ITO, RAJSAMAND v. M/s. Anuvarat Construction, RAJSAMAND

ITA 398/JODH/2013 | 2000-2001
Pronouncement Date: 25-04-2014 | Result: Dismissed

Appeal Details

RSA Number 39823314 RSA 2013
Assessee PAN AACFA0462C
Bench Jodhpur
Appeal Number ITA 398/JODH/2013
Duration Of Justice 10 month(s) 11 day(s)
Appellant ITO, RAJSAMAND
Respondent M/s. Anuvarat Construction, RAJSAMAND
Appeal Type Income Tax Appeal
Pronouncement Date 25-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 13-03-2014
Date Of Final Hearing 13-03-2014
Next Hearing Date 13-03-2014
Assessment Year 2000-2001
Appeal Filed On 13-06-2013
Judgment Text
IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.K. SAINI ACCOUNTANT MEMBER. ITA NO.398 & 399/JODH/2013 (A.YS. 2000-01 & 2001-02) ITO WARD-1 VS. M/S. ANUVARAT CONSTRUCTION RAJASMAND. INDRA PRASTH COMPLEX RAJNAGAR RAJASMAND. PAN NO. AACFA 0462 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN & SHRI RAJENDRA JAIN. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 13/03/2014. DATE OF PRONOUNCEMENT : 25/04/2014. O R D E R PER N.K. SAINI A.M THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED A GAINST THE SEPARATE ORDERS EACH DATED 28/03/2012 OF LD. CIT(A) UDAIPUR. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE SIMILAR AN D THE APPEALS WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 2 FIRST WE WILL DEAL WITH I.T.A.NO. 399/JODH/2013. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL:- ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN:- 1. DELETING THE ADDITION OF RS. 20 22 400/- ON ACCO UNT OF SUPPRESSED SALE ON SHOPS/FLATS DESPITE THE FACT THAT THE AO HA S ELABORATELY SUBSTANTIATED THE ADDITION OF SUPPRESSED SALES IN W ELL REASONED MANNER AFTER MAKING ENQUIRIES FROM FLAT/SHOP PURCH ASERS. 2. DELETING THE ADDITION OF RS. 5 11 881/- MADE ON ACCOUNT OF BOGUS EXPENDITURE DESPITE THE FACT THAT ONE CLALMED RECIP IENT NAMELY P.R. ENTERPRISES DENIED RECEIVING THE PAYMENT AND ALSO D ENIED SIGNATURE ON PAYMENT VOUCHER AND IN OTHERS COPY OF ACCOUNT WE RE NOT TALLYING. 3. VIDE GROUND NO. 1 THE GRIEVANCE OF THE DEPARTMEN T RELATES TO THE DELETION OF ADDITION OF RS. 20 22 400/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUPPRESSED SALES OF SHOPS/FLATS. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME ON 30/10/2010 DECLARING AN INCOME OF RS. 17 622/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE I.T. ACT 196 1 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT). LATER ON CASE WAS SELE CTED FOR SCRUTINY. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND FRAMED THE ASSESSMENT AT AN INCOME OF RS. 25 51 903/- BY MAKING THE FOLLOWING A DDITIONS:- 3 1) ADDITION ON ACCOUNT OF SUPPRESSED SALES RS. 20 22 400/- 2) ADDITION ON ACCOUNT OF BOGUS PAYMENT RS. 5 11 881/- 5. AGAINST THE SAID ADDITIONS ASSESSEE FILED AN APPE AL BEFORE THE LD. CIT(A) WHO DELETED THE ADDITIONS. THEREAFTER THE DEPARTMENT PREFERRED AN APPEAL TO THE ITAT WHEREIN VIDE ORDER DATED 13/0 8/2008 IN I.T.A.NO. 199/JU/2006 THE ORDER OF THE LD. CIT(A) WAS SET AS IDE BY MAKING THE FOLLOWING OBSERVATIONS:- '12) AFTER REJECTION OF ACCOUNTS THE ASSESSING OFF ICER HAS TAKEN SUPER AREA AND NOT CARPET AREA AND MADE ADDITION ON ESTIMATE BASIS WITHIN REA LM OF POWERS VESTED WITH HIM. THE FINDING OF FACT REACHED BY LD CIT(A) THAT PREMIUM TAKEN BY THE ASSESSEE HAS NOT BEEN ENTERED IN THE BOOKS OF ACCOUNT HAS NOT BEEN CHALLENGED BY WAY OF CROSS-AP PEAL OR CROSS-OBJECTION BY THE ASSESSEE. FURTHERMORE LD CIT(A) HAS NOT SET ASIDE THE ACTION OF ASSESSING AUTHORITY IN REJECTION OF ACCOUNT. THE LD CIT(A) INSTEAD DELETED THE ESTIMATED ADDITIO NS WHICH WAS NOT PERMISSIBLE UNDER THE LAW AS THE ASSESSMENT WAS TO BE MADE IN THE MANNER PROVIDE D U/S 144 OF THE ACT. HIS DECISION THEREFORE NEEDS TO BE SET ASIDE. 13) LD DR HAS BEEN HEARD EX-PARTE QUA ASSESSEE. SUB-SECTION (3) OF SECTION 145 OF THE I.T.ACT READS AS UNDER- '145 METHOD OF ACCOUNTING .. (3) WHERE THE ASSESSING OFFICER IS NOT SATISFIED AB OUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE OR WHERE THE METHOD O F ACCOUNTING PROVIDED IN SUB- SECTION(L) OR ACCOUNTING STANDARDS AS NOTIFIED UNDE R SUB-SECTION(2) HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION144.' 14) IN THIS CASE ADMITTEDLY THE ASSESSING OFFICER HAS TAKEN REASONING THAT THE ASSESSEE HAS SUPPRESSED SALE PRICE OF ITS FLATS AND HAS CLALMED FACT WHICH WERE CONTRARY TO MATERIAL BROUGHT ON RECORD. HE THEREFORE BEING NO T SATISFIED ABOUT THE CORRECTNESS AND COMPLETENESS OF THE ACCOUNTS REJECTED THE SAME BY APPLICATION OF SECTION 145 OF THE ACT. AFTER REJECTION OF ACCOUNTS IT WAS WITHIN THE REALM OF P OWERS OF THE ASSESSING AUTHORITY TO HAVE 4 MADE THE ESTIMATE OF INCOME IN THE MANNER AS PROVID ED U/S 144 OF THE ACT I.E. BY ESTIMATING THE INCOME OF THE ASSESSEE BY WAY OF HIS BEST JUDGM ENT. THE ASSESSING OFFICER THEREFORE CONSIDERING THE ENTIRE MATERIAL FACTS AND EVIDENCES THAT HAS BEEN BROUGHT ON RECORD ESTIMATED THE INCOME ON THE AREA SOLD BY APPLYING THE AVERAGE RATE OF RS.200/-BEING AMOUNT OF SALE PRICE SUPPRESSED BY THE ASSESSEE FOR SALE O F FLATS. THE ASSESSEE HAS CHALLENGED THE ACTION OF THE ASSESSING AUTHORITY FOR REJECTION OF BOOKS O F ACCOUNT BUT LD CIT(A) DID NOT ADVERT TO THE GRIEVANCE OF THE ASSESSEE AND PROCEEDED TO DELETE T HE ADDITION BY CONSIDERING CERTAIN PLEAS OF THE ASSESSEE AND PRESUMING THAT THE ADDITION HAS BE EN MADE ON THE BASIS OF DIFFERENCES TAKEN BETWEEN VALUE SATED FOR STAMP DUTY PURPOSE AN D THE ACTUAL SALE PRICE RECORDED IN THE BOOKS OF ACCOUNT AND ALSO THE FACT THAT THE PROPER ENQUIRIES HAVE NOT BEEN CONDUCTED BY THE ASSESSING AUTHORITY EVEN THOUGH HE ALSO ADMITT ED OF SUPPRESSION OF SALE PRICE IN CERTAIN CASE AS HAS BEEN RECORDED IN PARA-15 OF HIS ORDER. THE DECISION REACHED BY LD CIT(A) HOWEVER HAS TO BE SIDE ASIDE AS HE HAS NOT DECIDED THE GROU ND OF REJECTION OF ACCOUNTS U/S 145 OF THE ACT TAKEN BY THE ASSESSEE IN APPEAL BEFORE HIM. IN CASE IT IS TO TAKEN THAT BY NOT ANSWERING GROUND OF REJECTING THE BOOKS OF ACCOUNT THE SAME W AS ANSWERED AGAINST THE ASSESSEE THEN THE LD CIT(A) COULD ONLY CORRECT THE ESTIMATE TAKEN BY THE ASSESSING AUTHORITY AFTER HE HAS ACCEPTED THE FINDING THAT THERE IS SUPPRESSION OF SALE PRICE . EVEN THE MANDATE OF SECTION 145(3) IS THAT THE ASSESSING AUTHORITY AFTER REJECTION OF ACCOUNTS HAS TO ESTIMATE THE INCOME. THE DEFECTS AS POINTED OUT BY THE ASSESSING AUTHORITY ARE SUCH THA T WHERE THE ACCOUNTS ARE REJECTED ESTIMATION NEEDS TO BE MADE UNLESS OTHERWISE PROVED NEEDLESS TO SAY IN ESTIMATION OF INCOME SOME GUESS WORK IS INVOLVED BUT THIS PRINCIPLE HAS ALSO NOT BEEN KEPT IN MIND BY LD CIT(A) WHILE DELETING THE ADDITION. WHEN THE LD CIT(A) ENT ERTAINED THE VIEW THAT PROPER ENQUIRIES HAVE NOT BEEN CONDUCTED BY THE ASSESSING AUTHORITY IN MAKING ADDITION THE LD CIT(A) COULD HAVE REMANDED THE MATTER BACK TO THE FILE OF THE AS SESSING AUTHORITY FOR MAKING SUCH ENQUIRES OR HE HAVING CO-TERMINUS POWERS AS THAT OF ASSESSING AUTHORITY SHOULD HAVE HIMSELF CARRIED OUT SUCH ENQUIRIES AND WITHOUT DOIN G SO IT WAS NOT POSSIBLE TO REACH A CONCLUSION AS THAT HAS BEEN REACHED BY HIM IN GRANT ING RELIEF TO THE ASSESSEE. UNDER THE PECULIAR FACTS OF THIS CASE WE .DEEM IT PROPER TO SET ASIDE THE DECISION OF LD CIT(A) AND RESTORE THE MATTER BACK T O HIM SO THAT HE REDRESSES THE GRIEVANCE OF THE ASSESSEE FIRST ON THE GROUND IN AP PEAL IN REJECTION OF ACCOUNTS U/S 145 OF THE ACT TAKEN BEFORE HIM AND THEN COME TO THE CONCLUSIO N AFRESH IN RESPECT OF ESTIMATED ADDITION ON ACCOUNT OF SALE OF FLAT AS WELL AS BOGUS EXPENDI TURE TAKEN BY THE ASSESSING AUTHORITY IN FINALLY ASSESSING THE INCOME OF THE ASSESSEE. 15) SO FAR AS GROUNDS IN APPEAL FOR THE ASSESSMENT YEAR 2000-01 AND 1999-2000 IS CONCERNED IN THESE YEARS ALSO THE LD CIT(A) HAS DE LETED THE ADDITIONS MADE BY THE ASSESSING AUTHORITY ON THE BASIS OF HIS ORDER PASSED FOR THE ASSESSMENT YEAR 2001-02. SINCE WE HAVE ALREADY REMANDED THE ISSUES RAISED IN THE APPEAL FO R THE ASSESSMENT YEAR 2001-02 BACK TO THE FILE OF LD CIT(A) FOR THE REASONS AS DISCUSSED ABOV E WE SET ASIDE THE DECISION OF LD CIT(A) FOR 5 THE ASSESSMENT YEAR 2000-01 AND 1999-2000 ALSO AND RESTORE THE MATTER BACK THE FILE OF THE LD CIT(A) TO DECIDE THE MATTER AFRESH AS STATED ABO VE SO THAT NO PREJUDICE IS CAUSED TO EITHER OF THE PARTIES BY OUR DECISION ON MERIT IN GROUNDS IN APPEAL.' 6 ON THE DIRECTION OF THE ITAT LD. CIT(A) PROCEEDED TO DECIDE THE APPEAL OF THE ASSESSEE AND ADJUDICATED THE ISSUE AS TO WHETHER THE PROVISIONS OF SECTION 145(3) OF THE ACT AS INVOKED BY THE ASSESSING OFFICER WAS TENABLE. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) AS UNDER:- ' 1. IT IS HUMBLY SUBMITTED THAT THE THEN CIT(A) WA S PLEASED TO DELETE THE ENTIRE ADDITIONS MADE BY THE ID. AO ON MERITS OF THE CASE AND THE BOOK RESUL TS WERE ACCEPTED WHICH IMPLIEDLY MEAN THAT HE HAS SET ASIDE THE REJECTION OF BOOKS OF ACCOUNT BY THE ID. AO U/S 145 OF THE ACT. SINCE THE ADDITIONS IN TOTALITY WERE DELETED SETTING ASIDE THE REJECTION OF BOOKS IS MERELY A TECHNICAL ASPECT. 2. THAT NO SPECIFIC DEFECTS WERE POINTED OUT IN THE BO OKS OF ACCOUNT EVEN AFTER IMPOUNDING THE SAME EXCEPT ALLEGATIONS AS TO SUPPRE SSION OF SALES AND NON-RECONCILIATION OF ACCOUNT OF FEW SUPPLIERS FOR WHICH SEPARATE SUB MISSIONS ARE GIVEN HERE-IN-AFTER UNDER THE APPROPRIATE PARAGRAPHS. 3. THAT THE ID. AO HAS TAKEN THE BIASED APPROACH IN TH AT THE MATTER WAS REFERRED TO THE DVO U/S 131(1)(D) ON 05.02.2003 I.E. BEFORE PRODUCT ION OF THE BOOKS OF ACCOUNT BEFORE HIM WITHOUT EXAMINING THE SAME. AS SUCH WITHOUT POINTI NG OUT ANY DEFECT IN THE BOOKS OF ACCOUNT REGULARLY MAINTAINED BY THE APPELLANT-FIRM THE MATTER HAS BEEN REFERRED TO THE DVO FOR VALUATION PURPOSE. THIS ITSELF SHOWS THAT THE BOOKS WERE NOT TAKEN INTO ACCOUNT FROM THE VERY BEGINNING FOR NO GOOD REASON. 4. THAT EVEN THE OUTCOME OF DVO REPORT SUGGESTS THAT T HE BOOKS ARE RELIABLE BECAUSE THERE IS NO MATERIAL DIFFERENCE IN THE COST DECLARE D BY THE ASSESSEE AND AS ESTIMATED BY DVO. IT IS BECAUSE OF THIS SIMPLE REASON THAT THE I D. AO HAS NOT MADE USE OF IT. BUT THIS PROVES THE GENUINENESS OF THE ACCOUNTS MAINTAINED B Y THE APPELLANT-ASSESSEE. 5. IT IS SUBMITTED THAT AS FAR AS CONSTRUCTION IS CONC ERNED THE ID. AO HAS NOT BROUGHT ON RECORD ANY UNACCOUNTED INVESTMENTS OR ASSETS AND IN ABSENCE OF THE SAME IT CANNOT BE ALLEGED THAT THERE WAS ANY ON-MONEY PAYMENT. IT ALS O PROVES THE RELIABILITY OF ACCOUNT BOOKS. 6 6. THAT THE PRESUMPTION HOWEVER STRONG CANNOT TAKE THE PLACE OF EVIDENCE. THE EVIDENCE FOUND AND MATERIAL AVAILABLE SHOULD ONLY BE THE BAS IS FOR MAKING SUCH ALLEGATIONS. THE ID. AO WITHOUT GIVING ANY COGNIZANCE TO THE PERIOD TO W HICH A TRANSACTION PERTAINS OR RELATES HAS IGNORED THE DULY AUDITED BOOKS OF ACCOUNT MAINT AINED FOR OTHER PERIOD WITHOUT POINTING OUT ANY DEFECT TO THE FACT THAT THE TRANSACTION REL ATING TO THE YEAR UNDER CONSIDERATION IS NOT RECORDED IN BOOKS OF ACCOUNT FOR THAT PARTICULAR PE RIOD. FOR MAKING REJECTION OF BOOKS FOR THE ASSESSMENT YEAR 2001-02 HE POINTED OUT EVEN EN TRIES PERTAINING TO THE YEAR 1996 WHICH IS TOTALLY IRRELEVANT FOR THE PURPOSE. 7. ALL THE RELEVANT DOCUMENTS IN THE FORM OF REGIS TERED SALE DEEDS VOUCHERS RECEIPTS BANK STATEMENTS ETC. WERE PRODUCED BEFORE THE ID. AO. IT WAS FOR HIM TO CHECK THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS. PLACING RELIANCE ON OTHER SET OF INFORMATION WHICH ALREADY EXPLALNED TO BE NOT RELEVANT AND ARE BIASED EVIDENCES IS NOT A GROUND TO DISBELIEVE THE CORRECTNESS OF THE ACCOUNTS. EVEN THE ID. AO HIMSELF HAS RECORDED THE FACT THAT THERE WERE DISPUTES AND LITIGATIONS WITH THE WITNESSES EXAMINED BY HIM AND AS SUCH THEIR STATEMENTS CANNO T BE TREATED AS INDEPENDENT OR AT PAR. 8. IT IS HUMBLY STATED THAT THE DIFFERENCES IN AREA OF FLATS ON THE BASIS OF SUPER BUILT-UP AND FLOOR AREA MEASUREMENTS REGISTERED SALE CONSIDERAT ION & STAMP DUTY VALUATION STATEMENT OF WITNESSES WITHOUT GIVING COGNIZANCE TO THE PERIO D OF TRANSACTION AND VERACITY OF THEIR STATEMENTS ETC. HAVE BEEN MADE THE BASIS FOR REJEC TION OF BOOKS OF ACCOUNT WHICH IN NO WAY CAN BE CONSIDERED AS RELEVANT MATERIAL FOR THE PURPOSE OF ESTIMATION OF INCOME BECAUSE MANY SUCH WITNESSES EVIDENCES OR DOCUMENTS AS DESCRIBED IN THE ASSESSMENT ORDER ARE IRRELEVANT AS THE ID. AO HIMSELF HAS NOT USED THE SAME WHILE MAKING THE ESTIMATES. 9. THAT THE HON'BLE PATNA HIGH COURT IN THE CASE OF SU RAJMAL CHAMPALAL VS. CIT REPORTED AT 66ITR 369 HAS HELD THAT IF AN ESTIMATE IS BASED PARTLY UPON IRRELEVANT MATERIAL AND PARTLY UPON RELEVANT MATERIAL IT IS DIFFICULT TO SUSTAIN SUCH AN ESTIMATE BECAUSE IT CANNOT BE SAID AS TO WHAT EXTENT AND WHICH PART OF THE FIGURE OF E STIMATE WAS DEPENDENT UPON THE IRRELEVANT PORTION OF MATERIAL. THE ID. AO HAS DISCUSSED MANY DETAILS IN THE ASSESS MENT ORDER SOME OF WHICH ARE TOTALLY IRRELEVANT AND SUCH IRRELEVANT MATERIAL CANNOT BE SUSTAINED TO REJECT BOOKS AND MAKE ADDITIONS. 10. IN INDORE CONSTRUCTION (P) LTD. VS. ACIT (1999) 71 ITD 128 (IND) INVOLVING A COMPANY ENGAGED IN CONSTRUCTION AND SALE OF RESIDENTIAL AND COMMERCIAL BUILDINGS IT WAS OBSERVED AS FOLLOWS: 7 'WHEN THE ASSESSING OFFICER EXAMINES THE ACCOUNTS O F AN ASSESSEE HE HAS TO CONSIDER WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED THE METHOD OF A CCOUNTING; WHETHER THE ACCOUNTS ARE CORRECTLY MAINTAINED; AND WHETHER THE ACCOUNTS MAIN TAINED ARE COMPLETE IN THE SENSE THAT THERE IS NO SIGNIFICANT OMISSION THEREIN. IF THE FINDING OF THE ASSESSING OFFICER ON ANY OF THE AFORESAID IS IN NEGATIVE SECTION 145(2) APPLIES AND THE ASSESSING OFFICER MAY MAKE A BEST JUDGEMENT ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144. IT IS SIGNIF ICANT TO NOTE THAT EVEN IN SUCH A SITUATION THE BOOKS NEED NOT BE DISCARDED ALTOGETHER. THE ASSESSM ENT MAY BE ADJUSTED TO CURE THE EXTENT OF THE INFIRMITY FOUND SO AS TO MAKE IT A 'BEST JUDGM ENT' ASSESSMENT'. BUT IN THE INSTANT CASE THE ID. AO INSTEAD OF CURI NG THE INFIRMITY IF ANY FOUND IN THE BOOKS PROCEEDED TO ESTIMATE THE FIGURES OF SALES IN EXTRA POLATED MANNER AND MADE AD-HOC ADDITION WHICH DOES NOT MATCH WITH THE MATERIAL AV AILABLE ON RECORDS. 11. IT IS RESPECTFULLY SUBMITTED THAT THE ID. DR HAS NO T TAKEN THIS ISSUE OF REJECTION OF BOOKS IN CORRECT PERSPECTIVE AND MIXED ALL THE YEARS TOGE THER AND DRAWN INFERENCE FROM THE ORDER OF CIT (A) FOR YEAR IN WHICH EVEN NO BOOKS OF ACCOU NT WAS PRODUCED. WHILE ASSAILING THE ORDER OF THE THEN CIT(A) HE CONTENDED BEFORE THE H ON'BLE ITAT THAT THE ID. CIT(A) HIMSELF HAS ACCEPTED THE FINDING OF AO TO BE CORRECT THAT T HERE ARE SUPPRESSION OF SALE PRICE AND SUCH AN OBSERVATION HAVE BEEN MADE AT PAGE 78-79 OF HIS ORDER AS UNDER: '15. HOWEVER IN CASE OF SHRI MANGILAL SMT. MANJU BOHRA SHRI GEHRILALJI AND SMT. GANESHI DEVI THEY HAVE ACCEPTED IN THEIR STATEMENT RECORDE D AT THE TIME OF ENQUIRY AT MUMBAI TO HAVE GIVEN RS.101000/- RS.80000/- RS.75000/- AND RS.105000/- IN CASH TO THE APPELLANT OVER AND ABOVE THE BOOKING PRICE/AS PER SALE DEED RESPE CTIVELY. THE COPY OF THESE STATEMENT WERE PROVIDED TO SHRI RAVINDRA SANADHYA AND ASKED F OR HIS COMMENT/REPLY. SHRI RAVINDRA SANADHYA THOUGH DENIED TO HAVE RECEIVED THE CASH FR OM ANY OF THE ABOVE PERSONS AND IT IS. BUT NATURAL. BUT THE FACT OF GIVING THE CASH AM OUNT CANNOT BE IGNORED AS THERE IS ACCEPTANCE BY THE PURCHASERS. IT IS ALSO A FACT AND ESTABLISHED PRACTICE IN THIS TRADE OF CONSTRUCTION AND SALE OF FLATS THAT THE' CASH AMOUN T OVER AND ABOVE BOOKING PRICE/SALE PRICE IS TAKEN AND GIVEN AT THE TIME OF BOOKING ITSELF IR RESPECTIVE OF THE FACT THAT THE SALE MATERIALIZES AT LATER STAGE OR NOT. IN CASE OF NON MATERIALIZATION THE SAME WOULD BE GIVEN BACK TO THE PURCHASER. IN THE CASE OF THE APPELLANT IN ALL THE FOUR CASES THE SALE HAS NOT BEEN TAKEN PLACE AS THERE IS A DISPUTE DUE TO SOME OR O THER REASONS. BUT IT IS IMMATERIAL IN RESPECT OF CASH AMOUNT. THEREFORE THE A/R'S CONTENTION IN THIS REGARD CANNOT BE ACCEPTED AND THE ADDITION MADE BY THE AO IS CONFIRMED BUT TO THE EXT ENT OF CASH AMOUNT OF RS.260000/- IN ASSESSMENT YEAR 1999-2000 AS THE CASH RECEIPTS PERT AINS TO ASSESSMENT YEAR 1999-2000 NOT @ RS.200/- PER SQ. FT. APPLIED BY THE AO TO THE TOT AL AREA OF SALE.' 8 IN THIS REGARD IT IS RESPECTFULLY SUBMITTED THAT I N RESPECT OF ASSESSMENT YEAR 1999-2000 NO GROUND AS TO THE REJECTION OF BOOKS OF ACCOUNT WAS RAISED IN APPEAL THE SAME RELATES TO THE ASSESSMENT YEAR 2001-02 ONLY. THE ABOVE OBSERVATION OF THE THE N CIT(A) WAS IN RESPECT OF ASSESSMENT YEAR 1999-2000 AND NOT FOR THE YEAR UNDER CONSIDERATION WHERE ENTIRE ADDITIONS WERE DELETED. 12. IT IS SUBMITTED THAT FOR THE PURPOSE OF INCOME TAX ASSESSMENT THE UNIT OF ASSESSMENT IS ONE YEAR COVERED BY THE PREVIOUS YEAR RELEVANT TO T HE ASSESSMENT YEAR. THIS IS SPECIFIC AND INDEPENDENT UNIT OF ASSESSMENT FOR INCOME-TAX PURPO SES. WHEN THERE IS NO MATERIAL AT ALL IN RELATION TO A PARTICULAR PREVIOUS YEAR NO INFERENC E CAN BE DRAWN FROM TRANSACTION FOR OTHER YEAR AND NO PRESUMPTION COULD BE DETERMINED FOR THAT YEA R. 13. IT IS MOST RESPECTFULLY SUBMITTED THAT THE HON'BLE TRIBUNAL HAS ADJUDICATED OR GIVEN A FINDING ON THE QUESTION WHICH WAS NOT AGITATED OR I N REGARD TO WHICH NO RELIEF WAS CLALMED BEFORE THE TRIBUNAL OR WHICH WAS NOT IN DISPUTE AND WHICH DOES NOT FORM THE SUBJECT-MATTER OF THE APPEAL BEFORE IT. BEFORE THE TRIBUNAL THE R EVENUE AUTHORITIES HAD CHALLENGED THE ACTION OF THE CIT(A) IN GRANTING RELIEF TO THE ASSE SSEE IN RESPECT OF ADDITIONS MADE BY THE AO AND THERE WAS NO APPEAL OR CROSS OBJECTION FILED BY THE ASSESSEE. HAD THIS ASPECT BEEN CONSIDERED PERHAPS THE ORDER OF THE TRIBUNAL WOULD HAVE BEEN DIFFERENT. 14. IT IS A SETTLED LAW THAT EVEN IF THE BOOKS OF ACCOU NT WERE TO BE REJECTED AND NO FURTHER ADDITION WAS CALLED FOR THE ORDER PASSED BY ID. ASS ESSING OFFICER NEEDS TO BE SET ASIDE. UNDER THESE CIRCUMSTANCES THE ID. A.O. WAS INCORRE CT IN INVOKING THE PROVISION OF SECTION 145OF THE ACT AND THEREFORE DECISION OF THE ID. AO REGAR DING THE REJECTION OF BOOKS OF ACCOUNTS NEEDS TO BE SET ASIDE.' 7. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE OBSERVED THAT THE ASSESSING OFFICER HAD I NVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT ON THE BASIS OF DEFECT S NOTICED BY HIM DURING THE COURSE OF ENQUIRY CONDUCTED REGARDING UNSECURED LOANS ADVANCE MONEY DEPOSITED BY THE PERSONS WHO PROPOSED TO PUR CHASE OF FLATS FROM THE ASSESSEE AND THOSE DEFECTS POINTED OUT WERE NOT RELATED TO THE 9 ASSESSMENT YEAR UNDER CONSIDERATION BUT IT RELATED TO THE EARLIER YEARS WHICH WAS CLEAR FROM THE FOLLOWING DEFECTS:- UNSECURED LOANS:- ADVANCE AGAINST BOOKING SIMILAR IS THE POSITION IN THE CASE OF ADVANCE AGA INST THE BOOKING. 1. SHRI GEHRILAL JI VIKROLI RS. 1 25 000/- ON DIFFEREN T DATE IN THE F.Y. 1998-99 AS MENTIONED AT PAGE NO. 16 OF THE ASSESSME NT ORDER. 2. SMT. GANESH DEVI RS. 2 15 000/- IN THE F.Y. 1997-98 & 1998-99 AS MENTIONED AT PAGE NO. 17 OF THE ASSESSMENT ORDER. 3. SMT. SAROJ DEVI RS. 1 98 000/- GIVEN IN TWO INSTALL MENT OF RS. 50 000/- AND RS. 54 000/- ON 20/12/1999 AND 25/12/1999. 8. ON THE BASIS OF THE ABOVE FACTS THE LD. CIT(A) CAME TO THE CONCLUSION THAT THE REJECTION OF THE BOOKS OF ACCOU NTS BY THE ASSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION ON THE BAS IS OF DEFECTS NOTICED IN THE BOOKS OF ACCOUNTS MAINTAINED FOR THE EARLIER AS SESSMENT YEARS WAS NOT SUSTAINABLE. THE LD. CIT(A) CATEGORICALLY STAT ED THAT THE ASSESSING S.NO. NAME AMOUNT YEAR OF RECEIPT. 1 CHITRA SHARMA 34 500 1999-00 2 MANGILAL CCHEMBUR 75 000 1998-99 3 MANJU BOHRA 20 000 25 000 02/06/1998 4 RAM PYARI DEVI 2 00 000 11/02/1999 5 SUMITRA LODHA 1 40 000 31/03/1999 10 OFFICER HAD NOT POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS MAINTAINED EXCEPT SOME GENERAL DEFECTS IN THE PAYMENT FOR PURC HASE OF SOME MATERIAL FOR THE BUSINESS PURPOSES THEREFORE THER E WAS NO REASON FOR INVOKING THE PROVISIONS OF SECTION 145(3) OF THE AC T. 9. AS REGARDS TO THE MERIT OF THE CASE RELATING TO THE ADDITION ON ACCOUNT OF SUPPRESSED SALES AMOUNTING TO RS. 20 22 400/- THE LD. CIT(A) REPRODUCED THE SUBMISSIONS OF THE ASSESSEE IN PARA 3.2 AND THE SUBMISSIONS RELATING TO THE ADDITION ON ACCOUNT OF BOGUS PAYMENTS AMOUNTING TO RS. 5 11 000/- IN PARA 3.4 OF THE IMPU GNED ORDER WHICH ARE REPRODUCED VERBATIM AS UNDER:- (I) THAT THE ID. AO ON THE BASIS OF ENQUIRIES/INVES TIGATION WITH THE FOLLOWING EIGHT PERSONS DIFFERENCE IN FLAT AREA ON THE BASIS OF SUPER BUILT -UP AND FLOOR AREA AS WELL AS DIFFERENCE IN THE VALUE AS PER REGISTERED SALE DEED AND STAMP DUTY VA LUATION ADOPTED BY THE REGISTERING AUTHORITY HAS CONCLUDED THAT THERE WAS SUPPRESSION OF SALES: SHRI MANGILAL CHEMBUR SMT. MANJU BOHRA SMT. RAMPYARI DEVI SMT. SUMITRA DEVI LODHA SHRIGEHRILALJI SMT. GANESHI DEVI SMT. SAROJ DEVI SHRI BASANTI LAL KHATOD (II) OUT OF EIGHT PERSONS NAMED ABOVE FOUR PERSON S NAMELY; (A) SMT. RAM PYARI DEVI (B) SMT. SUMITRA DEVI LODHA (C) SHRI GEH RI LAL (D) SMT. SAROJ DEVI AND (E) MANGI LAL HAVE NEVER ACCEPTED / MENTIONED I N THEIR STATEMENTS TO 11 HAVE GIVEN CASH AMOUNT OVER AND ABOVE THE AMOUNT AS PER BOOKING AGREEMENT/SALE DEED. THEREFORE THESE CASES CANNOT BE MADE A BASIS FOR SUPPRESSION OF SALES AS CONSIDERED BY THE ID. AO. (III) DURING THE YEAR UNDER CONSIDERATION TOTAL 18 FLATS WERE SOLD TO DIFFERENT PERSONS. EXCEPT IN THE CASE OF SMT. SAROJ DEVI JAIN IN NONE OF THE OTHER 8 CASES AS STATED ABOVE SALE HAS BEEN MADE DURING TH E YEAR UNDER CONSIDERATION. IN FACT THE SALES HAS NOT BEEN MADE AT ALL TO THE ABOVE 7 PERSONS IN THE SUBSEQUENT YEARS ALSO DUE TO DISPUT E BETWEEN THE APPELLANT- FIRM AND THE PURCHASERS. THUS THE CASES WHERE SUPPRESSED SALES HAVE BEEN SU SPECTED BY THE ID. AO IT MAY BE NOTED THAT EVEN SALES HAS NOT BEEN AFFECTED TILL THE YEAR UNDER CONSIDERATION. IT IS RESPECTFULLY SUBMITTED THAT IN ABSENCE OF SALES THERE CANNOT BE ANY SUPPRESSION OF SALES AND INFLATING CO NSIDERATION IN RESPECT OF OTHER SALE OF TRANSACTIONS ON THE SAME BASIS WITHOU T ANY ADVERSE EVIDENCE IS NOT JUSTIFIED AND NOT SUSTAINABLE IN THE EYES OF LA W. (IV) THE ID. AO RECORDED STATEMENTS U/S 131 OF THE PARTIES ON BACK OF THE APPELLANT ON 16TH & 17TH MARCH 2004 AT MUMBAI. SUB SEQUENTLY HE RECORDED STATEMENT OF THE APPELLANT ON 19TH & 23RD MARCH 2004. IT IS SUBMITTED THAT THE APPELLANT IN THE COURSE OF RECOR DING OF STATEMENTS CATEGORICALLY REPLIED ALL THE QUESTIONS RELATED TO SUCH TRANSACTIONS. THE PARTY-WISE POSITION IS BRIEFLY STATED AS UNDER: (A) SHRI MANGI LAL CHAMBUR: HE STATED TO HAVE ENTERED INTO AN AGREEMENT ON 01.0 7.1996 IN THE NAME OF HIS SON ANIL LODHA FOR PURCHASE OF A FLAT NO. 19B A ND STATED TO HAVE GIVEN ADVANCE OF RS.288000/- BUT CONFIRMED HAVING RECEIPT OF RS.11000/- ONLY. THE APPELLANT DURING THE COURSE OF HIS STATEMENT ST ATED THAT HE DID NOT MEET SHRI MANGI LAL IN LAST 8 YEARS. HE STATED THAT RS.1 1000/- IN CASH WERE RECEIVED BY SHRI PARAS MAL LODHA & SHRI DEVI LAL CH HAJER IN 1996 AS COMMISSION THROUGH WHOM THIS BOOKING WAS MADE. HE F URTHER STATED THAT LATER ON SHRI MANGI LAL INSTEAD OF THE FLAT DESIRED SHOP NO.7 AND AS SUCH BECAUSE OF DISPUTE NO REGISTRATION OF SALE COULD B E AFFECTED. HE FURTHER ACCEPTED PAYMENT OF RS.75000Y- ONLY BY CHEQUE AND G ROSSLY DENIED TO HAVE RECEIVED RS.288000/-. ON THE CONTRARY HE STATED TH AT WHY RECEIPT OF SUCH HUGE AMOUNT WAS NOT TAKEN. HE AVERRED THAT RECEIPT BANK ACCOUNT ITR MAY BE PRODUCED FOR HIS COMMENTS. IT IS AGAINST ALL HUM AN PROBABILITIES THAT A 12 BUSINESSMAN WORKING AT MUMBAI AND MAKING EVEN SMALL PAYMENT OF RS.75000/- BY CHEQUE WILL MAKE HUGE PAYMENT OF RS.2 02000/- IN CASH AT RAJSAMAND AND THAT TOO WITHOUT OBTAINING RECEIPT. H E STATED THAT AGREEMENT WAS STATED TO BE FOR FLAT NO. 19 WHEREAS ON SO CALLED 'KACCHA HISAB' FLAT NO. IS MENTIONED AS 31A WHICH IS NOT RELATED TO SHRI MANGI LAL. THE NAME OF SHRI MANGI LAL IS ALSO NOT ON IT. HE ST ATED THAT THIS IS NOT ACKNOWLEDGEMENT OF RECEIPT OF RS.288000/-. WHEN THE ID. AO HIMSELF RECORDED THAT ALL THE TRANS ACTIONS WITH SHRI MANGI LAL PERTAINS TO PERIOD PRIOR TO 31.03.1998 HOW CAN HE REJECT THE BOOKS OF THE YEAR 2001-02. (B) SMT. MANJU BOHRA: IN HER STATEMENT SHE STATED TO BE DOING SEWING BUS INESS AND IS HAVING YEARLY INCOME OF ABOUT RS.40000/-. SHE STATED TO HA VE GIVEN HUGE AMOUNT OF RS.80000/- IN CASH. SHE DENIED HAVING ANY EVIDEN CE OF SUCH CASH PAYMENT. THE DATE OF SUCH PAYMENT WAS NOT SPECIFICA LLY MENTIONED BY HER. THE PLACE OF SUCH PAYMENT WAS ALSO NOT QUESTIONED ESPECIALLY WHEN SHE RESIDES AT MUMBAI. LEGAL NOTICE WAS SERVED TO HER F OR CANCELLATION OF FLAT IN 1998. THIS SHOWS TO THE EXISTENCE OF DISPUTE BETWEE N PARTIES AND AS SUCH BIASED STATEMENTS ARE OF NO EVIDENTIARY VALUE. IN S TATEMENT OF THE APPELLANT HE CATEGORICALLY DENIED ABOUT RECEIPT OF MONEY IN CASH. HE FURTHER STATED THAT SHE SHOULD HAVE PRODUCED EVIDENCES OF S UCH CASH PAYMENT BY ADDUCING BANK WITHDRAWALS FROM BANK STATEMENT RECE IPT ITR ETC. IN SUPPORT OF HER CLALM. COPY OF HER DISHONOURED CHEQU E WAS ALSO PRODUCED. (C) SMT. RAM PYARI DEVI : IN HER STATEMENTS SHE SAID TO HAVE PAID ADVANCE OF RS.200000/- AGAINST BOOKING OF FLAT IN 1999. SHE STATED THAT THE AGREEM ENT WAS A VERBAL ONE AND NO WRITTEN DOCUMENT WAS EXECUTED. SHE STATED THAT S UBSEQUENTLY THE APPELLANT BACKED OUT AND ASKED FOR SALE CONSIDERATI ON OF RS.751000/- INSTEAD OF RS.350000/- AS AGREED UPON VERBALLY. THE APPELLANT IN HIS STATEMENT ALSO AGREED TO HAVE RECEIVED RS.200000/- . THEREFORE IT IS NOT A CASE WHERE THE AMOUNT PAID AND RECEIVED IS IN DISPU TE. MOREOVER AS PER STATEMENT OF SMT. RAM PYARI HERSELF THIS CANNOT BE A CASE OF SUPPRESSION OF SALES. RATHER THIS IS A REVERSE CASE. AS STATED T HERE IS A DISPUTE BETWEEN PARTIES AND AS SUCH SALE COULD NOT MATERIALIZE. (D) SMT. SUMITRA DEVI LODHA : 13 IN HER STATEMENTS SHE SAID TO HAVE PAID ADVANCE OF RS.140000/- AGAINST BOOKING OF A FLAT IN 1999. SHE STATED THAT THE AGRE EMENT WAS A VERBAL ONE AND NO WRITTEN DOCUMENT WAS EXECUTED. SHE STATED TH AT SUBSEQUENTLY THE APPELLANT BACKED OUT AND ASKED FOR SALE CONSIDERATI ON OF RS.700000/- INSTEAD OF RS.350000/- AS AGREED UPON VERBALLY. THE APPELLANT IN HIS STATEMENT ALSO AGREED TO HAVE RECEIVED RS.140000/- . THEREFORE IT IS NOT A CASE WHERE THE AMOUNT PAID AND RECEIVED IS IN DISPU TE. MOREOVER AS PER STATEMENT OF SMT. SUMITRA DEVI HERSELF THIS CANNOT BE A CASE OF SUPPRESSION OF SALES. RATHER THIS IS A REVERSE CASE. AS STATED THERE IS A DISPUTE BETWEEN PARTIES AND AS SUCH SALE COULD NOT MATERIALIZE. (E) SHRI GEHRI LAL : SHRI GEHRI LAL IN HIS STATEMENT SAID THAT HE IS NON INCOME TAX PAYEE AND ADVANCED RS.225000/- FOR BOOKING OF FLAT. HE STATED TO HAVE GIVEN RS.153000/- BY CHEQUE AND RS.72000/- IN CASH. HE DE NIED TO HAVE OBTAINED POSSESSION OF FLAT. NO QUESTION WAS ASKED TO HIM AB OUT PURCHASE CONSIDERATION IN RESPECT OF THE FLAT BOOKED. THE AP PELLANT IN HIS STATEMENT ACCEPTED THAT IT RECEIVED RS.125000/- ONLY. IT IS SUBMITTED THAT ONCE THE PURCHASE CONSIDERATIO N AS PER WITNESS EXAMINED IS NOT DISPUTED HOW THE APPELLANT CAN BE BLAMED FOR SUPPRESSION OF SALE. AS TO THE PAYMENT IT IS SUBMITTED THAT SH RI GEHRI LAL MADE A BALD STATEMENT WITHOUT GIVING NECESSARY DETAILS OF CHEQU E PAYMENTS OF RS.153000/- LIKE CHEQUE NO. DATE NAME OF BANK DA TE OF ITS ENCASHMENT ETC. THE APPELLANT IN HIS STATEMENT FURTHER CLALMED THAT IF SHRI GEHRI LAL MADE SUBSTANTIAL PAYMENT OF RS.225000/- OUT OF TOTA L CONSIDERATION OF RS.300000/- HE SHOULD HAVE GOT THE REGISTRY OF FLA T DONE. THIS ITSELF SHOWS MORE PAYMENT IS DUE AND DENIED CLALM OF WITNESS. CO PY OF DISHONOURED CHEQUES RECEIVED FROM SHRI GEHRI LAL WAS ALSO PRODU CED TO ESTABLISH THE FACT. (F) SMT. GANESHI DEVI : IN HER STATEMENT IT IS AVERRED THAT SHE BOOKED A F LAT FOR RS.320000/- AND MADE FULL PAYMENT. REGARDING AMOUNT PAID IN CASH S HE SAID TO HAVE PAID ON VARIOUS DATES NOT REMEMBERED BY HER. IT IS ALSO STA TED THAT IN THE SAID AMOUNT RS.40000/- WERE TOWARDS REGISTRY EXPENSES A ND RS.20000/- FOR SOCIETY CHARGES. IT WAS STATED THAT AGREEMENT WAS M ADE FOR FLAT NO. 19B BUT LATER ON FLAT NO.38A WAS ACCEPTED. IN STATEMENT OF THE APPELLANT HE ALSO 14 AGREED TO HAVE RECEIVED FULL AMOUNT AS STATED BY SM T. GANESHI DEVI BEING RS.225000/- IN THE YEAR 2001-02 AND RS.95000/- IN 2 002-03. (G) SMT. SAROJ DEVI : IN HER STATEMENT SHE STATED TO HAVE PURCHASED A FL AT NO. 22B IN 1999-00 AND PAID RS.302000/-. SHE STATED THAT IN SALE DEED AMOUNT OF TRANSACTION IS MENTIONED AS RS.201314/-. IN THE STATEMENT OF THE A PPELLANT IT IS STATED THAT THE SAID FLAT WAS BOOKED IN THE NAME OF HER HU SBAND SHRI SURESH JAIN AND AS SUCH THE AMOUNT OF RS.198000/- IN THE BOOKS WAS APPEARING IN HIS NAME. SUBSEQUENTLY AFTER POSSESSION IT WAS CHANGE D IN HIS WIFE'S NAME AND THEN SHE ASKED FOR SOME CHANGES AND ALTERATION AND FOR THIS PURPOSE THE EXTRA AMOUNT WAS PAID. IN THE AFFIDAVIT SWORN BY SM T. SAROJ DEVI ON OATH ON 29.09.2004 SHE ALSO CONFIRMED THAT SHE BOOKED FLAT NO. 22B THROUGH SHRI PARAS MAI LODHA @RS.401/-PER SQ. FT. IT HAS BEEN CL EARLY MENTIONED THAT THE ADDITIONAL AMOUNT WAS PAID TO SHRI PARAS MAI LODHA FOR EXTRA WORK IN THE FLAT. THERE IS NO DISCREPANCY AS STATED BY THE ID. AO. (H) SHRI BASANTI LAL KHATOD : IN THE STATEMENT GIVEN HE STATED THAT HE ADVANCED RS.124000/- FOR BOOKING OF FLAT NO. 45 & 46. HE SAID THAT IT WAS A VERBAL A GREEMENT. HE SHOWED A LEGAL NOTICE IN WHICH RS.124000/-WAS STATED TO BE R ECEIVED BY THE APPELLANT- FIRM AND DEMANDED FURTHER RS.150000/- EACH FOR TWO SAID FLATS. IN STATEMENT OF THE APPELLANT HE DENIED TO HAVE ACTUA LLY RECEIVED ANY AMOUNT FROM SHRI BASANTI LAL KHATOD AND REPLIED THAT THESE NOTICES WERE SENT BECAUSE SHRI DEVI LAL CHHAJED WHO WAS THE MEDIATOR ; TOLD HIM TO DO SO. (V) AS TO THE OBSERVATION OF THE ID. AO REGARDING A FFIDAVITS AND PRAMANIKARAN IT IS REITERATED THAT THE AGREEMENT W ITH MR. PARAS MAI LODHA AND OTHER EVIDENCES WERE DULY PRODUCED TO PROVE HIS NEXUS WITH FLATS BOOKING THROUGH HIS AGENCY. IT IS REITERATED THAT H E WAS INSTRUMENTAL IN ARRANGEMENT OF THESE AFFIDAVITS AND PRAMANIKARANS. ALL THE AFFIDAVIT AND PRAMNIKARAN MENTIONED IN THE ASSESSMENT ORDER RELAT E TO THE PARTIES WHO HAVE BOOKED THE FLATS THROUGH BROKER SHRI LODHA. (VI) THAT THE ID. AO ON THE BASIS OF ENQUIRIES IN T HE ABOVE MENTIONED EIGHT PERSONS HAS GENERALIZED HIS CONCLUSION AND APPLIED THE SAME METHOD/RATIO/PRICE IN ALL THE SALE OF FLATS. THIS K IND OF GENERALIZATION CANNOT AND SHOULD NOT BE MADE ESPECIALLY WHEN BUYERS OF T HE FLATS SHOPS ETC. ARE 15 NOT RELATIVES OF THE APPELLANT-ASSESSEE. MOST OF TH E DISPUTED FLATS HAVE BEEN RE-SOLD TO OTHER PARTIES. (VII) IN THE VALUATION REPORT OF DVO IT IS MENTION ED THAT THE QUALITY OF CONSTRUCTION IS NOT GOOD AND THEREFORE IT IS SUBMI TTED THAT THE HIGHER REALIZATION CANNOT BE EXPECTED FROM SUCH CONSTRUCTI ON. MOREOVER AS ALREADY SUBMITTED FIRST TIMER OF MULTI-STORIED BUI LDING CONCEPT IN A SMALL TOWN LIKE RAJSAMAND ANTICIPATED HIGH RESPONSE BUT P ROVED A FAILURE ULTIMATELY AND THEREFORE RATES EXPECTED WERE SLASH ED AT BOTTOM AND THEREBY THE REALIZATION WAS POOR. (VIII) AS TO THE OBSERVATIONS OF THE ID. AO REGARDI NG DIFFERENCE IN SIZE OF FLATS IT WAS DULY EXPLALNED THAT THE MAP OF THE BUILDING HAS BEEN REVISED AND APPROVAL FROM THE COMPETENT AUTHORITY WAS RECEIVED FOR REDUCED SIZE. REVISED APPROVED MAPS AND ITS APPROVAL BY THE COMPE TENT AUTHORITIES WERE FURNISHED. IT IS REITERATED THAT THE NOTIONAL VALUE IN PLACE OF ACTUAL SALE CONSIDERATION STANDARD PRE-FIXATION VALUATION CRIT ERIA FOR LEVY OF STAMP DUTY BY THE REGISTERING AUTHORITY FOR REGISTRATION IS BE ING ADOPTED. (IX) IT IS SUBMITTED THAT THE FLATS IN THE YEAR UND ER CONSIDERATION HAVE BEEN SOLD AT THE RATE APPEARING IN THE SALE DEED EXECUTE D IN FAVOUR OF THE BUYERS. THE BUYERS WHO ARE SUPPOSED TO BEAR THE STAMP DUTY MAY HAVE PAID EXCESS STAMP DUTY THEREON TO AVOID LITIGATION. THE APPELLA NT-FIRM HAS NOTHING TO DO WITH THIS. MERELY BECAUSE THE REGISTERING AUTHORITY HAS COLLECTED THE STAMP DUTY AT HIGHER VALUE IT CANNOT BE SAID THAT THE AP PELLANT HAS SOLD THE FLATS/SHOPS AT HIGHER VALUE THAN STATED IN THE SALE DEED AND HAS SUPPRESSED THE SALE VALUE. GENERALLY THE REGISTERING AUTHORIT IES ASCERTAIN THE FLOOR-WISE STANDARD RATE FOR THE PURPOSE OF COLLECTING OF STAM P DUTIES. THEREFORE IT CANNOT FORM THE FOUNDATION TO DETERMINE THE MARKET VALUE. THE SUB- REGISTRAR DO IT IN COMPLETE DISREGARD OF LOCATION EFFECT FOR THE FRONT MIDDLE AND REAR VENTILATION ACCESS TO THE ROAD EXPOSURE TO SUNLIGHT AND SKY SECURITY AND SAFETY LIGHT AND WATER AVAILABILITY A ND NEIGHBORING CO-OWNER ETC. EVEN THERE IS A SUBSTANTIAL DIFFERENCE IN THE VALUATION BY REGISTERING AUTHORITY IN A & B BLOCK OF THE BUILDING. THE APPELLANT FIRM IS A BUILDER AND SALES ARE MADE TO THE PARTIES ON COMMERCIAL EXPEDIENCY ON BEST AND MOST COMPETITIVE RATES AND THEREFORE SUCH HYPOTHETICAL RATE MAY NOT BE CORRECT. 16 (X) IT HAS BEEN HELD BY NUMBER OF COURTS THAT VALU ATION DONE BY THE REGISTRAR IS ONLY FOR THE PURPOSE OF COLLECTING STA MP DUTY AND THEREFORE IT CANNOT FORM FOUNDATION TO DETERMINE THE MARKET VALU E. (XI) REGARDING ESTIMATION OF RS.200/ PER SQ. FT. AS SUPPRESSED SALES WITHOUT PREJUDICE TO ABOVE IT IS SUBMITTED THAT ALTHOUGH T HE MINIMUM AND THE MAXIMUM DIFFERENCE BETWEEN SALE DEED AND REGISTERIN G AUTHORITY AS WORKED OUT BY THE ID. AO IS RS.99/- AND RS.136/-ONLY BUT T HE ID. AO HAS TAKEN IT ON HIGHER SIDE @RS.200/- PER SQ. FT. FOR ESTIMATION OF SUPPRESSED SALES WITHOUT ANY BASIS OR COMPARABLE CASE MERELY ON AD-HOC BASIS . (XII) IT IS FURTHER SUBMITTED THAT THE INITIALIZATI ON PRIOR TO EXECUTION OF WRITTEN AGREEMENT IS OF NO CONSEQUENCE THE SALE PRICE WAS TO BE TAKEN AS PER THE FINAL SALE PRICE STATED IN THE SALE DEED. THE ESTIM ATE OF INCOME ON PRESUMED SALE PRICE WAS HELD TO BE IMPROPER IN THE ABSENCE O F ANY COMPARATIVE FIGURES AND REPORT OF THE VALUATION CELL. THE BURDEN OF SH OWING THAT THE ASSESSEE HAD UNDISCLOSED INCOME IS ON THE REVENUE. THAT BURD EN CANNOT BE SAID TO BE DISCHARGED BY MERELY REFERRING TO THE STATEMENT GIV EN BY A THIRD PARTY AND MAKING THAT THE SOLE FOUNDATION FOR A FINDING THAT THE ASSESSEE HAD DELIBERATELY SUPPRESSED HIS INCOME. (XIII) IT IS RESPECTFULLY SUBMITTED THAT NEITHER AN Y EVIDENCE HAS BEEN LALD NOR REASONS ADVANCED BY THE ID. AO TO SUPPORT HOW STATE MENTS OF THE WITNESSES COULD BE CONSIDERED TO BE OF RELIABLE PERSONS SO AS TO IGNORE THE STATEMENT OF THE APPELLANT AND EVIDENCES AVAILABLE ON RECORD. THEIR TESTIMONY HAS TO BE DISCREDITED AND DISBELIEVED ON MERITS ON ACCOUNT OF ADMITTED LITIGATION AND DISPUTES. IT IS AGAIN A SETTLED POSITION OF LAW THAT IN THE F ACE OF DOCUMENTARY EVIDENCE ON RECORD THE ORAL EVIDENCE IS NOT ENTITLED TO ANY WEIGHT. REFERENCE TO THIS PROPOSITION IS FOUND LALD IN THE CASE OF MURARKA PR OPERTIES (P) LTD. VS. BIHARI LAL MURARKA & ORS. AIR 1978 SC 300. IT IS ALSO TRIT E LAW THAT WITNESSES MAY LIE BUT DOCUMENTS DO NOT. R.S.NAYAK VS. A.R.ANTULAY AIR 1986 SC 2045. (XIV) IN KHOPADE KISANRAO MANIKRAO VS. ACIT (2000) 74 ITD (PUNE) TM 25/69 TTJ (PUNE) TM 135 THERE WAS AN ADMISSION OF RECEIP T OF ON-MONEY BUT EVEN SO IT WAS HELD THAT THE ADMISSION OF RECEIPT OF ON -MONEY IN ONE INSTANCE CANNOT BE TAKEN AS APPLICABLE FOR OTHER INSTANCES. THE ID. AO HAS ATTRIBUTED TO SUCH PATENTLY HYPOTHETICAL RECEIPTS. IN ANJANEYA BRICK WORKS V. ACIT (2002) 74 TTJ (BANG) 921 THE TRIBUNAL HELD THAT ES TIMATE OF UNDISCLOSED 17 INCOME FOR ANOTHER YEAR WITHOUT SUCH MATERIALS IS N OT POSSIBLE. THE TRANSACTIONS RELATING TO FEW CASES CANNOT BE YARDST ICK FOR ASCERTAINING THE SALES OF THE ENTIRE YEAR ON THE BASIS OF SUPPRESSED SALES WHEN IT IS NOT CERTAIN WHETHER SUCH TRANSACTIONS PERSISTED FOR THE WHOLE YEAR. (XV) THAT THE THEN CIT (A) WHILE DECIDING THE ISSUE HAS TAKEN CARE OF THE ABOVE ASPECT OF THE MATTER. HE HAS DISCUSSED THE CA SE IN DETAILS AND HAS SUMMARIZED HIS CONCLUSION IN HIS APPELLATE ORDER. T HE WORKING OF THE ID. AO IS ONLY AN EXERCISE IN ESTIMATE. THERE IS NO UNDISP UTED INDICATION OF ON MONEY RECEIPT. THEREFORE THE ADDITIONS SO MADE MAY KINDLY BE DELETED. 3.4. PAYMENTS MADE FOR NON-BUSINESS PURPOSES: RS.51 1881/- FINDINGS OF THE LD. AO IT HAS BEEN STATED THAT THE ACCOUNT OF M/S HONESTY PAINTS AND HARDWARE DOES NOT RECONCILE WITH THE ACCOUNT OF THE APPELLAN T-ASSESSEE IN THE BOOKS OF M/S HONESTY PAINTS AND HARDWARE. THERE WAS A DIF FERENCE IN THE OPENING BALANCE. THE APPELLANT-ASSESSEE HAS SHOWN OPENING C REDIT BALANCE OF RS.78178/- AS AGAINST DEBIT BALANCE OF RS.15715/- I N THE BOOKS OF M/S HONESTY PAINTS AND HARDWARE. THEREFORE IT IS SAID THAT THE CREDIT OF RS.62460/- AS ON 31.03.2000 REMAINED UNEXPLALNED. O N FURTHER VERIFICATION IT WAS NOTICED THAT CERTAIN PAYMENTS SHOWN BY THE A SSESSEE WERE NOT APPEARING IN THE BOOKS OF M/S HONESTY PAINTS AND HA RDWARE. IT WAS THEREFORE CONCLUDED THAT THE ASSESSEE HAS MADE THE SE EXPENSES FOR OTHER THAN BUSINESS PURPOSES AND DEBITED IN THE NAME OF M /S HONESTY PAINTS AND HARDWARE. IT HAS ALSO BEEN STATED THAT ON CONFRONTI NG M/S HONESTY PAINTS AND HARDWARE IT DENIED THE RECEIPT OF SUCH PAYMENT S. THE SAME WERE THEREFORE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IT IS STATED THAT DURING THE YEAR UNDER CONSIDERATI ON THE APPELLANT-ASSESSEE HAS SHOWN PURCHASE OF SANITARY WARES FROM M/S SHUBH AM CERAMICS KANKROLI FOR RS.46055/-. ON VERIFICATION OF BILLS IT WAS REVEALED THAT M/S SHUBHAM CERAMICS EXECUTED THE SALES IN THE YEAR REL EVANT TO ASSESSMENT YEAR 2000-01 AND NO SALES HAVE BEEN EFFECTED DURING THE YEAR UNDER CONSIDERATION. OVERWRITING ON THE DATE OF THE BILLS WAS ALSO OBSERVED. IN VIEW OF THE ABOVE IT WAS CONCLUDED THAT THE ASSESS EE HAS MADE THESE EXPENSES FOR OTHER THAN BUSINESS PURPOSES. HENCE T HE SAME WERE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE APP ELLANT-ASSESSEE. 18 IT IS STATED THAT DURING THE YEAR UNDER CONSIDERATI ON THE APPELLANT-ASSESSEE HAS NOT RECORDED/SHORT RECORDED CERTAIN CASH PAYMEN TS APPEARING IN THE BOOKS OF M/S P.R. ENTERPRISES WHO CONFIRMED THE SA ME. APPELLANT'S SUBMISSIONS (I) IT IS SUBMITTED THAT THE APPELLANT-FIRM HAS BEE N PURCHASING PAINT AND HARDWARE ITEMS REGULARLY AS A PART OF BUSINESS REQU IREMENTS FOR ITS CONSTRUCTION OF MULTI-STORIED BUILDING FROM THE SAI D CONCERN. THE SAME WERE PROCURED IN THE YEAR UNDER CONSIDERATION AND IN THE EARLIER YEARS ALSO ON REQUISITIONS ISSUED BY THE APPELLANT-FIRM AND SUPPL IES WERE MADE ON THE CHALLANS. (II) ON RECEIPT OF BILLS FROM M/S HONESTY PAINTS AN D HARDWARE THE CASH PAYMENTS HAVE BEEN MADE TO THE BEARER AT THE DOORST EPS OF THE APPELLANT- FIRM. THE FIRM BEING LOCAL PAYMENT THROUGH CHEQUE OR D.D. HAVE NOT BEEN MADE. (III) THE PERSON RECEIVED PAYMENTS ACKNOWLEDGED TH E RECEIPTS OF PAYMENTS ON THE VOUCHERS AS PER THE PREVALENT PRACTICE BEING REGULARLY FOLLOWED. THE APPELLANT-FIRM DULY RECORDED THESE PAYMENTS IN ITS BOOKS OF ACCOUNT. (IV) THESE BILLS AND VOUCHERS WERE PRODUCED BEFORE THE LD. AO. THE BILLS AND VOUCHERS HAVE BEEN SIGNED BY THE RECIPIENT EMPLOYEE OF THE HONESTY PAINTS AND HARDWARE OFF REVENUE STAMP AFFIXED ON EACH AND EVERY VOUCHER. NONE OF THE VOUCHERS HAS BEEN FOUND TO BE FORGED OR FALS E. (V) IT IS THE USUAL PRACTICE BEING ADOPTED AND FOLL OWED BY BUSINESSMEN IN THE LOCAL MARKET FOR DELIVERY OF THE GOODS AND RECEIPT OF THE PAYMENT. THE APPELLANT-ASSESSEE HAS MAINTAINED AND KEPT ALL THE BILLS AND VOUCHERS AND PRODUCED THE SAME BEFORE THE ID. AO AND THE THEN CI T(A) ALSO FOR VERIFICATION. MOREOVER THE APPELLANT-FIRM HAD SUFF ICIENT CASH BALANCE ON THE DATE OF PAYMENTS. (VI) IN CASE OF D.D. OF RS.1 99607- SHOWN IN THE BO OKS OF M/S HONESTY PAINTS AND HARDWARE IT IS REITERATED THAT NO SUCH PAYMENT BY WAY OF BANK'S DEMAND DRAFT HAS BEEN MADE BY THE APPELLANT-FIRM AN D THERE IS NO SUCH RECORDING OF EXPENDITURE IN THE BOOKS OF ACCOUNT. N O SUCH CLALM OF THE EXPENDITURE HAS BEEN MADE. AGAIN IT IS NOT CLALM O F THE ID AO THAT THE SAID DD HAS BEEN PURCHASED FROM THE APPELLANT'S ACCOUNT. 19 (VII) IT IS RESPECTFULLY SUBMITTED THAT THE LIABILI TY CANNOT BE FASTENED ON THE ASSESSEE ON THE BASIS OF BOOKS OF ACCOUNT OF OTHER PARTY. (VIII) THE YEAR OF DIFFERENCE COULD NOT BE FIXED BE CAUSE THE PARTY ACCOUNT CONTINUES TO BE IN CREDIT. IT IS SUBMITTED THAT THE APPELLANT-FIRM PURCHASED S ANITARY ITEMS FROM M/S SHUBHAM CERAMICS FOR RS.46055/- DURING THE YEAR UND ER CONSIDERATION AND NOT IN THE ASSESSMENT YEAR 2000-01 AS MENTIONED IN THE ASSESSMENT ORDER. THERE IS NO OVERWRITING ON THE BILLS. (II) M/S SHUBHAM CERAMICS HAS NOT MAINTAINED ANY RE GULAR BOOKS OF ACCOUNT AS BEING A RETAILER AND FILING RETURN OF INCOME U/S 44AF OF THE ACT. THE COPY OF THE BILL OF RS.46055/-WAS DULY PRODUCED. IT IS S UBMITTED THAT THE PAYMENTS WERE MADE IN THE MONTH OF AUGUST AND SEPTEMBER 200 0 AND PROPRIETOR OF THE SAID CONCERN SHRI MAHINDRA KUMAR HIMSELF HAS SI GNED ON THE VOUCHERS. (III) AS PER THE DATE AND YEAR THESE BILL & VOUCHE RS RELATE TO AUGUST AND SEPTEMBER 2000 AND AS SUCH THESE FALL IN THE RELE VANT YEAR UNDER CONSIDERATION I.E. 2001-02 AND NOT IN THE ASSESSMEN T YEAR 2000-01. (IV) IT IS RESPECTFULLY SUBMITTED THAT THE LIABILIT Y CANNOT BE FASTENED ON THE ASSESSEE ON THE BASIS OF BOOKS OF ACCOUNT OF OTHER PARTY. (I) IT IS SUBMITTED THAT THE APPELLANT-FIRM HAS BEE N PURCHASING CEMENT ITEMS REGULARLY AS A PART OF BUSINESS REQUIREMENTS FOR IT S CONSTRUCTION OF MULTI- STORIED BUILDING FROM THE SAID CONCERN. THE SAME WE RE PROCURED IN THE YEAR UNDER CONSIDERATION AND IN THE EARLIER YEARS ALSO O N REQUISITIONS ISSUED BY THE APPELLANT-FIRM AND SUPPLIES WERE MADE ON THE CH ALLANS. (II) ON RECEIPT OF BILLS FROM M/S P.R. ENTERPRISES THE CASH PAYMENTS HAVE BEEN MADE TO THE BEARER AT THE DOORSTEPS OF THE APP ELLANT-FIRM. THE FIRM BEING LOCAL PAYMENT THROUGH CHEQUE OR D.D. HAVE NO T BEEN MADE. (III) THE PERSON RECEIVED PAYMENTS ACKNOWLEDGED TH E RECEIPTS OF PAYMENTS ON THE VOUCHERS AS PER THE PREVALENT PRACTICE BEING REGULARLY FOLLOWED. THE APPELLANT-FIRM DULY RECORDED THESE PAYMENTS IN ITS BOOKS OF ACCOUNT. (IV) THESE BILLS AND VOUCHERS WERE PRODUCED BEFORE THE ID. AO. THE BILLS AND VOUCHERS HAVE BEEN SIGNED BY THE RECIPIENT EMPLOYEE OF THE P.R. ENTERPRISES ON REVENUE STAMP AFFIXED ON EACH AND EVERY VOUCHER. NONE OF THE VOUCHERS HAS BEEN FOUND TO BE FORGED OR FALSE. 20 (V) IT IS THE USUAL PRACTICE BEING ADOPTED AND FOLL OWED BY BUSINESSMEN IN THE LOCAL MARKET FOR DELIVERY OF THE GOODS AND RECEIPT OF THE PAYMENT. THE APPELLANT-ASSESSEE HAS MAINTAINED AND KEPT ALL THE BILLS AND VOUCHERS AND PRODUCED THE SAME BEFORE THE ID. AO AND THE THEN CI T(A) ALSO FOR VERIFICATION. MOREOVER THE APPELLANT-FIRM HAD SUFF ICIENT CASH BALANCE ON THE DATE OF PAYMENTS. (VI) IT IS RESPECTFULLY SUBMITTED THAT THE LIABILIT Y CANNOT BE FASTENED ON THE ASSESSEE ON THE BASIS OF BOOKS OF ACCOUNT OF OTHER PARTY. IT IS FURTHER SUBMITTED THAT: (I) THE EXPENSES CLALMED BY THE APPELLANT TOWARDS P AINT HARDWARE CEMENT AND SANITARY ITEMS PURCHASED FROM M/S HONESTY PAINT S AND HARDWARE M/S P.R. ENTERPRISES AND M/S SHUBHAM CERAMICS DURING TH E YEAR UNDER CONSIDERATION HAVE BEEN HELD AS EXPLALNED BY THE ID . AO. AT THE SAME TIME SOURCES OF RS.491821/- USED BY THE APPELLANT FOR AL LEGEDLY NON-BUSINESS PURPOSES HAVE ALSO BEEN HELD EXPLALNED BY THE AO. (II) THE DVO HAS ALSO NOT ASCERTAINED THAT THE APPE LLANT-ASSESSEE HAS SHOWN TO HAVE MADE EXCESS INVESTMENT IN CONSTRUCTION. UND ER THESE CIRCUMSTANCES HOW THERE CAN BE EXCESSIVE CLALM OF EXPENDITURE. (III) THERE ARE NO POSITIVE DIRECT OR INDIRECT EVID ENCES OF PERSONAL EXPENDITURE ESPECIALLY WHEN IT IS A CASE OF PARTNE RSHIP-FIRM WHERE PARTNERS ARE NOT RELATIVES. (IV) WHEN SPECIFICALLY ASKED ABOUT THE SAME THE AP PELLANT IN REPLY TO QUESTION NOS. 2 3 4 & 5 OF THE STATEMENT DATED 19T H MARCH 2004 AND QUESTION NO. 3 OF THE STATEMENT DATED 24TH MARCH 2 004 CLEARLY STATED THAT PAYMENTS SHOWN IN THE ACCOUNT HAVE BEEN MADE IN THE YEAR UNDER CONSIDERATION AND ARE DULY ACKNOWLEDGED BY THE RESP ECTIVE PARTIES. THE APPELLANT CATEGORICALLY DENIED THE CORRECTNESS OF T HE BOOKS MAINTAINED BY OTHERS AND ASSERTED THAT ENTRIES MADE IN ITS BOOKS SHOW THE CORRECT PICTURE OF AFFAIRS OF THE APPELLANT-FIRM. THE ID. AO HAS NO T RELIED ON THE CATEGORICAL STATEMENT GIVEN BY THE APPELLANT-FIRM WITHOUT ASSIG NING ANY REASON WHEN ALL THE PAYMENT SHOWN IN THE SAID ACCOUNT WERE FOUN D ACKNOWLEDGED BY THE RECEIVER AND APPELLANT HAS CONFIRMED THESE PAYMENT ON OATH. (V) THAT THERE ARE APPEARING OTHER PAYMENTS IN THE SAME ACCOUNTS DULY ACKNOWLEDGED BY THE SAME BEARER WHO HAS ACKNOWLEDGE D THESE DISPUTED 21 RECEIPTS AND THESE HAVE NOT BEEN DISPUTED BY THAT P ARTY. IT IS QUITE POSSIBLE THAT THE IMPUGNED PAYMENTS HAVE BEEN SHOWN AS RECEI VED IN THEIR ACCOUNT TO MEET THE CASH REQUIREMENTS OF THE SAID PARTY AND THEREFORE THE AVERMENTS OF THE SAID PARTY ARE LIABLE TO BE REJECT ED. (VI) IT IS A SETTLED PROPOSITION OF LAW THAT NO ADD ITION CAN BE MADE ON BASIS OF THIRD PARTY BOOKS.' 10 THE LD. CIT(A) DELETED THE IMPUGNED ADDITIONS BY OB SERVING THAT THE THEN LD. CIT(A) AFTER GIVING DETAILED FINDINGS IN EACH CASE AND RELYING UPON THE VARIOUS JUDICIAL PRONOUNCEMENTS DELETED TH E ADDITION SO THERE WAS NO REASON FOR DEVIATION FROM THE DETAILED REASO NS GIVEN BY HIS PREDECESSOR. NOW THE DEPARTMENT IS IN APPEAL. 11 . THE LEARNED D.R. SUPPORTED THE ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER AND REITERATED THE OBSERVATIONS M ADE IN THE SAID ORDER. 12 . IN HIS RIVAL SUBMISSIONS THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE DEPARTMENT HAD NOT CHAL LENGED THIS FINDING OF THE LD. CIT(A) THAT NO SPECIFIC DEFECT WAS POINTED OUT IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND THAT THE RE JECTION OF BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145( 3) OF THE ACT WAS NOT JUSTIFIABLE. IT WAS FURTHER STATED THAT WHEN THE D EPARTMENT HAD ACCEPTED THE ABOVE SAID FINDING OF LD. CIT(A) THERE WAS NO REASON TO CHALLENGE THE 22 DELETION OF ADDITION ON ACCOUNT OF SUPPRESSED SALES AND BOGUS EXPENDITURE WHEN IT WAS CATEGORICALLY HELD THAT NO SPECIFIC DEFECT WAS POINTED OUT BY THE ASSESSING OFFICER. 13 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT THE ASSESSING OFF ICER REJECTED THE BOOKS OF ACCOUNTS ON THE BASIS OF DEFECTS RELATING TO THE EARLIER YEARS AND NOT FOR THE YEAR UNDER CONSIDERATION. FOR THAT REASON THE LD. CIT(A) REJECTED THE ACTION OF THE ASSESSING OFFICER IN INV OKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. THE LD. CIT(A) CATEGORI CALLY STATED THAT THE ASSESSING OFFICER HAD NOT POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNTS FOR THE YEAR UNDER CONSIDERATION AND THE S AID FINDING OF THE LD. CIT(A) HAS BEEN ACCEPTED BY THE DEPARTMENT BECAUSE NO SUCH GROUND HAS BEEN TAKEN IN THE APPEAL UNDER CONSIDERATION. IN T HE PRESENT CASE WHEN THE BOOKS WERE WRONGLY REJECTED BY THE ASSESSING OF FICER ON THE BASIS OF SOME DEFECTS RELATING TO THE EARLIER YEARS AND NO S PECIFIC DEFECT WAS POINTED OUT FOR THE YEAR UNDER CONSIDERATION THERE WAS NO REASON TO MAKE THE ADDITION CONSIDERING THE EXPENSES ENTERED IN THE BOOKS OF ACCOUNTS AS BOGUS EXPENSES. IN THE PRESENT CASE T HE LD. CIT(A) BY RELYING THE DECISION OF HIS PREDECESSOR AND CONSIDE RING THE SUBMISSIONS OF 23 THE ASSESSEE DELETED THE ADDITION ON ACCOUNT OF S UPPRESSED SALES. NOTHING CONTRARY TO THE FINDINGS OF THE LD. CIT(A) IS BROUGHT ON RECORD WE THEREFORE DO NOT SEE ANY VALID GROUND TO INTERF ERE WITH THE FINDINGS OF THE LD. CIT(A). 14 . IN I.T.A.NO. 398/JODH/2013 GROUND NO. 1 RELATES TO THE DELETION OF ADDITION ON ACCOUNT OF SUPPRESSED SALES. 15. THE FACTS RELATING TO THIS ISSUE ARE SIMILAR AS WER E INVOLVED IN THE A.Y. 2001-02 IN I.T.A.NO. 399/JODH/2013 (SUPRA) TH EREFORE OUR FINDINGS GIVEN THEREIN SHALL APPLY MUTATIS-MUTANDIS FOR THIS YEAR ALSO. 16. VIDE GROUND NOS. 2 & 3 THE GRIEVANCE OF THE DEPART MENT RELATES TO THE DELETION OF ADDITION OF RS. 3 02 441/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLALNED CREDIT AND OF RS. 46 055/ - ON ACCOUNT OF CASH PAYMENT. 17. FACTS RELATING TO THESE ISSUES IN BRIEF ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD SHOWN CREDIT BALANCE OF RS. 2 82 140/- IN THE N AME OF M/S. P.R. ENTERPRISES AND RS. 78 175/- IN THE NAME OF M/S. HO NESTY PAINTS AND 24 HARDWARE. THE ASSESSING OFFICER OBSERVED THAT M/S. P.K. ENTERPRISES HAD SHOWN DEBIT BALANCE OF RS. 42 160/- ONLY IN THE NAM E OF ASSESSEE THUS CREDIT OF RS. 2 39 980/- REMAINED UNEXPLALNED. SIM ILARLY M/S. HONESTY PAINTS AND HARDWARE HAD SHOWN DEBIT BALANCE OF RS. 15 714/- AND THUS CREDIT OF RS. 62 461/- REMAINED EXPLALNED. THE ASS ESSING OFFICER ACCORDINGLY MADE THE ADDITION OF RS. 3 02 441/- (R S. 2 39 980/- + RS. 62 461/-). THE ASSESSING OFFICER ALSO ADDED A SUM OF RS. 46 055/- BY OBSERVING THAT THE ASSESSEE HAD SHOWN THE PURCHASES IN CASH FROM M/S. SHUBHAM CERAMICS AND DID NOT FURNISH ANY EXPLA NATION FOR THE SOURCE OF ABOVE PAYMENTS. ACCORDINGLY THE ADDITIO N OF RS. 46 055/- WAS ALSO MADE. THE ABOVE ADDITIONS WERE MADE BY THE AS SESSING OFFICER EXPARTE UNDER SECTION 144 OF THE ACT. 18. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER T O THE THEN LD. CIT(A) WHO DELETED THE ADDITION RELATING TO M/S. H ONESTY PAINTS & HARDWARE BY OBSERVING AT PAGE NOS. 99 & 100 OF THE ORDER DATED 09/01/2006 AS UNDER:- 4.1. THE A/R OF THE APPELLANT HAS SUBMITTED IN THI S REGARD THAT THE APPELLANT FIRM IN THE YEAR UNDER CONSIDERATION AND IN EARLIER YEARS ALSO HAS BEEN PURCHASING PAINT AND HARDWARE ITEMS REGULA RLY FOR ITS CONSTRUCTION OF MULTI STORYED BUILDING AS A PART OF REGULAR PRACTICE AND BUSINESS REQUIREMENTS WHICH WERE SUPPLIED ON REQUI SITION ISSUED BY THE APPELLANT FIRM AND SUPPLIED BY HONESTY PAINTS AND H ARDWARE ON THE 25 CHALLAN PREPARED BY THE APPELLANT FIRM. ON RECEIPT OF BILLS FROM M/S HONESTY PAINTS CASH PAYMENTS HAVE BEEN MADE TO THE BEARER A T THE DOORSTEPS OF THE APPELLANT FIRM. THE FIRM BEING LOCAL PAYMENT THROU GH CHEQUE OR D.D. HAVE NOT BEEN MADE. THE BEARER RECEIVING PAYMENTS A CKNOWLEDGES THE RECEIPTS OF PAYMENTS ON THE VOUCHERS PREPARED BY TH E APPELLANT FIRM AS THE SAID PRACTICE IS REGULARLY FOLLOWED. THE APPELL ANT FIRM HAS RECORDED THESE PAYMENTS IN THE BOOKS OF ACCOUNT. THE BILLS A ND VOUCHERS WERE PRODUCED BEFORE THE AO AND BEFORE THE CIT(A) ALSO. THE BILLS AND VOUCHERS HAVE BEEN SIGNED BY RECIPIENTS I.E. EMPLOYEE OF THE HONESTY PAINTS AND HARDWARE. REVENUE STAMP IS AFFIXED ON EACH AND EVER Y VOUCHER. ON SOME VOUCHERS THE SIGNATURE MAY DIFFER AS VARIOUS EMPLOY EES OF M/S HONESTY PAINTS AND HARDWARE USED TO DELIVER THE GOODS AT DI FFERENT TIMES AND ACKNOWLEDGED THE RECEIPT OF THE PAYMENT. ON GOING T HROUGH THE ABOVE I FIND THAT THE PRACTICE FOLLOWED BY THE APPELLANT IS THE REGULAR AND THE USUAL PRACTICE ADOPTED BY DIFFERENT BUSINESS MAN IN THE L OCAL MARKET FOR DELIVERY OF THE GOODS AND RECEIPT OF THE PAYMENT. THE APPELL ANT HAS MAINTAINED AND KEPT ALL THE BILLS AND VOUCHERS AND PRODUCED BEFORE THE UNDERSIGNED ALSO FOR VERIFICATION. THE SIGNATURE MAY DIFFER ON SOME VOUC HER AS THE RECIPIENTS OF THE PAYMENTS WERE DIFFERENT ONE AT DIFFERENT TIMES. BUT THE FACT IS THAT THE PAYMENT HAS BEEN MADE AND RECORDED IN THE BOOKS OF ACCOUNT ALSO. MOREOVER THE AO HAS NOT PROVED THE POINT THAT THE APPELLANT DID NOT HAVE SUFFICIENT CASH BALANCE ON THE DATE OF PAYMENT. THEREFORE THE ADDITION MADE BY THE AO IS DELETED. THE APPEAL IS ALLOWED ON THIS POINT. IN THE CASE OF D.D. OF RS. 19 960/- SHOWN IN THE BO OKS OF M/S HONESTY PAINTS AND HARDWARE. THE A/R HAS SUBMITTED THAT NO PAYMENT OF THE ABOVE MENTIONED AMOUNT BY D.D- HAS BEEN MADE BY THE APPEL LANT TO M/S HONESTY PAINTS AND HARDWARE. HAD IT BEEN SO THE APPELLANT WOULD HAVE DEFINITELY SHOWN IN THE BOOKS OF ACCOUNT. IT IS BUT NATURAL AL SO THAT ONCE ANY BUSINESS MAN MAKES THE PAYMENT BY D.D. HE WOULD DEFINITELY S HOW IT IN THE BOOKS OF ACCOUNT AND CLAIM THE DEDUCTION OF THE EQUAL AMOUNT . IT IS VERY ABNORMAL IN THE CIRCUMSTANCES TO TREAT IT AS PAYMEN T MADE OUT OF UNEXPLALNED SOURCES. BEFORE COMING TO THIS CONCLUS ION THE AO SHOULD HAVE ENQUIRED ABOUT THE FACT AS TO FROM WHICH BANK OR FROM WHICH ACCOUNT THIS D.D. HAS BEEN ISSUED. IN ABSENCE OF TH E SAME -HE STAND TAKEN BY THE AO CANNOT BE SUSTAINED. THE ADDITION IS DELE TED. THE APPEAL IS ALLOWED ON THIS ISSUE. 26 SIMILARLY THE ADDITION ON ACCOUNT OF M/S. P.R. E NTERPRISES WERE DELETED BY OBSERVING AT PAGE NOS. 102 & 103 OF THE ORDER DATED 09/01/2006 AS UNDER:- THE A/R OF THE APPELLANT HAS SUBMITTED IN THIS REGA RD THAT THE APPELLANT FIRM IN THE YEAR UNDER CONSIDERATION AND IN EARLIER YEARS ALSO PURCHASING OF PAINT AND HARDWARE ITEMS REGULARLY USED FOR ITS CONSTRUCTION OF MULTI STORYED BUILDING AS A PART OF REGULAR PRACTICE AND BUSINESS REQUIREMENTS WHICH WERE SUPPLIED ON REQUISITION ISSUED BY THE AP PELLANT FIRM AND SUPPLIED BY M/S.P.R. ENTERPRISES ON THE CHALLAN PRE PARED BY THE APPELLANT FIRM. ON RECEIPT OF BILLS FROM M/S. P.R. ENTERPRISE S CASH PAYMENTS HAVE BEEN MADE TO THE BEARER AT THE DOORSTEPS OF THE APP ELLANT FIRM. THE FIRM BEING LOCAL PAYMENT THROUGH CHEQUE OR D.D. HA VE NOT BEEN MADE. THE BEARER RECEIVING PAYMENTS ACKNOWLEDGES THE RECE IPTS OF PAYMENTS ON THE VOUCHERS PREPARED BY THE APPELLANT FIRM AS THE SAID PRACTICE IS REGULARLY FOLLOWED. THE APPELLANT FIRM HAS RECORDED THESE PAYMENTS IN THE BOOKS OF ACCOUNT. THE BILLS AND VOUCHERS WERE P RODUCED BEFORE THE AO AND BEFORE THE CIT(A) ALSO. THE BILLS AND VOUCHERS HAVE BEEN SIGNED BY RECIPIENTS I.E. EMPLOYEE OF THE HONESTY PAINTS AND HARDWARE. REVENUE STAMP IS AFFIXED ON EACH AND EVERY VOUCHER. ON SOME VOUCHERS THE SIGNATURE MAY DIFFER AS VARIOUS EMPLOYEES OF M/S. P .R. ENTERPRISES USED TO DELIVER THE GOODS AT DIFFERENT TIMES AND ACKNOWLEDG ED THE RECEIPT OF THE PAYMENT. ON GOING THROUGH THE ABOVE I FIND THAT TH E PRACTICE FOLLOWED BY THE APPELLANT IS THE REGULAR AND THE USUAL PRACTICE ADOPTED BY DIFFERENT BUSINESS MAN IN THE LOCAL MARKET FOR DELIVERY OF TH E GOODS AND RECEIPT OF THE PAYMENT. THE APPELLANT HAS MAINTAINED AND KEPT ALL THE BILLS AND VOUCHERS AND PRODUCED BEFORE THE UNDERSIGNED ALSO F OR VERIFICATION. THE SIGNATURE MAY DIFFER ON SOME VOUCHER AS THE RECIPIE NTS OF THE PAYMENTS WERE DIFFERENT ONE AT DIFFERENT TIMES. BUT THE FACT IS THAT THE PAYMENT HAS BEEN MADE AND RECORDED IN THE BOOKS OF ACCOUNT ALSO . MOREOVER THE AO HAS NOT PROVED THE POINT THAT THE APPELLANT DID NOT HAVE SUFFICIENT 27 CASH BALANCE ON THE DATE OF PAYMENT. THEREFORE THE ADDITION MADE BY THE AO DELETED. THE APPEAL IS ALLOWED ON THIS POINT . 19 THE ADDITION MADE ON ACCOUNT OF CASH PURCHASES FRO M M/S. SHUBHAM CERAMICS WAS DELETED BY THE LD. CIT(A) BY O BSERVING AT PAGE NO. 104 OF THE ORDER DATED 09/01/2006 AS UNDER:- THE A/R OF THE APPELLANT HAS SUBMITTED THAT THEY PU RCHASED THE SANITARY WARE FROM M/S SHUBHAM CERAMICS FOR RS.46 0 55/- DURING THE YEAR UNDER CONSIDERATION AND NOT IN THE ASSESSMENT YEAR 2000-01 AS MENTIONED IN THE ASSESSMENT ORDER. THERE IS NO OVER WRITING ON THE BILLS. FURTHER M/S SHUBHAM CERAMICS HAS NOT MAINTAINED AN Y BOOKS OF ACCOUNT AS IT HAS BEEN DEALING IN RETAIL BUSINESS A ND FILING RETURN OF INCOME U/S 44AF OF THE ACT. THE A/R HAS PRODUCED TH E COPY OF THE BILL OF RS.46 055/-. IT IS SEEN THAT THE PAYMENT IS MADE IN THE MONTH OF AUGUST AND SEPTEMBER 2000. PROPRIETOR SHRI MAHINDRA KUMAR HIMSELF HAS SIGNED ON THE VOUCHER. AS PER THE DATE AND YEAR ALL THE BILL/VOUCHER AS AUGUST AND SEPTEMBER 2000 THESE PAYMENTS FALLS IN THE RELEVANT YEAR UNDER CONSIDERATION I.E. 2001-02 AND NOT IN TH E ASSESSMENT YEAR 2000-01 AS STATED BY THE AO. THEREFORE THE ADDITIO N MADE BY THE AO IS DELETED. THE APPEAL IS ALLOWED ON THIS POINT. 20. THE LD. CIT(A) IN THE PRESENT CASE BY FOLLOWING T HE EARLIER DECISION OF HIS PREDECESSOR (THE RELEVANT PORTION O F WHICH HAS BEEN REPRODUCED IN THE FORMER PART OF THIS ORDER) DELET ED THE IMPUGNED ADDITIONS. NOTHING CONTRARY TO THE DETAILED REASON S GIVEN BY THE THEN LD. CIT(A) IN THE ORDER DATED 09/01/2006 HAS BEEN BROUG HT ON RECORD. THEREFORE WE DO NOT SEE ANY MERIT IN THE APPEAL OF THE DEPARTMENT ON THESE ISSUES. 28 21. IN THE RESULT APPEALS OF THE DEPARTMENT ARE DISMI SSED. (ORDER PRONOUNCED IN THE COURT ON 25 TH APRIL 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH APRIL 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR ITAT JODHPUR.