M/s. Sanatan Cold Storage Ltd.,, Lucknow v. Asstt. Commissioner of Income Tax,, Lucknow

ITA 232/LKW/2012 | 2006-2007
Pronouncement Date: 12-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 23223714 RSA 2012
Assessee PAN AAFCS0230G
Bench Lucknow
Appeal Number ITA 232/LKW/2012
Duration Of Justice 2 year(s) 6 month(s) 11 day(s)
Appellant M/s. Sanatan Cold Storage Ltd.,, Lucknow
Respondent Asstt. Commissioner of Income Tax,, Lucknow
Appeal Type Income Tax Appeal
Pronouncement Date 12-11-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 12-11-2014
Date Of Final Hearing 24-09-2014
Next Hearing Date 24-09-2014
Assessment Year 2006-2007
Appeal Filed On 01-05-2012
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER ITA NO.232/LKW/2012 ASSESSMENT YEAR:2006 - 07 M/S SANATAN COLD STORAGE LTD. MISHRIPUR DEPOT. KURSI ROAD LUCKNOW. PAN:AAFCS0230G VS. A.C.I.T. CENTRAL CIRCLE - I LUCKNOW. (APPELLANT) (RESPONDENT) ITA NOS.256 & 257/LKW/2012 A.YRS.:2006 - 07 & 2009 - 10 A.C.I.T. CENTRAL CIRCLE - I LUCKNOW. VS. M/S SANATAN COLD STORAGE LTD. MISHRIPUR DEPOT. KURSI ROAD LUCKNOW. PAN:AAFCS0230G (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA A.M. IN THIS BUNCH THERE ARE TWO CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE FOR THE ASSESSMENT YEAR 2006 - 07 AND THERE IS ONE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2009 - 10. ALL THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ASSESSEE BY SHRI P. K. KAPOOR C.A. REVENUE BY SHRI RANANJAY SINGH CIT D.R. DATE OF HEARING 24 /09/2014 DATE OF PRONOUNCEMENT 1 2 /1 1 /2014 2 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL FOR ASSESSMENT YEAR 2006 - 07 ARE AS UNDER: 1. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE OBJECTION RAISED BY THE APPELLANT TO THE VALIDITY OF SEARCH AND SEIZURE ACTION HAVING BEEN SEPARATELY ADJUDICATED UPON BY THE ASSESSING OFFICER NO APPEAL LIES AGAINST THE SAME. 2. BECAUSE THE OBJECTION RAISED BY THE APPELLANT HAD PERMEATED IN THE JURISDICTION OF THE ASSESSING OFFICER TO MAK E ASSESSMENT IN THE CASE OF THE APPELLANT UNDER SECTION 153A READ WITH SECTION 143(3) AND ON A DUE CONSIDERATION AND APPRECIATION OF THE CORRECT LEGAL POSITION THE 'CIT(A)' WAS UNDER THE STATUTORY OBLIGATION TO HOLD THAT THERE BEING NO VALID SEARCH IN THE CASE OF THE APPELLANT ASSESSMENT ORDER PASSED UNDER SECTION 153A READ WITH SECTION 143(3) DATED 30.12.2010 WAS VOID AB - INITIO. 3. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THAT 'THE APPELLANT WAS SUBJECTED TO SEARCH AND DOCUMENTS W ERE FOUND IN THE COURSE OF SEARCH CONTAINING TRANSACTIONS OF MONEY ADVANCED BY THE APPELLANT BESIDES UNDISCLOSED ASSETS HENCE THE PROCEEDINGS HAVE BEEN VALIDLY INITIATED U/S 153A OF THE INCOME - TAX ACT 1961 AND IN UPHOLDING THE VALIDITY OF ASSESSMENT ORDE R DATED 30.12 2010 CAPTIONED AS 'ORDER U/S 153A/143(3) OF THE INCOME - TAX ACT 1961' WITHOUT PREJUDICE TO THE AFORESAID 4. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN UPHOLDING AN ADDITION OF RS.70 47 656/ - OUT OF AN ADDITION OF RS.75 LAKHS AS H AD BEEN MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADVANCES GIVEN TO VARIOUS PERSONS AS FOUND RECORDED IN ANNEXURE - A - 13 & A - 14 AS HAD BEEN PREPARED BY THE AUTHORIZED OFFICERS DURING THE COURSE OF SEARCH AND SEIZURE ACTION AS HAD COMMENCED ON 19.11.2008. 5. BECAUSE WITHOUT CAUSING IN ANY MANNER ANY PREJUDICE TO THE CONTENTION THAT THE SEARCH AND SEIZURE ACTION ITSELF WAS NOT VALID THE ADVANCES FOUND RECORDED IN ANNEXURES - A - 13 3 & A - 14 STOOD FULLY COVERED BY THE INCOME OF RS.75 LAKHS AS HAD BEEN DECLARED BY SHRI K.N.SINGH PATEL ONE OF THE DIRECTORS OF THE APPELLANT COMPANY AND NO PART OF THE ADVANCES AGGREGATING RS.70 47 656/ - COULD HAVE BEEN TREATED A S UNEXPLAINED INVESTMENT ASSESSABLE IN THE HANDS OF THE APPELLANT. 6. BECAUSE ON A DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE PARTICULARLY THAT; ( A ) THE SEARCH AND SEIZURE ACTION (AS HAS BEEN REFERRED TO IN THE ORDERS PASSED BY THE AUTHORITIES BELOW) COVERED A NUMBER OF PERSONS/PREMISES AS MENTIONED IN THE STATEMENT OF FACTS ACCOMPANYING THE MEMO OF APPEAL; ( B ) DURING THE COURSE OF SEARCH AND SEIZURE ACTION SHRI K.N. SINGH PATEL AS HEAD OF PATEL GROUP (NOMENCLATURE ASSIGNED BY THE INCOME - TAX DEPARTMENT ITSELF) HAD GIVEN A STATEMENT UNDER SECTION 132(4); ( C ) IN THE STATEMENT SO MADE BY HIM HE HAD DISCLOSED AN INCOME OF RS.75 LAKHS IN THE ASSESSMENT YEAR 2006 - 07 ALONE ON ACCOUNT OF ADVANCES MADE TO VARIOUS PERSONS; ( D ) IN RELATION TO THE STATEMENT SO GIVEN BY SHRI K.N. SINGH PATEL HE WAS SUBJECTED TO CROSS EXAMINATION ALSO BY THE OFFICERS OF THE INVE STIGATION WING; ( E ) ON THE BASIS OF STATEMENT SO GIVEN (AND ACCEPTED ALSO BY THE AUTHORISED OFFICERS OF THE INVESTIGATION WING AFTER DUE CROSS EXAMINATION) SHRI K.N. SINGH PATEL HAD FILED HIS RETURNS FOR VARIOUS YEARS WHEREIN THE INCOME DECLARED IN THE STATEM ENT UNDER SECTION 132(4) HAD DULY BEEN DISCLOSED AND DUE TAXES WERE PAID; AND ( F ) THE RETURNS SO FILED BY SHRI K.N. SINGH PATEL WERE SUBJECTED TO ASSESSMENT ALSO IN HIS HANDS; THE AUTHORITIES BELOW SHOULD HAVE HELD THAT ANY ITEM OF INCOME/EXPENDITURE AS COVER ED BY THE SAID STATEMENT (AS GIVEN BY SHRI K.N. SINGH PATEL) COULD NOT HAVE BEEN CONSIDERED IN THE HANDS OF THE APPELLANT (OR ANY OTHER PERSON FALLING IN THE GROUP). 7. BECAUSE DIRECTION GIVEN BY THE 'CIT(A)' (AS CONTAINED IN PARA 3.2.4 OF THE IMPUGNED OR DER) READING AS 'ASSESSING OFFICER HOWEVER SHALL BE FREE TO TAKE ANY ACTION IN ACCORDANCE WITH THE LAW FOR ASSESSING THE INTEREST ACCRUED IN THE F.Y. RELEVANT TO A. Y. 2007 - 08' ARE WHOLLY ERRONEOUS 4 AS BEING BEYOND THE SCOPE OF SUBJECT MATTER OF APPEAL B EFORE HIM. 8. BECAUSE THE ADVANCES HAVING BEEN MADE BY SHRI K.N. SINGH PATEL AS PER HIS ADMISSION AND NO EVIDENCE TO THE CONTRARY BEING BROUGHT ON RECORD INCOME ARISING THERE FROM WAS ALSO LIABLE TO BE ASSESSED IN HIS HANDS AND IN FACT IT STOOD SO ASSESSED ALSO IN THE ASSESSMENTS MADE IN HIS CASE SIMULTANEOUSLY AND THE ADDITION OF RS.1 05 715 / - ON ACCOUNT OF INTEREST AS HAS BEEN SUSTAINED BY THE 'CIT(A)' IS WHOLLY ERRONEOUS. 9. BECAUSE THE ORDER APPEALED AGAINST TO THE EXTENT THE SAME HAS BEEN IMP UGNED IN THIS APPEAL IS CONTRARY TO THE FACTS LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. ALL THESE APPEALS WERE FILED IN 2012 AND WERE FIXED FOR HEARING ON VARIOUS DATES BUT THE HEARING WAS ADJOURNED SEVERAL TIMES MAINLY ON THE REQUEST OF LEARNED A.R. OF THE ASSESSEE. SINCE 01/07/2014 THE HEARING WAS ADJOURNED ON SIX OCCASIONS ON THE REQUEST OF THE ASSESSEE AND IT WAS MADE CLEAR ON EACH OCCASION THAT THIS IS THE LAST OPPORTUNITY. IN SPITE OF THIS ON THE LAST DAT E OF HEARING ON 24/09/2014 LEARNED A.R. OF THE ASSESSEE REQUESTED FOR ADJOURNMENT BUT THIS TIME THE ADJOURNMENT WAS NOT GRANTED AND THE LEARNED D.R. OF THE REVENUE WAS HEARD. LEARNED A.R. OF THE ASSESSEE REQUESTED THE BENCH TO GIVE SOME TIME TO FILE WRI TTEN SUBMISSIONS. SUCH TIME WAS ALLOWED AND ACCORDINGLY LEARNED A.R. OF THE ASSESSEE HAS SUBMITTED WRITTEN SUBMISSIONS AND THE SAME ARE BEING CONSIDERED FOR DECIDING THESE APPEALS. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES B ELOW IN RESPECT OF ASSESSEES APPEAL AND REGARDING THE REVENUES APPEAL S HE SUPPORTED THE ASSESSMENT ORDER. 5. IN THE APPEAL OF THE ASSESSEE AS PER GROUND NO. 1 TO 3 THE ASSESSEE HAS RAISED A TECHNICAL OBJECTION REGARDING VALIDITY OF INITIATION OF PROC EEDINGS U/S 5 153A COUPLED WITH VALIDITY OF SEARCH & SEIZURE ACTION U/S 132(1). THE WRITTEN SUBMISSIONS OF LEARNED A.R. OF THE ASSESSEE ON THIS ISSUE ARE AS UNDER: 3. THERE IS NO GAINSAYING THAT PROVISIONS OF SECTION 153A BECOME APPLICABLE ON THE ASSESSEE CONCERNED BEING SUBJECTED TO SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) AND SUCH SEARCH AND SEIZURE ACTION SHOULD BE VALID IN THE EYES OF LAW. IF ANY AUTHORITY IS NEEDED IT IS FOUND IN THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF AJIT JA IN VS. UNION OF INDIA & OTHERS REPORTED IN (2000) 242 ITR 302 WHEREIN AT PAGES 312/313 THEIR LORDSHIPS HAVE OBSERVED AND HELD AS UNDER: - AS THE TITLE OF THE SAID CHAPTER SUGGESTS THESE ARE SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES AND THEREFORE A SEARCH UNDER SECTION 132 IS A PRE - REQUISITE FOR INVOKING THE PROVISIONS OF THE SAID CHAPTER. IT IS AXIOMATIC THAT SEARCH UNDER SECTIO N 132 AS CONTEMPLATED IN THE CHAPTER HAS TO BE A VALID SEARCH. AN ILLEGAL SEARCH IS NO SEARCH AND AS A NECESSARY COROLLARY IN SUCH A CASE CHAPTER XIV - B WOULD HAVE NO APPLICATION . SINCE IN THE INSTANT CASE WE HAVE COME TO THE CONCLUSION THAT THE SEARCH CONDUCTED ON JANUARY 11 1996 WAS WITHOUT JURISDICTION AND WAS THUS VOID AB INITIO THE IMMINENT CONSEQUENCE WOULD BE THAT THE PROVISIONS OF CHAPTER XIV - B CANNOT BE INVOKED AGAINST THE PETITIONER PURSUANT TO THE SAID SEARCH OF HIS ROOM AT CHENNAI. CONS EQUENTLY THE BLOCK ASSESSMENT ORDER DATED JANUARY 31 1997 CANNOT BE SUSTAINED. WE ACCORDINGLY QUASH THE SAME. 4. NOW THE QUESTION THAT REMAINS TO BE CONSIDERED IS AS TO WHETHER SEARCH AND SEIZURE ACTION AS HAD COMMENCED IN THE GROUP HEADED BY SRI K.N. SINGH PATEL ON 19.11.2008 IS VALID SO AS TO IMPART LEGITIMACY TO THE INITIATION OF PROCEEDINGS UNDER SECTION 153A B Y ISSUE OF NOTICE THERE UNDER . IT IS A MATTER OF RECORD THAT SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) THAT HAD COMMENCED ON 19.11.2008 COVERED RESIDENTIAL PREMISES OF SRI K.N. SINGH PATEL HEAD OF PATEL GROUP AND HIS FAMILY MEMBERS (WITH WHICH SRI K.N. SINGH PATEL AND HIS FAMILY MEMBERS WERE ASSOCIATED IN ONE WAY OR ANOTHER) AS ALSO PREMISES OF VARIOUS BUSINESS AND OTHER ENTITIES IN TERMS OF WARRANT OF AUTHORIZATION ISSUED BY DIRECTOR OF INCOME - TAX (INV.) KANPUR RELEVANT PARTICULARS BEING AS UNDE R: - 6 SL. NO. WARRANT IN THE CASE OF (AS PER INFORMATION GATHERED) PLACES SUBJECTED TO SEARCH (I) SRI K.N SINGH PATEL O.N SINGH PATEL AND MAHESH PATEL FORM HOUSE CHANDRIKA DEVI MANDIR ROAD BAKSHI KA TALAB LUCKNOW (II) OM SINGH PATEL MAHESH PATEL AND K.N SINGH PATEL FORM HOUSE IIM ROADLUCKNOW (III) SRI K.N SINGH E - 3727 SECTOR E RAJAJI PURAM LUCKNOW (IV) SRI RAJ N PATEL KRISHNA FOOD PRODUCTS AND SMT. REKHA UTTAM 36 GAURA BAGH KURSI ROAD LUCKNOW (V) M/S HARSINGAR TEA (INDIA) PVT. LTD. 35 GAURA BAGH KURSI ROAD LUCKNOW (VI) M/S SANATAN COLD STORAGE LTD. GARHI TIRAHA KURSI ROAD LUCKNOW (VII) SHRI RAM AGENCIES (SRI RAJNISH TEWARI) 106 GAURA BAGH KURSI ROAD LUCKNOW (VIII) PANKAJ VERMA SMT. RAJNEE SIMGH PATEL HIG - 9 SECTOR - L KURSI ROAD ALIGANJ LUCKNOW (IX) K.N. SINGH PATEL MAHESH PATEL 113 M.M.B COLONY DALIGANJ LUCKNOW (X) PATEL PAN PRODUCTS LTD. 33 34 37 - 38 GAURA BAGH KURSI ROAD LUCKNOW (XI) SRI K.N SINGH PATEL SMT. SHARDA SINGH PATEL OM SINGH PATEL AND ANJU PATEL E - 3555 E3557 RAJAJIPURAM LUCKNOW (XII) HARSINGAR GROUP OF CASES HARSINGAR GUTKA (P) LTD. HARSINGAR TEA INDIA (P) LTD. ETC. WASIM COMPLEX - 215/56 - SUBHASH MARG LUCKNOW (XIII) K.K. SHUKLA 62 - B ASHOK NAGAR LUCKNOW (XIV) MAHESH SINGH PATEL ANITA SINGH O.N . SINGH PATEL AND K.N. SINGH PATEL HIG - 114 SECTOR - E ALIGANJ LUCKNOW (EMPHASIS ADDED) AND THE APPELLANTS NAME APPEARS AT SERIAL NO.(VI) ABOVE. 5. ALL ALONG SRI K.N. SINGH PATEL AND OTHER PERSONS WHICH INCLUDED THE APPELLANT ALSO HAD BEEN CONTENDING THAT SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) WAS NOT VALID AND CONSEQUENTLY INITIATION OF PROCEEDINGS UNDER SECTION 153A WAS BAD IN LAW. IT H AD ALSO BEEN THE CASE OF THE APPELLANT THAT FOR THE REASON THAT VALIDITY OF ASSESSMENT UNDER SECTION 153A WAS DEPENDENT ON VALIDITY OF SEARCH AND SEIZURE ACTION ITSELF THE MATTER COULD BE LOOKED INTO BY THE ASSESSING OFFICER AND LATER ON 7 IN APPEAL THAT MAY BE FILED AGAINST THE ORDER OF THE ASSESSING OFFICER BY THE APPELLATE AUTHORITIES ALSO. 6. THIS WAS THE VIEW EXPRESSED BY THE HONBLE ITAT ALLAHABAD BENCH ALLAHABAD IN ITA NO.1390(ALLD)/1997 IN THE CASE OF DR. A.K. BANSAL VS. ACIT ALLAHABAD. HOWEV ER THE SAID VIEW HAS SINCE BEEN SUPERSEDED BY HONBLE ALLAHABAD HIGH COURT VIDE ITS JUDGMENT AND ORDER DATED 05.04.2013. IN VIEW OF THE SAID DECISION THE ASSESSEE/APPELLANT VERY CANDIDLY ADMITS THAT THE LEGAL GROUNDS BEING GROUNDS NO.1 2 AND 3 NO LONGE R SURVIVE FOR CONSIDERATION BY THE HONBLE TRIBUNAL. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON THIS ISSUE IN PARA 6 OF THE WRITTEN SUBMISSIONS IT IS FAIRLY CONCEDED BY LEARNED A.R. OF THE ASSESSEE THAT AS PER THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT DATED 05/04/2013 IT WAS HELD THAT THE ISSUE REGARDING VALIDITY OF SEARCH CANNOT BE EXAMINED BY THE TRIBUNAL AND LEARNED A.R. OF THE ASSESSEE HAS FAIRLY ADMITTED THAT AS PER TH IS JUDGMENT THE LEGAL GROUND NOS. 1 TO 3 NO LONGER SURVIVE FOR CONSIDERATION BY THE TRIBUNAL. HENCE THESE GROUNDS ARE REJECTED . 7 . REGARDING THE SECOND ISSUE I.E. REGARDING ADDITION OF RS.7 5 LAC S WHICH WAS REDUCED TO RS.70 47 656/ - BY CIT(A) THE WRITTEN SUBMISSIONS OF LEARNED A.R. OF THE ASSESSEE ARE AS UNDER: 7. BEFORE DWELLING UPON THE SAME THE ASSESSEE/APPELLANT BEGS TO REFER TO THE OVERALL BACKGROUND OF THE CASE. THE PERSONS/BUSINES S ENTITIES AS HAVE BEEN REFERRED TO IN PARA 4 ABOVE WERE CONTROLLED BY SRI K.N. SINGH PATEL WHOSE FAMILY TREE GIVEN HEREUNDER: - KAILASH NATH SINGH PATEL (BORN ON 01.10.1949) SMT. SHARDA SINGH PATEL (WIFE) MS. REKHA MAHESH SINGH OM NARAIN MS. RAJNI PATEL (DAUGHTER BORN PATEL (ELDER SON SINGH PATEL (DAUGHTER BORN ON ON 14.09.70 BORN ON (2 ND SON BORN 15.08.1980 (SINCE SINCE MARRIED ) 18.02.1974) ON 03.02.1979) MARRIED) RAJ UTTAM SMT. ANITA SINGH ANJU SINGH PANKAJ VERMA (HUSBAND) (WIFE) (WIFE) (HUSBAND) 8 AND HE HAD BEEN TREATED AS A KEY PERSON EVEN BY THE INCOME TAX DEPARTMENT DURING THE COURSE OF SEARCH AND IN POST SEARCH ERA. 8. DURING THE COURSE OF SAID SEARCH AND SEIZURE ACTION ITSELF (WHILE TH E SEARCH PROCEEDINGS WERE CONTINUING) WHICH COVERED THE FAMILY MEMBERS OF SRI K.N. SINGH PATEL AS AFORESAID AS ALSO VARIOUS BUSINESS ENTITIES WITH WHICH SUCH FAMILY MEMBERS WERE INTERESTED/ASSOCIATED IN ONE WAY OR ANOTHER A STATEMENTS DECLARING ADDITIONA L INCOME OF RS.TEN CRORES (FOR THE GROUP AS A WHOLE) WAS GIVEN BY SRI MAHESH SINGH PATEL. THE STATEMENTS SO GIVEN UNDER SECTION 132(4) DURING THE COURSE OF SEARCH AND SEIZURE ACTION WAS SOUGHT (BY THE AUTHORISED OFFICERS THEMSELVES) TO BE RATIFIED BY SRI OM NARAIN SINGH PATEL OTHER FAMILY MEMBERS ALSO (WHO HAD BEEN INTERESTED IN/ASSOCIATED WITH VARIOUS BUSINESS ENTITIES AS MENTIONED ABOVE. INCIDENTALLY S/SRI MAHESH SINGH PATEL AND OM NARAIN SINGH PATEL ARE THE DIRECTORS IN THE APPELLANT COMPANY . 9. AFTER PERUSAL OF THE SEIZED MATERIAL AND IN CONTINUATION WITH THE STATEMENTS REFERRED TO ABOVE SRI K.N. SINGH PATEL WHO HAD BEEN TREATED AS KEY PERSON BY THE AUTHORISED OFFICERS THEMSELVES HAD SUBMITTED A SWORN STATEMENT DATED 25.02.2009OWNING THE SAID DISCL OSURE OF RS. TEN CRORES WHICH CONTAINED ASSESSEE WISE AND ASSESSMENT YEARWISE BREAKUP OF THE SAID SUM OF RS.TEN CORES COPY OF WHICH APPEARS ON PAGES 47 TO 59 OF THE PAPER BOOK SUBMITTED ON 15.09.2014. IN THIS RESPECT SOME PARAS WHICH ARE IMMEDIATELY RELE VANT ARE REPRODUCED HEREUNDER: - 3. THAT AS FAR AS THE DEPONENT HIMSELF IS CONCERNED HE HAS BEEN CARRYING ON THE DIVERSIFIED BUSINESS AND OTHER ACTIVITIES IN CONTINUATION WITH THE ACTIVITIES THAT WERE BEING CARRIED ON BY HIM AT HIS NATIVE PLACE IN DISTRI CT KANNAUJ EVER SINCE HE HAD SHIFTED FROM THERE TO LUCKNOW IN EARLY 1980S. XXXX XXXX XXXX 8. THAT DURING THE COURSE OF SAID SEARCH AND SEIZURE ACTION SRI MAHESH SINGH PATEL ELDER SON OF THE DEPONENT GAVE A STATEMENT WHEREBY AN ADDITIONAL INCOME OF RS.10 CRORES (TEN CRORES) WAS AGREED TO BE DISCLOSED ON BEHALF OF VARIOUS PERSONS. A COPY OF THE SAID STATEMENT DATED 19.11.2008 IS ENCLOSED AND THE SAME HAS BEEN MARKED AS ANNEXURE I HERETO. 9. THAT THE AUTHORISED OFFICERS SOUGHT FOR RATIFICATION OF THE SAID STATEMENT FROM OTHER FAMILY MEMBERS ALSO NAMELY 9 (I) SRI OM NARAIN SINGH PATEL (SECOND S ON OF THE DEPONENT) (II) SMT. ANITA SINGH WIFE OF SRI MAHESH SINGH PATEL AND (III) SMT. ANJU SINGH WIFE OF SRI OM NARAIN SINGH PATEL. COPIES OF THE SAID STATEMENTS ARE ENCLOSED AND THE SAME HAVE BEEN MARKED AS ANNEXURE II III& IV HERETO. XXXX XXXX XXXX 11. THAT LOOKING TO THE FACT THAT THE DEPONENT HIMSELF HAS BEEN INSTRUMENTAL IN SETTING UP VARIOUS BUSINESS ENTITIES AND /OR CREATING VARIOUS SOURCES OF INCOME ACQUISITION OF CAPITAL ASSETS ETC AND HE HIMSELF HAS BEEN PLAYING A PIVOTAL ROLE IN RUNNING AND MANAGING SUCH BUSINESS ENTITIES/SOURCES OF INCOME AND INVESTMENTS APPEARING IN THE NAMES OF VARIOUS BUSINESS AND OTHER ENTITIES INDIVIDUALS GROUP OF INDIVIDUALS AND IN KEEPING WITH LETTER AND SPIRIT OF THE STATEMENTS REFERRED TO IN PARAS 8 9 & 10 HEREINFORE THE DEPONENT HIMSELF HAS OWNED THE SAID DISCLOSURE OF INCOME OF RS.10 CRORES (TEN CRORES) AND HE UNDERTAKES AND AGREES TO PAY TAXES AS ARE PAYABLE WITH REFERENCE TO THE SAME. 12. THAT IN THIS RESPECT IT IS CLARIFIED THAT PURSUANCE OF THE SAID UNDERTAKING THE DEPONENT HIMSELF HAD ALREADY ARRANGED FOR PAYMENT OF TAXES AGGREGATING RS.1 CRORE THROUGH FOUR SEPARATE CHEQUES AS PER PARTICULARS GIVEN BELOW: - SL. NO. CHEQUE NO. DATE AMOUNT (RS.) (I) 836761 15.12.2008 25 00 000 (II) 836763 25.12.2008 25 00 000 (III) 836762 05.01.2009 25 00 000 (IV) 836764 25.01.2009 25 00 000 WHICH HAVE BEEN DRAWN ON HIS OWN BANK ACCOUNT NO. 2410000100132967 AT PUNJAB NATIONAL BANK RAKABGANJ. 13. THAT THE PRESENT STATEMENT IS BEING GIVEN UNDER SECTION 132(4) OF THE ACT AND IS OF CLARIFICATORY NATURE OF THE STATEMENTS/RECTIFICATION REFERRED IN PARAS 9 10 & 11 AND THE SAID STATEMENTS RECTIFICATIONS SHOULD BE DEEMED TO HAVE BEEN TELESCOPED IN THE PRE SENT STATEMENT. 10 14. THAT AS FAR AS THE MANNER IN WHICH THE SAID INCOME AGGREGATING RS.10 CRORES (TEN CRORES) HAS BEEN EARNED IS GIVEN HEREUNDER: - (I) THE DEPONENT HAILS FROM DISTRICT KANNAUJ AND WHILE LIVING IN THAT AREA HE HAD DEVELOPED STRONG LINKAGE WITH THE RURAL CLASS AND ALSO WITH THE SMALL TIME PERFUMERS OPERATING IN THAT REGION; ( II ) DURING THE COURSE OF HIS ASSOCIATION WITH SUCH CLASS OF PEOPLE HE HAS BEEN RENDERING ASSISTANCE TO THEM IN SELLING THEIR PRODUCTS AT FAIR PRICE. ALTHOUGH SUCH SERVICES WERE BEING RENDERED ON HUMANITARIAN GROUND AND OUT OF CONCERN FOR UPLIFTMENT OF THE BACKWARD CLASS OF THE SOCIETY AS A WHOLE WITHOUT THERE BEING ANY COMMERCIAL ANGLE INVOLVED IN THE SAME THE DEPONENT HAS BEEN OCCASIONALLY GETTING GIFTS IN CASH AND/OR IN KIND FROM THE PERSONS OF THAT STRATA OUT OF THEIR SENSE OF GRATITUDE FOR THE DEPONENT; ( III ) AT THAT STAGE HE HAD AN OPPORTUNITY TO INTERACT WITH SMALL TIME PERFUMERS AND ON ACCOUNT OF SUCH AN INTERACTION HE HAD DEVELOPED A VERY STRONG SENSE FOR P ROCESSING OF HERBS BLENDING MIXING AND RE - MIXING OF PERFUMES AND PERFUMERY PRODUCTS AND IN ORDER TO TRY HIS LUCK IN THIS LARGER FIELD HE SHIFTED TO LUCKNOW IN EARLY 1980S AND CONTINUED THE ACTIVITIES THAT WERE BEING CARRIED ON BY HIM WHILE AT KANNAUJ THIS TIME IN A MUCH WIDER AREA AND DIVERSIFIED FIELD. ( IV ) AFTER HE GOT SETTLED AT LUCKNOW HE CONTINUED TO ASSIST THE INHABITANTS OF HIS NATIVE PLACE IN THE MANNER MENTIONED ABOVE AND IN LIEU OF SUCH ASSISTANCE HE HAS BEEN GETTING GENEROUS GIFTS FROM LARGE N UMBER OF THE PERSONS WHO FELT BENEFITED BOTH SOCIALLY AS WELL AS ECONOMICALLY BY THE ADVICE AND ASSISTANCE RENDERED BY THE DEPONENT. ALL THESE SOURCES TAKEN TOGETHER CONSTITUTE THE MANNER IN WHICH THE DEPONENT GOT ENRICHED TO THE EXTENT OF THE DISCLOSU RE OF RS.10 CRORES (TEN) AS MADE DURING THE COURSE OF SEARCH THAT HAD COMMENCED ON 19.11.2008. 19. THAT THE ADDITIONAL INCOME AS AFORESAID HAS BEEN SURRENDERED ON THE STIPULATIONS THAT: - 11 I ) THE INCOME SO DISCLOSED BY THE DEPONENT SHOULD BE TREATED TO COVER THE EFFECT OF ALL SUCH MATERIAL /INFORMATION IN WHATEVER FORM THAT HAD BEEN FOUND DURING THE COURSE OF SEARCH/SURVEY AND/OR THAT MAY BE FOUND TO BE SO RELATED LATER TO THE SAID SEARCH/SURVEY IN PATEL GROUP AS A WHOLE THAT HAD COMMENCED ON 19.11.2008; XXXX XXXX XXXX 10. IN THE SAID SWORN STATEMENT ASSESSMENT YEAR WISE BREAKUP OF ADDITIONAL INCOME AS ALSO PARTICULARS OF INCOME/INVESTMENT AS COVERED BY THE SAID DISCLOSURE WERE GIVEN AS MAY BE SEEN FROM PARA 15 OF THE SWORN STATEMENT AS REPRODUCED HEREINBELOW: - (A) FINANCIAL YEAR 2002 - 03 SL. NO. NAME HEAD OF EXPENDITURE/INVESTMENT ETC. RS. (I) ANJU SINGH CONSTRUCTION & ACQUISITION OF CAPITAL ASSETS AT GAURA BAGH KURSI ROAD LUCKNOW 75 00 000 (II) ANJU SINGH & MAHESH SINGH CONSTRUCTION & ACQUISITION OF CAPITAL ASSETS AT GAURARA BAGH KURSI ROAD LUCKNOW 22 00 000 OTHER UNEXPLAINED INVESTMENT/EXPENDITURE ETC. 2 00 000 TOTAL 99 00 000 (B) FINANCIAL YEAR 2003 - 04 SL. NO. NAME HEAD OF EXPENDITURE/INVESTMENT ETC. RS. (I) MAHESH SINGH PATEL CONSTRUCTION & ACQUISITION OF CAPITAL ASSETS AT FARM HOUSE CHANDRIKA DEVI ROAD. 70 00 000 (II) OTHER UNEXPLAINED INVESTMENT/EXPENDITURE ETC. 3 00 000 TOTAL 73 00 000 (C) FINANCIAL YEAR 2004 - 05 SL. NO. NAME HEAD OF EXPENDITURE/INVESTMENT ETC. RS. (I) OTHER UNEXPLAINED INVESTMENT/EXPENDITURE ETC. 5 00 000 TOTAL 5 00 000 (D) FINANCIAL YEAR 2005 - 06 SL. NO. NAME HEAD OF EXPENDITURE/INVESTMENT ETC. RS. (I) SMT. RAJNI PATEL CONSTRUCTION & ACQUISITION OF CAPITAL ASSETS AT GAURA BAGH KURSI ROAD LUCKNOW 30 00 000 (II) ANJU SINGH LAND AT AADAR KHERA BKT 3 00 00 12 MEGHA WORKSHOP 2 00 000 (III) SANATAN COLD STORAGE LTD. LOAN FARMERS 75 00 000 OTHER UNEXPLAINED INVESTMENT/EXPENDITURE ETC. 3 00 000 TOTAL 1 13 00 000 (E) FINANCIAL YEAR 2006 - 07 SL. NO. NAME HEAD OF EXPENDITURE/INVESTMENT ETC. RS. (I) OM NARAIN SINGH LAND OF FARM HOUSE IIM ROAD 2 00 000 (II) PANKAJ VERMA LAND AT AMRAPALI ROAD HARDOI ROAD 5 00 000 (III) OTHER UNEXPLAINED INVESTMENT/EXPENDITURE ETC. 3 00 000 TOTAL 10 00 000 (F) FINANCIAL YEAR 2007 - 08 SL. NO. NAME HEAD OF EXPENDITURE/INVESTMENT ETC. RS. (I) ANJU SINGH CONSTRUCTION & ACQUISITION OF CAPITAL ASSETS AT GAURA BAGH KURSI ROAD LUCKNOW 90 00 000 (II) MAHESH PATEL & ANITA SINGH CONSTRUCTION & ACQUISITION OF CAPITAL ASSETS AT FAIZABAD ROAD. 50 00 000 (III) OTHER UNEXPLAINED INVESTMENT/EXPENDITURE ETC. 10 00 000 TOTAL 1 50 00 000 11. IT IS NOW A MATTER OF RECORD THAT IN RELATION TO THE SAID SWORN STATEMENT DATED 25.02.2009SRI K.N. SINGH PATEL WAS SUBJECTED TO CROSS EXAMINATION BY THE AUTHORITIES OF THE INVESTIGATION WING (BEFORE WHOM SRI MAHESH SINGH PATEL AND OTHERS HAD GIVEN A STATE MENT). COPY OF THE SAID CROSS EXAMINATION DATED 25.03.2009 APPEARS ON PAGES 60 AND 61 OF THE PAPER BOOK. IN SHORT THE APPELLANTS CONTENTION IS THAT THE STATEMENT OF ADDITIONAL INCOME READ WITH SWORN STATEMENT DATED 25.02.2009 GIVEN BY SRI K.N. SINGH PAT EL MET WITH FULL ACCEPTABILITY FROM THE INCOME TAX DEPARTMENT AFTER DUE CROSS EXAMINATION. 12. AS FAR AS SRI K.N. SINGH PATEL THE DEPONENT IN THE SWORN AFFIDAVIT DATED 25.02.2009 IS CONCERNED HE TOO HAD ADHERED TO THE STATEMENT SO GIVEN AND ACCORDINGLY HAD FILED THE RETURNS UNDER SECTION 153A FOR ALL THE SIX ASSESSMENT YEARS (FOR WHICH PROCEEDI NGS UNDER SECTION 153A HAD BEEN INITIATED) AND ALSO FOR THE ASSESSMENT YEAR 2009 - 10 WHICH WAS THE YEAR OF SEARCH WHEREIN THE INCOME AGGREGATING RS. TEN CRORES REPRESENTING UNDISCLOSED INCOME/INVESTMENT HAD DULY BEEN DISCLOSED AND TAXES 13 AS WORKED OUT TO BE PAYABLE THEREON WERE DULY PAID. IN RELATION TO THE INCOME SO DISCLOSED BY SRI K.N. SINGH PATEL HE HAD BEEN SUBJECTED TO ASSESSMENT ALSO BY THE ASSESSING OFFICER (THE ASSESSING OFFICER WHO HELD JURISDICTION IN THE CASE OF THE APPELLANT HAD THE JURISDICT ION IN THE CASE OF SRI K.N. SINGH PATEL ALSO). 13. SO FAR AS ASSESSMENT YEAR 2006 - 07 (YEAR UNDER APPEAL) IS CONCERNED [COPY OF THE ASSESSMENT ORDER PASSED UNDER SECTION 153A/143(3) IN THE CASE OF SRI K.N. SINGH PATEL APPEARS AT PAGES 67 TO 87 OF THE PAPER BOOK] RELEVANT PORTION OF WHICH IS REPRODUCED HEREUNDER: - THE VARIOUS DETAILS AND DOCUMENTS SUBMITTED BY THE COUNSEL OF ASSESSEE HAVE BEEN EXAMINED AFTER EXAMINATION OF ALL DETAILS AND DOCUMENTS INCLUDING THE SEIZED /IMPOUNDED DOCUMENTS THE ASSES SMENT IN THE CASE OF ASSESSEE FOR THIS YEAR IS COMPLETED ON TOTAL INCOME OF RS.1 150 04 980/ - THE INCOME SHOWN IN THE RETURN WAS ACCEPTED ALSO;BREAK OF THE SAID SUM OF RS.1 15 04 980/ - BEING AS UNDER: - RS. (A) INCOME SHOWN EAR LIER IN THE RETURNED FILED UNDER SECTION 139 2 04 980 (B) INCOME DISCLOSED IN THE RETURN FILED UNDER SECTION 139 AS PER BREAK GIVEN HEREUNDER: - SL. NO. NAME HEAD OF EXPENDITURE/INVESTMENT ETC. RS. (I) SMT. RAJNI PATEL CONSTRUCTION & ACQUISITION OF CAPITAL ASSETS AT GAURA BAGH KURSI ROAD LUCKNOW 30 00 000 (II) ANJU SINGH LAND AT AADAR KHERA BKT 3 00 00 MEGHA WORKSHOP 2 00 000 (III) SANATAN COLD STORAGE LTD. LOAN FARMERS 75 00 000 OTHER UNEXPLAINED INVESTMENT/EXPENDITURE ETC. 3 00 000 TOTAL 1 13 00 000 THE PARTICULARS MENTIONED AT SL. NO.(B) ABOVE TALLY FULLY WITH PARA 15(D) OF THE SWORN STATEMENT DATED 25.02.2009 AS HAS BEEN REPRODUCED IN PARA 10 ABOVE. 14. IT IS SIGNIFICANT TO MENTION THAT SRI K.N. SINGH PATEL HAD ACCEPTED THE SAID ASSESSMENT ORDER AND FOR THE ASSESSMENT YEAR 2006 - 07 (AND SO ALSO FOR VARIOUS ASSESSMENT YEARS TO WHICH THE SAID 14 STATEMENT PERTAINED) THERE WAS NO APPEAL FILED BY HIM ON THE QUANT UM SIDE OF THE ASSESSMENT. 15. THUS IT BECOMES EVIDENT THAT THE SUM OF RS.75 LACS AS HAD BEEN GIVEN BY WAY OF ADVANCES TO THE FARMERS THROUGH SANATAN COLD STORAGE LTD (THE APPELLANT HERE) HAD DULY BEEN OWNED BY SRI K.N. SINGH PATEL AND ON THE INVESTMENT S O OWNED BY HIM HE HAD PAID TAXES ALSO. 16. IT IS VERY SIGNIFICANT TO MENTION HERE THAT SWORN AFFIDAVIT HAD BEEN GIVEN BY SRI K.N. SINGH PATEL AMOUNTED TO RATIFICATION OF THE STATEMENT EARLIER GIVEN BY THE TWO SONS OF SRI K.N. SINGH PATEL NAMELY SRI MAHESH SINGH PATEL AND SRI OM NARAIAN SINGH PATEL (WHO ARE THE DIRECTORS IN THE APPELLANT COMPANY) AND IN THE BACKGROUND THAT HAS BEEN GIVEN IN PARA 4 OF THE SAID STATEMENT DATED 25.02.2009 ITSELF WHICH IS REPRODUCED HEREUNDER: - 4. THAT OVER A PERIOD OF YEARS THE DEPONENT HIMSELF HAD BEEN INSTRUMENTAL IN SETTING UP VARIOUS BUSINESS ENTITIES AND/OR ASSISTING HIS FAMILY MEMBERS (AS PER PARTICULARS GIVEN IN PARA 1 HEREINFORE) IN SETTING UP AND CARRYING OUT VARIOUS BUSINESS ACTIVITIES E ITHER BY THEMSELVES AND/OR IN ASSOCIATION WITH OTHERS EVEN BY UTILIZING HIS FINANCIAL RESOURCES IN FACILITATING AN ACQUISITION OF CAPITAL ASSETS IN THEIR NAMES. (EXTRACTED FROM P.B. 49) 17. IN OTHER WORDS IT WAS SRI K.N. SINGH PATEL ALONE WHO WAS THE PERSON WHO WAS CCREDITED WITH THE AVAILABILITY OF RESOURCES TO MAKE SUCH INVESTMENT AND SUCH A STATEMENT HAD BEEN ACCEPTED BY THE REVENUE ALSO AFTER CROSS EXAMINATION BY THE INVESTIGATION WING ON 25.03.2009 (TYPED COPY APPEARING AT PAGES 60 TO 62 OF T HE P.B.). FOLLOWING PORTION OF THE SAID CROSS EXAMINATION DATED 25.03.2009 IS WORTHY OF NOTICE BY YOUR HONOURS: - / ? 15 / / / / EDUCATION TRUST EDUCATION TRUST TRUSTE E 18. FROM THE SUBMISSIONS MADE IN THE FOREGOING PARAGRAPHS THE UNDISPUTED FACTS THAT HAVE EMERGED CAN BE SUMMARIZED AS UNDER: - A ) DURING THE COURSE OF SEARCH AND SEIZURE ACTION THAT HAD COMMENCED ON 19.11.2008 STATEMENT OF ADDITIONAL INCOME OF RS.10 CRORES (SPREAD OVER IN DIFFERENT YEARS) WAS GIVEN BY FAMILY MEMBERS OF SRI K.N. SINGH PATEL (INCLUDING THE DIRECTORS OF THE APPELLANT CO MPANY) AND THE SAME WAS SPECIFICALLY CONCURRED BY SRI K.N. SINGH PATEL THROUGH SWORN STATEMENT. B ) IN THE SAID SWORN STATEMENT SRI K.N. SINGH PATEL HAD GIVEN THE MANNER ALSO VIDE PARA 14 THEREOF (AS REPRODUCED IN PARA 9 HEREINFORE. C ) THE SWORN STATEMENT SO GIVEN ON 25.02.2009 WAS ACCEPTED BY THE INVESTIGATION WING (AUTHORISED OFFICERS) AFTER CROSS EXAMINATION OF SRI K.N. SINGH PATEL. D ) THE SWORN STATEMENT SO GIVEN BY SRI K.N. SINGH PATEL HAD DULY BEEN ACTED UPON BY HIM BY FILING THE RETURNS IN COMPLIANCE WITH NOTICES UNDER SECTION 153A WHEREIN ADDITIONAL INCOME SHOWN FOR THE ASSESSMENT YEAR 2006 - 07 (AND SO ALSO FOR OTHER ASSESSMENT YEARS) WHICH IS THE YEAR UNDER APPEAL HERE HAD DULY BEEN INCORPORATED. E ) FOR THE ASSESSMENT YEAR 2006 - 07 THE INCOME SO DISC LOSED INCLUDED THE SUM OF RS.75 LACS PERTAINING TO THE SANATAN COLD STORAGE LTD. F ) THE ASSESSING OFFICER HAD ALSO ACCEPTED THE SAID STATEMENT IN SO FAR OF QUANTUM OF INCOME SO DISCLOSED IS CONCERNED BY MAKING THE ASSESSMENT UNDER SECTION 153A IN THE CASE O F SRI K.N. SINGH PATEL ON SUBSTANTIVE BASIS. G ) SRI K.N. SINGH PATEL HAD PAID TAXES AS HAD BECOME DUE IN THE RETURN SO FILED (AFTER INCORPORATING THEREIN THE ADDITIONAL INCOME AGGREGATING RS.10 CRORES SPREAD OVER IN DIFFERENT ASSESSMENT YEARS) AND TAXES S O PAID BY SRI K.N. SINGH PATEL HAVE BEEN APPROPRIATED ALSO BY THE INCOME TAX 16 DEPARTMENT (OVER AND ABOVE THE TAXES SO PAID THEY ARE CLAIMING INTEREST UNDER SECTION 234A 234B AND 234C AS IS BORNE OUT FROM THE ASSESSMENT ORDER COPY APPEARING AT PAGES 67 TO 87 OF THE P.B. H ) SRI K.N. SINGH WAS NOT A STRANGER SO FAR AS THE APPELLANT IS CONCERNED AS IT IS BEING GOVERNED AND CONTROLLED BY HIS OWN KITH AND KINS NAMELY SRI MAHESH SINGH PATEL AND SRI OM NARAYAN SINGH PATEL (BOTH SONS OF SRI K.N. SINGH PATEL) AND AS PER THE ASSESSME NT YEAR WISE BREAK UP OF ADDITIONAL INCOME OF RS. TEN CRORES IS CONCERNED THE SAME INCLUDED A SUM OF RS.75 LACS ON ACCOUNT OF INVESTMENT IN LOANS TO FARMERS (FOR THE ASSESSMENT YEAR 2006 - 07) AND THE SAME WAS DULY OWNED BY SRI K.N. SINGH PATEL AS PER AVERM ENTS MADE IN THE BACKGROUND GIVEN IN PARA 4 OF THE AFFIDAVIT DATED 25.02.2009 AS HAS BEEN REPRODUCED IN PARA16ABOVE. 19. THUS DURING THE COURSE OF SEARCH AND SEIZURE ACTION ITSELF IT WAS EXPLAINED THAT SOURCE OF UNEXPLAINED /INVESTMENT OF RS.75 LACS IN GIVING LOANS TO THE FARMERS WAS ATTRIBUTABLE TO SRI K.N. SINGH PATEL. III AT THE ASSESSMENT STAGE 1920. EVEN THOUGH AFFIDAVIT DATED 25.02.2009 (PAGES 47 TO 59 OF P.B.) HAD BEEN ACTED UPON BY SRI K.N. SINGH PATEL AND HE HAD DULY INCLUDED THE ADDITIONAL INCOME OF RS.10 CRORES (WHICH INCLUDED INVESTMENT IN LOANS) IN THE RETURN FILED BY HIM IN COMPLIANCE OF NOTICE UNDER SECTION 153A AND THE REVENUE HAS ACCEPTED THE SAME BY SUBJECTING HIM TO ASSESSMENT FOR ALL THE YEARS COVERED BY THE SAID STATEMENT ON SU BSTANTIVE BASIS AS DEMONSTRATED ABOVE THE ASSESSING OFFICER IN A VERY PECULIAR MANNER HAS REFUSED TO ACCEPT THE VERACITY OF THE SAME BY REFERRING TO THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SRI KRISHNA VS. CIT KANPUR AND OTHERS REPORT ED IN (1983) 142 ITR 618 BY OBSERVING AS UNDER: - AS FAR AS YOUR RELIANCE ON THE AFFIDAVIT FILED BY SRI K.N. SINGH IS CONCERNED YOUR ATTENTION IS DRAWN TOWARDS THE CASE OF SRI KRISHNA VS. CIT KANPUR & OTHERS REPORTED IN 142 ITR 618 (ALLD). THIS IS A VERY JUDGMENT DELIVERED BY THE JURISDICTIONAL HIGH COURT AND THE RATIO LAID DOWN BY THIS JUDGMENT IS AS UNDER: - 17 IT IS NEITHER A RULE OF PRUDENCE NOR A RULE OF LAW THAT THE STATEMENTS MADE IN AN AFFIDAVIT WHICH REMAINS UNCONTROVERTED MUST INVARIABLY BE A CCEPTED AS TRUE AND RELIABLE. ORDINARILY IN THE ABSENCE OF DENIAL THE STATEMENTS MAY BE ACCEPTED AS TRUE BUT IF THERE ARE CIRCUMSTANCES WHICH SUGGEST THAT THE STATEMENTS ON AFFIDAVIT SHOULD NOT BE ACCEPTED AS TRUE THE ABSENCE OF DENIAL BY THE OTHER SID E WOULD NOT BY ITSELF BE SUFFICIENT TO CLOTHE THE STATEMENTS ON AFFIDAVIT WITH TRUTHFULNESS AND RELIABILITY. ALL THE OBJECTIONS RAISED BY YOU IN THE ABOVE REFERRED LETTER OF YOURS ARE THUS FINALLY DISPOSED OFF AND REJECTED. IT IS SUBMITTED THAT THE SA ID OBSERVATIONS (IN THE ASSESSMENT ORDER) WHICH LED THE ASSESSING OFFICER TO MAKE ADDITION OF RS.75 LACS IN THE ASSESSMENT OF THE APPELLANT IS A CLASSICAL EXAMPLE OF APROBATE AND REPROBATED IN THE SAME BREATH. 21. IN ANY CASE THE DECISION OF HONBLE ALL AHABAD HIGH COURT IN THE CASE OF SRI KRISHNA (SUPRA) HAS NO BEARING IN THE PRESENT CASE. RATHER THE APPELLANTS CONTENTION STANDS SUPPORTED BY THE VERY DECISION CONVERSELY SPEAKING. FOR THIS PURPOSE THE ASSESSEE/APPELLANT BEGS TO QUOTE AND INVITE KIND AT TENTION OF YOUR HONOUR TO THE FOLLOWING PASSAGE AS APPEARING THEREIN: - IT IS NEITHER A RULE OF PRUDENCE NOR A RULE OF LAW THAT THE STATEMENTS MADE IN AN AFFIDAVIT WHICH REMAINS UNCONTROVERTED MUST INVARIABLY BE ACCEPTED AS TRUE AND RELIABLE. ORDINARILY IN THE ABSENCE OF DENIAL THE STATEMENTS MAY BE ACCEPTED AS TRUE BUT IF THERE ARE CIRCUMSTANCES WHICH SUGGEST THAT THE STATEMENTS ON AFFIDAVIT SHOULD NOT BE ACCEPTED AS TRUE THE ABSENCE OF DENIAL BY THE OTHER SIDE WOULD NOT BY ITSELF BE SUFFICIENT TO C LOTHE THE STATEMENTS ON AFFIDAVIT WITH TRUTHFULNESS AND RELIABILITY. IN THE INSTANT CASE THE FACTS ARE ENTIRELY DIFFERENT. THE ISSUE INVOLVED WAS SOURCE OF INVESTMENT IN ADVANCING LOANS TO THE FARMERS. THE DIRECTORS OF THE COMPANY HAD SPECIFICALLY STATED THAT THE ENTIRE UNEXPLAINED/UNDISCLOSED INCOME WHICH WAS ESTIMATED AT RS.10 CRORES WAS ATTRIBUTABLE TO SRI K.N. SINGH PATEL SRI K.N. SINGH PATEL HAD NOT ONLY OWNED THE SAME THROUGH AN 18 AFFIDAVIT DATED 25.02.2009 SUCH AN AFFIDAVIT STOOD ALREADY ACCEPTED ALSO BY THE REVENUE AFTER RECORDING THE STATEMENT UNDER SECTION 131 AND AGAIN THROUGH THE ASSESSMENT ORDERS DATED 31.12.2010 PASSED IN THE CASE OF SRI K.N. SINGH PATEL (IN THE PRESENT APPEAL THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2006 - 07 IS RELEVANT COPY OF WHICH IS APPEARING IN THE PAPER BOOK). IT IS A SIMPLE CA SE WHERE DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT HAD EXPLAINED SOURCE OF INVESTMENT IN LOAN DISBURSED TO THE FARMERS BY SAYING THAT THE SOURCE PROVIDED BY SRI K.N. SINGH PATEL AND THAT TOO IN THE BACKGROUND GIVEN BY HIM IN HIS SWORN AF FIDAVIT VIDE PARA 4 THEREOF AS HAS BEEN REPRODUCED IN PARA 16 HEREINFORE.THUS THERE IS NO CONTROVERSY ABOUT THE VERACITY OF THE AFFIDAVIT. 22. IT IS FURTHER STATED THAT WITH REFERENCE TO THE SEIZURE IN THE FORM OF ANNEXURES A - 13 AND A - 14 SRI JOGEND RA PAL WAS MERELY REQUIRED TO EXPLAIN THE NATURE OF ENTRIES THEREIN AS MAY BE SEEN FROM QUESTION NO.10 AND ANSWER THERETOAND AT NO POINT OF TIME HE WAS REQUIRED TO GIVE INFORMATION ABOUT SOURCE THEREOF. THE INVESTMENT WAS UNEXPLAINED AND THE DIRECTORS OF THE APPELLANT COMPANY HAD ATTRIBUTED THE SAME TO SRI K.N. SINGH PATEL WHO IN TURN HAD OWNED THE SAME NOT ONLY IN THE AFFIDAVIT DATED 25.02.2009 BUT ALSO IN TERMS OF RETURN FILED BY HIM FOR DIFFERENT ASSESSMENT YEARS AND ON THE BASIS OF RETURNS SO FILE D HIS ASSESSMENTS HAVE ALSO BEEN MADE ON SUBSTANTIVE BASIS AND TAXES AS WERE WORKED OUT TO BE PAYABLE HAD DULY BEEN PAID BY THE OWNER OF INVESTMENT I.E. SRI K.N. SINGH PATEL. 23. AGGRIEVED BY THE SAID ASSESSMENT ORDER DATED 31.12.2010 THE ASSESSEE/APPELLA NT PREFERRED AN APPEAL BEFORE THE LD. CIT(A) - III LUCKNOW. IN TERMS OF WRITTEN SUBMISSIONS FILED ON BEHALF OF THE APPELLANT (COPY APPEARING AT PAGES 9 TO 19 OF THE PAPER BOOK) ALL THE RELEVANT FACTS WERE AGAIN SPECIFICALLY BROUGHT TO THE NOTICE OF THE LD. CIT(A). PARAS 8 TO 15 OF THE SAID SUBMISSIONS WHICH ARE REPRODUCED HEREUNDER: 8. AS SATED ABOVE THAT DURING THE COURSE OF SAID SEARCH & SEIZURE ACTION ITSELF STATEMENT ON OATH WAS RECORDED BY THE AUTHORIZED OFFICER OF SRI K.N. SINGH WHEREIN HE HAS GI VEN A STATEMENT BY OWNING THE ENTIRE ADDITIONAL INCOME OF RS.10 00 00 000/ - WHICH WAS SURRENDERED TO COVER UP ALL SUCH ADDITIONAL INCOME OF VARIOUS PERSONS AND ENTITIES RELATING TO THE GROUP. THE SAME WAS RATIFIED ALSO BY THE 19 OTHER FAMILY MEMBERS AND DIRE CTORS WHO HAD BEEN INTERESTED IN THE VARIOUS BUSINESS ENTITIES IN ONE OR THE OTHER AS SHRI K.N. SINGH WAS TREATED AS KEY PERSON BY THE AUTHORIZED OFFICERS. 9. AFTER PERUSAL OF THE SEIZED MATERIAL AND IN CONTINUATION WITH THE STATEMENTS REFERRED TO ABOVE SHRI K.N. SINGH HAD SUBMITTED A STATEMENT OF CLARIFICATORY NATURE AND TO PUT AN END ONCE FOR ALL SORTS OF CONTROVERSIES SUCH A CLARIFICATORY STATEMENT (WHICH RELATED TO DISCLOSURE OF ADDITIONAL INCOME OF RS.TEN CRORES AS MADE AT THE TIME OF SEARCH ON 19 .11.2008 ITSELF) WAS GIVEN IN THE FORM O SWORN AFFIDAVIT DATED 25.02.2009. IN THE SAID SWORN AFFIDAVIT ASSESSMENT YEAR WISE BREAK UP OF ADDITIONAL INCOME AS ALSO PARTICULARS OF INCOME/INVESTMENT AS COVERED BY THE SAID DISCLOSURE WERE GIVEN AS NARRATED IN PARA 3 ABOVE. 10. BESIDES THE SAID SWORN STATEMENT DATED 25.02.2009 CONTAINED FOLLOWING SPECIFIC AVERMENTS: - 8. THAT DURING THE COURSE OF SAID SEARCH AND SEIZURE ACTION SRI MAHESH SINGH PATEL ELDER SON OF THE DEPONENT GAVE A STATEMENT WHEREBY AN ADD ITIONAL INCOME OF RS.10 CRORES (TEN CRORES) WAS AGREED TO BE DISCLOSED ON BEHALF OF VARIOUS PERSONS. 9. THAT THE AUTHORISED OFFICERS SOUGHT FOR RATIFICATION OF THE SAID STATEMENT FROM OTHER FAMILY MEMBERS ALSO NAMELY (I) SRI OM NARAIN SINGH PATEL (SEC OND SON OF THE DEPONENT) (II) SMT. ANITA SINGH WIFE OF SRI MAHESH SINGH PATEL AND (III) SMT. ANJU SINGH WIFE OF SRI OM NARAIN SINGH PATEL. 10. THAT IT IS CLARIFIED AND SUBMITTED THAT ALL THE STATEMENTS REFERRED TO ABOVE I.E. THE STATEMENTS GIVEN BY (I) SRI MAHESH SINGH PATEL (II) SRI OM NARAIN SINGH PATEL (III) SMT. ANITA SINGH AND (IV) SMT. ANJU SINGH PERTAIN TO THE DISCLOSURE OF CONSOLIDATED SUM OF RS.10 CRORES (TEN CRORES) AS ADDITIONAL INCOME. 11. THAT LOOKING TO THE FACT THAT THE DEPONENT HIMSELF HAS BEEN INSTRUMENTAL IN SETTING UP VARIOUS BUSINESS ENTITIES AND /OR CREATING VARIOUS SOURCES 20 OF INCOME ACQUISITION OF CAPITAL ASSETS ETC AND HE HIMSELF HAS BEEN PLAYING A PIVOTAL ROLE IN RUNNING AND MANAGING SUCH BUSINESS ENTITIES/SOURCES OF IN COME AND INVESTMENTS APPEARING IN THE NAMES OF VARIOUS BUSINESS AND OTHER ENTITIES INDIVIDUALS GROUP OF INDIVIDUALS AND IN KEEPING WITH LETTER AND SPIRIT OF THE STATEMENTS REFERRED TO IN PARAS 8 9 & 10 HEREINFORE THE DEPONENT HIMSELF HAS OWNED THE SAID DISCLOSURE OF INCOME OF RS.10 CRORES (TEN CRORES) AND HE UNDERTAKES AND AGREES TO PAY TAXES AS ARE PAYABLE WITH REFERENCE TO THE SAME. XXX XXX XXX XXX 13. THAT THE PRESENT STATEMENT IS BEING GIVEN UNDER SECTION 132(4) OF THE ACT AND IS OF CLARIFICATORY NATURE OF THE STATEMENTS/RECTIFICATION REFERRED IN PARAS 9 10 & 11 AND THE SAID STATEMENTS RECTIFICATIONS SHOULD BE DEEMED TO HAVE BEEN TELESCOPED IN THE PRE SENT STATEMENT. 11. NOT ONLY THIS THE SAID SWORN STATEMENT ALSO CONTAINED AN UNAMBIGUOUS UNDERTAKING AT THE PART OF SHRI K.N. SINGH TO MAKE PAYMENTS OF TAXES (AS WERE PAYABLE ON THE ADDITIONAL INCOME OF RUPEES TEN CRORES AS AFORESAID) WHICH WAS NECESSARY CONCOMITANT TO THE D ISCLOSURE ITSELF AS MAY BE SEEN FROM PARA 12 OF THE SAID STATEMENT ITSELF WHICH TOO IS REPRODUCED HEREUNDER: - 12. THAT IN THIS RESPECT IT IS CLARIFIED THAT PURSUANCE OF THE SAID UNDERTAKINGS THE DEPONENT HIMSELF HAD ALREADY ARRANGED FOR PAYMENT OF T AXES AGGREGATING RS.1 CRORE THROUGH FOUR SEPARATE CHEQUES AS PER PARTICULARS GIVEN BELOW: - SL. NO. CHEQUE NO. DATE AMOUNT (RS.) (I) 836761 15.12.2008 25 00 000 (II) 836763 25.12.2008 25 00 000 (III) 836762 05.01.2009 25 00 000 (IV) 836764 25.01.2009 25 00 000 WHICH HAVE BEEN DRAWN ON HIS OWN BANK ACCOUNT NO.2410000100132967 AT PUNJAB NATIONAL BANK RAKABGANJ. 21 REST OF THE TAX LIABILITIES WAS DISCHARGED LATER ON BEFORE FILLING THE RETURNS. 12. THUS THE SWORN STATEMENT DATED 25.02.2009 WAS AN INTEGRAL PART OF THE STATEMENT OF ADDITIONAL INCOME OF RS. TEN CRORES GIVEN AT THE TIME OF SEARCH. IT WAS NOT ONLY SO AS PER THE PERCEPTION OF SHRI K.N. SINGH AND OTHER FAMILY MEMBERS BUT TREATED AS SUCH BY THE AUTHORISED OFFICERS ALSO AS IS EVIDENT FR OM AN UNDISPUTED FACT THAT SHRI K.N. SINGH WAS SUBJECTED TO CROSS EXAMINATION BY DR. NIEL JAIN THEN ASSTT. DIRECTOR OF INCOME TAX (INV.) LUCKNOW/AUTHORISED OFFICERS WITH REFERENCE TO THE SWORN STATEMENT DATED 25.02.2009. IN THE CROSS EXAMINATION SO MAD E (WITH REFERENCE TO THE SWORN STATEMENT DATED 25.02.2009) THE SAID SWORN STATEMENT WAS DULY TREATED (BY DR. NEIL JAIN) AS PART OF THE STATEMENT EARLIER GIVEN ON 19.11.2008 (WITH THE COMMENCEMENT OF SEARCH AND SEIZURE ACTION AND SPECIFICALLY AS A STATEMENT UNDER SECTION 132(4) MEETING ALL THE REQUIREMENT OF LAW. 13. THE SAID CROSS EXAMINATION HAS GOT A VITAL BEARING ON THE EFFICACY AS WELL APPLICABILITY IN THE PRESENT PROCEEDINGS AS IT DOES NOT CONTAIN ANY REBUTTAL TO VARIOUS STIPULATIONSAS ATTACHED TO THE STATEMENT OF SURRENDER OF INCOME OF RS.TEN CRORES AS ADDITIONAL INCOME. PARA 19 OF THE SWORN STATEMENT CONTAINING VARIOUS STIPULATIONS WHICH INCLUDE NON - APPLICABILITY/NON - LEVY OF PENAL PROVISIONS/PENALTIES WHICH REMAINED UNREBUTTED IS REPRODUCED HERE UNDER: - 19. THAT THE ADDITIONAL INCOME AS AFORESAID HAS BEEN SURRENDERED ON THE STIPULATIONS THAT: - V ) THE STATEMENT THAT IS BEING GIVEN IN TERMS OF THE PRESENT SWORN STATEMENT SHOULD BE TREATED AS STATEMENT GIVEN BY THE DEPONENT UNDER SECTION 132(4) READ WITH EXPLANATION 5 TO SECTION 271(1)(C); VI ) THE INCOME SO DISCLOSED BY THE DEPONENT SHOULD BE TREATED TO COVER THE EFFECT OF ALL SUCH MATERIAL /INFORMATION IN WHATEVER FORM THAT HAD BEEN FOUND DURING THE COURSE OF SEARCH/SURVEY AND/OR THAT MAY BE FOUND TO BE SO RELATED LATER TO THE SAID SEARCH/SURVEY IN PATEL GROUP AS A WHOLE THAT HAD COMMENCED ON 19.11.2008; 22 VII ) ENTIRE INCOME AS AFORESAID SHALL BE ASSESSED IN THE HANDS OF THE DEPONENT ONLY WITHOUT AFFECTING THE ASSESSMENTS OF ANY OTHER BUSINESS ENTITIES OTHER ENTITIES INDIVIDUALS AND OR GROUP OF INDIVIDUALS FORMING THE PATEL GROUP ETC.; VIII ) THE ADDITIONAL INCOME SO SURRENDERED BY THE DEPONENT SHALL BE ALLOWED TO BE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND OTHER RELEVANT RECORDS RELATED TO THE PER SONS CONCERNED IN THE NAME OF THE DEPONENT HIMSELF. IX ) ALL TAXES AS ARE PAYABLE ON SUCH ADDITIONAL INCOME SHALL BE BORNE EXCLUSIVELY BY THE DEPONENT HIMSELF AND HE HIMSELF SHALL BE HELD LIABLE TO PAY AND DISCHARGE THE SAME; X ) COMPLETE WAIVER FROM INTEREST IF ANY FOUND TO BE PAYABLE UNDER ANY PROVISIONS OF THE ACT SHALL BE CONSIDERED SYMPATHETICALLY; XI ) IMMUNITY FROM PENALTY UNDER SECTION 271(1)(C) AND/OR ANY OTHER PENAL PROVISIONS UNDER THE ACT SHALL BE GRANTED NOT ONLY TO THE DEPONENT BUT ALSO TO OTHER P ERSONS FORMING PART OF PATEL GROUP AS A WHOLE WHEREVER THE ADDITIONAL INCOME AND/OR PART THEREOF IS ACCOUNTED FOR OR DEEMED TO HAVE BEEN ACCOUNTED FOR/ ACCOUNTED; XII ) COMPLETE IMMUNITY FROM PROSECUTION AND/OR OTHER SUCH PROVISIONS SHALL BE GRANTED IN THE CASE OF THE DEPONENT AND/OR OTHER PERSON(S) FORMING PATEL GROUP WHO ARE FOUND/HELD TO BE AFFECTED BY THE SAID DISCLOSURE; AND XIII ) THE CONDUCT OF THE DEPONENT IN THE MATTER OF DISCLOSURE OF INCOME SHALL BE DULY RECIPROCATED BY THE INCOME - TAX DEPARTMENT AND NEITHER HE HIMSELF NOR ANY OTHER PERSON OR PERSONS BELONGING TO PATEL GROUP SHALL BE SUBJECTED TO ANY HARASSMENT AND THEIR ASSESSMENT SHALL BE COMPLETED EXPEDITIOUSLY. 23 14. THE ASSESSING OFFICER DID NOT CONSIDER THE SAID SUBMISSION AND REJECTED THE SAME O N THE GROUND THAT SHRI K.N. SINGH HAD NO ASSOCIATION ON PAPER WITH THE COMPANY IN THE RELEVANT PERIOD. SUCH A OBSERVATION IS UNTENABLE AS SHRI K.N. SINGH PATEL WAS THE MAY KEY PERSON WHO HAS ESTABLISHED ALL THE BUSINESS ENTITIES WHEREIN HE AND HIS FAMILY MEMBERS WERE DIRECTLY OR INDIRECTLY CONNECTED WITH THE COMPANIES. MOREOVER THE APPELLANTS CONTENTION IS FULLY SUPPORTED BY THE DECISION OF HONBLE DELHI COURT IN THE CASE OF CIT VS. SHIV PRAKASH AGGARWAL REPORTED IN (2008) 306 ITR 324 HEAD NOTE OF WHICH IS REPRODUCED HEREUNDER: - A SEARCH WAS CONDUCTED IN THE PREMISES WHERE THE ASSESSEE WAS RESIDING ALONGWITH HIS FATHER. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 158BC OF THE INCOME - TAX ACT 1961 TO THE ASSESSEE FOR FILING OF THE BLOCK RETURN. THE ASSESSEE WAS ASKED TO EXPLAIN NOTINGS AND TRANSACTIONS RECORDED IN THE SEIZED DOCUMENTS. THE ASSESSEE EXPLAINED THAT THE MATERIAL SEIZED FROM HIS RESIDENCE PERTAINED TO HIS FATHER AND NOT TO HIM BUT THE SAME WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSEE ALSO FURNISHED A LETTER FROM HIS FATHER ALONGWITH AN AFFIDAVIT OF HIS FATHER WHO CLAIMED THE OWNERSHIP OF THE DOCUMENTS SEIZED FROM HIS RESIDENCE. THE ASSESSING OFFICER REJECTED THE LETTER AND THE AFFIDAVIT FURNISHED BY THE ASSESSEES FATHER A ND MADE VARIOUS ADDITIONS TOTALING TO RS.1 00 61 675 TO THE TOTAL INCOME OF THE ASSESSEE AS HIS UNDISCLOSED INCOME. THE TRIBUNAL DELETED THE ADDITION. ON APPEAL TO THE HIGH COURT : HELD DISMISSING THE APPEAL THAT THE FATHER OF THE ASSESSEE HAD OWNED UP T HE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH AND HAD ALSO FILED AN AFFIDAVIT TO THIS EFFECT. THUS UNDER THESE CIRCUMSTANCES NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE SEIZED DOCUMENTS. 15. THUS THE ACTION OF THE ASSESS ING OFFICER IN FURTHER ADDING THE SAME AMOUNT IN THE HANDS OF THE APPELLANT IS HIGHLY ARBITRARY AND ERRONEOUS BOTH IN LAW AND ON FACTS AS THE SAID AMOUNT AS HAVE BEEN ADDED ALREADY STANDS PART OF 24 DISCLOSURE MADE AT THE TIME OF SEARCH AS HAS BEEN CATEGORICA LLY GIVEN IN THE PARAGRAPHS MENTIONED ABOVE. ARE RELEVANT AND THE SAME SPECIFICALLY REFERRED TO AND RELIED UPON. 24. FROM A PERUSAL OF THE SAID SUBMISSIONS AS MADE BEFORE THE LD. CIT(A) IT WOULD BE SEEN THAT THE ASSESSEE/APPELLANT HAD RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHIV PRAKASH AGGARWAL REPORTED IN (2008) 306 ITR 324 WHEREIN AFTER RELYING UPON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. ASHOK KUMAR REPORTED IN (2006) 286 ITR 541 IT W AS HELD THAT THE FATHER HAVING OWNED THE SEIZED MATERIAL ADDITION CANNOT BE VALIDLY MADE IN THE HANDS OF THE SON FROM WHOSE POSSESSION THE MATERIAL WAS SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION. HEAD NOTES OF THE SAID TWO CASES ARE REPRODUCED HEREUNDER: - (I) CIT VS. ASHOK KUMAR (REPORTED IN (2006) 286 ITR 541 LEARNED STANDING COUNSEL SUBMITTED THAT AS THE BOOKS WERE FOUND FROM THE PREMISES OF THE RESPONDENT/ASSESSEE IN THE SEARCH CONDUCTED ON JANUARY 25 1983 THEY BELONGED TO THE RESPONDENT/ASSESSEE AND THE INCOME - TAX OFFICER HAD RIGHTLY MADE ADDITIONS OF RS. 1 36 911 BEING THE TRANSACTIONS RECORDED IN THE SAID BOOKS. HE FURTHER SUBMITTED THAT AT THE TIME OF SEARCH THE FATHER OF THE RESPONDENT HAD MADE A STATEMENT THAT HE HAD DISCONTINUED HIS BUSINESS SINCE 1977 AND THEREFORE IF HE HAD COME FORWARD SUBSEQUEN TLY AND OWNED UP THE SEIZED BOOKS IN QUESTION IT WOULD NOT MAKE ANY DIFFERENCE. THE CONTENTION IS MISCONCEIVED. IT IS NOT IN DISPUTE THAT THE FATHER AND SON WERE LIVING JOINTLY IN THE HOUSE. IT IS ALSO NOT THE CASE OF THE DEPARTMENT THAT THE SEIZED BOOKS IN QUESTION WERE FOUND FROM THE ROOM OF THE RESPONDENT. INDISPUTABLY THE FATHER HAD OWNED UP THE BOOKS IN QUESTION. NORMALLY THE PRESUMPTION THAT THE SEIZED BOOKS BELONGED TO THE PERSON FROM WHOSE POSSESSION THEY HAVE BEEN SEIZED HAS BEEN DISCHARGED AND I T WAS UPON THE DEPARTMENT TO PROVE BY COGENT MATERIAL AND EVIDENCE THAT THE ENTRIES IN THE SAID BOOKS WERE 25 THAT OF THE RESPONDENT. NO SUCH MATERIAL HAS BEEN BROUGHT ON RECORD BY THE DEPARTMENT AND THEREFORE THE COMMISSIONER OF INCOME - TAX (APPEALS) WAS PE RFECTLY JUSTIFIED IN ACCEPTING THE PLEA RAISED BY THE RESPONDENT THAT THE BOOKS IN QUESTION DID NOT BELONG TO HIM BUT TO HIS FATHER WHO HAD OWNED UP THE SAME BY FILING AN AFFIDAVIT. THE FINDING RECORDED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) IS BASED ON APPRECIATION OF EVIDENCE AND MATERIAL ON RECORD AND HAS RIGHTLY BEEN UPHELD BY THE TRIBUNAL. (543/544) (II) CIT VS. SHIV PRAKASH AGGARWAL REPORTEDIN (2008) 306 ITR 324 WHERE HONBLE DELHI HIGH COURT AFTER REFERRING TO THE AFORESAID PASSAGE FROM TH E DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF ASHOK KUMAR HAS HELD AS UNDER: - SIMILARLY IN THE PRESENT CASE THE FATHER OF THE ASSESSEE HAD OWNED UP THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH AND HAD ALSO FILED AN AFFIDAVIT TO THIS EFF ECT. THUS UNDER THESE CIRCUMSTANCES NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE SEIZED DOCUMENTS AND THEREFORE WE FIND NO LEGAL INFIRMITY IN THE ORDER PASSED BY THE TRIBUNAL. THE ABOVE BEING THE POSITION NO FAULT CAN BE FOUND WITH THE VIEW TAKEN BY THE TRIBUNAL. THUS THE ORDER OF THE TRIBUNAL DOES NOT GIVE RISE TO A QUESTION OF LAW MUCH LESS A SUBSTANTIAL QUESTION OF LAW TO FALL WITHIN THE LIMITED PURVIEW OF SECTION 260A OF THE ACT WHICH IS CONFINED TO ENTERTAIN ONLY SUCH APPEAL AGAINST THE ORDER WHICH INVOLVES A SUBSTANTIAL QUESTION OF LAW. (327) 25. THE LD. CIT(A) HAS COMPLETELY OMITTED TO DEAL WITH THE SAID CASE LAWS WHILE DECIDING THE MERITS OF THE ADDITIONS. HOWEVER HE REFERRED TO THE SAME WHILE DECIDING THE ISSUE OF VALIDITY OF INITIATION OF PROCEEDINGS UNDER SECTION 153A VIDE GROUND NO.1 AND 2. THE DISCUSSION APPEARING IN PARAS 3.1 (PAGE 3) WHICH ARE REPRODUCED HEREUNDER: - 26 3.1 GROUNDS NO.1 AND 2 ARE AGAINST THE INITIATION OF THE PROCEEDINGS U/S. 153A. TH E ASSESSING OFFICER HAS DISCUSSED THIS ISSUE AS WELL AS REPRODUCED THE OBJECTIONS RAISED BY THE ASSESSEE ON PAGES 4 TO 7 OF THE ASSESSMENT ORDER AND HAD REJECTED THESE OBJECTIONS VIDE LETTER DATED 20.12.2010 ISSUED BY HIM IN WHICH THE DECISION RELIED UPON BY THE ASSESSEE IN THE CASE OF 306 ITR 324 286 ITR 541 HAVE BEEN DISTINGUISHED ON FACTS AND REGARDING THE RELIANCE ON THE AFFIDAVIT FILED BY SHRI K.N. SINGH THE ASSESSING OFFICER HAS RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHRI KRISHNA VS. CIT KANPUR & OTHERS REPORTED IN 142 ITR 618. THE EXTRACT FROM THE ASSESSMENT ORDER IS REPRODUCED BELOW: KINDLY REFER TO YOUR LETTER DATED 01.12.2010 RECEIVED IN THIS OFFICE ON 13.12.2010 ON THE ABOVE SUBJECT. YOU H AVE CITED THE FO LLOWING THREE CASE LAWS IN SUPPORT OF YOUR CONTENTIONS: - 1 . ANIL KUMAR BHATIA VS. ACIT REPORTED IN (2010) 1 ITR (TRIB) 484 (DELHI); 2 . MEGHMANI ORGANICS LTD. VS. DCIT REPORTED IN (2010) 129 TTJ 255 (AHD.) 3 . DY. CIT VS. RAJ KUMAR ARORA IN ITA NO.290 (LUC/2009) LUCK NOW ITAT BENCH LUCKNOW DATED 30.08.3010. THE ABOVE JUDICIAL PRONOUNCEMENTS ARE CLEARLY DISTINGUISHABLE FROM THE FACTS OF YOUR CASE. THIS IS SO BECAUSE IN ALL THE ABOVE CASES THE BASIC FACT WAS THAT IN THERE WAS NO DOCUMENT IN THE SEIZED DOCUMENTS RELATIN G TO THE ASSESSES CONCERNED AND AFFECTING THEIR INCOME. IN YOUR CASE THE SITUATION IS QUITE DIFFERENT. A NUMBER OF DOCUMENTS PERTAINING TO YOU HAVE BEEN SEIZED/IMPOUNDED AND THESE ARE SIGNIFICANT IN DETERMINATION OF YOUR TOTAL INCOME. HENCE THE ABOVE CA SE ARE NOT RELATABLE TO YOUR CASE. AS FAR AS THE CASE OF CIT VS. SHIV PRAKASH AGGARWAL REPORTED IN (2008) 306 ITR 324 IS CONCERNED IT IS NOTICED THAT THE FACTS OF THIS CASE ARE SIGNIFICANTLY DIFFERENT FROM YOUR CASE. THE MAJOR POINTS OF DISTINCTION AS PRIMA FACIE APPEAR FROM A PLAIN READING OF JUDGMENT ARE SUMMARIZED BELOW: - 27 ( A ) IT APPEARS THAT THEIR WAS NO SEARCH WARRANT IN THE NAME OF ASSESSEE SHIV PRAKASH AGGARWAL; THE WARRANT BEING ONLY IN THE NAME OF HIS FATHER SHRI RAM KISHAN AGGARWAL. THERE IS NO SUCH SITUATION IN YOUR CASE AS HAS ALREADY BEEN CLARIFIED TO YOU VIDE LETTER DATED 29.03.2010 OF THIS OFFICE THAT THERE IS A SEARCH WARRANT IN YOUR NAME. ( B ) IN THE CITED CASE THE FATHER OF THE ASSESSEE CLAIMED THE OWNERSHIP OF ENTIRE SEIZED DOCUMENTS FROM HIS RESIDENCE. IN YOUR CASE NOTHING OF THIS SORT HAS HAPPENED AND SRI K.N. SINGH PATEL HAS NEVER CLAIMED THE OWNERSHIP OF ANY OF THE SEIZED OR IMPOUNDED DOCUMENTS. HE HAS ONLY OWNED UP THE VARIOUS INVESTMENT/EXPENDITURE AS HAS BEEN STATED BY YOU ALSO. ( C ) IN T HE CITED CASE IT APPEARS THAT THE ADDITIONS TO INCOME WERE MADE BOTH IN THE HANDS OF SON AND FATHER. IN YOUR CASE ASSESSMENT IS YET TO BE MADE AND THEREFORE IT WILL BE PREMATURE TO COMMENT ON THIS. ( D ) IN THE CASE OF CIT VS. ASHOK KUMAR (2006) 286 ITR 541 ( ALLD) WHICH HAS BEEN REFERRED IN THE CITED CASE THE SITUATION WAS AGAIN THAT THE OWNERSHIP OF SEIZED DOCUMENTS WAS CLAIMED BY THE FATHER OF ASSESSEE AND THEREFORE THIS CASE IS ALSO QUITE DISTINQUISHABLE FROM YOUR CASE. IT WILL NOT BE OUT OF PLACE TO MENTI ON THAT THIS IS THE FIRST TIME AT THE FAG END OF PROCEEDINGS THAT YOU ARE CLAIMING THAT THE RETURN IN COMPLIANCE TO NOTICE U/S.153A WAS FILED UNDER PROTEST. YOUR OBJECTIONS TO THE ISSUE OF NOTICE U/S.153A HAVE ALREADY BEEN DISPOSED OFF AND NOWHERE DURIN G THE ASSESSMENT PROCEEDINGS HAS THE CLAIM OF RETURN BEING FILED UNDER PROTEST BEEN MADE BY YOU. THIS CLEARLY IS AN AFTERTHOUGHT WHICH HAS BEEN RAISED NOW FOR THE REASONS BEST KNOWN TO YOU ONLY. HOWEVER IT WILL BE SUFFICIENT TO STATE THAT THIS CLAIM OF Y OURS IS HEREBY REJECTED AS BEING WITHOUT ANY BASIS AND UNSUPPORTED BY MATERIAL ON RECORD. AS FAR AS YOUR RELIANCE ON THE AFFIDAVIT FILED BY SRI K.N. SINGH IS CONCERNED YOUR ATTENTION IS DRAWN TOWARDS THE CASE OF SRI KRISHNA VS. CIT KANPUR & OTHERS REPORT ED IN 142 ITR 618 (ALLD). THIS IS A 28 JUDGMENT DELIVERED BY THE JURISDICTIONAL HIGH COURT AND THE RATIO LAID DOWN BY THIS JUDGMENT IS AS UNDER: - IT IS NEITHER A RULE OF PRUDENCE NOR A RULE OF LAW THAT THE STATEMENTS MADE IN AN AFFIDAVIT WHICH REMAINS UNCO NTROVERTED MUST INVARIABLY BE ACCEPTED AS TRUE AND RELIABLE. ORDINARILY IN THE ABSENCE OF DENIAL THE STATEMENTS MAY BE ACCEPTED AS TRUE BUT IF THERE ARE CIRCUMSTANCES WHICH SUGGEST THAT THE STATEMENTS ON AFFIDAVIT SHOULD NOT BE ACCEPTED AS TRUE THE AB SENCE OF DENIAL BY THE OTHER SIDE WOULD NOT BY ITSELF BE SUFFICIENT TO CLOTHE THE STATEMENTS ON AFFIDAVIT WHICH TRUTHFULNESS AND RELIABILITY. ALL THE OBJECTIONS RAISED BY YOU IN THE REFERRED LETTER OF YOURS ARE THUS FINALLY DISPOSED OFF AND REJECTED. 3 . 1 . 1 THE APPELLANT HAS NOT CHALLENGED THE ORDERS/LETTERS OF THE ASSESSING OFFICER IN ANY JUDICIAL FORUM. ONCE IT HAD RAISED OBJECTIONS SEPARATELY WHICH HAVE BEEN SEPARATELY ADJUDICATED UPON BY THE ASSESSING OFFICER IT SHOULD HAVE SOUGHT REDRESSAL BEFORE THE APPR OPRIATE JUDICIAL FORUM IN CASE THE APPELLANT WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSING OFFICER WHICH HAS NOT BEEN DONE. NO APPEAL LIES AGAINST SUCH ORDERS OF THE ASSESSING OFFICER DISPOSING OF THE OBJECTIONS RAISED BY THE APPELLANT. AS THE ISSUE IS FACTUAL AND THE ASSESSING OFFICER HAS DULY ADDRESSED THE OBJECTIONS OF THE APPELLANT AND FOR INITIATION OF THE PROCEEDINGS U/S.153A/153C ONLY THE OWNERSHIP OF THE DOCUMENTS/ASSETS IS REQUIRED WHICH WHEN READ WITH THE PROVISIONS OF SECTION 292C WAS EX ISTING IN RESPECT OF THE DOCUMENTS/ASSETS FOUND AND SEIZED FROM THE PREMISES OF THE APPELLANT THEREFORE THE PROCEEDINGS HAVE BEEN VALIDLY INITIATED. FOR READY REFERENCE THE PROVISIONS OF SECTION 292C ARE REPRODUCED BELOW:.. 26. IT IS SUBMITTED THAT TH E DECISION IN THE CASE OF ASHOK KUMAR AND SHIV PRAKASH AGGARWAL HAD A BEARING ON THE ADDITION OF RS.75 LACS AS HAVE BEEN MADE IN THE ASSESSMENT. IN FACT THE APPELLANT HAD SPECIFICALLY REFERRED TO THE SAID CASE LAWS IN THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) WHILE CONTESTING THE 29 ADDITION OF RS.75 LACS ON ACCOUNT OF INVESTMENT IN TERMS OF LOAN AND INTEREST AMOUNTING TO RS.13 50 000/ - EARNED BY THEM AND AN OMISSION TO REBUT THE SAID SUBMISSION HAS RENDERED THE APPELLATE ORDER AS WHOLLY VITIATED. 2 7. FROM THE FACTS MENTIONED ABOVE PRECISELY SPEAKING THE FOLLOWING SITUATION EMERGES (A) DURING THE COURSE OF SEARCH AND SEIZURE ACTION THE MANAGER OF THE APPELLANT WAS MERELY REQUIRED TO EXPLAIN THE NATURE OF SEIZED MATERIAL I.E. A - 13 AND A - 14 AND HE WAS NOT EVEN REQUIRED AT ALL TO GIVE THE INFORMATION ABOUT THE SOURCE OF INVESTMENT IN LOANS GIVEN TO THE FARMERS (AS STOOD ENTERED IN THE SEIZED MATERIAL); (B) ON THE OTHER HAND DURING THE COURSE OF SEARCH AND SEIZURE ACTION ITSELF COMPLETE INFORMATI ON ABOUT UNDISCLOSED INVESTMENT/INCOME (WHICH INCLUDED THE INVESTMENT IN LOANS TO FARMERS) HAD BEEN GIVEN THROUGH A COMPREHENSIVE STATEMENT GIVEN BY SRI K.N. SINGH PATEL FATHER OF THE DIRECTORS OF THE APPELLANT COMPANY WHICH WAS IN THE NATURE OF RATIFICA TION OF THE STATEMENTS GIVEN BY THE DIRECTORS OF THE COMPANY CONTAINING ASSESSMENT YEAR /HEAD WISE BREAK UP OF SUCH UNDISCLOSED INCOME/INVESTMENT; (C) SUCH A STATEMENT INCLUDED THE INVESTMENT IN FARMERS LOAN AT RS.75 LACS AS PER THE SEIZED MATERIAL FO UND FROM M/S SANATAN COLD STORAGE LTD. THE APPELLANT HERE; (D) IN THE RETURN FILED BY SRI K.N. SINGH PATEL HAD DULY INCLUDED THE SAME AS PER THE SAID STATEMENT INCLUDING THE INVESTMENT IN FARMERS LOAN INITIALLY WORKED OUT AT RS.75 LACS.; (E) THUS AS FAR AS THE APPELLANT IS CONCERNED THE SOURCE OF INVESTMENT IN FARMERS LOAN STOOD FULLY EXPLAINED AND CORROBORATED AND THUS ONUS THAT LIED UPON THE APPELLANT HAD DULY BEEN DISCHARGED AND SHIFTED FROM THE APPELLANT TO THE ASSESSING OFFICER; (F) THE ASSESS ING OFFICER DID NOT REBUT THE SAME BY BRINGING ON RECORD ANY MATERIAL MUCH LESS ANY COGENT MATERIAL. 30 28. LOOKING TO THE MANNER AS HAS BEEN SPECIFIED BY SRI K.N. SINGH PATEL THE APPELLANTS CASE STAND FULLY PROVED NOT ONLY BY THE CASE LAWS REFERRED TO AB OVE BUT ALSO BY THE PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN THE CIT VS. SMT. P.K. NOORJAHAN REPORTED IN (1999) 237 ITR 570 WHEREIN THEIR LORDSHIPS HAVE OBSERVED AND HELD AS UNDER: - SHRI RANBIR CHANDRA LEARNED COUNSEL APPEARING FOR THE REVENU E HAS URGED THAT THE TRIBUNAL AS WELL AS THE HIGH COURT WERE IN ERROR IN THEIR INTERPRETATION OF SECTION 69 OF THE ACT. THE SUBMISSION IS THAT ONCE THE EXPLANATION OFFERED BY THE ASSESSEE FOR THE SOURCES OF THE INVESTMENTS WAS FOUND TO BE NON - ACCEPTABLE T HE ONLY COURSE OPEN TO THE INCOME0TAX OFFICER WAS TO TREAT THE VALUE OF THE INVESTMENTS TO BE THE INCOME OF THE ASSESSEE. THE SUBMISSIONS IS THAT THE WORD MAY IN SECTION 69 SHOULD BE READ AS SHALL. WE ARE UNABLE TO AGREE. AS POINTED OUT BY THE TRIBUNAL IN THE CORRESPONDING CLAUSE IN THE BILL WHICH WAS INTRODUCED IN PARLIAMENT THE WORD SHALL HAD BEEN USED BUT DURING THE COURSE OF CONSIDERATION OF THE BILL AND ON THE RECOMMENDATION OF THE SELECT COMMITTEE THE SAID WORD WAS SUBSTITUTED BY THE WORD MA Y. THIS CLEARLY INDICATES THAT THE INTENTION OF PARLIAMENT IN ENACTING SECTION 69 WAS TO CONFER A DISCRETION ON THE INCOME - TAX OFFICER IN THE MATTER OF TREATING THE SOURCE OF INVESTMENT WHICH HAS NOT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE AS THE IN COME OF THE ASSESSEE AND THE INCOME - TAX OFFICER IS NOT OBLIGED TO TREAT SUCH SOURCE OF INVESTMENT AS INCOME IN EVERY CASE WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE NOT SATISFACTORY. THE QUESTION WHETHER THE SOURCE OF THE INVESTMENT SHOUL D BE TREATED AS INCOME OR NOT UNDER SECTION 69 HAS TO BE CONSIDERED IN THE LIGHT OF THE FACTS OF EACH CASE. IN OTHER WORDS A DISCRETION HAS BEEN CONFERRED ON THE INCOME - TAX OFFICER UNDER SECTION 69 OF THE ACT TO TREAT THE SOURCE OF INVESTMENT AS THE INCOM E OF THE ASSESSEE IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND SATISFACTORY AND THE SAID DISCRETION HAS TO BE EXERCISED KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE. IN THE INSTANT CASE THE TRIBUNAL HAS HELD THAT THE DISCR ETION HAD NOT BEEN PROPERLY EXERCISED BY THE INCOME - TAX OFFICER AND THE APPELLATE ASSISTANT COMMISSIONER IN TAKING INTO ACCOUNT THE CIRCUMSTANCES IN WHICH THE ASSESSEE WAS PLACED AND THE TRIBUNAL HAS FOUND THAT THE SOURCES OF INVESTMENTS 31 COULD NOT BE TREAT ED AS INCOME OF THE ASSESSEE. THE HIGH COURT HAS AGREED WITH THE SAID VIEW OF THE TRIBUNAL. WE ALSO DO NOT FIND ANY ERROR IN THE SAID FINDING RECORDED BY THE TRIBUNAL. THERE IS THUS NO MERIT IN THESE APPEALS AND THE SAME ARE ACCORDINGLY DISMISSED. (573) 2 9. IN VIEW OF THE SUBMISSIONS MADE ABOVE IT IS SUBMITTED THAT NO SUCH ADDITION AS HAD BEEN MADE IN THE ASSESSMENT ON ACCOUNT OF INVESTMENT IN FARMERS LOAN WAS CALLED FOR EITHER ON FACTS OR IN LAW. 30. IT IS ALSO WORTHY OF MENTION THAT LATER ON IN RESPON SE TO THE SPECIFIC QUERIES MADE BY THE LD. CIT(A) A DETAILED ANALYSIS OF SEIZED MATERIAL WAS SUBMITTED AS PER WHICH AFTER ADJUSTMENT OF DEBITS AND CREDITS THE NET FIGURES WORKED OUT AS UNDER: - ANNEXURE A - 13 : RS.2 33 424/ - ANNEXURE A - 14 : RS.1 08 195/ - AND ON THAT BASIS IT WAS ALTERNATIVELY PLEADED THAT THE ADDITION OF RS.75 LACS COULD NOT HAVE BEEN MADE. PARAS 3 A N D 4 OF THE SAID SUBMISSIONS (APPEARING ON PAGES 20 AND 21) ARE SPECIFICALLY REFERRED TO AND RELIED UPON. 31. NOTWITHSTANDING THE SUBMISSIONS MADE ABOVE THE APPELLANT BEGS TO GIVE HEREIN BELOW GROUND WISE ANALYSIS AS HAS BEEN TAKEN BY THE LD. CIT(A) FOR REJECTING THE APPELLANTS CONTENTION: - S.NO. GROUNDS TAKEN BY THE APPELLANTS COMMENTS CIT(A) (I) NO WHERE IN THE STATEMENT OF THE MANAGER HAS HE MENTIONED THAT THE MONEY WAS ADVANCED BY SHRI K.N. SINGH WHO HAD ALLEGEDLY ADMITTED THE SAME IN THE STATEMENT RECORDED AT THE TIME OF THE SEARCH. FROM A PERUSAL OF THE STATEMENT OF SRI JO GENDRA PAL MEHTA (COPY APPEARING ON PAGES 41 TO 46 OF THE PAPER BOOK) IT WOULD BE SEEN THAT NO SUCH QUESTION ABOUT THE SOURCE OF INVESTMENT IN LOANS TO THE FARMERS WAS PUT TO THE MANAGER AS STATED ABOVE. ALL THAT WAS ENQUIRED INTO FROM THE MANAGER WAS THE NATURE OF TRANSACTION AS APPEARING IN THE SEIZED MATERIAL. ANY ENQUIRY ABOUT THE SOURCE OF INVESTMENT IN LOANS TO THE FARMERS WAS NOT CONSIDERED NECESSARY FOR THE REASON THAT SRI MAHESH SINGH PATEL ELDER SON OF SRI K.N. SINGH PATEL AND THE DIRECTOR O F SANATAN COLD STORAGE LTD. (THE APPELLANT HERE) HAD DULY QUANTIFIED THE ADDITIONAL INCOME AT RS.TEN CRORES AND THE SAME HAD BEEN ATTRIBUTED TO SRI K.N. SINGH PATEL WHO HAD DULY OWNED THE SAME AND 32 OFFERED FOR TAXATION. THUS SRI K.N. SINGH PATEL HAD NOT ON LY OWNED THE UNDISCLOSED INCOME/UNEXPLAINED INVESTMENT WHEREVER THE SAME HAD SURFACED IN THE GROUP AS A WHOLE BUT HAD GIVEN THE MANNER IN WHICH SUCH UNDISCLOSED INCOME HAD BEEN EARNED. LATER ON IT WAS ACCEPTED BY THE INVESTIGATION WING ALSO WHILE SEARCH AND SEIZURE ACTION WAS CONTINUING BY RECORDING THE STATEMENT OF SRI K.N. SINGH PATEL IN PURSUANCE OF SUMMON ISSUED UNDER SECTION 131 OF THE ACT. COPY APPEARING AT PAGES 60 AND 61 (TYPED COPY ON PAGES 62 AND 63 OF THE PAPER BOOK). (II) & (III) SHRI K.N. SINGH IS NOT ASSOCIATED WITH THE COLD STORAGE IN ANY CAPACITY EITHER AS A DIRECTOR/MANAGING DIRECTOR OR AS AN EMPLOYEE. AS PER THE STATEMENT OF THE MANAGER RECORDED U/S.132 AT THE TIME OF THE SEARCH ON 19.11.2008. SHRI OM NARAIN SINGH IS THE MANAGING DI RECTOR WHO LOOKS AFTER THE WORK FROM TIME TO TIME. SINCE THERE IS NO ASSOCIATION OF SHRI K.N.SINGH PATEL WITH THE COLD STORAGE THEREFORE THE STATEMENT REGARDING THE SURRENDER OF RS.75 00 000/ - MADE BY HIM IS NOT SUPPORTED BY ANY CIRCUMSTANTIAL EVIDENC E REGARDING HIS ASSOCIATION WITH THE COMPANY. IT IS WHOLLY WRONG TO SAY THAT SRI K.N. SINGH PATEL WAS NOT ASSOCIATED WITH SANATAN COLD STORAGE LTD . IN FACT HE HAS NOT BEEN THE PROMOTER DIRECTOR OF THE COMPANY AND AT THE TIME OF SEARCH AND SEIZURE ACTION HIS TWO SONS SRI MAHESH SINGH PATEL AND SRI OM NARAYAN SINGH PATEL WERE THE DIRECTORS. BOTH OF THEM HAD GIVEN STATEMENTS ABOUT THE UNDISCLOSED INCOME AS HAS BEEN REFERRED TO IN THE EXTRACT OF SWORN STATEMENT DATED 25.02.2009 AS GIVEN BY SRI K.N. SINGH PAT EL. IT IS THUS A CASE WHERE MANAGING DIRECTOR AND DIRECTOR OF THE APPELLANT COMPANY HAD GIVEN STATEMENT ABOUT THE UNDISCLOSED INCOME/INVESTMENT ANDTHE SAME WAS DULY OWNED BY THEIR FATHER SRI K.N. SINGH PATEL WITHIN THE PREMISE MENTIONED IN VARIOUS PARAGRA PHS OF THE AFFIDAVIT DATED 25.02.2009. COPY OF WHICH APPEARS AT PAGES 47 TO 59 OF THE PAPER BOOK. IN ANY CASE SRI K.N. SINGH PATEL ALONE BY VIRTUE OF HIS BACKGROUND WAS IN A POSITION TO MAKE INVESTMENT AND BONAFIDE OF THE SAID STATEMENT IS PROVED BY THE FACT THAT HE HAD DULY INCLUDED THE SAME IN THE RETURNS FILED UNDER SECTION 153A AND HAD PAID TAXES THEREON. NO OTHER PERSON AND/OR BUSINESS ENTITY OF THE PATEL GROUP WAS IN A POSITION TO MAKE ANY SUCH INVESTMENT AND ACCORDINGLY HE ALONE WAS ASSESSAB LE TO TAX IN LAW ALSO AS PER THE PRINCIPLE LAID DOWN BY THE HONBLE APEX 33 COURT IN THE CASE OF CIT VS. SMT. P.K. NOORJAHAN (SUPRA). (IV) THE REGISTERS FOR ADVANCE TO THE FARMERS WERE FOUND AND SEIZED FROM THE PREMISES OF THE COLD STORAGE AND WERE IN THE K NOWLEDGE OF THE EMPLOYEE/MANAGER OF THE COLD STORAGE. AS PER SECTION 292C. THE DOCUMENTS BELONG TO THE APPELLANT AND THE CONTENTS BELONG TO THE APPELLANT. IT IS ADMITTED THAT THE REGISTERS FOR ADVANCES MADE MARKED AS ANNEXURES A - 13 AND A - 14 WERE FOUND D URING THE COURSE OF SEARCH AND SEIZURE ACTION AT THE PREMISES OF THE APPELLANT. SO FAR AS THE KNOWLEDGE OF SRI JOGENDRA PAL MEHTA WAS CONCERNED IT WAS ONLY CONFINED TO THE NARRATION OF THE FACT THAT ADVANCES HAD BEEN GIVEN TO THE FARMERS AND THE RATE OF INTEREST CHARGEDTHEREIN AS MENTIONED IN THE SAID REGISTERS THEMSELVES. SO FAR AS SOURCE OF INVESTMENT IS CONCERNED AS STATED AT SL. NO.(I) ABOVE THERE WAS NO QUERY RAISED BY THE AUTHORISED OFFICERS. THE REASON FOR NOT MAKING ANY QUERY FROM SRI JOGENDRA PAL MEHTA (BY THE AUTHORISED OFFICERS) HAS ALSO BEEN GIVEN AT SL. NO.(I) ABOVE. (V) IT IS A SETTLED PRINCIPLE OF LAW THAT INCOME HAS TO BE ASSESSED IN THE CORRECT HANDS. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN INCOME - TAX OFFICER VS. CH. ATCHAIA [1996] 84 TAXMAN 630 (SC)/218 ITR 239 THAT UNDER THE 1961 ACT THE ASSESSING OFFICER HAS NO OPTION LIKE THE ONE HE HAD UNDER THE 1922 ACT. HE CAN AND HE MUST TAX THE RIGHT PERSON AND THE RIGHT PERSON ALONE. BY RIGHT PERSON IS MEANT THE PERSON WHO IS LIABLE TO BE TAXED ACCORDING TO LAW WITH RESPECT TO A PARTICULAR INCOME. THE APPELLANT IS ALSO AGREEABLE TO THE VIEW THAT INCOME SHOULD BE ASSESSED IN THE HANDS OF THE RIGHT PERSON. HOWEVER IT IS A CASE WHERE INCOME ON ACCOUNT OF INVESTMENT WHICH I S ASSESSABLE UNDER THE DEEMING PROVISION CONTAINED IN SECTION 69 69A 69B AND 69C AND INCOME YIELDED BY SUCH INVESTMENT IS INVOLVED. HERE SUCH AN INCOME AS REPRESENTED BY THE INVESTMENT IN FARMERS LOAN WAS ASSESSABLE UNDER THE DEEMING PROVISIONS OF SECT ION 69/69A OF THE ACT. SRI K.N. SINGH PATEL HAD OWNED THE INVESTMENT AND IN SUPPORT OF HIS CONTENTION HE HAD GIVEN SUFFICIENT EVIDENCE DIRECT AS WELL AS CIRCUMSTANTIAL AS HAS BEEN REFERRED TO IN VARIOUS PARAGRAPHS IN HIS STATEMENT ITSELF. AS STATED ABOVE THE SAID SWORN STATEMENT DATED 25.02.2009 WAS ACCEPTED BY THE INVESTIGATION WING ALSO BY CALLING SRI K.N. SINGH PATEL UNDER SECTION 131 AND RECORDED HIS STATEMENT THEREUNDER. IN THE SITUATION AS AFORESAID THE DECISION OF HONBLE ALLAHABAD HIGH COUR T IN THE CASE OF CIT VS. ASHOK KUMAR REPORTED IN 286 ITR 541 AND FURTHER AFFIRMED BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHIV 34 PRAKASH AGGARWAL REPORTED IN 306 ITR 324 ARE SQUARELY APPLICABLE. AS REGARDS ASSESSABILITY OF INCOME YIELDED BY THE S AID INVESTMENT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF PRAKASH NARAIN VS. CIT REPORTED IN (1982) 134 ITR 364 WHEREIN THEIR LORDSHIPS HAVE OBSERVED AND HELD AS UNDER: - THE BURDEN OF PROOF REGARDING BEN AMI IS UPON THE ONE WHO ALLEGES BENAMI. NO ABSOLUTE FORMULA OR ACID TEST UNIFORMLY APPLICABLE IN ALL SITUATIONS CAN BE LAID DOWN; YET IN WEIGHING THE PROBABILITIES AND FOR GATHERING THE RELEVANT INDICIA THE COURTS ARE USUALLY GUIDED BY THESE CIRCUMST ANCES: (1) THE SOURCE FROM WHICH THE PURCHASE MONEY CAME; (2) THE NATURE AND POSSESSION OF THE PROPERTY AFTER THE PURCHASE; (2) MOTIVE IF ANY FOR GIVING THE TRANSACTION A BENAMI COLOUR; (4) THE POSITION OF THE PARTIES AND THE RELATIONSHIP IF ANY B ETWEEN THE CLAIMANT AND THE ALLEGED BENAMIDAR; (5) THE CUSTODY OF THE TITLE DEEDS AFTER THE SALE; AND (6) THE CONDUCT OF THE PARTIES CONCERNED IN DEALING WITH THE PROPERTY AFTER THE SALE. THE ABOVE INDICIA ARE NOT EXHAUSTIVE AND THEIR EFFICACY VARIES AC CORDING TO THE FACTS OF EACH CASE. NEVERTHELESS THE SOURCE WHENCE THE PURCHASE MONEY CAME IS BY FAR THE MOST IMPORTANT TEST FOR DETERMINING WHETHER THE SALE STANDING IN THE NAME OF ONE PERSON IS IN REALITY FOR THE BENEFIT OF ANOTHER. THE MERE REJECTION OF AN EXPLANATION WOULD NOT ENTITLE THE DEPARTMENT TO CLAIM THAT THE CONSIDERATION FOR THE PURCHASE OF THE PROPERTY IN THE NAME OF ANOTHER WAS PROVIDED BY THE ASSESSEE. APART FROM THE RELATIONSHIP BETWEEN THE PARTIES THERE MUST BE SOME EVIDENCE OR MATE RIAL TO SUPPORT THE CASE OF THE BENAMI NATURE OF THE TRANSACTION. A FINDING REGARDING BENAMI IS A FINDING OF FACT. WHEN A FINDING OF FACT IS BASED ON MATERIAL PARTLY RELEVANT AND PARTLY 35 IRRELEVANT THEN SUCH A FINDING IS VITIATED IN LAW. THE ITO HELD T HE FOLLOWING PURCHASES MADE IN THE YEARS 1965 - 66 TO 1968 - 69 TO BE BENAMI (I) A HOUSE IN THE JOINT NAMES OF THE ASSESSEES WIFE AND MOTHER IN LAW; (II) FOUR SHOPS IN THE NAMES OF THE ASSESSEES WIFE HIS MOTHER - IN - LAW AND HIS FATHER IN LAW; (III) A HOUS E IN THE NAME OF HIS FATHER IN LAW; AND (IV) A HOUSE IN THE NAME OF THE ASSESSEES WIFE WHICH ALONE THE ASSESSEE ADMITTED WAS PURCHASED BY HIM IN HIS WIFES NAME. THE AAC HELD THAT THE TRANSACTIONS WERE NOT BENAMI BUT ON FURTHER APPEAL THE TRIBUNAL HEL D THAT THE TRANSACTIONS WERE BENAMI FOR THE FOLLOWING REASONS: (I) B THE FATHER IN LAW OF THE ASSESSEE COULD NOT BE BELIEVED WHEN HE SAID THAT HE HAD A SUM OF RS.1 00 000 IN CASH WITH HIM SINCE HE HAD DISCONTINUED HIS BUSINESS IN 1946. (II) B HAD NO SOU RCE OF INCOME AND AT THE RELEVANT PERIOD HE ALONG WITH HIS WIFE WAS LIVING WITH HIS SON IN LAW AND BOTH OF THEM WERE DEPENDENT ON THE ASSESSEE.(III) THE ASSESSEES WIFE WAS THE ONLY ISSUE OF HIER PARENTS AND (IV) THE ASSESSEE WAS NOT HONEST AS HE HAD ADMI TTEDLY PURCHASED A HOUSE PROPERTY BENAMI IN THE NAME OF HIS WIFE. ON A REFERENCE: HELD THAT THE MERE FACT THAT THE STATEMENT OF B THAT HE HAD CASH AMOUNTING TO RS.1 00 000 WAS NOT ACCEPTED BY THE TRIBUNAL WOULD NOT LEAD TO THE INFERENCE THAT THE PROPE RTIES IN QUESTION WERE PURCHASED BENAMI BY THE ASSESSEE HIMSELF. THE ASSESSEES MOTHER IN LAW HAD STATED THAT SHE HAD IN HER POSSESSION JEWELLERY WORTH RS.15 000 AND CASH OF RS.5 000. THE TRIBUNAL HAD NOT STATED THAT THIS STATEMENT WAS NOT ACCEPTABLE OR WAS BEING REJECTED AND UNLESS IT WERE REJECTED THE TRIBUNAL COULD NOT ENTER A FINDING THAT BOTH THE FATHER IN LAW AND MOTHER IN LAW OF THE ASSESSEE WERE DEPENDENT ON HIM. THE FACT THAT THE ASSESSEES WIFE WAS THE ONLY CHILD 36 OF HER PARENTS COULD NOT LEAD TO THE CONCLUSION THAT THE PURCHASES OF THE PROPERTIES WERE FINANCED NOT BY HER PARENTS BUT BY THE ASSESSEE. IN INDIA BENAMI TRANSACTIONS WERE NOT CONSIDERED TO BE DISHONEST AND THE TRIBUNAL ERRED IN CONCLUDING THAT THE ASSESSEE WAS DISHONEST BECAUSE HE HAD ADMITTEDLY PURCHASED ONE HOUSE BENAMI IN THE NAME OF HIS WIFE. NO MOTIVE HAD BEEN SUGGESTED FOR THE BENAMI PURCHASES BY THE ASSESSEE. THERE WAS NO MATERIAL OR EVIDENCE ON RECORD IN SUPPORT OF THE FINDING OF BENAMI RECORDED BY THE TRIBUNAL. THE PURCH ASES OF THE FIRST THREE ITEMS OF PROPERTIES WERE NOT BENAMI PURCHASES FOR PURPOSES OF INCOME - TAX. THEY COULD NOT BE INCLUDED IN THE TOTAL WEALTH OF THE ASSESSEE. XXX XXX XXX XXX THERE IS NO PRESUMPT ION THAT A PROPERTY STANDING IN THE NAME OF A MARRIED HINDU LADY DOES IN FACT BELONG TO HER HUSBAND. THE ORDINARY PRESUMPTION OF LAW IS THAT THE APPARENT STATE OF AFFAIRS IS REAL UNLESS THE CONTRARY IS PROVED. THE ABSENCE OF EVIDENCE ONE WAY OR THE OTH ER DID NOT UNDER THE LAW JUSTIFY THE ASSISTANT COMMISSIONER IN DRAWING AN INFERENCE THAT THE LADY WAS A BENAMIDAR OF HER HUSBAND. IF THE ASSISTANT COMMISSIONER HAD DISBELIEVED THE PAYMENT OF THE MONEY MUCH WOULD HAVE BEEN SAID IN FAVOUR OF THE VIEW THAT IT WAS A FINDING OF FACT BUT IN THIS CASE THE PAYMENT IS NOT DISPUTED. WHAT THE ASSISTANT COMMISSIONER HAS FOUND IS THIS THAT THE PAYMENT WAS TO HIMSELF BECAUSE THE LADY IN WHOSE NAME THE PAYMENT HAS BEEN MADE WAS A BENAMIDAR. FOR COMING TO THIS FINDING SOME EVIDENCE WAS ESSENTIAL WHICH IN MY OPINION WAS WANTING IN THIS CASE. (PAGES 377 - 378) 37 IT IS FURTHER SUBMITTED FOR THE KIND CONSIDERATION OF YOUR HONOURS THAT DECISION OF HONBLE SUPREME COURT IN THE CASE OF CH. ATCHIA (SUPRA) IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE . IN THE SAID DECISION HONBLE APEX COURT HAD BEEN DEALING WITH THE ASSESSMENT OF THE FIRM AND AOP WHERE OPTION WAS AVAILABLE WITH THE ASSESSING OFFICER AS TO THE PERSON IN WHOSE HANDS THE SAME WAS TO BE OWNE D WHICH WAS NOT AVAILABLE IN THE ACT OF 1961. AS AGAINST THIS THE INSTANT CASE OF A COMPANY AND THE ISSUE PERTAIN TO THE ASSESSABILITY OF DEEMED INCOME UNDER SECTION 69 AND 69C OF THE ACT. THEREFORE DECISION REFERRED TO BY THE LD. CIT(A) HAS NO BEARIN G IN THE INSTANT CASE. IN THE MATTER OF FOLLOWING THE RULE OF PRECEDENCE THE APPELLANT BEGS TO REFER TO THE DECISION OF HONBLE APEX COURT IN THE CASES OF ( I ) CIT VS. SUN ENGINEERING WORKS REPORTED IN (1992) 198 ITR 297 (II) UNION OF INDIA AND OTHERS VS. DHANWANTI DEVI & OTHERS REPORTED IN (1996) (VOL. VI) SCC PAGE 44 (III) AMBICA QUARRY WORKS VS. STATE OF GUJRAT & OTHERS REPORTED IN (1987) VOL.I) SCC PAGE 213. RELEVANT PASSAGE FROM THE SAID CASE LAWS HAVE BEEN EXTRACTED TO ANNEXURE II HERETO UNDER THE HEAD RULE OF FOLLOWING PRECEDENCE . (VI) & (VII) THE APPELLANT HAS MENTIONED IN THE WRITTEN SUBMISSIONS FILED THAT AS PER PARA 19 OF THE SWORN STATEMENT THE ADDITIONAL INCOME HAD BEEN SURRENDERED ON THE STIPULATIONS THAT THE SWORN STATEMENT SHOULD BE TREATED AS STATEMENT GIVEN BY THE DEPONENT UNDER SECTION 132(4) READ WITH EXPLANATION 5 TO SECTION 271(1)(C) OF THE THE OBSERVATIONS MADE BY THE LD. CIT(A) HAVE ABSOLUTELY NO BEARING ON THE ISSUE OF ASSESSABILITY OF UNEXPLAINED INVESTMENT UNDER THE DEEMING PROVISIONS OF THE ACT. THE APPELLANT HAD REFERRED TO THE SETTLED PROVISIONS MERELY TO EMPHASIS THAT PROVISIONS OF SECTION 271(1)(C) COULD NOT BE MADE APPLICABLE OWING TO THE REASONS MENTIONED IN THE SAID WRITTEN STATEMENT. IN ANY CASE THE FACT REMAINS THAT THE STATEMENT GIVEN BY SRI MAHESH SINGH PATEL AND SRI OM NARAYAN SINGH PATEL DURING THE COURSE OF SEARCH AND SEIZURE ACTION HAD DULY BEEN OWNED BY SRI K.N. SINGH PATEL WHO HAD 38 I.T.ACT 1961. HOWEVER EXPLANATION 5 TO SECTION 271(1)(C) IS APPLICABLE ONLY TO SEARCH INITIATED UNDER SECTION 132 BEFORE THE 1 ST DAY OF JUNE 2007 AND SINCE IN THE CASE OF THE APPELLANT THE SEARCH HAD TAKEN PLACE ON 19.11.2008 THIS EXPLANATION WAS NOT APPLICABLE. HENCE THE CONDITIONS UNDER WHICH THE STATEMENT HAD BEEN GIVEN WERE NOT APPLICABLE IN THE CASE OF THE A PPELLANT EITHER. INSTEAD OF EXPLANATION 5 EXPLANATION 5A IS APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT WHICH IS REPRODUCED BELOW. DULY INCLUDED THE ENTIRE UNEXPLAINED INVESTMEN T/UNDISCLOSED INCOME IN THE RETURN FILED UNDER SECTION 153A OF THE ACT. (VIII) HENCE NO SET OFF CAN BE ALLOWED FOR THE SURRENDER MADE BY SHRI K.N SINGH PATEL FOR THE UNEXPLAINED ADVANCES MADE TO THE FARMERS WHICH WERE FOUND RECORDED IN ANNEXURES A13 AND A14 AND WHICH BELONGED TO THE COMPANY. HENCE THE ADDITION HAS TO BE CONSIDERED IN THE CASE OF THE APPELLANT AND THE ACTION OF THE ASSESSING OFFICER IN THIS REGARD IS UPHELD. IN THE PRESENT CASE THE ISSUE INVOLVED IS AS TO WHETHER THE INVESTMENT MADE IN LOANS TO THE FARMERS STOOD PROVED OR NOT. IN SUPPORT OF ITS EXPLANATION THE APPELLANT HAD SUBMITTED THAT THE SAME IS ATTRIBUTABLE TO SRI K.N. SINGH PATEL AND COVERED BY THE INCOME SPECIFICALLY SHOWN UNDER THE HEAD LOANS TO FARMERS BY SRI K.N. SINGH PATEL AND FOR THE INCOME SO SHOWN HE HAS BEEN ASSESSED TO TAX ALSO . INCOME SO ASSESSED CONSTITUTE SOURCE OF INVESTMENT AS REVEALED BY SEIZED MATERIAL ANNEXURE A - 13 AND A - 14 AND ON THIS PREMISE IT HAS BEEN CONTENDED AND SHOWN WITH FULL LEGITIMACY THAT THE SOURCE OF INVESTMENT IS FULLY EXPLAINED AND THE DEEMING PROVISIONS CONTAINED IN 69 AND 69C ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT. THUS APPELLANTS EXPLANATION AB OUT THE SOURCE DESERVES TO BE ACCEPTED BY APPLYING THE PRINCIPLE LAID DOWN IN THE CASE OF ASHOK KUMAR AND SHIV PRAKASH AGGARWAL . 32. OVER AND ABOVE THE SUBMISSIONS MADE HEREINFORE IT IS SUBMITTED THAT IT IS A CASE OF DOUBLE TAXATION AS HAS BEEN 39 DEMONST RATED ABOVE SRI K.N. SINGH PATEL (WHO HAD OWNED THE INVESTMENT IN QUESTION) HAD SHOWN THE SAME AS UNEXPLAINED INVESTMENT IN RETURN IN RELATION TO THE SAME HE HAS BEEN ASSESSED TO TAX ALSO. IN THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD TO REBUT THE SAM E THE INVESTMENT IN LOANS TO FARMERS COULD NOT HAVE AGAIN BEEN ASSESSED IN THE HANDS OF THE APPELLANT COMPANY AND BY THE SAME TOKEN NO INCOME (YIELDED BY SUCH INVESTMENT COULD HAVE BEEN ADDED IN THE INCOME OF THE APPELLANT). 8 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER PARA 32 OF THE WRITTEN SUBMISSIONS IT IS THE CLAIM OF LEARNED A.R. OF THE ASSESSEE THAT IT IS A CASE OF DOUBLE TAXATION BECAUSE SHRI K. N. SINGH PATEL HAS ALREADY OWNED THE INVESTMENT IN QUEST ION AS UNEXPLAINED INVESTMENT IN RETURN OF INCOME AND HAS BEEN ASSESSED TO TAX ALSO. AS PER THE ORDER OF CIT ( A) IT IS NOT HIS CASE THAT THIS INCOME WAS NOT OWNED BY SHRI K. N. SINGH PATEL. THE STAND OF CIT ( A) IS THAT NO SET OFF CAN BE ALLOWED FOR SURR ENDER MADE BY SHRI K. N. SINGH PATEL . THIS IS ADMITTED POSITION OF FACT THAT SHRI K. N. SINGH PATEL IS NO STRANGER TO THE ASSESSEE COMPANY. IN FACT HE IS ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY. THIS IS ALSO THE CLAIM OF THE ASSESSEE THAT HE WAS T REATED AS KEY PERSON OF THIS GROUP. DURING THE COURSE OF SEARCH & SEIZURE ACTION SHRI K. N. SINGH PATEL WAS ALSO CALLED UPON TO GIVE STATEMENT. AS PER PAGE 3 OF THE STATEMENT OF FACTS FILED BEFORE CIT ( A) SUCH SURRENDER OF RS.10 CRORE BY SHRI K. N. SIN GH PATEL ALSO INCLUDED A SURRENDER OF RS.75 LAC S IN FINANCIAL YEAR 2005 - 06 IN RELATION TO SANATAN COLD STORAGE I.E. THE ASSESSEE COMPANY ON ACCOUNT OF LOAN TO FARMERS. HENCE IT IS SEEN THAT IF ANY FURTHER ADDITION IS MADE IN THE HANDS OF THE ASSESSEE COMP ANY ON ACCOUNT OF LOAN TO FARMERS THEN IT AMOUNTS TO DOUBLE ADDITION. THIS IS NOT IN DISPUTE THAT THIS SUM OF RS.10 CRORE WAS DECLARED BY SHRI K. N. SINGH PATEL IN THE RETURN OF HIS INCOME IN VARIOUS YEARS AND IT WAS CLAIMED BEFORE THE ASSESSING OFFICER T HAT TAX WAS PAID BY SHRI PATEL. BUT THIS IS NOT EXAMINED BY THE ASSESSING OFFICER AND HE DECIDED THE ISSUE ON THIS BASIS THAT THE ASSESSEE CANNOT GET BENEFIT OF DIS CLOSURE BY SHRI PATEL. I N OUR CONSIDERED OPINION THE ADDITION MADE BY THE ASSESSING OFFIC ER IN THE HANDS OF 40 THE ASSESSEE COMPANY ON ACCOUNT OF SUCH ADVANCE TO FARMERS IS NOT SUSTAINABLE IN THE FACTS OF THE PRESENT CASE IF THE TAX IS PAID BY SHRI PATEL . WE THEREFORE RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THIS CLAIM ABOUT PAYMENT OF TAX BY SHRI PATEL ON HIS DISCLOSURE OF RS.10 CRORES. IF IT IS ESTABLISHED THEN NO ADDITION SHOULD BE MADE BUT OTHERWISE THE ASSESSING OFFICER SHOULD DECIDE THE ISSUE AS PER LAW. GROUND NO. 4 TO 6 ARE ALLOWED FOR STATISTICAL PURPOSES. 9 . REGARDING GROUND NOS. 7 TO 9 WE FIND THAT THE ISSUE REGARDING TAXABILITY OF INTEREST INCOME ON THE SUM ADVANCED IS CONSEQUENTIAL. HENC E THIS ISSUE IS ALSO RESTORED TO ASSESSING OFFICER FOR FRESH DECISION IN ACCORDANCE TO HIS DECISION FOR GROUND NO. 4 TO 6. GROUND NO. 7 TO 9 ARE ALSO ALLOWED FOR STATISTICAL PURPOSES. 1 0 . IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11 . NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2006 - 07. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN REDUCING THE ADDITION OF RS.75 00 000/ - MADE U/S 69C OF THE I.T. ACT 1961 ON ACCOUNT OF ADVANCE TO FARMERS TO RS.70 47 656/ - WITHOUT APPRECIATING THE FACT THAT SHRI K.N. SINGH PATEL ONE OF THE DIRECTORS OF THE COMPANY HAS IN HIS STATEMENT ON OATH RECORDED U/S 132(4) OF THE I.T. ACT 1961 HAD SURRENDERED EQUIVALENT AMOUNT ON ACCOUNT OF ADVANCE TO FARMERS AND THAT NO SATISFACTORY EXPLANATION WAS PROVIDED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS REGARDING BOOK ENTRIES RELATING TO SUCH ADVANCES. 2. THAT LEARNED CIT(A) HAS ERR ED IN LAW AND ON FACTS IN REDUCING THE ADDITION OF RS.75 00 000/ - MADE U/S 69C OF THE I.T. ACT 1961 ON ACCOUNT OF ADVANCE TO FARMERS TO RS.70 47 656/ - WITHOUT APPRECIATING THE FACT THAT THE 41 COMPANY'S BALANCE SHEET FOR THE RELEVANT PERIOD DID NOT SHOW ANY ADVANCE TO THE FARMERS WHEREAS AS PER SEIZED DOCUMENT ANNEXURES 'A - 13' AND 'A - 14' THE AMOUNT OF RS.75 00 000/ - WAS FOUND TO HAVE BEEN ADVANCED AND THAT SINCE THE SEIZED DOCUMENTS BELONGED TO THE ASSESSEE COMPANY THE A.O. WAS JUSTIFIED AS PER PROVISIONS O F SECTION 292C OF THE I.T. ACT 1961 IN HOLDING THE UNACCOUNTED EXPENDITURE TO BE UNEXPLAINED EXPENDITURE U/S 69C OF THE I.T. ACT 1961 IN THE HANDS OF THE ASSESSEE COMPANY. 3. THAT LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION OF R S.13 50 000/ - MADE ON ACCOUNT OF UNDISCLOSED INCOME RESULTING FROM THE INTEREST CHARGED ON THE AMOUNT OF ADVANCE TO FARMERS TO RS.1 05 715/ - WITHOUT APPRECIATING THE A.O.'S FINDING THAT THE MANAGER OF THE COMPANY DURING THE COURSE OF ASSESSMENT PROCEEDIN GS HAD STATED ON OATH THAT INTEREST @18% WAS BEING CHARGED ON THE ADVANCES TO FARMERS AMOUNTING TO RS.75 00 000/ - . 4. THAT THE ORDER OF THE LD. CIT ( A) DESERVES TO BE VACATED AND THE ASSESSMENT ORDER PASSED BY THE A.O. BE RESTORED. 1 2 . WE FIND THAT THE ISSUES RAISED BY THE REVENUE ARE INTER - CONNECTED WITH THE ISSUES RAISED BY THE ASSESSEE IN ITS APPEAL. THE GRIEVANCE OF THE REVENUE IS THAT CIT(A) WAS NOT JUSTIFIED IN REDUCING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.75 LAC TO RS.70 47 656/ - AND REDUCING THE ADDITION ON ACCOUNT OF INTEREST ON SUCH ADVANCES FROM RS.13.50 LAC AS HAS BEEN MADE TO RS.10 575/ - . SINCE WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WHILE DECIDING THE APPEAL OF THE REVENUE AND HELD THAT NO PART OF RS. 75 LACS OWNED UP BY SRI PATEL AND OFFERED TO TAX BY HIM AND TAXED ALSO IS TAXABLE IN THE HANDS OF THIS ASSESSEE COMPANY THE GROUNDS RAISED BY THE REVENUE DO NOT SURVIVE AND ACCORDINGLY REJECTED. 1 3 . IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. 1 4 . NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2009 - 10. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 42 1. THAT LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.6 50 000/ - MADE U/S 69C OF THE I.T. ACT 1961 O N ACCOUNT OF UNEXPLAINED EXPENDITURE BY THE ASSESSEE COMPANY WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE'S EXPLANATION REGARDING EXPENDITURE MADE ON ACCOUNT OF INSTALLATION OF AIR CONDITIONER AND OTHER ITEMS OF FURNITURE AND FITTING WAS CONSIDERED IN DETAIL AND ONLY IN ABSENCE OF SATISFACTORY EXPLANATION FURNISHED BY THE ASSESSEE THE ADDITION OF RS.4 00 000/ - AND RS.2 50 000/ - WERE MADE TO THE INCOME OF THE ASSESSEE COMPANY U/S 69C OF THE I.T. ACT 1961 . 2. THAT LD CIT(A) HAS ERRED IN LAW AND ON FA CTS IN DELETING THE ADDITION OF RS.6 50 000/ - MADE U/S 69C OF THE I.T. ACT 1961 ON ACCOUNT OF UNEXPLAINED EXPENDITURE BY THE ASSESSEE COMPANY WRONGLY ASSUMING IT TO BE COVERED BY THE DISCLOSED SUM OF RS.25 00 OOP/ - MADE BY SHRI K.N. SINGH PATEL. 3. WITHO UT PREJUDICE TO ABOVE IT IS STATED THAT THOUGH THE TAX EFFECT INVOLVED FOR FILING APPEAL AGAINST THE ORDER OF THE LD. CIT(A) IS LESS THAN RS.3 00 000/ - AS PER CBDT'S GUIDELINES IN THIS REGARD YET CONSIDERING THE FACT THAT LD. CIT(A) HAS PASSED A COMPOSIT E ORDER AND COMMON ISSUES ARE INVOLVED IN RESPECT OF A.YRS. 2006 - 07 AND 2009 - 10 AND THAT IN RESPECT OF A.Y. 2006 - 07 THE APPEAL IS BEING FILED ON MERITS THE APPEAL FOR A.Y. 2009 - 10 IS BEING FILED AS PER CBDT'S GUIDELINES. 4. THAT THE APPELLANT CRAVES LEA VE TO AMEND ANY ONE OR MORE OF THE GROUNDS OF THE APPEAL AS STATED ABOVE AS AND WHEN NEED FOR DOING SO MAY ARISE. 5. THAT THE ORDER OF THE LD. CIT ( A) DESERVES TO BE VACATED AND THE ASSESSMENT ORDER PASSED BY THE A.O. BE RESTORED. 1 5 . LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE IN HIS WRITTEN SUBMISSIONS SUPPORTED THE ORDER OF LEARNED CIT ( A). 43 1 6 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THIS ISSUE WAS DECIDED BY CIT ( A) AS PER PARA 6.1 OF HIS ORDER WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 6.1 AS REGARDS THE DISCLOSURE OF THE UNEXPLAINED EXPENDITURE MADE BY SHRI K. N. SINGH PATEL IN VIEW OF THE FINDINGS GIVEN IN PARAS 3.2 TO 3.2.4 FOR A.Y. 2006 - 07 IT IS HELD THAT THE UNEXPLAINED EXPENDITURE U/S 69C/69 IS LIABLE TO BE ASSESSED IN THE HANDS OF TH E COMPANY. SHRI K. N. SINGH PATEL HAS APPARENTLY DISCLOSED A SUM OF RS.25 00 000/ - RELATING TO THE APPELLANT IN A.Y. 2009 - 10 AND NO ADVERSE VIEW HAS BEEN TAKEN BY THE ASSESSING OFFICER IN THIS REGARD. HOWEVER SINCE THE ADDITIONS OF RS.70 147 656/ - ARID RS.1 05 715/ - HAVE BEEN CONFIRMED IN A.Y. 2006 - 07 AND NO FINDING HAS BEEN GIVEN REGALING THE MANNER OF UTILIZATION OF THIS AMOUNT AND THE AMOUNT DOES NOT APPEAR TO HAVE BEEN INVESTED ELSEWHERE EXCEPT IN CONSTRUCTION OF THE BUILDING THEREFORE THE ADDITIO N OF RS.6 50 000/ - MADE IN THE HANDS OF THE COMPANY FOR THE YEAR UNDER CONSIDERATION CAN BE CONSIDERED AS COVERED BY THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENTS MADE IN THE A.Y 2006 - 07 WHICH UNDISCLOSED INVE S T MENT W AS APPARENTLY AVAILABLE WITH THE APPELLANT AND THE EVIDENCE OF REPAYMENT OF WHICH IS AVAILABLE IN ANNEXURES A 1 3 AND A14 ITSELF AND THE REPAYMENT HAS OCCURRED IN THE SUBSEQUENT ASSESSMENT YEAR 20 07 - 08 TO THE TUNE OF RS. 23 67 943/ - AND RS. 48 24 994 / - . SINCE THE ADDITION FOR UNACCOUNTED ADV ANCES HAS BEEN MADE WHICH HAVE BEEN SUBSEQUENTLY RETURNED AS PER THE ENTRIES IN THE ANNE XUR ES S EI ZED AND THERE IS NO OTHER EVIDENCE OF THE SAME NOT BEING AVAILABLE WITH T HE ASSESSEE HENCE THE ADDITION OF RS. 6 50 000/ - IS DEEMED TO BE COVERED BY THE FUNDS AVAILABLE WITH THE ASSESS E E IN THE EARLIER ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 AND DOES NOT REQUIRE TO BE SEPARATELY ADDED AND THE ADDITION OF RS. 6 50 000/ - MADE IS HEREBY DELETED. HENCE GROUNDS NO. 1 & 2 ARE ALLOWED WHILE GROUNDS NO. 3 & 4 ARE REJECTED WHILE GROUNDS NO. 5 & 6 BEING GENERAL IN NATURE DO NOT REQUIRE ANY SEPARATE ADJUDICATION. 17. FROM THE ABOVE PARA FROM THE ORDER OF CIT(A) WE FIND THAT THIS ISSUE WAS DECIDED ON THE BASIS THAT SHRI K. N. SINGH PATEL HAS DISCLOSED RS.25 LAC S RELATING TO ASSESSEE COMPANY IN ASSESSMENT YEAR 2009 - 10 BUT THE MAIN BASIS OF HIS DECISION IS THAT SINCE THE ADDITION OF RS.70 47 656/ - AND RS.1 05 715/ - HAVE BEEN CONFIRMED IN ASSESSMENT YEAR 2006 - 07 AND NO FINDING HAS BEEN GIVEN 44 REGARDING THE MANNER OF UTILIZATION OF THIS AMOUNT AND THE AMOUNT DOES NOT APPEAR TO HAVE BEEN INVESTED ELSEWHERE EXCEPT IN CONSTRUCTION OF THE BUILDING SEPARATE ADDITION OF RS.6.50 LAC MADE IN THE HANDS OF THE ASSESSEE COMPANY FOR THE PRESENT YEAR CAN BE CONSIDERED AS COVERED BY THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENTS MADE IN THE A.Y . 2006 - 07 . ON THIS ASPECT WE FIND THAT SUCH ADDITION IN A SSESSMENT YEAR 2006 - 07 HAS ALREADY BEEN DELETED BY US HENCE THIS BASIS OF CIT(A) THAT THIS ADDITION IS COVERED BY SUCH ADDITION CONFIRMED BY HIM IN ASSESSMENT YEAR 2006 - 07 DOES NOT SURVIVE BUT STILL AS PER PAGE 3 OF THE ASSESSMENT ORDER IT IS NOTED THAT THE DISCLOSURE MADE BY SHRI K. N. SINGH PATEL OF RS.10 CRORE INCLUDED A DISCLOSURE OF RS.25 LAC S IN FINANCIAL YEAR 2008 - 09 ON ACCOUNT OF ASSESSEE COMPANY ON ACCOUNT OF CONSTRUCTION AND ACQUISITION OF CAPITAL ASSET. THEREFORE IF THIS ADDITION IS CONFIRMED IN HANDS OF THIS ASSESSEE COMPANY THIS WILL AMOUNT TO DOUBLE ADDITION AND THEREFORE ON THIS ISSUE WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 18. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. 19. IN THE COMBINED RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED AND APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 2 /1 1 /2014 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R. I.T.A.T. LUCKNOW ASSTT. REGISTRAR