The ACIT, Central Circle-4,, Surat v. M/s. Amar Corporation, Valsad

ITA 2036/AHD/2007 | 1998-1999
Pronouncement Date: 31-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 203620514 RSA 2007
Assessee PAN AAFGA8447D
Bench Ahmedabad
Appeal Number ITA 2036/AHD/2007
Duration Of Justice 3 year(s) 10 month(s) 16 day(s)
Appellant The ACIT, Central Circle-4,, Surat
Respondent M/s. Amar Corporation, Valsad
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 31-03-2011
Date Of Final Hearing 10-03-2011
Next Hearing Date 10-03-2011
Assessment Year 1998-1999
Appeal Filed On 14-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI G.D. AGARWAL VICE-PRESIDENT (AZ) AND SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER APPEAL(S) / CO(S) BY SL. NO(S). ITA NO(S) / CO NO(S) ASSESSMENT YEAR(S) APPELLANT (S) RESPONDENT(S) 1. 2036/AHD/2007 1998-99 ASSTT.CIT M/S.AMAR CORPORATION4 TH FLOOR AMAR CHAMBERS STATION ROAD VALSAD PAN : AAFGA8447D 2. 2037/AHD/2007 1999-2000 -DO- -DO- 3. 2038/AHD/2007 2000-01 -DO- -DO- 4. 2039/AHD/2007 2002-03 -DO- -DO- 5. 2040/AHD/2007 2003-04 -DO- -DO- 6. 2041/AHD/2007 2004-05 -DO- -DO- 7. CO NO.190/AHD/07 (ITA 2036/A/07) 1998-99 ASSESSEE REVENUE 8. CO NO.191/AHD/07 (ITA 2037/A/07) 1999-2000 -DO- -DO- 9. CO NO.192/AHD/07 (ITA 2038/A/07) 2000-01 -DO- -DO- 10. CO NO.193/AHD/07 (ITA 2039/A/07) 2002-03 -DO- -DO- 11. CO NO.194/AHD/07 (ITA 2040/A/07) 2003-04 -DO- -DO- 12. CO NO.195/AHD/07 (ITA 2041/A/07) 2004-05 -DO- -DO- ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 2 2 REVENUE BY : SHRI D.C. PATWARI CIT-D.R. ASSESSEE BY : SHRI S.N. SOPARKAR SR.ADV. AND MS. URVASHI SHODHAN ADV. ORDER PER MUKUL KR. SHRAWAAT JUDICIAL MEMBER REVENUE HAS FILED SIX APPEALS PERTAINING TO ASSESS MENT YEARS 1998- 99 TO 2004-05 (EXCEPT AY 2001-02) ARISING FROM THE ORDERS OF THE CIT(A)- II ALL IDENTICALLY DATED 6/03/2007. FROM THE SIDE OF THE RESPONDENT- ASSESSEE CROSS OBJECTIONS HAVE BEEN FILED FOR THESE YEARS. ALMOST ON IDENTICAL MANNER THE AO HAD MADE THE ADDITION OF ON-MONEY FOR ALL THE YEARS UNDER CONSIDERATION AND THE FACTS AS ALSO THE REASON BEING SIMILAR THEREFORE ALL THESE APPEALS ARE HEREBY CONSOLIDATE D AND DECIDED BY THIS COMMON ORDER ALONGWITH THE CROSS OBJECTIONS OF THE ASSESSEE. WE SHALL INCORPORATE THE FACTS OF THE CASE FROM THE LEAD ASS ESSMENT YEAR 1998-99. 2. SUBSTANTIVE GROUND IS GROUND NO.1 IN ALL THE YEARS REPRODUCED BELOW:- (EXTRACTED FROM 2036/AHD/2007) THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.96 50 613/- MADE BY THE A.O. ON ACCOUNT OF ON MO NEY RECEIPT ON SALE OF FLATS. ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 3 3 3. ASSESSMENTS IN ALL THE YEARS WERE MADE U/S.143(3 ) R.W.S. 153A OF THE ACT. FOR ALL THE YEARS THE DATE OF ASSESSMENT O RDERS WERE 28/3/2006. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING A SSESSMENT ORDER WERE THAT A SEARCH U/S.132A WAS CARRIED OUT ON 18/06/200 3. AT THE OUTSET IT HAS BEEN MENTIONED THAT ONE OF THE PARTNERS SHRI BIMAL CHIMANLAL SHAH HAD TAKEN THE RESPONSIBILITY AND ADMITTED THE UNDISCLOS ED INCOME OF RS.31.76 LACS ON BEHALF OF THE GROUP CONCERNS. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND DEVELOPMENT OF TWO PROJECTS AMARJYOT APARTMENTS AND AMARDHAM. IT IS WORTH TO MENTION THAT THE CONSTRUCTION OF AMARJYOT APARTMENT WAS DONE BY M/S.BIMAL CONST RUCTION PROP. SHRI CHIMANLAL M.SHAH. THE ENTIRE ADDITION OF ON-MONEY FOR ALL THE YEARS WAS BASED UPON THREE PAPERS FOUND DURING THE COURSE OF SEARCH MARKED AS PAGE NO.19 PAGE NO.80 AND PAGE NO.65. IT IS ALSO WORTH TO MENTION THAT IN THE IMPUGNED ASSESSMENT ORDERS THER E IS NO REFERENCE OF SEIZURE OF CASH UNDISCLOSED ASSETS OR JEWELLERY ETC. SINCE THE AO HAD MADE THE BASIS OF THE ADDITION ON THESE PAPERS THE REFORE IT IS WORTH TO REPRODUCE THE RELEVANT OBSERVATIONS OF THE AO AS FO LLOWS:- (A) PAGE NO.19 THE CONTENTS AS FOUND WRITTEN ON THE SAID PAGE AND THE OBSERVATION OF THE AO WAS AS UNDER: SHRI MANUBHAI COST OF FLAT 1460 SQ.FEET. ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 4 4 1400 SQ. FT. X 625 = 8 75 000/- 8 77 460/- X 601 ADD : MAINTAINED DEPOSITE 28 00 0/- 28 000/- ADD : METER GUTTER WATER SERVICE CHARGES 15 000/- 15 000/- ---------------- --------------- 918000 920 460/- LESS : PAYMENT REC. 890725 /- 890 725/- BALANCE DUE 27 275/- 29 735/- TOTAL PAYMENT RECEIVED COST OF MATERIALS = 5 43 300/- CHEQUE DIFFERENCE = 21 425/- (1 00 000) CASH + CHEQUE = 3 00 000/- (1 00 000) (PTO) (1 00 000) INTEREST (PTO) 84 000 (3 MONTH) 10 000 (ASHWIN) 5.2. REVERSE SIDE OF THE PAGE: 1 00 0000 CHEQUE 6 JUNE 98 1 00 000 CASH 15 JULY 98 1 00 000 CASH 6 AUG 98 3 00 000 1 00 000 CASH 10 OCT.98 1 00 000 CASH 10 OCT. 98 ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 5 5 THESE DETAILS ARE RELATED TO THE SALE OF FLAT NO.A /204 AMARDHAM COMPLEX A BUILDING PURCHASED BY SMT. SARALABEN M ANSUKHBHAI (MANUBHAI) PATEL. THE AREA OF THE FLAT IS 1400 SQ. FEET. THE RATE OF SALE IS RS.625/- PER SQ.FEET. THE TOTAL VALUE OF THIS F LAT IS RS.8 75 000/-. THE MAINTENANCE DEPOSIT OF RS.28 000/- AND METER GUTTE R WATER SERVICE CHARGES OF RS.15 000/- ARE CHARGED BY THE ASSESSEE OUT OF WHICH RS.8 90 725/- ARE RECEIVED AND RS.27 275/- ARE OUTS TANDING. THE COST OF MATERIAL SUPPLIED BY SHRI MANSUKHBHAI (MANUBHAI) PA TEL OF RS.5 45 300/- IS ADJUSTED AGAINST THE SALE PRICE OF THE FLAT. RS.3 00 000/- WERE RECEIVED ON VARIOUS DATES IN CASH AS WELL AS B Y CHEQUE WERE WRITTEN ON THE REVERSE SIDE OF THIS PAGE. THUS IT IS EVIDENT THAT THE FLAT NO.A/204 OF AMARDHAM COMPLEX A WAS SOLD TO SMT. S ARALABEN MANUKHBHAI (MANUBHAI) PATEL FOR THE TOTAL SALE CONS IDERATION OF RS.8 75 000/- @ RS.625/- PER SQ.FEET. SHRI CHIMANL AL M. SHAH IN HIS STATEMENT RECORDED U/S.131 OF THE ACT ON 01.08.200 3 WHILE ANSWERING THE QUESTION NO.4 AT PAGE NO.8 HAS STATED AS UNDER: FLAT NO.A/204 AMARDHAM COMPLEX-A VALSAD ADMEAS URING 1400 SQ.FT. WAS SOLD TO SMT. SARLABEN MANSUKHBHAI P ATEL IN MARCH 2002 FOR THE TOTAL SALES CONSIDERATION OF RS. 8 75 000/- @ RS.725 PER SQ.FT. THE MAINTENANCE DEPOSIT OF RS.25 000/- AND ELECTRIC METER WATER CONNECTION CHARGES DRAINAGE CHARGES ETC. OF RS.50000/- ARE ADDED IN IT. THUS THE TOTAL SAL ES VALUE OF THE FLAT COMES TO RS.9 18 000/- OUT OF WHICH RS.8 90 72 5/- WERE RECEIVED AND RS.27 275/- WERE OUTSTANDING. BELOW T HESE DETAILS THE DETAILS OF VARIOUS RECEIPTS OF THE SALE OF FLAT S ARE MENTIONED. THE FLAT NO.A/204 AMARDHAM COMPLEX A WAS SOLD TO SMT. SARALABEN MANUBHAI PATE3L BY M/S.AMAR CORPORATION IN MARCH 20 02. THE SALES VALUE OF RS.5 89 401/- @ RS.421/- PER SQ.FT. IS SHOWN IN TH E REGULAR BOOKS OF ACCOUNT OF M/S.AMAR CORPORAITON. IN FACT THE FLAT NO.A/204 WAS SOLD @ RS.625/- PER SQ.FT. M/S.AMAR CORPORATION HAS RECEIVED ON MONEY O N SALE OF THIS FLAT @ RS.180 PER SQ.FT. THE RECEIPT OF ON MONEY IS NOT S HOWN IN THE REGULAR BOOKS OF ACCOUNT AND IT IS THE UNACCOUNTED INCOME OF M/S.AMA R CORPORATION. (B) PAGE NO.80 THE AO HAS FOUND THAT ON THIS PAGE THERE WAS DETAI LS OF UNSOLD FLATS AND THE POSITION AS ON 01 ST APRIL 01 ST MAY AND 01 ST JUNE. WE DO NOT CONSIDER IT NECESSARY TO REPRODUCE THE CHART WHICH WAS MADE BY THE AO ON ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 6 6 THE BASIS OF THE INFORMATION WRITTEN ON PAGE 80 HO WEVER THE CONCLUSION DRAWN BY THE AO WAS AS UNDER:- ON PERUSAL OF THE DETAILS MENTIONED IN THIS PAGE I S ITS NOTICED THAT IN THE FIRST COLUMN OF THIS PAGE THE AREA OF 12 UNS OLD FLATS ADMEASURING 14750 SQ.FT. OF AMARDHAM COMPUTER C P ROJECT AS ON THE DATED 1/4/2003 ARE WRITTEN. IN THE SECOND COL . THE SAME DETAILS AS ON 1 ST MAY IS MENTIONED AND IN THE THIRD COL. THE DETAIL S OF THE 11 UNSOLD FLATS ADMEASURING 13 6000 SQ. FEET IS WRITTE N. BELOW THIS THE DETAILS OF NAME OF THE FLAT HOLDER FLAT NO. OUTST ANDING SALES CONSIDERATION AMOUNT TO BE RECEIVED AS ON 1/4/2003 1/5/2003 AND 1/06/2003 ARE WRITTEN. IN THIS REGARD SHRI CHAMN M.SHAH IN HIS STATEMENT RECORDED U/S.131 OF THE ACT ON 7/08/2003 HAS GIVEN THE DETAILS SUCH AS THE NAME OF THE FLAT HOLDERS FLAT NO. AMOUNT SHOWN AS RECEIVED IN THE BOOKS OF ACCOUNTS AS ON 1/4/2003 OUTSTANDING AMOUNT TO BE RECEIVED WAS MENTIONED ON PAGE NO. 80 OF BF 22 AS ON THE DATE 1/4/2003 AND TOTAL VALUE OF THE FLAT. ON PERUSAL OF THE DETAILS IT IS NOTICED THAT SALE OF VARIOUS FLATS R ANGE FROM RS.288 TO RS.694 PER SQ.FT. WHEN THE FACTS OF LOW SALES RA TE OF RS.288/- PER SQ.FT. FOR SOME OF THE FLATS OF AMARDHAM COMPLEX C WAS CONFRONTED WITH SHRI CHIMANBHAI M.SHAH HE HAS FURTHER STATED THAT SOME OF THE AMOUNTS OF SALES CONSIDERATION OF THE FLATS SOLD/BO OKED AT THE LOW SALE RATE WERE ACTUALLY RECEIVED BY THEM. BUT THES E AMOUNT RECEIVED ARE NOT SHOWN IN THE REGULAR BOOKS OF ACCOUNT. THE COST OF CONST4UCTION OF AMARDHAM COMPLEX C BUILDING IS RS .350 PER SQ.FT. AS DISCUSSED SUPRA THIS PAGE RELATED TO THE DETAILS OF UNSOLD FLATS AND OUTSTANDING AMOUNT OF THE FLATS SOLD OUT UPTO THE DATE OF SEARCH HAVE BEEN WRITTEN. TOP ON THIS PAGE TOTAL UNSOLD AREA AND NOS. OF THE FLATS HAVE BEEN MENTIONED. IN THE STAT EMENT RECORDED U/S.131 OF THE I.T. ACT SHRI CHIMANBHAI M. SHAH HA S ADMITTED THESE FACTS. AT THE BOTTOM OF THE COLUMN OF 1 ST APRIL 1 ST JUNE AMOUNT OF RS.161.26 AND 149.90 (144.00) RESPECTIVELY HAVE BEE N WRITTEN. OBVIOUSLY THIS FIGURE ALSO MENTIONED IN LACS. THIS IS A RANGE OF TOTAL OF OUTSTANDING AMOUNT OF THE FLATS SOLD AND EXPECTE D SALES CONSIDERATION TO BE RECEIVED FOR THE FLATS. THE FI GURES ARE CO-RELATED AS UNDER: ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 7 7 (FIGURES IN THE ROW 3 TO 5 ARE IN LACS) 1 ST APRIL 1 ST JUNE 1. AREA OF THE UNSOLD FLATS 14750.00 13600.00 2. NO. OF UNSOLD FLATS 12 11 3. OUTSTANDING AMOUNT OF THE FLATS SOLD 57.40 48.27 4. TOTAL EXPECTED AMOUNT 161.26 143.90 5. AMOUNT PERTAINS TO THE UNSOLD FLATS (3-2) 103.86 95.63 6. EXPECTED SALES RATE OF THE FLATS (4/1 704.14 703.16 AS MENTIONED IN SR.NO.6 OF THE ABOVE CHART AFTER D EDUCTION OF THE TOTAL OF THE OUTSTANDING AMOUNT FROM THE TOTAL AMOU NT EXPECTED THE SALES RATE COMES TO RS.704.14 AND RS.703.16. THESE FIGURES ARE ODD BECAUSE IT INCLUDES MAINTENANCE DEPOSIT METER GUT TER WATER SERVICE CHARGES IN FACT THE EXPECTED SALES CONSIDERATION IS NEARER TO RS.700/- PER SQ.FEET. MOREOVER EXCEPT 11 FLATS A LL OTHER FLATS HAVE BEEN SOLD UPTO 1 ST JUNE 2003 IN AMARDHAM C BUILDING WHICH ARE NATURALLY HIGHER THAN THE RATE FOR AMARDHAM A BUI LDING WHICH WAS CONSTRUCTED EARLIER. (C) THE THIRD PAGE SEIZED WAS PAGE NO.65 WHICH WAS STATED TO BE IN THE NATURE OF THE PROJECTED FIGURES OF THE FLATS S ITUATED AT AMARDHAM. HOWEVER THE PURPOSE OF WRITING THE PROJECTED FIGUR E WAS TO GET THE LOAN AGAINST THE MORTGAGE OF THE FLATS FROM THE BANK RE LEVANT PORTION IS REPRODUCED BELOW:- AMARDHAM C FLAT 3 301 401 702 ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 8 8 5043.59 X 549 = 27 68 903.40 3950.00 X 591 = 23 34 450.00 51 03 353.00 50 00 000.00 1 03 353.00 68 625.00 34 728.00 THE FIGURE OF 5043.59 IS THE MEANSUREMENT OF AREA O F SOME OF THE PLOTS AT DHARANAGAR ABRAMA. THE FIGURE OF 3950 IS MEASUREMENT OF THREE FLATS AS MENTIONED IN THIS PAGE AND RS.591 IS THE SALE RATE PER SQ.FT. FOR THE FLAT NO.301 401 AND 702 AMARDHAM CO MPLEX C. DURING THE COURSE OF SEARCH PROCEEDINGS SHRI CHIMAN BHAI M. SHAH IN HIS STATEMENT HAS STATED THAT THESE WORKING HAS DONE FOR GETTING THE LOAN OF RS.50 00 000 AGAINST THE SALE/MORTGAGE OF THE PLOT/FLATS SHOWN AS ABOVE. FURTHER HE HAS STATED THAT THE SAL E RATE OF RS.591 PER SQ.FT. OF THE FLATS OF AMARDHAM COMPLEX C COM PLEX WAS TAKEN FOR CALCULATION OF THE TOTAL RECEIVABLE VALUE OF T HIS FLAT EITHER ON SALE OR ON MORTGAGE. THE RATE OF RS.591 PER SQ.FT. IS F OR THE FLAT CONSTRUCTED UPTO RCC WORK BRICK WORK AND OUTER PLA STER WORK. THUS THE SALE RATE OF THE SEMI CONSTRUCTED FLATS A T AMARDHAM COMPLEX C BUILDING IS SATED BY SHRI CHIMANBHAI M. SHAH @ RS.591 PER SQ.FT. (D) REVERSE SIDE OF PAGE NO.65. IT WAS EXPLAINED THAT ON THIS PAGE ONLY THE TRANSACTION OF TWO FLATS WAS RECORDED AND THE OBSERVATION O F THE AO WAS AS UNDER:- ON THIS PAGE FOLLOWING DETAILS ARE WRITTEN : 30. 00 BALANCE 4.25 23.07.2002 35.40/250 FOR FLATS ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 9 9 1.50 BY CHEQUE 2.00 EXTRA 7.66/7 DEPOSIT OF FLAT NO.502 6.40 BALANCE OF 604 & 605 0.51 MAINT. CHARGE OF FLAT NO.502 43.80/250 2.00 EXTRA +11.23/200 BY CHEQUE 604 AND 605 0.50 02/11 55.03/450 1.00 16/12 - 47.42/7 SEVAJIBHAI HISAB 47.42/7 7.60/750 .60/750 ------------- 7.00 BALANCE ON PERUSAL OF THE NOTING MENTIONED ON THIS PAGE AS MENTIONED ABOVE IT WAS NOTICED THAT SOME FIGURES ARE RELATED TO THE FLAT NO.604 AND 605. AS PER THE NOTING IT IS EVIDENT THAT THE ASSESSEE HAS RECEIVED RS.6.40 IT MEANS 6 40 000/- AND 11.23/200 MEANS 11 23 200/- BY CHEQUE MEANS 11 23 200/- BY CHEQUE W HICH WHEN DIVIDED BY AREA OF THESE TWO FLATS OF 3200 SQ.FEET COMES TO RS.351/- PER SQ.FEET WHICH MEANS CHEQUE RATE IS RS.351/- PE R SQ.FEET. WHILE NOTING THE ENTRY ON THIS PAPER FOR 6.40 THE ASSESSE E HAS NOTED AS BALANCE IT MEANS THE ASSESSEE HAS RECEIVED ADDITION AL PAYMENT EARLIER AND THE SAME IS A BALANCE AMOUNT WHEN THIS AMOUNT OF RS.6 40 000/- IS DIVIDED BY THE AREA OF THE FLATS OF 3 200 SQ.FEET IT COMES TO RS.200/- PER SQ.FEET. IN OTHER WORD THE ASSESSEE HAS RECEIVED THE TOTAL SALES CONSIDERATION ON THE SALES OF FLAT NO.604 AND 605 OF MORE THAN RS.17 63 200/-. THE TOTAL AR EA OF THE FLATS IS ADMEASURING 3200 SQ. FEET. BY APPLYING THE FIGURES THE SALES RATE PER SQ.FEET WORKED OUT TO RS.551/- PER SQ.FEET. AS DISCUSS SUPRA IT IS EVIDENT THAT THE TOTAL SALES CONSIDERATION OF BOTH THE FLATS IS MORE THAN RS.17 63 200/- PER SQ. FEET. IN THE SUBMISSI ON DATED 16.3.2006 ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 10 10 WHILE EXPLAINING ABOUT THE CONTENTIONS OF THIS PAGE THE ASSESSEE ON PAGE NO.121 OF ITS REPLY HAS ACCEPTED THAT 6.40 MEA NS 6.40 LACS. 3.1. ON PERUSAL OF THE ASSESSMENT ORDER IT WAS ALS O FOUND THAT AFTER THE SEARCH CERTAIN STATEMENTS WERE RECORDED OF SHRI CHI MANBHAI M. SHAH AS PER AO THERE WAS AN ADMISSION ON THE PART OF SHRI CHIMANBHAI THAT ON-MONEY WAS RECEIVED ON SALE OF EACH AND EVERY F LAT. THE SAID ADMISSION HAS STRONGLY BEEN CONTESTED. IN THIS REG ARD THERE WAS A DISCUSSION OF AN AFFIDAVIT OF ONE OF THE PARTNERS SHRI BIMAL C. SHAH DATED 14/8/2003. ALTHOUGH HIS STATEMENT WAS RECORD ED ON 18/06/2003 AND IN THAT RESPECT AN AFFIDAVIT WAS ALSO FILED ON 19/0 6/2003 HOWEVER AN ANOTHER AFFIDAVIT FILED ON 14/08/2003 THROUGH WHICH IT WAS STATED THAT WHATEVER WAS THE SALE CONSIDERATION RECEIVED FROM S MT. SARALABEN MANUBHAI PATEL WAS CORRECTLY RECORDED IN REGULAR B OOKS OF ACCOUNTS. IT WAS MADE CLEAR THAT THE AMARDHAM COMPLEX DEVELOPED BY AMAR CORPORATION HAS SOLD FLAT NO.204 TO SMT. SALARABEN MANUBHAI PATEL AT THE RATE OF 421 SQ.FT. HAVING AREA 1400 SQ.FT. FOR A T OTAL CONSIDERATION OF RS.5 89 401. THERE WAS A DISCUSSION OF PAGE 80 THA T UNSOLD AREA WAS 14 750/- SQ.FT. OF FLATS AT AMARDHAM COMPLEX C AN D AS PER THE STATEMENT THE VALUE OF EACH FLAT SOLD WAS 701 PER SQ.FT. A GAIN THERE WAS A DISCUSSION OF PAGE 65 ACCORDING TO WHICH SALEABLE V ALUE FOR THE PURPOSE OF OBTAINING LOAN FOR THE FLATS FOR AMARDHAM WERE TAKE N AT RS.591 PER SQ.FT. 3.2. THE AO HAS ALSO DISCUSSED THE RETRACTION O F SHIR CHIMANLAL. IT WAS FOUND THAT THE SAID RETRACTION WAS MADE AFTER THE L APSE OF ABOUT 2 ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 11 11 MONTHS. THE STATEMENT WAS FIRST RECORDED U/S.132(4 ) ON 18/06/2003 AND LATER ON ON 01/08/2003. THE AFFIDAVIT WAS FILED O N 26/09/2003 THROUGH WHICH THE RETRACTION WAS MADE. THERE WAS AN ALLEG ATION OF DURESS COERCION AND INTIMIDATION. AS PER AO ON THE BASIS OF THREE LOOSE PAPERS WHICH WERE MADE ANNEXURE BF-22 OF THE SEIZED MATERI AL PAGE NO.19 GIVES THE RATE OF RS.625/- PER SQ.FT. PAGE 80 GIVE S THE RATE OF RS.700/- AND PAGE NO.65 PAGE RS.691 AND REVERSE SIDE OF THIS AT RS.551/-. AS AGAINST THAT AS PER AO RATES FROM AMARDHAM APARTMENT AS D ISCLOSED BY THE ASSESSEE WERE RS.400 RS.451 RS.468/-. FINALLY H E HAS CONCLUDED AS FOLLOWS:- 19. IT IS CLEAR FROM THE ABOVE THAT PRESUMPTION O F RECEIPT OF ON- MONEY CAN BE MADE FOR OTHER FLATS SOLD DURING COTE MPORARY PERIOD. THE CALCULATION OF YEAR WISE ON MONEY RECEIPT IS WORKED OUT HERE UNDER: A.Y. SALES SHOWN IN SQ.FEET ESTIMATED SALES RATE ESTIMATED SALES CONSIDERATION SALES CONSIDERATION SHOWN IN THE BOOKS OF ACCOUNTS DIFFERENCE 1998-99 58600 450 26 370 000 16719387 9 650 613 1999-00 5300 500 2 650 000 1595302 1 054 698 2000-01 4800 550 2 640 000 1444805 1 195 195 2001-02 0 0 0 2002-03 103950 625 64 968 750 49151459 15 817 291 2003-04 19850 661 13 120 850 8997403 4 123 447 2004-05 700 0 0 0 31 841 244 ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 12 12 THE SAID CALCULATION OF ON MONEY AND THE CONSEQUENT IAL ADDITIONS WERE CHALLENGED. 4. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY WHO HAS AGAIN EXAMINED THE FACTS OF EACH YEAR IN DETAIL. THE FIR ST ARGUMENT WAS ABOUT THE STATEMENT RECORDED U/S.132(4) OF I.T. ACT. BY REFER RING A DECISION OF HONBLE SUPREME COURT IN THE CASE OF P.R. METRANI V C. CIT REPOTED AT (2006) 287 ITR 209 (SC) IT WAS OBSERVED THAT THE P RESUMPTION AS CONTEMPLATED U/S.132(4) OF THE ACT IS A REBUTTABLE PRESUMPTION. IT IS WAS ALSO OBSERVED BY CIT(A) BY REFERRING AN ORDER OF TH E TRIBUNAL THE STATEMENT RECORDED AT THE TIME OF SEARCH CAN BE RET RACTED. APART FROM THE ABOVE OBSERVATION THE LD.CIT(A) HAS PROCEEDED ON T HE MERITS OF THE CASE AND SUMMARISED THE ISSUE AS FOLLOWS:- 4. THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 3 18 41 244/- ON ACCOUNT OF ON MONEY RECEIVED BY THE APP. DURING THE SEARCH PROCEEDINGS THREE DOCUMENTS BEARING PAGE NO.19 80 & 65 WERE FOUND AND SEIZED. THE AO DERIVED THE RATE OF RS.62 5/- PER SQ.FT. FOR AMARDHAM COMPLEX A MAKING BASE OF PAGE NO.19 WHE RE THERE WAS A NOTHING WITH REQUEST OF FLAT NUMBER A/204 OF AMARDHAM COMPLEX A WHICH WAS PURCHASED BY SMT. SARLABEN M. PATEL. HOWEVER THE ASSESSING OFFICER FOUND THAT THE APP H AS RECORDED THE SAID TRANSACTION IN ITS REGULAR BOOKS OF ACCOUNTS A T RS.421/- PER SQ.FT. LIKEWISE ON PAGE NO.80 WAS SUPPOSED TO BE A FUND FLOW STATEMENT WHERE THE RATE PER SQ.FT. WAS WORKED OUT AT RS.700 PER SQ.FT. WITH RESPECT TO PAGE NO.65 THE ASSESSING OF FICER OBSERVED THAT THE SAID PIECE OF PAPER WAS WORKING FOR OBTAIN ING A LOAN OF RS.50.00 LACS FROM THE FINANCIERS AND WHILE WORKING OUT THE AMOUNT ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 13 13 THE RATE PER SQ.FT. WAS TAKEN AT RS.591/-. THE REV ERSE SIDE OF THE PAGE NO.65 WAS WITH RESPECT OF FLAT NO.604 & 605 WH ICH ACCORDING TO THE ASSESSING OFFICER THE APPELLANT RECEIVED MOR E THAN RS.551 PER SQ.FT. CONSIDERING THE EVIDENCES GATHERED BY THE A SSESSING OFFICER MADE TOTAL ADDITION TO THE TUNE OF RS.3 18 41 244/- . 4.1. ON THE BASIS OF THE STATEMENTS RECORDED AND TH E PAGES FOUND DURING THE COURSE OF SEARCH THE LD. CIT(A) HAS CONCLUDED THAT THERE WAS NO BASIS FOR MAKING ANY ADDITION OF ALLEGED ON-MONEY IN THE HANDS OF THE ASSESSEE AS FOLLOWS:- 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND SUBMISSIONS MADE BY THE APPELLANT. THE ADDITION MA DE BY THE ASSESSING OFFICER IS BASED ON THREE SEIZED DOCUMENT S. IN PAGE NO.19 OF THE SEIZED DOCUMENT IT IS OBSERVED THAT T HE ASSESSING OFFICER HAS FAILED TO INTERPRETE THE DOCUMENT. IF THE INTERPRETATION OF THE ASSESSING OFFICER IS ACCEPTED THEN IT WILL HAVE TO BE HELD THAT THE APPELLANT HAS PURCHASED TOTAL MATERIALS OF SAND AND GRIT AMOUNTING TO RS.5 45 300/- FROM THE SAID PARTY WHEREAS THE T OTAL MATERIAL PURCHASED FROM ALL THE PARTIES FOR THE ENTIRE PROJE CT WAS ONLY RS.4 44 060/-. THE AO HAS ALSO WORKED OUT THE OUTS TANDING AMOUNT OF THE SAID PARTY TO RS.27 275/- WHEREAS THE ACTUA L OUTSTANDING AMOUNT DUE FROM THE SAID PARTY WAS RS.1 39 400/- AN D THE PROOF OF PAYMENT RECEIVED AFTER THE SEARCH PROCEEDINGS AGAIN ST SUCH OUTSTANDING WERE PLACED BEFORE ME TO SHOW THAT EVEN THE SAID PARTY HAS ACCEPTED THE SAID OUTSTANDING AMOUNT IN THE SUM OF RS.1 39 400/-. THE AO OBSERVED WITH RESPECT TO PAG E NO.80 THAT THE STATEMENT WAS PREPARED ON A TENTATIVE BASIS AND DID NOT REFLECT THE TRUE PRICE OF THE FLAT. IN ANY CASE THE SAID PIE CE OF PAPER WAS NOT WRITTEN BY A PARTNER OF THE APPELLANT. WITH RESPEC T OF PAGE NO.65 DEPICTING THE DETAILS OF POTENTIAL DEAL BEING A ONE TIME SETTLEMENT WITH THE FINANCIERS OF THE APPELLANT. THIS DEAL H OWEVER NEVER MATERIALIZED. THEREFORE THIS PAPER CANNOT BE RELI ED UPON. IT IS FURTHER OBSERVED THAT ALL THESE THREE SEIZED DOCUME NTS VIZ. 19 65 & 80 ARE LOOSE PAPERS AND THE DETAILS NOTED ON THESE PAPERS ARE NOT IN ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 14 14 THE HANDWRITINGS OF ANY OF THE PARTNERS OF THE APPE LLANT. THE APPELLANT HAS PUT FORWARD NUMBER OF DECISIONS BEFOR E ME TO SUBSTANTIATE THE CLAIM THAT NO ADDITION CAN BE MADE ON THE BASIS OF SUCH LOOSE PAPERS. THEREFORE I AGREE WITH THE CO NTENTION OF THE APPELLANT THAT ADDITION CANNOT BE MADE RELYING ON S UCH LOOSE PAPERS. THE APP ALSO CONTENDED BEFORE ME THAT THE SAID LOOSE PAPERS FOUND AND SEIZED BY THE DEPARTMENT WAS RELAT ED TO AMARDHAM BLOCK A& B. HOWEVER NO SUCH EVIDENCE WAS FOUND WITH RESPECT TO AMARJYOT BLOCK A & B APART FROM THIS THE LOOSE PAPERS WHICH IS REFERRED TO BY THE AO ON PAGE 5 & 6 OF THE ASSESSMENT ORDERS FOR AY 1998-99 SHOWS THAT IT IS E STIMATED WORKING AND THERE IS NO SALE OF FLATS. THE WORKING IS FOR UNSOLD FLATS AS PER THE LOOSE PAPERS HENCE SUCH LOOSE PAPER WHIC H IS ONLY ESTIMATED WORKING CANNOT BE MADE THE SOLE BASIS FOR ESTIMATING THE SALE PRICE ON PRESUMPTION THAT THE FLATS WERE SOLD. THEREFORE THE ASSESSING OFFICER CANNOT FRAME THE ASSESSMENT ORDER BY MAKING PRESUMPTION. THUS THE ASSESSING OFFICER RELYING O N THREE SEIZED DOCUMENTS HAS NOT ONLY ESTIMATED THE SALE PRICE OF VARIOUS FLATS FOR WHICH THE SAID DOCUMENTS WERE FOUND OUT BUT ALSO ES TIMATED AND ADJUSTED THE SAME FOR THE ENTIRE SEVEN ASSESSMENT Y EARS FOR ALL THE PROJECTS UNDERTAKEN BY THE APPELLANT WHICH CANNOT BE PERMISSIBLE UNDER THE LAW. UNDER THE CIRCUMSTANCES I HOLD TH AT THERE IS NO BASIS FOR MAKING ANY ADDITION IN THE HANDS OF THE A PPELLANT FOR ON- MONEY AND RESULTANTLY THE ADDITION MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF ON MONEY RECEIPT OF RS.96 50 613/- FOR AY 1998- 1999 IS DIRECTED TO BE DELETED. 5. FROM THE SIDE OF THE REVENUE LD.DR MR.D.C. PATWA RI APPEARED AND STRONGLY SUPPORTED THE VIEW TAKEN BY THE AO. I T WAS ARGUED THAT THE DOCUMENTS HAVE REVEALED THAT THERE WAS TRANSACTION OF ON-MONEY. THOSE PAPERS HAVE FURTHER BEEN CORROBORATED BY THE STATEM ENT OF SHRI CHIMANLAL M.SHAH THROUGH WHICH HE HAS ADMITTED THE EXISTENCE OF ON-MONEY. IN THIS REGARD HE HAS REFERRED THE SAID STATEMENT DAT ED 18/06/2003 CARRIED ON ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 15 15 UPTO 01/08/2003 RECORDED ON OATH U/S.133A OF THE A CT COPY PLACED IN THE COMPILATION RELEVANT PORTION REPRODUCED BELOW:- PAGE NO.19 ON PAGE NO.19 THE DETAILS OF SALE OF FLAT NO.204 M ADE BY SARLABEN MANSUKHBHAI PATEL WHEREIN THE FLAT HAVING AREA OF 1400 SQ.FT. IS SOLD AT THE RATE OF 601 ACCORDINGLY THE S ALE CONSIDERATION AMOUNT COMES TO RS.8 75 000/-. MOREOVER ADDING RS .26 000/- OF MAINTENANCE DEPOSIT AND RS.15000 FOR ELECTRIC METER WATER DRAINAGE CHARGES THE TOTAL AMOUNT COMES TO RS.9 18 000/- WHICH IS SHOWN THERE. OUT OF WHICH THE PAYMENT OF RS.8 90 7 25/- IS RECEIVED AND THE AMOUNT OF RS.27 275/- IS REMAINING TO BE R ECOVERED. BELOW TO IT THE DETAILS OF WORKING FOR THE PAYMENT RECEI VED IS SHOWN. THE SAID FLAT NO.A-204 OF AMARDHAM COMPLEX M/S.AMA R CORPORATION WAS SOLD TO SMT. SARLABEN MANSUKHBHAI (MANUBHAI) PATEL IN MARCH 2002. IN THE BOOKS OF ACCOUNT THE SALE PRICE FOR THIS FLAT IS SHOWN AT THE RATE OF RS.421/- PER SQ.F T. MAKING TOTAL SALE CONSIDERATION AMOUNT OF RS.5 89 401/-. ACTUALLY IN FACT THIS FLAT WAS SOLD AT RS.601/- PER SQ.FEET. THAT MEANS ON-MONEY AT THE RATE OF RS.180/- PER SQ.FEET WAS RECEIVED ON THE SALE OF T HIS FLAT BY M/S.AMAR CORPORATION. BUT THE SAME IS NOT SHOWN IN THE REGULAR BOOKS OF A/C. OF AMAR COR4PORATION AND THIS IS THE UNACCOUNTED INCOME OF M/S.AMAR CORPORATION. 5.1. THE DR HAS ALSO POINTED OUT THAT MR.CHIMANBHAI BEING THE MAIN PERSON WAS AWARE OF THE BUSINESS ACTIVITY OF THE GR OUP THEREFORE HIS STATEMENT WAS VERY IMPORTANT AND MUST NOT BE IGNORE D. THE LD.DR HAS ALSO ARGUED THAT THOSE THREE DOCUMENTS HAVE DISCLOS ED THE UNACCOUNTED ACTIVITY OF THE GROUP. HE HAS ALSO REFERRED THE ST ATEMENT OF THE PARTNER MR.BIMAL SHAH. AS PER HIS ARGUMENT THOUGH MR.BIMA L SHAH PARTNER AND MR. CHIMANLAL HAVE RETRACTED BUT THE RETRACTION WAS VERY LATE AFTER THE ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 16 16 LAPSE OF MORE THAN TWO MONTHS THEREFORE SUCH RETR ACTION HAD NO EVIDENTIARY VALUE. LD.DR HAS ALSO REFERRED A NEWLY INSERTED SECTION 292C BY FINANCE ACT 2007 WITH RETROSPECTIVE EFFECTIVE F ROM 01/10/1975. HE HAS ELABORATED THAT WHERE ANY BOOKS OF ACCOUNTS DO CUMENTS JEWELLERY AMOUNT MONEY OR OTHER VALUABLE ARTICLE IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH U/S .132 OF THE ACT THEN IT MAY BE PRESUMED THAT SUCH DOCUMENT MONEY ETC. BEL ONGED TO SUCH PERSON AND THAT THE CONTENTS OF THE DOCUMENT ARE TR UE. HE HAS CONTENDED THAT THE CONTENTS OF THE LOOSE-PAPERS WERE NOTHING BUT TRUE AND AS PER THOSE CONTENTS THE AO HAS RIGHTLY ARRIVED AT THE FIGURE O F ON-MONEY WHICH WAS TAXED IN EACH YEAR IN THE HANDS OF THE ASSESSEE. H E HAS ALSO SUPPORTED THE ACTION OF THE AO FOR EXTRAPOLATING THE ON-MONEY I N ALL THE YEARS AND IN SUPPORT HE HAS CITED COMMISSIONER OF SALES TAX VS. H.M. ESUFALI H.M. ABDULALI REPORTED AT (1973) 90 ITR 271 (SC). 6. FROM THE SIDE OF THE RESPONDENT ASSESSEE LD.AR M R.S.N.SOPRARKAR AND MS. URVASHI SHODHAN APPEARED AND SUPPORTED THE VIEW TAKEN BY THE CIT(A). THE OPENING REMARK OF LD.COUNSEL MR.SOPAR KAR WAS THAT APART FROM THE SAID THREE PAPERS NOTHING WAS FOUND IN SP ITE OF SEARCH WAS CONDUCTED. THERE WAS NO RECOVERY OF UNACCOUNTED CA SH OR JEWELLERY OR DISPROPORTIONATE ASSETS. LD. AR MR.SOPARKAR HAS EM PHASIZED THAT THE ASSESSEE AND THE ENTIRE GROUP USED TO MAINTAIN REGU LAR BOOKS OF ACCOUNTS AND THE RETURNS HAVE DULY BEEN FILED. THOSE LOOSE PAPERS HAD NOTHING TO DO WITH THE DAY-TO-DAY BUSINESS ACTIVITY OF THE ASSESS EE. LD. AR HAS MADE AN ATTEMPT TO CLARIFY THE CONTENTS OF THOSE THREE DOCU MENTS. AS FAR AS THE ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 17 17 TRANSACTION WITH SMT.SARALABEN WAS CONCERNED AS NOT ED ON PAGE 19 HE HAS MENTIONED THAT THE CORRECT TRANSACTION WAS AT THE R ATE OF 421 SQ.FT.AND THE TOTAL CONSIDERATION OF RS.5 89 401/- WAS DULY RECOR DED IN THE BOOKS OF ACCOUNTS. IF AT ALL THE REVENUE DEPARTMENT ALLEGE S THAT ON-MONEY @ RS.180 PER SQ.FT. WAS RECEIVED THEN AS PER THE SAID STATEMENT IT SHOULD REMAIN CONFINED TO THE SAID FLAT ONLY. THERE WAS NO EVIDENCE THAT THE SAID ON-MONEY OF RS.180/- WAS ALLEGEDLY RECEIVED IN RESP ECT OF REST OF THE FLATS SOLD BY THE ASSESSEE. FEW CASE LAWS WERE CITED BY THE LD.AR WERE THAT PAUL MATHEWS & SONS (2003)263 ITR 101(KER.) CIT VS. S. KHADER KHAN & SON (2008)300 ITR 157(MAD.) AND ASHOK MANILAL TH AKKAR VS. ACIT (2005) 97 ITD 361 (AHD.). LD.AR HAS ALSO REFERRED FEW DECISIONS IN RESPECT OF THE VALIDITY OF THE STATEMENT AND THE PO SITION OF LAW IN CASE OF RETRACTION AS FOLLOWS :- HEIRS AND LEGAL REPRESENTATIVES OF LATE LAXMANBHA I S.PATEL VS.CIT [2008]174 TAXMAN 206 (GUJ.) ABHI DEVELOPERS VS. ITO [2007]12 SOT 444 (AHMEDA BAD) KAILASHBEN MANHARLAL CHOKSHI V.CIT [2008]174 TAXMA N 466 (GUJ.) TDI MARKETING PVT.LTD. VS. ASST.CIT [2009] 28 SOT 215 (DELHI) 7. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE COMPILATION FILED. WE HAVE ALSO EXAMINED THE APPLICABILITY OF THE PRECEDENTS CITED ON ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 18 18 THE FACTS OF THE CASE. THE ADMITTED FACTUAL POSITI ON IS THAT CONSEQUENCE UPON THE SEARCH U/S.132 OF THE ACT CONDUCTED ON 18/ 06/2003 NO UNACCOUNTED CASH NO UNACCOUNTED ASSET NO UNACCOUN TED JEWELLERY OR INCRIMINATING MATERIAL OF LIKE NATURE WAS SEIZED. AS NOTED FROM THE ABOVE DISCUSSION THE ENTIRE ASSESSMENT PROCEEDINGS AND IMPUGNED ADDITION FOR ALL THE YEARS INVOLVED HAVE IN FACT REVOLVED AROU ND THREE LOOSE PAPERS WHICH WERE MARKED AS ANNEXURE BF-22 BEARING PAGE NO S.19. 80 & PAGE 65. THE RELEVANT DISCUSSION AND THE FINDINGS ON FA CTS CONNECTED TO THESE THREE PAGES HAVE ALREADY BEEN EXTRACTED HEREINABO VE. APART FROM THESE THREE PAGES THE AO HAS ALSO PLACED THE RELIANCE ON THE STATEMENT OF SHRI CHIMANBAHI M. SHAH. THE RELEVANT QUESTION AND ANSW ERS OF THE SAID STATEMENT HAS ALSO BEEN EXTRACTED HEREINABOVE. O NE THING IS VERY STRANGE THAT THE SEARCH WAS CONDUCTED ON 18/06/2003 AND THE STATEMENT WAS REDCORDED NOT ONLY ON THE DATE OF THE SEARCH AND BU T LATER ON SEVERAL STATEMENTS WERE RECORDED STARTING FROM 01/08/2003 T O 15/08/2003 U/S.131 OF THE I.T. ACT. IT IS ALSO NOTED THAT THROUGH A N AFFIDAVIT WHICH WAS SWORN ON 14/08/2003 HOWEVER PLACED BEFORE THE REVE NUE AUTHORITIES ON 26/09/2003 THOSE STATEMENTS WERE RETRACTED. THE RE WERE TWO PROJECTS AS MENTIONED IN THREE LOOSE PAPERS 1) M/S.AMAR JYOT APARTMENTS CONSTRUCTED BY M/S.BIMAL CONSTRUCTION STATED TO BE UNDER THE PROPRIETORSHIP OF CHIMANBHAI M.SHAH. THE OTHER PR OJECT WHICH IS UNDER DISCUSSION IS AMARDHAM DEVELOPED BY M/S.AMAR CORPO RATION THE RESPONDENT-ASSESSEE. THE CONSTITUTION OF M/S AMAR CORPORATION DISCLOSED TO US WAS SHRI BIMAL C.SHAH 40% SHARE AND SMT. ARUNABEN C. SHAH 60% SHARE. WE HAVE MENTIONED THE CONSTITUT ION OF THE ASSESSEE- FIRM BECAUSE OF THE REASON THAT ONE OF THE VEHEMENT CONTENTIONS OF LD.AR ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 19 19 WAS THE REVENUE DEPARTMENT HAD PLACED STRONG RELIA NCE ON THE STATEMENT OF SHRI CHIMANBHAI THOUGH HE WAS NOT EVEN THE PART NER IN THE FIRM. 8. THE QUESTION OF INCRIMINATING MATERIAL HAS ALSO BEEN ADDRESSED BY LD. AR. IN THE PRESENT CASE THE INCRIMINATING M ATERIAL ON WHICH THE REVENUE HAS PLACED RELIANCE ARE THREE LOOSE PAPERS MARKED AS PAGE NOS.19 80 & 65. ON THE ANALYSIS OF PAGE 19 IT WAS FOUND THAT THERE WAS A MENTION OF A FLAT WHICH WAS SOLD TO ONE SMT. SARALA BEN MANSUKHBHAI. IF THE REVENUE DEPARTMENT WANTED TO PLACE RELIANCE ON THIS PAGE THEN THE ONLY RECOURSE AVAILABLE WAS TO TREAT THE TRANSACTIO N AS UNDISCLOSED TRANSACTION WHICH WAS FOUND WRITTEN IN THE SAID LOO SE PAPER. IF WE SEE THE CONTENTS OF THE LOOSE PAPER 19 AND THE CONNECTED ST ATEMENT OF MR.CHIMANBHAI THEN IT IS EVIDENT THAT IN HIS STATEM ENT HE HAD MADE IT CLEAR THAT IF THERE WAS ON-MONEY OF RS.180/- THE SAME WAS IN RESPECT OF THIS FLAT. APART FROM THE LOOSE PAPER AND THE STATEMENT OF MR. CHIMANBHAI THERE IS NO INCRIMINATING MATERIAL THROU GH WHICH IT WAS FOUND THAT THE ON-MONEY WAS RECEIVED IN RESPECT OF T HE OTHER FLATS. THE QUESTION OF EXTRAPOLATION CAN ARISE ONLY IN A SITUA TION WHEN THE DOCUMENTS GIVE AN INDICATION THAT THERE WAS A REGULAR OCCURRE NCE IN A SYSTEMATIC MANNER. ONLY IN THAT SITUATION THERE IS A POSSIB ILITY OF EXTRAPOLATION OTHERWISE NOT. AS FAR AS OTHER TWO PAGES ARE CONCE RNED PAGE 60 & 85 BOTH OF THEM HAVE NOT BEEN MADE THE BASIS OF ANY S PECIFIC ADDITION. THROUGH PAGE 80 THE FUND FLOW THE STATEMENT WAS RECORDED AND LIKEWISE PAGE 65 WAS IN RESPECT OF A WORKING FOR OBTAINING LOAN FROM FINANCER. THE ESTIMATED CASH FLOW WAS PREPARED ON PAGE 80. T HE HYPOTHETICAL ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 20 20 WORKING OF BUSINESS PROJECTION TO RAISE THE FUNDS S HOULD NOT BE MADE THE BASIS TO ASSESS UNACCOUNTED INCOME. EVEN THE A O HAS NOT PLACED MUCH RELIANCE ON THESE TWO PAGES. THE RELIANCE OF THE A O WAS PRIMARILY ON THE STATEMENT OF MR.CHIMANBHAI AND THE NOTINGS MADE ON PAGE 19. NOW WE HAVE TO EXAMINE THE VERACITY OF THE STATEMENT OF M R. CHIMANBHAI. 9. A STATEMENT HAS ITS VALUE IN THE EYES OF LAW IF IT IS CORROBORATED BY CONNECTED EVIDENCE. AS FAR AS THE STATEMENTS BEING RECORDED UNDER THE ACT ARE CONCERNED THERE ARE TWO SITUATIONS I.E. SOMETI MES STATEMENTS IS RECORDED U/S.133A OF THE ACT AT THE TIME OF SURVEY. THE COURTS HAVE CLEARLY HELD THAT THERE IS NO EVIDENTIARY VALUE IN RESPECT OF A STATEMENT U/S.133A UNLESS IT IS SUPPORTED BY SOME MATERIAL. S ECOND SITUATION IS THAT THE ACT HAS EMPOWERED THE REVENUE TO RECORD THE STA TEMENT DURING THE COURSE OF SEARCH AND STATEMENT IS RECORDED U/S.132( 4) OF THE I.T. ACT. BECAUSE U/S132(4) OF THE ACT AS ASSESSEE IS EXAMIN ED ON OATH THEREFORE SUCH A STATEMENT HAS ALWAYS BEEN TREATED AS AN EVID ENCE AS HELD BY THE HBLE COURT. FOR REFERENCE CASE LAWS ARE ABHI DEV ELOPERS [2007]12 SOT 444 (AHD.) TDI MARKETING PVT.LTD. [2009]28 SOT 21 5 (DEL) AND PAUL MATHEWS & SONS [2003]263 ITR 101 (KER.). EVEN IT HAS BEEN HELD BY THE HBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KAIL ASHBEN MANHARLAL CHOKSHI REPORTED AT 174 TAXMANN 466 (GUJ.) THAT ME RELY ON THE BASIS OF A STATEMENT RECORDED U/S. 132(4) NO ADDITION CAN BE MADE UNTIL SOME CORROBORATIVE EVIDENCE WAS FOUND IN SUPPORT OF SUCH ADMISSION. IN THE PRESENT CASE THE AO HAS PROCEEDED TO EXTRAPOLATE THE ON-MONEY OF RS.180/- FOR REST OF THE FLATS IN RESPECTIVE YEARS. BUT THERE WAS NO MATERIAL ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 21 21 IN HIS POSSESSION TO CONCLUSIVELY DEMONSTRATE THAT IN RESPECT OF THE OTHER FLATS THE ASSESSEE HAD IN FACT CHARGED ON-MONEY F ROM THE CUSTOMERS. ONCE THE REVENUE DEPARTMENT HAS TAKEN THE EXTREME STEP OF CONDUCTING A RAID ON THIS ASSESSEE THEN IT IS EXPECTED TO UNEAR TH EVERY PENNY OF UNRECORDED MONEY BUT THE FACT IS THAT NEITHER ANY UNACCOUNTED MONEY WAS RECOVERED NOR ANY SUCH DOCUMENT WAS FOUND IN POSSES SION OF THE ASSESSEE THROUGH WHICH IT COULD BE HELD THAT THE ASSESSEE WA S IN THE PRACTICE OF CHARGING ON-MONEY ON OTHER FACTS AS WELL. 10. AS FAR AS THE GENERAL PRINCIPLE IS CONCERNED A N ADMISSION CAN BE SAID TO BE AN EXTREMELY IMPORTANT PIECE OF EVIDENT IF M ADE AS PER THE PRESCRIBED LAW. BUT SUCH AN ADMISSION CANNOT BE S AID TO BE CONCLUSIVE. IT IS OPEN FOR THE ASSESSEE TO SHOW THAT THE SAID A DMISSION WAS INCORRECT. THE SAID RETRIEVAL IS TERMED ASRETRACTIONIN LEGAL TERMINOLOGY.A RETRACTION IS ADMISSIBLE BUT IT MUST BE WITHIN A REASONABLE TI ME AND THE ONUS IS ON THAT PERSON TO ESTABLISH THAT THE IMPUGNED ADMISSIO N WAS INCORRECT. HE HAS TO PLACE CONVINCING REASON OR EVIDENCE TO SHOW THAT THE EARLIER ADMISSION WAS NOT THE CORRECT POSITION OF FACT BUT THE CORREC T POSITION WAS AS PER THE RETRACTED STATEMENT. IN THE CASE OF S. KHADER KHAN & SON(SUPRA) THE SCOPE OF SECTION 133A WAS DISPUTE HOWEVER THE FI NDING WAS THAT SOLELY ON THE BASIS OF THE STATEMENT GIVEN BY ONE OF THE PARTNERS IT IS NOT LAWFUL TO ASSESS AN INCOME. THEREFORE AS FAR AS THE PRESE NT CASE IS CONCERNED SINCE THE STATEMENT IS NOT BY THE PARTNER OF THE FI RM AND MOREOVER THE SAME WAS RETRACTED BY FILING AN AFFIDAVIT COUPLED WITH THE FACT THAT NO INCRIMINATING MATERIAL WAS FOUND THEREFORE THE VI EW TAKEN BY THE AO COULD NOT SAID TO BE PERMISSIBLE IN THE EYES OF L AW. THEREFORE WE ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 22 22 HEREBY HOLD THAT THE EXTRAPOLATION WAS INCORRECT. THE AO IS EMPOWERED TO CONFINE HIMSELF ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND MATERIAL IS TO BE TREATED AS TRUE AND C ORRECT. MEANING THEREBY THE AO IS EXPECTED TO CONFINE HIMSELF IN RESPECT OF THE SALE TRANSACTION OF FLAT NO.A/204 ALLEGED TO BE PURCHASED BY ONE SMT. SARALABEN M.PATEL. THEREFORE WE ARE NOT OF THE OPINION THAT NO ADDITI ON AT ALL IS WARRANTED IN RESPECT OF ALL THE FLATS. WE ARE NOT WITH THE VIEW TAKEN BY THE LD.CIT(A) THAT THE ENTIRE ADDITION IS TO BE DELETED. WE TH EREFORE DIRECT AO TO REINVESTIGATE THE TRANSACTION IN RESPECT OF FLAT NO .A/204 PURCHASED BY SMT. SARALABEN AND IF THE EXPLANATION OFFERED BY TH E ASSESSEE IS FOUND UNSATISFACTORY THEN THE CONSEQUENTIAL ACTION CAN B E TAKEN AS PER LAW BUT ONLY IN RESPECT OF THAT SOLITARY TRANSACTION. WITH THE RESULT REST OF THE ADDITION PERTAINING TO OTHER FLATS AS DELETED BY LD . CIT(A) IS HEREBY AFFIRMED. FOR THIS YEAR THE SAID GROUND OF THE REVENUE IS PAR TLY ALLOWED. AS FAR AS OTHER YEARS ARE INVOLVED BECAUSE WE HAVE ALREADY HELD THAT IN THE ABSENCE OF ANY COGENT EVIDENCE TH ERE WAS NO SCOPE OF EXTRAPOLATION HENCE WE HEREBY UPHOLD THE VIEW TAK EN BY THE CIT(A) RESULTANTLY FOR OTHER YEARS THE SAID GROUND OF THE REVENUE DES ERVES TO BE DISMISSED . 11. CROSS OBJECTIONS FILED BY THE ASSESSEE I.E.CO NOS. 190/AHD/2007 TO 195/AHD/2007. 11.1. GROUND NO.1 IS IDENTICAL IN ALL THE YEARS AS REPRODUCED BELOW: ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 23 23 (EXTRACTED FROM AY 1998-99) 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLD ING THAT RETRACTION OF THE STATEMENTS MADE BY THE PARTNERS O F THE APPELLANT WAS INVALID AND NOT ACCEPTABLE WITHOUT APPRECIATING THAT THE SAID STATEMENT WAS TAKEN UNDER PRESSURE AND IMMEDIATELY AFTER THE STATEMENT WAS GIVEN RETRACTION AFFIDAVIT WAS DULY AFFIRMED AND PLACED BEFORE THE AUTHORITIES AT THE FIRST GIVEN OP PORTUNITY. 11.2. WE HAVE ALREADY DISCUSSED THIS ISSUE IN ABOV E PARAS WHILE DECIDING THE REVENUES APPEAL. IN VIEW OF THE ABOVE DISCUS SION GROUND NO.1 FOR ALL THE YEARS AS RAISED IN THESE CROSS OBJECTIONS T ANTAMOUNT AS ALLOWED. 12. GROUND NO.2 FOR 1998-99 1999-2000 AND .2003- 04 READ AS FOLLOWS: 2. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ACTION OF LD. AO IN ADDING RS.40 000/- (FOR AY 98-99) RS. 10 000/- (FOR AY 1999-2000) AND RS.30 000/- (FOR AY 2003-04) BEING AMOUNT PAID TO SHRI RAJESH AKNLESHARIA. 12.1. THE AO HAS PLACED RELIANCE ON SEIZED MATERI AL MARKED AS LOOSE- PAPER -5 (BF-22 PAGE NO.65) AND MADE AN OBSERVATI ON THAT THE ASSESSEE HAD MADE A CASH PAYMENT TO AN ARCHITECT MR. RAJESHB HAI ANKLESHARIA. A STATEMENT WAS RECORDED OF MR. CHIMANBHAI SHAH ON 07 /08/2003 WHEREIN HE HAS ACCEPTED THE SAID UNACCOUNTED PAYMENTS MADE IN CASH. SINCE THE ENTRIES WERE NOT EXPLAINED HENCE THE ADDITION WAS M ADE. EVEN BEFORE LD.CIT(A) NO COGENT EVIDENCE WAS PLACED IN SUPPORT OF THE SAID CLAIM. EVEN BEFORE US THE ASSESSEE WAS UNABLE TO IMPROVE ITS CASE THEREFORE THE ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 24 24 VIEW TAKEN BY THE AUTHORITIES BELOW IS HEREBY AFFIR MED. THESE GROUNDS ARE DISMISSED. 13. REST OF THE GROUNDS IN THESE CROSS OBJECTIONS ARE EITHER CONSEQUENTIAL IN NATURE CHALLENGING THE CHARGING OF INTEREST OR G ENERAL IN NATURE THEREFORE NEED NO INDEPENDENT ADJUDICATION. I N THE RESULT ALL THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE PARTLY ALLOWED . 14. IN THE RESULT ONE OF THE APPEALS OF THE REVENU E IS PARTLY ALLOWED AND REST ARE DISMISSED. CROSS OBJECTIONS FILED BY T HE ASSESSEE ARE PARTLY ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 31.3.2011. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUD ICIAL MEMBER AHMEDABAD; DATED 31/ 03 /2011 T.C. NAIR SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPAR TMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT(A PPEALS)-II AHMEDABAD 5. THE DR AHMEDABAD BENCH.6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD ITA NOS.2036 TO 2041/AHD/2007 (BY REVENUE) & CO NOS.190 TO 195/AHD/2007 RESPECTIVELY 25 25 1. DATE OF DICTATION.. 22.3.2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER 29.3.2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR .P.S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R.P.S./P.S 31.3.2011 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.3.2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER