Income Tax Appellate Tribunal - Delhi
Acit, Cc-6,, vs Afrin Rizvi,, on 20 December, 2017
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "A": NEW DELHI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
AND
SHRI O.P. KANT, ACCOUNTANT MEMBER
ITA No.:- 305/Del /2005
Block Period: 1.4.1995 to 8.11.2001
Asstt. Commissioner of Income Late Dr. A.H. Rizvi, through
Tax, Central Circle-6, L.H. Smt. Afrin Rizvi,
New Delhi. Vs. A-232, Defence Colony,
New Delhi
(Appellant) (Respondent)
ITA No.:- 306/Del /2005
Block Period: 1.4.1995 to 8.11.2001
Late Dr. A.H. Rizvi, through L.H. Asstt. Commissioner of
Smt. Afrin Rizvi, Income Tax, Central Circle-6,
A-232, Defence Colony, Vs. New Delhi
New Delhi
(Appellant) (Respondent)
Department by: Smt. Aparna Karan, CIT(DR)
Assessee by : Shri K. Sampat. Advocate
Shri V. Raj Kumar, Advocate
Date of Hearing 10/10/2017
Date of /12/2017
pronouncement
IT (SS) A No.:- 40/Del/2006
Block Period: 1.4.1995 to 8.11.2001
Mrs. Afrin Rizvi, Asstt. Commissioner of
A-232, Defence Colony, Income Tax, Central Circle-6,
New Delhi Vs. New Delhi
.
(Appellant) (Respondent)
ITA Nos. 305,306/Del/2005
ITSS Nos. 93, 40/Del/2006
IT (SS)A No.:- 93/Del/2006
Block Period: 1.4.1995 to 8.11.2001
Asstt. Commissioner of Income Mrs. Afrin Rizvi,
Tax, Central Circle-6, A-232, Defence Colony,
New Delhi. Vs. New Delhi
(Appellant) (Respondent)
Department by: Smt. Aparna Karan, CIT(DR)
Assessee by : Shri K. Sampat. Advocate
Shri V. Raj Kumar, Advocate
Date of Hearing 12/10/2017
Date of 20/12/2017
pronouncement
ORDER
PER AMIT SHUKLA, J.M.
The aforesaid cross appeals have been filed by the revenue as well as by the assessee against separate impugned order dated 31.3.2005 in the case of Late Dr A.H. Rizvi, through Legal heir, Smt. Afrin Rizvi; and order dated 12.1.2006 in the case of Smt. Afrin Rizvi, passed by the Ld. CIT (Appeals)-III, New Delhi for the quantum of assessment passed u/s 158BC for the block period 1.4.95 to 8.11.2001. Since the issues involved in both the appeals are common arising out of identical set of facts, therefore, the same were heard together and are being disposed of by way of this consolidated order.
2. We will first take up the cross appeals of late Dr. A.H. Rizvi. In the grounds of appeal, the revenue has taken following grounds:-
1. "On the facts and circumstances of the case the Ld. CIT (A) has erred in reducing the addition from Rs.94,52,393/- to Rs.33,15,399/- made on account of undisclosed investment in 2 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 agriculture land & farm house at Village Bhagoowala Saharanpur.
2. On the facts and circumstances of the case the Ld. C.I.T.(A) has erred in deleting the addition of Rs.1,64,59,981/- made on account of undisclosed investment in jewellery.
3. On the facts and circum stances of the case, the Ld. C.I.T. (A) has erred in reducing the addition of Rs.44,99.006'- to Rs.27,99,954/
- made on account of undisclosed investment in Farm house at Village Fatehpur Beri. Chattarpur, Mehrauli, New Delhi on the basis of seized material.
4. On the facts and circumstances of the case the Ld. C.I.T. (A) has erred in deleting the addition of Rs.10,40,100/- made on account of undisclosed income being perquisite value of rent free accommodation on the basis of seized material."
3. Brief facts are that the assessee was engaged in medical profession (Derma Doctor/Skin Specialist). A search and seizure action u/s 132(1) was carried out at his residential, business premises, as well as his farm house and bank lockers on 8.11.2001. In response to notice u/s 158BC, assessee had shown undisclosed income of Rs.14,30,000/- for the block period. On scrutiny of various seized documents, it was revealed that assessee along with his wife; Smt. Afrin Rizvi had made investments in purchase of agricultural land in the name of their son, Mr Saif Rizvi and daughter, Ms. Soheer Rizvi; and Smt. Jamila Begam and Smt. Aquila Begum who were their relatives. As many as 16 sale deeds were found from the premises of the assessee relating to the purchase of agricultural lands at village Bhaguwala, District Saharanpur. The details of these sale deeds have been incorporated at page 3 and 4 of the assessment order, which for the sake of ready reference is reproduced hereunder :-
3ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 Ref. of seized Date of Area Stamp Duty Value as per In the name of annexures purchase Purchase price as paid (Rs.) circle rate (Rs.) per deed (Rs.) A-10/129 13.8.97 12 Bigha 14 Biswa 152400 23000 287200 Dr. A.H. Rizvi A-26/1-12 25.7.97 2 Bigha 13 Biswa 24075 4760 59205 - do - A-35/1-29 - do- 8 Bigha 6 Biswa 74925 14000 174825 -do- A-35/50-51 29.7.97 5 Bigha 11 Biswa 50100 9360 116920 -do -
A-26/13-14 22.9.98 6 Biswa 5000 880 10130 Mrs. Afrin Rizvi A-26/17-25 7.10.97 2 Bigha 7 Biswa 32100 6250 81500 - do -
A-26/26-37 7.9.98 4 Bigha 4 Biswa 53100 9040 112050 - do -
A-26/46-52 7.10.97 11 Biswa 8000 1640 20375 - do -
A-12/18-20 8.8.97 4 Bigha 3 Biswa 37465 7040 87675 -do A-29/1-2 29.8.97 5 Bigha 11 Biswa 51000 9360 116970 -do - A-29/3-11 13.8.97 13 Bigha 3 Biswa 159150 22120 273150 Saif Rizvi A-32/1-16 13.6.97 11 Bigha 16 Biswa 141600 20720 258785 - do - A-32/17-31 13.8.97 4 Bigha 8 Biswa 54000 7480 93030 Soheer A-32/32-41 -do- 19 Bigha 2 Biswa 228450 32160 401914 Rizvi
-do-
A-10/10- 31 25.7.97 5 Bigha 10 Biswa 49650 9280 115850 Zamila Begum &
Akila Begumk
-do- 36075 8720 108675
A-35/30-32 4 Bigha
-do-
4
ITA Nos. 305,306/Del/2005
ITSS Nos. 93, 40/Del/2006
A 4. Before the AO it was contended that investment in the lands were made by the respective owners of the agricultural land, although the assessee's son, Mr Saif Rizvi and his daughter, Ms. Soheer Rizvi were not income tax assessees on the date of search and they were also not filing their return of income. However, the assessee had prepared a balance sheet of his children as on 31.3.98 and 31.3.1999 which was filed during the block assessment proceedings to justify the investments made by them in the agricultural land. The opening capital in the case of his son was shown at Rs. 7,14,425/- and in the case of daughter at Rs. 6,23,260/-. Apart from that, AO noted that no evidence whatsoever could be filed to justify such a huge capital investment and also sources of income and savings. Thus, AO held that investment in agricultural land in the name of the children were assessee's own undisclosed income. As regards the land standing in the name of the two relatives, Smt. Jamila Begum and Smt. Aquila Begum, it was contended that they were the real owners of the land and in support; sworn affidavits of these two ladies were filed before the AO affirming that they have bought the lands. However, the AO observed that they have not mentioned their source of income, amount of income earned, expenses incurred and savings made for investment in agricultural land and in the farm house at Saharanpur. Hence these affidavits do not constitute much evidentiary value to prove that these ladies have bought the land from their own sources of income. Accordingly, the investment in the land which stood in the name of these two ladies was also held to be belonging to the assessee and the purchase value was added in the hands of the assessee. During the course of block assessment proceedings the AO also carried out inquiry through Investigation Wing, Saharanpur to ascertain from the local revenue office about the exact area of land owned by the assessee 5 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 and his family members. The details obtained from Patwari (land revenue officer) of the Tehsil gave the following report:-
Date of purchase Area Value as per In the name of / Khata No. circle rate (Rs.) 12.5.2000 40 Bigha 840000 Dr. A.H, Rizvi 12.11.1997 51 Bigha 1071000 -do-
/51 10 Bigha 210000 -do-
/163 22 Bigha 462000 -do-
/198 70 Bigha 1470000 -do-
/200 7 Bigha 147000 -do-
24.1.2000 50 Bigha 1050000 Saif Rizvi
3.11.1997 15 Bigha 315000 Jamila Begum
& Aquila Begum
12.11.1997 12 Bigha 252000 -do-
-do- 3 Bigha 63000 -do-
Total: 280 Bighas 58,23,300/-
5. The investigation wing had also examined one Shri M.A Khan through whom the deal of purchase of land was carried out and in his statement on oath he stated that the consideration of purchase of agricultural land by the assessee was more than circle rate. When the statement of Shri M.A. Khan was confronted to the assessee, it was submitted that Shri M.A. Khan appears to have misunderstood the question and he later on has clarified by way of an affidavit that transactions were done at lower than circle rate and not above it.
However, the AO rejected such an affidavit filed by Shri M.A. Khan. The AO noted that transaction of the purchase of land has taken place above the circle rate which is evident from the contents and seized 6 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 papers A-20/40 and A-12/41 which the assessee has failed to rebut. On the basis of these seized documents AO concluded that Rs. 33 lacs was invested in agricultural land out of undisclosed income. The assessee in response to the notices had given detailed explanation with regard to the source of investments and the value on which these agricultural lands have been purchased. The AO held that, since the purchase deed and other relevant documents have been found from the possession of the assessee, therefore, the burden of proof was upon the assessee which could not be discharged at all and thus, he held that assessee is failed to discharge his obligation to rebut the presumption under the provisions of section 132(4A). Before the AO, on the issue of investment in the farm house, assessee had admitted investment of Rs. 10,86,910/- in the construction of farm house buildings at Rs. 9,81,910/- and investment in deep tube well at Rs. 1,05,000/-. Out of this sum it was claimed by the assessee that Rs. 4,22,011/- has been invested by him and Rs. 3,49,500/- by his wife; and Rs. 3,15,399/- by Smt. Jamila Begum and Smt. Aquila Begum. So far as the investment claimed in the case of assessee's wife Smt. Afrin Rizvi the same has been already considered in her block assessment. Accordingly, addition of Rs. 7,37,410/- was made. After detailed discussion and analysing the various documents and the inquiry report, the AO had made aggregate addition of Rs. 94,52,393/- the breakup of which can be summarised in the following manner:-
i. Addition of Rs. 20,83,994/- on account of investment in agricultural land at village Bhagoowala, Saharanpur made on the basis of 16 Sale Deeds seized at the premises of the appellant at the time of search.7
ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 ii. Addition of Rs. 30,00,000/- for investment in agricultural land at village Bhagoowala at Saharanpur made on the basis of document of Shri M.A. Khan, seized at the time of search numbered as A-20140 and A-12141 of seized documents and incorporated at pages 10 & 11 of Assessment Order. iii. Addition of Rs. 40,53,000/- for investment in agricultural land at village Bhagoowala at Saharanpur made on basis of Patwari's information of agricultural land holdings of assessee's family at Bhagoowala, Saharanpur. iv. Addition on account of investment made for construction of farm house and deep tube well of Rs.7,37,410/-.
From the above it is observed that the items of (i), (ii) and (iii) relate to investments in the same parcels of agricultural land at Bhagoowala village at Saharanpur.
6. Before the Ld. CIT (A), assessee gave detailed submissions and also filed certain evidences which were confronted to the AO by the Ld. CIT (A) by calling for the remand report. Assessee's explanation on the various aspects has been dealt by him from pages 9 to 17 of the appellate order and AO's remand report has been dealt by him from pages 18 to 23 of the appellate order. One of the major contentions raised by the assessee was that, as per the Patwari report, the measurement of the lands had been given at 280 Bighas, which in fact is in the form of Kuccha Bigha, whereas the Pucca Bigha is only 93.
This is evident from the sale deed and also the certificate from the Patwari which certifies that, one Pucca Bigha is equal to 3 Kuccha Bighas. The details of such reconciliation of Pucca Bigha into Kuccha Bigha is in the following manner:-
8ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 Name of the owner Bigha Biswa Dr. Rizvi 23 12 Afrin Rizvi 21 12 Saif Rizvi 15 09 Soher Rizvi 23 10 Zamila & Alkila 9 10 _________________________ 93 13 Patwari's information Total land owned by Pucca Bigha Kuccha Bigha Dr. Rizvi's Family 84-3-0 250 Zamila & Alkila 9-10-0 30
-------------- ----------------93-13-0 280
1 Pucca Bigha = 3 Kuchcha Bigha 93.65 * 3 = 280.95
7. Regarding various sources of investments in agricultural land etc., the assessee has justified the same by various evidences and explanations which has been dealt by the Ld. CIT (A) in his conclusion part also. Ld. CIT (A) so far as the land standing in the name of assessee's children, i.e., Mr. Saif Rizvi (son), Ms. Soheer Rizvi (daughter), held that since these children have not filed their return of income and did not had any source of income, therefore, same has rightly been added in the hands of the assessee. As regards the sale deed/ land records in the name of two relatives, i.e., Smt. Jamila Begum and Smt. Aquila Begum, he held that mere filing of affidavit does not prove that investments have been made by these two person, therefore, he held that the investment of purchase of agricultural land 9 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 in the name of these two ladies should be considered in the hands of the assessee.
8. So far as the contention of the assessee that one Pucca Bigha is equivalent to three Kuccha Bighas, Ld. CIT (Appeals) took note of letter/certificate from Patwari which clearly stated that, one Pucca Bigha is in fact equivalent to three Kuccha Bighas. Patwari has also given the details of land holding and also a certificate ascertaining the area of land owned by the assessee and his family members. Admitting the said certificate, Ld. CIT (A) held that AO is not justified in rejecting such a certificate given by the Land Revenue Authority. Ld. CIT (A) also made his own research and inquiry through an internet site of 'Krishi Sewa', wherein it has been mentioned that, one Pucca Bigha is actually equivalent to 3 kuccha Bigha. The printout from the Govt. site has also been annexed with the impugned appellate order. After considering the entire material on record including the sale deed, Ld. CIT (A) held that it stands established that assessee's contention in this regard is correct. He had also noted that details filed by the local revenue authorities before the Investigation Wing clearly mentions the date of mutation, i.e., as to when the land has been transferred in the name of different purchasers and the sale deed seized during the course of search provides the date of registration. Based on these materials, he held that for ascertaining the investment made in the land, the area as mentioned in the sale deed should be adopted.
9. Regarding the addition of Rs. 30 lacs made on the basis of seized documents A-20/40 and A-12/41, the explanation offered by the assessee regarding the source of cash, the relevant observation and finding of the Ld. CIT (A) after considering the assessee's 10 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 submissions, seized documents, finding of the AO in the assessment order as well as remand report held as under:-
5.8. The next issue to be decided is the addition of Rs.
30,00,000/- made by the A.O. on the basis of seized documents i.e. A-20/40 and A-12/41 which have been made a part of the assessment order by the A.O. Though the bottom line of page 13 of the assessment order states, "Further in view of the above discussion and as per notings on papers seized vide Annexure A- 12/41 and A-20/40 investment in land not recorded in books of account (and paid over and above mentioned in the purchase deed) amounting to Rs. 33,00,000/- is included in total undisclosed income." However, while making the addition on page 14 of the order which gives a breakup of the addition of Rs. 94,52,393/- the A.O. has added only a sum of Rs. 30,00,000/-. I have perused these seized documents and both these documents have to be read in conjunction. Page 40 of Ann. A-20 gives the graphic details of the amount brought and as to how it has been spent. The A.O. vide his show cause notice dated 12.12.04 has worked out the details of investments in respect of purchase of land at Vill. Bhaguwala. The relevant portion of this show-cause notice dated 12.12.04 is reproduced as under:-
"Annexure A-20 page No. 40 is also written document in which details of transactions in respect of purchase of land at Vill. Bhagoowala, Distt. Saharanpur is recorded. This document has recorded that Dr. A.H. Rizvi has brought cash from Delhi. This document has further recorded the outgoings. The details are as under:-11
ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 Date Receipt Outgoings 8.7 Land from Vinod Gupta 1,00,000/-
Paper work 10,625/-
Draft (prepared from cash) 7,36,400/-
_____________
8,47,025/-
13.7 11,00,000/-
Land 7,17,340/-
(cash brought from Delhi 18,000/-
By Dr. Rizvi)
Advance 10,000/-
__________
7,45,340/-
16.7 G.P. (Ganga Pd.) 10,00,000/-
(cash brought from Delhi By Dr. Rizvi) 5,70,000/-
Muzaffar (Deed written) 61,000/-
Court fee 13,000/-
Exp. 350/-
Adv. Md. Khan 1,00,000/-
Draft 1,58,000/-
Pay order 83,000/-
Adv. To Architect 2,000/-
________________
9,87,450/-
25.7 Cash Rs. G.P.(GangaPd.) 12,00,000/-
(cash brought from Delhi
Dr. Rizvi) 5,00,000/-
12
ITA Nos. 305,306/Del/2005
ITSS Nos. 93, 40/Del/2006
Court fee 11,250/-
Stamp paper 48,500/-
-do- 10,480/-
Peon 50/-
Muzaffar 7,960/-
____________
5,78,240/-
29.7 Land Shakeel 92,000/-
Stamp 9,360/-
Paper 25/-
Form 2,350/-
Peon 20/-
50/-
Type 60/-
- 400/-
Office charges 1,200/-
Patwari 500/-
300/-
Architect 2,000/-
Common 2,000/-
_______________
1,10,360/-
Total Rs. 32,68,415/-
5.9 The explanation offered by the appellant regarding the
source of cash was as under:-
Rs.3,70,000/- declared in block return of Dr. A.H. Rizvi Rs. 1,60,000/- declared in block return of Afrin Rizvi Rs. 5,35,720/- Agrl. income as per documents seized 13 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 Rs. 8,00,000/- Jamila Begum Rs. 5,34,280/- Aquila Begum Rs. 5,00,000/- Ram Jiyawan Pandey Rs.4,00,000/- Vindeshwari Prasad Dwivedi Approx. Rs. 33,00,000/-
As far as the sum of Rs. 3,70,000/- and Rs. 1,60,000/- is concerned, the same has been admitted as undisclosed income by the appellant and his wife in their block returns. However, as far as the money claimed to be belonging to Ms. Jamila Begum and Ms. Aquila Begum, Ram Jiyawan Pandey and Vindeshwari Prasad Dwivedi of Rs.8,00,000/-, Rs. 5,34,280/-, Rs. 5,00,000/- and Rs. 4,00,000/- respectively are concerned, only affidavits have been filed to substantiate the claim of the appellant. However, these affidavits cannot be taken on their face value as no other corroborative evidence has been filed to establish that cash was actually handed over by these parties to the appellant. It is also unbelievable that two persons namely Sh. Ram Jiyawan Pandey and Sh. Vindeshwari Prasad Dwivedi who claimed to have given Rs. 5,00,000/- and Rs .4,00,000/- in cash to the appellant, will give such a huge amount of cash unless and until the deal with regard to purchase for land had reached a very mature stage ultimately no land has been purchased by these two persons and it is claimed that they received the money back, preponderance of probability that these persons had given the cash for the purchase of land is against the assessee as there is nothing on record to suggest that these two persons directly or somebody on their behalf negotiated with the prospective sellers of land. Therefore, the claim of the appellant in this regard cannot 14 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 be accepted. As regards claim of Rs. 5,35,720/- which is stated to be out of agriculture income, it is a matter of record that some bills of sale of agriculture produce have been seized during the course of search. But, one fails to understand as to how the assessee could have derived agriculture income even before purchase of land. Therefore, the bills of agriculture produce seized during the course of search cannot be relied and lent any credence. Therefore, whole of this amount of Rs. 33 lacs has to be assessed as undisclosed income of the appellant and the addition to that extent is confirmed.
5.10 Another addition made by the A.O. is of Rs. 7,37,410/-. As per the A.O. the assessee admitted that investment of Rs. 10,86,910/- has been made in the construction of farm house and deep tube well. The investment claimed to have been made by Smt. Afrin Rizvi at Rs. 3,49,500/-has been considered in her hands. The investment of Rs. 3,15,399/- is claimed to have been made of Ms. Jamila Begum and Rs. 4,22,011/- in the appellant's hands. It is claimed by the Ld. AR that investment of Rs. 4,22,011/- has been declared in the return filed by Dr. Rizvi for the assessment year 99-2000 and of Rs. 4,20,000/- in the return filed by Ms. Afrin Rizvi for the A.Y. 99-2000. It is further claimed by the appellant that investment of Rs. 3,00,000/- has been made by Ms. Jamila Begum and Ms. Aquila Begum as per their affidavits filed. As the investment of Rs. 4,22,011/- has been declared in the return filed by the appellant to that extent the addition made by the AO cannot be upheld. However, with regard to investment made by Ms. Jamila Begum and Ms. Aquila Begum, only affidavits have been filed and the same cannot be taken on their face value as these are without any corroborative evidence 15 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 whatsoever. Therefore, the addition to the extent of Rs. 3,15,399/- is upheld. "
Thus, Ld. CIT(A) has confirmed the addition of Rs. 33 lacs to be assessed as undisclosed income and further sum of Rs. 3,15,399/- out of investment in construction of farm house and tube well.
10. Lastly, regarding addition of Rs.40,53,000/-, the same has been made by the AO on the ground that assessee was holding 280 Bighas of land out of that, assessee has only disclosed 87 Bighas and therefore, on such a difference AO has applied purchase price at Rs. 21,000/- per Bigha and made the addition. The relevant finding and conclusion of the Ld. CIT (A) on this issue is as under:-
"5.11 Another addition made by the A.O. is of Rs. 40,53,000/-. This addition has been made by the A.O. by holding that the assessee was holding 280 bighas of land and out of that the assessee has disclosed 87 bighas and by adopting the purchase price at Rs. 21000/- per bigha. As per the Ld. AR that the total land holding of the assessee and his relatives is as reflected in the seized 16 sale deeds and the total land holding as per the deeds works out to 93 bighas and 10 Biswas. It was further pointed out that there is some error with respect to the land area in the sale deed Ann. A-I0/129. In this sale deed on page No.3 it is stated that the area of land purchased by the' appellant is 7 bigha 2 biswa. However, this is erroneously shown as 12 bigha 14 biswa on page 3 and 13 of the assessment order. Therefore, the Ld. AR submitted that it should be amended to this extent. It is further contended that the area of land owned by the appellant is 23 bigha 12 biswa and this fact is corroborated by the certificate 16 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 from Patwari dated 11.6.04 which states the area belonging to the appellant is 23 bigha 10 biswa. It is further argued that in this certificate it is also stated that one pucca bigha is equivalent to 3 kacha bighas. With regard to the confusion about the kaccha bigha and pucca bigha, it is stated that the prevalent mode of entries in the land revenue records is that the land is shown in kachha Bighas while the sale deeds always record the area in pucca or pukhta bigha.
5.12 This addition has been made by the A.O. by taking the land holding as given by revenue authorities to ADIT (Inv.) Saharanpur. However, as I have already held that the appellant has been successful in establishing that one pucca bigha is equivalent to 3 kaccha bigha. Therefore, I feel there is no justification in taking the holding of land at 280 bighas. I have already held above that the land holding will be considered in the hands of the appellant only of the areas as mentioned in the Regd. sale deeds which have been seized during the assessment proceedings. The addition has been made by the A.O. after subtracting 87 bighas from 280 Bighas and multiplying it by Rs. 21,000/- i.e. the circle rate. The seized documents i.e. A-12/41 and A-20/40 give graphic details of the money involved in the transactions of the purchase of land at ViII. Bhaguwala. Even if the circle rate as mentioned in the sale deed is adopted the addition confirmed by me of Rs. 33,00,000/- will be sufficient to cover the investment made by the appellant. Therefore, no further addition on account of undisclosed investment in the land is called for and the addition made by the A.O. of Rs.40,53,000/- is deleted.17
ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 5.13 Another addition made by the A.O. is of Rs. 20,83,994/- on account of land holdings as appearing in the sale deeds pertaining to the appellant his son and daughter and his two relatives i.e. Smt. Jamila Begum and Smt. Aquila Begum. This addition has been made by the A.O. on the basis of circle rates as given in the sale deeds itself. I have already upheld the addition of Rs. 33,00,000/- made on the basis of seized documents i.e A- 20/40 and A-12/41. The transactions recorded on these pages relate to purchase of the same agriculture land. Therefore, no further addition on account of purchase of land is called for as it will tantamount to double addition. Therefore, the addition made by the A.O. of Rs. 20,83,994/- is deleted. "
So in this manner, out of aggregate addition of Rs. 94,52,393/- additions sustained by the Ld. CIT(A) was at Rs. 33,15,399/-.
11. Before us, Ld. CIT (DR), after referring to the relevant observations and finding of the AO as well as the comments made in the remand report, submitted that Ld. CIT (Appeals) has erred in holding that the agricultural holding of the assessee was not 280 Bigha, but 93 Bigha. This finding cannot accepted, because the additional evidence in the form of certificate from Patwari was after the assessment order. Secondly, after confirming the addition of Rs. 33 lacs, Ld. CIT (A) was not correct in holding that all the other additions on account of undisclosed income will get covered by such addition. For holding so Ld. CIT (A) has not addressed the reasoning of the AO.
12. On the other hand Ld. Counsel for the assessee, Shri Sampat submitted that there cannot be an iota of doubt that the purchase of agricultural land is in Pucca Bigha as mentioned in sale deeds and the 18 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 Local Revenue Authority has certified the same which has duly been confronted to the AO at the time of appellate proceedings. Thus, it cannot be held that such an additional evidence as admitted by the Ld. CIT (A) to adjudicate the same is not correct. Thus, he strongly relied upon the order of the Ld. CIT (A).
13. We have heard the rival submissions, perused the relevant finding given in the impugned orders as well as material referred to before us. Ld. AO has made the aggregate addition of Rs. 94,52,393/-, on account of unexplained investment in agricultural land and in construction of farm house and deep tube well. The breakup of such addition has already been incorporated by us in the foregoing paragraph. It is an undisputed fact that purchase of agricultural land through 16 sale deeds discovered during the course of search from the premises of the assessee on 8.11.2001, clearly disclosed 93 Bighas. The AO from the details of the land obtained from Patwari on the basis of Khata Number noted that it has been mentioned at 280 Bighas. The assessee pointed out that 280 Bighas were in fact Kaccha Bighas and land has purchased only in terms of Pacca Bighas. This factum was tried to be established by the certificate/ letter obtained from the Local Revenue Authority, i.e., Patwari who clearly certified that one Pacca Bigha is equivalent to three Kaccha Bigha. The calculation of 1/3rd of 280 Bighas comes down to roughly 93 bighas, which is in consonance with sale deed which clearly mentions that assessee through these sale deeds had purchased 93.13% Bigha. Ld. CIT (A) has duly confronted this certificate to the AO, on which the AO failed to rebut this fact by any proper material or evidence but has simply objected that it has been filed after the completion of the assessment. This cannot be the ground for objection, because it is a certificate given by 19 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 a Local Revenue Authority who is confirming/certifying about the actual fact; and not only that the Ld. CIT (A) has carried out his own research and came to his own independent conclusion that, in fact, one Pacca Bigha is equivalent to three Kaccha Bighas and based on this he has given relief to the assessee as discussed above. We are unable to find any infirmity in such finding of the Ld. CIT (A), because the same is based on material placed on record and it has not been rebutted by any contrary material by the department.
14. So far as the other additions are concerned like, addition of Rs. 30 lacs for investment in agricultural land based on the statement of Shri M.A. Khan and seized documents, we find that the details of receipts and outgoings based on seized annexure has been incorporated by the Ld. CIT (A) in para 5.8 and thereafter, he has examined the source of cash in detail. After detailed discussion he has confirmed Rs. 33 lacs to be assessed as undisclosed income. This sum of Rs. 33 lacs also includes sums aggregating to Rs. 13,34,280/- which has been claimed by the assessee to have been invested by two of his relatives, Smt. Jamila Begum and Smt. Aquila Begum of Rs. 8 lacs and Rs. 5,34,280/- respectively against which assessee is also in appeal. Ld. CIT (A) has rejected the assessee's plea on the ground that the affidavit filed by these two ladies cannot be accepted as they have not filed any evidence for source of their income. Though this is one of the ground / issue raised in the assessee's appeal therefore being the connected issue we would like to take up this issue at this stage only.
15. Before us the Ld. Counsel for the assessee submitted that the entire addition has been made on the ground that presumption u/s 132 (4A) could not be rebutted. However, the most glaring fact is that the sale deed itself mentions the name of the owner and also they have 20 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 filed their affidavit owning their land, therefore, so far as the assessee's concern the presumption drawn against the assessee stands rebutted. On the other hand, Ld. CIT (DR) supporting the order of the Ld. CIT (A) on this score submitted that no evidence could be filed that the land has been purchased by these two ladies out of their own sources and once the sale deed has been found from their possession, the onus is on the assessee which has not been discharged.
16. After considering the rival submissions and on perusal of the relevant material referred to before us as noted above, out of 16 sale deeds, sale deeds pertaining to 5 Bighas 10 Biswas and 4 Bighas belong to Ms. Jamila Begum and Ms. Aquila Begum who are close relatives of the assessee. Once during the course of search a document pertaining to third person has been found which clearly mentions that these two persons are owners of the land whose names are appearing in the sale deed and during the course of assessment proceedings they have not only owned up the ownership of said land that it belongs to them, but also have mentioned that it is out of their own source of income, then the source of their investment should have been examined in their hands. Though they may not have been able to adduce the source of income by giving any evidence, but so far as the assessee is concerned, the presumption cast upon him in terms of section 132 (4A) stands discharged, firstly, for the reason that the document does not contain the name of the assessee, albeit the owner of the document are other persons; and secondly, these two persons have owned up the document. Thus, at this stage itself the onus has shifted to the department and the revenue should have inquired from these two person as to what is the source of investment in the said 21 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 land and the right course would have been to initiate proceedings u/s 158BD which provision is applicable under these circumstances, because if the undisclosed income belongs to any person other than the persons searched, then law envisages that the proceedings u/s 158BD has to be separately initiated as laid down in the said section. Thus, we hold that so far as the value of these two sale deeds for purchase of land cannot be considered in the hands of the assessee or any other addition on account of undisclosed income can be made. Accordingly, to the extent of Rs. 13,34,280/- cannot be added and same is directed to be deleted from the hands of the assessee.
17. Now so far as the other additions are concerned which have been partly confirmed and partly deleted by the Ld. CIT (A), as discussed in para 5.8 to 5.10 of the appellate order (as incorporated above), we do not find any reason to deviate from the finding of the Ld. CIT (A) as it is not only based on correct appreciation of facts but also the entire material on record which is in accordance with the law. Thus, the other additions which have been deleted by the Ld. CIT (A) specifically on account of enhancing the measurement of land from 90 Bigha to 280 and thereby valuing the same differently and part of the investment which has been accepted in the construction of the farm house and tube well is upheld. Accordingly ground No. 1 of the revenue is dismissed and part of the ground no. 6.1 of the assessee is also allowed.
18. The next ground relates to addition of Rs. 1,64,59,981/- made on account of undisclosed investment in jewellery. The AO noted that during the course of search certain visiting cards/papers/bills relating to purchase/payment of jewellery were found from the residence from the assessee. During the course of search, the total 22 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 jewellery found was valued at Rs. 66,17,424/-, which has been separately added by the AO in the block assessment order assessee's wife, Smt. Afrin Rizvi. The assessee's explanation before the AO with regard to each and every seized documents have been discussed at length from pages 34 to 46. The relevant portion of assessee's explanation qua the seized documents for the sake of ready reference is reproduced hereunder:-
• Page no. 2 relates to some calculation, which shows basis of cost material only. However, this not related to any purchases as mentioned that it may be related to the bracelet, but is does not relate to any purchase made by the assessee.
• Page no.3 also relates to the item shown to Dr. Afroz Rehman for selection, however, no item relate to any purchase.
• Page no.4 does not reflect any purchase of gold, diamond jewellery but it relates only to calculation for the purpose of finding out the breakup of the jewellery cost.
• In the same way, page no. 5 is only a calculation, which does not automatically establish purchase by the assesse.
• Page No. 6 is again details of calculation to find out the cost of a diamond necklace, which does not mean any purchase.
• Page No. 7 having rough calculation which does not suggest anything.
• Page No. 8 also shows the calculation, if jewellery manufactured by given item gold and diamond etc. this does not show any purchases made by the assessee.23
ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 • Page no. again a calculation, which does not suggest any purchase.
• Page no. 10 also a rough calculation only.
• Page no. 11 again is a calculation shown the cost of jewellery
shown.
• Page no.12 also a rough calculation only.
• Page no. 13 does not reflect any receipt but only shows Rs.
200/- signed by someone. It does not mean a receipt.
• Page no. 14 again is a calculation of a set, ball tikka, pearl and jhoomer, this does not mean that these are purchase, but it may be possible that Smt. Afroj Rehman asked the jeweller to repair the jewellery for her daughter's marriage, however, the assessee cannot say whether it was purchased or not.
• In the same way, page no.15 is a description of jewellery, which may related to marriage of Dr. Afroj Rehman's daughter purchases.
• Page no. 16 is again a rough calculation.
• Page no.17 is again calculated of jewellery which does not relate to any purchases as your good self mentioned in the query.
• Page no.18 also relates to a calculation only.
• Page no.2 to 18 are related to calculation of gold and diamond jewellery but all the papers are unsigned and nowhere, it is mentioned that the item mentioned in the paper are actually purchased by the assessee. Therefore, on the basis of presumption it cannot be said that the papers relate to any purchases of gold 24 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 and diamond jewellery. Therefore, your goodself is requested to correct the query and delete the word purchase of gold and diamond jewellery. In fact with due respect it may be noted that the word "purchase" is a premature presumption itself.
• Page no. 19, 20, 21, 22, 23, 24, 25, 26, 27 relate to the visiting cards of Champalal jewellers. On the back of the visiting card some calculation or receipt of the gold jewellery mentioned. Actually, these cards relate to the gold jewellery which was returned back by the assessee from time to time as agreed by the jewellery at the time of selection or approval of gold and diamond jewellery.
• Page no.25 of annexure A2 E, it is very much clear that some gold items were deposited (returned back) by the jewellers on 17. 9. 2000 and this means other cards of page no.19to 29 similarly relate to the gold the diamond jewellery, which was returned to the jewellers after consultation with other family members- since the transactions were all "on approval"
• Page no. 28, 29, 30 & 31 are relates to the repair/renovation work of gold and diamond jewellery by Dr. Afroz Rehman.
19. It was further submitted that the assessee's wife's sister, Dr. Afroz Rehman, who is citizen of USA having four daughters did visit India during the period the April, 2000 to May, 2001 for the marriages of her daughters, Smt. Salma and Salra which was held on 20.5.2000 and 24.6.2001 respectively. During these visits to India, Smt. Afroz Rehman accompanied by assessee's wife had made heavy purchases of cosmetic item gold diamond jewellery. It may be possible that the calculation made at the time of purchase/manufacturing and renovation of old gold jewellery, they may have used the noting pad 25 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 which they had brought from Hong Kong during their visit to India. However, it is very much clear that Smt. Afroz Rehman during her visit to India had purchased various items of gold jewellery after a lot of bargaining from jewellers particularly Champa Lal, a famous jeweler of Greater Kailash New Delhi. Approximately, 5 to 6 lacs worth in gold, silver and diamond jewellery was purchased/manufactured/ renovated by Dr. Afroz Rehman and most of the jewellery was purchased/repaired/renovated by Champa Lal jewellers who agreed to exchange/return the gold and diamond jewellery is proper payment in the shape of security/purchase price are paid to the jeweller and returned is made within 6 months of the purchase. Such purchases "on approval" and "returned" was possible since the jeweller knows the assessee's reputation, Dr. Rehman's Daughter Salma and other relatives could conduct these transactions on returnable basis and the goods were returned form or taken to USA through various amongst relatives and friends visiting India. In support of the above explanation the assessee filed copy of invitation card of marriage of one of the daughter of Dr. Afroz Rehman and copy of passport of Dr. Afroz Rehman. The assessee also filed an affidavit from Dr. Afroz Rehman in which everything was mentioned regarding quantity of gold/diamond jewellery purchased/exchanged from various jewellers including Champa Lal Jewellers. Dr. Afroz Rehman in her affidavit further stated that she had a very short visit and lot of purchases were made for her younger daughter.
20. AO held that the content of the affidavit is in contradiction of the fact that the gold/diamond jewellery were purchased/exchanged on approval basis for six months. Moreover, affidavit has got not much evidentiary value and it is simply a self serving document. Mere 26 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 statement without supporting documentary evidence cannot justify that the jewellery were purchased by other persons and not by the assessee particularly in view of the fact the details in regard to purchase of jewellery was found in the possession of the assessee. The assessee in his submission failed to even identify the relatives and friends who were visiting India and who were taking back the jewellery to USA on behalf of Dr. Afroz Rehman. Further, it is worth mentioning here that search was conducted in the case of Champalal jewellers, Greater Kailash-II, New Delhi and documents relating to unaccounted sales were seized vide Annexure A-1. Page 51 of Annexure A-1 clearly shows sale of jewellery to "Dr. Rizvi". In the case of Champalal Jewellers, unaccounted sales made to various customers as per Annexure A -1 was disclosed in the block assessment proceedings which included unaccounted sales to "Dr. Rizvi" also. When the assessee was confronted with these facts, the assessee vide order sheet notings dated 24.12.2003 submitted that he has personally never visited to the shop of Champalal Jewellers nor he had done any transactions personally. It was further submitted by him that whatever transactions took place between his relatives and Champalal Jewellers has nothing to do with him. In his submission the assessee further stated that not a single item relating to such purchase attributed to me was ever found during the search and whoever purchased them, took them, as they were not meant for me and my family members. However the AO rejected the assessee's contention on the ground that no evidence has been produced in support of such explanation and the seized documents, clearly shows the assessee has transacted in purchase of jewellery which is undisclosed expenditure / investment. The relevant conclusion of the AO in this regard reads as under:-
27ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 "The explanation of the assessee is not categorical and moreover, no evidence was produced by him in support of his submission. The notings on seized papers, visiting cards as per Annexure A-28 is very much clear and it is written in the same language /style as it was written in seized papers, Annexure A-1/51 seized from the premises of Champalal Jewellers. The fact that the name of Dr. Rizvi was written on the seized documents in respect of unaccounted sales and it remains unanswered as to how the name of Dr. Rizvi appeared in the said documents. Further how Champalal Jewellers was aware of assesses reputation when the assessee has neighbour purchased any jewellery from them, under the circumstances how Champalal Jewellers gave costly ornaments to a stranger i.e. relative of Dr. A.H Rizvi on the basis of assessee's reputation. The transaction recorded on seized document, Annexure A-28 found in the residence of the assessee vis-a-vis the transactions recorded in the seized documents A- 1/51 found in the premises of Champalal Jewellers clearly proves that Champalal Jewellers had sold jewellery out of books and Dr. Rizvi, the asseseee made payments out of his undisclosed income. In view of above discussion the investment/expenditure made as per notings on documents inventoried as annexure A-28 amounting to Rs. 1,64,59,981/- is treated as undisclosed expenditure/investment out of income not disclosed."
21. Before the Ld. CIT(A), assessee has made very detailed submissions and one of the main crucial explanation was that these documents for purchase of jewellery relates to purchase made by sister of Smt. Afrin Rizvi. Dr. Afroz Rehman who is a citizen of USA having four daughters who had visited India during the period of 28 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 April, 2000 to May 2001 for marriages of her two daughters which was held on 20.5.2000 to 24.6.2001. During these visits she had made heavy purchase of cosmetic items, gold and diamond jewellery. All these details and submissions alongwith affidavit of Dr. Afroz Rehman sister of Smt. Afrin Rizvi was filed and these have been discussed in detail by Ld. CIT (A) in his appellate order.
22. After considering the entire material placed on record, Ld. CIT (A) held that the assessee has been throughout contending that entries in the seized papers were not in his handwriting and these pages contain jottings made by his wife's sister who lives in USA and was making purchase for the marriage of her daughter. This he held that is clearly corroborated by making figures given in the seized documents which if divided by 44 (which was the approximate prevailing dollar rate at that time) and evidence from the seized documents like pages 2 and 6 and others of Annexure A-28. After considering the explanation and all these documents coupled with affidavit of wife's sister, he held that assessee's explanation appears to be correct. Further he held that once only jewellery of Rs. 66,17,424/- was found during the search, then to make separate addition of Rs. 1,64,59,981/- cannot be upheld, once no jewellery has been found during the course of search for this amount. After relying upon the various judgments he concluded as under:-
"7.6 In view of foregoing discussion I am of the opinion that addition made merely on the basis of jottings in the seized papers is not justified as the AO has to bring some corroborative evidence to show that these jotting/entries actually show some transaction and that the assessee has made investment in purchase of jewellery which is not disclosed to the department. The AO can 29 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 tax only that expenditure which is proved to have been incurred by the assessee and the same is out of undisclosed sources. The AO has not brought any corroborative evidence on record to justify the addition made by him. In these circumstances, I have no option but to delete the addition of Rs. 1,64,59,981/-made by the AO. This ground of appeal is allowed."
23. Ld. CIT(DR) submitted that, once huge seized documents have been found indicating purchase of jewellery from particular jeweller, then onus was on the assessee to prove that investment in these jewelleries have been made through disclosed sources. Mere stating that these jewellers have been purchased by assessee's wife's sister cannot absolve the assessee, because once incriminating documents have been found, then onus is on the assessee to prove by cogent evidence. Thus, she strongly supported the order of the AO.
24. On the other hand Ld. Counsel for the assessee supported the order of the Ld. CIT(A) and submitted that looking to the fact that no jewellery has been found other than valuing at Rs. 66,17,424/- which has been considered in the case of assessee's wife, no addition can be made for such a huge amount.
25. We have heard the rival submissions, perused the relevant findings given in the impugned orders as well as material placed on record. The entire basis of addition is based on certain loose papers and bills for the purchase/payment of jewellery found from the residence of the assessee. Each and every documents and paper have been explained by the assessee, the relevant portion of which have been incorporated by us in the foregoing paragraphs. Some of the seized documents contained some rough calculation and some of them 30 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 are in the form of bills of one jeweller, Champalal Jewellers. The assessee's contention has been that assessee's wife's sister, Dr. Afroz Rehman who herself is a medical doctor and citizen of USA had come to India for marriage of her daughters and during her visit, she had made purchases or renovated old jewellery. She had also filed her affidavit that the jewelleries have been purchased by her and some of the documents were just rough calculation and noting and some of the jewelleries have given for approval and returned back which has been mentioned in the said seized documents itself. One very important fact which is noteworthy is that all the jewellery items as per the description made in the seized documents were never found from the premises of the assessee and if the assessee has purchased the jewellery worth of Rs. 1.64 crores in the year 2000, then it would have been a huge amount of jewellery (more than 37 kgs at then prevailing rate of gold) which must have been found from the possession of the assessee when a global search has been carried out at all the places including bank locker, residence, farm house and office. None of such items of jewelleries have been found barring jewellery valuing Rs. 66.17 lacs which has been separately considered in the hands of the assessee's wife. In support of this contention that Dr. Afroz Rehman had come to India, photocopy of her passport, photocopy of marriage invitation card of her daughter alongwith her affidavit was filed, wherein she has stated that she has purchased jewellery from Champalal Jewellers worth Rs. 10 lacs. Other notings have been stated to be rough calculation or jewellery purchased for approval which has been returned. Further one important fact which has been noted by the Ld. CIT (A) is that the calculations for the purchase of jewellery if is divided by Rs. 44, which was then prevalent exchange rate of INR against the US dollar which is appearing at several places, 31 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 he held that it will go to show that the said transaction was undertaken by Smt. Afroz Rahman who is a US citizen. Based on these facts and documents, we do not find any discrepancy or reasons to deviate from the order of the Ld. CIT(A) and therefore, same is affirmed. Accordingly, ground no. 2 raised by the revenue is dismissed.
26. The next issue relates to part relief given by the Ld. CIT(A), whereby he has reduced addition of Rs. 44,99,006/- to Rs. 27,99,954/- made on account of undisclosed income in farm house at Village Fatehpur Beri, Chattarpur, Mehrauli, New Delhi on the basis of seized material. These additions have been made by the AO on account of undisclosed investment/expenditure in the farm house based on seized documents. The assessee has admitted investment of Rs. 19,47,283/- in the construction of farm house and AO has made addition over and above this amount at Rs. 24,15,117/-. The assessee had purchased an agricultural land of 12.5 Bigha for Rs. 8,95,000/- on 16.8.1994 which was duly recorded in the books of accounts. The said land was developed and a farm house was constructed and details of investments were part of the seized documents inventorised as annexure A-2. The assessee had submitted total expenses of Rs. 19,47,000/- incurred on account of construction of farm house. The details are given as under:-
Assessment Year Amount Sources
Incurred
1997-98 19,710/- Declared in Block Return
1998-99 1,09,654/- Declared in Block Return
1999-00 2,44,500/- Saif & Soheer Rizvi-
agricultural income
32
ITA Nos. 305,306/Del/2005
ITSS Nos. 93, 40/Del/2006
2000-01 11,94,409/- Declared in Block Return:
Rs. 5,00,000. Saif & Soheer
Rizvi- Rs. 6,95,000/-
agricultural income.
2001-02 3,16,084/- Declared in the Block
Return of the company :
Rs. 3,16,084/-
2002-03 62,926/- Declared in Block Return of
Company : Rs. 62,926/-
Total 19,47,283/-
27. AO after analysing each and every seized documents as contained in annexure A-2 has made various additions which comes to Rs. 44,99,006/-. One of the main contentions of the assessee has been that, further addition of Rs. 24,15,117/- as made by the AO is erroneous as there are several duplicate additions which already stood included in the amount of Rs. 19.44 lacks. Out of this amount Rs. 10,86,374/- has already been declared in the block return. The Ld. CIT (A) has dealt with these additions on the basis of seized documents and has given a very detailed analysis while deleting or sustaining the said additions which we find it proper to be reproduced hereunder for proper appreciation of entire facts:-
"(i) Ann. A-2/121: On the basis of this document, an addition of Rs. 1944/- has been made by the A.O. A perusal of this seized document revealed that this contains description of goods alongwith cartage delivered at farm house by Ram Kumar contractor. The A.O. treated this amount of Rs. 1944/- as undisclosed expenditure and added the same. It is contended by the Ld. AR of the appellant that this is only an estimate and not 33 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 actually explained. I have seen the seized document and also seen the contents of the same. It contains certain items against which certain amount is written and the amounts are precise and do not seem to be an estimate. The addition made is confirmed.
(ii) Ann.A-2/132-133: As per the A.O., perusal of these seized documents show that these papers contains quantity of bricks of 48000 delivered at farm house for construction. This is a cash memo/challan of M/s. Shri Mahalaxmi Brick Field. According to the A.O. as the assessee failed to produce evidence as to how the payment against the purchase of 48000 number of bricks was made, therefore, he estimated the cost of brick at Rs. 4 per brick and accordingly made the addition of Rs. 1,92,000/-. I have seen the seized document. These are cash memo/challan of M/s Shri Mahalaxmi Bricks Field and are dated 15.9.99 and 16.9.99. The quantity of bricks mentioned on both these documents is 4000 each totalling 8000 bricks and against rate column nothing has been mentioned. It is contended by the Ld. AR that these are first quality bricks i.e. why (I) has been prefixed before the quantity and the column of the rate has been left blank. I have seen the seized document on the basis of which impugned addition has been made. It was also contended that the rate could not have exceeded Rs. 1/- per brick even by the current rate. Whereas the purchases relate to year 1999. I agree with the contention of the Ld. AR. The quantity mentioned is 4000 each. Therefore, adopting the value of Rs. 1 per brick addition of Rs. 8000/- is sustained.
(iii) Ann.A-8/22 & A-8/23: On the basis of these seized documents, an addition of Rs. 580001- has been made by the A.O. It was submitted before the A.O. by the assessee that amount mentioned 34 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 in Ann. A-8/23 of Rs. 34000/- each overlapping of amount mentioned in A-8/22. As per the A.O., perusal of the seized documents reveal that A-8/23 is a different bill. However, as per the A.O., the figure of measurement and amount are different in these two bills. Therefore, he proceeded to make the addition of Rs.
58,000/-. It is contended by the Ld. AR before me that both these seized documents relate to running bill of same item of work. Final figure has been worked out on page A -8/23. This is further carried out by the fact that at A.8/22 at the bottom a sum of Rs. 27,000/- has been shown as paid which has been duly taken in consideration while settling the final bill. It is also further contended that this amount of Rs.24000/- is conceded by the appellant as it is comprised in figure of Rs. 19,47,283/-. I have gone through the assessment order and the submissions made by the Ld. and I have also seen the seized document. The contention of the Ld. AR is found to be correct. No further addition is called for as it comprised in the sum of Rs. 19,47,283/- which is the admitted investment by the assessee in the farm house at Mehrauli.
(iv) Ann. A-8/24: It was contended before the A.O that this seized document relate to waterfall but actually no work was done. However, as per the A.O., a perusal of this seized document shows that the said work was done and expenses of Rs. 107000/- were incurred. It was contended by the Ld. AR that this is an estimate not fur waterfall but estimate for lily pond. It is undated document in which it is written that raw material as rocks, slate, motor pump etc. will be provided by the party. It further mentions two sums of Rs. 90,000/- and Rs. 17,000/- against which no narration has been given and these two figures have been totalled up wherein figure of Rs. 107,000/- has been 35 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 arrived at. There is nothing to suggest from the document that this expenditure has been actually incurred by the appellant. Therefore, the addition made by the A.O. is deleted.
(v) A-8/2S: As per the A.O., total amount written on this page is Rs. 64200/-, payment of Rs. 49200/- has been made and balance of Rs. 15000/- has not been paid. According to the A.O., perusal of this seized document shows that Rs. 64200/- is recorded on this paper. It is contended by the Ld. AR that this seized document on the basis of which addition of Rs. 64200/- has been made by the A.O. no where mention the figure of Rs. 64200/-. In fact the totals of the figures mentioned on this page is Rs. 49200/- and which is part of Rs. 19,47,283/-, the expenditure which has been conceded by the appellant and for which addition has been made by the A.O. Therefore, it is contended by the Ld. AR that it tantamount to double addition. I have gone through the assessment order and the submissions made by the Ld. AR and I have also seen the document on which the impugned addition has been made. This is a fact that perusal of the seized documents reveals that it nowhere mentions the figure of Rs. 64200/- as observed by the A.O. in the assessment order. I also agree with the Ld. AR that a sum of Rs. 49200/- which is a sum total of the figures mentioned on this page as investment for which an addition of Rs. 19,47,283/- has been separately made by the A.O. I find the contention of the Ld. AR in order. Therefore, this addition of Rs. 64200/- made by the A.O. is deleted. As this sum of Rs. 49,200/- already stands in included in the figure of Rs. 19.47 no further addition is called for and the same is deleted.
36ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006
(vi) A-8/26 & A-19/27: An addition of Rs. 31627/- has been made by the A.O. on the basis of this document. It was submitted before the A.O. that this document is to be read with document A- 19/29. As per the A.O., the perusal of both these seized papers reveals that total work done was of Rs. 51,627/- out of that advance-payment of Rs. 20,000/- was given and this amount of Rs. 20,000/- is recorded at A-19/29 but as regards payment of Rs. 31627/- according to the A.O. the assessee failed to produce any evidence as to why this payment was made against the work already done in Feb., 2000 and also failed to produce any evidence. This amount was outstanding at the date of search. It is contended by the Ld. AR that this paper has to be read in conjunction with document seized at A-19/27 and A-19/29. It is contended by the Ld. AR that A-19/29, the assessee has' already accepted the investment of Rs. 20000/- on account of payment made, and on that A-19/27 has further accepted further investment of Rs. 40134/- totalling Rs. 60134/- and these payments made on A-8/26 are duplication of the amount already accepted as investment. I have seen the paper A-8/26 and it is a kind of kacha bill of Laddu Lal Sharma wherein against items of work certain amounts have been mentioned which total upto Rs. 51627/-. On the bottom of the seized paper Sh. Laddu Lal Sharma has been paid a sum of Rs. 20,000/- on 23.2.2000 which comprised in the sum of Rs. 19,47,283/- investment admitted by the assessee. It is seen that another seized paper is A-19/29 wherein Laddu Lal has given a receipt of Rs. 20,000/- and this date also is 23.2.2000 and the amount of Rs. 20,000/- already has been conceded by the appellant is comprised in Rs.
37ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 19,47,283/-. No further addition is called for on the basis of this seized paper. Therefore, the addition made by the A.O. is deleted.
(vii) A-8/27, A-8/42, A-8/43: It was explained before the A.O. by the assessee that the amount mentioned on these annexures of Rs. 13269/-, 10900/- and Rs. 3514/- were not paid. However, the A.O. did not agree with the contention of the assessee and he observed that perusal of seized documents reveal that these are the bills for the work already done. As per him, the assessee failed to produce any evidence as to when these payments were made. Also, as per the A.O. these are bills of Feb., 01 and Jan.,01. Therefore, the A.O. made an addition of Rs. 27683/- on the basis of these seized documents. Seized paper A- 8/27 seems to be a bill of some construction work wherein at the end of the page it is mentioned "please pay Rs. 5608/". Page No.42 of Ann. A-8 is a bill of Fakhrealam of Rs. 10967/- and it is dated 27.l.0l. Page 43 is again a bill of the same person and it is also dated 27.l.01 for Rs. 3514/-. It is contended by the appellant that these are only bills and against which no payments have been made. It is a fact that these are only bills but the assessee has also not adduced any evidence to indicate that the payments against these bills were not made. Therefore, the addition made by the A.O. is upheld.
(viii) A-8/47: An addition of Rs. 4100/- has been made on the basis of this seized document. It was submitted before the A.O. that out of total bill of Rs. 6100/- no payment was made for Rs. 4,000/-. As per the A.O., perusal of the seized documents reveal that Rs. 4000/- was paid prior to raising the bill and balance of Rs. 2100/- after the bill was presented. This again is the bill of Sh.Fakhrealam and the same is dated 19.10.2000. There are four 38 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 items of work mentioned in the bill which total upto Rs. 6100/- first two items are of Rs.3200/- & Rs. 1260/- which total Rs. 4460/- and against which the word "Paid" is written. It is further contended by the Ld. AR that on the basis of this document, a sum of Rs. 2000/- already has been conceded as investment in the farm house and the same is comprised in the figure of Rs. 19.47 lakh. I have gone through the assessment order and also considered the submissions made by the Ld. AR and I have also seen the seized document as the sum of Rs. 2000/- has been admitted by the appellant as investment and the same amount of Rs. 2000/- comprised in the figure Rs. 19.47 to that extent I agree with the Ld. AR that there is a double addition. Therefore, out of total addition of Rs. 4100/-, addition of Rs. 2000/- is deleted.
(ix) A-8/33 & A-8/34: As per the A.O. perusal of the seized documents reveal that these two papers are different bills indicating advance payment. It was contended before the A.O. that there is no mention of the contractor's name and amount and, therefore, the same should not be taken as expenses incurred. However, the A.O. observed that it is not necessary that the bill always contain the name of the contractor. Accordingly he made an addition of Rs. 1,48,615/-. It is contended by the Ld. AR that a perusal of these seized documents will show that these are only estimates received from one of the contractors and on these papers even the name of the contractor is not mentioned. I have gone through the seized documents A-8/33 which gives a sum total of Rs. 86149/- comprising of various items and document A- 8/34 gives a total of Rs. 89388/- and below document A-8/34 it is written "Adv. paid" Rs. 80615/-. So the contention of the Ld. AR that these are only estimates cannot be taken on its face value.
39ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 The seized document A-8/34 clearly states that advance of Rs. 80615/- has been paid. Therefore, the addition to that extent is confirmed. The assessee gets relief of Rs. 68000/-.
(x) A-8/3S: With regard to this seized document, it was explained before the A.O. by the assessee that out of total bills as recorded on this page amounting to Rs. 34,000/- payment of only Rs. 18000/- has been made. It is mentioned by the A.O. that perusal of these seized document reveals that out of total bill of Rs. 34520/- of Sh. Mahender Singh, building contractor, payment of Rs. 34,000/- has been settled. It is submitted by the Ld. AR that a sum of Rs. 18000/- has already conceded as investment and the same is comprised in Rs. 19.4 7 lakh. Therefore, to that extent there is a double addition. For the balance of Rs. 16000/- it is contended that there is nothing to suggest that balance payment of Rs. 16000/- has been made and therefore, the addition made by the A.O. in uncalled for. I have gone through the assessment order and the submissions made by the Ld. AR and also seen the seized documents. It is a bill of one Sh. Mahender Singh which evidences payment of Rs. 18000/- and it seems the bill is of Rs. 35520/- and it has been settled for Rs. 34,000/- as this figure is mentioned in the right hand bottom corner of the bill. I agree with the Ld. AR that to the extent of Rs. 18000/-, there is a double addition. Therefore, the addition to that extent is deleted. However, addition of Rs. 16,000/- is sustained. The assessee gets relief of Rs. 18,000/-.
(xii) A-8/49: As per the A.O., it was claimed by the assessee before him that the amount of Rs. 20887/- as mentioned in the seized page was not paid. However, as per the A.O., the contents 40 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 of the document show that the work has been done and bill of Rs. 17754/- after deduction 15% security of Rs. 3133/- from total bill of Rs. 20887/- was passed for payment. It is contended by the Ld. AR that this paper nowhere mentioned that the payment of Rs. 17754/- has been made by the appellant. The argument of the Ld. AR is not acceptable and the addition made by the A.O. is upheld.
(xii) A-8/50, A-8/51, A-8/52 and A-8/53: As per the A.O., it was submitted by the assessee before him that expenditure recorded in A-8/50 and A-8/53 are overlapping of A-8/52. This contains bills of Rs. 38990/- and Rs. 16112/- of Manish Enterprises. It was contended before the A.O. that this is overlapping of A-8/52. However, the A.O. did not agree with the explanation of the assessee by holding that all the three documents indicate different payments for different work. According to the A.O., however, the assessee had admitted payment of Rs. 42034/- and Rs. 8000/-. Therefore, expenses of Rs. 30990/- and Rs. 16112/- total of which comes to Rs. 47102/- was treated by him as undisclosed income. It is contended by the Ld. AR that investment of Rs. 42034/- is already conceded and the same is comprised in the sum of Rs. 19,47,283/-.
I have seen the seized document A-8/50 on the letter head of M/s Manish Enterprises, who is Interior and Civil Contractor and relates to stone work wherein the total of various items as mentioned in this seized paper is Rs. 38990/- wherein it is stated that sum of Rs. 8000/- is received against advance payment. It is contended by the Ld. AR that sum of Rs. 8000/- already stands included in the sum of Rs. 19.47 lakh so, therefore, to that extent there is a double addition. This contention of the appellant is 41 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 found to be correct and addition to that extent is deleted. However, as the total amount mentioned in this bill is Rs. 38990/- therefore, addition to the extent of Rs. 30990/- is upheld.
(xiii) A-8/58 & A-8/59 : It was contended by the AO that the payment is an overlapping of A-8/58. However, as per the AO perusal of the seized paper shows that the work done as per A- 8/59 is totally different from the items as mentioned in A-8/58. Therefore, he made an addition of Rs. 50,100/-. I have seen the documents and a perusal of the papers shows that these relate to water treatment plant and it comprises of expenditure on various items like 5 HP motor, strainer etc. and the total arrived at page A- 8/59 is Rs. 15100/- and the gross total as given on page No. A- 8/58 is Rs. 97000/- wherein payment of this amount is shown on 4.11.99. A sum of Rs. 97000/- has been included by the assessee in the expenditure of Rs. 19.47 lakh and the sum of Rs. 50100/- already stand included in the sum of Rs. 19.47 lakh. Therefore, there is no justification for making this addition by the A.O. and this addition of Rs. 50,100/- is deleted.
(xiv) A-8/71: An addition of Rs. 20147/- was made on the basis of this seized document. This document shows a payment of Rs. 55000/- on various dates. The Ld. AR contended that this paper has to be read along with seized paper A- 8/27 & 50. However, the contention of the Ld. AR is not found to be correct and the addition made by the A.O. for Rs. 20147/- is upheld.
(xv) A-8/78: With regard to this paper, it was submitted by the A.O. that the addition of Rs. 16,000/- has been made by the A.O. As per the A.O., perusal of this sheet reveals that on these papers recording of measurement of 4073 sq. ft. is given which the 42 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 assessee claims as bill amount which is not correct. As per him, the bill amount is @ Rs. 2/- for 4000 sq.ft. which comes to Rs. 8000/-, therefore, he made an addition of Rs. 8000/-. It was contended by the Ld. AR that payment of Rs. 4000/- as mentioned on this page stand included in the amount of Rs. 19.47 lakh and therefore, it was prayed that this addition of Rs. 8000/- made by the A.O. should be deleted. A perusal of this document shows that the bill has been settled for Rs. 8000/- but the assessee has already included Rs. 4000/- in the amount of Rs. 19.47 lakh to that extent the addition is deleted. However, the addition to the extent of Rs. 4000/- made by the AO is sustained.
(xvi) A-8/79 : It was submitted by the assessee to the A.O. with regard to this seized paper that the payment of Rs. 8000/- is not a payment but it is a quotation. However, as per the A.O., seized paper reveals that this is a payment of Rs. 8000/- to Sh. Umesh Chand, Ghisaiwala. I have seen the seized document and it is to be noted that it has to be seen alongwith A-8/78 page A- 8/78 which also relates to the bill of rubbing of floors, and this page also mentions sum of Rs. 8000/- against which the name of "Umesh Chander" is written and on top of this page is written Ghisaiwala. As I have already upheld the addition of Rs. 4000/- while discussing the page A-8/78. I do not find any justification in upholding this addition of Rs. 80001- as it will tantamount of double addition. The addition made by the A.O. is deleted.
(xvii) A-8/80:An addition of Rs. 25001- has been made by the A.O. on the basis of this seized paper. On this page it is written please pay Rs. 25001- only. It is also further written on the left bottom of the page "passed Rs. 25001-." Only. However, Ld. AR on behalf of 43 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 the assessee contended that this is only an estimate and no payment was made. The contents of the seized paper are self explanatory and the action of the A.O. does not call for any interference and the addition of Rs. 2500/- is sustained.
(xviii) A-19/9, A-19121, A-1917, A-19/8, A-9112 & A-19/43:
These annexures indicates payment of Rs. 2,70,000/-, Rs. 3,99,799/-, Rs. 1,62,000/-, Rs. 15000/-, Rs. 25,000/- & Rs. 1,57,500/- (Total Rs. 10,29,299/-). The assessee claimed that payment of Rs. 3,99,799/- as recorded in A-19/21 includes payment of Rs . 2,70,000/-, Rs. 1,62,000/-, Rs. 15,000/-, Rs. 25,000/- & Rs. 1,57,500/-. The total of these five payments comes to Rs. 6,29,500/-. Therefore, it is not known as to how payment of Rs. 6,29,500/- is included in Rs. 3,99,799/-. After cross verification it was found that page 21 of annexure A -19 indicates that on 1.11.99 advance of Rs. 2,70,000/- was paid but on going through all the pages it is quite clear that these payments are different because the breakup of figures and dates do not tally. However, except the advance of Rs. 2,70,000/- no other payment was overlapping. Therefore, payments recorded in all the five annexures amounting to Rs. 10,29,299/- after deducting advance of Rs. 2,70,000/- which comes to Rs. 7,59,299/- is found undisclosed investment of the assessee in construction of farm house. The Ld. AR vide written submissions submitted as under:
"All these annexures relate to a contractor, namely Rajendra Baba in regard to civil construction. A careful examination of these annexures shows that:-
A-19/21 & A-19/5 44 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 A-19/21 is a paper containing details of payments made to the contractor from time to time. The total amount on this page is 3,99,799/- including the advance of Rs. 2,70,000/- acknowledged by the A. O. in this addition.
A-19/12,15, 17 and 18 is the break-up of this amount floor wise. However, the A.O. has made a duplicate addition of Rs.2,15,040/- relating to Annexure A- 19/5 on page 26 of the assessment order. A perusal of the annexure would show that it a running bill in respect of the same account. The amount of Rs. 3,99,799/- has already been declared in the block return.
The A.O. has referred to a figure of Rs. 10,29,277/- while making this addition.
This is explained as follows:
Amount Why it should not be included
A-19/21 2,70,000 Advance-acknowledged by AO
A-19/7 1,62,000 Pl. Refer to final Bill (PBP area is
the same)
A-19/8 15,000 Final Bill PB P
A-19/12 25,000 shown in annex. A-19/21 (payment
On 19.2.99)
A-19/43 1,57,500 payment recorded in A-19/21
A-19/21 3,99,799 Total payment
Total 10,29,299 This is a double addition already
made.
Hence, this needs to be deleted."
45
ITA Nos. 305,306/Del/2005
ITSS Nos. 93, 40/Del/2006
I have gone through the explanation given by the Ld. AR. The amount of Rs. 3,99,799/- which is recorded on page 21 is already declared by the appellant in the block return, therefore, to that extent no further addition is called for. I accept the explanation offered by the Ld. AR except in case of seized page A- 19/43 wherein it is claimed that sum of Rs. 1,57,500/- is recorded in A-19/21 this is not borne out from the facts of the case. Therefore, payments made to Sh. Ladoo Lal Sharma of Rs. 1,57,500/- have not been explained and addition to the extent of Rs. 1,57,5,00/- is confirmed.
(xix) A-19/23: This is a bill of building material supplier dated 25.9.2000 on which total amount of Rs. 36400/- is mentioned. It was contended before the A.O. that the payment of Rs. 10000/-
was made. However, as per the A.O. perusal of the seized document reveals that payments of Rs. 27,000/- and Rs. 7000/- were made on 6.9.99 and 2.9.99. Therefore, he made the addition of Rs. 26,400/-. It is contended by the Ld. AR that the sum of Rs. 10,000/- has already been included in the figure of Rs. 19.47 lakh i.e. the investment admitted by the assessee in the farm house. I have seen the documents that the bill is of Rs. 36,400/- and there is nothing to indicate that it has been settled for a lower amount. The addition made by the A.O. of Rs. 26,400/- is upheld.
(xx) A-19/25: An addition of Rs. 8050/- has been made by the A.O. This again a bill of Sh. Netrapal dated 18.2.2001 for Rs. 30900/-. It is contended by the appellant that only a sum of Rs. 22850/- was actually paid against this bill. It is seen from the seized document that the three amounts of Rs. 4000/-, Rs.16,000/- and Rs. 2850/-, which total upto Rs. 22850/- are 46 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 mentioned and beneath these figures signature of Sh. Netrapal are appearing. The contention of assessee seems to be correct that the payment has been settled for Rs. 22850/-. As this amount of Rs. 22850/-made by the AO is deleted.
(xxi) A-19/39 & 40: An addition of Rs. 39074/- has been made by the A.O. on the basis of this seized document. It is pointed out by the Ld. AR that out of this amount of Rs. 39074/-, a sum of Rs. 23000/- already stand admitted as investment in the construction of the farm house. It is seen from the details filed by the Ld. AR that Rs. 23,000/- already stand included in the sum of Rs. 19.4 7 lakh and the contention of the Ld. AR being correct is accepted and addition of Rs. 23,000/- is straightway deleted. As far as balance of Rs. 16074/- is concerned, it is seen from this page number that total of various items of work has been worked out at Rs. 39216/-. However, it seem that it has been settled for Rs. 33213/- out of advance given of Rs. 10,000/-, the total amount as per this seized document is arrived at Rs. 23,0001- which stands already admitted. Therefore, addition for the construction of the farm house made by the A.O. for Rs. 39074/- is deleted.
(xxii) A-19/50: An addition of Rs. 5000/- has been made by the A.O. on the basis of this seized document. It is seen from the seized document that on the letter head it is written North Academy and the top of which name Masroor is written and under this it is written 'Trap cutting' and against the figure of Rs. 5000/- , it is written "total work". It is contended by the Ld. AR that this is only an estimate and therefore, no addition should be made on the basis of this document. I have perused the document and it is seen from the document that it seems to be an estimate only and it 47 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 is not a proper bill. Nor there is any indication from the seized document that the payment of Rs. 5000- has actually been paid. Therefore, the addition of Rs. 2000/- has been made by the A.O. on the basis of this seized document. As per the A.O., perusal of this seized document shows that the payment has been made. It is seen from the seized document that on the left side of this document, payment of Rs. 8500/-is shown and right side there are two narrations stating "paid Rs. 1000/-" "paid Rs. 2000/-" are appearing. It is seen from this document that sum of Rs. 1000/- has been paid on 19.8. and 30.8. Then it also goes on state "paid Rs. 5000/- till date" and this narration is dated 26.10.2001. The addition made by the A.O. is upheld.
(xxiv) A-19/55 & A-19/56: An addition of Rs. 41000/- has been made by the A.O. on the basis of these seized documents. It is contended by the Ld. AR that these two seized documents have to be read alongwith annexure A-8/5. As per seized paper A-19/55, it is seen that an advance payment of Rs. 41,000/- has been received on 12.7.2001. I have seen the seized document A-S/52, which is also relating to Ganga Parsad Sharma and on this seized paper details of various payment made is mentioned and total is worked out at Rs. 34,000/- and perusal of page A-19/55 shows total advance payment of Rs. 41,000/-. I find force in the agreement of the Ld. AR that till July 2001 total advance payment of Rs. 41,000/- has been made and this already stand included in the admitted investment in farm house. I do not find any justification on the part of the A.O. to make further addition of Rs. 41,000/- and therefore, the same is deleted.
48ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 (xxv) A-19/57: An addition of Rs. 20,000/- has been made by the A.O. on the basis of this seized document. As per the A.O., perusal of this seized document shows that this is an account of finishing work for Rs. 20000/-. However, it is contended by the Ld. AR on behalf of the appellant that this is only an estimate. I do not agree with the Ld. AR and the addition made by the A.O.is confirmed.
(xxvi) A-19/61 & 62: An addition of Rs. 3000/- has been made by the A.O. on sis of this seized document. As per the Ld. AR on the basis of this seized document admitted investment in farm house is Rs. 3700/- which forms part of Rs. 19.47 lakh. Therefore, I agree with the contention of the Ld. AR that there is no further scope for making any further addition on the basis of this seized document and the same is deleted.
(xxvii) A-19/64, 65 & 69: An addition of Rs. 60047/- on the basis of these seized documents has been made. I have perused these documents and find that A-19/64 is duplicate of A-19/65 as the figures on these pages are exactly the same. It is stated by the Ld.A.R. that in A-19/64, a sum of Rs. 10000/- has been accepted as investment in the farm house and forms part of Rs. 19.47 lakh. Similarly, a sum of Rs. 44500/- has already been accepted as investment and forms part of Rs. 19.47 lakh. So, the total investment admitted by the assessee is Rs. 54,500/-. The explanation given by the Ld. AR is acceptable and the addition made is deleted.
(xxviii) A-24/40: An addition of Rs. 1,40,000/- has been made by the A.O. on the basis of this seized document. As per the A.O., it was contended by the assessee that this is a quotation on account of sanitary wares. The A.O. did not agree with the submission 49 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 made by the assessee and held that this is not a quotation but duly indicating the payment of Rs. 1,39,790/- and cartage of Rs. 270/-. I have perused the seized document. It is a photocopy and does not mention the name of the any party and it is a plain sheet of the paper so the findings of the A.O. that it is a bill is not borne out from records. It also does not state that the payment of Rs. 140000/- has been actually made. On the basis of this document alone no addition can be made without any corroborative evidence. Therefore, addition of Rs. 1,40,000/- is deleted.
(xxix) A-24/12 : An addition of Rs. 1,70,000/- has been made by the A.O. on the basis of this paper. It is seen from the seized documents that there are three pages of this annexure are on the letter head of Water Special India and undated. Page No. 10 of this annexure clearly writes on the top "Quotation" and then after various items have been mentioned and the total price of which has been mentioned as Rs. 1,70,000/-. On the. same page at the end of which it is written "Piping" is estimated for plant room 6-8 meter for pool", A perusal of this document leaves no doubt that it is only an estimate and no payment of Rs. 1,70,000/- is indicated from this document. Therefore, in these circumstance the addition made by the A.O. cannot be upheld and the same is deleted (xxx) A-28/1: An addition of Rs. 25020/- has been made by the A.O. on the basis of this page. I have seen the seized document and on the top of which it is clearly written "rough estimate". However, on the bottom of this page it is written "advance received 2000/-. Though it is mentioned on the seized paper rough estimate but as payment of Rs. 2000/- is evidenced from the 50 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 seized document itself so it cannot be taken as rough estimate. The action of the A.O. is justified and the addition made is upheld.
(xxxi)A-3/15: An addition of Rs. 62375/- has been made by the A.O. on the basis of this seized document. As per the A.O. this seized document specifically mentions that on 3.1.99, 27.1.99 and 22.2.99 180 bags and 300 bag respectively of cement were delivered. As the assessee did not offer an explanation, he made addition on account of purchase of 499 bags adopting the rates at Rs. 125/- per bag aggregating to Rs. 62375/-. It is contended by the Ld. AR that this is an account of empty bags being maintained by the chowkidar. This paper does not say any payment has been paid by the assessee. I have perused the seized document. A perusal of some of the entries support the claim of the appellant that these entries have been made by chowkidar for the sale of empty bags of cement. Some of the entries read as "khali bori becha", therefore, I find force in the contention of the Ld. AR and the addition made on the basis of these entries of Rs. 62375/- is deleted.
(xxxii) A-2/21: As per the A.O. this is a delivery challan dated 11.8.2000 of 100 bags of cement from ACC by truck No. DLK 4150. As no explanation was offered, the A.O. made an addition of Rs. 13500/- taking the cost of per bag at Rs. 135/-. It is stated before me that this has been taken in account in the contractor's payment. But, this has not been substantiated. Therefore, the addition made by the A.O. is upheld.
51ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 (xxxiii) A-8/60: As per the A.O. assessee submitted that this has been explained in explanation dated 29.10.2003 and it has been covered while explaining A-8 page 9 to 80. As per the A.O. perusal of explanation revealed that the assessee has not given any explanation in regard to payment of Rs. 1,32,500/- on 5.1.2000. Nothing has been stated before me also with regard to this addition, and, therefore, same is confirmed.
(xxxiv) A-24/21: It was submitted before the A.O. that this is plain page and does not bear name of the assessee or company nor does it mention any other details. As per the A.O. perusal of seized document reveals that this is an acknowledgement for cash payment of Rs. 228501- on 28.5.96 to Truck Syndicate. As per the Ld. AR this paper does not relate to the assessee and this apparently appears to have strayed alongwith certain other papers from some shop etc. I do not find any force in the argument of the A.O. and the addition made by the AO is upheld."
28. After hearing both the parties and on perusal of the impugned order, we find that each and every seized document has been discussed threadbare by the Ld. CIT(A) after considering the seized material, explanation of the assessee and the comments of the AO. Most of the additions has been confirmed by the Ld. CIT (A) after proper analysis against which assessee is also into appeal. However, carefully going through the order of Ld. CIT (A) as incorporated above, we do not find any infirmity in such a finding and therefore, the observation and finding of the Ld. CIT (A) as incorporated above is confirmed and accordingly, ground No. 3 raised by the revenue is dismissed and correspondingly, ground No. 6(iii), whereby the 52 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 assessee has challenged the balance addition confirmed by the Ld. CIT(A) is also dismissed.
29. The last issue raised vide ground No. 4 is deletion of addition of Rs. 10,40,100/- made on account of perquisite value of rent free accommodation. The AO on the perusal of the seized documents and the details revealed during the course of search that premises of the assessee in which he was living, i.e., A-232, Defence Colony, New Delhi is owned by the company M/s. Rizvi Skin Clinic PUVA therapy Research Centre Private Limited in which assessee is one of the Directors. The said premises comprise of 2½ floors, of which, basement and ground floor were used as clinic and balance as residence of the Director. He noted that in the computation the perquisite value of rent free accommodation as per rule 3(a) (iii) has not been shown and accordingly; he worked out the perquisite value for all the years involved in the block assessment and worked out the total perquisite value of Rs. 10,40,100/-.
30. The assessee though has made detailed submissions on this issue, however the Ld. CIT(A), held that this addition made by the AO is not based on any seized material and hence do not fall in the category of 'undisclosed income', therefore, is outside the scope and purview of chapter XIV-B and addition if at all can be made would a regular assessment.
31. After hearing both the parties and on perusal of the nature of addition made by the AO, we find that AO has estimated the fair market rent of the premises occupied by the assessee in terms of Rule 3a (iii) and such an estimate is sans any seized document and material and therefore, Ld. CIT (A) has rightly deleted the addition on 53 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 the ground that it is beyond the scope of assessment proceedings under chapter 14-B. Accordingly the ground No. 4 raised by the revenue is dismissed.
32. Now we will take up assessee's appeal vide which following grounds have been raised:-
On the facts and in the circumstances of the case and in law the Ld. CIT (Appeals) was not justified:-
1. in upholding the action of search & seizure carried out by the Department u/ s 132 of the Act;
2. in upholding the issuance of notice u/s 158 BC of the Act;
3. in confirming the time-barred order u/s 158BE of the Act;
4. in upholding the proceedings as valid and not violative of the principle of natural justice;
5. in confirming the action of the Assessing Officer in searching the three lockers at IOB, PNB and SBI and initiating and carrying out consequential proceedings even though no search warrants were issued in respect thereto;
6. In confirming the following additions made to the returned income:
(i) Rs. 36,15,399/- on account of alleged investment in agricultural land and farm house in district Saharanpur;
(ii) Rs 5,23.445/ - on account of alleged unexplained cash although the same was as per books of account found at the time of search;
(iii) Rs. 25,58,786/- out of Rs. 44,99,006/ - on account of alleged investment/ expenditure in the farm house at village Fatehpur Beri, Mehrauli;
(iv) Rs. 1,58,027/- on account of power line in farm house at Bhagoowala, Saharanpur;
(v) Rs. 1,00,000 on account of alleged purchase of gypsy.
7. In confirming the initiation of penalty proceedings u/s 158BFA(2) of the Act."
54ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006
33. Out of the said grounds, ground No. 1 to 5 has not been pressed and therefore, same are dismissed as not pressed.
34. So far as ground No. 6(i) is concerned, we have already discussed this issue in detail while dealing the same in the revenue's appeal vide ground No. 1. Out of the total aggregate addition of Rs. 94,52,393/-, partly has been confirmed by the Ld. CIT(A) and partly has been deleted. So far as the addition deleted by the Ld. CIT (A) the same has been affirmed by us in the Revenue's appeal. However, with regard to addition on account of investment in the purchase of land standing in the name of two relatives, i.e., Smt. Jamila Begumand Smt. Aquila Begum for sums aggregating to Rs. 13,34,280/-, we have already deleted the said addition on the ground that, firstly, that in the seized documents itself the name of the owner of the land is appearing which goes to show that land belongs to these two persons; and secondly, during the course of assessment proceedings these persons have owned up the property and also filed their sworn affidavits. Thus, the onus upon the assessee on the documents found at his residence/ premises stands discharged and AO, if at all, should have invoked the proceedings u/s 158BD in this case or should have asked about the source of their investment in the said land. Without any inquiry, adverse presumption cannot be drawn in the case of the assessee that investment made by these two ladies who are independent persons, belongs to the assessee or investment has been done by the assessee out of his undisclosed sources. Thus, ground No. 6(i) is partly allowed.
55ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006
35. So far as the alleged unexplained cash of Rs. 5,23,445/-, we find that Ld. CIT(A) has already discussed this issue in detail, whereby he has given part relief of Rs. 3,36,000/- on account of cash found during the course of search same has already been disclosed in the block return as undisclosed income and overall balance amount of Rs. 1445/- which was claimed out of aggregate income, no proof was submitted by the assessee. Without their being any rebuttal of these findings before us, we do not find any infirmity in the order of Ld. CIT(A) and accordingly addition of Rs. 187445/- as confirmed by the Ld. CIT(A) is affirmed.
36. Now coming to the third addition of Rs. 25,58,786/- on account of alleged investment /expenditure of farm house at Mehrauli. This issue, we have discussed in detail in the revenue's appeal whereby detail finding of the Ld. CIT (A) on each and every seized documents have been affirmed by us and we do not find any reason to tinker with such finding without any proper material on record to rebut the same. Ld. CIT (A) has already given relief based on explanation and evidences filed by the assessee and in those cases where assessee could not explain by filing any cogent evidence has been confirmed. Accordingly, addition of Rs. 25,68,786/- as confirmed by the Ld. CIT(A) is affirmed and assessee's ground on this score is dismissed.
37. Ground No. 6,(iv and (v) have not been pressed and Ld. Counsel on the ground that it is nominal in quantum. Accordingly same are dismissed. In the result appeal of the assessee is partly allowed.
56ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006
38. Now we will take up cross appeal in the case of M/s. Afrin Rizvi. In the revenue's appeal following grounds have been raised:
1. "On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in thereducting the addition of Rs.
10,84,704/- To Rs. 3,49,500/- made by the on account of unexplained investment in agricultural land and farm house at village Bhagoowala, Saharanpur.."
2. "On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in reducing the addition from Rs. 57,10,551/- to Rs. 1,85,671/- made by the AO on account of unexplained investment in jewellery found during the course of search .. "
3. "On the facts & in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 5,12,111/- made by the AO on account of unexplained cash found during the course of search."
39. Whereas in the assessee's appeal, following grounds have been raised:-
1. That the order the Ld. CIT(Appeals) sustaining the additions made by the Assessing Officer is bad on facts and in law for the above additions have been sustained without appreciating the various contentions/arguments/evidence adduced during the appellate proceedings and reliance has been placed upon irrelevant material and considerations. The additions as confirmed vitiates the assessment order and requires to be annulled.
2. That the Ld. CIT(Appeals) grossly erred on facts and in law in sustaining the following additions made by the Assessing Officer in the order dated 10.12.2003 passed u/s 158BC for the block period 1.4.1995 to 8.11.2001 relevant to block assessment 1996-97 to 2001-02 and A.Y. 2002-03 (for the period 11.4.2001 to 8.11.2001) 57 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006
(i) Rs. 3,49,500/- being investment in farm house building out of an addition of Rs. 10,84,704/- made by the AO;
(ii) Rs. 1,85,671/- being undisclosed and unexplained investment in jewellery out of an addition of Rs. 64,31,807/- made by the AO;
(iii) Rs. 22,000/- being undisclosed & unexplained investments in shares out of an addition of Rs. 2,20,000/- made by the AO;
(iv) Rs. 98,000/- being undisclosed & unexplained investment in FDR.
40. The brief facts qua the issue raised in ground No. 1 in revenue's appeal and ground No. 2.1 in assessee's appeal are that the AO on scrutiny of seized documents noted that assessee had made investment in purchase of agricultural land in village Bhagoowala, Saharanpur which was calculated by the AO on the basis of circle rate at Rs. 5,37,375/- and added stamp duty paid at Rs. 42,930/- aggregating to Rs. 5,80,305/-. The AO during the course of assessment proceedings has referred the matter to the Investigation Wing Saharanpur to ascertain from the local revenue office the exact quantity of land owned by the assessee and her family members. The details obtained from Patwari, revealed that assessee was owner of 242 bighas of land and the value of the same was Rs. 8,82,000/-. One Shri M.A. Khan was examined by ADIT, Saharanpur through whom the purchase of land was carried out, had stated that purchase of agricultural land was above the circle rate. Later on the said statement was retracted by Mr. M.A. Khan by way of affidavit. AO drew adverse inference on the basis of details given by Patwari that the total land holding of the land was 42 Bigha and the registered sale deed revealed 13.3 Bighas. The AO, applying the rate of Rs. 21,000/- per Bigha of balance 29 Bigha estimated the investment of Rs. 6,09,000/- and 58 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 accordingly in the land addition was calculated at Rs. 11,89,305/- (Rs. 5,80,305/- + Rs. 6,09,000/-) apart from that assesse had admitted construction in the farm house building at Rs. 9,81,910/- and investment in tube well at Rs. 1,05,000/- which aggregated to Rs. 10,86,910/-. The investment in the construction of the farm house was claimed by three persons namely assessee's husband, Shri A.H Rizwi of Rs. 4,22,011/-, Rs. 3,49,500 by the assessee herself and Rs. 3,15,399/- by Smt. Jamila Begum. Accordingly an aggregate addition of Rs. 150470/- was made in the following manner by the AO:-
a) Unexplained investment in agricultural land on the basis of Sale Deed found by applying the circle rate and stamp duty. Rs. 5,80,305
b) Investment in 29 bighas of agricultural land. Rs. 6,09,000
c) Unexplained investment in farmhouse bldg. Rs. 3,15,399 _______________ Total Rs.15,04,704/-
________________
41. Ld. CIT(A) relying upon the appellate order in the case of assessee's husband Dr. A.H. Rizwi and on the basis of certificate of Patwari that one Pacca Bigha is equal to three Kuccha Bigha held that addition of Rs. 6,09,000/- on the basis of difference in measurement of land cannot be sustained because assessee as per the sale deed was only holding 13.3 Bigha of Pacca Bigha. Regarding addition of Rs. 5,80,305/- on account of investment and the purchase of land, Ld. CIT(A) noted that, firstly, no evidence have been found at the purchase of agricultural land was more than the amount stated in the sale deed and the statement of Shri M.A. Khan has also been detracted; and secondly, the total investment in the land as per the sale deed is only Rs. 2,65,670/- which is much less the investment disclosed in the 59 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 regular return of income at Rs. 4,20,000/-. In this manner addition of Rs. 5,80,705/- was also deleted. For the balance, the Ld. CIT(A) has deleted the addition after observing and holding as under :-
"7.6 Regarding the investment in farmhouse building, the AO has taken the same at Rs. 3,15,399/-. This investment has been claimed by the appellant to have been made by Smt. Jamila Begum and Others. Similar addition was made by the AO in the case of Dr. AH. Rizvi as well. The addition stands confirmed in the hands of Dr. AH. Rizvi by me Ld. predecessor in para 5.10 of the appellate order. It appears that the AO has by mistake adopted the figure of Rs. 3,15,399/- in place of investment of Rs. 3,49,500/- shown by the appellant. Since the appellant could not explain satisfactorily the source of investment of Rs. 3,49,500/-, the same deserves to be upheld. The AO has made an addition of Rs. 10,84,704/- towards unexplained investment in agricultural land and construction of farmhouse building of which the sustainable addition is Rs. 3,49,500/-, the balance addition of Rs. 7,35,204/- is deleted."
42. After hearing both the parties, we find that so far as addition on account of difference in measurement of land of Rs. 6,09,000/- on the ground that details given by the Patwari to the investigation wing showed 42 Bighas, whereas the sale deed revealed 13.3 Bigha of land. In this case also, certificate from Patwari was obtained wherein it was certified and clarified that one Pucca Bigha is equal to three Kuccha Bighas and therefore, no adverse inference should be drawn. We have already discussed this issue in detail while discussing the appeal of assessee's husband and therefore, in view of the reasoning given above which has been followed by the Ld. CIT(A) in the impugned order also 60 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 we delete the addition of Rs. 6,09,000/-. So far as the other addition of Rs. 5,80,305/- the Ld. CIT(A) has taken a note of the fact that, the sale deed disclosed total investment of Rs. 2,65,670/- including stamp duty and since assessee had already disclosed investment in the said land at Rs. 4,20,000/- in the return of income, therefore, the addition of Rs. 5,80,305/- has rightly been held to be unsustainable. Accordingly, we confirm the order of the Ld. CIT (A) on this score. Regarding part deletion of investment in the farm house building we find that the Ld. CIT(A) has taken note of the fact that the addition already stands confirmed in the hands of Dr. A.H. Rizvi by the appellate order in para 5.10 and to the extent of Rs. 3,49,500/- assessee could not give any satisfactory explanation and therefore, out of addition of Rs. 10,84,704/-, Ld. CIT(A) has affirmed Rs. 3,49,500/- and balance addition of Rs. 735204/- has been deleted. We do not find any infirmity in the order of the Ld. CIT(A) and accordingly, the same is affirmed and resultantly ground No.1 as raised by the revenue as well as the assessee in ground no. 2(i) is dismissed.
43. So far as the second issue relating to addition of Rs. 57,10,531/- which has been challenged by the revenue as well as by the assessee, the facts in brief are that during the course of search and seizure action total jewellery amounting to Rs. 66,17,424/- was found from the following premises :-
From residence-cum-clinic, A-232, Defence Colony, New Delhi of Dr. AH.Rizvi & Mrs. Afrin Rizvi. Rs. 58,31,714/-
1. From locker No.28/11467, SBI, Defence Colony, New Delhi, of Dr. AH. Rizvi & Mrs. Afrin Rizvi. Rs. 1,64, 790/-
2. From locker No. 391, lOB M-82, G.K.-II (Market) of Dr. A H. Rizvi & Mtrs. Afrin Rizvi. Rs. 5,64, 977/-61
ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006
3. From locker no. 104, PNB of Dr. A. H. Rizvi & Mrs. Afrin Rizvi. Rs. 55,943/-
Total jewellery found during the search. Rs.66,17,424/-
44. The assessee in response to the show cause notice has given the detailed explanation, firstly, by stating that each comes from Jamindar family and her grandfather was Supdt. of Police of the northern region in pre-partition India and her father was engineer in Indian Railways. Apart from that, after marriage she had shifted to her husband's place who was working in Saudi Arabia. Most of the jewelleries were acquired either at the time of marriage from both the families and or were acquired or purchased in Saudi Arabia. Apart from that, it was submitted that her parents were living in USA and before they expired they have left huge gold and diamond jewellery for her and in support the 'Will' of the parents were also shown. Assessee's detailed explanation in this regard has been incorporated by the AO in the impugned order. The explanation of the assessee for the acquisition of jewellery was summarised as under:-
A. Inherited from Parents before their death Rs.642890/- & Rs.388548/-
B. Inherited from Parents after their death Rs.1638706/-
C. Recd. at the time of marriage in the year Rs.486160/- &
1975 Rs.176429/-
D. Purchased by assessee's husband
Dr. A.H. Rizvi Rs.725104/-
E. Recd. On 5th marriage anniversary in the
Year 1980 at Saudi Arabia Rs.2198342/-
F. Belongs to assessee's daughter Rs.164512/-
62
ITA Nos. 305,306/Del/2005
ITSS Nos. 93, 40/Del/2006
45. However the Ld. AO rejected the assessee's explanation on the ground that assessee has failed to produce any evidence in regard except for the declaration before the custom authority which has been claimed by the assessee that she had got the jewellery from Saudi Arabia and USA, which AO accepted the same. So far as the jewellery disclosed in the VDIS of Rs. 2 lacs, is concerned, same too was accepted by the AO. Finally, the addition on account of unexplained investment was made at Rs. 57,10,531/-.
46. Before the Ld. CIT(A) the detailed submissions were made which for the sake of ready reference is reproduced hereunder :-
"8.3 Before me, the Ld. Counsel for the appellant strongly objected to the addition made. A detailed chart explaining the jewellery and the sources of acquisition was enclosed along with the written submissions, It was stated that appellant belongs to a wealthy family of Zamindari background and the family hailed from Ferozpur, Bihar. It was stated that appellant's grandfather was Superintendent of Police of the Northern Region in pre partition of India and after partition also remained in a powerful position. It was stated that her father was an engineer in Indian Railways. It was stated that appellant married Or. AH. Rizvi in 1975 and at the time of marriage, she received jewellery both from her parents as well as her in-laws. It was stated that at the time of marriage, Dr. A H. Rizvi was serving as doctor in Saudi Arabia where she also shifted after marriage. It was stated that on shifting to Saudi Arabia, she purchased substantial jewellery at Saudi Arabia on various occasions such as wedding anniversary, 63 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 birth of son etc. It was stated that during last 20 years, the appellant's husband served as doctor in Saudi Arabia, Vienna and London and finally shifted to Delhi in 1983. It was stated that during their extensive travels and stay abroad, they acquired various assets like gold and precious stones which were much cheaper in Saudi Arabia compared to India. As gold and jewellery was cheap in Saudi Arabia, she accumulated jewellery over the years. It was stated that appellant had filed receipts of purchase of jewellery in the Saudi Arabia which were annexed to the chart explaining sources of purchase of jewellery. The appellant also filed a copy of statement made with the Customs at the time of transfer of residence from Saudi Arabia to India in 1983. It was stated that since the family was constantly on move and in foreign lands, they kept several items of jewellery in safe custody of a trusted friend and custodian. A letter of custodian confirming the possession of several item of jewellery in 1980 was also filed. Affidavit of appellant's mother-in-law explaining that she was in possession of jewellery which belonged to the family was also filed. It was stated that appellant's parents were living in USA. Her father expired in 1990 and mother in 1999 and left many properties in USA and in India which included gold and diamond jewellery. A copy of "Will" of appellant's mother who passed away in 1999 wherein she bequeathed several items of jewellery to the appellant was also filed. It was stated that most of these documents were submitted before the AO but he has taken no cognizance of the same. It was stated that the AO was thus having prejudiced mind set. It was stated that AO has grossly erred in attributing the entire purchase of jewellery out of undisclosed sources wholly and only to the block period of 1996 to 64 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 2001. It was stated that AO has erred in alleging that minimum jewellery belong to pre block period whereas the facts are completely reverse. It was stated that it is customary practice in traditional India that the jewellery is purchased at the time of marriages, wedding anniversaries, birth of children etc. It was stated that all these events took place much before the block period to which the assessment pertains. It was stated that by 1996 to 2001, appellant had already been married for more than 20 years and her children were grown up. It was stated that it is customary for Indian women to collect jewellery as 'Stri Dhan' and particularly at marriages and on family occasions. It was submitted that the order of AO fails this important test of reasonableness, as it is not in alignment with traditional and customary practices. It was stated that the order of AO mitigates against the test of reasonableness that the appellant did not buy jewellery in first 20 years of marriage life when she was a young bride and mother but constantly purchased huge quantity of jewellery only in the block period. It was stated that from the description of the jewellery item itself. It is obvious that most items of jewellery were ancestral and antique. It was thus contended that the entire addition of Rs. 57,10,531/- on account of unexplained investment in jewellery deserves to be deleted."
47. After calling for the remand report from the AO, the Ld. CIT(A) has discussed this issue in detail and has deleted the addition to the extent of Rs. 55,24,860/- after observing and holding as under :-
65ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 8.7 I have considered the reasoning given by the AD and submissions made by the appellant. The AO has not objected to the genuineness of bills furnished by the appellant for purchase of jewellery from the Middle East during her stay in Saudi Arabia.
His objection is whether the jewellery purportedly purchased by the appellant in Middle East is same as found during the course of search and seizure action. A careful perusal of jewellery chart and its comparison with the evidences furnished by the appellant reveals that not only description of all jewellery items, except for two groups of small items, but also their weight and cartage match with that given in valuation report prepared at the time of search by approved valuer. Even some portion of jewellery consisted in the above two unmatched group of small items, were duly explained from the documentary evidences by the appellant. These evidences reveal that besides the items belonging to the mother-in-law and the daughter of the appellant and those received by her through the" will" of her mother were acquired before she finally came back to India in 1983. Thus all the matched items that were acquired prior to the commencement of the block period on 1.4.95 must be considered as explained as these are beyond the scope of provisions of Chapter XIV - B. The reasoning of the AO that it is not evidenced that jewellery purchased prior to appellant's finally coming to India cannot be accepted in view of the fact that firstly the items match description and secondly that once a person finally shifts in 1983 in India it cannot be expected that she would leave her jewellery in that foreign country and buy fresh jewellery in India and that too within the block period. The AO has also simply brushed aside the explanations of the appellant, the affidavits of appellant's mother-
66ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 in-law, certificate of her daughter and inheritance from her mother duly supported by registered "will". He has not considered the social and financial status of the appellant and her in-laws. I am of the view that the AO was not justified in doing so without any cogent material or evidence. In view of this, I am of the opinion that only unmatched portion out of jewellery items listed at SI No. 33 and 46 of the valuation report dated 8.11.01 prepared at the time of search at A-232, Defence Colony, New Delhi can be held as unexplained and acquired out of undisclosed income during the block assessment period.
8.8 The appellant has further explained from purchase bills of Middle East- acquisition of three pieces of diamond bangles out of 13 pieces of bangles/kara of diamond and stone valued at Rs. 2,77,8001- and listed at S.No. 33 of the valuation report dated 8.11.2001. Likewise the appellant has also explained from the purchase bills of Middle East, acquisition of 5 pairs tops, 2 pieces rings and 1 piece tikka out of 6 pairs tops, 6 pieces pendants, 2 pieces rings and 1 piece tikka valued at Rs. 44,300/- and listed at SI.No. 46 of the valuation report dated 8.11.01. Thus, in both these cases the explained items had been acquired during her stay in Saudi Arabia. Thus after considering their weight and quantity, the proportionate value of unexplained jewellery items comes to Rs. 1,85,671/- out of total value of R. 3,22,100/- (Rs.2,77,200 +44,300/- of the small jewellery items at SI. No. 33 and 46 of the valuation report dated 8.11.2001.
8.9 Accordingly, out of total jewellery found from the possession of the appellant during search, jewellery of Rs. 64,31,807/- detailed as under, is accepted as fully explained:-
67ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006
1. Jewellery acquired upto 31.3.95 (i.e. prior to the commencement of the block assessment period) including that received on her marriage in 1975. Rs. 44,92,736/-
2. Jewellery inherited from mother. Rs. 5,66,108/-
3. Jewellery belonging to mother-in-law (other than that found from two lockers.) Rs. 9,87,718/-
4. Jewellery belonging to daughter. Rs. 1,64,512/-
5. Jewellery belonging to mother-in-law (found from locker No. 28/11467 SBI and 104 PNB as admitted by AO. Rs. 2,20,733/-
___________________ Total Rs. 64,31,807/-
_________________ Remaining, addition of Rs. 1,85,671/- for undisclosed investment in jewellery is confirmed. The appellant effectively gets a relief of Rs. 55,24,860/-."
48. After hearing both the parties and on perusal of the relevant finding given in the impugned order as well as the material referred to before us, we find that assessee has sought to explain the acquisition of jewellery, firstly, by giving her wealthy family background from her parent side and also the fact that she was married to a reputed doctor who was serving in Saudi Arabia at the time of marriage. After staying in Saudi Arabia with her husband has served in Saudi Arabia, Vienna and London and finally shifted to Delhi in 1983. Most of the jewelleries have been purchased during the time of stay at abroad which was brought to India in 1983. Assessee had also filed letter of custodian confirming the possession of items of jewellery along with the affidavit of her mother in law to show that she was actually in possession of 68 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 jewellery which belonged to the family. Part of the source was also explained from the jewellery inherited from her parents through 'Will' which has been already noted by the Ld. CIT(A). Apart from that the assessee has also furnished bills purchase of jewellery from Middle East during the staying in Saudi Arabia which was matched item wise from the jewellery found including weight and cartage. The observation and the finding given by the Ld. CIT(A) after perusing the entire details, examining of seized material, explanation of the assessee along with the evidence and the finding of the AO, is based on proper appreciation of facts and we do find any reason to deviate from such a finding and looking to the overall facts and circumstances of the case. Accordingly, the relief given by the Ld. CIT(A) is affirmed and grounds raised by the revenue is dismissed. So far as the addition of Rs. 1,85,671/- is concerned, reasons stated by the Ld. CIT(A) that the said jewellery could not be matched from the bills and details furnished by the assessee, therefore, without any rebuttal, the same is confirmed. Thus, ground No. 2 (ii) as raised by the assessee is also dismissed.
49. In ground No. 3 the revenue has challenged the addition of Rs. 5,12,111/- on account of unexplained cash found during the course of search. At the time of search and seizure action total cash of Rs. 49,98,000/- was found out of which it was explained that cash of Rs. 5,12,111/- pertains to assessee and same is her cash in hand as per the books of accounts as on 8.12.2001. In support of her contention the assessee has filed cash book account from 1.4.2001 to 31.3.2002 the cash shown was stated to be out of agricultural income of Rs. 549312/-. However the AO in absence of any proper evidence had treated the entire cash as unexplained.
69ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006
50. Before the Ld. CIT(A) the assessee submitted copies of receipts on account of sale of poplar trees at Bhagoowala which was sold to one, Jindal Timbers the said additional evidence was confronted to the AO on which remand report was called for which has been objected by the AO. Ld. CIT (A) after considering the gamut of facts has deleted the addition after observing and holding as under:-
"9.5 I have considered the reasoning given by the assessing officer and the submissions made by the Ld. Counsel. It is an admitted fact that the appellant is having a large agricultural holding in Distt. Saharanpur. This fact is also evident from page 7 of the assessment order wherein the AO has himself calculated the land holding of the appellant at 13 bigha and 3 biswa. In fact, on page 8 of the assessment order, there is a mention of statement of one Sh. M.A. Khan. It was mentioned by him that at the time of purchase of agricultural land, there were only 5-6 trees of mangoes and balance trees were of Eucalyptus and other poplar trees and these trees were cut after purchase of land. It was stated that after cutting of the trees, the mangoes and guavas trees were planted which were not ready for production of fruits. This inquiry conducted by ADIT (Inv.), Saharanpur thus clearly indicates that the appellant in fact, cut trees of Eucalyptus and Poplar varieties and the natural corollary would be that she sold these trees. Thus it cannot be said that the additional evidences in the shape of sale of trees of poplar is evidence totally in isolation. Since the appellant has produced the copy of bills of sale of Poplar trees and the cash received on sale of these trees is entered in cash book of the appellant, and the cash in hand is covered by cash book, I am of the view that the assessing officer was not 70 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 justified in treating the cash of Rs. 5,12,111/- as unexplained. The same is deleted."
51. After considering the rival submissions and on perusal of the impugned order and material referred to before us, we find that the Ld. CIT(A) has taken note of the fact that assessee was holding 13.3 Bighas of land and at the time of purchase of said land there were trees in the said land, like mango trees, eucalyptus and popular trees which was cut after the purchase of land. After the cutting of the trees mango and guavas trees were planted and the inquiry conducted by ADIT (Inv.) clearly indicate that assessee had 7 trees of mangoes and balance trees were of eucalyptus and other popular trees were cut down and once they are cut assessee's version is the same has been sold cannot be denied. In the light of these explanation we do not find any infirmity in the order of the Ld. CIT(A) and the same is affirmed and accordingly the ground No. 3 raised by the revenue is dismissed.
52. Lastly, coming to the addition of Rs. 22,000/- on account of unexplained investment in shares and Rs. 98,000/- being unexplained investment in FDR. So far as the issue relating to unexplained investment in shares, the AO has made addition of Rs. 2,20,000/-for 2200 shares held by the assessee in M/s. Vikas WSP Ltd. The AO has taken the face value of each share at Rs. 100/- instead of Rs. 10/-. Ld. CIT(A) held that since shares were purchased at face value of Rs. 10/- the addition of Rs. 22,000/- should be made and accordingly, he has relief of Rs. 1,98,000/-. Since the assessee could not explain the source of Rs. 22,000/- remains unexplained and therefore, the same is confirmed. With regard to undisclosed investment in FDR also the Ld. CIT(A) has dealt with this issue in the following manner :-
71ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 "11. The ninth ground of appeal is against the addition of Rs.
98,000/- on account of undisclosed investment in FORs. In the assessment order, the assessing officer observed that as per seized document A-52/45, the appellant made investment of Rs. 50,000 on 9.6.1999 in the name of Ms. Sohaer Rizvi and also purchased FDR of Rs. 48,000/- on the same day by debiting Rs. 98,000 in bank account No. 1190015815 SBI, Defence Colony, New Delhi. The assessing officer noted that Ms. Sohaer Rizvi was not income tax assessee on the date of search and the appellant was taken as co-owner of the FDRs. It was mentioned that Ms. Sohaer Rizvi filed her return of income for the first time on 31.3.2003 showing only interest income. The AO observed that Balance sheet of Ms. Sohaer Rizvi showed capital of Rs. 6,23,000/- as on 31.3.98. Since no explanation was furnished, AO held the investment in FDR of Rs. 98,000/- as undisclosed investment of the appellant. In the written submissions, it was stated by the appellant that AO has erred in holding that appellant made an undisclosed investment of Rs. 98,000 in FDRs. No further submissions in this regard were made. Since the appellant has not been able to explain the source of investment in the FDRs, in which appellant was the co-owner, addition of Rs. 98,000/- is confirmed."
53. After considering the rival submissions and on perusal of the aforesaid finding, we find that Ld. CIT(A) has confirmed the said addition on the ground that the assessee could not give any proper explanation and substantiate the source of investment in FDRs. In 72 ITA Nos. 305,306/Del/2005 ITSS Nos. 93, 40/Del/2006 absence of any proper rebuttal of such finding we do not find any infirmity in the order and the same is confirmed.
54. In the result appeal of the revenue as well as appeal of the assessee is dismissed.
Order pronounced in the open court on 20th December, 2017.
Sd/- sd/-
(O.P. KANT) (AMIT SHUKLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 20/12/2017
Veena
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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