The ACIT, Central Circle-2(3), Ahmedabad V. Late Kirchand B.Shah L/h Yogesh Kirchand Shah L/h of, Ahmedabad

ITSSA 6/AHD/2009

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8562 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-10-2012
• Assessment Year: misc
• Appeal Filed On: 22-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K S PANDYA
• Assessee Lawyers: M G PATEL
• Keywords: Unexplained investment; Business income; Document seized; Block assessment; Retraction; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER IT(SS)A NO. 76/AHD/2008 BLOCK PERIOD: 1-4-1992 TO 25-5-2001 SHRI YOGESH KIRCHAND SHAH 14/B STHANKWASI JAIN SOCIETY, NARANPURA, AHMEDABAD V/S . THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 2(3), AHMEDABAD PAN NO. AEDPS4653L (APPELLANT) .. (RESPONDENT) IT(SS)A NOS. 5 & 6/AHD/2009 BLOCK PERIOD: 1-4-1992 TO 25-5-2001 THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), AHMEDABAD V/S . SHRI YOGESH KIRCHAND SHAH 14/B STHANKWASI JAIN SOCIETY, NARANPURA, AHMEDABAD PAN NO. AEDPS4653L (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI B.K.S. PANDYA, CIT D.R. /BY ASSESSEE SHRI M.G. PATEL, A.R. /DATE OF HEARING 29.10.2012 /DATE OF PRONOUNCEMENT 14.12.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILED BY THE APPELLANT AS W ELL AS REVENUE AGAINST THE CIT(A)-III, AHMEDABAD, ORDER DATED 24.10.2008 FOR T HE BLOCK PERIOD 1.4.92 TO IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 2 25.5.2001. THESE CROSS APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONV ENIENCE. 2. THE FACTUAL MATRIX IS THAT THERE WAS A SEARCH SE IZURE OPERATION U/S.132 OF THE IT ACT ON 25.05.2001. NOTICE U/S. 158BC WAS ISSUED ON 03.09.2001 AND SERVED ON 05.-09.2001. THE APPELLANT WAS GIVEN ZEROX COPY OF THE SEIZED MATERIAL ON 08.10.2001. THE APPELLANT FILED THE BL OCK RETURN ON 22.10.2001 SHOWING NIL INCOME. THEREAFTER NOTICE U/S. 143(2) WAS ISSUED ON 25.01.2002. THE LD. A.O. ISSUED QUESTIONNAIRE ON 09.04.2003 TO EXPLAIN THE VARIOUS DOCUMENTS WHICH WERE SEIZED DURING THE SEARCH. THE APPELLANT DID NOT FILE ANY EXPLANATION BUT INFORMED THAT HE HAD FILED APPL ICATION U/S.245 C BEFORE THE SETTLEMENT COMMISSION ON 31.03.2003 AND REQUESTED T HAT THE ASSESSMENT MIGHT BE KEPT IN ABEYANCE U/S. 158BE (EXPLANATION 1 (IV)). THE SETTLEMENT COMMISSION CALLED FOR THE REPORTS FROM THE COMMISSI ONER UNDER RULE 6 AND AFTER HAVING HEARD THE ASSESSEE, REJECTED THE APPLI CATION U/S. 245 C (1) VIDE THEIR COMMON ORDERS NO.10/CC/030 TO 032/02/03/IT IN RESPECT OF THE ASSESSEE AND HIS FAMILY MEMBERS. THE A.O. RECEIVED THE REJE CTION ORDER OF THE SETTLEMENT COMMISSION ON 28.02.2006. THE LD. A.O. HAD COMPLETED THE BLOCK ASSESSMENT THEREAFTER. THE SEIZED RECORDS IN THE C ASE OF THIS GROUP OF ASSESSES SHOWED THAT SHRI YOGESH K. SHAH WAS MANAGI NG ALL THE AFFAIRS OF THE GROUP. IT WAS ALSO SEEN THAT SHRI YOGESH K. SH AH HAD OWNED UP ALL THE UNDISCLOSED AND UNRECORDED INCOME IN HIS STATEMENT U/S. 132(4) GIVEN TO THE AUTHORISED OFFICER OF THE SEARCH. THEREAFTER, WHIL E PRESENTING HIS APPLICATION IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 3 BEFORE THE HONBLE SETTLEMENT COMMISSION, HE RETRAC TED FROM THIS STATEMENT U/S 132(4) AND BIFURCATED A PART OF THE ADMITTED IN COMES IN NAMES OF HIS FATHER AND HIS BROTHER. IT WAS FURTHER HELD BY THE A.O. T HAT IT WAS VERY SIGNIFICANT TO NOTE HERE THAT BOTH HIS FATHER AND HIS BROTHER. LA TE SHRI KIRCHAND B. SHAH AND SHRI MAHESH K. SHAH RESPECTIVELY, HAD GIVEN VOLUNTA RY STATEMENTS BEFORE THE AUTHORISED OFFICERS TO THE EFFECT THAT SHRI YOGESH K. SHAH WAS LOOKING AFTER ALL THE BUSINESS OF THE GROUP. SHRI YOGESH K. SHAH HAD NOT DENIED THIS FACT AT ANY POINT OF TIME. THE REASON POINTED OUT BY WHICH HE TRIED TO BIFURCATE THE UNDISCLOSED INCOME, BEFORE THE HONBL E SETTLEMENT COMMISSION WAS THAT PART OF BUSINESS WAS OWNED BY THESE TWO PE RSONS. HOWEVER, THE RECORDS REFLECTED THAT SHRI YOGESH K. SHAH HAD BEEN MANAGING THE AFFAIRS OF ALL THE BUSINESS OF THE FAMILY, TAKING REMUNERATION FROM THE SO CLAIMED OWNERS. HENCE, THE SO CLAIMED OWNERS WERE AWARE ON LY OF THE BOOK POSITION OF THE BUSINESSES AND WHATEVER EXTRA INCOMES EARNED OUTSIDE THE BOOKS HAD BEEN EARNED AND KEPT BY SHRI YOGESH K. SHAH ONLY. UNDER THESE CIRCUMSTANCES, THE SEIZED RECORDS WERE MINUTELY PER USED AND THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE ENTIRE UNDISC LOSED INCOME SHOULD NOT BE ASSESSED IN HIS HANDS. THE ASSESSEE, IN HIS REPLY, DID NOT OBJECT TO THE TAXING OF THE ENTIRE UNDISCLOSED INCOME IN HIS HAND S. HENCE HE ASSESSED THE TOTAL UNDISCLOSED INCOME IN THE HANDS OF THIS ASSESSEE ONLY. THE LD. A.O. ISSUED DETAILED SHOW CAUSE NOTICE TO C OMPUTE THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD. THE ASSES SEE DID NOT FILE ANY REPLY IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 4 ON 20.03.2006 I.E. DATE OF HEARING. THE APPELLANT FILED A WRIT OF MANDAMUS AND WRIT OF CERTIORARI BEFORE THE HONBLE GUJARAT H IGH COURT ON 31.03.2006 VIDE SPECIAL CIVIL APPLICATION NO. 15069, REQUESTING THE REIN TO QUASH THE ORDER OF THE IT, SETTLEMENT COMMISSION AND TO GRANT INTERIM STAY ON THE BLOCK ASSESSMENT PROCEEDINGS. THE HONBLE HIGH COURT HEA RD THE MATTER ON 18.11.2006 AND REFUSED TO ADMIT THE WRIT PETITION. THEREAFTER THE APPELLANT SUBMITTED HIS COMPLIANCE TO THE ABOVE SHOW CAUSE NO TICE DATED 06.03.2006 ON 24.04.2006. THE ASSESSEES SUBMISSION HAD BEEN MADE PART OF THE ASSESSMENT ORDER ON PAGE NOS. 8 TO 40. THE LD. A.O. CALCULATED THE UNDISCLOSED INCOME AS WELL AS, AS PER EXPENDITURE A ND INVESTMENT FOUND DURING THE COURSE OF SEARCH AND COMPARE BOTH AND DE TERMINED THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD AT RS.1,02, 42,600/-. THE ASSESSEE FILED THE SETTLEMENT PETITION BEFORE SETTLEMENT COM MISSION, ADDITIONAL BENCH, MUMBAI, WHERE FOLLOWING INCOME HAD BEEN OFFERED BY THE ASSESSEE AS WELL AS HIS FATHER SHRI KIRCHAND: COMPUTATION OF REVISED TOTAL INCOME --------------------------------------------------- --------------------------------------------------- - PARTICULARS AMOUNTS (RS.) --------------------------------------------------- --------------------------------------------------- BUSINESS INCOME: TOTAL INCOME AS PER RETURN OF INCOME FOR THE BLOCK PERIOD FILED ON 22/10/2001 NIL ADD : ADDITIONAL INCOME DISCLOSED AS PER SETTLEMENT APPLICATION AS PER IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 5 FOLLOWING DETAILS: 1. INVESTMENT IN CONSTRUCTION OF BUNGALOW 5,00,000 AT 14-B STHANAKVASI JAIN SOCIETY, NARANPURA, AHMADABAD 380 013 2. INVESTMENT IN UNACCOUNTED SHARES / 7,92,000 SHARES/DEBENTURES. 3. INVESTMENT IN LAND AT BHARUCH 80,000 4. INVESTMENT IN FURNITURE, HOUSEHOLD 1,00,000 ARTICLES ETC. 5. HOUSEHOLD EXPENDITURE. 1,00,000 6. DIVIDEND/DIBENTURE INTEREST ETC. 3,12,563 --------------- 18,84,563 LESS: INCOME ALREADY DISCLOSED AS PER RETURN OF INCOME FOR THE BLOCK PERIOD FILED ON 22/10/2002 NIL ---------------- 18,84,563 ------------ REVISED TOTAL INCOME RS. . 18,84,563 ======= LATE SHRI KIRCHAND ALSO FILED SIMILAR PETITION BEFO RE THE COMMISSION WHO HAS ALSO OFFERED ADDITIONAL INCOME BEFORE THE COMMISSIO N AT RS.11,82,500/- WHICH INCLUDES RS.6 LACS CAPITAL INTRODUCED IN CASH IN KA LAMANDIR AND INTEREST EARNED ON CASH LOANS AT RS.82,500/-. THE REMAINING AMOUNT OF RS.5 LACS HAS NOT BEEN REFERRED IN SETTLEMENT PETITION WITH REFER ENCE TO ANY ITEM OF DISCLOSURE. THUS, TOTAL INCOME OFFERED BEFORE THE SETTLEMENT COMMISSION AT RS.30,67,066/-. IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 6 3. THE EFFECTIVE GROUNDS OF APPEALS ARE AS UNDER: (I) IT(SS)A NO. 76/AHD/2008 . 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-III, AHMEDABAD HAS ERRED IN LAW AS WELL AS ON FACTS OF T HE CASE IN CONFIRMING THE ADDITION OF RS.2,04,533/- IN CONNECT ION WITH UNACCOUNTED PROFITS FROM SPECULATION AS PER PAGE NO S.3 TO 20 OF ANNEXURE A-58 OF THE SEIZED DOCUMENT THOUGH THE SAM E HAS BEEN DULY EXPLAINED BY THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -III, AHMEDABAD HAS ERRED IN LAW AS WELL AS ON FACTS OF T HE CASE IN CONFIRMING THE ADDITION OF RS.5,50,000/- ON ACCOUNT OF UNACCOUNTED CASH FOUND DURING THE COURSE OF SEARCH THOUGH THE S AME WAS COVERED BY THE AMOUNT OF INCOME ADDED IN RESPECT OF INVESTMENT OF RS.6,00,000/- IN KALAMANDIR BY WAY OF TELESCOPING. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -III, AHMEDABAD HAS ERRED IN LAW AS WELL AS ON FACTS OF T HE CASE IN CONFIRMING THE ADDITION OF RS.11,50,000/- IN RESPEC T OF UNACCOUNTED INVESTMENT IN KALAMANDIR AS PER PAGE NOS. 41 TO 45 OF ANNEXURE A-64 THOUGH THE SAME HAS NOT BEEN MADE BY THE APPEL LANT AND ALSO NOT BORNE OUT BY THE SEIZED PAPERS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -III, AHMEDABAD HAS ERRED IN LAW AS WELL AS ON FACTS OF T HE CASE IN CONFIRMING THE ADDITION OF RS.1,85,017/- IN RESPECT OF INVESTMENT IN LAND AT BHARUCH INSTEAD OF AMOUNT OF RS.80,000/- WH ICH IS SHOWN AS INVESTMENT IN CASH IN SEIZED PAPER PAGE NO.92 OF ANNEXURE A- 64. IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 7 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -III, AHMEDABAD HAS ERRED IN LAW AS WELL AS ON FACTS OF T HE CASE IN CONFIRMING THE ADDITION OF RS.68,448/- IN RESPECT O F PURCHASE OF MATERIAL FOR RENOVATION AS PER PAGE NO. 13/14 OF AN NEXURE A-64 OF THE SEIZED DOCUMENTS THOUGH THE SAME HAS NOT BEEN M ADE. (II) GROUNDS OF IT(SS)A NO. 5/AHD/2009 (I) THE CIT(A) HAS ERRED IN LAW AND FACTS IN DELET ING THE ADDITION OF RS.52,82,600/- UN ACCOUNT OF UNDISCLOSE D PROFIT EARNED FROM SILVER BUSINESS. (II) THE CIT(A) HAS ERRED IN LAW AND FACTS IN DELET ING THE ADDITION OF RS.50,00,000/- MADE ON ACCOUNT OF SPECU LATION TRANSACTIONS. IN RESPECT OF ALTERNATIVE ADDITIONS: (III) THE CIT(A) HAS ERRED IN LAW AND FACTS IN REST RICTING THE ADDITION ON ACCOUNT OF INVESTMENT IN SHARES FROM RS.7,91,555/- TO RS.7,62,625/- AND THUS ALLOWING RE LIEF OF RS.28,930/- (IV) THE CIT(A) HAS ERRED IN LAW AND FACTS IN RESTR ICTING THE ADDITION ON ACCOUNT OF INVESTMENT IN REAL ESTATE FR OM RS.15.00 LACS TO RS.13,35,017/- AND THUS ALLOWING R ELIEF OF RS.1,64,983/-. (V) THE CIT(A) HAS ERRED IN LAW AND FACTS IN RESTRI CTING THE ADDITION ON ACCOUNT OF INVESTMENT IN RESIDENTIAL PR OPERTY FROM RS.15.00 LACS TO RS.68,448/- AND THUS ALLOWING RELIEF OF RS.14,31,552/-. IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 8 (III) GROUNDS OF IT(SS)A NO. 6/AHD/2009 (I) THE CIT(A) HAS ERRED IN LAW AND FACTS IN DELET ING THE ADDITION OF RS.52,82,600/- UN ACCOUNT OF UNDISCLOSED PROFIT EAR NED FROM SILVER BUSINESS. 4. GROUND NO.1 OF THE ASSESSEES APPEAL AGAINST CON FIRMATION OF THE ADDITION OF RS.2,04,533/- IN CONNECTION WITH UNACCO UNTED PROFIT FROM SPECULATION AS PER PAGE 3 TO 20 OF ANNEXURE A-58 OF THE SEIZED DOCUMENT AND WHEREAS THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.50 LACS IN GROUND NO.2 UNDER THIS HEAD. THE A.O. OBSERVED THAT THE ASSESSEE WAS ENGAGED IN RE-SELL OF SHARES OF INDIAN COMPANIES. THESE TRANSACTIONS WERE DONE BY THE APPELLANT EITHER HIS OWN NAME OR IN THE NAME OF FAMILY MEMBERS. DURING THE COURSE OF SEARCH STATEMENT OF HIS BROTHE R, SHRI MAHESH SHAH WAS RECORDED WHO HAD CATEGORICALLY ADMITTED IN ANSWER N O.8 OF HIS STATEMENT THAT HIS BROTHER SHRI YOGESH SHAH USED TO TAKE HIS SIGNA TURE ON 8 TO 10 BLANK CHEQUES AT A TIME AND THE DETAILS OF TRANSACTIONS E MANATING THERE FROM WERE WITH THE ASSESSEE ONLY. HE FURTHER ALSO CLARIFIED IN ANSWER NO.13 THAT ALL SHARE TRANSACTIONS WERE DONE BY THE ASSESSEE ONLY. THE A SSESSEE ALSO HAD ADMITTED DURING THE COURSE OF RECORDING STATEMENT O N 25.05.2001 AND EARNED PROFIT AT RS.50 LACS FOR THE BLOCK PERIOD. THE ASS ESSEE HAD BEEN IN THE LINE OF BUSINESS FOR MORE THAN A DECADE. IN SUBMISSION ALS O HE HAD ADMITTED THAT HE AND HIS WIFE WERE DOING BADALA TRADING IN SHARES AND ALL THE PROFITS WERE ACCOUNTED FOR AND DECLARED IN THEIR RETURN OF INCOM E. THE ASSESSEE AND HIS IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 9 FAMILY MEMBERS HAD DISCLOSED ACCOUNT OF SHARES VALU ED RS.1,10,13,419/-. THE A.O. STATED THAT THE ASSESSEE HAD DONE TRADE IN SHARES OUTSIDE THE BOOKS OF ACCOUNT. THE LD. A.O. HAD DISCUSSED THE SEIZED MATERIAL I.E. A/64 P.28, A64-P.27 & A-58 P.3 TO 20 ON PAGE NOS. 26 & 27. IT IS MENTIONED THAT APPELLANT WAS DEALING IN SHARE BUSINESS REGULARLY O N THAT PAGES. THE LD. A.O. CALCULATED ESTIMATED PROFIT ON IT AT RS.2,78,90,864 /- BUT AS PER THE OBSERVATION MADE BY THE HONBLE GUJARAT HIGH COURT, HE HAD REST RICTED THE ADDITION OF RS. 50 LACS I.E. DISCLOSURE MADE BY THE APPELLANT U/S. 132(4) OF THE IT ACT, DURING THE COURSE OF SEARCH. 5. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AP PELLANT CARRIED THE MATTER BEFORE CIT(A)-III, AHMEDABAD WHO HAD RESTRI CTED THE ADDITION AT RS.2,04,533/- BY OBSERVING THAT THE EVIDENCE IS FOR THE PERIOD OF 22 DAYS, COULD NOT BE JUSTIFY THE ESTIMATING SPECULATION PRO FIT FOR THE ENTIRE BLOCK PERIOD, ON A PRO-DATA BASIS. HE FURTHER HELD THAT THIS APP ROACH OF THE A.O. WAS NOT ONLY CONTRADICTORY TO THE DIRECTION OF THE HONBLE HIGH COURT BUT WAS ALSO DEVOID OF ANY MERIT, THERE BEING NO MATERIAL ON REC ORD, TO JUSTIFY IT. IN FACT, EVEN THE A.O. WAS NOT CONVINCED OF THE APPROACH ADO PTED BY HIM BECAUSE HE TOO HAD WHITTLED DOWN HIS OWN ESTIMATE OF SUCH PROF IT I.E. FROM RS. 2.78 CRORE TO RS.50 LACS. THUS, THE ESTIMATED ADDITION OF RS. 50 LACS ON ACCOUNT OF SPECULATIVE SHARE TRANSACTION CANNOT BE UPHELD AND WAS DELETED. 6. NOW THE ASSESSEE IN APPEAL IS BEFORE US. THE LD . COUNSEL FOR THE APPELLANT CONTENDED THAT ADDITION MADE ON THE BASIS OF STATEMENT RECORDED OF IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 10 THE APPELLANT DURING THE COURSE OF SEARCH WAS TAKEN BY FORCE AND HAD BEEN RETRACTED BY FILING AFFIDAVIT, DATED 24.04.2006 BY THE APPELLANT AND HIS FAMILY MEMBERS (PAGE NO.111 TO 113 OF THE PAPER BOOK). TH E HONBLE GUJARAT HIGH COURT HAD DIRECTED THE REVENUE TO DECIDE THE UNDISC LOSED INCOME FOR THE BLOCK PERIOD ON THE BASIS OF SEIZED MATERIAL. HE F URTHER ARGUED THAT ADDITION ON ESTIMATED BASIS IS NOT PERMITTED U/S.158 BB OF T HE IT ACT 1961. HE ALSO RELIED UPON VARIOUS CASES: (A) SUNDER AGENCIES V. DY. CIT, [63 ITD 245], (B) INDORE CONSTRUCTION PVT. LTD. V. ACIT, [71 ITD 128] (C) PATEL RAJESHKUMAR V. DY.CIT, [62 TTJ 189], (D) D.N.KAMANI, HUF V. DY.CIT , [70 ITD 77], (E) K.NAIDU V. ACIT, [(2002) 256 ITR 76 AT (TM)], (F) J AYA S. SHETTY V. ACIT,[69 ITD 336], (G) KAPUR SONS STEELS P. LTD. V. ACIT, [1 19 TAXMAN 113 (MAG)] & (H) CIT V. USHA TRIPATHI [(2001) 249 ITR 4 (ALL)]. HE REQUESTED TO DELETE THE ADDITION CONFIRMED BY THE CIT(A). AT THE OUTSET, T HE LD. CIT DR VEHEMENTLY ARGUED THAT THE LD. A.O. HAD CALCULATED THE UNDISCL OSED INCOME ON ACCOUNT OF SPECULATIVE SHARE TRANSACTION ON THE BASIS OF SEIZE D MATERIAL WHICH HAD BEEN DISCUSSED BY THE A.O. AT PAGE NOS. 26 & 27 OF THE A SSESSMENT ORDER. HE ALSO FAIRLY COMPUTED THE UNDISCLOSED INCOME ON THE BASIS OF SEIZED MATERIAL AS WELL AS DIRECTION OF THE HONBLE GUJARAT HIGH COURT AS R EASONABLE FIGURE OF RS. 50 LACS, WHEREAS AS PER EVIDENCE, IT WAS CALCULATED AT RS.2,78,90,864/- 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL BEFORE US. THE LD. A.O. CALCULATED UNDISCLOSED INCOME ON T HE BASIS OF EVIDENCE FOUND FOR SPECULATION BUSINESS FOR 22 DAYS ON TRANSACTION OF SHARES 1,53,784 AND THE IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 11 PROFIT EARNED WAS OF RS.2,04,533/-. THE APPELLANT H AD EXPLAINED THE TRANSACTION OF SHARES RECORDED IN SEIZED MATERIAL B EFORE THE A.O. AS WELL AS BEFORE THE CIT(A). HE ALSO HAS DRAWN OUR ATTENTION ON PAPER BOOK WHICH HAS BEEN PERUSED. THE LD. A.O. HAD NOT BROUGHT ON RECO RD ANY EVIDENCE THAT THE APPELLANT HAD DONE THIS BUSINESS IN WHOLE BLOCK PER IOD. IN BLOCK ASSESSMENT PROCEEDING, NO ADDITION ON THE BASIS OF ESTIMATION CAN BE MADE THE UNDISCLOSED INCOME IS TO BE DETERMINED ON THE BASIS OF SEIZED MATERIAL. THE APPELLANT HAD DISCLOSED AN ADDITIONAL INCOME ON ACC OUNT OF DIVIDEND, DEBENTURES, INTEREST ETC. AT RS.3,12,562/- BEFORE T HE SETTLEMENT COMMISSION. THE LD. CIT(A) HAD CONFIRMED THE ADDITION ON THE BA SIS OF PROFIT EARNED OF 22 DAYS OF TRANSACTION OF RS. 1,53,784/- AT RS.2,04,53 3/-, BUT, HAD NOT CONSIDERED THE DIVIDEND INCOME ON IT. THEREFORE, WE ARE OF CO NSIDERED VIEW THAT NOT ONLY PROFIT EARNED ON SPECULATION TRANSACTION BUT REMAIN ING UNDISCLOSED INCOME OF DIVIDEND NOT DISCLOSED BY THE APPELLANT IN THE BOOK S OF ACCOUNT WHICH HAD BEEN ADMITTED BY THE APPELLANT BEFORE THE SETTLEMEN T COMMISSION IS PART OF UNDISCLOSED INCOME. THUS, WE ALLOW THE REVENUES A PPEAL PARTLY AND CONFIRM THE ADDITION AT RS. 5,17,095 ( PROFIT EARNED RS. 2, 04,533/- + DIVIDEND INCOME OFFERED BY THE APPELLANT RS.3,12,563/-) AND DISMISS THE APPEAL OF THE ASSESSEE ON THIS GROUND. 8. NOW WE TAKE SECOND GROUND OF ASSESSEES APPEAL A GAINST CONFIRMING THE ADDITION OF RS. 5,50,000, WHICH WAS CONFIRMED B Y THE CIT(A). IT IS OBSERVED THAT DURING THE COURSE OF SEARCH UNACCOUNT ED CASH AMOUNTING IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 12 RS.5.5 LACS WAS FOUND WHICH WAS RECOVERED FROM THE RESIDENCE AND BUSINESS PREMISES. THE SAME WAS ADMITTED DURING THE COURSE OF SEARCH UNACCOUNTED IN HIS STATEMENT. BUT DURING THE COURSE OF ASSESSM ENT, IT WAS CLAIMED TO BE LENT RS.6 LACS BY HIS FATHER TO KALAMANDIR SCHEME W HICH WAS RECEIVED BACK WITH INTEREST OF RS.82,500/-. THE ALL FAMILY MEMBE RS INCLUDING MINOR CHILDREN MAINTAINED BOOK OF ACCOUNTS BUT NEITHER IT WAS RECO RDED IN BOOK OF LENDER, NOR IN THE BOOK OF ACCOUNTS OF LOANEE. IN OTHER REPLY OF CONSTRUCTION ACTIVITIES HAD BEEN DENIED BY THE ASSESSEE IN PAGE NO.9 OF THE ASS ESSMENT ORDER. ACCORDINGLY, IT WAS ASSESSED UNDISCLOSED INCOME FOR THE BLOCK PERIOD. 9. BEING AGGRIEVED WITH THE ADDITION OF THE A.O., T HE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD CONFIRMED THE ADDI TION BY OBSERVING THAT THE ASSESSEE HAD MADE DISCLOSURE, NO EVIDENCE WERE FURN ISHED FROM HIS FATHER THAT IT WAS A LOAN TO KALAMANDIR SCHEME. THUS, HE MADE PART OF UDI FOR BLOCK PERIOD. 10. NOW THE ASSESSEE IS BEFORE US. THE LD. COUNSEL FOR THE APPELLANT HAS SUBMITTED THAT CASH FOUND DURING THE SEARCH, WAS RE CEIVED BACK FROM KALAMANDIR BY FATHER OF THE ASSESSEE. SHRI KIRCHAN D B. SHAH, WHO WAS PARTNER IN THAT FIRM. HE ALSO HAS DRAWN OUR ATTENT ION ON PAGES NOS. 6,12,13 & 20 OF PAPER BOOK AND REQUESTED TO DELETE THE ADDITI ON. AT THE OUTSET, LD. CIT DR HAS VEHEMENTLY RELIED ON THE ORDER OF A.O., DISC LOSURE MADE U/S.132(4) BY THE ASSESSEE AND ARGUED FOR UPHELD THE ORDER OF THE CIT(A). IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 13 11. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL ON RECORD. THE CLAIM OF THE ASSESSEE THAT IT WAS RECEIVED BACK FROM KALAMANDIR BUT THIS AMOUNT HAD NOT BEEN DISCLOSED IN THE BOOK OF KALAMA NDIR. NO COGENT EVIDENCE FURNISHED BY THE ASSESSEE TO REFUTE THE FI NDING OF THE A.O. FURTHER, HIS FATHER HAD BEEN ADMITTED BEFORE ITSC AS AN ADDITIONAL INCOME. THUS, WE DO NOT FIND ANY REASON TO INTERVENE IN THE ORDER OF CIT(A). ACCORDINGLY, THE ORDER OF CIT(A) IS UPHELD. 12. THE ASSESSEES THIRD AND FORTH GROUNDS OF APPEA L OF THE ASSESSEE AGAINST CONFIRMING OF RS.11.5 LACS IN RESPECT OF UN ACCOUNTED INVESTMENT IN KALAMANDIR AS PER PAGE NOS. 41 TO 45 OF ANNEXURE A- 64 AND RS.1,85,017/- IN RESPECT OF INVESTMENT IN LAND AT BHARUCH INVESTMENT OF RS.80,000/- AS PER PAGE 92 OF ANNEXURE A 64 AND REVENUE HAS OBJECTED T HE APPELLANT OF INVESTMENT IN REAL ESTATE FROM RS.15 LACS TO 13,35, 017 IN GROUND NO.4. THE A.O. OBSERVED THAT THE ASSESSEE CLAIMED BEFORE HIM DURING ASSESSMENT PROCEEDING THAT HE AND HIS FATHER WERE NEVER A PART NER IN THE FIRM CALLED KALAMANDIR BUT THE SEIZED PAGES 41 TO 45 OF ANNEXUR E 64 CONTRADICTS HIS SUBMISSION. THESE PAPERS WERE SEIZED DURING THE CO URSE OF SEARCH PROCEEDING FROM HIS POSSESSION, WHICH ALSO SHOWED A MPLE CONNECTION WITH KALAMANDIR. THE ASSESSEE HAD DIFFERENTIATED BETWEE N KALAMANDIR & KALAKUNJ SCHEME MENTIONED IN THESE PAPERS. HE HAD ADMITTED THAT HIS FATHER HAD LENT RS. 6 LACS IN CASH TO PROMOTE THIS SCHEME. HE FURT HER OBSERVED THAT THE ASSESSEE HAD DESCRIBED DETAILS, THE MANNER IN WHICH HE HAD EARNED THE IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 14 UNDISCLOSED INCOME, VIDE HIS ANSWER NO.15 IN THE ST ATEMENT RECORDED THREE DAYS AFTER SEARCH AND THE ASSESSEE CANNOT CLAIM THA T THE STATEMENT WAS GIVEN UNDER DURESS. THE AMOUNTS APPEARING IN THESE PAPERS AS BELONGING TO THE KALAMANDIR SCHEME WERE AS UNDER: PAGE 45- IN THIS PAGE, THE LIST OF 12 MEMBERS OF THE KALAKUN J SCHEME IS WRITTEN WITH THE TOTAL MONEY RECEIVED FROM EACH MEM BER. THE GRAND TOTAL OF THE MONEYS RECEIVED AS ON 30/09/1993 IS RS.29,23,021 WHICH IS ALSO BIFURCATED AS BY CHEQUE RS.15,15,021 & BY CASH RS.14,08,000 PAGE 45 [REVERSE] IN THIS PAGE THE DETAILS OF THE DEPLOYMENT OF THE U NACCOUNTED CASH ON MONEY RECEIPTS ARE DISCUSSED. HERE RS.1,18,000 IS SHOWN AS GIVEN TO KALAMANDIR SCHEME . PAGE 44- IN THIS PAGE, THE DETAILS OF THE MONEYS RECEIVED BY THE ASSESSEE IS WRITTEN. THERE ARE TWO PARTS, THE TOP PART BEIN G THE RECEIPT & DEPLOYMENT AND THE BOTTOM PART BEING THE TOTAL INVE STMENT BY THE ASSESSEE. THE ENGLISH VERSION IS REPRODUCED AS UNDER. TOP PART KALAMANDIR UPTO 30/9/1993 K.B. 6,00,000 KIRIT PATEL 4,54,500 IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 15 K.P. 50,000 RAJKOT BANK 10 00 SCRAP SALE 16,500 RAJNIBHAI PROFIT 1,00,000 KALAKUNJ 1,18,000 BHUPENDRA [ENTRY] 1 ,00,000 RAJNIBHAI [LOAN GIVEN] 50,000 RAJKOT BANK 34,000 =================================================== === BOTTOM PART 6,30,000 [600 CASH+30 CHEQUE] 6,17,000[CHEQUE] 4,18,000 [KALAKUNJ] [300 CHEQUE + 118 CASH] 4,54,000 [CASH] 10,48,000 10,71,500 1,02,000 [MEMBERS] 45,000 [SOCIETY] & 34,000 [STAMP] 11,50,000 11,50,000 PAGE 43- & 42 & 41 THIS IS THE TRIAL BALANCE OF KALA BUILDERS [KALAKUN J] SCHEME FOR THE PERIOD 1.4.93 TO 30.9.93. THE ASSESSEE, AFTER DISTINGUISHING THE KALAMANDIR S HCEME AND AFTER IDENTIFYING THE VARIOUS PAPERS, HAS DESCRIBED AS TO HOW MUCH MONEY HAD BEEN INVESTED AND AS TO HOW MUCH MON EY HAD BEEN EARNED. THE UNDISCLOSED INVESTMENT ON THIS COUNT WAS WORKED OUT BY THE ASSESSEE HIMSELF AND HE HAD NOT ADMITTED THE ABOVE AMOUNT OF RS.28,80,500 IN HIS STATEMENT. IN STEAD, HE HAD DIS TINGUISHED THE UNACCOUNTED INVESTMENT IN THE SCHEME DURING THE BLO CK PERIOD AS RS.11,50,000 AS MENTIONED IN BOTTOM PART OF PAGE 44 OF ANNEXURE 64 REPRODUCED SUPRA: [II] REGARDING THE UNDISCLOSED INVESTMENTS IN LAND AT BHARUCH, THE ASSESSEE HAS SUBMITTED THAT ON PAGES 22,37 & 92 OF IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 16 ANNEXURE A-64, DETAILS IN RESPECT OF ACQUISITION OF PLOT AT BHARUCH IN HIS NAME AND IN THE NAME OF FAMILY MEMBERS HAVE BEEN MENTIONED. THE SAID PAPERS RELATES TO PURCHASE OF PLOT NO.32,33,34 & 117 TOTALING 6,521 SQUARE FEET AT BHA RUCH. IN THE SAID PAPERS, PAYMENT IN CASH OF RS.20000/- FOR EACH PLOT TOTALING TO RS.80,000/- IS MENTIONED. PAYMENT MADE BY DRAFT AMOUNTING TO RS.26,084/- IS MADE BY BHAVNABEN YOGESH SHAH WHI CH IS ACCOUNTED FOR IN HER BOOKS OF ACCOUNTS. IN THE SAI D PAPER, AREA OF PLOTS AND THE RATE OF PLOTS ARE ALSO WRITTEN. F OR EXAMPLE, FOR PLOT NO.32, AREA MENTIONED IS 1291 SQ.FT. IN THE B OTTOM OF THE PAPER, TOTAL AMOUNT PENDING OF FOUR PLOTS IS MENTIO NED AT RS.1,05,017/-. THE ASSESSEE COULD NOT EXPLAIN AS T O HOW AN ODD FIGURE OF RS. 26,084 HAD TO BE PAID BY DRAFT AND AS TO WHY AND HOW THE BALANCE PAYMENTS WERE TO BE MADE IN CASH. THE ASSESSEE HAS CLAIMED THAT THE BALANCE AMOUNT HA D NOT BEEN PAID AND HENCE ONLY RS.80,000 IS THE UNDISCLOSED IN COME. THIS PLEA IS TOTALLY INCORRECT. THE LEFT HAND SIDE OF PAGE 92 CLEARLY DISCUSSES HOW THE ENTIRE AMOUNT HAS BEEN PAID BY TH E ASSESSEE. THIS NOTING GIVES THE RECONCILIATION OF THE PAYMENT AS UNDER: TOTAL AREA :: 6,521 X RS.25 = RS.1,63,025 LESS; CASH RS. 80,000 BALANCE:: RS. 83,025 LESS:: DD RS. 26,084 BALANCE:: RS. 56,741 [CASH 55,000 + 1,941GIRISH ] THUS IT IS CLEAR THAT THE ASSESSEE HAS MADE UNACCOU NTED PAYMENTS OF RS.1,05,017 + RS.80,000 = RS.1,85,017 TOWARDS THESE PLOTS. THE ASSESSEE HAD ADMITTED INVESTMENT IN KALAMANDIR RS.6 LACS VIDE LETTER DATED 24/11/2006 BEFORE CIT(A) IN THE HAND OF HIS F ATHER BUT NO EVIDENCE OF IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 17 CASH RECEIVED FROM HIS FATHER HAS BEEN SUBMITTED BE FORE ANY STAGE. THE LD. A.O. MADE ADDITION OF RS. 15 LACS UNDER THE HEAD UN ACCOUNTED INVESTMENT IN REAL ESTATE AND CONSTRUCTION PROPERTIES IN TOTAL AS PER DISCLOSURE MADE U/S.132(4) ON ACCOUNT OF INVESTMENT IN KALAKUNJ OF RS.11.5 LACS & INVESTMENT IN LAND AT BHARUCH AT RS.1,85,017/- 13. THE ASSESSEE WENT IN APPEAL BEFORE CIT(A) WHO H AD CONFIRMED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAD NOT AB LE TO REFUTE THE CONTENTION/ARGUMENT OF THE A.O. ABOUT THE INVESTMEN T MADE IN LAND AND IN KALAMANDIR SCHEME (AS DETAILED ON PAGE NOS. 19 TO 2 1 OF THE A.OS. ORDER) WAS RS.11.5 LACS AND FOR THE LAND IN BHARUCH (PAGE NOS. 22, 37 & 92 OF ANNEXURE A-64) WAS RS.1,85,017/-. 14. THE ASSESSEE CAME BEFORE US, THE LD. COUNSEL FO R THE APPELLANT SUBMITTED THAT THE APPELLANT OR HIS FAMILY MEMBERS HAD NEVER INVOLVED IN CONSTRUCTION ACTIVITIES BUT SHRI KIRCHAND B. SHAH ( FATHER) WAS PARTNER IN FIRM KALAMANDIR. NEITHER APPELLANT NOR ANY HIS FAMILY M EMBERS WERE PARTNER IN KALAKUNJ. ALL SEIZED PAPERS WERE EXPLAINED BEFORE THE A.O. SHRI KIRCHAND B. SHAH INVESTED RS.6 LACS IN KALAMANDIR. DETAILS ADD RESS WITH PAN NO. 31-128 FZ 905/ ORDER 6 (1) ABD AS WELL AS NAMES OF PARTNER S MADE AVAILABLE TO A.O. NO ACTION U/S.158 BD WAS TAKEN BY THE A.O. ASSESSE ES REPLY ON RS. 1,85,017/- IS REPRODUCED AS UNDER: I. AT BHARUCH, 4 PLOTS PURCHASED BY THE APPELLANT AND HIS FAMILY MEMBERS CASH PAYMENT OF RS.80,000/- FOR FO UR IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 18 PLOTS DETAILS OF INVESTMENTS MADE AND AMOUNTS OUTSTANDING RS.1,05,017/- AVAILABLE IN SEIZED PAPER S. II. ADDITION OF RS.11,50,000/- IS BASED ONLY ON STA TEMENT TAKEN BY FORCE AT THE TIME OF SEARCH WHICH IS NOW R ETRACTED. ADDITION NOT SUPPORTED BY ANY EVIDENCE FOUND DURING SEARCH (PLS. SEE PAGE 165 & 166 OF THE PAPER BOOK). FROM THE ANOTHER SIDE, LD. CIT DR HEAVILY RELIED ON OBSERVATION MADE BY THE A.O. IN BLOCK ASSESSMENT AND ENTRIES IN SEIZED MATE RIAL AND ARGUED THAT THE ASSESSEE NEVER ADMITTED HIS FATHER AS PARTNER IN KA LAKUNJ AND DETAILS WERE NOT GIVEN BEFORE THE A.O. EVEN THEN, THESE EVIDENCES A DMITTED NOW HAVE NOT EXPLAINED THE INVESTMENT MADE IN KALAKUNJ. THUS, H E PRAYED TO UPHELD THE ORDER OF CIT(A). 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE PAPER BOOK SUBMITTED. THE ASSESSEE HAD DENIED ANY PARTNERSHIP BUSINESS BEFORE THE A.O. IN KALAKUNJ, NO DETAILS ADDRESS, PAN HAS BEEN SUBMITTED ANY STAGE BUT THESE EVIDENCE WERE FOUND FROM THE POSSESSION OF TH E ASSESSEE. THE BOTTOM PART SHOWED TOTAL UNACCOUNTED INVESTMENT OF RS.11.5 LACS IN KALAKUNJ. THE PAPER BOOK FILED BY THE ASSESSEE HAS NOT EXPLAINED THE SOURCE OF ENTRIES. THUS, WE CONFIRM THE ORDER OF A.O. AND UPHELD THE C IT(A)S ORDER. 16. IN FIFTH GROUND OF ASSESSEE, HE CHALLENGED THE CONFIRMATION OF ADDITION OF RS.68,448/- ON ACCOUNT OF RENOVATION MATERIAL AS PE R PAGE NO.13/14 OF ANNEXURE A-64 AND THE REVENUE HAS CHALLENGED THE RE STRICTING ADDITION ON ACCOUNT OF INVESTMENT IN RESIDENTIAL PROPERTY FROM RS. 15 LACS TO RS.68,448/-. IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 19 THE A.O. OBSERVED THAT THE ASSESSEE HAS RESIDENTIAL BUNGALOW IN JOINT NAME OF HIS WIFE. HE HAD DISCLOSED RS.15,00,000/- ON AC COUNT OF UNACCOUNTED INVESTMENT IN BUNGALOW BUT HE RETRACTED DURING THE COURSE OF ASSESSMENT PROCEEDING. THE LD. A.O. HAD OBSERVED THAT RUNNING PUNCHNAMA PREPARED DURING THE INSPECTION ON 31/5/2001 BY THE AUTHORISE D OFFICER, LISTING 36 KEY ITEMS. THE BUNGALOW HAS ALL THE RICHNESSES OF LUXU RY INCLUDING METAL AND GLASS CHANDELIERS, TOP QUALITY MARBLE FLOORING IN A LL THE ROOMS, CERAMIC CHANDELIER IN THE DINING ROOM, DECORATED METAL GRIL L WORK ON ALL STAIR WAYS AND SUCH OTHER PARAPHERNALIA TO QUALIFY IT TO BE A LUXU RY HOME. A MOST IMPORTANT DOCUMENTARY EVIDENCE IS PAGE NO.13 & 14 OF ANNEXURE A-64, WHERE THE EXCESS ITEMS AFTER MODIFICATION AND RENOVATION HAVE BEEN LISTED BY THE PERSONS WHO HAD UNDERTAKEN THE JOB. THE TOTAL OF T HESE ITEMS MARKED AS MAJERE APVANI ITEM (ITEMS FOR WHICH DISCOUNT TO B E GIVEN), COMES TO RS.68,448/-. IF THE MATERIAL BROUGHT AND FOUND EXCE SS AMOUNTS TO RS.68,448/-, THE ACTUAL CONSUMPTION CAN VERY WELL BEEN JUDGED. A RENOVATION ON THIS SCALE IS NOT APPEARING ANYWHERE IN THE BOOKS OF ACCOUNT O F THE ASSESSEE. THE TOTAL AMOUNT RECORDED IN THE BOOKS OF ACCOUNT AS SPENT FO R RESIDENTIAL PROPERTY IS NEARLY RS.11,00,000/-. SEEING TO THE CLEAR EVIDENC ES, POINTING TO THE LUXURIOUS NATURE OF THE BUNGALOW, THE ASSESSEE WAS QUITE RIGH T WHEN HE QUANTIFIED THE UNDISCLOSED INVESTMENT/EXPENDITURE ON THE BUNGALOW AS RS.15,00,000/- IN HIS SWORN STATEMENT. THUS, ON THE BASIS OF THE EXPLICI T EVIDENCES SEIZED DURING THE SEARCH AND ALSO ON THE BASIS OF THE RUNNING PAN CHNAMA AND THE LISTED IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 20 FORMS OF LUXURY RECORDED THEREIN, THE LD. A.O. HOLD THAT THE ASSESSEE HAS SPENT RS.15,00,000/- IN THE RENOVATION OF THE RESID ENTIAL BUNGALOW SITUATED AT 14/B, STHANKVASI JAIN SOCIETY, NARANPURA, AHMADABAD , OVER AND ABOVE WHAT HAS BEEN RECORDED IN HIS BOOKS AND HIS WIFES BOOKS . IT WAS CLARIFIED THAT THIS QUANTIFICATION WAS DONE ON THE BASIS OF THE RUNNING PANCHNAMA AND THE SEIZED RECORD MENTIONED ABOVE RESPECTFULLY FOLLOWIN G THE DECISION OF THE HON. GUJARAT HIGH COURT. THIS INCOME OF RS.15,00,000/- IS TAXED U/S.158BB. 17. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT( A), WHO HAD PARTLY CONFIRMED THE ADDITION. IT IS HELD THAT THE A.O. H AD MADE ADDITION ON ESTIMATED BASIS AS PER INSPECTION REPORT AND THE AS SESSEE HAD DISCLOSED EXPENSE IN THE BOOK OF ACCOUNT. THE ONLY EVIDENCE OF UNDISCLOSED EXPENSE TO THE TUNE OF RS.68,448/- WERE FOUND, DURING THE COUR SE OF SEARCH. THUS, HE DELETED THE REMAINING ADDITION. 18. NOW THE ASSESSEE AS WELL AS REVENUE IS BEFORE U S. THE LD. COUNSEL FOR THE APPELLANT HAS SUBMITTED THAT THE TOTAL INVESTIG ATION OF RS.11,20,142/- HAS BEEN DISCLOSED IN BOOK OF ACCOUNT OF THE ASSESSEE A ND HIS WIFE. HE HAD DRAWN OUR ATTENTION ON PAGE NOS. 85 TO 90 OF PAPER BOOK. AT THE OUTSET, LD. CIT ARGUED THAT THE LIST OF MATERIAL PREPARED DURIN G THE INSPECTION BY THE AUTHORIZED OFFICER WAS BASE OF COMPUTATION AND UNDI SCLOSED INCOME. THE ASSESSEE HAD DISCLOSED AN ADDITIONAL INCOME U/S.132 (4) OF THE IT ACT AT RS.15 LACS ON LUXURY ITEMS FITTED IN IT. HE HAS ALSO FIL ED COPY OF LOOSE & SEIZED IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 21 PAPERS VIDE HIS LETTER DATE 23./11/11. THUS, HE RE QUESTED TO REVERSE THE ORDER OF THE CIT(A). 19. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD, WHATEVER ADDITION MADE BY THE A.O. WAS BASE D ON STATEMENT RECORDED U/S.132(4) AS WELL AS INSPECTION REPORT. PAGE NOS. 13 & 14 OF THE ANNEXURE A- 64 WERE TO BE CONSIDERED BY THE A.O. FOR UNDISCLOSE D INCOME U/S. 158 BC OF IT ACT. FURTHER, THE APPELLANT HAD MADE DISCLOSURE ON ACCOUNT OF INVESTMENT IN CONSTRUCTION OF RS.5 LACS & INVESTMENT IN FURNITURE AND HOUSEHOLD ARTICLES AT RS.1 LAC IN BUNGALOW AT 14/B, STHANKVASI JAIN SOCIE TY, NARANPURA, AHMADABAD BEFORE SETTLEMENT COMMISSION, WHICH PERTA INED TO BLOCK PERIOD. THE AUTHORIZED OFFICER HAS IDENTIFIED THE LUXURIOUS ITEM FITTED IN BUNGALOW AND LIST OF ITEMS WERE PREPARED, SUBSTANTIATES THE FIND ING OF THE A.O. THE ENTRIES OF EXPENSE OF RS.68,448/- HAD NOT BEEN FOUND PLACE IN PAGE NOS. 85 TO 90 OF PAPER BOOK. THUS, WE CONFIRM THIS ADDITION AT RS.6 ,68,448/- (5 LACS + 1 LAC + 68,448). THE CIT (A) WAS NOT RIGHT IN CONFIRMING TH E ADDITION ONLY RS.68,448/-. THUS, REVENUES APPEAL IS PARTLY ALLOWED AND ASSESS EES APPEAL IS DISMISSED ON THIS GROUND. 20. NOW WE TAKE REMAINING GROUNDS OF REVENUES APP EALS IN IT(SS)A NOS. 5 & IT(SS)A NO. 6/AHD/2009 21. THE FIRST GROUND IN BOTH REVENUES APPEALS ARE DIRECTED AGAINST THE DELETION OF ADDITION OF RS.52,82,600/- ON ACCOUNT O F UNDISCLOSED PROFIT EARNED FROM SILVER BUSINESS. THE LD. A.O. OBSERVED THAT D URING THE COURSE OF SEARCH IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 22 AT BUSINESS PREMISES STOCK OF 330.670 KG. OF SILVER WAS FOUND. BESIDES THIS, 27.511 KG OF SILVER STOCK WAS WITH JOB WORKER AS PE R A-30. THUS, TOTAL STOCK PHYSICALLY WAS FOUND 358.181 KG, HOWEVER AS PER BOO KS, AS PER ANNEXURE A- 36 STOCK OF SILVER WAS WORKED OUT 158.598 KGS. THE A.O. HAD CALCULATED THE EXCESS STOCK OF 195.561 KG. THE ASSESSEE HAD FILED THE RECONCILIATION BEFORE HIM. AFTER CONSIDERING THE ASSESSEES REPLY, HE MA DE ADDITION UNDER HEAD EXPENDITURE/INVESTMENT AT RS.3,84,943/-. HE FURTHE R HELD THAT 92.965 KG OF SILVER WAS RECEIVED BY THE ASSESSEE FOR REMAKING IS LESS THAN 2 MONTHS (1-4- 2001 TO THE DATE OF SEARCH). THE PREVALENT AVERAGE RATE OF JOB WORK WAS RS.2000 PER KG, AS PER RETURN FILED BY THE ASSESSEE . THE ASSESSEE HAD NOT SHOWN THE TURN OVER OF JOB WORK CHARGES MORE THAN R S. 2.5 LACS. MOST OF THESE CHARGES ARE REFLECTED IN CASH WHERE NO CROSS CHECK WAS POSSIBLE. THEREFORE, HE REJECTED THE BOOKS RESULT AND ESTIMAT ED AS UNDER: WORK ORDER RECEIVED FROM 1.4.2001 TO 25.5.2001, APPROXIMATELY 2 MONTHS 92.965 KGS ESTIMATED WORK FOR 12 MONTHS = 92.965 X 6 558.00 KG S PREVALENT RATES FOR JOB WORK BEING RS.2,000/- PER KG. ANNUAL JOB WORK TURNOVER RS.11,16,000/- FOR THE BLOCK PERIOD UNDER ASSESSMENT, THE TOTAL TU RNOVER CAN BE ESTIMATED FOR 10 COMPLETED ACCOUNTING YEARS AND A B ALANCE OF TWO MONTHS. THIS TOTAL TURNOVER IS COMPUTED AS UNDER; AVERAGE ANNUAL TURNOVER: RS.11,16,000/- LESS; TURNOVER DECLARED [-] RS. 2,50,000 AVERAGE UNACCOUNTED ANNUAL TURNOVER; RS. 8,66, 000/- TOTAL UNACCOUNTED ANNUAL TURNOVER; FOR 10 YEARS AND SIX MONTHS. [RS. 8,66,000/- X 10 1/5 ] RS.88,04,333 TOTAL UNACCOUNTED PROFIT IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 23 [RS.88,04,333 X 60%] RS.52,82,600 THE LD. A.O. CALCULATED UNDISCLOSED INCOME U/S.158B C AT RS.52,82,600/- ON THE BASIS OF A-64 [87-REVERSE] AND A58[61]. SIMILA R ADDITION WAS ALSO MADE IN THE HANDS OF ASSESSEES FATHER, LATE SHRI KIRCHAND B. SHAH FOR THE BLOCK PERIOD AS PROTECTIVE BASIS. IN BOTH CASES, THE APP EAL FILED BEFORE THE CIT(A). IN CASE OF THE ASSESSEES FATHER, LD. CIT(A) HAD DE LETED THE ADDITION IN THE HAND OF LATE KIRCHAND B. SHAH DUE TO HE CONFIRMED T HE ADDITION IN CASE OF ASSESSEE AS SUBSTANTIVE. THE OPERATIVE PART OF THE ORDER IN CASE OF FATHER IS AS UNDER: 5. IN THE APPELLATE ORDER OF THE SAME DATE I.E. 24 /10/2008 IN APPEAL NO.CIT(A)-III/134/CC-2(3)/06-07 THE SAME ISS UE HAS BEEN CONSIDERED IN THE CASE OF SHRI YOGESH K SHAH AND TH IS MATTER HAS BEEN HELD AS PERTAINING TO YOGESH K. SHAH ON A SUBSTANTIVE MANNER. IN VIEW OF THIS FINDING, THE PROTECTIVE AD DITION IN RESPECT OF THE SAME ISSUE(S) AND SAME FACTS, IN CASE OF THE APPELLANT, IS NOT CALLED FOR. HENCE IT IS DELETED. IN CASE OF THE ASSESSEE, HE HAS HELD AS UNDER: 19. THE A.O. HAS PROCEEDED TO MAKE ESTIMATE OF THE TURNOVER OF JOB WORK AND OF PROFITS THEREON FOR THE ENTIRE BLOC K PERIOD, ON THE BASIS OF THE FACT THAT THE APPELLANT HAD RECEIVED 9 2.9 KGS. OF SILVER FOR JOB WORK BETWEEN THE PERIOD 1/4/2001 TO 25/5/20 01. THE A.O. ALSO FELT THAT THAT THE JOB WORK CHARGES WERE ACTUA LLY RS.2,000/- PER KG. AND NOT RS.5.00/- PER KG. AS HAS BEEN SHOWN BY THE APPELLANT. THUS THE QUANTUM OF THE TURNOVER AND ALS O THE RATE OF JOB CHARGE WERE PURELY ON ESTIMATES FOR WHICH THERE WAS NO IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 24 EVIDENCE/MATERIAL ON RECORD. THE ESTIMATE OF THE T URNOVER MADE BY THE A.O. OVER 10 L /2 YEARS, ON THE STRENGTH OF THE TURNOVER NOTED BY HIM, FOR A PERIOD OF ABOUT 55 DAYS, WAS A FLIGHT OF IMAGINATION AND WAS NOT WARRANTED, APART FROM THE F ACT THAT IT HAD BEEN SPECIFICALLY PROHIBITED BY THE HON'BLE HIGH CO URT. SIMILARLY, THE A.O. HAVING NOTED THAT PROFITS OF RS.2.04 LAKHS HAD ACCRUED IN SPECULATION ACTIVITY OVER A PERIOD OF 22 DAYS, WAS NOT JUSTIFIED IN ESTIMATING SPECULATION PROFITS FOR THE ENTIRE BLOCK PERIOD, ON A PRO RATA BASIS. THIS APPROACH OF THE A.O. WAS NOT ONLY CONTRADICTORY TO THE DIRECTIONS OF THE HON'BLE HIGH COURT BUT WAS ALSO DEVOID OF ANY MERIT, THERE BEING NO MATERIAL ON RECORD, TO JU STIFY IT. IN FACT, EVEN THE A.O. WAS NOT CONVINCED OF THE APPROACH ADO PTED BY HIM BECAUSE HE TOO HAD WHITTLED DOWN HIS OWN ESTIMATE O F SUCH PROFITS, I.E. FROM RS.2.78 CRORES TO RS.50 LAKHS. THUS THE ESTIMATED ADDITIONS OF RS.52.82 LAKHS, ON ACCOUNT O F UNDISCLOSED PROFITS OF SILVER BUSINESS AND OF RS.50 LAKHS ON AC COUNT OF SPECULATIVE SHARE TRANSACTION CANNOT BE UPHELD AND ARE DELETED. 22. NOW, THE REVENUE IS BEFORE US. LD. CITDR VEHEM ENTLY ARGUED THAT NO COGENT REASONS HAD BEEN GIVEN BY THE LD. CIT(A) IN ALLOWING THE APPEAL IN FAVOUR OF THE ASSESSEE. THE APPELLANT DISCLOSED PA LTRY AMOUNT INCOME ON ACCOUT OF JOBWORK. HE RELIED ON THE ORDER OF THE A .O. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE CONTENDED AS UNDER: I. SILVER BUSINESS BELONGS TO THE FATHER OF THE AP PELLANT. II. COMPUTATION BASED SOLELY ON ESTIMATION.. III. THE ASSESSING OFFICER HAS ESTIMATED TUR NOVER AS UNDER (PLS. SEE PAGE NO,5 OF THE ASSESSMENT ORDER : IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 25 A) TURNOVER IN KGS. FOR THE PERIOD PRECEDING THE DA TE OF SEARCH I.E. 1 ST APRIL TO 25' H MAY 2001 TAKEN AS OF TWO MONTHS. B) ESTIMATED TURNOVER IN KGS. OF TWO MONTHS WAS MUL TIPLIED BY 6 TO ARRIVE AT ANNUAL TURNOVER IN KGS. C) ESTIMATED ANNUAL TURNOVER IN KGS. WAS MULTIPLIED BY ESTIMATED JOB-WORK RATE OF RS.2,000/- PER KG. TO CA LCULATE ESTIMATED ANNUAL TURNOVER IN AMOUNT. D) AMOUNT OF ANNUAL TURNOVER (RS.2,50,000) DECLARD IN RETURN, DEDUCTED FROM ESTIMATED ANNUAL TURNOVER. E) ESTIMATED ANNUAL TURNOVER IN AMOUNT WAS MULTIPLI ED BY 10.1/6 TH TO CALCULATE ESTIMATED TURNOVER IN AMOUNT FOR BLOC K PERIOD. F) ESTIMATED UN-ACCOUNTED PROFIT FOR THE BLOCK PERI OD TAKEN AT ESTIMATED 60% OF ESTIMATED TURNOVER FOR THE BLOC K PERIOD. IV. THE ASSESSING OFFICER HAS ADOPTED JOB WORK RATE AT ESTIMATED RS.2,000/- PER KG. OF SILVER. ESTIMATED R ATE ADOPTED IS WITHOUT ANY BASIS OR ANY COMPARATIVE INS TANCES OR ANY OTHER EVIDENCE. THE RATE IN REGULAR BOOKS OF ACCOUNTS AVAILABLE IS ONLY RS.500/- AS PER RETURN O F INCOME FILED FOR A.Y.2001-02. V. FURTHER, PROFIT ON THIS ESTIMATED UNACCOUN TED TURNOVER HAS BEEN AGAIN ESTIMATED AT 60% AND SUCH P ROFIT IS TREATED AS UNDISCLOSED INCOME FOR BLOCK PERIOD. ACCORDINGLY, ADDITION IS MADE ON ESTIMATED BASIS AT RS.52,82,600/-. VI. DURING SEARCH NOT A SINGLE PIECE OF PAPER WAS FOUND TO PROVE UNACCOUNTED TURNOVER AND INCOME FROM SILVE R BUSINESS. ADDITION AS SUCH IS NOT SUPPORTED BY ANY EVIDENCE AND IS MERELY BASED ON ASSUMPTIONS, SURMIS ES AND CONJECTURES. VII. IT IS TO BE NOTED THAT QUANTITY OF ANNUA L TURNOVER SHOWN BY APPELLANT IN THE BOOKS OF ACCOUNTS AT AROU ND 500 KG. IS ALMOST THE SAME AS ESTIMATED AT 558 KG. BY T HE ASSESSING OFFICER. THEREFORE, NO MATERIAL DISCREPAN CIES OR IRREGULARITIES IN THE BOOKS OF ACCOUNTS HAVE BEEN F OUND DURING THE SEARCH. IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 26 VIII. ESTIMATED ADDITION, NOT SUPPORTED BY AN Y EVIDENCE, CANNOT SUSTAIN AS DECIDED IN VARIOUS CASES ON WHICH RELIANCE IS PLACED ASUNDER: (A) SUNDER AGENCIES V. DY. CIT, [63 ITD 245] (B) INDORE CONSTRUCTION PVT.LTD. V. ACIT, [71 ITD 1 28] (C) PATEL RAJESHKIUNAR V. DY.CIT, [62 TTJ 189] (D) D. N. KAMANI, HUF V. DY.CIT, [70 ITD 77] (E) K. NAIDU V. ACIT, [(2002)]256 ITR 76 AT (TM)] (F) JAYA S.SHETTY V. ACIT, [69 ITD 336] (G) KAPUR SONS SLEELS P.LTD. V. ACIT, [119 TAXMAN 113(MAG] (H) CIT V. USHA TRIPATHI [(2001) 249 ITR 4(ALL)] 23. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT THAT THE SILVER BUSINESS WAS BELONGED TO THE ASSESSEE BECAUSE HIS FATHER AS WELL AS HIS BROTHER HAD DENIE D HAVING BEEN ANY BUSINESS DONE THEMSELVES. ASSESSEES BROTHER WAS P ROVIDING SERVICES TO THE APPELLANT WHEREAS HIS FATHER HAD NOT ATTENDED THE B USINESS SINCE LAST 2 TO 3 YEARS. THUS, WE HOLD THAT THE SILVER BUSINESS WAS OWNED BY THE APPELLANT. HOWEVER, THE LD. A.O. ESTIMATED THE JOB CHARGE INCO ME WITHOUT ANY SEIZED MATERIAL WHICH IS NOT JUSTIFIED IN BLOCK ASSESSMENT PROCEEDINGS AS RELIED BY THE APPELLANT ON VARIOUS CASE LAWS. THE A.O. HAD N OT BROUGHT AY DISCRIMINATING DOCUMENTS IN ESTIMATING UNDISCLOSED INCOME AS PER SECTION 158BC OF THE IT ACT. THUS, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEALS OF REVENUE IN BOTH CASES. 24. THE REVENUES THIRD GROUND OF APPEAL IS AGAINST RESTRICTING THE ADDITION ON ACCOUNT OF INVESTMENT IN SHARE FROM RS.7,91,555/ - TO RS. 7,62,625/-. THE A.O. OBSERVED THAT THE ASSESSEE AND HIS FAMILY MEMB ERS WERE FOUND TO BE IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 27 POSSESSION OF LARGE NUMBER OF SHARES OF VARIOUS COM PANIES. OUT OF THESE SHARES WITH FACE VALUE OF RS.30,66,079/- WERE SEIZE D. THE ASSESSEE COULDNOT RECONCILE THE ACCOUNTED AND UNACCOUNTED SHARES DURI NG THE POST SEARCH INQUIRY. THE ASSESSEE SUBMITTED HIS RECONCILIATION , DURING THE REMAND PROCEEDING AS ORDER BY THE HONBLE SETTLEMENT COMMI SSION. THE TOTAL OF THE UNACCOUNTED SHARES HAD BEEN QUANTIFIED BY ASSESSEE HIMSELF AT RS.7,91,555/-. OUT OF THESE, SHARE AMOUNT TO RS.28 ,930/- HAD BEEN FOUND TO BE ACQUIRED PRIOR TO THE COMMENCEMENT OF THE BLOCK PERIOD. THE REMAINING INVESTMENT OF RS.7,62,625/- WAS EVEN ACCORDING TO T HE ASSESSEE TAXABLE U/S. 158BB. BUT, AT THE TIME OF BLOCK ASSESSMENT PROCEE DING, THE APPELLANT TOOK DIFFERENT VIEW ON IT THAT NO PART OF SHARE INVESTME NT WAS UNACCOUNTED. THE A.O. CONSIDERED THE SHARE LISTED IN AS PER ANNEXURE X-1 TO X-10 AND ANNEXURE 01 TO 03 AS PER PUNCHNAMA AND SHARE IN DEM AT ACCOUNT. THE APPELLANTS REPLY WAS NOT SUPPORTED WITH EVIDENCE A ND RETRACTION FROM OWN CALCULATION OF UNDISCLOSED SHARES CALCULATED FOR TH E PURPOSE OF SETTLEMENT PETITION BY THE APPELLANT HIMSELF. THUS, HE MADE A DDITION OF RS.7,62,626/- U/S. 158BB OF THE IT ACT. BUT IN COMPUTATION OF INCOME, THIS FIGURE HAS BEEN TAKEN AT RS.7,91,555/- WRONGLY BY THE A.O. THE LD. CIT(A ) HAD ADMITTED THIS CLERICAL MISTAKE AND CONFIRMED THE ADDITION ONLY RS.7,62,625 /-. 25. NOW THE REVENUE RAISED THIS GROUND OF APPEAL BE FORE US BUT IT CAN BE VERIFIED FROM THE ORDER OF THE A.O. THAT IT IS A CL ERICAL MISTAKE. THUS, WE DISMISS THE APPEAL OF THE REVENUE ON THIS GROUND. IT(SS)A NO.76/AHD/08, 5 & 6/AHD/09 BLOCK PERIOD: 1-4-92 TO 25-5-01 PAGE 28 26. IN RESULT, THE ASSESSEES APPEAL IN IT(SS)A NO. 76/AHD/2008 IS DISMISSED & THE REVENUES APPEAL (IT(SS)A NO. 5/AHD /2009) IN CASE OF ASSESSEE IS PARTLY ALLOWED BUT (IT(SS) A NO. 6/AHD/ 2009) IN CASE OF LATE SHRI KIRCHAND B. SHAH, THE REVENUES APPEAL IS DISMISSED . THIS ORDER PRONOUNCED IN OPEN COURT ON 14.12.2012 SD/- SD/- ( D.K. TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. '#$ / APPELLANT 2. &'#$ / RESPONDENT 3. )*)+ ' ', / CONCERNED CIT 4. ' ',- ' / CIT (A) 5. 01'' +, ' ''' +, 34 * / DR, ITAT, AHMEDABAD 6. 167 89 / GUARD FILE. BY ORDER/ , :/3' )' ' ''' +, 34 * < STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION H.W. PAPER OF MEMBER ON 10.12.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 11.12.2012 4) DATE OF CORRECTION 12.12.2012 5) DATE OF FURTHER CORRECTION XXX 6) DATE OF INITIAL SIGN BY MEMBERS 14.12.2012 7) ORDER UPLOADED ON ,, ,, 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE NO 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 14.12.2012