Naresh Chand Bansal, v. ACIT, CC 13,

ITSSA 230/DEL/2006 | misc
Pronouncement Date: 19-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 23020116 RSA 2006
Assessee PAN THMAY2003D
Bench Delhi
Appeal Number ITSSA 230/DEL/2006
Duration Of Justice 3 year(s) 2 month(s) 29 day(s)
Appellant Naresh Chand Bansal,
Respondent ACIT, CC 13,
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 19-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 19-02-2010
Date Of Final Hearing 09-11-2009
Next Hearing Date 09-11-2009
Assessment Year misc
Appeal Filed On 20-11-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI DEEPAK R. SHAH AND SHRI RAJPAL YADAV I.T.A. NO. 230/DEL/2006 ASSESSMENT YEAR: 2004-05 M/S. NARESH CHAND BANSAL VS. ASSTT. COMMISSIONER OF IT S-11 MIG FLATS PRASAD NAGAR CENTRAL CIRCLE-13 KAROL BAGH NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) IT(SS).A.NO.244/DEL/2006 ASSESSMENT YEAR: 2004-50 DEPUTY COMMISSIONER OF IT VS. M/S. NARESH CHAND B ANSAL CENTRAL CIRCLE 13 BLOCK I/S-11 MIG FLAT NEW DELHI. DEV NAGAR PRASAD NAGAR KAROL BAGH NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI BALJIT SINGH CA RESPONDENT BY: SHRI NAVNEET SON I CIT (DR) ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE AND REVENUE ARE IN CROSS-APPEALS AGAIN ST THE ORDER OF LEARNED CIT(APPEALS) DATED 15.09.2006 PASSED FOR BL OCK PERIOD STARTING FROM 1.4.1996 AND ENDING ON 6 TH SEPTEMBER 2002. 2. IN GROUND NO.1 ASSESSEE HAS PLEADED THAT THE SE ARCH CARRIED OUT ON HIS RESIDENTIAL AS WELL AS BUSINESS PREMISES WAS ILLEGA L BECAUSE THE INCOME-TAX 2 AUTHORITIES DID NOT HAVE ANY INFORMATION IN THEIR P OSSESSION WHICH WOULD CAUSE THEM TO BELIEVE THAT A SEARCH WAS WARRANTED O N THE ASSESSEE. IT IS ALSO PLEADED IN THIS GROUND THAT LEARNED CIT(APPEALS) HA S NOT PASSED A SPEAKING ORDER ON THIS ISSUE. LEARNED COUNSEL FOR THE ASSESS EE AT THE TIME OF HEARING DID NOT PRESS THIS GROUND OF APPEAL HENCE IT IS REJ ECTED. 3. GROUND NOS. 2 AND 4 TAKEN BY THE ASSESSEE ARE IN TER-CONNECTED WITH GROUND NO.1 AND 2 TAKEN BY THE REVENUE. THEREFORE WE TAKE ALL THESE GROUNDS OF APPEAL TOGETHER AND THEY READ AS UNDER: GROUNDS TAKEN BY ASSESSEE: THE LEARNED CIT(APPEALS) HAS ERRED IN DIRECTING TH E A.O. TO COMPUTE AN ADDITION TO THE ASSESSEES INCOME FOR PEAK CRED IT AND COMMISSION ON ACCOUNT OF CASH CREDIT NOT PERTAINING TO THE ASS ESSEE. THE LEARNED CIT(APPEALS) HAS ERRED IN DIRECTING THE A.O. TO COMPUTE AN ADDITION TO THE ASSESSEES INCOME FOR PEAK CREDI T AND COMMISSION AS BEING UNEXPLAINED INCOME/INVESTMENT. GROUNDS TAKEN BY REVENUE: DIRECTING THE A.O. TO TAX 1% OF TOTAL TRANSACTION I N THE HANDS OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT AGAINST THE ADD ITION OF RS.12 78 44 593 MADE BY THE A.O. ON THE BASIS OF SE IZED PAPERS. DIRECTING THE A.O. TO TAKE ONLY PEAK VALUE OF THE I NCOME/INVESTMENT AS AGAINST RS.4 41 29 147 TAKEN BY THE A.O. ON THE BASIS OF ENTRIES FOUND ON THE PAPER SEIZED DURING SEARCH OPERATION. 3 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS A CA BY PROFESSION. ACCORDING TO HIM HE HAS BEEN I N PRACTICE FOR MORE THAN 25 YEARS. A SEARCH AND SEIZURE OPERATION WAS CARRIE D OUT AT HIS RESIDENTIAL AS WELL AS OFFICIAL PREMISES. A NOTICE UNDER SEC. 158B C OF THE ACT WAS ISSUED TO THE ASSESSEE ON 31.3.2003 AND HE WAS REQUIRED TO FILE THE BLOCK RETURN WITHIN THIRTY DAYS OF RECEIPT OF NOTICE. IT EMERGES OUT FROM THE ASSESSMENT ORDER THAT THIS NOTICE WAS RECEIVED BY THE ASSESSEE ON 15.4.2003 AND HE FILED HIS RETURN ON 12 TH MAY 2003 DECLARING UNDISCLOSED INCOME AT RS.3 30 0 00. NOTICES UNDER SEC. 143 AND 142(1) OF THE ACT ALONG WITH A QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE ON 21.4.2004. DURING TH E COURSE OF SEARCH A SUM OF RS.9800 AND RS.3 01 600 WERE FOUND IN CASH FROM HIS PREMISES NO. S.11 MIG FLATS PRASAD NAGAR NEW DELHI AND 6103 BLOCK N O.1 GALI NO.7 DEV NAGAR KAROL BAGH NEW DELHI RESPECTIVELY. OUT OF T HE ABOVE CASH A SUM OF RS.2 60 000 WAS SEIZED. FURTHER SHARES AMOUNTING TO RS.19 31 000 WERE FOUND FROM KAROL BAGHS PREMISES AND SHARES AMOUNTI NG TO RS.17 32 500 WERE SEIZED. DURING THE COURSE OF SEARCH PAPERS EX HIBITING LEDGER ACCOUNT OF SHRI RN AGGARWAL IN THE BOOKS OF ASSESSEE WERE FOUN D. THESE DOCUMENTS WERE SEIZED AND INVENTORIZED IN ANNEXURE A1 AND A-7 . ASSESSING OFFICER HAD ISSUED A SHOW-CAUSE NOTICE INVITING ASSESSEES EXPLANATION WITH REGARD 4 TO THE ENTRIES FOUND IN PAGE NOS. 2 TO 33 OF ANNEXU RE A-1 AND 1 TO 24 OF ANN. A-7. ASSESSING OFFICER HAS REPRODUCED THE NARR ATION MENTIONED IN THE SHOW-CAUSE NOTICE IN PARAGRAPH NO.4 OF THE ASSESSME NT ORDER WHEREIN HE HAS POINTED OUT THE ENTRIES AVAILABLE ON EACH PAPER FOU ND DURING THE COURSE OF SEARCH. IN RESPONSE TO THE SHOW-CAUSE NOTICE ASSES SEE HAS SUBMITTED A LETTER DATED 21.7.2004 AND CONTENDED THAT THESE PAPERS BEL ONG TO SHRI RN AGGARWAL. SHRI R.N. AGGARWAL FILED A LETTER AND OWN ED UP THESE PAPERS. IT WAS CONTENDED BY SHRI RN AGGARWAL THAT HE WAS A SHA RE BROKER AND HIS OFFICE IS SITUATED AT 6420/1 BLOCK NO.8 DEV NAGAR KAROL BAGH NEW DELHI. HE HAS BEEN A REGULAR VISITOR TO THE OFFICE OF ASSE SSEE AND USED TO AVAIL ASSESSEES ADVISE ON VARIOUS MATTERS CONCERNING THE SHARE BUSINESS AND OTHER MATTERS RELATING TO HIS ACCOUNTING. HE ALSO SUBMITT ED THAT HE WAS CARRYING OUT TRANSACTIONS IN PURCHASES AND SALES OF SHARES O F CERTAIN COMPANIES ASSOCIATED TO ASSESSEE MR. NC BANSAL. SHRI RN AGGAR WAL FURTHER DISCLOSED THAT HE USED TO TAKE HIS RECORD OFTEN TO THE OFFICE OF MR. BANSAL FOR SEEKING HIS ADVISE ON ACCOUNTING AND ALSO OFFICE LEFT SUMMA RY OF SUCH ACCOUNT IN THE OFFICE OF SHRI BANSAL FOR THE PURPOSE OF FINALIZAT ION OF HIS ACCOUNTS FROM TIME TO TIME. HE DISCLOSED THAT HE HAS EXAMINED THE PHOTOCOPY OF DIFFERENT LOOSE PAPERS INVENTORIED IN ANNX. A1 AND A7 AND CON FIRMED THAT THESE 5 DOCUMENTS BELONG TO HIM AND SHRI NC AGGARWAL HAS NO RELEVANCY WITH THESE DOCUMENTS. ASSESSING OFFICER HAS CALLED FOR T HIS PERSON SHRI RN AGGARWAL AND RECORDED HIS STATEMENT. ON AN ANALYSIS OF HIS STATEMENT ASSESSING OFFICER FOUND THAT THIS VERSION PUT UP BY THE ASSESSEE IS NOT WORTHY OF CREDENCE. HE REJECTED THE STORY PUT FORTH BY THE ASSESSEE AND COMPUTED THE INCOME FROM THE ENTRIES AVAILABLE IN D OCUMENTS INVENTORIZED IN ANNX. A1 AND A-7 AT RS.12 78 44 593. THE RELEVAN T FINDING OF THE ASSESSING OFFICER HAS BEEN REPRODUCED BY THE LEARNE D CIT(APPEALS) AND THE SAME READ AS UNDER: 'IT IS INTERESTING TO NOTE HERE THAT THE ASSESSEE AS WELL AS SH. R.N. AGGARWAL HAS STATED THAT SH. R.N. AGGARWAL WAS COMI NG REGULARLY TO THE OFFICE OF THE ASSESSEE TO GET HIS ACCOUNTS WRITTEN. BUT DURIN G THE SEARCH & SEIZURE OPERATION PAPERS AND STATEMENTS RELATING TO ASSESS EE ONLY WERE SEIZED. THESE STATEMENTS AND OTHER PAPERS CLEARLY MENTION THE NAM E OF THE ASSESSEE EITHER AS NCB BANSALJI ETC. NO OTHER DOCUMENTS IN RESPECT OF TRANSACTION OF OTHER PERSONS WITH SH. R.N. AGGARWAL WERE FOUND DURING THE COURSE OF SEARCH. IF THERE HAS BEEN ANY TRUTH IN THE STATEMENT OF THE ASSESSEE AND SH. R.N. AGGARWAL STATEMENT OF ACCOUNTS IN RESPECT OF OTHER TRANSACTIONS OF SH. R. N. AGGARWAL SHOULD HAVE BEEN FOUND. THEREFORE THE CONTENTION OF THE ASSESSEE IS REJECTED AS INCORRECT FALSE UNRELIABLE WITHOUT ANY IOTA OF TRUTH. IT IS JUST A DEVICE TO MISLEAD REVENUE AND EVADE TAX. FURTHER CONSIDERING THE NATURE OF DOCUMENTS SEIZED FROM THE OFFICE OF THE ASSESSEE I.E. STATEMENT OF ACCOUNTS OF THE ASSESSEE FOR DIFFERENT PERIODS AND THE CONTRADICTION IN THE STATEMENT UNDER OATH AND LETTE R CONFIRMATIONS THE CONTENTION 6 OF THE ASSESSEE THAT THESE STATEMENTS ARE NOT RELAT ED TO HIM AND THAT THESE ENTRIES WERE MERELY MADE TO TEACH THE ARTICLE CLERK KNOW TO MAKE ENTRIES IS UNFOUNDED AND REJECTED. COMING TO THE MERITS OF THE LETTER DA TED 9.8.04 IN RESPECT OF THE SHOW CAUSE NOTICE THE ASSESSEE HAS REQUESTED THAT ONLY INCOME CONTENTS FROM THE TOTAL STATEMENT CAN BE AND SHOULD BE ADDED TO THE ASSESSE E'S INCOME AS UNDISCLOSED INCOME. FURTHER THE ASSESSEE HAS REQUESTED THAT A P EAK BALANCE MAY BE ADDED TO THE ASSESSEE'S INCOME AS UNDISCLOSED INVESTMENTS IN THESE TRANSACTIONS. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE. THE P EAK BALANCE THEORY IS NOT APPLICABLE IN THE CASE OF THESE STATEMENTS SINCE TH ESE RELATE TO PROVIDING OF ACCOMMODATION ENTRIES AND ARE NOT IN THE NATURE OF RUNNING ACCOUNTS AS SUBMITTED BY THE ASSESSEE. IN VIEW OF FACT THAT THE ASSESSEE HAS NOT SUBMITTED ANY PROOF TO NEGATE THE DEPARTMENT'S BELIEF THAT THE ABOVE STATE D STATEMENT OF ACCOUNTS BELONGS TO THE -ASSESSEE AND THE TRANSACTIONS STATED THEREI N HAS IN FACT BEEN KEPT OUT OF THE BOOKS EXCEPT FILING LETTER FROM SH. R.N. AGGARWAL WHICH STATES THAT THERE WERE NO TRANSACTION WITH SH. N.C. BANSAL IN HIS INDIVIDUAL CAPACITY I HOLD THE VIEW THAT THE ABOVE TRANSACTIONS IN FACT BELONGS TO THE ASSES SEE. THEREFORE CASH CREDITS ARE TREATED AS UNEXPLAINED CREDITS AND ADDED TO THE DEC LARED INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME U/S 68 OF THE I.T. ACT 1961. ADDITION MADE ON THIS ACCOUNT AGGREGATED TO RS.12 7 8 44 593/- AS PER THE CHART GIVEN IN PARA 9 OF THE ASSESSMENT ORDER WHIC H IS REPRODUCED HERE UNDER : WITH ABOVE REMARKS THE UNDISCLOSED INCOME OF THE ASSESSEE ON THE BASIS OF CASH CREDITS AS PER THE FOLLOWING ANNEXURES IS WORKED OUT AS UNDER : ANNEXURE A-1 PAGE 2-7 PERIOD 1.4.2000 TO 17.8.2000 : RS.4 61 46 555.00 (A.Y. 2001-02) PAGE 8 & 9 - PERIOD 1.4.2000 TO 20.9.2000 : RS.1 73 48 792.00 (A.Y. 2001-02) PAGE 10-13 - PERIOD 1.4.2000 TO 31.5.2000 : R S. 73 46 419.00 7 (A.Y. 2001-02) PAGE 14-17 - PERIOD 23.2.99 TO 31.3.1999 : RS. 1 46 24 873.00 (A.Y. 1999-2000) PAGE 29 - PERIOD 1.9.1999 TO 29.9.1997 : RS. 29 20 000.00 (A.Y. 1998-99) PAGE 32 & 33-PERIOD 8.4.97 TO 27.89.1997 : RS. 2 67 04 994.00 (A.Y. 1998-99) ANNEXURE A-7 PAGE 12-14 -PERIOD 30.6.01 TO 4.2.2002 : RS.1 27 52 960.00 (A.Y. 2002-03) RS.12 87 44 593.00 5. ON APPEAL ASSESSEE HAS REITERATED HIS CONTENTIO NS AS WERE RAISED BEFORE LEARNED A.O.. LEARNED CIT(APPEALS) DID NOT B ELIEVE THE VERSION PUT FORTH BY THE ASSESSEE THAT LOOSE PAPERS FOUND IN HI S PREMISES RELATE TO SHRI RN AGGARWAL. HE UPHELD THE FINDINGS OF THE ASSESSIN G OFFICER IN PRINCIPLE IN THIS REGARD. HOWEVER ON THE ALTERNATIVE SUBMISS IONS OF THE ASSESSEE THAT EITHER PEAK CREDIT FROM THESE ENTRIES SHOULD BE ADD ED AS INCOME OF ASSESSEE OR COMMISSION INCOME SHOULD BE ASSESSED FOR PROVIDI NG THE ACCOMMODATION ENTRIES LEARNED CIT(APPEALS) ACCEPTED THIS ALTERNA TIVE CONTENTIONS OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO TAX AT 1% OF THE TOTAL TRANSACTION IN THE HANDS OF ASSESSEE BEING COMMISSI ON INCOME EARNED ON PROVIDING ACCOMMODATION ENTRIES. LEARNED CIT(APPEAL S) DIRECTED THE ASSESSING OFFICER TO WORK OUT PEAK CREDIT AND MADE THE ADDITION OF THAT 8 AMOUNT ALSO. THE RELEVANT FINDING OF THE LEARNED CI T(APPEALS) READS AS UNDER: (A) PLEA OF THE APPELLANT THAT ACCOUNTS WERE WRITT EN FOR THE PURPOSE OF TRAINEES TO TEACH THEM ACCOUNTANCY AT THE PREMISES OF THE AP PELLANT IS CONSIDERED TO BE TOO FAR FETCHED AN ARGUMENT AND WITHOUT ANY MATERIAL/BA SIS TO SUPPORT. THIS ARGUMENT IS THEREFORE NOT ACCEPTABLE AND IS HEREBY REJECTE D. (B) THERE IS A CONTENTION OF THE APPELLANT THAT MAN Y OF THE SEIZED PAPERS AND ACCOUNTS BELONGED TO SH. R.N. AGGARWAL (RNA) AND S INCE THEY HAVE BEEN OWNED UP BY HIM THERE IS NOTHING THAT THE AO SHOULD HAVE ADDED ON THAT ACCOUNT IN THE HANDS OF THE APPELLANT. THIS CONTENTION IS CONSIDER ED TO BE UNACCEPTABLE AS RNA WAS ONLY A BUSINESS ASSOCIATE OF THE APPELLANT AS C LEARLY ESTABLISHED BY AO IN HIS ORDER AND MOREOVER THE SAID STATEMENT OF RNA OWNIN G UP CERTAIN PAPERS WAS GIVEN MUCH AFTER THE SEARCH PROCEEDINGS AND IT WAS MERELY A WELL THOUGHT OUT DEVICE TO SAVE THE ASSESSEE. FURTHER THE CONTENTIO N CANNOT BE ACCEPTED BECAUSE RNA HAS NOT BEEN ABLE TO PRODUCE HIS BOOKS OF ACCOU NT AT ANY STAGE OF THESE PROCEEDINGS DESPITE THE FACT THAT HE IS SAID TO BE A SUB-BROKER AND CLAIMED TO HAVE INDULGED IN TRANSACTIONS WORTH CRORES OF RUPEES. AS SUCH THE APPROACH OF AO IN THIS REGARD IS CON SIDERED TO BE CORRECT. (C)THEN DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT WAS ASKED TO PREPARE AFRESH RUNNING ACCOUNTS TO SHOW THE EXTENT OF TRANSACTIONS IN VARIOUS SEIZED PAPERS REFEREED TO BY THE AO IN NAME OF SH. R.N. AGGARWAL AND OTHERWISE. THIS WAS DONE WITH A VIEW TO WORK OUT PEAK CREDIT I N SUCH RUNNING ACCOUNTS. THE AO HAS REJECTED THE PEAK THEORY BY SAYING IT IS NOT APPLICABLE HERE AS THESE ENTRIES RELATE TO ACCOMMODATION ENTRIES. NOW ON THE ONE HA ND AO IS ADMITTING THESE ENTRIES TO BE ACCOMMODATION ENTRIES WHILE ON THE OT HER HAND IN THE COMPUTATION OF INCOME HE IS TOTALING UP THE WHOLE THING TO ADD ALL CREDITS TO INCOME OF THE APPELLANT. ALSO THE AO HAS NOT MADE ANY ADDITION A T ALL BY WAY OF COMMISSION 9 THAT WOULD HAVE BEEN EARNED BY THE APPELLANT IN ITS BUSINESS/ACTIVITY OF GIVING ACCOMMODATION ENTRIES. THIS APPROACH OF THE AO IS D EFINITELY INCONSISTENT IN SO MUCH SO THAT IT AMOUNTS TO A CONTRADICTION IN TERMS . THE ADDITION OF THE WHOLE AMOUNT SHOWING TOTAL OF ALL CREDIT ENTRIES WOULD OS TENSIBLY AMOUNT TO MAKING AN ADDITION U/S 68 OF THE LT. ACT BUT AO HAS DONE NOTH ING TO SUBSTANTIATE HIS CASE FOR THE SAME AND HAS NOT TAKEN ANY PAINS TO REFUTE THE ARGUMENTS OF THE APPELLANT FOR APPLICATION OF PEAK CREDIT THEORY WHICH CANNOT BE RULED OUT IN SUCH CASES WITHOUT EVEN GIVING A REASON FOR THE SAME. AS SUCH THE ACTION OF AO IN MAKING ADDITION OF THE ENTIRE AMOUNT OF RS.12.78CRORES WHICH REPRESENTS SUM TOTAL OF ALL C REDIT ENTRIES IS CONSIDERED TO BE INCORRECT. (D) IN THE BACKGROUND OF MY DISCUSSION IN PRECEDIN G SUB-PARA IT IS CLEAR THAT ADDITION OF RS.12. 78 CRORES IS INAPPROPRIATE. AT THE SAME TIME IN THE LIGHT OF MY OBSERVATIONS M ADE IN EARLIER PARAS OF THIS ORDER IT IS A CASE OF APPELLANT HAVING INDULGED IN TO A LARGE NUMBER OF UNACCOUNTED TRANSACTIONS WHICH HAVE NOT BEEN EXPLAINED BY HIM. AND GOING BY THE THEORY OF 'ACCOMMODATION ENTRIES' ACCEPTED BY THE AO IN HIS O RDER IT WOULD BE NECESSARY TO MAKE ADDITION IN THE INCOME OF THE ASSESSEE BY WAY OF I) PEAK CREDIT THEORY AND II) COMMISSION EARNED BY THE APPELLANT ON ITS ENT IRE SUM TOTAL OF TRANSACTIONS. AS REGARD (II) ABOVE THE COMMISSION EARNED BY APPE LLANT IS ESTIMATED AT THE RATE OF 1% OF THE AMOUNT INVOLVED KEEPING IN VIEW THE M ARKET TRENDS IN THIS SPHERE OF ACTIVITY. AS SUCH AO IS DIRECTED TO TAX 1% OF THE TOTAL TRANSACTIONS IN THE HANDS OF THE APPELLANT. 10 THEN AS REGARD (I) ABOVE IN THE LIGHT OF ARGUMENT S AND CASE LAW ENUMERATED IN THE PRECEDING PARAS I AM OF THE VIEW THAT PEAK CRED IT THEORY WOULD BE JUSTIFIED IN THE FACTS OF THIS CASE. AS SUCH THE AO IS HEREBY DIRECTED TO WORK OUT PEAK CREDIT FROM THE DETAILS AVAILABLE FOR MAKING NECESSARY ADD ITION UNDER THIS HEAD. THIS WOULD BE OVER AND ABOVE THE ADDITION TO BE MADE BY AO ON THE BASIS OF COMMISSION EARNED BY APPELLANT @ 1% AS DIRECTED BY ME ABOVE. WITH THESE ADDITIONS THIS GROUND OF APPEAL IS ACCORDINGLY DIS POSED OFF. 6. THE LEARNED COUNSEL FOR THE ASSESSEE HAS REITERA TED HIS CONTENTIONS AS WERE RAISED BEFORE THE ASSESSING OFFICER. HE TOOK U S THROUGH THE STATEMENT OF SHRI RN AGGARWAL RECORDED BY THE ASSESSING OFFIC ER AVAILABLE AT PAGE NOS. 90 TO 98 OF THE PAPER BOOK. THE LEARNED COUNSE L FOR THE ASSESSEE CONTENDED THAT ACCORDING TO THE ASSESSING OFFICER T HERE WAS A CONTRADICTION BETWEEN HIS STATEMENT AS WELL AS IN HIS LETTER DATE D 21 ST JULY 2004 WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN PARAGRA PH 5 ON PAGE 5 OF THE ASSESSMENT ORDER. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE THERE HAS NOT BEEN CONTRADICTION. SHRI RN AGGARWAL IS AN INDE PENDENT PERSON CARRYING ON HIS OWN BUSINESS AND THEREFORE THERE IS NOTHING UNUSUAL IF HIS PAPERS WERE FOUND AT THE PREMISES OF THE ASSESSEE. HE FURTHER C ONTENDED THAT NEITHER THE ASSESSING OFFICER NOR THE LEARNED CIT(APPEALS) HAS GIVEN ANY REASON AS TO WHY THE CONTENTIONS OF ASSESSEE THAT THE PAPERS SHO WING THE ACCOUNTS OF SHRI RN AGGARWAL IN THE BOOKS OF ASSESSEE WERE ACTUALLY NOT RELATED TO HIM AND 11 WERE ONLY IMAGINARY ENTRIES MADE BY THE ASSISTANT/T RAINEES ARE NOT ACCEPTABLE. HE EMPHASIZED THAT THE SEIZED PAPERS RE LATE TO SHRI RN AGGARWAL AND THEREFORE THEIR COGNIZANCE SHOULD NO T BE TAKEN IN THE HANDS OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESS EE FURTHER CONTENDED THAT LEARNED CIT(APPEALS) HAS ACCEPTED ON THE ONE HAND T HAT THESE ARE ACCOMMODATION ENTRIES PROVIDED BY THE ASSESSEE BUT SIMULTANEOUSLY HAS UPHELD THE UNEXPLAINED INVESTMENT BY THE ASSESSEE B ECAUSE HE HAS DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE COMMISSION EA RNED BY THE ASSESSEE ON ACCOMMODATION ENTRIES AT 1% OF ALL TRANSACTIONS AND ALSO DIRECTED THE ASSESSING OFFICER TO WORK OUT PEAK CREDIT. THUS IT AMOUNTS TO DOUBLE ADDITION. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE BOTH THE ADDITIONS ARE IN DIFFERENT FIELD AND CANNOT BE USED TO MAKE AN ADDITION ON THE SAME SET OF TRANSACTION. THE NATURE OF CREDIT DETER MINES THE TOTAL AMOUNT INVESTED BY THE ASSESSEE IN ANY FORM OF BUSINESS. T HIS SHOWS THAT AT THE START OF THE BUSINESS OR DURING THE COURSE OF THE BUSINES S THE ASSESSEE HAS INTRODUCED CERTAIN SUMS AS HIS CAPITAL BY WHICH HE RUNS THE BUSINESS AND SUCH SUM WAS FROM UNDISCLOSED SOURCE WHEREAS THE C OMMISSION ON THE OTHER HAND IS INCOME AND IS WORKED OUT TO DETERMINE THE PROFIT THAT MAY HAVE BEEN EARNED FROM THE TRANSACTION UNDERTAKEN BY THE ASSESSEE. HE FURTHER 12 CONTENDED THAT THE ESTIMATION OF COMMISSION AT 1% O F THE TOTAL TRANSACTION IS ON THE HIGHER SIDE. IT SHOULD NOT BE MORE THAN 0.25 %. IN SUPPORT OF HIS CONTENTION HE RELIED UPON THE ORDER OF THE SPECIAL BENCH IN THE CASE OF MANOJ KUMAR VS. DCIT WHEREIN COMMISSION IN ACCOMMOD ATION ENTRY AT 35 PAISE PER 100 RUPEES HAS BEEN ACCEPTED. THUS IT IN DICATES THAT COMMISSION AT 0.35% OUGHT TO HAVE BEEN AN APPROPRIATE ESTIMATION OF THIS LINE OF BUSINESS. 7. LEARNED DR ON THE OTHER HAND RELIED UPON THE FIN DINGS OF ASSESSING OFFICER. HE POINTED OUT THAT ASSESSEE FAILED TO EXP LAIN THE ENTRIES RECORDED IN THE LOOSE PAPERS AND THEREFORE ASSESSING OFFICER IS JUSTIFIED TO CONSIDER THE ENTRIES REFLECTED IN THE LOOSE PAPERS AS UNEXPLAINE D CASH CREDIT OF THE ASSESSEE. AS FAR AS ESTIMATION OF COMMISSION INCOM E ON PROVIDING ACCOMMODATION ENTRIES AT THE END OF LEARNED CIT(APP EALS) IS CONCERNED HE SUBMITTED THAT LEARNED FIRST APPELLATE AUTHORITY HA S NOT DISCLOSED ANY BASIS FOR FORMING SUCH AN OPINION. LEARNED FIRST APPELLAT E AUTHORITY HAS SIMPLY HELD THAT EARNING OF COMMISSION IN PROVIDING ACCOMM ODATION ENTRY COULD BE AT 1%. AS FAR AS THE CASE LAWS RELIED UPON BY THE L EARNED COUNSEL FOR THE ASSESSEE FOR ESTIMATION OF COMMISSION IS CONCERNED IN THAT CASE LEARNED CIT(APPEALS) HAS ESTIMATED THE COMMISSION AT 35 PAI SE AGAINST PER 100 RUPEES AND THE ITAT DID NOT INTERFERE IN SUCH ESTIM ATION. THE ESTIMATION OF 13 THE COMMISSION IN THAT CASE IS BASED ON THE FACTS O F THAT CASE AND IT CANNOT BE A GUIDING FACTOR FOR ESTIMATION OF THE COMMISSION I NCOME IN THE PRESENT CASE. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE RECORDS CAREFULLY. THE ASSESSEE IS A CHARTERED ACCO UNTANT BY PROFESSION. HE IS WELL VERSED WITH THE INCOME-TAX PROCEEDINGS. A SEAR CH WAS CARRIED OUT ON HIS PREMISES ON 15 TH JULY 2002 WHICH WAS CONCLUDED ON 6 TH SEPTEMBER 2002. UP TO 21 ST JULY 2004 HE NEVER AGITATED BEFORE THE DEPARTMEN T THAT DOCUMENTS RECOVERED FROM HIS PREMISES WERE RELATING TO SHRI RN AGGARWAL AND THE SAME MAY BE RELEASED. DURING THE COURSE OF ASSESSMENT PROCEEDING FOR THE FIRST TIME THIS PLEA WAS INTRODUCED BY THE ASSESSEE. AT THE TIME OF SEARCH HE COULD HAVE ALLEGED THAT THESE DOCUMENTS DO NOT BELONG TO HIM. WE HAVE GONE THROUGH THE STATEMENT OF SHRI RN AGGARWAL . IN QUESTION NO.12 IT WAS PUT TO HIM THAT AT THE TIME OF SEARCH ON THE PR EMISES OF SHRI NC AGGARWAL PAGE NOS. 2 TO 7 WERE FOUND AND SEIZED IN THESE PAPERS SHRI NC BANSAL HAD SHOWN YOUR ACCOUNT IN HIS BOOKS. SHRI RN AGGARWAL REPLIED TO THIS QUESTION THAT THESE PAPERS DO NOT BELONG TO HI M. HE ALSO SAID THAT HE NEVER LEFT THESE WITH SHRI NC BANSAL. SHRI RN AGGAR WAL FAILED TO SUBMIT HIS REGULAR BOOKS OF ACCOUNT SHOWING THE TRANSACTION RE FLECTED IN THESE PAPERS. HE WAS UNABLE TO EXPLAIN THE ENTRIES IN THESE PAPER S. ON PERUSAL OF THESE 14 PAPERS IT REVEALS THAT NAME OF ASSESSEE HAS BEEN S PECIFICALLY WRITTEN AND THEY ARE IN A SYSTEMATIC WAY. THUS IT IS JUST A FA INT ATTEMPT AT THE HAND OF THE ASSESSEE TO DISOWN THESE PAPERS. THE PAPERS WERE FO UND FROM HIS PREMISES REFLECTING THE TRANSACTION RELATING TO HIS ACTIVITI ES. THE PAPERS ALSO INDICATE THE BUSINESS TRANSACTION AND ON THE BASIS OF ENTRIE S AVAILABLE IN THESE PAPERS LOGICAL CONCLUSION CAN BE DRAWN. THEREFORE ASSESSE E FAILED TO DEMONSTRATE WITH THE HELP OF ANY SUPPORTING EVIDENCE THAT SEIZE D MATERIAL FOUND AT HIS PREMISES REFLECTING BUSINESS TRANSACTION WHICH IS N OT RELATED TO HIM RATHER THEY BELONG TO SHRI RN AGGARWAL. HE HAS JUST TAKEN UP A STORY AFTER DUE DELIBERATION AND CONSULTATION. 9. AS FAR AS THE ALTERNATIVE CONTENTION OF THE ASSE SSEE IS CONCERNED THAT ONLY INCOME CONTENTS FROM THE TOTAL STATEMENT OF AC COUNTS CONTAINING IN THE SEIZED MATERIAL CAN BE AND SHOULD BE ADDED TO THE A SSESSEES INCOME IS CONCERNED WE ARE OF THE OPINION THAT ASSESSING OFF ICER HAS RECORDED A CONTRADICTORY FINDING. THESE ARE EITHER THE BUSINES S TRANSACTION OF THE ASSESSEE OR THESE ARE ACCOMMODATION ENTRIES. IF TH EY ARE TAKEN TO BE ACCOMMODATION ENTRIES ONLY THEN COMMISSION INCOME E ARNED BY THE ASSESSEE FOR PROVIDING ACCOMMODATION ENTRIES AT THE MOST CAN BE ADDED. IF IT IS TAKEN THAT WHATEVER INVESTMENT REFLECTED IN THESE PAPERS RELATES TO THE ASSESSEE 15 THEN AN ADDITION ON ACCOUNT OF UNEXPLAINED INVESTME NT BY THE ASSESSEE HAS TO BE MADE. IN THAT CASE THE ENTRIES APPEARING IN ALL THE PAPERS HAS TO BE READ IN A CHRONOLOGY. THE ASSESSEE HAS FILED A CHART AT THE TIME OF ASSESSMENT PROCEEDING INDICATING THE FACTS THAT CREDIT AND DEB IT ENTRIES ARE AVAILABLE SIMULTANEOUSLY IN THE SEIZED MATERIAL. WHEN IT IS D IFFICULT TO RECONCILE THE CREDIT AND DEBIT ENTRIES IN THAT SITUATION THE PEAK AMOUNT DURING THE ACCOUNTING YEAR FOUND IS TO BE ADDED AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. THE PAPERS WERE FOUND FROM THE PREMISES O F THE ABOVE. THEY REFLECT BUSINESS TRANSACTION. IT IS FOR THE ASSESSE E TO PROVE THAT THEY RELATE TO THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. HE SHOULD HAVE IDENTIFIED THE BENEFICIARIES. HE FAILED TO DISCLOSE THE EXACT MODUS OPERANDI THUS THE TRANSACTION ARE TO HELD AS PERTAINING TO THE ASSESS EE AND PLACE OF THESE TRANSACTION IS TO BE ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE. 10. IN VIEW OF THE ABOVE DISCUSSION WE ALLOW THE G ROUND OF APPEALS RAISED BY THE ASSESSEE PARTLY UPHELD THE FINDING O F THE LEARNED CIT(APPEALS) TO THE EXTENT THAT PEAK CREDIT HAS TO BE TREATED AS UNEXPLAINED INCOME/INVESTMENT OF THE ASSESSEE. WE SET ASIDE THE ORDER OF LEARNED CIT(APPEALS) TO THE EXTENT OF ESTIMATION OF COMMISS ION INCOME FOR 16 PROVIDING ACCOMMODATION ENTRIES. CONSEQUENTLY BOTH THE GROUNDS RAISED BY THE REVENUE ARE REJECTED. GROUND NO.3: 10. IN THIS GROUND OF APPEAL ASSESSEE HAS CHALLENG ED THE ADDITION OF RS.63 10 000. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF SEARCH LOOSE PAPERS BEARING NOS. 20 TO 22 WERE FOU ND AND INVENTORISED IN ANNEXURE A1. ASSESSING OFFICER CONFRONTED THE ASSES SEE TO EXPLAIN THE ENTRIES AVAILABLE IN THESE PAPERS. IN THE OPINION O F ASSESSING OFFICER THE CALCULATION SHOWN ON PAGE 22 INDICATES PAYMENT OF S HARE APPLICATION MONEY AMOUNTING TO RS.11 50 000 TO SHRI S.C. GUPTA WHEREA S OTHER AMOUNTS CALCULATED ON PAGE NOS. 20 AND 21 REPRESENTS INTERE ST INCOME. THE STAND OF THE ASSESSEE IS THAT THESE PAPERS PERTAIN TO THE SE TTLEMENT OF A DISPUTE BETWEEN TWO PARTIES NAMELY SHRI HARI OM BHATIA AN D SHRI S.C. GUPTA. THE ASSESSEE WAS AN ARBITRATOR BETWEEN THESE TWO PARTIE S AND HELPED THEM TO RESOLVE THE DISPUTE THEREFORE THE PAPER IS IN THE HANDWRITING OF THE ASSESSEE. IT WAS ALSO CONTENDED BY THE ASSESSEE THAT DISPUTE PERTAINS TO THE FACT THAT SHRI S.C. GUPTA AND HIS FRIEND DURING THE INFOTECH BOON INVESTED A SUM AS SHARE APPLICATION MONEY IN M/S. ASSOCIATED INFOTECH LTD. MANAGED BY SHRI HARI OM BHATIA. ACCORDING TO THE ASSESSEE SHRI S.C . GUPTA MUST HAVE 17 ASSURED SOME RETURN WHICH DID NOT MATERIALIZED AND THEREFORE THERE WAS A DISPUTE BETWEEN SHRI HARI OM BHATIA AND SHRI S.C. GUPTA. ASSESSING OFFICER HAS CALLED FOR SHRI S.C. GUPTA AND RECORDED HIS STATEMENT. ON AN ANALYSIS OF HIS STATEMENT AND THE NARRATIONS AVAILA BLE IN THE SEIZED PAPERS HE REJECTED THE CONTENTION OF THE ASSESSEE AND MADE AN ADDITION OF RS.63 LACS. 11. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRIN G ANY RELIEF TO THE ASSESSEE. 12. BEFORE US LEARNED COUNSEL FOR THE ASSESSEE REI TERATED HIS CONTENTIONS AS WERE RAISED BEFORE THE ASSESSING OFFICER. HE POI NTED OUT THAT THIS PAPER DOES NOT BELONG TO THE ASSESSEE THOUGH IT WAS IN TH E HANDWRITING OF THE ASSESSEE BUT THE NARRATIONS IN THE PAPERS RELATE TO THE DISPUTE BETWEEN HARI OM BHATIA AND S.C. GUPTA. HE POINTED OUT THAT SHRI S.C. GUPTA IN HIS STATEMENT HAS NEGATED HIS PERSONAL INVOLVEMENT OF A NY KIND BUT HAS ACCEPTED THE FACT THAT THE CLIENTS HAD INVESTED WITH SHRI HA RI OM BHATIA IN HIS COMPANY. IT INDICATES THAT THE DISPUTE BETWEEN THES E TWO INDIVIDUALS COULD BE A POSSIBILITY. THE LEARNED COUNSEL FOR THE ASSES SEE FURTHER CONTENDED THAT ONE OF THE REASONS ASSIGNED BY THE ASSESSING OFFICE R IS THAT THE ASSESSEE HAS GIVEN EXPLANATION WITH REGARD TO PAGE NO.22 ONLY AN D DID NOT EXPLAIN THE ENTRIES ON PAGE NOS. 20 AND 21. HE TOOK US THROUGH THE COPY OF THE PAGES 18 AVAILABLE AT PAGE NOS. 99 TO 101 OF THE PAPER BOOK AND POINTED OUT THAT ALL THESE PAGES ARE INTER-CONNECTED. REFERRING TO PAGE NO.22 LEFT TOP CORNER HE POINTED OUT THAT A SUM OF RS.34 LACS HAS BEE WRITTE N. THE SAME AMOUNT IS BEING REFLECTING AT RS.34 LACS ON LEFT TOP CORNER O N PAGE 20. THIS INDICATES THAT SHRI S.C. GUPTA AND HARI OM BHATIA HAD DISCUSS ED THE DISPUTE IN THE PRESENCE OF ASSESSEE AND ASSESSEE HAS NOTED THEIR D ISPUTE ON THESE PAGES. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT ONCE ASSESSEE HAD DENIED HIS LINK TO THE DOCUMENT THEN IT IS FOR THE REVENUE TO PROVE THAT PAPER BELONGS TO THE ASSESSEE AND THE NARRATIONS IN THE P APER RELATABLE TO THE BUSINESS OF THE ASSESSEE. HE RELIED UPON THE DECISI ON OF THE ITAT LUCKNOW IN THE CASE OF SATNAM SINGH CHHABRA VS. CIT 74 TTJ 976. LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE REVENUE AUTHORITIES BELOW. HE TOOK US THROUGH STATEMENT OF SHRI S.C. GUPTA AVAILA BLE AT PAGE NOS. 102 TO 106 OF THE PAPER BOOK. LEARNED DR SPECIFICALLY REFE RRED QUESTION AND REPLY NOS. 5 AND 9 OF HIS STATEMENT AND SUBMITTED THAT IN VIEW OF HIS STATEMENT THE VERSION PUT FORTH BY THE ASSESSEE IS NOT A PLAUSIBL E ONE. 13. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GO NE THROUGH THE RECORDS CAREFULLY. THE DOCUMENT WAS FOUND FROM THE POSSESSION OF THE ASSESSEE. PAGE NOS. 20 AND 21 ARE TYPED SHEETS CONT AINING DATES OPENING 19 BALANCE INTEREST AND TO SOME EXTENT RATE OF INTERE ST. ON THE TOP LEFT NAME OF ASSESSEE NC BANSAL IS WRITTEN. IT IS TO BE PRESUMED THAT THESE PAPERS BELONG TO THE ASSESSEE AND THE NARRATION AVAILABLE IN THE PAPERS ARE LINKED TO THE BUSINESS OF THE ASSESSEE. THE ONUS IS UPON THE ASSE SSEE TO EXPLAIN THE ENTRIES AVAILABLE IN THESE PAPERS AND HOW THEY ARE NOT RELA TABLE TO HIM. HIS ARGUMENT WAS THAT HE WORKED AS AN ARBITRATOR IN BET WEEN SHRI S.C. GUPTA AND SHRI HARI OM BHATIA. THE ENTRIES IN THESE PAPER S ARE RELATABLE TO THEIR DISPUTES. IN REPLY TO QUESTION NO.9 SHRI S.C. GUTP A SPECIFICALLY DISCLOSED THAT THERE WAS NO DISPUTE BETWEEN HIM AND SHRI HARI OM BHATIA. HE DISCLOSED THAT THE PARTIES HAVE APPLIED FOR THE SUB SCRIPTION OF SHARES IN PROMOTIONAL QUOTA AT THEIR OWN. SHRI N.C. BANSAL NE VER ACTED AS AN ARBITRATOR REGARDING ANY DISPUTE BETWEEN HIM AND SHRI HARI OM BHATIA. THIS STATEMENT OF SHRI S.C. GUPTA WAS RECORDED IN THE PRESENCE OF ASSESSEE AND HE HAS ALSO SIGNED THE STATEMENT AT THE END. IT WAS CONFRONTED TO THE ASSESSEE ALSO. IN VIEW OF THIS CATEGORICAL STATEMENT WE DO NOT FIND ANY FORCE IN THE STORY PUT FORTH BY THE ASSESSEE. SIMILARLY IN REPLY TO QUEST ION NO.5 SHRI S.C. GUPTA ALSO DISCLOSED THAT HE WAS WORKING AS A SHARE BROKE R AND SHRI NC BANSAL WAS ALSO DOING THE SHARE TRADING THROUGH HIM. THE A SSESSEE WAS UNABLE TO DIG OUT ANY CIRCUMSTANCE FROM THIS WITNESS WHICH MA Y SUPPORT HIS LINE OF 20 EXPLANATION OF THESE DOCUMENTS. EXCEPT MAKING A BAL D STATEMENT THAT THESE PAPERS DO NOT BELONG TO HIM THE ASSESSEE WAS UNABL E TO PUT ANY EVIDENCE ON RECORD FOR INDICATING THE FACT THAT THESE PAPERS IN FACT NOT RELATABLE TO HIM OR ENTRIES ARE NOT RELATED TO HIS BUSINESS. THE DOCUME NTS ARE NOT THE DUMB DOCUMENT. THEY DULY DISCLOSED SOME SORT OF CALCULAT ION OF INTEREST ON DATEWISE AS WELL AS SOME SORT OF INVESTMENT. THE PA GE NO.22 IS IN THE HANDWRITING OF ASSESSEE. IT WAS FOUND FROM HIS PREM ISES. THUS ASSESSING OFFICER HAS RIGHTLY MADE THE ADDITION. THIS GROUND OF APPEAL IS REJECTED. 14. GROUND NOS. 5 TO 10 RAISED BY THE ASSESSEE AND GROUND NOS.3 TO 7 RAISED BY THE REVENUE ARE INTERCONNECTED. THEY READ AS UNDER: GROUNDS RAISED BY THE ASSESSEE: 5. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING TH E ADDITION OF RS.8 70 000 ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CHITS. 6. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING TH E ADDITION OF RS.4 86 000 ON ACCOUNT OF UNDISCLOSED INVESTMENT IN FEROZABAD LAND. 7. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING TH E ADDITION OF RS.15 05 000 ON ACCOUNT OF UNDISCLOSED INVESTMEN T IN 3 OFFICES. 8. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING TH E ADDITION OF RS.6 00 000 ON ACCOUNT OF UNDISCLOSED INVESTMENT IN 4-ACRE LAND SOLD IN 2003. 21 9. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING TH E ADDITION OF RS.50 00 000 ON ACCOUNT OF TREATING A SCHOOL PRO PERTY BELONGING TO A THIRD PARTY AS THE BENAMI PROPERTY O F THE ASSESSEE. 10. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING TH E ADDITION OF RS.50 00 000 ON ACCOUNT OF UNDISCLOSED INVESTMEN T IN SHARES. GROUNDS RAISED BY THE REVENUE: 3. DELETING THE ADDITION OF RS.6 LACS ON A/C OF INVEST MENT IN SURAJPUR LAND. 4. DELETING THE ADDITION OF RS. 6 LACS IN FLAT IN SIVA LIK SOCIETY. 5. DELETING THE ADDITION OF RS.8 LACS ON A/C OF UNEXPL AINED INVESTMENT IN LIC/BOND UNITS. 6. DELETING THE ADDITION OF RS.30 LACS ON A/C OF UNDIS CLOSED INVESTMENT IN COMPANIES. 7. DELETING THE ADDITION OF RS.35 97 000 ON A/C OF LOA NS ETC. NOT EXPLAINED. 15. THE ADDITIONS CONFIRMED BY THE LEARNED CIT(APPE ALS) AND DISPUTED BY THE ASSESSEE IN HIS APPEAL AS WELL AS THE ADDITIONS DELETED BY THE LEARNED CIT(APPEALS) AND DISPUTED BY THE REVENUE IN ITS APP EAL IN THESE GROUNDS OF APPEAL WERE MADE BY THE A.O. ON THE BASIS OF NARRAT ION FOUND IN PAGE 34 OF ANNX. A. THUS IT IS IMPORTANT TO TAKE NOTE OF PAGE 34 OF ANNX.A WHOSE PHOTO IS AS UNDER: 22 16. BEFORE EMBARKING UPON AN INQUIRY WHETHER THESE ADDITIONS CAN BE MADE IN THE BLOCK ASSESSMENT OR NOT. IT IS IMPORTAN T TO FIRST BEAR IN MIND THE SCOPE OF THE BLOCK ASSESSMENT. EXPOUNDING THE SCOPE OF THE BLOCK ASSESSMENT AND INCLUSION OF UNDISCLOSED INCOME THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. RAVI KANT JAIN [2001] 167 CTR (DEL) 566 : [2001] 250 ITR 141 (DEL) HAS OBSERVED THAT THE SPECIAL PROCEDURE OF CHAPTER XIV-B IS INTENDED TO PROVIDE A MODE OF ASSESSMENT O F UNDISCLOSED INCOME WHICH HAS BEEN DETECTED AS A RESULT OF SEARCH. AS T HE STATUTORY PROVISIONS GO TO SHOW IT IS NOT INTENDED TO BE A SUBSTITUTE FOR REGULAR ASSESSMENT. IT IS IN ADDITION TO THE REGULAR ASSESSMENT ALREADY DONE OR TO BE DONE. THE ASSESSMENT FOR THE BLOCK PERIOD CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNTS OR DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAI LABLE WITH THE AO. EVIDENCE FOUND AS A RESULT OF SEARCH IS CLEARLY REL ATABLE TO SS. 132 AND 132A. SIMILARLY HON'BLE RAJASTHAN HIGH COURT HAS EXPLAINE D THE SCOPE OF BLOCK ASSESSMENT AND DETERMINATION OF UNDISCLOSED INCOME IN CIT V. RAJENDRA PRASAD GUPTA [2001] 166 CTR (RAJ) 83 : [(2001] 248 1TR 350 (RAJ) . THE FOLLOWING OBSERVATIONS ARE WORTH TO NOTE : 'HOWEVER UNDER THE SCHEME OF THE PROVISIONS FOR BL OCK ASSESSMENT IT IS APPARENT THAT IT RELATES TO ASSESSMENT OF 'UNDIS CLOSED INCOME' OF THE 23 ASSESSEE EXCLUDING THE INCOME SUBJECTED TO REGULAR ASSESSMENT IN PURSUANCE OF THE RETURNS FILED BY THE ASSESSEE FOR SUCH PERIOD. IT IS ALSO APPARENT FROM THE PERUSAL OF S. 158BB THAT THE RETU RNS ARE ALSO REQUIRED TO BE FILED IN PURSUANCE OF THE NOTICE UND ER S. 158BC(A) AND THE ASSESSMENT IS TO BE FRAMED ON THAT BASIS IN THE LIGHT OF MATERIAL THAT HAS COME INTO POSSESSION OF THE ASSESSING AUTH ORITY DURING THE COURSE OF SEARCH WHICH IS THE FOUNDATION OF THE PRO CEEDINGS. THAT BEING SO THE CORRECTNESS OR OTHERWISE OF THE RETUR NS FILED IN PURSUANCE OF THE NOTICE UNDER S. 158BC (A) HAS TO BE EXAMINED WITH REFERENCE TO THE MATERIAL IN THE POSSESSION OF THE ASSESSING AUT HORITY HAVING NEXUS TO ASSESSMENT OF 'UNDISCLOSED INCOME' WHICH IS WITH THE ASSESSING AUTHORITY AND PREMISE OF SUCH PROCEEDINGS. IF THE RETURNS FILED BY THE ASSESSEE DO NOT ACCORD WITH THE MATERIALS WHICH ARE ALREADY IN THE POSSESSION OF THE AUTHORITY IT CAN BE ESTIMATED TO THE BEST JUDGMENT BY THE ASSESSING AUTHORITY ON THE BASIS OF THE MATE RIAL IN HIS POSSESSION. HOWEVER THE ASSESSING AUTHORITY IS NOT CONFERRED WITH POWER TO MAKE ESTIMATION OF INCOME DE HORS THE MATERIAL IN HIS POSSESSION WHILE MAKING REGULAR ASSESSMENT ORDER U NDER S. 158BB. IT HAS TO BE BORNE IN MIND THAT PROCEEDINGS UNDER SS. 158BB AND 158BC ARE THAT OF UNDISCLOSED INCOME. THEREFORE THE PROC EEDING CARRIES WITH IT A PRESUMPTION THAT RETURNS FILED IN PURSUANCE OF SUCH PROCEEDINGS ARE OF UNDISCLOSED INCOME AND NOT NECESSARILY IN AC CORDANCE WITH THE BOOKS OF ACCOUNTS. ITS VERIFICATION HAS TO BE SEARC HED OUTSIDE REGULAR BOOKS WITH REFERENCE TO MATERIAL THAT HAS BEEN FOUN D DURING SEARCH. THAT MAKES IT IMPERATIVE TO ADJUDICATE THE RETURN W ITH REFERENCE TO MATERIAL THAT HAS COME IN THE POSSESSION OF THE ASS ESSING AUTHORITY DURING THE COURSE OF SEARCH PROCEEDINGS AND ON WHIC H BASIS THE BELIEF ABOUT THE EXISTENCE OF UNDISCLOSED INCOME IS ENTERT AINED BY THE ASSESSING AUTHORITY INVITING INVOCATION OF SS. 158B B AND 158BC. THE ENQUIRY INTO THE CORRECTNESS OF SUCH RETURNS WITH R EFERENCE TO MATERIAL SO FOUND HAS NEXUS WITH THE OBJECT OF THE SPECIAL P ROVISIONS TO ADJUDICATE WHETHER THE ASSESSEE IS STILL HONESTLY D ISCLOSING HIS INCOME CORRECTLY AFTER INCRIMINATING MATERIAL HAS BEEN FOU ND IN THE POSSESSION OF THE REVENUE AUTHORITY BEFORE SUCH RETURNS CAN BE REJECTED AND THEREAFTER TO FRAME -ASSESSMENT ESTIMATING THE INCO ME LIABLE TO TAX TO THE BEST OF JUDGMENT ON THE BASIS OF THE MATERIAL T HAT IS AVAILABLE WITH HIM.' 24 17. THE HON'BLE BOMBAY HIGH COURT HAD ALSO AN OCCAS ION TO EXAMINE THE CONCEPT OF BLOCK ASSESSMENT IN CIT V. VINOD DANCHAND GHODAWAT [2000] 163 CTR (BORN) 432 : [2001] 247 ITR 448 (BOM) WHEREIN IT WAS FOUND THAT AN ASSESSEE HAD CONSTRUCTED A BUNGALOW AND INCURRED AN EXPENSE OF RS. 4 16 000. THEREAFTER SEARCH WAS CARRIED OUT AND THE AO REFERRED THE VALUATION OF THE BUNGALOW TO THE DEPARTMENTAL VALUE R WHO DETERMINED THE VALUE OF THE PROPERTY AT RS. 6 66 000 AND THE AO AD DED THE DIFFERENCE TO THE INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME. THE T RIBUNAL HAS DELETED THE ADDITION ON THE GROUND THAT ADDITION WAS NOT MADE O N THE BASIS OF THE MATERIAL GATHERED DURING THE COURSE OF SEARCH RATH ER ALL THESE INFORMATIONS WERE AVAILABLE TO THE AO AT THE TIME OF REGULAR ASS ESSMENT. HE OBTAINED THE DVO'S REPORT SUBSEQUENT TO THE REGULAR ASSESSMENT THEREFORE ADDITION IS MADE BEYOND THE SCOPE OF BLOCK ASSESSMENT. THE HON' BLE JURISDICTIONAL HIGH COURT UPHELD THE DELETION MADE BY THE TRIBUNAL. 18. THE TRIBUNAL MUMBAI BENCH IN THE CASE OF SUNDER AGENCIES V. DY. CIT [1997] 59 TTJ (MUMBAI) 610 : [1997] 63 ITD 245 (MUMBAI) HAS MADE EXTREMELY LUCID ENUNCIATION OF LAW ON THE SUBJECT A ND WE CANNOT DO BETTER THAN TO EXTRACT SOME OF THE OBSERVATIONS MADE IN TH AT DECISION; . 25 '23. THERE ARE ADEQUATE SAFEGUARDS PRESENT AGAINST ANY POSSIBLE MISUSE OF THE PROVISION OF SEARCH AND SEIZURE. CHAP TER XIV-B WAS INTRODUCED IN ORDER TO MAKE PROCEDURE OF ASSESSMENT OF SEARCH AND FOR REQUISITION CASES MORE EFFECTIVE. UNDER THE PROVISI ONS OF THIS CHAPTER THE UNDISCLOSED INCOME DETECTED AS A RESULT OF SEAR CH INITIATED OR REQUISITION MADE AFTER 30TH JUNE 1995 BE ASSESSED SEPARATELY AS INCOME OF THAT BLOCK OF TEN PREVIOUS YEARS. THE PRO VISION WAS INTRODUCED TO STREAMLINE THE PROCEDURE CONCERNING T HE SEARCH MATTERS. IT IS ABUNDANTLY CLEAR FROM THE PERUSAL OF THE PRES CRIPTION OF S. 15SBA THAT WITHIN THE PALE OF CHAPTER XIV-B ASSESSMENT CO ULD BE MADE ONLY IN RESPECT OF THE UNDISCLOSED INCOME. SUCH UNDISCLO SED INCOME MUST COME AS A RESULT OF SEARCH. THIS SECTION DOES NOT P ROVIDE A LICENCE TO THE REVENUE FOR MAKING ROVING ENQUIRIES CONNECTED W ITH THE COMPLETED ASSESSMENT. IT IS BEYOND THE POWER OF THE AO TO REVIEW THE ASSESSMENTS COMPLETED UNLESS SOME DIRECT EVIDENCE C OMES TO THE KNOWLEDGE OF THE DEPARTMENT AS A RESULT OF SEARCH W HICH INDICATES CLEARLY THE FACTUM OF UNDISCLOSED INCOME. WITHOUT S UCH EVIDENCE OR MATERIAL THE AO IS NOT EMPOWERED TO DRAW ANY PRESUM PTION AS TO THE EXISTENCE OF UNDISCLOSED INCOME. A PRESUMPTION IS A N INFERENCE OF FACT DRAWN FROM OTHER KNOWN OR PROVED FACTS. IT IS RULE OF LAW UNDER WHICH COURTS ARE AUTHORISED TO DRAW A PARTICULAR IN FERENCE FROM A PARTICULAR FACT UNTIL AND UNLESS THE TRUTH OF SUCH INFERENCE IS DISPROVED BY OTHER EVIDENCE. WE FIND THAT THE SCHEME OF CHAPT ER XIV-B DOES NOT GIVE POWER TO THE REVENUE TO DRAW THE PRESUMPTI ON IN REGARD TO THE UNDISCLOSED INCOME. THE AO COULD PROCEED ON THE BASIS OF MATERIAL DETECTED AT THE TIME OF SEARCH AND THE EVI DENCE GATHERED. 26 UNDER S. 132(4) THE AUTHORISED OFFICER MAY DURING THE COURSE OF SEARCH OR SEIZURE EXAMINE ON OATH ANY PERSON WHO I S FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT DOCU MENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR TIL ING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION MAY THE REAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THE ACT.' 19. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPU GNING THE ADDITIONS MADE ON THE BASIS OF ENTRIES FOUND ON PAGE 34 OF AN NX. A1 CONTENDED THAT ASSESSEE DOES NOT REMEMBER AS TO WHAT THESE AMOUNTS WERE. ACCORDING TO THE ASSESSEE THESE ARE MISCELLANEOUS WORKING MADE ON THIS PAGE SOMEWHERE IN 1996 AS DISCERNIBLE FROM THE STAMP OF THE POST O FFICE ON THE BOTTOM OF THE PAGE. THE CALCULATION APPEARS TO HAVE BEEN MADE IN A PENSIVE MOOD. THEY MAY REPRESENT THE PRESENT MARKET VALUE OF THE ASSET S. WHILE TAKING SPECIFIC ENTRY HE POINTED OUT THAT ADDITION CONFIRMED AT RS. 8 70 000 AND CHALLENGED IN GROUND NO.5 RELATES TO CHITS. IN THIS PAPER NO AMOUNT HAS BEEN WRITTEN AGAINST THE CHIT AND ASSESSEE FAILED TO UNDERSTAND HOW L CAN BE CONSTRUED AS LAC. HE POINTED OUT THAT IT DOES NOT INDICATE TH AT ASSESSEE HAS MADE ANY INVESTMENT IN THE CHITS. LEARNED DR ON THE OTHER HA ND RELIED UPON THE ORDER OF THE ASSESSING OFFICER. HE POINTED OUT THAT THIS PAGE SPECIFICALLY DISCLOSED THE DETAILS OF ASSETS OWNED BY THE ASSESSEE. HE IS HOLDING LAND AT FEROZABAD 27 3 OFFICES MADE INVESTMENT IN SURAJPUR LAND FLATS IN SOCIETY A DIFFERENT VALUE HAS BEEN SHOWN FOR SOME OF THE PROPERTIES IN HIS REGULAR BOOKS OF ACCOUNT. THUS IT CANNOT BE SAID THAT NARRATIONS MA DE IN THIS PAPER ARE ROUGH WORKING OR REPRESENT THE PRESENT MARKET VALUE. TAKI NG US THROUGH THE FINDING OF THE LEARNED CIT(APPEALS) WHILE DEALING WITH THE ISSUE OF FEROZABAD LAND AGITATED BY THE ASSESSEE IN GROUND NO.6 HE POINTED OUT THAT ASSESSEE HAS SHOWN THE INVESTMENT IN LAND AT RS.7 14 000 WHEREAS ASSESSING OFFICER HAS WORKED OUT THE INVESTMENT AT RS.12 LACS. THIS WORKI NG HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF A COPY OF AGREEME NT FOUND AT THE TIME OF SEARCH. IF THE COPY OF THE AGREEMENT SALE DEED AND THIS PAPER READ CONJOINTLY THEN IT WOULD INDICATE THAT NARRATIONS MADE IN THIS PAPER REFLECT THE TRANSACTIONS OF THE ASSESSEE. 20. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GO NE THROUGH THE RECORDS CAREFULLY. FIRSTLY WE TAKE GROUND NOS. 5 & 6 RAISED BY THE ASSESSEE. ACCORDING TO THE ASSESSEE THIS DOCUMENT DOES NOT G OAD ANY PERSON TO ARRIVE AT A FIRM CONCLUSION HENCE NARRATION AVAILABLE IN T HIS DOCUMENT ARE TO BE IGNORED. THE EXPRESSION DOCUMENT HAS NOT BEEN DEF INED IN THE INCOME-TAX ACT BUT ACCORDING TO THE DEFINITION AVAILABLE IN TH E INDIAN EVIDENCE ACT A DOCUMENT MEANS ANY MATTER EXPRESSED OR SCRIBED UPON ANY SUBSTANCE BY 28 MEANS OF LETTERS FIGURES MARK OR BY MORE THAN ONE OF THOSE MEANS INTENDED TO BE USED OR WHAT MAY BE USED FOR THE PURPOSE OF R ECORDING THE MATTER. THUS IF SUBSCRIPTION ON ANY SUBSTANCE IN THE SHAPE OF LETTERS MARKS PICTURE INDICATE SOME COMMUNICABLE IDEA THEN THE NARRATION ON SUCH SUBSTANCE ARE TO BE CONSIDERED FOR WORKING OUT THAT COMMUNICABLE IDE A. FROM PERUSAL OF PAGE 34 JUST BELOW THE CHIT NEXT ENTRY IS FIROZAB AD LAND. ASSESSING OFFICER HAS MADE THE ADDITION OF RS.4 86 000 ON ACC OUNT OF UNEXPLAINED INVESTMENT IN THE FIROZABAD LAND WHICH IS DISPUTED BY THE ASSESSEE BUT ASSESSEE PLACED ON RECORD COPY OF THE SALE DEED AND THE INVESTMENT MADE BY HIM AT A LESSER AMOUNT. IT INDICATES THAT ENTRIES A VAILABLE ON THIS PAPER ARE NOT IRRELEVANT RATHER THEY ARE RELATED TO THE ASSETS AN D LIABILITIES OF THE ASSESSEE. HIS ONE OF THE ARGUMENT IS THAT WHY L SHOULD BE C ONSIDERED AS LAC. THE SAME REASON FOR THIS IS THAT WITH REGARD TO THE OTH ER TRANSACTION ASSESSEE HIMSELF CONSIDERED THIS L AS LAC. FOR THE FIROZAB AD LAND ASSESSEE HAS SHOWN INVESTMENT AT RS.7 14 000 WHERE ASSESSING OFF ICER TOOK IT AS RS.12 LACS MENTIONED BY THE ASSESSEE ON THIS PAGE. BUT TH ERE IS NO DISPUTE WITH REGARD TO THE L BETWEEN THE ASSESSEE AS WELL AS T HE ASSESSING OFFICER. THUS ON A COLLECTIVE READING OF ALL THE TRANSACTIO NS ON THIS PAGE WE ARE OF THE OPINION THAT ASSESSEE HAS WRITTEN INVESTMENT IN CHITS WHICH WERE GIVEN TO 29 THESE FOUR PERSONS AND THE AMOUNTS WERE IN LACS. TH EREFORE ASSESSING OFFICER HAS RIGHTLY MADE THE ADDITION OF RS.8 70 00 0 GROUND NO.5 IS REJECTED. 21. AS DISCUSSED EARLIER ON PAGE 34 OF THE SEIZED M ATERIAL ONE OF THE NARRATIONS IS FIROZABAD LAND 12 L. APART FROM THE ABOVE A COPY OF THE AGREEMENT ON SIMPLE PAPER APPEARS TO HAVE BEEN EXEC UTED ON 29.4.1996 WAS FOUND WHICH DISCLOSED PURCHASE OF THE FIROZABAD LAN D MEASURING FOUR BIGHAS @ RS.2 70 000 PER BIGHAS. THE ASSESSEE HAS S HOWN INVESTMENT IN THIS LAND AT RS.7 14 000. ON THE BASIS OF PAGE 34 COUPLE D WITH THE COPY OF AGREEMENT ASSESSING OFFICER HAS CALCULATED THE COST OF LAND BY MULTIPLYING RS.2 70 000 X 4 BIGHAS = RS.10 80 000 REGISTRATION CHARGES RS.10 000 STAMP DUTY RS.1 10 000 TOTAL RS.12 LACS MINUS INVES TMENT SHOWN BY THE ASSESSEE AT RS.7 14 000. HE MADE AN ADDITION OF RS. 4 86 000. THE CONTENTION OF THE ASSESSEE IS THAT THOUGH HE AGREED FOR THE PU RCHASE OF LAND @ RS.2 70 000 BUT LATER ON IT CAME TO HIS NOTICE THAT THIS LAND WAS ALREADY SOLD BY THE FATHER OF THE VENDEE WHO ENTERED INTO AN AGR EEMENT WITH THE ASSESSEE. CIVIL SUITS CHALLENGING THE SALE DEED WERE FILED. D UE TO THIS LITIGATION ASSESSEE WAS ABLE TO PERSUADE THE VENDEE TO SALE TH E LAND AT A LOWER RATE. IT IS ALSO CONTENDED BY THE ASSESSEE THAT IN 2002 THE TE HSILDAR HAD PUT THAT LAND 30 ON AUCTION FOR RECOVERING THE DISPUTED SHORT PAYMEN T FOR REGISTRATION CHARGES OF RS. 3 LACS. THE ASSESSEE MADE THE PAYMENT OF RS. 3 LACS AND IT WAS RESTORED TO HIM. THE ASSESSEE HAS DISCLOSED THIS IN VESTMENT IN HIS REGULAR BOOKS. LEARNED DR WAS UNABLE TO CONTROVERT ABOVE FA CTS AND CIRCUMSTANCES. HE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES COPY OF THE PLAINTS AV AILABLE AT PAGE 119 COPY OF THE NOTICE FROM THE CIVIL COURT AT PAGE 118 OR DER OF THE TEHSILDAR PAGE 116 COPY OF THE SALE DEED WE ARE OF THE OPINION T HAT ASSESSEE IS ABLE TO EXPLAIN THAT LAND WAS PURCHASED AT A LOWER PRICE TH EN THE ONE MENTIONED IN PAGE 34. ACCORDING TO HIM RS. 12 LACS MENTIONED IN PAGE 34 IS FOR THE PURPOSE OF PRESENT MARKET VALUE OF THE LAND. IN SU PPORT OF THIS CONTENTION ASSESSEE COULD NOT PRODUCE ANY EVIDENCE RATHER WITH THE HELP OF CIRCUMSTANCES DISCUSSED ABOVE IT REVEALS THAT IN F ACT PURCHASE OF LAND WAS AGREED FOR A HIGHER AMOUNT EQUIVALENT TO RS.12 LACS BUT DUE TO SOME ENCUMBRANCES OVER THE LAND AND DEMONSTRATED BY THE ASSESSEE IT WAS PURCHASE FOR A LESSER AMOUNT. THESE CIRCUMSTANCES FALSIFY THE STAND OF THE ASSESSEE THAT FIGURES NOTED IN THE PAGE REPRESENT T HE PRESENT MARKET VALUE OF THE ASSETS AND NOT THE INVESTMENT MADE BY HIM. CONS IDERING THE EVIDENCE PLACED ON RECORD WITH RESPECT TO INVESTMENT IN FERO ZABAD LAND WE ARE OF 31 THE OPINION THAT ASSESSEE IS ABLE TO EXPLAIN HIS PO SITION ABOUT THE INVESTMENT MADE AT RS.7.14 LACS SHOWN IN THE BOOKS OF ACCOUNT. ON THE BASIS OF ENTRIES MADE IN PAGE 34 IT CANNOT BE CONSTRUED THAT EXCESS PAYMENT WAS MADE FOR THE PURCHASE OF FEROZABAD LAND THEREFORE WE ALLOW GROUND NO.6 RAISED BY THE ASSESSEE AND DELETE THE ADDITION OF RS.4 86 000 . 22. THE NEXT ITEM DISPUTED BY THE ASSESSEE IS INVES TMENT MADE IN THREE OFFICES. ACCORDING TO THE ASSESSEE HE HAS DISCLOSE D THE VALUE OF THREE OFFICES IN THE BALANCE SHEET HENCE THE VALUE OF SUCH OFFIC ES CANNOT BE REPLACED BY THE AMOUNT OF RS.25 LACS WRITTEN IN PAGE NO.34 OF T HE SEIZED MATERIAL. IN OUR OPINION ASSESSING OFFICER AS WELL AS LEARNED CIT(A PPEALS) HAS NOT CARRIED OUT PROPER INVESTIGATION OF THIS ISSUE. ACCORDING T O THE ASSESSEE HE HAS SHOWN VALUE OF THESE THREE PREMISES AT RS.2 83 400. THESE ARE ON THE BASIS OF SALE DEED AND THE COPIES OF THE SALE DEED HAVE B EEN PLACED ON RECORD ON PAGE NOS.126 TO 155. ONCE THE VALUE OF A PROPERTY H AS BEEN DISCLOSED BY THE ASSESSEE IN THE REGULAR ASSESSMENT THEN ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT ON THESE PROPERTIES CANNOT BE MADE IN TH E BLOCK ASSESSMENT BECAUSE THE INVESTMENT WAS ALREADY BROUGHT TO THE N OTICE OF THE DEPARTMENT. THE INVESTMENT ON ACCOUNT OF DIFFERENCE IN VALUE CA N BE MADE IF DURING THE COURSE OF SEARCH ANY MATERIAL WAS FOUND INDICATING THE INVESTMENT OF A 32 HIGHER AMOUNT IN THOSE PROPERTIES. IN OUR OPINION THE NARRATIONS OF RS.25 LACS AGAINST THREE OFFICES IS NOT A SUFFICIENT EVID ENCE TO FALSIFY THE THREE SALE DEEDS AND THE DISCLOSURE MADE BY THE ASSESSEE IN HI S REGULAR RETURN OF INCOME. THEREFORE NO ADDITION ON ACCOUNT OF UNEXPL AINED INVESTMENT IN THE OFFICE PREMISES OUGHT TO HAVE BEEN MADE. 23. THE NEXT ITEM DISPUTED BY THE ASSESSEE IS OF RS . 6 LACS. IT EMERGES OUT FROM THE RECORD THAT LAND AT SURAJPUR WAS PURCHASED IN 1989. IT WAS PURCHASED THROUGH DR. GUPTA FOR RS. 2 LACS. THIS LA ND WAS SOLD FOR RS.7.5 LACS IN 2003 AND SHOWN IN THE BOOKS. THE CASE OF TH E ASSESSING OFFICER IS THAT THIS LAND WAS PURCHASED FOR RS.6 LACS. EVEN IF WE PRESUME THAT THIS LAND WAS PURCHASED FOR RS. 6 LACS THEN ALSO ADDITION CAN NOT BE MADE IN THE BLOCK ASSESSMENT BECAUSE THE PURCHASE DEED IS OUT OF THE BLOCK PERIOD HENCE ADDITION IS NOT SUSTAINABLE. 24. THE NEXT ITEM IS OF RS. 50 LACS TAKEN BY THE AS SESSING OFFICER AS UNEXPLAINED INVESTMENT IN SHARES. ACCORDING TO THE ASSESSEE THE SHARES WERE PURCHASED PRIOR TO 1.4.1996 AND ARE OUTSIDE THE PUR VIEW OF BLOCK ASSESSMENT. THEIR VALUE HAS BEEN SHOWN AT RS.50 LACS ONLY FOR K EEPING THE TRACK. ASSESSING OFFICER COULD HAVE WORKED OUT THE VALUE O N THE BASIS OF QUOTATIONS AVAILABLE IN THE MARKET. 33 25. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES WE FIND THAT ASSESSING OFFICER HAS FAILED TO INVESTIGATE THE ISS UE IN RIGHT PERSPECTIVE. HE HAS TO ASCERTAIN WHEN THE SHARES WERE PURCHASED AND WHETHER THEIR VALUE WAS OF RS.50 LACS. WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION IN THE LIGHT OF DISCUSSION MADE BY U S IN RESPECT OF THE SCOPE OF BLOCK ASSESSMENT. HE SHALL AFFORD DUE OPPORTUNIT Y OF HEARING TO THE ASSESSEE. 26. THE NEXT ISSUE AGITATED BY THE ASSESSEE IN HIS APPEAL RELATES TO ADDITION OF RS.50 LACS. ON PAGE 34 AGAINST SCHOOLS RS.50 L ACS HAS BEEN WRITTEN ACCORDING TO THE ASSESSEE THIS REFERENCE IS TO A P ROPERTY OWNED BY R.K. CONVENT SCHOOL EDUCATION SOCIETY. THE ASSESSEE IS T HE PRESIDENT. ASSESSING OFFICER TREATED THIS PROPERTY AS A BENAMI PROPERTY OF THE ASSESSEE. ACCORDING TO THE ASSESSEE THE PROPERTY IS REGISTERED IN THE NAME OF R.K. CONVENT SCHOOL. HE PLACED ON RECORD COPY OF THE SALE DEED A T PAGE 214 OF THE PAPER BOOK. ASSESSEE ALSO POINTED OUT THAT INVESTMENT IN THIS PROPERTY HAS BEEN DULY DISCLOSED BY THE R.K. CONVENT SCHOOL. LEARNED DR WAS UNABLE TO CONTROVERT THE CONTENTIONS OF THE ASSESSEE. 27. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES WE ARE OF THE VIEW THAT IF WEIGH THE COPY OF THE SALE DEED BALAN CE SHEET OF THE SCHOOL 34 WHICH WERE SHOWN TO THE INCOME-TAX DEPARTMENT PRIOR TO THE SEARCH VIS-- VIS THE NARRATIONS MADE IN PAGE 34 THEN WE ARE OF T HE OPINION THAT THIS NARRATION ON PAGE 34 IS NOT SUFFICIENT TO FALSIFY T HE DOCUMENTARY EVIDENCE PLACED ON RECORD BY THE ASSESSEE. ASSESSING OFFICER CANNOT SAY ON THE BASIS OF THIS NARRATION THAT ASSESSEE IS THE BENAMI OWNER OF THIS PROPERTY. IT CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE. 28. THE NEXT ITEM COMING OUT ON PAGE 34 IS OF RS. 6 LACS. IT REPRESENTS THE INVESTMENT MADE IN SURAJPUR LAND. THIS ADDITION HAS BEEN DELETED BY THE LEARNED CIT(APPEALS). ACCORDING TO THE ASSESSEE SU RAJPUR LAND WAS PURCHASED BY MISS KAMLESH BANSAL IN 1989 AND RECORD ED IN THE BOOKS. THIS LAND HAS BEEN SOLD FOR RS.6 LACS IN 2003. ASSESSING OFFICER HAS MADE THE ADDITION ON THE GROUND THAT PURCHASE OF THE LAND WA S NOT SHOWN TO HIM AND THEREFORE HE MADE THE ADDITION. THE LEARNED COUNSE L FOR THE ASSESSEE AT THE TIME OF HEARING POINTED OUT THAT ASSESSING OFFICER HAS NOT ASKED ANY INFORMATION ABOUT THIS LAND. IN THE INCOME-TAX RETU RNS OF MISS KAMLESH BANSAL FOR ASSESSMENT YEAR 1991-92 THE INVESTMENT IN THE LAND WAS SHOWN. LEARNED DR WAS UNABLE TO CONTROVERT THE CONTENTIONS OF LEARNED COUNSEL FOR THE ASSESSEE. 35 29. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES WE ARE OF THE OPINION THAT ONCE INVESTMENT WAS MADE PRIOR TO THE COMMENCEMENT OF THE BLOCK PERIOD THEN ADDITION ON ACCOUNT OF UNEXPLAINE D INVESTMENT IN THE BLOCK PERIOD CANNOT BE MADE. HENCE LEARNED CIT(APP EALS) HAS RIGHTLY DELETED THE ADDITION. 30. THE NEXT ITEM IS OF RS. 6 LACS REPRESENTING INV ESTMENT IN SHIVALIK SOCIETY. FROM PERUSAL OF THE FINDINGS OF THE LEARNE D CIT(APPEALS) IT REVEALS THAT THIS INVESTMENT HAS DULY BEEN DISCLOSED BY THE ASSESSEE IN HIS REGULAR RETURN AND THERE IS NOTHING ON THE RECORD WHICH CAN SUGGEST THAT ASSESSEE HAS INVESTED SOMETHING MORE THAN THE ONE DISCLOSED TO T HE I.T. DEPARTMENT IN THE REGULAR RETURN. TAKING INTO CONSIDERATION THE FINDI NGS OF THE LEARNED CIT(APPEALS) WE DO NOT SEE ANY GOOD REASON TO INTE RFERE IN IT. GROUND NO.4 OF THE REVENUES APPEAL IS REJECTED. 31. THE NEXT ITEM IMPUGNED BY THE REVENUE IS DELETI ON OF RS.8 LACS. THE ASSESSEE HAS WRITTEN LIC BONDS- 8 LACS ON PAGE 34. ACCORDING TO THE ASSESSEE THE BONDS WERE PURCHASED PRIOR TO 1996. T HEY HAVE BEEN ENCASHED IN FINANCIAL YEARS 1999-00 AND 2001-02. ACCORDING T O THE ASSESSEE RS. 8 LACS IS THE VALUE OF THE BONDS AT THE TIME WHEN ENT RIES ON THIS PAGE WERE MADE. ONCE THE BONDS WERE STATED TO BE PURCHASED PR IOR TO 1996 THE 36 INVESTMENT IN SUCH BONDS CANNOT BE IN THE BLOCK ASS ESSMENT. ASSESSING OFFICER OUGHT TO HAVE FIND OUT THE EXACT DATE OF I NVESTMENT AND THE VALUE OF INVESTMENT. MERELY ON THE BASIS OF THIS ENTRY ON PA GE 34 ADDITION CANNOT BE MADE BECAUSE ASSESSEE HAS ALREADY DISCLOSED THE INV ESTMENT IN THE LIC BONDS AND THEIR ENCASHMENT TO THE DEPARTMENT NO AD DITION CAN BE MADE IN THIS BLOCK PERIOD. LEARNED CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION. THIS GROUND OF APPEAL IS REJECTED. 32. THE NEXT ITEM IS OF RS. 30 LACS STATED TO BE DI SCLOSED AS INVESTMENT IN THE COMPANIES. THE ASSESSEE HAS STATED THAT NARRATI ON OF RS. 30 LACS REPRESENT THE VALUATION OF THE COMPANIES TAKEN OVER FROM SHRI AVDESH MITTAL TO SETTLE THE DISPUTE. ASSESSING OFFICER DID NOT ACCEPT THIS CONTENTION OF ASSESSEE AND MADE THE ADDITION. ON APPEAL LEARNED CIT(APPEALS) HAS DELETED THE ADDITION. 33. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES WE HAVE GONE THROUGH THE RECORD CAREFULLY. ASSESSING OFFICER FAILED TO B RING ANY EVIDENCE ON RECORD INDICATING THE FACT THAT EXPRESSION COMPANI ES 30 LACS REPRESENTS SOMETHING ELSE THEN THE ONE CONTENDED BY THE ASSESS EE. THE ASSESSEE HAS EXPLAINED THE ENTRY AVAILABLE ON PAGE 30 AND INDICA TED THAT IT IS THE VALUE OF THE COMPANIES TAKEN OVER FROM THIS AVDESH MITTAL TO SETTLE THE DISPUTE. NOW 37 IT IS FOR THE ASSESSING OFFICER TO POINT OUT THAT N ARRATION ON PAGE 34 IS IN RESPECT OF SOME OTHER COMPANY. THUS LEARNED CIT(AP PEALS) HAS RIGHTLY DELETED THE ADDITION AND GROUND NO.6 IS REJECTED. 34. THE NEXT ITEM DISPUTED BY THE REVENUE IS DELETI ON OF ADDITION OF RS.35 97 000 REPRESENTING UNEXPLAINED LOANS. ACCORD ING TO THE ASSESSING OFFICER ASSESSEE HAS STATED IN HIS STATEMENT ON 3 RD SEPTEMBER 1992 THAT OTHER NARRATIONS PERTAIN TO LOAN TRANSACTION. HOWEVER DU RING THE COURSE OF ASSESSMENT PROCEEDING HE STATED THAT OTHER FIGURES ARE ONLY MISCELLANEOUS WORKING OF SOME TRANSACTIONS. ASSESSING OFFICER HAS MADE THE ADDITION ON THE GROUND THAT ASSESSEE FAILED TO EXPLAIN THE ENTR IES WITH THE HELP OF BOOKS OF ACCOUNT BALANCE SHEET ETC. 35. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPO N THE ORDER OF THE LEARNED CIT(APPEALS) WHEREAS LEARNED DR RELIED UPON THE ORDER OF ASSESSING OFFICER. 36. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTA NCES IT IS NOT DISCERNIBLE HOW AN AMOUNT OF RS.35 97 000 HAS BEEN WORKED OUT BY THE ASSESSING OFFICER AS REPRESENTING LOANS. IT APPEARS THAT THE FIGURES OF 21 4 2 ETC. HAVE BEEN TOTALED UP BY THE ASSESSING OFFICER TO MAKE IT RS.35 97 000 BUT ON CONSTRUCTION OF THIS DOCUMENT IN A LOGICAL W AY NO SUCH INTERPRETATION 38 IS FLOWING. LEARNED CIT(APPEALS) HAS RIGHTLY DELETE D THE ADDITION ON THE GROUND THAT ASSESSING OFFICER HAS ADDED THE AMOUNT BY TAKING GENERAL MEANING WITHOUT ANY CORROBORATIVE EVIDENCE. WE DO N OT SEE ANY REASON TO INTERFERE IN THE ORDER OF LEARNED CIT(APPEALS). THI S GROUND OF APPEAL IS ALSO REJECTED. 37. NOW WE TAKE THE LAST GROUND OF APPEAL RAISED BY THE ASSESSEE. HE HAS CHALLENGED THE ADDITION OF RS.2 47 586. AT THE TIME OF SEARCH TOTAL CASH OF RS.9800 AND RS.3 01 600 WAS FOUND. ACCORDING TO THE ASSESSING OFFICER ASSESSEE WAS ABLE TO EXPLAIN CASH OF RS.63 814 ON T HE BASIS OF THE BALANCE SHEET AS ON 15 TH JULY 2002. HE TREATED REST OF THE CASH AS UNEXPLAI NED ONE. THE LEARNED COUNSEL FOR THE ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF THE BALANCE CASH THEREFORE THIS GROUND OF APPEAL IS R EJECTED IN PRINCIPLE. HOWEVER SINCE A LARGE NUMBER OF AMOUNTS HAVE BEEN ADDED UNDER VARIOUS HEADS AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. A SSESSING OFFICER SHALL EXAMINE THE TELESCOPIC BENEFIT IF ANY AVAILABLE T O THE ASSESSEE. FOR THIS LIMITED PURPOSE THIS ISSUE IS SET ASIDE TO THE FIL E OF THE ASSESSING OFFICER. 38. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 19.02.201 0 ( DEEPAK R. SHAH ) ( RAJ PAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19/02/2010 MOHAN LAL 39 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR