The DCIT, Central Circle-1,, Baroda. v. Shri Manubhai K. Agrawal, Baroda.

ITSSA 68/AHD/2004 | misc
Pronouncement Date: 29-10-2010 | Result: Partly Allowed

Appeal Details

RSA Number 6820516 RSA 2004
Bench Ahmedabad
Appeal Number ITSSA 68/AHD/2004
Duration Of Justice 6 year(s) 7 month(s) 18 day(s)
Appellant The DCIT, Central Circle-1,, Baroda.
Respondent Shri Manubhai K. Agrawal, Baroda.
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 29-10-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 29-10-2010
Date Of Final Hearing 12-10-2010
Next Hearing Date 12-10-2010
Assessment Year misc
Appeal Filed On 12-03-2004
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI JM AND D.C.AGRAWAL A M DY. CIT CENTRAL CIRCLE-1 BARODA. VS. SHRI MANUBHAI K. AGRAWAL C/O. AGRAWAL TRADING CO. MODASAR ROAD TAL. SANKHEDA BODELI BARODA. (APPELLANT) .. (RESPONDENT) AND SHRI MANUBHAI K. AGRAWAL C/O. AGRAWAL TRADING CO. MODASAR ROAD TAL. SANKHEDA BODELI BARODA. VS. DY. CIT CENTRAL CIRCLE-1 BARODA. (APPELLANT) .. (RESPONDENT) REVENUE BY :- SHRI K. R. MEGHWAL CIT DR ASSESSEE BY:- SHRI S. N. SOPARKAR & M. BAKSHI ARS O R D E R PER D.C. AGRAWAL ACCOUNTANT MEMBER . THESE ARE TWO CROSS APPEALS ONE FILED BY THE REVEN UE AND THE OTHER BY THE ASSESSEE RAISING FOLLOWING GROUNDS :- IT(SS) A NO.68/AHD/2004 (REVENUES APPEAL) IT(SS)A NO.68/AHD/2004 BLOCK PERIOD 1..4.80 TO 23.1.2001 IT(SS)A NO.80/AHD/2004 BLOCK PERIOD 1..4.80 TO 23.1.2001 IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN GIV ING SET OFF OF CASH DEFICIT OF RS.66 95 538/- ON 15.11.96 AGAINST UNACCOUNTED INVESTMENT IN LAND AT DHOKALIA OF RS.11 43 851/- BO TH CANNOT BE CO-RELATED BECAUSE THE SALE DEED WERE REGISTERED IN JANUARY 1995 AND APRIL 1996. (2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN GIV ING SET OFF OF RS.28 97 406/- AGAINST THE PEAK CASH DEFICIT BECAUS E SET OFF OF RS.46 44 682/- ON ACCOUNT OF PEAK UNDISCLOSED INVES TMENT IN THE FDRS WAS ALREADY GIVEN IN THE ASSESSMENT ORDER AND THERE IS NO NEXUS IN THE SEIZED MATERIAL TO ENTITLE THE ASSE SSEE OF ANY SET OFF OF THE BALANCE AMOUNT. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. WHEREAS THE ASSESSEE HAS RAISED FOLLOWING GROUNDS I N HIS APPEAL IN ITA NO. IT(SS)A NO.80/AHD/2004 - (1) THE LD. CIT(A)IV AHMEDABAD HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE LD. A.O. IN INCLUDING AN AMOUNT OF RS.66 95 528/- IN THE UNDISCLOSED INCOME OF THE APP ELLANT BY HOLDING THAT SUCH AMOUNT BEING THE PEAK CASH DEFICI TS IS INVESTED BY THE APPELLANT OUT OF UNDISCLOSED INCOME IN THE MONEY LENDING BUSINESS. THE ADDITION BEING ERRONEOUS DESIRES TO BE DELETED OR IN THE ALTERNATIVE SUCH PEAK DEFICIT MAY BE HELD TO BE AV AILABLE WITH THE APPELLANT FOR HAVING MADE INVESTMENTS THEREAFTE R IN RESPECT OF WHICH SEPARATE ADDITIONS ARE MADE UNDER THE FOLL OWING HEADS:- 1) CASH SEIZED FROM RESIDENCE ON THE DATE OF SEAR CH RS.1 87 720/- 2) INVESTMENT IN HOUSEHOLD ARTICLES RS.3 00 000/- 3) FDRS KVP ETC. RS.2 37 100/- 4) EXPENDITURE IN RENOVATION OF HOUSE RS.2 3 0 000/- 5) SHARES & DEBENTURES RS.22 980/- 6) TRACTOR RS.50 000/- IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 3 7) UNEXPLAINED INVESTMENTS IN INVENTORY OF RAW COTTON AND COTTON BALES FOUND FROM THE RS.13 73 210/- PREMISES OF AGRAWAL COATSPIN (P) LTD. 3. VIDE LETTER DATED 18.03.2009 THE ASSESSEE HAS SO UGHT TO REVISE THE GROUND NO.1.4 AND 1.6 SUBMITTING THEREIN THAT REVIS ED CLAIM OF RELIEF BEFORE THE TRIBUNAL IN RESPECT OF EXPENDITURE IN RE NOVATION OF HOUSE IS RS.2 30 000 IN PLACE OF RS.4 47 820/-. SIMILARLY T HE REVISED CLAIM OF RELIEF IN RESPECT OF UNEXPLAINED INVESTMENT IN TRAC TOR IS RS.50 000/- AND NOT RS.1 90 000/- AS MENTIONED IN THE ORIGINAL GROU ND OF APPEAL. 4. THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZ URE OPERATION UNDER SECTION 132 WAS CARRIED OUT AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE ON 23.01.2001. CONSEQUENT THEREOF AND IN R ESPONSE TO NOTICE UNDER SECTION 158 BC THE ASSESSEE FILED THE RETURN OF UNDISCLOSED INCOME OF RS.82 24 913/-. WHILE EXAMINING THE SEIZED MATER IAL THE AO NOTICED THAT ANNEXURE A-53 A-54 A-72 AND A-3 CONTAINED RE CEIPTS OF CASH WHICH WERE NOT EXPLAINED. TOTAL OF SUCH CASH RECEIP TS AS WORKED OUT ON THE BASIS OF THESE FOUR ANNEXURES AMOUNTED TO RS.67 69 603/-. THE AO FURTHER NOTICED THAT ANNEXURES 53 & 54 ARE TWO NOTE -BOOKS CONTAINING DATE-WISE TRANSACTIONS AND SHOWING DATE-WISE LEDGER ACCOUNT. THE AO FURTHER NOTICED THAT IT IS ASSESSEE HIMSELF WHO HAS WORKED OUT THE PEAK CASH CREDIT ON THE BASIS OF THESE FOUR ANNEXURES AT THIS FIGURE (RS.67 69 603/-). INSTEAD OF EXPLAINING THE SOURCE OF CREDITS THE ASSESSEE OWNED UP THESE ENTRIES ON DETERMINATION OF THE PEAK THEREOF. THE AO ALSO NOTED THAT ASSESSEE HAD PREPARED A CASH-IN-FLOW AND CASH-OUTFLOW STATEMENT AS PER CONVENIENCE AND ENTERED THE RECEIP TS OF CASH EVEN THOUGH SUCH RECEIPTS WERE NOT FOUND RECORDED IN THE SEIZED DOCUMENTS. THE DETAILS OF THESE ALLEGED RECEIPTS NOT FOUND REC ORDED IN THE SEIZED DOCUMENTS HAVE BEEN GIVEN BY THE AO ON PAGE 5 OF HI S ORDER. THUS IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 4 THOUGH THE SEIZED DOCUMENTS SHOWED RECEIPTS OF CASH OF RS.67 69 603/- THE ASSESSEE WORKED OUT PEAK OF CASH RECEIPT IN THE CASH INFLOW AND OUTFLOW STATEMENT AT RS.66 00 823/- AS ON 31.3.1994 . THE AO THEREAFTER PROCEEDED TO EXAMINE SUCH CASH INFLOW AND OUTFLOW S TATEMENT AND FOUND THAT THERE IS A PEAK CASH DEFICIT OF RS.68 64 308/- AS ON 15.11.1996. THIS WAS FOUND IN ADDITION TO PEAK CASH CREDIT OF RS.66 00 823/- AS ON 31.3.1994. THE ASSESSEE SOUGHT TO EMPHASISE BEFORE THE AO THAT ASSESSEE HAS GENERATED INCOME OF RS.1 34 69 131/- WITHIN A S PAN OF 2 YEARS (FROM 31.3.94 TO 15.11.1996) BEING SUM OF RS.66 00 823/- + RS.68 64 308/-. THE AO HOWEVER DID NOT AGREE WITH THIS REVISED WORKING GIVEN BY THE ASSESSEE. HE POINTED OUT THAT ASSESSEE HAS PURCHASED AGRICULTURAL LAND AT DHOKALIA FOR RS.41 L ACS. WHICH IS REFLECTED FROM ANNEXURE A-89 BEING LAND IN BLOCK NO.18 MEASUR ING ONE ACRE AND 39 GUNTHAS AND PURCHASED FOR A CONSIDERATION OF RS. 26 66 961/- AS ON 9.1.1995. A PAYMENT OF RS.16 97 510/- WAS MADE UPTO 8.5.1995 WHICH IS REFLECTED IN ANNEXURE A-54. FURTHER THE ASSESSEE HA D PURCHASED LAND IN BLOCK NO.19/1 MEASURING 40 GUNTHAS FOR A CONSIDERAT ION OF RS.15 24 600/- AS ON 25.4.1996. A TOTAL PAYMENT OF RS.12 98 900/- IS RECORDED UPTO 10.12.1996. THE ASSESSEE HAD ALSO PUR CHASED ANOTHER PIECE OF LAND FROM SHRI RAMESH M. PANCHOLI AT RS.1.81 LAC S. IN ADDITION TO INVESTMENT IN LAND ASSESSEE HAD SAVING BANK ACCOUNT S WHICH WERE NOT DISCLOSED IN THE INCOME-TAX RETURN. THE DETAILS OF SUCH BANK ACCOUNTS ARE GIVEN AT PAGES 9 & 10 OF THE ASSESSMENT ORDER. THER E ARE 12 SUCH BANK ACCOUNTS IN THE NAMES OF ASSESSEE AND OTHER FAMILY MEMBERS SUCH AS WIFE OF THE ASSESSEE SHRI JIGNESH AGRAWAL SHRI SANJAY AGRAWAL PREETI M. AGRAWAL. THE AO FOUND THAT TOTAL DEPOSITS IN THESE BANK ACCOUNTS IN RESPECTIVE YEARS COVERED IN BLOCK PERIOD AMOUNTED TO RS.3 09 24 113/-. THE DETAILS OF THESE DEPOSITS ARE GIVEN BY THE AO O N PAGE 11 OF HIS ORDER. THE AO ALSO FOUND FROM THE SEIZED DOCUMENTS THAT TO TAL RECEIPTS OF IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 5 UNACCOUNTED CASH AS PER ANNEXURE A-53 AMOUNTED TO R S.1 98 88 566/- AND AS PER ANNEXURE A-54 SUCH UNACCOUNTED CASH RECE IPT WAS FOUND TO THE EXTENT OF RS.5 05 70 714/- . THE TOTAL OF SUCH UNACCOUNTED CASH RECEIPTS WAS WORKED OUT AT RS.7 04 59 280/-. ANNEXU RES A-53 & A54 ALSO INDICATED UNACCOUNTED SALES OF COTTON AND COTTON SE EDS AT RS.1 60 71 688/-. 5. EVEN THOUGH HE OBSERVED AS ABOVE BUT WHILE COMP UTING THE INCOME OF ASSESSEE THE AO HELD THAT TOTAL UNACCOUN TED CASH AVAILABLE IN THE FORM OF PEAK CASH CREDIT AS ON 31.3.1994 WAS AS RS.66 00 823/- AND PEAK CASH DEFICIT AS ON 15.11.1995 WAS RS.68 64 30 8/- RESPECTIVELY TOTALING TO RS.1 34 65 131/-. OUT OF THIS ASSESSEE HAD OFFERED A SUM OF RS.67 69 603/- IN THE BLOCK RETURN LEAVING THE DEFI CIT AT RS.66 95 528/-. THIS SUM WAS ADDED BY THE AO IN THE TOTAL UNDISCLOS ED INCOME OF THE ASSESSEE. 6. IN ADDITION TO ABOVE THE AO FOUND THAT TOTAL IN VESTMENT IN THE LAND AMOUNTED TO RS.41 91 561/- (RS.26 66 961/- + RS.15 24 600/-). BUT ONLY A SUM OF RS.30 47 710/- IS RECORDED IN THE SEIZED DOC UMENT AS UNDER :- PAGE 78 OF ANNEXURE A-53 RS.8 000/- PAGE 20 OF ANNEXURE A054 RS.43 300/- PAGE 35 OF ANNEXURE A-54 RS.15 97 510/- PAGE 77 OF ANNEXURE A-54 RS.12 98 900/- TOTAL RS.30 47 710/- THUS THERE IS A DEFICIT OF RS.11 43 851/-. SINCE SO URCE THEREOF WAS NOT EXPLAINED HE PROPOSED TO MAKE THIS ADDITION IN THE UNDISCLOSED INCOME OF THE ASSESSEE. IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 6 7. THE AO FURTHER FOUND THAT ASSESSEE HAD ARRANGED THE MARRIAGE OF HIS DAUGHTER WHEREIN THE SEIZED DOCUMENTS INDICATED AN EXPENDITURE OF RS.15 10 000/- WHEREAS ONLY A SUM OF RS.3.5 LAC IS RECORDED IN THE REGULAR BOOKS. 8. DURING THE COURSE OF SEARCH THE AO FOUND THAT AS SESSEE IS OWNING A TEMPO AND A TRACTOR TROLLY. THE TOTAL INVESTMENT IN THESE ITEMS WAS STATED BY THE ASSESSEE AT RS.1 25 000/- ON PURCHASE AND RS .25 000/- ON REPAIRS. HOWEVER IN THE BOOKS OF ACCOUNT ONLY A SUM OF RS.5 0 000/- WAS ENTERED. SINCE TOTAL INVESTMENT WAS FOUND AT RS.1 50 000/- W HEREAS ASSESSEE HAD DISCLOSED ONLY RS.50 000/- THE AO PROPOSED AN ADDI TION OF RS. 1 LAC UNDER THIS HEAD. 9. THE AO FOUND FROM THE SEIZED DOCUMENTS THAT FOR RENOVATION OF THE HOUSE THE ASSESSEE HAD INCURRED AN AMOUNT OF RS.4 8 0 269/-. THE ASSESSEE HAD DECLARED A SUM OF RS.2 50 000/- UNDER SECTION 1 32(4). AFTER GIVING FURTHER DISCOUNT TO THE DUPLICATION OF ENTRIES THE AO PROPOSED AN ADDITION OF RS.2 17 820/- AS EXPENDITURE OUTSIDE THE BOOKS I NCURRED TOWARDS RENOVATION OF THE RESIDENTIAL HOUSE. 10. THE SEIZED DOCUMENTS ALSO INDICATED AN EXPENDIT URE OF RS.31 600/- ON VISIT TO VAISHNAVDEVI PERTAINED TO ASSESSEES FA MILY WHICH WAS ALSO ADDED IN THE TOTAL INCOME OF THE ASSESSEE AS IT WAS NOT FOUND RECORDED IN THE BOOKS. 11. THE ASSESSEE WAS FOUND IN POSSESSION OF 773.100 GMS. JEWELLERY AND SILVER ARTICLES WEIGHING 17.300 KGS.. AFTER CON SIDERING THE VARIOUS EXPLANATIONS FURNISHED BY THE ASSESSEE THE AO PROPO SED AN ADDITION OF RS.1 18 400/- UNDER THIS HEAD AS UNEXPLAINED INVEST MENT IN SILVER ARTICLES. IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 7 12. IN APPEAL THE LD. CIT(A) CONFIRMED THE ADDITIO N OF RS.66 95 526/- ON THE GROUND THAT ASSESSEE HIMSELF HAD ADMITTED TO HAVE UNDISCLOSED CASH CREDIT AND CASH DEFICIT TO THE EXTENT OF RS.1 34 65 131/-. 13. REGARDING ADDITION OF RS.11 43 851/- THE LD. CI T(A) ACCEPTED THE EXPLANATION OF THE ASSESSEE THAT DEFICIT IN PURCHAS E OF LAND IS RS.10 43 851/- AND NOT RS.11 43 851/- AS AO HAS IGN ORED PAYMENT OF RS.1 LAC MADE BY CHEQUE. FURTHER SUM OF RS.10 43 85 1/- IS MADE AFTER 10.12.1996 AND THE SAME IS AVAILABLE OUT OF CASH DE FICIT OF RS.66 95 528/- 14. THE LD. CIT(A) ALSO DELETED THE ADDITION OF RS. 12 85 755/- BEING ALLEGED MARRIAGE EXPENDITURE OF ASSESSEES DAUGHTER JYOTI AGRAWAL ON THE GROUND THAT MARRIAGE OF THE DAUGHTER WAS ARRANGED I N THE MONTH OF MAY 1999 AND SUCH DEFICIT COULD BE AVAILABLE OUT OF CAS H DEFICIT OF RS.66 95 528/- SEPARATELY ADDED BY THE AO. 15. THE LD. CIT(A) ALSO DELETED THE ADDITION OF RS. 1 LACS BEING UNEXPLAINED INVESTMENT IN TRACTOR ON THE GROUND THA T SUCH DEFICIT WOULD BE AVAILABLE FROM THE REVISED CASHFLOW STATEMENT PR EPARED BY THE ASSESSEE AFTER INCLUDING THE ALLEGED CASH DEFICIT OF RS.66 9 5 528/-. THE LD. CIT(A) ALSO DELETED THE ADDITION OF RS.2 17 820/- RS.31 6 00/- AND RS.1 80 400/- ON THE GROUND THAT SUCH UNEXPLAINED CASH WOULD BE A VAILABLE OUT OF CASH DEFICIT OF RS.68 64 308/- AS FOUND ON 15.11.1996. 16. IN NUT SHELL THE LD. CIT(A) CONFIRMED THE UNDI SCLOSED INCOME AT RS.1 34 65 131/- AND TREATED THE OTHER INVESTMENTS AS EXPLAINABLE OUT OF CASH DEFICIT OF RS.66 95 528/- FOUND AS ON 15.11.1 996. 17. THE DEPARTMENT IS IN APPEAL AGAINST THE RELIEF GIVEN BY THE LD. CIT(A) WHEREAS THE ASSESSEE IS IN APPEAL AGAINST SU STAINING THE ADDITIONS. IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 8 18. DURING THE COURSE OF HEARING THE LD. AR DID NOT PRESS FOR GROUND NO.1 WHICH RELATES TO ADDITION OF RS.66 95 528/- BU T SUBMITTED THAT OTHER INVESTMENT/EXPENDITURE SHOULD BE TREATED AS COMING OUT OF SUCH CASH DEFICIT AS ON 15.11.1996. 19. THE LD. DR ON THE OTHER HAND SUBMITTED THAT IT IS INCORRECT TO HOLD THAT ASSESSEE WOULD HAVE SURPLUS CASH BALANCE AS ON 15.11.1996. IN FACT ON THIS DATE THERE WAS CASH DEFICIT TO THE EXTENT O F RS.66 95 528/- MEANING THEREBY THAT UPTO THAT DATE ASSESSEES OUTFLOW OF C ASH EXPENDITURE/INVESTMENT WAS MORE THAN AVAILABILITY O F CASH. IN ORDER TO WIPE OUT THAT DEFICIENCY A NOTIONAL INFLOW OF CASH IS MADE IN THE CASH BOOK WHICH FINALLY RESULTED IN NIL CASH BALANCE. I T IS NOT A CASE THAT THERE WAS A SURPLUS CASH OF RS.66 95 528/- AVAILABL E WITH THE ASSESSEE FOR MEETING OUT UNEXPLAINED EXPENDITURE ON FUTURE DATE. ONCE CASH BALANCE IS ZERO ON 15.11.1996 NO CASH IS SAID TO BE AVAILABL E WITH THE ASSESSEE TO EXPLAIN THE UNACCOUNTED EXPENDITURE. FURTHER THE LD . DR SUBMITTED THAT ASSESSEE HAD MADE INVESTMENT IN PURCHASE OF LAND AN D INVESTMENT IN DEPOSITS IN BANK ACCOUNTS PRIOR TO 15.11.96. IT CAN NOT BE SAID THAT SUCH OUTCOME COULD BE SUBSEQUENTLY AVAILABLE WITH THE AS SESSEE AS INFLOW FOR BUILDING UP CASH BALANCE AS ON 15.11.1996 SO AS TO MAKE CASH AVAILABLE TO MEET OUT UNEXPLAINED EXPENDITURE SUBSEQUENT TO 15.1 1.1996. THEREFORE UNEXPLAINED INVESTMENT/EXPENDITURE INCURRED AFTER 1 5.11.96 FOR WHICH AO HAS MADE SEPARATE ADDITION TOTALING TO RS.28.97 LACS HAS TO BE SEPARATELY ADDED AS THE EXPLANATION GIVEN BY THE AS SESSEE CANNOT BE ACCEPTED AS SATISFACTORY. 20. ON THE OTHER HAND THE LD. AR RELIED ON THE ORD ER OF LD. CIT(A) TO THE EXTENT THAT SUBSEQUENT UNACCOUNTED INVESTMENT/E XPENDITURE ARE EASILY EXPLAINED OUT OF CASH DEFICIT OF RS.66 95 528/-. IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 9 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIAL ON RECORD. DURING THE COURSE OF HEARING TH E LD. AR FAIRLY SUBMITTED THAT HE DOES NOT PRESS GROUND NO.1 WHICH RELATES TO INCLUSION OF AN INCOME OF RS.66 95 528/-. ACCORDINGLY THIS G ROUND IS REJECTED AS NOT PRESSED. 22. THEREFORE THE ONLY GROUND WHICH SURVIVES FOR A DJUDICATION IS ABOUT MISCELLANEOUS ADDITIONS CONTESTED BY THE ASSESSEE B EFORE US:- (1) CASH SEIZED FROM THE RESIDENCE ON THE DATE OF S EARCH RS.1 87 720/- (2) INVESTMENT IN HOUSEHOLD ARTICLES RS.3 00 000/- (3) FDRS/KVP RS.2 37 100/- (4) EXPENDITURE ON RENOVATION OF HOUSE RS.2 30 00 0/- (5) SHARES AND DEBENTURES RS.22 980/- (6) TRACTOR RS.50 000/- (7) UNEXPLAINED INVESTMENT OF INVENTORY OF RAW COTT ON AND COTTON BALES FOUND FROM THE PREMISES OF AGRAWAL COATSPIN ( P) LTD. RS.13 73 210/- THE LD. AR SUBMITTED THAT THE ASSESSEE HAS PREPARED A CASHFLOW STATEMENT FOR THE PERIOD FROM 1.4.1993 TO 31.3.2001 WHICH INC LUDES THE ENTRIES FOUND ON SEIZED DOCUMENTS AS WELL AS IN THE REGULAR BOOKS OF ACCOUNT. THIS CASH BOOK CONTAINS THE CREDIT-ENTRY OF RS.66 0 0 823/- AS ON 1..4.1994 WHICH THE ASSESSEE HAS SURRENDERED. THERE IS ALSO A CREDIT ENTRY OF RS.68 64 308/- AS ON 15.11.1996 WHICH ALSO THE ASSE SSEE HAS SURRENDERED. THUS THERE IS NO DISPUTE ABOUT SUM OF RS.1 34 69 13 1/- WHICH COMPRISES OF TWO SUMS BEING RS.66 00 823/- AND RS.68 64 308/- . ACCORDING TO THE IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 10 LD. AR OTHER ITEMS IN THE GROUNDS OF APPEAL OF ASSE SSEE SHOULD BE DEEMED TO BE COVERED OUT OF THESE TWO SUMS AND THEREFORE NO FURTHER ADDITION SHOULD BE MADE. 23. WE WILL DISCUSS EACH ITEM SEPARATELY AS UNDER : - (1) CASH SEIZED FROM THE RESIDENCE ON THE DATE OF SEARCH I.E. ON 23.1.2001 IS RS.1 87 720/-. THE CASH FLOW STATEMENT SHOWED A CASH BALANCE OF RS.3 45 983/- AS ON 23.1.2001 THE CLAIM OF THE ASSESSEE IS THAT THE SUM OF RS.1 87 720/- FOUND AT HIS PREMISES SHOU LD BE DEEMED TO BE COVERED BY THIS AMOUNT. SINCE THIS CASH FLOW STATEM ENT PREPARED BY THE ASSESSEE FROM 1.4.1993 TO 31.3.2001 IS NOT CHALLENG ED THE CASH AVAILABILITY OF RS.1 87 720/- IS ACCEPTED AS EXPLAI NED. WE DO NOT FIND ANY SEPARATE ADDITION MADE BY THE AO IN RESPECT OF THIS CASH. HOWEVER THE AO WILL VERIFY WHETHER THE DECLARATION OF RS.82 84 913/- OF UNDISCLOSED INCOME IN THE RETURN INCLUDES THIS SUM SEPARATELY. IF IT IS SO THEN IT SHOULD BE EXCLUDED FROM FINAL COMPUTATION OF UNDISCLOSED I NCOME. (2) INVESTMENT IN HOUSEHOLD ARTICLES THE ASSESSEE HAS SHOWN THIS SUM AS OUTFLOW IN THE CASH FLOW STATEMENT AS ON 23. 1.2001. THE AO HAS NOT MADE ANY SEPARATE ADDITION IN RESPECT OF THIS I TEM. IF THIS SUM IS INCLUDED IN THE DECLARED FIGURE OF RS.82 84 913/- T HEN THE SUM OF RS.3 LACS SHOULD BE EXCLUDED FROM FINAL COMPUTATION OF U NDISCLOSED INCOME. (3) INVESTMENT IN KVP RS.2 37 100/- THE AO HAS NOT MADE ANY SEPARATE ADDITION OF THIS AMOUNT. HOWEVER CASH FLO W STATEMENT SHOWED THAT ASSESSEE HAS MADE INVESTMENTS AS UNDER :- IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 11 1.6.1990 RS.10 000/- 31.8.99 RS.2 480/- 8.4.00 RS.25 000/- + RS.20 000/- + RS.20 000/- + RS.20 000/- THE AO WILL VERIFY THE CASH FLOW STATEMENT AND FIND OUT WHETHER IT REFLECTS ANY FURTHER INVESTMENT IN FDR AND KVP. THE AO HAS NOT MADE SEPARATE ADDITION IN RESPECT OF THESE ITEMS. IF IT IS FOUND TO BE INCLUDED IN THE SUM OF RS. 82 84 913/- BEING THE AMOUNT OF UNDI SCLOSED INCOME DECLARED BY THE ASSESSEE IN THE RETURN TO THE EXTE NT INVESTMENT IN FDR AND KVP AND FOUND RECORDED IN CASH FLOW STATEMENT S UBMITTED BEFORE US THEN REDUCTION FROM THE COMPUTATION OF UNDISCLOSED INCOME BE ALLOWED SUBJECT TO LIMIT TO RS.2 37 100/- AS PER GROUND OF APPEAL RAISED BY THE ASSESSEE. (4) INVESTMENT OF RS.2 30 000/- IN RENOVATION OF HOUSE- THE AO HAS NOT MADE SEPARATE ADDITION. HOWEVER CASH FLOW STAT EMENT SHOWED AN EXPENDITURE OF RS.2 30 000/- ON 15.3.2000. ACCORDIN GLY IF SUM OF RS.82 24 913/- INCLUDES EXPENDITURE IN THE RENOVATI ON OF HOUSE TO THE EXTENT OF RS.2 30 000/- THEN REDUCTION FROM THE COM PUTATION OF TOTAL UNDISCLOSED INCOME BE ALLOWED TO THE EXTENT OF RS.2 30 000/-. (5) INVESTMENT IN SHARES & DEBENTURES RS.22 980/- THE AO WILL VERIFY THE CASH FLOW STATEMENT AND IF SUM OF RS.22 980/- IS FOUND RECORDED IN IT AND THIS SUM IS INCLUDED IN UNDISCLO SED INCOME OF RS.82 24 913/- THEN REDUCTION TO THIS EXTENT MAY BE ALLOWED. (6) INVESTMENT IN TRACTOR RS.50 000/- AS PER ASSESSMENT ORDER UNACCOUNTED INVESTMENT IN TRACTOR IS RS.1 LAC INCUR RED IN FY 1996-97. A IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 12 PERUSAL OF CASH FLOW STATEMENT DID NOT SHOW ANY INV ESTMENT IN TRACTOR IN FY 1996-97 THEREFORE NO REDUCTION IN RESPECT OF T HIS ITEM IS ALLOWED. (7) UNEXPLAINED INVESTMENT IN RAW COTTON AND COTTON BAL ES AMOUNTING TO RS.13 72 210/- SINCE IT IS CLAIMED THAT INVENTORY IN M/S AGRAWAL COATSPIN (P) LTD. WAS FOUND EXCESS DURING T HE COURSE OF SEARCH/SURVEY IT SHOULD BE TREATED AS EXPLAINED OUT OF SURPLUS AVAILABLE IN THE CASH FLOW STATEMENT PREPARED BY THE ASSESSEE. B UT WE NOTICE THAT IN THE ORDER IN THE CASE OF AGRWAL COATSPIN (P) LTD. I N IT(SS)A NO.69/AHD/2004 AND IT(SS)A 84/AHD/2004 PRONOUNCED ON 22.10.2010 NO CREDIT OF ANY EXCESS OUT OF CASHFLOW STATEMENT W ORKED OUT IN THE CASE OF ASSESSEE CAN BE GIVEN. FOLLOWING THAT ORDER WE DECLINE TO ALLOW ANY SUCH CREDIT TO M/S AGRAWAL COATSPIN (P) LTD. 24. AS A RESULT APPEAL FILED BY THE ASSESSEE IS PA RTLY ALLOWED BUT FOR STATISTICAL PURPOSES. IT(SS)A NO.68/AHD/2004 (REVENUES APPEAL) 25. GROUND NO.1 OF THIS APPEAL RELATES TO ADDITION OF RS.11 43 851/- BEING UNACCOUNTED INVESTMENT IN LAND AT DHOKALIA. T HE AO FOUND THAT TOTAL INVESTMENT IN LAND WAS RS.41 95 561/- OUT OF WHICH A SUM OF RS.30 47 710/- IS FOUND ENTERED ON VARIOUS DATES IN CASH FLOW STATEMENT LEAVING A DEFICIENCY OF RS.11 43 851/- WHICH WAS AD DED BY THE AO. THE LD. CIT(A) ALLOWED THE RELIEF BY HOLDING THAT SUCH AMOUNT WOULD BE AVAILABLE OUT OF TOTAL SUM OF RS.1 34 65 131/-. 26. THE LD. AR HAS POINTED OUT THAT A SUM OF RS.1 L AC IS PAID BY CHEQUE THEREFORE DEFICIENCY IS ONLY OF RS.10 43 851/- WHI CH IS FOUND RECORDED IN THE CASH FLOW STATEMENT AS ON 9.12.1998 AND THEREF ORE NO SEPARATE IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 13 ADDITION SHOULD HAVE BEEN MADE. WE HOWEVER DO NOT AGREE. THE REASON IS THAT LAND WAS PURCHASED BETWEEN 1.3.94 AND APRIL 1996 AND WAS ALSO REGISTERED DURING THAT PERIOD. THE REASONABLE INFER ENCE IS THAT ENTIRE PAYMENT IS MADE TO THE SELLER PRIOR TO REGISTRATION /SALE DEED. THE ONUS WAS ON THE ASSESSEE TO PROVE THAT IN SPITE OF SALE DEED BEING REGISTERED UPTO APRIL 1996 THE PAYMENT WAS MADE IN DECEMBER 1998 AS SHOWN IN THE CASH FLOW STATEMENT. SINCE NO MATERIAL IS PROVI DED WE DECLINE TO ACCEPT THAT SURPLUS PAYMENT IS COVERED BY CASH FLOW STATEMENT UPTO 15.11.1996. THIS PAYMENT IS OVER AND ABOVE WHAT IS RECORDED IN THE CASH FLOW STATEMENT THEREFORE A SEPARATE ADDITION OF RS .10 43 851/- IS CALLED FOR. ADDITION TO THIS EXTENT IS RESTORED. 27. GROUND NO.2 RELATES TO INVESTMENT IN FDR ETC. THE TOTAL INVESTMENT AS FOUND BY THE AO IS RS.46 44 682/-. TH E LD. CIT(A) HAS ALLOWED CREDIT OF RS.28 97 406/-. IN OUR VIEW IT HA S TO BE SEEN WHETHER THE ENTIRE INVESTMENT IS RECORDED IN THE CASH FLOW STAT EMENT PREPARED BY THE ASSESSEE AS SUBMITTED BEFORE US. WE RESTORE THIS IS SUE TO THE AO. HE WILL VERIFY WITH THE HELP OF ASSESSEE AS TO WHAT EXTENT OF RS.46 44 682/- IS RECORDED IN THE CASH FLOW STATEMENT. TO THE EXTENT IT IS FOUND RECORDED IN THE CASH FLOW STATEMENT NO ADDITION IS REQUIRED TO BE MADE. IN ANY CASE THIS ISSUE REQUIRES FRESH CONSIDERATION VIS--VIS C ASH FLOW STATEMENT. ACCORDINGLY THIS GROUND OF REVENUE IS ALLOWED BUT FOR STATISTICAL PURPOSES. IT(SS)A NO.68 & 80/AHD/2004 BLOCK PERIOD 1.4.80 TO 23.1.2001 14 25. IN THE RESULT APPEAL FILED BY THE REVENUES APP EAL IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES .. ORDER WAS PRONOUNCED IN OPEN COURT ON 29/10/10. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT ME MBER AHMEDABAD DATED : 29/10/10. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 22/10/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 28/10/2010 MEMBER.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 DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..