Shri. Bharat Keshavlal shah,, Pune v. Dy. CIT, Cen Cir.1[1] Pune, Pune

ITA 517/PUN/2012 | 2003-2004
Pronouncement Date: 30-07-2013 | Result: Partly Allowed

Appeal Details

RSA Number 51724514 RSA 2012
Assessee PAN ADXPS3821M
Bench Pune
Appeal Number ITA 517/PUN/2012
Duration Of Justice 1 year(s) 4 month(s) 16 day(s)
Appellant Shri. Bharat Keshavlal shah,, Pune
Respondent Dy. CIT, Cen Cir.1[1] Pune, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 30-07-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 30-07-2013
Assessment Year 2003-2004
Appeal Filed On 14-03-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A PUNE BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NOS. 516 TO 520/PN/2012 (ASSESSMENT YEARS : 2002-03 TO 2006-07) SHRI BHARAT KESHAVLAL SHAH 27 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : ADXPS3821M . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE. . RESPONDENT ITA NOS. 522 TO 525/PN/2012 (ASSESSMENT YEARS : 2004-05 TO 2007-08) SHRI NILESH BHARAT SHAH 27 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : ADXPS4008G . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE. . RESPONDENT ITA NOS. 526 TO 529/PN/2012 (ASSESSMENT YEARS : 2005-06 TO 2008-09) SHRI KALPESH BHARAT SHAH FLAT 702 SUJAY GARDEN 2 MUKUNDNAGAR PUNE 411 037 PAN : AFHPS4448E . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE. . RESPONDENT ITA NO. 530/PN/2012 (ASSESSMENT YEAR : 2006-07) SHRI NITIN BHARAT SHAH 23 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : AFGPS4532H . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE. . RESPONDENT A.Y. 2007-08 ITA NO. 531/PN/2012 (ASSESSMENT YEAR : 2006-07) SMT. MONIKA NITIN SHAH 27 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : ASXPS4279A . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE. . RESPONDENT ITA NO. 532/PN/2012 (ASSESSMENT YEAR : 2005-06) SMT. VAISHALI KALPESH SHAH 27 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : AFHPS4533G . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE. . RESPONDENT ITA NO. 533/PN/2012 (ASSESSMENT YEAR : 2005-06) SMT. PUSHPA BHARAT SHAH 27 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : ADXPS3820L . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE. . RESPONDENT ITA NO.547/PN/2012 (ASSESSMENT YEAR : 2005-06) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE . APPELLANT VS. VAISHALI KALPESH SHAH FLAT NO. 702 SUJAY GARDEN 2 MUKUNDNAGAR PUNE 411 037 PAN : AFHPS4533G . RESPONDENT A.Y. 2007-08 ITA NO.548/PN/2012 (ASSESSMENT YEAR : 2005-06) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE . APPELLANT VS. NILESH BHARAT SHAH 27 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : ADXPS4008G . RESPONDENT ITA NO.549/PN/2012 (ASSESSMENT YEAR : 2006-07) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE . APPELLANT VS. MONIKA NIHIN SHAH 23 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : ASXPS4279A . RESPONDENT ITA NO.550/PN/2012 (ASSESSMENT YEAR : 2006-07) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE . APPELLANT VS. NITIN BHARAT SHAH 23 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : AFGPS4532H . RESPONDENT ITA NO.551/PN/2012 (ASSESSMENT YEAR : 2005-06) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE . APPELLANT VS. KALPESH BHARAT SHAH SUJAY GARDEN 2 MUKUNDNAGAR PUNE 411 037 PAN : AFHPS4448E . RESPONDENT A.Y. 2007-08 ITA NO.552/PN/2012 (ASSESSMENT YEAR : 2005-06) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE . APPELLANT VS. SMT. PUSHPA BHARAT SHAH 27 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : ADXPS3820L . RESPONDENT ITA NO.553/PN/2012 (ASSESSMENT YEAR : 2006-07) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (1) PUNE . APPELLANT VS. BHARAT KESHAVLAL SHAH 27 SUJAY GARDEN 12 MUKUNDNAGAR PUNE 411 037 PAN : ADXPS3821M . RESPONDENT ASSESSEE BY : MR. MAHENDRA MEHTA DEPARTMENT BY : MS. M.S. VERMA DATE OF HEARING : 04-07-2013 DATE OF PRONOUNCEMENT : 30-07-2013 ORDER PER G. S. PANNU AM THE CAPTIONED APPEALS RELATE TO DIFFERENT ASSESSEE S BELONGING TO ONE FAMILY AND INVOLVE CERTAIN COMMON ISSUES WHICH ARE AS A RESULT OF A SEARCH ACTION CARRIED OUT BY THE DEPARTMENT UNDER SECTION 132 OF THE ACT ON 08.08.2007 IN THE CAPTIONED GROUP CASES THEREFORE THE CAPTIONED APPEALS HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLID ATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. FIRST WE SHALL TAKE-UP THE APPEAL PREFERRED BY THE ASSESSEE (SHRI BHARAT KESHAVLAL SHAH) VIDE ITA NO. 516/PN/20 12 WHICH IS DIRECTED A.Y. 2007-08 AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I PUNE DATED 15.09.2011 WHICH IN TURN HAS ARISEN FROM AN ASSES SMENT ORDER DATED 31.12.2009 PASSED BY THE ASSESSING OFFICER UNDER S ECTION 143(3) READ WITH SECTION 153A OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2002-03. 3. THE SOLITARY DISPUTE IN THIS APPEAL RELATES TO A N ADDITION OF RS.1 53 057/- MADE ON ACCOUNT OF UNEXPLAINED/UNACCOUNTED EXPENDIT URE IN CONSTRUCTION OF RESIDENTIAL PREMISES. IN BRIEF THE RELEVANT FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL BEING A PROPRIETOR OF M/S B.K. SHAH CONS TRUCTION DIVISION ENGAGED IN THE BUSINESS OF REAL ESTATE. THE ASSESSEE IS ALSO A PARTNER IN VARIOUS FIRMS ENGAGED IN THE BUSINESS OF PROMOTERS AND BUILDERS. CONSEQUENT TO SEARCH ACTION UNDER SECTION 132 OF THE ACT CONDUCTED ON 08 .08.2007 THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153A OF THE ACT DATED 25.10.2007 CALLING FOR A RETURN OF INCOME AND IN RESPONSE ASSESSEE FI LED A RETURN OF INCOME FOR ASSESSMENT YEAR 2002-03 ON 28.11.2007 DISCLOSING TO TAL INCOME OF RS.3 82 910/-. IN THE SUBSEQUENT ASSESSMENT FINALIZ ED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT DATED 31.12.2009 THE TOTAL INCOME WAS DETERMINED AT RS.5 35 967/- WHICH ENTAILED AN ADDI TION OF RS.1 53 057/- ON ACCOUNT OF UNEXPLAINED/UNACCOUNTED INVESTMENT IN CO NSTRUCTION OF A RESIDENTIAL BUNGALOW AT 27 SUJAY GARDEN 12 MUKUND NAGAR PUNE. IN THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTICED THAT ASSESSEE HAD ACCOUNTED FOR AN INVESTMENT OF RS.50 31 631/- I N RESPECT OF THE SAID BUNGALOW. THE ASSESSING OFFICER REFERRED THE QUESTI ON OF VALUATION OF INVESTMENT MADE IN THE SAID BUNGALOW TO THE DEPARTM ENTAL VALUATION OFFICER (DVO). THE DVO SUBMITTED HIS REPORT IN TERMS OF WHI CH THE INVESTMENT IN THE SAID BUNGALOW WAS VALUED AT RS.66 62 000/-. THE DIF FERENCE IN THE VALUE OF INVESTMENTS AS DECLARED BY THE ASSESSEE AND AS OPI NED BY THE DVO AMOUNTED TO RS.16 30 369/-. THE ASSESSING OFFICER D ISTRIBUTED THE AFORESAID DIFFERENCE OVER THE ASSESSMENT YEARS 2002-03 TO ASS ESSMENT YEAR 2007-08 IN A.Y. 2007-08 PROPORTION OF THE DISCLOSED INVESTMENT OF DIFFERENT ASSESSMENT YEARS TO THE TOTAL ESTIMATED INVESTMENT IN THE SAID PROPERTY. AC CORDINGLY THE PROPORTION OF UNDISCLOSED INVESTMENT FOR THE ASSESSMENT YEAR 2002 -03 WAS COMPUTED AT RS.1 53 057/- WHICH WAS ADDED TO THE TOTAL INCOME O F THE ASSESSEE AS UNDISCLOSED INCOME. 4. BEING AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO HAS SINCE BEEN UPHELD THE ADDITION. AGA INST THE SUSTENANCE OF ADDITION BY THE CIT(A) ASSESSEE IS IN APPEAL BEFOR E US. 5. BEFORE US THE STAND OF THE ASSESSEE IN ORDER TO ASSAIL THE ADDITION MADE BY THE ASSESSING OFFICER IS MORE OR LESS ON TH E SAME LINES AS TAKEN BEFORE THE LOWER AUTHORITIES. THE FIRST PLEA OF THE ASSESSEE IS THAT THE ASSESSING OFFICER ERRED IN REFERRING THE MATTER TO THE DVO FOR THE PURPOSES OF ESTIMATING THE INVESTMENT IN CONSTRUCTION OF THE SA ID BUNGALOW. IT IS CONTENDED THAT ASSESSEE WAS MAINTAINING BOOKS OF ACCOUNT WHIC H DULY RECORDED THE EXPENDITURE INCURRED ON CONSTRUCTION OF BUNGALOW. T HE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED AND THEREFORE HAVING REGARD TO TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT (2010) 328 ITR 512 (SC) THERE WAS NO SCOPE FOR REFERRING THE MATTER T O THE DVO FOR ESTIMATING THE COST OF CONSTRUCTION. THE CIT(A) HAS NOT ACCEPTED T HE AFORESAID PLEA OF THE ASSESSEE BY POINTING OUT THAT INCRIMINATING MATERIA L WAS SEIZED DURING THE COURSE OF SEARCH WHICH SHOWED EXPENSES INCURRED ON CONSTRUCTION OF THE BUNGALOW WHICH WERE NOT FOUND RECORDED IN THE BOOKS OF ACCOUNT AND THEREFORE THE ASSESSING OFFICER WAS JUSTIFIED IN R EFERRING THE MATTER TO THE DVO FOR ESTIMATING THE COST OF CONSTRUCTION. THE AFORES AID POINT HAS BEEN REITERATED ON BEHALF OF THE REVENUE BEFORE US. 6. HAVING CONSIDERED THE RIVAL STANDS ON THIS ASPEC T IN OUR VIEW THE PROPOSITION CANVASSED BY THE ASSESSEE ON THE BASIS OF THE JUDGEMENT OF THE A.Y. 2007-08 HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA (SUPRA) IS UNTENABLE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. NO DOUBT THE HONBLE SUPREME COURT HAS LAID DOWN THAT AN ASS ESSING AUTHORITY COULD NOT REFER THE MATTER TO THE DVO WITHOUT REJECTING T HE BOOKS OF ACCOUNT. HOWEVER IN THE PRESENT CASE DISCUSSION IN PARA 4. 7 OF THE ASSESSMENT ORDER SHOWS THAT CERTAIN DOCUMENTS WERE SEIZED AT THE TIM E OF SEARCH WHICH SHOWED INCURRENCE OF EXPENDITURE OF RS.3 74 133/- ON CONST RUCTION OF THE IMPUGNED BUNGALOW WHICH WAS NOT RECORDED IN THE BOOKS OF ACC OUNT MAINTAINED. ON THIS BASIS THE ASSESSING OFFICER OBSERVED THAT THE SAME SUBSTANTIATES THAT THE ACCOUNT BOOKS SHOW UNDERINVESTMENT IN THE CONSTRUCT ION OF RESIDENTIAL PROPERTY. THE AFORESAID OBSERVATION MADE BY THE ASS ESSING OFFICER CLEARLY SHOWS THAT THE ACCOUNT BOOKS HAVE BEEN FOUND TO BE UNRELIABLE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT RE CORDED THE REJECTION OF ACCOUNTS BOOKS IN A FORMAL LANGUAGE BUT THE IMPLIC ATION IS CLEAR TO THE EFFECT THAT THE ACCOUNT BOOKS HAVE BEEN HELD TO BE UNRELIA BLE. IN VIEW OF THE AFORESAID FACTUAL POSITION THERE IS NO MERIT IN TH E PLEA OF THE ASSESSEE BASED ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN TH E CASE OF SARGAM CINEMA (SUPRA). THEREFORE THE ACTION OF THE ASSES SING OFFICER IN REFERRING THE MATTER TO THE DVO FOR VALUING THE INVESTMENT IN CON STRUCTION OF THE SAID BUNGALOW WAS FAIR AND PROPER HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 7. THE NEXT POINT RAISED BY THE ASSESSEE IS THAT TH E IMPUGNED ADDITION COULD NOT BE MADE SOLELY ON THE BASIS OF THE REPORT OF THE DVO INASMUCH AS THE REPORT OF THE DVO CANNOT BE TAKEN AS MATERIAL T O ESTABLISH THAT ASSESSEE INVESTED IN THE CONSTRUCTION OF THE BUNGALOW MORE T HAT WHAT HAS BEEN RECORDED IN THE BOOKS OF ACCOUNT. IN SUPPORT OF THI S PROPOSITION RELIANCE HAS BEEN PLACED ON THE FOLLOWING JUDGEMENTS :- (I) CIT VS. ABHINAV KUMAR MITTAL (2012) 30 TAXMANN.COM 357 (DELHI); (II) CIT VS. SAD HNA GUPTA (2013) 32 A.Y. 2007-08 TAXMANN.COM 185 (DELHI); AND (III) CIT VS. DINESH JAIN HUF (2012) 25 TAXMANN.COM 550 (DELHI). 8. ON THIS ASPECT THE LEARNED DEPARTMENTAL REPRESE NTATIVE APPEARING FOR THE REVENUE CONTENDED THAT IN THE PRESENT CASE THE ASSESSING OFFICER HAS REFERRED TO THE SEIZED MATERIAL TO SAY THAT THERE A RE UNRECORDED EXPENSES ON CONSTRUCTION AND THEREFORE THE ASSESSING OFFICER M ADE NO MISTAKE IN RELYING ON THE REPORT OF THE DVO TO ESTABLISH THE QUANTUM O F UNDISCLOSED INVESTMENT IN THE CONSTRUCTION OF THE IMPUGNED BUNGALOW. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE POINT SOUGHT TO BE RAISED BY THE ASSESSEE IS THAT THE REPORT OF THE DVO WHICH SHOWS THE VALUE OF INVESTMENT IN THE IMPUGNED BUNGALOW HIGHER THAN THE AMOUNTS RECORDED IN THE BOOKS OF ACCOUNT CANNOT BE TAKEN A S A BASIS TO SAY THE ASSESSEE HAS MADE ANY UNEXPLAINED INVESTMENT IN THE CONSTRUCTION SINCE THE REPORT OF THE DVO MERELY REFLECTS AN ESTIMATE OF CO ST OF CONSTRUCTION. THE PROPOSITION BEING CANVASSED BY THE ASSESSEE IS TO B E EXAMINED IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AS TO WHETHER THE REPORT OF THE DVO FORMED A GOOD BASIS FOR THE ASSESSING OFFICER T O MAKE THE IMPUGNED ADDITION. 10. IN THE CASE OF ABHINAV KUMAR MITTAL (SUPRA) TH E HONBLE DELHI HIGH COURT CONSIDERED AN ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 69 OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT TOW ARDS PURCHASE OF IMMOVEABLE PROPERTIES. THE ADDITION WAS BASED ON TH E DIFFERENCE IN THE VALUE OF PURCHASES AS DECLARED BY THE ASSESSEE AND AS EST IMATED BY THE DVO WHICH WAS DELETED BY THE TRIBUNAL. THE HONBLE HIGH COURT UPHELD THE DELETION BY NOTICING THAT NO MATERIAL WAS FOUND IN THE COURS E OF SEARCH AND SEIZURE OPERATION WHICH WOULD JUSTIFY THE ASSESSING OFFICE RS ACTION IN REFERRING THE MATTER TO THE DVO FOR HIS OPINION ON THE VALUATION OF THE SAID PROPERTY. IN THE A.Y. 2007-08 SAID CASE THE TRIBUNAL HAD OBSERVED THAT BEFORE RE FERRING THE MATTER TO THE DVO FOR VALUATION THERE MUST BE SOME MATERIAL TO S HOW THAT ANY INVESTMENT WAS MADE BY THE ASSESSEE WHICH WAS OUTSIDE THE BOO KS OF ACCOUNT. THEREFORE IN THE ABSENCE OF MATERIAL TO SHOW THAT ANY INVESTMENT WAS MADE BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT THE H ONBLE HIGH COURT AFFIRMED THE ORDER OF THE TRIBUNAL DELETING THE ADDITION MAD E BY THE ASSESSING OFFICER WHICH WAS MERELY BASED ON THE REPORT OF DVO ESTIMAT ING THE VALUE OF PROPERTY HIGHER THAN THE ACTUAL COST OF PURCHASE DECLARED BY THE ASSESSEE. 11. SIMILARLY IN THE CASE OF SADHANA GUPTA (SUPRA) THE HONBLE HIGH COURT WAS DEALING WITH AN ADDITION MADE UNDER SECTION 69B OF THE ACT TOWARDS UNEXPLAINED INVESTMENT IN PURCHASE OF A PROPERTY FO R THE REASON THAT THE FAIR MARKET VALUE OF THE PROPERTY DETERMINED BY THE DVO WAS HIGHER THAN THE PURCHASE CONSIDERATION DECLARED BY THE ASSESSEE. TH E CIT(A) AS WELL AS THE TRIBUNAL IN THE SAID CASE HAD DELETED THE ADDITION ON THE GROUND THAT THERE WAS NO EVIDENCE TO INDICATE THAT ANY EXTRA CONSIDER ATION HAD FLOWED IN THE TRANSACTION OF THE PURCHASE OF PROPERTY AND THE REP ORT OF THE DVO ARRIVING AT A HIGHER VALUATION CANNOT FORM THE BASIS OF SUCH AN A DDITION. THE HONBLE HIGH COURT AFFIRMED THE DELETION OF ADDITION MADE BY THE TRIBUNAL. 12. IN THE CASE OF DINESH JAIN HUF (SUPRA) THE ISSU E BEFORE THE HONBLE HIGH COURT RELATED TO AN ADDITION MADE UNDER SECTIO N 69B OF THE ACT ON ACCOUNT OF UNDISCLOSED INVESTMENT TOWARDS PURCHASE OF A FLAT. THE ADDITION WAS DELETED BY THE TRIBUNAL ON THE GROUND THAT THER E WAS NO EVIDENCE OR INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH WHICH REVEALED ANY UNDERSTATEMENT OF PURCHASE CONSIDERATION AND THEREF ORE THE REVENUE WAS NOT JUSTIFIED IN MAKING THE ADDITION MERELY BECAUSE THE VALUATION OF THE PROPERTY IN TERMS OF RULE 3 OF SCHEDULE III TO THE WEALTH TAX ACT 1957 WAS HIGHER THAN THE STATED PURCHASE CONSIDERATION. THE HONBLE DELHI HIGH COURT NOTICED THAT IN THE ABSENCE OF ANY INCRIMINATING MA TERIAL FOUND DURING THE A.Y. 2007-08 COURSE OF SEARCH REVEALING UNDERSTATEMENT OF PURCHA SE CONSIDERATION THE ADDITION WAS RIGHTLY DELETED BY THE TRIBUNAL. 13. IN ALL THE AFORESAID JUDGEMENTS WHICH HAVE BEE N REFERRED TO BY THE ASSESSEE BEFORE US A COMMON POINT EMERGES THAT UNL ESS AND UNTIL THERE IS SOME EVIDENCE TO INDICATE THAT EXTRA CONSIDERATION/ INVESTMENT HAD FLOWED IN A TRANSACTION THE REPORT OF THE DVO CANNOT FORM THE BASIS FOR ANY ADDITION. NOTABLY IN THE AFORESAID THREE JUDGEMENTS FACTUAL LY NO INCRIMINATING MATERIAL WAS FOUND IN THE SEARCH AND SEIZURE OPERATION WHICH REVEALED ANY UNDERSTATEMENT OF PURCHASE CONSIDERATION OR INVESTM ENT IN PROPERTIES. HOWEVER IN THE PRESENT CASE WE HAVE ALREADY NOTED EARLIER THAT AS PER DISCUSSION IN PARA 4.7 OF THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS POINTED OUT THAT INCRIMINATING MATERIAL WAS FOUND A ND SEIZED IN THE COURSE OF SEARCH WHICH SHOWED INSTANCES OF EXPENSES INCURRED ON THE CONSTRUCTION OF BUNGALOW WHICH WERE NOT FOUND RECORDED IN THE BOOKS OF ACCOUNT. FURTHER THE CIT(A) IN PARA 4.3 OF HIS ORDER HAS ALSO OBSERVED T HAT SUCH FINDING OF THE ASSESSING OFFICER HAS REMAINED UNCONTROVERTED BEFOR E HIM. BEFORE US THE LEARNED COUNSEL HAS SOUGHT TO POINT OUT THAT THE DO CUMENTS SEIZED IN THE COURSE OF SEARCH COPIES OF WHICH HAVE BEEN PLACED IN THE PAPER BOOK AT PAGES 60 62 ARE DUMB DOCUMENTS AND DO NOT REFLEC T ANY EXPENDITURE INCURRED BY THE ASSESSEE ON CONSTRUCTION OF THE BUN GALOW IN QUESTION. WE HAVE CONSIDERED THE AFORESAID PLEA AND FIND NO SUBS TANCE IN THE SAME. OSTENSIBLY SUCH A PLEA WAS NOT RAISED BY THE ASSES SEE BEFORE THE LOWER AUTHORITIES. FURTHER A PERUSAL OF THE DOCUMENTS DO NOT SUGGEST THAT THEY ARE DUMB. IN-FACT THE DOCUMENTS CONTAIN RECORDINGS O F EXPENSES RELATING TO CONSTRUCTION AND MOREOVER THE ONUS IS ON THE ASSES SEE TO EXPLAIN THE NATURE AND IMPORT OF THE NOTINGS IN THE DOCUMENTS AS THE SAME HAVE BEEN FOUND FROM ASSESSEES POSSESSION. PERTINENTLY THE ASSESS EE DOES NOT DENY THAT THE DOCUMENTS BELONG TO HIM. THEREFORE CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES WE FIND NO INFIRMITY ON THE PART OF THE ASSESSING OFFICER ON THIS A.Y. 2007-08 ASPECT; AND WE AFFIRM THE POSITION THAT IN THE PRE SENT CASE THERE IS INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE SEARCH ACTION WHICH SHOWS CERTAIN INVESTMENTS TOWARDS CONSTRUCTION OF BUNGALO W NOT RECORDED IN THE BOOKS OF ACCOUNT. THUS IN THE PRESENT CASE THE AS SESSING OFFICER WAS JUSTIFIED TO MAKE AN ADDITION ON ACCOUNT OF UNDERST ATEMENT OF INVESTMENT IN THE COST OF CONSTRUCTION OF THE BUNGALOW. IN ORDER TO DETERMINE THE QUANTUM OF SUCH ADDITION THE ASSESSING OFFICER RELIED ON THE REPORT OF THE DVO. IN THIS VIEW OF THE MATTER WE ARE UNABLE TO ACCEPT THE PLE A OF THE ASSESSEE THAT ADDITION IN THE PRESENT CASE IS BASED SOLELY ON THE REPORT OF THE DVO. 14. THE ONLY OTHER ASPECT WHICH IS LEFT FOR OUR DET ERMINATION IS THE PLEA OF THE ASSESSEE THAT THE VALUE OF CONSTRUCTION ESTIMAT ED BY THE DVO AT RS.66 62 000/- WAS EXCESSIVE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. IT WAS SUBMITTED BEFORE THE AS SESSING OFFICER THAT BEING ENGAGED IN THE BUSINESS OF PROMOTER/BUILDER AND REA L ESTATE ASSESSEE WAS IN A POSITION TO SAVE ALMOST 5% TO 7% OF THE CONSTRUCT ION COSTS AND THAT CREDIT SHOULD BE GIVEN FOR THE SAME WHILE ESTIMATING THE C OST OF CONSTRUCTION. THE ASSESSING OFFICER HAS REJECTED THE PLEA ON THE GROU ND THAT THE VALUATION WAS DONE BY THE DVO BASED ON PLINTH-AREA RATES AND THAT IT REQUIRED NO OTHER ADJUSTMENT. IN OUR CONSIDERED OPINION EXERCISE CAR RIED BY THE DVO IS PRIMARILY AN EXERCISE OF ESTIMATION AND THE FACTOR CANVASSED BY THE ASSESSEE CAN IMPACT THE ESTIMATION OF THE COST OF CONSTRUCTION I N THE HANDS OF THE ASSESSEE. IN OUR VIEW IT WOULD MEET THE ENDS OF JUSTICE IF THE VALUE OF COST OF CONSTRUCTION ESTIMATED BY THE DVO BE REDUCED BY 5% ON ACCOUNT OF SELF- SUPERVISION. ASSESSING OFFICER IS DIRECTED TO RE-CO MPUTE THE VALUE OF CONSTRUCTION ACCORDINGLY AND THEREAFTER RE-WORK THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF THE BUNGA LOW ACCORDINGLY. THUS ON THIS ASPECT ASSESSEE PARTLY SUCCEEDS. A.Y. 2007-08 15. THUS APPEAL OF THE ASSESSEE (BHARAT KESHAVLAL SHAH) IN ITA NO.516/PN/2012 FOR ASSESSMENT YEAR 2002-03 IS P ARTLY ALLOWED. 16. IT WAS A COMMON POINT BETWEEN THE RIVAL COUNSEL S THAT THE ISSUE RAISED IN THE APPEALS OF THE ASSESSEE (I.E. BHARAT KESHAVL AL SHAH) FOR ASSESSMENT YEARS 2003-04 TO 2005-06 VIDE ITA NOS. 517 TO 519/P N/2012 STANDS ON SIMILAR FOOTING AS CONSIDERED BY US IN ITA NO.516/PN/2012 F OR ASSESSMENT YEAR 2002-03. ACCORDINGLY OUR DECISION IN ITA NO. 516/P N/2012 SHALL APPLY MUTATIS-MUTANDIS IN THE ABOVE THREE APPEAL ALSO. ACCORDINGLY APPEA LS OF THE ASSESSEE IN ITA NO. 517 TO 519/PN/2012 FOR ASSESSME NT YEARS 2003-04 TO 2005-06 ARE PARTLY ALLOWED. 17. NOW WE MAY TAKE-UP APPEAL PREFERRED BY THE ASS ESSEE (SHRI NILESH BHARAT SHAH) VIDE ITA NO.522/PN/2012 WHICH IS DIRE CTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I PUNE DA TED 15.09.2011 WHICH IN TURN HAS ARISEN FROM AN ASSESSMENT ORDER DATED 31.12.2009 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) READ WITH S ECTION 153A OF THE ACT PERTAINING TO THE ASSESSMENT YEAR 2004-05. 18. THE SOLITARY DISPUTE IN THIS APPEAL RELATES TO AN ADDITION OF RS.7 41 644/- MADE BY THE INCOME-TAX AUTHORITIES ON ACCOUNT OF UN EXPLAINED INVESTMENT IN CONSTRUCTION OF A RESIDENTIAL BUNGALOW. IN BRIEF T HE FACTS ARE THAT ASSESSEE IS A PROPRIETOR OF M/S SUYOG TRADE LINK ENGAGED IN THE B USINESS OF TRADING IN TILES AND SANITARY WARES. IN RESPONSE TO NOTICE DATED 25. 10.2007 ISSUED UNDER SECTION 153A OF THE ACT ASSESSEE FILED A RETURN OF INCOME ON 28.11.2007 DISCLOSING TOTAL INCOME OF RS.8 96 446/-. IN THE SU BSEQUENT ASSESSMENT FINALIZED UNDER SECTION 143(3) READ WITH SECTION 15 3A OF THE ACT DATED 31.12.2009 THE TOTAL INCOME HAS BEEN DETERMINED AT RS.16 38 090/- WHICH INTER-ALIA CONTAINED AN ADDITION OF RS.7 41 644/- O N ACCOUNT UNEXPLAINED INVESTMENT IN CONSTRUCTION OF A BUNGALOW DIYA AT 23 SUJAY GARDEN 12 A.Y. 2007-08 MUKUNDNAGAR PUNE. THE ASSESSING OFFICER NOTICED TH AT THE ASSESSEE HAD DEBITED TOTAL CONSTRUCTION OF COST AT RS.32 87 084/ - IN ITS BOOKS OF ACCOUNT IN RESPECT OF THE SAID BUNGALOW. THE ASSESSING OFFICER REFERRED THE QUESTION OF VALUATION OF INVESTMENT MADE IN THE SAID BUNGALOW T O THE DVO WHO SUBMITTED A REPORT WHEREBY THE INVESTMENT IN THE SAID BUNGALO W WAS VALUED AT RS.49.34 LACS. THE DIFFERENCE IN THE VALUE OF INVESTMENT AS DECLARED BY THE ASSESSEE AND AS OPINED BY THE DVO AMOUNTED TO RS.16.47 LACS. THE ASSESSING OFFICER CONSIDERED THE SAID DIFFERENCE AS INVESTMENT IN CON STRUCTION OF BUNGALOW MADE BY THE ASSESSEE WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED. THE ASSESSING OFFICER DISTRIBUTED THE A FORESAID DIFFERENCE TO THE ASSESSMENT YEARS 2004-05 TO 2008-09 IN PROPORTION O F THE DISCLOSED INVESTMENT OF DIFFERENT YEARS TO THE TOTAL INVESTME NT IN THE SAID PROPERTY. ACCORDINGLY AN AMOUNT OF RS.7 41 644/- WAS CONSIDE RED AS UNDISCLOSED INVESTMENT MADE IN THE CONSTRUCTION OF THE SAID BUN GALOW FOR ASSESSMENT YEAR 2004-05 AND THE SAID AMOUNT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME. 19. THE ASSESSEE UNSUCCESSFULLY CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO FOLLOWING HIS DECISION ON SIMILAR ISSUE IN THE CASE OF SHRI BHARAT KESHAVLAL SHAH (WHICH HAS SINCE BEEN CONSIDERED BY US IN ITA NO.516/PN/2012) UPHELD THE STAND OF THE ASSESS ING OFFICER. AGAINST THE AFORESAID DECISION ASSESSEE IS IN FURTHER APPEAL B EFORE US. 20. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE PRIMARILY REITERATED SIMILAR SUBMISSIONS AS WERE ADVANCED BY HIM WHILE A SSAILING ADDITION ON ACCOUNT OF UNACCOUNTED INVESTMENT IN CONSTRUCTION O F A BUNGALOW IN THE CASE OF SHRI BHARAT KESHAVLAL SHAH IN ITA NO.516/PN/2012 (SUPRA) WHICH HAS BEEN CONSIDERED BY US IN EARLIER PARAGRAPHS. THE LE ARNED DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDERS OF THE AUTH ORITIES BELOW BY POINTING OUT THE RELEVANT DISCUSSION IN THE ASSESSMENT ORDER WHEREIN THE ASSESSING A.Y. 2007-08 OFFICER HAS NOTED THAT INVESTMENT IN THE RESIDENTIA L BUNGALOW TO THE EXTENT OF RS.16.47 LACS WAS NOT RECORDED IN THE BOOKS OF ACCO UNT MAINTAINED AND THEREFORE IT HAS BEEN TREATED AS UNDISCLOSED INVEST MENT SPREAD OVER THE RELEVANT ASSESSMENT YEARS. 21. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE CONTROVERSY BEFORE US IS WITH REGARD TO THE INVESTMENT IN THE C ONSTRUCTION OF IMPUGNED BUNGALOW WHICH HAS BEEN CONSIDERED BY THE ASSESSIN G OFFICER TO BE HIGHER THAN THE AMOUNT OF COST OF CONSTRUCTION RECORDED IN THE ACCOUNT BOOKS MAINTAINED BY THE ASSESSEE AND SUCH DIFFERENCE HAS BEEN ASSESSED AS UNDISCLOSED INCOME. THE RELEVANT PRINCIPLES IN ORDE R TO TEST THE EFFICACY OF SUCH AN ADDITION HAS BEEN DISCUSSED BY US IN THE EA RLIER PARAGRAPHS WHILE DEALING WITH THE APPEAL IN ITA NO.516/PN/2012 (SUPR A). CONSIDERED IN THE AFORESAID LIGHT WHAT IS REQUIRED TO BE EXAMINED HE RE IS AS TO WHETHER FACTS AND CIRCUMSTANCES OF THE PRESENT CASE JUSTIFY THE A SSERTION OF THE ASSESSING OFFICER THAT ASSESSEE HAS MADE UNDISCLOSED INVESTME NT TOWARDS CONSTRUCTION OF BUNGALOW. AT THE OUTSET WE MAY SAY THAT IT WAS A COMMON GROUND BETWEEN THE PARTIES THAT SO FAR AS THE PRESENT CASE IS CONC ERNED THERE IS NO INCRIMINATING MATERIAL SEIZED DURING THE SEARCH WHI CH REVEALED ANY UNRECORDED INVESTMENT BY THE ASSESSEE IN THE CONSTRUCTION OF T HE SAID BUNGALOW. IN THE ASSESSMENT ORDER THERE IS NO REFERENCE TO ANY INCR IMINATING MATERIAL FOUND DURING SEARCH WHICH REVEALS EXPENDITURE ON CONSTRUC TION OF BUNGALOW WHICH WAS NOT RECORDED IN THE ACCOUNT BOOKS. FACTUALLY SP EAKING THE SAID FACT SITUATION IS IN CONTRAST TO WHAT WAS FOUND BY THE A SSESSING OFFICER IN THE CASE OF SHRI BHARAT KESHAVLAL SHAH IN ITA NO.516/PN/2012 (SUPRA) DISCUSSED IN EARLIER PARAGRAPHS. 22. IN-FACT IT IS THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH WHICH HAS LED THE ASSESSING OFFICER TO RESOR T TO REFERRING THE QUESTION OF ESTIMATING THE COST OF CONSTRUCTION OF BUNGALOW TO THE DVO. OSTENSIBLY A.Y. 2007-08 THERE IS A FUNDAMENTAL FALLACY IN THE APPROACH OF T HE ASSESSING OFFICER IN THE PRESENT CASE HAVING REGARD TO THE EMERGING FACTS A ND CIRCUMSTANCES. IN THE ABSENCE OF ANY MATERIAL TO SAY THAT ASSESSEE HAS EX PENDED ANY SUMS TOWARDS CONSTRUCTION OF PROPERTY OVER AND ABOVE WHA T HAS BEEN RECORDED IN THE ACCOUNTS BOOK THE ASSESSING OFFICER IS NOT LEG ALLY EMPOWERED TO HOLD MERELY ON THE BASIS OF THE REPORT OF DVO THAT ASSES SEE HAS INVESTED CERTAIN AMOUNT OVER AND ABOVE THE STATED AMOUNTS. IN THE PR ESENT CASE THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS INVESTED IN CONSTRUCTION OF BUNGALOW OVER AND ABOVE THE AMOUNTS RECORDED BY THE ASSESSEE IN ITS ACCOUNT BOOKS. HAVING REGARD TO THE FACTUAL POSITIO N IN THE PRESENT CASE IN OUR VIEW THE JUDGEMENTS OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DINESH JAIN HUF (SUPRA) AS WELL AS IN THE CASE OF SADHANA GUPTA (SUPRA) RELIED UPON BY THE ASSESSEE FULLY COVERS THE CASE OF THE ASSESS EE AND ACCORDINGLY IT HAS TO BE HELD THAT THE IMPUGNED ADDITION DESERVES TO B E DELETED. 23. IN THE FINAL ANALYSIS WE HOLD THAT SINCE THE E NTIRE CASE HAS PROCEEDED ON A MERE PRESUMPTION THAT THERE WAS AN UNDERSTATEM ENT OF THE COST OF CONSTRUCTION OF BUNGALOW WITHOUT THERE BEING ANY E VIDENCE OR INCRIMINATING MATERIAL FOUND DURING THE SEARCH SHOWING UNRECORDED EXPENDITURE ON CONSTRUCTION OF BUNGALOW WE FIND NO REASONS TO UPH OLD THE IMPUGNED ADDITION. ACCORDINGLY THE ORDER OF THE CIT(A) IS S ET-ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS.7 41 644/-. THE ASSESSEE ACCORDINGLY SUCCEEDS. 24. IN THE RESULT THE APPEAL OF THE ASSESSEE IN IT A NO.522/PN/2012 FOR THE ASSESSMENT YEAR 2004-05 IS ALLOWED. 25. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES IN APPEALS OF SHRI NILESH BHARAT SHAH VIDE ITA NO.524 & 525/PN/2012 FOR ASSESSMENT YEAR 2006-07 & 2007-08 R ESPECTIVELY DEALING A.Y. 2007-08 WITH ADDITIONS OF RS.1 03 596/- AND RS.5 91 767/- R ESPECTIVELY ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF BUNGALOW DIYA AT 23 SUJAY GARDEN 12 MUKUNDNAGAR PUNE ARE IDENTICAL TO THAT CONSIDERED BY US IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 IN ITA NO.522/PN/2012 (SUPRA). THEREFORE OUR DECISION IN ITA NO.522/PN/2 012 SHALL APPLY MUTATIS- MUTANDIS IN THESE TWO APPEALS ALSO AND ACCORDINGLY THEY STA ND ALLOWED. 26. IN THE RESULT THE APPEALS OF THE ASSESSEE (SHR I NILESH BHARAT SHAH) IN ITA NO. 524 & 525/PN/2012 FOR ASSESSMENT YEAR 2006- 07 & 2007-08 ARE ALLOWED. 27. NOW WE MAY TAKE-UP APPEAL PREFERRED BY THE ASS ESSEE NAMELY SHRI KAPLESH BHARAT SHAH VIDE ITA NO.527/PN/2012 WHICH IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I PUNE DATED 15.09.2011 WHICH IN TURN HAS ARISEN FROM AN ASSESSMENT ORDER DATED 31.12.2009 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT PERTAINING TO THE ASSESSMENT YEAR 2006-07. 28. THE SOLITARY DISPUTE IN THIS APPEAL RELATES TO AN ADDITION OF RS.1 87 320/- MADE BY THE INCOME-TAX AUTHORITIES ON ACCOUNT OF UN EXPLAINED INVESTMENT IN RESIDENTIAL BUNGALOW. 29. IN BRIEF THE FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL AND A PARTNER IN CERTAIN FIRMS. IN RESPONSE TO NOTICE DATED 27.10.20 08 UNDER SECTION 153A OF THE ACT ASSESSEE FILED A RETURN OF INCOME ON 05.12 .2008 DISCLOSING TOTAL INCOME OF RS.6 13 424/-. IN THE SUBSEQUENT ASSESSME NT FINALIZED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT DA TED 31.12.2009 THE TOTAL INCOME HAS BEEN DETERMINED AT RS.17 56 491/- WHICH INTER-ALIA CONTAINED AN ADDITION OF RS.1 87 320/- ON ACCOUNT UNEXPLAINED IN VESTMENT IN CONSTRUCTION OF A RESIDENTIAL BUNGALOW NO. 24 AT 23 SUJAY GARDEN 12 MUKUNDNAGAR PUNE. A.Y. 2007-08 THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEBITED TOTAL CONSTRUCTION COST AT RS.98 34 919/- IN HIS BOOKS OF ACCOUNT IN R ESPECT OF THE SAID BUNGALOW. THE ASSESSING OFFICER REFERRED THE QUESTION OF VALU ATION OF INVESTMENT MADE IN THE SAID BUNGALOW TO THE DVO WHO SUBMITTED A REPORT WHEREBY THE INVESTMENT IN THE SAID BUNGALOW WAS VALUED AT RS.1 16 19 000/- . THE DIFFERENCE IN THE VALUE OF INVESTMENT AS DECLARED BY THE ASSESSEE AN D AS OPINED BY THE DVO AMOUNTED TO RS.17 84 081/-. THE ASSESSING OFFICER C ONSIDERED THE SAID DIFFERENCE AS INVESTMENT IN CONSTRUCTION OF BUNGALO W MADE BY THE ASSESSEE WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT MAIN TAINED. THE ASSESSING OFFICER DISTRIBUTED THE AFORESAID DIFFERENCE TO THE ASSESSMENT YEARS 2006-07 TO 2008-09 IN PROPORTION OF THE DISCLOSED INVESTMENT O F DIFFERENT YEARS TO THE TOTAL INVESTMENT IN THE SAID PROPERTY. ACCORDINGLY AN AM OUNT OF RS.1 87 320/- WAS CONSIDERED AS UNDISCLOSED INVESTMENT MADE IN THE CO NSTRUCTION OF THE SAID BUNGALOW FOR ASSESSMENT YEAR 2006-07 AND THE SAID AMOUNT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED INC OME. 30. THE ASSESSEE UNSUCCESSFULLY CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO FOLLOWING HIS DECISION ON SIMILAR ISSUE IN THE CASE OF SHRI BHARAT KESHAVLAL SHAH (WHICH HAS SINCE BEEN CONSIDERED BY US IN ITA NO.516/PN/2012) UPHELD THE STAND OF THE ASSESSING OFFICER. AGAINST THE AFORESAID DECISION ASSESSEE IS IN FURTHER APPEAL B EFORE US. 31. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE PARI-MATERIA TO THOSE CONSIDERED BY US IN THE EARLIER PARAGRAPHS IN THE CASE OF SHRI NILESH BHARA T SHAH VIDE ITA NO.522/PN/2012 FOR ASSESSMENT YEAR 2004-05. THE REFORE OUR DECISION IN THE APPEAL IN ITA NO.522/PN/2012 WOULD APPLY MUTATIS-MUTANDIS IN THIS APPEAL AND ACCORDINGLY THE APPEAL STANDS ALLOWED. A.Y. 2007-08 32. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO .527/PN/2012 FOR THE ASSESSMENT YEAR 2006-07 IS ALLOWED. 33. SIMILARLY THE APPEAL IN THE CASE OF SHRI KALPE SH BHARAT SHAH VIDE ITA NO.529/PN/2012 FOR ASSESSMENT YEAR 2008-09 ALSO CON TAINS SIMILAR ISSUE AS IN ITA NO.527/PN/2012 FOR ASSESSMENT YEAR 2006-07. FOLLOWING THE DECISION IN ITA NO. 527/PN/2012 THE SAID APPEAL IS ALSO ALL OWED. 34. IN THE RESULT APPEAL OF THE ASSESSEE (SHRI KAL PESH BHARAT SHAH) IN ITA NO. 529/PN/2012 FOR ASSESSMENT YEAR 2008-09 IS ALLOWED. 35. NOW WE MAY TAKE-UP THE APPEAL IN THE CASE OF S HRI KALPESH BHARAT SHAH VIDE ITA NO. 528/PN/2012 FOR ASSESSMENT YEAR 2 007-08. IN THIS APPEAL GROUND OF APPEAL NO. 1 RELATING TO AN ADDITION OF R S.9 00 206/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE COST OF CONSTRUCTION OF BUNGALOW IS IDENTICAL TO THAT CONSIDERED FOR ASSESSMENT YEARS 2006-07 & 2008 -09 IN THE ASSESSEES OWN CASE VIDE ITA NO. 527 & 529/PN/2012 RESPECTIVEL Y IN THE EARLIER PARAGRAPHS. THEREFORE FOLLOWING THE AFORESAID PREC EDENTS GROUND OF APPEAL NO.1 IS ALLOWED. 36. THE GROUND OF APPEAL NO.2 IN THIS APPEAL IS WIT H REGARD TO AN ADDITION OF RS.2 42 861/- ON ACCOUNT OF INVESTMENT IN FIXED DEPOSITS WHICH HAS BEEN CONSIDERED AS UNEXPLAINED. AT THE TIME OF HEARING ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL AND ACCORDINGLY THE SAME IS DISMIS SED AS NOT PRESSED. 37. IN THE RESULT APPEAL OF THE ASSESSEE FOR ASSES SMENT YEAR 2007-08 VIDE ITA NO. 528/PN/2012 IN THE CASE OF SHRI KAPLESH BHA RAT SHAH IS PARTLY ALLOWED. A.Y. 2007-08 38. NOW WE MAY TAKE-UP THE CROSS-APPEALS IN ITA NO . 520 & 553/PN/2012 IN THE CASE OF SHRI BHARAT KESHAVLAL SHAH PERTAININ G TO THE ASSESSMENT YEAR 2006-07 WHICH ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I PUNE DATED 15.09.2011 WHICH IN TU RN HAVE ARISEN FROM AN ASSESSMENT ORDER DATED 31.12.2009 PASSED BY THE ASS ESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. 39. IN THE AFORESAID CROSS-APPEALS PREFERRED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY ISSUE INVOLVED IS COMMON RELA TING TO THE LONG TERM CAPITAL GAIN OF RS.1 17 47 571/- DECLARED BY THE AS SESSEE AND CLAIMED EXEMPT UNDER SECTION 10(38) OF THE ACT. 40. IN THE RETURN OF INCOME ASSESSEE DECLARED LONG TERM CAPITAL GAIN OF RS.1 17 47 571/- ON SALE OF SHARES OF FAST TRACK E NTERTAINMENT LTD. (IN SHORT FTEL) AND CLAIMED THE SAME AS EXEMPT UNDER SECTIO N 10(38) OF THE ACT. THE ASSESSING OFFICER TREATED THE ENTIRE SALE PROCEEDS OF RS.1 20 05 996/- AS INCOME FROM OTHER UNDISCLOSED SOURCES. ACCORDING TO THE ASSESSING OFFICER THE SHARE TRANSACTIONS WERE SHAM AND THE LONG TERM CAPITAL GAIN REFLECTED IN THE RETURN OF INCOME WAS BOGUS. THE ASSESSING OFFIC ER FURTHER ESTIMATED AN UNDISCLOSED INCOME OF RS.7 20 359/- @ 6% OF THE TOT AL SALE CONSIDERATION AS HAVING BEEN INCURRED BY THE ASSESSEE FOR ARRANGING SUCH ACCOMMODATION ENTRY OF BOGUS LONG TERM CAPITAL GAIN. THE AFORESAI D ADDITIONS WERE CARRIED IN APPEAL BEFORE THE CIT(A). THE CIT(A) CONCURRED WITH THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEES CLAIM OF HAVI NG PURCHASED 1 50 000 SHARES OF FTEL ON 07.04.2003 THROUGH BROKER T.H. V AKIL SHARES SECURITIES PVT. LTD. WAS UNACCEPTABLE. HOWEVER THE CIT(A) ACC EPTED THE PLEA OF THE ASSESSEE THAT THE SALE PROCEEDS OF RS.1 20 05 996/- CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE WAS AS A RESULT OF THE SALE OF THE SHARES OF FTEL PRIMARILY FOR THE REASON THAT THE TRANSACTION OF SA LE WAS APPEARING IN THE DEMAT A/C OF THE ASSESSEE MAINTAINED WITH BANK OF R AJASTHAN IN RESPECT OF A.Y. 2007-08 FTEL SHARES. ACCORDINGLY THE CIT(A) UPHELD THE PLE A OF THE ASSESSEE THAT THE IMPUGNED SURPLUS RESULTING ON ACCOUNT OF RECEIPT OF SALE PROCEEDS OF RS.1 20 05 996/- WAS LIABLE TO BE ASSESSED UNDER TH E HEAD CAPITAL GAINS. HOWEVER THE CIT(A) DID NOT ACCEPT THE PLEA OF THE ASSESSEE THAT THE SALE OF FTEL SHARES RESULTED IN A LONG TERM CAPITAL GAIN IN ASMUCH AS ACCORDING TO THE CIT(A) THE EVIDENCE ON RECORD SHOWED THAT THE ASSES SEE CAN BE SAID TO HAVE BEEN IN POSSESSION OF THE SHARES ONLY FROM 01.11.20 04 AND NOT FROM THE CLAIMED DATE OF PURCHASE I.E. 07.04.2003. THEREFORE AFTER CONSIDERING THE PERIOD OF HOLDING OF THE ASSESSEE STARTING FROM 01. 11.2004 TO JUNE TO SEPTEMBER 2005 I.E. THE DATES OF SALES THE RESULTA NT GAIN HAS BEEN DIRECTED TO BE ASSESSED AS A SHORT TERM CAPITAL GAIN. THE CIT (A) ALSO DELETED THE ADDITION OF RS.7 20 359/- CONSEQUENT TO HIS AFORESA ID DECISION. AGAINST THE ABOVE CONCLUSION OF THE CIT(A) ASSESSEE AS WELL A S REVENUE IS IN APPEAL BEFORE US. 41. IN THE APPEAL OF THE ASSESSEE THE GRIEVANCE IS THAT THE CIT(A) OUGHT TO HAVE TREATED THE GAIN ON THE SALE OF SHARES AS LON G TERM CAPITAL GAIN INSTEAD OF SHORT TERM CAPITAL GAIN THEREBY ENTITLING ASSE SSEE TO EXEMPTION UNDER SECTION 10(38) OF THE ACT. PER CONTRA THE GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT THE CIT(A) ERRED IN HOLDING THAT THE SALE PROCEEDS OF RS.1 20 05 996/- ON SALE OF SHARES OF FTEL ARE LIAB LE TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS INSTEAD OF THE ACTION OF T HE ASSESSING OFFICER IN TREATING THE SAME AS UNEXPLAINED AND BOGUS INCOME. THE REVENUE IS ALSO AGGRIEVED WITH THE ACTION OF THE CIT(A) IN TREATING THE TRANSACTION TO BE ASSESSABLE AS SHORT TERM CAPITAL GAIN. FURTHER T HE REVENUE IS ALSO AGGRIEVED WITH THE ACTION OF THE CIT(A) IN DELETING THE ADDIT ION OF RS.7 20 359/- MADE BY THE ASSESSING OFFICER TOWARDS ESTIMATED COMMISSION EXPENDITURE ALLEGED TO HAVE BEEN INCURRED BY THE ASSESSEE IN ARRANGING THE SAID BOGUS LONG TERM CAPITAL GAIN. A.Y. 2007-08 42. IN VIEW OF THE AFORESAID IT IS QUITE EVIDENT T HAT THE DISPUTES RAISED IN THE CROSS-APPEALS RELATE TO THE SAME ISSUE AND THEREFOR E THEY ARE BEING TAKEN TOGETHER FOR ADJUDICATION. 43. IN BRIEF THE RELEVANT FACTS RELATING TO THE CO NTROVERSY AS EMERGING FROM THE ORDERS OF THE LOWER AUTHORITIES AS WELL AS THE MATERIAL ON RECORD CAN BE SUMMARIZED AS FOLLOWS. IN THE RETURN OF INCOME ASS ESSEE HAD DECLARED A LONG TERM CAPITAL GAIN OF RS.1 17 47 571/- ON THE SALE O F SHARES OF FTEL. IT WAS CLAIMED THAT 1 50 000 EQUITY SHARES OF FTEL WERE PU RCHASED ON 07.04.2003 FOR A CONSIDERATION OF RS.1 27 502/- THROUGH A BROK ER M/S T.H. VAKIL SHARES SECURITIES PVT. LTD. MUMBAI. DURING THE PERIOD JUN E TO SEPTEMBER 2005 THE AFORESAID 1 50 000 EQUITY SHARES OF FTEL WERE SOLD BY THE ASSESSEE THROUGH ANOTHER BROKER FOR A TOTAL CONSIDERATION OF RS.1 20 05 996/-. ACCORDINGLY THE GAIN ON THE AFORESAID SALE AND PURCHASE OF SHARES W AS COMPUTED AT RS.1 17 47 571/- AND AS THE PERIOD OF HOLDING OF SH ARES WAS CLAIMED TO BE IN EXCESS OF 12 MONTHS THE GAIN WAS CLAIMED AS A LONG TERM CAPITAL GAIN EXEMPT UNDER SECTION 10(38) OF THE ACT. THE AFORESAID POSI TION HAS NOT BEEN ACCEPTED BY THE ASSESSING OFFICER. 44. THE ASSESSING OFFICER NOTICED THAT A PECULIAR P ATTERN WAS EMERGING WHICH SHOWED THAT THE SHARES WERE PURCHASED AT A NO MINAL PRICE BUT SOLD AT A VERY HIGH PRICE WITHIN A SHORT PERIOD OF TIME; THAT RISE IN THE PRICE OF THE SHARES WAS PHENOMENAL AND WAS PARTICULARLY IN CONTRAST T O THE MARKET & FINANCIAL STANDING OF THE INVESTEE COMPANY; THAT THE SHARES W ERE TRANSFERRED TO THE DEMAT ACCOUNT OF THE ASSESSEE SHORTLY BEFORE THEIR SALE AND THAT IN THE INTERVENING PERIOD I.E. BETWEEN THE CLAIMED DATES O F PURCHASE AND DEMATERIALIZATION THERE WAS NO EVIDENCE THAT THE S HARES WERE EVER PHYSICALLY TRANSFERRED IN THE NAME OF ASSESSEE; THAT THERE WAS NO VALID AND SUBSTANTIAL PROOF OF DELIVERY; THAT CERTAIN ENQUIRIES WERE COND UCTED BY THE BOMBAY STOCK EXCHANGE (BSE) AND THE SECURITIES & EXCHANGE BOARD OF INDIA (SEBI) INTO THE A.Y. 2007-08 PURCHASE AND SALE OF SUCH LIKE SHARES REFERRED AS PENNY STOCKS AND IT WAS FOUND THAT THE PRICES OF SHARES WERE MANIPULATED; T HAT AS A RESULT OF SUCH ENQUIRIES CERTAIN BROKERS INCLUDING M/S T.H. VAKI L SHARES SECURITIES PVT. LTD. WHO WAS INVOLVED IN THE PRESENT PURCHASE OF SHARES WERE INDICTED. IN THIS BACKGROUND THE ASSESSING OFFICER SHOW-CAUSED THE A SSESSEE TO PROVE THE GENUINENESS OF THE CAPITAL GAINS CLAIMED TO HAVE BE EN EARNED ON THE SALE OF SHARES OF FTEL. THE ASSESSEE WAS ALSO SHOW-CAUSED INTER-ALIA THAT THE BROKER IN QUESTION HAD GIVEN A STATEMENT BEFORE THE INCOME-TAX AUTHORITIES AT MUMBAI WHICH CAST A SHADOW ON THE GENUINENESS OF T HE TRANSACTION AND THE ASSESSEE WAS ASKED TO PRODUCE THE BROKER IN SUPPORT OF THE CLAIM THAT THE TRANSACTIONS WERE GENUINE. THE ASSESSEE WAS CONFRON TED WITH THE STATEMENT OF ONE SHRI NARENDRA SHAH ACCOUNTS OFFICER OF M/S T.H. VAKIL SHARES SECURITIES PVT. LTD. BEFORE THE INCOME-TAX AUTHORIT IES AT MUMBAI THAT THE TRADE IN THE SHARES OF FTEL UNDERTAKEN BY THE SAID BROKER ING CONCERN WAS MERELY ACCOMMODATION TRANSACTIONS AND THERE WERE NO REAL T RANSACTIONS. IN THE COURSE OF ASSESSMENT PROCEEDINGS A STATEMENT OF OA TH OF THE ASSESSEE WAS ALSO RECORDED WHEREIN THE STATEMENT MADE BY THE ACC OUNTS OFFICER OF T.H. VAKIL SHARES SECURITIES PVT. LTD. BEFORE THE INCOME -TAX AUTHORITIES AT MUMBAI WAS CONFRONTED TO THE ASSESSEE. IN THE COURSE OF SU CH STATEMENT ASSESSEE WAS ALSO CONFRONTED WITH THE FACT THAT NORMALLY THE ASSESSEE WAS DEALING IN SHARES THROUGH A PUNE BROKER WHILE IN THE PRESENT C ASE THE TRANSACTION OF PURCHASE WAS UNDERTAKEN THROUGH A MUMBAI BROKER AND THAT TOO THE PAYMENT WAS MADE IN CASH. 45. BEFORE THE ASSESSING OFFICER ASSESSEE MAINTAIN ED THAT THE PURCHASE AND SALE OF SHARES WAS EVIDENCED BY THE CONTRACT NO TES ISSUED BY THE RESPECTIVE BROKERS. ASSESSEE SUBMITTED CONTRACT NOT E FOR PURCHASE OF SHARES TRANSACTED ON 07.04.2003; COPIES OF PHYSICAL SHARES DULY TRANSFERRED IN NAME OF ASSESSEE; CERTIFICATE FROM BANK OF RAJASTHAN CON FIRMING THE DEMATTING OF THE SHARES; A CONFIRMATION FROM T.H. VAKIL SHARES S ECURITIES PVT. LTD. DATED A.Y. 2007-08 08.06.2006 CONFIRMING THE PURCHASE OF 1 50 000 SHAR ES OF FTEL ON 07.04.2003 AND GIVING PHYSICAL DELIVERY TO THE ASSE SSEE OF SUCH SHARES WAS ALSO FURNISHED. IN SUPPORT OF THE SALE OF SHARES T HE CONTRACT NOTES ISSUED BY THE BROKER TRADE CONFIRMATION FROM BSE AND CREDITI NG OF PROCEEDS OF SALE OF SHARES TO THE BANK ACCOUNT WERE ALSO FURNISHED. WIT H REGARD TO THE DELAY IN DEMATTING OF THE SHARES ASSESSEE POINTED OUT THAT THERE WAS NO BAR IN HOLDING THE SHARES IN PHYSICAL FORM AND THAT DEMATTING OF S HARES WAS DONE WHEN IT WAS REALIZED THAT IN ORDER TO SELL SHARES ON THE ST OCK EXCHANGE DEMATTING WAS REQUIRED. IN THIS CONTEXT ASSESSEE SUBMITTED T HAT THE DISTINCTIVE NUMBER OF SHARES DEMATTED IN THE ACCOUNT MAINTAINED WITH B ANK OF RAJASTHAN WERE THE SAME AS WERE DELIVERED TO THE ASSESSEE AT THE T IME OF PURCHASE ON 07.04.2003. WITH REGARD TO THE STATEMENT OF AN ACCO UNTS OFFICER OF THE BROKER M/S T.H. VAKIL SHARES SECURITIES PVT. LTD. ASSESSE E REQUESTED THE ASSESSING OFFICER TO ISSUE SUMMONS TO CROSS-EXAMINE THE BROKE R. IN THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE ALSO FURNISHED A C OPY OF THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2004-05 ON 01. 11.2004 CONTAINING THE AUDITED BALANCE-SHEET AS ON 31.02.2005 WHICH DULY REFLECTED THE INVESTMENTS IN THE SHARES OF FTEL FOR A PURCHASE COST OF RS.1 2 7 502/-. SIMILARLY A COPY OF THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2005 -06 WAS ALSO FILED WHEREIN THE ANNEXED BALANCE-SHEET AS ON 31.02.2005 EVIDENCE D INVESTMENT IN SHARES OF FTEL AT A PURCHASE COST OF RS.1 27 502/-. THE AF ORESAID WAS FURNISHED TO DEMONSTRATE THAT THE ASSESSEE WAS INDEED HOLDING TH E SHARES OF FTEL FROM FINANCIAL YEAR 2003-04 ONWARDS AND THAT THERE WAS N O JUSTIFICATION TO DOUBT THE ACQUISITION OF SHARES ON 07.04.2003 BY THE ASSESSEE THROUGH M/S T.H. VAKIL SHARES SECURITIES PVT. LTD. THE CONCERNED BROKER. THE ASSESSEE ALSO EXPLAINED THAT SINCE HE WAS DEALING WITH THE BROKER M/S T.H. VAKIL SHARES SECURITIES PVT. LTD. FOR THE FIRST TIME THE CONSID ERATION FOR PURCHASE OF SHARES WAS PAID IN CASH AND AS THE SAID SHARES WERE DULY TRANSFERRED IN THE NAME OF THE ASSESSEE THE TRANSACTION COULD NOT BE DOUBTED MERELY BECAUSE PAID IN CASH. EVEN WITH REGARD TO THE STATEMENT GIVEN BY TH E ACCOUNTS OFFICER OF T.H. A.Y. 2007-08 VAKIL SHARES SECURITIES PVT. LTD. ASSESSEE POINTED OUT THAT THERE WAS NO SPECIFIC MENTION BY THE SAID PERSON ABOUT ANY PARTI CULAR TRANSACTION OF THE ASSESSEE WHICH WAS NOT GENUINE. 46. HOWEVER THE ASSESSING OFFICER WAS NOT SATISFIE D WITH THE REPLIES AND HELD THAT ASSESSEE WAS NOT ABLE TO PROVE THE GENUIN ENESS OF THE TRANSACTION BY NOT PRODUCING THE BROKER AND ALSO IN THE FACE OF THE FINDINGS OF THE INVESTIGATIONS CONDUCTED BY SEBI WHICH CAST A DOUBT ON THE TRANSACTIONS CARRIED OUT IN THE PENNY STOCK SHARES SUSPENSION O F BROKER CONCERNED ETC. ACCORDINGLY ASSESSING OFFICER HELD THAT THE STATED SHARE TRANSACTIONS WERE SHAM AND THE LONG TERM CAPITAL GAIN REFLECTED IN TH E RETURN OF INCOME WAS BOGUS. THEREFORE THE ENTIRE SALE CONSIDERATION OF RS.1 20 05 996/- CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE WAS TREATED AS INC OME FROM UNDISCLOSED SOURCES. 47. BEFORE CIT(A) ASSESSEE ASSAILED THE ORDER OF T HE ASSESSING OFFICER IN LAW AND ON FACTS BY MAKING DETAILED SUBMISSIONS W HICH HAVE BEEN REPRODUCED IN THE IMPUGNED ORDER. THE ASSESSEE INTER-ALIA CONTENDED THAT THE ACQUISITION OF SHARES STOOD PROVED BY THE FACT :- T HAT (I) THE SHARES WERE HELD IN DEMAT ACCOUNT BEFORE SALES; (II) THE DEMAT ACCOUNT WAS CONFIRMED BY THE DEPOSITORY I.E. BANK OF RAJASTHAN; (III) THE SHARE S WERE DULY REFLECTED IN THE BALANCE SHEETS AS ON 31.03.2004 & 31.03.2005 WHICH WERE ANNEXED TO THE RESPECTIVE RETURNS OF INCOME FILED WITH THE DEPARTM ENT; AND (IV) THE SHARES WERE SOLD AND SALE PROCEEDS RECEIVED THROUGH STOCK EXCHANGE BY WAY OF NORMAL BANKING CHANNELS. THE CIT(A) ACCEPTED THE PO SITION THAT ASSESSEE ACQUIRED THE SHARES PRIOR TO ITS SALES BUT DID NOT ACCEPT THE POSITION THAT ASSESSEE PURCHASED THE SHARES ON 07.04.2003 AS CLA IMED BY THE ASSESSEE. THE CIT(A) PROCEEDED ON THE BASIS THAT ASSESSEE COU LD BE SAID TO BE IN POSSESSION OF SHARES FROM 01.11.2004 ONWARDS THE D ATE WHEN ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 RE FLECTING THE SHARE A.Y. 2007-08 INVESTMENT IN THE ANNEXED BALANCE SHEET AS ON 31.03 .2004. IN THE FINAL ANALYSIS CIT(A) CONCLUDED THE FOLLOWING : - (I) THAT THE SALE PROCEEDS OF RS.1 20 05 996/- CRED ITED IN THE BANK ACCOUNT OF THE ASSESSEE WAS ON ACCOUNT OF SALE OF SHARES OF FTEL; (II) THAT THE PROCEEDS WERE TO BE ASSESSED AS CAPIT AL GAINS; (III) THAT PURCHASE OF SHARES CLAIMED ON 07.04.2003 WAS NOT PROVED BUT ASSESSEE WAS HELD TO BE IN POSSESSION OF SHARES FROM 01.11.2004 ONWARDS; AND (IV) THAT THE GAIN WAS TO BE ASSESSED AS SHORT TERM CAPITAL GAIN SINCE THE PERIOD OF HOLDING PRIOR TO SALES WAS LESS THAN 12 MONTHS RECKONED FROM 01.11.2004. 48. IN THE ABOVE BACKGROUND THE RIVAL COUNSELS HAV E MADE THEIR SUBMISSIONS. THE LEARNED DEPARTMENTAL REPRESENTATIV E HAS PRIMARILY REITERATED THE POINTS RAISED BY THE ASSESSING OFFIC ER IN THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE WHICH HAVE B EEN NOTED BY US IN PARAS 44 & 46 ABOVE AND ARE NOT BEING REPEATED FOR THE SA KE OF BREVITY. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS EMPHASIZED THAT THE FACTS AND CIRCUMSTANCES BROUGHT OUT BY THE ASSESSING OFFICER SHOWED THAT THE SHARE TRANSACTIONS WERE NOT BEYOND DOUBT. ACCORDING TO HE R THE STATEMENT GIVEN BY THE BROKER BEFORE THE INCOME-TAX AUTHORITIES AT MUM BAI AND ALSO THE RESULT OF ENQUIRIES CONDUCTED BY SEBI SHOWED THE TRANSACTIONS OF THE PURCHASE AND SALE OF SHARES OF FTEL WERE IN THE NATURE OF ACCOMM ODATION ENTRIES AND NO REAL TRANSACTIONS TOOK PLACE. THE LEARNED DEPARTMEN TAL REPRESENTATIVE ALSO POINTED OUT THAT THE ASSESSEE DID NOT PRODUCE THE B ROKER DURING THE ASSESSMENT PROCEEDINGS BUT MERELY RELIED UPON THE C ONTRACT NOTES FOR PURCHASE OF SHARES AND ALSO THE CONFIRMATION FROM T HE BROKER FROM WHOM THE SHARES OF PURCHASE. ACCORDING TO HER THE STATEMENT OF THE BROKER HAD PUT A QUESTION MARK ON THE GENUINENESS OF THE SHARE PURCH ASES AND THEREFORE A.Y. 2007-08 CIT(A) ERRED IN ACCEPTING THE PLEA THAT THE TRANSAC TION WAS TO BE ASSESSED AS CAPITAL GAINS. IN SUM AND SUBSTANCE THE LEARNED DE PARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 49. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE STAND OF THE ASSESSEE BY REFERRING TO THE DOCUMENTS VIZ. CONTRACT NOTES FOR PURCHASE OF SHARES; PHOTOCOPIES OF PHYSICAL SHARES DULY TRANSFERRED IN THE NAME OF THE ASSESSEE; CERTIFICATE FROM BANK FOR DEM ATERIALIZATION OF SHARES; CONFIRMATION FROM BROKER; CONTRACT NOTES FOR SALE O F SHARES AND TRADE CONFIRMATION FROM BSE FOR SALE OF SHARES ETC.. LEA RNED COUNSEL ALSO POINTED OUT THAT THE PURCHASE OF SHARES WAS DULY REFLECTED IN THE BALANCE-SHEETS FOR THE EARLIER ASSESSMENT YEARS OF 2004-05 AND 2005-06 WHICH WERE FILED ALONG WITH THE RESPECTIVE RETURNS OF INCOME. WITH REGARD TO THE NON-PRODUCTION OF THE CONCERNED BROKER THE LEARNED COUNSEL POINTED OUT T HAT IT WAS THE ASSESSING OFFICER WHO RELIED ON STATEMENT MADE BY AN EMPLOYEE OF THE BROKER BEFORE AUTHORITIES AT MUMBAI AND THEREFORE THE ASSESSEE H AD REQUESTED THE ASSESSING OFFICER TO ISSUE SUMMONS FOR HIS CROSS-EX AMINATION. THE AFORESAID REQUEST NOT GRANTED BY THE ASSESSING OFFICER AND IN SO FAR AS THE ASSESSEES STAND WAS CONCERNED IT WAS DULY SUPPORTED BY CONFI RMATION FROM THE BROKER CONFIRMING THE PURCHASE OF 1 50 000 SHARES ON BEHAL F OF THE ASSESSEE AND SUCH CONFIRMATION LETTER DATED 08.06.2006 WAS DULY FILED BEFORE THE ASSESSING OFFICER. THE LEARNED COUNSEL ALSO SUBMITTED THAT TH E CIT(A) MADE NOT MISTAKE IN ACCEPTING THE POSITION THAT THE INCOME RESULTING FROM SALE OF FTEL SHARES WAS ASSESSABLE AS CAPITAL GAIN BUT SUBMITTED THAT THE CIT(A) OUGHT TO HAVE HELD THAT THE SAME WAS LIABLE TO BE ASSESSED AS LO NG TERM CAPITAL GAIN. IN THE COURSE OF THE HEARING LEARNED COUNSEL ALSO REFERRE D TO THE PAPER BOOK WHEREIN IS PLACED COPIES OF CORRESPONDENCE AND THE MATERIAL RELIED UPON BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES IN SUPPOR T OF THE CASE OF THE ASSESSEE. A.Y. 2007-08 50. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN THIS CASE ASSESSEE PURCHASED 1 50 000 SHARES OF FTEL ON 07.04 .2003 AND CLAIMED TO HAVE SOLD THEM DURING THE PERIOD JUNE TO SEPTEMBER 2005. THE ASSESSEE OFFERED LONG TERM CAPITAL GAIN ON SALE OF SHARES DU RING THE ASSESSMENT YEAR 2006-07 WHICH HAS NOT BEEN ACCEPTED BY THE ASSESSI NG OFFICER. AS PER THE ASSESSING OFFICER THE ENTIRE TRANSACTION WAS SHAM AND THE SALE PROCEEDS OF RS.1 20 05 996/- WAS TO BE ASSESSED AS INCOME FROM THE UNDISCLOSED SOURCES. THE CIT(A) HAS ACCEPTED THE NATURE OF SALE PROCEEDS AS CAPITAL GAINS ALBEIT SHORT TERM CAPITAL GAIN AND NOT LONG TERM CAPITAL GAIN AS CONTENDED BY THE ASSESSEE. 51. FACTUALLY SPEAKING IN SO FAR AS THE RECEIPT OF SALE PROCEEDS OF RS.1 20 05 996/- IS CONCERNED THERE IS ENOUGH MATE RIAL TO SAY THAT THE SUCH PROCEEDS HAVE BEEN RECEIVED ON ACCOUNT SALE OF 1 50 000 SHARES OF FTEL. THE SALE HAS BEEN EFFECTED THROUGH A BROKER AND THE RELEVANT CONTRACT NOTES ISSUED FOR SALE MADE ON BEHALF OF THE ASSESSEE HAVE ALSO BEEN PLACED IN THE PAPER BOOK AT PAGES 104 TO 169. FURTHER THE BOMBAY STOCK EXCHANGE LTD. HAS VIDE LETTER DATED 24.06.2008 CONFIRMED THE DET AIL OF THE TRADES EXECUTED BY THE BROKER ON BEHALF OF THE ASSESSEE THROUGH THE STOCK EXCHANGE AND SUCH DOCUMENTS HAVE BEEN PLACED AT PAGES 170 TO 171 OF T HE PAPER BOOK. THE SALE OF SHARES IS FURTHER FORTIFIED BY THE DEMAT AC COUNT MAINTAINED WITH BANK OF RAJASTHAN LTD. A COPY OF RELEVANT COMMUNICATION FROM THE BANK OF RAJASTHAN LTD. IS ALSO PLACED AT PAGES 101 TO 103 O F THE PAPER BOOK. THE COMMUNICATION ISSUED BY THE BANK OF RAJASTHAN LTD. INDICATES THE DISTINCTIVE NUMBER OF SHARES OF FTEL SOLD BY THE ASSESSEE AND T HE SAME CORRESPONDS TO SHARES CLAIMED TO HAVE BEEN PURCHASED BY THE ASSESS EE ON AN EARLIER DATE. THEREFORE ON THE BASIS OF THE AFORESAID MATERIAL TO WHICH THERE IS NO DISPUTE THE FINDING OF THE CIT(A) THAT THE SALE PROCEEDS OF RS.1 20 05 996/- CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE ARE OUT OF SALE OF SHARES OF FTEL AND THEREFORE THE TRANSACTIONS ARE ASSESSABLE UNDER TH E HEAD CAPITAL GAINS IS A.Y. 2007-08 LIABLE TO BE AFFIRMED. THE AFORESAID STAND OF THE C IT(A) IN OUR VIEW IS DULY SUPPORTED BY THE RELEVANT MATERIAL AND EVIDENCE ON RECORD AND THERE IS NOTHING TO CONTROVERT SUCH MATERIAL. ACCORDINGLY T HE FINDING OF THE CIT(A) THAT THE SALE PROCEEDS OF RS.1 20 05 996/- ARE ON ACCOUN T OF SALE OF SHARES OF FTEL AND THUS LIABLE TO BE ASSESSED AS CAPITAL GA INS IS HEREBY AFFIRMED. 52. THE AFORESAID LEAVES US WITH THE QUESTION AS TO WHETHER THE CAPITAL GAIN IS TO BE ASSESSED AS LONG TERM CAPITAL GAIN OR SHOR T TERM CAPITAL GAIN WHICH DEPENDS ON THE PERIOD FOR WHICH ASSESSEE HELD THE S HARES PRIOR TO ITS SALE DURING JUNE TO SEPTEMBER 2005. NOTABLY THE CASE O F THE ASSESSING OFFICER WAS THAT THE ASSESSEE COULD NOT PROVE THE PURCHASE OF SHARES ON 07.04.2003. THE CIT(A) HAS CONCURRED WITH THE ASSESSING OFFICER ON THIS ASPECT AS ACCORDING TO HIM THE PURCHASE OF SHARES CLAIMED TO HAVE BEEN MADE ON 07.04.2003 IS NOT PROVED BY THE ASSESSEE. THE CIT(A ) HOWEVER HAS ACCEPTED THE POSITION THAT ASSESSEE INDEED ACQUIRED THE SHARES OF FTEL BECAUSE THE FACTUM OF SALE OF SUCH SHARES BY THE AS SESSES HAS BEEN ACCEPTED BY HIM. IN OUR VIEW ONCE IT IS ACCEPTED T HAT ASSESSEE HAD INDEED SOLD 1 50 000 SHARES OF FTEL IT IS A NATURAL COROL LARY TO INFER THAT ASSESSEE POSSESSED SUCH SHARES BEFORE ITS SALE. THE PERIOD O F SUCH HOLDING OF SHARES PRIOR TO ITS SALE BECOMES IMPORTANT TO JUDGE WHETHE R THE SALE OF SHARES IS TO BE ASSESSED AS LONG TERM CAPITAL GAIN OR SHORT TERM CA PITAL GAIN. 53. IN THIS BACKGROUND THE CIT(A) FOUND THAT THERE WAS INDEPENDENT EVIDENCE TO ESTABLISH THE DATE FROM WHICH ASSESSEE CAN BE SAID TO HAVE BEEN HOLDING THE SHARES INASMUCH AS THE DATE OF PURCHASE CANVASSED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY HIM. THE CIT(A ) NOTICED THAT ASSESSEE HAD DECLARED THE HOLDING OF SHARES IN HIS RETURNS F ILED FOR ASSESSMENT YEARS 2004-05 & 2005-06 ON 01.11.2004 & 30.10.2005 RESPE CTIVELY. ACCORDING TO THE CIT(A) THE AFORESAID DEMONSTRATED THAT INVESTM ENT IN SHARES OF FTEL WAS DISCLOSED BY THE ASSESSEE AND ON THAT BASIS HE INFE RRED THAT ON THE DATE OF A.Y. 2007-08 FILING OF THE RETURN FOR ASSESSMENT YEAR 2004-05 I. E. ON 01.11.2004 ASSESSEE CAN BE SAID TO BE IN POSSESSION OF SUCH SHARES WHIC H WERE THE SUBJECT MATTER OF SALE DURING JUNE TO SEPTEMBER 2005. THE CIT(A) CALCULATED THE PERIOD OF HOLDING OF SHARES FROM 01.11.2004 AND AS IT CAME TO LESS THAN 12 MONTHS HE TREATED THE RESULTANT CAPITAL GAIN AS SHORT TERM CAPITAL GAIN. 54. BEFORE US PLEA OF THE ASSESSEE IS THAT THE PUR CHASE OF SHARES ON 07.04.2003 IS GENUINE AND THUS THE PERIOD OF HOLDIN G IS IN EXCESS OF 12 MONTHS THUS THE GAIN IS A LONG TERM CAPITAL GAIN. EVEN IF WE GO WITH THE STAND OF THE ASSESSING OFFICER AS WELL AS OF THE CIT(A) T HAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE/PROVE THE PURCHASE OF SHA RES AS ON 07.04.2003 YET IN OUR CONSIDERED OPINION THE DETERMINATION OF THE CAPITAL GAIN AS A SHORT TERM CAPITAL GAIN BY THE CIT(A) IS NOT JUSTIFIED AS OUR FOLLOWING DISCUSSION WOULD SHOW. 55. THE CIT(A) HAS CONSIDERED THE DATE OF 01.11.200 4 FOR CALCULATING THE PERIOD OF HOLDING OF SHARES BY THE ASSESSEE BEING THE DATE WHEN ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2004 -05 SHOWING THE IMPUGNED INVESTMENT IN SHARES. AS PER DISCUSSION IN PARA 7.3 .3 OF HIS ORDER THE CIT(A) HAS JUSTIFIED HIS ACTION AS BEING BASED ON ..INDEPENDENT EVIDENCES OF CREDIBLE NATURE AVAILABLE.. BEING RETURN OF INCOME FOR ASSESSMENT YEARS 2004-05 AND 2005-06 FILED ON 01.11.2004 AND 31.10.2 005 RESPECTIVELY. ACCORDINGLY AS PER THE CIT(A) THE INVESTMENT WAS SHOWN RECORDED IN THE BALANCE SHEET FILED ON 01.11.2004 FOR ASSESSMENT YE AR 2004-05 AND THIS HAS REMAINED UNDISPUTED THEN THE HOLDING PERIOD FROM T HIS DATE UPTO THE DATES OF SALES MADE IN JUNE/ JULY 2005 CAN BE HELD TO BE C ORRECT. IN THIS VIEW OF THE MATTER THE TOTAL PERIOD OF HOLDING WHICH CAN BE IN FERRED FROM THE EVIDENCES AVAILABLE ON RECORD IS FROM NOVEMBER 2004 TO JULY 2005. A.Y. 2007-08 56. IN OUR VIEW THE CIT(A) WAS JUSTIFIED IN OPININ G THAT THERE OUGHT TO BE INDEPENDENT AND CREDIBLE EVIDENCE TO DETERMINE THE PERIOD FOR WHICH APPELLANT WAS HOLDING THE SHARES OF FTEL PRIOR TO ITS SALE. A CCORDING TO HIM SUCH INDEPENDENT AND CREDIBLE EVIDENCE IS THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2004-05 WHICH SHOWED INVESTMENT IN SHARES OF FTEL. THE MOOT QUESTION IS AS TO WHETHER THERE WAS ANY OTHER INDEPENDENT AND CREDIBLE EVIDENCE TO DETERMINE THE PERIOD OF HOLDING OF SHAR ES OF FTEL PRIOR TO ITS SALE. BEFORE WE PROCEED FURTHER WE MAY REFER TO THE FOLL OWING EXTRACT OF THE ORDER OF THE CIT(A) IN PARA 7.3.1 WHEREIN HE HAS TABULATED THE VARIOUS EVIDENCES AND MATERIAL SUBMITTED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES IN SUPPORT OF THE IMPUGNED TRANSACTIONS :- (I) LETTER DATED 08.06.2006 OF T.H. VAKIL IN THE N AME OF APPELLANT FOR CONFIRMATION OF PURCHASE OF 150000 SHARES OF FTEL V IDE BILL NO. B/008/0095 DATED 07.04.2003 AND PHYSICAL DELIVERY O F SHARES IN RESPONSE TO APPELLANTS LETTER DATED 12.05.2006 (TH E SHARES AT THE TIME OF PURCHASE WERE OF THE FACE VALUE OF RS.10/-). (II) COPY OF BILL OF PURCHASE OF T.H. VAKIL SHARES AND SECURITIES PVT. LTD. NO. B/008/0095 DATED 07.04.2003 FOR PURCHASE OF 150 000 SHARES OF FTEL FOR RS.127502.55 (III) LEDGER OF APPELLANT IN THE BOOKS OF T.H. VAKI L FOR THE F.Y. 2003-04 SHOWING CREDIT ENTRY OF RS.124875.07 FOR BILL NO. B /005/0022 AND CASH RECEIPT OF RS.2627.48 AND DEBIT ENTRY OF RS.127502. 55 FOR BILL NO. B/008/0095 WITH OPENING AND CLOSING BALANCE BEING NIL. (IV) LETTER DATED 11.02.2004 OF FTEL TO APPELLANT W ITH DETAIL OF CERTIFICATE NUMBERS DISTINCTIVE NUMBERS AND NUMBER OF SHARES S AYING THESE 1.5 LAKH SHARES HAVE BEEN TRANSFERRED IN YOUR NAME AFTE R RECEIPT OF SHARES AND TRANSFER DEEDS. (V) LETTER DATED 21.03.2005 OF FAST TRACK WRITTEN T O APPELLANT SAYING SPLITTING OF SHARES AND ISSUE OF JUMBO CERTIFICATE NO.92711 TO 92719. (VI) COPIES OF JUMBO SHARES AFTER SPLIT ISSUED IN T HE NAMES OF APPELLANT OF RS.15 LAKHS FOR CERTIFICATE NOS. 92711 TO 92719. (VII) CERTIFICATE DATED 27.03.2008 ISSUED BY BANK O F RAJASTHAN TO APPELLANT THAT AFORESAID SHARE CERTIFICATES OF RS.15 LAKHS SH ARES WERE DE- MATERIALIZED AND CREDITED IN DEMAT ACCOUNT NO.13017 60000225460 OF THE APPELLANT. (VIII) COPY OF APPLICATION BY APPELLANT DATED 05.04 .2005 FOR DEMATERIALIZATION TO BANK OF RAJASTHAN BY APPELLANT . (IX) COPY OF DEMAT STATEMENT SHOWING RECEIPT OF DEM AT 15 LAKH SHARES IN APPELLANTS DEMAT ACCOUNT NO.1301760000225460/- OF BANK OF RAJASTHAN ON 04.05.2005 AND ITS TRANSFER OUT ON 21 .06.2005. (X) COPIES OF BILLS OF SALES CONFIRMATION OF VRAJ FINANCE PVT. LTD. BROKER PUNE FOR SALE OF SHARES OF FTEL ON DIFFERENT DATES IN JUNE 2005 TO JULY 2005. A.Y. 2007-08 (XI) CERTIFICATE DATED 24.06.2008 FROM BSE FOR TRAD E ISSUED TO APPELLANT OF CONFIRMATION OF TRADE NO. 160 161 AND 129 OF 600 400 AND 9200 SHARES SOLD. (XII) COPIES OF RETURN OF INCOME AND BALANCE SHEET ETC. OF A.Y. 2004-05 FILED ON 1.11.2004 VIDE MACHINE RECEIPT NO. 0563007083 WI TH ITO WARD 5 (3) PUNE AND OF A.Y. 2005-06 FILED ON 30.10.2005 V IDE MACHINE NO. 0563007393 WITH ITO WARD 5 (3) PUNE WITH STATEMEN T OF ACCOUNT TDS CERTIFICATE COMPUTATION OF INCOME ETC. CLAIMIN G THEREBY THAT THESE INVESTMENTS WERE REFLECTED THEREIN. 57. FROM THE AFORESAID IT STANDS OUT THAT ASSESSEE FURNISHED A COMMUNICATION FROM THE INVESTEE COMPANY (I.E. FTEL) CONFIRMING THE TRANSFER OF SHARES IN THE NAME OF THE ASSESSEE AND ALSO THE RELEVANT SHARES CERTIFICATES WHICH SHOWED THE SHARES DULY REGISTERED IN THE NAME OF THE ASSESSEE AS PER THE RECORDS OF THE INVESTEE COMPANY. A COPY OF SUCH COMMUNICATION DATED 11.02.2004 ALONG WITH THE COPIES OF THE PHYSICAL SH ARES CERTIFICATES STANDING IN THE NAME OF THE ASSESSEE HAVE ALSO BEEN PLACED AT P AGES 89 TO 100 OF THE PAPER BOOK. THE COMMUNICATION OF THE INVESTEE COMPA NY IS DATED 11.02.2004. THE AFORESAID MATERIAL WAS BEFORE THE A SSESSING OFFICER AS WELL AS THE BEFORE THE CIT(A). THE SAID COMMUNICATION OF THE INVESTEE COMPANY HAS NEITHER BEEN REPUDIATED AND NOR SHOWN TO BE FAL SE BUT THE SAME HAS BEEN MERELY DISBELIEVED BY THE AUTHORITIES. ON THE BASIS OF THE AFORESAID COMMUNICATION OF THE INVESTEE COMPANY IT CAN BE IN FERRED THAT ASSESSEE WAS HOLDING THE SHARES OF THE INVESTEE COMPANY I.E. FTE L FROM A DATE PRIOR TO 11.02.2004. BE THAT AS IT MAY EVEN IF ONE IS TO CA LCULATE THE PERIOD OF HOLDING FROM THE DATE OF THIS COMMUNICATION I.E. 11.02.2004 AND UPTO THE PERIOD OF SALE OF SHARES IN JUNE SEPTEMBER 2005 IT EXCEED S 12 MONTHS. THEREFORE THE CAPITAL GAIN IS LIABLE TO BE TREATED AS A LONG TERM CAPITAL GAIN AND NOT SHORT TERM CAPITAL GAIN AS DEDUCED BY THE CIT(A). IN-FACT COMMUNICATION DATED 11.02.2004 OF THE INVESTEE COMPANY EVIDENCING TRANS FER OF SHARES IN THE NAME OF THE ASSESSEE SUPPORTS THE BALANCE-SHEET AS ON 31 .03.2004 ANNEXED BY THE ASSESSEE WITH HIS RETURN OF INCOME FILED FOR ASSESS MENT YEAR 2004-05 WHEREIN THE INVESTMENT IN THE SHARES OF FTEL HAS BEEN DEPIC TED. THUS THE EVIDENCE IN THE SHAPE OF THE LETTER OF INVESTEE COMPANY FTE L DATED 11.02.2004 IS AN A.Y. 2007-08 EVIDENCE WHICH HAS BEEN DISREGARDED BY THE REVENUE WITHOUT ANY BASIS THE SAME OUGHT TO HAVE BEEN CONSIDERED BY THE CIT(A) FO R DETERMINATION OF PERIOD OF FTEL SHARES BY THE ASSESSEE PRIOR TO ITS SALE. T HUS CONSIDERED IN THE ABOVE LIGHT THE CAPITAL GAIN IS LIABLE TO BE ASSES SED AS LONG TERM CAPITAL GAIN EVEN IF FOR ARGUMENT SAKE IT HAS TO BE HELD THAT AS SESSEE HAS FAILED TO PROVE THE PURCHASE OF SALES AS ON 07.04.2003. WE HOLD SO AND ACCORDINGLY ASSESSEE SUCCEEDS ON THIS ASPECT. AS A RESULT OF TH E ABOVE ASSESSEE IS ELIGIBLE FOR CLAIM OF EXEMPTION UNDER SECTION 10(38 ) OF THE ACT WITH RESPECT TO THE LONG TERM CAPITAL GAIN. 58. IN VIEW OF THE ABOVE ANOTHER ASPECT OF THE DIS PUTE RELATING TO THE ACQUISITION OF SHARES W.E.F. 07.04.2003 AS CLAIMED BY THE ASSESSEE IS RENDERED ACADEMIC AND IS NOT BEING ADJUDICATED AND IS KEPT OPEN. 59. IN VIEW OF THE AFORESAID DISCUSSION WE CONCLUDE BY HOLDING THAT THE GAIN ON THE SALE OF SHARES IS TO BE ASSESSED AS CAPITAL GAINS AS HELD BY THE CIT(A) ALBEIT AS A LONG TERM CAPITAL GAIN AND NOT AS A SHO RT TERM CAPITAL GAIN. THEREFORE WE HEREBY UPHOLD THE PLEA OF THE ASSESSE E AND DISMISS THAT OF THE REVENUE ON THIS POINT. 60. ANOTHER ASPECT RAISED IN THE APPEAL OF THE REVE NUE IS AGAINST THE DECISION OF THE CIT(A) IN DELETING THE ADDITION OF RS.7 20 359/- WHICH WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT AS SESSEE WOULD HAVE INCURRED CERTAIN COMMISSION EXPENDITURE FOR ARRANGI NG THE STATED BOGUS LONG TERM CAPITAL GAIN. THE ADDITION WAS DELETED BY THE CIT(A) CONSEQUENT TO HIS FINDING THAT THE RECEIPT OF SALE PROCEEDS OF RS.1 2 0 05 996/- IS LIABLE TO BE ASSESSED AS CAPITAL GAINS. SINCE THE AFORESAID ACTI ON OF THE CIT(A) HAS BEEN UPHELD BY US THE CONSEQUENT DECISION OF THE CIT(A) IN DELETING THE ADDITION OF RS.7 20 359/- IS ALSO HEREBY AFFIRMED. A.Y. 2007-08 61. IN THE RESULT WHEREAS THE APPEAL OF THE ASSESS EE IN ITA NO.520/PN/2012 IS ALLOWED THAT OF THE REVENUE I N ITA NO.553/PN/2012 PERTAINING TO THE ASSESSMENT YEAR 2006-07 IS HEREBY DISMISSED. 62. NOW WE MAY TAKE-UP THE CROSS-APPEALS IN ITA NO . 523 & 548/PN/2012 IN THE CASE OF SHRI NILESH BHARAT SHAH PERTAINING T O THE ASSESSMENT YEAR 2005-06 WHICH ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I PUNE DATED 15.09.2011 WHICH IN TU RN HAVE ARISEN FROM AN ASSESSMENT ORDER DATED 31.12.2009 PASSED BY THE ASS ESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. 63. IN THE AFORESAID CROSS-APPEALS PREFERRED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY A COMMON ISSUE INVOLVED RELAT ES TO THE LONG TERM CAPITAL GAIN OF RS.22 22 692/- DECLARED BY THE ASSE SSEE AND CLAIMED EXEMPT UNDER SECTION 10(38) OF THE ACT. 64. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES AND THE RESPECTIVE DISPUTES IN THESE APPEALS ARE IDENTICAL TO THOSE CONSIDERED IN ITA NO.520/PN/2012 AND ITA NO. 553/PN/2012 IN THE CASE OF BHARAT KESHAVLAL SHAH. ACCORDINGLY OUR DEC ISION IN ITA NO. 520/PN/2012 AND ITA NO. 553/PN/2012 APPLIES MUTATIS-MUTANDIS IN THOSE APPEALS ALSO. 65. THE GROUND OF APPEAL NO. 2 IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO AN ADDITION OF RS.1 29 783/- MADE BY THE INCOME-TAX AUTHORITIES ON ACCOUNT OF ALLEGED EXPENDITURE IN CONSTRUCTION OF R ESIDENTIAL BUNGALOW WHICH IS IDENTICAL TO THAT CONSIDERED FOR ASSESSMENT YEAR 2004-05 IN THE ASSESSEES OWN CASE VIDE ITA NO.522/PN/2012 IN THE EARLIER PAR AGRAPHS. THEREFORE FOLLOWING THE AFORESAID PRECEDENT GROUND OF APPEAL NO.1 IS ALSO ALLOWED. A.Y. 2007-08 66. IN THE RESULT WHEREAS THE APPEAL OF THE ASSESS EE IN ITA NO. 523/PN/2012 IS ALLOWED THAT OF THE REVENUE IN ITA N O. 548/PN/2012 IS DISMISSED. 67. NOW WE MAY TAKE-UP THE CROSS-APPEALS IN ITA NO . 526 & 551/PN/2012 IN THE CASE OF SHRI KALPESH BHARAT SHAH PERTAINING TO THE ASSESSMENT YEAR 2005-06 WHICH ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I PUNE DATED 15.09.2011 WHICH IN TU RN HAVE ARISEN FROM AN ASSESSMENT ORDER DATED 31.12.2009 PASSED BY THE ASS ESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. 68. IN THE AFORESAID CROSS-APPEALS PREFERRED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY A COMMON ISSUE INVOLVED RELAT ES TO THE LONG TERM CAPITAL GAIN OF RS.22 30 945/- DECLARED BY THE ASSE SSEE AND CLAIMED EXEMPT UNDER SECTION 10(38) OF THE ACT. 69. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES AND THE RESPECTIVE DISPUTES IN THESE APPEALS ARE IDENTICAL TO THOSE CONSIDERED IN ITA NO.520/PN/2012 AND ITA NO. 553/PN/2012 IN THE CASE OF BHARAT KESHAVLAL SHAH. ACCORDINGLY OUR DEC ISION IN ITA NO. 520/PN/2012 AND ITA NO. 553/PN/2012 APPLIES MUTATIS-MUTANDIS IN THOSE APPEALS ALSO. 70. THE GROUND OF APPEAL NO. 2 IN THIS APPEAL IS WI TH REGARD TO AN ADDITION OF RS.1 98 737/- MADE BY THE INCOME-TAX AUTHORITIES ON ACCOUNT OF ALLEGED EXPENDITURE IN CONSTRUCTION OF RESIDENTIAL BUNGALOW WHICH IS IDENTICAL TO THAT CONSIDERED FOR ASSESSMENT YEAR 2006-07 IN THE ASSE SSEES OWN CASE VIDE ITA NO.527/PN/2012 IN THE EARLIER PARAGRAPHS. THERE FORE FOLLOWING THE AFORESAID PRECEDENT GROUND OF APPEAL NO.1 IS ALSO ALLOWED. A.Y. 2007-08 71. IN THE RESULT WHEREAS THE APPEAL OF THE ASSESS EE IN ITA NO. 526/PN/2012 IS ALLOWED THAT OF THE REVENUE IN ITA N O.551/PN/2012 IS DISMISSED. 72. NOW WE MAY TAKE-UP THE CROSS-APPEALS IN ITA NO . 530 & 550/PN/2012 IN THE CASE OF SHRI NITIN BHARAT SHAH PERTAINING TO THE ASSESSMENT YEAR 2006-07 WHICH ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I PUNE DATED 15.09.2011 WHICH IN TU RN HAVE ARISEN FROM AN ASSESSMENT ORDER DATED 31.12.2009 PASSED BY THE ASS ESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. 73. IN THE AFORESAID CROSS-APPEALS PREFERRED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY ISSUE INVOLVED IS COMMON RELA TING TO THE LONG TERM CAPITAL GAIN OF RS.17 50 835/- DECLARED BY THE ASSE SSEE AND CLAIMED EXEMPT UNDER SECTION 10(38) OF THE ACT. 74. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES AND THE RESPECTIVE DISPUTES IN THESE APPEALS ARE IDENTICAL TO THOSE CONSIDERED IN ITA NO.520/PN/2012 AND ITA NO. 553/PN/2012 IN THE CASE OF BHARAT KESHAVLAL SHAH. ACCORDINGLY OUR DEC ISION IN ITA NO. 520/PN/2012 AND ITA NO. 553/PN/2012 APPLIES MUTATIS-MUTANDIS IN THOSE APPEALS ALSO. 75. IN THE RESULT WHEREAS THE APPEAL OF THE ASSESS EE IN ITA NO. 530/PN/2012 IS ALLOWED THAT OF THE REVENUE IN I TA NO. 550/PN/2012 IS DISMISSED. 76. NOW WE MAY TAKE-UP THE CROSS-APPEALS IN ITA N O. 531 & 549/PN/2012 IN THE CASE OF SMT. MONIKA NITIN SHAH PERTAINING TO THE ASSESSMENT YEAR 2006-07 WHICH ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME A.Y. 2007-08 TAX (APPEALS)-I PUNE DATED 15.09.2011 WHICH IN TU RN HAVE ARISEN FROM AN ASSESSMENT ORDER DATED 31.12.2009 PASSED BY THE ASS ESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. 77. IN THE AFORESAID CROSS-APPEALS PREFERRED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY ISSUE INVOLVED IS COMMON RELA TING TO THE LONG TERM CAPITAL GAIN OF RS.20 29 684/- DECLARED BY THE ASSE SSEE AND CLAIMED EXEMPT UNDER SECTION 10(38) OF THE ACT. 78. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES AND THE RESPECTIVE DISPUTES IN THESE APPEALS ARE IDENTICAL TO THOSE CONSIDERED IN ITA NO.520/PN/2012 AND ITA NO. 553/PN/2012 IN THE CASE OF BHARAT KESHAVLAL SHAH. ACCORDINGLY OUR DEC ISION IN ITA NO. 520/PN/2012 AND ITA NO. 553/PN/2012 APPLIES MUTATIS-MUTANDIS IN THOSE APPEALS ALSO. 79. IN THE RESULT WHEREAS THE APPEAL OF THE ASSESS EE IN ITA NO. 531/PN/2012 IS ALLOWED THAT OF THE REVENUE IN I TA NO. 549/PN/2012 IS DISMISSED. 80. NOW WE MAY TAKE-UP THE CROSS-APPEALS IN ITA N O. 532 & 547/PN/2012 IN THE CASE OF SMT. VAISHALI KALPESH SHAH PERTAININ G TO THE ASSESSMENT YEAR 2005-06 WHICH ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I PUNE DATED 15.09.2011 WHICH IN TU RN HAVE ARISEN FROM AN ASSESSMENT ORDER DATED 31.12.2009 PASSED BY THE ASS ESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. 81. IN THE AFORESAID CROSS-APPEALS PREFERRED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY ISSUE INVOLVED IS COMMON RELA TING TO THE LONG TERM A.Y. 2007-08 CAPITAL GAIN OF RS.23 38 043/- DECLARED BY THE ASSE SSEE AND CLAIMED EXEMPT UNDER SECTION 10(38) OF THE ACT. 82. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES AND THE RESPECTIVE DISPUTES IN THESE APPEALS ARE IDENTICAL TO THOSE CONSIDERED IN ITA NO.520/PN/2012 AND ITA NO. 553/PN/2012 IN THE CASE OF BHARAT KESHAVLAL SHAH. ACCORDINGLY OUR DEC ISION IN ITA NO. 520/PN/2012 AND ITA NO. 553/PN/2012 APPLIES MUTATIS-MUTANDIS IN THOSE APPEALS ALSO. 83. IN THE RESULT WHEREAS THE APPEAL OF THE ASSESS EE IN ITA NO. 532/PN/2012 IS ALLOWED THAT OF THE REVENUE IN I TA NO.547/PN/2012 IS DISMISSED. 84. NOW WE MAY TAKE-UP THE CROSS-APPEALS IN ITA N O. 533 & 552/PN/2012 IN THE CASE OF SMT. PUSHPA BHARAT SHAH PERTAINING T O THE ASSESSMENT YEAR 2005-06 WHICH ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I PUNE DATED 15.09.2011 WHICH IN TU RN HAVE ARISEN FROM AN ASSESSMENT ORDER DATED 31.12.2009 PASSED BY THE ASS ESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. 85. IN THE AFORESAID CROSS-APPEALS PREFERRED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY ISSUE INVOLVED IS COMMON RELA TING TO THE LONG TERM CAPITAL GAIN OF RS.46 64 190/- DECLARED BY THE ASSE SSEE AND CLAIMED EXEMPT UNDER SECTION 10(38) OF THE ACT. 86. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES AND THE RESPECTIVE DISPUTES IN THESE APPEALS ARE IDENTICAL TO THOSE CONSIDERED IN ITA NO.520/PN/2012 AND ITA NO. 553/PN/2012 IN THE CASE OF BHARAT KESHAVLAL SHAH. ACCORDINGLY OUR DEC ISION IN ITA A.Y. 2007-08 NO. 520/PN/2012 AND ITA NO. 553/PN/2012 APPLIES MUTATIS-MUTANDIS IN THOSE APPEALS ALSO. 87. IN THE RESULT WHEREAS THE APPEAL OF THE ASSESS EE IN ITA NO.533/PN/2012 IS ALLOWED THAT OF THE REVENUE IN IT A NO. 552/PN/2012 IS DISMISSED. 88. RESULTANTLY THE CAPTIONED APPEALS ARE DISPOSED -OFF ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 30 TH JULY 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)I PUNE; 4) THE CIT-I PUNE; 5) THE DR A BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T. PUNE