The ACIT, Central Circle-2,, Baroda v. Shri Ratilal M.Patel,, Baroda

IT(SS)329-04 & IT(SS) 17-05. 1 IN THE INCOME_TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD BEFORE SHRI MUKUL SHRAWAT AND SHRI D.C. AGRAWAL. IT(SS)A. NO.329 /AHD/2004 (BLOCK PERIOD 1.4.90 TO 8.8.2000) SHRI RATILAL M. PATEL 44 ROKADNATH SOCIETY R.C. CCIRCLE BARODA-390007. VS THE ASSTT. COMMISSIONER OF INCOME TAX CENT. CIRCLE-2 BARODA. (APPELLANT) (RESPONDENT) AND IT(SS) A.NO.17/AHD/2005. (BLOCK PERIOD 1.4.90 TO 8.8.2000) THE ASSTT. COMMISSIONER OF INCOME TAX CENT. CIRCLE-2 BARODA. VS SHRI RATILAL M. PATEL 44 ROKADNATH SOCIETY R.C. CCIRCLE BARODA-390007. (APPELLANT) (RESPONDENT) PAN: ACUPP3402 B APPELLANT BY : SHRI S.N.SOPARKAR SR.ADVOCAT E WITH SHRI AJIT WADH AWAN. REVENUE BY : SHRI RAJIV SAHAI CIT(DR) ( (( ( )/ )/)/ )/ ORDER PER: SHRI D.C. AGRAWAL A.M. THESE ARE TWO CROSS APPEALS ONE FILED BY THE ASSESSEE AND THE OTHER FILED BY THE REVENUE AGAINST THE ORDER OF LD. C.I.T.(A) DATED 30- IT(SS)329-04 & IT(SS) 17-05. 2 11-2004. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN HIS APPEAL. 1. THE ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW I N AS MUCH AS IT IS AGAINST THE FACTS OF THE CASE AND EVIDENCES ON RECORDS . 2 . THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.43 00 000 WITH RESPECT TO DISCLOSURE MADE U/S. 132(4) OF THE INCOME TAX ACT 1961. 3. THE LD. C.I.T. ERRED IN LAW AND ON FACTS IN CONFIRM ING ADDITION OF RS.21 05 334/- REPRESENTING DEPOSIT IN BAN K WITHOUT APPRECIATING THE FACT THAT THE CREDITS IN BANK HAD BEEN UTILIZED FOR PURCHASING FDRS FOR WHICH SEPARATE ADDITION HAS BEEN MADE. 4. THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.1 70 87 879/- REPRESENTING T HE VALUE OF FDRS NSCS SEIZED WHICH WERE ACQUIRED OUT OF ADVANCES RECEIVED FROM THE PURCHASERS OF LAND. 5. THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.29 82 310/- REPRESENTING BA NK BALANCES IN DIFFERENT BANK ACCOUNTS. 2. ON THE OTHER HAND REVENUE HAS RAISED FOLLOWING GRO UNDS :- 1. ON THE FACTS AND CIRCUMSTANCES THE LD. C.I.T.(A) ERRE D IN ADMITTING NEW EVIDENCES IN CONTRAVENTION OF PROVISION O F RULE 46A OF THE I.T. RULES 1962 PARTICULARLY IN RE SPECT OF ASSESSEES CLAIM THAT PART OF INCOME/INVESTMENT PERTAINS TO PRE BLOCK PERIOD. 2 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. C.I.T.(A) OUGHT TO HAVE WORKED OUT UNDISCLOSED INCOME O N THE BASIS OF INCOME AND UNEXPLAINED INVESTMENT EXPENDITURE AND HIGHER OF THE TWO OUGHT TO HAVE BEE N TAKEN AS UNDISCLOSED INCOME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. C.I.T.(A) OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE ITO TO VERIFY THE ASSESSEES CLAIM THAT FDRS WORTH RS.47 09 938/- IT(SS)329-04 & IT(SS) 17-05. 3 HAVE BEEN MADE OUT OF SAVING BALANCES IN VARIOUS BANK ACCOUNTS. 4. THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON THE FACT S OF THE CASE IN DELETING THE SURCHARGE LEVIED IN SPITE OF THE SPECIFIC PROVISION CONTAINED IN PARAGRAPH-I OF THE FIRS T SCHEDULE RELATING TO SURCHARGE ON INCOME TAX OF THE FINANCE ACT 2000. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. O N THE ABOVE POINTS. 6. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. C .I.T.(A) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO T HE ABOVE EXTENT. 3. SINCE THE TWO APPEALS INVOLVE COMMON FACTS AND SUBMI SSIONS ARE ALSO COMMON THEY ARE TAKEN UP TOGETHER FOR THE SA KE OF CONVENIENCE. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN T HE BUSINESS OF REAL ESTATE FOR THE LAST SEVERAL YEARS. A SEAR CH U/S.132 WAS CARRIED OUT AT THE RESIDENTIAL AND BUSINESS PREMISES O F THE ASSESSEE ON 8-8-2000. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE A.O. EXAMINED THE SEIZED MATERIAL AND WORKED OUT TOTAL UNDISCLOSED INCOME AS UNDER :- RS. I. UNEXPLAINED INVESTMENT IN FOREIGN CURRENCY 3 63 124/- (PARA 9.8) II. UNDISCLOSED INCOME ADMITTED ON OATH U/S.132(4) ON 8.8.2000(PARA 10.3) 1 00 06 000/- III. UNEXPLAINED INVESTMENT IN VARIOUS BANK ACCOUNTS (PARA 12.5). 68 45 272/- IV. ADMITTED UNEXPLAINED INVESTMENT IN SEIZED 2 15 51 089/- FDRS NSCS. ETC. (PARA 15.6) V. ADMITTED ACCRUED INTEREST ON THE AFORESAID FDRS NSCS ETC. (PARA 15.6.) 41 51 7 22/- IT(SS)329-04 & IT(SS) 17-05. 4 VI. UNEXPLAINED INVESTMENT IN VARIOUS BANK ACCOUNTS WHOSE BALANCES WERE SEIZED. (PARA-16) 72 23 399/- TOTAL UNDISCLOSED INCOME. 5 01 40 606/- ========== 5. IN APPEAL LD. C.I.T.(A) DELETED THE FIRST ADDITIO N OF RS.3 63 124/- ON THE GROUND THAT IT IS EXPLAINED. THE REVENUE IS NO T IN APPEAL AGAINST THIS DELETION. 6. REGARDING THE SECOND ADDITION LD. C.I.T.(A) PART LY UPHELD THE ADDITION TO THE EXTENT OF RS.43 00 000/- AND DELETED ADDITION OF RS.57 LAKHS. THE ASSESSEE IS IN APPEAL AGAINST SUSTAINING THE ADDI TION OF RS.43 LAKHS WHEREAS REVENUE HAS RAISED GROUND NIO.1 AND 2 WHICH ARE NOT SPECIFIC TO THE RELIEF ALLOWED BY THE LD. C.I.T. ( A). 7. IN RESPECT OF THIRD ADDITION LD. C.I.T.(A) SUSTAINED ADDITION OF RS. 21 05 334/- AND DELETED ADDITION OF RS.47 09 938/-. BOTH THE PARTIES ARE IN APPEAL AGAINST THIS ORDER OF THE LD. C.I.T.(A ). 8. IN RESPECT OF FOURTH ADDITION MADE BY AO THE LD. C .I.T. (A) DELETED RS.44 62 210/- AND SUSTAINED THE ADDITION OF R S.1 70 87 879. IT IS ONLY THE ASSESSEE WHO IS IN APPEAL AGAINST THE ADDI TION SUSTAINED. THE REVENUE HAS NOT AGITATED THE RELIEF ALLOWED BY L D. C.I.T.(A). 9. OUT OF FIFTH ADDITION LD. C.I.T.(A) SUSTAINED AN ADDITION OF RS.29 82 310/- AND ALLOWED THE RELIEF OF RS.42 41 000 /-. THE ASSESSEE IS IN APPEAL AGAINST THE ADDITION SUSTAINED WHEREAS REV ENUE HAS NOT PREFERRED ANY APPEAL AGAINST RELIEF. IT(SS)329-04 & IT(SS) 17-05. 5 10. REGARDING ADDITION OF RS.41 51 722/- BEING INTER EST ON FDRS NSCS THERE IS APPARENTLY NO DISCUSSION BY LD. C.I.T.(A) IN THE APPELLATE ORDER. IT SEEMS THAT NO SUCH GROUND WAS RAISE D BY TRHE ASSESSEE BEFORE THE LD. C.I.T.(A) AGAINST THE ADDITION OF INTEREST INCOME FROM FDRS AND NSCS AS THIS WAS CONSIDERED AS COVERED IN THE DISCLOSURE OF CONCEALED INCOME IN THE BLOCK RETURN FILED B Y THE ASSESSEE. ASSESSEES APPEAL IT.(SS) A.329/AHD/04. 11. GROUND NO.1 IS GENERAL AND DOES NOT REQUIRE ANY S PECIFIC ADJUDICATION. THEREFORE THIS GROUND IS REJECTED. 12. GROUND NO.2 RELATES TO TOTAL ADDITION OFRS.1 06 0 0 000/-.THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS REFERRED T O THE ADMISSION OF UNDISCLOSED INCOME IN THE STATEMENT RECORDED U/S. 132(4) ON 8-8-2000 AND 10-8-2000. IN THAT STATEMENT ASSESSEE HAS ADMITTED UNDISCLOSED INCOME OF RS.1 CRORE ON ACCOUNT OF V ARIOUS INCOME AND EXPENDITURE. FOR THE SAKE OF CONVENIENCE WE REPRODUCE QUESTION NO.23 FROM THE ORDER OF THE A.O. Q.NO.23. FROM THE QUESTIONS AND ANSWERS (1 TO 22) IT APPEARS THAT YOU HAVE EARNED HUGE UNACCOUNTED INCOME OVER A PERIOD OF YEARS. WHAT DO YOU WANT TO SAY ON THIS POIN T? HAVE YOU PAID INCOME TAX ON THE ABOVE INCOME? ANS. I HAVE NOT EARNED HUGE AMOUNT OF INCOME WHICH ARE NOT DISCLOSED TO THE DEPARTMENT. HOWEVER AS PER MY CALCULATION RS.1 CRORE IS NOT DISCLOSED TO THE DEPARTMENT AND NOT PAID INCOME TAX ON IT. THE BREAK-UP OF SUCH UNACCOUNTED INCOME IS AS FOLLOWS : IT(SS)329-04 & IT(SS) 17-05. 6 1. RS. 15 00 000/- ON ACCOUNT OF REPAIRS/RENOVATION OF RESIDENTIAL HOUSE AT 44 ROKADNATH NAGAR. 2. RS. 5 00 000/- UNACCOUNTED EXPENDITURE TO WARDS REPAIRS/RENOVATION OF OFFICE AT MANILAL CHAMBERS. 3. RS. 14 00 000/- UNACCOUNTED INVESTMENT IN PURCHASE OF LAND FROM AMBALAL H. PATEL. 4. RS. 21 00 000/- UNACCOUNTED EXPENDITURE TOWARD S REPAIRS/RENOVATION OF GROUND FLOOR AT MANILAL CHAMBERS. 5. RS. 23 00 000/- UNACCOUNTED INCOME GENERATED FRO M GO KUL TOWNSHIP. 6. RS.2 00 000/- CASH OF RS.2 06 000/- PAID FOR OBTAINING DEMAND DRAFTS (GIFT) WORTH RS.2 00 000/- FROM SHRI AJAYBHAI ZAVERBHAI PATEL. 7. RS.20 00 000/- UNACCOUNTED INCOME T HE DETAILS OF WHICH WILL BE GIVEN IN DUE COURSE. I DO ADMIT THAT RS.1 CRORE IS MY UNDISCLOSED INCOME WHICH WAS EARNED OVER A PERIOD OF 10 YEARS. THIS UNACCOUNTED INCOME HAS BEEN GENERATED FROM LAND-DEALING. SALE AND PURCHASE OF HOUSES IN GOKUL TOWNSHIP. THIS UNDISCLOSED INCOME HAS NOT BEEN DECLARED EITHER IN MY RETURN OF INCOME OR UNDER VDIS 97. WHILE ADMITTING THE UNACCOUNTED INCOME OF RS.1 CRORE MY C.A. SHRI KANUBHAI PATEL WAS PRESENT. I ALSO ASSURE YOU THAT THE ABOVE SAID UNDISCLOSED INCOME WILL BE SHOWN IN THE BLOCK RETURN TO BE FILED ON RECEIPT OF THE NOTICE FROM THE DEPARTMENT IN THE NAMES OF MYSELF FAMILY MEMBERS AND GOKUL TOWNSHIP. 13. THE LD. A.O. MENTIONED THAT IN A DOCUMENT ANNE XURE A-14 SEIZED IN THE SEARCH CONTAINED THE DECLARATION OF GIFT O F RS.2 LAKHS IT(SS)329-04 & IT(SS) 17-05. 7 MADE BY SHRI AJAYBHAI ZAVERBHAI PATEL. THE RECEIPT OF GIFT WAS ALSO GOT CONFIRMED IN THE STATEMENT VIDE QUESTION NO.17 REPROD UCED BY THE A.O. IN THE ASSESSMENT ORDER. THEREFORE STATEMENT U/S.13 2 (4) WAS CONSIDERED AS SUPPORTED BY SEIZED DOCUMENTS. 14. HE ACCORDINGLY HELD THAT ASSESSEE HAD UNDISCLOSED INCOME OF RS.1 06 00 000/-. THE A.O. ALSO REFERRED TO THE RETRA CTION OF ABOVE DISCLOSURE VIDE AFFIDAVIT DATED 9-8-2000 HOLDING THAT THIS RETRACTION IS WITHOUT ANY SUPPORTING EVIDENCE. THE AO FURTHER MENTI ONED THAT AT THE TIME OF OPENING A LOCKER NO. 677 IN BANK OF BARODA FATEHPURA BRANCH BARODA ON 10-8-2000 STATEMENT OF THE ASSESSEE WAS RECORD ED AND IN THAT STATEMENT ALSO ASSESSEE HAS STATED UNDER SEC. 132(4) TH AT HE IS MAKING FURTHER DISCLOSURE OF RS.2 TO 2.50 CRORES IN ADDIT ION TO DISCLOSURE OF RS.1 CRORE ALREADY MADE BY HIM. RELEVANT QUESTIONS AND ANSWERS AS NOTED IN THE STATEMENT RECORDED ON 10-8-2000 BY THE A.O. ARE AS UNDER :- Q.NO.2. YOUR BANK LOCKER NO.677 AT BOMBAY MERCANTILE BANK BARODA BRANCH HAS BEEN OPERATED TODAY IN THE PRESENCE OF SHRI S.S. ZAIDI BRANCH MANAGER AND TWO WITNESSES S/SHRI P.K. BHARDWAJ & SHRI DILIPBHAI SHASHIKANT SURVE TO GIVE. YOU ARE REQUESTED TO GIVE THE DETAIL OF CONTENTS THEREOF BEFORE THEY ARE INVENTORISED. ANS. IN THIS BANK LOCKER THERE ARE FDRS OF VARIOUS BANK S AND KVPS IN MY NAME AND IN THE NAMES OF MY FAMILY MEMBERS AND IN BENAMI NAMES AND BONDS OF ICICI NARMADA NIGAM ETC. HAVING INVESTMENT VALUE OF APPROXIMATELY RS.2 CRORE TO RS.2.5 CRORES (EXCLUDING INTEREST). SECURITIES IN THE BENAMI NAMES ARE OF MYSELF I.E. RATILAL PATEL WIFE DAXABEN PATEL AND JYOTIBEN PATEL SON AMRISH AND DHARMESH AND DAUGHTERS-IN-LAW LOPABEN D. PATEL VAISHALI A. PATEL AND SIGNED BY THEM. MOREOVER THERE ARE PASSPORTS OF MYSELF JYOTIBEN AND DAXABEN. BESIDES THIS THERE IT(SS)329-04 & IT(SS) 17-05. 8 ARE APPROXIMATELY 6000 TO 7000 US DOLLARS. THE US DOLLARS ARE NOTED IN PASS PORTS BETWEEN 1996 TO 1999. Q.NO.3. HOW IS YOUR HEALTH AT PRESENT? ANS. AT PRESENT MY HEALTH IS ALRIGHT AND I DO NOT REQU IRE ANY MEDICAL CONSULTATIONS WITH THE DOCTOR. Q.NO.4. PLEASE STATE WHETHER THE SECURITIES WORTH RS.2 CRO RES TO 2.5 CRORES MENTIONED IN QUESTION NO.2 ARE ACCOUNTED FOR AND EXPLAIN THE SOURCES THEREOF IN DETAIL. ANS. I AM FULLY CONSCIOUS AND STATE THAT ABOVE MENTIONE D SECURITIES OF RS.2 TO 2.5 CRORES ARE UNACCOUNTED AND ARE NOT DECLARED IN THE RETURNS OF INCOME FILED BY ME OR BY MY FAMILY MEMBERS. I AM READY TO PAY THE TAX ON THIS RS.2 TO 2.5 CRORES IN ADDITION TO DISCLOSURE OF RS.1 CRORE ALREADY MADE ON 8-8- 2000. MOREOVER I DISCLOSE UNACCOUNTED SECURITIES (APPROX. 2 TO 2.5 CRORES LIKELY TO BE FOUND TODAY IN ADDITION TO THE DISCLOSURE OF RS.1 CRORE MADE BY ME ON 8.8.2000. AS MY UNDISCLOSED INCOME OF LAST 7 TO 8 YEARS. THIS DISCLOSURE IS MADE VOLUNTARILY WITHOUT ANY THREAT COERCION OR PROMISE. THE ABOVE ADMISSION MADE BY ME IS BINDING UPON ME. THE ABOVE INVESTMENT HAS BEEN MADE OUT OF INCOME FROM MY FOLLOWING ACTIVITIES. 1) ON MONEY RECEIVED ON BOOKING OF GOKUL TOWNSHIP PRERNA SOCIETY JAY RATNA SOCIETY ETC. ORGANIZED BY ME. 2) ON MONEY RECEIVED IN LAND DEALING ACTIVITY I.E. SALES AND PURCHASE OF LAND AS POWER OF ATTORNEY HOLDER IN MY NAME AND IN NAMES OF MY SONS AMRISH PATEL AND DHARMESH PATEL AS POWER OF ATTORNEY HOLDERS. (EMPHASIS SUPPLIED) IT(SS)329-04 & IT(SS) 17-05. 9 15 FOLLOWING THESE STATEMENTS AND REJECTING RETRACTION A .O. MADE THE ADDITION OF RS.1 06 00 000/-. 16. THE LD. C.I.T.(A) PASSED A CRYPTIC AND NON SPEAKING ORDER AND DELETED THE ADDITION OF RS.57 00 000/- AND SUSTAINED ADDITION OF RS.43 00 000/- LAKHS. HE ONLY NOTED THAT ADDITION OF RS.1 06 00 000/- COMPRISED ITEMS AS STATED IN THE SUBMISSION OF THE ASSESSEE IN RESPONSE TO QUESTION NO.23 AS REFERRED ABOVE. 17. HE OBSERVED THAT ITEM NO.1 TO 4 TOTALING TO RS.57 LAKHS SHOWS INVESTMENT UNEXPLAINED. WHILE ITEM NO.5 TO 7 TOTALLI NG TO RS.43 LAKHS REPRESENTED UNDISCLOSED INCOME. FURTHER ITEM NO.3 BEIN G INVESTMENT IN PURCHASE OF LAND FROM SHRI AMBALAL PATEL DID NOT PERTAIN TO BLOCK PERIOD AS IT RELATES TO DATE 5-12-1988. ACCEPTING THE CO NTENTION OF THE LD. A.R. THAT NO LOOSE PAPER OR JOTTINGS WHATSOEVER WE RE FOUND TO SUBSTANTIATE DISCLOSURE HE DELETED ADDITION OF RS.57 L AKHS. HE HELD THAT EXPLANATION OF THE ASSESSEE REGARDING NATURE OF VA RIOUS ADDITIONS APPEARS TO BE VALID. AGAINST THIS LD. A.R. SUBMITTED T HAT ASSESSEE HAS RETRACTED THE DISCLOSURE VIDE AFFIDAVIT DT. 9-8-2000 AN D 10-8-2000 AND NO MATERIAL IS FOUND DURING THE COURSE OF THE SEARCH TH EREFORE NO ADDITION EVEN OF RS.43 LAKHS COULD BE SUSTAINED. HE REFER RED TO THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF KAI LASHBEN MANHARLAL CHOKLSHI VS. C.I.T. (2008) 174 TAXMAN 466 (GUJ) FOR THE PROPOSITION THAT IF STATEMENT GIVEN U/S. 132(4) IS RETR ACTED THEN NO ADDITION COULD BE MADE ON THE BASIS OF THAT STATEMENT . 18. THE LD. A.R. ALSO SUBMITTED THAT REVENUE HAS NOT F ILED ANY SPECIFIC GROUND AGAINST DELETION OF ADDITION OF RS.57 L AKHS THEREFORE THIS GROUND IS SETTLED AT THE ADDITION OF RS.43 LAKHS AG AINST WHICH ASSESSEE HAS FILED THE APPEAL. IT(SS)329-04 & IT(SS) 17-05. 10 19 AGAINST THE ABOVE LD. D.R SUBMITTED THAT IT IS INCO RRECT TO SAY THAT NO EVIDENCE WAS FOUND IN SUPPORT OF THE DISCLOSURE. EVEN IN THE AFFIDAVIT FILED BY THE ASSESSEE ON 9-8-2000 AND 10-8-20 00 REFERENCE HAS BEEN MADE TO VARIOUS REPAIRS AND RENOVATION ETC. M ADE BY THE ASSESSEE FOR THE HOUSE PROPERTY AND IN THE GROUND FLOOR OF MANILAL CHAMBERS. ONCE RENOVATED RESIDENTIAL HOUSE AND RENOVATE D MANILAL CHAMBERS (GROUND FLOOR) IS FOUND TO EXIST AND IT IS ADM ITTED THAT RENOVATION HAS BEEN CARRIED OUT IN THESE 2 BUILDINGS TH EN STATEMENT U/S. 132(4) CANNOT BE BRUSHED ASIDE ON THE GROUND THAT THERE IS NO EVIDENCE IN SUPPORT OF DISCLOSURE ONLY DIFFERENCE IS THAT AS AGAINST STATED INVESTMENT OF RS.15 LAKHS RS.5 LAKHS AND RS.21 LAK HS IN THE STATEMENT U/S. 132(4) ASSESSEE HAS IN THE RETRACTION AFFID AVIT ONLY ADMITTED TO HAVE MADE SMALLER AMOUNT OF EXPENDITURE OF RS.12 000/- IN ROKADNATH NAGAR SOCIETY OR OF RS.2 14 811/- IN MAN ILAL CHAMBERS THAT TOO BY M/S. V.M. PATEL CO-OWNERS ASSOCIATION LD. D. R. SUBMITTED THAT THIS AFFIDAVIT IS NOT BELIEVABLE. HE FURTHER SUBM ITTED THAT DECISION OF HONBLE GUJARAT HIGH COURT REFERRED TO BY LD. A.R. IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI (SUPRA) WOULD BE APPLICA BLE ONLY IN A CASE WHERE STATEMENT IS TAKEN BY COERCION OR PRESSURE AND W HERE ASSESSEE GIVES PROPER EVIDENCE IN SUPPORT OF RETRACTION. IN THE PRESENT CASE THERE IS NO EVIDENCE IN SUPPORT OF RETRACTION. THUS IN ABSENCE OF EVIDENCE RETRACTION COULD NOT BE GIVEN ANY WEIGHTAGE. 20. THE LD. D.R. FURTHER SUBMITTED THAT SUCH RETRACTIO N BY AFFIDAVITS COULD NOT BE RELIED BECAUSE THEY WERE FILED ONLY ALONG WITH RETURN OF INCOME FILED 29-1-2001. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE RETRACTION CANNOT BE GIVEN ANY IT(SS)329-04 & IT(SS) 17-05. 11 IMPORTANCE BECAUSE THE CONCERNED AFFIDAVITS WERE FILED AF TER A GAP OF MORE THAN 5 MONTHS. IF AFFIDAVITS WERE ACTUALLY SWORN ON THOSE DATES AS PURPORTED THEY SHOULD HAVE BEEN FILED MUCH BEFORE. THERE IS NO REASON FOR DELAYING THE FILING OF RETRACTION AFFIDAVI TS.. EVEN WHEN SUCH AFFIDAVITS WERE FILED AFTER 5 MONTHS ALONG WITH RETU RN NO EVIDENCE IS FURNISHED TO SHOW THAT DISCLOSURE MADE IN THE STATEMENT DT. 8-8-2000 IS NOT CORRECT. IN CASE AFFIDAVIT WOULD HAVE BEEN ACTUALL Y SWORN ON 9-8- 2000 AS PURPORTED TO BE DONE THEN THERE WAS NO OCCASION FOR THE ASSESSEE IN THE STATEMENT DT.10-8-2000 TO REITERATE THAT IN ADDITION TO DISCLOSURE OF RS. 1 CRORE HE IS MAKING FURTHER DISCLOSURE O F RS.2 TO 2.5 CRORES. THE ALLEGED RETRACTION OF DISCLOSURE OF RS.1 CRORE IS CLEARLY THROUGH THE AFFIDAVIT ALLEGEDLY SWORN ON 9-8-2000. I F THIS AFFIDAVIT WAS TRUE THEN ON THE VERY NEXT DAY I.E. 10-8-2000 IT WA S NOT EXPECTED FROM THE ASSESSEE TO FURTHER SAY THAT HE IS IN ADDITION T O DISCLOSURE OF RS.1 CRORE FURTHER MAKING DISCLOSURE OF 2 TO 2.5 CRORES. THIS DISCLOSURE IS MADE AGAINST OVERWHELMING EVIDENCE OF INVESTMENT IN FDRS/NSCS ETC. FOUND IN THE LOCKER NO.677 WHICH WAS NOT EARLIER DECLARED BY THE ASSESSEE IN THIS STATEMENT DATED 8-8-2000. THE LD. D.R. H AS FURTHER POINTED OUT DURING THE COURSE OF ARGUMENTS THAT THERE ARE OVER- WRITINGS IN THE AFFIDAVIT DT. 10-8-2000. THE DATES WE RE APPARENTLY PURPORTED TO BE 10-8-2000 WAS OVERWRITTEN AS 11-8-200 0. FURTHER THE STAMP PAPER ON WHICH AFFIDAVIT DT.9-8-2000 IS SWORN WAS PURCHASED ON 23-6-2000. IT IS NOT EXPLAINED HOW THE MATTER PERTAI NING TO SEARCH INITIATED ON 9-8-2000 A STAMP PAPER COULD BE PURCHASED ON 23-6- 2000. IN ANY CASE THE CREDIBILITY OF THESE TWO AFFIDAV ITS DT.9-8-2000 AND 10-8-2000 OR SAY 11-8-2000 IS IN DOUBT AND THEREF ORE CONTENTS THEREOF CANNOT BE GIVEN ANY WEIGHTAGE WHILE EVALUATI NG THE EVIDENCE AGAINST DISCLOSURE MADE BY THE ASSESSEE U/S. 132(4) IN THE STATEMENT DT.8-8-2000 AND 10-8-2000. NOTWITHSTANDING NO EVIDE NCE LEAST ANY IT(SS)329-04 & IT(SS) 17-05. 12 COGENT EVIDENCE WAS FURNISHED IN SUPPORT OF THE RETRACT ION WHICH COULD ONLY BE TAKEN TO HAVE BEEN MADE ALONG WITH THE FILI NG OF THE RETURN. NO EVIDENCE IN THE FORM OF ANY VALUATION REPORT OR A NY ENTRIES IN THE BOOKS OF ACCOUNTS AS TO THE LOWER ACTUAL/REAL AMOUNT OF E XPENDITURE AS CLAIMED TO BE INCURRED IN THE RENOVATION OF ROKADNATH NAGAR HOUSE AND MANILAL CHAMBERS HAVE BEEN FURNISHED. THEREFORE RETRACTION SO MADE BY THE ASSESSEE THROUGH THE AFFIDAVITS ARE WORTH R EJECTION AND THEREFORE REJECTED. 22. HOWEVER WE UPHOLD THE ARGUMENT OF THE LD. A.R. THAT IT IS EITHER INCOME OR INVESTMENT WHICH ALONE CAN BE CONSIDERED AND I T IS NOT THAT INCOME AND EXPENDITURE BOTH CAN BE ADDED TOGETHER AS UNDISCLOSED INCOME. THE PLEA OF THE LD. A.R. IS THAT UNDISCLOSED INCO ME AS STATED U/S. 132(4) WAS THE SAME WHICH WAS INVESTED IN UNACCOUNTED INVESTMENT/EXPENDITURE STATED BY THE ASSESSEE ON 8-8-2004 . THUS ACCORDING TO HIM ONLY ONE LIMB OF CONCEALED INCOME CAN B E ADDED I.E. EITHER ON THE BASIS OF INVESTMENT OR ON THE BASIS OF INCOME. SINCE REVENUE IS NOT IN APPEAL AGAINST DELETION OF RS.57 L AKHS ADDITION AS PER THE STATEMENT COULD NOT EXCEED RS.43 LAKHS. WE HOWE VER PROPOSE TO DECIDE THE ISSUE TOGETHER AS PART OF GLOBAL INCOME OR EXPENDITURE DISCOVERED UP TO THE DATE OF THE SEARCH. IN OUR CONSIDER ED VIEW THE CONTENTS OF THE STATEMENT AND DISCLOSURE U/S. 132(4) ON 8 -8-2000 CAN NOT BE CONSIDERED IN ISOLATION FROM OTHER INCOME AND EX PENDITURE DISCOVERED BY THE A.O. FOR THE BLOCK PERIOD UP TO THE DATE OF THE SEARCH. THEREFORE THIS ISSUE WILL BE FINALLY DECIDED IN THE TOTALITY OF INCOME EARNED BY THE ASSESSEE OR EXPENDITURE/INVESTMENT I NCURRED BY THE ASSESSEE. IT(SS)329-04 & IT(SS) 17-05. 13 23. GROUND NO.3 RELATES TO IN ASSESSEES APPEAL ABOUT SUSTAINING ADDITION OF RS.21 05 334/-AND GROUND NO.3 IN REVENUE S APPEAL IS ABOUT RELIEF OF RS.47 09 938/-. BOTH THE ISSUES ARE PAR T OF SAME ADDITION. 24. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. F OUND DEPOSITS OF RS.68 45 272/- IN VARIOUS BENAMI BANK ACCOUNT S IN THE NAME OF FAMILY MEMBERS AND OUTSIDERS WHICH WERE DISCOVE RED ON EXAMINATION OF MATERIAL SEIZED FROM LOCKER NO.677 WIT H BOMBAY MERCANTILE CO-OPERATIVE BANK LTD. NAGARWADA BRANCH BARODA AND FROM THE RESIDENCE OF SHRI RAJESH PATEL A CLOSED RELATI VE OF THE ASSESSEE. THE VARIOUS DEPOSITS FOULD IN DIFFERENT BANK ACCOU NTS WERE TABULATED BY THE A.O. AS UNDER :- PARTICULARS. AMOUNT. A/C.NO.992 WITH UNION BANK OF INDIA RACE COURSE BRANCH BARODA. 19 82 200/- A/C.NO.39/9958 WITH DIAMOND JUBILEE CO.OP. BANK SURAT. 11 14 338/- A/C.NO.1318 WITH RANDER PEIOPLES CO.OP. BANK LTD. RANDER SURAT. 12 43 375/- VARIOUS ACCOUNTS WITH UNION BANK OF INDIA KHAMBHAT. 18 25 600/- VARIOUS ACCOUNTS WITH DENA BANK ALKAPURI BARODA. 5 56 625/- BALANCE LYING IN BENAMI UNDISCLOSED ACCOUNT NO.4852 WITH UNION BANK OF INDIA SEVASI BRANCH IN THE NAME OF KASHMIRA RAJESH PATEL OWNED UP BY THE ASSESSEE AS HIS OWN. 1 23 134/- TOTAL 68 .45.272/- 25. THE ASSESSEE DID NOT GIVE ANY EXPLANATION OR ANY EV IDENCE TO EXPLAIN THE DEPOSITS IN THESE ACCOUNTS BUT FINALLY ADMIT TED THAT THESE IT(SS)329-04 & IT(SS) 17-05. 14 BANK ACCOUNTS BELONGED TO HIM. THE A.O. FOUND THESE DE POSITS DURING THE BLOCK PERIOD AND ACCORDINGLY PROPOSED THE ADDITION. 26. THE LD. C.I.T.(A) IN A SHORT AND NON SPEAKING ORD ER HELD THAT MONEYS DEPOSITED IN THESE BANK ACCOUNTS WERE WITHDRAWN IN CASH AND WERE UTILIZED FOR PURCHASE OF FDRS WORTH OF RS.2 15 51 889/- FOUND FROM THE LOCKER NO.677. THE FOLLOWING EXPLANATION WA S SUBMITTED BEFORE THE LD. C.I.T.(A) WHICH WAS ACCEPTED BY HIM WITH OUT APPARENTLY CONFRONTING THE SAME TO THE A.O. THE AMOUNT OF RS.11 14 338/- REPRESENTS BALANCE OF TWO ACCOUNTS I.E. A/C. NO. 9957 AND 9958. FROM THIS BALANCE FDR OF RS.11 14 000 IS PURCHASED ON 28.04.1992 AND THE SAME IS INCLUDED IN SEIZED FDR. THE DETAILS OF THE BANK ACCOUNT IS AS UNDER: DATE. PARTICULARS. A/C.NO.9957 A/C.NO.9958 TOTAL. 13.04.92 CASH DEPOSIT 100 100 200 25.04.92 DEMAND DRAFT 6 98 250 4 15 888 11 14 138 11 14 338 FDR PURCHASED ON 28.04.1992. 11 14 000 338 (III) A/C.NO.1318 WITH RANDER PEOPLES CO-OP. BANK LT D. SURAT RS.12 43 375/- THE AMOUNT OF RS.12 43 375/- REPRESENTS BALANCE OF TWO ACCOUNTS I.E. A/C.NO.1317 AND A/C.NO.1318.FROM THIS BALANCE FDR OF RS.12 42 000/- IS PURCHASED ON 28.03.1992 IT(SS)329-04 & IT(SS) 17-05. 15 AND THE SAME IS INCLUDED IN SEIZED FDR. THE DETAILS OF THE BANK ACCOUNT IS AS UNDER:- DATE. PARTICULARS. A/C.NO.9957 A/C.NO.9958 TOTAL. 20.03.1992 CASH DEPOSIT 100 100 200 28.03.1992 CASH DEPOSIT 5 88 675 5 88 675 6 54 300 6 54 300 12 42 875 12 43 075 28-03-1992 FDR PURCHASED 5 88 000 6 54 000 12 54 000 ----------- 1 075 (IV) VARIOUS ACCOUNTS WITH UNION BANK OF INDIA KHAMBH AT RS.18 25 600 THIS INCLUDES THE DEPOSITS RECEIVED FROM DENA BANK ALKAP URI BRANCH (RS.5 50 000/-) AS WELL AS A DEPOSIT OF RS.4 90 00 00 ON 9.8.95. BOTH THESE AMOUNTS WERE UTILIZED FOR PURCHASING FDR AND SUBSEQUENTLY THESE FDRS HAVE BEEN TRANSFERRED WITH INTEREST ON MATURITY TO UBI ALKAPURI BRANCH AND THE RENEWED FDR HAS BEEN SEIZED DURING THE COURSE OF SEARCH AND INCLUD ED IN 2 15 51 089/-.SINCE THIS IS DUPLICATE ADDITION THE SAME MAY BE DELETED. (V) VARIOUS ACCOUNTS WITH DENA BANK ALKAPURI BARODA RS. 5 56 625 THE APPELLANT WAS HAVING 15 ACCOUNTS WITH DENA BANK AL KAPURI BRANCH. ON 24.03.94 AN AMOUNT OF RS.5 04 500 WAS DEPOS ITED IN THESE BANK ACCOUNTS AND ON 31.03.1995 AN AMOUNT OF RS.5 50 000/- WAS TRANSFERRED TO UNION BANK OF INDIA KHAMBHAT IT(SS)329-04 & IT(SS) 17-05. 16 BRANCH AND THEREAFTER THIS AMOUNT HAS BEEN UTILIZED F OR PURCHASING FDRS OF RS.7 70 000 (INCLUDED IN PARA-IV ABO VE) WHICH HAS BEEN SUBSEQUENTLY TRANSFERRED WITH INTEREST ON MATURITY TO UBI. ALKAPURI BRANCH AND THE RENEWED FDR HAS BEEN SEIZED DURING THE COURSE OF SEARCH AND INCLUDED IN 2 15 51 089/- SINCE THIS IS DUPLICATE ADDITION THE SAME MAY BE DELETED. (VI) KASHMIRA ACCOUNT NO.4852 WITH UNION BANK OF INDIA SEVASI BRANCH IN THE NAME OF RAJESH PATEL. I WOULD FURTHER LIKE TO SUBMIT THAT THIS ACCOUNT BELON GS TO KASHMIRA RAJESH PATEL WHO IS WIFE OF RAJESH M. PATEL AN D DOES NOT BELONG TO ME. 27. THE GIST OF THE EXPLANATION IS THAT ENTIRE DEPOSIT S WAS UTILIZED IN PURCHASING FDRS BY WITHDRAWING MONEY IN CASH. THE LD. C .I.T.(A) HOWEVER HELD THAT ASSESSEE WAS NOT ABLE TO EXPLAIN THE DEPOSITS IN ACCOUNT NO.992 AMOUNTING TO RS.19 82 200/- AND DEPOSIT IN ACCOUNT NO.4852 IN UNION BANK OF INDIA AMOUNTING TO RS.1 23 134/- THEREFORE THEY REMAINED UNEXPLAINED. HE ACCORDINGLY SUSTAINED THE ADDITION OF RS.21 05 334/- BEING THE SUM OF THESE 2 FIGURES. 28. BEFORE US LD. A. R. SUBMITTED THAT ONCE MONEY WIT HDRAWN FROM THE ACCOUNTS ARE UTILIZED IN PURCHASE OF THE FDRS AND FIN AL BALANCES AS STANDING IN THESE ACCOUNTS WERE WITHDRAWN BY THE DEPARTM ENT IN RESPECT OF WHICH AO HAS PROPOSED AN ADDITION OF RS.72 23 399/- SEPARATELY THEN THERE IS NO CASE FOR SUSTAINING ANY ADD ITION SEPARATELY ON ACCOUNT OF THESE DEPOSITS. 29. ON THE OTHER HAND LD. D.R. SUBMITTED THAT NEXU S OF CASH WITHDRAWAL AND PURCHASE OF FDRS HAS NOT BEEN ESTABLISHED THEREFORE IT(SS)329-04 & IT(SS) 17-05. 17 NO CREDIT SHOULD BE GIVEN AND THEREFORE THE ADDITION SO DELETED BY LD. C.I.T.(A) SHOULD BE RESTORED. 30. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW T HE DEPOSITS IN THESE BANK ACCOUNTS DURING THE BLOCK PERIOD CANNOT BE CON SIDERED IN ISOLATION FROM TOTALITY OF INVESTMENT/EXPENDITURE MAD E BY THE ASSESSEE DURING THE BLOCK PERIOD AND CONCEALED INCOME EARNED BY HIM DURING THE BLOCK PERIOD. THE ISSUE WILL BE FINALLY CONSIDERED I N THE TOTALITY OF INCOME AND EXPENDITURE SCENARIO. 31. GROUND NO.4 RELATES TO SUSTAINING ADDITION OF RS.1 70 87 879/- OUT OF ADDITION OF RS.2 15 51 089/- PROPOSED BY THE A .O. DURING THE COURSE OF SEARCH OF LOCKER NO.677 IN THE NAME OF RATILAL M. PATEL WITH BOMBAY MERCANTILE CO-OPERATIVE BANK LTD. BARODA. VAR IOUS FDRS NSCS UNITS AND BONDS WITH INVESTMENT VALUE OF RS.2 15 5 1 089/-WAS FOUND. THE DETAILS OF VARIOUS BANK ACCOUNTS IN THE BENAM I NAME WERE ALSO DISCOVERED AFTER SCRUTINIZING VARIOUS BANK SLIPS AND OTHER DOCUMENTS FOUND IN THE SEARCH. THE STATEMENT OF THE ASSESSEE WAS RECORDED ON 10-8-2000 AND AS STATED ABOVE HE ADMITTE D TO HAVE UNACCOUNTED INCOME OF RS.2 TO 2.5 CRORES IN ADDITION TO RS.1 CRORE ALREADY DECLARED BY HIM. EXPLAINING THESE INVESTMENTS T HE ASSESSEE FURTHER STATED AS UNDER ON 10-8-2000 U/S. 132(4). Q.NO.6. TODAY ON OPENING BANK LOCKER NO.677 AT BOMBA Y MERCANTILE CO-OP. BANK IN THE PRESENCE OF SHRI PULIN K. PATEL SON OF YOUR C.A. & A.R. AND TWO WITNESSES . KVPS NSCS BANK FIXED DEPOSITS BONDS ETC. HAVE BEEN FOUND AND INVENTORISED IN ANNEXURE A1 TO A5 SHOWN TO YOU TODAY VALUED AT RS.2 15 51 049/- (RUPEES TWO CRORE FIFTEEN LACS FIFTY ONE THOUSAND FORTY NINE ONLY). IN SHORT YOUR TOTAL INVESTMENT IS OF RS.2 15 51 049/-. PLEASE STATE WHETHER THIS IT(SS)329-04 & IT(SS) 17-05. 18 INVESTMENT IS ACCOUNTED IN THE BOOKS OF ACCOUNTS OF YOUR GROUP. IF NOT PLEASE GIVE THE SOURCES THEREOF IN DETAIL. ANS. IN REPLY TO Q.NO.4 OF STATEMENT OF TODAY I HAVE ADMITTED THAT THIS INVESTMENT IS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS MAINTAINED BY ME OR MY FAMILY. THESE INVESTMENTS ARE MADE IN MY NAME MY FAMILY MEMBER NAME OR IN BENAMI (THIRD PARTY) NAMES AND FOR OPERATING THE ACCOUNTS I OR MY FAMILY MEMBERS ARE SIGNING. I AGAIN ADMIT/AGREE THAT THE RS.2 15 51 049/- ARE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF MYSELF OR MY FAMILY MEMBERS. THIS INVESTMENT IS MADE FROM UNDISCLOSED SOURCES I.E. THE INVESTMENTS ARE NOT DECLARED IN RETURNS OF INCOME OR UNDER V.D.I.S.1997. I ALSO ADMIT THAT THERE IS ALSO ACCRUED INTEREST ON SOME OF THE SECURITIES WHICH IS MY UNDISCLOSED INCOME. AFTER CALCULATING THE ACCRUED INTEREST. I WILL SUBMIT THE SAME AT THE EARLIEST. THESE INVESTMENTS ARE NOT MADE OUT OF MY AGRICULTURAL INCOME OR OTHER NON TAXABLE INCOME. I AGAIN STATE THAT THIS UNDISCLOSED INCOME DECLARED TODAY IS IN ADDITION TO ADMISSION OF RS. ONE CRORE MADE IN THE STATEMENT ON 8.8.2000/9.8.2000 I.E. MY AND MY FAMILY MEMBERS UNDISCLOSED INCOME FOR THE LAST 10 YEARS I.E. BLOCK PERIOD IS OF RS.3 15 51 089/- (RUPEES THREE CRORES FIFTEEN LACS FIFTY ONE THOUSAND EIGHTY NINE) + INTEREST ACCRUED THEREON. I AND MY FAMILY MEMBERS ARE READY TO PAY TAX THEREON AS PER INCOME TAX ACT. I HAVE EARNED THE ABOVE UNDISCLOSED INCOME AS UNDER I HAVE ORGANIZED UNDER MENTIONED SOCIETIES (A) GOKUL TOWNSHIP (B) PRERNA SOCIETY (C) JAY RATNA SOCIETY (D) OTHER SOCIETIES. ON-MONEY TAKEN THEREFROM. (1) INCOME EARNED OUT OF ON-MONEY ON LAND DEALING I.E. SALE AND PURCHASE OF LAND BY ME AND MY SONS AMRISH PATEL AND DHARMESH PATEL AS POWER OF ATTORNEY HOLDERS. IT(SS)329-04 & IT(SS) 17-05. 19 32. THE A.O. ACCORDINGLY PROPOSED AN ADDITION OF RS.2 15 51 089/-. IN ADDITION TO THIS HE WORKED OUT INTEREST ACCRUED ON SU CH FDRS AND NSCS AT RS.41 51 722/- WHICH WAS ALSO PROPOSED BY HIM AS A N ADDITION. 33. IN ADDITION TO ABOVE A.O. FOUND VARIOUS BENAMI ACCOUNTS WHOSE DETAILS ARE GIVEN BY HIM IN PARA 11.2 OF HIS ORDER. I N UNION BANK OF INDIA SEVASI BRANCH BARODA IN WHICH THERE WERE 9 BE NAMI ACCOUNTS HAD CONSECUTIVE NUMBERS THEIR RESPECTIVE BALANCES AS ON 1 7.8.2000 WAS RS.5 45 011/-; IN PARA 11.3 IN UNION BANK OF IN DIA PSB ALKAPURI BRANCH BARODA THERE WERE 15 BENAMI BANK ACCOUNTS WHOSE ACCOUNT NUMBERS WERE ALSO CONSECUTIVE WHERE DEPOSITS OF RS.25 87 8 22/- WERE FOUND AS ON 26.8.2000; IN PARA-11.4 IN BANK OF BARODA FATEHPURA BRANCH BARODA WHERE 17 BENAMI ACCOUNTS WERE FOUND WHOSE ACCOUNTS WERE ALMOST CONSECUTIVE AND WHERE DEPOSIT OF RS.28 35 189/- WERE FOUND AS ON 16.8.2000. TOTAL OF T HESE DEPOSITS WAS WORKED OUT AT RS.72 23 399/- WHICH WAS ADDED BY TH E A.O. AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. 34. THE LD. C.I.T.(A) OUT OF ADDITION OF RS.2 15 51 089/- DELETED A SUM OF RS.3 10 000/- BELONGING TO SHRI BALDEVBHAI PAT EL AND TREATED IT AS EXPLAINED. HE HELD THAT FURTHER A SUM OF RS.41 53 21 0/- WAS DECLARED IN THE BLOCK RETURN. THUS HE DELETED AN AMOU NT OF RS.44 63 210/- AND SUSTAINED THE REST OF THE ADDITION O F RS.1 70 87 879/- AGAINST WHICH ASSESSEE IS IN APPEAL. 35. REGARDING ADDITION OF RS.72 23 399/- BEING THE B ANK BALANCES FOUND IN THE BANK ACCOUNTS ON THE DATE OF SEARCH THE LD . C.I.T.(A) IT(SS)329-04 & IT(SS) 17-05. 20 ALLOWED RELIEF OF RS.42 41 000/- BEING AN ADVANCE RECE IVED FROM KARMYOGI CO-OPERATIVE HOUSING SOCIETY PRIOR TO THE DAT E OF THE SEARCH. 36. THE LD. A.R. SUBMITTED THAT LD. C.I.T.(A) HAS TOT ALLY IGNORED THE SUBMISSIONS OF THE ASSESSEE THAT ASSESSEE HAS RECEIVED A SUM OF RS.1 57 41 500/- AS AN ADVANCE FROM VARIOUS FARMERS AND THAT IT HAS DISCLOSED A SUM OF RS.84 04 932/- IN THE BLOCK PERIOD. EV IDENCE WAS FURNISHED TO THE LD. C.I.T.(A)AND ALSO TO THE A.O. TH AT ASSESSEE HAS ENTERED INTO LAND DEALINGS WITH VARIOUS FARMERS DURING THE BLOCK PERIOD AND AGAINST THAT AGREEMENT FOR SALE OF THE LAND ASSESSEE HAD RECEIVED ADVANCES FROM THE FARMERS WHICH WERE DEPOSITED IN THESE BANK ACCOUNTS AND AGAINST WHICH ASSESSEE HAS PURCHASED FDRS AND NSCS. THE A.O. HAS SUMMARILY REJECTED THE EXPLANATION FURNI SHED BY THE ASSESSEE AND LD. C.I.T.(A) HAS TOTALLY IGNORED THE EXPLA NATION. THE LD. A.R. SUBMITTED THAT ADVANCES ON VARIOUS DATES WERE R ECEIVED FROM THE FARMERS. THEY WERE DEPOSITED IN THE BANK ACCOUNT. W HEN ASSESSEE WAS NOT TRANSFERRING THE LAND TO THE FARMERS THEY FILE D A SUIT IN THE CIVIL COURT. A COMPROMISE WAS REACHED ACCORDING TO WHICH A SSESSEE AGREED TO TRANSFER THE LAND TO THE FARMERS AT THE STA TED PRICE BUT FINALLY DUE TO CERTAIN TECHNICAL BREACH SUCH LAND COULD NOT BE TRANSFERRED TO THE FARMERS. BUT THE FACT THAT ASSESSEE HA D RECEIVED THE ADVANCES FROM THE FARMERS COULD NOT BE DENIED. 37. AGAINST THIS LD. D.R. SUBMITTED THAT STORY OF RECEI PT OF ADVANCE FROM THE FARMERS IS TOTALLY COOKED UP AND CANNOT BE RE LIED UPON. THE ALLEGED BANAKHAT FOR THE SALE OF LAND TO THE FARMERS WERE WRITTEN AFTER LONG GAP OF RECEIPT OF ADVANCE. NO FARMER WOULD GIVE ANY ADVANCE WITHOUT FIRST EXECUTING THE AGREEMENT. SECONDLY NO PAY MENT IN CHEQUE HAS BEEN RECEIVED BY THE ASSESSEE. ALL THE ALLEGED ADVANCE IS SHOWN TO IT(SS)329-04 & IT(SS) 17-05. 21 HAVE BEEN RECEIVED ONLY IN CASH WHICH CREATED GENUINE D OUBT WHETHER SUCH BANAKHATS WERE GENUINE. IN ALLEGED COMPROMISE PROCEE DINGS THERE IS NO ROLL OF THE COURT IN INVESTIGATING THE MA TTER AND COMING OUT TO THE TRUTH. IT IS ACCEPTED AS SUCH AND THEREFORE IT D OES NOT SHOW OR THROW LIGHT WHETHER BANAKHATS WERE GENUINE OR NOT. I T IS ALSO NOT PROVED THAT ASSESSEE WAS IN FACT OWNER OF THE LAND WHICH W AS AGREED TO BE SOLD TO THE ALLEGED FARMERS. IDENTITY OF THE FA RMERS AND GENUINENESS OF THE BANAKHAT IS ALSO NOT PROVED. 36. THE LD. D.R. FURTHER SUBMITTED THAT FINALLY FOR THE TECHNICAL BREACH LANDS WERE NOT AT ALL TRANSFERRED TO THE FARME RS LEAVING THE LAND AS WELL AS ADVANCE WITH THE ASSESSEE. THERE IS NO MATERIAL TO SHOW THAT ASSESSEE HAS REFUNDED ANY MONEY TO THE ALLEGED FA RMERS. IT IS NOT KNOWN WHEN THE FDRS NSCS WERE FINALLY ENCASHED . MONEY REALISED AND RETURNED TO THE ALLEGED FARMERS. THEREFORE A.O. AS WELL AS LD. C.I.T.(A) BOTH WERE JUSTIFIED IN REJECTING THE STORY. 37. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORDS. IN OUR CONSIDERED VIEW THE LD. D.R. COULD PR IMA-FACIE SHOW THAT THE STORY OF ALLEGED ADVANCES RECEIVED FROM THE F ARMERS IS NOT TRUE. LD. C.I.T.(A) HAS NOT EXAMINED THE MATTER AND GIVEN HIS FINDING AS TO WHETHER THE ALLEGED CLAIM OF RECEIVING THE ADVAN CES FROM THE FARMERS WAS PROVED OR NOT. THE LD. C.I.T.(A) WAS EXPECT ED TO CONSIDER THE CLAIM EXAMINE THE EVIDENCE AND GIVE HIS FINDING. SINCE IT IS NOT DONE THERE IS CLEAR VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 38. FURTHER THE WITHDRAWAL OF CASH FROM THE BANK ACCO UNT OR OTHER ACCOUNTS CANNOT BE ON THE FACE OF IT ACCEPTED TO HAVE BEE N INVESTED IN PURCHASE OF FDRS AND NSCS. THE ONUS IS ON THE ASSESSEE TO SH OW NEXUS BETWEEN THE WITHDRAWAL OF MONEY FROM THE BANK AND PURCHASE IT(SS)329-04 & IT(SS) 17-05. 22 OF FDRS AND NSCS. IT IS SURPRISING AS TO WHY THE ASSESSEE H AS NOT ISSUED CHEQUE FOR PURCHASE OF FDRS. THE LD. D.R. ALSO SUBMI TTED THAT ALLEGED RECEIPT OF MONEY FROM KARMYOGI CO-OPERATIVE SOCIETY PRIOR TO THE BLOCK PERIOD CAN NOT BE ACCEPTED AS EXPLAINING FDRS NSCS ETC. IT HAS TO BE SHOWN THAT MONEY REMAINED DEPOSITED IN THE B ANK AND WAS ONLY UTILIZED FOR PURCHASE OF FDRS. FURTHER IT CANNOT ACCEPTED THAT ASSESSEE IS WITHDRAWING MONEY ONLY FOR PURCHASE OF FDRS OR NSCS AND NOT FOR ANY OTHER PURPOSE. THERE IS NO CONSIDERATION OF ANY HOUSEHOLD EXPENDITURE OR OTHER EXPENSES. 39. THE LD. C.I.T.(A) HAS NOT DISPOSED OF THE MATTER P ROPERLY AND IN ACCORDANCE WITH THE PRINCIPLES OF ACCOUNTING AND LAW. HE HA S TO TAKE INTO ACCOUNT OTHER INCOME EARNED DURING THE BLOCK PERI OD OR EXPENDITURE/INVESTMENT MADE DURING THE BLOCK PERIOD. BOTH THE ADDITIONS CAN NOT BE MADE SIDE BY SIDE. AS PER THE EVIDE NCE AVAILABLE ON RECORD IF EVIDENCE RELATING TO THE INCOME INDICATES HIGHER UNDISCLOSED INCOME AS COMPARED TO THE TOTAL UNDISCLOSED IN COME COMPUTED BY TAKING INTO ACCOUNT INVESTMENT /EXPENDITURE THEN SUCH HIGHER FIGURE HAS TO BE ADOPTED. IN ANY CASE AO/CIT(A ) WERE REQUIRED TO WORKED OUT THE INCOME FROM BOTH THE ANGLES I.E. IN COME ANGLE AND INVESTMENT OR EXPENDITURE ANGLE AND ADOPT HIGHER OF THE TWO FIGURE. IN THE PRESENT CASE WE FIND THAT ASSESSEE HAS MADE A RENOVA TION INVESTMENT IN THE FOLLOWING (I) IN RENOVATION/REPAI RS OF HOUSE AT ROKADNATH NAGAR AND MANILAL CHAMBERS. (II) MADE INVE STMENT IN FDRS/NSCS WHOSE SAVINGS FOUND TO THE EXTENT OF RS.2 15 51 089/- (III) BANK BALANCE TO THE EXTENT OF RS.72 23 399/- IS FOUND (IV) AS PER ASSESSMENT ORDER PAGE-5 A SEARCH AT THE RESIDENCE OF THE ASSE SSEE FDRS TO THE EXTENT OF RS.1 32 75 000/- ARE FOUND. (V ) THERE ARE SEVERAL ITEMS LIKE CASH GOLD ORNAMENTS SILVER FOREIGN CURRENCY ETC. (VI) ACCRUED INTEREST RS.41 51 722/- WHICH CANNOT BE SAID TO BE IT(SS)329-04 & IT(SS) 17-05. 23 COVERED IN THE ABOVE INVESTMENTS AS INVESTMENTS ARE TAKEN AT THE COST VALUE AND DID NOT ADMITTEDLY INCLUDE ANY ACCRUED INTER EST. (VII) OTHER UNDISCLOSED EXPENDITURE/INVESTMENT IF ANY WHOSE EVIDEN CE IS FOUND IN THE SEARCH AND RELATED POST SEARCH INVESTIGATION. THEREFO RE THIS ITEM IS REQUIRED TO BE CONSIDERED INDEPENDENTLY. 40. THE ABOVE INVESTMENT IS SAID TO BE EXPLAINED BY TH E ASSESSEE AS UNDER :- (I) FDR OF RS.3 10 000/- BELONGED TO SHRI BALDEVBHAI PATEL. IT SEEMS THAT THIS EXPLANATION IS SATISFACTORY. (II) THERE I S CLAIM OF ADVANCE FROM THE FARMERS OF RS.1 57 41 500/- IN RESPECT OF WHICH ASSESSEE HAS FURNISHED CERTAIN EXPLANATION. THE LD. D.R. H AS POINTED OUT THAT IT IS A CONCOCTED STORY BUT LD. C.I.T.(A) HAS NO T GIVEN ANY FINDING. THE MATTER IS TO BE EXAMINED THOROUGHLY BY GIVING OPPORTUNITY TO BOTH THE SIDES. (III) RECEIPT OF MONEY BACK FROM KA RMYOGI CO- OPERATIVE HOUSING SOCIETY AMOUNTING TO RS.42 41 000/-. (IV) WITHDRAWAL OF CASH FROM BANK AND REINVESTMENT IN THE F DRS/NSCS ETC. (V) DISCLOSURE ALREADY MADE IN THE BLOCK RETURN. THE LD. C.I.T.(A) IS REQUIRED TO EXAMINE ALL THESE EXPLANATIONS THOROUGHLY AND GIVE CREDIT TO THE EXTENT EXPLANATION IS FOUND SATISFACTORY. WE THE REFORE RESTORE THE ENTIRE APPEAL OF THE ASSESSEE AND THAT OF THE DEPAR TMENT TO THE FILE OF THE LD. C.I.T.(A) TO EXAMINE THE MATTER AFRESH IN THE LIGHT OF OUR OBSERVATIONS MADE ABOVE AND GIVE FINDINGS ON THE ISSUES B Y CONSIDERING THE EVIDENCES FURNISHED BY BOTH THE PARTIES. HE WILL PROVIDE OPPORTUNITY TO A.O. AS WELL AS TO THE ASSESSEE TO EXAMINE THE MATTER AND FURNISH THE EXPLANATION. IT(SS)329-04 & IT(SS) 17-05. 24 41. AS A RESULT WE RESTORE THE MATTER BACK TO THE FILE OF THE LD. C.I.T.(A) FOR DECIDING AFRESH IN ACCORDANCE WITH LAW. 42. AS A RESULT BOTH THE APPEALS I.E. OF THE DEPART MENT AND ASSESSEE ARE ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 30 /04 /2010. SD/- SD/- (MUKUL SHRAWAT) ( D.C.AGRAWAL) ACCOUNTANT MEMBER. JUDICIAL MEM BER. AHMEDABAD. DATED: 30 / 04 /2010. S.A.PATKI. 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.