Sunglow Builders Pvt. Ltd, New Delhi v. ACIT CC-1, New Delhi

ITA 2661/DEL/2008 | 2005-2006
Pronouncement Date: 30-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 266120114 RSA 2008
Assessee PAN AABCS7410C
Bench Delhi
Appeal Number ITA 2661/DEL/2008
Duration Of Justice 1 year(s) 8 month(s) 22 day(s)
Appellant Sunglow Builders Pvt. Ltd, New Delhi
Respondent ACIT CC-1, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 30-04-2010
Date Of Final Hearing 21-04-2010
Next Hearing Date 21-04-2010
Assessment Year 2005-2006
Appeal Filed On 08-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH G DELHI ] BEFORE SHRI RAJPAL YADAV JM AND SHRI K. D. RANJAN AM I. T. APPEAL NO. 2659 (DEL) OF 2008; I. T. APPEAL NO. 2660 (DEL) OF 2008 & I. T. APPEAL NO. 2661 (DEL) OF 2008; ASSESSMENT YEARS : 2002-03 2004-05 & 2005-06 SUNGLOW BUILDERS PVT. LTD. ASSTT. COMMISSIONER OF I NCOME-TAX 11 NEW RAJDHANI ENCLAVE VS. CENTRAL CIRCLE : 1 VIKAS MARG D E L H I 92. N E W D E L H I. PAN / GIR NO. AAB CS 7410 C. A N D I. T. APPEAL NO. 2847 (DEL) OF 2008; I. T. APPEAL NO. 2855 (DEL) OF 2008 & I. T. APPEAL NO. 2628 (DEL) OF 2008. ASSESSMENT YEARS : 2002-03 2004-05 & 2006-07. ASSTT. COMMISSIONER OF INCOME-TAX SUNGLOW BUILDERS PVT. LTD. CENTRAL CIRCLE : 1 VS. 11 NE W RAJDHANI ENCLAVE N E W D E L H I. VIKAS MARG D E L H I 92. PAN / GIR NO. AAB CS 7410 C. ( APPELLANTS ) ( RESPONDENTS ) ASSESSEE BY : SHRI AMIT GOEL C. A.; DEPARTMENT BY : SHRI GAJANAND MEENA [CIT] D R; O R D E R. 2 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 PER K. D. RANJAN AM : THESE APPEALS BY THE ASSESSEE AND THE REVENUE ARIS E OUT OF SEPARATE ORDERS OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)III NEW DELHI . THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF FOR THE SAKE OF CONVENIENCE BY THIS COMMON ORDER. ASSESSMENT YEAR : 2002-03 : 2. THE FIRST ISSUE FOR CONSIDERATION IN ASSESSEES APPEAL RELATES TO CONFIRMING THE ADDITION OF RS.5 66 490/- ON ACCOUNT OF VALUATION OF CLOSING ST OCK OF DWARKA PROJECT. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE COMPANY WAS E NGAGED IN THE BUSINESS OF EXECUTING BUILDING PROJECTS. SEARCH UNDER SECTION 132 OF THE INCOME-T AX ACT 1961 WAS CONDUCTED ON BUSINESS/RESIDENTIAL PREMISES OF THE ASSESSEE/DIREC TORS ON 18/11/2005. IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153-A OF THE ACT THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.1 20 885/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD COMPLETED DWARKA SECTOR : 10 PROJECT DURING THE YEAR UNDER CONSIDERATION. THE TOTAL SUPER BUILT UP AREA CONSTRUCTED BY THE COMPAN Y WAS 8 716.98 SQ. FT. CONSISTING OF SHOPS AND THE TOTAL COST OF CONSTRUCTION WAS ADMITTED AT RS.1 75 72 397/- GIVING AN AVERAGE COST OF RS.2 016 PER SQ. FT. OUT OF TOTAL SUPER BUILT UP AREA THE ASSESSEE HAD SOLD 5 168.63 SQ. FT. AND CLOSING STOC K OF 3 548.35 SQ. FT. WAS SHOWN. THE VALUE OF THE CL OSING STOCK WAS SHOWN AT RS.43 61 883/- GIVING AN AVERAGE RATE OF RS.1 229.27 PER SQ. FT. ON A QUERY ABOUT VALUATION OF THE CLOSING STOCK IT WAS SUBMITTED THAT THE CLOSING STOCK HAD BEEN VA LUED ON THE BASIS OF SALE INSTANCES OF SHOPS ON SIMILAR FLOORS. THIS EXPLANATION OF THE ASSESSEE W AS NOT FOUND TO BE ACCEPTABLE BY THE ASSESSING OFFICER ON THE GROUND THAT THE TOTAL SUPER BUILT UP AREA OF 5 168.63 SQ. FT. HAD BEEN SOLD FOR RS.1 37 08 219/- GIVING AN AVERAGE SALE PRICE OF RS .2 652.19. THE AO WAS OF THE VIEW THAT THE CLOSING STOCK WAS UNDER-VALUED. HE WAS ALSO OF THE OPINION THAT THE ASSESSEE HAD CONVENIENTLY CHOSEN THE LOWEST SELLING PRICE OF A PARTICULAR SHO P OF A PARTICULAR FLOOR FOR THE PURPOSE OF VALUING CLOSING STOCK WHICH HAD NO CO-RELATION WITH THE MA RKET PRICE AS ON 31 ST MARCH 2002. THE ASSESSEE HAD SHOWN SALE OF 16 129.67 SQ. FT. OF BUI LT UP AREA FOR RS.3 17 23 800/- GIVING AN 3 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 AVERAGE SALE PRICE OF RS.1 966.80 PER SQ. FT. THUS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD NEITHER TAKEN THE COST PRICE NOR THE MARKET PRI CE FOR THE VALUATION OF THE CLOSING STOCK. THE VALUATION OF THE CLOSING STOCK WAS ARBITRARILY MADE . THE AO BY TAKING AVERAGE COST PRICE AT RS.2 015.88 PER SQ. FT. VALUED THE CLOSING STOCK AT RS.71 53 048/- AS AGAINST RS.43 61 889/- SHOWN BY THE ASSESSEE. ACCORDINGLY AN ADDITION OF RS.27 91 165/- WAS MADE. 3. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED TH AT THE ASSESSING OFFICER HAD VALUED THE CLOSING STOCK BY APPLYING AVERAGE COST TO ALL THE F LOORS IN A PROJECT WHERE THE ASSESSEE HAD VALUED THE CLOSING STOCK ON FLOOR WISE BASIS AT COST OR MA RKET PRICE WHICHEVER WAS LESS. IT WAS ALSO SUBMITTED THAT THE CLOSING STOCK ON SECOND FLOOR WA S VALUED AT THE RATE OF RS.1603.18 PER SQ. FT. AND ON THIRD FLOOR RS.900/- PER SQ. FT. IT WAS FUR THER SUBMITTED THAT THE AO CANNOT IMPOSE IN HIS OWN METHOD MERELY BECAUSE THAT METHOD FOLLOWED BY H IM RESULTS INTO COMPUTATION OF HIGHER INCOME. THE ASSESSEE WAS FOLLOWING RECOGNIZED METH OD OF VALUATION AND THE AO WAS DUTY- BOUND TO ACCEPT SUCH METHOD OF ACCOUNTING. SINCE T HE ASSESSEE HAS VALUED THE CLOSING STOCK IN LINE WITH METHOD OF ACCOUNTING FOLLOWED BY IT CONSI STENTLY NO ADDITION COULD BE MADE. 4. THE LD. CIT (APPEALS) AFTER CONSIDERING THE SUBM ISSIONS MADE BY THE ASSESSEE AND THE FACTS OF THE CASE OBSERVED THAT IN REAL ESTATE BUSI NESS THERE IS VARIATION IN THE FLOOR WISE RATE OF RESIDENTIAL / COMMERCIAL BUILDINGS. THE SALE PRICE ALSO VARIES DEPENDING UPON LOCATION OF THE FLOOR. THEREFORE HE WAS OF THE VIEW THAT THE AO W AS NOT CORRECT IN APPLYING THE SAME RATE TO THE CLOSING STOCK OF DIFFERENT FLOORS. HE FURTHER NOTE D THAT THE AO HAD NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE MARKET VALUE OF CLOSING ST OCK WAS MORE THAN THE PRICE SHOWN BY THE ASSESSEE. MOREOVER THE AO HAD ACCEPTED THE SALE O F DIFFERENT FLOORS AND NO DISCREPANCY WAS POINTED OUT BY HIM IN SALE RATES ADOPTED BY THE ASS ESSEE DURING THE YEAR IN RESPECT OF VARIOUS FLOORS. THE AO HAD TAKEN RS.2 015.88 PER SQ. FT. F OR VALUATION OF THE CLOSING STOCK OF ALL THE FLOORS. THE LD. CIT (A) FURTHER NOTED THAT AVERAGE SALE RATE ON GROUND AND FIRST FLOOR WAS RS.3656.51 A ND RS.2 400.40 RESPECTIVELY WHICH WAS MORE THAN TH E AVERAGE RATE ADOPTED BY THE AO FOR VALUATION OF THE CLOSING STOCK. THERE WAS N O CLOSING STOCK OF THESE TWO FLOORS. IN RESPECT 4 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 OF STOCK OF SECOND FLOOR HAVING 1 660.05 SQ. FT. A REA IT WAS VALUED BY THE ASSESSEE AT 1 603.81 SQ. FT. THE AVERAGE SALE RATE FOR THE ENTIRE YEAR IN RESPECT OF SECOND FLOOR WAS RS.1 577.71 PER SQ. FT. THE ASSESSEE WAS ASKED TO GIVE DETAILS OF SUB SEQUENT SALES OF SECOND FLOOR MADE BY IT AFTER 31 ST MARCH 2002. FROM THE DETAILS SUBMITTED BY THE AS SESSEE IT WAS NOTICED BY CIT(A) THAT AVERAGE SALE RATE IN THE IMMEDIATE SUCCEEDING YEAR 2002-03 WAS SHOWN AT RS.1 456.20. HE THEREFORE CAME TO THE CONCLUSION THAT THE RATE OF RS.1 603.81 ADOPTED BY THE ASSESSEE TO VALUE THE CLOSING STOCK OF SECOND FLOOR WAS FAIR AND REAS ONABLE. THEREFORE NO ADVERSE VIEW COULD BE TAKEN IN RESPECT OF VALUATION OF THE SECOND FLOOR M ADE BY THE ASSESSEE. AS REGARDS THE THIRD FLOOR THE ASSESSEE HAD VALUED THE CLOSING STOCK AT RS.90 0 PER SQ. FT. WHEREAS THE SALES IN THE FINANCIAL YEAR 2003-04 WERE MADE AT THE RATE OF 1048.03 PER S Q. FT. THE AVERAGE SALE RATE FOR THIS FLOOR DURING THE YEAR WAS AT RS.1252.06 PER SQ. FT. THER EFORE THE LD. CIT (A) CAME TO THE CONCLUSION THAT THE ASSESSEE HAD UNDER-VALUED THE SOCK OF THIR D FLOOR. THE LD. CIT (A) TOOK THE MARKET PRICE OF THIRD FLOOR AS ON 31 ST MARCH 2002 AT RS.1200 PER SQ. FT. THE LD. CIT (A ) ACCORDINGLY VALUED THE CLOSING STOCK ON THIRD FLOOR MEASURING 1 888.30 BY APPLYING THE RATE OF RS.1200 PER SQ. FT. THE DIFFERENCE IN CLOSING STOCK WAS WORKED OUT AT R S.5 66 490/- AS AGAINST RS.27 91 165/-. THE LD. CIT(A) ACCORDINGLY UPHELD THE ADDITION OF RS 5 66 490/-. 4.1 THE ASSESSEE IS AGGRIEVED BY THE SUSTENANCE O F ADDITION OF RS.5 66.490/- WHEREAS THE REVENUE IS AGGRIEVED BY THE REDUCTION OF ADDITION F ROM RS.27 91 165/- TO RS.5 66 490/-. 5. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD VALUED THE CLOSING STOCK AT RS.900 PER SQ. FT. BASED ON THE SALE PRICE AS ON THE LAST DATE OF THE ACCOUNTING YEAR WHEREAS THE AO HAD TAKEN THE VALUE OF THE CLOSING S TOCK ON AVERAGE COST OF RS.2 015/-. THE LD. AR OF THE ASSESSEE HAS FILED A COPY OF THE ACCOUNT AS ON THE LAST DAY OF THE ACCOUNTING YEAR IN SUPPORT OF HIS CONTENTION THAT SALE PRICE OF THIRD FLOOR WAS AT THE RATE OF RS.900/- PER SQ. FT. ON THE OTHER HAND THE LD. CIT (DR) SUPPORTED THE ORDE R OF THE AO. 5 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS STATED ABOVE IT IS CLEAR THAT THE AVERAG E COST PRICE OF THE STOCK WAS RS.2 015.88 PER SQ. FT. THE LD. CIT (A) HAS GIVEN A FINDING THAT THE C LOSING STOCK OF SECOND FLOOR WAS VALUED AT RS.1 603.81 PER SQ. FT. AS AGAINST THE AVERAGE SALE PRICE OF RS.1577.71 PER SQ. FT. SINCE THE VALUATION OF THE CLOSING STOCK MADE BY THE ASSESSEE IN RESPECT OF SECOND FLOOR WAS HIGHER THAN THE AVERAGE SALE PRICE OF SECOND FLOOR IN OUR CONSIDER ED OPINION THE LD. CIT (A) WAS JUSTIFIED IN ACCEPTING THE VALUATION OF THE SECOND FLOOR. AS RE GARDS THE VALUATION OF THE THIRD FLOOR THE AVERAGE SALE RATE OF SHOPS AT THIRD FLOOR WAS RS.12 52.06 PER SQ. FT. WHEREAS THE ASSESSEE HAD ADOPTED THE SALE PRICE AT RS.900/- PER SQ. FT. AS AGAINST THIS THE LD. CIT (A) HAD TAKEN THE VALUATION OF THE CLOSING STOCK AT RS.12 00/-. FROM THE DETAILS FILED BY THE ASSESSEE WE FIND THAT THE ASSESSEE HAD MADE SALES OF SHOPS AT THIRD FLOOR ON 31 ST MARCH AS BELOW: SHOP & FLOOR. A R E A S O L D T O TOTAL COST RATE. F.307 199 SQ. FT. MANJUSHAH TANWAR 3 04 000/- 1 527.64 F.309 236 SQ. FT. SAFAL PRASAD SHARMA 3 33 940/- 1 415/- F. 306 265 SQ.FT. PHOOL SINGH 2 38 500 90 0/- 700 8 75 490 FROM THE DETAILS FILED IT MAY BE SEEN THAT THE ASSESSEE HAD SOLD THREE SHOPS ON THIRD FLOOR ON 31 ST MARCH AT THE RATE VARYING FROM RS.900/- PER SQ. FT . TO RS.1 527.64 PER SQ. FT. THE AVERAGE SALE PRICE PER SQ. FT. COMES TO RS.1 251/- [RS.8 75 940 RS.700/-]. THE AVERAGE RATE OF CONSTRUCTION FOR ALL THE FLOORS HAD BEEN WORKED AT BY THE AO AT RS.2 015.88 PER SQ. FT. WHEREAS THE SALE PRICE AS ON THE LAST DAY OF THE ACCOUNTING YEAR IN RESPECT OF THIRD FLOOR HAD VARIED BETWEEN RS.900/- TO RS.1 527/- PER SQ. FT. THE AVE RAGE SALE PRICE AS ON THE LAST DATE COMES TO RS.1 251/-. THEREFORE IN OUR CONSIDERED OPINION THE CLOSING STOCK SHOULD BE VALUED AT THE AVERAGE MARKET PRICE OF RS.1 251/- PER SQ. FT. IN R ESPECT OF RS.1 888.31 PER SQ. FT. WE 6 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 ACCORDINGLY DIRECT THE ASSESSING OFFICER TO WORK OU T THE VALUE OF CLOSING STOCK ON THIRD FLOOR BY TAKING RATE OF RS 1251 PER SQ. FT. THE ORDER OF CIT (A) IS MODIFIED TO THIS EXTENT. 7. THE NEXT ISSUE FOR CONSIDERATION IN ASSESSEE'S A PPEAL RELATERS TO CHARGING OF INTEREST UNDER SECTION 234-A OF THE ACT. THE ASSESSING OFFICER CH ARGED INTEREST UNDER SECTION 234-A FOR TWO MONTHS. IN THIS REGARD BEFORE CIT(A) IT WAS SUBMIT TED THAT IN RESPONSE TO NOTICE UNDER SECTION 153-A THE ASSESSEE COMPANY HAD ASKED FOR PROVIDING PHOTO COPIES OF SOME OF THE SEIZED MATERIAL. AFTER PHOTO COPIES WERE PROVIDED THE RE TURN OF INCOME WAS FILED. THEREFORE THERE WAS NO FAULT ON THE PART OF THE ASSESSEE IN FILING THE RETURN. RELIANCE WAS PLACED ON THE DECISION OF ITAT RAJKOT BENCH IN THE CASE OF BACHU BHAI S. UN TROLA VS. ACIT 288 ITR (AT) 57 (RAJKOT) WHEREIN IT WAS HELD THAT INTEREST COULD NOT BE CHAR GED FOR DELAY IN FILING OF RETURN DUE TO NON RECEIPT OF COPIES OF THE SEIZED MATERIAL. THIS DEC ISION WAS RENDERED IN THE CONTEXT OF SECTION 158-BFA OF THE ACT. IT WAS PLEADED THAT THE RATIO OF THIS DECISION WAS EQUALLY APPLICABLE. THE LD. CIT (APPEALS) CONSIDERED THE SUBMISSIONS MADE B Y THE ASSESSEE. HE OBSERVED THAT CHARGING OF INTEREST UNDER SECTION 234-A(3) OF THE I. T. ACT IS MANDATORY AND THE ASSESSING OFFICER HAD NO DISCRETION TO REDUCE OR WAIVE THE INTEREST. HE ACC ORDINGLY UPHELD THE INTEREST CHARGED UNDER SECTION 234-A OF THE ACT. 8. BEFORE US NO ARGUMENTS WERE ADVANCED BY THE ASS ESSEE. SINCE CHARGING OF INTEREST UNDER SECTION 234-A OF THE ACT IS MANDATORY WE DO NOT FI ND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) CONFIRMING THE CHARGING OF INTEREST UNDER S ECTION 234A OF THE ACT. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2002-03 IS DISMISSED AND APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ASSESSEES APPEAL (A. Y. 2004-05) : 10. THE FIRST ISSUE FOR CONSIDERATION IN ASSESSEE'S APPEAL RELATES TO CONFIRMING THE ADDITION OF RS.7 65 000/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF ALLEGED UN-EXPLAINED EXPENDITURE. 7 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 THE FACTS OF THE CASE STATED IN BRIEF ARE THAT DURI NG THE COURSE OF SEARCH OPERATIONS UNDER SECTION 132 OF THE ACT AT THE RESIDENTIAL PREMISES OF SHRI A. K. SINHA CONTRACTOR ONE ANNEXURE MARKED A-1 CONTAINING LOSE PAPERS 1 TO 57 WAS SEIZED. PAG E 3 OF THIS ANNEXURE CONTAINED DETAILS OF VARIOUS PAYMENTS DATE-WISE RECEIPT BY SHRI A. K. S INHA FROM THE ASSESSEE. THESE DETAILS HAVE BEEN GIVEN AT PAGE NOS. 5 AND 6 OF THE ASSESSMENT O RDER. DURING THE COURSE OF SEARCH OPERATIONS WHEN SHRI A. K. SINHA WAS CONFRONTED IT WAS STATED BY HIM THAT PAGE 3 OF THE ANNEXURE CONTAINED DETAILS OF PAYMENTS RECEIVED FROM KABARIE S FOR SALE OF SCRAPE AND CERTAIN OTHER PAYMENTS WHICH WERE RECEIVED FROM M/S. AGGARWAL AS SOCIATES. THE AO FURTHER NOTED THAT SHRI A K. SINHA WAS EXCLUSIVELY ENGAGED BY THE ASSESSEE AND HIS REFERENCE TO M/S. AGGARWAL ASSOCIATES ON THE SEIZED DOCUMENTS WAS TO BE TAKEN AS M/S. SUNGLOW BUILDERS PVT. LTD. THE AO FURTHER HELD THAT MODULE 7 AND 8 AS MENTIONED IN TH E SAID SEIZED DOCUMENTS WERE RELATED TO THE ASSESSEE. THE AO NOTED THAT AS PER THIS PAPER SHR I A. K. SINHA RECEIVED CASH OF RS.5 00 000/- ON VARIOUS DATES. FURTHER CASH AGGREGATING TO RS.2 65 000/- WAS RECEIVED BY SHRI A. K. SINHA ON VARIOUS DATES FROM KABARIES. PAYMENTS THROUGH CHEQ UE WERE MADE TO OTHER PARTIES AND TO SHRI A. K. SINHA IN THE PERIOD RELEVANT TO ASSESSMENT YE AR 2005-06. ON THE BASIS OF THESE ENTRIES THE AO OBSERVED THAT WHILE PAYMENTS AGGREGATING TO RS .5 LAKHS IN CASH AND RS.2 65 000/- RECEIVED FROM KABARIES IN CASH WERE NOT ACCOUNTED FOR BUT T HE AMOUNTS PAID TO SHRI A. K. SINHA AND OTHER PARTIES BY CHEQUE IN SUBSEQUENT ASSESSMENT YE ARS WERE ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH PAYMENT ENTERED IN THE SEIZED DOCUMENTS IT WAS SUBMITTED BY THE AS SESSEE THAT HE WAS NOT AWARE OF THE CIRCUMSTANCES AND THE PURPOSE FOR WHICH THIS DOCUME NT WAS PREPARED BY SHRI A. K. SINHA. IT WAS ALSO SUBMITTED THAT SHRI A. K. SINHA USED TO PU RCHASE MATERIAL DIRECTLY AND MAKE PAYMENTS TO SUPPLIERS DIRECTLY. THE PAYMENTS MADE BY THE AS SESSEE WERE REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS. HOWEVER THE AO WAS OF THE VIEW THAT THE ASSESSEE HAD AVOIDED TO FURNISH ANY SATISFACTORY EVIDENCE WITH REGARD TO THE SOURCE OF THE CASH PAYMENT. HE FURTHER NOTED THAT WHEN PAYMENTS MADE BY CHEQUE WERE OWNED BY THE ASSESSEE COMPANY AND WERE RECORDED IN THE BOOKS OF ACCOUNTS THE ENTRIES RELATING TO CASH TRANSACTI ONS COULD NOT BE DISOWNED BY THE ASSESSEE. AS REGARDS THE PAYMENT OF RS.2 65 000/- RECEIVED FROM KABARIES THE AO OBSERVED THAT THESE WERE RECEIVED BY SHRI A.K. SINHA ON BEHALF OF THE ASSESS EE IN RESPECT OF SCRAP OF MODULE 7 AND 8 AS 8 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 MENTIONED IN THE SEIZED DOCUMENT ITSELF. THESE MOD ULES WERE A PART OF THE PROJECT PURCHASED BY THE ASSESSEE FROM GHAZIABAD DEVELOPMENT AUTHORITY I N SEMI-BUILT CONDITION. THE PROJECT WAS LATER ON CONSTRUCTED AND CERTAIN OTHER IMPROVEMENTS IN THE EXISTING STRUCTURE WERE ALSO CARRIED OUT WHICH RESULTED IN THE YIELDING OF THE SCRAP. HE HELD THAT THESE RECEIPTS WERE ACTUALLY THE SALE PROCEEDS OF THE SAME SCRAP WHICH THE ASSESSEE COMP ANY HAD NOT ACCOUNTED FOR IN ITS BOOKS OF ACCOUNTS. THE AO ACCORDINGLY MADE ADDITION OF RS.7 65 000/-. 11. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED T HAT THE AO HAD MADE ADDITION ON THE BASIS OF STATEMENT OF SHRI A.K. SINHA AND THE DOCUMENTS S EIZED FROM HIS POSSESSION. THE ASSESSEE WAS NOT AWARE OF THE BASIS AND UNDER WHAT CIRCUMSTANCES SHRI A.K. SINHA HAD PREPARED THE DOCUMENT IN QUESTION. THE ASSESSEE WAS NOT AWARE OF ANY SAL E OF SCRAP. THE ASSESSEE HAD ALSO NOT MADE ANY CASH PAYMENT AS ALLEGED. IN FACT SHRI SINHA HA D SOLD SOME SCRAP IN CASH AND DID NOT INFORM THE ASSESSEE. THEREFORE THE SAME CANNOT BE TREATE D AS INCOME OF THE ASSESSEE. IT WAS ALSO PLEADED THAT IF THERE HAD BEEN ANY CASH PAYMENT BY THE ASSESSEE TO SHRI SINHA OUTSIDE THE BOOKS OF ACCOUNTS EVIDENCE THEREOF WOULD HAVE BEEN FOUND FROM THE PREMISES OF THE ASSESSEE DURING THE COURSE OF SEARCH. IT WAS ALSO PLEADED THAT OPP ORTUNITY TO CROSS EXAMINE TO SHRI SINHA WAS NOT GRANTED TO THE ASSESSEE. 12. THE LD. CIT (APPEALS) CONSIDERED THE SUBMISSION S MADE BY THE ASSESSEE. HE NOTED THAT THE DOCUMENT WAS SEIZED FROM THE PREMISES OF SHRI A . K. SINHA WHO WAS BUILDING CONTRACTOR ENGAGED BY THE ASSESSEE. SHRI SINHA HAD ADMITTED T HAT THE DOCUMENT CONTAINED THE DETAILS OF PAYMENTS RECEIVED FROM THE ASSESSEE OR FROM KABARIE S FOR SALE OF SCRAP TO THEM. THE ASSESSEE HAD GIVEN A VAGUE STATEMENT BY STATING THAT HE WAS NOT AWARE UNDER WHAT CIRCUMSTANCES THE SAID DOCUMENT WAS PREPARED BY SHRI A.K. SINHA. HE ALSO UPHELD THE VIEW OF THE ASSESSING OFFICER THAT WHEN CHEQUE PAYMENTS RECORDED ON THE SEIZED DOCUMEN TS WERE FOUND RECORDED IN THE BOOKS OF ACCOUNTS THE ASSESSEE CANNOT DISOWN THE CASH PAYME NT RECORDED ON THE SAME DOCUMENT. THE LD. CIT (A) ALSO NOTED THAT THE SALE OF SCRAP HAS BEEN MADE TO KABARIES ON BEHALF OF THE ASSESSEE BY SHRI A.K. SINHA WHO HAD NO LOCUS STANDI TO RECEIVE THE CASH PAYMENT ON BEHALF OF THE ASSESSEE 9 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 AND POCKET THE SAME WHEN HE WAS A CONTRACTOR WORKI NG FOR THE ASSESSEE. ACCORDINGLY THE LD. CIT (APPEALS) UPHELD THE ADDITION OF RS.7 65 000/-. 13. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS NOT ALLOWED OPPORTUNITY TO CROSS EXAMINE SHRI A.K. SINHA. THER EFORE THE ADDITION MADE BY THE AO WITHOUT PROVIDING OPPORTUNITY TO CROSS EXAMINE IS NOT JUSTI FIED. ON THE OTHER HAND THE LD. CIT (DR) SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). 14. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS A FACT THAT SHRI A.K. SINHA WAS EXCLUSIVELY WORKING F OR THE ASSESSEE. SHRI A.K. SINHA HAD RECEIVED RS.2 65 000/- FROM KABARIES ON ACCOUNT OF SALE OF SCRAP. THE DOCUMENT WAS SEIZED FROM THE RESIDENCE OF SHRI A.K. SINHA ON WHICH THE PAYMENT OF CASH AND CHEQUE ARE MENTIONED. IN THE SUBSEQUENT YEAR THE PAYMENTS MADE BY THE ASS ESSEE IN CHEQUE HAVE BEEN FOUND RECORDED IN THE BOOKS OF ACCOUNTS BUT THE CASH PAYMENT OF RS.5 LAKHS MADE BY THE ASSESSEE IS NOT FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. IT IS A SETTLED LAW THAT WHEN PAYMENTS MADE BY THE ASSESSEE BY WAY OF CHEQUE HAVE BEEN FOUND RECORDED IN REGULAR BOOKS OF ACCOUNTS THE CASH PAYMENT RECORDED IN THE SAME DOCUMENT COULD NOT BE DENIED BY THE ASSESSEE. HOWEVER SINCE THE ASSESSEE WAS NOT PROVIDED THE OPPORTUNITY TO CR OSS EXAMINE SHRI A.K. SINHA IN OUR CONSIDERED OPINION WE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO PROVIDE OPPORTUNITY TO THE AS SESSEE TO CROSS EXAMINE SHRI A.K. SINHA ABOUT THE NATURE OF EXPENDITURE AND THE SOURCE THEREOF. THE AO WILL DECIDE THE ISSUE ON MERITS AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD G IVEN TO THE ASSESSEE. 15. THE NEXT ISSUE FOR CONSIDERATION IN ASSESSEE'S APPEAL RELATES TO CHARGING OF INTEREST UNDER SECTION 234-A OF THE ACT. SINCE THE FACTS ARE IDEN TICAL TO THE FACTS OF ASSESSMENT YEAR 2002-03 AND WE HAVE UPHELD THE CHARGING OF INTEREST RESPEC TFULLY FOLLOWING THE PRECEDENT WE DO NOT FIND ANY INFIRMITY IN CONFIRMING THE STAND OF THE ASSESS ING OFFICER TO LEVY INTEREST UNDER SECTION 234-A OF THE ACT. 10 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 16. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTY ALLOWED FOR STATISTICAL PURPOSES. REVENUE'S APPEAL (AY 2004-05): 17. NOW COMING TO REVENUE'S APPEAL THE FIRST ISSUE FOR CONSIDERATION RELATES TO ALLOWING THE RELIEF OF RS.5 66 490/- TO THE ASSESSEE BY GIVING D IRECTION TO THE AO TO TAKE THE OPENING STOCK FOR THE ASSESSMENT YEAR AS PER HIS APPELLATE ORDER FOR ASSESSMENT YEAR 2002-03. THE FACTS OF THE CASE ARE THAT WHILE COMPLETING THE ASSESSMENT FOR ASSESS MENT YEAR 2002-03 THE AO MADE THE ADDITION ON ACCOUNT OF UNDER-VALUATION OF THE CLOSING STOCK OF RS.27 91 165/-. HOWEVER THE LD. CIT (A) UPHELD THE ADDITION OF RS.5 66 490/-. THE LD. CIT (A) RELYING ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MAHINDRA MILLS VS. AAC 99 ITR 135 HELD THAT THE CLOSING STOCK OF ONE ACCOUNTING YEAR FURNISHES THE FIGURE OF THE OPE NING STOCK OF THE FOLLOWING YEAR. WE HAVE CONFIRMED THE ADDITION ON ACCOUNT OF UNDER-VALUATIO N OF THE STOCK IN ASSESSMENT YEAR 2002-03. IT IS A SETTLED LAW THAT THE CLOSING STOCK OF ONE YEAR HAS TO BE TAKEN AS THE OPENING STOCK OF THE IMMEDIATELY SUCCEEDING YEAR. THE EFFECT WILL BE GIV EN IN AY 2003-04 AND NOT IN AY. 2004-05. THEREFORE THE LD. CIT (A) WAS NOT JUSTIFIED IN ALL OWING THE RELIEF TO THE EXTENT OF RS.5 66 490/- IN DIRECTLY IN AY 2004-05. SIMILAR EXERCISE HAS TO BE DONE IN AY 2003-04 IN ORDER TO ALLOW RELIEF OF CLOSING STOCK IN AY 2004-05. WE ARE NOT AWARE AS T O WHETHER SUCH AN EXERCISE WAS DONE IN AY 2003-04 SO AS TO ALLOW BENEFIT IN AY 2004-05. ACCO RDINGLY LD. CIT (APPEALS) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE REL IEF IN AY 2004-05 TO THE EXTENT OF ADDITION MADE ON ACCOUNT OF THE CLOSING STOCK IN AY 2002-03. 18. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION OF RS.1 56 206/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDER-VALUATION OF THE STOCK ON ACCOUNT OF DISCREPANCY IN THE AMOUNT TRANSFERRED TO 'BUILDING ON RENT ACCOUNT'. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT OUT OF SUPER BUILT-UP AREA OF ROH INI SECTOR : 8 PROJECT SUPER BUILT UP AREA OF 501 SQ. FT. WAS TRANSFERRED TO BUILDING ACCOUNT WH ICH HAD BEEN RENTED OUT. AN AMOUNT OF RS.6 64 310/- HAD BEEN DEDUCTED FROM THE OPENING ST OCK DEBITED TO THE PROFIT AND LOSS ACCOUNT. 11 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE TH E AVERAGE COST OF THE PROJECT WAS RS.1 637.76 PER SQ. FT. THE ASSESSEE SHOULD HAVE DEDUCTED THE AMOUNT OF RS.8 20 516/- ON ACCOUNT OF ABOVE TRANSFER. ON A QUERY IT WAS SUBMITTED THAT THE AMO UNT WAS TRANSFERRED ON THE BASIS ON WHICH THE OPENING AND CLOSING STOCK HAD BEEN VALUED. THE VAL UE OF THE CLOSING STOCK HAS BEEN TAKEN BY THE ASSESSEE ON THE BASIS OF SELLING PRICE OF THE CONCE RNED FLOOR BUT THE TRANSFER TO THE BUILDING ACCOUNT SHOULD HAVE BEEN DONE AT THE COST PRICE BEC AUSE THE TRANSFER TO BUILDING ACCOUNT COULD BY NO STRETCH OF IMAGINATION BE RELATED TO THE SELLING PRICE OF THE ASSESSEE. THE ASSESSEE COMPANY COULD NOT EARN PROFIT OR LOSS FROM HIMSELF BY ARBIT RARY ADOPTING THE RATES OF VALUATION OF HIS STOCK. HOWEVER THIS CONTENTION OF THE ASSESSEE WAS REJECT ED BY THE AO. THE ASSESSING OFFICER MADE ADDITION OF RS.1 56 206/- BEING THE DIFFERENCE BETW EEN THE COST PRICE AND THE OPENING VALUATION OF THE STOCK. 19. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED T HAT THE ASSESSING OFFICER HAD CALCULATED THE VALUE BY TAKING THE UNIFORM AVERAGE COST WHEREAS TH E ASSESSEE HAD TAKEN FLOOR-WISE COST. THE AO CANNOT IMPOSE HIS METHOD OF VALUATION. THE ASSE SSEE WAS FOLLOWING THE METHOD OF VALUATION CONSISTENTLY. FURTHER THE ASSESSING OFFICER HAD NO T REJECTED THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. HE PLACED RELIANCE ON THE DECISION O F HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SANT RAM MANGAT RAM 275 ITR 312 (P & H) WHEREIN IT WAS HELD THAT THE ASSESSEE HAD A CHOICE OF METHOD OF VALUATION OF THE STOCK. WHERE A METHOD WAS CONSISTENTLY FOLLOWED BY THE ASSESSEE YEAR AFTER YEAR IT WAS NO T OPEN TO THE AO TO QUESTION THE SAME. THE LD. ACIT (A) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE NOTED THAT A PART OF THE CLOSING STOCK AS ON 31 ST MARCH 2003 WAS TRANSFERRED TO THE BUILDING ACCOUN T AT THE SAME RATE AT WHICH IT WAS VALUED I.E. AT THE RATE OF 1 325.96 PER SQ. FT. THE VALUATION OF THE CLOSING STOCK OF DIFFERENT FLOORS DECLARED BY THE ASSESSEE WAS ACCEPTED IN ASS ESSMENT YEAR 2003-04. THEREFORE THE AO WAS NOT JUSTIFIED TO TAKE A DIFFERENT VIEW IN ASSES SMENT YEAR 2004-05 IN THE ABSENCE OF ANY NEW EVIDENCE ON RECORD TO JUSTIFY THE SAME. THE LD. CI T (APPEALS) ACCORDINGLY DELETED THE ADDITION OF RS.1 56 000/-. 12 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 20. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE BUILDING WAS TRANSFERRED AT THE SAME RATE AT WHICH IT WAS VALUED AND THEREFORE THE LD. CIT (APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION. ON THE OTHER HAND THE L D. CIT(DR) SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 21. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT IN ASSESSMENT YEAR 2003-04 THE V ALUATION MADE BY THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER. THEREFORE THE CLOSING S TOCK FOR ASSESSMENT YEAR 2003-04 WOULD BECOME OPENING STOCK FOR ASSESSMENT YEAR 2004-05. OUT OF THE OPENING STOCK THE ASSESSEE HAD TRANSFERRED THE STOCK VALUING RS.6 64 310/- TO BUIL DING ON RENT ACCOUNT. THE AO HAD ADOPTED THE VALUE OF THE BUILDING TO BE DEDUCTED FROM OPENI NG STOCK AT RS.8 20 516/- AT COST PRICE. AS PER THE METHOD OF VALUATION THE CLOSING STOCK HAS TO BE VALUED EITHER AT COST OR AT MARKET PRICE WHICHEVER IS LOWER. IN THE IMMEDIATE PRECEDING YEA R THE ASSESSEE HAD VALUED THE CLOSING STOCK WHICH BECAME OPENING STOCK FOR THE YEAR UNDER CONSI DERATION AT MARKET PRICE. THE VALUATION OF THE SAME HAS BEEN ACCEPTED BY THE AO. THEREFORE T HE ASSESSEE HAS TO REDUCE THE COST OF THE BUILDING AS DETERMINED IN ASSESSMENT YEAR 2003-04 A T MARKET PRICE. THE SUBSTITUTION OF COST PRICE WOULD RESULT IN PROFIT TO THE ASSESSEE. IT I S A SETTLED LAW THAT NO ONE CAN EARN PROFIT OUT OF HIMSELF. THEREFORE THE COST PRICE CANNOT BE SU BSTITUTED IN PLACE OF THE VALUE ADOPTED AS FOR CLOSING STOCK WHICH BECAME PART OF THE OPENING STOCK FOR THE YEAR UNDER CONSIDERATION. THEREFORE IN OUR CONSIDERED OPINION THE LD. CIT ( APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION. 22. THE LAST ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION OF RS.1 37 052/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDER-VALUATION OF THE CLOSING STOCK. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE COMPANY INCRE ASED THE VALUE OF THE CLOSING STOCK OF ROHINI SECTOR : 8 PROJECT. THE ASSESSING OFFICER NOTICED THAT THE AVERAGE STOCK OF ROHINI SECTOR : 8 PROJECT WHICH WAS COMPLETED DURING THE FINANCIAL Y EAR 2002-03 WORKED OUT TO RS.1 637.76 PER SQ. FT. DURING THE YEAR THE ASSESSEE HAD SHOWN SA LE OF 785 SQ. FT. FOR RS.17 LAKHS AT THE RATE OF 13 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 RS.2 166.99 PER SQ. FT. AND TRANSFER OF 501 SQ. FT. TO BUILDING ACCOUNT. THE CLOSING STOCK OF 5551.10 SQ. FT. HAD BEEN VALUED AT RS.89 54 318/- G IVING THE AVERAGE RATE OF RS.1 613.07 PER SQ. FT. THUS HE OBSERVED THAT THE ASSESSEE HAD UNDER-V ALUED THE CLOSING STOCK. WHEN ASKED TO EXPLAIN THE SAME THE ASSESSEE IN ITS LETTER DATED 5/12/2007 REFERRED TO PARA 5(D) OF THE AUDIT REPORT WHEREIN THE AUDITOR HAD MENTIONED THAT THE C LOSING STOCK HAD BEEN VALUED AT THE LAST SELLING PRICE. THE AO OBSERVED THAT THE ASSESSEE H AD CONVENIENTLY CHOSEN THE LOWEST SELLING PRICE OF A SHOP OF THAT PARTICULAR FLOOR TO VALUE I TS CLOSING STOCK. IN THIS MANNER HE HAD SUPPRESSED HIS TAXABLE INCOME. THEREFORE THE AO H ELD THAT THE VALUATION OF THE CLOSING STOCK WAS ARBITRARILY MADE BY THE ASSESSEE WITH AN INTENT ION TO SUPPRESS THE TAXABLE INCOME. ACCORDINGLY THE METHOD OF VALUATION OF THE CLOSING STOCK ADOPTED BY THE ASSESSEE WAS NOT ACCEPTED BY HIM. HE VALUED THE CLOSING STOCK AT CO ST PRICE. TAKING THE AVERAGE COST PRICE AT RS.1 636.76 PER SQ. FT. HE VALUED THE CLOSING STOC K AT RS.90 91 370/- [RS.1 637.76 X 5551.1 SQ. FT.] AS AGAINST RS.89 54 318/- SHOWN BY THE ASSESSE E. ACCORDINGLY HE MADE AN ADDITION OF RS.1 37 052/- BY PLACING RELIANCE ON THE SUPREME CO URT DECISIONS IN THE CASE OF CIT VS. BRITISH PAINTS INDIA LTD. 188 ITR 44 (SC); AND SAKTHI TRADI NG CO. VS. CIT 250 ITR 87 (SC). 23. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED T HAT THE ASSESSEE WAS FOLLOWING VALUATION CONSISTENTLY AT COST PRICE OR MARKET PRICE WHICHEVE R WAS LOWER. THE VALUATION WAS DONE FLOOR- WISE. THE ASSESSEE RELYING ON THE DECISION OF HON' BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SANT RAM MANGAT RAM (SUPRA) SUBMITTED TH AT WHERE A METHOD IS CONSISTENTLY FOLLOWED BY THE ASSESSEE YEAR AFTER YEAR IT WAS NO T OPEN TO THE AO TO QUESTION THE SAME. SINCE IN ASSESSMENT YEAR 2003-04 THE AO ACCEPTED THE CLOS ING STOCK HE WAS NOT JUSTIFIED TO VALUE THE CLOSING STOCK ON AVERAGE RATE. 24. THE LD. CIT (APPEALS) CONSIDERED THE FACTS OF T HE CASE AND ARGUMENTS ADVANCED BY THE ASSESSEE. HE OBSERVED THAT THE AO HAD ACCEPTED THE SALE OF DIFFERENT FLOORS MADE BY THE ASSESSEE IN ASSESSMENT YEAR 2003-04 WHEN THE PROJECT WAS COM PLETED AND NO DISCREPANCY WAS FOUND BY HIM IN THE SALE RATES ADOPTED BY THE ASSESSEE. FRO M THE DETAILS OF THE CLOSING STOCK AS ON 31 ST 14 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 MARCH 2003 IT WAS NOTICED THAT THE STOCK OF GROUND FLOOR FIRST FLOOR AND SECOND FLOOR WAS VALUED AT THE RATE OF RS.2 244.04; RS.1 500/- AND RS.1 326 .96 RESPECTIVELY. OUT OF THE CLOSING STOCK OF ALL THE THREE FLOORS AS ON 31 ST MARCH 2003 THE ASSESSEE HAD SOLD 784.50 SQ. FT. O F GROUND FLOOR. THE ASSESSING OFFICER HAD ACCEPTED THE VALUATION OF THE CLOSING STOCK OF DIFFERENT FLOORS IN ASSESSMENT YEAR 2003-04. THEREFORE THE AO WAS NOT JUSTIFIED IN TAKING A DIFFERENT VIEW FOR ASSESSMENT YEARS 2004-05 IN THE ABSENCE OF ANY NEW EVIDENCE ON RECORD TO JUSTIFY THE SAME. THE ASSESSEE WAS ASKED TO GIVE DETAILS OF SALES MADE IN THE SUCCEEDING YEARS IN RESPECT OF ALL THE FLOORS. FROM THE DETAILS FILED BY THE ASSESSEE TH E LD. CIT (A) NOTICED THAT IN FINANCIAL YEAR 2005- 06 THE SALES OF GROUND AND SECOND FLOORS WERE MADE AT THE AVERAGE RATE OF RS.1 752.58 AND RS.1 308.41 AS AGAINST THE VALUATION RATE OF RS.2 2 34.04 AND RS.1 325.96 RESPECTIVELY TAKEN BY THE ASSESSEE FOR THE VALUATION OF THESE FLOORS. TH US THE VALUATION MADE BY THE ASSESSEE REPRESENTED THE FAIR MARKET VALUE. AS REGARDS THE FIRST FLOOR NO SUBSEQUENT SALE WAS SHOWN IN FINANCIAL YEARS 2004-05 AND 2005-06. THE LD. CIT ( A) IN PECULIARITY AND IN VIEW OF THE FACT THAT THE VALUATION OF THE CLOSING STOCK WAS ACCEPTED IN ASSESSMENT YEAR 2003-04 CAME TO THE CONCLUSION THAT THE AO WAS NOT JUSTIFIED IN DISTURB ING THE SAME IN THE ASSESSMENT YEAR 2004-05. HE ACCORDINGLY DELETED THE ADDITION. 25. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE ORDER OF THE LD. CIT (A) IT IS CLEAR THAT THE A SSESSEE HAD VALUED THE CLOSING STOCK ON THE BASIS OF MARKET PRICE WHICH WAS LOWER THAN THE COST PRIC E. SINCE THE ASSESSEE IS FOLLOWING SYSTEM OF VALUATION AS COST PRICE OR MARKET PRICE WHICHEVER IS LOWER AND THE COST PRICE IS HIGHER THAN THE MARKET PRICE THE ASSESSEE WAS JUSTIFIED IN DELETIN G THE ADDITION MADE BY THE ASSESSING OFFICER BY ADOPTING THE COST PRICE. ACCORDINGLY WE DO NOT FI ND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) DELETING THE ADDITION. 26. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ASSESSMENT YEAR 2005-06 : 27. THE FIRST ISSUE FOR CONSIDERATION IN ASSESSEE'S APPEAL RELATES TO CONFIRMING THE ADDITION OF RS.11 23 500/- AND RS.1 50 000/- MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF ALLEGED UN- EXPLAINED EXPENDITURE. THE FACTS OF THE CASE FOR T HIS YEAR ARE IDENTICAL TO THE FACTS FOR ASSESSMENT 15 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 YEAR 2004-05 WHEREIN THE ASSESSING OFFICER MADE ADD ITION ON THE BASIS OF SEIZED DOCUMENTS FOUND FROM THE PREMISES OF SHRI A.K. SINHA. AS PER PAGE 3 OF ANNEXURE A-1 SHRI A.K. SINHA RECEIVED AMOUNT ON SALE OF SCRAP AT RS.2 73 500/- A ND AMOUNT OF RS.8 50 000/- ON DIFFERENT DATES IN CASH FROM THE ASSESSEE. THE ASSESSING OFFICER A S IN ASSESSMENT YEAR 2004-05 NOTED THAT CHEQUE TRANSACTIONS RECORDED ON THIS PIECE OF PAPER WERE F OUND RECORDED IN THE BOOKS OF THE ASSESSEE. HOWEVER SALE OF SCRAP AND CASH PAID BY THE ASSESSE E TO SHRI A.K. SINHA WAS NOT RECORDED. THE AO THUS MADE ADDITION OF RS.8 50 000/- ON ACCOUNT O F PAYMENTS MADE IN CASH AND RS.2 73 500/- ON ACCOUNT OF CASH RECEIVED BY SHRI A.K. SINHA ON B EHALF OF THE ASSESSEE FROM KABARIES. THE FACTS OF THE CASE ARE IDENTICAL TO THE FACTS OF THE CASE FOR ASSESSMENT YEAR 2004-05 WHEREIN WE HAVE SET ASIDE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTIONS TO ALLOW CROSS EXAMINATION OF SHRI A.K. SINHA IN RESPECT OF THE CASH PAYMENTS REC EIVED BY THE ASSESSEE AND SALE OF SCRAP FROM KABARIES. SINCE THE FACTS ARE IDENTICAL TO THE FAC TS FOR ASSESSMENT YEAR 2004-05 WE SET ASIDE THE ADDITION OF RS.11 23 500/- TO THE FILE OF THE ASSES SING OFFICER WITH THE SIMILAR DIRECTIONS. 28. AS REGARDS THE ADDITION OF RS.1 50 000/- THE F ACTS ARE THAT DURING THE COURSE OF SEARCH SHRI A.K. SINHA IN REPLY TO QUESTION NO. 4 WHOSE ST ATEMENT RECORDED BY THE AUTHORIZED OFFICER STATED THAT IN ADDITION TO CONTRACT RECEIPTS HE WAS RECEIVING RSD.25 000/- PER MONTH IN CASH FROM M/S. AGGARWAL ASSOCIATES AS MAINTENANCE CHARGES AND THIS PAYMENT CONTINUED FROM OCTOBER 2004 TO SEPTEMBER 2005. THE ASSESSING OFFICER STA TED THAT SINCE SHRI SINHA WAS EXCLUSIVELY ENGAGED WITH THE ASSESSEE COMPANY [HIS REFERENCE TO AGGARWAL ASSOCIATES IS TO BE TAKEN AS M/S. SUNGLOW BUILDERS PVT. LTD.]. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A COPY OF SHRI SINHA'S STATEMENT WAS SUPPLIED TO THE ASSESSEE AND HE WAS ASKED TO EXPLAIN THE SOURCE OF THE SAID PAYMENT MADE TO SHRI SINHA. IN ITS REPLY DATED 26/ 11/2007 THE ASSESSEE COMPANY DENIED HAVING MADE ANY SUCH PAYMENT MADE TO SHRI SINHA. THE ASSE SSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE IN VIEW OF THE STATEMENT OF SHRI A. K. SINHA AS WELL AS REPLY SUBMITTED BY HIM TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS. IN HIS REPLY SHRI A.K. SINHA STATED THAT THE AMOUNT OF RS.1 50 000/- WAS SURREND ERED AS THE SAME WAS NOT INCLUDED IN HIS RETURN OF INCOME. THE ASSESSING OFFICER ACCORDINGL Y MADE THE ADDITION OF RS.1 50 000/-. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT (APPEALS) IT WAS PLEADED THAT OPPORTUNITY 16 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 OF CROSS EXAMINATION OF SHRI A.K. SINHA WAS NOT GIV EN TO THE ASSESSEE. THE LD. CIT (A) HOWEVER UPHELD THE ADDITION OF RS.1 00 000/- ON TH E GROUND THAT SHRI A. K. SINHA HAD ADMITTED IN THE RETURN OF INCOME AND ALSO IN HIS STATEMENT R ECORDED UNDER SECTION 132(4) THAT HE WAS RECEIVING RS.25 000/- PER MONTH. SINCE SHRI SINHA HAD SURRENDERED THE AMOUNT OF RS.1 50 000/- NOT DISCLOSED IN HIS RETURN OF INCOME THE LD. CIT (A) UPHELD THE ADDITION. 29. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE ABOVE FACTS IT IS APPARENT THAT THE ASSESSEE HA D MADE PAYMENT AT THE RATE OF RS.25 000/- PER MONTH TO SHRI A.K. SINHA ON ACCOUNT OF MAINTENANCE CHARGES. THIS AMOUNT HAS BEEN SURRENDERED BY SHRI A.K. SINHA IN HIS RETURN OF INCOME. HOWEVE R THE FACT REMAINS THAT THE ASSESSEE WAS NOT PROVIDED OPPORTUNITY TO CROSS EXAMINE SHRI A.K. SIN HA. THEREFORE WE ARE OF THE CONSIDERED OPINION THAT THIS ISSUE SHOULD ALSO BE RESTORED BAC K TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO ALLOW CROSS EXAMINATION OF SHRI A.K. S INHA TO THE ASSESSEE. THE AO WILL PASS A SPEAKING ORDER AFTER AFFORDING THE ASSESSEE A REASO NABLE OPPORTUNITY TO THE ASSESSEE. 30. THE NEXT ISSUE RELATES TO LEVY OF INTEREST UNDE R SECTION 234-A OF THE ACT. AS IN EARLIER YEARS THE CHARGING OF INTEREST UNDER SECTION 234-A OF THE ACT BEING MANDATORY IN NATURE THIS GROUND OF APPEAL IS DISMISSED AS HAD BEEN DONE IN O THER YEARS. 31. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA. NO. 2628 (DEL) OF 2008 : 32. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION OF RS.15 29 442/- ON ACCOUNT OF SURRENDER MADE BY THE ASSESSEE. THE RELEVANT GROUND OF APPEAL ARE REPRODUCED AS UNDER :- 17 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 ' (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING RELIEF OF RS. 15 29 422/- THEREBY GIVING DIRECTION WHICH RESULT IN THE ASSESSED INCOME FOR T HE IMPUGNED ASSESSMENT YEAR FALLING BELOW THE RETURNED INCOME AFTER GIVING APPE AL EFFECT TO THE APPELLATE ORDER; (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING RELIEF OF RS. 15 29 422/- REGARDLESS OF THE FACT THAT THE ASSESSEE HAD FAILED TO GIVE THE BREAK -UP OF THE UNDISCLOSED INCOME OF RS.1 50 00 000/- SURRENDERED FOR ASSESSMENT YEAR 20 06-07 NEITHER IN HIS STATEMENT RECORDED UNDER SECTION 132(4) AT THE TIME OF SEARCH NOR DURING THE ASSESSMENT PROCEEDINGS; (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING RELIEF OF RS. 15 29 422/- REGARDLESS OF THE FACT THAT THE ASSESSEE HAD NEVER TAKEN THE PLEA BEF ORE THE ASSESSING OFFICER THAT THE SURRENDER OF RS.1 50 00 000/- INCLUDED CASH PAYMENT S OF RS.21 65 000/- MADE TO SHRI KISHORE CONTRACTOR. ' 33. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSING OFFICER HAD MADE ADDITION OF RS.9 20 000/- IN ASSESSMENT YEAR 2003-04; RS.13 05 000/- IN ASSESSMENT YEAR 2004-05 AND RS.65 000/- IN ASSESSMENT YEAR 2005-06. THE SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON THE PREMISES OF THE ASSESSEE ON 18/11/2005. DURING THE COURSE OF SEARCH SMT. UMA AGGARWAL DIRECTOR OF THE COMPANY ADMITTED AN UNDIS CLOSED INCOME OF RS.1 50 00 000/- IN HER STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 30 TH NOVEMBER 2006 DECLARING AN INCOME OF RS.3 96 10 0 58/- WHICH INCLUDED THE ADMITTED INCOME OF RS.1 50 00 000/-. THE ASSESSMEN T WAS COMPLETED AT THE RETURNED INCOME OF RS.3 96 10 058/-. THE ASSESSING OFFICER COMPUTED T HE ADDITION OF RS.1 34 70 558/- BASED ON VARIOUS DOCUMENTS SEIZED DURING THE COURSE OF SEAR CH. HE OBSERVED THAT SINCE THE TOTAL ADDITION MADE ON THE BASIS OF SEIZED DOCUMENTS WAS LESS THAN RS.1 50 00 000/- UNDER SECTION 132(4). NO 18 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 SEPARATE ADDITION WAS REQUIRED TO BE MADE TO THE AS SESSEE'S INCOME. THE ASSESSING OFFICER ACCORDINGLY ACCEPTED THE RETURNED INCOME. 34. DURING THE COURSE OF APPELLATE PROCEEDINGS IT W AS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THE ASSESSEE HAD DECLARED A SUM OF RS.21 65 00 0/- ON ACCOUNT OF PAYMENTS TO KISHORE CONTRACTOR. THE ASSESSING OFFICER MADE ADDITION OF RS.9 20 000/-; RS.13 05 000/- AND RS.65 000/- IN ASSESSMENT YEARS 2003-04 2004-05 AN D 2005-06 RESPECTIVELY ON ACCOUNT OF PAYMENTS TO KISHORE CONTRACTOR. THERE WAS A CALCUL ATION MISTAKE ON THE PART OF THE ASSESSING OFFICER IN TAKING THE FIGURE OF RS.13 05 000/- INST EAD OF RS.11 80 000/- FOR ASSESSMENT YEAR 2004- 05. THE TOTAL AMOUNT OF RS.21 65 000/- HAD SEPARAT ELY BEEN SHOWN AND DISCLOSED IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 AND WAS INCLUDED IN THE ADDITIONAL INCOME OF RS.1 50 00 000/- OFFERED BY THE ASSESSEE. HOWEVER THE ASSESSING OFFICER DID NOT GIVE ANY CREDIT IN ASSESSMENT YEAR 2006-07 FOR THE ADDITIONS MADE I N ASSESSMENT YEAR 2003-04 2004-05 AND 2005-06 RESULTING IN DOUBLE ADDITION. IT WAS MENTI ONED THAT EVEN AFTER ALL THE ADDITIONS MADE THERE WAS SHORT FALL OF RS.15 29 442/- IN ASSESSMEN T YEAR 2006-07 IN THE INCOME ASSESSED AT RS.1 50 00 000/- VIS-A-VIS INCOME COMPUTED AT RS.1 34 70 558/- IN ASSESSMENT ORDER. IT WAS THEREFORE SUBMITTED THAT AT LEAST CREDIT OF RS.15 29 442/- SHOULD BE ALLOWED. THE LD. CIT (A) AFTER CONSIDERING THE REPLY OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING AS UNDER :- ' 4.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. AR AND HAVE PERUSED THE MATERIAL ON RECORD. WHEN THE SEIZED DOCUMENTS IN QUESTION WERE CONFRONTED TO SMT. UMA AGGARWAL DIRECTOR OF THE COMPANY DURIN G THE COURSE OF SEARCH OPERATIONS IN REPLY TO QUESTION NO.3 OF HER STATEM ENT RECORDED ON 14/12/2005 SHE STATED THAT CASH PAYMENTS AGGREGATING TO RS.21 65 000/- ENTERED IN THESE DOCUMENTS WERE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE COMPANY. SIMILARLY IN RESPECT OF VARIOUS OTHER DOCUMENTS FOUND DURING THE COURSE OF SEARCH SHE IN HER STATEMENT RECORDED ON 14/12/2005 ADMITTED THAT THESE TRANSACTIONS WERE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE COMPANY. I N REPLY TO QUESTION NO. 20 OF 19 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 HER STATEMENT SHE MADE A DISCLOSURE OF RS.6.50 CRO RES IN THE HANDS OF THE APPELLANT COMPANY AND M/S. AGGARWAL ASSOCIATES (PRO MOTERS) PVT. LTD. TO COVER THE CASH RECEIPTS NOT RECORDED IN THE BOOKS OF ACCO UNT AND ALSO TO COVER CASH AND OTHER LOOSE PAPERS FOUND AND SEIZED DURING THE COUR SE OF SEARCH OPERATIONS AT VARIOUS PREMISES. IN HER SUBSEQUENT STATEMENT DATE D 20/12/2005 THE BREAK-UP OF RS.6.50 CRORES WAS GIVEN AS RS.5.00 CRORES IN THE H ANDS OF M/S. AGGARWAL ASSOCIATES (PROMOTERS) PVT. LTD. AND RS.1.50 CRORES IN THE HANDS OF THE APPELLANT- COMPANY. APART FROM THIS RS.50 LAKHS WAS DISCLOSE D UNDER SECTION 132(4) IN THE HANDS OF SMT. UMA AGGARWAL. IN THIS STATEMENT IT WAS MENTIONED THAT THE TOTAL AMOUNT OF RS.7 CRORES WAS BEING OFFERED AS ADDITION AL INCOME FOR THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07 TO COVER AL L SEIZED RECORD / PAPERS CASH AND JEWELLERY. SUBSEQUENTLY IN THE RETURN FOR THE ASSESSMENT YEAR 2006-07 FILED BY THE APPELLANT AN ADDITIONAL INCOME OF RS.1.50 C RORES WAS SHOWN IN THIS REGARD. SINCE IN HER STATEMENT SMT. UMA AGGARWAL H AD STATED THAT RS.1.50 CRORES WAS TO COVER INTER-ALIA ALL THE SEIZED DOCUMENTS IT IMPLIES THAT THE SEIZED DOCUMENTS IN QUESTION REFLECTING CASH PAYMENTS OF R S.21 65 000/- TO SHRI KISHORE WERE ALSO MEANT TO BE COVERED IN THE TOTAL DISCLOSU RE OF RS.1.50 CRORES. HOWEVER THESE TRANSACTIONS BEING RELEVANT TO THE ASSESSMENT YEARS 2003-04 2004-05 2005-06 THE AO MADE ADDITION TOTALING RS.21 65 000 /- IN THESE THREE ASSESSMENT YEARS SEPARATELY IN RESPECT OF CASH TRANSACTIONS RE CORDED IN THESE DOCUMENTS. THUS THE SAME INCOME HAS BEEN ADDED TWICE ONCE I N THE ASSESSMENT YEAR 2006- 07 (BEING PART OF RS.1.50 CRORES) AND AGAIN IN THE ASSESSMENT YEARS 2003-04 TO 2005-06. IN THE APPEAL ORDER DATED 27/05/2008 IN A PPEAL NO. 303/07-08 FOR THE ASSESSMENT YEAR 2005-06 IN THE APPELLANT'S CASE I H AVE UPHELD THE AO'S ACTION OF TAXING THESE CASH PAYMENTS IN THE ASSESSMENT YEAR T O WHICH THEY PERTAIN. IT IS THE FUNDAMENTAL PRINCIPAL OF TAXATION THE SAME INCOME C ANNOT BE TAXED TWICE. AN INCOME HAS TO BE TAXED IN THE ASSESSMENT YEAR TO WH ICH IT PERTAINS. SINCE THE INCOME REFLECTED IN THE SEIZED DOCUMENTS MENTIONED ABOVE ALREADY STANDS TAXED IN THE HANDS OF THE APPELLANT COMPANY IN THE ASSESSMEN T YEARS 2003-04 TO 2005-06 20 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 IN MY VIEW THE SAME CAN NOT BE TAXED AGAIN IN THE A SSESSMENT YEAR 2006-07 TO WHICH IT CLEARLY DOES NOT PERTAIN AS PER THE SEIZED DOCUMENTS. THEREFORE AN AMOUNT OF RS.21 65 000/- FORMING PART OF DISCLOSURE OF RS.1.50 CRORES CAN NOT BE TAXED IN THE ASSESSMENT YEAR 2006-07. HOWEVER THE AO HAS COMPUTED THE TOTAL ADDITION FOR THE ASSESSMENT YEAR 2006-07 ON THE BAS IS OF SEIZED DOCUMENTS AT RS.1 34 70 558/-. AS REGARDS THE BALANCE AMOUNT OF RS.15 29 442/- (RS.1 50 00 000 MINUS RS.1 34 70 558/-) THE SAME HAS ALSO BEEN TAXED BY THE AO IN THE ASSESSMENT YEAR 2006-07 IN VIEW OF DISCLOSUR E OF RS.1.50 CRORES MADE BY THE APPELLANT. THEREFORE IN VIEW OF THE AO'S ORDE R FOR THE ASSESSMENT YEAR 2006- 07 THE INCOME WHICH HAS BEEN TAXED TWICE IS NOT RS .21 65 000/- BUT RS.15 29 442/-. THIS INCOME BEING PART OF THE INCO ME OF RS.21 65 000/- WHICH STANDS TAXED IN THE HANDS OF THE COMPANY IN THE ASS ESSMENT YEARS 2003-04 TO 2005-06 CAN NOT FORM PART OF THE APPELLANT'S INCOME FOR THE YEAR 2006-07. ACCORDINGLY THE AO IS DIRECTED NOT TO TAKE AN AMOU NT OF RS.15 29 442/- AS THE APPELLANT'S INCOME FOR THE ASSESSMENT YEAR 2006-07. THIS GROUND OF APPEAL IS THEREFORE PARTLY ALLOWED. ' 35. WE HAVE HEARD BOTH THE PARTIES. IT HAS BEEN STA TED BY THE LD AR THAT THE ASSESSEE HAS SURRENDERED RS.1 50 00 000/- ON ACCOUNT OF POSSIBLE DISCREPANCIES. THE ADDITION ON ACCOUNT OF SEIZED DOCUMENT WAS WORKED OUT AT RS.1 34 70 588/-. THEREFORE THE ASSESSEE HAD SURRENDERED RS.15 29 442/- EXCESS AMOUNT IN ORDER TO COVER UP T HE OTHER DISCREPANCIES. FROM THE ORDER OF THE LD. CIT (A) IT IS CLEAR THAT THE ADDITION OF RS.21 65 000/- HAS BEEN ASSESSED IN ASSESSMENT YEARS 2003-04 2004-05 AND 2005-06. THE LD. CIT (A) HAS UPHELD THE ACTION OF THE ASSESSING OFFICER ASSESSING THE CASH PAYMENT IN THE YEAR TO WHICH THE Y PERTAINED. SINCE THE INCOME REFLECTED IN THE SEIZED DOCUMENT STOOD ALREADY TAXED IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 2003-04 TO 2005-06 THE SAME COULD NOT BE ASSESSED IN ASSESSMEN T YEAR 2006-07. THEREFORE THE AMOUNT OF RS.21 65 000/- FORMING PART OF DISCLOSURE OF RS.1 5 0 00 000/- COULD NOT BE TAXED IN THE ASSESSMENT YEAR 2006-07. THE ASSESSING OFFICER HAD COMPUTED THE UNDISCLOSED INCOME ON THE BASIS OF SEIZED DOCUMENTS AT RS.1 34 70 588/-. THE REFORE THE ASSESSING OFFICER HAD ALSO TAXED 21 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 RS.15 29 442/- IN ASSESSMENT YEAR 2006-07 IN VIEW OF DISCLOSURE OF RS.1 50 00 000/- MADE BY THE ASSESSEE. THE LD. CIT (APPEALS) HAS THEREFOR E NOTED THAT IN ASSESSMENT YEAR 2006-07 THE INCOME WHICH HAS BEEN TAXED TWICE IS NOT RS.21 65 0 00/- BUT RS.15 29 442/-. THIS INCOME BEING PART OF THE INCOME OF RS.21 65 000/- STANDS TAXED I N ASSESSEE'S HANDS IN ASSESSMENT YEARS 2003- 04 TO 2005-06 AND CANNOT BE TAXED IN ASSESSMENT YEA R 2006-07. THE CONTENTION OF THE LD. CIT(DR) THAT AS PER THE PROVISIONS OF LAW THE SURRE NDER CAN BE MADE IN RESPECT OF PENDING ASSESSMENTS AND NOT IN RESPECT OF EARLIER YEARS. T HIS IN OUR VIEW CAN BE SAID TO BE CORRECT LEGALLY BUT THE FACT REMAINS THAT THE ASSESSEE HAD MADE SURRENDER OF RS.1 50 00 000/- AS AGAINST THE ACTUAL UNDISCLOSED INCOME OF RS.1 34 70 588/- A S PER SEIZED DOCUMENTS. THE LD. CIT (APPEALS) HAS DIRECTED THE ASSESSING OFFICER TO ASS ESS THE AMOUNT OF RS.21 65 000/- IN ASSESSMENT YEAR 2003-04 TO ASSESSMENT YEAR 2005-06. THUS THE TOTAL ADDITION WOULD BE RS.1 56 35 558/- AS AGAINST SURRENDER OF RS.1 50 00 000/-. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (APPEALS) DELETING THE ADDITI ON. 36. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. 37. TO SUM UP THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2002-03 IS DISMISSED AND REVENUES APPEAL FOR ASSESSMENT YEAR 2002-03 IS PAR TLY ALLOWED. THE ASSESSEES APPEAL FOR ASSESSMENT YEARS 2004-05 AND 2005-06 ARE PARTLY ALL OWED FOR STATISTICAL PURPOSES. THE REVENUES APPEAL FOR ASSESSMENT YEAR 2004-05 IS PAR TLY ALLOWED. THE REVENUES APPEAL FOR ASSESSMENT YEAR 2006-07 IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON : 30 TH APRIL 2010. SD/- SD/- [ RAJPAL YADAV ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH APRIL 2010. *MEHTA * 22 I.T. APPEAL NOS. 2659 2660 & 2661 (DEL) OF 2008; AND I.T. APPEAL NOS. 2847 2855 & 2628 (DEL) OF 2008 COPY OF THE ORDER FORWARDED TO : - 1. APPELLANTS. 2. RESPONDENTS. 3. CIT 4. CIT (APPEALS) 5. DR ITAT NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR ITAT.