Commissioner Of Income Tax-Central, New Central Revenuebuiding, Statue Circle, Jaipur Raj v. Shri Tikam Khandelwal, A

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 35 / 2012 Commissioner of Income Tax-central, New Central RevenueBuiding, Statue Circle, Jaipur Raj ----Appellant Versus Shri Tikam Khandelwal, A-2, Rana Pratap Nagar, Jhotwara, Jaipur ----Respondent Connected With D.B. Income Tax Appeal No. 37 / 2012 Commissioner of Income Tax-central, New Central Revenue Building Statue Circle, Jaipur Raj ----Appellant Versus Shri Shankar Lal Khandelwal, A-2 Rana Pratap Nagar, Jhotwara, Jaipur ----Respondent D.B. Income Tax Appeal No. 40 / 2012 Commissioner of Income Tax-central, New Central Revenue Building, Statue Circle, Jaipur Raj ----Appellant Versus Shri Shankar Lal Khandelwal, A-2, Rana Pratap Nagar, Jhotwara, Jaipur ----Respondent D.B. Income Tax Appeal No. 41 / 2012 Commissioner of Income Tax-central, New Central Revenue Building, Statue Circle, Jaipur Raj ----Appellant Versus Smt. Guman Khandelwal, A-2, Rana Pratap Nagar, Jhotwara, Jaipur ----Respondent D.B. Income Tax Appeal No. 43 / 2012 Commissioner of Income Tax-central, New Central Revenue Building, Statue Circle, Jaipur Raj ----Appellant Versus Shri Shankar Lal Khandelwal, A-2, Rana Pratap Nagar, Jhotwara, Jaipur ----Respondent D.B. Income Tax Appeal No. 44 / 2012 Commissioner of Income Tax-central, New Central Revenue Building, Statue Circle, Jaipur Raj ----Appellant Versus Shri Shankar Lal Khandelwal, A-2 Rana Pratap Nagar , Jhotwara, Jaipur ----Respondent D.B. Income Tax Appeal No. 47 / 2012 Commissioner of Income Tax-central, New Central Revenue Building, Statue Circle, Jaipur Raj ----Appellant Versus M/s Shree Govind Kripa Buildmart (P) Ltd., A-2, Rana Pratap Nagar, Jhotwara, Jaipur ----Respondent D.B. Income Tax Appeal No. 50 / 2012 Commissioner of Income Tax-central, New Central Revenue Building , Statue Circle, Jaipur Raj ----Appellant Versus Shri Shankar Lal Khandelwal, A-2 Rana Pratap Nagar, Jhotwara, Jaipur ----Respondent D.B. Income Tax Appeal No. 7 / 2016 Pr. Commissioner of Income Tax-central, New Central Revenue Building, Statue Circle, Jaipur Raj ----Appellant Versus Shankar Lal Khandelwal, 171, Sirsi Road, Officers Campus Extension, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anil Metha with Mr. Sameer Sharma For Respondent(s):Mr. Mahendra Gargieya with Mr. Lokesh Tailor _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 20/09/2017 Since these appeals arise out of the same order, theyare being decided by this common order. By way of these appeals, the appellant has challengedthe judgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal of department as well as the appeal ofassessee was allowed. This Court while admitting the ITA No.35/2012 on14.08.2014 has framed following substantial question/s of law:- “(1) Whether the Tribunal was justified in on onehand not interfering with the finding that no booksof accounts and supporting bills/vouchers weremaintained by the assessee at the time of searchand simultaneously, on the other hand reducing theaddition made on the ground of unexplainedconstruction and working in progress expenses of Rs. 22,32,583/- to merely Rs. 63,770/-? (2) Whether the Tribunal was justified in deletingthe addition of Rs. 46,74,000/- made by theAssessing Officer on account of suppressed salesshown by the assessee, even when the documentsfound during search were corroborated by theassessee’s statement recorded u/s 132(4) of the Actand whether an impossible burden can be placed onthe revenue to establish the excess considerationreceived by the assessee?” “(1) Whether the Tribunal was justified in on onehand not interfering with the finding that no booksof accounts and supporting bills/vouchers weremaintained by the assessee at the time of searchand simultaneously, on the other hand reducing theaddition made on the ground of unexplainedconstruction and working in progress expenses of Rs. 22,32,583/- to merely Rs. 63,770/-? (2) Whether the Tribunal was justified in deletingthe addition of Rs. 46,74,000/- made by theAssessing Officer on account of suppressed salesshown by the assessee, even when the documentsfound during search were corroborated by theassessee’s statement recorded u/s 132(4) of the Actand whether an impossible burden can be placed onthe revenue to establish the excess considerationreceived by the assessee?” (3) Whether the Tribunal was justified in deletingthe addition of Rs. 88,25,000/- which was made bythe Assessing Officer on account of unexplainedinvestment of the assessee in various properties,when no evidence in support of the said investmentwas submitted by the assessee?” This Court while admitting the ITA No.37/2012 on14.08.2014 has framed following substantial question/s of law:- i) Whether the Tribunal was justified in on onehand upholding the finding that no books ofaccounts and supporting bills/vouchers weremaintained by the assessee at the time of searchand thereby confirming the rejection of books ofaccounts and simultaneously, on the other handreducing the addition made on the ground ofunexplained construction and working in progressexpenses of Rs. 40,00,000/- to merely Rs.1,00,000/-? iii) Whether the Tribunal was justified in deleting theaddition of Rs. 1,49,020/- being expenditure paid incash in violation of the provisions of Section 40A(3)of the Act, on the ground that since this Section isnot required? (v) Whether the Tribunal was justified in deletingthe addition of Rs. 87,25,000/- made by theAssessing Officer on account of suppressed salesshown by the assessee, even when the documentsfound during search were corroborated by theassessee’s statement recorded u/s 132(4) of the Actand whether an impossible burden can be placed onthe revenue to establish the excess considerationreceived by the assessee? vi) Whether the Tribunal was justified in deleting theaddition of Rs. 56,52,427/- made by the Assessing Officer u/s 68 of the Act on account of unexplainedcash credit, despite assessee failing to furnish anydocumentary proof in support of the said cashcredits and whether that tantamount to notaffording adequate opportunity to the assessee? This Court while admitting the ITA No.40/2012 on14.08.2014 has framed following substantial question/s of law:- “(1) Whether the Tribunal was justified in on onehand upholding the finding that no books ofaccounts and supporting bills/vouchers weremaintained by the assessee at the time of searchand thereby confirming the rejection of books ofaccounts and simultaneously, on the other handreducing the addition made on the ground ofunexplained construction and working in progressexpenses of Rs. 13,00,000/- to merely Rs.50,000/-? (2) Whether the Tribunal was justified in deletingthe addition of Rs. 75,000/- being expenditure paidin cash in violation of the provision of Section40A(3) of the Act, on the ground that since otheraddition has been made disallowance under thisSection is not required? (3) Whether the Tribunal was justified in deletingthe addition of Rs. 77,14,000/- made by theAssessing Officer on account of suppressed salesshown by the assessee, even when the documentsfound during search were corroborated by theassessee’s statement recorded u/s 132(4) of theAct and whether an impossible burden can beplaced on the revenue to establish the excessconsideration received by the assessee? (2) Whether the Tribunal was justified in deletingthe addition of Rs. 75,000/- being expenditure paidin cash in violation of the provision of Section40A(3) of the Act, on the ground that since otheraddition has been made disallowance under thisSection is not required? (3) Whether the Tribunal was justified in deletingthe addition of Rs. 77,14,000/- made by theAssessing Officer on account of suppressed salesshown by the assessee, even when the documentsfound during search were corroborated by theassessee’s statement recorded u/s 132(4) of theAct and whether an impossible burden can beplaced on the revenue to establish the excessconsideration received by the assessee? (4) Whether the Tribunal was justified in deletingthe addition of Rs. 31,93,100/- made by theAssessing Officer u/s 68 of the Act on account ofunexplained cash credit, despite assessee failing tofurnish any documentary proof in support of thesaid cash credits and whether that tantamount tonot affording adequate opportunity to theassessee? This Court while admitting the ITA No.41/2012 on 14.08.2014 has framed following substantial question/s of law:- (1) Whether the Tribunal was justified in on onehand upholding the finding that no books ofaccounts and supporting bills/vouchers weremaintained by the assessee at the time of searchand thereby confirming the rejection of books ofaccounts and simultaneously, on the other handdeleting the entire addition made on the ground ofunexplained construction and working in progressexpenses of Rs. 75,78,260/-? (2) Whether on the facts and circumstances of thecase, the Tribunal was justified in deleting theentire addition of Rs. 75,78,260/- despite holdingthat the assessee’s cost of construction varies andthe expenses are not verifiable? This Court while admitting the ITA No.43/2012 on14.08.2014 has framed following substantial question/s of law:- “(1) Whether the Tribunal was justified in onone hand upholding the finding that no books ofaccounts and supporting bills/vouchers weremaintained by the assessee at the time of searchand thereby confirming at the rejection of books ofaccounts and simultaneously, on the other handreducing the addition made on the ground ofunexplained construction and working in progressexpenses of Rs. 1,50,00,000/- to merely Rs.2,50,000/-? (2) Whether the Tribunal was justified in deletingthe addition of Rs. 19,22,600/- being expenditurepaid in cash in violation of the provisions of Section40A(3) of the Act, on the ground that since otheraddition has been made disallowance under thisSection is not required? (3) Whether the Tribunal was justified in deletingthe addition of Rs. 1,38,70,000/- made by theAssessing Officer on account of suppressed salesshown by the assessee, even when the documentsfound during search were corroborated by theassessee’s statement recorded u/s 132(4) of the Actand whether an impossible burden can be placed on the revenue to establish the excess considerationreceived by the assessee? (4) Whether the Tribunal was justified in deletingthe addition of Rs. 3,87,00,404/- made by theAssessing Officer u/s 68 of the Act on account ofunexplained cash credit, despite assessee failing tofurnish any documentary proof in support of thesaid cash credits and whether that tantamount tonot affording adequate opportunity to the assessee? (5) Whether the Tribunal was justified in deletingthe addition of Rs. 73,61,00,000/- made by theAssessing Officer and confirmed by the CIT(A) onaccount of unexplained cash credit, in spite ofholding that the transaction was benami transactionof the assessee? the revenue to establish the excess considerationreceived by the assessee? (4) Whether the Tribunal was justified in deletingthe addition of Rs. 3,87,00,404/- made by theAssessing Officer u/s 68 of the Act on account ofunexplained cash credit, despite assessee failing tofurnish any documentary proof in support of thesaid cash credits and whether that tantamount tonot affording adequate opportunity to the assessee? (5) Whether the Tribunal was justified in deletingthe addition of Rs. 73,61,00,000/- made by theAssessing Officer and confirmed by the CIT(A) onaccount of unexplained cash credit, in spite ofholding that the transaction was benami transactionof the assessee? (6) Whether the Tribunal was justified in deletingthe addition made on account of unexplained cashfound during search of Rs. 10,00,000/- when thesame was accepted and offered by the assessee fortaxation and no retraction was filed by theassessee, by simply relying upon cash bookprepared by the assessee after the searchproceedings? (7) Whether the Tribunal was justified in deletingthe addition of Rs. 2,10,00,000/- which was madeby the Assessing Officer and confirmed by theCIT(A) on account of unexplained investment of theassessee in the Global City Project, when noevidence in support of the said investment wassubmitted by the assessee? (8) Whether the Tribunal was justified in deletingthe addition of Rs. 83,91,000/- which was made bythe Assessing Officer on account of unexplainedcash deposit of the assessee in bank accounts in thename of various persons, even after confirming thefinding that assessee was maintaining the saidBenami Bank accounts?” This Court while admitting the ITA No.44/2012 on 14.08.2014 has framed following substantial question/s of law:- “(1) Whether the Tribunal was justified in on onehand upholding the finding that no books ofaccounts and supporting bills/vouchers weremaintained by the assessee at the time of searchand thereby confirming at the of search andthereby confirming the rejection of books of accounts and simultaneously, on the other handreducing the addition made on the ground ofunexplained construction and working in progressexpenses of Rs. 1,00,00,000/- to merely Rs.3,96,300/-? (2) Whether the Tribunal was justified in deletingthe addition of Rs. 19,71,053/- being expenditurepaid in cash in violation of the provisions of Section40A(3) of the Act, on the ground that since otheraddition has been made disallowance under thisSection is not required? (3) Whether the Tribunal was justified in deletingthe addition of Rs.3,00,000/- made by theAssessing Officer on account of suppressed salesshown by the assessee, even when the documentsfound during search were corroborated by theassessee’s statement recorded u/s 132(4) of theAct and whether an impossible burden can beplaced on the revenue to establish the excessconsideration received by the assessee? (4) Whether the Tribunal was justified in deletingthe addition of Rs. 3,22,64,594/- made by theAssessing Officer u/s 68 of the Act on account ofunexplained cash credit, despite assessee failing tofurnish any documentary proof in support of thesaid cash credits and whether that tantamount tonot affording adequate opportunity to theassessee? (5) Whether the Tribunal was justified in deletingthe addition of Rs. 2,49,31,125/- which was madeby the Assessing Officer and confirmed by theCIT(A) on account of unexplained investment of theassessee in various properties, when no evidencein support of the said investment was submitted bythe assessee? (6)Whether the Tribunal was justified in deletingthe addition of Rs. 28,79,500/- which was made bythe Assessing Officer on account of unexplainedcash deposit of the assessee in bank accounts inthe name of various persons, even after confirmingthe finding that assessee was maintaining the saidBenami Bank accounts?” (5) Whether the Tribunal was justified in deletingthe addition of Rs. 2,49,31,125/- which was madeby the Assessing Officer and confirmed by theCIT(A) on account of unexplained investment of theassessee in various properties, when no evidencein support of the said investment was submitted bythe assessee? (6)Whether the Tribunal was justified in deletingthe addition of Rs. 28,79,500/- which was made bythe Assessing Officer on account of unexplainedcash deposit of the assessee in bank accounts inthe name of various persons, even after confirmingthe finding that assessee was maintaining the saidBenami Bank accounts?” This Court while admitting the ITA No.47/2012 on05.04.2012 has framed following substantial question/s of law:- “(i) Whether the Tribunal was justified in deletingthe addition of Rs. 3,42,60,562/- being expenditurepaid in cash in violation of the provisions of Section40A(3) of the Act? (ii) Whether the Tribunal was justified in givingbenefit of Rule 6DD(g) to the assessee, ignoringthat the conditions provided in the Rule were notexisting and part payment was made by cheque tosuch persons? (iii) Whether the Tribunal was justified in deletingthe addition of Rs. 79,52,500/- made by theAssessing Officer u/s 68 of the Act on account ofunexplained cash credit, despite assessee failing tofurnish any documentary proof in support of thesaid cash credits and whether that tantamount tonot affording adequate opportunity to theassessee?” This Court while admitting the ITA No.50/2012 on14.08.2014 has framed following substantial question/s of law:- “(1) Whether the Tribunal was justified in on onehand upholding the finding that no books ofaccounts and supporting bills/vouchers weremaintained by the assessee at the time of searchand thereby confirming at the of search andthereby confirming the rejection of books ofaccounts and simultaneously, on the other handreducing the addition made on the ground ofunexplained construction and working in progressexpenses of Rs. 50,00,000/- to merelyRs.1,48,360/-? (2) Whether the Tribunal was justified in deletingthe addition of Rs. 18,02,064/- being expenditurepaid in cash in violation of the provision of Section40A(3) of the Act, on the ground that since otheraddition has been made disallowance under thisSection is not required? (3) Whether the Tribunal was justified in deletingthe addition of Rs. 59,50,000/- made by theAssessing Officer on account of suppressed salesshown by the assessee,even when the documentsfound during search were corroborated by theassessee’s statement recorded u/s 132(4) of theAct and whether an impossible burden can be placed on the revenue to establish the excessconsideration received by the assessee? (4) Whether the Tribunal was justified in deletingthe addition of Rs. 69,17,000/- made by theAssessing Officer u/s 68 of the Act on account ofunexplained cash credit, despite assessee failing tofurnish any documentary proof in support of thesaid cash credits and whether that tantamount tonot affording adequate opportunity to theassessee? (5) Whether the Tribunal was justified in deletingthe addition of Rs. 33,00,000/- which was made bythe Assessing Officer and confirmed by the CIT(A)on account of unexplained investment of theassessee in various properties, when no evidencein support of the said investment was submitted bythe assessee?” This Court while admitting the ITA No.7/2016 on 08.08.2016 has framed following substantial question/s of law:- “(i) Whether the Tribunal has erred indirecting the revenue to apply net profit @ 10%subject to interest and depreciation whereas for thesame assessee for earlier assessment years netprofit @ 12% was upheld by the ITAT and there hasbeen no change in business of the assessee incurrent assessment year. (5) Whether the Tribunal was justified in deletingthe addition of Rs. 33,00,000/- which was made bythe Assessing Officer and confirmed by the CIT(A)on account of unexplained investment of theassessee in various properties, when no evidencein support of the said investment was submitted bythe assessee?” This Court while admitting the ITA No.7/2016 on 08.08.2016 has framed following substantial question/s of law:- “(i) Whether the Tribunal has erred indirecting the revenue to apply net profit @ 10%subject to interest and depreciation whereas for thesame assessee for earlier assessment years netprofit @ 12% was upheld by the ITAT and there hasbeen no change in business of the assessee incurrent assessment year. (ii) Whether Tribunal has erred in recordingthe finding that the assessee entitled for claiminginterest paid on borrowed capital as businessexpense without any evidence or material onreocrd of having utilized the said amount towardsbusiness.” For the convenience a chart has been prepared by thecounsel for the parties which reads as under:- 08.08.2016 has framed following substantial question/s of law:- “(i) Whether the Tribunal has erred indirecting the revenue to apply net profit @ 10%subject to interest and depreciation whereas for thesame assessee for earlier assessment years netprofit @ 12% was upheld by the ITAT and there hasbeen no change in business of the assessee incurrent assessment year. (ii) Whether Tribunal has erred in recordingthe finding that the assessee entitled for claiminginterest paid on borrowed capital as businessexpense without any evidence or material onreocrd of having utilized the said amount towardsbusiness.” For the convenience a chart has been prepared by thecounsel for the parties which reads as under:- S.Question of lawDBITA No. DBITA No. DBITA No. DBITA No. DBITA43/201N.37/2012(AY040/2012 (AY 50/2012 (AY 44/2012 (AY 2(AY08-09) 5-06) A/o 22804-05) A/o 06-07) A/o 07 -08) A/o A/o 392 & 154/JP/11153 & 155 391 & &487/JP/11227/JP/11&229/JP/11431/JP/111. Whether the Tribunal was justified oneAO Pg 6-7 (PB Pg 6 pr 8 Pg 4 Pr (PB Pg6-7 Last Pg 8 Pr 12 hand upholding the finding that noCIT22-23)(PB24-25)23)(PB 26-27)(PB 31-32)books of accounts and supportingITATPg 19 Pr. 3.4 Pg 5-6, Pr.3.3,Pg 6-9 Pr. 3.3Pg 12-13 Pr. Pg 22 Pr 12 bills/vouchers were maintained by the(PB48)(PB 65-66)(PB38)3.3.3. (PB 53-(PB 57)assessee at the time of search andQ No. Pg 2 Pr. 2.6 1A/R (PB71) 54)Pg 71 Pr 6.8 thereby confirmed the rejection ofAddition(PB 83)13,00,000/-1Pg 12-14 Pr. (PB 178-179)books of accounts and simultaneously,3.79PB 123-11on the other hand reducing the50,00,000/-125) addition made on the ground ofRs.40,00,000/1,50,00,000/-unexplained construction and work in-1progress expenses. 1,00,00,000/-2. Whether the Tribunal justified inAO Pg 3-6 (PB Pg 6 (PB 24)Pg 7-8 (PB Pg 3-6 Pr (PB Pg 6-8 Pr deleting the addition of beingCIT19-22)Pg 6, Pr.2.3, 26)26)11(PB 29-31)expenditure paid in cash in violation ofITATPg 13 Pr. 2.4(PB 38) Pg 11Pg 2 Pr. 2.4Pg 6 Pr 2.5-Pg 19 Pr 4.3 the provision of S.40A(3) of the Act.(PB42)Pr 4.2, (PB (PB 34)2.6 (PB 46-(PB 56)Q No. On the ground that since other74)47) Pg 13 Pr. 4.4 Pg 3-4 pr 3.3 Pg 60-61 Pr. addition has been made disallowanceAddition(PB 94)2(PB72) Pg 5 Pr 2.5 5.9under this section is not required. 275,000/-2(PB116)(PB 167)2Rs.1,49,020/-18,02,064/-219,71,053/-19,22,600/-3. Whether the Tribunal was justified inAO Pg 11-12 (PB Pg 12 (PB 30)Pg 11-12 Pr Pg 11-12 (PB Pg 3-4 Pr deleting the addition made by theCIT27-28)Pg 12 Pr. 5.4 (PB 30)31-32)8(PB 26-27)Assessing Officer on account ofITATPg 28-32 Pr. (PB 48) Pg 11Pg 18-20 Pr.Pg 26 Pr. 7 Pg 5-6 Pr 2.3 suprressed sales shown by the6.3 (PB 90-Pr.3.8, (PB 8.3 (PB 50-(PB 142)(PB 42-43)assessee even when the documentsQ No. 93) A/R73)52) Pg 12-14 Pr. Pg 26-60 Pr. found during search were corroboratedAddition(PB 85)3Pg 25-28 Pr3.79PB 123-2.16by assessee’s statement recorded u/s377,14,000/-7.8 – 7. 12125) (PB 133-137)132(4) OF THE Act and whether animposibe burden can be placed on theRs.87,25,000/A/R (PB89) 33revenue to established the excess-33,00,000/-1,38,70,000/-considerationreceivedbythe59,50,000/-assessee?4. Whether the Tribunal was justified inAO Pg 9,10 (PB Pg 12 last (PBPg 10-11 Pr Pg 19 Last Pg 10 Pg 14 deleting the addition made by theCIT25-26)30)(PB 29)(PB 29-40)(PB 33-34)Assessing Officer u/s 68 of the Act onITATPg 45 to 50Pg 13, Pr. 7, Pg 27-33 Pr.Pg 68 Pr. 9.5 Pg 52-58 Pr. account of unexplained cash credit,Pr. 7.10 7.18(PB 49)9.4 (PB 59-(PB 109)7.4 onwards Q No. despite assessee failing to furnish any(PB 74-79)65)Pg 17 Pr. 6. 7 Pg 72 Pr. 9.2 (PB 89-95)documentary proof in support of theAdditionPg 13,14 Pr. Pg 29 Pr 8. 5 said cash and whether that tantamount5.2-5.6 (PB (PB 80-81)(PB97) A/R (PB 183)Pg 111 Prto not affording adequate opportunity94-95)4(PB71) 48.10 to the assessee?44(PB 218)3193100/-3,22,64,594/-Rs.56,52,427/69,17,000/-3,87,00,404/--5. Whether the Tribunal was justified inAO Pg11-19(PB deleting the addition made by theCIT31-39)Assessing Officer and confirmed by theITATPg 44 Pr. 9. CIT(A) on account of unexplained(PB 85)investment of the assessee in variousQ No. Pg 65 Pr 7.22 properties, when no evidence inAdditionPB 176) support of the said investment wassubmitted by the assessee? 52,49,31,125/-6. Whether the Tribunal was justified inAO Pg 8 Pr 9 (PB Pg 11 Pr (PB deleting the addition which was madeCIT27)34)by the Assessing Officer and confirmedITATPg 10-11 Pr.Pg 52 -58 Pr by the CIT(A) on account of4.3 (PB 42-7.4 onwards Q No. unexplained cash credit of the43)(PB 89-95)assessee on various properties, whenAdditionPg 8-9 Pr 4. 7Pg 109-111 no evidence in support of the said(PB 76- 77) Pr. 8.9investment was submitted by theA/R (PB 74) onwardsassessee?5(PB 216-218)33,00,000/-573,61,00,000/-7. Whether the Tribunal was justified inAO Pg 10-11 (PB Pg 4-5 Pr deleting the addition made by theCIT31)9(PB 27-38)Assessing Officer on account ofITATPg 24-26 Pr. Pg 3-6 Pr 2 unexplained cash deposit of the6.5-6.7 (PB (PB 40-43)assessee in banks accounts in theQ No. 65-67)Pg 39-40 Pr name of various persons, evenAdditionPr. 5.7(PB 3.8 confirming the finding that assessee138) (PB 146-147)was maintaining the said benami bank6accounts? 81,00,00,000/-83,91,000/-8.Whether the Tribunal was justified inAO Pg 11 Pr 15 deleting the addition made on accountCIT(PB 34)of unexplained cash found duringITATPg 62 Pr 8.4 search of Rs. 10,00,000/- when the(PB 99)Q No. same was accepted and offered by thePg 120 -121 assessee for taxation and no retractionAddition was field by the assessee, by simplyPr. 9.8relying upon cash book prepared by(PB 227)the assessee after the search6proceedings?10,00,000/-9. Whether the Tribunal was justified inAO Pg 112-113 deleting the addition made of Rs.CITPr 16 (PB 35-2,10,00,000/- which was made by the36)ITATassessing officer and confirmed by thePg 68 Pr 9.3 Q No. CIT(A) on account of unexplained(PB 105)investment of the assessee in GlobalAdditionPg 126-127 City Project, when no evidence inPr. 10.8support of the said investment was(PB 233)nsubmitted by the assessee?72,10,00,000/- Counsel for the appellant has taken us to the order ofTribunal wherein it has been observed as under:- “3.3 I have considered the argument of the A.R andhave perused the assessment order and relevantrecord. It is seen that the appellant has mainlycontended that Sh. Sunil Jhalani is not the benamiof the appellant. It is seen that Sh. ShankarKhandelwal, the brother of the appellant, hasadmitted Sh. Sunil Jhalani to be his benami.Considering the same situation the A.O. hasconsidered Sh. Sunil Jhalani to be benami of theappellant’s group. However, in such situation, theA.O. was not at all justified to make addition ofinvestment in the hands of appellant during theyear, as purchase from benami person will notrequire any actual investment by appellant duringthe year. Hence on this logic of A.O., the entireaddition needs to be deleted in the year underconsideration. 3.3.1 However, considering the argument of theappellant that Sushil Jhalani, Gopal Saini etc hasnot been admitted to be benami of TikamKhandelwal and considering that generally oneperson cannot be considered to be benami for Sh.Shankar Khandelwal as well as appellant Sh. TikamKhandelwal, it would be appropriate for the A.O. tohave examined the source of payment for purchaseof the plots and if the source was not explained, then addition should have been made. Now thisissue has been examined by the undersigned. 3.3.1 However, considering the argument of theappellant that Sushil Jhalani, Gopal Saini etc hasnot been admitted to be benami of TikamKhandelwal and considering that generally oneperson cannot be considered to be benami for Sh.Shankar Khandelwal as well as appellant Sh. TikamKhandelwal, it would be appropriate for the A.O. tohave examined the source of payment for purchaseof the plots and if the source was not explained, then addition should have been made. Now thisissue has been examined by the undersigned. 3.3.2 Regarding purchase from Sh. Shushil Jhalani,it was mentioned by the A.O. himself that out of Rs.30 lakhs has been paid through cheque and Rs. 6lakhs has been paid in cash. The A.R of theappellant has further submitted that Rs. 24 lakhswas paid by taking loan from ICICI Bank for whichthe copy of letter/chart from ICICI Bank indicatingamount financed, terms of repayment andagreement dated etc has been filed before theundersigned. It was submitted that these detailscould not be have been submitted before the A.O.as no such occasion arose as A.O. has not doubtedabout the investment in purchase of plot during theassessment proceedings and has not given anyshow cause for the same. Copy of this documentwas also made available to A.O. Considering thesefacts, the addition of Rs. 24 lakhs is deleted andsince no clear cut evidence has been filed for sourceof cash payment of Rs. 6 lakhs, expect theargument of cash flow statement, which is quitesketchy and not supported by confirmation from thepersons from whom contended cash was received,the addition to the extent of Rs. 6 lakhs is herebyupheld.” He contended that no reasons are given by the ITATwhile deciding the issue on question No.1 observed as under: “5.1The 4[th] ground of appeal of theassesee is that the ld. CIT(A) has erred inconfirming the disallowance out of taxi expenses tothe extent of 20% as against disallowance of 1/3rdof taxi expenses. 5. 2 The revenue in Ground No. 2 is aggrievedagainst reducing the disallowance of taxi hiringexpenses to 20% as against 33.33% made by theAO. 5.3We have heard both the parties. The AO hasdisallowed 1/3rd of the expenses to the extent ofRs. 2,08,504/-. The returen for the assessment year208-2009 has been filed after the search operationand this is the only return. The A.O has disallowed depreciation after placing reliance on the decision of ITAT Jodhpur inthe case of Suncity Alloys (P) Ltd. Vs. ACIT. CentralCircle-1 in ITA Nos. 586 to 588/JU/2008. This caseis not applicable as it is not a case of making blockassessemtn and moreover, this is only assessmentbased on the original returen. Hence, there was nocase of making disallowance of depreciation. The ld.CIT(A) was therefore, justified in deleting thedisallowance made by the AO on account ofdepreciation. The grievance of the assessee is thatthe ld. CIT(A) has confirmed the disallowance somade by the ld. CIT(A) is confirmed and thedepreciation is held to be allowed. Thus ground NO.2 of the revenue and Ground No. 4 of the assesseeboth are dismissed. 6.1 The 5[th] ground of appeal of the assessee is thatthe ld. CIT(A) has erred in not allowing the claim ofDepreciation. 6. 2 During the court of hearing, the ld. AR of theassessee has not pressed this ground. Hence, thesame is dismissed being not pressed. 7. 1 The sixth ground of appeal of the assessee isthat the ld. CIT(A) has erred in not annulling theassessment order as the AO has not providedproper opportunity of being heard. 7. 2 We have heard both the parties. This issue hasbeen decided us in the case of Shankar LalKhandelwal in ITA No. 155/JP/2011 dated 12-08-2011. Following that order, we hld that the ld.CIT(A) was justified in not annulling the assessmentorder. Thus Ground No. 6 of the assessee isdismissed. 8. 1 The 4[th] ground of the revenue is that the ld.CIT(A) has erred in not admitting the additionalevidence. 6. 2 During the court of hearing, the ld. AR of theassessee has not pressed this ground. Hence, thesame is dismissed being not pressed. 7. 1 The sixth ground of appeal of the assessee isthat the ld. CIT(A) has erred in not annulling theassessment order as the AO has not providedproper opportunity of being heard. 7. 2 We have heard both the parties. This issue hasbeen decided us in the case of Shankar LalKhandelwal in ITA No. 155/JP/2011 dated 12-08-2011. Following that order, we hld that the ld.CIT(A) was justified in not annulling the assessmentorder. Thus Ground No. 6 of the assessee isdismissed. 8. 1 The 4[th] ground of the revenue is that the ld.CIT(A) has erred in not admitting the additionalevidence. 8. 2 We have heard both the parties. The ld. CIT(A)has rightly admitted the additional evidencebecause the assessee was not provide adequateopportunity of being heard. However, in order todecide the issue and to determine the tax payableby the assessee, the ld. CIT(A) was justified inadmitting the additional evidences. Hence Ground NO. 4 of the revenue is dismissed. 9. 1 The 5[th] ground of the revenue is that the ld. CIT(A) has erred in directing the AO to give set offfor unaccounted/suppressed sale considerationagainst the availability of unaccounted money. 9.2 We have heard both the parties. Since no suchset off is being claimed by the assessee before usand therefore, this issue is academic and does notrequire to be adjudicated upon.” He contended that no reasons are given by the ITAT while deciding the issue on question No.2 observed as under: “4 The assessee has filed return of income on20.01.2009 declaring income of Rs.10,96,760/- 5. After obtaining prior approval from the Hon’bleDirector General of Income Tax, (Investigation) videletter No.DGIT/JPR/R-12/CASS/2008-09/2103 dated02.02.2009 along with questionnaire fixing thecase for hearing on 09.02.2009 which was dulyserved upon him on 09.0-2.2009. 6. Notice u/s 143(2)/142(1) were issue don04.02.2009 alongwith questionnaire for fixing thecase for hearing on 09.02.2009 which was dulyserved upon the assessee on 09.02.2009. Inresponse to notices issued Shri Pramod Bhatra,FCA & A/R of the assessee alongwith Accountant -Sh. Dharmendra Kumar for the assessee attendedfrom time to time. Various details were filed whichare placed on record and case was discussed withthem. 7. Disallowance of Taxi Running business : Theassessee has shown business of running taxi onhire basis but no details of the business have beenfiled such as log book, total number of taxisengaged on hire, payment received, vouchers forexpenses etc. In absence of these details it is notpossible to verify the actual transactions. Perusal of Profit & Loss account filed by theassessee reveals that the assessee has shownincome from vehicle hire at Rs.763260/- and hasclaimed indirect expenses for running of taxi atRs.625512/-. The assessee was asked to give details with the documentary evidences in supportof the claim but he has given only computersiedcopies of ledger and has failed to provide anyevidence in this regard to support his claim whetherhe has incurred expenses for running the taxi.Moreover, the statement filed showing the vehiclesare not taxi but are private vehicles which have nostay permit. Hence out of above 1/3rd is disallowedwhich works out to Rs.208504/- and the same isadded to the total income of the assessee beingunverifiable. Perusal of Profit & Loss account filed by theassessee reveals that the assessee has shownincome from vehicle hire at Rs.763260/- and hasclaimed indirect expenses for running of taxi atRs.625512/-. The assessee was asked to give details with the documentary evidences in supportof the claim but he has given only computersiedcopies of ledger and has failed to provide anyevidence in this regard to support his claim whetherhe has incurred expenses for running the taxi.Moreover, the statement filed showing the vehiclesare not taxi but are private vehicles which have nostay permit. Hence out of above 1/3rd is disallowedwhich works out to Rs.208504/- and the same isadded to the total income of the assessee beingunverifiable. 8.On account of depreciation: On perusalof details and ledger account produced by theassessee it is noticed that the assessee has claimeddepreciation @30% at Rs.5,62,631/-. The assesseehas claimed depreciation in the return filed inresponse to notice u/s 153A on 2.7.2008. In hisoriginal return the assessee neither shown incomefrom hiring of taxi nor claimed depreciation on taxiin his original return filed u/s 139(1). During thecourse of assessment proceedings the assesseewas asked as to why depreciation claimed on taxibe not disallowed as the assessee has claimeddepreciation in the original return filed u/s 139(1)of I.T. Act. but has claimed depreciation in thereturn filed in pursuance to notice u/s 153A of ITAct. The assessee filed reply dated nil stating that - “It would be wrong and bad in law to disallowdepreciation solely on the ground that income fromtaxi running business was declared while filing thereturn u/s 139 and no depreciation was claimed inthe said return of income. For sake of convenienceclause (a) of sub-section (1) of section 153 isreproduced here in below - Thus depreciation on taxi vehicles has beenclaimed by the assessee under the provisions of ITAct. As applicable, as if the such return were areturn required to be furnished under section 139.Further there is no bar on carry forward of absorbeddepreciation for set off in subsequent years.” The same is disallowable in view of judgment ofITAT in the case of Suncity Alloys Pvt. Ltd,Jodhpur vs. ACIT, Central Circle-1, Jodhpur in ITAsNo.586 to 588/Ju/2008 for assessment years 2001- 02, 2002-03 & 2003-04 which reads as follows : “The assessing authority primarily declined toaccept such a claim as the assessees has made nosuch claim in the returns of income filed originallyunder section 139 of the Act. He was of the viewthat returns of income filed in response to noticeunder section 153A of the I.T. Act are as aconsequence of action taken under section 132 ofthe Act on these assessees. These proceedings areanalogous to proceedings under section 147 of theAct to the extent that these are proceedings for thebenefit of revenue and not that of the assessee. Theassessee cannot be permitted to convert thesereassessment proceedings as his appeal orrevision in disguise and seek relief in respect ofitems earlier not claimed in the original return ofincome. Reliance was placed to the judgmentrendered b y the Hon’bloe Bombay High Court in K.Sudhakar S, Saubhag Vs. ITO 241 ITR 865 [Mum]which was rendered b y taking notice of the principlelaid by the Hon’ble Apex Court in Sun EngineeringWorks [P] Ltd. [1992] 198 ITR 297 to theeffect that in reassessment proceedings, anassessee can neither claim nor be allowed adeduction that was not claimed in the originalreturn. As such, it was held that the assessmentproceedings initiated on the basis of an action undersection 132 of the Act also cannot be utilised by theassessee to seek relief not claimed earlier. This all goes to show that the assessment orreassessment made pursuant to notice l;undersection 153A of the Act are not denovoassessments. We, therefore, find no merit in theground raised in appeal to make a new claim ofdeduction or allowance as such where admittedlythe regular assessments are shown as completedassessment on the date of initiation of u/s 132 ofthe Act. Such a ground in all these appeals standsrejected.” Hence the claim of depreciation is not allowablein view of the judgment of ITAT, Jodhpur bench,Jodhpur delivered in the ab above case. Therefore,-Rs.5,62,631/is disallowed and added to thetotal income of the assessee.” Learned counsel relied upon decision of the SupremeCourt reported in Attar Singh Gurmukh Singh vs. Income TaxOfficer Ludhiana, 1991(1) SCC 667 and contended that Section40A(3) was inducted for the benefit of assessee and whileconsidering the constitutional validity the Supreme Court hasobserved as under:- “In our opinion, there is little merit in thiscontention. Section 40A(3) must not be read inisolation or to the exclusion of rule 6DD. Thesection must be read along with the rule. If readtogether, it will be clear that the provisions arenot intended to restrict the business activities.There is no restriction on the assessee in histrading activities. Section 40A(3) only empowersthe Assessing Officer to disallow the deductionclaimed as expenditure in respect of whichpayment is not made by crossed cheque orcrossed bank draft. The payment by crossedcheque or crossed bank daft is insisted on toenable the assessing authority to ascertain whetherthe payment was genuine or whether it was out ofthe income from undisclosed sources. The terms ofsection 40A(3) are not absolute. Considerations ofbusiness expediency and other relevant factors arenot excluded. Genuine and bona fide transactionsare not taken out of the sweep of the section. Itis open to the assessee to furnish to thesatisfaction of the Assessment Officer thecircumstances under which the payment in themanner prescribed in section 40A(3) was notpracticable or would have caused genuine difficultyto the payee. It is also open to the assessee toidentify the person who has received the cashpayment. Rule 6DD provides that an assessee canbe exempted from the requirement of payment bya crossed cheque or or crossed bank draft in thecircumstances specified under the rule. It will beclear from the provisions of section 40A(3) andrule 6DD that they are intended to regulate business transactions and to prevent the use ofun-accounted money for business transactions.(See Mudiam Oil Company v. ITO [1973] 92 ITR 519(AP). If the payment is made by a crossedcheque drawn on a bank or a crossed bank draft,then it will be easier to ascertain, whendeduction is claimed, whether the payment wasgenuine and whether it was out of the incomefrom disclosed sources. In interpreting a taxingstatute, the court cannot be oblivious of theproliferation of black money which is undercirculation in our country. Any restraint intended tocurb the chances and opportunities to use orcreate black money should not be regarded ascurtailing the freedom of trade or business.” Counsel for the respondent Mr. Gargieya has contended that each issue is appreciation of facts and no substantial question of law has been raised, however he has relied upon following decisions of each of the issues:- “On Sec. 68 Cash Credit:CIT v/s Orissa Credit Corp. Ltd. 159 ITR 78 (SC)Aravali Trading Co. v/s ITO 8 DTR 199 (Raj)CIT v/s First Point Finance Ltd 286 ITR 477 (Raj) What is a Substantial Question of Law? Counsel for the respondent Mr. Gargieya has contended that each issue is appreciation of facts and no substantial question of law has been raised, however he has relied upon following decisions of each of the issues:- “On Sec. 68 Cash Credit:CIT v/s Orissa Credit Corp. Ltd. 159 ITR 78 (SC)Aravali Trading Co. v/s ITO 8 DTR 199 (Raj)CIT v/s First Point Finance Ltd 286 ITR 477 (Raj) What is a Substantial Question of Law? Santosh Hazari v/s Purushottam Tiwari (Dead) By LRs (2001)170 CTR 160 (SC) M. Janardhana Rao v/s Joint Commissioner of Income Tax(2005) 273 ITR 50 (SC)DCIT v/s Marudhar Hotels (P) Ltd. (1999) 155 CTR (Raj) 437 On admission of additional evidences: Smt. Prabhavati S. Shah v/s CIT (1998) 148 CTR (Bom) 192” Taking into consideration the issue and the facts we have gone through the order of the Tribunal the Tribunal whileconsidering gross profit of the assessee for the previous year hasrightly estimated 1% of the total turnover. In that view of the matter, the view taken by the Tribunal is required to be affirmed. Similarly, the assessee has made a chart showing of grossprofit chart which reads as under:- Assessment Year 2003-042004-05AssesseeAOCIT(A)AssesseeAOCIT(A)ITATGross Profit20100002010000201000020100001786000178600017860001786000Net Profit17688013768804949532008802054001505400693329255400NP Rate8.80%68.50%24.62%9.99%11.50%84.29%38.82%14.30%Addition on account of 120000031807324000130000048792950000construction/WIP Expenses made by the AO & Sustained by ld. CIT(A)/ITAT Assessment year2005-062006-07Assessee AO CIT(A)ITATAssesseeAOCIT(A)Gross Receipts11