M/S. BANSI FINANCE ,, Ahmedabad v. THE DY,CIT CENT CIR .2(1), Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH JM AND D.C.AGRAWAL AM M/S BANSI FINANCE C/O. D.P. THAKKER & CO. VISHARAT COMPLEX 1 ST FLOOR OLD HIGH COURT STREET NAVRANGPURA AHMEDABAD- 380009 VS. THE DY. CIT CENTRAL CIRCLE 2(1) AHMEDABAD. (APPELLANT) .. (RESPONDENT) THE DY. CIT CENTRAL CIRCLE 2(1) AHMEDABAD. VS. M/S BANSI FINANCE C/O. D.P. THAKKER & CO. VISHARAT COMPLEX 1 ST FLOOR OLD HIGH COURT STREET NAVRANGPURA AHMEDABAD- 380009 (APPELLANT) .. (RESPONDENT) THE ASSTT. CIT CENTRAL CIRCLE 2(1) AHMEDABAD. VS. SHRI CHANDULAL I. THAKKER HIGHWAY ROAD BHABHAR DIST. B.K. (APPELLANT) .. (RESPONDENT) IT(SS)A NO.123/AHD/2002 BLOCK PERIOD 1.4.1988 TO 22.9.1998 IT(SS)A NO.135/AHD/2002 BLOCK PERIOD 1.4.1988 TO 22.9.1998 IT(SS)A NO.127/AHD/2002 ALONG WITH C.O. 214/AHD/2002 BLOCK PERIOD 1.4.1988 TO 22.9.1998 IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 2 THE DY. CIT CENTRAL CIRCLE 2(1) AHMEDABAD. VS. SHRI HIRALAL TEJARAM THAKKAR MARKET YARD BHABHAR TAL. DEODAR DIST. BANASKANTHA. (APPELLANT) .. (RESPONDENT) SHRI HIRALAL TEJARAM THAKKAR MARKET YARD BHABHAR TAL. DEODAR DIST. BANASKANTHA. VS. THE DY. CIT CENTRAL CIRCLE 2(1) AHMEDABAD. (APPELLANT) .. (RESPONDENT) SHRI ASHOKKUMAR TEJARAM THAKKAR 168/3 KABUTAR KHANA CHOKHA BAZAR KALUPUR AHMEDABAD. VS. THE DY. CIT CENTRAL CIRCLE 2(1) AHMEDABAD. (APPELLANT) .. (RESPONDENT) THE DY. CIT CENTRAL CIRCLE 2(1) AHMEDABAD. VS. SHRI ASHOKKUMAR TEJARAM THAKKAR 168/3 KABUTAR KHANA CHOKHA BAZAR IT(SS)A NO.202/AHD/2002 BLOCK PERIOD 1.4.1988 TO 22.9.1998 IT(SS)A NO.208/AHD/2002 BLOCK PERIOD 1.4.1988 TO 22.9.1998 IT(SS)A NO.210/AHD/2002 BLOCK PERIOD 1.4.1988 TO 22.9.1998 IT(SS)A NO.230/AHD/2002 BLOCK PERIOD 1.4.1988 TO 22.9.1998 IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 3 KALUPUR AHMEDABAD. (APPELLANT) .. (RESPONDENT) IT(SS)A. NO.354/AHD/2003 (BLOCK PERIOD: 1-4-88 TO 22-9-1998) INCOME TAX OFFICER WARD-3 INCOME TAX OFFICER PALANPUR. (APPELLANT) VS. SHRI DAHYALAL ISHWARLAL THAKKAR OPP.GRAM PANCHAYAT OFFICE AZAD CHOWK BHABHAR (B.K.) (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR SR.ADV. WITH SHRI D.P. THAKKAR. REVENUE BY : SHRI K. K. VYAWAHARA D.R. ORDER PER SHRI D.C .AGRAWAL ACCOUNTANT MEMBER. ALL THESE APPEALS OF ASSESSEES AND THE REVENUE PER TAIN TO THE SAME GROUP INVOLVING COMMON ISSUES. THEREFORE THEY ARE TAKEN UP TOGETHER FOR DISPOSAL FOR THE SAKE OF CONVENIENCE. IT(SS)A NO.135/AHD/2002 (RE: M/S BANSI FINANCE )(R EVENUES APPEAL) 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.91674 MADE ON ACCOUNT OF UNACCOUNTED INCOME. (2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.5 LAKHS MADE ON ACCOUNT OF UNACCOUNTED INCOME . (3) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.7 95 880/-. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 4 (4) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.7 LAKHS TO RS.85 000/- MADE ON ACCOUNT OF UNA CCOUNTED INVESTMENT IN OFFICE. (5) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.20 000/- & RS.1 58 523/- MADE ON ACCOUNT OF U NACCOUNTED DISCOUNT. IT(SS)A NO.123/AHD/2002- RE:M/S BANSI FINANCE (ASSE SSEES APPEAL) 3. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ADDITION OF RS.85 000/- OUT OF THE TOTAL ADDITION O F RS.7 00 000/- MADE IN THE ASSESSMENT ON THE GROUND OF UNACCOUNTED INVESTMENT IN OFFICE. (2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ADDITION OF RS.14 51 000/- INADVERTENTLY SHOWN THRO UGH MISTAKE IN THE CASH FLOW STATEMENT AS CAPITAL INVESTMENT OF PA RTNER SHRI DAHYALAL ISHWERLAL RESULTING INTO INCREASE OF RS.14 51 000/- IN THE RESIDUE BALANCE AMOUNT OF RS.17 10 536/- IN THE CAS H FLOW STATEMENT. (3) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE BONA FIDE MISTAKE INADVERTENTLY CREPT DUE TO HUMAN ERROR IN THE CASH FLOW STATEMENT SUPPORTED BY AFFIDAVITS OF THE CONCERNED PERSONS AND OTHERWISE NOT FOUND FROM SEIZED MATERIA L OR ANY INFORMATION AVAILABLE FROM RECORDS. 4. THE FACTS OF THE CASE ARE THAT THERE WAS A SEARC H UNDER SECTION 132 IN THE CASE OF THE ASSESSEE ON 22.9.1998. IN RESPONSE TO NOTICE UNDER SECTION 158 BC ISSUED ON 3.12.1999 BLOCK RETURN WAS FILED O N AN UNDISCLOSED INCOME OF RS.25 LAKHS. HOWEVER BLOCK ASSESSMENT WA S MADE ON AN INCOME OF RS.56 32 880/-. THE LD. CIT(A) PARTLY ALLOWED TH E APPEAL OF THE ASSESSEE. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 5 AS A RESULT BOTH THE REVENUE AS WELL AS THE ASSESSE E ARE IN APPEAL RAISING RESPECTIVE GROUNDS AS ABOVE. 5. THE ASSESSEE IS ENGAGED IN THE FINANCING BUSINES S AS SHROFF AND COMMISSION AGENT. THIS ASSESSEE WAS A PARTNERSHIP F IRM STARTED FROM 14.7.1997 AND CONSISTED OF TWO PARTNERS NAMELY SHRI DAHYALAL ISHWERLAL THAKKAR AND SHRI ASHOKUMAR T. THAKKAR. IN THE COURS E OF BUSINESS ASSESSEE USED TO DISCOUNT CHEQUES OBTAIN DEMAND DRAFTS AND PAY ORDERS FOR CUSTOMERS ACCEPT DEPOSIT ADVANCE LOANS TO CUSTOME RS. THE FIRM WAS DISSOLVED ON 31.8.1998 AND BUSINESS WAS TAKEN-OVER BY ONE OF THE PARTNERS SHRI ASHOKKUMAR T. THAKKAR AS SOLE PROPRIETOR W.E.F . 1.9.1998. IT(SS)A NO.123/AHD/2002- RE:M/S BANSI FINANCE (ASSE SSEES APPEAL) 6. GROUND NO.1 OF ASSESSEES APPEAL AND GROUND NO.4 OF REVENUES APPEAL RELATE TO ADDITION OF RS.7 LAKHS ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE OFFICE OUT OF WHICH LD. CIT(A) HAD DELETED A N ADDITION OF RS.85 000/-. THE FACTS RELATING TO THIS GROUND ARE THAT DURING T HE COURSE OF SEARCH STATEMENT OF SHRI DAHYABHAI THAKKAR PARTNER OF THE ASSESSEE FIRM WAS RECORDED. IN RESPONSE TO ANSWER TO QUESTION NO.6 RE CORDED ON 22.9.1998 IT WAS STATED BY HIM THAT OFFICE OF THE BANSI FINANCE WAS PURCHASED IN JULY 1998 BY PAYING A GOOD WILL OF RS.7 LAKHS AND MONTHL Y RENT OF RS.500/-. AS NO SUCH PAYMENT OF RS.7 LAKHS WAS SHOWN IN THE BOOK S OF ACCOUNT THE AO SOUGHT TO TREAT THIS SUM AS ASSESSEES UNDISCLOSED INVESTMENT. IT WAS EXPLAINED TO THE AO THAT OUT OF RS.7 LAKHS RS.85 00 0/- WAS DEBITED IN FURNITURE ACCOUNT WHEREAS BALANCE AMOUNT OF RS.6 15 000/- IS COVERED IN UNDISCLOSED INCOME DECLARED IN THE BLOCK RETURN. TH E AO DID NOT ACCEPT THE IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 6 ABOVE CONTENTION AND MADE THE ADDITION OF RS.7 LAKH S AS UNACCOUNTED INVESTMENT IN THE OFFICE FOR FY 1998-99. THE LD. CI T(A) HELD THAT THERE IS NO MATERIAL TO INDICATE THAT AMOUNT OF RS.7 LAKHS WAS PAID BY THE ASSESSEE IN ADDITION TO RS.6 15 000/- WHICH HAS ALREADY BEEN DI SCLOSED SEPARATELY. THE LD. CIT(A) NOTED THAT SHRI ASHOKKUMAR T. THAKKAR HA S DECLARED A SUM OF RS.6 15 000/- SEPARATELY IN HIS BLOCK RETURN. THE L D. CIT(A) DID NOT ACCEPT THE EXPLANATION RELATING TO INVESTMENT OF RS.85 000 /- WHICH WAS ACTUALLY SPENT ON FURNITURE. HE ACCORDINGLY DELETED THE SUM OF RS.6 15 000/- AND RETAINED SUM OF RS.85 000/-. 7. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD AND DOCUMENTS IN THE PAPER BOOK REFERRED TO BY THE LD. AR AND THE LD. DR. THE LD. AR REFERRED TO THE STATEMENT OF SHRI DA HYABHAI I. THAKKAR GIVEN UNDER SECTION 132(4) AND POINTED OUT THAT SHRI DAHY ABHAI HAS NOT ACTUALLY STATED THAT A SUM OF RS.7 LAKHS HAS BEEN PAID FOR O FFICE BUT HE HAS ONLY STATED THAT OFFICE IS TAKEN ON GOOD-WILL OF RS.7 LAKHS AND MONTHLY RENT OF RS.500/-. SUM AT RS.6 15 000/- IS SHOWN AS INVESTMENT IN CASH FLOW STATEMENT AGAINST UNDISCLOSED INCOME SHOWN FOR WHICH LD. AR REFERRED TO THE BALANCE SHEET OF BANSI FINANCE AS ON 1.4.1998. IT WAS ALSO SUBMITTED THAT SUM OF RS.85 000/- IS DEBITED IN THE BOOKS AND THE PAYMENT FOR THIS WA S MADE BY CHEQUE DRAWN ON CITY UNION BANK. AFTER CLAIMING DEPRECIATION AT RS.8 500/- BALANCE SUM OF RS.75 500/- IS SHOWN ON THE ASSET SIDE IN THE TR IAL BALANCE AS ON 31.3.1999. AFTER VERIFYING THESE ENTRIES WE ARE OF THE VIEW TH AT ONCE FURNITURE BECOMES PART OF REGULAR BOOKS OF ACCOUNT NO ADDITION THERE OF IS REQUIRED TO BE MADE IN THE BLOCK ASSESSMENT. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 7 8. REGARDING SUM OF RS.6 15 000/- BALANCE SHEET OF BANSI FINANCE AT PAGE 56 OF ASSESSEES PAPER BOOK NO.1 SHOWED OFFI CE ACCOUNT 168/3. THIS BALANCE SHEET AT PAGE 56 IS REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER : BALANCE SHEET RS.23 25 000 ASHOKKUMAR TEJARAM THAKKER CAPITAL A/C RS.6 15 000/- OFFICE A/C 168/3 RS.4 75 000 DAHYALAL ISHWERLAL THAKKER CAPITAL A/C RS.10 85 000 BHAIYAJI A/C RS.6 90 464 BETTING PARTY A/C RS.1 50 000 R.K. THAKKER A/C RS.2 59 536 CASH & INVESTMENT RS.28 00 000 RS.28 00 000 WHILE VERIFYING THE BLOCK RETURN OF SHRI ASHOKKUMAR T. THAKKAR THE AO NOTED THAT ASSESSEE HAD MADE A DECLARATION OF RS.28 LAKHS AS INVESTMENT IN BANSI FINANCE WHICH IS SHOWN IN THE ABOVE CHART. T HUS THE SUM OF RS.6 15 000/- IS DECLARED BY SHRI ASHOKKUMAR T. THA KKAR IN ITS BLOCK RETURN AND THEREFORE IT IS NOT REQUIRED TO BE ADDED IN T HE CASE OF M/S BANSI FINANCE. AS A RESULT NO ADDITION IS CALLED FOR ON A CCOUNT SUM OF RS.7 LAKHS MADE BY THE AO. ACCORDINGLY GROUND RAISED BY THE R EVENUE IS DISMISSED WHILE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 9. IN ASSESSEES APPEAL THE SECOND GROUND RELATES T O ADDITION OF RS.14 51 000/-. THE FACTS RELATING TO THIS ADDITION ARE THAT IN THE BLOCK RETURN IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 8 FILED BY M/S BANSI FINANCE FOLLOWING SUMS WERE DECL ARED AS UNDISCLOSED INCOME BY THE ASSESSEE:- ASST. YEAR INCOME SHOWN 1998-99 RS.14 00 000 1999-2000 RS.11 00 000/- (1.4.98 TO 31.8.98) 10. IN ADDITION TO ABOVE UNACCOUNTED ASSETS DECLAR ED BY M/S BANSI FINANCE WERE AS UNDER :- RS.6 15 000 INVESTMENT IN OFFICE AT 168/3 KABUTAR KHANA RS.10 85 000 AMOUNT DUE FROM BHAIYAJI RS.6 90 646 AMOUNT DUE FROM BETTING PARTY RS.1 50 000 AMOUNT DUE FROM R.K. THAKKAR RS.17 10 536 AMOUNT DUE FROM OTHER PARTIES RS.42 51 000 TOTAL THIS INCLUDED A SUM OF RS.17 10 536/- DUE FROM OTHE R PARTIES. SUBSEQUENTLY ASSESSEE CAME FORWARD TO CLAIM THAT IN PLACE OF RS. 42 51 000/- UNDISCLOSED ASSETS WERE ONLY RS.28 LAKHS AS UNDER :- RS.6 15 000 INVESTMENT IN OFFICE AT 168/3 KABUTAR KHANA RS.10 85 000 AMOUNT DUE FROM BHAIYAJI RS.6 90 464 AMOUNT DUE FROM BETTING PARTY RS.1 50 000 AMOUNT DUE FROM R.K. THAKKAR RS.2 59 536 AMOUNT DUE FROM OTHER PARTIES RS.28 00 000 TOTAL IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 9 THUS THERE WAS A MISTAKE OF RS.14 51 000/- IN THE C ASH FLOW STATEMENT PREPARED I.E. IN PLACE OF DUES FROM OTHER PARTIES A T RS.17 10 536/- DUES FROM OTHER PARTIES WERE TO THE EXTENT OF RS.2 59 536/- O NLY. THE AO DID NOT ACCEPT THE ABOVE EXPLANATION ON THE GROUND THAT ONCE ASSES SEE HAS SHOWN UNACCOUNTED ASSET OF RS.42 41 000/- THEN THERE IS N O PROOF WITH THE ASSESSEE THAT THEY WERE ONLY RS.28 00 000/-. IT IS MERELY AF TER-THOUGHT. HE ACCORDINGLY MADE THE ADDITION OF RS.14 51 000/-. 11. THE LD. CIT(A) REJECTED THE GROUND RAISED BY TH E ASSESSEE ON THE GROUND THAT ASSESSEE IS NOT ENTITLED TO REVISE THE BLOCK RETURN. THE PLEA OF THE ASSESSEE THAT REVISION DOES NOT EFFECT THE DISCLOSU RE OF INCOME WAS NOT ACCEPTED BY THE LD. CIT(A) AND HE ALSO REJECTED HIS CONTENTION THAT IT WAS PURELY AN ARITHMETIC MISTAKE. 12. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. THE LD. AR FOR THE ASSESSEE DREW OUR ATTENT ION TO PAGES 7 8 12 & 13 OF HIS PAPER BOOK WHICH WERE THE SUBMISSIONS MADE B EFORE THE LD. CIT(A). IN ONE LETTER IT WAS EXPLAINED THAT ONE CLERK SHRI C. S. PARIKH OF THE TAX CONSULTANT SHRI D.P. POPAT WHO PREPARED THE CASH F LOW STATEMENT MIS- UNDERSTOOD THE INSTRUCTIONS GIVEN TO HIM BY SHRI D. P. POPAT. IT WAS INSTRUCTED THAT SUM OF RS.14 51 000/- SHOULD BE DIS CLOSED IN THE BLOCK RETURN OF DAHYALAL I. THAKKAR. INSTEAD OF THIS THE CLERK INCLUDED RS.14 51 000/- IN THE CASH FLOW STATEMENT THEREBY RESULTING IN HIGHER AMOUNT OF DUES FROM OTHER PARTIES. SHRI DAHYALAL I. THAKKAR HAD FILED A N AFFIDAVIT AND ALSO THE CLERK SHRI C. S. PARIKH TO THIS EFFECT. REVISED CAS H FLOW STATEMENT WAS ALSO FILED BEFORE THE AO. IN FACT THERE IS NO MATERIAL T O SHOW THAT THERE IS ANY CASH INVESTMENT OF RS.14 51 000/- EITHER BY SHRI DAHYALA L I. THAKKAR OR BY THE IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 10 ASSESSEE FIRM. THERE IS NO INVESTMENT OF THIS SUM A NYWHERE AND NO MATERIAL IS FOUND IN THE SEARCH TO INDICATE SUCH INVESTMENT OUTSIDE THE BOOKS. IT WAS A MATHEMATICAL MISTAKE WHICH ASSESSEE HAS SOUGHT TO R ECTIFY. THE LD. AR REFERRED TO PAGES 29 AND 30 OF HIS PAPER BOOK WHICH IS A LETTER WRITTEN BY THE ASSESSEE ON 26 TH SEPTEMBER 2000 WHEREIN THIS MISTAKE WAS FURTHER EXPLAINED. IT IS EXPLAINED THAT THE FIRM HAS DECLAR ED RS.25 LAKHS AS UNDISCLOSED INCOME AND SHRI ASHOKKUMAR T. THAKKAR H AS ALSO DECLARED RS.28 LAKHS AS UNDISCLOSED INCOME. SINCE THE FIRM I S TAKEN OVER BY SHRI ASHOKKUMAR T. THAKKAR THEN TOTAL UNDISCLOSED INCOME DECLARED WOULD COME TO RS.53 LAKHS. OUT OF THIS SUM ASHOKKUMAR T. THAKK AR HAS WITHDRAWN RS.16 LAKHS AND DAHYALAL I. THAKKAR HAS WITHDRAWN R S.9 LAKHS LEAVING THE ASSETS AT RS.28 LAKHS WHICH WAS DECLARED BY ASHOKKU MAR T. THAKKAR AS INVESTMENT IN BANSI FINANCE. 13. THE LD. DR SUBMITTED THAT THERE ARE CLEAR ANOMA LIES IN WHAT ASSESSEE HAS DECLARED AS INVESTMENT IN THE FIRM. HE DREW OUR ATTENTION TO PAGE 50 OF THE PAPER BOOK WHERE ASSETS OF RS.42 51 000/- ARE S HOWN AGAINST WHICH CAPITAL OF ASHOKKUMAR T. THAKKAR IS SHOWN AT RS.23 25 000/- AND THAT OF DAHYALAL I. THAKKAR IS SHOWN AT RS.19 26 000/-. IN ANOTHER BALANCE ON PAGE 56 ASSETS ARE SHOWN AT RS.28 LAKHS AGAINST WHICH CA PITAL OF DAHYALAL I. THAKKAR IS SHOWN AT RS.4 75 000/- REDUCED THEREFROM THE SUM OF RS.14 51 000/-. 14. THE LD. AR CLARIFIED THAT IT WAS ONLY BY MISTAK E ON 14.7.1997 THAT A SUM OF RS.41 51 000/- IS SHOWN AS INVESTMENT IN BAN SI FINANCE. IN FACT NO SUCH INVESTMENT WAS MADE BY HIM ON THAT DATE. THE B LOCK RETURNS OF BANSI FINANCE AND PARTNER DAHYALAL I. THAKKAR WERE FILED IN PAPER BOOK-III. THE IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 11 CORRECT CASH FLOW STATEMENT WAS ALSO FILED. IN PROO F THE LD. AR MADE FOLLOWING SUBMISSIONS IN THIS REGARD :- (J) IN THE FIRST CASH FLOW STATEMENT OF BANSI FINAN CE ( PB-I PAGE 49 TO 52) THROUGH MISTAKE RS.14 51 000/- IS SHOWN AS CASH INV ESTED BY DAHYALAL I THAKKER ON 14-07-97 WHICH IS REFLECTED IN CASH AND INVESTMENT OF RS.17 10 536/- (K) WHEN THE MISTAKE WAS NOTICED THAT DAHYABH AI I THAKKER HAS NOT INVESTED RS.14 51 000/- ON 14-07-97 REVISED CASH FLOW STATEM ENT WAS PREPARED IN WHICH RS.14 51 000/- WAS REMOVED FROM HIS CAPITAL A CCOUNT AND CORRESPONDINGLY CASH AND INVESTMENT REDUCED TO RS. 2 59 536/- FROM RS 1710536/- (PAGE NO. 53 TO 56 OF P/B-I). (1) THE MISTAKE OF RS. 14 5L 000/- IN CASH FLO W STATEMENT WAS POINTED OUT TO THE A.O. IN ASSESSMENT PROCEEDINGS AND AFFIDAVIT OF DAH YABHAI I THAKKER AND C.S. PARIKH CLERK OF THE C.A. D.P. THAKKER & CO. W ERE FILED (P/B-I PAGE 29 44 & 47). THE A.O. HOWEVER NOT CONSIDERED THE AFFIDAVITS NOR EXAMINED THE DEPONENTS. (M) IN THE CASH FLOW STATEMENT BALANCE SHEET ON PAGE NO. 56 THERE IS NO CREDIT AMOUNT IN THE ACCOUNT OF HARILAL TEJARAM. M/S BANSI FIANANCEWAS DISSOLVED ON 31-8-98 AND SO THERE WAS NO BALANCESHE ET OF M/S BANSI FINANCE AFTER 31-8-98 (N) DURING THE COURSE OF HEARING BEFORE THE HON' BLE BENCH COPY OF BLOCK RETURN OF BANSI FINANCE AND PARTNER DAHYABHAI ISHWE RLAL WERE CALLED WHICH ARE FILED IN PAPER BOOK-ILL. A) PAGE NO. 11 TO 14 ARE COPY OF CASH FLOW S TATEMENT FROM 14-07-97 TO 31-08-98 BEFORE FINDING OUT THE MISTAKE OF RS. 14 5 1 000/-. IT IS THE COPY OF PAGE NO. 49 TO 52 OF P/B-I. B) PAGE NO. 15 TO 17 DOES NOT PERTAIN TO M/S. BANSI FINANCE UPTO 31-08- 1998. BUT IT PERTAINS TO ASHOK TEJARAM THAKKER PRO P OF BANSI FINANCE 01-09-98 TO 22-09-98 WHICH WAS INCOMPLETE S TATEMENT THE CORRECT CASH FLOW STATEMENT OF ASHOK TEJARAM PROP OF BANSI FINANCE FOR 01-09-98 TO 22-09-98 IS FILED IN PAPER BOOK OF ASHOK TEJARAM THASKKER ITA NO. 210 P/B-I PAGE NO. 117 TO 119 & 120 TO 122. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 12 C) M/S. BANSI FINANCE UPTO 31-08-98 HAS NO CRE DITOR HARILAL TEJARAM. BANSI FINANCE PROP. ASHOK T. THAKKER HAS CREDITOR H ARILAL TEJARAM AND RS. 36 04 245/- IS CREDIT IN HIS ACCOUNT. THIS AMOUNT IS VERIFIABLE FROM PAGE NO. 20-21 26-27OF P/B-I FILED IN M/S. B ANSI FINANCE. D) THE AMOUNT OF RS. 36 04 2457- DUE FROM BANQI FIN ANCE IS ALSO VERIFIABLE FROM THE COPY OF ASSESSMENT ORDER OT LLA RILAI TEJARAM PAGE 2 PARA 4. COPY FILED IN P/B IN ASHDK T. T'HAKKAR (PAG E NO 65-97) (O) IN THE SEIZED MATERIAL NO NOTING NOR INDICATION IS FOUND ABOUT RS .14 51 000/- CASH BROUGHT BY PARTNER DAHYABHAI ISHWERLAL THAKKER . (P) CASH FLOW STATEMENT IS PREPARED ON THE BAS IS OF SEIZED MATERIAL FOUND EXCEPT RS.14 51 000/- AND RESIDUE CASH BALANCE SHOWN AT RS . 17 10 536/- (Q) DURING THE BEARING D.R POINTED OUT PAGE NO. 44 ENGLISH TRANSLATION OF AFFIDAVIT OF DAHYABHAI ISHWERLAL THAKKER THAT BE HAS INVESTE D RS. 2 LAKH IN BANSI FINANCE ON 14-07-97. THIS AMOUNT WAS INVESTED IN RE GULAR BOOKS OF ACCOUNT AS CAN BE SEEN FROM THE COPY OF BALANCE SHEET FROM THE BOOKS OF DAHYABHAI I. THAKKER AND FROM THE COPY OF BALANCE SHEET OF M/S. BANSI FINANCE FROM REGULAR BOOK OF ACCOUNT SUBMITTED HEREWITH. IN THE SAID AFFIDAVIT SHRI DAHYALAL I. THAKKER HAS STATED THAT HE HAS NOT INV ENTED ANY CASH OUT OF HIS UNDISCLOSED INCOME ON 14-07.1997 AS SHOWN IN THE. C ASH FLOW STATEMENT OF BANSI FINANCE. (R) DURING SEARCH STATEMENT OF DAHYABHAI I. TH AKKUR WAS RECORDED ON 22-9-98 P/B-1 PAGE NO. 35 Q NO 5 STALED THAT HE WAS WORKING PARTNER AND NOT INVESTED CAPITAL (S) THE LD. C.L.T. (A) HAS REJECTED THE REVISE D CASH FLOW STATEMENT ON THE GROUND THAT IT AMOUNTS TO REVISION OT RETURN FILED U/S. 15 SBC WHICH IA NOT PERMISSIBLE. IN FACT THE RETURN FILED U/A. 158 BC FOR RS. 25 00 0/- IS NOT REVISED BUT THE CASH FLOW STATEMENT PREPARED IS REVISED BECAUSE MISTAKE IS FOUND IN PREPARING THE CASHFLOW STATEMENT. 15. AFTER HEARING THE PARTIES WE ARE PRIMA FACIE S ATISFIED THAT SOME MISTAKE HAS OCCURRED IN PREPARATION OF CASH FLOW ST ATEMENT WHEREIN SUM OF RS.14 51 000/- WAS SHOWN AS INVESTMENT BY DAHYALAL I. THAKKAR IN BANSI FINANCE. WE ARE PERSUADED BY THE ARGUMENT OF LD. AR THAT NO MATERIAL WAS IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 13 FOUND IN THE SEARCH REGARDING INVESTMENT OF RS.14 5 1 000/- BY SHRI DAHYALAL I. THAKKAR IN BANSI FINANCE. THEREFORE NO ADDITION IS CALLED FOR IN THE BLOCK ASSESSMENT. THE LD. CIT(A) HAS CONFIRMED THE ADDITI ON MERELY ON THE GROUND THAT BLOCK RETURN CANNOT BE REVISED. IN FACT THERE IS NO CASE OF REDUCTION OF UNDISCLOSED INCOME DECLARED BY THE ASSESSEE FIRM IN BLOCK RETURN. WE REMIT THE MATTER BACK TO THE AO TO VERIFY THE CASH FLOW S TATEMENT AS AMENDED BY THE ASSESSEE AND IF CORRECTION OF MISTAKE HAS AN EF FECT OF REDUCING THE INCOME FROM WHAT IS DISCLOSED IN THE BLOCK RETURN T HEN THE EFFECT OF SUCH CORRECTION HAS TO BE IGNORED. BUT IF IT HAS AN EFFE CT IN REDUCING THE ADDITION MADE BY THE AO IN THE BLOCK ASSESSMENT THEN SUCH MI STAKE SHOULD BE CORRECTED AS NO MATERIAL IS FOUND IN THE SEARCH REL ATING TO SUCH INVESTMENT. THIS GROUND IS ACCORDINGLY RESTORED TO THE FILE OF AO FOR VERIFICATION AS ABOVE. AS A RESULT APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. IT(SS)A NO.135/AHD/2002 (REVENUES APPEAL) 16. THE FIRST GROUND RELATES TO ADDITION OF RS.91 6 74/- ON ACCOUNT OF UNACCOUNTED INCOME. THE FACTS RELATING TO THIS ISSU E ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO NOTICED THAT TH ERE WAS SEARCH IN THE CASE OF J. D. SHROFF ON 28.9.1998. IN THAT SEARCH D ETAILS OF VARIOUS TRANSACTIONS BETWEEN THE ASSESSEE AND THE SAID J.D. SHROFF WERE NOTICED. PEAK ADVANCES MADE TO J.D. SHROFF BY THE ASSESSEE AS PER THOSE DOCUMENTS WERE FOUND AT RS.5 09 300/- AS ON 31.10.1997. THE A O WORKED OUT ACCRUED INTEREST INCOME @ 18% ON SUCH ADVANCES FOUND TO BE GIVEN TO J.D. SHROFF. SUCH INTEREST WAS CALCULATED AT RS.91 674/- WHICH W AS ADDED IN THE BLOCK ASSESSMENT IN ASST. YEAR 1998-99. THE LD. CIT(A) DE LETED THE ADDITION ON IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 14 THE GROUND THAT NO NOTICE UNDER SECTION 158BD HAS B EEN ISSUED IN THE CASE OF THE ASSESSEE AND ASSESSEE IS NOT IN ANY WAY CONNECT ED WITH THOSE DOCUMENTS. HE UPHELD THE ARGUMENTS OF ASSESSEE THAT THIS ISSUE CANNOT FORM PART OF THE BLOCK ASSESSMENT AS NO MATERIAL IS FOUND IN THE SEA RCH OF THE ASSESSEE. 17. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW NO ADDITION CAN BE M ADE ON ACCOUNT OF ANY SUPPOSED INTEREST EARNED BY THE ASSESSEE. IF ASSESS EE HAS MADE ADVANCES TO J.D. SHROFF THEN ADDITION TO THIS EXTENT SHOULD HAV E BEEN MADE IN THE BLOCK ASSESSMENT OF THE ASSESSEE. A PERUSAL OF THE BLOCK ASSESSMENT ORDER REVEALED THAT NO SUCH ADDITION OF ALLEGED UNACCOUNTED ADVANC ES TO J.D. SHROFF HAS BEEN MADE. THE ADDITION PROPOSED BY THE AO FOR THE BLOCK ASSESSMENT FOR ASST. YEAR 1998-99 ARE AS UNDER :- ASST. YEAR 1998-99 RETURNED ASSESSED INCOME AS ON THE DATE OF SEARCH AS PER SEC.158BD(1) SUB-SEC.(A) TO (1) R S.48 000/- ADD: UNDISCLOSED INCOME AS PER THIS ORDER PEAK DEPOSIT IN MAHENDRA AGENCY RS.5 00 000/- TOTAL INCOME AS PER CHAPTER IV RS.5 48 090/- THUS IF NO ADDITION IN RESPECT OF PRINCIPAL IS MADE WHICH WAS APPARENTLY CLAIMED AS UNACCOUNTED THEN NO INVESTMENT FOR INTER EST ALLEGEDLY COULD HAVE BEEN EARNED BY THE ASSESSEE CAN BE MADE. IN ANY CA SE IF MATERIAL IS FOUND IN THE CASE OF SEARCH OF A THIRD PERSON WHICH BELONGS TO THE PRESENT ASSESSEE THAN THE AO OF THAT THIRD PARTY I.E. J.D.SHROFF IN THE PRESENT CASE SHOULD HAVE RECORDED THE SATISFACTION BEFORE COMPLETION OF THE BLOCK ASSESSMENT OF IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 15 THAT J.D.SHROFF GROUP AND SUCH MATERIAL COULD THEN BE CONSIDERED FOR ASSESSMENT IN THE HANDS OF THE ASSESSEE. ONCE NO SU CH JURISDICTION IS ASSUMED BY THE AO NO ADDITION OF ANY AMOUNT FOUND I N THE SEARCH OF THIRD PARTY CAN BE MADE. THE LD. AR DREW OUR ATTENTION TO AN ORDER OF THE TRIBUNAL IN THE CASE OF DCIT VS. HASMUKH BHANJI THAKKAR IN I T(SS)A NO.105/AHD/2002 WITH CO NO.212/AHD/2002 DATED 10.7. 2007 WHEREIN ALSO ADDITION PROPOSED ON THE BASIS OF MATERIAL FOUND IN SEARCH OF ANOTHER PARTY AND DELETION OF ADDITION WAS CONFIRMED BY THE TRIBU NAL OBSERVING AS UNDER :- 8. WE FIND MERIT IN THE ARGUMENTS OF THE LD. COUNS EL THAT SECTIONS 158BC AND 158BD ARE DISTINCT AND SEPARATE FORMER IS TAKE N UP CONSEQUENT TO SEARCH IN ASSESSEES PREMISES AND THE LATER CONSEQU ENT TO SEARCH IN THIRD PARTY PREMISES AND AFTER RECORDING NECESSARY SATISF ACTION. SINCE THE IMPUGNED ADDITION HAS BEEN MADE BY AO NOT ON THE BA SIS OF MATERIAL FOUND IN THE COURSE OF SEARCH IN THE ASSESSEES PREMISES ADDITION HAS BEEN RIGHTLY DELETED BY THE CIT(A). OUR VIEW IS SUPPORTED BY THI RD MEMBER DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF MORARJEE GOCULDA S SPG. & WVG. CO. LTD. (SUPRA). IN VIEW THEREOF GROUND NO.3 OF THE R EVENUE IS DISMISSED. IN VIEW OF ABOVE WE REJECT THIS GROUND OF REVENUE. 18. GROUND NO.2 RELATES TO ADDITION OF RS.5 LAKHS O N ACCOUNT OF INVESTMENT WITH MAHINDRA AGENCY. THE FACTS RELATING TO THIS ISSUE THAT THERE WAS A SEARCH IN THE CASE OF MAHINDRA AGENCY ON 29.6 .1998 AND AS PER DOCUMENTS FOUND IN THE SEARCH OF THAT PARTY ASSESSE E SEEMS TO HAVE MADE A PEAK INVESTMENT OF RS.5 LAKHS WITH SAID AGENCY. THE AO SOUGHT TO TAX THIS SUM OF RS. 5 LAKHS. HE REJECTED THE ARGUMENTS OF TH E ASSESSEE THAT IT DID NOT ENTER INTO ANY TRANSACTION WITH THAT PARTY AND MADE THE ADDITION. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 16 19. THE LD. CIT(A) DELETED THE ADDITION FOR THE SAM E REASONS AS GIVEN BY HIM IN RESPECT OF ADDITION OF RS.91 674/- RELATING TO FIRST GROUND. 20. WE HAVE HEARD THE PARTIES. SINCE THE FACTS RELA TING TO THIS ISSUE ARE THE SAME AS GROUND NO.11 THEN FOR THE REASONS GIVEN TH EREIN AND AFTER RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT VS. HASMUKH BHANJI THAKKAR (SUPRA) WE CONFIRM THE ORDER OF LD. CIT(A) ON THIS ISSUE. THIS GROUND OF REVENUE IS ACCORDINGLY REJECTED. 21. GROUND NO.3 OF REVENUES APPEAL RELATES TO SUM OF RS.7 96 880/- BEING THE NEGATIVE CASH BALANCE. THE AO HAS DISCUSS ED IN ANNEXURE A-5 WHICH WAS A MANUAL CASH BOOK FOUND DURING THE SEARC H. IT WAS AN INCOMPLETE CASH BOOK WHICH WAS APPARENTLY WRITTEN T ILL 23.7.1998. AS PER THIS CASH BOOK NEGATIVE CASH BALANCE APPEARED AT RS .10 30 000/-. IT WAS EXPLAINED THAT NEGATIVE CASH BALANCE APPEARED ON AC COUNT OF NON-INCLUSION OF BANK CASH ENTRIES. THE DAILY CASH BALANCE FROM 1 .4.1998 TO 22.9.1998 FROM THE SEIZED MATERIAL WAS PREPARED AND NEGATIVE CASH BALANCE OF RS.7 96 880/- WAS WORKED OUT WHICH WAS TREATED AS U NACCOUNTED CASH UTILIZED BUT NOT RECORDED IN THE BOOKS. ACCORDING T O THE ASSESSEE UNACCOUNTED CASH WAS INVESTED IN UNDECLARED ASSETS WHICH ARE COVERED BY UNACCOUNTED INCOME SHOWN IN THE BLOCK RETURN THEN I T SHOULD BE TREATED AS COVERED BY THE DECLARATION MADE. THE AO DID NOT AGR EE AND MADE THE ADDITION BY OBSERVING AS UNDER :- THE CONTENTION OF THE ASSESSEE THAT THE UNACCOUNTE D CASH IS COVERED UP IN THE UNDISCLOSED INCOME IS NOT ACCEPTABLE. THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE WHICH SHOWS THAT THIS CASH HAS BEEN UTILIZED FOR THE ASSE TS WHICH WERE DISCLOSED IN THE BLOCK PERIOD RETURN. FROM THE VERIFICATION OF COMPUTERIZE D CASH BOOK AND BANK STATEMENT THE AMOUNT OF NEGATIVE CASH BALANCE OF RS.7 96 880/- IS FOUND CORRECT. THEREFORE NEGATIVE IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 17 CASH BALANCE OF RS.7 96 880/- IS TREATED AS UNACCOU NTED ASSETS FOR THE FY 1998-99 IN THE FORM OF INTRODUCTION OF UNACCOUNTED CASH IN THE CAS H BOOK OF BANSI FINANCE. 22. THE LD. CIT(A) DELETED THE ADDITION ON THE GROU ND THAT SUCH NEGATIVE CASH BALANCE IS COVERED BY INVESTMENT SHOWN AND DEC LARATION IN THE BLOCK RETURN BY THE PARTNER ASHOKKUMAR T. THAKKAR AT RS.2 8 LAKHS BY OBSERVING AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS AND ALSO PERUSED THE OBSERVATIONS OF THE AO AS ABOVE. IT IS A CASE OF THE APPELLANT THAT THE NEGATIVE CASH BALANCE IS ALREADY CONSIDERED IN TERMS OF WITHDRAWALS MADE AND INVESTMENTS SHOWN AS UNACCOUNTED WHICH HAVE ALREADY BEEN DECLARED IN THE CASE OF PARTNER SHRI ASHOKKUMAR TEJARAM FOR RS.28 LAKHS. IT IS SUBMITTED THAT WITHDRAWALS WERE MADE ON 13.5.1998 AND 19.5.98. I HAVE GONE THROUGH THE PAPER BOOK AND SUBMISSIONS MADE INCLUDING THE DETAILS OF COPIES OF ACCOUNTS AND THE CASH BOOK AT PAGE 43 OF THE PAPER BOOK FILED. IT IS NOTE D THAT THE SAID BREAK UP OF THIS SHORTAGE/NEGATIVE CASH BALANCE OF RS.7 96 880/ - IS AS UNDER :- RS.50 000/- ON 4.5.98 RS.5 00 000/- ON 13.5.98 RS.1 45 941/- ON 19.5.98 RS.1 00 939.0 ON 31.7.98 ------------------- RS.7 96 880/- IT IS PLEADED THAT THE SAID AMOUNTS WHICH WERE WITH DRAWN RESULTING IN NEGATIVE CASH BALANCE HAD BEEN INVESTED IN THE FOLL OWING ITEMS WHICH HAVE BEEN SEPARATELY DISCLOSED IN THE BLOCK ASSESSMENT R ETURN OF THE APPELLANT AND OTHER PERSONS OF THE GROUP. RS.96 200/- JULY 1998 DEBITED TO BETTING PARTY A/C PAGE 39 OF PAPER BOOK RS.1 50 000/- AUGUST 1998 DEBITED TO R.K. THAKKAR A/C PAGE 40 OF PAPER BOOK RS.6 15 000/- SEPTEMBER IN PURCHASE OF OFFICE IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 18 ADDITION AND THEREFORE THIS ITEM OF RS.7 96 880/- H AVING BEEN ALREADY REFLECTED IN THE DISCLOSURE MADE BY SHRI ASHOKKUMAR T. THAKKAR CANNOT BE UPHELD AGAIN SEPARATELY. THE SAME IS ACCORDINGLY DE LETED. 23. WE HAVE HEARD THE PARTIES. THE EXPLANATION FURN ISHED BY THE ASSESSEE THAT THIS NEGATIVE CASH BALANCE IS UNDISCLOSED INCO ME DECLARED BY SHRI ASHOKKUMAR T. THAKKAR HAS NOT BEEN REBUTTED BY THE AO. IT IS ALWAYS DESIRABLE TO LOOK INTO EVERY PAPER AND CONSIDER THE ARGUMENTS OF THE ASSESSEE AND THEREAFTER AND MAKE THE ADDITION. OTHERWISE IT MAY UNNECESSARILY INFLATE THE ADDITION. WHEREVER THERE IS APPARENT NEXUS OF D EFICIENCY IN CASH FLOW IN EXPLAINING INVESTMENT OR IT IS CLAIMED THAT UNACCOU NTED INVESTMENT DECLARED AS INCOME WOULD COVER UP SUCH NEGATIVE CASH BALANC E THEN NO SEPARATE ADDITION SHOULD BE MADE UNLESS IT IS FOUND THAT SUC H NEGATIVE CASH BALANCE IS UTILIZED ELSEWHERE OTHER THAN ASSETS DECLARED BY TH E ASSESSEE IN THE BLOCK RETURN. THERE IS NO MATERIAL TO HOLD THAT INCOME DE CLARED BY SHRI ASHOKKUMAR T. THAKKAR AT RS.28 LAKH WAS DIFFERENT O R OVER AND ABOVE THE IMPUGNED NEGATIVE CASH BALANCE. WE ACCORDINGLY CON FIRM THE ORDER OF LD. CIT(A) AND DISMISS THIS GROUND OF REVENUE. 24. GROUND NO.4 HAS ALREADY BEEN DISPOSED OF AND IS DECIDED AGAINST THE REVENUE WHILE DISPOSING OF ASSESSEES APPEAL ON THI S ISSUE. AS A RESULT GROUND NO.4 IS ALSO REJECTED. 25. GROUND NO.5 RELATES TO DELETING THE ADDITION OF RS.20 000/- AND RS.1 58 523/- MADE ON ACCOUNT OF UNACCOUNTED DISCOU NT. THE AO MADE THIS ADDITION ON THE GROUND THAT DISCOUNT VOUCHERS WERE FOUND IN THE SEARCH. THESE DISCOUNTS WERE NOT SIGNED BY SHRI MAHADEV AND PAL CORPO INDIA (P) LTD. FOR THE SUM OF RS.20 000/- AND RS.1 58 523/-. THE ASSESSEE EXPLAINED IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 19 THAT CHEQUES WERE BROUGHT BY THESE PARTIES BUT THEY WERE NOT DISCOUNTED SINCE SURETY WAS NOT PROVIDED BY THEM. THE PARTIES TOOK AWAY THE CHEQUES FOR WANT OF SURETY BUT LEFT THE DISCOUNT VOUCHERS. NO CHEQUES WERE FOUND DURING SEARCH AND NOR WERE THEY TRACED IN THE BANK ACCOUNT. IN FACT NO DISCOUNT WAS DONE AND NO COMMISSION RECEIVED. THE T RANSACTIONS AS SUCH HAD FAILED. HENCE THERE WAS NO INCOME. THE AO REJEC TED THIS EXPLANATION AND ON THE GROUND THAT COMMISSION HAS BEEN EARNED B Y THE ASSESSEE ON DISCOUNTING THE CHEQUES. 26. THE LD. CIT(A) DELETED BOTH THE ADDITIONS BY OB SERVING AS UNDER :- (A) REGARDING RS.20 000/- THIS ADDITION IS BASED ON A DISCOUNT VOUCHER. IT IS SUBMITTED BY THE APPELLANT THAT NO SUCH ADVANCE OF RS.20 000/- WAS GIVEN TO SH RI MAHADEV AND THE SAID CLIENT HAD LEFT THE SAID VOUCHER SINCE HE FAILED TO GIVE THE REQUISITE SECURITY BY WAY OF CORRESPONDING CHEQUE IN FAVOUR OF THE APP ELLANT. IT IS STATED THAT THIS IS THE NORMAL TRADE PRACTICE. I HAVE CONSIDERED THE SUBMISSIONS AND FIND THAT THE RE IS NO AFFIDAVIT INDICATING THAT THE SAID AMOUNT HAS BEEN ADVANCED A ND THE INFERENCE DRAWN BY THE AO IS ON PRESUMPTION ONLY. THIS CANNOT BE AC CEPTED AND THE ADDITION BASED ON THE SAME CANNOT BE SUSTAINED AND THEREFORE DELETED. (B) REGARDING RS.1 58 523/- THIS RELATES TO ADDITION OF RS.1 58 523/-. THE FACT S ARE SIMILAR EXCEPT THAT THIS RELATES TO ANOTHER CLIENT VIZ. PALCOSPO. IN TH IS CASE ALSO THE VOUCHER WAS FOUND BUT NO SECURITY CHEQUE OF EQUAL AMOUNT OF RS. 1 58 523/- WAS FOUND IN THE SEARCH AND IT IS HIS SUBMISSION IN THIS RESPECT ALSO THAT NO ADVANCE OF RS.1 58 523/- HAVE BEEN ACTUALLY MADE TO THE SAID P ARTY. I FIND THAT THERE IS NO EVIDENCE IN THIS RESPECT AN D FOR THE REASONS IN RESPECT OF (A) ABOVE THIS ADDITION ALSO CANNOT BE SUSTAINE D AND THEREFORE DIRECTED TO BE DELETED. THE APPELLANT GETS RELIEF OF RS.1 78 52 3/-. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 20 27. WE HAVE HEARD THE PARTIES. DOCUMENT NO.A-13 AT PAGES 63 & 64 THEREOF WERE SEIZED BY THE DEPARTMENT IN THE SEARCH . THEY WERE PRINTED DISCOUNT VOUCHERS SIGNED BY THE CUSTOMERS. SINCE AS SESSEE HAD ASKED THE CUSTOMERS TO GIVE SURETY OF SOME ONE KNOWN TO THE A SSESSEE SO AS TO ENSURE RECOVERY OF THE AMOUNT IN CASE CHEQUES GIVEN BY T HOSE PARTIES FOR DISCOUNTING TO THE ASSESSEE GET BOUNCED. THE CHEQUE S WERE TAKEN BACK BY THE PARTIES. NO DETAILS OF ANY CHEQUE ETC. WERE FOUND O N THE BACK OF DISCOUNT VOUCHERS. SINCE NO OTHER CORROBORATIVE EVIDENCE WAS FOUND INDICATING RECEIPT OF CHEQUE OR MONEY AGAINST THE CHEQUES AND IN ABSENCE OF FURTHER DETAILS SUCH AS CHEQUE NUMBER AND THE NAMES OF THE PARTIES AND OTHER DETAILS OF THE TRANSACTION THE ADDITION FOR COMMISSION EAR NED CANNOT BE SUSTAINED. AS A RESULT WE CONFIRM THIS PART OF THE ORDER OF T HE LD. CIT(A). AS A RESULT APPEAL FILED BY THE REVENUE IS DISMISSED. IT(SS)A NO.127/AHD/2002 (RE: SHRI CHANDULAL I. THAK KAR) (REVENUES APPEAL) 28. IN THIS CASE THE REVENUE HAS RAISED FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.23 400/- MADE ON ACCOUNT OF UNACCOUN TED INVESTMENT IN PURCHASE OF PLOT. 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.80 000/- MADE ION ACCOUNT OF UNACCOU NTED INCOME. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.28 341/- MADE ON ACCOUNT OF UNACCOUN TED INVESTMENT OF PIPE MONO-BLOCK PUMP ETC. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 21 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1 33 947/- MADE ON ACCOUNT OF UNACCO UNTED 5. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.1 08 325/- MADE ON ACCOUNT OF UNACCO UNTED INVESTMENT IN TUBEWELL. 6. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.44 000/- MADE ON ACCOUNT OF WITHDRAW AL. 29. THE FIRST ISSUE RELATES TO DELETION OF ADDITION OF RS.23 400/- ON ACCOUNT OF INVESTMENT IN PURCHASE OF PLOT. DURING THE COURS E OF ASSESSMENT PROCEEDINGS A.O. REFERRED TO LOOSE PAPER BEING DOCU MENT NO.34 FROM ANNEXURE A-2 WHEREIN ASSESSEE HAD SHOWN INVESTMENT OF RS .83 400/- IN THE BLOCK ASSESSMENT FOR PURCHASE OF PLOT. THE ASSE SSING OFFICER HELD THAT ASSESSEE HAS NOT DISCLOSED THIS AMOUNT. HE ACCORDIN GLY PROPOSED AN ADDITION OF RS. 83 400/- IN THE BLOCK ASSESSMENT. 30. BEFORE THE LD. CIT (A) IT WAS EXPLAINED THAT A SUM OF RS .60 000/- HAS ALREADY BEEN DISCLOSED BY THE ASSESSEE AND THEREFOR E AFTER VERIFYING LD. CIT(A) DELETED THE ADDITION OF RS.60 000/-. THE L D. CIT (A) MENTIONED THAT THERE IS NO EVIDENCE WITH THE A.O. TO INDICATE THAT ASSESSEE HAS PAID FURTHER SUM OF RS.23 400/- OVER AND ABOVE RS.60 000 /- ALREADY DISCLOSED BY THE ASSESSEE. 31. BEFORE US THE LD. D.R. SUBMITTED THAT ONCE THE DEPARTMENT HAS FOUND INDICATING OUTGO OF RS .83 400/- THEN THE LD. CIT(A ) WAS NOT JUSTIFIED IN GIVING RELIEF OF RS.23 400/-. AGAINST THIS LD. AU THORIZED REPRESENTATIVE SUBMITTED THAT AS PER THE LOOSE PAPER NO. 34 RS.8 3 400/- WERE SHOWN PAYABLE AGAINST WHICH ONLY RS.60 000/- WAS PAID. TH ERE IS NO INDICATION IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 22 FROM THE SEIZED DOCUMENT THAT ASSESSEE HAS IN FACT PAID FURTHER SUM OF RS.23 400/-. 32. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW THERE I S NO CASE FOR INTERFERENCE IN THE ORDER OF THE LD. CIT(A). ONCE THE DOCUMENT S HOWS THAT A SUM PAYABLE THEN IT CANNOT BE INFERRED THAT SUM OF RS.83 400/- WAS IN FACT PAID. THE A.O. OUGHT TO HAVE CARRIED OUT INQUIRIES FROM THE SELLER OF THE PLOT TO FIND OUT AS TO HOW MUCH PAYMENT ASSESSEE HAS MADE. FURTHER RELEVA NT DOCUMENTS OF PLOT SHOULD HAVE BEEN EXAMINED TO FIND OUT THE ACTUAL PA YMENT. THUS IN ABSENCE OF ANY MATERIAL IT CANNOT BE INFERRED THAT RS.23 4 00/- WAS PAID OVER AND ABOVE RS.60 000/-. AS A RESULT THIS GROUND OF REVEN UE IS REJECTED. 33. GROUND NO.2 RELATED TO DELETION OF ADDITION OF RS.80 000/-. THE ASSESSING OFFICER DURING THE COURSE OF BLOCK ASSESS MENT PROCEEDINGS NOTED THAT AS PER LOOSE PAPER FILE A-29 FOUND IN THE SEAR CH THERE WERE CERTAIN PAY- IN SLIPS OF THE BANK. FROM THESE SLIPS IT WAS INFE RRED THAT ASSESSEE WAS INVOLVED IN ARRANGING LOANS FOR VEHICLES. THE ASSES SING OFFICER FURTHER INFERRED THAT INSTALLMENTS FOR THESE VEHICLES WERE APPARENTLY PAID BY THE ASSESSEE TILL THE BUYER WAS FOUND. THESE PAPERS WER E RELATED TO 4 PERSONS WHO PURCHASED VEHICLES THROUGH THE ASSESSEE. SINCE THE ASSESSEE WAS ENGAGED IN ARRANGING SALE OF VEHICLES AND HAD CHARG ED COMMISSION ON SUCH SALE OF VEHICLE AT RS. 20 000/- PER VEHICLE COMMIS SION INCOME OF RS.80 000/- WAS WORKED OUT AND ADDED IN THE TOTAL I NCOME OF THE ASSESSEE. THE LD. C.I.T.(A) HELD THAT OWNERSHIP OF VEHICLES V ESTED WITH THOSE FOUR PERSONS AND THERE IS NO EVIDENCE THAT APPELLANT WAS OWNER OF THESE VEHICLES. ACCORDINGLY THE LD. C.I.T (A) DELETED THE ADDITION . IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 23 34. WE HAVE HEARD THE PARTIES AND CAREFULLY CONSIDE RED THE MATERIAL AVAILABLE ON RECORD. THE LD. D. R. MERELY RELIED ON THE ORDER OF THE A.O. IN OUR CONSIDERED VIEW THE ADDITION IS MERELY INFERENT IAL. THERE IS NO MATERIAL TO SHOW THAT ASSESSEE HAS EITHER PAID ANY MONEY NOR THAT ASSESSEE HAS RECEIVED ANY COMMISSION. THERE IS NO STATEMENT OF T HE BUYERS OF THE CAR THAT THEY HAVE PAID ANY COMMISSION TO THE ASSESSEE. THER E IS ALSO NO CORROBORATIVE MATERIAL FROM THE CAR COMPANIES THAT THEY HAVE PAID ANY COMMISSION TO THE ASSESSEE FOR SELLING THEIR CARS. IT IS NOT KNOWN HOW THE FIGURE OF RS.20 000/- PER CAR IS WORKED OUT BY THE A.O. SINCE THE ADDITION IS MERELY ON CONJECTURE AND SURMISES THE SAME IS RIGHT LY DELETED BY THE C.I.T. (A). AS A RESULT THIS GROUND OF THE REVENUE IS REJ ECTED. 35. THE THIRD GROUND RELATES TO DELETION OF RS. 28 341/-. THIS SUM COMPRISES OF THREE ITEMS VIZ. RS.3 700/- RS.10 719/ - AND RS.13 922/-. THIS HAS BEEN DISCUSSED BY THE ASSESSING OFFICER IN PARA -14 OF THE ASSESSMENT ORDER. ANNEXURE A-1 PAGE 17 ANNEXURE A-2 AND PAGE 19 OF ANNEXURE A-2 FOUND IN THE SEARCH INDICATED INVESTMENT IN PIPE MONO BLOCK PUMP AND ELECTRIC MOTOR ETC. THE A.O. STATED THAT ASSESSEE D ID NOT FURNISH ANY EXPLANATION WITH RESPECT TO THESE EXPENSES AND HE A CCORDINGLY MADE THE ADDITION OF RS .28 341/-. 36. THE LD. C.I.T. (A) NOTED THAT A SUM OF RS.3 700 /- IS OUT OF AGRICULTURAL INCOME WHICH IS ALREADY DISCLOSED BY THE ASSESSEE I N THE RETURN. REGARDING RS.10 719/- HE NOTED THAT THIS IS ALSO OUT OF AGRI CULTURAL INCOME WHICH HAS BEEN ACCEPTED IN THE REGULAR ASSESSMENT AND FURTHER THIRD ITEM OF RS.13 922/- WAS OUT OF DISCLOSED INCOME OF RS.1 33 947/- BY SH RI HARILAL T. THAKKAR. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 24 THIS WAS VERIFIED BY LD. C.I.T.(A) AND FOUND THAT I T IS DISCLOSED IN THE BLOCK ASSESSMENT OF SHRI HARILAL T. THAKKAR. SINCE THE SU M IS ALREADY DECLARED THEN FURTHER ADDITION HERE WOULD AMOUNT TO DOUBLE A DDITION. 37. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. D.R. HAS RELIED ON THE ORDER OF THE A.O. AND HIS REASONING THAT ABOVE EXPENDITURE IS NOT EXPLAINED. THE FACT T HAT ASSESSEE IS AGRICULTURIST AND AGRICULTURAL INCOME HAS BEEN DECLARED BY HIM IN THE RETURN HAS NOT BEEN DISPUTED. THEREFORE NO ADDITION ON ACCOUNT OF THES E ITEMS CAN BE MADE AS THEY ARE PART OF AGRICULTURE INCOME DECLARED IN THE REGULAR RETURN. FURTHER ONCE A SUM OF RS.13 922/- IS COVERED BY THE DISCLOS URE MADE BY SHRI HARILAL T. THAKKAR THERE IS NO CASE FOR MAKING FURTHER ADDI TION HERE. ACCORDINGLY WE DECLINE TO INTERFERE. THIS GROUND OF REVENUE IS ALSO REJECTED. 38. THE FOURTH GROUND RELATES TO DELETION OF ADDITI ON OF RS.1 33 947/-. THE ADDITION WAS MADE ON THE BASIS OF ENTRIES IN CASH B OOK A-2 SEIZED FROM THE OFFICE OF JALARAM CANVASSING AT 148/8 KABUTAR KHANA AHMEDABAD. THIS CASH BOOK WAS CLAIMED TO BE BELONGING TO SHRI HARIL AL T. THAKKAR I.E. ASSESSEE. ANALYSIS OF CASH BOOK INDICATED TO THE A. O. THAT THE ASSESSEE HAS DIVERTED A SUM OF RS.1 33 947/- TO FARMS I.E. AGRIC ULTURAL ACTIVITIES. IT WAS EXPLAINED TO THE A.O. THAT ABOVE FUNDS WERE SPENT F OR AGRICULTURAL ACTIVITIES HENCE NOT DEBITED IN THE BOOKS. THE A.O. DID NOT A CCEPT THE EXPLANATION AND MADE THE ADDITION OF RS.1 33 947/- AS UNACCOUNTED I NVESTMENT IN FARMS FOR THE ASSESSMENT YEAR 1999-2000. BEFORE THE LD. C.I. T.(A) IT WAS EXPLAINED THAT THIS SUM WAS DISCLOSED IN THE BLOCK RETURN WHI CH HAS BEEN ACCEPTED VIDE ORDER DATED 28-9-2000. SINCE THIS AMOUNT IS ALREADY COVERED IN THE DISCLOSURE THE LD. C.I.T.(A) DELETED THE ADDITION. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 25 39. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. THE DR BASICALLY RELIED ON THE ORDER OF TH E A.O. ONCE THE SUM OF RS. 1 33 947/- BEING EXPLAINED IN FARM ACTIVITIES A S DECLARED BY SHRI HARILAL T. THAKKAR I.E. THE BROTHER OF THE ASSESSEE THEN T HE QUESTION OF MAKING FURTHER ADDITION IN THE CASE OF THIS ASSESSEE DOES NOT ARISE. ACCORDING THERE IS NO MERIT IN THE GROUND RAISED BY THE REVENUE. TH IS GROUND IS ALSO REJECTED. 40. THE NEXT GROUND RELATES TO DELETING THE ADDITIO N OF RS.1 08 325/-. THE A.O. FOUND A COMBINED CASH BOOK A-2 FROM THE OFFICE OF JALARAM CANVASSING. IT WAS A CASH BOOK OF SHRI HARILAL T. T HAKKAR. IT WAS A PEAK OF CASH AVAILABLE WORKED OUT FROM THAT CASH BOOK. IT W AS EXPLAINED THAT THIS SUM IS DECLARED BY SHRI HARILAL T. THAKKAR IN HIS B LOCK RETURN. THE A.O. DID NOT ACCEPT THE EXPLANATION AND MADE THE ADDITION. T HE LD. C.I.T. (A) DELETED THE ADDITION ON THE GROUND THAT THIS SUM IS ALREADY DISCLOSED IN THE BLOCK RETURN BY SHRI HARILTL T. THAKKAR WHICH HAS BEEN VE RIFIED BY HIM. 41 WE HAVE HEARD THE PARTIES. ONCE IT IS FOUND AS A FACT BY LD. C.I.T. (A) THAT THIS AMOUNT IS DISCLOSED IN THE CASE OF SHRI H ARILAL T. THAKKAR THE BROTHER OF THE ASSESSEE AND THERE IS NO MATERIAL C ONTRARY TO THIS FINDING THEN FURTHER ADDITION IN THE CASE OF THE ASSESSEE WILL A MOUNT TO DOUBLE ADDITION WHICH IS NOT PERMISSIBLE. IN ABSENCE OF ANY MATERIA L TO THE CONTRARY WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. C.I.T.(A). THIS GROUND OF REVENUE IS ACCORDINGLY REJECTED. 42. THE NEXT ADDITION RELATES TO DELETION OF RS.44 000/-. THIS ADDITION IS MADE ON THE BASIS OF COMBINED CASH BOOK A-2 SEIZED FROM THE OFFICE OF IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 26 JALARAM CANVASSING.IT WAS A CASH BOOK OF SHRI HARIL AL T. THAKKAR. THERE WERE VARIOUS DEPOSITS FOUND RECORDED IN THE CASH BO OK. THE PEAK OF THESE DEPOSITS WAS WORKED OUT AT RS.44 000/- AS ON 11-9-2 000. NOT FINDING THE EXPLANATION OF THE ASSESSEE SATISFACTORY THE A.O. M ADE THE ADDITION. THE LD. C.I.T.(A) NOTED THAT THERE IS ONLY A WITHDRAWAL OF RS.44 000/- AND THERE IS NOT DEPOSIT. THIS IS A DEBIT ENTRY AND NOT A CREDIT ENTRY. THE LD. C.I.T.(A) NOTED THE AMOUNT OF DEPOSIT WAS ONLY RS.60 000/- AS PER PAGE-3 OF THE SAID CASH BOOK WHEREAS RS.50 000/- WRITTEN AS 500 IN COD E HAS BEEN SHOWN AS WITHDRAWAL AS PER THE SAID DOCUMENT. THE DEPOSIT OF RS.60 000/- WAS ADVANCE MADE BY SHRI HARILTL T. THAKKAR OUT OF FUND S DISCLOSED BY HIM IN THE BLOCK RETURN AS UNDISCLOSED INCOME. THE TOTAL D ISCLOSURE MADE BY HIM WAS OF RS.7 82 000/- BY SHRI HARILAL TEJARAM OUT OF WHICH RS.60 000/- WAS CLAIMED AS DEPOSIT. THE LD. CIT(A) ACCORDINGLY DELE TED THE ADDITION. 43. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED TRHE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW THERE I S NO CASE TO INTERFERE IN THE ORDER OF THE LD. C.I.T (A) . THERE IS NO MATERI AL TO SHOW THAT THERE WAS A DEPOSIT OF RS.44 000/- AND WAS NOT A WITHDRAWAL CON TRARY TO FINDING GIVEN BY LD. CIT(A). IN ANY CASE ASSESSEE HAS DECLARED UNDI SCLOSED INCOME OF RS.7 82 000/- IN THE BLOCK RETURN. IT IS CLAIMED TH AT DISCREPANCY IN RESPECT OF SUCH WITHDRAWALS OR AVAILABILITY OF MONEY SHOULD BE TELESCOPED AGAINST DISCLOSURE OF UNDISCLOSED INCOME IN THE BLOCK RETUR N. IN ABSENCE OF ANY MATERIAL TO THE CONTRARY WE ALLOW THIS BENEFIT OF T ELESCOPING AGAINST THE DISCLOSED INCOME IN THE BLOCK RETURN. THIS GROUND OF REVENUE IS ACCORDINGLY REJECTED. AS A RESULT APPEAL FILED BY THE REVENUE IS DISMISSED. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 27 C.O. NO.214/AHD/2002 (RE: CHANDULAL T. THAKKAR) (AS SESSEES CROSS OBJECTION) 44. THE CO IS LATE BY 30 DAYS. FOLLOWING REASONS AR E ADVANCED FOR DELAY:- RESPECTED SIRS RE: C.O. NO.214/AHD/2002 IT(SS) 127/A-2002 DEPARTMENTAL APPEAL IN THE CASE OF CHANDULAL T. THAKKAR OF BHABHAR. SUB: PRAYER FOR CONDONATION OF DELAY WITH REFERENCE TO THE ABOVE I BEG TO SUBMIT HEREWI TH CROSS-OBJECTION IN THE ABOVE MATTER. I WAS ADVISED BY MY LOCAL TAX CONSULTANT THAT CROS S-OBJECTION IS TO BE FILED WITHIN 60 DAYS. I STAY IN BHABHAR A SMALL PLACE IN THE INTER IOR OF BANASKANTHA AND THEREFORE RELIED UPON THE ADVISE OF MY LOCAL TAX CONSULTANT. HOWEVER WHEN I CONTACTED TODAY MY ADVOCATE AT AHME DABAD HE ADVISED THAT THE CROSS- OBJECTION SHOULD BE FILED WITHIN 30 DAYS. IN THE ABOVE CIRCUMSTANCES THERE IS DELAY IN FILIN G THE CROSS-OBJECTION. I EARNESTLY PRAY FOR CONDONATION OF DELAY. THANKING YOU YOURS FAITHFULLY SD/- CHANDULAL T. THAKKAR WE HAVE HEARD THE PARTIES. SINCE THE ASSESSEE WAS W RONGLY ADVISED BY THE ADVOCATE WE TREAT IT AS A REASONABLE CAUSE AND ADM IT THE CO BY CONDONING THE DELAY. 44.1 THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE CONFIRMING THE ADDITION IN INVESTMENT IN CARS AT RS.1 33 000/- IN THE ASSESSMENT YEAR 1997- 98 RS.1 08 000/- IN ASSESSMENT YEAR 1998-99 AND RS .81 667/- IN THE ASSESSMENT YEAR 1999-2000. DURING THE COURSE OF EXA MINATION OF SEIZED IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 28 DOCUMENT THE A.O. FOUND INVESTMENT IN CARS BY THE ASSESSEE IN ABOVE YEARS AND HE ACCORDINGLY PROPOSED THE ADDITION. THE TOTAL ADDITION THUS WORKED OUT WAS RS.3 22 667/- AND THEY ARE REFLECTED FROM PAGE 6 TO 16 OF ANNEXURE A-1 SEIZED FROM 10 AMBAR SOCIETY. THIS DOCUMENT RELATED TO REGISTRATION OF THE VEHICLES. 45. THE EXPLANATION OF THE ASSESSEE THAT VEHICLES W ERE PURCHASED BY TAKING LOAN FROM THE BANK AND THE INVESTMENT HAS BE EN SHOWN IN THE BLOCK RETURN WAS REJECTED BY THE A.O. 46. THE LD. C.I.T.(A) CONFIRMED THE ADDITION ON THE GROUND THAT ALL THESE INVESTMENTS HAVE ALREADY BEEN DECLARED IN THE BLOCK RETURN. 47. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. D.R. BASICALLY RELIED ON THE ORD ER OF THE A.O. AND SUBMITTED THAT THERE IS NO NEXUS BETWEEN THE INVEST MENT IN CARS AND INCOME DECLARED. WE NOTICE THAT THE ASSESSEE HAS SHOWN INC OME TO THE EXTENT OF RS.7 82 000/- AGAINST WHICH FOLLOWING ASSETS ARE DE CLARED :- THE DETAILS OF ASSETS AS ON22-9-98 IS AS UNDER:- (1) RS. 76 230/- INTRODUCED IN BOOKS OF ACCO UNT FOR 91-92 (2) RS. 60 000/- INVESTMENT IN PL;OT NO.5 15 16 (3) RS. 3 300/- INVESTMENT IN F.D. (4) RS. 3 22 667/- INVESTMENT IN ZEN CAR (1 33 000 + 1 08 000 + 4 500 + 36 667) (5) RS. 20 000/- JEWELLERY. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 29 (6) RS. 45 000/- INVESTMENT IN ANIMALS (BULLOCK HORSES ETC.) ------------------- RS. 5 27 197/- ========== THE ABOVE ASSETS HAVE BEEN ACQUIRED OUT OF UNDISCLO SED INCOME OF RS.7 82 000/-. 48. FURTHER WE NOTICE THAT NO SEPARATE ADDITION ON ACCOUNT OF INVESTMENT IN CARS HAS BEEN MADE BY THE AO OVER AND ABOVE WHAT IS DISCLOSED BY THE ASSESSEE IN THE BLOCK RETURN SO AS TO CALL IT DOUB LE ADDITION. NO SUCH DOUBLE ADDITION HAS BEEN MADE. AS A RESULT THE CIT(A) CONF IRMED THE ADDITION BY DISMISSING THE GROUND ON THE REASONS THAT THESE SUM S ARE ALSO DISCLOSED BY THE ASSESSEE. AS A RESULT THESE GROUNDS IN THE CRO SS OBJECTION OF THE ASSESSEE ARE DISMISSED. 49. AS A RESULT THE CROSS OBJECTION BY THE ASSESSE E AS WELL AS THE APPEAL FILED BY THE REVENUE BOTH ARE DISMISSED. IT(SS)A NO.202/AHD/2002 (RE: HIRALAL T. THAKKAR) (R EVENUES APPEAL) 50. IN THIS CASE BOTH REVENUE AS WELL AS THE ASSES SEE HAVE FILED APPEAL AGAINST THE ORDER OF THE LD. C.I.T.(A) DATED 21-5-2 002. 51. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.72 50 514/- MADE ON ACCOUNT OF TRANS ACTION WITH SHRI MAGANLAL GIRDHARLAL. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 30 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.8 24 300/- MADE ON ACCOUNT OF UNDISC LOSED INCOME BY WAY OF CASH PAYMENT MADE TO M/S. J.D. SHROFF. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN REDUCING THE ADDITION OF RS.25 37 250/- TO RS.6 32 250/- MADE ON THE BASIS OF SAUDA BOOK. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN REDUCING THE ADDITION OF RS.60 12 888/- TO RS.21 79 844/- MADE O N ACCOUNT OF PEAK CREDIT BALANCE. IT(SS)208/AHD/2002 (RE: HIRALAL T. THAKKAR) (ASSESS EES APPEAL) 52. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DET ERMINING AND MAKING ADDITION OF RECEIPTS AS PER A-2 AT RS.38 75 822/-AS AGAINST ADDITION OF RECEIPTS AS PER A-2 AT RS.36 45 136/-. 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN MAKING ADDITION OF PEAK OF SATTA TRANSACTIONS AS INCOME AS AGAINST NET OF SATTA TRANSACTIONS AS PER A-2. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN IGNORING THE ENTRIES OF RS.2 30 083/- + RS.603/- TOTALING TO RS. 2 30 683/- BEING WITHDRAWAL ON THE SAME DAY I.E. 21-9-1998. 53 A SEARCH AT THE PREMISES OF THIS ASSESSEE WAS DO NE ALONG WITH THE SEARCH IN THE GROUP OF BANSI FINANCE. THE ASSESSEE WAS PARTNER IN BANSI FINANCE TILL 30-8-1998 WHICH WAS LATER TAKEN OVER B Y OTHER PARTNER SHRI ASHOK THAKKAR W.E.F. 1-9-1998. IN RESPONSE TO NOTIC E FOR FILING THE RETURN UNDER SECTION 158BC OF THE ACT THE ASSESSEE FILED BLOCK RETURN ON AN UNDISCLOSED INCOME OF RS.54 LACS. THE DETAILS OF IN COME DECLARED BY THE ASSESSEE HAS BEEN DISCUSSED BY THE ASSESSING OFFICE R IN PARAGRAPH 4 AND 5 OF IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 31 HIS ORDER. THE TOTAL INCOME DECLARED BY THE ASSESSE E IN THE BLOCK PERIOD IS AS UNDER:- A.Y. 1996-97 RS. 1 40 000/- A.Y. 1997-98 RS. 1 40 000/- A.Y. 1998-99 RS. 2 20 000/- A.Y. 1999-2000 RS. 49 00 000/- TOTAL RS. 54 00 0 00/- =========== UNACCOUNTED INCOME REPRESENTED THE FOLLOWING INVEST MENT MADE BY THE ASSESSEE. 1. DUE TO BANSI RS. 36 04 245/- 2. DUE TO CT RS. 23 775/- 3. AGRICULTURE RS. 1 3 3 947/- 4. DUE FROM OTHER PARTIES. RS. 2 61 702 /- 5. TUBE WELL. RS. 1 08 325/- 6. SAKUNTAL. RS. 1 64 000/- 7. MARUTI CAR RS. 2 70 000/- 8. AS PER ANNEXURE A-3. RS. 6 32 250/- 9. CASH. RS. 1 71 2 96/- ------------------- TOTAL. RS. 53 69 540/- =========== HOWEVER ASSESSING OFFICER CARRIED OUT THE EXAMINAT ION OF SEIZED DOCUMENTS AND FINALLY MADE THE ASSESSMENT AT RS. 1 53 80 858/-. IT(SS)A. NO.202/AHD/2002 (REVENUES APPEAL). 54. THE FIRST ISSUE RELATES TO DELETING THE ADDITIO N OF RS.72 50 514/-. THE FACTS RELATING TO THIS ISSUE ARE DISCUSSED BY THE A SSESSING OFFICER IN PARAGRAPH 13 ON PAGE 24 OF HIS ORDER. IT IS NOTED B Y THE A.O. THAT A SEARCH IN IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 32 THE PREMISES OF SHRI MAGANLAL GIRDHARLAL MORVI WAS CARRIED OUT. VARIOUS DOCUMENTS PERTAINING TO VYADA TRANSACTIONS AND EARN ING COMMISSION THEREON WERE SEIZED. VARIOUS LOOSE PAPERS/DOCUMENTS CONTAINING LEDGER ACCOUNTS OF THE ASSESSEE WERE SEIZED FROM THE PREMI SES OF SHRI MAGANLAL GIRDHARLAL. ZEROX COPY OF SUCH PAGES WERE FURNISHED TO THE ASSESSEE. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE ASS ESSING OFFICER TO TAX THE INCOME ARISING FROM THE TRANSACTIONS REFLECTED FROM THESE DOCUMENTS THE ASSESSEE EXPLAINED THAT A REFERENCE TO SHRI H.T. TH AKKAR IN THOSE DOCUMENTS/STATEMENTS DID NOT REFER TO HIM. NEITHER THE DOCUMENTS NOR THE TRANSACTIONS BELONGED TO HIM AND ACCORDINGLY HE DEN IED THE INCOME THEREFROM. BUT THE A.O. INFERRED THAT TRANSACTIONS RELATED TO SATTA AND DOCUMENTS INDICATED CASH PAYMENT BY THE ASSESSEE TO SHRI MAGANLAL GIRDHARLAL MORVI. EXPLANATION FURNISHED WAS NOT F OUND SATISFACTORY AND ACCORDINGLY HE TREATED A SUM OF RS.72 50 514/- AS A SSESSEES UNDISCLOSED INCOME. 55. WHEN THE MATTER CAME UP BEFORE THE LD. C.I.T. ( A) HE DELETED THE ADDITION ON THE BASIS OF DECISION OF HONBLE GUJARA T HIGH COURT IN THE CASE OF N.R. PAPER & BOARD 234 ITR 733 HOLDING THAT NO D OCUMENT WAS FOUND IN THE SEARCH OF THE ASSESSEE RELATING TO ABOVE TRANSA CTIONS. AGAINST THIS LD. D.R. RELIED ON THE ORDER OF A.O. WHEREAS LD. A.R. SUPPORTED THE ORDER OF THE LD. C.I.T(A). 56. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE DEC LINE TO INTERFERE FOR THE REASONS THAT FIRSTLY NO DOCUMENT WAS FOUND IN THE C OURSE OF THE SEARCH AGAINST THE ASSESSEE THEREFORE ANY OTHER MATERIAL EITHER FOUND IN THE SEARCH AGAINST ANY THIRD PERSON OR IN THE COURSE OF INVES TIGATION AFTER THE SEARCH IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 33 CANNOT BE INCLUDED IN THE BLOCK ASSESSMENT. SOME MA TERIAL SHOULD BE FOUND IN THE SEARCH AGAINST THE ASSESSEE WHICH SHOULD IND ICATE SOME UNDISCLOSED INCOME AND SHOULD HAVE NEXUS WITH THE MATERIAL DISC OVERED IN THE SEARCH OF THIRD PARTY OR WITH THE MATERIAL FOUND IN THE POST SEARCH INVESTIGATION IN THE CASE OF THE ASSESSEE. WHERE NO MATERIAL IS FOUND IN THE SEARCH AGAINST THE ASSESSEE NO ADDITION CAN BE MADE. SECONDLY THE A. O. OF SHRI MAGANLAL GIRDHARLAL MORVI HAS APPARENTLY NOT RECORDED ANY S ATISFACTION BEFORE FORWARDING THE MATERIAL TO THE A.O. OF THE PRESENT ASSESSEE. WITHOUT RECORDING THE SATISFACTION AS PROVIDED U/S. 158BD D OCUMENTS SEIZED IN THE SEARCH OF THIRD PARTY CANNOT BE USED AGAINST THE AS SESSEE. IF PROCEEDINGS UNDER BLOCK ASSESSMENT HAS ALREADY BEEN INITIATED A GAINST THE ASSESSEE AND A.O. WANTS TO UTILIZE THE MATERIAL FOUND IN THE SEA RCH OF THIRD PARTY THEN THERE HAS TO BE NECESSARY SATISFACTION RECORDED BY THE A.O. OF THAT THIRD PARTY THEREBY GIVING JURISDICTION TO THE A.O. TO U SE THAT MATERIAL AGAINST THE ASSESSEE. OR IN THE ALTERNATIVE FOR UTILIZING THE MATERIAL FOUND AGAINST THE ASSESSEE IN THE SEARCH OF THIRD PARTY SOME PRIMARY MATERIAL MUST BE FOUND IN THE SEARCH AGAINST THE ASSESSEE ENABLING THE A.O. T O CARRY OUT INQUIRY AND INVESTIGATION AND THEREBY REQUISITIONING THE MATERI AL HIMSELF FROM THE A.O. OF THIRD PARTY. WHEN NONE OF THE TWO CONDITIONS ARE SATISFIED SUCH MATERIAL FOUND IN THE SEARCH AGAINST THIRD PARTY CANNOT BE U TILIZED IN THE BLOCK ASSESSMENT OF THE PRESENT ASSESSEE. ACCORDING THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION BY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF N.R. PAPER BOARDS CASE (SUPRA ). THIS GROUND OF REVENUE IS ACCORDINGLY REJECTED. 57. SECOND GROUND RELATES TO DELETING THE ADDITION OF RS.8 24 300/- MADE ON ACCOUNT OF UNDISCLOSED PAYMENT TO M/S. J.D. SHRO FF. THIS ADDITION IS IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 34 SIMILAR TO THE ADDITION REFLECTED IN GROUND NO.1. C ERTAIN DOCUMENTS WERE SEIZED FROM THE PREMISES OF SHRI MAGANLAL GIRDHARLA L MORVI. IT CONTAIN A LEDGER ACCOUNT OF M/S. J.D. SHROFF WHICH ALSO REFLE CTED SOME ACCOUNT IN THE NAME OF HARILAL TEJA. THE ASSESSEE WAS ASKED TO EXP LAIN THE ENTRIES IN THE SEIZED MATERIAL. THE ASSESSEE DENIED EITHER THE OWN ERSHIP OVER THE TRANSACTIONS OR INCOME THEREFROM AS REFLECTED FROM THE SEIZED DOCUMENTS FROM MAGANLAL GIRDHARLAL. THE A.O. DID NOT ACCEPT T HE EXPLANATION OF THE ASSESSEE THAT THE DOCUMENTS OR THE TRANSACTIONS DID NOT BELONG TO HIM AND MADE THE ADDITION. FOLLOWING HIS DECISION IN RESPEC T OF GROUND NO.1 AS ABOVE LD. C.I.T (A) DELETED THE ADDITION. 58. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. FOLLOWING OUR REASONING IN RESPECT OF G ROUND NO.1 WE CONFIRM THE ORDER OF THE CIT (A) ON THIS ACCOUNT. WE WILL F URTHER ADD THAT UNDER SIMILAR SITUATION THE TRIBUNAL IN ITA NO.105/AHD/2 002 DECIDED ON 10-7- 2007 IN THE CASE OF SHRI HASMUKHBHAI BHANJIBHAI THA KKAR DELETED THE ADDITION. WE ACCORDINGLY REJECT THIS GROUND OF THE REVENUE. 59. THE THIRD GROUND RELATES TO REDUCING THE ADDITI ON OF RS.25 37 250/- TO RS.6 32 250/-. THE ASSESSING OFFICER EXAMINED SAUDA BOOK A-3. AFTER EXAMINING THE DEBIT AND CREDIT ENTRIES IN SAUDA BOO K A-3 THE A.O. WORKED OUT A SUM OF RS.25 37 250/- BEING THE NET AMOUNT RE CEIVABLE BY JALARAM CANVASSING IN WHICH ASSESSEE HAD INTEREST. THE A.O. SOUGHT TO MAKE ADDITION OF THIS AMOUNT AND CALLED FOR ASSESSEES E XPLANATION. THE ASSESSEE SOUGHT TO COVER THIS INCOME IN UNDISCLOSED INCOME O F RS.49 LACS DECLARED BY HIM IN THE RETURN OF INCOME IN THE ASSESSMENT YEAR 1999-2000. WHEN THE ASSESSING OFFICER EXAMINED THE DETAILS OF DISCLOSUR E OF RS.49 LACS HE FOUND IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 35 THAT ASSESSEE HAS DISCLOSED ONLY A SUM OF RS.6 32 2 50/- ON THE BASIS OF SAUDA BOOK A-3. WHILE IT REFLECTED A SUM OF RS.25 3 7 250/- AS AMOUNT RECEIVABLE TO THE ASSESSEE. THE ASSESSING OFFICER W AS NOT SATISFIED WITH THE EXPLANATION MADE TO HIM AS TO WHERE SUM OF RS.25 37 250/- IS DECLARED. HE PROCEEDED TO MAKE THE ADDITION OF THIS AMOUNT. 60. THE LD. C.I.T.(A) EXAMINED THE ISSUE AND FOUND THAT IT IS ONLY A SUM OF RS.6 32 250/- NOT COVERED IN THE DISCLOSURE WHE REAS OTHER SUM I.E. RS.19 05 000/- IS COVERED. THEREFORE HE SUSTAINED THE ADDITION OF RS.6 32 250/- ONLY. 61. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. ON THIS ISSUE LD. C.I.T.(A) HAD OBSERVED AS UNDER:- BEFORE ME THE ENTIRE COPIES OF ANNEXURES A-2 & A-3 WHICH IS A BASE OF THE ADDITION IS SUBMITTED. THE DETAILS OF THE AB OVE TRANSACTIONS IN RESPECT OF PARTIES MENTIONED ABOVE ARE PART OF THE SEIZED MATERIAL ANNEXURE A-2 I HAVE PERUSED THE SAME AND ALSO RECON CILED THE SAME WITH REFERENCE TO ANNEXURE A-2. KEEPING IN VIEW THE ABOVE FACTS THE PLEA OF THE APPELLANT THAT AMOUNT OF RS.19 05 000/- RELATES TO SATTA ACCOUNT (SPECULATION PROFIT) FOR 3 WHICH DISCLOSURE HAS ALREADY BEEN MADE THE BREAK UP OF WHICH IS GIVEN AT PAGE-32 (NEW PAGE 52) OF PAPER BOOK AMOUNTING TO RS.5 54 433/- RELATING TO T RANSACTION IN ANNEXURE A-1 AND RS.36 45 136/- RELATING TO TRANSAC TIONS RECORDED IN SEIZED ANNEXURE A-2 IS THEREFORE CORRECT AS FOUND F ROM VERIFICATION. IN VIEW OF THE ABOVE FINDINGS AND OBSERVATION THE . OS ACTION IN MAKING ADDITION OF RS.19 05 000/- IS THEREFORE NOT CORRECT AND THE FIGURE OF RS.25 37 250/- IS TO BE REPLACED BY RS.6 32 250/-. 62. THUS HE GAVE A RELIEF OF RS.19 05 000/-. AGAIN ST THIS LD. D.R. SUBMITTED THAT THERE IS NO CO-RELATION BETWEEN THE ADDITION PROPOSED BY THE A.O. AND THE EXPLANATION SUBMITTED BY THE ASSESSEE. THE ENTIRE ADDITION IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 36 SHOULD HAVE BEEN SUSTAINED. THE LD. A.R. ON THE OTH ER HAND SUBMITTED THAT EVEN THE SUM OF RS.19 05 000/- IS VERIFIABLE FROM A NNEXURE A-2. SUM OF RS.6 32 250/- IS ALREADY RECORDED AS NOTED BY THE L D. C.I.T.(A) ON PAGE-9 OF HIS ORDER AS UNDER:- AMOUNT(RS.) CREDIT. AMOUNT(RS.) DEBIT. 5 54 433/- FROM SATTA AS PER 4 050 /- EXPENSES. RUF PAD ANNEXURE A-1 36 45 136/- FROM SATTA AS PER RUF 49 0 0 000/- DIFFERENCE PAD ANNEXURE A-2. BEING CAPITAL. 6 32 250/- FROM SATTA(VALAN) AS PER NOTE BOOK ANNEXURE A-3. 72 231/- SUNDRIES. --------------- --------------- 49 04 050/- 49 04 050/- --------------- --------------- THIS IS REPRESENTED BY UNDISCLOSED CAPITAL OF RS.49 LACS DISCLOSED BY THE ASSESSEE IN THE BLOCK RETURN. A SUM OF RS.19 05 000 /- IS REFLECTED IN INCOME OF RS.36 45 136/- THEREFORE THERE IS NO LOGIC IN E VEN RETAINING ADDITION OF RS.6 32 250/-. 63. THE LD. A.R. REFERRED TO GROUND NO.2 IN ASSESSE ES APPEAL AND SUBMITTED THAT SUSTAINING ADDITION OF RS.6 32 250/- WAS LEGALLY NOT CORRECT. 64. WE HAVE HEARD THE PARTIES. SINCE A SUM OF RS.1 9 05 000/- IS COVERED IN THE SATTA INCOME OF RS.36 45 136/- AND THERE IS NO MATERIAL TO SAY THAT THIS DISCLOSURE OF RS.36 45 136/- WAS DIFFERENT THAN THE ONE COMPUTED BY THE A.O. AT RS.25 37 250/- WE DECLINE TO INTERFERE IN T HE ORDER OF THE LD. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 37 C.I.T.(A) . WE ALSO DO NOT AGREE WITH THE LD. A.R. THAT ISSUE REGARDING THE ADDITION OF RS.6 37 250/- IS COVERED IN GROUND NO.2 IN ASSESSEES APPEAL. GROUND NO.2 IN ASSESSEES APPEAL APPARENTLY RELATES TO A DIFFERENT TRANSACTION. AS A RESULT THIS GROUND OF APPEAL OF THE REVENUE IS REJECTED. 65. GROUND NO.4 IN REVENUES APPEAL RELATES TO REDU CING THE ADDITION FROM PEAK CREDIT BALANCE OF RS.60 12 588/- TO RS.21 79 844/-. ON EXAMINATION OF ANNEXURE A-2 THE A.O. WORKED OUT PE AK CREDIT OF RS.60 12 588/-. ON BEING ASKED TO EXPLAIN IT WAS S UBMITTED THAT THERE WERE SOME MISTAKES IN CALCULATING PEAK CREDIT AMOUNT. FU RTHER FOR CALCULATING PEAK ONLY THE CREDIT MOVEMENT OF CASH IN BANSI FIN ANCE AND THAT TOO RELATING TO HIRALAL TEJA ABOVE IS REQUIRED TO BE CO NSIDERED. THE A.O. DID NOT AGREE AND PROPOSED THE ADDITION OF RS.60 12 588/-. 66. THE LD. CIT (A) EXAMINED THE ISSUE WHICH APPARE NTLY PERTAINED TO SATTA TRANSACTION AND WORKED OUT THAT PEAK IS ONLY RS.38 75 822/-. HE SENT THE WORKING TO THE A.O. FOR HIS COMMENTS. THE A.O. DID NOT FIND ANY DEFECT IN THE WORKING DONE BY THE LD. CIT (A). THE LD. CIT (A) FURTHER CROSS VERIFIED THE WORKING WITH OTHER SEIZED DOCUMENTS AN D FOUND THE CALCULATION TO BE CORRECT. THUS THE LD. C.I.T. (A) WORKED OUT T HE PEAK AT RS.38 75 822/- IN PLACE OF RS.60 12 588/- BETWEEN THE PERIOD 8-9-9 8 TO 21-9-98. THE LD. D.R. RELIED ON THE ORDER OF THE A.O. BUT COULD NOT POINT OUT AS TO HOW THE WORKING DONE BY THE LD. CIT (A) WAS INCORRECT. THE LD. A.R. ON THE OTHER HAND SUBMITTED THAT THE LD. CIT(A) HAS NOT CONSIDER ED WITHDRAWAL OF RS.2 30 603/- AND THEREFORE PEAK SHOULD BE REDUCED TO RS.36 45 136/-. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 38 67. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW THERE I S NO CASE FOR INTERFERENCE IN THE ORDER OF THE LD. CIT(A). WE ARE NOT CONVINC ED AS TO HOW THERE IS A MISTAKE IN WORKING OUT BY THE LD. C.I.T.(A). ACCORD INGLY THE ARGUMENT OF LD. A.R. IN THIS REGARD ARE REJECTED AND THE GROUND OF APPEAL RAISED BY THE REVENUE IS ALSO REJECTED. IT(SS)A NO.208/AHD/2002 (ASSESSEES APPEAL) 68. IN ASSESSEES APPEAL ONLY ISSUE IS REGARDING WO RKING OUT OF PEAK AT RS.38 75 822/-. AND NOT AT RS.36 45 136/-. AS OBSER VED IN THE DEPARTMENTAL APPEAL WE ARE NOT SATISFIED AS TO HOW THERE IS A MI STAKE. WE THEREFORE CONFIRM THE WORKING DONE BY THE LD. CIT(A). ACCORDI NGLY APPEAL FILED BY THE ASSESSEE IS ALSO DISMISSED. 69. AS A RESULT BOTH THE APPEALS FILED BY THE REVEN UE AND AS WELL AS THE ASSESSEE ARE DISMISSED. IT(SS)A NO.210/AHD/2002(RE: ASHOK T. THAKKAR) (ASSE SSEES APPEAL) 70. IN ASSESSEES APPEAL FOLLOWING GROUNDS ARE RAIS ED :- THE LD. A.O. AND CIT(A) HAVE ERRED IN LAW AND ON F ACTS IN NOT CONSIDERING THE CASH FLOW STATEMENT ON RECORD ACCOR DING TO WHICH THE CREDIT BALANCE IN THE ACCOUNT OF DAHYALAL I. AND HA RILAL TEJARAM RS.4 75 000/- AND RS. 36 04 245/- RESPECTIVELY (TOT ALING TO RS.40 79 245/-) AND UTILIZED IN ACQUIRING UNACCOUNT ED ASSETS OUGHT TO HAVE BEEN REDUCED FROM THE UNACCOUNTED ASSETS CONSI DERED IN THE ASSESSMENT AT RS.2 27 28 523/-. THE LD. A.O AND CIT (A) HAVE ERRED IN LAW AND ON FA CTS IN NOT CONSIDERING THE CASH FLOW STATEMENT ON RECORD ACCOR DING TO WHICH THE AMOUNT OF RS.28 LACS INVESTED BY THE APPELLANT IN B ANSI FINANCE OUT OF IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 39 HIS UNDISCLOSED INCOME SHOWN IN THE BLOCK RETURN AN D OUGHT TO HAVE BEEN REDUCED RS.28 LACS FROM THE UNACCOUNTED ASSETS CONSIDERED IN THE ASSESSMENT. 71. IN ADDITION TO ABOVE ADDITIONAL GROUNDS ARE RA ISED AS UNDER:- (ASSESSEES APPEAL) (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DISMISSING THE GROUND NO.4 RELATING TO ADDITION OF RS.16 18 460/- AS UNACCOUNTABLE INVESTMENT IN NEW HOUSE AT SHAKUNTAL. THE LD. CIT(A) OUGHT TO HAVE DIRECTED FOR TELESCOPI NG THE INVESTMENT OF RS.16 18 460/- IN THE HOUSE AT SHAKUNTAL OUT OF UNDISCLOSED ASSETS SHOWN IN THE CASH FLOW STATEMENT PREPARED ON THE BA SES OF UNDISCLOSED INCOME DECLARED AND DELETED THE ADDITION. (2) THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DI SMISSING THE GROUND NO.7 RELATING TO ADDITION OF RS.19 68 544/- AS UNACCOUNTED ADVANCES. THE LD. CIT (A) OUGHT TO HAVE DIRECTED FOR TELESCOP ING THE UNACCOUNTED ADVANCES OF RS.19 68 544/- OUT OF UNDIS CLOSED ASSETS SHOWN IN THE CASH FLOW STATEMENT PREPARED ON THE BA SIS OF UNDISCLOSED INCOME DECLARED AND DELETED THE ADDITION. (3) THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS I N NOT DIRECTING FOR TELESCOPING UNDISCLOSED INVESTMENT OF RS. 14 41 128/- (INCLUDED IN THE ADDITION OF RS.1 39 60 258/- CASH CREDIT U/S. 68 OUT OF UNDISCLOSED ASSETS SHOWN IN THE CASH FLOW STATEMENT PREPARED ON THE BASIS OF UNDISCLOSED INCOME DECLARED AND DELETED THE ADDITIO N OF RS.14 41 128/-. (4) THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ADDITION OF RS.10 45 813/- ON ACCOUNT OF UNDISCLOSE D CASH CREDIT U/S. 68 OF THE I. T. ACT. (5) THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACT S IN DISMISSING THE GROUND NO.9 TO CONFIRMING ADDITION OF RS.1 68 0 00/- OUT OF IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 40 ADDITION OF RS.2 18 806/- ON ACCOUNT OF UNACCOUNTED INVESTMENT IN JEWELLERY. THE LD. C.I.T. (A) OUGHT TO HAVE DIRECTED FOR TELES COPING THE INVESTMENT OF RS.1 68 000/- IN JEWELLERY OUT OF UN DISCLOSED ASSETS SHOWN IN THE CASH FLOW STATEMENT PREPARED ON THE BA SIS OF UNDISCLOSED INCOME DECLARED AND DELETED THE ADDITION. (6) THE LD. C.I.T. (A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION OF RS.55 500/- ON ACCOUNT OF INVESTMEN T IN F.D. AND K.V.P. THE LD. C.I.T. (A) OUGHT TO HAVE DIRECTED FOR TELES COPING THE INVESTMENT OF RS.55 500/- IN F.D. AND KVP OUT OF UN DISCLOSED ASSETS SHOWN IN THE CASH FLOW STATEMENT PREPARED ON THE BA SIS OF UNDISCLOSED INCOME DECLARED AND DELETED THE ADDITION. (7) THE LD. CI.T.(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.3 64 845/- ON ACCOUNT OF OTHER U NDISCLOSED INVESTMENT. THE LD. C.I.T. (A) OUGHT TO HAVE DIRECTED FOR TELES COPING THE INVESTMENT OF RS.3 64 845/- OUT OF UNDISCLOSED ASS ETS SHOWN IN THE CASH FLOW STATEMENT PREPARED ON THE BASIS OF UNDISC LOSED INCOME DECLARED AND DELETED THE ADDITION. (8) THE LD. C.I.T. (A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION OF RS.2 00 000/- AS UNACCOUNTED ASSETS IN THE ACCOUNT OF RAJU K.THAKKAR. THE LD. C.I.T(A) OUGHT TO HAVE DIRECTED FOR TELES COPING THE UNACCOUNTED ASSETS OF RS.2 00 000/- IN ACCOUNT OF R AJU K. THAKKAR OUT OF UNDISCLOSED ASSETS SHOWN IN THE CASH FLOW ST ATEMENT PREPARED ON THE BASIS OF UNDISCLOSED INCOME DECLARED AND DEL ETED THE ADDITION. 72. WHEREAS IN DEPARTMENTAL APPEAL FOLLOWING GROUN DS ARE RAISED:- IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 41 1. THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3 15 904/- MADE ON ACCOUNT OF UNDIS CLOSED INTEREST. 2. THE LD. CIT (A) HAS ERRED IN LAW ON FACTS IN DELETING THE ADDITION OF RS.15 41 390/- MADE ON ACCOUNT OF UNACC OUNTED CASH CREDITS. 3. THE LD. CIT(A) HAS ERRED IN LAW ON FACTS IN DELE TING THE ADDITION OF RS.3 54 338/- MADE ON ACCOUNT OF INTERE ST INCOME. 73. SHRI ASHOKKUMAR TEJARAM THAKKAR THE ASSESSEE WA S EARLIER PARTNER IN M/S. BANSI FINANCE AND REMAINED AS SUCH PARTNER THE REIN WITH HIS BROTHER SHRI DAHYALAL I. THAKKAR UPTO 31-8-1998 AND THEREAF TER SHRI ASHOKKUMAR T. THAKKAR I.E. ASSESSEE BECAME SOLE PROPRIETOR OF M/S / BANSI FINANCE.. THE MAIN BUSINESS OF BANSI FINANCE IS OF FINANCING SHR OFF AND COMMISSION AGENT. THE SEARCH WAS CARRIED OUT AS PER THE DETAIL S GIVEN ABOVE IN THE CASE OF M/S.BANSI FINANCE.. VARIOUS DOCUMENTS AND ASSETS WERE FOUND WHICH WERE SEIZED BY THE A.O. IN THE BLOCK RETURN FILED I N RESPONSE TO NOTICE U/S. 158BC THE ASSESSEE DECLARED FOLLOWING INCOME :- RS. 10 40 000/- COMMISSION INCOME. RS. 14 10 000/- MARGIN MONEY INCOME. RS. 12 82 000/- INTEREST INCOME. --------------------- RS. 37 32 000/- TOTAL. ============ 4. INCOME WAS DECLARED AGAINST FOLLOWING ASSETS:- RS. 55 500 INVESTMENT IN F.D. KVP ETC. (10 500 + 12 000 +10 000 + 13 000 + 5 000 + 5000) RS. 1 68 806 JEWELLERY. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 42 (1 00 000 + 34 875 + 19 591 + 3200 + 2100 + 6500 + 1750 + 790). RS. 4 845 GUN RS. 15 000 REVOLVER RS. 16 18 160 SHAKUNTAL (6 85 000 + 9 28 160) RS. 3 45 000 LUXURY BUS. RS. 28 00 000 BANSI FINANCE. ----------------- RS.50 07 611 74. IN THE CASE OF BANSI FINANCE FOLLOWING ASSETS A S ON 22-9-1998 WERE SHOWN:- RS. 10 85 000 BHAIYAJI. RS. 6 90 464 BETTING PARTY. RS. 3 50 000 R.K. THAKKAR. RS.19 68 544 ADVANCES AGAINST CHEQUES. RS. 2 50 864 DIFFERENCE OF CASH SEIZED. RS. 6 15 000 OFFICE RS.29 95 373 RESIDUE (OTHER ADVANCE) ------------------- RS.79 55 245 TOTAL =========== 75. OUT OF THE ABOVE ASSETS FOLLOWING ASSETS WERE DECLARED AS BELONGING TO THE ASSESSEE:- RS. 6 15 000 INVESTMENT IN OFFICE RS. 6 90 464 BETTING PARTY. RS.10 85 000 BHAIYAJI RS. 1 50 000 R.K. THAKKAR. RS.17 10 536 ADVANCES AGAINST CHEQUES. ------------------ RS.42 51 000 TOTAL =========== SUBSEQUENTLY IN THE CASE OF BANSI FINANCE ASSESSEE HAD REDUCED THE ASSETS BY REDUCING IT BY RS.14 51 000/- ON THE GROUND THAT ADVANCES AGAINST IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 43 CHEQUES WAS NOT RS.17 10 536/- BUT WAS RS.2 59 536/ - THE TOTAL OF ASSETS AS REVISED WERE AS UNDER:- BALANCE SHEET 23 25 000.00 ASHOKKUMAR TEJARAM RS . 6 15 000 OFFICE A/C. 168/3 THAKKAR CAPITAL A/C. 4 75 000.00 DAHYALAL ISHWARLAL RS.10 85 000 BHAIYAJI A/C. THAKKAR CAPITAL A/C. RS. 6 90 464 BETTING PARTY A/C. RS. 1 50 000 R.K. THAKKAR A/C. RS. 2 59 536 CASH & INVESTMENT. ------------------ ------------------- 28 00 000 RS.28 00 000 ========== =========== 76. THE FACTS OF THIS ISSUE AS TO THE REDUCTION OF DUES FROM OTHER PARTIES FROM RS.17 10 536/- TO RS.2 57 536/- HAVE BEEN DISC USSED IN DETAIL IN THE CASE OF BANSI FINANCE AS ABOVE BUT FOR OUR PURPOSE S THE DECLARATION OF INCOME BY ASSESSEE IS RELEVANT. IT(SS)A NO.230/AHD/2002 (REVENUES APPEAL) 77. THE FIRST ISSUE IN DEPARTMENTAL APPEAL RELATES TO DELETING THE ADDITION OF RS.3 15 904/- BEING THE UNDISCLOSED INCOME. THIS HAS BEEN DISCUSSED BY THE A.O. ON PAGE 14 TO 18 OF HIS ORDER. THERE WAS A SEARCH AGAINST J.D. SHROFF GROUP. CERTAIN DOCUMENTS /BOOKS OF ACCOUNTS WERE SEIZED IN THE SAID SEARCH. THE A.O. INFERRED THAT ASSESSEE HAS MADE IN VESTMENT WITH J. D. SHROFF GROUP IN VARIOUS ASSESSMENT YEARS. THE A.O. SOUGHT TO MAKE ADDITION OF UNDISCLOSED INTEREST INCOME ON SUCH ADVANCES TO J.D. SHROFF GROUP. THE ASSESSEE DENIED TO HAVE DONE ANY TRANSACTION WITH T HEM. THE A.O. HOWEVER IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 44 DID NOT AGREE AND WORKED OUT THE INTEREST AT 18% ON THE ADVANCES CLAIMED TO HAVE BEEN MADE WITH J. D. SHROFF GROUP. THIS INTERE ST WAS WORKED OUT AT RS.3 15 904/- ON PEAK ADVANCES OF RS.17 55 020/-. T HE DETAILS OF TRANSACTIONS AS DISCOVERED FROM THE DOCUMENTS FOUND FROM THE SEARCH AT J. D. SHROFF GROUP IS GIVEN BY THE A.O. ON PAGES 14 TO 18 OF HIS ORDER. THE A.O. ACCORDINGLY MADE THE ADDITION OF RS.3 15 904/-. 78. THE LD. C.I.T. (A) DELETED THE ADDITION ON THE GROUND THAT NO DOCUMENT RELATED TO SUCH ADVANCE HAS BEEN FOUND IN THE SEARCH OF THE ASSESSEE.. FOLLOWING THE DECISION OF HONBLE GUJARA T HIGH COURT IN THE CASE OF N.R. PAPER BOARD VS. CIT 237 ITR 733 HE DELETED THE ADDITION AND FURTHER MENTIONED THAT NO NOTICE U/S. 158BD WAS GIVEN BEFOR E MAKING SUCH ADDITION.. 79. WE HAVE HEARD THE PARTIES. THE LD. D.R. RELIED ON THE ORDER OF THE A.O. AND ENTRIES FOUND WITH REGARD TO THE DOCUMENTS SEIZED AT THE PREMISES OF J. D. SHROFF GROUP IN THE SEARCH MADE AGAINST TH EM. IN OUR CONSIDERED VIEW NO SUCH ADDITION CAN BE MADE UNLESS SOME MATER IAL IS FOUND IN THE SEARCH OF THE ASSESSEE AS TO THE ADVANCES MADE BY H IM WITH J.D. SHROFF GROUP. IN THE ALTERNATIVE THE A.O. OF J.D. SHROFF GROUP SHOULD HAVE RECORDED A SATISFACTION ABOUT CERTAIN DOCUMENTS CON TAINING TRANSACTIONS OF ASSESSEE AND UNDISCLOSED INCOME ARISING THERE-FROM WHICH IS ASSESSABLE IN THE HANDS OF THE ASSESSEE. THIS SATISFACTION SHOUL D HAVE BEEN RECORDED BEFORE THE CLOSURE OF THE BLOCK ASSESSMENT OF J.D. SHROFF GROUP AS PER THE LIMITATION PRESCRIBED. THERE IS NO INDICATION THAT ANY SUCH SATISFACTION HAS BEEN RECORDED FOR INCLUDING THE UNDISCLOSED TRANSAC TIONS FOUND FROM THE DOCUMENT SEIZED FROM THE THIRD PARTY IN THE ASSESS MENT OF THE ASSESSEE. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 45 EVEN NO MATERIAL WAS FOUND IN THE SEARCH OF THE ASS ESSEE WHICH BY FURTHER INVESTIGATING BY WAY OF REQUISITIONING THE DOCUMENT S FROM THE A.O. OF J. D. SHROFF GROUP COULD HAVE ENABLED THE A.O. TO MAKE TH E ADDITION. WITHOUT THESE CONDITIONS BEING SATISFIED SAID ADDITION CAN NOT BE SUSTAINED. WE ALSO NOTICE THAT IN THE ASSESSMENT YEAR 1997-98 AND 1998 -99 FOR WHICH THE ASSESSING OFFICER HAS WORKED OUT INTEREST NO ADDITI ON OF UNDISCLOSED INVESTMENT WITH J. D. SHROFF GROUP HAS BEEN MADE. F OR THE SAKE OF CONVENIENCE WE REPRODUCE THE COMPUTED UNDISCLOSED I NCOME FOR THE ASSESSMENT YEAR 1997-98 AND 1998-99 IN RESPECT OF W HICH SUCH INTEREST INCOME SEEMS TO HAVE BEEN WORKED OUT. ASSESSMENT YEAR 1997-98 RS. RETURNED/ASSESSED INCOME AS ON THE DATE OF SEARCH AS PER SEC.158BB(1) SUB SECTION (A) TO (F). 60 510 ADD:-UNDISCLOSED INCOME AS PER THIS ORDER. INTEREST INCOME 5 20 000 TOTAL INCOME AS PER CHAPTER IV. 5 80 510 ASSESSMENT YEAR 1998-99. RETURNED/ASSESSED INCOME AS ON THE DATE OF SEARCH AS PER SEC.158BB(1) SUB-SECTION (A) TO (F). 13 370 ADD: UNDISCLOSED INCOME AS PER THIS ORDER: I) JEWELLERY. 22 79 1 II) INVESTMENT IN SHAKUNTAL 6 85 000 IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 46 III) INVESTMENT IN BANSI FINANCE. 28 00 000 35 07 791 TOTAL INCOME AS PER CHAPTER IV. 35 21 161 80. SIMILAR ISSUE HAD ARISEN IN THE CASE OF BANSI F INANCE WHEREIN AN ADDITION OF RS.91 674/- ON ACCOUNT OF SUCH INTEREST WAS MADE WHICH WAS DELETED BY LD. C.I.T.(A) WHICH WE HAVE CONFIRMED AS ABOVE ON THE BASIS OF DECISION OF THE TRIBUNAL IN SIMILAR ISSUE IN THE CA SE OF HASMUKH BHANJI THAKKAR IN ITA NO.105/AHD/2002 DECIDED ON 10-7-2007 AND AS REFERRED TO ABOVE IN THE CASE OF BANSI FINANCE. AS A RESULT TH IS GROUND OF THE REVENUE IS REJECTED. 81. SECOND GROUND RELATES TO DELETING THE ADDITION OF RS.15 41 390/- BEING UNACCOUNTED CASH CREDITS. DURING THE COURSE OF THE SEARCH CASH OF RS.18 59 940/- WAS FOUND FROM THE OFFICE OF THE BAN SI FINANCE. IT WAS EXPLAINED TO THE A.O. THAT ASSESSEE HAS MAINTAINED ONLY MANUAL CASH BOOK UPTO23-7-1998 AND RECONCILED CASH BALANCE AS ON 22 -9-98 WAS SUBMITTED TO THE THEN D.D.I.T. IN JANUARY 1999. ACCORDING TO THI S RECONCILED CASH BOOK OPENING CASH BALANCE AS ON 22-9-98 WAS RS.15 77 576 /-. IN ANY CASE IT WAS SUBMITTED THAT ON THE BASIS OF MANUAL CASH BOOK VER IFICATION COULD BE DONE ONLY UPTO 23-7-98 AND FOR THE PERIOD AFTER 23-7-98 VERIFICATION CANNOT BE DONE. THE A.O. TOOK THE VIEW THAT SINCE MANUAL CASH BOOK CANNOT BE SUBJECTED TO VERIFICATION AND DOES NOT EXPLAIN .CAS H AVAILABLE AT RS.18 59 940/- THIS SUM REMAINED UNEXPLAINED. THE A.O. NOTICED THAT AS PER LOOSE PAPER FILED A-3 THE OPENING BALANCE OF CA SH IS SHOWN AT RS.3 18 550/-. HE ACCORDINGLY ACCEPTED THE CASH A S EXPLAINED TO THIS EXTENT IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 47 AND BALANCE SUM OF RS. 15 41 390/- WAS TREATED AS U NEXPLAINED FOR THE ASSESSMENT YEAR 1999-2000. 82. THE CIT(A) CONSIDERED THE EXPLANATION OF THE AS SESSEE THAT MANUAL CASH BOOK WAS WRITTEN UP TO 23-7-98 ONLY AND AS PER RECONCILED CASH BOOK SUBMITTED AFTER THE SEARCH CASH BALANCE AS ON DATE OF SEARCH I.E. 22-9-98 CAME TO RS.15 77 576/-. HE ASKED THE A.O. TO RECONS IDER THE SAME AGAIN AND CALLED FOR THE REMAND REPORT. IN THE REMAND REPORT THE A.O. DID NOT ACCEPT THE TRANSACTION AFTER 23-7-98 BUT LD. C.I.T.(A) NOTED T HAT THE A.O. HAS NOT GIVEN ANY COMMENT ON THE BANK TRANSACTION W.E.F. 22-7-98 . HE NOTED FOLLOWING CASH TRANSACTIONS FROM CITY UNION BANK LTD. AHMEDA BAD FROM ACCOUNT NO.87 IN THE NAME OF M/S. BANSI FINANCE. 3-8-1998 RS. 9 00 000 5-8-1998 RS. 5 00 000 6-8-1998 RS. 1 00 000/- 17-8-1998 RS. 65 000/- 18-8-1998 RS. 20 000/- 02-9-1998 RS. 50 000/- 03-9-1998 RS. 90 000/- THERE WERE TRANSACTIONS WITH PROGRESSIVE BANK STAT E BANK OF INDIA MANEK CHOWK CO-OPERATIVE BANK STATE BANK OF SAURASHTRA E TC. THEY WERE PRODUCED BEFORE THE LD. C.I.T.(A) FOR HIS EXAMINATI ON WHO ACCEPTED THAT RECONCILED CASH BOOK PREPARED BY THE ASSESSEE IS CO RRECT AS NO INACCURACY HAS BEEN POINTED OUT BY A.O. THEREIN. THIS CASH BA LANCE TO THE EXTENT OF RS.15 77 576/- WAS THEREFORE ACCEPTED. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 48 83. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. WHEN ASSESSEE SOUGHT TO EXPLAIN CASH FOUND DURING THE SEARCH THROUGH RECONCILED CASH BOOK WHERE A CASH BALANCE O F RS.15 77 576/- WAS RECORDED AS ON 22-9-1998 IT WAS NECESSARY FOR THE A.O. TO EXAMINE THIS EXPLANATION AND SHOULD HAVE GIVEN A FINDING THAT SU CH EXPLANATION AND THE CASH BOOK SO PREPARED IS DEFECTIVE OR CONCOCTED AND CANNOT BE RELIED UPON. NO SUCH FINDING HAS BEEN GIVEN BY THE A.O. AND THER EFORE RECONCILED CASH BOOK PRESENTED BY THE ASSESSEE CANNOT BE REJECTED P ARTICULARLY WHEN LD. C.I.T. (A) HAS EXAMINED THE SAME AND FOUND THAT A.O . HAS NOT POINTED OUT ANY INACCURACY OR DEFECT THEREIN. ONCE CASH BALANCE OF RS.15 77 576/- IS FOUND RECORDED THEREIN THEN CASH TO THAT EXTENT SHO ULD BE TREATED AS EXPLAINED. WE FIND THAT CASH FOUND AS ON THE DATE OF THE SEARCH WAS RS.18 59 940/- WHEREAS AS PER RECONCILED CASH BOOK OPENING CASH BALANCE AS ON 22-9-1998 HAS BEEN SHOWN AT RS.15 77 576/-. ACCORDINGLY DIFFERENCE TO THIS EXTENT IS NOT COVERED AND THEREFORE ADDITI ON TO THIS EXTENT IS REQUIRED TO BE MADE. ACCORDINGLY THE DEFICIENCY OF RS.2 82 364/- OF UNEXPLAINED CASH IS REQUIRED TO BE SUSTAINED SUBJECT TO THE ARG UMENT OF THE ASSESSEE THAT IT SHOULD BE TREATED AS COVERED BY THE DISCLOSURE OF I NCOME MADE BY THE ASSESSEE. THE ASSESSEE HAD SHOWN DISCLOSURE OF INCO ME OF RS.10 40 000/- AND INTEREST INCOME OF RS.12 82 000/- INCLUDED IN D ISCLOSURE OF RS.37 32 000/-. WE ACCORDINGLY GIVE THE BENEFIT OF TELESCOPING AND THEREFORE NO ADDITION OF THE DEFICIENCY OF RS.2 82 364/- IS REQUIRED TO BE MADE. AS A RESULT THIS GROUND OF REVENUE IS REJECT ED. 84. THE LAST GROUND IN REVENUES APPEAL IS ABOUT DE LETION OF RS.3 54 338/- IN THE RETURN FILED FOR THE BLOCK PERIOD ASSESSEE HAD DECLARED UNACCOUNTED INVESTMENT OF RS.19 68 544/- WHICH IS COVERED IN TO TAL ASSETS OF IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 49 RS.50 07 611/- AS ABOVE. ON THIS INVESTMENT THE A.O . ESTIMATED INTEREST INCOME @ 18% AND WORKED OUT THE UNDISCLOSED INTER EST INCOME OF RS.3 54 338/-.THE LD. C.I.T.(A) DELETED THE ADDITIO N ON THE GROUND THAT DURING THE COURSE OF THE SEARCH NO EVIDENCE OF ANY INTEREST INCOME WAS FOUND. NO REFERENCE TO ANY SEIZED DOCUMENT OR PAPER INDICATING ANY PARTICULAR ENTRY RELATING TO EARNING OF INTEREST IN COME OR RECEIPT THEREOF HAS BEEN MADE. 85. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR MAKING ANY ADDITION. FIRSTLY THERE IS NO EVIDENCE OF ANY ACCRUAL OR RECE IPT OF INCOME. SECONDLY DISCOUNTING OF CHEQUES IN THE FORM OF CASH ADVANCE WAS FOR A SHORT PERIOD AND ASSESSEE HAS ALREADY DECLARED COMMISSION INCOME IN THE BLOCK RETURN AT RS.10 40 000/-. THIRDLY IT IS NOT POINTED OUT AS T O HOW ASSESSEE WOULD HAVE EARNED INTEREST INCOME ON THIS ADVANCE AS NO INQUIR Y FROM THOSE PARTIES TO WHOM THE ADVANCES WERE GIVEN WAS CARRIED OUT SHOWIN G ACCRUAL OR PAYMENT OF ANY INTEREST. ACCORDINGLY THIS GROUND OF REVENU E IS ALSO REJECTED. 86. AS A RESULT APPEAL FILED BY THE REVENUE IS DIS MISSED. ASSESSEES APPEAL 87. AT THE OUTSET THE LD. A.R. PRAYED FOR ADMISSION OF ADDITIONAL GROUNDS ON THE STRENGTH OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER (229 ITR 383). HE SUBMITTED THAT ALL THE GROUNDS ARE PURELY LEGAL AND THEREFORE TRIBUNAL SHOULD ADMI T THEM. THE LD. D.R. OBJECTED TO THE ADMISSION BUT SUBMITTED THAT SO LON G AS THEY ARE LEGAL THEY CANBE DISPOSED OF ON MERITS AFTER GIVING OPPORTUNIT Y TO THE DEPARTMENT. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 50 88. AFTER HEARING THE PARTIES WE ADMIT THE ADDITION AL GROUND AND DISPOSE OF THEM ON THE MERITS. 89. GROUND NO.1 ORIGINALLY RAISED BY THE ASSESSEE R ELATES TO ASSESSEES CLAIM THAT A.O. HAS NOT CONSIDERED CASH FLOW STATEM ENT ACCORDING TO WHICH THE CREDIT BALANCE IN THE ACCOUNT OF DAHYABHAI ISHW ARLAL THAKKAR AND H.T. THAKKAR WERE RS.4 75 000/- AND RS.36 04 245/- TOTAL ING TO RS.40 79 245/- AND THEREFORE UNACCOUNTED ASSETS COULD BE REDUCED TO THAT EXTENT 90. THE ASSESSING OFFICER HAD DURING THE COURSE OF THE SEARCH FOUND THAT FOLLOWING ASSETS ARE DECLARED IN THE CASE OF BANSI FINANCE :- RS. 10 85 000/- BHAIYAJI A/C. RS. 6 90 464/- BETTING PARTY A/C. RS. 3 50 000/- R.K.THAKKAR A/C. RS. 19 68 544/- ADVANCE AGAINST CHEQUES. RS. 2 50 864/- DIFFERENCE OF CASH SEIZED. RS. 6 15 000/- OFFICE A/C. RS. 15 44 373/- RESIDUE (OTHER ADVANCES.) --------------------- RS. 65 04 245/- EARLIER TOTAL ASSETS IN BANSI FINANCE WERE SHOWN AT RS.79 55 245/- WHEREIN RESIDUE (OTHER ADVANCES) WERE AT RS.29 95 373. AFTE R MAKING CORRECTION OF SUM OF RS.14 51 000/- THE TOTAL ASSETS IN BANSI FIN ANCE HAS BEEN REDUCED TO RS.65 04 245 WHEREIN THE RESIDUE (OTHER ADVANCE) HA VE BEEN CORRECTED TO RS.15 44 373 BY REDUCING THE ORIGINAL FIGURE BY RS. 14 51 000/-. AGAINST ABOVE ASSETS FOLLOWING LIABILITIES ARE SHOW N:- IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 51 RS. 24 25 000/- ASHOK TEJARAM (APPELLANT) RS. 4 75 000/- DAHYALAL ISHWERLAL. RS. 36 04 245/- HARILAL TEJARAM. ---------------------- RS. 65 04 245/- ============= IT WAS SUBMITTED THAT SHRI ASHOKKUMAR T. THAKKAR I. E. ASSESSEE HAD DECLARED FOLLOWING INVESTMENT IN BANSI FINANCE:- RS. 6 15 000/- OFFICE. RS. 10 85 000/- BHAIYAJI RS. 6 90 464/- BETTING PARTY. RS. 1 50 000/- R. K. THAKKAR. RS. 2 59 536/- CASH AND INVESTMENT. --------------------- RS. 28 00 000/- ============ 91. THE SECOND GROUND IS ALSO ABOUT NOT CONSIDERING THE SUM OF RS.28 LACS AS REVISED BY THE ASSESSEE AS AGAINST ORIGINAL FIGU RE OF RS.42 51 000/-. IN OUR CONSIDERED VIEW THE ABOVE TWO ISSUES ARE NOT RELEVA NT AS NO SEPARATE ADDITION IN RESPECT OF THESE AMOUNTS HAVE BEEN DONE BY THE A.O. IT IS MERELY AN EXPLANATION FOR EXPLAINING THE ASSETS/INCOME FOU ND BY THE A.O. AND ASSESSED IN THE BLOCK ASSESSMENT. THIS EXPLANATION WILL BE CONSIDERED AT APPROPRIATE PLACE AND THEREFORE THESE TWO GROUNDS OF THE ASSESSEE ARE ACADEMIC AND HENCE THEY ARE REJECTED. ADDITIONAL GROUNDS OF ASSESSEE 92. THE FIRST GROUND RELATED TO UNACCOUNTED INVESTM ENT IN NEW HOUSE AT SHAKUNTAL. DURING THE COURSE OF THE EXAMINATION OF THE DOCUMENTS THE ASSESSING OFFICER FOUND INVESTMENT IN HOUSE AT RS.1 6 18 460/-.THE ASSESSEE IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 52 HAD HOWEVER DISCLOSED THE SAME IN THE BLOCK RETURN. THE APPELLANT CHALLENGED THIS ON THE GROUND AS TO WHETHER THE A.O . HAS MADE DOUBLE ADDITION OF THIS AMOUNT. WE NOTICE THAT A.O. HAS NO T PROCEEDED ON THE BASIS OF SUM DECLARED IN THE BLOCK RETURN BUT HAS INDEPEN DENTLY COMPUTED UNDISCLOSED INCOME WHEREIN HE HAS MADE ADDITION OF RS.6 85 000/- IN THE ASSESSMENT YEAR 1998-99 AND OF RS.9 33 460/- IN THE ASSESSMENT YEAR 1999-2000 TOTALING TO RS.16 18 640/-.SINCE NO DOUBL E ADDITION IS MADE BY THE A.O. OF THIS SUM AND IT IS ADMITTED POSITION TH AT ASSESSEE HAS DECLARED RS.16 80 460/- IN THE TOTAL UNDISCLOSED INCOME OF R S.50 07 611/- THE QUESTION OF GIVING RELIEF WOULD NOT ARISE. IT IS T HE ARGUMENT OF THE LD.A.R. THAT BLOCK ASSESSMENT SHOULD BE MADE EITHER ON THE BASIS OF ASSETS/INVESTMENT FOUND OR ON THE BASIS OF INCOME W HICHEVER IS HIGHER. THE A.O. ON THE OTHER HAND CONSIDERED BOTH INCOME AS WE LL AS ASSET. IN THIS REGARD WE DIRECT THE A.O. THAT HE WOULD GIVE THE TE LESCOPING EFFECT AND ADJUST INVESTMENT AGAINST INCOME AND IF ANY DEFICIE NCY IS FOUND ONLY TO THIS EXTENT ADDITION SHOULD BE MADE. THE CLAIM OF THE AS SESSEE IS THAT IT HAS WITHDRAWN RS.17 49 000/- OUT OF INCOME DECLARED IN THE BLOCK PERIOD. RS.15 LACS IS WITHDRAWN BY THE ASSESSEE FROM THE CAPITAL ACCOUNT WITH BANSI FINANCE RS.85 000/- AGAIN FROM CAPITAL ACCOUNT AND RS.1 64 000/- BY SHRI H.T. THAKKAR TOTALING TO RS.17 49 000/- WHICH WOUL D COVER THE INVESTMENT IN NEW HOUSE AT SHAKUNTAL. THE A.O. WILL VERIFY THE SE WITHDRAWALS AND IF THEY ARE FOUND AS CLAIMED THEN INVESTMENT IN SHAKU NTAL SHOULD BE TREATED AS EXPLAINED. EVEN OTHERWISE TELESCOPING EFFECT OF INV ESTMENT AGAINST INCOME SHOULD BE GIVEN FOR CORRECT ASSESSMENT OF UNDISCLOS ED INCOME. ACCORDINGLY THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED BU T FOR STATISTICAL PURPOSES. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 53 93. THE NEXT GROUND RELATES TO UNACCOUNTED ADVANCE RS.19 68 544/- WHICH IS DISCUSSED BY THE A.O. IN PARAGRAPH 14 OF PAGE 24 OF HIS ORDER. IN THE BLOCK RETURN FILED BY THE ASSESSEE IT HAS DECLARED UNACCO UNTED INVESTMENT IN THE FORM OF CASH ADVANCES AT RS.19 68 544/-. THIS WAS C ONSIDERED AS UNDISCLOSED INVESTMENT BY THE A.O. AND ADDED IN THE BLOCK RETUR N. THE LD. C.I.T.(A) REJECTED THE ARGUMENT OF THE ASSESSEE THAT THIS SUM WAS DECLARED ON THE ASSET SIDE OF THE UNDISCLOSED INCOME AND FORMED PART OF R S.50 07 611/-. BEFORE US LD. A. R. SUBMITTED THAT ASSESSEE HAD SHOWN ASSETS TO THE EXTENT OF RS.65 04 245/- IN BANSI FINANCE WHOSE DETAILS ARE G IVEN ABOVE. A SUM OF RS.19 68 544/- IS SHOWN AS ADVANCES AGAINST CHEQUES . SINCE THE BLOCK ASSESSMENT IS MADE ON THE BASIS OF HIGHER OF ASSETS OR INCOME THEN TELESCOPING EFFECT SHOULD BE GIVEN. 94. WE HAVE CONSIDERED THE SUBMISSION AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW THE A.O. WILL VER IFY THE INVESTMENT OF RS.65 04 245/- AS CLAIMED BY THE ASSESSEE AND SEE H OW FAR IT IS COVERED BY THE UNDISCLOSED INCOME. SINCE THE ASSESSMENT IS MAD E ON THE BASIS OF UNDISCLOSED INCOME SEPARATE ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT SHOULD NOT BE MADE UNLESS NOT COVERED BY UNDISCLOSE D INCOME DECLARED IN THE RETURN. IN THE SUM OF RS.65 04 245/- ASSESSEES SHARE IS ONLY RS.24 25 000/- BEING LIABILITY IN THE BALANCE SHEET OF BANSI FINANCE AS ARGUED BY LD. A.R. THIS IS ACCORDINGLY COVERED BY T HE DISCLOSURE OF INCOME OF RS.37 32 000/- AND THEREFORE NO SEPARATE ADDITI ON IS REQUIRED TO BE MADE FOR THIS AMOUNT. THE GROUND IS DISPOSED OF ACCORDIN GLY. 95. THE NEXT ISSUE RELATES TO ADDITION OF RS.14 41 128/- BEING OTHER ADVANCES. AS PER THE A.O. SINCE ASSESSEE HAS DISCLO SED INVESTMENT OF IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 54 RS.14 41 128/- AS UNDISCLOSED ASSETS HE MADE THE A DDITION FOR THE ASSESSMENT YEAR 1999-2000 IN THE COMPUTATION OF INC OME FOR BLOCK PERIOD. THE LD. C.I.T.(A) DISMISSED THE GROUND OF THE ASSES SEE ON THE BASIS THAT ASSESSEE HAS HIMSELF DECLARED THIS AMOUNT AS UNDISC LOSED ASSET. 96. THE LD. A.R. EXPLAINED THAT SUM OF RS.15 44 375 /- ARE RESIDUE ADVANCES SHOWN IN TOTAL ASSET OF BANSI FINANCE AT R S.65 04 245/- AND THE SUM OF RS.14 41 128/- IS COVERED THEREIN. THEREFORE NO SEPARATE ADDITION SHOULD BE MADE IN THE CASE OF THE ASSESSEE. IN ANY CASE IT WAS PRAYED THAT TELESCOPING EFFECT SHOULD BE GIVEN. 97. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. FOR THE REASONS DISCUSSED WHILE DISPOSIN G OFF GROUND NO.2 WE DIRECT THAT TELESCOPING ADJUSTMENT OF ASSETS AGAINS T INCOME SHOULD BE GIVEN AND ONCE BANSI FINANCE HAS SHOWN ADVANCES OF RS.15 44 375/- THEN ADVANCE OF RS.14 41 128/- SHOULD BE DEEMED TO BE COVERED TH EREIN UNLESS IT IS SHOWN THAT THEY ARE DIFFERENT. NO SUCH MATERIAL IS BROUG HT BEFORE US AND THEREFORE NO SEPARATE ADDITION IS REQUIRED TO BE MADE. IT HAS TO BE ONLY SEEN THAT THERE IS NO CASE OF UNDISCLOSED ASSETS WHICH IS NOT COVER ED BY INCOME DECLARED BY THE ASSESSEE. THE A.O. WILL THUS ALLOW TELESCOPING ADJUSTMENT AND ACCORDINGLY NO SEPARATE ADDITION SHOULD BE MADE. TH IS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 98. THE 4 TH ISSUE IS REGARDING UNDISCLOSED PEAK OF RS.10 43 81 3/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. FOUND UNACCOUNTED INVESTMENT OF RS.1 39 60 258/-. HE REFERRED TO ANNE XURE A-2 SEIZED FROM THE OFFICE PREMISES AT 148/3 KABUTAR KHANA WHICH W AS ALSO A COMBINED IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 55 CASH BOOK WITH BANI FINANCE. HE ANALYSED THIS ANNEX URE AND FOUND THE FOLLOWING MOVEMENT OF FUNDS IN BANSI FINANCE AS UND ER:- CATEGORY. DEPOSIT WITHDRAWAL. IN HOW NUMBER. ASHOK 45000 50000 - 5000 2 BANK 0 500000 -500000 1 HT 3727977 1648133 2079844 17 OTHER PARTIES 11749283 12519130 -769847 146 SHAKUNTAL 25000 0 25 000 1 15547260 14717263 829997 99. IT SHOWED ADVANCE OF RS.1 17 49 283/- TO OTHER PARTIES AND ALSO AS CASH LOAN AND ASSESSEE WAS ASKED TO EXPLAIN THE SOU RCE THEREOF. IT WAS EXPLAINED TO THE A.O. THAT SOURCE OF THESE ADVANCES IS COVERED UP IN THE MONEY RECEIPT FROM H.T. THAKKAR AND MONEY INVESTED BY THE ASSESSEE FROM UNDISCLOSED SOURCE. THUS ASSESSEE WANTED THE TELESC OPING EFFECT OF SUCH AMOUNTS AGAINST INVESTMENT. THE A. O. DID NOT ACCE PT THE EXPLANATION AND TREATED THE SUM OF RS.1 25 90 130/- AS ASSESSEES U NACCOUNTED INCOME BEING UNEXPLAINED CASH CREDIT. 100. IN ADDITION HE IDENTIFIED SUM OF RS.14 41 128 /- AS ADVANCE TO OTHER PARTIES RESULTING IN TOTAL UNACCOUNTED ADVANCE OF R S.1 39 60 258/-. HE WORKED OUT INTEREST THEREON @ 18% WHICH ASSESSEE CO ULD HAVE EARNED AND WAS CALCULATED AT RS.13 86 125/-. THE TWO SUMS WERE ACCORDINGLY ADDED IN THE UNDISCLOSED INCOME. WHEN MATTER CAME UP BEFORE THE LD. C.I.T. (A) HE WORKED OUT PEAK OF DEBIT AND CREDIT IN RESPECT OF D EPOSIT AND WITHDRAWAL IN BANSI FINANCE AT RS.18 02 697/- AS UNDER:- IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 56 DATE. CONCERN DEBIT CREDIT PEAK CREDIT 9 SEP. BANSI 1692950 915253 (+) 777697 10-SEP. BANSI 451627 1126727 (+) 102597 11-SEP BANSI 484500 10000 (+) 577097 12-SEP BANSI 1309343 1636943 (+) 249497 14-SEP. BANSI 795150 258000 (+) 786647 15-SEP. BANSI 2558000 1541950 (+) 1802697 16-SEP. BANSI 223840 299500 (+) 1727037 17-SEP. BANSI 1360000 2093040 (+) 993997 19-SEP. BANSI 5910850 6110850 (+) 793997 21-SEP. BANSI 901000 825000 (+) 929997 101. WHEN THE MATTER WAS SENT TO THE A.O. FOR HIS C OMMENTS NO MISTAKE WAS POINTED OUT BY HIM AND ACCORDINGLY THE LD. C.I. T.(A) RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN GLASS LIN E EQUIPMENT CO. LTD. VS. CIT 255 ITR 455 HELD THAT ONLY PEAK FIGURE SHOU LD BE ADOPTED AS UNDISCLOSED. THE LD. C.I.T.(A) FURTHER WORKED OUT T HAT A SUM OF RS.7 56 884/- HAS BEEN RECEIVED AS FUND TRANSFER FR OM ONE SHRI H. T. THAKKAR RESULTING IN UNCOVERED CREDIT OF RS.10 45 8 13/-. IN THIS REGARD THE LD. C.I.T.(A) HELD AS UNDER :- I HAVE VERIFIED THE VARIOUS ENTRIES BOTH DEBIT AND CREDIT WITH RESPECTIVE DATES AND FIND THAT THE TOTAL AMOUNT REC EIVED FROM HT ACCOUNT (INDIVIDUAL) IS 13 94 177/- WHEREAS TOTAL C ASH OF RS.6 37 290/- HAVE ALSO BEEN RETURNED BACK TO HIS ACCOUNT. IN OTH ER WORDS ANY AMOUNT TRANSFERRED FROM H.T. ACCOUNT IS RS.13 94 17 7/- AND AMOUNT PAID BACK BY CASH UPTO 15-9 IS RS.6 37 293/-. THUS NET FUND TRANSFERRED FROM H.T. ACCOUNT UPTO 15 TH SEPTEMBER RS.7 56 884/- FOR WHICH THE APPELLANT GETS BENEFIT THE AMOUNT BEING ALREADY OFFERED IN HT ACCOUNT SEPARATELY. THE DIFFERENCE OF RS.10 45 813/- 91802697 0 756884) THEREFORE IS TREATED AS UNDISCLOSED PEAK C REDIT NOT RELATED TO INCOME ALREADY DISCLOSED. THIS WORKING HAS BEEN DON E IN THE PRESENCE OF SHRI D.P. POPAT APPELLANTS COUNSEL AND ACCEPT ED BY HIM WITH REFERENCE TO CHART SUBMITTED AND ENTRIES IN ANNEXUR E A/2. ACCORDINGLY HAVING REGARD TO THE ABOVE FACTUAL POS ITION ADDITION OF RS.10 45 813/- IS UPHELD OUT OF THE ADDITION MADE R S.1 39 60 258/-. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 57 102. THE LD. C.I.T.(A) DELETED THE ADDITION IN RESP ECT OF INTEREST CALCULATED BY THE A.O. AT RS.13 86 125/- ON THE GROUND THAT TH ERE IS NO MATERIAL FOUND DURING THE COURSE OF THE SEARCH THAT ASSESSEE HAS E ARNED ANY INTEREST THEREON. HE DELETED THE ADDITION BY OBSERVING AS UNDER:- THE ASSESSING OFFICER HAS ALSO ESTIMATED INTEREST INCOME AT RS.11 26 722/- BEING 18% OF RS.1 25 19 130/- WORKED OUT AT RS.11 26 722/- IN ADDITION TO RS.2 59 403/- ON THE DISCLOSED INVESTMENT /ADVANCES OF RS.14 41 128/-. THE TOTAL A DDITION MADE ON THIS ACCOUNT IS RS.13 86 125/-.IN THE WRITTEN SUBMI SSION THE APPELLANT HAS STATED THAT NO DEFECT HAS BEEN BROUGHT ON RECOR D OF THE APPELLANT HAVING RECEIVED/EARNED THIS INTEREST. NO REFERENCE TO SEIZED DOCUMENT IN THIS RESPECT OR ANY ENTRY FOUND IN THE SEIZED PA PERS HAVE BEEN POINTED OUT BY THE ASSESSING OFFICER. HAVING REGARD TO THE RATIO OF THE SUPREME COURT IN THE CASE OF GODHRA ELECTRICITY COM PANY 225 ITR 746 THE ONUS IN THIS RESPECT IS CAST UPON THE ASSE SSING OFFICER. IN THE ABSENCE OF THE SAME THIS ESTIMATE CANNOT BE UPHELD MORE SO IN THE CASE OF THE BLOCK ASSESSMENT ORDER. THIS ADDITION I S ACCORDINGLY DIRECTED TO BE DELETED. 103. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE LD. A.R. DID NOT EXACTLY CONTEST .TH E WORKING DONE BY THE LD. C.I.T.(A) BUT SUBMITTED THAT TELESCOPING EFFECT AGA INST OTHER INCOME DECLARED BY THE ASSESSEE SHOULD BE GIVEN. THE LD. D.R. ON TH E OTHER HAND SUBMITTED THAT ASSESSEE HAS NOT BEEN ABLE TO CO -RELATE THE C REDITS WITH THE WITHDRAWALS. 104. SINCE WORKING DONE BY THE LD. C.I.T.( A) WAS G IVEN TO THE A.O. FOR HIS COMMENTS AND THE A.O. COULD NOT FOUND ANY DEFEC T IN THE WORKING OUT OF THE PEAK NO INTERFERENCE IS CALLED FOR ON THIS COU NT. THE CLAIM OF ASSESSEE THAT TELESCOPING BENEFIT SHOULD BE GIVEN IS JUSTIFI ED BECAUSE THE ASSESSMENT IS BEING DONE ON ASSET BASIS. THUS FOR GIVING TELESCOP ING EFFECT WE RESTORE THE MATTER TO THE FILE OF THE A.O. THIS GROUND OF THE ASSESSEE IS ALLOWED BUT FOR STATISTICAL PURPOSES. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 58 105. GRLOUND NO.5 RELATES TO SUSTAINING ADDITION ON ACCOUNT OF JEWELLERY OF RS.1 68 000/-. 106. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY P ERUSED THE MATERIAL AVAILABLE ON RECORD.. WE FIND THAT THE ASSESSEE HA S ALREADY DISCLOSED INVESTMENT OF RS.1 68 000/- IN RESPECT OF JEWELLERY IN THE ASSETS. THE JEWELLERY WAS FOUND FROM THE RESIDENCE BUT WAS NOT ACCEPTED AS IT WAS EXPLAINED THAT IT BELONGED TO SMT. NIRUBEN A. TEJA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE HAS DENIED THAT JEW ELLERY BELONGED TO HIS WIFE BUT LATER A DIFFERENT STATEMENT WAS GIVEN BECA USE OF WHICH THE LD. C.I.T.(A) HAD CONFIRMED THE ADDITION. 107. BEFORE US THE LD. A. R. HAD ONLY CLAIMED THAT TELESCOPING EFFECT SHOULD BE GIVEN. SINCE THE ASSESSMENT IS BEING DONE ON THE BASIS OF NET ASSET BASIS AMOUNT OF JEWELLERY OF RS.1 68 000/- SO FOUND SHOUL D BE INCLUDED AND TELESCOPING ADJUSTMENT SHOULD BE GIVEN AGAINST UNDI SCLOSED INCOME. IN OTHER WORDS DOUBLE ADDITION SHOULD NOT BE MADE (1) ON ACC OUNT OF ASSET AND THE OTHER ON ACCOUNT OF INCOME. WITH THESE DIRECTIONS T HIS GROUND OF THE ASSESSEE IS ALLOWED BUT FOR STATISTICAL PURPOSES. 108. GROUND NO.6 AND 7 RELATES TO INVESTMENT IN FIX ED DEPOSITS/KISHANVIKAS PATRA AT RS. 55 000/- AND OTHE R INVESTMENT OF RS.3 60 845/-. THESE ASSETS WERE INCLUDED IN THE DI SCLOSURE MADE BY THE ASSESSEE BUT IN CASH FLOW STATEMENT. LD. C..I.T.(A) HAD DISMISSED THE GROUNDS RELATING TO THESE ADDITIONS ON THE BASIS TH AT ASSESSEE HAD HIMSELF DECLARED THEM IN THE RETURN. THE LD. A.R. PLEADED T HAT DOUBLE ADDITION IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 59 SHOULD NOT BE MADE OUT FOR INCOME AND OTHER FOR ASS ETS AND TELESCOPING ADJUSTMENT SHOULD BE GIVEN. 109. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT ASSESSEE HAS NOT BEEN ABLE ESTABLISH CO-RELATION BETWEEN THE INCOME EARNE D AND ASSET ACQUIRED. AFTER HEARING THE PARTIES WE ALLOW THE BENEFIT OF T ELESCOPING IN THE SENSE THAT HIGHER OF THE TWO INCOME DECLARED OR ASSET FOUND SH OULD BE ASSESSED BUT NOT BOTH INCOME FOUND TO HAVE BEEN EARNED DURING BLOCK PERIOD SHOULD BE TREATED AS INVESTED IN THE ASSET ACQUIRED DURING TH E BLOCK PERIOD. ACCORDINGLY GROUND NO.6 AND 7 ARE ALLOWED FOR STAT ISTICAL PURPOSES. 110. GROUND NO.8 RELATES TO ADVANCE TO SHRI R.K. TH AKKAR OF RS.2 LACS. THE ASSESSEE HAD SHOWN THIS AMOUNT AS ASSET/INVESTMENT. THE RELATED ISSUE WAS NOT PRESSED BEFORE THE LD. C.I.T.(A). IT WAS ARGUED BEFORE US THAT THIS SUM OF RS.2 LACS IS PART OF THE TOTAL ASSET OF RS.65 04 24 5/- AND THAT DOUBLE ADDITION SHOULD NOT BE MADE ONE FOR INCOME AND OTHER FOR ASS ET. AS OBSERVED IN SIMILAR GROUND ABOVE WE DIRECT THE A.O. TO GIVE THE TELESCOPING EFFECT WHILE WORKING OUT THE UNDISCLOSED INCOME ON ONE HAND AND UNDISCLOSED ASSET ON THE OTHER AND HIGHER OF THE TWO SHOULD BE TREATED A S UNDISCLOSED INCOME OF THE ASSESSEE. IN ANY CASE UNDISCLOSED INCOME OF T HE ASSESSEE WORKED OUT AFTER GIVING TELESCOPING EFFECT SHOULD NOT GO BELOW THE INCOME DECLARED IN THE BLOCK RETURN. WE RESTORE THIS ISSUE TO THE FIL E OF THE A.O. 111. AS A RESULT APPEAL FILED BY THE ASSESSEE IS PA RTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 60 IT(SS)A NO.354/AHD/2003 (RE: DAHYALAL I. THAKKAR) ( REVENUES APPEAL) 112. THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOLLOWING GROUNDS:- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING AN AMOUNT OF RS.14 51 000/- BEING ADDITION ON ACCOUNT OF UNAC COUNTED INVESTMENT IN M/S BANSI FINANCE. (2) THE LD. CIT(A) HAS ALSO ERRED IN LAW AND ON FACTS I N DELETING AN ADDITION OF RS.1 07 75 371/- ON ACCOUNT OF UNACCOUN TED INCOME AND RS.10 85 130/- ON ACCOUNT OF UNACCOUNTED INVEST MENT PERTAINING TO ASSESSEES BHANG BUSINESS. (3) THE LD. CIT(A) HAS ALSO ERRED IN LAW AND ON FACTS I N DELETING AN ADDITION OF RS.2 05 005/- MADE ON ACCOUNT OF UNEXPL AINED INVESTMENT IN JEWELLERY AND SILVER ARTICLES POSSESS ED BY THE ASSESSEE. 113. DAHYALAL ISHWERLAL THAKKAR HAS BEEN THE EX-PAR TNER OF M/S BANSI FINANCE WHICH HAS BEEN TAKEN OVER BY SHRI ASHOKKUMA R T. THAKKAR. IN RESPONSE TO 158BC NOTICE ASSESSEE HAD FILED BLOCK R ETURN DECLARING AN INCOME OF RS.17.51 LACS. THE ASSESSMENT WAS FINALLY COMPLETED ON AN UNDISCLOSED INCOME AT RS.1 44 75 700/-. 114. THE FACTS RELATING TO GROUND NO.1 HAVE BEEN DI SCUSSED IN THE CASE OF M/S BANSI FINANCE AS ABOVE. IN BRIEF ASSESSEE WAS A PARTNER IN THE FIRM OF M/S BANSI FINANCE. HE JOINED THE FIRM ON 14.7.1997 AND RETIRED THEREFROM ON 31.8.1998. M/S BANSI FINANCE HAD DISCLOSED UNACCOUN TED ASSETS OF RS.42 51 000/. DETAILS AS PER BALANCE SHEET WERE DI SCLOSED AS UNDER :- IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 61 BALANCE SHEET RS.23 25 000 ASHOKUMAR TEJARAM THAKKER CAPITAL A/C RS.6 15 000 OFFICE A/C 168/3 RS.19 26 000 DAHYALAL ISHWERLAL THAKKER CAPITAL A/C RS 10 85 000 RS.6 90 464 RS.1 50 000 RS.17 10 536 BHAIYAJI A/C BETTING PARTY A/C R.K. THAKKER A/C CASH & INVESTMENT RS.42 51 000 RS.42 51 000 SUBSEQUENTLY IT WAS CLAIMED THAT THERE WAS A MISTAK E IN PREPARATION OF CASH FLOW STATEMENT BY SHRI C. S. PARIKH THE CLERK OF M /S D. P. POPAT TAX CONSULTANT. BY MISTAKE HE HAD SHOWN A SUM OF RS.14. 51 LACS CASH INTRODUCED ON 14.7.1997. THIS WAS CONFIRMED THROUGH AFFIDAVIT BY THE CLERK SHRI C. S. PARIKH AND ALSO BY THE ASSESSEE TO THE EFFECT THAT HE HAD NOT INVESTED ANY UNACCOUNTED SUM IN M/S BANSI FINANCE. CONSEQUENTLY REVISED BALANCE SHEET OF BANSI FINANCE WAS FILED SHOWING TOTAL ASSET OF R S.28 LACS IN WHICH THE CAPITAL OF DAHYALAL I. THAKKER WAS ONLY OF RS.4.75 LACS AND NOT RS.19 26 000/- AS UNDER :- BALANCE SHEET RS.23 25 000 ASHOKKUMAR TEJARAM THAKKER CAPITAL A/C RS.6 15 000/- OFFICE A/C 168/3 RS.4 75 000 DAHYALAL ISHWERLAL THAKKER CAPITAL A/C RS.10 85 000 BHAIYAJI A/C RS.6 90 464 BETTING PARTY A/C RS.1 50 000 R.K. THAKKER A/C RS.2 59 536 CASH & INVESTMENT RS.28 00 000 RS.28 00 000 IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 62 THE AO HAD HOWEVER NOT AGREED WITH THE ABOVE SUBM ISSIONS AND HELD THAT ASSESSEE HAD IN FACT MADE INVESTMENT OF A SUM OF RS .14.51 LACS IN THE FIRM AS ORIGINALLY CLAIMED IN THE CASH FLOW STATEMENT AS WE LL AS IN THE BALANCE SHEET FILED. THE LD. CIT(A) DELETED THE ADDITION ON THE G ROUND THAT THIS AMOUNT WOULD BE TAXED TWICE ONCE IN THE HANDS OF BANSI FIN ANCE BY WAY OF INVESTMENT IN VARIOUS ASSETS AND AGAIN IN THE HANDS OF DAHYABHAI THAKKAR AS INVESTMENT IN THE PARTNERSHIP FIRM M/S BANSI FINANC E. ONCE THE AMOUNT IS DECIDED TO BE TAXED IN THE HANDS OF THE FIRM THEN T HERE IS NO REASON FOR TAXING THE SAME AGAIN IN THE HANDS OF THE ASSESSEE AS IT I S RESULTING INTO DOUBLE TAXATION. 115. THE LD. DR SUBMITTED THAT IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF M/S BANSI FINANCE UNDISCLOSED INCOME OF RS.25 LACS WAS DECLARED AGAINST WHICH UNACCOUNTED ASSETS OF RS.42.51 LACS W ERE SHOWN (CAPITAL ACCOUNT OF ASSESSEE CLEARLY SHOWED INTRODUCTION OF CASH OF RS.14.51 LACS ON 14.6.1997) WHICH IS NOW SOUGHT TO BE RETRACTED. THE RE IS NO REASON TO DELETE THE ADDITION. 116. THE LD. AR ON THE OTHER HAND SUBMITTED THAT EV EN DURING THE COURSE OF STATEMENT UNDER SECTION 132(4) IN REPLY TO QUESTION NO.5 ON 22.9.1998 THE ASSESSEE HAD SUBMITTED THAT HE WAS ONLY A WORKING P ARTNER AND HAD NOT INVESTED ANY CAPITAL. FURTHER IN NONE OF THE SEIZED MATERIAL AT M/S BANSI FINANCE OR AT THE RESIDENCE THERE IS ANY INDICATION OF ANY INVESTMENT OF RS.14.51 LACS IN M/S BANSI FINANCE. THE AO IN FACT REFUSED TO EXAMINE THE IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 63 EVIDENCE IN THE FORM OF AFFIDAVITS FILED BY SHRI C. S. PARIKH AND THE ASSESSEE. THEREFORE THE ADDITION WAS REALLY NOT CALLED FOR. 117. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN OUR CO NSIDERED VIEW THE ISSUE OF RS.14.51 LACS HAS BEEN RESTORED IN THE CASE OF M /S BANSI FINANCE TO THE FILE OF AO. SINCE THE ISSUE IS THE SAME WE RESTORE THIS ALSO TO HIS FILE FOR DECIDING IT ALONG WITH CASE OF M/S BANSI FINANCE. I N ANY CASE NO MATERIAL IS FOUND IN THE SEARCH RELATING TO INVESTMENT OF THIS SUM. IT WAS ALSO NOT DECLARED IN THE BLOCK RETURN AS INCOME BY THE FIRM OR BY THE PARTNER I.E. THE ASSESSEE THEREFORE THIS ADDITION DOES NOT BECOME AUTOMATIC. IN ANY CASE ONCE ASSESSEE HAS EXPLAINED THAT THERE WAS A MISTAK E AND AFFIDAVITS HAVE BEEN FILED WHICH HAVE NOT BEEN EXAMINED BY THE AO THE QUESTION OF ADDITION AS SUCH WOULD NOT ARISE. BUT IN ANY CASE T HE ISSUE IN THE CASE OF FIRM IS RESTORED THEREFORE FOR THE CONVENIENCE OF THE AO WE ARE RESTORING THIS MATTER TO HIS FILE. IF BY DELETING THIS AMOUNT UNDI SCLOSED INCOME COMES BELOW DECLARED INCOME IN THE BLOCK RETURN THEN SUCH REDUCTION HAS TO BE IGNORED AND INCOME DECLARED IN THE BLOCK RETURN HAS TO BE MAINTAINED. AS A RESULT THIS GROUND OF REVENUE IS ALLOWED BUT FOR S TATISTICAL PURPOSES. 118. GROUND NO.2 RELATES TO DELETING THE ADDITION O F RS.1 07 75 375/- ON ACCOUNT OF UNACCOUNTED INCOME AND RS.10 85 130/- ON ACCOUNT OF UNACCOUNTED INVESTMENT. 119. DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDI NGS THE ASSESSING OFFICER FOUND CERTAIN DOCUMENTS SHOWING TRADING BY THE ASSESSEE IN BHANG AND POPPY AS PER THE LOOSE PAPERS 1 TO 5 OF ANNEXUR E A-5 SEIZED FROM S-4 HEERA PANNA APARTMENT NEAR MANAGEMENT ENCLAVE BEI NG THE RESIDENCE OF IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 64 THE ASSESSEE. TRADING ACCOUNT PURCHASE ACCOUNT PR OFIT AND LOSS ACCOUNT AND BALANCE SHEET UPTO 31-8-1996 RELATING TO TRANSACTIO N IN BHANG AND POPPY WERE FOUND. IN MAL KHATA ACCOUNT GROSS PROFIT WAS S HOWN AT RS.1 07 67 998/- WHEREAS IN BHANG ACCOUNT GROSS PRO FIT WAS RS.83 301/-. IN MAL KHATA ACCOUNT AFTER REDUCING VARIOUS EXPENSES PROFIT WAS SHOWN AT RS.13 94 600/-. THE LD. AO ALSO REFERRED TO CERTAIN NOTINGS ON THE REVERSE OF PAGE-2 OF ANNEXURE A-5 WHICH INDICATED THE NAMES OF DAHYABHAI ASHOKBHAI AND BHABHAR PARTY. IN RESPECT OF THESE D OCUMENTS THE ASSESSEE FURNISHED THE EXPLANATION THAT THESE DOCUMENTS ARE ZEROX COPIES OF TRIAL BALANCE AND PROFIT AND LOSS ACCOUNT OF A BUSINESS W HICH DID NOT BELONG TO HIM BUT BELONGED TO SOME OTHER PARTY. THEY PERTAIN ED TO SOME THAKEDAR OF BHANG & POPPY WHO BELONGED TO RAJASTHAN. THE A.O. D ID NOT ACCEPT THIS DISOWNING OF THE DOCUMENTS BY THE ASSESSEE AND ON T HE BASIS OF FOLLOWING REASONING HE TREATED THE BUSINESS IN BHANG AND POPP Y AS BELONGING TO THE ASSESSEE. THE REASONS ARE AS UNDER:- (I) THESE DOCUMENTS FOUND FROM THE PREM ISE OF THE ASSESSEE DURING THE COURSE OF SEARCH. THESE THEREFORE BELONG TO ASS ESSEE UNLESS PROVED TO BE BELONGING TO SOME OTHER PARTY. THE ASS ESSEE HAS FAILED TO DISCHARGE HIS ONUS. THEREFORE IT IS CLEA R THAT THESE PAPERS ARE RELATED TO HIS BUSINESS ONLY. (II) IN THE SAME ANNEXURE PAGES 14 T O 18 ARE BLANK HEADS OF DIFFERENT CONCERNS. A PERUSAL OF THE SAME REVEAL THAT THESE P AGES ARE RELATED TO ASSESSEE ONLY. FROM THE PRINTING ON THES E LETTER HEADS IT IS CLEAR THAT THESE ARE FOR ONE PERSON ONLY. ON THE SE LETTER HEADS TELEPHONE NUMBER PRINTED ARE THAT OF THE ASSESSEE. IT IS THEREFORE CLEAR THAT THESE ARE RELATED TO ASSESSEE ONLY. IT I S ALSO CLEAR THAT THE ASSESSEE HAS INVOLVED IN THE BUSINESS OF POST D ODA ON LARGE SCALE. SUCH CONCERNS ARE NOT ASSESSED TO TAX. THE A SSESSEES INVOLVEMENT IN LARGE SCALE TRADING OF POPPY BHANG I S ESTABLISHED BEYOND DOUBT. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 65 (III) IN THE PROFIT AND LOSS ACCOUNT AND IN THE BALANCE SHEET IN THESE PAGES THE ACCOUNT OF ASSESSEE IS ALSO APPEARED. THE DETAILED BREAK UP OF THE ACCOUNT OF THE ASSESSEE IS APPEARED ON TH E REVERSE SIDE OF THE PAGE NO.2 7 3 WHICH IS IN THE HAND WRITING OF THE ASSESSEE. THIS ESTABLISHES BEYOND DOUBT THAT THE TRADING ACCO UNT IS THAT OF ASSESSEES BUSINESS ONLY. (IV) A BREAK UP OF ACCOUNT OF THE BHABHAR PARTY APPEA RS ON THE REVERSE SIDE OF THE PAGE NO.2 & 3. THIS IS ALSO IN THE HANDWRITING OF THE ASSESSEE. (V) THESE PAGES ARE RELATED TO POPPY AND BHANG WHICH IS THE CONCEALED TRADE OF ASSESSEE. (VI) PAGE NO.1 IS IN GUJARATI IN THE HANDWRITI NG OF THE ASSESSEE WHICH ALSO ESTABLISHED THAT ALL THESE PAGES ARE RELATED T O ASSESSEE. ON THESE PAGES OF ACCOUNT OF DIFFERENT PARTIES OF GUJA RATS ARE APPEARED. (VII) IT IS MOST RELEVANT TO NOTE THAT TH E ASSESSEE HIMSELF HAS DISCLOSED AN INCOME OF RS.1 65 000/- AS CONCEALED INCOME BASED U PON THESE PAGES. THUS HE HIMSELF ACCEPT THE OWNERSHIP OF THE SE PAGES. 120. EXAMINATION OF PROFIT AND LOSS ACCOUNT AS PER SEIZED DOCUMENT REVEALED CERTAIN EXPENSES WHICH THE A.O. CONSIDERED AS DISALLOWABLE AND FINALLY WORKED OUT THE UNACCOUNTED INCOME AT RS.1 0 7 75 371/- AND INVESTMENT ALSO UNACCOUNTED AT RS.10 85 130/- BO TH TAXABLE IN THE ASSESSMENT YEAR 1997-98 IN THE BLOCK PERIOD. 121 THE LD. C.I.T.(A) OBTAINED WRITTEN SUBMISSIONS FROM THE ASSESSEE AND FORWARDED THEM TO THE A.O. FOR HIS COMMENTS. IN THE WRITTEN SUBMISSIONS IT WAS EXPLAINED AS UNDER:- IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 66 (I) IT MAY BE POINTED OUT THAT THE LOOSE PAPERS DO NOT BELONG TO THE ASSESSEE BUT THESE WERE LEFT BEHIND BY SHRI RAM VAK TAJI MEENA OF SHYAMPURA DIST. CHITORGADH. IN SUPPORT OF THE ABOV E VARIOUS DOCUMENTS (ANNEXURE-6) ARE ATTACHED HEREWITH. HE HA S SWORN IN AN AFFIDAVIT WHICH CONFIRM THIS FACT A COPY THEREOF I S ENCLOSED (ANNEXURE-7). THUS IT IS VERY CLEAR THAT THE PROFIT AND LOSS ACC OUNT AND THE BALANCE SHEET FOUND FROM THE ASSESSEES PREMISES DURING THE COURSE OF SEARCH REALLY DO NOT BELONG TO THE ASSESSEE. THIS FACT WAS ALSO POINTED OUT DURING THE COURSE OF SEARCH ITSELF IN THE STATEMENT RECORDED BY THE ASSESSING OFFICER BEFORE QUESTION NO.5 OF HIS STATE MENT. A COGNIZANCE OF THE SAME HAS ALREADY BEEN TAKEN BY TH E ASSESSING OFFICER IN THE ASSESSMENT ORDER ITSELF. THUS WHAT THE ASSESSEE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDING S IN THE FORM OF EVIDENCE TO ESTABLISH THAT THE PAPERS IN QUESTION D O BELONG TO THE ASSESSEE IS NOT AN AFTER THOUGHT AT ALL AS UNDERSTO OD BY THE ASSESSING OFFICER. (II) WITHOUT PREJUDICE TO THE ABOVE IT MAY ALSO BE POINTED OUT THAT ON A SIMPLE PERUSAL OF THE DOCUMENTS IN QUESTION FOUND A ND SEIZED WOULD SHOW THE FOLLOWING: THE BALANCE SHEET FOUND FOR THE PERIOD ENDING 31.8 .1996 AND SEIZED BY THE AUTHORISED OFFICER ITSELF SHOWS THAT THE ASS ESSEE SHRI DAHYABHAI IS SHOWN AS A DEBTOR TO THE TUNE OF RS.1 0 90 500/-. HAD THE PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET B ELONGED GTO THE ASSESSEE THIS NAME WOULD NOT APPEAR IN THE BALANCE SHEET AS A DEBTOR AS IS REFLECTED IN THE SEIZED MATERIAL. THIS ALSO ESTABLISHES THAT THE DOCUMENT FOUND DOES NOT BELONG TO THE ASSESSEE MORE PARTICULARLY THE PROFIT AND LOSS ACCOUNT FOUND DURING THE COURSE OF SEARCH. THUS NO PART OF THE INCOME DETERMINED BY THE ASSESSING OFFI CER AT RS.1 07 75 371/- BELONGS TO THE ASSESSEE TO BE THE INCOME EARNED FROM BHANG BUSINESS. THE ENTIRE BUSINESS REFLECTED IN THE SEIZED DOCUMENT REALLY DO NOT BELONG TO THE ASSESSEE AND THE ADDITI ON IS UNCALLED FOR. IT SIMPLY DESERVES TO BE DELETED. (III) IT MAY BE SEEN THAT THE PAPERS REFERRED TO AR E LOOSE PAPERS. HENCE LOOSE PAPERS COLLECTED (MAY BE FROM DIFFERENT PALCE S IN HOUSES) CANNOT IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 67 SUGGEST THAT EACH LOOSE PAPER IS REPRESENTING ONE T HING AND ON THAT BASIS IT CANNOT BE PRESUMED THAT IMPUGNED PAPERS BE LONG TO APPELLANT. THUS LETTER HEADS FOUND DOES NOT ESTABLISH THAT TH E PAPERS REFERRED TO BY ASSESSING OFFICER IS ALSO FROM THE APPELLANT. FU RTHER LETTER HEARS ARE BLANK. THE ASSESSING OFFICERS OBSERVATION THAT BECAUSE OF SUCH LETTER HEADS ARE FOUND APPELLANT IS ENGAGED LARGE SCALE BUSINESS IN BHANG IS THUS ONLY HIS PRESUMPTION. (IV) THE ASSESSING OFFICERS OBSERVATION THAT REVER SE OF PAGE-2 AND 3 IS APPELLANTS HANDWRITING IS ALSO ONLY PRESUMPTION WH ICH IS NOT ESTABLISHED. SAME WAY PAGE-1 IS ALSO STATED BY HIM TO BE IN APPELLANTS HANDWRITING. HERE IT MAY BE NOTED THAT PAGE-1 IS DIFFERENT HANDWRITING THAN REVERSE OF PAGE 2 & 3 YET ASSESSIN G OFFICER HAS PRESUMED ALL 3 IN HANDWRITING OF APPELLANT. (V) MERELY BECAUSE OF APPELLANT HAD MADE DISCLOSUR E OF INCOME IT CANNOT BE PRESUMED THAT IMPUGNED PAPER BELONGS TO THE APPE LLANT AND IT REFLECTS APPELLANTS INCOME. (VI) WITHOUT PREJUDICE TO THE MAIN CONTENTION AS ST ATED ABOVE IT MAY BE POINTED OUT THAT THE ASSESSEE DID PURCHASE BHANG FROM THE AFORESAID SHRI RAMSINGH MEENA. IT MAY BE POINTED OUT THAT THE ASSESSEE HAS EARNED THE PROFIT OF RS.1 65 000/-. ON THE TOTAL SA LES OF BHANG OF RS.12 55 500/- PURCHASED FROM RAMSINGH GAGLAJI MEEN A AS REFLECTED IN THE BALANCE SHEET VIZ. RS.10 90 500 (ANNEXURE A- 5 PAGES 2 TO 5). THIS HAS BEEN INCLUDED IN THE UNDISCLOSED INCOME. A DDITION MAY BE REDUCED TO THE AFORESAID FIGURE. 122. IN RESPECT OF THE ADDITION OF RS.10 85 130/- T HE ASSESSEE HAD EXPLAINED AS UNDER:- 5. REGARDING THE ADDITION OF RS.10 85 130/- BEING THE ALLEGED UNACCOUNTED INVESTMENT FOR THE CIRCULATING CAPITAL FOR THE BHANG BUSINESS AT 10% OF THE TOTAL TURNOVER DESERVES TO B E DELETED FOR THE AFORESAID REASONS ONLY BECAUSE THE PROFIT AND LOSS ACCOUNT ETC. FOUND DO NOT REALLY BELONG TO THE ASSESSEE. THIS ADDITION THEREFORE ALSO DESERVES TO BE DELETED AS THE SAME IS MADE ON PRESU MPTIONS AND ASSUMPTIONS AND NOTHING MORE. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 68 WITHOUT PREJUDICE TO THE ABOVE THERE IS NO JUSTIF ICATION FOR ESTIMATING WORKING CAPITAL AND MAKING SEPARATE ADDITION FOR IT IN VIEW OF THE I.T.A.T. AHMEDABAD DECISION REPORTED IN KISHOR M. TELWALA. A COPY OF WHICH IS ENCLOSED. IN THAT CASE THE DEPARTMENT H AD PREFERRED REFERENCE TO HIGH COURT WHICH WAS ALSO REJECTED. 123. IN REMAND PROCEEDINGS THE ASSESSING OFFICER IS SUED SUMMONS TO SHRI RAMSINGH VEKATAJI MEENA AND ALSO CARRIED INQUIRIES WITH EXCISE OFFICE OF ZALORE UNDER SECTION 133(6). THE EXCISE AUTHORITIES CONFIRMED THAT THEY HAVE ISSUED A LICENSE IN THE NAME OF SHRI RAMSINGH V. ME ENA AND AS PER THE DETAILS GIVEN BY EXCISE OFFICE TENDER WAS PASSED I N THE NAME OF SHRI RAMSINGH V. MEENA FOR RS.1 74 00 000/- WHICH WERE TO BE PAID BY SHRI RAMSINGH V. MEENA TO THE EXCISE DEPARTMENT. THE ASS ESSING OFFICER AFTER CARRYING OUT THE INQUIRIES MADE FOLLOWING REPORT TO LD. C.I.T.(A):- 1. SHRI RAMSINGH VAKATAJI MEENA IS STAYING IN RAJA STHAN BEING AWAY FROM THIS OFFICE ABOUT 500 KM. AND SO POST COM PLIANCE IS MADE. 2. HE HAS CONFIRMED THE FACTS STATED IN THE AFFIDAV IT DATED 22-3- 2002 PRODUCED BY DHAYABHAI ISHWARBHAI THAKKAR IN TH E APPELLATE PROCEEDINGS AND THE COPY THEREOF IS SUBMI TTED ALONG WITH HIS LETTER. 3. HE HAS CONFIRMED THE FACT THAT IN THE YEAR 1996- 97 HE HAS BEEN ALLOTTED LICENSE THEKA IN THE NAME OF SHRI RAMSIN GH VAKATAJI MEENA AND PARTY ALONG WITH OTHERS AND HE HAS CARRIE D OUT THE BUSINESS OF POSHDODA AND BHANG. 4. HE HAS ALSO CONFIRMED THAT DHAYBHAI ISHWARBHAI T HAKKAR HAD BUSINESS DEALING WITH HIM OF ABOUT 10 00 000/- FOR THE RELEVANT PERIOD. 5. HE HAS SIGNED THE LETTER IN THE PRESENCE OF NOTA RY PRAKASHCHANDRA MOGRA AND HAD REQUESTED AND CLAIMED THAT THE SAME TO BE ACCEPTED AS AN EVIDENCE. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 69 124. AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF T HE ASSESSEE AND THE REMAND REPORT OF THE ASSESSING OFFICER LEARNED CIT( A) DELETED THE SAID TWO ADDITIONS BY OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER A ND THE ABOVE SUBMISSIONS. IT IS SEEN THAT THE ENTIRE ADDITION IS MADE ON THE BASIS OF THE SEIZED PAPERS IN RESPECT OF BUSINESS OF BHANG F OUND FROM THE RESIDENCE OF THE APPELLANT . HOWEVER ON PERUSAL OF THE DETAILS FURNISHED IT IS FOUND THAT AT THE TIME OF SEARCH IT SELF THE APPELLANT HAD EXPLAINED TO THE AUTHORIZED OFFICER THAT THOSE PAPE RS DID NOT BELONG TO HIM BUT THE SAME WERE BELONGING TO SOME OTHER PART Y WHO HAD BEEN AT THE RESIDENCE OF THE APPELLANT AND HAD FORGOTTEN IT. THE ASSESSEE HAD BUSINESS OF ABOUT RS.10.90 LACS WITH THE SAID PARTY WHICH IS MENTIONED IN THE SAID LOOSE PAPERS AGAINST THE NAME OF THE APPELLANT AND THE APPELLANT WAS SHOWN AS A DEBTOR IN THE SAID LOOSE PAPERS. THUS THE APPELLANT HAD AT THE VERY INITIAL STAGE D ENIED THE OWNERSHIP OF THESE LOOSE PAPERS. ON THE OTHER HAND ONE SHRI RAMASINGH VAKATAJI MEENA HAS GIVEN HIS AFFIDAVIT CLAIMING THE OWNERSHIP OF SUCH LOOSE PAPERS. THE ASSESSING OFFICER HAD MADE INQUIR IES U/S.131 WITH THE SAID PERSON AND GIVEN HIS REPORT THAT SHRI RAMA SINGH VAKATAJI MEENA HAD CONFIRMED WHAT WAS STATED IN THE AFFIDAVI T. IT IS FURTHER STATED THAT SHRI RAMASINGH VAKATAJI MEENA WAS ALLOT TED LICENSE BY THE EXCISE AUTHORITIES OF ZALORE. FURTHER SHRI RAMASIN GH VAKATAJI MEENA HAD CONFIRMED THAT HE HAD FORGOTTEN THIS PAPE RS AT RESIDENCE OF THE APPELLANT AND THE SAID PAPERS WERE RELATED TO H IS OWN BUSINESS. CONSIDERING ALL THESE FACTS I HOLD THAT THERE IS N O JUSTIFICATION OF HOLDING THAT THESE PAPERS WERE IN RELATING TO THE A PPELLANTS BUSINESS. THEREFORE THERE IS NO JUSTIFICATION FOR MAKING ANY ADDITIONS FOR THE PROFIT AS PER THE SAID PAPERS IN THE HANDS OF THE A PPELLANT. I ALSO APPRECIATED THAT THE AMOUNT KISHTH MENTIONED IN T HE LOOSE PAPERS IS NOT IN THE NATURE OF ANY ILLEGAL PAYMENT AS ALLEGED BY THE ASSESSING OFFICER. KISHTH MEANS EXCISE PAYMENTS MADE TO THE CONCERNED AUTHORITY. THUS IT IS NOT THE ILLEGAL PAYMENTS AS UNDERSTOOD BY THE ASSESSING OFFICER. THEREFORE THERE I NO QUESTION O F MAKING ADDITION FOR THE SAID AMOUNT TO THE PROFIT AS SHOWN IN THE L OOSE PAPER WHILE MAKING ESTIMATION. IN ANY CASE FOR THE REASON THAT THE LOOSE PAPERS DO IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 70 NOT BELONG TO THE APPELLANT THE ADDITION IN PROFIT ON THE BASIS OF THE SAID LOOSE PAPER OR INVESTMENT OF CAPITAL IN SUCH B USINESS IN THE HANDS OF THE APPELLANT DOES NOT ARISE. THE ENTIRE ADDITIO NS OF RS.1 07 75 310/- AND RS.10 85 130/- ARE THEREFORE DIRECTED TO BE DELETED. 125. IN NUTSHELL THE FINDINGS OF THE LD. C.I.T.(A) IS THAT THE BUSINESS IN BHANG AND POPPY DID NOT BELONG TO THE ASSESSEE BUT BELONGED TO A THIRD PARTY WHO HAD LEFT THE DOCUMENTS WITH THE ASSESSEE. THE ASSESSEE HAS DONE BUSINESS OF RS.10.90 LACS WITH THE SAID PARTY ONLY. THE ASSESSEE HAD DENIED THE OWNERSHIP IN THE BEGINNING ITSELF. THE INQUIRIE S CARRIED OUT BY THE A.O. DID NOT REVEAL ANY NEXUS OF THE ASSESSEE WITH THE B USINESS IN BHANG TO THE EFFECT THAT IT BELONGED TO HIM. 126. AGAINST THIS LD. D. R. SUBMITTED THAT THE CIT( A) WAS NOT JUSTIFIED IN DELETING EVEN THE PROFIT ELEMENT ON THE BUSINESS DO NE BY THE ASSESSEE IN BHANG. 127. THE LD. A.R. ON THE OTHER HAND SUBMITTED THAT WHATEVER INCOME ASSESSEE MIGHT HAVE EARNED IS A PART OF THE DISCLOS URE MADE BY THE ASSESSEE. 128. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THE FINDING OF LD. CIT(A) ON THE OWNERSHIP OF DOCUMENT ARE NOT CON TROVERTED. THE A.O. DID NOT CHALLENGE THE FINDING THAT THE DOCUMENT AND THE BUSINESS DID NOT BELONG TO THE ASSESSEE RATHER HE HAD HIMSELF INQUI RED AND FOUND THAT BUSINESS BELONGED TO THIRD PARTY AND ASSESSEES INT EREST IN THAT BUSINESS WAS ONLY TO THE EXTENT OF RS.10.90 LACS (I.E.PURCHASE). HOWEVER WE ESTIMATE THE INCOME FROM BHANG BUSINESS AT 20% OF THE TURNOVER ( BASED ON PURCHASE OF RS.10 90 500/-) BEING THE PURCHASES MADE BY THE ASS ESSEE FROM SHRI IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 71 RAMASINGH V. MEENA. THUS WE ESTIMATE AN INCOME OF RS.2 LACS FROM THIS BHANG BUSINESS. 129. SO FAR AS DELETION OF RS.1 07 75 310/- IS CONC ERNED NO ADDITION IS CALLED FOR AS IT IS NEITHER INVESTMENT NOR INCOME O F THE ASSESSEE. IT WAS A TURNOVER OF A THIRD PARTY WHICH IS NOW VERIFIED AND CONFIRMED AFTER ENQUIRIES BY THE AO ALSO. THEREFORE WE UPHOLD THE ORDER OF L D. CIT(A) IN DELETING THE ADDITION. THIS GROUND OF REVENUE IS ACCORDINGLY REJ ECTED. 130. FURTHER WE NOTICE THAT ASSESSEE HAS DECLARED ONLY AN INCOME OF RS.17 51 000/- IN F.Y. 1997-98 IN THE BLOCK ASSES SMENT. THE A.O. WILL FIND OUT AS TO HOW MUCH HE HAS DECLARED FOR THE FINANCIA L YEAR 1997-98 (ASST. YEAR 1998-99). IF THE DISCLOSURE IS LESS THAN RS.2 LACS THEN BALANCE OF ADDITION WOULD BE MADE AND IF IT IS MORE THAN RS.2 LACS NO ADDITION SHOULD BE MADE BY GIVING TELESCOPING EFFECT. FOR THIS LIMI TED PURPOSE AND VERIFICATION THE MATTER IS RESTORED TO THE ASSESSI NG OFFICER. AS A RESULT THIS GROUND OF THE REVENUE IS PARTLY ALLOWED. 130. THE THIRD GROUND RELATES TO THE ADDITION OF RS . 2 05 005/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY. 131. WE HAVE HEARD THE PARTIES. SINCE JEWELLERY IS LESS THAN 500 GM. FOLLOWING THE BOARDS INSTRUCTION NO.1916 DATED 11- 5-1994 WE DIRECT THE ASSESSING OFFICER TO TREAT THIS JEWELLERY AS EXPLAI NED. ACCORDINGLY WE CONFIRM THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE IS REJECTED. IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 72 132. IN THE RESULT- IT(SS)A NO.123/AHD/2002 (ASSESSEES APPEAL) IS PART LY ALLOWED FOR STATISTICAL PURPOSES. IT(SS)A NO.135/AHD/2002 (REVENUES APPEAL ) IS DISM ISSED. IT(SS)A NO.202/AHD/2002 (REVENUES APPEAL) IS DISMI SSED. IT(SS)A NO.208/AHD/2002 (ASSESSEES APPEAL) IS DISM ISSED. IT(SS)A NO.127/AHD/2002 (REVENUES APPEAL) IS DISMI SSED. C.O.NO.214/AHD/2002 IS DISMISSED. IT(SS)A NO.210/AHD/2002 (ASSESSEES APPEAL) IS PART LY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. IT(SS)A NO.230/AHD/2002 (REVENUES APPEAL) IS DISMI SSED. IT(SS)A NO.354/AHD/2003 (REVENUES APPEAL) IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 18/02/2011 . SD/- SD/- (MAHAVIR SINGH) (D.C. AGRAWAL) JUDICIAL MEMBER. ACCOUNTANT MEM BER. AHMEDABAD. DATED:18/02/2011. MAHATA/PATKI IT(SS) 123 135 127 & CO 214 & 5 OTHER APPEALS BLOCK PERIOD 1.4.1988 TO 22.9.1998 73 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD. 1.DATE OF DICTATION 3/2/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 14/2/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..