Sri. MANGATRAM ARORA, MUMBAI v. ACIT CENT. CIR. - 41, MUMBAI

ITSSA 101/MUM/2006 | misc
Pronouncement Date: 08-03-2010 | Result: Partly Allowed

Appeal Details

RSA Number 10119916 RSA 2006
Assessee PAN ABNPA3327L
Bench Mumbai
Appeal Number ITSSA 101/MUM/2006
Duration Of Justice 3 year(s) 11 month(s) 15 day(s)
Appellant Sri. MANGATRAM ARORA, MUMBAI
Respondent ACIT CENT. CIR. - 41, MUMBAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 08-03-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted I
Tribunal Order Date 08-03-2010
Date Of Final Hearing 08-02-2010
Next Hearing Date 08-02-2010
Assessment Year misc
Appeal Filed On 23-03-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI B. RAMAKO TAIAH (AM) IT(SS)A NO.101/MUM/2006 ASSESSMENT YEAR : BLOCK PERIOD :01.04.1990 TO 07.02.2001 SHRI MANGATRAM ARORA 4 SHIVDARSHAN SAROJINI NAIDU ROAD SANTACRUZ(W) MUMBAI-400 054. .. ( APPELLANT ) P.A. NO. (ABNPA 3327 L) VS. ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-41 IT DEPARTMENT AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. (RESPONDENT) IT(SS)A NO.113/MUM/2006 ASSESSMENT YEAR : BLOCK PERIOD :01.04.1990 TO 07.02.200 1 JT. COMMISSIONER OF INCOME TAX (OSD) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-43 ROOM NO.659 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. SHRI MANGATRAM ARORA MUMBAI-400 054. . .( RESPONDENT ) ASSESSEE BY : SHRI M.SUBRAMANIAM DEPARTMENT BY : SHRI N.K. BALODIA AND SHRI A JAYKUMAR SRIVASTAVA O R D E R PER D.K. AGARWAL (JM). THESE CROSS APPEALS BY ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER DATED 20.01.06 PASSED BY THE LD. CI T(A) FOR THE BLOCK PERIOD 1.4.1990 TO 7.2.2001. BOTH THESE APPEAL S ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. IT(SS)A NO.101 & 113/M/06 A.Y:BP 2 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE AN INDIVIDUAL DERIVES INCOME FROM SALARY AND INCOME FROM OTHER SOURCES I.E. INTEREST INCOME FROM BANK. A SEARCH ACTION U/S.132( 1) OF THE I.T. ACT 1961(THE ACT) WAS CARRIED OUT ON 7.2.2001 AT THE R ESIDENCE OF THE ASSESSEE WHEREIN CERTAIN LOOSE PAPERS FILES CASH AND JEWEL LERY WERE FOUND. A NOTICE U/S.158 BC OF THE ACT WAS ISSUED TO TH E ASSESSEE AND IN RESPONSE THE ASSESSEE FILED RETURN FOR THE BLOCK PERIO D DECLARING UNDISCLOSED INCOME AT RS. NIL. HOWEVER THE ASSESSMENT WAS COMPLETED ON A TOTAL UNDISCLOSED INCOME OF RS.64 84 620/- VIDE ORDER DATED 28.2.2003 PASSED U/S.158 BC(C) OF THE ACT. ON APP EAL THE LD. CIT(A) HAS ALLOWED PART RELIEF TO THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE AND THE REVENUE BOTH ARE IN APPEAL BEFORE US. 4. GROUND NO.1 AND 2 IN THE ASSESSEES APPEAL AND LAST G ROUND IN REVENUES APPEAL ARE GENERAL IN NATURE AND IN THE AB SENCE OF ANY SPECIFIC PLEA THE SAME ARE THEREFORE REJECTED. 5. GROUND NO.3 4 5 6 AND 7 IN ASSESSEES APPEAL ARE A GAINST THE SUSTENANCE OF ADDITION OF RS.15.00 LACS OUT OF CASH FOUND A ND SEIZED RS.27.00 LACS. IT(SS)A NO.101 & 113/M/06 A.Y:BP 3 6. GROUND NO.1 IN REVENUES APPEAL IS AGAINST THE RELI EF OF RS.12.00 LACS ALLOWED BY THE LD. CIT(A) OUT OF CASH FOUND AND SE IZED RS.27.00 LACS. 7. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT WAS OB SERVED BY THE AO THAT THE ASSESSEE WAS FOUND TO BE JOINT HOLDER OF BA NK LOCKER NO.434 WITH INDIAN OVERSEAS BANK KHAR BRANCH SANTACR UZ(W) MUMBAI WITH HIS WIFE SMT. SANYOGITA M. ARORA WHEREIN CASH OF RS.27.00 LACS WAS FOUND AND SEIZED. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH FOUND IN THE LOCKER. IT WAS E XPLAINED BY THE ASSESSEE THAT THE TOTAL CASH FOUND BY THE DEPARTMENT DURI NG THE COURSE OF SEARCH WAS RS.38.00 LACS INCLUDING RS.11.00 LACS FOU ND AND SEIZED FROM RESIDENCE. THE BIFURCATION OF TOTAL CASH FOU ND WAS AS UNDER :- I) ARORA POULTRY PRODUCTS LTD. RS.11 LACS AS PER CASH BOOK II) MANGATRAM ARORA FIN. LTD. RS.7 L ACS III)MANGATRAM ARORA - RS.5 LACS AS P ER BALANCE SHEET IV) MRS. SANYOGITA ARORA - RS. 5 LACS V) RAJNISH ARORA - RS.3 LACS VI) KAMAL ARORA - RS.4 LACS VII) LATE SURAJ ARORA - RS.3 LACS ----------- RS.38 LACS IT WAS FURTHER STATED THAT ALL THE ABOVE PARTIES ARE I NCOME TAX ASSESSEES AND THEIR GIR/PAN ARE ALREADY SUBMITTED. IT W AS FURTHER STATED THAT THE ASSESSEE HAS FILED THE SUFFICIENT PROOF I NCLUDING THE IT(SS)A NO.101 & 113/M/06 A.Y:BP 4 ACCEPTANCE THAT THE CASH OF RS.11.0 LACS WAS ADJUSTED AGAINST OUTSTANDING DEMAND OF THE ARORA POULTRY PRODUCTS LIMI TED AND THE SAID PARTY HAS ALSO GIVEN HIS CONSENT LETTER FOR ACCEPTING THE LIABILITY. FURTHER THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM ALL OTHER PARTIES NAMELY KAMAL ARORA-RS.4.00 LACS RAJNISH M. ARO RA-RS.3.00 LACS MANGATRAM ARORA RS.5.00 LACS SMT. SANYOGITA AROR A-RS.5.00 LACS LATE SURAJ ARORA RS.3.00 LACS AND MANGATRAM ARO RA FINANCE LTD.-RS.7 LACS. HOWEVER THE AO DID NOT ACCEPT THE ASSESSEE S EXPLANATION FOR THE FOLLOWING REASONS : 1. DURING SEARCH PROCEEDING OF THE LOCKER A STATEMENT FROM SMT. SANYOGITA M. ARORA WAS RECORDED. SHE WAS ASKED ABO UT THESE CASH. THE RELEVANT QUESTION AND ITS ANSWER IS REPR ODUCED AS UNDER :- Q.2] DURING THE COURSE OF SEARCH & SEIZURE ACTION O F YOUR LOCKER NO.434 IN INDIAN OVERSEAS BANK CASH AMOUNTING TO RS.27 LAKHS HAS BEEN FOUND. YOU ARE REQUESTED TO EXPLAIN THE SOURCE OF THE CASH AS WELL AS TO WHOM THE CASH BELONGS. A.2] THE CASH HAS BEEN GIVEN TO ME BY MY HUSBAND SH RI MANGATRAM ARORA FOR KEEPING IN THE LOCKER. I AM NOT AWARE OF THE SOURCE AND HE WILL EXPLAIN ITS SOURCE. 2) A STATEMENT OF SHRI MANGATRAM ARORA WAS RECORDE D ON 01.03.2001. THE RELEVANT QUESTION AND ITS ANSWER IS REPRODUCED AS UNDER . Q.3] DURING THE COURSE OF SEARCH AND SEIZURE ACTION CASH AMOUNTING TO RS.27 00 000/- HAS BEEN FOUND. YOUR WIFE HAS STATE D THAT SHE IS NOT AWARE OF THE SOURCE AND IT CAN BE EXPLAINED BY YOU. PLEASE EXPLAIN THE SAME. A.3] I AM NOT ABLE TO ACCOUNT FOR. 3) SMT. SANYOGITA M. ARORA IS HAVING THE INCOME BEI NG RENT RECEIPT. THE CHEQUES RECEIVED BY HER ARE BEING DEPOSITED IN M/S. MANGATRAM ARORA FINANCE LTD. SHE HAS FILED A RETUR N FOR THE A.Y. IT(SS)A NO.101 & 113/M/06 A.Y:BP 5 1999-00 AND 2000-01 ON 09.03.2001 WITHOUT A BALANCE SHEET AS ON THE RELEVANT DATES. THEREFORE HER CONTENTION THAT RS.5 LACS BELONGING TO HER IS NOT ACCEPTABLE. 4) SHRI SURAJ M. ARORA IS A DEAD PERSON. THE CONFI RMATION LETTER IS SIGNED BY THE ASSESSEE HIMSELF. THE SAME IS NOT AC CEPTABLE. ACCORDINGLY THE ASSESSING OFFICER ADDED UNEXPLAINED CASH OF RS.27.00 LACS AS INCOME FROM UNDISCLOSED SOURCES FOR THE BLOCK PERIOD . 8. ON APPEAL THE LD. CIT(A) OBSERVED THAT IN THE CA SE OF M/S. MANGATRAM ARORA FINANCE LTD. COPY OF CASH BOOK EXTRACT AS ON 6.2.2001 AND 7.2.2001 WAS FILED TO SUBSTANTIATE THAT T HE CLOSING BALANCE ON 6.2.2001 WAS RS.8 58 327/- AND SAME APPEARE D AS OPENING BALANCE AS ON 7.2.2001 SHOWING THAT THE CASH OF RS.7.00 LACS FOUND AND SEIZED FROM SHRI MANGATRAM ARORA (INDIVIDU AL) WAS PART OF RS.8.50 LACS BEING OPENING BALANCE ON 7.2.2001. SHE FU RTHER OBSERVED THAT THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER AS TO WHY THE AO HAS NOT ACCEPTED THE APPELLANTS CONTENTION. SHE HELD THAT FROM THE DOCUMENTS FILED IT IS SEEN THAT THE CASH BALANCE TO THE EX TENT OF RS.7.00 LACS IS EXPLAINED AS BELONGING TO M/S. MANGATRAM ARORA FINANCE LTD. AND ACCORDINGLY SHE DELETED THE ADDITION OF RS.7.00 LACS. 8.1 IN RESPECT OF CASH OF RS.5.00 LACS BELONGING TO THE ASSE SSEE THE LD. CIT(A) OBSERVED THAT SHRI MANGATRAM ARORA WAS REG ULAR ASSESSEE AND FILED THE RETURNS REGULARLY UP TO ASSESSMENT YEAR 20 00-01. A COPY OF BALANCE SHEET AS ON 7.2.2001 WAS ALSO FILED TO SU BSTANTIATE THE IT(SS)A NO.101 & 113/M/06 A.Y:BP 6 CASH AND BANK BALANCE OF RS.6 65 960/-. THE LD. CIT(A) AFTER CONSIDERING THE SAME WHILE OBSERVING THAT THE APPELLANT HAS BEEN ABLE TO SATISFACTORILY EXPLAIN THE SOURCE OF CASH AND ACCORDINGL Y SHE DELETED THE ADDITION OF RS.5.00 LACS. 8.2 IN THE CASE OF CASH OF RS.4.00 LACS STATED TO BE BELO NGING TO MRS. KAMAL ARORA THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS FILED CONFIRMATION LETTER OF MRS. KAMAL ARORA TOGETHER WITH A STATEMENT OF TOTAL INCOME AS WELL AS NET WEALTH TO SUBSTANTIATE THE CA SH AND BANK BALANCE OF RS.4 37 890/- AS ON 31.3.1999. HOWEVER IN VIEW OF THE TIME LAG BETWEEN 31.3.1999 (DATE OF BALANCE SHEET) AN D 21.2.2003 (DATE OF CONFIRMATION LETTER) AND MERE FILING OF CONF IRMATION LETTER IN NO WAY PROVES THAT THE CASH BELONGS TO MRS. KAMAL ARORA DA UGHTER OF THE APPELLANT AND HENCE SHE UPHELD THE ADDITION MADE B Y THE AO. 8.3 SIMILAR VIEW WAS TAKEN BY THE LD. CIT(A) IN RESPECT OF CASH OF RS.3.00 LACS STATED TO BE BELONGING TO MR. RAJNISH AROR A. 8.4 IN RESPECT OF CLAIM OF CASH OF RS.5.00 LACS BELONGING T O MRS. SANYOGITA ARORA THE LD. CIT(A) OBSERVED THAT MERE F ILING OF CONFIRMATION IN NO WAY PROVES THAT THE CASH BELONGS TO M RS. SANYOGITA ARORA. THE AO HAS ANALYSED IN THE ORDER THAT THERE W AS NO KNOWN SOURCE OF INCOME OF MRS. SANYOGITA ARORA TO SUBSTANTIATE HER CLAIM IT(SS)A NO.101 & 113/M/06 A.Y:BP 7 THAT THE CASH BELONGS TO HER AND HENCE SHE CONFIRMED THE ADDITION MADE BY THE AO. 8.5 IN RESPECT OF CASH OF RS.3.00 LACS IN THE NAME OF LATE SURAJ ARORA THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS FAIL ED TO SUBSTANTIATE THAT THE CASH BELONGED TO LATE SHRI SURAJ ARORA AND HENCE SHE CONFIRMED THE ADDITION MADE BY THE AO. 9. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE TH E AO AND THE LD. CIT(A) FURTHER SUBMITS THAT THE ASSESSEE HAS DULY FILE D HIS EXPLANATION CONFIRMATIONS FROM ALL THE PARTIES ALONG WITH COPY OF ACKNOWLEDGEMENT OF RETURNS STATEMENT OF TOTAL INCOME BALANCE SHEET COPY OF ASSESSMENT ORDER PASSED U/S.143(3) IN THE CASE OF SHRI MANGATRAM M. ARORA FOR ASSESSMENT YEAR 1999-2000 COPY OF ASSESSMENT ORDER PASSED U/S.143(3) IN THE CASE OF MRS. SANYO GITA M. ARORA FOR THE ASSESSMENT YEAR 1999-2000 COPY OF ORDER O F THE LD. CIT(A) IN THE CASE OF MRS. SANYOTIA M. ARORA FOR THE B LOCK PERIOD 1.4.90 TO 7.2.2001 APPEARING AT PAGE 21 TO 53 56 & 68 OF ASSESSEES PAPER BOOK. IN THE LIGHT OF THE ABOVE DOCUMENTARY E VIDENCE THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE HAS DISCHARGED HIS BURDEN TO SHOW THAT THE CASH WHICH WAS FOUND IN THE LO CKER BELONGED TO RESPECTIVE PARTIES/FAMILY MEMBERS. HE FURTHER SUBMITS THAT IN THE IT(SS)A NO.101 & 113/M/06 A.Y:BP 8 ABSENCE OF ANY FINDING IN THIS REGARD IN THE REMAND R EPORT APPEARING AT PAGE 57 TO 59 OF ASSESSEES PAPER BOOK THE LD. CIT(A)W AS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.15.00 LACS AND THE SAM E BE DELETED. 10. ON THE OTHER HAND THE LD. DR WHILE STRONGLY REL YING ON THE ORDER OF THE AO SUBMITS THAT THE CONFIRMATION LETTERS FILED B Y THE ASSESSEE ARE BALD STATEMENTS AND SELF SERVING DOCUMENTS. THE RETU RNS ALONG WITH STATEMENT OF INCOME AND BALANCE SHEET WERE FILED MERELY TO ESTABLISH THAT THE CASH FOUND IN THE LOCKER WAS AVAILABL E WITH THEM. HE FURTHER SUBMITS THAT IN ANY CASE THOSE RETURNS ARE NON-EST RETURNS AND CANNOT BE CONSIDERED AS VALID RETURNS IN THE EYE OF LAW. HE FURTHER SUBMITS THAT THE ASSESSEE HAS TOTALLY FAILED TO E STABLISH THE CAPACITY AND CREDIT WORTHINESS OF THE PARTIES. HE FURTHER SUBMITS THAT IN THE CASE OF M/S. MANGATRAM ARORA FIN. LTD. IT WAS STATED BY THE ASSESSEE THAT THE SAID COMPANY WAS HAVING CLOSING BALANCE OF RS.8 58 327/- ON 6.2.2001 AND THE SAME WAS APPEARING AS OPENING BALANCE ON 7.2.2001 I.E. ON THE DATE OF SEARCH HOWEVE R FROM THE ENQUIRIES CONDUCTED FROM THE BANK IT WAS FOUND THAT PRI OR TO THE DATE OF SEARCH THE BANK LOCKER WAS OPERATED ON 25.1.2001 AND NOT AFTER THAT THEREFORE THE EXPLANATION GIVEN BY THE ASSESSEE IS WITHOUT ANY BASIS/MERIT AND HENCE THE SAME IS LIABLE TO BE REJECTE D. IN SUPPORT HE ALSO PLACED ON RECORD THE COPY OF THE BANKS LETTER DATE D 9.2.2010 ALONGWITH DETAILS OF OPERATION OF BANK LOCKER FOR TH E PERIOD OF 3 IT(SS)A NO.101 & 113/M/06 A.Y:BP 9 MONTHS PRIOR TO 7.2.2001 TO SHOW THAT BANK LOCKER WAS L AST OPERATED ON 25.1.2001 BEFORE THE DATE OF SEARCH. THE RELIANCE WAS ALSO PLACED IN I.A.C VS. INDIAN ART EMPORIUM (1994) 121 CTR (BOM .) (TRIB.) (TM) 291 AND RAGHUBIR SINGH VS. ITAT AND ORS. (2007) 209 CTR (P&H) 394 TO SHOW THAT THE RETURNS HAVING BEEN FILED AFTER THE SEARCH MERELY TO ESTABLISH THE INCOME DISCLOSED IN THE RETURN WITHOUT BRI NGING ON RECORD THE CAPACITY AND SOURCE OF CASH CREDIT THE ADDITION HA S RIGHTLY BEEN MADE. THE RELIANCE WAS ALSO PLACED ON THE DECISION OF SUMATI DAYAL VS. CIT (1995) 214 ITR 801(SC) FOR THE PROPOSITION TH AT AFTER APPLYING THE TEST OF HUMAN PROBABILITIES THE ASSESSEES CLAIM ABOU T THE AMOUNT BEING HER WINNINGS FROM RACES IS NOT GENUINE. HE THER EFORE SUBMITS THAT IN THESE CIRCUMSTANCES THE LD. CIT(A) WAS NOT JUSTIF IED IN ALLOWING A RELIEF OF RS.12.00 LACS TO THE ASSESSEE AND HENCE THE ADD ITION MADE BY THE AO RS.27.00 LACS BE RESTORED. 11. IN THE REJOINDER THE LD. COUNSEL FOR THE ASSESSEE SU BMITS THAT ALL THE DECISIONS RELIED ON BY THE LD. DR ARE NOT AP PLICABLE AS THE IMPUGNED ASSESSMENT WAS MADE UNDER BLOCK ASSESSMENT UNDER SEPARATE CHAPTER AND FOR THIS PROPOSITION THE RELIANCE W AS ALSO PLACED IN CIT VS. DR. M.K.E. MENON (2001) 248 ITR 310(BOM.) . HE THEREFORE SUBMITS THAT THE ADDITION MADE BY THE AO R S.27.00 LACS BE DELETED. IT(SS)A NO.101 & 113/M/06 A.Y:BP 10 12. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE CASE OF MANGATRAM ARORA FINANCE LTD. IT WAS STATED BY THE ASSESSEE THAT A SUM OF RS.7.00 LACS WAS DEPOSITED OUT OF CASH AVAILABLE IN THE BOOKS OF THE COMPANY ON 6.2.2001 AS A CLOSING BALANCE AND THE SAME APPEARED AS OPENING BALANCE ON 7.2.2001 AND HENCE THE DEPOSIT OF CASH OF RS.7.00 LACS IN THE BANK LOCKER WAS PART OF RS.8.50 LACS BE ING OPENING BALANCE ON 7.2.2001. SIMILAR STAND WAS TAKEN BY THE A SSESSEE IN RESPECT OF DEPOSIT OF RS.5.00 LACS EACH IN THE CASE OF SHRI MANGATRAM ARORA ASSESSEE AND SMT. SANYOGITA M. ARORA WIFE OF TH E ASSESSEE THAT THE AMOUNT OF RS.5.00 LACS EACH WAS DEPOSITED OUT O F CASH AVAILABLE WITH THEM AS ON 7.2.2001 I.E. BEFORE THE SE ARCH AS PER COPY OF THEIR BALANCE SHEET APPEARING AT PAGE 31 AND 37 O F THE ASSESSEES PAPER BOOK. PER CONTRA THE CLAIM OF THE REVENUE IS T HAT ON ENQUIRY MADE FROM THE BANK IT WAS FOUND THAT PRIOR TO THE D ATE OF SEARCH THE BANK LOCKER WAS OPERATED ON 25.1.2001 THEREFORE THE ASSESSEES CLAIM CANNOT BE ACCEPTED AND IN SUPPORT THE LD. DR HAS ALSO FILED COPY OF LETTER DATED 9.2.2010 ALONGWITH DETAILS OF OPERAT ION OF BANK LOCKER FOR A PERIOD OF 3-MONTHS PRIOR TO 7.2.2001. SINCE TH E EVIDENCE FILED BY THE LD. DR IS A NEW EVIDENCE WHICH WAS NOT AVAILABLE BE FORE THE AO AND THE LD. CIT(A) AND KEEPING IN VIEW THE RULE OF AUDI ALTERAM PARTEM I.E. NO MAN SHOULD BE CONDEMNED UNHEARD WE ARE OF THE IT(SS)A NO.101 & 113/M/06 A.Y:BP 11 VIEW THAT IN THE INTEREST OF JUSTICE THE ISSUE SHOULD BE RESTORED BACK TO THE FILE OF THE AO AND ACCORDINGLY WE SET ASIDE THE OR DER PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK TH E MATTER TO THE FILE OF THE AO WHO SHALL DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATIONS HEREINABOVE AND ACCORDING TO LAW AFTER PR OVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY THE PART OF GROUND NO.3 AND GROUND NO.4 TAKEN BY TH E ASSESSEE AND GROUND NO.1 TAKEN BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 13. WITH REGARD TO THE ADDITION OF RS.3.00 LACS RS.4. 00 LACS AND RS.3.00 LACS STATED TO HAVE BEEN KEPT IN THE LOCKER BY T HE ASSESSEE OUT OF CASH AVAILABLE WITH SHRI RAJNISH ARORA MRS. KA MAL ARORA AND LATE SHRI SURAJ ARORA RESPECTIVELY WE FIND THAT THE ASSESSEE HAS FILED CONFIRMATORY LETTERS OF ALL THE ABOVE DEPOSITORS INASMU CH AS IN THE CASE OF MRS. KAMAL ARORA THE ASSESSEE HAS ALSO FILED COPY OF ACKNOWLEDGEMENT OF RETURNS ALONGWITH COPY OF STATEMEN T OF TOTAL INCOME AND STATEMENT OF WEALTH AS ON 31.3.1997 31.3. 1998 AND 31.3.1999. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISION RELIED ON BY THE PARTIES WE ARE OF THE VIEW THAT THE ASSESSEES EXPLANATION CAN NOT B E ACCEPTED FOR THE REASONS NAMELY (I) THE RETURNS IN THE CASE OF MRS. K AMAL ARORA WERE FILED ON 9.3.2001 I.E. AFTER THE DATE OF SEARCH ON 7.2.2001. (II) IT(SS)A NO.101 & 113/M/06 A.Y:BP 12 THERE IS NO NEXUS IN THE CASH AND BANK BALANCE OF RS.4 37 890/- AS ON 31.3.1999 AND DEPOSIT OF RS.4.00 LACS IN THE BANK LOCKER IN THE CASE OF MRS. KAMAL ARORA. (III) THERE IS NO COPY OF RETURN STA TEMENT OF INCOME AND BALANCE SHEET IN THE CASE OF SHRI RAJNISH ARORA AND LATE SHRI SURAJ ARORA AND (IV) THE ASSESSEE HAS FAILED TO PROVE T HE SOURCE CAPACITY OF THE DEPOSITORS AND GENUINENESS OF THE DEPOSITS IN ALL THESE THREE CASES DURING THE RELEVANT YEAR OF SEARCH. ACCORDIN GLY THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT (A) IN THE CASE OF SHRI RAJNISH ARORA RS.3.00 LACS MRS. KAMAL ARORA RS.4.00 LACS AND LATE SHRI SURAJ ARORA RS.3.00 LACS AGGREGATING TO RS.10 .00 LACS IS UPHELD. THE GROUNDS TAKEN BY THE ASSESSEE IN THIS REGA RD ARE THEREFORE REJECTED. 14. GROUND NO.8 TO 10 IN ASSESSEES APPEAL ARE AGAINST THE SUSTENANCE OF ADDITION OF RS.2 54 526/- AS UNDISCLOSED INCOM E INVESTED IN FDS. 15. THE BRIEF FACTS OF THE ISSUE ARE THAT DURING THE CO URSE OF SEARCH FDRS OF RS.6.00 LACS FROM BANK LOCKER FDRS OF RS.97 684/ - AND RS.1 56 842/- WERE FOUND FROM THE RESIDENCE OF THE ASSESSE E. THE AO IN THE ABSENCE OF ANY SOURCE OF INVESTMENT ADDED THE AGG REGATE AMOUNT OF FDR OF RS.8 54 526/- IN THE INCOME OF THE A SSESSEE AS UNDISCLOSED INCOME. ON APPEAL THE LD. CIT(A) AFTER CONSIDERING THE REMAND REPORT OF THE AO WHEREIN HE HAS CONCLUD ED THAT FDRS OF IT(SS)A NO.101 & 113/M/06 A.Y:BP 13 RS.6.00 LACS HAVE BEEN DISCLOSED TO THE DEPARTMENT HAS ACCE PTED THE SOURCE OF INVESTMENT IN FDRS OF RS.6.0 LACS AND CONFIRMED T HE ADDITION OF BALANCE AMOUNT OF FDRS RS.2 54 526/-. 16. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE SUBMITS THAT ALL THE FDRS ARE INCLUDED IN THE BALANCE SHEETS AND STATEMENT OF NET WEALTH OF THE RESPECTIVE FAMILY MEMBERS APPEARING IN THE ASSESSEES PAPER BOOK THEREFORE NO ADDITION IS CALLED FO R. 17. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE AO AND THE LD. CIT(A). 18. HAVING HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AN D PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND THAT THE DE TAILS OF THE FDRS OF RS.97 684/- ARE AS UNDER : S.NO. NAME OF HOLDER NAME OF BANK DT. OF ISSUE PAYM ENT 1. MASTER SURAJ U/G SMT. SANYOGITA ARORA ORIENTAL BANK OF COMMERCE 28.12.91 12 614.00 2. MASTER SURAJ U/G SMT. SANYOGITA ARORA ORIENTAL BANK OF COMMERCE 14.11.91 25 275.00 3. BABY KAMAL U/G SMT. SANYOGITA ARORA ORIENTAL BANK OF COMMERCE 28.12.91 14 000.00 4. SURAJ M. ARORA U/G MR. MANGATRAM M. ARORA DENA BANK 28.11.94 15 265.00 5. RAJNISH M. ARORA U/G MR MANGATRAM M. ARORA DENA BANK 28.11.94 15 265.00 6. KAMAL M. ARORA DENA BANK 28.11.94 TOTAL 15 265.00 97 684.00 IT(SS)A NO.101 & 113/M/06 A.Y:BP 14 WE FURTHER FIND THAT THE FOLLOWING FIXED DEPOSITS ISSUE D ON 24.2.1998 BY THE UNITED WESTERN BANK WERE ALSO FOUND AND SEIZED: - SR.NO. NAME OF THE HOLDER AMOUNT 1. ARORA MANGATRAM ARORA SANYOGITA MANGATRAM 21 128.00 2. ARORA MANGATRAM ARORA SANYOGITA MANGATRAM 21 128.00 3. ARORA SURAJ MANGATRAM ARORA MANGATRAM 21 128.00 4. ARORA KAMAL MANGATRAM ARORA SANYOGITA MANGATRAM 21 128.00 5. ARORA RAJNISH MANGATRAM 24 110.00 6. ARORA SURAJ MANGATRAM 24 110.00 7. ARORA KAMAL MANGATRAM 24 110.00 TOTAL 1 56 842.00 FROM THE ABOVE CHART OF FDRS IT IS OBSERVED THAT THE FDRS ARE OLD/RENEWED AND THERE IS NO EVIDENCE TO SHOW THAT THE FDRS WERE TAKEN BY THE ASSESSEE DURING THE BLOCK PERIOD. THIS BE ING SO AND KEEPING IN VIEW THAT THE FDRS ARE IN THE NAME(S) OF THE RESPECTIVE HOLDER OF THE FDRS AND IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS DIVERTED HIS UNDISCLOSED INCOME IN THE NAME OF HIS FAMILY MEMBERS AS ABOVE AND ALSO KEEPING IN VIEW THAT THE ASSESSE E HAS SHOWN THE INCOME FROM OTHER FDRS IN HIS REGULAR RETURNS WHICH HAS BEEN ASSESSED BY THE AO UNDER SCRUTINY ASSESSMENT AFTER THE D ATE OF IT(SS)A NO.101 & 113/M/06 A.Y:BP 15 SEARCH FOR THE ASSESSMENT YEAR 1999-00 VIDE ORDER DT.26.3 .2003 PASSED U/S.143(3) OF THE ACT WE ARE OF THE VIEW THAT THE ADDITION OF RS.2 54 526/- MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS NOT SUSTAINABLE AND ACCORDINGLY THE SAME IS DELETED. THE GR OUNDS TAKEN BY THE ASSESSEE IN THIS REGARD ARE THEREFORE ALLOWED. 19. GROUND NO.11 IN ASSESSEES APPEAL IS AGAINST THE SUSTEN ANCE OF ADDITION OF RS.7 028/- AS UNDISCLOSED INCOME INVESTED IN SH ARES. 20. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT A SUM O F RS.4 62 020/- WAS ADDED IN THE BLOCK ASSESSMENT AS UNEXPLA INED INVESTMENT IN SHARES AS THE ASSESSEE COULD NOT PRODUCE ANY E VIDENCE IN SUPPORT OF HIS CLAIM IN INVESTMENT IN SHARES. ON AP PEAL THE LD. CIT(A) ON THE BASIS OF THE REMAND REPORT OF THE AO W HEREIN IT HAS BEEN STATED THAT .... THE ASSESSEE HAS FILED STATEMENT OF INVESTMENT ALONGWTH COPIES OF BROKERS NOTE WHICH REFLECTS THAT THE ASSESSEE HAS PURCHASED THESE SHARES IN THE YEAR 1991 1996 AND 1997. THE TOTAL VALUE OF SHARES WORKS OUT TO RS.4 55 000/- AND THE SAM E MAY BE TREATED AS EXPLAINED DELETED THE ADDITION OF RS.4 55 000/- AND SUSTAINED THE ADDITION OF RS.7 028/-. 21. AFTER CONSIDERING THE SUBMISSIONS OF THE RIVAL PARTIE S AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE ARE OF T HE VIEW THAT SINCE THE AO IN HIS REMAND ORDER HAS ACCEPTED THE TOTAL VALUE OF SHARES AS IT(SS)A NO.101 & 113/M/06 A.Y:BP 16 EXPLAINED AND IN THE ABSENCE OF ANY CONTRARY MATERIAL TO SHOW AS TO WHICH INVESTMENT WAS NOT DISCLOSED BY THE ASSESSEE OR FALLS I N THE BLOCK PERIOD THE ADDITION OF RS.7 028/- MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. THE GROUND TAKEN BY TH E ASSESSEE IS THEREFORE ALLOWED. 22. GROUND NO.12 IN ASSESSEES APPEAL IS AGAINST THE SUSTEN ANCE OF ADDITION OF RS.5 24 115/- AS UNDISCLOSED INCOME UTILISED FOR FLAT RENOVATION. 23. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT ON THE BASIS OF SEIZED MATERIAL IT WAS FOUND BY THE AO THAT THE ASSESSEE HAS INCU RRED EXPENSES OF RS.9 41 320/- FOR RENOVATION OF THE FLAT I N AMARDEEP SOCIETY AND CLAIMED THE SAME BELONGED TO HIS SON RAJNI SH ARORA. THE AO IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE REN OVATION EXPENSES WERE INCURRED BY ASSESSEES SON SHRI RAJNISH ARORA A DDED RS.9 41 320/- AS UNDISCLOSED INCOME IN THE HANDS OF THE AS SESSEE. ON APPEAL THE LD. CIT(A) CALLED THE REMAND REPORT FRO M THE AO. THE AO IN HIS REMAND REPORT DATED 21.2.2005 HAS STATED AS UNDE R :- FLAT RENOVATION EXPENSES : AS PER THE ASSESSMENT ORDER ADDITION OF RS.9 41 320/- WAS MADE BY HOLDING THAT THE EXPENDITURE WAS INCURRED FROM UNACCOUNTED SOURCE FO R THE FLAT RENOVATION DONE BY THE ASSESSEE. THE ASSE SSEE WAS GIVEN TO INSPECT THE SEIZED MATERIAL PAGE 11 TO PAGE 18. THE ASSESSEE STATED THAT PAGE NO.14 15 16 AR E THE QUOTATION WHILE PAGE NO.17 AND 18 ARE THE ADVANCE PAYMENT AMOUNTING TO RS.1 70 000/- AND RS.20 000/- RESPECTIVELY MADE TO THE PERSON FOR RENOVATION OF F LAT IT(SS)A NO.101 & 113/M/06 A.Y:BP 17 THESE EXPENSES (RS.1 70 000/- + RS.20 000/- = RS.1 90 000/-) IS MADE OUT OF UNACCOUNTED RENOVATIO N EXPENSES OF RS.5 24 115/-. THUS THE ADDITION ON AC COUNT OF FLAT RENOVATION EXPENSES MAY BE TAKEN AT RS.5 24 115/- INSTEAD OF RS.9 41 320/- TAKEN BY MY PREDECESSOR. THE LD. CIT(A) ON THE BASIS OF THE REMAND REPORT OF THE AO HAS SUSTAINED THE ADDITION OF RS.5 24 115/- AND ALLOWED R ELIEF OF RS.4 17 204/-. 24. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE AO AND THE LD. CIT(A) FURTHER SUBMITS THAT SINCE THE FLAT DOES NO T BELONG TO THE ASSESSEE AND THE SAME IS BELONGING TO HIS SON SHRI RAJNISH ARORA THEREFORE NO ADDITION IS CALLED FOR. 25. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE AO AND THE LD. CIT(A). 26. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE FLAT BELONGS TO ASSESSEES SON SHRI RAJNISH ARORA WHO IS SEPARATELY ASSESSED TO TAX VIDE P.A.NO.ABJPA 21934. M ERELY BECAUSE THE ASSESSEE IS LIVING JOINTLY WITH HIS SON DOES NO T MEAN THAT THE ASSESSEE HAS INCURRED EXPENSES ON RENOVATION OF THE FL AT BELONGING TO HIS SON. THIS BEING SO AND IN THE ABSENCE OF ANY MATER IAL TO SHOW THAT THE RENOVATION EXPENSES WERE INCURRED BY THE ASSESSEE OUT OF HIS IT(SS)A NO.101 & 113/M/06 A.Y:BP 18 UNDISCLOSED INCOME THE ADDITION MADE BY THE AO AND SUST AINED BY THE LD. CIT(A) IS DELETED. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE ALLOWED. 27. GROUND NO.13 IN THE ASSESSEES APPEAL IS AGAINST THE SUSTENANCE OF ADDITION OF RS.2 48 000/- AS UNDISCLOSED IN COME INVESTED IN IVP. 28. GROUND NO.3 AND 4 IN REVENUES APPEAL ARE AGAINS T THE RELIEF OF RS.4.00 LACS ALLOWED BY THE LD. CIT(A) IN THIS REGARD AND TO RESTORE THE ORDER OF THE AO. 29. THE BRIEF FACTS OF THE ISSUE ARE THAT DURING THE CO URSE OF SEARCH INDRA VIKAS PATRIKA(IVP) VALUED AT RS.2 25 000/- AND RS.4 23 000/- WERE FOUND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS EXPLAINED BY THE ASSESSEE THAT IVP WORTH RS.4.00 LACS BEL ONGED TO SHRI T.M. DEDHIA IVP WORTH RS.1 10 000/- BELONGED TO SMT. BHAGWANTI ARORA MOTHER OF THE ASSESSEE AND IN RESPECT OF BALANCE IVP WORTH RS.1 38 000/- NO EXPLANATION WAS OFFERED. THE AO AFTER CONSIDERING THE ASSESSEES EXPLANATION AND KEEPING IN VIE W THE STATEMENT OF ASSESSEES WIFE THAT ALL THREE ARE IN THE NA ME OF MY FAMILY MEMBERS TREATED RS.6 48 000/- VALUE OF IVP AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD . ON APPEAL THE LD. CIT(A) AFTER CONSIDERING THE ASSESSEES EXPLANATION THAT THE IVP WORTH IT(SS)A NO.101 & 113/M/06 A.Y:BP 19 RS.4.00 LACS BELONGED TO SHRI T.M. DEDHIA WHICH WAS KEP T WITH THE ASSESSEE AS A SECURITY HAS DELETED THE ADDITION OF RS.4.00 L ACS AND SUSTAINED THE ADDITION OF RS.2 48 000/-. 30. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE AO AND THE LD. CIT(A). 31. ON THE OTHER HAND THE LD. DR WHILE RELYING ON T HE ORDER OF THE AO SUBMITS THAT THE ASSESSEES EXPLANATION THAT THE IVP O F RS.4.00 LACS BELONGED TO SHRI T.M. DEDHIA IS WITHOUT ANY MERIT AS THE LOAN WAS GIVEN TO SHRI T.M. DEDHIA ON 24.12.96 AND THE IVPS ARE OF A LATER DATE I.E. IVPS WORTH RS.1 20 000/- WERE RECEIVED ON 27/31 .12.96 IVPS WORTH RS.2 53 000/- WERE ISSUED ON 23.4.97 AND IVP WOR TH RS.50 000/- WAS ISSUED ON 13.10.98. HE THEREFORE SUBMIT S THAT THE ADDITION MADE BY THE AO BE RESTORED. 32. IN THE REJOINDER THE LD. COUNSEL FOR THE ASSESSEE SUB MITS THAT SHRI T.M. DEDHIA HAS OFFERED THE SECURITY OF IVP OF RS. 4.00 LACS AFTER THE DATE OF ISSUE OF PROMISSORY NOTE DATED 24.12.96 TH EREFORE THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. 33. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS IT(SS)A NO.101 & 113/M/06 A.Y:BP 20 ARE NOT IN DISPUTE. WE FURTHER FIND THAT THE LD. CI T(A) AFTER CONSIDERING THE DEMAND PROMISORY NOTE DATED 24.12.96 A ND THE IVPS WORTH RS.1 20 000/- RECEIVED ON 27/31.12.96 IVPS WORT H RS.2 53 000/- ISSUED ON 23.4.97 AND IVPS WORTH RS.50 000 /- WAS ISSUED ON 13.10.98 KEPT AS A SECURITY AT A LATER STAGE H AS HELD VIDE PARA 9.1 OF HIS ORDER AS UNDER : 9.1 I HAVE GONE THROUGH THE FACTS BROUGHT ON RECOR D BY THE AO THE PAPERS FILED BY THE APPELLANT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS THE CONTENTIONS OF THE APPELLANT. ON THE BASIS OF THE DOCUMENTS FILED IT IS CLEAR THAT THE IVP IN QUESTI ON WAS IN FAVOUR OF M/S. MANGATRAM ARORA FINANCE LTD. AND NO T IN FAVOUR OF SHRI MANGATRAM ARORA (INDIVIDUAL). THIS IS APPARENT FROM THE ORDER OF THE AO WHO HAS REPRODUC ED THE PROMISSORY NOTE ON PAGE-16 OF HIS ORDER WHICH THE PROMISSORY NOTE PROMISES TO PAY M/S. MANGATRAM AROR A FINANCE LTD. THE SUM OF RS.4.00 LAS AND NOT TO SHR I MANGATRAM ARORA (INDIVIDUAL). FURTHER THE AO HAS NOT TAKEN COGNIZANCE OF THE BACKSIDE OF THE PROMISSORY NOTE. IT IS A FACT THAT IVPS CARRY NO NAME AND HENCE THER E IS NO MERIT IN THE ACTION OF THE AO REJECTING THE EXPLANA TION OF THE APPELLANT ON THAT GROUND. THE APPELLANT HAS BE EN ABLE TO SATISFACTORILY EXPLAIN THE CONNECTION BETWE EN THE LOAN TAKEN BY SHRI T.M. DEDHIA FROM M/S. MANGATRAM ARORA FINANCE LTD. AND THE PROMISSORY NOTE IN FAVO UR OF M/S. MANGATRAM ARORA FINANCE LTD. GIVEN IN RETURN. THE AO HAS NOT BROUGHT ANY FACT ON RECORD AND REBUT THE CONTENTION OF THE APPELLANT. ON THE BASIS OF FACTS AS ANALYSED ABOVE THE ADDITION OF RS.6 48 000/- AS UNDISCLOSED INCOME OF THE APPELLANT IS DELETED. IN THE ABSENCE OF ANY OTHER CONTRARY MATERIAL BROUGHT ON RECORD BY THE REVENUE AND KEEPING IN VIEW THAT IT IS NOT THE CASE OF THE REVENUE THAT THE AFORESAID IVPS WERE NOT OFFERED AS A SECURITY BY SH RI T.M. DEDHIA AT A LATER DATE WE ARE OF THE VIEW THAT THE LD. CIT (A) WAS FULLY JUSTIFIED IN ACCEPTING THE ASSESSEES EXPLANATION WITH REGARD TO TH E ADDITION OF IT(SS)A NO.101 & 113/M/06 A.Y:BP 21 RS.4.00 LACS. FURTHER IN THE ABSENCE OF ANY OTHER SUPPOR TING MATERIAL PLACED ON RECORD BY THE ASSESSEE TO SHOW THE SOURCE AND CAPA CITY OF SMT. BHAGWANTI DEVI ARORA MOTHER OF THE ASSESSEE IN RE SPECT OF IVP OF RS.1 10 000/- STATED TO BE BELONGING TO HER AND NO EXPLANATION OFFERED BEFORE THE LD. CIT(A) IN RESPECT OF IVP OF R S.1.38 LACS WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD. CIT(A) IN SUS TAINING THE ADDITION OF RS.2 48 000/- AND ACCORDINGLY THE GROUND TAKEN BY T HE ASSESSEE AND THE REVENUE ARE REJECTED. 34. GROUND NO.14 AND 15 IN ASSESSEES APPEAL ARE AGAINST THE CONFIRMATION OF THE ACTION OF THE AO IN TREATING THE INCOME FOR ASSESSMENT YEAR 1997-98 AND 1998-99 AS UNDISCLOSED INCOME OF THE ASSESSEE. 35. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO OBSERVED THAT THE ASSESSEE FILED RETURNS OF INCOME DECLARING NET TAXABLE INCOME OF RS.1 30 130/- FOR ASSESSMENT YEAR 1997-98 RS.1 17 420/- FOR ASSESSMENT YEAR 1998-99 AND RS.2 28 265/- FOR ASSESSMENT YE AR 1999-00 ON 9.3.2001 BUT DID NOT FILE RETURN FOR ASSESSM ENT YEAR 2000- 01 THOUGH HAVING TAXABLE INCOME OF RS.2 18 360/-. TH E ASSESSEE WAS ASKED AS TO WHY THE INCOME DECLARED AFTER THE SEARCH SHOUL D NOT BE TREATED AS UNDISCLOSED INCOME. IN THE ABSENCE OF ANY EXPL ANATION OF THE ASSESSEE THE AO TREATED THE DECLARED INCOME FOR THE A SSESSMENT IT(SS)A NO.101 & 113/M/06 A.Y:BP 22 YEARS 1997-98 1998-99 1999-00 AND 2000-01 AS UNDISCLO SED INCOME OF THE BLOCK PERIOD. ON APPEAL THE LD. CIT(A) WHIL E OBSERVING THAT THERE HAS BEEN DEDUCTION AT SOURCE AND ADVANCE TAX PAID FOR THE ASSESSMENT YEARS 1999-00 AND 2000-01 THEREFORE THE RETU RNS OF THE SAID ASSESSMENT YEARS DO NOT FALL WITHIN THE AMBIT OF SECTI ON 158 BC AND IN RESPECT OF THE RETURNS FOR THE ASSESSMENT YEARS 1997 -98 AND 1998-99 NO TDS HAD BEEN MADE NOR ANY ADVANCE TAX WAS PAID AND HENCE THE AO HAS RIGHTLY INVOKED THE PROVISIONS OF SECTI ON 158 BC(1)(BB)(CA) OF THE ACT. 36. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE SUBMITS THAT SEC. 158 BB(1)(C) DOES NOT SAY THAT ANY INCOME SHOWN IN RETURN FILED AFTER EXPIRY OF TIME LIMIT IS TO BE TREATED AS UNDISCLOSED INCOME THEREFORE THE ADDITION MADE BY THE AO TREATING THE UNDISCLOSED INCOME FOR THE ASSESSMENT YEARS 1997-98 AND 1998-99 BE DELETED. THE RELIANCE WAS ALSO PLACED IN C.P. NANDA VS. DY. CIT(2 005) 144 TAXMAN 13 (ITAT-PUNE). 37. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE AO AND THE LD. CIT(A). 38. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND T HAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS FILED RETURNS FOR THE ASSESSMEN T YEARS IT(SS)A NO.101 & 113/M/06 A.Y:BP 23 1997-98 AND 1998-99 DECLARING AN INCOME OF RS.1 20 130 /- AND RS.1 17 420/- RESPECTIVELY ON 9.3.2001 I.E. AFTER THE SEARCH. HOWEVER THE PARTICULARS OF INCOME CONTAINED IN SUCH BEL ATED RETURNS SHOWING THE EARNING OF CORRESPONDING INCOME BY THE ASSESSEE ARE THE SAME AS WAS SHOWN IN THE ASSESSMENT YEARS 1999-00 AND 2000- 01. MOREOVER THE AO HAS ALSO ASSESSED THE INCOME FOR THE ASSESSME NT YEAR 1999-00 AT RS.2 38 000/- VIDE ORDER DATED 26.3. 2002 PASSED U/S.143(3) OF THE ACT AS AGAINST RETURNED INCOME OF RS.2 28 265/-. IF THAT BE SO A MERE FILING OF RETURNS AFTER THE SEARCH CONDUCTED ON 7.2.2001 BY ITSELF WILL NOT ENTITLE THE REVENUE TO TREAT THE INCOME ADMITTED BY THE ASSESSEE IN THESE YEARS AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK ASSESSMENT IN VIEW OF THE OBSERVATION IN THE CASE OF C.P. NANDA (SUPRA) AND ACCORDINGLY THE AO IS DI RECTED TO EXCLUDE THE ABOVE INCOME FOR THE ASSESSMENT YEARS 1997-98 AND 1998-99 FROM THE UNDISCLOSED INCOME OF THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE ALLOWED. 39. GROUND NO.16 IN ASSESSEES APPEAL IS AGAINST THE INTER EST CHARGED U/S.158 BFA(1) OF THE ACT. 40. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE WITHOUT POINTING OUT AS TO WHY THE INTEREST CHARGED U/S.158 BFA (1) IS INVALID IT(SS)A NO.101 & 113/M/06 A.Y:BP 24 SUBMITS THAT CONSEQUENTIAL RELIEF IN RESPECT OF LEVY OF I NTEREST U/S.158 BFA(1) BE ALLOWED WHICH WAS NOT OBJECTED TO BY THE LD . DR. 41. THAT BEING SO AND IN THE ABSENCE OF ANY OTHER SUPP ORTING MATERIAL PLACED ON RECORD BY THE ASSESSEE THE AO IS DIRECT ED TO ALLOW CONSEQUENTIAL RELIEF IN THIS REGARD. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE PARTLY ALLOWED. 42. GROUND NO.17 IN ASSESSEES APPEAL IS AGAINST THE LEVY OF SURCHARGE. 43. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ISSU E OF SURCHARGE HAS BEEN REFERRED TO THE LARGER BENCH BY THE HONBLE SUPREME COURT THEREFORE THE ISSUE MAY BE DECIDED ACCOR DINGLY. 44. ON THE OTHER HAND THE LEARNED DR RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SURESH N GU PTA (2008) (297 ITR 322)(SC) HOLDING THAT THE LEVY OF SURCHARGE IS JUSTIFIED. 45. HAVING CAREFULLY HEARD THE SUBMISSIONS OF RIVAL PAR TIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND THA T THE HONBLE SUPREME COURT AFTER THE JUDGMENT IN VATIKA TOWNSHIP P. LTD DATED 6.1.2009 REPORTED IN (2009) (314 ITR 338) HAS HELD I N CIT VS RAJIV IT(SS)A NO.101 & 113/M/06 A.Y:BP 25 BHATARA (2009) 310 ITR 105(SC) VIDE JUDGMENT DATED FEBRUARY 19 2009 AT PAGE 106 HEAD NOTE AS UNDER:- HELD REVERSING THE DECISION OF THE HIGH COURT THAT SURCHARGE LEVIABLE UNDER THE FINANCE ACT WAS A DIST INCT CHARGE NOT DEPENDENT FOR ITS LEVIABILITY ON THE ASS ESSEES LIABILITY TO PAY INCOME-TAX BUT ON ASSESSED TAX. THEREFORE EVEN WITHOUT THE PROVISO TO SECTION 113 OF THE INCOME-TAX ACT 1961 RELATING TO TAX IN THE CASE O F BLOCK ASSESSMENT OF SEARCH CASES THE FINANCE ACT 2001 WAS APPLICABLE TO BLOCK ASSESSMENT UNDER CHAPTER XIV-B IN RELATION TO THE SEARCH INITIATED ON APRIL 6 2000 AND ACCORDINGLY SURCHARGE WAS LEVIABLE. RESPECTFULLY FOLLOWING THE ABOVE AUTHORITATIVE PRONOU NCEMENT OF THE HONBLE SUPREME COURT WE ARE OF THE VIEW THAT LEVY OF SURCHARGE IS JUSTIFIED AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDING OF LEARNED CIT (A) IN THIS REGARD. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE REJECTED. 46. GROUND NO.2 IN REVENUES APPEAL IS AGAINST THE D ELETION OF ADDITION OF RS.3 62 119/- BEING UNACCOUNTED JEWELLERY. 47. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT WAS INTERALIA OBSERVED BY THE AO THAT JEWELLERY WORTH RS.3 62 119/- WAS SEIZED AS PER PANCHNAMA DATED 1.3.2001. ON BEING ASKED IT WAS EXPLAINED BY THE ASSESSEE THAT THE SAID JEWELLERY BELONGS TO SMT. BHAG WANTI ARORA AND IT IS INHERITED PROPERTY REFLECTED IN THE BALANCE SHEET. HOWEVER THE AO WAS OF THE VIEW THAT DURING THE SEARCH PROCEEDIN GS A IT(SS)A NO.101 & 113/M/06 A.Y:BP 26 STATEMENT OF SHRI MANGATRAM ARORA WAS RECORDED ON 1.3. 2001 WHEREIN IN ANSWER TO QUESTION NO.6 IT WAS STATED BY THE ASSESSEE TH AT THE JEWELLERY BELONGS TO ALL THE FAMILY MEMBERS INCLUDING PART OF THE JEWELLERY BELONGING TO MY MOTHER... . IT WAS FURTHER OBSERVED BY THE AO THAT THE STATEMENT OF SMT. SANYOGITA ARORA WAS ALSO RECORDED ON 1.3.2001 TO EXPLAIN THE SOURCE OF JEWELLERY. IT WAS ST ATED BY SMT. SANYOGITA ARORA THAT PART OF THE JEWELLERY HAS BEEN GIVEN TO ME BY MY MOTHER-IN-LAW AND PART OF THE JEWELLERY BELONGS T O MY DAUGHTER KAMAL ARORA. I HAD ALSO RECEIVED SOME JEWELLERY AT TH E TIME OF MY MARRIAGE... . THE AO AFTER CONSIDERING THE ABOVE STATEMENTS OBSERV ED THAT IT IS SEEN FROM THE BALANCE SHEET OF SMT. SANYOGIT A ARORA THAT NO JEWELLERY HAS BEEN SHOWN IN HER BALANCE SHEET AND SHRI MANAGTRAM ARORA HAS NEVER FILED BALANCE SHEET WITH RETURN OF INCO ME AND HENCE HE TREATED THE VALUE OF SEIZED JEWELLERY RS.3 62 119/ - AS UNDISCLOSED INCOME OF THE ASSESSEE. ON APPEAL THE LD. CIT(A) WHILE OBSERVING THAT THERE IS NO DISCUSSION IN THE ORDER REGARDING WHY THE A O COME TO THE CONCLUSION THAT THE JEWELLERY DID NOT BELONG TO MRS. BH AGWANTI ARORA DELETED THE ADDITION OF RS.3 62 119/-. 48. AT THE TIME OF HEARING THE LD. DR SUPPORTS THE OR DER OF THE AO. 49. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE R ELIED ON THE ORDER OF THE LD. CIT(A). IT(SS)A NO.101 & 113/M/06 A.Y:BP 27 50. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND KEEPIN G IN VIEW THAT IT IS NOT THE CASE OF THE REVENUE THAT THE JEWELLERY SEIZE D IS IN EXCESS OF THE LIMITS PRESCRIBED IN THE CBDTS GUIDELINES VIDE INSTR UCTION NO.1916 DATED 11.5.1994 WE DECLINE TO INTERFERE WITH THE OR DER PASSED BY THE LD. CIT(A) IN DELETING THE ADDITION OF RS.3 62 119/- AND ACCORDINGLY THE GROUND TAKEN BY THE REVENUE IS REJECTED. 51. IN THE RESULT BOTH THE APPEALS ARE PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8.3.2010. SD/- SD/- ( B. RAMAKOTAIAH ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JU DICIAL MEMBER MUMBAI DATED: 8.3.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI. IT(SS)A NO.101 & 113/M/06 A.Y:BP 28 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 11 12 15/2.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 12 15 17/10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 8.3.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 9.3.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER