THE ACIT, CIR ,4, v. M/S. MAZDA CONTROLS LTD,

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND N.S. SAINI A M) IT (SS) A NO.110/AHD/2002 BLOCK PERIOD: 1990-91 TO 1999-2000 THE A. C. I. T. CIRCLE-4 AHMEDABAD VS M/S. MAZDA CONTROLS LTD. 650/1 PANCHWAH SECOND LANE AMBAWADI AHMEDABAD PA NO. AABCM 9273 H (APPELLANT) (RESPONDENT) APPELLANT BY SHRI N. S. DAYAM DR RESPONDENT BY SHRI S.N. SOPARKAR AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY REVENUE IS DIRECTED AGAINST ORDER OF THE CIT(A)-VIII AHMEDABAD DATED 2 7-02-2002 FOR THE ABOVE BLOCK PERIOD. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD. 3. GROUNDS NO. 1 AND 2 OF THE APPEAL READ AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND AS WELL AS ON FACTS IN GRANTING DEDUCTION UNDER CHAPTER VIA (U/S 80 HHC ) FROM THE UNDISCLOSED INCOME FALLING IN THE BLOCK PE RIOD. 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS IN IGNORING THE PROVISIONS OF SECTION 158BB(2) AND HEL D THAT DEDUCTION U/S 80 HHC AND 80I WERE AVAILABLE AGAINST THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD . 4. THE ASSESSEE CHALLENGED THE FINDING OF THE AO BE FORE THE LEARNED CIT(A) IN NOT GRANTING DEDUCTIONS UNDER CHAPTER VIA FOR SECTION 80 HHC AND 80 IA OF THE IT ACT FROM THE INCOME FOR THE YEA RS FALLING IN THE BLOCK IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 2 PERIOD. THE AO NOTED ON PERUSAL OF THE RETURN OF IN COME FILED FOR THE BLOCK PERIOD AND THE ENCLOSURES ANNEXED ALONG WITH IT THAT THE ASSESSEE DISCLOSED TOTAL GROSS INCOME AT RS.12 65 864/- FOR THE BLOCK PERIOD UNDER DIFFERENT HEADS. HOWEVER THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.7 03 423/- U/S 80 HHC AND 80 IA OF THE IT ACT FO R THE BLOCK PERIOD AND DISCLOSED THE NET INCOME OF RS.5 62 441/- ONLY FOR THE BLOCK PERIOD. THE ASSESSEE CLAIMED THAT DEDUCTIONS U/S 80 HHC AND 80 IA OF THE ACT UNDER CHAPTER VI-A IS ELIGIBLE DEDUCTION IN THE BLO CK PERIOD AS PER THE PROVISIONS OF SECTION 158BB (1) AND EXPLANATION (A) ALONG WITH SECTION 158BH OF THE IT ACT. THE ASSESSEE RELIED UPON THE D ECISION IN THE CASE OF SATPAL SINGH 66 TTJ 602 AND ELECTROTHERM (I) LTD. ( UNREPORTED DECISION OF ITAT AHMEDABAD). THE AO CONSIDERING THE STATEMEN TS OF THE ASSESSEE AND MATERIAL ON RECORD NOTED THAT AS PER THE DETAIL S FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS NOT CLEAR T HAT INCOME EARNED PERTAINS TO THE BUSINESS ACTIVITY OR THE INDUSTRIAL UNDERTAKING. IN THE DETAILS OF UNDISCLOSED INCOME ANNEXED ALONG WITH T HE RETURN OF INCOME FOR THE BLOCK PERIOD THE ASSESSEE HAS GIVEN THE DET AILS OF UNDISCLOSED INCOME OF RS.12 65 684/- UNDER DIFFERENT HEADS LIKE PERSONAL EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT PURCHASE BILLS AN D SALE OF SCRAP. THE AO REPRODUCED THE TABLE AT PAGE 13 OF THE ASSESSMENT O RDER AND NOTED FROM THE TABLE THAT MOST OF THE ITEMS IN WHICH THE INCOM E HAS BEEN DISCLOSED ARE NOT VERY CLEARLY OUT OF THE BUSINESS ACTIVITIES OF THE INDUSTRIAL UNDERTAKING. THE AO FURTHER NOTED THAT ADDITION IS ALSO MADE ON ACCOUNT OF UNDISCLOSED SALE PROCEEDS OF IMMOVABLE PROPERTIE S. THE AO THEREFORE HELD THAT DEDUCTIONS CLAIMED BY THE ASSESSEE COMPAN Y U/S 80 HHC AND 80 IA OF THE IT ACT CANNOT BE ALLOWED IN THE BLOCK PERIOD. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED CIT(A) AND SAME S UBMISSIONS WERE REITERATED AND IT WAS EXPLAINED THAT DEDUCTION UNDE R CHAPTER VI-A U/S 80 HHC AND 80IA OF THE IT ACT ARE AVAILABLE FROM THE UNDISCLOSED INCOME UNDER THE BLOCK ASSESSMENT. THE LEARNED CIT( A) CONSIDERING THE BREAK-UP OF THE INCOME GIVEN BY THE ASSESSEE NOTED THAT THE INCOME IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 3 DISCLOSED IS DUE TO INTRODUCTION OF BOGUS BILLS SC RAP SALES AND PERSONAL EXPENDITURE DEBITED. NATURE OF PAYMENT AND RECEIPTS WERE SUPPORTED BY THE STATEMENT TAKEN DURING THE SEARCH AND HAS NOT B EEN DISPUTED IN THE ASSESSMENT ORDER. THE LEARNED CIT(A) FURTHER NOTED THAT ONCE BOGUS BILLS HAVE BEEN DEBITED AND AS THE TOTAL RECEIPTS HAVE NO T BEEN DOUBTED TO BE ARISEN OUT OF ANY OTHER ACTIVITIES EXCEPT MANUFACTU RING THE INCOME DISCLOSED HAS TO BE TAKEN AS INCOME OF INDUSTRIAL U NDERTAKING. SIMILARLY NO OTHER SOURCE IS FOUND TO HAVE EXISTED AND AS SUC H THE SCRAP SALES AND THE INCOME DISCLOSED THEREOF ALSO ARE OUT OF INDUST RIAL UNDERTAKING. THE LEARNED CIT(A) ACCORDINGLY DIRECTED THE AO TO CONSI DER THE UNDISCLOSED INCOME TO BE INCOME OUT OF BUSINESS ACTIVITIES OF T HE INDUSTRIAL UNDERTAKING AND DIRECTED TO ALLOW DEDUCTIONS U/S 80 HHC AND 80 IA OF THE IT ACT. 5. THE LEARNED DR SUBMITTED THAT THE DEDUCTION U/S 80 HHC IS NOT ALLOWABLE TO THE ASSESSEE IN THIS CASE BECAUSE THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS OF SECTION 80 HHC OF THE I T ACT AS THERE IS NO EXPORT MADE BY THE ASSESSEE AND NO FOREIGN EXCHANGE IS RECEIVED WHICH IS DISCLOSED AS UNDISCLOSED INCOME. HE HAS SUBMITTE D THAT SINCE IT IS UNDISCLOSED INCOME BY THE ASSESSEE THEREFORE NATU RE OF THE INCOME IS NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCO ME FILED AS WELL AS THE ASSESSEE HAS FAILED TO PROVE THAT INCOME WAS DERIVE D FROM ANY INDUSTRIAL ACTIVITIES. HE HAS SUBMITTED THAT THE ASSESSEE NEVE R ADMITTED OR PROVED THAT IT HAS EARNED INCOME FROM INDUSTRIAL UNDERTAKI NG. THE LEARNED DR SUBMITTED THAT FOR CLAIMING DEDUCTION U/S 80HHC AND 80IA OF THE IT ACT CERTAIN CONDITIONS PROVIDED UNDER THE PROVISIONS SH ALL HAVE TO BE SATISFIED BUT THE LEARNED CIT(A) HAS FAILED TO CONS IDER THE SAME ASPECT. THE LEARNED DR SUBMITTED THAT IN CASE OF UNDISCLOSE D INCOME IT CANNOT BE PART OF THE ACCOUNTS OF THE ASSESSEE. THEREFORE BOTH THE DEDUCTIONS HAVE BEEN WRONGLY ALLOWED AS DEDUCTION BY THE LEARN ED CIT(A). THE LEARNED DR SUBMITTED THAT SPECIFIED BUSINESS HAVE T O BE SEEN U/S 80 IA IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 4 OF THE IT ACT BEFORE GRANTING ANY RELIEF TO THE ASS ESSEE. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE ASSESSEE CLAIMED DEDUCTIONS U/S 80 HHC AND 80IA OF THE IT AC T ON THE INCOME OF RS.20 00 000/- WHICH IS ULTIMATELY REDUCED BY THE L EARNED CIT(A). HE HAS SUBMITTED THAT COMPUTATION OF UNDISCLOSED INCOM E OF THE BLOCK PERIOD HAS TO BE MADE U/S 158BB (1) OF THE IT ACT I N ACCORDANCE WITH THE PROVISIONS OF THIS ACT WHICH INCLUDES CHAPTER VI-A OF THE ACT. HE HAS FURTHER REFERRED TO EXPLANATION (A) TO SECTION 158B B (1) OF THE IT ACT TO SHOW THAT FOR THE PURPOSE OF DETERMINATION OF UNDIS CLOSED INCOME THE TOTAL INCOME OR LOSS OF EACH PREVIOUS YEAR WAS FOR THE PURPOSE OF AGGREGATION TO BE TAKEN AS TOTAL INCOME OR LOSS CO MPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT. THE LEARNED COUNSE L FOR THE ASSESSEE ACCORDINGLY SUBMITTED THAT THE LEARNED CIT(A) WAS J USTIFIED IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR DEDUCTIONS U/S 80 HHC AND 80IA OF THE IT ACT IN THE BLOCK ASSESSMENT. HE HAS RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SU MAN PAPER AND BOARDS LTD. 314 ITR 119 (GUJ) IN WHICH IT WAS HELD THAT NO FAULT CAN BE FOUND WITH THE IMPUGNED ORDER OF THE TRIBUNAL HO LDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80 I OR 80IA OF THE ACT OUT OF THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF NIRMA INDUSTRIES VS DCIT 283 ITR 402 (GUJ) IN WHICH IT WA S HELD THAT INTEREST RECEIVED ON LATE PAYMENT OF SALE CONSIDERATION AM OUNT DERIVED FROM BUSINESS AND INCLUDABLE IN THE PROFITS FOR THE PURPOSE OF SECTION 80 I OF THE ACT. HE RELIED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF EASTERN PRODUCE VS ITO 286 ITR 353 (MAD.) IN WHICH IT WAS HELD THAT AFTER AMENDMENT TO SECTION 158BB OF THE INCOME-TAX ACT 1961 WITH RETROSPECTIVE EFF ECT FROM JULY 1995 A BLOCK ASSESSMENT MADE UNDER THE PROVISIONS OF CHAPTER XIV-B WOULD HAVE THE BENEFIT OF CHAPTER VI-A DEDUCT IONS WHICH IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 5 INCLUDES SECTION 80HHC. HELD (I) THAT IN THE PRES ENT CASE THE TRIBUNAL HAD NOT CONSIDERED THE AMENDED PROVISION EVEN THOUGH THE ORDER WAS PASSED AFTER THE AMENDMENT OF THE PRO VISION. THE TRIBUNAL HAD TO DECIDE WHETHER THE ASSESSEE WAS ELI GIBLE TO CLAIM DEDUCTION UNDER SECTION 80 HHC OF THE ACT. HE HAS REFERRED TO PB-8 WHICH IS STATEMENT OF THE MANAGING DIRECTOR AND IN ANSWER TO QUESTION NO.5 -15 IT WAS EXPLAINED THAT CASH RECEIPTS ARE UN ACCOUNTED SALES OF MAL-FUNCTIONING EQUIPMENTS SCRAP ACCUMULATED OVER A PERIOD OF TIME INCLUDING INTRODUCTION OF BOGUS BILLS AND UNACCOUNT ED CASH. HE HAS REFERRED TO PAGE 13 OF THE ASSESSMENT ORDER IN WHIC H THE AO REPRODUCED THE DETAILS FILED IN THE RETURN OF INCOME TO SHOW T HAT RS.12 65 684/- IS EARNED ON ACCOUNT OF UNDISCLOSED INCOME. HE HAS ALS O REFERRED TO THE ORDER OF THE ITAT RAJKOT BENCH IN THE CASE OF ACIT VS PRABHUDAS S. PARIKH IN ITA NO.308/RAJ/1998 DATED 29-11-2000 IN W HICH IT WAS HELD THAT THE LEARNED CIT(A) IS PERFECTLY JUSTIFIED IN T REATING THE INCOME OF THE ASSESSEE FROM THE BUSINESS AND HAS CORRECTLY DIRECT ED THE AO TO RE- COMPUTE THE DEDUCTION U/S 80 HHC OF THE IT ACT TREA TING THE UNDISCLOSED INCOME AS BUSINESS INCOME. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. IT IS CLEAR THAT AFTER AMENDMENT TO SECTION 158BB O F THE IT ACT WITH RETROSPECTIVE EFFECT FROM 1-07-1995 THE BLOCK ASSE SSMENT MADE UNDER THE PROVISIONS OF CHAPTER XIV-B WOULD HAVE THE BENE FIT OF CHAPTER VI-A DEDUCTIONS WHICH INCLUDES SECTION 80 HHC AND 80IA OF THE IT ACT. AS PER THE EXPLANATION (A) TO THE AFORESAID SECTION AL SO THE COMPUTATION OF UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL HAVE T O BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT. THE JUD GMENT RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORT THE CA SE OF THE ASSESSEE THAT FOR COMPUTING UNDISCLOSED INCOME OF THE BLOCK PERIOD THE DEDUCTION U/S 80 HHC AND 80IA COULD HAVE BEEN ALLOWED IN FAVO UR OF THE ASSESSEE. THE HONBLE MADRAS HIGH COURT IN THE CASE EASTERN P RODUCE COMPANY IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 6 (SUPRA) RESTORED THE MATTER TO THE TRIBUNAL TO DECI DE WHETHER THE ASSESSEE WAS ELIGIBLE TO CLAIM DEDUCTION U/S 80 HHC OF THE IT ACT. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SUMAN PAP ER AND BOARD LTD. (SUPRA) CONSIDERED THE JUDGMENT OF THE TRIBUNAL AND THE SAME IS ALSO REPRODUCED IN THE IMPUGNED ORDER IN WHICH THE TRIBU NAL NOTED THAT THE UNDISCLOSED INCOME DECLARED IN FORM NO.2B IS UNDER THE HEAD BUSINESS INCOME FROM INDUSTRIAL UNDERTAKING AS THE ONLY ACTI VITY OF THE ASSESSEE COMPANY IS THE MANUFACTURING AND SALE OF BOARD PAPE R AND CRAFT PAPER WHICH HAS BEEN ALL ALONG ASSESSED AS BUSINESS INCOM E AND FALLING IN THE BLOCK PERIOD. NO EVIDENCE WAS FOUND THAT INCOME OF THE ASSESSEE WAS ASSESSABLE UNDER ANY OTHER HEAD. UNDER THIS PREMISE S THE TRIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80 IA/80I OF THE IT ACT IN RESPECT OF UNDISCLOSED INCOME FOR THE BLOCK PERIOD. THE FINDING OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE HONBLE GUJA RAT HIGH COURT. HOWEVER IN THE CASE OF THE ASSESSEE THE AO SPECIF ICALLY NOTED IN PARA 7.1 ON PERUSAL OF THE ANNEXURE ANNEXED WITH THE RET URN OF INCOME FILED FOR THE BLOCK PERIOD THAT THE ASSESSEE HAS DISCLOSE D A TOTAL GROSS INCOME OF RS.12 65 864/- FOR THE BLOCK PERIOD UNDER DIFFER ENT HEADS . THE AO AT PAGE 13 OF THE ASSESSMENT ORDER ALSO NOTED ON VERIF ICATION OF THE DETAILS FILED AT THE ASSESSMENT STAGE THAT IT IS NOT CLEAR THAT THE INCOME EARNED PERTAINS TO THE BUSINESS ACTIVITY OR INDUSTRIAL UND ERTAKING. THE AO AT PAGE 14 OF THE ASSESSMENT ORDER IN PARA 7.12 ALSO O N VERIFICATION OF THE DETAILS NOTED THAT MOST OF THE ITEMS IN WHICH INCOM E HAS BEEN DISCLOSED ARE NOT VERY CLEARLY OUT OF BUSINESS ACTIVITIES OF THE INDUSTRIAL UNDERTAKING. THOUGH THE LEARNED DR DID NOT DISPUTE THAT THE ASSESSEE COULD BE GRANTED DEDUCTIONS U/S 80 HHC AND 80IA OF THE IT ACT IN THE BLOCK PERIOD BUT THE SUBMISSIONS OF THE LEARNED DR ARE SPECIFIC THAT THE ASSESSEE HAS FAILED TO PROVE THE CONDITIONS OF SECT ION 80 HHC AND 80 IA OF THE IT ACT IN THIS CASE. THEREFORE THE ASSESSEE WOULD NOT BE ENTITLED FOR DEDUCTION UNDER THE ABOVE PROVISIONS EVEN IN TH E BLOCK PERIOD. THE LEARNED DR ALSO SUBMITTED THAT THE ASSESSEE NEVER A DMITTED IN HIS IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 7 STATEMENT THAT INCOME SO DISCLOSED WAS OUT OF BUSIN ESS ACTIVITIES OR INDUSTRIAL UNDERTAKING OF THE ASSESSEE. THE ABOVE F ACTS THEREFORE WOULD SHOW THAT THE LEARNED CIT(A) WITHOUT EXAMINING THIS ISSUE HAS MERELY ON ASSUMPTION OF CERTAIN FACTS ALLOWED RELIEF TO THE A SSESSEE U/S 80 HHC AND 80 IA OF THE IT ACT. 7. THE ABOVE FACTS THEREFORE WOULD SHOW THAT THE LEARNED CIT(A) WITHOUT TAKING INTO CONSIDERATION THE OBJECTIONS OF THE AO IN THE ASSESSMENT ORDER HAS ALLOWED RELIEF TO THE ASSESSEE GRANTING DEDUCTIONS U/S 80 HHC AND 80 IA OF THE IT ACT. THE LEARNED CIT (A) MERELY PRESUMED THAT ONCE BOGUS BILLS HAVE BEEN DEBITED WOULD PROVE THAT THE ASSESSEE WAS DOING MANUFACTURING ACTIVITIES AND NOT ANY OTHE R ACTIVITIES. THE LEARNED CIT(A) ALSO PRESUMED THAT NO OTHER SOURCE O F INCOME IS FOUND. THEREFORE SCRAP SALES IS UNDOUBTEDLY UNDISCLOSED I NCOME OUT OF INDUSTRIAL UNDERTAKING. THE LEARNED CIT(A) HAS FAIL ED TO NOTE THAT DEDUCTIONS U/S 80 HHC COULD BE GRANTED WHEN THE ASS ESSEE SATISFIED THE CONDITIONS LAID DOWN IN SECTION 80 HHC. IN ORDER TO QUALITY FOR DEDUCTION U/S 80 HHC THE ASSESSEE SHOULD HAVE DURING THE YE AR EXPORTED ANY QUALIFYING GOODS OR MERCHANDISED THE SALE PROCEEDS OF WHICH ARE RECEIVABLE IN CONVERTIBLE FOREIGN EXCHANGE WITHIN T HE SPECIFIC PERIOD AND OBVIOUSLY THROUGH LEGAL CHANNELS ONLY. THE ONUS TO ESTABLISH THAT ALL THE ABOVE CONDITIONS HAVE BEEN SATISFIED LIE ON THE AS SESSEE. THE LEARNED CIT(A) ALSO FAILED TO NOTE THAT IN ORDER TO QUALIFY FOR DEDUCTION U/S 80 IA OF THE IT ACT THE ASSESSEE SHALL HAVE TO PROVE THA T GROSS TOTAL INCOME OF THE ASSESSEE INCLUDES ANY PROFIT AND GAINS DERIVED BY THE UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB SECTION (4) (SUCH BUSINESS BEING REFERRED TO AS THE ELIGIBLE BUSINESS ) SUCH INCOME IS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION. THE AO AS PER HIS FINDING HAS CLEARLY NOTED THAT FROM THE DET AILS SUBMITTED BY THE ASSESSEE IT IS NOT CLEAR WHETHER THE INCOME WHICH H AS BEEN DISCLOSED WAS OUT OF BUSINESS ACTIVITY OF THE INDUSTRIAL UNDERTAK ING. THE LEARNED CIT(A) IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 8 WITHOUT CONSIDERING THE OBJECTIONS OF THE AO DECIDE D THE ISSUE IN FAVOUR OF THE ASSESSEE WITHOUT GIVING ANY SPECIFIC FINDING ON THE SAME. 8. ITAT AMRITSAR BENCH IN THE CASE OF M/S. NATIONAL LEGGUARD WORKS VS ITO IN ITA NO.343/ASR/2001 DATED 01-02-2005 CON SIDERED THE IDENTICAL ISSUE ON GRANT OF DEDUCTION U/S 80 HHC OF THE IT ACT ON ADDITIONAL INCOME SURRENDERED DURING THE COURSE OF SURVEY. IN THIS CASE THE ASSESSEE ADMITTED BEFORE THE AO IN A SURRENDER LETTER THAT THERE WAS DISCREPANCY IN THE STOCK AND THE AMOUNT WAS OFFERED FOR TAXATION BECAUSE OF THE DIFFERENCE IN THE STOCK. THE ASSESSE E HAS NOT PRODUCED ANY EVIDENCE BEFORE THE AUTHORITIES BELOW THAT RS.1 2 00 000/- ADDITIONAL INCOME WAS BUSINESS INCOME OF THE ASSESSEE. THE AUT HORITIES BELOW DECLINED TO GRANT DEDUCTION TO THE ASSESSEE U/S 80 HHC OF THE IT ACT WHICH WAS CONFIRMED BY THE TRIBUNAL BECAUSE THE ASS ESSEE FAILED TO PROVE INGREDIENTS OF SECTION 80 HHC OF THE IT ACT I N ORDER TO QUALIFY FOR DEDUCTION ON THE ADDITIONAL INCOME SO SURRENDERED ( AUTHORED BY ONE OF US JM). THE ASSESSEE CARRIED THE MATER IN APPEAL BE FORE THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF M/S. N ATIONAL LEGGUARD WORKS VS CIT 288 ITR 18 (P & H). THE HONBLE HIGH C OURT CONFIRMED THE ORDER OF THE TRIBUNAL ABOVE AND HELD AS UNDER: SPECIAL DEDUCTION UNDER SECTION 80HHC OF THE ACT 1961 CAN BE CLAIMED ONLY ON SHOWING FACTS WHICH MAK E THE ASSESSEE ELIGIBLE FOR THE DEDUCTION. THE BURDEN TO PROVE THESE FACTS IS ON THE ASSESSEE AND NOT ON THE REVENUE. TH ERE COULD BE NO PRESUMPTION THAT SURRENDER MADE ON ACCOUNT OF UNEXPLAINED STOCKS REPRESENTS EXPORT INCOME. THE ASSESSEE WAS A MANUFACTURER AND EXPORTER OF SPORTS GOODS. IT FILED ITS RETURN FOR THE ASSESSMEN T YEAR 1999- 2000 DECLARING AN INCOME OF RS.6 67 850. A SURVEY W AS CONDUCTED UNDER SECTION 133A ON THE ASSESSEE. THE S URVEY PARTY FOUND THAT THE STOCKS PHYSICALLY AVAILABLE AT THE PREMISES OF THE ASSESSEE WERE IN EXCESS BY RS.11 97 809 OF THE STOCKS REFLECTED IN THE BOOKS OF ACCOUNT. IN OR DER TO COVER THE DISCREPANCY THE ASSESSEE OFFERED TO DISCLOSE A N IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 9 ADDITIONAL INCOME OF RS.12 LAKHS OVER AND ABOVE THE NORMAL BUSINESS INCOME TO BE TAXED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THIS INCOME WAS DULY REFLECTED IN TH E PROFIT AND LOSS ACCOUNT AND THEREBY A NET PROFIT OF RS.51 16 053 WAS DECLARED. HOWEVER WHILE WORKING OUT THE DEDUCT ION UNDER SECTION 80 HHC OF THE ACT THE ENTIRE AMOUNT OF RS.51 16 053 WAS SHOWN AS PROFITS OF THE BUSINESS. THE ASSESSING OFFICER DID NOT ACCEPT THE STAND OF THE ASSESSEE AND HELD THAT THE EXCESS STOCKS AVAILABLE AT THE PR EMISES WERE NOT RECORDED IN THE BOOKS OF ACCOUNT ON WHICH DEDUCTION UNDER SECTION 80 HHC OF THE ACT WAS BEING CLAIMED. MERE SURRENDER BY THE ASSESSEE AT THE TIME OF SURVEY ON EXCESS STOCK BEING FOUND DID NOT ENTITLE THE ASS ESSEE TO DEDUCTION UNDER SECTION 80HHC OF THE ACT WHICH WAS AVAILABLE ONLY IN RESPECT OF INCOME DERIVED FROM TH E EXPORT. THIS VIEW WAS UPHELD BY THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL. ON APPEAL TO THE HIGH COURT: HELD DISMISSING THE APPEAL THAT THERE COULD BE NO PRESUMPTION THAT THE AMOUNT SURRENDERED REPRESENTED INCOME FROM EXPORTS. THE ASSESSEE WAS NOT ABLE TO P ROVE THAT IT WAS. HENCE IT WAS NOT ENTITLED TO SPECIAL DEDUCT ION UNDER SECTION 80 HHC IN RESPECT OF SUCH INCOME. 9. CONSIDERING THE ABOVE DISCUSSIONS WE ARE OF THE VIEW THAT THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT AS PER THE AMENDMENT IN SECTION 158BB OF THE IT ACT WITH RETROSPECTIVE EFFE CT BENEFIT OF DEDUCTIONS UNDER CHAPTER VI-A WOULD BE ALLOWED IN T HE BLOCK ASSESSMENT. HOWEVER THE LEARNED CIT(A) WITHOUT EXA MINING THE ISSUE PROPERLY ON MERIT FOR GRANT OF DEDUCTIONS U/S 80HHC AND 80IA OF THE IT ACT ALLOWED THE RELIEF TO THE ASSESSEE AS NOTED ABO VE. WE ARE THEREFORE OF THE VIEW THAT THE ISSUE ON MERITS REQUIRES RECONSID ERATION AT THE LEVEL OF THE LEARNED CIT(A). WE ACCORDINGLY SET ASIDE THE OR DER OF THE LEARNED CIT(A) TO THE ABOVE EXTENT AND RESTORE THIS ISSUE O N MERIT TO HIS FILE WITH DIRECTION TO RE-DECIDE THE ISSUE ON MERIT FOR GRANT OF DEDUCTIONS U/S 80 HHC AND 80 IA OF THE IT ACT IN ACCORDANCE WITH LAW AS PER THE OBSERVATIONS GIVEN IN THIS ORDER BY GIVING REASONAB LE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE LEA RNED CIT(A) SHALL PASS IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 10 SPEAKING ORDER CONSIDERING THE ENTIRE MATERIAL AND FACTS ON RECORD. AS A RESULT THESE GROUNDS OF APPEAL OF THE REVENUE ARE A LLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO.3 OF THE APPEAL READS AS UNDER: 3. THE LD. CITA) HAS ERRED IN LAW AS WELL AS ON FA CTS IN DELETING THE ADDITION OF RS.12 65 864/- THOUGH THE MANAGING DIRECTOR OF THE COMPANY AFTER ANALYZING THE LOOSE P APERS FOUND DURING THE SEARCH HAD ADMITTED EARNING OF UNA CCOUNTED INCOME AMOUNTING TO RS.20 LAKHS. THE HONBLE SUPREM E COURT IN 1963 AIR 1165 (SC) HAD HELD THAT THE ADMISSION O N FACT IS FINDINGS. 11. THE AO MADE ADDITION OF RS.20 00 000/- BASED ON STATEMENT OF MR. S. R. MODY MANAGING DIRECTOR OF THE ASSESSEE COMPANY WHICH WAS RECORDED U/S 132(4) OF THE IT ACT ON THE DATE OF SE ARCH ON 29-06-1999. THE AO DRAWN INFERENCE TO ANSWER TO QUESTION NO.15 OF THE STATEMENT RECORDED WHEREIN THE MANAGING DIRECTOR HAS ADMITTED UNDISCLOSED INCOME OF RS.20 00 000/-. HE FURTHER NOTED THAT THE ASSESSEE COMPANY HAS DISCLOSED ONLY AN AMOUNT OF RS.8 53 265/- BY WA Y OF BOGUS PURCHASE BILLS AND THAT THE ASSESSEE HAS THEREFORE BACK OUT FROM ITS PLEA THAT THEY ARE DISCLOSING RS.20 00 000/- AS UNA CCOUNTED INCOME. THE AO HAS ALSO OBSERVED THAT THE ASSESSEE COMPANY HAS STATED THAT THE ADMISSION MADE BY MR. S. R. MODY WERE UNDER IMMENSE COERCION AND PRESSURE FROM THE SEARCH PARTY FOR WHICH HE WAS REA DY TO FILE AN AFFIDAVIT. THE AO HOWEVER CONTENDED THAT THERE WAS NO COERCIO N ON THE PART OF THE SEARCH PARTY AND IN VIEW OF THE FACT NO AFFIDAVIT W AS FILED IT WAS ONLY AN AFTERTHOUGHT. THE AO ACCORDINGLY MADE ADDITION OF R S.20 00 000/- BEING ADMITTED BY THE MANAGING DIRECTOR OF THE ASSESSEE C OMPANY GIVING THE ASSESSEE BENEFIT OF TELESCOPING OF THE ENTIRE GROSS INCOME OF RS.12 65 864/-DISCLOSED BY THE ASSESSEE IN THE RETU RN OF INCOME FILED FOR THE BLOCK PERIOD. THE ADDITION WAS CHALLENGED BEFOR E THE LEARNED CIT(A) AND IT WAS BRIEFLY EXPLAINED THAT SHRI S. R. MODY I N HIS STATEMENT HAS IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 11 GIVEN BREAK UP THAT RS.20 00 000/- BE CONSIDERED AS UNACCOUNTED MONEY ON THE BASIS THAT RS.8 86000/- WERE BOGUS PUR CHASES AND RS.8 50 000/- ON ACCOUNT OF CASH RECEIPTS FOR THE P ERIOD FROM APRIL 1999 TO JUNE 1999. THE ABOVE STATEMENT WAS RECORDED ARO UND 2 AM AT THE NIGHT AND THERE WAS NO MENTION OF SPECIFIC MATERIAL . AT THAT TIME HE WAS NOT IN A POSITION TO EXPLAIN THE DETAILS WHICH CAN BE OBSERVED FROM THE BLOCK RETURN FILED BY THE COMPANY WHEREIN INSTEAD O F RS.8 86 000/- OF BOGUS BILLS ONLY RS.8 53 256/- WAS UNACCOUNTED WHIC H WAS DISCLOSED IN THE BLOCK RETURN AND AFTER SCRUTINY ACCEPTED BY THE AO. REGARDING CASH OF RS.8 50 000/- ONLY RS.59 255/- OF SCRAP SOLD WAS UNACCOUNTED AND BALANCE AMOUNT WAS PROPERLY ACCOUNTED FOR AND PROOF OF THE SAME WAS PROVIDED TO THE AO WHO HAS ACCEPTED THE SAME AND HA S NOT MADE FURTHER ADDITION. IT WAS THEREFORE SUBMITTED THAT ADDITION OF RS.20 00 000/- AGAINST ACTUAL UNACCOUNTED AMOUNT ME RELY ON THE BASIS OF THE ADMISSION NOT BE MADE. IT WAS FURTHER SUBMIT TED THAT EXPLANATION OF THE ASSESSEE HAS BEEN ACCEPTED BY THE AO. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE EXPLAINED ALL THE FACTS BEFORE TH E AO IN RESPONSE TO THE QUERY RAISED BY THE AO. IT WAS FURTHER EXPLAINED TH AT THE ASSESSEE EXPLAINED EVERY THING TO PROVE THAT THE SURRENDER O F ADDITIONAL INCOME OF RS.20 00 000/- WAS WITHOUT ANY BASIS. THEREFORE ON THE BASIS OF ADMISSION ONLY THE ADDITION SHOULD NOT HAVE BEEN MA DE. THE LEARNED CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE NOTED THAT THOUGH IN THIS CASE THE ASSESSEE HAS NOT RETRACTED FROM THE S TATEMENT BY FILING ANY AFFIDAVIT YET THE ASSESSEE COMPANY DID NOT OFFER T HE ENTIRE AMOUNT OF RS.20 00 000/- ADMITTED BY THE MANAGING DIRECTOR. T HEREFORE THE FACTS HAVE TO BE CONSIDERED. THE LEARNED CIT(A) ALSO NOTE D THAT THE MANAGING DIRECTOR WAS PUT TO QUESTION TO EXPLAIN THE DOCUMEN TS AND THE DISCREPANCIES THEREOF THE MANAGING DIRECTOR MADE T HE STATEMENT AS COULD NOT EXPLAIN THE DOCUMENTS BUT AT THE ASSESSME NT STAGE THE ASSESSEE WAS ABLE TO MENTION THE MAJOR ENTRIES OTH ER WISE THE AO HAVE TO MADE SPECIFIC ADDITION ON THE BASIS OF DOCUMENTS MAINLY RELATED TO THE IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 12 SCRAP SALES. THE LEARNED CIT(A) CONSIDERING THE EXP LANATION OF THE ASSESSEE FURTHER FOUND THAT THE CASH SEIZED FROM MA ZDA HOUSE OF RS.2 20 000/- WHICH IS NORMALLY DONE ON BEING UNEX PLAINED AT THE TIME OF SEARCH WAS FOUND TO BE FULLY EXPLAINED. THE LEAR NED CIT(A) THEREFORE NOTED THAT THESE FACTS CLEARLY INDICATE THAT THE AD MISSION MADE BY THE MANAGING DIRECTOR WAS WITHOUT HAVING FULL OPPORTUNI TY TO UNDERSTAND THE ENTRIES WHICH WERE RECORDED BY VARIOUS EMPLOYEE S. WHEN NO OTHER SOURCES OF INCOME HAS BEEN FOUND THE DOCUMENTS SEI ZED AND INFORMATION GATHERED HAS BEEN FULLY EXAMINED AND TH E EXPLANATION GIVEN REGARDING CASH RECEIPTS DURING APRIL 1999 TO JUNE 1999 RS.7 90 000/- (RS.8 50 000/- - RS.54 255/-) HAVING BEEN ACCEPTED BY THE AO THERE WAS NO JUSTIFICATION TO MAKE THE ADDITION ONLY ON THE B ASIS OF ADMISSION OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY. THE LEARNED CIT(A) THEREFORE NOTED THAT IF THE AMOUNT OF RS.7 50 000/ - BEING PART OF THE CASH RECEIPTS OUT OF ADMITTED AMOUNT OF RS.20 00 00 0/- IS REDUCED THE UNDISCLOSED INCOME WILL BE RS.12 50 000/-. WHEREAS THE ASSESSEE HAS DISCLOSED RS.12 66 000/-. THE LEARNED CIT(A) ALSO N OTED THAT ADMISSION OF UNACCOUNTED MONEY OF RS.20 00 000/- WAS MADE ON THE BASIS OF RS.8 86 000/- ON ACCOUNT OF INTRODUCTION OF BOGUS B ILLS AND RS.8 50 000/- ON ACCOUNT OF UNACCOUNTED CASH RECEIP TS FROM APRIL 1999 TO JUNE 1999. THE ASSESSEE HAS BEEN ABLE TO PROVE THAT OUT OF UNACCOUNTED CASH RECEIPTS OF R.8 85 000/- ONLY AN A MOUNT OF RS.59 255/- WAS ACTUALLY UNACCOUNTED. THE BALANCE A MOUNT WAS PROPERLY ACCOUNTED FOR AND THE SAME HAS BEEN ACCEPT ED BY THE AO. THE LEARNED CIT(A) THEREFORE NOTED THAT THE ADDITION TO THAT EXTENT IS CLEARLY UNJUSTIFIED. THE AO WAS ACCORDINGLY DIRECTED NOT TO TELESCOPE THE UNDISCLOSED GROSS INCOME OF RS.12 65 864/- WITH RS. 20 00 000/- DISCLOSED BY THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY DURING THE COURSE OF SEARCH. IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 13 12. THE LEARNED DR CHALLENGED THE DELETION OF THE ADDIT ION MADE BY THE LEARNED CIT(A) AND REFERRED TO PAGE 6 OF THE ASSESS MENT ORDER AND SUBMITTED THAT THE ASSESSEE ADMITTED THE UNDISCLOSE D INCOME OF RS.20 00 000/- IN THE STATEMENT OF THE MANAGING DIR ECTOR WHICH WAS ITS CONCEALED INCOME OUTSIDE THE BOOKS OF ACCOUNT. HE H AS SUBMITTED THAT ADMISSION IS GOOD EVIDENCE AND ADDITION CAN BE MADE ON THE BASIS OF ADMISSION MADE BY THE MANAGING DIRECTOR. THE LEARNE D CIT(A) SHOULD NOT HAVE DELETED THE PART OF THE ADDITION AND FURTHER SUBMITTED THAT THE LEARNED CIT(A) HAS NOT QUANTIFIED THE VALUE OF THE SCRAP AS POINTED BY THE AO AT PAGE 13 OF THE ASSESSMENT ORDER. THE LEARNED DR IN SUPPORT OF HIS CONTENTIONS RELIED UPON THE FOLLOWING DECISIONS: (1) MANHARLAL KASTURCHAND CHOKSHI VS ACIT 61 ITD 55 (AHD) - IN WHICH IT WAS HELD THAT IN THE ABSENCE OF ANY EV IDENCE TO SHOW THAT THE ASSESSEE HAD MADE DISCLOSURE UNDER DURESS PRESSURE AND COERCION RETRACTION AFTER A LAPSE OF OVER TWO MONT HS WAS AN AFTERTHOUGHT. ADDITION JUSTIFIED. (2) V. KUNHAMBU AND SONS VS CIT 219 ITR 235 (KER.) IN WHICH HONBLE KERALA HIGH COURT HELD THAT WHEN VOLUNTARY STATEMENT OF PERSON REGARDING SUPPRESSION OF STOCK IS MADE ASSE SSMENT ON THE BASIS OF VOLUNTARY STATEMENT WAS VALID. (3) ITO VS BIPIN FARASKHANA 73 ITD 334 (AHD) IN W HICH IT WAS HELD THAT THE SWORN TESTIMONY RECORDED U/S 132(4) W HICH WAS FULLY CORROBORATED BY DOCUMENTS AND RECORDS FOUND AT THE BUSINESS PREMISES ADDITION JUSTIFIED ON THE BASIS OF STATEM ENT RECORDED U/S 132(4) OF THE IT ACT. (4) HIRALAL MAGANLAL & CO. VS DCIT 96 ITD 113( MUM) IN WHICH IT WAS HELD THAT THE ASSESSEE HAVING MADE OF VOLUNTARY DECLARATION ON OATH AND INDUCED DEPARTMENTAL AUTHOR ITIES TO ACT IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 14 UPON SAME AT THE TIME OF SEARCH CANNOT BE PERMITTE D TO TURN AROUND LATER ON AND DENY TRUTH OF THE SAID DECLARAT ION OR REPRESENTATION MADE THEREIN. (5) CARPENTERS CLASSICS (EXIM) PVT. LTD. VS DCIT 29 9 IYR (AT) 124 (BANGALORE) IN WHICH IT WAS HELD THAT RETRACTIO N OF ADMISSION AFTER THREE MONTHS. NO MATERIAL WOULD SUPPORT RETRA CTION. ASSESSMENT OF UNDISCLOSED INCOME JUSTIFIED. 13. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND SUBMITTED THAT THE LEARNED CIT(A) ON VERIFICATION OF THE MATERIAL ON RECORD FOUND THAT NO BOGUS BILLS HAVE BEEN INTRODUCED AND THAT UNACCOUNT ED CASH WAS ONLY RS.59 255/-. HE HAS REFERRED TO PAGE 13 OF THE ASSE SSMENT ORDER TO SHOW THAT THE DETAILS OF UNDISCLOSED INCOME ANNEXED ALON G WITH RETURN OF INCOME FOR THE BLOCK PERIOD THE ASSESSEE HAS GIVEN THE DETAILS OF UNDISCLOSED INCOME OF RS.12 65 684/- WHICH HAS BEEN ACCEPTED BY THE AO AND THAT THE WORKING GIVEN BY THE ASSESSEE HAS N OT BEEN DISPUTED BY THE AO. HE HAS REFERRED TO PB -56 WHICH IS THE EXPL ANATION OF THE ASSESSEE ON THE ABOVE MATTER. THE LEARNED COUNSEL F OR THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIG H COURT IN THE CASE OF KAILASHBEN MANHARDAS CHOKSHI VS CIT 174 TAXMAN 466 (GUJ.) IN WHICH IT WAS HELD THAT MERELY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT HAVE BEEN SUBJECTED TO SUCH ADDITION UNLESS AND UN TIL SOME CORROBORATIVE EVIDENCES WERE FOUND IN SUPPORT OF SU CH EVIDENCE. FURTHER ADMISSION RECORDED AT THE ODD HOURS CANNOT BE CONSI DERED TO BE VOLUNTARY STATEMENT IF IT WAS SUBSEQUENTLY RETRACT ED AND NECESSARY EVIDENCE WAS LED CONTRARY TO SUCH ADMISSION. HENCE THERE WAS NO REASON TO DISBELIEVE THE RETRACTION BY THE ASSESSEE AND HIS EXPLANATION DULY SUPPORTED BY EVIDENCE. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS HOTEL BLUE MOON 321 ITR IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 15 362 (SC) AND REFERRED TO PAGE 368 IN WHICH IT WAS O BSERVED BY THE HONBLE SUPREME COURT THAT ASSESSMENT FOR BLOCK PER IOD CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR DOCUMENTS AND SUCH OTHER MATERI AL OR INFORMATION AS ARE AVAILABLE WITH THE AO. HE HAS ALSO RELIED UP ON THE ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF DCIT VS SHRI NITINKU MAR RAMCHANDRA PANCHAL IN ITA NO.2198/AHD/1999 DATED 31-10-2006 IN WHICH IT WAS HELD THAT THE ASSESSEE HAS SUCCEEDED IN ESTABLISHIN G THAT DISCLOSURE MADE DURING THE COURSE OF SEARCH WAS NOT ONLY MISTA KEN ONE BUT WAS UNTRUE AND ALSO THEREFORE ADDITION MADE SOLELY O N THE BASIS OF ADMISSION CANNOT BE SUSTAINED. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AVAILABLE ON RECORD. THE AO HEAVILY RELIED UPON THE STATEMENT OF THE MANAGING DIRECTOR RECORDED DURING THE COURSE OF SEA RCH IN WHICH HE HAS ADMITTED TO HAVE EARNED UNACCOUNTED MONEY OF RS.20 00 000/-. HOWEVER THE ANSWER TO QUESTION NO.15 (PB -10) SHOW S THAT IT WAS NOT CORRECT STATEMENT OF THE MANAGING DIRECTOR BECAUSE THE UNACCOUNTED MONEY OF RS.20 00 000/- INCLUDES AROUND RS.8 86 000 /- BY INTRODUCTION OF BOGUS BILLS AND RS.8 50 000/- ON ACCOUNT OF UNAC COUNTED CASH RECEIPTS FROM APRIL 1999 TO JUNE 1999. THE LEARNED CIT(A) ON VERIFICATION OF THE MATERIAL AND FACTS CORRECTLY NOTED THAT THER E WAS NO INTRODUCTION OF BOGUS BILLS AND THAT UNACCOUNTED CASH RECEIPTS W AS ONLY FOR A SUM OF RS.59 255/-. THE LEARNED COUNSEL FOR THE ASSESSEE H AS RIGHTLY POINTED OUT TO PAGE 13 OF THE ASSESSMENT ORDER WHEREIN THE ASSESSEE EXPLAINED THE UNDISCLOSED INCOME IN THE RETURN FILED FOR THE BLOCK PERIOD THAT IT GENERATED UNACCOUNTED INCOME OF RS.12 65 684/- WHIC H HAS ALSO NOT BEEN DISPUTED BY THE AO IN THE ASSESSMENT ORDER. RA THER IN THE COMPUTATION OF UNDISCLOSED INCOME THE AO HAS GIVEN BIFURCATION OF RS.12 65 864/- AS RS.5 62 441/- DISCLOSED IN THE RE TURN FOR THE BLOCK PERIOD AND RS.7 03 423/- AS CLAIMED UNDER CHAPTER V I-A AS PER PARA 7 OF IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 16 THE ASSESSMENT ORDER ON ACCOUNT OF DEDUCTION U/S 80 HHC AND 80IA OF THE IT ACT. THUS IT IS ADMITTED FACT ON RECORD THA T THERE WAS NO UNACCOUNTED INCOME EARNED BY THE ASSESSEE IN A SUM OF RS.20 00 000/-. EVEN DURING THE COURSE OF ARGUMENT THE LEARNED DR DID NOT DISPUTE THE FINDING OF FACT RECORDED BY THE LEARNED CIT(A) IN T HE IMPUGNED ORDER. THE LEARNED DR HOWEVER ARGUED THAT ADDITION OF RS.20 0 0 000/- COULD BE MADE ON THE BASIS OF SOLE STATEMENT OF THE MANAGING DIRECTOR RECORDED DURING THE COURSE OF SEARCH. HOWEVER WE DO NOT AGR EE WITH THE SUBMISSION OF THE LEARNED DR BECAUSE THE ASSESSEE W AS ABLE TO PROVE THAT THE STATEMENT MADE BY ITS MANAGING DIRECTOR DU RING THE COURSE OF SEARCH WAS FACTUALLY INCORRECT TO THE SAME EXTENT T O WHICH THE LEARNED CIT(A) DELETED THE ADDITION. HONBLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. VS STATE OF KER ALA 91 ITR 18(SC) HELD THAT ASSESSEE SHOULD BE GIVEN OPPORTUNITY TO S HOW THAT ADMISSION IS INCORRECT OR DOES NOT SHOW CORRECT STATE OF FACTS. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF KRISHAN LAL SHIV CHAND RAI VS CIT 88 ITR 293 (P&H) HELD THAT IT IS AN ESTABLISHED PR INCIPLE OF LAW THAT A PARTY IS ENTITLED TO SHOW AND PROVE THAT AN ADMISSI ON MADE BY HIM WAS IN FACT NOT CORRECT AND TRUE. HONBLE GUJARAT HIGH COURT IN THE CASE OF KAILASBEN MANHARDAS CHOKSHI (SUPRA) AS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO HELD THAT ADDITION CA NNOT BE MADE ON THE BASIS OF MERE ADMISSION UNLESS AND UNTIL SOME CORRO BORATIVE EVIDENCE WAS FOUND IN SUPPORT OF SUCH EVIDENCE. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DISCUSSIONS IT IS CLEAR THAT ADMISSION MADE BY THE MANAGING DIRECTOR ADMITTING UNDISCLOSED INCOME OF RS.20 00 000/- WAS WITHOUT ANY BASIS AND WITHOUT ANY CORROBORATION BY ANY MATERIAL ON RECORD. THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THAT THE UNDISCLOSED INCOME DISCLOSED WAS ONLY TO THE EXTENT OF RS.12 65 864/-. IT IS THEREFORE CLEAR WHAT WHILE RELYING UPON THE ADMISS ION THE CIRCUMSTANCES HAVE TO BEEN SEEN UNDER WHICH THE SAME ARE MADE. IT CAN BE WITHDRAWN UNLESS IT IS ESTOPPELS AND CONCLUSIVE. CONSIDERING THE DISCUSSION NOTED IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 17 ABOVE WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNED CIT(A) IN DIRECTING THE AO NOT TO TELESCOPE THE UNDISCLOSED G ROSS INCOME OF RS.12 65 864/- WITH RS.20 00 000/- DISCLOSED BY THE MANAGING DIRECTOR. THE DECISIONS RELIED UPON BY THE LEARNED DR ARE TH EREFORE CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE CASE. WE ACCO RDINGLY DISMISS GROUND NO.3 OF THE APPEAL OF THE REVENUE. 15. GROUND NOS. 4 AND 5 OF THE APPEAL OF THE ASSESS EE READ AS UNDER: 4. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON F ACTS IN DELETING THE ADDITION OF RS.37 23 750/- BEING UNACCOUNTED INVESTMENT IN IMMOVABLE PROPERTY. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AS WELL AS O N FACTS IN HOLDING THAT THE A. O. DID NOT PROVE THAT THE LO OSE PAPERS FOUND DURING THE COURSE OF SEARCH FROM THE CORPORATE OFFICE OF THE ASSESSEE DID NOT BELONG TO THE ASSESSEE IGNORING THE BASIC PRESUMPTION U/S 132(4A) 16. THE ADDITION OF RS.37 23 750/- WAS MADE ON THE BASIS OF LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH FROM THE C ORPORATE OFFICE OF THE ASSESSEE COMPANY. THE LOOSE PAPERS CONTAINED TH E DETAILS OF PLOTS SOLD FOR A TOTAL SUM OF RS.41.55 LACS. AGAINST THIS AN AMOUNT OF RS.4 31 250/- WAS SHOWN TO HAVE BEEN RECEIVED IN W HITE AND THE SAME WAS INDICATED BY THE LETTER W. THE MANOR PORTION BEING RS.37 23 750/- WAS SHOWN TO HAVE BEEN RECEIVED IN BLACK WHICH WA S INDICATED BY THE LETTER B. THE AO HAS ADDED BACK THIS AMOUNT TO TH E INCOME OF THE ASSESSEE COMPANY BEING UNACCOUNTED INVESTMENT ON TH E GROUND THAT THE ASSESSEE HAD SHOWN IGNORANCE REGARDING THESE PAPERS AND ALSO STATED THAT THEY DO NOT HAVE ANY KNOWLEDGE AS TO WHOM THES E PAPERS BELONGED TO. THE AO HAS ALSO REFERRED TO THE DECISION OF THE HONBLE SUPREME COURT REPORTED IN 72 ITR 250 (SC) IN WHICH THE PROV ISIONS OF INDIAN EVIDENCE ACT WERE ANALYZED AND WHEREIN IT WAS HELD THAT IN CASE ANY PIECE OF EVIDENCE/DOCUMENT/PAPER FOUND OR RECOVERED FROM SOMEBODYS IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 18 POSSESSION OR HOUSE IT IS ASSUMED THAT THE POSSESS OR IS THE OWNER OF THE SAME AND THE ONUS TO PROVE OTHERWISE IS ON THAT PER SON. THE ADDITION WAS CHALLENGED BEFORE LEARNED CIT(A) AND IT WAS BRI EFLY EXPLAINED THAT THESE LOOSE PAPERS WERE FOUND BY THE SEARCH PARTY S OMEWHERE IN THE OFFICE OTHER THAN THE POSSESSION OF THE MANAGING DI RECTOR. THE SEARCH PARTY HAS NOWHERE MENTIONED THE PLACE FROM WHICH TH ESE LOOSE PAPERS WERE FOUND. SINCE THE SEARCH PARTY COULD NOT ASSOCI ATE THESE PAPERS WITH ANY PERSON IN THE OFFICE THEREFORE THEY WERE UNAB LE TO TAKE STATEMENT FROM THE EMPLOYEES IN THIS REGARD. NO NEXUS IS ESTA BLISHED OF THESE PAPERS WITH THE MANAGING DIRECTOR. MR. MODY DENIED THE KNOWLEDGE OF THE ABOVE LOOSE PAPERS IN HIS STATEMENT. THEREAFTER NO FURTHER QUESTION WAS ASKED TO THE MANAGING DIRECTOR. IT WAS ALSO EXP LAINED THAT MANY OUTSIDERS VISITED THE CORPORATE OFFICE OF THE ASSES SEE COMPANY AND MANY CUSTOMERS/SUPPLIERS AND OTHERS VISITED THE PREMISES AND SOMEBODY MIGHT HAVE LEFT THE LOOSE PAPERS IN THE OFFICE. THE LOOSE PAPERS ARE NOT IN THE HAND WRITING OF THE MANAGING DIRECTOR AND THERE ARE ONLY JOTTINGS IN THE SAME. IF THE AMOUNT OF RS.4 31 250/- WOULD HAVE BEEN RELATED TO THE ASSESSEE COMPANY AS MENTIONED IN THE LOOSE PAPERS THEN THIS AMOUNT SHOULD HAVE BEEN REFLECTED IN THE BANK ACCOUNT AND THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO WAS NOT ABLE TO IDE NTIFY ANY SUCH AMOUNT. NO EVIDENCE WAS BROUGHT ON RECORD THAT THE MANAGING DIRECTOR OR ANY OTHER PERSON RECEIVED RS.37 23 750/- OR ANY OTHER AMOUNT. NO DOCUMENT OF PURCHASE OF THE PLOTS WAS FOUND. THEREF ORE THE AO HAS NOT BEEN ABLE TO ESTABLISH THAT THE PLOTS WERE EVER PUR CHASED BY THE MANAGING DIRECTOR OR BY HIS FAMILY MEMBERS. THERE I S MENTION OF NAME OF ATUL IN THE SEIZED PAPERS FROM WHOM MONEY IS REC EIVED. BUT THERE IS NO SUCH PERSON KNOWN TO THE MANAGING DIRECTOR OR TH E ASSESSEE COMPANY. NO TRANSACTION CONNECTED WITH THE SEIZED P APERS IS FOUND. THE PAPERS ALSO MENTION THAT SOME AMOUNT WAS PAID ON BE HALF OF THE PERSON NAMED FARUQ. THERE IS NO PERSON KNOWN TO THE ASSESS EE OR ITS MANAGING DIRECTOR. LIKEWISE SOME OTHER PERSONS HOMAI IS MEN TIONED IN THE SEIZED IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 19 PAPERS BUT IT IS NOT RELATED TO THE ASSESSEE COMPAN Y. SOME EXPENSES OF WEDDING WERE ALSO SHOWN BUT IT IS NOT PROVED IF ANY BODY IN THE FAMILY OF THE MANAGING DIRECTOR IS MARRIED. IT WAS THEREFOR E EXPLAINED THAT THE TRANSACTIONS MENTIONED IN THE NAME OF THE PERSONS M ENTIONED IN THE SEIZED PAPERS DO NOT BELONG TO THE ASSESSEE COMPANY OR ITS MANAGING DIRECTOR. THE ADDITION IS CLEARLY UNJUSTIFIED. IT W AS ALSO EXPLAINED THAT THE CASE LAW RELIED UPON BY THE AO IS NOT APPLICABL E BECAUSE IT IS NOT ESTABLISHED THAT THE SEIZED PAPERS WERE FOUND FROM THE MANAGING DIRECTOR OR FROM ANY PERSON RESPONSIBLE. IT WAS TH EREFORE SUBMITTED THAT IT WAS NOT CONCLUSIVELY PROVED THAT THE DOCUMENTS B ELONG TO THE ASSESSEE. IT WAS ALSO EXPLAINED THAT IN ORDER TO AT TRACT PRESUMPTION U/S 132(4A) OF THE IT ACT THE FIRST REQUIREMENT OF THE LAW WOULD BE THAT DOCUMENTS SHOULD BE FOUND FROM THE POSSESSION AND C ONTROL OF THE ASSESSEE HOWEVER IT WAS NOT SO IN THE CASE OF THE ASSESSEE. THE LEARNED CIT(A) THEREFORE NOTED THAT FOLLOWING POINTS EMERG E ON FACTS FOR CONSIDERATION: (I) THE ONLY FACT ESTABLISHED IS THAT THE RELEVANT LOOS E PAPERS FOUND IN THE CORPORATE OFFICE BUT THE DETAILS OF E XACT PLACE LIKE CABIN CUPBOARD AND DRAWER FROM THERE PAPERS W ERE FOUND IS NOT AVAILABLE. (II) THE IDENTITY OF THE PERSON FROM WHOM THESE PAPERS W ERE SEIZED IS NOT MENTIONED BY THE SEARCH PARTY IS ALSO NOT YET AVAILABLE. (III) THE STATEMENTS OF EMPLOYEES OF THE COMPANY TO PINPO INT OWNERSHIP OF THESE PAPERS ARE NOT TAKEN EITHER DURI NG SEARCH OR POST SEARCH. (IV) THE MD WHOSE STATEMENT WAS RECORDED HAS BEEN DENIED THE OWNERSHIP OF THESE PAPERS AND ALSO THE KNOWLEDGE AB OUT THESE PAPERS. DURING SEARCH NO EVIDENCE COULD BE GA THERED TO COUNTER CONTENTION OF SHRI MODY. IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 20 (V) IF THE MONEY MENTIONED W HAS BEEN RECEIVED WHICH IS NOT BROUGHT TOT AX INFERENCE IS THAT IT HAS BEEN ACCOUN TED FOR. IF THIS IS ACCOUNTED FOR THE RECEIPT SHOULD HAVE BEEN RECORDED AND FOUND IN THE BANK ACCOUNTS BUT NO SUCH EVIDENCE EXISTS. FURTHER THERE IS NO ADDITIONAL DOCUMENT OR DETAIL T O PROVE THE EXISTENCE OR IDENTITY OF ANY PROPERTY TO WHICH THESE TRANSACTIONS COULD BE RELATED. IT IS APPARENT THAT THE DOCUMENT DID NOT GIVE ANY CLUE TO PINPOINT THE OWNE RSHIP OF ANY OF FIVE PLOTS MENTIONED OR LEAD TO REASONABLE C ONCLUSION THAT TH4E PAPER SHOULD BELONG TO COMPANY. ONCE THE RECEIPT OF WHITE MONEY COULD NOT BE LINKED TO APPELLANT IT WILL BE ILLOGICAL TO LINK CASH MONEY MENTIONED IN THE PAPER TO THE APPELLANT. (VI) NO PERSON WITH THE NAME APPEARING IN THE LOOSE SHEE TS HAS BEEN IDENTIFIED DURING SEARCH TO BE CLOSELY CONNECT ED WITH THE COMPANY OR THE FAMILY MEMBERS OF THE DIRECTOR O R MD. (VII) EXCEPT JOTTING OF LOSE SHEETS THERE IS NO IOTA OF A DDITIONAL EVIDENCE WHICH MAY LINK THAT THE CONSIDERATION REFL ECTED CONCEALED INCOME OF THE CORPORATE IDENTITY. (VIII) IF THERE WAS CONCEALED INCOME RECEIVED BY APPELLANT CORRESPONDING INVESTMENTS IN ASSETS OR EXPENDITURE DETAILS SHOULD BE FOUND DURING THE SEARCH. IT WAS ALSO EXPLAINED THAT PRESUMPTION U/S 132(4A) OF THE IT ACT IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE LEARNED CIT(A) THEREFORE CONSIDERING THE ABOVE FACTS AND SEVERAL JUDICIAL PR ONOUNCEMENT REPRODUCED IN THE IMPUGNED ORDER NOTED THAT THE AO HAS NOT BEEN ABLE TO PROVE THAT THESE LOOSE PAPERS WERE FOUND FROM T HE POSSESSION OR CONTROL OF THE ASSESSEE COMPANY OR THAT THOSE TRANS ACTIONS RELATED TO THE ASSESSEE COMPANY. NONE OF THE ENTRIES/DETAILS MENTI ONED IN THE LOOSE PAPERS COULD BE LINKED TO THE BOOKS OF ACCOUNT OR B ANK ACCOUNT OF THE IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 21 ASSESSEE OR ANY OTHER EVIDENCE/DOCUMENTS FOUND AND SEIZED DURING THE SEARCH TO ESTABLISH THAT THE LOOSE PAPERS CONTAININ G JOTTINGS OF THE TRANSACTIONS OF THE ASSESSEE COMPANY. THE LEARNED C IT(A) THEREFORE HELD THAT NO ADVERSE PRESUMPTION CAN BE DRAWN AGAINST TH E ASSESSEE ON THE BASIS OF JOTTINGS MADE IN THE LOOSE PAPERS ON THE F ACTS OF THE CASE. THE ADDITION WAS ACCORDINGLY DELETED. 17. THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT THE SEIZED PAPERS WERE RECOVERED FROM THE PREMISES OF THE ASSESSEE. THEREFORE THE ASSESSEE SHALL HAVE TO EXPLAIN POSSE SSION OF THE SEIZED PAPERS. THE LEARNED DR SUBMITTED THAT THE SEIZED PA PERS BELONGED TO THE ASSESSEE. THE LEARNED DR RELIED UPON THE ORDER OF I TAT DHUNJIBHOY STUD & AGRICULTURAL FARM VS DEPUTY CIT [2002] 82 ITD 18 (PUNE) [TM] IN WHICH IT WAS HELD THAT THE IMPUGNED LOOSE PAPERS WAS AN ADMISSIBLE PIECE OF EVIDENCE AGAINST THE ASSESSEE A ND IN THE ABSENCE OF ALLEGATION OF COERCION OR PRESSURE IN MA KING THE STATEMENT AT THE TIME OF SEARCH THE STATEMENT WOULD BE ADMISSIBLE AGAINST THE ASSESSEE. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO THE SEIZED PAPERS FILED IN PAPER BO OK PB -69. HE HAS REFERRED TO QUESTION NO.12 IN THE STATEMENT OF THE MANAGING DIRECTOR SEEKING EXPLANATION OF THE ASSESSEE ON THE SEIZED P APERS IN WHICH THE MANAGING DIRECTOR DENIED HAVING KNOWLEDGE ABOUT ANY JOTTING IN THE SEIZED PAPERS. HE HAS REFERRED TO PB -39 WHICH IS T HE REPLY FILED ON THE ISSUE AND SUBMITTED THAT SEIZED PAPERS WERE NOT REC OVERED FROM THE POSSESSION OF THE MANAGING DIRECTOR. HE HAS REFERRE D TO PB 58 TO 61 WHICH IS THE EXPLANATION OF THE ASSESSEE ON THE SEI ZED PAPERS. THE LEARNED COUNSEL FOR THE ASSESSEE ACCORDINGLY SUBMIT TED THAT IT WAS A DUMB DOCUMENT AND HAS BEEN RIGHTLY IGNORED BY THE L EARNED CIT(A) FOR THE PURPOSE OF MAKING THE ADDITION. HE HAS RELIED U PON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CUT VS GIRISH CHAUDHARY IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 22 167 TAXMAN 608 IN WHICH IT WAS HELD THAT THERE WAS NO MATERIAL ON RECORD TO SHOW AS TO ON WHAT BASIS AO HAD REACHED A T THE CONCLUSION THAT THE FIGURE 48 WAS TO BE READ AS RS. 48 LACS AND THE DOCUMENT RECOVERED WAS A DUMB DOCUMENT. ADDITION OF RS.48 LACS WAS UNJUSTIFIED. HE HAS RELIED UPON THE ORDER OF THE ITAT AHMEDABAD A BENCH IN THE CASE OF SHRI DILIP R. PARIKH VS AC IT IN IT(SS)A NO.118/RAJ/2006 DATED 10-08-2007 (COPY FILED) IN WH ICH IT WAS HELD THAT NO ADDITION CAN BE MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE HANDS OF THE ASSESSEE AS THERE IS NO CORROBORAT IVE MATERIAL IN THE POSSESSION OF THE AO TO SHOW THAT THE AMOUNT ST ATED IN THE LOOSE PAPERS WAS THE INVESTMENT MADE BY THE ASSESSE E. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE SEIZED PAPERS WERE NOT RECOVERED FROM THE POSSESSION OF THE MANAGING DIREC TOR OR ANY OF HIS FAMILY MEMBERS OR ANY EMPLOYEE OF THE ASSESSEE COMP ANY. NO EVIDENCE IS BROUGHT ON RECORD THAT THE LOOSE PAPERS WERE IN THE HAND WRITING OF THE MANAGING DIRECTOR OR ANY OF THE EMPLOYEES OF THE AS SESSEE COMPANY. THE AO OBSERVED FROM THE SEIZED PAPERS THAT THE ASSESSE E COMPANY SOLD THE PLOTS FOR A SUM OF RS.41.50 LACS AGAINST WHICH RS.4 31 250/- HAS BEEN SHOWN TO HAVE BEEN RECEIVED IN WHITE. HOWEVER NO T RANSACTION WAS FOUND TO HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY OR IN ITS BANK ACCOUNT WHICH ARE MENTIONED IN THE SEIZED PAPERS. NO EVIDENCE IS ALSO BROUGHT IF THE ASSESSEE COMPANY HAS ANY CONNECTION WITH ANY OF THE PURCHASE OR SALE OF ANY OF THE PLOTS. FURTHER THE NAME OF ATUL IS MENTIONED IN THE SEIZED PAPERS REGARDING EXPENSES OF WEDDING ETC. ATUL IS NOT CONNECTED WITH THE ASSESSE E COMPANY AND NO EVIDENCE OF WEDDING CEREMONY CONDUCTED BY THE MANAG ING DIRECTOR IS FOUND. FURTHER NAMES OF FARUQ AND HOMAI ARE MENTIO NED WHO ARE ALSO NOT FOUND TO BE CONNECTED WITH THE ASSESSEE COMPANY . IN THE ABSENCE OF ANY SPECIFIC MATERIAL CONNECTED WITH THE NARRATION IN THE SEIZED PAPERS IT IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 23 IS DIFFICULT TO BELIEVE THAT THE ASSESSEE COMPANY O R ITS MANAGING DIRECTOR CONDUCTED ANY TRANSACTION OF PURCHASE AND SALE OF T HE PLOTS. SINCE THE DOCUMENTS WERE NOT FOUND FROM THE POSSESSION OF THE MANAGING DIRECTOR OR ANY RESPONSIBLE PERSON THEREFORE IT SHOULD NOT BE LINKED TO THE ASSESSEE COMPANY. THE MANAGING DIRECTOR WAS SHOWN T HE ABOVE LOOSE PAPERS AT THE TIME OF RECORDING STATEMENT IN WHICH HE HAS SPECIFICALLY DENIED TO HAVE ANY KNOWLEDGE WITH THE JOTTINGS CONT AINED IN THE LOOSE PAPERS. THE AO HAS THUS FAILED TO LINK THE SEIZED P APERS WITH THE ASSESSEE COMPANY OR ITS MANAGING DIRECTOR OR RESPON SIBLE PERSON. NO CORROBORATIVE EVIDENCE OR MATERIAL IS ALSO FOUND ON RECORD TO PROVE ANY SELLING OF THE PLOTS BY THE ASSESSEE COMPANY OR ITS MANAGING DIRECTOR. NO EVIDENCE IS ALSO FOUND ON RECORD TO PROVE THAT W AND B ARE THE WHITE AND BLACK MONEY RECEIVED BY THE ASSESSED COMPANY. C ONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE AND IN THE LIGH T OF THE FINDINGS OF THE LEARNED CIT(A) WE DO NOT FIND IT TO BE A FIT C ASE FOR INTERFERENCE. WE ACCORDINGLY DO NOT FIND ANY MERIT IN THE DEPARTMENT AL APPEAL ON THIS ISSUE. WE ACCORDINGLY DISMISS THESE GROUNDS OF APPE AL OF THE REVENUE. 19. AS A RESULT THE APPEAL OF THE REVENUE IS ALLOW ED PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 16-04-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 16-04-2010 LAKSHMIKANT/- IT(SS)A NO.110/AHD/2002 M/S. MAZDA CONTROLS LTD. 24 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD