The ACIT, 1 (2), v. Smt Truipti Agrawal P/o Truipti Agrawal Clasess,

ITSSA 84/IND/2008 | misc
Pronouncement Date: 30-12-2010 | Result: Partly Allowed

Appeal Details

RSA Number 8422716 RSA 2008
Assessee PAN TOTAL1127A
Bench Indore
Appeal Number ITSSA 84/IND/2008
Duration Of Justice 2 year(s) 7 month(s) 14 day(s)
Appellant The ACIT, 1 (2),
Respondent Smt Truipti Agrawal P/o Truipti Agrawal Clasess,
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 30-12-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 30-12-2010
Date Of Final Hearing 15-12-2010
Next Hearing Date 15-12-2010
Assessment Year misc
Appeal Filed On 16-05-2008
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C.SHARMA ACCOUNTANT MEMBER PAN NO. : ADNPA5948-B I.T.(SS)A.NOS.81 TO 86/IND/2008 A.YS.: 1999-2000 TO 2005-06 ACIT SMT.TRIPTI AGRAWAL 1(2) BHOPAL. VS PROP. TRIPTI AGRAWAL CLASSES 238-239 ZONE I M.P.NAGAR BHOPAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K.SINGH CIT DR RESPONDENT BY : SHRI H.P.VERMA ADV. AND SHRI GIRISH AGARWAL C.A. O R D E R PER BENCH THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF CIT(A)-I BHOPAL DATED 05-02- 2008 FOR THE ASSESSMENT YEARS 1999-2000 TO 2005-06. COMMON GROUNDS HAVE BEEN TAKEN IN ALL THE YEARS THEREFORE ALL THE 2 APPEALS WERE HEARD TOGETHER AND ARE NOW DECIDED BY THIS CONSOLIDATED ORDER. 2. THE GROUNDS TAKEN IN VARIOUS YEARS READ AS UNDER :- GROUNDS TAKEN IN I.T.(SS).A.NO. 81/IND/2008 READ AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN :- 1. DELETING THE ADDITION OF RS. 2 89 461/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CONCEALMENT OF RECEIPTS BY HOLDING THAT THE AO HAD NOT POINTED OUT ANY DEFECT IN THE ACCOUNTS NOR HAD HE REFERRED TO ANY MATERIAL FROM SEARCH PARTICULARLY WHEN THE ADDITION WAS MADE ON THE BASIS OF SEIZED DOCUMENTS LIKE LIST OF FORMS SOLD TO STUDENTS LIST FREE RECEIPTS FROM DROPPER BATCH LIST OF STUDENTS SEEKING TEST PAPERS. 2. DELETING THE ADDITION OF RS. 3 20 367/- MADE BY THE ASSESSING OFFICER BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE IGNORING THE FACT THAT THE AO HAS POINTED OUT SEVERAL DISCREPANCY IN THE ACCOUNTS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS MENTIONED IN THE ASSESSMENT ORDER. 3. DELETING THE ADDITION OF RS. 3 20 367/- WHICH WAS MADE BY THE ASSESSING OFFICER BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE AS THE ASSESSEE FAILED TO PRODUCE RECORDS/DOCUMENTS RELATED TO SALARIES PAID DURING THE ASSESSMENT PROCEEDINGS. 4. DELETING THE ADDITION OF RS. 85 407/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AD HOC DISALLOWANCES PARTICULARLY WHEN DESPITE OF REPEATED OPPORTUNITY NO BILLS VOUCHERS OR SUPPORTING DOCUMENTS IN SUPPORT OF EXPENSES CLAIMED WERE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 5. DELETING THE ADDITION OF RS. 85 407/-MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AD HOC DISALLOWANCES BY HOLDING THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WERE BASED ON PRESUMPTION AND WERE HYPOTHETICAL IGNORING THE 3 FACT THAT THE ASSESSEE FURNISHED AN ALTOGETHER DIFFERENT ACCOUNT DURING THE ASSESSMENT PROCEEDINGS FROM THE ACCOUNTS EXTRACTED DURING SEARCH. 6. RESTRICTING THE DISALLOWANCE OF RS. 17 995/- MADE BY THE ASSESSING OFFICER OUT OF DEPRECIATION TO 10 % OF THE DEPRECIATION CLAIMED IN VIEW OF I.T.A.T.S ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 DATED 8.1.2001 EVEN THOUGH THE AO DISALLOWED DEPRECIATION CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE. 3. GROUNDS TAKEN IN I.T.(SS).A.NO. 82/IND/2008 READ AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN :- 1. DELETING THE ADDITION OF RS. 6 75 212/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CONCEALMENT OF RECEIPTS BY HOLDING THAT THE AO HAD NOT POINTED OUT ANY DEFECT IN THE ACCOUNTS NOR HAD HE REFERRED TO ANY MATERIAL FROM SEARCH PARTICULARLY WHEN THE ADDITION WAS MADE ON THE BASIS OF SEIZED DOCUMENTS LIKE LIST OF FORMS SOLD TO STUDENTS LIST FREE RECEIPTS FROM DROPPER BATCH LIST OF STUDENTS SEEKING TEST PAPERS. 2. DELETING THE ADDITION OF RS. 3 44 762/- MADE BY THE ASSESSING OFFICER BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE IGNORING THE FACT THAT THE AO HAS POINTED OUT SEVERAL DISCREPANCY IN THE ACCOUNTS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS MENTIONED IN THE ASSESSMENT ORDER. 3. DELETING THE ADDITION OF RS. 3 44 762/- WHICH WAS MADE BY THE ASSESSING OFFICER BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE AS THE ASSESSEE FAILED TO PRODUCE RECORDS/DOCUMENTS RELATED TO SALARIES PAID DURING THE ASSESSMENT PROCEEDINGS. 4 4. DELETING THE ADDITION OF RS. 1 82 829/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AD HOC DISALLOWANCES PARTICULARLY WHEN DESPITE OF REPEATED OPPORTUNITY NO BILLS VOUCHERS OR SUPPORTING DOCUMENTS IN SUPPORT OF EXPENSES CLAIMED WERE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 5. DELETING THE ADDITION OF RS. 1 82 829/-MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AD HOC DISALLOWANCES BY HOLDING THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WERE BASED ON PRESUMPTION AND WERE HYPOTHETICAL IGNORING THE FACT THAT THE ASSESSEE FURNISHED AN ALTOGETHER DIFFERENT ACCOUNT DURING THE ASSESSMENT PROCEEDINGS FROM THE ACCOUNTS EXTRACTED DURING SEARCH. 6. RESTRICTING THE DISALLOWANCE OF RS. 17 995/- MADE BY THE ASSESSING OFFICER OUT OF DEPRECIATION TO 10 % OF THE DEPRECIATION CLAIMED IN VIEW OF I.T.A.T.S ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 DATED 8.1.2001 EVEN THOUGH THE AO DISALLOWED DEPRECIATION CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE 4. GROUNDS TAKEN IN I.T.(SS).A.NO. 83/IND/2008 READ AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN :- A. DELETING THE ADDITION OF RS.10 18 512/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CONCEALMENT OF RECEIPTS BY HOLDING THAT THE AO HAD NOT POINTED OUT ANY DEFECT IN THE ACCOUNTS NOR HAD HE REFERRED TO ANY MATERIAL FROM SEARCH PARTICULARLY WHEN THE ADDITION WAS MADE ON THE BASIS OF SEIZED DOCUMENTS LIKE LIST OF FORMS SOLD TO STUDENTS LIST FREE RECEIPTS FROM DROPPER BATCH LIST OF STUDENTS SEEKING TEST PAPERS. 5 B. DELETING THE ADDITION OF RS. 70 100/- MADE BY THE ASSESSING OFFICER BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE IGNORING THE FACT THAT THE AO HAS POINTED OUT SEVERAL DISCREPANCY IN THE ACCOUNTS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS MENTIONED IN THE ASSESSMENT ORDER. C. DELETING THE ADDITION OF RS. 70 100/- WHICH WAS MADE BY THE ASSESSING OFFICER BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE AS THE ASSESSEE FAILED TO PRODUCE RECORDS/DOCUMENTS RELATED TO SALARIES PAID DURING THE ASSESSMENT PROCEEDINGS. D. DELETING THE ADDITION OF RS. 3 20 631/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AD HOC DISALLOWANCES PARTICULARLY WHEN DESPITE OF REPEATED OPPORTUNITY NO BILLS VOUCHERS OR SUPPORTING DOCUMENTS IN SUPPORT OF EXPENSES CLAIMED WERE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. E. DELETING THE ADDITION OF RS. 3 20 631/-MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AD HOC DISALLOWANCES BY HOLDING THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WERE BASED ON PRESUMPTION AND WERE HYPOTHETICAL IGNORING THE FACT THAT THE ASSESSEE FURNISHED AN ALTOGETHER DIFFERENT ACCOUNT DURING THE ASSESSMENT PROCEEDINGS FROM THE ACCOUNTS EXTRACTED DURING SEARCH. F. RESTRICTING THE DISALLOWANCE OF RS. 14 396/- MADE BY THE ASSESSING OFFICER OUT OF DEPRECIATION TO 10 % OF THE DEPRECIATION CLAIMED IN VIEW OF I.T.A.T.S ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 DATED 8.1.2001 EVEN THOUGH THE AO DISALLOWED DEPRECIATION CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE. G. DELETING THE ADDITION OF RS. 2 00 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT EVEN THOUGH THE ASSESSEE DID NOT 6 DISCHARGE THE ONUS TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE DONORS AS DECIDED BY THE SUPREME COURT IN THE CASE OF SUMATI DAYAL. 5. GROUNDS TAKEN IN I.T.(SS).A.NO. 84/IND/2008 READ AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN :- A. DELETING THE ADDITION OF RS.21 02 282/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CONCEALMENT OF RECEIPTS BY HOLDING THAT THE AO HAD NOT POINTED OUT ANY DEFECT IN THE ACCOUNTS NOR HAD HE REFERRED TO ANY MATERIAL FROM SEARCH PARTICULARLY WHEN THE ADDITION WAS MADE ON THE BASIS OF SEIZED DOCUMENTS LIKE LIST OF FORMS SOLD TO STUDENTS LIST FREE RECEIPTS FROM DROPPER BATCH LIST OF STUDENTS SEEKING TEST PAPERS. B. DELETING THE ADDITION OF RS.2 07 150/- MADE BY THE ASSESSING OFFICER BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE IGNORING THE FACT THAT THE AO HAS POINTED OUT SEVERAL DISCREPANCY IN THE ACCOUNTS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS MENTIONED IN THE ASSESSMENT ORDER. C. DELETING THE ADDITION OF RS.2 07 150/- WHICH WAS MADE BY THE ASSESSING OFFICER BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE AS THE ASSESSEE FAILED TO PRODUCE RECORDS/DOCUMENTS RELATED TO SALARIES PAID DURING THE ASSESSMENT PROCEEDINGS. D. DELETING THE ADDITION OF RS. 7 61 426/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AD HOC DISALLOWANCES PARTICULARLY WHEN DESPITE OF REPEATED OPPORTUNITY NO BILLS VOUCHERS OR SUPPORTING DOCUMENTS IN SUPPORT OF EXPENSES CLAIMED WERE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 7 E. DELETING THE ADDITION OF RS. 7 61 426/-MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AD HOC DISALLOWANCES BY HOLDING THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WERE BASED ON PRESUMPTION AND WERE HYPOTHETICAL IGNORING THE FACT THAT THE ASSESSEE FURNISHED AN ALTOGETHER DIFFERENT ACCOUNT DURING THE ASSESSMENT PROCEEDINGS FROM THE ACCOUNTS EXTRACTED DURING SEARCH. F. RESTRICTING THE DISALLOWANCE OF RS. 60 700/- MADE BY THE ASSESSING OFFICER OUT OF DEPRECIATION TO 10 % OF THE DEPRECIATION CLAIMED IN VIEW OF I.T.A.T.S ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 DATED 8.1.2001 EVEN THOUGH THE AO DISALLOWED DEPRECIATION CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE. G. DELETING THE ADDITION OF RS. 1 00 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT EVEN THOUGH THE ASSESSEE DID NOT DISCHARGE THE ONUS TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE DONORS AS DECIDED BY THE SUPREME COURT IN THE CASE OF SUMATI DAYAL. 6. GROUNDS TAKEN IN I.T.(SS).A.NO. 85/IND/2008 READ AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN :- A. DELETING THE ADDITION OF RS. 35 18 111/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CONCEALMENT OF RECEIPTS BY HOLDING THAT THE AO HAD NOT POINTED OUT ANY DEFECT IN THE ACCOUNTS NOR HAD HE REFERRED TO ANY MATERIAL FROM SEARCH PARTICULARLY WHEN THE ADDITION WAS MADE ON THE BASIS OF SEIZED DOCUMENTS LIKE LIST OF FORMS SOLD TO STUDENTS LIST FREE RECEIPTS FROM DROPPER BATCH LIST OF STUDENTS SEEKING TEST PAPERS. 8 B. DELETING THE ADDITION OF RS.2 87 422/- MADE BY THE ASSESSING OFFICER BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE IGNORING THE FACT THAT THE AO HAS POINTED OUT SEVERAL DISCREPANCY IN THE ACCOUNTS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS MENTIONED IN THE ASSESSMENT ORDER. C. DELETING THE ADDITION OF RS.2 87 422/- WHICH WAS MADE BY THE ASSESSING OFFICER BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE AS THE ASSESSEE FAILED TO PRODUCE RECORDS/DOCUMENTS RELATED TO SALARIES PAID DURING THE ASSESSMENT PROCEEDINGS. D. DELETING THE ADDITION OF RS. 7 74 760/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AD HOC DISALLOWANCES PARTICULARLY WHEN DESPITE OF REPEATED OPPORTUNITY NO BILLS VOUCHERS OR SUPPORTING DOCUMENTS IN SUPPORT OF EXPENSES CLAIMED WERE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. E. DELETING THE ADDITION OF RS. 7 74 760/-MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AD HOC DISALLOWANCES BY HOLDING THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WERE BASED ON PRESUMPTION AND WERE HYPOTHETICAL IGNORING THE FACT THAT THE ASSESSEE FURNISHED AN ALTOGETHER DIFFERENT ACCOUNT DURING THE ASSESSMENT PROCEEDINGS FROM THE ACCOUNTS EXTRACTED DURING SEARCH. F. RESTRICTING THE DISALLOWANCE OF RS. 55 660/- MADE BY THE ASSESSING OFFICER OUT OF DEPRECIATION TO 10 % OF THE DEPRECIATION CLAIMED IN VIEW OF I.T.A.T.S ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 DATED 8.1.2001 EVEN THOUGH THE AO DISALLOWED DEPRECIATION CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE. G. DELETING THE ADDITION OF RS. 50 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT EVEN THOUGH THE ASSESSEE DID NOT 9 DISCHARGE THE ONUS TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE DONORS AS DECIDED BY THE SUPREME COURT IN THE CASE OF SUMATI DAYAL. 7. GROUNDS TAKEN IN I.T.(SS).A.NO. 86/IND/2008 READ AS UNDER :- IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN :- 1. HOLDING THAT THE REASONS PERTAINING TO THE ADDITION OF RS. 35 00 000/- MADE BY THE AO WERE BASED ON PRESUMPTION EVEN THOUGH THE ASSESSEE HAD OFFERED THE SAID AMOUNT FOR TAXATION IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH. 2. HOLDING THAT THE REASONS PERTAINING TO THE ADDITION OF RS. 35 00 000/- MADE BY THE AO WERE BASED ON PRESUMPTION EVEN THOUGH CONSIDERABLE UNDER STATEMENT OF RECEIPT WAS NOTICED DURING THE SURPRISE VISIT/SURVEY CONDUCTED IN THE PAST. 3. HOLDING THAT THE REASONS PERTAINING TO THE ADDITION OF RS. 35 00 000/- MADE BY THE AO WERE BASED ON PRESUMPTION EVEN THOUGH THE ASSESSEE HAD HERSELF ADMITTED THAT SHE USED TO DESTROY FEE RECEIPT REGISTER AND IT WAS NOT A PRACTICE TO ISSUE RECEIPTS TO STUDENTS. 4. HOLDING THAT THE REASONS PERTAINING TO THE ADDITION OF RS. 35 00 000/- MADE BY THE AO WERE BASED 0'; PRESUMPTION PARTICULARLY WHEN THE ASSESSEE FAILED TO PRODUCE ANY SUPPORTING DOCUMENTS LIKE LIST OF STUDENTS FEE RECEIPT REGISTER ETC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 10 5. HOLDING THAT THE REASONS PERTAINING TO THE ADDITION OF RS. 35 00 000/- MADE BY THE AO WERE BASED ON PRESUMPTION PARTICULARLY WHEN THE ADDITION WAS BASED ON STATEMENT RECORDED ON OATH DURING THE COURSE OF SEARCH AND SECTION 133A (III) OF THE INCOME-TAX ACT 1961 EMPOWERS THE INCOME-TAX AUTHORITY TO RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR & RELEVANT TO ANY PROCEEDINGS UNDER THE ACT. 6. DELETING THE ADDITION OF RS. 828247/- MADE BY THE AO ON ACCOUNT OF SUPPRESSED RECEIPT FOR POST SEARCH PERIOD IN VIEW OF SEVERAL JUDICIAL DECISIONS EVEN THOUGH IT HAS BEEN ESTABLISHED THAT THE ASSESSEE WAS IN PRACTICE OF SUPPRESSING RECEIPTS BY MEANS OF SURPRISE VISIT AND SURVEYS. 7. DELETING THE ADDITION OF RS. 1 18 113/- MADE BY THE AO BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE IGNORING THE FACT THAT THE ASSESSING OFFICER HAS POINTED OUT SEVERAL DISCREPANCY IN THE ACCOUNTS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS MENTIONED IN THE ASSESSMENT ORDER. 8. DELETING THE ADDITION OF RS. 1 18 113/- WHICH WAS MADE BY THE AO BY DISALLOWING EXCESS SALARY EXPENSES CLAIMED BY THE ASSESSEE AS THE ASSESSEE FAILED TO PRODUCE RECORDS/DOCUMENTS RELATED TO SALARIES PAID DURING THE ASSESSMENT PROCEEDINGS. 9. DELETING THE ADDITION OF RS. 2 74 376/- MADE BY THE AO ON ACCOUNT OF AD-HOC DISALLOWANCES PARTICULARLY WHEN DESPITE OF REPEATED OPPORTUNITY NO BILLS VOUCHERS OR SUPPORTING DOCUMENTS IN SUPPORT OF EXPENSES CLAIMED WERE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 11 10. DELETING THE ADDITION OF RS. 2 74 376/- MADE BY THE AO ON ACCOUNT OF AD-HOC DISALLOWANCES BY HOLDING THAT THE DISALLOWANCE MADE BY THE AO WERE BASED ON PRESUMPTION AND WERE HYPOTHETICAL IGNORING THE FACT THAT THE ASSESSEE FURNISHED AN ALTOGETHER DIFFERENT ACCOUNT DURING THE ASSESSMENT PROCEEDINGS FROM THE ACCOUNTS EXTRACTED DURING SEARCH. 11. RESTRICTING THE DISALLOWANCE OF RS. 50060/- MADE BY THE AO OUT OF DEPRECIATION TO 10% OF THE DEPRECIATION CLAIMED IN VIEW OF ITAT'S ORDER IN THE ASSESSEE'S OWN CASE FOR A. Y. 2000-01 DATED 08/01/2001 EVEN THOUGH THE AO DISALLOWED DEPRECIATION CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE. ' 8. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONDUCTING COACHING CLAS SES FOR STUDENTS. A SEARCH AND SEIZURE OPERATION U/S 1 32(1) OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE INST ITUTE ON 2.11.2004. ACCORDINGLY NOTICE U/S 153A OF THE ACT WAS ISSUED REQUIRING THE ASSESSEE TO FILE RETURN OF INC OME WITHIN THIRTY DAYS. THE ASSESSEE FILED RETURN OF I NCOME ON 23.9.2005 DECLARING TOTAL INCOME AT RS. 1 75 240/- FOR THE ASSESSMENT YEAR 1999-00. SIMILARLY RETURNS FOR OT HER YEARS WERE ALSO FILED. WHILE FRAMING THE ASSESSMENT ADDITION WAS MADE BY THE ASSESSING OFFICER IN RESPE CT OF FEES RECEIVABLE FROM THE STUDENTS BUT ALLEGED TO BE NOT 12 RECORDED IN THE BOOKS OF ACCOUNTS. THERE WAS ALSO DISALLOWANCE OF SALARY EXPENDITURE AND OTHER BUSINE SS EXPENDITURE. IN THE COURSE OF SEARCH ON 2.11.2004 ALL PRIMARY RECORDS RELATING TO THE ADMISSION OF NUMBER OF STUDENTS DAILY FEES COLLECTION REGISTERS STUDENTWI SE BATCHWISE AND ALL ACCOUNTING RECORDS OF THE YEAR OF SEARCH AS WELL AS OF EARLIER YEARS WHICH WERE IN THE COMP UTER WERE SEIZED. WHILE FRAMING THE ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF THE ACT THE ASSESSING OFFICE R MADE AN ADDITION ON ACCOUNT OF FEES BY ESTIMATING THE FE ES PAYABLE BY THE STUDENTS IN ALL THE ASSESSMENT YEARS STARTING FROM THE ASSESSMENT YEAR 1999-00 TO 2005-0 6 EXCEPT THE ASSESSMENT YEAR 2000-01.THE REASONING FO R ESTIMATION OF FEES RECEIVED WAS GIVEN IN THE ASSESS MENT YEAR 2005-06 ONLY. THE ASSESSING OFFICER STATED TH AT THE ASSESSEE HAS SURRENDERED FEES OF RS.35 LACS IN THE ASSESSMENT YEAR 2005-06 UPTILL THE DATE OF SEARCH A ND A FURTHER ADDITION OF RS.8 28 247/- WAS MADE FOR THE PERIOD FALLING AFTER THE DATE OF SEARCH. BY MAKING THE AS SESSMENT YEAR 2005-06 AS THE BASIS THE ASSESSING OFFICER AL SO MADE ADDITION IN ALL OTHER YEARS BY ESTIMATING SIMILAR I NCREASE 13 IN FEES FOR THE ASSESSMENT YEAR 1999-00 AT RS. 2 89 461/- FOR THE ASSESSMENT YEAR 2001-02 AT RS. 6 75 213/- FOR THE ASSESSMENT YEAR 2002-03 AT RS.10 18 512/- FOR THE ASSESSMENT YEAR 2003-04 AT RS. 21.02 LACS AND FOR T HE ASSESSMENT YEAR 2004-05 AT RS. 35.18 LACS. THE ASSESSING OFFICER HAS DISCUSSED THE DOCUMENTS FOUND S DURING THE COURSE OF SEARCH AND STATED THAT THE AS SESSEE IS THE PROPRIETOR OF THE COACHING INSTITUTE IN THE NAME OF TRIPTI AGRAWAL CLASSES WHICH PROVIDES INFRA STRUCTU RE FOR COACHING OF ITS STUDENTS FOR PREPARATION OF PMT/PET EXAMINATIONS. THE HUSBAND OF THE ASSESSEE SHRI AN IL AGRAWAL WAS FOUND TO BE TEACHING PHYSICS. SHRI S. M. RIZVI WAS TEACHING CHEMISTRY SHRI J.P. NEEMA WAS TEACHING BOTANI AND MR. DURANI WAS FOUND TO BE TEAC HING ZOOLOGY. THE ASSESSING OFFICER STATED THAT ALL THE TEACHERS OTHER THAN THE HUSBAND OF THE ASSESSEE SHRI ANIL AGRAWAL SHOWED THEIR RESPECTIVE RECEIPTS IN THEIR OWN ACCOUNTS. HOWEVER THE RECEIPTS FROM TEACHING OF P HYSICS DIRECTLY COME IN THE HANDS OF THE ASSESSEE AND FOR WHICH SALARY WAS PAID TO HER HUSBAND SHRI ANIL AGRAWAL. THE OTHER THREE PERSONS WHO TAKE THE CLASSES OF CHEMIST RY BOTANY ETC. ONLY USE THE INFRA STRUCTURE OF THE AS SESSEE. ACCORDINGLY THERE IS INCOME FROM SUCH LETTING OF I NFRA 14 STRUCTURE FACILITIES IN THE HANDS OF THE ASSESSEE. THE SEIZED MATERIAL REFERRED TO BY THE ASSESSING OFFICE R WERE ACTUALLY NOT IN THE NATURE OF INCRIMINATING PAPERS AND DID NOT DISCLOSE ANY UNDISCLOSED INCOME BUT THESE WERE ONLY THE RECORDS MAINTAINED BY THE CLERICAL STAFF OF THE COACHING INSTITUTE WHO MAINTAINS STUDENTWISE DAILY FEE COLLE CTION REGISTER FOR DIFFERENT BATCHES MANUALLY. FROM THES E PRIMARY RECORDS ENTRIES ARE MADE IN THE COMPUTER. THE CASH BOOK AND LEDGER ARE MAINTAINED IN THE COMPUTER . AT THE TIME OF SEARCH THE ASSESSING OFFICER FOUND THA T MANUALLY THE ACCOUNTS WERE NOT MAINTAINED UPTO DATE WHEREAS THE ASSESSEES ASSERTION WAS THAT THEY WERE MAINTAINED UP TO DATE BUT WERE NOT COMPLETE IN THE SENSE THAT ENTRIES FOR SOME OF THE DAYS WERE PENDING. HO WEVER AS PER THE ASSESSING OFFICER THE SEIZED MATERIAL R EFERRED BY HIM INDICATED THE UNDISCLOSED INCOME WHEREAS AS PER THE ASSESSEE THESE WERE THE PRIMARY RECORDS MAINTA INED FOR ACCOUNTING THE RECEIPTS OF FEES FROM VARIOUS ST UDENTS STUDYING IN DIFFERENT BATCHES AND RECORD FOR PAYMEN T OF SALARY TO DIFFERENT STAFF PERSONS AND OTHER EXPENSE S. THE FEES RECEIVED FOR THE ASSESSMENT YEAR 2005-06 WERE SHOWN AT RS. 65 34 502/- AND INFRA STRUCTURE INCOME WAS S HOWN AT RS. 3 30 000/-. HOWEVER THE ASSESSING OFFICER 15 ACCEPTED THE INFRA STRUCTURE INCOME AS SHOWN BY THE ASSESSEE BUT DID NOT AGREE WITH THE FIGURE OF STUDE NT FEES COLLECTION SHOWN IN THE BOOKS OF ACCOUNTS AT RS. 65 34 502/-. THE ASSESSING OFFICER STATED THAT THE ASSESSEE HAS SURRENDERED FEES OF RS. 35 LACS UPTO T HE DATE OF SEARCH AND BY MAKING THE SAME AS A BASIS THE ASSESSING OFFICER FURTHER ESTIMATED FEES RECEIPT OF RS. 8 28 247/- FOR THE PERIOD FALLING AFTER THE DATE OF SEARCH COMPRISING IN THE ASSESSMENT YEAR 2005-06. THE AMO UNT OF FEES OF RS. 35 LACS SURRENDERED DURING THE COURS E OF SEARCH WAS RETRACTED AND IN THE RETURN SO FILED THI S INCOME WAS NOT OFFERED. THE REASONS FOR RETRACTION WERE GI VEN BY WAY OF A NOTE IN THE COMPUTATION OF TOTAL INCOME FU RNISHED FOR THE ASSESSMENT YEAR 2005-06. 9. BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THE ASSESSEE DISPUTED THE ESTIMATION OF F EES MADE BY THE ASSESSING OFFICER AT RS.1.08 CRORES. T HE FINDINGS OF THE ASSESSING OFFICER WITH REGARD TO FE ES COLLECTED FROM 274 STUDENTS WERE ALSO CHALLENGED. I N THIS REGARD THE ASSESSING OFFICER STATED THAT CLASS FOR PHYSICS WAS TAUGHT IN THE FOLLOWING BATCHES AND THE FEES ST RUCTURE OF THE SAME WAS AS UNDER :- 16 CLASS WEEKDAYS TIME DURATION OF COURSE FEE PER STUDENT XITH TUESDAY THURSDAY SATURDAY 4 PM TO 6 PM 10 MONTHS RS.4500 XIITH MONDAY WEDNESDAY FRIDAY 2.30 PM TO 6 PM 10 MONTHS RS.5500 DROPPERS TUESDAY THURSDAY SATURDAY 9.30 PM TO 2 PM ON THE BASIS OF THE FINDING THAT CRASH COURSES WERE ALSO UNDERTAKEN SEPARATELY DURATION OF WHICH IS ONE MON TH AND THE FEES PER STUDENT COMES TO RS. 1000/- IN PLA CE OF FULL COURSE WHEREIN FEES WAS RANGING FROM RS. 4500/ - TO RS. 5500/-. THE ASSESSING OFFICER FOUND THAT DURIN G THE PERIOD 1.4.2004 TO 21.8.2004 TOTAL 1127 ADMISSION F ORMS WERE SOLD @ R. 100/- PER FORM. IT WAS ALSO FOUND B Y THE ASSESSING OFFICER THAT THE ASSESSEE WAS SELLING PRI NTED MATERIAL BOOKS TEST PAPERS ETC. ON THE PLEA OF T HE ASSESSEE HAVING SURRENDERED INCOME OF RS.35 LACS ON ACCOUNT OF FEES RECEIVED THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS BEEN IN THE PRACTICE OF UNDER- STATEMENT OF HER RECEIPTS. THE AMOUNT SURRENDERED WAS TREATED BY THE ASSESSING OFFICER AS SUPPRESSED RECE IPT FOR THE PERIOD UPTO THE DATE OF SEARCH FALLING IN THE ASSESSMENT YEAR 2005-06. AS THE FEES RECEIPT ACCOU NT WAS 17 FOUND TO BE MAINTAINED UPTO SEPTEMBER 2004 WHEREIN THE GROSS RECEIPT WAS SHOWN AT RS. 49.64 LACS. THUS IN THE ASSESSMENT YEAR 2005-06 TOTAL FEES RECEIPT WAS TAKE N BY THE ASSESSING OFFICER AT RS.1.08 CRORES COMPRISING OF RS. 65.34 LACS DISCLOSED IN THE REGULAR BOOKS OF ACCOUN TS WHICH WERE DULY AUDITED RS. 35 LCS ON ACCOUNT OF SURRENDER OF FEES AT THE TIME OF SEARCH AND RS.8.28 LACS AS FEES ESTIMATED BY THE ASSESSING OFFICER AS FEES NOT DISCLOSED PERTAINING TO THE PERIOD FALLING AFTER TH E DATE OF SEARCH TILL 31.3.2005. THE ASSESSING OFFICER BY MA KING SURRENDER OF RS.35 LACS AS THE BASE PRESUMED THAT IN ALL OTHER YEARS THE ASSESSEE WAS SUPPRESSING RECEIPTS. ACCORDINGLY ESTIMATED ADDITION WAS MADE IN ALL THE YEAR UNDER CONSIDERATION. BY THE IMPUGNED ORDER THE LEA RNED COMMISSIONER OF INCOMETAX (APPEALS) DELETED THE ADD ITION AFTER HAVING MADE THE FOLLOWING OBSERVATIONS :- I HAVE CONSIDERED THE ASSESSEES SUBMISSIONS. I HAVE ALSO GONE THROUGH THE REASONS ASSIGNED BY THE ASSESSING OFFICER. I FIND THAT THE ADDITION OF RS. 35 00 000/- HAS BEEN MADE BY THE ASSESSING OFFICER SOLELY ON THE BASIS OF THE ASSESSEES STATEMENT IN THE SEA RCH. THE OTHER ADDITION OF RS. 8 28 247/-HAS BEEN MADE ON THE PRESUMPTION THAT 18 THERE WOULD HAVE ALSO BEEN CONCEALED RECEIPTS DURIN G POST SEARCH PERIOD. THE ASSESSEES CONTENTION FIND FORCE IN THAT THE VARIOUS SEIZED MATERIALS WHICH T HE AO REFERRING IN HIS ORDER ARE NOT INCRIMINATING MATERIALS. THOSE ITEMS ARE THE DAILY COLLECTION FEE REGISTERS ETC. THE LOOSE PAPERS OF WHICH THE AO IS MAKING REFERENCE ARE THE ASSORTED NOTINGS OF THE OUTSTANDING FEE PREPARED FROM TIME TO TIME AND CERTAIN OTHER LOOSE PAPERS ARE THE RESULT SHEETS OF THE STUDENTS. THE FURTHER CONTENTION. THE FURTHER CONTENTION OF THE ASSESSEE THAT THEY ARE THE PRIMARY RECORDS OF THE ACCOUNTS AND ON THAT BASIS THE FEEDING IN THE COMPUTER IS MADE FOR THE PURPOSE OF GENERATING CASH BOOK AND LEDGER ACCOUNT. IT IS ALSO THE CONTENTION OF THE ASSESSEE THAT THE FEEDING OF THE FIGURES OF THE PRIMARY RECORDS IN THE COMPUTER WAS INCOMPLETE ON SEARCH DATE AND IT IS ON THAT BASIS INFERENCES HAVE BEEN DRAWN THAT THE ASSESSEE CONCEALING THE FEE RECEIPTS. THUS ACCORDING TO THE ASSESSEE SHE HAS DISCLOSED HER FEE RECEIPTS TRULY AND CORRECTLY WHEREAS THE AO'S INFERENCES ARE THAT THERE ARE MATERIALS WHICH REFLECT SUPPRESSION OF FEE RECEIPTS. THE ASSESSEE HOWEVER REFUTING SUCH CHARGES AND SUBMITTING THAT THERE IS NO SUPPRESSION AT ALL AS ALLEGED . THE AO IN HIS ORDER MENTIONED THE FEE STRUCTURE OF THE ASSESSEE AND THE ASSESSEE IS NOT DISPUTING THIS FEE STRUCTURE. THE FINDINGS OF THE AO ARE THAT THERE ARE 274 STUDENTS OF WHICH THE FEE HAS NOT BEEN RECORDED IN THE SEIZED REGISTER. SUCH FINDINGS HAVE ALSO BEEN REFUTED BY THE ASSESSEE AND PLACED IN THE PAPER BOOK THE CHARTS REFLECTING THAT FEE RECEIPTS FROM SUCH 274 STUDENTS HAVE BEEN DULY APPEARING IN THE PRIMARY RECORDS I.E. DAILY FEE COLLECTION REGISTER ETC. THE AO IN HIS ORDER MENTIONS THAT 1 127 NUMBERS OF ADMISSION FORMS WERE SOLD TO THE STUDENTS. THE ASSESSEE SUBMITS THAT EVEN IF IT IS ASSUMED THAT ALL THE 1 127 NUMBERS JOINED THE CLASSES THEN ALSO IN THE GIVEN FEE STRUCTURE THERE CANNOT BE A COLLECTION OF FEE MORE THAN RS. 58 60 400/-. WHEREAS IN THE RELEVANT YEAR THE ASSESSEE HAD COLLECTED TOTAL FEE RECEIPTS OF RS. 68 44 387/- OUT OF WHICH RS. 3 35 680/. WAS REFUNDED TO 19 DROP OUT STUDENTS AND THUS SHE HAD SHOWN NET RECEIPTS OF RS. 65 08 707/-. THE DIFFERENCE OF RS. 6 48 307/- BETWEEN THE AMOUNT OF THE OPTIMUM FEE RS. 58 60 400/- AND RS. 65 08 701/- IS DUE TO THE FEE RECEIPTS OF CRASH COURSES AND STUDY MATERIALS. THE ASSESSEE ALSO SUBMITTED THAT SALE OF FORMS INCLUDE IN THE FEE STRUCTURE. IT HAS ALSO BEEN POINTED OUT BY THE ASSESSEE THAT THE AO HAD ASSESSED THE TOTAL FEE OF THE ASSESSEE AT RS. 1 08 62 749/- AND ON THAT BASIS IF AVERAGE FEE PER STUDENT CALCULATED THAT THE SAME COMES TO RS. 9 638/- WHEREAS THE AO HIMSELF SAYING THAT ASSESSEES FEE PER STUDENT IS RS. 4 500/- FOR CLASS XI BATCH AND FOR THE OTHER BATCH IT IS RS. 5 500/- PER STUDENT. I FIND THAT ENTIRE ADDITION OF THE AO IS BASED ON ASSUMPTIONS AND PRESUMPTIONS AND WITHOUT ANY CONCRETE EVIDENCE ON RECORD THAT THE ASSESSEE HAD IN FACT COLLECTED THE FEE OF RS. 1 08 62 749/- AS AGAINST THE DISCLOSED FEE IN THE ACCOUNTS AT RS. 65 08 707/- AND TUITION FEE RS. 25 795/-. I FIND THAT HAVING REGARD TO THE TOTAL NUMBERS OF 1 127 STUDENTS TO WHOM FORMS WERE SOLD AND THE MAXIMUM FEE WOULD HAVE BEEN COLLECTED FROM THEM ASSUMING THAT THERE WERE NO DROP OUTS THE DISCLOSED FEE COULD NOT BE SAID TO BE ON A LOWER SIDE AND THEREFORE CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE CASE LAWS RELIE D UPON I DELETE THE ADDITION OF RS. 35 00 000/- AND RS. 8 28 247/- IN THE ASSESSMENT YEAR A.Y. 2005-06 . THUS THE RELATED GROUNDS ARE DECIDED IN FAVOUR OF THE ASSESSEE. IN RESPECT OF OTHER ASSESSMENT YEARS I.E. A.Y. 1999-2000 2001-02 2002-03 2003-04 AND 2004-05 ADDITIONS HAVE ALSO BEEN MADE BY THE ASSESSING OFFICER FOR THE SUPPRESSED FEE RECEIPTS WHICH ARE AS UNDER :- A.Y. ADDITION OF AMOUNT FOR THE ESTIMATION OF THE AO FOR MAKING ADDITION FOR THE SUPPRESSED FEE RECEIPT ( RS.) RECEIPT OF SUPPRESSED FEE RECEIPT . 1999-00 2 89 461/- 23% OF DISCLOSED RECEIPT 1258526 2000-01 NIL NIL 2001-02 6 75 213/- 37% OF DISCLOSED RECEIPT RS. 182490 0 20 2002-03 10 18 512/ - 44% OF DISCLOSED RECEIPT RS. 231480 0 . 2003-04 21 02 282/- 52% OF DISCLOSED RECEIPT RS. 404285 0 2004-05 .. 05 35 18 111/- 59% OF DISCLOSED RECEIPT RS 596290 0 IT IS THE SUBMISSION OF THE ASSESSEE THAT MUCH PRIOR TO SEARCH DATE (02-11- 2004) THERE WAS A SURVEY IN THE PREMISES OF THE ASSESSEE ON 08-02- 2000 . IN THE COURSE OF SURVEY THE AO IMPOUNDED THE BOOKS OF ACCOUNT AND ALL OTHER SUBSIDIARY RECORDS AND THOSE RECORDS ARE STILL IN THE POSSESSION OF THE DEPARTMENT. IN THE SURVEY THE ASSESSEE HAD SURRENDERED INCOME OF RS. 4 00 000/- FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2000-01 TO PURCHASE PEACE AND TO AVOID ANY PROTRACTED LITIGATION. THE SURVEY OFFICIALS AT THE RELEVANT TIME DID EXAMINE THE ACCOUNT BOOKS OF THE ASSESSEE AND ALL OTHER SUBSIDIARY RECORDS FOR THE ASSESSMENT YEAR 1999-00 AND 2000-01 . THE PROCEEDINGS OF SURVEY WERE HOWEVER ENDED AFTER MAKING THE SURRENDER OF INCOME OF RS . 4 00 000/- IN ASSESSMENT YEAR 2000-01 . THE ASSESSMENT FOR SAID ASSESSMENT YEAR I.E. 2000-01 WAS COMPLETED AFTER A DETAILED SCRUTINY AT A TOTAL INCOME OF RS. 8 40 110/- BY AN ORDER U/S. 143(3) DATED 28-03-2003. SINCE NO OTHER INCRIMINATING MATERIAL WAS FOUND FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1999-2000 THE ASSESSMENT FOR THAT ASSESSMENT YEAR WAS NOT DISTURBED AND NO RE-OPENING U/S 148 WAS DONE FOR THAT YEAR CONSEQUENT TO THE SURVEY OPERATION CONDUCTED ON 08-02-2000 I.E. MUCH PRIOR TO SEARCH DATE (02-11-2004). THE ASSESSEE SUBMITS THAT AFTER THE PASSING 21 ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2000-01 THE MATTER WAS CARRIED TO CIT(A) BHOPAL AND THEN FURTHER CARRIED TO I.T.A.T. INDORE. THE APPELLATE AUTHORITY GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE AND THE ADDITIONS WERE SUBSTANTIALLY REDUCED AND DELETED. AFTER THE ORDER OF THE TRIBUNAL THE TOTAL INCOME WAS REDUCED TO RS. 5 22 120/-. THE ORDER OF CIT(A) IS DATED 23.10.2003 AND THE ORDER OF I.T.A.T. IS DATED 8.1.2007. IT MAY BE SUBMITTED THAT IN ASSESSMENT YEAR 2000-01 THE AO AFTER THE SEARCH REMADE THE ASSESSMENT AND ASSESSED THE SAME INCOME OF RS. 8 40 110/-/- WHICH HE ASSESSED IN THE EARLIER REGULAR ASSESSMENT DATED 28.3.2003 AND WHILE DOING SO HE GAVE COMPLETE DISREGARD OF THE DECISIONS OF HIGHER AUTHORITIES INCLUDING THE INCOME TAX APPELLATE TRIBUNAL. THEREFORE IN THIS YEAR THE ASSESSMENT AT THE INCOME OF RS. 8 40 110/- IS WHOLLY UNLAWFUL AND WITHOUT JURISDICTION BECAUSE THE ORDER OF ASSESSMENT DATED 28.3.2003 STOOD MERGED WITH THE ORDER OF THE APPELLATE AUTHORITIES AND SINCE IN THE SEARCH NO ADVERSE MATERIAL WAS FOUND SUGGESTING ANY . CONCEALED INCOME THEREFORE THE AO IS UNDER A STATUTORY OBLIGATION TO ASSESS THE INCOME WHICH WAS FINALLY DETERMINED AFTER THE ORDER OF THE APPELLATE TRIBUNAL. THE ASSESSEE FURTHER SUBMITS THAT THE CBDT IN ITS CIRCULAR NO. 7/2003 DATED 5.9.2003 REPORTED IN 184 CTR (ST) 33 IN PARA 65.5 CLARIFIED THAT THE APPEAL REVISION OR RECTIFICATION PROCEEDINGS PENDING ON THE DATE OF INITIATION OF SEARCH U/S 132 SHALL NOT ABATE. FURTHER THE SECOND PROVISO TO SECTION 153A PROVIDES THAT ASSESSMENT OR RE-ASSESSMENT IF ANY RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS 22 REFERRED TO IN THIS SECTION PENDING ON THE DATE OF INITIATION OF SEARCH U/S 132 OR OF MAKING REQUISITION U/S 132A AS THE CASE MAY BE SHALL ABATE. THIS PROVISO MAKES EMPHATICALLY CLEAR THAT ONLY THE PENDING ASSESSMENT/RE- ASSESSMENT ON THE DATE OF INITIATION OF SEARCH SHALL ALONE ABATE. THE COMPLETED ASSTS SHALL NOT ABATE. THE ASSESSEE SUBMITS THAT EVEN AFTER THE INSERTION OF SECTION 153A OF THE INCOME-TAX ACT 1961 THE BASIC PRINCIPLES OF MAKING AN ASSESSMENT STILL ALIVE. THE PURPOSE OF INSERTION OF NEW SECTIONS 153A TO 153D IS TO GET OVER WITH THE PROCEDURAL REQUIREMENT FOR MAKING AN ASSESSMENT OR RE-ASSESSMENT ON THE BASIS OF MATERIAL OR EVIDENCES UNEARTHED AS A RESULT OF SEARCH. THE SECTION DOES NOT AUTHORIZE THE AO TO MAKE AN ASSESSMENT OF INCOME IN AN ARBITRARY MANNER WITHOUT REFERENCE TO ANY MATERIAL FOUND IN THE SEARCH. THE I.T.A.T. INDORE BENCH IN THE CASE OF MAHESH KUMAR SINGHAI BHOPAL VS. DCIT REPORTED IN (2007) 9 - ITJ - 682 WHILE DEALING WITH THE ASSESSMENT FRAMED U/S 153A HELD THAT IN ABSENCE OF ANY INCRIMINATING DOCUMENTS OF THE RELEVANT YEAR FOUND IN THE SEARCH NO ADDITION CAN BE MADE. IN THE SAID CASE THE AO MADE ESTIMATED ADDITION FOR HOUSEHOLD EXPENSES IN VARIOUS YEARS IN THE ASSESSMENT MADE U/S 143(3). THE APPELLATE TRIBUNAL HELD THAT THE ADDITION WAS MADE WITHOUT ANY MATERIAL FOUND IN THE SEARCH SUGGESTING SUCH ESTIMATE AND THEREFORE THE SAME WAS DELETED SINCE IT WAS BASED ON SUSPICION AND SURMISES. FURTHER. THE ITAT COCHIN BENCH IN THE CASE OF K.MOIDU VS. ACIT REPORTED IN 81 ITD 242 (COCH) (T.M) HELD THAT ESTIMATED ADDITION IN ABSENCE OF SPEAKING MATERIAL IS NOT VALID. THE BASIC PRINCIPLES OF ASSESSMENTS HAVE BEEN EXPLAINED BY THE HON'BLE APEX COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. VS. CIT REPORTED IN 26 ITR 775/783 ( S.C.) AND HELD THAT AS REGARDS THE SECOND CONTENTION WE ARE IN ENTIRE AGREEMENT WITH THE LEARNED SOLICITORS GENERAL WHEN HE SAYS THAT THE 23 ITO IS NOT FETTERS BY TECHNICAL RULES OF EVIDENCE AND PLEADINGS AND THAT HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN A COURT OF LAW BUT THERE THE AGREEMENT ENDS BECAUSE IT IS CLEAR THAT IN MAKING THE ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 23 OF THE ACT THE INCOME TAX OFFICER IS NOT ENTITLED TO MAKE A PURE GUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL. THERE MUST BE SOMETHING MORE THAN BARE SUSPICION TO SUPPORT THE ASSESSMENT U/S 23(3). THE RULES OF LAW ON THIS SUBJECT HAVE IN OUR OPINION BEEN FAIRLY AND RIGHTLY STATED BY THE LAHORE HIGH COURT IN THE CASE OF SETH GURMUKH SINGH VS. CIT. IT MAY ALSO BE SUBMITTED THAT UNDER THE INCOME-TAX ACT EACH YEAR IS SEPARATE AND DISTINCT AND THE PRINCIPLES OF RES JUDICATA DO NOT APPLY. . IT IS FURTHER SUBMITTED THAT IN ALL THE ASSESSMENT YEARS I.E. FROM ASSESSMENT YEARS I.E. FROM 1999-00 TO 2004-05 THE ASSESSING OFFICER HAD NOT FOUND ANY MATERIAL OR EVIDENCE RELATING TO THOSE YEARS IN THE SEARCH WHICH REFLECT THAT THERE IS A SUPPRESSION OF FEE RECEIPTS TO THE EXTENT OF THE ESTIMATION BY THE AO. THE ESTIMATION OF THE AO IS A WILD GUESS WORK NOT SUPPORTED BY ANY MATERIAL OR EVIDENCE OF THAT PARTICULAR YEAR FOR WHICH THE ADDITION HAS BEEN MADE. IN THE ASSESSMENT ORDER THE AO HELD THAT IN ASSESSMENT YEAR 2000-01 (FINANCIAL YEAR 1999-00) THE ASSESSEE WAS FOUND TO HAVE SUPPRESSED RECEIPT FROM 134 STUDENTS WHICH COMES TO AROUND 30 % OF THE RECEIPT SHOWN FROM THE STUDENTS FOR THE ACCOUNTING YEAR 2005-06 HER SUPPRESSED RECEIPTS AFTER ELABORATE DISCUSSION IN THE BODY OF THAT ORDER HAS BEEN ARRIVED AT RS. 43 28 247/-. WHICH COMES TO AROUND 66 % OF GROSS RECEIPTS OF RS. 6508707/- SHOWN BY HER. THUS THE AO SAID THAT IT CAN BE SEEN THAT THE PERCENTAGE OF SUPPRESSION OF GROSS RECEIPTS HAS INCREASED OVER THE YEARS. THE AOS FURTHER FINDINGS ARE THAT THE PERCENTAGE OF CONCEALMENT FOR THE 24 TWO YEARS ABOVE WERE FOUND TO BE 30% AND 66 % RESPECTIVELY OF GROSS RECEIPTS SHOWN BY THE ASSESSEE IN THE RESPECTIVE YEARS AND IT IS ON THIS BASIS AO SAYS THAT IT CAN BE SAFELY ESTIMATED THAT THE PERCENT OF CONCEALMENT OF THE ASSESSEE IN A UNIFORM MANNER I.E. 30 % FOR FINANCIAL YEAR 1999-2000 ( A.Y. 2000-01) 37 % IN FINANCIAL YEAR 2000-01 ( A.Y. 2001- 02) 44 % IN FINANCIAL YEAR 2001-02 (A.Y. 2002-03) 52 % IN FINANCIAL YEAR 2002- 03(A.Y.2003-04) AND 59% IN FINANCIAL YEAR 2003-04 (A.Y. 2004-05) AND FINALLY 66% IN FINANCIAL YEAR 2004-05 (A.Y. 2005--06). HE FURTHER SAYS THAT GOING BACK FURTHER ONE YEAR THE EXTENT OF SUPPRESSED RECEIPTS MAY SAFELY BE TAKEN AT 23% OF GROSS RECEIPTS AND THEREFORE IN FINANCIAL YEAR 1998-99 (A.Y. 1999-2000) THE AO HAD MADE THE ADDITION OF RS. 2 89 461/ -. IN ALL OTHER YEARS BASED ON SAME WILD GUESS WORK THE AO MADE ADDITIONS FOR THE ALLEGED SUPPRESSED FEE OF RS. 6 75 213/- IN ASSESSMENT YEAR 2001-02 RS. 10 18 512/- IN ASSESSMENT YEAR 2002-03 RS. 21 02 282/- IN ASSESSMENT YEAR 2003-04 AND RS. 35 18 111/- IN ASSESSMENT YEAR 2004-05. IT MAY BE SUBMITTED THAT IN THE FIRST ASSESSMENT YEAR THE AO PRESUMED THAT THERE IS A SUPPRESSION OF RECEIPT BY 23% THEREAFTER IN ASSESSMENT YEAR 2000-01 SINCE THE ASSESSEE SURRENDERED RS. 4 00 000 /-INCOME JUST TO PURCHASE PEACE AND TO AVOID PROTRACTED LITIGATION THE AO ON THE BASIS OF SUCH SURRENDER WORKED OUT THE PERCENTAGE OF 4 00 000/- WITH RESPECT TO THE FEE DISCLOSED IN THE INCOME & EXPENDITURE ACCOUNT AT RS. 12 45 298/-. THEREAFTER HE PRESUMED THAT THERE IS AN INCREMENTAL SUPPRESSION OF 7% FEE IN EVERY YEAR. AS FAR AS THE ASSESSMENT YEAR 2005-06 IS CONCERNED THE ASSESSEE HAD ALREADY MADE A SUBMISSION THAT THERE IS NO SUPPRESSION OF FEE IN THAT YEAR. THE ASSESSEE THUS SUBMITS THAT THE ADDITION FOR THE SUPPRESSED FEE RECEIPTS IS BASED ON 25 ASSUMPTIONS PRESUMPTIONS CONJECTURES AND SURMISES AND WITHOUT ANY CONCRETE EVIDENCE OR MATERIAL FOUND IN THE SEARCH. IT MAY ALSO BE SUBMITTED THAT THERE IS NO FINDING THAT THE PROVISION OF SECTION 145 ARE APPLICABLE. THE ASSESSEE FURTHER SUBMITS THAT THE HON'BLE SUPREME COURT IN THE CASE OF STATE OF KERALA VS. M.M. MATHEW HELD AS STRONG SUSPICION STRANGE COINCIDENCE AND GRAVE DOUBTS CANNOT TAKE THE PLACE OF LEGAL PROOF.' THIS DECISION HAS BEEN REFERRED BY THE I.T.A.T. INDORE BENCH IN THE CASE OF ASHA DEVI GOYAL VS. ACIT REPORTED IN 32 ITC 386/394 (1ND). THUS ALL THE ADDITIONS MADE FOR THE SUPPRESSED FEE ARE WHOLLY UNJUSTIFIED AND ARE NOT LAWFUL AND THEREFORE REQUIRED TO BE DELETED. IT MAY ALSO MENTIONED HEREIN THAT THE I.T.A.T. INDORE BENCH IN THE CASE OF JCIT VS. MALWA WHEAT PRODUCTS PVT.LTD. REPORTED IN [2007] 8 ITJ 645 HELD THAT IF THE ASSESSEE HAS SURRENDERED CERTAIN INCOME IN SURVEY THEN THERE IS NO PRESUMPTION UNDER THE LAW THAT IN EACH AND EVERY YEAR EARLIER TO THAT YEAR THE ASSESSEE WAS CONCEALING THE INCOME AT THE SAME RATE. THE APPELLATE TRIBUNAL HELD THAT EACH ASSESSMENT YEAR IS A SEPARATE ASSESSMENT YEAR AND UNLESS AND UNTIL MATERIAL IS BROUGHT ON RECORD AGAINST THE ASSESSEE IT IS HIGHLY UNBELIEVABLE THAT THE ASSESSEE ON THE SAME FACTS WOULD HAVE INDULGED IN EVASION OF TAX IN PRECEDING ASSESSMENT YEAR. ASSESSEE SUBMITS THAT IN HER CASE ALSO THE AO IS MAKING PRESUMPTION THAT THE ASSESSEE MUST HAVE EARNED UNDISCLOSED INCOME IN EARLIER YEARS BECAUSE IN THE SEARCH SHE H AD SURRENDERED INCOME. IN VIEW OF THE ABOVE IT IS PLEADED FOR DELETION OF THE ADDITIONS MADE BY THE AO. I FIND THAT THE AO HAS NOT POINTED OUT ANY DEFECTS IN THE ACCOUNTS OF ALL THE ABOVE ASSESSMENT YEARS. HE IS NOT REFERRING ANY MATERIALS FOUND IN THE SEARCH WHICH SHOWS THAT THE ASSESSEE HAD MORE FEE RECEIPTS THAN WHAT HAVE BEEN DISCLOSED IN THE ACCOUNT BOOKS IN THOSE YEARS. THE ADDITIONS MADE IN THESE YEARS ARE ON HYPOTHETICAL 26 ASSUMPTION AND PRESUMPTIONS WITHOUT ANY CONCRETE EVIDENCE ON RECORD; THE AO HOWEVER HAS NOT MADE ANY ADDITION IN ASSESSMENT YEAR 2000-01. IT IS A SETTLED LAW THAT THERE CANNOT BE GUESSWORK WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL; THE LAW IS THERE MUST BE SOMETHING MORE THAN BARE SUSPICION. THE APPELLATE TRIBUNAL INDORE BENCH IN THE CASE OF MAHESH KUMAR SINGHAI BHOPAL VS. DCIT REPORTED IN 9 ITJ 682 WHILE DEALING FRAMED U/S 153A HELD THAT IN ABSENCE OF ANY INCRIMINATING DOCUMENTS OF THE RELEVANT YEAR FOUND IN THE SEARCH NO ADDITION COULD BE MADE. IT IS A SETTLED PRINCIPLE OF LAW IT IS A SETTLED PRINCIPLE OF LAW THAT EACH YEAR IS DISTINCT AND SEPARATE. THE APPELLATE TRIBUNAL INDORE BENCH IN THE CASE OF CIT VS MALWA WHEAT PRODUCTS PVT. LTD REPORTED IN 8 ITJ 645 HELD THAT IF THE ASSESSEE HAS SURRENDERED CERTAIN INCOME IN SURVEY THEN THERE IS NO PRESUMPTION UNDER THE LAW THAT IN EACH AND EVERY EARLIER YEAR HE WAS CONCEALING THE INCOME AT THE SAME RATE. THE ADDITIONS FOR THE ALLEGED FEE RECEIPTS HAVE BEEN MADE SOLELY ON ASSUMPTION S AND PRESUMPTIONS AND THERE IS NO CONCRETE EVIDENCE ON RECORD THAT THERE WAS A SUPPRESSION OF FEE RECEIPTS IN THESE YEARS TO THE EXTENT THE AO ESTIMATED. THE HON'BLE SUPREME COURT IN THE CASE OF STATE OF KERALA VS. M.M. MATHEW HELD AS STRONG SUSPICION STRANGE COINCIDENCE AND GRAVE DOUBTS CANNOT TAKE THE PLACE OF LEGAL PROOF. I THUS FIND THAT SINCE THE ADDITIONS HAVE BEEN MADE WITHOUT ANY MATERIAL OR CONCRETE EVIDENCE AND THEREFORE SUCH ADDITIONS FOR THE ALLEGED SUPPRESSED SUPPRESSED RECEIPTS OF RS. 2 89 461/- IN ASSESSMENT YEAR 1999-2000 RS. 675213/- IN ASSESSMENT YEAR 2001-02 RS. 1018 512/- IN ASSESSMENT YEAR 2002-03 RS. 21 02 282/- IN ASSESSMENT YEAR 2003-04 AND RS. 35 18 111/- IN ASSESSMENT YEAR 2004-05 ARE DELETED. THUS THE RELATED GROUNDS OF ALL THESE ASSESSMENT YEARS ARE DECIDED IN FAVOUR OF THE ASSESSEE AND APPEAL IS ALLOWED. 27 10. AGAINST THIS ORDER THE DEPARTMENT IS IN FURTHE R APPEAL BEFORE US. 11. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREF ULLY GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT THE ASSESSEE WAS ENGAGED IN THE BU SINESS OF RUNNING COACHING CLASSES FOR STUDENTS APPEARING FOR PMT/PET. ONE OF THE SUBJECTS WAS TAUGHT BY SHRI AN IL AGRAWAL HUSBAND OF THE ASSESSEE FOR WHICH FEES WA S DIRECTLY GIVEN IN THE HANDS OF THE ASSESSEE AND SHO WN AS HER INCOME OUT OF WHICH THE ASSESSEE WAS PAYING SAL ARY TO SHRI ANIL AGRAWAL OTHERE STAFF MEMBERS AND INCURRI NG EXPENSES FOR RUNNING THE INSTITUTE. THE OTHER THRE E PERSONS WHO WERE TEACHING CHEMISTRY BOTANY AND ZOO LOGY WERE ONLY USING INFRA STRUCTURE OF THE ASSESSEE AND THEIR FEES WERE DIRECTLY CREDITED IN THEIR RESPECTIVE ACC OUNTS. THERE WAS SEARCH ON 2.11.2004 AT THE COACHING INSTI TUTE OF THE ASSESSEE WHEREIN COMPUTER WAS SEIZED CONTAIN ING THE ACCOUNT BOOKS. THE FEES REGISTER WAS ALSO FOUN D AND SEIZED WHICH IS THE PRIMARY ACCOUNTING RECORD OF TH E ASSESSEE. THE ENTIRE HARD DISC CONTAINING THE ACCOU NTING DATA FOR ALL THE YEAR UNDER CONSIDERATION INCLUDING THE SEARCH YEAR WAS ALSO SEIZED. BY MAKING REFERENCE T O VARIOUS DOCUMENTS/RECORDS FOUND DURING THE COURSE O F 28 SEARCH THE ASSESSING OFFICER MADE ESTIMATION OF FE ES RECEIPTS AND ACCORDINGLY ADDITION WAS MADE. HOWEV ER THE AMOUNT SURRENDERED ON ACCOUNT OF FEES DURING TH E COURSE OF SEARCH WAS RETRACTED AND IT WAS NOT INCOR PORATED IN THE RETURN FILED FOR THE ASSESSMENT YEAR 2005-06 . THE REASONS FOR RETRACTION WERE ALSO GIVEN BY WAY OF A NOTE IN THE COMPUTATION OF TOTAL INCOME FURNISHED WITH THE RETURN. THE ALLEGATION OF THE ASSESSEE WAS THAT THE ADDITIO N OF RS. 35 LACS WAS MADE SOLELY ON THE BASIS THE ASSESSEES STATEMENT WHICH WAS TAKEN AT THE TIME OF SEARCH BUT WHICH WAS RETRACTED AFTER CORRECT COMPUTATION OF FE ES RECEIVED AND OFFERED IN THE TAX RETURN OF A.Y. 2005 -06. FROM STUDENTS. THE OBSERVATION OF THE ASSESSING OF FICER WAS ALSO THAT FEES FROM 274 STUDENTS WERE FOUND REC ORDED IN THE SEIZED REGISTER. THIS OBSERVATION OF THE AS SESSING OFFICER WAS REBUTTED BY THE ASSESSEE IN THE FORM OF DETAILED CHARTS/STATEMENT REFLECTING FEES RECEIPTS FROM 274 STUDENTS WHICH WERE DULY APPEARING IN THE PRIMARY RECORDS I.E. DAILY FEE COLLECTION REGISTER. THE ASS ESSING OFFICER ALSO OBSERVED THAT TOTAL 1127 NUMBER OF ADM ISSION FORMS WERE SOLD TO THE STUDENTS. FEE PER STUDENT FO R CLASS XI WAS RS. 4500/- AND CLASS XII WAS RS. 5500/-. EV EN IF IT IS ASSUMED THAT ALL THE STUDENTS TO WHOM ADMISSI ON 29 FORMS WERE SOLD HAD UNDERTAKEN COACHING WITH THE ASSESSEE INSTITUTE AND JOINED THE CLASSES THEN ALSO AS PER THE GIVEN FEES STRUCTURE THERE CANNOT BE COLLECTIO N OF FEES MORE THAN RS.58 60 400/- TAKING THE AVERAGE FEES O F RS. 5200/- PER STUDENT (I.E. 1127X5200). HOWEVER THE ASSESSEE HAS ACTUALLY COLLECTED AND SHOWN FEES RECE IPTS OF RS.68.44 LACS OUT OF WHICH RS. 3.35 LACS WAS REFUND ED TO DROP OUT STUDENTS. THUS A NET RECEIPT OF FEES WAS S HOWN AT RS.65.08 LACS WHICH IS RS. 6.48 LACS MORE THAN THE MAXIMUM FEES WHICH THE ASSESSEE COULD HAVE COLLECTE D EVEN AS PER THE FINDING OF THE ASSESSING OFFICER ON ACCOUNT OF TOTAL NUMBER OF ADMISSION FORMS SOLD BY THE ASSE SSEE MULTIPLIED WITH AVERAGE FEES OF RS. 5200/- PER STUD ENT. IT WAS EXPLAINED BY THE ASSESSEE THAT THE DIFFERENCE O F RS. 6.48 LACS BETWEEN THE AMOUNT OF FEES OF RS.58.60 LA CS AND RS.65.08 LACS IS DUE TO THE FEES RECEIVED ON ACCOUN T OF CRASH COURSES AND STUDY MATERIAL. HOWEVER THE AMOU NT RECEIVED ON ACCOUNT OF SALE OF ADMISSION FORMS WAS INCLUDED IN THE FEES STRUCTURE IF THE STUDENTS HAV E TAKEN ADMISSION ON THE BASIS SUCH ADMISSION FORMS DUE CR EDIT FOR THE AMOUNT CHARGED FOR SUCH FORMS WAS ADJUSTED AGAINST THE FEES STRUCTURE FOR THE COURSE APPLIED F OR. THE FEES RECEIPTS WERE ESTIMATED BY THE ASSESSING OFFIC ER AT 30 RS. 1.08 CRORES AS AGAINST THE ACTUAL FEE RECEIPT O F RS.65.08 LACS. WE FIND THAT IF WE TAKE THE FIGURE O F THE ASSESSING OFFICER AT RS. 1 08 62 749/- TO BE CORREC T THE AVERAGE FEES COLLECTION PER STUDENT WORKS OUT TO BE RS. 9 638/- (1 08 62 749 1127) WHEREAS THE ASSESSING OFFICER HIMSELF HAS OBSERVED THAT THE ASSESSEES FE ES PER STUDENT WAS RS. 4500/- FOR CLASS 11 BATCH AND FOR T HE OTHER BATCHES IT WAS RS. 5500/- PER STUDENT. THUS WE ARE NOT INCLINED TO THIS ABSURDITY IN THE FEE TAKEN BY THE ASSESSING OFFICER AT RS.9 638/- PERE STUDENT. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS ALS O OBSERVED THAT THE ADDITION OF RS.35 LACS WAS MADE B Y THE ASSESSING OFFICER SOLELY ON THE BASIS THE ASSESSEE S STATEMENT IN THE COURSE OF SEARCH AND FURTHER ADDIT ION OF RS. 8.28 LACS FOR THE PERIOD FALLING AFTER THE DATE OF SEARCH WAS MADE ON THE PRESUMPTION THAT THERE WOULD ALSO H AVE BEEN CONCEALED RECEIPTS DURING THE POST SURRENDER P ERIOD. AFTER ANALYZING THE SEIZED DOCUMENTS AS REFERRED BY THE A.O. THE LEARNED COMMISSIONER OF INCOMETAX (APPEAL S) ALSO FOUND THAT VARIOUS SEIZED MATERIAL REFERRED TO BY THE ASSESSING OFFICER IN HIS ORDER WAS NOT INCRIMINATIN G MATERIAL BUT WAS RECORDS MAINTAINED BY THE CLERICAL STAFF IN THE CASE OF TEACHING INSTITUTE WHEREIN STUDENTWI SE DAILY 31 FEES COLLECTION REGISTER FOR DIFFERENT BATCHES IS M ANUALLY MAINTAINED. FROM THESE PRIMARY RECORDS ENTRIES AR E MADE IN THE COMPUTER. THUS CASH BOOK AND LEDGER A RE PREPARED AFTER FEEDING THE ENTRIES FROM THE PRIMARY RECORDS IN THE COMPUTER. THE DOCUMENTS REFERRED TO BY THE ASSESSING OFFICER AS INCRIMINATING WERE ACTUALL Y DAILY CASH COLLECTION REGISTER ETC. AND THE LOOSE PAPERS REFERRED TO BY THE ASSESSING OFFICER WERE THE ASSORTED NOTIN GS OF THE OUTSTANDING FEES PREPARED FROM TIME TO TIME.SOM E OF THE LOOSE PAPERS WERE ACTUALLY RESULT SHEETS OF THE STUDENTS. AS ON THE DATE OF SEARCH FEEDING FROM TH ESE PRIMARY DOCUMENTS IN THE COMPUTER WAS INCOMPLETE T HE ASSESSING OFFICER PRESUMED THAT THE ASSESSEE WAS CONCEALING THE FEES RECEIPTS. HOWEVER THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS OBSERVED TH AT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFEC T IN THE BOOKS OF ACCOUNTS FOR ALL THE ABOVE ASSESSMENT YEAR S. HE HAS FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS NOT REFERRED TO ANY MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH SHOWS THAT THE ASSESSEE HAD MORE FEES RECEIPT S THAN WHAT HAS BEEN DISCLOSED IN THE ACCOUNT BOOKS I N THOSE YEARS. BY COMPUTING THE FEES RECEIPTS ON THE BASIS NUMBER OF STUDENTS OBSERVED BY THE ASSESSING OFFICE R 32 HIMSELF WITH RESPECT TO THE FEES STRUCTURE STATED B Y THE ASSESSING OFFICER THE LEARNED COMMISSIONER OF INCO METAX (APPEALS) REACHED THE CONCLUSION THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS ON HYPOTHETICAL ASSUMP TIONS AND PRESUMPTIONS WITHOUT ANY CONCRETE EVIDENCE ON RECORD. HE FURTHER OBSERVED THAT THERE CANNOT BE A GUESS WORK WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATER IAL AT ALL. THERE MUST BE SOMETHING MORE THAN SUSPICION. BY REFERRING TO THE DECISION OF ITAT INDORE BENCH IN DORE IN THE CASE OF MALWA WHEAT PRODUCTS PRIVATE LIMITED; 8 ITJ 645 WHEREIN IT WAS HELD THAT IF THE ASSESSEE HAS SURRENDERED CERTAIN INCOME IN SURVEY THEN THERE IS NO PRESUMPTION UNDER THE LAW THAT IN EACH AND EVERY EA RLIER YEAR HE WAS CONCEALING THE INCOME AT THE SAME RATE . THUS THE ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF SUCH SURRENDER AND PRESUMPTION WITH REGARD TO EARLIER YEARS ALSO WAS FOUND TO BE NOT SUSTAINABLE. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOUND T HAT THE ADDITIONS FOR THE ALLEGED FEES RECEIPTS HAVE BE EN MADE SOLELY ON ASSUMPTIONS AND PRESUMPTION AND THERE WAS NO CONCRETE EVIDENCE ON RECORD THAT THERE WAS SUPPRESS ION OF FEES RECEIPTS IN THESE YEARS AS ESTIMATED BY THE A SSESSING OFFICER. 33 12. WITH REGARD TO THE DECLARATION MADE DURING THE COURSE OF SEARCH ON ACCOUNT OF FEES OF RS. 35 LACS IT WAS FOUND THAT THE DECLARATION OF INCOME BY LADY ENTREP RENEUR WAS UNDER THE DISTURBED STATE OF MIND AND WAS ONLY AN AD HOC DECLARATION WITHOUT REFERENCE TO ANY UNEXPLAINE D CASH OR INVESTMENT FOUND IN THE SEARCH. HOWEVER WE ALSO FIND THAT IN THE ASSESSMENT NO ADDITION HAS BEEN MADE FO R ANY UNEXPLAINED CASH OR INVESTMENT. TO CORROBORATE THE DECLARATION HOWEVER NO UNEXPLAINED ASSETS WERE FO UND EITHER DURING THE COURSE OF SEARCH OR ON POST SEAR CH INQUIRY INDICATING THE INVESTMENT OF THE ASSESSEE T O THE EXTENT OF RS. 35 LACS. THE STATEMENT WAS MADE WITHO UT REFERENCE TO ANY TANGIBLE MATERIAL FOUND IN THE SEA RCH SUGGESTING THE UNDISCLOSED INCOME OF THE ASSESSEE. ALONG WITH THE RETURN OF INCOME THE ASSESSEE HAS ALSO MEN TIONED THAT SHE WAS NOT INCORPORATING THE INCOME SURRENDER ED DURING THE COURSE OR SEARCH. THE JUSTIFICATION GIVE N BY THE ASSESSEE WAS THAT IN THE FAMILY OF THE ASSESSEE TH ERE ARE ONLY FOUR MEMBERS HERSELF HER HUSBAND AND TWO SCH OOL GOING CHILDREN. THE SEARCH WAS INSTITUTED ON 3.11. 2004 AND IT CONTINUED UNINTERRUPTEDLY TILL THE NEXT MORN ING. DUE TO CONSTANT GRUELING BY THE TEAM OF SEARCH OFFI CIALS THE WHOLE FAMILY AND CHILDREN IN PARTICULAR WERE VE RY 34 MUCH FRIGHTENED. THE SEARCH OFFICIALS WERE APPLYIN G ALL PRESSURE CONSTANTLY TO MAKE SUCH DISCLOSURE. THEY WANTED STANTANIOUS EXPLANATION OF NOTHINGS JOTTING S ETC. WHICH WAS NOT POSSIBLE AT ALL BECAUSE THE MEMORY AL SO HAS ITS LIMITATION. THEY WERE ALSO NOT GIVING TIME EVEN TO RECALL OR TO CONSULT WITH HER ACCOUNTANT. THE SEAR CH OFFICIALS IN THE SEARCH NOTICED NO INCRIMINATING DOCUMENTS/UNEXPLAINED ASSETS BUT NOT-WITH-STANDING THE SAID FACTS THE PRESSURE WAS TO MAKE SOME DISCLOSUR E. THE ASSESSEE AND HER FAMILY MEMBERS WERE VERY MUCH MENTALLY DISTURBED AND FEELING HARASSED. THE CHILD REN STARTED WEEPING AND THEREFORE TO GET OUT OF THAT SITUATION AND TO PURCHASE PEACE OF MIND AD HOC DISCLOSURE OF INCOME OF INCOME WAS MADE. 13. KEEPING IN VIEW THE ABOVE EXPLANATION VIS--VIS THE ACTUAL CALCULATION OF TOTAL MAXIMUM FEES RECEIVABLE ON THE BASIS NUMBER OF STUDENTS AND THE FEES STRUCTURE AS OBSERVED BY THE ASSESSING OFFICER HIMSELF BY THE L EARNED COMMISSIONER OF INCOMETAX (APPEALS) WE DO NOT FIND ANY MERIT IN THE ADDITION MADE BY THE ASSESSING OFFICER OVER AND ABOVE THE ACTUAL FEES RECEIVED AS SHOWN IN THE AUDITED BOOKS OF ACCOUNTS IN WHICH NO DEFECT WAS FOUND. TH E RETRACTION OF STATEMENT WAS MADE AT THE FIRST INSTA NCE 35 WHEN THE ASSESSEE WAS TO FILE HER RETURN OF INCOME WHEN ACTUAL TOTAL FEE WAS DULY DISCLOSED AND ACCOUNTED F OR. EVEN IN THE EARLIER YEARS BY MAKING SUCH SURRENDER AS A BASE THE ASSESSING OFFICER HAS ESTIMATED THE FEES FOR THOSE YEARS AT A HIGHER FIGURE AND MADE THE ADDITIO N ACCORDINGLY. THE DETAILED FINDINGS HAVE BEEN RECOR DED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR CALCULATION OF ACTUAL FEES RECEIVED BY THE ASSESSEE WHICH IS AS PER MATERIAL ON RECORD INDICATING THAT THERE WAS NO UNACCOUNTED FEE. ACCORDINGLY WE DO NOT FIND ANY R EASON TO INTERFERE WITH THE FINDINGS RECORDED BY THE LEAR NED COMMISSIONER OF INCOMETAX (APPEALS) FOR DELETING TH E ADDITION ON ACCOUNT OF FEES IN VARIOUS YEARS UNDER CONSIDERATION. 14. THE NEXT GROUND RELATES TO DISALLOWANCE OF PART OF SALARY PAID TO VARIOUS STAFF MEMBERS WHICH WAS DEL ETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER HAVING THE FOLLOWING OBSERVATIONS :- I FIND THAT THERE IS SOME DISCUSSION OF THE AO FOR MAKING THE DISALLOWANCE OUT OF SALARY IN A. Y. 2005-06 BUT IN ALL OTHER YEARS THE AO HAS VIRTUALLY REPEATED HIS FINDINGS OF A.Y. 2005-06 . THE ASSESSEE HAS PLACED IN THE PAPER BOOK FULL PARTICULARS OF SALARY PAYMENT EMPLOYEE-WISE AND DATE-WISE IN RESPECT OF EACH ASSESSMENT YEAR. THE PERUSAL OF 36 THOSE PAPERS SHOWS THAT TO THE SENIOR EMPLOYEES PAYMENTS ARE BY CHEQUES AND CASH PAYMENTS ARE MAINLY TO LOWER STAFF I.E. PEONS ETC. AS FAR AS THE DEEPESH SHARMA'S SALARY IS CONCERNED THE CONTENTION OF THE APPELLANT IS DUE TO SEARCH HIS SALARY WAS INCREASED AS HE HAD TO DEVOTE SUBSTANTIAL TIME TO THE ASSESSEES WORK. IN EARLIER YEARS DEEPESH SHARMA WAS PAID A SALARY AT RS. 2 000/- P.M. THE AO IN THE ORDER RAISED DOUBT AS TO THE GENUINENESS OF THE SALARY FOR ONE REASON THAT IN THE COMPUTER SEIZED ACCOUNTS SALARY PAYMENT TO DEEPESH SHARMA WAS SHOWN AT RS. 2 000/- P.M. WHEREAS IN THE ACCOUNTS SUBMITTED IN THE ASSESSMENT HIS SALARY WAS SHOWN AT RS. 5 000/- P.M. THE ASSESSEE SUBMITTED THAT THE REASONS WERE THAT IN THE SEARCH THE FEEDING OF ENTRIES IN THE COMPUTER WERE NOT COMPLETED AND PRIOR TO THE SEARCH DEEPESH SHARMA WAS PAID A SALARY RS. 2 000/- P.M. BUT AFTER SEARCH DUE TO INCREASED VOLUME OF WORK HIS SALARY WAS INCREASED TO RS. 5 000/- P.M. RETROSPECTIVELY FROM APRIL 2004 AND DUE TO THIS REASON IN THE COMPLETED CASH BOOK PRODUCED IN THE ASSESSMENT SUCH VARIATION REFLECTED. I FIND THAT THE AO HAS NOT IDENTIFIED THAT PERSON TO WHOM THE SALARY WAS PAID EXCESSIVELY OR WHOSE SALARY WAS BOGUS. THE DISALLOWANCE HAS BEEN BY THE ASSESSING OFFICER DUE TO ASSUMPTIONS PRESUMPTIONS CONJECTURES AND SURMISES. I FURTHER FIND THAT THE AO HAD DISALLOWED THE SALARY IN ASSESSMENT YEARS 2002-03 2003-04 2004-05 & 2005-06 ON THE BASIS OF THE FIGURES GIVEN BY THE ASSESSEE IN HER STATEMENT IN THE SEARCH. THE ASSESSEES CONTENTION APPEARS TO BE CORRECT THAT THE STATEMENT OF PAYMENT OF SALARY WAS JUST AN APPROXIMATE FIGURES OUT OF MEMORY AND 37 THAT COULD NOT BE THE BASIS FOR DISALLOWANCE. THE ACCOUNT BOOKS HAVE BEEN SEIZED FOR ALL THE YEARS. FULL DETAILS OF SALARY PAYMENTS ARE APPEARING IN THE ACCOUNTS. PAYMENTS ARE MOSTLY BY CHEQUES AS HAVE BEEN FOUND FROM THE DETAILS SUBMITTED IN THE PAPER BOOK. THUS IN MY OPINION THE DISALLOWANCES OUT OF SALARY HAVE ONLY BEEN MADE ON ASSUMPTIONS & PRESUMPTIONS CONJECTURES AND SURMISES AND WITHOUT ANY CONCRETE EVIDENCE AND MATERIALS ON RECORDS. THUS THE DISALLOWANCES MADE FOR THE SALARY PAYMENTS AT RS. 1 18 113/- IN ASSESSMENT YEAR 2005-06 RS. 2 87 422/- IN ASSESSMENT YEAR 2004-05 RS. 2 07 150/- IN ASSESSMENT YEAR 2003-04 RS. 70 100/- IN ASSESSMENT YEAR 2002-03 RS. 3 44 762/- IN ASSESSMENT YEAR 2001-02 & RS. 3 20 367/- IN ASSESSMENT YEAR 1999-2000 CANNOT BE SUSTAINED AND THUS THE APPEAL IS ALLOWED. 15. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREF ULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. I N THIS RESPECT THE FINDING OF THE ASSESSING OFFICER IS TH AT THE ASSESSEE HAS STATED IN HER STATEMENT AT THE TIME OF SEARCH THAT TOTAL SALARY PAYMENT FOR THE YEAR IS ABOUT RS.5 10 600/-. BASED ON THIS STATEMENT OF THE ASSE SSEE BY DISREGARDING THE ACTUAL SALARY OF RS. 6.28 LACS PAID DURING THE ASSESSMENT YEAR 2005-06 THE ASSESSING O FFICER HAS ALLOWED ONLY RS. 5.10 LACS AND DISALLOWED A SUM OF RS.1.18 LACS. THE ASSESSING OFFICER FURTHER STATED THAT UPTO SEPTEMBER 2004 AS PER THE SEIZED COMPUTER SAL ARY 38 DEBITED WAS FOUND AT RS.2.29 LACS. THE ASSESSEE HAS FURNISHED SALARY ACCOUNT DURING THE COURSE OF ASSE SSMENT WHICH SHOWS DEBIT BALANCE OF SALARY UPTO SEPTEMBER 2004 AT R. 2.78 LACS. THE ASSESSING OFFICER FOUND T HAT THE DIFFERENCE HAS BEEN MADE IN NUMBER OF ACCOUNTS FOR EXAMPLE MR. DEEPESH SHARMA IN THE SEIZED BOOKS SHOW N SALARY PAYMENT AT R.2 000/- PER MONTH BUT IN THE SA LARY ACCOUNT PRODUCED IN THE ASSESSMENT THE SALARY AMOU NT WAS SHOWN AT RS.5 000/- PER MONTH. IT WAS EXPLAINED BY THE ASSESSEE THAT A DETAILED CHART IS FURNISHED SHO WING EMPLOYEEWISE DETAILS AND THE SALARY PAID TO THEM IN WHOLE OF THE FINANCIAL YEAR. IT WAS ALSO SUBMITTED THAT DURING SEARCH WHEN THE QUESTION WAS PUT UP TO THE ASSESSE E SHE HAD A DISTURBED STATE OF MIND AND GAVE A TENTATIVE FIGURE OF RS.5.10 LACS. FURTHER THE FINING OF THE ASSESS ING OFFICER THAT IN THE SEIZED COMPUTER SALARY UPTO SEP TEMBER 2004 WAS RS. 2.29 LACS IS NOT CORRECT. WITH REGARD TO DEEPESH SHARMA WHO IS A PART TIME ACCOUNTANT HE WA S PAID SALARY @ RS. 2000/- PER MONTH IN THE PERIOD FA LLING BEFORE SEARCH AND UPTO THE DATE OF SEARCH ALSO THE SAME SALARY OF RS. 2000/- PER MONTH WAS CONTINUING BUT A FTER THE SEARCH THE SAID ACCOUNTANT DEEPESH SHARMA WAS ASKED TO WORK FOR MORE TIME SO AS TO UNDERTAKE ALL 39 ACCOUNTING WORK AND ALSO TO ATTEND THE OFFICE OF TH E TAX CONSULTANT DUE TO INCREASED NUMBER OF HOURS WHICH W AS REQUIRED TO BE GIVEN FOR COMPLETING THE SEARCH ASSESSMENTS. HOWEVER HE DECLINED TO CONTINUE WITH THE SALARY OF RS.2000/- PER MONTH THEREFORE IT WAS AG REED THAT HE WILL BE PAID SALARY AT THE RATE OF RS.5000/ - PER MONTH FOR FULL YEAR AND THE SAME WAS CLAIMED IN THE P&L ACCOUNT. IT IS NOT THE CASE OF THE DEPARTMENT THAT ANY OF THE EMPLOYEES HAS DECLINED THE QUANTUM OF SALARY AC TUALLY RECEIVED BY THEM NOR THE GENUINENESS OF THE SALARY OR CLAIM WAS DOUBTED NOR IT IS THE CASE OF THE ASSESSI NG OFFICER THAT SALARY PAID WAS UNREASONABLE OR EXCESS IVE SALARY WAS PAID TO ANY OF THE PERSONS FALLING U/S 4 0A(2). THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DELETED THE DISALLOWANCE OF SALARY BY OBSERVING THA T THE ASSESSEE HAS FURNISHED FULL PARTICULARS OF SALARY P AYMENT EMPLOYEEWISE AND DATEWISE IN RESPECT OF EACH ASSESS MENT YEAR. TO THE SENIOR EMPLOYEES PAYMENTS WERE MADE BY CHEQUES AND CASH PAYMENTS WERE MAINLY MADE TO LOWER STAFF I.E. PEONS ETC. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS ALSO DISCUSSED THE PAYMENT OF SALARY TO DEEPESH SHARMA AFTER THE PERIOD OF SEARCH WHEN HE WAS PAID RS. 5000/- PER MONTH FOR THE LONGER TIM E 40 PERIOD BEING DEVOTED BY HIM FOR COMPLETING THE ACCO UNTING WORK AND TO ATTEND THE OFFICE OF COUNSEL FOR FINALI ZING SEARCH MATTERS. IT WAS ALSO FOUND BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THAT FEEDING OF ENTRIES IN THE COMPUTER AT THE TIME OF SEARCH WAS N OT COMPLETE AND PRIOR TO SEARCH DEEPESH SHARMA WAS PAI D SALARY OF RS.2000/- PER MONTH AND THE SAME WAS CLAI MED ACCORDINGLY. HOWEVER DUE TO INCREASED VOLUME OF W ORK THE SALARY WAS INCREASED TO RS. 5000/- PER MONTH RETROSPECTIVELY FROM APRIL 2004 AND DUE TO THIS RE ASON IN THE COMPLETED CASH BOOK ENTRIES IN THE ASSESSMENT S TAGE VARIATION WAS REFLECTED. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO OBSERVED THAT THE ASSESSIN G OFFICER HAS NOT IDENTIFIED THE PERSONS TO WHOM THE SALARY WAS PAID EXCEPTIONALLY OR WHOSE SALARY WAS BOGUS AN D THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ONLY DUE TO ASSUMPTION PRESUMPTION AND CONJECTURES. THE FINDINGS RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAVE NOT BEEN CONTROVERTED BY BRINGING ANY POSITIVE MATERIAL ON RECORD. WE THERE FORE DO NOT FIND ANY JUSTIFICATION FOR PART DISALLOWANCE OF SALARY ACTUALLY PAID AND DEBITED IN THE BOOKS OF ACCOUNTS MERELY BY MAKING THE STATEMENT OF THE ASSESSEE GIVEN AT TH E TIME 41 OF SEARCH TO THE EFFECT THAT AVERAGE SALARY WAS RS. 5.10 LACS PER ANNUM AS A BASIS. THE ACTUAL PAYMENT OF S ALARY WITH REFERENCE TO EACH AND EVERY EMPLOYEE AND PERIO D FOR WHICH IT WAS PAID WAS DULY FURNISHED BEFORE THE ASS ESSING OFFICER WHO HAS VERIFIED THE SAME BUT DID NOT FIND ANY MISTAKE THEREIN. NO GROUND HAS BEEN RAISED BY THE REVENUE TO THE EFFECT THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS RELIED ON FRESH DOCUMENT IN CONTRAVENTION TO RULE 40A. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIO NER OF INCOMETAX (APPEALS) IN DELETING THE PART DISALLOWAN CE OF SALARY MADE BY THE ASSESSING OFFICER. 16. THE NEXT GRIEVANCE OF THE REVENUE RELATES TO DE LETING THE DISALLOWANCE OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. 17. THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT THE ASSESSING OFFICER HAS MADE AN AD HOC DISALLOWANCE OF 1/4 TH OF BUSINESS EXPENDITURE CLAIMED BY THE ASSESSEE AFTER HAVING MADE THE OBSERVATION THAT THE ASSESSEE HAS NOT PRODUCED BILLS AND VOUCHERS. BY TH E IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOMET AX (APPEALS) DELETED THE DISALLOWANCES AFTER HAVING MA DE THE FOLLOWING OBSERVATIONS :- 42 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE ASSESSEE. I HAVE ALSO SEEN THE REASONS OF THE AO. IN MY OPINION THE DISALLOWANCES HAVE BEEN MADE ON CONJECTURES AND SURMISES WITHOUT THERE BEING ANY SUPPORTING MATERIALS OF EVIDENCE FOUND IN THE SEARCH. THE AO HAD NOT REFERRED ANY MATERIAL OR EVIDENCE WHICH WAS FOUND IN THE SEARCH AND WHICH WAS RELATED TO THE YEAR CONCERNED FOR WHICH THE DISALLOWANCE WAS MADE. THE DISALLOWANCE IS ON AD HOC BASIS. NO ITEMS OF DISALLOWABLE NATURE OR BOGUS IN THE NATURE HAVE BEEN IDENTIFIED BY THE ASSESSING OFFICER. THE ENTIRE DISALLOWANCES ARE BASED ON PRESUMPTIONS AND HYPOTHESIS AND ON SUSPICION. IT IS A SETTLED LAW THAT SUSPICION HOWEVER STRONG CANNOT TAKE THE PLACE OF A LEGAL PROOF. REFERENCE IS MADE TO APEX COURTS DECISION UMACHARAN SHAW & BROTHERS VS. CIT REPORTED IN 37 ITR 271 ( S.C.). THE REFERENCE IS ALSO MADE TO A DECISION OF THE APEX COURT IN THE CASE OF STATE OF KERALA VS. M.M. MATHEW HELD AS STRONG SUSPICION STRANGE COINCIDENCE AND GRAVE DOUBTS CANNOT TAKE PLACE OF LEGAL PROOF. I THEREFORE DELETE THE DISALLOWANCES MADE AT RS. 85 407/- IN A.Y. 1999-00 RS. 1 82.829/- IN A.Y. 2001-02 RS. 3 20 631/- IN A.Y. 2002-03 RS. 7 61 426/- IN A.Y. 2003-04 RS. 7 74 760/- IN A.Y. 2004-05 & RS. 81 020/- RS. 90 150/- RS. 16 186/- & RS. 87 400/- IN A.Y. 2005-06. THUS THE GROUNDS RELATED TO SUCH DISALLOWANCES IN ALL THESE ASSESSMENT YEARS ARE ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE AND IN THE PROCESS THE APPEAL IS ALLOWED. 18. AGAINST THE ABOVE DECISION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THE REVENUE IS IN APPEAL BEFORE US. 19. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREF ULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FIND 43 FROM RECORD THAT THE ASSESSEE HAS INCURRED AND CLAI MED EXPENDITURE ON ACCOUNT OF ADVERTISEMENT BOOK PERIODICALS CONVEYANCE PROFESSIONAL CHARGES PRIN TING AND STATIONARY REPAIRS AND MAINTENANCE BROKERAGE BUSINESS PROMOTION MEMBERSHIP AND SUBSCRIPTION POSTAGE AND TELEGRAM TELEPHONE TEACHING MATERIAL ETC. ALL THESE EXPENSES ARE INCURRED FOR PURPOSE OF BUSI NESS. THE GENUINENESS OF THE EXPENDITURE WAS NOT DOUBTED. ONLY BY OBSERVING THAT THE ASSESSEE HAS NOT PRODUCE D BILLS AND VOUCHERS THE ASSESSING OFFICER HAD MADE AN AD- HOC DISALLOWANCE OF 1/4 TH OF EXPENSES. ON THE CONTRARY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS OBSERVED THAT THE ASSESSEE HAS SUBMITTED LEDGER ACC OUNT OF EXPENSES RELATING TO ALL THE ASSESSMENT YEARS UN DER CONSIDERATION AND THAT THE ASSESSING OFFICER HAS NO T TAKEN PAIN TO LOOK INTO THEM THEREFORE THE FINDING OF T HE ASSESSING OFFICER THAT THE BILLS VOUCHERS WERE NOT PRODUCED ARE WHOLLY WRONG AND INCORRECT. THE LEARN ED COMMISSIONER OF INCOMETAX (APPEALS) FURTHER OBSERVE D THAT HIS ATTENTION WAS DRAWN TO THE PAPER BOOK VOLU ME 3 PAGES 91 TO 248 AND VOLUME NO. 4 PAGES 249 TO 374 W HICH CONTAIN THE DETAILS OF VARIOUS EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT IN ALL THE ABOVE ASSESSMENT YEARS 44 AND SUCH DETAILS ALSO CONTAIN FULL PARTICULARS OF E XPENSES AND THE PAYMENTS ARE MOSTLY BY CHEQUES. AFTER OBSE RVING THESE THE LEARNED COMMISSIONER OF INCOMETAX (APPEA LS) CONCLUDED THAT DISALLOWANCES HAVE BEEN MADE ON CONJECTURES AND SURMISES WITHOUT THERE BEING ANY SUPPORTING MATERIAL OR EVIDENCE FOUND DURING THE CO URSE OF BUSINESS. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER HAD NOT REFERRED TO ANY MATERIAL OR EVIDENCE WHICH WAS FOUND IN THE COURSE OF SEARCH AND WHICH WAS RELATED WITH THE YEAR CONCERNED FOR WHICH THE DISALLOWANCE WAS M ADE. FURTHER OBSERVATION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS THAT NO ITEMS OF DISALLOWAB LE NATURE OR BOGUS IN NATURE HAVE BEEN IDENTIFIED BY T HE ASSESSING OFFICER AND THE ENTIRE DISALLOWANCES ARE MADE ON PRESUMPTIONS AND HYPOTHESIS AND ON SUSPICION. ACCORDINGLY HE DELETED THE ENTIRE AD-HOC DISALLOWA NCE WHICH WAS MADE BY THE ASSESSING OFFICER. NO GROUND HAS BEEN RAISED BY REVENUE BEFORE US TO THE EFFECT THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS REL IED UPON ANY ADDITIONAL DOCUMENT WHILE DELETING THE AD HOC DISALLOWANCES OF EXPENSES OR WHICH WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER OR WHICH WAS IN CONTRA VENTION TO RULE 46A. THUS IT IS APPARENT THAT WHATEVER DE LETION OF 45 DISALLOWANCE HAS BEEN MADE BY THE LEARNED COMMISSIO NER OF INCOMETAX (APPEALS) WAS AFTER CONSIDERING THE DE TAILS OF EXPENSES FILED BEFORE THE ASSESSING OFFICER. WE AL SO FIND THAT ALL THE EXPENSES CLAIMED ARE PURELY BUSINESS EXPENDITURE LIKE ADVERTISEMENT PROFESSIONAL CHARGE S PRINTING STATIONARY REPAIR MAINTENANCE ETC. THE SE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND GENUINENESS OF WHICH WAS AL SO NOT DOUBTED AND THE ASSESSING OFFICER HAS MERELY MA DE AD HOC DISALLOWANCE OF 20% OF ALL THESE EXPENSES WHIC H IS NOT SUSTAINABLE IN VIEW OF THE FINDING RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN DELE TING THE AD HOC DISALLOWANCE MADE BY THE ASSESSING OFFIC ER BY OBSERVING THAT ALL THE BILLS AND VOUCHERS WERE PROD UCED BEFORE THE ASSESSING OFFICER TO SUPPORT THE CLAIM O F EXPENDITURE. HOWEVER AT THE VERY SAME TIME WE FI ND THAT THERE WERE CERTAIN EXPENDITURE INCURRED ON ACCOUNT OF CONVEYANCE MEMBERSHIP FEE AND SUBSCRIPTION TELEPH ONE WHICH MAY BE PARTLY ENJOYED BY THE PROPRIETOR OF TH E CONCERN. PERSONAL ELEMENT OF THESE EXPENSES CANNOT BE DENIED. WE THEREFORE DIRECT THE ASSESSING OFFICE R TO 46 DISALLOW THESE EXPENSES AT 10% IN ALL THE YEAR UNDE R CONSIDERATION ON ACCOUNT OF PERSONAL USE. IN RESPE CT OF THE ASSESSMENT YEAR 2000-01 WE FIND THAT THE ASSESS ING OFFICER WHILE FRAMING THE INITIAL ASSESSMENT U/S 14 3(3) ON 28.3.2003 MUCH BEFORE THE DATE OF SEARCH HAS ASSESS ED THE TOTAL INCOME AT RS. 8.40 LACS. AGAINST THIS OR DER OF THE ASSESSING OFFICER THE ASSESSEE APPROACHED THE LEARN ED COMMISSIONER OF INCOMETAX (APPEALS) AND THEREAFTER TO ITAT. BOTH THE APPELLATE AUTHORITIES HAVE GIVEN SUBSTANTIAL RELIEF AND THE INCOME WAS FINALLY ASSES SED AT RS. 52 210/- BY THE ITAT. ACCORDINGLY THE ORDER O F THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2000-01 M ERGED WITH THE ORDER OF THE TRIBUNAL AND NOW THE ASSESSIN G OFFICER HAS NO POWER TO SIT OVER THE JUDGMENT OF TH E TRIBUNAL AND HAS GROSSLY ERRED IN AGAIN MAKING REASSESSMENT AT THE SAME INCOME OF RS.8 40 110/-. IF AGAINST THE DELETION OF ANY PART OF THE ADDITION MA DE BY THE ASSESSING OFFICER THE REVENUE IS AGGRIEVED TH EY CAN APPROACH THE APPROPRIATE AUTHORITY BUT THE ASSESSIN G OFFICER HAS NO POWER TO SIT OVER THE JUDGMENT OF TH E LEARNED COMMISSIONER OF INCOMETAX (APPEALS) OR THE TRIBUNAL. 47 20. IN VIEW OF THE ABOVE THESE GROUNDS OF THE REVE NUE IN ALL THE YEARS ARE ALLOWED IN PART AS INDICATED HERE INABOVE. 21. THE NEXT GRIEVANCE OF THE REVENUE RELATES TO DE LETING THE DISALLOWANCE OF PART OF DEPRECIATION BY OBSERV ING THAT THERE IS LITTLE MOVEMENT OF THE ASSESSEE FOR BUSINE SS PURPOSES. THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OUT OF DEPRECIATION CLAIM ON VEHICLES. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 10% BY OBSERVING THAT IN THE ASSESSMENT YEAR 2000-01 THE ASSESSEE HAS CLAIMED DEPRECIATION ON CAR PART OF W HICH WAS DISALLOWED BY THE ASSESSING OFFICER. THE ITAT H AS RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 10% OF THE CLAIM OF DEPRECIATION. FOLLOWING WAS THE PRECISE OBSERVATION OF THE LEARNED COMMISSIONER OF INCOMETA X (APPEALS) :- I FIND THAT IN A.Y. 2000-01 DISALLOWANCE WAS MADE FOR THE PERSONAL USER OF CLAIM OF DEPRECIATION ON CAR. THE CIT(A) VIDE ORDER DATED 23.10.2003 HAD MADE THE DISALLOWANCE OF 10% ON DEPRECIATION OF CAR. IN THAT YEAR THE ASSESSEE HAD CLAIMED DEPRECIATION ON MARUTI CAR AT RS.28 084/- AND THE CIT(A) IN THAT YEAR DISALLOWED RS. 2 800/- AT 10 % OF THE CLAIM. THE SAID DISALLOWANCE HAS BEEN UPHELD IN THAT ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2000-01 BY THE APPELLATE 48 TRIBUNAL. FOLLOWING THE ORDERS OF THE APPELLATE TRIBUNAL I RESTRICT THE DISALLOWANCE TO THE 10% OF THE DEPRECIATION CLAIMED AND ACCORDINGLY THE AO IS DIRECTED TO DISALLOW ONLY RS.2 246/- IN ASSESSMENT YEAR 1999-2000 RS. 5 398/- IN ASSESSMENT YEAR 2001-02 RS. 4 318/- IN ASSESSMENT YEAR 2002-03 RS. 3 607/-IN ASSESSMENT YEAR 2003-04 RS. 16 698/- IN A.Y. 2004-05 AND RS. 15 017/- IN A.Y. 2005-06. THUS THE GROUNDS RELATED TO DISALLOWANCE OF DEPRECIATION IN ALL THE SEVEN YEARS ARE PARTLY ALLOWED. 22. FROM THE ORDER OF TRIBUNAL FOR THE ASSESSMENT Y EAR 2000-01 WE FIND THAT THE TRIBUNAL HAS RESTRICTED T HE DISALLOWANCE OF DEPRECIATION TO THE EXTENT OF 10% O F THE ASSESSEES CLAIM. ACCORDINGLY WE CONFIRM THE ORDE R OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AND RES TRICT THE DISALLOWANCE TO THE EXTENT OF 10% IN ALL THE YE AR UNDER APPEAL BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 IN SO FAR AS FACTS AND CIRCUMSTANCES DURING THESE YEARS W ERE AT PERI MATERIA. THUS THIS GROUND OF THE REVENUE IN A LL THE YEARS IS DISMISSED. 23. THE NEXT GRIEVANCE OF THE REVENUE RELATES TO DE LETION OF DISALLOWANCE OF ADDITIONS MADE ON ACCOUNT OF GIF TS RECEIVED BY THE ASSESSEE DURING THE ASSESSMENT YEAR 2002-03 2003-04 AND 2004-05. BY THE IMPUGNED ORDE R 49 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AF TER CONSIDERING THE GIFT DEED AND DETAILS OF DONOR HA S DELETED THE ADDITION MADE IN THESE ASSESSMENT YEARS AFTER H AVING MADE THE FOLLOWING OBSERVATIONS :- CONSIDERING THE LEGAL POSITION AND THE MATERIAL PLACED ON RECORD I SUSTAIN THE ADDITION OF RS. 6 000/- IN A.Y. 1999-00 AND DELETE THE ADDITION OF RS.2 00 000/- IN A.Y. 2002-03 RS. 1 00 000/- IN A.Y.2003-04 AND RS. 50 000/- IN A.Y. 2004-05. IN A.Y. 2000-01 THE ADDITION OF RS. 32 000/- WAS ALREADY DELETED BY THE LD. CIT(A) IN THE APPELLATE ORDER DATED 23.10.2003 VIDE PARA 9.3 OF HIS ORDER AND THE DEPARTMENT DID NOT PREFER A SECOND APPEAL AGAINST THE SAID DELETION THEREFORE FOLLOWING THAT ORDER I ALSO DELETE THE ADDITION OF RS. 32 000/- MADE IN A.Y. 2000-01. THUS THIS GROUND IS ADJUDICATED AS INDICATED ABOVE AND DISPOSED OFF ACCORDINGLY. 24. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREF ULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FIND FROM RECORD THAT THE FOLLOWING GIFTS WERE RECEIVED BY THE ASSESSEE IN THESE YEARS UNDER CONSIDERATION : MODE OF GIFT NAME OF DONOR AMOUNT (RS.) RELATION WITH ASSESSEE DD NO. 362594 DATED 21.08.2001 SMT. USHA DEVI W/O BHAGCHAND SAMDHIA LASHKAR GWALIOR 1 00 000 AUNTY(MA USI) DD SMT. KAMLA DEVI 50 000 AUNTY 50 NO.073964 DATED 21.08.2001 W/O BHAGWANDAS MADHAVGANJ LASHKAR GWALIOR (MAUSI) DD NO.077964 DATED 21.08.2001 SMT. MOHINI DEVI D/O HEMANDAS TARANGANJ LASHKAR GWALIOR 50 000 AUNTY (MAUSI) DD NO. 161704 DATED 25.8.2003 KOMAL SEHGAL D/O SATINDER SAHGAL PANCHSHEEL NAGAR NARBADA ROAD JABALPUR 50 000 FAMILY FRIEND DD NO. 078456 DATED 25.7.02 LAXMICHAND S/O BHAGWANDAS TARAGANJ LASHKAR GWALIOR 50 000 UNCLE DD NO. 078455 DATED 25.07.2002 MOHINI DEVI W/O LAXMICHAND TARAGANJ LASHKAR GWALIOR 50 000 25. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE TH E ASSESSING OFFICER THAT THE ASSESSEE IN HER TAX RETU RNS FILED IN THE NORMAL COURSE THE FACT WITH REGARD TO RECEI PT OF GIFTS WAS DULY DISCLOSED. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS DISCHARGED PRIMARY ONUS CASTED UPON HE R TO PROVE THE IDENTITY GENUINENESS AND CREDIT WORTHINE SS OF THE DONORS. HOWEVER THE ASSESSING OFFICER HAS ASK ED FOR PERSONAL PRODUCTION OF DONORS AND THE ASSESSEE HAS REPLIED THAT THE ADDRESSES OF THE DONORS WERE GIVEN TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER WAS REQ UESTED TO CALL THEM DIRECTLY FOR EXAMINATION U/S 131 AT TH E COST OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT IN RESPEC T OF ALL 51 THESE GIFTS COPIES OF THE GIFT DEEDS AND THE COPY OF ACKNOWLEDGEMENT OF THEIR RETURNS ARE ATTACHED. AS THE ASSESSEE WAS CALLED TO APPEAR AND SUBMIT BEFORE THE ASSESSING OFFICER ON 29.12.2006 THE ASSESSEE APPEA RED ON 29.12.2006 AND FILED (I) COPY OF INCOME TAX RETU RN OF SMT. USHA DEVI AND THE COPY OF THE GIFT DEED (II) T HE COPY OF RETURN OF KAMLA DEVI AND THE COPY OF GIFT DEED ( III) THE COPY OF RETURN OF MOHINI DEVI AND THE COPY OF GIFT DEED (IV) THE COPY OF GIFT DEED OF SMT. KOMAL SEGHAL (V) COPY OF RETURN OF SHRI LAXMI CHAND AND THE COPY OF GIFT DEE D AND (VI) COPY OF RETURN OF MOHINI DEVI AND COPY OF GIFT DEED. THE ASSESSEE FURTHER SUBMITTED THAT THE AO IN HIS O RDER SAYS THAT THE ASSESSEE VIDE ORDER SHEET ENTRY WAS A SKED TO PRODUCE THE DONOR WITH THE BANK STATEMENTS AND INCO ME TAX DETAILS FOR EXAMINATION AND THE CASE WAS FIXED FOR HEARING ON 29.12.2006 AND ON THAT DATE THE ASSESSEE SUBMITTED THAT DUE TO PAUCITY OF TIME IT IS DIFFICU LT TO PRODUCE THE DONORS AND SUBMITTED THAT AS THEIR ADDR ESSES ARE ALREADY GIVEN HENCE THEY MAY BE EXAMINED U/S 13 1 OF THE IT ACT. IT WAS CONTENDED BY THE COUNSEL THAT A LL THE RECEIPTS WERE DULY DISCLOSED IN THE RETURNS FILED B Y THE ASSESSEE IN THE NORMAL COURSE AND THEREFORE IT IS NOT A 52 CASE THAT THE FACTUM OF GIFTS RECEIVED BY THE ASSES SEE CAME TO THE KNOWLEDGE OF THE DEPARTMENT AS A RESULT OF S EARCH ONLY. IT HAS ALSO BEEN STATED THAT THE A.O. HAD GI VEN THE DATE TO THE ASSESSEE TO PROVE DOCUMENTARY EVIDENCE THE GENUINENESS OF THE GIFT AND ALSO DIRECTED THAT THE DONOR MAY BE PRODUCED ON 29.12.2006. THE ASSESSEE SUBMIT TED THAT BEFORE THE DATE OF COMPLIANCE THE A.O. HAD AL READY PASSED THE ORDER ON 28.12.2006 AND WHEN ON 29.12.20 06 THE ASSESSEE WENT TO HIS OFFICE WITH THE DOCUMENTAR Y EVIDENCES THE A.O. TOOK THE SAME ON RECORD AND ON THAT DAY HE WAS TOO MUCH BUSY THEREFORE HE DID NOT DIS CUSS THE ISSUE MUCH. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITIONS AFTER OBSERVING THE GIFT DEEDS WHEREIN FULL PARTICULARS OF DONORS MODE OF R ECEIPT OF GIFT AMOUNT OF GIFT AND THE RELATION OF THE ASSESS EE WITH THE DONOR HAVE BEEN MENTIONED. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO OBSERVED T HE COPIES OF THE TAX RETURNS OF THE DONORS. FURTHER AG GRIEVED THE REVENUE IS IN APPEAL BEFORE US. 26. AFTER GOING THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND CONSIDERING THE RIVAL SUBMISSIONS A ND DOCUMENTS PLACED ON RECORD WE FIND THAT ALL THE DO NORS 53 WERE HAVING RELATIONS WITH THE ASSESSEE EXCEPT KOMA L SAHGAL WHO WAS STATED TO BE MERELY A FAMILY FRIEND. ALL THE GIFTS WERE GIVEN BY THE ACCOUNT PAYEE CHEQUES DONO RS WERE ASSESSED TO TAX AS STATED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). AFTER EXAMINI NG THE VARIOUS DOCUMENTS RELATING TO GIFTS AS PLACED O N RECORD WE CONFIRM THE ORDER OF THE LEARNED COMMISS IONER OF INCOMETAX (APPEALS) EXCEPT IN CASE OF KOMAL SAHG AL WHO WAS JUST A FAMILY FRIEND AND NOT IN RELATION WITH T HE ASSESSEE. AS THE ASSESSEE COULD NOT PROVE THE GENUI NENESS OF GIFT RECEIVED FROM KOMAL SEHGAL ALLEGED TO BE F AMILY FRIEND OF THE ASSESSEE ORDER OF THE LEARNED COMMIS SIONER OF INCOMETAX (APPEALS) IN RESPECT OF KOMAL SEHGAL I S SET ASIDE AND RESTORED BACK TO THE ASSESSING OFFICER FO R DECIDING AFRESH. THE ASSESSEE IS ALSO DIRECTED TO DISCHARGE ITS BURDEN WITH REGARD TO GENUINENESS OF GIFT TRANS ACTION. SO FAR AS THE REVENUE HAS NOT FILED ANY APPEAL AGAI NST THE DELETION OF ADDITION ON ACCOUNT OF GIFT OF RS.32 00 0/- BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) VID E ORDER DATED 23.3.2003 IN THE ASSESSMENT YEAR 2000-0 1 WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR DEL ETING 54 THE SAME. THUS THIS GROUND OF THE REVENUE IS ALLOW ED IN PART IN TERMS INDICATED HEREINABOVE. 27. IN THE RESULT ALL THE APPEALS OF THE REVENUE A RE ALLOWED IN PART IN THE TERMS INDICATED HEREINABO VE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER 2010. SD SD (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :_30 TH DECEM BER 2010. DN/-