Shri Omprakash J. Thakur, Vapi v. The ACIT, CC -(2), Surat

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI T.K.SHARMA JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER DATE OF HEARING:21.04.10 DRAFTED ON: 22.04.10 IT(SS)A NO.123/AHD/2005 WITH CROSS OBJECTION NO.162/AHD/2005 BLOCK PERIOD 1.4.96 TO 31.3.02 & UP TO 17.7.02 A.C.I.T. C.C.2 ROOM NO.504 AAYKAR BHAVAN MAJURAGATE SURAT. VS. SHRI OMPRAKASH J. THAKUR NEAR RAMJI MANDIR FISH MARKET VAPI PAN/GIR NO. : AEUPS 4496J (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI ANIL KUMAR CIT D.R. RESPONDENT BY: SHRI S.N.L. AGARWAL A.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)- II AHMEDABAD DATED 10.02.2005. 2. GROUND NO.1 TO 4 OF THE APPEAL READS AS UNDER:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITION OF RS.8 30 000/- MADE ON ACCOUNT OF UNACCO UNTED INVESTMENT BY WAY OF MONEYS LENT TO VARIOUS PARTIES . 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITION OF RS.1 99 200/-MADE ON ACCOUNT OF INTERES T EARNED ON THE AFORESAID UNACCOUNTED INVESTMENT OF RS.8 30 000/-. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRIC TING THE ADDITION OF RS.8 60 000/- MADE ON ACCOUNT OF UNACCOUNTED INV ESTMENT BY WAY OF MONEYS LENT TO VARIOUS PARTIES TO RS.30 000/ -. 4. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITION OF RS.2 06 400/- MADE ON ACCOUNT OF INTERE ST EARNED ON THE AFORESAID UNACCOUNTED INVESTMENT OF RS.8 60 000/-. - 2 - 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS DECIDED AS UNDER:- THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER MADE AN ADDITION OF RS.8 30 000/- AS PER PAGE NO.4 OF ANNEXURE-BS-L SEI ZED FROM THE SHOP OF THE APPELLANT. THE SAID PAGE CONSISTS OF 7 NAMES ALONGWITH AMOUNT IN ROUND FIGURES AND DATES. THE ASSESSING OFFICER H AS TREATED THE SAME AS THE LOAN GIVEN BY THE APPELLANT TO THESE PEOPLE ON INTEREST. FURTHER HE HAS TREATED THE SAID LOAN TO BE UNDISCLOSED AND HAS FURTHER ESTIMATED INTEREST INCOME OF RS.1 99 200/- AT THE RATE OF 24% PER ANNUM FOR 2 YEARS. BESIDES THIS THE ASSESSING OFFICER HAS SEPA RATELY MADE AN ADDITION OF RS.8 60 000/- ON THE BASIS OF PAGE NO.7 1 TO 83 AND 63 WHERE IN THE CHEQUES IN THE NAME OF PERSONS WHOSE N AME APPEAR ON PAGE NO.4 ARE FOUND. FURTHER THE ASSESSING OFFICER HAS ESTIMATED INTEREST INCOME AT THE RATE OF 24% PER ANNUM FOR ON E YEAR ON THE SAID AMOUNT WHICH AMOUNTS TO RS.2 06 400/-. THE APPELLANT HAS IN THE WRITTEN SUBMISSION MADE BE FORE ME ARGUED AT LENGTH AGAINST THE SAID ADDITIONS. AT THE OUT SET HE HAS CONTENTED THAT THE ASSESSING OFFICER HAS DUPLICATED THE ADDITION OF RS.8 30 000/- AND AGAIN 8 60 000/- WITHOUT CONSIDER ING THAT THE SAME NAME APPEAR IN BOTH THE SET OF DOCUMENTS AND EVEN A MOUNTS MENTIONED THERE IN ARE SAME. IN SUPPORT OF HIS CONTENTION THE APPELLANT HAS ENCLOSED A CHART IN HIS PAPER BOOK MARKED AS EXHIBI T-J ON PAGE NO.60 WHERE IN HE HAS PROVED THAT THERE HAS BEEN DUPLICAT ION OF ADDITION. I HAVE CONSIDERED THE ABOVE SUBMISSION OF THE APPELLA NT AND I AM CONVINCED THAT THERE HAS BEEN A DUPLICATION OF ADDI TION SO MUCH SO THAT RS.8 30 000/-ALREADY FORMS PART OF RS.8 60 000/- WH ICH HAS BEEN SEPARATELY ADDED. THE NAME OF THE PERSONS THE AMOU NTS ETC. ARE ALSO SAME. HENCE THE ADDITION OF RS.8 30 000/- AND CONS EQUENTLY INTEREST INCOME ESTIMATED AT RS.1 99 200/- DESERVES TO BE DE LETED. HENCE THE ASSESSING OFFICER IS DIRECTED TO DELETE RS.8 30 000 /- AND RS.1 99 200/- BEING DUPLICATION OF ADDITION. THEREFORE GROUND NO .7 AND 8 OF THE APPELLANT ARE ALLOWED. NOW GOING TO THE MERITS OF ADDITION OF RS.8 60 000/- THE ASSESSING OFFICER HAS IN HIS AS SESSMENT ORDER STATED THAT THESE WERE THE AMOUNTS WHICH WERE GIVEN AS LOA N SINCE THE SEIZED PAPER ITSELF THE APPELLANT HAD ALSO MENTIONED PRES UMABLY THE INTEREST AMOUNT ALONGWITH THE DATES THEREON. FURTHER THE AS SESSING OFFICER HAS STATED THAT IN HIS STATEMENT UNDER SECTION 132(4) T HE APPELLANT HAD SPECIFICALLY STATED THAT THESE WERE THE AMOUNTS GIV EN ON LOAN TO VARIOUS PERSONS. ON THE OTHER HAND THE APPELLANT HAS SUBMIT TED BEFORE ME THAT THE ASSESSING OFFICER HAS TOTALLY MISUNDERSTOOD THE STATEMENT OF THE APPELLANT AS WELL AS INTERPRETATION OF THE SEIZED P APER. HE HAS SUBMITTED THAT THERE IS NO DISPUTE WITH THE ASSESSING OFFICER THAT THE PERSONS - 3 - NAMED IN THE SEIZED PAPER ARE REGULAR TRADERS WHOSE NAMES APPEAR IN APPELLANT'S BOOKS EVEN PRIOR TO SEARCH ACTION. IT I S ALSO NOT IN DISPUTE THESE LEDGER ACCOUNTS ARE VERIFIED WITH THE ASSESSI NG OFFICER DURING THE ASSESSMENT PROCEEDINGS. AS REGARDS THE STATEMENT OF THE APPELLANT IT WAS SUBMITTED THAT THE SAID STATEMENT WHICH WAS REC ORDED IN HINDI MENTIONED 'UDHAR' WHICH MEANT 'CREDIT' AND NOT 'LOA N'. HENCE THE APPELLANT SUBMITTED THAT HE HAD STATED CATEGORICALL Y THAT THESE CHEQUES WERE 'SECURITY DEPOSIT' FOR GIVING GOODS ON CREDIT AND NOT FOR GIVING CASH AS SUCH. HE HAS ALSO SUBMITTED THAT THE SMALL AMOUNTS MENTIONED ON THE SEIZED PAPERS WERE THE DISCOUNT GIVEN ON VAR IOUS DATES FOR THE TRANSACTIONS UNDERTAKEN WITH THESE TRADERS. THE APP ELLANT ALSO SUBMITTED THAT IT WAS NORMAL TRADE PRACTICE IN THE MARKET OF ONION AND POTATO TO TAKE SOME SORT OF SECURITY DEPOSIT SINCE THERE WAS AN UNORGANIZED MARKET WITH MORE LIKELIHOOD OF BAD DEBT HENCE TO G UARD HIMSELF AGAINST BAD DEBT THE APPELLANT HAD OBTAINED UNDATED CHEQUES FROM THESE PARTIES THE DETAILS OF WHICH WERE MENTIONED ON PAG E NO.4 AND CHEQUES WERE FOUND FROM PAGE NO.71 TO 83. IN FURTHER SUPPO RT OF HIS CONTENTION THE APPELLANT HAD ALSO FURNISHED DULY NOTARIZED AFF IDAVIT OF THE PERSONS NAMED THEREIN STATING THAT THESE WERE SECURITY DEPO SITS GIVEN FOR TAKING GOODS ON CREDIT. THESE AFFIDAVITS ALSO FORMED A PAR T OF THE PAPER BOOK FROM PAGE NO.63 TO 74. THE APPELLANT ALSO SUBMITTED THAT THESE FACTS WERE ALSO FURNISHED BEFORE THE INVESTIGATING OFFICE R DURING THE COURSE OF POST SEARCH PROCEEDINGS AS WELL AS BEFORE THE AS SESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. HE SUBMITTED THA T THESE AFFIDAVITS REMAINED UNCONTROVERTED AND UN-REBUTTED FROM THE EN D OF THE DEPARTMENT. HENCE THE VERACITY OF THE SAME CAN NO T BE DOUBTED. IN SUPPORT OF HIS CONTENTION THE APPELLANT RELIED UPON THE DECISION OF THE SUPREME COURT IN THE CASE OF MEHTA PARIKAND CO. [30 ITR 181 (SC) AS WELL AS DECISION OF MUMBAI HIGH COURT IN THE CASE O F DILIPKUMAR ROY V. CIT [94 ITR L(BOM)]. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND HAVE PERUSED THE ASSESSMENT ORDER THE AFFIDAVITS AND LO OSE PAPERS ON WHICH THE RELIANCE HAS BEEN PLACED BY THE DEPARTMENT AS W ELL AS THE APPELLANT I AM INCLINED TO AGREE WITH THE APPELLANT THAT THE EN TIRE TRANSACTION HAS BEEN MISREAD BY THE DEPARTMENT. IT IS OBVIOUS THAT THE AMOUNT MENTIONED ON THE CHEQUES ARE IN FACT SECURITY DEPOS IT AND CAN NOT BE TREATED AS 'INCOME' OF THE APPELLANT. THE FACT OF T HE MATTER IS THAT THE APPELLANT HAS PROVED THE TRANSACTIONS WITH RESPECT TO THE BUSINESS EXPEDIENCY BY FILING AFFIDAVIT OF THE PERSONS NAME D THERE IN BY SHOWING THE LEDGER ACCOUNT OF THE PARTIES IN THE BO OKS OF ACCOUNT WHICH WERE SEIZED BY THE SEARCH PARTY. THE ASSESSING OFFI CER HAS MERELY PROCEEDED ON PRESUMPTION OR ASSUMPTION WITHOUT BRIN GING ON RECORD ANY CONCRETE EVIDENCE IN FAVOUR OF HIS CONTENTION W HEREAS THE APPELLANT - 4 - HAS PROVIDE COGENT EVIDENCE ALONGWITH ADEQUATE SUPP ORTING DOCUMENT AND EVIDENCES ADMISSIBLE UNDER THE INDIAN EVIDENCE ACT HENCE THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITIO N OF RS.8 30 000/-. SUBSEQUENTLY EVEN THE INTEREST INCOME ESTIMATED AT RS.2 06 400/- IS DELETED. HOWEVER ADDITION OF RS.30 000/- HAVING NO BEARING WITH CORRESPONDING ADDITION IN GROUND 7 & 8 IS SUSTAINED . THEREFORE GROUND NO. 10 AND 10.1 OF THE APPELLANT IS PARTLY ALLOWED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE LEARNED ASSESSING OFFICER OBSERVED THAT PAGE NO.4 OF ANNEXU RE-BS-1 SEIZED DURING THE COURSE OF SEARCH ON 17.07.2002 THAT THE SAME CO NTAINS NAME OF 8 PARTIES ON SECOND COLUMN AND THE AMOUNT MENTIONED IN FIRST COLUMN TOTALS TO RS. 8 30 000/-. HE ALSO OBSERVED FROM THE SAME DOCUMENT THAT IN COLUMN NO.3 FIGURES OF RS.4 000 2 500/- 1 000/- 1.500/- ETC. ARE WRITTEN. THE LEARNED ASSESSING OFFICER FURTHER OBSERVED THAT IN THE STAT EMENT RECORDED UNDER SECTION 132(4) ON 17.07.2002 THE ASSESSEE IN EXPLA NATION TO THE ABOVE DOCUMENT IN REPLY TO QUESTION NO.5 STATED THAT RECO RDINGS IN THE ABOVE PAPER RELATES TO ADVANCE GIVEN BY THE ASSESSEE. BEFORE TH E LEARNED ASSESSING OFFICER ASSESSEE EXPLAINED THAT THE ABOVE SHEET CON TAINS THE DETAILS OF SECURITY DEPOSITS RECEIVED FROM THE ABOVE PARTIES TO WHOM TH E ASSESSEE SELLS GOODS ON CREDIT. THE LEARNED ASSESSING OFFICER REJECTED THE ABOVE EXPLANATION OF THE ASSESSEE AND ASSUMED THAT THE AMOUNT OF RS.8 30 000 /- REPRESENTS THE LOAN GIVEN BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT AND TREATED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. FURTHER FROM THE NOTINGS OF RS.4 000/- 2 500/- 1 000/- 1 500/- ETC. ON THE SAID SHEET T HE LEARNED ASSESSING OFFICER INFERRED THAT THE ADVANCE WAS GIVEN ON INTEREST AND THEREFORE HE ESTIMATED THE INCOME INTEREST ON THE ABOVE ADVANCE @ 2% PER MONTH FOR 24 MONTHS AND THEREBY TREATED RS.1 99 200/- AS THE INTEREST INCOM E OF THE ASSESSEE AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER OBSERVED THAT FROM PAGE NOS.71 TO 83 AND 63 OF BS-1 OF THE SEIZED MATERIAL - 5 - THAT THE SAME CONTAINS 14 NUMBERS OF CHEQUES TOTALL ING TO RS.8 60 000/-. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSE E IN HIS STATEMENT RECORDED UNDER SECTION 132(4) WITH REFERENCE TO THE ABOVE IN REPLY TO QUESTION NO.18 ADMITTED THAT THE ABOVE CHEQUES WERE RECEIVED BY THE ASSESSEE IN RESPECT OF MONEY ADVANCED BY IT AS LOAN. THE LEARN ED ASSESSING OFFICER FINDING THAT THESE ADVANCE WERE NOT RECORDED IN THE BOOKS OF ACCOUNT TREATED THE AMOUNT OF RS.8 60 000/- AS UNDISCLOSED INCOME O F THE ASSESSEE. THE ASSESSEES EXPLANATION THAT THESE CHEQUES WERE RECE IVED AS SECURITY DEPOSIT FOR GOODS SOLD ON CREDIT WAS THEREFORE REJECTED BY THE LEARNED ASSESSING OFFICER AND THE AFFIDAVIT FILED BY THE ASSESSEE OF VARIOUS PERSONS IN SUPPORT OF HIS EXPLANATION WAS ALSO REJECTED BY THE LEARNED ASSESS ING OFFICER. THE LEARNED ASSESSING OFFICER FURTHER HELD THAT THE ABOVE ADVAN CE WAS GIVEN ON INTEREST BY THE ASSESSEE AND THEREFORE CALCULATED RS.2 06 400/ - AS INTEREST INCOME OF THE ASSESSEE ON ABOVE ADVANCE AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 5. ON APPEAL THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) OBSERVED THAT RS.8 30 000/- MENTIONED IN THE SEIZED PAPER MARKED PAGE 4 OF BS-1 IS PART OF THE AMOUNT OF RS.8 30 000/- CONTAIN ED IN SEIZED PAPER MARKED 71 TO 83 AND 63 OF BS-1. THEREFORE IN THE APPEAL THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) MAKING AN ADDITION OF RS.8 3 0 000/- ON THE BASIS OF SEIZED PAPER MARKED PAGE 4 OF BS-1 AND ALSO MAKING OF AN ADDITION OF RS.8 60 000/- ON THE BASIS OF SEIZED PAPER MARKED P AGE NOS.71 TO 83 AND 63 OF BS-1 AMOUNTS TO DOUBLE ADDITION OF THE VERY SAME AM OUNT OF RS.8 30 000/-. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE REFORE DELETED THE ADDITION OF RS.8 30 000/- AND CONSEQUENT ADDITION O F INTEREST THEREON RS.1 99 200/-. THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) ALSO OBSERVED THAT THE ASSESSEE ALSO EXPLAINED BEFORE HI M THAT STATEMENT UNDER SECTION 132(4) OF THE ASSESSEE WHICH WAS RECORDED O N 17.02.2002 WAS IN HINDI AND THEREIN THE ASSESSEE EXPLAINED THE SEIZED PAPER AS RELATING TO HIS UDHARI. UDHARI MEANS CREDIT AND REFERS TO SALE OF GOODS O N CREDIT AND THE LEARNED - 6 - ASSESSING OFFICER MISINTERPRETED THE SAID STATEMENT AS ASSESSEE HAS ADMITTED OF ADVANCING SOME LOAN AND THEREFORE LEARNED ASSES SING OFFICER MISLEAD HIMSELF IN THE INSTANT CASE. THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) FURTHER OBSERVED THAT OUT OF RS.8 60 0 00/- RS.8 30 000/- RELATES TO THE PARTIES TO WHOM THE ASSESSEE SELLS GOODS ON CREDIT AND THEREFORE ACCEPTED THE EXPLANATION OF THE ASSESSEE THAT CHEQU ES OF RS.8 30 000/- ARE SECURITY DEPOSITS IN RESPECT OF CREDIT SALES AND TH EREFORE CANNOT BE TREATED AS INCOME OF THE ASSESSEE. THEREFORE HE DELETED THE A DDITION OF RS.8 30 000/- OUT OF TOTAL AMOUNT OF RS.8 60 000/- AND CONSEQUENTLY A LSO DELETED THE ADDITION OF RS.2 06 400/- MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF INTEREST ON ADVANCE OF RS.8 60 000/-. 6. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTAT IVE ARGUED THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS NOT JUSTIFIED IN HOLDING THAT THE RS.8 30 000/- DETAILED IN SEIZED P APER MARKED PAGE 4 OF BS-1 WAS PART OF RS.8 60 000/- CONTAINED IN SEIZED DOCUM ENTS MARKED PAGE NOS. 71 TO 83 AND 63 OF BS-1. HE POINTED OUT FROM THE ORDE R OF THE ASSESSMENT THAT NAME OF THE PARTIES MENTIONED IN THE SEIZED DOCUMEN T MARKED PAGE 4 OF BS-1 WERE DIFFERENT FROM THE NAMES OF THE PARTIES CONTAI NED IN SEIZED CHEQUES MARKED PAGE NOS.71 TO 83 AND 63 OF BS-1. HE ARGUED THAT THE PARTIES BEING DIFFERENT THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) WAS NOT JUSTIFIED IN ARBITRARILY ASSUMING THAT RS.8 30 000/ - WAS PART OF RS.8 60 000/- AND THEREFORE IN DELETING THE ADDITION OF RS.8 30 000/- AND RS.1 99 200/-. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT AS RS.8 30 000/- WAS NOT THE AMOUNT OF SECURITY DEPOSITS WHEN CHEQUES WERE F OUND IN SEIZED DOCUMENT MARKED IN PAGE NO.71 TO 83 AND 63 OF BS-1 THE LEAR NED ASSESSING OFFICER WAS JUSTIFIED IN TREATING THE SAME AS UNEXPLAINED I NVESTMENT OF THE ASSESSEE AND THEREFORE IN MAKING ADDITION OF RS.8 30 000/- AND RS.1 99 200/-. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITT ED THAT AS PARTIES FROM WHOM CHEQUES WERE RECEIVED BY THE ASSESSEE WERE NOT PARTIES TO WHOM - 7 - ASSESSEE SALES GOODS ON CREDIT THE LEARNED ASSESSI NG OFFICER WAS JUSTIFIED IN HOLDING THAT THE CHEQUES WERE RECEIVED IN RESPECT O F CASH LOAN GIVEN BY THE ASSESSEE AND THEREFORE IN MAKING THE ADDITION OF E NTIRE AMOUNT OF RS.8 60 000/- AND INTEREST THEREON OF RS.2 06 400/- AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS NOT JUSTIFI ED IN RESTRICTING SUCH ADDITION TO RS.30 000/- ONLY. 7. ON THE OTHER HAND THE LEARNED AUTHORISED REPRE SENTATIVE OF THE ASSESSEE ADMITTED THAT THE CHEQUES WHICH WERE GIVEN AS SECURITY DEPOSITS WERE ISSUED BY OTHER PERSONS AND FOUND IN SEIZED DOCUMEN TS MARKED PAGE NO.71 TO 83 AND 63 OF BS-1. THE PERSONS WHOSE NAMES WERE MEN TIONED IN THE SEIZED DOCUMENTS PAGE NO.4 OF BS-1 WERE THE PERSONS TO WHO M THE ASSESSEE SOLD GOODS ON CREDIT FROM TIME TO TIME AND THEY ONLY HAV E GIVEN THE CHEQUES WHICH WERE FOUND IN THE SEIZED DOCUMENTS MARKED PAGE NOS. 71 TO 83 AND 63 OF BS- 1 AS SECURITY DEPOSITS FOR CREDIT TO THE ASSESSEE. HE THEREFORE SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS JUSTIFIED IN HOLDING THAT RS.8 30 000/- WAS TREATED TWICE BY THE LEARNED ASSESSING OFFICER AND AMOUNT OF SECURITY DEPOSITS CANNOT BE TREATED AS IN COME OF THE ASSESSEE. THUS THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.8 30 000/- RS.1 99 200/- RS.8 30 000/-- AND RS.2 06 400/-. 8. WE FIND THAT THE ASSESSEE DEALS IN POTATO AND O NIONS. THE ASSESSEE MAKES SALE OF GOODS ON CREDIT TO VARIOUS P ARTIES IS ALSO NOT IN DOUBT AND DISPUTE. WE FIND THAT NO MATERIAL WAS BROUGHT O N RECORD BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON THE BASIS OF WHICH LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS CONCLUDED T HAT AMOUNT OF RS.8 30 000/- MENTIONED IN SEIZED DOCUMENTS MARKED PAGE 4 OF ANNEXURE- BS-1 WAS PART OF SEIZED CHEQUES OF RS.8 60 000/- FO UND AT PAGE NOS. 71 TO 83 AND 63 OF BS-1. BEFORE US ALSO THE LEARNED AUTHORI SED REPRESENTATIVE OF THE ASSESSEE COULD NOT STATE WHICH CHEQUE FOUND IN THE SEIZED DOCUMENTS MARKED - 8 - PAGE NO.71 TO 83 AND 63 OF BS -1 WERE GIVEN BY WHIC H PARTIES. FURTHER IT IS OBSERVED THAT THE LEARNED DEPARTMENTAL REPRESENTATI VE COULD NOT DISPUTE THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) THAT IN THE STATEMENT RECORDED UNDER SECTION 132(4) THE ASSESS EE EXPLAINED THAT THE SEIZED PAPERS AND SEIZED CHEQUES IN QUESTION RELATE S TO HIS UDHARI I.E. CREDIT AND NOT ADVANCE GIVEN BY THE ASSESSEE BY PRODUCING COPY OF STATEMENT RECORDED UNDER SECTION 132(4) BEFORE US. FURTHER IT IS OBSERVED THAT COPIES OF AFFIDAVITS WHICH WERE FIELD BEFORE THE LOWER AUTHOR ITIES WERE NOT FILED BEFORE US BY ANY OF THE PARTIES. THE CONTENTS OF THE AFFID AVIT WAS ALSO NOT BROUGHT ON RECORD BY EITHER OF THE LOWER AUTHORITIES. IT IS OB SERVED THAT THE LEARNED ASSESSING OFFICER REJECTED THE CONTENTS OF THE AFFI DAVIT WITHOUT EXAMINING THE DEPONENT AND WITHOUT BRINGING ON RECORD THE CONTENT S OF THE AFFIDAVITS AND FURTHER WITHOUT BRINGING ON RECORD THE MATERIALS ON THE BASIS OF WHICH IT WAS FOUND BY IT THAT THE CONTENTS OF THE AFFIDAVIT ARE UNACCEPTABLE OR UNRELIABLE. FURTHER IT IS ALSO OBSERVED THAT THE LEARNED ASSES SING OFFICER COULD NOT BRING ON RECORD ANY CORROBORATIVE MATERIAL WHICH WAS FOUN D DURING THE COURSE OF THE SEARCH AND WHICH WOULD CORROBORATE THIS INFEREN CE DRAWN ON THE BASIS OF SEIZED DOCUMENTS MARKED PAGE 4 OF BS-1 AND MARKED P AGE NO.71 TO 83 AND 63 OF BS-1. IN THE ABOVE CIRCUMSTANCES IN OUR CONSI DERED OPINION IT SHALL BE IN THE INTEREST OF THE JUSTICE TO RESTORE THE ISSUE I NVOLVED IN THIS GROUND OF APPEAL BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER F OR PROPER VERIFICATION OF ALL THE MATERIALS AND THEREAFTER ADJUDICATING THE ISSU E AFRESH BY PASSING A SPEAKING ORDER AS PER LAW. THE LEARNED ASSESSING OF FICER SHALL ALLOW ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE BEF ORE ADJUDICATING THE ISSUE AFRESH. WE ORDER ACCORDINGLY. THUS THESE GROUNDS O F APPEAL OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO.5 OF THE APPEAL READS AS UNDER:- - 9 - 5. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO DELETE THE ADDITION OF RS.6 00 000/- MADE ON ACCOUNT OF O N MONEY' RECEIVED BY THE ASSESSEE ON THE SALE OF LAND. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS HELD AS UNDER:- THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.6 00 000/- BASED ON PAGE NO. 22 TO 138 WHICH IS THE SALE DEED BETWEEN THE APPELLANT HIS BROTHER SACHIDANAND THAKKUR AND SHRI V.R & CO. FOR RS.10 51 000/-. AS PER THE ASSESSING OFFICER TH E SAID SUM REPRESENTS THE ON MONEY ON SALE OF SUCH LAND WHICH WAS NOT DISCLOSED BY THE APPELLANT. ON THE OTHER HAND THE APPELLANT HAS STATED THAT THE ENTIRE SALE CONSIDERATION INCLUDING THE CASH RECEIPT OF RS.6 00 000/- ALREADY STANDS ACCOUNTED FOR IN TH E REGULAR RETURN FILED BY THE APPELLANT FOR THE A.Y. 2003-04 WHEN THE SAID AGREEMENT WAS EXECUTED. THE APPELLANT HAS FURNISHED A COPY OF THE RETURN FOR THE ABOVE ASSESSMENT YEAR ALONGWITH COMPUTATION THEREON. FURTHER THE APPELLANT HAS ALSO PRODUCED T HE CASHBOOK SEIZED DURING THE COURSE OF SEARCH WHERE IN THE REC EIPT OF RS.6 00 000/- IS DULY ACCOUNTED FOR ON VARIOUS DATE S AS CAPITAL CONTRIBUTION. FURTHER THE APPELLANT HAS SPECIFICAL LY RELYING UPON THE PROVISIONS OF SECTION 158BA(3) AS WELL AS SECTI ON 158BB(1) TRIED TO PROVE THAT IF THE AMOUNTS ARE RECORDED IN THE REGULAR BOOK THEN THE SAME CAN NOT BE TREATED AS UNDISCLOSE D INCOME OF THE APPELLANT. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT A ND HAVE ALSO PERUSED THE VARIOUS DOCUMENTS SUBMITTED BY HIM. THE PROVISIONS OF CHAPTER XIV-B IS VERY CLEAR THAT THE AMOUNT WHI CH HAS BEEN RECORDED IN BOOKS FOR WHICH DUE DATE FOR FILING RET URN HAS NOT EXPIRED CAN NOT BE TREATED AS 'UNDISCLOSED INCOME' OF THE APPELLANT. IN HIS COMPUTATION OF INCOME FOR THE A. Y. 2003-04 AND THE APPELLANT HAS RETURNED THE CAPITAL GAIN ON SALE OF THE SAID LAND AFTER TAKING INTO ACCOUNT THE TOTAL SALE CONSI DERATION WHICH INCLUDES THE CASH ELEMENT OF RS.6 00 000/-. EVEN OT HERWISE ONCE AGAIN THE ADDITION CAN NOT BE MADE IN BLOCK ASSESSM ENT AS IT WOULD LEAD TO DOUBLE TAXATION OF SAME AMOUNT THEREF ORE THIS ADDITION IS DIRECTED TO BE DELETED. HENCE THIS GROUND OF THE APPELLANT IS ALLOWED. - 10 - 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE LEARNED ASSESSING OFFICER ON THE BASIS OF SEIZED DOCUMENTS MARKED PAGE NOS. 122 TO 138 INFERRED THAT THE ASSESSEE HAS RECEIVED RS.6 LA CS IN CASH ON ACCOUNT OF SALE OF LANDS WHICH WAS NOT DISCLOSED IN THE RETURN OF INCOME AND THEREFORE ADDED THE SAME BY TREATING AS UNDISCLOSED INCOME OF THE B LOCK PERIOD. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ABO VE ADDITION BY OBSERVING THAT THE AMOUNT RECEIVED WAS RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE PRIOR TO THE DATE OF SEARCH AND THE ASSESSEE HAS DISCLOSED THE INCOME IN HIS REGULAR RETURN OF INCOM E FILED IN ASSESSMENT YEAR 2003-04 AND THE AMOUNTS STANDS ASSESSED IN THE ASSE SSMENT OF THAT RETURN. WE FIND THAT THE LEARNED DEPARTMENTAL REPRESENTATIVE C OULD NOT POINT OUT ANY DEFECT IN THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESS EE POINTED OUT THE LAND WAS SOLD JOINTLY BY THE ASSESSEE WITH HIS BROTHER S ACHINANAND J. THAKUR AND ADDITION OF SIMILAR AMOUNT OF RS.6 LACS WAS ALSO MA DE IN THE HANDS OF SAID SACHIDANAND J. THAKUR IN THE BLOCK ASSESSMENT ORDER WHICH WAS DELETED BY THE TRIBUNAL VIDE ORDER DATED 24.10.2008 PASSED IN IT(SS) A NO.140/AHD/2007 IN THE CASE OF SACHIDANAND J. THAKU R. THEREFORE FOLLOWING THE SAID DECISION ALSO NO INTERFERENCE W ITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS CALLED FOR. IN VIEW OF THE ABOVE WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF T HE REVENUE WHICH IS DISMISSED. 12. GROUND NO.6 OF THE APPEAL READS AS UNDER:- 6. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITION OF RS 57 000/-MADE ON ACCOUNT OF UNEXPLAIN ED INVESTMENT IN HOUSEHOLD VALUABLES. 13. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS HELD AS UNDER:- - 11 - THE NEXT GROUND OF THE APPELLANT IS AGAINST THE AD DITION OF RS.57 000/- MADE ON ACCOUNT OF INVESTMENT IN T.V. A ND WASHING MACHINE. THE ASSESSING OFFICER MERELY STATED THAT T HE ASSESSEE HAS NOT FURNISHED THE DETAILS OF INVESTMENT OF RS.5 7 000/- IN THESE HOUSEHOLD EQUIPMENTS. BEFORE ME THE APPELLANT HAS SUBMITTED THAT THE SEIZED CASH BOOK MARKED AN ANNEX URE BS-65 ITSELF CONTAIN CLEAR EVIDENCE OR WITHDRAWALS OR CAS H FROM THE BUSINESS FOR THE PURPOSE OF PURCHASE OF THIS HOUSE HOLD EQUIPMENT. THESE WITHDRAWALS HAVE ALSO BEEN REFLECT ED BY THE APPELLANT FOR ITSELF CAPITAL ACCOUNT IN THE FORM OF DRAWINGS IN REGULAR RETURN OF INCOME FOR THE A.Y.2002-03. HENCE AS PER THE ASSESSING OFFICER NO ADDITION COULD HAVE BEEN MADE IN THIS COUNT. THE APPELLANT ALSO SUBMITTED THAT BESIDES TH E ABOVE THE HOUSEHOLD EQUIPMENTS WERE ALSO PURCHASED FROM THE H UF WHICH WERE DULY REFLECTED IN THE SAID RETURN. THE APPELLA NT HAS SUBMITTED A COPY OF THE RETURN OF THE HUF WHICH INC LUDES HOUSEHOLD EQUIPMENTS IN THE BALANCE SHEET AND THE S AME STANDS FILED BEFORE THE DATE OF SEARCH. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT A ND IN MY OPINION THE SOURCE OF INVESTMENT FOR HOUSEHOLD EQUI PMENT STANDS PROVED FROM THE SEIZED CASH BOOK ITSELF WHEREIN CLE ARLY THE DRAWINGS ARE MENTIONED FOR THE PURPOSE OF PURCHASE OF T.V. AND WASHING MACHINE. BESIDES THE HUF BALANCE SHEET FILE D BEFORE THE DATE OF SEARCH ALSO CONTAINED AN AMOUNT OF RS.1 00 000/- TOWARDS HOUSEHOLD EQUIPMENTS. HENCE THE ASSESSING OFFICER IS DIRECTED TO DELETE SUCH ADDITION. THEREFORE THIS G ROUND OF THE APPELLANT IS ALLOWED. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE LEARNED ASSESSING OFFICER MADE ADDITION OF RS.57 000/- ON A CCOUNT OF INVESTMENT IN T.V. AND WASHING MACHINE. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOUND THAT THE INVESTMENT MADE IN TV A ND WASHING MACHINE WAS RECORDED IN THE REGULAR BOOKS OF ACCOUNT PRIOR TO THE DATE OF SEARCH AND THE SOURCE OF INVESTMENTS STANDS DISCLOSED. HE THER EFORE DELETED THE ADDITION OF RS.57 000/-. THE LEARNED DEPARTMENTAL REPRESENTA TIVE COULD NOT POINT OUT ANY ERROR IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). WE THEREFORE DO NOT FIND ANY GOOD REASON TO INTERF ERE WITH THE ORDER OF THE - 12 - LEARNED COMMISSIONER OF INCOME TAX(APPEALS). IT IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 15. GROUND NO.7 OF THE APPEAL READS AS UNDER:- 7. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITION OF RS.59 526/- MADE ON ACCOUNT OF UNDISCLO SED COMMISSION INCOME ON SALE OF POTATOES. 16. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S HELD AS UNDER:- THE ASSESSING OFFICER HAS ON THE BASIS OF LOOSE PA PER FILED MARKED AN ANNEXURE BS-1 SEIZED FROM THE RESIDENTS O F THE APPELLANT MADE AN ADDITION OF RS.59 526/- AS UNACCO UNTED COMMISSION INCOME IN HIS HANDS. THE ASSESSING OFFIC ER HAS STATED THAT THE APPELLANT HAS ADMITTED EARNING OF 5 % COMMISSION ON SALE WHICH WAS RETURNED IN HIS BOOKS OF ACCOUNT THE APPELLANT BEFORE ME HAS SUBMITTED THAT THE SAID TRA NSACTIONS DULY STOOD ACCOUNTED FOR IN THE BOOKS OF APPELLANT'S HUF AND WEE RETURNED EVEN PRIOR TO SEARCH ACTION. THE APPELLANT HAS SUBMITTED COPIES OR RETURN OF HUF WHICH WERE ALSO VERIFIED BY THE ASSESSING OFFICER AT ASSE SSMENT STAGE AND NO DISCREPANCY WHAT-SO-EVER WAS FOUND BY THE AS SESSING OFFICER. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT A ND HAVE ALSO PERUSED THE MATERIAL ON RECORD. THE FACTS OF THE MA TTER ARE VERY CLEAR THAT THE TRANSACTION MENTIONED IN THE HUF STO OD DULY RETURNED EVEN PRIOR TO SEARCH. IN FACT THE ENTIRE S EIZED ANNEXURE BS-1 CONTAIN ENTRIES ONLY PERTAINING TO HUF AND HEN CE THE SAME CAN NOT BE TREATED AS 'UNDISCLOSED'. IN VIEW OF THI S UNDISPUTED FACTS AS HAS ALSO BEEN OBSERVED BY THE ASSESSING OF FICER IN HIS ASSESSMENT ORDER NO COGNIZANCE OF THE STATEMENT UND ER SECTION 131 COULD HAVE BEEN TAKEN WHICH WAS RECORDED CONTRA RY TO ACTUAL FACTS. HENCE CONSIDERING THE TOTALITY OF TH E FACTS THE ASSESSING OFFICER IS DIRECTED TO DELETE AN ADDITION OF RS.59 526/- IN THE RESULT THIS GROUND OF THE APPELLANT IS ALL OWED. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE DOCUMENT MARKED ANNEXURE BS-1 PAGE NOS.12 14 TO 21 29 TO 32 81 TO 112 115 TO 118 A ND 125 TO 139 SHOWS COMMISSION INCOME OF RS.59 526/- AND HE ADDED THE S AME TO THE INCOME OF - 13 - THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) FOUND THAT THE SAID COMMISSION INCOME RELATES TO THE HUF OF TH E ASSESSEE AND NOT TO THE ASSESSEE AND THE SAME WAS ALSO DISCLOSED IN THE RET URN OF INCOME FILED BY THE HUF PRIOR TO THE DATE OF THE SEARCH. HE THEREFORE DELETED THE ADDITION AND ALSO OBSERVED THAT NO DEFECT IN THE EXPLANATION FURNISHE D BY THE ASSESSEE BEFORE THE LEARNED ASSESSING OFFICER COULD BE POINTED OUT BY T HE LEARNED ASSESSING OFFICER. WE FIND THAT NO ERROR IN THIS ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) COULD BE POINTED OUT BY THE LEA RNED DEPARTMENTAL REPRESENTATIVE AND IN ABSENCE OF THE SAME NO INTERF ERENCE WITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS CALLED FOR. THEREFORE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 18. GROUND NO.8 OF THE APPEAL READS AS UNDER:- 8. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO RESTRICT THE ADDITION OF RS.L 35 000/- MADE ON ACCOUNT OF UNA CCOUNTED EDUCATIONAL EXPENSES TO RS.70 000/-. 19 GROUND NO.6 OF THE CROSS OBJECTION READS AS UND ER:- 6. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.70 000/- BEING THE EX PENDITURE ON THE SON'S EDUCATION IGNORING THE FACT THAT THE SOUR CE OF SUCH EXPENSES STOOD PROVED ON THE HUGE CASH WITHDRAWAL M ADE BY THE APPELLANT FROM HIS BUSINESS. 20. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS HELD AS UNDER:- THE APPELLANT HAS RAISED THIS GROUND AGAINST AN AD DITION OF RS.1 35 000/-BEING TUITION FEES PAID IN THE EDUCATI ON OF APPELLANT'S SON SHRI SATYAPRAKASH THAKUR. AS PER TH E ASSESSING OFFICER THE APPELLANT HAD IN HIS STATEMENT UNDER S ECTION 132(4) ADMITTED AN EXPENSES OF RS.2 LAKHS ON HIS SON'S EDU CATION. OUT OF THIS THE APPELLANT HAS SHOWN THE PAYMENT OF RS. 65 000/- HAVING BEEN RECORDED IN THE CASH BOOK MARKED ANNEXU RE BS-65. THEREFORE THE ASSESSING OFFICER MADE AN ADDITION O F AN AMOUNT OF BALANCE RS.1 35 000/-. BEFORE ME THE APPELLANT SUBMITTED THAT - 14 - HE HAD HUGE CASH WITHDRAWALS TOTALING TO RS.6 73 00 0/- WHICH WERE PARTLY UTILIZED FOR MAKING PAYMENT OF SON'S ED UCATION. I HAVE CONSIDERED THE APPELLANT SUBMISSION ON THIS GROUND. THE APPELLANT HAS TRIED TO EXPLAIN THE SOURCE OF SON'S EDUCATION FROM CASH WITHDRAWALS MADE FROM HIS BUSINESS. I AGREE TH AT IF THE APPELLANT HAD SUCH HUGE WITHDRAWALS THEN SUBJECT TO A FINDING TO CONTRARY THE SAID SUM COULD HAVE BEEN UTILIZED BY T HE APPELLANT AS HE CLAIMS. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE REGARDING ANY OTHER USAGE OF THE HUGE CASH WITHDRAWAL. HENCE I RESTRICT THE ADDITION ON THIS ACCOUNT TO RS.70 000/- AND DELETE THE REMAINING ADDITION. THER EFORE THIS GROUND OF THE APPELLANT IS PARTLY ALLOWED. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE LEARNED ASSESSING OFFICER ON THE BASIS OF THE STATEMENT REC ORDED UNDER SECTION 132(4) OBSERVED THAT ASSESSEE HAS INCURRED RS.2 LACS ON AC COUNT OF EDUCATION EXPENSES OF HIS SON. THE LEARNED ASSESSING OFFICER OBSERVED THAT RS.65 000/- WAS ONLY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND THEREFORE TREATED THE BALANCE AMOUNT OF RS.1 35 000/- AS UNDISCLOSED INCO ME OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVE D THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF EDUCATION EXPENSES OF REMAINING RS.1 35 000/- AS OUT OF CASH WITHDRAWAL OF RS.6 73 000/- FROM THE RE GULAR BOOKS OF ACCOUNT. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OB SERVED THAT NO DEFECT IN THE ABOVE EXPLANATION OF THE ASSESSEE WAS POINTE D OUT BY THE LEARNED ASSESSING OFFICER AND THE LEARNED ASSESSING OFFICER COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE WITHDRAWAL OF R S.6 73 000/- WAS UTILISED OTHERWISE BY THE ASSESSEE SO THAT THE EDUCATION EXP ENSES OF SON COULD NOT HAVE BEEN MADE OUT OF THE WITHDRAWAL. IN THE CIRCUMSTANC ES THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) REDUCED THE INC OME OF RS.1 30 000/- TO RS.70 000/- AND DELETED RS.65 000/-. 22. BEING AGGRIEVED BY THIS ORDER BOTH THE PARTIES ARE IN APPEAL BEFORE US. - 15 - 23. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPOR TED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 24. THE LEARNED AUTHORISED REPRESENTATIVE OF THE A SSESSEE SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) WAS NOT JUSTIFIED IN ARBITRARILY SUSTAINING THE ADDITION OF RS.70 000/- EVEN AFTER FINDING THAT THE SUM AVAILABLE WITH THE ASSESSEE WAS MUCH M ORE THAN THE AMOUNT OF TOTAL EXPENSES OF RS.1 35 000/-. 25. WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASS ESSEE HAS MADE CASH WITHDRAWAL OF RS.6 73 000/- FROM HIS REGULAR BOOKS OF ACCOUNT. THE REVENUE HAS BROUGHT NO MATERIAL TO SHOW THAT WHY FROM THE S AID WITHDRAWAL THE ASSESSEE COULD NOT HAVE MET THE EDUCATION EXPENSES OF HIS SON. WE ALSO FIND THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) HAS BROUGHT NO BASIS FOR SUSTAINING THE ADDITION OF RS.70 000/- EVEN AFT ER FINDING THAT THE SUM FROM REGULAR BOOKS AVAILABLE WITH THE ASSESSEE WAS TO TH E TUNE OF RS.6 73 000/- WHEREAS THE EXPENSES WERE ONLY RS.1 35 000/-. IN TH E ABOVE CIRCUMSTANCES WE DO FIND THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.70 000/- OUT OF RS.1 35 000/- WITHOUT ANY BASIS OR MATERIAL. WE THEREFORE DELETE THE ADD ITION OF RS.70 000/- ALSO AND THEREFORE THE DISMISS THE GROUND OF APPEAL TAK EN BY THE REVENUE AND ALLOW THE GROUND OF CROSS OBJECTION OF THE ASSESSEE . 26. GROUND NO.9 OF THE APPEAL READS AS UNDER:- 9. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITION OF RS.2 00 000/- MADE ON ACCOUNT OF UNDISC LOSED INVESTMENT IN THE CONSTRUCTION OF HOUSE. 27. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS HELD AS UNDER:- - 16 - THE APPELLANT HAS AGITATED AGAINST AN ADDITION OF RS. 2 LAKHS WHICH WAS MADE BY THE ASSESSING OFFICER ON THE GROU ND THAT THE APPELLANT HAD ADMITTED IN HIS STATEMENT UNDER SECTI ON 132(4) THAT HE HAD SPENT RS.2 LAKHS IN CASH OVER AND ABOVE RS.4 LAKHS TOWARDS CONSTRUCTION OF HOUSE BUILDING WHICH WAS D ECLARED IN THE REGULAR BOOK. BEFORE ME THE APPELLANT HAS SUBM ITTED THAT THE ASSESSING OFFICER TOTALLY FAILED TO CONSIDER THAT T HE REGULAR RETURN FOR LAST SIX YEARS REFLECT AN AMOUNT OF RS.6 17 460 /- AGAINST HIS HOUSE PROPERTY. HENCE THE APPELLANT HAS SUBMITTED THAT THIS BEING A MISTAKE APPARENT FROM RECORD MADE BY THE A SSESSING OFFICER DESERVES TO BE DELETED. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT A ND ALSO PERUSED HIS BALANCE SHEET FOR LAST SIX YEARS. IN HI S PAPER BOOK SPECIALLY ON PAGE NO.104 BALANCE SHEET AS ON 31 ST MARCH 1997 IS ENCLOSED. THE STATED BALANCE SHEET IN SCHEDULE-C ON PAGE NO.107 REFLECT THE VALUE OF THE BUILDING AT RS.6 17 460/-. IT IS NOT CLEAR FROM WHERE THE ASSESSING OFFICER HAS DERIVED THE FIGURE OF RS.1 LAKHS. THEREFORE THIS ADDITION BEING A MISTAK E APPARENT FROM RECORD DESERVES TO BE RECTIFIED AND HENCE THE ASSESSING OFFICER IS DIRECTED TO DELETE THIS ADDITION. THEREF ORE THIS GROUND OF THE APPEAL IS ALLOWED. 28. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADD ITION OF RS.2 LACS MADE BY THE LEARNED ASSESSING OFFICER BY OBSERVING THAT INVESTMENT OF RS.6 17 460/- WAS ALREADY DISCLOSED BY THE ASSESSEE IN REGULAR RETURN OF INCOME FILED BEFORE THE DATE OF SEARCH AND OBSERVED THAT THE ADDITION OF RS.2 LACS MADE BY THE LEARNED ASSESSING OFFICER WAS AN A PPARENT MISTAKE. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT POINTED OUT ANY ERROR IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) . IN ABSENCE OF ANY ERROR BEING POINTED OUT WE DO NOT FIND ANY GO OD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IT IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE I S DISMISSED. - 17 - CROSS OBJECTION OF THE ASSESSEE 29 GROUND NO.1 OF CROSS OBJECTION READS AS FOLLOWS :- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DISMISS ING THE CHALLENGE TO THE VALIDITY OF BLOCK ASSESSMENT ORDER PASSED BY THE LD. ACIT CENTRAL CIRCLE-4 SURAT DUE TO ILLEGALIT Y IN ASSUMPTION OF JURISDICTION ON THE SHORT GROUND THAT THERE IS NO APPEAL AGAINST SECTION 127 OF THE INCOME TAX ACT 1961. 30. AT THE TIME OF HEARING THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THIS GROUND OF CROSS OBJECTION. THEREFORE THE SAME IS DISMISSED FOR WANT OF PROSEC UTION. 31. GROUND NO.2 OF THE CROSS OBJECTION READS AS UN DER:- 2. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONF IRMING THE ADDITION OF RS.65 000/- BEING THE CASH FOUND AT THE BUSINESS PREMISES OF THE APPELLANT SOLELY ON THE BASIS OF TH E STATEMENT OF THE APPELLANT WHICH WAS IN CONTRADICTION TO THE STA TEMENT OF THE ACCOUNTANT AND THE VARIOUS EXPLANATION AND DOCUMENT ARY EVIDENCES PRODUCED IN SUPPORT OF THE ACCOUNTANT'S S TATEMENT. 32. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE LOWER AUTHORITIES FOUND THAT DURING THE COURSE OF THE SEARCH EXCESS CASH OF RS.65 000/- WAS FOUND WHICH WAS ALSO ADMITTED BY THE ASSESSEE AND A SSESSEE OFFERED TO PAY TAX THEREON. AT THE TIME OF ASSESSMENT ASSESSEE RETRAC TED FROM THE SAID STATEMENT AND POINTED OUT FROM THE STATEMENT OF ACCOUNTANT RE CORDED DURING THE COURSE OF THE SEARCH WHERE ACCOUNTANT HAS STATED THAT CASH BOOK WAS NOT WRITTEN UPTO DATE AND CERTAIN ENTRIES OF CASH RECEIVED FROM SUND RY DEBTORS AND CASH SALES ARE YET TO BE ACCOUNTED FOR. THE ASSESSEE ALSO FILE D A RECONCILIATION STATEMENT BEFORE THE LOWER AUTHORITIES AND THEREIN SHOWN RECE IPT OF RS.62 164/- RECEIVED FROM DEBTORS AND RS.10 000/- RECEIVED FROM LABOUR F OR SAFE CUSTODY AND PAYMENTS MADE RS.4 075/- WITHOUT ANY DETAILS. ON TH E ABOVE FACTS THE RECONCILIATION STATEMENT FILED BY THE ASSESSEE WAS REJECTED BY THE REVENUE AND - 18 - ADDITION OF RS.65 000/- WAS CONFIRMED BY THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS). 33. BEFORE US THE LEARNED AUTHORISED REPRESENTATI VE OF THE ASSESSEE COULD NOT POINT OUT ANY SEARCH MATERIAL TO SHOW THA T ASSESSEE ACTUALLY RECEIVED RS.62 164/- AND RS.10 000/- BEFORE THE DATE OF SEAR CH AND WHICH REMAINS TO BE ENTERED IN THE REGULAR BOOKS OF ACCOUNT. MOREOVER IT IS ALSO OBSERVED THAT NO NAMES OF THE PARTIES AND OTHER DETAILS WERE FURNISH ED BY THE ASSESSEE FROM WHOM HE CLAIMED TO HAVE RECEIVED RS.62 164/- AND RS .10 000/- AND SUBMITTED NO VOUCHER AND/OR DETAIL OF EXPENSES CLAIMED OF RS. 4085/- COULD BE PRODUCED. IN ABSENCE OF THE DETAILS AND SUPPORTING VOUCHERS WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AU THORITIES. THEREFORE THIS GROUND OF CROSS OBJECTION OF THE ASSESSEE IS DISMIS SED. 34. GROUND NO.3 OF THE CROSS OBJECTION READS AS UN DER:- 3. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CON FIRMING THE ADDITION OF RS.18 975/- ON ACCOUNT OF ALLEGED EXCES S STOCK OF ONION POTATO AND GARLIC FOUND AT THE BUSINESS PREM ISES OF THE APPELLANT SOLELY ON THE BASIS OF THE STATEMENT OF T HE APPELLANT WHICH WAS IN CONTRADICTION TO THE STATEMENT OF THE ACCOUNTANT AND THE VARIOUS EXPLANATION AND DOCUMENTARY EVIDENC ES PRODUCED IN SUPPORT OF THE ACCOUNTANT'S STATEMENT. 35. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE ON VERIFICATION OF PHYSICAL STOCK EXCESS STOCK OF R S.18 975/- WAS FOUND DURING THE COURSE OF THE SEARCH. THE LEARNED ASSESSING OFF ICER OBSERVED THAT THE ASSESSEE IN HIS STATEMENT RECORDED UNDER SECTION 13 2(4) ADMITTED THE ABOVE EXCESS STOCK AS UNDISCLOSED INVESTMENT. BEFORE THE LEARNED ASSESSING OFFICER THE ASSESSEE POINTED OUT THAT DURING THE C OURSE OF SEARCH ITSELF THE ACCOUNTANT OF THE ASSESSEE EXPLAINED THAT DUE TO HE AVY RAIN CERTAIN PARTIES TO WHOM GOODS WERE SOLD HAVE NOT LIFTED THE GOODS. THE ASSESSEE FURNISHED THE - 19 - CONFIRMATION FROM THE SAID PARTIES BEFORE THE LEARN ED ASSESSING OFFICER. HOWEVER THE LEARNED ASSESSING OFFICER HAS REJECTED THE SAME BY TREATING THE SAME AS AN AFTERTHOUGHT AND ADDED RS.18 975/- TO TH E INCOME OF THE ASSESSEE. 36. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE ABOVE ADDITION SOLELY ON THE BASIS OF THE STATEMENT OF THE ASSESSEE RECORDED UNDER SECTION 132(4) OF THE ACT. 37. IN OUR CONSIDERED OPINION THE ASSESSEE HAS A RIGHT TO SHOW THAT THE STATEMENT GIVEN UNDER SECTION 132(4) WAS NOT CO RRECT AND /OR THE SAME WAS GIVEN UNDER A MISTAKEN KNOWLEDGE OF FACT OR LAW. WE FIND THAT NO SPECIFIC DEFECT IN THE EXPLANATION AND CONFIRMATION FURNISHE D BY THE ASSESSEE COULD BE POINTED OUT BY THE LOWER AUTHORITIES. NO MATERIAL W AS BROUGHT IN SUPPORT OF THE CONCLUSION THAT THE CONFIRMATION AND EXPLANATIO N WAS AN AFTERTHOUGHT BY THE LEARNED ASSESSING OFFICER. IN OUR CONSIDERED OP INION A PLAUSIBLE EXPLANATION CANNOT BE REJECTED WITHOUT POINTING OUT ANY SPECIFIC DEFECT THEREIN BY SIMPLY TREATING IT AS AN AFTER THOUGHT. IN THE C IRCUMSTANCES IN OUR CONSIDERED OPINION ADDITION OF RS.18 975/- IS NOT SUSTAINABLE IN LAW. WE THEREFORE DELETE ADDITION OF RS.18 975/- AND ALLOW THE GROUND OF CROSS OBJECTION OF THE ASSESSEE. 38. GROUND NO.4 OF THE CROSS OBJECTION READS AS UN DER:- 4. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONF IRMING THE ADDITION OF RS.56 500/- WHICH WAS BASED ON LOOS E PAPERS SEIZED FROM THE APPELLANT'S SHOP IGNORING THE VARIO US DOCUMENTARY EVIDENCES FILED IN SUPPORT OF HIS EXPLA NATION. 39. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. DURING THE COURSE OF SEARCH DOCUMENT MARKED PAGE NO.1 OF ANNEXURE-BS -1 WAS FOUND WHICH CONTAINED NAMES OF FOUR PARTIES ALONG WITH DATE AND AMOUNT. THE TOTAL OF SUCH - 20 - AMOUNTS COMES TO RS.56 500/-. THE ASSESSEE CLAIMED THAT THE ABOVE LOSE PAPER RECORDS HIS SALE TRANSACTIONS WHICH ARE DULY RECORDED IN HIS REGULAR BOOKS OF ACCOUNT ON ACCOUNT OF SHRI KISHAN TIWARI. THE ASSESSEE EXPLAINED THAT HE SOLD GOODS TO THE FOUR PARTIES ON THE INSTR UCTIONS OF SHRI KISHAN TIWARI AND THEREFORE RECORDED THE SALE TRANSACTION IN THE LEDGER OF KISHAN TIWARI. THE LEARNED ASSESSING OFFICER REJECTED THE ABOVE EX PLANATION OF THE ASSESSEE ON THE GROUND THAT SEIZED PAPER DOES NOT CONTAIN TH E NAME OF KISHAN TIWWARI AND SAID SEIZED PAPER HAS NO CO-RELATION TO THE SEI ZED PAPER. 40. ON APPEAL LEARNED COMMISSIONER OF INCOME TAX( APPEALS) CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFIC ER OBSERVING THAT THE ASSESSEE FAILED TO SHOW THESE ENTRIES BEING RECORDE D IN HIS BOOKS OF ACCOUNT EITHER IN THE NAME OF PERSONS NAMED IN THE SEIZED P APER OR IN THE LEDGER ACCOUNT OF SHRI KISHAN TIWARI. 41. WE FIND THAT THE ASSESSEE HAS NOT FILED BEFORE US LEDGER ACCOUNT OF SHRI KISHAN TIWARI AS APPEARING IN HIS REGULAR B OOKS OF ACCOUNT TO SHOW THAT THE TRANSACTIONS IN QUESTION WERE RECORDED AS SALE TRANSACTION IN HIS REGULAR BOOKS OF ACCOUNT. IN ABSENCE OF SUCH MATERI AL WE DO NOT FOUND FORCE IN THE SUBMISSION OF THE ASSESSEE THAT THE TRANSACT IONS IN QUESTION WERE ALREADY RECORDED IN THE REGULAR BOOKS OF ACCOUNT. THE ALT ERNATIVE SUBMISSION OF THE ASSESSEE WAS THAT THE TRANSACTION RECORDED IN THE S EIZED LOSE PAPERS WERE TRANSACTION OF SALE AND THE ENTIRE SALE VALUE CANNO T BE ADDED AS INCOME AND ONLY PROFIT ELEMENT EMBEDDED THEREIN CAN BE BROUGHT TO TAX. WE FIND THAT THE LOWER AUTHORITIES TREATED THE AMOUNT OF RS.56 500/- RECORDED IN THE SEIZED LOOSE PAPERS AS EXPENDITURE OF THE ASSESSEE AND NOT THE SALE PROCEEDS. WE FIND THAT NO BASIS FOR THIS CONCLUSION WAS STATED BY THE LOWER AUTHORITIES. THEREFORE THE EXPLANATION OF THE ASSESSEE THAT THE AMOUNT OF RS.56 500/- RELATES TO HIS SALE CANNOT BE REJECTED IN VIEW OF T HE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. PRESIDENT INDUSTRIES REPORTED IN 124 - 21 - TAXMAN 644 (GUJ). THE ENTIRE SALE PROCEEDS CANNOT B E ASSESSED AS INCOME OF THE ASSESSEE AND ONLY PROFIT ELEMENT CONTAINED THER EIN CAN BE BROUGHT TO TAX. WE THEREFORE SET ASIDE THE ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER AND DIRECT HIM TO ASSESS ONLY THE INCOME EL EMENT EMBEDDED IN THE SALE OF RS.56 500/- AFTER ALLOWING REASONABLE OPPORTUNIT Y OF HEARING TO THE ASSESSEE. THUS THIS GROUND OF CROSS OBJECTION OF T HE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 42. GROUND NO.5 OF THE CROSS OBJECTIONS READS AS U NDER:- 5. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN SUST AINING THE ADDITION OF RS. 30 000/- OUT OF RS.8 60 000/- WITHO UT ASSIGNING ANY REASON WHATSOEVER IN CONFIRMING THE SAID ADDITI ON. 43. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. DURING THE COURSE OF THE SEARCH CERTAIN CHEQUES WERE FOUND AND SEIZE D VIDE SEIZED DOCUMENT MARKED PAGE NOS.71 TO 83 AND 63 OF ANNEXURE-BS-1. T HE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT T HE TOTAL OF THE AMOUNTS OF CHEQUES WAS RS.8 60 000/- OUT OF WHICH CHEQUES O F RS.8 30 000/- CONTAINED ONLY AMOUNT AND ARE BLANK IN RESPECT OF NAME AND DA TE. HOWEVER CHEQUE OF RS.30 000/- WAS DRAWN BY SHREE CONSTRUCTIONS AND W AS DRAWN IN FAVOUR OF BEARER. 44. ON APPEAL LEARNED COMMISSIONER OF INCOME TAX( APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE WITH RESPEC T TO CHEQUES OF RS.8 30 000/- AS RECEIPT OF SECURITY AGAINST CREDIT SALE BUT HAS NOT ACCEPTED CHEQUE OF RS.30 000/- AS SECURITY AND AGREED WITH T HE FINDINGS OF THE LEARNED ASSESSING OFFICER THAT THIS CHEQUE HAS NO CONNECTIO N WITH THE CREDIT SALE OF THE ASSESSEE AND WAS IN LIEU OF MONEY LENT BY THE A SSESSEE. WE FIND THAT NO MATERIAL COULD BE BROUGHT BEFORE US BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE TO CONTROVERT THE ABOVE FINDINGS OF THE LEARNED COMMISSIONER - 22 - OF INCOME TAX(APPEALS). IN THE CIRCUMSTANCES WE D O NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED C OMMISSIONER OF INCOME TAX(APPEALS) WHICH IS CONFIRMED AND THE GROUND OF C ROSS OBJECTION OF THE ASSESSEE IS DISMISSED. 44 IN THE RESULT THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE BOTH ARE PARTLY ALLOWED AS ABOVE. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 30 TH DAY OF APRIL 2010. SD/- SD/- ( T.K. SHARMA ) ( N.S . SAINI ) JUDICIAL MEMBER ACCOUNTANT MEM BER AHMEDABAD; ON THIS 30 TH DAY OF APRIL 2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 23.04.2010 ---------------- -- 2. DRAFT PLACED BEFORE AUTHORITY 26.04.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 26.04.2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 27.04.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- --- ----------------- 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------