9911796707
TMI Blog2011 (8) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 account of such purchases and sales outside books, so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 Annexure A-25. The assessee was confronted with such seized paper and it was stated that it is the estimated and dumb pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 86993/-only. Further the assessee purchased this plot only for Rs. 1,00,000/- on 26/03/2004. The Ld AO has accepted the purchase cost of this plot and no body can sale the plot of Rs. 100000/- for the huge amount of Rs. 15,00,000/- within few days. The finding of the AO is against human probability and possibilities. The matter s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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:- Ram Nagar = 21x2 Therefore there is no entry on the seized paper in respect of plot no. 52 Ram Nagar. Figure 21 denotes the estimated value of the complete constructed house. In this case, the assessee made construction in 600 sq ft area only. 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 52 Ram Nagar was made on surmises and conjectures. 2) No inquiry from the buyer of the plot:- The Ld AO made the addition on presumption assumption surmises and conjectures without making proper inquiry from the buyer of the plot. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed 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 made on the basis of dumb documents. (g) Moonga Metals Pvt. Ltd., Vs. ACIT (All.) 67 TTJ 247 Burden is on the revenue to establish that figures appearing on loose papers found represent undisclosed investment of the Assessee. (h) Jagdamba Rice Mills Vs. ACIT (Chd.) 67 TTJ 838 It was held that no addition can be made on a dumb document.'' 2.6 The ld. CIT(A) after considering the submissions of assessee at para 6.3 t 6.3.4 of its for the assessment year 2005-06 held as under: - ''6.3 I have considered the submission of the A.R and have perused the assessment order and relevant record. The argument of the A.R. is that the impugned paper is mute, ambiguous, unspecific and rough and accordingly it is a dumb paper. No date is mentioned. On perusal of page 25 of annexure A-25, it is seen that on the top of it, property account- group summary is mentioned with date as '1.4.05 to 31.3.06' (in the form of heading) and below this heading type ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn to accommodate the purchaser as per the availability of accounted fund with him and that is why in the sale agreement construction details are not shown so that different rates of sale shown in the agreement may not be questioned on the ground of parity by any Govt. Authority. 6.3.3 When the loose paper is speaking and same was found from the premises of the appellant group, and then there is no requirement of the A.O. to make enquires from the present plot holder, as contended by the A.R. Hence this contention of the A.R is rejected. 6.3.4 After affirming the A.O's action in general on this issue in view of the discussion made in the aforesaid paras, it will be appropriate to mention about the individual plot/entry. i) From perusal of page 23 and 25 of Ann. A-25, it is seen that Krishna Nagar plot is mentioned on page 23 of A-25 and accordingly A.R's contention in this regard is incorrect that there is no entry of Krishna Nagar plot. Against the name 'Krishna Nagar' word 'sold' has also been mentioned and there being for sub-plots/ plots, rate '15x4' is also mentioned. Hence A.O. is justified in taking sale value of Krishna Nagar plot at Rs. 15 lakhs. ii) On perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was justified in taking the sale value of plot no. 173 at Rs. 15 lakhs being of the same size and being adjacent to the above mentioned plots namely 164- 165, 170-177. The argument regarding double addition by the A.O. in the case of Shnkar Khandewal the appellant as well as Sh. Tikam Khandelwal, his brother has been considered in the appeal order no.584/09-10 in the case of Sh. Tikam Khandelwal in A.Y 2005-06 and for the reasons discussed therein, the same has been rejected. Accordingly, A.O. was justified in taking sale value of portion of 173, Shyampuri plot sold by appellant at Rs. 15 lakhs instead of Rs. 5 lakhs shown by the appellant. v) As regards sale value of plot at Chitrakoot Colony, taken by the A.O. at Rs. 20 lakhs is concerned, it is seen that page no. 23 of Ann. A-25 at 5th written line has following narration "Sold Chitrakoot- 20x3 " Moreover, there is one more different entry on page 25 of Ann. A-25 which is as below:- "Chitrakoot Colony - 31 = 22x2 " " - 09 = 45 " Considering these narrations, the A.O. was justified in taking sale value of plot no. 34 and 35 at Rs. 22 lakh and for plot no. 98 at Rs. 20 lakhs. vi) Entry regarding Ram Nagar Colony Pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delwal Rs. 160.34 lacs 2. Shri Guman Khandelwal Rs. 19.12 lacs 3. Shri Tikam Khandelwal Rs. 35,93 lacs 4. Shri Mohan Lal Khandelwal Rs. 7.94 lacs 5. Total Rs. 223.33 lacs 2.9 During the course of proceedings before us, the ld. AR drew our attention to the facts which are relevant to understand state of mind of the person when he made a huge disclosure immediately after the commencement of search operation. The nephew of the assessee fell sick and the authorized officer had to rush Santokhba Durlabji Hospial alongwi the assessee to get the nephew admitted in the hospital. The nephew remained admitted in the hospital for two days. After returning from the hospital, the recording of the statement of the assessee started at about 3.00 PM on 16-11-2007. The Statement continued to be recorded till the next date i.e. 17-11-07. In between the assessee was required to witness the search proceedings at second point at Mansarovar Colony showroom. At that place also, the statement of the assessee was recorded by the authorized officer. All the sequence of the event is evident from panchnama prepared for the search proceedings. Hence at the time of recording of the statement, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of merits for the following reasons: (a) On careful study of the paper under consideration (page 23 & 25 of ex. A25 which is placed in the paper book at page no. 86-87 for ready reference) your honors would appreciate that the aforesaid paper is actually a deaf and dumb paper for the following reasons: (i) On perusal of the said papers, your honors would note that these are copies of a print out of "Property A/c" Group Summary for two financial years i.e. 1st April, 2006 to 31st .March, 2007 (page no.23) & 1st April, 2005 to 31st March, 2006 (page no.25). On the blank space of these sheets, there is rough jottings and working in hand. On careful study of these jottings your honors would note that there is no mention of any date, month or year, measurement or any size of the plot or property in hand written jottings, there is no mention of the nature of property i.e. whether it is a plot or a flat, there is no specification of the digits 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 sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this property particularly. In absence of any specific narration of any property, no valid addition can be made. Moreover, it is a matter of common prudence that the value of plots may fluctuate vastly on account of size, location, and other factors like construction works if any carried out on such plots and quantum/ quality/ fully finished/ semi-finished of construction etc.. In the jottings all these vital details are missing which may not lead to any definite and logical conclusion as drawn by the ld. AO for making such addition. In fact the said plot was purchased in August, 2006 for Rs. 12,75,000/- and was sold in July, 2007 for Rs. 22,00,000/- (in two parts each for Rs. 11,00,000/-) 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 conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered sale deed (copy lying at page no. 185 to 194 of PB). Plot no. 24, Mitra Nagar was sold for Rs. 9,25,000/- through registered sale deed (copy lying at page no. 195 to 205 of PB). Thus all the four plots were sold for Rs. 54,00,000/- as per copies of sale deeds and were duly shown in the books of account. (iii) Here it would also be worthwhile to mention that the Authorities Below have heavily relied upon such deaf and dumb jottings 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the percentage of the N.P. would go to un-imagined heights of Rs. 2,66,31,443/- giving N.P.rate 110.16% which is rather impossible in this line of business. Normally N.P. in this line of business ranges in 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 so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old' 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 sold for ₹ 10.21 lacs. First part sold contained 122 Sq. Yard on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 paper. There is no mention that the plots of Vijay Singh Pathik Nagar have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 in the hands of the purchaser when the seller gave different statements in respect of consideration received. Hon'ble Jurisdictional High Court at page 7 and 8 of the decision has observed as under:- ''7. We have considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 drawn that the assessee has not correctly declared or disclosed the consideration received or paid by him. As stated above in the locality of C-Scheme, Jaipur, the adjoining plots were sold at the rate of Rs. 60 or Rs. 75 per sq. yard and if we take the estimated rate taken by the Appellate Assistant Commissioner and the Tribunal the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce 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 cash balance as on the date of search in the case of the assessee was to the extent of ₹ 35,65,199.37. The cash balance as per cash book of M/s. Guman Furniture & Services (P) Ltd. is to the extent of ₹ 39,20,044.98. According to the AO, the assessee has not produced any supporting vouchers and therefore, the computerized books of accounts cannot be considered as reliable. A sum of ₹ 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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 (PB page 69) that the statements before the search were made under heavy mental pressure and the same were retracted immediately. The submission of the assessee before the ld AO was as under:- The queries raised are regarding addition to be made on the basis of the statement of the assessee recorded during the course of search. In this connection before submitting the head/item wise reply regarding alleged undisclosed income, the assessee submits the following facts for consideration:- 1. That the assessee is a Cancer patient. 2. There was a family function i.e. a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of books of accounts. In view of these facts, the stated cash balance as per the memorandum of books of accounts can not at all be relied upon and is rejected. As Regards argument of statement recorded u/s 132(4) being not under physically and mentally fit condtion, there is no such evidence on record. Moreover, even if statement are considered to be given under some mistaken belief, than also heavy burden lies on the appellant to rebut the contents of statement with cogent evidence. Appellant has squarely failed to furnish such strong evidence or explanation on this point. Accordingly, A.O. was justified in making addition of Rs. 13 lakhs being unexplained cash found and seized during the course of search.'' 3.5 Before us, the ld. AR has made the following submissions:- ''While making an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 it is also an undisputed fact that the appellant had been suffering from cancer and at the given point of time he was not proper frame of mind due to illness, search ordeals of prolonged and continuous proceedings of two days and anxiety of a recent family function etc. as informed immediately after search operations vide letters dated 20.11.2007 & 21.11.2007). Thus the appellant was not mentally and physically fit to admit any controversial point; particularly in absence of regular books. Apparently the admission so made in absence of any material on record is not maintainable as held in number of judicial citation referred to in the written submissions made before the Authorities Below. (PB 7-8)They had brushed aside all such citations and findings without specifying any reason. Thus the findings so arrived at are bad in law and are not well reasoned to this extent. (iii) Again it is incorrect on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 update books of accounts prepared by the assessee. There were primary evidences on record for acceptance of cash. The Hon'ble Chattisgarh High Court in the case of ITO Vs. Vijay Kumar Kesar (supra) has held as under:- ''From perusal of the order of the AO, it appears that the AO disregarded the books of accounts produced by the assessee during assessment proceedings u/s 143(3) for the period after Ist April, 1997 and other primary records solely on the ground that the assessee had made confessional statement during survey proceedings and voluntary of tax against the income from undisclosed sources surrendered during survey proceedings in the form of cash and surplus stock. The primary evidence in the form of purchase bills, vouchers, gifts etc. were rejected as the same were produced at the time of assessment after considerable period and retraction statement was made after more than 3-1/2 months and the same was an afterthought. From the record, it also appears that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant regarding acquisition of such jewellery and other documentary evidences as procured during the course of assessment and appeal proceedings. The addition so confirmed is bad in law and deserves to be deleted. '' 4.2 The facts in this ground are as under:- ''3.1 The A.O has made addition by observing as below:- "During search operation, the jewellery of Rs. 38,70,593/-as per Ann. J1,J2,J3,J4 and J5 of panchnama dated 17.11.2005 were found. The assessee has not explained the source above jewellery neither during the course of search operation nor during assessment proceeding except saying that there are three family members and they received gold jewellery at the time of their marriage and other occasion. Thus they have jewellery as Stridhan. Looking to the status of the family other factors the jewellery of Rs. 8,70,593/- is treated as explained and the remaining jewellery of Rs. 30,00,000/- is treated as unexplained investment and the same is added to the total incme of the assessee for the year 2008-09." 3.2 The submission of the assessee is as follows:- a) The ld AO made the addition without perusing the explanation of the assessee at the time of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .540-(128.564+350.000)= 845.976 grams. Belong to Smt. Mohini Devi Khandelwal w/o Shri Mohan Lal Khandelwal and Shri Mohan Lal Khandelwal. The marriage of Shri Mohan Lal Khandelwal took place before 45 years. The gold rate at that time was about 300-400 per ten gram. The said gold jewellery found at the time of search was received By Shri Mohan 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 children, marriage of children and other yearly festivals. Thus looking to the all facts and circumstances the total weight of jewellery found is reasonable and also as per CBDT's circular regarding possession of jewellery by a family and as such source of acquisition of jewellery explained above deserves to be accepted. Silver Items:- The total weight of silver items was 5.635 Kg. valued at Rs. 1,06,381/- were meager. Said silver items were received by the assessee, his wife at the time of marriage and thereafter on various other occasions from friends and relatives. It is verifiable from the inventory items that items are utensils etc. and are of old make and design and as such it proves that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd as such source of acquisition of jewellery explained above deserves to be accepted. Silver Items: The total weight of silver items was 832.00 grams valued at Rs. 26,217/-. The silver items were received by the assessee, his wife at the time of marriage and thereafter on various other occasions from friends and relatives. It is verifiable from the inventory items that items are utensils etc. and are of old make and design and as such it proves that the said items were acquired long back and that time of the value was very low. Total weight of silver found is reasonable and source of acquisition as explained above deserves to be accepted. Shri Tikam Khandelwal Annexure J-2 (PB 104) Jewellery found from Bed Room of Shri Tikam Khandelwal and Smt. Renu Khandelwal. Amount 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following facts for consideration:- 1. That the assessee is a cancer patient. 2. There was a family function i.e. a birth function of his nephew on 15.11.2007, which lasted up to late night. 3. The search was started in the early morning of 16.11.2007 and went to continue continuously till 17.11.2007. In view of the above facts it is apparent that the assessee neither physically nor mentally fit to understand and reply the various questions asked by the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 society cannot be overlooked. Further, it cannot be presumed that all the jewellery was purchased on just before the day of search. A person to whom the department is going to search; cannot be a person not having jewelry of even 500 gram. The CBDT after considering all these facts and prevailing practice in society, has prescribed a limit of reasonable holding of the jewellery by the family members. Accordingly, as per the Circular even in the normal course the credit to the extent following Jewellery should be given. S.No Name Status Explainable as per CBDT instruction (gram) 1. Shri Mohan Lal Khandelwal Married Gent 100 2. Smt Mohani Devi Married Lady 500 3. Shri Shanker Khandelwal Married Gent 100 4. Smt Guman Khandelwal Married Lady 500 5. Mr. Ankur Unmarried Son 100 6. Mr. Arpit Unmar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar to the appellant assessee. In this case gold jewellery of 500 gram per married lady was considered as explained following the CBDT Instruction. vii) Kanak Chand Jain vs Vs DCIT 27 Taxworld 377 ITAT Jaipur Bench Facts of this case are similar to the appellant assessee. In this case gold jewellery of 500 gram per married lady was considered as explained following the CBDT Instruction viii) Todarmal Mishra vs ACIT 24 Taxworld 88 ITAT JP Bench Held that the instructions issued by CBDT are fully applicable and addition made on account of jewellery was deleted. ix) Kailash Chand Sharma Vs. DCIT 25 Tax World, 349 ITAT JP Bench Held that the instructions issued by CBDT are fully applicable and addition made on account of jewellery was deleted. Hon'ble MP High Court in the case of Agarwal Warehousing & Leasing Limited Vs CIT(2002) 257 ITR 235 (MP) has held that the orders passed by the Tribunal are binding on all revenue authorities functioning under the jurisdiction of the Tribunal. Held that CIT(A) not only committed judicial impropriety but also erred in law in refusing to follow the order of the Tribunal-even if he had some reservations about the correctness of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lery found in the case of appellant. In the light of aforesaid decision of the Hon'ble High Court, considering 10 members in the family of appellant, including mother, father, self, wife, brothers, brothers's wife, 3 sons/ nephew and one daughter, I agree with the argument of the A.R that jewellery to the extent of 2350 gm is to be considered as reasonably explained. Further, the argument of the A.R. that jewellery to the extent of 269.797 gms is supported by purchase bill is not accepted in view of the fact that no evidence has been filed reflecting that payments for purchase have been made from recorded source. Accordingly, out of total jewellery of 2454.10 gms, 2350 gms is held explained and remaining 104.10 gms is held as unexplained, the value of which taken on proportionate basis comes to Rs. 1,64,186/-. In brief, addition of Rs. 1,64,186/- is sustained and balance addition out of Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quashed. Accordingly, the part addition of Rs.1,64,186/- as confirmed by the honorable CIT(A) on the basis of such incorrect findings may kindly be deleted.'' 4.5 Revenue in Ground No. 1 of its appeal is aggrieved against granting of relief of ₹ 28,35,814/- . 4.6 During the course of proceeding before us, the ld. DR has stated that the assessee was unable to explain the source of jewellery neither during the course of search operation nor during the course of assessment proceedings except saying that there are family members and they received the gold jewellery at the time of their marriages and other occasions. The AO has rightly estimated the 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l High Court in the case of Kanti Lal Pursotam & Co. Vs. CIT, 155 ITR 519 in which the Hon'ble Jurisdictional High Court held that proviso to sub-section (3) show that the provisions are not absolutely mandatory. The rigour of the restriction has also been lessened by rule 6DD which gives a discretionary power to the AO to allow deduction of payments exceeding the payment specified in certain cases. The AO was not satisfied with the contention of the assessee. The AO referred to the decision of Hon'ble Apex Court in the case of Attar Singh Gurmukh Singh Vs. ITO 191 ITR 667 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments on the plea that all the 'outgoings' including the cash payments for acquiring the stocks in trade attracted these provisions and confirmed addition of Rs.3,21,000/- only on account of cash payment (in part) made for purchasing a plot No. 26, Mitra Nagar, Jaipur. The honorable CIT (A) had summarily turned down our other arguments 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would appreciate that for invoking provisions of 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 ..... e 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 illustrative- As per circular No. 220 dated 31.05-77 clearly states that Rule 6DD(j) has to be liberally construed, and ordinarily where the genuineness of the transaction and the identity of the payee is established ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 business expediency. After considering the submissions of the assessee, we feel that no separate addition is required to be made u/s 40A(3) because the books of accounts has been rejected and there has been . The addition of ₹ 3.21 lacs made u/s 40A(3) is deleted. 6.1 Ground No.5 of the assessee is as under:- ''On the facts and in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (Enclosed as PB Page 537/II) showing Name of seller, Particulars of property sold, construction area, purchase cost of land, construction cost, construction cost per sq.ft, and appropriation of interest (named as WIP), name of purchaser, date of sale and profit in each property. 3. Payments in cash and not supported by vouchers:- In construction business, the payments are of less than Rs. 20000/- which is permissible in law. It is well known fact that payment of labour, stone, Bajari, grit etc cannot be made by cheque. Further, no supporting vouchers of such expenses can be obtained. The department has ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 adopted, which approximates most near to the truth. 8. The assessee has incurred construction & WIP expenses of Rs. 3,31,64,868/-. It is undisputed fact that the entire construction expenses and WIP expenses were not charged to revenue or say debited to Profit & Loss Account, but part of the expenses were carried to Balance Sheet as closing stock. Kindly see Paper Book page 16. Therefore the subject matter of the disallowance should be only those expenses which has been debited to profit & loss account. 9. Further, the WIP expenses mainly pertain to interest paid by the assessee for the loans obtained by him for purchasing the plots. The interest expenses are fully verifiable hence disallowance cannot be made on account of WIP expenses. 10. During the course of assessment proceedings, the assessee has submitted estimated construction cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. And moreover same was disallowed in A.Y 2005-06( Though not upheld by the undersigned). Moreover, the A.R. has rightly pointed out that out of total construction and WIP expenses, the major expenses is on account of interest paid to financial institutions and bank and also in the purchase of construction material and moreover, the construction work has been carried out by engaging direct labour or only petty amount was paid on contract, which was below the limit specified u/s 194C. Moreover, the A.R has also pointed out that the books of accounts have been audited and auditors have also reported that the appellant was not liable to deduct TDS. Consdiering these facts, this argument of the A.O., for making disallowance is not having any force. Moreover other argument of the A.O. for making disallowance is regarding interest free advances. I agree with the submission of the A.R. that interest free loan taken are sufficient in the case of appellant to make interest free advances and thus occasion for disallowing interest paid on interest bearing funds will not arise. Total interst free funds/loans taken from various persons are Rs. 5,12, 54,315/-, ( As per paper book page 503) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red that these expenses have been taken purely on estimated basis. 5.3.3 As already mentioned, the cost of construction per sq.ft taken in respect of these plots is varying from as low as Rs. 111.97 per sq. ft to as high as Rs. 254.84 per sq.ft during the year and as low as Rs. 75.14 per sq.ft to as high as Rs. 1433.93 per sq.ft in period relevant to A.Y 2007-08. There is no proper explanation for such a wide variation, except that the general explanation of low cost having lower quality construction, without specifying the number of rooms constructed, carpet area, built-up area, nature of flooring i.e simple plaster, kota stone, or mosaic or marble or vitrified tiles, nature of roof i.e stones slabs or RCC; nature of ceiling i.e plastered or POP; single storey or duplex; number of toilets or other details, which can justify lower rate of Rs. 111.97 per sq.ft on one side and higher rate of Rs. 254.84 per sq.ft on other side. Considering these facts and circumstances of the case and the legal position as mentioned above, the disallowance is called for in the instant case not on all the reasons mentioned by the A.O. but only on very few reasons given by A.O. and also the variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count as well (as per page no. 23-24 of the appeal order). He was however of the view that the expenses incurred on construction works were not properly verifiable and there was vast variation in the cost of constructions shown for different sites. For the purpose, he had also quoted rates of certain sites with different years to arrive at such findings and accordingly concluded that these expenses being not properly vouched were disallowed @ 15% of the expenses claimed. Accordingly he had confirmed addition of Rs. 49,74,730/- as against Rs. 1,50,00,000/- made by the AO. While confirming such addition @ 15% of the expenses claimed, the ld. CIT (A) did not discuss the volume of the turn-over and the trading results etc. and also did not assign any reason to estimate such disallowance @ 15%. Apparently confirming of such addition on the general plea of cost variation at different sites without pointing out any specific discrepancy or defect and also without bringing any material on record to show the expenditure of disallowable nature is patently bad in law and deserves to be deleted summarily. In the circumstances, the addition of Rs.49,74,730/- as confirmed by the CIT (A) is broadl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut prejudice to the above facts, it would also be noted that while quantifying the amount of the disallowance under this head at Rs.49,74,730/- , the learned CIT (A) had committed calculated mistake by taking the entire amount of the expenses debited under the heads of Construction Expenses as well as the expenses debited under WIP (which included interest payments of Rs.92,10,455/-) While discussing the nature of the expenses of the interest expenses debited under the head of WIP, the learned CIT(A) had given specific finding that such interest expenses were fully allowable and did not call for any disallowance. However, while quantifying the disallowance of the expenses debited under the head of Construction Expenses, the findings regarding interest expenses was ignored and the figures of the interest amount of Rs.85,06,091/- as debited under WIP was also taken into to work out the disallowance. Thus the disallowance so quantified had been over-worked by Rs.12,60,378/- which needed to the reduced accordingly. In view of above discussions, the addition as confirmed by the learned CIT (A) on this account is not factually and legally maintainable and deserves to be deleted.'' 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net profit rate disclosed by the assessee and considering the fact that all the expenses are not verifiable from the supporting vouchers, we therefore, feel that it will be fair and reasonable to sustain the disallowance to the extent of ₹ 2.50 lacs which will represent 1% of the turnover for the year under consideration. Thus Ground No. 5 of the assessee is partly allowed and the Ground No. 2 of the revenue is dismissed. 7.1 Ground No. 6 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.3,96,083/- out of total addition of Rs.6,60,139/- as made by the A.O. under this head by disallowing 20% of the taxi expenses of Rs.19,80,417/- shown under this head(as against 1/3 disallowed by A.O.). While restricting such disallowance by 20% ld. CIT (A) had been guided by the findings of the learned A.O. only as he had failed to point out any specific instance of discrepancy or defect. The addition has been confirmed with general findings which are apparently bad in law and deserve to be deleted.'' 7.2 The revenue in its Ground No. 3 is also aggrieved against reducing the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for number of months.'' 7.5 The ld. CIT(A) after considering the submissions reduced the disallowance to ₹ 3,96,083 after observing as under:- ''6.3 I have considered the argument of the A.R. and have perused the assessment order and relevant record. In absence of vouchers and other details, the A.O. was justified in making disallowance out of taxi running expenses. However, the disallowance is quite excessive and in view of the discussion made in appeal order A.Y 2005-06, the same is sustained to the extent of 20%, which comes to Rs. 3,96,083/-, resulting into relief of Rs. 2,64,056/-. During the year, the A.O. has rightly not made any disallowance out of depriciation. The argument of the A.R of estimating the income on the basis of 44AE is rejected, as 44AE is applicable for estimating the income of trucks/goods carriages and the taxis run by the appellant will not come within the purview of section 44AE. '' 7.6 Before us, the ld. AR has filed the following submissions. '' In appeal proceedings also, the 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 thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. During the year under reference, the assessee has six taxies out of which five taxies have been sold during the year. Therefore, the claim of depreciation is not substantial on account of sale of taxies. The receipts from tax have been accepted. Looking to the number of the taxies, the expenditure incurred on drivers salary is reasonable. Hence, there is no question of making substantial disallowance out of the expenditure as per facts on record. The assessee has given the details of taxies which have been plied during the year under reference.If one compares the petrol and diesel expenses with the receipts then one can visualize that these are favourably compared to each other. The AO has not given any basis for making disallowance of 1/3rd of the expenses. After making disallowance as made by the AO, the net profit for taxi running expenses will be to the extent of 40% which is difficult to attain. One 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces filed by the assessee in respect of cash creditors and comments of the AO. ''1) M/s Arpan Enterprises Ltd. Rs.1,50,000/- The confirmation letter is placed at PB page 293. The cash creditor is an income tax assessee as PAN is mentioned on confirmation letter. The cash creditor has also filed copy of Income Tax return for AY 2004-05, copy of which is at PB page 294. Date Amount. Nature of entry Explanation. 5.2.2008 1,00,000 Cheque The copy of bank account of Arpan Enterprises is enclosed. Amount received by cheque No. 4759 of UBI A/c No. 5052. Copy of bank account is enclosed. at PB 409/II The 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.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Nature of entry Explanation. 4-5-2007 25.2.2008 1,00,000 25,000 Receipt by cheque. Amount received by cheques. Copies of confirmation of accounts and sworn affidavit filed as Additional Evidence u/r 46A. Comments:- I have gone through the submission made by the assessee A/R during Appellate proceedings it was mentioned as unnamed creditor of Rs. 1.25 lakhs assessee has now given evidence regarding deposit of Rs.1,00,000/- and Rs.25,00,000/- by cheque. During App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in books of Guman Khandelwal at PB Page 385 and the same was withdrawal in cash on 07.05.07 which is verifiable from bank statement at PB Page 423/II. After withdrawal the cash the above amount paid to assessee which is verifiable from cash book at PB Page 416/II. 7.5.2007 400000 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 07.05.07 (PB Page 428/II) and paid the same to assessee (Cash book PB Page 416/II). 8.5.2007 45000 Cheque 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, out of this Shri Dilip Kumawat paid this amount to assessee (Bank statement PB Page 428/II). 8.5.2007 500000 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2007 900000 Cash Amount of Rs. 9,50,000/- received from Shri Govind kripa Buildmart Pvt. Ltd. (Copy of Bank a/c at PB Page 451/II) and the same deposited in UCO Bank (PB Page No.440/II). Shri Dilip Kumawat withdrawal 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 Out of Opening cash balance (Cash Book Page No. 416/II and previous year cash book Page No. 419 to 420/II) Rs. 9,50,000/- deposited in cash by Shri Kumawat in SBBJ A/c and cheque No. 216861 issued to the assessee. (Copy of Bank a/c PB Page 433/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be accepted. During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given. Regarding further received of cash on following dates as under: Date Amount Mode 7.5.2007 950000 Cash Comments- Assessee has given that this amount has been received from Guman Khandelwal who has withdrawn the cash from the bank account which has given as per P.B.423/II on 07.05.2007 and given on the same day to Dilip Kumawat who has given further to the assessee. Regarding further received of amount on following dates as under: Date Amount Mode 7.5.2007 400000 Cash 8.5.2007 45000 Cheque 8.5.2007 500000 Cash 9.05.2007 900000 Cash Comments- Assessee has given that this amount has been received from Rakesh Gupta who has taken loan of Rs.19 lakhs from ICIC Bank on 07.05.2007 same was deposited on bank account of Dilip Kumawat by withdrawal of cash from bank account on 07.05.2007/08.05.2007 and 09.05.2007. Assessee has given bank account of Rskesh Gupta and further loan evidence of Rs.19 lakhs from ICICI Bank. Regarding further received of cash on following dates as under: Date Amount Mode 12.07.07 500000 Cash 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng cash credit from the benami which has been already accepted by the assessee Shankar Khandelwal in his affidavit, thus no relief should be allowed to the assessee.(Copy of Bank A/c. in Books of Tikam Khandelwal has been given at P.B.388). 7. Yadav Traders. Rs. 7,00,000/- Additional evidence is at Page No. 307 - 309. Confirmation letter is placed at PB page No. 307. Copy of PAN card and sworn affidavit is placed at PB page No. 308 -309. Date Amount. Nature of entry Explanation. 17-08-07 20.8.07 23.8.07 2,00,000 2,00,000 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, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llu 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 assessee A/R during Appellate proceedings it was mentioned that this is Journal entry passed in the account Shri Sushil Jhalani by debiting the account of Khandelwal Hosiery & Bartan Bhandar Prop. Shri Sushil Jhalani and Shri Shnakar Khandelwal assessee. Assessee has further given that the amount of Rs.5.52 lakhs and 1.99 lakhs is journal entry received on out of amount of Rs.6 lakhs transferred from account of Meena Gupta on 27.12.06 which was paid to Meena Gupta on 27.12.06 from cheque received from Guman Furniture and Services Pvt. Ltd. and further Rs.1.99 lakhs was transferred from account of Lallu Ram Jhalani ( Copy of bank Statement given). During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Guman Khandelwal on 21.10.2007. The copy of account of party in books of Guman Khandelwal is at PB Page 395 and cash book of Gopal Lal Saini at Page 460/II. 2.11.2007 3,34,000 Cash Amount received in cash from Guman Khandelwal on 02.11.07. The copy of account of party in books of Guman Khandelwal is at PB Page 395 and cash book of Gopal Lal Saini at Page 460/II. 2.11.2007 3,84,000 Cash Amount received in cash from Guman Khandelwal on 02.11.07. The copy of account of party in books of Guman Khandelwal is at PB Page 395 and cash book of Gopal Lal Saini at Page 460/II. 2.11.2007 3,84,000 Cash Amount received in cash from Guman Khandelwal on 02.11.07. The copy of account of party in books of Guman Khandelwal is at PB Page 395 and cash book of Gopal Lal Saini at Page 460/II. 6.11.2007 55,00,000 Journal entry Journal entry by debiting the account of Govind Kripa Buildmart Pvt Ltd. The copy of account of Govind Kripa Buildmart is at PB Page 406. 8.11.2007 99,000 Journal entry Journal entry by debiting the account of Guman Furniture & Services Pvt Ltd. The copy of account of Gopal lal Saini in books of accounts of Guman Furniture & Services P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lal Saini cannot be relied. The above entries may not be accepted. Similarly the assessee has submitted that the following amount has been received on different dates under: Date Amount Mode 21.10.07 300000 Cash 02.11.07 3,34,000 Cash 02.05.11 3,84,000 Cash 02.11.07 3,84,000 Cash Assessee has submitted that this amount has been received from Shri Guman Khandelwal on above dates copy of accounts of party has been given in the 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. 51 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. The amount of Rs. 4,00,000/- received by cheque of HDFC on 18.5.2007 and paid back on 14.3.2008 by cheque No. 167359 of HDFC. Copy of bank account at PB Page 467/II-. 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. 15. Ranjeet Yadav and Mohd. Sharif. Rs. 56,50,000. Additional evidence is placed at PB page No. 360-362. Confirmation letter is placed at PB page No. 360 and copy of relevant page of the statement of assessee recorded by search party. The copy of stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i)" (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 this A/c transferred by crediting the a/c of M/s Guman Furniture & Services Pvt Ltd (Ledger a/c PB Page 468/II). During the year no amount received to assessee from this party and only journal entries passed in the account of party. Comments: - I have gone through the submission made by the assessee A/R during Appellate proceedings assessee has given evidences that this is journal entry and during the no amount received to the assessee from this party and only have been passed on account of party. 17. Shri Ramnarain Yadav Rs. 4,00,000/-. Additional evidence is at PB Page No. 324-326. Copy of confirmation letter is placed at PB Page No. 324. Copy of PAN card and affidavit are placed at PB Page No. 325-326. Date Amount Nature of entry Explanation. 18.5.2007 4,00,000 Receipt by cheque. Amount of ₹ 4,00,000/- received by cheque No. 29439 of BOB. The source of deposit is clearing of cheques received as advance of booking of plots. Copies of confirmation letter, sworn affidavit and PAN card filed as Additional Evidence u/r 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 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.14,000/- by cheque (copy of Bank account given). During Appellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given. 20. Smt. Monika Sharma Rs. 11,76,000/-. Additional evidences are placed at PB No. 332 - 341. Copy of ledger account of and plot sale 334 Ganesh Nagar account in the books of assessee and copy of Registered Sale Deed in respect of Plot No. 334 Ganesh Nagar executed by the assessee and Smt. Monika Sharma are placed at PB page No. 332-341. Date Amount. Nature of entry Explanation. 29.12.08 11,76,000 Receipt by cash Amount of ₹ 5,00,000/- received by cash for sale consideration of Plot No. 334. Ganesh Nagar and ₹ 6,76,000 received for construction work on the said plot. Copies of ledger account in the books of assessee and copy of Registered Sale deed in respect of plot No. 334 Ganesh Nagar, filed as Additional evidence u/r 46A and with written submissions. In view of the facts n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Proceeding assessee had failed to furnish sources of Fund inspite of number of opportunity given. 23. Shri Lalluram Jhalani. Rs. 1,99,000/-. Additional evidence is placed at PB Page No. 347-348. The confirmation letter is placed at PB Page No. 347. Copy of affidavit is placed at PB Page No. 348. Date Amount. Nature of entry Explanation. 23.05.07 1,99,000 Receipt by cash Amount of ₹ 1,99,000/- received by cash. The party withdrawn cash ₹ 2,00,000/- on 15.05.07 from his bank a/c and out of this ₹ 1,99,000/- paid to assessee. The copy of Bank statement and AO code is at PB Page 482 to 483A/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.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). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of Fund inspite of number of opportunity given. 26. Shri Kamlesh Sharma Rs. 4,00,000/-. Additional evidence is placed at PB Page No. 355-357. Confirmation letter is placed at PB Page No. 355. 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. 2,00,000/-. Additional evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation 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 statement. All these facts indicate that the observation of A.O. that repeated opporutntities was given for furnishing confirmation is not correct. This observation may be correct in respect of production of books of accounts and vouchers. However, it is noticed by the undersigned that the vide show cause letter dated 11.12.09, the A.O. had raised query for furnishing confirmation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im, 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 additions which are not coming in the purview of section 68, the appellant was not required to furnish confirmation as needed in the case of cash creditors. Hence, the additional evidence by way of confirmation, PAN no, are strictly speaking not needed in the aforesaid cases of journal entry and advance repaid. 7.4.5 Now coming to the remaining entries, from perusal of the comments given by the A.O. after checking and verifying the details, in his remand report, it is seen that A.O. has not given any adverse comments regarding Sr. no. 1- M/s Arapan Enterprise- Rs. 1 lakh (plusRs. 50,000/- journal ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The source of bank deposit in his bank account to enable these cheques to be cleared, was shown to be out of opening cash balance of Sh. Dilip Kumawat. However, there is no recorded cash balance of Sh. Dilip Kumawat. Moreover, if at all there was any cash available with him, that belonged to the appellant and same represent the undisclosed money of the appellant. Accordingly, I agree with the finding of A.O. in the remand report that the above amount of Rs. 35.50 lakhs have been deposited in cash on different dates being the unaccounted money of the appellant and loans have been shown through cheque to the appellant. Considering these facts and circumstances, the addition of Rs. 41.50 lakhs shown as cash credits in the name of Sh. Dilip Kumawat is sustained and as A.O. has not objected to/not given adverse comments about the balance amount, after verification, same is held to be not unexplained. 7.4.9 In the case of Sh. Gopal Lal Saini, the A.O. has not commented adversely about the three journal entries totaling to Rs. 63,49,000/-, as already mentioned elsewhere in the preceeding para and accordingly same is deleted. Regarding, other amount given in cash, the A.O. has objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned CIT (A) had admitted these additional evidences and accepted credits in respect of 25 creditors for Rs.3,13,39,404/-. In remaining two cases of Svs. Dilip Kumawat & Gopal Lal Saini, the ld. CIT (A) had accepted the deposits in part to the extent of the funds as received through A/c payee cheques but the deposits worth Rs. 73,61,000/- shown in cash were treated as un-explained within the meaning of section 68 of the Act and addition to this extent was confirmed. While confirming such addition, the learned CIT (A) had overlooked the basic fact that the alledged deposits under consideration were in the names of Svs. Dilip Kumawat, and Gopal Lal Saini, who had already been admitted by the appellant to be his benamidars and all the transactions (including these deposits etc) appearing in their names were owned by him. In the circumstances, there was no valid reason for the learned CIT (A) to make or confirm further addition on account of any deposit or transaction as noted in their names in the books of the appellant. However, the learned CIT (A) did not take note of this vital fact and proceeded to confirm the addition in part on the plea that such deposits were appearing in cash, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings are unrealistic and devoid of merits. In the given set of circumstances and as per principles of the Evidence Act, the inevitable conclusion should that such funds continued to be available with the concerned person until and unless proved otherwise with documentary evidence. In the present case no investment or expenditure whatsoever could be noticed by the department in the case of Shri Rakesh Gupta. This fact led to the irresistible conclusion that these funds continued to lie with Shri Rakesh Gupta, or in other words such funds are available in the hands of the appellant as both the persons Dilip Kumawat and Rakesh Gupta are benamidar of the appellant. The department had no reason or material to question the availability of such funds with Shri Rakesh Gupta. Thus the findings as arrived at by the ld. CIT (A) are illogical. Regarding balance 6 entries of cash deposits of Rs.35,50,000/- the learned CIT (A) had mentioned at page no. 39 of the appeal order "assessee has submitted that amount of Rs.35,50,000/- has been given out of opening Cash Balance of Shri Dilip Kumawat. Assessee has not submitted any cash flow statement of Dilip Kumawat who is Benami further it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anelwal, as produced by the appellant in support of such deposits were un-verifiable 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'. Obviously such findings of the Authorities Below are factually and legally incorrect for the following reasons: (i) The ld. AO & CIT (A) did not spell out the reasons for which the books were rejected in the cases of Shankarlal Khandelwal, Tikam Khandelwal and Smt. Guman Khandelwal. On perusal of these books, it would be noted that such books were prepared on the basis of bank statements and the sale and purchase instruments and other papers and documents etc. The books so prepared were duly audited by the approved Chartered Accountant. Thus, these were fully verifiable and supported by the documents, so it is incorrect to say that these books were not well supported and verifiable. While arriving at such findings, the ld. Authorities Below did not mention a single item of entry which was not properly verifiable. In absence of any specific discrepancy or deficiency, the books c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s The AO vide notice dated 27th Oct. 09 required the assessee to produce the books of accounts alongwith supporting vouchers. However, none attended the proceedings in response to that notice. Fresh notice was issued and the AO required the assessee to furnish the following informations. 1. To explain the source of funds and investment in property. 2. Details of constructions made and to give the source of funds with supporting vouchers. 3. The assessee was required to give cash flow statement 4. Books of accounts alongwith supporting vouchers. On 18th Nov. 2009, the assessee was required to produce the supporting vouchers in support of the constructions / sources of funds. The AO issued notice on 7th Dec.. 09 and the assessee was required to make compliance by the 10th Dec. 2009. On 22nd Dec. 2009, it is mentioned in the order sheet that the assessee has failed to file the confirmations in respect of the loans taken. Hence, from the records, it is clear that the assessee was not provided adequate opportunity of filing the confirmations. The ld. CIT(A) after considering the factual position recorded the findings that additional evidences can be admitted. The ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO has referred to the statement of the assessee recorded u/s 132(4) of the Act. In the statement, the assessee admitted that they have paid Rs. 2.10 cores as cash in respect of land purchased for Global City Project. The amount paid so paid was surrendered as undisclosed income. 9.3 Before the AO, it was submitted that M/s. Govind Kripal Buildmart Ltd. paid a sum of Rs. 3,81,22,887/- in cash on account of investment in agricultural land worth Rs. 5,66,22,867/-. The assessee paid a sum of Rs. 149.58 lacs as land advance against allotment of plots of land to the company and such payment was made to the company on various dates. The amount so advanced is disclosed in cash flow statement. According to the AO, the assessee has failed to establish the source of funds and accordingly added a sum of Rs. 2.10 crores in the hands of the assessee. 9.4 Before the ld. CIT(A), the assessee made the following submissions:- a) The scheme naming "Global City" does not pertain to the assessee. This scheme is of M/s Govind Kripa Buildmart Pvt Ltd i.e. a company in which the assessee is also shareholder. b) In the statement recorded the assessee admitted that the cash of Rs. 1.75 caro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari Lal Yadav who was also assessed with the same AO and as per the information available with assessee Shri Yadav has surrendered above Rs. 65 lacs as his income on account of sum paid to this company. f) The cash payment of Rs.149.58 lacs made by the assessee was duly entered in cash book of assessee which was produced before AO during assessment proceedings. The ld. AO mentioned that the assessee failed to produce capital a/c, drawing a/c to prove the source of funds while the complete books of accounts were submitted to AO and the source of funds was available in books of accounts so produced. g) No defect pointed out in books of accounts produced during assessment During the course of assessment proceedings the cash book was submitted before the A.O. to verify the advance given to this company in cash. While recasting the books of accounts, the assessee 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 addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure A-1 page 11, there is account of Sh. Govind Kripa Buildmart Ltd. (Ledger account enclosed as per annexure-2) which shows that Rs.1,65,89,000/- has been received by Sh. Shabkar Khandelwal on dates 01.10.2007 to 20.10.2007. The signature of Shanmkar Khandwal have been appended on the ledger account showing the receipt of cash Rs.1,65,89,000/-, thus the argument of the assessee has no ground. 8.4 I have also considered the written submission of the 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 sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AR has filed the following submissions. ''In appeal the addition so made was contended on the following grounds:- (i) For the reasons as explained hereinabove the confessional statement as recorded under abnormal circumstances was not legally maintainable and carried no evidentiary 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration had been considered in the case of Shri Banwarilal Yadav. 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. Sharrif , Ranjeev Yadav and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 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 cash deposited in bank account of above named persons Name of Person Bank a/c Date of Deposit Amount Source Dilip Kumawat (Copy of cash book at PB Page 416/II) Bank of Baroda 13.03.08 6,00,000 Out of Opening cash balance (Cash Book Page No. 416/II and previous year cash book Page No. 419 to 420/II) ₹ 6,00,000/- deposited in cash by Shri Kumawat in BOB. 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. Total 6,00,000 Dilip Kumawat (Copy of cash book at PB Page 416/II) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 seen that from these bank accounts, the entry of cash credit has been given either by giving cheque to the appellant or by giving cash (after withdrawing it from bank) in as far as bigger amounts are concerned, which is already been added by the A.O. as part of unexplained cash credit in these names. The undersigned has also confirmed the addition under the head unexplained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 plea that the books being unverifiable and unreliable could not be considered in support of such explanation. Apparently such findings are devoid of merits and without any material on record showing as to how such books are not reliable and verifiable. Here it would be pertinent to note that these books were prepared on the basis of the bank statements and instruments of sale and purchase of the properties. On the face of such documentary evidences, treating such books as unverifiable and unreliable would sound to be ridiculous; particularly when no specific instance of any unverifiable and unreliable entries is forth-coming. Apparently such findings are factually and incorrect and deserve to be quashed and the addition so confirmed by the ld. CIT (A) need to be deleted. '' 10.7 On the other hand, the ld. DR supported the orders of the authorities below. 10.8 We have heard both the parties. The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 extent the order of the learned CIT (A) is bad in law as per various judicial citations. In the interest of equity and natural justice, we pray the honorable Members to compute our income on 'Acqusition of Assets and Expenditure Theory' in order to avoid over-lapping and multiple additions in the interest of equity and natural justice.'' 11.2 This is a general ground of appeal. In the written submission of the ld. AR, has submitted that benefit of telescoping theory should be given in all the appeals pertaining to this group. There is no specific ground of appeal in respect of telescoping in the instant appeal. Hence, the ground of appeal No. 10 of the assessee is dismissed as infructuous. 12.1 The 7th ground of appeal filed by the revenue is general as there is no specific issue of allowing set off of suppressed sale consideration as against availability of unaccounted money. 12.2 Before parting this appeal, it is mentioned that the assessee in assessee in his written submission has stated that no addition can be made because there has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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