Shri Haresh G. Patel,, Baroda v. The Dy.CIT., Cent.Circle-1,, Baroda

ITSSA 233/AHD/2004 | misc
Pronouncement Date: 22-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 23320516 RSA 2004
Assessee PAN AFSPP1914M
Bench Ahmedabad
Appeal Number ITSSA 233/AHD/2004
Duration Of Justice 6 year(s) 11 month(s) 10 day(s)
Appellant Shri Haresh G. Patel,, Baroda
Respondent The Dy.CIT., Cent.Circle-1,, Baroda
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 22-07-2011
Date Of Final Hearing 06-07-2011
Next Hearing Date 06-07-2011
Assessment Year misc
Appeal Filed On 12-08-2004
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI G. D. AGARWAL VP AND BHAVNESH SAINI JM) IT (SS) A NO.233/AHD/2004 BLOCK PERIOD: 01-04-1955 TO 11-02-2002 HARESH G. PATEL 3 JAYSANTOSHI NAGAR VIBHAG-II KARELIBAUG BARODA VS THE D. C. I. T. CENTRAL CIRCLE-1 AAYAKAR BHAVAN RACE COURSE CIRCLE NR. G. E. B. BARODA PA NO. AFSPP 1914 M (APPELLANT) (RESPONDENT) IT (SS) A NO.234/AHD/2004 BLOCK PERIOD: 01-04-1955 TO 11-02-2002 SMT. CHANDRIKABEN G. PATEL F-203 SURYA COMPLEX TOWER KARELIBAUG BARODA VS THE D. C. I. T. CENTRAL CIRCLE-1 AAYAKAR BHAVAN RACE COURSE CIRCLE NR. G. E. B. BARODA PA NO. AEKPP 4914 L (APPELLANT) (RESPONDENT) IT (SS) A NO.264/AHD/2004 BLOCK PERIOD: 01-04-1955 TO 11-02-2002 THE A. C. I. T. CENTRAL CIRCLE-1 AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA 390 007 VS SHRI PRAKASH G. PATEL 408 BAKOR PATEL CHAMBER 4 TH FLOOR BHUTI ZAMPA BARODA PA NO. AFSPP 1919 L (APPELLANT) (RESPONDENT) C. O. NO. 293/AHD/2004 (IN IT (SS) A NO.264/AHD/2004) BLOCK PERIOD: 01-04-1955 TO 11-02-2002 SHRI PRAKASH G. PATEL 408 BAKOR PATEL CHAMBER 4 TH FLOOR BHUTI ZAMPA BARODA VS THE A. C. I. T. CENTRAL CIRCLE- 1 AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA 390 007 PA NO. AFSPP 1919 L (APPELLANT) (RESPONDENT) IT (SS) A NO.261/AHD/2004 BLOCK PERIOD: 01-04-1955 TO 11-02-2002 THE A. C. I. T. CENTRAL CIRCLE-1 AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA 390 007 VS M/S. GNP AUDIO CASSETTE (FIRM) 408 BAKOR PATEL CHAMBER 4 TH FLOOR BHUTI ZAMPA BARODA 2 PA NO. AACFG 2511 J (APPELLANT) (RESPONDENT) C. O. NO.291/AHD/2004 (IN IT (SS) A NO.261/AHD/2004) BLOCK PERIOD: 01-04-1955 TO 11-02-2002 M/S. GNP AUDIO CASSETTE (FIRM) 408 BAKOR PATEL CHAMBER 4 TH FLOOR BHUTI ZAMPA BARODA VS THE A. C. I. T. CENTRAL CIRCLE- 1 AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA 390 007 PA NO. AACFG 2511 J (APPELLANT) (RESPONDENT) IT (SS) A NO.260/AHD/2004 BLOCK PERIOD: 01-04-1955 TO 11-02-2002 THE A. C. I. T. CENTRAL CIRCLE-1 AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA 390 007 VS SHRI GOVINDBHAI N. PATEL 408 BAKOR PATEL CHAMBER 4 TH FLOOR BHUTI ZAMPA BARODA PA NO. AEKPP 9913 P (APPELLANT) (RESPONDENT) IT (SS) A NO.265/AHD/2004 BLOCK PERIOD: 01-04-1955 TO 11-02-2002 SHRI GOVINDBHAI N. PATEL 408 BAKOR PATEL CHAMBER 4 TH FLOOR BHUTI ZAMPA BARODA VS THE D. C. I. T. CENTRAL CIRCLE-1 AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA 390 007 PA NO. AEKPP 9913 P (APPELLANT) (RESPONDENT) ITA NO. 2486/AHD/2005 A. Y. 1999-2000 THE D. C. I. T. CENTRAL CIRCLE-1 AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA 390 007 VS SHRI GOVINDBHAI N. PATEL PROP. G. N. FILMS 408 BAKOR PATEL CHAMBER 4 TH FLOOR BHUTI ZAMPA BARODA PA NO. AEKPP 4198 F (APPELLANT) (RESPONDENT) C. O. NO.17/AHD/2006 (IN ITA NO.2486/AHD/2005: A.Y. 1999-2000) SHRI GOVINDBHAI N. PATEL PROP. G. N. FILMS 408 BAKOR PATEL CHAMBER 4 TH FLOOR BHUTI ZAMPA BARODA VS THE D. C. I. T. CENTRAL CIRCLE-1 AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA 390 007 PA NO. AEKPP 4198 F (APPELLANT) (RESPONDENT) 3 FOR ASSESSEE: S/SHRI S. N. SOPARKAR WITH P. M. MEHT A AR FOR DEPARTMENT: SHRI ALOK JOHRI CIT DR O R D E R PER SHRI BHAVNESH SAINI JM: THIS ORDER SHALL DISPOSE OF ALL THE ABOVE CROSS APPEALS AND CROSS OBJECTIONS BEING THE CONNECTED MATTERS. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH TH E PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BE LOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. THE CO MMON FACTS IN ALL THE APPEALS AS NOTED IN THE IMPUGNED O RDERS ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 (1) OF THE IT ACT TOOK PLACE IN G. N. FILMS GROUP OF CASES COVERING T HE RESIDENTIAL AS WELL AS BUSINESS PREMISES OF THE MEM BERS OF THE GROUP ON 11 TH FEBRUARY 2002. AFTER ISSUING STATUTORY NOTICES BLOCK ASSESSMENT ORDERS WERE PASSED WHICH W ERE SUBJECTED TO APPEAL BEFORE LEARNED CIT(A). THE APPE ALS/ CROSS OBJECTIONS ARE DISPOSED OF AS UNDER: IT (SS) A NO.233/AHD/2004 (HARESH G. PATEL) 3. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-IV AHMEDABAD DATED 30 TH JUNE 2004 FOR THE ABOVE BLOCK PERIOD. 4. ON GROUND NO.1 ASSESSEE CHALLENGED THE ADDITION OF RS.1 22 000/- BEING INCOME SHOWN BY THE ASSESSEE IN THE 4 RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2001-02 AS SUCH RETURN WAS FILED AFTER THE DATE OF THE SEARCH. THE FACTS ARE THAT ASSESSEE HAS OBJECTED TO THE ADDITION OF RS.2 44 000/- BEING THE INCOME AS PER RETURN OF INCOME FILED BY T HE ASSESSEE FOR ASSESSMENT YEARS 2000-01 AND 2001-02. LEARNED CIT(A) NOTED FROM THE RECORD THAT RETURN OF INCOME FOR ASSESSMENT YEAR 2000-01 WAS FILED ON 28-03-2002 SHOWING THE INCOME OF RS.1 22 000/-. A RETURN FOR ASSESSMENT YEAR 2001-02 WAS ALSO FILED ON 28-03-200 2 SHOWING THE RETURNED INCOME OF RS.1 22 000/-. THE S OURCES OF INCOME ARE SALARY FROM M/S. G. N. FILMS AND PART NERS REMUNERATION FROM G. N. P. AUDIO. THE AO CALLED FOR EXPLANATION OF THE ASSESSEE WHY THE SAID INCOME OF RS.2 44 000/- FOR BOTH THE ASSESSMENT YEARS SHOWN I N THE RETURN FILED BY THE ASSESSEE AFTER THE DATE OF SEAR CH ON 28- 03-2002 SHOULD NOT BE TAKEN AS UNDISCLOSED INCOME O F THE ASSESSEE. IT WAS ALSO NOTED THAT SIMILAR ADDITION I S MADE IN THE CASES OF SHRI PRAKASH G. PATEL SMT. CHANDRIKAB EN PATEL AND SHRI ASHWINBHAI G. PATEL. THE ASSESSEE FI LED EXPLANATION WHICH IS REPRODUCED IN THE APPELLATE OR DER IN WHICH IT WAS BRIEFLY EXPLAINED THAT FOR ASSESSMENT YEAR 2000-01 ON THE BASIS OF DOCUMENTS MAINTAINED IN THE NORMAL COURSE ASSESSEE PAID ADVANCE TAX OF RS.10 0 00/- ON 15-03-2000. THEREFORE INCOME CANNOT BE TAKEN AT NIL. SIMILARLY FOR ASSESSMENT YEAR 2001-02 ON THE BASIS OF ENTRIES RECORDED AND ON THE BASIS OF DOCUMENTS MAINTAINED THE INCOME FOR THIS YEAR CANNOT BE TAKE N AT NIL ALTHOUGH RETURN WAS FILED LATE. THE ASSESSEE RELIED UPON DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F 5 SHAMLAL BALRAM GURBANI 249 ITR 501. FOR ASSESSMENT YEAR 2001-02 NO MATERIAL WAS FOUND DURING THE SEAR CH TO SHOW THAT ASSESSEE EARNED UNDISCLOSED INCOME. THE A O REJECTED THE CONTENTION OF THE ASSESSEE AND HELD TH AT DECISION OF THE HONBLE BOMBAY HIGH COURT IS NOT APPLICABLE TO THIS CASE. FOR ASSESSMENT YEAR 2000-0 1 ASSESSEE FILED TWO RETURNS ON THE SAME DAY AT DIFFE RENT INCOME. FURTHER ASSESSEE HAS NOT PAID ANY ADVANCE TAX ON THE INCOME PERTAINING TO ASSESSMENT YEAR 2001-02 . THE AO FURTHER OBSERVED THAT ASSESSEE HAS RECEIVED PART NERS REMUNERATION FROM M/S. G. N. P. AUDIO CASSETTES WHI CH HAS ALSO NOT FILED THE RETURN OF INCOME FOR ASSESSM ENT YEAR 2000-01 TILL THE DATE OF SEARCH. FURTHER THE ASSES SEE HAS PAID ADVANCE TAX OF RS.10 000/- ON 15-03-2000 BUT N O TAX HAS BEEN DEDUCTED FROM THE SALARY INCOME RECEIVED F ROM M/S. G. N. FILMS. FURTHER FOR ASSESSMENT YEAR 2001 -02 ASSESSEE HAS SHOWN SALARY INCOME OF RS.1 30 000/- F ROM M/S. G. N. FILMS RETURN WAS FILED ON 28-03-2002 AN D FURTHER RS.12 000/- WAS SHOWN AS PARTNERS REMUNERA TION FROM M/S. G. N. AUDIO CASSETTES BUT NO ADVANCE TAX HAD BEEN PAID AND NO TDS DEDUCTED THEREFORE FOR BOTH THE ASSESSMENT YEARS RETURNED INCOME WERE TREATED AS UNDISCLOSED INCOME AND ADDITIONS WERE ACCORDINGLY M ADE. IT WAS SUBMITTED BEFORE LEARNED CIT(A) THAT TAX AUD IT REPORT OF M/S. G. N. FILMS WERE AVAILABLE WITH THE DEPARTM ENT IN WHICH THE SALARY PAID TO THE ASSESSEE WAS DULY REFL ECTED BEING THE PAYMENT MADE TO SPECIFIED PERSON U/S 40A (2) (B) OF THE IT ACT. THEREFORE IT CANNOT BE TREATED AS U NDISCLOSED INCOME. IT WAS ALSO EXPLAINED THAT SINCE NO MATERIA L WAS 6 RECOVERED DURING THE COURSE OF SEARCH THEREFORE B OTH THE ADDITIONS ARE UNJUSTIFIED. THE LEARNED CIT(A) DID N OT ACCEPT CONTENTION OF THE ASSESSEE. LEARNED CIT(A) NOTED TH AT FOR ASSESSMENT YEAR 2000-01 ASSESSEE PAID ADVANCE TAX O F RS.10 000/- ON `15-03-2000 WHICH SHOWS THAT THERE W AS NO INTENTION TO HIDE THE INCOME FOR ASSESSMENT YEAR 20 00-01 AND ACCORDINGLY HELD THAT THERE WAS NO JUSTIFICATIO N TO TREAT THE SAME AS UNDISCLOSED INCOME. AO WAS DIRECTED TO DELETE THE ADDITION OF RS.1 22 000/- IN ASSESSMENT YEAR 2000-01. HOWEVER FOR ASSESSMENT YEAR 2001-02 IT WA S NOTED THAT NO SUCH FACT EXISTS IN ASSESSMENT YEAR 2 001-02 THEREFORE ADDITION OF RS.1 22 000/- WAS CONFIRMED. THE ASSESSEE IS IN APPEAL CHALLENGING THE ADDITION OF RS.1 22 000/- FOR THE INCOME DECLARED IN ASSESSMENT YEAR 2001-02 WHICH WAS FILED AFTER SEARCH. THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES STATED THAT REV ENUE HAS NOT FILED ANY APPEAL FOR DELETING THE ADDITION OF RS.1 22 000/- IN ASSESSMENT YEAR 2000-01. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE RETURN FOR ASSESSMENT YEAR 2001- 02 WAS DUE IN AUGUST 2001 BUT THE RETURN WAS FILED ON 28- 03-2002 I.E. AFTER SEARCH. THE INCOME WAS DECLARED IN THE R ETURN AT RS.1 22 000/- WHICH COMPRISES OF RS.12 000/- AS PAR TNERS REMUNERATION FROM M/S. G. N. AUDIO CASSETTES AND SUBMITTED THAT HE WOULD NOT PRESS THE ADDITION OF RS.12 000/-. HE HAS FURTHER SUBMITTED THAT FOR THE BALANCE AMOUNT OF RS.1 10 000/- THE SAME IS SALARY INCOME O UT OF 7 RS.1 30 000/- RECEIVED FROM M/S. G. N. FILMS PROPR IETOR SHRI GOVINDBHAI NATHABHAI PATEL. HE HAS SUBMITTED T HAT SHRI G. N. PATEL FILED RETURN OF HIS INCOME ON TIME AND DECLARED THE SAME PAYMENT OF SALARY IN THE TAX AUDI T REPORT COPY OF WHICH IS FILED AT PAGE 27 OF THE PAPER BOOK (PB -30 SALARY SHOWN TO ASSESSEE HARESH G. PATEL IN A SUM OF RS.1 30 000/-). THE TAX AUDIT REPORT IS DATED 30-10 -2001. SHRI G.N. PATEL FILED THIS RETURN OF INCOME FOR ASS ESSMENT YEAR 2001-02 ON 31-10-2001 (PB 40) ALONG WITH TAX A UDIT REPORT AND OTHER DETAILS SHOWING THE PAYMENT OF SAL ARY TO THE ASSESSEE. HE HAS SUBMITTED THAT SINCE RETURN IS FILED SHOWING THE SALARY TO THE ASSESSEE PRIOR TO THE SEA RCH THEREFORE IT CANNOT BE TREATED AS UNDISCLOSED INCO ME OF THE ASSESSEE. HE HAS RELIED UPON DECISION OF THE HONBL E BOMBAY HIGH COURT IN THE CASE OF SHAMLAL BALRAM GUR BANI (SUPRA). ON THE OTHER HAND LEARNED DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT NO ADVA NCE TAX AND TDS DEDUCTED ON THE SALARY OF THE ASSESSEE THEREFORE ADDITION WAS RIGHTLY MADE. SINCE RETURN IS FILED BY THE ASSESSEE ADMITTEDLY AFTER THE SEARCH ON 28-03-2 002 THEREFORE ADDITION WAS RIGHTLY MADE. HE HAS RELIED UPON ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF SMT. J YOTI M BHANDARI VS ACIT 6 SOT 375 HOLDING THE SAME PROPOSITION. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L ON RECORD. LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS PART OF THIS GROUND IN A SUM OF RS.12 000/- BEING P ARTNERS REMUNERATION RECEIVED FROM M/S. G. N. AUDIO CASSETT ES. 8 PART OF THIS GROUND IS ACCORDINGLY DISMISSED AS NOT PRESSED. FOR THE REMAINING CLAIM WE HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT O F THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SHAMLAL BA LRAM GURBANI (SUPRA). IN THIS CASE SEARCH WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 25-03-1996 AND NOTICE U/S 158 BC OF THE IT ACT WAS ISSUED. THE ASS ESSEE DID NOT FILE THE RETURNS FOR THE YEARS 1993-94 199 4-95 AND 1995-96. THE AO TREATED THE INCOME OF THE THREE YEA RS AS INCOME OF THE BLOCK PERIOD. ON APPEAL THE TRIBUNAL FOUND THAT THE ASSESSEES INCOME FROM INTEREST SALARY AN D RENT WAS REFLECTED IN THE AUDITED BALANCE SHEET OF THE R ESPECTIVE ASSESSMENT YEARS OF THE FIRMS FILED FOR ALL THE THR EE YEARS PRIOR TO SEARCH ON 31-10-1993 31-10-1994 AND 31-03 -1995 AND THEREFORE TRIBUNAL DELETED THE ADDITION. THE DEPARTMENTAL APPEAL WAS DISMISSED HOLDING THAT THE CONCLUSION OF THE TRIBUNAL THAT THERE WAS NO REASON FOR TREATING THE SAID INCOME AS UNDISCLOSED INCOME FOR THE PURPOSE OF BLOCK ASSESSMENT BASED ON FACTS. NO SUBSTANTIAL QUESTION OF LAW AROSE. HONBLE MADRAS H IGH COURT IN THE CASE OF ACIT VS A. R. ENTERPRISES 274 ITR 110 HELD THAT SINCE ADVANCE TAX PAID BY SUCH PERSONS FOR RELEVANT ASSESSMENT YEAR THOUGH NO RETURN FILE D INCOME NOT UNDISCLOSED. BLOCK ASSESSMENT NOT VALID. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS MRS. KUMKUM KOHLI 276 ITR 589 HELD THAT ASSESSEE PAYIN G ADVANCE TAX FOR AMOUNT IN QUESTION MUCH PRIOR TO SE ARCH BUT RETURN FILED LATER ACCEPTED BY THE DEPARTMENT A ND 9 AMOUNT REFLECTED IN BOOKS NO INDICATION THAT AMOUN T NOT REFLECTED IN BOOKS SECTION 158 BC NOT APPLICABLE. IN THIS CASE FOR ASSESSMENT YEAR 2001-02 THE ASSESSEE RECE IVED SALARY INCOME OF RS.1 30 000/- FROM M/S. G. N. FILM S (PROPRIETOR G.N. PATEL) WHO HAS FILED RETURN OF INC OME FOR ASSESSMENT YEAR 2001-02 PRIOR TO SEARCH ON 31-10-20 01 (PB-40) AND FILED TAX AUDIT REPORT ALONG WITH THE R ETURN SHOWING THE PAYMENT OF SALARY TO THE ASSESSEE (PB 3 0). THEREFORE EVEN IF ASSESSEE FILED HIS PERSONAL RET URN ON 28-03-2002 AFTER SEARCH IT COULD NOT BE TREATED AS UNDISCLOSED INCOME AS PER DECISION OF THE HONBLE B OMBAY HIGH COURT IN THE CASE OF SHAMLAL BALRAM GURBANI (S UPRA). CONSIDERING THE ABOVE DISCUSSIONS WE ARE OF THE VI EW THE SALARY INCOME DISCLOSED IN THE CASE OF FIRM PRIOR T O THE SEARCH COULD NOT BE TREATED AS UNDISCLOSED INCOME. THE DECISION OF THE TRIBUNAL CITED BY THE LEARNED DR CA NNOT BE GIVEN PREFERENCE AS AGAINST THE DECISION OF THE HON BLE HIGH COURT. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.1 1 0 000/-. IN THE RESULT GROUND NO.1 OF THE APPEAL OF THE ASS ESSEE IS PARTLY ALLOWED. 7. ON GROUND NO.2 THE ASSESSEE CHALLENGED THE ADDITION OF RS.75 000/- ON ACCOUNT OF BROKERAGE INC OME. THIS ISSUE RELATES TO ADDITION OF RS.1 50 000/- FOR THE ALLEGED UNDISCLOSED INCOME FROM SHARE BROKERAGE. TH E AO REPORTED THAT DURING SEARCH A LARGE NUMBER OF DOCUM ENTS WERE FOUND WHICH SHOWED THAT ASSESSEE WAS ACTIVELY INVOLVED IN SHARE BUSINESS AND THAT ASSESSEE STATED THAT 10 HE WAS ACTING AS SUB-BROKER AND ADMITTED BEFORE DDI T (INV.) THAT UNDISCLOSED BROKERAGE EARNED BY HIM WAS AROUND RS.1 50 000/-. SAME WAS TREATED AS UNDISCLOS ED INCOME AND AO MADE ADDITION ACCORDINGLY. THE ADDITI ON WAS CHALLENGED BEFORE LEARNED CIT(A). SUBMISSIONS A RE RECORDED IN THE APPELLATE ORDER. IT WAS MAINLY HIGH LIGHTED THAT SHARE BROKERAGE BUSINESS WAS DONE FOR A VERY S HORT PERIOD FOR ABOUT ONE AND HALF/TWO YEARS IN FINANCIA L YEAR 1994-95 AND 1995-96 AND THEREAFTER THE ASSESSEE ST OPPED DOING SHARE BROKERAGE BUSINESS. IT WAS ALSO EXPLAI NED THAT ADDITION OF RS.1 50 000/- WAS UNJUSTIFIED BECAUSE N O DETAILS WERE AVAILABLE AND THAT PART OF THE SAME MIGHT HAVE BEEN EARNED PRIOR TO THE BLOCK PERIOD. THE LEARNED CIT(A ) CONSIDERING EXPLANATION OF THE ASSESSEE IN THE LIGH T OF THE SEIZED MATERIAL AND STATEMENT OF THE ASSESSEE MADE TO THE DDIT(INV.) NOTED THAT THOUGH THE ASSESSEE ADMITTED TO HAVE EARNED SHARE BROKERAGE INCOME BUT SOME PERIOD FALLS PRIOR TO THE BLOCK PERIOD AND ACCORDINGLY ADDITION WAS RESTRICTED TO RS.75 000/- AND BALANCE ADDITION OF RS.75 000/- WAS DELETED. ON CONSIDERATION OF THE SUBMISSIONS OF THE PARTIES WE DO NOT FIND ANY MERI T IN THIS GROUND OF APPEAL OF THE ASSESSEE. LEARNED COUNSEL F OR THE ASSESSEE MAINLY SUBMITTED THAT THERE WAS NO MATERIA L FOUND IN SEARCH TO INDICATE EARNING OF SHARE BROKER AGE INCOME BUT HE COULD NOT POINT OUT ANY INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW IN MAKING THE ADDIT ION. LEARNED DR RIGHTLY POINTED OUT THAT AO REPORTED THA T LARGE NUMBERS OF DOCUMENTS/MATERIALS WERE FOUND WHICH SHO WED ASSESSEE WAS ACTIVELY INVOLVED IN THE SHARE BUSINES S AND 11 WAS ACTING AS SUB-BROKER. THE ASSESSEE IN HIS STATE MENT ALSO ADMITTED BEFORE SEARCH PARTY THAT HE EARNED BR OKERAGE INCOME. IT WOULD SHOW THAT SUCH STATEMENT OF THE AS SESSEE WAS BASED ON THE APPRAISAL OF THE SEIZED DOCUMENTS/MATERIALS. THE LEARNED CIT(A) ON PROPER APPRECIATION OF FACTS RIGHTLY GIVEN PART OF THE BEN EFIT TO THE ASSESSEE FOR EARNING OF SHARE BROKERAGE DURING THE PERIOD PRIOR TO THE SEARCH. WE THEREFORE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. SAME IS ACCO RDINGLY DISMISSED. 8. ON GROUND NO.3 ASSESSEE CHALLENGED THE LEVY OF INTEREST U/S 158 BFA(1) OF THE IT ACT. THE AO NOTED THAT NOTICE U/S 158 BC WAS ISSUED ON 09-12-2002 REQUESTI NG THE ASSESSEE TO FILE THE RETURN FOR THE BLOCK PERIO D. HOWEVER THE RETURN WAS FILED ON 06-02-2003. INTERE ST WAS ACCORDINGLY LEVIED. THE ASSESSEE PLEADED BEFORE LEA RNED CIT(A) THAT DELAY IN FILING THE RETURN IS ENTIRELY DUE TO THE DELAY IN OBTAINING THE COPIES OF THE SEIZED MATERIA LS SEIZED DURING THE COURSE OF SEARCH. THE LEARNED CIT(A) NOT ED THAT THIS IS THE SAME ISSUE CONSIDERED IN THE CASE OF G. N. PATEL. THE AO WAS ACCORDINGLY DIRECTED TO FOLLOW SA ME DIRECTION. THE LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT NO DATA IS AVAILABLE TO EXPLAIN THE REASONS FO R DELAY. IN VIEW OF THIS STATEMENT OF THE LEARNED COUNSEL FOR T HE ASSESSEE WE DO NOT FIND ANY JUSTIFICATION TO INTERF ERE WITH THE ORDERS OF THE AUTHORITIES BELOW. WE CONFIRM THE IR FINDINGS AND DISMISS THIS GROUND OF APPEAL OF THE A SSESSEE. 12 9. NO OTHER GROUND IS ARGUED OR PRESSED. 10. IN THE RESULT APPEAL OF THE ASSESSEE IN IT(SS) A NO.233/AHD/2004 IS PARTLY ALLOWED. IT (SS) A NO.234/AHD/2004 (SMT. CHANDRIKABEN G. PAT EL) 11. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV AHMEDABAD DATED 30-06-200 4 FOR THE ABOVE BLOCK PERIOD. 12. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PR ESS GROUNDS NO.1 2 AND 4. THE SAME ARE ACCORDINGLY DISMISSED BEING NOT PRESSED. 13. ON GROUND NO.3 ASSESSEE CHALLENGED THE ORDER O F THE LEARNED CIT(A) IN UPHOLDING THE ADDITION OF RS.2 80 000/- REFERABLE TO THE ALLEGED UNEXPLAINED INVESTMENT IN PRUTHA APARTMENT WHEN THE ADDITION S HOULD HAVE BEEN DELETED. THE AO MADE ADDITION OF RS.3 37 648/- FOR THE ALLEGED UNDISCLOSED INVESTMENT IN PRUTHA APARTMENT AHMEDABAD. THE AO REPORTED THAT ANNEXURE A 2 SEIZED FROM THE RESIDENCE OF THE ASSESSEE SHOWS PURCHASE OF FLAT IN PRUTHA APARTMENT. IN THE SHOW C AUSE NOTICE THE AO PROPOSED TO MAKE THE ADDITION OF RS.5 37 648/- AS UNEXPLAINED INVESTMENT. THE ASSESS EE SUBMITTED BEFORE THE AO THAT RS.4 98 352/- HAS BEEN PAID TO PRUTHA APARTMENT. IT WAS CLARIFIED THAT FURTHER PAYMENT OF RS.2 00 000/- HAS BEEN MADE FROM THE ACCOUNT OF M/S . G. N. FILMS. INADVERTENTLY INSTEAD OF DEBITING HER ACC OUNT THE ACCOUNT OF SHRI G. N. PATEL WAS DEBITED. THUS TOTA L 13 PAYMENT OF RS.6 98 352/- HAS BEEN PAID TO PRUTHA DEVELOPERS AND POSSESSION HAS BEEN GIVEN TO THE ASSESSEE. THE REMAINING AMOUNT OF RS.3.40 LACS IS TOWARDS THE EXTRA WORKS. M/S. PRUTHA CONSTRUCTION H AD AGREED TO AN ESTIMATE OF RS.3 60 525/- TOWARDS EXTR A WORKS AND THE ASSESSEE HAD AGREED TO THE TERMS OF PRUTHA CONSTRUCTION. HOWEVER PRUTHA CONSTRUCTION HAS NOT DONE THE COMPLETE WORK AS PER THE ESTIMATE AGREED UPON A ND EVEN WHATEVER WORK WAS DONE WAS NOT TO THE SATISFAC TION OF THE ASSESSEE. THE ASSESSEE HAS NOT PAID FURTHER AMO UNT TO THIS PARTY. COPY OF THE ESTIMATE OF PRUTHA CONSTRUC TION WAS FILED TO SHOW THE ENTIRE AMOUNT WAS IN DISPUTE. IT WAS THEREFORE EXPLAINED THAT SINCE NO PAYMENT HAS BEEN MADE IT CANNOT BE TREATED AS HAVING BEEN MADE OUT OF UNDISCLOSED INCOME. THE BREAK-UP OF PAYMENT OF RS.6 98 352/- IS REPRODUCED IN THE IMPUGNED ORDERS. IT WAS ALSO EXPLAINED THAT PAYMENT OF RS.2 LACS ON 29-06-1 991 AS PER ANNEXURE AND RS.1 91 352/- AS PER ANNEXURE HAVE BEEN DULY RECORDED AND HENCE NO ADDITION COULD BE MADE. REGARDING REMAINING AMOUNT OF RS.3.37 LACS SINCE TH E AMOUNT IS IN DISPUTE; THEREFORE IT CANNOT BE TREAT ED AS UNDISCLOSED INCOME. THE ASSESSEE IN ORDER TO SUBSTA NTIATE THE CLAIM THAT NO UNACCOUNTED PAYMENT WAS MADE FILE D A COPY OF THE ACCOUNT OF THE ASSESSEE AS APPEARING IN THE BOOKS OF PRUTHA CONSTRUCTION ALONG WITH COPIES OF L ETTERS INDICATING THAT AMOUNT OF RS.2 82 000/- FOR THE COS T OF THE CONSTRUCTION AND AN AMOUNT OF RS.3 91 352/- BEING T HE PROPORTIONATE COST OF LAND HAVE BEEN RECEIVED BY PR UTHA CONSTRUCTION. IT WAS THEREFORE PRAYED THAT ADDITI ON MAY 14 NOT BE MADE. THE LEARNED CIT(A) CONSIDERED THE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF THE FIN DING OF THE AO AND NOTED THAT THE SEIZED MATERIAL I.E. PAGE 2 O F ANNEXURE A-2 HAS BEEN PERUSED BY HIM AND NOTICED TH AT THERE IS NOTING OF RS.2 80 000/- AS CASH PAID ON 29 -06-1998 WHICH IS NOT REFLECTED IN THE PAYMENTS ACCOUNTED FO R EITHER BY THE ASSESSEE OR BY G. N. FILMS. IN VIEW OF THE A BOVE ADDITION OF RS.2 80 000/- WAS CONFIRMED. THE ASSESS EES ALTERNATE CONTENTION WAS THAT SINCE THE ENTIRE PAYM ENT HAS BEEN MADE BY HER HUSBAND THEREFORE OVER AND ABOVE PAYMENTS OF AMOUNT OF RS.6 98 352/- ADDITION MAY BE MADE IN THE HANDS OF HER HUSBAND. IT WAS ALSO EXPLA INED THAT HER HUSBAND HAS ALREADY MADE A DISCLOSURE OF R S.55 LACS THEREFORE NO ADDITION SHOULD BE MADE. THE LE ARNED CIT(A) NOTED THAT ON PERUSAL OF RECORD OF G. N. PAT EL THE COMPLETE DETAILS OF DISCLOSURE OF RS.55 LACS IS NOT AVAILABLE THEREFORE THIS ARGUMENT OF THE ASSESSEE WAS ALSO R EJECTED. 14. THE LEANED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMI TTED THAT THOUGH THE PROPERTY STANDS IN THE NAME OF ASSE SSEE BUT ADMITTEDLY PART PAYMENT IS MADE BY HER HUSBAND THROUGH CHEQUE THEREFORE NO PRESUMPTION COULD BE DRAWN THAT ASSESSEE MADE CASH PAYMENT. ASSESSEE WOULD BE ENTITLED FOR SET OFF OUT OF SURPLUS INCOME SHOWN BY HER HUSBAND. ON THE OTHER HAND THE LEARNED DR RELIED U PON THE ORDERS OF THE AUTHORITIES BELOW. 15 15. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT ASSESSEE IS OWNER OF THE FLAT IN QUEST ION AND ON MAKING PART PAYMENT THE POSSESSION HAS BEEN GIVE N BY THE DEVELOPER TO THE ASSESSEE. THE ASSESSEE ALSO EXPLAINED THAT ENTIRE PAYMENT HAS BEEN MADE BY HER HUSBAND. THE ASSESSEE ALSO EXPLAINED THAT THERE WAS A DISPUTE OF EXTRA WORKS TO BE COMPLETED BY THE DEVEL OPER; THEREFORE NO BALANCE AMOUNT HAS BEEN PAID. THE AUTHORITIES BELOW HOWEVER ON GOING THROUGH THE SEI ZED PAPERS NOTED THAT RS.2 80 000/- WAS PAID IN CASH ON 29-06-1998. THE AO NOTED THAT SUCH PAYMENT IS MADE THROUGH JAYMINBHAI. NOTHING IS BROUGHT ON RECORD WH O IS JAYMINBHAI AND HOW THIS PERSON IS CONNECTED WITH TH E ASSESSEE. SINCE THE ENTIRE PAYMENT IS MADE BY HUSBA ND OF THE ASSESSEE ON BEHALF OF THE ASSESSEE THEREFORE THE EXPLANATION OF THE ASSESSEE IS PROBABLE THAT IF ANY PAYMENT IS MADE OVER AND ABOVE THE PAYMENT ALREADY SHOWN I T WOULD HAVE BEEN MADE BY HER HUSBAND. THE FACTS REVE AL THAT ASSESSEE WAS OWNER IN THE RECORDS BUT NO PAYME NT HAS BEEN MADE BY HER PERSONALLY. THE AO ON THE BASI S OF THE FACT THAT POSSESSION IS WITH THE ASSESSEE FORME D HIS OPINION THAT ENTIRE PAYMENT OF RS.10 36 000/- HAS B EEN MADE BY THE ASSESSEE. THE AO ALSO REPRODUCED THE DE TAILS OF PAGE 1 ANNEXURE A-2 IN WHICH THE DEVELOPER AGREE D FOR SALE OF LAND AT RS.10 36 000/- AND AGREED TO HAVE R ECEIVED RS.2 LACS BY CHEQUE. THE ABOVE PAGE WOULD NOT SAY I F ASSESSEE MADE ANY PAYMENT OVER AND ABOVE WHAT IS RECORDED AND EXPLAINED BY THE ASSESSEE. IN THE ABSE NCE OF ANY CONCRETE EVIDENCE ON RECORD THAT ASSESSEE MADE CASH 16 PAYMENT OF RS.2 80 000/- ADDITION CANNOT BE MADE A GAINST THE ASSESSEE. FURTHER NOTHING WAS BROUGHT ON RECOR D AS TO HOW JAYMINBHAI MADE THE CASH PAYMENT ON BEHALF OF T HE ASSESSEE. IN THE ABSENCE OF ANY SUCH EVIDENCE ON RE CORD ABOUT JAYMINBHAI THE EXPLANATION OF THE ASSESSEE S HALL HAVE TO BE ACCEPTED THAT SHE HAS NOT MADE ANY CASH PAYMENT OF RS.2 80 000/-. CONSIDERING THE ABOVE DISCUSSIONS AND IN THE ABSENCE OF ANY SPECIFIC MATE RIAL AGAINST THE ASSESSEE FOR MAKING SUCH CASH PAYMENT WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITI ON. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND DELETE THE ADDITION OF RS.2 80 000/-. GROUND NO .3 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 16. ON GROUND NO.5 ASSESSEE CHALLENGED THE LEVY OF INTEREST U/S 158 BFA(1) OF THE IT ACT. LEARNED COUN SEL FOR T THE ASSESSEE SUBMITTED THAT THE ISSUE IS SAME AS CONSIDERED IN IT(SS) A NO.233/AHD/2004 IN THE CASE OF HARESH G. PATEL AND STATED THAT ORDER IN THAT CASE MAY BE FOLLOWED IN THIS CASE ALSO. IN THE CASE OF HARESH G . PATEL WE HAVE DISMISSED THIS GROUND OF APPEAL OF THE ASSE SSEE. BY FOLLOWING THE SAME ORDER WE DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE ALSO. 17. NO OTHER POINT IS ARGUED OR PRESSED. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 17 IT (SS) A NO.264/AHD/2004 C. O. NO.293/AHD/2004 (PRAKASH G. PATEL) 19. THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJECT ION BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE L EARNED CIT(A)-IV AHMEDABAD DATED 30-06-2004 FOR THE ABOVE BLOCK PERIOD. 20. ON GROUND NO.1 REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.87 00 0/- MADE ON ACCOUNT OF UNDISCLOSED INCOME OF ASSESSMENT YEAR 2000-01. THE ASSESSEE IN THE CROSS OBJECTION ON GRO UND NO.1 SIMILARLY CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN UPHOLDING THE ADDITION OF RS.87 000/- BEING THE INC OME FOR ASSESSMENT YEAR 2001-02. THE LEARNED CIT(A) NOTED T HAT THIS GROUND HAS ALREADY BEEN DECIDED BY HIM IN THE CASE OF HARESH G. PATEL (SUPRA) AND THERE IS NO CHANGE IN F ACTS AND CIRCUMSTANCES THEREFORE BY FOLLOWING THE SAME REASONS HE HAS DELETED THE ADDITION FOR ASSESSMENT YEAR 2000-01 BUT CONFIRMED THE ADDITION FOR ASSESSMENT Y EAR 2001-02. LEARNED REPRESENTATIVES OF BOTH THE PARTIE S STATED THAT THE ISSUE IS SAME AS IS CONSIDERED IN THE CASE OF HARESH G. PATEL (SUPRA) BUT IN THAT CASE THE DEPAR TMENT HAS NOT PREFERRED ANY APPEAL. IN THIS CASE ALSO RE TURN OF INCOME FOR ASSESSMENT YEAR 2000-01 WAS FILED AFTER SEARCH AND THE ASSESSEE PAID ADVANCE TAX OF RS.10 000/- ON 15-03-2000 WHICH WAS PAID PRIOR TO THE SEARCH. FOR ASSESSMENT YEAR 2001-02 ASSESSEE RECEIVED SALARY F ROM M/S. G. N. FILMS PROPRIETOR G. N. PATEL WHICH WAS SHOWN IN 18 ITS AUDITED ACCOUNTS AND RETURN OF INCOME WAS FILED BY THE FIRM PRIOR TO THE SEARCH IN WHICH SALARY WAS ALREAD Y DISCLOSED TO THE REVENUE DEPARTMENT (PB-22). IT IS THEREFORE STATED THAT THE ISSUE IS SAME AS IS CONS IDERED IN THE CASE OF HARESH G. PATEL. LEARNED DR HOWEVER SUBMITTED THAT SINCE TWO RETURNS WERE FILED AND ONL Y PART OF ADVANCE TAX AND SELF-ASSESSMENT TAX PAID THEREFORE BENEFIT OF ADVANCE TAX PAYMENT MAY BE GIVEN TO THE ASSESSEE TO THAT EXTENT ONLY AND REMAINING RETURNED INCOME MAY BE TREATED AS UNDISCLOSED INCOME IN THE BLOCK PERIOD. 21. ON CONSIDERATION OF THE ABOVE FACTS WE ARE OF THE VIEW THE ISSUE IS SAME AS IS CONSIDERED IN THE CASE OF HARESH G. PATEL (SUPRA). THEREFORE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THE FACTS ARE SAME AND TH ERE IS NO CHANGE IN THE CIRCUMSTANCES. IN THE ASSESSMENT YEAR 2000-01 ADVANCE TAX IS PAID THEREFORE ISSUE WOULD BE COVERED BY THE JUDGMENTS OF HONBLE DELHI HIGH COUR T IN THE CASE OF SMT. KUMKUM KOHLI( SUPRA ) AND THE HON BLE MADRAS HIGH COURT IN THE CASE OF A. R. ENTERPRISES (SUPRA). ON THE SAME REASONING DEPARTMENT DID NOT PREFER ANY APPEAL IN THE CASE OF HARESH G. PATEL DELETING THE SAME ADDITION. FURTHER FOR ASSESSMENT YEAR 2001-02 THE FACTS ARE IDENTICAL AS HAVE BEEN CONSIDERED IN THE CASE O F HARESH G. PATEL (SUPRA) AND THE ISSUE IS COVERED BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF SHAMLAL BALRAM GURBANI (SUPRA). WE ACCORDINGLY FOL LOW THE SAME ORDER AND DISMISS THE DEPARTMENTAL APPEAL. THE 19 CROSS OBJECTION OF THE ASSESSEE IS ALLOWED AND ADDI TION OF RS.87 000/- IS ACCORDINGLY DELETED. IN THE RESULT GROUND NO.1 OF THE DEPARTMENTAL APPEAL IS DISMISSED AND GR OUND NO.1 OF THE CROSS OBJECTION OF THE ASSESSEE IS ALLO WED. 22. ON GROUND NO.2 REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.3 29 920/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN JEWELLERY. IT IS NOTED IN THE IMPUGNED ORDER THAT DURING THE COURSE OF SEA RCH GOLD ORNAMENTS FOUND FROM THE FAMILY OF G. N. PATEL AS P ER VARIOUS ANNEXURE IN NET WEIGHT WAS 2134.500 VALUIN G RS.8 59 800/-. IT WAS POINTED OUT THAT SHRI G. N. P ATEL THE HEAD OF THE FAMILY WHILE EXPLAINING THE ORNAMENTS EXPLAINED THAT THE SAME BELONG TO HIM AND HIS FAMIL Y MEMBERS INCLUDING WIFE AND DAUGHTERS HOWEVER THE AO HAS GONE THROUGH HIS PRELIMINARY STATEMENT AND FOUN D THAT ASSESSEE WAS HAVING LOCKER WITH PRAGATI CO-OPERATIV E BANK BARODA IN HIS NAME AND IN THE NAME OF HIS WIF E WHICH CONTAINED THE JEWELLERY OF 865.5 GRAMS. CONSI DERING REPLY OF THE ASSESSEE AND THE DETAILS OF THE JEWELL ERY FOUND AND EXPLAINED ADDITION WAS ACCORDINGLY MADE OF RS.3 29 920/-. THE AO HELD THAT THE ASSESSEE WAS AB LE TO EXPLAIN 1231 GRAMS OF GOLD JEWELLERY. THE ASSESSEE ALSO PLACED RELIANCE ON BOARDS INSTRUCTION NO.1916 DATE D 11-5- 1994 AND ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF MANILAL S. DAVE 70 TTJ 801 AND IT WAS EXPLAINED TH AT ALL THE GOLD JEWELLERY STAND EXPLAINED. THE LEARNED CIT (A) CONSIDERING THE REASONABLE HOLDING OF THE JEWELLERY IN TERMS OF BOARDS CIRCULAR AS ALSO HAVING REGARD TO EVIDEN CE FOUND 20 DURING THE COURSE OF SEARCH FOR PURCHASE OF ORNAMEN TS BY THE ASSESSEE THE TOTAL HOLDING OF FAMILY OF THE AS SESSEE WAS WORKED OUT TO 1222.700 WHICH LEADS THE PETTY DIFFERENCE OF 8.3000 GRAMS WHICH IS NEGLIGIBLE THE REFORE DELETED THE ADDITION. LEARNED DR RELIED UPON ORDER OF THE AO AND SUBMITTED THAT THE ASSESSEE IN THE PRELIMINA RY STATEMENT DENIED HAVING LOCKER BUT LATER ON LOCKER WAS FOUND CONTAINING JEWELLERY THEREFORE ADDITION IS JUSTIFIED IN THE MATTER. ON THE OTHER HAND LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND RELIED UPON DECISION OF HONB LE GUJARAT HIGH COURT IN THE CASE OF CIT VS RATANLAL VYAPARILAL JAIN 235 CTR 568 IN WHICH IT WAS HELD A S UNDER: CONCLUSION: INSTRUCTION NO. 1916 DT. 11 TH MAY 1994 WHICH LAYS DOWN GUIDELINES FOR SEIZURE OF JEWELLERY IN THE COURSE OF SEARCH TAKES INTO ACCOUNT THE QUANTITY OF JEWELLERY WHICH WOULD GENERALLY BE HELD BY THE FAMILY MEMBERS OF AN ASSESSEE AND THEREFORE UNLESS ANYTHING CONTRARY IS SHOWN IT CAN BE SAFELY PRESUMED THAT THE SOURCE TO THE EXTENT OF THE JEWELLERY STATED IN THE CIRCULAR STANDS EXPLAINED. 23. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVE NUE. THE ASSESSEE GAVE REASONABLE EXPLANATION BEFORE THE AUTHORITIES BELOW WHICH WAS PARTLY ACCEPTED BY THE AO BY GIVING DUE WEIGHTAGE TO THE BOARDS CIRCULAR. THE L EARNED CIT(A) ON PROPER APPRECIATION OF THE EXPLANATION AN D MATERIAL ON RECORD IN THE LIGHT OF THE BOARDS CIRC ULAR RIGHTLY ACCEPTED THE EXPLANATION OF THE ASSESSEE. THE FINDI NGS OF 21 THE LEARNED CIT(A) FIND SUPPORT FROM THE JUDGMENT O F THE HONBLE GUJARAT HIGH COURT IN THE CASE OF RATANLAL VYAPARILAL JAIN (SUPRA). WE THEREFORE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. SAME IS ACCORDINGLY DISMISSED. 24. ON GROUND NO.3 REVENUE CHALLENGED THE DELETIO N OF THE SURCHARGE. THE LEARNED CIT(A) NOTED THAT AMENDM ENT IN SECTION 113 IS OPERATIVE FROM 1-06-2002 WHICH IS PROSPECTIVE IN NATURE. SINCE SEARCH IS CONDUCTED PR IOR TO THIS DATE THEREFORE LEVY OF SURCHARGE WAS DELETED . LEARNED REPRESENTATIVES OF BOTH THE PARTIES STATED THAT THE ISSUE IS NOW COVERED BY DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF SURESH N. MEHTA 297 ITR 322 IN FAVOUR OF THE REVENUE IN WHICH IT WAS HELD THAT PROVISO TO SECTI ON 113 IS CLARIFICATORY IN NATURE. SURCHARGE IS LEVIABLE. BY FOLLOWING THE SAME DECISION WE SET ASIDE THE ORDER OF THE LE ARNED CIT(A) AND RESTORE THE ORDER OF THE AO FOR LEVY OF SURCHARGE. THIS GROUND NO.3 OF THE APPEAL OF THE RE VENUE IS ALLOWED. 25. ON GROUND NO.2 OF THE CROSS OBJECTION ASSESSEE CHALLENGED THE UPHOLDING OF THE LEVY OF INTEREST U/ S 158BFA(1) OF THE IT ACT. THE LEARNED COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE ISSUE IS SAME AS IS CON SIDERED IN THE CASE OF HARESH G. PATEL (SUPRA) AND ORDER IN THAT CASE MAY BE FOLLOWED. BY FOLLOWING THE ORDER IN THE CASE OF HARESH G. PATEL (SUPRA) WE DISMISS THIS GROUND OF CROSS OBJECTION OF THE ASSESSEE. 22 26. IN THE RESULT THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE PARTLY ALLOWED. IT(SS) A NO.261/AHD/2004 C. O. NO.291/AHD/2004 (G. N. P. AUDIO CASSETTES) 27. THE DEPARTMENTAL APPEAL AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV AHMEDABAD DATED 30-06-2004 FOR THE ABOV E BLOCK PERIOD. 28. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PR ESS GROUND NO.1 OF THE CROSS OBJECTION. THE SAME IS DIS MISSED AS NOT PRESSED. ON GROUND NO.2 OF THE CROSS OBJECTI ON THE ASSESSEE CHALLENGED THE LEVY OF INTEREST U/S 158 BF A(1) OF THE IT ACT. THE LEARNED COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE ISSUE IS SAME AS IS CONSIDERED IN THE CASE OF HARESH G. PATEL (SUPRA) AND ORDER IN THAT CASE MAY BE FOLLOWED. BY FOLLOWING THE ORDER IN THE CASE OF HAR ESH G. PATEL (SUPRA) WE DISMISS THIS GROUND OF CROSS OBJE CTION OF THE ASSESSEE. 29. THERE IS NO OTHER GROUND IN THE CROSS OBJECTION . CROSS OBJECTION OF THE ASSESSEE IS ACCORDINGLY DISM ISSED. 30. ON GROUND NO.1 OF THE DEPARTMENTAL APPEAL REVE NUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN RESTR ICTING THE ADDITION OF RS.15 07 330/- MADE ON ACCOUNT OF ESTIM ATED GROSS PROFIT TO RS.9 076/-. THE AO MADE ADDITION OF RS.15 16 406/- WHILE ESTIMATING GROSS PROFIT AND DI SCUSSED 23 THE SAME IN DETAIL IN PARA 4 OF THE ASSESSMENT ORDE R. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE AO ESTIMATE D THE TOTAL UNRECORDED SALES AT RS.1 11 71 874/- AND WORK ED OUT THE GROSS PROFIT AT RS.30 16 406/- BY ADOPTING THE RATE OF GROSS PROFIT AT 27% ON UNRECORDED SALES. THE ENTIRE INCOME OF RS.30 16 406/- WAS CONSIDERED AS UNDISCLOSED INC OME OUT OF WHICH THE AO HAS GIVEN DEDUCTION OF RS.15 00 000/- FOR UNDISCLOSED INCOME AS IS SHOWN IN THE RETURN OF INCOME AND MADE THE ADDITION OF RS.15 16 406/-. THE AO REJ ECTED THE CONTENTION OF THE ASSESSEE ON THE FOLLOWING REA SONS: (1) THE AVERAGE SALE PRICE OF CASSETTES WAS RS.17.50 TO RS.18.00 PER CASSETTE AS AGAINST THE AVERAGE SALES OF RS.15.50 PER CASSETTE AS WORKED OUT BY THE ASSESSEE. (2) THE COST OF CASSETTE ADOPTED BY THE AO IS RS.6.40 PER CASSETTE IN PLACE OF RS.7.00 PER CASSETTE SHOWN BY THE ASSESSEE. (3) THE COST OF PLASTIC COVER AS ADOPTED BY THE AO IS RS.1.20 PER COVER IN PLACE OF RS.1.45 PER COVER ADOPTED BY THE ASSESSEE. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LEA RNED CIT(A) AND FILED THE CALCULATION OF SALES AS PER SE IZED MATERIALS WHICH IS REPRODUCED IN THE APPELLATE ORDE R. IT WAS EXPLAINED THAT WORKING GIVEN BY THE ASSESSEE WAS CO RRECT AND THE AO HAD IGNORED THE PURCHASES AT HIGHER PRIC E RECORDED ON THE SAME PAGES. IT WAS ALSO POINTED OUT THAT PURCHASE OF CASSETTE AT LOWER PRICE WOULD NOT INCLU DE VARIOUS SPARE PARTS AND SUCH EXPENSES HAVE ALSO BEE N IGNORED. IT WAS ALSO EXPLAINED THAT AS PER THE BOOK S OF ACCOUNTS THE AVERAGE GROSS PROFIT OF THE ASSESSEE F OR SEVERAL YEARS WOULD COME TO 11.64%. THEREFORE EVEN IF IT 24 IS APPLIED AGAINST THE UNDISCLOSED INCOME COMPUTED BY THE AO THE UNDISCLOSED INCOME WOULD COME TO RS.13 40 64 0/- THE SAME WOULD NOT EXCEED THE UNDISCLOSED INCOME ALREADY OFFERED BY THE ASSESSEE AT RS.15 00 000/-. IT WAS SUBMITTED THAT THE AO APPLIED AVERAGE OF PERCENTAGE OF PROFIT FOR THREE YEARS WHICH MAY NOT GIVE THE CORRE CT RESULT FOR THE SIMPLE REASON THAT THE SALES PERTAINED TO S EVERAL YEARS. THE ASSESSEE FILED RETURN OF INCOME FOR BLOC K PERIOD ON THE BASIS OF THE UNDISCLOSED SALES WORKED OUT O N THE BASIS OF THE SEIZED MATERIALS AND THE SALES WORKED OUT TO RS.1 09 21 390/- AND IF AVERAGE PROFIT OF 11.64% I S ADOPTED IT WOULD BE WITHIN THE LIMIT OF RETURNED U NDISCLOSED INCOME OF RS.15 00 000/-. WITHOUT PREJUDICE TO THES E CONTENTIONS IT WAS FURTHER SUBMITTED THAT IF UNDIS CLOSED SALES IS WORKED OUT ON YEAR TO YEAR BASIS AND RATE OF GROSS PROFIT FOR THE RESPECTIVE YEAR IS APPLIED; THE PROF IT WOULD BE WORKED OUT TO NEGATIVE FIGURE AS WAS SHOWN BEFORE T HE AUTHORITIES BELOW. THE BREAK-UP OF THE YEAR WISE SA LES AS PER SEIZED MATERIALS ARE REPRODUCED AT PAGE 13 OF T HE APPELLATE ORDER AND ARE ALSO REPRODUCED FOR CONSIDE RATION AS UNDER|: PARTICULARS FINANCIAL YEAR TOTAL 2001- 02 2000-01 1999-2000 1998-99 1997-98 SALES AS PER SHEET ATTACHED LESS: SALES AS PER BOOKS 0 140354 246125 149187 1719354 965850 5335856 1432525 7234015 926145 14535451 3614061 UNDISCLOSE D SALES 0 96938 753504 3903431 6307871 11061744 GROSS PROFIT RATE 26.87% 26.26% 29.88% 17.16% -20.60% PROFIT ON UNDISCLOSE D SALES 0 25454 225145 669907 -(1299368) (378861) 25 IT WAS THEREFORE SUBMITTED THAT THE DISCLOSURE MA DE BY THE ASSESSEE SHOULD BE ACCEPTED. THE LEARNED CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF THE SEIZED MATERIAL NOTED THAT THE AO HAS FAILED TO APPRECIATE THE FACTS OF THE CASE AND COMPUTED THE P ROFIT BY APPLYING RATE AT 27% WITHOUT ANY JUSTIFICATION. IT WAS FOUND THAT MAXIMUM UNDISCLOSED SALES PERTAIN TO FINANCIAL YEAR 1997-98 IN WHICH THE GROSS PROFIT RATE OF THE ASSES SEE AS PER BOOKS IS (-) 20.67% WHICH HAS NOT BEEN CHALLENG ED BY THE AO AND IN THE IMMEDIATE SUCCEEDING FINANCIAL YE AR THE GROSS PROFIT IS ONLY 17.16% THEREFORE THERE IS NO JUSTIFICATION IN APPLYING GROSS PROFIT @27%. THE IN COME DECLARED BY THE ASSESSEE AT RS.15 00 000/- IS THUS REASONABLE HENCE NO ADDITION IS CALLED FOR. HOWEVE R WITH REGARD TO SALES NOT DISCLOSED BY THE ASSESSEE IN TH E BLOCK RETURN IT WAS DIRECTED TO APPLY GROSS PROFIT OF TH AT YEAR ON THE BASIS OF THE DETAILS AVAILABLE IN THE SEIZED MA TERIAL. SUCH SALES WERE AMOUNTING TO RS.16 450/- AND RS.13 924/- (TOTAL RS.30 374/-) ON WHICH GROSS PROFIT OF 29.88% WAS APPLIED OF FINANCIAL YEAR 1999-2000 AND THE REST OF THE ADDITION WAS DELETED. THE ASSESSEE DID NOT PRESS SU CH ADDITION OF RS.9 076/- ON GROUND NO.1 OF THE CROSS OBJECTION. THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT THE AO MADE ADDITION ON THE BASI S OF THE SEIZED MATERIALS. THEREFORE THE LEARNED CIT(A) SHOULD NOT HAVE DELETED THE ADDITION. ON THE OTHER HAND T HE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE GAVE SPECIFIC EXPLANATIONS BEFORE 26 THE AUTHORITIES BELOW EXPLAINING SALES AS PER SEIZE D MATERIALS WHICH WAS BASED ON ACTUAL DATA AS IS REPR ODUCED IN THE APPELLATE ORDER. THE SALES WAS ALSO BIFURCAT ED AS PER SEIZED MATERIALS WHICH SHOWS THAT MAXIMUM UNDISCLOS ED SALES WERE MADE IN FINANCIAL YEAR 1997-98 IN WHICH THERE WAS LOSS AND THE AVERAGE PROFIT RATE FOR ALL THE FI NANCIAL YEAR WAS 11.64% THEREFORE CONSIDERING THE CASE OF THE ASSESSEE FROM EVERY POSSIBLE ANGLE THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN THE RETURN FOR T HE BLOCK PERIOD AT RS.15 00 000/- IS SUFFICIENT TO COVER UP THIS ISSUE. 30.1 ON CONSIDERATION OF RIVAL SUBMISSIONS WE DO N OT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE GAVE COMPLETE DATA OF UNDISCLOSED SALES YE AR WISE ON THE BASIS OF THE SEIZED MATERIAL AND EXPLAI NED THAT THE FIGURES TAKEN BY THE AO ARE INCORRECT. THE AO H AS IGNORED DETAILS IN THE SEIZED PAPERS AND AS PER THE ASSESSEE THE AVERAGE GROSS PROFIT FOR ALL THE FINAN CIAL YEARS IN REFERENCE COMES TO 11.64%. IN FINANCIAL YEAR 199 7-98 THERE WAS LOSS IN GROSS PROFIT (-) 20.60% AND THE M AXIMUM UNDISCLOSED SALES PERTAIN TO THIS YEAR ONLY. THERE IS A MARGINAL DIFFERENCE IN THE UNDISCLOSED SALES COMPUT ED BY THE AO AND THE ASSESSEE AS NOTED ABOVE WHICH IS ALS O INSIGNIFICANT. THE LEARNED CIT(A) THEREFORE CONSI DERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES RIGHTLY HEL D THAT THE INCOME DISCLOSED BY THE ASSESSEE IN THE BLOCK RETUR N IS REASONABLE AT RS.15 00 000/-. THE LEARNED CIT(A) FO R FURTHER UNDISCLOSED INCOME DIRECTED TO APPLY GROSS PROFIT RATE OF THAT YEAR 1999-2000 TO WORK OUT THE PROFIT. IT IS 27 SETTLED LAW THAT WHILE COMPUTING THE PROFIT THE HI STORY OF THE ASSESSEE AND THE CIRCUMSTANCES OF THE CASE SHALL HA VE TO BE CONSIDERED. IN THIS CASE THE LEARNED CIT(A) ON OVER ALL CONSIDERATION OF THE FACTS AND HISTORY OF THE ASSES SEE BASED ON SEIZED MATERIALS RIGHTLY DELETED THE ADDIT ION. NO INFIRMITY IS POINTED OUT IN THE ORDER OF THE LEARNE D CIT(A) IN DELETING THE ADDITION. WE ACCORDINGLY CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS GROUND NO.1 OF THE A PPEAL OF THE REVENUE. 31. ON GROUND NO.2 OF THE DEPARTMENTAL APPEAL REVE NUE CHALLENGED THE DELETION OF ADDITION OF RS.2 50 485/ - ON ACCOUNT OF UNDISCLOSED SALES. THE LEARNED CIT(A) NO TED THAT WHILE COMPUTING UNDISCLOSED SALES AT RS.1 11 7 1 874/- THE AO INSTEAD OF SALES OF RS.1 08 91 015/- TAKEN B Y THE ASSESSEE ON THE BASIS OF THE SEIZED MATERIAL HAS AL SO TAKEN CONSIDERATION THE FIGURE OF RS.16 450/- AND RS.13 924/- WHICH HAS NOT BEEN CHALLENGED BEFORE HI M ON WHICH ALSO LEARNED CIT(A) MAINTAINED THE ADDITION N OTED IN GROUND NO.1 ABOVE. THE ASSESSEE DID NOT RAISE ANY C ROSS OBJECTION ON THE SAME. THE REST OF THE FIGURE IS OF RS.2 50 485/- WHICH WAS TAKEN INTO CONSIDERATION. I T WAS POINTED OUT BEFORE THE LEARNED CIT(A) THOUGH SHOW C AUSE NOTICE WAS ISSUED AND ITEM WAS DESCRIBED AS STOCK BUT THE AO PROCEEDED ONLY ON PRESUMPTION TO MAKE THE ADDITI ON WHICH MIGHT HAVE BEEN SOLD SUBSEQUENTLY WHICH HAS N OT BEEN RECORDED. IT WAS EXPLAINED THAT NOTINGS IN THE SEIZED MATERIALS ARE NOT REGULAR BOOKS OF THE ASSESSEE. TH E STOCK MEANS THESE CASSETTES WERE WITH THE VARIOUS DEALERS WHICH 28 WERE NOT SOLD NOR SALEABLE AND NO EVIDENCE WAS FOUN D FOR ACTUAL SALES MADE IN A SUM OF RS.2 50 485/-. IT WA S THEREFORE SUBMITTED THAT ADDITION IS UNJUSTIFIED. IT WAS ALSO EXPLAINED THAT THIS FIGURE IS NEGLIGIBLE AS AGAINST SALES SHOWN IN CRORES. THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND FOUND THAT THERE IS NOTHING IN THE SEIZED MATERIALS TO INDICATE THAT ASSESSEE D ID RECEIVE THE AMOUNT OF RS.2 50 485/- IN RESPECT OF DAMAGED CASSETTES PARTICULARLY WHEN SUBSTANTIAL SALES HAVE ALREADY BEEN REFLECTED IN THE SEIZED MATERIAL ON WHICH ASSE SSEE HAS ALREADY SHOWN UNDISCLOSED INCOME. IN THE ABSENC E OF ANY EVIDENCE TO ESTABLISH ASSESSEE DID RECEIVE THE ALLEGED SALE PROCEEDS ADDITION WAS DELETED. LEARNED DR MER ELY RELIED UPON THE ORDER OF THE AO AND HAS NOT POINTED OUT ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). ON CONSIDERATION OF THESE FACTS WE DO NOT FIND ANY ME RIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE LEARNED CIT(A) SPECIFICALLY FOUND IN HIS FINDINGS THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO TO ESTABLISH THAT ASSES SEE DID REALIZE THE ALLEGED SALE PROCEEDS. SUCH FINDINGS OF THE LEARNED CIT(A) HAVE NOT BEEN REBUTTED THROUGH ANY EVIDENCE. IN THE ABSENCE OF ANY EVIDENCE CONTRARY T O THE FINDINGS OF THE LEARNED CIT(A) WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LE ARNED CIT(A). WE CONFIRM HIS FINDINGS AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 32. ON GROUND NO.3 REVENUE CHALLENGED THE DELETION OF THE SURCHARGE. THE LEARNED CIT(A) NOTED THAT AMENDM ENT 29 IN SECTION 113 IS OPERATIVE FROM 1-06-2002 WHICH IS PROSPECTIVE IN NATURE. SINCE SEARCH IS CONDUCTED PR IOR TO THIS DATE THEREFORE LEVY OF SURCHARGE WAS DELETED . LEARNED REPRESENTATIVES OF BOTH THE PARTIES STATED THAT THE ISSUE IS NOW COVERED BY DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF SURESH N. MEHTA 297 ITR 322 IN FAVOUR OF THE REVENUE IN WHICH IT WAS HELD THAT PROVISO TO SECTI ON 113 IS CLARIFICATORY IN NATURE. SURCHARGE IS LEVIABLE. BY FOLLOWING THE SAME DECISION WE SET ASIDE THE ORDER OF THE LE ARNED CIT(A) AND RESTORE THE ORDER OF THE AO FOR LEVY OF SURCHARGE. THIS GROUND NO.3 OF THE APPEAL OF THE RE VENUE IS ALLOWED. 33. NO OTHER POINT IS ARGUED OR PRESSED. 34. IN THE RESULT DEPARTMENTAL APPEAL IS PARTLY AL LOWED. WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS DISM ISSED. IT(SS) A NO.260/AHD/2004 IT (SS) A NO.265/AHD/2004 GOVINDBHAI N. PATEL. 35. BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV AHMEDABAD DATED 30-06-200 4 FOR THE ABOVE BLOCK PERIOD. 36. THE REVENUE ON GROUND NO.1 CHALLENGED THE DELET ION OF ADDITION OF RS.2 61 850/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN GOLD JEWELLERY. THE AO HA S DISCUSSED THIS ISSUE IN PARA 5 OF THE ASSESSMENT OR DER AND 30 REPORTED THAT DURING THE COURSE OF SEARCH FOLLOWIN G GOLD JEWELLERY ARE FOUND AT THE RESIDENCE OF THE ASSESSE E: IN THE BED ROOM OF SHRI GOVIND N. PATEL AND SMT. CHANDRIKABEN G. PATEL 971.6 GMS (GM) 903.5 GMS(NW) RS.3 67 400(VALUE IN LOCKER NO.2823 OF PRAGATI SAHAKARI BANK BARODA 649.8 GMS (GW) 628.1 GMS(NW RS.2 92 050 (VALUE) TOTAL 1621.4 GMS(GW) 1531.6 GMS (NW) RS.6 59 450(VALUE) OUT OF THE ABOVE GOLD JEWELLERY VALUED AT RS.12 61 850/- (563.100 GMS. NET WEIGHT) BELONGING TO SHRI GOVIND N. PATEL AND SMT. CHANDRIKABEN G. PATEL WERE SEIZED. BESIDES THE ABOVE FOLLOWING GOLD JEWELLERY WERE FO UND IN POSSESSION OF SHRI PRAKASH G. PATEL STAYING AT THE SAME HOUSE: IN THE BED ROOM OF SHRI PRAKSSH N. PATEL AND SMT. PRITI G. PATEL 411.3 GMS (GW) 365.5 GMS (NW) RS.1 46 200 (VALUE) IN LOCKER NO.1966A OF PRAGATI SAHAKARI BANK BARODA 915.3 GMS (GW) 865.5 GMS (NW) RS.3 46 200 (VALUE) TOTAL 1326.6 GMS (GW) 1231 GMS (NW) RS.4 92 400 OUT OF ABOVE GOLD JEWELLERY VALUED AT RS.3 29 920/ - (824.1 GMS NET WEIGHT) BELONGING TO SHRI PRAKASH G. PATEL AND SMT. PRITI G. PATEL WERE SEIZED. THE AO FURTHER REP ORTED THAT ASSESSEE HAS APPENDED A NOTE ALONG WITH BLOCK RETURN 31 IN WHICH IT WAS EXPLAINED THAT HE WAS STAYING IN JO INT FAMILY CONSISTING OF HIMSELF HIS WIFE UNMARRIED DAUGHTER SON HIS WIFE AND HIS DAUGHTER. THE GOLD ORNAMENTS FOUND AT THEIR RESIDENCE ARE ONLY 2134.500 GRAMS WHICH IS CONSISTI NG OF ALL THE FAMILY MEMBERS AND CONSIDERING THE SOCIAL T RADITION AND CUSTOM THE SAME ARE STREEDHAN IN NATURE RECEIVE D TIME TO TIME. THE AO DID NOT ACCEPT EXPLANATION OF THE ASSESSEE BECAUSE ASSESSEE WAS CHANGING HIS STAND AN D WAS INVARIANCE WITH THE STATEMENT GIVEN AT THE TIME OF SEARCH BY HIS FAMILY MEMBERS AND REFERRED TO STATEM ENT OF SMT. CHANDRIKA G. PATEL. THE AO THEREFORE CONCLUD ED THAT THE EXPLANATION OF THE ASSESSEE THAT THE GOLD ORNAMENTS BELONG TO SHARDABEN SAVITABEN RADHABEN AND MIRABEN WERE KEPT IN BANK LOCKER IS PROVED TO B E FALSE BY PRELIMINARY STATEMENT OF SMT. CHANDRIKABEN G. PA TEL. THEREFORE THE GOLD JEWELLERY SEIZED DURING THE COU RSE OF SEARCH AMOUNTING TO RS.2 61 850/- WAS TREATED AS UNEXPLAINED AND ADDED TO THE UNDISCLOSED INCOME OF THE ASSESSEE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A ) THAT DURING THE ASSESSMENT PROCEEDINGS ASSESSEE EXPLAINE D THE OWNERSHIP OF THE TOTAL GOLD ORNAMENTS FOUND AS DETAILED IN THE STATEMENT OF FACT. THE CHART OF EXPLANATION IS NOTED IN THE IMPUGNED ORDER. IT WAS FURTHER POINTED OUT THAT GOLD ORNAMENTS IN THE CASE OF PRAKASH G. PATEL WERE ALSO CONSIDERED SEPARATELY WHERE ADDITION OF RS.3 29 920 /- WAS MADE ON SUBSTANTIVE BASIS WHICH IS SEPARATELY IN AP PEAL. IT WAS ALSO EXPLAINED THAT IN CASE BOARD CIRCULAR NO.1 916 IS APPLIED NO ADDITION CAN BE MADE. THE LEARNED CIT(A ) CONSIDERING THE EXPLANATION NOTED THAT THE ORNAMENT S 32 WHICH ARE TO BE EXPLAINED IN THE CASE OF THE ASSESS EE ARE ONLY 2834.300 GMS AND BY APPLYING BOARD CIRCULAR TH E FAMILY POSSESS OF REASONABLE HOLDING OF 3050 GMS. THEREFORE BY FOLLOWING THE SAME ADDITION WAS DELE TED. 37. THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND ALSO REFERRED TO STATEMENT OF SHRI G. N. PATEL RECO RDED ON THE DATE OF SEARCH. COPY OF THE SAME IS FILED AT PA GE 9 OF THE DEPARTMENTS PAPER BOOK. HE HAS SUBMITTED THAT MORE RELATIVES HAVE BEEN ADDED TO CLAIM POSSESSION OF TH E JEWELLERY BY THE ENTIRE FAMILY BUT NO SUCH DETAILS HAVE BEEN GIVEN IN THE STATEMENT. BOARD CIRCULAR IS APPLICABL E FOR SEIZURE AT THE TIME OF SEARCH ONLY. SINCE NO EXPLAN ATION IS GIVEN BY THE ASSESSEE ABOUT POSSESSION OF UNACCOUNT ED JEWELLERY NO ADDITION SHOULD HAVE BEEN DELETED. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND REFERRED TO PAGE 7 OF THE APPELLATE ORDER IN WHICH PRELIMINARY STATEMENT OF SMT. CHANDRIKABEN G. PATEL IS NOTED IN WHICH SHE HAS EXPLAINED GOLD JEWELLERY POSSESSED BY THE JOINT FAMILY INCLUDING OTHER RELAT IONS. HE HAS ALSO REFERRED TO STATEMENT OF FACTS FILED BEFOR E LEARNED CIT(A) TO SHOW THAT COMPLETE FACTS WERE EXPLAINED. THEREFORE LEARNED CIT(A) RIGHTLY DELETED THE ADDIT ION. HE HAS ALSO REFERRED TO THE DECISION OF THE HONBLE GU JARAT HIGH COURT IN THE CASE OF RATANLAL VAYPARILAL JAIN (SUPRA) AND SUBMITTED THAT THE ISSUE IS SAME AS IS CONSIDER ED IN THE CASE OF PRAKASH G. PATEL (SUPRA). 33 38. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERI AL ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTE RFERE WITH THE ORDER OF THE LEARNED CIT(A). THE ASSESSEE EXPLA INED THE POSSESSION OF THE GOLD JEWELLERY IN THE LIGHT O F THE BOARD CIRCULAR AND THE VIEW OF THE LEARNED CIT(A) IS CONF IRMED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF RATANLAL VAYAPARILAL JAIN(SUPRA). SMT. CHANDRIKABEN G. PATEL IN HER STATEMENT ALSO EXPLAINED THAT GOLD JEWELLERY BELONG TO THE DIFFERENT FAMILY MEMBERS. THE SAME MATTER IS CONSID ERED IN THE CASE OF ASSESSEE PRAKASH G. PATEL IN DEPARTMENT AL APPEAL NO. IT(SS)A NO.264/AHD/2004 AND THE SAME HAS BEEN DISMISSED. BY FOLLOWING THE SAME REASONS WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 39. ON GROUND NO.2 REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.8 85 000/- MADE ON ACCOUNT OF UNDISC LOSED INVESTMENT IN IVPS. THE AO CONSIDERED THIS ISSUE IN PARA 6 OF THE ASSESSMENT ORDER AND NOTED THAT DURING THE C OURSE OF SEARCH ANNEXURE A/16 WAS SEIZED FROM THE RESIDE NCE OF THE ASSESSEE. PAGE 59 OF THIS ANNEXURE SHOWS THE DE TAILS OF MATURITY VALUE OF INVESTMENTS MADE BY THE ASSESS EE ON A PARTICULAR DATE. THE ENGLISH TRANSLATION IS REPRO DUCED GIVING THE NAME OF THE BANK AND THE AMOUNT OF THE F DR AND IVPS TOTALING TO RS.4 24 70 219/-. THE PAPER SH OWS THE MATURITY VALUE OF IVPS PURCHASED BY THE ASSESSEE IS RS.1 00 00 000/- + RS.10 20 000/- = RS.1 10 20 000/ -. IT MEANS THAT INVESTMENT IN IVPS IS RS.55 10 000/- (IV PS MATURED AFTER A PERIOD OF 5 YEARS AT DOUBLE THE V ALUE OF INVESTMENT). HOWEVER IN THE CASH FLOW STATEMENT 34 UNACCOUNTED INCOME SUBMITTED BY THE ASSESSEE THE I VPS CONSIDERED AS UNDISCLOSED WERE SHOWN IN A SUM OF RS.46 25 000/-. THE ASSESSEE CONTENDED THAT UNDISCL OSED INVESTMENT IN THE IVPS IS ONLY RS.46 25 000/- AS PE R THE DETAILS NOTED IN THE SEIZED PAPERS. THEREFORE NO F URTHER ADDITION SHOULD BE MADE. THE AO HOWEVER DID NOT AC CEPT CONTENTION OF THE ASSESSEE AND UNDISCLOSED INVESTME NT IN IVPS WAS TAKEN AT RS.55 10 000/- AND ADDITION WAS ACCORDINGLY MADE. IT WAS SUBMITTED BEFORE THE LEARN ED CIT(A) THAT DETAILS OF IVPS AS PER THE BIFURCATION GIVEN ON PAGE 42 OF ANNEXURE A/1 IS AT RS.92 50 000/- (REPRO DUCED IN PARA 5.1 OF THE IMPUGNED ORDER). THEREFORE THE MATURITY VALUE OF THE IVPS IS NOT RS.1 10 20 000/-. THE FACE VALUE OF THE IVPS IS CORRECTLY MENTIONED IN THE CASH FLOW ST ATEMENT. IT WAS SUBMITTED THAT THE SEIZED PAPERS CONTAINED T HE DETAILS OF IVPS WORKED OUT TO RS.46 25 000/-. THE A O WAS NOT JUSTIFIED IN TAKING THE INVESTMENT AT RS.55 10 000/-. IT WAS THEREFORE SUBMITTED THAT ADDITION OF RS.8 85 000/- IS UNJUSTIFIED. THE LEARNED CIT(A) CONSIDERING THE EXP LANATION OF THE ASSESSEE NOTED THAT THE AO WAS NOT JUSTIFIED IN ADOPTING THE UNDISCLOSED INVESTMENT IN IVPS AT RS.55 10 000/- ON THE BASIS OF UNSUBSTANTIATED SEIZ ED DOCUMENTS AS AGAINST THE AMOUNT OF RS.46 25 000/- MENTIONED IN THE SEIZED PAPERS FOUND DURING THE COU RSE OF SEARCH AND PRODUCED BEFORE HIM. THE AO ALSO FOUND T HAT TOTAL INVESTMENT IN IVPS ARE RS.46.25 LACS. ADDITIO N WAS ACCORDINGLY DELETED. 35 40. THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT MATURITY VALUE OF THE IVPS WAS RS.55 10 000/-. ON SEIZED PAPERS DATES OF MATURITY VALUE AND OTHERS TALLY THEREFORE THE LEARNED CIT(A) DID NOT APPRECIATE THESE FACTS CORRECTLY. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT NO ADDITION CAN BE MADE ON PRESUMPTI ON. 41. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVE NUE. THE AO NOTED THE MATURITY VALUE OF THE IVPS AT RS.1 10 20 000/- AND PRESUMED THAT SINCE THE IVPS MATURE AFTER PERIO D OF 5 YEARS AT DOUBLE THE VALUE OF THE INVESTMENT THER EFORE HE HAS TAKEN INVESTMENT IN IVPS AT RS.55 10 000/-. THE ASSESSEE FILED CASH FLOW STATEMENT OF UNACCOUNTED I NCOME TO SHOW UNDISCLOSED INVESTMENT IN IVPS IN A SUM OF RS.46 25 000/- WHICH IS BASED ON THE SEIZED PAPERS. THE ASSESSEE ALSO EXPLAINED THE BIFURCATION GIVEN IN AN NEXURE A/1 PAGE 42 THAT INVESTMENT IN IVPS WAS ONLY RS.92 50 000/-. IT WOULD SHOW THAT THE AO MERELY PRESUMED THAT SINCE THE IVPS MATURE AFTER PERIOD OF 5 YEARS AT DOUBLE THE VALUE OF INVESTMENT THEREFORE INVESTMENT WOULD BE OF RS.55 10 000/-. SUCH A PRESUMPTION OF THE AO WAS NOT BASED UPON THE EVIDEN CE OR MATERIAL ON RECORD. THE LEARNED CIT(A) THEREFORE ON GOING THROUGH THE SEIZED PAPERS AND MATERIAL ON RECORD RI GHTLY DELETED THE ADDITION OF RS.8 85 000/- BEING THE DIF FERENCE OF 36 RS.55 10 000/- AND RS.46 25 000/-. THIS GROUND OF APPEAL OF THE REVENUE HAS NO MERIT AND IS ACCORDINGLY DISM ISSED 42. ON GROUND NO.3 THE REVENUE CHALLENGED THE ORDE R OF THE LEARNED CIT(A) IN RESTRICTING THE UNDISCLOSED A CCRUED INTEREST IN IVPS FROM RS.14 20 832/- TO RS.9 27 881 /-. THE ASSESSEE ON THE SAME ISSUE RAISED GROUND NO.1 IN HI S APPEAL CHALLENGING THE UPHOLDING OF PART OF THE ADD ITION OF RS.9 27 881/-. THE AO MADE THE ADDITION OF RS.14 20 832/- ON ACCOUNT OF ACCRUED INTEREST ON IVPS. THE ASSESSE E DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUBMITT ED THAT IVPS ARE OF MATURITY VALUE OF RS.92.50 LACS HA VING FACE VALUE OF RS.46.25 LACS. IN THE CERTIFICATES SEIZED BY THE DEPARTMENT MATURITY VALUE HAS BEEN MENTIONED. IN OT HER WORDS BY INVESTING RS.1 000/- IN IVP CERTIFICATE OF RS.2 000/- WAS BEING ISSUED BY THE POST OFFICE AND THAT TOO WAS PAYABLE ON MATURITY. THE POST OFFICE ISSUING TH E CERTIFICATE WILL NOT PAY THE ACCRUED INTEREST IF EN CASHED BEFORE MATURITY. THUS IVPS ARE IN WAY JUST LIKE DE EP DISCOUNT BOND AND AS PER CIRCULAR ISSUED BY THE BOA RD THE DIFFERENCE BETWEEN SUBSCRIPTION PRICE AND REDEMPTIO N PRICE OF SUCH BOND WILL BE TREATED AS INTEREST INCOME IRR ESPECTIVE OF YEAR OF ACCRUAL. IN IT ACT THE CHARGE IS ON ACCR UAL BASIS OR ON RECEIPT BASIS AND THE TAXABILITY DEPENDS UPON THE SYSTEM OF ACCOUNTING ADOPTED BY THE ASSESSEE. WHERE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS AND H AS ALSO NOT ADOPTED MERCANTILE SYSTEM OF ACCOUNTING T HE TAXABILITY IS TO BE ASCERTAINED ON CASH SYSTEM OF ACCOUNTING. THEREFORE INTEREST ON IVPS SHOULD BE 37 CONSIDERED ONLY ON CASH SYSTEM OF ACCOUNTING AND ESTIMATE OF INCOME IS UNJUSTIFIED. IN THE CASE OF THE ASSESSEE IVPS (INDIRA VIKASH PATRA) GET MATURED AFT ER THE DATE OF SEARCH THEREFORE INTEREST INCOME WILL BE RECEIVED THEREFROM AND WILL BE OFFERED TO TAX ON MATURITY. T HESE CERTIFICATES HAVE BEEN SEIZED BY THE DEPARTMENT AND THE ASSESSEE REQUESTED THE DEPARTMENT SEVERAL TIME TO E NCASH THOSE IVPS AND ADJUST SALE PROCEEDS AGAINST THE TAX LIABILITY OF THE ASSESSEE. SINCE THE FACE VALUE OF THE CERTIF ICATE WAS RS.46.25 LACS OUT OF WHICH CERTIFICATES WORTH RS.1 2.75 LACS WERE LOST AND WERE NOT IN POSSESSION OF THE ASSESSE E ON THE DATE OF THE SEARCH. THEREFORE CALCULATION OF I NTEREST AT RS.36 43 823/- IS UNJUSTIFIED. THE SAME WAS ALSO CL ARIFIED IN THE STATEMENT OF THE ASSESSEE RECORDED DURING THE C OURSE OF SEARCH AND COPY OF NEWS PAPER GIVING ADVERTISEME NT OF LOSS OF IVPS AND OTHER DOCUMENTS WAS FILED. IT WAS EXPLAINED THAT SINCE CERTIFICATES OF RS.12.75 LACS WERE LOST AND CERTIFICATES OF RS.10.75 LACS WERE SOLD BEFORE MATURITY THEREFORE NET IVPS OF RS.22.75 LACS WERE FOUND DUR ING THE COURSE OF SEARCH. IT WAS THEREFORE EXPLAINED THAT WITHOUT PREJUDICE TO THE CLAIM OF TAXABILITY OF THE INTERES T ON RECEIPT BASIS IF ANY INTEREST IS TO BE CHARGED ON ACCRUAL BASIS THE FACE VALUE SHALL HAVE TO BE TAKEN AT RS.46 25 LACS AND IT SHOULD REDUCE LOSS OF CERTIFICATES OF RS.12.75 LACS AND SOLD BEFORE MATURITY OF RS.10.75 LACS. THE AO HOWEVER D ID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND NOTED THA T SINCE INVESTMENTS HAVE NOT BEEN DISCLOSED IN IVPS THEREF ORE INTEREST COULD NOT BE OFFERED ON RECEIPT BASIS. THE REFORE INTEREST IS TO BE CHARGED ON ACCRUAL BASIS. IT WAS ALSO NOTED 38 THAT IVPS WORTH RS.23.25 LACS HAVE BEEN SEIZED BY T HE DEPARTMENT DURING THE COURSE OF SEARCH THEREFORE ON ACCRUAL BASIS THE INTEREST WOULD BE CHARGED TO TAX IN A SUM OF RS.14 20 832/- AND ADDED TO THE UNDISCLOSED INCO ME OF THE ASSESSEE DURING THE BLOCK PERIOD. SAME SUBMISSI ONS WERE REITERATED BEFORE THE LEARNED CIT(A) AND IT WA S SUBMITTED THAT ADDITION WAS UNJUSTIFIED. ALTERNATIV ELY IT WAS EXPLAINED THAT IF ANY ADDITION IS TO BE MADE THE I NTEREST ACCRUED UP TO THE DATE OF SEARCH AT THE BEST COULD BE CHARGED IN A SUM OF RS.9 72 881/-. THE LEARNED CIT( A) CONFIRMED THE ORDER OF THE AO THAT INTEREST ON IVPS SHOULD BE TAXED ON ACCRUAL BASIS HOWEVER IT WAS FOUND TH AT AO TAXED THE INTEREST UP TO THE DATE OF MATURITY WHICH WAS FALLING BEYOND THE BLOCK PERIOD THEREFORE INTERES T WAS CHARGED UP TO THE DATE OF SEARCH I. E. UP TO 11-02- 2002 IN A SUM OF RS.9 72 881/-. BOTH THE PARTIES ARE IN APPEA L AGAINST THE ORDER OF THE LEARNED CIT(A). 43. LEARNED DR RELIED UPON ORDER OF THE AO. ON THE OTHER HAND LEARNED COUNSEL FOR THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND REFERRED TO PB-69 WHICH IS CALCULATION OF INTEREST ON ACCRUAL BASIS UP TO THE DATE OF SEARCH IN A SUM OF RS.9 72 881/- AND ALSO REFERRED TO THE BOARD CIRCULAR RELATING TO DEEP DISCOUNT BOND. 44. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE FACE VALUE OF THE IVPS WAS FOUND T O BE RS.46.25 LACS WHICH WERE ALSO CONSIDERED ON GROUND NO.2 39 ABOVE AND IT WAS UPHELD THAT FACE VALUE WAS RS.46.2 5 LACS. THE AO ACCEPTED THE CLAIM OF THE ASSESSEE FOR IVPS LOST BEFORE MATURITY AS WELL AS SOLD BEFORE MATURITY AND WORKED OUT THE INTEREST ON ACCRUAL BASIS ON IVPS WORTH RS. 23.25 LACS SEIZED BY THE DEPARTMENT DURING THE SEARCH. TH E ASSESSEE CLAIMED THAT ON EACH IVP CERTIFICATE THERE IS A DATE OF MATURITY MENTIONED. THE SAME IS ALSO MENTIO NED IN THE DETAILS OF WORKING OF THE INTEREST FILED AT PAG E 69 OF THE PAPER BOOK. FOR ALL THE INVESTMENTS OF RS.23.25 LAC S IN IVPS THE DATE OF MATURITY FALLS BEYOND THE DATE OF THE SEARCH. THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECO RD TO PROVE WHETHER INTEREST COULD ACCRUE OR PAYABLE TO T HE ASSESSEE BEFORE MATURITY OF IVPS. THE AO DESPITE HA VING POSSESSION OF CERTIFICATES OF IVPS DID NOT DISPUTE THE CONTENTION OF THE ASSESSEE THAT WHEN INVESTMENT OF RS.1 000/- IS MADE IN IVP RS.2 000/- WOULD BE PAYA BLE ON MATURITY BY THE POST OFFICE. THE ASSESSEE ALSO CLAI MED THAT POST OFFICE ISSUED THE CERTIFICATES WILL NOT PAY TH E ACCRUED INTEREST IF IVPS ARE ENCASHED BEFORE MATURITY. NO A DVERSE COMMENTS HAVE BEEN OFFERED BY THE AO AGAINST THESE SUBMISSIONS OF THE ASSESSEE. THE AO MERELY NOTED TH AT SINCE INTEREST ON FDRS HAVE BEEN SHOWN BY THE ASSES SEE ON ACCRUAL BASIS IN THE REGULAR RETURN; THEREFORE ACCRUED INTEREST ON IVPS HAS TO BE TAXED ON ACCRUAL BASIS. THERE IS A DISTINCTION BETWEEN INTEREST ACCRUED ON FDRS AND IVPS BECAUSE AS PER TERMS OF FDRS THE INTEREST IS PAYABL E TIME TO TIME AND CREDITED IN THE ACCOUNT OF THE DEPOSITO R OF THE FDRS BUT THE DETAILS EXPLAINED BY THE ASSESSEE REGA RDING IVPS IS DIFFERENT. THE ASSESSEE FURTHER CLAIMED THA T IVPS 40 ARE JUST LIKE DEEP DISCOUNT BOND ON WHICH CBDT CIRC ULAR IS ALSO ISSUED. COPY OF THE SAME IS FILED TO SHOW T HAT BOARD HAS ISSUED CLARIFICATION REGARDING TAXABILITY OF TH E INCOME RELATING TO DEEP DISCOUNT BONDS VIDE LETTER DATED 12-03-1996 AND IT WAS CLARIFIED THAT DIFFERENCE BET WEEN ISSUE PRICE AND THE REDEMPTION PRICE OF DEEP DISCOU NT BONDS WILL BE TREATED AS INTEREST INCOME ASSESSABLE UNDER IT ACT. ON THE TRANSFER OF BONDS BEFORE MATURITY T HE DIFFERENCE BETWEEN THE SALE CONSIDERATION AND ISSUE PRICE WILL BE TREATED AS CAPITAL GAINS/LOSS IF THE ASSESS EE PURCHASES THEM BY WAY OF INVESTMENT. HOWEVER IN TH E CASE OF AN ASSESSEE WHO DEALS IN PURCHASE AND SALES OF BOND SECURITIES ETC. THE PROFIT OR LOSS SHALL BE T REATED AS TRADING PROFIT OR LOSS. THE ABOVE CLARIFICATION OF THE BOARD ON DEEP DISCOUNT BOND CLEARLY PROVE THAT IF SUCH BO NDS ARE TRANSFERRED BEFORE MATURITY IT WOULD NOT BE TREATE D AS INTEREST ACCRUED ON THE BONDS BECAUSE THE DIFFEREN CE BETWEEN THE SALE CONSIDERATION AND ISSUE PRICE WILL BE TREATED AS CAPITAL GAIN/LOSS. THE CONDITION OF IVPS AS EXPLAINED BY THE ASSESSEE APPEARS TO BE SAME AS THA T OF DEEP DISCOUNT BONDS PARTICULARLY WHEN THE AO HAS N OT ADVERSELY COMMENTED ON THIS EXPLANATION OF THE ASSE SSEE. THEREFORE NO INTEREST WOULD ACCRUE ON IVPS PRIOR T O THE MATURITY DATE. THE ASSESSEE HAS GIVEN DETAILS OF INVESTMENT IN IVPS IN A SUM OF RS.23.25 LACS AT PAG E 69 OF THE PAPER BOOK WHICH CLEARLY MENTION THE DATES OF M ATURITY OF IVPS AFTER THE DATE OF THE SEARCH. THE LEARNED C IT(A) HAS ALSO DIRECTED THAT INTEREST WOULD BE CHARGED UP TO THE BLOCK PERIOD WOULD SHOW THAT IVPS WERE PAYABLE ONLY AFTER 41 THE DATE OF THE SEARCH. CONSIDERING THE ABOVE DISCU SSIONS WE ARE OF THE VIEW THAT NO INTEREST ACCRUED ON IVPS DURING THE BLOCK PERIOD THEREFORE ENTIRE ADDITION SHALL HAVE TO BE DELETED. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITION. G ROUND NO.3 OF THE APPEAL OF THE REVENUE IS DISMISSED. GRO UND NO.1 OF APPEAL OF THE ASSESSEE IS ALLOWED. THE AO I S HOWEVER AT LIBERTY TO TAX THE INTEREST ON IVPS ON THEIR MATURITY IN ACCORDANCE WITH LAW IF SO ADVISED. 45. ON GROUND NO.4 REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.8 00 000/- MADE ON ACCOUNT OF UNDISC LOSED INVESTMENT IN KVPS. THE ASSESSEE IN THE WRITTEN SUBMISSION POINTED OUT THAT KVPS IN QUESTION WERE PURCHASED BY THE PARTNERS OF THE FIRM G. N. P. AUDI O CASSETTES IN THEIR NAMES OUT OF UNDISCLOSED INCOME OF SUCH FIRM. SINCE THE FIRM IS NOT A JUDICIAL PERSON THE INVESTMENTS WERE MADE IN THE NAMES OF THE PARTNERS. UNDISCLOSED IN THE CASE OF THE FIRM IS ALREADY DISCLOSED IN A SUM OF RS.15 00 000/-. THE INVESTMENT OF RS.7 00 000/- BEI NG INVESTMENT IN KVPS IS OUT OF THE SAID INCOME WHICH IS NOT PROPERLY APPRECIATED BY THE AO. THEREFORE THERE IS NO JUSTIFICATION FOR MAKING ADDITION IN RESPECT OF KVP S OR INTEREST THEREON. IT WAS FURTHER SUBMITTED THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMI TTED THAT DISCLOSURE IN KVPS HAS BEEN MADE IN THE CASE O F M/S. G. N. P. AUDIO CASSETTES. THE ASSESSEE IN REPLY TO THE SHOW CAUSE NOTICE ISSUED BY THE AO SUBMITTED BY REF ERRING TO THE SEIZED MATERIAL THAT MATURITY VALUE OF THE K VPS IS 42 RS.14 00 000/- AND NOT AS IS NOTED BY THE AO. THERE IS NO FACE VALUE OF RS.8 00 000/-. KVPS WERE ENCASHED AFT ER THE DATE OF SEARCH SO NO INTEREST ACCRUED. THE AO HOWE VER DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND NOTED THAT AS PER PAGE 59 OF ANNEXURE A/16 THE MATURITY VALUE OF KVP IS RS.16 00 000/- WHICH MEANS THE ORIGINAL INVE STMENT IN KVPS WAS RS.8 00 000/- AND ACCORDINGLY RS.8 00 0 00/- WAS ADDED AS UNDISCLOSED INCOME FOR THE BLOCK PERIO D. THE ASSESSEE REITERATED THE SAME SUBMISSIONS BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND HELD THAT THERE IS N O JUSTIFICATION IN ADOPTING FIGURE OF INVESTMENT IN K VPS AT RS.8 00 000/- WHEN THE REAL INVESTMENT WAS ONLY RS.7 00 000/- WHICH IS ALSO CLEAR FROM THE SEIZED P APERS. IT WAS ALSO NOTED THAT THE AO HIMSELF ADMITTED THAT TH ESE INVESTMENTS WERE MADE OUT OF UNACCOUNTED INCOME FRO M THE FIRM M/S. G. N. P. AUDIO CASSETTES AS PER PARA 17 OF THE ASSESSMENT ORDER. THEREFORE ADDITION WAS DELET ED. 46. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVE NUE. LEARNED DR MERELY RELIED UPON THE ORDER OF THE AO A ND HAS NOT BROUGHT ANYTHING ON RECORD TO REBUT THE FIN DINGS OF THE LEARNED CIT(A). THE LEARNED COUNSEL FOR THE ASS ESSEE ALSO EXPLAINED THAT RS.15 00 000/- HAS BEEN ACCEPTE D AS UNDISCLOSED INCOME IN THE CASE OF THE FIRM WHICH I S ALSO AVAILABLE TO THE ASSESSEE. SINCE THE AO ACCEPTED TH E EXPLANATION OF THE ASSESSEE THAT UNDISCLOSED INCOME IN THE CASE OF M/S. G. N. P. AUDIO CASSETTES WAS AVAILABLE TO THE 43 ASSESSEE FOR MAKING UNACCOUNTED INVESTMENT THEREFO RE LEARNED CIT(A) RIGHTLY DELETED THIS ADDITION. THUS THERE WAS NO BASIS TO MAKE THE ADDITION OF RS.8 00 000/- WHIC H WAS NOT BASED UPON ANY SEIZED MATERIAL. THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 47. ON GROUND NO.5 REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.7 65 000/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN FDRS. THIS ADDITION WAS MADE FOR INVE STMENT IN FDRS OF UNNATI COOPERATIVE BANK AND ACCRUED INTE REST OF RS.4 71 744/- FROM THE AFORESAID DEPOSIT. IT WAS POINTED OUT THAT THE ASSESSEE DURING THE COURSE OF ASSESSME NT PROCEEDINGS WHILE EXPLAINING THE SOURCE OF INVESTME NT IN FDRS WAS SO MADE OUT OF TOTAL CONSIDERATION OF RS.8 22 222/- RECEIVED BY THE ASSESSEE AS BANAKHAT AMOUNT FROM THE PURCHASER OF THE LAND AGREED TO BE SOLD BY THE ASSESSEE ON 29-12-1998. IT WAS EXPLAINED THA T SUCH AMOUNT WAS AVAILABLE TO THE ASSESSEE. THE AO HOWEVE R DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND N OTED THAT SINCE FDRS HAD NOT BEEN OFFERED IN THE REGULAR RETURN THEREFORE ADDITION OF ABOVE AMOUNT SHALL HAVE TO B E MADE HOWEVER CREDIT OF THE UNDISCLOSED INCOME OF THE FI RM M/S. G. N. P. AUDIO CASSETTES WILL BE GIVEN IN THE LAST PARA OF THE ASSESSMENT ORDER. IT WAS THEREFORE SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE AO MISUNDERSTOOD THE WH OLE ISSUE THAT ASSESSEE CLAIMED THAT INVESTMENT OF RS.7 65 000/- WAS FROM UNDISCLOSED INCOME OF M/S. G . N. P. AUDIO CASSETTES. IT WAS FURTHER SUBMITTED THAT T HAT THE AO PROCEEDED TO CONSIDER THIS ISSUE IN THE LIGHT OF 44 ASSESSEES EXPLANATION FOR THE AMOUNT RECEIVED THRO UGH BANAKHAT. BUT NO CREDIT WAS GIVEN AND THE BANAKHAT WAS FOUND TO BE DOUBTFUL. THE LEARNED CIT(A) FURTHER NO TED THE SUBMISSION OF THE ASSESSEE THAT ADDITION WAS MADE BECAUSE THE ASSESSEE DID NOT PRODUCE THE PURCHASER BEFORE THE AO. HOWEVER COMPLETE DETAILS OF PURCHAS ERS WERE FURNISHED BEFORE THE AO AND THAT AMOUNT WAS RECEIVED THROUGH THE AGREEMENT TO SELL. THE AO DID NOT PROVE THAT BANAKHAT WAS NOT GENUINE. THE INVESTMENT IN FDRS WAS MADE WITHIN THREE MONTHS ON RECEIPT OF BANAKHAT AMOUNT THEREFORE SOURCE IS EXPLAINED. TH E LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSES SEE THAT THE AMOUNT WAS RECEIVED THROUGH BANAKHAT. THE LEARNED CIT(A) NOTED THAT THE MOMENT THE ASSESSEE PRODUCED AGREEMENT TO SELL AND THAT AMOUNT HAS BEEN RECEIVED THROUGH THE SAME THEREFORE NO ADDITION S HOULD HAVE BEEN MADE. ADDITION WAS ACCORDINGLY DELETED. 48. THE LEARNED DR RELIED UPON ORDER OF THE AO AND SUBMITTED THAT BENEFIT IS ALREADY GIVEN BY THE LEAR NED CIT(A) OF INCOME OF THE FIRM AND G.P. ADDITION IS S ET OFF THEREFORE NO FURTHER BENEFIT SHOULD BE GIVEN. NO B ANAKHAT AGREEMENT WAS FOUND IN THE SEARCH AND THE PARTIES T O THE BANAKHAT WERE NOT PRODUCED BEFORE THE AO AND POSSESSION OF PROPERTY REMAINED WITH ASSESSEE THER EFORE THE AO RIGHTLY MADE THE ADDITION. ON THE OTHER HAND LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSION MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE 45 AMOUNT OF FDRS TALLY WITH THE BANAKHAT SO NO ADDIT ION SHOULD BE MADE IN THE BLOCK ASSESSMENT. 49. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVE NUE. THE ASSESSEE EXPLAINED THAT AMOUNTS IN FDRS WAS INVESTE D OUT OF THE AMOUNT RECEIVED THROUGH AGREEMENT (BANAK HAT). THE AO HAS NOT PROVED THAT THE SAID BANAKHAT WAS NO T GENUINE. THE AO NOTED THAT SINCE THE BANAKHAT WAS N OT FOUND DURING THE COURSE OF SEARCH THEREFORE IT IS DOUBTFUL. SUCH REASON IS NOT CORRECT AND WOULD NOT ALLOW THE AO TO MAKE THE ADDITION. MERELY BECAUSE POSSESSION OF THE PROPERTY REMAINED WITH THE ASSESSEE WOULD NOT DISPR OVE THE EXPLANATION OF THE ASSESSEE THAT THE AMOUNT WAS RECEIVED THROUGH THE AGREEMENT. THE REVENUE SHALL H AVE TO CONSIDER AVAILABILITY OF THE FUNDS WITH THE ASSESSE E FOR MAKING INVESTMENT IN THE FDRS. THE LEARNED CIT(A) O N PROPER APPRECIATION OF THE FACTS RIGHTLY DELETED TH E ADDITION. THIS GROUND OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 50. ON GROUND NO.6 REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.7 00 000/- MADE ON ACCOUNT OF UNDISC LOSED INVESTMENT IN FDRS. THIS ADDITION WAS MADE ON ACCOU NT OF UNEXPLAINED INVESTMENT IN 7 FDRS OF RS.1 00 000/- E ACH WITH UNNATI COOPERATIVE BANK. THE AO NOTED THAT ASSESSEE AND HIS FAMILY MEMBERS HAD PURCHASED 7 FDR S OF RS.1 00 000/- EACH FROM THE ABOVE BANK ON 16-05- 1998. ALL THESE FDRS WERE PURCHASED BY TRANSFERRING THE F UNDS 46 FROM THEIR SAVINGS ACCOUNT IN THE SAME BANK. CASH H AS BEEN DEPOSITED IN THE BANK WHICH WAS UTILIZED FOR PURCHASING THE FDRS. THE DETAILS OF THE SAME IS NOT ED IN PARA 9 OF THE APPELLATE ORDER WHICH ARE NOT EXPLAIN ED. ADDITION WAS ACCORDINGLY MADE. IT WAS SUBMITTED BEF ORE THE LEARNED CIT(A) THAT THE DEPOSITS WERE MADE BY THE P ARTNERS OUT OF UNDISCLOSED INCOME OF M/S. G. N. P. AUDIO CA SSETTES WHICH IS INCLUDED IN THE TOTAL DISCLOSURE OF RS.15 00 000/- BY THAT FIRM AS DISCLOSED IN THEIR SUBMISSION WHILE DEALING WITH THE INVESTMENT IN KVPS. LEARNED CIT(A) FOLLOWI NG HIS ORDER ON KVPS DELETED THE ADDITION. LEARNED REPRESENTATIVES OF BOTH THE PARTIES SUBMITTED THAT THE ISSUE IS SAME AS IS CONSIDERED ON GROUND NO.4 ABOVE IN DEPARTMENTAL APPEAL AND THE ORDER IN THAT CASE MAY BE FOLLOWED. WE HAVE DISMISSED GROUND NO.4 OF THE DEPARTMENTAL APPEAL AND FIND THAT THE ISSUE IS SAME WHICH IS RAISED IN GROUND NO.6. THE LEARNED CIT(A) WAS THEREFORE JUSTIFIED IN DELETING THE ADDITION. BY F OLLOWING THE SAME REASONING WE DISMISS GROUND NO.6 OF THE APPEA L OF THE REVENUE. 51. ON GROUND NO.7 REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.25 87 350/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN AGRICULTURAL L AND AT VILLAGE KANDIWADA. 51.1 THE AO HAS DISCUSSED THIS ISSUE IN PARA 12 OF THE ASSESSMENT ORDER. THE AO REPORTED THAT A LARGE NUMB ER OF SALE DOCUMENTS WERE SEIZED FROM RESIDENTIAL PREMISE S OF 47 THE ASSESSEE. WHICH SHOWED THAT THE ASSESSEE HAS PURCHASED HUGE PIECES OF LAND AT KHANDIWADA ASAJ A ND ANANDPURA AT A VERY NOMINAL RATE AND HAS FURTHER NO TED THAT THE ASSESSEE HAS ADMITTED THAT THE ENTIRE INVE STMENT IN THE LAND ARE UNACCOUNTED AND THE SAME HAVE BEEN INCORPORATED IN THE CASH FLOW STATEMENT SUBMITTED B Y HIM. REGARDING KHANDIWADA LAND THE ASSESSEE PURCHASED AGRICULTURAL LAND HAVING AREA 9.18.06 HECTORS FOR RS.7 27 100/- AS PER THE FIGURES REPRODUCED BY THE AO IN PARA 12 OF THE ASSESSMENT ORDER. OUT OF PURCHASE CONSIDERATION OF RS.7 27 100/- THE ASSESSEE HAS PA ID RS.3 08 702/- BY DEBITING IN THE BOOKS OF ACCOUNT WHILE HE HAS MADE PAYMENT OF RS.4 18 398/- OUT OF UNDISCLOSE D INCOME. THE SAID AMOUNT OF RS.4 18 398/- + STAMP DU TY THEREON OF RS.79 000/- TOTAL RS.4 97 398/- HAS BEEN DISCLOSED BY THE ASSESSEE AS UNACCOUNTED INVESTMEN T IN THE BLOCK RETURN. AS AGAINST TOTAL INVESTMENT OF RS.4 97 398/- OUT OF UNDISCLOSED INCOME THE AO HAS ADDED RS.25 87 350/- AS UNDISCLOSED INVESTMENT IN AGRICULTURAL LAND AT KHANDIWADA. THUS THE AO HAS M ADE FURTHER ADDITION OF RS.20 89 952/- AS UNDISCLOSED INVESTMENT IN KHANDIWADA AGRICULTURAL LAND. FOR THE PURPOSE THE AO RAISED THE FOLLOWING QUERY VIDE NOT ICE DATED 11.2.2004: '2. PLEASE REFER TO ANNEXURE A-20 SEIZED FROM YOUR RESIDENTIAL PREMISES ON 11.02.2002. THIS CONTAINS T HE SALE DEED DATED 16.12.1991 OF 5008 SQ. MTRS. OF LA ND FOR RS. 1 67 300/- OF R.S. NO.32/3/9 AT VILLAGE KHANDIWADA TAL. WAGHODIA DIST BARODA. THE SALE DEED IS BETWEEN MEIABHAI SHIVABHAI NANABHAI 48 BHIKHABHAI (SELLERS) AND ALMESH STEEL PVT. LTD (PURCHASER). AS PER THIS SALE DEED THE RATE PER SQ . MTR. COMES TO RS.33.40 AS ON 16.12.1991. IN THE SAM E ANNEXURE ANOTHER SALE DEED DATED 21.09.1999 WHEREBY YOU HAVE PURCHASED 560 SQ MTRS. OF LAND I N THE SAME SURVEY NO. FOR RS.4 000/- ONLY. IN THIS CA SE ALSO THE SELLERS ARE MEIABHAI SHIVABHAI AND NANABH AI .BHIKHABHAI. THIS MAKES THE RATE PER SQ. MTR. COMES TO RS.7.14 ONLY AS ON 21.09.1999. THIS PROVES THAT THE INVESTMENT SHOWN IN THE LANDS AT KHANDIWADA IS HIGHLY SUPPRESSED BECAUSE IT IS NOT POSSIBLE THAT A LAND WHICH FETCHED RS.33.40 PER SQ. MTR. IN 1991 WI LL BE SOLD FOR RS.7.14 PER MTR. IN 1999. FURTHER I HAD VISITED THE ABOVE MENTIONED LAND ALONG WITH YOU'RE A.R. SHRI NAIIESH PATEL AND SHRI HASMUKH K PATEL ON 10 02 2004. IT WAS SEEN THAT THE COST OF THE LAND MUST HAVE APPRECIATED MANY TIMES BECAUSE IT IS LYING ADJACENT TO VADODARA KALOL EXPRESS HIGHWAY WHICH HAS BEEN BUILT IN 1999. SIMILARLY I HAD ALSO VISITED YOUR LAND AT VILLAGE ASOJ ALONG WITH YOUR A.R. SHRI NAILESH PATEI AND SHRI HASMUKH K. PATEL ON 10.2.2004. IT WAS FOUND THAT THE LOCATION OF THE LAND AT ASOJ IS EXACTLY SIMILAR TO ONE AT VILLAGE KHAUDIWADA. THE ONLY DIFFERENCE IS THAT THEY ARE AROUND 1.5 KMTR. DISTANCE FROM EACH OTHER. THE LOCATIONAL SIMILARITY OF THE TWO LANDS LEADS TO THE CONCLUSION THAT THE SALE PRICE IN 1999 MUST BE VERY SIMILAR. ANNEXURE A-8 SEIZED FROM THE RESIDENCE CONTAINS THE SALE DEED OF LAND AT VILLAGE ASOJ TAL. WAGHODIA DIST. VADODARA DATED 25.11.1998. BY THIS SALE DEED SHRI GOVINDBHAI PATEL HAD PURCHASED ONE HECTARE AND 14 ARE OF LAND (11 4000 SQ. MTRS.) FOR RS.10 27 630/-. THIS MAKES THE RATE PER SQ. MTR. OF LAND AT RS.90.14 IN NOVEMBER 1998. HENCE ADDITION IS PROPOSED AS UNACCOUNTED INVESTMENT IN THE PURCHASE OF LAND AT VILLAGE KHANDIWADA AND VILLAGE ASOJ.' 3. PLEASE PREPARE A CHART SHOWING THE DETAILS OF THE LAND PURCHASED AT VILLAGE KLIANDIWADA AND VILLAGE ASOJ SHOWING THE AREA IN SQ. MTRS.' 49 THE ASSESSEE FURNISHED REPLY VIDES PARA 4 OF HIS LE TTER DATED 14.2.2004: ' 4. VIDE PARA 2 YOU HAVE REFERRED TO ANN. A-20 SEIZED FROM THE RESIDENTIAL PREMISES. AS PER YOU THERE IS A SALE DEED DATED 16.12.1991 OF 5.00.889 SQ. METERS OF LAND FOR RS. 1 67 300/- AT VILLAGE KHANDIWADA. AS PER THE SALE DEED THE RATE PER SQUARE METER COMES TO RS.33.40 AS ON 16.12.1991 YOU HAVE THEREAFTER REFERRED TO ANOTHER SALE DEED DATED 21.9.1999 WHEREBY THE ASSESSEE HAS PURCHASED 560 SQ. MTRS. OF LAND FOR RS.4 000/- ONLY . IN BOTH THE CASES THE SELLERS ARE THE SAME. YOU HAV E ON THAT BASIS PRESUMED THAT THE INVESTMENT SHOWN IN THE LAND AT KHANDIWALA IS HIGHLY SUPPRESSED AND SOUGHT OUR EXPLANATION IN THAT REGARD. IT IS NOT SO THAT THE ASSESSEE HAS PURCHASED ONLY ONE PIECE OF PLOT BEARING SURVEY NO.32/3/9 IN THE SCAM OF KLIANDIWADA BUT THE ASSESSEE HAS PURCHASED TOTAL 19 PLOTS OF LAND HAVING TOTAL AREA OF 91 806 SQ. METERS FOR RS.7 27 100/-. THE AVERAGE RATE PER SQUARE METER COMES TO RS.7.92. IT MAY BE NOTED THAT THE ASSESSEE HAS PURCHASED ALL THE PLOT S IN THE VICINITY OF EACH OTHER DURING A PERIOD OF AB OUT ONE YEAR AND THE RATE PER SQ. MTR. RANGES FROM RS.6.17 TO RS.8.13. IT IS NOT UNDERSTOOD AS TO HOW THE COMPANY ALMESH STEEL PVT. LTD. HAS PURCHASED THE LAND AT THE RATE OF RS.33.40 PER SQ. MTR. IN TH E YEAR 1991. THE COMPANY MIGHT HAVE ITS OWN COMPULSIONS TO SHOW MORE RATE PER SQ. MTR. THAN THE MARKET RATE. PERHAPS THE COMPANY MIGHT HAVE TO TAKE A LOAN FROM PUBLIC FINANCE INSTITUTION OR THE COMPANY MIGHT HAVE DECIDED TO GO FOR PUBLIC ISSUE OF SHARES. ONE THING IS CERTAIN THAT AT THE RELEVAN T TIME THE RATES WERE NOT SO HIGH AT WHICH THE LAND H AS BEEN PURCHASED BY THE COMPANY. IT IS ANYBODY'S GUESS AS TO WHAT THE DIRECTORS OF PVT. LTD. CO. MIG HT HAVE DONE BY SHOWING HIGHER RATE THAN THE EXISTING MARKET PRICE. THE ASSESSEE HAS NOT PAID ANY EXTRA 50 STAMP DUTY IN THIS TRANSACTION ALSO ANNEXURE A ATTACHED HEREWITH SHOWS THE DETAILS OF LAND PURCHASED IN VILLAGE KHANDIWADA VILLAGE ASOJ AND VILLAGE ANANDPURA. THE ASSESSEE HAS PURCHASED LAND ADMEASURING 560 SQ. MTRS. AT THE MARKET RATE O F RS.7.14 PER SQ. MTR AND HENCE IT IS SUBMITTED THAT THE LAND RATES MAY NOT THEREFORE KINDLY BE DISTURBE D OR ALTERED. YOU HAVE ALREADY VISITED THE SITE AND Y OU ARE SATISFIED THAT THE ASSESSEE HAS PURCHASED LAND IN VILLAGE KHANDIWADA FOR THE PURPOSE OF FANNING AN D NOT FOR INDUSTRIAL USE. REGARDING THE LAND AT ASOJ YOU HAVE NOT CORRECTLY CALCULATED THE RATE AT RS.90.14 PER SQ. M TR. IN NOVEMBER 1998. IN FACT IN NOVEMBER 1998 THE ASSESSEE HAS PURCHASED 64 343 SQ. MTRS. OF LAND FOR RS. 10 27 630 AT THE RATE OF RS. 15.97 PER SQ. MTR. IN THE ASOJ VILLAGE. THERE APPEARS SOME MIS-CALCULATIO N AT YOUR END. THE CORRECT RATE IS RS.15.97 PER SQ.MT R AS SHOWN IN ANN. -A ATTACHED HEREWITH. NO ADVERSE VIEW MAY THEREFORE KINDLY BE TAKEN AND THE FIGURE S SHOWN BY THE ASSESSEE MAY BE ACCEPTED.' THE RELEVANT PART OF ANNEXURE A THEREOF IS ALSO REPRODUCED HERE BELOW:- KHANDIWADA SR. NO. DATE OF PURCHASE SURVEY NO. AREA (FEET) SQ. MTRS. PRICE RATE PER SQ MTR. 1 07-07-99 32/1/14 0.85.99 8 599.00 68 000 7.91 2 27-07-99 31/1/11 0.58.68 5 868.00 46 400 7.91 3 4. 08-07-99 08-07-99 32/1/15 32/3/25 0.88.01 0.39.46 8 801.00 3 946.00 69 600 31 200 7.91 7.91 5 6 08-07-99 07-07-99 32/3/28 32/2 0.25.29 0.73.86 2 529.00 7 386.00 20 000 58 400 7.91 7.91 7 8 08-07-99 30-08-99 32/3/15 32/3/21 0.53.62 0.40.47 5 362.00 4 047.00 42 400 32 400 7.91 8.01 9 22-10-99 32/1/10 0.41.48 4 148.00 10 22-10-99 32/3/19 0.65.75 6 575.00 87 200 8.13 11 22-10-99 32/3/27 0.58.68 5 868.00 12 22-10-99 32/3/29 0.40.47 4 047.00 78 500 7.92 13 30-03-00 32/1/16 0.47.55 4 755.00 37 600 7.91 14 09-06-00 32/3/23 0.59.69 5 969.00 47 000 7.87 51 15 24-05-00 32/3/20 0.42.49 4 249.00 33 600 7.91 16 21-06-00 32/3/24 0.49.57 4 957.00 39 480 7.96 17 18 21-06-00 22-09-99 32/3/14 32/3/4 0.33.30 0.08.10 3 330.00 810.00 26 320 5 000 7.90 6.17 19 22-09-99 32/3/9 0.05.60 560.00 4 000 7.14 TOTAL 9 18.06 91 806.00 727 100 7.92 51.2 THE AO HAS STATED THAT ALTER RECEIVING A LETTE R FROM THE ASSESSE HE HAD DEPUTED INSPECTOR TO CONDUCT ENQUIRY WITH THE VARIOUS SELLERS IN PRESENCE OF THE TALATI. THE WRIT TEN CONFIRMATIONS FROM THE AFORESAID 9 PERSONS HAVE BEE N OBTAINED ACCORDING TO WHICH THE PARTIES HAVE CONFIRMED THAT THEY HAVE SOLD LAND TO SHRI GOVINDBHAI PATEL AT THE RATE RANG ING FROM RS.60.000 TO RS. 70 000 PER BIGHA. THE AO HAS THERE AFTER STATED THAT THE CONFIRMATION LETTERS WERE GIVEN TO THE ASSESSEE ON 21.2.2004 AND THAT THE ASSESSEE HAS RAISED CERTA IN OBJECTIONS THAT THE PERSONS HAVE NOT MENTIONED AS T O HOW MUCH LAND WAS ACTUALLY SOLD TO SHRI GOVINDBHAI THAT ALL THE CONFIRMATIONS ARE IDENTICALLY WORDED AND THEY ARE P REPARED BY THE SAME PERSON AND THE PERSONS HAVE SIGNED OR PUT THEIR THUMB IMPRESSION ON THE DOTTED LINES WITHOUT KNOWIN G AS TO WHAT IS WRITTEN IN THOSE CONFIRMATIONS ETC. THE AO HAS STATED THAT THE ASSESSEE HAS ASKED FOR THE OPPORTUNITY TO CROSS EXAMINE THE PERSONS AND PLEADED THAT NO ADDITION S HOULD BE MADE ON THOSE CONFIRMATION LETTERS. REPLY OF THE AS SESSEE DATED 24.2.2004 IS REPRODUCED HERE BELOW FOR THE SAKE OF READY REFERENCE:- '2. THE ASSESSEE HAS EMPHATICALLY AND FORCEFULLY SUBMITTED IN HIS REPLY DATED 14.2.2004 THAT HE HAS NOT PAID ANY AMOUNT OVER AND ABOVE WHAT IS MENTIONED IN THE SALE DEEDS OF AGRICULTURAL LAND AT VILLAGES KHANDIWALA ASOJ AND ANANDPURA OF TALUKA WAGHODIA OF DISTRICT VADODARA. NOW 52 IN RESPECT OF LAND AT VILLAGE KHANDIWALA YOU HAVE O BTAINED CONFIRMATION LETTERS FROM THE SELLERS OF LAND TO SH OW THAT THEY WERE PAID AT RS.60.000 TO RS.75 000 PER BIGHA AS AGAINST SALE DEEDS OF RS. 18 500 PER BIGHA (APPROX. ). ON THAT BASIS YOU HAVE MENTIONED THAT UNACCOUNTED INVESTMENT IN THE LANDS AT VILLAGES KHANDIWALA ASO J AND ANANDPURA HAS BEEN MADE BY THE ASSESSEE. IN SUPPORT YOU HAVE GIVEN THE PHOTOCOPIES OF THE CONFIRMATIONS OF THE FOLLOWING PERSONS AND ASKED THE ASSESSEE TO SHOW CA USE AS TO WHY THE VALUE OF LAND SHOULD NOT BE COMPUTED AT RS.65 000 PER BIGHA. (1) RAMANBHAI LALLUBHAI PARMAR (2) INDUBHAI K. JADAV (3) RAMANBHAI A. JADAV (4) SHANTABEN DHOLABHAI (5) UDESING SOMABHAI (6) FATEHSINGH BAPUBHAI PARMAR (7) NAVINBHAI GIIIASING PARMAR (8) LAKLIIBEN B. SOLANKI (9) VANUBHAI M. PARMAR 3. WE HAVE GONE THROUGH THE CONFIRMATIONS OF THE AFORESAID NINE PERSONS AND WE FIND THAT THE CONFIRM ATIONS ARE UNRELIABLE AND WITHOUT ANY SUBSTANCE FOR THE FO LLOWING REASONS: (I) ALL THE CONFIRMATIONS ARE IDENTICALLY WORDED AN D ARE PREPARED BY THE SAME PERSON. (II) THE PERSONS WHOSE CONFIRMATIONS HAVE BEEN OBTAINED BY YOU APPEAR TO HAVE PUT THEIR SIGNATURES OR THUMB IMPRESSIONS ON THE DOTTED LINES WITHOUT EVEN KNOWING AS TO WHAT HAS BEEN WRITTEN IN THOSE CONFIRMATIONS. (III) ALL THE PERSONS HAVE GIVEN THE RATE PER BIGHA AT RS.60 000 OR RS.65 000 OR RS. 70 000 BUT NONE OF THEM HAVE STATED HOW MUCH BIGHA OF LAND THEY HAVE SOLD TO SHRI GOVINDBHAI NATHABHAI GADUIA AND HOW MUCH CONSIDERATION THEY HAVE RECEIVED FROM SHRI GOVINDBHAI. NO EVIDENCE OF THE RATE PER BIGHA HAS 53 BEEN OBTAINED FROM THEM NOR IT IS AVAILABLE IN THE SALE INSTANCES OF THE LAND SOLD IN THE VICINITY DUR ING THE SAID PERIOD. (IV) COMING TO THE CONFIRMATION OF SHRI VAJUBHAI MANUBHAI PARMAR HE HAS STATED THAT HE HAS SOLD LAND HAVING AREA 0-73-87 BUT HE HAS NOT MENTIONED HOW MANY BIGHAS OF LAND HE HAS SOLD. HE HAS GIVEN THE RATE OF RS.60 000 PER BIGHA BUT HE HAS NOT GIVEN THE AMOUNT OF CONSIDERATION HE HAS RECEIVED FROM GOVINDBHAI. THE AMOUNT STATED TO HAVE BEEN SPENT BY HIM IS ALSO AMBIGUOUSLY WORDED IN THE CONFIRMATION. NOWHERE HE HAS STATED ABOUT HIS BANK ACCOUNT AND THE POSITION OF HIS BANK BALANCE. THE ASSESSEE OBJECTS TO THE PROPOSED ADDITION ON THE BASIS OF THE CONFIRMATION GIVEN BY VAJUBHAI MANUBHAI PARMAR AS IT IS UNRELIABLE AND FAR FROM TRUTH. (V) THE NEXT CONFIRMATION IS OF SMT. LAKHIBEN BABAR BHAI SOLANKI. HOWEVER THE PERSON WHO HAS SIGNED THE CONFIRMATION IS NOT LAKHIBEN BABARBHAI SOLANKI BUT SOME LAKSHMAN KANJIBHAI RATHOD. SMT. LAKHIBEN OR SHRI LAKSHMAN WHOEVER SHE OR HE MAY BE HAS ALSO MENTIONED THE AREA AS 0-39-46 BUT HAS NOT GIVEN HOW MUCH BIGHA HE OR SHE HAS SOLD TO SHRI GOVINDBHAI. SHE HAS STATED THAT SHRI GOVINDBHAMAS PAID TO HER THE CONSIDERATION AT RS.65 000 PER BIGHA BUT HAS NOT MENTIONED THE EXACT AMOUNT OF CONSIDERATION RECEIVED FROM GOVINDBHAI. THE UTILIZATION OF CASH IS ALSO AMBITIOUSLY WORDED. IT IS ALSO NOT CLEAR AS TO WHO HAS SOLD THE LAND AND TO WHOM THE CONSIDERATION HAS BEEN PAID. THE ASSESSEE OBJECTS TO ANY ADDITION BEING MADE ON THE CONFIRMATION OF SMT. LAKHIBEN SOLANKI (VI) REGARDING THE CONFIRMATION OF SHRI NAVINBHAI GIILABSINGH PARMAR HE HAS ALSO MENTIONED THE AREA AS 0-42-49. LIE HAS STATED THAT AGRICULTURAL LAND E QUAL TO HIS LAND HAS BEEN GIVEN TO HIM BY SHRI GOVINDBHAIAT A DIFFERENT PLACE AND HAS ALSO PAID RS . 50 000 TO HIM IN-ADDITION TO THE LAND. HE HAS NOWHERE MENTIONED HOW MANY BIGHAS OF LAND HE 54 HAS GIVEN TO SHRI GOVINDBHAI AND HOW MUCH OF LAND HE HAS RECEIVED FROM SHII GOVINDBHAI IN EXCHANGE. BOTH THE LANDS ARE IN THE SAME LOCALITY. IT IS NOT CLEAR AS TO WHY SHRI GOVINDBHAI SHOULD PAY TO HIM RS. 50.000. HE HAS NOT FURNISHED A COPY OF SALE DEED OF THE LAND GIVEN TO HIM IN EXCHANGE BY SHRI GOVINDBHAI. THIS STATEMENT ALSO DOES NOT GIVE A COLOUR OF GENUINENESS AND DOES NOT REQUIRE TO BE TAKEN IN EVIDENCE. (VII) REGARDING STATEMENT OF SHRI FATEHSINGH BAPUBH AI PARMAR HIS CONFIRMATION IS ALSO AMBIGUOUSLY WORDED AS HO HAS MENTIONED THE AREA 0-5-68 WHICH IS NOT IN BIGHAS. HOWEVER HE HAS GIVEN THE RATE OF RS.65 000 PER BIGHA. HE HAS NOT GIVEN HOW MUCH TOTAL CONSIDERATION HE HAS RECEIVED FROM GOVINDBHAI . THE ASSESSEE OBJECTS TO ANY ADDITION BEING MADE ON THE BASIS OF HIS STATEMENT (VIII) AS REGARDS STATEMENT OF SHRI UDESING SOMABHAI JADAV SHRI UDESING JADAV IS NOT A PARTY TO THE SALE DEED. EVEN IF SOMABHAI HAS EXPIRED THE OTHER TWO PERSONS VIZ. RAMSING MOHANBHAI AND CHIMARI MOHANBHAI WERE ALREADY AVAILABLE AND HENCE THE CONTINUATION OF ANY OF THESE TWO PERSONS SHOULD HAVE BEEN OBTAINED. FURTHER UDESING SOMABHAI HAS STATED THAT THE OWNER HAS SOLD LAND 0-59-69 FOR A CONSIDERATION OF RS. 1 62 000 TO GOVINDBHAI. NEXT STATEMENT IS OF SMT SHANTABCN DHOLABHAI AND SHE HAS STATED THAT LAND HAVING AREA 0-25-29 HAS BEEN SOLD BY HER FOR A CONSIDERATION OF RS. 1 60 000 TO GOVINDBHAI. THUS SHRI GOVINDBHAI IS STATED TO HAVE PURCHASED ADJACENT LAND OF LESS THAN HALF AREA FOR NEARLY EQUAL CONSIDERATION. IF THE STATEMENT OF SMT . SHANTABEN AND UDESING ARE PLACED SIDE BY SIDE THE DISCREPANCY IN FIGURES BETWEEN THE TWO CONFIRMATIONS BECOMES CLEARLY VISIBLE AND THAT ALSO PROVES BEYOND DOUBT THAT THE CONFIRMATIONS HAVE BEEN INTENTIONALLY TAKEN SO AS TO IMPLICATE THE ASSES-SEE. SHRI UDESING AND SMT. SHANTABEN APPEAR TO HAVE PUT THEIR SIGNATURE AND THUMB IMPRESSION RESPECTIVELY ON THE DOTTED LINES WITHOUT EVEN KNOWING AS TO WHAT HAS BEEN WRITTEN IN THEIR 55 CONFIRMATIONS. THE ASSESSEE STRONGLY OBJECTS TO THESE STATEMENTS BEING USED AGAINST HIM. (IX) RAMANBHAI AMARSING JADAV HAS ALSO GIVEN THE AR EA IN HECTATRE-AND HAS GIVEN THE RATE PER BIGHA. HE HA S EVEN NOT MENTIONED THE TOTAL CONSIDERATION RECEIVED BY HIM FOR THE SALE OF HIS LAND. (X) SIMILAR IS THE MATTER IN THE CO NFIRMATION OF NANABHAI KARSHANBHAI JADAV. (XI) THE CONFIRMATION OF RAMANBHAI LALLUBHAI PARMAR IS ALSO ON THE SALE LINES. IT MAY BE POINTED OUT THAT THE CONFIRMATIONS ETC. HAVE BEEN TAKEN BEHIND THE BACK OF THE ASSESSEE WIT HOUT AFFORDING THE OPPORTUNITY TO CROSS-EXAMINE THEM BEF ORE USING SUCH EVIDENCE AGAINST THE ASSESSEE. THEREFORE SUCH AN EVIDENCE COLLECTED CANNOT BE CONSIDERED FOR MAKING THE ADDITION. THEREFORE ON THAT GROUND ALONE THE ADDITION DESERVES TO BE DELETED. IN THIS REGARD REL IANCE IS PLACED ON THE DECISION IN THE CASE OF SMT. SURJEETK AUR VS. JTO (2002) 74 TTJ 722(IHYD.).' 51.3 APART FROM THAT THE ASSESSEE SUBMITTED THAT NOT ONLY HE HAS PURCHASED THE AGRICULTURAL LAND AT THE RATES M ENTIONED IN THE SALE DEEDS BUT THE OTHER VENDORS AND VENDORS H AVE ALSO ENTERED INTO THE LAND TRANSACTIONS AT MORE OR LESS THE EQUAL RATES. THE ASSESSEE HAS OBTAINED CERTAIN SALE INSTA NCES FROM REVENUE RECORDS IN SUPPORT OF HIS CONTENTION THAT T HE LAND PURCHASED BY HIM IS AT THE RATE MENTIONED IN THE SA LE DEED AND HENCE IT IS SUBMITTED THAT NO ADDITION CAN BE MADE ON THE BASIS OF THE SO CALLED CONFIRMATIONS OF THE PERSONS WHO HAVE NOT EVEN MENTIONED AS TO HOW MUCH BIGHAS OF LAND THEY HAVE SOLD AND HOW MUCH TOTAL CONSIDERATION THEY HAVE RECEIVED. THE AO HAS ALSO REPRODUCED ENGLISH VERSION OF THE TALATI'S SO CALLED LETTER 56 COPY OF WHICH .WAS .NOT GIVEN TO THE ASSESSEE. TALA TI HAS STATED THAT HE KNOWS ALL THE PERSONS AND HAVE PUT THEIR SI GNATURES VOLUNTARILY AND WITHOUT ANY COERCION AND THAT THOSE PERSONS HAVE VOLUNTARILY STATED AS TO WHAT HAS BEEN WRITTEN IN THEIR CONFIRMATIONS. ON THIS BASIS THE AO HAS HELD THAT THE ASSESSEE HAS MADE UNDISCLOSED INVESTMENT OF RS.25 87 350/- AT THE ESTIMATED COST OF RS.65 000/- PER BIGHA AND HAS ALS O INVESTED. RS.79 000/- IN THE STAMP DUTY. THUS TOTAL UNDISCLO SED INVESTMENT IN KHANDIWACLA LAND ACCORDING TO ASSESSI NG OFFICER IS RS.25 87 350/-. DESPITE SUCH A LETTER FROM TALAT I THE ASSESSEE STILL FEELS THAT THE PERSONS WHOSE CONFIRMATIONS HA VE BEEN TAKEN HAVE SIGNED ON THE DOTTED LINES. THEY ALL HAVE MENT IONED THE LAND SOLD BY THEM IN HECTORS WHILE THEY HAVE GIVEN THE RATE OF SALE IN BIGHAS. NONE OF THEM HAVE MENTIONED AS TO H OW MANY BIGHAS MAKE ONE HECTOR. THE ASSESSEE HAD REQUESTED FOR CROSS EXAMINATION OF THOSE DEPARTMENTAL WITNESSES WHOSE CONFIRMATIONS THE AO HAD OBTAINED BUT THE AO DID N OT ALLOW THE CROSS EXAMINATION OF THOSE WITNESSES. IN VIEW OF WH AT HAS BEEN STATED ABOVE THE AO IS NOT JUSTIFIED IN MAKING ADD ITION OF RS.25 87 350/- AS AGAINST RS.4 97 398/- MADE BY THE ASSESSEE. THE EXCESS ADDITION OF RS.20 89 952/- REQUIRES TO B E DELETED. WITHOUT PREJUDICE TO THE ABOVE IT MAY BE POINTED O UT THAT THE ASSESSEE HAS PURCHASED THE LAND BY REGISTERED PURCH ASE DEEDS. THE SAID PURCHASE DEEDS ARE PART OF SEIZED M ATERIAL WITH THE AO AND ARE ON RECORD. 51.4 SINCE THE PURCHASES OF THE PROPERTY ARE VALIDL Y DOCUMENTED ANY OTHER EVIDENCE STANDS PRECLUDED UNDE R THE EVIDENCE ACT. THE ALLEGED ACCEPTANCE OF THE SELLERS HAS NO 57 RELEVANCE INSOFAR AS THESE PEOPLE WERE EXAMINED BEH IND THE BACK OF THE ASSESSEE NOR ANY INQUIRIES WERE MADE BY THE AO TO FIND OUT THE SOURCE OF THE ALLEGED EXTRA PAYMENT FO R TESTING THE VERACITY OF THE STATEMENTS GIVEN BY THEM PROVIDED T O THE ASSESSEE ACCORDING TO WHICH SOME ADDITIONAL CONSID ERATION WERE PAID. APART FROM THAT SUCH EVIDENCE ALSO STAND S PRECLUDED BY VIRTUE OF THE PROVISIONS OF SECTIONS 5 91 & 92 OF THE EVIDENCE ACT 1872 ACCORDING TO WHICH WHEN THE TERM S OF ANY DISPOSITION OF THE PROPERTY ETC. HAVE BEEN REDUCED TO THE FORM OF A DOCUMENT NO EVIDENCE SHALL BE GIVEN IN PROOF IN T ERMS OF SUCH DISPOSITION OF THE PROPERTY EXCEPT THE DOCUMENT ITS ELF. THIS BEING THE POSITION IN LAW AND FACTS THERE IS NO JUSTIFICA TION IN MAKING THE ADDITION OF RS.25 87 350/-AS IS DONE BY THE AO. IN THIS REGARD RELIANCE IS PLACED ON THE ITAT HYDERABAD DEC ISION IN THE CASE OF K. NARSAMMA VS ITO (1990) 32 ITD 494 (HYD.) . ON THAT SCORE ALSO THE ADDITION IS TO BE DELETED. IT WAS PO INTED OUT THAT THE SALE OF LAND REFERRED TO ON PAGE 40 OF THE SUBM ISSIONS VIZ SURVEY NO.32/3/ MEASURING 91.806 SQ. MTRS. FOR RS.7 27.100 (RATE PER SQ. MTR. WORKS OUT TO RS.7.92) IS NOT AT ALL COMPARABLE WITH THE PURCHASES MADE BY THE OTHERS FOR THE SIMPL E REASON THAT THE SALE OF LAND IN QUESTION WAS LAND CONVERTE D INTO NON- AGRICULTURAL LAND TO BE USED FOR INDUSTRIAL PURPOSE S (COPY OF DOCUMENT FURNISHED) WHEREAS THE ASSESSEE HAS PURCHA SED AGRICULTURAL LANDS. THESE ARE EVEN AS ON THE DATE O F SEARCH ARE AGRICULTURAL LANDS NOT CONVERTED INTO NON-AGRICULTU RAL LAND. THUS THAT SALE INSTANCE ALSO DOES NOT LEND SUPPORT TO T HE ADDITION MADE BY THE AO. 58 51.5 THE LEARNED CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE AND MATERIAL ON RECORD DELETED THE ADDITIO N. HIS FINDINGS IN PARA 11.1 OF THE IMPUGNED ORDER ARE REP RODUCED AS UNDER: 11.1 IN THE APPELLANT PROCEEDINGS THE APPELLANT H AS BASICALLY REITERATED THE SUBMISSION. I HAVE LO OKED INTO THE ASSESSMENT ORDER AND I HAVE CONSIDERED THE CONTENTIONS PUT FORTH ON BEHALF OF THE ASSESSEE. I FIND THAT THE AO HAS PROCEEDED TO MAKE THE ADDITI ON ON THE BASIS OF INQUIRIES CONDUCTED BEHIND THE BACK OF THE ASSESSEE WITHOUT GIVING ANY OPPORTUNITY O F BEING HEARD. THE ADDITION THEREFORE CANNOT BE SUSTAINED ON THAT GROUND ITSELF. APART FROM THAT I FIND THAT THERE ARE TOO MANY LOOSE ENDS IN THE STATEMENT RECORDED BY THE AO FOR INSTANCE THE PERSON DO NOT KNOW AS TO HOW MANY BIGHAS MAKE A HECTOR. FURTHER I AGREE WITH THE ASSESSEE THAT SINCE THE PURCHASES OF THE PROPERTY ARE VALIDLY DOCUMENTED ANY OTHER EVIDENCE STANDS PRECLUDED UNDER THE EVIDENCE ACT. THE ALLEGED ACCEPTANCE OF THE PURCHASERS HAS NO RELEVANCE INSOFAR AS THESE PEOPLE WERE EXAMINED BEHIND THE BACK OF THE ASSESSEE NOR ANY INQUIRIES WERE MADE BY THE AO TO FIND OUT THE SOURCE OF THE ALLEGED EXTRA PAYMENT FOR TESTING THE VERACITY OF T HE STATEMENTS GIVEN BY THE PURCHASERS ACCORDING TO WHICH SOME ADDITIONAL CONSIDERATION WERE PAID. APAR T FROM THAT SUCH EVIDENCE ALSO STANDS PRECLUDED BY VIRTUE OF THE PROVISIONS OF SECTIONS 5 91 & 92 OF THE EVIDENCE ACT. 1872 ACCORDING TO WHICH WHEN THE TERMS OF ANY DISPOSITION OF THE PROPERTY ETC HAVE BEEN REDUCED TO THE FORM OF A DOCUMENT NO EVIDENCE SHALL BE GIVEN IN PROOF IN TERMS OF SUCH DISPOSITIO N OF THE PROPERTY EXCEPT THE DOCUMENT ITSELF. THIS BEING THE POSITION IN LAW AND FACTS THERE IS NO JUSTIFICA TION IN MAKING THE ADDITION OF RS. 25.87.350 AS IS DONE BY THE AO. IN THIS REGARD RELIANCE IS PLACED ON THE IT AT HYDERABAD DECISION M THE CASE OF K. NARSAMMA VS ITO (1990) 32 ITD 494 (HYD.) ON THAT SCORE ALSO THE ADDITION IS TO BE DELETED. FURTHER IT WAS ALSO POIN TED OUT THAT THE SALE INSTANCE FOR THE LAND BEARING -SU RVEY 59 NO.32/3/9 ADMEASURING 91806 SQ. MTRS. @ RS.7.92 PER SQ. MTR. IS NOT AT ALL COMPARABLE INSOFAR AS THE L AND IN QUESTION WAS THE LAND CONVERTED INTO NON-AGRICULTUR AL LAND TO BE USED FOR INDUSTRIAL PURPOSE AND IN FACT S SOUSED FOR THE PURCHASER WHEREAS WHAT THE ASSESSEE HAS PURCHASED IS AGRICULTURAL LANDS AND EVEN THE DA TE OF SEARCH SUCH AS LANDS ARE NOT CONVERTED TO NON- AGRICULTURAL LAND. HAVING REGARD TO THE TOTALITIES OF FACTS AND CIRCUMSTANCES AND THE LAW ON THE SUBJECT I AM OF THE CONSIDERED OPINION THAT THERE IS NO JUSTIFICATION IN MAKING THE ADDITION OF RS.25 87 35 0/- AS IS DONE BY THE AO. IT IS DELETED. 51.6 THE LEARNED DR RELIED UPON ORDER OF THE AO AND SUBMITTED THAT STATEMENTS OF THE SELLERS HAVE BEEN RECORDED IN THE PRESENCE OF THE TALATI WHO CONFIRME D RECEIPT OF THE HIGHER AMOUNT. THE LEARNED CIT(A) CO ULD HAVE ALLOWED CROSS EXAMINATION TO THE STATEMENT OF THE SELLERS AT THE APPELLATE PROCEEDINGS HAVING CO-TERM INUS POWERS TO THAT OF THE AO. THEREFORE THE MATTER MAY BE REMANDED TO THE AO. 51.7 ON THE OTHER HAND LEARNED COUNSEL FOR THE ASS ESSEE REITERATED THE SUBMISSION MADE BEFORE THE LEARNED C IT(A). THE INSPECTOR MADE A VISIT IN FEBRUARY 2004 AND SA ME WAS GIVEN TO ASSESSEE ON 21-2-2004. NO CROSS EXAMINATION IS ALLOWED TO THE ASSESSEE. LATER ON T HE SELLERS FILED THE AFFIDAVITS DISPUTING THEIR STATEM ENTS AND SIGNATURES. PROPER SALE DEEDS HAVE BEEN EXECUTED. T HE ASSESSEE DID NOT PAY ANY AMOUNT OVER AND ABOVE THE AMOUNT MENTIONED IN THE SALE DEEDS. HE HAS SUBMITTE D THAT THE SEARCH WAS CONDUCTED IN FEBRUARY 2002 60 THEREFORE THERE IS NO PURPOSE IN REMANDING THE MAT TER TO THE AO AFTER LAPSE OF ABOUT TEN YEARS. 51.8 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD AND DO NOT FIND ANY JU STIFICATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) I N DELETING THE ADDITION. IT IS NOT IN DISPUTE THAT THE AO PROC EEDED TO MAKE ADDITION ON THE BASIS OF ENQUIRIES CONDUCTED B EHIND THE BACK OF THE ASSESSEE WITHOUT GIVING ANY OPPORTU NITY OF BEING HEARD OR WITHOUT GIVING ANY OPPORTUNITY TO CR OSS EXAMINE THE STATEMENTS OF THE SELLERS. THE LEARNED CIT(A) WAS THEREFORE JUSTIFIED IN HOLDING THAT THE ADDIT ION CANNOT BE SUSTAINED ON THIS GROUND ITSELF. THE HONBLE SUP REME COURT IN THE CASE OF KISHANCHAND CHELLARAM 125 ITR 713 HELD THAT THE EVIDENCE COLLECTED AT THE BACK OF THE ASSESSEE HAS TO BE CONFRONTED TO THE ASSESSEE TO GI VE HIM OPPORTUNITY TO REBUT THE EVIDENCE OTHERWISE S AME WOULD NOT BE ADMISSIBLE IN EVIDENCE AGAINST THE ASSESSEE. THE ASSESSEE FILED SPECIFIC REPLIES BEFORE THE AO CONTROVERTING THE STATEMENTS OF THE SELLERS AND MATERIAL COLLECTED BEHIND THE BACK OF THE ASSESSEE AND ALSO REQUESTED FOR THEIR CROSS EXAMINATION BUT THE AO DELIBERATELY DID NOT ALLOW THE ASSESSEE TO CROSS EX AMINE THE STATEMENTS OF SUCH PERSONS. THEREFORE SUCH STATEMENTS AND MATERIALS COLLECTED AT THE BACK OF T HE ASSESSEE CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. THE ASSESSEE PLEADED BEFORE THE AO THAT CONFIRMATIONS OF SELLERS ARE NOT RELIABLE BECAUSE T HERE WAS DIFFERENCE IN BIGHAS OF LAND AND LAND SOLD TO THE A SSESSEE. 61 NONE EXPLAINED HOW MUCH LAND SOLD TO THE ASSESSEE A ND HOW MUCH CONSIDERATION WAS RECEIVED BY THEM. SOME CONFIRMATIONS WERE NOT OF SELLERS. ASSESSEE GAVE IN STANCES OF SALE CONSIDERATION OF COMPARABLE CASES SHOWING M ORE OR LESS SAME RATES. THE COMPARABLE CASE CITED BY THE A O WAS OF NON-AGRICULTURAL LAND BUT IN THE CASE OF THE ASS ESSEE IT WAS AGRICULTURAL LAND EVEN ON THE DATE OF SEARCH. T HUS THERE IS A DENIAL OF OPPORTUNITY TO THE ASSESSEE. T HE OBJECTIONS OF THE ASSESSEE TO THEIR STATEMENTS WERE VERY SPECIFIC WHICH HAVE ALSO NOT BEEN TAKEN INTO CONSID ERATION BY THE AO IN PROPER PERSPECTIVE. NONE OF THE OBJECT IONS OF THE ASSESSEE HAS BEEN CONTROVERTED BY THE AO. NO MATERIAL IS BROUGHT ON RECORD TO SHOW THAT ASSESSEE PAID ANY MONEY OVER AND ABOVE WHAT IS STATED IN THE SALE DEEDS/DOCUMENTS. IN THE ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCE ON RECORD THE AO WAS NOT JU STIFIED IN MAKING THE ADDITION. SINCE IT IS OLD MATTER TH EREFORE WE DO NOT FIND IT PROPER TO REMAND THE MATTER TO THE F ILE OF THE AO FOR PROVIDING FURTHER OPPORTUNITY TO THE ASSESSE E TO CROSS EXAMINE SUCH STATEMENTS OF THE SELLERS PARTIC ULARLY WHEN ACCORDING TO LEARNED COUNSEL FOR THE ASSESSEE THEY HAVE FILED AFFIDAVITS BEFORE THE REVENUE DEPARTMENT TO CONTRADICT THEIR SIGNATURES AND STATEMENTS OBTAINED BY THE INSPECTOR. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE WE ARE OF THE VIEW THAT THE LEARNED CIT(A) O N PROPER APPRECIATION OF THE FACTS AND MATERIAL ON RECORD RI GHTLY DELETED THE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE HAS NO MERIT. THE SAME IS ACCORDINGLY DISMISSED. 62 52. ON GROUND NO.8 REVENUE CHALLENGED THE DELETION OF SURCHARGE. THE LEARNED CIT(A) NOTED THAT THE ASSESS EE RAISED ADDITIONAL GROUND FOR LEVY OF SURCHARGE WHIC H WAS ALLOWED TO BE RAISED BUT IT APPEARS NO FINDING IS G IVEN. THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES STATED THAT THE ISSUE IS NOW COVERED BY DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF SURESH N. MEHTA 297 ITR 322 IN FAVOUR OF THE REVENUE IN WHICH IT WAS HELD THAT PR OVISO TO SECTION 113 IS CLARIFICATORY IN NATURE. SURCHARGE I S LEVIABLE. BY FOLLOWING THE SAME DECISION WE DIRECT THAT CHAR GING OF SURCHARGE IS JUSTIFIED. GROUND NO.8 OF THE APPEAL O F THE REVENUE IS DISPOSED OF. 53. IN THE RESULT DEPARTMENTAL APPEAL IS PARTLY AL LOWED. 54. THE GROUND NO.1 OF THE APPEAL OF THE ASSESSEE H AS ALREADY BEEN ALLOWED WHILE DECIDING GROUND NO.3 OF THE APPEAL OF THE REVENUE. 55. ON GROUND NO.2 THE ASSESSEE CHALLENGED THE ORD ER OF THE LEARNED CIT(A) IN HOLDING THAT THE ASSESSEE IS LIABLE TO BE TAXED ON THE ACCRUED INTEREST UP TO THE DATE OF SEARCH ON THE INVESTMENT IN KVPS OF RS.7 00 000/- WHEN THE ENTIRE ADDITION ON ACCOUNT OF ACCRUED INTEREST OF RS.5 13 256/- SHOULD HAVE BEEN DELETED. MAIN GROUND OF INVESTMENT IN KVPS HAS BEEN CONSIDERED ON GROUND NO.4 IN THE DEPARTMENTAL APPEAL. THE FACTS ARE SAME IN WHICH IT WAS FOUND THAT INVESTMENT IN KVPS CAME OUT OF UNACCOUNT ED INCOME OF FIRM M/S. G. N. P. AUDIO CASSETTES. THE S AID FIRM HAS OPTED FOR SHOWING THE INCOME FROM THE SAID INVE STMENT 63 IN KVPS ON CASH BASIS AND THE BOOKS OF ACCOUNTS WOU LD NOT SHOW THAT THE ASSESSEE HAD DISCLOSED ANY INTERE ST INCOME ON ACCRUAL BASIS. IT WAS THEREFORE SUBMITT ED BEFORE THE LEARNED CIT(A) THAT ADDITION IS UNJUSTIF IED BECAUSE NO INTEREST ACCRUED DURING THE BLOCK PERIOD . THE LEARNED CIT(A) HOWEVER DID NOT ACCEPT THE CONTENTI ON OF THE ASSESSEE BECAUSE KVPS HAVE BEEN PURCHASED BY TH E ASSESSEE IN THEIR NAMES. MERELY FUNDS HAVE BEEN PRO VIDED BY THE FIRM FROM ITS UNDISCLOSED INCOME WOULD NOT M AKE THEM OWNER. SINCE KVPS ARE IN THE NAME OF THE ASSE SSEE THEREFORE INTEREST INCOME WAS HELD TO BE CONSIDERE D IN THE CASE OF THE ASSESSEE. THE LEARNED CIT(A) FURTHER NO TED THAT ON GROUND NO.3 WITH REGARD TO INTEREST ACCRUED ON IVPS HE HAS HELD THAT INTEREST INCOME HAS TO BE TAXED ON ACCRUAL BASIS THEREFORE BY FOLLOWING THE SAME REASONS TH E AO WAS DIRECTED TO TAX THE INTEREST INCOME IN THE HAND S OF THE ASSESSEE UP TO THE DATE OF SEARCH ONLY AND BALANCE WAS DIRECTED TO BE DELETED. THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES SUBMITTED THAT THIS ISSUE IS SAME AS IS CONSIDERED ON ACCRUAL OF INTEREST ON IVPS ON GROUND NO.3 OF THE DEPARTMENTAL APPEAL AND GROUND NO.1 OF THE A PPEAL OF THE ASSESSEE AND THE SAME ORDER MAY BE FOLLOWED HERE. BY FOLLOWING THE SAME REASONING IN THIS ORDER WE S ET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. IN THE RESULT GROUND NO.2 OF THE APPEAL OF THE ASS ESSEE IS ALLOWED. 56. ON GROUND NO.3 THE ASSESSEE CHALLENGED THE ORD ER OF THE LEARNED CIT(A) FOR TAXING THE INTEREST ON AC CRUED 64 BASIS UP TO THE DATE OF SEARCH IN RESPECT OF INVEST MENT IN FDRS OF RS.7 00 000/- WITH UNNATI COOPERATIVE BANK AND FURTHER ON GROUND NO.4 THE ASSESSEE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN TAXING THE ACCRUED INTERES T IN RESPECT OF INVESTMENT IN FDRS OF RS.7 65 000/- WITH THE SAME BANK. THE LEARNED CIT(A) DIRECTED TO TAX THE I NTEREST ON ACCRUAL BASIS ON FDRS UP TO THE DATE OF SEARCH. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT THE ISSUE IS AGAINST THE ASSESSEE BECAUSE THE INTEREST ON FDRS WAS SHOWN IN EARLIER YEAR ON ACCRUAL BASIS BY THE ASSESSEE THEREFORE THE LEARNED CIT(A) RIGHTLY DIR ECTED TO TAX THE SAME ON ACCRUAL BASIS UP TO THE DATE OF SEA RCH. IN VIEW OF THE ABOVE FACTS AND SUBMISSION OF THE LEARN ED COUNSEL FOR THE ASSESSEE WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE LEARNED CIT(A). GROUNDS NO.3 AND 4 OF THE APPEAL OF THE ASSESSEE ARE DISMISSED. 57. ON GROUNDS NO.5 AND 6 THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THE SAME GROUNDS. THESE GROU NDS ARE THEREFORE DISMISSED AS NOT PRESSED. 58. ON GROUND NO.7 ASSESSEE CHALLENGED THE ORDER O F THE LEARNED CIT(A) IN NOT ADJUDICATING UPON THE GRO UND REGARDING THE TREATMENT OF UNACCOUNTED INCOME OF RS.36 92 260/- ON THE BASIS OF THE SEIZED MATERIAL AS AGAINST THE CORRECT INCOME OF RS.2 78 176/-. THE A SSESSEE FURNISHED DETAILS OF UNACCOUNTED INCOME FROM VARIOU S SOURCES AND DETAILS WERE NOTED IN THE APPELLATE ORD ER. THE ASSESSEE OBJECTED TO COMPUTATION OF THE AO OF 65 UNACCOUNTED INCOME OF RS.36 92 260/-. THE LEARNED C IT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE NOTED T HAT THE TOTAL INCOME WORKED OUT FROM THE BUSINESS OF FILM PRODUCTION IS FAR BELOW THE TOTAL INCOME DECLARED B Y ASSESSEE OF RS.55 00 000/- AND THE AO HIMSELF DID N OT MAKE ANY ADDITION ON THIS SCORE THEREFORE THIS GR OUND WAS CONSIDERED PURELY ACADEMIC AND WAS DISMISSED AS SUC H. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THOUGH THIS GROUND WAS NOT DECIDED BY THE LEARNED C IT(A) BUT THE BUSINESS INCOME CANNOT BE BELOW THE RETURNE D BLOCK INCOME. SINCE THE COMPUTATION OF INCOME CANN OT BE BELOW THE RETURNED INCOME OF RS.55 00 000/- THE LE ARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND ALSO. THIS GROUND OF APPEAL OF THE ASSESSEE IS ACCORDINGL Y DISMISSED BEING NOT PRESSED. 59. ON GROUND NO.8 ASSESSEE CHALLENGED THE LEVY OF INTEREST U/S 158BFA(1) OF THE IT ACT. IT IS STATED THAT THIS GROUND IS SAME AS WAS CONSIDERED IN EARLIER YEAR. I N THE ABSENCE OF ANY DATA TO EXPLAIN THE DELAY THIS GROU ND IS ALSO DISMISSED. 60. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 61. IN THE RESULT THE DEPARTMENTAL APPEAL AND THE APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED AS INDICATED ABO VE. 66 ITA NO.2486/AHD/2005 C. O. NO.17/AHD/2006 A. Y.: 1999-2000 (GOVINDBHAI N. PATEL) 62. THE DEPARTMENTAL APPEAL AS WELL AS THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV AHMEDABAD DATED 09-08-2005 F OR ASSESSMENT YEAR 1999-2000. 63. THE REVENUE ON GROUND NO.1 OF THE DEPARTMENTAL APPEAL CHALLENGED THE DELETION OF ADDITION OF RS.7 29 970/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN LAND. THE A O REPORTED THAT ASSESSEE HAD PURCHASED LAND AT VILLAG E ASOJ VALUE OF WHICH WAS SUPPRESSED BY RS.7 29 970/-. ON THE BASIS OF OBSERVATION MADE IN THE BLOCK ASSESSMENT O RDER WITH REGARD TO ANOTHER LAND AT VILLAGE KHANDIWADA THE AO MADE THE ABOVE ADDITION. IT WAS SUBMITTED BEFORE TH E LEARNED CIT(A) THAT IN THE BLOCK ASSESSMENT ORDER T HE ADDITION WAS DELETED VIDE ORDER DATED 30-06-2004. T HE LEARNED CIT(A) FOUND THAT FACTS ARE SAME AS WERE CONSIDERED IN THE BLOCK ASSESSMENT ORDER AND ACCORD INGLY THIS ADDITION WAS ALSO DELETED. IN THE BLOCK ASSESS MENT THE IDENTICAL GROUND HAS BEEN DISMISSED. THEREFORE THE RE IS NO MERIT IN THE DEPARTMENTAL APPEAL. SAME IS ACCORDING LY DISMISSED. 64. THE ASSESSEE IN THE CROSS OBJECTION CHALLENGED THE REOPENING OF THE ASSESSMENT. THE LEARNED COUNSEL FO R THE ASSESSEE APART FROM REITERATING THE SUBMISSIONS MAD E BEFORE THE AUTHORITIES BELOW SUBMITTED THAT IN CASE 67 DEPARTMENTAL APPEAL IS DISMISSED HE WOULD NOT BE PRESSING THE CROSS OBJECTION. SINCE THE AO MADE ON LY ADDITION OF RS.7 29 970/- IN THE ASSESSMENT ORDER O N WHICH THE LEARNED CIT(A) DELETED THE ADDITION AND WE HAVE DISMISSED THE DEPARTMENTAL APPEAL THEREFORE THE I SSUE HAS BECOME ACADEMIC IN NATURE. ASSESSEE IS THEREFOR E PERMITTED NOT TO PRESS THE SAME. THE CROSS OBJECTIO N OF THE ASSESSEE IS THEREFORE DISMISSED BEING NOT PRESSED. 65. IN THE RESULT THE DEPARTMENTAL APPEAL IS DISMI SSED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSE D BEING NOT PRESSED. 66. IN THE RESULT:- (1) APPEAL OF THE ASSESSEE IN IT(SS) A NO.233/AHD/2004 IS PARTLY ALLOWED. (2) APPEAL OF THE ASSESSEE IN IT(SS) A NO.234/AHD/2004 IS PARTLY ALLOWED. (3) APPEAL OF THE DEPARTMENT IN IT(SS) A NO.264/AHD/2004 IS PARTLY ALLOWED. (4) CROSS OBJECTION OF THE ASSESSEE IN C. O. NO.293/AHD/2004 IS PARTLY ALLOWED. (5) APPEAL OF THE DEPARTMENT IN IT(SS)A NO.261/AHD/2004 IS PARTLY ALLOWED. (6) CROSS OBJECTION OF THE ASSESSEE IN C. O. NO.291/AHD/2004 IS DISMISSED. \ (7) APPEAL OF THE DEPARTMENT IN IT(SS) A NO.260/AHD/2004 IS PARTLY ALLOWED. 68 (8) APPEAL OF THE ASSESSEE IN IT(SS)A NO.265/AHD/2004 IS PARTLY ALLOWED. (9) APPEAL OF THE DEPARTMENT IN ITA NO.2486/AHD/2005 IS DISMISSED AND (10) CROSS OBJECTION OF THE ASSESSEE IN C. O. NO.17/AHD/2006 IS DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 JULY 201 1. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 22-07-2011 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE DR ITAT 5. GUARD FILE BY ORDER //TRUE COPY// DY.R/AR ITAT AHMEDABAD