Shri Vivek Kumar Kathotia, Kolkata v. DCIT, Central Circle - VI, Kolkata, Kolkata

ITSSA 1/KOL/2011 | 2003-2004
Pronouncement Date: 29-07-2011

Appeal Details

RSA Number 123516 RSA 2011
Assessee PAN AFAPK8653C
Bench Kolkata
Appeal Number ITSSA 1/KOL/2011
Duration Of Justice 5 month(s) 25 day(s)
Appellant Shri Vivek Kumar Kathotia, Kolkata
Respondent DCIT, Central Circle - VI, Kolkata, Kolkata
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 29-07-2011
Date Of Final Hearing 25-05-2011
Next Hearing Date 25-05-2011
Assessment Year 2003-2004
Appeal Filed On 03-02-2011
Judgment Text
A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE . . . . . . . . ! ! ! ! /AND ' #!' $% ) [BEFORE HONBLE SHRI G. D. AGRAWAL V.P. & HONBLE SHRI MAHAVIR SINGH JM] ( & ' ( ) !) / I.T(SS).A NOS. 1 TO 4/KOL/2011 #*+ -/ ASSESSMENT YEARS: 2003-04 TO 2006-07 & ( & ' ( ) !) / I.T.(SS)A NOS. 6 & 7/KOL/2011 #*+ -/ ASSESSMENT YEARS: 2007-08 & 2008-09 SHRI VIVEK KUMAR KATHOTIA VS. DEPUTY COMMISSIONE R OF INCOME-TAX (PAN-AFAPK 8653 C) CENTRAL CIRCLE-VI KOLKATA (/0 /APPELLANT ) (12/0/ RESPONDENT ) & ( & ' ( ) !) / I.T.(SS)A NO. 10/KOL/2011 #*+ -/ ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME-TAX VS. SHRI VIVEK KUMAR KATHOTIA CENTRAL CIRCLE-VI KOLKATA (/0 /APPELLANT ) (12/0/ RESPONDENT ) FOR THE ASSESSEE: SHRI S. K. TULSIYAN FOR THE DEPARTMENT: SHRI D. R. SINDHAL $34 / ORDER PER MAHAVIR SINGH JM ( ' #!' ' #!' ' #!' ' #!' $% $% $% $% ) IT(SS)A NOS. 1 TO 3/KOL/2011 AND IT(SS)A NOS. 4&6/K OL/2011 AND IT(SS)A NO.7/KOL/2011 BY ASSESSEE AND IT(SS)A NO.10/KOL/201 1 BY REVENUE ARE ARISING OUT OF THE ORDERS OF CIT(A) CENTRAL-1 KOLKATA IN APPEAL NOS. 107 TO 109 110 & 111 & 112/CC- VI/CIT(A)-C-I/09-10 VIDE DATED 26.11.2010 & 29.11.2 010 & 30.11.2010. ASSESSMENTS WERE FRAMED BY DCIT CC-VI KOLKATA U/S.144/153A OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2003 -04 TO 2008-09 VIDE HIS ORDERS DATED 31.12.2009. 2. IN RESPECT TO IT(SS)A NOS. 1 2 AND 3/KOL/2011 O F ASSESSEES APPEALS FOR ASSESSMENT YEARS 2003-04 TO 2005-06 THE LD. COUNSEL FOR THE A SSESSEE STATED THAT THERE IS NO REVENUE IMPLICATION AND REVENUE IS NOT IN APPEAL AGAINST DE LETION OF ADDITION BY CIT(A). HENCE HE IS 2 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 NOT INTERESTED IN ADJUDICATION OF THESE THREE APPEA LS AND IS NOT PRESSING THE SAME. AS THE LD. COUNSEL FOR THE ASSESSEE ON INSTRUCTIONS OF ASSESS EE HAS NOT PRESSED THESE THREE APPEALS DUE TO NO REVENUE IMPLICATION SAME ARE DISMISSED AS NOT P RESSED. 3. EFFECTIVE INTER-CONNECTED ISSUES IN IT(SS)A NOS. 4 6 AND 7/KOL/2011 FOR ASSESSMENT YEARS 2006-07 TO 2008-09 OF ASSESSEES APPEAL ARE AGAINST ORDERS OF CIT(A) CONFIRMING ACTIONS OF AO ARE AS UNDER: (I) REJECTION OF BOOKS OF ACCOUNT REVISED BALANCE SHEET AND P&L ACCOUNT FOR ASSESSMENT YEARS 2006-07 2007-08 AND 2008-09; (II) REJECTION OF ENTRIES OF SEIZED DOCUMENTS MARK ED AS RM-1 TO RM-4 BY MISINTERPRETING THE PROVISIONS OF SECTION 292C OF THE ACT; (III) CONFIRMING ADDITIONS TO THE EXTENT OF RS.6 9 0 00 000/- AND RS.90 00 000/- IN ASSESSMENT YEARS 2006-07 AND 2007-08 RESPECTIVELY ON ACCOUNT O F UNDISCLOSED INVESTMENT IN PROPERTY AT SECTOR-V SALT LAKE KOLKATA DISREGARDING THE FACT THAT THE SOURCES OF INVESTMENT IS EXPLAINED ON THE BASIS OF ENTRIES MADE IN RM-1 AND RM-2 THE SEIZED DOCUMENTS WHEREBY THE CLAIM MADE BY ASSESSEE REGARDING SALE OF PAINTINGS AT RS.7.25 CR. FOR THIS THE ASSESSEE HAS RAISED FOLLOWING GROUND S IN IT(SS)A NO. 4/KOL/2001 FOR ASSESSMENT YEAR 2006-07. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) ERRED IN DISREGARDING THE NOTING RECORDED IN THE SEIZED DOC UMENTS MARKED AS RM/1 AND RM/2 BY MIS- INTERPRETING THE PROVISIONS OF SECTION 292C OF THE INCOME-TAX ACT 1961 AND THEREBY IN REJECTING THE CLAIM OF THE APPELLANT ABOUT SALE OF PAINTINGS AT RS.7 25 00 000/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN CONFIRMING THE REJECTION OF BOOKS OF ACCOUNTS OF TH E ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF THE ALLEGED U NACCOUNTED PAYMENT TO SR. BAGGA TO THE EXTENT OF RS.6 00 90 000/- FOR THE PURPOSE OF SO-CA LLED UNDISCLOSED INVESTMENT AS RECORDED IN SEIZED DOCUMENT MARKED AS RM/4 WITHOUT CONSIDERIN G THE SOURCE OF THE SAID INVESTMENT AS RECORDED IN THE REVISED BALANCE SHEET FOR F.Y. 2005 -06 FILED BY THE APPELLANT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. 4. IN IT(SS)A NO. 6/KOL/2011 FOR ASSESSMENT YEAR 20 07-08 ASSESSEE HAS RAISED FOLLOWING GROUNDS: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE EA SE THE LEARNED CIT(A) ERRED IN DISREGARDING THE NOTING RECORDED IN THE SEIZED DOCU MENTS MARKED AS RM/1 AND RM/2 BY MIS-INTERPRETING THE PROVISIONS OF SECTION 292C OF THE INCOME-TAX ACT 1961 AND THEREBY IN REJECTING THE REVISED BALANCE SHEETS AND PROFIT & LOSS ACCOUNTS FOR THE EARLIER YEARS FILED DURING THE COURSE OF THE ASSESSMENT PROCEEDIN GS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN CONFIRMING THE REJECTION OF BOOKS OF ACCOUNTS OF TH E ASSESSEE. 3 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN REJECTING THE CLAIM OF THE APPELLANT ABOUT THE SOUR CE OF THE CURRENT INVESTMENT OF RS.90 00 000/- IN PROPERTY AT SALT LAKE FROM SALES OF DIAMONDS GOLD AND PAINTINGS MADE DURING EARLIER YEARS AND DULY RECORDED IN THE ABOVE -MENTIONED SEIZED DOCUMENTS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN NOT ONLY CONFIRMING THE ADDITION OF RS.75 10 000/- MADE BY THE A.O. TOWARDS ALLEGED UNDISCLOSED INVESTMENT IN PROPERTY BUT ALSO IN ENHA NCING THE SAME TO RS.90 00 000/-. 5. IN IT(SS)A NO.7/K/2011 FOR ASSESSMENT YEAR 2008- 09 OF ASSESSEES APPEAL ISSUE RAISED IS REGARDING MAKING FRESH ADDITION OF RS.18.60 CR. AS AGAINST UNDISCLOSED CASH RECEIPT ADDED BY ASSESSING OFFICER AT RS.19 07 35 000/- ON ACCOUNT OF ALLEGED UNDISCLOSED INVESTMENT IN SHARES OF DIFFERENT COMPANIES. THE ASSESSEE HAS RAISED FO LLOWING GROUNDS: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE EA SE THE LEARNED CIT(A) ERRED IN DISREGARDING THE NOTING RECORDED IN THE SEIZED DOCU MENTS MARKED AS RM/1 AND RM/2 BY MIS-INTERPRETING THE PROVISIONS OF SECTION 292C OF THE INCOME-TAX ACT 1961 AND THEREBY IN REJECTING THE REVISED BALANCE SHEETS AND PROFIT & LOSS ACCOUNTS FOR THE EARLIER YEARS FILED DURING THE COURSE OF THE ASSESSMENT PROCEEDIN GS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN CONFIRMING THE REJECTION OF BOOKS OF ACCOUNTS OF T HE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN REJECTING THE CLAIM OF THE APPELLANT ABOUT THE EXEM PTED RECEIPT OF RS.19 07 35 000/- DECLARED ON ACCOUNT OF SALES OF DIAMOND AND GOLD D ULY RECORDED IN THE ABOVE MENTIONED SEIZED DOCUMENTS AND THEREBY IN CONFIRMI NG THE ADDITION OF RS.18 60 00 000/- ON ACCOUNT OF ALLEGED UNDISCLOSED INVESTMENT IN SHARES OF DIFFERENT COMPANIES. THESE BEING COMMON AND INTERCONNECTED ISSUES WE WI LL DEAL WITH BY CONSOLIDATING THE SAME. 6. BRIEF FACTS LEADING TO THE ABOVE ISSUES ARE THAT SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE ACT WAS CARRIED OUT IN FORT GROUP OF CASES ON 2 8.02.2008. THE ASSESSEE DIRECTOR IN FORT PROJECTS PVT. LTD. WAS ALSO SEARCHED WHO IS A RESI DENT OF BALLYGUNGE PARK KOLKATA-19. DURING THE COURSE OF SEARCH ON ASSESSEE GROUP CASH JEWEL LERY SILVER UTENSILS AND VARIOUS DOCUMENTS SEIZED AS RM-1 TO RM-5 WERE FOUND. AS ALLEGED BY A SSESSEE SEIZED DOCUMENTS ANNEXED AS RM-5 WAS FORCIBLY GOT MANUFACTURED BY SEARCH PARTY OF I. T. DEPTT AND ASSESSEE WAS FORCED TO WRITE SEIZED DOCUMENT RM-5 AND MAKE AN EXORBITANT D ISCLOSURE OF RS. 9.02 CRORES ON THE BASIS OF THE SAME IN RESPECT OF ON-MONEY RECEIPTS. ACCOR DING TO ASSESSEE THIS DISCLOSURE WAS MADE TO BUY PEACE AND TO AVOID UNNECESSARY AND PROTRACTE D LITIGATION IN THE MATTER. SUBSEQUENTLY ENTIRE ALLEGED ON MONEY RECEIPTS OF RS.9.02 CR. WAS OFFERED AS UNDISCLOSED INCOME IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICES U/S. 153C OF THE ACT FOR ASSESSMENT YEAR 2008-09 IN THE CASE OF FORT PROJECTS PVT. LTD. AND PAID TAXES THER EON. SIMULTANEOUSLY SURVEY ACTION U/S. 133A 4 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 OF THE ACT WAS ALSO CONDUCTED IN THE OFFICE PREMISE S OF GROUP COMPANIES FROM WHERE BOOKS OF ACCOUNTS/DOCUMENTS WERE IMPOUNDED. IN CONSEQUENT T O SEARCH ACTION NOTICE U/S. 153A WAS ISSUED ON 1.8.2009 AND ASSESSEE FILED HIS RETURN U/ S. 153A ON 28.1.2009 DECLARING YEAR WISE INCOME (FOR THE SAKE OF CLARITY WE WANT TO REPROD UCE THE INCOME ASSESSED BY AO U/S. 153A ALSO) AS UNDER: A.Y. INCOME AS PER RETURN OF INCOME FILED BY THE ASSESSEE U/S L53A TOTAL INCOME ASSESSED BY THE AO U/S 153A INCOME ASSESSED U/S 143(3) 2003-04 378 709 677 910 480210 2004-05 223 576 276 900 225080 2005-06 419 869 470 397 419869 2006-07 373 300 82 830 282 2007-08 719 651 8 417 101 2008-09 79 956 044 210 387 469 82 071 149 303 060 059 SUBSEQUENTLY NOTICES U/S. 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE WERE ISSUED. ASSESSING OFFICER ISSUED SHOW-CAUSE NOTICE TO THE ASSESSEE DA TED 22.12.2009 AND ASSESSEE REPLIED VIDE SUBMISSIONS DATED 28.12.2009. REPLY OF THE ASSESSE E IS REPRODUCED IN THE ASSESSMENT ORDER WHICH IS AGAIN REPRODUCED FROM THE ASSESSMENT ORDE R FOR THE SAKE OF CLARITY OF FACTS AS UNDER: 20) THE DOCUMENTS WERE MAINTAINED BY THE ASSESSEE FOR HIS OWN USE AND THEREFORE THERE WAS NO REASON OR OCCASION TO RECORD TRANSACTIONS IN A FALSE MANNER. 21) THE EXERCISE BOOK IS A BOOKS OF ACCOUNT AND IS BEING DISBELIEVED WITHOUT ANY COGENT REASONS WHEREAS NOTING MADE IN LOOSE SHEETS ARE BE ING TREATED AS CORRECT IN SOME CASE AND INCORRECT IN SOME CASES. 22) RM/1 AND RM/2 ARE ONE AND THE SAME AND RM/2 IS A BOUND EXERCISE NOTEBOOK AND IS THEREFORE TO BE TREATED AS BOOKS OF ACCOUNT. 23) THE SAID DOCUMENTS CONTAIN NOT JUST NOTING IN R ESPECT OF UNACCOUNTED TRANSACTIONS BUT ALSO NOTING IN RESPECT OF TRANSACTIONS DULY DIS CLOSED IN BOOKS OF ACCOUNT OF VARIOUS CONCERNS WHEREIN THE ASSESSEE IS A DIRECTOR. SIMILA RLY A NUMBER OF OTHER NOTING PERTAINING TO CASH WITHDRAWN FROM REGULAR BOOKS OF ACCOUNT OF VARIOUS COMPANIES PAYMENT OF CASH DULY RECORDED IN REGULAR BOOKS OF A CCOUNT OF SAID COMPANIES AND OTHER NOTING DULY RECORDED IN REGULAR BOOKS OF ACCOUNT A ND ALL THESE NOTING ARE DULY IDENTIFIABLE AND VERIFIABLE WITH EVIDENCE AND NOTIN G IN REGULAR BOOKS OF ACCOUNT. THEREFORE NO DOUBT CAN BE RAISED IN RESPECT OF SAI D RECORDINGS AND IT WOULD BE ABSURD TO EVEN CONTEMPLATE THAT OTHER NOTING DULY RECORDED IN THE SEIZED DOCUMENTS ARE NOT CORRECT. THE ALLEGATIONS LEVELED AGAINST ARE CLEARLY A FRAGM ENT OF IMAGINATION WITHOUT ANY COGENT BASIS. 5 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 24) THE ENTRIES NOTED IN THE SEIZED DOCUMENTS WHICH IS DULY IN FORM OF BOOKS OF ACCOUNT AND WHEREIN SOME ENTRIES ARE DULY VERIFIABLE FROM R EGULAR BOOKS BANK STATEMENTS AND OTHER EVIDENCE CANNOT BE DISBELIEVED ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS. 25) IT IS CLEAR FROM PROVISIONS OF SECTION 292C THA T NOTING RECODED IN SEIZED DOCUMENTS ARE TO 26) BE TREATED AS CORRECT UNLESS CONTRARY IS PROVED . THE ONUS LIES ON THE PERSON IN WHOSE OPINION THE RECORDINGS IN THE SEIZED DOCUMENTS ARE NOT CORRECT BUT THE ONUS IS BEING TRIED TO BE SHIFTED TO THE ASSESSEE WHICH IS CONTRARY TO THE PROVISIONS OF SECTION 292C. AS REGARDS RM/5 THE RECORDS OF ON-MONEY RECEIVED P ERTAIN TO FORT PROJECT PVT. LTD. AND THE SAME HAS NOTHING TO DO WITH THE ASSESSEE. 27) THE SEIZED DOCUMENTS RM/5 WAS MANUFACTURED BY T HE DEPTT. AT THE TIME OF SEARCH. SRI KATHOTIA THE ASSESSEE WAS FORCED TO WRITE THE SAI D DOCUMENTS BY THE SEARCH PARTY AND WAS ASKED TO SIGN ON THE DOTTED LINE IN THE STATEME NT U/S 132(4). (SOME DEFECTS HAVE BEEN POINTED OUT CLAIMING THAT THERE WAS NO SALE OF THE FLATS AND THAT THE AREAS DIFFER IN SOME CASES). THE ASSESSEE ACCEPTED TO BUY PEACE AND NOT TO ENTER INTO ANY DISPUTE OR LITIGATION. THEREFORE RELIANCE ON RM/5 IS ARBITRARY AND CONTRA RY TO THE TRUE STATE OF AFFAIRS. 28) THE DEPTT. HAS TRIED TO HARASS THE ASSESSEE FRO M THE DATE OF SEARCH AS WOULD BE EVIDENT FROM THE FACTS STATED AND VARIOUS STATEMENT S RECORDED IN COURSE OF SEARCH BY CONTINUOUSLY ALLEGING THAT NOTING IN RM/5 ARE CORRE CT. THE SAID EFFORT IS BEING CONTINUED BY THE AO. 29) IN VIEW OF THE SUBMISSIONS NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE AND RECORDINGS IN RM/1 AND RM/2 HAVE TO BE TREATED AS C ORRECT AND NO OTHER INTERPRETATION CAN BE ALLEGED TO THE SAID NOTING WITHOUT BRINGING ANY MATERIAL ON RECORD TO SHOW THAT THE RECORDINGS THEREIN ARE NOT CORRECT. IN RESPECT OF RM/5 THE ASSESSEES CONTENTIONS THAT THE DEPTT. FORCED THE ASSESSEE TO WRITE DOWN THE DOCUMENTS ARE NOT REASONABLE SINCE THERE IS NO EVIDENCE. THE ISSUE HAS BEEN RAISED FOR THE FIRST TIME NOW AFTER ABOUT 22 MONTHS FROM THE DATE OF SEARCH. THERE IS ALSO NOTHING TO SHOW THAT THE ASSESSEE WAS ASKED TO SIGN ON THE DOTTED LINES AS ALLEGED. AS REGARDS ON-MONEY THE RECEIPTS HAVE BEEN ADMITTED AND ACCORDINGLY INCLUDED IN THE RETURN BY THE COMPANY M/S FORT PROJECTS P. LTD. IN A.Y.2008-09. AS REGARDS HARASSMENT NOTH ING IS APPARENT FROM THE STATEMENTS OR ANY OTHER FACTS ON RECORD. ANY QUESTION ASKED OR SHOW-C AUSE ISSUED IN SOME MATTERS CANNOT BE SAID TO BE HARASSMENT. HOWEVER THE CLAIM THAT THE RECOR DS OF ON-MONEY RECEIVED PERTAINS TO THE COMPANY AND THAT IT HAS NOTHING TO DO WITH THE ASSE SSEE IS APPARENTLY REASONABLE. 7. THE ASSESSING OFFICER IN VIEW OF DOCUMENTS RM-1 AND RM-2 ASSESSED THE INCOME OF ASSESSEE BY GIVING FOLLOWING FINDING: IT IS APPARENT FROM THE NOTING IN RM/L PAGES-3 TO 14 AS DISCUSSED ABOVE THAT SUCH ACCOUNT HAS BEEN PREPARED JUST BEFORE THE SEARCH A LSO INCORPORATING SOME ACTUAL TRANSACTIONS AS PER BOOKS BELONGING TO THE GROUP PU RPOSELY IN ORDER TO GIVE IT A LOOK OF GENUINENESS KEEPING IN VIEW THAT FOR EARLIER PERIO D AS MENTIONED ABOVE UNDISCLOSED PURCHASES AND SALES AS NOTED WILL BE OUTSIDE THE PU RVIEW OF THE PROVISIONS OF THE ACT FOR ANY ACTION FOR ANY ASSESSMENT FOR THOSE YEARS INVOL VED THAT PAINTINGS WERE NOT CAPITAL ASSETS FOR THE PURPOSE OF ASSESSMENT OF CAPITAL GAI NS DURING THE RELEVANT PERIOD OF SALES SINCE THE RELEVANT AMENDMENT IN THE ACT IS NOT RETR OSPECTIVE THAT PROVISIONS FOR PRESUMPTION AS TO CORRECTNESS OF SEIZED DOCUMENTS A RE THERE ITSELF IN THE ACT IN THE FORM OF 6 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 SECTION 132(4A) AND ALSO SECTION 292C INTRODUCED BY THE FINANCE ACT 2007 WITH RETROSPECTIVE EFFECT FROM 01/10/1975 AND THAT BY N OTING THE PAYMENTS OUT OF SUCH SALES THE UNACCOUNTED FOR INVESTMENTS ETC. IN CASH OUTSID E ACCOUNTS MADE IN LATER YEARS THE SOURCES WILL STAND EXPLAINED AS SUCH AND NO TAX WI LL BE REQUIRED TO BE PAID EXCEPT A SMALL AMOUNT OF TAX ON LTCG AS DISCLOSED BY THE ASS ESSEE. I HAVE EXAMINED AND SEEN THE WHOLE SEIZED DOCUMENTS RM/1 PAGES-3 TO 14 AND ALSO RM/2. THE TRANSACTIONS AS AFORESAID AND NOTED/WRITTEN IN THE DOCUMENTS SINCE 15/04/1993 ON WARDS ARE IN CRORES OF RUPEES ALL IN CASH IN THOSE TIMES LONG BACK. HEAV Y DIAMOND PCS. FAMOUS PAINTINGS ARE NOTED/WRITTEN AS HAVING BEEN PURCHASED FOR CRORES O F RUPEES. THE FIGURES AND TRANSACTIONS REGARDING ALLEGED PURCHASES IN CASH OF GOLD DIAMON D AND PAINTINGS AS NOTED ARE QUITE FANTASTIC AND UNIMAGINABLE IN THE CIRCUMSTANCES OF THE CASE. IT IS ALSO INCREDIBLE THAT THE ASSESSEE MADE SUCH TRANSACTIONS. THE CHART AT PAGE- 4 OF THIS ORDER WHICH IS A GIST OF RM/1 SHOWS THAT ALL SUCH PURCHASES WERE UP TO F.Y. 2000-01 ONLY WHICH PERIOD IS BEYOND THE PURVIEW OF SEARCH AND SEIZURE ASSESSMENTS U/S 1 53A. INTERESTINGLY NO TRANSACTION IS NOTED DURING THE F.YRS.2001-02 TO 2004-05 NO PURCH ASE EXCEPT PAINTING FOR PERSONAL USE OF RS.3.62 LAKH IS REFLECTED DURING THE PERIOD COV ERED BY SECTION 53A OR THE YEAR OF SEARCH. THERE IS NO OPENING CASH BALANCE AS ON THE STARTING DATE I .E. 15/04/1993. IF THE TRANSACTIONS AS PER RM/1 WERE TRUE THERE WOULD HAV E BEEN GOLD OF 2 KGS DIAMOND COSTING RS.25 LAKH AND HUGE CASH IN CRORES OF RUPEE S REMAINING AS ON THE DATE OF SEARCH BUT NO SUCH THINGS OR CASH WERE FOUND. THE ASSESSEE HAS NOT FURNISHED ANY DETAILS ABOUT THE DIAMONDS WHICH WOULD HAVE REMAINED I HAND. BESI DES IT HAS NOT BEEN ESTABLISHED THAT THE SAME MATERIALS ALLEGEDLY PURCHASED EARLIER LONG BACK WERE SOLD LATER IN DIFFERENT YEARS. THE DETAILS AVAILABLE IN ORIGINAL RECORDS BE FORE SEARCH DOES NOT REFLECT ANY SUCH STATUS OF THE ASSESSEE OR ANY SUCH PRACTICE/ACTIVIT IES IN PAINTINGS GOLD AND DIAMOND. FOR EXAMPLE THE ORIGINAL BALANCE SHEET AS ON 31/03/200 2 FILED ALONGWITH THE RETURN U/S 139 FOR THE A.Y. 2002-03 DOES NOT REFLECT ANY PAINTINGS OR ANY PIECE OF DIAMOND. IT ONLY REFLECTS GOLD COINS COSTING RS.1 950/- JEWELLERY C OSTING RS.L 58 687/- AND SILVER UTENSILS COSTING RS.7 020/-. THE ORIGINAL OPENING CAPITAL BA LANCE AS ON 01/04/2001 WAS ONLY RS.34 88 739.29. NO ACCOUNTS OR PAPERS RELATING TO ANY TRANSACTIONS OF SIMILAR NATURE AS NOTED IN THE SEIZED DOCUMENTS CONCERNED HAVE BEEN F OUND ALTHOUGH SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED IN THE RESIDENCE OF THE A SSESSEE AND SURVEY WAS CONDUCTED IN THE OFFICE PREMISES OF THE GROUP COMPANIES. SOURCES OF HUGE CASH REQUIRED FOR PAYMENTS FOR ALLEGED PURCHASES HAVE NOT BEEN EXPLAINED. NO D OCUMENT OR EVIDENCE HAS BEEN FURNISHED /PRODUCED IN THIS RESPECT. NOTHING HAS BE EN FOUND IN COURSE OF SEARCH OR SURVEY REGARDING ANY AMOUNT OF SUCH INCOMES EARNED AT ANY TIME DURING THE RELEVANT PERIOD LONG BACK STARTING FROM 1993 WHICH COULD HAVE SUPPORTED ANY PROBABILITY OF EARNING AND HAVING SO MUCH OF CASH AS WOULD HAVE BEEN REQUIRED FOR THE ALLEGED PURCHASES. IT IS APPARENT THAT THE DOCUMENTS HAVE BEEN MADE UP PURPO SELY TO ACCOUNT FOR/EXPLAIN SUBSEQUENT OUTGOINGS IN THE YEARS COVERED BY SECTIO N 153A OR DURING THE YEAR OF SEARCH. IN THE FACTS AND CIRCUMSTANCES I DOUBT THE CORRECT NESS AND TRUTHFULNESS OF THE RELEVANT NOTING/WRITINGS IN THE AFORESAID DOCUMENTS. IN VIEW OF THE ABOVE OF THE FACTS AND CIRCUMSTANCE S AND IN ABSENCE OF ANY PAPER/DOCUMENT/EVIDENCE PROOF REGARDING THE AUTHEN TICITY OF THE TRANSACTIONS IN GOLD DIAMOND AND PAINTINGS AND IN VIEW OF ASSESSEES FAI LURE WHICH IS APPARENTLY WILLFUL TO EVEN STATE THE DETAILS REGARDING THE TRANSACTIONS W HICH ALLEGEDLY TOOK PLACE FEW DAYS BEFORE THE SEARCH THE AO IS NOT BOUND TO PRESUME T HAT WHATEVER NOTED/WRITTEN REGARDING THOSE TRANSACTIONS ARE TRUE AND CORRECT. OTHERWISE ALSO IF SUCH PRACTICES ARE DONE BY ANY ASSESSEE BY NOTING/WRITING SIMILARLY SUCH TRANSACTI ONS LONG BACK FOR ANY PERIOD FOR WHICH NO ACTION IS POSSIBLE FOR ASSESSMENT FOR COLLECTION OF REVENUE AND ALSO BY NOTING UNACCOUNTED INVESTMENTS ETC. LATER ON THE REVENUE WILL NOT HAVE ANYTHING TO DO TO PROPERLY AND CORRECTLY TAXING SUCH OTHER-WISE UNEXPLAINED IN VESTMENTS MADE ACTUALLY OUT OF UNDISCLOSED INCOME EXCEPT TO WATCH AND ALLOW. THIS WOULD DEFEAT THE WHOLE PURPOSES OF THE ACT AND MAKE IT A FARCE. 7 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 IT IS SEEN FROM THE HAND WRITTEN RM/2 IN INK THAT S AME INK PEN HAS BEEN USED IN DIFFERENT YEARS. HOWEVER A REFERENCE HAS BEEN MADE TO THE EX AMINER OF QUESTIONED DOCUMENTS AND THE REPORT IS AWAITED. IN VIEW OF THE ABOVE AND ALSO IN ABSENCE OF PRODUCT ION OF ANY PAPERS AND DOCUMENTS SUPPORTING SUCH TRANSACTIONS ETC. IT IS HELD THAT T HE SAID TRANSACTIONS IN RESPECT OF GOLD DIAMOND PAINTINGS AS NOTED IN RM/L PAGES-314 AS AL SO WRITTEN IN RM/2 AS ALLEGED/STATED ARE NOT GENUINE AND THAT THE STATEMENTS OF THE ASSE SSEE IN THESE RESPECTS ARE NOT CORRECT & ARE UNRELIABLE THAT THE ASSESSEE HAS NOT SPOKEN TH E TRUTH AND DID NOT COMPLY WITH SUMMONS FOR PERSONAL APPEARANCE FOR RECORDING HIS S TATEMENTS-WILLFULLY BEING AFRAID OF COMING OUT OF TRUTH/ACTUAL/TRUE STATE FAIRS AND AS SUCH IT IS ACCORDINGLY HELD THAT THE ALLEGED AMOUNTS ON ACCOUNT OF SALES OF GOLD DIAMON D & PAINTINGS AS PER SEIZED DOCUMENTS ARE IN REALITY INCOMES OF THE ASSESSEE FROM OTHER UNDISCLOSED SOURCES BUT NOTED/WRITTEN AS SALE CONSIDERATIONS OF GOLD DIAMO ND & PAINTINGS TO WILLFULLY EVADE TAXES AND TO DEFRAUD THE REVENUE AND ALSO TO EXPLAIN OUT THE UNRECORDED CASH PAYMENTS TOWARDS INVESTMENTS VIZ. ON-MONEY PAYMENTS FOR PURCHASE OF LAND AS PER SEIZED DOCUMENTS AND INTRODUCTION OF BOGUS SHARE CAPITAL IN DIFFERENT GR OUP COMPANIES THROUGH ENTRY OPERATOR AND AS ADMITTED BY THE ASSESSEE VIDE THE STATEMENTS RECORDED. AS REGARDS PRESUMPTION U/S 292C OF THE ACT REGARDIN G CONTENTS OF SEIZED DOCUMENTS ETC. AS TRUE THE PRESUMPTION IS REBUTTABLE AND IN VIEW OF THE FACTS AND CIRCUMSTANCES AND REASONS DISCUSSED IN THE EARLIER PARAGRAPHS THE SA ID PRESUMPTION STAND REBUTTED. IN VIEW OF THE ABOVE THE SUBMISSIONS OF THE ASSESS EE REGARDING RM/1 AND RM/2 ETC. ARE HELD NOT REASONABLE AND HENCE REJECTED. INCIDENTALLY A QUESTION MAY ARISE WHY A PART RELAT ING TO RECEIPTS IS DISBELIEVED AND A PART RELATING TO PAYMENT REGARDING OUTGOING AS PER RM/ A ND RM/2 IS BELIEVED. AS REGARDS CASH PAYMENTS OUT OF BOOKS TO S. P. BAGLA THE SAME IS E VIDENCED BY GB/12 AND IT IS APPARENT FROM THE PRINT-OUTS VIDE RM/4 THERE WAS SOME DISPU TE EVEN BEFORE THE COURT AND AS SUCH IT WOULD COME TO LIGHT ANY TIME. THE CASH PAYMENTS FOR BOGUS SHARE CAPITAL RAISING IN GROUP COMPANIES WOULD HAVE COME TO LIGHT ALSO ANYTI ME SINCE CASH WAS DEPOSITED AT ONE STAGE. THE ASSESSEE HAS FILED REVISED BALANCE SHEETS P/L ACCOUNTS ALONG WITH THE RETURNS FILED U/S 153A FOR THE A.YRS. 2002-03 TO 2007-08 THE ASS ESSMENT YEARS RELEVANT TO THE PERIOD OF SIX YEARS AND ALSO FILED BALANCE SHEET AND ACCOUNTS FOR A.Y.2008-09 RELEVANT TO THE YEAR OF SEARCH. IT IS APPARENT THAT THE ASSESSEE HAS REVISE D THE BALANCE SHEETS/PREPARED THE BALANCE SHEET AND ACCOUNTS CONSIDERING AND INCORPO RATING THE TRANSACTIONS ETC. AS PER RM/L/RM/2 AS REAL AND CORRECT. BUT IN VIEW OF THE T REATMENT AS DISCUSSED ABOVE THE REVISED BALANCE SHEETS AND ACCOUNTS FOR THE A.YRS.2 002-03 TO 2007-08 AND ALSO THE TRANSACTIONS INCORPORATED IN ACCOUNTS AND BALANCE S HEETS AND ACCOUNTS FOR A.Y. 2008-09 ON THOSE BASIS INCLUDING ALL THE RELEVANT BOOKS OF ACCOUNT ARE REJECTED. IN VIEW OF THE ABOVE DISCUSSIONS THE CASH RECEIPTS AS NOTED IN RM/I ARE TREATED AS INCOME FROM UNDISCLOSED SOURCES OF THE ASSESSEE AND IS BEI NG ASSESSED IN THE RELEVANT A.YRS. SIMILAR ARE FINDINGS IN OTHER YEARS ALSO I.E. ASSES SMENT YEARS 2007-08 AND 2008-09. ASSESSEE AGGRIEVED AS IN THE ABOVE GROUND RAISED THE FIRST ISSUE REGARDING ADDITION OF RS.6.09 CR. AND RS.90 LACS FOR ASSESSMENT YEARS 200 6-07 AND 2007-08 RESPECTIVELY ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SALT LAKE PROPERTY AND RS.18.60 CR. ON ACCOUNT OF UNEXPLAINED 8 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 INVESTMENT IN SHARES FOR ASSESSMENT YEAR 2008-09 BE FORE CIT(A). THE CIT(A) CONFIRMED THE ADDITION BY GIVING FOLLOWING FINDING IN PARA 4.1 T O 4.8 OF HIS APPELLATE ORDER: 4.1 THE A.O HAS DISCUSSED IN DETAIL THE REASONS FO R REJECTING THE NOTING OF RMJ1 FOUND DURING THE COURSE OF SEARCH ON PAGE 6 TO 8 OF THE ASSESSMENT ORDER. IT HAS BEEN EMPHASIZED THAT INVESTMENT IN CRORES HAS BEEN SHOWN IN THE SEIZED PAPER SINCE 15/04/1993 WITHOUT HAVING ANY OPENING CASH BALANCE WHICH IS UNIMAGINABLE TAKING INTO ACCOUNT THE BUSINESS AND FINANCIAL BACKGROUND OF THE ASSESSEE . IT HAS BEEN FURTHER POINTED THAT NEITHER ANY SUPPORTING DOCUMENT OR EVI DENCE IN SUPPORT OF THE NOTING WERE FOUND DURING THE COURSE OF SEARCH NOR THE SAME WAS FURNISHED DURING THE ASSESSMENT PROCEEDINGS. IT HAS ALSO BEEN SPECIFIED THAT NO STO CK OF DIAMOND OR GOLD AS PER NOTING WERE FOUND DURING THE COURSE OF SEARCH. IT HAS ALSO BEEN OBSERVED THAT THE HAND WRITTEN RM/2 IS A RECENTLY PREPARED ACCOUNTS AS SAME INK HA S BEEN USED FOR MAKING ENTRY FOR DIFFERENT YEARS. ACCORDINGLY IT HAS BEEN HELD THAT THE CLAIM OF THE APPELLANT THAT THE RECEIPTS OF RS.7 25 00 000/- IN QUESTION IS FROM SA LE OF PAINTINGS PURCHASED DURING F.Y 1993-94 TO 1995-96 WAS REJECTED AND THE AMOUNT IN Q UESTION WAS ADDED AS INCOME FROM UNDISCLOSED SOURCES. 4.3. NOW THE ISSUE TO BE DECIDED THAT WHETHER AS PE R PROVISION OF SECTION 292C INTRODUCED BY THE FINANCE ACT 2007 WITH RETROSPECTI VE EFFECT FROM 01.10.1975 THE ASSESSING OFFICER HAS TO PRESUME THAT WHATEVER IS R ECORDED IN THE SEIZED DOCUMENT IS DEEMED TO BE TRUE AND THE ASSESSMENT HAS TO BE COMP LETED SOLELY ON THE BASIS OF THE SAID DOCUMENT. SECTION 292C READS AS UNDER : 292C. WHERE ANY BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH UND ER SECTION 132 (OR SURVEY UNDER SECTION 133A) IT MAY IN ANY PROCEEDING UNDE R THIS ACT BE PRESUMED (I) THAT SUCH BOOKS OF ACCOUNT OTHER DOCUMENTS MO NEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS T O SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SU CH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE BEEN SIGNED BY OR TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON ARE IN THAT P ERSONS HANDWRITING AND IN THE CASE OF A DOCUMENT STAMPED EXECUTED OR ATTESTE D THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT P URPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED. 4.4 .FROM THE PLAIN READING OF THE SECTION IT IS EV IDENT THAT IN CASE OF SEIZURE OF DOCUMENT IN THE COURSE OF SEARCH OR SURVEY PROCEEDI NG CERTAIN PRESUMPTION CAN BE MADE REGARDING THE OWNERSHIP AND CONTENT RECORDED T HEREOF .THE LEGAL APPLICABILITY OF THE TERM HAS BEEN CLARIFIED BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF P. R. METRANI V CIT BANGLORE (2006) 157 TAXMAN 325 (S.C) A PRESUMPTION IS AN INFERENCE OF FACT DRAWN FROM OTHER KNOWN OR PROVED FACTS. IT IS A RULE OF LAW UNDER WHICH COURTS ARE AUTHORIZED TO DRAW A PARTICULAR INFERENCE FROM A PARTICULAR FACT. IT IS OF THREE TYPES (I) MAY PRESUME (II) SHALL PRESUME AND (III) CONCLUSIVE PROOF. MAY PRESUME LEAVES IT TO THE DISCRETION OF THE COURT TO MAKE TH E PRESUMPTION ACCORDING TO THE CIRCUMSTANCES OF THE CASE. SHALL PRESUME LEAVES N O OPTION WITH THE COURT NOT TO MAKE THE PRESUMPTION. THE COURT IS BOUND TO TAKE TH E FACT AS PROVED UNTIL EVIDENCE IS GIVEN TO DISPROVE IT. IN THIS SENSE SUCH PRESUMPTI ON IS ALSO REBUTTABLE. CONCLUSIVE 9 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 PROOF GIVES AN ARTIFICIAL PROBATIVE EFFECT BY THE LAW TO CERTAIN FACTS. NO EVIDENCE IS ALLOWED TO BE PRODUCED WITH A VIEW TO COMBATING THA T EFFECT. IN THIS SENSE THIS IS IRREBUTTABLE PRESUMPTION. 4.5 IN SECTION 292C OF THE INCOME TAX ACT THE WORD USED BY THE LEGISLATURE MAY PRESUME. HENCE IT LEAVES IT TO THE DISCRETION OF T HE COURT TO MAKE OR NOT TO MAKE THE PRESUMPTION ACCORDING TO THE CIRCUMSTANCES OF THE C ASE. HENCE 292C IS NOT FOR THE BENEFIT OF THE ASSESSEE. IN OTHER WORDS THE ASSESSE E CANT ESCAPE THE LEGAL RESPONSIBILITY TO EXPLAIN WITH DOCUMENTARY PROOF THE EXPENDITURE O R DEDUCTION CLAIMED OR INVESTMENT SHOWN IN THE RETURN. IN THE CASE UNDER CONSIDERATI ON THE ASSESSEE HAS CLAIMED TO HAVE EARNED NON-TAXABLE CAPITAL GAIN . HENCE ONUS IS ON THE ASSESSEE TO PROVE IT TO BE TRUE. THE SUBMISSION OF THE APPELLANT THAT THE ONUS IS ON THE A.O TO PROVE THAT THE NOTING IN THE RM/L IS NOT CORRECT IS ILLOGICAL. THE DETAILS A ND THE BASIS OF THE TRANSACTION RECORDED IN THE SEIZED DOCUMENT IS THE PERSONAL KNOWLEDGE OF THE ASSESSEE. HENCE UNLESS HE PROVIDES THE NECESSARY DETAILS AND SUPPORTING EVIDE NCES RELATING TO THE TRANSACTIONS THE A.O CANNOT PROCEED TO PROVE OR DISPROVE IT. MOR E OVER IN THE CASE UNDER CONSIDERATION THE A.O HAS GIVEN ENOUGH CIRCUMSTANTI AL EVIDENCE TO REBUT THE CLAIM MADE BY THE ASSESSEE. MOREOVER THE HONBLE ITAT KOL KATA IN THE CASE OF NIRMAL FASHION (P) LTD V DCIT CENTRAL CIRCLE I (2008) 25 SOT 387 (KOL) HAS HELD THAT THE PROVISION OF SECTION 292C IS ONLY A DEEMING PRO VISION. THE PRESUMPTION UNDER SECTION 292C IS REBUTTABLE PRESUMPTION AND THE DOCU MENT HAS TO BE CONSIDERED CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE. THE DEEMING PROVISION CANNOT BE APPLIED MECHANICALLY IGNORING THE FACTS OF THE CASE AND THE SURROUNDING CIRCUMSTANCES. 4.6 MOREOVER AS PER THE SUBMISSION OF THE APPELLANT THAT PRESUMPTION SHOULD BE MADE THAT THE ASSESSEE WAS CARRYING ON THE BUSINESS OF P URCHASE AND SALE OF GOLD AND DIAMOND OUTSIDE THE BOOKS ON LARGE SCALE WHICH HAD RESULTED IN THE HUGE INCOME WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT SINC E THE YEAR 1993-94 HOWEVER DURING THE COURSE OF SEARCH OF THE ASSESSEES PREMI SES NO STOCK OF GOLD OR DIAMOND WERE FOUND. THE REVENUE HAD SEARCHED THE RESIDENTIA L PREMISES OF THE APPELLANT. NOT A SINGLE EVIDENCE OF PURCHASE OR SALE OF DIAMOND GOL D OR PAINTING WAS FOUND. THE ASSESSING OFFICER HAS POINTED OUT SEVERAL OTHER INC ONSISTENCIES IN THE CLAIM OF THE APPELLANT INCLUDING THE FACT THAT THE SEIZED PAPER RM/2 IS NOT A DAY TO DAY ACCOUNTS PREPARED BY THE APPELLANT BUT HAVE BEEN RECENTLY WR ITTEN IN ONE OPERATION OF WRITING WHICH WAS SUBSEQUENTLY CONFIRMED BY THE DY. GOVT. E XAMINER OF QUESTIONED DOCUMENTS CENTRAL FORENSIC SCIENCE LABORATORY DIR ECTORATE OF FORENSIC SCIENCE MINISTRY OF HOME AFFAIRS GOVT. OF INDIA VIDE OPINIO N NO DXC-1/2010 DATED 09.09.2010. . THEREFORE THE CONTENTION OF THE ASSE SSEE THAT AS PER SECTION 292C THE SEIZED PAPERS WERE TO BE CONSIDERED AS TRUE WITHOUT CALLING FOR ANY OTHER SUPPORTING EVIDENCE IS NOT JUSTIFIED AND DESERVED TO BE REJECT ED. FURTHER SINCE NO MATERIAL WERE PUT FORWARD BY THE APPELLANT TO EXPLAIN THE CONTENT S OF THE DOCUMENT AND THE TRANSACTION RECORDED THEREOF WERE ALSO TOTALLY UNEX PLAINED. THEREFORE ON THE BASIS OF NOTING AND JOTTINGS IT COULD NOT BE SAID THAT THES E ARE THE NOTING OF TRANSACTIONS RELATED TO PURCHASE AND SALE OF DIAMONDS GOLD AND PAINTING S CARRIED OUT BY THE ASSESSEE DURING FINANCIAL YEAR 1993-94 TO FINANCIAL YEAR 200 7-08. ACCORDINGLY IT IS HELD THAT THE DOCUMENT IN QUESTION IS A DUMB DOCUMENT. 4.7. SINCE IT HAS BEEN HELD THAT THE DOCUMENT IN QU ESTION IS A DUMB DOCUMENT HENCE NO PRESUMPTION CAN BE MADE ON THE BASIS OF NOTING AND JOTTINGS MADE THEREIN. ACCORDINGLY IT IS HELD THAT THE A.O HAS RIGHTY REJECTED THE REV ISED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT PREPARED ON THE BASIS OF SEIZED DOCUMENT RM /1 AND RM/2. FURTHER SINCE IT IS A SETTLED LEGAL POSITION THAT THE SEIZED DOCUMENTS ARE REQUIRED TO BE READ AS A WHOLE I.E. ACCEPTED OR REJECTED AS A WHOLE. SINCE THE GENUINEN ESS OF THE TRANSACTION RECORDED IN RM/1 AND RM/2 HAS BEEN REJECTED NO FURTHER PRESUMP TION CAN BE MADE OF THE NATURE OF 10 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 RECEIPT RECORDED IN THE SAID DOCUMENT. ACCORDINGLY NO ADDITION CAN BE MADE ONLY BY TAKING INTO ACCOUNT THE UNACCOUNTED RECEIPTS RECORD ED IN THE SAID DOCUMENT. 4.8. HOWEVER IN PAGE 4 OF THE ASSESSMENT ORDER IT H AS BEEN MENTIONED BY THE A.O THAT CERTAIN DETAILS OF OUT UNRECORDED CASH PAYMENT ON A CCOUNT OF ACQUISITION OF SALT LAKE PROPERTY WAS FOUND AND IMPOUNDED DURING THE COURSE OF SURVEY IN THE BUSINESS PREMISES OF THE ASSESSEE (GB 12) . FURTHER THE SEIZ ED RECORD RM/4 CONFIRMS THAT CERTAIN DISPUTE REGARDING THE SAID PROPERTY IS PEND ING BEFORE THE CIVIL JUDGE COURT BARASAT. DURING THE COURSE SEARCH THE APPELLANT ADM ITTED THAT HE HAS MADE UNACCOUNTED PAYMENT TO SR. BAGGA AND IN THE REVISED BALANCE SHEET FOR THE F.Y 2005- 06 THE SAME HAS BEEN CALCULATED AT RS.6 00 90 000/ AND INCORPORATED IN THE DECLARED INVESTMENT. THE SAME WAS ALSO CONFIRMED FROM THE OR DER DATED 25.05.2009 OF THE CIVIL JUDGE BARASAT IN TITLE SUIT NO 2007. HENCE IT IS A N UNDISPUTED FACT THAT UNACCOUNTED PAYMENT OF RS. 6 00 90 000/ HAS BEEN MADE BY THE AS SESSEE DURING THE YEAR UNDER CONSIDERATION. THE EXPLANATION OFFERED BY THE APPEL LANT THAT THE SAME IS FROM THE SALE PROCEEDS OF PAINTINGS IS FOUND TO BE UNSATISFACTORY AS NO DETAILS OF THE TRANSACTION OR ANY OTHER SUPPORTING EVIDENCE HAS BEEN FILED. CONSI DERING ABOVE OUT OF TOTAL ADDITION MADE BY THE A.O OF RS.7 25 00 000/ ADDITION OF RS. RS. 6 00 90 000/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IS CONFIRMED . APPELLANT WIL L GET NECESSARY RELIEF ACCORDINGLY. 8. EXACTLY ON SIMILAR FACTS CIT(A) ALSO CONFIRMED A CTION OF AO AND ALSO ENHANCED THE ADDITION FROM RS.75 LAC TO RS.90 LAC BY GIVING FOLL OWING FINDINGS IN PARA 4.7 IN ASSESSMENT YEAR 2007-08: 4.7. HOWEVER IN PAGE 4 OF THE ASSESSMENT ORDER IT HAS BEEN MENTIONED BY THE A.O THAT CERTAIN DETAILS OF OUT UNRECORDED CASH PAYMENT ON A CCOUNT OF ACQUISITION OF SALT LAKE PROPERTY WAS FOUND AND IMPOUNDED DURING THE COURSE OF SURVEY IN THE BUSINESS PREMISES OF THE ASSESSEE (GB 12). FURTHER THE SEIZED RECORD RM/4 CONFIRMS THAT CERTAIN DISPUTE REGARDING THE SAID PROPERTY IS PENDING BEFORE THE C IVIL JUDGE COURT BARASAT. DURING THE COURSE SEARCH THE APPELLANT ADMITTED THAT HE HAS MA DE UNACCOUNTED PAYMENT TO SR. BAGGA AND IN THE REVISED BALANCE SHEET FOR THE F.Y 2006-07 THE SAME HAS BEEN CALCULATED AT RS. 90 00000/ AND INCORPORATED IN THE DECLARED I NVESTMENT. THE SAME WAS ALSO CONFIRMED FROM THE ORDER DATED 25.05.2009 OF THE CI VIL JUDGE BARASAT IN TITLE SUIT NO 2007. HENCE IT IS AN UNDISPUTED FACT THAT UNACCOUNT ED PAYMENT OF RS. 90 00 000/ HAS BEEN MADE BY THE ASSESSEE DURING THE YEAR UNDER CON SIDERATION . CONSIDERING ABOVE THE ASSESSEE WAS SHOW CAUSE THAT WHY NOT THE ADDITION O N ACCOUNT OF UNDISCLOSED INVESTMENT SHOULD BE ENHANCED TO RS.90 00000/. IN RESPONSE IT WAS SUBMITTED BY THE APPELLANT THAT THE SOURCE OF THE INVESTMENT HAS BEEN DULY RECORDED IN THE SEIZED DOCUMENT RM/1 AND RM/2 AND THE SAME HAS BEEN DULY INCORPORATED IN THE REVISED RETURN FILED UNDER SECTION 153A OF THE ACT. THE EXPLANATION OFFERED BY THE APP ELLANT THAT THE SAME IS FROM THE SALE PROCEEDS OF PAINTINGS GOLD AND DIAMONDS HAS BEEN FO UND TO BE UNSATISFACTORY AS HELD IN THE APPELLATE ORDER FOR THE A.Y. 2006-07. ACCORDIN GLY THE ADDITION OF RS.75 00 000/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IS ENHANCED TO RS .90 00 000/-. THE A.O. WILL REVISE THE ORDER ACCORDINGLY. 9. SIMILARLY CIT(A) ALSO CONFIRMED THE ACTION OF A O IN AY 2008-09 BY GIVING FOLLOWING FINDING IN PARA 4.7 AND 4.8: 4.7. SINCE IT HAS BEEN HELD THAT THE DOCUMENT IN Q UESTION IS A DUMB DOCUMENT HENCE NO PRESUMPTION CAN BE MADE ON THE BASIS OF NOTING A ND JOTTINGS MADE THEREIN. ACCORDINGLY IT IS HELD THAT THE A.O HAS RIGHTY REJE CTED THE REVISED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT PREPARED ON THE BASIS OF SE IZED DOCUMENT RM/I AND RM/2. FURTHER SINCE IT IS A SETTLE LEGAL POSITION THAT THE SEIZED DOCUMENTS ARE REQUIRED TO BE 11 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 READ AS A WHOLE I.E. ACCEPTED OR REJECTED AS A WHOL E. SINCE THE GENUINENESS OF THE TRANSACTION RECORDED IN RM/L AND RM/2 HAS BEEN REJE CTED NO FURTHER PRESUMPTION CAN BE MADE OF THE NATURE OF RECEIPT RECORDED IN THE SA ID DOCUMENT. ACCORDINGLY NO ADDITION CAN BE MADE ONLY BY TAKING INTO ACCOUNT TH E UNACCOUNTED RECEIPTS RECORDED IN THE SAID DOCUMENT. 4.8. HOWEVER IT IS A UNDISPUTED FACT THAT RS. 18 60 00000/ HAS BEEN INVESTED BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION ON PU RCHASE OF SHARE CAPITAL OF M/S RAJAHAT HOUSING PVT LTD (8 80 000 00/) M/S RAJAHAT BUILDERS PVT LTD. (RS.9 60 000 00/ AND M/S FORT PROJECT PVT LTD ( RS. 20 000.00/ AND THE SAME IS DULY REFLECTED IN THE AUDITED ACCOUNTS OF THE RESPECTIVE COMPANIES M/S RAJAHAT BUILDERS PVT LTD. M/S RAJAHAT HOUSING PVT LTD AND M/S FORT PROJECT PVT LTD. THE EXPLANATION OFFERED BY THE APPELLANT THAT THE SOURCE OF INVESTM ENT IS FROM THE SALE PROCEED OF DIAMONDS AND GOLD HAS FOUND TO BE UNSATISFACTORY AS NO DETAILS OF THE TRANSACTION OR ANY OTHER SUPPORTING EVIDENCE HAS BEEN FILED. CONS IDERING ABOVE OUT OF TOTAL ADDITION MADE BY THE A.O OF RS.19 07 35 000/- ADDITION OF R S.18 60 000 00/ ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SHARES OF DIFFERENT COMPA NY IS CONFIRMED. APPELLANT WILL GET RELIEF OF RS.47 35 000/- ACCORDINGLY. AGGRIEVED AGAINST THE ACTIONS OF THE LOWER AUTHORIT IES ASSESSEE IS IN APPEALS FOR ALL THREE YEARS BEFORE US ON THESE ISSUES. 10. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT DURING THE COURSE OF SEARCH AT THE RES IDENTIAL PREMISES OF THE ASSESSEE ON 28.2.2008 REVENUE FOUND DOCUMENTS WHICH WERE INVENTORISED AS RM-1 AND RM-2 AND SEIZED THESE CONTAINS DETAILS OF UNACCOUNTED RECEIPTS OF PAINTIN GS GOLD DIAMONDS SHARE APPLICATIONS ETC. APART FROM OTHER ENTRIES. THE ASSESSEE IN ITS PAPE R BOOK AT PAGES 117 TO 150 HAS ENCLOSED COPIES OF SEIZED DOCUMENTS INVENTORISED AS RM/1 AND RM/2. WE FIND THAT ASSESSING OFFICER HAS SUMMARIZED ADDITIONS OF THREE YEARS IN ASSESSM ENT ORDERS AND RELEVANT SUMMARY IS BEING REPRODUCED AS IT IS. F.Y RELEVANT AY ITEM(S) PURCHASE (RS LAKHS) SALES (RS. LAKH CASH PAYMENTS (RS. LAKH FOR INVESTMENTS/BOGUS SHARE CAPITAL/EXPENSES 1993-940 1994-95 PAINTINGS DIAMONDS (45 CT & 35 CT)S 20.50 88.50 TOTAL 109.00 NIL NIL 1994-95 1995-96 PAINTINGS DIAMONDS (10 CT & 50CT) 21.00 50.00 TOTAL 71.00 NIL NIL 1995-96 1996-97 PAINTINGS DIAMONDS (14 CT & 47.5 CT) 16.00 31.225 TOTAL 47.225 NIL NIL 1996-97 1997-98 PAINTINGS NIL NIL NIL 1997-98 1998-99 DIAMOND (12 110.40 NIL NIL 12 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 CT & 52 CT) 1998-99 1999-2000 DIAMOND (125 CT) 110.40 NIL NIL 1999-2000 2000-01 NIL NIL NIL NIL 2000-01 2001-02 DIAMOND (12 CT & 45 CT) NIL 174.5 NIL 2001-02 TO 2004-05 2002-03 TO 2005-06 NIL NIL NIL NIL 2005-06 2006-07 PAINTINGS NIL 725.00 620.90 TO SURY A PRAKASH BAGLA FOR PROPERTY AT BP SECTOR-V OTHERS RS.29.00 TOTAL 649.90 2006-07 2007-08 NIL NIL NIL 90.00 TO S.P BAGLA FOR ABOVE 2007-08 2008-09 PAINTINGS DIAMONDS (8CT & 4.5 CT@7.5 LAKH PER CT:10 CT@ 8 LAKH: 14 CT@1.30 LAKH: 25 CT@2.70 LAKH 27 CT@2.70 LAKH 55 CT@2.90 LAKH 47.50 CT@1.50 LAKH 125 CT@4.25 LAKH 85 CT@4.00 LAKH GOLD( 20 KGS) GOLD(20 KGS) 3.62 TOTAL 3.62 - 1434.35 235.00 238.00 TOTAL: 1907.35 I) 35.00 FOR FURNITURE FIXTURES FLOORING AT FLAT NO. 501 20 LEE ROAD II) 1840.00 FOR SHARE APPLICATION ASSESSEE BEFORE US POINTED OUT THAT ASSESSING OFFIC ER HAS COMMITTED CERTAIN MISTAKES IN SUMMARIZING TRANSACTIONS OF PAGES 3 TO 14 OF RM-1 A ND THE COUNSEL POINTED OUT MISTAKES. ACCORDING TO ASSESSEE ASSESSING OFFICER INADVERTEN TLY MADE ADDITION OF RS.75.10 LACS ON ACCOUNT OF UNEXPLAINED INVESTMENT FOR THE ASSESSMEN T YEAR 2007-08 AS AGAINST HIS OWN OBSERVATION THAT THE DIFFERENCE BETWEEN OUTGOING OF RS.90 LACS AND CASH AVAILABILITY OF RS.75.10 LACS IS ONLY AT RS.14.90 LACS WHICH SHOULD BE TREA TED AS UNDISCLOSED INVESTMENT FOR ASSESSMENT YEAR 2007-08. THE ASSESSEE POINTED OUT THAT ACTUA LLY THERE IS NO UNEXPLAINED INVESTMENT FOR ASSESSMENT YEAR 2007-08 AS TOTAL AMOUNT PAID TO SRI S. P. BAGGA DURING FY 2005-06 RELEVANT 13 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 TO ASSESSMENT YEAR 2006-07 IN VIEW OF SEIZED DOCUM ENT RM-1 WHICH ADDS UPTO RS.570.9 LACS AND NOT RS.620.90 LACS TAKEN BY THE ASSESSING OFFIC ER. LD. COUNSEL FOR THE ASSESSEE REFERRED TO SEIZED DOCUMENTS INVENTORISED AS RM-1 THE COPIES O F WHICH ARE ENCLOSED AT ASSESSEES PAPER BOOK PAGES 117 TO 131. WE HAVE GONE THROUGH SEIZED DOCUMENT RM-1AND FIND THAT NO OTHER PAYMENT OF RS.29 LACS AS INDICATED IN THE SUMMARY T ABLE OF ASSESSMENT ORDER IS MENTIONED. WE FURTHER FIND THAT CASH AVAILABILITY AS PER RM-1 AT THE START OF FY 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08 WAS RS.725 LACS AND RS.570.9 LACS I.E. RS.725 LAC. WE FIND THAT OUTGOING OF RS.90 LACS FOR THE SAID YEAR WAS EXPLAINED AND IN VIEW OF THESE FACTS THERE WAS NO UNEXPLAINED INVESTMENT FOR FY 2006-07 RELEVANT TO ASSESSMENT YE AR 2007-08. WE FIND THAT THE AO HAS NOTED THAT SINCE MOST OF PURCHASES ARE NOTED IN THE SEIZED DOCUMENTS RM-1 AND RM-2 BEYOND THE PERIOD COVERED U/S.153A OF THE ACT I.E. PRIOR T O FY 2001-02 (DURING THE PERIOD FY 1993-94 TO 2000-01) AND SAME DID NOT FALL WITHIN THE PURVIE W OF SECTION 153A OF THE ACT BUT SALES MADE FALLS WITHIN THE TIME PERIOD COVERED U/S. 153A OF T HE ACT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO FURNISH THE DETAILS OR NAMES OF PERSONS FROM WHOM OR TO WHOM PURCHASES/SALES OF GOLD DIAMONDS AND PAINTINGS WER E MADE AND FURTHER ASSESSEE COULD NOT GIVE ANY EVIDENCE OF SUPPORTING DOCUMENTS IN RESPECT OF SALES MADE. THE ASSESSING OFFICER TRIED TO NEGATE THE CLAIM OF CASH GENERATED ON SALES UTILIZA TION OUT OF BOOKS CASH PAYMENTS FOR INVESTMENT IN LANDS SHARE APPLICATION MONEY ETC. W HICH HAVE BEEN REFLECTED BY THE ASSESSEE IN HIS REVISED BALANCE SHEET FILED ALONG WITH RETURNS OF INCOME IN RESPONSE TO NOTICE U/S. 153A OF THE ACT. IT MEANS THAT THE ALLEGATION OF ASSESSING OFFICER THAT ASSESSEE WAS INVOLVED IN REAL ESTATE BUSINESS WHERE ON MONEY RECEIPT WAS RAMPANT AND RECEIPTS WERE NOTHING BUT ON MONEY RECEIPTS NOTED IN THE GUISE OF SALE CONSIDERATION O F GOLD AND DIAMONDS TO DEFRAUD REVENUE AND TO EXPLAIN AWAY RECEIPT AS CASH PAYMENTS TOWARDS INVES TMENTS. BUT WE FIND THAT THE ASSESSING OFFICER ACCEPTED AS IT IS OTHER ENTRIES PERTAINING TO UNDISCLOSED INVESTMENTS MADE IN PROPERTY ETC. AND ENTRIES DISCLOSED IN THE REGULAR BOOKS AND ACCOUNT OF ASSESSEE MAINTAINED IN REGULAR COURSE. THE ASSESSING OFFICER HAS ONLY DISREGARDED SPECIFIC NOTING MADE IN RM-1 AND RM-2 RECORDING PURCHASES AND SALES OF DIAMONDS GOLD AND PAINTINGS. HENCE THE ASSESSING OFFICER MADE ADDITION OF RS.7.25 CR. AND RS.19.07 CR. FOR A SSESSMENT YEAR 2006-07 AND ASSESSMENT YEAR 2008-09 RESPECTIVELY ON ACCOUNT OF UNDISCLOSED CASH RECEIPTS APPEARING AS SALE PROCEEDS OF GOLD DIAMONDS AND PAINTINGS IN RM-1 AND RM-2 BY DISREGARDING LONG TERM CAPITAL GAINS DISCLOSED BY THE ASSESSEE ON SALE OF DIAMOND AND GO LD TO THE TUNE OF RS.7.70CR. IN HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 IN VIEW OF NOTI NG MADE IN RM-1 AND RM-2 IN RESPONSE TO NOTICE U/S. 153A OF THE ACT. WE FURTHER FIND TH AT THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2007-08 HAS NOTED THAT ASSESSEE HAD OUTGOINGS OF RS .90 LACS (BUT ASSESSING OFFICER HAS 14 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 ASSESSED IN ASSESSMENT ORDER BY NOTING AS RS. 90 CR . WRONGLY) BUT CASH AVAILABILITY WAS TO THE EXTENT OF 725 CR. AND RS.640.90 LACS AND THUS THER EBY THE DIFFERENCE OF RS.75.10 LACS. WE FIND THAT CIT(A) DELETED THE ADDITION OF RS.7.25 CR. AND RS.19.07 CR. MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED CASH RECEIPTS FOR ASSESSM ENT YEAR 2006-07 AND 2008-09 BUT MADE ADDITION OF RS.6 90 00 000/- FOR ASSESSMENT YEAR 20 06-07 AND RS.18.60 CR. FOR ASSESSMENT YEAR 2008-09 ON ACCOUNT OF UNDISCLOSED INVESTMENT I N PROPERTY AT SALT LAKE AND UNEXPLAINED INVESTMENT IN SHARES RESPECTIVELY. FOR ASSESSMENT YEAR 2007-08 CIT(A) ENHANCED ADDITION TO RS. 90 LACS AS AGAINST ADDITION MADE BY THE ASSESS ING OFFICER AT RS.75.10 LACS. THE CIT(A) WHILE ADJUDICATING THIS INTERCONNECTED ISSUES HELD SEIZED DOCUMENTS INVENTORIES AS RM-1 AND RM-2 AS DUMB DOCUMENTS AND REJECTED THE SAME BY INV OKING PROVISIONS OF SECTION 292C OF THE ACT STATING THAT THE WORDS USED BY LEGISLATOR WERE MAY PRESUME AND IT IS FOR THE DISCRETION OF THE COURT TO MAKE OR NOT TO MAKE THE PRESUMPTION AC CORDING TO CIRCUMSTANCES OF THE CASE. THE CIT(A) HELD THAT PROVISIONS OF SECTION 292C OF THE ACT WAS NOT FOR THE BENEFIT OF THE ASSESSEE AND ASSESSEE COULD NOT ESCAPE LEGAL RESPONSIBILITY TO EXPLAIN SEIZED DOCUMENTS PARTICULARLY WHEN THERE IS NO DOCUMENTARY EVIDENCES TO PROVE EX PLANATION OR DEDUCTION OR INVESTMENT AS SHOWN IN THE RETURN OF INCOME FILED IN RESPONSE TO SEC. 153A OF THE ACT. THE CIT(A) NOTED THAT DURING THE COURSE OF SEARCH NO STOCK OF GOLD DIAMO NDS OR PAINTINGS WAS FOUND ALTHOUGH ASSESSEE WAS CLAIMING TO HAVE BEEN CARRYING ON THE BUSINESS OF PURCHASE AND SALE OF THIS ITEMS OUTSIDE THE BOOKS OF ACCOUNT I.E. UNACCOUNTED PURCH ASE AND SALES. ACCORDING TO THE CIT(A) RM-2 WAS NOT A DAY TO DAY ACCOUNT PREPARED BY THE ASSESSEE BUT WRITTEN IN ONE OPERATION OF WRITING AND HE REJECTED THE CONTENTION OF ASSESSEE THAT THE SEIZED PAPERS WERE TO BE CONSIDERED AS TRUE WITHOUT CALLING FOR ANY OTHER SUPPORTING EV IDENCE. ACCORDING TO CIT(A) SINCE ASSESSEE HAD NOT FURNISHED EVIDENCE TO PROVE THE CONTENTS OF RM-1 AND RM-2 AS TRUE THE SAME WERE HELD AS DUMB DOCUMENTS AND THEREFORE THE REVISED BALANCE SHEETS AND P&L ACCOUNT PREPARED BY ASSESSEE ON THE BASIS OF RM-1 AND RM-2 WERE HELD TO BE RIGHTLY REJECTED BY ASSESSING OFFICER. THE CIT(A) HELD THAT SEIZED DOCUMENTS WERE REQUIRED TO BE READ AS A WHOLE AND HAS TO BE ACCEPTED OR REJECTED AS A WHOLE. ACCORDING TO C IT(A) SINCE GENUINENESS OF TRANSACTIONS RECORDED IN RM-1 AND RM-2 HAS NOT BEEN PROVED NO F URTHER PRESUMPTION COULD BE MADE ON THE NATURE OF RECEIPT OR EXPENDITURE RECODED IN RM-1 AN D RM-2. THE CIT(A) ALSO NOTED THAT CERTAIN OWN RECORDED CASH PAYMENTS FOR ACQUISITION OF SALT LAKE PROPERTY WAS FOUND AND IMPOUNDED FROM THE BUSINESS PREMISES OF THE ASSESS EE DURING THE COURSE OF SURVEY U/S. 133A OF THE ACT AND INVENTORISED THE SAME DOCUMENT AS GB 12. IT IS ALSO PROVED CIT(A) NOTED THAT THE SEIZED DOCUMENT RM-1 CONTAINS CERTAIN DISPUTES REGARDING SALT LAKE PROPERTY BEFORE CIVIL JUDGE COURT BARASAT. EVEN FROM THE REVISED BALAN CE SHEET FILED BY ASSESSEE FOR AY 2006-07 15 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 AND 2007-08 PAYMENT MADE TO SHRI S.P. BAGGA HAS BE EN CALCULATED BY THE ASSESSEE AT RS.6.009 CR. AND RS.90 LACS RESPECTIVELY AND DECLARED AS INV ESTMENT. HENCE CIT(A) HELD THAT UNACCOUNTED PAYMENT OF RS.6.009 CR. AND RS. 90 LACS HAD BEEN MADE BY THE ASSESSEE FOR ACQUISITION OF SALT LAKE PROPERTY FOR ASSESSMENT YE AR 2006-07 AND 2007-08 AND ADDED THE SAME AS UNDISCLOSED INVESTMENT. FOR ASSESSMENT YEA R 2008-09 THE CIT(A) HELD THAT ASSESSEE HAS INVESTED A SUM OF RS.18.60 CR I.E. FOR PURCHASE OF SHARES OF RAJARHAT HOUSING PVT. LTD. AMOUNTING TO RS.8.80 CR. RAJARHAT BUILDER PVT. LTD . AMOUNTING TO RS.0.6- CR. AND FORT PROJECT PVT. LTD. AMOUNTING TO RS.20 LACS AND THE SAME WERE ALLEGEDLY REFLECTED IN AUDITED ACCOUNTS OF THE COMPANY RESPECTIVELY. HENCE CIT(A) MADE ADDITI ON OF UNDISCLOSED INVESTMENT OF SHARE IN DIFFERENT COMPANIES BY THE ASSESSEE. THE CIT(A) FU RTHER HELD THAT THE EXPLANATION THAT SHARES WERE ACQUIRED OUT OF SALE PROCEEDS OF GOLD DIAMOND S AND PAINTINGS IS WITHOUT ANY BASIS. HENCE HE HAS NOT ACCEPTED THE EXPLANATION OF THE A SSESSEE AND UPHELD THE ADDITIONS BY GIVING DIFFERENT REASONING AND TREATING THE UNEXPLAINED IN VESTMENTS. 11. WE FIND THAT THE ASSESSING OFFICER HAS MADE ADD ITIONS FOR THESE THREE ASSESSMENT YEARS ON THE BASIS OF PICK AND CHOOSE BASIS OF ENTRIES OF RM-1 AND RM-2 AND BY REJECTING SOURCE EXPLAINING ENTRIES OF INVESTMENT. ASSESSING OFFICE R ACCEPTED THE QUANTUM OF CASH IN RM-1 AND RM-2 BUT REJECTED THE NATURE EXPLAINING THE SOURCE AND ALSO ACCEPTED ENTRIES BELONGING TO UNACCOUNTED INVESTMENTS IN PROPERTY AND SHARES REFL ECTED IN RM-1 AND RM-2. THE ASSESSING OFFICER MADE ADDITION WHERE SALE PROCEEDS OF PAINTI NGS GOLD AND DIAMONDS HAS REFLECTED IN RM-1 AND RM-2 EXCEEDS UNACCOUNTED INVESTMENTS BUT M ADE ADDITION ON ACCOUNT OF UNEXPLAINED CASH RECEIVED IN THESE TWO ASSESSMENT O RDERS. FURTHER ASSESSING OFFICER ALSO MADE ADDITION ON ACCOUNT OF UNACCOUNTED INVESTMENT REFLECTED IN RM-1 AND RM-2 WHERE EXCEEDED INFLOW OF CASH BY TREATING THE SAME AS DE FICIT AND UNEXPLAINED INVESTMENTS. BUT CIT(A) REJECTED THE SEIZED DOCUMENTS RM-1 AND RM-2 IN TOTO AND ALSO REJECTED THE REVISED ACCOUNTS PREPARED ON THE BASIS OF ENTRIES IN RM-1 AND RM-2. THE CIT(A) SINCE REJECTED RM- 1 AND RM-2 INFLOW OUTFLOW OF CASH SHOWN THEREIN WAS ALSO REJECTED. HE MADE FRESH ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PROPERTY MA DE ON THE BASIS OF ENTRIES IN GB-12 FOUND FROM THE BUSINESS PREMISES OF THE ASSESSEE AND ON A CCOUNT OF INVESTMENT MADE IN SHARES OF DIFFERENT COMPANIES AS NARRATED ABOVE EVEN FROM THE AUDITED BALANCE SHEET OF SUCH COMPANIES. HERE WE WANT TO MENTION ONE IMPORTANT ASPECT THAT THE ASSESSING OFFICER MADE ADDITIONS WHICH WERE DELETED BY THE CIT(A) APART FROM CHALLE NGING THE DELETION OF RS.35 LACS BALANCE ADDITIONS ARE NOT SUBJECT MATTER OF CHALLENGE BY RE VENUE BEFORE US. 16 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 12. WE FIND THAT REVENUE DURING THE COURSE OF SEARC H ON THE RESIDENTIAL PREMISES OF ASSESSEE ON 28.2.2008 U/S. 132 OF THE ACT FOUND AND INVENT ORISED DOCUMENTS AS RM-1 AND RM-2. WHETHER THESE DOCUMENTS ARE TO BE TREATED AS TRUE O R NOT IS NOW TO BE DECIDED FIRST. WE FIND THAT CIT(A) AS WELL AS ASSESSING OFFICER HAS INVOKE D PROVISION OF SECTION 292C OF THE ACT FOR NOT ACCEPTING THESE DOCUMENTS RM-1 AND RM-2. THE M AIN CONTENTION OF THE REVENUE AUTHORITIES IS THAT U/S. 292C OF THE ACT THE WORDS USED BY LEGISLATOR WERE MAY PRESUME AND HENCE IT WAS AT THE DISCRETION OF THE COURT TO MAKE OR NOT TO MAKE PRESUMPTION ACCORDING TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE REVENUE A UTHORITIES IN SUPPORT HAS RELIED ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF P.R. METRANI VS. CIT (2006) 287 ITR 209 (SC). HE THUS CONCLUDED THAT SECTION 292C OF THE A CT WAS NOT FOR THE BENEFIT OF THE ASSESSEE AND HE COULD NOT ESCAPE THE LEGAL RESPONSIBILITY TO EXPLAIN WITH DOCUMENTS AND WITHOUT ANY EVIDENCE FOR THE CLAIM OF EXPENDITURE OR DEDUCTION OR INVESTMENT SHOWN IN THE RETURN OF INCOME FILED U/S. 153A OF THE ACT. ACCORDING TO CIT(A) O NUS WAS ON THE ASSESSEE TO PROVE THAT WHAT WAS STATED IN SEIZED DOCUMENT IS TRUE AND IN THE PR ESENT CASE SINCE THE ASSESSEE FAILED TO PRODUCE EVIDENCE IN SUPPORT OF TRANSACTIONS PERTAIN ING TO SALE OF GOLD DIAMONDS AND PAINTINGS RECORDED IN SEIZED DOCUMENTS INVENTORISED AS RM-1 A ND RM-2 AND HENCE REJECTED BY CIT(A). FIRST ALL WE HAVE TO GO THROUGH THE PROVISIONS OF SECTION 292C OF THE ACT. 292C. 35A [ (1) ] WHERE ANY BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH UNDER SECTION 132 35B [ OR SURVEY UNDER SECTION 133A ] IT MAY IN ANY PROCEEDING UNDER THIS ACT BE PRESUMED (I)THAT SUCH BOOKS OF ACCOUNT OTHER DOCUMENTS MO NEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AN D OTHER DOCUMENTS ARE TRUE; AND (III)THAT THE SIGNATURE AND EVERY OTHER PART OF SU CH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRITING OF ANY PARTI CULAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE BEEN SIGNED BY OR TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON ARE IN THAT PERSONS HANDWRITING AND IN THE CASE O F A DOCUMENT STAMPED EXECUTED OR ATTESTED THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED.] 35C [ (2) WHERE ANY BOOKS OF ACCOUNT OTHER DOCUMENTS OR ASSETS HAVE BEEN DELIVERED TO THE REQUISITIONING OFFICER IN ACCORDANCE WITH THE PROVI SIONS OF SECTION 132A THEN THE PROVISIONS OF SUB-SECTION (1) SHALL APPLY AS IF SUC H BOOKS OF ACCOUNT OTHER DOCUMENTS OR ASSETS WHICH HAD BEEN TAKEN INTO CUSTODY FROM THE P ERSON REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) AS THE CASE MAY BE OF SU B-SECTION (1) OF SECTION 132A HAD BEEN FOUND IN THE POSSESSION OR CONTROL OF THAT PERSON I N THE COURSE OF A SEARCH UNDER SECTION 132 . ] 13. WE FIND THAT IN THE INSTANT CASE SEARCH AND SE IZURE OPERATION U/S. 132(1) OF THE ACT WAS CONDUCTED IN THE FORT GROUP OF CASES INCLUDING ASS ESSEE ON 28.2.2008 AND FROM THE RESIDENTIAL PREMISES OF THE ASSESSEE I.E. BALLYGUNGE PARK KOLK ATA-19 CASH JEWELLERY SILVER UTENSILS AND 17 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 VARIOUS DOCUMENTS MARKED AS ANNEXURE RM-1 TO RM-5 W AS FOUND AND SEIZED. ON THE BASIS OF THESE SEIZED DOCUMENTS MARKED AS RM-1 TO RM-5 ASS ESSEE WAS ASKED TO MAKE DISCLOSURE OF RS.9.02 CR. IN RESPECT TO ON MONEY RECEIPTS OF FORT PROJECTS PVT. LTD. A PRIVATE LIMITED COMPANY IN WHICH ASSESSEE IS ONE OF THE DIRECTOR. WE FIND THAT THE ASSESSEES STATEMENT DURING THE COURSE OF SEARCH IN RESPECT OF NOTING I N VARIOUS SEIZED DOCUMENTS RECORDED WERE ACCEPTED U/S. 132(4) OF THE ACT. IN THE COURSE OF STATEMENT RECORDED U/S. 132(4) OF THE ACT ON 14.3.2008 ASSESSEE MADE DISCLOSURE OF RS.7.70 CR. ON THE BASIS OF NOTING IN RM-1 ON ACCOUNT OF CAPITAL GAIN ARISING ON SALE OF DIAMONDS AND GOL D IN ASSESSMENT YEAR 2008-09. WE HAVE PERUSED COPIES OF STATEMENT OF ASSESSEE RECORDED DU RING THE COURSE OF SEARCH WHICH ARE ENCLOSED IN ASSESSEES PAPER BOOK AT PAGES 82 TO 11 1. THE MAIN ISSUE IN THE PRESENT APPEALS REVOLVES AROUND NOTING MADE IN SEIZED DOCUMENTS MAR KED RM-1 AND RM-2 WHICH ARE COMPUTER PRINT OUT IN RESPECT OF ASSESSEES UNACCOU NTED INVESTMENT IN GOLD DIAMONDS AND PAINTINGS ETC. UP TO 23.2.2008. RM-1 IS A NOTE BOO K IN HAND WRITING OF ASSESSEES RECORDING ENTRIES UP TO 20.2.2008 AND ALL THESE ENTRIES ARE C OMPLETELY REFLECTED IN RM-1 IF WE COMPARE THESE TWO. WE FIND THAT ASSESSING OFFICER DISBELIE VED PART OF NOTING IN SEIZED DOCUMENTS AND MADE ADDITION IN RESPECT OF NOTING IN DOCUMENT RM-1 AND RM-2 OF SALE OF GOLD DIAMONDS AND PAINTINGS BY STATING THAT ACTUALLY IT IS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. THE ASSESSING OFFICER NOTED THAT ASSESSEE WAS IN REAL E STATE BUSINESS WHERE ON MONEY RECEIPTS WERE RAMPANT AND THESE RECEIPTS WERE NOTHING BUT ON MONE Y NOTED AS SALE CONSIDERATION OF GOLD AND DIAMONDS AND TO EXPLAIN AWAY UNRECORDED CASH PAYMEN TS TOWARDS INVESTMENT. THE CIT(A) ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER BUT ENTIRELY ON DIFFERENT GROUND BY APPLYING THE PROVISIONS OF SECTION 292C AS WELL AS DECISION OF H ONBLE APEX COURT IN THE CASE OF P. R. METRANI (SUPRA). FIRST OF ALL IT IS TO BE NOTED TH AT THE DECISION OF HONBLE APEX COURT IN THE CASE OF P. R. METRANI (SUPRA) HAS DISCUSSED THE ISS UE OF PRESUMPTION U/S. 132(4A) OF THE ACT AND ACCORDING TO HONBLE APEX COURT THIS WAS A REB UTTABLE PRESUMPTION. THE HONBLE APEX COURT IN THE CASE OF P. R. METRANI (SUPRA) HAS DISC USSED THE FACTS AS UNDER: P. R. METRANI AND Y. R. METRANI WERE TWO BROTHERS AND ARE THE MEMBERS OF THE JOINT HINDU FAMILY. P. R. METRANI (HUF) ASSESSEE WAS A PA RTNER IN A FIRM CALLED M/S. R. N. METRANI AND SONS. Y. R. METRANI WAS ALSO A PARTNER IN THIS FIRM. P. R. METRANI AS WELL AS Y. R. METRANI HAVE DIED DURING THE PENDENCY OF THES E CASES. A SEARCH OF THE RESIDENTIAL PREMISES RANGANATHA NIL AYA WAS CONDUCTED BY THE INCOME- TAX CENTRAL EXCISE AND CUSTOMS DEPARTMENTS ON JUNE 30 1982 AND JULY 1 1982 AND AS WELL AS THE BUSINESS PREMISES WHERE THE BUSINESS OF THE FIRM WAS BEING CONDUCTED.THE RESIDENTIAL PREMISES OF J. J. BAKALE NEPHEW OF P. R. METRANI WERE ALSO SEARCHED. THE SEARCH BROUGHT TO SURFACE UNACCOUNTED MONEY GOLD B ISCUITS GOLD JEWELLERY SILVER ETC. BESIDES SOME IMPORTANT DOCUMENTS. FOR THE PURPOSE O F ASSESSMENT FOR THE ASSESSMENT YEARS 1981-82 AND 1982-83 THREE DOCUMENTS WERE FOUN D TO BE RELEVANT BY THE ASSESSING OFFICER AND THEY WERE MARKED AS PRM-1 PRM-7 AND PR M-13 AT THE TIME OF SEARCH AND 18 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 SEIZURE WHICH WERE SEIZED FROM THE RESIDENTIAL PRE MISES NAMELY RANGANATHA NILAYA. THE STATEMENT OF J. J. BAKALE WAS RECORDED AT THE T IME OF SEARCH. P. R. METRANI WAS AWAY TO RAJASTHAN ON A BUSINESS TOUR. HE WAS EXAMINED AF TER HIS RETURN TO HUBLI ON JULY 13 1982. HE DENIED THE POSSESSION OF PRM-1 PRM-13 AND PRM-14. HE ALSO DENIED THAT THESE PAPERS CONTAIN ANY WRITING MADE BY HIM. THE A SSESSING AUTHORITY MADE A SUMMARY ADJUDICATION ORDER UNDER SECTION 132(5) OF THE INCO ME-TAX ACT 1961 (FOR SHORT THE ACT). HE MADE CERTAIN ADDITIONS AND RETAINED THE ASSETS S EIZED. NOTICE UNDER SECTION 139(2) DATED SEPTEMBER 17 198 2 FOR THE ASSESSMENT YEAR 1982-83 WAS SERVED ON THE ASSESSEE ON SEPTEMBER 21 1982. T HE APPELLANT DECLARED A TOTAL INCOME OF RS. 46 200 AND A NET AGRICULTURAL INCOME OF RS. 6 000. NOTICES UNDER SECTIONS 143(2) AND 142(1) WERE ISSUED ON SEVERAL DATES. THE APPELL ANT APPEARED BEFORE THE AUTHORITIES ON SEVERAL DATES AND ASSESSMENT CAME TO BE COMPLETED. THE FOLLOWING ADDITIONS WERE MADE IN RESPECT OF THE ASSESSMENT YEAR 1982-83 : - (I) INCOME FROM UNDISCLOSED SOURCES AS DISCUSSED I N RS. 28 67 920 PARA. 3.2 AS PER PRM-1 AND PRM-7 (II) INCOME FROM UNDISCLOSED SOURCES AS DISCUSSED I N RS. 6 66 690 PARA. 3.3 I.E. PRM13 (III) INVESTMENT IN DURGADABAILU BUILDING AT HUBLI AS PER RS. 2 62 100 PARA. 5 BEING 50% OF RS. 5 24 200 (IV) UNEXPLAINED EXPENDITURE UNDER SECTION 69C RS. 8 33 525 THE ASSESSMENT FOR THE YEAR 1981-82 WAS COMPLETED A FTER MAKING AN ADDITION OF RS. 19 93 117. THE ASSESSING AUTHORITY MADE AN ASSESSMENT FOR THE CONSTRUCTION OF A COMMERCIAL COMPLEX IN DURGADABAILU THE INVESTMENT FOR WHICH W AS DECLARED AT RS. 5 55 000 FOR THE ENTIRE BUILDING. HALF OF THE BUILDING BELONGED TO P . R. METRANI AND OTHER HALF TO Y. R. METRANI. THE DEPARTMENT HAD SENT THE VALUATION OFFI CER FOR ENQUIRY REGARDING THE COST OF BUILDING AND IT WAS FIXED BY THE DEPARTMENT VALUATI ON OFFICER AT RS. 5 83 000. THE ASSESSING AUTHORITY HOWEVER DID NOT ACCEPT THE VALU ATION MADE BY THE VALUATION OFFICER AND HELD THAT THE TOTAL INVESTMENT ON THE BUILDING WAS RS.6 45 809. A SOURCE TO THE EXTENT OF RS. 1 21 627 WAS ACCEPTED. THE BALANCE WAS ROUND ED OFF TO RS.5 24 200. HALF OF THIS WAS ADDED TO THE ASSESSMENT OF P. R. METRANI (HUF) AND OTHER HALF WAS ADDED IN THE ASSESSMENT OF Y. R. METRANI. THE APPELLANT BEING AGGRIEVED FILED APPEALS BEFORE THE COMMISSIONER (APPEALS). THE COMMISSIONER (APPEALS) BY SEPARATE ORDER DISPOS ED OF THE APPEALS RELATING TO THE ASSESSMENT YEARS 1981-82 AND 1982-83. HE EXAMINED T HE ISSUE INCLUDING CERTAIN CREDITS AND ON SEPTEMBER 19 1988 CONFIRMED THE ADDITIONS BARRING THE SUM OF RS. 36 000 FOR THE ASSESSMENT YEAR 1982-83. THE ORDERS OF THE ASSESSIN G AUTHORITY AS WELL AS THE COMMISSIONER (APPEALS) ARE BASED ON THE PRESUMPTION S IN TERMS OF SECTION 132(4A) OF THE ACT. IT WAS HELD THAT THE PRESUMPTIONS UNDER SECTIO N 132(4A) WERE NOT CONFINED TO THE ORDERS PASSED UNDER SECTION 132 ONLY BUT WERE AVA ILABLE FOR FRAMING THE REGULAR ASSESSMENTS AS WELL. THE ASSESSEE BEING AGGRIEVED FILED A FURTHER APPEA L BEFORE THE INCOME TAX APPELLATE TRIBUNAL BANGALORE (FOR SHORT THE TRIBU NAL). THE TRIBUNAL RELYING UPON THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN THE CASE OF PUSHKAR NARAIN SARRAF V. CIT [1990] 183 ITR 388 ON THE SCOPE OF SECTION 132(4A) HELD T HAT THE PRESUMPTIONS UNDER SECTION 132(4A) ARE CONFINED TO THE FRAMING OF THE ORDER UN DER SECTION 132(5) ONLY AND ARE NOT 19 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 AVAILABLE FOR FRAMING THE REGULAR ASSESSMENT. THE T RIBUNAL ACCEPTED THE APPEALS SET ASIDE THE ORDERS PASSED BY THE COMMISSIONER (APPEALS) AS WELL AS THE ASSESSING AUTHORITY EXCEPT TO THE EXTENT OF ADDITION OF RS.2 62 100. AT THE IN STANCE OF THE REVENUE THE TRIBUNAL REFERRED THE FOLLOWING TWO QUESTIONS FOR BOTH THE A SSESSMENT YEARS 1981-82 AND 1982-83 FOR THE OPINION OF THE HIGH COURT (PAGE 247) : (1) WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS CORRECT IN LAW IN HOLDING THAT THE PRESUMPTION UNDER SUB-SECTION (4A) OF SECTION 132 OF THE INCOME-TAX ACT 1961 IS ONLY FOR THE LIMITED PURPO SE OF PASSING AN ORDER UNDER SUB-SECTION (5) OF THE SAID SECTION ? (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE THE INCOME-TAX APPELLATE TRIBUNAL WAS RIGHT IN LAW IN H OLDING THAT THE DOCUMENTS SEIZED FROM THE RESIDENTIAL PREMISES OF T HE ASSESSEE HINDU UNDIVIDED FAMILY WERE NOT OF THE SAID HINDU UNDIVID ED FAMILY AND THE ENTRIES THEREIN DID NOT PERTAIN TO IT PARTICULARLY WHEN TH E INCOME-TAX APPELLATE TRIBUNAL ITSELF HAS ACCEPTED THAT THE ENTRIES IN T HE SAID DOCUMENTS CULMINATING IN ADDITION OF RS. 2 62 100 IN THE ASS ESSMENT FOR THE ASSESSMENT YEAR 1982-83 PERTAINED TO THE ASSESSEE-HINDU UNDIVI DED FAMILY AND UPHELD THE SAID ADDITION ? AT THE INSTANCE OF THE ASSESSEE THE TRIBUNAL REFER RED THE FOLLOWING TWO QUESTIONS FOR THE OPINION OF THE HIGH COURT (PAGE 249) : (1) WHETHER ON THE FACTS THE TRIBUNAL WAS JUSTIFIE D IN HOLDING THAT THE APPLICANT HUF WAS LIABLE TO BE TAXED IN RESPECT OF RS.2 62 100 BEING ALLEGED UNEXPLAINED INVESTMENT IN THE PROPERTY INVO KING THE PROVISIONS OF SECTION 69 OF THE ACT ? (2) ON THE FACTS WHETHER THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE PART OF THE ENTRIES IN THE SEIZED DOCUMENTS COULD BE ATTRIB UTED TO THE APPLICANT HUF WHEN THE APPLICANT HAD DENIED THE KNOWLEDGE OR OWNE RSHIP OF THE DOCUMENT? THE HIGH COURT ANSWERED ALL THE FOUR QUESTIONS IN F AVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. ON QUESTION NO. 1 REGARDING PRESUMPTION U NDER SUB-SECTION (4A) OF SECTION 132 OF THE ACT IT HAS BEEN HELD THAT THE SAME IS NOT LIMITED TO THE PASSING OF AN ORDER UNDER SUBSECTION (5) OF SECTION 132 ONLY ; THE SAME PRESU MPTION CAN BE RAISED FOR FRAMING THE REGULAR ASSESSMENT AS WELL. THE BENCH HAS RECORDED ITS DISSENT WITH THE VIEW TAKEN BY THE ALLAHABAD HIGH COURT IN PUSHKAR NARAIN SARRAF [199 0] 183 ITR 388. 14. THE HONBLE APEX COURT HAS FINALLY CONCLUDED AS UNDER: SEARCH AND SEIZURE UNDER SECTION 132 IS A SERIOUS INVASION INTO THE PRIVACY OF A CITIZEN THEREFORE IT HAS TO BE CONSTRUED STRICTLY . SUB-SECTION (4A) WAS INSERTED BY THE TAXATION LAWS (AMENDMENT) ACT 1975 WITH EFFECT F ROM OCTOBER 1 1975 TO PERMIT A PRESUMPTION TO BE RAISED IN THE CIRCUMSTANCES MENTI ONED THEREIN. BEFORE THE INSERTION OF SUB-SECTION (4A) THE ONUS OF PROVING THAT THE BO OKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY ETC. FOUND IN THE POSSES SION OR CONTROL OF A PERSON IN THE COURSE OF A SEARCH BELONGED TO THAT PERSON WAS ON T HE INCOME-TAX DEPARTMENT. SUB- SECTION (4A) ENABLES AN ASSESSING AUTHORITY TO RAIS E A REBUTTABLE PRESUMPTION THAT SUCH BOOKS OF ACCOUNT MONEY BULLION ETC. BELONGED TO SUCH PERSON ; THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE AND THAT THE SIGNATURES AND 20 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 EVERY OTHER PART OF SUCH BOOKS OF ACCOUNT AND OTHE R DOCUMENTS ARE SIGNED BY SUCH PERSON OR ARE IN THE HANDWRITING OF THAT PARTICULA R PERSON. RAISING OF SUCH PRESUMPTION HAS BEEN ENACTED BY TH E LEGISLATURE TO ENABLE THE ASSESSING AUTHORITY TO MAKE A PROVISIONAL ADJUDICAT ION WITHIN THE TIME FRAME PRESCRIBED UNDER SECTION 132. OTHERWISE IT MAY NOT BE POSSIBLE TO DO SO. THE OBJECT OF INTRODUCTION OF SECTION 132 IS TO PREVENT THE EVASI ON OF TAX I.E. TO UNEARTH HIDDEN OR UNDISCLOSED INCOME OR PROPERTY AND BRING IT TO ASSE SSMENT. IT IS NOT MERELY AN INFORMATION OF UNDISCLOSED INCOME BUT ALSO TO SEIZE MONEY BULLION ETC. REPRESENTING THE UNDISCLOSED INCOME AND TO RETAIN THEM FOR THE P URPOSES OF REALIZATION OF TAXES PENALTIES ETC. SEARCH AND SEIZURE IS A SERIOUS INVA SION INTO THE PRIVACY OF THE PERSON. SECTION 132 WHICH IS A COMPLETE CODE BY ITSELF PROV IDES THAT THE MONEY BULLION OR THE BOOKS OF ACCOUNT ETC. SHOULD NOT BE RETAINED UNNECE SSARILY AND THAT THE PROVISIONAL ASSESSMENT MADE UNDER SECTION 132 FOR THE PURPOSE O F RETENTION OF THE BOOKS IS PASSED WITHIN A SPECIFIED TIME IN ACCORDANCE WITH LAW. IT PROVIDES THAT THE BOOKS OF ACCOUNT MONEY AND BULLION WHICH ARE NOT REQUIRED ARE NOT RE TAINED UNNECESSARILY THEREBY CAUSING HARASSMENT TO THE PERSON CONCERNED. IN ORDE R TO SEE THAT THE ASSESSMENT ORDER IS FRAMED WITHIN THE TIME FRAME PROVIDED UNDER SECT ION 132 THE LEGISLATURE PROVIDED FOR A REBUTTABLE PRESUMPTION TO BE RAISED AGAINST T HE PERSON FROM WHOSE POSSESSION AND CONTROL THE BOOKS OF ACCOUNT MONEY BULLION ETC. ARE SEIZED SO THAT THE ORDER CAN BE PASSED WITHIN THE TIME FRAME PROVIDED UNDER SEC TION 132. A PRESUMPTION IS AN INFERENCE OF FACT DRAWN FROM O THER KNOWN OR PROVED FACTS. IT IS A RULE OF LAW UNDER WHICH COURTS ARE AUTHORIZ ED TO DRAW A PARTICULAR INFERENCE FROM A PARTICULAR FACT. IT IS OF THREE TYPES (I) MAY PRESUME (II) SHALL PRESUME AND (III) CONCLUSIVE PROOF. MAY PRESUME LEAVES IT T O THE DISCRETION OF THE COURT TO MAKE THE PRESUMPTION ACCORDING TO THE CIRCUMSTANCES OF T HE CASE. SHALL PRESUME LEAVES NO OPTION WITH THE COURT NOT TO MAKE THE PRESUMPTION. THE COURT IS BOUND TO TAKE THE FACT AS PROVED UNTIL EVIDENCE IS GIVEN TO DISPROVE IT. I N THIS SENSE SUCH PRESUMPTION IS ALSO REBUTTABLE. CONCLUSIVE PROOF GIVES AN ARTIFICIAL PROBATIVE EFFECT BY THE LAW TO CERTAIN FACTS. NO EVIDENCE IS ALLOWED TO BE PRODUCED WITH A VIEW TO COMBATTING THAT EFFECT. IN THIS SENSE THIS IS AN IRREBUTTABLE PRESUMPTION. THE WORDS IN SUB-SECTION (4A) ARE MAY BE PRESUMED . THE PRESUMPTION UNDER SUB- SECTION (4A) THEREFORE IS A REBUTTABLE PRESUMPTIO N. THE FINDING RECORDED BY THE HIGH COURT IN THE IMPUGNED JUDGMENT THAT THE PRESUMPTION UNDER SUB-SECTION (4A) IS AN IRREBUTTABLE PRESUMPTION IN SO FAR AS IT RELATES TO THE PASSING OF AN ORDER UNDER SUB- SECTION (5) OF SECTION 132 AND A REBUTTABLE PRESUMP TION FOR THE PURPOSE OF FRAMING A REGULAR ASSESSMENT IS NOT CORRECT. THERE IS NOTHING EITHER IN SECTION 132 OR ANY OTHER PROVISIONS OF THE ACT WHICH COULD WARRANT SUCH AN I NFERENCE OR FINDING. THE PRESUMPTION UNDER SUB-SECTION (4A) WOULD NOT BE AVAILABLE FOR THE PURPOSE OF FRAMING A REGULAR ASSESSMENT. THERE IS NOTHING EITH ER IN SECTION 132 OR ANY OTHER PROVISION OF THE ACT TO INDICATE THAT THE PRESUMPTI ON PROVIDED UNDER SECTION 132 WHICH IS A SELF-CONTAINED CODE FOR SEARCH AND SEIZURE AND RETENTION OF BOOKS ETC. CAN BE RAISED FOR THE PURPOSES OF FRAMING OF THE REGULAR A SSESSMENT AS WELL. WHEREVER THE LEGISLATURE INTENDED THE PRESUMPTION TO CONTINUE I T HAS PROVIDED SO. REFERENCE MAY MADE TO SECTION 278D OF THE ACT WHICH PROVIDES THAT WHERE DURING THE COURSE OF ANY SEARCH UNDER SECTION 132 ANY MONEY BULLION JEWEL LERY OR OTHER VALUABLE ARTICLES OR THINGS OR ANY BOOKS OF ACCOUNT ETC. ARE TENDERED BY THE PROSECUTION IN EVIDENCE AGAINST THE PERSON CONCERNED THEN THE PROVISIONS OF SUB-SE CTION (4A) OF SECTION 132 SHALL SO FAR AS MAY BE APPLY IN RELATION TO SUCH ASSETS OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS. THIS CLEARLY SPELLS OUT THE INTENTION OF THE LEGISL ATURE THAT WHEREVER THE LEGISLATURE INTENDED TO CONTINUE THE PRESUMPTION UNDER SUB-SECT ION (4A) OF SECTION 132 IT HAS 21 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 PROVIDED SO. IT HAS NOT BEEN PROVIDED THAT THE PRES UMPTION AVAILABLE UNDER SECTION 132 (4A) WOULD BE AVAILABLE FOR FRAMING THE REGULAR ASS ESSMENT UNDER SECTION 143 AS WELL. THIS IS ALSO EVIDENT FROM THE FACT THAT WHEREAS THE LEGISLATURE UNDER SECTION 132(4) HAS PROVIDED THAT THE BOOKS OF ACCOUNT MONEY BULLION JEWELLERY AND OTHER VALUABLE ARTICLES OR THINGS AND ANY STATEMENT MADE BY SUCH PERSON DURING EXAMINATION MAY THEREAFTER BE USED AS EVIDENCE IN ANY OTHER PROCEE DINGS UNDER THE ACT IT HAS NOT PROVIDED SO UNDER SUB-SECTION (4A) OF SECTION 132. IT DOES NOT PROVIDE THAT THE PRESUMPTION UNDER SECTION 132(4A) WOULD BE AVAILABL E WHILE FRAMING THE REGULAR ASSESSMENT OR FOR THAT MATTER UNDER ANY OTHER PROCE EDING UNDER THE ACT EXCEPT UNDER SECTION 278D. SECTION 132 BEING A COMPLETE CODE IN ITSELF CANNOT INTRUDE INTO ANY OTHER PROVISION OF THE ACT. SIMILARLY OTHER PROVISIONS OF THE ACT CAN NOT INTERFERE WITH THE SCHEME OR THE WORKING OF SECTION 132 OR ITS PROVISIONS. THE PRESUMPTION UNDER SECTION 132(4A) IS AVAILABLE ONLY IN REGARD TO THE PROCEEDINGS FOR SEARCH AND SEIZURE AND FOR THE PURP OSE OF RETAINING THE ASSETS UNDER SECTION 132(5) AND THEIR APPLICATION UNDER SECTION 132B. IT IS NOT AVAILABLE FOR ANY OTHER PROCEEDING EXCEPT WHERE IT IS PROVIDED THAT T HE PRESUMPTION UNDER SECTION 132(4A) WOULD BE AVAILABLE. 15. WE FIND THAT THE TERM USED IN THE PROVISION O F SECTION 292C OF THE ACT MAY BE PRESUMED IS DISCUSSED BUT IN THE CONTEXT OF SECTI ON 132(4) OF THE ACT BY HONBLE APEX COURT IN THE CASE OF P. R. METRANI (SUPRA) AND SAID TERM IMPLIES THAT THE PRESUMPTION IS REBUTTABLE. THE TERM REBUT MEANS TO DISPROVE. IN OTHER WORDS UNLESS CONTRARY IS PROVED WHAT IS STATED IN THE SEIZED DOCUMENTS HAS TO BE PRESUMED TO BE TRUE AND THUS THE PROVISIONS OF SECTION 292C OF THE ACT DOES NOT CONFER DISCRETIONARY POWER ON THE DEPARTMENT TO PRESUME OR NOT TO PRESUME THE CORRECTNESS OF SEIZED DOCUMENTS HELD BY CIT(A). WE FIND THAT CIT(A) OBSERVED THAT SECTION 292C OF THE ACT IS NOT FOR THE BENEFIT OF T HE ASSESSEE BUT IT IS FOR BENEFIT OF DEPARTMENT. WE ARE OF THE VIEW THAT THE PROVISION WILL EQUALLY APPLY TO BOTH ASSESSEE AS WELL AS DEPARTMENT AND SECTION 292C OF THE ACT ONLY CREATES A LEGAL FI CTION WHEREBY IN CASE OF SEARCH AND SEIZURE CONTENTS OF SEIZED MATERIAL ARE PRESUMED TO BE TRUE UNLESS REBUTTED BY THE PARTY CLAIMING CONTRARY. NOW WE ARE OF THE VIEW THAT ONUS OF REB UTTING THE PRESUMPTION U/S. 292C OF THE ACT IS ON THE PARTY CLAIMING OTHERWISE BE IT ASSESSEE OR REVENUE. IN THE PRESENT CASE BEFORE US THE SEIZED DOCUMENTS RM-1 AND RM-2 WERE FOUND FROM THE POSSESSION AND CONTROL OF THE ASSESSEE. IN PRESENT CASE SINCE SEIZED DOCUMENTS RM/1 & RM/2 WERE FOUND FROM POSSESSION AND CONTROL OF THE ASSESSEE DURING THE COURSE OF SEARCH IN HIS CASE AND BY LEGAL FICTION A PRESUMPTION U/S 292C HAD TO BE DRAWN THAT THE SAID DOCUMENTS BELONG ED TO THE ASSESSEE AND THE CONTENTS THEREOF WERE TRUE UNLESS DISPROVED BY COGENT EVIDENCE. THE ONUS TO PROVE THAT WHAT WAS APPARENT FROM THESE BOOKS WAS NOT REAL WAS ON THE PARTY WHICH CLA IMED IT TO BE SO. THE DEPARTMENT CLAIMED THAT THE CONTENTS OF RM/ 1 & RM/2 FOUND FROM THE PO SSESSION AND CONTROL OF THE ASSESSEE IN 22 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 COURSE OF SEARCH WERE INCORRECT. THUS THE ONUS WAS ON THE DEPARTMENT TO BRING ON RECORD SOME ACCEPTABLE EVIDENCE TO PROVE THAT WHAT WAS STA TED IN THE SEIZED DOCUMENTS DID NOT DEPICT THE ACTUAL STATE OF AFFAIRS. THE AO AND CIT(A) FAIL ED TO DISCHARGE SUCH ONUS BY BRINGING ON RECORD SOME COGENT EVIDENCE TO DISPROVE NOTING IN T HE SEIZED PAPERS. ON THE CONTRARY CIT(A) AND AO TRIED TO SHIFT ONUS OF PROVING ENTRIES IN SE IZED BOOKS/ PAPERS ON THE ASSESSEE IN CONTRADICTION TO PROVISIONS OF SECTION 292C OF THE ACT. WE ARE OF THE VIEW THAT SEIZED DOCUMENTS RM/ 1 & RM/2 CLEARLY DEPICTING THE PURCHA SE AND SALE OF GOLD DIAMONDS AND PAINTINGS AND INVESTMENT OF THE SALE PROCEEDS IN PR OPERTY AND SHARES HAD TO BE ACCEPTED AS SUCH UNLESS SOME EVIDENCE OR MATERIAL WAS BROUGHT ON REC ORD BY THE REVENUE TO SHOW THAT WHAT WAS STATED IN THE SEIZED DOCUMENTS WAS NOT CORRECT. CIT (A)S OPINION THAT ONUS WAS ON THE ASSESSEE TO PROVE THAT WHAT WAS STATED IN THE SEIZED DOCUMEN T WAS TRUE. SUCH AN INTERPRETATION WOULD RENDER THE DEEMING PROVISIONS OF SECTION 292C OTIOS E AND PRESUMPTION AS TO THE CORRECTNESS OF SEIZED DOCUMENTS IS AUTOMATIC UNDER SECTION 292C OF THE ACT UNLESS THE CONTRARY IS PROVED AND AS SUCH THE ASSESSEE WAS NOT LEGALLY REQUIRED TO S UBSTANTIATE THE SEIZED DOCUMENTS WITH SUPPORTING EVIDENCE. WHERE THE STATUTE PROVIDES A D EEMING PROVISION WHAT IS PRESCRIBED IS TO BE DEEMED WITHOUT SEEKING CORROBORATIVE EVIDENCE. W E FIND FROM A BARE PERUSAL OF RM/ 1 & RM/2 WHICH WOULD REVEAL THAT SEIZED DOCUMENTS HAVE BEEN MAINTAINED IN CONSIDERABLE DETAILS SUCH AS EXACT CARATAGE OF DIAMONDS THE WEIGHT OF G OLD AND THE RATES OF PURCHASES AND SALES THE DATES OF PURCHASE AND SALES HAVE BEEN MENTIONED. FU RTHER IN RESPECT OF PAINTINGS MINUTE DETAILS SUCH AS THE EXACT SIZE OF THE PAINTINGS AND THE NAMES OF THE ARTISTS HAVE ALSO BEEN MENTIONED IN THE SEIZED DOCUMENTS. THUS THESE ARE SPEAKING DOCUMENTS AND NOT DUMB DOCUMENTS. A DUMB DOCUMENT IS A DOCUMENT WHICH DOES NT SPEAK FOR ITSELF AND NOT A SELF EXPLANATORY AND DETAILED DOCUMENT LIKE PRESENT ONE. FURTHER GOING THROUGH THESE DOCUMENTS IT IS REVEALED THAT THESE DOCUMENTS ALSO RECORD SEVERA L REGULAR TRANSACTIONS OF THE ASSESSEE WHICH STAND DULY DISCLOSED IN REGULAR BOOKS OF ACCOUNT. T HE ASSESSEE HAS CITED FEW EXAMPLES IN HIS WRITTEN SUBMISSIONS OF TRANSACTIONS OF DISCLOSED/ R EGULAR NATURE FOUND RECORDED IN RM/ 1 ARE AS UNDER: DATE PARTICULARS OF TRANSACTIONS 02.12.2002 PAYMENT OF RS.12 65 322/- IN THE BOOKS O F RAMANI PROJECTS ON ACCOUNT OF REGISTRATION STAMP DUTY ETC. TO REGISTRY OFFICE 15.02.2002 PAYMENT OF RS.11 15 514/- IN THE BOOKS O F RAMANI PROJECTS TO KMC 30.03.2006 CASH WITHDRAWN OF RS.16 00 000/- AND RS. 25 00 000/- FROM ANDHRA BANK BELONGING TO SALASAR MAHANIRMAN PVT. LTD 23 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 SIMILARLY SEVERAL OTHER NOTING PERTAINING TO WITHD RAWAL OF CASH FROM THE REGULAR BANK ACCOUNTS OF VARIOUS COMPANIES PAYMENT OF CASH ON ACCOUNT OF VARIOUS PROPERTIES ACQUIRED BY VARIOUS COMPANIES DULY RECORDED IN THE BOOKS OF THOSE COMPA NIES ETC. WERE ALSO RECORDED IN RM/ 1 & RM/2. ALL THESE ENTRIES WERE VERIFIED FROM REGULAR BOOKS OF ACCOUNT AND FOUND TO BE CORRECT AND ACCEPTED AS SUCH BY THE DEPARTMENT. THIS ALSO F ORTIFIES THE FACT THAT RM/ 1 & RM/2 CONTAINED GENUINE ENTRIES OF THE APPELLANT AND WERE NOT DUMB DOCUMENTS. 16. WE FURTHER FIND THAT REVENUE DID NOT MAKE ANY E FFORT TO CONTROVERT THE CORRECTNESS OF THE NOTING IN THE SEIZED DOCUMENTS. REVENUE BOTH AUTHO RITIES BELOW DID NOT DOUBT THE RATES AT WHICH GOLD DIAMONDS AND PAINTINGS WERE PURCHASED A ND SOLD BY THE ASSESSEE AND WERE NOT PROVED TO BE UNFEASIBLE OR IMPRACTICABLE. LOWER AUT HORITIES FAILED TO PROVE A SINGLE INSTANCE WHERE SALE PROCEEDS OF DIAMONDS GOLD OR PAINTINGS ACTUALLY REPRESENTED ON-MONEY OR SOME OTHER FORM OF UNDISCLOSED RECEIPT AND IN THE ABSENC E OF COGENT EVIDENCE EXPRESS NOTING IN THE SEIZED DOCUMENTS COULD NOT BE ARBITRARILY DISREGARD ED AND NO ADDITIONS COULD BE MADE SOLELY ON THE BASIS OF SURMISES AND CONJECTURES. EVEN SEIZED DOCUMENTS COULD NOT BE OUT-RIGHTLY REJECTED AS DUMB DOCUMENTS WITHOUT DISPROVING THE SAME. IT I S ALSO A FACT THAT SEIZED PAPERS WERE FINDINGS OF SEARCH OPERATIONS CARRIED OUT BY THE DE PARTMENT AND NOT PAPERS SUBMITTED BY THE ASSESSEE SUO MOTO IN COURSE OF NORMAL ASSESSMENT WH ICH REQUIRED SUBSTANTIATION. THESE PAPERS WERE PART OF DEPARTMENTS EVIDENCE UNEARTHED AS A R ESULT OF SEARCH CARRIED OUT BY THE DEPARTMENT AND THUS THE SAME WERE TO BE TAKEN AT FACE VALUE UNLESS CONTRARY IS PROVED. THE SAID PAPERS WERE NOT MEANT FOR PRODUCTION BEFORE TH E DEPARTMENT BUT FOR PERSONAL INFORMATION OF THE ASSESSEE AND AS SUCH COULD NOT HAVE BEEN UN TRUE OR FABRICATED. THEREFORE IT WAS HIGHLY ILLOGICAL ON THE PART OF THE DEPARTMENT TO ASSUME T HAT THE SAID PAPERS HAD BEEN PURPOSELY PREPARED BY THE ASSESSEE TO DEFRAUD THE DEPARTMENT. AS REGARDS CIT(A)S CONTENTION THAT NO STOCK OF GOLD DIAMONDS OR PAINTINGS WERE FOUND IN COURSE OF SEARCH AT THE RESIDENTIAL PREMISES WE ARE OF THE VIEW THAT MOST OF THE GOLD DIAMONDS AND PAINTINGS WERE SOLD PRIOR TO SEARCH ACTION AND AS SUCH CONSIDERABLE STOCK OF AFORESAID ITEMS WERE NOT REMAINING AT THE TIME OF SEARCH. EVEN DURING THE COURSE OF SEARCH THE ASSESS EE IN REPLY TO QUESTION NO. 8 OF HIS STATEMENT RECORDED ON OATH U/S 132(4) ON 14.03.2008 PAGES 10 1 TO 102 OF ASSESSEES PAPER BOOK REFERRED BY LD. COUNSEL WHEREIN HE STATED THAT THE GOLD AFT ER PURCHASE WAS KEPT AT VARIOUS LOCATION AND THIS EXPLAINS THE REASON WHY THE REMAINING 2 KGS OF GOLD WAS NOT FOUND IN COURSE OF SEARCH AT THE RESIDENTIAL PREMISE OF THE ASSESSEE. EVEN DURIN G THE COURSE OF SEARCH IN REGARDS PAINTINGS ASSESSEE ADMITTED VIDE QUESTION NO. 15 ON THE DATE OF SEARCH THAT THE SAME WERE ON DISPLAY AT 24 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 HIS RESIDENCE AND THE SAME QUESTION NO. 15 PAGES 1 04-105 OF ASSESSEES PAPER BOOK IS REPRODUCED AS UNDER: ANS 15. I AM FOND OF PAINTINGS AND HAVE BEEN COLLE CTING THEM FOR MY PERSONAL PURPOSE TO DISPLAY IN MY RESIDENCE FROM YEAR 1993. I GOT BORED OF HAVING THE SAME PAINTINGS IN THE HOUSE FOR SO LONG AND THEREFORE DECIDED TO SELL THE OLD ONES AND PURCHASED NEW ONES TO DISPLAY IN THE RESIDENCE WHICH WERE ALSO ON DISPLAY IN THE RESIDENCE ON THE DATE OF SEARCH IN VIEW OF THESE FACTS WE ARE OF THE OPINION THAT RM/1 AND RM/2 WAS A DAY TO DAY ACCOUNT PREPARED BY ASSESSEE AND DISCOVERED AS A RESULT OF SEARCH AND THE CONTENTS THEREIN HAD TO BE PRESUMED TO BE TRUE U/S 292C UNLESS PROVED OTHERWIS E. THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE THAT THIS IS NOT A AUTHENTICATED DOCUMENT BUT RELIED ON DOCUMENTS MARKED GB/ 12 IMPOUNDED IN COURSE OF SURVEY IN THE PREMISES OF M/ S. FORT PROJECTS (P) LTD AND THE SAID SEIZED DOCUMENTS CONTAINED CERTAIN DETAILS OF UNRECORDED C ASH PAYMENT ON ACCOUNT OF ACQUISITION OF SALT LAKE PROPERTY. SINCE RM/ 1 & RM/2 EXPLAINING T HE SOURCE OF ACQUISITION OF SUCH PROPERTY AND ACCOUNTS PREPARED ON THE BASIS OF THE SAME WERE REJECTED BY CIT(A) WE ARE OF THE CONSIDERED OPINION THAT NOTING IN GB-12 ONLY SUBSTA NTIATE/ CONFIRM THE ENTRIES PERTAINING TO INVESTMENT IN PROPERTY AT SALT LAKE NOTED IN RM/ 1 & RM/2. THUS GB-12 ONLY FORTIFIES THE CORRECTNESS OF RM/ 1 & RM/2 AND CIT(A) FAILED TO EX PLAIN THE LOGIC BEHIND RELYING ON ONE SET OF SEIZED DOCUMENTS MARKED GB-12 CONTAINING DETAILS OF UNACCOUNTED INVESTMENT IN PROPERTY AND REJECTING THE OTHER SET OF SEIZED DOCUMENTS MAR KED RM/ 1 & RM/2 CONTAINING BOTH THE DETAILS OF INVESTMENT IN PROPERTY AS WELL AS EXPLAI NING THE SOURCE THEREOF. CIT(A) FAILED TO APPRECIATE THAT SINCE RM/ 1 & RM/2 WERE FOUND FROM THE POSSESSION AND CONTROL OF THE APPELLANT IN COURSE OF SEARCH CONDUCTED IN THE ASSE SSEES OWN CASE PRESUMPTION U/S 292C COULD MORE APTLY BE DRAWN IN RESPECT OF RM/ 1 & RM/2 RATH ER THAN DOCUMENTS IMPOUNDED IN COURSE OF SURVEY IN GROUP CASE I.E. GB-12. 17. IN VIEW OF ABOVE FACTS IT IS CLEAR THAT THE DO CUMENTS SEIZED DURING THE COURSE OF SEARCH FROM THE POSSESSION OF ASSESSEE ARE TRUE TILL IT IS PROVED OTHERWISE BY COGENT EVIDENCE. THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO. HERE IN THE PRESENT CASE DEPARTMENT CLAIMED THAT DOCUMENTS INVENTORISED RM-1 TO RM-4 ARE DUMB DOCUMENTS AND FOR THIS REVENUE HAS NO BASIS WHATSOE VER. TO GIVE A FINDING THAT THE DOCUMENTS ARE DUMB AND SUCH A FINDING CAN BE REVIEWED ON THE GROUND THAT THERE IS NO EVIDENCE TO SUPPORT IT OR IT IS PERVERSE. FURTHER WHEN A CONCLUSION H AS BEEN REACHED ON AN APPRECIATION OF A NUMBER OF FACTS WHETHER THAT IS SOUND OR NOT MUST BE DETERMINED NOT BY CONSIDERING THE WEIGHT TO BE ATTACHED TO EACH SINGLE FACT IN ISOLA TION BUT BY ASSESSING THE CUMULATIVE EFFECT OF ALL THE FACTS IN THEIR SETTING AS A WHOLE. WHEN A COURT OF FACTS ACTS ON MATERIAL PARTLY RELEVANT 25 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 AND PARTLY IRRELEVANT IT IS IMPOSSIBLE TO SAY TO W HAT EXTENT THE MIND OF THE COURT WAS AFFECTED BY THE IRRELEVANT MATERIAL USED BY IT IN ARRIVING AT I TS FINDING. SUCH A FINDING IS VITIATED BECAUSE OF USE OF INADMISSIBLE MATERIAL AND HENCE DECISION IN SUCH SITUATION IS BASED ON CONJECTURES SURMISES AND SUSPICION. HENCE WE CONSIDER DOCUMENT S FOUND FROM THE POSSESSION OF THE ASSESSEE DURING THE COURSE OF SEARCH WAS REAL AND D ECLARATION MADE BY ASSESSEE ON THE BASIS OF ENTRY RECORDED IN THESE DOCUMENTS OF LONG TERM CAPI TAL GAIN ON ACCOUNT OF SALE OF GOLD AND DIAMOND AND ALSO RECEIPTS ON ACCOUNT OF SALE OF PAI NTINGS ARE TRUE AND THERE IS NO BASIS NOT TO ACCEPT THE SAME. ACCORDINGLY WE DELETE THE ADDITI ON MADE BY CIT(A) OF RS.6.009 CR. AND RS.90 LACS FOR AY 2006-07 AND 2007-08. THIS INTER-C ONNECTED ISSUE OF THE ASSESSEES APPEALS IS ALLOWED. 18. SINCE SEIZED DOCUMENTS RM-1 AND RM-2 ARE ACCEPT ED AS TRUE CONSEQUENTLY THE ASSESSEE HAS ALSO EXPLAINED THE INVESTMENT MADE IN PURCHASE OF SALT LAKE PROPERTY AND ALSO EXPLAINED THE INVESTMENT IN SHARES EXPLAINING SOURC E THEREOF FROM SALE PROCEEDS OF DIAMONDS AND GOLD. THE ASSESSEE HAS EXPLAINED THAT IT DID N OT MAKE ANY INVESTMENT OF RS.20 LAC IN THE PURCHASE OF SHARES OF FORT PROJECTS PVT. LTD. AS HE LD BY CIT(A) WHICH IS CLEARLY PROVED BY SEIZED DOCUMENTS RM-1 AND RM-2 AND THE TABLE REPROD UCED BY THE AO IN HIS ASSESSMENT ORDERS OF THESE YEARS. AFTER GOING THROUGH FACTS WE FIND THAT THIS MISTAKE HAS CROPPED UP DUE TO MISTAKEN NOTION OF THE CIT(A). AS REGARDS TO IN VESTMENT OF RS.18.40 CR. THE SAME HAS BEEN EXTRACTED BY LOWER AUTHORITIES FROM RM-1 AND RM-2. APART FROM RM-1 AND RM-2 CIT(A) COULD NOT HAVE ARRIVED AT THE FACTUM OF INVESTMENT IN SHARES BY ASSESSEE FROM ANY OTHER SOURCE. THE CIT(A) ACCEPTED THE FACTUM OF INVESTMENT IN SHA RES FROM RM-1 AND RM-2 FOR MAKING ADDITION ON ONE HAND AND REJECTING THE SAME AS DUMB DOCUMENTS ON THE OTHER HAND. SINCE WE HAVE ALREADY HELD THAT SEIZED DOCUMENTS RM-1 AND RM -2 ARE CORRECT AND FINANCIAL STATEMENTS PREPARED AFTER INCORPORATION THE ENTRIES FROM THE S EIZED DOCUMENTS ARE ALSO TRUE EXPLAINING THE INVESTMENT IN SHARES. ACCORDINGLY ON THE SAME REA SONING WE DELETE THE ADDITION OF UNEXPLAINED INVESTMENT IN SHARES AMOUNTING TO RS.18 .60 CR. FOR AY 2008-09. THIS ISSUE OF ASSESSEES APPEAL IS ALSO ALLOWED. 19. THE NEXT ISSUE IN IT(SS)A NO. 4/KOL/2011 RAISE D BY ASSESSEE BY WAY OF ADDITIONAL GROUND IS AS REGARDS TO DISALLOWANCE OF INTEREST PA ID TO M/S. FLOOR & WALLS. FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUND S: 1. THAT THE LD. CIT(A) OMITTED TO CONSIDER THE ADD ITIONAL GROUND FILED BY THE APPELLANT IN REGARD TO DISALLOWANCE OF INTEREST OF RS.2 93 36 6/- PAID TO M/S. FLOOR & WALLS BY THE APPELLANT FOR A.Y. 2006-07. 26 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 2. THAT THE A.O. ERRED IN DISALLOWING INTEREST ON C APITAL OF RS.2 93 366/- PAID TO M/S. FLOORS AND WALLS ALLEGING THAT THE SAME WAS IN THE NATURE OF INTEREST ON LOAN AND REMAINED UNSUBSTANTIATED DESPITE THE FACT THAT THE GENUINENESS OF THE SAME WAS PROVED FROM THE FACTS AND EVIDENCE ON RECORD. 20. AT THE OUTSET THE LD. CIT DR FAIRLY AGREED TH AT THIS CAN BE ADMITTED AND ADJUDICATED UPON AS THE FACTS ARE AVAILABLE IN THE RECORDS OF T HE DEPARTMENT. HENCE WE ADMIT THIS ISSUE AND ADJUDICATE THE SAME. 21. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THIS ADDITION WAS ALSO NOT CHALLENGED IN THE ORIGINAL GROUNDS OF APPEAL BEFORE THE FIRST APPELLATE AUTHORITY BUT WAS CHALLENGED BY ADD ITIONAL GROUNDS BUT CIT(A) INADVERTENTLY OMITTED TO CONSIDER THIS ADDITIONAL GROUNDS OF APPE AL. AS THIS GROUND HAS NOT BEEN ADJUDICATED BY CIT(A) WE SET ASIDE THIS ISSUE TO THE FILE OF C IT(A) TO ADJUDICATE THE SAME ON MERITS. ACCORDINGLY THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 22. THE NEXT ISSUE IN IT(SS)A NO. 7/KOL/2011 IS AS REGARDS TO THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO MAKING ADDITION OF CASH FOUND DURING SEARCH AS UNEXPLAINED. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NO.5: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN REJECTING THE CLAIM OF THE APPELLANT ABOUT THE SOURCE OF THE CASH FOUND DURING THE SEARCH AT RS.50 61 250/- AND IN CONFIRMING THE ADDITION AS MA DE BY THE A.O. IN THAT REGARD. 23. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT DURING COURSE OF SEARCH AT THE ASSESSEES RESIDENTIAL PREMISES CASH OF RS.50 61 2 50/- WAS FOUND OUT OF WHICH CASH OF RS. 50 00 000/- WAS SEIZED. THE AO ADDED RS. 50 61 250/ - ON ACCOUNT OF UNEXPLAINED CASH ON THE GROUND THAT THE ASSESSEE HAD ADMITTED THE SAME TO B E OUT OF BOOKS IN STATEMENT RECORDED U/S 132(4). AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND CIT(A) CONFIRMED THE ACTION OF AO BY HOLDING THAT RM/ 1 & RM/2 ARE DUMB DOCUMEN TS AND ACCORDINGLY CASH RECEIPT ON THE BASIS OF NOTING IN RM/ 1 COULD NOT BE TAKEN AS EXPLANATION FOR THE ALLEGED UNDISCLOSED CASH FOUND DURING THE COURSE OF SEARCH. AGGRIEVED NOW A SSESSEE IS IN APPEAL BEFORE US. BEFORE US LD. COUNSEL FOR THE ASSESSEE STATED THAT CASH WAS G ENERATED FROM UNDISCLOSED TRANSACTIONS NOTED IN RM/ 1 AND RM/2. THE ASSESSEE FILED RETURNS OF IN COME U/S 153A REVISED BALANCE SHEETS AND PROFIT & LOSS ACCOUNTS FOR THESE YEARS AFTER INCORP ORATING ALL THE ENTRIES OF DISCLOSED AND UNDISCLOSED NATURE NOTED IN THE SEIZED DOCUMENTS. T HE UNDISCLOSED INCOME IN THE FORM OF LONG TERM CAPITAL GAINS ARISING FROM THE UNDISCLOSED TRA NSACTIONS WAS ALSO DULY OFFERED FOR TAXATION BY THE ASSESSEE IN HIS RETURN OF INCOME FOR A.Y. 20 08-09 AND DUE TAXES WERE PAID THEREON. AFTER 27 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 INCORPORATING ALL THE ENTRIES IN SEIZED DOCUMENTS M ARKED RM/ 1 AND RM/2 THE ASSESSEE HAD SURPLUS CASH BALANCE OF RS. 6 28 53 906/- ON THE DA TE OF SEARCH I.E. 28.02.2008 AND RS. 6 08 43 906/- ON 31.03.2008. IN SUPPORT OF THE ABOV E ASSESSEE ENCLOSED CASH ACCOUNT WHICH IS AT PAGES 164 OF THE ASSESSEES PAPER BOOK. 24. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ENTIRE CASH OF RS.50 61 250/- FOUN D IN COURSE OF SEARCH ON 28.02.2008 STOOD ADEQUATELY EXPLAINED SINCE TOTAL UNDISCLOSED INCOM E ARISING FROM THE SEIZED DOCUMENTS WERE ALREADY OFFERED FOR TAXATION BY ASSESSEE AND CASH F OUND IN COURSE OF SEARCH STOOD EXPLAINED FROM THE ENTRIES RECORDED IN SEIZED DOCUMENTS NO S EPARATE ADDITION CAN BE MADE IN RESPECT TO CASH FOUND. WE HAVE ALREADY ACCEPTED THE SEIZED DO CUMENT RM-1 AND RM-2 AS GENUINE DOCUMENTS EXPLAINING AWAY THE ENTRIES THE CASH EXP LAINED BY ASSESSEE CANNOT BE TREATED UNEXPLAINED. ACCORDINGLY THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 25. THE NEXT ISSUE IN REVENUES APPEAL IN IT(SS)A N O. 10/KOL/2011 IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION OF UNDISCLOSED INCOME MADE BY AO ON ACCOUNT OF EXPENDITURE INCURRED BY ASSESSEE ON FURNITURE FIXTURE FLOORIN G ETC. IN RESPECT OF FLAT NO.501 20 LEE ROAD KOLKATA. FOR THIS REVENUE HAS RAISED FOLLOWING TW O GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E LD. CIT(A) HAS ERRED IN BOTH LAW AND FACTS IN DELETING THE ADDITION OF RS.35 00 000/ - ON ACCOUNT OF UNDISCLOSED INCOME WITHOUT APPRECIATING FACT THAT THE ASSESSEE INCURRE D EXPENDITURE OF RS.35 LAKHS FOR FURNITURE FIXTURES FLOORING ETC. IN RESPECT OF FL AT NO. 501 AT 20 LEE ROAD KOLKATA. 2. THAT IN DOING SO LD. CIT(A) OVERLOOKED THE FAC TS THE EXPENDITURE REFERRED ABOVE WERE DULY RECORDED IN THE SAME SEIZED DOCUMENTS MARKED A S RM-1 & RM-2. 26. THE BRIEF FACTS LEADING TO ABOVE ISSUE ARE THAT ASSESSEE INCURRED UNDISCLOSED EXPENDITURE FOR FURNITURE FIXTURE FLOORING ETC. INCURRED IN R ESPECT OF FLAT NO. 501 AT 20 LEE ROAD KOLKATA FOR A.Y. 2008-09. THE SAID EXPENDITURE WAS FOUND RE CORDED IN RM/1 & RM/2. THE EXPENDITURE OF RS. 35 LACS WAS INCURRED BY THE ASSESSEE IN CONN ECTION WITH PURCHASE OF FURNITURE OF DIRECTORS FLAT AT 20 LEE ROAD ON BEHALF OF M/S. FO RT PROJECTS PVT. LTD. IT IS PERTINENT TO NOTE THAT NO SUCH ADDITION OF RS. 35 LACS ON ACCOUNT OF UNDISCLOSED EXPENDITURE WAS MADE BY AO IN VERY FIRST PLACE AND THIS WILL BE CLEAR FROM PERUSA L OF ASSESSMENT ORDER FOR A.Y. 2008-09 WHICH WOULD MAKE CLEAR THAT AO MADE AN ADDITION OF RS. 19 .07 CRORES FOR THE SAID YEAR ON ACCOUNT OF ALLEGED UNDISCLOSED CASH RECEIPTS ARISING ON SALE O F GOLD AND DIAMONDS AND NOT ON ACCOUNT OF ANY UNEXPLAINED EXPENDITURE ON FURNITURE FIXTURES ETC. BUT CIT(A) AFTER REJECTING NOTING IN RM/ 1 & RM/2 IN TOTO APART FROM OTHER ADDITIONS TH IS UNEXPLAINED EXPENDITURE WAS ALSO ADDED. SINCE ONLY SEIZED MATERIAL EVIDENCING PAYMENT OF EX PENSES OF 35 LACS BY ASSESSEE WERE RM/ 1 28 IT(SS)A NO.1 TO 4 6 7&10/K/2011 SHRI VIVEK KUMAR KATHOTIA A.Y.03-04 TO 08-09 & RM/2 AND ALL THE ENTRIES IN RM/ 1 & RM/2 WERE DUL Y INCORPORATED IN THE ACCOUNTS OF THE ASSESSEE FOR RELEVANT YEARS AND THE RESULTANT UNDIS CLOSED INCOME WAS OFFERED FOR TAXATION IN RETURNS FILED U/S 153A EXPENSES OF RS. 35 LACS WAS SIMILARLY INCORPORATED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR A.Y. 2 008-09 AND HIS I NCOME AS PER RETURN WAS COMPUTED AFTER TAKING INTO ACCOUNT THE SAID EXPENSES. IN SUPPORT O F THE AFORESAID ASSESSEE HAS FILED COPIES OF RELEVANT LEDGER ACCOUNTS SHOWING PAYMENT OF EXPENSE S IN THE BOOKS OF ASSESSEE ON BEHALF OF M/S. FORT PROJECTS PVT. LTD. AND IN THE BOOKS OF M/ S. FORT PROJECT PVT. LTD. FOR A.Y. 2008-09. THE RELEVANT COPIES ARE ENCLOSED AT PAGES 1-7 OF AS SESSEES PAPER BOOK. SINCE WE HAVE ALREADY ACCEPTED SEIZED MATERIAL RM-1 AND RM-2 AS TRUE AUT OMATICALLY THE EXPENDITURE RECORDED IN THESE DOCUMENTS IS EXPLAINED AND THE ASSESSEE HAS A LSO MADE DISCLOSURE TO COVER UP THE SAME. ACCORDINGLY THIS ADDITION IS NOT WARRANTED AND HEN CE DELETED. 27. IN THE RESULT APPEALS OF THE ASSESSEE IN IT(SS )A NOS.1 2 & 3/KOL/2011 ARE DISMISSED APPEALS OF ASSESSEE IN IT(SS)A NO.4 6 AND 7/KOL/20 11 ARE ALLOWED. REVENUES APPEAL IN IT(SS)A NO.10 IS DISMISSED. 28. ORDER PRONOUNCED IN OPEN COURT ON 29.7.2011. SD/- SD/- . . . . . . . . ' ' ' ' #!' #!' #!' #!' $% (G. D. AGRAWAL) (MAHAVIR SINGH) VICE PRESIDENT JUDICIAL MEMBER ( & & & &) )) ) DATED 29 TH JULY 2011 PRONOUNCED BY SD/- C. D. RAO SD/- M. SINGH AM 29/7/ JM 29.7.11 56 #*7 #8 JD.(SR.P.S.) $34 9 1##: 3: ;- COPY OF THE ORDER FORWARDED TO: 1 . /0 / APPELLANT SHRI VIVEK KUMAR KATHOTIA 7/1A HAZRA ROAD KOLKATA-700 026. 2 12/0 / RESPONDENT DCIT CENTRAL CIRCLE-VI KOLKATA 3 . #4* ( )/ THE CIT(A) KOLKATA 4. #4* / CIT KOLKATA 5 . A#B 1#* / DR KOLKATA BENCHES KOLKATA 2: 1#/ TRUE COPY $34*C/ BY ORDER ' ! /ASSTT. REGISTRAR .