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TMI Blog2014 (5) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by learned AO holding the investment in land of Rs. 173,000/- has been made out undisclosed sources of income. 4. Alternatively and without prejudice to the Ground of 1 to 3, the learned CIT(A)-I, Pune has erred in law and facts not appreciating the fact that the AO did not allow the deductions claimed for various expenditures, including land cost, depreciation on cars, while computing the taxable income." 5. Alternatively and without prejudice to the Ground of 1, 2 & 3 the learned CIT(A)-I, Pune has erred in law and facts in not giving effect of telescoping for the income declared during the course of search. 6. The appellant craves leave to add / delete / amend / modify all / any of the grounds. 2.1 In ITA No.2192/PN/2012 for A.Y. 2005-06, the assessee has filed the appeal on the following grounds. 1. The learned CIT (A)-I, Pune has erred in law and on facts in confirming the addition made by learned AO Rs. 4,65,000/- as against returned income of "Nil". 2. The learned CIT(A)-I has erred in law and facts in confirming the addition made by learned AO only on the basis of declaration made during the course of search without appreciating fact that the said decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in law and facts in not giving effect of telescoping for the income declared during the course of search. 4. Alternatively and without prejudice to the Ground of 1 to 3, the learned CIT(A)-I, Pune has erred in law and facts not appreciating the fact that the AO did not allow the deductions claimed for various expenditures, including land cost, depreciation on cars, while computing the taxable income." 5. The appellant craves leave to add / delete / amend / modify all / any of the grounds. 2.4 In ITA No.1503/PN/2012 for A.Y. 2008-09, the assessee has filed the appeal on the following grounds. 1. The learned CIT (A)-I, Pune has erred in law and on facts in confirming the addition made by learned AO Rs. 68,95,430/- as against returned income of Rs. 25,88,485/-. 2. The learned CIT(A)-I has erred in law and facts in confirming the addition made by learned AO only on the basis of declaration made during the course of search without appreciating fact that the said declaration has been retracted by the appellant. 3. Alternatively and without prejudice to the Ground of 1 & 2, the learned CIT(A)-I, Pune has erred in law and facts in not giving effect of telescoping for the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out prejudice to the Ground of 1 to 7, the learned CIT(A)-I, Pune has erred in law and facts in not appreciating the fact that the AO did not allow the deductions claimed for various expenditures, including land cost, depreciation on cars, while computing the taxable income." 9. Alternatively and without prejudice to the Ground of 1 to 8, the learned CIT(A)-I, Pune has erred in law and facts in not giving effect of relief provided of Rs. 88,000/- while adjudicating in the final order and assessing income Rs. 1,70,96,830/- instead of 1,70,08,830/-. 10. The appellant craves leave to add / delete / amend / modify all / any of the grounds. 3. The assessee is an individual resident of Ravet, Taluka - Haveli, Dist - Pune, engaged in land transactions in Pimpri Chinchwad area of Pune. A search and seizure action was carried out at his premises on 13.08.2008 and numerous incriminating documents showing evasion of tax were found by the concerned revenue authorities. The search revealed that the assessee has not been filing its return of income at all. Even books of accounts were found to be not maintained in any manner by him. According to revenue authorities, the assessee was found to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d return of income u/s.153A on 12.10.2010 i.e. almost after 8 months of notice issued by the Assessing Officer on 11.02.2010. The Assessing Officer noted from the return filed by the assessee that the assessee has not filed return as admitted u/s.132(4) during search. The income declared by the assessee u/s.153A vis-à-vis the disclosure made, as noted above are as under: Sr. No. Asstt. Year Undisclosed income declared u/s.132(4) Income shown in the return u/s 153A 1 2003-04 --- --- 2 2004-05 --- Rs.Nil 3 2005-06 Rs.4.65 lakhs Rs.Nil 4 2006-07 Rs.4.5 lakhs Rs.Nil 5 2007-08 Rs.63.60 lakhs Rs.5,66,000 6 2008-09 Rs.105 lakhs Rs.25,88,485 7 2009-10 Rs.22.25 lakhs Rs.Nil Total Rs.200 lakhs Rs.31,54,485 3.3 The Assessing Officer observed that the assessee has not disclosed even the undisclosed income which was admitted u/s 132(4), so the assessee was asked by show cause notice to explain the situation. In response to the same, it was contended on behalf of assessee before the Assessing Officer that the disclosure was based on figures worked out by search party and therefore, it was not acceptable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he details filed by the assessee while filing returns u/s.153A were made mainly in A.Y. 2009-10. The Assessing Officer has also considered the undisclosed household expenses in the light of the declaration made u/s 132(4) on 13.08.2008 wherein the assessee has admitted household expenses of Rs. 20 lakhs, donations (Denagi) of Rs. 20 lakhs and contributions (Vargani) of Rs. 20,47,000/- to various clubs and Mandals etc. The year wise bifurcations were not given to the Assessing Officer during assessment. They were also not considered in the reconciliation or returns. Instead, the assessee denied to have made any such expenditure during the course of assessment in response to the question issued during assessment and reply given vide letter dated 16.11.2010. The Assessing Officer has held the declaration as valid and concluded that the assessee is incorrectly trying to escape from the facts found during search. No separate addition has been made by the Assessing Officer for this expenditure as apparently he was of the opinion that these expenses were met out of undisclosed income assessed in the hands of the assessee. Similarly the Assessing Officer has not made any addition for inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve years. 4. We find that the assessee is an individual resident of Ravet, Taluka - Haveli, Dist - Pune also engaged in land transactions in Pimpri Chinchwad area of Pune. A search u/s. 132 was conducted on assessee's premises on 13.08.2008 and some documents were seized and the statement of assessee u/s.132(4) was recorded. It is undisputed that prior to the search, the assessee had not filed return of income, even the books of accounts were not available since not maintained till then. In this regard, the stand of the assessee has been that he was from agriculturist background and has sizeable agricultural income, where from the other activities of land dealing, commission activity were started. Considering the papers seized during search and since the books of accounts were not prepared by the assessee, summary of books and other transactions were prepared by investigating team. When the assessee was questioned on the basis of said summary, the assessee made declaration of Rs. 2 crores as discussed above. In short declaration during search was based on the following accounts: a) summations of credits in the bank accounts - Rs. 1,52,50,000 b) Income from sale of Lexus car - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has been that agricultural activity and related income was bonafide one as a source of initial funds. The source of agricultural income ought to have considered the overall quantification of income. The addition has been made on the basis of search statement alone, which is not justified. According to the Assessing Officer, the disclosure promise during search u/s.132(4) has not been fulfilled. While, according to the CIT(A), self serving books are not admitted. The Assessing Officer's verification of books, his findings, etc. are contrary to his finding of facts on the issue. In this background, the stand of the assessee has been that the Assessing Officer's observation as regards the books of accounts, mistake of quantification of credits, summations, etc., are facts. These observations ought to have not been brushed aside by the CIT(A). According to us, this approach is not justified. The authorities below should give finding on each and every point while reaching to its conclusion. 4.5 The next objection of assessee has been that the return filed based on books of account and income declared was reflected based on cogent reasoning. The main objection of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities below have taken contradictory stand while rejecting the stand of assessee. In fact, it should be analysed as per fact put forward by the assessee on the point and authorities below should have appreciated the fact before reaching any adverse opinion that too mainly based on admission of assessee. 4.7 For A.Y. 2005-06, the stand of the assessee has been that actual bank summations are Rs. 1.76 lakhs and the declaration of Rs. 4.63 lakhs were based on erroneous assumptions. The stand of the assessee has been that the Assessing Officer himself agrees with the credit statement, so, the addition made and confirmed by the CIT(A), is not justified. For A.Y. 2006-07, the stand of the assessee has been that actual bank summations are Rs. 2.97 lakhs while declaration of Rs. 4.50 lakhs was based on erroneous assumption during search. The Assessing Officer has reproduced the assessee's statements, bank summations only Rs. 2.9 lakhs and not Rs. 4.5 lakhs, but further observed that as income disclosure in search is not honoured amount declared in search, is considered as taxable income. In appeal, on this point, the CIT(A) in para 22, page 30 observed that the declaration made during s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given by Mr.Chaslani and the same was produced before the CIT(A). In this background, the CIT(A) was not justified in rejecting contentions of assessee while upholding the addition made by the Assessing Officer. This aspect needs deep probe into the matter on the issue. 4.9 With regard to the other addition i.e. Rs. 32.50 lakhs received from Mr. Sonigra, the stand of the assessee has been that the said amount was not received from Ravet land deal from Mr. Sonigra. According to the learned Authorized Representative, both the authorities have not commented on this point. Further, in A.Y. 2009-10, the stand of the assessee has been that the assessee did not receive amount of Rs. 1.35 crores in cash from Sonigra. The Assessing Officer has observed that since Sonigra has paid taxes on Rs. 1.35 crores, the assessee must have received the same. The CIT(A) confirmed the order of Assessing Officer on the point. The stand of the assessee has been that the assessee has not received any cash from Ravet land deal from Sonigra. However, the assessee was in receipt of Rs. 33 lakhs for another land deal at Shinde Wasti which ultimately did not materialize. The said fact clearly emerged from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Hence, declaration was retracted. The Assessing Officer could have verified the reconciled income prepared by the assessee which was contrary to the income summary prepared at the time of search with books of accounts prepared by search party. Specially so when the Assessing Officer has also accepted the reconciliation of differences as discussed above. As such, the Assessing Officer made addition mainly based on search statement and discrepancy worked out by search party at the time of search. The action of the Assessing Officer in adding the income for above reason, in our opinion, is not justified. The CIT(A) has not appreciated this fact and merely dismissed the appeal without giving proper reasoning for the same. The books of accounts prepared after search should not be brushed aside. Once the books of accounts of assessee has been prepared based mainly on the bank entries and other details, same can be rejected by cogent reasoning. According to us, the books of accounts should be rejected only after rejecting the claim of assessee by cogent reasoning because the assessee's contention revolves around bank statement found during the course of search. 4.11 According to ..... 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