The DCIT, Central Circle-2(4),, Ahmedabad v. Shri Dayaram Premchand Punjabi, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND MUKUL KUMAR SHRAWAT JUDICIAL MEMBER) IT(SS)A NO.181/AHD/2004 [BLOCK ASSTT. 1-4-1995 TO 6-9-2001] DAYARAM PREMCHAND PUNJABI-HUF PROP. DAYARAM HANDLOOM HOUSE ROCHIRAM CHAMBER PANCHKUVA AHMEDABAD. VS. ACIT CENT.CIR.2(4) AHMEDABAD. IT(SS)A NO.192/AHD/2004 [BLOCK ASSTT. 1-4-1995 TO 6-9-2001] DCIT CENT.CIR.2(4) AHMEDABAD. VS. DAYARAM PREMCHAND PUNJABI-HUF PROP. DAYARAM HANDLOOM HOUSE ROCHIRAM CHAMBER PANCHKUVA AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.C. SHAH REVENUE BY : SHRI SHELLEY JINDAL O R D E R PER MUKUL KUMAR SHRAWAT JUDICIAL MEMBER: THESE TWO APPEALS ARE CROSS-APPEALS ARISING FROM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III DATED 26.03.2004. FIRST W E SHALL TAKE UP THE ASSESSEES APPEAL AS UNDER: A) IT(SS)A.NO.181/AHD/2004( ASSESSEES APPEAL): 2. GROUND NO.1 OF THIS APPEAL READS AS UNDER: (I) THE AMOUNT OF RS.5 50 000/- BEING ALLEGED PAYMENT TO SHRI P.K.AHUJA AS PER PROMISSORY NOTE [PARA 6(1) OF THE ASSESSMENT ORDER] IN NOT CONSIDERING AS REPAYMENT ON THE DUE DATE OF 1 ST APRIL 2001 (AS PER THE PROMISSORY NOTE] IN THE FUND FLOW STATEMENT IS NOT PROPER. 3. THE FACTS IN BRIEF AS EMERGED FROM THE CORRESPON DING ASSESSMENT ORDER PASSED UNDER SECTION 158BC DATED 24-10-2003 WERE TH AT THE ASSESSEE WAS SUBJECTED TO SEARCH ON 6-9-2001. THE ASSESSEE IS S TATED TO BE IN THE BUSINESS OF TRADING OF DRESS MATERIAL AND TEXTILE . DURING THE COURSE OF SEARCH A IT(SS)A NO.181 AND 192/AHD/2004 -2- PROMISSORY NOTE MARKED AS ANNEXURE O DATED 1-4-2 001 WAS FOUND AND SEIZED FROM THE SHOP SITUATED AT ROCHIRAM CHAMBERS. OUT OF THE THREE PARTIES THE AMOUNT REPRESENTING M/S.K.S. FASHION (KANAIYALA L L. TULSIANI) RS.5 00 000/- AND SHRI SHYAM DUDHANI RS.5 00 000/- WAS RESPECTIVELY DISCLOSED. HOWEVER IN RESPECT OF PROMISSORY NOTE PERTAINING TO ONE SHRI PURSHOTTAM AHUJA FOR RS.5 50 000/- THE CONTENTION OF THE ASSESSEE WAS THAT NO FINANCE WAS GIVEN TO HIM. IT WAS EXPLAINED THAT ON LY A PROMISSORY NOTE WAS OPENED AND THAT BEFORE THE ASSESSEE COULD ACTUALLY FINANCE THE AMOUNT SEARCH TOOK PLACE THEREFORE NO AMOUNT WAS ADVANCED. IN SU PPORT OF THE SAID CONTENTION AN AFFIDAVIT OF THE SAID PARTY SHRI AH UJA WAS ALSO FILED. IT HAS ALSO BEEN CONTESTED THAT THE AMOUNT OF RS.18 04 100/- HA S ALREADY BEEN DISCLOSED THEREFORE THE SAID AMOUNT WAS COVERED BY THE DISCL OSED AMOUNT. THE AO WAS NOT CONVINCED AND THE ADDITION WAS MADE. 4. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY WHO HAS AFFIRMED THE FINDINGS OF THE AO AS FOLLOWS: 6.3 I HAVE CAREFULLY GONE THROUGH THE OBSERVATION AND CONCLUSION OF THE AO AND EXPLANATION OF THE AR. ON GOING THROUGH THE ORDER I FIND THAT THE REQUEST OF THE AO TO PRODUCE SHRI P.K. AHUJA PERSO NALLY WAS NOT COMPLIED WITH BY THE APPELLANT. THE ARGUMENT OF THE LD. AR ARE CONFLICTING. FIRSTLY HE SAYS THAT THE MONEY COULD NOT BE ADVANCED TO MR.AHUJA DUE TO SEARCH WHEREAS THERE IS A BIG GAP BETWEEN THE DATE OF SEARCH AND THE DUE DATE OF PAYMENT. THEN HE TAKEN THE PLEA THAT EVEN IF THE MONEY WAS PAID IT SHOULD BE CONSIDERED TO BE C OVERED IN THE AMOUNT DISCLOSURE. HE ALSO TAKES THE PLEA THAT THE AMOUNT WAS RETURNED BY MR. AHUJA ON THE DUE DATE BUT THE PROMISSORY NOTE COUL D NOT BE RETURNED TO HIM. THE MONEY WAS UTILISED BY THE APPELLANT IN SO ME OTHER INVESTMENT. IT IS SEEN THAT THE ARGUMENTS OF THE AR ARE WITHOUT ANY SUPPORTING EVIDENCES AND BASIS AND ARE ON SPECULATION AND POSS IBILITIES WHEREAS THE CONCLUSION OF THE AR(SIC.)(CORRECT AO) IS BASED ON THE DOCUMENTARY EVIDENCE AVAILABLE DURING THE COURSE OF SEARCH AND STRONG ESTABLISHED BUSINESS NORMS. THE ADDITION IS THEREFORE SUSTAIN ED. 5. FROM THE SIDE OF THE ASSESSEE MR. A.C.SHAH ADV OCATE APPEARED AND CONTESTED THAT THE AO HAS PRESUMED THAT THE DATE OF REPAYMENT WAS EXTENDED THOUGH THERE WAS NO SUCH EVIDENCE WAS FOUND. THE A SSESSEE HAS ALREADY IT(SS)A NO.181 AND 192/AHD/2004 -3- DISCLOSED REST OF THE TWO PROMISSORY NOTES. HOWEVE R IN RESPECT OF THE PROMISSORY NOTE OF SHRI PURSHOTTAM AHUJA THE SAME W AS NOT DISCLOSED BECAUSE THE ASSESSEE HAD ALREADY RECEIVED THE AMOUNT BACK O N DUE DATE I.E. 1-4-2001. HOWEVER SHRI AHUJA HAS DENIED THE FACT THAT ANY LO AN WAS EVER ADVANCED THROUGH AN AFFIDAVIT FILED BUT SHRI AHUJA WAS NOT SUMMONED IT WAS ALLEGED. CASE LAW CITED WERE (I) GLASSLINE EQUIPMENT 253 ITR 454 (GUJ) AND (II) MEHTA PARIKH & CO. 30 ITR 181 (SC). 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. TH E ADMITTED FACTUAL POSITION IS THAT THE PROMISSORY NOTE IN QUESTION WA S DETECTED CONSEQUENCE UPON THE SEARCH. IT IS ALSO NOT IN DISPUTE THAT IT WAS FOUND IN THE POSSESSION OF THE ASSESSEE. A GENERAL PRESUMPTION IS THAT IF AN INCR IMINATING MATERIAL IS FOUND IN POSSESSION OF THE ASSESSEE THEN AS PER THE PROVISI ONS OF SECTION 132(4A) THE CONTENTS OF THE DOCUMENTS MUST BE HELD AS TRUE AND CORRECT. THIS IS THE FIRST PRESUMPTION WHICH CAN BE DRAWN ON DETECTION OF AN I NCRIMINATING DOCUMENT HOWEVER THE ASSESSEE HAS OPTION TO REBUT. THIS IS THE ONE OF THE BASIC AND ELEMENTARY OF LAW PRONOUNCED WITH REGARD TO THIS SE CTION. IN THE PRESENT CASE THE REBUTTAL WAS NOT SUPPORTED BY ANY COGENT EVIDEN CE. EVEN THE AFFIDAVIT FURNISHED BY SHRI AHUJA WAS NOT RELIABLE PIECE OF E VIDENCE BEING MORE IN THE NATURE OF A SELF-SERVING DOCUMENT. IT IS ALSO WORTH TO NOTE THAT THE A.O. HAD GIVEN THE OPPORTUNITY TO PRODUCE THE SAID PERSON SO THAT HE COULD BE CROSS EXAMINED BUT HE WAS NOT PRODUCED. THEREFORE SUCH AN AFFIDAVIT WHICH HAD NOT BEEN CONFRONTED TO THE DEPONENT THOUGH OPPORTUNITY WAS GRANTED WAS NOTHING BUT A SELF-SERVING RECITAL. FOR THIS LEGAL PROPOSIT ION WE DRAW SUPPORT FROM DURGA PRASAD MORE 82 ITR 540(S.C.) SOHAN LAL GUPTA 33ITR786(ALL.) MEHTA PARIKH&CO.30 ITR 181(S.C.) THE SAID PROMISSO RY NOTE DATED 1-4-2001 HAS IN UNEQUIVOCAL TERM HAS AFFIRMED THAT THE AMOUN T OF RS.5 50 000/- WAS RECEIVED BY MR. AHUJA AND TO BE PAID TO THE ASSESSE E ON DEMAND. IT IS DIFFICULT TO ACCEPT THE THEORY OF THE ASSESSEE AS ALSO NARRAT ED IN THE AFFIDAVIT OF SHR AHUJA THAT THE PROMISSORY NOTE WAS HANDED OVER BUT THE AMOUNT WAS NOT RECEIVED. AS SUGGESTED THROUGH THE ARGUMENTS THAT ONLY PROMISSORY NOTE WAS IT(SS)A NO.181 AND 192/AHD/2004 -4- RETAINED BY THE ASSESSEE BUT NO PAYMENT HAS ACTUA LLY BEEN MADE MUST NOT BE ACCEPTED BECAUSE OF THE PREVAILING MARKET SYSTEM IN FINANCE BUSINESS. AS ARGUED BY THE LEARNED SR-DR SHRI SHELLY JINDAL A PROMISSORY NOTE IS ALWAYS DESTROYED ON RETURN OF THE MONEY AND IN MONEY LENDI NG BUSINESS THE TERMS AND CONDITIONS ARE VERY STRICT. A COMMON PRACTICE IS T HAT INTEREST IS BEING CHARGED ON DAY-TO-DAY BASIS AND THERE IS NO LENIENCY IN THE TERMS AND CONDITIONS PREVAILED IN MONEY LENDING BUSINESS THEREFORE NO J USTIFIABLE REASONS WAS ADVANCED AS TO WHY THIS PROMISSORY NOTE WAS NOT EIT HER RETURNED OR DESTROYED. IN THIS CONTEXT A DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SMT. SUMATI DAYAL VS. CIT 214 ITR 801 IS CITED IN RESPE CT OF THE PROPOSITION OF HUMAN PROBABILITIES PREVAILED ACCORDING TO THE CIRC UMSTANCES OF THE CASE. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS WE HERE BY CONFIRM THE FINDINGS OF THE AUTHORITIES BELOW AND DISMISS THIS GROUND. 7. GROUND NO.2 READS AS UNDER: THE ADDITIONS MADE OF RS.18 04 100 [PARA-8 & 9 OF THE ASSESSMENT ORDER] TOWARDS ALLEGED UNACCOUNTED PAYMENTS AS ON MONEY FOR PURCHASE OF SHOP NO.114 AT SINDHI MARKET IS WITHOUT ANY EVIDENCES AND IT IS BASED ONLY ON PRESUMPTION. FURTHER THE LD.ACT HAS IGNORED THE APPROVAL VALUERS REPORT FILED STATEMEN T U/S.132(4) OF SHRI RAMESHBHAI D. PUNJABI AND STATEMENT U/S.131 OF SHRI MOHANLAL KESWANI THE SELLER OF SHOP NO.114 SINDHI MARKET. 8. ON EXAMINATION OF THE SEIZED MATERIAL MARKED AT PAGE NO.80 OF ANNEXURE A/5 A NAME SHRI MOHANLAL SETH 114 WAS W RITTEN AND IT WAS FOUND THAT DATE-WISE SEVERAL ITEMS OF THE AMOUNT WERE WRI TTEN. IT WAS EXPLAINED THAT A SHOP BEARING NO.114 SITUATED AT SINDHI MARKET AHME DABAD WAS PURCHASED DURING THE FINANCIAL YEAR 2000-2001 FROM SHRI MOHAN LAL. AS PER THE AMOUNTS MENTIONED IN THE SAID SIZED PAPER THERE WAS A SPEC IFIC MENTION OF A SUM OF RS.1000=00 DATED 1/1/01 CHECK. HOWEVER IT IS NOT IN DISPUTE THAT THE ENTRIES OF CASH PAYMENT WERE WRITTEN IN 1000=00 HOWEVER 00 WAS TO BE ADDED TO THE FIGURE MENTIONED IN THE SEIZED DOCUMEN TS. THE TOTAL OF THE ENTIRE AMOUNT WAS STATED TO BE RS.18 04 100/- ON DIFFERENT DATES. THE ARGUMENT OF IT(SS)A NO.181 AND 192/AHD/2004 -5- THE ASSESSEE WAS THAT CASH FINANCE WAS GIVEN TO SEV ERAL PARTIES BUT THROUGH SHRI MOHANLAL SETH. THEREFORE AFTER WRITING HIS NAME A T THE TOP OF THE SEIZED DOCUMENTS THE ASSESSEE HAS NOTED THE DATE AND AMO UNT OF MONEY ADVANCED THROUGH SHRI MOHANLAL SETH. A STATEMENT OF SHRI MO HANLAL SETH WAS RECORDED BY THE ADIT AND HE HAS STATED THAT ONLY RS.1 00 000 /- WAS RECEIVED TOWARDS THE COST OF THE SHOP. IT HAS ALSO BEEN EXPLAINED THAT THE SHOP WAS IN FACT PURCHASED IN THE NAME OF ONE SHRI KAMLESH K. PANJAB I AND THE AMOUNT OF RS.1 LAKH WAS PAID THROUGH ACCOUNT PAYEE CHEQUE. THE AMOUNT OF RS.1 LAKH WAS ALSO DEBITED IN THE BOOKS OF ACCOUNTS OF SHRI K AMLESH K. PUNJABI. IT WAS FURTHER EXPLAINED THAT ENTRIES ON THE SAID PAGE NO.80 HAS IN FACT REF LECTED THE CASH FINANCE GIVEN TO THE DIFFERENT PERSONS ADMITT EDLY AN UNACCOUNTED BUSINESS HOWEVER THROUGH SHRI MOHANLAL SETH. THE SAID FACT WAS STATED BY SHRI KAMLESHBHAI PUNJABI IN HIS REPLY TO QUESTION N O.9 DURING THE STATEMENT RECORDED UNDER SECTION 132(4) DATED 14-9-2001. FUR THER SHRI MOHANLAL SETH HAS ALSO BEEN CALLED UPON BY THE ADIT AND IN HIS ST ATEMENT HE HAS ALSO ACCEPTED THAT THE COST OF THE SHOP WAS ONLY RS.1 LA KH. BEFORE THE AO A COPY OF THE PURCHASE DEED DATED 15-1-2001 HAS ALSO BEEN PLACED. IT WAS VEHEMENTLY CONTESTED THAT NO EVIDENCE OR FINDING WA S PLACED ON RECORD BY THE REVENUE TO DEMONSTRATE THAT THE VALUE OF THE SHOP W AS MORE THAN RS.1 LAKH OR EXTRA AMOUNT HAS BEEN PAID BY THE ASSESSEE. IT HAS ALSO BEEN MENTIONED THAT THE SAID SHOP IS ONLY 48 SQ.FT . CERTAIN COMPARABLE INS TANCE HAS ALSO BEEN REFERRED SUCH AS SUCH SHOP NO.113 WAS SOLD FOR RS.75 000/- ON 31 ST AUGUST 1999 AND ANOTHER 20 SHOPS HAVE BEEN SOLD FOR RS.75 000/- ON 28-7-2000 HENCE PLEADED THAT THE PRICE PAID BY THE ASSESSEE WAS VERY MUCH R EASONABLE. ANOTHER FACT HAS ALSO BEEN STATED THAT THE SHOPS ARE SITUATED ON THE LAND BELONGING TO AHMEDABAD MUNICIPAL CORPORATION. THOSE SHOPS WERE ORIGINALLY ALLOTTED TO THE DISPLACED TENANTS ON A MEAGER PAYMENT AND THE L AND CONTINUED TO BE A LEASE-HOLD LAND. BECAUSE THE SHOP IS SITUATED ON TH IS LEASEHOLD LAND THEREFORE THE PRICE OF RS.1 LAKH WAS ADEQUATE. FURTHER ONE MORE EVIDENCE WAS PLACED BEFORE THE AO IN THE FORM OF VALUATION REPORT OF TH E SHOP TO DEMONSTRATE THAT IT(SS)A NO.181 AND 192/AHD/2004 -6- THE CONSIDERING THE AREA OF THE SHOP BEING ONLY 48 SQ.FT. THEREFORE THE PRICE AS QUOTED WAS REASONABLE. FINALLY IT WAS ARGUED THAT IF THE COST OF THE SHOP IS TO BE TAKEN AT RS.18 04 100/- LAKHS PLUS RS.1 LAKH I.E . RS.19 04 100/- THEN THE COST PER SQUARE FEET WOULD BE ABOUT RS.39 666/- PER SQUA RE FEET. HENCE IT WAS PLEADED THAT NOWHERE IN THE CITY THE MARKET PRICE WAS SO HIGH AS SUGGESTED BY THE AO. THE AO WAS NOT CONVINCED BY THOSE ARGUMENT S AND BRUSHED ASIDE THE THEORY OF CASH LOANS WERE EVER ADVANCED THROUGH SHR I MOHANLAL SETH. THE AO HAS ALSO NOT ACCEPTED THE VALUATION REPORT. HE HAS ALSO MENTIONED THAT THE SHOP IN QUESTION HAD SOME EXTENDED PORTION HENCE THE PR ICE OF THE SHOP AS ARGUED AT RS.1 LAKH WAS NOT THE CORRECT COST. HE HAS HELD TH AT THE ANNEXURE-A/5 PAGE NO.80 HAS QUOTED THE TOTAL AMOUNT TOWARDS THE PUR CHASE OF SHOP NO.1214 AND HENCE THE SUM OF RS.18 04 100/- WAS TAXED AS UNACCO UNTED ON- MONEY INVESTED TOWARDS PURCHASE OF SHOP. 9. BEING AGGRIEVED THE MATTER WAS CARRIED BEFORE TH E FIRST APPELLATE AUTHORITY. THE LEARNED CIT(A) HAS AFFIRMED THE VIE W TAKEN BY THE AO THAT THE ASSESSEE HAD PAID THE ON-MONEY AND THEREFORE MADE U NACCOUNTED INVESTMENT TOWARDS PURCHASE OF SHOP AS PER HIS FOLLOWING FINDI NG AT PARA-9.1: 9.1 BEFORE THE COUNSEL FOR THE APPELLANT HAS TAKE N THE SAME ARGUMENTS AS W TAKEN BEFORE THE AO DURING THE COURS E OF ASSTT. PROCEEDINGS. I HAVE GONE THROUGH THE CASE LAWS CIT ED BY THE LD. AR AND ALSO PERUSED THE COPY OF SEIZED PAPERS AS WELL AS T HE RELEVANT PORTION OF THE STATEMENT RECORDED ON THIS ASPECT. I FIND THAT ALL THE ARGUMENTS OF THE AR HAVE BEEN BEFITTINGLY REPLIED WHILE NARRATIN G THE ISSUE IN THE ASSTT. MY CAREFUL CONSIDERATION OF THE ARGUMENTS O N BOTH THE SIDES MAKE ME BELIEVE THAT THE SEIZED DOCUMENTS ARE REGARDING EH PAYMENT OF ON- MONEY AND CHEQUE PAYMENT FOR THE PURPOSE OF SHOP NO .114 ONLY. THE ARGUMENT OF THE APPELLANT THAT THE AMOUNT MENTIONED ON THE LOOSE PAPER PERTAINING TO THE FINANCE PAID TO THE PARTIES ARRAN GED BY SHRI MOHANLAL IS TOTALLY UNCONVINCING ESPECIALLY IN VIEW OF THE F ACT THAT SHRI MOHANLAL WHO ACCORDING TO THE AR HAD BEEN ARRANGING PARTIES IS NOT ABLE TO REMEMBER EVEN A SINGLE NAME OF SUCH PARTIES. ONE C OULD UNDERSTAND WHY HE IS NOT DISCLOSING THE IDENTITY OF SUCH PARTI ES BECAUSE SHRI MOHANLAL IS INTELLIGENT ENOUGH TO KNOW THAT THE DEP ARTMENT WILL DEFINITELY CONTACT SUCH PARTIES AND FIND OUT THE TR UTH OF THE MATTER. HE THEREFORE WISELY CHOOSES TO SAY THAT HE DID NOT RE MEMBER THE NAMES OF IT(SS)A NO.181 AND 192/AHD/2004 -7- ANY OF SUCH PARTIES. SHRI MOHANLAL IS THE PERSON W HO HAS SOLD HIS SHOP TO THE APPELLANT. HOWEVER NO EVIDENCES WERE PRODU CED TO SHOW THAT EVEN IN EARLIER TIMES OR AFTER THE SEARCH HE HAD A RRANGED ANY PARTY WHO REQUIRES LOAN FROM THE APPELLANT. SHRI KISHOREBHAI IN HIS STATEMENT ALSO STATED THAT ON-MONEY ON PURCHASE OF SHOP NO.114 WAS PAID. IN THE ABOVE SITUATION AND KEEPING IN MIND THE DISCUSSION AND ARGUMENTS OF THE CASE I AM OF THE VIEW THAT THE ADDITION MADE BY TH E AO OF RS.18 04 100/- ACCOUNT OF ON-MONEY PAYMENTS FOR THE PURPOSE OF SHO P IS CORRECT AND ACCORDINGLY SUSTAINED. 10. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AND ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. A STATEMENT WAS RECORDED ON 11-9-2001 AND VIDE QUESTION NO.6 IT WAS ASKED TO EXPLAIN THE DETAILS OF PAYMENT IN RESPECT OF SHOP NO.114. THE ASSESSEE HAS REPLIED THAT THE FIGURES AS PER ANNEXURE-A/5 HAS TO BE ADDED BY TWO ZEROS. HOWEVER THE PAYMENT OF RS.1 LAKH WAS MADE ON 1-1- 2001 THROUGH CHEQUE FOR THE SHOP IN FAVOUR OF THE M OHANLAL SETH. IT WAS STATED THAT IN RESPECT OF REST OF THE FIGURES THE EXPLANA TION SHALL BE TENDERED LATER ON. THERE WAS AN ANOTHER STATEMENT OF RAMESHBHAI SON O F DAYARAM PUNJABI RECORDED ON 14-9-2001 TO WHOM IT WAS ASKED TO EXPL AIN THE ENTRIES OF PAGE NO.18. IT WAS REPLIED THAT THE SHOP NO.114 WAS PU RCHASED FOR A SUM OF RS.1 LAKH FROM MOHANLAL SETH. IN RESPECT OF REST OF THE AMOUNTS IT WAS CATEGORICALLY STATED THAT BEING IN THE BUSINESS OF FINANCE THERE FORE THE REST OF THE AMOUNT OF RS.18 04 100/- WAS CASH ADVANCE TO VARIOUS PARTIES THROUGH THE RECOMMENDATION OF SHRI MOHANLAL SETH. IN ADDITION TO THE STATEMENT TO WHICH THE CONCERNED PERSONS HAVE ADMITTED OF ADVANCING TH E CASH AMOUNT IN RESPECT OF THEIR UNACCOUNTED FINANCE BUSINESS THE SAID STA TEMENT WAS MADE AT THE FIRST INSTANCE AND NO CHANGE HAD EVER BEEN MADE. SUCH A STATEMENT CANNOT BE BRUSHED ASIDE LIGHTLY BECAUSE OF THE PRESENCE OF CO RROBORATIVE EVIDENCE I.E. A PURCHASE DEED WHICH HAS REFLECTED THE COST OF SHOP AT RS.1 LAKH AND ALSO THE BANK STATEMENT THROUGH WHICH THE ASSESSEE HAS TRIED TO EXPLAIN THAT THE AMOUNT WAS PAID THROUGH CHEQUE. THE ASSESSEE HAS ALSO DEM ONSTRATED THAT THE COMPARABLE INSTANCE ALSO SUPPORTED THE PRICE OF THE SHOP AT RS.1 LAKH WAS REASONABLE. THE ASSESSEE HAS ALSO FURNISHED VALUAT ION REPORT TO CONFIRM THE IT(SS)A NO.181 AND 192/AHD/2004 -8- COST OF SHOP. THIS FACT HAS ALSO BEEN FURTHER FOR TIFIED BY NARRATING CERTAIN DOCUMENTS THAT THE SHOP WAS SITUATED AT A LEASEHOLD LAND OF THE AHMEDABAD MUNICIPAL CORPORATION. THE ASSESSEE HAS FURNISHED AN AFFIDAVIT OF SHRI MOHANLAL SETH WHO HAS AFFIRMED THAT THE COST OF THE SHOP WAS RS.1 LAKH AND REST OF THE AMOUNT WAS PERTAINING TO FINANCE ACTIVI TY OF SHRI RAMESH PUNJABI AND KISHORE PUNJABI GROUP. THE PURCHASE OF SHOP WA S DULY DECLARED BY SHRI KAMLESH PUNJABI IN HIS BOOKS OF ACCOUNTS SINCE HE H AS MADE THE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE. THE SHOP WAS PURCHASED ON 15-1-2001 HOWEVER THE SEARCH TOOK PLACE ON 06-09-2001 . THEREFORE ALL THE EVIDENCES WERE PRIOR TO THE DATE OF SEARCH HENCE ACCOUNTED FO R IN THE BOOKS OF ACCOUNTS. AN IMPORTANT FACT HAS ALSO BEEN BROUGHT TO OUR NOTI CE THAT ONCE THE ASSESSEE HAS ACCEPTED THE BUSINESS OF UNACCOUNTED FINANCE T HEREFORE WHILE DECLARING TOTAL UNDISCLOSED INCOME OF RS.34 34 713/ - THEN THE SAID AMOUNT OF RS.18 04 100/- WAS INCLUDED SUO MOTTO AND TAXED ACCORDINGLY . IN THE LIGHT OF THE ABOVE EVIDENCES AND THE DISCUSSION MADE HERE INABOVE WE ARE OF THE VIEW THAT THE HUGE AMOUNT TAXED AS COST OF SHOP WAS MERE LY ON PRESUMPTION RATHER ON PREVAILING FACTS. THE ASSESSEE HAS DEMONSTRATED THAT THE COST OF SHOP WAS NOT AS HIGH AS ASSESSED. THE ASSESSEE HAS ALSO CITED CE RTAIN COMPARABLE INSTANCES. THEREFORE WE HEREBY DELETE THE ADDITION AS UNACCOU NTED INVESTMENT TOWARDS PURCHASE OF SHOP. WITH THE RESULT THIS GROUND GOE S IN FAVOUR OF THE ASSESSEE. 11. GROUND NO.3 READS AS UNDER: (III) THE LD. ACIT HAS ERRED IN NOT GIVING CREDIT OF PURCHASE BILLS AMOUNTING TO RS.77 627 ( PARA 125 OF THE ASSESSMENT ORDER) FOR THE PURPOSE OF CALCULATING UNACCOUNTED EXCESS STOCK IN AS MUCH AS THE GOODS WERE RECEIVED BY THE ASSESSEE AND WERE REFLEC TED IN THE PHYSICAL STOCK FOUND. 12. CERTAIN BILLS WERE FOUND AT THE TIME OF SEARCH WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS. CERTAIN ENQUIRIES HAVE BEEN MADE IN RESPECT OF THE GENUINENESS OF THOSE BILLS. THE AO HAS ISSUED LETT ERS HOWEVER RETURNED WITH REMARK NOT KNOWN. CERTAIN BILLS WERE ALSO FOUND UNRECORDED IN THE BOOKS OF IT(SS)A NO.181 AND 192/AHD/2004 -9- ACCOUNTS. THE EXPLANATION OF THE ASSESSEE WAS THAT THOUGH THE BILLS WERE RECEIVED BUT NOT ENTERED IN THE BOOKS OF ACCOUNTS B ECAUSE THE PAYMENTS HAVE NOT BEEN MADE AND THE PRACTICE ADOPTED WAS TO ENTER THE BILLS IN THE BOOKS ONLY AFTER THE MAKING THE PAYMENT. THE AO HAD MADE TWO REMARKS FIRST THAT THE BILLS OF RS.40 910/- WERE NOT GENUINE BILLS AND SE COND THE BILLS OF RS.36 717/- WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS; THOUGH THE BILLS OF LATER PERIOD HAVE DULY BEN RECORDED. BOTH THE AMOUNTS WERE THE REFORE TAXED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. THE MATTER WA S CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHO HAS CONFIRMED THE FINDINGS OF THE AO VIDE PARA-11.1 AS UNDER: 11.1 BEFORE ME THE LD. AR OF THE APPELLANT ARGUED THAT THE GOODS HAD BEEN RECEIVED AND THE BILLS WERE YET TO BE ENTE RED BECAUSE IT WAS THE PRACTICE OF THE APPELLANT THAT HE USED TO ENTER THE BILLS IN THE BOOKS ONLY AFTER HE HAD MADE THE PAYMENTS TO THE PA RTIES. I DO NOT AGREE WITH THE AR BECAUSE THE APPELLANT IS NOT ALLO WED TO FOLLOW HIS OWN METHOD OF ACCOUNTING AND HE IS BOUND BY CERTAIN PRINCIPLES OF ACCOUNTANCY ON THE BASIS OF WHICH HE HAS TO MAINTAI N THE BOOKS TO REFLECT THE CORRECT INCOME OF THE YEAR. IF THE AP PELLANT STARTS ENTERING THE BILLS ON THE BASIS OF HIS OWN WHIMS AN D FANCIES ON WHATEVER DATE IT WILL BE DIFFICULT TO TREAT HIS BO OKS OF ACCOUNTS AS RELIABLE THE AO HAS VERIFIED AND FOUND THAT EITHER THE PARTIES WERE NOT AVAILABLE AND BILLS WERE NOT ENTERED ON THE COR RECT DATES ACCORDINGLY HE TREATED SUCH BILLS AS BOGUS. THE A CTION OF THE AO IS UPHELD. 13. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES W E HAVE NOTICED THAT THESE BILLS WERE UNEARTHED CONSEQUENCE UPON THE SEARCH . THE AO HAS NOTICED CERTAIN DISCREPANCIES AND THOSE DISCREPANCIES HAVE NOT BEEN PROPERLY RESPONDED. ON THE PART OF THE AO CERTAIN LETTERS WERE ISSUED TO CONFIRM THE GENUINENESS HOWEVER THAT WAS NOT ESTABLISHED. FURT HER IN RESPECT OF REST OF THE BILLS IT WAS NOTICED THAT SAME WERE NOT RECORDED I N THE BOOKS OF ACCOUNTS IN THE REGULAR COURSE. WE ARE ALSO NOT CONVINCED OF THE ARGUMENTS OF THE LEARNED AR BECAUSE THERE WAS NO CONVINCING CORROBORATIVE EVIDE NCE TO EXPLAIN THAT WHY THOSE BILLS WERE NOT FOUND RECORDED IN THE BOOKS OF ACCOUNTS IN THE REGULAR IT(SS)A NO.181 AND 192/AHD/2004 -10- COURSE OF BUSINESS. WITH THE RESULT WE HEREBY CON FIRM THE FINDINGS OF THE AUTHORITIES BELOW AND DISMISS THIS GROUND. 14. GROUND NO.4 READS AS UNDER: IV) THE ADDITION OF RS.1 00 000 BEING ALLEGED UNACCOUNTED FINANCE GIVEN TO ARUNBHAI ST ( PARA 6(2) OF THE ASSESSMENT ORDER) AS PER PAGE NO.1 OF ANNEX.O IS NOT PROPER IN AS MUC H AS THE ADDITION IS BASED ON LOOSE CHIT AND ONLY THE BASIS OF PRESUM PTION WITHOUT ANY CORROBORATIVE EVIDENCE. 15. A PAPER WAS SEIZED AND MARKED AS PAGE NO.1 OF A NNEXURE O WHICH WAS SIGNED BY ONE SHRI ARUNBHAI DATED 24-9-1999 ACK NOWLEDGING THE RECEIPT OF RS.1 LAKH. THERE WAS A NOTING THAT A FINANCE OF RS.1 LAKH WAS MADE ON 24-4- 1999 AT THE RATE OF INTEREST OF 15% PER MONTH. IN THE ABSENCE OF ANY SATISFACTORY REPLY THE SAME WAS TAXED AS UNDISCLOSE D FINANCE GIVEN BY THE ASSESSEE. 16. THE LEARNED CIT(A) WAS NOT CONVINCED WITH THE A RGUMENTS OF THE ASSESSEE AND HELD THAT THE ASSESSEE HAS ACCEPTED TH E UNACCOUNTED FINANCE GIVEN FROM TIME TO TIME THEREFORE THE SAID AMOUNT OF RS.1 LAKH WAS ALSO FINANCE WITHOUT RECORDING IN THE BOOKS OF ACCOUNTS. RESULT ANTLY THE ACTION OF THE AO WAS CONFIRMED. 17. WE HAVE HEARD BOTH THE SIDES AND ALSO PERUSED T HE MATERIAL PLACED BEFORE US. THE PRESENCE OF THE SAID LOOSE PAPER AN D THE FIGURE MENTIONED WITH CERTAIN NARRATIONS HAS NOT BEEN AGITATED BEFORE US. THE FOREMOST ARGUMENT OF THE LEARNED AR WAS THAT THE SAID AMOUNT OF RS.1 LAK H WAS TO BE TREATED AS PART OF THE DISCLOSURE OF RS.18 04 100/- OFFERED BY THE ASSESSEE. WE ARE NOT CONVINCED WITH THIS ALTERNATE PLEA BECAUSE THE SAID AMOUNT OF RS.18 04 100/- REPRESENTED UNACCOUNTED FINANCE WHICH WAS DETECTED VIDE PAGE NO.80 OF ANNEXURE A/5 TITLED AS SHRI MOHANLAL SETH-114. T HE SAID DISCLOSURE OF UNACCOUNTED PEAK AMOUNT OF FINANCE HAS ALREADY BEEN ADJUSTED THEREFORE NO IT(SS)A NO.181 AND 192/AHD/2004 -11- SCOPE IS LEFT FOR THE FURTHER ADJUSTMENT AGAINST TH E ADDITION OF RS.1 LAKH . WITH THE RESULT WE HEREBY CONFIRM THE FINDINGS OF THE A UTHORITIES BELOW AND DISMISS THIS GROUND. 18. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLO WED. B . IT(SS)A.NO.192/AHD/2004 (REVENUES APPEAL): 19. GROUND NO.1 READS AS UNDER: THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1.50 LAKHS MADE BY THE AO BEING FIN ANCE GIVEN TO SHRI JAI. 20. THERE WAS SEIZURE OF PAGE NO.1 MARKED AS ANNEXU RE A/2 WITH CERTAIN NOTING UNDER THE NAME JAI. THE AO HAS ADDED TWO ZEROS AND HELD THAT THE AMOUNT MENTIONED BELOW NAMED JAI A CASH FINANCE OF RS.1 50 000/- WAS MADE. THE CONTENTION OF THE ASSESSEE WAS THAT THE AMOUNT HAD ALREADY BEEN DISCLOSED IN THE BLOCK RETURN. FURTHER A CONFIRMA TION WAS ALSO PLACED ON RECORD THAT THE TRANSACTION WAS NOT TOWARDS FINANCE BUT PURCHASE AND SALE THEREFORE IF THE AMOUNT WAS TO BE TREATED AS RS.1 50 000/- THEN ONLY 10% PROFIT COULD BE ADDED. IT HAS ALSO BEEN CONTESTED THAT TH ERE WAS NO BASIS FOR ADDING TWO ZEROS BECAUSE THE ACTUAL FIGURES HAVE BEEN WR ITTEN ON THE SIDE OF THE SEIZED PAPER. THE AO HAS HELD THAT ONCE THE ASSESS EE HAS ALREADY ACCEPTED THE PRESENCE OF UNACCOUNTED FINANCE THEREFORE THE SAI D AMOUNT WAS OF THE SAME NATURE AND TAXED ACCORDINGLY AS UNDISCLOSED FINANCE GIVEN TO JAI. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. THE LEARNED CIT(A) HAS EXAMINED THE FACTS OF THE CASE AND ALLOWED THE GROU ND ASSIGNING THE FOLLOWING REASONS: 7.2 I HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCE S OF THE CASE. THERE IS NO DOUBT THAT THE FIGURES ARE WRITTEN IN C ODED FORM AND THE TOTAL AMOUNT IS RS.1 50 000/- AND NOT RS.1 500/-. HOWEVER IT HAS NOT BEEN ESTABLISHED BY THE AO THAT THE SAME PERTAI NS TO IT(SS)A NO.181 AND 192/AHD/2004 -12- UNACCOUNTED FINANCIAL TRANSACTIONS BETWEEN THE APPE LLANT AND ONE MR. JAI. HIS CONCLUSION IS BASED ON PRESUMPTION ONLY. IF ACCORDING TO THE APPELLANT THE FIGURES ARE TAKEN AS UNACCOUNT ED SALE GP @ 0% ONLY I.E. RS.1 500/- COULD BE TAKEN. IN VIEW OF THE ABOVE DISCUSSION I AM OF THE OPINION THAT THE ADDITION I S MADE ON NO SOUND GROUND. THEREFORE THE ADDITION OF RS.1 50 000/- I S DELETED. 21. THE LEARNED AR VEHEMENTLY CONTESTED THAT THE AS SESSEE HAD MAINTAINED A DIARY IN RESPECT OF SALES WHICH WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS THEREFORE THE AMOUNT IN QUESTION WAS NOT RELATED TO THE UNACCOUNTED FINANCE BUT IT WAS IN THE NORMAL COURSE OF UNACCOU NTED SALES AND PURCHASE. IN RESPECT OF THE SAID CONTENTION THAT THE AMOUNT IN Q UESTION WAS BUSINESS TRANSACTION A CONFIRMATION HAS ALSO BEEN PLACED ON RECORD. CONSIDERING THE OVERALL CIRCUMSTANCES WE HEREBY CONFIRM THE FINDIN G ON FACTS OF LEARNED CIT(A) .THIS GROUND OF THE REVENUE IS THEREFORE DIS MISSED. 22. GROUND NO.2 READS AS UNDER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.30 000/- MADE BY THE AO BEING ADVANC E MADE TO ZAVERI. 23. AS PER ANNEXURE A/2 PAGE NO.1 SEIZED FROM THE RESIDENCE THERE WAS A FINDING IN RESPECT OF ZAVERI . IT WAS STATED THA T THE SAID AMOUNT OF RS.30 000/- HAD ALREADY BEEN DISCLOSED IN THE BLOCK RETURN FILE D. FURTHER A CONFIRMATION HAS BEEN FILED FROM M/S.DAYARAM SONS THAT AN AMOUNT OF RS.30 000/- WAS TAKEN BY HIM WHICH WAS REPAID IN INSTALLMENTS OF RS .5 000/- ON DIFFERENT DATES. THE AO HAS NOTED THAT IN THE RETURN FILED AN AMOUN T WAS DISCLOSED AS MISCELLANEOUS EXPENSES/PAYMENTS. AS PER THE AO TH E ASSESSEE HAS TAKEN CONFLICTING STAND THEREFORE TAXED THE AMOUNT IN T HE HANDS OF THE ASSESSEE. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHO RITY WHO HAS DELETED THE ADDITION AS PER THE OBSERVATIONS AS UNDER: 8.1 I HAVE CAREFULLY GONE THROUGH THE FACTS AND CI RCUMSTANCES OF THE CASE AND FOUND THAT THE APPELLANT HAS BEEN ABLE TO EXPLAIN THE PAYMENT OF LOAN OF RS.30 000/- TO MR. ZAVERI WITH T HE HELP OF THE IT(SS)A NO.181 AND 192/AHD/2004 -13- CONFIRMATION LETTER DURING THE COURSE OF ASSTT. PRO CEEDINGS. THE AO HAS ALSO NOT DISBELIEVED THE CONFORMATION LETTER. IN THE CIRCUMSTANCES IT IS NOT JUDICIOUS ON THE PART OF T HE AO TO MAKE THE ADDITION WITHOUT REBUTTING THE EVIDENCES OF THE APP ELLANT. THE ADDITION IS THEREFORE DELETED. 24. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES W E ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A) E SPECIALLY WHEN THE AMOUNT HAS ALREADY BEEN DISCLOSED AS PER THE BLOCK RETURN FILED. WITH THE RESULT WE HEREBY CONFIRM THE FINDINGS OF THE LEARNED CIT(A) O N THIS ISSUE AND DISMISS THIS GROUND OF THE REVENUE. 25. GROUND NO.3 READS AS UNDER: 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACT S OF THE CASE IN DELETING THE ADDITION OF RS.10.50 LAKHS MADE BY THE AO ON ACCOUN T OF PAYMENT OF ON-MONEY FOR PURCHASE OF SHOPS IN RUC HIRAM CHAMBERS AND RAHUL COMPLEX. 26. A STATEMENT OF SHRI KISHOREBHAI PUNJABI WAS REC ORDED ON 8-9/9/2001. THERE WAS SOME EXPLANATION IN RESPECT OF FEW SHOPS PURCHASED BY THE ASSESSEE. LATER ON IN THE SAME STATEMENT IT WAS ALLEGED THAT DUE TO THREATENING BY THE POLICE HE HAS MADE THE ABOVE STATEMENT. BEFORE THE AO IT WAS CONTESTED THAT IN THE ABSENCE OF ANY OTHER EVIDENCES FOUND DURING THE COURSE OF SEARCH NO ADDITION SHOULD BE MADE MERELY ON THE BASIS OF STAT EMENT WHICH WAS RETRACTED AT THAT VERY STAGE. HOWEVER THE AO WAS NOT CONVINCED AND HELD THAT IN VIEW OF THE STATEMENT OF SHRI KISHOREBHAI WHICH WAS HAVING EVIDENTIARY VALUE PAYMENT OF RS.10 50 000/- WAS MA DE IN CASH TOWARDS PURCHASE OF SHOPS AT RUCHI RAM CHAMBERS AND RAHUL C OMPLEX. THE SAME WAS ACCORDINGLY TAXED AS UNDISCLOSED INVESTMENT BY THE ASSESSEE. 27. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY IT WAS OBSERVED THAT THERE WAS NO CORROBORATIVE EVIDENCE D ISCOVERED AT THE TIME OF SEARCH TO ESTABLISH THAT THE ASSESSEE HAS PAID ON-M ONEY FOR PURCHASE OF SHOP OVER AND ABOVE THE AMOUNT ALREADY DISCLOSED. MERE A STATEMENT WAS NOT IT(SS)A NO.181 AND 192/AHD/2004 -14- SUFFICIENT TO MAKE THE ADDITION AND ACCORDINGLY TH E CIT(A) GRANTED THE RELIEF AS UNDER: 9.4 I HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CASE AND ALSO THE STATEMENT OF THE PARTNER RECORDED DURING THE CO URSE OF SEARCH AND THE ARGUMENTS PUT FORTH BEFORE ME ALONG WITH SU PPORTING CASE LAWS. THERE IS NO DOUBT THAT THE PARTNER HAD STATE D IN THE STATEMENT INITIALLY RECORDED THAT SOME AMOUNT OF UNACCOUNTED MONEY WAS PAID FOR THE PURCHASE OF CERTAIN SHOPS BUT LATER HE DISO WNED HIS STATEMENT. HOWEVER IT IS ALSO SEEN THAT THE AO HA S NOT BROUGHT ANYTHING ELSE TO STRENGTHEN THE CLUE TAKEN FROM THE STATEMENT. THERE ARE NO CORROBORATIVE EVIDENCES FOUND OR SEIZED DURI NG THE COURSE OF SEARCH WHICH COULD PROVE OR INDICATE THAT HOW MUCH AMOUNT HAD BEEN PAID BY THE APPELLANT UNACCOUNTABLY FOR THE PU RPOSE OF SHOPS. THE SUPPORT OF THE CASE LAWS AND JUDICIAL PRONOUNCE MENTS TAKE BY THE APPELLANT CLEARLY DIRECT THAT THE INFORMATION A VAILABLE TO THE DEPARTMENT IN THE FORM OF THE STATEMENT IS NOT SUFF ICIENT TO MAKE THE ADDITION OF SUCH A HUGE AMOUNT. THE STATEMENT GIVES A SUGGESTION THAT SOME AMOUNT HAS BEEN PAID UNACCOUNTABLY FOR TH E PURPOSE OF CERTAIN SHOPS BUT THE AO DID NOT MAKE ANY INQUIRY T O ESTABLISH CONCLUSIVELY THE QUANTUM OF UNACCOUNTED INVESTMENT MADE BY THE APPELLANT. THEREFORE ONE CAN SEE THAT THE AO COULD HAVE DONE SOME MORE EFFORTS TO MAKE THIS POINT FIT FOR ADDITION. IT IS A COMMON KNOWLEDGE THAT TRANSACTIONS IN PROPERTIES INVOLVE U NACCOUNTED MONEY. BUT THE DEPARTMENT CAN MAKE ADDITION ON THI S ASPECT ONLY WHEN THE DEPTT. GETS SOME CORROBORATIVE EVIDENCES. OTHERWISE NO COURT SUPPORTS THE ADDITION OF ON-MONEY MERELY ON T HE BASIS OF STATEMENT. I AGREE THAT THE CASE LAWS RELIED UPON BY THE APPELLANT SUGGEST THAT THIS IS NOT A FIT CASE FOR MAKING ADDI TION IN ABSENCE OF ANY CORROBORATIVE EVIDENCE FOUND OR SEIZED DURING T HE COURSE OF SEARCH. THEREFORE THE ADDITION OF RS.10 50 000/- IS DELETED. 28. WE HAVE HEARD BOTH THE SIDES AND ON CAREFUL CON SIDERATION OF THE TOTALITY OF THE CIRCUMSTANCES WE HEREBY CONFIRM THE FINDING S OF THE LEARNED CIT(A) PRIMARILY ON THE GROUND THAT THE IMPUGNED STATEMENT WAS MADE THE BASIS OF THE SAID ADDITION. THERE WERE CERTAIN ALLEGATIONS ABOUT THE MANNER IT WAS RECORDED. THE SAID STATEMENT WAS RETRACTED THEN AND THERE. RATHER IT WAS ALLEGED THAT THE ASSESSEE WAS THREATENED DURING THE COURSE OF RECORD ING OF THE STATEMENT. THEREFOER UNDISPUTEDLY THE ASSESSEE HAD AT THAT VE RY POINT OF TIME RETRACTED THE SAID STATEMENT. FURTHER IT IS ALSO IMPORTANT TO NO TE THAT NO INCRIMINATING IT(SS)A NO.181 AND 192/AHD/2004 -15- MATERIAL WAS FOUND WHICH COULD CORROBORATE THE SAID STATEMENT. IN THE ABSENCE OF ANY OTHER EVIDENCES IT IS DIFFICULT TO HOLD THA T MERELY ON THE BASIS OF AN UNSUPPORTED STATEMENT AN ADDITION CAN BE MADE WHIL E FRAMING THE ASSESSMENT UNDER CHAPTER-XIVB OF THE IT ACT. A FEW CASE LAWS RELIED UPON WERE (I) CHITRA DEVI VS. ACIT 77 TTJ 640 (JODH) AND INDIA S EED HOUSE VS. ACIT 69 TJ 241 (DEL)(TM). THE TOTALITY OF THE CIRCUMSTANCE S AND THE CASE LAWS CITED THUS WARRANTS TO CONFIRM THE FINDINGS OF THE LEARNE D CIT(A). RESULTANTLY THIS GROUND OF THE REVENUE IS HEREBY DISMISSED. 30. GROUND NO.4 READS AS UNDER: 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.3 54 090/- MADE BY THE AO ON ACCOUNT OF INTEREST ON UNACCOUNTED FINANCE . 31. AN OBSERVATION WAS MADE BY THE AO THAT THE THOU GH UNACCOUNTED FINANCE AND LOANS & ADVANCES WERE SHOWN BUT NO INTE REST INCOME WAS DISCLOSED BY THE ASSESSEE. THE AO WORKED OUT THE INTEREST AT THE RATE OF 18% ON SUCH UNACCOUNTED LOANS AND ADVANCES OF RS.3 54 090/-. W HEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY IT WA S ARGUED THAT MERELY ON PRESUMPTION THE AMOUNT OF INTEREST WAS TAXED IN TH E HANDS OF THE ASSESSEE. THE LEARNED CIT(A) HAS GRANTED RELIEF TO THE ASSESS EE WITH THE FOLLOWING FINDINGS: 10.2 I HAVE CONSIDERED THE ACTION OF THE AO AND TH E ARGUMENT OF THE LD. AR IN THIS REGARD. I FIND THAT IN THE SEIZED D OCUMENT THERE IS NO MENTION OF CHARGING OF ANY INTEREST EXCEPT AGAINST THE PARTIES AT SL. NO.1 11 AND 13. THE BASIS OF THE ADDITION IN THE SEARCH AND SEIZURE CASES IS THE MATERIAL FOUND AND SEIZED DURING THE C OURSE OF SEARCH. THERE IS NO SCOPE OF PRESUMPTION OR ESTIMATION IN S UCH CASES. SEVERAL CASE LAWS ALSO SUPPORT THE SAME VIEW. IT WOULD THE REFORE BUT NOT JUSTIFIED IF THE ADDITIONS ARE MADE ON THE BASIS O F THE PERSONAL KNOWLEDGE OF THE AO OR THE ESTIMATION MADE ON THE B ASIS. THEREFORE I FIND THAT THE ACTION OF THE AO IN CHARGING OF INTER EST IN THE CASES EXCEPT AGAINST THE PARTIES AT SL.NO.1 11 AND 13 IS NOT JU STIFIED. ACCORDINGLY THE ADDITION OF RS.3 54 090/- IS DELETED. IT(SS)A NO.181 AND 192/AHD/2004 -16- 32. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES W E ARE OF THE VIEW THAT IN THE ABSENCE OF ANY COGENT EVIDENCES THE AFORESAID ADDITION WAS OUT OF THE AMBIT OF THE PROVISIONS OF CHAPTER XIVB OF THE ACT. BEFORE US RELIANCE WAS PLACED ON INDIA SEED HOUSE 69 TTJ 241(SUPRA) AND AC IT VS. HOTEL BLUE MOON 321 ITR 362. UNDISPUTEDLY AND AS PER THE SETT LED LAW CHAPTER XIVB PROVIDES FOR AN ASSESSMENT OF THE UNDISCLOSED INCOM E UNEARTHED AS A RESULT OF SEARCH. THE ASSESSMENT FOR THE BLOCK PERIOD CAN ONL Y BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR SUCH OTHER INFORMATION OR MATERIAL AS ARE AVAILABLE WITH THE A.O. SINCE NOTHING OF THIS NATUR E WAS REPORTED BY THE A.O. THEREFORE THE ADDITION MERELY ON PRESUMPTION CAN NO T BE TAXED UNDER CHAPTER XIVB OF THE ACT. THIS GROUND OF THE REVENUE IS HERE BY DISMISSED. 32.1 REST OF THE GROUNDS ARE GENERAL IN NATURE NEED NO JUDICIAL ADJUDICATION. 33. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28 TH FEBRUARY 2011. SD/- SD/- (G.D. AGARWAL) VICE-PRESIDENT (MUKUL KR. SHRAWAT) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 28-02-2011 COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD