THE JT ,CIT SR.2, v. SHRI TUSHAR. J. PATEL,

ITSSA 85/AHD/2000 | misc
Pronouncement Date: 28-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 8520516 RSA 2000
Assessee PAN REAOF7000S
Bench Ahmedabad
Appeal Number ITSSA 85/AHD/2000
Duration Of Justice 11 year(s) 15 day(s)
Appellant THE JT ,CIT SR.2,
Respondent SHRI TUSHAR. J. PATEL,
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 28-07-2011
Date Of Final Hearing 02-05-2011
Next Hearing Date 02-05-2011
Assessment Year misc
Appeal Filed On 13-07-2000
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI G.D. AGARWAL VICE-PRESIDENT (AZ) AND SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER DATE OF HEARING : 02/05/2011 DRAFTED ON:14/07/ 2011 APPEAL(S) BY APPELLANTS VS. RESPONDENTS SL. NO(S). IT(SS)A NO(S) BLOCK PERIOD APPELLANT (S) RESPONDENT(S) 1. 85/AHD/2000 1-4-87 TO 31-3-97 AND 1-4-97 TO 28-8-97 JCT (ASSTT.) SPL.RANGE-2 AHMEDABAD SHRI TUSHAR J.PATEL 2 ND FLOOR RAJBHAI NIKETAN KUTCH KADVA PATIDAR COLONY BHULABHAI 4 RASTA AHMEDABAD PAN : - 2. 43/AHD/2000 -DO- ASSESSEE REVENUE 3. 57/AHD/2000 -DO- REVENUE SHRI JETHABHAI P.PATEL GROUND FLOOR RAJBHAI NIKETAN AHMEDBAD PAN :- ASSESSEE(S) BY : SHRI DHIREN SHAH REVENUE BY : SHRI N.S. DAYAM CIT-D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : A) { I T(SS)A NO. 8 5/AHD/2000 (BY REVENUE ) & IT(SS)A NO.43/AHD/2000 (BY ASSESSEE) } THESE ARE CROSS APPEALS ARISING FROM THE ORDER OF THE CIT(APPEALS)-IV AHMEDABAD DATED 07/04/2000. AS FA R AS THE APPEAL OF THE REVENUE IS CONCERNED EARLIER CERTAIN GROUNDS H AVE BEEN RAISED AS PER THE ORIGINAL GROUNDS OF APPEAL WHICH ARE REPRODUCED BELOW:- IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 2 - THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE FOLLOWING: 1. ADDITION ON ACCOUNT OF BROKERAGE @ 5% ON COST RS.43 85 964 2. ADDITION ON ACCOUNT OF LAND PURCHASED (REDN.) RS.11 30 000 3. ADDN. ON ACCOUNT OF INVESTMENT IN PURCHASE OF REVOLVER RS.1 00 000 4. ADDITION ON ACCOUNT OF UNEXPLAINED H.H. EXPS. RS.2 54 126 SUBSEQUENTLY THE GROUNDS WHICH RELATED TO BROKERAGE HAS BEEN ELABORATED AND THEREUPON THE GROUNDS WERE REVISED AS FOLLOWS:- THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE FOLLOWING: 1. ADDITION ON ACCOUNT OF CASH FOUND DURING SEAR CH 14 500 2. (I) ADDITION ON ACCOUNT OF BROKERAGE @5% OF RS.7 25 00 000/- 36 25 000 (II) ADDITION ON ACCOUNT OF BROKERAGE @5% OF RS.82 92 400/- I.E. RS.4 14 620 /- 4 14 620 (III)ADDITION ON ACCOUNT OF BROKERAGE @5% OF RS.28 05 000/- I.E. RS.1 40 250 1 40 25 0 (IV) ADDITION ON ACCOUNT OF BROKERAGE @5% OF RS.19 40 000/- I.E. RS.97 000 /- 97 000 (V) ADDITION ON ACCOUNT OF BROKERAGE @5% OF RS.9 00 000/- I.E. RS.45 000/- 45 000 (VI) ADDITION ON ACCOUNT OF BROKERAGE @5% OF RS.42 000/- I.E. RS.2 100/- 2 100 (VII)ADDITION ON ACCOUNT OF BROKERAGE @ 5% OF RS.12 39 886/- I.E. RS.61 994/- 61 994 3. ADDITION ON ACCOUNT OF LAND PURCHASED (REDN.) 11 30 000 4. ADDITION ON ACCOUNT OF INVESTMENT IN IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 3 - PURCHASE OF REVOLVER 1 00 000 5. ADDITION ON ACCOUNT OF UNEXPLAINED H.H.EXPS. 2 54 126 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.158BC RW.S.143 DATED 24/08/1999 WERE THA T A SEARCH U/S.132 WAS CONDUCTED ON 28/08/1997. DURING THE COURSE OF SEARCH A CASH OF RS.89 500/- JEWELLERY OF RS.2 48 745/- AND SHARE CERTIFICATES HAVING VALUE OF RS.1 48 390/- WERE FOUND. IN ADDITION T O THE ABOVE ASSETS NUMBER OF BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WER E FOUND AND SEIZED. FROM THE DOCUMENTS SEIZED IT WAS NOTED THAT THE AS SESSEE WAS A REAL ESTATE DEALER AND EARNING BROKERAGE ON L AND DEALINGS. THE ASSESSEE HAS FURNISHED A RETURN FOR THE BLOCK- YEARS AT RS.2 96 794/-. 2.1. APROPOS GROUND NO.1 WHICH IS IN RESPECT OF ADDITION ON ACCOUNT OF CASH FOUND DURING THE COURSE OF SEARCH THE AO HAS OBSERVED TH AT OUT OF THE TOTAL AMOUNT OF RS.89 500/- WHICH WAS FOUND AT THE TIME OF SEARCH THE ASSESSEE HAS OFFERED ONLY RS.75 000/- IN THE BL OCK RETURN WHICH WAS ACTUALLY SEIZED AT THE TIME OF SEARCH. IN RESPECT OF REMAINING AMOUNT OF RS.14 500/- NO EVIDENCE WAS PRODUCED ABOUT THE SOUR CE OF THE SAID CASH. THEREFORE THE BALANCE AMOUNT WAS TAXED AS UNEXPLAI NED INCOME OF THE BLOCK PERIOD. 2.2. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST A PPELLATE AUTHORITY LD. CIT(APPEALS) HAS FOUND THAT CERTAIN CASH WAS WITHD RAWN BY THE FAMILY MEMBERS. LD.CIT(A) HAS CONSIDERED THE FOLLOWING S UBMISSION OF THE ASSESSEE REPRODUCED BELOW:- IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 4 - 2.1. BEFORE ME THE AUTHORIZED REPRESENTATIVE PLAC ED ON RECORD THE PAPER BOOK NO.I & II VIDE HIS LETTER DATED 23/2 /2000 CONTAINING PAGES 1 5O 555. THE AUTHORIZED REPRESEN TATIVE HAS ALSO RELIED UPON THE APPELLANTS REPLY DATED 13/7/1999 S UBMITTED BEFORE THE A.O. AND PARTICULARLY ABOVE PAGE NO.58 OF THE P APER BOOK NO.I. IT HAS ALSO BEEN FURTHER ARGUED THAT THE APP ELLANT HAS ALREADY SUBMITTED THE PARTICULARS OF THE WITHDRAWAL S MADE BY THE APPELLANT AND HIS FAMILY MEMBERS VIDE HIS LETTER DA TED 24/8/1999 WHEREIN AS PER EXHIBIT-I PAGE NO.489 OF THE PAPER BOOK NO.II THE PARTICULARS OF WITHDRAWALS WERE SUBMITTED BEFOR E THE A.O. DURING THE FINANCIAL YEAR 1996-97 THE AGGREGATE WI THDRAWALS IN NAME OF SHRI TUSHAR J.PATEL THE APPELLANTS WIFE V IBHUTIBEN T.PATEL WAS OF RS.72 000/- WHEREAS IN FINANCIAL YEA R 1997-98 THE TOTAL AGGREGATE WITHDRAWAL IN THE CASE OF APPELLANT AND HIS FAMILY MEMBERS IS OF RS.82 500/-. SO THE CLAIM OF THE APP ELLANT THAT THE CASH BALANCE OF RS.14 500/- REPRESENTS THE WITHDRAW AL MADE BY THE FAMILY MEMBERS SAVINGS OF THE FAMILY MEMBERS AND P IN-MONEY GIFTS RECEIVED IN CASH ON THE OCCASION OF FESTIVALS IS JUSTIFIABLE. THEREFORE THE ADDITION ON ACCOUNT OF CASH FOUND OF RS.14 500/- DESERVES TO BE DELETED. 3. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES CONSIDERING THE AMOUNT BEING TRIFLE THE SAME COULD HAVE BEEN THE P IN-MONEY OF THE FAMILY MEMBERS WHICH MIGHT HAVE BEEN KEPT BY THEM HENCE WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE CIT (A). THIS GROUND OF THE REVENUE IS THEREFORE DISMISSED. 4. APROPOS GROUND NO.2 AS PER THE ORIGINAL GROUND AND SUB- GROUNDS FROM 2(I) TO (VII) FACTS DISCUSSED BY THE AO WERE THAT THE ASSESSEE HAS ADMITTED THAT HE WAS DEALING IN LAND TRANSACTION AND EARNING BROKERAGE. THE TRANSACTIONS WHICH WERE CONSIDERED BY THE AO FOR THE IMPUGNED ADDITIONS CAN BE DISCUSSED IN B RIEF AS UNDER:- IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 5 - (A) TRANSACTION OF LAND ALLEGED TO BE BELONGING TO BURMA DISPLACED PERSONS CO-OPERATIVE HOUSING SOCIETY WHIC H WAS TRANSACTED ON A FIGURE OF RS.7.52 CRORES ON WHICH A S PER AO THE ASSESSEE HAS EARNED 5% BROKERAGE. THE BROKERAGE - AMOUNT TAXED AS UNDISCLOSED INCOME AT RS.36 25 000/ -. (B) LAND AT PALDI WHICH WAS TRANSACTED FOR A SUM OF RS.82 92 400/- AND THE AO HAS WORKED OUT THE BROKER AGE @ 5% AND ACCORDINGLY TAXED UNDISCLOSED INCOME AT RS.4 14 620/-. (C) LAND AT BOPAL WHICH WAS TRANSACTED FOR A SUM OF RS.28 05 000/- ON WHICH AO HAS ESTIMATED BROKERAGE AT 5% AND TAXED UNDISCLOSED INCOME AT RS.1 40 250/-. (D) LAND BEHIND DGP OFFICE WHICH WAS FOUND TO BE TR ANSACTED FOR A SUM OF RS.19.40 LACS ON WHICH THE AO COMPUTED THE BROKERAGE @ 5% AND HENCE A SUM OF RS.97 000/- WAS TAXED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. (E) TRANSACTION OF LAND THROUGH M/S.SUBHASH ORGANIZ ERS & DEVELOPERS A FIRM CONSTITUTED ON 07/07/1979 IN WH ICH ASSESSEE HAD 20% SHARE OF PROFIT. A LAND WAS TRAN SACTED WITH A PERSON CALLED MR. NARESH PATHAK FOR A SUM O F RS.9 LACS ON WHICH THE AO HAS HELD THAT THE ASSESSEE HAS EARNED BROKERAGE @ 5% THEREFORE AN UNDISCLOSED INCOME OF RS.45 000/- WAS TAXED. (F) A LOOSE-PAPER WHICH WAS RELATED TO M/S.SUB HASH ORGANISERS & DEVELOPERS SHOWING A TRANSACTION OF RS.42 000/- O N IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 6 - WHICH THE AO HAS ESTIMATED BROKERAGE @ 5% AND TAXED RS.2 100/- AS UNDISCLOSED INCOME. (G) CERTAIN POWER OF ATTORNEY AND BANAKHAT AGREEMEN TS WERE RECOVERED SHOWING A TOTAL TRANSACTION OF RS.12 39 8 86/- ON WHICH THE AO HAS ESTIMATED BROKERAGE @ 5% AT RS.61 994/- WHICH WAS TAXED AS UNDISCLOSED INCOME. 4.1. ACCORDINGLY THE AO HAS TAXED THESE AMOU NTS ON THE BASIS OF THE EVIDENCES FOUND AT THE TIME OF SEARCH HOWEVER ON NUMBER OF OCCASIONS HE HAS GIVEN A CATEGORICAL FINDING THAT THERE WAS NO PRINCIPLE TO PRINCIPLE TRANSACTION AND HENCE THE AS SESSEE HAD NOT ACQUIRED ANY OF THOSE ASSETS. IN RESPECT OF THE LAND NAMED AS SURYA CITY A FINDING WAS THAT IT DID NOT BELONG TO ASSES SEE. RATHER IT WAS FOUND TO BE UNDER THE OWNERSHIP OF BURMA DISPLACED PERSO NS CO-OPERATIVE HOUSING SOCIETY. IN THAT REGARD THE AO HELD THAT IT WOULD BE REASONABLE TO ESTIMATE THE BROKERAGE. LIKEWISE IN RESPECT OF THE LAND WHICH WAS SITUATED AT PALDI THE AO HAS GIVEN A VERDICT THAT IT WOULD BE PRUDENT TO PRESUME THAT THE ASSESSEE HAD CHARGED BROKERAGE ON THE SAID TRANSACTION. FURTHER IN RESPECT OF OTHER TRANSACTIONS THE OBSER VATION OF THE AO WAS THAT THE ASSESSEE HAD DEALT WITH THOSE LANDS ONLY I N THE CAPACITY OF A BROKER AND THE TRANSACTION WAS NOT ON PRINCIPLE TO PRINCIPLE BASIS AND MERELY THE BANAKHAT AND RELATED AGREEMENTS WERE FOU ND FROM THE POSSESSION OF THE ASSESSEE. THE OUT-COME OF THOSE FINDINGS WAS THAT THE BROKERAGE INCOME WAS TAXED. BEING AGGRIEVED THOSE FINDINGS OF THE AO WERE CHALLENGED BEFORE THE FIRST APPELLATE AUTHORIT Y. IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 7 - 5. WHEN THE MATTER WAS REACHED BEFORE THE FIRST APP ELLATE AUTHORITY EACH ADDITION WAS DECIDED IN THE FOLLOWING MANNER:- (A) IN RESPECT OF THE ADDITION OF RS.36 25 000/- PERTAINING TO THE LAND BELONGING TO BURMA DISPLACED PERSONS CO-OPERA TIVE HOUSING SOCIETY THE OBSERVATION OF LD.CIT(A) WAS T HAT THE AO HAD NOT BROUGHT ON RECORD ANY COGENT MATERIAL TO DEMONSTRATE THAT IN RESPECT OF THE SAID TRANSACTION THE ASSESSEE HAS ACTED AS A BROKER HENCE THE ADDITION WAS MERELY ON PRESUMPTION. THE LD.CIT(A) HAS HELD THAT THE SAID AMOUNT WAS ASSESSED HYPOTHETICALLY. THE ADDIT ION WAS DELETED. (B) IN RESPECT OF PALDI LAND THE ADDITION WAS AT R S.4 14 620/- HOWEVER LD.CIT(A) HAS HELD THAT IT COULD NOT BE CONCLUSIVELY PROVED THAT THE ASSESSEE HAD ACTED AS A DALAL IN RESPECT OF THE SAID LAND DEALING. HE HAS HELD T HAT THE ADDITION WAS MERELY ON PRESUMPTION. IN THE RESULT IT WAS DELETED. (C) IN RESPECT OF LAND AT BOPAL ON WHICH BROKERAGE INCOME AT RS.1 40 250/- WAS TAXED BY THE AO BUT LD.CIT(A) HA S HELD THAT THE LAND AT BOPAL WAS NOT REGISTERED IN THE NA ME OF THE ASSESSEE AND THUS ASSESSEE HAS NOT BEEN A PARTY IN THE LAND DEALING. AS PER LD.CIT(A) THE AO HAD PROCEEDED ME RELY ON PRESUMPTION AND SO THE ADDITION WAS DELETED. (D) IN RESPECT OF THE LAND BEHIND DGP OFFICE IN ID ENTICAL MANNER IT WAS HELD THAT THERE WAS NO MATERIAL TO ES TABLISH IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 8 - THAT ANY LAND TRANSACTION HAD TAKEN PLACE. THE AD DITION WAS DELETED. (E) IN RESPECT OF THE PARTNERSHIP OF M/S.SUBHASH O RGANIZERS AND DEVELOPERS FOR WHICH AN ADDITION OF RS.45 000/- WAS MADE THE LD.CIT(A) HAS AGAIN REPEATED THAT THE ASSESSEE HAS NOT ACTED AS A BROKER AND THEREFORE THE AOS ACTION W AS REVERSED. (F) IN RESPECT OF THE CERTAIN LOOSE-PAPERS WERE REC OVERED FOR A TRANSACTION OF RS.42 000/- ON WHICH BROKERAGE ADDIT ION OF RS.2 100/- WAS MADE THE ACTION OF THE AO WAS REVER SED AND HELD THAT THE SAID ADDITION WAS A NOTIONAL ADDITION . (G) IN RESPECT OF DOCUMENTS SEIZED FROM THE BUSINES S PREMISES THE TOTAL AMOUNT OF BROKERAGE WAS ASSESSED AT RS.61 994/- AND THAT TOO WAS DELETED. 5.1. NOW THE REVENUE HAS VEHEMENTLY CHALLENGED THE MANNER IN WHICH LD.CIT(A) HAS DELETED ALL THE ADDITIONS. 6. FROM THE SIDE OF THE REVENUE LD.DR MR.N.S.DAYAM APPEARED AND CONTESTED THAT THE ADDITION MADE BY THE AO WERE BAS ED UPON THE MATERIAL GATHERED DURING THE COURSE OF SEARCH OPERATION. HE HAS PLEADED THAT IT WAS WRONG ON THE PART OF THE LD.CIT(A) TO HOLD THAT IN THE ABSENCE OF PRINCIPLE TO PRINCIPLE TRANSACTION THERE WAS NO ELE MENT OF EARNING OF BROKERAGE BY THE ASSESSEE. HE HAS PLEADED THAT LD.C IT(A) HAD ALTOGETHER IGNORED THE SEIZED MATERIAL THROUGH WHICH IT WAS EV IDENT THAT THE ASSESSEE IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 9 - HAD COMMERCIAL INTEREST IN ALL THOSE TRANSACTIONS. LD.DR HAS THUS CONCLUDED THAT THE APPELLATE ORDER SHOULD BE REVERS ED. 7. FROM THE SIDE OF THE RESPONDENT-ASSESSEE LD.AR MR.DHIREN SHAH APPEARED AND SUPPORTED THE ACTION OF THE LD.CIT(A) HOWEVER IN THE ALTERNATE HE HAS PLEADED THAT AT BEST THE BROKERAGE INCOME OF THE ASSESSEE BE TAXED BY APPLYING THE PERCENTAGE AT 2% AND IN RE SPECT OF THESE ADDITIONS HE HAS SUMMARIZED THE CALCULATION AS FOLL OWS:- CIT(A) GROUND NO. AMOUNT @ 5% BROKERAGE @ 2% BOKERAGE 1(II) 72 500 000 3 625 000 1 450 000 1(III) 8 292 400 414 620 165 848 1(IV) 2 805 000 140 250 56 100 1(V) 1 940 000 97 000 38 800 1(VI) 900 000 45 000 18 000 1(VIII) 42 000 2 100 840 1(IX) 1 239 886 61 994 24 798 TOTAL 87 719 286 4 385 964 1 754 386 8) EVEN AT THE OUT SET WE ARE AMAZED TO NOTIC E THAT THE CIT(A) HAS HELD THAT THE ADDITIONS WERE MADE MERELY ON SURMIS ES THOUGH THIS CASE WAS COVERED BY THE SEARCH OPERATION U/S 132 OF THE ACT AND THEREUPON CERTAIN INCRIMINATING EVIDENCES WERE RECOVERED. UND ISPUTEDLY THOSE EVIDENCES WERE EITHER FOUND IN THE POSSESSION OF TH E ASSESSEE OR AT THE BUSINESS PREMISES. ONCE CERTAIN DOCUMENTS WERE REC OVERED FROM THE ASSESSEE OR HIS ASSOCIATES THEN THE ONUS IS ON THE ASSESSEE AS PER SEC. 132(4A) TO REBUT THE CONTENTS. A FUNDAMENTAL QUERY COULD HAVE BEEN RAISE THAT WHY THOSE INCRIMINATING MATERIAL WAS AV AILABLE WITH THE ASSESSEE IF THE ASSESSEE HAD NO COMMERCIAL INTEREST ? IN OUR HUMBLE IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 10 - OPINION LD. CIT(A) HAS ALTOGETHER FAILED TO PONDER UPON THIS ASPECT. IN MOST OF THE INSTANCES EVEN IT WAS NOT EXPLORED TH AT WHY THIS ASSESSEES NAME WAS APPEARING IF HE HAD NO BUSINESS INTEREST ? PREPONDERANCE OF PROBABILITIES IN THOSE CIRCUMSTANCES DID SUGGEST TH AT DEFINITELY THE ASSESSEE HAD BUSINESS INTEREST IN ALL SUCH DEALS WH ICH WERE FINALIZED THROUGH HIS INVOLVEMENT. RATHER THE ASSESSEE HAS NOT DENIED HIS COMMERCIAL INTEREST IN THOSE TRANSACTIONS. ADMITTED LY HIS LIVING IS ON BROKERAGE INCOME. THEN HOW THE CIT(A) HAS HELD THAT THE BROKERAGE WAS ASSESSED ON SURMISES. MAXIMUM HE COULD HAVE HELD TH AT THE BROKERAGE AMOUNT WAS EXCESSIVE OR THE PERCENTAGE OF BROKERAGE WAS IMPROPER BUT ASTONISHINGLY HE HAS OVERLOOKED THOSE CONTENTS OF T HE SEIZED DOCUMENTS. LD. D.R. HAS VEHEMENTLY SAID THAT IN A WAY BY THE S AID ORDER OF LD. CIT(A) THE SEARCH OPERATION GOT TOPPLED BUT BEFORE GIVING OUR FINAL VERDICT WE HEREIN BELOW SHALL DISCUSS THE MERITS OF SUCH ADDITIONS. 8.1) WE HAVE HEARD BOTH THE SIDES AND THOROUGHLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE COMPIL ATION FILED. CONSEQUENT UPON THE SEARCH STATED TO BE CARRIED OUT ON 28/08/ 1997 CERTAIN DOCUMENTS WERE FOUND IN THE POSSESSION OF THE ASSES SEE. THERE WAS A REGISTER WHICH WAS MARKED AS ANNEXURE A-1 WHICH HAD CONTAINED THE DETAILS OF LAND DEALINGS ALLEGED TO BE TRANSAC TED THROUGH THIS ASSESSEE. IN ADDITION TO THE ABOVE REGISTER CERTAIN LOOSE-PAPERS HAVE ALSO BEEN SEIZED AND THOSE LOOSE-PAPERS HAVE CORROBORATED THE CONTENTS OF THE SAID REGISTER. LOOSE-PAPERS WERE MARKED AS ANNEXURE A-2 . THE ASSESSEE WAS CONFRONTED WITH THOSE EVIDENCES AND THE MATERIA L GATHERED DURING THE COURSE OF SEARCH. HIS STATEMENT WAS RECORDED U/S.1 32(4) OF THE ACT IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 11 - THOUGH LATER ON RETRACTED. THEREAFTER HIS STATEME NT WAS ALSO RECORDED U/S.131 OF THE IT ACT. CERTAIN INDEPENDENT INQUIR IES HAVE ALSO BEEN CONDUCTED BY THE AO. ON THAT BASIS THE AO HAD HELD THAT THE PROPERTIES IN QUESTION DID NOT BELONG TO THE ASSES SEE. RATHER A CLEAR FINDING WAS GIVEN THAT THE PROPERTIES IN QUESTION W ERE NOT UNDER THE OWNERSHIP OF THE ASSESSEE. WE HAVE PERUSED SOME OF THE FINDINGS ON FACTS IN RESPECT OF FEW OF THE PROPERTIES IN QUES TION. I) IN RESPECT OF ONE OF SUCH LAND IT WAS FOUND BY THE AO THAT THE SAME BELONGED TO BURMA DISPLACED PERSONS HOUSING CO -OP.SOCIETY. IN RESPECT OF THE SAID SOCIETYS LAND IT WAS NOTED BY THE AO THAT NO AMOUNT OF CONSIDERATION WAS RECEIVED BY THE ASSESSEE BUT THERE WERE ENTRIES RECORDED IN THE REGISTER AND DOCUMENTS FOUND IN POS SESSION OF THE ASSESSEE AND THEY HAVE ALSO BEEN FOUND WRITTEN BY H IM THEREFORE IT WAS WRONG ON THE PART OF THE ASSESSEE TO CONTEST THAT I T HAD NOTHING TO DO WITH THOSE ENTRIES. THE ADMITTED FACTUAL POSITION WAS THAT THE ASSESSE E HAS ACTED AS A LAND BROKER. BECAUSE OF THE PRESENCE OF CERTAIN CORROBORATIVE EVIDENCES THE AO HAS FINALLY HELD TH AT IN THOSE LAND DEALINGS THE ASSESSEE HAS WORKED IN CAPACITY OF A BROKER. WE HAVE ALREADY DISCUSSED THE VIEW TAKEN BY THE AO AND LD.C IT(A) IN RESPECT OF EACH SUCH LAND DEALINGS. ON ONE HAND THE AO HAS A DOPTED THE PERCENTAGE OF BROKERAGE AT 5% HOWEVER ON THE OTHE R HAND LD.CIT(A) HAS REVERSED THAT FINDING OF THE AO AND DELETED THE ENTIRE ADDITION BY A SINGLE STROKE OF PEN HOLDING THAT THE IMPUGNED ADDI TIONS WERE MERELY ON SURMISES AND CONJECTURES . ON DUE CONSIDERATION OF THE EVIDENCES PLACED ON RECORD WE ARE NOT WITH THE VERDICT OF THE LD.CI T(A) THAT NO BROKERAGE AT ALL WAS EARNED BY THE ASSESSEE IN RESPECT OF THO SE LAND DEALINGS WHICH IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 12 - WERE FOUND DURING THE COURSE OF SEARCH. IT WAS AB SOLUTELY WRONG ON THE PART OF THE LD.CIT(A) TO REVERSE THE FINDINGS OF TH E AO MERELY ON THE GROUND THAT HE HAD ADOPTED AN ESTIMATE BASIS OF PER CENTAGE OF BROKERAGE I.E. AT 5% SO SHOULD NOT BE SUSTAINED. ACCORDING TO US IT WAS A FARTHEST VIEW NO WHERE NEAR TO THE FACTS DETECTED CONSEQUENC E UPON THE SEARCH; SPECIALLY UNDER THE CIRCUMSTANCES WHEN CERTAIN DOCU MENTS WERE RECOVERED FROM THE POSSESSION OF THE ASSESSEE. THO SE DOCUMENTS ITSELF HAVE ESTABLISHED THAT THE ASSESSEE WAS INVOLVED IN LAND DEALINGS. AND THOSE DOCUMENTS HAVE FURTHER ESTABLISHED THAT THE A SSESSEE WAS INVOLVED IN THOSE LAND DEALINGS AS A BROKER. UPTO THIS EXTENT THE FINDINGS OF THE AO THAT THE ASSESSEE HAS ACTED AS A BROKER IN THOSE IMPUGNED LAND DEALINGS ARE HEREBY CONFIRMED BY US. NOW THE ISSUE IS THAT HOW MUCH PERCENTAGE OF BROKERAGE HAD BEEN EARNED BY THE ASSE SSEE. PARTIES APPEARING BEFORE US HAVE STATED THAT GENERALLY A CO MMON PRACTICE IS THAT A BROKER IS ENTITLED FOR 2% OF BROKERAGE IN LAND DE ALING TRANSACTIONS. EVEN LD. AR HAS PLACED A CHART THROUGH WHICH THE PERCENTAGE OF BROKERAGE OF THE PROPERTIES IN QUESTION WAS SUMMARIZED AND COMPUTED THE BROKERAGE AMOUNT BY ADOPTING 2% RATE OF BROKER AGE. ALONG WITH THIS BACKGROUND IT WAS VEHEMENTLY CONTESTED THAT THE 5% BROKERAGE AS ADOPTED BY THE AO WAS NOT AT ALL PREVAILING IN THE MARKET AND THAT HIGH PERCENTAGE OF BROKERAGE WAS UNHEARD OF. CONSIDERI NG THE EVIDENCES ON RECORD AND PECULIARITY OF THE FACTS OF THIS CASE AN D THE ASSETS FOUND IN POSSESSION OF THE ASSESSEE WE HEREBY HOLD THAT THE UNDISCLOSED INCOME FROM BROKERAGE ON THE LAND DEALINGS FOUND BY THE SE ARCH PARTY; A BROKERAGE @ 2% IS NOT ONLY REASONABLE BUT DULY SUBSTANTIATED BY THE IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 13 - EVIDENCE ON RECORD. WE HOLD ACCORDINGLY THEREF ORE ALL SUCH GROUNDS REVOLVING AROUND THIS ISSUE OF THE REVENUE ARE PART LY ALLOWED. 9. APROPOS GROUND NO.3 AS PER THE REVISED GROUNDS FACTS OF THE CASE HAVE REVEALED THAT THERE WAS A GIDC LAND AT RA TANPUR. AS PER AO THE TRANSACTION WAS ENTERED INTO BETWEEN THE LAND L ORD SHRI GANPAT S. PATEL AND THE PURCHASER SHRI VALL MOHMED K. SHAIKH . THE ASSESSEE HAS CONTESTED THAT HE HAD ACTED ONLY AS A BROKER AND TH E LAND WAS IN FACT PURCHASED BY SHRI VALL MOHMED K. SHAIKH. THE ASS ESSEE HAS FURTHER STATED THAT THE PURCHASER BEING MUSLIM HENCE IT WAS DIFFICULT FOR HIM TO TAKE THE POSSESSION OF THE LAND. HOWEVER THE LD .AO WAS NOT CONVINCED. THE AO HAS GIVEN A FINDING THAT THE LAND WAS PURCHA SED BY THE ASSESSEE FROM SHRI GANPAT S.PATEL AND THE SAME WAS REGISTERE D FOR A SUM OF RS.6.30 LAKHS HOWEVER AS PER DOCUMENT RECOVERED A ND MARKED AS ANNEXURE A-2 THERE WAS A RECEIPT OF CASH TRANSAC TION OF RS.10 LACS. ON THE BASIS OF THE SAID CASH RECEIPT ALLEGED TO BE THE AMOUNT RECEIVED BY SHRI GANPAT PATEL ON SALE OF LAND THE AO HAS ASSES SED UNDISCLOSED INCOME AT RS.16 30 000/-. THE MATTER WAS CARRIED B EFORE THE FIRST APPELLATE AUTHORITY. 10. WHEN THE SAID ADDITION WAS CONTESTED BEFORE THE LD.CIT(A) CONVEYANCE DEED WAS PLACED ON RECORD AND ON THAT BA SIS HE HAS HELD THAT PART OF THE LAND WAS TRANSACTED AND THE APPELLANTS SHARE IN THE LAND WAS ONLY ONE HALF. THEREFORE OUT OF THE TOTAL CASH TRAN SACTION OF RS.10 LACS LD.CIT(A) HAS HELD THAT UNACCOUNTED AND UNEXPLAINED INVESTMENT WAS TO THE EXTENT OF RS.5 LACS ONLY AS PER THE PARAGRAPH R EPRODUCED BELOW: IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 14 - 8.2. I HAVE CONSIDERED THE OBSERVATION MADE BY T HE A.O. IN THE ASSESSMENT ORDER AND THE APPELLANTS REPLY DATED 13 /7/1999 AND THE PAPERS AND DOCUMENTS PLACED BY THE APPELLANT IN THE PAPER BOOK AS WELL AS THE ORAL ARGUMENTS OF THE AUTHORIZE D REPRESENTATIVE. THE EVIDENCE IN THE NATURE OF SEIZ ED STAMPED RECEIPT FOR RS.10 LAKHS AND THE CONVEYANCE DEED CAN NOT BE DISPUTED. FROM THE VERIFICATION OF THE TWO CONVEYA NCE DEED IT IS NOTICED THAT THE LANDLORD SHRI GANPATBHAI SHANKERBH AI PATEL SOLD ONLY PART OF THE LAND BELONGING TO HIM OF THE LAND AREA OF 7000 SQ. MTRS FOR AN AGGREGATE CONSIDERATION OF RS.6 30 000/ - WHICH HAS BEE STATED TO BE PAID IN CASH AS MENTIONED IN CONVE YANCE DEED. THE DATE OF STAMPED RECEIPT OF RS.10 LAKHS CASH PAY MENT TO SHRI GANPATHBHAI SHAKERBHAI PATEL AND THE CONVEYANCE DEE D IS ALSO OF THE SAME DATE I.E. 19/1/1996. LOOKING TO THE FACTS OF THE CASE I AM OF THE VIEW THAT THE ACTUAL CONSIDERATION OF THE LA ND SOLD BY SHRI GANPATHBHAI SHANKERBHAI PATEL TO THE APPELLANT AND TO ANOTHER CO-OWNER SHRI VALLMOHMED KALUBHAI SHAIKH IS FOR A T OTAL CONSIDERATION OF RS.10 LAKHS FOR WHICH THE STAMPED RECEIPT HAS BEEN FOUND IN THE SEIZED RECORDED WHEREAS THE CONVE YANCE DEED HAS BEEN EXECUTED FOR A CONSIDERATION OF RS.6 30 00 0/- BEING PAID IN CASH WHICH MUST BE AGAINST THE STAMPED RECEIPT O F CASH RECEIPT OF RS.10.00 LAKHS. THEREFORE THE UNEXPLAINED INVE STMENT IN THE LAND DEAL TRANSACTION IS OF RS.10.00 LAKHS AND AS P ER THE CONVEYANCE DEED THE APPELLANT AND SHRI VALLMOHMED KALUBHAI SHAIKH ARE THE CO-PURCHASERS HAVING EQUAL SHARE TH E APPELLANTS SHARE IN THE SAID LAND DEAL TRANSACTION WORKS OUT A T SHARE AND ACCORDINGLY THE APPELLANTS UNEXPLAINED INVESTMENT IN THE SAID LAND TRANSACTION WORKS OUT AT RS.5 00 000/-. THE A .O. IS THEREFORE DIRECTED TO MAKE AN ADDITION OF RS.5 00 000/- AS UNEXPLAINED INVESTMENT OF THE APPELLANT IN THE PURC HASE OF LAND AT RATANPUR AND THE APPELLANT GETS RELIEF OF RS.11 30 000/-. 11. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO P ERUSED THE DOCUMENTS IN QUESTION. ON CAREFUL EXAMINATION OF THE FACTS WE ARE NOT INCLINED TO INTERFERE WITH THE FACTUAL FINDINGS OF LD.CIT(A). THE DOCUMENTS HAVE IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 15 - ESTABLISHED THAT THE TOTAL LAND AREA WAS NOT TRANSA CTED WITH THE ASSESSEE AND ONLY PART OF THE LAND WAS SOLD. ONCE THE ADM ITTED FACTUAL POSITION WAS THAT THERE WAS INVOLVEMENT OF TWO PARTIES THERE FORE LD.CIT(A) WAS CORRECT IN HOLDING THAT ONLY ONE HALF OF THE CASH T RANSACTION WAS AN UNDISCLOSED INVESTMENT OF THE ASSESSEE. WE HEREBY CONFIRM THE PART RELIEF GRANTED BY THE LD.CIT(A). THIS GROUND OF THE REVENUE IS THEREFORE DISMISSED. 12. APROPOS GROUND NO.4 OF THE REVISED GROUND AN UNEXPLAINED INVESTMENT FOR PURCHASE OF REVOLVER WAS TAXED BY TH E AO. WHEN THE MATTER WAS CARRIED BEFORE LD.CIT(A) IT WAS DELETED VIDE FOLLOWING PARAGRAPH: 11.2 I HAVE CONSIDERED THE OBSERVATION OF THE A.O . AND THE APPELLANTS REPLY DATED 23/7/99 AND ALSO THE SUPPOR TING EVIDENCE FOR PAYMENT OF REVOLVER PLACED DURING THE COURSE OF APPEAL HEARING. IT IS AN UNDISPUTED FACT THAT THE APPELLA NT AND HIS FATHER WERE LIVING TOGETHER IN THE YEAR 1988-89 AND THERE WAS AGRICULTURAL INCOME IN THE CASE OF SHRI JETABHAI PA TEL AND THE GIFT TO THE EXTENT OF RS.30 000/- WAS TAX FREE IN THE YE AR 1988-89. HENCE CONSIDERING THE FACTS OF THE CASE AND THE SU PPORTING EVIDENCES AND SUBMISSION PLACED BY THE AUTHORIZED R EPRESENTATIVE AND THE FACT THERE IS NO MATERIAL REGARDING DATE C OST OF SOURCE OF PURCHASE AVAILABLE ON RECORD THE ADDITION OF RS.1 0 0 000/- ON ACCOUNT OF INVESTMENT IN PURCHASE OF REVOLVER IS DI RECTED TO BE DELETED. 13. ON HEARING BOTH THE SIDES WE ARE OF THE VIEW T HAT THE A.O. HAS EXERCISED HIS DISCRETION IN ESTIMATING THE UNACCOUN TED INVESTMENT. BUT THE FACT IS THAT NO EVIDENCE ABOUT THE VALUE OF THE REVOLVER WAS FOUND IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 16 - THROUGH WHICH IT COULD BE ESTABLISHED THAT THE REVO LVER WAS PURCHASED OF SOME SPECIFIC AMOUNT OF CONSIDERATION. AS AGAINST THAT THE EXISTENCE OF AGRICULTURAL INCOME STATED TO BE EARNED BY THE FATH ER WAS NOT DENIED. WE THEREFORE UPHOLD THE FINDINGS ON FACTS OF LD.CIT(A) . THIS GROUND OF THE REVENUE IS DISMISSED. 14. THE LAS T GROUND NO.5 (AS PER REVISED GROUND) IS IN RESPECT OF UNEXPLAINED HOUSEHOLD EXPENSES. THE LD.CIT(A) HAS CONSIDERED FIRSTLY THAT THE ASSESSEE HAPPENED TO BE STAYING IN A JOIN T FAMILY. THERE WERE WITHDRAWALS BY FAMILY MEMBERS FROM OTHER CONCERNS A S WELL. SECONDLY IT HAS ALSO BEEN APPRECIATED BY THE LD.CIT(A) THAT THERE WAS SUBSTANTIAL AGRICULTURAL ACTIVITY OF ASSESSEES FATHER WHO HAD DECLARED THAT A SUM OF RS.1 LAC PER ANNUM WAS EARNED AS AGRICULTURE INCOME . IT WAS ALSO AN UNDISPUTED FACT THAT NO INCRIMINATING MATERIAL WAS RECOVERED TO ESTABLISH THE EXACT QUANTUM OF HOUSEHOLD EXPENSES INCURRED BY THE FAMILY. WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS ON FACTS RECORDED BY THE LD.CIT(A) HENCE THIS GROUND OF THE REVENUE IS DISMISSED. 15. IN THE RESULT REVENUES APPEAL I..E IT(SS)A N O.85/AHD/2000 IS PARTLY ALLOWED. B ASSESSEES APPEAL IT(SS)A NO.43/AHD/2000 16. ONLY ONE GROUND WAS RAISED IN RESPECT OF THE CONFIRMATION OF AN ADDITION OF RS.5 LACS IN RESPECT OF THE LAND PURCHA SED FROM SHRI GANPATBHAI PATEL. AS FAR AS THIS SOLITARY GROUND O F THE ASSESSEE IS IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 17 - CONCERNED WE HAVE ALREADY APPRECIATED THE CONNECTE D FACTS AND THEREAFTER ARRIVED AT THE CONCLUSION THAT THERE WAS AN ELEMENT OF UNEXPLAINED INVESTMENT IN RESPECT OF THE LAND IN QU ESTION HOWEVER THE ASSESSEES SHARE WAS ONLY ONE HALF IN THE TOTAL CAS H AMOUNT OF RS.10 LACS. IT IS ALSO NOT IN DISPUTE THAT THE IMPUGNED CASH RE CEIPT WAS FOUND FROM THE POSSESSION OF THE ASSESSEE. IN VIEW OF THE EVI DENCE ON RECORD WE HAVE CONFIRMED THAT ONE HALF OF THE CASH TRANSACTIO N I.E. RS.5 LACS WAS THE UNDISCLOSED INVESTMENT OF THE ASSESSEE. ONCE A VIEW HAS ALREADY BEEN TAKEN THEREFORE THIS GROUND OF THE ASSESSEE IS HEREBY DISMISSED SUBJECT TO OUR DIRECTION THAT IN THE FOREGOING PARA GRAPHS WE HAVE HELD THAT THE ASSESSEE HAD EARNED UNDISCLOSED BROKERAGE INCOME THEREFORE A SET-OFF HAS TO BE GIVEN OF THIS UNDISCLOSED INVESTM ENT AGAINST THE SAID BROKERAGE INCOME. C ) REVENUES APPEAL IT(SS)A NO.57/AHD/2000( JET HABHAI P. PATEL ) 17. THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-IV BARODA D ATED 30/03/2000. 17.1 GROUNDS READ AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS.3 76 163/- MADE ON ACCO UNT OF CASH FOUND DURING SEARCH. 2. DELETING THE ADDITION OF RS.75 000/- MADE ON ACCOUNT OF ADVANCES AND INTEREST. IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 18 - 3. DELETING THE ADDITION OF RS.1 96 142/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY . 4. DELETING THE ADDITION OF RS.2 00 120/- MADE ON A CCOUNT OF UNEXPLAINED INVESTMENT IN FACTORY. 5. DELETING THE ADDITION OF RS.4 11 416/- MADE ON ACCOUNT OF PEAK OF THE BANK BALANCE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 7. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. 17.2. FACTS IS BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.158BC R.W.S.143(3) OF T HE IT ACT DATED AUGUST 24 1999 WERE THAT A SEARCH WAS CONDUCTED ON 28/8/1997. I N COMPLIANCE OF STATUTORY NOTICE U/S.158BC OF THE ACT THE ASSESSEE HAS DECLARED AN INCOME OF RS.3 85 000/-. A CASH OF RS .3 76 163/- WAS FOUND. FURTHER JEWELLERY OF RS.3 58 914/- WAS A LSO FOUND. WHEN A RETURN WAS FILED AN INVESTMENT IN THE IMMOVABLE PR OPERTY SITUATED AT TALUKA MOJE VILLAGE ISANPUR AHMEDABAD OF RS.2 85 00 0/- WAS DISCLOSED. FURTHER A SUM OF RS.1 LAC WAS ALSO DISCLOSED. IN RESPECT OF THE IMPUGNED ADDITION THE EXPLANATION OF THE ASSESSEE WAS THAT OUT OF THE AGRICULTURAL INCOME AND SOME OF THE CASH BELONGING TO THE FAMILY MEMBERS WAS FOUND AT THE TIME OF SEARCH. THE AO WA S NOT CONVINCED AND TAXED THE ENTIRE CASH FOUND AS UNDISCLOSED INCO ME OF THE ASSESSEE. IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 19 - 18. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY LD.CIT(A) HAS GRANTED RELIEF AS PER THE FOLLOWING P ARAGRAPH:- 2.2. I HAVE CONSIDERED THE OBSERVATIONS MADE BY TH E ASSESSING OFFICER AND THE PAPERS AND DOCUMENTS PLACED BY THE APPELLANT IN PAPER BOOK AS WELL AS THE ORAL ARGUMENTS OF THE AUT HORIZED REPRESENTATIVE IN APPEAL HEARING. IT IS AN UNDISPU TED FACT THAT THE APPELLANT IS HAVING AGRICULTURAL AND OF ABOUT 12 AC RES 34 GUNTHAS AND IT IS ALSO AN UNDISPUTED FACT THAT THE APPELLA NT IS TAKING THREE CROPS A YEAR ON THE SAID AGRICULTURAL LAND. THEREFORE LOOKING TO THE HOLDING OF AGRICULTURAL LAND AND THE THREE TIMES AGRICULTURAL CROPS TAKEN FROM THE AGRICULTURAL LAND IN A YEAR THE APPELLANTS CONTENTION OF EARNING OF AGRICULTURAL I NCOME OF RS.1 LAKH PER ANNUM APPEARS REASONABLE. FROM THE VERIFICATION OF THE DETAILS OF THE PEAK WORKING OF THE FOUR BANK ACCOUN TS THE PEAK BALANCE FALLS ON 25/2/1991 AND THEREAFTER THERE IS A CONSTANT REDUCTION IN THE PEAK BALANCE AND AT THE TIME OF SE ARCH THERE IS ONLY A NEGLIGIBLE BANK BALANCE AND AT THE TIME THER E IS NO DEPOSIT OF SUBSTANTIAL CASH IN 4 BANK ACCOUNTS BY THE APPEL LANT AFTER 25/2/1991 OUT OF HIS EARNING FROM THE AGRICULTURAL INCOME SAVINGS. THEREFORE LOOKING TO THE TOTALITY OF FACTS THE ADD ITION OF RS.3 76 163/- IN RESPECT OF CASH FOUND AT THE TIME OF SEARCH IS HEREBY DELETED. 19. WE HAVE HEARD BOTH THE SIDES. THE PRELIMINARY ARGUMENT OF THE ASSESSEE WAS THAT THERE WERE BANK ACCOUNTS AND THE PEAK BALANCE IN THE YEAR 1991 WAS AT RS.4 11 416/- WHICH HAD GONE DOWN IN THE SUBSEQUENT YEARS. WHEN AT THE TIME OF SEARCH IN THE YEAR 1997 THE SAID CASH WAS FOUND THE SAME WAS CLAIMED TO BE OUT OF THE SAID B ANK WITHDRAWALS. WE ARE NOT INCLINED TO INTERFERE WITH THOSE FINDINGS O F THE LD.CIT(A) WHICH WERE BASED UPON THE EVIDENCES. THIS GROUND OF TH E REVENUE IS THEREFORE DISMISSED. IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 20 - 20. APROPOS GROUND NO.2 ON THE BASIS OF THE STATEMENT RECORDED THE AO HAD TREATED THE AMOUNT OF ADVANCE OF RS.1 10 000 /- AND INTEREST THEREON RS.65 000/- AGGREGATING TO RS.1 75 000/- A S UNDISCLOSED INCOME FOR THE BLOCK PERIOD. THE AO HAD ALSO ALLOWED TE LESCOPING EFFECT. A SUM OF RS.1 LAC WAS OFFERED IN THE BLOCK RETURN F OR WHICH A SET OFF WAS GRANTED AND BALANCE OF RS.75 000/- WAS TAXED AS UND ISCLOSED INCOME. 21. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY RELIEF WAS GRANTED AS PER THE FOLLOWING PARAGRAPH:- 3.2. I HAVE CONSIDERED THE OBSERVATION MADE BY THE ASSESSING OFFICER AND THE PAPERS AND DOCUMENTS COMPILED BY TH E APPELLANT IN THE PAPER BOOK AS WELL AS THE ORAL ARGUMENTS OF THE AUTHORIZED REPRESENTATIVE IN APPEAL HEARING. AS I HAVE HELD I N PARA 2.2. OF THIS ORDER LOOKING TO THE HOLDING OF AGRICULTURAL LAND AND THE FACT THAT THE THREE TIMES AGRICULTURAL CROP IS BEING TAK EN FROM THE SAID LAND IN A YEAR THE APPELLANTS CONTENTION OF EARNI NG OF AGRICULTURAL INCOME OF RS.1 LAKH PER ANNUM APPEARS REASONABLE. ALSO FROM THE VERIFICATION OF THE PEAK WORKING OF T HE 4 BANK ACCOUNTS IT IS SEEN THAT FROM 25/2/1991 THERE WAS A CONSTANT REDUCTION IN PEAK BALANCE WHICH HAS GIVEN THE GENER ATION OF CASH BALANCE (IN ABSENCE OF ANY CONTRARY FINDINGS TO THA T EFFECT) IN THE HANDS OF THE APPELLANT. THE APPELLANTS CONTENTION THAT THE ADVANCE OF RS.1 10 000/- TO THE RELATIVES WAS GIVEN OUT OF AGRICULTURAL INCOME FUNDS AVAILABLE WITH THE APPELL ANT CANNOT BE REJECTED SUMMARILY UNLESS IT IS CONCLUSIVELY ESTABL ISH THAT THE APPELLANT HAD USED THE SURPLUS FOR OTHER UNEXPLAINE D INVESTMENTS OR WAS NOT LEFT WITH ANY SURPLUS AFTER MAKING HIS H OUSEHOLD EXPENSES. IN APPELLANTS SON KAMLESH H.PATEL IT I S SEEN THAT THE APPELLANT WAS STAYING IN A JOINT FAMILY AND THE OTH ER MEMBERS WERE ALSO WITHDRAWING FROM FAMILY CONCERNS FOR HOUS E HOLD EXPENSES. FURTHER THE A.O. HAS IN THAT CASE (KAMLE SH J.PATEL) ESTIMATED JOINT FAMILY HOUSEHOLD EXPENSES AT RS.600 00/- P.A. AND HAS ALSO ESTIMATED THE APPELLANTS CASE AGRICULTURA L INCOME AT IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 21 - RS.60 000/- P.A. THEREFORE CONSIDERING ALL THESE FACTORS APPELLANT CAN BE PRESUMED TO BE LEFT WITH SURPLUS AGRICULTURA L INCOME FUND. AS STATED ABOVE THEREFORE IN THE ABSENCE OF ANY O THER UNEXPLAINED INVESTMENT ON THE PART OF THE APPELLANT APPELLANT S CONTENTION ABOUT THE SOURCE OF ADVANCE OF RS.1 10 000/- CANNOT BE REJECTED. AS REGARDS THE INTEREST EARNED OF RS.65 000/- THE SAME IS REQUIRED TO BE GIVEN SET OFF AS PER THE APPELLANTS CLAIM OF TELESCOPING EFFECT OF RS.1 LAKH OFFERED IN THE BLOCK PERIOD RETURN OF INCOME AS CONTENDED IN NOTE NO.2 FORMING PART OF STATEMENT OF TOTAL INCOME. THE A.O. IS THEREFORE DIRECTED TO DELETE THE ADDI TION OF RS.1 75 000/-. 22. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES WE ARE OF THE VIEW THAT LD.CIT(A) HAS APPRECIATED CERTAIN FACTS IN RES PECT OF THE AGRICULTURE HOLDING AND THEREAFTER ARRIVED AT THE CONCLUSION TH AT THE ASSESSEE WAS LEFT WITH SURPLUS AGRICULTURE INCOME AND ACCORDINGLY GRA NTED THE RELIEF. THE VIEW TAKEN BY THE LD.CIT(A) APPEARS TO BE ENTIRELY ON APPRECIATION OF FACTS AND IN THE ABSENCE OF ANY CONTRARY EVIDENCE WE ARE NOT INCLINED TO DISTURB THOSE FINDINGS. THIS GROUND OF THE REVENU E IS THEREFORE DISMISSED. 23. APROPOS GROUND NO.3 A QUERY WAS RAISED IN RESPECT OF THE JEWELLERY FOUND AT THE TIME OF SEARCH. TOTAL VALUE OF THE JEWELLERY FOUND WAS AT RS.3 58 914/- OUT OF WHICH JEWELLERY WORTH RS.2 57 902/- WAS STATED TO BE BELONGING TO DAUGHTER-IN-LAW AND BALAN CE REMAINED OF RS.1 01 012/-; STATED TO BE BELONGING TO WIFE OF TH E ASSESSEE. ON PAGE NO.36 OF THE ASSESSMENT ORDER THOUGH THE AO HAD O BSERVED QUOTE I HAVE CAREFULLY GONE THROUGH THE FACTUAL SUBMISSIONS OF THE ASSESSEE AS WELL AS THE LEGAL ARGUMENTS TAKEN. THE JEWELLERY F OUND FROM THE PREMISES IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 22 - OF THE ASSESSEE IS REASONABLE AND IN LIGHT OF THE F ACTS GIVEN BY THE ASSESSEE HIS EXPLANATION IS BEING TREATED AS REASO NABLE AND NO ADVERSE INFERENCE SHALL BE DRAWN ON THIS ACCOUNT UNQUOTE. UP TO THAT EXTENT OF JEWELLERY IT APPEARS THAT THERE WAS NO DISPUTE. HOWEVER THEREAFTER A QUERY WAS RAISED PERTAINING TO CERTAIN BILLS AND RE CEIPT FOUND AT THE TIME OF SEARCH OF THE GOLD ORNAMENTS VALUING RS.1 96 142 /- . IN RESPECT OF THE ITEMS OF JEWELLERY IT WAS EXPLAINED THAT PART OF I T BELONGED TO HIS SON SHRI TUSHAR J.PATEL. IT WAS ALSO POINTED OUT THA T PART OF THE JEWELLERY BELONGED TO THE MOTHER-IN-LAW OF HIS SON. HOWEVE R AO WAS NOT CONVINCED AND TAXED THAT INVESTMENT AS UNEXPLAINED INVESTMENT. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHO RITY. HOWEVER ON CAREFUL READING OF THE ORDER WE HAVE NOTICED THAT THIS ISSUE WAS NOT PROPERLY EXAMINED AND DECIDED BY LD.CIT(A). VIDE PARAGRAPH NO.5 HE HAS DISCUSSED THE ASSESSMENT ORDER BUT LATER ON V IDE PARAGRAPH NOS. 5.1 & 5.2 HE HAS CONFUSED THE ISSUE. THERE WAS NO SPEC IFIC FINDING IN PARAGRAPH NO.5.2 IN RESPECT OF THE ISSUE OF UNEXPLA INED INVESTMENT IN THE JEWELLERY. IN THE ABSENCE OF ANY SPECIFIC FINDING WE ARE OF THE VIEW THAT THE ISSUE NOW RAKED UP BY THE REVENUE DEPARTMENT DE SERVES TO GO BACK TO LD.CIT(A) FOR A DE NOVO CONSIDERATION. AS FAR AS THE ASSESSEE IS CONCERNED IF THE SAID ALTERNATE PLEA OF AVAILABILI TY OF CASH IS TO BE RAISED THEN THE ASSESSEE IS REQUIRED TO ESTABLISH THE NEXU S OF THE SAID CASH WITH THE INVESTMENT IN THE JEWELLERY. IN ANY CASE THE ASSESSEE IS ALSO FREE TO RAISE ANY LEGAL CONTENTION BEFORE THE FIRST APPELLA TE AUTHORITY. THIS GROUND OF THE REVENUE MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES. IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 23 - 24. APROPOS GROUND NO.4 THE QUESTION WAS ABOUT AN INVESTMENT IN THE FACTORY CALLED AS GEETA FABRICS PVT.LTD.IN THE NAME OF ASSESSEES SON. A STATEMENT WAS RECORDED U/S.132(4) OF THE ACT AND THE ASSESSEE HAD ADMITTED THAT THE AMOUNT WAS SPENT ON THE CONSTRUCT ION OF THE FACTORY IN THE NAME OF HIS SON. THE ASSESSEES EXPLANATION W AS THAT THE FACTORY WAS CLOSED DOWN SINCE 1984 AND THE LOOSE-PAPERS FOUND A T THE TIME OF SEARCH PERTAINED TO SOME ESTIMATED CALCULATION WHICH WERE MADE ONLY FOR LIQUIDATION PURPOSE. HOWEVER THE AO HAD TREATED THOSE NOTING AS AN INVESTMENT AND TAXED THE SAID AMOUNT OF RS.2 00 120 /- AS UNEXPLAINED INVESTMENT IN THE FACTORY. 25. THE MATTER WAS CARRIED BEFORE THE FIRST APPELL ATE AUTHORITY AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE VIDE PA RAGRAPH NO.4.2; REPRODUCED BELOW:- 4.2. I HAVE CONSIDERED THE OBSERVATION MADE BY THE ASSESSING OFFICER AND THE PAPERS AND DOCUMENTS PLACED BY THE APPELLANT IN THE PAPER BOOK AS WELL AS THE ORAL ARGUMENTS OF THE AUTHORIZED REPRESENTATIVE. AT THE OUTSET IT IS TO BE SEEN THA T THE A.OS OBSERVATION THAT THE APPELLANTS STATEMENT U/S.132( 4) HAS NOT BEEN RETRACTED IS MISPLACED IN AS MUCH AS DURING THE COU RSE OF ASSESSMENT PROCEEDINGS THE APPELLANT HAS RETRACTED FROM HIS STATEMENT U/S.132(4) BY MAKING NECESSARY SUBMISSION S WITH THE SUPPORTING EVIDENCES PLACED BEFORE THE A.O. FURTHER THE NOTINGS ON THE LOOSE PAPER DO NOT BEAR ANY DATE. IT IS ALSO APPELLANTS CONTENTION THAT THE UNIT WAS CLOSED DOWN IN THE YEA R 1984 AND SUBSEQUENTLY IT WAS TAKEN OVER BY THE COURT RECEIVE R. THIS CONTENTION ON THE PART OF THE APPELLANT HAS NOT BEE N NEGATED BY THE A.O. THUS IT IS AN UNDISPUTED FACT THAT THE UNIT B ELONGING TO APPELLANTS SON GEETA FABRICS PVT.LTD. WAS IN LIQUI DATION FOR WHICH THE ORDER OF THE HIGH COURT HAS BEEN PLACED IN THE PAPER IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 24 - BOOK AND EXCEPT THE NOTINGS IN THE LOOSE PAPER FOR WHICH THE APPELLANT HAS OFFERED THE EXPLANATION THE A.O. HAS NTO BROUGHT ON RECORD ANY MATERIAL EVIDENCE BY CARRYING OUT ANY IN QUIRY WITH THE LIQUIDATOR THAT AFTER THE COMPANY HAS GONE INTO LIQ UIDATION ANY EXPENDITURE HAS BEEN INCURRED BY THE APPELLANTS SO N OR BY THE APPELLANT IN RESPECT OF THE SAID FACTORY FOR WHICH THE NOTINGS HAS BEEN FOUND IN THE LOOSE PAPERS. AS PER THE PROVISI ONS OF THE LAW ONCE THE COMPANY GOES INTO LIQUIDATION BY THE ORDER OF THE HIGH COURT THE ENTIRE STATE OF AFFAIRS OF THE COMPANY F ALLS WITH THE JURISDICTION OF THE LIQUIDATOR AND ACCORDINGLY EVEN IF ANY EXPENDITURE IS INCURRED IN RESPECT OF THE SAID FACT ORY IT CAN BE INCURRED ONLY WITH THE CONSENT OF THE LIQUIDATOR AN D ONLY THROUGH LIQUIDATORS OFFICE. THE A.O. HAS NOT BROUGHT ON R ECORD ANY MATERIAL TO ESTABLISH THAT THE EXPENDITURE HAS BEEN INCURRED IN RESPECT OF APPELLANTS SONS FACTORY. THE ADDITION IN QUESTION SEEMS TO HAVE BEEN MADE SOLELY ON THE BASIS OF APPE LLANTS 132(4) STATEMENT. HOWEVER IF THE APPELLANTS RETRACT AND THE RETRACTION IS SUPPORTED BY OTHER EVIDENCE WHICH IS NOT PROVED TO BE UNTRUE MERELY ON THE BASIS OF STATEMENT GIVEN AT THE TIME OF SEARCH A DEFINITE CONCLUSION CANNOT BE DRAWN. I THEREFORE DIRECT THE A.O. TO DELETE THE ADDITION. 26. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LD.C IT(A) PARTICULARLY WHEN HE HAS FOUND THAT THE LOOSE-PAPERS WHICH WERE RECOV ERED DID NOT BEAR ANY DATE. OTHERWISE ALSO THE ADMITTED FACTUAL POSITION IS THAT THE FACTORY WAS CLOSED DOWN IN THE YEAR 1984 MEANING THEREBY THAT T HE INVESTMENT WAS PRIOR TO THAT DATE. HOWEVER THE BLOCK PERIOD UNDER ASSESSMENT IS 1.4.1987 TO 28.8.97 . THEREFORE THE ISSUE AS RAKED UP BY THE A.O. IS OUT OF AMBITS OF THE BLOCK-PERIOD. MOREOVER LD. CIT(A) HAS ALSO EXPRESSED A POSSIBILITY THAT THE FACTORY WAS UNDER LIQUIDATION AND THOSE LOOSE-PAPERS WERE MERELY A CALCULATION OF THE EXPECTED PRICE OF THE PROPERTY ON IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 25 - LIQUIDATION. BUT THE FACT WAS THAT THOSE LOOSE-PA PERS HAVE NOT INDICATED THE EXPENDITURE MADE BY THE ASSESSEE ON THE SAID FA CTORY. IN VIEW OF THOSE UNCONTROVERTED FACTS WE FIND NO FALLACY IN T HE FINDINGS OF THE LD.CIT(A) AND AFFIRM THE SAME. THIS GROUND OF THE REVENUE IS DISMISSED. 27. APROPOS GROUND NO.5 AT THE TIME OF SEARCH FOUR BANK ACCOUNTS WERE FOUND. A PEAK WAS WORKED OUT AND THE COMB INED AMOUNT WAS CALCULATED AT RS.4 11 416/-. THE ASSESSEES EXPLAN ATION WAS THAT THE PEAK BALANCE WAS AGRICULTURAL INCOME. IT WAS ALSO INFOR MED BY THE ASSESSEE THAT ALTERNATIVELY THE PEAK SHOULD NOT BE TAXED BEC AUSE THE ASSESSEE HAD OFFERED UNDISCLOSED INCOME OF RS.3.85 LACS IN THE B LOCK RETURN. THE AO WAS NOT CONVINCED AND HELD THAT THE AMOUNT WHICH WA S DISCLOSED IN THE BLOCK RETURN PERTAINED TO INVESTMENT IN THE PROPERT Y IN TALUKA MOJE VILLAGE ISANPUR OF RS.2 85 000/- AND RS.1 00 000/- CONCERNING OTHER SEIZED MATERIAL. THE AO HAS THUS CONCLUDED THA T THE PEAK WAS OVER AND ABOVE THE AMOUNT DISCLOSED HENCE TAXED THE SA ME AS UNEXPLAINED INVESTMENT. 28. THE LD.CIT(A) HAS HELD THAT THE PEAK WAS REQUI RED TO BE SET OFF AGAINST THE AGRICULTURAL INCOME. IN HIS OPINION THE SET OFF AGAINST THE INCOME DECLARED AS PER THE BLOCK RETURNS WAS RIGHTL Y DENIED BY THE AO. BUT LD.CIT(A) HAS HELD THAT THE PEAK BALANCE WAS OU T OF THE AGRICULTURAL INCOME. RELEVANT PARAGRAPH IS REPRODUCED BELOW:- 7.2. I HAVE CONSIDERED THE OBSERVATIONS MADE BY TH E ASSESSING OFFICER AND THE PAPERS AND DOCUMENTS PLACED BY THE APPELLANT IN THE PAPER BOOK AS WELL AS THE ORAL ARGUMENTS OF THE AUTHORIZED REPRESENTATIVE. AS I DISCUSSED IN PARA 2.2 OF THIS ORDER THE IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 26 - APPELLANTS CONTENTION ABOUT HAVING AGRICULTURAL INCOME OF RS.1 LAKH P.A. APPEARS REASONABLE AND AS THE APPELLANT IS SINCE LAST 20 YEARS ENGAGED IN THE AGRICULTURAL ACTIVITY THE PEA K BALANCE WORKED OUT FOR 4 BANK ACCOUNTS AT RS.4 11 416/- IS REQUIRED TO BE GIVEN SET OFF AGAINST THE SAID AGRICULTURAL INCOME AVAILABLE WITH THE APPELLANT AND BEING DEPOSITED IN THE BANK ACCOU NT PRIOR TO THE DATE OF PEAK BALANCE. IT IS ALSO A FACT THAT THERE WAS A PEAK BALANCE OF RS.4 11 416/- IN THE MONTH OF FEBRUARY-M ARCH 1991 AND FROM APRIL 1991 THERE IS CONSTANT REDUCTION I N 4 BANK ACCOUNTS. THE APPELLANTS CONTENTION BEFORE THE A. O. IS TWO-FOLD I.E. IF THE APPELLANTS CONTENTION ABOUT SOURCES OF BANK DEPOSITS BEING THE AGRICULTURAL INCOME IS NOT ACCEPTED THEN THERE IS ALSO A DISCLOSURE OF RS.3.85 LAKH NEEDS TO BE CONSIDERED A ND GIVEN A TELESCOPIC EFFECT. AS FAR AS DISCLOSURE OF RS.3.85 LAKHS IS CONCERNED I AM IN AGREEMENT WITH THE OBSERVATION M ADE BY THE A.O. WHICH ARE ALSO SUPPORTED BY THE SPECIFIC FACT S ON RECORD AND ACCORDINGLY APPELLANTS CONTENTION FOR GIVING TELES COPIC EFFECT IN RESPECT OF DISCLOSURE OF RS.3.85 LAKHS CANNOT BE AC CEPTED. HOWEVER AS FAR AS THE APPELLANTS CONTENTION REGAR DING SOURCES PER BANK DEPOSITS BEING AGRICULTURAL INCOME IS CONC ERNED IN VIEW OF THE DISCUSSION IN PARA 2.2 AND 3.2 THE SAME IS ACCEPTED. THE A.O. IS THEREFORE DIRECTED TO DELETE THE ADDITION . 29. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES WE ARE OF THE VIEW THAT LD.CIT(A) HAS PROCEEDED ON PRESUMPTION WITHOUT LOOKING INTO THE FACT THAT NO EVIDENCE OR COGENT MATERIAL WAS FOUND THROUGH WHICH IT COULD BE DEMONSTRATED OR CONCLUSIVELY PROVED THAT T HE ASSESSEE HAD EARNED AGRICULTURAL INCOME TO THAT EXTENT WHICH WAS CLAIMED TO HAVE BEEN DEPOSITED IN THE BANKS. BE THAT AS IT WAS LD.CIT (A) HAS ALTOGETHER IGNORED THE FACT THAT A BENEFIT HAS ALREADY BEEN GI VEN WHILE GRANTING RELIEF IN RESPECT OF GROUND NO.1 PERTAINING TO THE PEAK OF THE BANK RESULTED INTO THE CASH FOUND AT THE TIME OF SEARCH . ON BOTH THE COUNTS IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 27 - THE ASSESSEE SHOULD NOT HAVE BEEN GRANTED RELIEF A ND IT WAS WRONGLY DONE BY THE LD.CIT(A). INTERESTINGLY THE ARGUMENT OF SET OFF OF INCOME DISCLOSED AS PER THE BLOCK RETURNS HAD ALREADY BEEN DISMISSED BY LD.CIT(A) AND THE ASSESSEE HAS NOT CHALLENGED THOSE FINDINGS. TOTALITY OF THE CIRCUMSTANCES THUS DEMAND TO REVERSE THE V IEW TAKEN BY THE LD.CIT(A). THIS GROUND OF THE REVENUE IS ALLOWED . IN THE RESULT REVENUES APPEAL I.E. IT(SS)A NO.57/AHD/2000 IS PA RTLY ALLOWED. 30. WE SUMMARIZE THE RESULT AS UNDER:- 1. REVENUES APPEAL I.E. IT(SS)A NO.85/AHD/2000 IS PARTLY ALLOWED. 2. ASSESSEES APPEAL I.E. IT(SS)A NO.43/AHD/2000 I S DISMISSED BUT WITH A DIRECTION. 3. REVENUES APPEAL I.E. IT(SS)A NO.57/AHD/2000 I S PARTLY ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 28 TH JULY 2011. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 28 / 07 /2011 T.C. NAIR SR. PS IT(SS)A NOS.85 43(CROSS APPEALS) & 57/AHD/2000 JT.CIT SR-2 VS. SH. TUSHAR J.PATEL JT.CIT SR-2 VS. SH.JETHABHAI P.PATEL (RESPECTIVELY) BLOCK PERIOD 1.4.87 TO 31.3.97 & 1.4.97 TO 28.8.97 - 28 - COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-IV AHMEDABAD 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD 1. DATE OF DICTATION..14.7.2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 15.7.2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S28.7.2011 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.7.2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER