Shri Manubhai P.Vyas,, Ahmedabad v. The ACIT., Cent.Circle-1(2),, Ahmedabad

ITSSA 52/AHD/2005 | misc
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 5220516 RSA 2005
Assessee PAN URING7200S
Bench Ahmedabad
Appeal Number ITSSA 52/AHD/2005
Duration Of Justice 7 year(s) 23 day(s)
Appellant Shri Manubhai P.Vyas,, Ahmedabad
Respondent The ACIT., Cent.Circle-1(2),, Ahmedabad
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 30-03-2012
Date Of Final Hearing 23-11-2012
Next Hearing Date 23-11-2012
Assessment Year misc
Appeal Filed On 07-03-2005
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI G. C. GUPTA VP AND SHRI A. MOHAN ALAN KAMONY AM) IT(SS) A NO. 52/AHD/2005 BLOCK PERIOD: 1-4-1996 TO 26-02-2002 MANUBHAI P. VYAS AHMEDABAD VS THE A. C. I. T. CC -1(2) 3 / 4 MALAY APARTMENT AHMEDABAD BARRIAGE ROAD VASNA (APPELLANT) (RESPONDENT) IT(SS) A NO.58/AHD/2005 BLOCK PERIOD :1-4-1995 TO 26-2-2002 THE D. C. I. T. CC-1(2) VS RAJENDRA M. VYAS ROOM NO.305 3 RD FLOOR PROP. SUNITA CONSTRUCTION AAYAKAR BHAVAN ASHRAM ROAD 10-11 PARSHWANATH AHMEDABAD CHAMBERS ASHRAM ROAD AHMEDABAD (APPELLANT) (RESPONDENT) IT(SS)A NO.59/AHD/2006 BLOCK PERIOD ENDING 26-2-2002 THE A. C. I. T. CC-1(2) VS RAJENDRA M. VYAS ROOM NO.305 3 RD FLOOR PROP. SUNITA CONSTRUCTION AAYAKAR BHAVAN ASHRAM ROAD 10-11 PARSHWANATH AHMEDABAD CHAMBERS ASHRAM ROAD AHMEDABAD (APPELLANT) (RESPONDENT) 2 IT(SS)A NO.63/AHD/2005 BLOCK PERIOD:1-4-1995 TO 26-2-2002 RAJENDRA M. VYAS VS THE A. C. I. T. CC-1(2) PROP. SUNITA CONSTRUCTION ROOM NO.305 3 RD FLOOR 10-11 PARSHWANATH CHAMBERS AAYAKAR BHAVAN ASHRAM ROAD AHMEDABAD ASHRAM ROAD AHMEDABAD (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI S. K. GUPTA CIT DR ASSESSEE BY : SHRI N. C. AMIN AR DATE OF HEARING: 13-1-2012 DATE OF PRONOUNCEMENT: 30-03-2012 O R D E R PER A. MOHAN ALANKAMONY: 1. THESE ARE FOUR APPEALS (I) TWO APPEALS BY THE ASSESSEES AND (II) ANOTHER TWO A PPEALS BY THE REVENUE ARE DIRECTED AGAINST THE IMPUGNED ORDERS OF THE CIT (A) AHMEDABAD IN: (I) APPEAL NO. CIT(A)-I/CC 1(2)/03/04-05 DATED 31.1 2.2004 IN THE CASE OF SHRI MANUBHAI P VYAS FOR THE BLOCK PERI OD 1.4.1996 TO 26.2.2002; (II) APPEAL NO. CIT(A)-I/CC 1(2)/33/03-04 DATED 29. 12.2004 IN THE CASE OF SHRI RAJENDRA M VYAS FOR THE BLOCK PERI OD 1.4.1995 TO 26.2.2002; & (III) APPEAL NO. CIT (A)-I/CC 1(2)1/05-06 DATED: 25 .1.2006 IN THE CASE OF SHRI RAJENDRA M VYAS FOR THE BLOCK PERIOD /98 TO 26/2/2002; & 3 I IT (SS)A 52/A/2005 BY SHRI MANUBHAI P VYAS: 2. THE ASSESSEE IN HIS GROUNDS OF APPEAL HAD OBJ ECTED TO THE IMPUGNED ORDER IN AN ILLUSTRATIVE AND NARRATIVE MANNER RUNNING INTO 21 GROUNDS. IN THIS CONNECTION THE ASSESSEES SPECIFIC ATTENTION IS INVITED TO THE RULE 8 OF THE INCOME-TAX (APPELLA TE TRIBUNAL) RULES 1963 WHEREIN IT HAS BEEN PRESCRIBED UNDER THE CAPTI ON CONTENTS OF MEMORANDUM OF APPEAL THAT 8. EVERY MEMORANDUM OF APPEAL SHALL BE WRITTEN IN ENGLISH AND SHALL SET FORTH CONCISELY AND UNDER DISTINCT HEADS THE GROUNDS OF APPEAL WITHOUT ANY ARGUMENT OR NARRATIVE; AND SUCH GROUNDS SHALL BE NUMBERED CONSECUTIVELY . 2.1. TURNING TO THE ISSUES ON HAND TO BE PRECISE THE GRIEVANCES OF THE ASSESSEE ARE REFORMULATED IN A C ONCISE MANNER AS UNDER: GR. NO.1 (GROUND NOS.1 TO 4 17 & 18) THE CIT (A) ERRED I N UPHOLDING THE PROCEEDINGS INITIATED BY THE AO U/S 1 58BC OF THE ACT AND THE ASSESSMENT CO NCLUDED U/S 158BC R.W.S. 143(3) OF THE ACT; GR. NO.2 (GROUND NOS.5 TO 9) THAT THE CIT (A) HAD ERRED IN CONFIRMING THE ADDITION OF RS.15 00 000/- SUBSTANTIVE BASIS; GR. NO.3 (GROUND NOS.10 TO 16) THAT THE CIT (A) HAD ERRED IN CONFIRMING THE ADDITIONS OF RS 4 35 000/- RS.81 850/- AND RS. 8 LAKHS BEING UNACCOUNTE D MONEY ADVANCED AND INTEREST AND UNACCOUNTED RECEIPT S; 4 GR. NO.4 (GROUND NO.19) CHARGING OF INTEREST U/S 158BFA(1) OF THE ACT; & GR. NO.5 (GROUND NO.20) INITIATION OF PENAL PROCEEDINGS U/ S 158BFA (2) OF THE ACT. GR. NO.6 (GROUND NO.21) BEING GENERAL IT DOESNT QUALIFY FOR ADJUDICATION. II IT (SS)A 58/A/2005 BY THE REVENUE [SHRI RAJEND RA M VYAS BLOCK PERIOD 1.4.95 TO 26.2.2002]: (1) THE CIT (A) HAD ERRED IN DELETING THE ADDITION OF RS.15 LAKHS MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN A PROP ERTY AT TRAGAD; (2) THE CIT (A) ERRED IN DELETING THE ADDITION OF R S.11.85 630/- MADE ON ACCOUNT OF UNACCOUNTED RECEIPTS FROM AMCO B ANK; & (3) AS THE GROUNDS RAISED IN 3 & 4 BEING GENERAL AN D NO SPECIFIC ISSUES INVOLVED THEY HAVE BECOME INCONSEQUENTIAL. III IT (SS)A 59/A/2006 BY THE REVENUE [SHRI RAJENDRA M VYAS]: (1) A SOLITARY GROUND BEING THAT THE CIT (A) HAD ER RED IN DELETING THE ADDITION OF RS.12 38 815/- ON ACCOUNT OF ON MO NEY RECEIPTS; (2) THE OTHER TWO GROUNDS RAISED DO NOT SURVIVE FOR CONSIDERATION AS THEY WERE IN GENERAL AND WITH NO SPECIFIC ISSUES INVOLVED. IV IT (SS)A 63/A/2005 BY THE ASSESSEE [SHRI RAJEN DRA M VYAS BLOCK PERIOD 1.4.95 TO 26.2.2002]: 5 THE TWENTY NINE GROUNDS RAISED BY THE ASSESSEE ARE REFORMULATED KEEPING IN VIEW THE CONVENIENCE AND CLARITY AS UNDER: GR. NO.1 (GROUND NOS.1 28 & 29) BEING GENERAL NO ADJUDI CATION WAS WARRANTED; GR. NO.2 (GROUND NOS.2 TO 8) THE CIT (A) ERRED IN CONFIRM ING THE ADDITION OF RS.64 45 000/- BEING EXCESSIVE INVESTMENT; GR. NO.3 (GROUND NOS. 9 TO 11) THE CIT (A) ERRED IN DIREC TING TO DELETE THE AMOUNT FROM ADDITION OF RS.27 97 069/- WITHOUT SIMULTANEOUSLY DELETING THE ADDI TION; GR. NO.4 (GROUND NOS.12 TO 19) THE CIT (A) ERRED IN CONFI RMING THE ADDITIONS OF RS.30 30 000/- AND RS.9 65 000/-; GR. NO.5 (GROUND NOS.20 TO 23) THE CIT (A) ERRED IN CONFI RMING THE ADDITION OF RS.3 LAKHS; GR. NO.6 (GROUND NO. 24) THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.24 07 923/- ON AC COUNT OF CREDITS IN AMCO BANK ACCOUNT; GR. NO.7 (GROUND NOS. 25 TO 27) THE CIT (A) ERRED IN CON FIRMING THE ADDITION OF RS.16 73 342/- H OLDING THAT IT WAS NOT OFFERED FOR TAX ON THE INCOME ES TIMATED U/S 44AD OF THE ACT AT THE RATE OF 8% ON TOTAL C ONSTRUCTION WORK CARRIED OUT BY THE ASSESSEE. 3. DURING THE COURSE OF HEARING THE ASSESSEE [SHR I RAJENDRA M VYAS FOR THE BLOCK PERIOD 1.4.1995 TO 26.2.2002] HAD SOUGHT THE PERMISSION OF THIS BENCH TO PLACE ADDITI ONAL GROUNDS OF APPEAL VIDE HIS APPLICATION DATED 24.11.2011 ON WHI CH THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 6 1. THAT THE VALIDITY OF SEARCH IS A SINE QUA NON F OR INITIATING BLOCK ASSESSMENT AND THOUGH THE APPELLANT CANNOT PREFER A N APPEAL AGAINST THE AUTHORIZATION OF SEARCH AND SEIZURE ONCE UNAUT HORIZED OR ILLEGAL SEARCH AND SEIZURE CULMINATES IN ASSESSMENT ORDER THE APPELLANT HAS A RIGHT TO CHALLENGED ASSESSMENT ON SEVERAL GROUNDS INCLUDING THE VALIDITY OF AUTHORIZATION AND INITIATION AND SEARCH SEIZURE; 2. THAT THE APPELLANT HAS RAISED LEGAL GROUNDS REGA RDING VALIDITY OF SEARCH FOR INITIATING OF PROCEEDINGS U/S 158BC WHIC H IS NOT IN ACCORDANCE WITH THE LAW AND WITHOUT ANY MATERIAL OR INFORMATION AS CONTEMPLATED U/S 132 AND 132(1) AND THEREFORE WHO LE PROCEEDINGS ARE AB INITIO VOID AND ILLEGAL; 3. THAT THE APPELLANT HAS RAISED GROUND NOS.4 TO 6 BEFORE LEARNED CIT (A HAS DECIDED THESE GROUNDS HOLDING IT AS NOT IN ACCORDANCE WITH LAW AND THEREFORE REJECTED; 4. THESE GROUNDS GOES TO THE ROOT OF THE INITIATION OF PROCEEDINGS AND ASSESSMENT WHICH NEED NOT REQUIRE ANY MATERIAL FACT S FOR DISPOSAL AND CONSIDERING THESE LEGAL GROUNDS IT MAY BE DECID ED ON MERITS; & 5. YOUR APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND ANY OF THE GROUNDS TILL THE APPEAL IS FINALLY HEARD AND DECIDE D. 3.1. AFTER HEARING THE RIVAL SUBMISSIONS ON THE IS SUE THE PERMISSION SOUGHT BY THE ASSESSEE TO RAISE THE ADDI TIONAL GROUNDS HAS BEEN ACCEDED TO AND THE REGISTRY WAS DIRECTED T O PLACE THE ADDITIONAL GROUNDS OF THE ASSESSEE ON RECORD. 3.2. AS THE ISSUES RAISED IN THESE APPEALS BY EITH ER PARTY BEING INTER-LINKED TO THE SAME ASSESSEE THEY WERE HEARD CONSIDERED AND DISPOSED OFF FOR THE SAKE OF CONVENIENCE AND C LARITY IN THIS COMMON ORDER. 7 4. WE SHALL NOW DEAL WITH THE ISSUES RAISED CHRON OLOGICALLY IN THE FOLLOWING MANNER: I IT (SS)A 52/2005 BY SHRI MANUBHAI P VYAS: 5. THE ASSESSEE WAS DEALING IN LANDS. BY ISSUANCE OF A NOTICE U/S 158BC OF THE ACT DATED 20.2.2004 THE AS SESSEE WAS REQUIRED TO FURNISH A RETURN AND ACCORDINGLY HE H AD FURNISHED A RETURN DISCLOSING UNDISCLOSED INCOME AT NIL ON 16.3 .2004. AFTER EXAMINING THE MATERIALS UNEARTHED AT THE RESIDENCE OF THE SON OF THE ASSESSEE ON 26.2.2002 CONSIDERING THE ASSESSEES C ONTENTIONS IN RESPONSE TO THE QUERIES AND FOR THE REASONS RECORDE D ELABORATELY IN HIS IMPUGNED ORDER UNDER DISPUTE THE AO HAD MADE THE FOLLOWING ADDITIONS AMONG OTHERS UNDER VARIOUS HEADS NAMEL Y: (I) UNACCOUNTED INVESTMENT PROPERTIES AT TRAGAD (PROTECTIVELY) RS.15 00 000 (II) UNACCOUNTED RECEIPTS/EXPENSES RS. 4 35 000 (III) UNACCOUNTED PRINCIPALS & INTEREST RS. 81 150 (IV) UNEXPLAINED RECEIPTS RS. 8 00 000 6. AGGRIEVED THE ASSESSEE TOOK UP THE ISSUES AMO NG OTHERS BEFORE THE CIT (A) FOR RELIEF. CONSIDERING THE CONTENTIONS PUT FORTH BY THE ASSESSEE REPORT OF THE AO AND FOR THE REASONS RECORDED THEREIN THE CIT (A) HAD DEALT WITH THE ISSUES AS U NDER: 8 6.1. WITH REGARD TO THE INITIATION OF PROCEEDINGS U/S 158BC R.W.S. 158BD OF THE ACT IT WAS CLAIMED BY THE ASSE SSEE THAT THERE WAS NO SEARCH WARRANT AGAINST THE ASSESSEE AND THE REFORE ORDER U/S 158BC OF THE ACT WAS AGAINST THE PROVISIONS OF THE ACT AND SUBSEQUENTLY IN HIS LETTER DATED 28.12.2004 THE AS SESSEE HAD STATED THAT THE ACIT CIRCLE 9 HAD ISSUED NOTICE U/S 158 BC DATED 20.4.2004 WHEREIN THE ACIT HAD SPECIFICALLY AND CLE ARLY STATED REGARDING APPLICABILITY OF PROVISIONS OF S.158BD AN D ALSO REQUIRED TO FURNISH HIS RETURN OF INCOME IN FORM NO.2B U/S 158B D AND ACCORDINGLY THE RETURN WAS FILED AND ON THE BASIS O F WHICH SUBSEQUENT PROCEEDINGS HAVE BEEN CONTINUED. IT WAS FURTHER SUBMITTED THAT THE FUNDAMENTAL PROCEEDINGS WERE ITSELF NOT IN ACCORD ANCE WITH THE LAW AND AS SUCH THE ASSESSMENT DESERVES TO BE CANCELL ED ETC. HOWEVER THE AO IN HIS REPORT DATED 31.12.2004 HAD CLARIFIED THAT IN THE CASE OF ASSESSEE A WARRANT WAS EXECUTED ON THE LOCKER NO.422 A CLASS AT CENTRAL BANK OF INDIA KANKARLA BRANCH MANINAGAR AHMEDABAD IN THE NAMES OF SITABEN M VYAS AND MANUBH AI P VIYAS THAT THE FACT WAS EVIDENT FROM THE PANCHNAMA WHICH WAS PREPARED ON 8.3.2002 (COPY OF WHICH WAS ENCLOSED) AND THUS TH E ASSESSEES SUBMISSION DOES NOT SURVIVE ETC. 9 6.2. ON A CAREFUL CONSIDERATION OF THE CONTENTION OF THE ASSESSEE AS WELL AS THE REASONING OF THE AO THE CI T (A) HAD OBSERVED THUS: 2.1(ON PAGE 4) ON A CAREFUL CONSIDERATION OF ABOVE REPORT I AM OF THE VIEW THAT NOTICE U/S 158BC WAS JUSTIFIED AND NO REA SONS WERE TO BE RECORDED FOR SATISFACTION OF AO U/S 158BD OF THE I.T. ACT 1961. FURTHER I FIND THAT THE NOTICE ISSUED BY THE AO ON 20.2.2004 WAS SPECIFICALLY ISSU ED U/S 158BC. THE MENTION OF SECTION 158BD IN THE FIRST LINE OF THE SAID NOTICE IS MERELY AN ERROR WHICH DOES NOT MAKE IT INVALID IN VIEW OF PROVISIONS OF SECTIO N 292B OF I.T. ACT 1961. IT IS VERY MATERIAL THAT APPELLANT HAS FILED HIS RETURN O F INCOME U/S 158BC. . THEREFORE THE OBJECTIONS NOW RAISED VIDE LETTER ON 30.12.04 ARE FOUND TO BE NOT JUSTIFIED. (I) PROTECTIVE ADDITION OF RS.15 LAKHS BEING INVEST MENT IN PROPERTIES: 3.2..I DO NOT FIND THE OBJECTIONS ACCEPTABLE IN VIEW OF THE FACT THAT THE SEIZED DOCUMENT DOES NOTE THE CASH TRANSACTION WHIC H HAVE NOT BEEN EXPLAINED BY THE APPELLANT AS RELATING TO ANY OTHER PERSON. IT IS ALSO A WELL KNOWN FACT THAT THE LAND IS OFTEN HELD THROUGH DOCUMENTS INDICATING POWER OF ATTORNEY. NOW UNLESS THE APPELLANT PROVES THAT THE TRANSACTIONS A RE OF ANY OTHER INDIVIDUAL THE AGREEMENT FOR LAND TRANSACTION IN HIS NAME WHERE CA SH PAYMENT OF RS.7 LAKHS IS EVIDENCED IT IS TO BE HELD TO HAVE BEEN PAID BY AP PELLANT. EVEN THE LATER CHANGE IN POWER OF ATTORNEY HOLDING WOULD THEN BE SAFELY H ELD TO BE A SALE MADE BY THE APPELLANT. CLAIM OF MERELY BEING A MANAGER IS NOT PROVED BY THE PERSON AHMEDKHAN SADATKHAN AND REASON FOR CASH PAYMENT BY APPELLANT IS NOT EXPLAINED. IN FACT LATER RECEIPT OF RS.8 LAKH IN CASH (DEALT WITH IN GROUND OF APPEAL NOS.18 TO 20) MAY ALSO BE LINKED TO THIS APP ARENT CHANGE IN POWER OF ATTORNEY FOR THE SEIZED DOCUMENT DISCUSSED BY THE A O THE ADDITION MADE IS UPHELD ON SUBSTANTIVE BASIS. (II)&(III) UNACCOUNTED RECEIPTS/EXPENSES OF RS.4.35 LAKHS & UNACCOUNTED PRINCIPLES AND INTEREST OF RS.81 150/- : 4.2.I FIND THAT APPELLANTS EXPLANATION IS NO T BACKED WITH ANY DOCUMENTARY EVIDENCE OF ANY SORT THAT WOULD PROVE T HAT HE ACTUALLY BORROWED MONEY OR SOLD JEWELLERY. ALSO THE CHIT NO.IV REFE RS TO VARIOUS FIGURES TOTALING 435 AND ONE FIGURE IS 15 LITE BILLS/TEL BILLS. THIS CERTAINLY CANNOT BE TAKEN AT FACE VALUE OF RS.15/- BEING FOR LIGHT AND TELEPHONE BILLS. THEREFORE TOO APPELLANTS EXPLANATION TO BE ACCEPTABLE. THERE IS NO DOUBT THAT APPELLANT HAS FAILED TO DISCHARGE ONUS U/S 132(4A) AND SO THE INT ERPRETATION BY THE AO IS FOUND TO BE JUSTIFIED AND LOGICAL. 10 (IV) UNEXPLAINED RECEIPTS OF RS.8 LAKHS: 6.2..I FIND THAT APPELLANT HAS SUO MOTO ADMITTE D THAT THE LAND IN QUESTION IS BEING SOLD BY POWER OF ATTORNEY. OBVIOUSLY IT HAS BEEN SOLD BY HIM THE ORIGINAL POWER OF ATTORNEY HOLDER AND THE DOCUMENT NEEDED TO BE PREPARED SHOWING TRANSFER BY ORIGINAL HOLDER OF LAND TO NEW POWER OF ATTORNEY HOLDER. THESE SUBMISSIONS OF APPELLANT IN FACT SUPPORT TH E AOS VIEWS AND MY FINDINGS FOR GROUNDS OF APPEAL NOS. 4-6 WHERE I HAVE SUSTAI NED THE ADDITION MADE FOR PURCHASE OF TRAGAD LAND ON SUBSTANTIVE BASIS. THE SE GROUNDS OF APPEAL ARE ALSO REJECTED AND ADDITION MADE IS UPHELD. 7. AGITATED THE ASSESSEE HAS COME UP WITH THE PRE SENT APPEAL. DURING THE COURSE OF HEARING THE SUBMISSI ONS MADE BY THE LD. A R ARE FOR APPRECIATION OF FACTS SUMMARIZED AS UNDER: - THAT THE CIT (A) HAD RELIED ON THE REPORT OF THE AO BUT FAILED TO CONSIDER THE FACT THAT NO ADDITION WHATSOEVER HAS B EEN MADE BY THE AO IN CONNECTION WITH THE CONTENT OF THE LOCKER AND THEREFORE THE PROCEEDINGS INITIATED IN THE HANDS OF THE APPELLANT WAS NOT LEGAL VALID AND IN ACCORDANCE WITH LAW AND HENCE PROCEEDINGS WERE AB INITIO VOID ILLEGAL AND CONTRARY TO THE PROVISIONS OF THE ACT; AND THAT THE PROCEEDINGS INITIATED U/S 158BC AND THE ASSESSMENT MADE U/S 158 BC R.W.S. 143(3) BE HELD AS ILLEGAL AND WITHOUT JU RISDICTION; . - THE ASSESSEE RELIES ON THE RULING OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF C RAMAIAH REDDY V ACIT REPORTE D IN 61 DTR 82 WITH REGARD TO THE LEGAL ISSUE BY CHALLENGING THE S EARCH PROCEEDINGS; - ALSO RELIES ON THE RULING OF HONBLE RAJASTHAN HI GH COURT ON AN IDENTICAL ISSUE IN THE CASE OF CIT V. SMT CHITRA DE VI SONE REPORTED IN 313 ITR 174 (RAJ) AND THE SLP OF THE DEPARTMENT WA S ALSO DISMISSED AND THEREFORE THE LEGAL POSITION VIZ. WH ETHER THE TRIBUNAL DOES HAVE A POWER TO DECIDE THE LEGALITY AND PROPRI ETY OF RAID U/S 132 OF THE ACT REMAINS NO LONGER RES INTEGRA IN THE LIG HT OF THE RULING IN THE CASE OF CHITRA DEVI WHICH WAS UPHELD BY THE HONBLE SUPREME COURT AND THE DISMISSAL OF SLP OF THE REVENUE AGAINST THE RULING OF HONBLE HIGH COURT IN (2009) 313 ITR (ST) 28; 11 - WITH REGARD TO THE CONFIRMING THE ADDITION OF RS. 15 LAKHS ON SUBSTANTIVE BASIS THE CIT (A) HAD FAILED TO PERUS E THE DOCUMENTARY AND LEGAL EVIDENCES FURNISHED DURING THE COURSE OF APPELLATE PROCEEDINGS; - THAT THE AO HAD NOT BROUGHT ANY MATERIAL ON RECO RD AND MERELY ON ASSUMPTION MADE THE ADDITIONS WHICH WAS CONFIRMED B Y THE CIT (A) 7.1. IN CONCLUSION THE LD. A R HAD VEHEMENTLY ARG UED THAT THE PROCEEDINGS INITIATED IN THE CASE OF THE ASSESS EE WAS NOT LEGAL VALID AND IN ACCORDANCE WITH LAW AND THEREFORE TH E PROCEEDINGS CONCLUDED WERE AB INITIO VOID ILLEGAL AND CONTRARY TO THE PROVISIONS OF THE ACT. DURING THE COURSE OF THE HEARING THE LD. AR HAD FURNISHED VOLUMINOUS PAPER BOOKS CONTAINING VARIOUS CORRESPON DENCES ENTERED INTO WITH THE AUTHORITIES BELOW AND ALSO COPIES OF VARIOUS DOCUMENTS ETC. THE LD. A R HAD ALSO PLACED RELIANCE ON VARIO US CASE LAWS IN SUPPORT OF THE ASSESSEES CLAIM. 7.1.1. ON THE OTHER HAND THE LD. D R FIRMLY ARGU ED THAT THE LD CIT (A) WAS WITHIN HER REALM TO ASSERT THAT THE ISS UANCE OF NOTICE U/S 158BC OF THE ACT BY THE AO WAS JUSTIFIED AND NO REA SONS WERE TO BE RECORDED FOR SATISFACTION OF THE AO U/S 158BD OF TH E ACT AND HE HAD ALSO JUSTIFIED THE REASONING OF THE CIT (A) THAT WR ONGLY MENTIONING OF S. 158D OF THE ACT IN THE SAID NOTICE BY THE AO DOE SNT VITIATE THE PROCESS IN LIEU OF THE PROVISIONS OF S.292B OF THE ACT. 12 7.1.2. WITH REGARD TO THE VALIDITY OF THE SEARCH [ ADDITIONAL GROUND IN THE CASE OF RAJENDRA M VYAS WHO IS THE LEGAL HEI R OF THE PRESENT ASSESSEE] THE ASSESSEE CITING THE RULING OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF C. RAMAIYA REDDY V. ACIT [244 CTR 126 (KAR)] SUBMITTED THAT IT IS OBLIGATORY ON THE PART OF THE TRIBUNAL TO GO INTO THE JURISDICTIONAL ASPECT AND SATISFY ITSELF T HAT THE SEARCH WAS VALID AND LEGAL AND ONLY THEREAFTER IT COULD GO INT O THE CORRECTNESS OF THE BLOCK ASSESSMENT ORDER ETC. THE LD D R COUNTER ED THE ASSESSEES ASSERTION BY QUOTING THE RULING OF THE I TAT MADHYA PREADESH (SIC) HONBLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF GAYA PRASAD PATHAK V. ACIT REPORTED IN 290 ITR 12 8 (MP)/(2007) 209 CTR 74 (MP) WHEREIN IT WAS HELD THAT THE VALIDITY OF SEARCH AND SEIZURE IS NEITHER JURISDICTIONAL FACT NOR ADJUDICA TORY FACT AND THEREFORE THE SAME CANNOT BE DWELLED UPON OR DELVE D INTO IN AN APPEAL. AND ALSO TAKING CUE FROM THE RULING OF THE HONBLE DELHI HIGH COURT IN THE CASE OF S.K. INDUSTRIES V. DGIT ( INV) REPORTED IN (2007) 290 ITR 359 (DEL) THE LD. D R ARGUED THAT I N THE PRESENT CASE ALSO IF THE ASSESSEE WAS OF THE VIEW THAT THE SEAR CH WAS INVALID THEN THE ASSESSEE SHOULD HAVE FILED A WRIT PETITION BEFO RE THE HIGH COURT CHALLENGING THE VALIDITY OF THE SEARCH CONDUCTED ON 26.2.2002; THAT 13 THE ASSESSEE DID NOT CHALLENGE THE VALIDITY AT THAT TIME OF THE SEARCH WAS IMPORTANT AND JUST BECAUSE THERE WAS A DECISION OF THE HONBLE KARNATAKA HIGH COURT THE ASSESSEE CANNOT CHALLENGE THE VALIDITY OF THE SEARCH AFTER A LAPSE OF NINE YEARS. THE D R HA D THEREFORE FORCEFULLY ARGUED THAT THE ADDITIONAL GROUND SHOULD NOT HAVE BEEN ENTERTAINED AT THE INITIAL STAGE ITSELF. THE LD D R DREW THE ATTENTION OF THIS BENCH TO THE RECENT RULING OF THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF NEESA LEISURE LTD V. UNION OF INDIA REPORTED 338 ITR 460 (GUJ) THAT THE LEGALITY OF THE SEARCH BY WAY OF WRIT PETITION. 7.1.3. IN CONCLUSION IT WAS URGED BY THE REVENUE THAT THE REMEDY LIES BY WAY OF A WRIT PETITION BEFORE THE HO NBLE HIGH COURT AND NOT BY WAY OF APPEAL BEFORE THE TRIBUNAL AND IN VIEW OF THE ABOVE THE ADDITIONAL GROUND OF APPEAL OF THE ASSES SEE DESERVES NO MERIT WHICH REQUIRES TO BE DISMISSED AND THE APPEAL S BE ADJUDICATED ON MERITS. 7.2. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS METICULOUSLY PERUSED THE RELEVANT CASE RECORDS THE DOCUMENTARY EVIDENCES ADVANCED BY THE LD. A R IN THE SHAPE OF P APER BOOKS AND ALSO THE NUMEROUS CASE LAWS QUOTED BY EITHER PARTY IN THEIR FAVOUR. 14 7.2.1. BEFORE VENTURE TO ADJUDICATE THE I SSUES ON MERITS WE WOULD LIKE TO DEAL WITH THE VALIDITY OF SEARCH AND INITIATION OF PROCEEDINGS U/S 158 BC OF THE ACT WHICH HAS BEEN RA ISED BY SHRI RAJENDRA M VYUS WHO IS THE LEGAL HEIR OF THE PRESEN T ASSESSEE. 7.3. GROUND NO. 1: BRIEFLY STATED SEARCH AND SEIZURE OPERATION TOOK PLACE IN THE RESIDENCE OF SHRI RAJEN DRA M VYUS - SON OF THE ASSESSEE - ON 26.2.2002 AND AS PER THE SEIZ ED MATERIALS [PAGE 36 OF ANNEXURE A 3] IT WAS NOTICED THAT TH ERE WAS AN INVESTMENT OF RS.15 LAKHS [RS.8 + 7 LAKHS] IN SURVE Y NO.305 OF TRAGAD AD-MEASURING 7200 SQ.YDS IN THE NAME OF THE ASSESSEE AND ALSO BASED ON THE PERUSAL OF OTHER SEIZED MATERIALS IT WAS FURTHER NOTICED BY THE AO THAT THE ASSESSEE HAD MADE MONEY TRANSACTIONS UNACCOUNTED INVESTMENTS UNACCOUNTED RECEIPTS ETC. TO FURTHER VERIFY THE VERACITY OF SUCH TRANSACTIONS THE AO IS SUED A NOTICE U/S 158BC OF THE ACT CALLING FOR HIS RETURN OF INCOME F OR THE BLOCK PERIOD FROM 1.4.1996 TO 26.2.2002. IN COMPLIANCE THE ASS ESSEE HAD FURNISHED A RETURN DISCLOSING UNDISCLOSED INCOME A T RS. NIL. HOWEVER FOR THE REASONS RECORDED THEREIN THE AO H AD CONCLUDED THE ASSESSMENT U/S 158BC R.W.S. 143(3) OF THE ACT AT R S.30 46 150/-. IT WAS CONTENDED BEFORE THE CIT (A) THAT THE AO HAD NO T RECORDED 15 REASONS FOR HIS SATISFACTION PRIOR TO INITIATION OF PROCEEDINGS U/S 158BC R.W.S.158BD OF THE ACT AND THEREFORE THE IM PUGNED ORDER OF THE AO WAS ILLEGAL INVALID WHICH REQUIRES TO BE CA NCELLED. HOWEVER THE CIT (A) TOOK A STAND THAT ISSUANCE OF NOTICE U/ S 158BC OF THE ACT WAS JUSTIFIED AND NO REASONS WERE TO BE RECORDED FO R SATISFACTION OF AO U/S 158BD OF THE ACT AND THAT THE NOTICE ISSUED BY THE AO ON 20.2.2004 WAS SPECIFICALLY U/S 158BC OF THE ACT AND ALSO THE MENTIONING OF S.158BD IN THE FIRST LINE OF THE SAID NOTICE WAS MERELY AN ERROR WHICH DOES NOT VITIATE ANYWAY THE PROCES S IN VIEW OF THE PROVISIONS OF S.292B OF THE ACT. 7.3.1. HOWEVER THE LEGAL HEIR OF THE ASSESSEE (SH RI RAJENDRA M VYAS) HAD RAISED OBJECTION THROUGH ADDITIONAL GROUN D THAT THE VALIDITY OF SEARCH FOR INITIATING OF PROCEEDINGS U/S 158BC W AS NOT IN ACCORDANCE WITH THE LAW AND WITHOUT ANY MATERIAL OR INFORMATION AS CONTEMPLATED U/S 132 AND 132(1) OF THE ACT. 7.3.2. AT THIS JUNCTURE WE WOULD LIKE TO RECALL T HAT THE INITIATION OF SEARCH AND SEIZURE OPERATION WAS CARRIED OUT NOT BY THE ASSESSING OFFICER BUT BY THE INVESTIGATION WING IN CONSEQUE NCE TO INFORMATION IN ITS POSSESSION ETC. IN THIS CONNECTION THIS B ENCH WOULD LIKE TO REITERATE THAT IT IS NOT WITHIN THE PURVIEW OF THE TRIBUNAL TO UNEARTH THE 16 JUSTIFIABILITY OR OTHERWISE OF AN ACTION ENACTED U/ S 132 OF THE ACT. TO ILLUSTRATE FURTHER IT WOULD NOT BE A JURISDICTION AL FACT WITHIN THE PARAMETERS OF AN APPEAL THERE-FROM AND THAT IT CAN ONLY PARTAKE OF THE NATURE AND CHARACTER OF ADJUDICATORY FACT TO THE LI MITED EXTENT WHETHER SUCH SEARCH AND SEIZURE HAD TAKEN PLACE AND WHAT HA D BEEN FOUND DURING THE SEARCH AND SEIZURE AND THUS THE VALIDI TY OF SEARCH AND SEARCH WAS NEITHER JURISDICTIONAL FACT NOR ADJUDICA TORY FACT AND THEREFORE THE SAME CANNOT BE DWELLED UPON OR DELVE D INTO IN AN APPEAL [SOURCE: 290 ITR 128 (MP]. 7.3.3. FURTHER THE HONBLE JURISDICTIONAL HIGH CO URT IN ITS RECENT RULING IN THE CASE OF NEESA LEISURE LTD V. UNION OF INDIA REPORTED IN (2011) 16 TAXMANN.COM 163 (GUJ) HAS OBSERVED AS UNDER: FOR THE PURPOSE OF EXERCISE OF POWERS UNDER SECTIO N 132 TWO CONDITIONS PRECEDENT ARE REQUIRED TO BE SATISFIED. THE FIRST C ONDITION IS THAT THE CONCERNED OFFICER MUST HAVE SOME INFORMATION IN HIS POSSESSIO N AND THE SECOND CONDITIONS FOR EXERCISE OF THE POWER TO ORDER SEARCH EXIST. T HE BASIS FOR EXERCISE OF POWER MUST BE SOME MATERIAL WHICH CAN BE REGARDED AS INFO RMATION WHICH MUST EXIST ON THE FILE ON THE BASIS OF WHICH THE AUTHORIZING O FFICER CAN HAVE REASON TO BELIEVE THAT ACTION UNDER SECTION 132 P IS CALLED F OR. SUCH INFORMATION SHOULD BE FAIRLY RELIABLE AND SHOULD NOT BE A MERE RUMOUR OR AN UNVERIFIED PIECE OF GOSSIP OR A HUNCH. THE COURT THEREFORE WHILE EXAMINING THE VALIDITY OF THE AUTHORIZATION ISSUED UNDER SECTION 132 WOULD FIRST LY BE REQUIRED TO EXAMINE AS TO WHETHER THERE EXISTS ANY INFORMATION OF THE NATURE REFERRED TO HEREINABOVE IN THE POSSESSION OF THE CONCERNED OFFICER ON THE BASIS O F WHICH HE COULD HAVE FORMED A REASON TO BELIEVE. THE NEXT REQUIREMENT WHICH WOUL D BE REQUIRED TO BE SATISFIED IS AS TO WHETHER BEFORE ISSUANCE OF THE AUTHORIZATI ON THE CONCERNED OFFICIAL HAS RECORDED THE REASONS FOR HIS BELIEF. IF REASONS HA VE BEEN RECORDED THE OPINION WHICH HAS TO BE FORMED BEING SUBJECTIVE THE JURISD ICTION OF THE COURT TO INTERFERE IS VERY LIMITED. THE COURT WILL NOT ACT AS APPELLA TE AUTHORITY AND EXAMINE METICULOUSLY THE INFORMATION IN ORDER TO DECIDE FOR ITSELF AS TO WHETHER THE ACT OF 17 ISSUANCE OF AUTHORIZATION UNDER SECTION 132 IS ARBI TRARY OR MALA FIDE OR WHETHER THE SATISFACTION RECORDED IS SUCH WHICH SHOWS LACK OF APPLICATION OF MIND ON THE PART OF THE APPROPRIATE AUTHORITY. THE REASON TO B ELIEVE MUST BE TANGIBLE IN LAW AND IF THE INFORMATION OR REASON HAS NO NEXUS WITH THE BELIEF OR THERE IS NO MATERIAL OR TANGIBLE INFORMATION FOR THE FORMATION OF THE BELIEF ACTION TAKEN UNDER SECTION 132 WOULD BE BAD IN LAW. IF REASONS H AVE BEEN RECORDED AND THE CONCERNED OFFICER IS SATISFIED THAT THERE IS REASON TO BELIEVE THE COURT CANNOT SIT IN APPEAL OVER THE DECISION OF THE SAID OFFICER REG ARDING THE EXISTENCE OF THE REASON TO BELIEVE NOR CAN THE COURT EXAMINE THE ADE QUACY OF THE GROUNDS ON WHICH THE REASON TO BELIEVE ENTERTAINED BY SUCH OFF ICER CAN BE SCRUTINIZED BY THE COURT. IF THE GROUNDS ON WHICH REASON TO BELIEVE IS FOUNDED ARE NOT RELEVANT TO THE SUBJECT-MATTER OF INQUIRY OR ARE EXTRANEOUS TO THE SCOPE AND PURPOSE OF THE STATUTE OR ARE SUCH AS NO RATIONAL HUMAN BEING CAN CONSIDER CONNECTED WITH THE FACT IN RESPECT OF WHICH THE BELIEF IS TO BE ENTERT AINED SO THAT NO REASONABLE MAN CAN COME TO SUCH A BELIEF THE EXERCISE OF THE POWE R WOULD BE BAD. IN APPROPRIATE CASES A WRIT PETITION MAY LIE CHALLENGING THE VALID ITY OF THE ACTION ON THE GROUND OF ABSENCE OF POWER OR ON A PLEA THAT PROCEEDINGS W ERE TAKEN MALICIOUSLY OR FOR A COLLATERAL PURPOSE. 7.3.4. AS RIGHTLY RULED BY THE HONBLE COURT (SUPR A) THE LEGALITY OR OTHERWISE OF SEARCH AND SEIZURE OPERATION U/S 13 2 OF THE ACT CAN BE CHALLENGED ONLY THROUGH A WRIT PETITION. 7.3.5. IN CONSONANCE WITH THE RULING OF THE HONBL E JURISDICTIONAL COURT (SUPRA) WE ARE OF THE CONSIDERED VIEW THAT T HE ADDITIONAL GROUND RAISED BY THE ASSESSEE CHALLENGING THE VALID ITY OR OTHERWISE OF SEARCH FOR INITIATION OF PROCEEDINGS U/S 158BC OF T HE ACT HAS NO LEGS TO STAND AND THAT TO DECIDE THE JUSTIFIABILITY OR O THERWISE OF SUCH AN ACTION U/S 132 OF THE ACT BY THE AUTHORITIES BELOW DOES NOT FALL WITHIN THE PURVIEW OF THIS BENCH. IT IS ORDERED ACCORDING LY. 18 7.3.6. BEFORE PARTING WITH THE ISSUE WE WOULD LIK E TO REITERATE THAT THE CASE LAWS RELIED UPON BY EITHER PARTY HAVE BEEN DULY PERUSED AND KEPT IN VIEW WHILE DECIDING THE ISSUE. WE SHALL NOW PROCEED TO ADJUDICA TE THE OTHER ISSUES ON MERITS CHRONOLOGICALLY. GROUND NO.2 ADDITION OF RS.15 LAKHS ON SUBSTANTIVE BASIS : 8. WE HAVE DULY CONSIDERED THE ELABORATE SUBMISSIO N MADE BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORIT Y AS REPRODUCED VERBATIM AND ALSO REASONING FOR UPHOLDING THE ADDIT ION ON SUBSTANTIVE BASIS BY HER IN HER IMPUGNED ORDER UNDER CONSIDERAT ION. DURING THE COURSE OF HEARING NO CREDIBLE DOCUMENTARY EVIDENCE WAS BROUGHT ON RECORD TO THWART THE REASONABLENESS OF THE CIT (A) S FINDING. WE ARE THEREFORE OF THE CONSIDERED VIEW THAT THERE WAS NO INFIRMITY IN HER CONCLUSION WHICH REQUIRES OUR INTERVENTION. THE IS SUE IS THEREFORE DECIDED AGAINST THE ASSESSEE. GR. NO3: CONFIRMING THE ADDITIONS OF RS 435000/- R S.81850 AND RS.8 LAKHS: 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E ASSESSEE HAD NEITHER GIVEN ANY COGENT REASONS NOR B OOKS OF ACCOUNTS PRODUCED FOR RECONCILIATION; IN STEAD HE H AD DISOWNED ANY TRANSACTIONS AS MENTIONED IN THE SEIZED MATERIALS. 19 9.1. DURING THE COURSE OF APPELLATE HEARING IT WA S SUBMITTED BY THE ASSESSEE ON PERUSAL OF THE DOCUMENTARY EVIDE NCES LYING IN SEIZED MATERIALS IT WOULD REVEAL THAT HE HAD IN F ACT BORROWED MONEY FOR PERSONAL EXPENDITURE AND THEREFORE THERE WAS NO QUESTION OF ADVANCING ANY MONEY TO ANYBODY AND THAT HE HAD BOR ROWED MONEY BY MORTGAGING OF HIS FAMILY ORNAMENTS AND THUS TH E ADDITIONS MADE REQUIRE TO BE DELETED. HE HAD FURTHER JUSTIFIED TH AT ON PAGE NO.4 OF THE SEIZED MATERIAL THERE WAS A NOTING OF ONLY RS. 435/- WHEREAS THE AO HAD ADDED RS.435000/- ASSUMING THAT RS.435/- AS RS.4 35 000/-. LIKEWISE THE AO HAD ADDED RS.69125/- AND INTEREST THEREON RS.11925/- AGGREGATING TO RS.81 150/- ON THE PREMIS E THAT THE ASSESSEE HAD UNACCOUNTED INVESTMENT AND INTEREST TH EREON. WITH REGARD TO THE ADDITION OF RS.8 LAKHS AS UNACCOUNTED RECEIPTS IT WAS CONTENDED THAT ON PERUSAL OF PAGE 36 OF ANNEXURE A- 3 IT EXHIBITS THAT THERE WAS NO EVIDENCE THAT THE ASSESSEE HAD RECEIVE D ALLEGED UNACCOUNTED MONEY OF RS.1 LAKH ON 27.9.97 AND RS.7 LAKHS ON 28.12.97. IT WAS CLEARLY STATED THAT THE ASSESSEE WAS ONLY A POWER OF ATTORNEY HOLDER OF TRAGAD PROPERTY AND THAT ONLY ON ASSUMPTION THE AO HELD THAT THE ASSESSEE WAS IN RECEIPT OF UNACCOU NTED MONEY WHICH WAS AGAINST THE DOCUMENTARY EVIDENCE ON RECOR D. IT WAS 20 FURTHER CLAIMED THAT THE POWER OF ATTORNEY GIVEN T O HIM WAS CANCELLED AND THE OWNER OF THE LAND HAD SOLD A PORTION OF LAN D TO OTHER PARTY BY APPOINTING ANOTHER PAH WHICH PROVES THAT THE ADDITI ON MADE WAS NOT TENABLE IN LAW. IT WAS FURTHER ARGUED THAT EVEN ON PAGE 36 THERE WAS NO NAME OF MANUBHAI VYAS PAID RS.1 LAKH ON 27.9 .97 AND RS.7 LAKHS ON 28.12.97 AS ALLEGED BY THE AO. 9.2. WE HAVE DULY CONSIDERED THE SUBMISSION OF THE ASSESSEE AND ALSO REASONING OF THE AUTHORITIES BELOW IN ADDI NG THE ADDITIONS TO THE ASSESSEES TOTAL INCOME. 9.2.1. THE ASSESSEE HAD CONTENDED BEFORE THE FIRST APPELLATE AUTHORITY THAT ON PAGE NO.4 IT WAS MENTIONED ONLY A N AMOUNT OF RS.435/- HOWEVER ON THE ASSUMPTION THE AO HAD AD DED RS.4 35 000/- WITHOUT PROPERLY VERIFYING THE FACTS . AT THIS JUNCTURE WE WOULD LIKE TO REITERATE THAT THE ASSESSEE HAD NO T COME OUT WITH ANY PLAUSIBLE DOCUMENTARY EVIDENCE TO REBUT THE REA SONING OF THE AO. MOREOVER THE ASSESSEE HAD CLAIMED/EXPLAINED T HAT HE BORROWED MONEY OR PLEDGED/SOLD JEWELLERY TO RAISE T HE FUNDS. IF IT WERE TO BE SO WHAT HAD PREVENTED THE ASSESSEE TO F URNISH THE NAMES AND ADDRESSES OF THE PERSONS FROM WHOM HE HAD ALLEG EDLY BORROWED THE FUNDS AND TO WHOM HE HAD PLEDGED THE FAMILY ORN AMENTS TO RAISE 21 FUNDS? FURTHER CHIT NO. IV REFERRED TO VARIOUS F IGURES TOTALING TO 435 AND ONE OF THE FIGURES BEING 15 LITE BILLS/T EL. BILLS. AS PER THE ASSESSEES THEORY DOES IT MEAN THAT RS.15/- BEING FOR BILLS FOR LIGHT AND TELEPHONE CHARGES? AS RIGHTLY HIGHLIGHTED BY THE CIT (A) THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS CAST ON H IM U/S 132(4A) OF THE ACT EVEN AT THIS STAGE. IN THE ABSENCE OF ANY PLAUSIBLE DOCUMENTARY EVIDENCE TO REBUT THE STAND OF THE AUTH ORITIES BELOW WE ARE OF THE CONSIDERED VIEW THAT AS THE ASSESSEE HAD FAILED TO PROPERLY/SATISFACTORILY EXPLAIN THE GENERATION OF S UCH FUNDS AND ACCORDINGLY SUSTAINED THE ADDITIONS MADE ON THIS C OUNT GR. NO.4 (GR NO.19) CHARGING OF INTEREST U/S 158BFA(1) OF THE ACT : 9.3. THIS GROUND IS NOT MAINTAINABLE AS CHARGING O F INTEREST U/S 158BFA (1) OF THE ACT IS MANDATORY AND CONSEQUENTIA L IN NATURE. GR. NO.5 (GR.20) INITIATION OF PENAL PROCEEDINGS U/S 158BFA (2) OF THE ACT . 9.4. INITIATION OF PENAL PROCEEDING U/S 158BFA (2) OF THE ACT WAS IN ITS INFANCY WHEN THE BLOCK ASSESSMENT PROCEE DING WAS CONCLUDED AND THEREFORE THIS GROUND IS NOT MAINTA INABLE. II IT (SS)A 58/2005 BY THE REVENUE [SHRI RAJENDRA M VYAS BLOCK PERIOD 1.4.95 TO 26.2.2002]: 22 10. THE FIRST GROUND OF THE REVENUE BEING THAT THE CIT (A) HAD ERRED IN DELETING THE ADDITION OF RS.15 LAKHS M ADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN A PROPERTY AT TRAGAD. FOR THE REASONS RECORDED IN HIS IMPUGNED ORDER THE AO HAD ADDED THE SAID AMOUNT OF RS.15 LAKHS TO THE BLO CK INCOME OF THE ASSESSEE BEING UNACCOUNTED INVESTMENT IN THE PROPER TIES AT TRAGAD. 10.1. AFTER CONSIDERING THE CONTENTIONS OF THE AS SESSEE DURING THE APPELLATE PROCEEDINGS THE LD. CIT (A) HAD DELE TED THE ADDITION FOR THE REASONING THAT: 6.1. I HAVE IN THIS MATTER FOUND THAT IN APPEAL O F SHRI MANUBHAI P VYAS FATHER OF THE APPELLANT WHERE ADDITION WAS MADE OF THE SAM E AMOUNT ON PROTECTIVE BASIS. I HAVE UPHELD THAT ADDITION ON SUBSTANTIV E BASIS HOLDING THAT SHRI MANUBHAI P VYAS WHO WAS POWER OF ATTORNEY HOLDER OF THE TRAGAD LAND WAS THE ACTUAL OWNER OF THE LAND WHICH WAS PURCHASED ON POW ER OF ATTORNEY BASIS AND SUBSEQUENTLY FURTHER TRANSFERRED THE SAME LAND ON P OWER OF ATTORNEY BASIS. SINCE THE SAME ADDITION HAVE BEEN CONFIRMED ON SUBSTANTI VE BASIS IN THE HANDS OF THE APPELLANTS FATHER ADDITION MADE HERE IS FOUND TO BE NOT JUSTIFIED AND THE SAME IS DIRECTED TO BE DELETED. 10.2. THE SUBMISSION OF THE REVENUE DURING THE CO URSE OF HEARING WAS MERELY THAT THE CIT (A) HAD ERRED IN LAW AND ON FACTS IN DIRECTING TO DELETE THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE PROPERTY AT TRAGAD. 10.2.1. HOWEVER ON A PERUSAL OF THE RELEVANT CASE RECORDS AS WELL AS THE REASONING OF THE CIT (A) IN DELETING THE ADD ITION WE FIND THAT AN ADDITION OF RS.15 LAKHS MADE IN THE HANDS OF THE ASSESSEES 23 DECEASED FATHER LATE SHRI MANUBHAI P VYAS ON PROTE CTIVE BASIS WAS SUSTAINED BY THE CIT (A) SUBSTANTIVELY AND THEREFORE THE CIT(A)S WAS JUSTIFIED TO DELETE THE ADDITION OF THE SAME AM OUNT OF RS.15 LAKHS IN THE HANDS OF THE ASSESSEE OTHERWISE IT WOULD H AVE LED TO DOUBLE TAXATION OF THE SAME AMOUNT. 10.2.2. IN VIEW OF THE ABOVE FACTS WE ARE OF THE C ONSIDERED VIEW THAT THE STAND OF THE CIT(A) REQUIRES NO INTERVENTI ON OF THIS BENCH AT THIS JUNCTURE. IT IS ORDERED ACCORDINGLY. 10.3. THE OTHER GROUND OF THE REVENUE BEING THAT T HE CIT (A) ERRED IN DELETING THE ADDITION OF RS.11 85 630/- MA DE ON ACCOUNT OF UNACCOUNTED RECEIPTS FROM AMCO BANK. 10.3. THE STAND OF THE AO WAS THAT: 2.4 THE SUBMISSION OF THE ASSESSEE IS PERUSED CARE FULLY BUT CANNOT BE ACCEPTED AS: FROM THE LIST OF THE MEMBERS AND THE PAYMENTS SHOWN TO HAVE BEEN RECEIVED FROM THEM IT CAN BE SEEN THAT THE ASSESSEE HAS REC EIVED MONIES BY WAY OF ON- MONEY RECEIPTS IN THE BOOK OF THE SCHEME FOR SHOPS AS WELL AS FLATS AFTER 1.4.95 I.E. FOR THE PERIOD OF THE BLOCK. E AS REGARDS THE PAYMENT OF RS.17 85 630/- IS CONCER NED NOT A SINGLE RUPEE OUT OF THIS IS TAKEN TO THE BOOKS BY THE ASSESSEE ALTHOUG H THE MONEY HAS BEEN RECEIVED BY WAY OF CHEQUES FROM A FINANCIAL INSTITUTION. AN AMOUNT OF RS.10 LAKHS WAS RECEIVED BY THE ASSESSEE FROM AMCO BANK VIDE CHEQUE NO.9354 DTD 17/4/95 AND RS.1 85 630/- WERE RECEIVED BY HIM ON 1/7/1995 VIDE CHEQUE NO.028695. 6 LAKHS OUT OF THE TOTAL AMOUNT OF RS.17 85 630/- WAS RECEI VED IN THE FINANCIAL YEAR 94-95 WHICH IS NOT COVERED IN THE BLOCK PERIOD. THUS AN AMOUNT OF RS.11 85 630/- WAS RECEIVED BY HIM FROM THE AMCO BANK DURING THE BLOCK PERIOD. 24 10.3.1. AFTER DUE CONSIDERATION OF THE ASSESSEES C ONTENTIONS THE CIT (A) HAD DELETED THE ADDITION FOR THE FOLLOWING REASONS: 4.2.1. IN LUMP SUM THE FIRST ADDITION IS OF RS.19 25 890/- HELD TO BE ON MONEY RECEIVED FOR SHOP NOS.1 26 31 AND THE ENTIRE 1 ST FLOOR IN OCCUPATION OF AHMEDABAD MERCANTILE CO-OPERATIVE BANK. EACH OF TH ESE FOUR ITEMS IS DISCUSSED BELOW: .. (D) THE ADDITION OF RS.11 85 630/- ON ACCOUNT OF TH E ENTIRE 1 ST FLOOR TAKEN BY AMCO BANK LTD IS MADE BY THE AO ON ACCOUNT OF NO EN TRY MADE IN THE BOOKS OF ACCOUNTS FOR THE ENTIRE SUM OF RS.17 83 600/- (SIC) RS.17 85.630/- RECEIVED BY CHEQUES A SUM OF RS.6 00 000/- OUT OF THE SAME FAL LING PRIOR THE BLOCK PERIOD. IT IS ARGUED BY THE APPELLANT THAT THE BANK IS CURRENT LY RUNNING THE BUSINESS AND ENTRIES WERE MADE IN THE BOOKS OF THE SOCIETY FOR T HE SUMS RECEIVED AND THEREFORE THE ADDITION WAS NOT JUSTIFIED. THESE A RGUMENTS GIVEN ARE FOUND TO BE ACCEPTABLE. THE PAYMENT IS RECEIVED BY WAY OF CHEQ UES WHICH BEEN DULY ACCOUNTED FOR IN THE BOOKS OF THE SOCIETY AND THIS PAYMENT BY CHEQUE RECEIVED FROM BANK CANNOT BE TERMED AS ON MONEY FOR SALE O F OFFICE SPACE. THE ADVERSE COMMENTS MADE FOR THIS TRANSACTION ARE THEREFORE DIRECTED TO BE DELETED. 10.3.2. THE BRIEF SUBMISSION OF THE REVENUE DURING THE COURSE OF HEARING BEFORE THIS BENCH WAS THAT THE CIT (A) HAD ERRED IN LAW AND ON FACTS IN DIRECTING TO DELETE THE ADDITION MADE O N ACCOUNT OF UNACCOUNTED RECEIPTS FROM AMCO BANK. 10.3.3. WE HAVE DULY CONSIDERED THE SUBMISSIONS OF EITHER PARTY AND ALSO CAREFULLY PERUSED THE RELEVANT RECORDS. I T IS AN UNDISPUTED FACT THAT THE AMOUNT IN QUESTION HAS BEEN RECEIVED THROUGH CHEQUES AND ACCORDING TO THE CIT (A) THE RECEIPT OF WHICH BY WAY OF CHEQUES HAS ALSO BEEN ACCOUNTED FOR IN THE BOOKS OF THE SOC IETY. SUCH BEING THE SCENARIO THE RECEIPT OF SUCH PAYMENTS THROUGH CHEQUES CANNOT 25 BE CATEGORIZED AS ON MONEY FOR SALE OF OFFICE SPA CE AS BRANDED BY THE AO. IN VIEW OF THE ABOVE FACTS WE ARE IN AGRE EMENT WITH THE FINDING OF THE CIT (A) ON THIS POINT. IN ESSENCE THE DELETION OF ADDITION OF RS.11 85 630/- IS SUSTAINED. III IT (SS)A 59/2006 U/S 250 OF THE ACT BY THE REV ENUE [SHRI RAJENDRA M VYAS]: 11. THE SOLITARY GROUND RAISED BY THE REVENUE BEI NG THAT THE CIT (A) HAD ERRED IN DELETING THE ADDITION OF RS.12 38 815/- ON ACCOUNT OF ON MONEY RECEIPTS FOR 12 FLATS IN TOWE R B OF MANSI PROJECT BY ENTERTAINING THE ADDITIONAL EVIDENCES I N VIOLATION OF THE PROVISIONS OF RULE 46A OF I.T. RULES 1962. 11.1. WE HAVE DULY CONSIDERED THE SUBMISSION OF TH E REVENUE AS WELL AS PERUSED THE FINDINGS OF THE CIT(A) IN HE R IMPUGNED ORDER UNDER DISPUTE. 11.1.1 THE MAIN GRIEVANCE OF THE REVENUE WAS THAT T HE CIT (A) HAD CONTRAVENED THE PROVISIONS OF RULE 46A OF I.T. RULES WHILE ENTERTAINING THE ADDITIONAL EVIDENCE PURPORTEDLY AD VANCED BY THE ASSESSEE AT THE TIME OF APPELLATE PROCEEDINGS. 11.1.2. BEFORE VENTURE TO ADDRESS TO THE GRIEVANCE OF THE REVENUE WE SHALL HAVE A GLIMPSE AT THE RELEVANT PR OVISIONS OF RULE 46A AND FOR THE APPRECIATION OF FACTS THEY ARE EX TRACTED AS UNDER: 26 R.46A.PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE COMMISSIONER (APPEALS)-(1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFO RE THE COMMISSIONER (APPEALS) ANY EVIDENCE WHETHER ORAL OR DOCUMENTARY OTHER TH AN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE ASS ESSING OFFICER EXCEPT IN THE FOLLOWING CIRCUMSTANCES NAMELY:- (A) WHERE THE ASSESSING OFFICER HAS REFUSED TO ADMIT EV IDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY TH E ASSESSING OFFICER; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVIDENCE WHICH IS RELEVAN T TO ANY GROUND OF APPEAL; OR (D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPE ALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO A DDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE COMMISSIONER (APPEALS) RECORDS IN WRITING THE REASONS FOR ITS AD MISSION. (3) THE COMMISSIONER (APPEALS) SHALL NOT TAKE INTO ACCO UNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE ASSESSING OF FICER HAS BEEN ALLOWED A REASONABLE OPPORTUNITY- 11.1.3. REVERTING BACK TO THE ISSUE ON HAND THE CI T (A) IN HER FINDINGS HAD VOUCHED THAT 4.1.2. DURING THE COURSE OF APPEAL PROCEEDINGS THE APPELLANT HAD SUBMITTED WRITTEN SU BMISSIONS ON 27.4.04 19.10.04 AND LATER ON 5.11.04. THE MATTER HAS BEEN DISCUSSED AT GREAT LENGTH AND REPORT OF THE AO HAS ALSO BEEN OBTAINED ON THE VARIOUS SUBMISSIONS MADE.. THIS ASSERTION OF THE CIT (A) MAKES IT UNAMBIGUOUSLY EXHIBITS THAT TH E AO HAS BEEN FACILITATED TO HAVE A SAY ON THE SUBMISSIONS ADVANC ED BY THE ASSESSEE AT THE TIME OF APPELLATE PROCEEDINGS. THER EFORE THE ACTION 27 OF THE CIT (A) CANNOT BE TERMED THAT SHE HAD VIOLAT ED THE PROVISIONS OF RULE 46A OF I.T. RULES AS ALLEGED BY THE REVENUE . 11.1.4. AS COULD BE SEEN FROM THE FINDINGS OF THE C IT (A) THAT SHE HAD NOT DELETED THE ADDITION IN ONE GO AS APPREHENDED BY THE REVENUE IN STEAD THE AO HAS BEEN DIRECTED TO VERIFY FROM THE SEIZED DOCUMENTS THE DATE OF HANDING OVER OF THE PO SSESSION OF THESE VARIOUS FLATS AND TO REDUCE THE RECEIPT OF ON -MONEY BY THE AMOUNTS WHICH RELATE TO FLATS WHICH WERE HANDED OVE R PRIOR TO THE BLOCK PERIOD. ADVERSE FINDINGS TO THAT EXTENT WILL BE DELETED. 11.1.5. IN OUR CONSIDERED VIEW THE CIT (A) HAD NOT ADMITTED ANY ADDITIONAL EVIDENCE AS PROJECTED BY THE REVENUE IN STEAD THE AO HAS BEEN DIRECTED TO VERIFY FROM THE SEIZED DOCUMEN TS WHICH WERE IN THE POSSESSION OF THE DEPARTMENT ITSELF. THEREFORE THERE WAS NO CASE FOR THE REVENUE TO AGITATE THE DIRECTIONS OF T HE CIT (A). IT IS ORDERED ACCORDINGLY. IV IT (SS)A 63/2005 BY THE ASSESSEE [SHRI RAJENDR A M VYAS BLOCK PERIOD 1.4.95 TO 26.2.2002]: 12. THE ADDITIONAL GROUND WITH REGARD TO THE VALID ITY OF SEARCH FOR INITIATION OF PROCEEDINGS U/S 158BC OF THE ACT ETC. RAISED BY THE 28 ASSESSEE HAS SINCE BEEN DECIDED IN FAVOUR OF THE RE VENUE FOR THE REASONS RECORDED SUPRA (PARAS 7.3.3. 7.3.5 ). 13. GR. NO.2: IT WAS CONTENDED BY THE ASSESSEE THAT THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.64 45 00 0/- BEING EXCESSIVE INVESTMENT AND EXPENSES WHICH WERE GREATER THAN THE UNACCOUNTED INCOME WHICH THE CIT (A) HAD APPROVED WHICH WAS ILL EGAL AND INVALID IN LAW; THAT THE INCOME DETERMINED BY THE AO BY WOR KING OUT ALLEGED UNACCOUNTED ON MONEY WAS TOTALLY NOT IN ACCORDANC E WITH LAW AND THE PROVISIONS OF THE ACT. IT WAS FURTHER ARGUED THAT THE ALLEGED INCOME WORKED OUT BY THE AO FOR THE BLOCK PERIOD WA S MERELY ON ASSUMPTION EVEN THOUGH THE INCOME WAS NOT FALLING I N THE BLOCK PERIOD AND THE INCOME SHOWN HAVE ALSO BEEN TAXED WH ICH HAS NOT BEEN PROPERLY APPRECIATED BY THE CIT (A) WHILE DEAL ING WITH THE ISSUES. IT WAS FURTHER ARGUED THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH THE SOCIETY FOR CHARGING OF 3.5% REM UNERATION ON TOTAL WORK DONE AND THAT THE ASSESSEE HAD ACTED IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT AND ACCOR DINGLY FURNISHED HIS RETURNS OF INCOME; HOWEVER THE CIT (A) HAD NOT ACCEPTED THE CONTENTIONS OF THE ASSESSEE. FURTHER THE ASSESSEE HAD CONTENDED THAT EVEN THOUGH THE CIT (A) HAD DELETED THE ADDITI ON AS DISCUSSED IN 29 PARA 4.2. TO 4.2.2 OF HER IMPUGNED ORDER HOWEVER THE SAME HAS NOT BEEN DELETED FROM THE ALLEGED INVESTMENT MADE BY TH E ASSESSEE AND THEREFORE THE CIT (A) HAD ERRED IN SIMULTANEOUSLY NOT REDUCING FROM THE INVESTMENT. 13.1. THIS ISSUE HAS BEEN CONSIDERED BY THE CIT (A ) IN HER IMPUGNED ORDER UNDER CONSIDERATION. THE OBSERVATIO NS OF THE CIT (A) ARE EXTRACTED AS UNDER: 4.1. THIS MATTER HAS BEEN DISCUSSED AT LENGTH BY T HE AO IN PAGES 1 TO 7 OF THE ASSESSMENT ORDER. THE AO HAS HELD THE MANASI SCHEM E DEVELOPED FOR DHAVAL CO-OP HOUSING SOCIETY AND NANDAN CO-OP. HOUSING SOC IETY TO BE RUN IN AN EXCLUSIVELY PERSONAL FORMAT BY THE APPELLANT WHO WAS BOTH THE PRINCIPAL OFFICER AND CHAIRMAN FOR THE SOCIETIES AND THEIR DEVELOPER THOUGH THE FIRM OF M/S. SUNITA CONSTRUCTION. THE AO HELD THAT ALTHOUGH THE CLAIM WAS OF EARNING ONLY 3.5% OF THE COST OF SCHEME IT WAS THE APPELLANT WH O AS THE DEVELOPER WAS LIABLE TO EARN THE PROFIT AND LOSS FROM THE SCHEME AND SO WAS TO BE ASSESSED AS SUCH. THE AO HAS POINTED OUT THE RECEIPTS OF RS.19 95 890 /- FROM SALE OF SHOPS RS.11 66 101/- FROM SALE OF FLATS OF TOWER A OF SCH EME AND RS.27 97 069/- FROM SALE OF FLATS IN TOWER B TO BE ON MONEY RECEIVED IN THE BOOKINGS OF THE SHOPS AND FLATS. AFTER GIVING DETAILED SHOW-CAUSE NOTICE AND CONSIDERING THE SIMPLE EXPLANATION THAT PAYMENTS FOR SHOPS AND FLATS IN TO WERS A & B WERE RECEIVED AND ACCOUNTED FOR AND THAT AHMEDABAD MERCHANTILE C O-OP BANK HAD PAID FOR ENTIRE FIRST FLOOR A SUM OF RS.11 83 630/- BY CHEQ UES DIRECTLY TO THE SOCIETY AND THAT ALL AMOUNTS RECEIVED WERE ENTERED INTO THE BOO KS OF ACCOUNTS OF THE SOCIETIES THE AO ARRIVED AT THE CONCLUSION THAT TH E ASSESSEE HAD ACTUALLY EARNED ON MONEY WHICH HAD NOT BEEN ENTERED IN THE BOOKS OF ACCOUNTS NOR IT HAD BEEN DISCLOSED FOR THE PURPOSE OF TAXATION. 4.1.1. HOWEVER AFTER CALCULATING THE UNDISCLOSED I NVESTMENTS/EXPENSES BY THE AO WHEREBY THAT AMOUNT AT RS.64 45 000/- WAS FOUND TO BE GREATER THAN THE UNDISCLOSED INCOME OF RS.58 89 060/- NO ADDITION W AS SEPARATELY MADE TOWARDS UNDISCLOSED INCOME. 4.1.2. DURING THE COURSE OF APPEAL PROCEEDINGS THE APPELLANT HAD SUBMITTED WRITTEN SUBMISSIONS ON 27.9.04 19.10.04 AND LATER ON 5.11.04. THE MATTER HAS BEEN DISCUSSED AT GREAT LENGTH AND REPORT OF THE AO HAS ALSO BEEN OBTAINED ON THE VARIOUS SUBMISSIONS MADE. IT IS IN SHORT THE OBJ ECTION OF THE APPELLANT THAT THE AO FAILED TO APPRECIATE THE FACT THAT POSSESSION OF MOST OF THE FLATS AND SHOPS HAD 30 BEEN GIVEN BEFORE 31.3.95 AS WOULD BE CLEAR FROM PO SSESSION LETTERS PLACED ON PAPER BOOK PAGE 21 TO 57 WHICH WERE ALSO IN SEIZURE . ONLY VERY FEW PERSONS WERE GIVEN POSSESSION THEREAFTER WHICH LIST IS GIVEN VID E LETTER DATED 3.11.04 SHOWING TOTAL PAYMENTS OF RS.17 78 000/- BEING PARTLY FROM HASMUKH P TRIVEDI FOR FLAT NO.A-101 FROM SUNIL B SHARMA FOR FLAT NO.A-102 FR OM YOGESHWAR DAIRY FOR SHOP NO.GF 31 AND FROM BUSINESS INDIA TALLEY INTERN ATIONAL FOR FLAT NO. A 104 AND FURTHER FROM JASHBIR SINGH BAGHA FOR FLAT NO. A 103. IT WAS CLAIMED THAT THE APPELLANT HAD DURING THE PERIOD 1991-93 SUBMI TTED DETAILS TO THE INCOME-TAX DEPARTMENT AND RELATING TO CONSTRUCTION AND HANDING OVER POSSESSION TO DIFFERENT MEMBERS OF THE SCHEME VIDE LETTERS ADDRESSED TO THE ACIT CIB CIRCLE AHMEDABAD SO THAT IT COULD CONCLUSIVELY BE PROVED T HAT THE MAJORITY PORTION OF THE PROJECT HAD BEEN COMPLETED BEFORE 31.3.95. THE REFORE THE AOS FINDINGS WERE NOT JUSTIFIED AND THEY WERE NOT BASED ON MATERIAL O N RECORD. COPY OF LETTER GIVEN TO ACIT CIB AHMEDABAD WITH ANNEXURES WAS SUBMITTE D AS PAPER BOOK PAGES 58 TO 103. IT WAS ALSO STATED THAT INCOME-TAX RETURN FOR AY 92-93 WAS FILED SHOWING 3.5% RETURN ON WORK DONE OF RS.48 83 672/- WHICH WA S ACCEPTED BY THE DEPARTMENT AND LIKEWISE FOR AY 96-97 RETURN WAS FI LED SHOWING SIMILAR GROSS EARNING OF 3.5% OF VALUE OF WORK DONE AT RS.46 73 3 23/- AND FURTHER RETURN WAS FILED FOR AY 97-98 WHICH WAS ASSESSED AND WHEREIN A LSO GROSS RECEIPTS WERE SHOWN AT 3.5% OF VALUE OF WORK DONE AT RS.23 89 387 /- WHICH HAD BEEN ASSESSED INSTEAD AT 8% OF GROSS RECEIPTS IN VIEW OF PROVISIO NS OF SECTION 44AD OF I T ACT 1961. FURTHER DETAILED EXPLANATION FOR EACH ENTRY HAS ALSO BEEN GIVEN. 4.2. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE. AT THE OUTSET I AM OF THE OPINION THAT THE APPELLA NT NEED HAVE NO GRIEVANCE REGARDING FINDING OF AO TO THE EXTENT THAT NO ADDIT ION HAS BEEN MADE SPECIFICALLY FOR THE SUM HELD TO BE UNDISCLOSED RECEIPTS EARNED AS A DEVELOPER OF MANASI SCHEME. YET IN VIEW OF THE ADVERSE FINDINGS RECORD ED BY THE AO SPECIFIC DECISIONS ARE BEING GIVEN BY ME IN THE FOLLOWING PA RAS WITH REGARD TO EACH ADDITION MADE. 13.1.1. WE HAVE DULY CONSIDERED THE CONTENTIONS OF THE ASSESSEE AS WELL AS THE REASONING OF THE CIT (A) REFERRED SU PRA. AFTER TAKING INTO ACCOUNT THE APPREHENSIONS EXPRESSED BY THE ASS ESSEE THE CIT (A) HAD MADE IT CLEAR THAT NO ADDITION HAS BEEN MAD E SPECIFICALLY FOR THE SUM HELD TO BE UNDISCLOSED RECEIPTS EARNED AS A DEVELOPER OF MANASI SCHEME AND THUS WE ARE OF THE CONSIDERED V IEW THAT THE 31 APPREHENSION OF THE ASSESSEE AGAINST THE FINDING OF CIT (A) TO TERM IT MILDLY IS UNFOUNDED. 13.2. GR. NO.3 THE GRIEVANCE OF THE ASSESSEE WAS THAT THE CIT (A) ERRED IN DIRECTING TO DELETE THE AMOUNT FRO M ADDITION OF RS.27 97 069/- WITHOUT SIMULTANEOUSLY DELETING THE ADDITION; 13.2.1. WHILE DEALING WITH THE ADDITION OF RS. 27 97 069/- THE CIT (A) AFTER DUE CONSIDERATION OF THE ASSESSEES CONT ENTIONS THAT THERE WAS NO QUESTION OF SUCH RECEIPT FALLING WITHIN THE BLOCK PERIOD SINCE MAJORITY OF THOSE FLATS WERE HANDED OVER TO THE PUR CHASERS/MEMBERS IN THE PERIOD PRIOR TO THE BLOCK PERIOD ETC. HAS O BSERVED THUS: 4.2.3 I HAVE CAREFULLY CONSIDERED THE FACTS AND THE SUBMI SSIONS MADE. I HAVE SEEN THE PHOTO COPIES OF THE LETTER ISSUED BY THE ACIT CIB AHMEDABAD TO SUNITA CONSTRUCTION IN THE YEAR 1992 AND AGAIN IN MARCH 1 994 TO DHAVAL CO-OP HOUSING SOCIETY AND CERTAIN DETAILS WERE DULY FILED BY THE APPELLANT AT THAT TIME INDICATING PAYMENTS RECEIVED IN THE YEARS 1991 199 2 1993 AND ACCORDINGLY THEREFORE THE RECEIPTS OF ON MONEY FOR THOSE UNI TS HANDED OVER TO MEMBERS PRIOR TO 1.4.95 WOULD FALL BEYOND THE BLOCK PERIOD. IT IS ALSO EVIDENT FROM THE PHOTO COPIES OF THE RETURN FILED BY M/S. SUNITA CON STRUCTION FOR AY 1992-93 ON 15 TH JULY 1993 IN THE OFFICE OF ACIT CIR.2-CUM-NEW AS SESSMENT CIR. AHMEDADABAD-14 THAT THE APPELLANT HAD INDICATED REC EIPT OF DEVELOPMENT FEES AT 3.5% FOR WORK DONE DURING THE YEAR BEING RS.48 83 6 72/-. I WILL THEREFORE CONSIDER IT JUSTIFIED TO DIRECT THE AO TO VERIFY FR OM THE SEIZED DOCUMENTS THE DATE OF HANDING OVER OF THE POSSESSION OF THESE VARIOUS FLATS AND TO REDUCE THE RECEIPT OF ON-MONEY BY THE AMOUNTS WHICH RELATE TO FLATS WH ICH WERE HANDED OVER PRIOR TO THE BLOCK PERIOD. ADVERSE FINDINGS TO THAT EXT ENT WILL BE DELETED. 13.2.2. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION S OF THE ASSESSEE AS WELL AS THE FINDINGS OF THE CIT (A). T HE CIT (A) HAD 32 MADE IT ABSOLUTELY CLEAR THAT THE RECEIPTS OF ON M ONEY FOR THOSE UNITS WHICH HAVE BEEN HANDED OVER TO THE MEMBERS PRIOR TO 1.4.1995 WOULD FALL BEYOND THE BLOCK PERIOD OF THE ASSESSEE UNDER CONSIDERATION AND THAT WAS WHY THE AO WAS DIRECTED TO VERIFY FROM THE SEIZED MATERIALS WHICH WERE THE FLATS HANDED OV ER TO THE MEMBERS PRIOR TO 1.4.1995 AND ACCORDINGLY REDUCE SUCH RECEIPTS OF ON-MONEY FROM THE ADDITION OF RS.27 97 069/-. WH EN SUCH EXERCISE TAKES PLACE AT THE AOS END THE RECEIPTS OF SUCH ON MONEY FROM THE FLAT OWNERS WHO HAVE BEEN GIVEN POSSESSION PRIOR TO 1.4.1995 GET REDUCED FROM THE ADDITION OF RS.27.97 LAKHS WHICH WILL SIMULTANEOUSLY HAVE AN IMPACT ON THE TOTAL ADDITION ALSO. TO MAKES IT EXPLICIT THE AO IS DIRECTED TO REDUCE SUCH ADDITIO N FROM THE TOTAL ADDITION TOO. IT IS ORDERED ACCORDINGLY. 13.3. GR. NO.4 : IT WAS THE CONTENTION OF THE ASSESSEE THAT THE CIT (A) ERRED IN CONFIRMING THE ADDITIONS OF RS.30 30 000/- AND RS.9 65 000/- BEING ALLEGED INVESTMENTS IN THE LAN D BEARING SURVEY NO.164/5 OF JAMNAGAR. IT WAS CONTENDED THAT THE C ONFIRMATORY LETTER OF SHRI BHIKHUBHAI OF JAMNAGAR WOULD CONFIRM THAT T HE LAND BEARING SURVEY NO.164/5 OF JAMNAGAR WAS STANDING IN GOVERNM ENT ACCOUNT 33 AND BEING GOVERNMENT LAND IT COULD NOT HAVE BEEN T RANSFERRED TO ANY OTHER PARTY. 13.3.1. DURING THE COURSE OF APPELLANT PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE HAD FURNISH ED A PHOTOSTAT COPY OF THE LAND CERTIFICATE ISSUED BY THE DEPUTY COLLEC TOR WHICH WAS FORWARDED BY THE CIT (A) TO THE AO WHEREIN THE HAK PATRAK AND GAM NAMUNA NO.6 SHOWED GOVERNMENT OWNERSHIP OF THE LAND NO.;51. HOWEVER THE AO IN HIS REPORT OBJECTED THAT NOTIN G ON PAPER WAS DATED 14.6.1995 AND THEREAFTER NO ENTRIES WERE MAD E SO CURRENT POSITION AND STATUS OF THE LAND WAS NOT CLEAR AND T HAT THE LAND BEING IN THE VICINITY OF RELIANCE COMPLEX IT HAD HIGH VA LUE AND THE ASSESSEE WAS MAKING REGULAR INVESTMENTS IN BENAMI N AMES ETC. 13.3.2. ON THE OTHER HAND THE ASSESSEE HAD OBJECTE D THAT NO MONEY OF RS.90 000/- WAS INVESTED ON 13.2.1996 AND 23.11.1996 AS POINTED OUT BY THE AO AND THAT THE AOS ADDITION WA S NOT JUSTIFIED BEING BASED ON A PROPOSAL BROUGHT BY A BROKER WHICH DID NOT MATERIALIZE. IT WAS FURTHER CONTENDED THAT THE SA ID PROPOSAL DID NOT BEAR ANY AUTHENTICATED SIGNATURE OR SEAL OF ANYBODY AND THERE WAS ALSO NO RECEIPT OF PAYMENT OF RS.90 000/-. IT WAS FURTHER CONTENDED THAT THE ADDITION OF RS.9 65 000/- AS DISCUSSED ON PAGE 14 OF THE 34 ASSESSMENT ORDER WAS NOT JUSTIFIED BECAUSE THERE WA S IN FACT NO INDICATION OF NAME SURVEY NUMBER BANAKHAT OR ANY OTHER DOCUMENTARY EVIDENCE FOR PURCHASE OF LANDS IN QUEST ION. THERE WERE MERE PROPOSALS BROUGHT BY THE BROKERS HOWEVER THE Y DID NOT MATERIALIZE. IN CONCLUSION IT WAS AVERRED BEFORE THE CIT (A) THAT NO INVESTMENT OF RS.30 30 000/- AS MENTIONED BY THE AO HAD BEEN MADE AND THAT NO NAME AND ADDRESS OF THE PARTY WAS MADE AVAILABLE TO JUSTIFY SUCH AN ADDITION. 13.3.3. AFTER DUE CONSIDERATION OF THE ASSESSEES C ONTENTIONS THE CIT (A) HAD MADE THE FOLLOWING OBSERVATIONS: 5.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF TH E CASE AND THE SUBMISSIONS MADE AND FIND THAT THE AO HAS GIVEN IN PARA 3.4 A DETAIL OF THE TRANSACTIONS MADE ON VARIOUS DATES AND RELATING TO SURVEY NO.164/5 OF JA MNAGAR INDICATING PAYMENTS IN CASH MADE IN BHIKHUBHAI. THE SUBMISSIONS NOW MA DE BY BHIHUBHAI VIDE LETTER GIVEN IN APPEAL PROCEEDINGS IS ONLY AN AFTER THOUGHT AND IT IS BUT A SELF- SERVING STATEMENT AND APPELLANT HAD FAILED TO EXPLA IN SATISFACTORILY THE ENTRIES OF RS.30 30 000/- WHICH ARE REFLECTED ON PAGE 29 OF AN NEXURE X-1 AND RELATING TO SURVEY NO.164/5. THE HAK PATRAK NOW GIVEN DOES NOT INDICATE THIS SURVEY NUMBER AND NUMBER INDICATED THERE IS 51 WHICH CANNOT BE TA KEN TO IDENTIFY THE SAME LAND. THIS ADDITION MADE TO THIS EXTENT IS THEREFO RE FOUND TO BE JUSTIFIED. 5.4. 5.4.1. AS REGARDS THE ADDITION MADE AT RS.9 65 000/ - AND DISCUSSED BY THE AO IN PARA 5 IT IS CLAIMED THAT APPELLANT DID NOT HAVE N ECESSARY MONEY AND HAD BEEN BORROWING FUNDS AFTER MORTGAGING HIS JEWELLERY. 5.5. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS MADE AND FIND THAT AS REGARDS THE ANNEXURES X-1 PAGE 29 SHOWING TRANSACTIONS ON VARIOUS DATES TOTALING RS.30 30 000/- AND ANNEXURE A-3 PAG E 33 THEREOF SHOWING RECEIPT OF RS.6 50 000/- FOR PROPOSED SALE OF LAND AND THE ANNEXURE X-1 PAGE 31 THEREOF SHOWING TRANSACTIONS OF RS.9 65 000/- I FIND THAT THE APPELLANT HAS NOT BEEN ABOVE TO SATISFACTORILY EXPLAIN THESE DOCUMENTS. F IRSTLY THE SURVEY NO. RELATING 35 TO TRANSACTIONS OF RS.30 30 000/- IS 164/5 WHICH IS NOT THE LAND COVERED IN THE HAK PATRAK FOR SURVEY NO. 51 WHICH LAND IS STATED TO BE IN GOVERNMENT NAME. AS REGARDS THE RECEIPT OF RS.6 50 000/- THE NON MENTI ON OF THE ACTUAL LOCATION OF LAND IS NOT RELEVANT TO THE EXTENT THAT IT IS THE R ECEIPT FOR PAYMENT ON AGREEMENT OF SALE AND PURCHASE FOR 40 BIGHAS OF LAND THE FINAL TRANSACTIONS OF WHICH MAY YET BE PENDING. THERE IS NO EXPLANATION REGARDING THE DOCUMENT ANNEXURE X-1 PAGE 32 WHICH ARE ALSO VERY DETAILED AND SPECIFIC D ATES ARE INDICATED UNDER THE HEADING VADIPETI WHICH OBVIOUSLY MEANS TOWARDS A GREEMENT. IN THE ABSENCE OF PROPER EXPLANATION FOR ALL THESE ENTRIES THE IN TERPRETATION GIVEN BY THE AO IS FOUND TO BE JUSTIFIED AND THE ADDITIONS MADE ON THI S ACCOUNT ARE SUSTAINED. 13.3.4. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS PUT FORTH ON BEHALF OF THE ASSESSEE AND ALSO DILIGENTLY PERUSED THE REASONING OF THE CIT (A) IN TURNING DOWN THE ASSESSEES CONTENTI ONS. WHEN THE ASSESSEE HAD PRODUCED A PHOTOSTAT COPY OF THE LAND CERTIFICATE PURPORTEDLY ISSUED BY THE DEPU TY COLLECTOR THE AO DISPUTED THE ASSESSEES CLAIM THAT THE HAT PATRA K AND GAM NAMUNA NO.6 SHOWED GOVERNMENT OWNERSHIP OF THE LAND BEARING SURVEY NO.51 WHEREAS THE LAND UNDER CONSIDERATION B EARING SURVEY NO;164/5 OF JAMNAGAR. THIS VERY FACT BROUGHT ON RE CORD BY THE AO HAS NOT BEEN SATISFACTORILY DISPUTED BY THE ASSESSE E WITH ANY DOCUMENTARY EVIDENCE. FURTHER THE ASSESSEE DID NO T HAVE ANY COGENT DOCUMENTARY PROOF TO SATISFACTORILY EXPLAIN THE ENTRIES OF RS.30 30 000/- WHICH WERE REFLECTED ON PAGE 29 OF A NNEXURE X-1 RELATING TO SURVEY NO.164/5. THERE WERE CONFLICTIN G FACTS IN HIS SUBMISSIONS TOO. 36 13.3.5. TAKING INTO ACCOUNT THE FACTS AND CIRCUMST ANCES OF THE ISSUE AS DISCUSSED IN THE FORE-GOING PARAGRAPHS WE ARE OF THE FIRM VIEW THAT THE ASSESSEES ASSERTION WAS NOT BACKED W ITH ANY DOCUMENTARY PROOF TO THWART THE STAND OF THE AUTHOR ITIES BELOW. IN VIEW OF THE ABOVE WE ARE OF THE CONSIDERED VIEW TH AT THE FINDINGS OF THE CIT (A) REQUIRE NO INTERVENTION OF THIS BENCH A T THIS JUNCTURE. 13.4. GR.5 (GR. NOS.20 TO 23) CONFIRMING THE ADDITION OF RS.3 LAKHS : AS PER PAGE OF 11 OF ANNEXURE-A- 1 UNEARTHED FROM THE RESIDENCE OF THE ASSESSEE WHICH REVEALED THAT THE A SSESSEE HAD GIVEN RS.3 LAKHS TO ONE SHRI I.M. BENGALI ON 10.5.9 6. WHEN CONFRONTED THE ASSESSEE ACCORDING TO THE AO DID ADMIT IN HIS STATEMENT DATED 26.2.2002 ON OATH THAT THE JOTTING WAS IN HIS HANDWRITING ONLY BUT MERELY OBJECTED TO THE ADDIT ION AND CONSIDERING THE FACTS OF THE CASE NO ADDITION NEED TO BE MADE IN HIS HANDS. IN A SUBSEQUENT QUERY THE ASSESSEE ADMITTED THAT I.M. B ENGALI WAS HIS ADVOCATE BUT NO FURTHER EXPLANATION WAS OFFERED. SINCE NO PLAUSIBLE RESPONSE WAS FORTH-COMING IN SPITE OF REP EATED OPPORTUNITIES AFFORDED THE AO CONSIDERED THIS AMOU NT REPRESENTS THE 37 ASSESSEES UNDISCLOSED EXPENDITURE AND ACCORDINGLY BROUGHT UNDER THE TAX NET. 13.4.1. DURING THE APPELLATE PROCEEDINGS IT WAS CO NTESTED THAT THE SAID BENGALI WAS AN ADVOCATE OF MANSI HOTEL PVT . LTD IN WHICH THE ASSESSEE WAS ONE OF THE DIRECTORS AND ON ACCOUN T OF NON- PAYMENT OF INSTALLMENTS TO GSFC THE POSSESSION WAS TAKEN OVER BY THE GSFC AND THE ASSESSEE WAS ADVISED TO MAKE PAYME NT OF RS.3 LAKHS AND THEN ONLY THE CORPORATION WILL FIX THE IN STALLMENT FOR PAYMENT OF BALANCE BUT DUE TO NON-AVAILABILITY OF LIQUID FUNDS NO INSTALLMENTS COULD BE PAID AND THEREFORE THE ADVO CATES NAME WAS APPEARING IN THE DIARY ETC. HE HAD VEHEMENTLY CON TESTED THE THEORY OF THE AO THAT THE ALLEGED SUM OF RS.3 LAKHS REPRE SENTS HIS UNDISCLOSED EXPENDITURE. 13.4.2. HOWEVER THE CIT (A) TOOK A STAND THAT THE ENTRY OF RS.3 LAKHS TO SHRI I. M. BENGALI AS PER DOCUMENT SEIZED WAS DATED 10.5.1996 WHEREAS THE EXPLANATION GIVEN BY THE ASSE SSEE DOESNT FIT IN TO THE PAYMENTS PURPORTED TO HAVE BEEN MADE TO G SFC MUCH LATER AND ACCORDINGLY SUSTAINED THE ADDITION. 13.4.3. IT WAS PLEADED DURING THE COURSE OF HEARING THAT THE CIT (A) ERRED IN CONFIRMING THE AMOUNT CREDITED IN THE CURRENT BANK 38 ACCOUNT HOLDING IT AS UNDISCLOSED INCOME AND THAT T HE SUPPORTING EVIDENCE COULD NOT BE SUBMITTED ON ACCOUNT OF DISTU RBANCE DUE TO EARTHQUAKE AND APPRECIATING THE FACTS THE ADDITION MADE BY THE AO AND SUBSEQUENTLY SUSTAINED BY THE CIT (A) REQUIRE S TO BE DELETED. 13.4.4. WE HAVE DULY CONSIDERED THE SUBMISSION OF T HE ASSESSEE AS WELL AS REASONING OF THE AUTHORITIES BELOW IN MA KING THE ADDITION OF RS.3 LAKHS. 13.4.5. IT IS AN UNDISPUTED FACT THAT THERE WAS AN ENTRY IN THE SEIZED MATERIAL THAT THE ASSESSEE HAD SHOWN TO HAVE GIVEN RS.3 LAKHS TO BENGALI ON 10.5.96 AND WHEN THE ASSESSEE W AS CONFRONTED HE MERELY OBJECTED TO THE ADDITION [SOURCE: HIS LET TER DT.23.2.04 PARA 6.3 OF ASST. ORDER]. HOWEVER IN HIS STATEMENT ON O ATH DT.26.2.2002 HE HAD ADMITTED THAT THE JOTTING IN THE SEIZED MATE RIAL WAS HIS HANDWRITING. HOWEVER SUBSEQUENTLY HE CAME UP WITH A STORY THAT THE AMOUNT GIVEN TO BENGALI WAS MEANT FOR MAKING PAYMEN T TO GSFC. ASTONISHINGLY THE PHOTOSTAT COPIES OF CHEQUES PROD UCED BEFORE THE FIRST APPELLATE AUTHORITY JUSTIFYING HIS CLAIM BEI NG PAYMENTS OF RS.3 LAKHS AND RS.4 LAKHS TO GSFC WERE IN FACT MUCH L ATER PRECISELY AFTER SEVEN YEARS I.E. ON 1.5.2003 AND 1.11.2003 RESPECTIVELY. THIS IN OUR VIEW DOESNT ABSOLVE THE ASSESSEE FRO M THE CASH 39 PAYMENT MADE TO SRI BENGALI WAY BACK IN 1996. SINC E THE ASSESSEE HAS FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE TO J USTIFY HIS CLAIM THAT THE PAYMENT MADE TO SHRI BENGALI BEING TOWARDS PAYMENT OF INSTALLMENTS OF GSFC WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN THEIR FINDINGS WHICH REQUIRE TO BE SUSTAINED. IT IS ORDERED ACCORDINGLY. 13.5. GR. NO.6 ( GR.NO. 24 ) CONFIRMING THE ADDITION OF RS.24 07 923/- : THE POST SEARCH INQUIRY MADE WIT H AMCO NAVARANGPUR BRANCH WITH REGARD TO A/C NO.243 ACCORDING TO THE AO REVEALED THAT THERE WERE HUGE REGULAR CREDIT TRANSACTIONS TO THE TUNE OF RS.24.07 LAKHS. WHEN THE ASSESSEE WAS CONFRONTED HE MERELY OBJECTED TO THE ADDITION. CONSIDERING THE FACTS OF THE CASE THAT NO EXPLANATION WAS FORTH-COMING WITH REGARD TO SOURCE NATURE OF CREDI TS IN THE BANK ACCOUNT AND RECONCILED STATEMENT WITH BOOKS OF ACCO UNTS ETC. THE ASSESSEE WAS FURTHER REQUIRED TO EXPLAIN THAT THERE WERE HUGE REGULAR CREDITS. ACCORDING TO THE ASSESSEE THOUGH THE MANS I PROJECT GOT OVER IN MARCH 1997 ALL THE RECEIPTS RELATED TO THE BOOK ING OF THE DWELLING UNITS WHICH WERE RECEIVED BY THAT DATE. HOWEVER O N PERUSAL OF THE ACCOUNT OF SUNITA CONSTRUCTION [A/C NO.243] IT WAS NOTICED BY THE AO THAT THE ASSESSEE WAS RECEIVING THE PAYMENTS TOWARD S SELLING OF FLATS 40 EVEN AFTER 31.3.1997 AND THE TOTAL CREDITS WERE TO THE TUNE OF RS.24 07 923/-. 13.5.1. IT WAS THE CASE OF THE ASSESSEE THAT HE WAS NOT IN A POSITION TO FIND OUT THE DOCUMENTARY EVIDENCES AND TO BUY PEACE HE HAD OFFERED INCOME AT THE RATE OF 3.5% ON TOTAL CRE DITS IN THE BANK ACCOUNT WHICH HAS BEEN TURNED DOWN BY THE CIT (A) W HO WENT AHEAD IN CONFIRMING THE AOS STAND. 13.5.2. IT WAS FURTHER SUBMITTED BY THE ASSES SEE DURING THE APPELLATE PROCEEDINGS THAT THE MANASI PROJECT HAD N OT BEEN COMPLETED IN MARCH 1997 BUT SEVERAL RECEIPTS FRO M MEMBERS IN CASH AS WELL AS BY CHEQUES HAD BEEN CREDITED IN THE BANK ACCOUNT FOR THE SAME PROJECT AND SEVERAL PAYMENTS HAD BEEN MADE TO THE CREDITORS FOR GOODS LABOUR MAINTENANCE COMMON AM ENITIES LEGAL AND DRAINAGE CHARGES ETC. WHICH RESULTED IN VERY NOMINAL BALANCE REMAINING IN THE BANK ACCOUNT AT RS.4329/- AS ON 31 .7.1998. IT WAS ALSO SUBMITTED THAT THE CREDITS IN THE BANK ACCOUNT WERE PAYMENTS OF INSTALLMENTS BY THE MEMBERS WHO HAVE NOT PAID THE A MOUNTS IN DUE DATE. IN CONCLUSION IT WAS PLEADED THAT THE TRANS ACTIONS WERE GENUINE AND BONA-FIDE BUT JUST TO PEACE AND TO CO -OPERATE WITH THE DEPARTMENT THE ASSESSEE WAS READY TO OFFER BEING T AXED AT 3.5% OF 41 THESE RECEIPTS OF RS.24.07 LAKHS AND THAT SINCE THE DETAILS OF CREDITS AND DEBITS WAS NOT AVAILABLE FROM THE BANK AND THE CIRCUMSTANCES WERE BEYOND HIS CONTROL AND IN THE INTERESTS OF NAT URAL JUSTICE THE ASSESSEES PLEA FOR BEING TAXED AT 3.5% BE ACCEPTED . 13.5.3. AFTER DUE CONSIDERATION OF THE ASSESSEES CONTENTIONS CITED SUPRA THE CIT (A) HAD RECORDED HER FINDINGS AS UNDER: 8.2.I FIND THAT THE APPELLANT HAS REPEATE DLY BEFORE THE AO AND IN APPEAL PROCEEDINGS MADE SUBMISSIONS IN WRITI NG TO THE EFFECT THAT THE TOTAL RECEIPTS RELATING TO MANASI PROJECT WERE OF RS.2 40 31 492/- FOR ACCOUNTING YEARS 1991-902 TO 1996-97 AND THAT THE TOTAL WORK DONE FO R THE PROJECT WAS COVERED IN THE FOLLOWING MANNER: SR.NO A/C YEAR ASST.YEAR TOTAL WORK DONE 1 1991-92 1992-93 RS. 41 72 052 2 1992-93 1993-94 RS. 34 46 513 3 1993-94 1994-95 RS. 58 45 437 4 1994-95 1995-96 RS. 35 04 778 5 1995-96 1996-97 RS. 46 73 324 6 1996-97 1997-98 RS. 23 89 387 TOTAL RS.2 40 31 492 THEREFORE IT IS NOT AN ACCEPTABLE PROPOSITION THAT THESE RECEIPTS OF RS.24 97 923/- RECEIVED AFTER 31.3.97 RELATED TO THE SAME SCHEME. ALSO I FIND THAT ADMITTEDLY THERE IS NO DETAIL OF THE SPECIFIC ENTRIES IN THE B ANK ACCOUNT SO THAT THE NATURE OF THE ENTRIES IS NOT AT ALL CLEAR. ALSO ADMITTEDLY THERE ARE NO REGULAR BOOKS OF ACCOUNTS AND NO RETURN OF INCOME HAS BEEN FILED BY THE APPELLANT FOR THE PERIOD AFTER 31 ST MARCH 1997 SO THAT THE NATURE OF THESE DEPOSITS C ANNOT BE ACCEPTED TO BE PAYMENTS BY THE MEMBERS OF THE TWO SCHEMES FOR A ND TOWARDS THEIR PURCHASE IN MANASI SCHEME. DESPITE LAPSE OF LONG PERIOD OF TIME THE APPELLANT HAS MADE NO ATTEMPT TO GET VERIFIED FROM THE MEMBERS OF THE SCHEME THE CLAM THAT THESE WERE PAYMENTS MADE TOWARDS PURCHASE AND THEREFORE NOT TO BE TREATED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. IN THE AB SENCE OF ANY ADEQUATE EXPLANATION OR CONTEMPORARY EVIDENCE TO RECONCILE/E XPLAIN THE INDIVIDUAL ENTRIES IN THIS BANK ACCOUNT THE INTERPRETATION TAKEN BY T HE AO THAT THEY REPRESENT UNDISCLOSED INCOME IS FOUND TO BE JUSTIFIED AND THE ADDITION MADE IS SUSTAINED. 42 13.5.4. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION S MADE BEFORE THIS BENCH AS WELL AS DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY AN D METICULOUSLY PERUSED THE RELEVANT CASE RECORDS AND THE DOCUMENT ARY EVIDENCES ADVANCED BY THE LD. AR DURING THE COURSE OF HEARING IN THE SHAPE OF VOLUMINOUS PAPER BOOKS AS WELL. 13.5.5. WHEN THE ASSESSEES STATEMENT WAS RECO RDED ON OATH ON 7.5.2002 HE HAD GIVEN A CATEGORICAL THAT THE MANSI PROJECT SCHEME GOT OVER IN MARCH 1997 AND THAT ALL THE RECEIPTS R ELATED TO THE BOOKING OF THE DWELLING UNITS WERE RECEIVED BY THAT DATE. HOWEVER SCRUTINIZING THE ACCOUNTS OF SUNITA CONSTRUCTION [A /C NO.243] IT WAS NOTICED BY THE AO THAT THE ASSESSEE WAS IN RECEIPT OF THE PAYMENTS TOWARDS THE SELLING OF FLATS EVEN AFTER 31.3.1997 A ND THE TOTAL CREDITS OF WHICH WAS AGGREGATING TO RS.24.07 LAKHS. CONTRAR Y TO HIS INITIAL ADMISSION ON OATH THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS AVERRED THAT THE CREDITS IN THE BANK A CCOUNT WERE PAYMENTS OF INSTALLMENTS BY THE MEMBERS WHO HAVE NO T PAID THE AMOUNTS IN DUE DATE. AT THIS JUNCTURE IT IS PERTIN ENT TO MENTION THAT ANY PRUDENT DEVELOPER LIKE THAT OF THE ASSESSEE WOU LD NOT HAVE 43 HANDED OVER THE POSSESSION OF FLATS TO THE ALLOTTEE S WITHOUT CLEARING THE INSTALLMENTS DUE FROM THEM. 13.5.6. IN FACT HE CONCEDED THAT HE WAS NOT IN A POSITION TO ADVANCE ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE HI S CLAIM AND CAME UP WITH AN ALTERNATIVE COMPROMISE FORMULA ACC ORDING TO WHICH HE HAD OFFERED INCOME AT THE RATE OF 3.5% ON THE TO TAL CREDITS IN THE BANK ACCOUNT. THIS SUGGESTION OF THE ASSESSEE MAKE S IT IMPLICITLY CLEAR THAT HE HAD NO COGENT DOCUMENTARY PROOF TO RE BUT THE STAND OF THE AO. 13.5.7. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE ISSUE AND FOR THE REASONS RECORDED THEREIN THE CIT (A) CAME TO A CONCLUSION THAT IN THE ABSENCE OF ANY ADEQUATE EXPLANATION OR CONTEMPORARY EVIDENCE TO RECONCILE/EXPLAIN THE INDIVIDUAL ENTRIE S MADE IN THE BANK ACCOUNT THE AO WAS RIGHT IN HIS STAND TO CONSIDER THE ENTIRE SUM OF RS.24 97 923/- CREDITED IN THE BANK ACCOUNT NO. 243 IN AMCO BANK REPRESENTS UNDISCLOSED INCOME OF THE ASSESSEE. 13.5.8. EVEN AT THIS STAGE OF HEARING ALSO THE ASSESSEE HAD FAILED TO COME UP WITH ANY IMPECCABLE DOCUMENTARY EVIDENCE TO REFUTE THE STAND OF THE AUTHORITIES BELOW ON THIS COUNT. 44 13.5.9. IN VIEW OF THE ABOVE CIRCUMSTANCES WE AR E OF THE CONSIDERED VIEW THAT THERE ARE NO INFIRMITIES IN TH E FINDINGS OF THE AUTHORITIES BELOW WHICH WARRANT OUR INTERVENTION. IN ESSENCE THE FINDINGS OF THE LD. CIT (A) ARE SUSTAINED. 13.6. GR. NO.7 (GR.NOS. 25 TO 27) CONFIRMING ADDITION OF RS.16 73 342 : THE ASSESSEE OBJECTS TO THE ADDI TION OF RS.16 73 342/- AS INCOME NOT OFFERED FOR TAXATION. ON PERUSAL OF THE RETURN OF INCOME OF THE ASSESSEE FOR THE AY 1997-98 THE AO NOTICED THA T THE ASSESSEE HAD SHOWN RS.2 40 31 492/- AS WORK-IN-PROGRESS BUT HE FAILED TO FURNISH THE RETURN FOR THE NEXT AY WHERE THE PROFIT S FROM COMPLETION OF THE SCHEME SHOULD HAVE BEEN OFFERED FOR TAXATION. WHEN CONFRONTED WITH A NOTICE U/S 142(1) OF THE ACT DATED 19.2.2004 THE ASSESSEE CAME UP WITH RESPONSE THOROUGH HIS LETTER DATED 23. 2.2004 THAT:- - THE BOOKS OF ACCOUNTS WERE NOT AVAILABLE BECAUSE OF EARTHQUAKE AND THUS HE WAS NOT ABLE TO GIVE THE DETAILS; - THE BLOCK ASSESSMENT IS UNDER THE SPECIAL PROVISI ONS AND THAT THE ESTIMATION AT 8% WAS NOT IN ACCORDANCE WITH LAW; - THE WORK-IN-PROGRESS NOT FALLING IN THE BLOCK ASS ESSMENT PERIOD; - WITHOUT PREJUDICE THAT AS AGAINST THE FIGURE OF R S.2 40 31 492/- LOAN FROM DHAVAL CO-OP HOUSING SOCIETY AND NANDAN CO-O P. HOUSING SOCIETY AND SUNDRY CREDITORS FOR THE SUPPLY OF MA TERIALS LABOUR ETC. 45 WHICH WORKED OUT TO RS.2 55 49 898/- AND THUS THERE WAS LOSS OF RS.15.18 LAKHS; 13.6.1. REBUTTING THE ASSESSEES CONTENTIONS T HE AO HAD OBSERVED THUS: - THAT THE ASSESSEES APPEAL FOR THE AY 1997-98 WAS DISMISSED AS EX-PARTE BY THE CIT (A) AS NONE HAD REPRESENTED; - THAT NO BOOKS OF ACCOUNT WAS PRODUCED FOR RE-CONC ILIATION; - THAT THE ASSESSEE HAD HIMSELF ADMITTED ON OATH TH AT THE SCHEME WAS COMPLETED BY MARCH 1997 AND ALL THE RECEIPTS RELATED TO THE BOOKING OF THE DWELLING UNITS WERE RECEIVED BY TH AT DATE WHICH MEANS THAT ALL THE DWELLING UNITS HAVE BEEN SOLD BY THAT DATE AND THE SCHEME WAS COMPLETE BY THAT DATE - THAT SINCE NO BOOKS OF ACCOUNT BOOKING REGISTERS OR ANY OTHER INFORMATION WERE MADE AVAILABLE THE RECEIPTS OF THE ASSESSEE HAVE BEEN WORKED OUT AT 8% ON GROSS RECEIPTS; - BRUSHING ASIDE THE ASSESSEES OBJECTION OF INVOKI NG THE PROVISIONS OF S. 44AD OF THE ACT IN THE BLOCK ASSESSMENT THE AO TOOK A STAND THAT NO SEPARATE TRADING ACCOUNT OR THE DETAILS WIT H REGARD TO THE METHOD OF ACCOUNTING OR THE AUDITED ACCOUNT WERE MA DE AVAILABLE AND HELD THAT HAD THERE BEEN NO SEARCH OPERATION T HE EVASION OF INCOME COULD NOT HAVE COME TO THE FORE? 13.6.2. BY APPLYING THE PROVISIONS OF S.44AD OF THE ACT AND FOR THE DETAILED WORKINGS RECORDED IN HIS IMPUGNED ORDE R THE AO HAD ARRIVED AT THE INCOME OF THE ASSESSEE AT RS.18 64 4 86/- AND SINCE RS.1 91 144/- HAD SUFFERED TAX AS PER THE THEN CIT (A)S ORDER THE BALANCE AMOUNT OF RS.16 73 342/- [1864486 191144] WAS BROUGHT TO TAX NET AS INCOME FROM THE PROJECT NOT OFFERED F OR TAXATION. 46 13.6.3. AFTER CAREFULLY CONSIDERING THE ASSESSEE S CONTENTIONS COUPLED WITH CASE LAWS AS RECORDED IN HER IMPUGNED ORDER UNDER CONSIDERATION THE LD. CIT (A) HAD OBSERVED THUS: 9.2..I FIND MYSELF IN AGREEMENT WITH THE AOS FINDINGS THAT THE CARRYING ON OF THIS BUSINESS AS A DEVELOPER OF MANA SI SCHEME AND THE FINDING OUT THAT THE APPELLANT WAS WHOLE AND SOLE IN-CHARGE OF THE SCHEME WHICH WAS CARRIED ON IN A PERSONALIZED MANNER; THAT THESE FACTS WOULD NOT HAVE BEEN REVEALED UNLESS SEARCH HAD BEEN CONDUCTED AND THEREFORE CO UPLED WITH THE FACT THAT THE APPELLANT DID NOT FILE ANY RETURN OF INCOME AFTER A Y 1997-98 AND WAS NOT ASSESSED TO TAX FOR THE AYS 1995-96 1996-97 AND FO R THE YEARS AFTER AY 1997-98 WHICH WERE FALLING THE BLOCK PERIOD THEREFORE THE INCLUSION OF THIS INCOME EARNED BY THE APPELLANT AS A DEVELOPER WAS FULLY JU STIFIED. HOWEVER THERE IS SUBSTANCE IN THE ARGUMENT THAT THERE ARE RECEIPTS I NCLUDED BY THE AO WHICH ARE BEYOND THE BLOCK PERIOD BEING PRIOR TO 1.4.1995. T HESE RECEIPTS WERE DULY INTIMATED TO THE INCOME-TAX DEPARTMENT BY THE APPEL LANT IN RESPONSE TO QWUERY LETTER ISSUED BY THE ACIT CIB AHMEDABAD IN THE YE ARS 1992 AND 1994. THEREFORE KEEPING IN VIEW MY DECISION WITH REFEREN CE TO GROUNDS OF APPEAL NOS.7 & 8 I WOULD LIKEWISE HOLD HERE THAT THE AO SHOULD IDENTIFY ALL THOSE RECEIPTS OF THE SCHEME. THE REMAINDER RECEIPTS MAY BE CONSIDER ED FOR CALCULATING THE INCOME AS DONE U/S 44AD. THE AO HAS ALREADY GRANTE D DEDUCTION FOR THE ASSESSED INCOME FOR THE ASSTT. YEAR 1997-98 AND THE REFORE APPELLANTS OBJECTION THAT RELIEF SHOULD BE GRANTED FOR THIS SUM ALREADY BROUGHT TO TAX IS NOT JUSTIFIED. THE AO WILL CONTINUE TO GIVE THAT RELIEF AND ONLY B RING TO TAX AT 8% OF GROSS RECEIPTS INCOME ON REMAINDER RECEIPTS IDENTIFIED A FTER REMOVING THE AMOUNTS RELATING TO REPLIES FILED IN RESPONSE TO ACIT CIB AHMEDABADS LETTER DATED. 1991 & 1994. 9.3. AS SUCH THE APPELLANTS RELIANCE PLACED ON THE DECISIONS OF ITAT BANGALORE BENCH B REPORTED IN 84 TTJ 165 IS FOUND T O BE MADE APPLICABLE IN AS MUCH AS ESTIMATE OF INCOME IS NOT ARBITRARY AND IS BASED ON RECEIPTS FALLING WITHIN THE BLOCK PERIOD AFTER REMOVING EARLIER REC EIPTS AS VERIFIABLE FROM THE RECORDS OF THE INCOME-TAX DEPARTMENT. REGARDING AP PELLANTS RELIANCE ON THE DECISIONS OF HONBLE GUJARAT HIGH COURT REPORTED IN 258 ITR PAGE 654 AND M.P HIGH COURT REPORTED IN 263 ITR PAGE 610 I FIND THA T THE DECISION RELATES TO FINDING THAT THE ADDITION CANNOT BE OF ENTIRE SALE PROCEEDS BUT OF PROFITS INCORPORATED IN THE SALE PROCEEDS. IT IS HOWEVER QUITE CLEAR IN THE PRESENT CASE THAT THIS MANASI SCHEME HAVING BEEN COMPLETED BY MA RCH 1997 AND APPELLANT HAVING NO EVIDENCE TO THE CONTRARY AND ALSO APPELLA NT HAVING NO DETAILS FROM THE BANK OF THE NATURE OF THE CREDIT ENTRIES IN THIS BA NK ACCOUNT AND FURTHER APPELLANT HAVING NO EVIDENCE FROM MEMBERS OF THE SC HEME THAT THEY MADE PAYMENTS TO THE EXTENT OF RS.24 97 923/- CREDITED I N THIS BANK ACCOUNT TOWARDS PURCHASE OF FLATS/SHOPS ETC. THERE IS NO MANNER IN WHICH AO CAN EXCLUDE THIS 47 AMOUNT FROM INCLUSION IN THE TOTAL UNDISCLOSED INCO ME FOR THE BLOCK PERIOD. THE ADDITION IS THEREFORE SUSTAINED. 13.6.4. DURING THE COURSE OF HEARING BEFORE TH IS BENCH THE ASSESSEE HAD CONCEDED THAT HE WAS NOT IN A POSITION TO FIND OUT THE DOCUMENTARY EVIDENCES AND ACCORDINGLY OFFERED THE INCOME AT THE RATE OF 3.5% ON THE TOTAL CREDITS IN THE BANK ACCOU NT HOWEVER THE CIT (A) HAD NOT ACCEPTED AND CONFIRMED THE ADDITION HOLDING THAT THE SAID AMOUNT REPRESENTS UNDISCLOSED INCOME OF THE AS SESSEE; THAT THE CIT (A) HAD FURTHER ERRED IN CONFIRMING THE ADDITIO N HOLDING IT NOT OFFERED FOR TAX ON THE INCOME ESTIMATED U/S 44AD AT THE RATE OF 8% ON TOTAL CONSTRUCTION WORK CARRIED OUT BY THE ASSESSEE ; AND THAT THE CIT (A) HAD FAILED TO APPRECIATE THE FACT THAT FOR CER TAIN ASSESSMENT YEARS RETURNS HAVE BEEN FILED AND ALSO OFFERED THE WORK DONE AND TAX PAYABLE THEREON AT THE RATE OF 3.5% ON AGREED TERMS AND ON THE BASIS OF DOCUMENTARY EVIDENCES THE INCOME OFFERED BY THE ASSESSEE HAVE BEEN ACCEPTED BY THE DEPARTMENT AND THAT THERE WAS NO PLAUSIBLE CAUSE TO MAKE DUPLICATE ADDITION OF RS. 16.73 LAKHS AND MOREOVER THE AO HAD FURTHER ADDED RS.24.07 LAKHS THEREBY HEAVY ADDITIONS HAVE BEEN MADE WHICH ARE DESERVE TO BE DELETED. 48 13.6.5. WE HAVE CAREFULLY CONSIDERED THE FORCEFUL CONTENTIONS OF THE ASSESSEE AND ALSO DULY PERUSED THE REASONING OF THE AUTHORITIES BELOW IN THEIR RESPECTIVE STANDS. 13.6.6. AT THE OUTSET WE WOULD LIKE TO REITERATE THAT NO CREDIBLE DOCUMENTARY EVIDENCES HAVE BEEN BROUGHT ON RECORD T O JUSTIFY HIS CLAIM. ON THE CONTRARY IN THE ABSENCE OF ANY PROOF OR THE BOOKS OF ACCOUNT HE CAME FORWARD TO OFFER THE INCOME AT THE FLAT RATE OF 3.5% ON THE TOTAL CREDITS IN THE BANK ACCOUNT OF AMCO BA NK. IT IS ALSO AN UNDISPUTED FACT THAT THE TOTAL RECEIPTS TILL 31.3.1 997 FROM THE TWO SOCIETIES WERE AGGREGATING TO RS.2 33 06 081/- THE DETAILS OF WHICH ARE AS UNDER: (I) DHAVAL CO-OP HOUSING SOCIETY RS.1 70 66 932 (II) NANDAN CO-OP HOUSING SOCIETY 62 39 149 TOTAL RECEIPT RS.2 33 06 081 13.6.7. THE ENTIRE GAMUT OF THE ISSUE HAS B EEN EXHAUSTIVELY DEALT WITH BY THE AUTHORITIES BELOW AND THAT THE RE LEVANT PORTIONS OF THEIR REASONING HAVE ALSO BEEN EXTRACTED FOR APPRE CIATION OF FACTS IN THE FORE-GOING OF PARAGRAPHS. 13.6.8. CONSIDERING THE FACTS AND CIRCUMS TANCES OF THE ISSUE AS DISCUSSED SUPRA AND ALSO IN THE ABSENCE OF ANY CRED IBLE EVIDENCE IS EMERGING FROM THE ASSESSEES ANGLE WE ARE OF THE C ONSIDERED VIEW 49 THAT THE AOS STAND WAS QUITE REASONABLE IN THE GIV EN CIRCUMSTANCES AND HE WAS ALSO WITHIN HIS REALM TO ARRIVE AT SUCH A CONCLUSION WHICH HAS BEEN DULY SUSTAINED BY THE LD. CIT (A) IN A JUD ICIOUS MANNER. UNDER THESE CIRCUMSTANCES WE FIND NO INFIRMITY IN THE FINDINGS OF THE AUTHORITIES BELOW WARRANTING OUR INTERVENTION AT TH IS STAGE. IT IS ORDERED ACCORDINGLY. 13.7. IN THE RESULT : (I) THE ASSESSEES APPEAL IN IT (SS)A/52/A/20 05 IS DISMISSED; (II) THE REVENUES APPEAL IN IT (SS)A/58/A/20 05 IS DISMISSED; (III) THE REVENUES APPEAL IN IT (SS)A/59/A/2006 I S DISMISSED; (IV) THE ASSESSEES APPEAL IN IT (SS)A/63/A/2005 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF MARCH 12. SD/- SD/- (G. C. GUPTA) (A. MOHAN ALANKAMONY) VICE PRESIDENT ACCOUNTANT MEMBER 50 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY OR DER DY. REGISTRAR ITAT AHMEDABAD