9911796707
TMI Blog2019 (10) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was already considered and covered by the peak balance therefore, we do not find any infirmity in the decision of ld. CIT(A) in deleting the aforesaid addition which was already covered in the peak balance. Addition on account of unexplained jewellery - During the course of search total jewellery weighing 7876.92 grams, 106.73 diamonds and 33650 grams of silver worth ₹ 2,15,25730/- was found belonging to the Sanghvi Group - disclosure made under the VDIS scheme - HELD THAT:- Assessee furnished the certificate issued u/s. 68(2) of the VDIS, 1997 along with challan of payment of taxes filed by the assessee. These facts were also reported by the assessee in his statement recorded u/s. 132(4) of the act at the time of search action. During the course of assessment, the assessee has also furnished remaking bill of jewellery to substantiate his claim that jewellery was remade out of the jewellery declared under VDIS. The assessee has also furnished the confirmation of the jeweller confirming the remaking of the jewellery. CIT(A) has rightly allowed the telescoping of the income against separate addition, therefore, we do not find any substance in this ground of appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coping against the payment/outflow. Therefore, this ground of appeal of the Revenue is dismissed. Assessee could not substantiate with relevant evidences that cash loan given to the Babulal Vora was separate transaction. However, the ld. CIT(A) has already provided telescoping effect to the cash loan of ₹ 45 lacs against the income of ₹ 40,66,860/- and ultimately the ld. CIT(A) has confirmed the balance amount to the extent of ₹ 4,33,140/-. The assessee failed to controvert the finding of the ld. CIT(A) with any relevant supporting material therefore the cross objection filed by the assessee is dismissed. Addition on account of own money payment - CIT(A) has deleted the impugned addition after allowing telescoping of the income against the application and the same has been covered in the cash flow statement - HELD THAT:- As demonstrated from the material on records i.e. statements of the assessee recorded during the course of search that assessee was the key person of the group who had undertaken all the transactions particularly the cash transactions for or on behalf of the group. No substance in the inference of the assessing officer that on money paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,850/- has clearly disclosed by Dhirajlal Sanghvi HUF in assessment year 2011-12. Therefore, we consider without contradicting these materiel facts, the assessing officer is not justified in adding the same as unaccounted income of the assessee therefore we do not find any error in the decision of ld. CIT(A) on this issue. Addition on account of other expenses - HELD THAT:- As demonstrated from the loose paper assessee had specifically incurred such expenses on BMW car. The lower authority had also not verified that assessee was having any BMW car. The ld. CIT(A) has accepted that out of such expenses on amount for ₹ 1,81,000/- was pertained to renovation expenses therefore we observe that the lower authority had failed to disprove the contention of the assessee that not any expenses of ₹ 6,14,589/- was incurred on BMW car. Therefore, addition to the extent of ₹ 6,14,598/- is deleted. Considering the finding of ld. CIT(A) that out of the expenses of ₹ 98,72,060/- expenses to the tune of ₹ 70,49,962/- has been considered in the cash flow statement, we do not find any force in the appeal of the Revenue on this issue. Accordingly, the appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 9,50,310. 4. A search action u/s. 132 of the act was carried out in the group cases of Sanghvi Group on 9th March, 2011. A notice u/s. 153A of the act was issued on 28th Sep, 2011. In response to notice issued u/s. 153A of the act, the assessee has filed return on 23rd March, 2012 declaring income of ₹ 1,60,060/-. During the course of search, the assessee has disclosed ₹ 24.6 cores as unaccounted income vide statement u/s. 132(4) of the act on 10th March, 2012 and the assessing officer stated that assessee has not disclosed this amount in his return of income filed in respect to notice issued u/s. 153A of the act. The assessee has submitted that he had disclosed most of the items and huge difference in figures was only due to telescoping effect and submitted a cash flow contending that he had included entire unaccounted transaction in the cash flow statement. The assessing officer stated that assessee has divided cash flow statement in four parts (i) Receipt inflow, (ii) Receipt (iii) payment outflow and (iv) payments. The assessee submitted that receipts and payments were transactions of financial nature and no income was generated from these transactions, loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash payment of ₹ 46 lacs was made on this property. In the return of Income shri Ashik Sanghvi suo-mot declared the value of the property as ₹ 2.71 crores. Shri Ashik Sanghvi could not furnish any basis for considering the value of this property at ₹ 2.51 crores and the cash component of ₹ 1.56 crores is considered in the cash flow of the assessee. Similarly, it is seen that a flat of ₹ 33 lacs was purchased by Shri Sagar Sanghvi, wherein cash payment of ₹ 25 lacs was made. This amount was considered as payment by the asseessee in the cash flow statement. It is seen that the banakhat is registered in the name of Shri Sagar Sanghvi, further the agreement to sale wherein the amount of ₹ 33 lacs in mentioned against the documented price of ₹ 8 lacs is also in the name of Shri Sagar Sanghvi, hence, the assessee contention that the payment has been made by his is not acceptable as Shri Sagar Sanghiv is the Prop. Of Abberant Style retail state and is also engaged in share trading business. Similarly it is seen that the assessee's wife smt. Kokilaben Sanghvi, who is the prop of retail Saree shop in the name of Aishwarya NX ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material. However, in case of entry reversed , there is no seized paper where such transaction is recorded. The assessee has inserted these receipts only on the basis of issuance of cheques and such receipts cannot be considered only on presumptive basis. (v) The assessee has not shown many inward and outward transactions in cash in his cash flow statement on the plea that either these transactions do not pertain to him or these transactions are accounted for. The claim of the assessee in respect of these transactions is considered in subsequent paragraphs. In view of the above observations, the assessing officer has rejected the cash flow statement submitted by the assessee and discussed the issues as under. During the course of assessment proceedings, the assessing officer has asked the assessee to explain the content of a diary A/13 comprising of 36 pages found and impounded during the course of survey carried at the group show room Ashwarya NX, Badaj, Ahmedabad. The assessing officer has produced the page wise summary of diary at para 6.1 of assessment order as under:- Sr. No. Name of the person to whom cash paid Page No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account should not be treated as his unaccounted income. The assessee explained that noitngs found in the loose papers, diaries etc. has nexus with the additional income declared by him based on cash flow statement. Based on the explanation the amount admitted by the assessee as receipt/payment mentioned at para 6.4 in the assessment order is reproduced as under:- Sr. No. Name of the person to whom cash paid Amount (Rs.) Receipt Payment Remarks 1 Pratik Bharwad 700000 700000 2 Rajesh Jhaveri 17500000 17500000 17500000 During the statement recorded u/s 131 on 26.05.2011 the assessee had contended that the cash given in F.Y. 2009-10 was received back 3 Rajesh Jhaveri Mashukbhai Adani 3500000 3500000 4 Manish Pakoda 300000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment or receipt and taken benefit of telescoping. The assessing officer has also observed that some of the transactions were pertained to the assessment year 2010-11 and some of the transactions were pertained to assessment year 2011-12. The assessing officer was of the view that assessee has without assigning any reasons or evidence considered the amount as either receipt or payment and taken benefits of telescoping. The assessing officer has taken the view of the transactions as under:- A.Y.2010-11 A.Y.2011-12 Receipt Payment Receipt Payment Pratik Bharwad 700000 Rajesh Jhaveri 10000000 17500000 7500000 Rajesh Jhaveri Mashukbhai Adani 3500000 Manish Pakoda 300000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010-11. 5. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has partly allowed the appeal of the assessee. The relevant part of the decision of ld. CIT(A) is reproduced as under:- 7.2 I have gone through the contentions of the Appellant and the observations made by the Assessing Officer in her Assessment Order. The Assessing Officer has made addition of ₹ 1,00,00,000 on account of the amount received from Rajesh Jhaveri holding that the source of payment is not explained. The Appellant has shown source of such payment primarily out of the amount disclosed from the sale of Mumbai flat. The Appellant has contended that the same is in the nature of current account transaction and this was also stated in the statement recorded before the Departmental Authorities. The extract of the statement is as under:- Statement u/s 131 on oath of Shri Dhirailal V. Sanphvi on 26/05/2011 at 05.00 p.m at Room No. 134, 1st floor Aavkar Bhavan, Ashram road. Ahmedabad. ₹ 45 Lac received in cash on 18.03.2010 from Rajesh Jhaveri ₹ 55 Lac received in cash on 19.03.2010 from Rajesh Jhaveri All the above cash received from Shree Rajesh Jhaveri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,09,50,310. As Appellant has made a disclosure of ₹ 15,00,000 the balance of ₹ 94,50,310 is confirmed. The ground of appeal is partly allowed. 6. We have heard the rival contentions and perused the material on record. After taking into consideration the document and material found and seized from search and survey action, the assessee has offered peak balance of ₹ 1,79,75,937/- on the basis of consolidated cash flow statement prepared and filed before the assessing officer. The assessee made year wise disclosure of peak balance to the amount of ₹ 9,50,310 and ₹ 1,70,07,627/- for assessment year 2010-11 and 2011-12. However the assessing officer observed that in assessment year 2010-11, the assessee has not received any cash against the payment to the amount of ₹ 1,70,00,000/- made during the year, therefore the assessing officer has not given telescoping effect of this transaction and consider ₹ 1,70,00,000/- as undisclosed income of the assessee for the year under consideration. However, after considering the fact that assessee has received ₹ 45 lacs in cash on 18th March, 2010 and on 19th March, 2010 respectively from Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in cash. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in restricting the addition to ₹ 4,33,140/-out of total addition of ₹ 3,19,00,000/- and thereby granted relief of ₹ 3,14,66,860/- made on account of unexplained cash credits and cash advances. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 5,84,71,400/- made on account of on-money payment. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 5,29,43,000/- made on account of RTGS receipts. 6. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in restricting the addition to ₹ 6,03,00,000/- out of total addition of ₹ 6,11,10,000/- and thereby granted relief of ₹ 8,10,000/- made on account of RTGS cash receipts. 7. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 1,02,33,850/- made on account of income from advices given to investo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 4. In law and in facts and circumstances of the case, the Ld. CIT (Appeals) has erred in upholding addition of alleged unexplained expenditure for ₹ 19,64,598 (₹ 13,50,000 for AMC Fees + ₹ 6,14,598 for expenses on BMW Car) out of total addition of ₹ 98,72,060 made by Assessing Officer. 4.1 In law and in facts and circumstances of the case, the Ld. CIT (Appeals) has erred in confirming addition of AMC fees for ₹ 13,50,000 without appreciating the fact that loose paper No. 2 of Annexure - A/30 shows the figure of 15 which means that ₹ 1.5 lacs was paid and not ₹ 15,00,000 as alleged by Assessing Officer and said figure of ₹ 1.5 lacs was already accepted by Authorised Officer while recording statement of Appellant under Section 131 of the Act on 26th May, 2011. 4.2 Without prejudice to para 4.1 Learned CIT (Appeals) ought to have appreciated that entire transaction is tax neutral as loose paper itself states that figure of 15 was returned on very same date and same would have no impact on cash flow statement prepared by Appellant. 9. The basic facts pertaining to the assessment year 2011-12 are similar to the fact as elab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000/- A.Y.2008-09 ii) Dhirajlal Sanghavi, Indl. ₹ 10,000/- A.Y.2009-10 iii) -do- ₹ 15,00,000/- A.Y.2010-11 vi) -do- ₹ 10,65,00,000/- A.Y.2011-12 v) Ashik D. Sanghavi ₹ 1,56,00,000/- A.Y.2008-09 vi) Dhirajlal Sanghavi, HUF ₹ 1,02,33,850/- A.Y.2008-09 ______________ Total ₹ 135933850/- However, the assessing officer has observed the following discrepancies in the cash flow statement. i) Transactions done under names of different members of family A members have been included by the assessee in his cash flow statement. It is pertinent to mention here that those transactions of property, wherein the name of the assessee is not appearing in the legal documents and cheque amount is also not paid by the assessee cannot be claimed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turned the cash has also be given, but there is no evidence or noting in respect of the cash repaid. Hence the assessee's contention is not acceptable. (iii) In the case of Shri. Ashik Sanghvi, it is to be further noticed that as per seized documents, only ₹ 46 lacs were received in cash on sale of flat in Mumbai. However, the assessee has arbitrarily shown further cash receipts of ₹ 1.10 crores in his cash flow statement. There is no such material found during search which indicates such on-money receipt by the assessee. Further, no such information was given by the assessee or Shri Ashik Sanghvi in their statements during the course of search. (iv) The assessee is not only taking benefit of telescoping in the case of his family members, but he is also taking benefit of telescoping in the cash flow statement in respect of transactions done by Shri Mohanbhai Bharwad, who is altogether a different party. (v) At the end of the cash flow statement, the assessee has shown various amounts as entry reversed under the head 'receipts' between 21/02/2011 to 05/03/2011. When inquired during the course of the assessment proceedings, the assessee contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same stated at page no. 6 of the assessment order is reproduced as under:- The jewellery and valuables which had been found during the course of search were received by the assessee, his wife and other members of the family from their parents, in-laws and relatives on the occasion of marriage, festivals, child-birth in the family and other social occasions and rituals. The jewellery was received on various occasions as per family custom and tradition. The assessee submits that, the assessee's HUF, under the Voluntary Disclosure of Income Scheme, 1997 (VDIS), had made disclosure of Gold Jewellery weighing 6,202.56 gms and diamonds weighing 259.60 carats. Copies of the certificate issued under Section 68(2) of the VDIS, 1997, along with challan submitted. This fact was stated in statement recorded on 10th March, 2011 was again reiterated on 26th May, 2011 under the statement recorded under Section 131 of the Act Accordingly, out of gold jewellery and other valuables found weighing 7,876.92 gms from the residence and bank lockers, the same was out of the disclosure made under the VDIS, 1997. Out of the disclosure of jewellery and other valuables made under the V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmental Authorities has stated that the disclosure of jewellery was made in the VDIS. The Assessee has also rebutted the contentions of the Assessing Officer at para No. 11.3 of the SOF. It has also been stated that the bills along with the items from which the ornaments were remade were also filed before the Assessing Officer. The Assessing Officer's contention for not accepting the contention that the jewellery which was out of the VDIS was on the ground that no bills were found during the course of search and they were remade out of the ornaments. However, this contention cannot be the sole ground for rejecting that the ornaments were made out of the items declared in the VDIS, since the search cannot be sacrosanct to all the documents/bills found. There is substantial force in the argument of the Appellant about the items being remade from the items declared in the VDIS for the reasons stated in the SOF. Accordingly, after considering the items disclosed in the VDIS from which new ornaments were being prepared, the Appellant has considered total outflow towards jewellery of ₹ 24,69,275/ and ₹ 71,00,000/- in the cash flow statement. Further, the AR of the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A - 30, Page no. 23 7000000 13 Dhaval Sanghvi A - 30, Page no. 29 2000000 14 Ruchir A - 30, Page no. 30 6000000 15 Pravin Vora 85 S.K. A - 30, Page no. 32 7000000 16 Dhavalbhai A - 30, Page no. 33 1000000 17 Ramesh Hira (Dessa) A - 30, Page no. 34 2000000 18 Mohanbhai 85 Pratik Bharwad A - 30, Page no. 35 13000000 Total 6,51,50,000 The assessing officer has stated that during the course of search proceedings Shri Dhirajlal Sanghvi in his statement recorded u/s. 131 admitted that he had made cash advances which were not recorded in the books of accounts. On perusal of the aforesaid page, the assessing officer observed that assessee has given short term advances to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 Mitulbhai 250000 2500000 10 Kiritbhai 250000 250000 11 Hareshbhai 600000 600000 12 Four persons 7000000 5000000 13 Dhaval Sanghvi 2000000 14 Ruchir 6000000 6000000 Pertains to 20 10- 11 15 Pravin Vora 8s S.K. 7000000 6500000 300000 500000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000000 Dhaval Sanghvi 2000000 Ruchir 6000000 Pravin Vora S.K. 3000000 6500000 500000 Dhavalbhai 1000000 1000000 Ramesh Hira (Dessa) 2000000 2000000 Mohanbhai Pratik Bharwad 13000000 17000000 28500000 43150000 The assessing officer was of the view that assessee has not explained the source of cash payment and the benefit of telescoping cannot be given as no direct nexus regarding the payment and receipt was found in the seized document. The assessing offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment and receipt is not found is also not acceptable for the reason that the Assessing Officer has not been able to bring out any corroborative evidence to support that the payment has been made by the Appellant were not out of the income declared by the Appellant and his group and once the peak is offered by the Appellant as additional income, the addition the made by the Assessing Officer is uncalled for and accordingly the same is deleted. Thisjgound of \' appeal is allowed. The appellant gets relief Ground No. 3 (Addition as unaccounted cash and cash advances of ₹ 4,33,140/-) and Ground No. 2 of Cross Objection of the assessee 13. During the course of survey at the office premises of Sanghvi Fincap Pvt. Ltd. a diary as per Annexure A-30 was seized which contained various entries regarding cash payment. Further page 82 of the Annexure 9 impounded from the same premises revealed acknowledgement of cash receipt. The assessing officer has given page wise summary of the transactions recorded on these pages at page 15 of the assessment order as under:- Sr. No. Name of the Person to whom cash paid Page No. of seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sajan A. Shah 13-01-11 6,00,000 Pravin Vora 3 Abhay H. Mehta HUF 13-01-11 14,00,000 Pravin Vora 4 Hardik Gems 13-01-11 9,00,000 Pravin Vora 5 Nidhi Exports 13-01-11 9,00,000 Pravin Vora Sub-total 45,00,000 6 Ashokkumar H. Vora 31-12-10 1,50,000 Pravin Vora 7 Shantaben H. Vora 31-12-10 1,00,000 Pravin Vora 8 Alkaben H. Vora 30-12-10 12,00,000 Pravin Vora 9 Minaxiben C. Vora 31-12-10 3,50,000 Pravin Vora 10 Jinal Properties Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of such transactions and offered the same as income. Since the sarafi entries as stated by the Assessing Officer herself they are in the nature of recycling funds and under that circumstances the Assessing Officer was not justified in making addition of ₹ 2,74,00,000 as the same is covered by the income offered as peak balance. Accordingly, the addition made by the Assessing Officer of ₹ 2,74,00,000 is deleted. 10.4 The facts of next transaction of ₹ 45,00,000 are that, Appellant has contended that 45,00,000 was given to Babulal Vora and cheque was taken. During the course of search noting of ₹ 45,00,000 given was also found and the extract of the notings has also been reproduced in the Assessment Order by the Assessing Officer. The Appellant contention is that the amount which was given to Babulal is already included in the figure of ₹ 2,74,00,000 and hence no separate addition is called for. The Assessing Officer has contended that this transaction of ₹ 45,00,000 is over and above the transaction of ₹ 2,74,00,000. The Assessing Officer has contended that this transaction was done with Pravin Vora and not with Babulal Vora. The conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 5,84,71,400/- as cash payment unaccounted sources. In respect of addition of ₹ 5,84,71,400/- made on account of own money payment, the ld. CIT(A) has deleted the said addition. Relevant part of decision of ld. CIT(A) is as under:- 9.3 I have considered the submissions made by the Appellant and the Assessing Officer's observations and I find that the total on-money payment made for the land at Vadaj was to the tune of ₹ 5,84,71,400/. Out of the same and as per the material found during the course of search /survey, the payment made in A.Y. 2010-11 was ₹ 75,51,000/ and the balance in A.Y. 2011-12. The same is evidenced by the seized material and accepted by the Appellant. As I have already allowed the telescoping of the income against the application and this payment being covered in the cash flow statement as outflow as land payment, no separate addition is called for. The addition made by the Assessing Officer of ₹ 5,84,7 1,400/ has also resulted in double addition as the income and application both getting taxed. Accordingly, the addition made by the Assessing Officer for ₹ 5,84,7 1,400/ is deleted and this ground of appeal is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that all the relevant details from the remitters and the receivers of the RTGS such as name, address, PAN, bank account nos. of remitters and receivers and the copies of the same were submitted at the time of assessment proceedings. The assessing officer has not accepted the explanation of the assessee stating that merely confirming bank transaction does not prove the genuineness of the transaction and the share transaction on the seized documents have in fact taken place which was evident from the entries in the books of the assessee and the admission of the cash received. The assessing officer has also stated that none of the beneficiaries have replied to letters issued u/s. 133(6) of the Act. Therefore, the assessing officer has treated RTGS entries amounting to ₹ 5,29,43,000/- as belonging to the assessee which was not recorded in the books of account as unaccounted income of the assessee. The ld. CIT(A) has deleted this addition. Relevant part of decision of ld. CIT(A) is as under:- 13.3 I have gone through the facts of the case and the observation made by the Assessing Officer in her order. During the course of search, notings pertaining to certain RTGS transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh flow statement the same would be of no use since the it would be telescoped against the negative balance which is separately offered by the Appellant as peak balance. 13.4 In view of above, (i) the identity of the Remitter and Beneficiary are proved as banks have confirmed. (ii) the capacity of the payer stands proved since the payment has been received by means of a cheque drawn in the bank account of the payer, by virtue of the fact of the existence of adequate bank balance in his bank account- (Rohini builders - SLP dismissed and binding on department) (iii) It is submitted that name and addresses of Remitter and Beneficiary along with PAN Bank Account number hence initial burden are fulfilled. Accordingly, the addition made by the Assessing Officer of ₹ 5,29,43,000 is deleted and the Appellant's ground of appeal is allowed. Ground No. 6 (Restricting addition of ₹ 6,03,00,000/- on account of RTGS cash receipt) 16. During the course of assessment, the assessing officer has noticed cash entries on various pages of annexure A-9 as under:- As discussed at page 12 of this order, the assessing officer observed that all the aforesaid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper as per annexure A-10 there was hand written entry wherein a calculation was made as per which 70% of ₹ 1,02,33,850/- had been worked out at ₹ 71,63,695. Shri Sajjankumar Nanwal one of the key person of the group has stated in the statement recorded u/s. 131 of the act that calculation on this page pertained to one Shri Rameshbhai of Sabarmati and the calculation show profit of ₹ 1,02,33,850/- which was distributed in the ratio of 70% to Shri Rameshbhai and balance 30% to Shri Deerajlal Sanghvi i.e. 30,70,155/-. During the course of assessment, the assessee was asked to submit the details of the transaction along with the complete address of Shri Rameshbhai. The assesseee failed to furnish the details and submitted that he has considered the entire amount of ₹ 1,02,33,850/- in disclosure reflected in the cash flow statement. The assessing officer was of the view that the assessee accepted the entire transaction in the cash flow statement therefore the assessing officer has treated the amount of ₹ 1,02,33,850/- as unaccounted income of the assessee. The addition of ₹ 1,02,33,850/- was made on account of income from services rendered to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and accordingly has made addition to the assessed income. The action of the Assessing Officer in making such addition is incorrect since that out of the expenses of ₹ 9872060 expenses to the tune of J₹ 70,49^,962 has been considered4n-the-cash 41ow~statement. As I have already allowed the telescoping of the income against the application and this payment being covered in the cash flow statement as outflow as expenses/outflow, no separate addition is called for. The addition made by the Assessing Officer of ₹ 70,49,962 has also resulted in double addition as the income and application both getting taxed. Accordingly, the addition made by the Assessing Officer for ₹ 70,49,962 / is deleted. For balance of the amount of ₹ 28,22,098/, the Appellant has contended that (a) Outflow on account of Honda Jaz pertains to A.Y. 2010-11 and therefore the same is without jurisdiction - x (b) Expenses on Renovation of ₹ 72,500 is already included in overall renovation expenses and therefore no separate addition is called for; Pursuant to the statement of the Appellant AMC fees that ₹ 1.5 lac fee of AMC given in cash to Mohanbhai Bharwad whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of the manager of the proprietary concern on the date of survey that cash was re-conciled as per cash book. The ld. CIT(A) has sustained this addition. Relevant part of decision of ld. CIT(A) is as under:- 8.2 I have gone through the submission made by the Appellant and the observation of the Assessing Officer. The Assessing Officer has made an addition of ₹ 4,89,863/ on comparison with the physical cash found during the course of search with that of the books of account. The Assessing Officer has not accepted the balance of the cash book pertaining to the M/S Aberrant Style, proprietorship concern of Sagar Sanghvi, on the ground that the cash balance as per the return of income filed for A.Y. 2009-10 did not match with the return of income filed under Section 153A of the Act. Since that would have the cascading effect in subsequent years, the balance as stated by the Appellant cannot be accepted. I agree with the contention of the Assessing Officer about the genuineness of the cash balance claimed by the Appellant more so since the Appellant has also not been able to prove the cash balance as on 31st March, 2009 as stated in the Assessment Order. Accordingly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and address of the other beneficiary of the transaction. Since the Appellant has himself offered ₹ 52,31,112/- as part of the Additional Income the balance amount of ₹ 40,66,860/ is confirmed. Accordingly total addition made by the Assessing Officer of ₹ 93,87,972/- is confirmed. However the additional income of ₹ 40,66,860/ would be available for telescoping against the payment/outflow. The ground of appeal is dismissed. Findings:- 21. During the course of appellate proceedings before us, ld. departmental representative has contended that assessing officer has rightly made the various additions as elaborated above in the grounds of appeal of the revenue after considering the various seized documents found during the course of survey and search taken place in the group cases of the assessee. On the other hand, ld. counsel has submitted various paper book comprising details of submissions and copies of documents furnished before the assessing officer and ld. CIT(A) during the course of hearing. In respect of appeal of revenue, the ld. counsel contended that ld. CIT(A) has correctly deleted the addition after considering the seized material and fund fl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above question I state that being the eldest person in the family, I support/ undertake in all the types of trade/business/occupation and financial activities carried on by my sons, son's wives and my wife. I along with my family live together in HUF. I carry out financial activities and business/occupation by myself. b] In the declaration executed by the Appellant he has stated the following: (Free English Translation) (2) I, in the name of Aishwarya Sarees carry out the business of selling sarees, dress material and readymade garments. I also undertake business in real estate and also share market transactions. All these businesses are being carried out by my family members and associates under my direct control and supervision. I owe and undertake the responsibility for all the financial transactions. C] The Appellant during the assessment proceedings had stated the following to the Assessing Officer vide different communications made from time to time as under: ...........6. The Assessee submits that all the business operations and financial decisions are being carried out under the direct control and supervision of Dhirajlal V. Sanghvi and accordingly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain to expenses made on jewellery purchase, vehicles, financial transactions, etc. You are also requested to explain the sources and also whether they are reflected in the books of account in respect of expenses and financial transactions appearing in the seized and impounded material. A-19: Party No. Annexure Page No. Explanation S-2 A/12 69 to 73 Copy of Banakhat agreement of property TP Scheme No. 3/5, final Plot No. 682, Devarshi Co-Op. Housing Society Limited, Flat No. G-1, total area 90 Sq. Yard. As per Banakhat was purchased by Sagar D. Sanghvi m Rajesh Balwantbhai Gohil for ₹ 33 lacs. However, in the registered purchase deed the price has been shown as ₹ 8 lac. I, therefore, admit ₹ 25 lac as unaccounted investment on behalf of Sagar D. Sanghvi. S-13 A bungalow was purchased on 14-09-2010, plot No. 302, Vasanmhar Co-op Housing Society tenement No. 15B, 414.72 sq.mtr. This property was purchased by my wife Kpkilaben D. Sanghvl from Gunvantbhai Kantilal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und the company had no source of making the payment, therefore held that the addition is to be made in the case of Appellant. Similar is the situation in the case of Sagar and Kokilaben Sanghvi as they also do not have any source of making the on money payment and thus the rejection of cash flow statement owing to payments made for Sagar Kokilaben Sanghvi is contradictory to the stand taken by the Assessing Officer herself. (iv) Lastly the observation of the Assessing Officer that many entries have not been shown in the cash flow statement is only to make a high pitched assessment and without considering the facts of the case. The Appellant had submitted exhaustive details were provided in the assessment proceedings and the explanation regarding each of the observation made by the Assessing Officer about the non-inclusion in the cash flow statement is dealt with in subsequent paras. 8. Thus the rejection the entire cash flow statement thereby making additions of receipts and payments both without bringing a single corroborative evidence to support the fact that the payments have been made by the Appellant were NOT out of the income declared bv the Appellant and its Group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jewelry. In the light of the above facts and circumstances, we consider that ld. CIT(A) has rightly allowed the telescoping of the income against separate addition, therefore, we do not find any substance in this ground of appeal of the Revenue and the same is dismissed. Ground No. 2 (Advance made on account of cash):-During the survey action at the group s show room at Aishwarya NX at Vadaj Ahmedabad, a diary marked as A/30 consisting of 36 pages was impounded. The pages of this diary were hand written in respect of financial transactions as explained by the assessee Shri Dhirajlal V. Sanghvi. The page wise summary of such pages containing financial transactions was aggregating to ₹ 6,51,50,000/-. Shri Dhirajlal Sanghvi in his statement recorded u/s. 131 admitted that he had made cash advances which were not recorded in the books of accounts. The assessee has contended that all the entries have nexus with the additional income declared by him as per the cash flow submitted in his submission. The assessing officer has stated that benefit of telescoping cannot be given as no direct nexus regarding the payment and receipt was found in the seized documents. The assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the transaction of ₹ 45 lacs which was included in the cash flow statement pertaining to Babulal Vora was a separate transaction and cannot be linked with the loan entry provided by Shri Pravin Vora which was considered as unaccounted income of the assessee. The assessing officer has made addition of ₹ 3.19 crores comprising of ₹ 2.74 crores accepted by the assessee as per the cash flow statement and the aforesaid transaction of ₹ 45 lacs aggregating to ₹ 3.19 crore as the unaccounted cash of the assessee. The ld. CIT(A) has deleted the addition of ₹ 2.74 crore on the ground that the assessee had considered the same in the cash flow statement which was also accepted by the assessing officer. The ld. CIT(A) has confirmed he addition of ₹ 45 lacs considering that same as different transaction which was not included in the cash flow statement. However, the ld. CIT(A) has given telescoping effect of the aforesaid payment of ₹ 45 against the addition ₹ 40,66,860/- as income from investor made as per income from investor for telescoping of such payment to the extent in para 15.3 in order of the ld. CIT(A), therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s against the income of ₹ 40,66,860/- and ultimately the ld. CIT(A) has confirmed the balance amount to the extent of ₹ 4,33,140/-. The assessee failed to controvert the finding of the ld. CIT(A) with any relevant supporting material therefore the cross objection filed by the assessee is dismissed. Ground No. 4 of the Revenue deleting addition of ₹ 5,84,71,400/- made on account of no-money payment:- During the course of assessment, the assessing officer observed that M/s. Sanghvi Infracon Pvt. Ltd was engaged in the business of the construction. During the assessment year 2011-12, it had purchased a plot of land at Nava Vadaj in Ahmedabad owned by Sanjoy Dharmsibhai Patel and Shri Jayesh Dharmsibhai Patel. During the course of search evidence of cash payment to Shri Dharamsibhai amounting to ₹ 5,52,01,000/- was found. Further, the documents found from the residence of the assessee revealed that the final value of the land was @ 35000/- per sq. yard as against the documented price of ₹ 9000/- per sq. meter for purchase of the said land. Accordingly, cash payment of ₹ 5,84,71,400/- was paid as on money for the purchase of the land. The assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated the aforesaid RTGS as unaccounted transaction of the assessee without considering and disproving the supporting evidences furnished by the assessee that these transactions were belonged to the third parties. The assessee has also furnished before the lower authorities the proforma copy of RTGS form wherein the detail of both the parties i.e. remitter and the beneficiary were given by the issuing authority which is reproduced as under:- Sl. No Page No. of Anx 9 Name and Address of Party Received RTGS Date of Transactions Amount Name and Address of Remitter 1 114 High Growth Vin Trade Pvt. Ltd 08/09/2010 4500000 Caspican Project Pvt. Ltd Plot No 159 A, first Floor, MLA colony, Road No, 12 Banjara Hills Hyderabad-34 2 110 Harish Bohra 5/10/2010 5550000 Raja Reddy Nandygadada Vilage Srinivas Sandra Post Banarpet Taluka Kolar Dist Karnataka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneficiary in the said transitions. After considering the above facts and findings of ld. CIT(A), we do not find any merit in the appeal of the Revenue as assessing officer has failed to disprove the material furnished by the assessee that the impugned transactions were pertained to the third party not to the assessee or his group. Therefore, this ground of appeal of the Revenue is dismissed. Ground No. 6 of the Revenue in restricting addition to ₹ 6,03,00,000/Regarding addition of ₹ 6.3 crore during the course of assessment, the assessing officer noticed that on different pages of Annexure A-9 there were cash entries to the amount of ₹ 6.11 crore and the assessee had admitted that the aforesaid cash belonged to him and he would pay tax on the same, therefore, the assessing officer has added the aforesaid amount as unaccounted income of the assessee. The ld. CIT(A) has restricted the said addition to the extent of ₹ 6,03,00,000/- on the ground that act out of ₹ 6.11 crore an amount of ₹ 8,10,000/- has been disclosed in the books of Ashok D. Sanghvi. In this connection, the assessee has submitted that out of ₹ 6.11 crore an amount of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized from various premises. In this regard, it is noticed that assessee has given the bifurcation of these expenses and stated that out of the expenses of ₹ 98.72 lacs expenses to the amount of ₹ 70.46 lacs have been considered in the cash flow statement and the source of such expenses was out of the additional income declared by the assesseee except expenses to the amount of ₹ 19,64,594/-, the assessee has included the remaining expenses in the cash flow statement. The ld. CIT(A) has sustained the following expenses:- AMC Fees 13,50,000/- BMW Car 6,14,598/- ------------- 19,64,598/- After perusal of the material on record, we observe that the assesse could not contradict the contents of loose paper as reproduced by the assessing officer at page no. 35 of the assessment order in respect of noting of AMC payment made to Shri Mohankaka on 08-04-2010. However, regarding expenses of ₹ 7,95,598/- the ld. CIT(A) has accepted that an amount of ₹ 1,81,000/- out of this expenses was included ..... 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