Moreshwar Mahadev Bhondve, Pune vs Assessee on 20 May, 2014

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Income Tax Appellate Tribunal - Pune

Moreshwar Mahadev Bhondve, Pune vs Assessee on 20 May, 2014

            IN THE INCOME TAX APPELLATE TRIBUNAL
                     PUNE BENCH "B", PUNE

           BEFORE SHRI SHAILENDRA KUMAR YADAV,
                    JUDICIAL MEMBER, AND
            SHRI R.K. PANDA, ACCOUNTANT MEMBER

          ITA Nos.2191 to 2193 & 1502 to 1504/PN/2012
                    (A.Ys: 2004-05 to 2009-10)

Moreshwar Mahdev Bhondve
A/P Ravet, Tal Haveli
Pune - 412010

PAN: AAJPB8648Q                                         Appellant

                                    Vs.
ACIT, Central Circle 1(2), Pune                         Respondent

                Assessee by    :          Shri Kishore Phadke
                Department by :           Shri S.P. Walimbe
                Date of Hearing :         20.05.2014
                Date of order   :         27.05.2014

                                  ORDER

PER SHAILENDRA KUMAR YADAV, J.M:

All these appeals pertain to the same assessee on similar issues for different assessment years, so they are being disposed off by this common order.

2. In ITA No.2191/PN/2012 for A.Y. 2004-05, the assessee has filed the appeal on the following grounds.

1. The learned CIT (A)-I, Pune has erred in law and on facts in confirming the addition made by learned AO Rs.1,73,000/- as against returned income of "Nil".

2. The learned CIT(A)-I has erred in law and facts in confirming the addition made by learned AO only on the basis of declaration made during the course of search without appreciating fact that the said declaration has been retracted by the appellant.

3. The learned CIT(A)-I has erred in law and facts in confirming the addition made by learned AO holding the investment in land of Rs.173,000/- has been made out undisclosed sources of income.

4. Alternatively and without prejudice to the Ground of 1 to 3, the learned CIT(A)-I, Pune has erred in law and facts not appreciating the fact that the AO did not allow the deductions claimed for various expenditures, including land cost, depreciation on cars, while computing the taxable income."

5. Alternatively and without prejudice to the Ground of 1, 2 & 3 the learned CIT(A)-I, Pune has erred in law and facts in not giving effect of telescoping for the income declared during the course of search.

6. The appellant craves leave to add / delete / amend / modify all / any of the grounds.

2.1 In ITA No.2192/PN/2012 for A.Y. 2005-06, the assessee has filed the appeal on the following grounds.

1. The learned CIT (A)-I, Pune has erred in law and on facts in confirming the addition made by learned AO Rs.4,65,000/- as against returned income of "Nil".

3. Alternatively and without prejudice to the Ground of 1 & 2, the learned CIT(A)-I, Pune has erred in law and facts in not giving effect of telescoping for the income declared during the course of search.

5. The appellant craves leave to add / delete / amend / modify all / any of the grounds.

2.2 In ITA No.2193/PN/2012 for A.Y. 2006-07, the assessee has filed the appeal on the following grounds.

1. The learned CIT (A)-I, Pune has erred in law and on facts in confirming the addition made by learned AO Rs.1,86,632/- as against returned loss of Rs.1,63,368/-.

5. The appellant craves leave to add / delete / amend / modify all / any of the grounds.

2.3 In ITA No.1502/PN/2012 for A.Y. 2007-08, the assessee has filed the appeal on the following grounds.

1. The learned CIT (A)-I, Pune has erred in law and on facts in confirming the addition made by learned AO Rs.60,85,737/- as against returned income of Rs.5,65,997/-.

5. The appellant craves leave to add / delete / amend / modify all / any of the grounds.

2.4 In ITA No.1503/PN/2012 for A.Y. 2008-09, the assessee has filed the appeal on the following grounds.

1. The learned CIT (A)-I, Pune has erred in law and on facts in confirming the addition made by learned AO Rs.68,95,430/- as against returned income of Rs.25,88,485/-.

5. The appellant craves leave to add / delete / amend / modify all / any of the grounds.

2.5 In ITA No.1504/PN/2012 for A.Y. 2009-10, the assessee has filed the appeal on the following grounds.

1. The learned CIT (A)-I, Pune has erred in law and on facts in confirming the addition made by learned AO Rs.1,70,96,830/- as against returned loss of Rs.119,431/-.

3. The learned CIT(A)-I has erred in law and facts in confirming the addition adding the sum of Rs. 1.35 Crores as the undisclosed income of the assessee in deal of Sonigara, ignoring the fact that the same is not actually received by the assessee.

4. Alternatively and without prejudice to the Ground of 1 to 3 the learned CIT(A)-I, Pune has erred in law and facts in not appreciating the fact that on the basis of seized documents the 5 addition ought to have been Rs.32,50,000/- in Sonigara deal instead of Rs. 1,35,00,000/-.

5. The learned CIT(A)-I, Pune has erred in law and facts in confirming the addition made by learned in case of Sonigara deal without considering the affidavits filed by the assessee and without affording CROSS EXAMINATION of Mr. Sonigara to the assessee.

6. The learned CIT(A)-I, , Pune has erred in law and facts in confirming the addition made by learned AO amounting Rs. 15 Lakhs as undisclosed investment of the assessee without giving telescoping effect of the said amount received on sale Lexus car to Mr.Chachalani. Further, The learned CIT(A)-I has erred in law and facts in not considering the confirmation filed by the Mr. Chachalni regarding the same.

7. Alternatively and without prejudice to the Ground of 1 to 6, the learned CIT(A)-I, Pune has erred in law and facts in not giving effect of telescoping for the income declared during the course of search.

8. Alternatively and without prejudice to the Ground of 1 to 7, the learned CIT(A)-I, Pune has erred in law and facts in not appreciating the fact that the AO did not allow the deductions claimed for various expenditures, including land cost, depreciation on cars, while computing the taxable income."

9. Alternatively and without prejudice to the Ground of 1 to 8, the learned CIT(A)-I, Pune has erred in law and facts in not giving effect of relief provided of Rs.88,000/- while adjudicating in the final order and assessing income Rs 1,70,96,830/- instead of 1,70,08,830/-.

10. The appellant craves leave to add / delete / amend / modify all / any of the grounds.

3. The assessee is an individual resident of Ravet, Taluka - Haveli, Dist - Pune, engaged in land transactions in Pimpri Chinchwad area of Pune. A search and seizure action was carried out at his premises on 13.08.2008 and numerous incriminating documents showing evasion of tax were found by the concerned revenue authorities. The search revealed that the assessee has not been filing its return of income at all. Even books of accounts were found to be not maintained in any manner by him. According to revenue authorities, the assessee was found to have made huge profits from land deals 6 and was claimed to have been maintaining an extravagant life style. He also admitted though subsequently retracted to have given donations and contributions of more than ₹ 20 lacs each totaling to ₹ 40 lacs, etc. On the basis of these findings, loose papers and assets found and seized along with the bank accounts, statement of oath u/s.132(4) was recorded. The statement of assessee on various documents and assets found was recorded. The questions in respect of his investment and expenses were also asked. It was found that the assessee had made substantial expenses and investments and land deal business. The statement on oath of other connected persons Shri Sanjay Sonigara, Shri Subhash Kantilal Sonigara, etc. were also recorded in connection with land transactions revealed by the seized material or the statement of the assessee and others. According to revenue authorities, the assessee in his statement of oath recorded u/s.132(4) on 13.08.2008 admitted to have undisclosed income of ₹ 2 crores approximately for block period for different assessment years as under:

Sr. No. Asstt. Year Undisclosed income declared 1 2005-06 Rs.4.65 lakhs 2 2006-07 Rs.4.5 lakhs 3 2007-08 Rs.63.60 lakhs 4 2008-09 Rs.105 lakhs 5 2009-10 Rs.22.25 lakhs Total Rs.200 lakhs 3.1 It was further noted from the materials available that the assessee in his statement recorded u/s 132(4) on 13.8.2008, has further stated that the deposits appearing in the bank totaling to ₹ 1,47,20,808/- evidenced the cash received in Sonigara land deal of ₹ 32,50,000/- and amount received from the sale of Lexus car of ₹ 15 lakhs were taxable as undisclosed income. The Assessing Officer also noted that the assessee on 14.08.2008 u/s 132(4), in response to Question No.2 and 5 admitted to have received commission of ₹ 6,93,000/- also from certain land deals. Therefore, the Assessing Officer observed that the assessee has admitted to have undisclosed 7 taxable income of ₹ 2 crores for assessment years as detailed above.

As stated above, the assessee has further admitted an undisclosed income of ₹ 6,93,000/- in the statement recorded u/s.132(4) on the next date i.e. 14.08.2008. Thus, total income declared by the assessee was ₹ 2,01,63,808/-.

3.2 In response to notice u/s 143(2), the assessee filed return of income u/s.153A on 12.10.2010 i.e. almost after 8 months of notice issued by the Assessing Officer on 11.02.2010. The Assessing Officer noted from the return filed by the assessee that the assessee has not filed return as admitted u/s.132(4) during search. The income declared by the assessee u/s.153A vis-à-vis the disclosure made, as noted above are as under:

Sr. Asstt. Undisclosed income Income shown in the No. Year declared u/s.132(4) return u/s 153A 1 2003-04 --- ---

2 2004-05 --- Rs.Nil 3 2005-06 Rs.4.65 lakhs Rs.Nil 4 2006-07 Rs.4.5 lakhs Rs.Nil 5 2007-08 Rs.63.60 lakhs Rs.5,66,000 6 2008-09 Rs.105 lakhs Rs.25,88,485 7 2009-10 Rs.22.25 lakhs Rs.Nil Total Rs.200 lakhs Rs.31,54,485 3.3 The Assessing Officer observed that the assessee has not disclosed even the undisclosed income which was admitted u/s 132(4), so the assessee was asked by show cause notice to explain the situation. In response to the same, it was contended on behalf of assessee before the Assessing Officer that the disclosure was based on figures worked out by search party and therefore, it was not acceptable to the assessee. It was contended before the Assessing Officer that the assessee is an agriculturist and had no knowledge of income tax law and other procedure. The income had been worked out after search for AYs.2003-04 to 2009-10 and returns accordingly have been prepared and filed. The Assessing Officer noted that the assessee has decided to retract the assessment without bringing any relevant materials for its cause after a gap of more than two years.

The Assessing Officer has discussed this issue in detail in assessment order and has held that the retraction after a gap of 28 months cannot be accepted without bringing on record any materials which could show that the declarant assessee was subjected to any threat or coercion or inducement for giving the same. The onus is on the assessee / declarant to establish that the declaration was not genuine and under misconception of fact. The Assessing Officer was of the view that retraction cannot admitted. The Assessing Officer after considering the reconciliation has given finding that credit shown in the banks taken in the books of accounts constructed by the assessee after search on the basis of material found and the stand taken by the assessee is correct.

3.4 The Assessing Officer has also stated in the assessment order that the agricultural receipts and business receipts as per stand of the assessee has been noted in the constructed books. However, the Assessing Officer has not found reconstructed books to be reliable enough which could form the basis of retraction of declaration made u/s.132(4). Therefore, wherever declaration was more than amount appearing in the books or otherwise, the Assessing Officer stuck to the figure of declaration. In certain years, the Assessing Officer has also allowed certain expenses which were found to be genuine and allowable on the basis of third party evidence available on record. However, the Assessing Officer has not allowed any further expenses commission, salary, etc. on assumption basis as the basis of income itself is based on evidences only, including oral and is clearly on net basis. Further, the additions over and above declared income u/s. 132(4) based on materials gathered by him during assessment and other seized materials not considered while giving statements u/s.132(4) for making declaration of undisclosed income of ₹ 2 crores as described above and also the details filed by the assessee while filing returns u/s.153A were made mainly in A.Y. 2009-10. The Assessing Officer has also considered the undisclosed household expenses in the light of the declaration made u/s 132(4) on 9 13.08.2008 wherein the assessee has admitted household expenses of ₹ 20 lakhs, donations (Denagi) of ₹ 20 lakhs and contributions (Vargani) of ₹ 20,47,000/- to various clubs and Mandals etc. The year wise bifurcations were not given to the Assessing Officer during assessment. They were also not considered in the reconciliation or returns. Instead, the assessee denied to have made any such expenditure during the course of assessment in response to the question issued during assessment and reply given vide letter dated 16.11.2010. The Assessing Officer has held the declaration as valid and concluded that the assessee is incorrectly trying to escape from the facts found during search. No separate addition has been made by the Assessing Officer for this expenditure as apparently he was of the opinion that these expenses were met out of undisclosed income assessed in the hands of the assessee. Similarly the Assessing Officer has not made any addition for investment in house property, which was admitted by assessee at ₹ 20 lakhs approximately for similar reasons. Thus, the Assessing Officer has allowed the telescopic benefit to the assessee in respect of undisclosed household expenses, Denagi and Vargani of more than ₹ 60 lakhs found during search and also investment in house of approximately ₹ 20 lakhs.

3.5 Finally, the Assessing Officer after considering entire facts and circumstances of the case, computed total income of assessee for different assessment years on the basis of declaration made and certain other documents seized, details of investment and expenses found after giving telescopic effect wherever possible in the following manner. The following table shows the declaration of undisclosed income, return of income and assessed income for different assessment years involved in the block detailed as under:

           Sr.    Asstt.  Undisclosed       Income shown Assessed
           No.    Year    income            in the return income
                          declared          u/s 153A
                          u/s.132(4)
           1      2003-04 ---               Rs.Nil         No appeal filed
                                                           by assessee
           2      2004-05 ---               Rs.Nil         Rs.1,73,000
                                     10



        3     2005-06   Rs.4.65 lakhs     Rs.Nil         Rs.4,65,000
        4     2006-07   Rs.4.5 lakhs      Rs.Nil         Rs.1,86,632
        5     2007-08   Rs.63.60 lakhs    Rs.5,66,000    Rs.60,85,737
        6     2008-09   Rs.105 lakhs      Rs.25,88,485   Rs.68,95,430
        7     2009-10   Rs.22.25 lakhs    Rs.Nil         Rs.1,70,96,830
              Total     Rs.200 lakhs      Rs.31,54,485   Rs.3,09,02,629

3.6 The year-wise cases was discussed in the appeal and having discussed in detail, the CIT(A) partly allowed the appeal of the assessee for A.Y. 2007-08 & 2009-10 and for A.Y. 2008-09 was dismissed. For A.Y. 2004-05 to 2006-07, the appeals of assessee were dismissed. Before us, the learned Authorized Representative has reiterated the submission made before authorities and submitted that the CIT(A) erred in law in confirming the additions made by the Assessing Officer against the return of income. The CIT(A) erred in confirming addition only on the basis of declaration made during the course of search without appreciating the fact that the said declaration has been retracted by the assessee. A similar ground has been taken by the assessee in all the years and requested to delete the additions in question. On the other hand, the learned Departmental Representative has raised various contentions to support the order of CIT(A) in all the above years.

4. We find that the assessee is an individual resident of Ravet, Taluka - Haveli, Dist - Pune also engaged in land transactions in Pimpri Chinchwad area of Pune. A search u/s. 132 was conducted on assessee's premises on 13.08.2008 and some documents were seized and the statement of assessee u/s.132(4) was recorded. It is undisputed that prior to the search, the assessee had not filed return of income, even the books of accounts were not available since not maintained till then. In this regard, the stand of the assessee has been that he was from agriculturist background and has sizeable agricultural income, where from the other activities of land dealing, commission activity were started. Considering the papers seized during search and since the books of accounts were not prepared by the assessee, summary of books and other transactions were prepared by investigating team. When the 11 assessee was questioned on the basis of said summary, the assessee made declaration of ₹ 2 crores as discussed above. In short declaration during search was based on the following accounts:

a) summations of credits in the bank accounts - ₹ 1,52,50,000

b) Income from sale of Lexus car - ₹ 15,00,000

c) Entry appearing in a seized document - ₹ 32,50,000 4.1 Regarding retraction of admission, the stand of the assessee has been that he prepared the books of accounts, based on bank transactions, property deals, expenses, cars acquisition transactions, etc. The agricultural income entries were also entered in the relevant books of accounts. Based on these books, final accounts were prepared. Computation of income was prepared from Profit & Loss and return was filed. According to the assessee, this process took a very long period. In the said process of making accounts, the assessee realized that an erroneous admission has been made by him, so the assessee has decided to retract the admission. The assessee claims to have retracted from incorrect admission of income.

4.2 The learned Authorized Representative has submitted that during assessment proceedings, the Assessing Officer checked the books of accounts, bank statements, submission of assessee. The Assessing Officer has also verified the existence of agricultural income, adequacy of business income, expense details, etc. The Assessing Officer has also verified the transactions with Mr. Sonigra for Rawet land. The statement of said Sonigra was also recorded. Based on these enquiries, the Assessing Officer finalized the assessment. The learned Authorized Representative has pointed out that the Assessing Officer even after accepting the wrong declaration of income due to wrong credits, summations in bank statement, preferred to make further addition. The income computed by the Assessing Officer has been summarized which is detailed in para 3.5 of this order.

4.3 The CIT(A) confirmed all additions made by the Assessing Officer except for cash balance of ₹ 88,000/- in A.Y. 2009-10. While doing so, the CIT(A) has confirmed the stand of the Assessing Officer that the income declared in search should be taxable income of assessee, subjected to further addition / reduction.

4.4 With regard to justification of retraction, the stand of the assessee has been manifold. The learned Authorized Representative has submitted that a mistake in the declaration during search was due to incorrect bank credit summation which is matter of record. According to the learned Authorized Representative in general, books prepared by the assessee have not been rejected by cogent reasoning. The main emphasis of the assessee has been that agricultural activity and related income was bonafide one as a source of initial funds. The source of agricultural income ought to have considered the overall quantification of income. The addition has been made on the basis of search statement alone, which is not justified. According to the Assessing Officer, the disclosure promise during search u/s.132(4) has not been fulfilled. While, according to the CIT(A), self serving books are not admitted. The Assessing Officer's verification of books, his findings, etc. are contrary to his finding of facts on the issue. In this background, the stand of the assessee has been that the Assessing Officer's observation as regards the books of accounts, mistake of quantification of credits, summations, etc., are facts. These observations ought to have not been brushed aside by the CIT(A). According to us, this approach is not justified. The authorities below should give finding on each and every point while reaching to its conclusion.

4.5 The next objection of assessee has been that the return filed based on books of account and income declared was reflected based on cogent reasoning. The main objection of the Assessing Officer has been that there is long gap of 28 months for retracting by way of return while there was no threat or coercion during search.

According to the Assessing Officer, the onus of proving misunderstanding has not been discharged by the assessee. In appeal, the CIT(A) on this point has held that the retraction after 28 months is not acceptable. In this regard, the stand of assessee has been that the retraction is based on valid reasons of error or mistake, etc., hence, ought to have been deliberated on merit. According to us, even if the retraction is made after a long gap, it should be rejected by cogent reasoning. The same was possible by demonstrating the stand of the assessee taken by way of books of accounts prepared and produced at assessment stage as well as appellate stage. According to the Assessing Officer, sufficient documents were not filed in this regard. While in appeal, the CIT(A) observed that the expenses found genuine were allowed by the Assessing Officer while the expenses not supported by evidence were disallowed by the Assessing Officer. This shows that the details of expenses as reflected in books of accounts prepared could not be brushed aside. According to us, the reasoning of retraction should not be rejected at the strength of admission by assessee but retraction based on prepared books of accounts should be rejected by cogent reasoning only. According to us, material put forward on behalf of assessee has been rejected in adhoc manner, which is not justified. Having said so, let us analyse the year-wise proposition as raised by the learned Authorized Representative before us.

4.6 For A.Y. 2004-05, source of funds for Ghanawat land deal were claimed from agricultural income and gift from relatives. The Assessing Officer in para 7.2 of pages 11 & 12 has observed that the agricultural income was not sufficient considering Ghanawat land deal, hence, the said argument was not accepted. While in appeal, the CIT(A) in para 13, page 22 observed that considering the lavish life style of assessee, the agricultural income of ₹ 1.95 lakhs was not sufficient to explain the source of land payment. In this background, the stand of the assessee has been that the amount payments recorded in books of accounts, agricultural income was bonafide and 14 gifts have not been doubted, so the addition in question was not justified. Thus, the authorities below have taken contradictory stand while rejecting the stand of assessee. In fact, it should be analysed as per fact put forward by the assessee on the point and authorities below should have appreciated the fact before reaching any adverse opinion that too mainly based on admission of assessee.

4.7 For A.Y. 2005-06, the stand of the assessee has been that actual bank summations are ₹ 1.76 lakhs and the declaration of ₹ 4.63 lakhs were based on erroneous assumptions. The stand of the assessee has been that the Assessing Officer himself agrees with the credit statement, so, the addition made and confirmed by the CIT(A), is not justified. For A.Y. 2006-07, the stand of the assessee has been that actual bank summations are ₹ 2.97 lakhs while declaration of ₹ 4.50 lakhs was based on erroneous assumption during search. The Assessing Officer has reproduced the assessee's statements, bank summations only ₹ 2.9 lakhs and not ₹ 4.5 lakhs, but further observed that as income disclosure in search is not honoured amount declared in search, is considered as taxable income. In appeal, on this point, the CIT(A) in para 22, page 30 observed that the declaration made during search could not be rejected on the basis of books created as self serving evidence. In this regard, the stand of the assessee has been that the books are made on the basis of bank statement primarily. The very same statement was used as basis for declaration during search. This mistake crept in assessment and appellate stage, which could not be cured. According to us, the facts on record should not have been ignored to justify addition mainly based on admission.

4.8 Regarding A.Y. 2007-08, the learned Authorized Representative has submitted that receipts and credits like advance plus loans exist which cannot be considered as income. In the assessment proceedings, the Assessing Officer has reproduced the contention raised on behalf of assessee at page 4 of its order while on page 7 & 15 8, there is no discussion relating to credit aspect. While finalizing taxable income, the expenses were partially disallowed in the absence of supporting evidence by the Assessing Officer. In appeal, the CIT(A) held that neither the receipts nor the expenses were found complete and reliable. Based on books, consolidated charts were given on behalf of assessee. Ignoring the same, Assessing Officer's addition based on search declaration was held as valid by CIT(A). In this regard, the stand of the assessee has been that best possible attempt was made to explain the problems in taking credit, summations as taxable income. Bounced cheques, repaid advances, etc. could not be instances of income. Evidences placed on record should have been rejected after due deliberation on the same. A similar objection was raised for A.Y. 2008-09. Regarding A.Y. 2009- 10, the learned Authorized Representative has submitted that the valid cash source exists for ₹ 15 lakhs paid to Ms. Kavita Kajale on 03.05.2008. The Assessing Officer observed at page 22 of its order that the payment of ₹ 15 lakhs was not reflected in books and the assessee's explanation was not accepted. In appeal, in this regard, the CIT(A) has observed that at this stage, the explanation could not be considered in view of rule 46A since this claim was not made before the Assessing Officer. In this regard, the stand of the assessee has been that the transaction of sale of Lexus car was stated in search statement itself. The telescopic effect on the said receipt ought to have been given. Confirmation of receipt of ₹ 15 lakhs was given by Mr.Chaslani and the same was produced before the CIT(A). In this background, the CIT(A) was not justified in rejecting contentions of assessee while upholding the addition made by the Assessing Officer. This aspect needs deep probe into the matter on the issue.

4.9 With regard to the other addition i.e. ₹ 32.50 lakhs received from Mr. Sonigra, the stand of the assessee has been that the said amount was not received from Ravet land deal from Mr. Sonigra. According to the learned Authorized Representative, both the 16 authorities have not commented on this point. Further, in A.Y. 2009-10, the stand of the assessee has been that the assessee did not receive amount of ₹ 1.35 crores in cash from Sonigra. The Assessing Officer has observed that since Sonigra has paid taxes on ₹ 1.35 crores, the assessee must have received the same. The CIT(A) confirmed the order of Assessing Officer on the point. The stand of the assessee has been that the assessee has not received any cash from Ravet land deal from Sonigra. However, the assessee was in receipt of ₹ 33 lakhs for another land deal at Shinde Wasti which ultimately did not materialize. The said fact clearly emerged from the statement of Sonigra. These arguments of assessee have not been met out by authorities below. According to us, it is not justified. To reach a proper conclusion, it needs deep probe into the matter. It is pertinent to mention here that the person from agricultural background is not able to understand and meet out economic complications with income tax angle in fast urbanization.

4.10 The next issue raised by assessee is that Sonigra himself was misleading and conflicting. The cross-examination of Sonigra was not given, which is not justified. In this regard, the Assessing Officer made bald observation that the Sonigra's statement was correct and affidavit was not correct, which was confirmed by the CIT(A) on the point. According to assessee, there is no justification done by the authorities below. The CIT(A) did not take the cognizance of the arguments of learned Authorized Representative. In this regard, the stand of the assessee has been that he has not received any cash from Ravet land deal from Sonigra. However, the assessee was in receipt of ₹ 33 lakhs for another land deal at Shinde Wasti as stated above which did not ultimately materialized. These facts have not been dealt by the Assessing Officer and the CIT(A) pproperly. Nothing emerges from the search material as such indicating that the entire amount was paid to the assessee. The Assessing Officer and the CIT(A) on the basis of statement of Sonigra have presumed that the said amount has been received by the assessee. Further, 17 the CIT(A) stated that the assessee was aware of the contents of the statement given by Sonigra. However, the assessee claimed to be not aware of the fact that statement of Sonigra, which has been taken on record. Copies of the statement were not provided and cross- examination opportunity was also not provided. In this background, the argument of the assessee has been that in all the years involved, the Assessing Officer has decided to make taxable income on the basis of declaration made during search. At the time of search, the declaration of income was based on bank statement plus seized papers found during search. Further, the bank transactions summary was prepared by search party only. In the absence of any clarity, the assessee has made declaration of income at relevant point of time. However, once books of accounts were prepared, the mistake was realized by the assessee. Hence, declaration was retracted. The Assessing Officer could have verified the reconciled income prepared by the assessee which was contrary to the income summary prepared at the time of search with books of accounts prepared by search party. Specially so when the Assessing Officer has also accepted the reconciliation of differences as discussed above. As such, the Assessing Officer made addition mainly based on search statement and discrepancy worked out by search party at the time of search. The action of the Assessing Officer in adding the income for above reason, in our opinion, is not justified. The CIT(A) has not appreciated this fact and merely dismissed the appeal without giving proper reasoning for the same. The books of accounts prepared after search should not be brushed aside. Once the books of accounts of assessee has been prepared based mainly on the bank entries and other details, same can be rejected by cogent reasoning. According to us, the books of accounts should be rejected only after rejecting the claim of assessee by cogent reasoning because the assessee's contention revolves around bank statement found during the course of search.

4.11 According to us, this whole issue should be looked into in the light of above discussion. So, we set aside the order of CIT(A) and restore the whole issue to the file of the Assessing Officer with a direction to decide the same as per fact and law and after providing due opportunity of being heard to the assessee. Similarly, the other additions with regard to land rights expenses, depreciation on cars, interest on loans and overheads and other land deals and expenses has to be looked into by the Assessing Officer as per fact and law after providing due opportunity of being heard to the assessee, which is the essence of principles of natural justice, which could not be compromised in any manner. Since, we are setting aside the order of CIT(A) for all the years on broad legal proposition based on principles of natural justice as discussed above, we are refraining from commenting on the merit of the issue at hand.

5. In the result, all the appeals filed by assessee are allowed for statistical purposes as discussed above.

Pronounced in the open Court on this the 27th day of May, 2014.

        Sd/-                                       Sd/-
   (R.K. PANDA)                         (SHAILENDRA KUMAR YADAV)
 Accountant Member                          Judicial Member
Pune, Dated: 27th May, 2014
GCVSR

Copy to:-
    1.      Assessee
    2.      Department
    3.      The CIT(A)-I, Pune
    4.      The CIT-I, Pune
    5.      The DR, "B" Bench, I.T.A.T., Pune.
    6.      Guard File
                                                     By Order

       //True Copy//
                                             Senior Private Secretary,
                                                 I.T.A.T., Pune

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Income Tax Appellate Tribunal - Pune

Moreshwar Mahadev Bhondve, Pune vs Assessee on 20 May, 2014