Income Tax Appellate Tribunal - Ahmedabad
Kawaljeetsingh P.Chhabda L/H Of Late ... vs Department Of Income Tax on 2 September, 2013
आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद Ûयायपीठ बी, बी, अहमदाबाद ।
IN THE INCOME TAX APPELLATE TsRIBUNAL "B" BENCH, AHMEDABAD BEFORE SHRI D.K. TYAGI, JUDICIAL MEMBER And SHRI A.K. GARODIA, ACCOUNTANT MEMBER
1. आयकर (ss) अपील सं./I.T(ss).A.No.374/Ahd/2002
2. आयकर (ss) अपील सं./I.T(ss).A.No.375/Ahd/2002 (Block period : 1/4/1989 to 20/05/1999)
1. Dy.CIT बनाम/ 1. Kawarjeetsingh P. Central Circle-1(2) Vs. Chhabda Ahmedabad L/H. of Shri Pradhansingh S.Chhabda 5, Maharshi Complex Nr.Bank of Baroda Sardar Patel Colony, Naranpura Ahmeadbad-14
2. Kawarjeetsingh P. 2. Dy.CIT Chhabda,Ahmedabad Central Circle-1(2),Ahd ःथायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AAHPC 3315 M (अपीलाथȸ /Appellants) .. (ू×यथȸ / Respondents) Revenue by : Shri O.P.Vaishnav, CIT-DR Assessee by : Shri Mehul Thakkar सुनवाई कȧ तारȣख / Date of Hearing : 02/09/2013 घोषणा कȧ तारȣख /Date of Pronouncement : 24/09/2013 आदे श / O R D E R PER SHRI A.K.GARODIA ACCOUNTANT MEMBER :
These are cross-appeals directed against the order of the ld.CIT(A)-II, Ahmedabad dated 28.10.2002 for the block period from 1.4.89 to 31.3.99.
2. Ground No.1 of the Revenue's appeal and ground No.1 of the Assessee's appeal are inter-connected which read as under:-
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99 -2- Revenue's ground of appeal:-
1. The learned CIT(A) has erred in law and on facts in deleting the addition made of Rs.8,31,000/- out of the total addition of Rs.48,31,000/- on account of unaccounted investment in bungalow. Assessee's ground of appeal:-
1. On the facts and in the circumstance of the case the Ld.CIT(A) has erred in not deleting the addition of Rs.40,00,000/- in respect of investment in bungalow even though it was fully explained.
2.1. Brief facts regarding this issue and the decision of ld.CIT(A) is as per para-4 of the order of the ld.CIT(A) which is reproduced below:
"04. The first ground of appeal is regarding an addition of Rs.48,31,000/- on account of investment in Bunglow No.154, Sunrise Park, Drive-in-Road, Ahmedabad. The Assessing Officer has observed that Annexure A-6, A-18, A-23, A-24 and A-50 contain the details of investment as well as expenses incurred in the purchase and renovation of the said bungalow. Smt. Bimlajeet Kaur, wife of the appellant stated on oath on 20th May, 1999 that the bungalow at Sunrise Park was purchased in 1994 from Shri C.V. Somaiya for Rs.30 lakhs and thereafter expenses were incurred on renovation of the bungalow up to 1996. The documented price of the above property is at Rs.8 lakhs which is registered in the joint names of Smt.Bimlajeet Kaur and Shri Pradhan Singh. The Assessing Officer has observed that the appellant invested Rs.30 lakhs on purchase of the property and further Rs.26.31 lakhs on its renovation. The property was also referred to the District Valuation Officer under section 131(1)(d) of the I.T. Act 1961 who valued the same at Rs.23,52,000/- vide his report dated 25th May, 2001. The Assessing Officer did not accept the report of the District Valuation Officer as the approved valuer of the appellant had valued the bungalow at Rs.71,11,600/-. The appellant had explained during the course of assessment proceedings that the said valuation was submitted to the bank for obtaining loans. The Assessing Officer has made total addition of Rs.48,31,000/- after giving a set off of Rs.8 lakhs which was a documented price and was shared by the appellant and his wife. The appellant has submitted that the Assessing Officer has made the above addition arbitrarily because actual payments which are treated in the hands of the appellant were made by the original owner of the property.
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99 -3- The appellant further clarified that the expenses on renovation were mixed with other expenses over the period of several years and hence the entire expenses should not be treated as incurred for the renovation of the bungalow. The appellant argued that the property was on rent, therefore, its cost could not be at Rs.30 lakhs. However, I have perused the arguments raised by the appellant and also looked in to the merits of the above addition. Looking to the explanation of the appellant regarding cost as well as renovation of the property addition of Rs.40 lakhs is sustained and remaining addition of Rs.8,31,000/- is deleted."
3. Now, the assessee is in further appeal before us for the part addition of Rs.40 lacs confirmed by ld.CIT(A), whereas the Revenue is in appeal before us for the deletion of part addition of Rs.8.31 lacs by the ld.CIT(A).
4. The ld.DR of the Revenue supported the assessment order. As against this, it was submitted by the ld.AR of the assessee the addition was made by the AO only on the basis of statement of the wife of the assessee, which is not justified. He also submitted that as per Valuation Report of the DVO obtained by the AO, the property in question was valued by the DVO at Rs.23.52 lacs only and hence, value of the property in question cannot be said to be more than this amount. He also submitted that in addition to the amount disclosed by the assessee regarding purchase value of this property, i.e. Rs.8 lacs, ld.CIT(A) has allowed the benefit of telescoping of Rs.10,56,530/-, Rs.3.74 lacs and Rs.53,258 against the addition sustained by him in respect of this property and, hence, if this total amount is considered which is Rs.22,84,788/- as against the value as per DVO of Rs.23.52 lacs, it should be accepted that no further addition over and above Rs. 22,84,788/- is called for because the minor difference with value as per DVO on estimate basis does not call for any addition. He submitted that IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99 -4- this is also worth noting that the property in question is jointly owned by the assessee and his wife and this is admitted by the AO also because he has also noted that out of the payment of Rs.8 lacs disclosed by the assessee having been made by cheque/draft, an amount of Rs.3.50 lacs was paid by wife of the assessee and, therefore, even if there is any cash expenditure for acquiring this property, only 50% of the same can be considered in the hands of the assessee. He submitted that under these facts, the entire addition made by the AO in the hands of the assessee on this account should be deleted.
5. We have considered the rival submissions and we find force in the submissions of the ld.AR of the assessee. This is an admitted position that out of the declared value of the property in question, i.e. Rs.8 lacs, an amount of Rs.4.50 lacs only was paid by the assessee by way of drafts as shown in the books and the balance amount of Rs.3.50 lacs was paid by the wife of the assessee Smt.Bimaljeet Kaur by way of draft and, hence, even if it is held that there was some cash expenses incurred in respect of acquiring this property, the entire amount cannot be considered in the hands of the assessee. In addition to Rs.8 lacs already declared by the assessee, ld.CIT(A) had confirmed three addition on some different heads of Rs.10,56,530/-, Rs.3.74 lacs and Rs.53,258/- totaling Rs.14,83,788/-. The AO had determined the total value of the property at Rs.56.31 lacs and after deducting Rs.8 lacs being the disclosed amount, he had made an addition of Rs.48,31 lacs. Out of this addition of Rs.48.31 lacs, the ld.CIT(A) had allowed relief of Rs.8.31 lacs and confirmed the balance addition of Rs.40 lacs. In our considered opinion, in the facts of the present case, the total value of this property should be considered at Rs.38 lacs which is in between of value as per DVO and value as per A.O. and out of this, IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99 -5- admittedly, payment of Rs.8 lacs was made by way of cheque/draft as per disclosure of the assessee and his wife. Hence, the toal payment in cash on account of this property has to be considered at Rs.30 lacs. Since the property in question is held jointly by the assessee and his wife, a total cash payment to be considered in the hands of the assessee cannot exceed Rs. 15 Lacs out of this total cash payment of Rs.30 lacs. Hence, we confirm the addition of this account to the extent of Rs.15 lacs only. We want to make it clear that against this addition of Rs.15 lacs being confirmed by us, the assessee will get the benefit of telescoping as allowed by the ld.CIT(A) of Rs.1056,530/-, Rs.3,74,000/- and Rs.53,258/- totaling to Rs.14,83,788/- and the net addition confirmed by us will remain the balance amount of Rs.16,212/-. The ground raised by the Revenue is rejected, whereas the ground raised by the assessee is partly allowed.
6. Ground No.2 raised by the Revenue is inter-connected with ground No.2 raised by the assessee. These two grounds are as under:-
Revenue's ground of appeal:-
2. The learned CIT(A) has erred in law and on facts in deleting the addition of Rs.5 lacs out of total addition of Rs.8 lacs in respect of unaccounted investment in the purchase of plot.
Assessee's ground of appeal:-
2. On the facts and in the circumstance of the case, the Ld.CIT(A), has erred in not deleting the addition of Rs.3,00,000/- in respect of investment in Radhe Acre eventhough it was fully explained.
6.1. Brief facts regarding this issue and the decision of the ld.CIT(A) is as per para-5 of his order which is reproduced below:
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99 -6- "5. The second ground is regarding an addition of Rs.8 lakhs on account of investment in plot. The Assessing Officer has made addition of Rs.8 lakhs by observing that the appellant purchased a plot No.40-A by paying Rs.10 lakhs, out of which Rs.2,00,700/- was paid by cheque and the rest Rs.8,00,000/- was paid in cash. The Assessing Officer observed that the appellant has shown the valuation report of the above plot at Rs.39,68,800/-. The Assessing Officer also referred the property to the District Valuation Officer under section 131(1)(d) of the I.T.Act to value the same at Rs.2,31,000/-. The appellant pleaded at the time of assessment proceedings that he valuation report showing higher value was prepared to obtain bank loans. However, Assessing Officer proceeded to make the above addition. I have perused the contention raised by the appellant as well as noted facts of this case. The element of 'on money' involved in the above transaction can not be ruled out. In view of the facts of this case an addition of Rs.3,00,000/- is upheld and the remaining addition of Rs.500,000/- is deleted."
7. The Revenue is in appeal for the relief allowed by ld.CIT(A) of Rs.5 lacs out of toal addition made by the AO of Rs.8 lacs and the assessee is in appeal before us for the part addition confirmed by ld.CIT(A) of Rs.3 lacs. The DR of the Revenue supported the assessment order, whereas it is submitted by the ld.AR of the assessee that the value of the property as per the valuation done by the DVO was only Rs.2.31 lacs and the amount declared by the assessee is Rs.2,00,700/- and since the valuation is an estimate only and is very close to the amount declared by the assessee, no addition is justified.
8. We have considered the rival submissions. We find that as per the report of the DVO regarding this property, this property was valued by him at Rs.2.31 lacs as against the value declared by the assessee of Rs.2,00,700/-. The AO has also mentioned regarding valuation report obtained by the assessee from registered valuer in respect of this property at Rs.39,63,800/-. Regarding this IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99 -7- valuation report, it was explained by the assessee before the AO that the same was obtained for the purpose of obtaining the loan from the bank and, therefore, the same should not be relied upon. The AO has also ignored the valuation report of the registered valuer valuing this property at Rs.39,63,800/- because he has also adopted the value of this property at Rs.10 lacs only as against, the amount paid by cheque of Rs.2 lacs and in this manner, he has made addition of Rs.8 lacs only. The addition made by the AO of Rs.8 lacs was on this basis that receipt of Rs.10 lacs is on record. The ld.AR of the assessee strongly submitted that this observation of the AO is not correct and receipt of Rs.10 lacs is not available on record. Ld.DR of the Revenue could not produce before us any such receipt of Rs.10 lacs although copy of seized materials is available in paper book. In view of this factual position that this addition of Rs.8 lacs was made by the AO without any valid basis and ld.DR of the Revenue could not produce before us the alleged receipt of Rs.10 lacs in respect of this property, we are of the considered opinion that no addition is justified in respect of this property in the facts of the present case. We, therefore, delete the entire addition. Ground No.2 of the Revenue is rejected, whereas ground No.2 of the assessee is allowed.
9. Ground No.3 of the Revenue reads as under:-
3. The learned CIT(A) has erred in law and on facts in deleting the addition of Rs.29,25,540/- in respect of post-dated cheques found.
9.1. Brief facts regarding this issue and the decision of the ld.CIT(A) is as per para-6 of his order which is reproduced below:
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99 -8- "6. The third ground of appeal is regarding an addition of Rs.29,25,540/- in respect of items of Annexure-II mentioned in Para 11 of the assessment order. The Assessing Officer has made the above addition on the basis of post dated cheques belonging to other parties which are stated to be unexplained. The details of cheques are reproduced from the relevant Para as under:
Rs. 5,000/- Delta Star Corpn. Rs. 10,540/- of S.P. Thakkar Rs. 10,000/- of Prakash Patel Rs. 5,00,000/- of Chamunda Plywood Traders Rs.18,00,000/- of Sagar Consultancy Rs. 1,00,000/- of Vaalinath Corporation Rs. 5,00,000/- of H.H. Gami Rs.2925,540/- (Total)
The appellant submitted before me that it was explained during the course of assessment proceedings that the above cheques were obtained as security for arranging finance for the vehicles and the appellant has not entered into any transaction with the customers for giving finance or recovery of the same. The relevant portion of the appellant's explanation before the Assessing Officer is reproduced for the sake of clarity as under:
"At the outset I wish to state that I am a sole proprietor of M/s.Punjab Motor, Ahmedabad basically doing the business of commission agency in the purchase and sale of old and new cars. The main source of income is in the form of commission received from the seller and purchaser of vehicles which are mostly four wheelers and two wheelers. Sometime, there are commissions when I arrange/tie up finance on behalf of the prospective customers either from the seller himself or through other sources. To the finance I am also standing as a guarantor for the loan amount taken by the purchaser as I am taking suitable security from the purchaser for arranging the required finance. I do not expect any income from this business because I consider it as a part of my business which in turn increases my clientele".
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99 -9- The purpose of reproduction of the above version of the appellant is to ascertain the genuineness of transactions which will be discussed in the following pares. Now on the fact of the cheques of other parties which could neither be encashed by the appellant nor there is any evidence to indicate that the appellant directly or indirectly received the equivalent amount can not be treated as belonging to the appellant. Not only that the cheques are very old and even the number of vehicles are mentioned against them. In view of the reasons given by the appellant and nature of the very old cheques, addition of Rs.29,25,540/- is deleted."
10. The ld.DR of the Revenue supported the assessment order, whereas the ld.AR of the Assessee supported the order of the ld.CIT(A).
11. We have considered the rival submissions. We find that this addition was deleted by the ld.CIT(A) mainly on this basis that the cheques of other parties could neither be encashed by the assessee nor there is no evidence to indicate that the assessee directly or indirectly received the equivalent amount and, therefore, in our considered opinion, no interference is called for in the order of the ld.CIT(A) on this issue because ld.DR of the Revenue could not controvert this clear finding of ld.CIT(A). Accordingly, ground No.3 of Revenue's appeal is rejected.
12. Ground No.4 of Revenue's appeal reads as under:-
4. The learned CIT(A) has erred in law and on facts in deleting,
(i) addition of Rs.70,000/- in respect of loan given to Smt.Kusumben and
(ii) addition of Rs.55,000/- in respect of unexplained payment made to one Shri Jatinbhai, Advocate.
12.1. Brief facts regarding this issue and the decision of the ld.CIT(A) is as per para-7 of his order which is reproduced below:
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 10 -
"07. The fourth ground of appeal is regarding an addition of Rs.1,25,000/ in respect of items mentioned in Para 11 of the assessment order. The assessing Officer has made addition of Rs.70,000/- on account of loan given to Kusumben and another addition of Rs.55,000/- on account of receipt by Jatin Advocate. The appellant has explained that loan of Rs.70,000/- was arranged from a party of Baroda whose name and telephone number is mentioned on the seized paper itself. Similarly Shri Jatin Advocate had issued receipt of Rs.55,000/- to Shri I.K. Baxi which has noting to do with the affairs of the appellant. It appears that the Assessing Officer has not carefully looked into the transactions. In view of the appellant's explanation and facts of the case, the total addition of Rs.1,25,000/- is deleted."
13. The ld.DR of the Revenue supported the assessment order, whereas the ld.AR of the Assessee supported the order of the ld.CIT(A).
14. We have considered the rival submissions. We find that for the recovery of loan of Rs.70,000/-, it was explained by the assessee that the same was arranged from the party of Baroda whose name and telephone number is mentioned on the seized paper itself. Regarding second amount of Rs.55,000/-, it was explained by the assessee that one Shri Jatin Advocate had issued the receipt of this amount to Shri I.K.Baxi and he has nothing to do with the affairs of the assessee. The ld.CIT(A) had deleted both these additions by observing that the AO has not carefully looked into these transactions. The ld.DR of the Revenue could not controvert this finding of the ld.CIT(A) and, hence, we decline to interfere with the order of the ld.CIT(A) on this issue also. Therefore, ground No.4 of Revenue's appeal is rejected.
15. Ground No.5 of Revenue's appeal which reads as under:-
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
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5. The learned CIT(A) has erred in law and on facts in deleting the addition of Rs.3,17,500/- in respect of unaccounted money advanced to Jagdish Chavana Sweet Mart for the purchase of shop.
15.1. Brief facts regarding this issue and the decision of the ld.CIT(A) is as per para-8 of his order which is reproduced below:
"8. The sixth ground of appeal is regarding an order of Rs.3,17,500/- in respect of item of Annexure 12 mentioned in Para 15 of the assessment order. The Assessing Officer has jotted only one line i.e. "relates to money advanced to Jagdish Chawans Sweet Mart for purchase of shop:. However, the appellant explained that although finance of Rs.3,17,500/- was to be arranged for purchase of shop by Jagdish Chawan Sweet Mart but the transaction did not materialize. The annexures are just papers prepared for the same and cheque lying with the appellant was 4 years old. In this case the Assessing Officer should have established that the transaction took place i.e. the finance was actually given by the appellant to the concerned party for purchase of shop. When such an event could not take place the Assessing Officer was not justified in making such addition. In view of these facts the addition of Rs.3,17,500/- is deleted. "
16. The ld.DR of the Revenue supported the assessment order, whereas the ld.AR of the Assessee supported the order of the ld.CIT(A).
17. We have considered the rival submissions and we find that this issued had been decided by ld.CIT(A) on this basis that the papers prepared along with cheque were lying with the assessee and these were four years old. He has given a clear finding that the AO could not establish that the transaction took place in actual. Ld.DR could not controvert this finding of the ld.CIT(A) by producing any evidence to establish that the transaction actually took place. We, therefore, decline to interfere with the order of the ld.CIT(A) on this issue also. Ground No.5 of Revenue's appeal is rejected.
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
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18. Ground No.6 of Revenue's appeal reads as under:-
6. The learned CIT(A) has erred in law and on facts in directing to allow set-off of the amount of Rs.10,56,530/- representing the addition made on account of loan amounts to be recovered from various parties as also certain unexplained expenses against the addition of Rs.40 lakhs sustained by him [CIT(A)] on account of investment in bungalow.
18.1. On this issue, ld.DR of the Revenue supported the assessment order, whereas ld.AR of the Assessee supported the order of the ld.CIT(A).
19. We have considered the rival submissions. We find that this ground of the Revenue is misplaced because, in fact, the ld.CIT(A) has confirmed the addition of this amount and he has simply allowed set off of this amount against the addition of Rs.40 lakhs sustained by him on account of investment in bungalow. This addition was made by the AO and confirmed by ld.CIT(A) on this basis that these amounts were mostly in the form of credits and, therefore, the addition is sustained, but set off is allowed against the addition of Rs.40 lakhs on account of investment in bungalow. In our considered opinion, the ground raised by the Revenue has no merit because addition is already confirmed by ld.CIT(A) and set off allowed by him of this addition against addition sustained by him in respect of investment in bungalow cannot be faulted because this addition is on account of credit entries and addition in respect of bungalow is on account of debit entries and, therefore, the set off allowed by the ld.CIT(A) cannot be faulted without showing that this amount was used elsewhere and not in the bungalow. We, therefore, uphold the order of the ld.CIT(A) on this issue and this ground of Revenue's appeal is also rejected.
20. Ground No.7 of Revenue's appeal reads as under:-
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
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7. The learned CIT(A) has erred in law and on facts in deleting the addition of Rs.2,63,00,000/- in respect of unaccounted loan given to Shri Bholabhai Patel.
20.1. Brief facts regarding this issue and the decision of the ld.CIT(A) are as per paras-10 & 10.1 of his order which are reproduced below:
"10. The twelfth ground of appeal is regarding addition of Rs.3,35,97,610/-. The Assessing Officer has made the above addition on the ground that the appellant advanced Rs.2,63,00,000/- to Bhotabhai as per Annexure A 31 page 1 as the appellant was found to be in possession of documents like power of attorney for 119 Sunrise park, Mangal murti Complex etc. and the value of that property was around 2 Crores. The appellant has submitted that he is not having any licence for giving finance. He is merely earning commission from sale and purchase of new as well as old cars. The appellant admitted that he got sold number of imported cars to Shri Bholabhai and other members of his family for the past 15 years which is duly reflected in the Books of account. The appellant has referred to the question answers raised during the course of assessment proceedings, which are reproduced as under:
"Q2- I saw you page 1 of Annexure A-41 and Annexure A-43 which has seized by us and according to that you have given a loan of Rs.2,65,00,000/- to Bholabhai Patel. Please explain.
A-2- I know Bholabhai since last 10-15 years and we are having good relation. His son Raj Bholabhai and his daughter Rekha Bholabhai are interested in having new car. Therefore they used to ask us the rates of imported and premium car because of our old dealing with them. As regards assets of Bholabhai, these are all copies of the documents with us obtained for security against car loans. Whatever amount we have to received from them is shown in our books of accounts.
Question No.5- How much finance you gave to Bholabhai? A-5- I have given finance to Bholabhai and his family members are reflected in our books of accounts. It may be please be confirmed with Mr.Bholabhai after calling him personally.
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
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Q-6- Whether Bholabhai confirmed or not, how much finance you gave to him?
A-6- There is a mortgage loan on Bholabhai's Bunglow about Rs.15,00,000/- (with interest and exact can be said after verifying the books. This bungalow is in the name of Raj Bholabhai and Rekhaben Bholabhai. All these transactions are legal and documents are notarized before notary.
Q-7- I show you page 1 of annexure A-31 of annexure A-36, which were seized from your office, there is an account of Bholabhai. I also saw you annexure A-2 in which there are cheques of Mahalaxmi Enterprise. Please refer this and tell us how much you given to Bholabhai and how much amount you have to recover from him?
A-7- Bholabhai is my friend and I know him since last 15 years. We are residing in the same society. Because Mr.Bholabhai wanted to purchase car on installment basis, he has to put a proposal, quotation for the car, advance cheques and documents of the property for security. Being a middleman and responsibility of the loan lies on the appellant, the appellant has to obtain these documents for security. These are all transactions to car dealings only and not an account of finance.
A-8- I show you page 1 of annexure A-31 and page 31 of the annexure A-36, please refer this and explain regarding credit 50 shop.
A-8- This may be note regarding shop dealings. Sardarji is written on the page. There may be a talk on some Sardarji.
Q-9- On back side of page 1 of annexure A-31, in which 10-08-98, 10- 09-98 and 10-10-98, 3.40, 3.40, 3.40 written and this matter is also written on page 31 of annexure A-36.
A-9- I know Bholabhai since last 15 years, these figures are related to booking of shop, there is no loan transaction. This may be confirmed with Mr.Bholabhai for further verification.
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
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Q-10- Please refer page 1 of annexure A-31 and tell us what is the meaning of figures written in ) circle.
A-10- These are the shop numbers and not any business transactions. You are showing circles but it is neither any transaction nor any Rupees
- written.
Q-11- I show you page 1 of annexure A-31 again on this 10, 13-08-96, 10, 10-09-96, 10, 23-09-96, 10, 03-11-96, 10, 03-03-97 advance is written. Please explain.
A-11- When any builder puts a scheme, they start advance booking. This may be a talk regarding booking of shop no.10 in very raw of Ghantakarn Market. (Please refer seized material wherein number of pamphlets of scheme or Ghantakarn Market launched by Bholabhai Patel).
Q-12 I show you page 2 of annexures A-31, in which from 10th June, 1998 on January 99 full and final page is written - 4% Please explain.
A-12- I have to get 4% commission for the deal of shop and full and final payment to be completed at he time of possession in January 1999.
Q-13- On Page no.31 annexure A-36, 3 pending, 10-11-98, 3 pending, 10-12-98, 3 pending, 10-12-98, 3 p3nding 10-02-99, 3 pending, 10-03-99.
A-13- It is a note of our R.T.O. agent, to we have given R.C.Book for registration of the vehicles which are pending in the various months.
Q-14- Please refer page 1 of annexure A-31, we understand that your finance is Rs.2,90,00,000/- to Bholabhai on interest, in which Rs.27,00,000/- received back, Thus total Rs.2,63,00,000/- you have to receive from Bholabhai. Please explain.
A-14- Respected Sir, Please refer this page very carefully. Nothing is written in Rupees Hundreds, Thousands, lacs, Crores. So how can you understand it is in crores? I request you to please clarify.
Q-15- You have taken cheques of 35+1+4+6+1+1+12+0.50 = Rs.60.50 from Bholabhai. Please explain this.
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 16 -
A-15- I have already explained you in earlier questions I have not made any transaction with Bholabhai. These are the cheques received towards quotations of the cars, proposal of the loan for security, the cheques are not valid on this date".
10.1 The appellant further referred to the clarifications given by Shri Bholabhia to the Assessing Officer. Extracts from these confirmations are reproduced as under:
"I have appeared before your kind honour twice in response to said notices and explained the position. It is submitted for your record that Indubhai Dahyabhai Exhibitors Pvt.Ltd. is a Private Limited Company. It closed its cinema business long back and other business thereafter. The company is not doing any business operations for the last 6 to 7 years and is this Non-function company.
We have checked up and there are no records or details showing any business dealings or transactions with M/s.Punjab Motors or Pradhan Singh Chhabra by the said company".
(Extract from letter dated 29/05/2002 to the DCIT, Central Circle.1(2), Ahmedabad) "I have appeared before your kind honour twice in response to said notices and explained the position. It is submitted herewith a copy of my Income Tax return filed for the financial year 31.3.2000 (A.Y. 2000-2001) as desired by you.
I also submit that I do not have any details of transactions with Shri Pradhan Singh Chhabra or Punjab Motors".
(Extract from letter dated 29/05/2001 to DCIT, CC.1(2), Ahmedabad.) In view of the aforesaid discussion it appears that the Assessing Officer did not apply his mind properly. The cheque is very old and was not encashed. The concerned party has denied having any such transaction. The Assessing Officer was required to establish after making independent IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 17 -
enquiries that such a transaction took place with the appellant and the money actually changed hands. However, no such transaction appears to have taken place. Such a huge addition appears to have been made in a very callous manner. It may not be out of place to mention that I have perused the decoding of a large number of items, contained in the show cause letter, where in the Assessing Officer has added three zeros ('000') and totaled up the figure to several crores of rupees. The loose papers, without any particulars or date or name etc. are dumb papers and can not be made the basis for addition. In the above addition the Assessing Officer has not established any conclusive evidence so as to make the appellant solely responsible for the transaction. A corroborative evidence to indicate that the funds have gone to the pocket of the appellant must have been established by the Assessing Officer. In view of these facts addition of the principal amount along with interest etc. at Rs.2,63,00,000/- is deleted."
21. The ld.DR of the Revenue supported the assessment order, whereas the ld.AR of the Assessee supported the order of the ld.CIT(A).
22. We have considered the rival submissions. We find that this addition was deleted by the ld.CIT(A) on this basis that the loose-papers on the basis of which the addition are made by the AO are without any particulars or date or name etc. and, therefore, these are dump-papers and cannot be made the basis for addition. This finding of the ld.CIT(A) could not be controverted by the ld.DR of the Revenue by bringing any evidence on record to show that this essential information such as date, name or particulars are available on the seized paper on the basis of which the addition was made by the AO and, hence, on this issue also, we do not find any reason to interfere with the order of the ld.CIT(A). Therefore, this ground of the Revenue is also rejected.
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
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23. Ground No.8 raised by the Revenue is inter-connected with ground No.3 raised by the assessee. These two grounds are as under:-
Revenue's ground of appeal:-
8. The learned CIT(A) has erred in law and on facts in deleting the addition of Rs.56,96,060/- out of the total addition made of Rs.67,97,610/- in respect of unaccounted loans given by the assessee to various persons.
Assessee's ground of appeal:-
3. On the facts and in the circumstance of the case, the Ld.CIT(A), has erred in not deleting the addition of Rs.11,01,550/- in respect of unexplained items contained in Para 35 of the assessment order of the Ld.A.O. even though it was fully explained.
23.1. Brief facts regarding this issue and the decision of the ld.CIT(A) is as per para-10.2 of his order which is reproduced below:
"10.2 The second part of the addition relating to unexplained items is contained in Para 35 of the assessment order. The Assessing officer has made addition of Rs.67,97,610/- which include debit as well as credit entries. The appellant has explained the entries as under:
"Para 35 Relevant Annexures Name of Debtor Last debit balance Annexure-A-31 AnnexureA-31 Page-4 Ghanshyam,Dariapur Rs.90,000/- It is Rs.10,000/- for sale of car. Account is old and settled.
Annexure A-31 Page9 Pravin Prajapati Rs.4,500/- It is for the Scooter adv.
Account old and settled.
Annexure-A-31 Page10 Suresh Joitaram Annexure-A-31 Page 15 Amarjit Rs.45,000/- It is for the Maruti Van and arranged loan for Amarjit.
Annexure-A-31 Page18 Gurumuka Sardarji Rs.50,000/- It is a rough work back IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 19 -
Side.
Annexure-A-31 Page 21 Mahesh Rs.26,500/- It is loan arranged for Mahesh for purchase of van.
Annexure-A-31 Page 24 S.P.Thakkar Rs.58,000/- It is regarding car deal-
ing and loan arranged through garden finance Annexure-A-31 Page 21 Rajendrasingh Chavla Rs.35,000/- Van loan arrange Annexure-A-31 Page 27 Rajendra Rs.15,000/- Car account already settled.
Annexure -A-31 Page 28 Jaipal Rs.47,550/- Account settled since long.
Annexure A-31 Page30 Ravinder,Jaipur Rs.50,000/- Account settled since long.
Annexure A-31 Page 32 Boss Rs.1,00,000/- Account settled since long.
AnnexureA-31 Page 34 Jasu Pistol Rs.70,000/- Car loan arrange.
Account old and Settled.
Annexure-A-31 Page 34 Jagjitsingh Rs.80,00 Car loan arrange.
Account old and Settled.
Backside Annexure-A-31 Page 36 Dilipkumar Rs.3,90,000/- Page 36 backside is a Loose paper no transaction Annexure A-31 Page 38 Inderjit Lal Rs.30,00000/- Rough work decoding Annexure A-31 Page 40 S.P. Rs.13,00,000/- Rough work decoding Annexure-A-36 Annexure A-36 page 2 Gupta R.P. Rs.17,190/- Rough work no dealing Annexure A-36 Page 11 Raghuvir Cycle Rs.44,675/-Estimate of car no dealing Annexure A-36 Page 11 Surjeet Rs.5,000/- Scooter Estimate.
IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 20 -
Annexure A-36 Page 30 Pankhi Rs.1,50,000/- Tea etc.misc.expenses and decoding.
Annexure A-36 Page 30 Ramesh Trivedi Rs.3,50,000/- Tea etc.misc.expenses and decoding.
Annexure-A 36 Page 31-13 Expenses incurred Rs.5,22,223/- These are all rough work and decoding and Not accounts of anybody
- car details also Mentioned.
Annexure A-36 Page 37 Mahesh Trivedi Rs.5,000/- Rough work Annexure A-36 Page 38 Jashir and Sukhbir Rs.30,000/- Rough work Annexure A-36 Page 39 Ruparel Rs.8,972/- Cancelled written Annexure A-36 43 Inderjit Rs.1,00,000/- Rough work no name Mentioned Annexure-A-36 Page 45 P.Bhatia & S.P. Rs.30,000/- Rough work and crossed Annexure A-36 Page 46 Mahesh Popat Rs.58,000/- Rough work and crossed Annexure A-36 Page 47 Ramesh Choshi Rs.60,000/- Rough work and crossed.
-------------------
Total : Rs.67,97,610/-
The appellant explained that most of the accounts were settled in the past. Some are dumb and rough papers. Perusal of the explanation given by the appellant indicates that Assessing Officer was not justified in making addition of debit entries which are either expenses or inflated figures due to decoding exercised by the Assessing Officer. The Assessing Officer can not arbitrarily make addition on account of both income and expenditure. In view of these facts addition of Rs.56,96,060/- is deleted and addition of Rs.11,01,550/- is sustained."
24. The ld.DR of the Revenue supported the assessment order, whereas the ld.AR of the Assessee supported the order of the ld.CIT(A) for the ground raised by the revenue. Regarding the part addition of Rs.11,01,550/- sustained IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 21 -
by the ld.CIT(A), he submitted that no part of this addition deserves to be confirmed because the entire addition was made by the AO on the basis of dumb and rough papers only.
25. We have considered the rival submissions. We find that the addition was made by the AO on the basis of seized papers containing only name and amount without any date thereon. In the assessment order also, the AO had not mentioned any date of these transactions, although he had noted each and every amount. Before ld.CIT(A), it was explained by the assessee that most of the accounts were settled in the past and these are dumb and rough papers. Since no date was mentioned on these loose-papers, in our considered opinion, no such addition is justified on the basis of such dumb documents. Hence, we delete the entire addition. Accordingly, ground No.8 of Revenue's appeal is rejected, whereas ground No.3 of Assessee's appeal is allowed.
26. Ground No.9 or Revenue's appeal reads as under:-
9. The learned CIT(A) has erred in law and on facts in deleting the addition of Rs.50,00,000/- in respect of unaccounted loan given to Shri K.I.Bakshi.
26.1. Brief facts regarding this issue and the decision of the ld.CIT(A) is as per para-12 of his order which is reproduced below:
"12. The fourteenth ground is regarding an addition of Rs.50,00,000/- in respect of K.I.Bakshi mentioned in Para 37 of the assessment order. The assessing Officer has made the above addition on the basis of statement made before the DDIT wherein the appellant stated that he had advanced Rs.50,00,000/-. However, the appellant stated that the Assessing Officer did not appreciate the complete facts of the case and IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 22 -
hastily concluded that addition of Rs.50 lakhs is to be made in the hands of the appellant. It is explained by the appellant before me that K.I.Bakshi of Bombay met him and promised to pay loan of Rs.5000,000/- at the rate of 15%. Shri Bakshi gave a cheque for Rs.50,000/- which could never be encashed. The particulars of properties given by Shri Bakshi were also false and in fact there was no such property in his name. It was further clarified by the appellant that Shri Bakshi even took a fiat car but never returned nor could be traced. It was gathered from newspaper report only that Shri K.I.Bakshi died during earthquake in Bhuj. Explanation of the appellant is further extracted as under:
"It is respectfully submitted that Mr.Bharatbhai Bhatt has introduced Mr.K.I. Bakshi as a Industrialist and the Chairman and managing director of Dehyd Foods Ltd. at Bhuj and chairman of Sajawat Group of companies at Bombay and accordingly we were highly impressed. He has purchased costly premium cars though us ofter and often. In the meantime, he offered us to arrange loans at a cheaper from foreign countries. The appellant therefore paid him in advance commission to him and received cheques of Rs.50,00,000/- from him as a loan. Mr.Bakshi informed appellant that the loans shall be arranged within a fortnight and after a call from America to deposit the cheque. Thereafter Bakshi never turned up. Therefore it was a clear case of cheating with your appellant. After various inquiries, it was came to your appellant's notice that Mr.Bakshi was a great cheater, which was confirmed when your appellant read the news in the newspaper that Mr.Bakshi has made a cheating with the Punjab National Bank, Delhi for Rs.33,00,00,000/-. The said cutting is enclosed with the seized material for your ready reference. It was also came to the notice to the appellant that Security Exchange Board of India (SEBI) has also launched a criminal complaint against Mr.K.I.Bakshi (Gujarat Dehyd Ltd., Bhuj) for issuing Bogus shares to the Public".
The explanation given by the appellant has been carefully perused by me. It appears the Assessing officer did not make even an attempt to verify whether the person involved was actually in a position to issue a cheque of such amount. The Assessing Officer has not been able to bring on record any material indicating that the appellant was either a recipient or payee of such a huge amount. The worst part of the additions made in the appellant's case is that the same do not match with the seized valuables or assets owned by the appellant. The addition is totally unwarranted and without any corroborative evidence. Perusal of the relevant Para of the assessment order reveals that the Assessing Officer IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 23 -
has made such a heavy addition in a very casual manner. In view of these facts addition of Rs.50,00,000/- is deleted."
27. The ld.DR of the Revenue supported the assessment order, whereas the ld.AR of the Assessee supported the order of the ld.CIT(A).
28. We have considered the rival submissions. From the facts noted by the ld.CIT(A) in para-12 as reproduced above, we find that a cheque of Rs.50 lacs was given by Shri K.I.Bakshi of Bombay to the assessee for a loan @ 15%. The said cheque should never be encashed. It was also submitted by the assessee before ld.CIT(A) that Shri Bakshi took a fiat-car of the assessee but never returned and he is not traceable. It is also submitted before the ld.CIT(A) that as per newspaper report, Shri K.I.Bakshi has already died during earthquake in Bhuj. Under these facts, in our considered opinion, no such addition is justified because the AO could not establish that any amount was received by the assessee from Shri K.I.Bhakshi or any amount was given by the assessee to Shri Bhakshi. Hence, we decline to interfere with the order of the ld.CIT(A) on this issue. Therefore, ground No.9 of Revenue's appeal is also rejected.
29. Ground No.10 of Revenue's appeal reads as under:-
10. The learned CIT(A) has erred in law and on facts in deleting the protective addition of Rs.7,50,000/- in respect of unaccounted advance paid to Sanjeev Rajiv Shukla.
29.1. Brief facts regarding this issue and the decision of the ld.CIT(A) is as per para-13 of his order which is reproduced below:
"13. The Fifteenth ground of appeal is regarding an addition of Rs.7,50,000/- in respect of Sanjiv Rajiv mentioned in Para 38 of the assessment order. The appellant has submitted that the investment is not IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 24 -
related to him but made by Smt.Mohinder Kaur Suri. The addition is made on protective basis. Facts of the case indicate that the Assessing Officer did not apply his mind properly because action was required to be taken in the hands of the concerned person. Addition can not be made on the basis of somebody else's paper lying with the appellant. In view of these facts addition of Rs.7,50,000/- is deleted."
30. The ld.DR of the Revenue supported the assessment order, whereas the ld.AR of the Assessee supported the order of the ld.CIT(A).
31. We have considered the rival submissions. We find that it is noted by the ld.CIT(A) that the addition is made on protective basis. He has also given a finding that addition cannot be made on the basis of somebody else's paper lying with the appellant. This finding of the ld.CIT(A) could not be controvert by the ld.DR of the Revenue and, hence, we decline to interfere with the order of the ld.CIT(A) on this issue also. Revenue's Ground No.10 is rejected.
32. Ground Nos.11 & 12 of Revenue's appeal read as under:-
11. The learned CIT(A) has erred in law and on facts in allowing set-
off of the amount of Rs.3,74,000/- representing the addition made on account of loans given to various parties, discussed in pares 40 & 41 of the assessment order, against the addition of Rs.40 lakhs sustained on account of investment in bungalow.
12. The learned CIT(A) has erred in law and on facts in directing to allow set-off of the amount of Rs.53,258/- representing the addition made on account of unaccounted house-hold expenses against the addition of Rs.40 lakhs sustained on account of investment in bungalow. 32.1. As per these grounds, we find that the Revenue is disputing regarding set off allowed by ld.CIT(A) for these two amounts against the addition of Rs.40 lakhs sustained by him on account of investment in bungalow. Since both these additions are upheld by the ld.CIT(A) and only set off was allowed by IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 25 -
him, we do not find any reason to interfere with the order of ld.CIT(A) on this issue. Accordingly, both these grounds are rejected.
33. Ground No.13 & 14 are general in nature and do not call for any separate adjudication.
34. The only remaining ground is ground No.4 as per assessee's appeal which reads as under:-
I4. On the facts and in the circumstance of the case, the Ld.CIT(A), has erred in not deleting the addition of Rs.5,00,000/- in respect of advance to Shri Suresh Joitaram even though it was fully explained.
34.1. Brief facts regarding this issue and the decision of the ld.CIT(A) is as per para-11 of his order which is reproduced below:
"11.The thirteenth ground of appeal is regarding addition of Rs.5,00,000/- on account of advance to Shri Suresh Joitaram. The Assessing Officer has made the above addition after pointing out the details of recovery etc. The appellant has stated that the addition made only after decoding 2+3 meaning thereby Rs.5,00,000/-. However, the detailed accounts reflects the amount hence explanation given by the appellant is not valid. The Assessing Officer was justified in making the above addition hence the same is upheld."
35. The ld.AR of the assessee reiterated the same arguments which were made before the ld.CIT(A). The DR of the Revenue supported the orders of the authorities below.
36. We have considered the rival submissions. We find that a clear finding is given by the ld.CIT(A) that this addition was made by the AO after pointing out the details of recovery, etc. He has also given a finding that in addition to decoding done by the AO, the detailed accounts also reflect the amount and, therefore, the explanation of the assessee has no merit that this addition is not justified because the same is on the basis of decoding done by the AO. We, IT(ss)A Nos.374 (By Revenue) & 375/Ahd/2002(By Assessee) DCIT vs. Kawarjeetsingh P.Chhabda(L/H) Block Period - 1.4.89 to 20.5.99
- 26 -
therefore, uphold the order of the ld.CIT(A) on this issue. Ground No.4 of Assessee's appeal is rejected.
37. In the combined result, Revenue's appeal is dismissed, whereas Assessee's appeal is partly allowed.
Order pronounced on the date mentioned on caption page Sd/- Sd/-
( D.K. TYAGI ) ( A. K. GARODIA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 24/ 09 /2013 Order pronounced on 24.9.13
Sd/- Sd/-
A.M. J.M.
(TRM) (DKT)
टȣ.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS
आदे श कȧ ूितिलǒप अमेǒषत/Copy
षत of the Order forwarded to :
1. अपीलाथȸ / The Appellant
2. ू×यथȸ / The Respondent.
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ(अपील) / The CIT(A)-II, Ahmedabad
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाईल / Guard file.
आदे शानुसार/ BY ORDER, स×याǒपत ूित //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) उप/ आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation ......16.9.13 (dictation-pad 35 pages attached with the file)
2. Date on which the typed draft is placed before the Dictating Member ............16.9.13
3. Date on which the approved draft comes to the Sr.P.S./P.S.................
4. Date on which the fair order is placed before the Dictating Member for pronouncement......
5. Date on which fair order placed before Other Member............
6. Date on which the fair order comes back to the Sr.P.S./P.S.......25.9.13
7. Date on which the file goes to the Bench Clerk.....................25.9.13
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................