M/s. Mukesh Narbheram Shroff, Bharuch v. The DY.CIT., Cent.Circle-1,, Baroda

ITSSA 241/AHD/2005 | misc
Pronouncement Date: 23-07-2010 | Result: Allowed

Appeal Details

RSA Number 24120516 RSA 2005
Assessee PAN AADFM1215E
Bench Ahmedabad
Appeal Number ITSSA 241/AHD/2005
Duration Of Justice 4 year(s) 9 month(s) 20 day(s)
Appellant M/s. Mukesh Narbheram Shroff, Bharuch
Respondent The DY.CIT., Cent.Circle-1,, Baroda
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 23-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 23-07-2010
Date Of Final Hearing 21-06-2010
Next Hearing Date 21-06-2010
Assessment Year misc
Appeal Filed On 03-10-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI MAHAVIR SINGH JUDICIAL MEMBER AND SHRI D. C. AGRAWAL ACCOUNTANT MEMBER IT(SS)A NO.241/AHD/2005 BLOCK PERIOD: 1/4/96 TO 13/8/02 DATE OF HEARING:21.6.10 DRAFTED:15.7.10 M/S. MUKESH NARBEHRAM SHROFF OPP. BHAVNA FARM RAJIPIPLA ROAD ANKLESHWAR PAN NO.AADFM1215E V/S . DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1 BARODA (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI J.P. SHAH SR-AR RESPONDENT BY:- SHRI B.S. GAHLOT CIT-DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS IS APPEAL BY ASSESSEE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-IV AHMEDABAD IN APPEAL NO. CI T(A)-IV 94B.CC.1/04-05 DATED 04-07-2005. THE BLOCK ASSESSMENT WAS FRAMED B Y DCIT CENTRAL CIRCLE-1 BARODA U/S. 158BC R.W.S 158BG OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30-08-2004 FOR T HE BLOCK PERIOD FROM 01-04-1996 TO 13-08-2002. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ASSUMPTION OF JURISDICTION. FOR THIS ASSESSEE HAS RAISED THE FOL LOWING GROUND NO.1-3 :- 1. THE C.I.T.(APPEALS) ERRED IN UPHOLDING AN INVALI D NOTICE UNDER SEC.158BC AND IN PROCESS VALIDATING THE PROCEEDINGS UNDER CHA PTER XIV-B. 2. THE C.I.T (APPEALS) FURTHER ERRED IN DISMISSING THE GROUND QUESTIONING THE JURISDICTION OF THE ASSESSING OFFICER TO MAKE ASSES SMENT UNDER CHAPTER XIV-B IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 2 WHICH HE HAD WRONGLY ASSUMED WITHOUT FOLLOWING THE STATUTORY PROCEDURE PRESCRIBED UNDER SECTION 127 OF THE I.T. ACT. 3. THE C.I.T.(APPEALS) COMPLETELY OVERLOOKED THE FA CT THAT THE ASSESSING OFFICER ERRED IN DETERMINING THE UNDISCLOSED INCOME BY TRAVELING BEYOND THE DEFINITION OF UNDISCLOSED INCOME UNDER THE PROVIS IONS OF CHAPTER XIV-B OF THE ACT AND HENCE ANY ADDITION MADE BY THE ASSESS ING OFFICER SHOULD HAVE BEEN DELETED. 3. AT THE OUTSET SR-LD. COUNSEL FOR THE ASSESSEE SHRI J.P.SHAH STATED THAT HE HAS INSTRUCTIONS NOT TO PRESS THIS ISSUE AND ACCORD INGLY THE SAME IS DISMISSED AS NOT PRESSED. 4. THE SECOND ISSUE ON MERITS IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF COMMISSION INCOME NOT DISCLOSED IN THE BOOKS OF ACCOUNT AT RS.71 23 234/- AND FURTHER ESTIMATING THE INTEREST INCOME NOT DISCLOSED IN THE BOOKS OF ACCOUNT AMOUNTING TO RS.22 06 126/- ON ESTIMATE BASIS. FOR THIS ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.4-5 :- 4. THE C.I.T.(APPEALS) ERRED IN UPHOLDING THE ADDI TION OF RS.71.23.234/- BEING ALLEGED COMMISSION INCOME NOT DISCLOSED IN THE BOOK S ON MERE ESTIMATE AND NOT BEING SUPPORTED BY ANY COGENT OR VALID BASIS. THE C.I.T.(APPEALS) COMPLETELY OVERLOOKED THE LEGAL SUBMISSION THAT THIS KIND OF ADDITION BASED ON MERE ESTIMATES ARE NOT PERMISS IBLE UNDER CHAPTER XIV-B AND ARE BEYOND THE PURVIEW OF THE CONCEPT OF BLOCK ASSESSMENT.. 5. THE C.I.T(APPEALS) FURTHER ERRED IN FACT AND IN LAW IN CONFIRMING AN ADDITION OF RS.22 06 126/- ON ESTIMATED INTEREST INCOME ALLE GEDLY NOT DISCLOSED IN THE BOOKS OF ACCOUNTS FOR THE BLOCK PERIOD PURELY ON A SSUMPTION SURMISE AND CONJECTURE. 5. THE BRIEF FACTS ARE THAT A SEARCH U/S.132 OF THE ACT WAS CARRIED OUT ON THE RESIDENTIAL AND BUSINESS PREMISES OF SHROFF GROUP O F CASES OF BHARUCH AND ANKLESHWAR ON 13-08-2002. THE ASSESSEE IS ENGAGED I N THE ACTIVITY OF CHEQUES DISCOUNTING AND PROVIDING FINANCIAL SERVICES. THE A SSESSING OFFICER NOTED THE FOLLOWING SOURCES OF INCOME OF THE ASSESSEE:- A. CHEQUE DISCOUNTING B. CHEQUE VATAV COMMISSIONS C. BANK ACCOUNT & F.D. INTEREST D. CURRENT ACCOUNT INTEREST IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 3 THE ASSESSING OFFICER ISSUED NOTICE U/S.158BC ON 16 -01-2003 AND THE ASSESSEE FILED ITS BLOCK RETURN ON 27-02-2003 DECLARING UNDI SCLOSED INCOME AT RS.61 LAKH AND THE DETAILS OF SAID UNDISCLOSED AMOUNT DECLARED BY THE ASSESSEE READS AS UNDER:- SR. NO. NATURE OF TRANSACTION AMOUNT (RS) 1. BOGUS DEPOSIT TAKEN IN THE NAME OF VARIOUS FAMILY MEMBERS 54 54 000/- 2. INVESTMENT IN JOLWA LAND 90 000/- 3. INVESTMENT IN JEWELLERY 75 000/- 4. STAMP DUTY CHARGES 80 000/- 5. HOUSE HOLD EXPENSES 1 55 000/- 6. INTEREST EARNED 13 340/- 7. TOTAL UNDISCLOSED INCOME 60 64 340/- INCOME DECLARED IN RETURN OF INCOME 61 00 000 THE ASSESSING OFFICER WHILE FRAMING BLOCK ASSESSMEN T ADDED UNDISCLOSED INCOME FROM INCOME SIDES I.E. FROM DISCOUNT EARNED AT RS.7 1 23 234/- AND ALSO INTEREST INCOME AT RS.22 06 126/-. AGAIN THE AO HAS CONSIDE RED THE INVESTMENT AND EXPENDITURE AND MADE ADDITION OF RS.61 LAKH AS DISC LOSED BY THE ASSESSEE ON ACCOUNT OF VARIOUS INVESTMENTS AND EXPENDITURE AND ALSO UNDISCLOSED INVESTMENT IN LAND AT RS.33.77 LAKH. THE AO HAS TAKEN THE INVESTM ENT SIDE AS UNDISCLOSED INCOME BEING ON THE HIGHER SIDE AND HE MADE ADDITION IN PARA-7-8 OF HIS BLOCK ASSESSMENT ORDER AS UNDER:- 7. SO THE UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD FROM INCOME SIDE BECOMES RS.71 23 234/- + RS.22 06 126/- = RS.93 29 360/-. HOWEVER THE UNDISCLOSED INCOME OF THE ASSESSEE FRO M THE INVESTMENT / EXPENDITURE SIDE BECOMES RS.61 00 000/- + RS.33 77 000/- = RS.94 77 000/-. SINCE THE UNDISCLOSED INCOME FROM THE INVESTMENT S IDE IS MORE THAN THE INCOME SIDE THE UNDISCLOSED INCOME FOR THE BLOCK P ERIOD IS WORKED OUT FROM INVESTMENT SIDE. 8. IN VIEW OF THE ABOVE DISCUSSION THE TOTAL UNDIS CLOSED INCOME OF THE ASSESSEE IS COMPUTED AS UNDER:- TOTAL INCOME AS PER BLOCK RETURN : RS.61 00 000/- ADD: AS DISCUSSED IN PARA NO.6 : RS.33 77 000/- TOTAL UNDISCLOSED INCOME : RS.94 77 000/- IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 4 NOW WE WILL DEAL WITH THE DISCOUNT INCOME ADDED BY ASSESSING OFFICER AND CONFIRMED BY CIT(A). DURING THE COURSE OF SEARCH I N THE CASE OF ASSESSEE CERTAIN DISCOUNT VOUCHERS PERTAINING TO TWO FINANCIAL YEARS I.E. 2001-02 AND 2002-03 (PART OF THE YEAR) WERE FOUND AND SEIZED WHICH REVEALED THA T THERE ARE TWO FIGURES OF DISCOUNT EARNED BY THE ASSESSEE MENTIONED ON THE DI SCOUNT VOUCHERS I.E. ONE IN PENCIL AND OTHER IN PEN. ACCORDING TO ASSESSING OFFICER THE PENCIL AMOUNT IS HIGHER THAN THE PEN AMOUNT AND ACCORDINGLY PEN FIGU RE WHICH IS REDUCED AMOUNT BEING RECORDED IN THE BOOKS OF ACCOUNT AND ACTUAL I S WRITTEN IN PENCIL WHICH IS ACTUAL COMMISSION EARNED BY THE ASSESSEE. SUCH VOUCHERS WE RE INVENTORIED BY SEARCH PARTY AS ANNEXURE-A/1-2 TO ANNEXURE-A/8 OF PANCHNAM A DATED 13-08-2002 AND ANNEXURE-A/1 TO ANNEXURE-A/13 OF PANCHNAMA DATED 16 -08-2002. THE AO AFTER GOING THROUGH THE INVENTORIES NOTED THAT FOR THE F INANCIAL YEAR 2001-02 AS PER PENCIL NOTICE THE DISCOUNT WAS AT RS.17 46 733/- AND AS PE R PEN I.E. RECORDED IN THE BOOKS OF ACCOUNT AT RS.6 15 818/-. ACCORDING TO ASSESSING OFFICER FOR THE FINANCIAL YEAR 2001-02 THE ASSESSEE HAS EARNED UNACCOUNTED DISCOUN T COMMISSION AT RS.11 30 915/-. HE FURTHER NOTED THAT IN FINANCIAL YEAR 2002-03 THE DISCOUNT COMMISSION AS PER PENCIL WAS RS.9 00 794/- AND AS P ER PEN RS.3 87 717/- AND THE UNACCOUNTED DISCOUNT COMMISSION FOR THIS YEAR IS RS .5 13 077/-. THE AO COMPUTED THE UNDISCLOSED INCOME AS PER VOUCHERS FOUND DURING THE COURSE OF SEARCH FOR THESE TWO FINANCIAL YEARS AT RS.16 43 992/-. HE ALSO NOTE D THE DISCLOSED COMMISSION INCOME FOR THESE TWO FINANCIAL YEARS AT RS.17 18 40 2/- AND HE APPLIED THE PERCENTAGE OF UNACCOUNTED DISCOUNT INCOME AT 95.66% AND ACCORDING TO HIM ASSESSEE HAS ACCEPTED THE MODUS OPERANDI ADOPTED FO R EARNING THIS INCOME FOR THE ENTIRE BLOCK PERIOD. THE AO RELIED ON THE STATEMENT RECORDED ON 16-08-2002 U/S.132(4) OF THE ACT AND THE RELEVANT QUESTION NO. 1 READS AS UNDER:- Q.1 WHAT FIGURES YOU ACCOUNT I THE BOOKS WHETHER P ENCIL FIGURE OR PEN FIGURE? ANS. WE ACCOUNT FOR IN THE BOOKS OF ACCOUNT ONLY TH E FIGURES WRITTEN IN PEN. THERE IS NO DIFFERENCE IN THE FIGURE OF COMMISSION CHARGED AND ACCOUNTED IN THE CASE OF CHEQUES AGAINST DISCOUNTING OF CHEQUE S. THE DIFFERENCE IS IN RESPECT OF DISCOUNTING AGAINST CASH. THE DIFFERENCE BETWEEN PEN FIGURES AND PENCIL FIGURES IS NOT ACCOUNTED IN THE BOOKS. FURTHER THIS WAS CONFIRMED ON 19-08-2002 AS UNDER:- IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 5 I REAFFIRM MY STATEMENT MADE ON 16.08.2002 THAT T HE DIFFERENCE BETWEEN THE COMMISSION ON DISCOUNTING OF CHEQUES SHOWN IN PEN F IGURES AND THE PENCIL FIGURES REPRESENTS MY UNACCOUNTED INCOME FOR THE BL OCK PERIOD. ACCORDING TO ASSESSING OFFICER ASSESSEE HAS DISCLOS ED DISCOUNT INCOME IN REGULAR RETURNS FROM FINANCIAL YEAR 1996-97 TO THE DATE OF SEARCH AT RS.93 19 157/-. HENCE HE APPLIED THE PERCENTAGE OF UNDISCLOSED INCOME AT 95.66% WHICH COMES TO RS.89 14 705/- AND THEREAFTER ALLOWED DISCOUNT OF D ISCLOSURE MADE ON ACCOUNT OF VDIS 97 AT RS.10 LAKH AND REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY RS.79 14 705/- BE NOT ADDED TO ITS UNDISCLOSED INCO ME OF THE BLOCK PERIOD. THE AO AFTER CONSIDERING THE ASSESSEES SUBMISSION ALLOWED FURTHER 10% REBATE AFTER VERIFICATION IN THE WORKING OF UNDISCLOSED DISCOUNT INCOME AND RECOMPUTED THE INCOME AT RS.71 23 234/- AND THE SAME WAS ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO EXACTLY ON THE SAME FACTS CONFIRMED THE ADDITIO N MADE BY ASSESSING OFFICER. 6. NOW WE WILL DEAL WITH THE ISSUE OF ADDITION OF U NDISCLOSED INCOME ON ACCOUNT OF SUPPRESSION OF INTEREST INCOME ON CURRENT ACCOUN TS AT RS. 22 06 126/-. THE ASSESSING OFFICER DURING BLOCK ASSESSMENT PROCEEDIN GS NOTICED FROM THE SEIZED MATERIAL THAT THE ASSESSEE IS CHARGING INTEREST @ 3 6% I.E. ANNEXURE-A/23 SEIZED FROM THE RESIDENCE OF ASSESSEE ON 13-08-2002 WHICH CONTENTS LEDGER ACCOUNT OF VARIOUS PERSONS FOR THE FINANCIAL YEAR 2002-03 UP T O 31-07-2002. THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY 36% INTEREST SHOULD N OT BE CHARGED INSTEAD OF 18% DISCLOSED BY THE ASSESSEE VIDE SHOW-CAUSE NOTICE DA TED 30-06-2004. THE ASSESSING OFFICER ALSO NOTED IN THE SHOW CAUSE NOTI CE THE DISCLOSED INTEREST INCOME FROM FINANCIAL YEAR 1996-97 TILL THE DATE OF SEARCH WHICH WAS AT RS.24 51 251/-. THE ASSESSEE REPLIED THAT INTEREST @ 21 TO 24% IS CHARG ED AND NOT ABOVE THAT FIGURE. THE ASSESSEE EXPLAINED THAT THE PARTNERS NORMALLY ASSIG N THE WORK TO THEIR ACCOUNTANT TO WORK OUT THE INTEREST ON ALL THE CURRENT ACCOUNTS B Y CALCULATING THE PRODUCT OF THE SAID ACCOUNTS AND ALSO FOR THAT PURPOSE APPLY A HYPOTHET ICAL RATE OF INTEREST OF 36%. THIS IS DONE FOR ALL THE CURRENT ACCOUNT IRRESPECTIVE OF THE AGREED RATE OF INTEREST IN ANY OF THE CASES AND NORMALLY THE RATE OF INTEREST IS CHAR GED @ 21% TO 24% AS THE CASE MAY BE. AFTER COMPUTING THE SAME ASSESSEE REVISES THE PRODUCT BY DIVIDING THE TOTAL INTEREST BY 36 AND MULTIPLYING IT BY THE AGREED RAT E OF INTEREST. THIS IS ONLY ONE STEP PROCESS AS IN ALL CASES THE REST OF THE THINGS ARE ALREADY CALCULATED. IN VIEW OF SUCH IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 6 EXPLANATION ASSESSEE AGREED THAT ASSESSEE MIGHT HA VE EARNED INTEREST INCOME TO THE TUNE OF RS.6-7 LAKH ON ACCOUNT OF SUPPRESSION O F INTEREST BETWEEN 3-6%. THE ASSESSING OFFICER WAS NOT CONVINCED BY SUCH EXPLANA TION AND ADDED A SUM OF RS.22 06 126/- AFTER ALLOWING 10% REBATE ON ACCOUNT OF VARIATION IN WORKING OF UNDISCLOSED INCOME VIS--VIS DISCLOSED INCOME IN TH E REGULAR RETURNS OF INCOME. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER. AGGRIEVED THE ASSESSE E PREFERRED APPEAL BEFORE TRIBUNAL. 7. AGGRIEVED ASSESSEE CAME IN SECOND APPEAL BEFOR E US. BEFORE US LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE H AS ALREADY MADE DISCLOSURE OF RS.61 LAKH I.E. IN THE SHAPE OF BOGUS DEPOSITED TAK EN IN THE NAME OF VARIOUS FAMILY MEMBERS INVESTMENT IN JEWELLERY AND INTEREST EARNE D ETC. HE STATED THAT VOUCHERS FOUND DURING THE COURSE OF SEARCH WERE PART OF UNDI SCLOSED INCOME DECLARED BY THE ASSESSEE AT RS.61 LAKH WHEREAS THE VOUCHERS WERE V ALUED AT RS.16 43 995/-. HE FURTHER STATED THAT ASSESSING OFFICER HAS APPLIED A FORMULA OF PERCENTAGE FOR COMPUTING UNDISCLOSED INCOME VIS--VIS DISCLOSED IN COME AND APPLIED FOR ENTIRE BLOCK PERIOD WHEREAS THE VOUCHERS WERE FOUND FOR O NLY ONE FULL FINANCIAL YEAR AND PART OF YEAR FALLING IN THE BLOCK PERIOD. ON THE OT HER HAND THE LD. CIT-DR HEAVILY RELIED ON THE BLOCK ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A) AND SATED THAT THE VOUCHERS FOUND FOR FINANCIAL YEARS 2001-02 AND 2002-03 CO-RELATION WITH ADMISSION OF THE ASSESSEE THAT THE PENCIL FIGURE RE PRESENTS UNACCOUNTED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD CLEARLY SHOWS THA T THE ASSESSEE WAS INDULGING IN CONCEALING THE INCOME. SIMILAR ARGUMENTS WERE ADVAN CED BY BOTH THE SIDES ON THE ISSUE OF SUPPRESSION OF INTEREST. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE LOWER AUTHORITIES SHOULD NOT HAVE MADE ANY ADDITION ON ACCOUNT OF UNDISCLOSED COMMISSION I NCOME AS THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SEARCH INDICATING UNDISC LOSED COMMISSION FOR THE PERIOD PRIOR TO FINANCIAL YEAR 2001-02 VOUCHERS RELATING TO ALL YEARS WERE FOUND BUT THE EVIDENCE OF ADDITIONAL COMMISSION CHARGED WERE AVAI LABLE ONLY FOR FINANCIAL YEAR 2001-02 AND FINANCIAL YEAR 2002-03 TILL THE DATE OF SEARCH AND THEREFORE EVEN IF SOME ADDITION IS REQUIRED TO BE MADE THEN THE SAME SHOUL D HAVE BEEN RESTRICTED ON THE IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 7 ACTUAL AMOUNT OF UNDISCLOSED INCOME. EXTRAPOLATION IS NOT POSSIBLE AS THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE WAS CH ARGING EXTRA COMMISSIONS OVER AND ABOVE SHOWN IN THE BOOKS OF ACCOUNT. ACCORDINGL Y WE ARE OF THE VIEW THAT UNDISCLOSED INCOME ON ACCOUNT OF EXTRA DISCOUNT INC OME BE RESTRICTED TO RS.16 43 995/-. FURTHER THE LOWER AUTHORITIES HAVE ASSUMED THAT THE ASSESSEE HAS CHARGED INTEREST NOTED IN PENCIL AS THE PEN FIGURES ARE LOWER THAN THE PENCIL FIGURES BUT THE SAME HAS NOT BEEN APPRECIATED. THE AO HAS T OTALED THE PENCIL FIGURE AND HAS CONSIDERED THIS AMOUNT AS TOTAL UNDISCLOSED DIS COUNT INCOME OF THE ASSESSEE. WE FURTHER FIND THAT THE PENCIL FIGURE DOES NOT REP RESENT THE TOTAL COMMISSION INCOME AND THIS FIGURE ALSO INCLUDES THE OLD OUTSTANDING A ND ALSO REMARKS NOTED BY THE STAFF OF THE ASSESSEE. WE ARE IN AGREEMENT WITH THE ARGUM ENTS OF THE LD. COUNSEL FOR ASSESSEE THAT THERE WERE MORE THAN ONE FIGURES MENT IONED ON THE SAME VOUCHER BY PENCIL AND AO HAS ASSUMED THAT THE ASSESSEE WOULD H AVE CHARGED THE TOTAL AMOUNT NOTED ON THE VOUCHERS AS COMMISSION. THE ASSESSEE C LARIFIED THAT THE SAID FIGURES WOULD INCLUDE OLD OUTSTANDING OF COMMISSION AND ALS O THE CURRENT CHARGEABLE AMOUNT. THE ASSESSEE AGAIN STATED THESE FACT HAD BE EN REPEATEDLY MENTIONED VIDE VARIOUS SUBMISSIONS AND ALSO AT THE TIME OF RECORDI NG OF STATEMENTS. HOWEVER THE LOWER AUTHORITIES HAVE NOT CONSIDERED IT POSITIVELY AND ASSESSEE HAVE GIVEN SPECIFIC INSTANCES WHICH CLEARLY POINT OUT THAT THE FIGURES IN THE PENCIL ARE NOT NECESSARILY THE FIGURE OF THE DISCOUNT CHARGED ONLY FOR THE CHEQUES DISCOUNTED ON THAT VOUCHER. ASSESSEE ALSO APPRECIATE THAT THERE ARE CASES WHERE THE AMOUNT AS HIGH AS RS.50 000/- IS MENTIONED IN THE VOUCHER AND THIS AM OUNT ONLY REFERS TO SOME ADDITIONAL SUM WHICH THE CONCERNED PERSON WOULD HAV E TAKEN EXTRA OR WAS ACCOUNT FOR SOME EARLIER TRANSACTIONS. ACCORDINGLY THE FIG URES ARRIVED AT BY HIM BY EXTRAPOLATION THE SAME ARE INCORRECT AND CONSEQUENT LY THE ESTIMATED UNACCOUNTED DISCOUNT EARNED BY ASSESSEE OF RS.71 LAKH IS ALSO I NCORRECT AND THEREFORE DESERVES TO BE DELETED. THE ADDITION OF RS.16 43 992/- IS TO BE SET OFF AGAINST THE DECLARED INCOME OF THE ASSESSEE AT RS.61 LAKH. 9. THE FACTS ARE EXACTLY IDENTICAL IN RESPECT OF OT HER ISSUE I.E. SUPPRESSION OF CURRENT ACCOUNTS ADDED BY ASSESSING OFFICER AS UNDI SCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD AND CONFIRMED BY CIT(A). EXACT LY ON SIMILAR FINDINGS AS IN THE ISSUE OF DISCOUNT INCOME ABOVE WE ARE OF THE VIEW THAT INTEREST IN ANY CASE WILL BE 21 TO 24% AND THEREFORE THE ASSESSEE HAS RIGHTLY ST ATED THAT INTEREST INCOME IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 8 SUPPRESSED ON ACCOUNT OF DOCUMENTS FOUND WILL BE CO MPUTED WHICH IS RS7 59 852/-. THIS WILL IN ANY CASE WILL GIVE SET OFF AGAINST T HE DECLARED INCOME OF RS.61 LAKH BY THE ASSESSEE. 10. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AS REGARDS TO CONFIRMATION OF ADDITION OF UNDISCLOSED INCOME ON ACCOUNT OF PURCHA SE OF LAND AT RS.33.77 LAKH. FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.6 :- 6. THE C.I.T. (APPEALS) GROSSLY ERRED IN FACT AND IN LAW IN CONFIRMING THE ADDITION OF RS.33 77 000/- BEING ALLEGED UNDISCLOSE D PAYMENT ON PURCHASE OF LAND WITHOUT ANY SUPPORTING EVIDENCE TO LAY DOWN TH E SAME. 11. THE BRIEF FACTS LEAD TO THE ABOVE ISSUE ARE THA T THE ASSESSEE ALONG WITH FAMILY MEMBERS HAVE PURCHASED PIECES OF LAND IN VILLAGE UM RAJ. ACCORDING TO ASSESSING OFFICER THE ASSESSEE HAS MADE UNACCOUNTED INVESTMEN T IN THE FORM OF ON-MONEY PAYMENT AS THE REGISTERED DOCUMENTS WERE AT A VERY LOW PRICE AS AGAINST THE MARKET PRICE OF LAND AS REVEALED FROM LOCAL INQUIRY. THE A SSESSEE GROUP HAS PURCHASED LANDS AT SURVEY NO.162A 168 166 179 AND 178 AND MADE UNACCOUNTED INVESTMENT OF RS.23 LAKH AS ADMITTED BY HIM VIDE STATEMENT REC ORDED U/S.132(4) OF THE ACT ON 19-08-2002. THE AO NOTED THAT THE STATEMENT GIVEN B Y SHRI AZIZ UMRAJ KELAWALA AND SHRI ABDUL VALI BOKHA CLEARLY SHOWED THAT THE R ATE OF LAND AT VILLAGE UMRAJ WAS MUCH HIGHER THAN THE DOCUMENTED PRICE AND THERE WAS A GENERAL PRACTICE OF ACCEPTING ON-MONEY ON THE SALE OF THESE LANDS AT VI LLAGE UMRAJ. AS PER THE STATEMENT GIVEN BY SHRI AZIZ UMRAJ KELAWALA THE LA ND AT SURVEY NO.180 WAS SOLD TO SHRI MUKESH N. CHADDARWALA FOR RS.15.30 LACS @ RS.4 .50 LAKH PER ACRE WHEREAS THE DOCUMENT PRICE WAS RS.2.05 LAKH. SINCE THIS LAN D WAS THE FAMILY LAND OF SHRI AZIZ UMRAJ KELAWALA IT CAN BE SAFELY PRESUMED THAT HE W AS AWARE OF THE SALE TRANSACTION THOUGH HE MIGHT NOT HAVE BEEN A DIRECT PARTY TO THE SALE AGREEMENT. THIS PROVES THE ON-MONEY PAYMENT BY SHRI MUKESH N C HADDERWALA TO THE EXTENT OF RS.11.25 LAKH. THE OTHER STATEMENTS OF SHRI BHAILAL BHAI PATEL SHRI AYUB MOHAMMED AND SHRI ABDUL VALI BOKHA CITED IN THE SHOWCAUSE NO TICE CONFORMED THE TREND OF PAYMENT OF ON-MONEY TOWARDS PURCHASE OF LAND AT VIL LAGE UMRAJ OVER AND ABOVE THE DOCUMENTED PRICE. ACCORDING TO THE AO ALL THE INSTA NCES QUOTED ABOVE ARE DIRECTLY APPLICABLE TO THE CASE OF ASSESSEE BECAUSE ALL THE LANDS MENTIONED ABOVE BELONG TO THE SAME AREA AND ARE GEOGRAPHICALLY JUXTAPOSED. TH E STATEMENT OF SHRI BHAILAL B IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 9 PATEL SHRI AYUB MOHAMMED AND SHRI ABDUL VALI BOKHA CLEARLY PROVED THAT THE AVERAGE COST OF LAND AT SURVEY NO.161A AND 177 RANG ED FROM RS.8 LAKH PER ACRE TO RS.12 LAKH PER ACRE. HENCE THE AO CONCLUDED THAT T HE RATE OF LAND PURCHASED BY SHRI MUKESH N CHADDARWALA AND HIS FAMILY MEMBERS AT VILLAGE UMRAJ MUST HAVE BEEN NOT LESS THAN RS.8 LAKH PER ACRE APPROXIMATELY AND THIS RATE IS TAKEN TO WORK OUT THE UNDISCLOSED INVESTMENT OF THE ASSESSEE GROU P AT VILLAGE UMRAJ AS UNDER:- SURVEY NO. AREA (IN ACRES) DATE OF PURCHASE PURCHASE PRICE COST PER ACRE TOTAL COST RS.8 LACS PER ACRE 179 1.32 26.04.2002 1 25 000/- 94 697/- 10 56 000/- 162A 1.17 06.05.2002 96 000/- 82 051/- 9 36 000/- 168 0.40 11.04.2002 97 000/- 2 42 500/- 3 20 000/- 166 0.46 11.04.2002 1 10 000/- 2 39 130/- 3 68 000/- TOTAL 4 28 000/- 26 80 000/- SO THE DIFFERENCE OF COST PRICE BETWEEN CALCULATED @ RS.8 LAKH PER ACRE AND THAT OF THE OFFICIAL DOCUMENT IS RS.26.80 LAKH (-) RS.4.28 LAKH = RS.22.52 LAKH WHICH REPRESENTS THE UNDISCLOSED INVESTMENT OF THE ASSESS EE GROUP IN THE LAND AT VILLAGE UMRAJ. THUS THE TOTAL ADDITION ON ACCOUNT OF UNDIS CLOSED INVESTMENT IN LAND AT VILLAGE UMRAJ BY THE ASSESSEE GROUP BECOMES RS.22.5 2 LAKH + RS.11.25 LAKH = RS.33.77 LAKH. SINCE THE INDIVIDUAL MEMBERS OF THE GROUP DO NOT HAVE INDEPENDENT SOURCE OF INCOME FROM M/S. M.N. SHROFF THE ADDITIO N IS MADE IN THE CASE OF M/S. M.N. SHROFF BECAUSE IT IS THE ULTIMATE SOURCE OF FL OW OF UNDISCLOSED INCOME. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND HE ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER EXACTLY ON SAME FIN DINGS. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. COUNSEL FOR ASSE SSEE STATED BEFORE US THAT THE STATEMENT U/S.132(4) ON THE DATE OF SEARCH WAS GIVE N UNDER PRESSURE ON ACCOUNT OF ILL HEALTH OF THE ASSESSEES AGING FATHER AND ASSES SEE WAS INTERESTED IN GETTING THE SEARCH PROCEEDINGS OVER AND SINCE THE SEARCH PARTY WERE INSISTING ON THE DISCLOSURE OF RS.1 CRORE FROM THE ASSESSEE THE ASSESSEE SOME HOW MENTIONED RS.23 LAKH AS ADDITIONAL INVESTMENT IN THE LAND AS BALANCING FIGU RE. THE ASSESSEE THEREFORE IMMEDIATELY AFTER SEARCH ON 03-10-2002 IN REPLY TO QUESTION NO.20 OF THE STATEMENT CLARIFIED THAT NO INVESTMENT HAS BEEN MADE IN THE U MRAJ LAND AND EARLIER STATEMENT IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 10 WAS GIVEN UNDER PRESSURE AND IN THE SAME STATEMENT WHILE REPLYING TO QUESTION NO.20 THE ASSESSEE CLEARLY STATED THAT THERE IS NO ON-MONEY PAID BY THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THA T THE LOWER AUTHORITIES RELIED ON THE STATEMENT OF THE PERSON WHO WERE NOT IN ANY WAY CONNECTED WITH THE LAND PURCHASED BY THE ASSESSEES PARTNERS OR THEIR RELAT IVES. WE FIND THAT EACH LAND IS A DIFFERENT LAND AND IT IS NOT CORRECT TO RELY UPON E VIDENCE OF OTHER PERSONS IN UNRELATED CASES FOR ESTIMATING THE VALUE OF THE INVESTMENT MA DE BY THE ASSESSEE. WE FURTHER FIND FROM THE STATEMENT RECORDED U/S.132(4) ON 13-0 8-2002 WHERE ASSESSEE SPECIFICALLY STATED THAT THE VALUE OF THE LAND WAS PAID BY A CHEQUE AND THE DOCUMENT WERE REGISTERED WITH THE OFFICE OF REGISTRAR DIST. BHARUCH IT WAS NOTED THEREIN THE AMOUNT @ RS.1.50 LAKH PER ACRE WHICH IS AS PER THE VALUATIO N DONE BY THE STAMP VALUATION AUTHORITY AND MOREOVER THE LAND MENTIONED IN THE STATEMENTS AND THE LAND PURCHASED BY THE ASSESSEE ARE NOT COMPARABLE. WE FI ND FROM THE CASE RECORDS AS WELL AS ARGUMENTS THAT THE LAND PURCHASED BY THE AS SESSEE IS ON THE BACK SIDE AND THE LANDS MENTIONED IN THE STATEMENTS BY DIFFERENT PERSONS ARE ON THE FRONT SIDE AND DIRECTLY ON ACCOUNT OF HIGHWAY AND THE LAND ON THE BACK SIDE WOULD FETCH FOR LOWER PRICE AS COMPARED TO LAND ON THE FRONT SIDE. THE LA ND REFERRED TO BY THE ASSESSING OFFICER IS RIGHT ON THE MAIN ROAD HAVING SUBSTANTIA LLY VALUE AND THE ONGC WAS TO FLOAT A TENDER FOR CONSTRUCTING A HUGE TOWNSHIP AT THAT POINT OF TIME AND AS PER SAID TENDER CONDITIONS THE LAND REQUIRED FOR TOWNSHIP W AS TO BE RIGHT ON THE ROAD AND NOT INTERIOR. THIS THEREFORE LED TO MAJOR PRICE DIFFERE NTIALS BETWEEN THE LAND WHICH WAS QUALIFIED AND THE LAND WHICH WAS NOT QUALIFIED THE LAND CONSIDERED BY THE ASSESSING OFFICER WERE LAND ELIGIBLE AS PER THE ONGC TENDER A ND THEREFORE IT IS POSSIBLE THAT THESE LANDS WOULD HAVE BEEN TRANSACTED OF HIGHER AM OUNT. THE ASSESSEE WHILE REPLYING TO QUESTIONNO.21 OF THE STATEMENT DATED 13 -08-2002 STATED THAT THE LAND COULD NOT BE DEVELOPED BECAUSE OF COMMUNAL RIOTS AN D THEREFORE IT WOULD BE WRONG TO ADOPT THE VALUATION TAKEN BY AO FOR THE PURPOSE OF MAKING ADDITION. FUTURE THE LANDS MENTIONED BY AO ARE NON-AGRICULTURE LAND AND THE LAND PURCHASED BY THE ASSESSEE ARE AGRICULTURE LAND THAT AGRICULTURE LAND WOULD FETCH LOW VALUE AS NON- AGRICULTURE PREMIUM IS REQUIRED TO BE PAID FOR CONV ERSION OF LAND INTO NON-AGRICULTURE LAND. BECAUSE OF THIS REASON ALSO THE RATES ADOPTED BY AO CANNOT BE TAKEN. 13. WE FIND FROM THE ABOVE FACTS AND VARIOUS CASE L AWS RELIED ON BY BOTH THE SIDES THAT THE ADDITION CANNOT BE SUSTAINED ON THE BASIS OF STATEMENT MADE IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 11 U/S.132(4) OF THE ACT ONCE THAT IS NOT SUPPORTED B Y ANY EVIDENCE OR CORRELATED WITH ANY MATERIAL FOND DURING THE COURSE OF SEARCH. WE A RE IN AGREEMENT WITH THE ARGUMENT OF THE ASSESSEE THAT THE DECISION OF THE T RIBUNAL IN THE CASE OF ARUN KUMAR BHANSALI V. DCIT (2006) 10 SOT 46 (BANG) (URO) WHICH HOLDS THAT AS SESSING OFFICER MUST GO BY INCRIMINATING EVIDENCE AND NOT B Y ADMISSION OF ASSESSEE. THE FOLLOWING AHMEDABAD TRIBUNAL DECISION IS ALSO HOLDI NG TO THE CONTRARY I.E. 132(4) STATEMENT IS NOT BINDING WITHOUT EVIDENCE TO SUPPOR T IT IN THE CASE OF ACIT V. JORAWARSINGH RATHOD (2005) 94 TTJ 867 (AHD). IN THIS MATTER THE QUESTI ON IS WHETHER THE ADDITION CAN BE MADE IN RESPECT OF THE ASSESSMENT YEARS I.E. ASSESSMENT YEARS 1997-98 TO 2000-01 MERELY ON THE B ASIS OF THE STATEMENT THOUGH NO EVIDENCE OF CONCEALMENT HAS BEEN FOUND IN RESPEC T OF THAT PART OF THE PERIOD? WE FIND THAT THE INCRIMINATING EVIDENCE WAS FOUND FOR ASSESSMENT YEARS 2001-02 AND 2002-03 IN RESPECT OF COMMISSION OF RS.16 43 993/- AND INTEREST OF RS.16 64 818/- MAKING A TOTAL OF RS.33 30 811/- AND NO INCRIMINATI NG EVIDENCE WAS FOUND FOR LAND AND YET A.O ADDS RS.33.77 LAKH FOR LAND. FURTHER I T MUST BE POINTED OUT THAT IN 132(4) THE ASSESSEE STATED IN REPLY TO QUESTION NO. 4 THAT HE EARNED RS.1 CRORE AS UNACCOUNTED INCOME OUT OF BOOKS STILL THE FACT OF THE MATTER IS THAT BOTH THE ASSESSEE AND THE ASSESSING OFFICER DISOWNED THIS ST ATEMENT. THE AO COMPUTED THE COMMISSION INCOME AT RS.71 23 234/- AND THE INTERES T OF RS.22 06 126/- MAKING A TOTAL OF RS.93 29 360/- AND FURTHER DOWN IN THE ASS ESSMENT ORDER HE ACCEPTS THE RETURN OF RS.61 LAKH AND MAKES THE ADDITION OF RS.3 3.77 LAKH WITHOUT ANY EVIDENCE OF UNDISCLOSED INCOME FOUND IN RESPECT OF THE LAND PUR CHASED BY THE ASSESSEE; WHEREAS THE ASSESSEE FILED THE RETURN OF INCOME AT RS.61 LAKH OF UNDISCLOSED INCOME IN BLOCK PERIOD. THEREFORE BOTH THE SIDES DISOWNED THE ADMISSION. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI V. CIT (2008) 14 DTR 257 (GUJ) WHEREIN THE HONBLE HIGH COURT HE LD THAT IN VIEW OF WHAT HAS BEEN STATED HEREINABOVE THIS EXPLANATION SEEMS TO B E MORE CONVINCING HAS NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW AND ADDITIONS W ERE MADE AND/OR CONFIRMED MERELY ON THE BASIS OF STATEMENT RECORDED U/S. 132( 4). HONBLE HIGH COURT FURTHER NOTED THAT DESPITE THE FACT THAT THE SAID STATEMENT WAS LATER ON RETRACTED NO EVIDENCE HAS BEEN LED BY THE DEPARTMENT AUTHORITY. THEREFORE MERELY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT HAVE BEEN SUBJECTE D TO SUCH ADDITIONS UNLESS AND UNTIL SOME CORROBORATIVE EVIDENCE IS FOUND IN SUPP ORT OF SUCH ADMISSION. THE STATEMENT RECORDED AT SUCH ODD HOURS CANNOT BE CONS IDERED TO BE A VOLUNTARY IT(SS)A NO.241/AHD/2005 B.P. 1.4.96 TO 13.8.02 M/S. MUKESH N SHROFF V. DCIT CC-1 BRD PAGE 12 STATEMENT IF IT IS SUBSEQUENTLY RETRACTED AND NECE SSARY EVIDENCE IS LED CONTRARY TO SUCH ADMISSION. THEREFORE THE TRIBUNAL WAS NOT JUS TIFIED IN MAKING ADDITION OF RS.6 LACS ON THE BASIS OF STATEMENT RECORDED BY THE AO U /S.132(4). THE TRIBUNAL HAS COMMITTED AN ERROR IN IGNORING THE RETRACTION MADE BY THE ASSESSEE. IN THE ABOVE VIEW OF THE MATTER ADDITION OF RS.1 LAC MADE ON AC COUNT OF UNACCOUNTED CASH IS CONFIRMED AND THE ADDITION OF RS.6 LAC IS DELETED B Y HONBLE HIGH COURT. ALMOST SIMILAR ARE THE FACTS BEFORE US ALSO IN THE PRESEN T CASE WHEREIN INCRIMINATING EVIDENCES ARE AVAILABLE FOR THE ASSESSMENT YEARS 20 01-02 AND 2002-03 IN RESPECT OF COMMISSION INCOME AT RS.61 43 993/- AND INTEREST IN COME OF RS.16 64 818/-. THERE IS NO INCRIMINATING EVIDENCE IN REGARD TO INVESTMEN T IN VILLAGE UMRAJ LAND ADDED BY THE LOWER AUTHORITIES AT RS.33.17 LAKH. ACCORDINGLY WE ARE OF THE VIEW THAT THE ASSESSEE HAS MADE A DISCLOSURE OF HIS STATEMENT AS NOTED BY THE LOWER AUTHORITIES AT RS.61 LAKH WHICH IS TO BE ACCEPTED. ACCORDINGLY ALL THE ABOVE INTERCONNECTED ISSUES OF THE ASSESSEES APPEAL ARE ALLOWED. 14. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23 /07/2010 SD/- SD/- (D.C.AGRAWAL) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD DATED : 23/07/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-IV AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD