Atlantic Credit & Capital Ltd.,, Ahmedabad v. The DY.CIT.(OSD) Range-1,, Ahmedabad

ITSSA 83/AHD/2006 | misc
Pronouncement Date: 07-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 8320516 RSA 2006
Assessee PAN OFTHE1961A
Bench Ahmedabad
Appeal Number ITSSA 83/AHD/2006
Duration Of Justice 4 year(s) 11 day(s)
Appellant Atlantic Credit & Capital Ltd.,, Ahmedabad
Respondent The DY.CIT.(OSD) Range-1,, Ahmedabad
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 07-05-2010
Date Of Final Hearing 11-03-2010
Next Hearing Date 11-03-2010
Assessment Year misc
Appeal Filed On 26-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING: 08.03.10 DRAFTED ON:09.0 3.10 IT(SS)A NO.83/AHD/2006 BLOCK PERIOD FROM 1/04/1985 TO 21/12/1995 ATLANTIC CREDIT AND CAPITAL LTD. SUMATINATH COMPLEX PRITAMNAGAR 2 ND SLOPE PALDI AHMEDABAD. VS. DY. COMMISSIONER OF INCOME TAX (OSD) RANGE-1 AHMEDABAD. PAN/GIR NO. :31 - 131 - CZ - 0617 (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S.N.DIVETIA AND ANIL KSHATRIYA A.RS. RESPONDENT BY: SHRI B.S.SANDHU CIT. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 158BC READ WITH SECTION 254 OF THE INCOME TAX ACT 1961 ON 30.03.2006. 2. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ALONG WITH THE OTHER GROUP CONCERNS AT IOL HOUSE AMBAWAD I BAZAR AHMEDABAD U/S.132 OF THE INCOME TAX ACT 1961 [THE ACT FOR SHORT] ON 21.12.1995. NOTICE U/S 158BC OF THE ACT WAS ISSUED AND SERVED O N THE ASSESSEE ON IT (SS) A NO. 83/AHD/2006 - 2 - 27.08.1996 ASKING THE ASSESSEE TO FURNISH THE RETUR N WITHIN 16 DAYS OF SERVICE OF NOTICE. THE ASSESSEE FILED ITS BLOCK RET URN ON 27.6.1997 DECLARING AN UNDISCLOSED INCOME AT RS.NIL. ORIGINAL BLOCK ASS ESSMENT WAS COMPLETED U/S 158BC ON 29.06.1997 DETERMINING THE TOTAL INCOM E AT RS.46 31 43 672/-. THE SAID ASSESSMENT WAS SET ASID E BY THE ITAT VIDE ORDER DATED 25.08.2004 DIRECTING THE AO TO PASS FRE SH ASSESSMENT AFTER ALLOWING ADEQUATE OPPORTUNITY TO THE ASSESSEE. IN C ONSEQUENCE THEREOF THE AO PASSED THE SUBSEQUENT BLOCK ASSESSMENT VIDE ORDE R DATED 30.03.2006 DETERMINING THE TOTAL UNDISCLOSED INCOME AT RS.42 5 4 62 172/- AFTER GETTING PRIOR APPROVAL OF THE CIT AHMEDABAD VIDE HIS LETTE R NO.CIT.ABD.1/APPROVAL/ 158BC/2005-06 DATED 30.03.2 006 BY MAKING THE FLOWING ADDITIONS:- PARA NO. OF ASSESS- MENT ORDER HEADING AMOUNT (RS.) 4.1 DISCLOSURE MADE BY DR. AMIT SH AH 5 21 86 400 4.2 ADDITIONAL UNDISCLOSED INCOME OF THE ASSESSEE NOT DISCLOSED DURING THE COURSE OF SURVEY 71 59 658 4.3 UNACCOUNTED CASH DEPOSIT MADE IN THE BANK ACCOUNT 28 88 000 4.4 UNACCOUNTED SALES OF SHARES BY THE ASSESSEE 64 83 110 4.5 INCOME F ROM UNDISCLOSED SHARE TRANSACTIONS 2 98 64 000 4.6 UNACCOUNTED SALES OF THE ASSESSEE 2 40 00 000 4.7 UNEXPLAINED INCOME OF THE ASSESSEE 45 000 4.8 UNEXPLAINED INVESTMENT OF THE ASSESSEE 44 32 093 4.9 UNEXPLAINED INCOME OF THE ASSESSEE 92 650 4.10 UNACCOUNTED RECEIPTS OF THE ASSESSEE 15 00 000 4.11 UNEXPLAINED INVESTMENT OF THE ASSESSEE 36 36 000 4.12 UNACCOUNTED RECEIPTS OF THE ASSESSEE 3 20 00 000 IT (SS) A NO. 83/AHD/2006 - 3 - 4.13 UNACCOUNTED INCOME OF THE ASSESSEE 7 94 48 703 4.14 UNDISCLOSED INVESTMENT OF THE ASSESSE E 14 800 4.15 UNACCOUNTED EXPENDITURE OF THE ASSESSEE 13 20 000 4.16 UNACCOUNTED INCOME OF THE ASSESSEE 17 00 000 4.17 UNACCOUNTED INVESTMENT OF THE ASSESSEE 8 25 57 037 4.18 UNEXPLAINED INCOME OF THE ASSESSEE 79 75 790 4.19 UNACCOUNTED CASH DEPO SITS IN THE BANK ACCOUNTS. 45 49 000 4.20 UNEXPLAINED INVESTMENT OF THE ASSESSEE 2 68 44 886 4.21 UNACCOUNTED SALES OF THE ASSESSEE 5 39 55 045 4.22 ADDITIONAL INCOME OFFERED BY THE ASSESSEE 28 10 000 TOTAL INCOME 42 54 62 172 3. THE ASSESSEE HAD RAISED THE GROUNDS OF APPEAL I N THE MEMO OF APPEAL FILED ON 26.04.2006. THESE GROUNDS OF APPEAL WERE REVISED BY THE ASSESSEE ON 22.01.2009 WHEN THE APPEAL WAS HEARD B Y THE THEN BENCH. THEREAFTER THE APPEAL WAS DE-HEARD BY THE BENCH. T HE APPEAL AGAIN CAME UP FOR HEARING BEFORE THE PRESENT BENCH WHEN AGAIN THE ASSESSEE FILED ANOTHER SET OF REVISED GROUNDS OF APPEAL ON 9.03.20 10. IN THE ABOVE CIRCUMSTANCES THE BENCH ASKED THE LD. CIT DR SHRI B.S.SANDHU TO VERIFY THE THREE SETS OF GROUNDS OF APPEAL FILED BY THE AS SESSEE AND INFORM THE BENCH WHICH ARE THE GROUNDS OF APPEAL WHICH SHOULD BE TAKEN UP FOR HEARING. THE CASE WAS ADJOURNED FOR 30 MINUTES ON T HAT DAY AND THE BENCH AGAIN REASSEMBLED FOR HEARING OF THE APPEAL. THE LD . CIT DR SHRI SANDHU SUBMITTED THAT HE HAS NO OBJECTION TO THE ASSESSEE TAKING THE REVISED GROUNDS OF APPEAL FILED ON 9.03.2010 EXCEPT THE GRO UND NO.19.1 OF THE REVISED GROUND OF APPEAL AND THE SAME MAY BE HEARD AND DECIDED BY THE BENCH. THE GROUND NO.19.1 OF THE REVISED GROUNDS OF APPEAL READS AS UNDER:- IT (SS) A NO. 83/AHD/2006 - 4 - 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUS LY ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. INCOME TREATED AS INCOME IN THE HANDS OF ASSESSEE C OMPANY ..RS.5 21 86 400/- THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THIS GROUND OF APPEAL WAS NOT RAISED IN THE ORIGINAL MEMORANDUM OF APPEAL AND EVEN THE REVISED GROUNDS WHICH WERE FILED ON 22.01.2009. NOW THIS GROUND OF APPEAL RAISED BY THE ASSESSEE WAS NOT DUE TO ANY BONAFIDE OMISSION. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE COULD NOT SHOW BEFORE US THAT THE ABOVE ADDITIONAL GROUND TAKEN IN THE REVISED GR OUNDS OF APPEAL FILED NOW WAS DUE TO ANY BONAFIDE OMISSION. THEREFORE WE PROCEED TO DECIDE THE GROUNDS FILED BEFORE THE BENCH ON 9.03.2010 EXCEPT GROUND NO.19.1 WHICH IS NOT ADMITTED AFTER HEARING BOTH THE PARTIES IN R ESPECT OF THOSE GROUNDS. 4. GROUND NO.1 OF THE APPEAL READS AS FOLLOWS:- 1. THAT THE ASSESSING OFFICER FRAMED THE ASSESSMEN T ORDER WITHOUT MENTIONING THE ASSESSMENT YEARS THE INCOME ATTRIBUTABLE TO WHICH IS MANDATORY AS PER SECTION158BB OF THE ACT A ND SUCH ILLEGALITY CANNOT BE CURED BY AN APPELLATE AUTHORITY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE LD. AR POINTED OUT THAT WHILE FRAMING THE BLOCK ASSESSMENT THE AO HAS NOT MADE THE YEAR-WISE COMPUTATION OF UNDISCLOSED INCOME. HE CONTENDED THAT SUCH COMPUTATION WAS MANDATORY IN VIEW OF PROVISIONS OF SECTION 158BB OF THE ACT AND VIOLATION OF THE SAME MADE THE ORDER BAD IN LAW LIABLE TO BE QUASHED. THE LD. DR ARGUED THAT THE ABOVE MISTAKE I S A CURABLE MISTAKE AND THEREFORE THE ORDER CANNOT BE CANCELLED. WE FI ND THAT IT IS NOT IN DISPUTE THAT THE AO HAD HELD A VALID JURISDICTION T O COMPUTE THE UNDISCLOSED INCOME OF THE ASSESSEE. THE MISTAKE POINTED OUT HE RE IS NOT A MISTAKE IN THE ASSUMPTION OF JURISDICTION. THE ALLEGED ERROR W AS ERROR IN EXCISE OF JURISDICTION I.E. IN THE MANNER OF COMPUTATION WHIC H IS A PROCEDURAL IRREGULARITY. THEREFORE IN OUR CONSIDERED VIEW THE ORDER PASSED BY THE AO IT (SS) A NO. 83/AHD/2006 - 5 - CANNOT BE QUASHED ON THIS GROUND. WE THEREFORE SE T ASIDE THE ORDER OF THE AO AND DIRECT THE AO TO RECOMPUTE THE UNDISCLOSED I NCOME AS PER THE PROCEDURE PRESCRIBED UNDER SECTION 158BB OF THE ACT BY MAKING YEAR-WISE COMPUTATION. THUS THIS GROUND OF APPEAL IS ALLOWED AS ABOVE FOR STATISTICAL PURPOSES. 6. GROUND NOS.2 AND 3 OF THE APPEAL READS AS FOLLO WS. 2. ON THE FACTS AND CIRCUMSTANCES AND IN LAW BOTH THE AO AND COMMISSIONER HAVE ERRED IN NOT GIVING ANY OPPORTUNI TY OF BEING HEARD BEFORE PASSING THE ORDER U/S.142(2A) OF THE A CT DATED 11 12.1996 AND THEREFORE THE OBSERVATION/FINDINGS G IVEN ON THE BASIS OF SAME MAY KINDLY BE TREATED AS NULL AND VOID HAVI NG NO BEARING ON THE CASE. 3. WITHOUT PREJUDICE AND IN THE ALTERNATIVE TO THE GROUND NO. 2 ABOVE THE LEARNED AO HAS FAILED TO APPRECIATE THAT THE APPELLANT WAS PREVENTED BY A SUFFICIENT CAUSE FOR FAILURE TO GET ACCOUNTS AUDITED AS DIRECTED U/S142(2A) OF THE ACT WHEN THE AO HIMSELF HAS FAILED TO SUPPLY NECESSARY INFORMATION AND PARTICULARS TO THE AUDITOR AS REQUIRED TO BE INVESTIGATED BY THE AUDITOR FOR THE PURPOSE OF CARRYING OUT THE AFORESAID AUDIT. 7. THE RELEVANT OBSERVATION OF THE AO IN THIS REGA RD IS AS UNDER:- 2.0 DIRECTION FOR SPECIAL AUDIT U/S. 142(2A) OF TH E ACT. . THE ASSESSEE WAS DIRECTED ON 11.12.96 TO GET ITS AC COUNT AUDITED FOR THE PREVIOUS YEAR RELEVANT TO A.Y. 1995-96 AND 1996 -97 COVERING THE PERIOD FROM 24.11.94 (DATE OF INCORPORATION OF COMP ANY) TO 21.12.1995- INCLUDED IN THE BLOCK PERIOD FROM MANUB HAI & CO. C.A AHMEDABAD WITHIN TWO MONTHS FROM THE RECEIPT OF THE LETTER. THE COPY OF THE LETTER WAS ALSO SERVED TO M/S MANUBHAI & CO. C.A AHMEDABAD FOR INFORMATION AND NECESSARY ACTION. THI S ORDER WAS ISSUED WITH THE PRIOR APPROVAL OF THE C.I.T. GUJ.-L AHMEDABAD. THE SAID DIRECTION WAS SERVED TO THE ASSESSEE ON 12.12. 96. VIDE LETTER DATED 2.1.97 THE ASSESSEE REQUESTED TO M/S MANUBHAI & CO. C.A TO INFORM ABOUT AS TO WHEN AND AT WHAT TIME WILL IT BE CONVENIENT TO START THE AUDIT. AGAIN VIDE LETTER DATED 4.2.97 THE ASSESSEE MADE THE SAME REQUEST. M/S. MANUBHAI & CO. C.A VIDE LETTER D T. 6.2.97 REQUESTED THE ASSESSEE TO CONTACT SHRI N.A.JAPEE TO ARRANGE THE AUDIT PROGRAM. THE ASSESSEE VIDE LETTER DATED 10.2. 97 REQUESTED TO IT (SS) A NO. 83/AHD/2006 - 6 - GRANT EXTENSION FOR THREE MONTHS AS THE ASSESSEE'S CHIEF ACCOUNTANT SHRI MAHESH SHARMA HAD LEFT THE JOB FROM JANUARY 97 . IN ABSENCE OF THE CHIEF ACCOUNTANT SHRI NUPOOR KANSARA HAD TAKEN OVER THE CHARGE FROM JANUARY 97. IT WAS FURTHER SUBMITTED BY THE A SSESSEE THAT DUE TO SOME UNAVOIDABLE CIRCUMSTANCES IT WAS NOT POSSIB LE TO COMPLETE THE AUDIT WITHIN THE PRESCRIBED TIME. THE REQUEST O F THE ASSESSEE FOR GRANT OF TIME FOR FURTHER THREE MONTHS WAS ACCEPTED BY THE A.O. AND EXTENSION WAS GRANTED UPTO 20 TH APRIL 97. THE ASSESSEE WAS REQUESTED TO INTIMATE THE PROGRESS OF AUDIT WORK TO THE A.O. VIDE LETTER DT. 15 4.97 THE ASSESSEE HAS FURTHER REQUEST ED TO GRANT EXTENSION OF TWO MONTHS ON THE GROUND THAT NEWLY AP POINTED CHIEF ACCOUNTANT SHRI RAJESH SHAH STILL NEEDS SOME TIME I N BECOMING CONVERSANT WITH THE AFFAIRS OF THE GROUP. THE COMPA NIES' AFFAIRS ARE IN GOOD PROGRESS HOWEVER IT WILL REQUIRE SCRUTINY BEF ORE STARTING THE AUDIT WORK. THE ASSESSEE WAS FURTHER INFORMED VIDE THIS OFFICE LETTER DT. 20TH APRIL 97 ABOUT THE EXTENSION OF TIME UPTO 20 LH JUNE 97 AND DIRECTED TO COMPLETE THE AUDIT WORK WITHIN THE STIP ULATED TIME AND INTIMATE THE PROGRESS OF THE AUDIT WORK ON OR BEFOR E 20 TH MAY 97. M/S. MANUBHAI & CO. ONCE AGAIN REQUESTED THE ASSESS EE VIDE LETTER DTD.22 ND MAY 97 WITH A COPY TO THE UNDERSIGNED TO CONTACT T HEM IMMEDIATELY AND PRODUCE THE BOOKS OF ACCOUNTS FOR T HE PERIOD TO BE COVERED UNDER THE AUDIT. M/S MANUBHAI & CO. FURTHER INFORMED THE A.O. VIDE LETTER DT. 22 ND MAY 97 THAT PILE OF THEIR WRITTEN REQUEST AND REPEATED REMINDERS ON PHONE THE ASSESSEE COMPANY NO T YET APPROACHED THEM WITH BOOKS OF ACCOUNT AND OTHER REL EVANT RECORDS FOR THE PURPOSE OF CARRYING OUT THE AUDIT ASSIGNED TO THEM AND THEREFORE THE AUDIT OF THE AFORESAID COMPANY WOULD NOT BE COMMENCED BY THEM. THEY THEREFORE REQUESTED TO THE A.O. TO ISSUE NECESSARY INSTRUCTIONS TO THE ASSESSEE TO EXTEND TH EIR COOPERATION FOR THE PURPOSE OF COMPLETION OF AUDIT AS WITHOUT THEIR COOPERATION IT WILL NOT BE POSSIBLE FOR THEM TO COMPLETE THE AUDIT WORK WITHIN THE STIPULATED TIME. THE ASSESSEE WAS FURTHER REMINDED VIDE THIS OFFICE LETTER DT. 30.5.97 TO SUBMIT THE AUDIT REPORT BY 6. 6.97 TO TAKE CARE OF THE SAME WELL WITHIN TIME ALTHOUGH EXTENSION WAS GR ANTED UPTO 20 TH JUNE 97. SUDDENLY AT THE FAG END OF THE TIME GRANTE D FOR AUDIT WORK THE ASSESSEE REQUESTED VIDE LETTER DT. 6.6.97 TO TH E A.O. TO PROVIDE XEROX COPIES OF THE SEIZED MATERIALS TO GET THE ACC OUNT OF THE COMPANY AUDITED U/S 142(2A) OF THE ACT. THE GROUNDS FOR REQUEST TO PROVIDE XEROX COPIES OF THE MATERIALS SECOND TIME H AS BEEN GIVEN BY THE ASSESSEE THAT DURING THE COURSE OF INQUIRIES BY THE CBI AND SEBI THE XEROX COPY OF THE SEIZED MATERIALS HAVE BEEN MI SPLACED. THE XEROX COPIES OF THE SEIZED MATERIALS WERE GIVEN TO THE ASSESSEE LONG BACK ON 22.11.96. THE DIRECTION FOR SPECIAL AU DIT OF THE ASSESSEE'S BOOKS OF ACCOUNTS U/S 142(2A) WAS GIVEN TO THE ASSESSEE ON 11.12.96 AND WAS RECEIVED BY THE ASSESSEE ON 12. 12.96 AND SUBSEQUENTLY THE EXTENSION OF TIME HAS BEEN GRANTED TO THE ASSESSEE TILL 20 TH JUNE 1997 ON THE REQUEST OF THE ASSESSEE BUT THE AUDIT WORK COULD NOT BE COMPLETED TILL THE DATE OF ORDER. IT (SS) A NO. 83/AHD/2006 - 7 - IT CAN BE SEEN THAT IN SPITE OF NUMBER OF OPPORTUNI TIES ASSESSEE NEVER COOPERATED WITH THE SPECIAL AUDITOR AND ENSUR ED THAT SPECIAL AUDIT COULD NOT BE DONE IN ITS CASE. 8 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE LD. AR SUBMITTED THAT THE ORDER FOR SPECIAL AUDIT UNDER SE CTION 142(2A) WAS PASSED IN THE INSTANT CASE ON 11.12.1996 WITHOUT ALLOWING ANY OPPORTUNITY OF HEARING TO THE ASSESSEE. THEREFORE AS VARIOUS ADDI TIONS HAVE BEEN MADE IN THE ORDER OF ASSESSMENT ON THIS COUNT ALONE AND THE REFORE THE ORDER OF ASSESSMENT SHOULD BE CANCELLED. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE ASSESSEE HAD NOT GOT DONE THE SPECIAL AUDI T IN PURSUANCE TO THE ORDER PASSED IN HIS CASE AND THEREFORE THE ASSESSE E COULD NOT HAVE ANY GRIEVANCE AGAINST THE SAID ORDER. WE FIND THAT THE REVENUE COULD NOT SHOW THAT THE ASSESSEE WAS AFFORDED ANY OPPORTUNITY OF H EARING BEFORE ORDER FOR SPECIAL AUDIT WAS PASSED IN HIS CASE. THE HON'BLE S UPREME COURT IN THE CASE OF SAHARA INDIA (FIRM) VS. CIT & ANR. (2008) 300 IT R 403 (SC) HELD THAT OPPORTUNITY OF HEARING IS MUST AND SHOULD BE GRANTE D TO THE ASSESSEE BEFORE PASSING ANY ORDER UNDER SECTION 142(2A) OF T HE ACT. IT WAS FURTHER HELD THAT IN ABSENCE OF SUCH OPPORTUNITY BEING GRAN TED TO THE ASSESSEE THE ASSESSEE MAY OBJECT TO THE CORRECTNESS OF THE MATER IAL GATHERED ON THE BASIS OF THE AUDIT REPORT SUBMITTED UNDER SECTION 1 42(2A) OF THE ACT. THEREFORE IN OUR CONSIDERED OPINION THE ORDER PAS SED UNDER SECTION 142(2A) IN THE INSTANT CASE WITHOUT ALLOWING ANY OP PORTUNITY OF PRIOR HEARING TO THE ASSESSEE WAS NOT A VALID ORDER. HOWE VER IT IS ALSO OBSERVED THAT SPECIAL AUDIT WAS NOT CARRIED OUT IN THE CASE OF THE ASSESSEE AND NO REPORT OF THE SPECIAL AUDITOR WAS USED IN THE INSTA NT CASE. THEREFORE THE ASSESSEE COULD NOT HAVE ANY SPECIFIC GRIEVANCE IN T HIS APPEAL AGAINST THE SAID ORDER. IN RESPECT OF THE VARIOUS ADDITIONS MAD E IN THE ORDER OF ASSESSMENT THE SAME WILL BE CONSIDERED ON MERITS O F INDIVIDUAL ITEMS ON THE BASIS OF REASONS RECORDED IN THE ORDER OF ASSES SMENT AND NO ADVERSE VIEW SHALL BE DRAWN AGAINST THE ASSESSEE MERELY ON THE BASIS OF NOT GETTING THE ACCOUNT AUDITED UNDER SECTION 142(2A) OF THE AC T. THUS WITH THE ABOVE IT (SS) A NO. 83/AHD/2006 - 8 - OBSERVATION THE GROUNDS OF APPEAL OF THE ASSESSEE ARE DISPOSED OFF AS ABOVE. 9. GROUND NO.4 OF THE APPEAL READS ARE UNDER:- 4. THE LEARNED AO HAS FAILED TO APPRECIATE THAT AL L THE MAJOR IMPUGNED ADDITIONS WERE OUTSIDE THE SCOPE OF PROVIS IONS OF SECTION 158B(B) AND OTHER RELEVANT PROVISIONS OF THE ACT IN AS MUCH AS THE SAME WERE ALREADY RECORDED IN THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS FOUND AND SEIZED AND ALSO MAINTAINED IN T HE NORMAL COURSE RELATING TO SUCH PREVIOUS YEARS THEREFORE SUCH TRANSACTION OR INCOME ARISING OUT OF IT SHOULD NOT HAVE BEEN INCLU DED IN THE BLOCK PERIOD. THE APPELLANT SUBMITS THAT IN ORDER TO HOLD ANY ITEM AS UNDISCLOSED INCOME U/S. 158B(B) OF THE IT. ACT IT IS NOT A CONDITION PRECEDENT TO HAVE THE ACCOUNTS AUDITED EITHER TAX AUDIT OR SPECIAL AUDIT SO THAT THE AO'S CONTENTION DESERVED TO BE R EJECTED AND SUCH ADDITION SHOULD BE DELETED. 10. AFTER HEARING THE RIVAL SUBMISSIONS WE FIND THAT IN THIS GROUND OF APPEAL THE ASSESSEE HAS NOT CHALLENGED ANY SPEC IFIC ADDITION MADE IN THE ORDER OF ASSESSMENT. THIS GROUND IS GENERAL IN NATU RE. THE ASSESSEE HAS CHALLENGED THE VARIOUS ADDITIONS BY TAKING SEPARATE GROUNDS OF APPEAL WHICH SHALL BE CONSIDERED AND DISPOSED OFF ON MERIT OF EACH ITEM SEPARATELY. THEREFORE THIS GROUND OF APPEAL OF THE ASSESSEE DOES NOT REQUIRE SEPARATE ADJUDICATION BY US AND ACCORDINGLY DISMISSED. 11. GROUND NO.5 OF THE APPEAL READS AS FOLLOWS:- 5. THE APPELLANT ABOVE NAMED BEGS TO SUBMIT THAT T HE IMPUGNED ORDER PASSED BY AO. IS BARRED BY LIMITATION OF TIME IN AS MUCH AS THE TIME LIMIT PRESCRIBED FOR ASSESSMENT UNDER CHAPTER XIV-B IN SECTION 158BE IS ONE YEAR FROM THE DATE OF ISSUE OF NOTICE ULS.158BC OF THE ACT. THIS PROVISION DOES NOT PRESCRIBE ANY OTHER TI ME LIMIT FOR PASSING DE NOVO ORDER IN CONSEQUENCE TO THE ORDER SETTING A SIDE THE 'ORIGINAL ASSESSMENT BY THE APPELLANT AUTHORITY. IN THE PRESE NT CASE THE ORIGINAL ASSESSMENT WAS FRAMED ON 29.6.1997 AND THE SAME WAS SET ASIDE BY ITAT VIDE ITS ORDER DATED 25.082004. THE N OTICE U/S 158BC WAS ISSUED ON 27.8.1996 AND HENCE THE BLOCK ASSESSM ENT WAS REQUIRED TO BE FRAMED WITHIN ONE YEAR FROM THIS DAT E IN VIEW OF IT (SS) A NO. 83/AHD/2006 - 9 - SECTION 158BE. HOWEVER THE IMPUGNED ORDER HAS BEEN PASSED ON 30/3/2006 AND HENCE IT IS BARRED BY LIMITATION. 5.1 SECONDLY IT IS SUBMITTED THAT THE PROVISIONS O F 153 ARE NOT APPLICABLE TO CHAPTER XIV-B AND AS SUCH THE EXTENDE D TIME WOULD NOT BE APPLICABLE.. THE APPELLANT DERIVES SUPPORT FROM THE UNREPORTED DECISION OF DELHI BENCH OF ITAT IN IT(SS) A NO 228/ DEL/2004 WHEREIN IT WAS HELD THAT BLOCK ASSESSMENT ORDER FLAMED IN C ONSEQUENCE OF AN ORDER U/S 263 BUT PASSED AFTER THE EXPIRY OF PERIOD PRESCRIBED U/S 158BE IS BARRED BY LIMITATION AND AS SUCH INVALID. 5.2 THIS PROPOSITION HAS NOW BEEN SETTLED BY THE H ON'BLE SC AS REPORTED ON PAGE 334 OF 297 ITR WHERE IT HAS HELD A S UNDER 'IF THERE IS NO CONFLICT BETWEEN THE PROVISIONS OF CHAPTER XIVB AND ANY OTHER PROVISIONS OF THE 1961 ACT THEN THE LATTE R WILL OPERATE' 5.3 THE HON'BLE HIGH COURT OF GUJARAT FOLLOWING TH E SUPREME COURT'S DECISION (SUPRA) IN THE CASE OF CARGO CLEARING AGEN CY (2008) 307 1TR -1 HAS THEREFORE ALSO HELD THE SAME. 5.4 SINCE THERE IS CONFLICT BETWEEN THE PROVISIONS OF SECTION 158BE & 153 AND CHAPTER XIV.B BEING A SELF CONTAINED CODE PROVISIONS OF CHAPTER XIV-B SO FAR AS LIMITATION IS CONCERNED I T IS THE SECTION 158BE WHICH WILL BE APPLICABLE TO THE PRESENT CASE. 5.5 IN VIEW OF THE ABOVE THE GROUND WITHOUT PREJU DICE AND IN ALTERNATIVE TO GROUNDS RAISED IN APPEAL MEMO IS RA ISED FOR KIND CONSIDERATION OF THE HON'BLE MEMBERS: 'THE IMPUGNED ORDER IS BARRED BY LIMITATION AS PER THE TIME LIMIT PROVIDED UNDER THE PROVISIONS CHAPTER XIV - B OF TH E INCOME TAX ACT 1961 WHICH IS A SELF CONTAINED CODE AND THE PROVI SIONS OF SECTION 153 ARE NOT APPLICABLE IN THIS DENOVO ASSESSMENT' 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE RELEVANT FACTS ARE THAT SEARCH AND SEIZURE OPERATION IN THIS CASE WAS CONDUCTED ON 21.12.1995 AND IN PURSUANCE TO THE SAME ASSESSMENT FOR THE BLOCK PERIOD COMPLETED UNDER SECTION 158BC ON 29.06.1997 WHICH WAS WELL WITHIN THE TIME PRESCRIBED UNDER SECTION 158BE OF THE ACT. THE REAFTER THE TRIBUNAL VIDE ITS ORDER DATED 25.08.2004 SET ASIDE THE SAID ORDER OF BLOCK IT (SS) A NO. 83/AHD/2006 - 10 - ASSESSMENT AND DIRECTED THE AO TO REFRAME THE ASSES SMENT AFRESH. IN PURSUANCE TO THIS DIRECTION OF THE TRIBUNAL THE AO REFRAMED THE BLOCK ASSESSMENT ORDER ON 30.03.2006 WHICH WAS ALSO WITHI N THE TIME LIMIT PROVIDED UNDER SECTION 153 OF THE ACT. ON THE ABOVE FACTS THE CONTENTION OF THE LD. AR OF THE ASSESSEE IS THAT THE ASSESSMENT F OR THE BLOCK PERIOD COMPLETED ON 30.03.2006 BEING IN PURSUANCE TO SEARC H CONDUCTED ON 21.12.1995 IS BEYOND THE TIME LIMIT PRESCRIBED UNDE R SECTION 158BE OF THE ACT. IN SUPPORT OF THIS CONTENTION HE PLACED RELIA NCE ON THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN IT(SS)A NO.228/DELHI /2004 WHEREIN IT WAS HELD THAT ORDER FRAMED IN CONSEQUENCE TO AN ORDER U NDER SECTION 263 BUT PASSED AFTER EXPIRY OF PERIOD PRESCRIBED UNDER SECT ION 158BE IS BARRED BY LIMITATION AND AS SUCH INVALID. THE LD. DR ON THE O THER HAND SUBMITTED THAT IF THE ARGUMENT OF THE ASSESSEE IS ACCEPTED AS CORR ECT THEN IT IMPLIES THAT TRIBUNAL HAD NO JURISDICTION ON 25.08.2004 TO SET A SIDE THE ORIGINAL ASSESSMENT ORDER OF BLOCK ASSESSMENT AND CONSEQUENT LY THE ORIGINAL ORDER OF THE BLOCK ASSESSMENT SHOULD BE TREATED AS FINAL. THE LD. AR PLACED RELIANCE ON THE DECISION OF THE HONBLE GUJARAT HIG H COURT IN THE CASE OF CARGO CLEARING AGENCY (GUJARAT) V. JOINT CIT (2008) 307 ITR 1 (GUJ). WE FIND THAT IN THE SAID DECISION THE HIGH COURT WAS C ONCERNED WITH THE APPLICABILITY OF PROVISIONS OF SEC. 147/148 IN CASE OF A BLOCK ASSESSMENT WHERE ASSESSMENT IS ALREADY COMPLETED U/S 158BC OF THE ACT AND THE HIGH COURT HELD THAT NO NOTICE U/S 148 OF THE ACT CAN BE ISSUED IN SUCH A CASE. THUS THE FACTS OF THE INSTANT CASE IS QUITE DIFFER ENT AND DISTINGUISHABLE IN AS MUCH AS THE FRESH ASSESSMENT HAS NOT BEEN MADE BY T HE AO BY INITIATING ANY FRESH PROCEEDING BY ISSUANCE OF NOTICE U/S 148 OF THE ACT BUT ON THE OTHER HAND PASSED FRESH ORDER IN PURSUANCE TO THE D IRECTION OF THE TRIBUNAL ON AN APPEAL AGAINST THE ORIGINAL ORDER WHICH WAS W ITHIN TIME AND THE APPELLATE ORDER WAS IN CONTINUATION TO THE ORIGINAL ASSESSMENT PROCEEDINGS. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE D ECISION OF MADRAS HIGH COURT IN THE CASE OF LAXMI JEWELLARY VS. DCIT (200 1) 252 ITR 712(MAD) WHEREIN IT WAS HELD THAT:- SEC. 158BE ONLY SPECIFIES THE PERIOD WITHIN WHICH THE AO MUST COMPLETE THE ASSESSMENT. IT DOES NOT COME IN THE WA Y OF THE IT (SS) A NO. 83/AHD/2006 - 11 - APPELLATE AUTHORITIES WHO FIND THE ASSESSMENT ORDE R TO BE DEFECTIVE FOR ANY REASON REMANDING THE MATTER TO THE AO FOR MAKING A PROPER ORDER IN RELATION TO THE MATTERS WITH RESPECT TO WH ICH THE MATTER IS REMANDED BY THE APPELLATE AUTHORITY. THE LIMITATION OF ONE YEAR IS ONLY FOR THE ASSESSMENT AND IT IS NOT A LIMITATION WHICH FETTERS THE DISCRETION OF THE APPELLATE FORUM. THERE CAN BE NO DISPUTE AND THERE IS NONE REGARDING THE EXTENT OF THE POWER OF THE AP PELLATE AUTHORITY THAT IT HAS THE POWER NOT ONLY TO UPHOLD OR SET ASI DE THE ASSESSMENT ORDER BUT ALSO HAS THE POWER TO MODIFY OR REMIT. TH E TRIBUNAL THEREFORE WAS WELL WITHIN ITS POWERS IN DIRECTING THE AO TO REDO THE ASSESSMENT IN RESPECT OF CERTAIN ITEMS AFTER GIVIN G A COPY OF THE REPORT THAT IT HAD RELIED ON TO THE ASSESSEE. THER E WAS NO BREACH OF S. 158BE IN MAKING THAT ORDER. IN VIEW OF THE ABOVE DECISION WE DO NOT FIND ANY M ERIT IN THESE GROUNDS OF APPEAL OF THE ASSESSEE. THEREFORE THESE GROUNDS OF APPEAL ARE DISMISSED. 13. GROUNDS NOS.7 12 AND 13 READS AS UNDER:- 7. THAT FOR THE REASONS SEARCH WAS CONDUCTED BEING FOUND UNTENABLE THE ASSESSMENT MADE ON THE BASIS OF SEARC H IS ILLEGAL UNJUSTIFIED AND ULTRAVIROUS. 12. THAT IT IS APPARENT FOR SEVERAL FACTS THAT NEI THER THE ASSESSING OFFICER NOR THE COMMISSIONER OF INCOME-TAX APPLIED THEIR MIND IN RESPECT OF THE ASSESSMENT MADE IN VIEW OF THE FACT IN THE SHOW CAUSE NOTICE THE ADDITION PURPORTED TO BE MADE OF RS.70 0 0 000/- BUT IN FACT THE ADDITION WAS MADE AT RS. 17 00 000/- IN TH E ASSESSMENT ORDER. AGAIN IN THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER HE DID NOT SPECIFIED PROPER REQUIREMENT ON THE BASI S OF WHICH THE ASSESSMENT IS PURPORTED TO MAKE AND HE HAS ALSO IGN ORED SEVERAL REPLIES BY THE APPELLANT IN THE MATTER OF HIS QUERI ES. 13. THAT THE ASSESSING OFFICER CANNOT TREAT THE EN TRIES IN THE BANK ACCOUNT WOULD NOT HAVE BEEN SHOWN BY THE ASSESSEE A ND TREAT THE ENTRIES AS UNDISCLOSED INVESTMENT OF THE APPELLANT. IT (SS) A NO. 83/AHD/2006 - 12 - 14. AT THE TIME OF THE HEARING THE LD.AR SUBMITTE D THAT HE IS NOT PRESSING THE ABOVE THREE GROUNDS OF APPEAL AND HENC E THEY ARE DISMISSED AS NOT PRESSED. 15. GROUND NO.8 OF THE APPEAL READS AS UNDER:- 8. THAT THE ASSESSING OFFICER EXCEEDED HIS JURISDI CTION IN ADDING UP FOLLOWING ADDITIONS WHICH HAD NOT BEEN MA DE AT THE TIME OF ORIGINAL ASSESSMENT WHICH HAD BEEN SET ASID E BY THE LEARNED INCOME-TAX APPELLATE TRIBUNAL. I) RS. 70 00 000/- IN RESPECT OF PAGE 11(IV)(REVER SE PAGE) OF ANNEXURE A-6 (PARA 4.16 OF ASSESSMENT ORDER) II) RS. 9 60 000/- IN RESPECT OF PAGE 11(VIII)(REVE RSE PAGE) OF ANNEXURE A-6 (PARA 4.17 OF ASSESSMENT ORDER). 16. AT THE TIME OF THE HEARING IT WAS SUBMITTED B Y BOTH THE PARTIES THAT THE ABOVE GROUNDS ARE COVERED IN GROUND NOS.19 .16 AND 19.17 OF THE ASSESSEE AND HENCE THEY WILL BE CONSIDERED WHILE A RGUING THOSE GROUNDS AND THIS GROUND OF APPEAL IS NOT REQUIRED TO BE ADJ UDICATED SEPARATELY. THEREFORE THIS GROUND OF APPEAL IS DISMISSED. 17. GROUND NOS.6 10 11 14 15 16 17 AND 18 OF THE APPEAL READS AS UNDER:- 6. THE ASSESSING OFFICER FAILED TO CONSIDER THAT T HE PLACE WHERE THE SEARCH WAS CONDUCTED IT WAS NOT THE REGI STERED OFFICE OF THE APPELLANT SO THAT THE BOOKS OF ACCOUN TS WOULD BE AVAILABLE AT THAT PLACE AND HE COMPLETELY IGNORED T HE FACT THAT THE BOOKS OF ACCOUNTS HAD BEEN PRODUCED BEFORE HIM AND ALSO BEFORE THE ADIT BEFORE FRAMING THE IMPUGNED ASSESSM ENT WHICH IS APPARENT FROM THE ASSESSMENT ORDER ITSELF NOTING DOWN THE DATE OF TRANSACTION WHICH HAD BEEN CONSIDE RED IN THE ASSESSMENT ORDER. 10. THAT THE IMAGINATIONS OF THE ASSESSING OFFICER THAT THE FIGURES MENTIONED IN THE LOOSE PAPERS ARE IN LAKHS IS WITHOUT IT (SS) A NO. 83/AHD/2006 - 13 - ANY CORROBORATIVE EVIDENCE AND ON THE BASIS OF SUSP ICION AND SURMISES AND CANNOT BE ACCEPTED. 11. THAT THE ASSESSING OFFICER HAD TAKEN IRRELEVANT CONSIDERATION THAT THE BOOKS OF ACCOUNTS HAD NOT BE EN AUDITED U/S. 142(2A) FOR THE PURPOSE OF MAKING ADDITION AS UNDISCLOSED INCOME IN SPITE OF THE FACT THAT THEY ARE RECORDED IN THE 14. THAT THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TAX ERRED ON FACTS AND IN LAW IN ASSUMING TH AT THE APPELLANT HAD SUPPRESSED / UNDERSTATED UNDISCLOSED INCOME OVER AND ABOVE AS REFLECTED IN THE INVESTMENTS ASS ETS EXPENDITURE ETC. FOUND AT THE TIME OF SEARCH CONT RARY TO THE PROVISIONS CONTAINED IN SECTIONS 158B 158BA 158BB AND 158BC OF THE ACT THOUGH THE BOOKS OF ACCOUNTS WERE MAINTAINED AND FOUND AS A RESULT OF SEARCH. 15. THAT THE BLOCK ASSESSMENT ORDER PASSED BY THE D Y. COMMISSIONER OF INCOME-TAX (OSD) RANGE-1 AHMEDABAD UNDER SECTION 158BC R.W.S. 254 OF THE I.T.ACT ON 30 /3/2006 IS ARBITRARY AND AGAINST THE PRINCIPLES OF NATURAL JUS TICE BASED ON ASSUMPTIONS SURMISES AND CONJECTURES BRUSHING ASI DE ALL WRITTEN AS WELL AS ORAL SUBMISSIONS MADE IN THE COU RSE OF ASSESSMENT PROCEEDINGS. THE SAID ASSESSMENT ORDER I S THEREFORE ILLEGAL AND BAD IN LAW. 16. THAT THE BLOCK ASSESSMENT ORDER PASSED BY THE D Y. COMMISSIONER OF INCOME-TAX (OSD) RANGE-1 AHMEDABAD UNDER SECTION 158BC R.W.S. 254 OF THE I.T.ACT ON 30 /3/2006 IS ARBITRARY AND AGAINST THE PRINCIPLES OF NATURAL JUS TICE INASMUCH AS THAT THE MATERIAL USED TO MAKE THE ADDITION OF RS.2 68 44 886/- BEING ALLEGED PURCHASE FROM R.K. INVESTMENT MUMBAI AND RS.5 39 55 045/- BEING SALES AFFECTED BY N.V. SHAH MUMBAI AS PER ORIGINAL SHOW CAUSE NOT ICE DATED 17.6.1997 AND NOTICE DATED 9.3.2006 ISSUED BY THE P RESENT ASSESSING OFFICER WAS NOT SUPPLIED THOUGH SPECIFIC REQUEST WERE MADE AS PER REPLY DATED 10.3.2006 14.3.2006 A ND 30.3.2006. 17. THAT THE BLOCK ASSESSMENT ORDER PASSED BY THE D Y. COMMISSIONER OF INCOME-TAX (OSD) RANGE-1 AHMEDABAD UNDER SECTION 158BC AFTER THE PREVIOUS APPROVAL OF THE COMMISSIONER OF INCOME-TAX AHMEDABAD-L AHMEDABAD AS PROVIDED UNDER SECTION 158BG OF THE I.T.ACT 1961 I S ARBITRARY AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS THE SAID APPROVAL HAS BEEN GIVEN BY THE LEARNED COMMISS IONER OF INCOME-TAX ACTING ARBITRARILY INSTEAD OF ACTING FAI RLY JUSTLY AND REASONABLY BRUSHING ASIDE AND WITHOUT TAKING INTO CONSIDERATION THE ORAL AS WELL AS WRITTEN SUBMISSIO NS MADE VIDE LETTER DATED 10.3.2006 14.3.2006 AND 24.3.200 6 BY THE IT (SS) A NO. 83/AHD/2006 - 14 - APPELLANT BEFORE THE ASSESSING OFFICER AND ORAL AS WELL AS WRITTEN SUBMISSIONS DATED 30.3.2006 MADE AT THE TIM E OF HEARING BEFORE THE COMMISSIONER OF INCOME-TAX. HOWE VER THE LEARNED COMMISSIONER OF INCOME-TAX COMMUNICATED HIS APPROVAL TO THE ASSESSING OFFICER VIDE HIS LETTER N O. CIT.ABD.I/APPROVAL/ 158BC/ 2005-06 DATED 30/3/2006 POST- HATE WITHOUT FULLY APPRECIATING ALL THE SUBMISSIONS AS WELL AS THE BOOKS OF ACCOUNT PRODUCE BEFORE HIM. THE SAID A SSESSMENT ORDER IS THEREFORE ILLEGAL AND BAD IN LAW. 18. THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN MAKING THE FOLLOWING ADDITIONS BY WAY OF UNDISCLOSE D INCOME ARBITRARILY WITHOUT TAKING INTO CONSIDERATION THE DETAILED WRITTEN SUBMISSIONS DATED 10.3.2006 14.3.2006 24. 3.2006 AND 30 3.2006 DULY SUPPORTED WITH ALL THE AVAILABLE EVIDENCE AS WELL AS DULY AUDITED BOOKS OF ACCOUNTS AND THE A UDIT REPORT PRODUCED BEFORE THE ASSESSING OFFICER AS WELL AS TH E COMMISSIONER OF INCOME-TAX AT THE TIME OF HEARING B EFORE THEM. 18. THE LD. AR SUBMITTED THAT THE ABOVE GROUNDS AR E THE ARGUMENTS OF THE ASSESSEE AGAINST ADDITIONS MADE BY THE AO. THE ASSESSEE HAS TAKEN SEPARATE GROUNDS FOR EACH OF THE ADDITION S ALSO INVOLVED IN THE ABOVE GROUNDS OF APPEAL AND THEREFORE SEPARATE ADJ UDICATION OF THESE GROUNDS OF APPEAL ARE NOT REQUIRED AND REQUESTED TO CONSIDER THE ABOVE ARGUMENTS AT THE TIME OF DISPOSAL OF THE RELEVANT G ROUNDS OF APPEAL. IN VIEW OF THE ABOVE SUBMISSIONS OF THE LD. AR THESE GROUN DS OF APPEAL ARE TREATED AS DISMISSED. 19. GROUND NO. 19.2 IS AS FOLLOWS: 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. ON ACCOUNT OF DIFFERENCE OF INCOME BETWEEN DISCLO SED INCOME AND INCOME COMPUTED BY AVERAGE AND FIFO METHOD . RS.71 59 658/- IT (SS) A NO. 83/AHD/2006 - 15 - 20. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVI NG AS UNDER: 4.2. ADDITIONAL UNDISCLOSED INCOME OF THE ASSESS EE NOT DISCLOSED DURING THE COURSE OF SURVEY; THE ASSESSEE COMPANY HAS TRANSACTED IN SCRIPTS OF I NDO AMERICAN OPTICS LTD AS UNDER :- PURCHASE SALES DATE SHARES AMOUNT SHARES AMOUNT 15.4.95 64400 1674400 - - 01.5.95 281000 7306000 - - 01.5.95 100000 2600000 . 01.5.95 45000 1170000 - 05.5.95 100000 2900000 _ 10.7.95 36500 1149615 - 14.7.95 17100 420275 5400 167200 14.8.95 17100 455675 51200 1711718 16.8.95 139700 4805359 - - 17.8.95 79200 3341265 25000 1070000 21.8.95 123200 5234400 2000 70200 24 8.95 57400 3089644 10100 4556 25 25.8.95 106500 6509688 91100 5024082 28.8.95 59700 4055420 361100 20180120 31.8.95 181400 9712160 167300 8528900 01.9.95 189800 11320570 392100 15710235 5.9.95 106800 5396868 - - 6.9.95 4000 188000 - - 8.9.95 14600 783480 14600 775550 8.9.95 150 200 6066788 - - IT (SS) A NO. 83/AHD/2006 - 16 - 8.9.95 13500 682425 - - 11.9.95 4400 204922 186900 5377360 12.9.95 10800 590220 - - 13.9.95 200 5350 116100 2929195 14.9.95 250000 6375000 157200 3665826 14.9.95 1000 58750 - 15.9.95 200000 4040000 223300 4556980 15.9.95 100000 210 0000 - - 18.9.95 - - 118800 2458680 19.9.95 100 2020 500 10050 22.9.95 2900 136300 83000 2259350 25.9.95 24800 1608225 52600 1133425 26.9.95 - - 32900 835755 27.9.95 - - 75000 1696485 6.10.95 356700 795442 98200 2373200 6.10.95 - - 615000 1549335 23.10.95 1700 34530 55100 1438110 25.10.95 16000 324850 - - 26.10.95 34100 657990 - - 31.10.95 10000 194000 - - 13.11.95 11600 189445 - - 20.11.95 1000 14300 - - 01.12.95 - - 1500 21000 2936000 104248386 2936000 97939381 IT (SS) A NO. 83/AHD/2006 - 17 - TRANSACTIONS IN SCRIPT OF INDO AMERICAN CREDIT CORP ORATION LTD. BY ATLANTIC CREDIT AND CAPITAL LTD. DATE ACQUISITION SALES SHARES AMOUNT SHARES AMOUNT 7.6.95 1733800 26454900 . 31.8.95 - - 5000 262925 4.9.95 - - 34800 1599320 5.9.95 - - 24700 1019220 6.9.95 - - 100800 3036565 8.9.95 - - 43400 1178745 11.9.95 - - 17100 497715 13.9.95 - - 16900 437995 18.9.95 . - 78100 1788480 19.9.95 - - 4500 92700 25.9.95 - - 100000 3078225 27.9.95 - - 3000 93765 28.9.95 17000 449600 - - 29.9.95 71700 1520040 156600 3310255 6.10.95 32500 877500 11900 321300 13.10.95 165000 7838000 550900 10257945 16.10.95 700000 11354000 700000 11189025 17.10.95 - - 10000 168500 20.10.95 - - 857600 13778690 23.10.95 - - 231800 3541050 IT (SS) A NO. 83/AHD/2006 - 18 - 25.10.95 6900 126865 - - 26.10.95 - - 25000 384525 27.10.95 - 393975 121100 182710 8.11.95 25000 393975 - - 13.11.95 216400 3083010 - - 2984700 47370890 2984700 56219655 THE AVERAGE PURCHASE RATE OF INDO AMERICAN OPTICS L TD. COMES TO RS. 15.88 AND AVERAGE SALE RATE RS. 18.82. THUS IT CAN BE SEE N THAT TOTAL 2936000 SHARES OF INDO AMERICAN OPTICS LTD. HAS BEEN SOLD BY THE COMPANY FOR A TOTAL CONSIDERATION OF RS. 97 93 381/- SIMILARLY 29 84700 SHARES OF INDO AMERICAN CREDIT CORPORATION HAS BEEN SOLD BY THE CO MPANY FOR A TOTAL CONSIDERATION OF RS. 5 61 68 654/-. 12900 SHARES OF GUJARAT COTEX LTD. WERE SOLD FOR A TOTAL CONSIDERATION OF RS. 25 98 84 0/-. METHODS FOR DETERMINATION OF QUANTUM. NOW THE QUESTION ARISES AS WHAT WAS THE SALE CONSI DERATION OF SHARES WHICH HAD BEEN RECEIVED BY ATLANTIC CREDIT & CAPITAL LTD. FROM DR. AMIT SHAH. AS THE DISTINCTIVE NUMBERS OF THE SHARES ARE NOT AVAIL ABLE TILL DATE SO THE ACTUAL SALE OF EACH AND EVERY SHARE COULD NOT BE DETERMINE D PRECISELY. IN THIS REGARD ONE OF THE TWO METHODS IS POSSIBLE: 1. AVERAGE METHODS 2. FIRST IN FIRST OUT METHOD. AVERAGE METHOD: THE AVERAGE RATE OF SALE OF SHARES OF INDO AMERICAN OPTICS LTD. COMES TO RS. 33.36 PER SHARE AND AVERAGE RATE OF SHARES OF I NDO AMERICAN CREDIT CORPORATION COMES TO RS 18.82. SO THE SALE CONSIDE RATION RECEIVED BY THE ASSESSEE (CLAIMED TO BE DR AMIT SHAH) BY AVERAGE M ETHOD WOULD BE AS UNDER : SCRIP INDO AMERICAN CREDIT CORP. QUANTITY 1754200 RATE AMOUNT 33014044 IT (SS) A NO. 83/AHD/2006 - 19 - INDO AMERICAN OPTICS LTD. INDO AMERICAN OPTICS LTD. GUJARAT COTEX LTD. MAXIMA SYSTEMS LTD. 164400 281000 12900 38000 18.82 33.36 23.36 11.00 15.00 5484384 6564160 141900 570000 45774488 SO THE UNACCOUNTED INCOME OF DR. AMIT SHAH FROM THE SHARES WHICH ARE CLAIMED TO HAVE BEEN SOLD THROUGH ATLANTIC CREDIT A ND CAPITAL LTD. WILL BE RS. 45774488/- AS PER AVERAGE METHOD. FIRST IN FIRST OUT METHOD : FURTHER IF FIRST IN FIRST OUT METHOD IS APPLIED TH EN THE SALES CONSIDERATION OF FIRST 1733800 SHARES OF INDO AMERICAN OPTICS LTD. CAN BE TAKEN TO BE THE SALE CONSIDERATION OF DR. AMIT SHAH. BY THIS METHOD THE SALE CONSIDERATION WILL BE QUITE HIGH. THUS THE SALE RS. 23062489/- AN D PROFIT WILL BE RS. 10404544/-. SIMILARLY FOR INDO AMERICAN CREDIT CORP ORATION LTD. THE SALES CONSIDERATION OF 1733800 SHARES WILL BE RS. 3628356 9/- AND PROFIT WILL BE RS. 18945569/- BY AVERAGE METHOD THE PROFIT WOULD B E RS. 15292116/- AND BY FIRST IN FIRST OUT METHOD FIGURE OF UNACCOUNTED INCOME WILL BE HIGHER BY RS. 13571570/-. THE TOTAL INCOME BY AVERAGE METHOD AND FIFO METHOD COMES TO 5 93 46 058/-AND ACTUAL DECLARATION OF INCOME IS 5 21 86 400/- THUS THERE IS LESS DISCLOSURE OF INCOME OF RS. 71 59 658/- WOU LD BE ADDITIONAL INCOME ON SUBSTANTIVE BASIS AND TOTAL INCOME WOULD BE 5 96 46 058/- (ADDITION OF RS. 71 59 658) 21 THE A.R. FIRSTLY RELIED ON THE SUBMISSION DATED 30/3/2006 MADE BEFORE THE A.O. AT PAPER BOOK PAGE NO.421 TO 4 23 AS EXTRACTED BELOW. IT (SS) A NO. 83/AHD/2006 - 20 - 'AT THE OUTSET IT IS SUBMITTED THAT THE WHOLE EXERC ISE EARNED OUT IN THIS REGARD AMOUNTS TO ESTIMATION OF UNDISCLOSED IN COME. THE UNDISCLOSED INCOME HAS TO BE COMPUTED ON THE BASIS OF MATERIAL FOUND AS A RESULT OF SEARCH ARE NOT DISCLOSED PRIOR TO SEARCH OR WOULD N OT HAVE BEEN DISCLOSED. IN OTHER WORDS IT IS USUALLY NOT RECORDED IN THE RE GULAR BOOKS OF ACCOUNTS AND THEREFORE TERMED AS UNRECORDED TRANSACTIONS. IN THE INSTANT CASE ALL THE TRANSACTIONS ARE DULY RECORDED IN THE BOOKS OF ACCO UNTS MAINTAINED IN THE NORMAL COURSE AND SEIZED AS SUCH. AS SUBMITTED DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOT THE CHOICE OF THE ASSESSEE COMPANY THAT WHICH PARTICULAR BOOKS OR DOCUMENTS THE AUTHORISED OFFICER SHOULD SEIZE. THUS IT WAS THE AUTHORISED OFFICER WHO OPTED TO SE IZE ONLY LIMITED PART AND NOT THE ENTIRE SET THOUGH AVAILABLE. THE SAID FACTS ARE EVIDENT FROM THE NON SEIZURE OF CASH FOUND. IN FACT FOR THE PURPOSE OF EXPLAINING CASH FOUND THOUGH THE BOOKS OF ACCOUNTS OF FOLLOWING CONCERNS WERE PRODUCED (I) ASIATIC INFRASTRUCTURE & SHELTER LTD. (II) ATLANTIC CREDIT & CAPITAL LTD. (III) INDO AMERICAN OPTICS LTD. (IV) CURE SPECTS LESER LTD. (V) ZILLION PHARMACHEM LTD. BEING GROUP COMPANIES THE BOOKS OF 3 COMPANIES AT SR. (III) TO (V) ABOVE WERE NOT EVEN INVENTORIES AS FOUND. WHAT IS T O BE TAXED IS THE ACTUAL UNDISCLOSED INCOME AND NOT THE NOTIONAL ONE AS PROP OSED. WITH THIS BACKGROUND WE REITERATE AGAIN AS UNDER. THE ADDITION OF RS.71 59 658/- WAS MADE IN THE ORIG INAL ORDER ON ACCOUNT OF PROFIT ON SALE OF SHARES RELATED TO SHAR E TRANSACTION IN INDO AMERICAL CREDIT CORPORATION LTD. THE INCOME FROM TR ANSACTIONS OF SHARES IS CALCULATED BY APPLYING AVERAGE METHOD AND FIFO METH OD AT RS.5 93 46 058/- AND ACTUAL DECLARATION OF INCOME I S RS.5 21 86 400/-. (RS.5 93 46 058 - RS.52186400 = RS.71 59 658/-). IT IS SUBMITTED THAT THE AVERAGE PURCHASE PRICE AT RS.35.51 WAS CONSIDERED A ND THE AVERAGE SALE PRICE TAKEN AT RS.33.36 FOR THE SCRIPT OF INDO AMER ICAN OPTICS LTD. THE AVERAGE PURCHASE PRICE IS TAKEN AT RS.15.88 AND AVE RAGE SALE PRICE OF RS.18.82 IS ADOPTED FOR THE SHARES OF INDO AMERICAN CREDIT & CAPITAL LTD IT (SS) A NO. 83/AHD/2006 - 21 - AND ACCORDINGLY WORKED OUT THE ADDITIONAL INCOME RS .4 57 74 488/-. THE ANOTHER METHOD APPLIED I.E. FIFO METHOD AND ON TH AT BASIS THE ADDITIONAL INCOME WAS WORKED OUT AT RS.1 18 57 398/-. THE SA ID WORKING IS DONE WITHOUT GOING INTO THE DETAILED FACTS OF THE CASE. AS PER THE PRESENT SITUATION THE FACT REMAINED THAT THE COST OF ACQUIS ITION OF THE ENTIRE QUANTITY OF THE SCRIPS INVOLVED FOR THE ALLEGED ADDITION IS COVERED BY THE TRANSACTIONS MADE BY IT IN THE REGULAR BOOKS OF A/C. RETURN OF I NCOME FILED FOR THE BLOCK PERIOD. AS AND WHEN THE SHARES WERE SOLD IN THE NOR MAL BUSINESS PROFIT / LOSS ARISING THEREFROM HAD ALREADY ACCOUNTED FOR I N THE REGULAR BOOKS OF ACCOUNTS OF THE COMPANY. THEREFORE ANY SUBSEQUENT INCOME / LOSS ON ACCOUNT OF SALES OF SUCH SHARES HAS BEEN RECORDED I N THE BOOKS OF ACCOUNTS THEREFORE APPLICATION OF THE AVERAGE METHOD OR FIFO METHOD IS NOT JUSTIFIABLE. ANY ADDITION ON THIS ACCOUNT IS NOW UN WARRANTED. TO CONCLUDE IT IS SUBMITTED THAT THE SURVEY OPERATI ON WERE NOT CARRIED OUT IN THE CASE OF THE ASSESSEE COMPANY AS NARRATED IN OPENING LINE OF PARA 4.2. THEREFORE THERE IS NO QUESTION OF ANY ADDITIO NAL INCOME NOT DISCLOSED DURING THE COURSE OF SURVEY. THERE APPEARS TO BE SO ME TYPOGRAPHICAL ERROR IN IT WHICH SHOULD BE CLARIFIED. THIS IS JUST TO K EEP THE RECORD STRAIGHT.' THE A.R. FURTHER CONTENDED THAT THE ADDITIONS MADE ARE NOT BASED ON ACCOUNT OF ANY SURVEY AS NO SURVEY MATERIAL IS AVAI LABLE OR MADE AVAILABLE IF AT ALL IT WAS THERE. IN FACT IT IS COPIED OUT FR OM THE ORDER PASSED BY THE PREDECESSOR A.O. AS APPEARING AT PAGE NO 534 OF PAP ER BOOK WHERE IN THERE IS NO MENTION OF ANY SURVEY ACTION WHICH SUPPORTS T HE CONTENTION OF THE A.R. THE D.R. COULD NOT SUBSTANTIATE THE SURVEY ACT ION BY SUCH MATERIAL. THE SAID WORKING IS ARRIVED AT FROM THE DATE WISE / SCRIP WISE DETAILS RECORDED IN THE BOOKS OF APPELLANT COMPANY BY APPLY ING VARIOUS METHODS TO MAKE THE ADDITIONS BUT THE SAME COULD ONLY BE APPLI ED IN THE REGULAR ASSESSMENT AS IT COULD NOT BE SUBJECT MATTER OF BLO CK ASSESSMENT AS THERE IS NO MATERIAL FOUND AS A RESULT OF SEARCH. THE COM PLETE DETAILS OF ACTUAL PROFIT ON SALE OF ALL THE SHARES INCLUDING THE REFE RRED SCRIPS IN THE PARA 4.2 OF THE ASSESSMENT ORDER IS DULY REFLECTED IN THE BOOK OF ACCOUNT PRODUCED AND ALSO AT PAPER BOOK PAGE NO 90 TO 94 BEING BALANCE S HEET AS ON 21.12.1995 IT (SS) A NO. 83/AHD/2006 - 22 - I.E DATE OF SEARCH AND ALSO AT PAPER BOOK PAGE NO 5 55 TO 566 AUDITED ACCOUNTS FOR PERIOD ENDING ON 31.3.1996 (WHICH INCL UDES THE TRANSACTIONS AS PER ASSESSMENT ORDER FROM 15-4-95 TO 21.12.95). THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE A.O. AND WERE VERIFIED BY HIM AND NO DEFECTS WERE FOUND AS EVIDENT FROM ORDER SHEET AT PAPER BOOK PAG E NO 554. FURTHERMORE THE A.O. HAS NOT DEALT WITH THE ABOVE SUBMISSION DA TED 30-3-2006 APPEARING AT PAPER BOOK PAGE NO 421 TO 423 AT ALL BUT SIMPLY COPIED IT FROM THE ORIGINAL ORDER DATED 29-6-97. THEREFORE TH E TRANSACTIONS RECORDED IN THE REGULAR BOOKS OF ACCOUNTS CANNOT BE TREATED AS UNDISCLOSED AND THE ACTUAL BOOK RESULT IS DULY REFLECTED & SUPPORTED B Y THE VERIFIED BOOKS OF ACCOUNTS AND AUDIT REPORT AS AFORESAID. 22. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT INCOME OF RS.5 21 86 400/- ASSESSED IN THE HANDS OF THE ASSESSEE COMPANY COVERS THE COST OF ACQUISITION OF THE SHARES OF INDO AMERICAN OPTICS LTD. AND INDO AMERI CAN CREDIT CORPORATION LTD. AND FURTHER ADDITION OF RS.71 59 658/- WAS M ADE BY THE LD. AO ON ACCOUNT OF PROFIT ON SALE OF SUCH SHARES. THE ABOV E PROFIT WAS ARRIVED AT BY APPLYING FIFO METHOD. THE CONTENTION OF THE AS SESSEE IS THAT AS THE FULL DETAILS OF PURCHASE AND SALE OF SHARES WERE RECORDE D IN THE BOOKS OF ACCOUNT THE LD. AO WAS NOT JUSTIFIED IN ARBITRAR ILY APPLYING FIFO METHOD AND MAKING ADDITION OF RS.71 59 658/- ON ACCOUNT OF PROFIT ON SALE OF SHARES. WE FIND THAT THE LD. AR COULD NOT FILE AN Y DETAILS BEFORE US TO SHOW THAT THE ACTUAL PROFIT ON SALE OF SUCH SHARES WE RE LESSER THAN RS.71 59 658/-. FURTHER IT IS OBSERVED THAT THE IN VESTMENT IN SHARES IN QUESTION WERE TREATED AS UNDISCLOSED INCOME AND THE GROUND RELATING TO THE SAME WAS NOT ADMITTED AS THE SAME WAS NOT TAKEN IN ORIGINAL MEMORANDUM OF APPEAL AS WELL AS THE REVISED GROUNDS OF APPEAL TAKEN ON 22.01.2009 AND THE SAME WAS FOUND AS NOT A BONAFIDE OMISSION. IN V IEW OF THIS IT CANNOT BE ACCEPTED THAT THE PROFIT OF SALE ON SUCH SHARES WOU LD NOT CONSTITUTE UNDISCLOSED INCOME. WE THEREFORE DO NOT FIND ANY M ERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE AND THE SAME IS DISMISSED. IT (SS) A NO. 83/AHD/2006 - 23 - 23. GROUND NO.19.3 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUS LY ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. ON ACCOUNT OF CASH DEPOSITS MADE IN BANK ACCOUNT .RS.28 88 000/- 24. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.3. UNACCOUNTED CASH DEPOSIT MADE IN THE BANK ACC OUNT: ANNEXURE A-2 SEIZED DURING THE SURVEY IS A BANK PAS S MAINTAINED BY THE ASSESSEE IN BANK OF MADURAI. ON EXAMINATION OF THE BANK PASS BOOK IT IS SEEN THERE ARE CASH DEPOSITS ON VARIOUS DATES THE DETAILS ARE AS UNDER: CASH DEPOSIT RS. D ATE NAME OF THE BANK 1 00 000/ - 21.06.95 BANK OF MADURAI 10 000/ - 19.07.95 10 000/ - 19.07.95 13 000/ - 20.08.95 15 000/ - 25.08.95 8 000/ - 27.07.95 5 000/ - 28.07.95 5 00 000/ - 01.08.95 9 00 000/ - 02.08.95 2 000/ - 08.08.95 2 25 00 0/ - 25.08.95 11 00 000/ - 13.11.95 28 88 000/ - TOTAL VIDE FINAL SHOW CAUSE DATED 9/3/2006 THE ASSESSEE W AS REQUESTED TO EXPLAIN AS TO WHY THE ABOVE CASH CREDIT AMOUNTING T O RS. 28 88 000/- SHOULD NOT BE TREATED AS UNEXPLAINED CA SH CREDIT. IN HIS IT (SS) A NO. 83/AHD/2006 - 24 - SUBMISSION ASSESSEE EXPLAINED THAT THE CASH DEPOSIT S IN QUESTION AS DEPOSITS MADE FROM THE AVAILABLE CASH BALANCE IN TH E BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY AND PRODUCED EXTRAC T OF THE CASH BOOK AND RELEVANT PORTION OF THE BANK BOOK. ACCORDI NG TO AO THE EXTRACTS OF THE BOOKS PRODUCED BY THE ASSESSEE IS N OT RELIABLE AS THE WERE NOT AUDITED U/S 142(2A). HE TREATED THAT NO JU STIFIED EXPLANATION FOR THE ABOVE CASH DEPOSITS COULD BE SU BMITTED BY THE ASSESSEE AND THEREFORE ADDED THE SAME TO THE TOTAL INCOME TREATING THE SAME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE A CT IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS. (ADDITION OF RS. 28 88 000) 25. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE IS MAINTAIN ING A BANK ACCOUNT WITH BANK OF MADHURA IN WHICH THERE WAS CASH DEPOSITS ON VARIOUS DATES WITHIN THE PERIOD 21.06.1995 TO 31.11.1995 TOTALING TO RS. 28 88 000/-. BEFORE THE AO THE ASSESSEE PRODUCED EXTRACTS OF CASH BOOK AND SUBMITTED THAT THE DEPOSITS WERE MADE OUT OF THE FUNDS AVAILABLE WITH THE ASSESSEE. THE AO WAS OF THE VIEW THAT EXTRACTS OF CASH BOOK PRODUCE D BY THE ASSESSEE ARE UNRELIABLE AND THEREFORE HE TREATED THE ENTIRE AMO UNT OF CASH DEPOSITS IN BANK OF MADHURA AS UNDISCLOSED INCOME OF THE ASSESS EE AMOUNTING TO RS.28 88 000/-. BEFORE US THE LD. AR OF THE ASSESS EE POINTED OUT FROM PAGE NO.436 OF THE PAPER BOOK THAT THE BANK ACCOUNT MAINTAINED WITH BANK OF MADHURA WAS DULY REFLECTED IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE. HE SUBMITTED THAT DURING THE COURSE OF TH E SEARCH REGULAR BOOK OF ACCOUNT OF THE ASSESSEE COMPANY FOR THE FINANCIA L YEAR 1994-95 WAS SEIZED AND MARKED AS ANNEXURE-A SR. NO.8 CONTAININ G 74 PAGES WHICH INCLUDED LEDGER ACCOUNT OF BANK OF MADHURA LTD. ACC OUNT NO.1466. THUS THE LD. AR CONTENDED THAT THE BANK ACCOUNT OF THE A SSESSEE MAINTAINED WITH BANK OF MADHURA WAS ALREADY ENTERED IN THE REG ULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE COMPANY AND THEREFORE T HE SAID BANK ACCOUNT CANNOT BE TREATED AS NOT DISCLOSED OR ENTRIES IN TH E SAID BANK ACCOUNT COULD NOT BE ASSUMED AS WOULD NOT HAVE BEEN DISCLOSED TO THE DEPARTMENT. THE ABOVE SUBMISSIONS OF THE ASSESSEE COULD NOT BE CONT ROVERTED BY THE LD. DR. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE ALSO RELIED ON IT (SS) A NO. 83/AHD/2006 - 25 - THE DECISION OF AHMEDABAD D BENCH IN THE CASE OF ASIATIC INFRASTRUCTURE & SHELTERS LTD. VS. DCIT IN IT(SS)A NO.84/AHD/2006 OR DER DATED 9/10/2009. WE FIND THAT THE AO COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE FUNDS AVAILABLE WITH THE ASSESSEE COMPANY ON VARIOU S DATES FROM REGULAR SOURCES WERE NOT SUFFICIENT FOR ENABLING THE ASSESS EE TO MAKE DEPOSITS ON THE DATE ON WHICH IT WAS MADE IN THE BANK ACCOUNT M AINTAINED WITH BANK OF MADHURA LTD. EXCEPT STATING THAT THE EXTRACT OF CAS H BOOK AND BANK BOOK PRODUCED BY THE ASSESSEE IS UNRELIABLE NO SPECIFIC DEFECT THEREIN COULD BE POINTED OUT BY THE REVENUE. FURTHER IT IS NOT IN D ISPUTE THAT THE SAID BANK ACCOUNT WAS ENTERED INTO THE REGULAR BOOKS OF ACCOU NT MAINTAINED BY THE ASSESSEE COMPANY PRIOR TO THE DATE OF THE SEARCH AS EVIDENCED BY THE BOOKS OF ACCOUNT SEIZED DURING THE COURSE OF THE SE ARCH FOR THE FINANCIAL YEAR 1994-95. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS THE BANK ACCOUNT MAINTAINED WITH BANK OF MADHURA ALREADY ENT ERED INTO THE REGULAR BOOKS OF ACCOUNT IN OUR CONSIDERED VIEW ENTRIES M ADE THEREIN CANNOT BE TREATED AS THE SAME WOULD NOT HAVE BEEN DISCLOSED T O THE DEPARTMENT. THEREFORE SUCH ENTRIES COULD NOT GIVE RISE TO ANY UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 158B(B) OF THE ACT AND THER EFORE THE ADDITION OF RS.28 88 000/- MADE BY THE AO IS NOT SUSTAINABLE. W E ACCORDINGLY DELETE THE ADDITION OF RS.28 88 000/- ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 26. GROUND NO.19.4 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. SALE OF SHARES OF WORLD FIN TRADE TREATED AS UNDIS CLOSED INCOME. ..64 83 110/- 27. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.4. UNACCOUNTED SALES OF SHARES BY THE ASSESSEE : PAGE NO. 61 TO 70 OF ANNEXURE A-5 CONTAINS THE DETA ILS OF SALE OF SHARES OF WORLD FIN TRADE AS UNDER: IT (SS) A NO. 83/AHD/2006 - 26 - PG . NO. NO. OF SHARES AMOUNT DATE RATE SHARES OF 70 11 400 2 53 890/ - 26.9.95 TO 29.9.95 VARIOUS RATES WORLD FIN TRADE 69 68 800 14 88 890/ - 26.9.95 TO 29.9.95 VARIOUS RATES ' 69 11 2000 21 00 000/ - 18.9.95 18.75 ' 68 3 800 73 720/ - 28.8.95 18.40 67 5 300 1 03 350 / - 15.9.95 19.50 66 8 900 1 77 405/ - 01.09.95 VARIOUS RATES *' 64 13 200 2 79 775/ - 14.8.95 TO24.8.95 63 34 200 7 53 135/ - 07.8.95 TO 9.8.95 ' ' 62 4 200 1 03 110/ - 25.7.95 24.65 ' 61 40 400 11 49 835 / - 24.7.95 TO 25.7.95 VARIOUS RATES TOTAL 64 83 110/ - VIDE FINAL SHOW-CAUSE NOTICE DATED 9/3/06 THE ASSES SEE WAS ASKED TO EXPLAIN AS TO WHY THE ABOVE AMOUNT OF RS. 64 83 110 /- SHOULD NO BE TREATED AS ITS INCOME U/S 69 OF THE ACT. THE ASSESS EE TRIED TO EXPLAIN THE TRANSACTION BY MENTIONING THAT IT IS A SAUDA RE PORT SENT BY S.M. CONSULTANCY AND THEY ARE ALL REFLECTED IN THE FINAL BILLS SEND BY THEM. ASSESSEE ALSO PRODUCED EXTRACTS OF STOCK REGISTER A ND BANK BOOK. ACCORDING TO AO THE EXTRACTS OF THE BOOKS NOW PROD UCED BY THE ASSESSEE IS NOT RELIABLE. IN ABSENCE OF ANY RELIABL E EXPLANATION AND EVIDENCES IN THIS REGARD THE AMOUNT OF RS. 64 83 1 10/- IS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE BY THE AO AND AD DED TO THE TOTAL INCOME IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS. (ADDITION OF RS. 64 83 110) 28. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE SOLD SHARES OF WORLD FIN TRADE THROUGH S.M . CONSULTANCY FOR RS. IT (SS) A NO. 83/AHD/2006 - 27 - 64 83 110/-. THE AO TREATED THE ENTIRE SALE PROCEED S OF SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE ON THE GROUND TH AT THE BOOKS OF ACCOUNT WHEREIN THE SALE ENTRIES ARE CLAIMED TO HAVE BEEN R ECORDED IS FOUND TO BE UNRELIABLE. THE LD. AR CONTENDED THAT THE ACCOUNT OF S. M. CONSULTANCY IS OLD AND REGULAR ACCOUNT AS APPEARING AT PAPER BOOK PAGE NO 512 OF SEIZED DOCUMENT AS PER ANNEXURE A 8 TO THE PANCHNAMA DATED 21/12/1995. HE ALSO POINTED OUT THAT THE PAYMENTS IN RESPECT OF TH ESE SALE PROCEEDS WERE RECEIVED BY CHEQUES WHICH WERE DEPOSITED IN BANK OF MADURA WHICH ACCOUNT WAS ALSO A RECORDED BANK ACCOUNT APPEARING IN SEIZED DOCUMENTS. HE ALSO RELIED ON THE DECISION OF CIT VS. GURUBACHH AN SINGH J JUNEJA (2008) 302 ITR 63 (GUJ) MANMOHAN SADANI V/S.CIT (2008) 30 4 ITR 52 (MP) AND DECISION OF AHMEDABAD D BENCH IN THE CASE OF ASIA TIC INFRASTRUCTURE & SHELTERS LTD. VS. DCIT IN IT(SS)A NO.84/AHD/2006 OR DER DATED 9/10/2009. WE FIND THAT THE NO SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT HEARING CO ULD BE POINTED OUT BY THE AO. THE REVENUE COULD NOT BRING ANY MATERIAL BE FORE US TO SHOW THAT THE TRANSACTIONS WITH S.M. CONSULTANCY WAS NOT RECO RDED BY THE ASSESSEE COMPANY IN THE REGULARS BOOKS OF ACCOUNT PRIOR TO T HE DATE OF SEARCH OR SUCH TRANSACTION WOULD NOT HAVE BEEN DISCLOSED BY T HE ASSESSEE BUT FOR THE SEARCH. ON THE OTHER HANDS THE FACT THAT SALE PROC EEDS WERE DEPOSITED IN REGULAR BANK ACCOUNT OF THE ASSESSEE SHOWS THAT THE SE WERE REGULAR TRANSACTIONS AND ASSUMPTION TO THE EFFECT THAT THE TRANSACTIONS ENTERED INTO REGULAR BOOKS OF ACCOUNT WOULD NOT HAVE BEEN DISCLO SED IS NOT SUSTAINABLE. WE THEREFORE AGREE WITH THE SUBMISSION OF THE ASS ESSEE THAT THE SUCH SALE PROCEEDS OF SHARES OR THE AMOUNT OF INCOME EMBEDDED IN SUCH SALE PROCEEDS CANNOT BE TREATED AS UNDISCLOSED INCOME WI THIN THE MEANING OF SECTION 158B(B) OF THE ACT AND THEY CANNOT BE SUBJE CTED TO ASSESSMENT UNDER CHAPTER XIV-B OF THE ACT. MOREOVER THE TREAT MENT OF ENTIRE SALE PROCEEDS AS INCOME IS NOT SUSTAINABLE IN ANY VIEW O F THE MATTER. IN VIEW OF THE ABOVE WE DELETE THE ADDITION OF RS. 64 83 110/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. IT (SS) A NO. 83/AHD/2006 - 28 - 29. GROUND NO.19.5 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. PURCHASE AND SALE OF SHARES THROUGH S.M.CONSULTANC Y .RS.2 98 64 000/- 30. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.5. INCOME FROM UNDISCLOSED SHARE TRANSACTIONS : PAGE 72 CONTAINS THE DETAILS OF PURCHASE AND SALE O F SHARES ON BEHALF OF THE ASSESSEE COMPANY BY S.M. CONSULTANCY SERVICE S. THE NET DEBIT BALANCE IS RS. 2 98 64 000/-. THE ASSESSEE VIDE FIN AL SHOW CAUSE NOTICE DATED 9/3/06 WAS ASKED TO EXPLAIN AS TO WHY THE SAID AMOUNT SHOULD NOT BE TREATED AS ITS INCOME FROM UNDISCLOSE D SOURCES. THE ASSESSEE TRIED TO EXPLAIN THE TRANSACTION BY MENTIO NING THAT IT IS A SAUDA REPORT SENT BY S.M. CONSULTANCY AND THEY ARE ALL REFLECTED IN THE FINAL BILLS SEND BY THEM. ASSESSEE ALSO PRODUCE D EXTRACTS OF STOCK REGISTER AND BANK BOOK. AS DISCUSSED EARLIER THE EX TRACTS OF THE BOOKS NOW PRODUCED BY THE ASSESSEE IS NOT RELIABLE. IN AB SENCE OF ANY RELIABLE EXPLANATION AND EVIDENCES IN THIS REGARD THE AMOUNT OF RS. 2 98 64 000/- IS TREATED AS UNDISCLOSED INCOME OF T HE ASSESSEE AND ADDED TO THE TOTAL INCOME OF THE I.T. ACT IN THE HA NDS OF THE ASSESSEE ON SUBSTANTIVE BASIS. (ADDITION OF RS. 2 98 64 000) 31. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE LD. AR OF THE AS SESSEE EXPLAINED THAT THE AFORESAID AMOUNT OF RS. 2 98 64 000/- REPRESENTS TH E DIFFERENCE OF PURCHASES AND SALES OF SHARES MADE BY THE ASSESSEE THROUGH S M CONSULTANCY. THE TOTAL SALES AMOUNTED TO RS.3 50 15 000/- AND PURCHASE TOTALED TO RS.51 51 000/-. THE LD. AR CONTENDED THA T THESE PURCHASES AND SALES WERE RECORDED IN THE REGULAR BOOKS OF ACCOUNT S OF THE ASSESSEE COMPANY AND A PRINT OUT OF THE SAME WAS ALSO SEIZED AS PAGE 17 OF ANNEXURE A-8 WHEREIN ALL THE ABOVE TRANSACTIONS ARE REFLECTED IN THE SEIZED BOOKS. HE ALSO CONTENDED THAT NO CASH TRANSACTION I S INVOLVED IN THE ABOVE PURCHASES AND SALES AND ALL THE TRANSACTIONS WERE S ETTLED BY CHEQUES OR BOOK ENTRIES. THE BANK ACCOUNTS THROUGH WHICH ABOVE TRANSACTIONS WERE SETTLED ARE RECORDED IN THE REGULAR BOOKS OF ACCOUN T THEREFORE THE IT (SS) A NO. 83/AHD/2006 - 29 - TRANSACTIONS RECORDED IN THE SEIZED BOOKS AS WELL A S REGULAR BOOKS OF ACCOUNT CANNOT BE REGARDED TO BE THE UNDISCLOSED IN COME OF THE ASSESSEE. HE ALSO RELIED UPON THE DECISIONS QUOTED IN PARA NO .28 ABOVE. WE FIND THAT THE LD. DR COULD NOT CONTROVERT THE ABOVE SUBMISSIO NS OF THE LD. AR OF THE ASSESSEE. THE PREVIOUS YEAR IN WHICH TRANSACTIONS W ERE ENTERED INTO HAVE NOT ENDED BEFORE THE DATE OF THE SEARCH AND THE REV ENUE COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THE ABOVE TRANSACTIO NS OF SHARES WOULD NOT HAVE BEEN DISCLOSED BY THE ASSESSEE IN ITS REGULAR RETURN OF INCOME. THE CONTENTION OF THE ASSESSEE TO THE EFFECT THAT THE T RANSACTIONS IN QUESTION WERE RECORDED IN THE REGULAR BOOKS OF ACCOUNT BEFOR E THE DATE OF THE SEARCH COULD NOT BE CONTROVERTED BY THE REVENUE BY BRINGIN G COGENT MATERIAL ON RECORD. IN ABSENCE OF THE SAME IN OUR CONSIDERED O PINION THE TRANSACTIONS IN QUESTION ARE BEYOND THE SCOPE OF BLOCK ASSESSMEN T UNDER CHAPTER XIV-B OF THE ACT. WE THEREFORE DELETE THE ADDITION OF R S. 2 98 64 000/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 32. GROUND NO.19.6 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. TRANSACTION IN SHARES OF ZILLION PHARMA & WFL .. R S.2 40 00 000/- 33. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.6. UNACCOUNTED SALES OF THE ASSESSEE: PAGE NO. 77 OF ANNEXURE A-5 CONTAINS THE DETAILS OF SALE OF 19 LAKH SHARES OF ZILLION PHARMA BY S.M. CONSULTANCY SERVIC ES ON BEHALF OF THE ASSESSEE AND AN AMOUNT OF RS. 1 60 00 000/- HAS BEEN CREDITED TO THE ASSESSEE. SIMILARLY PAGE NO. 78 CONTAINS THE DETAILS OF 12 LAKHS SHARES OF WORLD FIN TRADE OF AN AMOUNT OF RS. 80 LAKHS. VIDE FINAL SHOW CAUSE NOTICE DATED 9.3.06 THE ASSESSEE W AS ASKED TO EXPLAIN AS TO WHY THE ABOVE TRANSACTIONS TOTALING T O RS. 2 40 00 000/- SHOULD NOT BE TREATED AS UNEXPLAINED INCOME. THE ASSESSEE DISPUTED THE SEIZED DOCUMENTS AND SUBMITTE D THAT THEY ARE DEBIT ENTRIES RATHER THEN CREDIT ENTRIES AND THERE IS NO QUESTION OF ANY RECEIPTS BY THE ASSESSEE. IN FACT THERE IS NO F ORCE IN THE IT (SS) A NO. 83/AHD/2006 - 30 - ARGUMENT OF THE ASSESSEE IT IS VERY CRYSTAL CLEAR FROM THE SEIZED DOCUMENT THAT THE AMOUNT IN QUESTION IS THE RECEIPT OF THE ASSESSEE COMPANY AND THE SAME IS HEREBY ADDED AS THE UNACCOU NTED SALES/RECEIPTS OF THE ASSESSEE COMPANY ON SUBSTANTI VE BASIS. (ADDITION OF RS. 2 40 00 000) 34. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSI NG THE MATERIALS AVAILABLE ON RECORD WE FIND THAT THE CONTENTION OF THE LD. AR IS THAT THE SEIZED DOCUMENTS MARKED AS PAGE NOS. 77 & 78 OF ANN EXURE A5 REFLECTS AS UNDER:- ANNEXURE - A/5 PAGE NO 77 DETAIL OF CHEQUE RECD. FROM S.M. CONSULTANCY ___________________________________________________ _________ DATE PARTICULARS CHEQUE NO BANK AMOUNT --------------------------------------------------- --------------------------------- 25-08-94 TO CHEQUE PAID 738489 BOB 500000.00 27-08-94 TO CHEQUE PAID 738500 BOB 2500000.00 22-09-94 TO CHEQUE PAID 363604 DENA 2500000.00 05-10-94 TO CHEQUE PAID 684870 DENA 2500000.00 05-10-94 TO CHEQUE PAID 684871 DENA 2500000.00 17-10-94 TO CHEQUE PAID 25475 BOB 3000000.00 21.11-94 TO CHEQUE PAID 684779 DENA 2500000.00 ___________________________________________________ _____ TOTAL AMOUNT 16000000.00 ___________________________________________________ _____ IT (SS) A NO. 83/AHD/2006 - 31 - ANNEXURE - A/5 PAGE NO 78 DETAIL OF CHEQUE RECD. FROM S.M. CONSULTANCY ___________________________________________________ _____ DATE PARTICULARS CHEQUE NO BANK AMOUNT ___________________________________________________ _____ 13-01-95 TO CHEQUE PAID 764815 SBI 4000000.00 13-01-95 TO CHEQUE PAID 764823 SBI 1000000.00 19-01-95 TO CHEQUE PAID 11990 BOB 3000000.00 ___________________________________________________ _____ TOTAL AMOUNT 8000000.00 ___________________________________________________ _____ PAGE 77 & PAGE 78 ( 16000000.00 + 8000000.00) = RS. 2 40 00 000.00 35. THE LD. AR EXPLAINED THAT THE AMOUNT OF RS. 2 40 00 000/- REPRESENTS THE AMOUNT RECEIVED FROM S.M. CONSULTANC Y BY THE ASSESSEE BY CHEQUES. IT WAS EXPLAINED THAT THESE RECEIPTS WERE PART OF SALE PROCEEDS OF RS. 3 50 15 000/- WHICH WAS CONSIDERED BY THE AO WH ILE MAKING ADDITION OF RS. 2 98 64 000/-. THUS THE ADDITION IN QUESTION A MOUNTS TO DOUBLE ADDITION IN RESPECT OF SAME TRANSACTION. FURTHER I T WAS CONTENDED THAT ALL THE CHEQUES WERE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND ALSO THE BANK ACCOUNTS IN WHICH ABOVE CHEQUES OF RS. 2 4 0 00 000/- WERE DEPOSITED WERE ALREADY FOUND RECORDED IN THE REGULA R BOOKS OF ACCOUNT IN THE SEIZED DOCUMENTS AND THUS THE TRANSACTION IN Q UESTION COULD NOT BE A SUBJECT MATTER OF BLOCK ASSESSMENT. THE LD. DR COUL D NOT CONTROVERT THE ABOVE SUBMISSIONS OF THE LD. AR OF THE ASSESSEE. T HE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE ALSO RELIED UPON THE DECISIONS QUOTED IN PARA NO.28 ABOVE. WE FIND THAT THE AMOUNT OF RS. 2 40 00 000/- IS THE AMOUNT RECEIVED BY ASSESSEE BY CHEQUES AGAINST SALE OF SHA RES BY IT OF RS. 3 50 15 000/- THROUGH S.M. CONSULTANCY. AFTER MAKIN G OF ADDITION OF RS. 2 98 64 000/- IN RESPECT OF ABOVE SALE OF SHARES M AKING OF SEPARATE ADDITION OF RS. 2 40 00 000/- AGAIN IS CLEARLY UNSU STAINABLE AND BAD IN LAW. IT (SS) A NO. 83/AHD/2006 - 32 - FURTHER THE ADDITION MADE BY THE AO OF RS. 2 98 64 000/- IN RESPECT OF SALES OF SHARES OF RS. 3 50 15 000/- HAVE ALREADY B EEN DELETED BY US FOR REASONS MENTIONED ABOVE WHILE DECIDING THE GROUND O F APPEAL RELATING TO THE SAID AMOUNT OF RS. 2 98 64 000/-. FOR THE SAME REASONS IN OUR CONSIDERED OPINION THE AMOUNT IN QUESTION OF RS. 2 40 00 000/- CANNOT BE SUBJECTED TO BLOCK ASSESSMENT UNDER CHAPTER XIV-B O F THE ACT. WE THEREFORE DELETE THE ADDITION OF RS. 2 40 00 000/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 36. GROUND NO. 19.7 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. SHARES RECEIVED FROM JAYESH PARIKH (PORTFOLIO MANAGEMENT) ..RS. 45 000/- 37. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.7. UNEXPLAINED INCOME OF THE ASSESSEE : PAGE 79 TO 80 OF ANNEXURE A-5 CONTAINS THE DETAILS OF SHARES RECEIVED BY THE ASSESSEE FROM DR. JAYESH FOR PORTFOLIO MANAG EMENT. THE TOTAL VALUE COMES TO RS. 22 500/-EACH. THE ASSESSEE WAS A SKED TO EXPLAIN AS TO WHY THE AMOUNT OF RS. 45 000/- SHOULD NOT BE TREATED AS ITS UNEXPLAINED INCOME. THE ASSESSEE SUBMITTED THAT THE AMOUNT IN QUESTION IS DULY REFLECTED IN HIS BOOKS OF ACCOUNTS AND PRODUCE EXTRACT OF BANK BOOK IN SUPPORT OF HIS CLAIM. AS DI SCUSSED EARLIER THE EXTRACTS OF THE BOOKS NOW PRODUCED BY THE ASSESSEE IS NOT RELIABLE. IN ABSENCE OF ANY RELIABLE EXPLANATION AND EVIDENCES I N THIS REGARD THE AMOUNT OF RS. 45 000/- IS TREATED AS UNDISCLOSED IN COME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME OF THE I.T. ACT ON SUBSTANTIVE BASIS. (ADDITION OF RS. 45 000) 38. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE LD. A.R. POINTED OUT THAT PAGE NOS. 79 & 80 ARE TWO COPIES OF THE SAME ACCOUNT. THEY ARE NOT TWO SEPARATE IT (SS) A NO. 83/AHD/2006 - 33 - TRANSACTIONS BUT ONLY ONE TRANSACTION AND THEREFORE THE TOTAL AMOUNT INVOLVED WAS RS. 22 500/- ONLY AND NOT RS. 45 000/- . IN SUPPORT THE LD. A.R. FURTHER RELIED ON THE BOOKS OF ACCOUNT SEIZED AT ANNEXURE A 8 TO THE PANCHNAMA DATED 21/12/1995 WHICH IS AT PAPER BOOK P AGE NO 496 WHEREIN THE AMOUNT RECEIVED BY TWO CHEQUES OF RS. 5 000/- & RS. 17 500/- EACH TOTALING FOR RS. 22 500/- IS REFLECTED. HE ALSO CON TENDED THAT THESE ENTRIES WERE RECORDED IN THE REGULAR BOOKS OF ACCOUNT BEFOR E THE DATE OF SEARCH AND THE BANK ACCOUNT WHEREIN DEPOSITS WERE MADE WAS DIS CLOSED BANK ACCOUNT ALREADY RECORDED IN REGULAR BOOKS OF ACCOUNT THERE FORE THE DEPOSITS MADE THEREIN CANNOT BE REGARDED TO BE THE UNDISCLOSED IN COME OF THE ASSESSEE. HE ALSO RELIED UPON THE DECISIONS QUOTED IN PARA NO .28 ABOVE. WE FIND THAT THE LD. DR COULD NOT BRING ANY MATERIAL BEFORE US T O CONTROVERT THE SUBMISSIONS OF THE LD. AR. FURTHER NO SPECIFIC DEF ECT IN THE REGULAR BOOKS OF ACCOUNT PRODUCED BEFORE THE AO COULD BE POINTED OU T BY THE AO. IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD TO SHOW T HAT THESE TRANSACTIONS WOULD NOT HAVE BEEN DISCLOSED BY THE ASSESSEE IN IT S REGULAR RETURN OF INCOME IN OUR CONSIDERED OPINION THE AO WAS NOT J USTIFIED IN TREATING THE SAME AS UNDISCLOSED INCOME WITHIN THE MEANING OF SE C. 158B(B) OF THE ACT. FURTHER THE TOTAL TRANSACTION WAS FOR RS. 22 500/- AND NOT RS. 45 000/- AS OBSERVED IN THE IMPUGNED ORDER OF ASSESSMENT. WE T HEREFORE DELETE THE ADDITION OF RS. 45 000/- AND ALLOW THIS GROUND OF A PPEAL OF THE ASSESSEE. 39. GROUND NO.19.8 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. TRANSACTION IN SHARE OF ZILLION PHARMA TREATED AS UNDISCLOSED INCOME ..RS.44 32 093/- 40. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- IT (SS) A NO. 83/AHD/2006 - 34 - 4.8. UNEXPLAINED INVESTMENT OF THE ASSESSEE: PAGE 81 OF ANNEXURE A-5 CONTAINS THE DETAILS OF PUR CHASE AND SALES OF SHARES OF ZILLION PHARMA BY N.V. SHAH BROKER OF BOMBAY ON BEHALF OF THE ASSESSEE COMPANY AND THE DIFFERENCE IS RS. 1 7 91 628/-. PAGE 82 CONTAINS THE DETAILS OR PURCHASE AND SALES OF SH ARES OF ZILLION PHARMA BY N.V. SHAH BROKER OF BOMBAY ON BEHALF OF T HE ASSESSEE AND THE DIFFERENCE IS RS. 26 40 465/-. THE ASSESSEE WAS VIDE FINAL SHOW CAUSE NOTICE DATE 9/3/06 ASKED TO EXPLAIN AS T O WHY THE AMOUNT SHOULD NOT BE TREATED AS ITS UNEXPLAINED INV ESTMENT. THE ASSESSEE ARGUED THAT ALL THE TRANSACTION IN QUESTIO N ARE DULLY ACCOUNTED FOR IN THE BOOKS AND PRODUCE EXTRACTS OF BANK BOOK. AS DISCUSSED EARLIER THE EXTRACTS OF THE BOOKS NOW PRO DUCED BY THE ASSESSEE IS NOT RELIABLE. IN ABSENCE OF ANY RELIABL E EXPLANATION AND EVIDENCES IN THIS REGARD THE AMOUNT OF RS.17 91 62 8/- IS TREATED AS UNDISCLOSED INVESTMENT OF THE ASSESSEE U/S.69 OF TH E I.T.ACT ON SUBSTANTIVE BASIS. (ADDITION OF RS. 44 32 093) 41. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE LD. AR OF THE AS SESSEE AT THE OUTSET EXPLAINED THAT THE PAGE 81 AND 82 OF ANNEXURE A5 CO NTAINS RECORDS OF TRANSACTIONS OF PURCHASE AND SALE OF SHARES OF ZILL ION PHARMA THROUGH N.V. SHAH BROKER OF BOMBAY. HE POINTED OUT THAT SHARES O F ZILLION PHARMA BY N.V. SHAH BROKER OF BOMBAY PAGE 82 CONTAINS CUMULAT IVE TOTAL OF PAGE 81 ALSO. THUS THE TOTAL OF RS. 26 40 465/- AT PAGE 82 ALSO INCLUDES RS. 17 91 628/- CONTAINED AT PAGE 81. THUS THE AO HAS ERRED IN TREATING BOTH THE PAGES AS SEPARATE AND AGAIN MAKING ADDITION OF RS. 17 91 628/- AFTER MAKING ADDITION OF RS. 26 40 465/- I.E. TOTAL ADD ITION OF RS. 44 32 093/- WHEREAS TOTAL OF BOTH THE PAGES TAKEN TOGETHER IS R S. 26 40 465/- ONLY. HE FURTHER CONTENDED THAT THE ENTRIES IN RESPECT OF AB OVE TRANSACTIONS WERE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT PRIOR TO THE DATE OF SEARCH AND ALSO POINTED OUT THAT THE TRANSACTIONS MENTIONE D IN THE DOCUMENTS IN QUESTION WERE SETTLED THROUGH BANK ACCOUNT WHICH WE RE ALREADY RECORDED AND DISCLOSED. IN THE CIRCUMSTANCES THE AO WAS NOT JUSTIFIED IN ARBITRARILY TREATING THE TRANSACTION AS REPRESENTING UNDISCLOSE D INCOME OF THE ASSESSEE. HE ALSO RELIED UPON THE DECISIONS QUOTED IN PARA NO.28 ABOVE. WE FIND THAT THE LD. DR COULD NOT CONTROVERT THE ABOVE SUBMISSIONS OF THE LD. IT (SS) A NO. 83/AHD/2006 - 35 - AR. NO SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT PROD UCED BY THE ASSESSEE BEFORE THE AO COULD BE POINTED OUT BY THE AO. AS NO MATERIAL COULD BE BROUGHT BEFORE US TO SHOW THAT THE TRANSACTIONS IN QUESTION WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT OR THE TRA NSACTIONS WERE NOT SETTLED THROUGH THE REGULAR BANK ACCOUNT OF THE ASS ESSEE IN OUR CONSIDERED OPINION THE LD. AO WAS NOT JUSTIFIED IN TREATING T HE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE ASSESSABLE UNDER CHAPTER XIV -B WITHOUT BRINGING ON RECORD ANY MATERIAL TO SHOW THAT THESE TRANSACTIONS WOULD NOT HAVE BEEN DISCLOSED BY THE ASSESSEE. WE THEREFORE DELETE TH E ENTIRE ADDITION OF RS. 44 32 093/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 42. GROUND NO.19.9 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. DIFFERENCE IN PURCHASE AND SALE OF SHARES RS.9 2 650/- 43. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.9. UNEXPLAINED INCOME OF THE ASSESSEE ; PAGE 83 OF ANNEXURE A-5 CONTAINS THE DETAILS OF PUR CHASE AND SALES OF SHARES AND THE DIFFERENCE IS RS. 92 650/-. VIDE FINAL SHOW CAUSE NOTICE DATED 9/3/06 THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE AMOUNT SHOULD NOT BE TREATED AS ITS UNEXPLA INED INCOME. THE ASSESSEE ARGUED THAT ALL THE TRANSACTION IN QUE STION ARE DULLY ACCOUNTED FOR IN THE BOOKS AND PRODUCE EXTRACTS OF COPY OF LEDGER OF N.V.SHAH AND EXTRACT OF STOCK REGISTERS. AS DISCUSS ED EARLIER THE EXTRACTS OF THE BOOKS NOW PRODUCED BY THE ASSESSEE IS NOT RELIABLE. IN ABSENCE OF ANY RELIABLE EXPLANATION AND EVIDENCES I N RESPECT OF THE ABOVE TRANSACTION THE AMOUNT OF RS. 92 650/- IS ADD ED TO THE TOTAL INCOME OF THE ASSESSEE TREATING IT AS THE UNEXPLAIN ED INCOME OF THE ASSESSEE ON SUBSTANTIVE BASIS. (ADDITION OF RS. 92 650) 44. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORDS. WE FIND THAT THE CO NTENTION OF THE LD. AR THAT THE TRANSACTIONS IN QUESTION WERE RECORDED IN THE REGULAR OF BOOKS OF IT (SS) A NO. 83/AHD/2006 - 36 - ACCOUNT AND WERE MADE THROUGH DISCLOSED BANK ACCOUN T COULD NOT BE CONTROVERTED BY THE REVENUE. IN THE CIRCUMSTANCES WE FIND THAT THE TRANSACTION COULD NOT BE HELD AS WOULD NOT HAVE BEE N DISCLOSED BY THE ASSESSEE AND CONSEQUENTLY COULD NOT BE ALLEGED AS UNDISCLOSED INCOME WITHIN THE MEANING OF SEC. 158B(B) OF THE ACT. WE THEREFORE DELETE THE ADDITION OF RS. 92 650/- AND ALLOW THIS GROUND OF A PPEAL OF THE ASSESSEE. 45. GROUND NO.19.10 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. TRANSACTIONS IN PURCHASE AND SALE OF SHARES RS.1 5 00 000/- 46. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.10 UNACCOUNTED RECEIPTS OF THE ASSESSEE : AS PER PAGE 84 OF ANNEXURE A-5 A CHEQUE OF RS. 15 LAKHS HAS BEEN PAID TO THE ASSESSEE ON 31.3.95 BY N.V. SHAH BROKER OF BOMBAY. VIDE FINAL SHOW CAUSE NOTICE DATED 9/3/06 THE ASSES SEE WAS ASKED TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE TREATED AS ITS UNEXPLAINED INCOME. THE ASSESSEE ARGUED THAT ALL THE TRANSACTIO N IN QUESTION ARE DULLY ACCOUNTED FOR IN THE BOOKS AND PRODUCE EXTRAC TS OF COPY OF LEDGER OF N.V.SHAH AND EXTRACT OF BANK BOOK AND PAS S BOOK. AS DISCUSSED EARLIER THE EXTRACTS OF THE BOOKS NOW PRO DUCED BY THE ASSESSEE IS NOT RELIABLE. IN ABSENCE OF ANY RELIABL E EXPLANATION AND EVIDENCES IN THIS REGARD THE SAME IS ADDED TO THE T OTAL INCOME TREATING THE SAME AS UNEXPLAINED INCOME OF THE ASSE SSEE ON SUBSTANTIVE BASIS. (ADDITION OF RS. 15 00 000) 47. AFTER HEARING THE RIVAL SUBMISSIONS WE FIND T HAT THE LD. AR POINTED OUT THAT THE BOOKS OF ACCOUNT SEIZED AT ANN EXURE A 8 TO THE PANCHNAMA DATED 21/12/1995 CONTAINS THE LEDGER ACCO UNT OF N V SHAH WHICH IS PLACED AT PAPER BOOK PAGE NO 500 OF THE PA PER BOOK AND CONTAINS THE ENTRIES IN QUESTION. HE FURTHER POINTED OUT FRO M PAGE NO. 523 OF PAPER BOOK WHICH IS LEDGER ACCOUNT OF VIJAYA BANK BOMBAY WHERE IN ALSO THE IT (SS) A NO. 83/AHD/2006 - 37 - ENTRIES ARE RECORDED. HE THUS CONTENDED THAT ENTRI ES WERE REFLECTED IN THE REGULAR BOOKS OF ACCOUNT AND WERE SETTLED THROUGH T HE BANK ACCOUNT DULY DISCLOSED AND RECORDED IN THE REGULAR BOOKS OF ACCO UNT. HE ALSO CONTENDED THAT EVEN OTHERWISE ALSO THE CHEQUES WERE RECEIVED FOR SALES MADE AND THEREFORE ENTIRE RECEIPT CANNOT BE TAXED AND ONLY PROFIT EMBEDDED THEREIN IS TO BE CONSIDERED WHICH IS RECORDED IN THE BOOKS AND THUS CANNOT FORM PART OF UNDISCLOSED INCOME. HE ALSO RELIED UPON THE DECISIONS QUOTED IN PARA NO.28 ABOVE. WE FIND THAT NO MATERIAL COULD BE BROU GHT ON RECORD BY THE REVENUE TO CONTROVERT THE ABOVE SUBMISSIONS OF THE ASSESSEE. IN OUR CONSIDERED OPINION ENTIRE SALE PROCEEDS CANNOT BE TREATED AS INCOME AND ONLY INCOME ELEMENT EMBEDDED IN SUCH SALE PROCEEDS ALONE COULD HAVE BEEN TREATED AS INCOME. FURTHER AS NO MATERIAL COU LD HAVE BROUGHT BEFORE US TO SHOW THAT THE TRANSACTIONS IN QUESTION WERE N OT RECORDED IN REGULAR BOOKS OF ACCOUNT BEFORE THE DATE OF SEARCH OR TO SH OW THAT THE TRANSACTIONS WOULD NOT HAVE BEEN DISCLOSED IN THE REGULAR RETURN OF INCOME IN OUR CONSIDERED OPINION THE ADDITION MADE BY THE AO IS UNSUSTAINABLE. WE THEREFORE DELETE THE ADDITION OF RS. 15 00 000/- A ND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 48. GROUND NO.19.11. OF THE APPEAL READS AS UNDER: - 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. PURCHASE /SALES THROUGH S.M. CONSULTANCY. RS.36 36 000/- 49. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.11. UNEXPLAINED INVESTMENT OF THE ASSESSEE : PAGE 85 OF ANNEXURE A-5 CONTAINS THE DETAILS AS UND ER - BROUGHT FROM S.M. NO. OF SHARES AMOUNT 80 000 RS.41 00 350/- IT (SS) A NO. 83/AHD/2006 - 38 - S.M. SALE PURCHASE WFL 12 00 000@ 10.00 ANAND COTS 30 000 @ 20.20 WFL 1 00 0007- @ 10.00 FAIRDEAL 100000@15.50 ZPL L 50 000/-@ 10.00 UMLIV FOOD 50000@20.20 ZPL 7 50 000/-@ 10.00 NILA 100000@15.15 ON PERUSAL OF THE DETAILS MENTIONED ON PAGE NO. 85 IT IS SEEN THAT THE ASSESSEE HAS PURCHASE THE SHARES MENTIONED ON THE R IGHT SIDE OF THE PAGE AND SOLD SHARES MENTIONED AT THE LEFT SIDE OF THE PAGE AT THE RATE MENTIONED THEREIN FROM AND TO S.M. CONSULTANCY . IT IS FURTHER SEEN THAT PURCHASE OF 100000 SHARES FAIR DEAL AT TH E RATE OF RS. 15.15 ALSO APPEARS ON THE SAME SIDE OF THE SAME NUM BER OF SHARES AND AT THE SAME RATE. THEREFORE THIS TRANSACTION C AN BE SET OFF. VIDE THIS OFFICE SHOW-CAUSE DATED 9/3/06 THE ASSESS EE WAS ASKED WHY THE BALANCE TRANSACTION FOR PURCHASE OF RS.36 3 6 000/- SHOULD NOT BE CONSIDERED AS HIS UNEXPLAINED INVESTMENT U/S .69 OF THE ACT. THE ASSESSEE ARGUED THAT ALL THE TRANSACTIONS IN QU ESTION ARE DULY REFLECTED IN HIS BOOKS OF ACCOUNTS AND IT ALSO PROD UCED RELEVANT EXTRACTS FROM THE BOOKS. AS DISCUSSED EARLIER THE E XTRACTS OF THE BOOKS NOW PRODUCED BY THE ASSESSEE IS NOT RELIABLE AND HAS NOT SHOWN THE SALE PROCEEDS OF SHARES AS HIS INCOME IN THE RETURN FOR CONCERNED ASSESSMENT YEAR. THE BALANCE TRANSACTION FOR PURCHASE AMOUNTING TO RS. 36 36 000/- IS TREATED AS UNEXPLAI NED INVESTMENT U/S 69 OF THE ACT AND ADDED TO THE INCOME OF THE AS SESSEE ON SUBSTANTIVE BASIS. (ADDITION OF RS. 36 36 000/-) 50. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE LD. AR POINTED O UT THAT THE TRANSACTIONS IN QUESTION WERE ALSO RECORDED AT PAGE 72 OF ANNEXU RE A-5 WHICH HAS ALREADY BEEN CONSIDERED BY THE AO AND HE MADE ADDIT ION OF RS. 2 98 64 000/- IN RESPECT THEREOF WHICH IS AGITATED AT GROUND NO. 19.5 OF THIS APPEAL. AGAIN MAKING SEPARATE ADDITION OF RS. 36 36 000/- IN RESPECT OF THE VERY SAME TRANSACTION AMOUNTS TO DOUBLE ADDITION WH ICH IS BAD IN LAW. WE FIND THAT PAGE 72 OF ANNEXURE A-5 CONTAINS AS UNDER :- IT (SS) A NO. 83/AHD/2006 - 39 - ANNEXURE - A/5 PAGE NO 72 SCRIP WISE REPORT OF S.M. CONSULTANCY FOR THE PER IOD 1/04/94 TO 31/03/95 BROUGHT FROM SOLD TO VALUE QTY RATE SCRIP NAME DATE VALUE QTY RATE ANAND COTSPINS 23/10 606000.00 30000 20.20 FAIRDEAL FILAME 23/10 1515000.00 100000 15.15 1515000.00 100000 15.15 FAIRDEAL FILAMENT23/10 KANAIYA FOODS 22/11 505000.00 25000 20.20 NILA BUILDERS 05/03 1515000.00 100000 15.15 UNILIVES FOODS 22/11 1010000.00 50000 20.20 4000000.00 400000 10.00 WORLD FIN TRADE 05/04 4000000.00 400000 10.00 WORLD FIN TRADE 05/04 4000000.00 400000 10.00 WORLD FIN TRADE 05/04 1000000.00 100000 10.00 WORLD FIN TRADE 05/04 5000000.00 500000 10.00 ZILLION PHARMAC 17/08 5000000.00 500000 10.00 ZILLION PHARMAC 17/08 3000000.00 150000 20.00 ZILLION PHARMAC 18/08 7500000.00 750000 10.00 ZILLION PHARMAC 20/09 -------------------------------------- -------- ----------------------------- 35015000.00 3300000 CLIENT TOTAL 5151000.00 305 000 29864000.00 2998000 CLIENT NET THUS WE FIND FORCE IN THE CONTENTION OF THE ASSESS EE AND AS TRANSACTION RELATING TO RS.36 36 000/- FORMED PART OF ADDITION RS. 2 98 64 000/- ALREADY CONSIDERED AND DECIDED BY US IN RESPECT OF GROUND NO. 19.5 OF THIS APPEAL THE SEPARATE ADDITION OF RS. 36 36 000/- IS BAD IN LAW AND IT (SS) A NO. 83/AHD/2006 - 40 - UNSUSTAINABLE. WE ACCORDINGLY DELETE THE ADDITION OF RS. 36 36 000/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 51. GROUND NO.19.12 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. RECEIPT TREATED AS UNDISCLOSED INCOME RS.3 20 00 000/- 52. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.12. UNACCOUNTED RECEIPTS OF THE ASSESSEE: PAGE NO. 86( REVERSE SIDE) OF ANNEXURE A-5 CONTAINS THE DETAILS OF RECEIPT OF CHEQUES AS UNDER: - S.M. BOMBAY DATE 10000000/- 764857 04.08.95 5000000/- 764859 24.08.95 6500000/- 764858 24.08.95 21500000/- BOMBAY. 21500000/- UPTO AUG.95 AHMEDABAD 1050000/- 3 20 00 000/- IT IS SEEN THAT THE CHEQUE NUMBERS AND DATE ARE WRI TTEN AGAINST THE AMOUNTS RECEIVED FROM S.M CONSULTANCY UPTO AUG. 95 . VIDE THESE OFFICE SHOW-CAUSE DATED 9/3/06 THE ASSESSEE WAS ASK ED TO EXPLAIN WHY THE RECEIPT IN QUESTION SHOULD NOT BE TREATED A S YOUR UNACCOUNTED INCOME. THE ASSESSEE ARGUED THAT ALL TH E RECEIPTS IN QUESTION ARE DULY REFLECTED IN THE BOOKS OF ACCOUNT S AND NOT A SINGLE ENTRY IS UNACCOUNTED. SINCE ASSESSEE FAILED TO PROV E THE TRANSACTION IN QUESTION SATISFACTORILY THE RECEIPT IN QUESTION IS CONSIDERED AS UNACCOUNTED RECEIPT OF THE ASSESSEE AND THE SAME IS HEREBY ADDED IN ITS INCOME FOR THE YEAR UNDER CONSIDERATION ON SUBS TANTIVE BASIC. (ADDITION OF RS. 3 20 00 000) IT (SS) A NO. 83/AHD/2006 - 41 - 53. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSI NG THE MATERIALS AVAILABLE ON RECORD WE FIND THAT THE LD. AR HAS EX PLAINED THAT THE AMOUNT IN QUESTION OF RS. 3 20 00 000/- REPRESENTS CHEQUES RECEIVED BY THE ASSESSEE FROM S.M. CONSULTANCY AGAINST SALE OF SHAR ES. HE POINTED OUT THAT THE CHEQUES WERE DEPOSITED IN VIJAYA BANK AND BANK OF MADURA WHICH WERE ALSO DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT PRIOR TO SEARCH AND ALSO FOUND MENTIONED IN THE BOOKS OF ACCOUNT SEIZED DURI NG THE COURSE OF SEARCH AND SEIZURE OPERATION. HE ALSO CONTENDED THAT CHEQU ES WERE RECEIVED FOR SALES MADE THEREFORE THE ENTIRE RECEIPT CANNOT BE T AXED AND ONLY PROFIT ON IT IS TO BE CONSIDERED WHICH IN THE EVENTUALITY IS REC ORDED IN THE BOOKS WHICH CANNOT FORM PART OF UNDISCLOSED INCOME. HE ALSO REL IED UPON THE DECISIONS QUOTED IN PARA NO.28 ABOVE. WE FIND THAT NO MATERIA L COULD BE BROUGHT ON RECORD BY THE REVENUE TO CONTROVERT THE ABOVE SUBMI SSIONS OF THE ASSESSEE. IN OUR CONSIDERED OPINION ENTIRE SALE PROCEEDS CAN NOT BE TREATED AS INCOME AND ONLY INCOME ELEMENT EMBEDDED IN SUCH SALE PROCE EDS ALONE COULD HAVE BEEN TREATED AS INCOME. WE FIND THAT THE SALE PROCE EDS WERE DEPOSITED IN BANK ACCOUNTS WHICH WERE ALREADY RECORDED IN REGULA R BOOKS OF ACCOUNT PRIOR TO THE DATE OF SEARCH. FURTHER AS NO MATERIA L COULD HAVE BROUGHT BEFORE US TO SHOW THAT THE TRANSACTIONS IN QUESTION WERE NOT RECORDED IN REGULAR BOOKS OF ACCOUNT BEFORE THE DATE OF SEARCH OR TO SHOW THAT THE TRANSACTIONS WOULD NOT HAVE BEEN DISCLOSED IN THE R EGULAR RETURN OF INCOME IN OUR CONSIDERED OPINION THE ADDITION MADE BY THE AO IS UNSUSTAINABLE. WE THEREFORE DELETE THE ADDITION OF RS. 3 20 00 0 00/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 54. GROUND NO.19.13 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. RECEIPT TREATED AS UNEXPLAINED INCOME. ..RS.7 94 48 703/- 55. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- IT (SS) A NO. 83/AHD/2006 - 42 - 4.13. UNACCOUNTED INCOME OF THE ASSESSEE: PAGES 4 5 6 7 8 AND 10 OF ANNEXURE A-6 SHOWS RECEI PT OF AMOUNTS BY THE ASSESSEE ON VARIOUS DAYS FROM DIFFERENT PARTIES AS UNDER: PAGE NO. DT. OF RECEIPT AMOUNT FROM WHOM RECVD. 4 5 6 7 8 10 24.10.95 18.11.95 12.10.95 5.12.95 18.11.95 3.11.95 TOTAL 1 00 00 000 1 00 00 000 20 46 406 2 00 00 000 37 42 297 3 36 60 000 7 94 48 703/- N.V.SHAH BROKER OF BOMBAY R.K. INVEST. BOMBAY VIDE FINAL SHOW CAUSE NOTICE DATED 9.3.06 THE ASSES SEE WAS ASKED TO EXPLAIN AS TO WHY THE AMOUNT MENTIONED ABOVE SHOULD NOT BE TREATED AS ITS INCOME. THE ASSESSEE ARGUED THAT ALL THE REC EIPT IN QUESTION IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS AND NOT A S INGLE ENTRY IS UNACCOUNTED. THE ASSESSEE ALSO PRODUCED EXTRACT OF THE BOOKS OF ACCOUNTS REFLECTING THE RECEIPTS IN QUESTION. AS DI SCUSSED EARLIER THE EXTRACTS OF THE BOOKS NOW PRODUCED BY THE ASSESSEE IS NOT RELIABLE. IN ABSENCE OF ANY RELIABLE EXPLANATION AND EVIDENCES I N RESPECT OF THE ABOVE TRANSACTIONS THE ENTIRE AMOUNT OF RS. 7 94 48 703/- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS ITS UNEXPLAI NED INCOME ON SUBSTANTIVE BASIS. (ADDITION OF RS. 7 94 48 703) 56. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSI NG THE MATERIALS AVAILABLE ON RECORD WE FIND THAT THE LD. AR EXPLAIN ED THAT THE TRANSACTION IN QUESTION REPRESENTS PAYMENTS RECEIVED BY ASSESSEE B Y CHEQUES FROM N.V. SHAH AND R.K. INVEST IN RESPECT OF SALE OF SHARES T HROUGH THEM. THE CHEQUES RECEIVED WERE DEPOSITED IN BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH VIJAYA BANK MUMBAI WHICH IS RECORD ED IN THE REGULAR BOOKS OF ACCOUNT BEFORE THE DATE OF SEARCH. HE ALSO RELIED UPON THE DECISIONS QUOTED IN PARA NO.28 ABOVE. THE REST OF S UBMISSIONS WERE SAME AS MADE IN RESPECT OF GROUND NO. 19.12 ABOVE. WE FI ND THAT THE FACTS AND IT (SS) A NO. 83/AHD/2006 - 43 - CIRCUMSTANCES OF THE CASE AND ISSUE INVOLVED ARE SI MILAR TO GROUND NO. 19.12 ABOVE. WE THEREFORE FOR THE SAME REASONING AS STATED IN RESPECT OF GROUND NO. 19.12 ABOVE DELETE THE ADDITION OF RS. 7 94 48 703/- AND ALSO ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 57. GROUND NO.19.14 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. UNEXPLAINED INVESTMENT IN SHARES ..RS.14 800/- 58. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVING AS UNDER:- 4.14. UNDISCLOSED INVESTMENT OF THE ASSESSEE : PAGE 17 OF ANNEXURE A-6 SHOWS INVESTMENT IN SHARES THE MARKET VALUE OF WHICH AS ON 21.12.95 TO RS. 14 800/- THE A SSESSEE VIDE FINAL SHOW CAUSE NOTICE DATED 9/3/06 WAS REQUESTED TO EXP LAIN AS TO WHY THE ABOVE AMOUNT SHOULD NOT BE TREATED AS UNEXPLAIN ED INVESTMENT U/S. 69 OF THE I.T. ACT. THE ASSESSEE ARGUED THAT T HESE ARE JUST NOTINGS AND NO FINANCIAL TRANSACTION OF ANY NATURE IS INVOLVED. IN FACT THERE IS NO FORCE IN THE ARGUMENT OF THE ASSESSEE A ND SINCE IT HAS FAILED TO FURNISH ANY EXPLANATION IN 'THIS REGARD THE AMOUNT OF RS. 14 800/- IS ADDED TO THE TOTAL INCOME OF THE ASSESS EE TREATING IT AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T. ACT ON PR OTECTIVE BASIS. THE SAME ADDITION IS MADE IN THE CASE OF DR. AMIT S HAH INDIVIDUAL ON SUBSTANTIVE BASIS. (ADDITION OF RS. 14 800) 59. WE HAVE HEARD THE RIVAL SUBMISSION. THE LD. AR EXPLAINED THAT THE ADDITION OF RS. 14 800/- WAS MADE ON THE BASIS OF LOOSE PAPER PAGE 17 FOUND AND SEIZED DURING THE COURSE OF SEARCH. HE EX PLAINED THAT THE NOTING ON THIS LOOSE PAGE CONTAINS A MESSAGE WHICH WAS TO BE GIVEN TO SHRI GIRISHBHAI SHAH (CHACHA). NO FINANCIAL TRANSACTION S WERE INVOLVED. ON LOWER SIDE IT IS WRITTEN TO BRING 1000 SHARES OF IN DO AMERICAN OPTICS LTD. AND ALSO 200 SHARES OF WORLD FINTRADE TO BE GIVEN F OR TRANSFER. NO DATES ARE ALSO MENTIONED. THEREFORE THE ADDITION OF RS. 14 800/- MADE IN THE ORDER IS BASELESS. WE FIND THAT SIMILAR SUBMISSIONS WAS MADE BY THE IT (SS) A NO. 83/AHD/2006 - 44 - ASSESSEE BEFORE THE AO. THE LEARNED AUTHORISED REPR ESENTATIVE OF THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION IN TH E CASE OF SMT. FARJAN. F. DESIA VS. ACIT 119 TTJ (AHD) 387 SAYAJI IRON ENGIN EERING 253 ITR 749 (GUJ) AND IN CASE OF MR. AMIT N. SHAH VS. ACIT IN IT(SS)A NO.87/AHD/2006 AHMEDABAD D BENCH DATED 10.07.2009. THE AO APART FROM DISBELIEVING THE SUBMISSIONS OF THE ASSESSEE COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT CORRECT. IN OUR CONSIDERED VIEW A PLAUSIBLE EXPLANATION GIVEN BY T HE ASSESSEE COULD NOT BE REJECTED BY THE REVENUE WHIMSICALLY AND WITHOUT BRI NGING ON RECORD ANY RELEVANT MATERIAL TO SHOW THAT THE EXPLANATION IS U NTRUE OR NOT CORRECT. IN ABSENCE OF ANY CORROBORATIVE MATERIAL FOUND DURING THE COURSE OF SEARCH TO SHOW THAT ACTUAL INVESTMENT OF RS. 14 800/- WAS MAD E BY THE ASSESSEE IN ACQUIRING THE SHARES MENTIONED IN LOOSE PAPER IN QU ESTION IN OUR CONSIDERED VIEW THE ADDITION OF RS. 14 800/- IS BA D IN LAW AND UNSUSTAINABLE. WE ACCORDINGLY DELETE THE ADDITION OF RS. 14 800/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 60. GROUND NO.19.15 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. UNEXPLAINED EXPENDITURE RS.13 20 000/- 61. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.15. UNACCOUNTED EXPENDITURE OF THE ASSESSEE : PAGE NUMBER 18 OF ANNEXURE A-6 CONTAINS THE DETAILS OF AMOUNT GIVEN ON 1.10.94 WITH DATE AND AMOUNT OF CHEQUE. TH E AMOUNTS APPEAR TO HAVE WRITTEN IN CODES. VIDE FINAL SHOW CA USE NOTICE DATED 9/3/06 THE ASSESSEE WAS REQUESTED TO FURNISH EXPLA NATION AS TO WHY THE AMOUNT RS. 13 20 000/- SHOULD NO BE TREATED AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. THE ASSESSEE FAILED TO FURNISH ANY JUSTIFIABLE EXPLANATION IN THIS REGARD. THEREFORE T HE AMOUNT OF RS. 13 20 000/- IS ADDED TO THE TOTAL INCOME TREATING T HE SAME AS UNEXPLAINED EXPENDITURE U/S 69C OF THE I T. ACT ON PROTECTIVE BASIS. IT (SS) A NO. 83/AHD/2006 - 45 - THE SAME ADDITION IS MADE IN THE CASE OF DR. AMIT S HAH INDIVIDUAL ON SUBSTANTIVE BASIS. (ADDITION OF RS. 13 20 000) 62. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE LD. AR POINTED O UT FROM PAGE NOS. 435 & 436 OF THE PAPER BOOK WHICH CONTAINS THE REPLY OF T HE ASSESSEE SUBMITTED BEFORE THE AO. THE LD. AR REITERATED THAT THE ADDIT ION WAS MADE ON THE BASIS OF LOOSE PAGER MARKED PAGE 18 WHICH IS NOT IN THE HANDWRITING OF THE PERSONS CONNECTED WITH THE GROUP. THE SAID FACTS W ERE ALSO NARRATED IN THE STATEMENT RECORDED ON 13.1.1996 VIDE ANSWER NO. 11 ON PAGE 5 OF THAT STATEMENT. THE AO HAS OBSERVED THAT PAGE 18 CONTAIN THE DETAILS OF DATE AND OF CHEQUES. HOWEVER THE AO AFTER GOING THROUGH ALL THE BANK STATEMENTS OF THE ASSESSEE COULD NOT POINT OUT THAT EVEN A SINGLE CHEQUE WAS ENTERED THEREIN. THE ABOVE CONCLUSIVELY PROVES THE SUBMISSION OF THE ASSESSEE THAT THE LOOSE PAPER DOES NOT RELATE TO TH E ASSESSEE. THE ASSESSEE ALSO PLACED RELIANCE UPON THE DECISION QUOTED IN PA RA NO.59 ABOVE. WE FIND THAT THE ACCORDING TO THE AO LOOSE PAPER MARKED PAG E NO. 18 OF ANNEXURE A-6 CONTAINS DETAILS OF AMOUNT GIVEN ON 1.10.94 WIT H DATE AND AMOUNT OF CHEQUE. AS PER THE AO THE AMOUNTS WERE WRITTEN IN C ODES AND THEREFORE HE HAS DECODED THE SAME IN LACS AND ARRIVED AT A FIGUR E OF RS.13 20 000/-. WE FIND THAT NO MATERIAL COULD BE BROUGHT ON RECORD BY THE AO TO CONTROVERT THE EXPLANATION OF THE ASSESSEE FILED BEFORE HIM. APART FROM REJECTING THE EXPLANATION OF THE ASSESSEE BY CONSIDERING THE SAME AS UNJUSTIFIABLE NO REASON WAS GIVEN BY THE AO AS TO HOW THE ABOVE EXPL ANATION OF THE ASSESSEE WAS FOUND TO BE UNJUSTIFIED BY HIM. IN ABS ENCE OF ANY REASON MENTIONED IN THE IMPUGNED ORDER OF ASSESSMENT IN O UR CONSIDERED OPINION THE ORDER IS BAD IN LAW AND UNSUSTAINABLE. FURTHER IT IS OBSERVED THAT NO CORROBORATIVE MATERIAL COULD BE BROUGHT ON RECORD B Y THE AO TO SHOW THAT RS. 13 20 000/- AS FOUND BY HIM AS MENTIONED IN LOO SE PAPER MARKED 18 OF ANNEXURE A6 WAS IN FACT REPRESENTS ANY PAYMENT MADE BY THE ASSESSEE AND THE EXPLANATION OF THE ASSESSEE IS NOT CORRECT. ACC ORDING TO THE AO THE PAYMENTS WERE MADE BY CHEQUES AND THEREFORE IN OUR CONSIDERED OPINION IT (SS) A NO. 83/AHD/2006 - 46 - IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO TO BRIN G SUCH MATERIAL ON RECORD AFTER VERIFYING THE BANK ACCOUNTS OF THE ASSESSEE H AD IT BEEN THE ACTUAL PAYMENT MADE BY THE ASSESSEE. WE THEREFORE DELETE THE ADDITION OF RS. 13 20 000/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 63. GROUND NO.19.16 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. UNEXPLAINED INVESTMENT .RS.70 00 000/- 64. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.16. UNACCOUNTED INCOME OF THE ASSESSEE : PAGE NUMBER 11(IV)(REVERSE PAGE) OF ANNEXURE A-6 CO NTAINS THE DETAILS OF VARIOUS AMOUNTS (IN CODES) INVESTED. VID E FINAL SHOW CAUSE NOTICE DATE 17.6.97 THE ASSESSEE WAS REQUESTED TO EXPLAIN AS TO WHY ANY AMOUNT OF RS. 70 LACS SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. THE ASSESSEE FAILED T O FURNISH ANY SATISFACTORY EXPLANATION IN THIS REGARD. IN ABSENCE OF ANY EXPLANATION THE SAID AMOUNT OF RS. 70 00 000/- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT U/S 69 OF TH E I.T. ACT ON PROTECTIVE BASIS. THE SAME ADDITION IS MADE IN THE CASE OF DR. AMIT SHAH INDIVIDUAL ON SUBSTANTIVE BASIS. (ADDITION OF RS. 70 00 000) 65. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE LD. AR POINTED O UT FROM PAGE NOS. 442 OF THE PAPER BOOK WHICH CONTAINS THE REPLY OF THE ASSE SSEE SUBMITTED BEFORE THE AO IN RESPECT OF THE ISSUE UNDER CONSIDERATION. THE SAID EXPLANATION READS AS UNDER:- IT (SS) A NO. 83/AHD/2006 - 47 - UNACCOUNTED INCOME OF ASSESSEE - RS.70 00 000/- THE NOTINGS ON THIS PAGE CONTAINS SOME TELEPHONE NUMBER BESIDES CERTAIN FIGURES WHICH ARE WRITTEN AS - 30 10 15 15 ------ 70 ------ LIKEWISE THE SAME IS CANCELLED AS EVIDENT FROM TH E PAPER. NOWHERE ON THIS PAGE THE AMOUNT IS WRITTEN IN LACS NEITHER THE FIGURES REPRESENT THE AMOUNT IN RUPEES. IT APPEARS THAT AS NO EXPLANATIO N HAD BEEN OFFERED AND FOR THE ALLEGED VOLUMINOUS TRANSACTIONS DONE BY US THE FIGURES WERE IN LACS. AS REGARDS TO EXPLANATION FOR THE NOTHINGS WE HAVE ALREADY NARRATED THE FACTS HEREINABOVE. THE NOTINGS ARE NOTHING BUT ROUG H WORK WHICH MIGHT HAVE BEEN WRITTEN IN A ROUTINE MANNER AS DESCRIBED HEREINABOVE. NO FINANCIAL TRANSACTIONS ARE INVOLVED THEREFORE THE FIGURES SHOULD NOT BE TREATED AS RS. AND BE STRETCHED IN LACS. UNDER THE CIRCUMSTANCES THE SAME MAY NOT BE TREATED AS UNDISCLOSED INCOME BEING UNEX PLAINED INVESTMENT U/S. 69 OF THE I.T. ACT. THE LD. AR REITERATED THE SAME SUBMISSION BEFORE US AND THE LD. DR RELIED UPON THE ORDER OF THE AO. THE ASSESSEE ALSO PLACED RELIANCE UPON THE DECISION QUOTED IN PARA NO.59 ABOVE. WE FIND THAT T HE AO MADE THE ADDITION OF RS. 70 LACS ON THE BASIS OF WRING ON LOOSE PAGE NUMBER 11(IV)(REVERSE SIDE) OF ANNEXURE A-6 AND BY TREATING THE FIGURES WRITTEN THEREIN IN CODES AND BY TREATING THE SAME REPRESENTS RECORD OF SOME INVESTMENT ACTUALLY MADE BY THE ASSESSEE. WE FIND THAT NO MATERIAL COUL D BE BROUGHT ON RECORD BY THE AO TO CONTROVERT THE EXPLANATION OF THE ASSE SSEE FILED BEFORE HIM. APART FROM REJECTING THE EXPLANATION OF THE ASSESSE E BY CONSIDERING THE SAME AS NOT SATISFACTORY NO REASON WAS GIVEN BY TH E AO AS TO HOW THE ABOVE EXPLANATION OF THE ASSESSEE WAS FOUND TO BE U NSATISFACTORY BY HIM. IN ABSENCE OF ANY REASON MENTIONED IN THE IMPUGNED ORDER OF ASSESSMENT IN OUR CONSIDERED OPINION THE ORDER IS BAD IN LAW AND UNSUSTAINABLE. FURTHER IT IS OBSERVED THAT NO MATERIAL TO CORROBO RATE HIS INFERENCE OF THE IT (SS) A NO. 83/AHD/2006 - 48 - WRITING ON LOOSE SHEET TO THE EFFECT THAT RS. 70 00 000/- WAS ACTUALLY INVESTED BY THE ASSESSEE SOMEWHERE COULD BE BROUGHT ON RECORD BY THE AO. IN OUR CONSIDERED OPINION FROM THE ABOVE LOOSE SHE ET ALONE IT COULD NOT BE CONCLUDED THAT THE ASSESSEE HAS IN FACT MADE ANY IN VESTMENT OF RS. 70 00 000/-. WE THEREFORE DELETE THE ADDITION OF RS. 70 00 000/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 66. GROUND NO.19.17 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. UNEXPLAINED INVESTMENT RS.8 25 57 037/- 67. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.17. UNACCOUNTED INVESTMENT OF THE ASSESSEE : SIMILARLY PAGE 11(V) TO 11(XVI) OF ANNEXURE A-6 SH OW THE DETAILS AND INVESTMENTS AS UNDER: (EXCEPT 11(VII) PAGE NO. DETAILS CONTAINED AMT. INVOLVED 11 (V) CONTAINS THE FIGURE OF 750 & 70 WRITTEN IN CODE WORDS. 82 50 000/- 11 (VI) CONTAINS THE DETAILS OF SCRIP AND THE AMOUNT. 2 30 00 000/- 11(VII) SHOWS INVESTMENT OF RS. 576000/- 5 76 000/- 11(VIII) SHOWS INVESTMENT OF IN DIFFERENT 9 60 000/- SCRIPTS TOTALING TO RS. 9 60 000 CONTAINS THE NAMES OF SCRIP'S NAME OF SOME PERSONS CHEQUE NUMBERS. 3 00 00 000/- 11 (X) CONTAINS THE AMOUNT NAME OF SCRIP ETC. OF INVESTMENT OF RS. 95 00 000. 95 00 000/- IT (SS) A NO. 83/AHD/2006 - 49 - 11(XI) CONTAINS THE NAME OF ONE MIHIR AMOUNT + 5 OPTICS - RS. 18 000 = RS. 38 38 774/- 38 38 774/- 11(XII) CONTAINS THE NAME OF SCRIPTS QUANTITY AND AMOUNT WRITTEN IN CODES. 41 00 000/- 11 (XIII) CONTAINS NAMES OF SOME PERSONS PHONE NUMBERS NO. OF SHARES AND RATES TOTAL AMOUNT X RATE X NUMBER OF SHARES - RS. 8 93 238 8 93 238/- 11 (XIV) CONTAINS NUMBER OF SHARES RATE DATE TOT AL AMOUNT X RATE X NUMBER OF SHARES = 7 07 325 7 07 325/- 11 (XV) CONTAINS THE NAMES OF SOME PERSONS SCRIPTS DATES NUMBER OF SHARES AND RATE - TOTAL AMOUNT X RATE X NUMBER OF SHARES = RS. 7 31 700/- 7 31 700/- 1L(XVI) CONTAINS SCRIPTS NAME AND NUMBER OF SHARES - TOTAL VALUE @ 27.50 AND RS. 10 RESPECTIVELY ON THE DATE OF SEARCH COMES TO RS. 7 11 500/- 7 11 500/- RS.8 25 57 037/- THE ASSESSEE WAS VIDE FINAL SHOW CAUSE NOTICE DATED 9/3/06. THE ASSESSEE FAILED TO FURNISH ANY REASONABLE JUSTIFICATION IN T HESE REGARDS. IN ABSENCE OF ANY EXPLANATION IN RESPECT OF THE ABOVE NOTINGS TH E AMOUNT OF RS. 8 23 08 537/- IS ADDED TO THE TOTAL INCOME OF THE A SSESSEE AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T. ACT ON PROTECTIVE BAS IS. THE SAME ADDITION IS MADE IN THE CASE OF DR. AMIT SHAH INDIVIDUAL ON SUB STANTIVE BASIS.(ADDITION OF RS. 8 25 57 037) IT (SS) A NO. 83/AHD/2006 - 50 - 68. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS AVAILABLE ON RECORD. THE LD. AR POINTED O UT FROM PAGE NOS. 442 TO 447 OF THE PAPER BOOK WHICH CONTAINS THE REPLY OF T HE ASSESSEE DATED 30.03.2006 SUBMITTED BEFORE THE AO IN RESPECT OF TH E ISSUES UNDER CONSIDERATION. THE SAID EXPLANATION READS AS UNDER: - PAGE 11 (V) CONTAINS THE FIGURE OF 750 & 75 WRITTEN IN CODE WOR DS - RS.82 50 000/- THE FIGURES WRITTEN ARE 750 + 75 = 825 ONLY. TELEPH ONE NO. 6426967 OF HOTEL SHALIN AHMEDABAD IS WRITTEN ON TH IS PAGE BESIDES OTHER FIGURES. NOWHERE IT IS WRITTEN THAT THE SAME IS INVESTMENT RECEIPT OR PAYMENT FOR ANY PARTICULAR COMMODITY TR ANSACTION ETC. IT IS ALSO NOT WRITTEN AS RUPEES OR LACS. THE SAME IS SIMPLY SOME CALCULATIONS MADE AND NO FINANCIAL TRANSACTIONS ARE INVOLVED THEREIN. THERE IS NO BASE TO MAKE THE ADDITION. THEREFORE T HE SAME MAY NOT BE TREATED AS UNEXPLAINED INVESTMENT U/S. 69 OF THE I.T. ACT. PAGE 11 (VI) CONTAIN DETAILS OF SCRIP AND THE AMOUNT - RS.2 30 00 000/- IT HAS BEEN ALLEGED THAT THE PAGE CONTAINS THE NAME S OF THE SCRIPT AND THE AMOUNT IS MENTIONED AGAINST THAT. T HE CONTENTS OF THE SAME ARE TO BE READ HEREUNDER:- (1) ASIAN FINSTOCK (NAME OF THE COMPANY) (2) D.N. BAROT (NAME OF PERSON) (3) GAURAV (NAME OF PERSON) (4) MAMTA THAKKAR (NAME OF THE PERSON) THE ABOVE PERSONS HAVE OBTAINED FINANCE FROM AFL. A S THEY WERE ADVANCED MONEY BY ACCOUNT PAYEE CHEQUE OUT OF AVAILABLE FUND WHICH IS DULY DEBITED IN THE BANK PASS BOOK AND THE BOOKS OF ACCOUNTS. BALANCE IS MET BY THEIR OTHER SOURCES. THE TRANSACTIONS ARE NOT RELATED TO COMPANY. UNDER THE CIRCUMSTANC ES THE SAME REMAINS FULLY EXPLAINED THEREFORE THE SAME MAY NOT BE TREATED AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. PAGE 11(VII) SHOWS INVESTMENT OF RS.5 76 000/- THESE ARE THE NOTINGS ON THE BACK SIDE OF PAGE 7. O N THE FRONT SIDE OF WHICH SOME TELEPHONE NUMBERS ARE WRITTEN. NOWHERE ON THE PAPER IT IT (SS) A NO. 83/AHD/2006 - 51 - IS WRITTEN THAT IT REPRESENT THE AMOUNT IN RUPEES O R IN LACS. NOWHERE IT IS WRITTEN THAT THE SAME IS INVESTMENT OR RECEIP T. NO SUCH CORRESPONDING ASSETS INVESTMENT OR EXPENDITURE HAV E BEEN INCURRED WAS FOUND AS A RESULT OF SEARCH OR EVEN TILL DATE. YOUR HONOUR HAS REFERRED TO THE DISCUSSION MENTIONED IN PARA 1 OF P AGE 11 WHICH APPEARS TO BE PARA 21 (1) OF PAGE 26. AS PER THE D ISCUSSION MADE IN PARA 21(1) YOU HAVE ARRIVED AT A CONCLUSION THAT T HE DIFFERENCE OF PAYMENT OR RECEIPT SHOULD BE TREATED AS UNEXPLAINED INVESTMENT AND THEREFORE AS AN UNDISCLOSED INCOME. UNDER THE CIRC UMSTANCES THE SAME MAY NOT BE TREATED AS UNEXPLAINED EXPENDITURE U/S. 69 OF THE I.T. ACT. PAGE -11(VIII) SHOWS INVESTMENT OF DIFFERENT SCRIPT TOTALING TO R S. 9 60 000/-. THE PAPER WAS NOT FOUND FROM THE POSSESSION OF THE ASSESSEE. IT WAS FOUND FROM THE PREMISES OF INDO AMERICAN OPTICS LIM ITED. THE NOTING ON THE PAPER NOT SHOW THAT IT PERTAINS TO SHARES TR ANSACTIONS. THE PAPER DOES NOT CONTAIN THE NAME OF THE ASSESSEE. NO REFERENCE OF THE ASSESSEE IS GIVEN. IT IS NOT IN THE HANDWRITING O F THE ASSESSEE. THE PAPER CANNOT BE REGARDED PERTAINING TO THE ASSESSEE . PAGE 11(IX) CONTAINS THE NAMES OF SCRIPS NAME OF SOME PERSONS CHEQUE NUMBERS - RS.3 00 00 000/- THE NOTINGS ON THE PAGE REPRESENT DESCRIPTION OF TH E NAME CHEQUE NO. NO. OF APPLICATION TO BE MADE ---------- ---------------- ------------- GAURAV INVESTMENT 643551 25 SUBHANGINI 643501 25 ASIATIC INFRASTRUCTURE & SHELTERS LTD. 8989970 60 ATLANTIC CREDIT & CAPITAL LTD. BOM. 897110 70 ASIATIC INFRASTRUCTURE & SHELTERS CAPITAL LTD. 644060 70 JAYESH 489249 25 IT (SS) A NO. 83/AHD/2006 - 52 - DETAILS OF CHEQUES WHICH WERE TO BE SUBSCRIBED DOES NOT MEAN THAT THEY ARE PRESENTED. THEREFORE THE SAME CANNOT BE TR EATED AS INVESTMENT MADE BY COMPANY. EVEN OTHERWISE CHEQUE NOT PRESENTED CANNOT BE TREATED AS INVESTMENTS. PAGE 11(X) CONTAINS THE AMOUNT NAME OF SCRIP ETC. OF INVESTM ENT - RS.95 00 000/- THE NOTINGS ON THE PAGE ARE TO BE READ AS UNDER:- 10 - SAMPLAST (RAMABEN PATEL ) 33 - ATLANTIC CREDIT & CAPITAL LTD. 12 - ASIATIC INFRASTRUCTURE & SHELTERS LTD. 40 - PHARMA SYNTH 95 NOWHERE ON THIS PAGE THE NAME OF ANY SCRIPTS IS WRI TTEN. THE SAME IS FURTHER FORTIFIED BY THE FACT THAT PHAR MA SYNTH IS THE PARTNERSHIP FIRM THEREFORE NO QUESTION OF SHARE S OF THAT SCRIPT ARISE. RAMABEN IS A NAME OF PERSON. NOWHER E ON THIS PAGE THE AMOUNT IN TERMS OF RS. IS ALSO WRITTEN TH AT TOO IN LACS. THIS APPEARS TO BE SOME ROUGH NOTINGS ON A G IVEN DAY IN WHICH NO FINANCIAL TRANSACTIONS ARE INVOLVED. UNDE R THE CIRCUMSTANCES BASED ON THE DISCUSSION MENTIONED IN PARA 1 OF PAGE 21 I.E. PARA 21(1) OF PAGE 26 THE SAME SHOULD NOT BE TREATED AS MY UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. AS EVIDENT FROM THE PAPER THE SAME DOES NOT APPEAR TO BE INVESTMENT OR RECEIPT OR TRANSACTIONS AND IS PARTIA LLY CANCELLED. PAGE 11(XI) CONTAINS THE NAME OF ONE MIHIR AMOUNT - RS.38 38 77 4/- THE NOTINGS IN THE PAGE DO NOT INDICATE THAT THE SA ME REPRESENTED INVESTMENT MADE BY THE COMPANY. MERE W RITING OF A FIGURE DOES NOT MEAN THAT INVESTMENT IS MADE. THE SAME IS SOME ROUGH NOTINGS ONLY AND NO FINANCIAL TRANSAC TIONS ARE INVOLVED IT. PAGE 11(XII) CONTAINS THE NAME OF SCRIPTS QUANTITY AND AMOUNT WR ITTEN IN CODES - RS.41 00 000/- THE NOTINGS ON THIS PAGE ARE TO READ AS UNDER:- UNILIVES FOOD 50 000 10 IT (SS) A NO. 83/AHD/2006 - 53 - FAIR DEAL FILAMENT 1 00 000 20 ANAND SCOTPIN 30 000 6 KANENIAYA FOOD 25 000 5 41 M/S. ATLANTIC CREDIT & CAITAL LTD. HAS INTENDED TO PURCHASE THE SHARES OF ABOVE MENTIONED COMPANIES. THEREFORE THE EXPECTED RATE FOR ACQUIRING THE SAME WAS WRITTEN ON THE SIDE. THE SAME WERE IN FACT PURCHASED BY TH E COMPANY FROM S.M. CONSULTANCY SERVICES AHMEDABAD. COPY OF ACCOUNT FROM THE BOOKS OF M/S. ATLANTIC CREDIT & CAPITAL LT D. AND ALSO CONTRA ACCOUNT FROM THE S.M. CONSULTANCY SERVICES A LONG WITH COPY OF BILLS ARE ENCLOSED HEREWITH. THE TRANSACTI ONS ARE REFLECTED IN THE ACCOUNTS AT ACTUAL RATE WHEREIN TH E ONE NOTED ON THE PAGE WERE ESTIMATED AND APPROXIMATED ONE. A S REGARDS TO YOUR INTERPRETATION THAT 41 TOTAL IS RS. 41 LACS. I MAY MENTION HERE THAT IT WAS NOTHING BUT A CALCULAT ION THAT THE AVERAGE PRICE OF THE ENTIRE LOT COMES TO RS. 5/- BU T THE COMPANY INTENDED TO BY IT AT RS. 4.1 WHICH WAS WRIT TEN THERE UNDER. THE SAME IS EVIDENT FROM THE NOTINGS MADE O N THE PAGE WHICH IS 4.1 AND NOT 41. PAGES 11(XIII) TO (XV) - RS.8 93 238/- RS.7 07 325 /- AND RS.7 31 700/- FROM THE NOTINGS MADE ON THE PAGE IT APPEARS THAT T HE SAME CONTAIN A DAILY REPORT NOTED FOR SOME SCRIP WH ICH WAS NOT TRADED BY US BUT WHICH WAS A GATHERING OF MARKET IN FORMATION ONLY. NO FINANCIAL TRANSACTIONS ARE INVOLVED. WE HAVE NOT BOUGHT THE SHARES IF ANY NOR WE HAVE SOLD THE SAME. THEREFORE THE SAME MAY NOT BE TREATED AS UNEXPLAINED INVESTME NT U/S. 69 AND TO BE ADDED AS MY UNDISCLOSED INCOME. PAGE 11(XVI) CONTAINS SCRIPTS NAME AND NUMBER OF SHARES - RS. 7 11 500/- THE NOTINGS ON THIS PAGES ARE AS UNDER:- ZILLION PHARMACHEM LTD. - 24 600 WORLD FINTRADE - 35 000 OVERNIGHT EXPRESS RECEIPT NO. 41766583 PHONE NOS. 6133853 854. AS DISCUSSED HEREIN ABOVE THE SAME IS SOME ROUGH JO TTINGS AND COURIER RECEIPT NO. IS ALSO WRITTEN. NO FINANCIAL TRANSACT IONS INVOLVED. IT (SS) A NO. 83/AHD/2006 - 54 - THE A.R. FURTHER CONTENDED THAT THE PAPERS IN QUEST ION WERE NOT FOUND FROM THE PREMISES OF THE ASSESSEE HAVING ITS REGISTER OF FICE AT SUMATHINATH COMPLEX PRITAMNAGAR 2 ND SLOPE PALDI AHMEDABAD-380007 BUT WERE FOUND FROM THE PREMISES OF THIRD PARTY I.E. INDO AMERICAN OPTICS LTD HAVING ITS REGISTER OFFICE SITUATED AT IOL HOUSE NEAR SWATI A PARTMENT AMBAWADI BAZAR AMBAWADI AHMEDADAB-380006. THE ADDITIONS BA SED ON THE BASIS OF JOTTINGS OR UNNAMED AND UNTITLED LOOSE PAPERS ARE I LLEGAL AND ARBITRARY AS THERE IS NO NAME MARK OR THERE IS ANY FINDING IN T HE HAND WRITING OF THE APPELLANT HAS BEEN MADE. THE LOOSE PAPERS DO NOT CO NTAIN THE NAME OF ASSESSEE NATURE OF ANY EXPENDITURE/INVESTMENT WHIC H COULD BE CORRELATED WITH ASSESSEE. THE ASSESSING OFFICER CANNOT BE ALLO WED TO INTERPRET THE LOOSE PAPERS ACCORDING TO HIS OWN WHIMS AND FANCY WITHOUT DISCHARGE HIS ONUS. THE LOOSE PAPERS NOWHERE PROVE THAT THE ASSESSEE HA D MADE THE INVESTMENT. THE PAPERS SO SEIZED ARE DUMB DOCUMENTS AND NO ADDITIONS CAN BE MADE ON THE BASIS OF THIS LOOSE PAPER UNTIL AND UNLESS REVENUE PROVES THAT THE APPELLANT HAS MADE INVESTMENT. THAT THE IMAGINATIONS OF THE ASSESSING OFFICER THAT THE FIGURES MENTIONED IN THE LOOSE PAPERS ARE IN LAKHS IS WITHOUT ANY CORROBORATIVE EVIDENCE AND ON THE BASIS OF SUSPICION AND SURMISES AND SHOULD NOT BE ACCEPTED. THE LOOSE PAPER NOWHERE STATED THAT THE ASSESSEE HAS INVESTED AND THE REVENUE AS N OT BROUGHT ANY EVIDENCE ON RECORD WHICH MAY PROVE THAT ASSESSEE HA S INVESTED THE SUM MENTIONED IN THE ADDITIONS. THE A.R. RELIED ON THE ORDER DATED 7/6/2010 PASSED BY THE ITAT D-BENCH AHMEDABAD IN IT(SS)A N O.87/AHD/2006 (BLOCK PERIOD 01-04-1985 TO 21-12-1995) IN THE CASE OF DR.AMIT N SHAH AS PER PARAS 23 TO 75 WHEREIN THE FINDING ON THE VERY SAME ITEMS OF ADDITIONS MADE ON SUBSTANTIVE BASIS WAS GIVEN IN FAVOUR OF T HE ASSESSEE AND ALL THE ADDITIONS MADE ON THESE LOOSE PAPERS WERE DELETED A ND THEREFORE ALL THE ABOVE ADDITIONS MADE ON PROTECTIVE BASIS BE DELETED . ON THE OTHER HAND THE LD. DR RELIED UPON THE ORDER OF THE AO. HE ALSO RELIED ON THE DECISIONS QUOTED IN PARA NO.59 ABOVE. WE FIND THAT NO MATERIA L COULD BE BROUGHT ON RECORD BY THE AO TO CONTROVERT THE EXPLANATION OF T HE ASSESSEE FILED BEFORE HIM. APART FROM REJECTING THE EXPLANATION OF THE AS SESSEE BY CONSIDERING IT (SS) A NO. 83/AHD/2006 - 55 - THE SAME AS NOT REASONABLE JUSTIFICATION NO REASON WAS GIVEN BY THE AO AS TO HOW THE ABOVE EXPLANATION OF THE ASSESSEE WAS FO UND TO BE NOT REASONABLE BY HIM. IN ABSENCE OF ANY REASON MENTION ED IN THE IMPUGNED ORDER OF ASSESSMENT FOR NOT ACCEPTING THE EXPLANATI ON OF THE ASSESSEE IN OUR CONSIDERED OPINION THE ORDER IS BAD IN LAW AND UNSUSTAINABLE. FURTHER IT IS OBSERVED THAT NO MATERIAL TO CORROBORATE HIS INFERENCES DRAWN FROM THE WRITINGS ON LOOSE SHEETS COULD BE BROUGHT ON RECORD BY THE AO. IN OUR CONSIDERED OPINION FROM THE ABOVE LOOSE SHEETS ALO NE IT COULD NOT BE CONCLUDED THAT THE ASSESSEE HAS IN FACT MADE ANY IN VESTMENT OF RS. 8 25 57 037/-. WE THEREFORE DELETE THE ADDITION O F RS. 8 25 57 037/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 69. GROUND NO.19.18 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. CASH CREDITS RS.79 75 790/- 70. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.18. UNEXPLAINED INCOME OF THE ASSESSEE : PAGE 17 TO 24 OF ANNEXURE A-4 CONTAINS SCRIP WISE R ECORDS SENT BY M/S R.K. INVESTMENT CO BOMBAY TO M/S ASIATIC INFR ASTRUCTURE AND SHELTERS LTD. M/S ASIATIC INFRASTRUCTURE & SHELTERS LTD WAS ASKED VIDE THIS OFFICE NOTICE U/S 142(1) DATED 6.11.96 TO FU RNISH THE DETAILS AND EXPLAIN THE SOURCE OF PURCHASE OF THE SHARES. THE . ABOVE COMPANY VIDE ITS LETTER DATED 7.12.96 REPLIED THAT THE TRAN SACTIONS PERTAINS TO M/S ATLANTIC CREDIT AND CAPITAL LTD. IN SUPPORT OF THIS COPIES OF THE BILLS BY M/S R.K. INVESTMENT CO. AND COPY OF ACCOUN T FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY HAS BEEN ENCLOS ED. ON VERIFICATION OF THE ABOVE PAPERS IT WAS SEEN THAT M /S R.K. INVESTMENT HAS SOLD SHARES ON BEHALF OF THE ASSESSEE COMPANY. THE TOTAL SALE AMOUNT OF SHARES COMES TO 79 75 790/-. THEREFORE V IDE FINAL SHOW CAUSE NOTICE DATED 9/3/06 THE ASSESSEE WAS REQUEST ED TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE TREATED AS THE INCOME OF THE ASSESSEE. THE ASSESSEE SUBMITTED THAT ALL THE TRANS ACTION IN QUESTION ARE ACCOUNTED FOR AND PRODUCED EXTRACTS OF THE STOC K REGISTER IN SUPPORT OF HIS CLAIM. AS DISCUSSED EARLIER THE EXTR ACTS OF THE BOOKS IT (SS) A NO. 83/AHD/2006 - 56 - NOW PRODUCED BY THE ASSESSEE IS NOT RELIABLE. IN AB SENCE OF ANY RELIABLE EXPLANATION AND EVIDENCES IN RESPECT OF TH E ABOVE TRANSACTIONS THE ENTIRE AMOUNT OF RS. 79 75 790/- I S ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS ITS UNEXPLAINED INC OME ON SUBSTANTIVE BASIS. (ADDITION OF RS. 79 75 790) 71. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE AMO UNT OF RS.79 75 790/- WAS ADDED IN THE HANDS OF THE ASSESSEE ON THE BASI S OF PAGE NUMBERS 17- 24 OF ANNEXURE A-4. IT IS ALSO OBSERVED THAT ON T HE BASIS OF VERY SAME PAGES ADDITION OF EXACTLY IDENTICAL AMOUNT OF RS.7 9 75 790/- WAS ALSO MADE BY THE AO IN THE HANDS OF ASIATIC INFRASTRUCT URE & SHELTERS LTD. THE AFORESAID PAGES CONTAIN SCRIPT-WISE RECORD SENT BY M/S. R.K.INVESTMENT COMPANY BOMBAY IN RESPECT OF SALE OF SHARES MADE BY THEM. WE FIND THAT THIS ISSUE WAS DECIDED BY THE TRIBUNAL VIDE IT S ORDER DATED 9.10.2009 PASSED IN IT(SS)A NO. 84/AHD/2006 IN THE CASE OF A SIATIC INFRASTRUCTURE & SHELTERS LTD. THE RELEVANT DECISION OF THE TRIBUNA L ARE AT PARA NOS. 22 OF PAGE 23 PARA 23 OF PAGE 24 AND PARA 25 OF PAGE 26. A PERUSAL OF THE AFORESAID ORDER SHOWS THAT THE TRIBUNAL FOUND THAT OUT OF RS.79 75 790/- RS.2 80 570/- (RS.1 60 245/- + RS.1 20 325/-) RELAT ES TO ASIATIC INFRASTRUCTURE & SHELTERS LTD. AND THE BALANCE AMO UNT OF RS.76 95 220/- (RS.79 75 790/- - RS.2 60 570/-) RELATES TO ATLANT IC CREDIT AND CAPITAL LTD. I.E. THE ASSESSEE IN THE INSTANT CASE. IN VIEW OF THE ABOVE THE ADDITION OF RS.2 80 570/- IS DELETED IN THE INSTANT CASE. F URTHER IN RESPECT OF BALANCE AMOUNT OF RS.76 95 220/- IT IS OBSERVED TH AT THE SAME COMPRISED OF TWO AMOUNTS I.E. RS.14 18 940/- AND RS.62 76 280/-. WE FIND THAT AT PARA NO. 22 OF PAGE 23 THE TRIBUNAL OBSERVED FROM THE COPY OF LEDGER ACCOUNT OF M/S. ATLANTIC CREDIT AND CAPITAL LTD. IN THE BOOKS OF M/S. R.K.INVESTMENT COMPANY AND COPY OF LEDGER ACCOUNT O F M/S. R.K. INVESTMENT COMPANY IN THE BOOKS OF M/S. ATLANTIC CR EDIT AND CAPITAL LTD. THAT TRANSACTION OF RS.14 18 940/- WAS RECORDED T HEREIN. FURTHER IN RESPECT OF BALANCE AMOUNT OF RS.62 76 280/- THE TR IBUNAL OBSERVED AT PARA NO. 25 OF PAGE NO. 26 OF THE ORDER AS UNDER: IT (SS) A NO. 83/AHD/2006 - 57 - WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMI SSIONS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDE R OF THE AO. WE NOTED FROM THE SEIZED PAPERS 21 22 AND 23 OF ANN EXURE A-4 THE COPIES OF WHICH ARE AVAILABLE AT PAGES 148 149 AN D 150 OF THE PAPER BOOK FRESH TYPED COPIES WERE FILED BY THE A SSESSEE AT PAGES 593 TO 597. ON THE BASIS OF THESE PAGES THE AO MADE THE ADDITION OF RS.62 76 280/- IN THE HANDS OF THE A SSESSEE FOR THE SALE OF THE SHARES. DURING THE COURSE OF HEARING WE VERIFIED THAT ALL THESE SALES RELATE TO BILL NO. 9515/00140 AND 9535/ 0031 ISSUED BY R.K. INVESTMENT. THE BILLS ARE IN THE NAME OF M /S. ATLANTIC CREDIT AND CAPITAL LTD. THE ENTRIES OF SALES OF THESE SHARES ARE APPEARING IN THE COPY OF ACCOUNT OF M/S. ATLANTIC CREDIT A ND CAPITAL LTD. IN THE BOOKS OF R.K. INVESTMENT AND CORRESPONDINGLY THE ENTRIES ARE DULY RECORDED IN THE BOOKS OF M/S. ATLANTIC CREDIT AND CAPITAL LTD. IN THE ACCOUNT OF R.K. INVESTMENT WHICH WERE DULY VE RIFIED DURING THE COURSE OF HEARING IN THE PRESENCE OF LEARNED DR T O WHICH HE DID NOT RAISE ANY OBJECTION. BEFORE US THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT SINCE THE TRANSACTION OF RS.76 95 220/- WERE O NLY RELATING TO THE ASSESSEE COMPANY AND THE SAID TRANSACTIONS WERE DU LY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY AND THE CHEQUES RECEIVED WERE DEPOSITED IN THE REGULAR BANK ACCOU NT WHICH WERE ALSO RECORDED AND DISCLOSED IN THE REGULAR BOOKS OF ACC OUNT AND THEREFORE THE SAME CANNOT BE TREATED AS UNDISCLOSED INCOME OF TH E ASSESSEE. HE ALSO RELIED UPON THE DECISIONS QUOTED IN PARA NO.28 ABOV E. WE FIND THAT THE LEARNED DEPARTMENTAL REPRESENTATIV E COULD NOT CONTROVERT THE SUBMISSIONS OF THE ASSESSEE. IT IS ALSO OBSERVE D THAT NO DEFECT IN THE BOOKS OF ACCOUNT PRODUCED BEFORE THE LEARNED ASSES SING OFFICER COULD BE POINTED OUT BY THE LD. ASSESSING OFFICER APART FRO M OBSERVING THAT THE BOOKS ARE NOT RELIABLE ON ACCOUNT OF NOT GETTING THE SPECIAL AUDIT DONE. ON THE ABOVE FACTS WE FIND THAT NO SPECIFIC DEFEC TS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE COULD BE POINTED OUT BY THE REVENUE AND NO MATERIAL WAS BROUGHT BEFORE US BY THE REVENUE TO SHOW THAT THE SALE TRANSACTION OF RS.76 95 220/- WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE OR THE SAME WOULD NOT HAV E BEEN DISCLOSED BY THE ASSESSEE IN THE REGULAR RETURN OF INCOME. IN T HE CIRCUMSTANCES IN OUR IT (SS) A NO. 83/AHD/2006 - 58 - CONSIDERED OPINION RS.76 95 220/- ALSO COULD NOT B E TREATED AS UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 158B(B) OF THE ACT. WE THEREFORE DELETE THE ENTIRE ADDITION OF RS.79 75 790/- COMPRISING OF RS.2 80 570/- AND RS.76 95 220/-. THUS THIS GROUN D OF APPEAL OF THE ASSESSEE IS ALLOWED. 72. GROUND NO.19.19 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. CASH CREDITS .RS.45 49 000/- 73. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.19. UNACCOUNTED CASH DEPOSITS IN THE BANK ACCOUN TS: VERIFICATION OF THE BANK A/C SHOWS THAT THERE ARE C ASH DEPOSITS BY THE ASSESSEE COMPANY IN THE FOLLOWING BANKS ON THE DATE S AS MENTIONED BELLOW : NAME OF THE BANK AMOUNT DATE. BANK OF INDIA MANINAGAR BRANCH AHMEDABAD 70 000 14.2.9 5 -DO- 25 00 000 17.5.95 BANK OF MADURAI 19 79 000 ON VARIOUS DAT ES. RS. 45 49 000 THE ASSESSEE VIDE FINAL SHOW CAUSE NOTICE DATED 9/3 /06 WAS REQUESTED TO EXPLAIN AS TO WHY THE ABOVE AMOUNT SHOULD NOT BE TR EATED AS CASH CREDIT U/S 68 OF THE I.T. ACT. THE ASSESSEE TRIED TO JUSTI FY THE CASH DEPOSITS BY SUBMITTING THAT ALL THE CASH DEPOSITS IN QUESTION A RE DULY REFLECTED IN THE BOOKS OF ACCOUNTS. IN ABSENCE OF ANY EXPLANATION TH E AMOUNT RS. 45 49 000/- IS ADDED TO THE TOTAL INCOME OF THE ASS ESSEE AS UNEXPLAINED IT (SS) A NO. 83/AHD/2006 - 59 - CASH CREDITS U/S 68 OF THE I.T. ACT ON SUBSTANTIVE BASIS. (ADDITION OF RS. 45 49 000) 74. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE LD. AR POINTED O UT FROM PAGE NO. 448 OF THE PAPER BOOK WHICH CONTAINS THE REPLY OF THE ASSE SSEE DATED 30.03.2006 SUBMITTED BEFORE THE AO IN RESPECT OF THE ISSUE UND ER CONSIDERATION. THE SAID EXPLANATION READS AS UNDER:- AS REGARDS TO THE ENTRY OF RS.70 000/- DATED 14.2. 1995 WITH BANK OF INDIA MEMNAGAR BRANCH AND RS.25 00 000/- O N 7.5.1995 WITH SAME BANK WE HAVE TO STATE THAT THE CASH DEPOSITED IN THE SAID BANK ACCOUNT ARE THE ONE WHIC H ARE AS PER PARA 2.2 AND 2.3 OF SUBMISSION DATED 14.3.2006 AS REFLECTED IN THE SEIZED BOOKS OF ACCOUNTS AT ANNEXU RE A-8. THE CASH SO DEPOSITED REPRESENTS THE CASH ON HAND AVAIL ABLE IN THE REGULAR BOOKS OF ACCOUNTS AND RECORDED AS SUCH IN I T. THERE IS NO INTRODUCTION OF CASH CREDIT I.E. TO SAY ALL THE CREDITS ARE BY WAY OF CHEQUES ONLY. IN SUPPORT CASH BOOK IS PROD UCED FOR VERIFICATION. AS REGARDS TO THE PROPOSED ADDITION OF RS.19 79 000/- DEPOSITED ON VARIOUS DATES IT IS SUB MITTED THAT NO SUCH ENTRIES ARE REFLECTED IN THE BANK STATEMENT FILED AND NO SUCH DETAILS ARE PROVIDED TO THE ASSESSEE AND AL SO APPEARS IN THE SAID ANNEXURE. THE SAME MAY DISTINCTIVELY W ITH REFERENCE TO THE AMOUNT AND DATE AND PAGE NUMBER BE BROUGHT TO THE NOTICE OF THE ASSESSEE FOR SUBMITTIN G IN REBUTTAL. WE INVITE YOUR HONOUR EVEN TO PIN POINT WITH THE HELP OF MATERIAL NOW PRESENT IN THIS ROOM TO SHOW IT ACCORDINGLY WITH EXACT AMOUNT AND EXACT DATE. IT A PPEARS THAT THE ADDITION PROPOSED IS SIMPLY REPETITION OF THE O RIGINAL ORDER WHICH HAS NO BASE AND THEREFORE IT REMAINED SO AT PRESENT ALSO AND THUS LIABLE TO BE DROPPED AT THIS STAGE ON LY. THE LD. AR REITERATED THE ABOVE SUBMISSION BEFORE U S AND POINTED OUT THAT EVEN AFTER THE ABOVE EXPLANATION THE AO FAILED TO BRING ON RECORD ANY MATERIAL TO SHOW THAT RS. 19 79 000/- WAS DEPOSITED IN CASH ON VARIOUS DATES IN BANK OF MADURAI. IN RESPECT OF CASH DEPOSI T OF RS. 25 75 000/- IN BANK OF INDIA HE SUBMITTED THAT THE SAME WAS DEPOSI TED OUT OF CASH IN HAND AVAILABLE IN REGULAR CASH BOOK AND WAS DULY RECORDE D IN THE REGULAR CASH IT (SS) A NO. 83/AHD/2006 - 60 - BOOK ALSO AND ON VERIFICATION OF THE CASH BOOK PROD UCED BEFORE THE AO NO SPECIFIC DEFECT THEREIN COULD BE POINTED OUT BY THE AO. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE ALSO RELI ED ON THE DECISION OF AHMEDABAD D BENCH IN THE CASE OF ASIATIC INFRASTR UCTURE & SHELTERS LTD. VS. DCIT IN IT(SS)A NO.84/AHD/2006 ORDER DATED 9/10 /2009. THE LD. DR RELIED UPON THE ORDER OF THE AO. WE FIND THAT NO MA TERIAL COULD BE BROUGHT BEFORE US OR IN THE ORDER OF ASSESSMENT BY THE REVE NUE TO SHOW THAT THERE WAS CASH DEPOSIT OF RS. 19 79 000/- IN BANK OF MADU RAI ON VARIOUS DATES WHICH WAS DENIED BY THE ASSESSEE BEFORE THE AO ALSO . THUS IN ABSENCE OF SUCH A MATERIAL THE ADDITION ON THE GROUND OF CASH DEPOSIT IN BANK OF MADURAI IS UNSUSTAINABLE AND BAD IN LAW. IN RESPECT OF CASH DEPOSIT OF RS. 25 75 000/- IN BANK OF INDIA WE FIND THAT THE REVE NUE HAS BROUGHT NO MATERIAL ON RECORD TO CONTROVERT THE EXPLANATION OF THE ASSESSEE TO THE EFFECT THAT THEY WERE DEPOSITED OUT OF CASH AVAILAB LE IN REGULAR CASH BOOK OF THE ASSESSEE AND WERE DULY RECORDED IN THE CASH BOO K OF THE ASSESSEE. WE FIND THAT NO SPECIFIC DEFECT EITHER IN THE ENTRY OR IN THE SOURCE AVAILABLE AS PER CASH BOOK OF THE ASSESSEE COULD BE POINTED OUT BY THE REVENUE. IN ABSENCE OF ANY SPECIFIC DEFECT BEING POINTED OUT I N OUR CONSIDERED OPINION THE ADDITION SO MADE CANNOT BE SUSTAINED. WE THERE FORE DELETE THE ENTIRE ADDITION OF RS. 45 49 000/- AND ALLOW THIS GROUND O F APPEAL OF THE ASSESSEE. 75. GROUND NO.19.20. OF THE APPEAL READS AS UNDER: - 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. INVESTMENTS (PURCHASE).RS.2 68 44 886/- 76. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- IT (SS) A NO. 83/AHD/2006 - 61 - 4.20. UNEXPLAINED INVESTMENT OF THE ASSESSEE : SURVEY U/S 133A WAS CONDUCTED IN THE OFFICE PREMISE S OF M/S R.K. INVESTMENT COMPANY BOMBAY. DURING THE SURVEY IT HAS COME TO THE NOTICE THAT THE ASSESSEE COMPANY HAS MA DE TRANSACTION OF SHARES WITH R.K. INVESTMENT COMPANY FROM JULY 1995 ONWARDS UPTO 16.12.95. THIS TRANSACTION HAS BE EN TO THE EXTENT OF RS. 9 00 00 000/-. ON GOING THROUGH THE D ETAILS FURNISHED BY R.K. INVESTMENT COMPANY DURING THE SUR VEY ACTION IT IS SEEN THAT THE ASSESSEE COMPANY HAS PUR CHASED VARIOUS SHARES WORTH RS. 2 68 44 886/-. THEREFORE VIDE FINAL SHOW CAUSE NOTICE DATED 9/3/06 THE ASSESSEE WAS REQ UESTED TO EXPLAIN AS TO WHY THE ABOVE AMOUNT SHOULD NOT BE TR EATED AS ITS UNEXPLAINED INVESTMENT. INSTEAD OF PRODUCING RE LIABLE EVIDENCES SHOWING THE GENUINENESS OF THE TRANSACTIO N THE ASSESSEE TRIED TO DISPUTE THE MATTER BY SUBMITTING THAT IT HAS NOT BEEN PROVIDED PROPER OPPORTUNITY TO JUSTIFY THE TRANSACTION. THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION IN A BSENCE OF ANY EXPLANATION THE AMOUNT OF RS. 2 68 44 886/- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED INV ESTMENT U/S 69 OF THE I.T. ACT ON SUBSTANTIVE BASIS. (ADDIT ION OF RS. 2 68 44 886) 77. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE LD. AR EXPLAINED THAT ADDITION OF RS. 2 68 44 886/- WAS NOT MADE ON THE BASIS OF ANY DOCU MENT FOUND DURING THE COURSE OF SEARCH BUT WAS MADE ON THE BASIS OF DOCUM ENT FOUND DURING THE COURSE OF SOME SURVEY U/S 133A OF THE ACT ALLEGEDLY CONDUCTED IN THE CASE OF R.K. INVESTMENT. HE POINTED OUT FROM PAGE NOS. 2 6 27 & 448 449 & 450 OF THE PAPER BOOK THAT THE ASSESSEE HAD REPEATEDLY REQUESTED THE AO TO SUPPLY COPY OF DOCUMENT WHICH WAS GATHER BEHIND THE BACK OF THE ASSESSEE AND ON THE BASIS OF WHICH THE ADDITION IN QUESTION WAS PROPOSED. HOWEVER EVEN AFTER SPECIFIC REPEATED DEMAND BY THE ASSESSEE COPY OF NO SUCH DOCUMENT WAS SUPPLIED TO THE ASSESSEE AND THEREFORE THE ADDITION IN QUESTION IS BAD IN LAW. THE LD. DR RELIED UPON THE ORDER OF THE AO. WE FIND THAT IT IS NOT IN DISPUTE THAT THE ADDITION OF RS. 2 68 44 886/- IN QUESTION IS MADE ON THE BASIS OF CERTAIN DOCUMENT FOUND IN THE COURSE OF SURVEY PROCEEDING U/S 133A OF THE ACT CONDUCTED IN THE PRE MISES OF R.K. INVESTMENT. IT IS AN ESTABLISHED POSITION OF LAW TH AT NO MATERIAL GATHERED IT (SS) A NO. 83/AHD/2006 - 62 - BEHIND THE BACK OF THE ASSESSEE CAN BE USED AGAINST THE ASSESSEE UNLESS THE ASSESSEE IS SUPPLIED WITH THE COPY OF THE DOCUM ENT WHICH IS TO BE USED AGAINST HIM AND THEREAFTER HE IS ALLOWED REASONABLE OPPORTUNITY TO CONTROVERT OR REBUT THE SAME. IN THE INSTANT CASE W E FIND THAT INSPITE OF SPECIFIC DEMAND BY THE ASSESSEE THE AO HAS NOT SUP PLIED THE ASSESSEE WITH THE COPY OF SURVEY MATERIALS WHICH WAS USED AGAINST THE ASSESSEE BY HIM AND WHICH WAS GATHERED BEHIND THE BACK OF THE ASSES SEE FROM THE PREMISES OF M/S. R.K. INVESTMENT. IN OUR CONSIDERED OPINION JUSTICE SHOULD NOT ONLY BE DONE BUT IT SHOULD ALSO MANIFESTLY BE SEEN TO H AVE BEEN DONE. NO MATERIAL COULD BE BROUGHT BEFORE US TO SHOW THAT MA TERIALS WHICH WERE GATHERED DURING THE COURSE OF SURVEY CONDUCTED AT T HE PREMISES OF R.K. INVESTMENT WERE SUPPLIED TO THE ASSESSEE BEFORE USI NG THE SAME AGAINST THE ASSESSEE. IN OUR CONSIDERED OPINION IN ABSENCE OF SUCH MATERIAL BEING SUPPLIED TO THE ASSESSEE THE SAME CANNOT BE LEGALL Y USED AGAINST THE ASSESSEE. THUS THE ADDITION OF RS. 2 68 44 886/- W AS BASED ONLY ON AN INADMISSIBLE AND UNRELIABLE MATERIAL THE ADDITION SO MADE IS BAD IN LAW AND UNSUSTAINABLE. WE THEREFORE DELETE THE ADDITION O F RS. 2 68 44 886/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 78. GROUND NO.19.21 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. UNACCOUNTED INCOME ON ACCOUNT OF PURCHASE AND SALE OF SHARES RS.5 39 55 045/- 79. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.21. UNACCOUNTED SALES OF THE ASSESSEE: ON GOING THROUGH THE ESTIMATED BILLS FURNISHED BY N .V. SHAH BROKER OF BOMBAY FOR PURCHASE AND SALE OF SHARES O N BEHALF OF THE ASSESSEE IT WAS SEEN THAT THERE IS SALE OF RS. 5 39 55 0457- AND PURCHASE OF RS. 4 13 77 322.75/- THE ASSESSEE WAS THEREFORE VIDE FINAL SHOW CAUSE NOTIC E DATED IT (SS) A NO. 83/AHD/2006 - 63 - 9/3/06 REQUESTED TO EXPLAIN AS TO WHY THE AMOUNT OF RS. 5 39 55 045/- SHOULD NOT BE TREATED AS ITS UNEXPLAI NED INCOME. INSTEAD OF PRODUCING RELIABLE EVIDENCES SHOWING THE GENUINENESS OF THE TRANSACTION THE ASSESSEE TRIED T O DISPUTE THE MATTER BY SUBMITTING THAT IT HAS NOT BEEN PROVI DED PROPER OPPORTUNITY TO JUSTIFY THE TRANSACTION. IN ABSENCE OF ANY EXPLANATION THE AMOUNT OF RS. 5 39 55 045/- IS ADD ED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED INCOME ON SUB STANTIVE BASIS. (ADDITION OF RS. 5 39 55 045) 80. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSI NG THE MATERIAL AVAILABLE ON RECORD WE FIND THAT SIMILAR TO THE FAC TS INVOLVED IN THE GROUND NO. 19.20 ABOVE IN RESPECT OF THE INSTANT ISSUE AL SO THE ADDITION OF RS. 5 39 55 045/- WAS MADE BY THE AO ON THE BASIS OF MA TERIAL GATHERED FROM N.V. SHAH BROKER OF BOMBAY WITHOUT SUPPLYING COPY O F THE SAME TO THE ASSESSEE INSPITE OF THE SPECIFIC REQUEST OF THE ASS ESSEE. THE FACTS AND ISSUE INVOLVED ARE SIMILAR AS IN GROUND NO. 19.20 ABOVE A ND THEREFORE FOR THE SAME REASONING AS MENTIONED IN RESPECT OF GROUND NO . 19.20 ABOVE WE DELETE THE ADDITION OF RS. 5 39 55 045/- AND ALSO A LLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 81. GROUND NO.19.22 OF THE APPEAL READS AS UNDER:- 19. THE LD. LEARNED ASSESSING OFFICER HAS GRIEVOUSL Y ERRED IN LAW AND OR ON FACTS IN MAKING FOLLOWING ADDITIONS. ADDITIONAL INCOME ..RS.28 10 000/- 82. THE AO HAS MADE THE ABOVE ADDITION BY OBSERVIN G AS UNDER:- 4.22. ADDITIONAL INCOME OFFERED BY THE ASSESSEE : NOTICE U/S. 142(1) OF THE I.T.ACT WAS ISSUED TO THE ASSESSEE ON 15/2/2006. IN RESPONSE TO THE NOTICE THE ASSESSEE H AS FILED CERTAIN DETAILS REGARDING HIS UNDISCLOSED INCOME. I T CAN BE SEEN THAT ASSESSEE HAS FURTHER OFFERED RS.28 10 000 /- ON ACCOUNT OF THE SHARES OF INDO AMERICAN OPTICS LTD. ACCORDING IT (SS) A NO. 83/AHD/2006 - 64 - TO THE ASSESSEE THIS DISCLOSURE DOES NOT FORM PART OF THE ORIGINAL DISCLOSURE OF RS.3 64 51 400/- MADE BY THE ASSESSEE. ACCORDINGLY RS.28 10 000/- IS HEREBY ADDED AS THE U NDISCLOSED INCOME OF THE ASSESSEE SUBSTANTIVE BASIS. (ADDITION OF RS. 28 10 000) 83. WE FIND THAT THE LD. AR HAS NOT PRESSED THIS G ROUND OF APPEAL AT THE TIME OF HEARING OF THE APPEAL. THEREFORE TH IS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED FOR LACK OF PROSECUTION. 84. IN THE RESULT THE APPEAL FILED BY THE ASS ESSEE IS PARTLY ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 07 TH MAY 2010. SD/- SD/- (MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 07 TH MAY 2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD