Sri Surya Prakash Bagla, Kolkata v. DCIT, Central Circle - VII, Kolkata, Kolkata

ITA 1411/KOL/2012 | 2007-2008
Pronouncement Date: 05-10-2016

Appeal Details

RSA Number 141123514 RSA 2012
Assessee PAN AEBPB4558F
Bench Kolkata
Appeal Number ITA 1411/KOL/2012
Duration Of Justice 4 year(s) 2 day(s)
Appellant Sri Surya Prakash Bagla, Kolkata
Respondent DCIT, Central Circle - VII, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 05-10-2016
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 05-10-2016
Date Of Final Hearing 02-08-2016
Next Hearing Date 02-08-2016
Assessment Year 2007-2008
Appeal Filed On 03-10-2012
Judgment Text
1 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH AM & SHRI K. NARSIMHA CHARY JM] I.T.A NO.857/KOL/2014 ASSESSMENT YEAR: 2010-11 & I.T.(SS)A NOS. 34 TO 37/KOL/2012 ASSESSMENT YEARS: 2006-07 TO 2009-10 DEPUTY COMMISSIONER OF INCOME-TAX VS. SURYA PRAKA SH BAGLA CENTRAL CIRCLE-VII KOLKATA. (PAN: AEBPB4558F) ( APPELLANT ) ( RESPONDENT ) & I.T.A. NO.1418 1411 1419 & 1412/KOL/2012 & C.O. NOS. 145 TO 148/KOL/2012 ASSESSMENT YEARS: 2006-07 TO 2009-10 SURYA PRAKASH BAGLA VS. DEPUTY COMMISSIONER OF IN COME-TAX CENTRAL CIRCLE-VII KOLKATA. ( APPELLANT/CROSS OBJECTOR ) ( RESPONDENT ) DATE OF HEARING: 10.08.2016 DATE OF PRONOUNCEMENT: 05.10.2016 FOR THE REVENUE: SHRI NIRAJ KUMAR CIT DR FOR THE ASSESSEE/CROSS OBJECTOR: SHRI J. P. KH AITAN ADVOCATE & SHRI S. JHAJHARIA CA ORDER PER BENCH: IT(SS)A NOS. 34 TO 37/KOL/2012 AND I.T.A. NO.1418 1411 1419 & 1412/KOL/2012 AND C.O. NOS. 145 TO 148/KOL/2012 FOR ASST YEARS 20 03-04 TO 2009-10 ARE ARISING OUT OF COMMON ORDERS OF CIT(A) CENTRAL-1 KOLKATA VIDE AP PEAL NOS. 236-242/CC-VII/CIT(A)C- I/KOL/10-11 DATED 6.8.2012 AND SEPARATE ORDER OF CI T(A) FOR ASST YEAR 2010-11 IN APPEAL NO. 172/CC-VII/CIT(A)C-I/13-14 DATED 14.2.2014. ASS ESSMENTS WERE FRAMED BY DCIT C.C.VII KOLKATA U/S. 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS SEPARATE ORDERS. FOR THE SAKE OF C ONVENIENCE WE DISPOSE OF ALL THE ABOVE APPEALS AND COS BY THIS CONSOLIDATED ORDER. 2 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 2. GENERAL FACTS THE BRIEF FACTS OF THE CASE THAT THE PROCEEDINGS U/ S 153A OF THE ACT WAS INITIATED CONSEQUENT TO THE SEARCH U/S 132 CONDUCTED ON 25.2. 2009 AT THE RESIDENTIAL AND BUSINESS PREMISES OF SALTEE GROUP PROMOTED AND OWNED LARGE LY WITH HIS FAMILY MEMBERS BY MR. SURYA PRAKASH BAGLA. THE ASSESSEE THROUGH ITS ASSOC IATE CONCERN IS ENGAGED MAINLY IN THE BUSINESS OF REAL ESTATE & CIVIL CONSTRUCTION. CONSE QUENT TO SEARCH U/S 132 OF THE ACT NOTICE U/S 153A OF THE ACT WAS ISSUED FOR ASST YEAR S 2003-04 TO 2008-09 AND ASSESSMENTS FRAMED U/S 153A OF THE ACT THEREON AND FOR THE ASS T YEAR 2009-10 BEING THE YEAR OF SEARCH ASSESSMENT WAS FRAMED U/S 143(3) OF THE AC T. THE ASSESSEES APPEAL IS MAINLY CONTAINING THE VALI DITY OF THE SEARCH AND THE GROUNDS OF APPEAL IN ALL THE YEARS CAN BE SUMMARIZED AS FOLLOW S : 1. FOR THAT IN VIEW OF THE FACTS AND IN THE CIRCUMS TANCES THE ASSESSMENT ORDER MADE BY THE AO WAS WHOLLY BAD ILLEGAL AND VOID ABINITIO BOTH O N POINTS OF LAW AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE LD CIT(A) WAS WHOLLY U NJUSTIFIED IN CONFIRMING THE ACTION OF THE AO AS FAR AS LEGAL ISSUES WERE CONCERNED AND TH E LD. CIT(A) WAS WHOLLY UNJUSTIFIED IN HOLDING THAT THERE WAS NO LEGAL INFIRMITY IN THE AS SESSMENT ORDER OF THE AO AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD THAT THE ASSESSMENT ORDER MADE BY AO WAS WHOLLY BAD ILLEGAL AND VOID ABINITIO. 2. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE ASSESSMENT ORDER MADE BY THE AO IS WHOLLY BAD ILLEGAL AND VOID ABINITIO SINCE A) THE ORDER WAS MADE BY THE AO WITHOUT HAVING ASSU MED LEGAL AND VALID JURISDICTION U/S 127 OF THE INCOME-TAX ACT ON YOUR APPELLANT ; B) WITHOUT MAKING FULL AND COMPLETE COMPLIANCE REQ UIRED WITH REFERENCE TO SECTION 153C AND WITHOUT PROPER RECORDING OF SATISFACTION ETC. S INCE IN RESPECT OF ALL THE ADDITIONS MADE IN THE HANDS OF THE PETITIONER THE PAPERS AND DOCU MENTS HAD BEEN SEIZED NOT FROM YOUR APPELLANT BUT FROM SOME OTHER PERSONS AND HENCE THE AO WAS REQUIRED STATUTORILY TO RECORD SATISFACTION; AND C) THE SEARCH WARRANT / PANCHANAMA BEING IN THE JOI NT NAMES OF SEVERAL PERSONS AND NOT IN THE INDIVIDUAL NAME OF YOUR PETITIONER ONLY NEITHER SUCH SEARCH WAS VALID NOR SUCH WARRANT WAS VALID NOR ANY ASSESSMENT COULD NOT BE MADE IN T HE NAME OF YOUR PETITIONER AS INDIVIDUAL ONLY ON THE BASIS OF SUCH SEARCH WARRANT / PANCHANA MA. 3. FOR THAT YOUR PETITIONER CRAVES THE RIGHT TO RAI SE ADDITIONAL GROUND OR GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING AND OR TO ALTER /A MEND/RECTIFY THE PRESENT ANY GROUND OR GROUNDS OF APPEAL. 3 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 2.1. THE LD AR DURING THE COURSE OF THE HEARING DID NOT PRESS THE GROUNDS TOWARDS VALIDITY OF SEARCH IN THESE APPEALS AND THE SAME IS TAKEN AS A STATEMENT FROM THE BAR. ACCORDINGLY THE GROUNDS RAISED ON THE VALIDITY OF SEARCH IN VAR IOUS YEARS ARE DISMISSED AS NOT PRESSED AND ALL THE APPEALS ARE ADJUDICATED HEREIN ONLY ON MERI TS OF EACH ADDITION. 3. THE ISSUES IN THESE APPEALS ARE SUMMARIZED GROUN D-WISE AS FOLLOWS AND HAVE BEEN DEALT ACCORDINGLY :- SL.N O SEIZED MATERIAL PARTICULA RS ITA/C.O. NO. A Y AMOUNT DEPARTMEN T'S APPEAL GROUNDS NO. ASSESSEE'S APPEAL/C. O. GROUNDS NO. 1 FORT TRANSACTIO N 34/K/12 2006 -07 6 00 90 000 1 - 5 - 35/K/12 2007 -08 1 40 00 000 1 5 - 857/K/14 2010 -11 7 40 90 000 1 4 - 2 SSG/1 34/K/12 145/K/12 2006 -07 4 30 272 7 5 36/K/12 147/K/12 2008 -09 74 27 109( +) 3 03 65 126 2 3 & 4 5 147/K/12 ADDL. GROUND 1- 3 (C.O) 1419/K/12 ADDL. GROUND 1- 4(A'S APPEAL) 3 SSG/3 35/K/12 146/K/12 2007 -08 18 00 000 7 5 36/K/12 147/K/12 2008 -09 37 25 000 5 6 37/K/12 148/K/12 2009 -10 84 66 724 3 8 4 SSG/6 37/K/12 148/K/12 2009 -10 6 00 000 4 9 - 4 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 5 SSG 9/39 34/K/12 145/K/12 2006 -07 8 61 501 (+) 3 60 500 9 & 10 7 35/K/12 146/K/12 2007 -08 6 94 299 8 6 36/K/12 147/K/12 2008 -09 6 28 500 7 8 37/K/12 148/K/12 2009 -10 86 257 7 11 6 SSG/8 34/K/12 145/K/12 2006 -07 10 00 000 8 6 SSG/44 36/K/12 147/K/12 2008 -09 50 000 6 7 37/K/12 148/K/12 2009 -10 1 67 000(+)27 03 31 000 5 & 6 10 148/K/12 ADDL. GR.1 (IN C.O) 1412/K/12 ADDL. GROUND 1 (IN A'S APPEAL ) 7 SSG/42 35/K/12 146/K/12 2007 -08 50 64 383 9 7 36/K/12 2008 -09 5 89 47 000 8 - 37/K/12 2009 -10 45 456(+)1 30 00 000 9 & 8 - 8 SSG/45 35/K/12 146/K/12 2007 -08 79 82 640 10 8 36/K/12 2008 -09 5 00 00 000 10 - 9 SSG/48 36/K/12 2008 -09 5 91 83 000 12 36/K/12 147/K/12 2008 -09 1 85 08 949 11 9 37/K/12 148/K/12 2009 -10 2 57 984 9 12 10 JEWELLERY CASH & BANK 34/K/12 145/K/12 2006 -07 65 300 6 4 35/K/12 2007 85 863 / 67 411 6 4 5 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 146/K/12 -08 36/K/12 147/K/12 2008 -09 69 882 1 4 37/K/12 148/K/12 2009 -10 3 74 170(+)17 56 785 1 & 2 5 6 & 7 4. ADDITION MADE IN RESPECT OF TRANSACTIONS WITH F ORT GROUP : A.Y 2006-07 : (DEPARTMENTS APPEAL ITA NO. 34/K/2012) 1. GROUND NO. 1 THE LD. CIT (A) ERRED IN HOLDING THAT RS.6 00 90 000/- RECEIVED BY CASH BY SRI BAGLA AGAINST THE SALE OF SHARES OF M/S. GRA PHITECH INDIA LTD. IS TAXABLE IN A.Y.2010- 11 AND NOT IN A.Y. 2006-07 AS AGAINST CBDT CIRCULA R NO. 704 DATED 28/04/1995 WHICH SQUARELY FITS IN THE FACTS OF THE CASE. APPLICANT H AS NOT TREATED AS CASH RECEIPT OF CAPITAL RATHER IT HAS TAKEN UNDISCLOSED INCOME IN A.Y.2010- 11 2. GROUND NO. 2 - THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE APPLICANT SHRI S.P. BAGLA HIMSELF HAS NOT TREATED THE CASH RE CEIPT OF RS. 6 00 90 000/- AS CAPITAL GAIN FROM SALE OF SHARES RATHER HE HAS TAKEN IT AS U NDISCLOSED INCOME FROM OTHER SOURCES IN A.Y.2010-11. 3. GROUND NO. 3 - THE LD. CIT(A) HAS ERRED IN HOLDING THAT CAPITAL GAIN ARISING ON THE 100% SALE OF SHARES OF M/S. GRAPHITECH IS TAXABLE I N 2010-11 AND NOT IN THE YEAR IN WHICH MOU (CONTRACT FOR SALE) I.E. /F.Y. 2005-06 RELEVANT FOR A.Y.2006-07 WAS SIGNED AND THAT THE ORDER OF LD. CIT(A) IS IN CONTRAVENTION TO THE CIRC ULAR NO. 704 DATED 28/04/1995 OF CBDT. 4. GROUND NO. 4 -THE LD. CIT (A) ERRED IN DIRECTING A.O. TO TAKE T HE CONSIDERATION AS 14 01 00 000/- FOR SALE OF SHARES OF GRAPHITECH AS AGAINST SALE VALUE OF RS. 6 51 00 000/- MENTIONED IN MOU (SALE CONTRACT) 5. GROUND NO. 5 - THE LD. CIT (A) HAS FURTHER ERRED IN HOLDING TH AT THE SALE CONSIDERATION FOR THE SALE OF SHARES IS TO BE TAKEN AS RS.14 01 00 000/- AND THE DATE OF SALE AS 25/05/2009. A.Y 2007-08 : (DEPARTMENTS APPEAL ITA NO. 35/K/2012) 1. GROUND NO. 1 - THE LD. CIT (A) ERRED IN HOLDING THAT RS. 14 00 00 000/- RECEIVED IN CASH BY SRI BAGLA AGAINST THE SALE SHARES OF GRAPH ITECH TECH INDIA LTD. IS TAXABLE IN A.Y. 2010-11 AND NOT IN THE A.Y. 2007-08 AS AGAINST THE CBDT CIRCULAR NO. 704 DATED 28/04/1995 WHICH SQUARELY FITS IN TO THE FACTS OF THE CASE. 2. GROUND NO. 2 - THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE APPLICANT SHRI S.P.BAGLA HIMSELF HAS NOT TREATED THE CASH REC EIPT OF RS. 1 40 00 000/- AS CAPITAL GAIN FROM SALE OF SHARES RATHER HE HAS TAKEN IT AS UNDISCLOSED INCOME FROM OTHER SOURCES IN A.Y.2010-11. 6 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 3. GROUND NO. 3 - THE LD. CIT(A) HAS ERRED IN HOLDING THAT CAPITAL GAIN ARISING ON THE 100% SALE OF SHARES OF M/S. GRAHITECH IS TAXABLE IN 2010-11 AND NOT IN THE YEAR IN WHICH MOU (CONTRACT FOR SALE) I.E. /F.Y. 2006-07 RELEVANT FOR A.Y.2007-08 WAS SIGNED AND THAT THE ORDER OF LD. CIT(A) IS IN CONTRAVENTION TO THE CIRC ULAR NO. 704 DATED 28/04/1995 OF CBDT. 4. GROUND NO. 4 - THE LD. CIT (A) ERRED IN DIRECTING A.O. TO TAKE THE CONSIDERATION AS 14 01 00 000/- FOR SALE SHARES OF GRAPHITECH AS AG AINST SALE VALUE OF RS. 16 51 00 000/- MENTIONED IN MOU (SALE CONTRACT) 5. GROUND NO. 5 - THE LD. CIT (A) HAS FURTHER ERRED IN HOLDING TH AT THE SALE CONSIDERATION FOR THE SALE OF SHARES IS TO BE TAKEN AS RS. 14 01 00 000/- AND THE DATE OF SALE AS 25/05/2009. A.Y 2010-11 DEPARTMENTS APPEAL - ITA NO. 857/KOL / 2014 THE GROUNDS OF APPEAL AS EMERGING OUT OF THE ORDER OF THE LD. CIT(A)/ C- 1 ARE AS UNDER : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) CENTRAL I KOLKATA HAS ERRED IN RELYING ON CIT(A) C-IS EARLI ER ORDER NO. 236-242 /CC-VII/CIT(A) C- I/10-11 DT. 16.8.2012 FOR THE A.Y 2003-04 TO 2009-1 0 WHICH HAS NOT YET REACHED FINALITY AS THE DEPARTMENT HAS PREFERRED FURTHER APPEAL BEFORE THE HONBLE ITAT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) CENTRAL I KOLKATA HAS ERRED IN HOLDING THAT THE UNDISCLOSED R ECEIPTS RS. 7 40 90 000/- SHOULD BE TREATED AS CAPITAL GAIN INSTEAD OF INCOME FROM O THER SOURCES. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE ORDER PASSED BY THE LD. CIT(A) CENTRAL I KOLKATA IS NOT ONLY ERRONEOUS BUT PREJ UDICIAL TO LAW. 4. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND MODIFY ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURIN G THE HEARINGS. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT SALTEE INFOTECH PVT LTD WAS HOLDING 100% SHARES IN M/S GRAPHITECH INDIA LTD A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956. ONE MR. SURYA PRAKASH BAGLA (ASSESSEE HEREIN) IS ITS DI RECTOR. M/S GRAPHITECH INDIA LTD HAS LONG TERM LEASE ON A PIECE OF LAND MEASURING ABOUT 60 CO TTAHS AND THERE WAS NO LEGAL IMPEDIMENT TO CONSTRUCT COMMERCIAL BUILDING ON THE SAID LAND. THERE WAS A MEMORANDUM OF UNDERSTANDING (MOU) ON 4.8.2005 BETWEEN SALTEE INFO TECH PVT LTD REPRESENTED BY ITS DIRECTOR MR. SURYA PRAKASH BAGLA AND ONE MR. VIVEK KATHOTIA WITH A RECITAL THAT THE SHAREHOLDERS OF M/S GRAPHITECH INDIA LTD WENT TO TR ANSFER THEIR 100% HOLDING IN M/S 7 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA GRAPHITECH INDIA LTD TO MR. VIVEK KATHOTIA FOR A CO NSIDERATION OF RS. 16 51 00 000/-. IN THE SAID MOU THERE WAS A RECITAL TO THE EFFECT THAT ALL THE ORIGINAL SHARE CERTIFICATES AND TRANSFER DEED SHALL BE DEPOSITED WITH MR. B. K. JAI N ADVOCATE IN TRUST AND THE SAME SHALL BE HANDED OVER TO THE TRANSFEREE ON MAKING THEIR FULL AND FINAL PAYMENT OF THE CONSIDERATION AMOUNT. FURTHER VIDE CLAUSE 4 IN LIABILITIES AND RESPONSIBILITIES OF THE TRANSFEROR IT WAS STIPULATED THAT THE TRANSFEROR AT HIS COST AND EFFO RTS SHALL BE RESPONSIBLE TO GET BUILDING PLANS WHICH SHALL BE PREPARED BY THE TRANSFEREE SANCTION ED FROM THE CONCERNED AUTHORITIES AND ALSO OBTAIN ALL OTHER PERMISSIONS WHICH SHALL INCLU DE CLEARANCES FROM THE DEPARTMENTS OF FIRE AIRPORT AUTHORITY POLLUTION CONTROL BOARD W ATER & SEWERAGE ETC. AS MAY BE ESSENTIAL AND NECESSARY TO ENABLE THE TRANSFEREE TO CONSTRUCT AND COMPLETE THE BUILDING ON THE SAID LAND WITHOUT ANY PROBLEM. FURTHER VIDE CL AUSES 13 AND 14 THEREOF IT WAS STIPULATED THAT THE TRANSFEROR HAS ASSURED THE TRANSFEREE THAT IT SHALL GET THE PLAN SANCTIONED PREPARED AS PER PREVAILING RULES AND REGULATION OF THE COMPE TENT AUTHORITY OF DIFFERENT GOVT. DEPARTMENT OF GOVT OF WEST BENGAL & CENTRAL GOVT. B IDHANNAGAR MUNICIPALITY HAVE SANCTIONED THE PLAN UP TO A HEIGHT OF 75 METRES AND /OR MORE SUBJECT TO NOC FROM AIRPORT AUTHORITY OF INDIA. TRANSFEROR HAS ASSURED TO GET THE PLAN SANCTIONED UPTO MAXIMUM HEIGHT OF 75 METRES MENTIONED HEREINBEFORE. IF THE TRANSF EROR FAILS TO GET PLAN SANCTIONED THEN THE TRANSFEROR SHALL REFUND THE ENTIRE AMOUNT RECEIVED FROM TRANSFEREE WITHIN ONE MONTH. THE TRANSFEROR SHALL AT HIS COST AND RESPONSIBILITY GE T THE LEASE DEED MODIFIED FROM URBAN DEVELOPMENT (UD) DEPARTMENT TO THE EXTENT THAT THE LAND CAN BE USED FOR CONSTRUCTION OF BUILDING FOR USE OF INFORMATION TECHNOLOGY INDUSTRY . VIDE CLAUSE 4 OF CONSIDERATION PART IT IS STATED THAT THE CONSIDERATION AMOUNT SHALL BE PA ID TO THE SHARE HOLDERS OF GRAPHITECH AND THIS WILL BE VALID DISCHARGE OF PAYMENT. 4.1.1. OUT OF THE SALE CONSIDERATION RS.16.51 CR. A SUM OF RS.6 00 90 000/- WAS PAID IN AY 2006-07 AND RS.1 40 00 000/- WAS PAID IN AY 2007-08 TOWARDS CASH PORTION. SUBSEQUENTLY TRANSFEROR PLEADED THAT THE MUNICIPAL ITY REFUSED TO SANCTION THE PLAN PREPARED BY THE TRANSFEREE FOR ITS I.T COMPLEX AND ULTIMATEL Y THE TRANSFEREE DECIDED TO ABANDON THE PROJECT AND ACCORDINGLY ABOUT THE 1 ST WEEK OF FEBRUARY 2007 THE PARTIES MUTUALLY AGREED TO RESCIND THE CONTRACT AND TO RELEASE EACH OTHER FROM THE OBLIGATION THERE UNDER. AT THAT TIME LARGE AMOUNTS REMAINED OUTSTANDING TO THE TRANSFERO R AND OTHERS IN RELATION TO THE SALE AND PURCHASE OF SHARES. 8 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 4.1.2. SALTEE INFOTECH FILED TITLE SUIT NO. 216 OF 2007 IN THE COURT OF THE CIVIL JUDGE SENIOR DIVISION IIND COURT AT BARASAT SEEKING A DECREE D ECLARING THE MEMORANDUM DATED 04.08.2005 AS TERMINATED WITH MUTUAL CONSENT LETTE RS DATED 01.11.2007 AND 19.11.2007 AS VOID DELIVERY UP AND CANCELLATION OF SUCH LETTERS AND A DECREE FOR PERPETUAL INJUNCTION RESTRAINING THE TRANSFEREE FROM DEMANDING DELIVERY OF POSSESSION OF THE SHARES AND FROM GIVING EFFECT TO THE MOU DATED 04.08.2005. IN THE SAID SUIT IT WAS PLEADED THAT PURSUANT TO THE MOU THE ORIGINAL SHARE CERTIFICATES WERE DEPOSI TED WITH ADVOCATE SHRI B. K. JAIN AND SUBSEQUENTLY ALL THE STEPS WERE TAKEN TO SEE THAT T HE TERMS OF MOU ARE IMPLEMENTED BUT INSPITE OF VARIOUS CORRECTIONS MADE FROM TIME TO T IME TO THE BUILDING PLAN GOT PREPARED BY THE TRANSFEREE THE SAME COULD NOT BE ACCOMPLISHED AND BIDHANNAGAR MUNICIPALITY REFUSED TO APPROVE THE PLAN AS SUCH THE TRANSFEREE ULTIMATEL Y DECIDED TO ABANDON THE PROJECT AND WITH MUTUAL CONSENT THE CONTRACT WAS RESCINDED BUT TO T HE SURPRISE OF THE TRANSFEROR A LETTER WAS RECEIVED FROM MR. B. K. JAIN ADVOCATE WHEREIN THE RESCINDING OF CONTRACT WAS DISPUTED AND DELIVERY OF SHARES WAS INSISTED. IN THOSE CIRC UMSTANCES THE DECLARATORY SUIT CAME TO BE FILED. 4.1.3. THE TRANSFEREE ALSO FILED ANOTHER SUIT IN T. S. NO. 222 OF 2007 BEFORE THE CIVIL JUDGE (SR. DIVISION) 2 ND COURT AT BARASAT DISPUTING THE RECESSION OF CONTRA CT AND PRAYING FOR SPECIFIC PERFORMANCE THEREOF. ACCORDING TO THE TRA NSFEREE AFTER RECEIPT OF SUBSTANTIAL AMOUNTS THE TRANSFEROR WITH OBLIQUE MOTIVE ALLEGED THAT THERE IS RESCINDING OF CONTRACT WITH MUTUAL CONSENT. ACCORDING TO THEM ONLY A SUM OF RS .2 59 10 000/- WAS DUE AND A SUM OF RS. 13 91 90 000/- WAS PAID FROM TIME TO TIME AS SU CH THE TRANSFEREE DEMANDED THE DELIVERY OF SHARES. ACCORDING TO THE TRANSFEREE BY INCURRIN G HUGE EXPENDITURE THEY GOT THE BUILDING PLAN PREPARED AND COOPERATED WITH THE TRANSFEROR TO GET THEM APPROVED BY THE MUNICIPALITY AND ACCORDING TO THEM SUCH BUILDING PLANS WERE ALM OST APPROVED AND AT THE FINAL STAGE OF RECEIVING THE AMOUNTS AND ISSUE FORMAL SANCTION LET TER. HOWEVER IT WAS EFFECTIVELY THWARTED BY THE TRANSFEROR ONLY TO CONCOCT THE STOR Y OF NON APPROVAL OF PLANS BY THE MUNICIPALITY. HE FURTHER ALLEGED THAT FOR THE FIRS T TIME BY WAY OF LETTER DATED 22.11.2007 MR. B. K. JAIN ADVOCATE INFORMED THE TRANSFEREE TH AT THE TRANSFEROR DEPOSITED ONLY THE SHARE CERTIFICATES BUT NO SHARE TRANSFER DEEDS. IN THESE CIRCUMSTANCES SPECIFIC PERFORMANCE OF CONTRACT WAS PRAYED FOR. 9 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 4.1.4. WHILE THE MATTER STOOD THUS THERE WAS A SEA RCH AND SEIZURE OPERATION AT THE PREMISES OF SALTEE GROUP OF COMPANIES ON 25.2.2009 BY THE IN COME TAX DEPARTMENT U/S 132 OF THE ACT INCLUDING THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE. SUBSEQUENTLY THE PARTIES ENTERED INTO A SETTLEMENT PURSUANT TO WHICH T.S NO. 216 OF 2007 WAS DISMISSED AND THE OTHER TS NO. 222 OF 2007 WAS DECREED. UNDER TH E TERMS OF SETTLEMENT THE TRANSFEROR AGREED TO TRANSFER THE 100% SHARES EXCEPT 30 SHARES TO THE TRANSFEREE HANDOVER ALL THE PAPERS BOOKS ETC. THE TRANSFEREE HAS TO PAY RS.2 59 10 000/- TO THE TRANSFEROR WHEREAS THE TRANSFEROR HAD TO PAY RS.2 50 00 000/- TO THE TRANS FEREE TOWARDS COST OF LITIGATION COMPENSATION ETC. AS SUCH AFTER ADJUSTMENT OF THE A MOUNTS THE TRANSFEREE PAID A SUM OF RS.9 10 000/- TO THE TRANSFEROR ETC. THIS WAS IMPL EMENTED BY BOTH THE PARTIES PURSUANT TO THE DECREE. 4.1.5. NOW THE QUESTIONS ARE WHEN THE TRANSFER OF SHARES TOOK PLACE AND WHAT IS THE ACTUAL SALE CONSIDERATION FOR THE PURPOSE OF RECKONING CAP ITAL GAINS? ACCORDING TO CBDT CIRCULAR NO. 704 DATED 28.04.1995 WITH REFERENCE TO SECTION 2(42A) OF THE ACT THE BOARD IN CASE OF TRANSACTIONS TAKE PLACE DIRECTLY BETWEEN THE PARTIES AND NOT THROUGH STOCK EXCHANGES THE DATE OF CONTRACT FOR SALE AS DECLARE D BY THE PARTIES SHALL BE TREATED AS THE DATE OF TRANSFER PROVIDED IT IS FOLLOWED UP BY ACTUAL D ELIVERY OF SHARES AND THE TRANSFER DEEDS. IN VIEW OF THIS CIRCULAR THE DATE OF CONTRACT FOR SAL E ASSUMES IMPORTANCE. ACCORDING TO THE REVENUE THE DATE OF CONTRACT FOR SALE IS THE DATE OF MOU WHEREAS ACCORDING TO THE ASSESSEE THE DATE OF SUBSEQUENT COMPROMISE BY WAY OF WHICH T HE CONDITION AS TO THE APPROVALS BY DIFFERENT AUTHORITIES WAS GOT RID OF. FURTHER ACCOR DING TO THE REVENUE THE SALE CONSIDERATION IS THE ENTIRE RS.16.51 CR WHEREAS THE ASSESSEE CLAI MS IT TO BE ONLY 14.01 CR AS REDUCED IN THE COMPROMISE DECREE BY WAY OF ADJUSTMENT. 4.2. THE ASSSSEE OFFERED CAPITAL GAINS FOR SALE OF SHARES IN ASST YEAR 2010-11 ON THE BASIS OF TRANSFER OF SHARES THAT HAPPENED PURSUANT TO DECREE AND REVISED MOU DATED 25.5.2009. THE ASSESSEE ALSO OFFERED THE SUMS OF RS. 7 40 90 000/- IN THE REVISED RETURN FOR ASST YEAR 2010- 11 UNDER THE HEAD INCOME FROM OTHER SOURCES BEING THE CASH COMPONENT RECEIVED ON SALE OF SHARES. BUT DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSEE PLEADED BEFORE THE LD AO TO TREAT THE SUMS OF RS. 7 40 90 000/- AS PAR T OF SHARE SALE CONSIDERATION AND ASSESS CAPITAL GAINS ACCORDINGLY. THIS REQUEST WAS REJECT ED BY THE LD AO. THE LD AO ULTIMATELY FRAMED THE ASSESSMENTS FOR THE ASST YEARS 2006-07 A ND 2007-08 BY ADDING THE SUMS OF RS. 10 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 6 00 90 000/- AND RS. 1 40 00 000/- RESPECTIVELY AN D CAPITAL GAINS IN ASST YEAR 2010-11 AS DISCLOSED BY THE ASSESSEE BY TAKING THE CONSIDERATI ON AT RS. 16.51 CRORES AND ASSESSED THE SUMS OF RS. 7 40 90 000/- AS INCOME FROM OTHER SOUR CES FOR THE ASST YEAR 2010-11 AS DISCLOSED IN THE REVISED RETURN BY THE ASSESSEE. 4.3. THE LD CITA IN HIS ORDER APPRECIATED THE CONTE NTIONS OF THE ASSESSEE AND DELETED THE ADDITIONS OF RS. 6 00 90 000/- AND RS. 1 40 00 000/ - MADE BY THE LD AO IN ASST YEARS 2006- 07 AND 2007-08 AND ALSO HELD THAT THE SAME ARE TO B E TREATED ONLY AS ADVANCE RECEIVED BY THE ASSESSEE AGAINST SHARE SALE CONSIDERATION AND FURTH ER HELD THAT CAPITAL GAINS AROSE ONLY IN ASST YEAR 2010-11 AS PER THE COMPROMISE DECREE ENTE RED INTO AND REVISED MOU DATED 25.5.2009. 4.4. IT IS THE ARGUMENT OF THE LEARNED DR THAT THE PARTIES INTENDED THE TRANSFER OF A PARTICULAR NUMBER OF SHARES OF A PARTICULAR COMPANY FOR A PART ICULAR CONSIDERATION AND ULTIMATELY THE SAME THING HAPPENED EVEN AFTER THE COURT RECORDING THE COMPROMISE DECREE AS SUCH FOR ALL PRACTICAL PURPOSES WHAT WAS ENFORCED IS ONLY THE M OU DATED 4.8.2005 AS SUCH THE DATE OF CONTRACT FOR SALE IS 4.8.2005 ONLY. HE FURTHER ARGU ED THAT WHAT IS SPECIFICALLY ENFORCED BY WAY OF COMPROMISE DECREE IS THE MOU DATED 04.08.200 5 AND ALL THE TERMS OF COMPROMISE REACHED BY THE PARTIES ARE NOTHING BUT REAFFIRMATIO N OF THE TERMS OF MOU DATED 04.08.2005. IN RESPECT OF CONSIDERATION HIS ARGUMENT IS THAT AL L ALONG THE SALE CONSIDERATION REMAINED SAME BECAUSE OF THE INTERVENING LITIGATION THE TR ANSFEROR WAS FASTENED WITH THE LIABILITY TO PAY COMPENSATION TO THE TRANSFEREE AT RS.2 50 00 00 0/- AND IT IS ONLY BY WAY OF ADJUSTMENT THE AMOUNT PAYABLE HAD COME DOWN BUT AS A MATTER OF FACT THERE WAS NO REDUCTION IN THE SALE CONSIDERATION. HE SUBMITS THAT THE PARTIES NE VER INTENDED TO REDUCE THE SALE PRICE OF THE SHARES BUT THERE IS AN AGREEMENT TO PAY COMPENSATIO N OF A SUM OF RS.2.5 CR. WHICH LIABILITY DOES NOT ARISE WITH REFERENCE TO THE PRICE OF SHARE S AS STATED IN THE MOU BUT AROSE DUE TO THE INTERVENING LITIGATION. SINCE THE TRANSFER COU LD NOT HAVE MATERIALIZED IN THE ABSENCE OF PAYMENT OF SUCH COMPENSATION IT FORMS PART FOR SALE CONSIDERATION. ACCORDING TO HIM SALE CONSIDERATION REMAINED THE SAME ALTHOUGH THE TRANSA CTION BUT THE LIABILITY OF THE TRANSFEROR FOR COMPENSATION ONLY INTERVENED. HE THEREFORE A RGUED THAT THE DATE OF MOU IS THE DATE OF CONTRACT FOR SALE AND THE SALE CONSIDERATION IS THE ENTIRE AMOUNT OF RS.16 51 00 000/-. ON THIS PREMISE LD. COUNSEL ARGUED THAT THE SALE CONS IDERATION OF SHARES OF THE ASSESSEE IS RS.16.51 CR. AND FOLLOWING THE CBDT CIRCULAR 704 DA TED 28.04.1995 SUCH DATE (I.E THE DATE 11 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA OF MOU DT 4.8.2005) WILL BE TREATED AS THE DATE OF TRANSFER SINCE IT IS ONLY PURSUANT TO THE TERMS OF THE MOU THE DELIVERY TOOK PLACE. HE PLAC ED RELIANCE ON A DECISION REPORTED IN AJAY GULIYA VS. ASSISTANT COMMISSIONER OF INCOME TA X (2012) 209 TAXMAN 0295 (DEL) WHEREIN IT WAS OBSERVED THAT - THE REASONING OF THE TRIBUNAL IS PREMISED UPON THE FACT THAT CAPITAL ASSETS WERE TRANSFERRED ON A PARTICULAR DATE THE ASSESSEE PASSE D ON THE EXECUTION OF THE AGREEMENT. THERE IS NO MATERIAL ON THE RECORD OR IN THE AGREEMENT SUGGESTING THAT EVEN IF THE ENTIRE CONSIDERATION OR PART IS NOT PAI D THE TITLE TO THE SHARES WILL REVERT TO THE SELLER. IN THAT SENSE THE CONTROLLING EXPRESSIO N OF 'TRANSFER' IN THE PRESENT CASE IS CONCLUSIVE AS TO THE TRUE NATURE OF THE TRANSACTION . THE FACT THAT THE APPELLANT ASSESSEE ADOPTED A MECHANISM IN THE AGREEMENT THAT THE TRANSFEREE WOULD DEFER THE PAYMENTS WOULD NOT IN ANY MANNER DETRACT FROM THE C HARGEABILITY WHEN THE SHARES WERE SOLD. 4.5. IT IS THE ARGUMENT OF THE LD. AR THAT THE MOU DATED 04.08.2005 CAME TO AN END WITH RESCINDING THEREOF BY THE PARTIES WITH MUTUAL CONSE NT AND ALSO WHEN IT WAS SUBSTITUTED BY A DE NOVO CONTRACT BY WAY OF COMPROMISE DECREE. HE F URTHER SUBMITTED THAT AS PER THE AGREEMENT IN COMPROMISE DECREE RS.2.5 CR. WAS ADJU STABLE AGAINST THE BALANCE SALE CONSIDERATION OF RS.2.591 CR. AS SUCH TO THE EXTEN T OF RS.2.5 CR. THE SALE CONSIDERATION WAS REDUCED AND THIS AMOUNT ALONE HAS TO BE RECKONED AN D IN THE YEAR OF COMPROMISE DECREE. RELIANCE IS PLACED ON A DECISION REPORTED IN COMMISSIONER OF WEALTH TAX VS. BABULAL JATIA (DECD.)137 ITR 540 (CAL) WHEN SHARES IN THE JOINT STOCK COMPANY WERE THE SUB JECT-MATTER OF TRANSFER THE PROVISIONS OF THE TRANSFER OF PROPERTY ACT WERE NO T CONCLUSIVE AND IT SHOULD BE SEEN WHETHER THERE WAS TRANSFER IN ACCORDANCE WITH THE P ROVISIONS OF COMPANIES ACT AND THE TRANSFER OF THE INTEREST IN THE SHARES FROM THE TRANSFEROR TO THE TRANSFEREE WAS INDEPENDENT OF THE REQUIREMENT OF ITS REGISTRATION FOR THE PURPOSES OF THE COMPANIES ACT. FURTHER RELIANCE WAS PLACED ON A DECISION IN THE CA SE OF CIT VS. BHASKAR MITTER REPORTED IN (1994) 73 TAXMAN 437 (CAL) AT PARA 8 AT P. 442 REFERRED IN MAYNAK PODDAR (HUF) VS. WEALTH TAX OFFICER (2003) 262 ITR 0633. IN THIS DECISION THIS COURT OBSERVED : '....... AN ASSESSEE IS LIABLE TO PAY TAX ONLY UPON SUCH INCOME AS CAN BE IN LAW INCLUDED IN HIS TOTAL INCOME AND WHICH CAN HE LAWFU LLY ASSESSED UNDER THE ACT. THE LAW EMPOWERS THE ITO TO ASSESS THE INCOME OF AN ASS ESSEE ACCORDING TO LAW AND DETERMINE THE TAX PAYABLE THEREON. IN DOING SO HE CANNOT ASSESS AN ASSESSEE ON AN AMOUNT WHICH IS NOT TAXABLE IN LAW EVEN IF THE SA ME IS SHOWN BY AN ASSESSEE. THERE IS NO ESTOPPEL BY CONDUCT AGAINST LAW NOR IS THERE ANY WAIVER OF THE LEGAL RIGHT AS 12 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA MUCH AS THE LEGAL LIABILITY TO BE ASSESSED OTHERWIS E THAN ACCORDING TO THE MANDATE OF THE LAW (SIC). IT IS ALWAYS OPEN TO AN ASSESSEE TO TAKE THE PLEA THAT THE FIGURE THOUGH SHOWN IN HIS RETURN OF TOTAL INCOME IS NOT TAXABLE IN LAW. ........' 4.6. THE LD. AR IN HIS REJOINDER DREW OUR ATTENTION TO CIRCULAR RELIED UPON BY THE LD AO WHICH IS PLACED AT PAGE 257 OF PAPER BOOK NO. 2 AND POINTED OUT THAT EVEN AS PER THE BOARDS CIRCULAR TAXABILITY OF SHARES ARISE ONLY I N THE YEAR OF TRANSFER OF SHARE CERTIFICATES. THE LD AR TOOK US TO PG 48 OF PB NO. 2 WHICH IS THE MOU DT. 4.8.2005 AND IN THE CONSIDERATION PART OF SUCH MOU AT CLAUSE 5 IT HAS BEEN CATEGORICALLY MENTIONED THAT SHARE TRANSFER DEED WERE TO BE DEPOSITED WITH MR. B. K. J AIN (ADVOCATE) IN TRUST AND WERE TRANSFERRED TO TRANSFEREE (I.E. VIVEK KATHOTIA) ONL Y ON FULL AND FINAL PAYMENT OF CONSIDERATION. THE LD AR FURTHER TOOK US TO THE LET TER WRITTEN BY THE ASSESSEE TO THE SOLICITOR MR. B. K. JAIN (PAPER BOOK NO.2 PAGE 48) WHICH SHOW S THAT THE SOLICITOR WAS HOLDING SUCH SHARE CERTIFICATES ONLY IN TRUST IN TERMS OF THE MO U DT. 4.8.2005 AND THE SHARES WERE NEVER TRANSFERRED TO MR. VIVEK KATHOTIA AND/ OR HIS ASSIG NEES/ ASSOCIATES AS MENTIONED IN MOU. THE LD AR FURTHER TOOK US TO ROC RETURNS FOR ASST Y EARS 2006-07 & 2007-08 AS WELL AS FOR ASST YEAR 2010-11 WHICH ARE PLACED AT PAGES 151 TO 245 OF THE PAPER BOOK NO.2 AND CONTENDED THAT SINCE THE SHARE CERTIFICATES HAVE BE EN TRANSFERRED BY THE ASSESSEE AND RECORDED IN THE FINANCIAL YEAR 2009-10 RELEVANT TO ASST YEAR 2010-11 THE FACT SO CONTENDED BY THE LD DR IS NOT CORRECT AND IN TERMS OF THE CIRCULAR NO. 204 ITSELF THE TRANSFER HAD HAPPENED ONLY IN FINANCIAL YEAR 2009-10 RELEVAN T TO ASST YEAR 2010-11. THE LD AR FURTHER CONTENDED THAT THE VALUE OF CONSIDERATION A T RS. 14 01 00 000/- IS IN TERMS OF DIRECTION OF THE COURT ONLY AND ACCORDINGLY HAS BEE N CONSIDERED BY THE LD CITA AT RS. 14 01 00 000/- ONLY. THE LD AR TOOK US TO PAGE 134 ALONG WITH PAGE 136-137 OF PAPER BOOK NO.2 WHICH IS PART OF COMPROMISE DECREE GIVEN BY BA RASAT COURT AND AS SUCH THIS IS A FACT EMANATING FROM THE RECORDS ONLY. THE LD AR FURTHER CONTENDED THAT SINCE THE SAME IS TAXABLE AS CAPITAL GAIN ONLY THE LD CITA IS RIGHT IN TREATI NG THE SAME AS ASSESSABLE IN ASST YEAR 2010-11 IN THE HEAD CAPITAL GAIN AND NOT AS INCO ME FROM OTHER SOURCE SHOWN BY THE ASSESSEE IN SUCH YEAR. 4.7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK CONTAINING ALL THE RELEVAN T DOCUMENTS WITH REGARD TO THIS ADDITION. 13 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA IT IS NOT IN DISPUTE THAT THERE WAS A MOU BETWEEN T HE PARTIES. CONSIDERATION WAS ASCERTAINED AND PART IS PAYABLE IN INSTALLMENTS. ONE OF THE TER MS OF MOU IS THAT THE TRANSFEROR SHALL BE RESPONSIBLE TO GET BUILDING PLANS WHICH SHALL BE P REPARED BY THE TRANSFEREE SANCTIONED FROM THE CONCERNED AUTHORITIES AND ALSO OBTAIN ALL OTHER PERMISSIONS WHICH SHALL INCLUDE CLEARANCE FROM THE DEPARTMENTS OF FIRE AIRPORT AUTHORITY PO LLUTION CONTROL BOARD WATER AND SEWERAGE ETC AS MAY BE ESSENTIAL AND NECESSARY TO E NABLE TO TRANSFEREE TO CONSTRUCT AND COMPLETE THE BUILDING ON THE LAND WITHOUT ANY PROBL EM. CONSIDERATION AMOUNT TO A TUNE OF RS. 13 26 00 000/- WAS PAYABLE BY NOVEMBER 2005 AN D A BALANCE CONSIDERATION OF RS.3 25 00 000/- HAS TO BE PAID ON RECEIVING THE SA NCTION PLAN TOGETHER WITH ALL OTHER ESSENTIAL CLEARANCES FROM ALL THE CONCERNED DEPARTM ENTS AS ARE REQUIRED AND RECEIVING ALL ORIGINAL DOCUMENTS PAPERS ACCOUNT BOOKS STATUTOR Y REGISTERS ETC. 4.7.1. IRRESPECTIVE OF THE FACT OF PAYMENT AND RECE IPT OF THE AMOUNTS AND APART FROM READINESS AND WILLINGNESS OF THE PARTIES PERFORMAN CE OF THE CONTRACT BY EITHER OF THE PARTIES IS DEPENDANT ON THE PERMISSIONS AND SANCTIONS TO BE GRANTED BY THIRD PARTIES LIKE DEPARTMENTS OF FIRE AIRPORT AUTHORITY POLLUTION C ONTROL BOARD WATER AND SEWERAGE ETC AND TILL THE PERMISSIONS ARE GRANTED NEITHER OF TH E PARTIES WILL BE IN A POSITION TO PERFORM OR DEMAND PERFORMANCE OF CONTRACT FROM OTHER PARTY. BY WAY OF STIPULATION IN THE MOU BY WAY OF CLAUSE 13 THEREOF VIZ IF THE TRANSFEROR FA ILS TO GET PLAN SANCTIONED THEN THE TRANSFEROR SHALL REFUND THE ENTIRE AMOUNT RECEIVED FROM TRANSFEREE WITHIN ONE MONTH THE PARTIES ADOPTED A MECHANISM IN THE MOU THAT TILL TH E TRANSFEROR GETS THE REQUIRED PERMISSIONS AND CLEARANCES THE AMOUNTS PAID BY THE TRANSFEREE WOULD REMAIN AS ADVANCE ONLY AND IT IS ONLY ON THE ACCOMPLISHMENT OF THIS PRE REQUISITE CONDITION FURTHER STEPS WOULD BE TAKEN. THIS INTENTION IS VERY CLEAR FROM T HE MOU ITSELF. 4.7.2. IT IS NOT IN DISPUTE THAT FOR ONE REASON OR THE OTHER PERMISSIONS WERE NOT GRANTED BY THE AUTHORITIES AND THERE WAS LITIGATION. BY THE DA TE OF FILING OF THE TITLE SUIT NO 222/2007 BY THE TRANSFEREE SEEKING SPECIFIC PERFORMANCE TRANSF EREE CLAIMS TO HAVE PAID A SUM OF RS. 13 91 90 000/- FROM TIME TO TIME AND ONLY A SUM OF RS.2 59 10 000/- WAS DUE AND AS SUCH THE TRANSFEREE DEMANDED THE DELIVERY OF SHARES FOLL OWING BY FILING OF SUCH SUIT. IT IS ONLY BY WAY OF SETTLEMENT DEED PURSUANT TO WHICH COMPROMIS E DECREE WAS PASSED THE TERM RELATING TO OBTAINING THE PERMISSIONS WAS REMOVED AND THE PA RTIES AT THEIR READINESS AND WILLINGNESS COULD SEEK PERFORMANCE. FURTHER ON A PERUSAL OF THE ANNUAL RETURNS OF GRAPHITECH INDIA LTD 14 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA FILED WITH THE REGISTRAR OF COMPANIES FOR ANNUAL GE NERAL MEETING HELD ON 30.9.2005 30.9.2006 30.9.2007 AND 30.9.2008 PRODUCED BY THE ASSESSEE THE LEARNED CIT(A) FOUND THAT THE SHARES IN QUESTION CONTINUED IN THE NAME O F THE ASSESSEE OR THEIR ALLIED COMPANIES WHEREAS IN THE ANNUAL RETURNS FOR THE AGM HELD ON 3 0.9.2009 THOSE APPEAR TO HAVE BEEN TRANSFERRED TO THE NAME OF THE PURCHASER AND SUCH T RANSFER WAS DULY RECORDED IN THE BOOKS OF GRAPHITECH INDIA LTD. SUGGESTING THAT TILL THE CON DITION OF OBTAINING THE PERMISSIONS AND CLEARANCES WAS EITHER FULFILLED OR REMOVED THE PAR TIES DID NOT CONSIDER IT FIT TO PROCEED WITH THE MATTER. 4.7.3. THE QUESTION IN THESE CIRCUMSTANCES IS THAT WHETHER THE PARTIES ARE IN A POSITION TO TREAT THE AMOUNT RECEIVED PRIOR TO OBTAINING ALL PE RMISSIONS AND CLEARANCES FROM THE DEPARTMENTS OF FIRE AIRPORT AUTHORITY POLLUTION C ONTROL BOARD WATER AND SEWERAGE ETC. BECAUSE OF THE STIPULATION AS TO THE ANNULMENT OF T HE UNDERSTANDING AND REFUND OF THE AMOUNTS RECEIVED TILL SUCH DATE WITHIN ONE MONTH TH EREAFTER IT WAS NOT POSSIBLE FOR THE ASSESSEE TO TREAT SUCH AMOUNT AS PART FOR SALE CONS IDERATION BECAUSE BOTH THE PARTIES REASONABLY FORESAW THE CONTINGENT OF NON OBTAINABIL ITY OF THE PERMISSIONS AND CLEARANCES INASMUCH AS THEY HAVE STIPULATED IN THE MOU THAT IN SUCH AN EVENT THE AMOUNTS RECEIVED BY THE ASSESSEE ARE REFUNDABLE WITHIN ONE MONTH. CLAU SE 13 OF THE MOU SUGGESTS THAT EVEN IF THE ENTIRE CONSIDERATION IS PAID AND SHARE CERTIFI CATES WITH TRANSFER DEEDS ARE DELIVERED THE TITLE TO THE SHARES WILL NOT PASS TO THE SELLER UN LESS THE TRANSFEROR OBTAINS THE REQUISITE PERMISSIONS AND CLEARANCES. IN THAT SENSE THE CONTR OLLING EXPRESSION OF 'TRANSFER' IN THE PRESENT CASE IS NON CONCLUSIVE AS TO THE AGREEMENT FOR SALE OR SALE. THEREFORE UNTIL PERMISSIONS AND CLEARANCES THE TERMS OF MOU WERE OB TAINED IT CANNOT BE SAID THAT TERMS AND CONDITIONS REQUIRED FOR CONTRACT FOR SALE UNDER THE CONTRACT FOR SALE ARE CRYSTALLISED NOR IS THERE IS ANY POSSIBILITY OF ASSESSEE TREATING THE A MOUNTS RECEIVED IN THIS REGARD AS PART FOR SALE CONSIDERATION. 4.7.4. CIRCULAR NO. 704 DATED 28.04.1995 WITH REFER ENCE TO SECTION 2(42A) SAYS THAT IN CASES OF TRANSACTIONS TAKING PLACE DIRECTLY BETWEEN THE P ARTIES AND NOT THROUGH STOCK EXCHANGES THE DATE OF CONTRACT FOR SALE AS DECLARED BY THE PA RTIES SHALL BE TREATED AS THE DATE OF TRANSFER PROVIDED IT IS FOLLOWED UP BY ACTUAL DELIVERY OF SH ARES AND THE TRANSFER DEEDS. IN THIS CASE ACCORDING TO THE ASSESSEE DATE OF CONTRACT FOR SAL E IS THE DATE OF COMPROMISE AND COMPROMISE DECREE I.E 25.5.2009. FOR THE REASONS SET FORTH IN THE PRECEDING PARAGRAPHS 15 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA WE FIND THAT THE DATE OF MOU CANNOT BE TAKEN AS THE DATE OF CONTRACT FOR SALE BECAUSE UNLESS AND UNTIL THE CONDITION IN CL 13 IS FULFILLED THE U NDERSTANDING DOES NOT ASSUME THE CHARACTER OF AGREEMENT FOR SALE AND IT IS ONLY ON THAT EVENT THE AMOUNT BECOMES THE PART CONSIDERATION. TILL SUCH TIME IT IS ONLY AN ADVANC E AMOUNT ONLY NOT LIABLE FOR TAX UNDER THE HEAD OF CAPITAL GAINS. 4.7.5. NEXT QUESTION THAT ARISES IS AS TO WHAT EXAC TLY THE SALE CONSIDERATION WAS WHETHER IT WAS RS.16 51 00 000/- AS CONTEMPLATED IN THE MOU OR RS.14 01 00 000/- AS ADJUSTED IN CL 12 (A) READ WITH CL 11 OF THE TERMS OF SETTLEMENT R EACHED BY PARTIES AND TAKEN COGNIZANCE BY THE COURT VIDE COMPROMISE DECREE IN TS NO 222 OF 2007. WE HAVE CAREFULLY GONE THROUGH THE MOU DATED 4.8.2005 SUBSEQUENT COURT PR OCEEDINGS INCLUDING THE PLAINTS TERMS OF SETTLEMENT AND COMPROMISE DECREE. IN MOU IT WAS MENTIONED AS 16.51 CRS. SO ALSO MENTIONED IN THE PLAINT IN TS 222 OF 2007. IN THE PLAINT OF TS 222/2007 THE TRANSFEREE VIDE PARAGRAPH 14 ALLEGED THAT THE SALE CONSIDERATION WA S RS. 16 51 00 000/-. IN PARA 9(A) THEY HAVE STATED THAT THEY PAID FROM TIME TO TIME A SUM OF RS. 13 91 90 000/- AND VIDE PARA 17 STATED THAT ONLY A SUM OF RS.2 59 10 000/- WAS DUE. THIS FACTUAL POSITION WAS NOT DISPUTED BY THE PARTIES IN THE TERMS OF SETTLEMENT AND VIDE PARA 5 THEY AGREED THAT LET THERE BE A DECREE DIRECTING THE TRANSFEREE TO PAY A SUM OF RS. 2 59 10 000/- TOWARDS PAYMENT OF THE BALANCE PURCHASE CONSIDERATION OF THE SHARES AGREED TO BE TRANSFERRED TO THE TRANSFEREE UNDER THE MOU DATED 4.8.2005. HOWEVER VIDE PARA 11 OF T HE TERMS SETTLEMENT PARTIES AGREED FOR A DECREE AGAINST THE TRANSFEROR FOR A SUM OF RS .2 50 00 000/- PAYABLE TO THE TRANSFEREE TOWARDS COST OF LITIGATION COMPENSATION ETC. VID E PARA 12(A) OF THE SAID SETTLEMENT THE PARTIES AGREED TO ADJUST THE AMOUNTS AND THE TRANSF EREE WILL GIVE RS.9 10 000/- BY WAY OF CHEQUE. 4.7.6. NOWHERE IN THE PAPERS COULD WE FIND THAT TH E PARTIES INTENDED TO REDUCE THE SALE CONSIDERATION FROM RS. 16.51 CR. SO ALSO WE DID NO T FIND ANYWHERE EITHER FROM THE TERMS OF SETTLEMENT OR COMPROMISE PETITION OR THE TERMS O F THE DECREE OF COMPROMISE. WHATEVER THAT WAS MENTIONED IN MOU DATED 4.8.2005 REMAINED T HROUGHOUT AS SALE CONSIDERATION FOR THE SHARES. MERE ADJUSTMENT BETWEEN THE PARTIES FOR ADJUSTMENT OF THE MUTUAL PAYMENTS OR SET OFF THE SMALLER AMOUNT PAYABLE BY THE TRANSFERO R AGAINST THE LARGER AMOUNT PAYABLE BY THE TRANSFEREE DOES IPSO FACTO CANNOT BE SAID THAT THE AMOUNT AFTER SUCH ADJUSTMENT ALONE IS THE SALE CONSIDERATION. AT BEST THE AMOUNT OF RS. 2.5 CR PAID BY THE TRANSFEROR TO THE 16 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA TRANSFEREE TOWARDS COSTS COMPENSATION ETC COULD BE AN EXPENDITURE ASSOCIATED WITH THE SALE OF THE SHARES AND ACCORDINGLY COULD BE CONSTRUED AS EXPENSES ON TRANSFER WHILE COMPUTING CAPITAL GAINS. 4.7.7. FOR THE FOREGOING DISCUSSION WE HOLD THAT W HEN THE PARTIES ADOPT A MECHANISM IN THE AGREEMENT FOR SALE ITSELF THAT IF A SPECIFIED CONDI TION IS NOT FULFILLED THE AMOUNTS PAID SHALL BE REFUNDED AND THE AGREEMENT SHALL BE ABANDONED A ND IT IS ONLY ON THE ACCOMPLISHMENT OF SUCH CONDITION ANY FURTHER STEPS WOULD BE TAKEN I N SUCH SITUATION THE CONTROLLING EXPRESSION OF 'TRANSFER' IS NON CONCLUSIVE AS TO TH E TRUE NATURE OF THE TRANSACTION TILL THE CONDITION IS FULFILLED AND THEN THE DATE OF FULFILL MENT OF SUCH CONDITION SHALL BE TAKEN AS DATE OF CONTRACT FOR SALE WITHIN THE MEANING OF CIRCULA R NO. 704 DATED 28.04.1995 WITH REFERENCE TO SECTION 2(42A) AND THE AMOUNTS PAID BY THE TRANS FEREE TILL THE FULFILLMENT OF SUCH CONDITION WOULD REMAIN AS ADVANCE ONLY BUT NOT AS PART FOR SALE CONSIDERATION FOR THE PURPOSE OF RECKONING THE CAPITAL GAINS. FURTHER I N THE ABSENCE OF ANY EXPRESS CONTRACT BETWEEN THE PARTIES ANY LIABILITY OF THE PARTIES I N THE FORM OF COSTS ETC DUE TO SOME INTERVENING CIRCUMSTANCES WOULD NOT IN ANY MANNER DETRACT FROM THE CHARGEABILITY OF TOTAL SALE CONSIDERATION. AT BEST THOSE COSTS WOULD BE E XPENSES RELATING TO THE SALE OR PURCHASE AS THE CASE MAY BE WHICH IN ANY CASE WOULD BE ELIGIB LE FOR DEDUCTION WHILE COMPUTING CAPITAL GAINS. 4.7.8. AS REGARDS THE HANDING OVER OF THE SHARE SCR IPTS TO THE SOLICITOR MR. B. K. JAIN IT IS SEEN THAT IT WAS NOT ACCOMPANIED WITH THE TRANSFER DEEDS AND INDEED THE TRANSFER DEEDS HAVE BEEN EXECUTED ONLY IN MAY 2009 WHEN THE DECREE HAS BEEN PASSED AND THE EFFECT OF WHICH HAS BEEN OBSERVED IN THE ANNUAL RETURNS FOR 2009 WH EREIN SUCH TRANSFER IS DULY REFLECTED. A CAREFUL READING OF THE MOU ALONG WITH COMPROMISE DE CREE AND EVEN CIRCULAR NO. 704 DT. 7.8.1995 IT REVEALS THE FACT THAT THE ASSESSEE HAS TRANSFERRED THE SHARES OF GRAPHITECH INDIA LTD. IN FAVOUR OF SRI VIVEK KATHOTIA ONLY IN FINAN CIAL YEAR 2009-10 RELEVANT TO ASST YEAR 2010-11. WE FIND IN THE AFORESAID FACTUAL MATRIX IT IS CLEAR THAT THE SHARE SCRIPTS WERE TRANSFERRED IN ASST YEAR 2010-11 AND HENCE ACCRUAL OF GAIN IF ANY HAS HAPPENED ONLY IN ASST YEAR 2010-11 AS PER SEC 45(1) OF THE ACT AND S UCH INSTRUMENT OF TRANSFER HAVING BEEN EXECUTED IN MAY 2009 TRANSFER IS EFFECTED ONLY IN MAY 2009. HENCE THE ENTIRE GAIN ARISING ON SALE OF TRANSFER (INCLUDING THE CASH COM PONENT) OF RS. 6 00 90 000/- IN ASST YEAR 17 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 2006-07 AND RS. 1 40 00 000/- IN ASST YEAR 2007-08 HAS TO BE ASSESSED IN ASST YEAR 2010- 11 AS PART OF THE SALE CONSIDERATION AND AS CAPITA L GAIN ONLY. THE LD DR ARGUED THAT THE ASSESSEE HAD VOLUNTARILY DISCLOSED A SUM OF RS. 7 4 0 90 000/- AS HIS INCOME FROM OTHER SOURCES IN THE RETURN FILED FOR ASST YEAR 2010-11. BUT DURING THE COURSE OF ASSESSMENT PROCEEDINGS HE REQUESTED TO TREAT THE SAME AS PART OF SHARE SALE CONSIDERATION AND BE PART OF COMPUTATION OF INCOME UNDER CAPITAL GAINS. IN THIS REGARD WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD RECEIVED THE CASH COMPONENT O F THE SUBJECT MENTIONED TRANSACTION AMOUNTING TO RS. 7 40 90 000/- AS PER THE MOU DATED 4.8.2005 IN ASST YEARS 2006-07 AND 2007-08 WHICH WAS NOT DISCLOSED BY HIM IN HIS REGU LAR BOOKS OF ACCOUNTS. ON THE FACE OF IT IT MIGHT LOOK UNDISCLOSED RECEIPT. BUT IN THE SEARCH PROCEEDINGS IT SURFACED THAT THE ASSESSEE WAS IN RECEIPT OF THE CASH COMPONENT OF R S. 740.90 LACS ONLY TOWARDS THE SHARE SALE CONSIDERATION THE SAID RECEIPT CANNOT BE TAX ED / TREATED SEPARATELY UNDER ANY OTHER HEAD OTHER THAN CAPITAL GAINS. WE HOLD THAT THE CHARA CTER OF THE RECEIPT DOES NOT CHANGE PURSUANT TO THE SEARCH. INFACT THE SEARCH PROCEEDI NGS HAD RATHER SANCTIFIED THE NATURE AND CHARACTER OF SUCH RECEIPT TO BE PART OF SHARE SALE CONSIDERATION. ACCORDINGLY WE HOLD THAT SINCE IT IS A PART OF THE TRANSACTION PERTAINING TO SALE OF THE SHARES THE CASH COMPONENT OF RS. 7 40 90 000/- CANNOT BE TREATED SEPARATELY AND HAS TO BE TREATED AS CAPITAL GAIN ARISING ON SALE OF SUCH SHARES AND AS SUCH THE CONTENTION OF T HE REVENUE TO TREAT THE SAME AS OTHERWISE CANNOT BE UPHELD IN ANY MANNER EVEN IN ASST YEAR 20 10-11. IN ANY CASE THE SAID RECEIPT CANNOT BE TAXED IN ASST YEARS 2006-07 AND 2007-08 S EPARATELY. 4.7.9. AS DISCUSSED EARLIER TRANSFER HAVING TAKEN PLACE ONLY IN FINANCIAL YEAR 2009-10 RELEVANT TO ASST YEAR 2010-11 WHEN EXECUTED TRANS FER DEEDS ALONG WITH SHARE CERTIFICATES WERE HANDED OVER MR. KATHOTIA AND WHEN TRANSFER PUR SUANT TO ORDER OF COURT WAS COMPLETED THE ENTIRE CAPITAL GAIN IS TAXABLE IN AS ST YEAR 2010-11 ONLY AND CASH COMPONENTS IN THIS REGARD RECEIVED EARLIER CANNOT BE TAXED IN THE ASST YEARS 2006-07 AND 2007-08. 4.7.10. AS A RESULT WE HOLD AS FOLLOWS : ASST YEAR APPEAL NO. GROUND NOS. RESULT 2006-07 34/K/12 1 TO 5 DISMISSED 2007-08 35/K/12 1 TO 5 DISMISSED 2010-11 857/K/14 1 TO 4 DISMISSED HENCE THESE GROUNDS ARE DISPOSED ACCORDINGLY. 18 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 5. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED S SG/1 A.Y 2008-09 : IT(SS) 36/KOL/2012 1. GROUND NO. 2 - THE LD. CIT(A) HAS ERRED IN TREATING THE ADDITIO N OF UNDISCLOSED RECEIPT OF RS. 3 03 65 126/- AS PER SEIZED DOCUMENT SSG/1 AS UNEXPLAINED EXPENDITURE. 2. GROUND NO. 3 - THE LD. CIT(A) HAS FURTHER ERRED IN DIRECTING T HE THE A.O. TO CONSIDER THE UNACCOUNTED RECEIPT OF RS. 3 03 65 12 6/- AS UNEXPLAINED EXPENDITURE IN THE CASH FLOW STATEMENT. 3. GROUND NO. 4 - THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. T O CONSIDER THE RECEIPT OF CUT-OFF MONEY OF RS. 74 27 109/- AS PER SEIZED DOCUMENT SSG/1 AS PART OF CASH FLOW STATEMENT. C.O. 147/KOL/2012 GROUND NO.5 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING TBE ACTION OF THE AO IN TREATING RS.74 27 109/- & RS.3 03 65 126/- AS UNDISCLOSED RECEIPTS OF TBE APPELLANT ON THE BASIS OF ALLEGED DOCUMENT SSG/1 AND SUCH ACTION IS WITHOUT APPRECIA TING THE FACT THAT SUCH AMOUNTS AS MENTIONED AND AS ALLEGED TO HAVE BEEN FOUND FROM THE SEIZED DOCUMENT WERE ONLY ESTIMATE OF THE EXPENSES AND THE ACTUAL EXPENSE WER E ALREADY RECORDED IN THE BOOKS OF ACCOUNT. THE LD. CLT(A) FAILED TO APPRECIATE THE FACT THAT THERE WAS NO MATERIAL TO JUSTIFY THE AO'S ACTION EXCEPT MERE ASSUMPTION AND WITHOUT ANY COGENT FINDING EITHER DURING THE ASSESSMENT PROCEEDINGS OR APPELLATE PR OCEEDINGS AND NO MATERIAL HAVING BEEN BROUGHT ON RECORD BY THE REVENUE TO JUSTIFY THE ACTION IN TREATING THE SUM AS UNDISCLOSED RECEIPT THE ACTION OF LD. CIT( A) IS WHOLLY UNJUSTIFIED. HENCE THE ACTION OF THE LD CIT(A) IN CONFIRMING THE ACTION O F THE AO IN SUCH REGARD IS LIABLE TO BE QUASHED/ CANCELLED AND SET ASIDE. THIS GROUND IS WITHOUT PREJUDICE TO THE FACT THAT THE APPELLANT HAS SHOWN THE SAME AS APPLICATION OF THE INCOME OFFERED BY IT AND HENCE IT MAY KINDLY BE CONSIDERED ACCORDINGLY. ADDL. GROUND NO.1 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN TREATING RS. 3 03 65 126/- AS UNEXPLAINED EXPENDITURE AND SUCH ACTION OF THE LD. CIT(A) IS WITHOUT APPRECIATING THE FACTS THAT T HE AMOUNT MENTIONED AND ALLEGED TO HAVE BEEN FOUND FROM THE APPELLANT WERE ONLY EST IMATE OF THE EXPENSES AND THE ACTUAL EXPENSES HAVING BEEN ALREADY RECORDED IN THE BOOKS OF ACCOUNTS THE LD. CIT(A) FAILED TO APPRECIATE THE FACTS THAT THE ALLE GED AMOUNT CANNOT BE UNEXPLAINED EXPENDITURE AND IN VIEW OF THE FACTS AND IN THE CIR CUMSTANCES IN MAY KINDLY BE HELD ACCORDINGLY. ADDL. GROUND NO.2 - FOR THAT IN VIEW OF THE FACTS AND IN THE CIRCUMST ANCES AND WITHOUT PREJUDICE TO THE LEGALITY OF ADDITION SO MA DE/ CONFIRMED BY THE LD. CIT(A) 19 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA TREATING THE SAME AS ALLEGED UNEXPLAINED EXPENDITUR E. A.O. AND THE LD. CIT(A) ERRED IN APPRECIATING THE FACTS THAT THE AMOUNT OF RS. 28 12 000/- PERTAINING TO THE SEIZED DOCUMENT NO. SSG/1 AT PAGE 9 HAS BEEN ADDED BY THE AO TWICE AND AS SUCH SUCH AMOUNT HAVING BEEN CONSIDERED TWICE BY AO THE APPE LLANT'S INCOME HAS BEEN INCREASED BY SUCH AMOUNT WRONGLY AND IN VIEW OF TH E FACTS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. ADDL. GROUND NO.3 -FOR THAT IN VIEW OF THE FACTS AND IN THE CIRCUMSTA NCES AND WITHOUT PREJUDICE TO THE GROUND NO. 1 ABOVE TREATI NG RS. 3 03 65 126/- AS UNEXPLAINED EXPENDITURE THE AO AND LD. CIT(A) FAIL ED TO APPRECIATE THE FACTS THAT THE AMOUNT CONSIDERED ON THE BASIS OF SSG/1 AT PAGE S 29-30 HAS BEEN WRONGLY CONSIDERED AT RS. 1 16 00 000/- WITHOUT CONSIDERING THE FIGURES APPEARING IN THE BOOKS OF ACCOUNT AND ON CONSIDERATION OF SUCH AMOUN T AS APPEARING IN THE BOOKS OF ACCOUNT THE ADDITION IN RESPECT OF THE SUCH SEIZED DOCUMENTS WILL REDUCE TO 'ZERO' AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES I T MAY KINDLY BE HELD ACCORDINGLY. THE ADDITIONAL GROUND RAISED IN ASSESSEES APPEAL I N ITA NO.1419/K/12 HAVE NOT BEEN REPEATED SINCE THE ASSESSEE HAS SUBMITTED THAT SUCH GROUNDS ARE SAME AS THAT IN ADDITIONAL GROUND IN CROSS-OBJECTION AND THEY HAVE BEEN RAISED ONLY AS A PRECAUTION AND ARE HEREBY ADMITTED FOR ADJUDICATION. A.Y 2006-07: IT(SS) -34/KOL/2012 GROUND NO. 7 - LD. CIT(A) IS ERRED IN DIRECTING THE A.O. TO CONSI DER THE UNEXPLAINED EXPENDITURE OF RS. 4 30 272/- ADDED ON THE BASIS OF SEIZED DOCUMENT SSG/1 AGAINST THE UNDISCLOSED CASH RECEIPT SHOWN IN CASH FLOW STA TEMENT AND THAT THE OF LD. CIT(A) IS AGAINST THE PROVISION OF SECTION 69C OF THE INCO ME TAX ACT. C.O NO.145/KOL/2012 GROUND NO. 5 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS . 4 30 272/- AS UNDISCLOSED EXPENDITURE OF THE APPELLANT ON THE BASIS OF THE ALLEGED DOCUMENT SSG - 1 AND SUCH ACTION OF THE LD.. CIT(A) IN CONFIRMING THE ACTION OF THE AO IS WITHOUT APPRECIATING THE FACTS AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE ADDITION SO MADE IS LIABLE TO BE QUASHED / CANCELLED/ SET ASIDE. 5.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO HAS MADE ADDITION OF RS. 74 27 109/- AND RS. 3 03 65 126/- IN A.Y 2008-09 AS UNDISCLOSED REC EIPTS AND THAT OF RS. 4 30 272/- IN A.Y 2006-07 AS UNDISCLOSED EXPENDITURE ON THE BASIS OF THE SEIZED DOCUMENT MARKED SSG/1. THE LD AO HAS NOTED IN THE ASSESSMENT ORDER THAT THE MA TERIAL SEIZED AT SSG/1 CONTAINS DETAIL OF 20 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA EXPENSES INCURRED ON PURCHASE OF LAND BY DIFFERENT COMPANIES OF THE ASSESSEE GROUP. THESE EXPENSES MAINLY COMPRISE VALUE OF THE LAND STAMP D UTY AND REGISTRATION COST MISCELLANEOUS EXPENSES AND LAND DEVELOPMENT COST. THE LD AO EXAMI NED THE SEIZED MATERIAL WITH REFERENCE TO THE RELEVANT BOOKS OF ACCOUNT. IT WAS FOUND THAT EXCEPT FOR THE LAND DEVELOPMENT COST THE REMAINING EXPENSES WERE RECOR DED IN THE REGULAR BOOKS OF ACCOUNT. HOWEVER THE LAND DEVELOPMENT COST AS CONTAINED IN THE SEIZED MATERIAL WAS ONLY PARTLY RECORDED IN THE BOOKS OF ACCOUNT. IT WAS ARGUED BE FORE THE LD AO THAT THE LAND DEVELOPMENT COST @ RS. 5 000/- PER COTTAH AS MENTIONED IN THE S EIZED MATERIAL WAS ONLY AN ESTIMATE WHEREAS THE ACTUAL EXPENSES ARE RECORDED IN THE BOO KS OF ACCOUNT. THE LD AO DID NOT ACCEPT THE EXPLANATION. HE WAS OF THE OPINION THAT WHEN AL L OTHER EXPENSES WERE CORRECTLY RECORDED IN THE SEIZED MATERIAL THE LAND DEVELOPMENT EXPENS ES AS RECORDED THEREIN CANNOT BE TREATED AS ESTIMATE. THE LD AO NOTED THAT THE SEIZED MATERI AL CONTAINED LAND DEVELOPMENT EXPENSES OF RS. 5 07 50 375/- OUT OF WHICH SUM OF RS. 2 03 85 249/- ONLY WAS RECORDED IN THE BOOKS OF ACCOUNT. THE LD AO TREATED THE DIFFERENCE OF RS. 3 03 65 126/- AS UNDISCLOSED RECEIPT OF THE ASSESSEE WHICH WAS ASSESSABLE AS HIS UNDISCLOSE D INCOME IN A.Y 2008-09. THE LD AO ALSO FOUND THAT THE SEIZED MATERIAL SHOWS RECEIPT O F CUT MONEY OF RS. 46 34 960/- AND RS. 27 92 230/- WHICH WAS ASSESSABLE IN THE CASE OF THE ASSESSEE AS HIS UNDISCLOSED INCOME IN ASST YEAR 2008-09. THE LD AO HAS MENTIONED IN THE A SSESSMENT ORDER THAT THE ASSESSEE HAD ALREADY ADMITTED THE CUT MONEY OF RS.45 54 460/- AN D HAS ALSO INCLUDED THE SAME IN HIS STATEMENT OF CASH FLOW. THE LD AO FURTHER NOTED THA T PAGE 54 OF SSG/1 SHOWS UNDISCLOSED EXPENDITURE OF RS. 1 25 000/- ON ACCOUNT OF LEGAL E XPENSES AND THAT OF RS. 3 05 272/- ON ACCOUNT OF LAND DEVELOPMENT COST WHICH WAS ASSESSAB LE AS UNDISCLOSED EXPENDITURE IN ASST YEAR 2006-07. 5.2. ON A PERUSAL OF THE LD AOS ORDER IT IS OBSERV ED AS UNDER :- PAGE 1 TO 30 OF THE SEIZED DOCUMENTS MARKED SSG/1 REFLECT LAND DEVELOPMENT EXPENSES OF RS. 5 07 50 375/- AND CUT MONEY OF RS. 45 55 460/-. SSG/1 PAGE NO. NAME AMOUNT (IN RS) 1 & 2 SALTEE CITIZONE (CONTINUOUS SERIALS 1-66) 37 18 000 /- 3 SALTEE BUILDCON (LAND DEVELOPMENT ACCOUNTED FOR) 3 45 455/- 21 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 4 2 03 030/- 5 PUSKAR NIWAS (LAND DEVELOPMENT COST NOT SHOWN OTH ER EXPENSES SHOWN AS LAND DEVELOPMENT COST) 10 89 578/- 6 SALTEE VALLEY 13 75 590/- 7 SYNDICATE TANKER 80 606/- 8 MUKTI SHELTER 1 90 818/- 9 COZY ENCLAVE (STARTED FROM PAGE 10 AND ENDS IN PA GE 9) 68 25 394/- 10 ANAND NIRMAN (STARTED FROM PAGE 11 (SL . 1-21) E NDS PAGE 10- 22-32) 15 39 878/- 12 PUSKAR INFRASTRUCTURE 42 22 350/- 14 UTKARSH HORTICULTURE 54 09 600/- 15 DARSH ENCLAVE (P) LTD. 9 30 000/- 16 FAST FLOW 80 37 713/- 17 DEBNATH CONSULTANT 18 69 151/- 18 SALTEE PARKS 16 00 000/- 22& 23 KERF CONSTRUCTION (P) LTD. 35 69 939/- 23 & 24 SALTEE VILLAGE (DETAILS STARTS FROM PAGE 23 AND END AT 24) 16 54 485/- 25 ANKIT PLANTATION 22 85 000/- 26 DEWAN EXPORT 26 59 970/- 29 & 30 MARINE PARK (STATEMENT STARTED PAGE 30 AND B/F 26 7 0 967 AND END PAGE 29) 31 43 788/- 5 07 50 375/- 5.2.1. THE CUT MONEY RECEIPT AS PER PAGE 12 OF THE SSG/1 HAD ALREADY BEEN ADMITTED BY THE ASSESSEE AS UNDISCLOSED RECEIPT. 5.2.2. FURTHER THERE WAS ALSO A RECEIPT OF CUT MONE Y OF RS. 27 92 230/- FROM M/S PUSKAR NIWAS AS PER PAGE 5 OF SSG/1. THEREFORE TOTAL CUT MONEY RECEIPT BY THE ASSESSEE WAS RS. 74 27 109/- [RS.46 34 960/- (PAGE-12) + RS 27 92 2 30/- (PAGE 5) OF SSG/1]. PAGE NO. NAME AS PER SEIZED RECORDS AS PER BOOKS DIFFERENCE 1 & 2 SALTEE CITIZONE (CONTINUOUS SERIALS 1- 66) 3 718 000 845 672 2 872 328 3 SALTEE BUILDCON (LAND DEVELOPMENT ACCOUNTED FOR) 345 455 302 987 42 468 4 203 030 - 203 030 5 PUSKAR NIWAS (LAND DEVELOPMENT COST NOT SHOWN OTHER EXPENSES SHOWN AS LAND DEVELOPMENT COST) 1 089 578 2 092 205 (1 002 627) 6 SALTEE VALLEY 1 375 590 280 197 1 095 393 22 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 7 SYNDICATE TANKER 80 606 130 328 (49 722) 8 MUKTI SHELTER 190 818 101 149 89 669 9 COZY ENCLAVE (STARTED FROM PAGE 10 AND ENDS IN PAGE 9) 6 825 394 7 501 331 (672 937) 10 ANAND NIRMAN (STARTED FROM PAGE 11 (SL . 1-21) ENDS PAGE 10-22-32) 1 539 878 456 202 1 083 676 12 PUSKAR INFRASTRUCTURE 4 222 350 2 990 048 1 232 302 14 UTKARSH HORTICULTURE 5 409 600 613 258 4 796 342 15 DARSH ENCLAVE (P) LTD. 930 000 944 300 (14 300) 16 FAST FLOW 8 037 713 - 8 037 713 17 DEBNATH CONSULTANT 1 869 151 363 973 1 505 178 18 SALTEE PARKS 1 600 000 309 726 1 290 274 22& 23 KERF CONSTRUCTION (P) LTD. 3 569 939 377 459 3 192 480 23 & 24 SALTEE VILLAGE (DETAILS STARTS FROM PAGE 23 AND END AT 24) 1 664 485 287 702 1 366 783 25 ANKIT PLANTATION 2 282 030 1 710 462 574 568 26 DEWAN EXPORT 2 659 970 1 078 250 1 581 720 29 & 30 MARINE PARK (STATEMENT STARTED PAGE 30 AND B/F 26 70 967 AND END PAGE 29) 3 143 788 - 3 143 788 50 750 375 20 385 249 30 365 126 THE DIFFERENCE IS TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. THEREFORE THE SUM OF RS. 3 03 65 126/- ON ACCOUNT OF LAND DEVELOPMENT COST RECEIPT AND RS. 74 27 109/- ON ACCOUNT OF CUT MONEY RECEIPT T OTALING TO RS. 3 77 92 236/- IS ADDED AS ASSESSEES UNDISCLOSED INCOME FOR ASST YEAR 2008-09 . IT WAS FURTHER OBSERVED THAT PAGE 54 OF SSG/1 SHOWS SOME UNDISCLOSED EXPENDITURE OF RS. 1 25 000/- AND RS. 3 05 272/- ON ACCOUNT OF LEGAL EXPENSES AND LAND DEVELOPMENT COST S WHICH HAVE BEEN ACCEPTED AS UNDISCLOSED. [UNDISCLOSED INCOME FOR ASST YEAR 2008-09 - RS. 3 77 92 235/-] [UNDISCLOSED EXPENDITURE FOR ASST YEAR 2006-07 - RS . 4 30 272/-] 5.3. THE LD CITA IN HIS ORDER HAD OBSERVED THE FOLL OWING:- I HAVE PERUSED THE ASSESSMENT ORDER WHEREIN THE AO HAS DISCUSSED THE MATERIAL FACT IN DETAIL. I HAVE ALSO PERUSED THE REMAND REPORT OF THE AO WHEREIN HE HAS MERELY REITERATED THE CONTENTIONS AS MADE IN THE ASSESSMEN T ORDER. THOUGH A COPY OF THE WRITTEN SUBMISSION ALONG WITH ENCLOSURES WAS FORWAR DED TO HIM THE AO HAS NOT OFFERED ANY COMMENTS SEPARATELY. I HAVE CONSIDERED THE RELEVANT MATERIAL AS 23 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA AVAILABLE ON RECORD. I HAVE ALSO CONSIDERED THE SUB MISSION MADE ON BEHALF OF THE APPELLANT AND THE REJOINDER TO THE REMAND REPORT. T HE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE APPELLANT HAS ADMITTED TH E RECEIPT OF CUT MONEY OF RS. 45 54 460/- VIDE HIS LETTER DT. 11.11.2010 ALONG WI TH WHICH THE COMPUTATION OF UNDISCLOSED INCOME AS PER ANNEXURE U THE CASH FLO W STATEMENT AS PER ANNEXURE X AND THE EXPLANATION OF SEIZED DOCUMENTS MARKED S SG/1 AS PER ANNEXURE B WAS ALSO FURNISHED. THE AO HAS ALSO MENTIONED THAT THE APPELLANT HAS EXPLAINED AT ANNEXURE B THAT PAGES 1 TO 39 OF SSG/1 WERE STATE MENT OF LAND PURCHASED BY THE GROUP COMPANIES WHICH WAS DULY SHOWN IN THEIR REGUL AR BOOKS OF ACCOUNT. THE AO EXAMINED THE MATERIAL BEFORE HIM AND THEN CONCLUDED THAT THE EXPENSES RECORDED IN THE BOOKS OF ACCOUNT ARE MUCH LESS THAN THOSE MENTI ONED IN THE SEIZED DOCUMENTS. HOWEVER THE AO FOUND THAT THE LAND VALUE STAMP DUT Y AND REGISTRATION FEES AND MISCELLANEOUS EXPENSES WAS DULY RECORDED IN THE BOO KS OF ACCOUNT. THE AO REJECTED THE SUBMISSION OF THE APPELLANT THAT THE LAND DEVEL OPMENT COST AS MENTIONED IN THE SEIZED DOCUMENT WAS MERELY ESTIMATE ON THE GROUND T HAT ALL OTHER EXPENSES WERE TALLYING WITH THE REGULAR BOOKS OF ACCOUNT OF THE G ROUP COMPANIES. THE AO HELD THAT THE LAND DEVELOPMENT COST WAS NOT FULLY RECORDED IN THE BOOKS OF ACCOUNT. THE AO MADE A COMPARATIVE STUDY ON THE BASIS OF THE SEIZED DOCUMENT VIS-A-VIS THE REGULAR BOOKS OF ACCOUNT OF THE GROUP COMPANIES AND THEN MADE ADDITION OF RS. 3 03 65 126/- BEING THE DIFFERENCE IN THE AMOUNTS A S SHOWN IN THE SEIZED DOCUMENTS AND THOSE AS RECORDED IN THE REGULAR BOOKS OF ACCOU NT OF THE GROUP COMPANIES. THE AO FURTHER HELD THAT THE CUT MONEY ALSO WAS NOT REC ORDED IN THE BOOKS OF ACCOUNT. THE AO NOTED THAT THOUGH THE APPELLANT HAS ADMITTED CUT MONEY OF RS. 45 54 460/- ONLY THERE WAS EVIDENCE OF RECEIPT OF CUT MONEY OF RS. 46 34 960/- ON PAGE 12 AND THAT OF RS. 27 92 230/- ON PAGE 5 OF SSG/1. THE AO ALSO OBSERVED THAT THE LAND DEVELOPMENT COST AND THE CUT MONEY HAS ACTUALLY BEE N RECEIVED BY THE APPELLANT AS CHARGES FOR THE SERVICES RENDERED BY HIM. IN VIEW O F THE ABOVE THE AO MADE TOTAL ADDITION OF RS. 3 77 92 235/- (RS. 3 03 65 126/- PL US RS. 74 27 109/-) ON ACCOUNT OF UNDISCLOSED RECEIPTS IN A.Y 2008-09. THE LD. A.R HAS ARGUED THAT THE SEIZED DOCUMENTS WE RE RECOVERED FROM THE CUSTODY AND POSSESSION OF THE COMPANY SALTEE CONSTRUCTION C O. PVT. LTD. AND ALSO THE AO HAS BROUGHT NO MATERIAL OR EVIDENCE ON RECORD TO SHOW T HAT SUCH SEIZED DOCUMENTS WERE IN THE HANDWRITING OF THE APPELLANT OR HIS ACCOUNTA NT. UNDER THE CIRCUMSTANCES NO ADDITION COULD BE MADE IN THE CASE OF THE APPELLANT . THE LD. A.R CONTENDED THAT THE LAND DEVELOPMENT COST AS CONTAINED IN THE SEIZED DO CUMENTS MERELY REPRESENTED ESTIMATES AND THAT THE ACTUAL EXPENSES INCURRED W HICH WAS MUCH LESSER WAS RECORDED IN THE BOOKS OF ACCOUNT. IT WAS ALSO ARGUE D THAT THE LAND DEVELOPMENT COST WAS INCURRED BY THE GROUP COMPANIES WHO WERE THE AC TUAL OWNERS OF THE LAND AND SUCH EXPENDITURE WAS ALSO ACCOUNTED FOR BY THEM IN THEIR REGULAR BOOKS OF ACCOUNT. CONSEQUENTLY THE EXCESS EXPENDITURE IF ANY ON AC COUNT OF LAND DEVELOPMENT COST CANNOT BE TREATED AS UNDISCLOSED EXPENDITURE OF THE APPELLANT AND SO NO ADDITION CAN BE MADE IN HIS CASE. THE AO WAS CONCEPTUALLY WR ONG IN HOLDING THAT THE EXCESS EXPENDITURE ON LAND DEVELOPMENT COST AS RECORDED IN THE SEIZED DOCUMENT WAS THE UNDISCLOSED RECEIPT OF THE APPELLANT. BY NO STRETCH OF IMAGINATION THE EXCESS EXPENDITURE OF RS. 3 03 65 126/- ON ACCOUNT OF LAND DEVELOPMENT EXPENSES CAN BE TREATED AS UNDISCLOSED RECEIPT OF THE APPELLANT. IT WAS ARGUED THAT THE DIFFERENCE OF RS. 3 03 65 126/- CAN AT BEST BE TREATED AS UNDISCL OSED EXPENDITURE OF THE GROUP 24 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA COMPANIES. I FIND MERIT IN THIS ARGUMENT THAT THE D IFFERENCE OF RS. 3 03 65 126/- WHICH REPRESENTS EXCESS EXPENDITURE ON ACCOUNT OF L AND DEVELOPMENT COST CAN ONLY BE TREATED AS UNDISCLOSED EXPENDITURE. THE AO IS CO NCEPTUALLY INCORRECT IN HOLDING THAT SUCH EXPENDITURE WAS THE UNDISCLOSED RECEIPT O F THE APPELLANT. IT WAS ARGUED BEFORE ME THAT SUCH EXPENDITURE CAN BE CONSIDERED O NLY IN THE HANDS OF THE RESPECTIVE COMPANIES HOWEVER AS THE APPELLANT IS IN CONTROL OF THE AFFAIRS OF THE GROUP COMPANIES AND AS THE APPELLANT HAS ALSO ADMITTED TH E RECEIPT OF CUT MONEY ON BEHALF OF THE COMPANIES IT IS TO BE HELD THAT THE EXCESS EXPENDITURE WAS MADE BY HIM ON BEHALF OF SUCH COMPANIES AND CONSEQUENTLY THE UNDIS CLOSED EXPENDITURE WAS ASSESSABLE IN HIS HANDS. AS REGARDS THE RECEIPT OF CUT MONEY THE APPELLANT HAS MAINLY CONTENDED THAT THE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF THE CON FESSIONAL STATEMENT WITHOUT BRINGING ANY CORROBORATIVE MATERIAL ON RECORD TO SH OW THAT SUCH MONEY WAS ACTUALLY RECEIVED BY THE APPELLANT. I DO NOT FIND MERIT IN T HIS ARGUMENT. THE ADMISSION MADE BY THE APPELLANT IS CERTAINLY CORROBORATED BY THE D OCUMENTS SEIZED IN COURSE OF THE SEARCH. THE APPELLANT HAS ALSO INCLUDED THE CUT MON EY OF RS. 45 54 460/- IN HIS STATEMENT AS CASH FLOW. THE APPELLANT IS THEREFORE NOT FAIR OR JUSTIFIED IN DISPUTING THE RECEIPT OF CUT MONEY. SECONDLY ONCE THE APPELLANT HAS HIMSELF ADMITTED THE RECEIPT OF CUT MONEY OF RS. 45 54 460/- HE CANNOT ARGUE THAT SIMILAR CUT MONEY OF RS. 27 92 230/- RECORDED IN THE SAME SEIZED DOCUMENTS S SG/1 DOES NOT BELONG TO HIM. HENCE THE ENTIRE CUT MONEY OF RS.74 27 109/- SHOULD BE TREATED AS CUT MONEY RECEIVED BY THE APPELLANT; AND IS ASSESSABLE IN HI S CASE AS UNDISCLOSED INCOME. HENCE THIS ACTION OF THE AO IN TREATING THE CUT MO NEY OF RS. 74 27 109/- SHOULD BE TREATED AS UNDISCLOSED RECEIPT OF THE APPELLANT IS CONFIRMED. HOWEVER ONCE THE CUT MONEY OF RS. 27 92 230/- IS ASSESSED AS UNDISCLOSED RECEIPT THEN CONSEQUENTIAL EFFECT HAS TO BE GIVEN IN AS MUCH AS SUCH RECEIPT HAS TO B E CONSIDERED AS BEING AVAILABLE FOR USE TOWARDS ANY UNEXPLAINED EXPENDITURE MADE BY THE APPELLANT. I HAVE CONSIDERED THE SUBMISSION MADE ON BEHALF OF THE APPELLANT THAT THE LAND DEVELOPMENT COST WHICH IS MENTIONED ON AN AVERAGE BASIS @ RS 5000/- PER COTTAH IN THE SEIZED DOCUMENT CANNOT BE THE SAME FOR ALL KIN DS OF LAND AND AS SUCH IT SHOULD BE CONSIDERED AS ESTIMATE ONLY. HOWEVER THE APPELLANT ON HIS PART HAS FAILED TO ADDUCE ANY SEPARATE EVIDENCE IN THIS REGARD. IN THIS FACTU AL BACKGROUND I AM OF THE CONSIDERED VIEW THAT THE DIFFERENCE OF RS. 3 03 65 126/- HAS TO BE TREATED UNEXPLAINED EXPENDITURE INCURRED BY THE APPELLANT ON BEHALF OF THE GROUP COMPANIES AND CONSEQUENTLY THE SUM OF RS.3 03 65 126/- IS CONFIRM ED AS UNEXPLAINED EXPENDITURE. SIMILARLY THE ADDITION OF RS. 4 30 272/- IN A.Y 20 06-07 WHICH WAS MADE ON ACCOUNT OF UNDISCLOSED EXPENSES AS CONTAINED ON PAGE 54 OF THE SEIZED DOCUMENT SSG/1 IS ALSO CONFIRMED FOR THE SAME REASON. HOWEVER THE AO IS DIRECTED TO CONSIDER THE RECEIPT OF THE CUT MONEY OF RS. 74 27 109/- ALONG W ITH THE CASH RECEIVED FROM THE TRANSACTION WITH THE FORT GROUP AS PART OF THE CASH FLOW; AND THEN CONSIDER THE NET OF THE UNEXPLAINED EXPENDITURE OF RS. 3 03 65 126/- AN D RS. 4 30 272/- IF ANY FOR THE PURPOSES OF ADDITION. 5.4. THE LD AR ADVANCED THE FOLLOWING ARGUMENTS :- 25 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA (I) AT THE OUTSET THE LD AR CONTENDED THAT THE ASSE SSEE HAD RAISED 3 ADDITIONAL GROUNDS IN THE C.O RAISED BY IT AND 4 ADDITIONAL GROUNDS IN AS SESSEES OWN APPEAL WHICH ALSO MAY KINDLY BE CONSIDERED. THE LD AR FURTHER SUBMITTED T HAT ADDITIONAL GROUND IN C.O & ASSESSEES OWN APPEAL ARE SIMILAR AND HENCE MAY BE CONSIDERED ACCORDINGLY. (II) THE ASSESSEE SUBMITTED THAT THE SUM OF RS. 3 0 3 65 126/- (PAGE 54 OF SSG/1) RS. 74 27 109/- (PAGE 12 & PAGE 5 OF SSG/1) AGGREGATING TO RS.3 77 92 935/- HAS BEEN TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE BY THE LD AO. THE LD AR STATED THAT RS. 74 27 109/- OF ALLEGED CUT MONEY IN ASST YEAR 2008-09 AND RS. 4 30 272/- IN ASST YEAR 2006-07 HAS BEEN ADDED ONLY ON BASIS OF CONFESSIONAL STATEMENT AND NO OTHER EVIDENCE WAS BROUGHT ON RECORD BY LD AO. HOWEVER IT WAS ALSO SUBMITTED THA T THE ASSESSEE HAD CONSIDERED SAME AS UNDISCLOSED INCOME IN ASSESSMENT PROCEEDINGS AS PAR T OF CASH FLOW BEING CASH AVAILABLE FOR UNACCOUNTED EXPENDITURE AS WELL. (III) AS REGARDS LAND DEVELOPMENT COST (LDC) OF RS. 3 03 65 126/- IT WAS STATED THAT THE LDC HAS BEEN INCURRED BY VARIOUS COMPANIES AS MENTIONED IN SUCH DOCUMENT AND HENCE IT HAS TO BE CONSIDERED IN THEIR HANDS ONLY AND WHICH HAVE NO T BEEN EXAMINED AT ANY STAGE. THE ASSESSEE CONTENDED THAT SUCH LDC REPRESENTED ES TIMATED EXPENDITURE TOWARDS DEVELOPMENT OF LAND AT RS. 5 000/- PER COTTAH APPRO XIMATELY IN MOST CASES AND FOR WHICH ATTENTION WAS DRAWN TO PAGES 337 353 370 403 & 4 83 AND SIMILAR OTHER PAGES AT PAPER BOOK NO. 4. THE ASSESSEE CONTENDED THAT AT SOME PLA CES THE ESTIMATE IS LITTLE HIGHER AS WELL SUCH AS PAGES 470 505 528 & 555 OF PAPER BOOK NO. 4. HOWEVER THE SAME IS MERE ESTIMATE OF EXPENDITURE AND CANNOT BE TREATED AS AC TUAL EXPENDITURE IN ANY MANNER. (IV) THE LD AR ALSO CONTENDED THAT SUCH SUM OF RS. 3 03 65 126/- MERELY REPRESENTS EXPENDITURE AND CANNOT BE TREATED AS INCOME SINCE T HE ASSESSEE HAD DONE LAND FILLING FOR SUCH COMPANY WHICH IS CORROBORATED BY THE EXPENSES BOOKED BY RESPECTIVE COMPANIES TO THEIR BOOKS OF ACCOUNT. (V) THE ASSESSEE THEN REFERRED TO ADDITIONAL GROUND NO. 2 OF C.O AND ADDITIONAL GROUND NO.2 OF ASSESSEES APPEAL BEING ADDITION OF RS. 1 1 6 00 000/-. THE LD AR DREW OUR ATTENTION 26 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA TO THE FACT THAT SUCH TRANSACTION PERTAINS TO MARIN E PARK LTD. DETAILS OF WHICH ARE AT PAGE 611 OF THE PAPER BOOK (VOLUME 4). THE LD AR THEN SUBMIT TED THAT THE LAND DEVELOPMENT EXPENSES AS PER BOOKS HAS BEEN CONSIDERED AT NIL BY LD AO WHEREAS THE SAME IS RS. 1 16 56 247/-. AS SUCH THERE COULD NOT BE ANY ADDIT ION ON SUCH ACCOUNT. 5.4.1. THE LD AR THEN REFERRED TO ADDITIONAL GROUND NO.3 OF C.O AND ADDITIONAL GROUND NO.3 OF ASSESSEES APPEAL BEING ADDITION OF RS. 28 12 000/-. THE LD AR DREW OUR ATTENTION TO THE FACT THAT SUCH TRANSACTION PERTAINS TO COZY ENC LAVE (P) LTD. DETAILS OF WHICH ARE AT PAGE 441 OF PAPER BOOK (VOLUME 4). PAGE 9 OF SSG/1 REFLE CTS THAT THE LD AO HAD ADDED THE BROUGHT FORWARD AMOUNT OF LAND DEVELOPMENT EXPENSES RS. 28 12 303/- TWICE AND HENCE THE SAME AMOUNTED TO DOUBLE ADDITION. 5.4.2. AS REGARDS THE LD CITAS ACTION IN ALLOWING THE SET OFF OF THE EXPENSES SO INCURRED BY ASSESSEE AND / OR ITS ASSOCIATES IT WAS SUBMITTED BY LD AR THAT THERE IS NO DISPUTE IN THE FACT THAT ASSESSEE HAD RECEIVED CASH ON ACCOUNT OF TRAN SACTION WITH FORT TO THE TUNE OF RS. 7 40 90 000/- AND ALSO OTHER RECEIPTS WHICH WAS AVA ILABLE WITH ASSESSEE AND THE EXPENSES WERE OUT OF SUCH SUMS ONLY AND HENCE LD CITA WAS F ULLY JUSTIFIED IN ALLOWING SUCH SET OFF. THE LD AR ALSO SUBMITTED THAT ON A PERUSAL OF ASSE SSMENT ORDER ITSELF IT COULD BE OBSERVED THAT LD AO HIMSELF HAD ALLOWED SUCH SET OFF AND NOW THE REVENUE IS DISPUTING SUCH ACTION WHICH AMOUNTS TO DISPUTING ITS OWN EARLIER ACTION A ND WHICH IS NOT PERMISSIBLE AS PER LAW. 5.5. IN RESPONSE TO THIS THE LD DR CONTENDED THAT THE SAID AMOUNT OF RS. 3 03 65 126/- HAS TO BE TREATED AS UNDISCLOSED INCOME AND RELIED HEAVILY ON THE ORDER OF THE LD AO. THE LD DR FURTHER SUBMITTED THAT THE DOCUMENT HAS BEEN ACCEPT ED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF AND THE ASSESSEE HAD ALSO ACCEPTED THE ADMISSION OF CUT MONEY AS UNDISCLOSED RECEIPT. THE LD DR FURTHER CON TENDED THAT THE LAND DEVELOPMENT EXPENSES CANNOT BE CONSTRUED AS MERE ESTIMATE OF EX PENSES IN ANY MANNER AND IT IS THE ACTUAL RECEIPT OF SUCH SUM BY THE ASSESSEE AND HENC E THE SAME HAS TO BE TREATED AS UNDISCLOSED RECEIPT ONLY. 5.6. THE LD AR IN HIS REJOINDER RE-ITERATED THAT S UCH LAND DEVELOPMENT EXPENSES WERE MERELY ESTIMATES OF EXPENDITURE AND THE EXPENDITURE INCURRED SUBSEQUENTLY WAS MUCH LESSER 27 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA AND IN NUMBER OF CASES THE EXPENSES HAD BEEN INCU RRED TILL THE DATE OF SEARCH AND HENCE PARTICULARLY LIKE PAGE 16 OF SSG-1 AND HENCE IT CAN NOT BE CONSTRUED AS UNDISCLOSED INCOME IN ANY MANNER. 5.7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE RELEVANT PAGES OF THE PAPER BOOK AND THE SEIZED DOCUMENTS. THE ISSUE INVOLVED THE AFORESAID MATTER CAN BE SUMMARIZED VIS--VIS TH E SEIZED DOCUMENT AND THE RELEVANT PAGES ARE AS FOLLOWS : SSG/1 PAGE 54 RS. 4 30 272/- PAGE 12 RS.46 34 960/- PAGE 5 RS.27 92 330 /- RS.78 57 562 /- (UNDISCLOSED RECEIPT) PAGES 1 30 RS.3 03 65 126/- (UNDISCLOSED RECEIPT /EXPENSES) AS REGARDS THE SUM OF RS. 27 92 330/- AND RS. 4 30 272/- THE SAME HAS BEEN ACCEPTED BY THE ASSESSEE AT THE ASSESSMENT STAGE AND AS SUCH WE DO NOT FIND MUCH MERIT IN THE MATTER AND SINCE THE NATURE OF RS. 46 34 960/- (COMPRISED IN R S. 46 34 960/- + 27 92 330/- = RS.74 27 290/-) IS SAME I.E. CUT MONEY AND SINCE AS SESSEE HAS ALREADY ACCEPTED RS.27 92 330/ RS.46 34 960/- IS ALSO TREATED AS UN DISCLOSED RECEIPT ONLY AND HENCE THE SAME TREATED ACCORDINGLY AS UNDISCLOSED RECEIPT ONLY. 5.7.1. AS REGARDS THE SUM OF RS. 3 03 65 126/- PERT AINING TO PAGES 1 30 OF SSG-1 WE FIND ASSESSEES CONTENTION IS THAT THE SAME IS AN ESTIMA TE OF EXPENSES. ON A PERUSAL OF THE DOCUMENT WE FIND THAT THERE IS A MUCH VARIATION O F SUCH SUMS AS REFLECTED IN SEIZED DOCUMENTS AND SUCH SUM IS NOT MERELY RS. 5 000/- PE R COTTAH. THE ASSESSEES CONTENTION IN SUCH SEIZED DOCUMENTS PAGES 1-30 OF SSG/1 CANNOT BE ACCEPTED. HOWEVER THE LD AR HAS SUCCESSFULLY POINTED OUT THAT IN SOME DOCUMENTS SUC H AMOUNT HAS BEEN MENTIONED WHEREAS NOTHING HAS MENTIONED IN THE BOOKS OF ACCOUNT AND H ENCE IT HAS TO BE NECESSARILY FOLLOWED THAT SUCH SUMS ARE EXPENSES INCURRED BY THE ASSESSE E AND THE ACTUAL EXPENSES HAVE BEEN BOOKED IN THE RESPECTIVE COMPANIES. MOREOVER WE FI ND THAT THE LD AO HAS CHOSEN TO TREAT THE SAID SUMS AS UNDISCLOSED INCOME MERELY ON ASSUM PTION WITHOUT ANY EVIDENCE BEING IN HIS POSSESSION NOR HE EXAMINED SUCH COMPANIES. HENC E THE ASSUMPTION HAS TO BE FOLLOWED 28 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA THAT SINCE SOME OF SUCH COMPANIES ARE ASSESSEES AS SOCIATE CONCERN AS OBSERVED BY LD CITA AND WHICH HAS ALSO NOT BEEN DISPUTED BY REVENUE IN ITS APPEAL AT ANY STAGE. HENCE THE NECESSARY COROLLARY OF THESE FACTS IS THAT THESE SU MS REFERRED TO AS LAND DEVELOPMENT COST IS NOTHING BUT EXPENDITURE INCURRED AND HENCE HAS T O BE TREATED AS UNDISCLOSED EXPENDITURE ONLY. IN RESPECT OF THE TREATMENT OF T HE SAID SUM AS UNDISCLOSED EXPENSES WE FIND SUBSTANTIAL MERIT IN THE FACT AND WE UPHOLD TH E ORDER OF LD CITA. 5.7.2. AS REGARDS THE REVENUES GROUND IN TREATING RS. 78 57 562/- (RS.4 30 272/- + RS. 46 34 960/- + RS.27 92 330/-) AS AVAILABLE FOR SET OFF IN CASH FLOW AND ALSO ALLOWING SET OFF OF RS. 3 03 65 126/- OUT OF AVAILABLE CASH WE FIN D MERIT IN THE FACT THAT THAT THE LD AO HIMSELF HAD ALLOWED SUCH SET OFF IN THE ASSESSMENT ORDER SO REVENUE CANNOT BE ALLOWED TO CHANGE ITS STAND NOW. EVEN OTHERWISE THE REVENUE I S NOT IN POSSESSION OF ANY EVIDENCE NOR IT HAS FURNISHED ANY SUCH FACT ON RECORD THAT THE S UMS EXPENDED WERE OTHER THAN OUT OF SUM EARNED / RECEIVED AS CASH BY THE ASSESSEE. HENCE W E CONCUR WITH THE ORDER OF LD CITA IN ALLOWING SUMS AS PART OF CASH FLOW AND AS SUCH THE REVENUES GROUND FAILS ON SUCH ACCOUNT. 5.7.3. AS REGARDS THE ASSESSEES CONTENTION IN ADD ITIONAL GROUNDS NO. 1 2 & 3 IN C.O 147/K/12 FOR A.Y 2008-09 AND ADDITIONAL GROUNDS NO. 1 2 3 & 4 IN ASSESSEES APPEAL IN ITA NO.1419/K/12 WE HAVE GONE THROUGH THE MATERIAL PLACED AND WE FIND MERIT IN THE MATTER. HOWEVER SUCH ISSUE PERTAINING TO PAGES 29- 30 (SSG/1) RELATED TO ADDITION OF RS.1 16 00 000/- AND PAGE 9 (SSG/1) RELATED TO ADDI TION OF RS. 28 12 000/- IS BEING SET ASIDE TO LD AO FOR VERIFICATION IN THE INTEREST OF JUSTIC E AND FAIRPLAY AND DIRECT THE LD AO TO DECIDE THESE CLAIMS OF THE ASSESSEE. PURSUANT TO THE VERI FICATION BY THE LD AO IF THE CLAIMS OF THE ASSESSEE ARE FOUND TO BE TRUE THEN THE RELIEF SOUG HT BY THE ASSESSEE IN THAT REGARD IS TO BE GRANTED. WE DIRECT THE LD AO ACCORDINGLY. 5.7.4. AS A RESULT WE SUMMARIZE AS FOLLOWS : ASST YEAR APPEAL NO. GROUND NOS. RESULT 2006-07 34/K/12 7 DISMISSED 145/K/12 5 DISMISSED 2008-09 36/K/12 2 DISMISSED 3 DISMISSED 4 DISMISSED 29 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 147/K/12 5 DISMISSED ADDL. GROUND 1 ALLOWED FOR STATISTICAL PURPOSES ADDL. GROUND 2 ALLOWED FOR STATISTICAL PURPOSES ADDL. GROUND 3 ALLOWED FOR STATISTICAL PURPOSES 6. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED S SG/3 A.Y 2007-08: C.O. 146/KOL/2012 GROUND NO. 5 -FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATI NG RS. 18 00 000/- AS UNDISCLOSED EXPENDITURE OF THE APPELLANT ON THE BASIS OF THE ALLEGED DOCUMENT SSG - 3 AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE ACT ION OF THE LD. CIT(A) IN SUCH REGARD IS WITHOUT APPRECIATING THE FACTS AND I N THE CIRCUMSTANCES IT MAY BE KINDLY BE HELD ACCORDINGLY. A.Y 2008-09 C.O. 147/KOL/2012 GROUND NO.6 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS. 37 25 000/- AS UNDISCLOSED EXPENDITURE OF THE APPELLANT ON THE BASIS OF ALLE GED DOCUMENT SSG-3 AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE ACTION OF LD . CIT(A) IN SUCH REGARD IS WITHOUT APPRECIATING THE FACTS IN THE MATTER PROPERLY AND I N VIEW OF THE FACTS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. A.Y 2009-10 C.O. 148/KOL/2012 GROUND NO.8 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATIN G RS.10.00 000/- & RS.84 66.224/- AS UNDISCLOSED EXPENDITURE OF THE APPELLANT ON THE BASIS OF ALLEGED DOCUMENT SSG-3 AND IN VIEW OF THE FACTS AND IN THE CIRC UMSTANCES THE ACTION OF LD. CIT (A) IN SUCH REGARD IS WITHOUT APPRECIATING THE F ACTS IN THE MATTER PROPERLY AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCE S IT MAY KINDLY BE HELD ACCORDINGLY. 30 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA A.Y 2007-08 IT(SS) 35/KOL/2012 GROUND NO. 7 - THE LD. CIT(A) IS ERRED IN DIRECTING THE A.O. T O CONSIDER THE UNEXPLAINED EXPENDITURE OF RS.18 00 000/- ADDED ON THE BASIS OF SEIZED DOCUMENT SSG/3 AGAINST THE UNDISCLOSED CASH RECEIPT SHOWN IN CASH FLOW STATEMENT AND THAT THE OF LD. CIT(A) IS AGAINST THE PROVISION OF SECTION 6 9C OF THE IT ACT. A.Y 2008-09 IT(SS) 36/KOL/2012 GROUND NO. 5 - THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO CONSIDER THE UNEXPLAINED EXPENDITURE OF RS. 37 25 000/- AS PER S EIZED DOCUMENT SSG/3 AGAINST THE UNACCOUNTED CASH RECEIPT OF THE ASSESSEE. A.Y 2009-10 IT(SS) 37/KOL/2012 GROUND NO. 3 - THE LD. CIT(A) HAS FURTHER ERRED IN DIRECTING THE A.O. TO CONSIDER THE UNEXPLAINED EXPENDITURE OF RS. 84 66 724/- AS P ER SEIZED DOCUMENT SSG/3 AGAINST THE ACCOUNTED CASH RECEIPT OF RS. 7 40 90 000/- IN A.Y. 2006-07 & 2007-08. 6.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO FOUND THAT THE SEIZED DOCUMENTS SSG/3 CONTAIN ORIGINAL MONEY RECEIPTS BY CASH AS WELL AS BY CHEQUE. THE LD AO HAS NOTED IN THE ASSESSMENT ORDER THAT THE ASSESSEE ADMITTED SUCH UN DISCLOSED EXPENSES OF RS. 18 00 000/- RS. 37 25 000/- & RS.16 20 000/- IN ASST YEARS 2007 -08 2008-09 & 2009-10 DURING THE ASSESSMENT PROCEEDINGS AND HAS ALSO INCLUDED THEM I N THE CASH FLOW STATEMENT. THE LD AO THUS MADE ADDITION OF RS. 18 00 000/- RS. 37 25 00 0/- & RS.16 20 000/- IN ASST YEARS 2007-08 2008-09 & 2009-10 ON ACCOUNT OF UNDISCLOSE D EXPENDITURE. THE LD AO FOUND THAT PAGE 26 OF THE SEIZED DOCUMENT SSG/3 CONTAINS UNDIS CLOSED EXPENDITURE OF RS.17 63 664/- & RS.36 53 564/- INCURRED IN RESPECT OF PROJECTS AT EN-62 AND DN-18. THE LD AO FURTHER FOUND THAT PAGE 27 CONTAINS DETAIL OF PAYMENTS BY C ASH AS WELL AS BY CHEQUE THE CASH COMPONENT BEING RS. 6 51 288/-. SIMILARLY PAGE 29 TO 32 CONTAIN NET LOSS OF RS. 7 77 878/- ON BOOK FAIR ORGANIZED BY THE ASSESSEE. THE LD AO C ONCLUDED THAT UNDISCLOSED EXPENSES OF RS. 7 77 878/- WAS EMBEDDED IN SUCH LOSS. THE LD AO FOUND ON THE OTHER HAND THAT PAGE 3 OF THE SEIZED DOCUMENT SSG/3 IS ACCOUNT STATEMENT O F MACKINTOSH BURN LIMITED REFLECTING UNACCOUNTED RECEIPT OF RS. 10 00 000/- WHICH WAS AD MITTED BY THE ASSESSEE AND WAS ALSO INCLUDED IN THE CASH FLOW STATEMENT. THE LD AO THUS MADE ADDITION OF RS. 10 00 000/- IN ASST YEAR 2009-10 AS UNDISCLOSED RECEIPT AND ADDITI ONS OF RS. 18 00 000/- RS. 37 25 000/- 31 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA AND RS. 84 66 724/- (RS. 16 20 000/- PLUS RS. 17 63 994/- PLUS RS. 36 53 564/- PLUS RS. 6 51 288/- PLUS RS.7 77 878/-) IN ASST YEARS 2007-0 8 2008-09 AND 2009-10 AS UNDISCLOSED EXPENDITURE ON THE BASIS OF THE SEIZED DOCUMENTS MA RKED SSG/3. THE ORDER OF THE LD AO IS REPRODUCED AS UNDER :- THIS SEIZED DOCUMENT CONSISTS OF LOOSE BUNCH OF DO CUMENTS CONTAINING ORIGINAL MONEY RECEIPTS IN CASH AND CHEQUE. DURING THE ASSES SMENT PROCEEDINGS THE ASSESSEE HAS ADMITTED RS. 71 45 000/- AS UNDISCLOSED EXPENDI TURE VIDE ANNEXURES D AND D-1 READ WITH DATE WISE UNDISCLOSED CASH FLOW STATEMENT AS PER ANNEXURE X AND STATEMENT OF UNDISCLOSED EXPENDITURE AS PER ANNEXUR E U WHICH ARE INTEGRAL PART OF ASSESSEES LETTER DT. 11.11.2010. THE YEAR-WISE UND ISCLOSED EXPENDITURE COMES AS FOLLOWS : A.Y 2007-08 RS. 18 00 000/- A.Y 2008-09 RS. 37 25 000/- A.Y 2009-10 RS. 16 20 000/- THE ASSESSEE FURTHER DISCLOSED A SUM OF RS. 10 00 0 00/- AS RECEIVED OUT OF BOOKS FOR THE F.Y 2008-09 RELEVANT TO A.Y 2009-10 AS PER PAGE 3 OF THE ABOVE SEIZED ITEM WHICH IS AN ACCOUNT STATEMENT OF MACKINTOSH BURN LI MITED. PAGE 23 OF SSG/ 3 CONTAINS THE DETAILS OF SITE WISE FIGURE OF INVESTM ENTS UPTO 15.2.2009 AT DIFFERENT SITE/ PROJECTS OF THE ASSESSEE. 6.2. THE LD CITA IN HIS ORDER OBSERVED AS FOLLOWS : - I HAVE PERUSED THE ASSESSMENT ORDER AND THE REMAND REPORT OF THE AO. I HAVE ALSO CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE MATERIAL ON RECORD. I FIND THAT THE UNDISCLOSED RECEIPT OF RS. 10 00 000/- AS CONTAINED IN PAGE 3 OF THE SEIZED DOCUMENT SSG/3 AS WELL AS UNDISCLOSED EXPENSES OF RS. 18 00 000/- RS.37 25 000/- AND RS. 16 20 000/- HAS BEEN INCLUDED BY THE APPELLANT IN H IS STATEMENT AS CASH FLOW FILED IN COURSE OF ASSESSMENT PROCEEDINGS. THERE CAN BE NO D ISPUTE REGARDING THE ASSESSABILITY OF THE UNDISCLOSED RECEIPT OF RS. 10 00 000/- WHICH HAS ALSO BEEN INCLUDED BY THE APPELLANT IN HIS STATEMENT OF CASH FLOW. THE ADDITION OF RS. 10 00 000/- IN A.Y 2009-10 ON ACCOUNT OF UNDISCLOSE D RECEIPT IS CONFIRMED. THE UNDISCLOSED EXPENSES OF RS. 18 00 000/- RS.37 25 000/- AND RS. 16 20 000/- ARE ADMITTED BY THE APPELLANT AND ALSO INCLUDED IN HIS STATEMENT OF CASH FLOW. AS REGARDS OTHER EXPENSES OF RS. 17 63 994/- RS. 36 53 564/- RS.6 51 288/- AND RS. 7 77 878/- THE APPELLANT HAS BROUGHT NO MATERIAL ON RECORD TO REBUT THE FINDINGS OF THE AO THAT THESE ARE THE UNDISCLOSED EXPENSES OF THE APPELLANT . I THEREFORE UPHOLD THE ORDER OF THE AO THAT ALL THESE EXPENSES ARE TO BE TREATED AS UNEXPLAINED EXPENSES OF THE APPELLANT. HOWEVER I FIND MERIT IN THE ARGUMENT TH AT SUCH UNDISCLOSED EXPENSES ARE TO BE CONSIDERED AS BEING MADE OUT OF UNDISCLOSED R ECEIPTS AS SHOWN BY THE APPELLANT AND ALSO ACCEPTED BY THE AO. THE CASH FLOW STATEMEN T HAD BEEN FILED BEFORE THE AO IN RESPECT OF THE UNACCOUNTED INCOME WHICH MAINLY C OMPRISED OF CASH RECEIVED ON DIFFERENT DATES FROM THE FORT GROUP IN CONNECTION W ITH SALE OF SHARES. THE CASH FLOW STATEMENT WAS FORWARDED TO ME BY THE AO ALONG WITH HIS REMAND REPORT. I FIND FROM ITS PERUSAL THAT THE APPELLANT HAD SUFFICIENT CASH BALANCE AVAILABLE WITH HIM FOR EXPENSES OR INVESTMENT. AND AS THE AO HAS BROUGHT NO MATERIAL ON RECORD TO SHOW 32 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA THAT SUCH CASH BALANCE WAS OTHERWISE INVESTED OR SP ENT BY THE APPELLANT IT HAS TO BE ACCEPTED THAT SUCH CASH BALANCE WAS AVAILABLE WITH THE APPELLANT TO COVER FOR THE UNEXPLAINED EXPENSES. ACCORDINGLY THE AO IS DIRECT ED TO CONSIDER THE NET OF THE UNEXPLAINED EXPENSES OF RS. 18 00 000/- RS.37 25 000/- RS. 16 20 000/- RS. 17 63 994/- RS. 36 53 564/- RS.6 51 288/- AND RS. 7 77 878/- IF ANY FOR THE PURPOSES OF ADDITION. 6.3. THE LD AR ARGUED THE FOLLOWING:- (I) HE CONTENDED THAT THE MONEY RECEIPTS ARE NOT IN THE NAME OF THE ASSESSEE AND SO NO ADDITION CAN BE MADE IN HIS CASE. IT WAS ALSO ARGUE D THAT THE SEIZED MATERIAL WAS NOT FOUND FROM THE POSSESSION OR CUSTODY OF THE ASSESSEE. (II) THE LD AO HAD MADE THE ADDITION ON THE BASIS O F THE CONFESSIONAL STATEMENT OF THE ASSESSEE WITHOUT BRINGING ANY COGENT MATERIAL ON RE CORD. (III) FROM A PERUSAL OF THE ASSESSMENT ORDER AND PA GE 18 OF THE ASSESSMENT ORDER IT WILL BE SEEN THAT THE LD AO HAD PROPOSED THE ADDITIONS OF R S. 18 00 000/ - RS. 37 25 000/ - RS. 10 00 000/- & RS. 84 66 724/- IN ASST YEARS 2007-08 2008-09 2009-10 & 2009-10 RESPECTIVELY ON THE BASIS OF THE SEIZED DOCUMENTS A T SSG-3. (IV) AS WILL APPEAR FROM THE ASSESSMENT ORDER THE LD AO HAS MADE SUCH ADDITIONS ON ACCOUNT OF DIFFERENT MONEY RECEIPTS ISSUED BY DIFFE RENT PERSONS IN RESPECT OF PAYMENTS MADE BY THEM TO DIFFERENT PERSONS. THE LD AO HAS TREATED SUCH PAYMENTS AS UNACCOUNTED PAYMENTS OF THE ASSESSEE. (V) AS WILL APPEAR FROM THE SEIZED DOCUMENTS NONE OF SUCH MONEY RECEIPTS STAND IN THE NAME OF THE ASSESSEE HEREIN AND AS WILL FURTHER APP EAR FROM THE SEIZED DOCUMENTS SUCH MONEY RECEIPTS HAVE BEEN ISSUED BY DIFFERENT PERSON S INCLUDING SOME CORPORATE BODIES AND HENCE THE ASSESSEE FAILS TO UNDERSTAND AS TO UNDER WHICH PROVISIONS OF THE ACT THE SAME COULD BE TREATED AS UNEXPLAINED EXPENDITURE IN RESP ECT OF UNACCOUNTED PAYMENTS MADE BY THE ASSESSEE. (VI) IN THIS CONNECTION IT MAY NOT BE OUT OF PLACE TO MENTION THAT NONE OF SUCH PERSONS WHO HAD ISSUED SUCH MONEY RECEIPTS OR RECEIVED THE AMOU NTS HAD EVER BEEN EXAMINED BY THE LD AO NOR THE LD AO HAD EVER ALLOWED ANY OPPORTUNITY T O THE ASSESSEE TO CROSS-EXAMINE SUCH 33 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA PERSONS NOR THE LD AO HAD EVER EXAMINED OF ANY BOOK S OF ACCOUNT OF SUCH PERSON. (VII) NONE OF SUCH SEIZED PAPERS WERE SEIZED FROM T HE CUSTODY AND OR POSSESSION OF THE ASSESSEE AND ALL SUCH SEIZED DOCUMENTS WERE SEIZED ONLY FROM THE POSSESSION OF SALTEE CONSTRUCTION CO. PVT. LTD. AS WILL BE APPARENT FROM PANCHANAMA B AND HENCE THE ENTIRE ACTION OF THE LD AO IN MAKING SUCH ADDITIONS DURING DIFFERENT ASSESSMENT YEARS AS UNDER IS WHOLLY BAD ILLEGAL UNJUSTIFIED AND UNCALLED FOR A ND IN VIEW OF THE FACTS AND CIRCUMSTANCES ACCORDINGLY PRAYED FOR DELETION OF THE SAME. 6.4. IN RESPONSE TO THIS THE LD DR ARGUED THAT SUC H DOCUMENTS HAVING SSG/3 WERE FOUND IN THE PREMISES OWNED / CONTROLLED BY ASSESSEE AND / O R ITS ASSOCIATED CONCERN AND HENCE IT IS NECESSARILY TO BE PRESUMED THAT SUCH DOCUMENT PERTA INS TO ASSESSEE ONLY. THE LD DR VEHEMENTLY ARGUED THAT THE SAID SUM BE TREATED AS U NDISCLOSED EXPENDITURE ONLY AS PER THE FINDING GIVEN BY LD AO IN ITS ORDER. 6.5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOKS SUBMITTED IN THAT REGARD. WE HAVE GONE THROUGH THE MATERIAL PLACED I.E. SSG/3 PARTICULAR PAGES AS FOLLOWS : PGS 3 & 8 RS. 18 00 000/- A.Y 2007-08 EXPENSES VARIOUS PAGES RS.37 25 000/- A.Y 2008-09 EXPENSES PGS 32 33 26 & 27 RS.84 66 724/- A.Y 2009-10 EXPEN SES PG 33 RS. 10 00 000/- A.Y 2009-10 INCOME THE ASSESSEE HAS MERELY RE-ITERATED THAT THE DOCUME NTS DOESNT BELONG TO IT. HOWEVER HE FAILED TO REBUT THE CONTENTION THAT THE CONTENTS OF SUCH DOCUMENT DOES NOT RELATE TO HIM AND INDEED WE FIND THAT THE LD AO HAD RIGHTLY ADDED SUC H SUM AS UNDISCLOSED RECEIPT IN RESPECT OF PAGE 33 AND UNDISCLOSED EXPENSES IN RESPECT OF P AGES 3 8 33 AND OTHER PAGES AS MENTIONED . HENCE WE FIND MERIT IN THE ACTION OF REVENUE AND ASSESSEES GROUNDS IN THAT REGARD FAILS AND ARE CONFIRMED AS UNDISCLOSED EXPEN SES / INCOME ACCORDINGLY. AS REGARDS THE REVENUES GROUND IN TREATING RS. 18 00 000/- RS.37 25 000/- & RS.84 66 724/- OUT OF AVAILABLE CASH WE FIND MERI T IN THE FACT THAT THE LD AO HIMSELF HAS ALLOWED SUCH SET OFF IN THE ASSESSMENT ORDER SO R EVENUE CANNOT BE ALLOWED TO CHANGE ITS 34 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA STAND NOW. EVEN OTHERWISE THE REVENUE IS NOT IN PO SSESSION OF ANY EVIDENCE NOR IT HAS FURNISHED ANY SUCH FACT ON RECORD THAT THE SUMS EXP ENDED WERE OTHER THAN OUT OF SUM EARNED / RECEIVED AS CASH BY THE ASSESSEE. HENCE WE CONCU R WITH THE ORDER OF LD CITA IN ALLOWING SUMS AS PART OF CASH FLOW AND AS SUCH THE REVENUES GROUND FAILS ON SUCH ACCOUNT. AS A RESULT WE HOLD AS FOLLOWS : ASST YEAR APPEAL NO. GROUND NOS. RESULT 2007-08 146/K/12 5 DISMISSED 35/K/12 7 DISMISSED 2008-09 147/K/12 6 DISMISSED 36/K/12 5 DISMISSED 2009-10 148/K/12 8 DISMISSED 37/K/12 3 DISMISSED HENCE THESE GROUNDS ARE DISPOSED ACCORDINGLY. 7. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED S SG / 6 A.Y 2009-10 C.O. 148/KOL/2012 GROUND NO.9 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TRE ATING RS. 6 00 000/- ON THE BASIS OF ALLEGED SEIZED DOCUMENT SSG-6 AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE ACTION OF LD. CIT (A) IN SUCH REGARD IS WITH OUT APPRECIATING THE FACTS IN THE MATTER PROPERLY AND IN VIEW OF THE FACTS AND I N THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. THIS GROUND IS WITHOUT P REJUDICE TO THE FACT THAT THE APPELLANT HAS SHOWN THE SAME AS APPLICATION OF THE INCOME OFFERED BY IT AND HENCE IT MAY KINDLY BE CONSIDERED ACCORDINGLY. A.Y 2009-10 IT(SS) 37/KOL/2012 GROUND NO. 4 - THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO CONSIDER THE UNEXPLAINED EXPENDITURE OF RS. 6 00 000/- AS PER SE IZED DOCUMENT SSG/6 AGAINST THE ACCOUNTED CASH RECEIPT IN A.Y. 2006-07 & 2007-08. 7.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO FOUND THAT PAGE 13 OF THE SEIZED DOCUMENTS SSG/6 CONTAINS DETAIL OF EXPENSES TOTALIN G TO RS. 6 00 000/- ON PURCHASE OF TICKETS AND TV AND ALSO CASH PAYMENTS OF RS. 3 55 080/-. IT WAS CONTENDED BEFORE THE LD AO THAT THE SEIZED DOCUMENT WAS NOT RELATED TO THE ASSESSEE AS IT WAS NOT FOUND FROM HIS 35 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA POSSESSION. THE LD AO DID NOT ACCEPT THE EXPLANATIO N AND MADE ADDITION OF RS. 6 00 000/- AS UNDISCLOSED EXPENSES IN A.Y 2009-10. THE LD AR MER ELY MENTIONED THAT SUCH EXPENSES BE TREATED AS PART OF CASH FLOW OUT OF AVAILABLE CASH WITH THE ASSESSEE. 7.2. THE LD CITA IN HIS ORDER HAS OBSERVED AND DECI DED AS FOLLOWS : - THE AO FOUND THAT PAGE 13 OF THE SEIZED DOCUMENTS S SG/6 CONTAINS DETAIL OF EXPENSES TOTALING TO RS. 6 00 000/- ON PURCHASE OF TICKETS AND TV AND ALSO CASH PAYMENTS OF RS. 3 55 080/-. IT WAS CONTENDED BEFORE THE AO THAT THE SEIZED DOCUMENTS WAS NOT RELATED TO THE APPELLANT AS IT WAS NOT FOUN D FROM HIS POSSESSION. THE AO DID NOT ACCEPT THE EXPLANATION AND MADE ADDITION OF RS. 6 00 000/- AS UNDISCLOSED EXPENSES IN A.Y 2009-10. THE LD. A.R REITERATED THE SUBMISSION MADE AT THE ASSESSMENT STAGE. I DO NOT FIND MERIT IN THE SUBMIS SION. THE ORDER OF THE AO IN CONSIDERING THE EXPENSES OF RS. 6 00 000/- IS CONFI RMED. HOWEVER THE AO IS DIRECTED TO CONSIDER THE SAME AS PART OF THE CASH FLOW AND T HEN CONSIDER THE NET OF THE UNEXPLAINED EXPENSE OF RS. 6 00 000/- IF ANY FOR TH E PURPOSES OF ADDITION. 7.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK FILED IN THAT REGARD. WE F IND NO MERIT IN ASSESSEES APPEAL. HOWEVER AS REGARDS REVENUES APPEAL WE HOLD THAT AS REGARDS THE LD CITAS ACTION IN ALLOWING THE SET OFF OF THE EXPENSES SO INCURRED BY ASSESSEE AND / OR ITS ASSOCIATES IT WAS SUBMITTED BY THE LD AR THAT THERE IS NO DISPUTE IN THE FACT THAT ASSESSEE HAD RECEIVED CASH ON ACCOUNT OF TRANSACTION WITH FORT TO THE TUNE OF R S. 7 40 90 000/- AND ALSO OTHER RECEIPTS WHICH WAS AVAILABLE WITH ASSESSEE AND THE EXPENSES WERE OUT OF SUCH SUMS ONLY AND HENCE THE LD CITA WAS FULLY JUSTIFIED IN ALLOWING SUCH S ET OFF. AS REGARDS THE REVENUES GROUND IN TREATING RS. 6 0 0 000/- AS AVAILABLE FOR SET OFF IN CASH FLOW AND ALSO ALLOWING SET OFF OF RS. 3 55 080/- OU T OF AVAILABLE CASH WE FIND MERIT IN THE FACT THAT THAT LD AO HIMSELF HAS ALLOWED SUCH SET O FF IN THE ASSESSMENT ORDER SO REVENUE CANNOT BE ALLOWED TO CHANGE ITS STAND NOW. EVEN OTH ERWISE THE REVENUE IS NOT IN POSSESSION OF ANY EVIDENCE NOR IT HAS FURNISHED ANY SUCH FACT ON RECORD THAT THE SUMS EXPENDED WERE OTHER THAN OUT OF SUM EARNED / RECEIVED AS CASH BY THE ASSESSEE. HENCE WE CONCUR WITH THE ORDER OF THE LD CITA IN ALLOWING SUMS AS PART OF C ASH FLOW AND AS SUCH THE REVENUES GROUND FAILS ON SUCH ACCOUNT. AS A RESULT WE HOLD AS FOLLOWS : 36 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA ASST YEAR APPEAL NO. GROUND NOS. RESULT 2009-10 148/K/12 9 DISMISSED 37/K/12 4 DISMISSED HENCE THESE GROUNDS ARE DISPOSED ACCORDINGLY. 8. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED SS G / 8 READ WITH SSG / 44 A.Y 2006-07 C.O. 145/KOL/2012 GROUND NO. 6 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS .10 00 000/- AS UNDISCLOSED EXPENDITURE ON THE BASIS OF ALLEGED SEIZED DOCUM ENT SSG-8 AND SUCH ACTION OF THE LD. CIT(A) IN CONFIRMING THE ACTION OF THE A O IS WITHOUT APPRECIATING THE FACTS AND IN VIEW OF THE FACTS AND IN THE CIRCUMST ANCES THE ADDITION SO MADE IS LIABLE TO BE QUASHED I CANCELLED/ SET ASIDE. A.Y 2008-09 C.O. 147/KOL/2012 GROUND NO. 7 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS.5 0 000/- AS UNDISCLOSED EXPENDITURE ON THE BASIS OF ALLEGED SEIZED DOCUMENT SSG-8 AND I N VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE ACTION OF LD. CIT (A) IN SUCH REG ARD IS WITHOUT APPRECIATING THE FACTS IN THE MATTER PROPERLY AND IN VIEW OF THE FA CTS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. A.Y 2009-10 C.O. 148/KOL/2012 GROUND NO.10 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATIN G RS.1 67 000/- AS UNDISCLOSED EXPENDITURE ON THE BASIS OF ALLEGED SEIZED DOCUMENT SSG-8 AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE ACTION OF LD. CIT (A) IN SUCH REGARD IS WITHOUT APPRECIATING THE FACTS IN THE MATTER PROPERLY AND I N VIEW OF THE FACTS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. T HIS GROUND IS WITHOUT PREJUDICE TO THE FACT THAT THE APPELLANT HAS SHOWN THE SAME AS A PPLICATION OF THE INCOME OFFERED BY IT AND HENCE IT MAY KINDLY BE CONSIDERED ACCORD INGLY. ADDITIONAL GROUND - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES AND WITHOUT PREJUDICE TO THE LEGALITY OF ADDITION OF RS. 26 64 00 000/- MADE ON THE BASIS OF SSG-8 ALLEGED TO HAVE BEEN FOUND FROM THE APPELLANT AND W ITHOUT PREJUDICE THE LD. CIT(A) ERRED IN TREATING THE SAID COMPANIES AS GROUP COMPA NIES OF THE APPELLANT WITHOUT 37 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA BRINGING THE AN EVIDENCE ON RECORD AS TO THE SHAREH OLDING OF SUCH COMPANY VESTED WITH THE APPELLANT AND CONSEQUENTLY THE OBSERVATION BY THE LD. CIT(A) IN SUCH RESPECT MAY KINDLY BE DELETED ACCORDINGLY. A.Y 2006-07 IT(SS) 34/KOL/2012 GROUND NO. 8 - THE LD. CIT(A) IS ERRED IN DIRECTING THE A.O. T O CONSIDER THE UNEXPLAINED EXPENDITURE OF RS. 10 00 000/- MADE ON THE BASIS OF SEIZED DOCUMENT SSG/8 AGAINST THE CASH RECEIPT SHOWN IN CASH FLOW S TATEMENT DURING THE HEARING AND THAT THE ORDER OF LD. CIT(A) IS IN CONTRAVENTION OF THE SECTION 69C OF IT ACT. A.Y 2008-09 IT(SS) 36/KOL/2012 GROUND NO.6 - THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO CONSIDER THE UNEXPLAINED EXPENDITURE OF RS. 50 000/- AS PER SEIZ ED DOCUMENT SSG/8 AGAINST THE UNACCOUNTED CASH RECEIPT OF THE ASSESSEE. A.Y 2009-10 IT(SS) 36/KOL/2012 GROUND NO.5 - THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIO N OF RS. 27 03 31 000/- AS UNDISCLOSED INVESTMENT FOR PURCHA SE OF LAND OF 2950.56 COTTOH IN PHASE-1 PHASE-2 MOHAMMADPUR JAMALPURA. THE LD. C IT(A) HAS ERRED IN NOT APPRECIATING THE PAGES 31 32 37 OF THE SEIZED DOCUM ENT-SSG/44 (CORRECT SSG/8) GROUND NO.6 - THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO CONSIDER THE UNEXPLAINED EXPENDITURE OF RS. 1 67 000/- (AS PER S EIZED DOCUMENT SS/8) AGAINST ACCOUNTED CASH RECEIPT OF THE ASSESSEE. 8.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO FOUND THAT THE SEIZED DOCUMENTS SSG/8 CONTAIN MONEY RECEIPTS OF RS.10 00 000/- RS.50 000 /- AND RS.1 67 000/- WHICH WAS ADMITTED BY THE ASSESSEE AS HIS UNDISCLOSED EXPENSE S IN ASST YEARS 2006-07 2008-09 AND 2009-10; AND HAS ALSO BEEN DECLARED IN HIS STATEME NT OF CASH FLOW. THE LD AO THUS MADE ADDITIONS OF RS.10 00 000/- RS.50 000 AND RS.1 67 000/- AS UNDISCLOSED EXPENSES IN ASST YEARS 2006-07 2008~09 AND 2009- 10. THE LD AO HAS ALSO REFERRED TO PAGE 31 OF SSG/8 WHICH CONTAINS DETAILS UNDER THE HEAD 'ACCOUNT AS O N 15TH DECEMBER 2008'. THE LD AO FELT THAT THE FIGURES ON PAGE 31 ARE APPARENT LY WRITTEN IN LAKHS. THE FIGURE OF 3609.987 WAS MENTIONED AGAINST LAND AREA OF 2950.56 COTTAH - THE LD AO PRESUMED THAT THE FIGURE 3609.987 ACTUALLY MEANT RS.36 09 98 700/- WH ICH WAS USED FOR PURCHASING 2950.56 COTTAH OF LAND. IT WAS EXPLAINED AT THE ASSESSMENT STAGE THAT THE FIGURE OF 3609.987 ACTUALLY 38 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA REPRESENTED RS.36 09 987/- WHICH WAS MEANT FOR LAND FILLING CHARGES. THE SAME WAS ADMITTED AS UNDISCLOSED EXPENSES AND WAS ALSO INC LUDED IN THE STATEMENT OF CASH FLOW. THE LD AO NOTED THAT THE EXPLANATION WAS NOT SATISFACTO RY. THE LD AO REFERRED TO THE SEIZED DOCUMENTS SSG/44 TO CONCLUDE THAT THE COST OF LAND WAS RS. L IAKH PER COTTAH. THE LD AO THEN CONCLUDED THAT TOTAL INVESTMENT OF RS.37 64 00 .000/- WAS MADE TOWARDS THE PURCHASE OF LAND. AS SUM OF RS.1L 00 00 000/- WAS RECORDED TOWA RDS INVESTMENT IN LAND IN THE BOOKS OF ACCOUNT OF THE GROUP COMPANIES THE LD AO CONCLUDED THAT THE ASSESSEE HAD MADE UNDISCLOSED INVESTMENT OR RS.26 64 00 000/- TOWARDS PURCHASE OF LAND. THE LD AO ALSO CONSIDERED THE UNDISCLOSED EXPENDITURE ON ACCOUNT O F LAND-FILLING CHARGES AT RS.37 64 000/-. THE LD AO THUS MADE TOTAL ADDITION OF RS.27 03 31 0 00/- (RS.26 64 00 000/- PLUS RS.37 64 000/- PLUS RS.1 67 000/-) IN ASST YEAR 200 9-10. THE ASSESSMENT ORDER OF THE LD AO IS REPRODUCED AS UNDER - PAGES - 19 21 22 TO 24 CONTAINS MONEY RECEIPT OF RS.50 000/- RS. 67 000/- RS.10 00 000/- RS. 20 11 000/- & RS.1 00 000/- RE SPECTIVELY OUT OF WHICH THE ASSESSEE ADMITTED THE FOLLOWING AMOUNTS AS HIS UNDI SCLOSED EXPENDITURE. IT APPEARS THAT PAGE - 31 OF SSG/8 CONTAINS THE DET AILS OF LAND PURCHASED UPTO 15.12.2008 UNDER THE HEAD WRITTEN AS ACCOUNT AS ON 15TH DECEMBER 2008'. THE FIGURES ON THIS PAGE IS APPARENTLY WRITTEN IN LAKH OF RUPEES. AS PER THIS PAGE A TOTAL LAND OF 2950.56 COTTAH WAS PURCHASED FOR RS. 36 09 98 700/- IN PHASE -1 PHASE-2 MOHAMMAD PUR JAMALPARA. [ALSO REFER PAGES -31 32 37 OF SSG-44]. FROM THE LOWER PART OF THE TABLE APPEARING IN PAGE - 31 OF S SG-8 IT APPEARS THAT A TOTAL AMOUNT OF RS. 37.64 CRORES HAD BEEN RECEIVED BY THE ASSESSEE OUT OF WHICH RS. 70 LAKHS HAD BEEN CLAIMED TO HAVE PAID AND RS. 36.09 C RORES HAD BEEN SPENT ON LAND A/C. LEAVING BALANCE OF RS.85 LAKHS. THE ASSESSEE ADMITTED UNDISCLOSED EXPENDITURE TO TH E TUNE OF RS.36 09 987/- VIDE LETTER DT. 11.11.2008. THE ASSESSEE WAS ASKED TO SU BSTANTIATE THE SAME. THE ASSESSEE SUBMITTED VIDE LETTER DATED 14.12.2010:- 'IN THE LAST HEARING YOUR GOODSELF HAD ASKED US TO SUBSTANTIATE THE LAND FILING CHARGES VIS-A-VIS THE REGULAR BOOKS OF ACCOUNTS. IN THIS CONNECTION IT IS SUBMITTED THAT THIS PAGE IS AN ACCOUNT GIVEN BY THE CONTRACTOR FOR. .LAND FILING EXPENSES PURPORTED TO HAVE BEEN .INCURRED BY HIM AS ON 15.12.2008. THE FIGURE OF RS. 3609.987 REPRESENT 36 09 987/-. THIS IS THE AMOUNT PURPORTED TO HAVE BEEN PAYMENTS F.Y A.Y AMOUNT (RS.) 2005-06 2006-07 10 00 000/- 2007-08 2008-09 50 000/- 2008-09 2009-10 1 67 000/- 39 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA INCURRED BY HIM. OUR CLIENTS HAD ADVANCED RS. 37 6 4 000/- AS MENTIONED IN THE SEIZED DOCUMENT ITSELF WHICH WAS MORE THAN THE CONTRACTOR'S OWN BILL. AS SUCH RS.70 000/- WAS RETURNED BY HIM AS PER HIS ST ATEMENT IN THE SEIZED DOCUMENT MENTIONED ABOVE. ' IN HIS CLARIFICATION VIDE PARA-15 OF LETTER DT. 14. 12.2010 THE ASSESSEE DENIED THAT FIGURES AT PAGE - 31 OF SSG/8 IS RS. 36 09 98 700/- AND CLAIMED THAT IT IS ACTUALLY RS. 36 94 000/- AND CLAIMED THAT IT IS ACTUALLY RS. 36 94 000/-. THE ASSESSEE'S EXPLANATION IS NOT ACCEPTABLE AND NO T SUPPORTED WITH CLINCHING EVIDENCE. IT IS FOUND FROM THE PAGE 32 AND 33 OF SS G/44 THAT THE ASSESSEE HAD PURCHASED 66.34 COTTAH OF LAND FOR RS. 65 71 304 AL MOST @ RS. 1 LAKH PER COTTAH IN MOHAMMEDPUR AS ON 15.3.2005. AS PER STATEMENT AS ON 15.12.2008 IN THE PAGE 31 O F SSG/8 IT IS FOUND THAT 77.38 COTTAH OF LAND PURCHAS ED AT MOHAMMEDPUR. IF RATE OF RS. 1 LAKH PER COTTAH IS APPLIED THEN INVESTMENT FOR LA ND PURCHASE IN MOHAMMEDPUR COMES TO NEARLY RS. 77 LAKHS WHICH IS ALMOST MATCHI NG WITH THE RATE 1.0405 FOR 77.38 COTTAH TOTALING TO RS. 80 51 100/- (WRITTEN AS 80. 511 IN: PAGE 31 OF (SEIZED DOCUMENT SSG/8). THEREFORE FIGURE OF 36.64 IS ACTUALLY RS. 36.64 CRORES TAKING INTO NOTE OF THE ABBREVIATED FIGURES OF PAGE 31 OF SSG/8. THE FIGURE 1.2 IN THE COLUMN OF RATE ACTUALLY DENOTES 1.20 LAKHS FOR PURCHASE OF 2707.76 COTTAH F OR TOTAL VALUE OF RS.32 49 31 400/- FROM THE DISCUSSIONS IN THE EARLI ER PARAS AND THE ASSESSEES ADMISSION VIDE LETTER DT. 11.11.2010 THAT ASSESSEE IS IN THE HABIT OF WRITING FIGURES WITH ZERO SUPPRESSIONS. THEREFORE RS. 37 64 00 000 /- IS BEING CONSIDERED AS INVESTMENT BY THE ASSESSEE IN PURCHASING 2950.56 CO TTAH OF LAND IN PHASE -1 PHASE 2 MOHAMMEDPUR JAMALPUR. SINCE THE ABOVE DOCUMENT HAS BEEN FOUND FROM THE CUSTODY OF THE ASSESSE DURING HE SEARCH PROCEEDINGS AND ON THE BASIS OF PRESUMPTIVE THEORY THE ENTIRE UNDISCLOSED INVESTMENT OF RS. 26 64 00 000/- ( OUT OF THIS INVESTMENT RS. 11 CRORES HAS BEEN RECORDED AS INVE STMENT IN THE BOOKS OF THE DIFFERENT COMPANIES INCIDENTALLY IT IS TO BE MENTI ONED THAT BANK ACCOUNT DETAILS OF THESE COMPANY WERE ALSO FOUND FROM THE CUSTODY OF T HE ASSESSEE ) IS TREATED AS ASSESSEES UNDISCLOSED INVESTMENT. [UNDISCLOSED EXPENDITURE FOR A.Y 2006-07 RS. 10 00 000/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2009-10 RS. 50 00 0/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2007-08 RS. 27 03 31 000/-] 8.2. THE LD CITA OBSERVED AS FOLLOWS:- I HAVE PERUSED THE ASSESSMENT ORDER AND THE REMAND REPORT OF THE AO. I HAVE ALSO CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE MATERIAL ON RECORD. THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE SEIZED D OCUMENTS SSG/8 CONTAIN MONEY RECEIPTS OF RS.10 00 000/- RS.50 000 AND RS.1 67 0 00/- WHICH WAS ADMITTED BY THE APPELLANT AS HIS UNDISCLOSED EXPENSES IN A.YS 2006- 07 2008-09 AND 2009-10; AND HAS ALSO BEEN INCLUDED IN HIS STATEMENT OF CASH FLO W. THE AO HAS THUS MADE ADDITIONS OF RS.10 00 000/- RS.50 000 AND RS.1 67 000/- AS U NDISCLOSED EXPENSES IN A.YS 2006-07 2008-09 AND 2009-10. I UPHOLD THE ORDER OF THE AO THAT THESE EXPENSES ARE 40 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA TO BE TREATED AS PART OF THE CASH FLOW STATEMENT AN D THE AO IS DIRECTED TO CONSIDER THE NET OF EXPENSES IF ANY FOR THE PURPOSES OF AD DITION. THE AO HAS REFERRED TO PAGE - 31 OF SSG/8 WHICH CON TAINS DETAILS UNDER THE HEAD ACCOUNT AS ON 15TH DECEMBER 2008. I FIND MERIT I N THE ARGUMENT THAT WHILE INTERPRETING THE SEIZED DOCUMENT THE AO HAS MADE T OO MANY PRESUMPTIONS AND ASSUMPTIONS WITHOUT ANY BASIS. FOR THE AO HAS SIMP LY PRESUMED THAT THE SEIZED DOCUMENT CONTAINS DETAILS REGARDING PURCHASE OF LAN D. THE SEIZED DOCUMENT HAS MENTIONED ACCOUNT AS ON 15TH DECEMBER 2008. IT W AS NOWHERE MENTIONED THAT THE ACCOUNT RELATES TO PURCHASE OF LAND. BUT THEN THE AO HAS PRESUMED WITHOUT ANY BASIS THAT IT PERTAINS TO PURCHASE OF LAND. IT IS O NLY ON THE BASIS OF HIS OWN IMAGINATION THAT THE AO HAS CONCLUDED THAT THE DOCU MENT IS RELATED TO PURCHASE OF LAND. BUT THEN THE AO HAS PRESUMED WITHOUT ANY BASI S THAT IT PERTAINS TO PURCHASE OF LAND. IT IS ONLY ON THE BASIS OF HIS OWN IMAGINATIO N THAT THE AO HAS CONCLUDED THAT THE DOCUMENT IS RELATED TO PURCHASE OF LAND. IT APP EARS FROM THE ASSESSMENT ORDER THAT THE GROUP COMPANIES HAVE SHOWN INVESTMENT OF R S. 11 CRORES IN LAND IN THEIR BOOKS OF ACCOUNT. AS THE AO HAS ALLOWED SET OFF FOR THE INVESTMENT OF RS. 11 ORORES WHILE COMPUTING THE UNDISCLOSED INVESTMENT THE AO SEEMS TO HAVE PRESUMED THAT THE LAND WAS PURCHASED BY THE GROUP COMPANIES FOR WHICH UNACCOUNTED PAYMENT WAS MADE BY THE APPELLANT. BUT THEN THE DETAIL OF THE SELLERS WAS AVAILABLE WITH THE AO. THE AO COULD HAVE CALLED FOR THE LAND DEED FROM THE GROUP COMPANIES AND EXAMINED THE SELLERS WHICH HE HAS FAILED TO DO. EVEN IN COUR SE OF THE REMAND PROCEEDINGS THE AO HAS FAILED TO BRING ANY POSITIVE MATERIAL OR EVI DENCE ON RECORD IN SUPPORT OF HIS ACTION. IT WAS ALSO ARGUED THAT THE ENTIRE INVESTME NT IN LAND WAS NOT MADE IN THE F.Y 2008-09. ON THE CONTRARY LAND WAS ALSO PURCHASED I N THE PRECEDING YEARS. AND SO THE ACCOUNT AS ON 15TH DECEMBER 2008 CANNOT BE R ELATED TO PURCHASE OF LAND. SECONDLY THE AO HAS MADE ANOTHER PRESUMPTION WITHO UT ANY BASIS THAT THE FIGURES ARE MENTIONED IN LAKHS. IT WAS CONTENDED BEFORE ME THAT THE AO HAS WRONGLY MENTIONED IN THE ASSESSMENT ORDER THAT THE APPELLAN T ADMITTED VIDE SUBMISSION DT. 11.11.2010 ABOUT HIS HABIT OF SUPPRESSING ZEROS WHI LE WRITING FIGURES. I FIND SUBSTANCE IN THE ARGUMENT THAT THE USE OF THE WORDS LIKE APPEARS OR APPARENTLY ONLY SUGGESTS THAT THE AO IS HIMSELF NOT SURE OF TH E FACTS AND THAT HE WAS RELYING MORE ON PRESUMPTIONS AND GUESS WORK THAT ON MATERIA L FACTS. I FIND FROM THE ASSESSMENT ORDER THAT THE APPELLANT HAD EXPLAINED B EFORE THE AO THAT THE SEIZED DOCUMENT WAS RELATED TO LAND FILLING CHARGES IN RES PECT OF THE LAND THAT WAS ALREADY OWNED BY THE GROUP COMPANIES FOR WHICH INVESTMENT O F RS. 11 CRORES WAS ALSO SHOWN IN THE REGULAR BOOKS OF ACCOUNT. THE SEIZED DOCUMEN T ACTUALLY CONTAINED ACCOUNT GIVEN BY THE CONTRACTOR FOR LAND FILLING EXPENSES I NCURRED BY HIM AS ON 15.12.2008. THE FIGURE OF 3609.987 ACTUALLY REPRESENTED RS. 36 09 987/- THE AMOUNT THAT WAS INCURRED BY THE CONTRACTOR TOWARDS LAND FILLING CHA RGES. AS ADVANCE OF RS. 37 64 000/- WAS ALREADY GIVEN TO THE CONTRACTOR HE HAD RETURNED RS. 70 000/- AND THE BALANCE OF RS. 84 013/- WAS PENDING. AS THE LAN D FILING EXPENSES OF RS. 36 09 987/- WAS NOT RECORDED IN THE REGULAR BOOKS O F ACCOUNT OF THE GROUP COMPANIES THE SAME WAS ADMITTED AS UNDISCLOSED INC OME AND WAS ALSO INCLUDED IN THE STATEMENT OF CASH FLOW. BUT THE EXPLANATION AS MADE BY THE APPELLANT WAS REJECTED BY AO MORE ON PRESUMPTIONS THAN ON FACTUAL GROUND. THE DECISION OF THE AO IS NOT BASED ON PROPER FINDINGS. WHILE INTERPRETING THE SEIZED DOCUMENT AT PAGE 31 OF SSG/ 8 THE AO HAS MADE TOO MANY PRESUMPTIONS WHICH ARE TOTALLY ARBITRARY AND 41 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA WITHOUT ANY BASIS. THE OBSERVATIONS OF THE AO ARE N OT BASED ON ANY MATERIAL FACT OR DOCUMENTARY EVIDENCE. AS ASSESSMENT HAS TO BE MADE BY THE AO ON THE BASIS OF THE MATERIAL AND EVIDENCE AVAILABLE ON RECORD. BUT IN THE PRESENT CASE THE ORDER OF THE AO IS BASED MORE ON PRESUMPTIONS THAN ON FACTUAL GR OUND. THE AO HAS ONLY CREATED HYPOTHETICAL SITUATION BY HIS OWN IMAGINATION AND T HEN DRAWS SUCH CONCLUSIONS WHICH HAVE NO LEGS TO STAND THE TEST OF LAW. IN VIE W OF THE ABOVE I AM OF THE CONSIDERED OPINION THAT THE CONCLUSION DRAWN BY THE AO THAT THE SEIZED DOCUMENT SSG/8 REPRESENTS UNDISCLOSED INVESTMENT OF RS. 26.6 4 CRORES MADE BY THE APPELLANT ON BEHALF OF THE GROUP COMPANIES IS ARBITRARY AND W ITHOUT ANY BASIS AND THAT IT WAS NOT SUPPORTED BY ANY MATERIAL OR EVIDENCE ON RECORD . THE ACTION OF THE AO CANNOT BE UPHELD. THE ADDITION OF RS. 26 64 00 000/- IS DIREC TED TO BE DELETED. THE APPELLANT HAS SUBMITTED THAT THE SEIZED DOCUMEN T AT PAGE 31 OF SSG/ 8 CONTAINS LAND FILING EXPENSES OF RS. 36 09 987/- IN RESPECT OF LAND OWNED BY THE GROUP COMPANIES. IT WAS ALSO ADMITTED BEFORE THE AO THAT THESE EXPENSES WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE GROUP COMPAN IES AND SO THE SAME WAS INCLUDED IN THE STATEMENT OF CASH FLOW. I THEREFORE UPHOLD THE ORDER OF THE AO THAT LAND FILLING EXPENSES OF RS. 36 09 987/- HAD TO BE CONSIDERED IN THE CASE OF THE APPELLANT AS UNDISCLOSED EXPENSES. HOWEVER AS THE SE EXPENSES ARE ALREADY INCLUDED IN THE STATEMENT OF CASH FLOW THE AO IS DIRECTED T O CONSIDER THE NET OF EXPENSES IF ANY FOR THE PURPOSES OF ADDITION. 8.3. THE LD AR ARGUED THE FOLLOWING:- (I) HE CONTESTED THAT MONEY RECEIPTS OF RS.10 00 00 0/- RS.50 000/- & RS. 1 67 000/- HAS BEEN DECLARED IN THE STATEMENT OF CASH FLOW AND SO THESE UNEXPLAINED EXPENSES ARE COVERED BY THE UNDISCLOSED INCOME ALREADY DECLARED TO THE D EPARTMENT. THE LD AO WAS THEREFORE NOT JUSTIFIED IN MAKING SEPARATE ADDITIONS ON ACCOUNT O F SUCH UNDISCLOSED EXPENSES. (II) THE LD AR RE-ITERATED THAT THE SEIZED DOCUMENT WAS NOT SEIZED FROM THE POSSESSION OR CUSTODY OF THE APPELLANT. NEITHER IT CONTAINS THE N AME OF ASSESSEE OR ANY ASSOCIATE FIRM / CONCERN AND INDEED IT DIDNT CONTAIN ANY NAME. (III) SECONDLY THERE WAS NO MATERIAL ON RECORD TO SUGGEST THAT THE ASSESSEE HAS MADE PURCHASE OF LAND. THE LAND BELONGS TO THE GROUP COM PANIES AND INVESTMENT OF RS. 11 CRORES IS SHOWN IN THEIR BOOKS OF ACCOUNT. (IV) THE LD AR EXPLAINED THAT PAGE 31 OF SSG/8 CONT AINS DETAILS UNDER THE HEAD ACCOUNT AS ON 15 TH DECEMBER 2008. IT WAS ARGUED THAT THE LD AO HAS MADE TOO MANY PRESUMPTIONS AND ASSUMPTIONS ABOUT THE SEIZED DOCUMENT. THE LD AO HAS PRESUMED 42 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA THAT THE SEIZED DOCUMENT CONTAINS DETAILS REGARDING PURCHASE OF LAND WHICH IS NOWHERE MENTIONED ON THE SEIZED DOCUMENT. THE SEIZED DOCUME NT HAS SIMPLY MENTIONED ACCOUNT AS ON 15 TH DECEMBER 2008. IT HAS NOWHERE MENTIONED THAT THE ACCOUNT RELATES TO PURCHASE OF LAND. (V) THE LD AR CONTENDED THAT THE OBSERVATION MADE BY THE LD AO WAS FACTUALLY INCORRECT. THE USE OF WORDS LIKE APPEARS OR APPARENTLY CLE ARLY SUGGESTS THAT THE LD AO WAS HIMSELF NOT SURE ABOUT THE FACTS. IT WAS EXPLAINED BEFORE T HE LD AO THAT THE SEIZED DOCUMENT WAS RELATED TO LAND FILLING CHARGES FOR EXISTING LAND T HAT WAS OWNED BY THE GROUP COMPANIES FOR WHICH INVESTMENT OF RS. 11 CRORES WAS ALSO SHOWN IN THEIR REGULAR BOOKS OF ACCOUNT. THE SEIZED DOCUMENT ACTUALLY CONTAINED ACCOUNT GIVEN BY THE CONTRACTOR FOR LAND FILLING EXPENSES PURPORTED TO HAVE BEEN INCURRED BY HIM AS ON 15.12. 2008. THE FIGURE OF 3609.987 ACTUALLY REPRESENTED RS. 36 09 987/- THE AMOUNT THAT WAS IN CURRED BY THE CONTRACTOR TOWARDS LAND FILLING CHARGES. AS ADVANCE OF RS. 37 64 000/- WAS ALREADY GIVEN TO THE CONTRACTOR HE HAD RETURNED RS. 70 000/- AND THE BALANCE OF RS. 84 013 /- WAS PENDING. AS THE LAND FILLING EXPENSES OF RS. 36 09 987/- WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE GROUP COMPANIES THE SAME WAS ADMITTED AS UNDISCLOSED EXPE NSES AND WAS ALSO INCLUDED IN THE STATEMENT OF CASH FLOW. THE CONCLUSION OF THE LD AO THAT THE ASSESSEE HAS MADE UNDISCLOSED INVESTMENT OF RS. 26.64 CRORES TOWARDS PURCHASE OF LAND IS FACTUALLY INCORRECT AND IS NOT SUPPORTED BY ANY MATERIAL OR EVIDENCE ON RECORD. TH E CONCLUSION IS BASED PURELY ON PRESUMPTIONS AND ASSUMPTIONS. THE LD AO HAS ALSO AD DED THE LAND FILLING CHARGES WHICH AMOUNT TO DIVERGENT STAND OF THE LD AO AND ALSO AMO UNTS TO DOUBLE ADDITION FOR THE SAME DOCUMENT. (VI) NO PART OF THE LAND AREA MENTIONED IN PAGE 31 OF SSG-8 WERE EVER PURCHASED BY ASSESSEE NOR ANY SUCH LAND OR PART OF ANY SUCH LAND BELONGED TO ASSESSEE NOR THE LD AO HAS BROUGHT ANY COGENT EVIDENCE ON RECORD TO PROVE THAT SUCH LAND WAS EVER PURCHASED BY YOUR ASSESSEE AND IN THIS CONNECTION THIS IS TO AFFIRM A ND DECLARE SUCH LAND OR PART OF ANY SUCH LAND WAS NEVER PURCHASED BY YOUR ASSESSEE. TO THE B EST KNOWLEDGE OF ASSESSEE EVEN NEITHER SALTEE CONSTRUCTION CO. PVT. LTD. OR ANY GROUP COMP ANY OF ASSESSEE HAD EVER PURCHASED ANY SUCH LAND OR PART OF SUCH LAND. (VII) THE LD AR THEN TOOK US TO THE LETTER DT. 11.1 2.2010 FILED BEFORE LD AO AND WHICH IS 43 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA PART OF ANNEXURE I FILED BEFORE US DURING THE COU RSE OF HEARING. ON PAGE 2186 WHICH WAS LETTER DT. 11.12.2010 IT WAS EXPLAINED BEFORE THE L D AO THAT IT IS MERE LAND FILLING CHARGES. (VIII) THE LD AR THEN TOOK US TO PAGE 728 OF PAPER BOOK (PAPER BOOK NO.5) AND ALSO TO PAGES 31 32 AND 33 OF SSG/44 AND SUBMITTED THAT TH E AVERAGE RATE OF LAND IS RS. 44 281/ COTTAH ONLY. THE LD AR THEN SUBMITTED THAT THE LD A O HAS MERELY PRESUMED THE RATE RS 1 00 000 PER COTTAH ON A PARTICULAR AREA ONLY AND T HEN SUPERIMPOSED THIS RATE OF 1 00 000 PER COTTAH ON THE ENTIRE AREA OF 2950.56 COTTAH (AS ON 15.3.2008) TO JUSTIFY HIS CASE OF TREATING THE FIGURE 3609.987 AS RS.36 09 98 700/- . HENCE THE LD AO HAS MERELY PICKED UP AND CHOSEN AN AMOUNT OF HIS CHOICE WITHOUT CONSIDER ING THE DOCUMENT AS A WHOLE. (IX) THE LD AR ALSO DREW OUR ATTENTION TO THE FACT THAT AS PER SEIZED DOCUMENTS AT PAGE 32 SSG/44 FOR THE TOTAL LAND AREA OF 2486.20 COTTAH TH E VALUE IS RS.11 00 93 463/- (AS ON 15.3.2008) WHEREAS AS PER PAGE 31 SSG/8 THE LAND AREA IS 2950.56 COTTAH THE LAND VALUE HAS BEEN CONSIDERED BY LD AO AT RS. 36 09 98 700/- (AS ON 15.12.2008) AND IT IS ONLY MERE PRESUMPTION BY THE LD AO . THIS ALSO CLEARLY SHOWS THAT SAID FIGURE OF 3609.987 IS ONLY LAND FILLING CHARGES OF RS. 36 09 987/- AND IT HAS TO BE CONSIDERED ACCORDINGLY. 8.4. IN RESPONSE TO THIS THE LD DR ARGUED THAT SU CH PAGE 31 OF SSG/8 REPRESENTED THE LAND PURCHASED BY ASSESSEE WHICH WAS NEVER REFLECTED IN BOOKS OF ACCOUNT OF THE ASSESSEE FAILED TO PROVE SUCH PRESUMPTION OF THE LD AO. THE LD DR ALSO SUBMITTED THAT SINCE ASSESSEE WAS ENGAGED IN REAL ESTATE AND SUCH DOCUMENT READ WITH PG 31 & 33 OF SSG/44 PROVED THAT ASSESSEE HAS MADE SUCH PURCHASES IN HIS GROUP COMPA NIES AS SUCH THE SAME WAS UNDISCLOSED EXPENSES OF ASSESSEE. 8.5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE FILED IN T HAT REGARD. WE HAVE GONE THROUGH THE MATERIAL PLACED PARTICULARLY THE FOLLOWING SEIZED D OCUMENTS ALONG WITH OTHER DOCUMENT WAS PLACED IN PAPER BOOK AS WELL AS ORDER OF THE LOWER AUTHORITIES :-. SSG/8 PGS 21 & 22 RS.10 00 000/- PG 19 RS. 50 000/- SSG/8 PG 31 RS.27 03 31 000/- SSG/44 PGS 31 32 & 37 (RS.26 01 64 000/-+RS.1 67 0 00/-) 44 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA AS FAR AS ADDITION OF RS. 10 00 000/- & RS.50 000/- IN A.YS 2006-07 AND 2008-09 IS CONCERNED WE DO NOT FIND MUCH MERIT IN ASSESSEES C ONTENTION AND HENCE THE ASSESSEES GROUND IN SUCH RESPECT FAILS. AS REGARDS THE SUM OF RS. 26 01 64 000/- THE ASSE SSEES CONTENTION THAT THERE IS NO CORROBORATIVE MATERIAL TO PROVE THE ALLEGATION BY T HE REVENUE HAS SUBSTANTIAL MERIT. ON A PERUSAL OF PG. 8 OF SSG/8 AND PAGES 31 32 & 33 OF S SG/44 IT IS VERY CLEAR THAT THE LD AO HAS DONE A PICK AND CHOOSE JOB AND PICKED UP AN AMO UNT SUITABLE TO HIM AND IMPOSED IT ON ENTIRE PAPER WITHOUT MAKING ANY EFFORT TO UNDERSTAN D THE DOCUMENTS PROPERLY. THE LD AO EVEN FAILED TO EXAMINE THE FACT AS TO LAND SO MENTI ONED IN SSG/44 PAGES 31 32 & 33 ACTUALLY BELONGED TO ASSESSEE OR NOT WHICH HE COULD HAVE ENQUIRED WITH REGISTRAR OF ASSURANCES SINCE ALL SUCH DETAILS OF LAND WERE REFL ECTED IN SSG/44 (BEING LAND OF MOHAMMEDPUR ETC.). THE LD AO CONVENIENTLY CONSIDERE D THE SAME AS PURCHASE OF LAND WITHOUT PROPER EXAMINATION OF THE MATTER. NO CORRE SPONDING VERIFICATION WAS CARRIED OUT IN THE HANDS OF THE SELLER OF THE LAND EVEN THOUGH THE DETAILS WERE VERY MUCH AVAIALBEL WITH THE LD AO. THE ASSESSEE HAD DULY REBUTTED THE PRESUMPTI ON OF THE LOOSE SHEETS AS REPRESENTING ONLY LAND FILLING EXPENSES AND ADMITTEDLY THERE IS ABSOLUTELY NO EVIDENCE BROUGHT ON RECORD TO CONCLUDE THAT THE SAME REPRESENTS AMOUNTS PAID F OR PURCHASE OF LAND. WE ALSO AGREE WITH THE ARGUMENT OF THE LD AR THAT THE LD AO HAD RESORT ED TO DIVERGENT STAND ON THE SAME SEIZED DOCUMENT BY ONE TREATING IT AS PURCHASE OF LAND AND THE OTHER TREATING IT AS LAND FILLING CHARGES THEREBY ERRONEOUSLY MAKING ADDITION ON BOT H THE COUNTS. IT IS PERTINENT FROM SUCH DOCUMENTS THAT THE VALUE OF 2486.20 COTTAHS COULDN T HAVE BECOME RS. 36 09 98 700/- FOR 2950.56 COTTAHS FROM MARCH 2008 TO DECEMBER 2008. A S FAR AS THE CONTENTION OF ASSESSEE TO TREAT THE (PG 31 OF SG/8) AS LAND FILLING CHARGE S IT APPEARS TO BE CREDIBLE SINCE REVENUES ACTION IN THAT REGARD IS MERELY ON ASSUMPTION. EVEN OTHERWISE THE REVENUE FAILED TO BRING ANY EVIDENCE ON RECORD TO PROVE ITS FINDING. HENCE THE LD AOS ACTION IN SUCH RESPECT IS REJECTED AND DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH THE FINDING OF THE LD CITA. AS REGARDS THE REVENUES GROUND IN TREATING RS. 10 00 000/- RS.50 000/- RS.1 67 000/- & RS.36 09 987/- OUT OF AVAILABLE CASH WE FIND MER IT IN THE FACT THAT THAT LD AO HIMSELF HAS ALLOWED SUCH SET OFF IN THE ASSESSMENT ORDER SO R EVENUE CANNOT BE ALLOWED TO CHANGE ITS STAND NOW. EVEN OTHERWISE THE REVENUE IS NOT IN PO SSESSION OF ANY EVIDENCE NOR IT HAS 45 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA FURNISHED ANY SUCH FACT ON RECORD THAT THE SUMS EXP ENDED WERE OTHER THAN OUT OF SUM EARNED / RECEIVED AS CASH BY THE ASSESSEE. HENCE WE CONCU R WITH THE ORDER OF THE LD CITA IN ALLOWING SUMS AS PART OF CASH FLOW AND AS SUCH THE REVENUES GROUND FAILS ON SUCH ACCOUNT. AS A RESULT WE HOLD AS FOLLOWS: ASST YEAR APPEAL NO. GROUND NOS. RESULT 2006-07 145/K/12 6 DISMISSED 34/K/12 8 DISMISSED 2008-09 147/K/12 7 DISMISSED 36/K/12 6 DISMISSED 2009-10 148/K/12 10 DISMISSED 37/K/12 5 DISMISSED 6 DISMISSED ADDL. GROUND IN C.O 148/K/12 1 DISMISSED ADDL. GROUND IN 1419/ K/12 1 DISMISSED 9. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED S SG /9-39 A.Y 2006-07 C.O 145/KOL/2012 GROUND NO. 7 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREA TING RS.12 32 581/- AS UNDISCLOSED INVESTMENT OF THE APPELLANT ON THE BASIS OF SS G-9 TO 39 AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE ACTION OF LEI. C IT (A) IN SUCH REGARD IS WITHOUT APPRECIATING THE FACTS IN THE MATTER PROPERLY AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY . A.Y 2007-08 C.O 146/KOL/2012 GROUND NO. 6 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS.6 94 299/- AS UNDISCLOSED INVESTMENT OF THE APPELLANT ON THE BASIS OF SSG-9 L O 39 AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE ACTION OF LD. CIT (A) IN SUCH REGARD IS WITHOUT APPRECIATING THE FACTS IN THE MATTER PROPERLY AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY A.Y 2008-09 C.O 147/KOL/2012 GROUND NO.8 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS.6 28 500/- AS UNDISCLOSED INVESTMENT OF THE APPELLANT ON THE BASIS OF SSG-9 T O 39 AND IN VIEW OF THE FACTS AND IN 46 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA THE CIRCUMSTANCES THE ACTION OF LD. CIT(A) IN SUCH .REGARD IS WITHOUT APPRECIATING THE FACTS IN THE MATTER PROPERLY AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. A.Y 2009-10 C.O 148/KOL/2012 GROUND NO.11 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD.CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS.8 6 257/- AS UNDISCLOSED INVESTMENT OF THE APPELLANT ON THE BASIS OF SSG-9 TO 39 AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE ACTION OF LD. CIT (A) IN SUCH REG ARD IS WITHOUT APPRECIATING THE FACTS IN THE MATTER PROPERLY AND IN VIEW OF THE FAC TS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. THIS GROUND IS WITHOUT PREJUDICE TO THE FACT THAT THE APPELLANT HAS SHOWN THE SAME AS APPLICATION OF TH E INCOME OFFERED BY IT AND HENCE IT MAY KINDLY BE CONSIDERED ACCORDINGLY. A.Y 2006-07 IT(SS) 34/KOL/2012 GROUND NO. 9 - THE LD. CIT(A) IS ERRED IN DIRECTING THE A.O. TO CONSIDER THE UNEXPLAINED EXPENDITURE OF RS.3 60 500/- AS UNEXPLA INED EXPENDITURE AS PER SEIZED DOCUMENT SSG-9-39 AGAINST THE UNDISCLOSED CASH REC EIPT AND THAT THE ORDER OF THE LD. CIT(A) IS AGAINST THE PROVISION OF SECTION 69C OF THE ACT. GROUND NO. 10 - THE LD. CIT(A) IS ERRED IN DIRECTING THE A.O. TO C ONSIDER THE UNEXPLAINED EXPENDITURE OF RS. 8 61 581/- ADDED ON THE BASIS OF SEIZED DOCUMENT SSG/9-39 AGAINST THE UNDISCLOSED CASH RECEIPT AND THAT THE ORDER IS AGAINST THE 69C OF THE ACT. A.Y 2007-08 IT(SS) 35/KOL/2012 GROUND NO.8 - THE LD. CIT(A) IS ERRED IN DIRECTING THE A.O. TO C ONSIDER THE UNEXPLAINED EXPENDITURE OF RS. 6 94 299/- MADE ON THE BASIS OF SEIZED DOCUMENT SSG/9-39 AGAINST THE UNACCOUNTED CASH RECEIPT. THIS IS AGAINST THE SECTION 69C OF ACT. A.Y 2008-09 IT(SS) 36/KOL/2012 GROUND NO.7 - THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO CONSIDER THE UNEXPLAINED EXPENDITURE OF RS. 6 28 500/- AS PER SE IZED DOCUMENT SSG/9-39 AGAINST THE UNACCOUNTED CASH RECEIPT OF THE ASSESSEE. A.Y 2009-10 IT(SS) 37/KOL/2012 GROUND NO. 7 - THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO CONSIDER THE UNEXPLAINED EXPENDITURE AS PER SEIZED DOCUMENT SSG/ 9-39 OF RS. 86 257/- AGAINST ACCOUNTED CASH RECEIPT OF THE ASSESSEE. 47 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 9.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO FOUND THAT THE SEIZED MATERIAL MARKED SSG/9 TO SSG/39 IS SMALL POCKET DIARIES CONTAINING DETAIL OF PAYMENTS MADE TO DIFFERENT LABOUR CONTRACTORS IN RESPECT OF PROJECTS UNDERTAKE N BY THE GROUP COMPANIES WHICH WAS NOT RECORDED IN THEIR REGULAR BOOKS OF ACCOUNT. THE LD AO HAS NOTED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS HIMSELF ADMITTED UNDISCLOSED EXPEN SES OF RS.20 000/- RS.1 45 000/- RS.3 80 500/- RS.3 70 500/- RS.6 94 299/- RS.6 28 500/- AND RS. 86 257/- IN ASST YEARS 2003-04 2004-05 2005-06 2006-07 2007-08 2008-0 9 AND 2009-10 RESPECTIVELY. THE LD AO ALSO FOUND THAT UNDISCLOSED EXPENSES OF RS.15 55 000/- AND RS.8 61 581/- RELATED TO ASST YEARS 2005-06 AND 2006-07 WAS RECORDED IN THE SEIZED DOCUMENTS SSG/10 16 32 & 35. IT WAS CONTENDED BEFORE THE LD AO THAT THESE EX PENSES RELATE TO SALTEE INFOTEX (P) LTD. HOWEVER THE SAID COMPANY DENIED HAVING ANY CONNECTI ON WITH SUCH EXPENSES. THE LD AO CONCLUDED THAT THE EXPENSES RELATE TO THE ASSESSEE. THE LD AO THUS MADE ADDITIONS OF RS.20 000/- RS.1 45 000/- RS.3 80 500/- RS.3 70 500/- RS.6 94 299/- RS.6 28 500/- AND RS. 86 257/- IN ASST YEARS 2003-04 2004-05 2005-0 6 2006-07 2007-08 2008-09 AND 2009-10 AS UNDISCLOSED EXPENDITURE ON THE BASIS OF THE SEIZED DOCUMENTS MARKED SSG/9 TO SSG/39. THE ORDER OF THE LD AO IS REPRODUCED AS UND ER :- SSG/9 TO SSG/39 ARE SMALL POCKET DIARIES WHICH CON TAINS THE DETAILS OF PAYMENT MADE TO DIFFERENT LABOUR CONTRACTOR / CONTRACTORS. THE MAIN CONTRACTORS WERE T.T. CONSTRUCTIONS R.K. NAYER BABLU MONDAL HANUMAN PR ASAD JIOAN RAM DAYANAND THAKUR BSR CONSTRUCTIONS COMPANY SANKAR S. R. CO NSTRUCTION ETC. THE ASSESSEE VIDE ANNEXURE J TO LETTER DT. 11.11.2010 ADMITT ED UNDISCLOSED EXPENDITURE ON ACCOUNT OF LABOUR PAYMENT AMOUNTING TO RS. 23 25 05 6/-. HOWEVER IN RESPECT OF LABOUR PAYMENT ON THE PROJEC T DN-9 THE ASSESSEE CLAIMED THAT THE PAYMENTS WERE MADE BY SALTEE INFOTEX AND NOT RELATED TO US. HOWEVER DURING THE ASSESSMENT PROCEEDINGS U/S 153A M/S SAL TEE INFOTEX DENIED THE PAYMENT OF SUCH EXPENSES. SINCE THESE DIARIES ARE FOUND FRO M THE POSSESSION OF SRI SURYA PRAKASH BAGLA AND HIS GROUP COMPANIES THE SAME IS PRESUMED TO BE THE EXPENSES OF SRI SURYA PRAKASH BAGLA AND NOT DISCLOSED IN THE RE GULAR BASIS. THE YEAR WISE TOTAL OF LABOUR PAYMENT ON DN-9 IS AS UNDER : - F.Y 2004-05(A.Y 2005-06) F.Y 2005-06 (A.Y 2006-07) SSG/10 (R. K. NARAYAN) RS.30 000/- RS.37 000/- SSG/16 (BABLU MONDAL) RS.90 000/- RS.95 000/- SSG/32 ( S. R. CONSTRUCTION ) RS.14 00 000/- RS.6 79 581/- SSG/35 (MONORANJAN BARAUI) RS.35 000/- RS.50 000/- TOTAL RS.15 55 000/- RS.8 61 581/- 48 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA THEREFORE TOTAL UNDISCLOSED EXPENSES ARE WORKED OU T : UNDISCLOSED APPLICATION/ EXPENSES F.Y A.Y AS PER ASSESSEES ADMISSION VIDE LETTER DT. 11.11.10 AS PER DISCUSSION TOTAL 2002-03 2003-04 20 000/- - 20 000/- 2003-04 2004-05 1 45 000/- - 1 45 000/- 2004-05 2005-06 3 80 500/- 15 55 000/- 19 35 000/- 2005-06 2006-07 3 70 5010/- 8 61 581/- 12 32 081/- 2006-07 2007-08 6 94 299/- - 6 94 299/- 2007-08 2008-09 6 28 500/- - 6 28 500/- 2008-09 2009-10 86 257/- - 86 257/- [UNDISCLOSED EXPENDITURE FOR A.Y 2003-04 RS. 20 000 /-] [UNDISCLOSED EXPENDITURE FOR A.Y 2004-05 RS. 1 45 000/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2005-06 RS. 19 35 000/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2006-07 RS. 12 32 081/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2007-08 RS. 6 94 299/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2008-09 RS.6 28 50 0/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2009-10 RS. 86 257 /-] 9.2. THE LD CITA OBSERVED THE FOLLOWING:- I HAVE PERUSED THE ASSESSMENT ORDER AND CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND ALSO THE MATERIAL ON RECORD. THE HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE SEIZED DOCUMENTS SSG/9-39 CONTAIN PAYMENTS TO LABOU R CONTRACTORS AMOUNTING TO RS. RS.20 000/- RS.1 45 000/- RS.3 80 500/- RS. 3 70 500/- RS.6 94 299/- RS.6 28 500/- AND RS.86 257/- IN AY 2003-04 2004-05 2005-06 20 06-07 2007- 08 2008-:09 AND 2009-10 WHICH WAS ADMITTED BY THE APPELLANT AS HIS UNDISCLOSED EXPENSES; AND HAS ALSO BEEN INCLUDED IN HIS STATEMENT OF CASH FLOW. I FIND FROM THE PERUSAL OF THE CASH FLOW STATEMENT THAT TWO EXPENSES OF RS. 5 000/- EAC H BOOKED IN AY 2006-07 ACTUALLY PERTAIN TO AY 2005-06 AS THEY WERE INCURRED ON 05-0 3-2005 AND 25-03-2005. CONSEQUENTLY THE CORRECT FIGURES OF UNDISCLOSED EX PENSES PERTAINING TO AY 2005-06 AND 2006-07 SHOULD BE RS.3 90 500/- AND RS.3 60 500 /- (INSTEAD OF RS.3 80 500/- AND RS 3 70 500/- AS MENTIONED IN THE ASSESSMENT ORDER) . IT WAS CONTENDED THAT UNDISCLOSED EXPENSES WERE INCURRED OUT OF UNDISCLOS ED RECEIPTS ALREADY DECLARED TO THE DEPARTMENT AND SO CONSEQUENTIAL RELIEF SHOULD BE ALLOWED. SINCE THE EXPENSES OF RS.20 000/- RS.1 45 000/- RS.3 90 500/- PERTAIN T O AY 2003-04 2004-05 AND 2005- 06 WHEN THERE WAS NO UNDISCLOSED RECEIPTS THESE AD DITIONS ARE CONFIRMED. HOWEVER AS THE UNDISCLOSED EXPENSES OF RS.3 60 500/- RS.6 94 299/- RS.6 28 500/- AND RS.86 257/- RELATE TO AY 2006-07 2007-08 2008-09 AND 2009-10 THEY COULD POSSIBLY BE' COVERED BY UNDISCLOSED RECEIPTS. THE AO IS DIRECTED TO CONSIDER THESE EXPENSES AS PART OF THE CASH FLOW STATEMENT AND CON SIDER THE NET OF EXPENSES IF ANY FOR THE PURPOSES OF THE ADDITION. 49 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT U NDISCLOSED EXPENSES OF RS.15 55 000/- AND RS.8 61 581/- RELATED TO A.Y 200 5-06 AND 2006-07 WAS RECORDED IN THE SEIZED DOCUMENTS SSG/10 16 32 & 35. IT WAS CONTENDED BEFORE THE AO THAT THE EXPENSES WERE RELATED TO SALTEE INFOTEX (P) LTD BUT THEN THE SAME WAS DENIED BY THE SAID COMPANY. THE APPELLANT THUS FAILED TO SUPP ORT ITS CONTENTION. I FIND THAT THE APPELLANT IS IN CONTROL OF HIS GROUP COMPANIES; AND HAS ALSO ADMITTED UNDISCLOSED RECEIPTS AS WELL AS UNDISCLOSED EXPENSES OF THE GRO UP COMPANIES IN HIS OWN CASE I AM THEREFORE NOT INCLINED TO ACCEPT THE ARGUMENT TH AT THE EXPENSES CONTAINED IN THE SEIZED DOCUMENTS SSG/10 16 32 & 35 ARE NOT ASSESS ABLE IN THE HANDS OF THE .APPELLANT. HOWEVER THESE UNDISCLOSED EXPENSES ARE TO BE CONSIDERED AS BEING MADE OUT OF UNDISCLOSED RECEIPTS AS SHOWN BY THE APPELLA NT AND ALSO ACCEPTED BY THE AO. THE CASH FLOW STATEMENT .HAD BEEN FILED BEFORE .THE AO IN RESPECT OF THE UNACCOUNTED INCOME WHICH MAINLY COMPRISED OF CASH RECEIVED ON D IFFERENT DATES FROM THE FORT GROUP IN CONNECTION WITH THE SALE OF SHARES. AS THE RE IS UNDISCLOSED RECEIPTS IN AY 2005-06 THE ADDITION OF RS.15 55 000/- IN AY 2005- 06 IS SUSTAINED. HOWEVER THE AO IS DIRECTED TO CONSIDER THE NET OF THE UNEXPLAINED EXPENSES OF RS.8 61 581/- IF ANY FOR THE PURPOSES OF ADDITION. 9.3. THE LD AR MERELY SUBMITTED THAT THE UNDISCLOSE D EXPENDITURE BE ALLOWED TO BE SET OFF FROM CASH AVAILABLE OUT OF UNDISCLOSED INCOME AS PE R THE DATE OF EXPENSES AND AVAILABILITY OF CASH. THE LD DR OPPOSED THE CONTENTION OF LD AR FOR REASONS MENTIONED EARLIER. 9.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK SUBMITTED BY THE ASSESSEE IN THAT REGARD. AS REGARDS THE REVENUES GROUND IN TREATING RS. 8 61 500/- RS.3 60 500/- R S.6 28 500/- & RS.86 257/- OUT OF AVAILABLE CASH WE FIND MERIT IN THE FACT THAT THA T THE LD AO HIMSELF HAS ALLOWED SUCH SET OFF IN THE ASSESSMENT ORDER SO REVENUE CANNOT BE ALLOWE D TO CHANGE ITS STAND NOW. EVEN OTHERWISE THE REVENUE IS NOT IN POSSESSION OF ANY EVIDENCE NOR IT HAS FURNISHED ANY SUCH FACT ON RECORD THAT THE SUMS EXPENDED WERE OTHER TH AN OUT OF SUM EARNED / RECEIVED AS CASH BY THE ASSESSEE. HENCE WE CONCUR WITH THE ORDER OF THE LD CITA IN ALLOWING SUMS AS PART OF CASH FLOW AND AS SUCH THE REVENUES GROUND FAILS ON SUCH ACCOUNT WHICH AMOUNTS TO DISPUTING ITS OWN EARLIER ACTION AND WHICH IS NOT P ERMISSIBLE AS PER LAW. AS A RESULT WE HOLD AS FOLLOWS: ASST YEAR APPEAL NO. GROUND NOS. RESULT 2006-07 145/K/12 7 DISMISSED 34/K/12 9 & 10 DISMISSED 2007-08 146/K/12 6 DISMISSED 35/K/12 8 DISMISSED 50 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 2008-09 147/K/12 8 DISMISSED 36/K/12 7 DISMISSED 2009-10 148/K/12 11 DISMISSED 37/K/12 7 DISMISSED 10. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED A S SSG / 42 A.Y 2007-08 C.O 146/KOL/2012 GROUND NO.7 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS.5 0 64 383/- AS ALLEGED SEIZED DOCUMENT SSG-42 & AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE ACTION OF LD. CIT (A) IN SUCH REGARD IS WITHOUT APPRECIATING THE FACTS IN THE MATTER PROPERLY AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES I T MAY KINDLY BE HELD ACCORDINGLY. A.Y 2007-08 IT(SS) 35/KOL/2012 GROUND NO. 9 - THE LD. CIT(A) IS ERRED IN DIRECTING THE A.O. TO C ONSIDER THE UNEXPLAINED EXPENDITURE OF RS. 50 64 383/- AS PER SEIZED DOCUMENT PAGE NO.4 SSG/42 AGAINST THE UNACCOUNTED CASH RECEIPT. A.Y 2008-09 IT(SS) 36/KOL/2012 GROUND NO. 8 - THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 5 89 47 000/- AS UNDISCLOSED INVESTMENT AS PER THE PAGE NO. 6 OF SEIZED DOCUMENT SSG/42. A.Y 2009-10 IT(SS) 37/KOL/2012 GROUND NO.8 - THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 1 30 00 000/- MADE AS UNEXPLAINED INVESTMENT ON THE BASIS OF SEIZ ED DOCUMENT PAGE 6. SSG/42. 10.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE L D AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT PAGE 6 OF THE SEIZED DOCUMENTS MARKED SSG/42 C ONTAINS ACCOUNT OF ONE KISHANJI. THE LD AO INTERPRETED THE SEIZED DOCUMENT AS CONTAINING DETAIL OF INVESTMENT IN DIFFERENT PLACES OR PROJECTS. IT ALSO APPEARED TO THE LD AO THAT THE FIGURES WERE WRITTEN IN LAKHS OF RUPEES. THE LD AO CONCLUDED THAT PAGE 6 OF THE SEIZED DOCUM ENT INVOLVES UNDISCLOSED INVESTMENT OF RS. 7 19 47 000/- (COMPRISING RS. 5 89 47 000/- IN ASST YEAR 2008-09 AND RS. 1 30 00 000/- IN ASST YEAR 2009-10). HE NOTED THAT IT WAS FOR THE ASSESSEE TO EXPLAIN THE NATURE OF THE TRANSACTIONS AS RECORDED IN THE SEIZE D DOCUMENT AS IT WAS RECOVERED FROM HIM. AS THERE WAS NO PROOF REGARDING THE GENUINENESS OF KISHANJI THE LD AO HELD THAT THE SUM OF 51 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA RS. 7 19 47 000/- HAD TO BE TREATED AS UNDISCLOSED INVESTMENT OF THE ASSESSEE. THE LD AO THUS MADE ADDITION OF RS. 5 89 47 000/- IN ASST YEA R 2008-09 AND RS. 1 30 00 000/- IN ASST YEAR 2009-10 ON ACCOUNT OF UNDISCLOSED INVESTMENT. 10.2. THE LD AO FURTHER NOTED THAT PAGE 4 OF SSG/42 CONTAINS DETAIL OF EXPENDITURE INCURRED UPTO 20.3.2008 IN JESSORE ROAD PROJECT. THE LD AO H AS MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS ADMITTED UNDISCLOSED EXPENSES OF RS.12 64 383/- WHICH WAS INCLUDED IN THE STATEMENT OF CASH FLOW. HOWEVER THE SAME WA S DETERMINED BY REDUCING SUM OF RS.38 00 000/- ON THE GROUND THAT THE SAME HAD ALRE ADY BEEN CONSIDERED AS UNDISCLOSED INCOME UNDER THE SEIZED DOCUMENT SSG/3. THE LD AO O BSERVED THAT THE ENTRIES IN SSG/3 DID NOT MATCH AND CONSEQUENTLY NO SET OFF FOR RS. 38 00 000/- COULD BE ALLOWED. THE LD AO THUS HELD THAT SUM OF RS. 50 64 383/- HAD TO BE TREATED AS UNDISCLOSED EXPENSES OF THE ASSESSEE. THE LD AO FURTHER NOTED THAT PAGE 23 TO 37 SHOWS UN DISCLOSED EXPENSES OF RS. 45 456/- WHICH WAS ADMITTED BY THE ASSESSEE. THE LD AO FURTH ER NOTED THAT PAGES 23 TO 37 SHOWS UNDISCLOSED EXPENSES OF RS.45 456/- WHICH WAS ADM I TTED BY THE ASSESSEE AND HAS ALSO BEEN INCLUDED IN THE .STATEMENT OF CASH FLOW. THE LD AO THUS MADE ADDITION OF RS.50 64 383/- AND RS.45 456/- AS UNDISCLOSED EXPENSES IN ASST YEA R 2007-08 AND ASST YEAR 2008-09. THE ORDER OF THE LD AO IS REPRODUCED AS UNDER:- PAGE 6 OF SSG/42 IS THE ACCOUNT OF ONE 'SHRI KISHAN JI' IN WHICH THE DETAIL OF INVESTMENT AT DIFFERENT PLACES/PROJECTS HAS BEEN ME NTIONED. IT APPEARS THAT THE FIGURES WRITTEN ON THIS PAGE ARE IN LAKHS OF RUPEES . THE ASSESSEE SUBMITTED VIDE ANNEXURE M TO LETTER DT. 11.11.2010 AS NOT RELA TED TO US. THE DOCUMENTS WERE FOUND IN ASSESSEES POSSESSION. ONUS IS UPON THE ASSESSEE TO EXPLAIN THE TRANSACTIONS. IN ABSENCE OF PROOF OF GE NUINENESS REGARDING KISHANJI THE TOTAL INVESTMENT IS CONSIDERED IN THE HAND OF THE A SSESSEE. THEREFORE AMOUNT OF RS. 7 19 47 000/- INCLUDING CASH OF RS. 4 82 00 000/- ( OTHER THAN THOSE MENTIONED AS CH MEANING CHEQUE) HAS BEEN TREATED AS UNDISCLOSE D INVESTMENT BY THE ASSESSEE AS PER DATES MENTIONED IN THE SEIZED PAGE AS BELOW : - THEREFORE YEAR-WISE ADDITION WILL BE :- PAYMENT / APPLICATION F.Y 2007-08(A.Y 2008- 09) F.Y 2008-09 (A.Y 2009-10) RS. 5 89 47 000/- RS. 1 30 00 000/- PAGE 4 OF SSG - 42 CONTAINS THE DETAILS OF EXPENDIT URE INCURRED AT JESSORE ROAD 52 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA PROJECT UP TO 20 03.2008. THE ASSESSEE ADMITTED THE FOLLOWING UNDISCLOSED- EXPENDITURE VIDE ANNEXURE M' & M2' ATTACHED TO TH E LETTER DT.11.11.2010 TO THE TUNE OF 12 64 383/- HAS BEEN ARRIVED AT BY REDUCING 38 00 000/- ON THE GROUND THAT THE UNDISCLOSED INCOME OF RS.38 00 000/- HAS ALREAD Y BEEN CONSIDERED IN SSG/3. THE ASSESSEE'S EXPLANATION IS EXAMINED. THE DISCLOSURE FOR SSG/3 CANNOT BE MATCHED WITH ENTRIES WITH THE SEIZED DOCUMENT. ACCORDINGLY THE UNDISCLOSED INCOME AND EXPENDITURE FROM THIS SEIZED DOCUMENT COMES TO RS.5 0 64 383/- FOR A.Y 2007 - 08. PAGES 23 TO 37 FURTHER SHOWS EXPENSES OUT OF WHICH RS. 45 456/- HAS BEEN ADMITTED AS UNDISCLOSED FOR A.Y 2008-09. [UNDISCLOSED EXPENDITURE FOR A.Y 2007-08 RS. 50 64 383/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2008-09 RS.5 89 92 456/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2009-10 RS. 1 30 0 0 000/-] 10.3. THE LD CITA OBSERVED AS FOLLOWS:- I HAVE PERUSED THE ASSESSMENT ORDER AND CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND ALSO THE MATERIAL ON RECORD. THE AO HAS MENTIO NED IN THE ASSESSMENT ORDER THAT PAGE 4 OF THE SEIZED DOCUMENTS SSG/42 CONTAIN DETAI L OF EXPENSES OF RS.12 64 383/- AND THAT PAGE 23 TO 37 RECORD EXPENSES OF RS.45 45 6/- WHICH WAS ADMITTED BY THE .APPELLANT AS UNDISCLOSED EXPENSES IN AY 2007-08 AN D 2008-09 AND WAS ALSO INCLUDED IN THE STATEMENT OF CASH FLOW. THE AO HAS ALSO NOTED THAT EXPENSES OF RS.12 64 383/- WAS ARRIVED AT BY REDUCING RS.38 00 000/- ON THE GROUND THAT IT WAS ALREADY CONSIDERED IN SSG/3. THE APPELLANT HAS PROD UCED NO EVIDENCE TO SUBSTANTIATE HIS CLAIM. I AM THEREFORE UNABLE TO AC CEPT THE ARGUMENT THAT RS.38 00 000/- HAD ALREADY BEEN CONSIDERED UNDER SS G/3. HOWEVER AS UNDISCLOSED EXPENSES ARE TO BE CONSIDERED AGAINST UNDISCLOSED I NCOME THE AO IS DIRECTED TO TREAT THE UNDISCLOSED EXPENSES OF RS.50 64 383/- (RS.12 6 4 383/- PLUS RS.38 00 000/-) AND RS.45 456/- AS PART OF THE CASH FLOW STATEMENT AND THEN CONSIDER THE NET OF EXPENSES IF ANY FOR THE PURPOSES OF THE ADDITION. IT WAS ARGUED BEFORE ME THAT THE SEIZED DOCUMENT SS G/42 WAS NOT SEIZED FROM THE POSSESSION OR CUSTODY OF THE APPELLANT; AND FURTHER THERE WAS NO MATERIAL ON RECORD TO SUGGEST THAT THE APPELLANT HAD MADE INVESTMENT I N DIFFERENT PLACES OR PROJECTS AS MENTIONED BY THE AO IN THE ASSESSMENT ORDER. THE LD . A/R EXPLAINED THAT PAGE 6 OF SSG/42 CONTAINS CERTAIN DETAILS UNDER THE HEAD KIS HANJI ACCOUNT. IT WAS ARGUED THAT THE AO HAS MADE TOO MANY PRESUMPTIONS AND ASSU MPTIONS ABOUT THE SEIZED DOCUMENT. FOR THE AO HAS PRESUMED THAT THE SEIZED DOCUMENT CONTAINS DETAILS OF INVESTMENT WHICH IS NOWHERE MENTIONED IN THE SEIZED DOCUMENT. THE SEIZED DOCUMENT HAS SIMPLY MENTIONED KISHANJI ACCOUNT. IT HAS NOW HERE MENTIONED THAT THE ACCOUNT RELATES TO INVESTMENT IN PLACES OR PROJECTS . BUT THEN WITHOUT ANY BASIS THE AO HAS PRESUMED THAT IT PERTAINS TO INVESTMENT. THE AO HAS NOWHERE EXPLAINED IN THE ASSESSMENT ORDER AS TO WHY HE BELIEVES THAT THE FIGURES WRITTEN ON THE SAID DOCUMENT REPRESENTED INVESTMENT. THE AO HAS MADE FU RTHER PRESUMPTION WITHOUT ANY BASIS THAT THE FIGURES ARE MENTIONED IN LAKHS. THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT - IT APPEARS THAT THE FIGURE S WRITTEN ON THIS PAGE ARE IN LAKHS 53 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA OF RUPEES. THE LD. A.R ARGUED THAT THE VERY LANGUA GE USED BY THE AO ONLY SUGGESTS THAT THE AO IS HIMSELF NOT SURE ABOUT THE FACTS. TH ERE WAS NO REASON OR BASIS OR JUSTIFICATION FOR THE AO TO HOLD THAT THE FIGURES A RE IN LAKHS OF RUPEES. THE LD. A.R HAS FURTHER ARGUED THAT THE SEIZED DOCUMENT HAS TO BE CONSIDERED AND BELIEVED IN TOTALITY. WHEN IT WAS MENTIONED IN THE SEIZED DOCUM ENT ITSELF THAT IT CONTAINED THE ACCOUNT OF KISHANJI THE AO WAS NOT JUSTIFIED IN PRE SUMING AND THAT TOO WITHOUT ANY BASIS THAT THE SEIZED DOCUMENT WAS RELATED TO THE A PPELLANT. THE AO HAS MADE NO EFFORTS TO LOCATE OR EXAMINE KISHANJI WITH WHOM THE SEIZED DOCUMENT IS POSSIBLY RELATED. I FIND SUBSTANCE IN THE ARGUMENT THAT THE AO HAS BROUGHT NO CORROBORATIVE MATERIAL ON RECORD TO SHOW THAT THE ACCOUNT OF KISH ANJI AS MENTIONED IN SSG/42 WAS IN ANYWAY RELATED TO THE APPELLANT OR EVEN TO THIS GROUP COMPANIES. THERE IS NO POSITIVE MATERIAL ON RECORD TO LINK THE ACCOUNT OF KISHANJI EITHER WITH THE REGULAR BOOKS OF ACCOUNT OF THE APPELLANT OR HIS GROUP COMP ANIES OR WITH THE SEIZED DOCUMENTS FOUND IN SEARCH. WITHOUT ESTABLISHING ANY NEXUS THE AO CANNOT PRESUME THAT THE ACCOUNT OF KISHANJI WAS RELATED TO THE INV ESTMENT MADE BY THE APPELLANT. THE SEIZED DOCUMENT DOES NOT MENTION THE NAME OF THE AP PELLANT OR HIS GROUP COMPANIES. ON THE CONTRARY IT SPECIFICALLY MENTIONS THAT THE ACCOUNT PERTAINS TO KISHANJI. IN THIS FACTUAL BACKGROUND THE AO HAD NO LEGAL SANCTION OR AUTHORITY TO PRESUME THAT THE PERIOD SEIZED DOCUMENT RELATES TO THE APPELLANT WIT HOUT BRINGING ANY CORROBORATIVE MATERIAL OR EVIDENCE ON RECORD. ALSO THERE IS NO M ATERIAL TO SHOW THAT THE SEIZED DOCUMENT ACTUALLY REPRESENTS DETAIL OF INVESTMENT. IT IS ONLY THE PRESUMPTION OF THE AO THAT THE FIGURES WRITTEN ON PAGE 4 OF SSG/42 ARE IN LAKHS OF RUPEES. THE CONCLUSION OF THE AO THAT THE APPELLANT HAS MADE UN DISCLOSED INVESTMENT OF RS. 7 19 47 000/- IS NOT SUPPORTED BY ANY MATERIAL OR EVIDENCE ON RECORD; ON THE CONTRARY IT IS BASED ONLY ON THE IMAGINATION OF TH E AO. THE DECISIONS MADE BY THE AO ARE NOT BASED ON PROPER FINDINGS. THE AO HAS MAD E HIS CONCLUSIONS MORE FROM HIS PRESUMPTIONS AND ASSUMPTIONS THAN FROM MATERIAL FACTS. IN VIEW OF THE ABOVE I AM OF THE OPINION THAT THE ADDITION OF RS. 7 19 47 000/- (COMPRISING RS. 5 89 47 000/- IN A.Y 2008-09 AND RS. 1 30 00 000/- IN A.Y 2009-10) ON ACCOUNT OF UNDISCLOSED INVESTMENT IS NEITHER SUSTAINABLE IN LA W NOR ON FACTS; AND SO THE SAME IS DIRECTED TO BE DELETED. 10.4. THE LD AR ARGUED THE FOLLOWING :- (I) HE SUBMITTED THAT THE LD AO HAD MADE TWO ADDITI ONS BEING AS FOLLOWS: PG 6 OF SSG/42 ASSESSMENT YEAR : 2008-09 RS.5 89 92 456/- ASSESSMENT YEAR : 2009-10 RS.1 30 00 000/- RS.7 19 92 456/- & PAGE 4 OF SSG/42 A.Y. 2007-08 RS.50 64 38 3/- (II) AS REGARDS PG. 4 OF SSG/42 IT REPRESENTED ACCO UNTS PERTAINING TO JESSORE ROAD PROJECT WHICH WAS ACCOUNTED FOR IN THE BOOKS OF RESPECTIVE COMPANY. HOWEVER TO BUY PEACE OUT OF SUCH SUM OF RS.50 64 383/- RS. 38 00 000/- HAD ALR EADY BEEN OFFERED UNDER SSG/3 AND HENCE ONLY RS. 12 64 383/- CAN BE ADDED. THE LD AR ALSO DREW OUR ATTENTION TO ANNEXURE M-1 & M-2 OF LETTER DT. 11.11.2010 WHICH WERE AT PA GE 1085 & 1086 OF PAPER BOOK NO.8 54 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA AND HENCE ADDITION IF ANY BE RESTRICTED ONLY UPTO RS. 12 64 383/-. (III) AS REGARDS PAGE 6 OF SSG/42 IS CONCERNED HE SUBMITTED THAT SUCH DOCUMENT DOESNT PERTAIN TO IT NOR IT IS AWARE OF CONTENTS OF SUCH D OCUMENT AND RATHER IT PERTAINS TO SOME KISHANJI AS MENTIONED IN SUCH DOCUMENT. (IV) HE SUBMITTED THAT IS MERE ASSUMPTION & PRESUMP TION ON PART OF THE LD AO TO HOLD THAT CONTENTS OF SUCH PAGE 6 ARE THAT OF ASSESSEE AND LD AO EVEN PRESUMED THAT THE SAME IS IN LAKHS AND/ OR IT REPRESENTS UNEXPLAINED EXPENDIT URE WITHOUT ANY CORROBORATIVE MATERIAL IN SUCH RESPECT AND / OR WITHOUT MAKING ANY EFFORT TO MAKE ANY ENQUIRY DURING SEARCH SUBSEQUENTLY. (V) HE SUBMITTED THAT PRESUMPTION U/S 292C IS NOT A MANDATORY PRESUMPTION AND RATHER A DISCRETIONARY PRESUMPTION. SECTION 292C USES THE EX PRESSION MAY BE PRESUMED AND AS SUCH IT IS REBUTTABLE PRESUMPTION. HE SUBMITTED THA T SUCH PAGE 6 WAS A MERE LOOSE SHEET FOUND AT THE PREMISES SEARCHED. BUT IT WAS NEITHER UNDER POSSESSION NOR UNDER CONTROL OF ASSESSEE AND NOR ITS CONTENTS ARE CORROBORATED OR L INKED WITH ASSESSEE IN ANY MANNER AND HENCE IT CANNOT BE TREATED AS CONCLUSIVE EVIDENCE M ERELY BECAUSE IT WAS FOUND AT THE SEARCHED PREMISES. HE ALSO RELIED ON JUDGMENT OF HONBLE KERALA HIGH COURT IN ITO V. ABDUL MAJEED 169 ITR 440 (KER) AND IN SUCH RESPECT AND ALSO SUBMITTED THAT SAME HA S BEEN FOLLOWED BY COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF RA JESH KR. KANKARIA IN ITA NO. 70/ KOL/2009 DT. 25.6.2010 . (VI) HE CONCLUDED BY STATING THAT PAGE 6 IS RATHER A DUMB DOCUMENT AND ADDITION IN SUCH RESPECT BY TREATING THE SAME AS UNEXPLAINED EXPEND ITURE IS BAD IN LAW. (VII) AS REGARDS THE LD CITAS ACTION IN ALLOWING T HE SET OFF OF THE EXPENSES SO INCURRED BY ASSESSEE AND / OR ITS ASSOCIATES IT WAS SUBMITTED BY THE LD AR THAT THERE IS NO DISPUTE IN THE FACT THAT ASSESSEE HAD RECEIVED CASH ON ACCOUNT OF TRANSACTION WITH FORT TO THE TUNE OF RS. 7 40 90 000/- AND ALSO OTHER RECEIPTS WHICH WAS AVA ILABLE WITH ASSESSEE AND THE EXPENSES WERE OUT OF SUCH SUMS ONLY AND HENCE THE LD CITA W AS FULLY JUSTIFIED IN ALLOWING SUCH SET OFF. HE ALSO SUBMITTED THAT ON A PERUSAL OF ASSESSM ENT ORDER ITSELF IT CAN BE OBSERVED THAT THE LD AO HIMSELF HAS ALLOWED SUCH SET OFF AND NOW THE REVENUE IS DISPUTING SUCH ACTION WHICH AMOUNTS TO DISPUTING ITS OWN EARLIER ACTION A ND WHICH IS NOT PERMISSIBLE AS PER LAW. 55 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 10.5. IN RESPONSE TO THIS THE LD DR ARGUED THAT TH E ASSESSEE IS ACCEPTING ONE PART OF THE SAID DOCUMENTS SSG/42 AS ITS OWN AND DENYING THE OWNERSH IP AND CONTENT OF ANOTHER PART I.E. PAGE 6 OF SSG/42 WHICH IS AN ANOMALY BY ITSELF AND SUCH CONDUCT PROVES THAT THE DOCUMENT HAS TO BE TREATED IN ENTIRETY ALONG WITH OTHER DOCU MENT IN SSG/42 AND ACTION OF LD AO BE AFFIRMED. MOREOVER THE SEIZED DOCUMENT WAS FOUND IN THE PREMISES OF SALTEE CONSTRUCTION CO P LTD AS RECORDED IN PAGE 4 OF THE ORDER OF THE LD AO. THE SAME SEIZED DOCUMENT RESULTED IN THE ADDITION OF RS. 50 64 383/- WHICH W AS CONFIRMED BY THE LD CITA. 10.6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE SUBMITTED IN THAT REGARD. AS REGARDS THE PAGE 4 OF SSG/42 WE FIND THAT ASSESSEE HAS ACCEPTED RS. 38 00 000/- BEING PART OF SSG/3 AND PLEADED TO ADD ONLY RS. 12 64 383/-. HOWEVER THE A SSESSEE HAS FAILED TO POINT OUT AT WHICH DOCUMENT IN PARTICULAR IN THE BUNCH SSG/3 SUCH SUM OF RS. 38 00 000/- HAS BEEN DISCLOSED. IN THE ABSENCE OF SAME WE HAVE NO OPTION OTHER T HAN TO AFFIRM THE ACTION OF THE LD AO IN TREATING ENTIRE SUM OF RS. 50 64 383/- AS UNDISCLOS ED EXPENDITURE ONLY. 10.6.1. AS REGARDS PAGE 6 OF SSG/42 WE FIND THAT THE LD AO HAS PRESUMED THAT THE DOCUMENT BELONGS TO ASSESSEE AND / OR ITS CONTENTS PERTAIN TO ASSESSEE. IN THIS REGARD WE FIND THAT THE POINT IS WHETHER THE PRESUMPTION U/S 292C SHALL BE TREATED AS MANDATORY UNDER THE LAW OR WHETHER IT SHA L L B E TR EA T E D AS A R E BUTT AB L E P RESU MPTI O N AND W H E THER E V E N MANDATOR Y PR E SUMPTION AB O UT TH E DOC UM EN TS AS B E LON G IN G TO THE ASSESSEE HA S THE C O N C LU S I VE CO N SE QU E N CE OF MAKING T H E A D D ITION IN TH E MANNER IN W HI C H THE A S S E SSM E NT ORD E R H A S DON E IT. IN THIS CONTEXT THE FOLLOWING OBSERVATIONS OF THE HONBLE APEX COURT IN THE CASE OF P.R. METRANI VS. CIT REPORTED IN (2006) 287 ITR 209 AT PAGE 220 ABOUT THREE TYPES OF PRESUMPTIONS UNDER THE LAW ARE RELEVANT:- A PRESUMPTION IS AN INFERENCE OF FACT DRAWN FROM OT HER KNOWN OR PROVED FACTS. IT IS A RULE OF LAW UNDER WHICH COURTS ARE AUTHORIZED TO DR AW A PARTICULAR INFERENCE FROM A PARTICULAR FACT. IT IS OF THREE TYPES (I) 'MAY PRE SUME' (II) 'SHALL PRESUME' AND (III] 'CONCLUSIVE PROOF. 'MAY PRESUME' LEAVES IT TO THE DISCRETION OF THE COURT TO MAKE THE PRESUMPTION ACCORDING TO THE CIRCUMSTANCES OF T HE CASE. 'SHALL PRESUME' LEAVES NO OPTION WITH THE COURT NOT TO MAKE THE PRESUMPTIO N. THE COURT IS BOUND TO TAKE THE FACT AS PROVED UNTIL EVIDENCE IS GIVEN TO DISPROVE IT. IN THIS SENSE SUCH PRESUMPTION IS ALSO REBUTTABLE. 'CONCLUSIVE PROOF' GIVES AN ARTIFI CIAL PROBATIVE EFFECT BY THE LAW TO CERTAIN FACTS. NO EVIDENCE IS ALLOWED TO BE PRODUCE D WITH A VIEW TO COMBATING THAT EFFECT. IN THIS SENSE THIS IS AN IRREBUTTABLE PRES UMPTION. 56 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA THE WORDS IN SUB-SECTION (4A) OF SECTION 132 ARE ' MAY BE PRESUMED'. THE PRESUMPTION UNDER SUB-SECTION (4A) THEREFORE IS A REBUTTABLE PRESUMPTION. THE FINDING RECORDED BY THE HIGH COURT IN THE IMPUGNED JUDGEMENT THAT THE PRESUMPTION UNDER SUB-SECTION (4A) IS A IRREBUTTABLE PRESUMPTIO N IN SO FAR AS IT RELATES TO THE PASSING OF AN ORDER UNDER SUB-SECTION (5) OF SECTI ON 132 AND REBUTTABLE PRESUMPTION FOR THE PURPOSE OF FRAMING A REGULAR ASSESSMENT IS NOT CORRECT. THERE IS NOTHING EITHER IN SECTION 132 OR ANY OTHER PROVISIONS OF TH E ACT WHICH COULD WARRANT SUCH AN INFERENCE OR FINDING.' 10.6.2. IN OUR CONSIDERED OPINION THIS IS THE JUDG EMENT WHICH MADE THE INTRODUCTION OF SECTION 292C OF THE ACT WITH RETROSPECTIVE EFFECT NECESSARY AS A MATTER OF CLARIFICATION. NEVERTHELESS THE LIMITED CONCLUSION IS THAT THE LA NGUAGE OF SECTION 132(4A) OF THE ACT AND OF SECTION 292C OF THE ACT USE THE COMMON EXPRESSIO N 'MAY BE PRESUMED'. CONSEQUENTLY THE OPINION OF THE HON'BLE SUPREME COURT ABOUT THE PRESUMPTION BEING A REBUTTABLE PRESUMPTION IN THE LIGHT OF SUCH EXPRESSION IS APPL ICABLE TO SECTION 292C OF THE ACT AS WELL. WE HAVE TO CONSIDER WHAT PRESUMPTION IS PERMITTED I N RESPECT OF THE SEIZED DOCUMENTS UNDER CONSIDERATION. FROM THE PERUSAL OF THE SEIZED DOCUMENTS WE FIND IT CONTAINS TRANSACTIONS OF RECEIPTS AND PAYMENTS BOTH IN CASH AND BY CHEQUE. THE NAME OF THE PARTY STATED IS KISHANJI. THE PAPER DOES NOT REFER TO T HE ASSESSEE AND THERE IS NO WAY IN WHICH THE EXPRESSIONS ABOUT THE PARTIES IN THE DOCUMENTS CAN BE RELATED TO THE ASSESSEE NOR THE LD AO HAS GIVEN ANY FINDING IN SUCH RESPECT. TH E PRESUMPTION U/S 292C OF THE ACT ARE THAT TH E DO C UM E NT B E LON GS T O TH E P E R SONS F ROM . W HOSE POSSE S SION AND C ONTROL IT W AS F O UND . TH E SECO ND P RES UMPTI O N IS THAT T H E CO NT E NTS OF S U C H DOCUM E NTS AR E TRU E . THE THIRD PR ES UMPTI O N I S TH A T T HE S I G NA T URE AND HAND W RITING SHALL BE TAKEN TO B E THAT OF TH E P E R S ON F ROM W H OM TH E DO C UMENTS WERE FOUND. IT WOULD BE RELEVANT NOW TO DEC IDE AS TO H OW TO DEAL WITH THE DOCUMENTS WITH THE FIRST TWO PRESUMPTIONS? THE DOCU MENTS BELONG TO THE ASSESSEE HAS NOT BEEN PROVED. THE CONTENTS ARE TRUE HAS ALSO NOT BEE N CORROBORATED. THE DISPUTE IS : WHAT ARE THE CONTENTS? IS IT P E RMI SS IBL E T O DR AW TH E INF E R ENCE AGA IN S T T HE ASSESSEE O N HIS FAILUR E TO EX PLAIN THE C ONT E NT S OF TH E D OC U ME NT S AF T ER PR ES UMIN G T HAT TH E CONTENTS ARE C ORR EC T ? THI S QUESTI O N I S OUT S ID E TH E RE B U TT A B L E P RE SUMPTION MADE UND E R SECTION 292C OF THE ACT . TH E LE G AL PRE S UMPTI O N D OES N O T P E R M IT TH E INF E R E N C E THAT KISHANJI IS NONE OTHER THAN THE ASSESSEE OR HIS REPRESENTATIVES. THE SEARCH ACTION AT THE PREMISES HAVE NOT YIELDED ANY MATERIAL WHICH MIGHT JUSTIFY SUCH INFERENCE. IT IS NOT LEGALLY CORRECT TO HOLD THAT AN ADVERSE INFERENCE AGAINST THE ASSESSEE UNLESS THE ASSESSEE EXPLAINED THE CONTENTS OF THE DOCUMENTS. IN OUR OPINION EVEN AFTER PRESUMPTION APPLIED TO T HE FACTS U/S 292C OF THE ACT THERE IS NO ADEQUATE MATERIAL TO CONCLUDE THAT THE TRANSACTIONS IN THE SEIZED DOCUMENTS ARE THE 57 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA TRANSACTIONS OF THE ASSESSEE WHICH REMAINED UNDISCL OSED. THE OTHER ASPECTS OF THE MATTER IS THAT THE PRESUMPTION U/S 292C OF THE ACT IS REBUTTA BLE PRESUMPTION AND THEY DON'T LEAD TO CONCLUSIVE EVIDENCE. THE ASSESSEE UNDER THE PRINCI PLES OF NATURAL JUSTICE HAS THE RIGHT TO REBUT THE PRESUMPTION. UNDER THAT RIGHT ALSO HE IS ENTITLED TO STATE THAT THE TRANSACTIONS BELONGING TO HIM ARE NOT RECORDED UNDER ANY NAME AS KISHANJI. IN OUR OPINION THE INFORMATION ABOUT THE UNDISCLOSED EXPENDITURE THE ASSESSEE IS BASED ON INADEQUATE OR IRRELEVANT MATERIAL. UNDER THE CIRCUMSTANCES THIS G ROUND OF APPEAL IS DISMISSED. AS REGARDS THE REVENUES GROUND IN TREATING RS. 50 64 383/- OUT OF AVAILABLE CASH WE FIND MERIT IN THE FACT THAT THAT THE LD AO HIMSELF HAS A LLOWED SUCH SET OFF IN THE ASSESSMENT ORDER SO REVENUE CANNOT BE ALLOWED TO CHANGE ITS STAND NO W. EVEN OTHERWISE THE REVENUE IS NOT IN POSSESSION OF ANY EVIDENCE NOR IT HAS FURNISHED ANY SUCH FACT ON RECORD THAT THE SUMS EXPENDED WERE OTHER THAN OUT OF SUM EARNED / RECEIV ED AS CASH BY THE ASSESSEE. HENCE WE CONCUR WITH THE ORDER OF THE LD CITA IN ALLOWING S UMS AS PART OF CASH FLOW AND AS SUCH THE REVENUES GROUND FAILS ON SUCH ACCOUNT. AS A RESULT WE HOLD AS FOLLOWS: ASST YEAR APPEAL NO. GROUND NOS. RESULT 2007-08 146/K/12 7 DISMISSED 35/K/12 9 DISMISSED 2008-09 36/K/12 8 DISMISSED 2009-10 37/K/12 8 DISMISSED 11. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED A S SSG / 45 A.Y 2007-08 C.O 146/KOL/2012 GROUND NO. 8 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD.CIT(A) WAS WHOLLY UNJUSTIFIED IN CONFIRMING THE ADDITION OF RS .79 82 640/- ON THE BASIS OF SSG- 45 WITHOUT APPRECIATING THE FACT THAT THE SAID DOCUMENT CONTAINED MERE WORKING OF UN MATERIALIZED JOINT VENTURE AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. TH IS GROUND IS BEING TAKEN WITHOUT PREJUDICE TO THE FACT THAT THE AO HAD BEEN DIRECTED TO DELETE THE ADDITION ON THE BASIS OF THE ROTATION STATEMENT. A.Y 2007-08 IT(SS) 35/KOL/2012 58 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA GROUND NO. 10 - THE LD. CIT(A) IS ERRED IN DIRECTING THE A.O. T O CONSIDER THE UNEXPLAINED EXPENDITURE OF RS.79 82 640/- AS PER PA GE NO. 43 OF THE SEIZED DOCUMENT SSG/45 TO CONSIDER IT AGAINST THE UNACCOUNTED CASH RECEIPT OF THE ASSESSEE .THE ORDER IS AGAINST THE PROVISION OF SECTION 69C OF T HE ACT. A.Y 2008-09 IT(SS) 36/KOL/2012 GROUND NO. 10 - THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIO N OF UNEXPLAINED INVESTMENT OF RS. 5 00 00 000/-AS PER THE PAGE NO. 40 OF SEIZED DOCUMENT SSG/45. 11.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD AO FOUND THAT PAGE 43 OF THE SEIZED DOCUMENT SSG/45 CONTAINS DETAIL OF UNEXPLAINED EXPE NDITURE OF RS. 79 82 640/- WHICH HAD BEEN ADMITTED BY THE ASSESSEE AND WAS ALSO INCLUD ED IN THE STATEMENT OF CASH FLOW. THE LD AO THUS MADE ADDITION OF RS.79 82 640/- AS UNDISCLO SED EXPENSES IN A.Y 2007-08 ON THE BASIS OF PAGE 43 OF THE SEIZED DOCUMENT MARKED SSG/ 45. 11.2. THE LD AO ALSO REFERRED TO PAGE 40 OF SSG/45. THE LD AO HAS INFERRED FROM THE SAID DOCUMENT THAT THE ASSESSEE AND THREE OTHER PERSONS HAVE RECEIVED AMOUNT OF RS. 22.75 CRORES. THE LD AO ALSO CONCLUDED THAT THE ASSESSEE ALONG WITH OTHER PERSONS HAD TAKEN OVER A COMPANY FOR WHICH SUM OF RS. 8.71 CRORES WAS PAID . IT WAS EXPLAINED BEFORE THE LD AO THAT THE SEIZED DOCUMENT CONTAINS THE VALUATION OF SHARES AND WORKING OF JOINT VENTURE WHICH DID NOT MATERIALIZE. THE LD AO HAS NOTED IN T HE ASSESSMENT ORDER THAT NO EVIDENCE WAS PRODUCED BEFORE HIM TO SHOW THAT THERE WAS NO T AKEOVER OF THE COMPANY OR THAT NO TRANSACTION WAS ACTUALLY MADE. THE LD AO THEN CONCL UDED BY STATING THAT THE FIGURE OF RS.5 CRORES WRITTEN AGAINST THE ASSESSEE IS TREATED AS U NDISCLOSED INVESTMENT MADE BY HIM IN CASH IN A.Y 2009-10. THE ORDER OF LD AO IS REPRODUCED AS UNDER :- PAGE 43 OF SSG/45 IS A STATEMENT IS A RECEIPT AND P AYMENT ACCOUNT FOR THE PERIOD JULY 2006 TO SEPTEMBER 2006 WHERE SOME RECEIPT AND PAYMENT HAS BEEN SHOWN IN CASH AND CHEQUE. THE ASSESSEE VIDE CASH FLOW STATEM ENT OF UNDISCLOSED TRANSACTIONS BEING ANNEXURE X OF LETTER DATED 11.11.2010 AND V IDE ANNEXURE U BEING BREAK- UP OF UNDISCLOSED INCOME ADMITTED RS. 79 83 640/- AS UNDISCLOSED EXPENDITURE OF A.Y 2007-08. FOR THE REMAINING AMOUNT THE ASSESSEE EXP LAINED IT TO BE PART OF REGULAR BOOKS OF VARIOUS COMPANIES MENTIONED THEREIN. THE A SSESSEE PRODUCED BANK STATEMENT OF VARIOUS COMPANIES INCLUDING THEIR AUDI TED FINAL ACCOUNTS AND COPY OF IT RETURNS CASH FLOW STATEMENTS. IT WAS SUBMITTED THA T CASH FOR LAND PURCHASES WERE DONE BY WITHDRAWALS OF CASH FROM BANK ITSELF AND WH EREVER THE ASSESSEE COULD NOT LINK THE CASH EXPENDITURES WITH BANK WITHDRAWALS N ECESSARY DISCLOSURES HAVE BEEN 59 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA MADE. SSG/45 PAGE 43 IS AN ACCOUNT GIVEN BY A BROKER. T HE LEFT SIDE SHOWS AMOUNT RECEIVED BY THE BROKER AND THE RIGHT SIDE SHOWS THE AMOUNT EXPENDED BY THE BROKER. THE RECEIPT SIDE AND INTER-ALIA SHOWS CASH RECEIVED BY BROKER OF RS.6 60 00 000/- . THIS FIGURES HAS BEEN RECONCILED PERIOD WISE FROM T HE ACCOUNT OF VARIOUS COMPANIES AND AS EVIDENT FROM WORKINGS OF ANNEXURE P2 OF LETT ER DT.11.11.2010 A SUM OF RS.6 08 50 000/- WAS WITHDRAWN FROM BANK ACCOUNT OF FIVE COMPANIES ON WHOSE NAME THE LAND WAS ACQUIRED AS MENTIONED IN THE RIG HT SIDE OF THE SEIZED DOCUMENTS. A SUM OF RS.70 50 000/- COULD NOT BE BACKED BY BANK WITHDRAWALS AND TREATED AS UNDISCLOSED. BESIDES THIS PAGE CONTAINS RECEIPT OF RS. 9 32 640/- WHICH COULD NOT BE RECONCILED WITH REGULAR BOOKS AD HENCE THE SAME WAS ALSO OFFERED AS UNDISCLOSED. AS SUCH SUM OF RIGHT SIDE OF THIS P AGE SHOWS LAND VALUE AND OTHER EXPENSES INCURRED BY BROKER WHICH WAS RECONCILED WI TH THE BOOKS. A SUM OF RS. 18 09 946/- COULD NOT BE RECONCILED. PAGE 40 OF SSG/45 CONTAINS THE DETAILS MONEY CONSI DERATION RECEIPT AND DETAIL OF CASH / CHEQUE RECEIPT. IT APPEARS THAT TOTAL CONSID ERATION OF RS. 8 CRORES HAS BEEN RECEIVED AS SALE CONSIDERATION AND AFTER REDUCING L OAN LIABILITY TO 5 DIFFERENT CONCERNS PROFIT OF RS. 3 90 56 668/- IS REMAINING. IN THE 2 ND HALF OF PAGE 40 OF SSG/45 A STATEMENT CONTAINING RECORDS OF CASH OF RS. 14.04 CRORES AND CHEQUE OF RS. 8.71 CRORES HAD BEEN WRITTEN. AS PER THIS PAGE THE ASSESSEE SRI SURYA PRAKASH BAGLA ALONG WITH OTHER THREE PARTIES RECEIVED RS. 22.75 CRORES. THE ASSESSEE IN HIS EXPLANATION STATED THAT THE PAG E CONTAINS THE VALUATION OF SHARES AND WORKING OF JOINT VENTURE WHICH DID NOT MATERIAL IZE. HOWEVER IT APPEARS THAT THE ASSESSEE ALONG WITH OTHER PARTIES PURCHASED A COMPA NY AFTER PAYING RS.8 CRORES AS CONSIDERATION AND FOR TAKEOVER OF THIS COMPANY ALON G WITH INCIDENTAL EXPENSES TOTALING TO RS. 8.71 CRORES BECAUSE MENTION OF THE LOAN CREDITORS AS ADYAMA NIRMAN BISHNU NIRMAN BISHNUPRIYA PLAZA GAYATRI PLAZA KA RTICK PLAZA CANNOT BE TREATED AS IMAGINARY. IT IS FOUND FROM THE WORKING PAGES BANK STATEMENT OF SALTEE INFRASTRUCTURE PARIMALA MERCANTILES ETC. THAT ON 5.9.2007 M/S SALTEE INFR ASTRUCTURE LTD. A COMPANY CONTROLLED BY THE ASSESSEE PAID RS. 1 00 00 000/- V IDE CHEQUE NO. 293330 DRAWN ON ABN AMRO BANK TO M/S SHREE ADYAMA NIRMAN PVT. LTD. A COMPANY MENTIONED IN THE ABOVE REFERRED DOCUMENTS AND IT IS SHOWN AS ADVANCE AGAINST PROPERLY IN THE BALANCE SHEET OF SHREE ADYAMA NIRMAN PVT. LTD. DURING THE F .Y 2006-07 SHREE ADYAMA NIRMAN PVT. LTD. OF EMBASSY 1-B 4 SHAKESPEARE SA RANI OF ASSURANCES II KOLKATA 17.5.2006 FOR RS. 6 00 000/- 20.5.2006 FOR RS. 10 LAKHS 21.7.2006 RS. 10 LAKHS [ALL PAYMENTS MADE TO PRASANT DEY AND AMAL CHAKRABORTY] AND ON 7.9.2000 FOR RS. 5 16 327/- TO DUM DUM MUNICIPALITY FOR DEVELOPMENT FEES & MUTATION FEES. ALL THE MONEY AS ABOVE HAD BEEN RECEIVED FROM M/S SALTEE IN FRASTRUCTURE ON 5.9.2007 IS ALSO PERFECT MATCH CHEQUE PORTION OF RS. 1.04 CRORES WRI TTEN AGAINST SPB IN THIS PAGE 40 OF SSG/45. 60 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA THE ASSESSEE HAS NOT PROVIDED ANY DETAILS REGARDING THIS COMPANY NOR ANY EVIDENCE TO PROVE THAT THE COMPANY WAS NOT TAKEN OVER AND NO TRANSACTIONS WERE MADE. THEREFORE THE FIGURE OF RS. 5 CRORES WRITTEN AGAIN ST THE ASSESSEE IS TREATED UNDISCLOSED INVESTMENT OF THE ASSESSEE IN CASH FOR A.Y 2009-10. [UNDISCLOSED EXPENDITURE FOR A.Y 2007-08 RS. 79 82 640/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2008-09 RS.5 CRORE S] 11.3. THE LD CITA OBSERVED AS FOLLOWS:- I HAVE PERUSED THE ASSESSMENT ORDER AND CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND ALSO THE MATERIAL ON RECORD. THE AO HAS MENTIO NED IN THE ASSESSMENT ORDER THAT PAGE 43 OF THE SEIZED DOCUMENTS SSG/45 CONTAIN DETA IL OF UNDISCLOSED PAYMENTS RS.79 .82 640/- WHICH WAS ADMITTED BY THE APPELLANT AS UNDISCLOSED EXPENSES IN A.Y 2007-08 AND WAS ALSO INCLUDED IN THE; STATEMENT O F CASH FLOW. I UPHOLD THE ORDER OF THE AO THAT THE PAYMENTS OF RS.79 82 640/- WAS TO B E CONSIDERED IN THE CASE OF THE APPELLANT AS UNDISCLOSED EXPENSES. HOWEVER AS UNDI SCLOSED EXPENSES ARE TO BE CONSIDERED AGAINST UNDISCLOSED INCOME THE AO IS DIR ECTED TO TREAT THE UNDISCLOSED EXPENSES OF RS.79 82 640/- AS PART OF THE CASH FLOW STATEMENT AND THEN CONSIDER THE NET OF EXPENSES IF ANY FOR THE PURPOSES OF THE AD DITION. THE LD A/R HAS ARGUED BEFORE ME THAT IN HIS OWN AS SESSMENT ORDER THE AO HAS GIVEN CONTRADICTORY FINDINGS WITH REFERENCE TO THE SEIZED DOCUMENT AT PAGE 40 OF SSG/45. FOR ON ONE HAND THE AO HAS STATED THAT TH E APPELLANT ALONG WITH OTHER PERSONS HAD RECEIVED SUM OF RS.22.75 CRORES. AND SU BSEQUENTLY HE HAS CONCLUDED THAT THE APPELLANT ALONG WITH OTHER PERSONS HAD TAK EN OVER A COMPANY BY ASSESSING SUM OF RS. 8.71 CRORES. FOR I FIND THAT THE AO HAS TAKEN DIAGONALLY OPPOSITE POSITIONS IN INTERPRETING THE SAME SEIZED DOCUMENT / (PAGE 40 OF SSG/45). IT WAS ARGUED THAT THE NAME OF THE APPELLANT WAS NOWHERE M ENTIONED IN THE SEIZED DOCUMENT WHICH ONLY STATES AS UNDER : - RAM 1 SPB 2 KEJ 2 BUT THE AO HAS PRESUMED THAT SPB MEANT SURYA PRAKA SH BAGLA (THE APPELLANT) THE AO HAS MERELY ADDED THE SAID FIGURE OF 2 + 2 + 1 = 5; AND THEN INTERPRETED THAT THE FIGURE 5 ACTUALLY REPRESENTS 5 CRORES. THE AO EVENT UALLY HELD THAT THE ENTRIES MADE ON THE SEIZED DOCUMENT SUGGEST THAT ALONG WITH OTHE RS THE APPELLANT HAS TAKEN-OVER A COMPANY BY INVESTING RS.5 CRORES. I FIND MERIT IN THE ARGUMENT THAT THERE IS NEITHER ANY EVIDENCE NOR CORROBORATIVE MATERIAL TO JUSTIFY THE FINDING OF THE AO. IT WAS ARGUED IN COURSE OF THE APPELLATE PROCEEDING S THAT THERE COULD HAVE BEEN A PROPOSAL OR NEGOTIATION FOR TRANSFER OF SUCH 5 COMP ANIES IN A.Y 2008- 09; AND IN CASE THE DEAL WAS' FINALIZED THE TRANSACTION WOULD HAVE BEEN MADE AS SUGGESTED IN THE SEIZED DOCUMENT. BUT THEN THE DEAL HAVING NOT MATERIALIZED THERE WAS NO QUESTION OF RECEIPT OR PAYMENT OF ANY CONSIDERATION . HENCE THE ADDITION BASED ON THE PRESUMPTIONS AND ASSUMPTIONS OF THE AO THAT THE APPELLANT ACQUIRED OR SOLD THE 61 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 5 COMPANIES IN AY 2008-09 CANNOT BE SUSTAINED. IT W AS ALSO ARGUED THAT WHEN 1 WAS WRITTEN AGAINST RAM 2 AGAINST SPB AND 2 AGAINST KE J THERE WAS NO BASIS FOR THE AO TO PRESUME THAT THE ENTIRE CONSIDERATION WAS REC EIVED OR PAID BY SPB ALONE THE LD A/R HAS FURTHER ARGUED THAT THE AO HA MENTIONED IN THE ASSESSMENT ORDER THAT THE APPELLANT HAD RECEIVED RS.14.04 CRORE IN CASH A ND RS.8.71 CRORE BY CHEQUE. BUT THEN THE AO HAS NOT BEEN ABLE TO SUBSTANTIATE OR C ORROBORATE THE RECEIPT OF THE CHEQUE WITH REFERENCE TO THE BOOKS OF ACCOUNT OR TH E BANK STATEMENT OF THE APPELLANT. I FIND FROM THE ASSESSMENT ORDER THAT THE AO HAS MA DE ADDITION OF RS.5 CRORES WITH REFERENCE TO THE SEIZED DOCUMENT AT PAGE 40 OF SSG/ 45 ON THE GROUND THAT THE APPELLANT ALONG WITH OTHER PERSONS HAD TAKEN OVER A COMPANY. THE AO HAS NOTED IN THE ASSESSMENT ORDER THAT NO EVIDENCE WAS PRODUCED BEFORE HIM TO SHOW THAT THERE WAS NO TAKE-OVER OF THE COMPANY OR TO SHOW THAT NO TRANSACTION WAS ACTUALLY MADE. BUT THEN SUCH NON-COMPLIANCE CANNOT BE MADE THE BA SIS FOR CONCLUDING THAT THERE WAS TAKE-OVER OF A COMPANY WHETHER OR NOT A COMPAN Y WAS TAKEN-OVER IS A MATTER OF FACT AND ALSO A MATTER OF PUBLIC RECORD. THE A O COULD HAVE CALLED FOR THE ANNUAL RETURN OF THE COMPANIES FILED BEFORE THE ROC. THE A .O COULD HAVE VERIFIED FROM THE.LIST OF SHARE-HOLDERS WHETHER OR NOT THERE WAS ANY CHANGE IN THE SHARE-HOLDING PATTERN OF THE CONCERNED COMPANIES. BUT THE AO HAS MADE NO EFFORTS TO ASCERTAIN THE FACTS. THE AO BAS BROUGHT NO POSITIVE MATERIAL OR E VIDENCE ON RECORD TO ESTABLISH THAT THERE WAS TAKE-OVER OF ANY COMPANY BY THE APPE LLANT. THE AO HAS SIMPLY PRESUMED WITHOUT ANY BASIS THAT .THE APPELLANT HA D TAKEN-OVER A COMPANY AND THEN HAS DRAWN HIS OWN CONCLUSIONS. I FIND THAT TH E AO HAD MADE NO EFFORTS TO VERIFY THE FACTS; AND THAT THERE IS NO MATERIAL WHATSOEVE R TO SUPPORT THE FINDING OF THE AO. EVEN IN COURSE OF THE REMAND PROCEEDINGS THE AO HA S FAILED TO BRING ANY MATERIAL ON RECORD TO SUPPORT HIS FINDINGS. I THEREFORE DIRE CTED THE APPELLANT IN COURSE OF THE APPELLATE PROCEEDINGS TO PRODUCE THE AUDITED ACCOUN TS OF THE 5 COMPANIES (MENTIONED IN THE SEIZED DOCUMENT) FOR THE PERIOD E NDING 31-03-2008 31-03-2009 AND 31-03-2010; AND THE LIST OF-SHARE-HOLDERS ALON G WITH THE COPY OF ANNUAL RETURNS AS FILED BEFORE THE ROC. ON PERUSAL OF SUCH DOCUMEN TS I FIND THAT THE CONTENTION OF THE APPELLANT WAS FACTUALLY CORRECT. THERE WAS NO C HANGE IN THE SHARE-HOLDING PATTERN AND THERE WAS NO TAKE-OVER OF ANY 'COMPANY. THE AO HAD DRAWN HIS CONCLUSIONS ON THE BASIS OF THE PRESUMPTION THAT TH E APPELLANT ALONG WITH OTHERS HAD TAKEN-OVER A COMPANY. BUT ONCE THE APPELLANT HAS B EEN ABLE TO ESTABLISH THAT THERE WAS NO TAKE-OVER OF ANY OF THE 5 COMPANIES THAT WAS MENTIONED 'IN THE SEIZED DOCUMENTS ALL THE SUBSEQUENT CONCLUSIONS AND FINDI NGS OF THE AO HAVE FALLEN FLAT. 'IN VIEW OF THE ABOVE I AM OF THE CONSIDERED OPINION T HAT THE AO HAS MADE THE ADDITION OF RS.5 CRORES PURELY ON PRESUMPTIONS AND ASSUMPTIO NS; THAT THE FINDINGS OF THE AO AS CONTAINED IN THE-ASSESSMENT ORDER ARE SELF-CONT RADICTORY THAT THERE IS NO MATERIAL OR EVIDENCE ON .RECORD TO SUPPORT THE ACTION OF THE AO; AND ALSO THAT THE DECISIONS AS MADE BY THE AO ARE CONTRARY TO THE FACTS OF THE CASE AND THE MATERIAL AVAILABLE ON RECORD. THE ADDITION OF RS.5 CRORES IN AY 2008-09 I S DIRECTED TO BE DELETED. 11.4. THE LD AR SUBMITTED THAT THE ASSESSEE HAS AL READY ADMITTED UNDISCLOSED EXPENSES OF RS. 79 82 640/- AS CONTAINED ON PAGE 43 OF THE SEIZ ED DOCUMENTS SSG/45. BUT AS THESE EXPENSES HAVE ALREADY BEEN INCLUDED IN THE STATEMEN T OF CASH FLOW NO ADDITION CAN BE MADE 62 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA ON THIS GROUND. IT WAS ARGUED THAT THE LD AO WAS TH EREFORE NOT JUSTIFIED IN MAKING ADDITION OF RS. 79 82 640/- IN ASST YEAR 2007-08. 11.4.1. THE LD. A.R FURTHER SUBMITTED THAT THE LD A O WAS TOTALLY CONFUSED IN SO FAR AS THE INTERPRETATION OF THE SEIZED DOCUMENT AT PAGE 40 OF SSG/45 WAS CONCERNED. ON THE OTHER HAND THE LD AO HAS STATED THAT THE ASSESSEE ALONG WITH THREE OTHER PERSONS HAD RECEIVED SUM OF RS. 22.75 CRORES. AND SUBSEQUENTLY HE HAS CONC LUDED THAT THE ASSESSEE ALONG WITH OTHER PERSONS HAD TAKEN OVER A COMPANY BY INVESTING SUM O F RS. 8.71 CRORES. THE LD AO HAS ALSO MADE MANY OBSERVATIONS WHICH ARE TOTALLY IRRELEVANT TO THE FACTS OF THE CASE. THE LD AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT NO EVIDENCE WAS PRODUCED BEFORE HIM TO SHOW THAT THERE WAS NO TAKEOVER OF THE COMPANY OR THAT NO TRA NSACTION WAS ACTUALLY MADE. BUT THEN WHAT MATERIAL THE LD AO HAD BROUGHT ON RECORD TO ES TABLISH THAT A COMPANY WAS TAKEN OVER BY THE ASSESSEE? THE COMPANIES ARE REQUIRED TO FILE ANNUAL RETURNS WITH THE ROC WHICH COULD HAVE BEEN SUMMONED BY THE LD AO. THE LD AO CO ULD HAVE EASILY VERIFIED THAT NO COMPANY WAS TAKEN OVER AS THERE WAS NO CHANGE IN TH E SHAREHOLDING PATTERN. THE LD AO MADE NO EFFORTS TO ASCERTAIN THE FACTS OR TO VERIFY THE CONTENTION OF THE ASSESSEE. THE LD AO HAS SIMPLY PRESUMED WITHOUT ANY BASIS THAT THE AS SESSEE HAD TAKEN OVER A COMPANY AND THEN CONCLUDED BY STATING THAT THE FIGURE OF RS. 5 CRORES WRITTEN AGAINST SPB ALONG WITH OTHERS IS TREATED AS UNDISCLOSED INVESTMENT MADE BY HIM IN CASH IN ASST YEAR 2009-10. THE LD AR CONTENDED THAT THERE WAS NO POSITIVE MATERIAL ON RECORD TO SHOW THAT THERE WAS TAKEOVER OF ANY COMPANY. ON THE CONTRARY THE FINDI NG OF THE LD AO WAS FACTUALLY INCORRECT AND ALSO CONTRARY TO THE EVIDENCE ON RECORD. HE FI LED THE COPY OF ANNUAL RETURNS FILED BEFORE THE ROC ALONG WITH THE LIST OF SHAREHOLDERS FOR THE 5 COMPANIES AS MENTIONED IN SEIZED DOCUMENT TO SHOW THAT THERE WAS NO CHANGE IN THE SH AREHOLDING PATTERN. 11.4.2. HE SUBMITTED THAT THE ADDITION IS ON FOLLOW ING SUMS AND DOCUMENTS : I) PAGE 43 SSG/45 RS. 79 82 640/- II) PAGE 48 SSG/45 RS. 5 00 00 000/- 11.4.3. HE SUBMITTED THAT ADDITION ON BASIS OF PAG E 43 IS MERELY ON CONFESSIONAL STATEMENT AND AS SUCH ADDITION MAY KINDLY BE NOT SUSTAINED. 11.4.4. HE THEN SUBMITTED THAT PAGE 45 OF SSG/43 I T WILL BE SEEN THAT SEVERAL PEOPLE 63 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA COMBINED TOGETHER PERHAPS TO ACQUIRE A COMPANY HAVI NG 50 000 SHARES @ 781.13 PER SHARE BUT THE DEAL MIGHT NOT HAVE MATERIALIZED AND HE SUB MITTED THAT IT WAS A MERE PLANNING DOCUMENT WHICH NEVER HAPPENED ACTUALLY. AT LEAST T HE NAME OF 4 (FOUR) PERSONS APPEAR ON SECOND PART OF SUCH SEIZED DOCUMENT ON WHICH RELIAN CE HAS BEEN PLACED BY THE LD AO FOR MAKING ADDITION OF RS 5 CRORES. THE LD AO HAS UNNEC ESSARILY CONFUSED HIMSELF WITH SPB WHICH THE LD AO HAS TAKEN TO REPRESENT SURYA PRAKAS H BAGLA WHICH MAY BE REPRESENTING SHRI SHREE PRAKASH BAGLA AND OR ANY OTHER PERSON BY THIS ABBREVIATION AND NOT SURYA PRAKASH BAGLA. THE LD AO HAS UNNECESSARILY PLACED G REAT RELIANCE ON AMOUNTS OF LIABILITIES WHICH IS REFLECTED IN THE BOOKS OF CERTAIN COMPANIE S. SINCE THE COMPANY PROPOSED TO BE ACQUIRED AND WHICH ULTIMATELY WAS NOT ACQUIRED AND MIGHT BE HAVING SUCH LIABILITIES IN THEIR BOOKS OF ACCOUNT BUT IT DOES NOT PROVE IN ANYWAY TH AT SUCH COMPANY WHICH SUCH LIABILITIES WERE ACCOUNTED FOR HAD BEEN ACTUALLY ACQUIRED BY AS SESSEE. MOREOVER AND EVEN OTHERWISE THERE BEING NO DATE NOR ANY YEAR UNDER NO CIRCUMST ANCES IT COULD BE PRESUMED AS THAT RELATING TO ASST YEAR 2008-09. THE LD AO EVEN NEVER EXAMINED SUCH COMPANIES BEFORE COMING TO SUCH WILD CONCLUSION. MOREOVER THE LD AO HAS BROUGHT NO EVIDENCE ON RECORD TO PROVE THAT ANY COMPANY WAS ACQUIRED OR SOLD BY YOUR ASSESSEE. 11.4.5. IN ANY CASE WITHOUT PREJUDICE AND EVEN OTHE RWISE SPB COULD NEVER MEAN SURYA PRAKASH BAGLA ONLY AND AS STATED ABOVE IT MIGHT MEA N SHRI SHREE PRAKASH BAGLA AND ANY OTHER PERSON WITH SUCH ABBREVIATION ALSO. MOREOVER IT WILL BE SEEN FROM THE PAPER SEIZED IN THE NAME OF SPB IT IS ONLY RS. 2/- WHICH THE LD AO HAS PRESUMED TO BE RS.2 CRORES WHEREAS ANOTHER 2 APPEARS IN THE NAME OF KEJ AND RE.1/- IN THE NAME OF RAM AND HENCE THE ASSESSEE FAILS TO UNDERSTAND AS TO HOW THE ENTIRE 1 + 2 + 2 COULD BE TREATED AS UNACCOUNTED EXPENDITURE OF SPB. UNDER NO CIRCUMSTANCES IN THE CASE OF SPB IT COULD EXCEED RS. 2/- BUT THAT SPB WAS NOT THE ASSESSEE. 11.4.6. THE LD AR ALSO DREW THE ATTENTION TO PAGES 1279 1280 1281 1282 1283 AND THEN 1317 1395 1475 1555 OF PAPER BOOK NO.10 TO STREN GTHEN HIS CONTENTION THAT THERE IS NO CHANGE IN SHAREHOLDING OF SUCH COMPANIES AND HENCE THE LD AOS CONTENTION IS EVEN OTHERWISE ONLY AN ASSUMPTION. 11.4.7. AS REGARDS THE LD CITAS ACTION IN ALLOWI NG THE SET OFF OF THE EXPENSES SO INCURRED 64 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA BY ASSESSEE AND / OR ITS ASSOCIATES IT WAS SUBMIT TED BY THE LD AR THAT THERE IS NO DISPUTE IN THE FACT THAT ASSESSEE HAD RECEIVED CASH ON ACCOUNT OF TRANSACTION WITH FORT TO THE TUNE OF RS. 7 40 90 000/- AND ALSO OTHER RECEIPTS WHICH WAS AVAILABLE WITH ASSESSEE AND THE EXPENSES WERE OUT OF SUCH SUMS ONLY AND HENCE THE L D CITA WAS FULLY JUSTIFIED IN ALLOWING SUCH SET OFF. THE LD AR ALSO SUBMITTED THAT ON A PE RUSAL OF ASSESSMENT ORDER ITSELF IT CAN BE OBSERVED THAT THE LD AO HIMSELF HAS ALLOWED SUCH SE T OFF AND NOW THE REVENUE IS DISPUTING SUCH ACTION WHICH AMOUNTS TO DISPUTING ITS OWN EARL IER ACTION AND WHICH IS NOT PERMISSIBLE AS PER LAW. 11.5. IN RESPONSE TO THIS THE LD DR HEAVILY RELIED ON THE ORDER OF A.O AND URGED TO SUSTAIN THE ADDITION ON BOTH PAGES 43 AND 45 OF SSG/45. 11.6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE SUBMITTED IN THIS REGARD. AS REGARDS PAGE 43 OF THE SEIZED DOCUMENT SINCE ASSESSEE HAS NOT DISPUTED AD DITION AND HAS ONLY REQUESTED FOR SET OFF IN CASH FLOW WE DIRECT ACCORDINGLY FOR REASON MENTI ONED EARLIER IN THIS ORDER. 11.6.1. AS REGARDS PAGE 48 OF THE SEIZED DOCUMENT WE FIND THAT FACTUALLY THERE IS NO CHANGE IN SHAREHOLDING OF THE IMPUGNED COMPANIES I.E ADAMA YA NIRMAN SHREE BISHNU NIRMAN SHREE BISHNU PRIYA PLAZA SHREE GAYATRI PLAZA AND S HREE KARTIC PLAZA AND HENCE EVEN IF IT IS ASSUMED THAT THE CONTENTS OF PAGE 48 ARE TRUE THE N ALSO THE VERY BASIS BEING TRANSFER OF SUCH COMPANIES HAVING NOT TAKEN PLACE AND HENCE ENTIRE A RGUMENT OF THE LD AO FAILS. HOWEVER IN THE FACTS AND CIRCUMSTANCES WE DO NOT FIND MERIT IN THE LD AOS CONTENTION SINCE THE TRANSFER OF COMPANY ITSELF NOT HAVING TAKEN PLACE A ND HENCE ENTIRE ADDITION OF RS. 5 00 00 000/- FAILS. AS A RESULT WE HOLD AS FOLLOWS: ASST YEAR APPEAL NO. GROUND NOS. RESULT 2007-08 146/K/12 8 DISMISSED 35/K/12 10 DISMISSED 65 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 2008-09 36/K/12 10 DISMISSED 12. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED S SG / 48 A.Y 2008-09 C.O. 147/KOL/2012 GROUND NO.9 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) WAS WHOLLY UNJUSTIFIED IN CONFIRMING THE ADDITION OF RS . 1 85 08 949/- ON THE BASIS OF SSG-48 AND IN VIEW OF THE FACTS AND IN THE CIRCUMST ANCES IT MAY KINDLY BE HELD ACCORDINGLY. THIS GROUND IS BEING TAKEN WITHOUT PRE JUDICE TO THE FACT OF THE AO BAD BEEN DIRECTED TO DELETE THE ADDITION ON THE BASIS O F THE ROTATION STATEMENT. IT(SS) 36/KOL/2012 GROUND NO. 11 - THE CIT(A) HAS ERRED IN DIRECTING THE A.O. TO CO NSIDER THE UNEXPLAINED EXPENDITURE OF RS. 1 85 08 949/- AGAINS T UN ACCOUNTED CASH RECEIPT OF RS. 7 40 90 000/- IN THE A.Y.2006-07 THE ADDITION WAS MADE ON THE BASIS OF SEIZED DOCUMENT SSG/48. GROUND NO. 12 THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. OF RS. 5 91 83 392/- MADE ON THE BASIS OF PAGE NO. 1 AND 21 OF SEIZED DOCUMENT SSG/48. A.Y 2009-10 C.O. 148/KOL/2012 GROUND NO.12 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CLT(A) WAS WHOLLY UNJUSTIFIED IN CONFIRMING THE ADDITION OF RS .2 57 984/- ON THE BASIS OF SSG-48 AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES I T MAY KINDLY BE HELD ACCORDINGLY. THIS GROUND IS BEING TAKEN WITHOUT PREJUDICE TO THE FACT OF THE AO HAD BEEN DIRECTED TO DELETE THE ADDITION ON THE BASIS OF THE ROTATION STATEMENT. IT(SS) 37/KOL/2012 GROUND NO.9 THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO C ONSIDER THE UNEPXLIANED EXPENDITURE OF RS. 2 57 984/- MADE ON T HE BASIS OF SEIZED DOCUMENT SSG / 45 AGAINST UNACCOUNTED CASH RECEIPT OF THE ASSESS EE. 12.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE L D AO FOUND THAT PAGES 1 AND 21 OF THE SEIZED DOCUMENT SSG/48 CONTAIN DETAIL OF UNEXPLAINED EXPEN SES OF RS. 1 85 08 949/- & RS.2 57 984/- WHICH HAD BEEN ADMITTED BY THE ASSESS EE AND WAS ALSO INCLUDED IN THE STATEMENT OF CASH FLOW. THE LD AO THUS MADE ADDITIO N OF RS. 1 85 08 949/- & RS.2 57 984/- 66 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA AS UNDISCLOSED EXPENSES IN ASST YEARS 2008-09 AND 2009-10 ON THE BASIS OF PAGES 1 AND 21 OF THE SEIZED DOCUMENT MARKED SSG/48. 12.2. THE LD AO HAS MENTIONED IN THE ASSESSMENT ORD ER THAT PAGE 7 OF THE SEIZED DOCUMENTS SSG/48 CONTAINED WORKING OF PROFIT ON SALE OF LAND HELD IN THE NAME OF THE COMPANIES. THE LD AO NOTED THAT THE PROFIT WAS WORKED OUT AT RS.5 91 83 392/- THE ASSESSEES SHARE BEING RS. 2 07 14 187/-. THE LD AO FURTHER NOTED THAT NO DETAILS WERE FILED ABOUT THE OTHER PERSONS AND ALSO NO MATERIAL WAS PRODUCED TO SHOW THAT THE PROFIT WAS RECORDED BY SUCH OTHER PERSONS IN THEIR REGULAR BOOKS OF ACCOUNT. TH E LD AO THEN ADDED THE ENTIRE PROFIT OF RS. 5 91 83 392/- IN THE HANDS OF THE ASSESSEE IN A .Y 2008-09. THE ORDER OF THE LD AO IS REPRODUCED AS UNDER :- PAGE 1 OF SSG/48 CONTAINS STATEMENT OF ACCOUNT AS O N 10.9.2008. THE ASSESSEE IN HIS EXPLANATION VIDE ANNEXURE S [S2 & S3] THROUGH C ASH FLOW STATEMENT OF UNDISCLOSED TRANSACTIONS BEING ANNEXURE X OF LETT ER DATED 11.11.2010 AND VIDE ANNEXURE U BEING BREAK-UP OF UNDISCLOSED INCOME A DMITTED RS. 1 85 08 949/- AS UNDISCLOSED EXPENDITURE OF A.Y 2009-10. FOR THE REM AINING ACCOUNT ASSESSEE EXPLAINED IT TO BE PART OF REGULAR BOOKS OF VARIOUS COMPANIES MENTIONED THEREIN. THE ASSESSEE PRODUCED BANK STATEMENT OF VARIOUS COMPANI ES INCLUDING THEIR AUDITED FINAL ACCOUNTS AND COPY OF IT RETURNS CASH FLOW STATEMEN TS. IT WAS SUBMITTED THAT CASH FOR LAND PURCHASES WERE DONE BY WITHDRAWALS OF CASH FRO M BANK ITSELF AND WHEREVER THE ASSESSEE COULD NOT LINK THE CASH EXPENDITURES WITH BANK WITHDRAWALS NECESSARY DISCLOSURES HAVE BEEN MADE. SSG/48 PAGE 1 IS ALSO AN ACCOUNT GIVEN BY BROKER F OR LAND PURCHASED BY OUR CLIENTS AT DIFFERENT LOCATIONS. THE RIGHT SIDE SHOWS AMOUNT RECEIVED BY THE BROKER AND THE LEFT SIDE SHOWS THE AMOUNT EXPENDED BY THE BROKER AND TH E BOTTOM SIDE BELOW THE TABULAR FIRM REPRESENTS AMOUNT DUE TO BE PAID BY OUR CLIENT S AGAINST LAND PURCHASE AND AMOUNT EXPENDED BY THE BROKER. THE RECEIPT SIDE INTER-ALIA SHOWS CASH RECEIVED BY BROKER OF RS.6 91 20 440/-. THIS FIGURE HAS BEEN RECONCILED FROM THE ACCOUNT OF VARI OUS COMPANIES AND AS EVIDENT FROM WORKINGS OF ANNEXURE S2 OF LETTER DT. 11.11. 2010 A SUM OF RS. 5 87 30 000/- WAS WITHDRAWN FROM BANK ACCOUNT OF FOUR COMPANIES O N WHOSE NAME THE LANDS WAS ACQUIRED AS MENTIONED IN THE LEFT SIDE OF THE SEIZ ED DOCUMENTS. A SUM OF RS. 1 03 90 440/- COULD NOT BE BACKED BY BANK WITHDRAWA LS AND TREATED AS UNDISCLOSED. BESIDES THIS THIS PAGE CONTAINS OTH ER RECEIPTS BY BROKER OF RS.81 18 509/- WHICH COULD NOT BE RECONCILED WITH R EGULAR BOOKS AND HENCE THE SAME WAS ALSO OFFERED AS UNDISCLOSED. AS SUCH A SUM OF RS. 1 85 08 949/- WAS TREATED AS UNDISCLOSED ON THE BASIS OF RECEIPTS SIDE OF SSG/48 PAGE 1. THE LEFT SIDE OF THIS PAGE SHOWS LAND VALUE AND OTH ER EXPENSES INCURRED BY BROKER 67 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA WHICH WAS RECONCILED WITH THE BOOKS. A SUM OF RS. 8 6 95 799/- COULD NOT BE RECONCILED. THE BOTTOM SIDE (SHOWING EXPENSES INCUR RED BY BROKER) BELOW THE TABULAR FORM WAS ALSO RECONCILED WITH THE BOOKS AND A SUM O F RS.33 58 229/-COULD NOT BE RECONCILED AND HENCE THE SAME WAS TREATED AS UNDIS CLOSED. THUS THE BROKER ACCOUNTS SHOWS UNDISCLOSED PAYMENTS OF RS. 1 85 08 949/- WHICH WAS MORE THAN UNDISCLOSED EXPENDITURE OF RS.1 20 54 028/- MADE BY HIM. AS SUCH A SUM OF RS. 1 85 08 949/- HAS BEEN TREATED AS UNDIS CLOSED EXPENDITURE IN THE WORKING OF UNDISCLOSED INCOME FILED VIDE LETTER DT. 11.11.2010. PAGE 21 OF SSG/48 CONTAINS ACCOUNT WITH SANAT. IN T HIS RESPECT THE ASSESSEE ADMITTED UNDISCLOSED EXPENSES OF RS.2 57 984/- FOR A.Y 2009-10. PAGES 7 8 AND 9 CONTAIN THE DETAIL OF PURCHASE AND SALE OF LAND AND DISTRIBUTION OF PROFIT ON SALE OF LAND RELATING TO PROJECT AT CHOTA CHANDIPUR (RECORDED IN THE NAMES OF M/S ANKIT PLANTATIONS DEWAR EXPORTS). IN THE SUB MISSION THE ASSESSEE CLAIMED WRITING IN THESE PAGES AS ESTIMATES/ ROUGH WORKING EXCEPT AS PER PAGES 8 & 9 WHICH ARE AS PER REGULAR BOOKS. THESE ARE OTHER PAPERS WH ERE THE MENTION OF PROJECT AT CHOTA CHANDIPUR PROJECTS HAS BEEN FOUND. FURTHER T HE TOTAL AMOUNT OF EXPENSES OF RS. 9 70 93 817/- APPEARING PAGE 9 OF SSG/46 AS CLA IMED BY THE ASSESSEE AS PER REGULAR BOOKS IS ALSO NOTICED IN THE WORKING AS PER PAGE 13 OF SSG/48 WHERE IT IS RECORDED AS PURCHASE VALUE 1642.79 COTTAH-9 70 938. 17 (OOTWO ZERO SUPPRESSION). TOTAL PROFIT OF RS. 5 91 833.92/- (INCLUDING ASSESS EES SHARE OF RS. 2 07 14 187/-) AS RECORDED AFTER OO TWO ZERO SUPPRESSION IS ACTUALL Y RS. 5 91 83 392/- AND TREATED AS UNDISCLOSED INCOME FOR THE FINANCIAL YEAR 2007-0 8 RELEVANT TO A.Y 2008-09 IN THE HANDS OF THE ASSESSEE HIMSELF SINCE HE COULD NOT FU RNISH DETAILS REGARDING OTHER PERSONS AND WHETHER THE TRANSACTIONS WERE RECORDED IN THEIR REGULAR BOOKS. [UNDISCLOSED INCOME FOR A.Y 2008-09 RS. 5 91 83 092 /-] [UNDISCLOSED EXPENDITURE FOR A.Y 2008-09 RS.1 85 08 949/-] [UNDISCLOSED EXPENDITURE FOR A.Y 2008-09 RS.2 57 98 4/-] 12.3. THE LD CITA OBSERVED AS FOLLOWS:- I HAVE PERUSED THE ASSESSMENT ORDER AND CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND ALSO THE MATERIAL ON RECORD. THE AO HAS MENTIO NED IN THE ASSESSMENT ORDER THAT PAGE 1 AND 21 OF THE SEIZED DOCUMENTS SSG/48 CONTAI N DETAIL OF UNDISCLOSED EXPENSES OF RS. 1 85 08 949/- AND RS. 2 57 984/- WHICH WAS A DMITTED BY THE APPELLANT AS UNDISCLOSED EXPENSES IN A.Y 2008-09 AND 2009-10 AN D WAS ALSO INCLUDED IN THE STATEMENT OF CASH FLOW. I UPHOLD THE ORDER OF THE A O THAT THE EXPENSES OF RS.1 85 08 949/- AND RS.2 57 984/- WAS TO BE CONSID ERED IN THE CASE OF THE APPELLANT AS UNDISCLOSED EXPENSES. HOWEVER AS UNDISCLOSED EX PENSES ARE TO BE CONSIDERED AGAINST UNDISCLOSED INCOME THE AO IS DIRECTED TO T REAT THE UNDISCLOSED EXPENSES OF RS. 1 85 08 949/- AND RS. RS.2 57 984/- AS PART OF THE CASH FLOW STATEMENT AND THEN CONSIDER THE NET OF EXPENSES IF ANY FOR THE PURPO SES OF THE ADDITION. THE AO HAS ALSO MADE ADDITION OF RS.5 91 83 392/- O N ACCOUNT OF PROFIT MADE ON ALLEGED SALE OF LAND HELD BY THE COMPANIES ANKIT PL ANTATION KERF CONSTRUCTION AND 68 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA DEWAN EXPORTS ON THE BASIS OF PAGE 7 8 AND 9 OF TH E SEIZED DOCUMENTS SSG/48. IT WAS EXPLAINED THAT PAGE 8 AND 9 CONTAIN DETAIL OF I NVESTMENT MADE IN LAND BY THE SAID-COMPANIES WHICH IS DULY RECORDED IN THEIR BOOK S OF ACCOUNT: AND WHICH HAS ALSO BEEN ACKNOWLEDGED BY THE AO IN THE ASSESSMENT ORDER. IT WAS CONTENDED THAT PAGE 7 CONTAINED ESTIMATES OR ROUGH WORKING AND THE RE WAS NO ACTUAL SALE OF LAND BY THE COMPANIES AS ALLEGED BY THE AO. THE AO HAS MENT IONED IN THE ASSESSMENT ORDER THAT NO DETAIL OF THE OTHER PERSONS WAS FILED. BUT THEN THE NAME OF THE COMPANIES WAS AVAILABLE ON THE SEIZED DOCUMENT. THE AO COULD HAVE EXAMINED THOSE COMPANIES TO ASCERTAIN THE FACTS AND ALSO TO VERIFY THE NATURE OF ENTRIES AS MADE IN THE SEIZED DOCUMENT. I FIND FROM THE ASSESSMENT ORDER THAT IT WAS EXPLAINED BEFORE THE AO AT THE ASSESSMENT STAGE THAT PAGE 70 OF THE SEIZED DOCUMEN T SSG/48 ONLY CONTAINED' ESTIMATES OR ROUGH WORKINGS; AND THAT THERE WAS NO ACTUAL SALE OF LAND. IN COURSE OF THE APPELLATE PROCEEDINGS I HAD REQUIRED THE APPEL LANT TO PRODUCE COPY OF THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET OF THE CONCERNED C OMPANIES FOR THE YEAR ENDING 31.3.2008 31.3.2009 AND 31.3.2010. THE APPELLANT H AS PRODUCED THE SAID DOCUMENTS ALONG WITH THE ANNUAL RETURNS AS FILED BEFORE THE R OC. I FIND THAT THE LAND HOLDING OF THE COMPANIES AS SHOWN IN THE BALANCE SHEET REMAINE D THE SAME OR HAD NOMINALLY INCREASED. I ALSO FIND THAT NO PROFIT OR LOSS ON AC COUNT OF SALE OF LAND WAS CREDITED OR DEBITED IN THE PROFIT & LOSS ACCOUNT OF THE COMPANI ES. THE APPELLANT HAS BROUGHT SUFFICIENT MATERIAL ON RECORD IN SUPPORT OF HIS CON TENTION THAT ACTUALLY THERE WAS NO SALE OF LAND BY THE COMPANIES AND THAT THE SEIZED DOCUMENT MERELY CONTAINED ESTIMATES OR ROUGH WORKINGS. ON THE OTHER HAND THE AO HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT ANY SALE OF LAND WAS ACTUALLY M ADE. NO TRANSFER DEED WAS FOUND IN SEARCH NOR WAS NAY BROUGHT ON RECORD BY THE AO I N COURSE OF THE ASSESSMENT PROCEEDINGS. THE AO HAS NOT IDENTIFIED THE PIECE OF LAND THAT WAS SOLD BY THE COMPANIES. THE AO DID NOT EXAMINE THE COMPANIES TO ASCERTAIN THE FACTS OR TO VERIFY THE NATURE OF ENTRIES AS MADE IN THE SEIZED DOCUMEN T. THE AO HAS BLINDLY INTERPRETED THE SEIZED DOCUMENT WITHOUT ASCERTAINING THE FACTS OR VERIFYING THE NATURE OF THE ENTRIES IN THE SEIZED DOCUMENT. EVEN IN COURSE OF T HE REMAND PROCEEDINGS THE AO HAS FAILED TO BRING POSITIVE MATERIAL ON RECORD TO SUBSTANTIATE HIS FINDING THAT PROFIT WAS MADE ON SALE OF LAND HELD BY THE COMPANIES. THE AO HAS SIMPLY PRESUMED THAT THERE WAS SALE OF LAND RESULTING IN PROFIT OF RS. 5 91 83 392/-. THE DECISION OF THE AO IS NOT BASED ON PROPER FINDINGS. THE EXPLANATION SU BMITTED BY THE APPELLANT HAS BEEN SUMMARILY REJECTED BY THE AO MORE ON PRESUMPTION TH AN IN FACTUAL GROUND. THERE IS POSITIVE MATERIAL ON RECORD IN THE FORM OF THE PROF IT & LOSS ACCOUNT AND BALANCE SHEET OF THE CONCERNED COMPANIES FOR THE YEAR ENDING 31.3 .2008 31.3.2009 AND 31.3.2010 TO SHOW THAT NO SALE OF LAND WAS ACTUALLY MADE BY T HE COMPANIES. ALL THE THREE COMPANIES MENTIONED IN THE SEIZED DOCUMENT STILL CO NTINUE TO HOLD SUCH LAND AS PER THEIR RESPECTIVE AUDITED ACCOUNTS AND SO THE ENTIRE PRESUMPTION OF SALE OF LAND BY THE AO CARRIES NO FORCE. THE CONCLUSION OF THE AO THAT PROFIT WAS MADE ON SALE OF LAND IS CONTRARY TO THE EVIDENCE ON RECORD. IN THIS FACTUAL BACKGROUND I AM OF THE OPINION THAT THERE IS NO MATERIAL OR EVIDENCE WHATSOEVER TO SUBSTANTIATE THE FINDING OF THE AO. THE ADDITION OF RS. 5 91 83 392/- AS MADE BY TH E AO IS DIRECTED TO BE DELETED. 12.4. THE LD AR SUBMITTED THAT ADDITION IS AS FOLLO WS : A) PAGE 1 SSG/48 RS 1 85 08 949/- B) PAGES 7 8 & 9 RS.5 91 83 392/- 69 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 12.4.1. HE SUBMITTED HAT ADDITION ON THE BASIS OF P AGE 1 RS. 1 85 08 949/- IS MERELY ON CONFESSIONAL STATEMENT AND AS SUCH ADDITION MAY KIN DLY BE NOT SUSTAINABLE. 12.4.2. HE SUBMITTED THAT RS. 5 91 83 392/- HAS BEE N ADDED ON BASIS OF PAGE 7 8 & 9 OF SSG/48. AS FAR AS PAGE 9 IS CONCERNED IT REPRESEN TS THE LAND OWNED BY DIFFERENT COMPANIES THE NAME OF WHICH ARE DULY APPEARING THEREIN AND S UCH AMOUNT BEING DULY REFLECTED IN RESPECTIVE COMPANIES BOOKS OF ACCOUNT AND HENCE N O ADVERSE INFERENCE CAN BE DRAWN IN THAT REGARD. SIMILARLY PAGE 8 SIMPLY SHOWS CERTAI N BALANCE SHEET ITEMS OF THOSE COMPANIES AND IN THAT REGARD ALSO NO ADVERSE INFERENCE CAN BE DRAWN. AS REGARDS PG 7 KINDLY APPRECIATE THAT IT DOES NOT CONTAIN ANYWHERE THE N AME OF THE ASSESSEE EXCEPT THE WORD SP AND SIMPLY ON SUCH BASIS IT CANNOT BE PRESUMED THAT THE SAME BELONGS/ PERTAINS TO THE ASSESSEE. FURTHER THE SAID DOCUMENT WAS MERELY A PL ANNING DOCUMENT AND DEAL NOT HAVING MATERIALIZED SUCH COMPANIES CONTINUE TO HOLD SUCH L AND IN THEIR BOOKS AND HENCE NO ADVERSE INFERENCE CAN BE DRAWN IN THAT REGARD AS WELL. WITH OUT PREJUDICE TO THE EARLIER ARGUMENT EVEN IF IT IS PRESUMED THAT SP MEANS THE ASSESSEE THEN ALSO ONLY 35% OF 59183392 COULD BE TREATED IN THE HANDS OF THE ASSESSEE. HOWEVER THE LD AO NOT HAVING CORROBORATED IN ANY MANNER THE LINK OF THE ASSESSEE WITH SUCH DOCUMENT THE PRESUMPTION DRAWN IS BAD IN LAW. 12.4.3. HE DREW OUR ATTENTION TO PAGES 1970 2021 2063 OF PAPER BOOK NO.12 TO SUBSTANTIATE THE FACT THAT NO CHANGE IN SHAREHOLDIN G OF SUCH COMPANIES HAVE TAKEN PLACE AND HENCE THE ENTIRE CONTENTION OF THE LD AO HAS NO SUB STANCE. 12.4.4. AS REGARDS THE LD CITAS ACTION IN ALLOWING THE SET OFF OF THE EXPENSES SO INCURRED BY ASSESSEE AND / OR ITS ASSOCIATES IT WAS SUBMIT TED BY THE LD AR THAT THERE IS NO DISPUTE IN THE FACT THAT ASSESSEE HAD RECEIVED CASH ON ACCOUNT OF TRANSACTION WITH FORT TO THE TUNE OF RS. 7 40 90 000/- AND ALSO OTHER RECEIPTS WHICH WAS AVAILABLE WITH ASSESSEE AND THE EXPENSES WERE OUT OF SUCH SUMS ONLY AND HENCE THE L D CITA WAS FULLY JUSTIFIED IN ALLOWING SUCH SET OFF. THE LD AR ALSO SUBMITTED THAT ON A PE RUSAL OF ASSESSMENT ORDER ITSELF IT CAN BE OBSERVED THAT THE LD AO HIMSELF HAS ALLOWED SUCH SE T OFF AND NOW THE REVENUE IS DISPUTING SUCH ACTION WHICH AMOUNTS TO DISPUTING ITS OWN EARL IER ACTION AND WHICH IS NOT PERMISSIBLE AS PER LAW. 70 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 12.5. IN RESPONSE TO THIS THE LD DR RELIED HEAVILY ON THE ORDER OF AO AND URGED TO SUSTAIN THE ADDITION ARISING OUT OF PAGE 43 AND PAGE 45 OF SSG/45. 12.6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK SUBMITTED BY THE ASSESSEE IN THIS REGARD. AS REGARDS PAGE 43 OF THE SEIZED DOCUMENT SINCE LD AR STATED THAT THE SAME IS NOT PRESSED THE SAID ADDITION OF RS. 2 57 984/- IS SUSTAINED AND GROUND RAISED IN CO OF ASSESSEE IS DISMISSED AS NOT PRESSED. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA IN THIS REGARD. 12.6.1. AS REGARDS PAGE 48 WE FIND THAT FACTUALLY THERE IS NO CHANGE IN THE SHAREHOLDING OF THE IMPUGNED COMPANIES I.E. KERF CONSTRUCTIONS ANK IT PLANTATION AND DEWAN EXPORTS AND HENCE EVEN IF WE PRESUME FOR THE TIME BEING THAT TH E CONTENTS IN PAGES 7 8 & 9 ARE TRUE AND THEN ALSO THE VERY BASIS OF LD AOS ADDITION HAS LOST RELEVANCE AND ADDITION CANNOT BE SUSTAINED ON SUCH ACCOUNT. HOWEVER WE ALSO FIND TH AT LD AO HAS FILED TO CORROBORATE THE TRANSACTION IN SUCH RESPECT NOR HAS BROUGHT ANY EVI DENCE AND HAS MERELY PRESUMED OF SUCH TRANSACTIONS THE ENTIRE ADDITION IS BAD IN LAW. IN THE FACTS OF THE MATTER WE DO NOT FIND ANY MERIT IN LD AOS CONTENTION AND HENCE THE ENTIRE A DDITION OF RS. 5 91 83 392/- CANNOT BE SUSTAINED AND SUCH GROUND OF REVENUE FAILS. 12.6.2. AS REGARDS THE REVENUES GROUND IN TREATING RS. 1 85 08 949/- OUT OF AVAILABLE CASH WE FIND MERIT IN THE FACT THAT THAT LD AO HIMSELF H AS ALLOWED SUCH SET OFF IN THE ASSESSMENT ORDER SO REVENUE CANNOT BE ALLOWED TO CHANGE ITS STAND NOW. EVEN OTHERWISE THE REVENUE IS NOT IN POSSESSION OF ANY EVIDENCE NOR IT HAS FURNIS HED ANY SUCH FACT ON RECORD THAT THE SUMS EXPENDED WERE OTHER THAN OUT OF SUM EARNED / RECEIV ED AS CASH BY THE ASSESSEE. HENCE WE CONCUR WITH THE ORDER OF LD CITA IN ALLOWING SUMS A S PART OF CASH FLOW AND AS SUCH THE REVENUES GROUND FAILS ON SUCH ACCOUNT. AS A RESULT WE HOLD AS FOLLOWS: ASST YEAR APPEAL NO. GROUND NOS. RESULT 2008-09 36/K/12 11 & 12 DISMISSED 71 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA 147/K/12 9 DISMISSED 2009-10 37/K/12 9 DISMISSED 148/K/12 12 DISMISSED 13. ADDITION TOWARDS CASH JEWELLERY & UNDISCLOSED BANK ACCOUNTS A.Y 2006-07 IT(SS) 34/KOL/ 2012 GROUND NO. 6 - THE LD. CIT(A) IS ERRED IN DIRECTING THE A.O. TO CO NSIDER THE UNDISCLOSED AMT. OF 65 300/- FOUND IN BANK A/C OF A SSESSE'S WIFE AGAINST THE UNDISCLOSED CASH RECEIPT OF ASSESSE. A.Y 2006-07 C.O. 145/KOL/2012 GROUND NO.4 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CLT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS. 65 300/- BEING THE SUM CREDITED IN THE BANK ACCOUNT OF THE WIFE OF THE APPELLANT AS UN DISCLOSED INVESTMENT OF THE APPELLANT AND SUCH ACTION OF THE LD. CIT(A) IN CONF IRMING THE ACTION OF THE AO IS WITHOUT APPRECIATING THE FACT THAT THE SAID BANK ACCOUNT STOOD IN THE NAME OF THE WIFE OF THE APPELLANT AND IF ANY ADDITION WERE TO BE MADE SUCH ADDITION HAVE BEEN MADE IN THE HANDS OF THE WIFE OF THE APPELL ANT ONLY. HOWEVER THE LD. CIT(A) WITHOUT APPRECIATING THE FACT SUSTAINED THE ADDITION SO MADE AND SUCH ACTION OF THE LD. CIT(A) IS LIABLE TO BE Q UASHED / CANCELLED / SET ASIDE. A.Y 2007-08 CO. 146/KOL/2012 GROUND NO. 4 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CLT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS. 85 863/- BEING THE SUM CREDITED IN THE BANK ACCOUNT OF THE WIFE OF THE APPELLANT AS UN DISCLOSED INVESTMENT OF THE APPELLANT AND SUCH ACTION OF THE LD. CIT(A) IN CONF IRMING THE ACTION OF THE AO IS WITHOUT APPRECIATING THE FACT THAT THE SAID BANK ACCOUNT STOOD IN THE NAME OF THE WIFE OF THE APPELLANT AND IF ANY ADDITION WERE TO BE MADE SUCH ADDITION HAVE BEEN MADE IN THE HANDS OF THE WIFE OF THE APPELL ANT ONLY. HOWEVER THE LD. CIT(A) WITHOUT APPRECIATING THE FACT SUSTAINED THE ADDITION SO MADE AND SUCH ACTION OF THE LD. CIT(A) IS LIABLE TO BE Q UASHED / CANCELLED / SET ASIDE. IT(SS) 35/KOL/2012 GROUND NO. 6 - THE LD. CIT(A) IS ERRED IN DIRECTING THE A.O. TO CO NSIDER THE UNDISCLOSED AMT. OF 67 411/- (CORRECT AMOUNT 85 863 /-) FOUND IN BANK A/C OF ASSESSE'S WIFE AGAINST THE UNDISCLOSED CASH RECEIPT OF ASSESS E. A.Y 2008-09 72 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA C.O. 147/KOL/2012 GROUND NO.4 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CLT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS. 69 882/- BEING THE SUM CREDITED IN THE BANK ACCOUNT OF THE WIFE OF THE APPELLANT AS UN DISCLOSED INVESTMENT OF THE APPELLANT AND SUCH ACTION OF THE LD. CIT(A) IN CONF IRMING THE ACTION OF THE AO IS WITHOUT APPRECIATING THE FACT THAT THE SAID BANK ACCOUNT STOOD IN THE NAME OF THE WIFE OF THE APPELLANT AND IF ANY ADDITION WERE TO BE MADE SUCH ADDITION HAVE BEEN MADE IN THE HANDS OF THE WIFE OF THE APPELL ANT ONLY. HOWEVER THE LD. CIT(A) WITHOUT APPRECIATING THE FACT SUSTAINED THE ADDITION SO MADE AND SUCH ACTION OF THE LD. CIT(A) IS LIABLE TO BE Q UASHED / CANCELLED / SET ASIDE. IT(SS) 36/KOL/2012 GROUND NO.1 - THE LD. CIT(A) IS ERRED IN DIRECTING THE A.O. TO CO NSIDER THE UNEXPLAINED CASH DEPOSIT OF RS. 69 882/- IN THE BAN K ACCOUNT OF THE WIFE OF ASSESSEE AGAINST UNACCOUNTED CASH RECEIPT OF THE ASSESSEE. A.Y 2009-10 C.O. 148/KOL/2012 GROUND NO. 5 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATIN G RS. 3 74.170/- AS UNDISCLOSED ASSETS OF THE APPELLANT ALTHOUGH SUCH SUM WAS SEIZED FROM THE PREMISES WHICH DOES NOT BELONG TO THE APPELLANT AND AS SUCH THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ACTION OF THE AO IS COM PLETELY BAD & ILLEGAL AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES SUC H ACTION OF THE LD. CIT(A) IS LIABLE TO BE QUASHED/ CANCELLED/ SET ASIDE. THIS GROUN D IS WITHOUT PREJUDICE TO THE FACT THAT THE APPELLANT HAS SHOWN THE SAME AS APPLICA TION OF THE INCOME OFFERED BY IT AND HENCE IT MAY KINDLY BE CONSIDERED ACCORDINGLY. GROUND NO.6 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING RS. 67 411/- BEING THE SUM CREDITED IN THE BANK ACCOUNT OF THE WIFE OF THE AP PELLANT AS UNDISCLOSED INVESTMENT OF THE APPELLANT AND SUCH ACTION OF THE LD. CJT(A) IN CONFIRMING THE ACTION OF THE AO IS WITHOUT APPRECIATING THE FACT THAT THE S AID BANK ACCOUNT STOOD IN THE NAME OF THE WIFE OF THE APPELLANT AND IF ANY ADDITION WERE TO BE MADE SUCH ADDITION HAVE BEEN MADE IN THE HANDS OF THE WIFE OF THE APPELLANT ONLY. HOWEVER THE LD. CIT(A) WITHOUT APPRECIATING THE FACT SUSTAINED THE ADDITION SO MADE AND SUCH ACTION OF THE LD. CIT(A) IS LIABLE TO BE QUASHED /C ANCELLED/SET ASIDE. THIS GROUND WITHOUT PREJUDICE TO THE FACT THAT THE APPELLANT HA S SHOWN THE SAME AS APPLICATION OF THE INCOME OFFERED BY IT AND HENCE IT MAY BE KINDLY BE CONSIDERED ACCORDINGLY. GROUND NO.7 - FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) ERRED IN CONFIRMING LHE ACTION OF THE AO IN TREATING RS .17 56 785/- AS UNDISCLOSED INVESTMENT OF THE APPELLANT WITHOUT APPRECIATING THE FACT THAT SUCH JEWELLERY HAD NOT BEEN FOUND EITHER IN THE POSSESSION OF T HE APPELLANT OR FROM THE PREMISES OF THE APPELLANT HENCE SUCH ACTION OF THE AO IS WITHOUT APPRECIATING THE FACT THAT SUCH JEWELLERY BELONGED TO THE OTHER PERSONS AND HENCE THE ACTION OF THE LD. CLT(A) IN CONFIRMING THE ACTION OF THE AO IS LI ABLE TO BE QUASHED/ CANCELLED/ SET 73 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA ASIDE. THIS GROUND IS WITHOUT PREJUDICE 10 TH E FACT THAT THE APPELLANT HAS SHOWN THE SAME AS APPLICATION OF THE INCOME OFFERED BY IT AND HENCE IT MAY KINDLY BE CONSIDERED ACCORDINGLY. IT(SS) 37/KOL/2012 GROUND NO. 1 THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIO N OF RS. 3 74 170/- THE UNACCOUNTED CASH SEIZED FROM THE PREMISES OF TH E ASSESSEE. GROUND NO. 2 - THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS. 17 56 785/- MADE AGAINST THE UNDISCLOSED JEWELLERY BY STATING T HAT THESE ARE COVERED BY THE UNACCOUNTED CASH RECEIPT OF RS. 7 96 45 460/- IN A. Y. 2006-07 & 2007-08. A.Y 2008-09 IT(SS) 36/KOL/2012 GROUND NO. 9 - THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO CON SIDER THE UNEXPLAINED EXPENDITURE OF RS. 45 456/- ACCOUNTED C ASH RECEIPT OF THE ASSESSEE. 13.1. THE LD AR SUBMITTED THAT AS REGARDS THE LD CI TAS ACTION IN ALLOWING THE SET OFF OF THE AMOUNT OF CASH JEWELLERY AND UNDISCLOSED BANK ACCO UNT BEING OUT OF AVAILABLE CASH IT WAS SUBMITTED BY THE LD AR THAT THERE IS NO DISPUTE IN THE FACT THAT ASSESSEE HAD RECEIVED CASH ON ACCOUNT OF TRANSACTION WITH FORT TO THE TUNE OF R S. 7 40 90 000/- AND ALSO OTHER RECEIPTS WHICH WAS AVAILABLE WITH ASSESSEE AND AS SUCH THE C ASH FOUND OR THE JEWELLERY AND / OR THE UNDISCLOSED BANK ACCOUNT WERE OUT OF SUCH SUMS ONLY AND HENCE THE LD CITA WAS FULLY JUSTIFIED IN ALLOWING SUCH SET OFF. HE ALSO SUBMITT ED THAT ON A PERUSAL OF ASSESSMENT ORDER ITSELF IT CAN BE OBSERVED THAT THE LD AO HIMSELF HAS ALLOWED SUCH SET OFF AND NOW THE REVENUE IS DISPUTING SUCH ACTION WHICH AMOUNTS TO D ISPUTING ITS OWN EARLIER ACTION AND WHICH IS NOT PERMISSIBLE AS PER LAW. ON MERITS THE LD AR DID NOT SUBMIT ANYTHING IN PARTICULAR. 13.2. IN RESPONSE TO THIS THE LD DR OBJECTED TO SU CH CONTENTION OF THE LD AR AND REQUESTED FOR AFFIRMING THE ADDITION. 13.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE SUBMITTED IN THIS REGARD. AS REGARDS ASSESSEES GROUND ON MERITS WE DO NOT FIND ANY SUBSTANCE NOR THE LD AR WAS ABLE TO POINT OUT ANY MISTAKE IN THE ORDER OF THE LD AO IN THAT REGARD. H ENCE ASSESSEES GROUND IN THE RESPECTIVE YEARS IN THAT REGARD FAILS. 74 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA AS REGARDS THE REVENUES GROUND IN TREATING RS. 85 863/- RS.69 882/- RS.3 74 170/- RS.67 411/- & RS.17 56 785/- OUT OF AVAILABLE CASH WE FIND MERIT IN THE FACT THAT THAT THE LD AO HIMSELF HAS ALLOWED SUCH SET OFF IN THE ASSESSME NT ORDER SO REVENUE CANNOT BE ALLOWED TO CHANGE ITS STAND NOW. EVEN OTHERWISE THE REVENU E IS NOT IN POSSESSION OF ANY EVIDENCE NOR IT HAS FURNISHED ANY SUCH FACT ON RECORD THAT T HE SUMS EXPENDED WERE OTHER THAN OUT OF SUM EARNED / RECEIVED AS CASH BY THE ASSESSEE. HENC E WE CONCUR WITH THE ORDER OF LD CITA IN ALLOWING SUMS AS PART OF CASH FLOW AND AS SUCH T HE REVENUES GROUNDS IN RESPECTIVE YEARS FAILS ON SUCH ACCOUNT. AS A RESULT WE HOLD AS FOLLOWS: ASST YEAR APPEAL NO. GROUND NOS. RESULT 2006-07 34/K/12 6 DISMISSED 145/K/12 4 DISMISSED 2007-08 35/K/12 6 DISMISSED 146/K/12 4 DISMISSED 2008-09 36/K/12 1 DISMISSED 147/K/12 4 DISMISSED 2009-10 37/K/12 1 & 2 DISMISSED 148/K/12 5 6 & 7 DISMISSED 14. THE OTHER GROUNDS RAISED IN VARIOUS YEARS ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 15. IN THE RESULT THE APPEALS OF THE REVENUE AS WE LL AS THE ASSESSEE AND CROSS OBJECTIONS OF THE ASSESSEE ARE DISPOSED OFF AS DIRECTED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 05.10.2016 SD/- SD/- (K. NARSIMHA CHARY) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 5 TH OCTOBER 2016 JD.(SR.P.S.) 75 ITA NO. 1418 1411 1419 1412 857/KOL/2012 & IT(SS)A NO.34-37/KOL/2012 & CO NOS. 145-148/KOL/2 012 SURYA PRAKASH BAGLA COPY OF THE ORDER FORWARDED TO: 1 . ASSESSEE: SHRI SURYA PRAKASH BAGLA C/O SALARPURIA JAJODIA & CO. 7 C. R. AVENUE KOLKATA0700 072. 2 REVENUE DCIT CENTRAL CIRCLE-VII KOLKATA 3 . THE CIT (A) KOLKATA 4. 5. CIT KOLKATA DR KOLKATA BENCHES KOLKATA / TRUE COPY BY ORDER ASSTT. REGISTRAR .