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TMI Blog2011 (8) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... doing so the ld . Authorities Below had heavily relied upon the deaf and dumb document in violation of the principles of Evidence Act . In fact, the papers containing rough jottings do not contain evidentiary value until and unless supported by any corroborative documentary evidence . In the present case, no supporting documentary corroborative documentary evidence was forthcoming . In the circumstances, such paper did not contain any evidentiary value . However, the Authorities below have over looked this vital legal aspect of the case and have made and confirmed this addition, which being bad in law deserves to be deleted summarily . Without prejudice to such contention, it would also be worth mentioning here that while making such addition, the authorities below have over -looked the vital fact and principle of working of the additional income on account of the so called incriminating document . They had proceeded to make addition of the entire turn -over as undisclosed income, whereas in the body of the assessment order itself they have mentioned that there had been suppressed purchases and sales . Meaning thereby, on -money had passed the hands -on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being extended. In absence of any supporting vouchers, the AO rejected the books of accounts and completed the assessment exparte u/s 144 of the Act. 2.3 The assessee during the course of search operation admitted that he has made transaction of purchases and sales in benami names in all the financial years falling in Block Period: The assessee has not complied with the notice for making personal appearance during the assessment proceedings. The AO therefore, computed the income from various sources. The AO made the addition of ₹ 1,38,70,000/- which represented suppression of sale consideration in respect of the properties sold. From assessment year 2003-04 to 2008-09, the assessee has sold 24 properties on which the AO concluded that the assessee has received excess consideration as compared to consideration shown in the books of accounts. The details of all the 24 properties have been mentioned been by the AO at pages 3 and 4 of the assessment order. The chart contains the name of the property, assessment year, date of sales, sales shown as per books, actual sales and the difference. For ascertaining the difference, the AO has relied upon the seized paper No. 25/23 of An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity finished house . Further the assessee purchased this plot only for Rs . 2,50,000 /- on 29 /03 /2004 . The Ld AO has accepted the purchase cost of this plot and no body can sale the plot of Rs . 250000 /- for the huge amount of Rs . 45,00,000 /- within few days . The finding of the AO is against human probability and possibilities . The matter should be considered by applying human probabilities . Reliance is placed on Sumati Dayal Vs CIT 214 ITR 801 (SC ), Therefore, addition on account of suppressed sale in respect of the plot no 164 Kalyan Kunj was made on surmises and conjectures . c ) 49 Agarsen Nagar alleged sale for Rs . 150000 /- as against declared sales at Rs . 210000 /- The seized paper shows the rough working in respect of Agarsen Nagar as under :- Sold Agarsen Nagar 15 x 4 Therefore, there is no entry on the seized paper in respect of plot no . 49 Agarsen Nagar . The Figure 15 denotes the estimated value of the complete constructed house . The assessee has not made out complete construction over the plot but some minor construction in 325 sq ft area was carried out which involved investment of Rs . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot . Therefore, addition on account of suppressed sale in respect of the plot no 98 Chitrakoot was made on surmises and conjectures . f ) 34 35 Chitrakoot Colony alleged sale for Rs . 22,00,000 /- as against declared sales of Rs . 21,50,000 /- The seized paper shows the rough working in respect of Chitrakoot Colony as under : - Chitrakoot colony 31 = 22x2 Chirtakoot Colony 9 45 Therefore, there is no entry on the seized paper in respect of plot no . 34 35 Chitrakoot Colony . Plot numbers of Chitrakoot colony are clearly mentioned which are 31 and 9 . Figure 22 or 45 denotes the estimated value of the constructed house and figure 2 denotes to number of plots . Further, the Ld AO failed to appreciate that the word Sold is not mentioned against these plots . Therefore, addition on account of suppressed sale in respect of the plot no 34 35 Chitrakoot Colony was made on surmises and conjectures . g ) 52 Ram Nagar alleged sale for Rs . 21,00,000 /- as against declared sales of Rs . 6,00,000 /- The seized paper shows the rough working in respect of Ram Nagar as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see s own hand -writing . (b ) Hissaria Bros Vs ACIT (ITA No . 179 /JDPR /1998 ) 22 Taxworld 684 ITAT Jaipur It was held that addition cannot be made on the basis of vague figures found noted on seized loose paper without proving that the alleged amount are receipts and income of the assessee . (c ) ITO Vs Mannalal Jhalani (ITA No . 250 TO 260 /JP /1998 ) 22 Taxworld 551 ITAT Jaipur . It was held that addition cannot be made simply recovery of some papers found and seized during the course of search without making necessary verification and examination . (d ) Ashwani Kumar Bhardwaj Vs DCIT 21 Taxworld 358 ITAT Jaipur . It was held in para 29 .6 that no addition can be made on the basis of deaf and dumb documents . (e ) Mohd . Illias Choudhary Vs DCIT 25 Tax World 394 ITAT Jaipur . It was held that the addition cannot be justifiably be made as undisclosed income on the basis of certain entries found recorded on a seized paper without making any inquiry and investigation and without examining the assessee . (f ) Aswani Kumar Vs ITO 39 ITD 183 Del . It was held that no addition can be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue etc . in summary manner . The A .O . has also cross checked and correlated the sale of plots mentioned in this document (in the summary and coded manner ) with the sales shown in the memorandum books of accounts . The date of sale is very well known from the copies of the agreement to sale available in the seized documents or with the appellant and some of them was also furnished before the A .O . Thus, it is not at all a dumb, ambiguous and unspecific document . The document is well self -speaking . Accordingly, the argument of the appellant in this regard is rejected . The A .O . was justified in holding that rates have been written in coded form . 6 .3 .1 Various decisions cited by the A .R of the appellant are on the issue that no addition can be made on the basis of dumb document . As in the instant case, the document relied on by the A .O . has been held to be not a dumb document and rather held to be loud speaking document, the ratio of the cases cited by the A .R . is not applicable in the instant case . 6 .3 .2 It is clear that in the agreement to sale, the different sale amount for same area of plot (with construction ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plots /lands were sky rocketing and accordingly such a high profit is quite possible, particularly when the sale price is mentioned on these loose papers . iii ) Regarding Agarsen Nagar plot, page 25 of Ann .A -5 inter alia include following narration on the first handwritten line Sold Agrasen Nagar 15x4 It is evident that in the appellant group there are 4 plots in the Agrasen Nagar which have been sold at Rs . 15 lakhs each . Non -mention of the plot number in the loose paper is not relevant, in view of the fact that the appellant did sold plot in Agrasen Nagar Colony . One plot in Agrasen Nagar belonging to Sh . Tikam Khandelwal sold during A .Y 2005 -06 has been considered in his hand and sale value of Rs . 15 lakhs has been upheld by the undersigned . Considering the aforesaid fact and legal position the A .O . is justified in taking sale value of Agrasen Nagar Plot at Rs . 15 lakhs . The argument of value being against human probability has already been discussed and rejected in the earlier paragraph . iv ) Regarding Shyamapuri Colony plot arguments of the A .R that the plot no . 173 is not mentioned is not mentioned is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally referred to properties which have been sold during the year. The properties sold in assessment year 2005-06 were different as compared to the properties sold in the assessment year 2008-09. 2.8 During the course of proceeding before us, the ld. AR has filed written submission alongwith paper book. Search and seizure operations were carried out in the group cases of Shankar Lal Khandelwal of Jaipur. The group consists of six individuals and three companies. During the course of search operations, no regular books of account were found and seized. In absence of regular books of account, Shri Shankal Lal Khandelwal the main person of the group, admitted additional income on account of unrecorded investment in different properties including the cash found at the time of search. Such unrecorded investments admitted were to the extent of ₹ 375.28 lacs. However, immediately after the search operations, the assessee informed the Department vide letter dated 20th Nov. 2007 and 21 Nov. 2007 that he was a cancer patent and at the given point of time, he was not in proper frame in mind due to his illness, anxiety and recent family functions which was performed only on the previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S .No . Name of Properties Sales Shown as per Books Actual Sales Difference 1 208, Shyampuri 9,30,000 15,00,000 5,70,000 2 52, Kalyan Nagar 22,00,000 30,00,000 8,00,000 3 9, Chitrakoot 10,00,000 20,00,000 10,00,000 4 185,186Vijay Singh Pathik Nagar 14,00,000 33,00,000 19,00,000 5 1,2,3,24, Mitra Nagar 54,00,000 1,50,00,000 96,00,000 While making such addition, the AO had observed that the explanation as furnished by the appellant that the said papers were deaf dumb papers and carried rough working only and was not acceptable and untenable . The AO accordingly opined that these papers carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gits denoting the exact amount of the sale consideration as per the list of the properties sold during the year under consideration . It is not under -stood from where the authorities below could deduced the shown figures in lacs , when there is no specific mention of lac anywhere in the hand -written jottings . In the circumstances, the appellant had been correctly pleading that these are deaf and dumb papers only carrying no evidentiary value as opined by number of judicial authorities in number of cases as referred to in the written submission made from time to time . (Kindly refer to page no . 4 -5 of PB ). In view of these facts, it is established beyond doubt that these papers are deaf and dumb papers as being pleaded before the authorities below . (ii ) Now coming to the correctness of the chart as drawn by the ld . AO at page no . 4 of the assessment order . Your honors would note that the properties for which addition of Rs . 1,38,70,000 /- was made are shown at S . No 20 to 24 which are discussed one by one as under : (1 ) 208, Shyampuri Rs . 5,70,000 /- On careful study of the jottings on these papers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after carrying out construction works worth Rs . 5,73,849 /- (as per copies of the registered sale deeds submitted in the paper book at page no . 110 to 135 ) . Thus the profit earned on this plot was Rs . 3,51,151 /- duly shown in books of account . The suppressed sale amount as taken by the AO without any corroborative evidence is not maintainable . (3 ) 9, Chitrakoot Rs . 10,00,000 /- Again in the jottings, there is no specific mention of properties shown as 9, Chitrakoot . The plot under consideration was purchased for Rs . 7,50,000 /- in September, 2006 and was sold after one year in October, 2007 for Rs . 10,00,000 /- after construction of boundary wall (as per copy of the registered sale deed submitted in the paper book at page no . 136 to 143 ). Now it is for kind consideration as to whether, a plot purchased for Rs . 7,50,000 /- one year back could fetch the price of Rs . 20 lac as taken by the AO . As per price indexation, such inflation in the cost is practically impossible . Obviously, the figures as taken by the AO are incorrect and without any basis on the face of such documented evidences . (4 ) 185, 186, V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without causing any enquiry to find out the correctness of such jottings . In absence of such an exercise , such jottings cannot be relied upon blindly as held by honorable Delhi High Court in the case of CIT vs . Lubtec India Ltd . The relevant extract from the judgment is re -produced hereunder for ready reference : Search and seizure - Block assessment - Computation of undisclosed income -Addition under s . 69 -C - Some figures were found noted against certain items jotted down in pencil on two sheets of paper which were recovered during the course of search and seizure operations in the premises of the assessee - AO did not accept the Explanation of the assessee that it did not incur the said expenditure and treated the amount as unexplained expenditure - Not justified - ..AO has not made any enquiry whatsoever to find out whether such expenditure was actually incurred by the assessee - Tribunal justified in upholding the order of the CIT (A ) deleting the impugned addition . For further judicial citations on the subject, kindly refer to the written submissions as made before ld . CIT (A ) PB No . 4 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the vicinity of 8 to 10 %. As per Rules of Accountancy, suppressed sales is part of the trading results only . Once trading results are estimated after rejecting the books u /s 145 (3 ) of the Act, then no further addition is warranted on account of any other defect or deficiency . Before parting with the point at issue, it would be in the fitness of things to bring it on record that the jottings under consideration are appearing on the computer print -outs of the property A /c pertaining to the financial years 2006 -07 and preceding year, meaning thereby these print -outs could be obtained only after the financial year ending on 31 .03 .2007 . However, the ld . AO had hunched to connect these jottings as appearing on such sheets to the properties which were mostly sold long back say about three four years back and there was no apparent reason for the appellant to make such jottings in respect of such properties after the lapse of three four years as the said properties stood already sold long back and making of such jottings was totally useless and immaterial for the appellant . From this fact, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs. For example, for the property Shyampuri, it is mentioned as word sold and figure mentioned is 15x4 = 60. It means 04 plots have been sold for ₹ 15.00 lacs each. On query from the Bench, it was stated that property sold during the year is of Kalyan Nagar though there is mentioning of the property at Kalyanpuri and Kalyankunj but there is no mention of property at Kalyan Nagar. In the seized paper, there is description of figure of 10,000/- and same has been multiplied by 7500 and the figure has been denoted as ₹ 7.5 crores. From these descriptions, the ld. DR submitted that there has been tremendous suppression of sale consideration and the AO was therefore, justified in making the addition. Similarly in respect of Vijay Singh Pathik Nagar, there has been a figure of 10,000 x 1,000 and figure of ₹ 1.00 crore is written though the word sold is not mentioned but that indicate the price at which the plots were to be sold. 2.13 We have heard both the parties. Plot No. 208, Shyampuri, has been sold through two registered sale deed available at pages 92 to 109 of the paper book filed by the ld. AR. One part was sold for ₹ 9.30 lacs and second part was so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was sold for ₹ 10.00 lacs in Oct. 2007. The sale deed is available at pages 136 to 143 of the paper book filed by the ld. AR. The plot consisted of 179.43 Sq. Yard and covered area of 1700 sq.ft and consisted of ground floor and first floor. The stamp authority had taken the consideration at ₹ 10.00 lacs which has been declared by the assessee. The AO has added a sum of ₹ 19.00 lcs on account of suppressed sale consideration in respect of Plot No. 185 and 186 at Vijay Singh Pathik Nagar. The Plot measuring 500 Sq. Yard has been sold for ₹ 6.75 lacs as per registered sale deed available at pages 145 to 152 of the paper book. The adjacent Plot No. 187 is also of 500 Sq. Yard and has also been sold in March 2008 for ₹ 7.25 lacs. The copy of registered sale deed is available at pages 155 to 162 of the paper book. In the Plot No. 186, there is some constructed area to the extent of 260 sq.ft while there was no construction in Plot No. 185. It is true that pages 23 and 25 of Annexure A-25 contains the description of 1,000 x 10,000 = 1.00 crore against Vijay Singh Pathik Nagar. Whether the addition can be made simply on the basis of such notings on a pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d both the parties . The issue before us stands covered by the order of the Tribunal in the case of M /s . Rajeev Mishra, Contractor Vs . The Addl . CIT and ACIT Vs . M /s . Rajeev Mishra, Contractor (ITA No . 654 /JP /2010 dated 23 -12 -2010 ). The Tribunal vide order dated 23th Dec . 2010 has held as under :- 6 .4 We have heard both the parties . The Sub -Registrar, Kota while charging the stamp duty has taken the cost of the plot at Rs . 4,58,070 /-. The sub -registrar is supposed to adopt the DLC rates for the purpose of stamp duty . Moreover, the ld . CIT (A ) has rightly pointed that plot considered for ascertaining the rate of land was plot of 327 sq . meter and was situated on the road of 18 meter . The AO has recorded the statement of seller and the seller has admitted to have received the sale consideration of Rs . 7 .11 lacs for the house . There is no comparable case of plot of similar size to hold that the consideration paid is inadequate . The Hon'ble Jurisdictional High Court in the case of CIT Vs . Bhanwarlal Murwatiya, 215 CTR 489 had an occasion to consider the addition u /s 69 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Jurisdictional High Court, the Valuation Officer gave instance of the sale of similar plots and rate of sale of such plot was Rs . 60 /- or Rs . 75 /- per sq . yard . In that case, the assessee was not able to point out any mistake / lacuna in ascertaining the value of the plot of land by valuer . It will be useful to reproduce the following paragraph from the decision of Jurisdictional High Court . It is true that that the burden is on the Department to establish the fact that the property has been sold for a lesser consideration than the market value . It is also to be established that the actual consideration is more than the consideration shown in the account book / sale deed . In the case of K .P . Verghese (1981 ), 131 ITR 597 (SC ), their Lordships have observed that before invoking the powers under sub -section (2 ) of Section 52 of the Income tax Act, 1961, the burden is on the Revenue to prove that the actual consideration was more than disclosed by the assessee . But their Lordships have further observed that this burden may be discharged by establishing the facts and circumstances from which a reasonable inference can be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng such addition . Thus the addition so made and confirmed by the Authorities Below was bad in law and deserve to be deleted summarily . 3.2 During course of search, cash to the extent of ₹ 10.30 lacs was found at the premises 59, Mansarovar Colony, Kalwar Road, Jhotwara, Jaipur. A sum of ₹ 10.00 lacs was seized . During the course of search, the assessee was asked to explain the source of cash and the assessee vide reply to question no. 21 accepted that cash of ₹ 10.00 lacs is out of undisclosed income and therefore, offered the same for taxation purposes. The cash of ₹ 14.21 lacs was also found at the residential premises of the assessee. Thus out of total cash found at the residential and business premises to the extent of ₹ 24.51, the assessee surrendered a sum of ₹ 23.00 lacs as undisclosed income. The relevant question and answer has been reproduced by the AO at page 5 of the assessment order. During the course of assessment proceedings, the assessee stated before the AO that a sum of ₹ 13.00 lacs is reflected in the cash book of the assessee and ₹ 10.00 lacs is reflected in M/s. Guman Furniture Services (P) Ltd. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment in plots /properties - though recorded but he made the addition ). The cash book is nothing but recording of the receipts and payments transaction in chronological order . The learned AO rejected the cash book without pointing out specific defect in the recording of receipt or payments in cash book . c ) The case of the assessee is covered by the decision of the Hon ble ITAT Jaipur bench in the case of Shri Rajendra Kr . Kedia V /s . DCIT 22 Tax World, 506 . wherein Hon ble ITAT Jaipur Bench have observed that where the books of account are not properly maintained, the same could be subsequently prepared and re -casted on the basis of his bank statement, vouchers and other related documents of sales and purchase which could be relied upon for the purpose of making the income tax assessments . d ) Statements of the assessee u /s 132 (4 ) of Income Tax Act The ld . A .O . has mentioned that the assessee has surrendered this amount as unexplained income in his statement recorded u /s 132 (4 ) of Income Tax Act . During the course of the assessment proceedings, the assessee has submitted before the ld AO ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able one in the eyes of law and no adverse inference deserves to be drawn on the basis of said statement . Reliance is placed on the following decisions :- (i ) Hon ble Appex Court in Pullangode Rubber Produce Co Ltd Vs State of Kerala [1973 ] 91 ITR 18 has held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive . It is open to the person who made the admission to show that it is incorrect . (ii ) Gargidin Jwala Prasad vs CIT (1974 ) 96 ITR 97 (All ) Held that the addition merely based on statement of witnesses cannot be made . iii ) CIT Vs G .Krishnan (1994 ) 210 ITR 707 Mad . Held that addition cannot be made merely on the basis of statement . iv ) ACIT v /s Ashok Kumar Jain 32 TW 115 (ITAT Jaipur ) It is open to the person who made the admission to show that it is incorrect . 3.4 The ld. CIT(A) has confirmed the addition made by the AO after observing as under:- In fact, no books of accounts were maintained in the regular course of business and it was only after the search that appellant prepared memorandum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax World, 506 were relied upon impressing upon the fact that no valid addition can be made on the basis of such invalid confessional statement; particularly when supporting corroborative documentary evidence in the form of books was forthcoming . However, the learned CIT (A ) was also not willing to accept such contentions and turned down the claim of the appellant on the same plea as that of AO . The conclusions of the honorable CIT (A ) are factually and legally incorrect for the following reasons : (i ) It is an undisputed fact that at the time of search operations, there were no regular books of Account . This fact stood duly admitted by the learned AO and CIT (A ) in the body of their respective orders . In the circumstances, it is practically impossible to admit or confess the fact as to whether the funds as found at the time of search operations were duly accounted for or not . Obviously the fact so admitted in the confessional statement in absence of regular books at the time of search operation was factually incorrect and therefore the admission made on the basis of such incorrect facts is not legally maintainable . (ii ) Again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed. 3.7 We have heard both the parties. It is true that the assessee has not maintained the books of accounts regularly. After search operation, the assessee prepared the cash book to show the receipts and expenses. It is not the case of revenue that cash receipts shown in the cash book can not be verified. It is also not the case of the revenue that the assessee has postponed the cash payments in the cash book to show the inflated cash balance. The Hon'ble Jurisdictional High Court in the case of Hukam Chand Jain Vs . ITO, 324 ITR 197 has observed that it is open to the assessee to show with the material that admission is not correct. If no material is produced then it is to be considered that admission has not been dislodged. In the instant case, the a has produced the cash book though cash book has been prepared after the date of search. The Hon'ble Chattisgarh High Court in the case of ITO Vs . Vijay Kumar Kesar 327 ITR 497 had an occasion to consider the case in which the assessee has retracted from disclosure for undisclosed income made by him during the survey proceedings. The addition made on account of excess cash in stock was deleted by accepting upd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Instruction No . 286 /2 /2003 dated . 10th March 2003, it is evident that the Board had issued instruction to its office not to extract confessional statement by way of admission from the assessee at the time of search, seizure or survey operations . It is also settled law that the admission of a person is an important piece of evidence, however, the same is not conclusive Pullagode Rubber Produce Co . Ltd . Vs . State of Kerala, 1972 CTR (SC ): (1973 ) 91 ITR 18 (SC ) 3.8 We therefore, feel that AO was not justified in including the sum of ₹ 10.00 lacs as undisclosed income of the assessee because the cash balance as per update cash book showed the cash balance exceeding ₹ 10.00 lacs 4.1 The Ground No.3 of the assessee is as under:- On the facts and in the circumstances of the case, the ld . CIT (A ) had legally and factually erred in confirming the addition of Rs .1,64,186 /- out of total addition of Rs .30,00,000 /- made by the AO . on account of unexplained gold / precious stones ignoring the explanation of the appellant regarding acquisition of such jewellery and other documentary evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 27,256/- (weight 1435 gm) Total of Annexure J and J -4 . Amount Gold Jewellery Silver items. Rs.14,12,961/- (weight 1324.540 gm) ₹ 1,06,381/- (weight 5635.000 gm) Gold Jewellery /gold coins . Total net weight of gold jewellery gold coins found during the course of search from Bed room bank locker of Shri Mohan Lal Khandelwal was 1324 .540 grams valued at Rs . 14,12,961 /-. Out of this jewellery the jewellery weighing 128 .564 grams was purchased from M /s . Mehandi Jewellers by Shri Tikam Khandelwal and kept in locker of parents as per detail here under :- Bill No . mj /0117 /07 dated 29 .10 .2007 for Rs . 6,79,700 /- (net weight 128 .564 grams ) paid vide cheque No . 631074 dated 02 .01 .2008 from bank account No . 48283 of Shri Tikam Khandelwal (PB page 113 ) . Bill No . MJ /0119 /07 for Rs . 79,274 /- dated 5 -11 -2007 (net weight 0 .860 grms ) paid vide cheque N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Guman Khandelwal . Amount Gold Jewellery Silver items. ₹ 6,20,465/- (weight 646.900 gms) ₹ 17,749/- (weight 782.000 gm) Annexure J -2 . (PB page 103 ) Jewellery found from Bed Room of Shri Shankar Khandelwal Amount Gold Jewellery Silver items. ₹ 16,86,142/- . (weight 325.070 gm.) ₹ 8,468/- (weight 450.000 gm) Total of Annexure J -1 J -2 Amount Gold Jewellery Silver items. ₹ 23,06,607/- (weight 971.970 gm) ₹ 26,217/- (weight 832.000 gm) Gold Jewellery /gold coins . Total net weight of gold jewellery /gold coin found during the course of search from Bed room and Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Gold Jewellery Silver items. ₹ 1,51,925/- (weight 157.700 gms) ₹ 12,232/- (weight 650.000 gms) Apart from the above said jewellery weighing 157 .700 grams, Gold ornaments weighing 128 .564 grams purchased by Shri Tikam Khandelwal as explained here in above and gold jewellery weighing 350 .000 grams were laying in the locker of his father Shri Mohan Lal Khandelwal . Thus the assessee his wife were having total gold jewellery weighing (157 .700 + 128 .564 + 350 .00 ) = 636 .264 grams . Source of acquisition of jewellery weighing 157 .700 grams is already explained in para (1 ) of this letter . The remaining gold jewellery (636 .264 -128 .564 ) = 507 .700 grams belongs to wife of the assessee Smt . Renu Khandelwal and the assessee himself . The said gold jewellery weighing 507 .700 grams found at the time of search was received by the assessee and his wife at the time of marriage from both sides of the relative and thereafter on the other auspicious occasions i .e . on the birth of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he search party under duress, mental pressure and tense atmosphere . Thus it would be wrong and bad in law to rely upon the said statement of the assessee recorded u /s 132 (4 ) of the I .T . Act, during the course of search . In this connection the assessee also submits that became to know about total undisclosed income from the daily newspapers and after going through the news immediately contacted to the concerned officers of the Investigation Wing to submit and clarify that no such huge amount of disclosure was made by me . But no fruitful results were came out and accordingly the assessee sent a written request that the above said alleged huge amount of undisclosed income not surrendered by him . Thereafter reminder on 20 .11 .2007 and 21 .11 .2007 was also sent . Photocopy of the UPC acknowledgment and copy of letter is enclosed herewith . Further income has been got surrendered without considering the borrowings from various banks amounting to Rs . 1,586 .91 lacs by the assessee, his business concerns and his family members . The cash flow chart has been prepared after taking into account said proceedings . The submissions are verifiable from the cash flow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Mr. Arpit Unmarried Son Sons 7. Tikam Khandelwal Married Gent Brother 8. Mrs. Renu Khandelwal Married Lady Wife of brother 9. Ku. Palak Unmarried daughter Daughter 10. Mr. Honey Unmarried Son Sons e ) CBDT Circular No . 1916 Over and above the submissions made above, we submit that even in normal cases, where the assessee are not W . T . Payers the CBDT has issued guidelines prescribing the norms for seizure of Gold Jewellery during the course of search . As per Circular No . 1916 Dated : 11 .05 .1994 the Board has prescribed such limit at 500 gms . in the case of a married lady . The intention of CBDT is to treat the jewellery explained upto a reasonable extent . It is customary in Hindu Family to receive jewellery on marriage and other auspicious occasions like birth of son, marriage of son etc . This practice in the soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Instruction No . 1916, dt . 11th May, 1992 which lays down guidelines for seizure of jewellery and ornaments in the course of search takes into account the quantity of jewellery which would generally be held by the family members of an assessee -Though the said circular has been issued for the purpose of laying down guidelines for seizure of jewellery, unless anything contrary is shown, it can be safely presumed that the source to the extent of the jewellery stated in the circular stands explained . (ii ) CIT VS Kailash Chand Sharma [2005 ] (2005 ) 198 CTR (Raj ) 201; 146 Taxman 376 (Rajasthan ) Held that Tribunal was justified in deleting addition on account of jewellery having regard to CBDT Instruction No . 1916, dt . 11th May, 1994 (iii ) CIT VS M .S . Agarwal (HUF ) MP High Court (2008 ) 11 DTR (MP ) 169 Held that Tribunal was justified in deleting addition on account of jewellery having regard to CBDT Instruction No . 1916, dt . 11th May, 1994 (iv ) Smt . Pati Devi Vs ITO and Another 240 ITR 727 (Karnataka ) Relying upon CBDT instruction dated 11 .5 .94 have held that 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evi 4200.000 41 2 Bed Room Mohan Lal Khandewlal Smt Mohani Devi 1435.00 1 2. Locker No. 23 SBBJ Shanker Khandelwal Smt Guman Khandelwal 782.000 118 3 Bed Room Shanker Khandelwal Smt Guman Khandelwal 450.000 0 4 Bed Room Tikam Khandelwal Smt Renu Khandelwal 650.000 0 7517.00 160.0 The silver items found from three families are very reasonable considering the family status . These items were received by the family members of the assessee on various auspicious occasions like marriage, birth of son etc . It is also a practice to have silver coins for Deepawali Pooja . The parts of the items found from the possession of Shri Mohan Lal Khandelwal are ancestral . Therefore, no addition deserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s . 30 lakhs made on lumpsum basis, being Rs . 28,35,814 /- is deleted . 4.4 During the course of proceedings before us, the ld. AR has filed the submissions as under:- The learned AO had discussed this addition at page no . 5 6 of the assessment order . While making such addition, the ld . AO did not discuss the detailed written reply as submitted by the appellant explaining therein acquisition of each and every jewellery items assessee -wise, room wise, locker -wise and other point -wise with reference to the Board s instructions on the subject . The learned AO simply turned down explanation with pet finding that the explanation so furnished was not satisfactory . Apparently the findings so arrived at the learned AO were illogical and factually incorrect . In appeal, the learned CIT (A ) had discussed such explanation at length in his appeal order at page No .6 to 16 and had accepted the same in to -to . However going by the norms of CBDT circular, the honorable CIT (A ) had opined that acquisition of the jewellery items weighing 2350 grams was properly explained and balance jewellery items weighing 104 .10 (being in excess of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed jewellery at ₹ 8,70,593/-. 4.7 We have heard both the parties. It is noticed that the ld. CIT(A) has referred to the decision of Jaipur Bench in which it has been held that jewellery to the extent mentioned in Circular No. 1916 should be considered as explained. The Hon'ble Jurisdictional High Court in the case of Kailash Chand Sharma (supra) had an occasion to consider the following question of law. Whether on the facts and in the circumstances of the case, the Tribunal was justified in giving relief of undisclosed jewellery of 195 .85 grams even though the AO and the ld . CIT (A ) had given relief as per CBDT Instruction No . 1916 dated 11th May, 1994 though Wealth Tax Returns were not filed by the family members for the block assessment period . 4.8 The findings given by the Tribunal were not disturbed by the Hon'ble Jurisdictional High Court. In the case before Hon'ble Jurisdictional High Court, the revenue has not agitated upon the acceptance of jewellery as disclosed as per guidelines given in CBDT Instruction N. 1916.The revenue is aggrieved in not confirming the addition on account of undisclosed jewellery which was beyond the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67 in which it has been held that payments made for purchasing stock in trade are also covered by the word expenditure . Reliance has been placed on the decision of Hon'ble Gujarat High Court in the case of Nathalal Jethalal Vs . CIT 199 ITR 757 . The AO accordingly disallowed a sum of ₹ 19,22,660/- u/s 40A (3) of the Act. 5.4 Before the ld. CIT(A), the assessee filed the chart in which details of payments made against the purchases of plots was submitted. The ld. CIT(A) confronted this chart to the AO and after considering the chart held that a sum of ₹ 3.21 lacs is disallowable u/s 40A (3) of the Act. This is with reference to the plot no. 26, Mitra Nagar. The details are as under:- Plot No. 26, Mitra Nagar. 8,51,000 This plot was purchased by assessee from Shri Koshalaya Devi for ₹ 8,51,000/- in which ₹ 3,21,000/- paid cash and Rs . 5,30,000 /- paid through account payee cheque of Guman Furniture Services Pvt Ltd on behalf of assessee . Kindly refer the ledger at Page 170 to 172 of Paper book . Thus only cash payment for purchases of this plot was ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guments as listed at S .NO . 17 to 23 . In the written submissions citing therein number of judicial citations on the point (PB 21 22 ) and also the interpretation of the observations of honorable Supreme Court in the case of Attar Singh Gurumukh Singh etc . vs ITO (1991 ) 191 ITR 667 (SC ). ) . It appeared that the learned Authorities Below did not appreciate the decision of the honorable Supreme Court in right perspective . The said judgment has been elaborately dealt with and interpreted by honorable High Court of Allahabad in the case of CIT vs Chaudhary Co . While interpreting the above judgment of honorable Supreme Court, the honorable High Court of Allahabad (1995 ) 129 CTR (All ) 101 opined Business expenditure -Disallowance u /s 40A (3 )- Assessee produced evidence that the payee insisted on cash payment - identity of payee was disclosed and genuineness of payment also established - Disallowance u /s 40 A (3 ) was not called for - The object of section 40A (3 ) is that no fictitious amount should be allowed as revenue expenditure and not that cash payment can never be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 40 (A )(3 ) of the Act the real intention for carrying out a transaction is to be looked in to decide the nature of a particular payment . Whether a particular payment is of expenditure nature or of investment nature would be decided by the intention of carrying out such transaction only . If the intention is to make investment only then these provisions would not come into play and if such out -going is made for acquiring the stocks in trade only then these provisions would come into play . In the present case, the Authorities Below did not dwell upon the actual intentions of the appellant . In absence of such an exercise, these provisions could not be invoked legally and validly . More -over, here it would be relevant to mention here that initially, the appellant made payment for purchase of the said with the intention of making an investment only . However, subsequently when it was found economically viable to convert such investment as business stock, the said plot was put as stock in trade . Such intention of the appellant is evident from the fact that the plot under consideration was not sold during the year under considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come into play where the books results were rejected u /s 145 of the Act and profits were estimated as held in the case of CIT vs Banwari Lal Banshidhar (1998 )148 CTR (All ) 533 as under : Business Expenditure - Disallowance u /s 40 A (3 )- Income assessed at G .P . rate - Where income is assessed at G .P . rate by rejecting the books of the assessee u /s 145 (1 ) proviso, no disallowance can be made separately u /s 40 A (3 ). Followed by honorable Punjab Haryana High Court in the case of CIT vs Smt . Santosh Jain (2008 ) 296 ITR (P H ) 324 . (vi ) And lastly, while dealing with Rule 6DD and the real spirit on the Board s Circular on the subject, the honorable Rajasthan High Court in the case of Smt . Harshila Chordia vs ITO (2007 )208ctr (RAJ ) 2008 )298 ITR 349 (Raj ) have opined as under : Business Expenditure - Disallowance u /s 40A (3 )- Exceptional or unavoidable circumstances - circumstances in which the conditions laid down in Rule 6DD (j ) could be applicable can not be spelt out and the circumstances provided in CBDT circular are not exhaustive but illustra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxi running expenses. The addition made under both the heads are substantial. The Hon'ble Jurisdictional High Court in the case of CIT Vs. G.K. Contractors, 19 DTR 305 held that if the profit is estimated by applying higher net profit rate after rejecting the books of accounts by invoking the provisions of Section 145(3)of the Act then no separate addition can be made on account of cash credit u/s 68 of the Act. The Hon'ble Punjab Haryana High Court in the case of CIT Vs. Smt. Santosh Jain, 296 ITR 324 held that Section 40A(3) cannot be invoked when the income is estimated by applying the gross profit rate. The Hon'ble Punjab Haryana High Court followed the decision of The Hon'ble Allahabad High Court in the case of CIT Vs . Banwari Lal Bansi Dhar, 229 ITR 229 . The Jaipur Tribunal in the case of Singhal Builders Contractor Vs . Addl . CIT, 133 TTJ 102 has also held that once an income of the assessee is estimated by applying the gross profit rate or net profit rate then no disallowance can be made u/s 40A (3) or any other provisions. The proviso to Section 40A(3) makes an exception that cash payment is not to be disallowed if it is an account of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A), the assessee made following submissions:- 1 .The learned AO disallowed the expenses on account of (i ) expenses not supported by voucher (ii ) out of interest claimed and (iii ) against provisions of section 40 (a )(ia ) of Income Tax . The Ld AO made adhoc and lump sum amount of Rs . 1,50,00,000 /- without bifurcating the disallowance under these three head . 2 . Not furnishing of Ledger account of WIP expenses The Ld . AO has alleged that the assessee has not furnished ledger account of WIP Expenses . At page 2, the Ld AO categorically admitted that the assessee has produced books of account in respect of his property business and other businesses . The WIP Expenses represents to heading of Group Summary of various accounts such as interest, financial expenses etc . The group summary is given in audited statement of account (PB page 19 ). The ledger account of the various accounts under group summary WIP Expenses is part of the books of account produced before the Ld AO . The copy of ledger account of Further, during the course of assessment proceedings the assessee has submitted detailed chart (Enclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst this head is Rs . 68,62,622 /-, 1,31,433 /-, 3,27,855 /- 2,43,634 /- 6,74,785 /- 1,03,769 /-, 84,393 /- and 77,600 /- totalling to Rs . 85,06,091 /- out of the total amount Rs . 92,10,455 /- under the head WIP ( PB page 261 ). The said amount is verifiable from the bank statements . The other expenses like loan processing expenses, bank charges Foreclosure Charges, Insurance charges are of such type which can easily be verified from bank statements . 7 . The assessee s total turnover were of Rs . 2,28,27,775 /- + Rs . 13,46,905 /- = 2,41,74,690 /- and the Gross Profit was of Rs . 76,00,056 /- which comes to 41 .44 % of the turnover . The ld AO has made addition of Rs . 1,50,00,000 /- which results in GP of Rs . 2,26,00,056 /- which gives very huge GP Rate of 93 .49 % which is not possible at all in this trade . Where the income is determined on estimation basis, the best method of estimation should be applied, which must be very close to the reality . The House of Lords pointed it out in Son Insurance Office vs . Clarks 1912 AC 443 that where it becomes necessary to make estimates by income -tax department, the method should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent u /s 143 (3 )/144 . Reliance is place on :- a ) Dhakeshwari Cotton Mill s Ltd . Vs . CIT (1954 ) 26 ITR 775 (SC ) b ) Badri Co . (P ) Ltd ., Vs . CIT (1993 ) 144 ITR 352 (KAR ), c ) Omar Salay Mohammed Sait Vs . CIT (1959 ) 37 ITR 151 (SC ) d ) Uma Charan Shaw Bros . Vs . CIT (1959 ) 37 ITR 271 (SC ). In view of the above submission, the addition made by the AO deserves to be deleted . The appellant prays your honor to kindly delete the addition made by the A .O . 6.5 The ld. CIT(A) after considering the submissions reduced the additions after observing as under:- 5 .3 I have considered the submission of the A .R and have perused the assessment order and relevant record . As regards the reasoning given by the A .O . that the appellant has not deducted TDS and provisions of section 40 (a )(ia ) are attracted, it is seen that the A .O . has himself not disallowed any expenditure u /s 40 (a )(ia ) though same was specifically mentioned to be done in subsequent para . And moreover same was disallowed in A .Y 2005 -06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted that bills and vouchers were not produced for verification before the A .O . 5 .3 .2 Though the A .O has not further probed into the matter, however, undersigned has occasion to peruse the construction expenses debited by the appellant . On going through the chart furnished before the A .O . and now furnished at P .B . page 537, it is noticed that construction expenses in respect of different plots sold during the year have been shown at highly varying rate starting from Rs . 111 .97 per sq .ft to Rs . 204 .58 per sq .ft, Rs . 215 .99 per sq .ft and Rs . 254 .84 per sq .ft . It is seen that in period relevant to A .Y 2007 -08, the rates were verying from Rs . 75 .14 per sq .ft, to Rs . 210 .99 per sq .ft, Rs . 220 .87 per sq .ft, Rs . 302 .50 per sq .ft, Rs . 345 .12 per sq .ft, Rs . 465 .85 per sq .ft, Rs . 509 .66 per sq . ft, Rs . 703 .78 per sq . ft, Rs . 856 .40 per sq . ft, Rs . 908 .13, per sq . ft, Rs . 1064 .94 per sq .ft , Rs . 1242 .51 per sq .ft to as high as Rs . 1433 .93 per sq .ft . No any bills /vouchers in support of these expenses were furnished before the A .O . It is undisputed fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other defects as mentioned by the undersigned in the earlier paragraphs, certain reasonable disallowance need to be called for on this account . In other cases of this group the interest free advances given was found to be more than the interest free loans available and accordingly the disallowance out of construction and WIP expenses at higher rate was upheld considering part interest disallowance includable in the overall disallowance . However in the instant case of the appellant, the interest fee advances given are noticed to be less than the interest free loan taken, thereby not requiring interest disallowance . Considering the totality of facts and circumstances, it will be appropriate to sustain the disallowance to the extent of 15 % out of the expenses claimed as done in appeal of appellant for earlier years, which comes to ₹ 49,74,730 /- and balance of ₹ 1,00,25,270 /- is deleted . 6.6 Before us, the ld. AR has filed the following submissions. In appeal, while appreciating the above facts, the ld . CIT (A ) proceeded to examine the above facts as pointed out in the written submission and was in agreement with most of the points as conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts . On study of the trading activities, it would be noted that the appellant had already shown Net profit of Rs . 76,00,056 /- on the sales of Rs .2,41,74,680 /- giving N .P . rate 31 .44 % which would rather appear to be excessive in view of the prevalent trend of G .P ./N .P . in this line of business which run between 8 to 10 % thus warranted no interference at all . However after taking into account the addition of 49,74,730 /- as confirmed by the honorable CIT (A ), such N .P . would go up to Rs .1,25,74,786 /- giving N .P . rate of 52 .02 % which is apparently abnormal and un -comparable with any of the assessee in this line of business . It is a matter of common prudence that where the income is determined on estimation basis, the best method of estimation should be applied, which must be very close to the reality . The House of Lords pointed it out in Son Insurance Office vs Clarks 1912 AC 443 that where it becomes necessary to make estimates by income -tax department, the method should be adopted, which approximates most near to the truth . (iii ) The scenario of the trading results would become all the more absurd when the addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction. The ld. DR therefore, submitted that the AO was justified in disallowing the expenses. 6.8 We have heard both the parties. The assessee has debited the expenses of ₹ 2,39,54,413/60- under the head construction account in which the following expenses are in round figures. 1. Architect expenses ₹ 32,500/- 2. Bajri, rodi, cement Bricks expenses ₹ 19,05,000/- 3. Job work at construction ₹ 21,000/- 4. Labour charges ₹ 52,90,500/- 5. POP expenses ₹ 2,65,000/- Thus out of total expenses of ₹ 2.39 crores, the expenses which are in round figures are to the extent of ₹ 75.14 lacs. The ld. CIT(A) has referred to the cost of construction per sq.ft on various sites for the period relevant to assessment year 2007-08 and noticed that the rates varied from ₹ 75.14 per sq.ft. to ₹ 1433.93 per sq.ft The ld. CIT(A) has given the finding that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t income to the extent of ₹ 2,26,836/-.The AO noticed that the assessee has not maintained day to day accounts and receipts are not verifiable. The assessee has not produced any supporting vouchers. Income from such business was not being disclosed in the regular return. Since receipts as well as expenses were not at all verifiable therefore, the AO disallowed 1/3rd of the expenses of ₹ 19,80,417/- to the extent of ₹ 6,60,131/-. 7.4 Before, the ld. CIT(A), the assessee made following submissions:- 1 . The assessee has computed net profit from taxi business as under :- Gross Receipts . 22,07,253 /- Less : - Depreciation 44,628 /- Less : Taxi Running expenses (PB 265 to 292 ) 19,80,417 /- Net Profit from Taxi running business . 1,82,208 /- The assessee has filed detailed calculation in support of gross receipt Rs .22,07,253 /- Petrol Diesel expenses at Rs .12,50,437 /- (PB 266 -272 )and drivers salary at ₹ 3,75,900 ./- vide PB Pages . (286 - 292 ). The assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld . CIT (A ) did not venture to examine the income and expenditure account as furnished by the appellant in respect of these taxis and proceeded to decide this point on the same footings as done by the ld . AO and opined that such disallowance as made by the AO was quite excessive and accordingly reduced the percentage of such disallowance to 20 % from 1 /3rd as made by the AO for the same reasons as mentioned by him in the A .Y . 2005 -06 . However, on reading of the relevant extract from the assessment order of the A .Y . 2005 -06 (page No .23 24 ) your honors would observe that in the said assessment order also the ld . CIT (A ) did not point out any specific discrepancy or defect in the details of the Income Expenditure A /c as furnished by the appellant in this regard . Thus the ld . CIT (A ) had rejected the results as shown by the appellant in this regard without analyzing the profit results and also without pointing out the specific discrepancies or defects or the volume of amount involved in the so called unverifiable vouchers etc . though the details of head -wise expenses were duly submitted and were very much available with them . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne has to consider that the assessee is not basically involved in this business but the main business of the assessee was in the filed of real estate. Looking to the quantum of receipts shown and the expenses claimed, we feel that it will be fair and reasonable to estimate the net profit from taxi running business at ₹ 2.00 lacs as against ₹ 1,82,208/- shown by the assessee. Thus Ground No. 6 of the assessee is partly allowed while the Ground No. 3 of the revenue is dismissed. 8.1 Ground No.7 of the assessee is as under:- On the facts and in the circumstances of the case, the ld . CIT (A ) had legally and factually erred in confirming addition of Rs .73,61,000 /- on account of unexplained cash credits out of total addition of Rs .3,87,00,404 /- as made by the A .O . under this head . While confirming such addition, the ld . CIT (A ) did not appreciate the facts of the respective deposits in right perspective for the detailed reasons as explained during the course of assessment and appeal proceedings . Thus the order of the learned CIT (A ) is not self contained and well reasoned for confirming such addition and is therefore bad in law . The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of deposit of Rs .5,00,000 /- is by cheque clearing on 1 .1 .2008 . 1 .3 .2008 50,000 Journal entry . This is a journal entry of Rs . 50,000 /- against the amount transferred from Khandelwal Buildcon Pvt . Ltd . No sum was received by this credit entry, hence no addition u /s 68 is attracted . Comments :- I have gone through the submission made by the assessee A /R / during Appellate proceedings assessee has now given evidence regarding deposit of Rs .1,00,000 /- by cheque . Evidence regarding Bank account of Arpan Enterprises in Union Bank of India has been given and Rs .50,00,00 /- is journal entry . During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given . 2 ) Ashok Pareek . Rs . 9,00,000 /- The confirmation letter is placed at PB Page 295 . The copy of PAN card and affidavit regarding giving cheque for advance of booking of plot is at PB page No . 296 297 . The AO code is ITO Ward 4 (2 ) Jaipur (PB pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econdly of Rs . 50000 /- (sic ) on account of transfer of money from the account of Shri Manohar Lal Choudhary . This is JV entry for transfer, no sum was received through this entry; no addition can be made u /s 68 . Comments :- I have gone through the submission made by the assessee A /R during Appellate proceedings assessee has now given evidence regarding Journal entry of no some was received to this entry . The amount has been received on transfer of money from the account of Shri Manohar Lal choudhary . During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given . 4 Smt . Mohini devi Khandelwal W /o Shri Mohanlal Khandelwal . Rs .1,25,000 /-. The creditor is the mother of the assessee . The A .O . has mentioned it as un -named creditor . Additional Evidence at Page No . 301 02 . The confirmation letter is placed at Page . 301 . Affidavit giving the amount to assessee is also placed at PB No . 302 . Date Amount . Natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date Amount . Nature of entry Explanation . 3 .5 .2007 100000 Cash An amount of Rs . 1,00,000 /- received in cash from Shri Rakesh Gupta ( Cash book at PB Page 416 /II ), who has received the amount of Rs . 6,00,000 /- from Khandelwal Bulding Material Suppliers by cheque No 127602 dated 02 .03 .07 (Copy of Bank a /c (PB Page 505 to 507 /II ) and the same withdrawal by Rakesh Gupta in cash on 02 .03 .07 (PB Page 446 /II ). Out of this amount Rs .1,00,000 /- paid by Rakesh Gupta to Dilip Kumawat 4 .5 .2007 500000 Cash An amount of Rs . 5,00,000 /- received in cash from Shri Rakesh Gupta (Cash book at PB Page 416 /II ) , who has received the amount of Rs . 6,00,000 /- from Khandelwal Bulding Material Suppliers by cheque No 127602 dated 02 .03 .07 (Copy of Bank a /c (PB Page 505 to 507 /II ) and the same withdrawal by Rakesh Gupta in cash on 02 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om account of Tikam Khandelwal . The copy of account of Shri Dilip Kumawat in books of Tikam Khandelwal is at PB Page 388 . Shri Dilip Kumawat paid Rs . 20,000 /- to Shri Tikam Khandelwal on 08 .05 .2007 by cheque (Bank statement PB Page 428 /II ) out of amount of Rs . 19,00,000 /- deposited by Bank loan of Rs . 19,00,000 /- taken from ICICI bank on 7 .5 .2007 by Shri Rakesh Gupta (Statement at PB Page 445 /II ) and the same deposited in the Bank account of Dilip Kumawat (Bank statement at PB Page 428 /II ). 9 .5 .2007 900000 Cash Bank loan of Rs . 19,00,000 /- was taken from ICICI bank on 7 .5 .2007 by Shri Rakesh Gupta ( Statement at PB Page 445 /II ) and the same deposited in the Bank account of Dilip Kumawat ( Bank statement at PB Page 428 /II, Shri Dilip Kumawat withdrawal the cash from bank account on 09 .05 .07 (PB Page 428 /II ) and paid the same to assessee (Cash book PB Page 416 /II ). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thdrawal this amount cash on 07 .11 .07 (Bank statement PB Page 440 /II ) and paid the same to assessee (Cash Book PB Page 416 /II ). 17 .12 .2007 400000 Cheque Out of Opening cash balance (Cash Book Page No . 416 /II and previous year cash book Page No . 419 to 420 /II ) Rs . 4,00,000 /- deposited in cash by Shri Kumawat in SBBJ A /c and cheque No . 565760 of SBBJ issued to the assessee (Copy of Bank a /c PB Page 432 /II ). 20 .12 .2007 600000 Cheque Out of Opening cash balance (Cash Book Page No . 416 /II and previous year cash book Page No . 419 to 420 /II ) Rs . 6,00,000 /- deposited in cash by Shri Kumawat in SBBJ A /c and Cheque No . 525987 issued to the assessee . ( Copy of Bank a /c PB Page 433 /II ). 24 .12 .2007 950000 Cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Comments :- I have gone through the submission made by the assessee A /R / during Appellate proceedings assessee has now given evidence regarding receipt of Rs . 1,00,000 /- in cash on 03 .02 .2007 and further cash of Rs .5 lakhs received on 04 .05 .2007 . Assessee has submitted that amount of Rs .1,00,000 /- has been received from Rakesh Gupta and further this amount was received Sh . Rakesh Gupta from Kahndelwal Building Material Suppliers which has withdrawn by Rakesh Gupta on 02 .03 .2007 and paid to Sh . Dilip Kumawat on 03 .05 .2007, thus difference of cash withdrawn of period is about two months which seems to be unbelievable and not reasonable, thus this cash credit should not be accepted . Similarly Assessee has submitted that amount of Rs .5,00,000 /- has been received from Rakesh Gupta and further this amount was received Sh . Rakesh Gupta from Kahndelwal Building Material Suppliers which has withdrawn by Rakesh Gupta on 02 .03 .2007 and paid to Sh . Dilip Kumawat on 04 .05 .2007, thus difference of cash withdrawn of period is about two months which seems to be unbelievable and not reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Assessee has given that the amount of Rs . 5 lakhs received on 12 .07 .07 from Guman Khandelwal which was withdrawn bearer cheque (Bank account statement given ) ii ). Assessee has given that the amount of Rs . 9 lakhs received on 10 .08 .07 from Guman Furniture Services and Pvt . Ltd . which was withdrawn bearer cheque on 10 .08 .2007 (Bank account statement and cash book given ) iii ). Assessee has given that the amount of Rs . 9 .5 lakhs received on 23 .10 .07 from Sh . Govind Kripa Buildmart Pvt . Ltd . and deposited in UCO bank of Dilip Kumawat which was withdrawn on 23 .10 .2007 . (Bank account statement and cash book given ). iv ). Assessee has given that the amount of Rs . 5 lakhs received by Dilip Kumawat from Shankar Khandelwal SBBJ Bank A /c . and same withdrawn in cash on 05 .11 .07 and paid to the assessee (Bank account statement given ). v ). Assessee has given that the amount of Rs . 9 .5 lakhs received from Sh . Govind Kripa Buildmart Pvt . Ltd . and deposited in UCO Bank A /c . of Dilip Kumawat and same withdrawn in cash on 07 .11 .07 and paid to the assessee (Bank account statement give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 3,00,000 Receipt by cheques . Amount received by cheques for booking of plot as advance . Copies of confirmation, sworn affidavit, PAN card filed as Additional Evidence u /r 46A with written submission . In view of the facts no addition u /s 68 is attracted and deserves to be deleted . Further all the ingredients required u /s 68 stands satisfied . The copy of Bank statement is at PB Page 453 to 454 /II and AO code at PB Page 454 -A /II Comments :- I have gone through the submission made by the assessee A /R during Appellate proceedings it was mentioned that this amount was received by cheque for booking of plot as advance . Assessee has filed confirmation, bank Statement, Ward Details . During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given . 8 . Shri Tarun Agarwal Rs . 9,50,000 /- Additional evidence is at P .B . Page No . 310 311 . Confirmation letter is placed at PB Page No . 310 and affidavit is placed at PB Page . No 311 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Bartan Bhandar in books of Guman Furniture Services Pvt Ltd is enclosed at PB Page No . __________ . 01 . 01 . 07 1,99,000 Journal Entry Transfer from A / c of Lallu Ram Jhalani . Rs . 1,99,000 /- paid to Shri Lallu Ram Jhalani on 19 . 08 . 06 by cheque drawn on PNB ( copy of Bank statement at PB Page 483 ) 16 . 05 . 07 1,75,000 Cheque Cheque given out of personal loan of Rs . 2,63,938 /- taken from ICICI . 28 . 09 . 07 3,20,000 Cheque Cheque given out of personal loan of Rs . 3,72,613 /- taken from ABN Amro Bank . 20 . 10 . 07 (-) 1,00,000 Cheque Cheque given back by assessee . Total 11,46,000 Comments :- I have gone through the submission made by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 Cash Out of cash Received from Shri Tikam Khandelwal on 21 . 04 . 07 . The copy of account of party in books of Tikam Khandelwal is at PB Page 396 and cash book of Gopal Lal Saini at Page 459 / II . 1 . 5 . 2007 4,00,000 Cash Rs . 4,00,000 /- cash withdrawn from Bank of Baroda a / c on 01 . 05 . 07 ( Copy of Bank a / c at PB Page 462A / II ) . The amount was withdrawn out of cheque of Rs . 45,00,000 /- deposited in bank account which was received from Shri Tikam Khandelwal ( Copy of account in books of Tikam Khandelwal at PB Page 396 ). Shri Tikam Khandelwal gave Rs . 45,00,000 /- from housing loan taken from ICICI Bank . ( Copy of loan statement at PB Page 461 ). 11 . 6 . 2007 3,00,000 Cash Amount deposited in cash with assessee out of Opening cash balance with him amounting to Rs . 3,61,200 /-. Copy of cash book at PB Page 459 / II . The opening cash balance was out of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the cash credit in the name of Shri Gopal Saini is not undisclosed income of the assessee but represents to introduction of disclosed funds of the family members routed through the account of Gopal Saini . It is relevant to mention here that the family members took the housing loan from banks on the basis of some fabricated agreement to sale of properties prepared in the name of Shri Gopal Saini in favour of the family members; on the basis of these documents, the loan from bank were taken, the payment to Gopal Saini against the disbursement of loan was made, subsequently the cash was withdrawn against the deposit of cheques of loan amount and the money was re introduced in the books of assessee . Since the cash was received from party through disclosed source which explained as above, therefore no addition can be made u /s 68 of Income Tax Act, 1961 . Comments : - I have gone through the submission made by the assessee A /R during Appellate proceedings assessee has now given evidence regarding Journal entries on 01 .04 .2007 of Rs .7 .5 lakhs from Dilip Kumawat (copy of bank account of Dilip Kumawat an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of Guman Khandelwal and cash book of Gopal Saini Submitted but cash flow has already rejected in case of Sh . Shankar Khandel and further in the case of Sh . Guman Khandelwal cash extract remains unverifiable and sketchy which cannot be relied upon and further Gopal Saini benami of assessee Shankar Khandelwal as per the affidavit filed the cash book of Gopal Lal Saini cannot be relied . The above entries may not be accepted . 11 . Shri Gopallal . Jat Rs . 50,000 /-. Additional evidence is at P .B . Page No . 312 -313 . Confirmation letter is placed PB PAGE No . 312 and affidavit is placed at PB page No . 313 . Date Amoun . Nature of entry Explanation . 29 . 10 . 07 50,000 Receipt by cheque . Amount received by cheque No . 517966 as advance for purchase of Car RJ - 14 5439 . Copies of confirmation of account and sworn affidavit filed as Additional Evidence u / r 46A and with written submissions . In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date Amount . Nature of entry Explanation . 31 . 8 . 07 8,00,000 Receipt by cheque . Amount of Rs . 8,00,000 /- received by cheque No . 59678 of SBBJ . The source of deposit is by clearing of cheque 528082 . Copy of bank account and AO code is enclosed at PB Page 465 to 466A / II . Copies of confirmation letter and sworn affidavit filed as Additional Evidence u / r 46A and with written submissions . In view of the facts no addition u / s 68 is attracted and deserves to be deleted . Further all the ingredients required u / s 68 stands satisfied . Comments : - I have gone through the submission made by the assessee A /R during Appellate proceedings assessee has now given evidence regarding receipt of Rs .8,00,000 /- by cheque (copy of Bank account given ). During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given . 14 . Smt . Sona Jhalani . Rs . 4,00,000 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng assessee had failed to furnish sources of Fund inspite of number of opportunity given . 16 Shri Rakesh Gupta Plot No . 92, Raghunathpuri Rs . 7,00,000 . Additional evidences are at PB Page . 318 -323 . Copy of ledger account of plot No . 92 Raghunathpuri and account of Rakesh Gupta in the books of assessee and copy of account of Rakesh Gupta in the books of GFSPL and copy of seized agreement to sale in respect stated plot are placed at PB Page No . 318 -323 . The assessee was maintaining two ledger accounts in the name of Shri Rakesh Gupta first in the name Rakesh Gupta (92, Raghunath Puri ) and second in the name of Guman Furniture (Rakesh Gupta 92 Raghunath Puri ) . In FY 2006 -07 M /s Guman Furniture Services Pvt Ltd made payment of Rs . 7,00,000 /- to Shri Rakesh Gupta (Ledger PB Page 320 ) on behalf of assessee and debited the same in the name of Shri Rakesh Gupta and the assessee credit this amount in a /c naming Guman Furniture (Rakesh Gupta 92 Raghunath Puri ) ( Ledger PB Page 320 ) in place of crediting the account of M /s Guman Furniture Services Pvt Ltd . During the year the credit balance in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount of ₹ 1,00,000/- received by cash as advance of booking of plot. Cash withdrawn by Shri Rajeev Kumar Dubey on 15.3.2008. The source of deposit of ₹ 1,00,000 is clearing received on 27.2.2008. The copy of Bank statement and AO code is placed at PB Page 471 to 472A / II . Copies of confirmation letter, Sworn affidavit and PAN card filed as Additional Evidence u/r 46A and with written submissions. In view of the facts no addition u/s 68 is attracted and deserves to be deleted. Further all the ingredients required u/s 68 stands satisfied. Comments : - I have gone through the submission made by the assessee A /R during Appellate proceedings assessee has now given evidence regarding receipt of Rs .1,00,000 /- by cash and source of deposit of Rs .1,00,00 /- is clearing received on 27 .02 .2008 (copy of Bank Statement and Ward detail given ). During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given . 19 . Shri Pawan Sharma Rs . 14,000 /- . Additional evidence is at PB page No . 330-331 . Copy of confirmation is placed at PB Page No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arma which remained unexplained and the plea of the assessee may be rejected . During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given . 21 . Shri Manoharlal Chaudhary . Rs . 15,70,000 /-. Additional evidence is place at PB Page No . 342 -344 . Confirmation letter is place at PB Page No . 342 . Copy of PAN card and affidavit placed at PB Page No . 343 -344 . Date Amount. Nature of entry Explanation. 01.05.07 29.08.07 20.10.07 03.01.08 20,000 1,00,000 9,50,000 5,00,000 Cheque Cheque Cash Cheque Received by Cheque No.54442 S.B.B.J. ( Copy of Bank a / c at PB Page 474 / II ) Received by Cheque No. 319599 of S.B.B.J. ( Copy of Bank a / c at PB Page 476 / II ) Received out of Cash withdrawal from bank SBBJ on 19.10.07. ( Copy of Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no addition u/s 68 is attracted and deserves to be deleted. Further all the ingredients required u/s 68 stands satisfied. Comments : - I have gone through the submission made by the assessee A /R during Appellate proceedings assessee has now given evidence regarding receipt of Rs .1,99,000 /- by cash from the above assessee by withdrawal of cash of Rs .2 lakhs on 15 .05 .07 from the party account (copy of Bank account given ). During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given . 24 . Shri Laxmi Kant Sharma . Rs . 1,30,000 /-. Additional evidence is placed at PB Page No . 349 -350 . The confirmation letter is placed at PB page No . 349 . The affidavit is placed at PB page No . 350 . Date Amount. Nature of entry Explanation. 15.05.07 1,30,000 Receipt by cheque. Amount of ₹ 1,30,000/- received by a/c. payee cheque No. 038868 of SBBJ as advance for booking of plot. Source of deposit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Copy of Demand Draft and affidavit is placed at PB page No . 356 -357 . Date Amount. Nature of entry Explanation. 01.06.07 4,00,000 Receipt by cheque Amount of ₹ 4,00,000/- received by Demand Draft No. 001116 of State Bank of India dated 29-5-2007. Copy of D.D. is enclosed P.B. Page No. 356. as advance for booking of plot. Copies of confirmation letter, Demand Draft, and Sworn affidavit filed as Additional Evidence u/r 46A and with written submissions. In view of the facts no addition u/s 68 is attracted and deserves to be deleted. Further all the ingredients required u/s 68 stands satisfied. Comments : - I have gone through the submission made by the assessee A /R during Appellate proceedings assessee has now given evidence regarding receipt of Rs .4,00,000 /-by cheque (copy of Bank account given ). During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given . 27 . M /s . Keshav Industries . Rs . 2,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered as rectified . The A .O . has mentioned in the remand report that repeated opportuntities were given to furnish confirmation and produce books of accounts and vouchers . On perusal of the record and the reply of the A .R, it is seen that vide notice dated 27 .8 .09, the assessee was asked to produce books of accounts and information as per letter . However as per A .R ., no such letter was served on the assessee . On being asked, the A .O . clarified that the common letter was issued . However, he accepted that no query was raised for furnishing confirmation of the cash creditors . Similarly, the A .R . has pointed out that vide another notice u /s 142 (1 ) dated 27 .10 .09 also, no requirement of furnishing the confirmation of cash creditors was raised . The A .O . has mentioned that the assessee was asked to produce the books of accounts and supporting vouchers . Similary vide notice dated 12 .11 .09, no query was raised to furnish the confirmation of the cash creditors . Similary, vide notice dated 4 .12 .09 also, appellant was not asked to furnish confirmation of the cash creditors . The query was raised in respect of furnishing cash flow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r entry in the other member of the group . Needless to mention, the A .O . has examined these details and has furnished his comments mentioned below each of these entries . No adverse comments have been made by the A .O . Accordingly, additions to the aforesaid extent which have been inadvertently made by the A .O . in respect of these journal entries are straight away deleted . 7 .4 .4 The entry at Sr . no . 5 namely Dharam Raj Singh, it was seen that there is actually no loan taken from him but Rs . 2 .5 lakhs was earlier advanced by the appellant to him, which has been repaid by him during the year under consideration . Thus, same being not a loan creditor, addition u /s 68 of I .T . Act is normally not warranted . In any case, the appellant has now furnished confirmation plus PAN no . plus residential proof plus affidavit and has even further furnished bank statement evidencing repayment of advance earlier taken . A .O . has also not given any adverse comments on merits of the addtional evidences so filed . Accordingly, addition of Rs . 2 .5 lakhs, being unwarranted, deserves to be deleted . It may be reiterated that in respect of aforesaid add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17.12.2007 Rs.4,50,000/- Cheque 20.12.2007 Rs.6,00,000/- Cheque 24.12.2007 Rs.9,50,000/- -do- 1.3.2007 -do- -do- 13.3.2007 ₹ 3, 00,000/- -do- 17.3.2008 -do- It is seen by the undersigned that A .O . has rightly objected to the explanation of source of cash of Rs . 1 lakh and Rs . 5 lakh deposited on 3 .5 .2007 and 4 .5 .2007 respectively, which has been stated to be received from Sh . Rakesh Gupta, who has in turn received the cheque of Rs . 6 lakhs on 2 .3 .07 and withdrawan the amount from the bank on the same date, in view of the fact that there is gap of two months in the cash withdrawal from bank by Sh . Rakesh Gupta and conteded giving of cash by him to Sh . Dilip Kumawat . As regards above remaining six entries totaling to Rs . 35 .50 lakhs are concerned, it is seen that A .O . has rightly not accepted the explanation of source of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese facts, I agree with the argument of A .R, that it is not the loan creditor and moreover, during the year under consideration, there is no receipt of actual money but there is only journal entry . Hence, the provsions of section 68 are not attracted . In any case, the money has been received in F .Y 2008 -09 as sale proceeds of the plot no . 334, Ganesh Nagar and construction over it . Hence, addition of Rs . 11,76,000 /- does not deserve to be upheld in A .Y 2008 -09 and is accordingly deleted . 7 .5 In brief, the additions on account of cash credit to the extent of ₹ 73,61,000 /- is sustained and balance addition of ₹ 3,13,39,404 /- so made by the A .O . is hereby deleted . 8 .7 Before us, the ld . AR has filed the following submissions The AO had discussed this addition at pages No .10 11 of the assessment order . In fact such additions were made while passing assessment order u /s 144 of the Act holding therein that the appellant had failed to furnish any satisfactory explanation in respect of 27 creditors . In fact, during the course of assessment proceedings the appellant was prevented by reasonable cause from fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant in the cash flow statements and were treated as the funds of the appellant only . In the circumstances, the deposits appearing in name of Shri Dilip Kumawat would not come in the ambit of the meaning of cash creditor as Shri Dilip Kumawat is not the creditor as treated by the learned CIT (A ) while confirming such addition . Again it is incorrect to say that no immediate sources of the cash deposits of Rs .41,50,000 /- could be explained properly . In fact, the appellant had submitted cash flow statement in respect of all the benamidars as lying placed in the PB at page no . 206 . On careful study of such cash flow statements, it would be noted that all these funds were routed through such cash flow statements only as per detailed explanation discussed by the CIT at pages no . 34 to 37 of the appeal order . While turning down the explanation of the appellant on the point, the CIT (A ) had relied upon the remand report of the AO (discussed at page no . 37 of the appeal order ) wherein the ld . AO had opined that the funds of Rs .6 lac as claimed to had been received by the alleged creditor Shri Dilip Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore your honors for your kind perusal and ready reference at PB page no . 206 . As per such cash flow statement, it would be noted that Shri Dilip Kumawat had opening balance of Rs ..51,85,561 /- out of which these deposits were shown by the appellant . On the face of such details and cash flow statement, the findings of the authorities below are incorrect and deserve to be quashed . (b ) Addtion of Rs .32,01,000 /- confirmed by CIT (A ) out of total addition of Rs .95,51,000 /- made by the AO on account of unexplained cash credit appearing in the name of Shri Gopal Lal Saini (benami of the appellant ):- The ld AO had made addition of the entire credit balance Rs . 95,51,000 /- (copy lying in PB at page no . 207 ) as appearing in the name of Shri Gopal Lal Saini (benami of the appellant ) in absence of the details as discussed above . However, before the ld . CIT (A ) the appellant could procure the required details and relevant documents in support of such deposits with the request to admit these under Rule 46A of I .T . Rules, 1962 . After following the proper course as laid down in the Rules, the ld . CIT (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urces of such cash funds were also properly explainable . Either these funds were withdrawn from the banks, or were received through the instruments etc . Thus, the immediate sources of such cash funds could not be questioned by any of the Authorities Below . In absence of such an exercise, the books could not be rejected by general observations . In view of above discussions, the additions as made and confirmed by the Authorities Below are bad in Law and deserve to be deleted . 8 .8 The ld . DR referred to Ground No . 4 and 5 raised by the revenue in their appeal . The details filed by the assessee before the ld . CIT (A ) were not subject to complete verification, There was no reasonable cause with the assessee for not producing the evidence before the AO . The ld . CIT (A ) was not justified in admitting the additional evidences under Rule 46A . Before the ld . CIT (A ), the assessee raised a plea that he could not file the evidences before the AO on account of his illness while no such plea was raised before the AO that he was ill and not able to produce the evidences . The assessee has carried on substantial business during the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal evidences . The justice should prevail over the technicalities of the Rules . We therefore, feel that the ld . CIT (A ) was justified in admitting the additional evidences . The only grievance of the AO before the ld . CIT (A ) was that the assessee failed to furnish the sources of funds in spite of number of opportunities given . It is not the case of the revenue that additional evidences filed by the assessee are not sufficient to hold that no addition u /s 68 can be made . Once the opportunity has been given by the ld . CIT (A ) to the AO in respect of additional evidences then there is no case of sending the matter back to the AO . 8 .10 The ld . CIT (A ) has confirmed the addition of Rs . 73 .61 lacs u /s 68 of the I .T . Act . The additions of Rs . 41 .50 has been confirmed in the name of Shri Dilip Kumawat and Rs . 32 .01 lacs in the name of Shri Gopal Saini . The assessee in his statement recorded at the time of search admitted vide Q .No . 24 that he has purchased the properties in benami name of Shri Dilip Kumawat and Shri Rakesh Gupta . The assessee filed the cash flow statement in the name of Shri Dilip Kumawat and Shri Gopal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hareholder . b ) In the statement recorded the assessee admitted that the cash of Rs . 1 .75 caror was paid to farmers and Rs . 35 lacs paid to Shri Hanuman Yadav for making the payment to farmers but no where the assessee admitted that the same money was paid out of his own undisclosed income of the assessee . c ) The land for the project naming Global City was purchased in the company naming M /s Govind Kripa Buildmart Pvt Ltd The promoters of the company were Shri Shankar Khandelwal, Riddhi Sddhi Infra Projects Pvt Ltd and Shri Banwari Lal Yadav . This company purchased a agriculture land of Rs . 5,72,92,887 /- against which Rs . 3,81,22,887 /- was paid in cash and the same is duly recorded in the books of accounts of this company and the same accepted by AO during the assessment proceeding of this company . For making payment of Rs . 3,81,22,887 /- the funds was received to company from following source : - a ) Shri Shankar Lal Khandelwal (Plot Booking Advance ) Rs . 149 .58 Lacs b ) Shri Banwari Lal Yadav Rs . 65 .00 lacs c ) Shri Madan Singh Shekhawat Rs . 60 .25 lacs d ) Shri Suraj Ram Yadav Rs . 36 .0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has recorded the correct payments /and receipts in chronological order . The learned AO has made separate addition for the receipts which he found non -genuine (Cash credits ), and separate addition for the payments which he found under recorded (Unexplained investment in plots /properties - though recorded but he made the addition ). The cash book is nothing but recording of the receipts and payments transaction in chronological order . The learned AO rejected the cash book without pointing out specific defect in the recording of receipt or payments in cash book . h ) The case of the assessee is covered by the decision of the Hon ble ITAT Jaipur bench in the case of Shri Rajendra Kr . Kedia Vs . DCIT, 22 Tax World, 506 . wherein Hon ble ITAT Jaipur Bench have observed that where the books of account are not properly maintained, the same could be subsequently prepared and re -casted on the basis of his bank statement, vouchers and other related documents of sales and purchase which could be relied upon for the purpose of making the income tax assessments . i ) Statements of the assessee u /s 132 (4 ) of Income Tax Act The ld . A .O . has me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the cash flow chart and documentary evidence filed . In view of the above facts and submission made the assessee again submits that the alleged disclosure made in the statement recorded u /s 132 (4 ) of I .T . Act is not a reliable one in the eyes of law and no adverse inference deserves to be drawn on the basis of said statement . Reliance is placed on the following decisions :- (i ) Hon ble Appex Court in Pullangode Rubber Produce Co Ltd Vs State of Kerala [1973 ] 91 ITR 18 has held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive . It is open to the person who made the admission to show that it is incorrect . (ii ) Gargidin Jwala Prasad vs CIT (1974 ) 96 ITR 97 (All ) Held that the addition merely based on statement of witnesses cannot be made . iii ) CIT Vs G .Krishnan (1994 ) 210 ITR 707 Mad . Held that addition cannot be made merely on the basis of statements . iv ) ACIT vs Ashok Kumar Jain 32 TW 115 (ITAT Jaipur ) It is open to the person who made the admission to show that it is incorrect . In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A .R . The undisputed fact are that the appellant has not been maintaining regular books of accounts . The books of accounts of M /s Govindkripa Buildmart Pvt . Ltd were also not maintained regularly . Infact during the course of search, no any bills /vouchers of the appellant of the company were found . It is admitted fact that the memorandum of books of accounts has been prepared after the search and seizure operation . Accordingly, decision in the case of Sh . Rajendra Kumar Kedia vs . DCIT referred by the A .R is not fully applicable in the instant case, as in the instant case no any books of accounts were maintained . Even otherwise, the memorandum of books of account so prepared can not be relied upon . More particularly the cash flow statement so furnished indicating incoming and outgoing of the cash can not be relied upon in absence of direct independent evidence of cash being received or paid or in absence of direct evience by way of withdrawals from the bank on the same date . It is seen that appellant, during the course of statement recorded u /s 132 (4 ), has averred that for entering into trasnsaction of purchase of 220 bigha of land for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary value as per numerous judicial citation relied upon in the written submissions (lying in the PB 51 ). In the circumstances, addition made on the basis of such invalid confessional statement was bad in law and was to be deleted summarily . (ii ) The contents of the said statement were not appreciated in its entirety . On careful study of this statement, it would be noted that the appellant had been explaining the nature and source of the investment in the said project on behalf of the Co . M /s Govind Kripa Buildmart Pvt . Ltd . Jaipur only . But in the concluding part of the statement, he had included such investment in his own case and confessed such investment for no reason . Thus the statement of the appellant on the point is self -contradictory as revealed from the following extracts of his statements : Abstract of Statement of Shri Shankar Lal Khandelwal taken by Shri Rajesh Gupta ITO on dated 16 .11 .2007 Abstract of Statement of Shri Shankar Lal Khandelwal taken by Shri Ravindra Sandhu ADI (Invt .) II Udaipur on dated 16 .11 .2007 From the reading of the above extracts, it would be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The relevant extract from the statement of Shri Banwarilal Yadav is re -produced here -under for ready reference : (vi ) The cash book / the so called cash flow statement had been rubbished without pointing out any defect or deficiency with general observations that these were not properly verifiable and reliable . (vii ) Lasty, the AO had incorrectly mentioned that no capital A /c and drawing account of the appellant was submitted . Such Capital A /c and drawing account were duly submitted before him and again submitted with CIT (A ) also . 9 .7 On the other hand, the ld . DR has supported the orders of the authorities below . It was submitted that the assessee at the time of search admitted that cash payment represented as undisclosed income . It was therefore, submitted that the ld . CIT (A ) was justified in confirming the addition of Rs . 2 .10 crores . 9 .8 We have heard both the parties . M /s . Global City Project was a joint venture project between company namely M /s . Govind Kripa Buildmart (P ) Ltd . and Shri Banwari Lal Yadav . Subsequent there was an agreement between the company and Mohd . Sharr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . has made the addition in the following names for the transactions made of banks in F .Y . 2007 -08 relevant for the assessment year 2008 -09 :- Name of the persons Bank A / c No . Cash Deposited as per AO Actual cash deposited Dilip Kumwat Bank of Baroda 20,50,000 6,00,000 (Cheque of ₹ 9,50,000+5,00,000) received from Guman Khandelwal also added treating the same as cash deposited Dilip Kumawat SBBJ 01190012467 51014106649 29,97,500 29,97,500 Dilip Kumawat UCO Bank 9,70,000 9,90,000 Gopal Saini Bank of Baroda 73,500 73,500 Rakesh Gupta UCO Bank 23,00,000 18,00,000 (Cheque of ₹ 5,00,000/- received from Sunil furniture also added treating the same as cash deposited) b ) The source of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.11.07 5,000 -do- 10.12.07 3,000 -do- 17.12.07 4,00,000 Out of Opening cash balance ( Cash Book Page No . 416 / II and previous year cash book Page No . 419 to 420 / II ). Further this amount was utilized for giving advance to Shri Shankar Kahndelwal and the same advance has been added as income of the assessee treating the same unexplained . 20.12.07 6,00,000 -do- 24.12.07 9,50,000 -do- 12.02.08 4,000 Out of Opening cash balance ( Cash Book Page No . 416 / II and previous year cash book Page No . 419 to 420 / II ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the above it is clear that the cash was deposited from explained sources, therefore the additiona mad by AO is unjustifiable and deserve to be deleted . 10 .5 The ld . CIT (A ) after considering the submissions of the assessee reduced the addition to Rs . 10 .61 lacs after observing as under :- 9 .2 I have considered the submission of the ld . A .R, remand report of the A .O and the material available on record . The details furnished were seen and checked by the A .O . and also by the undersigned . The facts mentioned by the A .R at table (a ) were found correct that actual cash deposit in the Bank of Baroda account of Sh . Dilip Kumawat is only Rs . 6 lakh, as against Rs . 20,50,000 /- taken by the A .O . (Cheque of Rs . 9 .5 lakh + Rs . 5 lakh received from Sh . Guman Khandelwal was mistakenly considered by A .O as cash deposit .) Similary, actual cash deposit in UCO Bank account of Sh . Rakesh Gupta is Rs . 18 lakhs as against Rs . 23 lakhs taken by A .O . 9 .2 .1 Now coming to the source of cash deposit in the various aforesaid bank account of these benami persons, it is se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, Rs . 8,50,000 /- deposited on 27 .10 .07 in UCO Bank account of Sh . Rakesh Gupta is also held as unexplained in view of no specific submsision and addition is confirmed . 9 .3 In brief, total addition of Rs . 10,61,000 /- are sustained and balance addition of Rs . 73, 30,000 /- is deleted . 10 .6 During the course of proceeding before us, the ld . AR has filed the following submissions . In appeal, having considered the detailed written submission (as lying in the PB ) the CIT (A ) had given credit of the cash withdrawals appearing in these bank accounts and also the deposits shown through cheques or by transfer etc . No credit was however given for cash deposits on the plea that the cash books as produced in support of such cash deposits were rejected being un -verifiable and un -reliable . Accordingly confirmed the following additions on this plea : 1 . Shri Dilip Kumawat Rs . 1,38,000 /- 2 . Shri Gopal Lal Saini Rs . 73,500 /- 3 . Shri Rakesh Gupta Rs . 8,50,000 /- From the above discussions, it would be noted that the Authorities Below have turned down the claim of the appellant on the lone p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition of Rs . 10 .61 lacs . Hence, Ground No . 9 of the assessee is allowed while Ground No . 6 of the revenue is dismissed . 11 .1 Ground No . 10 of the assessee is as under :- On the facts and in the circumstances of the case, the ld . AO . had legally and factually erred in making multiple over -lapping additions on account of suppression of purchases, sales, disallowances of the expenses being un -vouched or unverifiable or expended in violation of certain provisions of the Act etc ., unexplained investment u /s 69, unexplained cash credits u /s 68 of the Act and investment and deposits etc . shown in the names of the so -called benami persons etc . without taking care of Telescoping Theory, or following a uniform method of working of the Income of the appellant . In appeal proceedings, the learned CIT (A ) had dealt with this ground of appeal halfheartedly vide para no .11 .2 without giving any specific finding on the point . In the circumstances, the ld AO could not give any appeal effect on this ground . As the findings of the learned CIT (A ) on the point are not well reasoned and self contained, so to this ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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