The DCIT, Central Circle-2(2),, Ahmedabad v. Shri Ravindra M.Agrawal, Ahmedabad

ITA 1725/AHD/2008 | 2005-2006
Pronouncement Date: 28-01-2011 | Result: Dismissed

Appeal Details

RSA Number 172520514 RSA 2008
Assessee PAN ACIPA6398M
Bench Ahmedabad
Appeal Number ITA 1725/AHD/2008
Duration Of Justice 2 year(s) 8 month(s) 13 day(s)
Appellant The DCIT, Central Circle-2(2),, Ahmedabad
Respondent Shri Ravindra M.Agrawal, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-01-2011
Date Of Final Hearing 07-01-2011
Next Hearing Date 07-01-2011
Assessment Year 2005-2006
Appeal Filed On 15-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND BHAVNESH SAINI JUDICIAL MEMBER) SR.NO. ITA NO. APPELLANT RESPONDENT 1. 1725/AHD/2008 AY : 2005-2006 DCIT CENT.CIR.2(2) AHMEDABAD SHRI RAVINDRA M. AGRAWAL 70 VASANT BAHAR COLONY BOPAL AHMEDABAD 54. PAN : ACIPA 6398 M 2. 1821/AHD/2008 AY : 2000-2001 SHRI RAVINDRA M. AGRAWAL 70 VASANT BAHAR COLONY BOPAL AHMEDABAD 54. DCIT CENT.CIR.2(2) AHMEDABAD. 3. 1822/AHD/2008 AY : 2003-2004 -DO- -DO- 4. 1823/AHD/2008 AY : 2003-2004 -DO- -DO- 5. 1824/AHD/2008 AY : 2004-2005 -DO- -DO- 6. 1825/AHD/2008 AY : 2005-2006 -DO- -DO- 7. 3177/AHD/2008 AY : 2000-2001 DCIT CENT.CIR.2(2) AHMEDABAD. SHRI RAVINDRA M. AGRAWAL 70 VASANT BAHAR COLONY BOPAL AHMEDABAD 54. 8. 3178/AHD/2008 AY : 2001-2002 -DO- -DO- 9. 3179/AHD/2008 AY : 2003-2004 -DO- -DO- 10. 3180/AHD/2008 AY : 2004-2005 -DO- -DO- 11. 2113/AHD/2008 AY : 1999-2000 -DO- -DO- 12. 2114/AHD/2008 AY : 2002-2003 -DO- -DO- 13. 2115/AHD/2008 AY : 2004-2005 DCIT CENT.CIR.2(2) AHMEDABAD. SHRI JADEEP RAVINDRA AGARWAL C/O.SHRI RAVINDRA M. AGARWAL 70 VASANT BAHAR COLONY DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -2- BOPAL AHMEDABAD 54. 14. 2116/AHD/2008 AY : 2005-2006 -DO- -DO- 15. 2117/AHD/2008 AY : 1999-2000 DCIT CENT.CIR.2(2) AHMEDABAD. SMT. REENA R. AGARWAL 70 VASANT BAHAR COLONY BOPAL AHMEDABAD 54. 16. 2118/AHD/2008 AY : 2000-2001 -DO- -DO- 17. 2119/AHD/2008 AY : 2001-2002 -DO- -DO- 18. 2120/AHD/2008 AY : 2002-2003 -DO- -DO- 19. 2121/AHD/2008 AY : 2003-2004 -DO- -DO- 20. 2122/AHD/2008 AY : 2004-2005 -DO- -DO- 21. 2123/AHD/2008 AY : 2005-2006 -DO- -DO- 22. 2153/AHD/2008 AY : 1999-2000 DCIT CENT.CIR.2(2) AHMEDABAD. SMT. PRATIBHADEVI D. AGARWAL 70 VASANT BAHAR COLONY BOPAL AHMEDABAD 54. 23. 2154/AHD/2008 AY : 2000-2001 -DO- -DO- 24. 2155/AHD/2008 AY : 2004-2005 -DO- -DO- 25. 2162/AHD/2008 AY : 1999-2000 DCIT CENT.CIR.2(2) AHMEDABAD. SMT. SAVITRIDEVI M. AGARWAL 70 VASANT BAHAR COLONY BOPAL AHMEDABAD 54. 26. 2163/AHD/2008 AY : 2000-2001 -DO- -DO- DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -3- 27. 2164/AHD/2008 AY : 2001-2002 -DO- -DO- 28. 2165/AHD/2008 AY : 2002-2003 -DO- -DO- 29. 2166/AHD/2008 AY : 2004-2005 -DO- -DO- 30. 2167/AHD/2008 AY : 2005-2006 -DO- -DO- (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI ANIL KUMAR ASSESSEE BY : SHRI S.N. SOPARKAR O R D E R PER BENCH : THESE APPEALS ARE FILED BY THE REVENUE AND THE ASSE SSEES. THEY ARE THIRTY IN NUMBER TWENTY FIVE APPEALS ARE FILED BY THE REVENUE AND FIVE APPEALS BY THE DIFFERENT ASSESSEES AGAINST RES PECTIVE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AHMEDABAD. IN THIS GROUP OF APPEALS COMMON GROUNDS ARE RAISED BY THE REVENUE AND ASSESS ES. THEREFORE FOR THE SAKE OF CONVENIENCE WE DISPOSE OF ALL THESE APPEALS BY THIS CONSOLIDATED ORDER. FIRST WE TAKE UP REVENUES APPEALS: 2. THE ONLY COMMON GROUND RAISED IN ALL THESE APPEA LS BY THE REVENUE READS AS UNDER: 1. THE LD. CIT(A) HAS ERRED N LAW AND ON FACTS IN DIRECTING THE AO TO TREAT THE ASSESSEE AS AN INVESTOR AND COMPUTE TH E INCOME FROM CAPITAL GAIN IN RESPECT OF THE TRANSACTIONS ENTERED INTO TH ROUGH SUB-BROKERS INSTEAD OF TREATING IT AS BUSINESS INCOME. 3. THE FACTS OF THE CASE OF ALL THE ASSESSEES FOR A LL THE YEARS ARE ALMOST SIMILAR EXCEPT VARIATIONS IN THE AMOUNTS OF CAPITAL GAIN SHOWN BY THE ASSESSEES AND CONSEQUENTIAL BUSINESS INCOME ASSESSED BY THE R EVENUE. THEREFORE FOR THE SAKE OF BREVITY WE SHALL DISCUSS HEREIN THE FAC TS RELATING TO SHRI RAVINDRA DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -4- M. AGRAWAL FOR A.Y.2001-2002. BOTH THE PARTIES ALS O ARGUED ONLY ONE APPEAL OF ONE ASSESSEE AND ADMITTED THAT WHATEVER FINDING IS GIVEN IN ONE YEAR WOULD BE APPLICABLE IN THE REMAINING DEPARTMENTAL APPEALS . 4. A SEARCH ACTION UNDER SECTION 132 OF THE INCOME TAX ACT 1961 WAS INITIATED IN THE CASE OF SHRI RAVINDRA AGARWAL AND HIS FAMILY MEMBERS ON 29- 10-2004. SHRI RAVINDRA AGARWAL WHO WAS EXECUTIVE DIRECTOR IN SAURASHTRA CHEMICALS LTD. PORBANDAR AT THE TIME OF SEARCH IS MAIN PERSON OF THE GROUP. THE ASSESSEE GROUP HAS BEEN INVOLVED IN MAKING LARG E NUMBER OF TRANSACTIONS IN SHARES AND MUTUAL FUNDS OVER A PERIOD OF TIME. A WARRANT OF AUTHORIZATION UNDER SECTION 132 OF THE I.T.ACT 1961 WAS SERVED U PON THE ASSESSEE ON 29-10- 2004. CONSEQUENT TO SEARCH ACTION A NOTICE UNDER SECTION 153A(A) OF THE I.T.ACT 1967 DATED 16-3-2005 WAS DULY SERVED UPON THE ASSESSEE ASKING FOR FILING THE RETURN OF INCOME WITHIN 30 DAYS OF RECEI PT OF THE SAID NOTICE. THE ASSESSEE FILED THE RETURN OF INCOME UNDER SECTION 1 53A ON 1-12-2006 DECLARING TOTAL INCOME AT RS.21 91 658/-. SUBSEQUENTLY A RE VISED RETURN OF INCOME WAS FILED ON 24.04.2007 REVISING THE TOTAL INCOME TO RS .26 11 980/-. IN THE RETURN OF INCOME THE ASSESSEE HAS SHOWN INCOME MAINLY FROM SALARY CAPITAL GAIN DIVIDEND AND INTEREST. THE INCOME FROM SALE OF SHA RES WAS SHOWN AS CAPITAL GAIN WHICH THE AO HELD TO BE BUSINESS INCOME. THE AO THEREFORE ASSESSED PROFIT FROM SALE OF SHARES AS BUSINESS INCOME AS AG AINST CAPITAL GAIN SHOWN BY THE ASSESSEE WHICH IS THE ONLY DISPUTE IN ALL THES E APPEALS. THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION AND DIRECTED THE AO TO TREAT THE ASSESSEE AS INVESTOR AND COMPUTE INCOME FROM CAPITAL GAIN IN RE SPECT OF TRANSACTIONS IN SHARES. THE REVENUE AGGRIEVED WITH THE ORDER OF TH E CIT(A) IS IN APPEAL BEFORE US. 5. IN THE IMPUGNED ORDER THE CIT(A) HAD SUMMARIZED THE FINDING GIVEN IN THE ASSESSMENT ORDER AS WELL EXPLANATION OF THE ASS ESSEE IN THIS REGARD. THE SAME IS AT PAGE NOS.10 TO 18 OF THE CIT(A)S ORDER. (PLACED IN ITA NO.2133/AHD/2008). AFTER CONSIDERING THE FINDING O F THE AO AS WELL AS THE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -5- EXPLANATION OF THE ASSESSEE THE CIT(A) ACCEPTED AS SESSEES CLAIM WITH THE FOLLOWING FINDING: 13.4 IN CASE OF THE APPELLANT THE A.O ALSO HAS NOTED THAT ONLY THE SURPLUS FUNDS REALIZED ON DISINVESTMENT/SALE WERE INVESTED IN PU RCHASE OF SHARES. THE APPELLANT/FAMILY MEMBERS HAVE BEEN ASSESSED TO CAPI TAL GAINS IN THE PAST. WHEN SEEN IN TERMS OF THE NUMBER OF SCRIPTS THE NUMBER OF IN DEPENDENTLY ASSESSED ENTITIES THE PERIOD INVOLVED THE NUMBER OF DAYS ON WHICH TRANSA CTIONS TOOK PLACE THE NUMBER OF YEAR-WISE DETAILS OF BILLS RAISED BY SUB-BROKER(S) ETC. THE VOLUME OF TRANSACTION BY ITSELF WOULD NOT RENDER THE APPELLANT AS A TRADER . THE DETAILS/EXPLANATION/REBUTTAL FURNISHED BY THE APPELLANT IN RESPECT OF THE PREMIS ES OF THE A.O. (THE GIST OF WHICH IS NARRATED IN PARA-11.1 OF THIS ORDER) ANSWERS THE DOUBTS OF THE A.O. THE SALE/PURCHASE OF SECURITIES WAS APPARENTLY AN INDEPENDENT ACTIVITY A ND DID NOT FORM THE ONLY SOURCE OF SHARE TRADING. THE LOW RATIO BET WEEN PURCHASES AND SALES AND HOLDING THE PURCHASE OF LISTED SECURITIES OF INDEP ENDENT COMPANIES AND NOT AS PROMOTERS THE DELIVERY BASED TRANSACTIONS AND THE ACTUAL PAYMENTS/RECEIPTS AND NOT MERE BOOK ENTRIES ABSENCE OF LACK OF INTRA DAY TRA DING AND OF REPEATED TRANSACTIONS OF SAME SCRIPTS ETC. ARE FACTORS THE HOLISTIC CON SIDERATION OF WHICH LEADS TO THE CONCLUSION THAT THE APPELLANT WAS AN INVESTOR. THU S CONSIDERING THE DETAILS SUBMISSIONS FACTS ON RECORD THE BOARDS CIRCULAR ETC. THE AO WAS NOT JUSTIFIED IN HOLDING THE APPELLANT AS A TRADER AND ASSESSING HIS INCOME SHOWN FROM CAPITAL GAINS AS BEING INCOME FROM BUSINESS. THE ACTION OF THE AO IS THEREFORE NOT SUSTAINABLE. THE AO IS DIRECTED TO TREAT THE APPELLANT AS AN INV ESTOR AND THEREBY COMPUTE THE INCOME FROM CPIAP8TIAL GAINS IN RESPECT OF THE TRAN SACTIONS ENTERED INTO THROUGH SUB- BROKERS. THE RELATED GROUND OF APPEAL IS ALLOWED. 6. AT THE TIME OF HEARING BEFORE US IT WAS CONTEND ED BY THE LEARNED CIT- DR THAT DURING THE COURSE OF SEARCH OF THE ASSESSEE -PREMISES NO BOOKS OF ACCOUNTS WERE FOUND. THE BOOKS WERE PREPARED SUBSE QUENT TO SEARCH AND THEREFORE MUCH CREDENCE CANNOT BE GIVEN TO THE SAME . DURING THE COURSE OF SEARCH FROM THE LOCKERS OF THE ASSESSEE HUGE UNACC OUNTED CASH WAS FOUND AND IT WAS ALSO NOTICED THAT THE ASSESSEE WAS MAINTAINI NG LARGE NUMBER OF BANK ACCOUNTS IN HIS NAME AS WELL AS IN THE NAME OF VARI OUS FAMILY MEMBERS. THE TOTAL BANK ACCOUNTS WERE 47. THE ASSESSEE WAS CARR YING ON THE PURCHASE AND SALE OF THE SHARES ON LARGE SCALE BASIS IN HIS NAME AS WELL AS IN THE NAMES OF VARIOUS FAMILY MEMBERS. THE AO HAS MENTIONED THAT TOTAL TRANSACTIONS OF THE SHARES IN THE NAMES OF VARIOUS FAMILY MEMBERS IN AL L THE YEARS WERE MORE THAN THIRTY-SIX THOUSAND; THAT ALL THE TRANSACTIONS WERE NOT DELIVERY BASED TRANSACTION. SINCE THE ASSESSEE DID NOT MAINTAIN A NY BOOKS OF ACCOUNTS AND MOST OF THE TRANSACTIONS WERE NOT DISCLOSED TO THE DEPARTMENT THE INTENTION OF THE ASSESSEE IS OBVIOUS THAT HE WAS CARRYING ON THE BUSINESS OF PURCHASE AND DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -6- SALE OF SHARES IN HIS NAME AS WELL AS IN THE NAME O F VARIOUS FAMILY MEMBERS; THAT THE CIT(A) ACCEPTED THE ASSESSEES CONTENTIONS THAT HE WAS INVESTOR IN THE SHARES WITHOUT PROPERLY APPRECIATING THE FACTS OF T HE CASE; THAT THE OBSERVATIONS OF THE CIT(A) IS OF GENERAL NATURE. HE ALSO STATED THAT MERELY BECAUSE THE REVENUE HAS ACCEPTED THE CAPITAL GAIN DISCLOSED BY THE ASSESSEE IN RESPECT OF TRANSACTIONS DISCLOSED TO THE DEPARTMENT WILL NOT BE APPLICABLE TO OTHER TRANSACTIONS MAINLY TO THE TRANSACTIONS WHICH WERE NOT DISCLOSED TO THE DEPARTMENT. HE THEREFORE SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE REVERSED AND THAT OF THE AO BE RESTORED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND STATED THAT THE ASSESSEE IS A CHARTERED ACCOUNTANT COST ACCOUNTANT AS WELL AS COMPANY SECRETARY. AT THE RELEVANT TIME HE WAS EXECUTIVE DIRECTOR IN SAURASHTRA CHEMICALS LTD. PORBANDAR; THAT DUE TO HIS EMPLOYME NT HE WAS REQUIRED TO TRAVEL FREQUENTLY; THAT THE ASSESSEE AS WELL AS HIS FAMILY MEMBERS INVESTED MONEY IN SHARES FROM TIME TO TIME; THAT SINCE THE A SSESSEE WAS A QUALIFIED PERSON HE WAS LOOKING AFTER THE INVESTMENT MATTER OF THE ENTIRE FAMILY MEMBERS; THAT NO MONEY WAS EVER BORROWED FOR INVEST MENT IN SHARES; THAT UNDER THE INCOME TAX ACT THE ASSESSEE IS REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNTS ONLY WHEN THE ASSESSEE IS CARRYING ON THE BUSINESS. NEITHER THE ASSESSEE NOR OTHER FAMILY MEMBERS IS CARRYING ON AN Y BUSINESS. THE ONLY SOURCE OF INCOME OF THE ASSESSEE IS INCOME FROM SAL ARY CAPITAL GAIN DIVIDEND AS WELL AS INTEREST; THAT THE ASSESSEE MADE THE INV ESTMENT IN THE SHARES FOR EARNING DIVIDEND INCOME AND IT WOULD BE EVIDENT FRO M THE FACT THAT THE YEAR AFTER YEAR THE ASSESSEE EARNED SUFFICIENT DIVIDEND INCOME; THAT THE ASSESSEE IS NOT MAINTAINING ANY OFFICES OR STAFF FOR LOOKING AF TER THE INVESTMENT IN SHARES. THUS NO ORGANIZED ACTIVITY IS BEING CARRIED OUT BY THE ASSESSEE FOR INVESTMENT IN SHARES; THAT THE ALLEGATIONS OF THE LEARNED DR T HAT THE TRANSACTIONS IN THE SHARES WERE NOT DISCLOSED TO THE DEPARTMENT IS FACT UALLY INCORRECT. ALL THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE DU LY DISCLOSED IN THE RETURN OF INCOME OF THE ASSESSEE AS WELL AS FAMILY MEMBERS FR OM TIME TO TIME. ANY DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -7- SURPLUS ARISING FROM THE SALE OF SHARES WAS ALWAYS SHOWN AS CAPITAL GAIN AND ACCEPTED BY THE REVENUE; THAT THE CONTENTIONS OF TH E REVENUE THAT THERE WERE TOTAL 36 000 TRANSACTIONS IN PURCHASE AND SALE OF S HARES BY THE ASSESSEE AND HIS FAMILY MEMBERS IS FACTUALLY INCORRECT; THAT THE TOT AL TRANSACTION BY THE ASSESSEE AND THE FAMILY MEMBERS FOR ALL THE YEARS TAKEN TOGE THER IS 4 611 AND PER ASSESSEE PER YEAR THE TRANSACTION WOULD BE NOT MUCH ; THAT THE ASSESSEE IS MAINLY DEALING IN B GROUP SCRIPTS AND WHENEVER THE ASSES SEE WANTED TO MAKE THE INVESTMENT BULK NUMBER OF SHARES OF SUCH SCR IPTS WERE NOT SOLD BY A SINGLE PERSON THEREFORE EVEN FOR PURCHASING O NE SCRIPT THERE WERE SEVERAL TRANSACTIONS OF PURCHASES; THAT THE ASSESSE E AS A PRUDENT INVESTOR FOLLOWED THE POLICY OF NOT MAKING THE INVESTMENT IN ONE SCRIPT ONLY AND THEREFORE HE HIMSELF MADE INVESTMENT IN MORE NUMBE R OF SCRIPTS; THAT FREQUENCY OF THE PURCHASES AND SALE OF SHARES IS TO BE CONSIDERED WITH REFERENCE TO FREQUENCY IN THE PURCHASE AND SALE OF SAME SCRIP T. THE ASSESSEE SELDOM RE- PURCHASES THE SCRIPT SOLD BY HIM. HE ALSO STATED T HAT ALMOST EVERY TRANSACTION OF PURCHASE AND SALE BY THE ASSESSEE AND EACH FAMIL Y MEMBER IS ON DELIVERY BASIS EXCEPT A VERY FEW TRANSACTIONS WHERE THE BROK ER BY MISTAKE PURCHASED WRONG SCRIPT AND ON BEING POINTED OUT BY THE ASSESS EE THOSE SCRIPTS WERE RESOLD BY THE BROKER EVEN BEFORE THE DELIVERY COULD BE TAK EN. HE HAS STATED THAT THE IDENTICAL MATTER IS CONSIDERED BY THE MUMBAI BENCH OF THE ITAT IN THE CASE OF GOPAL PUROHIT (2009) 29 SOT 117 (MUM) WHEREIN THERE WERE LARGE NUMBER OF TRANSACTIONS. PART OF THE TRANSACTIONS WAS SHOWN B Y THE ASSESSEE AS BUSINESS INCOME AND PART AS CAPITAL GAIN. THE DEPARTMENT HA S TREATED ALL THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES AS BUSINESS MAINLY O N THE GROUND THAT THERE WERE HUGE VOLUME OF PURCHASES AND SALES OF SHARES. THE ITAT MUMBAI BENCH ACCEPTED THE ASSESSEES CONTENTIONS THAT WHERE THE SHARES WERE HELD AS INVESTMENT THE SAME CANNOT BE TREATED AS BUSINESS INCOME DESPITE THE FREQUENCY IN THE TRANSACTIONS. THE ITAT ALSO NOTIC ED THAT THE SOME TRANSACTIONS WERE ACCEPTED AS INVESTMENT IN EARLIER YEARS. THE REVENUE HAD FILED THE APPEAL BEFORE THE HONBLE BOMBAY HIGH COU RT ON BOTH THE GROUNDS DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -8- AND THE HONBLE HIGH COURT UPHELD THE ORDER OF THE ITAT HOLDING THAT THERE IS NO SUBSTANTIAL QUESTION OF LAW VIDE ORDER REPORTED IN 228 CTR 582. HE ALSO RELIED UPON THE FOLLOWING DECISIONS: I) JANAK S. RANGWALA (2007) 11 SOT 627 (MUM); II) SARNATH INFRASTRUCTURE PVT. LTD. (2009) 120 TTJ 216 (LUCK); III) SUGAMCHAND C. SHAH ITA NO.3554 & 4024/AHD/2008 (AH D) AND ITA NO.2219 & 1932/AHD/2009 (AHD) IV) HIMANSHU J. SHAH & OTHERS ITA NO.2875 TO 2889/AHD/ 2008; V) SMT. BELABEN HIMANSHU SHAH ITA NO.3196 TO 32000/AH D/2008; VI) NIDHI DYING & PRINTING MILLS PVT. LTD. ITA NO.3579 /AHD/2008; VII) SMK SHARES & STOCK BROKING ITA NO.799/MUM/2009; VIII) MANAGEMENT STRUCTURE & SYSTEMS P. LTD. 41 DTR 426 ( MUM); IX) BHARAT KUNVERJI KENIA 130 TTJ 86 (MUM) 8. THE LEARNED DR IN THE REJOINDER STATED THAT VA RIOUS DECISIONS RELIED UPON BY THE LEARNED COUNSEL WOULD NOT BE APPLICABLE BECAUSE THEY WERE IN RESPECT OF THE TRANSACTIONS DISCLOSED BY THE ASSESS EE WHILE IN THE CASE OF THE ASSESSEE THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE NOT DISCLOSED TO THE DEPARTMENT. HE ALSO STATED THAT LAW OF RES JUDICATA IS NOT APPLICABLE TO THE INCOME TAX PROCEEDINGS THEREFORE MERELY BECAUSE I N THE EARLIER YEARS THE CAPITAL GAIN HAS BEEN ACCEPTED WOULD NOT DEBAR THE AO FROM EXAMINING THIS IN THE SUBSEQUENT YEARS. HE ALSO STATED THAT THOUGH THE ASSESSEE HAD NOT BORROWED THE FUNDS BUT IT HAS MANAGED THE FUNDS OF OTHER FAMILY MEMBERS. HE ALSO SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED A NY DOCUMENTARY EVIDENCES IN SUPPORT OF HIS CONTENTIONS THAT ONE TRANSACTIONS OF PURCHASE/SALE OF SHARES WAS BROKEN UP IN SEVERAL TRANSACTIONS DUE TO NON-AV AILABILITY OF ONE BUYER OR SELLER OF THOSE SHARES. HE THEREFORE REITERATED TH AT THE ORDER OF THE CIT(A) SHOULD BE REVERSED AND THAT OF THE AO BE RESTORED. 9. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. IT WAS ADMI TTED BY BOTH THE PARTIES THAT DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -9- THE FACTS IN THE CASES OF ALL THE ASSESSEES IN ALL THE YEARS ARE MORE OR LESS SIMILAR THEREFORE THE FACTS IN ANY YEAR CAN BE CONSIDERED WHICH WOULD BE APPLICABLE IN OTHER YEARS ALSO. THEREFORE THE ASSESSEE WAS DIRE CTED TO FURNISH COPY OF ORIGINAL COMPUTATION AS WELL AS REVISED COMPUTATION OF ONE YEAR IN THE CASE OF SHRI RAVINDRA M. AGARWAL. HE HAS FURNISHED THE COP Y OF RETURN FOR ASSESSMENT YEAR 2001-2002 THEREFORE WE SHALL DEAL HEREINBELO W THE FACTS FOR ASSESSMENT YEAR 2001-2002. 10. THE ONLY DISPUTE IN THIS APPEAL BY THE REVENUE IS WHETHER THE PROFIT FROM SALE OF SHARES IS TO BE ASSESSED AS BUSINESS I NCOME OR AS INCOME FROM CAPITAL GAIN. TO DETERMINE THIS THE MOST IMPORTAN T TEST IS WHETHER THE INITIAL ACQUISITION OF THE SHARES WAS WITH THE INTENTION OF DEALING IN THE SHARES OR IT WAS MADE AS AN INVESTMENT. THE INTENTION OF THE AS SESSEE IS BEST KNOWN TO HIM AND THE DISPUTE COMES TO THE APPELLATE AUTHORITIES ONLY WHEN THE REVENUE AUTHORITIES DO NOT ACCEPT THE CLAIM OF THE ASSESSEE . THE APPELLATE AUTHORITIES HAVE LAID DOWN CERTAIN GUIDELINES ON THE BASIS OF W HICH THE INTENTION OF THE ASSESSEE CAN BE INFERRED. IN THE CASE OF SARNATH I NFRASTRUCTURE PVT. LTD. (SUPRA) THE LUCKNOW BENCH OF THE ITAT HAS LAID VARIOUS PRIN CIPLES WHICH MAY BE APPLIED TO DETERMINE WHETHER THE TRANSACTION OF PUR CHASE AND SALE OF SHARE IS IN THE NATURE OF TRADE OR INVESTMENT. THE RELEVANT FI NDINGS OF THE ITAT READ AS UNDER: THE FOLLOWING PRINCIPLES CAN BE APPLIED ON THE FAC TS OF A CASE TO FIND OUT WHETHER TRANSACTION(S) IN QUESTION ARE IN THE N ATURE OF TRADE OR ARE MERELY FOR INVESTMENT PURPOSES: (1) WHAT IS THE INTENTION OF THE ASSESSEE AT THE TI ME OF PURCHASE OF THE SHARES. THIS CAN BE FOUND OUT FROM THE TREATMENT IT GIVES TO SUCH PURCHASE IN ITS BOOKS OF ACCOUNTWHETHER IT IS TREA TED AS STOCK-IN-TRADE OR INVESTMENT; WHETHER SHOWN IN OPENING/CLOSING STO CK OR SHOWN SEPARATELY AS INVESTMENT OR NON-TRADING ASSET. (2) WHETHER ASSESSEE HAS BORROWED MONEY TO PURCHASE AND PAID INTEREST THEREON. NORMALLY MONEY IS BORROWED TO PU RCHASE GOODS FOR THE PURPOSES OF TRADE AND NOT FOR INVESTING IN AN A SSET FOR RETAINING. DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -10- (3) WHAT IS THE FREQUENCY OF SUCH PURCHASES AND DISPOSA L IN THAT PARTICULAR ITEM ? IF PURCHASES AND SALES ARE FREQUE NT OR THERE ARE SUBSTANTIAL TRANSACTIONS IN THAT ITEM IT WOULD IND ICATE TRADE. HABITUAL DEALING IN THAT PARTICULAR ITEM IS INDICATIVE OF IN TENTION OF TRADE. SIMILARLY RATIO BETWEEN THE PURCHASES AND SALES AN D THE HOLDINGS MAY SHOW WHETHER THE ASSESSEE IS TRADING OR INVESTING ( HIGH TRANSACTIONS AND LOW HOLDINGS INDICATE TRADE WHEREAS LOW TRANSACTION S AND HIGH HOLDINGS INDICATE INVESTMENT). (4) WHETHER PURCHASE AND SALE ARE FOR REALIZING PROFIT OR PURCHASES ARE MADE FOR RETENTION AND APPRECIATION IN ITS VALUE? F ORMER WILL INDICATE INTENTION OF TRADE AND LATTER AN INVESTMENT. IN TH E CASE OF SHARES WHETHER INTENTION WAS TO ENJOY DIVIDEND AND NOT MER ELY EARN PROFIT ON SALE AND PURCHASE OF SHARES. A COMMERCIAL MOTIVE IS AN ESSENTIAL INGREDIENT OF TRADE. (5) HOW THE VALUE OF THE ITEMS HAS BEEN TAKEN IN THE BA LANCE SHEET ? IF THE ITEMS IN QUESTION ARE VALUED AT COST IT WOULD INDICATE THAT THEY ARE INVESTMENTS OR WHERE THEY ARE VALUED AT COST OR MAR KET VALUE OR NET REALIZABLE VALUE (WHICHEVER IS LESS) IT WILL INDIC ATE THAT ITEMS IN QUESTION ARE TREATED AS STOCK-IN-TRADE. (6) HOW THE COMPANY (ASSESSEE) IS AUTHORIZED IN MEMORAN DUM OF ASSOCIATION/ARTICLES OF ASSOCIATION ? WHETHER FOR T RADE OR FOR INVESTMENT ? IF AUTHORIZED ONLY FOR TRADE THEN WHETHER THERE ARE SEPARATE RESOLUTIONS OF THE BOARD OF DIRECTORS TO CARRY OUT INVESTMENTS IN THAT COMMODITY ? AND VICE VERSA. (7) IT IS FOR THE ASSESSEE TO ADDUCE EVIDENCE TO SHOW T HAT HIS HOLDING IS FOR INVESTMENT OR FOR TRADING AND WHAT DISTINCTION HE HAS KEPT TO THE RECORDS OR OTHERWISE BETWEEN TWO TYPES OF HOLDINGS : IF THE ASSESSEE IS ABLE TO DISCHARGE THE PRIMARY ONUS AND COULD PRIMA FACIE SHOW THAT PARTICULAR ITEM IS HELD AS INVESTMENT (OR SAY STOC K-IN-TRADE) THEN ONUS WOULD SHIFT TO REVENUE TO PROVE THAT APPARENT IS NO T REAL. (8) THE MERE FACT OF CREDIT OF SALE PROCEEDS OF SHARES (OR FOR THAT MATTER ANY OTHER ITEM IN QUESTION) IN A PARTICULAR ACCOUNT OR MUCH FREQUENCY OF SALE AND PURCHASE WILL ALONE WILL NOT BE SUFFICIENT TO SAY THAT ASSESSEE WAS HOLDING THE SHARES (OR THE ITEMS IN QUESTION) F OR INVESTMENT. (9) ONE HAS TO FIND OUT WHAT ARE THE LEGAL REQUISITES F OR DEALING AS A DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -11- TRADER IN THE ITEMS IN QUESTION AND WHETHER THE ASS ESSEE IS COMPLYING WITH THEM. WHETHER IT IS THE ARGUMENT OF THE ASSESS EE THAT IT IS VIOLATING THOSE LEGAL REQUIREMENTS IF IT IS CLAIMED THAT IT IS DEALING AS A TRADER IN THAT ITEM ? WHETHER IT HAD SUCH AN INTENTION (TO CA RRY ON ILLEGAL BUSINESS IN THAT ITEM) SINCE BEGINNING OR WHEN PURC HASES WERE MADE ? (10) IT IS PERMISSIBLE AS PER CBDTS CIRCULAR NO. 4 OF 2 007 OF 15-6- 2007 THAT AN ASSESSEE CAN HAVE BOTH PORTFOLIOS ONE FOR TRADING AND OTHER FOR INVESTMENT PROVIDED IT IS MAINTAINING SEP ARATE ACCOUNT FOR EACH TYPE THERE ARE DISTINCTIVE FEATURES FOR BOTH AND THERE IS NO INTERMINGLING OF HOLDINGS IN THE TWO PORTFOLIOS. (11) NOT ONE OR TWO FACTORS OUT OF ABOVE ALONE WILL BE SUFFICIENT TO COME TO A DEFINITE CONCLUSION BUT THE CUMULATIVE EF FECT OF SEVERAL FACTORS HAS TO BE SEEN. THE ASSESSEE-COMPANY WAS DEALING IN SHARES AND IT H AD DEALT IN SHARES BOTH AS STOCK-IN-TRADE AS WELL AS INVESTMENT. IT SO LD SHARES FROM THE INVESTMENT PORTFOLIO AND CLAIMED THAT THE PROFIT AR ISING THEREFROM WAS CAPITAL GAIN. THE ASSESSING OFFICER HELD THAT MAIN BUSINESS OF THE ASSESSEE WAS PURCHASE AND SALE IN SHARES. IT WAS NE ITHER A SHARE DEALER NOR A SHARE BROKER. THE DETAILS FOR PURCHASE AND SA LES AFFECTED BY THE ASSESSEE COMPANY REVEALED THAT SALES AND PURCHASES WERE QUITE SUBSTANTIAL AND WOULD NOT BE MADE BY A PERSON WHO I NVESTED IN SHARES. FURTHER THE ASSESSEE DID NOT HAVE SUFFICIENT FUNDS TO MAKE SUCH INVESTMENTS AND THE ASSESSEE WAS CLAIMING TO HAVE M ADE INVESTMENT OUT OF BORROWED CAPITAL. HE THEREFORE HELD THAT THE P ROFIT IN QUESTION WAS ASSESSABLE AS BUSINESS INCOME. HELD THAT THE UNDISPUTED FACT WAS THAT THE ASSESSEE WAS DEALING IN SHARES BOTH AS BUSINESS AS WELL AS INVESTMENT. IT H AD KEPT SEPARATE ACCOUNTS IN RESPECT OF TWO PORTFOLIOS. NO MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT DEMARCATION LINE BETWEEN BUSINE SS AND INVESTMENT WAS HAZY OR THAT THE ASSESSEE HAD NOT MAINTAINED AN INVESTMENT PORTFOLIO AND IT WAS DEALING IN SHARES ONLY LIKE A TRADER. THUS ON APPRECIATION OF CUMULATIVE EFFECT OF SEVERAL FACTOR S PRESENT IT WAS TO BE HELD THAT THE SURPLUS WAS CHARGEABLE TO CAPITAL GAI NS ONLY AND THE ASSESSEE WAS NOT TO HE TREATED AS TRADER IN RESPECT OF SALE AND PURCHASE OF SHARES IN THE INVESTMENT PORTFOLIO. DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -12- THE ITAT MUMBAI BENCH IN THE CASE OF JANAK S. RANG WALA (SUPRA) HELD AS UNDER: THE MERE VOLUME OF TRANSACTION TRANSACTED BY THE A SSESSEE WOULD NOT ALTER THE NATURE OF TRANSACTION. IT IS AN ESTABLISH ED PRINCIPLE THAT INCOME IS TO BE COMPUTED WITH REGARD TO THE TRANSACTION. T HE TRANSACTION IN WHOLE HAS TO BE TAKEN INTO CONSIDERATION AND THE MA GNITUDE OF THE TRANSACTION DOES NOR AFTER THE NATURE OF TRANSACTIO N. THOUGH THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO THE INC OME-TAX PROCEEDINGS AS EACH YEAR IS AN INDEPENDENT YEAR OF THE ASSESSME NT BUT IN ORDER TO MAINTAIN CONSISTENCY IT IS A JUDICIALLY ACCEPTED P RINCIPLE THAT SAME VIEW SHOULD BE ADOPTED FOR THE SUBSEQUENT YEARS UNLESS T HERE IS A MATERIAL CHANGE IN THE FACTS. (PARA 6] IN THE FACTS OF THE INSTANT CASE THE ASSESSEE WAS HOLDING THE SHARES AS INVESTMENT FROM YEAR TO YEAR. IT WAS THE INTENTION OF THE ASSESSEE WHICH WAS TO BE SEERS TO DETERMINE THE NATURE OF TRANSACT ION CONDUCTED BY THE ASSESSEE. THOUGH THE INVESTMENT IN SHARES WAS ON A LARGE MAGNITUDE BUT THE SAME WOULD NOT DECIDE THE NATURE OF TRANSACTION . SIMILAR TRANSACTIONS OF SALE AND PURCHASE OF SHARES IN THE PRECEDING YEARS HAD BEEN HELD TO BE INCOME FRONT CAPITAL GAINS BOTH ON LONG-TERN AND SHORT- TERM BASIS. TIRE TRANSACTION IN THE YEAR UNDER CONS IDERATION ON ACCOUNT OF SALE AND PURCHASE OF SHARES WAS SAME AS IN THE P RECEDING YEARS AND THE SAME WAS TO BE ACCEPTED AS SHORT-TERM CAPITAL G AINS. THERE WAS NO BASIS FOR TREATING THE ASSESSEE AS A TRADER IN SHAR ES WHEN HIS INTENTION WAS TO HOLD SHARES ITS THE INDIAN COMPANIES AS AN I NVESTMENT AND NOT AS STOCK-IN-TRADE. THE MERE MAGNITUDE OF THE TRANSACTI ON DOES NOT CHANGE THE NATURE OF TRANSACTION WHICH ARE BEING ASSESSED AS INCOME FROM CAPITAL GAINS IN THE PAST SEVERAL YEARS: THE ITAT MUMBAI BENCH IN THE CASE OF GOPAL PUROHIT (SUPRA) FOLLOWED THE DECISION OF THE ITAT LUCKNOW BENCH IN THE CASE OF SARNATH INFRASTRUCTURE PVT. LTD. (SUPRA) AND HELD AS UNDER: FURTHER ON THE BASIS OF MERITS ALSO IN VIEW OF T HE RATIO OF THE DECISION OF SARNATH INFRASTRUCTURE P. LTD.S CASE (SUPRA) I T WAS HELD THAT THE DELIVERY BASED TRANSACTION SHOULD BE TREATED AS OF THE NATURE OF INVESTMENT TRANSACTIONS AND PROFIT THEREFROM SHOULD BE TREATED AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN DEPENDI NG UPON THE PERIOD OF HOLDING. DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -13- IN ADDITION TO THE ABOVE THE ITAT MUMBAI BENCH AL SO ACCEPTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT IN THE PRECEDING YE AR SIMILAR CLAIM WAS ACCEPTED BY THE REVENUE. THE RELEVANT FINDINGS OF THE ITAT ARE AS UNDER: THUS THE NATURE OF ACTIVITIES MODUS OPERANDI OF THE ASSESSEE MANNER OF KEEPING RECORDS AND PRESENTATION OF SHARES AS IN VESTMENT AT THE YEAR END WERE SAME IN ALL THE YEARS AND HENCE APPAREN TLY THERE APPEARED NO REASON AS TO WHY THE CLAIMS MADE BY THE ASSESSEE SHOULD NOT BE ACCEPTED. HOWEVER THE REVENUE AUTHORITIES HAD TAK EN A DIFFERENT VIEW IN THE YEAR UNDER CONSIDERATION BY HOLDING THAT PRI NCIPLE OF RES JUDICATA WAS NOT APPLICABLE TO THE ASSESSMENT PROCEEDINGS. T HERE COULD NOT BE ANY DISPUTE ON THIS ASPECT BUT THERE IS ALSO ANOTH ER JUDICIAL THOUGHT THAT THERE SHOULD BE UNIFORMITY IN TREATMENT AND CONSIST ENCY UNDER THE SAME FACTS AND CIRCUMSTANCES AND IT WAS AS ALREADY FOUND THAT FACTS AND CIRCUMSTANCES WERE IDENTICAL EVEN THOUGH A DIFFEREN T STAND HAD BEEN TAKEN BY THE REVENUE AUTHORITIES.: THE REVENUE FILED THE APPEAL BEFORE THE HONBLE BOM BAY HIGH COURT AGAINST THE DECISION OF THE ITAT IN THE CASE OF GOPAL PUROH IT (SUPRA) AND A SPECIFIC QUESTION WAS RAISED AGAINST THE RULE OF CONSISTENCY APPLIED BY THE ITAT. THE HONBLE HIGH COURT VIDE ORDER DATED 6-1-2010 228 C TR 582 (BOM) UPHELD THE ORDER OF THE ITAT AND HELD AS UNDER: 3. IN SO FAR AS QUESTION (B) IS CONCERNED THE TR IBUNAL HAS OBSERVED IN PARE 8. OF ITS JUDGMENT THAT THE ASSESSEE HAS FO LLOWED A CONSISTENT PRACTICE IN REGARD TO THE NATURE OF THE ACTIVITIES THE MANNER OF KEEPING RECORDS AND THE PRESENTATION OF SHARES AS INVESTMEN T AT THE END OF THE YEAR IN ALL THE YEAR THE REVENUE SUBMITTED THAT A DIFFERENT VIEW SHOULD BE TAKEN FOR THE YEAR UNDER CONSIDERATION SINCE TH E PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE TO ASSESSMENT PROCEEDING S. THE TRIBUNAL CORRECTLY ACCEPTED THE POSITION THAT THE PRINCIPLE OF RES JUDICATA IS NOT ATTRACTED SINCE EACH ASSESSMENT YEAR IS SEPARATE IN ITSELF. THE TRIBUNAL HELD THAT THERE OUGHT TO BE UNIFORMITY IN TREATMENT AND CONSISTENCY WHEN THE FACTS AND CIRCUMSTANCES ARE IDENTICAL PARTICUL ARLY IN THE CASE OF THE ASSESSEE. THIS APPROACH OF THE TRIBUNAL CANNOT BE F AULTED. THE REVENUE DID NOT FURNISH ANY JUSTIFICATION FOR ADOPTING A DI VERGENT APPROACH FOR THE ASSESSMENT YEAR IN QUESTION. QUESTION (B) THER EFORE DOES NOT ALSO RAISE ANY SUBSTANTIAL QUESTION. 11. ON MERIT ALSO THEIR LORDSHIPS UPHELD THE FINDI NGS OF THE ITAT HOLDING THE SAME TO BE PURE FINDING OF THE FACT. DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -14- 12. SIMILAR VIEW IS TAKEN BY THE OTHER BENCHES OF T HE ITAT IN VARIOUS DECISIONS RELIED UPON BY THE LEARNED COUNSEL. HOWE VER FOR THE SAKE OF BREVITY THE SAME ARE NOT DISCUSSED HERE IN DETAIL. 13. THE LEARNED DR HAD CONTENDED THAT THE ABOVE DEC ISIONS OF THE ITAT WOULD NOT BE APPLICABLE TO THE CASE UNDER APPEAL BE FORE US BECAUSE IN THESE CASES THE TRANSACTIONS OF THE PURCHASE AND SALE OF SHARES WERE DISCLOSED TO THE DEPARTMENT WHILE IN THE CASE OF THE ASSESSEE THES E WERE UNDISCLOSED TRANSACTIONS DETECTED BY THE REVENUE ONLY AS A RESU LT OF SEARCH. TO VERIFY FACTUAL CORRECTNESS OF THE CONTENTION OF THE REVENU E THE ASSESSEE WAS ASKED TO FURNISH THE COPY OF ORIGINAL COMPUTATION AS WELL AS REVISED COMPUTATION IN THE CASE OF RAVINDRA AGRAWAL FOR ANY ONE ASSESSMENT YEA R. THE ASSESSEE FURNISHED THE DETAIL FOR A.Y.2000-2001 FROM WHICH WE FIND THA T THE ORIGINAL RETURN WAS FURNISHED BY THE ASSESSEE ON 7-11-2001 WHEREAS THE SEARCH HAS TAKEN PLACE AT THE ASSESSEES PREMISES ON 29-10-2004. IN THIS ORI GINAL RETURN LONG TERM CAPITAL GAIN OF RS.10 02 774/- WAS DISCLOSED. IN RESPONSE TO THE NOTICE UNDER SECTION 153A THE ASSESSEE FURNISHED RETURN DISCLOSING CAPI TAL GAIN OF RS.7 31 096/- WHICH WAS FILED ON 30-11-206. THIS RETURN WAS AGAI N REVISED ON 24-4-2007 IN WHICH THE CAPITAL GAIN OF RS.7 33 450/- WAS DISCLOS ED. THE FACT REMAINS THAT THE CAPITAL GAIN WAS DISCLOSED BY THE ASSESSEE IN T HE ORIGINAL RETURN AS WELL. OF COURSE THERE IS SOME VARIATION IN THE AMOUNT OF CAP ITAL GAIN DISCLOSED. IN THE ORDER UNDER SECTION 153A ALSO THERE IS NO FINDING B Y THE AO THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES WERE NOT DISCLOSED BY THE ASSESSEE. THE SAME IS NOT ASSESSED AS INCOME FROM UNDISCLOSED SOURCES BUT ASSESSED AS BUSINESS INCOME. THEREFORE THE CONTENTION OF THE LEARNED DR THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES WAS NOT DISCLOSED TO THE DEPARTMENT IS FACTUALLY NOT CORRECT. MOREOVER WHETHER THE TR ANSACTION OF PURCHASE AND SALE OF SHARES WAS DISCLOSED BEFORE THE DATE OF SEARCH O R NOT WOULD NOT BE RELEVANT FOR DETERMINING WHETHER THE TRANSACTION WAS IN THE NATURE OF TRADING TRANSACTION OR IN THE NATURE OF INVESTMENT. THEREFORE WHETHER THE TRANSACTION OF PURCHASE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -15- AND SALE OF SHARES WAS A TRADING TRANSACTION OR INV ESTMENT WILL HAVE TO BE EXAMINED CONSIDERING THE TOTALITY OF THE FACTS OF T HE ASSESSEES CASE. WE FIND THAT SHRI RAVINDRA M. AGARWAL IS A CHARTERED ACCOUN TANT COST ACCOUNTANT AS WELL AS COMPANY SECRETARY BY EDUCATION. HE WAS AN EXECUTIVE DIRECTOR IN SAURAHSTRA CHEMICALS LTD. PORBANDAR AT THE RELEVAN T TIME. HE WAS NOT IN THE BUSINESS OF PURCHASE AND SALE OF SHARES. IN THE OR IGINAL RETURN OF INCOME FURNISHED PRIOR TO THE SEARCH THE PROFIT FROM SALE OF SHARES WAS OFFERED TO TAX AS CAPITAL GAIN AND THE SAME WAS ACCEPTED BY THE REVEN UE UNDER SECTION 143(1). NO MONEY WAS BORROWED BY THE ASSESSEE FOR THE ACQUI SITION OF THE SHARES. ALL SHARES WERE ACQUIRED BY UTILISING OWN FUND. NEITHE R ANY OFFICE NOR ANY STAFF WAS KEPT AND MAINTAINED FOR THE PURPOSE OF SALE OF PURCHASE/SHARES. HOWEVER THERE WERE FREQUENT TRANSACTIONS OF PURCHASE AND SA LE OF SHARES. THERE IS DISPUTE WITH REGARD TO TOTAL NUMBER OF SHARE TRANSA CTIONS OF PURCHASE AND SALE OF SHARES BY VARIOUS ASSESSES. AS PER THE REVENUE THE TOTAL NUMBER OF TRANSACTION BY ALL THE ASSESSEES DURING THE VARIOUS ASSESSMENT YEARS UNDER APPEAL WAS TOTALING TO 36 000 (APPROX.). AS PER TH E ASSESSEE THE NUMBER OF TRANSACTIONS WERE 4611. THE REVENUE HAS NOT GIVEN ANY BASIS FOR THE FIGURE OF 36 000 MENTIONED IN THE ASSESSMENT ORDER WHILE THE ASSESSEE HAS GIVEN WORKING HOW THERE WERE 4 611 TRANSACTIONS BY VARIOUS ASSESS EES IN SEVERAL YEARS. WHETHER THE TRANSACTIONS WERE 4 611 OR 36 000 THE FACTS REMAIN THAT THERE WERE FREQUENT TRANSACTIONS OF PURCHASE AND SALE OF SHARE S. HOWEVER EXCEPT THE PARAMETER OF FREQUENCY IN PURCHASE/SALE OF SHARES A LL OTHER PARAMETERS INDICATE THAT THE TRANSACTIONS WERE IN THE NATURE OF INVESTM ENT AND NOT THE TRADE TRANSACTIONS. EVEN FOR FREQUENCY IT WAS EXPLAINED BY THE LEARNED COUNSEL THAT THE ASSESSEE WAS MOSTLY MAKING THE INVESTMENT IN B- GROUP SCRIPTS AND TO AVOID RISK HE MADE INVESTMENT IN SEVERAL SCRIPTS INSTEAD OF INVESTING IN ONE SCRIPT. FOR EXAMPLE IF THE ASSESSEE HAD TO INVEST RS.10 LA KHS INSTEAD OF INVESTMENT IN ONE SCRIPT HE USED TO INVESTMENT IN TEN DIFFERENT SCRIPTS. HE MADE A STATEMENT THAT THE ASSESSEE NEVER PURCHASED AND SOLD THE SAME SCRIPTS FREQUENTLY. HE ALSO STATED THAT SHARES WERE KEPT FOR LONG PERIOD AND TH ERE IS NO FREQUENT DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -16- PURCHASE/SALE OF SAME SCRIPTS. THIS CONTENTION OF T HE LEARNED COUNSEL APPEARS REASONABLE AND HAS NOT BEEN FACTUALLY CONTROVERTED BY THE REVENUE. THERE IS A SAYING THAT NEVER PUT ALL YOUR EGGS IN ONE BASKET AND IF THE ASSESSEE AS A PRUDENT PERSON MADE INVESTMENT IN NUMBER OF SCRIPTS INSTEAD OF ONE SCRIPTS IT CANNOT BE SAID THAT HE WAS CARRYING ON THE BUSINESS OF PURCHASE AND SALE OF SHARES. THERE WERE SUBSTANTIAL INCOME FROM THE DIV IDEND. IN THE CASE OF SHRI RAVINDRA M. AGARWAL FOR A.Y.2001-2002 AS PER THE R EVISED RETURN THE DIVIDEND INCOME WAS AS HIGH AS RS.19 33 425/-. IT IS A SETTLED LAW THAT TO DETERMINE WHETHER THE ASSESSEE IS A TRADER OR INVES TOR IN SHARES NO SINGLE TEST IS CONCLUSIVE BUT CUMULATIVE EFFECT OF ALL THE FACTS A RE TO BE SEEN. IN THE CASE OF THE ASSESSEE ONE FACT I.E. FREQUENT PURCHASE/SALE OF SHARES CAN BE SAID TO BE AGAINST THE ASSESSEE BUT ALL OTHER FACTS WHICH CAN BE SUMMARISED AS UNDER ARE IN FAVOUR OF THE ASSESSEE: I) SHRI RAVINDRA AGRAWAL IS A QUALIFIED PROFESSIONAL B EING CHARTERED ACCOUNTANT COMPANY SECRETARY AND COST AC COUNTANT; II) SHRI AGRAWAL WAS FULL TIME DIRECTOR OF A PUBLIC LIM ITED COMPANY AT THE RELEVANT TIME POSTED AT PORBANDER; III) SHARES WERE ACQUIRED WITH OWN MONEY AND THERE WAS N O BORROWING BY SHRI RAVINDRA AGRAWAL OR ANY OTHER FAM ILY MEMBER; IV) NO OFFICE OR ANY STAFF WAS MAINTAINED FOR LOOKING A FTER PURCHASE AND SALE OF SHARES; V) THERE WAS SUBSTANTIAL DIVIDEND INCOME; VI) HIS SOURCE OF INCOME WAS INCOME FROM SALARY CAPITA L GAIN DIVIDEND AND INTEREST AND HE WAS NOT HAVING ANY BUS INESS INCOME; VII) IN THE ORIGINAL RETURN OF INCOME FURNISHED FROM TIM E TO TIME INCOME FROM SALE OF SHARES WAS DISCLOSED UNDER THE HEAD CAPITAL GAIN AND WAS ACCEPTED BY REVENUE AS SUCH UNDER SEC TION 143(1). DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -17- WHEN TOTALITY OF ALL THE ABOVE FACTS ARE CONSIDERED THE INFERENCE DRAWN BY THE CIT(A) THAT THE ASSESSEE IS AN INVESTOR IN SHARES APPEARS TO BE CORRECT. APART FROM THE ABOVE ON THE PRINCIPLE OF CONSISTENCY ALS O ORDER OF THE CIT(A) ON THIS POINT DESERVES TO BE UPHELD BECAUSE IN THE ORIGINAL RETURNS INCOME FROM SALE OF SHARES WAS DISCLOSED UNDER THE HEAD CAPITAL GAIN AND THE SAME WAS ACCEPTED BY THE REVENUE. ITAT MUMBAI BENCH IN THE CASE OF GOPTAL PURROHIT (SUPRA) HELD THAT THOUGH IN INCOME TAX PROCEEDINGS THE RULE OF RES JUDICATA DOES NOT APPLY BUT THERE SHOULD BE UNIFORMITY IN TREATMENT A ND CONSISTENCY UNDER THE SAME FACTS AND CIRCUMSTANCES. THIS DECISION IS UPH ELD BY THE HONBLE MUMBAI HIGH COURT IN CIT VS. GOPTAL PUROHIT 228 CTR 582 ( BOM). THESE DECISIONS WOULD BE SQUARELY APPLICABLE TO THE CASES OF THE AS SESSEE UNDER APPEAL BECAUSE IN THESE CASES NOT ONLY IN EARLIER YEAR BUT IN THE YEARS UNDER APPEAL ALSO IN ORIGINAL PROCEEDINGS TRANSACTION OF PURCHASE AND SA LE OF SHARES SHOWN AS CAPITAL GAIN WAS ACCEPTED BY THE REVENUE. MERELY BECAUSE THERE WAS SEARCH AT THE ASSESSEES PREMISES THE NATURE OF TRANSACTION WOUL D NOT CHANGE. IN VIEW OF THE ABOVE AFTER CONSIDERING THE TOTALITY OF THE FA CTS AND CIRCUMSTANCES OF THE CASE AND VARIOUS JUDICIAL PRONOUNCEMENT REFERRED AB OVE WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CI T(A) ON THIS POINT. THE SAME IS UPHELD AND THE REVENUES APPEALS ARE DISMISSED. 14. IN THE RESULT ALL THE APPEALS OF THE REVENUE A RE DISMISSED. ITA NO.1821/AHD/2008 (ASSESSEES APPEAL) : A.Y.2000 -2001 15. IN GROUND NO.1 AND 2 OF THIS APPEAL THE ASSESS EE CHALLENGED THE CONFIRMATION OF ADDITION OF RS.3 99 10 000/- ON ACC OUNT OF UNEXPLAINED CASH CREDIT. SIMILARLY ADDITIONS OF RS.42 30 000/- AND RS.1 56 00 000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT ARE CHALLENGED IN ASSESS MENT YEAR 2001-2002 AND 2004-2005. SINCE THE FACTS ARE IDENTICAL ON ALL TH ESE GROUNDS THEREFORE THE FACTS ARE BRIEFLY NOTED FOR ALL THE APPEALS. DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -18- 16. THE RESIDENCE OF THE ASSESSEE AND HIS WIFE IN P ORBANDAR AND JAIPUR AND THEIR BANK LOCKERS AT JAIPUR AND PORBANDAR WERE SUB JECT TO THE SEARCH UNDER SECTION 132 OF THE IT ACT INITIATED ON 29-10-2004. THE ACTION UNDER SECTION 133A WAS ALSO UNDERTAKEN AT THE OFFICE OF THE ASSES SEE LOCATED IN FACTORY PREMISES OF M/S.SAURRASHTRA CHEMICALS LTD. PORBAND AR. THE BANK BALANCE OF OVER RS.1 CRORE IN THE ICICI BANK PORBANDAR AND LA TER THE BANK BALANCE (RS.2.68 CRORES APPROXIMATELY) OF THE ASSESSEE AND FAMILY MEMBERS IN UCO BANK ELLISBRIDGE WERE ATTACHED AND SEIZED. DOCUME NTS/BOOKS OF ACCOUNTS WERE SEIZED FROM RESIDENTIAL PREMISES AT PORBANDAR AS PER ANNEXURE A-1 TO ANNEXURE-7. THE BOOKS OF ACCOUNTS/DOCUMENTS WERE A LSO IMPOUNDED IN THE SURVEY CONDUCTED AT THE OFFICE PREMISES OF THE ASSE SSEE. THE STATEMENTS OF THE ASSESSEE AND HIS WIFE WERE RECORDED UNDER SECTION 1 32(4). THE BOOKS WERE SUBJECT TO SPECIAL AUDIT UNDER SECTION 142(2A) OF T HE I.T.ACT. THE AO APART FROM CONSIDERATION OF THE ISSUE OF CAPITAL GAIN IN THE NATURE OF TRADE ALSO CONSIDERED THE ISSUE OF UNEXPLAINED CASH CREDIT. T HE AO NOTED THAT ADVANCES IN THE FORM OF CASH AMOUNT HAVE BEEN SHOWN AS RECEI PTS FROM NUMBER OF PARTIES OF RESIDENTS IN NEW DELHI TOWARDS THE PROPOSED SITE OF FLATS IN THE CITY OF JAIPUR IN THE RESIDENTIAL SCHEME STATED TO HAVE BEEN FLOAT ED BY THE ASSESSEE IN THE NAMES OF SUNDERNAGAR SCHEME AND RADHA VIHAR SCHEMES . THE DETAILS OF SALE PROCEEDS/ADVANCES SHOWN TO HAVE RECEIVED IN VARIOUS YEARS AGAINST THE BOOKING OF THE FLATS WERE SUMMARISED BY THE AO AS UNDER: A.Y. AMOUNT NO. OF PARTIES MODE OF PAYMENT NAME OF SCHEME. 2000-01 3 99 10 000 89 BY CASH SUNDER NAGAR 2001-02 42 30 000 9 BY CASH SUNDER NAGAR 2004-05 1 56 00 000 42 BY CASH RADHA VIHAR ALL THE AFOREMENTIONED ADVANCES WERE SHOWN TO HAVE REPAID TO THE CONCERNED ALLOTTEES/PARTIES BETWEEN JANUARY 2004 AND MARCH 2 005. THE AO HAS DISCUSSED THIS TRANSACTION IN PARA 3 TO 3.7 OF THE ASSESSMENT ORDER FOR A.Y.2000-2001 AND IN OTHER YEARS ALSO. THE NARRATI ON/DECISION/FINDING OF THE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -19- AO AND THE REPLIES/EXPLANATIONS OF THE ASSESSEE IN RESPECT OF ALL THESE THREE YEARS ARE SIMILAR. THE FACTS OF THE CASE AND THE IS SUE INVOLVED BEING IDENTICAL EXCEPT IN THE ASSESSMENT YEAR 2004-2005 WHICH WAS IN RESPECT OF THE SCHEME RADHA VIHAR. THE ASSESSEE CHALLENGED THE FINDING OF THE AO THAT THIS WAS THE UNEXPLAINED CASH CREDIT. THE AO FELT THAT THE NOME NCLATURE/HEAD OF INCOME I.E. CAPITAL GAINS OFFERED IN DIFFERENT ASSESSMENTS FOR TAXATION REQUIRED EXPLANATION BECAUSE OF THE FREQUENCY AND MAGNITUDE OF TRANSACTI ONS AND OTHER FACTORS. AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE CONCLUDED THAT THE ASSESSEE WAS A TRADER IN SHARES AND SOUGHT TO TAX THE PROFIT FROM SHARE TRANSACTION AS INCOME FROM BUSINESS. IN RESPECT OF THE ADVANCES S HOWN TO HAVE RECEIVED IN CASH THE AO SOUGHT EXPLANATION/DETAILS /EVIDENCES AS WERE NARRATED BY THE AO IN THE ASSESSMENT ORDER. THE ASSESSEE WAS REQUIRED TO SUBSTANTIATE THAT THE STATED RESIDENTIAL SCHEMES WERE ACTUALLY FLOATED AN D TO PROVE THE GENUINENESS OF THE TRANSACTIONS IN RESPECT OF THESE SCHEMES. THE AO ALSO SENT NOTICES UNDER SECTION 133(6) TO ALL THE PARTIES AT THEIR RE SPECTIVE ADDRESS PROVIDED BY THE ASSESSEE. THE AO HAS AT LENGTH NARRATED THE DI SMAL FATE OF THESE NOTICES WHICH PROVED NOT ONLY THE NON-TRACEABILITY OF A LAR GE NUMBER OF SUCH PARTIES BUT ALSO RAISED FURTHER DOUBTS ABOUT THE AUTHENTICI TY OF THE TRANSACTION AS WERE EXPRESSED BY THE AO. THE AO HAD ALSO SOUGHT OTHE R RELEVANT AND PERTINENT DETAILS FROM THE ASSESSEE VIDE LETTER DATED 13-4-20 07. IN RESPONSE VIDE LETTER DATED 26-4-2007 IT WAS SUBMITTED THAT ORIGINAL AFF IDAVITS (ALMOST 140 IN NUMBERS) WITH ALL THE SOUGHT DETAILS COPIES OF IT RETURN OF THE PARTIES EXPLANATION ABOUT THE SCHEMES AND FOR THE LACK OF A NY CORRESPONDENCE FOUND IN THIS REGARD THE DESTINATION OF THE CASH RECEIVED I .E. IN MUTUAL FUNDS IN NAME OF NINE FAMILY MEMBERS THE SOURCE OF REPAYMENTS I.E. WITHDRAWALS FROM BANK ACCOUNTS OF NINE FAMILY MEMBERS THE DETAILS OF THE FLATS THE MODE/MANNER OF THE SALE OF FLATS ETC. WERE FURNISHED. THE AO HAS PARTLY REPRODUCED THE REPLY OF THE ASSESSEE DATED 26-4-2007 IN HIS ORDER. THE AO VIDE FURTHER LETTER DATED 5- 7-2007 REQUIRED THE ASSESSEE TO PRODUCE PARTIES/ALL OTTEES OF FLATS I.E. DEPONENTS OF THE AFFIDAVITS FOR ASCERTAINING THE VERACITY OF THE CLAIMS/DETAILS AFFIRMED IN DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -20- THE RESPECTIVE AFFIDAVITS AND PROVIDED OPPORTUNITY TO PRODUCE THE PARTIES. THE AO ALSO INTIMATED VIDE LETTER DATED 3-8-2007 FOR HI S PROPOSAL TO TREAT THE RECEIPTS AS UNEXPLAINED INCOME. THE ASSESSEE FILED REPLY DATED 16-8-2007 TO THE SHOW CAUSE NOTICE. THE AO CONSIDERED THE REPLI ES/EXPLANATION OF THE ASSESSEE AND POINTED OUT THAT THE EXPLANATION FURNI SHED WAS NOT ONLY MISLEADING BUT ALSO INCREDULOUS. FOR EXAMPLE HUGE RECEIPTS IN CASH HAD NEVER BEEN MENTIONED BY THE ASSESSEE IN THE STATEMENT AT THE TIME OF SEARCH ON 29-10- 2004. IT WAS ONLY ON 8-12-2006 THE ASSESSEE FIRST REFERRED TO THESE CASH RECEIPTS. THE AO FELT THAT IT WAS NOT BECAUSE OF A NY MEMORY LAPSE OF THE ASSESSEE BUT BECAUSE OF THE INTERVENING PERIOD WAS USED TO CONCEIVE CONCOCT AND CONTRIVE AN EXPLANATION FOR THE HUGE UNDISCLOSE D INVESTMENT MADE BY THE ASSESSEE. THIS WAS ALSO ONE OF THE REASONS WHY THE RETURNS OF INCOME WERE FILED LATE. THE AO ALSO REFERRED TO THE UNNATURAL /UNUSUAL FEATURES WHICH FURTHER ADDED TO THE INCREDIBLE EXPLANATION OF THE ASSESSEE. IT WAS FURTHER NOTED THAT NO PAPERS WERE FOUND/SEIZED IN RESPECT O F THE STATED RESIDENTIAL SCHEMES AND/OR THE ADVANCES STATED TO BE RECEIVED A GAINST THEM. THE ASSESSEE HAS ALSO FAILED TO PRODUCE THE PARTIES FOR EXAMINAT ION EXCEPT THE OFFER TO DO SO OF A FEW OF THEM JUST BEFORE THE ASSESSMENT WAS TO GET BARRED BY LIMITATION. THE AO ALSO NOTED THAT ALL THE APPLICANTS WERE RESI DENTS OF DELHI AND HAD PAID THE ENTIRE AMOUNT MUCH IN ADVANCE IN CASH AND HAD NOT MADE ANY QUERIES. THE AO ALSO NOTED THAT HOW THE LARGE NUMBER OF PEOP LE FROM DELHI HAD COME TO KNOW ABOUT THE SCHEMES IN JAPIUR WITHOUT ANY ADV ERTISEMENT WAS NOT KNOWN. THE AO POINTED OUT THAT AFFIDAVITS/DETAILS OF FEW PARTIES WERE FILED BY THE ASSESSEE EVEN WHEN NO NOTICES UNDER SECTION 133 (6) WERE SERVED UPON THE PERSONS. THE REPLY ON BEHALF OF DEVENDER VARMA WAS RECEIVED ON 11-7-2007 THOUGH HE HAD EXPIRED. THE AO IN HIS DISCUSSION HA S REFERRED TO SUCH OTHER MAKE-BELIEF INSTANCES AND IN HIS OPINION NOT ONLY THERE WAS NO SUCH SCHEME OF THE FLATS BUT ENTIRE ARRANGEMENT WAS A FACADE CREAT ED MUCH AFTER THE SEARCH IN ORDER TO EXPLAIN THE CASH INTRODUCED IN THE BOOKS O F ACCOUNTS. THUS THE ONUS OF PROVING THE IDENTITY/GENUINENESS AND CREDITWORTH INESS WAS NOT ESTABLISHED DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -21- AND ACCORDINGLY THE ADDITION WAS TREATED TO BE UNE XPLAINED CASH CREDIT UNDER SECTION 68 OF THE I.T.ACT. 17. THE ASSESSEE CHALLENGED THE ADDITION MADE BY TH E AO BEFORE THE LEARNED CIT(A) AND THE SAME SUBMISSIONS WERE REITERATED. I T WAS ALSO EXPLAINED THAT ORIGINAL AFFIDAVITS OF ALL THE PARTIES DETAILS OF NAMES ADDRESSES SOURCE OF INCOME PAN DESIGNATION OF THE AO AMOUNT OF CASH ADVANCES THE SCHEME DETAILS NUMBER OF THE ALLOTTED FLATS AND THE DATE OF REFUND ETC. DULY VERIFIED AND NOTARISED HAVE BEEN FILED BEFORE THE AO. THE COPY OF THE I.T. RETURNS OF MOST OF THEM ALLOTMENT LETTERS AND RECEIPTS OF PAYMENT HAD ALSO BEEN FURNISHED. THE INDIVIDUAL ALLOTTEES DID NOT HAVE TO ENTER INTO COR RESPONDENCES WITH ANY STATUTORY BODY AND AS FOR THE ASSESSEES CORRESPOND ENCE IN THIS REGARD WAS EITHER VERY LIMITED OR NOT READILY TRACEABLE. THE ADVANCES RECEIVED IN CASH WERE DULY INVESTED IN MUTUAL FUNDS THROUGH DDS. OBT AINED FROM THE BANKS AND THE REPAYMENTS WERE MADE BY SUBSEQUENT ENCASHMENT WHICH HAVE BEEN REFLECTED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE H AD OFFERED TO PRODUCE THE DEPONENTS OF THE AFFIDAVITS/ALLOTTEES OF THE FLATS BEFORE THE AO I.E. FOR FIVE ALLOTTEES ON 2-8-2007 BUT THIS OFFER WAS NOT ACCEPT ED/ACTED UPON BY THE AO. THE OTHER DOUBTS OF THE AO HAD ALSO BEEN ANSWERED V IDE REPLY DATED 26-4- 2007. IT WAS THEREFORE SUBMITTED THAT THE AO WITHO UT ANY BASIS CONSIDERED THE CASH CREDITS AS UNEXPLAINED. THE ASSESSEE HAS PROV ED IDENTITY OF THE DEPONENTS THEIR CREDIT-WORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. THE FLATS COULD NOT BE CONSTRUCTED OWING TO DISPUTES. 18. THE LEARNED CIT(A) HOWEVER DISMISSED THE APPEAL OF THE ASSESSEE ON THIS GROUND. HIS FINDINGS IN PARA 14.1 ARE REPRODU CED AS UNDER: 14.1 THE CONTENTIONS/DETAILS ON RECORD WERE CAREF ULLY CONSIDERED. IT IS SEEN THAT THE EXPLANATION/DETAILS OFFERED BY THE AP PELLANT TO THE A.O. AS ALSO BEFORE ME IN THE APPELLATE PROCEEDINGS IS NO T ONLY FAR FETCHED AND INCREDULOUS BUT ALSO CONSTITUTE AN ATTEMPT TO CREAT E A FACADE ELABORATELY CONCEIVED END CONTRIVED IN THE FACTS A ND CIRCUMSTANCES OF THE CASE. THUS FOR INSTANCE; THE AFFIDAVITS THE ST AMP PAPER FOR WHICH DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -22- HAVE BEEN BOUGHT FROM THE SAME STAMP VENDER SIMULT ANEOUSLY BY DIFFERENT PEOPLE RESIDING ALL OVER DELHI) THE LANG UAGE IN THE AFFIDAVITS THE FORMAT EVEN THE COMPUTER TYPE THE WITNESS TH E NOTARY IS IDENTICAL/SAME. ALL THE DEPONENTS RAN PETTY BUSINES S OR WERE HOUSEWIVES SURVIVING DEPONENT ON PETTY INCOMES FROM ODD JOBS I NCLUDING TUITION/COMMISSION AS INDICATED BY THE COPY OF THE IR IT RETURNS. IT IS ALSO TOO MUCH OF A COINCIDENCE TO OBSERVE THAT THESE PER SONS HAVING ADVANCED A SUBSTANTIAL (CONSIDERING BY THEIR EXTENT OF INCOMES SHOWN) CASH AMOUNT HAD REMAINED CONTENDED AND UNCOMPLAININ G EVEN WHEN THE SCHEME FOR THE FLATS ITSELF HAD NOT BECOME OPERATIV E AND NO INTEREST WAS BEING ON THEIR ADVANCE. THE APPELLANT HAS ALSO NOT EXPLAINED THE REASONS/NECESSITY OF MAKING THE REPAYMENT OF THE SU BSTANTIAL DEPOSITS OF THESE STATED ALLOTTEES IN CASH. SUCH A STEP WAS NO T ONLY IMPRUDENT BUT WOULD HAVE ALSO OPENED THE APPELLANT TO THE POSSIBI LITY OF MULTIFARIOUS LITIGATIONS AGAINST THE APPELLANT. THE ELABORATE DI SCUSSION ON THIS ISSUE BY THE A.O. JUSTIFIES HIS APPROACH AND HIS ACTION IN MAKING THE ADDITION OF THE STATED RECEIPTS IN CASH IN THE RESPECTIVE AS SESSMENT YEARS. IN CASE OF NARESH K. PAHUJA VS. DY.CIT [17 SOT 636 (MUM.) I T HAS BEEN KID THAT 'AN EXPLANATION TENDERED UNDER SECTION 68 CANN OT BE CONSIDERED TO BE SATISFACTORY UNLESS TRANSACTION GIVING RISE TO C ASH CREDIT IS ALSO FOUND TO BE GENUINE. GENUINENESS OF A TRANSACTION HAS TO BE GATHERED ON THE PARAMETERS SPELT OUT UNDER SECTION 3 OF THE OF THE EVIDENCE ACT WHICH PROVIDES AS TO WHEN A FACT SHOULD BE TREATED AS PRO VED. IN THE INSTANT CASE ALL THE DECLARATIONS WERE IDENTICALLY WORDED. IDENTICALLY WORDED DECLARATIONS WOULD NOT HAVE BEEN POSSIBLE UNLESS T HEY ARE CONSTRAINED BY THE INTERFERENCE OR IMPELLED BY OUTSIDE INFLUENC E EITHER AT THE INSTANCE OF THE ASSESSEE OR OF A PERSON ACTING ON T HIS BEHALF. AS SUCH THE ADDITION MADE BY THE AO IS CONFIRMED AND THE RE LATED GROUND OF APPEAL IS REJECTED. 19. THE LEARNED COUNSEL FOR THE ASSESSEES REITERATE D SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT INITIALLY THE ASSESSEE FILED COPIES OF THE AFFIDAVITS LATEST RETURNS OF T HE DEPOSITORS CASH RECEIPTS AND PROVISIONAL ALLOTMENT LETTERS TO SUPPORT THE CONTEN TIONS OF THE GENUINE DEPOSITS HAVE BEEN RECEIVED AGAINST THE BOOKING OF THE FLATS . HE HAS FURTHER SUBMITTED THAT VIDE REPLY DATED 15-3-2007 (PB-1196) COMPLETE DETAILS WERE FILED BEFORE THE AO TO PROVE THAT ADVANCE WERE RECEIVED AGAINST THE PROPOSAL SALE OF FLATS AT SUNDERNAGAR SCHEME AND RADHA VIHAR SCHEMES FOR WHIC H DETAILS HAVE BEEN MAINTAINED IN THE BOOKS OF ACCOUNTS. HE HAS REFERR ED TO THE LETTER OF THE AO DATED 13-4-2007 (PB 1199) THROUGH WHICH THE AO HAS ASKED FOR FURTHER DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -23- CLARIFICATION IN THE MATTER WHICH WAS REPLIED BY T HE ASSESSEE ON 26-4-2007 (PB-1193) AND COMPLETE DETAILS WERE FILED AND ALL T HE ORIGINAL AFFIDAVITS (140 IN NUMBERS) OF THE DEPOSITORS WERE ALSO FILED BEFORE T HE AO. ALL THE QUERIES RAISED BY THE AO WERE REPLIED WITH REGARD TO PAN OF THE DEPOSITORS ABOUT THE SCHEME AND THE BUILT-UP AREA ETC. HE HAS REFERRED TO THE LETTER OF THE AO DATED 5-7-2007 (PB 1211) THROUGH WHICH ASSESSEE WAS REQUI RED TO PRODUCE DEPONENTS OF AFFIDAVITS ON 13-7-2007 TO 24-7-2007 BEFORE HIM WHICH WAS REPLIED BY THE ASSESSEE ON 3-8-2007 (PB-1198) AND THE ASSESSEE OFF ERED TO PRODUCE ALL THE PARTIES/DEPONENTS OF THE AFFIDAVITS IN BATCHES AND HE HAS SUBMITTED THAT IN THE AFORESAID LETTER IT WAS EXPLAINED THAT WITH THE AP PROVAL OF THE AO ON 2-8-2007 IN FIRST BATCH FIVE ALLOTTEES WOULD BE PRODUCED BE FORE HIM ON 3-8-2007. IT WAS ALSO EXPLAINED THAT ON EARLIER OCCASIONS BECAUSE T HE AO WAS PRE-OCCUPIED WITH OTHER PRESSING MATTERS THEIR PERSONAL APPEARANCE W AS CHANGED BY THE AO. THE AO HOWEVER DID NOT EXAMINE ANY OF THE DEPONENTS THE REAFTER AND PASSED THE ORDER ON 16-8-2007. HE THEREFORE SUBMITTED THAT TH E APPROACH OF THE AO WAS VERY CASUAL AND UNUSUAL AND FOR THAT THE ASSESSEE C OULD NOT BE BLAMED FOR THE SAME. HE HAS SUBMITTED THAT COMPLETE DETAILS OF BO TH THE SCHEME OF SUNDERNAGAR SCHEME AND RADHA VIHAR ARE FILED IN THE PAPER BOOK. PB-3 CONTAINS THE DETAILS OF SUNDERNAGAR SCHEME FLATS (F ROM PAGES 383 TO 794) AND PB-2 OF RADHA VIHAR (PB-213-382). HE HAS SUBMITTED THAT IN ALL THESE DETAILS (CONTAINED IN THE PB) COMPLETE DETAILS OF THE PURC HASERS AFFIDAVITS CONFIRMATION ALLOTMENT LETTERS PAN DETAILS ETC. H AVE BEEN FILED TO SHOW THAT THE ASSESSEE FILED COMPLETE DETAILS BEFORE THE AUTH ORITIES BELOW TO EXPLAIN THE ADVANCES RECEIVED FROM VARIOUS DEPONENTS AGAINST BO TH THE HOUSING SCHEME. HE HAS THEREFORE SUBMITTED THAT THE AO SHOULD NOT H AVE MADE THE ADDITION AGAINST THE ASSESSEE. HE HAS SUBMITTED THAT WHATEV ER STATEMENTS RECORDED WERE NOT SUPPLIED TO THE ASSESSEE. HE SUBMITTED THAT DU E TO THE ADVANCES RECEIVED FROM 140 PARTIES THE AMOUNT WAS AVAILABLE WITH THE ASSESSEE WHICH HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNTS. HE HAS SUBMITTE D MERELY BECAUSE THE ALLOTTEES/DEPONENTS OF THE AFFIDAVITS WERE FROM DEL HI IS NOT THE GROUND TO MAKE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -24- THE ADDITION AGAINST THE ASSESSEE. HE HAS SUBMITT ED THAT THE ADVANCE MONIES WERE RETURNED TO THE PARTIES BECAUSE OF THE DISPUTE BETWEEN THE OWNERS AND THAT THE RETURN OF THE MONIES TO THE DEPOSITORS HAVE NOT BEEN DISPUTED BY THE AO. HE HAS SUBMITTED THAT SUBSTANTIAL PARTIES HAVE CONF IRMED ABOUT THE TRANSACTIONS WITH THE ASSESSEE IN REPLY TO THE LETTER ISSUED BY THE AO UNDER SECTION 133(6) OF THE IT ACT. HE HAS SUBMITTED THAT ALL THESE REPLIE S FILED BY THE PARTIES TO THE AO DIRECTLY UNDER SECTION 133(6) HAVE BEEN FILED BY TH E REVENUE IN THEIR PAPER BOOK WHICH HAVE NOT BEEN DISCUSSED AND CONSIDERED BY THE AO IN THE ASSESSMENT ORDER. HE HAS SUBMITTED THAT SINCE THE NAMES ADDRESSES CONFIRMATIONS OF THE PARTIES ALONG WITH ALLOTMENT L ETTERS PAN AND OTHER DETAILS WERE FILED BEFORE THE AO ALONG WITH AFFIDAVITS OF T HE DEPONENTS THE ONUS UPON THE ASSESSEE IS DISCHARGED TO PROVE THE CONDITIONS OF THE SECTION 68 OF THE ACT. HE SUBMITTED THAT SINCE THE LOCATION OF THE DEPONEN TS WERE FAR AWAY FROM AHMEDABAD THEREFORE ACCORDING TO THE GENERAL PROV ISIONS OF THE CODE OF CIVIL PROCEDURE THE AO SHOULD HAVE GOT THE TRANSACTIONS VERIFIED BY ISSUING COMMISSION AT DELHI THROUGH THE DEPARTMENTAL OFFICE RS WHICH HAVE ALSO NOT BEEN DONE BY THE AO. HE HAS SUBMITTED THAT SINCE T HE ASSESSEE PRODUCED ALL THE EVIDENCES BEFORE THE AO TO EXPLAIN THE ADVANCES AND DEPOSITS AND ALSO OFFERED TO PRODUCE THE PARTIES FOR CROSS-EXAMINATIO N BEFORE THE AO THEREFORE IF THE AO DID NOT CROSS-EXAMINE THE DEPONENTS NO A DDITION SHOULD HAVE BEEN MADE AGAINST THE ASSESSEE. HE HAS SUBMITTED THAT A LL THE EVIDENCES ON RECORD SHALL HAVE TO BE EXAMINED BY THE AUTHORITIES. IN S UPPORT OF THIS CONTENTION HE HAS RELIED UPON THE FOLLOWING DECISIONS: I) CIT VS. PRAGATI CO-OPERATIVE BANK LTD. 278 ITR 170 (GUJ) II) CIT VS. ORISSA CORPOATION P. LTD. 159 ITR 78 (SC); III) MURLIDHAR LAHORIMAL VS. CIT 280 ITR 512 (GUJ); IV) SAROGI CREDIT CORPORATION VS. CIT 103 ITR 344 (PAT ) 20. ON THE OTHER HAND THE LEARNED DR RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT RETURN OF INCO ME FILED BY THE DEPOSITORS DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -25- SHOWED THAT THE SAME HAVE BEEN FILED AT MEAGER INCO ME. BROCHURES WERE NOT RECOVERED IN SEARCH ABOUT THE HOUSING SCHEME. THE DATES OF RECEIPT ARE PRIOR TO THE SEARCH BUT THE RECEIPTS OF THE MONEY AND THE RE PAYMENT THROUGH CASH WERE ALSO NOT RECOVERED DURING THE SEARCH. THE LETTERS WERE WRITTEN TO ALL THE PARTIES AND MANY OF THEM HAVE RETURNED UNSERVED AND IN SOME CASES REPLIES ARE FILED EVEN WHEN NO LETTERS UNDER SECTION 133(6) WERE SERV ED UPON THE PARTIES. HE HAS SUBMITTED THAT NO CORRECT ADDRESSES WERE FILED. THE ASSESSEE FAILED TO PRODUCE THE PARTIES WHO HAVE FILED THE AFFIDAVITS A ND CONFIRMATION BEFORE THE AO FOR CROSS-EXAMINATION. HE HAS SUBMITTED THAT TH E ASSESSEE HAS NOT PROVED THAT ANY APPROVAL WAS TAKEN FROM THE GOVERNMENT OR SEMI-GOVERNMENT IN RESPECT OF THE HOUSING SCHEME. HE HAS SUBMITTED TH AT MONEY WAS LOCKED FOR MORE THAN THREE YEARS BUT NO INTERESTS WERE PAID N OR REPLIES OR CORRESPONDENCES BETWEEN THE PARTIES HAVE BEEN FILED. THE AO HAS NO TED SEVERAL GLARING DISCREPANCIES IN THE CONFIRMATIONS AND AFFIDAVITS L IKE HAND-WRITING IS DIFFERENT AND PATTERN OF THE REPLY IS SAME. THE LEARNED DR S UBMITTED THAT NO AMOUNT WAS KEPT IN BANK AND IS STATED TO BE REPAID THROUGH BAN K AFTER THE SEARCH. THEREFORE ONUS UNDER SECTION 68 OF THE IT IS NOT D ISCHARGED. THE PARTIES WERE NON-EXISTENT AND MERELY FILED RETURN AT THE MEAGER AMOUNT WHICH WERE NOT ENOUGH TO PROVE THE CASH CREDIT. HE HAS SUBMITTED THAT THE PRINCIPLE OF PRE- PONDERANCE OF PROBABILITIES APPLIES AS A RULE OF EV IDENCE AND CIRCUMSTANCES SHOWN THAT THERE WERE NOT GENUINE CASH CREDITS AND NO GENUINE TRANSACTION ENTERED INTO BETWEEN THE ASSESSEE AND THE DEPOSITOR S. HE HAS RELIED UPON THE DECISION OF THE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS COMMISSIONER OF INCOME-TAX 214 ITR 801. 21. THE LEARNED COUNSEL FOR THE ASSESSEE ON A QUERY ON THE DOCUMENTS FILED BY THE DEPARTMENT IN THEIR PAPER BOOK SUBMITTED THA T ALL THE REPLIES TO THE LETTER OF THE AO UNDER SECTION 133(6) HAVE BEEN FILED BY T HE DEPARTMENT IN THEIR PB- 3. HOWEVER NO LIST IS ATTACHED. ALL THE PARTIES IN THEIR REPLY UNDER SECTION 133(6) CONFIRMED THE TRANSACTIONS WITH THE ASSESSEE FOR DEPOSITS OF THE ADVANCES FOR BOOKING OF THE FLATS BUT THE SAME HAV E NOT BEEN DISCUSSED BY THE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -26- AO IN THE ASSESSMENT ORDER. HE HAS FURTHER SUBMITT ED THAT SOME OF THE REPLIES WERE NOT RECEIVED BY THE AO THEREFORE THE SAME WERE FILED AT THE COUNTER IN AUGUST 2007 AND EVEN SOME OF THE REPLIES WERE BEIN G FILED LATER BEFORE THE AO BUT THE SAME HAVE NOT BEEN CONSIDERED AND DISCUSSED . 22. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERI AL AVAILABLE ON RECORD. THE ASSESSEES VIDE REPLY DATED 15-3-2007 (PB-1196) HAVE FILED A DETAILED REPLY BEFORE THE AO IN RESPONSE TO NOTICES UNDER SECTION 142(1) CALLING FOR THE DETAILS ON THE ISSUE. THE ASSESSEE IN THE REPLY SU BMITTED DETAILS OF ADVANCES RECEIVED/REFUNDED AGAINST THE PROPOSED SALE OF FLAT S AT SUNDERNAGAR AND RADHA VIHAR SCHEMES. COMPLETE DETAILS AS WERE REQUIRED IN THE PERFORMA WERE SUBMITTED. THE SAME WERE SUPPORTED BY THE DOCUMENT S I.E. COPIES OF THE PROVISIONAL ALLOTMENT LETTER RECEIPTS/VOUCHERS OF THE ADVANCES RECEIVED AND THE REFUND ISSUED COPIES OF THE AFFIDAVITS COMPLETE A DDRESSES PAN AND THE INCOME TAX WARD WHERE THESE PERSONS WERE ASSESSED T O TAX ALONG WITH THEIR CONFIRMATIONS WHICH WERE SUPPORTED BY THE COPIES OF THE INCOME-TAX ACKNOWLEDGEMENTS. THE COMPLETE DETAILS OF THE OWNE RSHIP OF THE PROPERTY IN QUESTION WERE ALSO FILED TO SUPPORT THAT THE DEPOSI TORS HAVE MADE ADVANCES AGAINST THE PROPOSED SALE OF FLATS AT SUNDERNAGAR S CHEME AND RADHA VIHAR. THE AO INSTEAD OF EXAMINING THE ABOVE DETAILS ON RE CORD ASKED THE ASSESSEE ON 13-4-2007 TO FILE ALL THE ORIGINAL AFFIDAVITS AS NO TED ABOVE FOR HIS CONSIDERATION AND THE SOME MORE QUERIES WERE ALSO RECEIVED. THE ASSESSEE FILED DETAILED REPLY BEFORE THE AO ON 26-4-2007 (COPY OF WHICH IS FILED IN THE PB AT PAGE NO.1193) IN WHICH THE ASSESSEE ALONG WITH THE REPLY SUBMITTED ALL ORIGINAL 140 AFFIDAVITS ALONG WITH COMPLETE PAN AND FILING OF TH E RETURNS BY THE DEPOSITORS. FURTHER QUERIES RAISED BY THE AO WERE REPLIED IN WH ICH IT WAS EXPLAINED THAT SINCE ADVANCES WERE RECEIVED AS PART OF PRE-LAUNCH THEREFORE NO ADVERTISEMENT WAS ISSUED OF THE SCHEME. IT WAS SUBMITTED THAT SI NCE THE PLOTS BELONGED TO RESPECTIVE CO-OPERATIVE SOCIETIES THE RELEVANT COR RESPONDENCES IN RESPECT OF THE SAME WERE RESTED WITH THE CONCERNED SOCIETIES AND N O INDIVIDUAL OWNER WAS ALLOWED TO ENTER INTO ANY CORRESPONDENCE. IT WAS A LSO EXPLAINED THAT THE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -27- REASONS FOR CANCELLATION OF THE PROVISIONAL ALLOTME NT OF THE FLATS WAS BECAUSE OF LARGE NUMBER OF ORIGINAL OWNERS OF SUNDERNAGAR SOCI ETY HAVE FILED CASES AGAINST EACH OTHER AND ALSO OBTAINED EX- PARTE STAY ORDER. IT WAS ALSO EXPLAINED THAT ALL THE MONIES WERE TAKEN IN CASH WHICH WERE I NVESTED IN VARIOUS MUTUAL FUNDS BY OBTAINING DEMAND DRAFTS FROM THE BANK AND ALL THOSE INVESTMENTS IN MUTUAL FUNDS ARE RECORDED IN THE BOOKS OF ACCOUNTS OF THE CONCERNED MEMBER. THE REPAYMENT WAS MADE BY WITHDRAWAL OF CASH FROM V ARIOUS BANK ACCOUNTS MAINTAINED BY THE FAMILY MEMBERS OF THE SOCIETY. COMPLETE DETAILS WERE ALSO FILED ALONG WITH THE ABOVE REPLY. SUCH DETAILS CON TAIN THE NAMES AND ADDRESSES OF THE ALLOTTEES SOURCES OF THEIR INCOME THEIR PA N ALLOTTED FLATS BUILT-UP AREA AND CONFIRMATION OF ADVANCES ALONG WITH REFUND. TH ESE DETAILS WOULD SHOW THAT THE DEPOSITORS HAVE NOT ONLY CONFIRMED THEIR T RANSACTIONS WITH THE ASSESSEE BUT ALSO EXPLAINED THEIR SOURCES OF INVESTMENT/ADVA NCES AND THEY HAVE CONFIRMED OF GIVING OF THE AMOUNTS TO THE ASSESSEE. THEY ALL WERE ASSESSED TO TAX. THE REASONS FOR CANCELLATION OF THE ALLOTMENT WAS ALSO EXPLAINED WHICH IS ALSO NOTED AT PAGE NO.9 OF THE ASSESSMENT ORDER. T HE AO INSTEAD OF CONSIDERING THE AFFIDAVITS AND MATERIAL ON RECORD ISSUED NOTICE S UNDER SECTION 133(6) DATED 11-5-2007 TO ALL THE DEPOSITORS IN ORDER TO CROSS-V ERIFY THE ABOVE DOCUMENTS. (COPY FILED IN DEPARTMENTS PAPER BOOK). THE ALLOTT EES FILED THEIR RESPECTIVE REPLIES WITH THE DETAILS AND CONFIRMED THEIR TRANSA CTIONS WITH THE ASSESSEES. PB-3 OF THE DEPARTMENT CONTAINED (VOLUME 1 & 2) IN WHICH ALL THE REPLIES OF VARIOUS ALLOTTEES UNDER SECTION 133(6) HAVE BEEN FI LED BY THE DEPARTMENT WHICH WERE FILED IN RESPONSE TO THE NOTICE UNDER SECTION 133(6) DATED 11-5-2007 ISSUED BY THE AO. IN THE DEPARTMENTS PAPER BOOK REPLIES OF THE ALLOTTEES IN RESPONSE TO THE NOTICE ISSUED BY THE AO THE DETAIL OF THE AMOUNT MODE OF PAYMENT AND REASONS FOR THE BOOKING OF THE FLATS AN D THE RETURN OF THE AMOUNT AND COPIES OF THE AFFIDAVITS WERE ALSO FILED. THUS THE REPLIES OF THE ALLOTTEES IN RESPONSE TO NOTICE UNDER SECTION 133(6) CONTAINED T HEIR CONFIRMATIONS OF THE TRANSACTIONS WITH THE ASSESSEE THEIR PAN COPIES O F THE INCOME-TAX RETURNS REPLIES PROVISIONAL ALLOTMENT LETTERS. THESE DETA ILS AND REPLIES FILED IN THE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -28- DEPARTMENTS PAPER BOOK SUPPORT THE CASE OF THE ASS ESSEE THAT ALL THE DEPOSITORS NOT ONLY CONFIRMED THEIR TRANSACTIONS BY FILING THE IR AFFIDAVITS BUT ALSO SUPPORTED THE CASE OF THE ASSESSEE BY INDEPENDENTLY CONFIRMING THE TRANSACTION OF DEPOSITS OF THE AMOUNT WITH THE ASSESSEE IN THE IR REPLIES FILED IN RESPONSE TO THEIR REPLIES ON THE LETTER ISSUED BY THE AO UNDER SECTION 133(6) OF THE ACT. THE AO HOWEVER DID NOT DISCUSS THESE REPLIES AND TH E DOCUMENTS COLLECTED AT THE ASSESSMENT STAGE BY HIM IN ASSESSMENT ORDER. I T WOULD THEREFORE SHOW THAT THE ATTITUDE OF THE AO SINCE THE BEGINNING THAT HE WAS NOT INTERESTED TO ACCEPT ANY REPLY OF THE ASSESSEE IN THIS REGARD. SINCE TH E ALLOTTEES HAVE CONFIRMED THEIR TRANSACTIONS INDEPENDENTLY IN THEIR REPLY UND ER SECTION 133(6) THERE WERE NO REASON FOR THE AO TO DISCARD THE EVIDENCES AND M ATERIAL ON RECORD. SINCE THE DOCUMENTS OF THE ASSESSEE HAVE BEEN FILED IN TH E PAPER BOOK BY THE REVENUE THEREFORE IT WOULD NOT ONLY CONFIRM THE T RANSACTION BETWEEN THE ALLOTTEES AND THE ASSESSEE BUT ALSO PROVED THE CASE OF THE ASSESSEE THAT THE AO DELIBERATELY DID NOT DISCUSS THE SAME IN THE ASSESS MENT ORDER AND HAVE NOT ADVERSELY COMMENTED ON SUCH MATERIALS AND EVIDENCES ON RECORD. IT IS NOT IN DISPUTE THAT THE AMOUNT OF CASH RECEIVED BY THE ASS ESSEE FROM VARIOUS DEPOSITS WERE DEPOSITED IN THEIR BANK ACCOUNT AND THAT THE I NVESTMENTS WERE MADE OUT OF THE SAME AMOUNT IN VARIOUS MUTUAL FUNDS SCHEME ETC. BY OBTAINING DEMAND DRAFTS FROM THE BANK. THUS THE AMOUNT IN QUESTION WAS PROVED TO BE INVESTED IN MUTUAL FUNDS ETC. BY THE ASSESSEE. IT IS ALSO A DMITTED FACT THAT THE PAYMENTS WERE MADE BY THE ASSESSEE FROM WITHDRAWING THE AMOU NTS FROM THE BANK AND ALL THESE ENTRIES HAVE BEEN MADE IN THE BOOKS OF AC COUNTS. THESE INVESTMENTS MADE IN MUTUAL FUNDS ETC. WITH THE AMOUNTS RECEIVED FROM VARIOUS DEPOSITORS AND THE SUBSEQUENT REPAYMENTS BACK TO THE DEPOSITOR S/ALLOTTEES HAVE NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES. WITH REGARD T O THE INVESTMENT IN THE MUTUAL FUNDS AND OTHERS THE AO HAS CONSIDERED THE ISSUE OF LONG TERM CAPITAL GAINS OR BUSINESS INCOME AND MADE FURTHER ADDITIONS WHICH WOULD STRENGTHEN THE CASE OF THE ASSESSEE THAT THE ASSESSEE RECEIVED GENUINE AMOUNT FROM VARIOUS DEPOSITORS UNDER TWO HOUSING SCHEMES. THE AO INSTE AD OF CONSIDERING THE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -29- EVIDENCES AND MATERIAL ON RECORD AND THE REPLIES FI LED BY THE VARIOUS DEPOSITORS UNDER SECTION 133(6) OF THE ACT HAVE GIVEN SEVERAL IRRELEVANT REASONS FOR REJECTING THE CLAIM OF THE ASSESSEE. SUCH REASONS HAVE BEEN MENTIONED IN PARA.3.6 OF THE ASSESSMENT ORDER. THE SAME ARE ALS O CONSIDERED IN THE LIGHTS OF THE REPLY OF THE ASSESSEE AND THE RESPECTIVE BUYER. THE AO NOTED THAT THE ASSESSEE IN HIS STATEMENT DID NOT MENTION OF RECEIP T OF CASH. AS PER THE BOOKS THE CASH SO RECEIVED HAS BEEN SHOWN TO HAVE USED FO R PURCHASING SHARES AND INVESTING IN MUTUAL FUNDS BUT NO QUESTION IS PUT T O THE ASSESSEE IN THIS REGARD IN THE STATEMENT OF THE ASSESSEE RECORDED BY THE SEARC H PARTY THEREFORE THERE WAS NO REASON FOR THE ASSESSEE TO GIVE REPLY OF THE SAM E. IT IS NOT IN CONTROL OF THE ASSESSEE TO ASK QUESTIONS. IT IS UNDISPUTED ABOVE PURCHASE OF SHARES AND MUTUAL FUND HAVE NOT BEEN DISPUTED BY THE AUTHORIT IES BELOW. IN ANSWER TO QUESTION NO.10 AS NOTED AT PAGE NO.12 OF THE ASSES SMENT ORDER IT WAS REPLIED BY THE ASSESSEE TO FILE DETAILS AND DISCLOSE SOURCE . THE REPAYMENTS OF THE ADVANCES HAVE NOT BEEN DISPUTED BY THE AO. FURTHER THE AO NOTED THAT NO PAPERS HAVE FOUND IN SEARCH TO INDICATE THE RECEIPT OF THE ADVANCES BUT THE AO FORGOT TO NOTE THAT THE BOOKS WERE PREPARED ON THE BASIS OF THE MATERIAL FOUND IN SEARCH AND OTHERS. THE AO FURTHER NOTED THAT THE A SSESSEE FAILED TO PRODUCE THE PARTIES BEFORE THE AO FOR CROSS-EXAMINATION. HOWEV ER THE AO AS NOTED ABOVE DID NOT TAKE ANY PROPER STEP IN CROSS-EXAMINING THE DEPONENTS OF THE AFFIDAVITS/PERSONS WHO HAVE GIVEN THE ADVANCES TO T HE ASSESSEE. THE ASSESSEE IN HIS REPLY DATED 3-8-2007 (PB-1198) EXPLAINED THA T THE ASSESSEE HAS ARRANGED THE PERSONAL APPEARANCE OF FIRST BATCH OF FIVE ALLO TTEES ON FRIDAY I.E. ON 3 RD AUGUST 2007 WITH THE APPROVAL OF THE AO ON 2-8-200 7 BECAUSE THE AO HAS ALREADY PRE-OCCUPIED WITH ALL OTHER PRESSING MATTER S. THE LETTER OF THE ASSESSEE WOULD SHOW THAT THE ASSESSEE HAS SERIOUSLY MADE EFF ORTS TO PRODUCE THE DEPONENTS BEFORE THE AO FOR CROSS-EXAMINATION BUT THE AO DID NOT MAKE ANY EFFORT TO RECORD THE STATEMENT OF THE DEPONENTS OF THE AFFIDAVITS. NO ADVERSE COMMENTS HAVE BEEN MADE. IT WOULD SHOW THAT THE AS SESSEE HAS ALL THE INTENTION TO PRODUCE ALL THE PERSONS FOR CROSS-EXAM INATION BEFORE THE AO WHO DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -30- WERE RESIDENTS OF THE DELHI. THE AO SHOULD HAVE AL SO CONSIDERED THE DISTANCE FROM AHMEDABAD TO DELHI IN ORDER TO PRODUCE VARIOUS DEPONENTS FOR CROSS- EXAMINATION AT AHMEDABAD. ACCORDING TO ORDER XVI R ULE 19 OF THE CODE OF CIVIL PROCEDURE NO PERSON SHALL BE ORDERED TO ATTE ND IN PERSON TO GIVE EVIDENCE UNLESS HE RESIDES (A) WITHIN THE LOCAL LIMITS OF THE COURT/S ORDINARY ORIGINAL JURISDICTION OR (B) WITHOUT SUCH LIMIT BUT AT A PL ACES LESS THAN ONE HUNDRED OR WHERE THERE IS RAILWAY OR STEAMER COMMUNICATION OR OTHER ESTABLISHED PUBLIC CONVEYANCE FOR FIX-SIXTHS OF THE DISTANCE BETWEEN T HE PLACE WHERE HE RESIDES AND THE PLACE WHERE THE COURT SITUATE LESS THAN FI VE HUNDRED KILOMETERS DISTANCE FROM THE COURT HOUSE. PROVIDED THAT WHERE THE TRAN SPORT BY AIR IS AVAILABLE BETWEEN THE TWO PLACES MENTIONED IN THIS RULE AND T HE WITNESS IS PAID THE FARE BY AIR HE MAY BE ORDERED TO ATTEND IN PERSON. TH E AO HOWEVER ISSUED THE LETTER TO THE ASSESSEE ON 5-7-2007 (PB-1211) WHEREB Y THE ASSESSEE WAS ASKED TO PRODUCE ALL THE PARTIES WHO HAVE GIVEN ADVANCES FOR THE HOUSING SCHEME TO THE ASSESSEE FOR HIS CROSS-EXAMINATION IN HIS OFFICE IN BATCHES DURING WORKING HOURS FROM 13 TH JULY 2007 TO 24 TH JULY 2007 AND ON 29-7-2007 ALSO TELEPHONICALLY INTIMATED TO MAKE ARRANGEMENT OF APP EARANCE OF SUCH PERSONS. THE AO HOWEVER FORGOT TO NOTE THAT THE DISTANCES WAS TOO FAR AND THE PERSONS IN BATCHES SHALL HAVE TO BE ARRANGED BY THE ASSESSE E THEREFORE IT WAS DIFFICULT TO PRODUCE PARTIES WITHIN A SHORT SPAN OF TIME. TH E ASSESSEE HOWEVER PROPOSED TO PRODUCE THE PARTIES BEFORE THE AO FOR CROSS-EXAM INATION IN BATCHES FROM 3 RD AUGUST 2007. THE AO INSTEAD OF EXAMINING THE WITN ESSES IN BATCHES FROM 3 RD AUGUST 2007 ONWARDS DREW ADVERSE INFERENCE AGAINS T THE ASSESSEE THAT THE ASSESSEE DID NOT PRODUCE THE DEPONENTS BEFORE HIM F OR CROSS-EXAMINATION. THESE FACTS WOULD SHOW THAT THE AO DID NOT HAVE ANY INTENTION TO CROSS- EXAMINE THE DEPONENTS OF THE AFFIDAVITS ON OATH. OT HERWISE THE AO COULD HAVE TAKEN SOME STEPS IN THE MATTER TO CROSS-EXAMINE SOM E OF THE DEPONENTS STARTING FROM 3 RD AUGUST 2007. THE AO TOOK ANOTHER REASON FOR REJEC TING THE CLAIM OF THE ASSESSEE THAT NO SUFFICIENT TIME WAS AVAILABLE FOR CONCLUDING THE ASSESSMENT BECAUSE THE ASSESSMENT WAS GOING TO BE TIME BARRED. HOWEVER HE WOULD HAVE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -31- STARTED EXAMINING THE DEPONENTS FROM 3 RD AUGUST 2007. THE AO HAS FAILED TO NOTE THAT IN THIS CASE SEARCH WAS CONDUCTED ON 29 TH OCTOBER 2004 AND ACCORDING TO SECTION 153B OF THE IT ACT THE ASSESS MENT COULD HAVE FRAMED WITHIN A PERIOD OF TWO YEARS FROM THE END OF THE FI NANCIAL YEAR IN WHICH THE LAST OF THE AUTHORISATION FOR SEARCH WAS EXECUTED. THE EXPLANATION TO THE ABOVE PROVISION FURTHER EXTEND THE PERIOD OF LIMITATION DURING WHICH THE AO DIRECTS THE ASSESSEE TO GET THE ACCOUNTS AUDITED UNDER SECT ION 142(2A) OF THE ACT TILL THE DATE OF FURNISHING OF AUDIT REPORT. THIS PERIO D OF LIMITATION WOULD BE EXTENDED TILL THE DATE OF FILING OF THE SPECIAL AUD IT REPORT UNDER SECTION 142(2A) OF THE IT ACT. IN THIS CASE THE SPECIAL AUDIT WAS DIRECTED ON 22-12-2006 AND THE REPORT WAS SUBMITTED ON 22 ND JUNE 2007. THEREFORE SUFFICIENT TIME WAS AVAILABLE TO THE AO TO CROSS-EXAMINE THE DEPONENTS OF THE AFFIDAVITS ON OATH AND/OR COULD HAVE CROSS-EXAMINED AS PER THE LAW ON THE ISSUE OF COMMISSION BECAUSE THE LIMITATION WAS NOT GOING TO EXPIRE ON T HE DATE WHEN THE ASSESSEE OFFERED TO PRODUCE THE PARTIES FOR CROSS-EXAMINATIO N BEFORE HIM. AT LEAST ON THE DATE OF PASSING OF THE ORDER ON 16 TH AUGUST 2007 THE LIMITATION TO PASS THE ORDER DID NOT EXPIRE. THEREFORE THE REASONS GIVEN BY THE AO BLAMING THE ASSESSEE FOR NON-PRODUCTION OF THE DEPONENTS WOULD BE OF NO USE AND CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. THESE FACTS WOULD SHOW THAT THE AO DID NOT TAKE ANY STEPS TO CROSS-EXAMINE ANY OF THE DEPO NENTS OF THE AFFIDAVITS AT THE ASSESSMENT STAGE. SUCH A VIEW OF THE AO WOULD NOT ENTITLE HIM TO MAKE ADDITION AGAINST THE ASSESSEE. 23. MERE CASH TRANSACTION IS NOT BAR FOR CONSIDERIN G THE TRANSACTION FOR ADDITION UNDER SECTION 68 OF THE ACT. THERE IS NO REQUIREMENT UNDER THE I.T. LAW THAT ALL THE HOUSING SCHEME SHOULD BE APPROVED BECAUSE IN THIS CASE THE ASSESSEE WAS AT THE STAGE OF PRE-LAUNCH OF HOUSING SCHEME AND AT THAT TIME SUCH ASSESSEE WOULD NOT HAVE OBTAINED APPROVAL. MOREOVE R FOR CONSIDERING THE ISSUE UNDER SECTION 68 OF THE I.T.ACT IDENTITY OF T HE DEPOSITORS THEIR SOURCE OF INCOME AND GENUINENESS OF THE TRANSACTION WOULD ONL Y BE RELEVANT. MERELY BECAUSE ALL THE PARTIES ARE FROM DELHI IS NO BAR FO R BOOKING OF THE FLATS. THERE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -32- IS NO REASON TO TREAT THE TRANSACTION TO BE INGENUI NE IF ANY CORRESPONDENCES BETWEEN THE PARTIES HAVE NOT BEEN FILED. THE ASSES SEE EXPLAINED THAT SINCE THERE WERE NO AGREEMENTS FOR CHARGING OF INTEREST THEREFO RE ON TRANSACTIONS NO INTEREST HAVE BEEN PAID. THE ASSESSEE PROVED THAT ALL THE DEPONENTS WERE ASSESSED TO INCOME-TAX AND ALL HAVE FILED THEIR RET URNS OF INCOME WITH DIFFERENT INCOME TAX WARDS. MERELY BECAUSE MORE THAN ONE FAM ILY MEMBERS HAVE MADE THE DEPOSITS WITH THE ASSESSEE FOR BOOKING OF THE F LATS IS NO GROUND TO REJECT THE EXPLANATION OF THE ASSESSEE. AT THE PRE-LAUNCH SCH EME THE ADVERTISEMENT MAY NOT BE RELEVANT FOR CONSIDERATION OF THE INGREDIENT S OF SECTION 68 OF THE ACT. THE AO REJECTED THE EXPLANATION OF THE ASSESSEE THA T OUT OF 140 PARTIES 38 PERSONS DID NOT FILE REPLY UNDER SECTION 133(6) OF THE ACT. HOWEVER THE FACTS REMAINS THAT ALL 140 PERSONS HAVE FILED THEIR ORIGI NAL AFFIDAVITS BEFORE THE AO ADMITTING TRANSACTION WITH THE ASSESSEE AND MADE DE POSITS WITH THE ASSESSEE. THEY ALSO EXPLAINED THAT THEY ALL WERE ASSESSED TO TAX AND ALSO EXPLAINED THEIR SOURCE OF INCOME FOR MAKING THESE DEPOSITS. EVEN I F THE CONTENTION OF THE AO IS CONSIDERED THAT ONLY 102 PERSONS FILED THEIR REP LY UNDER SECTION 133(6) OF THE ACT THE AO HOWEVER DID NOT DISCUSS AND CONSIDER AN Y OF THEIR REPLY IN PROPER PERSPECTIVE. THE AO FAILED TO NOTE ALL THE 102 PER SONS IN THEIR REPLIES UNDER SECTION 133(6) CONFIRMED THE TRANSACTION WITH THE A SSESSEE GIVING THE AMOUNT IN CASH TO HIM FOR THE PURPOSE OF BOOKING OF THE FL ATS. THEY HAVE ALSO CONFIRMED THAT THEY ARE ASSESSED TO TAX AND THEIR R EFUNDS HAVE BEEN GRANTED TO THEM. THE LEARNED COUNSEL FOR THE ASSESSEE BY REFE RRING TO THE PB FILED BY THE DEPARTMENT HAS BEEN ABLE TO SHOW THAT EVEN SOME OF THE REPLIES UNDER SECTION 133(6) HAVE BEEN FILED IN AUGUST 2007 AND HE HAS F URTHER SUBMITTED THAT SOME OF THE REPLIES WERE NOT ACCEPTED AT THE LATER STAGE OF THE ASSESSMENT WHICH WERE FILED AT THE DAK COUNTER. THIS FACT WOULD SHOW THAT THE AO WAS NOT INTERESTED IN INVESTIGATING THE CASE IN PROPER MANNER AND FROM THE BEGINNING ITSELF HE WAS INTERESTED TO REJECT THE EXPLANATION OF THE ASSESSE E IN ONE OR OTHER WAY. THE AO ALSO GIVEN ANOTHER REASONS THAT ALL THE REPLIES FIL ED UNDER SECTION 133(6) ARE ON THE SIMILAR PATTERN BUT HE FORGOT TO NOTE THAT THE LETTERS UNDER SECTIONS 133(6) DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -33- WERE ON THE SAME PATTERN ISSUED BY THE AO CALLING F OR THE DETAILS FROM THE PARTIES THEREFORE THE REPLIES ARE BOUND TO BE AS PER THE QUERIES OF THE AO. THE AO FURTHER NOTED SOME MINOR DISCREPANCIES IN THE RE PLIES OF THE VARIOUS DEPOSITORS WHICH WOULD NOT GO TO THE ROOT OF THE MA TTER BECAUSE ULTIMATELY THE REQUIREMENT OF SECTION 68 HAS BEEN THAT THE ASSESSE E SHALL HAVE TO PROVE THE IDENTITY OF THE DEPOSITORS THEIR CREDIT-WORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATER. THE ASSESSEE THROUGH THE EVIDENCES MATERIAL ON RECORD HAS BEEN ABLE TO PROVE IDENTITY OF THE DEPOS ITORS THEIR CREDIT-WORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER B ECAUSE THE ASSESSEE FILED ALL THE AFFIDAVITS OF THE DEPOSITORS CONFIRMING THE TRA NSACTIONS WITH THE ASSESSEE. COPIES OF THE INCOME-TAX RETURNS ALONG WITH PAN OF THE DEPOSITORS WERE FILED TO SHOW THEIR SOURCE OF INCOME. THE ALLOTMENT OF F LATS AND REFUND OF THE AMOUNT LETTERS ARE FILED. ALL THE DEPOSITORS HAVE ALSO CONFIRMED THEIR TRANSACTIONS WITH THE ASSESSEE INDEPENDENTLY THROUG H THEIR REPLIES FILED UNDER SECTION 133(6) OF THE ACT. THE FOLLOWING AUTHORITI ES WOULD SUPPORT THE CASE OF THE ASSESSEES: I) CIT VS. PRAGATI CO-OPERATIVE BANK LTD. 278 ITR 170 (GUJ) WHEREIN THE HONBLE GUJARAT HIGH COURT HELD AS UNDE R: ....IT WAS APPARENT THAT THE ASSESSEE HAD FURNISHE D THE DETAILS WHICH WOULD DISCHARGE THE ONUS WHICH LAY ON THE ASS ESSEE CONSIDERING THE FACT THAT THE DEPOSITS WERE MADE BY THIRD PARTIES VIZ. CUSTOMERS OF THE BANK. IT WAS NOBODYS CASE T HAT THE DEPOSITS WERE MADE EITHER BY THE DIRECTORS OF THE ASSESSEE-B ANK OR ANY OF THE RELATIVES OF THE DIRECTORS. THE ACTIVITIES OF T HE ASSESSEE-BANK WERE REGULATED BY THE PROVISIONS OF THE BANKING REG ULATION ACT 1949 AND THE GUIDELINES ISSUED BY THE RESERVE BANK OF INDIA. THIS WAS APART FROM THE FACT THAT UNDER THE PROVISI ONS OF SECTION 80P OF THE ACT THE ENTIRE INCOME FROM BANKING ACTI VITIES WAS EXEMPT IN THE HANDS OF THE ASSESSEE A CO-OPERATIVE BANK. THUS THERE COULD EXIST NO REASON FOR THE ASSESSEE-BANK T O INDULGE IN ANY ACTIVITY WHICH WOULD YIELD UNDISCLOSED INCOME. THE TRIBUNAL WAS RIGHT IN DELETING THE ADDITION OF RS.1 80 95 81 1 IN RESPECT OF FIXED DEPOSITS AND RS. 21 71 500 IN RESPECT OF THE INTEREST. II) HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION P. LTD. 159 ITR 78 HELD AS UNDER: DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -34- ...THAT IN THIS CASE THE RESPONDENT HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE K NOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASS ESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE APART FROM ISSUING NOTICES UNDER SECTION 131 AT THE INSTANCE OF THE RESPONDENT DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID AL LEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDIWORTHY. THERE WA S NO EFFORT MADE TO PURSUE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES THE RESPONDENT COULD NOT DO ANYTHING FURTHER. IN THE PREMISES IF THE TRIBUNAL CAME TO THE CONCLUSIO N THAT THE RESPONDENT HAD DISCHARGED THE BURDEN THAT LAY ON IT THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION WAS BASE D ON SOME EVIDENCE ON WHICH THE CONCLUSION COULD BE ARRIVED A T NO QUESTION OF LAW AS SUCH AROSE. THE HIGH COURT WAS R IGHT IN REFUSING TO STATE A CASE. III) IN THE CASE OF MURLIDHAR LAHORIMAL VS. CIT 280 ITR 512 (GUJ) HELD THAT ..THE TRIBUNAL FAILED TO NOTE THE FACT THAT THE ID ENTITY OF THE DONOR WAS ESTABLISHED THE DONOR HAVING APPEARED IN PERSON BEFORE THE ASSESSING OFFICER THE GENUINENESS OF TH E TRANSACTION WAS ESTABLISHED NOT ONLY BY THE RECEIPT OF THE BAN K DRAFT BUT ALSO BY THE FACT OF THE TRANSACTION HAVING BORNE GIFT TA X ONCE THE ASSESSMENT WAS FRAMED. THE PRIMARY ONUS WHICH RESTE D WITH THE ASSESSEE THUS STOOD DISCHARGED. THEREAFTER IF TH E REVENUE WAS NOT SATISFIED WITH THE SOURCE OF THE FUNDS IN THE H ANDS OF THE DONOR IT WAS UP TO THE REVENUE TO TAKE APPROPRIATE ACTION. THE TRIBUNAL CONSIDERED THE MOTIVATION FOR MAKING THE G IFT WHICH WAS NOT RELEVANT. THE ADDITION OF RS. 50 000 WAS NOT JU STIFIED. IV) HONBLE PATNA HIGH COURT IN THE CASE OF SAROGI CRED IT CORPORATION VS. CIT 103 ITR 344 (PAT) HELD THAT - ... IF THE CREDIT ENTRY IN THE BOOKS OF THE ASSESS EE STANDS IN THE NAME OF THE ASSESSEE OR THE ASSESSEE'S WIFE AND CHI LDREN OR IN THE NAME OF ANY OTHER CLOSE RELATION OR AN EMPLOYEE OF THE ASSESSEE THE BURDEN LIES ON THE ASSESSEE TO EXPLAIN SATISFAC TORILY THE NATURE AND SOURCE OF THE ENTRY. BUT IF THE ENTRY DOES NOT STAND IN THE NAME OF ANY SUCH PERSON HAVING A CLOSE RELATION OR CONNECTION WITH THE ASSESSEE BUT IN THE NAME OF AN INDEPENDEN T PARTY THE DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -35- BURDEN WILL STILL LIE ON HIM TO ESTABLISH THE IDENT ITY OF THAT PARTY AND TO SATISFY THE INCOME-TAX OFFICER THAT THE ENTR Y IS REAL AND NOT FICTITIOUS. ONCE THE IDENTITY OF THE THIRD PARTY IS ESTABLISHED BEFORE THE INCOME-TAX OFFICER AND OTHER SUCH EVIDENCE ARE PRIMA FACIE PLACED BEFORE HIM POINTING TO THE FACT THAT THE ENT RY IS NOT FICTITIOUS THE INITIAL BURDEN LYING ON THE ASSESSE E CAN BE SAID TO HAVE BEEN DULY DISCHARGED BY HIM. IT WILL NOT THER EFORE BE FOR THE ASSESSEE TO EXPLAIN FURTHER AS TO HOW OR IN WHA T CIRCUMSTANCES THE THIRD PARTY OBTAINED THE MONEY OR HOW OR WHY HE CAME TO MAKE AN ADVANCE OF THE MONEY AS A LOAN T O THE ASSESSEE. ONCE SUCH IDENTITY IS ESTABLISHED AND THE CREDITORS AS IN THE PRESENT CASE HAVE PLEDGED THEIR OATH THAT T HEY HAVE ADVANCED THE AMOUNTS IN QUESTION TO THE ASSESSEE T HE BURDEN IMMEDIATELY SHIFTS ON TO THE DEPARTMENT TO SHOW AS TO WHY THE ASSESSEE'S CASE COULD NOT BE ACCEPTED AND AS TO WHY IT MUST BE HELD THAT THE ENTRY THOUGH PURPORTING TO BE IN THE NAME OF A THIRD PARTY STILL REPRESENTED THE INCOME OF THE ASSESSEE FROM A SUPPRESSED SOURCE. AND IN ORDER TO ARRIVE AT SUCH A CONCLUSION EVEN THE DEPARTMENT HAS TO BE IN POSSESSION OF SUFF ICIENT AND ADEQUATE MATERIALS. THE INCOME-TAX OFFICER'S REJECTION NOT OF THE EXPL ANATION OF THE ASSESSEE BUT OF THE EXPLANATION REGARDING THE SOUR CE OF INCOME OF THE DEPOSITORS COULD NOT BY ITSELF LEAD TO ANY INFERENCE REGARDING THE NON-GENUINE OR FICTITIOUS CHARACTER O F THE ENTRIES IN THE ASSESSEE'S BOOKS OF ACCOUNT. THE APPELLATE ASSI STANT COMMISSIONER CLEARLY POINTED OUT THAT THE FINDINGS RECORDED BY THE INCOME-TAX OFFICER WERE NOT POSITIVE FINDINGS. FURTHER THE TRIBUNAL HAD PARTLY ACCEPTED THE SOURC E TO THE EXTENT OF RS. 5 000 AND PARTLY REJECTED IT TO THE EXTENT O F RS. 15 000. HAVING ACCEPTED THE GENUINENESS OF THE ENTRIES IN T HE BOOKS OF ACCOUNT HAVING ACCEPTED THE EXPLANATION OFFERED BY THE THIRD PARTIES WITH REGARD TO THEIR SOURCES OF MONEY IN PA RT AT LEAST THERE WAS NO MATERIAL FOR THE TRIBUNAL TO HOLD THAT THE ASSESSEE HAD NOT DISCHARGED THE ONUS ON HIM AND THE FINDING TO THAT EFFECT MUST BE HELD TO BE WITHOUT ANY EVIDENCE AND HENCE WHOLLY ILLEGAL AND THE CONCLUSIONS DRAWN PERVERSE. THEREFORE THE ASSESSEE HAD DISCHARGED THE ONUS WIT HIN THE MEANING OF SECTION 68 OF THE ACT FOR THE CASH CREDI TS AND THE APPELLATE TRIBUNAL WAS NOT JUSTIFIED IN MAINTAINING THE ADDITION OF RS. 15 000 AS THE ASSESSEE'S INCOME FROM UNDISCL OSED SOURCES. DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -36- V) HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. META CHEM INDUSTRIES 245 ITR 160 HELD THAT: ...ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN INVESTED BY A PARTICULAR PERSON BE HE A PARTNER OR AN INDIVIDUAL THEN THE RESPONSIBILITY OF THE ASSESSEE IS OVER. WHETHER THA T PERSON IS AN INCOME-TAX PAYER OR NOT AND WHERE HE HAD BROUGHT TH IS MONEY FROM IS NOT THE RESPONSIBILITY OF THE FIRM. THE MO MENT THE FIRM GIVES A SATISFACTORY EXPLANATION AND PRODUCES THE P ERSON WHO HAS DEPOSITED THE AMOUNT THEN THE BURDEN OF THE FIRM I S DISCHARGED AND IN THAT CASE THAT CREDIT ENTRY CANNOT BE TREATE D TO BE THE INCOME OF THE FIRM FOR THE PURPOSES OF INCOME-TAX. 24. CONSIDERING FACTS OF THE CASE IN THE LIGHT OF M ATERIAL AND EVIDENCES ON RECORD IT IS CLEAR THAT THE AO FAILED TO REBUT THE EVIDENCES OR RECORD SO PRODUCED BY THE ASSESSEE. THE AFFIDAVITS OF ALL DE PONENTS AND THE DEPOSITORS REMAINED UNCONTROVERTED. THE AO FAILED TO CROSS-EX AMINE THE DEPONENTS/DEPOSITORS WHICH ASSESSEE WANTED TO PRODU CE THEM BEFORE HIM IN BATCHES ON DIFFERENT DATES. NO FAULT CAN BE FOUND WITH THE ASSESSEE IN THIS REGARD. 25. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE EVIDENCES AND MATERIAL ON RECORD AND IN THE LIGHT O F THE ABOVE DECISIONS WE ARE OF THE VIEW THAT THE ASSESSEE HAS BEEN ABLE TO PROV E IDENTITY OF THE DEPOSITORS THEIR CREDIT-WORTHINESS AND THE GENUINENESS TRANSAC TIONS WITH THE ASSESSSEES. THUS IF THE PRINCIPLE OF PREPONDERANCE OF THE PROB ABILITIES APPLIES IN THE CASE OF THE ASSESSEE IT WOULD LEAD TO IRRESISTIBLE CONCL USION THAT THE ASSESSEE PROVED GENUINENESS OF THE RECEIPTS OF THE AMOUNTS FROM DIF FERENT PARTIES ON ACCOUNT OF BOOKING OF THE FLATS. THE AUTHORITIES BELOW THUS C ANNOT TAKE ANY ADVERSE INFERENCE AGAINST THE ASSESSEE FOR NON-PRODUCTION O F THE PARTIES BEFORE HIM FOR CROSS-EXAMINATION. THE ASSESSEE HAS THUS DISCHARGE D THE ONUS UPON HIM TO PROVE THE GENUINENESS OF THE CASH CREDITS IN THE MA TTER. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELET E THE ADDITION. AS A RESULT GROUND NOS.1 AND 2 OF THE APPEAL OF THE ASSESSEE AR E ALLOWED. DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -37- 26. GROUND NO.3 IS REGARDING CHARGING OF INTEREST U NDER SECTION 234A 234B AND 234C WHICH IS CONSEQUENTIAL IN NATURE AND IS MANDATORY AND ACCORDINGLY REJECTED. 27. GROUND NO.4 5 AND 6 OF THE ASSESSEES APPEAL A RE INITIATION OF THE PENALTY UNDER SECTION 271(1)(C) AND UNDER SECTION 2 69SS AND 269T OF THE IT ACT WHICH IS INDEPENDENT PROCEEDINGS AND THEREFORE THESE GROUNDS ARE PREMATURE. THE SAME ARE ACCORDINGLY DISMISSED. 28. IN RESULT ITA NO.1821/AHD/2008 IS PARTLY ALLOW ED. ITA NO.1822/AHD/2008 : A.Y.2001-02 (ASSESSEES APPE AL) 29. GROUND NO.1 AND 2 OF THIS APPEAL CHALLENGING AD DITION OF RS.42 30 000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT WERE CONSIDERED IN ITA NO.1821/AHD/2008. BY FOLLOWING THE SAME REASONS WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. ACCORDINGLY GROUND NOS.1 AND 2 OF T HE ASSESSEES APPEAL ARE ALLOWED. 30. GROUND NO.3 IS REGARDING CHARGING OF THE INTERE ST UNDER SECTION 234A 234B AND 234C WHICH IS CONSEQUENTIAL IN NATURE AND IS MA NDATORY AND ACCORDINGLY REJECTED. 31. GROUND NO.4 5 AND 6 OF THE ASSESSEES APPEAL A RE INITIATION OF THE PENALTY UNDER SECTION 271(1)(C) AND UNDER SECTION 2 69SS AND 269T OF THE IT ACT WHICH IS INDEPENDENT PROCEEDINGS AND THEREFORE THESE GROUNDS ARE PREMATURE AND ARE DISMISSED. 32. IN RESULT ITA NO.1822/AHD/2008 IS PARTLY ALLOW ED. ITA NO.1823/AHD/2008 : A.Y.2003-04 (ASSESSEES APPE AL) 33. THE GROUND NO.1 AND 2 READ AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ACTION OF AO IN MAKING ADDITION ON ACCOUNT OF D IFFERENCE IN VALUATION AS PER BOOKS OF ACCOUNTS AND DVO IN RESPE CT OF SAMODH DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -38- HAVELI PROPERTY. LD. CIT(A) HAS FURTHER ERRED IN LA W AND ON FACTS IN NOT ACCEPTING VALUATION REPORT OBTAINED BY THE APPELLAN T FROM A REGISTERED VALUER BY TREATING THE SAME AS ADDITIONAL EVIDENCE. LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN CONFIRMING ADD ITION OF RS.18 90 000/- ON ACCOUNT OF VALUATION DIFFERENCE. 2. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN PASSING THE ORDERS WITHOUT PROPERLY APPRECIATING TH E FACT AND THAT HE FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSI ONS EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TINTS T O TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED OR DER. THIS ACTION OF BOTH THE AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 34. BRIEFLY STATED FACTS ON THE ABOVE GROUNDS ARE T HAT THE AO MADE THE ADDITION OF RS.23 62 000/- IN ASSESSMENT YEAR 2003-2004 AND RS. 41 747/- IN ASSESSMENT YEAR 2004-05 ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE AO DISCUSSED THIS IN THE ASSESSMENT ORDER AND NOTED THAT ANNEXURES SEIZED FR OM PORBANDER I.E. PAGE NO.54 OF THE ANNEXURE A-4 AND PAGE NO.10 OF THE ANNEXURE A-1 SEIZED FROM OFFICE PREMISES REVEALED THAT AN INVESTMENT OF RS.95 LAKHS HAS BEEN MADE IN THE PROPERTY VIZ. TABELA SAMODH HAVELI IN JAIPUR PURCHASED FROM RAWAL RAGHV ENDRA SINGH. THE SALE DEED DATED 14-6-2002 HOWEVER SHOWS THE CONSIDERATION OF RS.10 LAKHS ONLY. THE AO REFERRED THE MATTER TO DISTRICT VALUATION OFFICER A T JAIPUR FOR ASCERTAINING THE TOTAL INVESTMENT IN THIS PROPERTY AND OBTAINED A COPY OF THE REPORT DATED 28-3-2007 OF THE DVO. THE DVO ESTIMATED THE TOTAL INVESTMENT AT RS. 90.20 LAKHS. IN THE REPLY DATED 12-7-2007 THE ASSESSEE CONTENDED THAT THE BUILDING PURCHASED WAS WORN OUT AND THE AREA WAS USED FOR KEEPING HORSES/CATTLE WITH THE ID EA THAT THE OLD STRUCTURE BE DEMOLISHED AND A SHOW ROOM OF TEXTILE/CARPET WOULD BE CONSTRUCTED. IN ADDITION ONE FLAT AT SAROJINI MARG JAIPUR WAS ALSO PURCHASED FO R RS.9 LAKHS. THE ENTRIES ON SEIZED PAGE 54 OF ANNEXURE A-4 SHOWED THE FIGURE OF 85 UND ER THE HEAD ESTIMATES WHILE THE FIGURE OF 10 (DDS) IS THE COST OF THE TABELA AN D THE FIGURE OF 9 UNDER THE HEAD FLAT IS THE COST OF THE FLAT. THE FIGURE OF 85 W AS AN ESTIMATE FOR RENOVATION OF TABELA. THE OLD STRUCTURE HOWEVER COULD NOT BE DEMOLISHED A S THE TABELA WAS A PART OF HERITAGE PROPERTY. HENCE ONLY ABOUT RS.55 LAKHS WE RE SPENT FOR MODIFICATION/ ADDITION TO THE SAME STRUCTURE FOR STRENGTHENING IT . THUS THE TOTAL EXPENDITURE ALSO VERIFIED AND CERTIFIED BY THE AUDITORS CAME TO BE AROUND RS.55.87 LAKHS EXCLUDING THE CONSIDERATION AND COST OF REGISTRATION. AS A MATTE R OF FACT THE COST OF MODIFICATION/ DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -39- ADDITION HAS BEEN ESTIMATED AT RS.56.87 LAKHS BY TH E DVO I.E. AN ADDITIONAL AMOUNT OF RS.1 LAKHS BUT THE DVO HAS ARBITRARILY ADOPTED THE VALUE OF LAND AT RS.33.20 LAKHS INSTEAD OF THE CORRECT VALUE OF RS.10 LAKHS. THE AO HAS NOTED THE DIFFERENCES AS UNDER: F.Y. COST OF CONSTRUCTION AS ESTIMATED BY DVO DECLARED BY THE ASSESSEE AS ESTIMATED BY DVO LAND VALUE AS ON DATE OF PURCHASE : (JUNE 2002 TOTAL (A) 10 00 000 RS.33 32 350/- (EXCLUDING EXISTING STRUCTURES VALUE OF INVESTMENT IN CONSTRUTION/ ALTERATIONS F.Y.2002-03 16 88 000/- RS.127 18 424/- F.Y.2003-04 23 01 000/- RS.23 42 474/- F.Y.2004-05 15 98 000/- RS.16 26 802/- TOTAL (B) 55 87 000/- RS.56 87 700/- INCLUDING ARCHITECTS FEES OF RS.12.11 LAKHS ESTIMATED BY DVO) GRAND TOTAL (A+B) 65 87 000/- RS.90 20 050/- 35. THE AO FELT THAT THE ARGUMENT OF THE ASSESSEE T HAT THE VALUE OF THE LAND WAS JUSTIFIED AT RS.10 LAKHS BECAUSE OF THE LIMITED AP PROACH AND BACK DOOR ENTRY THROUGH MUSLIM DOMINATED AREA TO THE PROPERTY AND THE FACT OF ITS BEING SURROUNDED BY SLUMS HAS ALREADY BEEN CONSIDERED BY THE DVO AND THEREFOR E WOULD NOT REQUIRE ANY MODIFICATION IN THE LAND VALUE COMPUTED AT RS.33.20 LAKHS BY THE DVO. FURTHER THE DISCLOSED INVESTMENT OF RS.55.87 LAKHS IN THE CONST RUCTION/ALTERATION (INCLUDING PAYMENTS THROUGH THE ARCHITECT) HOWEVER DID NOT INC LUDE THE COST OF FURNITURE FALSE CEILING AIR CONDITIONING SYSTEM DECORATIVE PARTIT IONS ELECTRICITY AND WATER CONNECTION ETC. A CONSIDERABLE AMOUNT HAS BEEN SPENT ON SUCH ITEMS ALSO. IN FACT THE SEIZED DOCUMENTS SPECIFIED THE INVESTMENT/EXPENDITURE INCU RRED ON THIS PROPERTY BETWEEN JANUARY FEBRUARY 2002 TO 10 TH FEBRUARY 2004. RS.15 LAKHS HAD BEEN SPENT IN CAS H FROM JANUARY TO APRIL 2002 ALONE. SIMILARLY OTHE R DETAILS OF BOTH CASH AND CHEQUE PAYMENTS WERE NOTED IN THE HAND WRITINGS OF THE ASS ESSEE AND THE ENTRIES ARE MOSTLY DATED AFTER THE DATE OF PURCHASE. THE ENTRIES THE REIN ARE AUTHENTIC IN THE SENSE THAT THE CHEQUE PAYMENTS SHOWN AS PER THESE SEIZED PAGES ALS O CO-RELATE WITH THE CHEQUE PAYMENTS SHOWN IN THE RELEVANT RECORDS. THE AO FE LT THAT THE EXPENDITURE TOWARDS SUCH MODIFICATION/ALTERATION WAS RS.61.67 LAKHS AS AGAINST RS.55.87 LAKHS AS PER THE ASSESSEE. FURTHER THE EXCESS EXPENDITURE WAS RELEV ANT FOR A.Y.2005-06 AS THE RELATED DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -40- WORK WAS CARRIED OUT IN THE LATER STAGES OF MODIFIC ATION. THE AO THEREFORE ADDED THE DIFFERENCE AS UNDER: A.Y. ACTUAL INVESTMENT MADE BY ASSESSEE (S PER ABOVE PARA) INVESTMENT ACCOUNTED FOR IN THE BOOKS CONSTRUCTED UNACCOUNTED INVESTMENT. 2003-04 RS.50 50 774/- (RS.33 32 350 + RS.17 18 424) RS.26 88 000/- (RS.10 LAKH + RS.16.88 LAKHS) RS.23 62 000/- 2004-05 RS.23 42 474/- RS.23 01 000/- RS.41 474/- 2005-06 RS.21 06 752/- (RS.16 26 802 + RS.4 79 950/- RS.125 98 000/- RS.5 08 752/- TOTAL RS.95 00 000/- 36. THE AO IN RESPECT OF A.Y.2004-05 NOTED THAT THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AT RS.23.01 LAKHS WAS SHORT OF THE ESTIMATE OF RS.23.42 LAKHS MADE BY THE AO AND SO MADE AN ADDITION FOR THE DIFFERENCE O F RS.41 470/-. IT WAS POINTED OUT TO THE LEARNED CIT(A) THAT VALUATION WAS NOT BEING DONE ON SCIENTIFIC METHOD AND THE DIFFERENCE WAS LESS THAN 15% THEREFORE THERE ARE VARIOUS JUDICIAL PRONOUNCEMENTS TO DELETE SUCH ADDITIONS. THE LEARNED CIT(A) ACCEPTE D THE CONTENTIONS OF THE ASSESSEE AND DELETED THE ADDITION OF RS.412 471/- IN A.Y.200 4-2005. IN RESPECT OF ASSTT.YEAR 2003-04 UNDER APPEAL ADDITION OF RS.23.62 LAKHS WAS CHALLENGED BEFORE THE LEARNED CIT(A) AND IT WAS SUBMITTED THAT THE ESTIMATION OF THE LAND VALUED BY THE DVO WAS INCORRECT BECAUSE THE SALE DEED IS REGISTERED WITH THE SUB-REGISTRAR AND THE PROPER STAMP DUTY HAS BEEN PAID THEREFORE THERE CANNOT BE ANY DOUBT IN THE VALUATION. THE LEARNED CIT(A) CONSIDERING THE FACTS AND CIRCUMSTAN CES OF THE CASE AND THE REPORT OF THE DVO AND THE SALE DEED ETC. FURTHER ALLOWED DEDU CTION OF 20% IN THE VALUATION AND CONFIRMED THE ADDITION OF RS.18.90 LAKHS IN A.Y.200 3-04. 37. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND REFERRED TO THE SEIZED PAPERS TO SHOW THAT IT WAS ONLY AN ESTIMATE AND THAT PLOT WAS VALUED AT RS10 LAKHS AND PROPER SALE DEED WAS EXECUTED. THEREFORE THE DVO COULD NOT ESTIMATE HIGHER VALUE OF THE LAND IN QUESTION. HE HAS SUBMITTED THAT PROPER REPLY WAS FILED BEFORE THE AU THORITIES BELOW. PB-172 SHOWED THAT THE DETAILS CONTAINED IN THE SEIZED PAPERS WOU LD NOT SUPPORT THE CASE OF THE REVENUE AND SUBMITTED THAT THE ADDITION IS HIGHLY I MPROBABLE. THE LEARNED DR RELIED DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -41- UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMIT TED THAT THE SEIZED PAPERS WERE RECOVERED FROM THE ASSESSEES PREMISES THEREFORE THE ASSESSEE SHALL HAVE TO EXPLAIN THE SAME. IF ONE PART OF THE DOCUMENTS IS BELIEVED ENTIRE DOCUMENTS SHALL HAVE TO BE CONSIDERED AGAINST THE ASSESSEE. HE HAS SUBMITTED THAT THE CIT(A) WITHOUT ANY REASON GRANTED 20% DEDUCTION OF THE VALUATION. 38. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIAL AVAILABLE ON RECORD. THE ASSESSEE EXPLAINED THAT THE LAND VALUE WAS RS.1 0 LAKHS AS PER THE SALE DEED DULY REGISTERED WITH THE SUB-REGISTRAR. THE AO HOWEVER DID NOT TAKE ANY STEP FOR THE PURPOSE OF VERIFYING THE COST OF THE LAND AND HAVE NOT EXAMINED ANY OF THE SELLERS IN THIS REGARD. THE AO MERELY ACTED UPON THE REPORT O F THE DVO. THE ASSESSEE GAVE SEVERAL REASONS FOR THE LESSER PRICE OF THE LAND BE CAUSE THE BUILDING SO PURCHASED WAS USED FOR KEEPING HORSES AND CATTLE AND THAT INITIAL LY THE ASSESSEE WANTED TO DEMOLISH THE PROPERTY BUT IT COULD NOT BE DEMOLISHED AND ONL Y RENOVATION HAVE BEEN DONE. THE ASSESSEE THEREFORE RIGHTLY SUBMITTED THAT THE SEIZE D PAPERS CONTAINED THE DETAILS OF THE ESTIMATE ONLY WHICH HAVE NOT BEEN SUPPORTED ANY COR ROBORATIVE EVIDENCES. CONSIDERING THE LOCATION OF THE PROPERTY AND ITS EN TRY FROM THE SIDE SHOWED THAT THE VALUE OF THE PROPERTY WAS NOT SO AS IS ESTIMATED BY THE DVO. WE HAVE ALSO SEEN THE REPORT OF THE DVO AND AS PER THE ANNEXURE-2 THE DV O HAS GIVEN THE VALUE OF THE LAND AT RS.33 32 350/- ON THE BASIS OF DLC RATES WH ICH ACCORDING TO THE LEARNED COUNSEL OF THE ASSESSEE IS THE DISTRICT LAND COMMIT TEE RATE WHICH HAVE NOT BEEN SUPPORTED THROUGH ANY MATERIAL ON RECORD. THE ABOV E FACTS WOULD SHOW THAT EVEN THE DVO HAS NOT BROUGHT ANY COMPARABLE CASE TO SUPPORT HIS FINDING THAT THE VALUE OF THE LAND WAS MORE. CONSIDERING THE EXPLANATION OF THE ASSESSEE AND THE SITUATION OF THE PROPERTY IN MUSLIM DOMINATED AREA AND THE ENTRY ON THE BACK SIDE WOULD PROVE THAT EVEN THE DLC RATE WOULD NOT BE APPLICABLE IN SUCH S ITUATION AGAINST THE PROPERTY OWNED BY THE ASSESSEE. THE ATTENDING CIRCUMSTANCES SHALL HAVE TO BE CONSIDERED PROPERLY IN THE LIGHT OF THE EXPLANATION GIVEN BY T HE ASSESSEE. IN THE ABSENCE OF ANY INDEPENDENT AND CORROBORATIVE MATERIAL AVAILABLE ON RECORD WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN EVEN THE PART ADDITION ON THIS ISSUE. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. 39. IN THE RESULT GROUND NO.1 AND 2 OF THE APPEAL O F THE ASSESSEE ARE ALLOWED. DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -42- 40. GROUND NO.3 IS REGARDING CHARGING OF THE INTERE ST UNDER SECTION 234A 234B AND 234C WHICH IS CONSEQUENTIAL IN NATURE AND IS MA NDATORY AND ACCORDINGLY REJECTED. 41. GROUND NO.4 5 AND 6 OF THE ASSESSEES APPEAL A RE INITIATION OF THE PENALTY UNDER SECTION 271(1)(C) AND UNDER SECTION 2 69SS AND 269T OF THE IT ACT WHICH IS INDEPENDENT PROCEEDINGS AND THEREFORE THESE GROUNDS ARE PREMATURE AND ARE DISMISSED. 42. IN THE RESULT ITA NO.1823/AHD/2008 IS PARTLY AL LOWED. ITA NO.1824 /AHD/2008 : A.Y.2004-05 (ASSESSEES AP PEAL) 43. GROUND NO.1 IN THE ASSESSEES APPEAL CHALLENGES THE ADDITIONS ON ACCOUNT OF REPORT OF DVO IN RESPECT OF SAMOD HAVELI. IT IS N OTED ABOVE THAT THESE ADDITIONS HAVE ALREADY DELETED BY THE LEARNED CIT(A) AND THER EFORE THESE GROUNDS HAVE BECOME INFRUCTOUS AND ARE ACCORDINGLY DISMISSED. 44. GROUND NOS.2 AND 3 OF THE APPEAL ARE IN RESPECT OF ADDITION OF RS.1 56 00 000/- ON ACCOUNT OF UNEXPLAINED CASH CRE DITS. THESE GROUNDS HAVE ALREADY CONSIDERED WHILE CONSIDERING THE SIMILAR GROUND RAI SED IN ITA NO.1821/AHD/2008 ABOVE. BY FOLLOWING THE SAME REASONS FOR DECISION WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND DELETE THE IMPU GNED ADDITIONS. ACCORDINGLY GROUND NOS.2 AND 3 OF THE ASSESSEES APPEALS ARE AL LOWED. 45. GROUND NO.4 OF BOTH THE APPEALS ARE REGARDING C HARGING OF THE INTEREST UNDER SECTION 234A 234B AND 234C WHICH IS CONSEQUENTIAL IN NATURE AND IS MANDATORY AND ACCORDINGLY REJECTED. 46. GROUND NO. 5 6 AND 7 OF THE APPEALS ARE INITIA TION OF THE PENALTY UNDER SECTION 271(1)(C) AND UNDER SECTION 269SS AND 269T OF THE IT ACT WHICH IS INDEPENDENT PROCEEDINGS AND THEREFORE THESE GROUNDS ARE PREMATURE AND ARE DISMISSED. DCIT VS. RAVINDRA AGRAWAL GROUP (30 APPEALS) -43- 47. IN THE RESULT APPEAL OF THE ASSESSEE IN ITANO. 1824/AHD/2008 IS PARTLY ALLOWED. ITA NO.1825 /AHD/2008 : A.Y.2005-06 (ASSESSEES AP PEAL) 48. GROUND NOS.1 AND 2 IN THE ASSESSEES APPEAL CHA LLENGE THE ADDITION ON ACCOUNT OF REPORT OF DVO IN RESPECT OF SAMOD HAVELI. IT I S NOTED ABOVE THAT THESE ADDITIONS HAVE ALREADY DELETED BY THE LEARNED CIT(A) AND THER EFORE THESE GROUNDS HAVE BECOME INFRUCTOUS AND ARE ACCORDINGLY DISMISSED. 49. GROUND NO.3 OF BOTH THE APPEALS IS REGARDING CH ARGING OF THE INTEREST UNDER SECTION 234A 234B AND 234C WHICH IS CONSEQUENTIAL IN NATURE AND IS MANDATORY AND ACCORDINGLY REJECTED. 50. GROUND NO. 4 AND 5 OF THE APPEALS ARE INITIATIO N OF THE PENALTY UNDER SECTION 271(1)(C) WHICH IS INDEPENDENT PROCEEDINGS AND THEREFORE THESE GROUNDS ARE PREMATURE AND ARE DISMISSED. 51. IN THE RESULT ALL THE DEPARTMENTAL APPEALS ARE DISMISSED AND THE ASSESSEES APPEALS IN ITA NO.1821/AHD/2008 1822/AHD/2008 182 3/AHD/2008 AND 1824/AHD/2008 ARE PARTLY ALLOWED. APPEAL OF THE AS SESSEE IN ITA NO.1825/AHD/2008 IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28 TH JANUARY 2011. SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 28-01-2011 COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD