The ACIT, Central Circle-1(1), Ahmedabad V. Shri Nayan K.Thakkar, Ahmedabad

ITSSA 658/AHD/2010

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0592 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T P KRISHNA KUMAR
• Keywords: Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Transactions in derivatives; Question of law; Retraction; Documents seized
• Section: 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 00 , ! ' #$, % & BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ IT(SS)A.NO. 655/AHD/2010 WITH CO NO.296/AHD/2010 % ) *)/ ASSESSMENT YEAR: 2005-06 ACIT, CENT.CIR.1(1) AHMEDABAD. VS SHRI NAYAN K. THAKKAR 17, AMBAVIHAR, KAILASH COLONY OFF: 132FT. RIG ROAD SATELLITE, AHMEDABAD. PAN : ABJPT 6683 Q !./ IT(SS)A.NO. 656/AHD/2010 WITH CO NO.297/AHD/2010 % ) *)/ ASSESSMENT YEAR: 2006-07 ACIT, CENT.CIR.1(1) AHMEDABAD. VS SHRI NAYAN K. THAKKAR 17, AMBAVIHAR, KAILASH COLONY OFF: 132FT. RIG ROAD SATELLITE, AHMEDABAD. PAN : ABJPT 6683 Q !./ IT(SS)A.NO. 657/AHD/2010 WITH CO NO.298/AHD/2010 % ) *)/ ASSESSMENT YEAR: 2007-08 ACIT, CENT.CIR.1(1) AHMEDABAD. VS SHRI NAYAN K. THAKKAR 17, AMBAVIHAR, KAILASH COLONY OFF: 132FT. RIG ROAD SATELLITE, AHMEDABAD. PAN : ABJPT 6683 Q !./ IT(SS)A.NO. 658/AHD/2010 % ) *)/ ASSESSMENT YEAR: 2008-09 ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 2 ACIT, CENT.CIR.1(1) AHMEDABAD. VS SHRI NAYAN K. THAKKAR 17, AMBAVIHAR, KAILASH COLONY OFF: 132FT. RIG ROAD SATELLITE, AHMEDABAD. PAN : ABJPT 6683 Q +, / (APPELLANT) -. +, / (RESPONDENT) REVENUE BY : SHRI T.P.KRISHNAKUMAR, CIT-DR ASSESSEE(S) BY : SHRI S.N. SOPARKAR WITH SHRI P.M. MEHTA / DATE OF HEARING : 24/03/2015 / DATE OF PRONOUNCEMENT: 27/03/2015 // O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: 1. IT(SS)A.NO.655/AHD/2010 IS THE APPEAL OF THE REV ENUE AND CO.NO.296/AHD/2010 IS THE CROSS-OBJECTION OF THE AS SESSEE, AND ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, AHMEDAB AD DATED 25.6.2010 FOR THE ASSTT.YEAR 2005-06. IT(SS)A.NO.656/AHD/2010 IS THE APPEAL OF THE REVEN UE AND CO.NO.297/AHD/2010 IS THE CROSS-OBJECTION OF THE AS SESSEE, AND ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, AHMEDAB AD DATED 25.6.2010 FOR THE ASSTT.YEAR 2006-07. IT(SS)A.NO.657/AHD/2010 IS THE APPEAL OF THE REVEN UE AND CO.NO.298/AHD/2010 IS THE CROSS-OBJECTION OF THE AS SESSEE, AND ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, AHMEDAB AD DATED 25.6.2010 FOR THE ASSTT.YEAR 2007-08. IT(SS)A.NO.658/AHD/2010 IS THE APPEAL OF THE REVEN UE DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, AHMEDABAD DATED 25.6.2010 FOR THE ASSTT.YEAR 2008-09. ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 3 2. COMMON GROUND NO.1 OF THE APPEAL IN ALL THE ASSE SSMENT YEARS UNDER CONSIDERATION IS DIRECTED AGAINST THE ORDER O F THE CIT(A) IN DELETING THE ADDITION OF RS.35,50,000/- IN A.Y.2005 -06, RS.1,16,70,000/- IN A.Y.2006-07, RS.44,00,000/- IN A.Y.2007-08 AND RS.3,80,000/- MADE ON ACCOUNT OF UNDISCLOSED INCOME ON THE BASIS OF CLIENT CODE MODIFICATION. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DIRECTOR IN KUNWARJI FINSTOCK PVT. LTD. (KFPL) AND IS ENGAGED I N THE BUSINESS OF COMMODITY TRANSACTION THROUGH THE BROKER, KUNWARJI COMMODITIES BROKERS PVT. LTD. (KCBPL) AND IS AN INVESTOR IN SHA RES AND SECURITIES. IN THE KUNWARJI GROUP OF CASES, A SEARCH UNDER SECT ION 132(1) OF THE ACT WAS CARRIED OUT ON 25.3.2008. DURING THE COUR SE OF SEARCH, BOOKS OF ACCOUNTS AND DOCUMENTS AS PER ANNEXURES A1 TO A6 5 OF THE PANCHNAMA WERE SEIZED FROM THE MAIN OFFICE PREMISES OF THIS GROUP AND SURVEY WERE ALSO CARRIED OUT IN THE COMPANIES OF TH IS GROUP. THE SEARCHES WERE SIMULTANEOUSLY CARRIED OUT AT THE RES IDENTIAL PREMISES OF THE DIRECTOR, SHRI NAYAN THAKKAR AND HIS STATEMENT WAS RECORDED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF KCBP L, THE AO FOUND THAT THE SAID BROKER HAS DONE CLIENT CODE MODIFICAT ION UNUSUALLY FOR HIGH NUMBERS OF TIMES. THEREFORE, THE AO INFERRED THAT THE MODIFICATION OF THE CLIENT CODE HAD BEEN RESORTED TO WITH MALAFIDE INTENTION AND FOR THE PURPOSE OF TRANSFERRING THE PROFIT/LOSS FROM ONE CL IENT TO ANOTHER, THOUGH HE ADMITTED IN THE ASSESSMENT ORDER THAT THE RE ARE POSSIBILITIES OF COMMITTING MISTAKES THAT MAY REQUIRE MODIFICATIO N OF CLIENT CODE. HOWEVER, HE WAS OF THE OPINION THAT THE ASSESSEE-CO MPANY AND KCBPL ARE THE GROUP CONCERNS AND SINCE THERE WAS UNUSUALL Y HIGH NUMBER OF CLIENT CODE MODIFICATIONS IN THE CASE OF THE ASSESS EE, HE WAS OF THE OPINION THAT THE CLIENT CODE MODIFICATION WAS NOT T HE BONA FIDE MISTAKE BUT IT WAS DONE WITH THE INTENTION OF TRANSFERRING THE PROFIT FROM ONE CLIENT TO ANOTHER. HE, THEREFORE, WORKED OUT THE N OTIONAL PROFIT/LOSS WHICH COULD HAVE BEEN OCCURRED TO THE ASSESSEE HAD THE CLIENT CODE WAS ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 4 NOT MODIFIED. AS PER HIS WORKING, THE AO MADE ADDI TION OF RS.35,50,000/- IN A.Y.2005-06, RS.1,16,70,000/- IN A.Y.2006-07, RS.44,00,000/- IN A.Y.2007-08 AND RS.3,80,000/-, WH ICH WAS WORKED OUT ON THE BASIS OF YEAR-WISE RATIO OF CLIENT CODE MODIFICATION. 4. ON APPEAL, THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY FOLLOWING HIS DECISION RENDERED IN THE CASE OF KFPL AND OBSERVED AS UNDER: 11. GROUNDS NO. 3 WHICH IS COMMON FOR THE ASSESSMEN T YEARS 2005-06, 2007-08 AND 2008-09 IS AS UNDER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE ASSESSING OFFICER ERRED IN ASSUMING THAT PROFITS WE RE ALLEGEDLY SUPPRESSED BY THE APPELLANT ON ACCOUNT OF CLIENT CODE MODIFICATIONS BY THE BROKERS, KUNWARJI COMMODI TY BROKERS PVT. LTD. IN A LARGE NUMBER OF COMMODITY TRANSACTIONS.' THIS ISSUE HAS ALSO BEEN DISCUSSED BY ME IN DETAIL WHILE DECIDING THE APPEALS IN THE CASE OF KUNWARJI FINANCE PVT. LT D. IN THAT CASE THE CORRECT FACTUAL POSITION REGARDING CLIENT CODE MODIFICATIONS HAS BEEN THOROUGHLY ANALYZED AND EXAMINED BY ME AND IT HAS BEEN FOUND THAT WHATEVER PROFITS HAVE ACCRUED TO TH E CLIENTS. ARID, THE OTHER PARTIES WITH WHOM THE CLIENTS HAVE TRADED ARE DULY ACCOUNTED IN THE BOOKS OF THE CONCERNED PARTIES AND THESE TRANSACTIONS DULY MATCHED WITH THE DATA OF THE COMM ODITY EXCHANGES. THE MISMATCH WHICH HAS BEEN WORKED OUT B Y THE ASSESSING OFFICER IS ONLY ON ACCOUNT OF THE FACT TH AT THE ASSESSING OFFICER HAS CALCULATED NOTIONAL PROFITS ON THE ASSU MPTION AS IF CLIENT CODE MODIFICATIONS WERE NOT CARRIED OUT AND THE TRANSACTIONS WERE CLOSED ON THE EXPIRY DATE. WHILE DECIDING THE APPEALS IN THE CASE OF KFPL, ON SIMILAR ISSUES, IT WAS FORCEFULLY ARGUED BEFORE ME THAT THE ADDITION ON THE BASIS OF CLIENT CODE MODIFICATIONS ARE ONLY ON ASSUMPTIONS AND SURMISES WHICH IS NOT PERMISSIBLE UNDER LAW AND FURTHER THAT THE ADDITION S ARE, ONLY NOTIONAL AND BRINGING TO THE CHARGE OF TAX SUCH NOT IONAL INCOME IS REPUGNANT TO THE CONCEPT OF 'REAL INCOME'. FOR THE ABOVE PROPOSITIONS RELIANCE WAS PLACED ON SEVERAL DECIDED CASES. MY FINDINGS ON ALL THESE ISSUES AS RECORDED IN MY ORDE R IN THE CASE OF KFPL HAVE ALREADY BEEN REPRODUCED SUPRA. FOR THE SA ME REASONS GROUND NO. 3 FOR THE A.YS. 2005-06. 2007-08 AND 200 8-09 IS ALLOWED. ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 5 5. AT THE TIME OF HEARING BOTH THE PARTIES AGREED B EFORE US THAT THIS ISSUE WAS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S.KUNVARJI FINANCE PVT. LTD. AND OTHERS, IN IT(SS)A.NOS.615 TO 618/AHD/2010 & OTHERS ORDER DATED 19.3.2015. 6. WE FIND THAT THE TRIBUNAL IN THE SAID ORDER DATE D 19.3.2015, ON THIS ISSUE, HAS HELD AS UNDER: 8. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. T HE ASSESSING OFFICER BELIEVED THE CLIENT CODE MODIFICATION TO BE MALAFIDE BECAUSE IN HIS OPINION THE CLIENT CODE MODIFICATION WAS FOR UNUSUALLY HIGH NUMBER OF CASES. THEREFORE, FIRST TH ING TO BE DECIDED IS WHETHER THERE WAS THE CLIENT CODE MODIFI CATION FOR UNUSUALLY HIGH NUMBER OF CASES. THE COMMODITY EXCHA NGE I.E. MCX VIDE CIRCULAR NO.MCX/T&S/ 032/2007 DATED 22.01. 2007, ISSUED GUIDELINES WITH REGARD TO THE CLIENT CODE MO DIFICATION, WHICH READS AS UNDER:- CIRCULAR NO. MCX/T&S/032/2007 JANUARY 22, 2 007 CLIENT CODE MODIFICATIONS IN TERMS OF PROVISIONS OF THE RULES, BYE-LAWS AND B USINESS RULES OF THE EXCHANGE, THE MEMBERS OF THE EXCHANGE ARE NO TIFIED AS UNDER: FORWARD MARKETS COMMISSION (FMC) VIDE ITS LETTER NO . 6/3/2006/MKT-II (VOL III) DATED DECEMBER 20, 2006 A ND JANUARY 5, 2007 HAS DIRECTED AS UNDER. A. THE FACILITY OF CLIENT CODE MODIFICATIONS INTRA- DAY ARE ALLOWED. B. THE MEMBERS ARE ALSO ALLOWED TO CHANGE THEIR CLI ENT CODES BETWEEN 5:00 P.M. TO 5:15 P.M., IN CASE OF THE CONT RACTS TRADED TILL 5:00 P.M. AND BETWEEN 11:30 P.M. TO 11:45 P.M. FOR THE CONTRACTS TRADED TILL 11:30 P.M. ON ALL THE TRADING DAYS FROM MONDAYS TO FRIDAYS AND ON SATURDAYS THE SAME SHALL BE ALLOWED BETWEEN 2:00 P.M. TO 2:15 P.M. C. HOWEVER, ON THE DAYS WHEN TRADING IN COMMODITIE S TAKES PLACE TILL 11:55 P.M. THE CLIENT CODE MODIFICATION WILL B E ALLOWED ONLY UPTO 12:00 P.M. ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 6 D. AT ALL TIMES, PROPRIETARY TRADES SHALL NOT BE AL LOWED TO BE MODIFIED AS CLIENT TRADES AND CLIENT TRADES SHALL N OT BE ALLOWED TO BE MODIFIED AS PROPRIETARY TRADES. E. IN ORDER TO ENSURE THAT CLIENT CODES ARE ENTERE D WITH ALERTNESS AND CARE, A PENALTY ON THE CLIENT CODE CHANGES MADE ON A DAILY BASIS SHALL BE IMPOSED AS UNDER: S. NO PERCENTAGE OF CLIENT CODE CHANGED TO TOTAL ORDERS (MATCHED) ON A DAILY BASIS PENALTY (RS.) 1 LESS THAN OR EQUAL TO 1% NIL 2 GREATER THAN 1% BUT LESS THAN OR EQUAL TO 5% 500 3 GREATER THAN 5% BUT LESS THAN OR EQUAL TO 10% 1000 4 GREATER THAN 10% 10000 F. IT IS CLARIFIED THAT THE FACILITY OF CLIENT COD E MODIFICATION IS ALLOWED AS AN INTERIM MEASURE ONLY UPTO MARCH 31, 2 007 AND AFTER THIS DATE THE SAID FACILITY WILL BE COMPLETEL Y STOPPED. WITH REFERENCE TO POINT C. AS REFERRED ABOVE, MEMBE RS MAY PLEASE NOTE THAT THE CLIENT CODE MODIFICATIONS WILL BE ALLOWED ONLY UPTO 11:55 P.M. IN INTERNATIONAL REFERENCEABLE COMM ODITIES (I.E. COMMODITIES TRADED UPTO 11:55 P.M.) MEMBERS ARE REQUESTED TO TAKE NOTE OF THE FMC DIREC TIVES AND ENSURE STRICT COMPLIANCE. FROM THE ABOVE, IT IS EVIDENT THAT CLIENT CODE MOD IFICATION IS PERMITTED INTRA-DAY, I.E. ON THE SAME DAY. AS PER COMMODITY EXCHANGE, IF CLIENT CODE MODIFICATION IS UPTO 1% OF THE TOTAL ORDERS, THERE IS NO PENALTY AND IF IT IS GREATER TH AN 1% BUT LESS THAN 5%, THE PENALTY IS RS.500/-. IF IT IS GREATER THAN 5% BUT LESS THAN 10%, PENALTY IS RS.1000/- AND IF IT IS GREATER THAN 10%, THEN PENALTY IS RS.10,000/-. FROM THE ABOVE, THE ONLY INFERENCE THAT CAN BE DRAWN IS THAT AS PER MCX, THE CLIENT CODE MO DIFICATION UPTO 1% IS ABSOLUTELY NORMAL AND THEREFORE, THE BROKER I S PERMITTED TO MODIFY THE CLIENT CODE UPTO 1% WITHOUT PAYING ANY P ENALTY. EVEN CLIENT CODE MODIFICATION UPTO 5% IS NOT CONSIDERED UNUSUALLY HIGH BECAUSE THAT IS ALSO PERMITTED WITH THE TOKEN PENAL TY OF RS.500/-. IN THE CONTEXT OF THE CIRCULAR ISSUED BY COMMODITY EXCHANGE, LET US EXAMINE WHETHER THE CLIENT CODE MODIFICATION DON E BY THE BROKER I.E. KCBPL IS UNUSUALLY HIGH. AT PAGE NO.16 ON PARAGRAPH NO.4.3, THE CIT(A) HAS GIVEN THE NUMBER OF TRANSACT IONS ENTERED INTO BY THE ASSESSEE FOR THE PERIOD 2004-05 TO 2007 -08 AND THE NUMBER OF CLIENT CODE MODIFICATION AND PERCENTAGE T HEREOF. WE ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 7 HAVE ALSO REPRODUCED THE SAME AT PARAGRAPH NO.6 OF OUR ORDER. FROM THE SAID DETAILS, IT IS EVIDENT THAT THE CLIEN T CODE MODIFICATION WAS DONE IN FOUR YEARS 36,161 TIMES. AS AN ABSOLUTE FIGURE, THE CLIENT CODE MODIFICATION MAY LOOK VERY HIGH, BUT IF WE LOOK IT AT IN TERMS OF TOTAL TRANSACTIONS, IT IS ON LY 0.94%. THE TOTAL NUMBER OF TRADE TRANSACTIONS IS 38.58 LACS AND THE CLIENT CODE MODIFICATION IS ONLY 36,161. THEREFORE, THE CLIENT CODE MODIFICATION IS LESS THAN 1% OF THE TOTAL TRADING T RANSACTIONS. AS PER CIRCULAR OF COMMODITY EXCHANGE, CLIENT CODE MOD IFICATION UPTO 1% IS QUITE NORMAL AND IS PERMITTED WITHOUT ANY PEN ALTY. THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON ON W HAT BASIS HE PRESUMED THE CLIENT CODE MODIFICATIONS TO BE UNUSUA LLY HIGH. IN THE LIGHT OF THE MCX CIRCULAR, WE ARE OF THE OPINIO N THAT THE CLIENT CODE MODIFICATION WAS QUITE NOMINAL AND NOT UNUSUAL LY HIGH AS ALLEGED BY THE ASSESSING OFFICER. 9. THE ASSESSING OFFICER HELD THE CLIENT CODE MODIF ICATIONS TO BE MALAFIDE WITH THE INTENTION TO TRANSFER THE PROF IT TO OTHER PERSON BY MODIFYING THE CLIENT CODE SO AS TO AVOID THE PAYMENT OF TAX. FROM THE CIRCULAR OF THE COMMODITY EXCHANGE, I T IS EVIDENT THAT CLIENT CODE MODIFICATION IS PERMITTED ON THE S AME DAY. THEREFORE, WE ARE UNABLE TO FIND OUT ANY JUSTIFICAT ION FOR THE ALLEGATION OF THE ASSESSING OFFICER THAT THE CLIENT CODE MODIFICATION WAS WITH THE MALAFIDE INTENTION. WHEN THE CLIENT CODE WAS MODIFIED ON THE SAME DAY, THERE CANNOT BE ANY M ALAFIDE INTENTION. HAD CLIENT MODIFICATION DONE AFTER THE T RANSACTIONS PERIOD WHEN THE PRICE OF THE COMMODITY HAS ALREADY CHANGED, THEN PERHAPS THERE COULD HAVE BEEN SOME BASIS TO PR ESUME THAT CLIENT CODE MODIFICATION IS INTENTIONAL. HOWEVER, WHEN THE CLIENT CODE MODIFICATION IS DONE ON THE SAME DAY, IN OUR O PINION, THERE WAS NO BASIS OR JUSTIFICATION TO HOLD THE SAME TO B E MALAFIDE. 10. MOREOVER, THE LD. ASSESSING OFFICER HAS COMPUTE D THE NOTIONAL PROFIT/LOSS TILL THE TRANSACTIONS PERIOD A ND NOT TILL THE PERIOD BY WHICH THE CLIENT CODE MODIFICATION TOOK P LACE. EVEN IF THE VIEW OF THE REVENUE IS ACCEPTED THAT THE CLIENT CODE MODIFICATION WAS WITH MALAFIDE INTENTION, THEN THE PROFIT OR LOSS ACCRUED TILL THE CLIENT CODE MODIFICATION CAN BE CO NSIDERED IN THE CASE OF THE ASSESSEE BUT BY NO STRETCH OF IMAGINATI ON THE PROFIT/LOSS ARISING AFTER THE CLIENT CODE MODIFICAT ION CAN BE CONSIDERED IN THE HANDS OF THE ASSESSEE. 11. THE LD. CIT(A) IN PARAGRAPH 4.13 OF HIS ORDER H AS ALSO RECORDED THE FINDINGS THAT ALL TRANSACTIONS AT THE COMMODITIES EXCHANGES HAVE BEEN DULY ACCOUNTED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE CONCERNED PARTIES. SUCH PROFITS/L OSS HAS BEEN DULY ACCOUNTED WHENEVER THE TRANSACTIONS HAVE BEEN CLOSED. THUS, WHATEVER PROFITS HAVE BEEN GENERATED OR ACCOU NTING OF ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 8 ACTUAL TRADE, HAVE BEEN OFFERED AND BROUGHT TO THE CHARGE OF TAX IN THE CASES OF CONCERNED ASSESSEES. THESE FINDING S OF FACT RECORDED BY THE LD. CIT(A) HAS NOT BEEN CONTROVERTE D BY THE REVENUE AT THE TIME OF HEARING BEFORE US. WHEN THE TRANSACTION HAS BEEN DULY ACCOUNTED FOR AND THE PROFIT/LOSS HAS ACCRUED TO THE CONCERNED PARTIES IN WHOSE NAMES TRANSACTIONS HAVE BEEN CLOSED, THERE CANNOT BE ANY BASIS OR JUSTIFICATION FOR CONS IDERING THOSE PROFIT/LOSS IN THE CASE OF THE ASSESSEE ON THE BASI S OF MERE PRESUMPTION OR SUSPICION. IT IS NOT THE CASE OF TH E REVENUE THAT SUCH ALLEGED PROFIT HAS ACTUALLY BEEN RECEIVED BY T HE ASSESSEE. IN VIEW OF THE TOTALITY OF THE ABOVE FACTS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CI T(A) IN THIS REGARD AND THE SAME IS SUSTAINED; AND GROUND NOS. 1 AND 3 OF THE REVENUES APPEAL ARE REJECTED. 7. RESPECTFULLY FOLLOWING THE ABOVE QUOTED ORDER OF THE TRIBUNAL, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE FOR AL L THE YEARS UNDER CONSIDERATION. 8. THE GROUND NO.2 IN THE ASSTT.YEAR 2005-06, GROUN D NO.3 IN ASSTT.YEAR 2006-07, GROUND NO.3 IN ASSTT.YEAR 2007- 08, THE GROUND NO.2 IN THE ASSTT.YEAR 2008-09 ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) HOLDING THAT THE DISCLOSURE MADE BY THE APPE LLANT CANNOT BE ASSUMED TO BE VOLUNTARY AND BASED ON SEIZED DOCUMEN TS. 9. THE CIT(A) HAS DECIDED THE ISSUE AS UNDER: 6. THIS GROUND OF APPEAL PRIMARILY CHALLENGES THE F INDING OF THE ASSESSING OFFICER THAT THE DISCLOSURE OF RS.12,00,0 0,000 MADE BY SHRI NAYAN THAKKAR WAS VOLUNTARY AND BASED ON THE S EIZED DOCUMENTS, AND THEREFORE, THE SUBSEQUENT RETRACTION WAS NO1 ACCEPTABLE. SIMILAR ISSUE HAS BEEN' COMPREHENSIVELY DEALT, WITH AND DECIDED BY ME IN THE CASE OF KUNWARJI FINANCE P VT. LTD. IN MY CONSOLIDATED ORDER. REFERRED TO ABOVE. AFTER CONSID ERING THE FACTUAL POSITION AS ALSO THE LEGAL POSITION ELABORA TELY THE FOLLOWING FINDING WAS RECORDED IN THE ABOVE REFERRED CASE OF KUNWARJI FINANCE PVT. LTD. 3.6 'I HAVE GIVEN A CAREFUL CONSIDERATION THE FAC TS HAVING BEARING ON THIS ISSUE AND THE SUBMISSIONS MADE ON B EHALF OF THE APPELLANT COMPANY. THERE IS NO DISPUTE THAT DUR ING THE COURSE OF SEARCH SHRI NAYAN THAKKAR DISCLOSED INCOM E OFRS.1-2 CRORES AND THIS DISCLOSURE WAS SUBSEQUENTL Y ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 9 CONFIRMED BY FILING A LETTER WHEREIN THE AMOUNT OF DISCLOSURE WAS ALSO BIFURCATED. HOWEVER, ALL THE RELEVANT FACT S WHICH HAVE BEEN BROUGHT TO MY NOTICE IN THE STATEMENT OF FACTS AND ALSO DURING THE COURSE OF HEARING SHOW THAT WHE N THE STATEMENT OF SHRI NAYAN THAKKAR WAS BEING RECORDED DURING THE COURSE OF SEARCH, NO SPECIFIC INCRIMINATI NG PAPERS WERE AVAILABLE AND WERE CONFRONTED TO HIM. AS A MATTER OF FACT, VOLUMINOUS RECORDS IN THE FORM OF LOOSE PA PERS, DOCUMENTS, BOOKS OF ACCOUNT AND DIGITAL RECORD WERE FOUND AND SEIZED, THE CONTENTS OF WHICH WERE NEVER ASCERT AINED AT THE TIME OF SEARCH NOR THE ASSESSES OF THIS GROUP W ERE SPECIFICALLY INFORMED ABOUT SUCH CONTENTS. IT IS T RUE THAT THE SEARCH CONTINUED NON-STOP FOR A PERIOD OF 36 HOURS AND THE STATEMENT OF SHRI NAYAN THAKKAR WAS COMMENCED AT AB OUT 11 O'CLOCK IN THE-NIGHT AND CONTINUED UPTO 5.00 AM NEXT DAY. I HAVE ALSO OBSERVED THAT AT THE TIME OF REC ORDING THE STATEMENT U/S.132(4), THE AUTHORITIES REFERRED TO A NNEXURE- 1, WHICH WAS MADE THE BASIS OF DISCLOSURE. HOWEVER , THERE SEEMED TO BE LACK OF CLARITY AND UNCERTAINTY WITH R ESPECT TO 'ANNEXURE-A'. SUBSEQUENTLY, IT WAS INFORMED TO THE ASSESSEE THAT THE SAID ANNEXURE-1 SHOULD BE CONSTIT UTED AS ANNEXURE-A AND THAT THE SAID ANNEXURE-A CONTAINED A 1ST OF 65 ITEMS OF BOOKS/DOCUMENTS/PAPERS. IT IS ALSO OBSE RVED THAT ON THE BASIS OF THIS ANNEXURERA, STATEMENT U/S .132 WAS RECORDED; HOWEVER, THE SAID ANNEXURE WAS NOT MADE T HE BASIS OF ADDITION. MOREOVER, THE ASSESSING OFFICER HAS NOT BEEN ABLE TO DEAL WITH THE CONTENTS' OF AFFIDAV IT IN A CONVINCING MANNER. REGARDING ;THE DELAY IN RETRACT ION, THE FACTS AND CIRCUMSTANCES HAVE BEEN EXPLAINED BEFORE ME IN DETAIL. THE APPELLANT COMPANY WAS NEVER ALLOWED ADEQUATE OPPORTUNITY TO INSPECT AND GO THROUGH THE VOLUMINOUS SEIZED RECORDS AND EVEN THE COPY OF THE STATEMENT RECORDED ON 25/26TH MARCH, 2008 WAS GIVEN TO THE APPELLANT COMPANY ON 20TH MARCH, 2009 AFTER ONE YEAR OF THE SEARCH. MOREOVER, I HAVE .ALSO VERIFIED T HE CONTENT OF THE LETTER DATED 10-04-2008, ADDRESSED BY SHRI NAYAN THAKKAR TO THE ASST. DIRECTOR OF INCOME-TAX. IN THE SAID LETTER, HE HAS CLEARLY STATED HE WAS ALLOWED INSPEC TION OF SEIZED MATERIAL ONLY FOR ABOUT 3 HOURS AND THAT F OR . PROPER VERIFICATION OF THE SAME, THE COPIES THEREOF MAY BE PROVIDED. HE HAS ALSO STATED THAT THE DISCLOSURE W AS MADE ON ACCOUNT OF CERTAIN IRREGULARITIES, DEFECT AND MI STAKES IN RECORD KEEPING AND BUSINESS AFFAIRS. HOWEVER, TH ERE IS NOTHING ON RECORD TO PROVE THAT THERE WAS ANY SUCH IRREGULARITY, DEFECT OR MISTAKE EITHER IN THE RECOR D KEEPING OR SEIZED MATERIAL. THE ENTIRE POSITION WAS ALSO EXPLAINED BEFORE THE ASSESSING OFFICER BY FILING DETAILED LET TER DATED ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 10 2ND SEPTEMBER, 2009. DURING THE COURSE OF ENTIRE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS B EEN UNABLE TO REFER TO ANY SEIZED MATERIAL, ON THE BASI S OF WHICH UNACCOUNTED INCOME COULD BE PROVED OR ESTABLISHED. IT PROVES THAT WHATEVER ADDITIONS HAVE BEEN MADE BY THEASSESSING OFFICER ARE NOT BASED UPON ANY. SEIZED DOCUMENTS AND THE SAME BEEN MADE ON THE BASIS OF VARIOUS DATA COLLECTED BY THE DEPARTMENT COMMODIT Y EXCHANGE WHICH REFLECTED CLIENT CODE MODIFICATIONS. 3.7 'FROM THE ABOVE REFERRED LETTER DATED 2ND SEPTEMBER, 2009 ADDRESSED TO ASSESSING OFFICER AND THE STATEMENT RECORDED U/S.132(4), WHICH I HAVE PER I T BECOMES CLEAR THAT THE DISCLOSURE WAS OBTAINED BY THE AUTHORIZED OFFICER ACCOUNT OF THE FOLLOWING FOUR CO UNTS: (1) ANNEXURE-1 (2) SEIZED MATERIAL 'A-6, KACHHA BOOKS SERIATED FRO M A-18 TO A-29'. (3) OTHER IRREGULARITIES / DISCREPANCIES (4) CLIENT CODE MODIFICATION. IT IS AN ADMITTED FACT THAT NO ADDITION HAS BEEN MA DE IN THE ASSESSMENT ORDER ON ACCOUNT OF THE FIRST THREE AS PECTS. IT IS ALSO AN ADMITTED FACT THAT THE CODE MODIFICATION DETAILS WERE NOT AVAILABLE AND NOT CONFRONTED AT THE TIME OF SEARCH. CODE MODIFICATION DETAILS WERE OBTAINED BY THE DEPARTMENT FROM THE 'COMMODITY EXCHANGES IN POST S EARCH INQUIRIES AND NO SUCH DETAILS WERE CONFRONTED AT- THE TIME OF SEARCH OPERATIONS AND ACCORDINGLY, THE BASIS OF THE DISCLOSURE DID NOT EXIST. SO FAR-AS THE FIRST THREE ASPECTS ARE CONCERNED, EVEN THE ASSESSING OFFICER HAS ADMITTED THAT THERE IS NO SUCH QUANTUM OF DISCLOSURE ON THE BAS IS OF THE SEIZED MATERIAL, ALLEGED INCRIMINATING D OCUMENTS OR ANNEXURE-1. SO FAR AS CODE MODIFICATION IS CONCERNED, IT HAS BE EN DEALT WITH BY ME ON MERITS WHILE DEALING WITH THE GROUNDS RELATING TO THE ADDITION. ACCORDINGLY, THE STATEMEN T RECORDED U/S. 132(4) HAD NO BASIS OF ARRIVING AT THE DISCLOS URE OF RS.12 CRORES WHICH DID NOT CONTAIN ANY YEAR OR WHIC H DID NOT EVEN REFER TO ANY ASSETS -AND IT IS A KNOWN FAC T THAT ANY UNDISCLOSED INCOME FOUND DURING THE COURSE OF SEARC H SHOULD ALSO SIMULTANEOUSLY BE REFLECTED IN SOME VAL UABLES, ASSETS OR EXPENDITURE. IN SPITE OF EXHAUSTIVE INQUI RIES AT THE TIME OF SEARCH AND DURING THE POST SEARCH INQUIRES AND ALSO AT THE TIME OF ASSESSMENT PROCEEDINGS NO UNDISCLOSE D ASSETS OR EXPENDITURE WERE EVER FOUND OUT OR REFERR ED TO ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 11 WHICH CAN CORRESPOND TO THE ALLEGED UNDISCLOSED INC OME AND ACCORDINGLY, THE VIEW OF THE APPELLANT THAT THE DIS CLOSURE AT THE TIME OF SEARCH HAD NO BASIS HAS TO BE ACCEPTED. ' 8. FOR THE SAME REASONS IN THE PRESENT CASE ALSO I HOLD THAT THE DISCLOSURE MADE BY SHRI NAYAN THAKKAR CANNOT BE ASS UMED TO BE VOLUNTARY AND BASED ON SEIZED DOCUMENTS. ACCORDINGL Y, GROUND NO.2 IS ALLOWED. 10. BOTH THE PARTIES DURING THE COURSE OF HEARING A GREED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE C ONSOLIDATED ORDER OF THE TRIBUNAL DATED 19.3.2015 (SUPRA) AND HAS HELD A S UNDER: 12. GROUND NO.2 OF THE REVENUES APPEAL IS WITH RE GARD TO THE CLAIM OF THE REVENUE THAT THE CIT(A) OUGHT TO HAVE DIRECTED FOR THE ADDITION IN RESPECT OF THE INCOME DISCLOSED BY THE ASSESSEE AT THE TIME OF SEARCH. 13. IT IS SUBMITTED BY THE LD. DEPARTMENTAL REPRESE NTATIVE THAT DURING THE COURSE OF SEARCH, STATEMENT OF SHRI NAYA N THAKKAR WAS RECORDED. HE IS THE DIRECTOR OF THE ASSESSEE-COMPAN Y. IN HIS STATEMENT DATED 25.03.2008, HE DISCLOSED THE UNACCO UNTED INCOME OF RS.12 CRORES. THAT ON 10.04.2008, HE FURN ISHED A LETTER BEFORE THE ASSISTANT DIRECTOR OF INCOME-TAX IN WHIC H HE GAVE THE BREAK-UP OF RS.12 CRORES, WHICH READS AS UNDER:- (A) M/S. KUNVARJI FINANCE PVT LTD. - RS.8,00,00, 000 (B) INDIVIDUALS AND OTHER GROUP ENTITIES LIKE NAYAN THAKKAR, - RS. 4,00,00,0000 CHETAN THAKKAR ETC. ________________ _ RS.12, 00,00,000 ============== THUS, IN CLEAR TERMS, HE DISCLOSED SUM OF RS.8 CRO RES AS UNACCOUNTED INCOME OF THE ASSESSEE. THIS LETTER DAT ED 10.04.2008 WAS FILED AFTER THE CONCLUSION OF THE SEARCH. THAT TILL THE FILING OF THE RETURN OF INCOME, THE DISCLOSURE MADE AT THE TI ME OF SEARCH WAS NOT RETRACTED. HOWEVER, IN THE RETURN OF INCOME , THE UNDISCLOSED INCOME DECLARED AT THE TIME OF SEARCH W AS NOT OFFERED; THEREFORE, THE ADDITION FOR UNDISCLOSED IN COME DECLARED AT THE TIME OF SEARCH OUGHT TO HAVE BEEN SUSTAINED BY CIT(A). THAT THE ASSESSING OFFICER WORKED OUT THE ADDITION ON AC COUNT OF CLIENT CODE MODIFICATION. SINCE THE ADDITION WORKED OUT D UE TO CLIENT MODE MODIFICATION WAS MORE THAN RS. 8 CRORES, NO SE PARATE ADDITION FOR UNDISCLOSED INCOME DECLARED AT THE TIM E OF SEARCH WAS MADE. HOWEVER, WHEN THE CIT(A) DELETED THE ADD ITION MADE ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 12 BY THE ASSESSING OFFICER ON ACCOUNT OF CLIENT CODE MODIFICATION, HE OUGHT TO HAVE SUSTAINED THE ADDITION FOR UNDISCLOSE D INCOME DECLARED BY THE ASSESSEE AT THE TIME OF SEARCH. HE, THEREFORE, SUBMITTED THAT IF THE ITAT SUSTAIN THE ADDITION FOR CLIENT CODE MODIFICATION, THEN NO ADDITION ON ACCOUNT OF UNDISC LOSED INCOME DECLARED BY THE ASSESSEE AT THE TIME OF SEARCH WOUL D BE CALLED FOR; OTHERWISE THE ITAT SHOULD SUSTAIN THE ADDITION OF RS.8 CRORES WHICH WAS VOLUNTARILY DECLARED BY SHRI NAYAN THAKKA R AT THE TIME OF SEARCH WITHOUT ANY PRESSURE OR COERCION FROM THE DEPARTMENT. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE F OLLOWING DECISIONS:- (I) RAMESCHANDRA & CO. VS. CIT : (1988) 168 ITR 375 (B OM.) (II) RAMESH T. SALVE VS. ACIT : (2000) 75 ITD 75 (MUM.) (III) DR. S.C. GUPTA VS. CIT : (2001) 248 ITR 782 (IV) GARIBDAS CHANDRIKA PRASAD VS. CIT : 230 ITR 771 (MP ) (V) HOTEL KIRAN VS. CIT : 82 ITD 453 (PUNE) 14. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, STATED THAT DURING THE COURSE OF SEARCH, STATEMENT OF SHRI NAYAN THAKKAR WAS RECORDED FOR ALMOST 36 HOURS. HIS GRANDFATHER WAS ILL AND WAS HOSPITALIZED. THEREFORE, SHRI NAYAN THAKKAR WAS PHYSICALLY AND MENTALLY PERTURBED. THE AUTHORIZED OFFICER WHO RECORDED HIS STATEMENT HAS TOLD HIM THAT THE VARIOUS PAPERS AND DOCUMENTS SEIZED FROM THEIR OFFICE PREMISES AS PER ANNEXURE-1 INDICATED VARIOUS DEFECTS AND DISCREPANCIES. HE WAS ASKED TO EXPLAIN THE SAME WITHOUT GIVING THE COPY OF SUCH ANNEXURE-1. I N THAT BACKGROUND, HE OFFERED SOME ADDITIONAL INCOME. HOW EVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE VIDE LETTER DATED 27.03.2009 REQUESTED FOR SUPPLYING OF THE ANN EXURE-1. THE ASSESSING OFFICER VIDE REPLY DATED 27.08.2009 C ONFIRMED THAT THERE IS NO ANNEXURE-1 BUT ONLY ANNEXURE-A WHICH WA S INADVERTENTLY MENTIONED AS ANNEXURE-1. THAT WHEN T HE ASSESSEE RECEIVED THE PHOTOCOPIES OF ALL THE SEIZED DOCUMENT S, THE ASSESSEE VERIFIED THOSE DOCUMENTS WITH THE BOOKS OF ACCOUNTS AND FOUND THAT THERE IS NOT A SINGLE DISCREPANCY IN THE ASSESSEES SEIZED BOOKS OF ACCOUNTS. SINCE THERE WAS NO DISCRE PANCY IN THE ASSESSEES BOOKS OF ACCOUNTS AND THE SEIZED DOCUMEN TS, THE ASSESSEE DID NOT OFFER ANY UNDISCLOSED INCOME. FROM THESE FACTS, IT IS EVIDENT THAT DISCLOSURE MADE BY THE ASSESSEE AT THE TIME OF SEARCH WAS ERRONEOUS, BASED UPON INCORRECT FACTS CO NVEYED BY THE AUTHORIZED OFFICER WHO WAS RECORDED HIS STATEME NT. HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE CIT(A) I S FULLY JUSTIFIED AND THE SAME SHOULD BE SUSTAINED. IN SUPPORT OF THI S CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS:- ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 13 (I) KAILASHBEN MANHARLAL CHOKSHI VS. CIT : (2010) 328 ITR 411 (GUJ) (II) CIT VS. K. BHUVANENDRA AND OTHERS (2008) 303 ITR 235 (MAD.) (III) DCIT VS. RATAN CORPORATION: (2005) 145 TAXMAN 503 (GUJ.) (IV) CIT VS. RADHE ASSOCIATES : (2013) 37 TAXMANN.COM 33 6 (GUJ.) 15. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. T HE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACTION WAS CONDU CTED ON THE KUNWARJI GROUP ON 25.03.2008. THE ASSESSEE-COMPA NY IS ONE OF THE GROUP CONCERNS BELONGING TO KUNWARJI GROUP. DURING THE COURSE OF SEARCH, STATEMENT OF SHRI NAYAN THAKKAR, WHO IS DIRECTOR OF THE ASSESSEE-COMPANY, WAS RECORDED IN W HICH HE ADMITTED UNACCOUNTED INCOME OF RS.12 CRORES IN THE CASE OF GROUP CONCERNS. ON 10TH APRIL 2008, HE FILED A LETTER ADD RESSED TO ASSISTANT DIRECTOR OF INCOME-TAX IN WHICH HE REITER ATED THE UNDISCLOSED INCOME OF RS.12 CRORES AND IN THE BREAK -UP, OFFERED INCOME OF RS.8 CRORES IN THE HANDS OF THE ASSESSEE AND BALANCE RS.4 CRORES IN THE HANDS OF INDIVIDUALS AND OTHER G ROUP ENTITIES. IN THE RETURN OF INCOME, NO UNDISCLOSED INCOME WAS OFF ERED FOR TAXATION AS WAS ADMITTED IN THE STATEMENT DURING TH E COURSE OF SEARCH. HOWEVER, AN AFFIDAVIT WAS FURNISHED RETRAC TING THE STATEMENT GIVEN AT THE TIME OF SEARCH. THE ASSESSIN G OFFICER DID NOT ACCEPT THE ASSESSEES AFFIDAVIT AND THE SUBMISS IONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS; HOWEVE R, SINCE THE TOTAL ADDITION MADE BY HIM WAS MORE THAN UNDISCLOSE D INCOME OFFERED IN THE STATEMENT, HE DID NOT MAKE ANY ADDIT ION IN RESPECT OF INCOME DISCLOSED AT THE TIME OF SEARCH. THE REL EVANT FINDING OF THE ASSESSING OFFICER READS AS UNDER:- IN VIEW OF THE ABOVE, THE CLAIMS MADE BY THE ASSES SEE IN HIS AFFIDAVIT AND SUBMISSIONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ARE NOT ACCEPTABLE AND IT IS HEREBY REJ ECTED. HOWEVER, SINCE THE TOTAL SUPPRESSION OF PROFITS, WH ICH REFLECTS THE IRREGULARITIES IN THE BUSINESS AFFAIRS OF THE COMPA NY AND DISCREPANCY IN INCOME, AND WORKED OUT FOR DIFFERENT YEARS (A.Y. 2005-06 TO 2008-09) IS RS.17.71 CRORES, WHICH IS IN EXCESS OF THE AMOUNT OF RS.12 CRORES VOLUNTARILY DISCLOSED BY THE KUNWARJI GROUP, NO SEPARATE ADDITION IS BEING MADE ON THIS ISSUE IN THE CASE OF THE ASSESSEE. THE CIT(A) WAS OF THE OPINION THAT NO ADDITION IS REQUIRED TO BE MADE ON ACCOUNT OF DISCLOSURE MADE AT THE TIME OF S EARCH. THE RELEVANT FINDING OF THE CIT(A) IN THIS REGARD READS AS UNDER:- ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 14 3.6 I HAVE GIVEN A CAREFUL CONSIDERATION TO THE FAC TS HAVING BEARING ON THIS ISSUE AND THE SUBMISSIONS MADE ON B EHALF OF THE APPELLANT COMPANY. THERE IS NO DISPUTE THAT DURING THE COURSE OF SEARCH SHRI NAYAN THAKKAR DISCLOSED INCOME OF RS.1. 2 CRORE AND THIS DISCLOSURE WAS SUBSEQUENTLY CONFIRMED BY FILIN G A LETTER WHEREIN THE AMOUNT OF DISCLOSURE WAS ALSO BIFURCATE D. HOWEVER, ALL THE RELEVANT FACTS WHICH HAVE BEEN BROUGHT TO M Y NOTICE IN THE STATEMENT OF FACTS AND ALSO DURING THE COURSE OF TH E HEARING SHOW THAT WHEN THE STATEMENT OF SHRI NAYAN THAKKAR WAS BEING RECORDED DURING THE COURSE OF SEARCH, NO SPECIFIC I NCRIMINATING PAPERS OR DOCUMENTS WERE AVAILABLE AND WERE CONFRON TED TO HIM. AS A MATTER OF FACT, VOLUMINOUS RECORDS IN THE FORM OF LOOSE PAPERS, DOCUMENTS, BOOKS OF ACCOUNT AND DIGITAL REC ORD WERE FOUND AND SEIZED, THE CONTENTS OF WHICH WERE NEVER ASCERTAINED AT THE TIME OF SEARCH NOR THE ASSESSEES OF THIS GROUP WERE SPECIFICALLY INFORMED ABOUT SUCH CONTENTS. IT IS TR UE THAT THE SEARCH CONTINUED NON-STOP FOR A PERIOD OF. 36 HOURS AND THE STATEMENT OF SHRI NAYAN THAKKAR WAS COMMENCED AT AB OUT 11 O'CLOCK IN THE NIGHT AND CONTINUED UPTO 5.00 AM NEX T DAY. I HAVE ALSO OBSERVED THAT AT THE TIME OF RECORDING THE STA TEMENT U/S 132(4), THE DEPARTMENTAL AUTHORITIES REFERRED TO AN NEXURE-I, WHICH WAS MADE THE BASIS OF DISCLOSURE. HOWEVER, TH ERE SEEMED TO BE LACK OF CLARITY AND UNCERTAINTY WITH RESPECT TO 'ANNEXURE-A'. SUBSEQUENTLY, IT WAS INFORMED TO THE ASSESSEE THAT THE SAID ANNEXURE-L SHOULD BE CONSTRUED AS ANNEXURE-A AND TH AT THE SAID ANNEXURE-A CONTAINED A LIST OF 65 ITEMS OF BOOKS/ D OCUMENTS/ PAPERS. IT IS ALSO OBSERVED THAT ON THE BASIS OF TH IS ANNEXURE-A, STATEMENT U/S 132(4) WAS RECORDED; HOWEVER, THE SAI D ANNEXURE WAS NOT MADE THE BASIS OF ADDITION. MOREOVER, THE A SSESSING OFFICER HAS NOT BEEN ABLE TO DEAL WITH THE CONTENTS OF AFFIDAVIT IN A CONVINCING MANNER. REGARDING THE DELAY IN RETRACTIO N, THE FACTS AND CIRCUMSTANCES HAVE BEEN EXPLAINED BEFORE ME IN DETAIL. THE APPELLANT COMPANY WAS NEVER ALLOWED ADEQUATE OPPORT UNITY TO INSPECT AND GO THROUGH THE VOLUMINOUS SEIZED RECORD S AND EVEN THE COPY OF THE STATEMENT RECORDED ON 25/26TH MARCH 2008 WAS GIVEN TO THE APPELLANT COMPANY ON 20TH MARCH, 2009 AFTER ONE YEAR OF THE SEARCH. MOREOVER, I HAVE ALSO VERIFIED THE CONTENT OF THE LETTER DATED 10-04-2008, ADDRESSED BY SHRI NAYA N THAKKAR TO THE ASST. DIRECTOR OF INCOME-TAX. IN THE SAID LETTE R, HE HAS CLEARLY STATED THAT HE WAS ALLOWED INSPECTION OF SEIZED MAT ERIAL ONLY FOR ABOUT 3 HOURS AND THAT FOR PROPER VERIFICATION OF THE SAME, THE COPIES THERE OF MAY BE PROVIDED. HE HAS ALSO STATED THAT THE DISCLOSURE WAS MADE ON ACCOUNT OF CERTAIN IRREGULAR ITIES, DEFECT AND MISTAKES IN RECORD KEEPING AND BUSINESS AFFAIRS . HOWEVER, THERE IS NOTHING ON RECORD TO PROVE THAT THERE WAS ANY SUCH IRREGULARITY, DEFECT OR MISTAKE EITHER IN THE RECOR D KEEPING OR SEIZED MATERIAL. THE ENTIRE POSITION WAS ALSO EXPLA INED BEFORE THE ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 15 ASSESSING OFFICER BY FILING DETAILED LETTER DATED 2 ND SEPTEMBER, 2009. DURING THE COURSE OF ENTIRE ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER HAS BEEN UNABLE TO REFER TO ANY S EIZED MATERIAL, ON THE BASIS OF WHICH UNACCOUNTED INCOME COULD BE P ROVED OR ESTABLISHED. IT PROVES THAT WHATEVER ADDITIONS HAVE BEEN MADE BY THE ASSESSING OFFICER ARE NOT BASED UPON ANY SEIZED DOCUMENTS AND THE SAME HAVE BEEN MADE ON THE BASIS OF VARIOUS DATA COLLECTED BY THE DEPARTMENT FROM COMMODITY EXCHANGE S WHICH REFLECTED CLIENT CODE MODIFICATIONS. 3.7 FROM THE ABOVE REFERRED .LETTER DATED 2ND SEPTE MBER, 2009 ADDRESSED TO THE ASSESSING OFFICER AND THE STATEMEN T RECORDED U/S. 132(4), WHICH I HAVE PERUSED, IT BECOMES CLEAR THAT THE DISCLOSURE WAS OBTAINED BY THE AUTHORIZED OFFICER O N ACCOUNT OF THE FOLLOWING FOUR COUNTS : (1) ANNEXURE-1 (2) SEIZED MATERIAL 'A-6, KACHHA BOOKS SERIATED FRO M A-18 TO A- 29'. (3) OTHER IRREGULARITIES / DISCREPANCIES (4) CLIENT CODE MODIFICATION. IT IS AN ADMITTED FACT THAT NO ADDITION HAS BEEN MA DE IN THE ASSESSMENT ORDER ON ACCOUNT OF THE FIRST THREE ASPE CTS. IT IS ALSO AN ADMITTED FACT THAT THE CODE MODIFICATION DETAILS WERE NOT AVAILABLE AND NOT CONFRONTED AT THE TIME OF SEARCH. CODE MODIFICATION DETAILS WERE OBTAINED BY THE DEPARTMEN T FROM THE COMMODITY EXCHANGES IN POST SEARCH INQUIRIES AND NO SUCH DETAILS WERE CONFRONTED AT THE TIME OF SEARCH OPERATIONS AN D ACCORDINGLY, THE BASIS OF THE DISCLOSURE DID NOT EXIST. SO FAR A S THE FIRST THREE ASPECTS ARE CONCERNED, EVEN THE ASSESSING OFFICER H AS ADMITTED THAT THERE IS NO SUCH QUANTUM OF DISCLOSURE ON THE BASIS OF THE SEIZED MATERIAL, ALLEGED INCRIMINATING DOCUMENTS OR ANNEXURE-1. SO FAR AS CODE MODIFICATION IS CONCERNED, IT HAS BE EN DEALT WITH BY ME ON MERITS WHILE DEALING WITH THE GROUNDS RELA TING TO THE ADDITION. ACCORDINGLY, THE STATEMENT RECORDED U/S. 132(4) HAD NO BASIS OF ARRIVING AT THE DISCLOSURE OF RS.12 CRORES WHICH DID NOT CONTAIN ANY YEAR OR WHICH DID NOT EVEN REFER TO ANY ASSETS AND IT IS A KNOWN FACT THAT ANY UNDISCLOSED INCOME FOUND D URING THE COURSE OF SEARCH SHOULD ALSO SIMULTANEOUSLY BE REFL ECTED IN SOME VALUABLES, ASSETS OR EXPENDITURE. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT MADE ANY SPECIFIC ADDITIO N ON ACCOUNT OF STATEMENT RECORDED U/S.132(4) OF THE I.T. ACT. IN S PITE OF EXHAUSTIVE INQUIRIES AT THE TIME OF SEARCH AND DURI NG THE POST SEARCH INQUIRES AND ALSO AT THE TIME OF ASSESSMENT PROCEEDINGS NO UNDISCLOSED ASSETS OR EXPENDITURE WERE EVER FOUN D OUT OR ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 16 REFERRED TO WHICH CAN CORRESPOND TO THE ALLEGED UND ISCLOSED INCOME AND ACCORDINGLY, THE VIEW OF THE APPELLANT T HAT THE DISCLOSURE AT THE TIME OF SEARCH HAD NO BASIS HAS T O BE ACCEPTED. 16. THE REVENUE AGGRIEVED WITH THE ORDER OF THE CIT (A) IS IN APPEAL BEFORE US. 17. BEFORE COMING TO THE FACTUAL ARGUMENTS OF BOTH THE SIDES, IT WOULD BE MORE APPROPRIATE TO FIRST DISCUSS THE JUDI CIAL PRONOUNCEMENTS RELIED UPON BY THE LD. CIT-DR AS WEL L AS LD. COUNSEL FOR THE ASSESSEE. THE FIRST DECISION RELIED UPON BY THE LD. CIT-DR WAS A BOMBAY HIGH COURT DECISION IN THE CASE OF RAMESCHANDRA & CO. VS. CIT, (1988) 168 ITR 375 (BO M.). IN THE SAID CASE, DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER CAME ACROSS THE DISCREPANCY IN S ARKI ACCOUNT. HE ASKED THE ASSESSEE FOR EXPLANATION. IN RESPONSE, THE ASSESSEE FILED A LETTER SUBMITTING THAT THE DISCREPANCY COUL D NOT BE EXPLAINED AND VALUE THEREOF COULD BE ADDED TO THE F IRMS INCOME. THEREAFTER, THE ASSESSING OFFICER MADE THE ADDITION OF RS.18,052/-. THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE AAC ADMITTED THE APPEAL AND DELETED THE ADDITION. ON APPEAL BY THE REVENUE, THE TRIBUNAL HELD THAT AA C WAS WRONG IN ENTERTAINING THE APPEAL. ON A REFERENCE, THE HON BLE HIGH COURT HAS HELD THAT THE APPELLATE ASSISTANT COMMISSIONER HAD NO JURISDICTION TO CONSIDER THE GROUND OF APPEAL AGAIN ST THE ADDITION OF RS.18,052 RELATING TO ALLEGED SUPPRESSED SALES O F SARKI. 18. IN THE CASE OF DR. S.C. GUPTA VS. CIT, (2001) 248 ITR 782, THE HONBLE ALLAHABAD HIGH COURT HAS HELD AS UNDER: - THAT A STATEMENT MADE VOLUNTARILY BY THE ASSESSEE COULD FORM THE BASIS OF ASSESSMENT. THE MERE FACT THAT THE AS SESSEE RETRACTED THE STATEMENT COULD NOT MAKE THE STATEMEN T UNACCEPTABLE. THE BURDEN LAY ON THE ASSESSEE TO EST ABLISH THAT THE ADMISSION MADE IN THE STATEMENT AT THE TIME OF SURVEY WAS WRONG AND IN FACT THERE WAS NO ADDITIONAL INCOME. T HUS BURDEN WAS NOT EVEN ATTEMPTED TO BE DISCHARGED. THE ORDER OF THE TRIBUNAL WAS BASED ON FACTS AND NO QUESTION OF LAW AROSE FROM IT. 19. IN THE CASE OF GARIBDAS CHANDRIKA PRASAD VS. CI T, 230 ITR 771 (MP), HEIR LORDSHIPS OF MADHYA PRADESH HIGH COU RT HAS HELD AS UNDER:- THAT AS PER THE FINDINGS RECORDED BY THE THREE AUT HORITIES, I.E. THE INCOME-TAX OFFICER, THE APPELLATE ASSISTANT COMMISS IONER AND THE TRIBUNAL, THE ASSESSEE FAILED TO SHOW THAT U WAS AN INDIVIDUAL PERSON, WHO WAS ALSO DOING THE MONEY LENDING BUSINE SS AND THEREAFTER THE AFFIDAVIT WAS PRODUCED TO JUSTIFY TH E UNDISCLOSED INCOME OF THE ASSESSEE. ALL THE AUTHORITIES BELOW H AD FOUND THAT ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 17 THERE WAS A CONTRADICTION BETWEEN THE STATEMENT REC ORDED ON OATH OF U AND THE SUBSEQUENT AFFIDAVIT FILED BY HIM . A PERUSAL OF THE RECORD SHOWED THAT THE AFFIDAVIT OF U FILED BY THE ASSESSEE WAS NOTHING BUT AN AFTERTHOUGHT AND JUST TO COVER UP TH E UNDISCLOSED INCOME. THE AUTHORITIES BELOW AFTER CONSIDERING THE AFFIDAVIT AND STATEMENT FOUND THAT THE AFFIDAVIT DID NOT INSPIRE ANY CONFIDENCE. IN THIS VIEW OF THE MATTER, IT WAS NOT NECESSARY TO EXAMINE U ON HIS AFFIDAVIT. THE STATEMENT GIVEN BY U WAS ON OATH AFTER THE RAID WAS ON RECORD AND THEREAFTER IT APPEARED THAT U WAN TED TO CHANGE HIS STAND IN ORDER TO OBLIGE THE ASSESSEE. THE TRIB UNAL WAS RIGHT IN ARRIVING AT THE CONCLUSION THAT THE MONEY-LENDING B USINESS CARRIED ON BY U BELONGED TO THE ASSESSEE-FIRM. 20. IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI VS. CIT, (2010) 328 ITR 411 (GUJ), THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- THAT THE STATEMENT OF THE ASSESSEE WAS RECORDED UN DER SECTION 132(4) OF THE ACT AT MIDNIGHT. IN NORMAL CIRCUMSTAN CES, IT WAS TOO MUCH TO GIVE ANY CREDIT TO THE STATEMENT RECORDED A T SUCH ODD HOURS. THE PERSON WOULD NOT BE IN A POSITION TO MA KE ANY CORRECT OR CONSCIOUS DISCLOSURE IN A STATEMENT IF SUCH STAT EMENT WAS RECORDED AT SUCH ODD HOURS. THE ASSESSEE HAD GIVEN PROPER EXPLANATION FOR ALL THE ITEMS UNDER WHICH DISCLOSUR E WAS SOUGHT TO BE OBTAINED FROM THE ASSESSEE. 21. IN THE CASE OF CIT VS. K. BHUVANENDRAN AND OTHERS, (2008) 303 ITR 235 (MAD.), THE HONBLE MADRAS HIGH COURT H AS HELD AS UNDER:- DISMISSING THE APPEAL, THAT THE TRIBUNAL HAD FOUND THAT THERE WAS NON EVIDENCE OR MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIONS. THE STATEMENT RECORDED FROM THE ASSESSE E WAS SUBSEQUENTLY RETRACTED AND REBUTTED. FURTHERMORE, T HE STATEMENT WAS NOT RELATABLE TO ANY SEIZED MATERIAL. THEREFORE , EVEN THE STATEMENT COULD NOT BE THE BASIS FOR MAKING ANY ADD ITION. WHEN THE SALE DEED DISCLOSES A SALE CONSIDERATION, IT SI FOR THE REVENUE TO SHOW THAT WHAT WAS DISCLOSED IN THE SALE DEED IS NOT THE CORRECT SALE CONSIDERATION. IN THIS CASE THE REVENU E COULD NOT BRING ON RECORD ANY MATERIAL TO SHOW THAT THE ASSES SEE HAD PAID ON-MONEY OF RS.23,00,000. THE REASONS GIVEN BY THE TRIBUNAL WERE BASED ON VALID MATERIAL. THE DELETION OF ADDIT ION WAS JUSTIFIED. 22. IN THE CASE OF DCIT VS. RATAN CORPORATION, (200 5) 145 TAXMAN 503 (GUJ.), THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 18 AS NOTICED HEREINBEFORE, THE TRIBUNAL HAS OBSERVED THAT, IN LIGHT OF THE RETRACTION BY SHRI PRAVINBHAI RUPAWALA FROM THE STATEMENT, IT WAS THE DUTY OF THE ASSESSING OFFICER TO MAKE FU RTHER INQUIRY IN RESPECT OF SHOP OWNERS. IN THE ASSESSMENT ORDER, IN PARAGRAPH NO.6(1), WHILE REFERRING TO THE EXPLANATION TENDERE D BY THE ASSESSEE, THE ASSESSING OFFICER HAS REFERRED TO ONE OF THE LOOSE PAPERS SEIZED DURING THE SEARCH AND SEIZURE OPERATI ON UNDER SECTION 132 OF THE ACT AND RECORDED THAT THE EXPLAN ATION WAS IN CONTRADICTION TO THE NOTINGS IN THE SEIZED DOCUMENT THAT THESE RELATE TO RATAN MARKET PROJECT CONTAINING NAMES OF SHOP HOLDERS, AMOUNT RECEIVED FROM THEM, CONSTRUCTION ACCOUNT WIT H SHOW-WISE DETAILS. IT IS, THUS, APPARENT THAT WHEN THE TRIBUN AL REFERS TO THE DUTY OF THE ASSESSING OFFICER TO MAKE FURTHER INQUI RIES IN RESPECT OF THE SHOP OWNERS, IT IS IN THIS CONTEXT. THE TRIB UNAL HAS ALSO, AS NOTICED HEREINBEFORE, FOUND THAT ALL THE SEIZED PAP ERS DO NOT RELATE TO RATAN MARKET PROJECT. IN THESE CIRCUMSTAN CES, IT IS NOT POSSIBLE TO ACCEPT THE CONTENTION RAISED ON BEHALF OF THE APPELLANT THAT THE TRIBUNAL HAD OMITTED TO CONSIDER OTHER MAT ERIAL. 23. IN THE CASE OF CIT VS. RADHE ASSOCIATES, (2013 ) 37 TAXMANN.COM 336 (GUJ.), THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- 3. WE HAVE HEARD MS. PAURAMI SHETH, LEARNED COUNS EL FOR THE REVENUE AND CONSIDERED THE IMPUGNED JUDGMENT AND OR DER PASSED BY THE LEARNED ITAT AS WELL AS THE ORDER OF ASSESSMENT PASSED BY THE AO. AT THE OUTSET IT IS REQUIRED TO BE NOTED THAT THOUG H IN THE ORDER, THE AO HAD MENTIONED THAT THERE IS CLINCHING DOCUME NTARY EVIDENCE WITH RESPECT TO RECEIPT OF ON-MONEY, THE AO HAS NOT MENTIONED AS TO WHAT WERE THOSE CLINCHING DOCUMENTA RY EVIDENCES. BY MAKING THE AFORESAID ADDITION, NOWHER E IT IS MENTIONED BY THE AO THAT WHAT WAS THE NATURE OF CLI NCHING DOCUMENTARY EVIDENCE ON THE BASIS OF WHICH THE AO H AS COME TO THE CONCLUSION THAT THE ASSESSEE HAS RECEIVED RS.1, 45,37,500/- AS ON-MONEY WITH RESPECT TO THE OFFICE-CUM-SHOP AS W ELL AS THE SHOPS IN GANESH PLAZA. IT APPEARS THAT WHILE PASS ING THE ORDER OF ASSESSMENT, THE AO HAS SOLELY RELIED UPON THE STATE MENT OF THE ASSESSEE WHICH HAS BEEN SUBSEQUENTLY RETRACTED AND THE QUESTION ANSWERS RECORDED WHILE RECORDING THE STATEMENT OF T HE WORKING PARTNER ON 01.05.1996. 3.1 THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQ UARELY COVERED BY THE DECISION OF THE MADRAS HIGH COURT IN THE CAS E OF K. BHUVANENDRAN (SUPRA); THE DECISION OF THE DELHI HIG H COURT IN THE CASE OF BALAJI WIRE (P.) LTD. (SUPRA) AS WELL AS TH IS COURT IN THE CASE OF CIT V. MAULIKKUMAR K. SHAH [2008] 307 ITR 1 37. ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 19 4. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCE S AND THE REASONING GIVEN BY THE ITAT AND THE AFORESAID THREE DECISIONS, WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED JUDGME NT AND ORDER PASSED BY THE LEARNED ITAT IN DELETING THE ADDITION OF RS.1,45,37,500/- AS UNACCOUNTED INCOME AS ON-MONEY ALLEGED TO HAVE BEEN RECEIVED BY THE ASSESSEE. THE DECISION OF THE ITAT IS ON APPRECIATION OF MATERIAL ON RECORD AND ON FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISE IN THE PRESENT APPEAL. HENCE, PRESENT TAX APPEAL DESERVES TO BE DISMISSED AND IS, ACCORDINGLY , DISMISSED. 24. NOW WE REVERT BACK TO THE FACTS OF THE ASSESSEE S CASE UNDER THE APPEAL BEFORE US SO AS TO REACH TO THE CO NCLUSION THAT THE RATIO OF WHICH OF THE ABOVE DECISIONS WOULD BE APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. XEROX COPY OF TH E STATEMENT OF SHRI NAYAN THAKKAR IS PLACED AT PAGE NO.296 ONWARDS OF THE ASSESSEES PAPER-BOOK. FROM THE FIRST PAGE OF THE S AID STATEMENT, IT IS CLEAR THAT THE STATEMENT BEGAN ON 25TH MARCH 2008 AT 11.30 PM. THUS, RECORDING OF THE STATEMENT WAS STARTED AT ALMOST MIDNIGHT OF 25TH MARCH 2008. FROM THE LAST PAGE OF THE STATEMENT, IT IS EVIDENT THAT IT WAS CONCLUDED ON 2 6TH MARCH 2008. NO TIME WAS MENTIONED ON THE CONCLUSION OF T HE STATEMENT. HOWEVER, THE STATEMENT IS RUNNING INTO 1 0 PAGES, THEREFORE, IT CAN SAFELY BE INFERRED THAT IT WAS CO NCLUDED ON THE EARLY HOURS OF 26TH MARCH 2008. IN THE CASE OF KAIL ASHBEN MANHARLAL CHOKSHI (SUPRA), THE HONBLE JURISDICTION AL HIGH COURT HELD THAT IF A STATEMENT IS RECORDED AT MIDNIGHT, M UCH CREDENCE CANNOT BE GIVEN TO SUCH STATEMENT BECAUSE THE PERSO N WOULD NOT BE IN A POSITION TO MAKE ANY CORRECT OR CONSCIOUS D ISCLOSURE IN A STATEMENT RECORDED AT ODD HOURS. THE RATIO OF THE A BOVE DECISION OF THE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE BECAUSE THE STATEMENT WAS RECORDED AT THE MIDNIGHT OF 25TH AND 26TH MARCH 2008. 25. THE REVENUE HAS HEAVILY RELIED UPON THE QUESTIO N NO.21 AND ANSWER THERETO IN THE STATEMENT OF SHRI NAYAN T HAKKAR, WHICH READS AS UNDER:- 'Q.21 I AM SHOWING YOU VARIOUS PAPERS AND DOCUMENTS WHICH HAVE BEEN SEIZED FROM YOUR OFFICE PREMISE AS PER AN NEXURE-1, IN WHICH VARIOUS DEFECTS AND DISCREPANCIES ARE OBSERVE D. YOU ARE REQUESTED TO EXPLAIN THE SAME. ALSO, IT IS SEEN THA T CLIENT CODE MODIFICATIONS HAVE BEEN UNDERTAKEN BY YOUR COMPANY. YOU ARE REQUESTED TO EXPLAIN THE SAME. I AM PARTICULARLY SH OWING A-6, KACHHA BOOKS SERIALLED FROM A-18 TO A-29. YOU ARE R EQUESTED TO GO THROUGH SEIZED DOCUMENTS /PAPERS AND EXPLAIN THE SAME? ANS. I HAVE CAREFULLY GONE THROUGH THE SEIZED DO CUMENTS /PAPERS SHOWN TO BE BY YOU AND UNDERSTOOD THE CONTE NTS. THESE ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 20 ARE RELATED TO MY TRADING AS WELL AS CLIENTS, WHOSE COMPLETE DETAILS ARE MAINTAINED IN MY OFFICE SITUATED AT 310 , SHYAMAK COMPLEX, AMBAWADI, AHMEDABAD & KUNWARJI HOUSE, AMBA WADI, AHMEDABAD. I HAVE ALSO CAREFULLY GONE THROUGH VARIO US DISCREPANCIES DEFECTS POINTED OUT BY YOU. LOOKING I NTO THE VARIOUS DISCREPANCIES AS WELL AS UNRECORDED TRANSACTIONS IN MY REGULAR BOOKS AND INCOME, I ADMIT UNACCOUNTED INCOME OF RS. 12 CRORES (RUPEES TWELVE CRORES) ON WHICH, TAX WORKS OUT RS.4 CRORES (RUPEES FOUR CRORES) APPROXIMATELY, WHICH I AM READ Y TO PAY. THIS ADMITTED INCOME IS IN ADDITION TO THE REGULAR INCOME EARNED DURING THE LAST SIX YEARS, INCLUDING THE CURRENT YE AR. I FURTHER REQUEST YOU TO GRANT ME SOMETIME TO PAY T HE AFORESAID TAX. I FURTHER PROMISE YOU THAT THE AFORESAID TAX W ILL BE PAID WITHOUT FAIL. THIS DISCLOSURE AND ADDITIONAL INCOME OF RS.12 CRORES IS MADE AFTER CONSULTING MR. KUNAL S. SHAH, MRS. JA YANABEN N. THAKKAR AND SMT. RUJUTA D. SHETH, WHO ARE DIRECTORS OF KUNVARJI COMMODITIES BROKERS PVT. LTD. THE ADMITTED UNACCOUN TED INCOME PERTAINS TO KUNVARJI COMMODITIES BROKERS PVT. LTD., KUNVARJI FINSTOCK PVT. LTD., KUNVARJI FINANCE PVT. LTD., KUN VARJI COMMODITIES PVT. LTD.' 26. FROM THE ABOVE, IT IS EVIDENT THAT THE AUTHORIZ ED OFFICER WHO WAS RECORDING THE STATEMENT INFORMED SHRI NAYAN THA KKAR THAT VARIOUS PAPERS AND DOCUMENTS HAVE BEEN SEIZED FROM THEIR OFFICE WHICH ARE LISTED IN ANNEXURE-1. FROM SUCH PAPERS A ND DOCUMENTS, VARIOUS DISCREPANCIES AND DEFECTS HAVE B EEN OBSERVED. HE HAS ALSO STATED ABOUT THE CLIENT MODE MODIFICATION. IN RESPONSE TO THESE INPUTS FROM THE AUTHORIZED OFF ICER SHRI NAYAN THAKKAR ADMITTED UNACCOUNTED INCOME OF RS.12 CRORES . THE STATEMENT HAS TO BE READ AS A WHOLE; THE UNACCOUNTE D INCOME WAS OFFERED IN RESPONSE TO THE INFORMATION GIVEN BY THE AUTHORIZED OFFICER THAT VARIOUS DEFECTS AND DISCREP ANCIES WERE OBSERVED IN THE SEIZED DOCUMENTS. NOW THE QUESTION REMAINS WHETHER THERE WERE ANY DEFECT AND DISCREPANCY IN TH E SEIZED DOCUMENTS AS PER ANNEXURE-1. IT WAS STATED BY THE LD. COUNSEL THAT THERE WAS NO ANNEXURE-1 AT ALL, AND IN RESPONS E TO THE ASSESSEES LETTER DURING THE ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER ADMITTED THESE FACTS VIDE LETTER DATED 27.08.2009 BY THE DEPUTY COMMISSIONER OF INCOME-TAX WHICH READS AS UNDER:- OFFICE OF THE DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1(1) , 3FD FLOOR, AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD - PHONE: 079 - 27546781 NO.DCIT/CC1(1)/AHD/KUNVARJI/2009-10 DATE: 27.08 .2009 ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 21 TO: THE PRINCIPAL OFFICER KUNVARJI FINANCE PVL. LTD. 310, SHYAMAK COMPLEX, NR. KAMDHENU COMPLEX, AMBAWADI, AHMEDABAD SIR, SUB: CLARIFICATION ON CERTAIN CLAIMS MADE BY YOU IN THE AFFIDAVIT FILED ALONGWITH RETURN OF INCOME OF A.Y.2002-03 TO 2008- 09 -REG. REF: 1. AFFIDAVIT ALONGWITH RETURNS FILED BY YOU FO R A.Y.2002-03 TO 2008-09 2. YOUR LETTER DATED 27.03.2009 FILED ON 30 .03.2009 YOU HAVE CLAIMED IN THE AFFIDAVIT FILED WITH THE RE TURN OF INCOME THAT YOU HAVE NOT BEEN PROVIDED WITH THE COP IES OF ANNEXURE-1, WHICH HAS BEEN MENTIONED IN QUESTION NO .21 OF STATEMENT OF SHRI NAYAN THAKKAR RECORDED IN THE COU RSE OF HIS STATEMENT AT 310, SHYAMAK COMPLEX, AHMEDABAD ON 25 & 26.03.2008. 2. FROM THE PLAIN READING OF THE STATEMENT, IT IS CLEAR THAT THE AUTHORISED OFFICER IS REFERRING TO THE DOCUMENTS / PAPER / ELECTRONIC MEDIA SEIZED AS PER THE LIST WHICH IS AN ANNEXURE TO THE PANCHNAMA. THE ANNEXURE-1 REFERRED ABOVE PERTAINS T O ANNEXURE A, CONTAINING PAGES NUMBER 1 TO 3 AND CONTAINING LI ST OF 65 ITEMS OF BOOKS / DOCUMENTS / PAPER ELECTRONIC MEDIA FOUND AND SEIZED FROM OFFICE PREMISES. WHILE RECORDING THE STATEMENT , THE ANNEXURE-A IS INADVERTENTLY REFERRED AS ANNEXURE-1. IF ANY DOCUMENT / PAPERS IS MADE PART OF STATEMENT THEN TH E QUESTION OF SEIZING THE SAME DOES NOT ARISE AT ALL. IT BECOMES PART OF THE STATEMENT. IN THE STATEMENT IT IS SPECIFICALLY REFE RRED AS SEIZED ANNEXURE. THE QUESTION POSED TO THE ASSESSEE WAS BA SED ON THE SEIZED DOCUMENTS / BOOKS AS PER ANNEXURE-A. IF IT W ERE TO BE PART OF THE STATEMENT THEN THE QUESTION OF SAME BEING RE FERRED AS SEIZED ANNEXURE-1 DOES NOT ARISE AT ALL. HENCE, IT IS CLARIFIED THAT THE SEIZED ANNEXURE-1 IS NOTHING BUT SEIZED ANNEXUR E-A. 3. FURTHER, THE SEIZED DOCUMENTS HAD BEEN PROVIDED TO YOU ON 06.08.2008 AS PER EVIDENCE FORWARDED BY INVESTIGATI ON WING. THUS CLAIMS MADE BY YOU IN YOUR AFFIDAVIT ARE WITHO UT ANY BASIS AND ARE FACTUALLY INCORRECT. THIS IS FOR YOUR INFOR MATION AND RECORD. YOURS FAITHFULLY, SD/- ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 22 (GAURAV BATHAM) DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 1(1), AHMEDABAD 27. THUS, THERE WAS NO ANNEXURE-1 AS REFERRED TO IN QUESTION NO.21. STILL THE QUESTION REMAINS WHETHER THERE WE RE ANY DEFECTS OR DISCREPANCIES IN THE SEIZED PAPERS AND DOCUMENTS AS MENTIONED BY THE OFFICER RECORDING THE STATEMENT VI DE QUESTION NO.21. IN THE ASSESSMENT ORDER, THE ASSESSING OFFI CER HAS NOT POINTED OUT ANY DEFECT OR DISCREPANCY IN ANY OF THE SEIZED DOCUMENTS FROM THE BUSINESS PREMISES OF THE ASSESSE E. THE ADDITION MADE BY THE ASSESSING OFFICER IS ON ACCOUN T OF CLIENT CODE MODIFICATION WHICH HAS ALSO BEEN COMPUTED ON T HE BASIS OF INFORMATION COLLECTED FROM THE COMMODITY EXCHANGE I N POST SEARCH ENQUIRY. THE CIT(A) HAS FOUND THE ADDITION ON ACCOUNT OF CLIENT CODE MODIFICATION TO BE UNTENABLE AND WHILE DISPOSING OF GROUND NO.1 OF THE REVENUS APPEAL, WE HAVE CONCURR ED WITH THE FINDINGS OF THE CIT(A). NO DEFECTS OR DISCREPANCIE S IN ANY OF THE SEIZED DOCUMENTS HAVE BEEN POINTED OUT BY THE ASSES SING OFFICER IN THE ASSESSMENT ORDER OR BY THE LD. DR AT THE TIM E OF HEARING BEFORE US. DURING THE COURSE OF SEARCH ALSO THE OFF ICER RECORDING THE STATEMENT OF SHRI NAYAN THAKKAR HAS NOT SPECIFI ED ANY DISCREPANCY OR DEFECT IN ANY OF THE SEIZED DOCUMENT S BUT MADE A GENERAL STATEMENT THAT THERE WERE DEFECTS AND DISCR EPANCIES IN THE VARIOUS DOCUMENTS SEIZED FROM THE ASSESSEES PR EMISES. SUCH ASSERTION BY THE AUTHORIZE OFFICER IS FOUND TO BE F ACTUALLY INCORRECT. IN THE AFFIDAVIT OF SHRI NAYAN THAKKAR FURNISHED BE FORE THE ASSESSING OFFICER THESE FACTS HAVE BEEN CLARIFIED. HE STATED THAT AFTER GETTING THE PHOTOCOPY OF THE SEIZED DOCUMENTS AND THEIR VERIFICATION WITH REFERENCE TO THE BOOKS OF ACCOUNT S, SINCE NO DISCREPANCY WAS NOTICED, NO UNDISCLOSED INCOME WAS OFFERED IN THE RETURN OF INCOME. IF THERE WAS ANY DISCREPANCY OR DEFECT IN THE ASSESSEES BOOKS OF ACCOUNTS OR THE SEIZED DOCU MENTS INDICATING ANY UNDISCLOSED INCOME, THE ASSESSING OF FICER OUGHT TO HAVE MENTIONED THE SAME IN THE ASSESSMENT ORDER. IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI (SUPRA), THE HONBLE J URISDICTIONAL HIGH COURT HAS NOTICED THAT WHEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS GIVEN THE P ROPER EXPLANATION FOR INVESTMENT IN VARIOUS PROPERTIES, T HE ADDITION CANNOT BE MADE ON THE BASIS OF STATEMENT MADE AT OD D HOURS. SIMILARLY, IN THE CASE OF RATAN CORPORATION (SUPRA) , THE HONBLE JURISDICTIONAL HIGH COURT REITERATED THAT WHEN THE STATEMENT MADE DURING THE COURSE OF SEARCH HAS BEEN RETRACTED, THE N IT IS DUTY OF THE ASSESSING OFFICER TO MAKE FURTHER INQUIRIES. SI MILAR VIEW IS EXPRESSED BY THEIR LORDSHIPS OF HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF RADHE ASSOCIATES (SUPRA), WHEREIN TH E ASSESSING OFFICER HAS MADE THE ADDITION BY MENTIONING THAT TH ERE WERE ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 23 CLINCHING DOCUMENTARY EVIDENCES WITH RESPECT TO REC EIPT OF ON- MONEY. HOWEVER, THESE CLINCHING DOCUMENTARY EVIDENC ES WERE NOT SPECIFIED. IN THE CASE UNDER APPEAL BEFORE US A LSO, WE FIND THAT THE OFFICER RECORDING THE STATEMENT OF SHRI NA YAN THAKKAR HAS MENTIONED THAT VARIOUS DEFECTS AND DISCREPANCIE S HAVE BEEN OBSERVED FROM THE PAPERS AND DOCUMENTS SEIZED FROM THE ASSESSEES PREMISES. HOWEVER, ANY DEFECTS OR DISCRE PANCIES WERE NOT SPECIFIED. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT ON THE FACTS OF THE ASSESSEES CASE THE DECISIONS OF T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF KAILASHBE N MANHARLAL CHOKSHI, RATAN CORPORATION AND RADHE ASSOCIATES WOU LD BE SQUARELY APPLICABLE. THE FACTS IN THE OTHER CASES R ELIED UPON BY THE LD. DR ARE ALTOGETHER DIFFERENT. MOREOVER, WHEN THERE IS A DECISION OF HONBLE JURISDICTIONAL HIGH COURT, IT W OULD BE BINDING UPON THE ITAT FUNCTIONING WITHIN THE JURISDICTION O F GUJARAT HIGH COURT. IN VIEW OF ABOVE, WE, RESPECTFULLY FOLLOWING THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF K AILASHBEN MANHARLAL CHOKSHI (SUPRA), RATAN CORPORATION (SUPRA ) AND RADHE ASSOCIATES (SUPRA), UPHOLD THE ORDER OF THE CIT(A) AND REJECT GROUND NO.2 OF THE REVENUES APPEAL. RESPECTFULLY FOLLOWING THE ABOVE QUOTED ORDER OF TH E TRIBUNAL, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE FOR AL L THE YEARS UNDER CONSIDERATION. 11. THE GROUND NO.2 OF THE APPEAL IN A.Y.2006-07, A ND GROUND NO.2 IN THE ASSTT.YEAR 2007-08 IS DIRECTED AGAINST THE O RDER OF THE CIT(A) DELETING THE ADDITION OF RS.2,03,270/- MADE ON ACCO UNT OF SUPPRESSED PROFIT DUE TO CLIENT CODE MODIFICATION. 12. THE AO MADE ADDITION OF RS.2,03,270/- IN THE AS STT.YEAR 2006-07 AND 2007-08 ON THE BASIS OF CLIENT CODE MODIFICATIO N SPECIFIC TO THE CASE OF THE ASSESSEE AS DONE BY THE BROKER KCBPL. 13. ON APPEAL, THE CIT(A) OBSERVED THAT THE FACTS O F THE CASE WERE IDENTICAL AS IN THE CASE OF KFPL WHEREIN APPEALS WE RE DECIDED BY HIM AND HELD THAT NO ADDITION COULD BE MADE ON THE BASI S OF CLIENT CODE MODIFICATION. FURTHER, THE CIT(A) OBSERVED THAT IN THE CASE OF THE ASSESSEE TOTAL NUMBER OF CLIENT CODE MODIFICATION W AS ONLY 759 AS ACIT VS. SHRI NAYAN K. THAKKAR (4 APPEALS AND 3 COS.) 24 MENTIONED BY THE AO AT PAGE NO.4 OF THE ASSESSMENT ORDER. THEREFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN ON THE BASIS O F SUCH NEGLIGIBLE MODIFICATION WHICH WAS DONE TO RECTIFY PUNCHING ERR ORS. THEREFORE, HE DELETED THE ADDITION FOR THESE YEARS UNDER CONSIDER ATION. 14. BEFORE US, BOTH THE PARTIES AGREED THAT THE ISS UE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE CONSOLIDAT ED ORDER OF THE TRIBUNAL DATED 19.3.2015 IN THE CASE OF ACIT VS. M/ S.KUNVARJI FINANCE PVT. LTD. AND OTHERS, IN IT(SS)A.NOS.615 TO 618/AHD /2010 & OTHERS, WHEREIN THE ADDITIONS MADE ON ACCOUNT OF CLIENT COD E MODIFICATION WAS DELETED. THE ORDER OF THE TRIBUNAL IS QUOTED ABOVE IN THIS ORDER VIDE PARA-6, WHILE DECIDING THE GROUND NO.1 OF THE APPEA L UNDER CONSIDERATION. FOR THE SAME REASON, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THIS GROUND OF THE APPEAL OF THE REVENU E. 15. AT THE TIME OF HEARING, THE AR OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THE CROSS OBJECTIONS FILED BY THE A SSESSEE IN THE ASSTT.YEARS 2005-06,2006-07 AND 2007-08 AND AN ENDO RSEMENT TO THIS EFFECT WAS MADE IN THE FORM NO.36A FILED BEFORE THE TRIBUNAL. THEREFORE, THE CROSS OBJECTIONS FILED BY THE ASSESS EE ARE DISMISSED AS NOT PRESSED. 16. IN THE RESULT, APPEALS OF THE REVENUE AND CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 27 TH DAY OF MARCH, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED /03/2015