Kutubuddin N.Boriyawala, Lunawada v. The Income tax Officer,Ward-1,, Dahod

ITA 288/AHD/2008 | 1993-1994
Pronouncement Date: 21-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 28820514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 288/AHD/2008
Duration Of Justice 2 year(s) 11 month(s) 26 day(s)
Appellant Kutubuddin N.Boriyawala, Lunawada
Respondent The Income tax Officer,Ward-1,, Dahod
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 21-01-2011
Date Of Final Hearing 03-01-2011
Next Hearing Date 03-01-2011
Assessment Year 1993-1994
Appeal Filed On 25-01-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND BHAVNESH SAINI JUDICIAL MEMBER) ITA NO.288/AHD/2008 [ASSTT. YEAR : 1993-1994] DICTATED ON: 03-01-2011 MR. KUTUBUDDIN N. BORIYAWALA WADI MOHALLA LUNAWADA 389 230. VS. ITO WARD-1 DAHOD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N.SOPARKAR REVENUE BY : SHRI DHOMESTA O R D E R PER G.D. AGARWAL VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST THE ORDERS OF THE CIT(A)-VI BARODA DATED 8 .10.2007 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) R.W.S. 254 OF THE I.T. ACT 1961. 2. THE GROUND NO.1 OF THE ASSESSEES APPEAL READS A S UNDER: 1. THE LD.CIT(A) HAS GROSSLY ERRED IN LAW AND ON F ACTS IN PARTLY CONFIRMING ADDITIONS MADE BY THE AO IN THE DE-NOVO PROCEEDINGS UNDERTAKEN IN THE SET ASIDE ASSESSMENT BY THE ORDER OF THE ITAT. BOTH THE LOWER AUTHORITIES HAVE NOT APPRECIATED THE FACT THAT THE MATTER WAS SET ASIDE FOR DE NOVO PROCEEDINGS TO CONSIDER THE F RESH EVIDENCE AS WELL TO GRANT REASONABLE OPPORTUNITY TO BOTH THE SIDES T O MEET OUT CAUSE OF NATURAL JUSTICE. UNDER THE FACTS AND THE CIRCUMSTA NCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE ACCEPTED THE VARIOUS SUBMI SSIONS AND DOCUMENTARY EVIDENCE PRODUCED BY THE APPELLANT AND DELETED ENTIRE ADDITION MADE BY AO. 3. THE ABOVE GROUND IS OF GENERAL NATURE AND DOES N OT REQUIRE ANY SEPARATE ADJUDICATION. IN VIEW OF THE ABOVE GROUND NO.1 IS TREATED AS NOT PRESSED. ITA NO.288/AHD/2008 -2- 4. GROUND NO.2 OF THE ASSESSEES APPEAL READS AS UN DER: THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN CONFIRMING ADDITION O RS.10 30 100/- MADE BY THE AO IN RESPECT OF INVES TMENT IN BURHANI COMPLEX BY IGNORING THE RETRACTION MADE BY THE APPE LLANT. FURTHER THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT INVESTORS OF THE COMPLEX WERE IDENTIFIED WHO HAD INVESTED FROM THEIR INDEPENDENT SOURCE OF FUNDS AND THE APPELLANT HAD NO INTEREST WHATSOEV ER IN THE SAID PROPERTY. 5. AT THE TIME OF HEARING BEFORE US IT IS STATED B Y THE LEARNED COUNSEL THAT THERE WAS SEARCH AND SEIZURE OPERATION AT THE ASSES SEES BUSINESS PREMISES ON 23-9-1992. DURING THE COURSE OF SEARCH THE STATEM ENT OF THE ASSESSEE WAS RECORDED IN WHICH HE SURRENDERED INCOME OF RS.20 LA KHS; THAT WHILE GIVING BREAK-UP OF RS.20 LAKHS THE SUM OF RS.10 30 000/- WAS SURRENDERED FOR CONSTRUCTION OF BURHANI COMPLEX SITUATED AT DAHOD. HOWEVER IN THE RETURN OF INCOME THE SUM OF RS.10 30 000/- WAS NOT DISCLOSED BECAUSE THE ASSESSEE WAS NOT THE OWNER OF THE BURHANI COMPLEX AND A NOTE TO THIS EFFECT WAS GIVEN IN THE COMPUTATION OF INCOME. IN THE SAID NOTE THE NAMES OF THE OWNERS OF THE COMPLEX AND THE EXPENDITURE ACTUALLY INCURRED BY TH EM WERE SHOWN. THE AFFIDAVITS OF THE OWNERS OF THE COMPLEX WERE ALSO F URNISHED. HOWEVER IGNORING THE ABOVE DOCUMENTARY EVIDENCES THE AO SI MPLY ON THE BASIS OF THE STATEMENT MADE ADDITION OF RS.10 30 000/- IN THE O RIGINAL ASSESSMENT ORDER DATED 29-2-1996. THAT THE CIT(A) VIDE ORDER DATED 22-5-1996 DELETED THE ADDITION OF RS.10 30 000/-; THAT THE REVENUE HAD FI LED APPEAL BEFORE THE CIT(A) HOWEVER WHILE DEFENDING THE APPEAL FILED B Y THE REVENUE THE ASSESSEE SOUGHT FOR ADMISSION OF CERTAIN DOCUMENTS AS ADDITIONAL EVIDENCES. THE TRIBUNAL VIDE ITS ORDER DATED 8-2-2005 IN ITA N O.3208/AHD/1996 WAS PLEASED TO ADMIT THE ADDITIONAL EVIDENCE HOWEVER IT SET ASIDE THE MATTER BACK TO THE FILE OF THE AO TO BE RE-EXAMINED IN ACCORDAN CE WITH LAW; THAT IN THE SET ASIDE ASSESSMENT THE AO VIDE ORDER DATED 27-12-200 6 REPEATED THE ADDITION OF RS.10 30 000/- SIMPLY ON THE BASIS OF THE STATEMENT RECORDED AT THE TIME OF SEARCH IGNORING ALL THE DOCUMENTARY EVIDENCES PRODU CED BY THE ASSESSEE IN THIS ITA NO.288/AHD/2008 -3- REGARD. HE SUBMITTED THAT THE LAND WAS PURCHASED B Y FOUR CO-OWNERS. COPY OF THE LAND DOCUMENT IS PLACED AT PAGE NO.88 OF THE AS SESSEES PAPER BOOK; THAT ALL THE FOUR CO-OWNERS HAVE GIVEN AFFIDAVITS THAT THEY HAVE DEVELOPED THE LAND TOGETHER AS AN AOP. THEY HAVE ALSO EXPLAINED THE S OURCES OF INVESTMENT IN THE SAID COMPLEX. THE COPY OF THEIR AFFIDAVIT IS PLACE D AT PAGE NO.117 ONWARDS OF THE ASSESSEES PAPER BOOK; THAT THE AOP HAS FILED T HE RETURN OF INCOME FROM ASSTT.YEAR 1996-97 AND YEAR AFTER YEAR THE INCOME O F BURHANI COMPLEX IS ASSESSED IN THE HANDS OF THE AOP. HE THEREFORE SUB MITTED THAT WHEN THE ASSESSEE IS NOT THE OWNER THE QUESTION OF ANY UNEX PLAINED INVESTMENT BY THE ASSESSEE IN THE SAID COMPLEX DOES NOT ARISE. IN SU PPORT OF HIS ABOVE CONTENTIONS HE RELIED UPON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI VS. CIT 328 ITR 411. 6. THE LEARNED DR RELIED UPON THE ORDERS OF THE AU THORITIES BELOW AND HE STATED THAT IF THE ASSESSEE WAS NOT THE OWNER HE S HOULD HAVE STATED THIS FACT AT THE TIME OF SEARCH THAT HE IS NOT THE OWNER OF THE SAID COMPLEX. THAT DURING THE COURSE OF SEARCH OF ASSESSEES PREMISES CERTAIN DO CUMENTS RELATING TO THE CONSTRUCTION OF BURHANI COMPLEX WERE FOUND AND SEIZ ED; THAT IF THE ASSESSEE IS NOT THE OWNER HOW THE SAID DOCUMENTS WERE FOUND FR OM HIS PLACE; THAT THE RETRACTION OF THE ASSESSEES STATEMENT IS AFTER A L ONG PERIOD. IN VIEW OF THE TOTALITY OF THE ABOVE FACTS THE CIT(A) WAS FULLY J USTIFIED IN CONFIRMING THE ADDITION OF RS.10 30 000/- FOR UNEXPLAINED INVESTME NT IN THE CONSTRUCTION OF THE BURHANI COMPLEX. 7. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. AT PAGE NO.88 OF TH E ASSESSEES PAPER BOOK THERE IS A SALE DEED FOR PURCHASE OF THE PLOT OF LA ND BY THE FOLLOWING PERSONS: I) SARIFABEN SAIFUDDIN KATABJIWALA; II) RASHIDA MOHAMADBHAI MALEKPURWALA ITA NO.288/AHD/2008 -4- III) SOBHA ASHOK SEVAK; IV) MUNIRA KUTUBBHAI BORIYAWALA IT IS UNDISPUTED THAT THE BURHANI COMPLEX WAS CONST RUCTED ON THE ABOVE PIECE OF LAND. THUS THE ASSESSEE IS NOT THE OWNER OR EV EN ONE OF THE CO-OWNERS OF THE PLOT OF LAND ON WHICH THE BURHANI COMPLEX WAS C ONSTRUCTED. ALL THE ABOVE FOUR CO-OWNERS HAVE GIVEN AFFIDAVITS THAT THE COMPL EX WAS CONSTRUCTED BY THE CO-OWNERS AND ALL OF THEM HAVE EQUAL RIGHT IN THE B URHANI COMPLEX. NO EVIDENCE IS BROUGHT ON RECORD BY THE REVENUE TO CON TROVERT THE AVERMENTS GIVEN IN THE AFFIDAVIT. THE AOP NAMED AS BURHANI C OMPLEX (APARTMENT) FURNISHED RETURN OF INCOME SINCE A.Y.1996-97 ONWARD S AND WAS ASSESSED AS SUCH. THE REVENUE HAS NOT BROUGHT ON RECORD AN IOT A OF EVIDENCE TO ESTABLISH THAT THE ASSESSEE WAS THE OWNER OF THE BURHANI COMP LEX. ONCE THE ASSESSEE IS NOT THE OWNER OF THE BURHANI COMPLEX THE QUESTION OF MAKING OF ANY UNEXPLAINED INVESTMENT IN SUCH COMPLEX BY THE ASSES SEE CANNOT ARISE. SO FAR AS THE CONTENTION OF THE LEARNED DR THAT WHY THE PA PERS OF THE CONSTRUCTION OF THE BURHANI COMPLEX WERE FOUND FROM THE ASSESSEES PREMISES THE ANSWER IS THAT ONE OF THE CO-OWNERS IS ASSESSEES WIFE. NATU RALLY HUSBAND AND WIFE RESIDE IN THE SAME PREMISES AND THEREFORE THE PREMI SES FROM WHERE THE PAPER OF THE CONSTRUCTION WERE FOUND BELONGS TO THE ASSESSE ES WIFE AS WELL. IN THE RETURN OF THE INCOME THE ASSESSEE GAVE THE DETAILE D NOTE WHY THE DISCLOSURE OF RS.10 30 000/- CANNOT BE ADDED IN HIS CASE. THE NO TE NO.5 READS AS UNDER: (5) THE PROPERTY KNOWN AS BURHANI COMPLEX DAHOD WA S CONSTRUCTED JOINTLY BY THE FOLLOWING CO-OWNERS:- I) SMT. SHOBANABEN A. SEVAK; II) MUNIRABEN KUTUBUDDIN BORIYAWALA; III) SARIFABEN SAIFUDDIN KATABJIWALA IV) RASHIDABEN MOHAMMED MALEKPURWALA AS PER THE INFORMATION GATHERED FROM THE ABOVE PERS ONS TOTAL AMOUNTS SPENT FOR CONSTRUCTION OF THE ABOVE COMPLEX UPTO THE DATE OF SEARCH WAS RS.4 06 000/- AS PER THE REGISTE RED VALUERS REPORT DATED 30.9.1992. COPY OF THE VALUERS REPOR T IS ENCLOSED. ITA NO.288/AHD/2008 -5- THE INVESTMENT IN THE CONSTRUCTION HAS BEEN MADE BY THE ABOVE PERSONS OUT OF THE FUNDS RECEIVED BY WAY OF LOANS F ROM THE FOLLOWING PERSONS OUT OF THEIR N.R.E. ACCOUNT. I) KIKABHAI S. MANDIWALA : RS. 1 60 000/-; II) ZAKIYA HJ. FATEHPURWALA : RS. 65 000/-; III) SAIFUDDIN K. MANDIWALA : RS.1 10 000/- AFFIDAVIT OF THE AFORESAID PERSONS AND ALSO COPY OF N.R.E. BANK ACCOUNT EVIDENCING THE WITHDRAWALS ARE ENCLOSED HER EWITH. COPY OF RECORDS SHOWING THE PARTICULARS OF OWNERS OF THE PROPERTY ARE ENCLOSED HEREWITH. I DO NOT OWN THIS PROPERTY NOR DO I HAVE ANY INTERE ST IN THE SAID PROPERTY. I HAVE NOT MADE ANY INVESTMENT FOR THE C ONSTRUCTION OF THIS COMPLEX. THUS IN THE ORIGINAL ASSESSMENT ITSELF THE ASSESS EE EXPLAINED THAT HE IS NOT THE OWNER. HE GAVE THE NAMES OF THE OWNERS AS WELL AS THEIR AFFIDAVITS ACCEPTING THAT THEY ARE THE OWNERS. THEREFORE DOCUMENTARY E VIDENCES CLEARLY PROVE THAT THE ASSESSEE IS NOT THE OWNER OF THE COMPLEX AND NO MATERIAL IS BROUGHT ON RECORD BY THE REVENUE TO CONTROVERT THE ABOVE FINDI NG. THE ONLY BASIS FOR MAKING THE ADDITION IS THE STATEMENT MADE AT THE TI ME OF SEARCH. HOWEVER THE STATEMENT CANNOT BE A CONCLUSIVE EVIDENCE AGAINST T HE ASSESSEE. THE ASSESSEE BY PRODUCING THE DOCUMENTARY EVIDENCES HAS PROVED B EYOND DOUBT THAT HE IS NOT THE OWNER OF THE BURHANI COMPLEX. ONCE HE IS NOT THE OWNER OF THE BURHANI COMPLEX THE QUESTION OF MAKING ANY UNEXPLA INED INVESTMENT BY HIM IN SUCH COMPLEX CANNOT ARISE. EVEN IF THE REVENUE HAD ANY EVIDENCE THAT UNEXPLAINED INVESTMENT WAS MADE IN SUCH COMPLEX TH EY COULD HAVE TAKEN THE ACTION AGAINST THE OWNERS. IN VIEW OF THE TOTALITY OF THE ABOVE FACTS WE DO NOT FIND ANY JUSTIFICATION FOR THE ADDITION OF RS.10 30 000/- FOR UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF THE BURHANI COMPL EX THE SAME IS DELETED THE GROUND NO.2 OF THE ASSESSEE IS ALLOWED. 9. THE GROUND NO.3 OF THE ASSESSEES APPEAL READS A S UNDER: ITA NO.288/AHD/2008 -6- 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION MADE BY THE AO OF RS.1 25 000/- AND OF RS. 1 15 000/- ON ACCOUNT OF CONSTRUCTION OF UPPER FLOORS OF THE RESI DENTIAL BUILDING AS WELL OF RENOVATION & FURNITURE OF THE SAME BY NOT A PPRECIATING THE REPORT OF THE REGISTERED VALUER SUBMITTED BY THE AP PELLANT. THE LD. CIT(A) OUGHT TO HAVE ACCEPTED THE DECLARATION OF TH E EXPENSES INCURRED IN THE RETURN AND DELETED THE ADDITION CONFIRMED BY THE AO ON THE BASIS OF THE STATEMENT AT THE TIME OF SEARCH IGNORING THE RETRACTION OF THE SAME BY THE ASSESSEE. 10. AT THE TIME OF HEARING BEFORE US IT IS STATED BY THE LEARNED COUNSEL THAT DURING THE COURSE OF SEARCH THE ASSESSEE SURRENDERE D SUM OF RS.2 LAKHS FOR THE CONSTRUCTION OF FIRST AND SECOND FLOORS OF THE HOUS E SITUATED AT HUSENI CHOWK AND ANOTHER SUM OF RS.2 LAKHS FOR RENOVATION IN BAS EMENT AND ACQUISITION OF FURNITURE CARPET ETC. ; THAT IN THE RETURN OF INCO ME THE ASSESSEE OFFERED THE SUM OF RS.75 000/- IN RESPECT OF CONSTRUCTION OF HOUSE AND RS.85 000/- FOR RENOVATION OF FURNITURE AND CARPET; THAT AT THE TIM E OF SURVEY ONLY ESTIMATED AMOUNT WAS GIVEN WHILE IN THE RETURN OF INCOME THE ASSESSEE DISCLOSED THE SUM OF RS.75 000/- BASED UPON THE VALUERS REPORT AND R S.85 000/- ON THE BASIS OF ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE. HE TH EREFORE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.2 00 000/- EACH ON THE BASIS OF ONLY THE STATEMENT RECORDED AT THE TIME OF SEARC H. HOWEVER HE WAS FAIR ENOUGH TO ACCEPT THAT UNLIKE THE BURHANI COMPLEX T HE ASSESSEE WAS THE OWNER OF RESIDENTIAL HOUSE AT HUSENI CHOWK. THEREFORE A NY UNEXPLAINED INVESTMENT IN THE CONSTRUCTION/ RENOVATION OF SUCH HOUSE BELON GS TO THE ASSESSEE BUT ONLY DISPUTE IS WITH REGARD TO THE QUANTUM OF SUCH INVES TMENT. HE THEREFORE SUBMITTED THAT WHATEVER WAS THE CORRECT UNACCOUNTED EXPENDITURE WAS DULY DISCLOSED IN THE RETURN OF INCOME THE SAME SHOULD BE ACCEPTED. THE LEARNED DR ON THE OTHER HAND STATED THAT IN T HE FIRST ROUND OF APPEAL THE ASSESSEE HAD FURNISHED SEVERAL FRESH EV IDENCES BEFORE THE ITAT AND ITA NO.288/AHD/2008 -7- THEREFORE THE ITAT VIDE ITS ORDER DATED 8-2-2005 S ET ASIDE THE MATTER BACK TO THE FILE OF THE AO; THAT DURING THE SET ASIDE ASSES SMENT PROCEEDINGS THE AO ALLOWED SEVERAL OPPORTUNITIES TO JUSTIFY INVESTMENT IN CONSTRUCTION/ RENOVATION OF THE HOUSE. HOWEVER THE ASSESSEE DID NOT PRODUC E ANY EVIDENCE IN SUPPORT OF THE CLAIM THAT THE INVESTMENT IN THE CONSTRUCTIO N OF FIRST AND SECOND FLOOR WAS ONLY RS.75 000/-. SIMILARLY NO EVIDENCE WAS P RODUCED TO ESTABLISH THAT THE INVESTMENT IN THE RENOVATION OF OLD HOUSE AND T HE ACQUISITION OF THE FURNITURE AND CARPET WAS ONLY RS.85 000/-. THEREFO RE THE AO ON THE BASIS OF DETAILED DISCUSSION ON FACTS MADE THE ADDITION OF R S.2 LAKH EACH AS SURRENDERED BY THE ASSESSEE HIMSELF AT THE TIME OF THE SEARCH. 11. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. IT IS UNDIS PUTED THAT THE ASSESSEE IS THE OWNER OF RESIDENTIAL HOUSE AT THE HUSENI CHOWK AND THEREFORE IF THERE IS ANY UNEXPLAINED INVESTMENT THE SAME IS TO BE ADDED IN THE CASE OF THE ASSESSEE. IT IS ALSO UNDISPUTED THAT DURING THE COURSE OF SEARCH THE ASSESSEE HIMSELF ADMITTED THAT THERE WAS UNDISPUTED INVESTMENT OF RS .2 LAKHS IN THE CONSTRUCTION OF FIRST AND SECOND FLOOR OF THE HOUSE AT HUSENI CH OWK AND RS.2 LAKHS FOR THE PURPOSE OF RENOVATION OF THE OLD HOUSE ACQUISITION OF FURNITURE CARPET ETC. THEREFORE THE BURDEN WAS UPON THE ASSESSEE TO ESTA BLISH THAT THE AMOUNT OF RS.2 LAKH EACH ACCEPTED TO HAVE BEEN INVESTED IN TH E CONSTRUCTION/ RENOVATION WAS INCORRECT. THE RELEVANT FINDINGS OF THE AO WIT H REGARD TO THE CONSTRUCTION OF FIRST AND SECOND FLOOR READ AS UNDER: IN RESPONSE TO THE SHOW CAUSE LETTER THE ASSESSEE HAS FURNISHED REPLY IN GENERAL TERMS. BESIDES SUBMISSION CONTAINE D IN PAPER BOOK-I & II WERE EXAMINED BY ME AS WELL AS MATERIAL SEIZED F ROM THE ASSESSEE DURING THE COURSE OF SEARCH PROCEEDINGS AND ALSO SU BMISSION WHICH THE ASSESSEE HAD MADE DURING THE COURSE OF RETRACTION O F DISCLOSURE I.E. DURING FILING THE REVISED RETURN OF INCOME OR LATER ON. I AM ALSO IN AGREEMENT WITH FINDINGS OF THE ASSESSING OFFICER WH ICH HE HAS MADE DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S. IN RESPONSE TO THE FRESH OPPORTUNITIES PROVIDED AS PER ITAT'S DIRECTIO N HE FAILED TO PROVE HOW THE OFFER OF DISCLOSURE OF RS.2 LAKH MADE BY HI M DURING SEARCH PROCEEDINGS WAS NOT CORRECT & NOT RELATED TO THE CO NSTRUCTION OF 1ST & ITA NO.288/AHD/2008 -8- 2ND FLOOR OF RESIDENCE WHEN HE HAS SPECIFICALLY ACC EPTED TO HAVE CONSTRUCTED 1ST & 2ND FLOOR OF RESIDENCE & OFFERED DISCLOSURE OF RS.2 LAKHS FOR CONSTRUCTION OF THE SAME IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. THE ASSESSEE COULD NOT EXPLAIN HOW THE SO CALLED FRESH EVIDENCE WERE RELEVANT TO THE CONTENTION OF THE ASSESSEE. ON GOING THROUGH THE VALUATION REPORT THE VALUER MADE THE VALUE OF ROOM SITUATED AT 2ND FLOOR HAVING RCC SLOPPING SLAB. NATURALLY THE VALUER HA S PREPARED VALUATION REPORT FOR ONE ROOM OF THE 2ND FLOOR ONLY AS PER TH E DIRECTION OF THE ASSESSEE. IT MAY BE NOTED HERE THAT IN VALUATION RE PORT THE VALUER HAS CERTIFIED IN HIS VALUATION REPORT THAT THE WHOLE EX PENSES ARE BORNE BY SHRI KUTUBUDDIN BORIYAWALA. HOW HE BECOME TO KNOW T HAT THE ASSESSEE HAS INCURRED THE CONSTRUCTION COST. THESE FACTS IT SELF PROVED THAT THE VALUER HAS PREPARED VALUATION REPORT AS DESIRED BY THE ASSESSEE. SINCE THE ASSESSES DOES NOT HAVE ANY CASE TO ARGUE HE FA ILED TO REMAIN PRESENT. HE HAS NOTHING TO EXPLAIN. BESIDES LIE HAS NOTHING TO OFFER AS FRESH EVIDENCE. IN THIS REGARDS HE WAS PROVIDED REPEATED OPPORTUNITIES OF BEING HARD AS STATED EARLIER. I HAVE THEREFORE NO OTHER ALTERNATIVE BUT TO DECIDE THE ISSUE INVOLVED ON THE BASIS OF FACTS & M ATERIAL AVAILABLE ON RECORDS I HAVE ALSO NO REASON NOT TO RELY UPON THE STATEMENT OF THE ASSESSES RECORDED U/S 132(4) OF THE ACT WHICH CONTA INED DISCLOSURE MADE VOLUNTARILY DURING THE COURSE OF SEARCH ON THE BASI S OF ACTUAL CONSTRUCTION MADE & FOUND DURING SEARCH. AFTER CONS IDERING ALL THESE FACTS & MATERIALS AVAILABLE ON RECORDS I AM CONVI NCED THAT DURING SEARCH THE DISCLOSURE MADE BY THE ASSESSEE OF RS.2 LAKHS U/S 132(4) OF THE ACT WAS AFTER CONSIDERING THE ACTUAL CONSTRUCT ION ON 1ST & 2ND FLOOR CARRIED OUT BY HIM & ALSO IN NATURAL COURSE. AT THE TIME OF RECORDING THE STATEMENT THE ASSESSEE WAS AWARE HOW MUCH UNACCOUN TED EXPENDITURE INCURRED BY HIM IN CONSTRUCTION OF 1ST & 2ND FLOOR OF THE RESIDENCE. ON A SECOND THOUGHT TO AVOID TAX LIABILITY ON THE DISCL OSED INCOME THE ASSESSEE HAS CREATED A STORY. THE PAPERS FILED IN P APER BOOK NO.I & II IS NOTHING BUT REPETITION OF THE SUBMISSIONS WHICH WER E MADE BY HIM EITHER AT THE TIME OF RETRACTION OF DISCLOSURE I.E. WHILE FILLING THE REVISED RETURN OF INCOME OR AT THE TIME OF ORIGINAL ASSTT. PROCEED INGS. THEREFORE AN AMOUNT OF RS.2 00 000/- BEING THE AMOUNT DISCLOSED FOR CONSTRUCTION OF 1ST & 2ND FLOOR OF RESIDENCE AS ADMITTED BY THE ASS ESSES IS TAXED AS HIS INCOME AS AGAINST RS.75 000/- DISCLOSED BY GRIM IN REVISED RETURN OF INCOME. ACCORDINGLY RS.2 LAKHS IS TAXED AS HIS INCO ME & ADDED TO THE TOTAL INCOME. THE ASSESSES HAD DISCLOSED VOLUNTARIL Y RS.2 00 000/- U/S 132(4) OF THE ACT DURING SEARCH PROCEEDINGS WHICH W AS RETRACTED & ONLY RS.75 000/- WAS OFFERED BY HIM IN RETURN OF INCOME. I AM SATISFIED THAT BY FURNISHING INACCURATE PARTICULARS OF HIS INCOME IN RESPECT OF RS. 1 25 000/- THE ASSESSEE ATTRACTED SECTION 271(1)(C ) OF THE ACT. PENALTY PROCEEDINGS WITHIN THE MEANING OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT HAS BEEN INITIATED BY ISSUE OF NOTICE U/S 2 74 RWS 271 OF THE ACT. ITA NO.288/AHD/2008 -9- 12. AT THE TIME OF HEARING BEFORE US THE LEARNED C OUNSEL FOR THE ASSESSEE WAS UNABLE TO CONTROVERT THE ABOVE FINDING. DURING THE SEARCH THE ASSESSEE HAD ADMITTED THAT THE CONSTRUCTION OF 1 ST AND 2 ND FLOOR OF HOUSE WHILE THE VALUATION REPORT WAS ONLY FOR ONE ROOM SITUATED AT 2 ND FLOOR. THEREFORE THE AO HAS NOT ACCEPTED THE SAID VALUATION REPORT. THE AS SESSEE DID NOT FURNISH ANY EXPLANATION IN THIS REGARD AND REMAINED ABSENT BEFO RE THE AO. SIMILARLY WITH REGARD TO THE INVESTMENT IN THE RENOVATION/FURNITUR E THE AO HAS RECORDED THE FOLLOWING FINDINGS: IN RESPONSE TO THE SHOW CAUSE LETTER THE ASSESSEE HAS FILED REPLY IN GENERAL TERMS. BESIDES SUBMISSION CONTAINED IN PAPE R BOOK-I & 11 WERE EXAMINED BY ME AS WELL AS MATERIAL SEIZED FROM THE ASSESSEE DURING THE COURSE OF SEARCH PROCEEDINGS ALSO SUBMISSION WHICH THE ASSESSEE MADE DURING THE COURSE OF RETRACTION OF DISCLOSURE I.E. DURING FILING THE REVISED RETURN OF INCOME OR LATER ON. I AM ALSO IN AGREEMEN T WITH FINDINGS OF THE ASSESSING OFFICER WHICH HE HAS MADE DURING THE COUR SE OF ORIGINAL ASSESSMENT PROCEEDINGS. IN RESPONSE TO THE FRESH OP PORTUNITIES PROVIDED AS PER ITAT'S DIRECTION HE FAILED TO PROVE HOW THE OFFER OF DISCLOSURE OF RS. 2 LAKH MADE BY HIM DURING SEARCH PROCEEDINGS WA S NOT CORRECT & NOT RELATED TO THE RENOVATION FURNISHING & CARPET WORK OF THE GROUND FLOOR & ENTIRE HOUSE WHEN LIE HAS SPECIFICALLY ACCE PTED TO HAVE INCURRED EXPENDITURE FOR SUCH WORK FOR GROUND FLOOR & ENTIRE HOUSE & OFFERED DISCLOSURE OF RS.2 LAKHS FOR THE SAME IN THE STATEM ENT RECORDED U/S 132(4) OF THE ACT. THE ASSESSES ALSO COULD NOT EXPL AIN HOW THE SO CALLED FRESH EVIDENCE WERE RELEVANT TO THE CONTENTION OF T HE ASSESSEE. ON GOING THROUGH THE VALUATION REPORT THE VALUER MADE THE V ALUE OF ONLY FURNISHING LYING AT THE GROUND FLOOR OF THE RESIDEN CE WHEREAS THE ASSESSES HAS DISCLOSED ITS. 2 LAKHS ON ACCOUNT OF R ENOVATION FURNISHING & CARPET FOR THE GROUND FLOOR & ENTIRE HOUSE IN STA TEMENT RECORDED U/S 132(4) OF THE ACT. NATURALLY THE VALUER HAS PREPAR ED THE VALUATION REPORT FOR FURNISHING LYING AT GROUND FLOOR ONLY AS DESIRED BY THE ASSESSEE. SINCE THE ASSESSEE DOES NOT HAVE ANY CASE TO ARGUE LIE FAILED TO REMAIN PRESENT. HE HAS NOTHING TO EXPLAIN. BESID ES HE HAS NOTHING TO OFFER AS FRESH EVIDENCE. IN THIS REGARDS HE WAS PRO VIDED REPEATED OPPORTUNITIES OF BEING HARD AS STATED EARLIER. I HA VE THEREFORE NO OTHER ALTERNATIVE BUT TO DECIDE THE ISSUE INVOLVED ON THE BASIS OF FACTS & MATERIAL AVAILABLE ON RECORDS. I HAVE ALSO NO REAS ON NOT TO RELY UPON THE STATEMENT OF THE ASSESSES RECORDED U/S 132(4) O F THE ACT WHICH CONTAINED DISCLOSURE MADE VOLUNTARILY DURING THE CO URSE OF SEARCH ON THE BASIS OF ACTUAL WORK CARRIED OUT BY HIM & FOUND DURING SEARCH. AFTER CONSIDERING ALL THESE FACTS & MATERIALS AVAILABLE O N RECORDS I AM ITA NO.288/AHD/2008 -10- CONVINCED THAT DURING SEARCH THE DISCLOSURE MADE B Y THE ASSESSEE OF RS.2 LAKHS U/S 132(4) OF THE ACT WAS AFTER CONSIDE RING THE ACTUAL RENOVATION FURNISHING & CARPET WORK CARRIED OUT BY HIM IN ENTIRE HOUSE INCLUDING GROUND FLOOR & ALSO IN NATURAL COURSE. AT THE TIME OF RECORDING THE STATEMENT THE ASSESSES WAS AWARE HOW MUCH UNACCOUNTED EXPENDITURE INCURRED BY HIM IN FOR SUCH WORK IN GRO UND FLOOR & ENTIRE RESIDENCE. ON A SECOND THOUGHT TO AVOID TAX LIABIL ITY ON THE DISCLOSED INCOME THE ASSESSEE HAS CREATED A STORY. THE PAPER S FILED IN PAPER BOOK NO.1 & II IS NOTHING BUT REPETITION OF THE SUBMISSI ONS WHICH WERE MADE BY HIM EITHER AT THE TIME OF RETRACTION OF DISCLOSU RE I.E. WHILE FILLING THE REVISED RETURN OF INCOME OR AT THE TIME OF ORIGINAL ASSTT. PROCEEDINGS. THEREFORE AN AMOUNT OF RS.2 00 000/- BEING THE AMO UNT DISCLOSED FOR RENOVATION FURNISHING & CARPET WORK CARRIED OUT AT GROUND FLOOR & ENTIRE HOUSE AS ADMITTED BY THE ASSESSES IS TAXED A S HIS INCOME AS AGAINST RS.85 000/- DISCLOSED BY HIM IN REVISED RET URN OF INCOME. ACCORDINGLY RS.2 LAKHS IS TAXED AS HIS INCOME & ADD ED TO THE TOTAL INCOME. THE ASSESSEE HAD DISCLOSED VOLUNTARILY RS.2 00 000/- U/S.132(4) OF THE ACT DURING SEARCH PROCEEDINGS WHICH WAS RETR ACTED & ONLY RS.85 000/- WAS OFFERED BY HIM IN RETURN OF INCOME. I AM SATISFIED THAT BY FURNISHING INACCURATE PARTICULARS OF HIS INCOME IN RESPECT OF RS.1 15 000/- THE ASSESSEE ATTRACTED SECTION 271(1 )(C) OF THE ACT. PENALTY PROCEEDINGS WITHIN THE MEANING OF EXPLANATI ON 5 TO SECTION 271(1)(C) OF THE ACT HAS BEEN INITIATED BY ISSUE OF NOTICE U/S.274 RWS 271 OF THE ACT. THIS FINDING HAS ALSO NOT BEEN CONTROVERTED BY THE LEARNED COUNSEL AT THE TIME OF HEARING BEFORE US. CONSIDERING THE FACTS OF THE CASE THAT THE ASSESSEE CONSTRUCTED TWO FLOORS I.E. 1 ST AND 2 ND FLOORS IN THE RESIDENTIAL HOUSE ESTIMATED INVESTMENT OF RS.2 LAKHS IN SUCH CONSTRUCTION AS A DMITTED BY THE ASSESSEE HIMSELF AT THE TIME OF SEARCH CANNOT BE SAID TO BE EXCESSIVE OR UNREASONABLE. SIMILARLY THE EXPENDITURE ON THE RENOVATION OF THE OLD HOUSE INCLUDING ITS BASEMENT AND ALSO THE ACQUISITION OF FURNITURE AND CARPET AT RS.2 LAKHS AS STATED BY THE ASSESSEE HIMSELF AT THE TIME OF SEARCH CANN OT BE SAID TO BE UNREASONABLE OR EXCESSIVE. CONSIDERING THE TOTALITY OF THE ABOV E FACTS WE DO NOT FIND ANY MERIT IN THE GROUND NO.3 OF THE ASSESSEES APPEAL THE SAME IS REJECTED. 13. GROUND NO.4 OF THE ASSESSEES APPEAL READS AS U NDER: ITA NO.288/AHD/2008 -11- THE LD.CIT(A) HAS FURTHER ERRED IN CONFIRMING ADDI TION OF RS.37 000/- MADE BY THE AO IN RESPECT OF EXPENSES INCURRED BY T HE SON OF THE ASSESSEE ON FOREIGN TOUR CONDUCTED WITHOUT EXAMININ G THE EVIDENCE OF ACTUAL EXPENSES INCURRED SIMPLY ON THE BASIS OF ST ATEMENT MADE AT THE TIME OF SEARCH IGNORING THE SUBSEQUENT RETRACTION M ADE BY THE APPELLANT. 14. THE FACTS ARE THAT DURING THE ACCOUNTING YEAR R ELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEES SON VISITE D ABROAD TWICE FOR WHICH NO EXPENDITURE WAS RECORDED IN THE BOOKS OF ACCOUNTS. DURING THE COURSE OF SEARCH THE ASSESSEE ADMITTED UNACCOUNTED EXPENDITU RE OF RS.50 000/- IN SUCH FOREIGN TRIP. IN THE RETURN OF INCOME THE ASSESSE E CLAIMED THAT THE ASSESSEES SON INCURRED AN EXPENDITURE OF RS.13 000/- ONLY IN TWO FOREIGN TRIPS. HOWEVER DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS UNABLE TO FURNISH ANY DETAILS WITH REGARD TO INCURRING OF EXPENDITURE. E VEN AT THE TIME OF HEARING BEFORE US THE ASSESSEE WAS UNABLE TO PRODUCE THE D ETAILS OF EXPENDITURE INCURRED BY THE ASSESSEES SON. IN THE ABSENCE OF ANY DETAILS FURNISHED BY THE ASSESSEE IN OUR OPINION ESTIMATE OF RS.50 000/- O N TWO FOREIGN TRIPS OF ASSESSEES SON WHICH WAS ADMITTED BY THE ASSESSEE H IMSELF IN THE STATEMENT RECORDED DURING THE SEARCH CANNOT BE SAID TO BE EX CESSIVE OR UNREASONABLE. WE THEREFORE REJECT THE GROUND NO.4 OF THE ASSESSEES APPEAL. 15. GROUND NO.5 READS AS UNDER: 5. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE LEVY OF INTEREST UNDER SECTION 234A 234B AND 234C OF THE ACT. 16. THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY ADM ITTED THAT THE CHARGING OF INTEREST UNDER SECTION 234A 234B AND 234C IS CONSE QUENTIAL IN NATURE. ACCORDINGLY WE DIRECT THE AO TO RE-CALCULATE THE I NTEREST UNDER SECTION 234A 234B AND 234C AFTER GIVING EFFECT TO OUR ABOVE ORDE R. ITA NO.288/AHD/2008 -12- 17. THE SEVENTH GROUND REGARDING INITIATION OF PENA LTY UNDER SECTION 271(1)(C) OF THE ACT IS PREMATURE AT THIS STAGE TH E SAME IS ACCORDINGLY REJECTED. 18. IN RESULT ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 21 ST JANUARY 2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 21-01-2011 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : DEPARTMENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD