Income Tax Appellate Tribunal - Ahmedabad
Shri Kalyanbhai K.Patel, Ahmedabad vs The Dy.Cit.,(Osd) Circle-9,, ... on 25 May, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "C" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
IT(SS)A No. 325/Ahd/2010
(Block Assst. From 01.04.1986 to 21.01.1997)
Shri Bhagwanbhai K Patel
61, 62, Mayur Park Society,
Bapunagar, Ahmedabad Appellant
Vs.
Asst. CIT(OSD),
Circle - 9, Ahmedabad Respondent
&
IT(SS)A No. 465/Ahd/2010
(Block Assst. From 01.04.1986 to 21.01.1997)
Asst. CIT(OSD),
Circle - 9, Ahmedabad Appellant
Vs.
Shri Bhagwanbhai K Patel
61, 62, Mayur Park Society,
Bapunagar, Ahmedabad Respondent
PAN: ABAPP0653M
&
IT(SS)A No. 326/Ahd/2010
(Block Assst. From 01.04.1986 to 21.01.1997)
M/s. Shyam Groups -2-
Shri Arvindbhai Pragjibhai Patel
57/58, Mayur Park Society,
Bapunagar, Ahmedabad Appellant
Vs.
The Dy. Comm. of Income Tax (OSD),
Circle - 9, Ahmedabad Respondent
&
IT(SS)A No. 466/Ahd/2010
(Block Assst. From 01.04.1986 to 21.01.1997)
Asst. CIT(OSD),
Circle - 9, Ahmedabad Appellant
Vs.
Shri Arvindbhai Pragjibhai Patel
57/58, Mayur Park Society,
Bapunagar, Ahmedabad Respondent
PAN: ABAPP0656Q
&
IT(SS)A No. 76/Ahd/2010
&
Cross Objection No. 45/Ahd/2013
(in IT(SS)A No. 34/Ahd/2013)
(Block Assst. From 01.04.1986 to 21.01.1997)
Shri Kalyanbhai K Patel
G-8, S.K. Complex, Thakkarbapa
Nagar Road, Bapunagar, Ahmedabad Appellant/ Cross Objector
M/s. Shyam Groups -3-
Vs.
The Dy. Comm. of Income Tax (OSD),
Circle - 9, Ahmedabad Respondent
&
IT(SS)A Nos. 67/Ahd/2010 & 34/Ahd/2013
(Block Assst. From 01.04.1986 to 21.01.1997)
Asst. CIT(OSD)/D.C.I.T. (OSD),
Circle - 9, Ahmedabad Appellant
Vs.
Shri Kalyanbhai K Patel
G-8, S.K. Complex, Thakkarbapa
Nagar Road, Bapunagar, Ahmedabad Respondent
PAN: ABYPP8096Q
&
IT(SS)A No. 139/Ahd/2007
With
Cross Objection No. 111/Ahd/2009
(Block Assst. From 01.04.1986 to 21.01.1997)
Asst. CIT(OSD),
Circle - 9, Ahmedabad Appellant
Vs.
Shri Jaswantlal K. Patel
Shyam Farm Bungalows,
Nr. Bus Stand, Nr. Police Booth,
M/s. Shyam Groups -4-
Nava Nikol - Naroda Road,
Nikol, Ahmedabad Respondent / Cross Objector
PAN: ABTPP8098A
आवेदक क ओर से/By Assessee : Mr. Aseem Thakkar, A.R.
राज व क ओर से/By Revenue : Mr. S. L. Meena, CIT(A) D.R.
सन
ु वाई क तार ख/Date of Hearing : 24.03.2017
घोषणा क तार ख/Date of
Pronouncement : 25.05.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
This is a batch of ten cases pertaining to four different assessees S/Shri Bhagwanbhai K Patel, Arvindbhai P Patel, Kalyanbhai K Patel and Jaswantbhai K Patel. The relevant assessment year in all these cases is block period from 01.04.1986 to 21.01.1997. The CIT(A)-XV, Ahmedabad has exercised lower appellate jurisdiction in passing the orders under challenge in these cases.
2. First assessee Bhagwanbhai K Patel is involved in two cases i.e. his appeal IT(SS)A No. 325 and 465/Ahd/2010 (Revenue's cross appeal) emanating from the CIT(A)'s order in appeal no. CIT(A)- XV/DCIT/OSD/Cir.9/181/07-08 dated 31.01.2008, in proceedings u/s.158BC/245HA of the Income Tax Act, 1961; in short "the Act".
3. Second assessee Shri Arvindbhai P Patel involves two cases i.e. his appeal IT(SS)A No.326 & 466/Ahd/2010 (Revenue's cross appeal) arising against the CIT(A)'s order dated 31.01.2008 in case no. CIT(A)-
M/s. Shyam Groups -5- XV/DCIT/OSD/Cir.9/185/07-08, in proceedings u/s.158BC/245HA of the Act.
4. There are total four cases pertaining to the third assessee Shri Kalyanbhai Patel. He and Revenue have filed cross appeal IT(SS)A Nos. 76 & 67/Ahd/2010 against the CIT(A)'s order dated 31.01.2008 in case no. CIT(A)-XV/DCIT/OSD/Cir.9/189/07-08, in proceedings u/s. 158BC/ 143(3)/ 245HA of the Act. The Revenue's latter appeal IT(SS)A No.34/Ahd/2013 alongwith assessee's cross objection CO No. 45/Ahd/2013 therein emanate against the CIT(A)'s order dated 03.10.2012 in case no. CIT(A)- XV/DCIT/OSD/Cir.9/95/10-11, in proceedings u/s.158BFA(2) r.w.s. 158BFA(3) of the Act.
5. Last assessee Jaswantlal K Patel is a party in two cases i.e. Revenue's appeal IT(SS)A No. 139/Ahd/2007 and his cross objection therein CO No.111/Ahd/2009 arising from the CIT(A)'s order dated 06.07.2007 in case no. CIT(A)-XV/AC.Cir.9/221/06-07, in proceedings u/s.158BC r.w.s. 158BD r.w.s. 143(3) and 254 of the Act.
6. Both the learned representatives inform us at the outset that the abovestated assessees Shri Bhagwanbhai and Kalyanbhai are real brothers. Shri Arvindbhai C Patel hereinabove is their nephew whereas the other assessee Shri Jaswantbhai K Patel is son of Shri Kalyanbhai. First assessee Shri Bhagwanbhai is stated to be a partner in M/s. Shyam Organisers , Shyam Corporation and Shyam Developers. He alongwith his brother Kalyanbhai and nephew Arvindbhai established M/s. Shree Shyam Construction Company. These four assessees split thereafter. Shri Bhagwanbhai and Shri Arvinbhai set up three firms M/s. Shaym Organisers, Sham Corporation and M/s. Shyam Groups -6- Shyam Developers. Latter two assessees/father son duo of Shri Kalyanbhai and Jaswantbhai established M/s. Shyam Builders.
7. The department carried out the search in question on 21.01.1997 culminating initiation of the impugned block assessment proceedings u/s.158BC r.w.s. 158BD in respective cases. This search action involved seizure of cash sums, kilograms of silver, duplicate books of accounts, diaries, loose papers etc. from different searched places/assessees. Shri Bhagwanbhai and Arvindbhai filed petitions before the Income Tax Settlement Commission. They attached cash flow/fund flow statements with their respective petitions. The said commission abated the same on 22.10.2007 on account of non payment of interest u/s.245D(2D) on account of the fact that delayed payment of taxes had not been made. Mr. Thakkar points out that the assessees had already paid tax and interest whilst taking recourse to the above settlement remedy. He further informs us that the Settlement Commission concluded M/s. Shyam Organisers' petition on 09.02.2015 i.e. post facto all CIT(A)s' orders subject matter of challenge in the instant batch of appeals. The Settlement Commission also appears to have sought department's field authorities' comments on the said assessee's cash flow statement and written submissions who chose not to dispute correctness thereof. The Settlement Commission then finalized proceedings in M/s. Shyam Organiser's case on 09.02.2015. It not only accepted the above cash flow statement but also the above seized duplicate books of account as well. Mr. Thakkar seeks to highlight the fact that the first assessee Mr. Bhagwanbhai is the person addressed as " Kaka" who acted as the authorized person for the land transactions in question. He stated to have been handed over all receipts forming part of the comprehensive cash flow statement filed in settlement proceedings hereinabove. He takes us to settlement petitions filed at the behest of five assessees M/s. Shyam M/s. Shyam Groups -7- Developers, Shyam Corporation, Bhagwanbhai, Arvindbhai and Kalyanbhai (supra) at page 4, four entities M/s. Shyam Organisers, Shyam Developers, Shri Shyam Construction and Shyam Corporation and their respective projects, namely, Shyam Darshan, Shaym Vihar, Shyam Park and Shyamal Park at page 5 of Settlement Commission's order. Mr. Thakkar's plea thereafter is that the Settlement Commission accepted his plea of having filed a comprehensive cash flow statement of the entire group as prepared on the basis of duplicate books of accounts. We come to para 3.7 page 9 of its order to this effect reading as under:
"3.7 It was further added that for computing the availability of cash, a "comprehensive cash flow statement" of the entire group had been prepared on the basis of the duplicate cash books of the various concerns found during the course of the search. The cash flow statements include the column "Receipts" which are the amounts handed over to "Kaka"and appear in the duplicate books of accounts. The "Payments" column refers to the date wise payments made to the land owners for the purchase of the land and duly identified with the diaries found during the search. The "Transfer Outward" column refers to the cash availability with a particular firm on a particular date and which is available for making investments in lands. The "Transfer Inward" refers to the amount received internally from another firm in the group for making investment in land by that particular firm on the specified date. Wherever there is insufficient cash available for making the land payments, the differential amount has been offered by way of "unexplained investments" in the hands of the respective firms. The consolidated cash flow statements have also been furnished before the Settlement Commission as early as in 2001-02."
8. The above Settlement Commission's order further indicates that it sought field authorities verification qua correctness of various issues raised at assessee's behest and accepted the above comprehensive cash flow statement of the entire group as follows:
"5. The CIT was directed by the Commission vide its order dated 14.02.2005 to verify some issues under Section 245D(3) and report. These issues for verifications are given as under:-
(i) To examine the seized No. 2 books vis-a-vis No, 1 books as well as seized diary and bank accounts and arrive at the gross as well as net receipt of all the concerns, M/s. Shyam Groups -8-
(ii) To verify the correctness of the cash flow statement as prepared by the applicants vis-a-vis no. 1 and no. 2 books of accounts as well as seized books.
(iii) To examine the land transactions from the banakhat and ascertain the amount of concealed income from land transactions giving the details of land agreements i. e. date, plot No., actual cost and declared cost in respect of each land of all the concerns and to get list of agreements showing higher amounts payable than the amount entered in the books.
(iv) To verify the investments in lands, name of their co-owners and their respective shares and source of invested fund by these persons.
(v) To examine the utilization of withdrawals of various persons made in acquisitions of movable and immovable assets, house hold expenses, capital introduced in firms etc.
(vi) To verify the applicant's claim of surplus fund of one firm was utilized for investment in land of other firm/firms."
9. Learned Settlement Commission thereafter decided M/s. Shyam Organiser's petition in its order dated 09.02.2015 reading as under:
"7. DECISION We have carefully gone through the written submissions made as well as the arguments of the Department and the AR of the applicant. The prime allegation of the CIT is that the booking amounts received from the members and noted in the duplicate cash book are separate from the amounts recorded in the regular books of accounts , But the applicant has made the analysis of the duplicate cash book which contains the complete details of receipts as well as expenses. The receipts included cash, cheques as well as loans and advances. The expenses included personal withdrawals, loans returned, cash deposits in banks, other expenses and the net surplus was given to "Kaka" for purchase of land. Hence the receipts do not represent only the on-money but also cheques which are accounted and the cheques along with a part of the cash have been taken to the regular cash books. Shri Bhawandas Patel (Kaka) maintained a separate diary for the receipt of net surplus from the different entities which accounted for the payment of land purchases. The submission of the applicant that the income generated from a particular scheme was utilized for the purchase of land for another scheme thereby indulging in intermingling and interlacing of funds has not been adversely commented upon by the Department. Hence the applicant's submissions that the rough cash book revealed the entire receipts of both on-money as well as the regular booking money is quite acceptable.
7.1 The applicant has prepared a detailed combined fund flow statement of the receipts and expenditure containing the net surpluses of the different entities, which was put to verification in the proceedings u/s 245D(3) authorized M/s. Shyam Groups -9- by the Commission. The very fact that the querries made by the AO have been met by the applicant and no further information was called for, shows that the accuracy and veracity of the cash flow statement has not been challenged by the Department. The applicant has also arrived at the offer of additional income after considering the net surplus and disallowing the personal withdrawals as well as the inadmissibles. This seems to be in order.
7.2 As regards the land purchase payments totaling to Rs.60 Lakhs, though the CIT has suggested to treat the entire amount as unexplained investment, the applicant has offered Rs.3,32,200/- and Rs.26.77,150/-which were also explained as surplus of the group and declared as additional income. Further, as stated by the applicant, the payment columns in the cash flow statement reveal the loan payments as appearing in the seized diaries and wherever there is insufficient cash balance, the deficit amounts have been offered in the hands of the respective firms. Similarly, with regard to the reference of the A.O. to various expenditures not eligible for deductions, the applicant has offered them as additional income. We do not find anything wrong done by the applicant.
7.3 We also find that the interim report dated 18-05-2005 submitted by the CIT in response to the proceedings under Section 245D(3) can be treated as the final report, as the Department could not produce any such copy or evidence of a final report. In this report the CIT has presumed that the books showing the actual transactions are regular books and the books written to be produced before the income tax department are duplicate books. This is actually a contrary stand taken by the CIT. Further, the CIT (DR)'s arguments of showing lesser receipts for the Assessment Year 1994-95 and 1996-97 have been successfully countered by the applicant as the additional receipts computed by the applicant amount to more than the shortfall pointed out by the CI.T (DR).
7.4 The learned CIT (DR) has also objected to the claim of deduction of Rs. 1,24,97,975/-. The AR of the applicant explained the claim of the deduction as correctly done with reference to the seized books of accounts and contended that whatever amount was reflected in the regular books of accounts have not been claimed. Only the balance amount of Rs. 1,24,97,975/- has been claimed, which was put to verification by the Department with the original land owners, who admitted to have received the amounts as written in the diary. Hence, we do not propose to view the issue adversely.
7.5 Considering the facts and circumstances of the case, we are of the view that the applicant has come out clean, which is evidenced by the seized materials. We consider the offer made by the applicant as full and true. The issues, thus, get settled."
10. Learned Departmental Representative raises a very strong argument that these assessees are not entitled to take benefit from the above extracted Settlement Commission's order or from the comprehensive cash flow statement filed therein. We find no force in this plea as a co-ordinate bench's M/s. Shyam Groups - 10 -
decision dated 29.07.2016 in cases of other group entities M/s. Shyam Corporation and Shyam Developers (supra) has already accepted the veracity of the abovestated comprehensive cash flow statement as follows:
"6.1.3 Manner in which the duplicate books of accounts are written was explained in pg.27 to 31 of the paper book dated 29.08.2012. Complete receipts i.e. No.l & II recorded in the duplicate books of accounts. Statement showing receipts by cheque recorded in duplicate books of accounts. (Pg.255 to 256 of PB dated 29.08.2012). Furthermore, the cash deposited in the bank as per the No.II is duly reflected in the bank statement which indicates the flow of cash in the regular books of accounts. The Balance sheet drawn on the No.II books and placed on pg.280 to 285 of the paper book dated 29.08.2012 indicates the cash deposited in the bank account. Conformation of the members regarding the booking money paid till the date of search placed on pg.270 to 273 of the paper book dated 29.08.2012. The manner in which the income has been worked out has been mentioned in pg.27 of the PB dated 29.08.2012. The credit side of the duplicate cash book includes the booking money received from the members (accounted including that received by cheque as well as unaccounted), loans from group concerns, miscellaneous income etc. The debit side of the cash book includes the payments made towards various expenses, personal withdrawals, non business expenditure, cash deposited in the bank account, repayment of loans and amount given to "Kaka". The amount given to KAKA is the net surplus of the firm after meeting all the expenditure. While offering additional income before the Hon. Income Tax Settlement Commission these amounts handed over to KAKA have been considered as income and the prima facie disallowable expenses and personal withdrawals of the partners as debited in the duplicate books of accounts have been added back. Out of the money handed over to KAKA the land payments have been made by him which are recorded separately in the diary. This diary contained the notings of land payments had also been found and seized during the course of search proceedings. While offering additional income before ITSC out of the total income offered the claim of deduction for land expenses have been made since the same is not recorded in the duplicate cash book maintained. Generally one firm develops / constructs one particular scheme. The scheme developed by the assessee is "Shyamal Park" scheme. The surplus earned by one firm was used for purchasing land which was subsequently developed by another firm.
6.1.4 To explain the flow of funds a detailed cash flow statement was also prepared and produced at the assessment and appellate stage. The same was also furnished during the course of hearing before us. The cash flow statement contains day to day flow of cash transactions. The receipt column in the cash flow statement is the amount handed over to KAKA after meeting all expenditure. The payment column indicates the disbursements made for the purchase of land. The details of land payments have been noted in the diaries found and seized from the possession of KAKA. The "transfer inward" column indicates the date, amount and from where the funds have been received for making land payments. The "transfer outward" column indicates the date, amount and where the money has been given for making land payments by others. The balance column indicates the cash available with the respective firm. Wherever the investment has been made in M/s. Shyam Groups - 11 -
excess of the funds availability the balance amount has been offered as "unexplained investment" in the hands of the assessee. Therefore, in the case of the assessee firm the unexplained investment of Rs.11,34,092/- has been offered by way of additional tax. As stated earlier while offering additional income before the Hon. Income Tax Settlement Commissions the net surplus was the amount given to KAKA has been considered. This amount was also in accordance with the verification done in the special audit report. Our attention was invited to the paper book dated 22.09.2015. The additional income offered is Rs. 10,23,220/- which includes net surplus of Rs.9.00 lacs and withdrawals of the other partners Rs. 1,23,220/-. Attention was invited to page 204 of the paper book dated 28.09.2012 which contains the No.II balance sheet in the Special Audit Report. The partner debit balance are Rs.10,23,220/- (9,00,000+1,23,220). Therefore, the accuracy of the additional income offered could not be doubled and was infact verifiable with the SAR.
6.1.5 Similarly, attention was invited to page 9C of the PB dated 22.09.2015, the addition income offered comprises of Net surplus (Amount given to KAKA) of Rs.41,19,000/- and withdrawals by partners Rs.4,10,000/-. This was verifiable with No.II Balance Sheet prepared by the Special Audit Report and appearing on pg.229 of the paper book dated 29.08.2012. The partners debit balances amount to 4.13 which is more or less in agreement with the additional income offered by the assessee firm and that to Shri Bhagwanbhai K. Patel (KAKA) was Rs.41,19,000/- which is in complete agreement. Attention was invited to page 9D of the paper book dated 22.09.2015 which contains the details of additional income offered for the broken period 01.04.1996. The net surplus (amount given to KAKA) is Rs. 53,00,000/- and withdrawals of partners is Rs.3,65,775/-. The No.II balance as prepared by the special auditor is placed on pg.249 of the PB dated 29.08.2012 which shows that the amounts as appearing in the partners accounts are more or less in accordance with the additional income offered. Therefore, the accuracy and veracity of the additional income offered by the applicant firm was also verifiable with the special audit report.
6.1.6 The manner of computing undisclosed income has been accepted in the group concern M/s Shyam Organizers by the ITSC. In the order passed u s 245D(4) by the ITSC the accuracy of the cash flow statement was also accepted.
6.1.7 In fact, separate inquiry directed by the ITSC u/s 245D(3) of the Act and no adverse finding was reported by the Department. The written submissions dated 25.11.2014 were confronted to the CIT-5, Ahmedabad and no adverse comments have been received thereon. In view of above factual discussion, enhancing the addition made by Assessing Officer for the net as per audited report u/s.142(2A) of the Act i.e. Rs.35,31,530/- for A.Y. 1995-96, Rs.62,49,885/- for A.Y. 1996-97 and Rs. 88,99,750/- for broken period 01.04.1996 to 21.01.1997 is not justified. Same is directed to be deleted."
11 We therefore reject Revenue's hyper technical argument seeking to ignore the abovestated comprehensive cash flow statement. We now proceed ahead to deal with instant batch of cases in light of the abovestated M/s. Shyam Groups - 12 -
comprehensive cash flow statement indicating the first assessee Shri Bhagwanbhai who have received the money in question pertaining to various projects for acting as their authorized persons in order to execute their land purchases transactions. We thus treat his appeal along with Revenue's cross case IT(SS)A Nos. 325 & 465/Ahd/2010 for the impugned block period as the lead cases.
12. A perusal of the above lead cross appeals indicates that assessee raises total fourteen substantive grounds as against seventeen substantive grounds raised in Revenue's appeal. The assessee's first substantive ground and Revenue's first two substantive grounds raise common issue of correctness of unexplained investment addition of Rs. 2.09crores pertaining to "Vastral" land in assessment year 1997-98 as made by the Assessing Officer and restricted to Rs.1,41,12,826/- in lower appellate proceedings. The assessee seeks to delete the entire addition whereas Revenue strongly supports to revive the same.
13. It is evident from the case record that this "Vastral" land admeasures 92500sq.yards. The department found/seized the relevant banakhat (Annexure A-2/13) revealing the assessee to have co-purchased the abovestated land @Rs.565/- per sq.yard. Total consideration money accordingly came to be Rs.5,22,62,500/-. The department found total consideration money paid as on the date of search was Rs.1.31crores on banakhat date 30.06.1996 followed by subsequent payment of Rs.78lacs on 01.11.1996 made as confirmed by the respective sellers. The Assessing Officer's order in assessment dated 28.01.1999 rejected assessee's explanation regarding source of this amount of Rs.2.09 crores to corresponding withdrawals in M/s. Shyam Group firms' accounts as their authorized person for land purchases (supra). He quoted assessee's failure in M/s. Shyam Groups - 13 -
filing the relevant cash flow statement as well as reconciliation of the relevant figures followed by absence of the said money assessment in the other assessee Shri Arvindbhai's hands. The Assessing Officer further declined assessee's deposition in search statement that he was only a co- owner of this "Vastral" land. All this resulted in the impugned addition of Rs.2,09,00,000/-.
14. The CIT(A)'s order grants part relief to assessee as under:
"7. During the course of appellate proceedings vide written submissions and arguments the learned AR emphasized that entire Rs.2,09,00,000 cannot be added in the hands of the appellant because even during the search he had stated that this land was purchased initially in equal partnership with one Shri Kantibhai and later other co owners also came in.
It was explained that cash for investment in the land even at the time of Search was explained to have come from different firms of Shyam rbup. This stand was reiterated during the course of present appellate proceedings and in addition it was stated that already surplus in the hands of the firms in other words Undisclosed Income of the firms which had been utilized for making land purchases by the appellant and others had been offered for taxation before Settlement Commission. Thus it was stated that only 50% of Rs.2,09,00,000 can be considered in the hands of the appellant which comes to Rs.1,04,50,000. Source of this was explained as under vide submission dated 12.03.2009:
Date Amount Remarks
10.07.1996 25,96,313 From Shyam Organisers wherein it has been
offered as UDI before Settlement
Commission. The application has been admitted
by the Settlement Commission and is pending for
final orders.
1.11.1996 53,87,174 Sale proceeds of Kathwada land which have been
offered as UDI before Settlement Commission in the case of the appellant and another kingpin of Shyam Group - Arvindbhai.
13,00,000 Surplus from Shyam Organisers which has been offered as UDI before Settlement Commission.
4.12.1996 2,00,000 Surplus from Shyam Organisers which has been offered as UDI before Settlement Commission.
4.12.1996 1,00,000 Surplus from Shyam Developers offered as UDI before Settlement Commission, consequent to abatement of application by the ITSC the same has been added in the block order and has been confirmed in appeal vide order dated 8.10.2009.
M/s. Shyam Groups - 14 -
4,50,000 Surplus from Shyam Corporation offered as UDI
before Settlement Commission, consequent
to abatement of application by the ITSC the same
has been added in the block order and has been
confirmed in appeal by CIT(A) XV vide order dated 11.9.2009.
1,00,33,487 It was argued that out of Rs.1,04,50,000 (share of Bhagwanbhai) Rs.1,00,33,487 stands explained as per the above chart. The balance Rs.4,16,513 (Rs.1,04,50,000
- Rs.1,00,33,487) was explained to have been covered by UDI declared before Settlement Commission of Rs.6,00,000 in the case of the appellant.
Statement of facts filed before Settlement Commission of the two kingpins of Shyam Group and the firms where the appellant is a partner are enclosed as Annexure-1 of this order.
i) Bhagwanbhai
ii) Arvindbhai
iii) Shyam Construction Company: : Appellant not a partner
iv) Shyam Corporation :Appellant partner by 40%
v) Shyam Developers :Appellant partner by 30% yi) Shyam Organisors :Appellant partner by 30%
9. Interestingly in the Statement of facts filed before Settlement Commission by the appellant the investment in Vastral land has been explained as under:
For investment in Vastral land measuring 92500 sq.yds it has been stated that following amounts were invested:
Amount Date From Shyam Organisors UDI before Settlement Commission 25,96,313 30.6.1996 Rs.73,19,147 1.11.1996 Rs.53,87,174 from sale proceeds of Kathwada land Rs.13,00,000 from UDI of Shyam Organisors Rs.6,31,967 balance out of Undisclosed sources of Bhagwanbhai out of which his share amounting to Rs.3,15,984 has been offered to tax before Settlement Commission other Rs.3,15,984 to be Arvindbhai's share..
Rs.14,00,000 24.12.1996 Rs.4,50,000 withdrawn from Shyam Corporation Rs.1,00,000 withdrawn from Shyam Developers and Rs. 2,00,000 withdrawn from Shyam Organisers.
Balance Rs.6,50,000 has been informed invested out of undisclosed sources out of M/s. Shyam Groups - 15 -
which Bhagwanbhai's share has been informed to be Rs.3,25,000, other Rs.3,25,000 to be Arvindbhai's share.
Thus in the SOF total investment of Rs. 1,13,15,460 (Rs. 25,96,313 + Rs.73,19,147 + Rs.14,00,000) in Vastral land was informed by the appellant, whereas in submission dated 12.3.2009 amount of Rs. 1,04,50,000 has been claimed and explained as appellant's share.
10. After going through rival submissions I am unable to agree that the appellant is accountable about the source of investment of just Rs. 1,04,50,000 out of total investment of Rs.2,09,00,000 because the seller of land - Uday Bhatt - in statement recorded on 19.02.1997 stated that he received Rs.2,09,00,000 in cash from the appellant. The name of Kantibhai is in the banakhat, but the actual investment in land has been made by the kingpin of Shyam Group - Shri Bhagwanbhai - the appellant. Interestingly Shri Kantibhai is not partner in any firm. And he is no more in this world.
Hence the argument of the Id. AR that investment is just Rs. 1,04,50,000 in Vastral land of the appellant is not factually correct, more so when the seller of land has himself stated that he received Rs.2,09,00,000 from the appellant himself. This is also important to point out that in the block assessment order dated 26.12.2008 of Kantibhai passed in the name of Harshad K Patel, his legal heir u/s.158 BD r.w.s. 158BC no such investment In Vastral land has been discussed or added.
11. Now it is to be seen how much set off on account of investment in land can the appellant claim on account of UDI declared by the firms before Hon'ble ITSC. It is important to remember that the Statement of facts of the firms show that the appellant is a partner in Shyam Organisers by 30%, in Shyam Corporation by 40% and in Shyam Developers by 30%, while he is not a partner at all in Shyam Construction Company. These firms have claimed heavy deductions on account of investment in land from the Undisclosed income declared before Settlement Commission. While Shyam Orqanisors has claimed a deduction of Rs. 1,24,97,975 on account of land investment. Shvam Corporation has claimed deduction of Rs.35,02,778 and Shvam Construction Company where wife (Manguben Bhagwanbhai Paten of appellant is a partner bv 33% deduction of Rs.1 9.36.000. It is after reducing these amounts that tax has been paid by the appellant before Settlement Commission.
Now once again from the Income disclosed of the firms in the table above set off of unexplained investment / cash payment for land purchase has been claimed in the submission dated 12.3.2009, while but for Shyam Organisers the appellant has not claimed any deduction in his SOF from any other firm, but in the submission dated 12.3.2009 fresh firms have been incorporated. In my view if this plea of the appellant is accepted it would be giving double deduction on account of Unexplained investment in land that is once to the firms and second time to the kingpin - the appellant - Shri Bhagwanbhai. Therefore the source of amounts shown as explained from UDI of the firm Shyam Organizers in the SOF of the appellant and in .the submission from the firms Shyam Developers and Shyam Corporation is found not explained because already heavy land investment M/s. Shyam Groups - 16 -
deduction of Rs.1.24.97.975.has been claimed by Shyam Organisers in its UDI filed before Settlement Commission and also by Shyam Corporation of Rs.35,02,778.
12. However source of investment of Rs.53,87,174 from sale proceeds of Kathwada land is accepted because addition of the sale proceeds 50% each in the hands of two kingpins - Bhagwanbhai and Arvidndbhai - has been made in the original block assessment orders and is being confirmed in the appellate orders.
13. It is not disputed that the appellant accepted during search that following cash payments were made for Vastral land:
Rs.1,31,00,000 was made on 30.06.1996 and Rs. 78.00,000 was made on 1.11.1996 totalling to Rs. 2,09,00,000.
Out of which source of Rs.53,87,174 has been successfully explained to be from Kathwada land sale. Also withdrawals from firms of Rs. 14,00,000 in the SOF table given above is accepted as explained source of investment in Vastral land because bigger amounts have been declared in the SOF of the firms as partners withdrawals, and addition of this amount is also directed to be deleted, however out of Rs.2,09,00,000 the source of balance investment of Rs.1.41.12.826 (Rs.2.09.00.000 - Rs.53.87.174 + Rs.14.00.000) is not found explained as per reasons discussed in the preceding paras."
This leaves both parties aggrieved to the extent of their respective pleadings.
15. We have given our thoughtful consideration to rival submissions. The assessee's first plea is that both the lower authorities have erred in holding in as the sole investor in this "Vastral" land. The relevant banakhat is dated 15.06.1996 at pages 415 to 431 of the paper book stating payment of Rs.1.31crores followed by Rs.78lacs at page 432; totaling to Rs.2.09crores.
The said banakhat admittedly reveals to vendees including assessee and Shri Ashvinbhai. The assessee's search statement dated 21.01.1997 at page 115 of the case records also clarifies himself to be not the sole vendee since taking various other names S/Shri Kantibhai, Ashvinbhai, Bachhubhai etc. Both the lower authorities reject the same after placing heavy reliance upon vendor's confirmation of having received the entire amount from Shri Bhagwanbhai only. We observe in these peculiar facts that they have erred in M/s. Shyam Groups - 17 -
taking the assessee as the sole investor going against his search statement as well as the relevant terms of banakhat to be taken as correct u/s. 292C of the Act as inserted by the Finance Act, 2008 with retrospective effect from 01.10.1975.
16. It further emerges from the case record that assessee's co-vendee Ashwinbhai had disclosed a sum of Rs.72lacs for acquisition of lands in VDIS 1997 followed by payment of taxes thereof. His assessment order dated 29.06.2001 pertaining to the very block period in this regard is at page
294. The Assessing Officer therein assesses him qua undisclosed income of Rs.40,60,800/- pertaining to this "Vastral" land itself at page 307 after treating him as a co-owner. The other co-vendee Shri Bachhubhai (supra) also made a similar declaration under the very VDIS (pages 321 to 340) wherein page 333 reveals his investment in this "Vastral" land. We then notice last vendee Shri Kantibhai's affidavit dated 07.02.1997 supporting assessee's plea qua an amount of Rs.47,31,300/- (page 289) regarding "Vastral" land only. It is thus clear that both the lower authorities below have erred in treating the assessee as the sole investor to the tune of Rs.2.09 crores.
17. This leaves us with yet another equally important question source of assessee's investments in this "Vastral" land. The assessee pleaded in lower appellate proceedings to have invested a sum of Rs.1,13,15,454/- with above co-vendee Ashwinbhai i.e. Rs.25,96,313/-, Rs.73,19,141/- and Rs.14lacs as on 30.06.1996, 01.11.1996 and 25.12.1996; respectively. This followed explanation of the remaining amount of Rs.26,85,075/- in case of Ashwinbhai in VDIS (supra) out of Rs.72lacs, Rs.21,68,171/- pertaining to Shri Bachhubhai and Rs.47,31,300/- relates to Shri Kantibhai; respectively. Learned Departmental Representative fails to dispute all these facts and M/s. Shyam Groups - 18 -
figures in the course of hearing. We wish to repeat here at this stage that the assessee had already disclosed before Settlement Commission source of the above investment of Rs.1,00,33,487/- as extracted in the lower appellate order. Learned Departmental Representative submits that his settlement petition stands rejected. We find no force in this plea in view of Section 245HA of the Act wherein subsection 3 envisages that such kind of material or information can be taken cognizance for the purpose of arriving at appropriate conclusion. We also emphasize that the Settlement Commission in case of M/s. Shyam Organisers and this tribunal in appeals pertaining to Shaym Corporation & Shyam Bilders have already accepted the fact that assessee "Kaka" acted as their authorized person for land purchase transactions. This crucial fact has attained finality as of now. So is the case of cash flow statement depicting this "Vastral" land to have been purchased from outward flow of funds from the relevant entities followed by inward flow in case of the very land accounts heads. Learned CIT(A) is fair enough in the above extracted portion that the said firms had claimed heavy deduction. In view of all these facts that the assessee at the most has failed to explain the source of this "Vastral" land involving investment of Rs.2,09,00,000/- - Rs.26,85,075/- (Ashwinbhai) - Rs.21,68,171/- (Bachchubhai) - Rs.47,31,300/- (Kantibhai) = Rs.1,13,15,454/-. His settlement petition has already explained source of Rs.1,00,33,487/- (supra) on the basis of comprehensive cash flow statement already accepted in Settlement Commission as well as tribunal (supra). All this leaves behind a paltry sum of Rs.12,81,967/-. His share is admittedly 50% equal to Shri Ashvin bhai. This results in the relevant figure once again coming down to Rs.6,40,984/- which is the relevant sum of unexplained investment pertaining to the very land already disclosed in settlement petition. We thus restrict the impugned addition of Rs.2,09,00,000/- to Rs.6.40lacs only. The assessee's instant substantive ground is partly accepted whereas the Revenue's two M/s. Shyam Groups - 19 -
substantive grounds raising the issue of unexplained investment as well consequential sale profit addition (supra) are declined.
18. The assessee's second substantive ground alongwith Revenue's third substantive ground also raise the issue of correctness of unexplained investment addition in "Umiya" farm land amounting to Rs.1,01,00,000/- spread over in assessment years 1996-97 and 1997-98. This addition emanates from a banakhat Annexure A-2/4 seized and inventoriesed in the course of search pertaining to 90000 sq.yards. This banakhat also reveals three vendees S/Shri Bhikubhai, Arvindbhai and Ajitbhai (benamidars). The relevant advance money paid was of Rs.1.01 crores out of gross amount of Rs.2,70,90,000/-. The vendor also confirms the above advance payment. The Assessing Officer therefore added the same in assessee's hands as unexplained investments after rejecting his various pleas inter alia claiming source thereof to Shaym Group profits, relevant notings to this effect in duplicate cash book which should duly offered as income etc.
19. The CIT(A) partly upholds the above additions as follows:
"15. Unexplained investment in Umiya Farm land of Rs.1,01,00,000 Ground No.17 AY 1996-97 Rs.5,00,000 Ground No.25 AY 1997-98 Rs.96,00,000 As per para 7 of the assessment order, the AO added Rs.1,01,00,000 as cash paid by the appellant for purchase of land measuring 90000 sq. yards located at Village Muthiya, Dist Ahmedabad.
Though the total consideration for 90,000 sq.yds of land at the rate of Rs.301 was as per 'banakhat' Rs.2,70,90,000 but in the interest of justice the AO took following cash payments made till the date of search:
Rs. 5,00,000 was made on 15.03.1996, Rs.62,00,000 was made on 30.9.1996 and Rs.34,00,000 on various dates from 30.09.1996 till the date of search totaling to Rs.1,01,00,000.
This addition was made on the basis of 'banakhat' seized from the office of Shyam Builders group marked as Annexure A-2 /14 which informed that the sellers of the M/s. Shyam Groups - 20 -
land had received Rs.1,01,00,000 till the date of search. This fact was confirmed by the appellant in response to Question No.28 asked on the date" of search i.e. 21.1.1997 cash payment was confirmed by page No.3 of diary A - 2/10 seized from the office of the Group. The order in para 7.6 mentions that four sellers of the land also reaffirmed in their statements recorded that they had received cash payment of Rs.1,01,00,000 from the appellant.
16. During the course of appellate proceedings, it was argued that the entire Rs.1,01,00,000 cannot be added in the hands of the appellant. A table giving source of Rs.73,94,370 from various firms was submitted vide submission dated 12.3.2009 and is given below:
Date Amount Remarks
15.03.1996 5,00,000 From Shyam Corporation wherein it has been
taxed during the block assessment.
10.9.1996 10,00,000 From Shyam Corporation wherein it has been
taxed during the block assessment.
30.9.1996 20,20,513 Surplus from Shyam Organisers wherein a larger
amount has been offered as UDI before Settlement Commission.
5,64,410 From Shyam Corporation wherein it has been taxed during the block assessment.
2,51,000 From Shyam Developers wherein it has been taxed during the block assessment.
1,08,452 Sale proceeds from Kathwada land offered before Settlement Commission by the appellant.
26.10.1996 8,00,000 Surplus from Shyam Organisers wherein a larger amount has been offered as UDI before Settlement Commission.
29.10.1996 3,45,626 Surplus from Shyam Organisers wherein a larger amount has offered as UDI before Settlement Commission.
54,374 Surplus from Shyam Organisers wherein a larger amount has been offered as UDI before Settlement Commission.
30.10.1996 95,626 Surplus from Shyam Corporation taxed in block assessment.
2,00,000 Surplus from Shyam Organisers wherein a larger amount has been offered as UDI before Settlement Commission.
M/s. Shyam Groups - 21 -
1,04,374 Sale proceeds from Kathwada land offered before
Settlement Commission by the appellant.
24.12.1996 1,50,000 Surplus from Shyam Developers taxed in the
hands of the firm during the block assessment.
10,50,000 Surplus from Shyam Organisers wherein a larger
amount has been offered as UDI before Settlement Commission.
1,50,000 Surplus from Shyam Corporation taxed in block assessment 73,94,375 It was argued that the source of above Rs.73,94,375 was from Income of firms mentioned in the table above and that balance Rs.28,00,000 had already been added in the case of Shri Kantibhai Patel in the block assessment order dated 26.12.2008.
17. After going through rival submissions, it is seen that in the Statement of facts of the firm Shyam Organisers summary of which is reproduced below already Rs.1,24,97,975 has been reduced by the appellant as land investment from UDI and from Shyam Corporation heavy deduction of Rs. 35,02,778 has been taken from the UDI.
18. The summary of both these firms of SOF is given below:
Statement of facts of Shyam Organizers filed before Settlement Commission Year Narration Surrender before Settlement Commission AY 1994-1995 Unexplained investment in Rs. 33,22,850 purchase of land for the scheme Shyam Darshan AY 1995-1996 Net Surplus Rs. 24,50,000 Partners withdrawals Rs. 1,43,768 Donation Rs. 1,48,675 AY 1996-1997 Net Surplus Rs. 78,25,000 Partners withdrawals Rs. 11,28,737 Donation Rs. 1,22,171 Broken Period 1-4-1996 Net Surplus Rs.1,22,25,000
- 21-1-1997 Partners withdrawals Rs. 1135,047 Donation Rs. 58,580 Total Rs.2,89,82,133 M/s. Shyam Groups - 22 -
Less amount paid for Rs.1,24,97,975
land purchased
Rs.1,64,84,158
Less income as per block Rs. 22,71,790
return
Additional income before Rs.1, 42,12368
Settlement Commission
19. Statement of facts of Shyam Corporation filed before Settlement
Commission
Year Narration Surrender before
Settlement Commission
AY 1994-1995 Unaccounted purchase of Rs. 19,03,201
land
Less:Surplus front Shyam
Construction Rs. 7,74,109
Rs. 11,34,090
AY 1995-96 Net surplus Rs. 9,99,000
Partners withdrawals Rs. 1,22,220
Rs.10,223,220
AY 1996-97 Net surplus Rs. 41,19,000
Partners withdrawals Rs. 3,70,000
Rs. 44,89,000
Broken Period from 1-6- Net Surplus Rs. 53,00,000
1996 to 21-1-1997 Partners withdrawals Rs. 3,21,775
Rs. 56,21,775
Total Rs.1,22,68,087
Less: Amount paid for Rs. 35,02,778
land purchase
Rs. 87,66,5,308
Less income as per block Rs. 28,55,930
return
Additional income before Rs. 59,09,378
Settlement Commission
20. The above Income has been accepted in block assessments of the firms and confirmed in appeals also. The question is how can from the same Income another set off on account of land investment be given once to the firm and second time to the appellant ?
This contention of source from firms is thus not acceptable as it has been given in a vague manner. However sale proceeds from Kathwada land are accepted as explained source because they have been declared as UDI bv the two kingpins in their SOFs filed before Settlement Commission also and no land investment deductions have been claimed from this Income. This is also important to M/s. Shyam Groups - 23 -
remember that Rs.28,00,000 was accepted given to Kantibhai by the appellant and this Rs.28,00,000 is part of amount paid of Rs.1,01,00,000. Reference is invited to the block assessment order dated 26.12.2008 passed in the case of Shri Harshad K Patel, legal heir of late Shri Kantibhai Patel, wherein Rs.28,00,000 has been added on the basis of statement of Bhagwanbhai Patel. In the block order of Kantibhai reply of Bhagwanbhai given vide Question No.22 asked during search statement has been reproduced in which Bhagwanbhai has confirmed having paid Rs.28,00,000 to Kantibhai. In my view no addition was warranted in the hands of Kantibhai who worked primarily as a broker and who received this amount from Bhaqwanbhai. It is Bhagwanbhai who should explain the source, whereas instead of explaining the source in the appellate proceedings the plea is being taken that this amount has already been added in the case of Kantibhai and hence no addition should be made here. A copy of this order is being passed on to the CIT(A)-XI where Kantibhai's appeal is pending. Therefore the addition of unexplained investment in Umiya Farm land is confirmed deleting the source explained from Kathwada land sale Rs.2,12,826 (Rs.1,08,452 + 1,04,374) balance addition of Rs.98,87,174 (Rs.1,01,00,000-Rs.2,12,826) is upheld."
20. Heard both sides. We notice herein as well that the Assessing Officer as well as the CIT(A) assess the entire investment amount in assessee's hands whereas his search statement at pages 118 to 123 makes it clear that he alongwith other assessee Kantibhai (supra) had co-purchased the land in question as partners. The CIT(A)'s findings treating the said other assessee as a mere commission agent are accordingly reversed. Shri Kantibhai's account stood debited to the extent of Rs.16lacs giving rise to assessment of undisclosed income of Rs.28lacs is thus granted credit qua the former sum. The impugned addition amount of Rs.1,01,00,000/- is accordingly reduced by the abovestated sum of Rs.16lacs leaving behind the remaining figure of Rs.85lacs only. Mr. Thakkar takes us once again to assessee's search statement at page 123 that Shri Bachchubhai was also included as a partner in the impugned parcel of land who also declared the very investment in VDIS (supra) along with his son Shri Ajit B Chauhan. Mr. Thakkar's case therefore is that the said two assessees have also been assessed to the extent of Rs.33.16lacs investment amount including this Umiya land. All these facts go unrebutted from Revenue's end. Coupled with this, the assessee has M/s. Shyam Groups - 24 -
already disclosed in his settlement petition a sum of Rs.73,94,375/- as received from Shyam Group entities as per their cash flow statement accepted in Settlement Commission as well as this tribunal (supra). We thus conclude that the assessee has sufficiently explained source of the impugned investment amount followed by his settlement petition indicating disclosure of Rs.4,61,094/- in the impugned head. We accordingly restrict the impugned addition to the extent of assessee's disclosure in a settlement petition hereinabove and delete the remaining addition amount under challenge. The assessee's substantive ground is accepted whereas that raised at Revenue's behest fails.
21. Assessee's third substantive ground pleads that the authorities below have erred in making unexplained investment addition of Rs.1,49,27,709/- pertaining to Nava Naroda land in assessment year 1997-98. We notice that the CIT(A)'s discussion relevant to the instant issue read as under:
"23. Unexplained investment in land at Nava Naroda of Rs.1,49,27,709 As per para 9 of the assessment order, the AO added Rs.1,49,27,729 as cash paid by the appellant for purchase of land measuring 42000 sq. yards located at Village Naroda, Dist Ahmedabad.
Cash payment till the date of search of Rs.5,00,000 was made on 3.4.1996, of Rs.98,00,000 was made on 4.6.1996 and Rs.46,27,709 on various dates till the date of search totaling to Rs. 1,49,27,709. This has been disputed in the following ground:
Ground No.27 AY 1997-98 Rs.1,49,27,709 This addition was made on the basis of 'banakhat' seized from the office of Shyam Group of Builders marked as Annexure A-2/16 and on the basis of the statement recorded of the appellant during the search. This cash payment paid to the vendors of land is corroborated by page 6 of Diary (A -2/10) seized from office premises. In the block assessment order in para 9.6 the AO has stated that three persons out of 8 who sold the. land confirmed in the statements recorded that they received Rs.1,49,27,709 from Bhagwan K Patel. It has also been emphasized by the AO in para 9.9.1 that the appellant confessed in the statement recorded during search that the purchasers mentioned in the 'banakhat' were benamidars of himself and others.
M/s. Shyam Groups - 25 -
24. During the course of appellate proceedings, it was argued that the entire Rs.1,49,27,709 cannot be added in the hands of the appellant because there are other co-owners.
Vide page 59 of the submission dated 12.3.2009 a table giving source of Rs.97,53,241 of investment made by the appellant from various firms was furnished and is given below:
Date Amount Remarks 3.4.1996 5,00,000 From Shyam Corporation wherein it has been offered before Settlement Commission and has been taxed in the block assessment, and confirmed in appeal vide order dated 11.9.2009.
22.4.1996 17,99,496 From Shyam Corporation wherein it has been offered before Settlement Commission and has been taxed in the block assessment, and confirmed in appeal vide order dated 11.9.2009.
7,00,594 Surplus from Shyam Organisers wherein a larger amount has been offered as TJDI before Settlement Commission.
The application has been admitted.
27.41996 20,00,000 Surplus from Shyam Organisers wherein a larger amount has been offered as UDI before Settlement Commission. The application has been admitted .
18.5.1996 8,46,850 From Shyam Corporation wherein it has been offered before Settlement Commission and has been taxed in the block assessment, and confirmed ii) appeal vide order dated 11.9.2009.
4.6.1996 38,740 From Shyam Corporation wherein it has been offered before Settlement Commission and has been taxed in the block assessment, and confirmed in appeal vide order dated 11.9.2009.
15.9.1996 25,67,651 From Shyam Corporation wherein it has been offered before Settlement Commission and has been taxed in the block assessment, and confirmed in appeal vide order dated 11.9.2009.
M/s. Shyam Groups - 26 -
11.12.1996 6,50,000 From Shyam Corporation wherein it has been offered before Settlement Commission and has been taxed in the block assessment, and confirmed in appeal vide order dated 11.9.2009.
6,50,000 Surplus from Shyam Organisers wherein a larger amount has been offered as UDI before Settlement Commission. The application has been admitted .
97,53,241
25. After going through rival submissions it is seen that the firms mentioned in the table above i.e. Shyam Organisors and Shyam Corporation have claimed heavy deductions on account of investment in land from the Undisclosed income declared before Settlement Commission. The summary of Statement of facts of Shyam Organisers is available in para 18 above and that of Shvam Corporation in para 10 above. While Shvam Organisors has claimed a deduction of Rs. 1,24,97,975 on account of land-investment. Shvam Corporation has claimed deduction of Rs.35,02,778. It is after reducing these amounts that tax has been paid bv the appellant before Settlement Commission. Now once again from the Income disclosed of the firms in the table above set off of unexplained investment /cash payment for land purchase has been claimed in the submission dated 12.3.2009. In my view if this plea of the appellant is accepted it would amount to giving double deduction on account of Unexplained investment in land that is once to the firms and second time to the kingpin - the appellant - Shri Bhagwanbhai. Also how can any deduction on account of investment in land be given from Income assessed in the block assessment because this has been disputed by the appellant. Even if this income" is confirmed by CIT(A) then too how can deduction be allowed to the appellant on account of land investment because the income so assessed in assessment or appellate order is not accepted by the appellant. Then how can deduction be claimed by the appellant and how can it be allowed in his individual capacity as already land investment deductions have been allowed to the firms. If deduction is allowed to the appellant practically the Income declared by the firms before Settlement Commission reduces to a negligible amount because once deduction has been claimed before arriving at UDI and again further deduction is being claimed for land investment from the reduced UDI. The dates and amounts given in the table able do not in any way tally with the two clear cut dates of cash payments i.e. Rs.5,00,000 paid on 3.4.1996 and Rs.98,00,000 paid on 4.6.1996. Therefore the addition of Rs.1,49,27,709 in Nava Naroda land purchase by the appellant is confirmed."
22. We have heard rival submissions. It is evident first of all that the CIT(A) has adopted the very reasoning as in preceding issues in not treating M/s. Shyam Group entities to have advanced the impugned sum to the tune of Rs.97.53lacs forming part of their settlement petition including cash flow M/s. Shyam Groups - 27 -
statement to this effect. We thus accept assessee's arguments by once again reiterating Settlement Commission's as well as this tribunal's findings extracted hereinabove to the extent of investment amount of Rs.97,53,241/-. We further reiterate that the assessee and his nephew Arvindbhai (supra) had been having equal share in investments as per their duplicate books of accounts. Coming to remaining addition sum of Rs.51,74,468/-, it emerges from page 273 of the paper book that the assessing authority in Kantibhai's block assessment has accepted assessee's search statement attributing source of Rs.13lacs qua the very land (supra). We therefore grant credit to the extent of this investment amount as well. The unexplained amount that remains now is Rs.38,74,468/- only. It is further evident that Shri Bachchubhai and his son Ajitbhai have also declared to have made investments in the impugned land under VDIS (supra) at page 324 of the paper book. Learned Departmental Representative fails to cotrovert said investments to the tune of Rs.18,49,848/-. It further emerges that the assessee also produced affidavit / promissiory note dated 07.02.1997 at the behest of Goverdhanbhai and 6others explaining source of Rs.46lacs in this parcel of land. This affidavit seems to have been filed right before the ADIT immediately after search in question dated 21.01.1997. The same has gone unrebutted right in the course of block assessment, Assessing Officer's remand report submitted before the CIT(A) and in lower appellate proceedings. We conclude in view of all these facts that the assessee has sufficiently explained the impugned investment of Rs.1.47crores. The relevant addition subject matter of challenge in the instant ground is thus deleted.
23. Mr. Aseem Thakkar is very fair in not pressing assessee's fourth substantive ground challenging unexplained investment addition of Rs.48000/- made in respect of lands purchased at Balapur and Bavda keeping M/s. Shyam Groups - 28 -
in mind smallness of the amount. This substantive ground is accordingly rejected as not pressed.
24. The assessee's fifth and Revenue's sixth substantive ground challenge correctness of the CIT(A)'s order restricting unexplained investment addition of Rs.59,64,993/- to Rs.29,82,447/- @ 50% in respect of lands purchased at Naroda (Kathwada) in assessment year 1995-96. Mr. Thakkar submits that the assessee has already admitted a sum of Rs.28lacs in his Settlement Commission petition (supra) which is not disputed from Revenue's side. The sum in question left behind is therefore Rs.1,82,497/- only. We conclude in these facts that the assessee deserves to be allowed set off of the abovestated remaining figure in various accounts forming subject matter of the instant lis. We therefore partly allow both parties' corresponding grounds.
25. The assessee's sixth substantive ground raises the issue of correctness of unexplained investment addition of Rs.22.64lacs made in Dhansura Taluka (Hill Station Road) in assessment year 1997-98. The CIT(A)'s finding under challenge to this effect read as under:
"31. Addition of Rs.22,64.OOP on account of unexplained investment in land at Dhansura. Taluka (Hill station land) This addition has been made as per para 13 of the block assessment order. This was made on the basis of diary marked - Annexure A-5 -found from the "residence of the appellant and the statement recorded of the appellant during search (para 13.2). In para 13.6 the AO has stated that out of total consideration paid for this land of Rs.32,00,000, Rs.9.36 lacs was paid by Shri Kantibhai and balance Rs.22,64,000 was paid by the appellant till the date of search. This has been disputed in the following ground:
Ground No.29 1997-98 Rs.22,64,000 During the course of appellate proceedings it was argued that the appellant did not have anything to do with this land and already addition has been made in the case of block assessment order of Kantibhai.
M/s. Shyam Groups - 29 -
32. After going through the rival submissions, it is seen that the appellant himself admitted in the statement recorded during search on 21.01.1997 that land measuring 318 acres (hill station land) was purchased for a total consideration of Rs.36.1 lacs, out of which Rs.9.36 lacs was paid to the appellant by Kantibhai which was handed over to the seller Shri Imtiazbhai. This was also confirmed during the statement that total Rs.32 lacs on account of this land had been paid to Shri Imtiazbhai in cash till the date of search. The block assessment order of Shri Harshad K Patel legal heir of Kantibhai Patel dated 26.12.2008 shows addition of only Rs.9,36,000 for AY 1997-98. Though during the course of appellate proceedings it was argued by the ld.AR that affidavit of Harshad K Patel was submitted at the time of block assessment, but no proofs of submission or copy of affidavit were furnished during the course of appellate proceedings. The ld.AR could not prove that any affidavit was furnished at all. This is also important to remember that the diary containing cash payment was found from the residence of the appellant, therefore, in the light of the evidence and statement of the appellant himself the addition made by the AO is confirmed of Rs. 22,64,000."
26. We have heard rival contentions. This Dhansura land admittedly measures 318acres @ Rs.11,351/- per acre; totaling to Rs.36.10lacs. The assessee's search statement at page 97 clarifies source of Rs.9.36lacs to Shri Kantibhai as a partner. This amount already stands assessed in his hands (supra). The Assessing Officer herein therefore assessee's the balance amount 22.64lacs as unexplained investment. Mr. Thakkar seeks to invite our attention to case records comprising of Harshad Patel S/o Shri Kanitbhai hereinabove's statement that the land in question does not belong to the assessee which is not stated to be rebutted in Assessing Officer's remand report filed before the CIT(A). We find no force in this technical plea as that would mount to reversing Assessing Officer's findings in Shri Kantibhai's case in treating him as the sole investor instead of that to the extent of Rs.9.36lacs hereinabove. We further reiterate that assessee's search statement at page 97 also projects himself to be a co-purchaser. We thus decline in the instant substantive ground.
27. The assessee's and Revenue's seventh substantive ground pleads that the CIT(A) has erred in confirming unexplained investment addition of M/s. Shyam Groups - 30 -
Rs.4,80,175/- @ 25% of gross sum of Rs.19,20,700/- pertaining to Mahadevnagar lands in assessment year 1995-96. The Assessing Officer invoked the said addition after taking note of a banakhat indicating the assessee, Kantibhai, Ashwinbhai and another co-vendee to have agreed to purchase 25% share each in above land for Rs.34,10,410/- out of which advance amount of Rs.19,20,700/- stood paid. The assessee admittedly could not challenge correctness thereof before the Assessing Officer as well as CIT(A) who have proceeded to make the impugned addition to the extent of 1/4th of the total advance amount. Both the assessee as well as Revenue fail to rebut the above assessment of 1/4th amount's assessment in assessee's hands as unexplained investment. This substantive ground in assessee's as well as Revenue's appeal is accordingly rejected.
28. The assessee's eighth substantive ground avers that both the lower authorities have erred in making the undisclosed profit addition on sale of Mahadevnagar's land in assessment year 1996-97 to the tune of Rs. 2,45,000/-. Both parties inform us that this ground is consequential to preceding substantive ground as no change in facts is involved herein. We thus uphold the CIT(A)'s findings under challenge qua the instant substantive ground.
29. The assessee's ninth substantive ground challenges correctness of unexplained investment addition of Rs.8,54,704/- i.e. Rs.4lacs, Rs.2.28lacs, Rs.50,000/-, Rs.66,666- and Rs.1,10,338/- pertaining to assessment years 1990-91 to 1992-93, 1996-97 to 1997-98; respectively regarding land bearing survey no. 327 & 328/1, Nikol Road. Mr. Thakkar is very very fair in informing us that we must confirm the impugned addition as the other co- owner Shri Kalyanbhai has already admitted the same as correct in his M/s. Shyam Groups - 31 -
settlement petition. We appreciate this fair stand and confirm the impugned addition at the same time.
30. The assessee's tenth and Revenue's eighth substantive ground plead that the CIT(A) has erred in confirming unexplained investment addition of Rs.4,87,98,000/- to Rs.21,95,665/-; only in assessment year 1997-98 after giving telescoping benefit of an amount of Rs. 4,58,04,335/- i.e. the amount of additions confirmed on account of unexplained investments in land.
31. We come to relevant facts. The abovestated search lead to seizure of page 46 of loose paper filed A-1. The assessee's search statement stated the same to be in the nature of his personal unaccounted investments wherein 43.84 would represent Rs.43.84lacs and so on. He deposed that all the said figures were nowhere reflected in any of the books. He however clarified in the course of assessment to be in the nature of rough jottings belonging to the entire Shyam group. The Assessing Officer still went by his search statement to add the entire amount of Rs.5.78crores as unexplained investment. He further granted set off of Karnavati, Umiya, Vastral lands (supra) totaling to corresponding figures of Rs.90.02lacs thereby adding the remaining amount of Rs.4,87,98,000/- in question.
32. The CIT(A) partly confirms Assessing Officer's action as under;
"38. Addition of Rs.4.87.98.000 in AY 1997-98 as investment in assets This addition has been made as per para 16 of the block assessment order and has been disputed in the following ground:
Ground No.31 AY 1997-98 Rs.4,87,98,000 During the course of search proceedings, a paper marked as page 46 of loose paper file A-1 was seized from the residence of the appellant, in which details of M/s. Shyam Groups - 32 -
personal unaccounted investments were noted by the appellant in his own handwriting.
In para 16.5 the AO has mentioned that the total investments as per page 46 come to Rs.5,78,00,000 which include following items also:
Karnavati Rs.43.86lacs
Umiya Rs.06.16lacs
Vastral Rs.40.00 lacs
Total Rs.90.02 lacs
The AO reduced the above amount from Rs.5,78,00,000 stating that separate additions had been made in the order and made addition of Rs.4,87,98,000 (Rs.5,78,00,000 - Rs.90,02,000).
39. It was argued in the counter comments dated 29.9.2009 that the amounts mentioned in loose paper page 46 were not just personal investments of the appellant but of entire Shyam Group. It was stated that as Undisclosed Income more or less the same amount i.e. Rs. 4,62,50,180 has been offered before the Settlement Commission by the various firms of Shyam group. It was also argued that the amounts mentioned in the paper are not investments as on the date of the search, for instance, investment in Vastral as per this paper is mentioned just Rs.40 lacs but, as per 'banakhat' and statement of the appellant, the investment is much higher as the AO has added Rs.2.09 crores on account of Vastral land in the same order.
40. Page 46 of seized loose paper file Annexure A-1 English translation of which has given by the ld.AR is reproduced below:
Page 46 of loose paper file - Annexure A-1 seized from the residence of the appellant (English Translation) Karnavati 43.86 Umiya 646 Vastral 40.00 Arjanbhai Odhav 18.00 Investment in land 108.02 Expense in hill station 6.50 Kantibhai 3.00 In Hill Company 6.50 Arvindbhai 2.00 Keshubhai 2.00 Ashwinbhai 10.00 Virjibhai 35.00 Virjibhai 1.50 R.K. 9.00 Bipinbhai 5.00 Kanjibhai 12.00 Ashokkumar 25.00 Bhanubhai 4.50 M/s. Shyam Groups - 33 -
Ratilal 1.00
Amount 231.02
Saijpur Bogha 195.00
Not legible in Gujarati 162.00
5:88.02
Submitted by A.R. Shri Aseem Thakkar, C.A.
41. After going through rival submissions, it is seen that Investment in land has been mentioned in the table above as per fourth row at Rs.1,08,02,000, whereas AO has reduced just Rs.92,02,000 for investment of land, therefore if Rs.
1,08,02,000 is reduced from Rs.5,88,02,000, the figure comes of Rs.4,80,00,000, which is taken as total of amounts mentioned on page 46 reproduced above instetad of Rs.4,87,98,000 taken by the AO. Therefore deletion of Rs.7,98,000 is made from the addition of Rs.4,87,98,000.
It is also seen that the AO has taken this page 46 as an account of investments made by the appellant in his personal capacity as per the appellant's own statement recorded during search and reproduced in the para 16.1 of the block assessment order. For the sake of clarity once gain the statement recorded during search is reproduced below:
"Q.No.26 Please explain page no.46 of Annexure A-1. In whose handwriting this is written and what is written on this.
Ans. This page is written in my own handwriting. This gives details of my personal unaccounted investments. All the amounts written on this page are coded. For example 43.84 means 43.84 lakhs, 6.16 means 6.16 lakhs and likewise.
Q.No.27. Whether any of the investment/assets described in page No.46 is shown in any of your personal books or firm's books of accounts. Ans: No all the assets mentioned on this page are not reflected in my personal or any firm's books of accounts because all these assets have come from my unaccounted investment.
Q.29. In reply to your explanation of page no.46, you have stated that the paper represents unaccounted investment in assets of Rs.578 lakhs. How have you earned the income for these investments.
Ans: The income for investment in assets of Rs.578 lakhs has been earned by me in personal capacity from my business of construction and my land business. This does not get reflected in any of my personal or firm's books of accounts."
In the light of the above clear reply of the assessee during search the plea taken during the course of block assessment proceedings and present appellate proceedings that this was from income of firms is not maintainable. Similarly for the alternative argument that the amounts may be loans, no proofs with respect to the names appearing in the paper were submitted. No evidence of any sort was submitted at the time of assessment or appellate proceedings, rather the burden was cast upon the Department to prove that this was appellant's income. The paper is in the handwriting of the appellant, he has confessed that it M/s. Shyam Groups - 34 -
contains his unaccounted investments. As the appellant is engaged in buying of lands the investments would be towards land transactions, therefore out of addition of Rs.4,80,00,000 in the interest of justice amount totaling to Rs.4,58,04,335, which is total of additions* confirmed on account of Unexplained land investments is telescoped in the addition of Rs.4,58,04,335 made on account of land investments. And the balance Rs.21,95,665 (Rs.4,80,00,000 - Rs.4,58,04,335) is upheld on account of Unexplained investments as per seized page 46 reproduced above.
Additions confirmed on account of unexplained land investments.
On account of Vastral land : Rs.1,41,12,826
On account of Umiya Farm land : Rs. 98,87,174
On account of Nava Naroda land : Rs. l, 49,27,709
On account of BalapurBavda land : Rs. 48,000
On account ofProfit on Naroda (Kathwada land) : Rs. 29,82,497
On account of Hill station road : Rs. 22,64,000
On account of l/4th share in Mabadev Nagar
Land i.e.l/4th of Rs.19,29,7000: : Rs. 4,82,425
Profit on Mahadev Nagar : Rs. 2,45,000
On account of Nikol Road : Rs. 8,54,704
Rs.4,58,04,335
33. Mr. Thakkar strongly argues that the lower authorities have erred in making the impugned addition after rejecting assessee's additional evidence as well as rejoinder to Assessing Officer's remand report which have not been considered in appropriate perspective. Learned Departmental Representative vehemently support the Assessing Officer's action making the impugned addition on the basis of assessee's search statement. There is no dispute that neither the Assessing Officer nor the CIT(A) have undertaken any exercise to link assessee's jottings in question to any asset corresponding thereto. They have simply gone by assessee's search statement not supported by any evidence. We therefore quote CBDT's circular dated 10.03.2003 advising the field authorities to collect evidence in the course of a search or survey rather than obtaining such admissions of the searched assessees. There is further no material in the case file which could indicate the relevant figure of Rs.43.86 to be Rs.43.86lacs. The assessee's search statement sough to clarify the relevant figures were nowhere entered in books. The CIT(A) still M/s. Shyam Groups - 35 -
considered the same for set off purpose (supra) without clearly establishing even a remote nexus between Shyam group land purchases and the abovestated figures. Hon'ble jurisdictional high court's judgment in Kailashben Manharlal Choksi vs. CIT (2010) 328 ITR 411 pertaining to a search conducted on 04.11.1988 i.e. much earlier to Board's circular hereinabove holding that no such addition is to be made in absence of evidence collected during search squarely applies here in facts of the instant case. We therefore delete the entire addition amount of Rs.5.78crores. The assessee's instant substantive ground succeeds whereas that raised at Revenue's behest is declined.
34. The assessee's eleventh substantive ground challenges addition of Rs.60,000/- in assessment year 1993-94 and Rs.2,29,328/- out of Rs.2,80,33/- in assessment year 1997-98 for alleged unexplained household expenditure as made by both Assessing Officer as well as the CIT(A) after adopting estimation method. We find no reason to concur with the same on a basic premise that an addition in the course of a block assessment is to be made only on the basis of specific evidence collected rather than on estimation basis as held in hon'ble Delhi high court's decision in CIT vs. M/s. Mittal Consul & Co. ITA No.1277/2007 decided on 25.03.2011. The above two additions are accordingly deleted.
35. Assessee's twelveth substantive ground raises the issue of correctness of unexplained expenditure / payment addition of Rs.4lacs made to Shri Kantibhai in assessment year 1996-97. Mr. Aseem Thakkar takes us to paper book page 275 indicating the very sum to have been assessed in the hands of Shri Kantibhai which goes unrebutted from Revenue's side. We further notice at this stage that the CIT(A) has confirmed Assessing Officer's action as follows:
M/s. Shyam Groups - 36 -
"50. Addition of Rs.4,00,000 as unaccounted payment to Kantibhai in AY 1996-97.
This addition has been made as per para 25.4(e) of the block assessment order, on page 58 of the order it has been stated that Rs.4,00,000 was paid by the appellant in cash to Kantibhai for interest as per page No.57 of loose paper file A/1 seized from the appellant's residence, and this was confirmed in the statement (Q.No.28) recorded during search of the appellant.
Ground No.22 AY 1996-97 Rs.4,00,000 Through the counter comments dated 29.9.2009 furnished during the course of appellate proceedings it was argued that the addition was unjustified because addition of Rs.2,09,00,000 had been made in the hands of the appellant for investment in land, that there were other co-owners, that this amount has been added in the block assessment order of late Shri Kantibhai Patel, that affidavit of Kantibhai had been furnished at the time of original block assessment and that no addition u/s.69 could be made because proviso to section 69 came into effect from AY 1999-2000 while the payment was made earlier.
After going through rival submissions it is seen that in the block assessment order dated 26.12.2008 passed in the case of Shri Kantibhai Patel through his legal heir Shri Harshad K Patel the addition of Rs.4,00,000 had been made, but the notings on page 57 show two payments i.e. of rs.3,00,000 on 27.7.1995 and Rs. 1,00,000 on 27.12.1995 which are with respect to Hill station land as obvious from the answer given by the appellant in response to Q.No.28 in the statement recorded on 21.1.1997. Therefore the ld.AR's contention that Rs.2,09,00,000 has been added is not tenable because it is with respect to land at Vastral and not with respect to the Hill station land. Therefore this addition is confirmed as the source has not been properly explained by the appellant though the payment has been conceded during search statement."
36. We come to assessee's search statement deposing the impugned payment for hill station land has given to Shri Kantibhai which is to be taken as correct u/s.132 (4) r.w.s. 292C of the Act. We thus agree to assessee's submission that Section 69C proviso inserted by the Finance Act, 1998 w.e.f. 01.04.1999 stipulating disallowance of such an unexplained expenditure deemed to be income would not be retrospectively applicable in the impugned assessment year 1996-97. We accordingly accept assessee's instant alternative plea and direct the Assessing Officer to delete the impugned addition.
M/s. Shyam Groups - 37 -
37. Assessee's next substantive ground challenges both the lower authorities' action adding unexplained cash of Rs.2.5lacs seized in the course of search in assessment year 1997-98. Mr. Thakkar states that the assessee has already offered the same in his cash flow statement filed before the Settlement Commission which was unrebutted from the Revenue's side. We therefore delete the impugned addition on this score alone since the very amount stands offered in assessee's settlement petition.
38. The assessee's fourteenth and last substantive ground poses challenge to both the lower authorities' action in adding five heads of unexplained expenditure / payments of Rs.50,000/-, Rs.2,08,637/-, Rs.2lacs, Rs.8lacs and Rs.50,000/- (supra). Mr. Thakkar is very fair again in not pressing for the above two additions of Rs.50,000/- each keeping in mind smallness of the amounts involved. We therefore uphold the same.
39. We now advert to the remaining first head of Rs.2,08,637/- pertaining to payment for jewellery out of money received from Shri Arvindbhai. We find no reason to interfere with the learned CIT(A)'s conclusion that there is no evidence indicating such a transaction. This addition amount is accordingly confirmed.
40. We now come to remaining two additions of Rs.2 lacs and Rs.8lacs; respectively confirmed in the CIT(A)'s order reading as under:
Ground No.39 as 1997-98 Rs.2,00,000 Vide counter comments it per para 25.4(g) was explained as payment of brokerage to Shri Kantibhai from money received from Shri Arvindbhai.
After going through rival
submissions the addition
is confirmed because in the
M/s. Shyam Groups - 38 -
block assessment order this
brokerage was explained as
paid to Shri one Shri
Surjitsingh Pritsingh Palwa
for land whereas at
remand report stage the
payment is informed to Shri
Kantibhai. I am of the view
that the payment might have
been made to any person
but the source should have
been properly explained
which has not been done,
therefore the addition is
confirmed.
Ground No.39 as 1997-98 Rs.8,00,000 In the counter comments
per para 25.4(h) dated 29.9.2009 it has been
stated that the ld.AR relies
on comments in column 21
above of the counter
comments, but in this
column comments are with
respect to Rs.4,00,000
addition made by the AO
as interest amount paid to
Shri Kantibhai. After going
through rival submissions
the addition is confirmed
because Kantibhai was
involved in brokerage (as
clear from the block
assessment order passed in
his case dated 26.12.2008)
and brokerage amount
would have been paid by the
appellant to him, therefore
this addition is confirmed.
41. We notice herein as well that the Assessing Officer in
payee/Kantibhai's assessment order at page 279 (supra) has already assessed him qua an amount of Rs.1.8lacs instead of Rs.2lacs and Rs.8lacs; respectively. We therefore restrict the impugned additions to the extent of the remaining sum of Rs.20,000/- only in order to avoid double addition.
M/s. Shyam Groups - 39 -
This substantive ground partly succeeds. So is the outcome of assessee's appeal IT(SS)A No.325/Ahd/2010.
42. We now come to Revenue's cross appeal. Its remaining fourth substantive ground pleads that the CIT(A) has erred in reversing Assessing Officer's findings making addition of cash payment of Rs.16lacs. to Shri Kanitbhhai in assessment year 1997-98. Mr. Takes us to page 272 of the paper book indicating the very sum to have been assessed in Shri Kantibhai's hands. We therefore see no reason to interfere with the CIT(A)'s conclusion deleting the impugned addition.
43. The Revenue's fifth substantive ground is that the CIT(A) has erred in deleting cash payment addition of Rs.13lacs made to Shri Kantibhai. The Assessing Officer had made the impugned addition in respect of Nava Naroda land. Learned CIT(A) observes that the same would amount to double taxation as the entire investment made already stood added in assessee's hands pertaining to the very land. This crucial finding already stands dealt with in assessee's appeal hereinabove. Learned Departmental Representative fails to dispute this factual position. This Revenue's substantive ground is declined accordingly.
44. The Revenue's sixth substantive ground raises the issue of undisclosed investment of Rs.59,64,993/- made in Naroda lands which already stands decided/partly accepted in assessee's corresponding ground no.5. We follow the very discussion herein as well to decline the instant substantive ground.
45. The Revenue's seventh substantive ground raised the issue of unexplained investment addition of Rs.19,20,700/- pertaining to Mahadevnagar's land which the CIT(A) has restricted to only 25% in M/s. Shyam Groups - 40 -
assessee's hands to the extent of Rs.4,80,175/-. There is no dispute that we have already upheld the CIT(A)'s action in assessee's seventh substantive ground. This Revenue's ground is declined accordingly.
46. The Revenue's eighth substantive ground seeks to revive unexplained investment addition of Rs.4,58,04,335/- as made by the Assessing Officer on the basis of assessee's search statement and loose papers which we have already deleted in assessee's substantive ground no.10. The instant ground is accordingly rejected.
47. The Revenue's ninth substantive ground pleads that the CIT(A) has wrongly deleted protective addition of Rs.63,34,924/- in the nature of unexplained cash given to Shri Arvindbhai Patel in assessment year 1994-95. The assessee takes us to para 42 page 28 of the CIT(A)'s order to this effect referring to Shri Arvindbhai search statement that he had in fact given the money to Shri Bhagwanbhai / assessee. It has already come on record that the Assessing Officer has made a substantive addition in said assessee's hands. We thus find no reason to interfere with the CIT(A)'s order deleting the instant protective addition.
48. The Revenue's tenth substantive ground seeks to revive unexplained expenditure/payment addition of Rs.25,001/- in assessment year 1994-95 pertaining to flat booking at A/4, Kunj Apartment in assessment year 1994-
95. The Assessing Officer made the impugned addition whereas the CIT(A) has deleted the same. It has come on record that one Shri Dhirubhai has appeared to file a confirmation regarding the impugned flat booking right from block assessment as well as in Settlement Commission. The relevant record is at page 448 to 450 which has not been rebutted at Revenue's instance. We therefore uphold the CIT(A)'s findings under challenge.
M/s. Shyam Groups - 41 -
49. The Revenue's eleventh substantive ground challenges the lower appellate's findings deleting addition of Rs.31,000/- in assessment year 1995- 96 on account of unexplained expenditure/payment to Shri Pravinbhai and Shri Dhirubhai. The CIT(A) observes on the basis of case records that both these persons have confirmed their signatures on the loose papers found in the course of search indicating the two amounts of Rs.9000/- and Rs.22000/- respectively. Learned Departmental Representative is unable to dispute correctness thereof in the course of hearing. We therefore reject the instant substantive ground.
50. The Revenue's twelfth substantive ground seeks to revive unexplained expenditure / payment addition of Rs.2,41,753/- as made by the Assessing Officer and deleted in lower appellate proceedings as pertaining to assessment year 1995-96. The Assessing Officer had treated noting on diary A-8 pages 5 & 6 to make the impugned addition after concluding that the amount in question was used for purchase of tractor. The CIT(A) observes that assessee's share of withdrawals worked out of Rs.20,62,368/- from Shyam Group firm is sufficient to cover the impugned amount. These facts and figures have not been controverted in the course of hearing. We therefore reject the Revenue's instant substantive ground as well.
51. The Revenue's thirteenth substantive ground challenges the CIT(A)'s order deleting addition of Rs.5lacs in respect of unexplained investments in FDRs. in assessment year 1996-97 as made by the Assessing Officer in the impugned block assessment. Learned CIT(A) observes that the Assessing Officer had made the impugned addition on protective basis whereas his share of withdrawals from the two firms M/s. Shyam Organisers and Shyam Construction Co. which have been assessed; has been much more than the impugned sum. We afforded sufficient opportunity to learned Departmental M/s. Shyam Groups - 42 -
Representative to controvert these crucial findings. He however fails to rebut correctness thereof. We thus conclude that the CIT(A) has rightly deleted the impugned protective addition.
52. The Revenue's fourteenth substantive ground pleads that the CIT(A) has erred in reversing Assessing Officer's action making addition of Rs.2,07,20,284/- in assessment year 1997-98 on account of cash received from various persons i.e. Shri Dilipbhai D Suratwala, Dr. Pipalia, S/Shri Bachchubhai, Bhikhubhai, Mannubhai and Bachchubhai K Bricswala involving respective sums of Rs.19lacs, Rs.94,62,600/-, Rs.22,74,162/-, Rs.27,44,772/-, Rs.20,53,125/- and Rs.22,55,625/-. The Assessing Officer referred to Chart A-5 as well as other seized document for making the impugned additions. The CIT(A) reverses the same after detailed discussions as under:
Ground & Para AY Basis of addition Remarks
No. of Asstt.order
Ground No. 36 as AY 1997-98 Rs. 19,00,000 Vide counter
per para 23.3(a) as cash received Comments dated
of AO's order from Dilipbhai 29.9.2009 it was
Devranbhai stated that this very
Suratwala as per land of 72,000
page 5 of diary - sq.yds. has been
A-5 seized from accepted by the
the appellant's Assessing Officer
residence, because as Umiya Farm
he wanted to enter land in the block
as a partner order and
in purchase of appellant's
land at Umiya investment in the
Farm. same of Rs.1,
01,00,000 has been
taxed in the
hands of the
appellant. It has
also been argue
that address etc.of
this person was
given at the time of
M/s. Shyam Groups - 43 -
original block
assessment
proceedings but no
cross verifications
were made from
him, and the
addition was made
ignoring the
contentions of the
appellant that deal
did not
materialize. After
going through
rival submissions
the AO is directed
to delete the
addition as the
aforementioned
contention of the
appellant is
factually correct,
investment in
Umiya Farm land
has been taxed
in the hands of
the appellant in the
block assessment
order of
Rs.1,01,00,000 and
has been
considered in this
order.
Ground No. 36 as Rs.94,62,600 from Vide counter
per para 23.3(b) Dr. Pipalia as per comments dated
of AO's order A-5 mentioned 29.09.2009 it was
above who was stated that the
interested in loose paper on the
purchase of land basis of which
at Vastral addition has been
made mentions
"Accounts of
doctors". The AO
treated this as
income of the
appellant because
confirmation from
Dr. Pipalia was not
furnished, also the
proof that this
M/s. Shyam Groups - 44 -
amount was
actually returned
back to the doctor.
It was argued that
the appellant did
not sell any land or
derived any profit
from a trading
transaction, that
the appellant had
furnished the
identity, telephone
number and
detailed address of
this person during
statement at
search. That the
addition has been
made without any
cross verifications
on the part of the
Department. After
going through rival
submissions I find
that the appellant's
investment in
Vastral land has
been added of
Rs.2,09,00,000 by
the AO and has
been considered in
this order,
therefore this
addition of
Rs.94,62,600 is
directed to be
deleted because it
is not well
substantiated.
Ground No. 36 as -do- Rs.22,74,162 from Vide counter
per para 23.3(c) Shri Bachubhai for comments dated
of AO's order 25% share in 29.9.2009 it was
Vastral land as per stated that there
loose paper file A- were multiple
1. additions made of
the same
transactions by the
AO. After
considering the
arguments given in
M/s. Shyam Groups - 45 -
the counter
comments by the
ld.AR the AO is
directed to delete
the addition
because investment
in Vastral land at
Rs.2,09,00,000 has
been added in the
block assessment
order and has been
considered in this
order.
Ground No. 36 as -do- Rs.27,74,772 from Vide counter
per para 23.3(d) Shri Bhikubhai for comments dated
of AO's order 25% share in 29.9.2009 it was
Karnavati land as stated that there
per loose paper were multiple
file A-1. additions made of
the same
transactions by the
AO. After
considering the
arguments given in
the counter
comments by the
ld.AR the AO is
directed to delete
the addition
because investment
in 42000 sq.yd. of
land identified as
Nava Naroda land
(explanined also
known as
Karnavati land) of
Rs.1,49,27,709 was
added in the block
assessment order
as unexplained
investment of the
appellant. And this
addition has been
considered in this
order, therefore the
addition here is not
warranted.
Ground No. 36 as -do- Rs.20,53,125 from Vide counter
per para 23.3(e) Shri Manubhai G. comments dated
of AO's order Patel for 29.9.2009 it was
M/s. Shyam Groups - 46 -
partnership for stated that there
purchase of Umiya were multiple
Farm land as per additions made of
diary A-2/10 the same
seized from office. transactions by the
AO. After
considering rival
submissions the AO
is directed to delete
the addition
because investment
in 42000 sq.yd. of
land identified as
Nava Naroda land
(explanined also
known as
Karnavati land) of
Rs.1,49,27,709 was
added in the block
assessment order
as unexplained
investment of the
appellant. And this
addition has been
considered in this
order, therefore the
addition here is not
warranted.
Ground No. 36 as -do- Rs.22,55,625 from Vide counter
per para 23.3(f) Shri Bachubhai comments dated
of AO's order Kailash Brickwala 29.9.2009 it was
for investment of stated that there
his share in Umiya were multiple
Farm land as per additions made of
diary A-2/10 the same
seized from office. transactions by the
AO. After
considering the
arguments given in
the counter
comments by the
ld.AR the AO is
directed to delete
the addition
because investment
in 40000 sq.yd. of
Umiya Farm land
of Rs.1,01,00,000
was added in the
block assessment
M/s. Shyam Groups - 47 -
order as
unexplained
investment of the
appellant. And this
addition has been
considered in this
order, therefore the
addition here is not
warranted.
53. A perusal of the above extracted findings indicate that all this amount pertain to assessee's investments in various lands situated at Vastral, Umiya Farms, Nava Naroda etc. which have been already assessed forming subject matter of adjudication in preceding paragraph. We therefore conclude that the CIT(A) has rightly treated the impugned addition to be a case of double taxation of the very amount. We find no reason to interfere in his above extracted conclusion.
54. Revenue's fifteenth and sixteenth substantive grounds seek to revive unaccounted cash payment addition of Rs.45,93,516/- and Rs.75,34,840/- made to Shri Kantibhai and Ashwinbhai in assessment year 1997-98. We notice that the CIT(A)'s order deleting the impugned addition discusses assessment finding and assessee's contentions against the same as follows:
"54. Addition on account of cash payment of Rs.45,03,516 in AY 1997-98 and also of Rs.75,34,840 in AY 1997-98 Ground No.37(Cash paid) AY 1997-98 Rs.45,93,516 Ground No.38(Cash paid AY 1997-98 Rs.75,34,840 This addition has been made as per para 24 of the block assessment order. The AO has noted that as per page No.1 of Diary A-4 the appellant paid Rs.45,93,516 to Shri Kantibhai and as per page No.4 of Diary A-5 the appellant paid Rs.75,34,840 to Shri Ashwin Bababhai. The explanation that this payment was made to Shri Kantibhai for land at Karnavati for handing over the amount to the land owner and that to Shri Ashwinbhai because he was a partner in the land at Vastral was not found fully explained / proved by the AO.
M/s. Shyam Groups - 48 -
Vide counter comments dated 29.9.2009 it was stated that Rs.45,93,516 has been added in the hands of late Shri Kantibhai vide order dated 26.12.2008 passed in the case of his legal heir Shri Harshad K Patel.
55. After going through rival submissions in my view the addition of this amount is not justified in the hands of Shri Kantibhai because the appellant himself has accepted during search that this amount was paid to Kantibhai in cash by him for this land, but it is seen that Rs.1,49,27,709 as investment in Nava Naroda land has been added in the case of the appellant and has been considered in para 23 above of this order, now payment of Rs.45,93,516 would amount to duplication of addition as argued by the ld.AR. The AO is directed to delete the addition.
56. Vide counter comments dated 29.9.2009 it was argued that the entire land investment in Vastral land has been treated as UDI of the appellant individual despite the fact that there were various co-owners, and that this amounts to multiple addition on the same land. This contention of the appellant is in order. Investment in Vastral land of Rs.2,09,00,000 has been added in the block assessment order and has been considered in para 6 above of this order, therefore a separate addition of Rs.75,34,840 is not warranted. The AO is directed to delete the same."
55. We afforded ample opportunity to learned Departmental Representative to controvert the above extracted findings regarding both these heads that the same pertain to Nava Naroda and Vastral lands already forming subject matter of addition as adjudicated in assessee's appeal hereinabove. The Revenue fails to dispute correctness thereof. We accordingly confirm the CIT(A)'s findings qua both these grounds raised at Revenue's behest. Its cross appeal IT(SS)A No.465/Ahd/2010 is partly accepted.
56. We now proceed to deal with the other assessee Shri Arvindbhai's cases involving IT(SS)A No. 326 & 466 (Revenue's cross appeal)/Ahd/2010. We notice that this assessee raises eight substantive grounds. His first substantive ground challenges both the lower authorities' action making unexplained investment additions of Rs.1.52lacs and Rs.1.12lacs in assessment years 1987-88 and 1988-89; respectively made in land bearing Survey no. 268A and 268B at Nikol. Mr. Thakkar states very fairly that the M/s. Shyam Groups - 49 -
assessee does not wish to press for the instant substantive ground keeping in mind smallness of the amount involved. He reiterates assessee's very stand for second substantive ground challenging similar additions in assessment years 1990-91 to 1992-93, 1996-97 to 1997-98 amounting to Rs.4lacs, Rs.2.2lacs, Rs.50,000/-, Rs.66,666/- and Rs.1,11,038/-; respectively. These first two substantive grounds are accordingly dismissed as not pressed.
57. Assessee's third substantive ground pleads that both the lower authorities have erred in adding unexplained capital contribution in firms of Rs.3.5lacs, Rs.7.25lacs, Rs.2lacs and Rs.63,34,924/- in assessment years 1989-90 to 1991-92 and 1994-95; respectively totaling to Rs.76,09,924/-. The CIT(A)'s findings under challenge discuss the issue as follows:
"8. Addition of Unexplained Capital Contribution in firms The relevant discussion has been made in para 6 of the block assessment order. The AO has stated that as per the statement recorded during search the appellant had made contribution to the capital of the firms which have been utilized for making of the payment of the lands belonging to the firms. This has been disputed in the following Grounds of appeal.
Ground No.5 AY 1989-90 Rs.3,50,000
Ground No. 7 AY 1990-91 Rs.7,25,000
Ground No. 9 AY 1991 -92 Rs.2,00,000
Ground No. 13 AY 1994-95 Rs.63,34,924
Vide counter comments dated 14.2,2010 it has been stated that the AO has placed blind reliance on the statement recorded during search and has completely ignored the fact that the land investments were made by the firms and that the alleged investment in lands have been treated as UDI before Settlement Commission in the hands of various firm operating in the Group. After going through rival submissions I am of the view that the above reply is a general reply. It has not been specified how much amount has been offered before Settlement Commission as UDI on account of land investment by which firm in which the appellant is a partner. Rather the Statement of facts of Shyam Construction Company shows no UDI has been offered on account of land investment. The Statement of facts of Shyam Corporation shows that out of Undisclosed income offered an amount of Rs.35,02,778 has been taken as deduction for land purchase in the Income offered before Settlement Commission. In the Statement of facts of Shyam Organisers Rs.33,22,850 has been offered for M/s. Shyam Groups - 50 -
tax on purchase of land, but it has been specified that the land was for the scheme Shyam Park. Interestingly in the Statement of facts submitted to Hon'ble Settlement Commission, Mumbai and admitted there in the case of the firm Shyam Organisers a total deduction of Rs. 1,24,97,975 has been taken as Amount paid for land purchase.
Note: The Statement of facts filed before Hon'ble ITSC Mumbai in Shyam Group of cases listed below are enclosed as Annxure-1 of this order:
i) Shri Bhagwanbhai Khodabhai Patel
ii) Shri Arvindbhai Pragjibhai Patel
iii) Shyam Construction Company
iv) Shyam Developers
v) Shyam Corporation
vii) Shyam Organisers Thus the argument that amount on land investment has been offered before Settlement Commission is not correct, rather the firms where appellant is a partner have taken deduction of land investments from the UDI offered. And in the block assessment orders of the firms passed by the AO in December 2007 after the cases were abated back to the AO by the Settlement Commission the Income declared before Settlement Commission has been brought to tax, thus giving land deduction to the firms.
This has been confirmed vide appellate orders passed in the cases of the firms of by this office in 2009.
Therefore the addition made by the AO on account of capital contribution in firms summarized in the table above in this para is confirmed because investment in land has been sought as deduction from UDI declared before Settlement Commission as clear from SOFs of firms enclosed as Annexure 1 of this order. It is incorrect on the part of the appellant to say that it has been offered as UDI before Settlement Commission. It is also important to remember that in the SOF before Settlement Commission the appellant himself-; (SOF of the appellant part of Annexure 1 of this order) the appellant has offered Rs Rs.3,15,984 + Rs.3,25,000 as unexplained investment in Vastral land and Rs.4,61,094 for Umiya Farm land. This also justifies that there was unexplained capital contribution in the firms by the appellant, therefore the addition summarized in the table above is upheld, and the UDI on account of land investments declared by the appellant before Settlement Commission is telescoped in the addition made above".
58. We have heard rival submissions and perused assessee's search statement in paper book page 182, fund flow statement, additional submissions made before the lower appellate authority and contents of Assessing Officer's remand report at page 381 pertinent to the issue in hand. There does not appear to be any dispute about assessee's search statement about the sums in question. We have already discussed the issue at length M/s. Shyam Groups - 51 -
about such an admission in Bhagwanbhai's case adjudicated in preceding paragraph in view of CBDT's circular and hon'ble jurisdictional high court's decision. It flows therefrom that there has to be some evidence forming foundation of an addition in view of such a search statement. It is evident that there is no such effort on both the lower authorities' part before arriving at the impugned conclusion holding the assessee to have contributed the impugned seed capital in group firms for land purchases. We reiterate that there are multiple such firms as indicated in beginning of instant order. We opine in this peculiar factual backdrop that the Revenue does not have a case in support of the impugned addition either way i.e. if it is assumed that the assessee had contributed to any of the group entity's seed capital, then there has to be some material about identity of the said firm alongwith proof of land investment. We observe in facts of the instant case that all the groups' firms (supra) already stand assessed before the Settlement Commission and their cases have also been reached up to this tribunal. We afforded ample opportunity to learned Departmental Representative to take us to any of the group to pinpoint the impugned seed capital at a slighter pretext. He failed to indicate any such material. We therefore hold that the lower authorities have erred in making the impugned seed capital investment addition. Learned Departmental Representative then pointed out that the assessee can be presume to have utilized the relevant sums in other evidence. We find no force in this alternative plea as well since that would amount to improvement of the lower authorities' orders adding the impugned sum as seed capital only instead of the same being utilized anywhere else. We therefore accept assessee's instant substantive ground.
59. Assessee's fourth substantive ground challenges correctness of unexplained investment addition /profit on sale of Rs.29,82,497/- in Naroda land "to be corrected as Kathwada land" as made by both the lower M/s. Shyam Groups - 52 -
authorities. Mr. Thakkar informs us that the assessee has already admitted additional income of Rs.28lacs before Settlement Commission and therefore, the income left behind is of Rs.1,82,497/- only to be granted set off benefit in case of various accounts as done in first assessee Shri Bhagvanbhai's case. Learned Departmental Representative fails to dispute this factual position. We therefore restrict the impugned addition to the extent of Rs.1,82,497/- only since the assessee has already offered a sum of Rs.28lacs in his settlement petition. The remaining amount is directed to be eligible for set off in various accounts. This substantive ground is partly accepted.
60. The assessee's fifth substantive ground pleads that both the lower authorities have erred in making addition of Rs.23lacs for unexplained investment and expenditure in house u/s.69 r.w.s.158BB(2) of the Act. Mr. Thakkar thereafter refers to assessee's sixth substantive ground in the nature of a consequential plea that the Assessing Officer as well as CIT(A) have ignored the fact that the relevant withdrawal have already been taxed separately in the hands of group firms.
61. We have heard both the parties strongly supporting their respective pleadings against and in support of the impugned addition. It is evident that the assessee's residential house is named "Mayur Park". Mr. Thakkar takes us to page 16 of the paper book indicating assessee's withdrawals of Rs.70.42lacs offered to tax by the Shyam Group firms before the Settlement Commission. It has already come on record that all the group firms stand assessed qua the same. We therefore conclude on the basis of assessee's duplicate books prepared forming basis of his settlement petition clearly indicating the very residential property and withdrawals therein to conclude that re-assessment of the very amount in the impugned block assessment in M/s. Shyam Groups - 53 -
addition to that already declared would amount to double addition. We therefore accept assessee's substantive ground on this score alone.
62. Assessee's seventh substantive ground challenges correctness of addition of Rs.30,000/- for alleged unexplained cash in assessment year 1997-98 as made by both the lower authorities. Mr. Thakkar is once again very fair in not pressing the instant ground keeping in mind smallness of the amount involved. This ground is accordingly declined as not pressed.
63. Mr. Thakkar lastly takes us to assessee's eighth substantive ground challenging the Assessing Officer as well CIT(A)'s action in not granting basic exemption and deductions under chapter VI of the Act in assessment years 1987-88 to 1989-90. He once again clarifies that the assessee nor more wishes to press the same. We therefore decline the instant substantive ground as well as not pressed. This appeal IT(SS)A No. 326/Ahd/2010 is partly accepted.
64. The Revenue's cross appeal IT(SS)A No.466/Ahd/2010 raises ten substantive grounds. Its first substantive ground seeks to revive protective addition of Rs.24,000/- made by the Assessing Officer in respect of unexplained investment in Balapur land. We find that we have already upheld substantive addition in Bhagvanbhai's case hereinabove raising fourth substantive ground with regard to the very land. This substantive ground is accordingly rejected.
65. The Revenue's second substantive ground pleads that the CIT(A) has erred in deleting protective addition of unexplained investment of Rs.9,60,350/- made by the Assessing Officer as pertaining to Mahadevnagar lands. Learned CIT(A) concludes in page 10 para 11 that the assessee M/s. Shyam Groups - 54 -
Arvindbhai is not a vendee with respect to the agreement in question involving four parties paying advance amount of Rs.19,20,700/-. Mr. Thakkar points out that we have already confirmed substantive addition in ground no.7 raised in Bhagwanbhai's case decided in preceding paras. We therefore see no reason to interfere with the CIT(A)'s action under challenge deleting the impugned protective addition.
66. The Revenue's third substantive ground seeks to revive unexplained profit on sale of Mahadevnagar lands of Rs.1,22,500/- as made in the course of assessment and deleted in lower appellate proceedings. We notice herein as well that we have already confirmed substantive addition under the very head in substantive ground no.8 in Bhagwanbhai's case in preceding paragraphs. The CIT(A)'s findings under challenge are accordingly confirmed so as to avoid double addition of very amount.
67. We proceed further to notice that Revenue's fourth to eighth substantive ground seek to revive protective additions of unexplained investments of Rs.50.50lacs made in Umiya Firm in assessment year 1996- 97, addition of Rs.1,04,50,000/- pertaining to Vastral land followed by profit of Rs.16.51lacs on relinquishment of share, unexplained investment of Rs.74,63,855/- pertaining to Nava Naroda Land, investment of Rs.11.32lacs made in Dhansura land and Rs.1lac invested in purchase of Guntha land; respectively as made by the Assessing Officer and deleted in lower appellate proceedings. Mr. Thakkar first of all submits that the CIT(A) has rightly held all these protective additions as a case of double taxation since the same have been substantively added in Shri Bhagwanbhai Patel's case as adjudicated in preceding paragraphs. He thereafter points out that the assessee Arvindbhai has also offered 50% of the addition amounts pertaining to fourth and fifth substantive ground in his Settlement Commission's petition. He then comes M/s. Shyam Groups - 55 -
to Nava Naroda land addition to indicate that the very amount stands verify and accepted by the departmental authorities in Settlement Commission followed by its substantive assessment in Bhagwanbhai's hands. The Revenue is fair enough in not rebutting correctness of all these assertions as well as CIT(A)'s findings under challenge. We therefore reject all these substantive grounds pertaining to the corresponding protective additions.
68. The Revenue's ninth substantive ground pleads to restore Assessing Officer's action adding a sum of Rs.3.25lacs on account of unexplained household expenditure and personal investments as made on estimation basis. We reiterate our discussion with respect to Shri Bhagwanbhai's substantive ground no.11 adjudicated hereinabove that such an estimation without any specific evidence is not to be resorted in a block assessment's case. The instant substantive ground is accordingly declined.
69. The Revenue's last substantive ground challenges the CIT(A)'s order reversing Assessing Officer 's action making addition of Rs.1lac on account of unexplained investment in valuables. The Assessing Officer made the impugned addition pertaining to various households items such as clour TV, Air conditioner, washing machine, vacuum cleaner, motorcycle etc. The CIT(A) concludes that these valuables can be held to be from firms withdrawal which have already been assessed in their hands. Learned Departmental Representative is unable to rebut correctness thereof by taking us to the said firm's assessment orders. We therefore uphold learned CIT(A)'s findings under challenge. The Revenue's instant substantive ground as well as main appeal IT(SS)A No.466/Ahd/2010 fail.
70. Next come four cases pertaining to the third assessee Shri Kalyanbhai Patel. This assessee and Revenue institute quantum cross appeals IT(SS)A M/s. Shyam Groups - 56 -
No. 76/Ahd/2009 & 67/Ahd/2010; respectively followed by latter's penalty appeal IT(SS)A No. 34/Ahd/2013 & former's cross objection therein CO No. 45/Ahd/2013.
71. A perusal of the above quantum cross appeals reveals that many of the grounds raised therein are interconnected. The assessee's first substantive ground challenges correctness of unexplained investment addition in Nikol land in assessment years 1990-91 to 1992-93, 1996-97 & from 01.04.1996 to 21.01.1997 involving sums of Rs.4lacs, Rs.2.28lacs, Rs.50,000/-, Rs.66,666/- and Rs.1,11,038/- whereas Revenue's second substantive ground seeks to reverse CIT(A)'s findings deleting unexplained investment addition in the very lands amounting to Rs.8,54,704/-. Mr. Thakkar states very fairly that the assessee is not interested in prosecuting the instant substantive ground which stands on identical footing to substantive ground no.2 raised in Arvindbhai's appeal hereinabove. We then find in Revenue's grievance that the CIT(A)'s records a categoric finding that the impugned sum of Rs.8.4lacs already stands offered before the Settlement Commission and the Assessing Officer has made the double addition therefore. We thus find no merit in either of the two grounds. The same are rejected.
72. The assessee's second substantive ground poses challenge to unexplained investment addition of Rs.17,32,757/- confirmed in the lower appellate proceedings in respect of Odhav land in assessment year 1996-97 whereas the Revenue seeks to restore the very unexplained investments of Rs.76,000/-, Rs.22.74lacs and Rs.5,41,243/- in assessment years 1995-96 to 1997-98; respectively in its third substantive ground. The CIT(A) discusses the issue in detail as under:
"11. Unexplained investment in land at Odhav M/s. Shyam Groups - 57 -
This addition has been discussed in para 5 of the block assessment order dated 28.1.1999. The addition has been made on the basis of banakhat dated 31.12.94 found and seized from the residence of the appellant, pertaining to purchase of 1,12,500 sq.yards of land at the rate of Rs.60 thus total consideration has been worked out to Rs 67,50,000. The schedule of payments is also mentioned in the banakhat. Till the date of search an amount of Rs 38,51,000 had been paid for this land on different dates mentioned in para 5.8 of the assessment order, Rs 6,83,889 could be explained by the appellant to have been withdrawn from the firm - M/s Shyam Builders - in which appellant is a partner, AO added the balance amount of Rs 31,67,191 as unexplained investment u/s 69C .
The table from the block assessment order in which a column of Grounds has been added is reproduced below:
"Date Schedule as Amount debited in Unexplained Ground of per banakhat Duplicate book Investment appeal Amount Rs. (Amount Rs.) (Amount Rs.) 31.12.94 1,51,000 75,000 76,000 Ground No. 9 Addition of Rs. 76,000 in AY 1995-96.
30.5.95 10,00,000 76,000 9,24,000 Ground No. 12
addition of
Rs.22,74,000 in
AY.96-97.
31.8.95 4,50,000 - 4,50,000
30.11.95 4,50,000 - 4,50,000
28.2.96 4,50,000 - 4,50,000
31.5.96 4,50,000 4,43,574 6,426
(on 12. 6.96 &
18.6.96)
31.8.96 4,50,000 89,235 3,60,765 Ground No. 17
Addition of
Rs.8,17,191 in
AY. 97-98
30.11.96 4,50,000 - 4,50,000
Total 38,51,000 6,83,809 31,67,191
12. During the course of appellate proceedings vide written submission dated 2.7.2009 a very interesting story was told that son of the appellant Shri Jaswantlal K. Patel had entered into an agreement for the purchase of land with the original owners of he land one Jadhav family, and Shri Bhikubhai Patel ( brother-in-law of the appellant) had entered into an agreement with the tillers of the land - Jayarambhai Chunara , payments had been made to the owners of land and that M/s. Shyam Groups - 58 -
the AO has erroneously drawn a conclusion that son of the appellant had entered into an agreement with the tiller (Jayarambhai Chunara ), It was stated that on account of dispute of land between the owners and tiller Nuclear title has not been obtained and the matter is pending with High Court. It has been stated that that the banakhat does not bear name or signatures of the appellant, that the addition had been made relying on the statement of one Bhikhubhai. V. Patel only, though later through an affidavit he has stated that the appellant had nothing to do with the land deal, that the remand report of the AO reiterates what has been stated in the block assessment order. It was also argued that No.II funds from Shyam Builders in which appellant is the partner were utilized for purchase of this land and these funds had been declared before Settlement Commission.
13. After going through material on record following points emerge:
(a) During the course of original block assessment proceedings the appellant not just confirmed through reply dated 21.1.99 that the seized banakhat pertained to Odhav land but explained the source of payments made for purchase of this land to the extent of Rs 6,83,809, now after 10 years during the course of present appellate proceedings he is trying his best to show that he is not in any way involved in the land deal. The so called affidavit of Bhikubhai has not been furnished in original neither a certified copy, same is the case with the so called affidavits of the owners of land. And therefore the story that Kalyanbhai has nothing to do with land is not established, Jaswant is his son and Bhikubhai is brother-in-law of Jaswantbhai.
(b) On one hand the appellant is stating that the land is disputed. The dispute being between the owners and tiller of land - tiller being Jayaram Chunara
- while on the other hand appellant is submitting xerox copies of affidavits of owners of land stating that they sold the land to Jaswantbhai Patel - son of the appellant and received the stated amounts on various dates. Thus trying to establish that Bhikubhai entered into an agreement with the tiller of land - Jayaram Chunara while the son of the appellant with the owners of land.
(c) However during hearing dated 26.11.2009 the Id.AR argued that funds for investment in Odhav land were obtained from the No.II books of Shyam Builders, and vide written submission stated that the disclosure made by the firm (Shyam Builders) before Settlement Commission covers the investments of which additions were made by the AO. Vide written submission dated 26.11.2009 following table was given in support of the argument:
A.Y Income Disclosure by Investment made in Land M/s Shyam Builders 1995-1996 2,00,975 Investment in land at Odhav Rs.78,000/-
M/s. Shyam Groups - 59 -
1996-1997 27,06,214 Investment in land at
Odhav Rs,22,74,000/-.
Investment in land at Raipur-
DehgamRs.1, 36,9997-
01-04-1996 to 50,56,433 Investment in land at
21-01-1997 Odhav Rs.8,17,191/-
It was also stated in the written submission that the disclosure made by the firm was at a higher amount than the investment made in the land and since there is a direct link between the two the benefit of telescoping should be granted to the appellant.
14. After going through rival submissions it is seen that direct link of any dates and withdrawals from No.II books of Shyam Builders could not be established either at the assessment or at the appellate stage, however in the interest of justice I am of the view that this is a fact that before Hon'ble Settlement Commission disclosure has been made in the Statement of Facts by the firm Shyam Builders on account of No. II profits earned. The Statement of Facts is enclosed as Annexure-2 of this order. This is also a fact that Kalyanbhai is a partner in the firm and No investment in lands would have been made from No.II profits only, but |n the firm Shyam Builders Kalyanbhai is not the only partner, this firm has four partners:
1. Patel Jaswantbhai Kalyanbhai- 35%
2. Patel Kalyanbhai Khodabhai 20%
3. Patel Girishbhai Kalyanbhai 30%
4. Patel Natnaben Jawantbhai 15% and the benefit of telescoping cannot be the monopoly of one partner ( only, therefore in the interest of justice Kalyanbhai can be given set off of Income disclosed by the firm Shyam Builders before Settlement Commission to the extent of 20% of the disclosure because he is partner in the ratio of 20% in the firm Shyam Builders. By this logic the AO is directed to delete the addition made with respect to Odhav land in AY 1995-96 and in the broken period because it is less than 20% amount which comes in Kalyanbhai's share from the disclosure in Shyam Builders reproduced in para 13 above. However disclosure by Shyam Builders in AY 1996-97 is of Rs. 27, 06, 214, 20% of which comes to Rs. 5,41 ,243 whereas the addition has been made of Rs. 22,74,000 by the AO, the AO is directed to delete Rs. 5,41 ,243 out of this addition made in AY 1996-97, the addition of balance amount of Rs. 17,32,757 (Rs.22,74,000 - Rs.5,41,243) is upheld".
73. Heard both parties. Relevant case record perused. We do not find any merit in assessee's first argument that he had no connection whatsoever with the land in question as established in the CIT(A)'s findings extracted in preceding paragraph. Mr. Thakkar then submits that the lower appellate M/s. Shyam Groups - 60 -
authority has erred in granting credit of only 20% in case of the firm M/s. Shyam Builders instead of 100%. We find this alternative plea to be acceptable since the lower authority particularly the CIT(A) has nowhere rebutted assessee's contention seeking 100% credit of the said entity to the tune of Rs.27,06,214/- turning out to be more than the investment in question of Rs.22.74lacs. Neither the Assessing Officer nor the CIT(A) observe or record a finding that the assessee's partners in the above firm having anywhere succeeded in claiming their respective shares. We conclude in these peculiar circumstances that the assessee deserves to be granted credit of the impugned entire sum in the hands of the above group firm. This impugned addition is accordingly deleted. The Revenue's third substantive ground is therefore declined.
74. The assessee's third and fourth substantive ground challenge correctness of unexplained investment additions of Rs.1lac each pertaining to Jayesh School land in Assessment year 1997-98 and Raipur land in assessment year 1996-97; respectively. Mr. Thakkar is again very fair in submitting that the assessee does not wish to press for the instant grounds provided he is granted consequential telescoping benefit wherever necessary in computation to be made at Assessing Officer's end in furtherance to our instant adjudication. Learned Departmental Representative does not dispute this limited plea. We therefore partly allow these two substantive grounds for statistical purposes and leave it open for the Assessing Officer to follow consequential telescoping in computation exercise as prayed hereinabove.
75. The assessee's fifth substantive ground pleads that both the lower authorities have erred in adding unexplained household expenditure of Rs.72,000/-, Rs.1.44 & 1.74lacs in assessment years 1995-96 to 1996-97 and from 01.04.1996 to 21.01.1997; respectively by following estimation method.
M/s. Shyam Groups - 61 -
We refer to our discussion on the very issue in preceding two assessees' cases to conclude that such an estimation is not open in this kind of block assessment. The impugned additions are accordingly deleted.
76. The assessee's sixth and last substantive ground challenges unexplained investment addition of Rs.3lacs in assessment year 1997-98 relating to Hero Honda Motor Cycle, Kinetic Scooter and Mahindra Jeep; as made by the Assessing Officer and confirmed in lower appellate proceedings.
77. We have considered rival submissions and also perused the relevant records pertaining to the instant issue. We notice first of all from pages 27 to 29 of the paper book that the abovestated Kinetic Scooter purchased has already been reflected in regular books of M/s. Shyam Builders as recorded in balance sheet. We further find that the above Mahindra Jeep vehicle was taken on loan obtained from M/s. Saraspur Nagrik Co-operative Bank and its re-payment was debited in M/s. Shyam Builders' books. Coming to Hero Honda Motor Cycle, we observe in larger interest of justice that the assessee must have purchased the same from his withdrawals and also in view of the above telescoping directions we find no reason to concur with the impugned addition. This substantive ground is therefore accepted. IT(SS)A No.76/Ahd/2009 partly succeeds.
78. The Revenue's quantum appeal IT(SS)A No. 67/Ahd/2010 raises first substantive ground seeking to restore protective addition of unexplained cash given to Shri Arvindbhai P Patel. The CIT(A) records a clinching finding that the land purchase transaction in question of Rs.19.36lacs had already been claimed by M/s. Shyam Construction Co. whilst filing its settlement petition before the above Settlement Commission. Learned Departmental M/s. Shyam Groups - 62 -
Representative fails to rebut correctness thereof. This first substantive ground fails therefore.
79. The Revenue's fourth substantive ground pleads that the CIT(A) has erred in deleting unexplained investment addition for Jayesh School land amounting to Rs.7lacs as under:
"15. Unexplained investment in Jayesh school land of Rs 8,00,000 in AY 97- 98 Ground No.18 The addition has been made as per discussion given in para 6 of the assessment order dated 28.1.99.
During the course of present appellate proceedings vide submission dated 25.2.2009 it was stated that as per seized Banachithi dated 21.7.95 (Annexure A-5 of seized documents)total consideration of the land was Rs.36,00,000 out of which Rs 28,00,000 had been paid from duplicate set of books withdrawals which had been accepted by the AO after verification it was further contended that the AO ignored that payment of Rs 7,00,000 was recorded in the regular books of accounts of Shyam Builders and balance Rs 1,00,000 was paid from withdrawals made in the duplicate set of books of accounts. It was also stated that in the remand report factual aspects have not been challenged by the AO.
After going through rival submissions it is seen that Rs.7,00,000 in the break up of Rs.3,50,000 has been shown under the head Loans and Advances- on the Asset side of the balance sheet filed with the regular return of Shyam Builders for AY 1996-97 along with Audit Report. Rs.3,50,000 each has been shown in the name of the two sellers of land i.e. Kailashben Amrutlal Prajapati and Amrutlal Chaganlal, copies of their accounts show payments from Amco Bank through cheques were made. Therefore the AO is directed to delete the addition of Rs.7,00,000 out of Rs.8,00,000 added. Balance Rs.1,00,000 addition is upheld because no direct link could be established between the payments made for purchase of land and withdrawals from Shyam Builders by the appellant."
80. We have heard rival submissions. It emanates that the CIT(A) has already accepted assessee's explanation stating source of Rs.3.5lacs under the head "loans and advances" on asset side of the balance sheet pertaining to M/s. Shyam Builders in assessment year 1996-97 along with audit report and balance Rs.3.5lacs have been held to be received from Kailashben and Amrutlal. The Revenue fails to rebut these findings based on specific M/s. Shyam Groups - 63 -
supporting evidence. We therefore find no reason to interfere in above extracted lower appellate conclusion.
81. The Revenue's fifth substantive ground seeks to restore unexplained cash credit addition of Rs.8.5lacs and Rs.17lacs in the names of Shri P. I. Jain and Babubhai Nagjibhai Patel; respectively. The CIT(A) observes that M/s. Shaym Builders has already offered the very sums as additional income in its petition filed before Settlement Commission. We therefore find no reason to restore the impugned double addition.
82. The Revenue's sixth substantive ground pleads that the CIT(A) has erred in deleting unexplained investment addition of Rs.40,000/- in a Hero Honda Motor Cycle. We repeat that we have already decided the issue in assessee's favour in his corresponding ground no.6. We rely upon the said discussion to decline the instant substantive ground.
83. The Revenue's last substantive ground seeks to restore unexplained expenditure addition of Rs.75,757/-. The CIT(A) concludes that the assessee had sufficient withdrawals in past to justify the impugned expenditure. Learned Departmental Representative fails to refer to the relevant withdrawal's statement so as to dispute the impugned finding. We therefore reject Revenue's instant substantive ground as well as its appeal IT(SS)A No. 67Ahd/2010.
84. We now advert to Revenue's penalty appeal IT(SS)A No.34/Ahd/2013 and assessee's CO thereto no. 45/Ahd/2013. The Revenue raises four substantive grounds in seeking to revive the impugned Section 158 BFA (2) penalties pertaining to unexplained investment land at Nikol of Rs.8,54,704/-, addition of Rs.22.74 lacs, household expenditures of Rs.72,000/- , M/s. Shyam Groups - 64 -
Rs.1.44lacs and Rs.1.74lacs and unexplained investments of Rs.3lacs in three vehicles. Suffice to say, we have deleted / decided all the relevant issues in assessee's favour in preceding paragraph in quantum cross appeal (supra). The impugned penalties have no legs to stand therefore. All the Revenue's grounds as well as the instant appeal IT(SS)A No.34/Ahd/2013 fail.
85. The assessee's CO No.42/Ahd/2013 challenges the CIT(A)'s action in upholding Assessing Officer's action imposing Section 158BFA(2) penalties on an amount of Rs.18,69,756/- relevant to undisclosed investment in Odhav land and remaining addition of Rs.1,36,999/- pertaining to investments made in Naroda lands. We have admittedly deleted the former addition pertaining to Odhav land investment in assessee's quantum appeal hereinabove. The corresponding penalties under challenge have to be deleted on this count alone. The assessee however fails to explain his bonafides regarding the latter penalty issue pertaining to Naroda land investments. We therefore confirm the impugned penalty since there is no evidence in the case file which could make us to conclude that both the lower authorities have committed any error in imposing the impugned penalty. This assessee's cross objection CO. No. 45/Ahd/2013 partly succeeds.
86. This leaves us with fourth and the last assessee involving two cases i.e. Revenue's appeal IT(SS)A No.139/Ahd/2007 followed by the former's CO No.111/Ahd/2009. The Revenue's first substantive ground is that the CIT(A) has erred in deleting protective additions of Rs.19.18lacs and Rs.15, 43,800/- substantive addition on account of unexplained investment in Mahavirnagar land by concluding as under:
"3.1 In order to decide the issue, I have carefully considered the various arguments put up by the ld. Authorised Representative in this regard and have also perused the assessment order. While the appellant on the one hand is denying his M/s. Shyam Groups - 65 -
involvement in the purchase of land measuring 738 sq. yds. bearing plot No. 22A, 23A, 24A and 25A at Mahavir Nagar out rightly and has attempted to attribute the sale transaction exclusively to Shri Ratanlal C Agrawal, Shri Ratanlal Agrawal on the other hand while accepting the payment of Rs. 1,00,0007- and of Rs.50,000/- made on 27/12/1996 and 11/1/1997 respectively in respect of the same land has denied the knowledge or existence of any such Banakhal dated 27/12/1996 found from the residence of the appellant. In my considered opinion, the appellant cannot dispute the material fact that the Bana-Chitthi dated 27/12/1996 has been found in his Possession and therefore, the presumption would be that the Banakhat belongs the appellant and all the contents mentioned in the said Banakhat are required to be explained by him only. The appellant during the course of his statement recorded u/s.133(1A) of the Act on 6/3/1997 has himself admitted that the land as is mentioned in the Banakhat dated 27/12/1996 was to be purchased by him alongwith Shri Ratanlal C Agrawal. His father Shri Kalyanbhai K. Patel after identifying the notings on the Bana-Chitthi had also confirmed in his statement that the land under consideration was to be purchased by his son alongwith Shri Ratanlal C Agrawal. The details of payments mentioned on the said Banakhat also indicate that a part of the payment was made by Shri Ratanlal C Agrawal and part of the payment was made by the appellant. All these facts are sufficient in themselves to prove that the appellant was equally involved in the purchase transaction of the land at Mahavir Nagar alongwith Shri Ratanlal C Agrawal. In the background of these facts, I am not inclined to accept all the contentions raised by the ld Authorised Representative so as to establish that the appellant was nowhere involved in the said land deal.
The question now remains to be decided is as to how much investment was actually made by the appellant. The ld. Assessing Officer in para 4.7 of his assessment order has already held Shri Ratanlal C Agrawal to be a partner in investment to the extent of 50%. In the light of said findings of the Id. Assessing Officer, there appears to be no justification for him to make protective addition of Rs. 19,18,800/- in the hands of the appellant which needs to be deleted.
In so far as the addition of Rs. 19,18,800/- made in the hands of the appellant on substantive basis is concerned, there is no discussion in .the assessment order as to where from the investment of Rs. 19,18,800/- has been picked up by the ld. Assessing Officer. The Assessing Officer seems to have proceeded with the assumption that since the purchase rate of land of Rs. 5200/- per sq. yd. was mentioned in the Banakhat , the same rate when multiplied to the size of plot measuring 738 sq. yds. would work out the total investment to Rs. 38,37,600/- and 50% thereof being Rs. 19,18,800/- will fall to the share of the appellant. Therefore is however, no evidence brought on record to substantiate the charge that the payment of Rs. 38,37,600/- was actually made by the appellant in respect of the said land before the date of search. The only evidence regarding the payments made in respect of the said land is the Banakhat dated 27/12/1996 seized during the search. If we go by the details of the payments made or to be made as per the Banakhat, the appellant was required to make part payment of Rs. 11,51,280/- being 30% of the total sale transaction before 20/1/1997. As against the agreed amount of payment of Rs. 11,51,280/-, the actual payment of Rs. 1,00,001/-, Rs. 2,50,000/- and of Rs. 3 lacs are found to be made on 27/12/1996, 9/1/1997 and 11/1/1997 respectively. The contention of the ld. Authorised M/s. Shyam Groups - 66 -
Representative that during the course of block assessment, only the undisclosed income relating to the block period is required to be assessed, is found to be legally correct. The hon'ble members of the ITAT Amritsar Bench in the case of Maj. Gen (Retd.) Kanwarjit Singh Gill L/H of Smt. Narinder Kaur Gill (Decd.) vs. ACIT (2006) 101 TTJ (Asr.) 538 (supra) have laid down that any undisclosed asset acquired by an assessee prior to the commencement of the block period cannot be subject matter of the block assessment under Chapter XIV-B. The hon'ble members have even gone to the extent of laying down that any undisclosed income even if it is declared in the return filed by an assessee for the block period cannot be considered if it falls beyond the block period. Similarly, the ITAT, Jodhpur bench in the case of Mangilal Remeshwarlal Soni (HUF) vs. ACIT (2004) 83 TTJ (Jd.) 770 has held that any capital possessed by an assessee prior to the block period as revealed from the ledger found and seized during the search could not be treated as undisclosed income in the first assessment year for the block period. The law in this regard is thus very clear. Only the income which can be said to be undisclosed as a result of search and the same falls within the block period, can only be added while framing the block assessment. In this background of the matter, the evidence on record points out only to the payment of Rs. 6,50,001/- in respect of the land under consideration prior to the date of commencement of the search. Since the ld. Assessing Officer has accepted that Shri Ratanlal C Agrawal was a contributor to the investment to the extent of 50% share, it implies that rest of the 50% payment was made by the appellant. It will be relevant to mention here that Shri Ratanlal C Agrawal during the course of his sta^meit recorded u/s. 131(1 A) on 18/12/2006 has accepted in Ans. to Q.No. 11 that he had given Rs. 1,50,000/- in cash to Shri Babulal Patel in respect of plots No. 22A, 23A, 24A and 25A. / During the course of cross examination done by the ld. Counsel of the appellant on the same date, Shri Agrawal in Ans. to Q. No.3 has again admitted having paid Rs. 1,50,000/- in cash to Shri Babubhai. Shri Agrawal in Ans. to Q. No. 5 has further clarified that Rs. 1 lac was given by him on 27/12/1996 and Rs. 50,000/- was given by him on 11/1/1997. The candid admission of Shri Ratanlal C Agrawal also establishes the fact that he was an equal contributor to the investment in the land. Since the total investments in this land prior to the date of search was of Rs. 6,50,001/-, the appellant's share being 50% thereof would work out to 3,75,000/-. Accordingly, the substantive addition made at Rs. 19,18,800/- is thus required to be confirmed to the extent of Rs. 3,75,000/-. The appellant will get a relief of Rs. 15,43,800/-."
It emerges that assessee's third substantive ground seeking to delete the remaining addition of Rs.3.75lacs of the above latter addition also emanates from the above extracted findings.
87. We have given our thoughtful consideration to both parties' grievances. Case file indicates that the Assessing Officer had himself treated the other co-vendee Shri Ratanlal to the extent of half share for making substantive addition in his case before taking recourse to the impugned M/s. Shyam Groups - 67 -
protective addition. We thus conclude that the said substantive addition being made in co-vendee's hands leaves no requirement for the impugned protective addition. We accordingly are of the view that the CIT(A) has rightly deleted the same in above extracted findings. Coming to substantive addition, the Revenue had admittedly not raised any ground challenging the CIT(A)'s conclusion regarding scope of a block assessment (supra). There is further no evidence that the actual amount paid in facts of the instant case was more than Rs.6.5lacs (supra) out of which the CIT(A) has retained the addition in question to the tune of Rs.3.25lacs in assessee's hands which has been wrongly incorporated as Rs.3.75lacs. We further afforded adequate opportunity to Shri Thakkar to rebut the above amount of Rs.6.5lacs to have been not actually paid. His arguments failed to controvert the same with the help of any cogent evidence. We therefore uphold above extracted CIT(A)'s findings and decline the instant Revenue's as well as assessee's substantive ground.
88. The Revenue's second substantive ground pleads that the CIT(A) has erred in reversing Assessing Officer's action making addition of Rs.1,01,250/- on account of undisclosed income utilized for repayment of loan obtained for purchasing a Tata Sumo Car alongwith initial investment of Rs.30,000/- made at the time of purchase. The assessee's fourth substantive ground in his cross objection seeks to delete the remaining addition corresponding to the above vehicle as upheld to the tune of Rs.26,508/- in lower appellate order. Suffice to say, it emerges that the CIT(A) has deleted the former addition of Rs.1,01,250/- after recording a categoric finding that the said repayment fail on the very day of withdrawal of even amount i.e. 09.06.1995. The latter withdrawal in other words has been treated as source of repayment. We thus find no reason to concur with Revenue's grievance pleaded in its substantive ground. We further proceed to consider assessee's M/s. Shyam Groups - 68 -
arguments and find that the CIT(A) has confirmed the impugned addition of Rs.56,508/- to the tune of Rs.26,508/- after granting a very reasonable credit of Rs.30,000/- out of withdrawals of Rs.46,136/-. The same is found to be very much just and appropriate in facts and circumstances relevant to the issue. Both parties therefore fail in their respective substantive grounds.
89. The Revenue's last substantive ground challenges correctness of the CIT(A)'s order deleting protective addition of Rs.1,29,48,750/- and substantive addition of Rs.43,60,250/-; respectively in respect of unexplained investment made in Nikol land as under:
"9.1 I have carefully considered the various arguments advanced by the ld. Authorised Representative in this regard and have perused the assessment order. I am inclined to agree with the contention of the ld. Authorised Representative that the ld. Assessing Officer has accepted in principle that the investment to the extent of 75% in the land at Nikol was made by the other three partners namely Shri Virendra K Bhadoria, Shri Rajubhai M Dagga and Shri MaganBhai S. Gupta having 25% share each. The Id. Assessing Officer in sub-para 1 of para 6.6 of the assessment order has recorded the findings to the effect that on the basis of documentary evidence seized during the course of search, it has been clearly established that the land was purchased by the assessee alongwith three other partners. In para 6.7 of his order, the investment of the assessee in the said land has been held to the extent of 25% only. In the background of these findings, there appears to be no justification for the Assessing Officer to make the addition of Rs. l,29,48,750/- being 75% in the hands of the appellant on protective basis. Addition of Rs. 1,29,48,750/- is therefore, required to be deleted.
The ld. Assessing Officer has proceeded to make addition of Rs. 43,60,250/- on substantive basis as according to him, the total investment of Rs. 1,72,65,000/- calculated on the basis of 15000 sq. yds. to be multiplied by Rs. 11517- per sq. yd was made in the said land in which the share of the appellant being 25% comes to Rs. 43,16,250/-. In order to prove his findings that unexplained investment of Rs. 43,16,250/- was made by the appellant prior to the date of search, no evidence or any other material has been brought on record. I have already held while deciding the Ground of appeal No 2 in para 3.1 above that while framing the block assessment, only the undisclosed income relating to the block period can be added and that too on the basis of evidence either found during the course of search or during the course of post search inquiries. There is no discussion in the assessment order which may indicate that the appellant has invested undisclosed income of Rs. 43,16,250/- in the acquisition of the said land much less to allege that the same was made prior to the date of search. In the absence of any such evidence, the investment of Rs. 52 lacs as is admitted by the M/s. Shyam Groups - 69 -
appellant in his statement recorded has to be made the basis for working out any unexplained investment prior to the date of search, order to prove the source of his share of investment of Rs. 13 lacs being 25% of Rs. 52 lacs, the appellant has referred to the withdrawals of money made by from the duplicate set of books of accounts of M/s. Shyam Builders lying seized in the custody of the department. The duplicate set of books of accounts have been written on day to day basis and in a routine manner. There appears to be no reason to disbelieve the entries made in the said duplicate set of books of accounts which were found written upto the date of search. The firm M/s. Shyam Builders in which the appellant is a partner has infact disclosed additional income of Rs.l.28 crores on the basis of the said duplicate books. The contention of the appellant that his part of the investment in the land at Nikol has been made out of money withdrawn from the duplicate books of accounts of the firm M/s Shyam, Builders is found to be correct as the entries of withdrawl of cash have been made on different dates with a specific narration of Nikol land. It was the duty of the Assessing Officer to verify these entries as are appearing in the seized books of accounts in order to verily their contention made in this regard. Had the Assessing Officer made an effort to verify such entries, there was no need for him to make any addition in the hands of the appellant because the withdrawl of Rs. 14,70,001/- made from the firm M/s Shyam Builders in which the appellant was a partner, were infact more than the admitted investment of Rs. 13 lacs. The Assessing Officer could also initiate action in the hands of Shri Maganlal S. Gupta and Shri Rajkumar M Daga as they had also contributed Rs. 8,53,000/- and Rs. 10,16,000/-respectively which apparently appears to be unaccounted. It is noticed from the assessment order itself that addition of Rs. 43,16,250/- was made in the case of Shri Virendra K Bhadoria on the basis of his share of investment which was confirmed to the extent of Rs. 12,94,875/- by the CIT(A). No action seems to have been taken in the case of Shri Rajbhai M Daga whereas there is a clear evidence by way of specific entries in the seized books of accounts of his having made the investment of Rs. 10,16,000/- in the Nikol land. The difference of the payment, according to the appellant was made by Shri Rajubhai M Daga directly to the sellers. It is also noticed that proceedings initiate u/s. 158BD in the case of Sh Maganlal S. Gupta have been dropped and it is not coming on records whether the source of his investment to the extent of Rs. 8,53,000/- as is appearing in the seized books of accounts has been examined in his case or not. According to the appellant, the difference of the payment like in the case of Rajubhai was directly made by Shri Maganlal S. Gupta to the sellers of the land. In this background of the matter, no addition was called for in so far as the appellant is concerned because he has adequately explained his share of investment made prior to the date of search as having come by way of withdrawals made from the firm M/s. Shyam Builders. The Assessing Officer however, may consider the possibility of taking the appropriate action in the case of Shri Maganlal S. Gupta and Shri Rajkumar M Daga on the basis of entries as are appearing in the seized books of accounts of M/s. Shyam Builders. The addition of Rs. 43,16,250/- needs to be deleted."
90. We first come to the abovestated protective addition. It is evident that there are total four vendees pertaining to the said land including the assessee. We thus find no reason to revive the impugned protective addition solely M/s. Shyam Groups - 70 -
made in assessee's hands. Learned Departmental Representative further fails to dispute the CIT(A)'s findings regarding substantive addition inter alia on the legal facet of a block assessment alike in first substantive ground (supra), linking withdrawals to group entities to the tune of Rs.13lacs coming to 1/4th of search statement amount of Rs.52lacs etc. Nor is there any evidence quoted at Revenue's behest indicating any action taken in cases of other parties S/Shri Maganlal etc. We thus find no reason to restore the impugned substantive addition as well. The Revenue's instant ground as well as main appeal IT(SS)A No.139/Ahd/2007 fail.
91. This leaves us with assessee's first two substantive grounds in his cross objection challenging legality of the impugned assessment proceedings framed on 31.07.2001 on the ground of limitation and jurisdiction of the Assessing Officer. Mr. Thakkar states at the bar that these two grounds are not pressed any more. He has also made necessary endorsement way back on 19.04.2012. We thus decline assessee's cross objection CO No.111/Ahd/2009 as well.
92. The Assessing Officer(s) in all these cases is directed to frame consequential computation in light of our above detailed findings. We make it clear before parting that our instant adjudication would not amount to granting relief to any of the four assessees hereinabove reducing their income in various heads declared in respective petitions filed before the Settlement Commission (supra).
93. We quote our above detailed discussion to partly accept assessees' appeals IT(SS)A Nos. 325, 326 & 76/Ahd/2010 alongwith the third assessee's CO No.45/Ahd/2013. Revenue's first appeal IT(SS)A No.465/Ahd/2010 is also partly allowed. Revenue's remaining appeals M/s. Shyam Groups - 71 -
IT(SS)A Nos. 139/Ahd/2007, 67 & 466/Ahd/2010 & 34/Ahd/2013 are dismissed. Fourth assessee Shri Jaswantlal K Patel's Cross Objection CO No.111/Ahd/2009 is also dismissed.
[Pronounced in the open Court on this the 25th day of May, 2017.] Sd/- Sd/-
(MANISH BORAD) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 25/05/2017
True Copy
S.K.SINHA
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।