The ACIT, Mehsana Circle., Mehsana V. M/s Arjun C orportation, Mehsana

ITSSA 61/AHD/2004

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7752 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-01-2012
• Assessment Year: misc
• Appeal Filed On: 08-03-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Document seized; Source of fund; Corroborative evidences; Valuation report; Block assessment; Documents seized
• Section: 32; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. K. GARO DIA, AM) IT(SS)A NO.61/AHD/2004 B. P.: 1988-89 TO 1998-99 THE A. C. I. T., MEHSANA CIRCLE, APOLLO ENCLAVE, 2 ND FLOOR, OPP. SIMANDER JAIN TEMPLE, HIGHWAY, MEHSANA 384 002 VS M/S. ARJUN CORPORATION, C/O. SABERA HOTEL PVT. LTD., RAMOSANA JAKAT MARKET, NR. RAILWAY CROSSING, MEHSANA PA NO. - (APPELLANT) (RESPONDENT) IT(SS)A NO.62/AHD/2004 B. P.: 1988-89 TO 1998-99 THE A. C. I. T., MEHSANA CIRCLE, APOLLO ENCLAVE, 2 ND FLOOR, OPP. SIMANDER JAIN TEMPLE, HIGHWAY, MEHSANA 384 002 VS M/S. AMAR CORPORATION, C/O. SABERA HOTEL PVT. LTD., RAMOSANA JAKAT MARKET, NR. RAILWAY CROSSING, MEHSANA PA NO. - (APPELLANT) (RESPONDENT) IT(SS)A NO.184/AHD/2005 B. P.: 1988-89 TO 1998-99 THE A. C. I. T., MEHSANA CIRCLE, APOLLO ENCLAVE, 2 ND FLOOR, OPP. SIMANDER JAIN TEMPLE, HIGHWAY, MEHSANA 384 002 VS SABERA HOTEL PVT. LTD., RAMOSANA JAKAT MARKET, NR. RAILWAY CROSSING, MEHSANA PA NO. - (APPELLANT) (RESPONDENT) IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 2 IT(SS)A NO.185/AHD/2005 B. P.: 1988-89 TO 1998-99 THE A. C. I. T., MEHSANA CIRCLE, APOLLO ENCLAVE, 2 ND FLOOR, OPP. SIMANDER JAIN TEMPLE, HIGHWAY, MEHSANA 384 002 VS VIKAS BUILDERS, C/O.SABERA HOTEL PVT. LTD., RAMOSANA JAKAT MARKET, NR. RAILWAY CROSSING, MEHSANA PA NO. - (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI B. L. YADAV, SR. DR ASSESSEE BY SHRI SUNIL TALATI, AR DATE OF HEARING: 11-01-2012 DATE OF PRONOUNCEMENT: 03-02-2012 O R D E R PER BHAVNESH SAINI: THIS ORDER SHALL DISPOSE OF ALL THE ABOVE DEPARTMENTAL APPEALS FILED AGAINST DIFFERENT ASSESSEES. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. 3. BRIEFLY, THE BACKGROUND LEADING TO FILING OF THE SE APPEALS ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION U/S 1 32 OF THE IT ACT CARRIED OUT AT THE RESIDENTIAL PREMISES OF SHRI SEN DHABHAI M. DESAI AND HIS FAMILY MEMBERS AT MEHSANA AND AT AHMEDABAD ON 28-08- 1997 AND CERTAIN DOCUMENTS WERE SEIZED. BLOCK ASSES SMENT PROCEEDINGS WERE COMPLETED IN THEIR CASES AS WELL A S PROCEEDINGS U/S 158BD OF THE IT ACT WERE ALSO CONDUCTED. THE AO FRAMED THE IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 3 BLOCK ASSESSMENT ORDERS WHICH REMAINED IN APPEAL BE FORE THE LEARNED CIT(A). THE LEARNED CIT(A) GRANTED RELIEF T O THE ASSESSEE AGAINST WHICH THE REVENUE HAS PREFERRED THE PRESENT APPEALS AGAINST DIFFERENT ASSESSEES. NOW, WE TAKE UP ALL THE APPEAL S SEPARATELY FOR THE PURPOSE OF DISPOSAL AS UNDER: IT(SS)A NO.61/AHD/2004 ( ASSESSEE M/S. ARJUN CORPORATION) 4. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE LEARNED CIT(A)-XXI, AHMEDABAD DATED 24-12-2003 FOR THE ABOVE BLOCK PERIOD. 5. ON GROUND NO.1(I), REVENUE CHALLENGED THE DELETI ON OF ADDITION OF RS.40,000/- MADE ON ACCOUNT OF UNEXPLAINED EXPEN DITURE BY WAY OF PAYMENT TO OWNER OF THE LAND WHICH WAS STATED TO BE DEVELOPED BY THE ASSESSEE FIRM. THIS ADDITION WAS MADE BY THE AO ON ACCOUNT OF TERMS OF DEVELOPMENT AGREEMENT, COPY OF WHICH WAS F ILED WITH THE RETURN OF INCOME. AS PER THE AO, THE ASSESSEE HAD P AID A SUM OF RS.40,000/- TO SHRI VASTABHAI H. DESAI, THE OWNER O F THE LAND AND THE PAYMENT WAS NOT RECORDED IN THE BALANCE SHEET PREPA RED BY THE ASSESSEE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A ) THAT THE DEVELOPMENT AGREEMENT IS NOT CORRECTLY INTERPRETED BY THE AO. THE PARTNERS OF THE ASSESSEE FIRM ARE SHRI KAUSHIKBHAI S. DESAI AND SHRI VASTABHAI H. DESAI. THE LAND ON WHICH THE DEVELOPME NT AGREEMENT FOR CONSTRUCTION OF SHOPS HAD BEEN EXECUTED IS OWNE D BY SHRI VASTABHAI H. DESAI WHO IS ONE OF THE PARTNERS OF TH E ASSESSEE FIRM. THE PARTNER OF THE FIRM AND THE OWNER OF THE LAND T HOUGH ARE DIFFERENT IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 4 HEAD, THEY WERE INTERRELATED AS ABOVE. CONSIDERING THE CLOSE ASSOCIATION OF BOTH THE PARTIES TO THE DEVELOPMENT AGREEMENT IT HAD BEEN MENTIONED IN THE AGREEMENT THAT COST OF THE LA ND HAD BEEN DETERMINED AT RS.40,000/- AND THAT RS.40,000/- HAD BEEN RECEIVED BY THE LAND OWNER. HOWEVER, IT WAS NOT MENTIONED IN TH E AGREEMENT AS TO WHETHER THE PAYMENT WAS MADE IN CASH OR KIND OR THROUGH CHEQUES ETC. IN FACT, NO ACTUAL PAYMENT WAS REQUIRE D TO BE MADE AT THAT TIME CONSIDERING THE RELATION BETWEEN THE PART IES. FURTHER, PAYMENT TO LAND OWNER WAS MADE BY THE ASSESSEE FIRM AFTER RECEIPT OF THE SAME FROM THE CUSTOMER AND IT WAS ACTUALLY P AID IN SUBSEQUENT PERIOD ON 22-10-1997. IT WAS, THEREFORE, SUBMITTED THAT THE SAME IS MENTIONED IN THE CASH BOOK RELEVANT FOR THE SAID PE RIOD. THE LEARNED CIT(A) ACCEPTED THE EXPLANATION OF THE ASSESSEE BEC AUSE THE DEVELOPMENT AGREEMENT WAS SILENT WITH REGARD TO PAY MENT WHETHER MADE IN CASH OR KIND. THE LEARNED CIT(A) CONSIDERIN G THE RELATION OF THE PARTIES ACCEPTED THE EXPLANATION OF THE ASSESSE E. EVEN OTHERWISE, THE PAYMENT WAS SHOWN TO BE RECEIVED SUB SEQUENTLY ON 22-10-1997 OUT OF THE AMOUNTS RECEIVED FROM CUSTOME RS. ADDITION WAS ACCORDINGLY DELETED. THE LEARNED CIT(A) ALSO NO TED THAT THE AO HAS NOT MADE THIS ADDITION SEPARATELY AND IT WAS TA KEN TO BE COVERED IN THE OVERALL ADDITION MADE FOR THE PROFIT OF THE PROJECT IN THE RELATED CASE OF M/S. AMAR CORPORATION. ADDITION WAS ACCORDI NGLY DELETED. 6. CONSIDERING THE RIVAL SUBMISSIONS, WE DO NOT FIN D ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LE ARNED CIT(A). THE LEARNED DR SUBMITTED THAT COST IS NOTED IN THE AGRE EMENT BUT THE ASSESSEE CLAIMED THAT NOTHING WAS PROVED ON RECORD IF ACTUAL IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 5 PAYMENT WAS MADE AS IS MENTIONED IN THE DEVELOPMENT AGREEMENT. THE ASSESSEE PLEADED BEFORE THE LEARNED CIT(A) THAT PAYMENT WAS MADE SUBSEQUENTLY ON RECEIPT OF PAYMENT FROM THE CU STOMERS WHICH IS ALSO SHOWN IN THE BOOKS OF ACCOUNTS MAINTAINED B Y THE ASSESSEE. THE LEARNED CIT(A) CONSIDERING THE DUAL CAPACITY OF THE PARTNER OF THE ASSESSEE FIRM BEING OWNER OF THE LAND AND PARTY TO THE DEVELOPMENT AGREEMENT RIGHTLY APPRECIATED THE FACTS OF THE CASE AND RIGHTLY DELETED THE ADDITION BECAUSE ENTRIES WERE MADE ON A CTUAL RECEIPT OF THE AMOUNT SUBSEQUENTLY IN THE BOOKS OF ACCOUNTS. T HIS GROUND OF APPEAL OF THE REVENUE HAS NOT MERIT AND IS DISMISSE D. 7. ON GROUND NO.1 (II), REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.47,56,000/- OUT OF TOTAL ADDITION MADE OF RS. 49,66,800/- AS UNDISCLOSED PROFIT OF THE PROJECT. AS PER THE ASSES SMENT ORDER, IN THE COMPUTATION SHEET FILED WITH THE RETURN, THE ASSESS EE MADE A REFERENCE OF VALUATION REPORT. ACCORDING TO THE SAM E THE ASSESSEE HAD WORKED OUT COST OF CONSTRUCTION FOR THE BLOCK P ERIOD AT RS.12,61,000/-. ACCORDING TO THE AO, THE ASSESSEE H AS STATED TO HAVE SOLD NO SHOP TILL THE DATE OF SEARCH. THE AO O BSERVED THAT THIS WAS APPARENTLY DONE BY THE ASSESSEE TO GET THE UNDI SCLOSED INCOME ASSESSED AT THE RATE OF 30% AS AGAINST 60% APPLICAB LE FOR THE BLOCK ASSESSMENT CASES. THE CONTENTION OF THE ASSESSEE HA S NOT BEEN ACCEPTED THAT NO SHOP HAS BEEN SOLD. ACCORDING TO THE AO WHEN THE ENTIRE PROJECTS WERE UNACCOUNTED, HOW THE ASSESSEE COULD ASSERT ABOUT ANY PARTICULAR METHOD OF ACCOUNTING HAVING BE EN RESORTED TO. AS PER THE AO THE LOGICAL METHOD WOULD BE TAKEN INT O ACCOUNT THE EXPENSES AS WELL AS PROFIT ESTIMATED ON YEAR TO YEA R BASIS. ACCORDING IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 6 TO THE AO THE ASSESSEE HAD TO OFFER PROFIT FOR THE BLOCK PERIOD AND THE AO ACCORDINGLY PROCEEDED TO WORK OUT THE PROFIT OF THE ASSESSEE FROM THE SAID PROJECT. THE ASSESSEE HAS TAKEN COST PRICE OF THE PROJECT AT RS.12,61,000/- AS ON 31-03-1998 AS PER THE REPORT O F THE REGISTERED VALUER AND THE ASSESSEE HAS SHOWN OPENING STOCK OF THE SAME AMOUNT AS ON 01-04-1997. THE VALUATION REPORT WAS NOT FOUND CORRECT. ACCORDING TO THE AO IT COULD NOT BE SAID W HETHER THE ASSESSEE CARRIED OUT ANY CONSTRUCTION FROM THE DATE OF THE SEARCH TO THE DATE OF INSPECTION ON 03-07-2000. THE AO CONSID ERING THE CONSIDERING THE COST OF THE PROJECT, EXPENSES AND O THER THINGS HELD THAT 90% OF THE SALE CONSIDERATION AND 90% OF THE C OST OF CONSTRUCTION WERE REQUIRED TO BE CONSIDERED FOR WOR KING OUT THE PROFIT. THEREFORE, 90% OF RS.16,48,200/- HAS BEEN TAKEN AS COST OF THE CONSTRUCTION BY THE AO. THE AO FURTHER OBSERVED THA T AS PER DETAILS CONTAINED IN THE SEIZED DOCUMENTS I.E. PAGE 28 OF A NNEXURE A-15 OF PARTY NO.1, THE ASSESSEE RECEIVED AMOUNTS OF RS.1,5 0,000/-, RS.1,75,000/- AND RS.1,85,000/- AGAINST S ALE OF DI FFERENT SHOPS NUMBERS CONSTRUCTED BY THE ASSESSEE . THE AO OBSERVED THAT SALE PRICE PER SHOP WAS AROUND RS.1,50,000/- TO RS.1,85,000/- AND AVERA GE SALE PRICE OF THE SHOPS WAS CONSIDERED AT RS.1,75,000/-. THE CONTENTI ON OF THE ASSESSEE THAT NO SHOP WAS SOLD WAS NOT ACCEPTED. THE AO, THE REFORE, CONSIDERED THE SALES MADE BY THE ASSESSEE AT 90% OF THE TOTAL PRICE OF 42 SHOPS @ RS.1,75,000/- PER SHOP AS RELEVANT AND TOTAL PRICE COMES TO RS.73,50,000/- . 90% OF THE SAME COMES TO RS.66,15,000/- AND AFTE R DEDUCTING COST OF CONSTRUCTION PROFIT OF PROJECT WAS WORKED OUT TO RS .49,66,800/-. THE FURTHER DETAILS ARE NOTED BY THE AO IN PARA 27 AND 28 OF TH E ASSESSMENT ORDER FOR THE PURPOSE OF MAKING THE ADDITION. IT WAS CONTENDE D BEFORE THE LEARNED IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 7 CIT(A) THAT THE AO WAS NOT JUSTIFIED IN CONSIDERING THAT THE ENTIRE PROJECT WAS COMPLETED BEFORE THE DATE OF SEARCH AND THE ENTIRE SALES HAVE BEEN MADE. IT WAS INFORMED TO THE AO THAT UP T O THE DATE OF SEARCH, THE ASSESSEE HAD CONSTRUCTED ONLY 21 SHOPS AND SOLD NO SHOP AND NO SALE DEED WAS EXECUTED BEFORE THE DATE OF SEARCH. THE SHOPS WERE SOLD BY EXECUTING SALE DEEDS AFTER THE D ATE OF SEARCH AND THE ASSESSEE FILED REGULAR RETURN OF INCOME FOR THE SAME. IT WOULD, THEREFORE, AMOUNT TO DOUBLE TAXATION. IT WAS FURTHE R SUBMITTED THAT THE AO HAS WRONGLY CONSIDERED THE SALE PRICE OF THE SHO PS @ RS.1,75,000/- PER SHOP AND THE SEIZED PAPER CANNOT BE RELIED UPON IN THIS REGARD. CONFIRMATION LETTERS FROM THE PURCHASE RS OF THE SHOPS HAVE BEEN FILED WITH THE COPY OF THE SALE DEEDS TO SUPPORT THE CONTENTION OF THE ASSESSEE. THEREFORE, EVIDENCE ON RECORD SHOULD NOT HAVE BEEN DISBELIEVED. IT WAS FURTHER CONTENDED THA T THE AO HAD REJECTED THE COST OF CONSTRUCTION WORKED BY THE REG ISTERED VALUER WITHOUT BRINGING ANY MATERIAL AGAINST THE ASSESSEE. THE ADDITION IS, THEREFORE, MADE ARBITRARILY AND WITHOUT ANY BASIS. IT WAS FURTHER SUBMITTED THAT AT THE MOST PROFIT RATE OF 8% OF THE RECEIPTS COULD HAVE BEEN TAXED. AS AGAINST THE ADDITIONS COVERED BY THE MAIN ADDITION, IT WAS SUBMITTED THAT ADDITIONS ARE UNJUSTIFIED AND WI THOUT CONSIDERING THE MATERIAL ON RECORD. NO ON MONEY WAS RECEIVED. T HEREFORE, THE ENTIRE ADDITION SHOULD HAVE BEEN DELETED. THE LEARN ED CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE AND MAT ERIAL ON RECORD NOTED THAT THE ISSUE OF ON MONEY RECEIPT BY THE ASS ESSEE FOR SALE OF SHOPS HAS BEEN CONSIDERED BY THE AO ON THE BASIS OF THE SEIZED MATERIAL AND IT IS COMMON KNOWLEDGE THAT IN SIMILAR BUSINESS OF CIVIL IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 8 CONSTRUCTION SUCH PRACTICE IS THERE TO RECEIVE ON M ONEY. ONUS UPON THE ASSESSEE IS NOT DISCHARGED. THE LEARNED CIT(A) ALSO NOTED THAT IF THE CONTENTION OF THE ASSESSEE IS TO BE ACCEPTED FO R PRICE MENTIONED IN THE SALE DEEDS AND THE EXPENSES INCURRED AS MENT IONED IN THE SEIZED DOCUMENTS, THE ASSESSEE WOULD PUT TO GROSS L OSSES. HOWEVER, IN THIS LINE OF BUSINESS PROFIT RANGES UP TO 8% OR SO. THEREFORE, REASONABLE POSITION ONLY EMERGES IF THE SAME PRICE OF THE SHOPS AS TAKEN BY THE AO IS CONSIDERED FOR ESTIMATING THE IN COME OF THE ASSESSEE FROM THEIR PROJECT UNDERTAKING BY THE ASSE SSEE. THE AO HAS CONSIDERED THAT THE ENTIRE PROJECT WAS COMPLETE D AND SOLD BEFORE THE DATE OF SEARCH. HOWEVER, THE ASSESSEE CONTENDED THAT IT HAD SOLD NO SHOP UP TO THE DATE OF SEARCH, THEREFORE, SALE W AS NIL AND SALE DEEDS WERE EXECUTED AFTER THE DATE OF SEARCH ONLY. THE AO OBSERVED IN THE ASSESSMENT ORDER THAT BY THE DATE OF SEARCH THE ASSESSEE HAD RECEIVED THE AMOUNT IN RESPECT OF 15 SHOPS AS IS ME NTIONED IN PARA 14 OF THE ASSESSMENT ORDER. SALE DEEDS IN RESPECT O F THESE SHOPS HAVE BEEN EXECUTED AFTER THE DATE OF SEARCH BUT SAL E AMOUNT IS RECEIVED BEFORE THE DATE OF SEARCH ITSELF. ACCORDI NG TO THE LEARNED CIT(A) THOUGH MAJOR PART OF THE PROJECT WAS COMPLET ED BEFORE THE DATE OF SEARCH AS OBSERVED BY THE AO, YET AS EVEN B OOKING AMOUNT WAS NOT RECEIVED IN RESPECT OF LARGE NUMBERS OF SH OPS, THEREFORE, THE AO WAS NOT JUSTIFIED TO ASSESS THE INCOME FROM THE ENTIRE PROJECT IN THE BLOCK PERIOD UP TO THE DATE OF SEARCH. THE LEA RNED CIT(A), THEREFORE, FOUND IT FAIR IF THE SALE OF 15 SHOPS IS TAKEN BEFORE THE DATE OF SEARCH AND THE TOTAL VALUE AS PER THE AO WOULD C OME TO RS.26,25,000/- (15 X RS.1,75,000/-) AND CONSIDERING THE DECISIONS OF IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 9 ITAT AHMEDABAD BENCH IN THE CASE OF KISHOR MOHANLAL TELWALA VS ACIT, 64 TTJ 543 AND ABHISHEK CORPORATION VS DCIT, 63 TTJ 651 PROFIT RATE OF 8% WAS APPLIED AND ADDITION WAS CONF IRMED IN A SUM OF RS.2,10,000/-. THE LEARNED CIT(A) WITH REGARD TO SU PPRESSION OF RECEIPTS FURTHER NOTED THAT SAME WOULD BE COVERED B Y THE SALE PRICE. IT WAS ALSO NOTED THAT WHEN INCOME IS TO BE CONSIDE RED, EXPENSES ARE ALSO REQUIRED TO BE CONSIDERED. THE LEARNED CIT(A), THEREFORE, DIRECTED TO CONSIDER ADDITION OF RS.2,10,000/- AS A GAINST RS.49,66,800/-. 8. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) HAS NOT SHOWN ANY BASIS TO TAKE SALE CONSIDERATION OF 15 SH OPS ONLY. THE ASSESSEE IS NOT IN CIVIL CONSTRUCTION BUSINESS. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW. 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LE ARNED CIT(A). THE AO MERELY ON ASSUMPTION OF CERTAIN FACTS WHICH ARE NOT ON RECORD ESTIMATED THE PROFIT OF THE ENTIRE PROJECT PRESUMIN G THAT THE ENTIRE PROJECT WAS COMPLETED AND THE SHOPS HAVE BEEN SOLD PRIOR TO THE DATE OF SEARCH. THERE WAS NOTHING ON RECORD TO JUSTIFY T HE FINDINGS OF THE AO IN THIS REGARD. THE ASSESSEE PLEADED BEFORE THE AUTHORITIES BELOW THAT NO SHOP HAS BEEN SOLD PRIOR TO THE DATE OF SEA RCH. THE LEARNED CIT(A) ON THE BASIS OF FINDINGS GIVEN BY THE AO SEP ARATELY FOUND THAT THE ASSESSEE HAS SHOWN SALE PROCEEDS OF 15 SHOPS AN D BOOKING AMOUNT WAS RECEIVED BEFORE THE DATE OF SEARCH BUT THE SALE DE EDS HAVE BEEN EXECUTED IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 10 LATER ON. IT IS WELL SETTLED LAW THAT THE ENTIRE RE CEIPTS CANNOT BE TREATED AS INCOME OF THE ASSESSEE. PROFIT RATE SHOULD BE A PPLIED AGAINST THE RECEIPT FOR WORKING OUT THE INCOME OF THE ASSESSEE. THE LEARNED COUNSEL RELIED UPON THE ORDER OF ITAT IN THE GROUP CASES OF VIKAS CORPORATION IN IT(SS)A NO.240/AHD/2005 DATED 03-04- 2009 (PB-41) IN WHICH ON IDENTICAL FACTS THE LEARNED CIT(A) APPL IED PROFIT RATE OF 8% AGAINST SALE VALUE AND THE TRIBUNAL DISMISSED THE D EPARTMENTAL APPEAL. THE LEARNED CIT(A) CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES RIGHTLY NOTED THAT ONLY 15 SHOPS SHAL L HAVE TO BE TAKEN INTO CONSIDERATION AS SOLD PRIOR TO THE SEARCH. THE REFORE, ON SUCH SHOPS THE SALE CONSIDERATION ADOPTED BY THE AO WAS APPLIED FOR WORKING OF THE PROFIT @ 8%. NO INFIRMITY HAS BEEN BROUGHT TO OUR KNOWLEDGE FOR INTERFERING IN THE ORDER OF THE LEARN ED CIT(A). WE, THEREFORE, DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE SAME IS ACCORDINGLY DISMISSED. 10. ON GROUND NO.1 (III), THE REVENUE CHALLENGED TH E DELETION OF ADDITION OF RS.13,00,000/- BEING UNEXPLAINED INVEST MENT MADE IN PURCHASE OF LAND IN THE NAME OF SHRI SENDHABHAI M. DESAI. ACCORDING TO ASSESSMENT ORDER FROM THE SEIZED PAPER IT WAS SEEN THAT PAYMENT OF RS.3,00,000/- WAS MADE IN RESPECT O F THE LAND AT SURVEY NO.1500 AND 1497 AT MEHSANA ON 22-08-1997. T HE SEIZED DOCUMENT WHICH IS THE RECEIPT OF THIS PAYMENT IS ON THE LETTER HEAD OF THE ASSESSEE. IT IS SIGNED BY HARISKUMAR RAMANLAL J AISHWAL AND UTTAM RAMANLAL JAISHWAL. FURTHER, OTHER SEIZED PAPE R IS AGREEMENT TO SALE DATED 15-07-1997. THIS IS IN RESPECT OF SAL E OF LAND IN OTHER SURVEY NOS. 1535, 1497, 1501, 1502 AND 1528 ETC. TH IS AGREEMENT IS IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 11 SHOWN TO BE BETWEEN SHRI SENDHABHAI M. DESAI AND SH RI HARISHBHAI RAMANLAL JAISHWAL AND SHRI MANISH ALIAS UTTAM RAMAN LAL JAISHWAL. AS PER THE BANAKHAT RS.10,00,000/- WAS PAID ON 15-0 7-1997 TO SHRI HARISHBHAI R. JAISHWAL AND SHRI UTTAM R. JAISHWAL. AS PER THE ASSESSMENT ORDER IT WAS EXPLAINED BY SHRI SENDHABHA I M. DESAI THAT THE AFORESAID TRANSACTION PERTAINED TO M/S. ARJUN C ORPORATION AND HE HAS NOTHING TO DO WITH THE SAME. HOWEVER, THE ASSES SEE FAIRLY STATED AT THE ASSESSMENT STAGE THAT THE TRANSACTION WAS EN TERED INTO BY SHRI SENDHABHAI M. DESAI. THE AO OBSERVED THAT SINCE THE TRANSACTION WAS NOTED IN THE LETTER HEAD OF THE ASSESSEE, THERE FORE, ADDITION SHOULD BE MADE IN THE HANDS OF THE ASSESSEE FIRM. I T WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT AGREEMENT IS EXECUTE D BETWEEN THE OWNER OF THE LAND AND SHRI SENDHABHAI M. DESAI AND SHRI SENDHABHAI M. DESAI IN HIS STATEMENT RECORDED U/S 1 32(4) OF THE IT ACT STATED THAT PAYMENT WAS MADE BY HIM OUT OF AGRI CULTURAL INCOME WHO IS ALSO NOT PARTNER OF THE ASSESSEE FIRM. THERE FORE, NO INVESTMENT COULD BE MADE ON BEHALF OF THE ASSESSEE FIRM. IT WAS, THEREFORE, SUBMITTED THAT THE ADDITION MAY BE DELET ED. THE LEARNED CIT(A) FOUND THE CONTENTION OF THE ASSESSEE TO BE C ORRECT BECAUSE THE AGREEMENT TO SELL WAS EXECUTED BETWEEN SHRI SEN DHABHAI M. DESAI AND THE OWNER OF THE LAND AND RECEIPT OF RS.3 ,00,000/- WAS ISSUED ON THE LETTER HEAD OF THE ASSESSEE. THEREFOR E, MERELY RECEIPT IS ON THE LETTER HEAD OF THE ASSESSEE WOULD NOT PRO VE ANY INVESTMENT MADE BY THE ASSESSEE FIRM. IT WAS FURTHER NOTED THA T SHRI SENDHABHAI M. DESAI MADE INVESTMENT IN THE PROPERTY AND NOT TH E ASSESSEE FIRM. ADDITION WAS ACCORDINGLY DELETED. IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 12 11. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. ADMI TTEDLY, NO AGREEMENT TO SELL IS EXECUTED BY THE ASSESSEE FIRM. THE AGREEMENT TO SELL IS EXECUTED BY THE OWNER OF THE LAND AND SH RI SENDHABHAI M. DESAI WHO IS NOT PARTNER OF THE ASSESSEE FIRM. ONLY LETTER HEAD OF THE ASSESSEE FIRM IS USED FOR THE PURPOSE OF RECEIPT WH ICH IS ALSO NOT SIGNED ON BEHALF OF THE ASSESSEE FIRM. THUS, IT WOU LD NOT PROVE THAT THE ASSESSEE MADE ANY INVESTMENT IN ANY OF THE PROP ERTY. ACCORDING TO THE ASSESSEE, SHRI SENDHABAI M. DESAI ADMITTED I NVESTMENT IN THE PROPERTY OUT OF AGRICULTURAL INCOME. THEREFORE, THE LEARNED CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION IN THE CASE OF THE ASSESSEE FIRM. GROUND NO.1 (III) OF THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 12. IN THE RESULT, THE DEPARTMENTAL APPEAL IN IT(SS )A NO.61/AHD/2004 IS DISMISSED. IT(SS)A NO.62/AHD/2004 (ASSESSEE M/S. AMAR CORPORATION) 13. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)- XXI, AHMEDABAD DATED 24-12-2003 FOR THE ABOVE BLOCK PERIOD. 14. ON GROUND NO.1 (I), REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.4,40,000/- MADE ON ACCOUNT OF CASH DEPOSITED IN THE ACCOUNT OF MEHSANA URBAN CO-OPERATIVE BANK LTD. FROM THE COPY OF THE BANK ACCOUNT OF THE ASSESSEE FIRM WITH MEHSANA URBAN CO- OPERATIVE BANK LTD., THE AO OBSERVED THAT THE ASSESSEE HAD DEPOSIT ED CASH OF IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 13 RS.4,40,000/- IN THE SAME ON DIFFERENT DATES IN FIN ANCIAL YEAR 1996- 97. IT WAS EXPLAINED BEFORE THE AO THAT CASH HAD B EEN RECEIVED FROM DIFFERENT PERSONS AS ADVANCE TOWARDS SALE OF SHOPS. CONFIRMATIONS FROM 13 OUT OF 16 SUCH PERSONS WERE ALSO FILED BY T HE ASSESSEE BEFORE THE AO. HOWEVER, THE ASSESSEE COULD NOT PROD UCE THE PERSONS TO CONFIRM AS TO WHETHER THEY HAD GIVEN CAS H OR NOT, THE ENTIRE AMOUNT WAS ADDED AS UNDISCLOSED INVESTMENT O UT OF UNDISCLOSED SOURCE. IT WAS EXPLAINED BEFORE THE LEA RNED CIT(A) THAT THE ASSESSEE HAD NOT MAINTAINED CASH BOOK DUE TO DI SPUTES AMONGST THE PARTNERS. IT WAS INFORMED TO THE AO THAT EVEN N O CASH BOOK WAS FOUND DURING THE COURSE OF SEARCH. THE AMOUNTS WERE DEPOSITED OUT OF THE CASH AVAILABLE WITH THE ASSESSEE FIRM FROM T HE ADVANCES RECEIVED FROM THE CUSTOMERS AND PARTNERS CAPITAL T O THE TUNE OF RS.11,55,000/-. IT WAS EXPLAINED THAT THE AMOUNT OF RS.4,40,000/- WAS MADE OUT OF THE DEPOSITS RECEIVED FROM THE CUST OMERS AND ADVANCES AND TOWARDS PARTNERS CAPITAL. CONFIRMATIO NS WERE FILED TO EXPLAIN THE ABOVE ISSUE. THE CASH FLOW STATEMENT W AS ALSO FILED TO EXPLAIN THE SOURCE OF THE DEPOSITS. IT WAS, THEREFO RE, EXPLAINED THAT THE ADDITION IS UNJUSTIFIED. THE AO HOWEVER, DID NO T ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE THE PARTIES COUL D NOT BE PRODUCED. IT WAS ALSO EXPLAINED THAT THE REQUEST OF THE ASSESSEE TO ISSUE SUMMONS TO THE CUSTOMERS/PERSONS HAD BEEN REJ ECTED BY THE AO AND THE ASSESSEE WAS DIRECTED TO PRODUCE THIS PA RTIES. THE ASSESSEE GAVE COMPLETE ADDRESS WITH THEIR SOURCE OF INCOME, COPY OF THE SALE DEEDS AND THEIR PERMANENT ACCOUNT NUMBERS AND CONFIRMATIONS. THEREFORE, THE ADDITION SHOULD NOT H AVE BEEN MADE. IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 14 THE LEARNED CIT(A) FOUND THAT SOURCE OF THE CASH DE POSITED IN THE BANK ON DIFFERENT DATES ARE SHOWN IN THE CASH FLOW STATEMENT PREPARED BY THE ASSESSEE ON THE BASIS OF DETAILS OF CASH RECEIVED ON ACCOUNT OF DEPOSITS RECEIVED ON SHOP BOOKING AND OT HER EXPLAINED SOURCES. IN THE CONFIRMATIONS, THE DETAILS LIKE SOU RCE OF FUNDS, PERMANENT ACCOUNT NUMBERS AND WARD NUMBER ETC. HAVE BEEN MENTIONED. SUBSEQUENTLY, THE PERSONS FROM WHOM ADVA NCES WERE RECEIVED, SHOPS HAVE BEEN SOLD AND SALE DEEDS HAVE BEEN DULY EXECUTED. THE LEARNED CIT(A), THEREFORE, CONSIDERIN G THE MATERIAL ON RECORD AND THE CASH FLOW STATEMENT FILED BY THE ASS ESSEE ALONG WITH SOURCE OF THE CASH RECEIVED FROM VARIOUS CUSTOMERS DELETED THE ADDITION. 15. THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT NO SOURCE OF THE DEPOSIT IS EXPLAINED. THEREFO RE, ADDITION WAS RIGHTLY MADE BY THE AO. ON THE OTHER HAND, THE LEAR NED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO THE DETAILS FILED IN THE PAPE R BOOK AT PB 39 TO 41 AND PB 55 TO 79 IN SUPPORT OF THE FINDINGS OF TH E LEARNED CIT(A). 16. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE A RE OF THE VIEW THAT THE LEARNED CIT(A) ON PROPER APPRECIATION OF T HE FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. TH E ASSESSEE EXPLAINED THE SOURCE OF THE DEPOSITS MADE IN THE BA NK ACCOUNT BEING ADVANCES RECEIVED FROM THE CUSTOMERS AND AMOUNT REC EIVED TOWARDS PARTNERS CAPITAL. CASH FLOW STATEMENT WAS FURNISHE D TO EXPLAIN THE SOURCE WHICH IS SUPPORTED BY CONFIRMATIONS AND EVID ENCES ON RECORD. IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 15 THEREFORE, THE LEARNED CIT(A) ON PROPER APPRECIATIO N OF THE FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. AC CORDINGLY, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A). THIS GROUND OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 17. ON GROUND NO. 1(II), REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.38,69,756/- OUT OF ADDITION OF RS.41,06,556/- MADE ON ACCOUNT OF PROFIT OF THE PROJECT. THIS ISSUE IS SAME AS IS CONSIDERED ON GROUND NO.1 (II) OF THE APPEAL IN THE CASE OF M/S. ARJUN C ORPORATION (SUPRA). IN THIS CASE, THE ASSESSEE CONTENDED THAT IT HAD SO LD ONLY 4 SHOPS DURING THE BLOCK PERIOD BUT THE CONTENTION OF THE A SSESSEE WAS NOT ACCEPTED. THE AO ADOPTING THE SALE PRICE OF 40 SHOP S @ RS.1,85,000/- TOOK THE TOTAL PRICE AT RS.74,00,000/ - AND 90% OF THE SAME WAS CONSIDERED AS SALE PRICE OF RS.66,60,000/- AND AFTER DEDUCTING COST OF THE CONSTRUCTION OF RS.25,53,444/ - MADE THE ADDITION OF RS.41,06,556/-. THE ASSESSEE MADE SIMIL AR SUBMISSIONS BEFORE THE LEARNED CIT(A) AND THE LEARNED CIT(A) CO NSIDERING 8% PROFIT ON SALE OF 16 SHOPS ONLY BY ADOPTING THE VAL UE PER SHOP AS PER AO, CONSIDERED THE SALE CONSIDERATION AT RS.29,60,0 00/- AND BY APPLYING 8% PROFIT RATE RESTRICTED THE ADDITION TO RS.2,36,800/-. 18. THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES SUBMITTED THAT THE ISSUE IS SAME AS IS CONSIDERED IN THE CASE OF M /S. ARJUN CORPORATION AND STATED THAT FINDINGS IN THAT CASE M AY BE FOLLOWED IN THIS CASE ALSO. IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 16 19. ON CONSIDERATION OF THE FACTS OF THE CASE AND S UBMISSIONS OF THE PARTIES, WE FIND THAT THE ISSUE IS SAME AS IS C ONSIDERED IN THE CASE OF M/S. ARJUN CORPORATION (SUPRA). BY FOLLOWIN G THE FINDINGS IN THAT CASE ABOVE, WE DISMISS THIS GROUND OF APPEAL O F THE REVENUE. IN THE RESULT, GROUND NO.1 (II) OF THE APPEAL OF THE R EVENUE IS DISMISSED. 20. NO OTHER POINT IS ARGUED OR PRESSED. 21. IN THE RESULT, THE DEPARTMENTAL APPEAL IN IT(SS )A NO.62/AHD/2004 IS DISMISSED. IT(SS)A NO.184/AHD/2005 (ASSESSEE SABERA HOTEL PVT. LTD.) 22. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XXI, AHMEDABAD DATED 30-03-2005, FOR THE ABOVE BLOCK PERIOD. 23. ON GROUND NO. 1(I), REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.22,67,322/- ON ACCOUNT OF CONSTRUCTION EXPENS ES. THE AO TREATED THE CONSTRUCTION EXPENSES OUT OF UNDISCLOSE D SOURCES OF INCOME. FROM THE SEIZED MATERIAL FILES IT WAS FOUND THAT CERTAIN BILLS, VOUCHERS PERTAINED TO HOTEL CONSTRUCTION WERE THERE . SIMILAR TYPE OF BILLS, VOUCHERS WERE ALSO FOUND VIDE SEPARATE ANNEX URE. THEREFORE, THE AO HAS OBSERVED THAT THE ASSESSEE HAS INCURRED THE EXPENSES AS INVESTMENT MADE FOR PURCHASE OF CONSTRUCTION MATERI AL OUT OF UNDISCLOSED SOURCES OF INCOME AND MADE THE ABOVE AD DITION. THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A) THAT T HE ASSESSEE COMPANY IS IN THE BUSINESS OF HOTEL AND WAS INCORPO RATED BY MR. S. IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 17 M. DESAI, K. B. DESAI AND V. H. DESAI AS PROMOTER D IRECTORS. THE ASSESSEE COMPANY HAS ACQUIRED LAND BY PURCHASING LA ND RIGHT IN REVENUE SURVEY NO.1725 OF MEHSANA AND CONSTRUCTION WORK WAS GIVEN TO M/S. VIKASH BUILDERS. INITIALLY, CONSTRUCT ION OF HOTEL BUILDING WAS CARRIED OUT BY M/S. VIKASH BUILDERS AND PAYMENT S HAVE BEEN MADE FOR THE SAME UP TO 1992-93. IT W AS ALSO STATE D THAT DUE TO DISPUTES AMONGST THE DIRECTORS, CONSTRUCTION AND FU RNISHING WORK HAS BEEN DISCONTINUED FOR APPROXIMATELY TWO YEARS. THE CONSTRUCTION WORK AGAIN COMMENCED FROM THE YEAR 1996-97. IT WAS EXPLAINED THAT IT IS WELL KNOWN TO THE REVENUE DEPARTMENT THAT CON STRUCTION OF HOTEL AND FURNITURE WAS PREPARED AT THE HOTEL SITE WHICH WAS ALSO EXPLAINED IN THE BLOCK RETURN PERIOD AND IT HAS BEEN MENTIONE D THAT TOTAL CIVIL CONSTRUCTION AMOUNTING TO RS.23,86,600/- WAS COMPLE TED UP TO THE FINANCIAL YEAR 1992-93 AND VALUATION REPORT OF M/S. CHAUDHARY CONSULTING ENGINEERS, MEHSANA WAS ALSO FURNISHED. I N SUPPORT OF THE VALUATION REPORT DETAILED CHART OF THE EXPENSES WAS ALSO GIVEN. THE AUDITED ACCOUNTS WERE ALSO FILED FROM THE YEAR 1991 -92 TO 1997-98 WITH THE RETURN OF INCOME. IT WAS, THEREFORE, CONTE NDED THAT INCURRING OF THE EXPENDITURE WAS EXPLAINED THROUGH SOURCES. I T WAS SUBMITTED THAT VALUATION REPORT WAS PREPARED BY CERTIFIED ENG INEER AND COMPLETE RECORDS WERE PRODUCED, THEREFORE, ADDITION IS UNJUS TIFIED. IT WAS SUBMITTED THAT CONSTRUCTION EXPENSES BILLS FOUND DU RING THE COURSE OF SEARCH HAS BEEN RECORDED IN THE REGULAR BOOKS OF AC COUNTS MAINTAINED BY THE ASSESSEE WHICH WERE SUBMITTED ALO NG WITH THE RETURN OF INCOME. COMPLETE RECORDS WERE MAINTAINED AS PER COMPANIES ACT. BILLS AND VOUCHERS OF THE EXPENSES ARE MAINTAINED IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 18 AND THE TOTAL OF THE SAME ARE ALSO NOTED IN THE APP ELLATE ORDER ALONG WITH THE CHART. IT WAS, THEREFORE, EXPLAINED BEFORE THE LEARNED CIT(A) THAT MORE AMOUNTS HAVE BEEN INCURRED FOR CONSTRUCTI ON AS AGAINST THE SEIZED PAPER. IT WAS, THEREFORE, SUBMITTED THAT WHA TEVER IS MENTIONED IN THE REGULAR BOOKS OF ACCOUNT CANNOT BE SUBJECT M ATTER IN THE BLOCK ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT SINCE ALL THE EXPENSES ARE RECORDED IN THE BOOKS OF ACCOUNTS AND MENTIONED IN THE BALANCE SHEET FOR FINANCIAL YEAR 1991-92 TO 199 7-98 AND RETURN IS ALSO FILED FOR THE SAME, THEREFORE, ADDITION IS UNJ USTIFIED. GSFC LOAN OF RS.26,95,000/- HAS BEEN SANCTIONED IN FAVOUR OF THE ASSESSEE COMPANY AND DISBURSEMENT OF THE LOAN HAS BEEN OBTAI NED BY THE ASSESSEE COMPANY AND RECORDED IN THE BOOKS OF ACCOU NTS. COPY OF THE LETTER SANCTIONING THE LOAN WAS ALSO PRODUCED. FURTHER, SHARE CAPITAL AND SHARE APPLICATION MONEY AMOUNTING TO RS .35,53,686/- HAVE BEEN BROUGHT BY THE DIRECTORS FROM THE GROUP A SSOCIATES, FRIENDS AND RELATIVES. DETAILS OF THE SAME HAVE ALSO BEEN F ILED TO SHOW THAT THE ASSESSEE HAS SOURCE OF INCURRING OF THE CONSTRU CTION EXPENSES. FURTHER, ADDITION IF MADE ON ACCOUNT OF SHARE CAPIT AL WOULD AMOUNT TO DOUBLE TAXATION. IT WAS, THEREFORE, PRAYED THAT ADD ITION MAY BE DELETED. AS REGARDS OTHER OBSERVATIONS AGAINST THE ASSESSEE, THE ASSESSEE CONTESTED THE ADDITION AND IT WAS EXPLAINE D THAT THE ASSESSEE COMPANY CAME INTO EXISTENCE ON 18-02-1991; THEREFORE, IT IS NOT POSSIBLE TO START CONSTRUCTION PRIOR TO THAT . THEREFORE, THE SEIZED MATERIALS FOR EARLIER PERIOD HAVE NO RELEVANCE AND SUCH ADDITION WOULD BE UNWARRANTED. FURTHER, OBSERVATIONS WERE MA DE AGAINST THE ASSESSEE MERELY ON PRESUMPTIONS AND SURMISES FOR IN CURRING IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 19 EXPENDITURE. FURTHER, LOOSE PAPER WAS EXPLAINED WHI CH IS ON THE LETTER HEAD OF THE ASSESSEE COMPANY WHERE TOTAL AMOUNTS WE RE WRITTEN. IT WAS, THEREFORE, SUBMITTED THAT SINCE THE LETTER HEA D OF SABERA HOTEL IS CONSIDERED BUT NONE OF THE PERSONS IS ENGAGED IN TH E CONSTRUCTION ACTIVITY AND NO LETTER IS RECEIVED FROM ANYBODY ELS E. SINCE THE LOOSE PAPER WAS ROUGH NOTING AND JOTTINGS AND IS NOT SUPP ORTED BY ANY EVIDENCE, THEREFORE, ADDITION IS CLEARLY UNJUSTIFIE D AND REQUIRED DELETION. THE LEARNED CIT(A) CONSIDERING THE EXPLAN ATION OF THE ASSESSEE DELET4ED THE ADDITION. HIS FINDINGS IN THE IMPUGNED ORDER ARE REPRODUCED AS UNDER: I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORD. THE FACT THAT THE HOTEL CONSTRUCTION WORK HAS BEEN CARRIED OUT IN DIFFERENT YEARS OF BLOCK PERIOD HAS BEEN ACCEPTED BY THE APPE LLANT AS WELL AS BY THE REVENUE. THERE IS NO DISPUTE ABOUT H OTEL CONSTRUCTION. AS PER ASSESSING OFFICER THE APPELLAN T HAS MADE CONSTRUCTION IN SABERA HOTEL FOR WHICH BILLS HAVE B EEN FOUND DURING SEARCH OPERATION AND THE APPELLANT HAS NOT E XPLAINED THE SOURCE OF PAYMENTS AND AS TO WHERE THE EXPENSES ARE RECORDED. THE APPELLANT HAS CONTENDED THAT YEARWISE AUDITED ACCOUNTS FROM F. Y. 1991-92 TO F. Y. 1997-98 HAVE B EEN SUBMITTED WITH BLOCK PERIOD RETURN OF INCOME, WHERE IN DETAIL CHART SHOWING YEARWISE ADDITION IN RELEVANT ASSETS HAVE BEEN SUBMITTED. MOREOVER THE APPELLANT HAS STATED THAT T O SUPPORT THE CONSTRUCTION WORK SHOWN IN AUDITED ACCOUNTS, A VALUATION REPORT OF M/S. CHAUDHARY CONSULTING ENGINEERS HAS A LSO BEEN ATTACHED WITH BLOCK PERIOD RETURN. THE LD. COUNSEL FOR THE APPELLANT HAS STATED THAT THE BILLS FOUNDS HAVE BEE N ACCOUNTED FOR IN REGULAR BOOKS OF ACCOUNTS AS MAINTAINED BY T HE APPELLANT AND HAVE ALSO BEEN AUDITED. MOREOVER THIRD PARTY EX PERT VALUATION REPORT IN SUPPORT WHEREOF HAS ALSO BEEN S UBMITTED TO THE ASSESSING OFFICER. BOTH THE ABOVE DOCUMENTS HAV E NOT BEEN ACCEPTED BY THE ASSESSING OFFICER ON MINOR GRO UNDS. NO IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 20 FINDING OR REASONING FOR DISBELIEVING THESE DOCUMEN TS HAVE BEEN GIVEN IN THE ASSESSMENT ORDER. IT IS SEEN THAT NO INDEPENDENT INQUIRY WAS MADE OR ANY EVIDENCE HAS BE EN BROUGHT ON RECORD BY THE ASSESSING OFFICER IN SUPPO RT OF REJECTING VALUATION REPORT AND/OR AUDITED ACCOUNTS. IN VIEW OF THE DETAILS/EXPLANATION FILED IT IS CLEAR THAT THAT THE EXPENSES ARE TRULY AND FULLY RECORDED IN THE BOOKS CERTIFIED BY WAY OF THE AUDITOR. SIMILARLY SOURCES OF T HE EXPENSES ARE FUL LY EXPLAINED BY WAY OF GSFC LOAN AND BY INTRODUCTION OF SHARE CA PITAL. HENCE, THE ADDITION MADE IS NOT JUSTIFIED AND SAME IS DELETED. 24. THE LEARNED DR SUBMITTED THAT THE DOCUMENTS FOU ND DURING THE COURSE OF SEARCH PROVE UNACCOUNTED CONSTRUCTION EXP ENSES SPENT BY THE ASSESSEE AND NO BOOKS WERE PRODUCED BEFORE THE AO. THEREFORE, ADDITION WAS RIGHTLY MADE BY THE AO. ON THE OTHER H AND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE VALUATI ON REPORT AND COMPLETE DETAILS WERE FURNISHED AND ALL THE OBSERVA TIONS HAVE BEEN EXPLAINED THROUGH MATERIAL ON RECORD. THEREFORE, AD DITION IS UNJUSTIFIED. THE LEARNED CIT(A) ON PROPER APPRECIAT ION OF THE FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION . 25. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE PRODUCED THE VALUATION REPORT AS WELL AS AUDIT REPORT PERTAI NING TO THE CONSTRUCTION EXPENSES. THE AO HAS NOT MADE ANY INDEPENDENT INQUIRY AND NOTHING WAS BROUGHT ON RECORD AGAINST THE VALUA TION REPORT FILED BY THE ASSESSEE. THE DETAILS SUBMITTED BEFORE THE LEARNED CIT(A) CLEARLY PROVE THAT EXPENSES WERE CORRECTLY RECORDED IN THE BOOKS OF ACCOUNTS WHICH IS ALSO CERTIFIED BY THE AUDITOR. TH E ASSESSEE IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 21 EXPLAINED THE SOURCES OF INCURRING OF CONSTRUCTION EXPENSES OUT OF LOAN AND INTRODUCTION OF SHARE CAPITAL WHICH IS ALS O NOT DISPUTED BY THE REVENUE. SINCE, THE EXPLANATION OF THE ASSESSEE CLEARLY PROVE THAT ALL EXPENSES WERE RECORDED IN THE BOOKS OF ACCOUNTS AND THE AUDITOR HAS CERTIFIED THE SAME WHICH IS ALSO SUPPORTED BY V ALUATION REPORT, THEREFORE, NO ADDITION WAS REQUIRED TO BE MADE. FUR THER, THE ASSESSEE EXPLAINED THAT PRIOR TO THE SEARCH CONSTRU CTION EXPENSES HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNTS IN SEVE RAL FINANCIAL YEARS WOULD SUPPORT THE CASE OF THE ASSESSEE THAT N O SUCH ADDITION COULD BE MADE IN THE BLOCK ASSESSMENT IN RESPECT OF EXPENSES SHOWN IN THE BOOKS OF ACCOUNTS PRIOR TO THE SEARCH AND FOR THAT RETURN FOR RESPECTIVE YEARS HAVE BEEN FILED WITH THE REVEN UE DEPARTMENT. THE LEARNED CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. THERE IS NO ME RIT IN THIS GROUND OF APPEAL OF THE REVENUE. SAME IS ACCORDINGLY DISMISSE D. 26. ON GROUND NO.1 (II), REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.2,15,000/- OUT OF TOTAL ADDITION OF RS.3,00,0 99/- ON ACCOUNT OF PAYMENT MADE FOR WHICH BILLS ARE NOT MADE AVAILABLE . ACCORDING TO THE AO ON EXAMINATION OF THE SEIZED MATERIAL, IT WA S OBSERVED THAT THE ASSESSEE HAS MADE PAYMENT TO CERTAIN SUPPLIERS AMOUNTING TO RS.3,00,099/- FOR WHICH CORRESPONDING BILLS ARE NOT AVAILABLE. THE SOURCE OF THESE PAYMENTS WAS ASKED FOR. THE AO IN T HE ABSENCE OF ANY EXPLANATION HELD THAT PAYMENTS HAVE BEEN MADE O UT OF UNDISCLOSED INCOME. ADDITION WAS ACCORDINGLY MADE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT IT IS DOUB LE ADDITION. THE AO HAS MADE ADDITION ON ACCOUNT OF BILLS OF CONSTRUCTI ON EXPENSES WHICH IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 22 WERE FOUND DURING THE COURSE OF SEARCH AS UNEXPLAIN ED. FURTHER EXPLANATION WAS ALSO GIVEN TO SHOW THAT ADDITION IS CLEARLY UNJUSTIFIED. THE LEARNED CIT(A) ON EXAMINATION OF THE MATERIAL O N RECORD AND SUBMISSION OF THE ASSESSEE DELETED PART OF THE ADDI TION. HIS FINDINGS IN THE IMPUGNED ORDER ARE REPRODUCED AS UNDER: I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORD. IT HAS BEEN SEEN THAT CERTAIN BILLS OF SHRI LAXMI TRADERS AMOUN TING TO RS.227094/- AND OF CARPENTER FOR FURNITURE LABOUR A MOUNTING TO RS.28350/- HAVE BEEN SHOWN IN THE LIST IN THE ASSES SMENT ORDER IN PARA 4(II). THE ARGUMENT OF THE APPELLANT IS C ONVINCING ON THESE TWO PAYMENTS FOR WHICH BILLS HAVE BEEN FOUND AND RECORDED IN ASSESSMENT ORDER ITSELF. AS REGARD SOUR CES AND RECORDING SUCH PAYMENT, I REFER TO MY DECISION TAKE N IN GROUND NO.1 OF APPEAL MENTIONED HEREIN ABOVE IN FAVOUR OF THE APPELLANT AND DELETE THE ADDITION OF RS.200000/- AN D RS.15000/-. THE REMAINING PAYMENTS AMOUNTING TO RS. 24099/- AND RS.61000/- THE APPELLANT HAS NOT SUBMITTED ANY MATERIAL OR DETAILS OF BILLS FOR WHICH PAYMENTS HAVE BEEN MADE. IT IS ALSO NOT EXPLAINED AS TO HOW THE APPELLANT COULD BE TAKE N TO BE JUSTIFIED IN NOT SUBMITTING ANY EXPLANATION BEFORE THE ASSESSING OFFICER AND EVEN DURING APPELLANT PROCEEDINGS. ADDI TION OF RS.85099/- (RS.24099 + RS.61000) MADE BY THE ASSESS ING OFFICE ON ACCOUNTS OF THESE PAYMENTS MADE IS THEREF ORE CONFIRMED. 27. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THIS GROUND OF APPEAL IS SAME AS IS CONSIDERED ON G ROUND NO.1 (I) ABOVE. IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 23 28. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. SINC E, THE BILLS ARE SAME FOR WHICH ADDITION IS ALREADY MADE FOR CONSTRU CTION EXPENSES AND THAT GROUND HAS BEEN DISMISSED ABOVE, THEREFORE , THIS GROUND OF APPEAL OF THE REVENUE HAS NO MERIT AND IS ACCORDING LY DISMISSED. 29. ON GROUND NO.1 (III), REVENUE CHALLENGED THE DE LETION OF ADDITION OF RS.33,43,506/- MADE ON ACCOUNT OF SHARE CAPITAL AND SHARE APPLICATION MONEY. THE AO TREATED THE SHARE CAPITAL AND SHARE APPLICATION MONEY INTRODUCED IN THE ASSESSEE COMPAN Y AS INCOME FROM UNDISCLOSED SOURCES. THE ASSESSEE COMPANY HAS INTRODUCED SUCH SHARE CAPITAL AND SHARE APPLICATION MONEY IN D IFFERENT YEARS FROM FINANCIAL YEAR 1991-92 TO FINANCIAL YEAR 1997- 98. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE AO WAS NOT JUSTIFIED IN TREATING THE SHARE CAPITAL AND SHARE APPLICATION MO NEY AMOUNTING TO RS.35,53,683/- AS INCOME OF THE ASSESSEE. NO OPPORT UNITY WAS PROVIDED TO EXPLAIN THIS ISSUE BECAUSE THE AO WAS H EARING OTHER GROUP CASES. WHOLE ADDITION IS MADE FOR WANT OF CO NFIRMATION. IT WAS SUBMITTED THAT ALL THE SHARE APPLICATION MONEY HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNTS AND INTIMATED TO THE REGISTRA R OF COMPANIES. COMPLETE DETAILS WERE FILED DURING THE APPELLATE PR OCEEDINGS WHICH CONTAINED NAMES OF THE INVESTORS AND THEIR DETAILS. COMPLETE DETAILS AND NAMES WOULD SHOW THAT SHARE APPLICATION MONEY I S CLEARLY EXPLAINED. THE AO HAS NOT MADE ANY INQUIRY OR INVES TIGATION AND NO STATEMENT OF ANY PERSON IS RECORDED. THE ASSESSEE S UBMITTED COMPLETE DETAILS BEFORE THE LEARNED CIT(A) AND SUBM ITTED THAT THE ASSESSEE COMPANY WAS PROMOTED BY THREE DIRECTORS NA MELY S/SHRI IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 24 S.M. DESAI, K. B. DESAI AND V. H. DESAI AND THEY HAVE INTRODUCED AMOUNTS IN THE ASSESSEE COMPANY IN DIFFERENT YEARS FOR THE PURPOSE OF CONSTRUCTION WORK. ALL THE DIRECTORS ARE AGRICUL TURISTS AND THEY HAVE SUFFICIENT LAND HOLDINGS AND THEIR CONFIRMATIONS WE RE ALSO FILED. IT WAS FURTHER SUBMITTED THAT SHRI S. M. DESAI HAD CONTRIB UTED THE AMOUNTS FOR SHARE CAPITAL AND SHARE APPLICATION MONEY OUT O F WITHDRAWALS MADE FROM DIFFERENT FIRMS NAMELY M/S. DESAI ENTERPR ISES, M/S. GITA ENTERPRISES, M/S. GUJARAT LIVESTOCK AGENCY, M/S. VI KASH BUILDERS AND M/S. S.M. DESAI, HUF. IT WAS FURTHER SUBMITTED THAT THEY ARE ASSESSED TO TAX AND FILED RETURN OF INCOME WHICH HA D BEEN VERIFIED BY THE AO. IT WAS, THEREFORE, SUBMITTED THAT SOURCE OF SHARE APPLICATION MONEY IS ALSO EXPLAINED. THE LEARNED CIT(A) CONSIDE RING THE EXPLANATION OF THE ASSESSEE PARTLY DELETED THE ADDI TION. HIS FINDINGS IN THE IMPUGNED ORDER ARE REPRODUCED AS UNDER: I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTS OF THE ASSESSING OFFICER AND OF THE LD. COUNSEL FOR THE AP PELLANT AND PERUSED THE RECORD. AS PER ASSESSING OFFICER THE APPELLANT HAS FAILED TO SUBMIT CONFIRMATION IN SUPP ORT OF INTRODUCTION OF CAPITAL. IN ABSENCE OF SUCH EXPLANA TION AND SUBMISSION THE ACTION TAKEN BY THE ASSESSING OFFICE R IS AS PER ACCEPTED PRACTICE OF THE REVENUE. THE LD. COUNSEL F OR THE APPELLANT VEHEMENTLY ARGUED THAT THE APPELLANT HAS NOT BEEN HEARD ON THE DATES OF HEARINGS AS ALL THE SIX GROU P CASES HAS BEEN KEPT ON HEARING ON SINGLE DAY AND ONLY TWO CAS ES HAVE BEEN HEARD WHEREAS IN REMAINING FOUR CASES ORDER ON EX-PARTE BASIS HAVE BEEN PASSED. THE CONTENTION OF APPELLANT IS QUITE REASONABLE AND REQUIRES TO BE JUSTIFIED AT APPELLAT E LEVEL AND HAS BEEN ATTENDED IN JUDICIAL MANNER. THE LD. COUNS EL FOR THE APPELLANT HAS INITIALLY SUBMITTED CONFIRMATIONS OF ALL THE SHARE APPLICANTS WITH SUPPORTING EVIDENCE OF INCOME. IT I S FOUND FROM SUCH CONFIRMATIONS THAT INDIVIDUALLY MAJOR SHARE AP PLICANTS HAVE IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 25 CONTRIBUTED SHARE APPLICATION MONEY UP TO RS.10000/ - TO RS.20000/- OUT OF THEIR AGRICULTURAL AND MILK SALE INCOME. THE AMOUNT BEING SMALL AND RECEIVED FROM FARMERS AND HA S BEEN FROM AGRICULTURAL INCOME. I AGREE TO SUCH INTRODUCT ION OF CAPITAL, BASED ON THEIR CONFIRMATION AND INCOME PROOF. THE A PPELLANT HAS DURING APPELLATE PROCEEDINGS CONTENDED THAT MAI N SHARE CONTRIBUTION HAS BEEN RECEIVED FROM MR. S. M. DESAI GROUP AND IT HAS BEEN ASKED TO SUBMIT ITS DETAIL PROOF, FROM WHERE IT HAS BEEN RECEIVED. THE APPELLANT VIDE A DETAIL SUBMISSI ONS DATED 22.3.2005 STATED THAT MR. S. M. DESAI IS PARTNER IN MANY FIRMS. HE HAS MADE WITHDRAWALS FROM THE FIRMS I.E. M/S. DE SAI ENTERPRISES, M/S. GITA ENTERPRISE, M/S. GUJARAT LIV E STOCK AGENCY, M/S. VIKAS BUILDERS AND MR. S.M. DESAI HUF. ZEROX COPIES OF I. T. RETURN ACKNOWLEDGMENTS, STATEMENT O F TOTAL INCOME, COPY OF CAPITAL ACCOUNTS ETC. HAVE BEEN SUB MITTED. CONFIRMATION LETTERS FROM ASSESSING OFFICER HAVE AL SO BEEN SUBMITTED IN SUPPORT OF THE SUBMISSIONS AND ARGUMEN TS. BASED ON THE ABOVE SUBMISSIONS, I AGREE TO ACCEPT THE INT RODUCTION OF CAPITAL BY MR. S.M. DESAI FROM THE FIRMS M/S. GITA ENTERPRISE, M/S. DESAI ENTERPRISE, M/S. GUJARAT LIVE STOCK AGEN CY AND MR. S. M. DESAI, HUF. ALL THESE FIRMS HAVE BEEN ASSESSE D TO TAX AND SHARE CAPITAL MONEY HAVE BEEN RECEIVED FROM THE SE FIRMS. SO FAR AS AMOUNTS OF RS.410180/- FROM M/S. VIKAS BU ILDER IS CONCERN, I FOUND THAT THOUGH MONEY HAVE BEEN FOUND RECEIVED FROM M/S. VIKAS BUILDERS, IT HAS NOT FILED ANY REGU LAR RETURN OF INCOME. ONL8Y BLOCK PERIOD RETURN HAVE BEEN FILED B Y THE APPELLANT GROUP. CONSIDERING THE APPELLATE PROCEEDI NGS AND ADDITIONS MADE ON ESTIMATION OF INCOME BASIS U/S. 4 4AD OF THE I. T. ACT, 1961, I ALLOW RS.2,00,000/- AS CAPITAL C ONTRIBUTED OUT OF TAXABLE INCOME OF THE FIRM AND CONFIRM THE ADDIT ION OF RS.210180/- AS OUT OF UNDISCLOSED INCOME OF THE APP ELLANT. 30. THE LEARNED DR SUBMITTED THAT NO EVIDENCE WAS F ILED BEFORE THE AO AND EVEN NO REMAND REPORT WAS CALLED FOR. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE AO DID NOT GIVE ANY OPPORTUNITY AT THE ASSESSMENT STAGE TO EXPLAIN THIS ISSUE, IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 26 THEREFORE, COMPLETE DETAILS WERE FILED BEFORE THE L EARNED CIT(A), WHICH ARE MENTIONED AT PB 77 TO 159 AND FURTHER SUB MITTED THAT NOW THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F LOVELY EXPORTS LTD., 216 CTR 195 IN WHICH IT WAS HELD AS UNDER: CONCLUSION: IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPE N THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW , BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. 31. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE A RE OF THE VIEW THAT THERE IS NO MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A) THAT T HE ASSESSEE WAS NOT HEARD OF THIS CASE AT THE ASSESSMENT STAGE BECA USE OTHER GROUP CASES WERE GOING FOR HEARING. THE ASSESSEE, THEREFO RE, SUBMITTED THAT NO OPPORTUNITY WAS GIVEN AT THE ASSESSMENT STA GE AND THE CONTENTION OF THE ASSESSEE WAS FOUND RELIABLE BY TH E LEARNED CIT(A). THERE IS NO GROUND OF APPEAL BY THE REVENUE TO DISP UTE SUCH FINDINGS OF THE LEARNED CIT(A). IT WOULD, THEREFORE , SHOW THAT THE AO MADE ADDITION WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE. THEREFORE, THERE IS NO REASON FOR THE ASSESSEE TO F URNISH ANY EVIDENCE BEFORE THE AO. THE ASSESSEE FILED COMPLETE DETAILS OF SHARE APPLICATION MONEY AND SOURCE OF THE INTRODUCTION OF THE SHARE CAPITAL ALONG WITH CONFIRMATIONS. THE LEARNED CIT(A) ON PRO PER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. SINCE THE IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 27 ISSUE IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F LOVELY EXPORTS LTD. (SUPRA) AND THAT NOTHING IS PRODUCED BEFORE US TO CONTRADICT THE FINDINGS OF THE LEARNED CIT(A) AND THAT THE CASE IS VERY OLD ONE, THEREFORE, WE DO NOT FIND ANY JUSTIFICATION NOW EVE N TO REMAND THE MATTER TO THE FILE OF THE AO FOR RECONSIDERATION. T HIS GROUND OF APPEAL OF THE REVENUE HAS NO MERIT AND IS ACCORDINGLY DISM ISSED. 32. ON GROUND NO.1 (IV), REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.5,13,000/-. AS PER THE AO THE ASSESS EE HAS RECEIVED DEPOSITS FROM FOUR PERSONS AMOUNTING TO RS.5,13,000 /- WHICH WAS RECORDED IN THE LOOSE PAPER. IN THE ABSENCE OF ANY EXPLANATION, ADDITION WAS MADE. THE ASSESSEE OBJECTED TO THE ADD ITION AND SUBMITTED THAT THE LOOSE PAPER IS THE LETTER HEAD O F SABERA HOTEL ON WHICH ROUGH WORKING IS MADE AND NAME OF SOME PERSON S HAVE BEEN WRITTEN BUT NOTHING IS STATED IF ANY AMOUNT IS RECE IVED. THE AO ASSUMED CERTAIN FACTS WITHOUT ANY JUSTIFICATION. TH EREFORE, IN THE ABSENCE OF ANY EVIDENCE ADDITION IS CLEARLY UNJUSTI FIED. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT SAME DOCU MENT WAS ALSO CONSIDERED IN THE CASE OF S. M. DESAI. THEREFORE, N O DOUBLE ADDITION COULD BE MADE. THE LEARNED CIT(A) CONSIDERING THE E XPLANATION OF THE ASSESSEE DELETED THE ADDITION. HIS FINDINGS IN THE IMPUGNED ORDER ARE REPRODUCED AS UNDER: I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE APPELLANT AND PERUSED THE RELEVANT RECORD. THE IMPUGNED ADDITION HAS BEEN MADE ON THE BASIS OF LOOSE PAPER FOUND VIDE PAGE NO .22 OF ANNEXURE A-15 OF PARTY NO.1. THE LOOSE PAPER IS A LETTER HEAD IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 28 OF HOTEL SABERA ON WHICH NAMES OF PERSONS HAVE BEEN WRITTEN AND AGAINST THEM AMOUNTS HAVE BEEN WRITTEN WHICH HA S BEEN TOTALED AMOUNT RS.513000/-. IT IS ALSO SEEN THAT AND CONTENDED BY THE APPELLANT THAT THE ASSESSING O FFICER HAS SIMPLY ASKED THE APPELLANT ABOUT RECEIPT OF SUCH DE POSITS AND WHERE IT HAS BEEN RECORDED. NO INDEPENDENT INQUIRY WAS MADE OR ANY SUPPORTING EVIDENCE HAVE BEEN BROUGHT ON REC ORD FOR THE INFERENCE DRAWN THAT THE ABOVE AMOUNTS ARE DEPOSITS RECEIVED BY THE APPELLANT. AS AGAINST THE ABOVE ACTION OF TH E ASSESSING OFFICER, THE LD. COUNSEL FOR THE APPELLANT HAS CONT ESTED THAT THE LOOSE PAPER BEARS NO LEGAL AND/OR EVIDENTIAL VALUE IN THE EYES OF LAW IF NOT SUPPORTED BY CLINCHING AND CORROBORAT IVE RECORD, STATEMENT OR PROOF. MANY LEGAL PRONOUNCEMENTS HAVE BEEN CITED IN SUPPORT OF THE ARGUMENTS. IT IS FURTHER CO NTENDED THAT THE LOOSE PAPER ON WHICH ADDITION HAS BEEN MADE HAS ALREADY BEEN CONSIDERED IN ASSESSMENT PROCEEDINGS IN THE CA SE OF MR. S. M. DESAI (INDIVIDUAL) IN HIS PERSONAL BLOCK PERI OD ASSESSMENT. RELEVANT PORTION OF THE ASSESSMENT ORDE R AND APPELLATE ORDER HAS BEEN PRODUCED DURING ASSESSMENT PROCEEDINGS. HENCE, AGREEING WITH THE FINDING OF TH E CIT(A) GIVEN IN THE CASE OF THE APPELLANT (9NDIVIDUAL STAT US), I DELETE THE ADDITION OF RS.5,13,000/-. 33. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE AO HAS NOT MADE ANY INDEPENDENT INQUIRY AND NO MATERIAL IS BROUGHT ON RECORD TO SUPPORT THE ADDITION. THE LEARNED CIT(A) FOUND THAT SIMILAR ADDITION IS CONSIDERED IN THE CASE OF SHRI S. M. DESAI (INDIVID UAL) ON THE BASIS OF SAME LOOSE PAPER. SINCE, NOTHING IS MENTIONED ON TH E SEIZED PAPER COPY OF WHICH IS FILED AT PAGE 160 OF THE PAPER BOO K ABOUT RECOVERY OF ANY AMOUNT BY THE ASSESSEE, THEREFORE, ADDITION WAS RIGHTLY DELETED BY THE LEARNED CIT(A). THIS GROUND OF APPEAL OF THE REVENUE HAS NOT MERIT AND IS ACCORDINGLY DISMISSED. IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 29 34. ON GROUND NO.1 (V), REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.30,18,922/- ON ACCOUNT OF SUPPRESSION OF COST OF CONSTRUCTION OF THE HOTEL. ACCORDING TO THE AO THE SEIZED PAPER CON TAINED THE DETAILS ON THE LETTER HEAD OF SABERA HOTEL WHICH WAS WRITTE N TO UNITED INDIA INSURANCE CO. FOR INCREASING INSURANCE COVER OF TH E HOTEL BUILDING AND FURNITURE BY AN AMOUNT OF RS.20,00,000/-. IN TH E SECOND PAGE NO.53 DETAILS AMOUNT OF CONSTRUCTION, TV ETC. HAS B EEN TOTALED AT RS.54,22,000/-. HOWEVER, IN THE AUDIT REPORT THE BO OK FIGURE IS SHOWN AT RS.24,02,578/-. THE DIFFERENCE OF RS.30,18,922/- WAS TREATED AS INVESTMENT MADE OUT OF UNDISCLOSED INCOME AND ADDIT ION WAS ACCORDINGLY MADE. IT WAS SUBMITTED BEFORE THE LEARN ED CIT(A) THAT ADDITION IS MADE WITHOUT ANY BASIS. MERELY INSURANC E COMPANY WAS REQUESTED TO INCREASE THE VALUE HAS NO GROUND TO MA KE THE ADDITION. NOTHING WOULD PROVE OUT OF THE SAME. FURTHER, DETAI LS WERE SUBMITTED TO PROVE THAT ALL THE BILLS AND VOUCHERS OF THE AMO UNT SPENT HAVE BEEN NOTED IN THE BOOKS OF ACCOUNTS. THEREFORE, ADDITION MERELY ON THE BASIS OF THE LETTER WRITTEN TO THE INSURANCE COMPAN Y IS UNJUSTIFIED. THE LEARNED CIT(A) ON CONSIDERATION OF THE MATERIAL ON RECORD DELETED THE ADDITION. HIS FINDINGS IN THE IMPUGNED ORDER AR E REPRODUCED AS UNDER: I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE APPELLANT AND PERUSED RELEVANT RECORD. IT IS FOUND THAT THE A SSESSING OFFICER HAS MADE THE ADDITION ON ACCOUNT OF DIFFERE NCE BETWEEN TOTAL OF LOOSE PAPER FIGURES AND TOTAL OF ASSETS SH OWN IN AUDITED ACCOUNTS. IT IS ACCEPTED PRINCIPLE IN ASSESSMENT PR OCEEDINGS THAT DIFFERENCE FOUND IN SUCH CASES IS REQUIRED TO BE RECONCILED TO FINALISE THE ISSUE. IN THIS CASE DUE TO NON COOP ERATION FROM THE APPELLANT SIDE THE DIFFERENCE HAS BEEN TREATED AS IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 30 INVESTMENT OUT OF UNDISCLOSED INCOME OF THE APPELLA NT. AT THE SAME TIME THE ARGUMENTS OF THE LD. COUNSEL THAT THE ASSESSING OFFICER HAS NOT CARRIED OUT ANY INDEPENDENT INQUIRY AND HAS NOT BROUGHT ON RECORD ANY CLINCHING EVIDENCE IN SUPPORT OF SUCH HUGE ADDITION SEEMS CONVINCING. IT IS ALSO CONTESTE D THAT NOTHING HAS BEEN VERIFIED WHETHER ANY INSURANCE PRE MIUM HAS BEEN PAID BY THE APPELLANT OR NOT. THE APPELLANT FU RTHER STATED THAT INSURANCE COVER HAS BEEN TAKEN BEFORE COMMENCE MENT OF THE YEAR AND HAS BEEN TAKEN ON PROPOSED CONSTRUCTIO N AND OR FURNITURE FIXTURES ETC. TO BE INSTALLED. IN THE PRE SENT CASE IT HAS BEEN TAKEN ON PROPOSED CONSTRUCTION WORK WHICH HAS BEEN DISCONTINUED FOR MORE THAN TWO YEAR PERIOD DUE TO S ERVER DISPUTES AMONGST DIRECTORS AND THE SAME COULD BE SE EN FROM TH4E CHART OF ASSETS FROM AUDITED ACCOUNTS SUBMITTE D IN GROUNDS OF APPEAL NO.1. AS PROPOSED CONSTRUCTION AN D ALLIED WORK HAS NOT BEEN CARRIED OUT THE PROPOSED INSURANC E BEARS NO VALUE. THE ARGUMENTS RAISED BY THE APPELLANT ARE CO NVINCING. IN THE RESULT THE ADDITION MADE FOR RS.3018922/- IS DE LETED. 35. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND R EFERRED TO PB- 164 AND 165 WHICH IS THE SEIZED PAPER. ON CONSIDERA TION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUN D OF APPEAL OF THE REVENUE. ADDITION IS MADE MERELY ON THE BASIS OF LO OSE PAPER FIGURE AND ASSETS SHOWN IN THE BOOKS OF ACCOUNTS. THE AO H AS NOT MADE ANY INDEPENDENT INQUIRY AND HAS NOT VERIFIED WHETHE R INSURANCE PREMIUM HAS BEEN PAID BY THE ASSESSEE OR NOT. MERE LY ON THE BASIS OF INSURANCE CORRESPONDENCE NOTHING COULD BE PROVED THAT THE ASSESSEE SUPPRESSED THE COST OF CONSTRUCTION AND BU ILDING ETC. ADDITION WAS, THEREFORE, RIGHTLY DELETED BY THE LEA RNED CIT(A). THE PROPOSED INSURANCE HAS NOT EVIDENTIARY VALUE TO MAK E ADDITION IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 31 AGAINST THE ASSESSEE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 36. ON GROUND NO.1(VI), REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.10,55,000/-. THE AO OBSERVED THAT CERTAIN CAS H HAVE BEEN DEPOSITED IN THE CURRENT ACCOUNT NO.2051 WITH MEHSA NA URBAN CO- OPERATIVE BANK LTD. ON DIFFERENT DATES. IN THE ABSE NCE OF EXPLANATION OF THE SOURCE OF THE DEPOSITS ADDITION WAS MADE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE IS A RE GISTERED COMPANY AND BOOKS OF ACCOUNTS ARE AUDITED AND COPY OF THE A UDITED ACCOUNTS FROM 1991-92 ONWARDS WAS FILED BEFORE THE REGISTRAR OF COMPANIES AND ALL THE BANK TRANSACTIONS ARE RECORDED IN THE B OOKS OF ACCOUNTS AS WELL AS FOR DEPOSITS MADE IN THE BANK ACCOUNT. T HEREFORE, ADDITION IS UNJUSTIFIED. IT WAS ALSO SUBMITTED THAT CASH AVA ILABLE IN THE CASH BOOK WAS DEPOSITED IN THE ACCOUNT OF THE ASSESSEE C OMPANY. DETAILS OF THE SAME ARE RECORDED IN THE REGULAR BOOKS OF AC COUNTS AND THE BOOKS OF ACCOUNTS AND BANK STATEMENT WERE PRODUCED TO EXPLAIN THE SAME. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS S HARE CAPITAL MONEY ON WHICH OTHER ADDITION IS MADE ABOVE, THEREF ORE, IT WOULD AMOUNT TO DOUBLE TAXATION. ADDITION IS MADE BY THE AO WITHOUT VERIFYING THE FACTS. THE LEARNED CIT(A) ACCEPTED TH E EXPLANATION OF THE ASSESSEE AND DELETED THE ENTIRE ADDITION. HIS F INDINGS IN THE IMPUGNED ORDER ARE REPRODUCED AS UNDER: I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORDS. AS PER ASSESSING OFFICER THE SOURCES OF CASH DEPOSITED HAV E NOT BEEN EXPLAINED AND ORDER HAS BEEN PASSED EX-PARTE. THE C ONTENTION IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 32 OF THE APPELLANT IS THAT THE SOURCES OF CASH DEPOSI TS ARE FULLY EXPLAINED AND DETAILS CONFIRMATIONS AND SOURCES OF INCOME OR FUNDS HAVE BEEN SUBMITTED IN EARLIER GROUNDS OF APP EAL NO.3 IN RESPECT OF INTRODUCTION OF SHARE CAPITAL AND SHARE APPLICATION MONEY. IT IS FURTHER CONTENDED AND SUBMITTED THAT T HE BOOKS OF THE APPELLANT HAVE BEEN AUDITED AND AUDITED ACCOUNT S HAVE BEEN SUBMITTED BEFORE THE ASSESSING OFFICER AS WELL AS IN APPEAL PROCEEDINGS. THE TRANSACTIONS WITH URBAN CO. OP BANK LTD. IN CURRENT A/C NO.1051 HAS BEEN RECORDED IN TH E BOOKS. DETAILS COPY OF BANK ACCOUNT ETC. AND COPY OF BANK STATEMENT HAVE BEEN PRODUCED IT HAS BEEN SHOWN IN THE ACCOUNT S THAT CASH DEPOSITED IN THE BANK ACCOUNT HAS BEEN SHOWN I N CASH BOOK OF THE APPELLANT AND HAS BEEN TALLIED WITH EAC H ENTRY OF BANK DEPOSITS. UNDER THE CIRCUMSTANCES TO JUSTIFY T HE FACTS OF THE CASE, I HOLD THAT THE CASH DEPOSITED IN TO BANK ACCOUNT HAS BEEN OUT OF SOURCES EXPLAINED BY THE APPELLANT AND HAS BEEN RECORDED IN THE REGULAR BOOKS OF ACCOUNTS WHICH ARE ALSO AUDITED AND SUBMITTED BY THE APPELLANT. THEREFORE, ADDITION OF RS.1055000/- IS DELETED. 37. THE LEARNED DR SUBMITTED THAT NO CASH BOOK WAS PRODUCED BEFORE THE AO. ON THE OTHER HAND, THE LEARNED COUNS EL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO PB- 166 TO 174 TO EXPLAIN THE SOURCE OF BANK DEPOSITS AND ALSO SUBMITTED THAT APART FROM THE SAM E THE ASSESSEE HAS SUFFICIENT SHARE CAPITAL. THEREFORE, ADDITION I S RIGHTLY DELETED. 38. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE BANK DEPOSITS WERE PROVED TO HAVE CO-RELATION WITH THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS. FURTHER, THE ASSESSEE HAS SUFFICIENT SHAR E CAPITAL AND SHARE APPLICATION MONEY TO EXPLAIN THIS ISSUE. THER EFORE, THIS GROUND OF APPEAL OF THE REVENUE HAS NO MERIT AND IS DISMIS SED. IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 33 39. NO OTHER POINT IS ARGUED OR PRESSED. 40. IN THE RESULT, THE APPEAL OF THE REVENUE IN IT( SS) A NO.184/AHD/2005 IS DISMISSED. IT(SS) A NO.185/AHD/2005 (ASSESSEE: M/S. VIKAS BUILDERS) 41. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XXI, AHMEDABAD DATED 30-03-2005 FOR THE ABOVE BLOCK PERIOD. 42. ON GROUND NO.1(I), REVENUE CHALLENGED THE DELET ION OF ADDITION OF RS.17,53,235/- ON ACCOUNT OF CONSTRUCTION EXPENS ES OF SABERA HOTELS PVT. LTD. IT WAS SUBMITTED BEFORE THE LEARNE D CIT(A) THAT THE ASSESSEE HAD NOT KEPT REQUIRED BOOKS OF ACCOUNTS WH ICH IS ALSO EXPLAINED IN THE ENCLOSURE FILED WITH THE RETURN FO R THE BLOCK PERIOD. IT WAS, THEREFORE, EXPLAINED THAT DUE TO NON-MAINTENAN CE OF BOOKS OF ACCOUNTS ALL THE EXPENSES MADE AND BILLS PAID COULD NOT BE VERIFIED WITH THE BOOKS. THERE WERE CERTAIN BILLS FOUND DURI NG THE COURSE OF SEARCH PROCEEDING WHICH WERE NOT TOTAL OF ALL THE B ILLS BUT THEY WERE OF SOME BILLS REGARDING CONSTRUCTION WORK CARRIED OUT TO CONSTRUCT SABERA HOTEL. THEREFORE, IT CANNOT BE SAID THAT SAM E WERE OUT OF BOOKS OF ACCOUNTS. THE AO HOWEVER, OBSERVED THAT DE PARTMENT HAS FOUND BILLS REGARDING CONSTRUCTION EXPENSES OF SABE RA HOTEL AMOUNTING TO RS.17,35,235/-. AS PER VALUATION REPOR T PREPARED BY P. M. CHAUDHARY THE TOTAL VALUE OF CONSTRUCTION OF SAB ERA HOTEL COMES TO RS.23,47,290/-. THE VALUATION INCLUDES THE BILLS WHICH WERE FOUND IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 34 DURING THE COURSE OF SEARCH AND THE SAME HAVE BEEN CONSIDERED IN THE CONSTRUCTION WORK OF SABERA HOTEL. THE LEARNED CIT(A) ON CONSIDERATION OF THE ABOVE FACTS FOUND THAT REPORT IS GIVEN BY REGISTERED VALUER IN RESPECT OF CONSTRUCTION OF SAB ERA HOTEL AND THE VALUATION OF THE VALUER IS SHOWN HIGHER VALUE THAN THE BILLS OF CONSTRUCTION FOUND DURING THE COURSE OF SEARCH. ADD ITION WAS ACCORDINGLY DELETED. 43. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THIS GROUND IS ALREADY CONSIDERED IN THE CASE OF SABERA HOTEL PVT. LTD. (S UPRA) AND THE DEPARTMENTAL APPEAL HAS BEEN DISMISSED ON THE SAME GROUND. FURTHER, THE VALUATION SHOWN BY SABERA HOTEL WAS MO RE THAN THE BILLS FOUND DURING THE COURSE OF SEARCH. THEREFORE, ADDIT ION IN CASE OF THE ASSESSEE WAS RIGHTLY DELETED. THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 44. ON GROUND NO.1 (II), REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.1,25,000/- ON ACCOUNT OF PURCHASE OF PLOT. TH E LEARNED CIT(A) FOUND ON EXAMINATION OF THE LOOSE PAPER THAT THE LO OSE PAPER CONTAINED NAMES OF OTHER PERSONS AND FURTHER THE NA ME OF THE ASSESSEE FIRM WAS NOT RECORDED IN THE SEIZED PAPER. IN THE ABSENCE OF ANY DIRECT EVIDENCE OF PROVING PURCHASE OF LAND BY THE ASSESSEE, ADDITION WAS DELETED. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, IN THE LIGHT OF THE FINDINGS OF THE AUTHORITIES BELOW, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE PLEADED BEFORE THE LEARNED CIT(A) THAT THIS ADDITION IS MAD E WITHOUT VERIFYING IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 35 THE NAMES SHOWN IN THE SALE DEED BECAUSE IN THE SEI ZED SALE DEED THERE IS NO MENTION OF THE NAME OF THE ASSESSEE FIR M NOR OF ITS TWELVE PARTNERS. SALE DEED IS MADE IN THE NAME OF FIFTEEN OTHER PERSONS WHO HAVE NOT CONCERN WITH THE ASSESSEE FIRM. THE LEARNE D CIT(A) ON PROPER APPRECIATION OF FACTS AND CONSIDERATION OF T HE LOOSE PAPER RIGHTLY DELETED THE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 45. ON GROUND NO.1(III), REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.1,95,000/- OUT OF TOTAL ADDITION OF RS.4,65,0 00/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. THE AO MADE ADDITION OF RS .4,65,000/- TREATING THE SAME AS UNEXPLAINED CASH CREDITS AS UN DISCLOSED SOURCE OF INCOME OF THE ASSESSEE. THE ADDITION WAS MADE ON THE BASIS OF LOOSE PAPER. LOOSE PAPER CONTAINED CERTAIN NAMES FR OM WHOM THE ASSESSEE HAS RECEIVED DEPOSITS. THE DETAILS OF THE SAME ARE NOTED IN THE APPELLATE ORDER AT PAGE 9. THE ASSESSEE CLAIMED THAT SHOPS HAVE BEEN SOLD BY THE ASSESSEE TO THOSE PERSONS FROM WHO M DEPOSITS HAVE BEEN RECEIVED. HOWEVER, THE EVIDENCES AND CONF IRMATIONS WERE FILED ONLY IN CASE OF DEPOSITS OF RS.1,50,000/- FRO M SHRI R. K. PATEL AND FOR RS.45,000/- FROM SHRI NANJIBHAI. THE LEARNE D CIT(A), THEREFORE TREATED ONLY TWO CASH CREDITS AS EXPLAINE D AND DELETED THE ADDITION OF RS.1,95,000/- OUT OF TOTAL ADDITION OF RS.4,65,000/-. 46. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ADDITION WAS MADE ON THE BASIS OF THE LOOSE PAPER FOUND IN SEARCH WHI CH CONTAINED NAMES OF CERTAIN PERSONS FROM WHOM THE ASSESSEE HAS RECEIVED IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 36 DEPOSITS. THE ASSESSEE IN RESPECT OF TWO PERSONS ME NTIONED ABOVE EXPLAINED THAT SHOPS HAVE BEEN SOLD TO THEM AGAINST THE DEPOSITS WHICH WAS PROVED THROUGH CONFIRMATIONS AND OTHER EV IDENCES. THE LEARNED CIT(A) ON PROPER APPRECIATION OF THE FACTS AND MATERIAL ON RECORD RIGHTLY DELETED PART OF THE ADDITION IN RESP ECT OF THE DEPOSITS RECEIVED FROM THE TWO PERSONS FOR SALE OF THE SHOPS . GROUND NO.1 (III) OF THE APPEAL OF THE REVENUE IS DISMISSED. 47. ON GROUND NO.1 (IV), REVENUE CHALLENGED THE ORD ER OF THE LEARNED CIT(A) IN DIRECTING TO TAKE INCOME OF RS.1, 52,000/- INSTEAD OF RS.9,18,250/- ON ACCOUNT OF PROFIT ON SALE OF SHOPS . THE ASSESSEE PLEADED THAT SHOPS WERE SOLD FOR WHICH SALE DEEDS H AVE BEEN EXECUTED. THEREFORE, THE AO WAS NOT JUSTIFIED IN EN HANCING THE VALUE OF THE SALES. IT WAS ALSO PLEADED THAT AGAINST THE TOTAL RECEIPT ONLY PROFIT COULD BE TAXED. THE LEARNED CIT(A) CONSIDERI NG THE SALE VALUE OF SHOPS AT RS.19,00,000/- AS WAS TAKEN BY THE AO A LSO CONSIDERED THE DECISION OF ITAT AHMEDABAD THAT AGAINST THE RE CEIPTS THE PROFIT SHOULD BE ESTIMATED FOR THE PURPOSE OF MAKING THE A DDITION. ACCORDINGLY, 8% PROFIT RATE WAS APPLIED AND ADDITIO N OF RS.1,52,000/- WAS CONFIRMED AS AGAINST ADDITION MADE BY THE AO IN A SUM OF RS.9,18,250/-. 48. BOTH THE PARTIES SUBMITTED THAT THE ISSUE IS SA ME AS IS CONSIDERED IN GROUP CASES ABOVE IN WHICH THE ORDER OF ITAT IN THE CASE OF VIKAS CORPORATION (SUPRA) WAS RELIED UPON IN WHICH PROFIT WAS ESTIMATED BY APPLYING 8% AS PROFIT ON THE SALE VALUE. THIS GROUND IS, THEREFORE, COVERED BY THE DECISION IN TH E GROUP CASES IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 37 MENTIONED ABOVE AND ACCORDINGLY THIS GROUND OF APPE AL OF THE REVENUE IS DISMISSED. 49. ON GROUND NO.1 (V), REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.10,42,111/- ON ACCOUNT OF CASH DEPOSITS IN BA NK ACCOUNT. THE AO MADE THE ABOVE ADDITION BY TREATING CASH DEPOSIT S IN BANK ACCOUNT AS UNDISCLOSED SOURCES OF INCOME. IT WAS EX PLAINED BEFORE THE LEARNED CIT(A) THAT ADVANCES WERE RECEIVED AGAI NST THE SAME. THEREFORE, ADDITION IS UNJUSTIFIED. THE LEARNED CIT (A) FOUND THAT THE ASSESSEE HAS SOLD 19 SHOPS FOR RS.19,00,000/- WHICH IS SUFFICIENT TO EXPLAIN THE ABOVE ADDITION. ON CONSIDERATION OF THE ABOVE FACTS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF T HE REVENUE. SAME IS ACCORDINGLY DISMISSED. 50. ON GROUND NO.1 (VI), REVENUE CHALLENGED THE DIR ECTION OF THE LEARNED CIT(A) TO TAKE INCOME OF RS.1,87,783/- AS A GAINST RS.3,21,510/- ON ACCOUNT OF PROFIT FROM CONSTRUCTIO N OF SABERA HOTEL PVT. LTD. THE AO MADE ADDITION OF RS.3,24,500/- ON ACCOUNT OF PROFIT FROM CONSTRUCTION OF SABERA HOTEL. THE ASSESSEE OBJ ECTED TO THE SAID ADDITION AND SUBMITTED THAT THE PROJECT WAS UNDERTA KEN ON NO PROFIT NO LOSS BASIS BECAUSE SABERA HOTEL WAS SISTER CONCE RN. IT WAS FURTHER SUBMITTED THAT REPORT OF THE REGISTERED VALUER WAS FILED WHICH INCLUDES PROFIT OF 15% AND SUCH PROFIT AMOUNTS TO RS.2,31,08 0/- FOR THE BILL DATED 03-10-1992 AND SIMILARLY IN FINANCIAL YEAR 19 93-94 CONSTRUCTION OF SABERA HOTEL WAS CARRIED OUT TO THE EXTENT OF RS .6,22,875/- AND ON THE SAME GROUND 15% BEING RS.93,430/- IS BROUGHT TO TAX. THEREFORE, THE PROFIT OF RS.3,25,510/- WAS BROUGHT TO TAX. IT WAS ALSO EXPLAINED IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 38 THAT THE ADDITION IS MADE WITHOUT APPRECIATING THE FACTS OF THE CASE. THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE A SSESSEE AND BY APPLYING PROFIT RATE OF 8% AGAINST THE TOTAL RECEIP T SUSTAINED THE ADDITION OF RS.1,87,783/-. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE ARE OF THE VIES THE ISSUE IS SAME AS IS CONSIDER ED ON GROUND NO.1 (IV) ABOVE. BY FOLLOWING THE SAME REASONS FOR DECIS ION, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 51. ON GROUND NO.1 (VII), REVENUE CHALLENGED THE DE LETION OF ADDITION OF RS.44,60,244/- ON ACCOUNT OF PROFIT ON SALE OF SHOPS. IN THE ASSESSMENT ORDER IT IS STATED THAT FROM THE SEIZED PAPER IT WAS OBSERVED THAT ON THE LETTER HEAD OF VIKAS BUILDERS CERTAIN DISCREPANCY IS MADE. FROM THE NOTING MADE AND NOTE PLACED BY TH E ASSESSEE IT APPEARS THAT THE ASSESSEE IS IN THE BUSINESS OF PUR CHASE AND SALE OF LAND. ADDITION OF THE ABOVE AMOUNT WAS MADE ON ACCO UNT OF SUPPRESSION OF PROFIT FROM LAND TRANSACTIONS. COPY OF THE SEIZED PAPER IS FILED AT PAGE 40 OF THE PAPER BOOK AND IS ALSO R EPRODUCED AT PAGE 17 OF THE APPELLATE ORDER. THE ASSESSEE EXPLAINED T HAT IT WAS MERELY A ROUGH WORKING, THEREFORE, ADDITION IS UNJUSTIFIED . IT WAS ALSO EXPLAINED THAT TOTAL AREA AND PROFIT MARTIN NOTED I N THE SAME IS WITHOUT ANY BASIS AND IS NOT CONNECTED WITH THE ASSESSEE. T HE SEIZED PAPER DO NOT RECONCILE WITH THE ACTUAL WORKING OF THE ASS ESSEE. NO SUPPORTING EVIDENCE IS FILED TO EXPLAIN FOR MAKING THE ABOVE ADDITION. IN THE ABSENCE OF ANY INDEPENDENT INQUIRY TO PROVE ROUGH WORKING, ADDITION IS UNJUSTIFIED. THE LEARNED CIT(A) ON EXAM INATION OF THE SEIZED PAPER (PB-40) FOUND THAT THE LOOSE PAPER CON TAINED ONLY IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 39 ROUGH WORKING WHICH IS NOT SUPPORTED BY ANY EVIDENC E, THEREFORE ADDITION IS MADE MERELY ON PRESUMPTION. 52. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE LEARNED DR SUBMITTED THAT SEIZED PAPER WAS FOUND FROM THE POSS ESSION OF THE ASSESSEE, THEREFORE, ADDITION IS JUSTIFIED. HOWEVER , ON GOING THROUGH THE WORKING ON THE SEIZED PAPER (PB-40) WHICH IS AL SO REPRODUCED IN THE APPELLATE ORDER AT PAGE 17, WE FIND THAT THE LE ARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ADDITION IS MADE MERE LY ON PRESUMPTION. THE LOOSE PAPER CONTAINED SOMETHING AS SQUARE FEET AND BALANCE OF SIX PARTS AND FIVE PARTS, AND THEN SOME WORKING IS MADE. THE SAID WORKING IN THE LOOSE PAPER WOULD NOT INDICATE ANY P ROFIT EARNED BY THE ASSESSEE ON SALE OF SHOPS/PLOTS. THE ASSESSEE ALSO SPECIFICALLY EXPLAINED THAT THE AREA MENTIONED IN THE SEIZED PAP ER WOULD NOT MATCH WITH THE DETAILS SUBMITTED BY THE ASSESSEE. N OTHING WAS ALSO PROVED FROM THE LOOSE PAPER IF THE ASSESSEE WAS INV OLVED IN ANY SALE TRANSACTIONS. THE LEARNED CIT(A), THEREFORE, ON PRO PER APPRECIATION OF THE FACTS AND THE SEIZED PAPER RIGHTLY DELETED THE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE HAS NO MERIT AND IS ACCORDINGLY DISMISSED. 53. NO OTHER POINT IS ARGUED OR PRESSED. 54. IN THE RESULT, THE DEPARTMENTAL APPEAL IN IT(SS )A NO. 185/AHD/2005 IS DISMISSED. IT (SS) A NO.61 AND 62/AHD/2004 & IT (SS) A NO.184 AND 185/AHD/2005 M/S. ARJUN CORPORATION AND M/S. AMAR CORPORATION SABERA HOTEL PVT. LTD. AND M/S. VIKASH BUILDERS 40 55. IN THE RESULT, ALL THE DEPARTMENTAL APPEALS IN ITA NOS. 61 AND 62/AHD/2004 AND IT(SS)A NOS. 184 AND 185/AHD/2005 A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD