The DCIT, Circle-3,, Surat v. Smt. Meenaben Jivanchand Bhansali, Surat

ITSSA 77/AHD/2007 | misc
Pronouncement Date: 30-07-2010 | Result: Allowed

Appeal Details

RSA Number 7720516 RSA 2007
Assessee PAN AASPB9449C
Bench Ahmedabad
Appeal Number ITSSA 77/AHD/2007
Duration Of Justice 3 year(s) 3 month(s) 7 day(s)
Appellant The DCIT, Circle-3,, Surat
Respondent Smt. Meenaben Jivanchand Bhansali, Surat
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 30-07-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 30-07-2010
Date Of Final Hearing 21-07-2010
Next Hearing Date 21-07-2010
Assessment Year misc
Appeal Filed On 23-04-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND D. C. AGRAWAL AM) IT (SS) A NO.77/AHD/2007 BLOCK PERIOD: 1990-91 TO 1999-2000 AND UP TO 29-10- 1999 THE D. C. I. T. CIRCLE-3 ROOM NO.112 AAYAKAR BHAVAN MAJURA GATE SURAT VS SMT. MEENABEN JIVANCHAND BHANSALI A-304 CHANDAN PARK B/H. MAHARJA AGRASEN BHAVAN CITYLIGHT ROAD SURAT PA NO AASPB 9449C (APPELLANT) (RESPONDENT) APPELLANT BY SHRI R. K. DHANESTA DR RESPONDENT BY SHRI J. P. SHAH AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II SURAT D ATED 26-02-2007 FOR THE ABOVE BLOCK PERIOD. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH THE P ARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERE D THE MATERIAL AVAILABLE ON RECORD. 3. ON GROUND NO.1 THE REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.8 38 615/- MA DE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN PURCHASE OF TWO FLATS. 4. THE FACTS OF THE CASE ARE THAT IN THE COURSE OF THE SEARCH OF THE PREMISES OF M/S. OHM DEVELOPERS AND M/S. OHM ORGANI SERS EVIDENCE WAS FOUND REGARDING THE RECEIPT OF ON MONEY FROM VA RIOUS PERSONS WHO HAD BOOKED FLATS AND SHOPS AT YOGI COMPLEX RANDER ROAD SURAT. THE PARTNERS OF THE FIRM WHOSE STATEMENT WAS RECORDED O N OATH ADMITTED TO HAVE RECEIVED ON MONEY AS PER THE ACCOUNTS SEIZED D URING THE COURSE OF IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 2 SEARCH. THE ON MONEY SO RECEIVED WAS ASSESSED IN TH E HANDS OF M/S. OHM DEVELOPERS AND M/S. OHM ORGANISERS AND THE ADDI TIONS MADE IN THE BLOCK ASSESSMENT PROCEEDINGS IN THEIR CASES HAV E BEEN CONFIRMED BY THE ITAT AHMEDABAD BENCH. IN THE COURSE OF THE SEA RCH IN THE PREMISES OF THE ABOVE PARTIES A KHATAVAHI MARKED BS 2/26 WA S FOUND AND SEIZED. PAGE 8 OF THE KHATAVAHI CONTAINED DETAILS OF PAYMEN T RECEIVED FROM THE ASSESSEE TOWARDS THE PURCHASE OF FLAT NO.A-204/304 AT CHANDAN PARK APARTMENTS CITY LIGHT AREA SURAT. THE PARTNERS OF M/S. OHM DEVELOPERS HAVE ACCEPTED THAT NOTINGS IN SUCH BOOKS OF ACCOUNT CONTAINING AMOUNTS RECEIVED FROM VARIOUS PARTIES BO TH IN CHEQUE AND IN CASH FOR BOOKING OF THE FLATS AND SHOPS. THE AO WAS THEREFORE SATISFIED THAT THE AMOUNT PAID IN CASH BY THE ASSESSEE REPRES ENTED THE ASSESSEES UNDISCLOSED INCOME. PROCEEDINGS WERE ACCORDINGLY IN ITIATED AGAINST THE ASSESSEE. THE ASSESSEE FILED RETURN OF INCOME IN RE SPONSE TO THE NOTICE U/S 158BD OF THE IT ACT DECLARING HER UNDISCLOSED I NCOME AT NIL. FROM THE NOTINGS ON PAGE 8 OF THE KHATAVAHI MARKED AS BS 2/26 THE AO OBSERVED THAT THE ASSESSEE HAD PAID A SUM OF RS.10 31 000/- FOR PURCHASE OF FLAT NO.A-204/304 AT CHANDAN PARK APART MENT CITY LIGHT AREA SURAT. THE ASSESSEE SUBMITTED THAT THE TOTAL PAYMENT MADE WAS ONLY RS.3 00 000/- WHICH WAS MADE BY CHEQUE DRAWN O N THE SURAT PEOPLES CO-OP. BANK BHATAR ROAD SURAT AND THIS AM OUNT WAS PAID EQUALLY BY THE ASSESSEE AND HER SON SHRI KALPESH J. BHANSALI. THE ASSESSEE FURNISHED COPIES OF ACKNOWLEDGEMENT OF RET URNS FILED FOR AY 2001-02 ALONG WITH THE COMPUTATION OF INCOME FOR HE R AND FOR HER SON. ON THIS EXPLANATION FURNISHED TO THE DCIT CENTRAL CIRCLE-1 SURAT CERTAIN QUERIES WERE RAISED ON THE BASIS OF THE MAT ERIAL SEIZED IN THE COURSE OF SEARCH IN THE PREMISES OF M/S. OHM DEVELO PERS AND M/S. OHM ORGANISERS. IN THE COURSE OF PROCEEDINGS U/S 158 BD READ WITH SECTION 158BC OF THE IT ACT THE AO ISSUED SHOW CAUSE NOTIC E ON 5-06-2006. SHRI KETAN O. DER PARTNER OF M/S. OHM ORGANISERS S TATED ON OATH THAT THE KHAAVAHI CONTAINED THE ACCOUNTS OF FLAT OWNERS OF CHANDAN PARK IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 3 APARTMENTS AND EACH PAGE OF THE KHATAVAHI CONTAINED DIFFERENT ACCOUNTS OF PURCHASERS ALONG WITH HIS TELEPHONE NUMBER FLAT NUMBER TOTAL AREA AND TOTAL PRICE AND DETAILS OF DATE WISE PAYMENTS R ECEIVED THROUGH CHEQUES AND BY CASH AND THAT ON MONEY WAS ALSO RECE IVED THROUGH CHEQUE AS WELL AS BY CASH. THE ASSESSEE REQUESTED F OR CROSS EXAMINATION OF SHRI KETAN O. DER WHICH WAS PROVIDED ON 20-06-20 06 AND COPY OF THE STATEMENT RECORDED DURING THE CROSS EXAMINATION WAS PROVIDED TO THE ASSESSEE ON HER REQUEST. THE AO OBSERVED THAT ON PA GE 8 OF THE KHATAVAHI PAYMENTS WERE RECORDED FOR TWO FLATS I.E. A-204/304 AND THE TOTAL PAYMENTS OF RS.10 31 000/- WAS RECORDED THERE IN. DURING THE CROSS EXAMINATION SHRI KETAN O. DER STATED THAT THE ASSES SEE PURCHASED FLAT NO.A-304 WITH AREA OF 1285SQ. FT. AND THE BOOKING P RICE WAS RS.461/- PER SQ FT. AND THE TOTAL SALE PRICE WAS RS.5 92 385/-. IT WAS FURTHER STATED THAT HE DID NOT REMEMBER AS TO WHY PAYMENTS FOR BOT H THE FLATS A- 204/304 WAS RECORDED BY THE ACCOUNTANT IN THE ACCOU NT OF THE ASSESSEE. THE AO NOTED THAT SHRI KETAN O. DER HAD STATED THAT PAGE NO.8 CONTAINED DETAILS OF PAYMENT OF BOTH THE FLATS A-20 4 AND A-304 AND THAT IT WAS NOT POSSIBLE FOR HIM TO STATE AS TO HOW MUCH WAS EXACTLY RECEIVED BY HIM FROM THE ASSESSEE. HE ALSO STATED THAT HE RE MEMBER THAT ONLY ONE FLAT WAS SOLD TO THE ASSESSEE AND AS PER THE CONVEY ANCE DEED IN THE JOINT NAMES OF THE ASSESSEE AND SHRI KALPESH J. BHANSALI THE AMOUNT OF CONSIDERATION SHOWN WAS AT RS.1 95 000/-. WHEN SUGG ESTED BY THE AO THAT FLAT NO.A-204 MUST HAVE BEEN SOLD TO SOMEBODY ELSE BY THE ASSESSEE BECAUSE OF WHICH SHRI KETAN O. DER DID NO T HAVE ANY SEPARATE RECORD IN RESPECT OF FLAT NO.A-204 SHRI KETAN O. D ER COULD NOT GIVE ANY CLARIFICATION IN THIS REGARD. HOWEVER THE FLAT NO. A-204 HAD BEEN SOLD TO ONE SHRI VYOMESH SOLANKI. THE AO THEREFORE TREATED THAT THE ASSESSEE HAD PURCHASED BOTH THE FLATS A- 204 AND A-304 AND R ELYING ON THE DECISION OF ITAT PUNE BENCH IN THE CASE OF M/S. GOL ANI BROTHERS VS ACIT IN ITA NO.579 TO 583/P/1998 165 ITC 144 THE AO OBSE RVED THAT SINCE THE CHEQUE TRANSACTIONS HAD BEEN MENTIONED IN THE C ONVEYANCE DEED IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 4 AND WERE DULY SUBSTANTIATED IT MEANS THAT THE CASH PAYMENTS WERE ALSO MADE BY THE ASSESSEE AND AGAINST THE PURCHASE OF BO TH THE FLATS THE ASSESSEE HAD PAID A SUM OF RS.10 31 000/- TILL THE DATE OF SEARCH EVEN THOUGH THE TOTAL CONSIDERATION WAS TO BE PAID IN A SUM OF RS.11 84 770/- .THE AO OBSERVED THAT THE ASSESSEE HAD FAILED TO EX PLAIN THE SOURCE OF PAYMENT OF RS.3 00 000/- WHICH WAS MADE BY CHEQUE B Y FILING COPIES OF RELEVANT BANK ACCOUNT AND RESULTANTLY THE ENTIRE AM OUNT OF RS.10 31 000/- REMAIN UNEXPLAINED. ACCORDINGLY THE AO ADDED THE SAME AS UNDISCLOSED INVESTMENT OF THE ASSESSEE IN THE SA ID FLATS. 5. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED C IT(A) AND IT WAS CONTENDED BY THE ASSESSEE THAT THE ASSESSEE HAD PUR CHASED ONLY FLAT NO.A-304 AND IT HAS BEEN CONFIRMED BY SHRI KETAN O. DER DURING HIS CROSS EXAMINATION AND THAT FLAT NO.A-204 HAS BEEN S OLD TO SHRI VYOMESH SOLANKI AND SMT. JYOTI V. SOLANKI BY CONVEYANCE DEE D DATED 02-08-2001 COPY OF WHICH HAS BEEN FURNISHED. IT WAS FURTHER SU BMITTED THAT IF ASSUMPTION OF THE AO THAT THE ASSESSEE HAD ALSO PUR CHASED FLAT NO.A- 204 WAS CORRECT THEN THE CONVEYANCE DEED WOULD SHO W THE NAME OF THE ASSESSEE AS SELLER AND NOT AS BUILDER/ORGANIZER AND THE FACT THAT THE CONVEYANCE DEED SHOWED THE NAME OF THE BUILDER/PROM OTER AS THE SELLER CLEARLY ESTABLISHED THE FACT THAT THE ASSESSEE HAD NOT RESOLD THE SAME AND THAT THE AO COULD NOT PROVE BY ANY MATERIAL ON RECORD THAT THE SAID FLAT NO.A-204 HAD BEEN PURCHASED BY THE ASSESSEE. D URING THE COURSE OF CROSS EXAMINATION SHRI KETAN O. DER IN REPLY TO QUE STION NO.2 CLEARLY STATED THAT THE ASSESSEE HAD BOOKED FLAT NO. A-304 FOR A CONSIDERATION OF RS.5 92 385/-. FURTHER SHRI KETAN O. DER IN REPLY TO QUESTION NO.5 STATED THAT THE ASSESSEE HAD PURCHASE D ONLY FLAT NO.A-304 FOR WHICH SALE DEED HAD BEEN EXECUTED ON 19-06-2000 AND IN REPLY TO QUESTION NO.6 HE STATED THAT DUE TO HAVING DOUBTS W ITH REGARD TO EXACT FLAT NUMBER BOOKED BY THE ASSESSEE THE ACCOUNTANT H AD WRITTEN BOTH THE FLAT NUMBERS I.E. FLAT NOS. A-204/304 BELOW ASSESSE ES NAME. IN REPLY TO IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 5 QUESTION NO.6 SHRI KETAN O. DER STATED THAT IT WAS BEYOND HIS COMPREHENSION AS TO WHY THE PAYMENTS FOR BOTH THE F LATS WERE COLLECTIVELY WRITTEN AGAINST THE NAME OF THE ASSESS EE. DURING CROSS EXAMINATION BEFORE THE AO IN REPLY TO QUESTION NO.4 HE HAD CLEARLY STATED THAT THE SALE DEED FOR FLAT NO.A-304 HAD BEEN EXECU TED IN FAVOUR OF THE ASSESSEE AND SHRI KALPESH J. BHANSALI IN JUNE 2000 FOR A CONSIDERATION OF RS.1 95 000/- AND IN RESPONSE TO QUESTION NO.5 H E STATED THAT SALE DEED FOR FLAT NO.A-204 HAD BEEN EXECUTED IN FAVOUR OF ONE SHRI VYOMESH SOLANKI. IT WAS FURTHER SUBMITTED THAT THE SUM OF R S.3 00 000/- WAS PAID EQUALLY BY THE ASSESSEE AND HER SON THROUGH CH EQUES AND THAT THE AO WAS NOT JUSTIFIED IN OBSERVING THAT THE SOURCE O F THE SAID SUM WAS NOT EXPLAINED ESPECIALLY WHEN THE BALANCE SHEETS OF THE CO-OWNERS WERE FILED ALONG WITH THE RETURNS OF INCOME FOR AY 2000-01 ONW ARDS DULY REFLECTING THE INVESTMENT OF RS.1 50 000/- BY EACH. THE SAME W ERE AVAILABLE ON RECORD OF THE AO FOR VERIFICATION AND THE COPIES OF BANK ACCOUNTS FILED ALONG WITH WRITTEN SUBMISSIONS WERE NOT CALLED FOR BY THE AO DURING THE ASSESSMENT PROCEEDINGS. IT WAS THEREFORE PRAYED TH AT THE INVESTMENT MADE BY THE ASSESSEE IN A SUM OF RS.3 00 000/- SHOU LD BE CONSIDERED ONLY FOR FLAT NO.A-304 HAD BEEN PAID BY THE ASSESSE E AND HER SON THROUGH CHEQUES AGAINST THE TOTAL CONSIDERATION OF RS.5 92 385/- AND ACCORDINGLY RELIEF MAY BE PROVIDED TO THE ASSESSEE . 6. THE LEARNED CIT(A) CALLED FOR REMAND REPORT FROM THE AO. THE AO PRECISELY SUBMITTED THE SAME FACT THAT THE ASSESSEE COULD NOT PRODUCE RELEVANT BANK ACCOUNT TO SUBSTANTIATE PAYMENT OF RS .3 00 000/-. THE AO FURTHER STATED THAT THE ASSESSEE DESPITE GIVING OPP ORTUNITY COULD NOT EXPLAIN THE ISSUE. THE REPLY OF THE ASSESSEE WAS AL SO CALLED FOR BY THE LEARNED CIT(A) ON THE REMAND REPORT FILED BY THE AO . THE LEARNED CIT(A) AFTER CONSIDERING THE MATERIAL ON RECORD REMAND RE PORT AND SUBMISSIONS OF THE ASSESSEE HELD THAT FLAT NO.A-204 WAS PURCHAS ED BY SHRI VYOMESH SOLANKI AND SMT. JYOTI SOLANKI. THEREFORE THE ASSE SSEE HAS NOT IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 6 PURCHASED THE SAID FLAT. THE LEARNED CIT(A) ALSO HE LD THAT THE ASSESSEE HAD PURCHASED FLAT NO.A-304 FOR A TOTAL CONSIDERATI ON OF RS.5 92 385/- WHICH WAS PAID. THE LEARNED CIT(A) ACCEPTED THE EXP LANATION OF THE ASSESSEE REGARDING SOURCE OF A SUM OF RS.3 00 000/- PAID TOWARDS PURCHASE OF THE PROPERTY AND ACCORDINGLY DIRECTED T HE AO TO RESTRICT THE ADDITION TO RS.1 92 385/- AND DELETED THE ADDITION OF RS.8 38 615/-. THE FINDINGS OF THE LEARNED CIT(A) IN PARA 8 8.1 8.2 AND 8.4 ARE REPRODUCED AS UNDER: 8. I HAVE CAREFULLY CONSIDERED THE FINDINGS AND CONCLUSION OF THE AO IN ASSESSMENT PROCEEDINGS AS W ELL AS HIS OBSERVATIONS IN THE REMAND REPORT. I HAVE ALSO CONS IDERED THE WRITTEN SUBMISSIONS OF THE AR. THERE ARE TWO ISSUES HERE. FIRSTLY WHETHER THE ASSESSEE HAD BOOKED ONE FLAT O R TWO FLATS. SECONDLY WHETHER THE SUM OF RS.3 00 000 WAS SATISFACTORILY EXPLAINED. AS REGARDS THE FIRST ISSU E THE AO HAS RELIED ON THE NOTINGS ON THE SEIZED MATERIALS AS AL SO ON THE STATEMENT OF SHRI KETAN O. DER DURING HIS CROSS EXA MINATION. FROM A COPY OF PAGE-8 OF BS-2/26 I FIND THAT PAYME NTS RECORDED THEREIN WERE UNDER THE NAME OF THE ASSESSE E AND HER SON. THE FLAT(S) BOOKED WAS SHOWN AS A-204/304. THE TOTAL AMOUNT PAYABLE WAS SHOWN AS RS.11 84 770. THE VERY FACT THAT BOTH THE FLATS WERE NOT RECORDED SEPARATE LY AS A-204 AND A-304 AND FROM THE MANNER IN WHICH IT WAS NOTED WITH A STROKE OR A SLASH BETWEEN THE TWO NOS. IT CLEARLY APPEARS THAT IT COULD BE EITHER A-204 OR A-304 AND NOT BOTH. FUR THER THE AO HAS PLACED RELIANCE ONLY ON QUESTION NO. 5 AND THE ANSWER TO THE SAME PROVIDED BY SHRI KETAN O. DER IN COURSE OF HIS CROSS- EXAMINATION. THE SAME IS REPRODUCED AS UNDER: Q.5: IT CAN BE SEEN FROM THE ABOVE THAT MEENABEN J . BHANSALI HAD BOKED FLAT NO. A-204 AND A-304 OUT OF WHICH FLAT NO.A-204 MUST HAVE BEEN SOLD OUT TO SOME ONE ELSE IN RESALE AFTERWARDS AND THEREFORE YOU DO NOT HAVE ANY SEPARATE RECORD OF DEALINGS IN RESPECT OF FLAT NO.A-204 IN THE KHATAVAHI. YOU ARE REQUESTED TO GIV E CLARIFICATION IN THIS REGARD. ANS.5: I AM UNABLE TO GIVE ANY CLARIFICATION IN THI S REGARD EXCEPT THAT THE SALE DEED OF FLAT NO.A-204 W AS DONE IN THE NAME OF MR. SOLANKI. IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 7 FROM THE ABOVE IT IS CLEARLY SEEN THAT THE QUESTIO N POSED TO HIM WAS A LEADING QUESTION IN WHICH IT WAS SUGGESTED THAT THE ASSESSEE MUST HAVE SOLD A-204 AN D THEREFORE THERE WAS NO SEPARATE RECORD IN RESPECT OF THE SAID FLAT. SHRI KETAN O. DERS REPLY WAS OBVIOUS SINCE HE WOULD NOT HAVE BEEN IN A POSITION TO PROVIDE ANY CLARIFIC ATION TO THE DIRECT SUGGESTION MADE BY THE AO. HOWEVER HE CLEAR LY STATED THAT A-204 HAD BEEN SOLD TO SHRI SOLANKI. THE AO HA S HOWEVER NOT REFERRED TO ANY OF THE OTHER REPLIES P ROVIDED BY SHRI KETAN O. DER DURING THE CROSS-EXAMINATION AND WHICH HAVE BEEN CLEARLY POINTED OUT BY THE AR AS DISCUSS ED EARLIER IN THIS ORDER. FROM THE ENGLISH TRANSLATION OF THE COMPLETE STATEMENT OF SHRI KETAN O. DER IT IS SEEN THAT HE HAD EXPRESSED SURPRISE AS TO HOW HIS ACCOUNTANT HAD REC ORDED THE PAYMENTS RECEIVED FOR BOTH THE FLATS UNDER THE SAME HEAD OR NAMES OF THE ASSESSEE AND HER SON ESPECIALLY WHEN PAYMENTS FOR EACH FLAT WAS TO BE RECORDED SEPARATEL Y ON DIFFERENT PAGES. HE ALSO STATED THAT THE ASSESSEE H AD PURCHASED ONLY A-304 THE TOTAL CONSIDERATION FOR W HICH WAS RS.5 92 385 AND THAT THE CONVEYANCE DEED WAS REGIS TERED ONLY FOR THE SUM OF RS.1 95 000 WHICH WAS EXECUTED ON 19/6/2000. FROM THESE FACTS THERE CAN BE NO OTHER CONCLUSION DRAWN EXCEPT THAT THE ASSESSEE HAD PURCH ASED ONLY ONE FLAT I.E. A -304. 8.1 IN COURSE OF THE APPELLATE PROCEEDINGS IN ORD ER TO STRENGTHEN THE ASSESSEES CASE THE AR HAS FURNISHED A COPY OF THE SALE-DEED IN RESPECT OF A-204 WHICH WAS EXEC UTED ON 2/8/2001 IN FABOUR OF SHRI VYOMESH SOLANKI AND SMT. JYOTI V. SOLANKI. THE AO PROVIDED AN OPPORTUNITY TO EXAMI NE THE SAME IN COURSE OF THE REMAND PROCEEDINGS. UNFORTUNA TELY THE AO HAS ENDED UP ASSUMING THAT SINCE THE SALE-DEED WAS EXECUTED AFTER THE SEARCH IT MUST HAVE BEEN A TRAN SACTION OF RESALE WHEREBY THE SALE CONSIDERATION WOULD HAVE B EEN POCKETED BY THE ASSESSEE EVEN THOUGH THE SALE DEED WAS EXECUTED BY SHRI SOLANKI WITH THE BUILDER/PROMOTER. WHAT THE AO FAILED TO OBSERVE IS THAT THE SALE-DEED EXECUTE D IN FAVOUR OF THE ASSESSEE IN RESPECT OF A-304 WAS ON 19/6/200 0 WHICH WAS ALSO AFTER THE DATE OF SEARCH I.E. 29/10/1999. WITHOUT FURTHER EXAMINING SHRI KETAN O. DER IN COURSE OF TH E REMAND PROCEEDINGS BY CONFRONTING HIM WITH THE SALE-DEED I N RESPECT OF A-204 THE AO WAS UNREASONABLE AND UNJUSTIFIED I N MAKING SUCH A FAR-FETCHED ASSUMPTION ESPECIALLY WHEN HE HAD ABSOLUTELY NO MATERIAL SUBSTANTIATE THE SAME. SUCH FAILURE TO FURTHER EXAMINE ISSUES IN COURSE OF REMAND PROCEEDI NGS MAKES SUCH PROCEEDINGS IRRELEVANT EVEN THOUGH THR OUGH SUCH IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 8 PROCEEDINGS THE AO IS PROVIDED A SECOND INNINGS TO STRENGTHEN HIS CASE. HE HAS HOWEVER NOT OBJECTED TO THE ADMIS SION OF SUCH EVIDENCE IN COURSE OF THE APPELLATE PROCEEDING S. THE SALE DEED IN RESPECT OF A-204 CLEARLY ESTABLISHES APART FROM THE CATEGORICAL STATEMENT OF SHRI KETAN O. DER THAT TH E SAID FLAT WAS PURCHASED BY SHRI VYOMESH SOLANKI AND SMT. JYOT IV. SOLANKI. IT CLEARLY ESTABLISHES THAT THE ASSESSEE H AD NOT PURCHASED THE SAID FLAT AND THAT SHE HAD ONLY PURC HASED A- 304 FOR WHICH A TOTAL CONSIDERATION OF RS.5 92 385 WAS PAID. 8.2 REGARDING THE SOURCE OF THE SUM OF RS.3 00 000 WHICH THE ASSESSEE CLAIMED TO HAVE JOINTLY PAID WIT HER SON THE AOS REJECTION WAS BASED ON THE SIMPLE ISSUE TH AT COPIES OF THEIR BANK ACCOUNTS WERE NOT PRODUCED IN THE COU RSE OF THE ASSESSMENT PROCEEDINGS. HE HOWEVER ACCEPTED THE FA CT (PARAGRAPH-14) THAT THE CHEQUE PAYMENTS WERE SUBSTA NTIATED BY THE SUM RECORDED IN THE CONVEYANCE DEED AND THAT THE ASSESSEE HAD FURNISHED COPIES OF THE ACKNOWLEDGEMEN TS OF RETURNS FILED AND THE COMPUTATIONS OF INCOME FOR TH E AY 2001- 02 WHERE THE SUMS OF RS.1 50 000 EACH WAS SHOWN TO HAVE BEEN PAID BY THE ASSESSEE AND HER SON (PARA -4) AND THAT THE CHEQUES WERE DRAWN ON THE SURAT PEOPLES CO-OP. BANK BHATAR ROAD SURAT. WHEN THE AO HAD SUCH INFORMATIO N ON RECORD HE COULD HAVE OBTAINED COPIES OF THE BANK A CCOUNTS OF THE ASSESSEE AND HER SON IF HE SO DESIRED FROM TH E SAID BANK. SECONDLY IF THE PAYMENTS HAD INDEED BEEN DIS CLOSED IN THE RETURNS FILED FOR THE A. Y. 2001-02 BY BOTH THE ASSESSEE AND HER SON THERE WAS NO REASON TO TAKE THE VIEW T HAT THE SOURCE OF RS.3 00 000 HAD NOT BEEN SATISFACTORILY E XPLAINED. THE RETURNS FILED BY THE ASSESSEE AND HER SON WERE PART OF THE RECORDS OF THE AO AND THEREFORE THE ONUS WAS ON HI M TO EXAMINE AND VERIFY THE SAME TO ESTABLISH WHETHER OR NOT THE CLAIM OF THE ASSESSEE WAS CORRECT. THE SAME DOCUMEN TS HAVE BEEN FURNISHED BY THE AY IN COURSE OF THE APPELLATE PROCEEDINGS. IT IS CLEARLY8 SEEN THAT THE ASSESSEE AND HER SON HAD PAID RS.1 50 000 EACH THROUGH CHEQUES TOWARDS THE PURCHASE OF THE SAID FLAT. THE BANK ACCOUNTS ALONG WITH SUCH INVESTMENTS ARE REFLECTED IN THEIR BALANCE SHEETS. THEREFORE THERE CAN BE NO OTHER CONCLUSION DRAWN EXCEPT THE F ACT THAT THE SOURCE OF THE SAID SUM OF RS.3 00 000 WAS FULLY EXPLAINED. 8.4 TAKING INTO CONSIDERATION THE DISCUSSION ABOVE IT IS HELD THAT AS PER THE NOTHINGS ON PAGE 8 OF BS-2/ 26 AND AS PER STATEMENTS OF SHRI KETAN O. DER THE TOTAL CONS IDERATION PAID FOR FLAT A-304 WAS RS.5 92 385. OUT OF THIS T HE SOURCE OF THE SUM OF RS.3 00 000 PAID THROUGH CHEQUES WAS FU LLY IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 9 EXPLAINED. THIS LEAVES THE BALANCE OF RS.1 92 385 W HICH WAS PAID IN CASH AS ON-MONEY AND FOR WHICH NO EXPLANATI ON HAS BEEN FURNISHED BY THE ASSESSEE WITHER IN COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROC EEDINGS. THE SAID SUM THEREFORE IS TO BE TREATED AS THE UNE XPLAINED INVESTMENT OF THE ASSESSEE TOWARDS THE SAID FLAT. T HE AO IS THEREFORE DIRECTED TO LIMIT THE ADDITION TO THE SU M OF RS.1 92 385. THIS MEANS THAT THE ASSESSEE WOULD GET A RELIEF OF RS.8 38 615. THE AO IS DIRECTED TO TAKE ACTION A CCORDINGLY. 7. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT THE SEIZED MATERIAL CLEARLY DISCLOSES THAT THE ASSE SSEE HAS PAID RS.10 31 000/- FOR PURCHASE OF BOTH THE PROPERTIES/ FLATS AND THAT THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF PAYMENT OF RS.3 00 000/-. THEREFORE ADDITION WAS CORRECTLY MADE BY THE AO. T HE LEARNED DR SUBMITTED THAT IN THE CROSS EXAMINATION OF SHRI KET AN O. DER PARTNER OF M/S. OHM ORGANISERS HAS CLEARLY MADE A STATEMENT AG AINST THE ASSESSEE. THEREFORE THE LEARNED CIT(A) SHOULD HAVE DELETED THE ADDITION. 8. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND SUBMITTED THAT THE SALE DEED OF FLAT NO.A-204 WAS RECORDED IN THE NAME OF SHRI VYOMESH SOLANKI AND SMT. JYOTI V. SOLANKI COPY OF SALE DEE D IS FILED AT PAGE 76 OF THE PAPER BOOK WOULD SHOW THAT THE ASSESSEE HAS NO CONCERN WITH THE ABOVE PROPERTY. HE HAS ALSO REFERRED TO CROSS EXAMI NATION OF SHRI KETAN O. DER IN WHICH HE HAS CLEARLY STATED IN QUESTION N O.2 THAT THE ASSESSEE HAD BOOKED FLAT NO.A-304 FOR A CONSIDERATION OF RS. 5 92 385/- AND THAT IN THE CROSS EXAMINATION HE HAS CLEARLY STATED THAT PROPERTY NO.A-204 WAS EXECUTED IN THE NAME OF SHRI SOLANKI. HE HAS FU RTHER SUBMITTED THAT PAYMENT OF RS.3 00 000/- WAS MADE BY CHEQUE WHICH I S ALSO RECORDED IN THE BALANCE SHEET OF THE ASSESSEE AND HER SON COPI ES OF WHICH IS FILED AT PAGE 116 AND 120 OF THE PAPER BOOK. HE HAS THEREFOR E SUBMITTED THAT THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE AD DITION. IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 10 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THE DEPARTMENTAL APPEAL ON THI S ISSUE. THE ASSESSEE PRODUCED SUFFICIENT MATERIAL BEFORE THE LEARNED CIT (A) TO SHOW THAT FLAT NO.A-204 WAS PURCHASED BY SHRI YOMESH SOLANKI AND H IS WIFE. THIS FACT IS ALSO RECORDED IN THE CROSS EXAMINATION OF SHRI K ETAN O. DER COPY OF THE SALE DEED IS ALSO FILED ON RECORD WHICH CLEARLY SHOWS THAT THE BUILDERS HAVE SOLD FLAT NO.A-204 TO SHRI SOLANKI AND HIS WIF E. ON THE FACE OF THE DOCUMENTARY EVIDENCE AND CROSS EXAMINATION OF SHRI KETAN O. DER CLEARLY PROVE THAT THE ASSESSEE HAS NOT PURCHASED F LAT NO.A-204 FROM THE BUILDERS. THEREFORE THE LEARNED CIT(A) WAS JUSTIFI ED IN DELETING THE ADDITION ON ACCOUNT OF PURCHASE OF FLAT NO.A-204 AL LEGEDLY BY THE ASSESSEE. THE LEARNED CIT(A) ALSO NOTED THAT SHRI K ETAN O. DER IN HIS STATEMENT EXPLAINED THAT THE ASSESSEE HAS BOOKED FL AT NO.A-304 FOR TOTAL SALE CONSIDERATION OF RS.5 92 385/- BUT THE SALE DE ED WAS REGISTERED ONLY IN A SUM OF RS.1 95 000/-. THE LEARNED CIT(A) CONSI DERING THE MATERIAL ON RECORD GAVE A SPECIFIC FINDING THAT THE ASSESSEE HAD ONLY PURCHASED FLAT NO.A-304 FOR A TOTAL CONSIDERATION OF RS.5 92 385/-. THE ASSESSEE IS NOT IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ABOVE FINDINGS OF THE LEARNED CIT(A) AS WELL AS DID NOT RAISE ANY CROSS O BJECTION CHALLENGING THE ABOVE FINDINGS OF THE LEARNED CIT(A). THEREFORE IT STANDS PROVED ON RECORD THAT THE ASSESSEE PURCHASED FLAT NO.A-304 FO R A TOTAL CONSIDERATION OF RS.5.92 385/- WHICH WAS ALSO PAID AS PER THE FINDING OF FACT GIVEN BY THE LEARNED CIT(A). THE ASSESSEE ALSO PRODUCED SUFFICIENT EVIDENCE BEFORE THE AUTHORITIES BELOW REGARDING SOU RCE OF SUM OF RS.3 00 000/- WHICH IS PARTLY PAID BY HER AND PARTL Y BY HER SON. COPIES OF THE ACKNOWLEDGEMENTS OF RETURN WAS FILED AND COP Y OF THE BANK ACCOUNT WAS ALSO FILED WHICH CLEARLY PROVE THAT THE ASSESSEE HAD PAID RS.3 00 000/- FOR PURCHASE OF THE ABOVE PROPERTY. T HEREFORE THE LEARNED CIT(A) ON THE BASIS OF DOCUMENTARY EVIDENCE ON RECO RD WAS RIGHTLY SATISFIED THAT THE SOURCE OF THE SAID SUM OF RS.3 0 0 000/- WAS FULLY EXPLAINED. THE LEARNED CIT(A) THEREFORE RIGHTLY G RANTED BENEFIT TO THE IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 11 ASSESSEE FOR A SUM OF RS.3 00 000/-. HOWEVER WE MA Y NOTE THAT THE LEARNED CIT(A) WHILE RESTRICTING THE ADDITION FOR T HE BALANCE AMOUNT DIRECTED THE AO TO LIMIT THE ADDITION TO A SUM OF R S.1 92 385/- INSTEAD OF RS.2 92 385/-. THE LEARNED DR ALSO SUBMITTED THAT I T IS TYPOGRAPHICAL ERROR IN THE ORDER OF THE LEARNED CIT(A). WE MAY NO TE HERE THAT THE LEARNED CIT(A) HAS GIVEN A SPECIFIC FINDING THAT TH E ASSESSEE PAID TOTAL CONSIDERATION OF RS.5 92 385/- FOR PURCHASE OF FLAT NO. A-304 OUT OF WHICH PAYMENT OF RS.3 00 000/- IS EXPLAINED. NO ADD ITION WAS MADE ON ACCOUNT OF PURCHASE OF FLAT NO.A-204. THEREFORE TH E LEARNED CIT(A) SHOULD HAVE RESTRICTED THE ADDITION TO RS.2 92 385/ - INSTEAD OF RESTRICTING TO RS.1 92 385/-. THE LEARNED COUNSEL F OR THE ASSESSEE ON RAISING THE ABOVE QUERY SUBMITTED THAT SHRI KETAN O . DER HAS NOT CLARIFIED IN HIS STATEMENT IF FULL AMOUNT IS PAID B Y THE ASSESSEE AND THAT IN THE SALE DEED ONLY PART AMOUNT IS MENTIONED. THE REFORE FROM THE STATEMENT OF SHRI KETAN O. DER IT WAS NOT CLEAR WHE THER RS.5 92 385/- WAS RECOVERED FROM THE ASSESSEE OR NOT. HE HAS THER EFORE SUBMITTED THAT DEPARTMENTAL APPEAL MAY BE DISMISSED AS IT IS WITHO UT ENHANCING THE ADDITION TO RS.2 92 385/- INSTEAD OF RS.1 92 385/- MADE BY THE LEARNED CIT(A). WE DO NOT AGREE WITH THE SUBMISSIONS OF THE LEARNED AR IN THIS REGARD BECAUSE THE ASSESSEE IS NOT IN APPEAL. THE F INDING OF FACT RECORDED BY THE LEARNED CIT(A) HAS BEEN ACCEPTED BY THE ASSE SSEE. THE ULTIMATE FINDING OF THE LEARNED CIT(A) PROVE THAT THE ASSESS EE PAID TOTAL CONSIDERATION OF RS.5 92 385/-. THEREFORE BY GIVIN G BENEFIT OF RS.3 00 000/- THE ADDITION SHOULD HAVE BEEN CONFIRM ED AT RS.2 92 385/- . FURTHER THE CONTENTION OF THE LEARNED COUNSEL FO R THE ASSESSEE WOULD NOT BE ACCEPTABLE BECAUSE THE ASSESSEE CLAIMED BENE FIT OF RS.3 00 000/- BEFORE THE AUTHORITIES BELOW AND INC CASE THE SALE DEED WAS EXECUTED ONLY FOR RS.1 95 000/- IF ACTUALLY PAID BY THE ASSESSEE THEN THERE WAS NO NEED FOR THE ASSESSEE TO PAY MORE AMOUNT TO THE BUI LDERS AS AGAINST THE AMOUNT MENTIONED IN THE SALE DEED. IT WOULD THEREF ORE STRENGTHEN THE FINDING OF THE LEARNED CIT(A) THAT THE ASSESSEE PAI D ON MONEY OVER AND IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 12 ABOVE THE AMOUNT MENTIONED IN THE SALE DEED. SINCE THE FINDINGS OF THE LEARNED CIT(A) HAVE BEEN ACCEPTED BY THE ASSESSEE THEREFORE THE LEARNED CIT(A) SHOULD HAVE RESTRICTED THE ADDITION TO RS.2 92 385/- INSTEAD OF RS.1 92 385/-. WE THEREFORE IN PRINCIPLE CONFIRM THE FINDINGS OF THE LEARNED CIT(A) IN DELETING THE SUBSTANTIAL AMOUNT A GAINST THE ASSESSEE. HOWEVER THE ORDER OF THE LEARNED CIT(A) IS MODIFI ED TO THE EXTENT THAT THE AO IS DIRECTED TO LIMIT THE ADDITION TO A SUM O F RS.2 92 385/- INSTEAD OF RS.1 92 385/-. AS A RESULT THIS GROUND OF APPEA L OF THE REVENUE IS PARTLY ALLOWED. 9. ON GROUND NO.2 THE REVENUE CHALLENGED THE DELET ION OF SURCHARGE LEVIED U/S 113 OF THE IT ACT. IT WAS SUBMITTED BEFO RE THE LEARNED CIT(A) THAT SINCE PROVISO TO SECTION 113 OF THE IT ACT WAS INTRODUCED WITH EFFECT FROM 01 ST JUNE 2002 AND SEARCH IN THE CASE OF M/S. OHM DEVE LOPERS WAS CONDUCTED ON 29-10-1999 PRIOR TO THE SAID DATE THEREFORE NO SURCHARGE WOULD BE LEVIED. THE LEARNED CIT(A) ACCEP TED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE AO WAS NOT JUSTIFIED IN LEVYING THE SURCHARGE. 10. ON CONSIDERATION OF THE ABOVE FACTS WE ARE OF T HE VIEW THAT THE ISSUE IS NOW SQUARELY COVERED BY THE JUDGMENT OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS SURESH N. GUPTA REPORTE D IN 297 ITR 322 IN WHICH IT WAS HELD THE PROVISO WAS INSERTED IN SECTION 113 TO INDICATE THAT THE FINANCE ACT OF THE YEAR IN WHICH THE SEARCH WAS INITIATED WOULD APPLY. THAT PROVISO WAS ONLY CLARIF ICATORY IN NATURE. THERE IS NO QUESTION OF RETROSPECTIVE EFFEC T. THE PROVISO HAS TO BE READ AS IT STANDS. PRIOR TO JUNE 1 2002 IN SEVERAL CASES TAX WAS PRESCRIBED SOMETIMES IN THE INCOME-TAX ACT AND SOMETIMES IN THE FINANCE ACT AND SOMETIMES IN BOTH. THIS MADE LI ABILITY UNCERTAIN. THEREFORE CLARIFICATION WAS NEEDED. THE PROVISO IS CURATIVE IN NATURE. THE PROVISO ONLY CLARIFIES THAT OUT OF THE FOUR IT(SS)A NO.77/AHD/2007 DICT CIR-3 SURAT VS SMT. MEENABEN JIVANCHAND BHAN SALI SRUAT 13 DATES PARLIAMENT HAS OPTED THE DATE NAMELY THE Y EAR IN WHICH THE SEARCH UNDER SECTION 158BC IS INITIATED WHICH DATE WOULD BE RELEVANT FOR APPLICABILITY OF A PARTICULAR FINANCE ACT. 11. BY FOLLOWING THE SAME DECISION WE SET ASIDE TH E ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE ORDER OF THE AO. AS A RESULT THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 12. AS A RESULT THE APPEAL OF THE REVENUE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-07-2010 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 30-07-2010 LAKSHMIKANT/- 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 ORDER DY. REGISTRAR ITAT AHMEDABAD