACH OF THE LAND. DARING THE COURSE OF SEARCH THE LETTER DATED 24.08.2(00 WRITTEN YEAR UNDER CONSIDERATION SHRI RAJESH J. DESAI TO THE SCRVODAY COMMERCIAL CO - OP. BANK LTD. WAS FOUND AND SEIZED. THE CONTENTS OF THIS LETTE R ARE REPRODUCED AS UN DER : - 'MY FT. A/C. NO.6 IN YOUR BANK, IN THE NAME OF SHRI RAJESHBHAI JIVRAJBHAL DESAI AVAILING FT FACILITIES FOR RS.15,00,000/ - (RUPEES FIFTEEN LACS) I NEED MORE RS.15,00,000/ - ( RUPEES FIFTEEN LACS) FT FACILITIES FOR MY BUSINESS EXPANSION. I ALREADY PURC HASED A LAND IN MOUJE KHORAJ, DISTRICT (GAND IINAG AR, ADMEASURING ABOUT 13130 SQ. YARDS, PRESENT VALUE (APPROX.) 90,00,000/ - AND APPLIED FOR SANCTION LETTER FROM AUDA. I ALREADY PURCHASED A LAND IN MOUJE SOLA, DISTRICT AHMEDABAD. S NO.292/2, ADMEASURING AB OUT 4477 SQ. YARDS, PRESENT VALUE. (APPROX.) 75,00,000/ - . I ALREADY PURCHASED A LAND IN MOUJE VASTRAPUR, S' NO.198/2, T SCHEME. NO.31, OPP. MANAV MCIND.TR, DRIVE - IN ROAD, AHMEDABAD CITY, ADMEASURING ABOUT 1120 SQ. YARDS PRESE NT VALUE (APPROX.) 65,0 0,000/ - I REQUEST YOU TO GIVE RS.15,00,000/ - MORE FT FACILITIES FOR MY NEW SCHEME DEVELOPMENT. THANKING YOU, YOURS FAITHFULLY, RAJESHBHAIJDLSAI EN CL : XE ROX COPY OF MY PROPERTY & AUDA RECEIPT,' FROM THE READING OF THIS LETTER, IT IS APPARENT THAT THE ASSESSEE HAS APPLIED FOR AVAILING OF LOAN FACILITIES FO R RS.15,00,000/ - AND FOR THAT THE AS SESSEE HAS STATED THE PRESENT VALUE FOR EACH OF THE LAND. THE ASSESSEE NOWHERE STATED THE ACTUAL INVESTMENTS MADE IN EACH OF THE LAND. NO DOUBT, THIS DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH BUT THIS DOCUMENT NOWHE RE STATES THE ACTUAL INVESTMENTS MADE BY THE ASSESSEE IN THE RESPECT LAND. CHAPTER XIV B WHICH CONSISTS OF SECTION 158B TO SECTION 158B11 WAS INTRODUCED BY THE FINANCE ACT, 1995 W.E.F. L /7/1995 TO MADE PROCEDURE OF ASSESS MENT OF CASES IN WHICH SEARCH IN IN ITIALED U/S. 132 OR WHERE BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARC REQUISITIONED U/,V. I32A. THE CHAPTER IS TITLED (SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES). THE SCHEME OF BLOCK ASSESSMENT ENACTED UNDER THIS CHAPTER LAYING DOWN PROCEDUR E FOR THE BLOCK ASSESSMENT PROCEEDINGS IS INTENDED BY THE LEGISLATURE TO OPERATE SIMULTANEOUSLY WITH THE NORMAL AND REGULAR SCHEME OF ASSESSMENT INDICATE UNDER CHAPTER XIV OF THE I.T. ACT. BOTH THE TAX SCHEMES ARE INDEPENDENT OF EACH OTHER AND THEY ARE NOT MUTUALLY EXCLUSIVE. BLOCK ASSESSMENT UNDER CHAPTER XIVB IS NOT INTENDED TO BE A SUBSTITUTE FOR REGULAR ASSESSMENT. ITS SCOPE AND AMBIT IS LIMITED IN THAT SENSE, TO MATERIAL UNEARTHED DURING SEARCH. THEREFORE, IF THE SEARCH ACTION DOES NOT DISCLOSE UNDISCL OSED INCOME, THE QUESTION OF ANY ASSESSMENT BEING FARMED UNDER THAT CHAPTER IS SIMPLY IMPROPER AND OUTSIDE THE PURVIEW OF THAT CHAPTER. CLAUSE (B) OF SECTION 158B CONTAINS INCLUSIVE DEFINITION OF UNDISCLO SED INCOME AND READS AS UNDER: - '(B) 'UNDISCLOSED IN COME' INCLUDES ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS, WHERE SUCH MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES, THING, ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT (OR ANY EXPENSE, DEDUCTION OR AFLOYANCE CLAIMED UNDER THIS AC! WHICH IS FOUND TO BE F ALSE).' ' 8. ' IF WE ANALYZE THE AFORESAID DEFINITION IL PROVIDES THAT UNDISCLOSED INCOME INCLUDES: - (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE, ARTICLE OR THING OR, (II) ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DO CUMENTS OR TRANSACTIONS; (II I). SUCH MONEY, BULLION, JEWCLLEN 1 . VALUABLE ARTICLE, THING, ENTRY IN THE BOCKS OF ACCOUNT OR OTHER DOCUMEN TS OR TRANSACT IONS REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY; WHICH HAS NOT BEEN OR WOULD NOT HAVE BEE N DISCLOS ED FOR THE PURPOSES OF THIS ACT. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 15 9. FROM THE AFORESAID ANALYSIS OF THE DEFINITION, IT CLEARLY EMERGES THAT IF ANY INCOME AS RECORDED IN THE BOOKS OR DOCUMENTS HAS BEEN TUSCLOSCD OR INTENDED TO BE DISCLOSED TO THE INCOME TAX AUTHORITIES, THIS WOULD HE OUTSI DE THE PALE OF UNDISCLOSED INCOME AS DEFINED UNDER CLAUSE (B) AS ABOVE . 10. WE MAY NEXT REFER TO SECTION 15TIBB, WHICH, PROVIDES FOR COMPUTATION OF UNDISCLOSED INCOME OF BLOCK PERIOD. THE SECTION EXPRESSLY AND UNEQUIVOCALLY PROVIDES THAT THE UNDISCL OSED INCOME HAS TO BE COMPUTED 'ON THE BASIS' OF EVIDENCE FOUND AS A RESULT RESEARCH....... AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICE I AND REFUTABLE TO SUCH EVIDENCE.' THE EXPRESSION 'RELAIABLE TO SUCH EVIDEN CE ' HAS BEEN INSERTED BY THE F INANCE ACT, 2002 RETROSPECTIVELY W.E.F. 01.07.1995. A BARE READING OF THIS PROVISION WOULD INDICATE THAT UNDISCLOSED INCOME HAS TO BE COMPUTED ON THE BASIS OF EVIDENCE ARID MATERIAL FOUND DURING THE SEARCH. ANY M ATERIAL OR EVIDE NCE, AVAILABLE TO THE ASSESSING OFFICER, W HICH IS NOT RELATED TO THE SEAR CH WOULD NOT FORM THE BASIS FOR COMPUTATION OF UNDISCLOSED INCOME. 11. ON THE BASIS OF THE AFORESAID LEGAL PROVISION WE ARE OF THE FIRM VIEW THAT THE INCOME WHICH THE ASSESSEE HAD DUL Y DISCLOSED IN THE REGULAR ASSESSMENT AND THE HOOKS RELATING THERETO NOT SHOWING ANY UNEARTH INCOME AND THE RETURNS AND DOCUMENTS FILED BY THE ASSESSEE SUBSEQUENTLY WILL NOT ENTRUST THE JURISDICTION ON THE ASSESSING OFFICER TO MAKE ASSESSMENT UNDER CHAPTER XIV B. THE LD. D.R. HAS NOT BROUGHT OUT BEFORE US FROM THE FILE OF THE ASSESSES THAT THE ASSESSING OFFICER ON THE BASIS OF THE EVIDENCE FOUND AS A RESULT OF SEARCH UNEARTHED ANY UNDISCLOSED INCOME. IN THE CASE OF CIT VS. RAVIKANT JAIN 250 ITR 141 (DELHI), THE HON'BLE DELHI HIGH COURT HAS HELD THAT 'A BLOCK ASSESSMENT UNDER CHAPTER XIV B OF THE ACT IS NOT INTENDED OF THE LT. ACT BE A SUBSTITUTE FOR A REGULAR ASSESSMENT, THAT ITS SCOPE AND AMBIT IS LIMITED IN THAT SENSE TO MATERIALS UMARTHED DURING THE SEARC H, THAT IT IS IN ADDITION TO THE REGULAR ASSESSMENT ALREADY DONE OR TO BE DONE.' SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE JURISDICTIONAL HIGH COURT AND OTHER HIGH COURT AND THE BENCHES OF THE TRIBUNAL AS ENUMERATED AS UNDER : - 283 ITR 326 (DELHI) 246 IT R 671 (BOM) 248 ITR 562 (CAL) 270 1TR287 (CAL) 287ITR287 (DELHI) 234LTR733(GUJ) 237 ITR 70 (KER) 2451TR488((GU J) 92 TTJ1027 (BOM) 250 ITR 141 (DELHI) 80 1TD 429 (MAD) 70 TTJ 122 84 ITD 320 (MAM) 104 ITD 166 (I'M) 12. ON CONTRARY DECISIONS WAS BROUGHT TO OUR KNOWLEDGE BY THE LD. DR. A PERUSAL OF THE ASSESSMENT ORDER IN THE IMPUGNED CASE CLEARLY SHOWS THAT WL - AT HAS BEEN ASSESSED IN THE BLOCK ASSESSMENT ARE TLIE. MARKET VALUE OF THE LAND, THE PURCH ASE OF THE RESPECTIVE: LAND WERE ALREADY DISCLOSED BY THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNT. THEREFORE, IN OUR OPINION THE MARKET VALUE OF THE UMD CANNOT BE REGARDED TO BE TLIE UNDISCLOSED INCOME OF THE ASSESSEE WITHIN THE DEFINITION OF THE UNDISCL OSED INCOME GIVEN U/S.158 B(B) OF THE LT. ACT CHAPTER XIV B. NO DOUBT UNDER SECTION 158BTT(2), THE PROVISIONS OF SECTION 68, 69, 69 A, 69B AND 69C, WILL APPLY TO A BLOCK ASSESSMENT 69B WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS MADE INVESTMENTS OR IS FO UND TO BE THE OWNER OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, AND THE ASSESSING OFFICER FINDS THAT THE AMOUNTS EXPENDED ON MAKING SUCH INVESTMENTS OR IN ACQUIRING SUCH BILLION, JEWELLERY OR OTHER VALUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN T HIS BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FAR ANY SOURCE INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH EXCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE, OJPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE EXCE SS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 16 FROM THE READING OF THE AFORESAID SECTION IT IS APPARENTLY CLEAR THAT: THE SECTION STATES (I) THE ASSE SSEE HAS MADE INVESTMENTS DURING , THE YEAR; (II) THAT THE AMOUNT SO INVE STED EXCEEDS THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME; (HI) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF INVESTMENTS OF SUCH EXCESS AMOUNT; AND (IV) 'THE EXPLANATION OFFERED BY THE ASSESSED IN THE OPINION OF THE 'ASSESSING OFFICER IS NOT SATISFACTORY, THE ASSESSING OFFICER TREAT SUCH EXCESS AMOUNT TO BE THE INCOME O F THE ASSESXEE. THE FIRST MOST ESSENTIAL CONDITION THEREFORE FOR THE APPLICABILITY OF THE PROVISIONS OF SECTION 69B IS THAT THE REVENUE SHOULD PROVE THAT THE ASSESSEE HAS MADE THE INVESTMENTS IN THE ASSETS DURING THE YEAR AND SUCH INVESTMENTS MADE ARE ACTUALLY MORE, THAN THE INVESTMENTS AS HAD BEEN RECORDED IN THE BOOKS OF ACCOUNT. ONCE THE REVENUE PROVES THAT THE ASSESSEE HAD MADE THE INVESTMENTS MORE THAN WHAT HAS BEEN RECORDED IN .THE BOOKS OF ACCOUNT, THE ONUS GETS SHIFTED ON THE ASSESSEE TO PROVE BY OFFERING THE EXPLANATION ABOUT, THE NATURE AND SOURCE OF SUCH EXCESS INVESTMENTS. THE MARKET VALUE OR THE PRESENT VALUE O F AN ASSET CANNOT REPRESEN T THE ACTUAL INVESTMENTS MADE. THE ASSESSING OFFICER HAS TREATED THE PRESENT V ALUE STALED BY THE ASSESSEE IN LETTER HATED 24.08.2000 TO BE THE ACTUAL INVESTMENTS MADE BY THE ASSESSEE. 'FAIR MARKET VALUE' AND THE 'COST' BOTH ARC TW O DIFFERENT ECONOMIC TERMS AND CANNOT BE SUBSTITUTED FOR EACH OTHER. THIS IS AN ADMITTED FACT THAT THERE IS NO MATERIAL BEING FOUND OR BROUGHT ON RECORD MAY PROVE THAT THE ASSESSEE HAS MADE THE INVESTMENTS MUCH MORE THAN WHAT HAS BEEN RECORDED IN THE BO OKS OF ACCOUNT. THE PRESENT VALUE (APPROXIMATE) CANNOT BE SUBSTITUTED FAR THE ACTUAL INVESTMENTS MADE BY THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT, THE REVENUE HAS NOT DISCHARGED ITS BURDEN EVEN FOR THE APPLICABILITY OF SECTION 69B AND THEREFORE, NO ADDITION CAN BE MADE MERELY ON THE BASIS OF LETTER WRITTEN TO THE B ANKER FOR OBTAINING LOAN AND SHO WING THE ESTIMATED VALUE. 13. WE HAVE ALSO GONE THROUGH THE ORDER OF THIS ITAT, AHMEDABAD BENCH - B IN THE CASE OF ACIT VS. HOTEL RANGOLI IN ITA NO.4 36/AHD/2003 ON WHICH THE LEARNED AR HAS HEAVILY RELIED ON AND THE COPY OF WHICH WAS FILED BEFORE US. WE FIND THAT UNDER PARA 5 OF ITS ORDER DATED 29. G2.2008, THIS T RIBUNAL HAS HELD AS UNDER : - WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES. WE, HAVE ALSO GONE THROUGH VARIOUS DECISIONS AS HAVE BEEN RELIED UPON BY THE ASSESSEE BEFORE THE CIT(A). WE FIND THAT THE ADDITION HAS BEEN MADE ON THE BASIS OF VALUATION REPORT. H OWEVER, THE VALUATION REPORT WAS FOR WORKING OUT THE MARKET VALUE AS ON 01.05.2002 AND NOT THE 'COST OF LAND' AND THAT THE VALUATION REPORT WAS OBTAINED FROM THE BANK TO WHOM THE SAME WAS GIVEN FOR THE PURPOSE OF LOAN. WE FIND THAT THE CTL(A) HAS RIGHTLY O BSERVED THAT AS NO EVIDENCE WAS FOUND AT THE TIME OF SEARCH AND EXTRA INVESTMENT IS BASED ON VALUATION REPORT OF A DATE OBTAINED MUCH AFTER THE SEARCH IN THIS CASE, THE ADDITION IS EVEN OTHERWISE BEYOND THE SCOPE OF BLOCK ASSESSMENT. WE THEREFORE, DO NOT F IND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF THE CIT(AJ. WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS. 10,62,016/ - . THUS, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED. ' RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF T HE TRIBUNAL,, WE ARE OF THE VIEW THAT THERE IS NO ILLEGALITY OR INFIRMITY IN THE ORDER OF THE C1T(A) IN DELETING THE ADDITIONS. THUS, GROUND NO. 1 IN E ACH OF THE APPEALS FILED BY T HE REVENUE STANDS DISMISSED. 14. THE SECOND GROUND IN 1T(SS)A NO.54/AHD/200 4 RELATES TO DELETION OF THE ADDITION OF. RS.8,41,060/ - AND RS.17,87,170/ - MADE ON ACCOUNT OF - UNEXPLAINED INVESTMENT,, IN OFFICE NO.L AND SHOP NO. 20, IN BUILDING KNOWN AS '1'ARLH EMPIRE '. THE ASSESSING OFFICER NOTED FROM THE VALUATION REPORT (LETTER ) DAT ED 01 .09.2000 AND 05.04.2000 ADDRESSED TO MEHSANA NAGRIK SAHAKARI BANK, AHMEDABAD THAT THE VALUE OF OFFICE NO. L IN 'PARTH EMPIRE.' AND SHOP NO.2 IN FIRST FLOOR WAS WORKED OUT BY THE APPROVED VALUER AT RS. 25,00,000/ - AND RS. 30,00,000 - RESPECTIVELY. THE A SSESSING OFFICER NOTED THAT THE ASSESSED HAS SHOWN THE VALUE OF OFFICE PREMISES IN HIS BALANCE SHEET AT RS. 16, 58,940/ - WHILE OF SHOP NO.20 AT RS.8,06,430/ - , THE ASSESSING OFFICER AFTER GIVING, COST INDEXATION EFFECT BY TAKING THE VALUE OF THE PROPERTY AS O N 01.04.2000 ESTIMATED THE COST OF I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 17 ACQUISITION AND MADE THE ADDITION FOR THE UNDISCLOSE D INVESTMENT FOR THE OFFICE NO. 1 FOR RS.8,41,060/ - AND FOR SHOP NO.20 AT RS.17,87,170/ - . 15. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A), THE CJ'T(A) DELETED THE AD DITION BY OBSERVING AS UNDER : - '5.2 I HAVE CONSIDERED THE ISSUE CAREFULLY. THE ADDITION OF RS.8,41,060/ - IS BASED ON LETTER DATED 01.09.2000 ADDRESSED TO THE MEHSANA NAGRIK SAHAKARI BANK LTD., WHEREIN PRESENT VALUE OF OFFICE NO.L OF PARTH EMPIRE HAS BE EN SHOWN AT RA.25 LACS AND OTHER, ADDITION OF RS.17,87,170/ - IS BASED ON VALUATION REPORT DATED 05.04.2000 AS ON 01.04.2000 OFRS.30 LACS. THESE FACTS ARE CLEARLY DISCUSSED, BY THE ASSESSING OFFICER IN THE BODY OF THE ASSESSMENT ORDER, BUT NO EVIDENCES OF W HATSOEVER HAVE BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER INDICATING ANY PAYMENT OVER AND ABOVE THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNTS. IT HAS BEEN SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY THE APPELLANT THAT WITHOUT INQITIRIES AN D EVIDENCES, NO ADDITION CAN BE MADE ON THE BASIS OF VALUATION REPORT. ASSESSING OFFICER HAS MADE THE ADDITION PURELY ON VA LUATION REPORT APPLYING THE COST INFLATION INDEX. THE ADDITION OF RS.8,41,060/ - IS BASED ON LETTER DATED 01.09.2000 ADDRESSED TO THE MEHSANA NAGARIK SAHKARI BANK LTD., WHEREIN THE VALUE OF THE SAID OFFICE HAS BEEN SHOWN AT RS.25 LACS AND CONSIDERING THE AMOUNT SHOWN IN THE BALANCE SHEET OF RS.16,58,940/ - , BALANCE AMOUNT RS.8,41,060/ - HAS BEEN CONSIDERED BY THE ASSESSING OFFICER FOR THE PURPOSE OF ADDITION, WHICH WITHOUT ANY EVIDENCES OF PAYMENT OF ON MONEY OR OTHERWISE CANNOT BE MADE AND THUS, THE SAID ADDITION OF RS.8,41,060/ - IS DELETED. THE ANOTHER ADDITION OF RS.17,87,170 / - IS PURELY BASED ON A VALUATION REPORT, WHEREIN THE SAID PROP ERLY HAS BEEN VALUED AT RS.30 LACS AS ON 01.04.2000 AND APPLYING THE COST INFLATION INDEX, THE ASSESSING OFFICER HAS CALCULATED THE SAID VALUE AT RS.25,93,600/ - FOR THE YEAR OF ACQUISITION AND CONSIDERING THE INVESTMENT SHOWN IN THE BOOKS OF ACCOUNTS OF RS. 8,06,430*' - BALANCE AMOUNT OF RS.17,87,17 OF - HAS BEEN ADDED, WHICH AGAIN IS UNWARRANTED IN ABSENCE OF ANY EVIDENCES OF PAYMENT OFON - MONEY OR THE FACT THAT INVESTMENT SHOWN IN BOOKS OF ACCOUNTS IS NOT CORRECT. THESE ADDITIONS ARE THUS TOTALLY BEYOND IHE SC OPE OF BLOCK ASSESSMENT. THEREFORE, THIS ADDITION OF RS. 17,87,1701 - IS ALSO DELETED.' 16. THE LEARNED DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. THE LEARNED AR, ON THE OTHER HAND, RELIED ON THE OR DER OF THE CIT(A') AND ALSO RELI ED ON THE ORDER OF T HE ITAT AHMEDABAD BENCH - 13 IN THE CASE OF ACIT VS. HOTEL RANGOLI IN ITANO.436/AHD/2003. - 17. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND, PERUSED TH E MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES. WE HAVE ALSO GONE THROUGH TH E ORDER OF THIS TRIBUNAL IN THE CASE OF HOTEL RANGOLI CITED SUPRA. WE FIND THAT IN THAT CASE ALSO THE ADDITION HAS BEEN MADE ON THE BASIS OF VALUATION REPORT. THE TRIBUNAL VIDE ORDER D ATED 29 - 02 - 2008 DELETED THE ADDITION BY OBSERVING AS UNDER: - '5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND, PERUSED T HE MATERIAL ON RECORD ALONGWITH THE ORDER OF THE TAX AUTHORITIES. WE HAVE ALSO GONE THROUGH VARIOUS DECISIO NS AS HAVE BEEN RELIED UPON THE A SSESSEE BEFORE THE CJT(A). WE FIND THAT THE ADDITION HAS BEEN MADE ON THE BASIS OF VALUATION REPORT. HOWEVER, THE VAL UATION REPORT WAS FOR WORKING ON THE MARKET VALUE, AS ON 01.05.2002 AND NOT THE 'COST OF LAND' AND THAT THE VALUATION REPORT WAS OBTAINED FROM THE BUNK TO WHOM THE SAME WAS GIVEN FOR THE PURPOSE O F LOAN. WE FIND THAT THE C1T(A) HAS RIGHTLY OBSERVED THAT AS - NO EVIDENCE WAS FOUND AT THE TIME OF SEARCH AND EXTRA INVESTMENT IS BASED ON VALUATION REPORT OF A DATE OBTAINED MUCH AFTER THE SEARCH IN THIS CASE, THE ADDITION IS EVEN OTHERWISE BEYOND THE SCOP E OF BLOCK ASSESSMENT. WE THEREFORE, DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF THE CIT(A). WE ACCORDINGLY CONFIRM THE ORDER OF THE C1T(A) DELETING THE ADDITION OF RS. 10,62,016/ - . THUS, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED.' R ESPECTIVELY FOLLOWING THE AFORESAID ORDER OF THIS TRIBUNAL, WE DO NOT FIND AN Y ILLEGALITY OR INFIRMITY IN TH E ORDER OF THE CJT(A). IN DELETING BOTH THE ADDITIONS AND ACCORDINGLY GROUND NO. 2 OF THE REVENUE 'S APPEAL STANDS DISMISSED, ' 6.4.3 IT IS FURTHER OBSERVED THAT THE ISSUE OF VALUATION WAS ARGUED BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT BEFORE MY PREDECESSOR AND REFERENCE IN THIS CONNECTION IS INVITED TO LETTER DATED I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 18 26.10.2010 PREPARED BY MY LEARNED PREDECESSOR AND ADDRESSED TO THE ASSESSING OFFICER, ASST. CIT CENTRAL CIRCLE 1(1)., IT IS OBSERVED TH AT THE MATTER OF VALUATION WAS SET ASIDE AND REMITTED BACK TO DEPARTMENTAL VALUATION OFFICER. THE DISTRICT VALUATION OFFICER, INCOME TAX DEPARTMENT, AHMEDABAD IN THE SET ASIDE PROCEEDINGS VIDE HIS VALUATION REPORT DATED 25.04.2011 HAS ESTIMATED THE AGGREGATE COST OF THE PROPERTY KNOWN AS 'KINGS SQUARE' AT: RS.7,20,46,864/ - , AS REPRODUCED, SUPRA. IN MY OPINION AFTER CAREFULLY CONSIDE RING ALL THE SSIONS BY THE APPELLANT COMPANY, DETAILS PROVIDED BY HU DCO, REPORT PREPARED BY SIIRI N.K SHAH THE LATEST VALUATION REPORT PREPARED BY DVO, AHMEDABAD THE VALUATION OF THE PROPERTY AT RS7,20,46,864/ - AS PER THE LATEST REPORT OF DVO IS CONSIDERED TO BE ABSOLUTELY REASONABLE AND FAIR. TH E ASSESSING OFFICER IS THE REFORE DIRECTED TO ADOPT RS. 7,20,46,864/ - COST AS AGAINST THE COST ADOPTED BY HIM OF PROPERTY KNOWN AS KINGS SQUARE. THE COST OF INVESTMENT DECLARED BY THE APPELLANT COMPANY IS RS. 6,85,30,522/ - AND THEREFORE DIFFERENCE OF RS. 35,16,342/ - FOR THE ASS ESSMENT YEAR 2004 - 05 TO 2007 - 08 I S TO BE MADE ACCORDINGLY UNDER SECTIONS. 69B AND 69C OF THE INCOME TAX ACT, 1961. 6.4.4 IN THE A.Y.2004 - 05, THE ASSESSING OFFICER HAS MADE ADDITION OF 1 RS. 1, 93,84,626/ - ON BASIS OF AM OUNT OF INVESTM ENT WORKED OUT AS PER EARLIER REPORT OF DVO AND HUDCO , WHICH STANDS SET ASIDE. ' HOWEVER FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ON BASIS OF LATEST REPORT OF DV O DIFFERENCE OF RS. 11 ,66,286/ - IS BEING CONFIRMED AS U NEXPLAINED EXPENDITURE INCURRED BY T HE APPELLANT COMPANY. THE APPELLANT COMPANY ACCORDINGLY GETS RELIEF O F RS. 1,82,80,340/ - . THIS GROUND O F APPEAL IS ACCORDI NGLY PARTLY ALLOWED. 18 . REGARDING ADDITION OF R S. 20 , 40 , 100/ - FOR THE UNACCOUNTED CASH CREDIT U/S. 68 OF THE ACT AND ADDITI ON OF RS. 1,50,000/ - ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL , THE LD. CIT(A) HAS DELETED THE ADDITION S . THE RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 7.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER, AND T HE WRITTEN SUBMISSIONS PLACED ON THE RECORDS BY THE APPELLANT COMPANY AND ALSO THE CONTENTIONS RAISED BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT COMPANY. THE APPELLANT COMPANY HAS ALSO FILED COPIES OF THE LETTERS OF CONFIRMATIONS IN THE MATTER OF LO AN OF RS. 2,10,40,100/ - AND SHARE CAPITAL OF RS. 150,000/ - AT PAGE MO. 175/197 OF THE PAPER BOOK. THE LETTERS OF THE CONFIRMATION PLACED ON THE RECORDS HAVE BEEN VERY CAREFULLY CONSIDERED AND IT IS FOUND THAT THE LETTERS OF CONFIRMATION ARE CONTAINING ALL THE RELEVANT AND PRIMARY DETAILS NAMELY, NAME OF THE PERSON WHICH HAS ADVANCED MONEY, COMPLETE ADDRESS OF THE PERSON, DETAILS OF BANK TRANSACTIONS, PAN OF THE PERSON AND THE CONFIRMATION HAVE BEEN DULY SIGNED BY ALL THE PARTIES. THE APPELLANT COMPANY UNDE R THE FACTS AND CIRCUMSTANCES BY PROVIDING THE COMPLETE ADDRESS OF THE F THE PARTY, DETAILS OF BANK TRANSACTIONS OF THE PARTY HAS ESTABLISHED THE IDENTITY OF ALL THE PARTIES AND THEIR GENUINENESS. THE CREDITWORTHINESS OF THE TRANSACTIONS ALSO STAND ESTABL ISHED BECAUSE THE APPELLANT COMPANY HAS STATED PAN AND ALSO THE DETAILS OF ALL THE TRANSACTIONS INCLUDING THE DETAILS AND PARTICULARS OF THE BANKS. THE APPELLANT HAS ALSO RELIED UPON PRINCIPLES SETTLED BY THE HON'BLE SUPREME COURT AND VARIOUS HIGH COURTS A T PARA 5.7 OF THE WRITTEN SUBMISSIONS. THE APPELLANT COMPANY HAS PROVIDED ALL THE DETAILS AND PRIMARY ONUS HAS BEEN DISCHARGED. RESPECTFULLY FOLLOWING DECISIONS RELIED UPON BY THE APPELLANT COMPANY AND ALSO IN VIEW OF DOCUMENTARY EVIDENCES SUBMITTED DURING ASSESSMENT PROCEEDINGS AS WELL AS DURING APPELLATE PROCEEDINGS, THE ADDITION OF RS.2,11,90,100/ - IS NOT SUSTAINABLE AND THEREFORE THE ADDITION IS DELETED. THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 19 19 . DURING THE COURSE OF APPELLATE PROCEEDINGS, LD . DEPARTMENTAL REPRESENTATIVE HAS CONTENDED THAT DURING THE COURSE OF SEARCH ACTION AT NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. PROVISIONAL BALANCE SHEET AND P & L A/C. WERE FO UND AND SEIZED AS PER PAGE NO. 31 TO 51 PLACED IN THE PAPER BOOK FILED BY THE REVENUE COMPRISING OF PROVISIO NAL P & L A/C AND BALANCE SHEET PERTAINING TO SUJAN INFRASTRUCTURE PVT. LTD.. T HE LD. DEPARTMENTAL REPRESENTATIVE HAS ALSO REFERRED PARA NO. 7.2 OF THE ASSESSMENT ORDER POIN TING OUT UNACCOUNTED INVESTMENT IN THE KING SQUARE PROJECT ON THE BASIS OF PROVI SIONAL BALANCE SHEET AND P & L A/C. THE LD. COUNSEL AL SO CONTENDED THAT LD. CIT(A) HAD ERRED IN NOT SUSTAINING THE REJECTION OF BOOKS OF ACCOUNT MADE BY THE ASSESSING OFFICER AS DISCREPANCY WAS DETECTED BY THE ASSESSING OFFICE R IN THE M AINTAINING OF BOOKS OF ACCOUNT BY THE ASSESSEE. TH E LD. DEPARTMENTAL REPRESENTATIVE HAS ALSO STATED THAT LD. CIT(A) HAS ERRED IN NOT CALLING REMAND REPORT FROM THE ASSESSING OFFICER BEFORE DELETING THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED IN VESTMENT IN THE PROJECT . ON THE OTHER HAND , THE LD. COUNSEL HAS CONTENDED THAT ASSESSING OFFICER HAS MADE ADDITION ON THE BASIS OF VALUATION REPORT AND NOT ON THE BASIS OF SEIZED MATERIAL . HE HAS SUBMITTED THAT NO ADDITION SHOULD BE MADE AS PER DVO REPOR T AND THE SEIZED MATERIAL WAS NOT USED FOR MAKING ADDITION. REGARDING CROSS OBJECTION FILED THE LD. COUNSEL HAS CONTENDED THAT NO UNEXPLAINED EXPENDITURE WAS INCURRED BY THE ASSESSEE AND THERE WAS NO EVIDENCE IN RESPECT OF UNEXPLAINED EXPENDITURE. THE LD . COUNSEL HAS ALSO REFERRED PAGE NO. 24 AND PARA 6.4 OF THE OR D ER OF LD. CIT(A) POINTING OUT THAT NEITHER THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOR THE DEPARTMENTAL VALUATION OFFICER DURING THE COURSE OF VALUATION PROCEEDINGS HA VE BROUGHT ON RECORD ANY MATERIAL ON THE BASIS OF WHICH IT CAN BE I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 20 CONTENDED THAT THE UNEXPLAINED EXPENDITURE WAS INCURRED BY THE ASSESSEE COMPANY WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. 20 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL ON RECORD. IN RESPECT OF REJECTION OF BOOKS OF ACCOUNT DURING THE COURSE OF SEARCH ACTION TAKEN PLACE IN THE CASE OF NA VRATNA GROUP ON 10 TH MAY, 2006 VARIOUS DOCUMENTS WERE SEIZED INCLUDING THREE PROVISIONAL SET OF BALANCE SHEET P & L A/C AS REPORTED A BOVE IN THIS ORDER. ON TAKING INTO CONSIDERATION THE CONTENTS OF VARIOUS NOTINGS FOUND ON THE SEIZED PAPER AND DOCUMENTS, T HE ASSESSING OFFICER WAS OF THE VIEW THAT ACTUAL COST OF QUANTUM OF WORK DONE HAD NOT BEEN REFLECTED IN THE BOOKS OF ACCOUNT AND E XPLANATION FURNISHED BY THE ASSESSEE WAS IN COMPLETE THEREF ORE THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE HOLDING THAT THE BOOKS OF ACCOUNT WERE NOT CORRECT AND COMPLETE AND VARIOUS EXPENSES RELATING TO THE PROJECT WERE NOT RECO RDED IN THE BOOKS OF ACCOUNT. T HEREFORE , THE ASSESSING OFFICER HAS ESTIMATED THE COST OF INVESTMENT IN THE KING SQUARE PROJECT ON THE BASIS OF DOCUMENT FOUND AND SEIZED. IN TH IS REGARD, ON PERUSAL OF THE RECORD, WE OBSERVE THAT ASSESSEE HAS MAINTAINED TH E BOOKS OF ACCOUNT ON THE BASIS OF MERCANTILE SYSTEM OF ACCOUNTING . T HE BOOKS OF ACCOUNT WERE DULY AUDITED AND SUPPORTED WITH RELEVANT EVIDENCES. THE ASSESSING OFFICER HAS ESTIMATED THE INCOME ON THE BASIS OF PROVISIONAL BALANCE SHEET AND P & L A/C , HOWE VER , THE ASSESSING OFFICER COULD NOT PROVE THE INCORRECTNESS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE , THEREFORE , WE DO NOT FIND ANY ERROR IN THE FINDINGS OF L D . CIT(A) IN NOT SUSTAINING THE REJECTION OF BOOKS OF ACCOUNT MADE BY THE ASSESSING OFF ICER. THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 21 REGARDING GROUND NO S . 3 &4 ( DELETING ADDITION OF RS. 1 , 82 , 18 , 340/ - OUT OF TOTAL ADDITION OF RS. 1 , 93 , 84 , 626/ - MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN LAND) 21 . T HE ASSESSIN G OF FICER HAS DISCUSSED THE MATTER PERTAINING TO THE DEVELOPMENT OF KING SQUARE PROJECT AT PAGE NO. 3 TO 22 OF THE ASSESSMENT ORDER. THE KING S QUARE PROJECT WAS CONSTRUCTED ON THE LAND OWNED BY THE ASSESSEE COMPANY SUJAN INFRASTRUCTURE PVT. LTD. THE CONST RUCT ION AND DEVELOPMENT OF THE PROJECT WAS CARRIED OUT BY NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. BEING A HOLDING COMPANY. AFTER CONSTRUCTION AND DEVELOPMENT OF KING SQUARE PROJECT, THE ASSESSEE COMPANY SUJAN INFRASTRUCTURE PVT. LTD. WAS TRANSFERRED TO A NOTHER GROUP BY SALE OF SHARE OF THE PROMOTER AS WELL AS ISSUANCE OF SHARE CAPITAL . THE ASSESSING OFFICER HAS REFERRED THE SEIZED DOCUMENT ANNEXURE A - 3 SEIZED ON 10TH MAY, 2006 FROM THE OFFICE OF NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. STATING THAT PR OJ ECT WAS LAUNCHED IN THE YEAR 200 4 . THE ASSESSING OFFICER HAS STATED THAT THE SALE PRICE OF THE PROJECT WAS IN THE RANGE OF RS. 15 CRORES AND THE SALE VALUE WAS TARGETED TO BE REALIZED IN THE YEAR 2006 AND 2007. THIS PROJECT HAS BEEN FUNDED PARTLY THROU GH INTERNAL CASH ACCRUAL OF NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. AND PARTLY THROUGH THE REALIZATION/SURPLUS PERTAINING TO THE EARLIER PROJECT. THE ASSESSING OFFICER HAS ALSO STATED THAT DURING THE COURSE OF SEARCH VALUATION REPORT S T ATING THE COST OF ITEM CONSUMED AT KING SQUARE PROJECT AMOUNTING TO RS. 8 , 65 , 93 , 124/ - WAS SEIZED AS PER PAGES 61 TO 67 OF ANNEXURE 13. HOWEVER , THE COMPANY NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. VIDE ITS REPLY DATED 19 TH AUGUST, 2008 STATED THAT THE ACCOUNTS AND PA RTICULARS STATED IN THE SAID PROJECT WERE I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 22 PROJEC TED FIGURE AND NOT THE ACTUAL MATERIAL CONSUMED AT KING SQUARE PROJECT. IN SUPPORT OF ITS CONTENTION, THE A SSESSEE HAS ALSO FILED DETAIL S PERTAINING TO THE SBI TERM LOAN THROUGH HUDCO. IN THIS REGARD, THE A SSESSING OFFICER HAS ENQUIRED FROM THE HUDCO . T HE HUDCO HAS STATED THAT THE ESTIMATED COST OF THE PROJECT WAS RS. 13.80 CRORES AND TERM LOAN SANCTIONED WAS OF RS. 9 CRORE . THE ASSESSEE HAS SUBMITTED THAT VALUER SHRI N.K. SHAH HAD MERELY PREPARED A COST OF THE ESTIMATE WITH A VIEW TO MAKE APPLICATION FOR LOAN DISBURSEMENT FROM HUDCO AND STATED THAT THE FIGURE SUBMITTED TO HUDCO WAS O NLY ESTIMATE. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES , THE ASSESSING OFFICER WAS OF THE VIEW THAT ACTUAL COST QUA NTUM OF WORK DONE HAS NOT BEEN REFLECTED IN THE BOOKS OF ACCOUNT AND EXPLANATION FURNISHED BY THE ASSESSEE WAS NOT SATISFACTORY AND COMPLETE THEREFORE THE PROJECT WAS REFERRED TO THE DEPARTMENT VALUATION OFFICER ON 15 TH OCTOBER, 2008 TO ASCERTAIN THE REAL COST OF LAND AND COST OF CONSTRUCTION. CONSIDERING THE EVIDENCES POINTING TOWARDS UNACCOUNTED TRANSACTION DETECTED DURING THE COURSE OF SEARCH, T HE DEPARTMENT VALUATION OFFICER HAS WORKED THE COST OF INVESTMENT IN THE LAND INCLUSIVE OF STAMP DUTY AT RS. 5 , 27 , 72 , 120/ - AS AGAINST THE AMOUNT DISCLOSED IN THE LAND BY THE ASSESSEE INCLUSIVE OF STAMP DUTY TO THE AMOUNT OF RS. 3 , 33 , 87 , 493/ - , THEREFORE, DIFFERENCE OF RS. 1 , 93 , 84 , 626/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SINCE THE ASSESSEE HAS OBJECTED THE DVO REPORT ON ACCOUNT OF NO OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ON MERIT OF THE CASE, THEREFORE, THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO AGA IN REFER THE MATTER TO VALUER FOR A FRESH VALUATION REPORT. THEREAFTER, THE DVO HAS S UBMITTED ANOTHER VALUATION REPORT ON 25 TH ARIL, 2011 AND AS PER THIS VALUATION REPORT, THE DVO HAS DETERMINED THE FAIR MARKET VALUE OF THE LAND AT RS. 29 , 53 , 910 AS AGAINST COST OF INVESTMENT I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 23 DECLARED BY THE ASSESSEE AT RS. 27987624/ - EXCLUDING THE STAMP DU TY AND REGISTRATION CHARGES. THE LD. CIT(A) HAS CALLED COMMENT FROM THE ASSESSING OFFICER ON THE MODIFIED VALUATION REPORT. THE ASSESSING OFFICER IN HIS COMMENTS VIDE LETTER DATED 2 ND SEP, 2011 HAS SUBMITTED THAT SUITABLE DECISION AS MAY BE DEEMED FIT M AY KINDLY BE TAKEN ON THE BASIS OF VALUATION REPORT DATED 25 TH APRIL, 2011. THEREFORE, THE LD. CIT(A) HAS CONSIDERED THE LATEST VALUATION REPORT PREPARED BY THE DVO AT RS. 7 , 20 , 46 , 864/ - TO BE REASONABLE AND FAIR AND DIRECTED THE A SSESSING OFFICER TO ADOP T THE SAME AS COST OF THE KING SQUARE PROJECT AS AGAINST COST OF INVESTMENT DECLARED BY THE ASSESSEE AT RS. 6 , 85 , 30 , 522/ - THEREFORE DIFFERENCE OF RS. 35 , 16 , 342/ - TOWARDS COST OF LAND AND COST OF CONSTRUCTION APPORTIONED FOR THE ASSESSMENT YEAR 2004 - 05 TO 2007 - 08. ACCORDINGLY , DIFFERENCE OF RS. 11,66,286/ - AS UNEXPLAINED EXPENDITURE WAS ADDED FOR THE YEAR UNDER CONSIDE RATION. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES IT IS CLEAR THAT ASSESSING OFFICER HAS FOUND DISCREPANCY IN THE FIGURE OF COST OF MAT ERIAL /EXPENSES ON THE BASIS OF DIFFERENT SETS OF P & L A/C AND BALANCE SHEET S FO U ND AND SEIZED DURING THE COUR S E OF SEARCH ACTION AT THE PREMISES OF NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD. EVEN DURING THE COURSE OF SEARCH ACTION A VALUATION REPORT PR EPARED BY VALUE R SHRI N.K. SHAH FOR OBTAINING LOAN FROM HUDCO WAS FOUND AND SEIZED DETERMINING THE VALUE OF THE PROJECT AT RS. 13 .80 CRORE . HOWEVER, THE ASSESSEE HAS CLAIMED THAT THE VALUATION REPORT PREPARED BY THE VALUER WAS ONLY AN ESTIMAT E FOR OBTAINI NG LOAN FROM HUDCO. T HEREFORE, IN VIEW OF INCOMPLETE INFORMATION AND THE DOUBT RAISED BY THE ASSESSEE TOWARDS THE CORRECTNESS OF THE SEIZED REPORT PREPARED BY VALUER, SHRI N.K. SHAH, T HE ASSESSING OFFICER HAS R EFERRED THE MATTER TO THE DEPARTMENT VAL UAT ION OFFICER ON THE BASIS OF SEIZED MATERIAL AND VALUER HAS V ALUE D THE TOTAL COST OF PROJECT I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 24 AT R S. 13.80 CRORE. THE ASSESSEE HAS OBJECTED THE VALUATION REPORT OF THE DEPARTMENT VALUATION OFFICER ON THE GROUND THAT NO OPPORTUNITY FOR BEING HEARD GIVEN AS WELL AS ON MERIT . T HEREFORE, T HE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO AGAIN REFER THE MATTER FOR VALUATION TO THE DVO FOR A FRESH VALUATION REPORT. A FTER CONSIDERING ALL THE MATERIALS AND FACTS OF THE CASE ON MERIT , THE DVO HAS DETERMINED THE VALUATION OF THE PROPERTY AT RS. 7 , 2 0 , 4 6 , 8 6 4/ - . THE LD. CIT(A) HAS CALLED THE COMMENTS OF THE ASSESSING OFFICER ON THE MODIFIED VALUATION REPORT OF THE VALUER AND THE ASSESSING OFFICER VIDE A LETTER DA T ED 02 - 09 - 2011 REPORTED AT PAGE NO. 20 OF THE ORDER OF THE LD. CIT(A) HAS SUBMITTED THAT SUITABLE DECISION AS MAY BE DEEMED FIT MAY KINDLY BE TAKEN ON THE BASIS OF MODIFIED VALUATION REPORT DATED 25 - 04 - 2011. IN THE LIGHT OF THE ABOVE FACT AND REPORT OF THE ASSESSING OFFICER , THE LD. CIT(A) HAS CONSIDERED THE LATEST REPORT OF THE DVO TO BE ABSOLUTELY FAIR AND REASONABLE. THE CIT(A) HAS ALSO TAKEN INTO CONSIDERATION THE COMMEN TS OF THE DVO FOR VARIATION IN VALUATION VIDE HIS LETTER DATED 29 - 07 - 2011 THAT MODIFIED VALUATION OF THE PROJECT HAS BEEN MADE ON THE MEA SUREMENT OF ACTUAL CONSTRUCTION VERIFICATION AT THE SITE ON THE BASIS OF MARKET RAT E S OF EACH/EVERY ITEM OF CONSTRUCTIONS. IT IS CLEAR FROM THE ABOVE FACTS AND LETTER DATED 02 - 09 - 2011 OF THE ASSESSING OFFICER REPRODUCED AT PAGE 20 OF THE ORDER OF THE LD. CIT(A), THE ASSESSING OFFICER HAS NOT POINTED OUT ANY INFIRMITY/DISCREPANCIES IN THE MODIFIED VALUATION REPORT OF THE DVO DATED 25 - 04 - 2011. IT IS DEMONSTRATED FROM THE ABOVE FACTS AND CIRCUMSTANCES THAT THE LD. CIT(A) HA S ADDED THE ONLY DIFFERENCE OF R S. 11 , 66 , 286/ - IN VERY FAIR MANNER AFTER VERIFYING THE CORRECTNESS OF THE SEIZED DOCUMENT . IN THE LIGHT OF THE ABOVE FINDINGS, WE DO NOT FIND ANY SUBSTANCE IN THE APPEAL OF THE REVENUE, THEREFORE, THE SAME STANDS DISMISSED. IN THE LIGHT OF THE ABOVE I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 25 FACTS A ND FINDINGS WE ALSO DO NOT FIND MERIT IN THE CROSS OBJECTION AND ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSSESSEE SINCE THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION AFTER TAKING INTO CONSIDERATION THE SEIZED PAPER INCLUDING VALUATION REPORT PREP ARED BY THE REGISTERED VALUER SHRI N.K. SHAH. THE CASE LAWS RELIED UPON BY THE ASSESSEE IS DISTINGUISHABLE ON FACTS AND IS OF NO HELP TO THE ASSESSEE IN THE PRESENT CASE. INSTEAD OF MAKING GROSS ADDITION ON THE BASIS OF THE SEIZED MATERIAL, THE ASSESSING OFFICER HAS REFERRED THE MATTER TO THE DVO FOR APPROPRIATE RECONCILIATION. THE REFE RE NCE MADE TO THE DVO WAS CONNECTED TO THE DOCUMENTS/PAPERS SEIZED FROM THE SEARCH ACTION. THE PLEA OF THE ASSESSEE TOWARDS DEFECTIVE PROCEDURE ADOPTED BY THE DVO FOR NOT PROVIDING OPPORTUNITIES TO THE ASSESSEE WAS DULY CONSIDERED BY THE LOWER AUTH O RIT IES AND IN VERY FAIR AND REASONABLE MANNER THE MODIFIED VALUATION REPORT WAS ADOPTED . WE CONSIDER THAT IT IS CLEAR FROM THE ABOVE FACTS THAT THE LD. CIT(A) HA S SUSTAINED ONL Y ADDITION OF R S. 11 , 66 , 286/ - . AFTER V ERIFICATION OF THE CORRECTNESS OF THE TRANSACTION RECORDED IN THE SEIZED MATERIAL , THEREFORE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE, CROSS OBJECTION OF T HE ASSESSEE AND ADDITIONAL GROUND OF APPEAL OF T HE ASSESSEE , THEREFORE, BOTH ARE DISMISSED. GROUND NOS. 5 , 6 & 6( DELETING ADDITION OF RS. 2 , 10 , 40 , 100/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND ADDITION OF RS. 1,50,000/ ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF SHARE CAPITAL 22 . THE ASSESSING OFFICE R HAS MADE ADDITION OF RS. 2 , 10 ,4 0 , 100/ - AS UNEXPLAINED UNSECURED LOAN APPEARING IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31.04.2004. DURING THE COURSE OF ASSESSMENT, THE ASSESSEE HAS FAILED TO FURNISH SUPPORTING DETAILS TO PROVE THE GENUINENESS OF THES E TRANSACTIONS, I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 26 THEREFORE, THE ASSESSING OFFICER HAS TREATED IT AS UNE X P LAINED . THE ASSESSING OFFICER HAS ALSO MADE ADDITION OF RS. 1,50,000/ - OF SHARE CAPITAL APPEARING IN THE BALANCE SHEET AS ON 31 ST MARCH, 2014 AS THE ASSESSEE HAS NOT FILED THE SUPPO RTING DETAIL TO PROVE THE GENUINENESS OF THE TRANSACTION. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE LD. CIT(A) , THE ASSESSEE SUBMITTED THAT OBSERVATION OF THE ASSESSING OFFICER WAS NOT CORRECT AN D IT HAD FILED WITH THE ASS ESSING OFFICER CONFIRMATI ON OF EACH OF THE PARTY IN RESPECT OF UNSECURED LOAN OF RS. 2 , 10 , 40 , 100/ - AND SHARE CAPITA L OF RS. 1,50,000/ - . T HE CONFIRMATION REFLECTED THE NAME OF THE PARTY, NATURE OF THE TRANSACTION, THE SIGNATURE OF THE PARTY, COMPLETE ADDRESS OF THE P ARTY AND THE PAN . AFTER CONSIDERING THE SUBMISSION SUBMITTED BY THE ASSESSEE ALONG WITH RELEVANT SUPPORTING DETAIL, IT IS OBSERVED THAT THE INFORMATION CONTAINED ALL THE PRIMARY EVIDENCES I . E. NAME OF THE PERSON, COMPETE ADDRESS, DETAIL OF BANK TRANSACTION, PAN OF THE PERSON AND CONFIRMATION DU LY SIGNED BY THE PARTIES, THEREFORE, WE DO NOT F IND ANY INFIRMITY IN THE DECISION OF LD. CIT(A) IN DELETING BOTH THE ADDITION. IN THE RESULT, THE APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. IT (SS)A 587 /AHD/2011 & CO NO. 62/AHD/2012, ASSESSMENT YEAR 2005 - 06 23 . THE FACTS OF THE CASE INVOLVED IN THE CASE ARE THE SAME AS DISCUSSED FOR THE ASSESSMENT YEAR 2004 - 05 AS ABOVE IN THIS ORDER, THEREFORE, AFTER APPLY THIS FINDING OF IT(SS)A 586/AHD/ 201 1 & CO NO. 61/AHD/2012, ASSESSMENT YEAR 2004 - 05 ALL THESE GROUND S OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE STAND DISMISSED. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 27 IT(SS)A 596 /AHD/ 2011 & CO NO. 63 /AHD/2012, ASSESSMENT YEAR 2006 - 07 24 . THE FACTS OF THE CASE INVOLVED IN THE CASE AR E THE SAME AS DISCUSSED FOR THE ASSESSMENT YEAR 2004 - 05 AS ABOVE IN THIS ORDER, THEREFORE, AFTER APPLY THIS FINDING OF IT(SS)A 586/AHD/ 2011 & CO NO. 61/AHD/2012, ASSESSMENT YEAR 2005 - 06 GROUND NOS. 1 TO 6 OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSE E STAND DISMISSED. GROUND NO S . 7 & 8 PERTAINING TO DELETION OF ADDITION OF RS. 34 , 4 0 , 48 2 / - OUT OF TOTAL ADDITION OF R S. 70 , 0 7 , 500/ - I N RESPECT OF BOOKING AMOUNT AND CROSS OBJECTION 3 AND 3.1 OF THE ASSESSEE 25. A S PER PAGE NO. 21 OF ANNEXURE 1 FOUND AND SEIZED ON 10 TH MAY, 2006 F R O M THE PREMISES OF NAVRATNA ORGANIZER AND DEVELOPERS PVT. LTD TH E FOLLOWING TRANSACTIONS PERTAINING TO KING SQUARE PROJECT WAS NOTICED : - 4.1 AS PER DOCUMENT ANNEXURE - 1 (PAGE 21) CERTAIN TRANSACTIONS RELATED TO SUJAN INFRAST RUCTURE PVT. LTD. WERE RECORDED. THE ASSESSEE WAS ASKED TO EXPLAIN THESE TRANSACTIONS VIDE NOTICE U/S. 142(1) DATED 29.09.2008, THE RELEVANT PORTION OF WHICH IS QUOTED BELOW: - 'Q.6. B) IN PAGE NO.21 OF ANNEXURE 1, AS ON 4/6/2005, FOLLOWING COMMENTS ARE WRI TTEN : - 'KING'S SQUARE OPERATION RECONCILIATION COMPLETED AND CONFIRMED BY PRANAVBHAI'. 05.06.05 17550350 IN COME 1398333 EXPENSE 3567018 - BALANCE M/S SUJAN INFRASTRUCTURE PVT. LTD. MANAGES THE OPERATION OF KING'S SQUARE - PROJECT SITUATED AT NETAJ J SUBHASH CHANDRA ROAD, NEAR OLD SHARDA MAN DIR ROAD, AHMEDABAD - 380 006. FURTHER, PRANAVBHAI IS THE MAIN DIRECTOR O F THE GROUP CONCERNS INCLUDING NODL. ON VERIFICATION OF THE BOOKS OF ACCOUNTS OF M/S SUJAN INFRASTRUCTURE PVT. LTD., DURING THE COURSE OF POST SEARCH INVESTIGATIONS IN ITS BALANCE SHEET AS ON 31/3/2006, TOTAL BOOKING AMOUNT IS FOUND TO BE SHOWN ONLY RS.1,05,42,850/ - INSTEAD OF RS. 1,75,50,350/ - . PLEASE EXPLAIN THIS DISCREPANCY AND AS TO WHY THE DIFFERENCE BE NOT TREATED AS UNRECORDE D RECEIPTS.'' HOWEVER , THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION ON THIS ISSUE, THEREFORE , ON VERIFICATION OF THE BOOKS OF ACCOUNT OF M/S. SUJ AN INFRASTRUCTUR E LD., THE ASSESSING OFFICER NOTICED THAT AS PER BALANCE SHEET AS I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 28 ON 31 ST MARCH, 2006 THE TO TAL BOOKING AMOUNT WAS SHOWN AT RS. 1 , 05 , 42 , 850/ - AS AGAINST AMOUNT OF RS. 17 , 75 , 50 , 350/ - REPORTED IN THE ABOVE CITED SEIZED PAPER. THEREFORE, THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAS RECEIVED THE BALANCE BOOKING AMOUNT OUT OF THE BOOKS OF ACC OUNT. IN THIS REGARD, THE ASSESSING OFFICER HAS RECORDED THE STATEMENT OF SHRI PRANAV D. SHAH, DIRECTOR OF THE COMPANY U/S. 131(1A) ON 3 RD JULY, 2016. THE RELEVANT PART OF THE QUESTION AND ANSWER IS PLACED AS UNDER: - 'Q.4 PLEASE REFER PAGE NO.21 IN W HICH DIFFERENCE OF RS.3567018 IS SHOWN AS DIFFERENCE OF INCOME AND EXPENSES OF KING'S SQUARE AS CONFIRMED BY PRANAVBHAI FROM THE INCOME OF AROUND 35 - 67 LAKHS IN KING'S SQUARE SEEMS TO HAVE BEEN GENERATED TILL 5/6/2005. HAVE YOU OFFERED THIS FOR TAX ? A.4 THIS AMOUNT OF RS.35 - 67 LAKHS IS NOT THE PROFIT OR THE INCOME GENERATED FROM KING'S SQUARE, IT IS JUST THE BALANCE ARRIVED AT BY CALCULATING THE DIFFERENCE BETWEEN THE COLLECTION AND THE EXPENSES INCURRED TILL DOTE. THE PROJECT IS STILL UNDER CO NSTRUCTION AND THE BALANCE AMOUNT IS TO BE USED IN CONSTRUCTION ONLY.' SINCE NO PROPER REPLY HAS BEEN GIVEN BY THE ASSESSEE, THE ASSESSING OFFICER HAS ISSUED SHOW CAUSE NOTICE DATED 16 TH DECEMBER, 2008 WHICH IS REPRODUCED AS UNDER: - '3. AS PER SEIZED DO CUMENT AT PAGE NO.21 OF ANNEXURE - 1 (SEIZED ON 10.05.2006 FROM THE OFFICE OF NAVRATNA ORGANIZERS & DEVELOPERS PVT. LTD, BASEMENT ASHOKWADI APT., ASHOKWADI, ELLISBRIDGE, AHMEDABAD - 6), THE INCOME FROM KINGS SQUARE PROJECT AS ON 05.06.2005 IS RS.1,75,50,350 / - . HOWEVER; AS PER THE BALANCE SHEET AS ON 31.03.2005, THE TOTAL BOOKING RECEIPT ARE SHOWN AT ONLY RS.1,05,42,850/ - . PLEASE EXPLAIN THIS DIFFERENCE WITH SUPPORTING EVIDENCE, - FAILING WHICH DIFFERENCE WILL.BE TREATED AS UNRECORDED INCOME.' HOWEVER , THE ASS ESSEE HAS NOT SUBMITTED PROPER EXPLANATION AND ONLY FILED GENERAL DETAIL AS REPORTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE RE FORE THE ASSESSING OFFICER HA S CONCLUDED T HAT THE ASSESSEE HAS RECEIVED UNACCOUNTED INCOME , THEREFORE, DIFFERENCE OF RS. 1 , 75 , 50 , 350/ - - RS. 1 , 05 , 4 2 , 850/ - WAS ADDED TO THE TOTAL INC O M E OF THE ASSESSEE. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 29 26 . THE ASSESSEE HAS PREFERRED APPEAL BEFORE THE LD. CIT(A) . THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE AMOUNT OF RS. 35 , 67 , 018/ - . THE RELEVANT PART OF TH E DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 9.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND FINDINGS OF THE ASSESSING OFFICER, THE WRITTEN SUBMISSIONS AND CONTENTIONS RAISED BY THE A.R. OF THE APPELLANT COMPANY AS WELL AS THE SEIZED DOCUMEN T ON THE BASIS OF WHICH THE ADDITION HAS BEEN MADE. DURING SEARCH OPERATION U/S.132 OF THE IT. ACT, ONE DOCUMENT PAGE NO.21 WAS FOUND AND SEIZED AS ANNEXURE - 1. THE ASSESSING 'OFFICER ASKED TO EXPLAIN THE ASSESSEE, THE NOTINGS WRITTEN ON THE DOCUMENT. THE A SSESSEE SUBMITTED BEFORE ASSESSING OFFICER AS UNDER: - 'Q.6. B) IN PAGE NO.21 OF ANNEXURE 1, AS ON 4/6/2005, FOLLOWING COMMENTS ARE WRITTEN: - 'KING 'S SQUARE OPERATION RECONCILIATION COMPLETED AND CONFIRMED BY PRANAVBHAI'. 05.06.05 0 17550350 INCOME 13983332 EXPENSE 3567018 BALANCE ' M/S SUJAN INFRASTRUCTURE PVT. LTD. MANAGES THE OPERATION OF KING'S SQUARE PROJECT SIN AT NETAJI SUBHASH CHANDRA ROAD, NEAR OLD SHARDA MANDIR RO AD, AHMEDABAD - 380 FURTHER, PRANAVBHAI IS THE MAIN DIRECTOR OF THE GROU P CONCERNS INCLUDING NODL VERIFICATION OF THE BOOKS OF ACCOUNTS OFM/S SUJAN INFRASTRUCTURE PVT. LTD, DURING THE ECU, OF POST SEARCH INVESTIGATIONS IN ITS BALANCE SHEET AS ON 31/3/2006, TOTAL BOOKING AMOUTU FOUND TO BE SHOWN ONLY RS.1,05,42,850/ - INSTEAD OF RS. 1,75,50,350/ - . PLEASE EXPLAIN THIS DISCREPANCY AND AS TO WHY THE DIFFERENCE BE NOT TREATED AS UNRECORDED RECEIPTS.' 4.2 NO EXPLANATION WAS GIVEN BY THE ASSESSEE ON THIS ISSUE. AS MENTIONED EARLIER THE ASSESSEE THROUGHOUT REMAINED NON COOPERA TIVE .AND DID NOT SUBMIT THE REQUIRED DETAILS. M/S SUJAN INFRASTRUCTURE PVT. LTD. IS THE OWNER OF KING'S SQUARE PROJECT SITUATED AT NETAJI SUBHASH CHANDRA ROAD, NEAR OLD SHARDA MANDIR ROAD, AHMEDABAD - 380 006. NAVRATNA ORGANISERS & DEVELOPERS PVT. LTD. IS HOLDING 93.33% SHARE HOLDING IN SUJAN INFRASTRUCTURE PVT. LTD DURING THE RELEVANT FINANCIAL YEAR. ON VERIFICATION OF THE BOOKS OF ACCOUNTS OF M/S SUJAN INFRASTRUCTURE PVT. LTD., IN ITS BALANCE SHEET AS ON 31/3/2006, TOTAL BOOKING AMOUNT IS FOUND TO BE SHO WN ONLY RS.1,05,42,850/ - INSTEAD OF RS. 1,75,50,350/ - . FROM THIS IT APPEARS THAT THE ASSESSEE HAS RECEIVED THE BALANCE BOOKING AMOUNT OUTSIDE THE BOOKS OF ACCOUNTS. IN THIS REGARD, QUERY WAS RAISED DURING THE COURSE OF SEARCH PROCEEDINGS IN THE STATEMENT O F SHRI PRANAV D. SHAH, WHICH WAS RECORDED U/S.131 (1A) ON 03.07.2006. THE RELEVANT PORTION IS QUOTED BELOW: - 'Q.4 PLEASE REFER PAGE NO.21 IN WHICH DIFFERENCE OF RS.3567018 IS SHOWN AS DIFFERENCE OF INCOME AND EXPENSES OF KING'S SQUARE AS CONFIRMED BY PRANAVBHAI FROM THE INCOME OF AROUND 3 5 - 67 LAKHS IN KING'S SQUARE SEEMS TO HAVE BEEN GENERATED TILL 5/6/2 005. HAVE YOU OFFERED THIS FOR T AX ? A.4 THIS AMOUNT OF RS.35 ~ 67 LAKHS IS NOT THE PROFIT OR THE INCOME GENERATED FROM KING'S SQUARE, IT IS JUST THE BALANCE ARRIVED AT BY CALCULATING THE DIFFERENCE BETWEEN THE COLLECTION AND THE EXPENSES' INCURRED TILL DATE. THE PROJECT IS STILL UNDER CONSTRUCTION AND THE BALANCE AMOUNT IS TO BE USED IN CONSTRUCTION ONLY.' 9.3.1 THE ASSESSING OFFICER DID NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND ADDED THE DIFFERENCE OF INCOME AS WRITTEN IN THE NOTINGS OF PAGE NO.21 OF RS.1,75,50,350/ - AND THE BOOKING AMOUNT SHOWN IN THE BOOKS OF ACCOUNTS AS ON Q5.06.2005 OF RS.1,05,42,850/ - . FOR THE SAKE OF CLARITY AND CONVENIENCE, THE CONCLUDING PARA OF THE ASSESSING OFFICER IS AS UNDER : - '3. AS PER SEIZED DOCUMENT AT PAGE NO.21 OF ANNEXURE - 1 (SEIZED ON 10.05.2006 FROM THE OFFICE OF NAVRATNA ORGANIZERS & DEVELOPERS PVT. LTD, BASEMENT ASHOKWADI APT., ASHOKWADI, ELLIS BRIDGE, AHMEDABAD - 6), THE INCOME FROM KINGS SQUARE PROJECT AS ON 05.06.2005 IS RS. 1,75, 50,350/ - . HOWEVER, AS PER THE BALANCE SHEET AS ON 31.03.2005, THE I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 30 TOTAL BOOKING RECEIPT ARE SHOWN AT ONLY RS.1,05,42,850/ - . PLEASE EXPLAIN THIS DIFFERENCE WITH SUPPORT ING EVIDENCE, FAILING WHICH DIFFERENCE WILL BE TREATED AS UNRECORDED INCOME. ' 4.4 ON THE VERY FAG END OF ASSESSMENT PROCEEDINGS, AUTHORISED REPRESENTATIVE OF THE ASSESSEE MR. BIPIN PANCHAL APPEARED AND FILED SOME GENERAL DETAILS IN REPLY TO NOTICE U/S.142 (1) DATED 15.10.2008. CLEARLY THE ASSESSEE HAS NOT COOPERATED WITH THE ASSESSMENT PROCEEDINGS AND THE SERIES OF NON COMPLIANCE HAS BEEN DISCUSSED ABOVE. THE ENTRIES IN THE SEIZED DOCUMENTS CLEARLY SUGGEST THAT THE ASSESSEE HAS RECEIVED MORE MONEY BUT DID N OT RECORD IN THE BOOKS OF ACCOUNT. THUS, THIS AMOUNT IS UNACCOUNTED INCOME INTRODUCED AS AND WHEN REQUIRED AND SQUARE UP LATER ON. THEREFORE, RS.70,07,500/ - (RS. 1,75,50,350 - RS.1,05,42,850) REPRESENTS UNACCOUNTED INCOME OF THE ASSESSEE. THE SAME IS ACCORD INGLY BEING ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ' 9.3.2 DURING APPELLATE PROCEEDINGS, THE LEARNED A.R, OF THE APPELLANT STRONGLY OBJECTED THE ADDITION AND SUBMITTED THAT SHRI PRANAV D. SHAH, DIRECTOR OF THE COMPANY CORRECTLY EXPLAINED THE NOTINGS ON THE SEIZED PAPER IN HIS STATEMENT RECORDED ON 03.07.2006.. HE REITERATED THE FACT THAT - THE IMPUGNED NOTINGS ARE THE INCOMES AND EXPENSES OF THE PROJECT WHICH IS ONGOING AND NOT COMPLETED AND THEREFORE, THE ADDITION MADE BY ASSESSING OFFICER IS NOT SUSTAIN ABLE. THE LEARNED A.R. ALSO SUBMITTED THE RECONCILIATION OF BOOKING AMOUNT AS PER BOOKS OF ACCOUNTS VIS - A - VIS THE SEIZED DOCUMENTS, A'S UNDER : - 17.2 THE APPELLANT SUBMITS THAT THE ANNEXURE (1) CONTAINED SEVERAL DETAILS ABOUT THE BUSINESS OPERATIONS OF NAV RATNA ORG. & DEV. PVT. LTD AND INTER ALIA IT STATED.AS ONE OF THEM OFRS. 1,75,50,350/ - AS INCOME ON 5 LH JUNE, 2005 IN RESPECT OF KINGS SQUARE. THE APPELLANT SUBMITS THAT ANNEXURE WAS PREPARED BY JUNIOR ACCOUNTANT OF THE COMPANY WHO HAD NOTED ABOUT SEVERAL MATTERS VIZ. MISTAKE OF RS. 5.00 RECONCILIATION OF BANKS, TALLY INSTALLATION, JILL ; FEES ETC. BUSINESS DETAILS ABOUT KINGS SQUARE OPERATIONS. HE HAD CONSIDERED ALL THE COLLECTIONS MADE (I.E. KINGS SQUARE OPERATIONS) AS INCOME. THE SAID PERSON HAD TITLED A LL INCOMING AS AS INCOME AND THEREFORE AMOUNT OF RS. L, 75,50,3 50/ - WAS REFLEC TED. THE BROAD BREAK UP OF RS. 1 ,75,50,350/ - AS RECORDED IN BOOKS OF ACCOUNTS AS ON 5 TH JUNE, 2005 IS AS UNDER : - DEPOSIT FROM SMT. KALPANA F. SHAH RS. 3 0,00, 000 / - DEPOSIT FR OM SHRI. JAY VIDHYT SHAH RS. 20,00,000/ - DEPOSITFROM NARESH P. MEHTA RS. 1,00,000 / - TOTAL RS. 51,00,000/ - ADD: AMOUNT COLLECTED TOWARDS BOOKINGS RS. 1,05,42,850! - ADD: - DEPOSITS (NET) IN CITI BANK UPTO 5 LH JUNE, 2005 RS. 12,91,509/ - ADD: DEPOSITS (NET) IN HDFC BANK UPTO 5 TH JUNE, 2005 RS. 6, 60,58 3/ - TOTAL RS. L,75,94,942/ - 17.3 THE APPELLANT SUBMITS THAT JR. ACCOUNTANT HAD STATED THAT ALL THE ABOVE STATED AMOUNTS HAS RS. 1,75,50,350/ - AS INCOME AND THE RECONCILIATION WAS SHOWN TO SHRI P. D SHAH. THE APPELLANT HAS ENCLOSED HEREWITH EVIDENCES OF ALL THE ABOVE STATED TRANSACTIONS WHICH HAVE BEEN DULY RECORDED IN THE BOOKS OF ACCOUNT. COPIES OF THE ACCOUNTS OF SMT. K.V. SHAH, SHRI JV SHAH, SHRI.NP MEHTA AND PHOTOCOPIES OF BANK JOURNAL IN RESPECT OF CITI BANK AND HDFC BANK RECORDING TRANSACTION UPTO 5 L JUNE, 2005 ARE ALSO ENCLOSED HEREWITH. IT IS SUBMITTED THAT UNDER THE CIRCUMSTANCES RS. 1,75,50,350/ - HAS BEEN RECORDED IN 'THE BOOKS OF ACCOUNT WITH COMPLETE DETAILS AND BREAK UP. THE AP PELLANT SUBMITS THAT WHILE FINALIZING THE BOOKS OF ACCOUNT AS ON 31 ST MARCH, 2006 THE SAID COLLECTIONS OF RS. 1,75,50,350/ - WAS CORRECTLY REFUTED AS DEPOSITS BOOKING AMOUNTS, SHARE CAPITAL ETC. IT IS SUBMITTED THAT UNDER THE CIRCUMSTANCES - ALLEGATION ON THE PART OF THE ASSESSING OFFICER IS UNFOUNDED. ' 9.3.3 THE LEARNED A.R. FURTHER SUBMITTED AS UNDER : - 3.1 THE APPELLANT RESPECTFULLY SUBMITS THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN ADOPTING RS. L, 75, 50, 350 ONLY AND ACCORDINGLY MAKING ADDITION ON THE BASIS OF THE SAID I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 31 AMOUNT. IT IS RESPECTFULLY SUBMITTED THAT ON PAGE NO. 21 ON WHICH THE ASSESSING OFFICER HAS RELIED UPON RS. 35,67,018 HAS BEEN REFLECTED AS INCOME AND THEREFORE THE ASSESSING OFFICER OUGHT TO HAVE ADOPTED RS. 35,67,018 IN COMPUTAT ION OF THE TOTAL INCOME. THE APPELLANT IN THIS CONNECTION RELIES UPON THE FOLLOWING DECISIONS AND IT IS RESPECTFULLY SUBMITTED THAT THE ADDITION OF RS. 70,07,500 THEREFORE BE RESTRICTED TO RS. 5,60,600. THE APPELLANT SUBMITS THAT THE DOCUMENT AS A WHOLE SH OULD BE READ AND IN THIS CONNECTION RELIANCE IS PLAC ED ON THE DECISION IN THE CASE O F K.K. SAHANA V/S CIT REPORTED AT 216ITR717. 4.0 THE APPELLANT UNDER THE CIRCUMSTANCES - WOULD SUMMARIZE THE SUBMISSIONS AS UNDER: - 4.1 RS. 1,75,50,350 WHICH HAS BEEN CONS IDERED AS BOOKING AMOUNT STANDS DULY SUPPORTED BY THE BOOKS OF ACCOUNT AND EXPLANATION AND THEREFORE ADDITION OF RS. 70,07,500 SHOULD BE DELETED. 4.2 THE APPELLANT WITHOUT PREJUDICE TO ABOVE FURTHER SUBMITS THAT ADDITION OF RS. 70,07,500 SHOULD BE RESTRICT ED TO RS. 5,60,600 WHICH CAN BE CONSIDERED AS ELEMENT OF INCOME IN THE BOOKING COLLECTION OF RS. 70,07,500 4.3 THE APPELLANT WITHOUT PREJUDICE TO ABOVE FURTHER SUBMITS THAT ADDITION OFRS. 70,07,500 SHOULD BE RESTRICTED TO RS. 5,60,600 I.E. THE AMOUNT WHICH HAS BEEN REFLECTED IN THE DOCUMENTS WHICH HAS BEEN FOUND AND SEIZED DURING THE PROCEEDINGS UNDER SECTION 132.' ' 9.3.4 ON CAREFUL CONSIDERATION OF THE ENTIRE FACTS AND MATERIAL AVAILABLE ON RECORD, I OBSERVED THAT THERE IS NO DISPUTE REGARDING THE SEIZURE OF DOCUMENT NO.21 HAVING SOME NOTINGS RELATING TO SUJAN INFRASTRUCTURE PVT. LTD. UNDER THE DATE 05.06.2005. FOR THE CLARITY, THE NOTI NGS ARE REPEATED AS UNDER: - 05.06.05 0 17550350 INCOME 13983332 EXPENSE 3567018 BALANCE . ' 9.3.5 THE NOTING O N THE SEIZED DOCUMENT CL EARLY DEMONSTRATE THAT AS ON 05.06.2005 THERE - IS INCO ME (RECEIPTS) OF RS.1,75,50,350/ - AND EXPENSES OF RS.1,39,83,332/ - AND THE BALANCE RS.35,67,018/ - IS THE PROFIT (BALANCE). THE ASSESSING OFFICER MADE THE ADDITION OF THE D IFFERENCE BETWEEN THE BOOKING AMOUNT AS ON 05.06.2005 AS PER BOOKS OF ACCOUNTS OF RS.1,05,42,850/ - AND THE INCOME (RECEIPTS) AS PER SEIZED DOCUMENT OF RS.1,75,50,350/ - I.E. RS.70,07,500/ - . MEANING THEREBY, THE ASSESSING OFFICER ADOPTED ONLY THE FIGURE OF T HE RECEIPTS (INCOME) AS PER THE SEIZED DOCUMENT AND HE DID NOT CONSIDER THE EXPENSES WRITTEN ON THE SAME PIECE OF SEIZED DOCUMENT - AS RELIED UPON BY THE LEARNED A.R. IN THE CASE OF K.K. SAHARIYA VS. CIT REPORTED AT 216 ITR 717, THE SEIZED DOCUMENT SHOULD BE READ AS A WHOLE AND NOT IN THE PIECEMEAL. I DO AGREE TO THAT EXTANT WITH THE LEARNED A.R. THAT WHEN THE INCOME AND EXPENSES BOTH ARE RECORDED ON THE SAME PIECE OF PAPER, ONLY THE FIGURE OF INCOME CANNOT BE CONSIDERED FOR THE PURPOSE OF ADDITIONS. THE CONS OLIDATED READING OF THE SEIZED DOCUMENT NO.21 SUGGESTS THAT THER E IS THE INCOME OF RS.35,67,018/ - IN THE HANDS OF THE COMPANY, WHICH HAS NOT BEEN OFFERED FOR THE TAX. IT IS ALSO OBSERVED THAT THE APPELLANT COULD NOT SUBMIT ANY SATISFACTORY EXPLANATION ON T HE SEIZED DOCUMENT DURING ASSESSMENT PROCEEDINGS AS WELL AS DURING APPELLATE PROCEEDINGS. THE LOANS AND DEPOSITS FROM VARIOUS PARTIES AND NET DEPOSITS IN THE BANK CANNOT FO R PART OF INCOME AS ATTEMPTED BY THE LEARNED A.R. IN THE RECONCILIATION SUBMITTED DURING APPELLATE PROCEEDINGS. 9.3.6 IN VIEW OF THE DETAILED DISCUSSIONS HELD ABOVE AND ON THE CONSOLIDATED READING OF THE SEIZED DOCUMENT, IN .MY CONSIDERED OPINION, THE INCOME (BALANCE) RECORDED ON T HE SEIZED PAPER OF RS.35,67,018/ - IS THE JUSTIFIED ADDI TION IN THE HANDS OF THE APPELLANT. I - THEREFORE, CONFIRM THE ADDITION OF RS.35,67,018/ - . AS SUCH, THE APPELLANT GETS THE RELIEF OF RS.34,40,482/ - ON THIS GROUND. THIS GROUND OF APPEAL IS ACCORDINGLY PARTLY ALLOWED. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 32 27 . WE HAVE HEARD THE RIVAL CONTENTIO NS ON THIS ISSUE. IT IS UNDISPUTED FACT THAT DURING OF SEARCH ONE DOCUMENT VIDE PAGE NO. 21 AS PER ANNEXURE A WAS FO U ND AND SEIZED. THE CONTENTS OF THE PAGE NO. 2 1 IS REPORTED AS ABOVE IN THIS ORDER . I N SPITE OF GIVING OPPORTUNITY TO THE ASSESSEE NO RE LEVANT EXPLANATION WAS FURNISHE D BY THE ASSESSEE ON THIS ISSUE. ON VERIFICATION OF THE CONTENTS OF THE DOCUMENTS WITH THAT BOOKS OF ACCOUNT M/S . SUJAN INFRAST R U CTU RE PVT. LTD. , THE ASSESSING OFFICER NOTICED THAT IN ITS BALANCE SHEET ON 31 ST MARCH, 2006 T OTAL BOOKING AMOUNT WAS SHOWN AT RS. 1 , 05 , 42 , 850/ - AS AGAINST TOTAL AMOUNT OF RS. 1 , 75 , 50 , 350/ - REFLECTED IN THE ABOVE MENTIONED SEIZED DOCUMENT. SHRI PRANAV D. SHAH, DIRECTOR OF THE COMPANY IN HIS STAMEN T STATE D THAT DIFFERENCE OF RS. 35 , 67 , 018/ - ARISED BETWEEN THE AMOUNT OF BOOKING SHOWN IN THE BOOKS OF ACCOUNT AND I N THE ABOVE REFERRED DOCUMENT OF RS. 1 , 75 , 50 , 350/ - WAS JUST THE BALANCE ARRIVED BY CALCULATING THE DIFFERENCE BETWEEN CLAIM AND EXPENSES INCURRED TILL DATE AND THE PROJECT WAS STILL UNDER CON STRUCTION AND THE BALANCE AMOUNT WAS TO BE U S ED IN CONSTRUCTION ONLY. BEFORE THE LD. CIT(A) THE ASSESSEE HAS CONTENDED THAT THE PAGE NO. 21 WAS PREPARED BY JUNIOR ACCOUNTANT OF THE COMPAN Y AND THE SAID PERSON HAS INCLUD ED ALL THE DEPOSIT AMOUNT AS INCOME OF RS. 1 , 75 , 50 , 350/ - . A FTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, TH E LD. CIT(A) HAS CONSIDERED THAT IT IS VERY CLEARLY REPORTED IN THE DOCUMENT THAT THERE WAS INCOME OF RS. 1 , 75 , 50 , 350/ - ON 5 TH JUNE, 2005 AND THER E WAS EXPENSES OF RS. 13 , 98 , 332 / - AND THE BALANCE OF RS. 35 , 67 , 0 1 8/ - WAS THE PROFIT. CONSIDERING THE ABOVE THE LD. CIT(A) HAS HELD THAT ASSESSING OFFICER HAS IN CORRECTLY MADE ADDITION OF R S. 70 , 07 , 500/ - AFTER COMPARING THE DOCUMENT WITH THE BOOKS OF ACCOUNT WITHOUT CONSIDERING THE EXPE NSES WRITTEN ON THE SEIZED PAPER. THEREFORE, THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF RS. I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 33 35 , 67 , 018/ - ACTUALLY REFLECTED ON THE SEIZED PAPER AS A DIFFERENCE BETWEEN INCOME AND EXPENDITURE. CONSIDERING THE SUBMISSION OF THE ASSES S EE, DE TAILED FINDING OF LD. CIT(A), WE OBSERVE THAT ASSESSEE HAS FAILED TO CONTRADICT THE FINDING OF LD. CIT(A) WITH ANY RELEVANT SUPPOR T ING MATERIAL, THE RE FORE , WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A) IN RESTRICTING THE ADDITION TO THE EXTENT OF RS. 35 , 67 , 018/ - , THEREFORE, GROUND OF APPEAL OF T H E REVENUE AND CROSS OBJECTION OF T HE ASSESEEE BOTH ARE DISMISSED. IT(SS)A 597 /AHD/ 2011 & CO NO. 64 /AHD/2012, ASSESSMENT YEAR 2007 - 08 28 . THE FACTS OF THE CASE INVOLVED IN THE CASE ARE THE SAME AS D ISCUSSED FOR THE ASSESSMENT YEAR 2004 - 05 AS ABOVE IN THIS ORDER, THEREFORE, AFTER APPLY THIS FINDING OF IT(SS)A 586/AHD/ 2011 & CO NO. 61/AHD/2012, ASSESSMENT YEAR 2004 - 05 GROUND NO. 1 TO4 OF THE REVENUE AND CROSS OBJECTION INCLUDING ADDITIONAL GROUND OF THE ASSESSEE STAND DISMISSED. GROUND NO S. 5 & 6 OF THE REVENUE ( DELETING THE ADDITION FOR R S. 4 , 00 , 781/ - ON ACCOUNT OF UNEXPLAINED EXPENSES IN CONTRAVENTION OF RULE 46A ) 29 . DURING THE COURSE OF SEARCH, CERTAIN DOCUMENT RELATING TO PAYMENTS OF BILLS FOR CONSTRUCTION OF KING SQUARE PROJECT WERE FOUND. THESE BILLS BELONGED TO UDAY BUIDCON WAS SEIZED . A S PER ANNEXURE 12 PAGE NO. 46 TO 49 FROM THE SEIZED DOCUMENT, THE ASSESSING OFFICER NOTICED THAT CERTAIN LABOUR JOB RELATING TO KING SQUARE PROJECT WA S DONE UNDER UDAY BUILDCON PVT. L TD. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO RE - CONCILE THESE DOCUM ENTS WITH THE BOOKS OF ACCOUNTS, HOWEVER, THE ASSESSEE HAS NOT SUBMITTED ANY REPLY , THEREFORE, THE ASSESSING OFFI CER HAS ISSUED SUMMON U/S. 131 TO UDAY BUILDCON PVT. L TD.. THE DIRECTOR I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 34 OF THE COMPANY MR. CHIRAG SHAH APPEARED BEFORE THE ASSESSING OFFICER BUT HE COULD NOT RECONCILE THE BILL RAISED ON 28 TH APRIL, 2006 OF RS. 4 , 00 , 781/ - WHICH WAS SEIZED AS PER PAGE NO. 47 OF THE ANNEXURE 12, THEREFORE, THE ASSESSING OFFICER HAS TREATED THE AMOUNT OF RS. 4 , 00 , 781/ - AS UNEXPLAINED EXPENDITURE AN D ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 30 . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). T HE LD. CIT(A) HA S DELETED THE SAID ADDITION . THE RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 7.3 I HAVE CONSIDERED FINDINGS OF THE ASSESSING OFFICER, SUBMISSION OF THE APPELLANT AND ALSO PERUSED PHOTOCOPIES OF INVOICES RAISED BY M/S UDAY BU ILDCON PVT. LTD UPON THE APPELLANT ALONGIWTH COPY OF ACCOUNT AND DETAILS OF PAYMENT HAVE BEEN PLACED ON CORDS AND VERIFIED. IT IS NOTED THAT THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ON BASIS OF BILL NO. RABLLLKS/5/DATED 28 TH APRIL, 2006 WHICH WAS SEIZED AND MARKED ON PAGE NO. 47 OF THE ASSESSMENT ORDER. 7.4 ON EXAMINATION OF ALL THE RECORDS AND DOCUMENTS IT IS OBSERVED THAT RS. 400781.71 WAS NEVER AMOUNT OF THE BILL AND RS. 400781.71 IN FACT WAS SERVICE CHARGE BY M/S UDAY UPON THE APPELLANT AT THE RATE OF 10.20% ON AMOUNT OF RS. 39,29,232.42 VIDE BILL DATED 28 TH APRIL, 2006/ BILL NO. RA BILL KS/5. M/S UDAY VIDE THE SAID BILL DATED 28 TH APRIL, 2006 RAISED BILL OF RS. 3,99,600/ - FOR LABOUR CHARGES WHICH WAS NET AMOUNT AFTER CONSIDERING PREVIOUS BI LLS. THE BILL DATED 28 TH APRIL, 2006 FOR AN AMOUNT OF RS. 3,99,600/ - WAS AWAITING THE APPROVAL ON ACCOUNT OF PROCEEDINGS UNDER SECTION 132 ON 10 TH MAY, 2006 AND OTHER PROCEEDINGS - VIZ. - RECORDING OF STATEMENT, PROVIDING DETAILS/STATEMENTS, OBTAINING PHOTOCOP IES OF THE RECORDS, SEIZURE OF THE SAID BILL ETC. M/S UDAY MEANWHILE CARRIED ON THE CIVIL CONSTRUCTION WORKS AND IT HAD SUBMITTED FINAL BILL I.E BILL KS/FINAL ON 10 TH SEPTEMBER, 2006 WHEREIN AMOUNT OF RS.3,99,600/ - WAS INCLUDED. THIS BECOME EVIDENT ON COMP ARISON OF AMOUNT OF PREVIOUS YEAR'S BILL I.E. RS.35,29,632.42. I FIND THAT APPROPRIATE ENTRY IN RESPECT OF ENTIRE AMOUNT OF RS.49,53,361/ - PAYABLE TO M/S UDAY FOR THE JOB HAS BEEN MADE IN THE BOOKS.OF ACCOUNT AND THE BILL DATED 28 TH APRIL, 2006 MARKED AS P AGE NO. 47/APEX 12 HAS BEEN DULY ACCOUNTED FOR. THE BILL OF RS. 400781/ - HAS BEEN DULY ACCOUNTED FOR AND IT IS NOT UNEXPLAINED EXPENDITURE. . 7.5 ADDITION OF RS. 4,00,781/ - IS THEREFORE DELETED. THE GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 31 . WE HAVE HEARD THE RIVAL CON T ENTION ON THIS ISSUE. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE LD. CIT(A) THE ASSESSEE HAS EXPLAI NED THAT EVERY EXPENDITURE INCURRED FOR JOB WORK ASSIGNED TO M/S. UDAY BUILDCON HAS BEEN ACCOUNTED IN THE BOOKS OF ACCOUNT. THE ASSESSEE HAS ALSO PROVIDED COPY OF INVOICES RAISED BY M/S. UDAY BUILDCON PVT. LTD. AND ALSO SUBMITTED COPY OF ACCOUNT AND DETAIL OF PAYMENT. THE ASSESSEE HAS ALSO EXPLAINED T H AT THERE I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 35 WAS BILL OF RS. 4 , 00 , 781/ - AS CITED BY THE ASSESSING OFFICER IN THE AS SESSMENT ORDER AND IN FACT THIS AMOUNT OF RS. 4 , 00 , 781/ - WAS SERVICE TAX CHARGED BY UDAY BUILDC ON PVT. LTD. @ 10.20% ON AMOUNT OF RS. 39 , 29 , 232/ - . AFTER CONSIDERING THE SUB MISSION OF THE ASSESSEE AND COPIES OF INVOICES AND BILL S AS PER WHICH AMOUNT WAS CH ARGED AS SERVICE TAX, THE LD. C IT(A) HAS DELETED THE ADDITION. CONSIDERING THE ABOVE FACTS, IT IS CLEAR THAT ASSESSEE HAS CATEGORICALLY EXPLAINED WITH RELEVANT SUPPORTING EVIDENCES THAT THE AFORESAID AMOUNT WAS CHARGED AS PER SERVICE TAX AND SAME HAS BEEN PLACED AT PAGE NO. 164 OF THE PAPER BOOK. CONSIDERING THE ABOVE FACTS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE, THEREFORE , BOTH THE APPEAL OF THE REVENUE ARE DISMISSED ON THIS ISSUE. GROUND NO. 7 (DELETING THE DISALLOWANCE OF INTEREST OF RS. 67000795/ - AND M UNICIPAL TAXES OF RS. 3 , 29 , 500/ - FROM HOUSE PROPERTY INCOME 32 . DURING T H E COUR S E OF ASSES SMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE COMPANY HAS SHOWN RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND IT HAS TAKEN DEDUCTION FOR MUNICIPAL TAXES INTEREST PAID TO HUDCO AND SBI, HOWEVER , NO EVIDENCE OF INCURRING ALL THESE EXPENSES WERE FILED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ALSO NOTICED THAT AS PER PROVISION OF SECTION 24 OF EXPLANATION THE INTE REST OF CAPITAL BORROWED FOR THE PERIOD PRIOR TO THE PREVIOUS YEAR IN WHICH THE PROPERTY HAS BEEN ACQUIRED OR CONSTRUCTED SHALL BE DEDUCTED UNDER THIS C L AU S E IN EQUAL INSTALLMENT FOR EACH OF TH E FIVE IMMEDIATELY SUCCEEDING YEARS , HOWEVER , THE ASSESSEE HAS CLAIMED THE NEW EXPENSES IN THE RELEVANT FINANCIAL Y EAR ITSELF WH ICH IS NOT PERMISSIBLE AS PER LA W, THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE INTEREST PAYMENT TO BANK TO THE AMOUNT I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 36 O F RS. 67 , 00 , 795/ - AND CLAIM OF MUNICIPAL TAXES OF RS. 3 , 29 , 500/ - ON COMPUTING HOUSE PROPERTY INCOME OF THE ASSESSEE. 33 . THE ASSESSEE FIL ED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 9.4 THE AS SESSING OFFICER HAS MADE DISALLOWANCE OF RS. 67,00,795/ - IN RESPECT OF INTEREST AND DISALLOWANCE OF RS. 3,29,500/ - IN RESPECT OF EXPENDITURE BY WAY OF MUNICIPAL TAX AND I FIND THAT DISALLOWANCES HAVE BEEN MADE BY THE ASSESSING OFFICER IN PARA 4.3 STATING T HAT NO PROOF OF PAYMENT OF INTEREST AND MUNICIPAL TAX. 9.4 THE APPELLANT COMPANY HAS PROVIDED DETAILS OF INTEREST OF RS.67,00,795/ - .....I. FIND THAT THE INTEREST OF RS. 67,00,795/ - IS INTEREST REFERABLE TO THE PERIOD AFTER 1 ST APRIL, 2006 I.E. REFERABLE TO THE PERIOD OF THE PREVIOUS YEAR IN WHICH THE PROPERTY HAS BEEN ACQUIRED OR CONSTRUCTED. THE PROPERTY HAS BEEN PUT TO USE AND STARTED DERIVING INCOME BY WAY OF RENT. I FIND FORCE IN SUBMISSION OF THE APPELLANT THAT PROVISION OF EXPLANATION TO SECTION 24 HA S NOT BEEN CORRECTLY INTERPRETED BY THE ASSESSING OFFICER VIDE PARA 4.2/27 OF THE ASSESSMENT ORDER. ENTIRE INTEREST AMOUNT OF RS. 67,00,795/ - IS REFERABLE TO THE PERIOD AFTER PROPERTY HAS BEEN ACQUIRED OR CONSTRUCTED AND THEREFORE IT IS DEDUCTIBLE IN COMPU TATION OF THE TOTAL INCOME UNDER SECTION 24(B) OF THE INCOME TAX ACT, 1961. DISALLOWANCE OF RS.67,00,795/ - IS DELETED AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION ACCORDINGLY. 9.5 THE APPELLANT HAS ALSO CONTESTED DISALLOWANCE OF RS. 3,29,500/ - BEING EXPENDITURE BY WAY OF MUNICIPAL TAX. I FIND THAT EXPENDITURE WAS INCURRED BY WAY OF MUNICIPAL TAX AND THE EXPENDITURE WAS DEBITED T O THE PROFIT AND LOSS ACCOUNT. THE APPELLANT HAS BROUGHT ON RECORD PROOF OF PAYMENT OF MUNICIPAL TAX. I FIND THAT THE EXPENDITURE WAS EFFECTED AND THE EXPENDITURE IS DEDUCTIBLE IN VIEW OF PROVISO TO SECTION 23(1). I THEREFORE DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 34 . WE HAVE HEARD THE RIVAL CONTENTION ON THIS ISSUE. TH E ASSES S EE EXPLAINED IN HIS SUBMISSION THAT INTEREST OF RS. 67 , 00 , 795/ - WAS INTEREST FOR THE PERIOD AFTER 1 ST APRIL, 2006 PERTAINING TO THE PREVIOUS YEAR IN WHICH THE PROPERTY HAS BEEN ACQUIRED. THE ASSESSEE HAS ALSO EXPLAINED THAT THE PROPERTY HAS BEEN PUT TO USE AND STARTED DERIVI NG INCOME BY WAY OF RENT DURING THE YEAR UNDER CONSIDERATION. THE ASSESSE HAS ALSO SUBMITTED THAT ENTIRE I NTEREST EXPENDITURE OF RS. 67,00, 795/ - WAS PERTAINED TO THE PERIOD AFTER PROPERTY HAS BEEN ACQUIRED . T HEREFORE IN VIEW OF THE EXPLANATION TO SECTION 24 , THE AS S ESS E E HAS CLAIMED THAT IT IS ENTITLED FOR DEDUCTION OF SUCH INTEREST WHILE COMPUTING INCOME FROM HOUSE PROPERTY. IN R ESPE C T OF I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 37 MUNICIPAL TAXES OF RS. 3 , 29 , 5 0 0 / - , THE ASSESSEE HAS SUBMITTED THAT THIS EXPENDITURE WAS INCURRED BY WAY OF MUNICIPAL TAXES AND SAME IS DEDUCIBLE IN VIEW OF PROVISO TO SECTION 23(1) OF THE ACT AFTER CONSIDERING THE DETAIL OF INTEREST OF RS. 6 7, 00 , 795/ - AND MUNICIPAL TAXES OF RS. 3 , 29 , 500/ - . THE LD. CIT(A) HAS ALLOWED T HE CLAIM OF THE ASSESSEE. AFTER CONSIDERING THE ABO VE FACTS AND FINDING OF LD. CIT(A) , IT IS CLEAR THAT INTE RE ST EXPENDITURE WAS PERTAINED TO THE PERIOD AFTER 1 ST APRIL, 2006 WHEN THE PROPERTY WAS ACQUIRED AND PUT TO USE AND RENTAL INCOME WAS GENERATED, THEREFORE, WE UPHOLD THE DECISION OF LD. CIT(A) IN UP HOLDING SUCH INTEREST EXPENDITURE U/S. 24 OF THE ACT. REGARDING MUNICIPAL TAXES OF R S. 3 , 29 , 500/ - , IT IS CLEAR FROM THE FINDING OF THE LD. CIT(A) THAT ASSESSEE HAS PAID MUNICIPAL TAXES AS PER PAGE NO. 84 PLACED IN THE PAPER BOOK WHICH IS ALLOWABLE AS PER PROVISO TO SECTION 23 WHILE COMPUTING INCOME UND ER THE HEAD HOUSE PROPERTY. IN VIEW OF THE SPECIFIC EVIDENCES AND FINDING OF LD. C IT(A), WE CONSIDER THAT THE REVENUE HA S FAILED TO CONTROVERT THE RELEVAN T MATERIAL AND FINDING OF LD. CIT(A) TH A T THE CLAIM W AS ALLOWED ON T H E BASIS OF SPECIFIC EVIDENCES FURNISHED BY THE ASSESSEE. THEREFORE , WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS DISMISSED . 35 . IN THE RESULT, APPEAL I.T(SS).A NOS. 585, 586, 596 & 597/AHD/2011 FILED BY RE VENUE & CO NOS. 61, 62, 63 & 64/AHD/2012 FILED BY ASSESSEE ALL ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 09 - 12 - 201 9 SD/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER I.T(SS).A NOS. 585, 586 , 596 & 597/AHD/2011 & CO NOS. 61, 62, 63 & 64/AHD/2012 PAGE NO ACIT VS. SUJAN INFRASTRUCTURE PVT. LTD. 38 AHMEDABAD : DATED 09 /12 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,