Kiran J. Trivedi, Ambaji V. The Dy. CIT, Central Circle-2(2), Ahmedabad

CO 114/AHD/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2885 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 30-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: DHIREN SHAH WITH KARAN SHAH
• Keywords: Unexplained investment; Unexplained expenditure; Loose papers; Document seized; Retrospective amendment; Deemed dividend; Block assessment; Documents seized
• Section: 143(3); 153A; 131; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER IT(SS)A NO.60 TO 62/AHD/2014 & ITA NO.265 /AHD/2014 (ASSESSMENT YEAR:2005-06 TO 2007-08 & 2011-12) & IT(SS)A NO.63 TO 65 & 100 TO 102/AHD/2014 WITH CO NOS. 113 TO 115/AHD/2014 (ASSESSMENT YEAR:2008-09 TO 2010-11) SHRI KIRAN J. TRIVEDI, 384, LANE NO.18, SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD 380 015 APPELLANT/ CROSS OBJECTOR VS. THE DCIT, CENTRAL CIRCLE 2(2), AHMEDABAD RESPONDENT/CROSS APPELLANT PAN: AAIPT1734C & IT(SS)A NO.66 TO 68/AHD/2014 & ITA NO.266 /AHD/2014 (ASSESSMENT YEAR:2005-06, 2006-07, 2009-10 & 2011-1 2) & IT(SS)A NO.69 & 99/AHD/2014 WITH IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 2 - CO NOS. 112/AHD/2014 (ASSESSMENT YEAR: 2010-11) M/S. TRIVEDI CORPORATION PVT. LTD., 350, 351, 354, CHANGODAR INDL. AREA, CHANGODAR, NR. S.G.HIGHWAY, AHMEDABAD A PPELLANT/ CROSS OBJECTOR VS. THE DCIT, CENTRAL CIRCLE 2(2), AHMEDABAD RESPONDENT/CROSS APPELLANT PAN: AAACT6908R /BY ASSESSEE : MR. DHIREN SHAH WITH KARAN SHAH, A.R. /BY REVENUE : MS. VIBHA BHALLA, CIT. D.R. /DATE OF HEARING : 13.04.2017 /DATE OF PRONOUNCEMENT : 18.04.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS BATCH OF TWENTY CASES PERTAINS TO TWO DIFFEREN T ASSESSEES SHRI KIRAN J. TRIVEDI AND M/S. TRIVEDI CORPORATION PVT. LTD. THE RELEVANT ASSESSMENT YEARS THEREIN ARE FROM 2005-06 TO 2011-1 2. THERE ARE TOTAL THIRTEEN CASES RELATING TO THE ABOVE FORMER ASSESSE E. HE HAS FILED SEVEN APPEALS IT(SS)A NOS. 60 TO 65/AHD/2014 & ITA NO.265 /AHD/2014 IN ASSESSMENT YEARS 2005-06 TO 2011-12; RESPECTIVELY, AGAINST THE CIT(A)-III, AHMEDABADS ORDERS; ALL DATED 28.11.2013 IN CASE NO S. CIT(A)-III/195 TO 201/DCIT.CC.2(2)/13-14. THE REVENUE ON THE OTHER H AND HAS PREFERRED ITS IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 3 - CROSS APPEALS IN ASSESSMENT YEARS 2008-09 TO 2010-1 1 BEARING IT(SS)A NOS. 100 TO 102/AHD/2014. THIS FOLLOWS ASSESSEES CROSS OBJECTIONS IN SAID THREE APPEALS C.O. NOS. 113 TO 115/AHD/2014 BEING PREFERR ED IN REVENUES CASES. 2. WE ADVERT TO LATTER ASSESSEE M/S. TRIVEDI CORPOR ATION PVT. LTD. THERE ARE TOTAL SEVEN CASES WITH REGARD TO THIS ASSESSEE. IT HAS PREFERRED FIVE APPEALS IT(SS)A NOS. 66 TO 69 & 266/AHD/2014 IN ASSESSMENT YEARS 2005-06, 2006- 07, 2009-10 TO 2011-12 AGAINST THE CIT(A)-III, AHME DABADS ORDERS; IN CASE NOS. CIT(A)-III/190, 166, 167, 191 & 168/DCIT.CC.2( 2)/13-14. THE REVENUES SOLE CROSS APPEAL IT(SS)A NO. 99/AHD/2014 HAS COME IN ASSESSMENT YEAR 2010-11 ONLY AS FOLLOWED BY THE INS TANT ASSESSEES CROSS OBJECTION NO.112/AHD/2014. RELEVANT PROCEEDINGS IN ALL CASES EXCEPT IN ASSESSMENT YEAR 2011-12 ARE U/S. 153A R.W.S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT WHEREAS THE ABOVE ASSESSME NT YEAR INVOLVES PROCEEDINGS U/S.143(3) OF THE ACT. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED . 3. WE NOW ADVERT TO RIVAL PLEADINGS. LEARNED AUTHO RIZED REPRESENTATIVE HAS FILED BEFORE US A BRIEF COMPILATION CHART OF AL L THE ABOVESTATED APPEALS AS WELL AS VARIOUS ISSUES RAISED THEREIN. THE REVENUE IS FAIR ENOUGH IN NOT DISPUTING CORRECTNESS THEREOF. IT IS EVIDENT THAT THE FORMER ASSESSEE CHALLENGES CORRECTNESS OF DEEMED DIVIDEND ADDITIONS OF RS.3,44,991/-, 3,68,000/-, RS.11,227/-; AS MADE BY BOTH THE LOWER AUTHORITIES BY INVOKING SECTION 2(22)(E) OF THE ACT IN ASSESSMENT YEARS 20 05-06, 2006-07, 2007-08; RESPECTIVELY. IT EMERGES THAT THE LATTER ASSESSEE M/S. TRIVEDI CORPORATION PVT. LTD. WAS FOUND TO HAVE ADVANCED THE ABOVE SUMS TO THE ASSESSEE IN HIS SALARY ACCOUNT. THE ASSESSEES CASE WAS THAT THE SAME WER E IN THE NATURE OF SALARY ADVANCES. BOTH THE LOWER AUTHORITIES HOWEVER DID N OT AGREE TO THE SAID IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 4 - EXPLANATION. THEY ACCORDINGLY INVOKED DEEMED DIVID END FICTION ENSHRINED IN SECTION 2(22)(E) OF THE ACT IN ORDER TO MAKE THE AD DITIONS IN QUESTION. 4. LEARNED AUTHORIZED REPRESENTATIVE APPEARING AT A SSESSEES BEHEST SUBMITS THAT THE VERY ISSUE HAD ARISEN IN IT(SS)A N OS. 426 TO 428/AHD/2013 DECIDED ON 06.10.2016 IN HIS WIFE SMT. HEENA K. TRI VEDIS CASE PERTAINING TO THE VERY SEARCH CONDUCTED ON 21.04.2010 WHEREIN BOT H THE LOWER AUTHORITIES HAD MADE AN IDENTICAL ADDITION. LEARNED CO-ORDINAT E BENCH THEREIN STATED TO HAVE DELETED THE SAID ADDITION BY OBSERVING AS UNDE R: 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. SOLITARY GRIEVANCE OF THE ASSESSEE IN ALL THESE THR EE APPEALS IS AGAINST THE ORDER OF LD. CIT(A) CONFIRMING THE ADDITIONS TOWARDS DEEMED DIVIDENDS U/S 2(22)(E) OF THE ACT FOR THE MAXIMUM DEBIT BALANCE AT ANY POINT OF T IME OF PARTICULAR ASSESSMENT YEAR IN THE LEDGER ACCOUNT IN THE NAME OF ASSESSEE IN THE BOOKS OF ACCOUNT OF TRIVEDI CORPORATION PVT. LTD. WE OBSERVE THAT THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE IS A DIRECTOR AND GETTING SALARY FROM THE COMPANY TOWARDS THE SERVICES PROVIDED. THIS FACT IS EVIDENT FROM THE LEDGER ACCO UNT OF ASSESSEE IN THE BOOKS OF ACCOUNT OF TRIVEDI CORPORATION PVT. LTD. SHOWN IN T HE ASSESSMENT ORDER ITSELF. THE CLEAR PICTURE WHICH COMES OUT FROM GOING THROUGH TH E LEDGER ACCOUNT IS THAT AS ON 1.4.2004 THERE WAS A CREDIT BALANCE AND DURING THE YEAR MONTHLY ENTRIES OF SALARY HAVE BEEN PROVIDED AND SALARY PAYMENTS HAVE BEEN MA DE EITHER IN CASH PAYMENT OF CREDIT CARDS DUES & TRAVEL EXPENSES. TDS DEDUCTE D AND PAYMENT BY BANK. DURING ASST. YEAR 2005-06 THE BALANCE REMAINED CRED IT AT VARIOUS POINTS OF TIME. SIMILAR IS THE SITUATION FOR ASST. YEAR 2006-07 AN 2007-08. 8. WE FURTHER OBSERVE FROM THE JUDGMENT OF THE HON. ALLAHABAD HIGH COURT IN THE CASE OF SHYAMA CHARAN GUPTA VS. CIT 377 ITR 511 (ALL) WHEREIN IT HAS BEEN HELD THAT ADVANCE PAYMENT OF SALARY OR COMMISSION TO MANAGING DIRECTOR IS A TRADE ADVANCE ORDINARILY MADE IN THE COURSE OF BUSI NESS SO THAT SUCH ADVANCE IS NOT COVERED UNDER SECTION 2(22)(E) OF THE ACT. WE FIND THAT THE FACTS OF THE PRESENT CASE ARE QUITE SIMILAR TO THE FACTS ADJUDICATED BY HON. ALLAHABAD HIGH COURT IN THE CASE OF SHYAMA CHARAN GUPTA VS. CIT (SUPRA) SO MUCH SO THAT IN THE CASE OF ASSESSEE ALSO THE DEBIT BALANCE AT CERTAIN POINT OF TIME ARE IN THE NATURE OF ADVANCE SALARY. WE, THEREFORE, ARE OF THE VIEW THAT THE IMPUGNED DEBIT BALANCES CANNOT BE TERMED AS ADVANCE IN THE FORM OF DEEMED D IVIDEND U/S 2(22)(E) OF THE ACT AS THEY ARE TRADE ADVANCE ORDINARILY MADE IN THE RE GULAR COURSE OF BUSINESS. WE DELETE THE ADDITIONS FOR ALL THE THREE YEARS AND AL LOW THE APPEALS OF THE ASSESSEE. 5. THE ASSESSEES CASE THEREFORE IS THAT THE DEBIT BALANCES IN QUESTION SOUGHT TO BE ADDED U/S.2(22)(E) OF THE ACT ARE IN T HE NATURE OF SALARY ADVANCES IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 5 - NOT TO BE TREATED AS DEEMED DIVIDENDS. WE AFFORDED SUFFICIENT OPPORTUNITY TO LEARNED DEPARTMENTAL REPRESENTATIVE WHO FAILED TO D RAW ANY DISTINCTION ON FACTS VIS--VIS THE ISSUE INVOLVED IN THE TWO SETS OF CASES. WE THEREFORE REVERSE BOTH THE LOWER AUTHORITIES ACTION UNDER CH ALLENGE. THE ASSESSEES CORRESPONDING GROUND RAISED IN THE ABOVE CAPTIONED APPEALS ARE THEREFORE ACCEPTED. HIS APPEAL IT(SS)A NOS. 60/AHD/2014 THUS SUCCEEDS. 6. THE ASSESSEE THEN RAISES HIS SECOND SUBSTANTIVE ISSUE CHALLENGING SECTION 40(A)(IA) DISALLOWANCES/ADDITIONS OF RS.1,6 1,229/-, RS.5,55,856/-, RS.6,78,926/-, RS.3,46,718/-, RS.5,04,824/- AND RS. 2,58,212/- IN ASSESSMENT YEARS 2006-07 TO 2011-12 CONTAINING IT(SS)A NOS. 61 TO 65 & ITA NO.265/AHD/2014; RESPECTIVELY. BOTH THE PARTIES DO NOT DISPUTE THAT RELEVANT FACTS PERTAINING TO THE INSTANT ISSUE ARE ON THE SA ME FOOTING WHEREIN THE ASSESSEE HAS MADE PAYMENT TO HIS C&F AGENTS WITHOUT DEDUCTING TDS THEREUPON RESULTING IN THE DISALLOWANCE(S) IN QUEST ION MADE BY THE LOWER AUTHORITIES AFTER QUOTING SECTION 40(A)(IA) OF THE ACT. SHRI DHIREN SHAH SUBMITS THAT THE ASSESSEE HAD INDEED NOT DEDUCTED T DS ON THE ABOVESTATED PAYMENTS. HE HOWEVER SUBMITS THAT THE C&F AGENTS/P AYEES IN QUESTION HAVE ALREADY BEEN ASSESSED TO TAX QUA THE ASSESSEES PAY MENTS. HE THEN CONTENDS THAT SECTION 40(A)(IA) SECOND PROVISO STIPULATES TH AT NO DISALLOWANCE IS TO BE MADE IN CASE THE PAYER ASSESSEE IS NOT THE ONE IN D EFAULT IN TERMS OF SECTION 201(1)(1 ST PROVISO). HIS CASE IS THAT THE ABOVESTATED PROVIS O TO SECTION 40(A)(IA) INSERTED IN THE ACT BY THE FINANCE ACT, 2 012 W.E.F. 01.04.2013 IS CURATIVE IN NATURE HAVING RETROSPECTIVE EFFECT FROM 01.04.2005 AS HELD BY THIS TRIBUNALS CO-ORDINATE BENCH DECISION IN ITA NO.337 /AGRA/2013 AND QUOTED IN EXTEMPORE IN HONBLE DELHI HIGH COURTS JUDGMENT CIT VS. ANSAL LANDMARK TOWNSHIP LTD. (2015) 377 ITR 635(DELHI). MS. BHALLA FAILS TO REBUT ALL THESE LEGAL DEVELOPMENTS. WE THEREFORE A CCEPT ASSESSEES LEGAL CONTENTION IN PRINCIPLE. LEARNED ASSESSING OFFICER IS DIRECTED TO PASS A FRESH IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 6 - ORDER AS PER LAW AFTER CARRYING OUT NECESSARY FACTU AL VERIFICATION AS TO WHETHER ASSESSEES PAYEES/C&F AGENTS STAND ASSESSED QUA THE AMOUNTS IN QUESTION OR NOT. THIS SUBSTANTIVE GROUND IN ABOVE CAPTIONED AP PEAL IS ACCEPTED FOR STATISTICAL PURPOSES. THE ASSESSEES APPEALS IT(SS )A NOS. 61 & 62/AHD/2014 ARE PARTLY ACCEPTED WHEREAS IT(SS)A NOS. 63, 64, 6 5 & ITA NO. 265/AHD/2014 ARE ALLOWED FOR STATISTICAL PURPOSES. 7. WE COME TO REVENUES CROSS APPEALS IN FORMER ASS ESSEES CASE WHEREIN IT(SS)A NOS. 100 TO 102/AHD/2014 AND SAID ASSESSEE S CROSS OBJECTIONS CO NO. 113/AHD/2014 RAISING THE ISSUE OF UNEXPLAINED I NVESTMENTS OF RS.47,94,018/-, RS.30LACS AND RS.87LACS IN ASSESSME NT YEARS 2008-09 TO 2010-11; RESPECTIVELY. THE REVENUES OBVIOUS CASE IS THAT THE CIT(A) OUGHT NOT TO HAVE REVERSED ASSESSING OFFICERS FINDINGS M AKING THE ABOVESTATED ADDITION OF UNEXPLAINED INVESTMENT. THE ASSESSEES CROSS OBJECTION ON THE OTHER HAND STRONGLY SUPPORT THE LOWER APPELLATE FIN DINGS UNDER CHALLENGE DELETING THE SAID IMPUGNED ADDITION. 8. WE STATE THE RELEVANT FACTS AT THIS STAGE. THER E IS NO DISPUTE ABOUT THE SEARCH IN QUESTION BEING CONDUCTED ON 21.04.2010. THE SAID SEARCH REVEALED THE ASSESSEE TO HAVE PURCHASED LANDS AT VILLAGE ROH IKA, TALUKA BAVLA, DIST. AHMEDABAD FROM TOTAL EIGHT FARMERS. THE DEPARTMENT AL AUTHORITIES RECORDED THEIR STATEMENTS U/S.131 OF THE ACT STATING THE ASS ESSEE TO HAVE PAID ON MONEY IN QUESTION. THERE IS NO DISPUTE THAT THE SEARCH I N QUESTION DID NOT FIND ANY INCRIMINATING EVIDENCE WHATSOEVER INDICATING ANY SU CH ON MONEY PAYMENT. THE SAID EIGHT FARMERS ALSO RETRACTED FROM THEIR ST ATEMENTS. THE ASSESSEES STAND FROM THE DAY ONE CONTESTED ANY SUCH ON MONEY PAYMENT. THE ASSESSING OFFICER HOWEVER WENT BY THE SAID FARMERS STATEMENTS AS RETRACTED AFTER A PERIOD OF THREE YEARS TO MAKE THE ABOVESTAT ED ADDITION OF UNEXPLAINED INVESTMENT IN THE THREE ASSESSMENT YEARS BEFORE US. IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 7 - 9. THE CIT(A) REVERSES ASSESSING OFFICERS ACTION A S FOLLOWS: 8. BEFORE TAKING A DECISION IN THIS CASE, IT WILL BE WORTHWHILE TO GO-THROUGH THE RELEVANT JUDICIAL DECISIONS IN THIS REGARD: (A) IT WAS HELD BY HON'BLE HIGH COURT OF BOMBAY IN THE EASE OF CIT VS. C. J. SHAH & CO. (246 ITR 671) THAT ESTIMATION OF UNDISCLOSED PROFIT MADE BY AO FOR THE ENTIRE BLOCK PERIOD ON THE BASIS OF SEIZ ED LOOSE PAPERS WHICH INDICATED UNDISCLOSED SALES FOR THREE MONTHS WAS NO T JUSTIFIED. (B) IN THE CASE OF DOLPHIN BUILDERS PVT. LID (356 ITR 420), HON'BLE HIGH COURT OF MADHYA PRADESH HELD THAT MAKING ADDITION MERELY ON THE BASIS OF SEIZED DOCUMENTS WITHOUT COGENT EVIDENCE THAT EXCES S AMOUNT MENTIONED IN SEIZED DOCUMENT WAS ACTUALLY PASSED ON TO THE ASSES SEE WAS NOT SUSTAINABLE WHERE BOOKS OF ACCOUNT OF ASSESSEE WERE DULY AUDITE D. (C) IT WAS HELD BY HON'BLE 1TAT PUNE BENCH IN THE C ASE OF SAMRAT BEER BAR (75 ITD 19) THAT IN THE ABSENCE OF ANY OTHER EVIDEN CE, AO IS NOT EMPOWERED TO ESTIMATE THE SUPPRESSION OF SALES FOR A LARGER PERIOD ON THE BASIS OF THE DIARY FOUND IN SEARCH SHOWING SUPPRESS ION OF SALES FOR A PARTICULAR PERIOD. (D) IN THE CASE OF D. N. KAMANI HUF (70 ITD 77) HON'BLE ITAT PATNA BENEH HELD THAT DOCUMENTS REGARDING RECEIPT OF ON-MONEY B Y ASSESSEE HAVING BEEN FOUND IN RESPECT OF SALE OF FLATS TO ONE PARTY , ADDITION COULD NOT BE MADE IN RESPECT OF ALL THE PARTIES TO WHOM ASSESSEE SOLD FLATS MERELY ON THE BASIS OF PRESUMPTION. (E) IN THE CASE OF FORT PROJECTS PVT. LTD (63 DTK 145) HON'BLE ITAT KOLKATA BENEH HELD THAT AO WAS NOT JUSTIFIED IN EXTRAPOLATING FEW NOTINGS IN A SEIZED DIARY TO BALANCE FLATS IN THREE PROJECTS GIV EN THAT NO INCRIMINATING EVIDENCE PERTAINING THERETO WAS FOUND IN THE COURSE OF SEARCH. (F) IN THE CASE OF DR. R. M. L. MEHROTRA (64 TTJ 259) HON'BLE ITAT ALLAHABAD BENCH HELD THAT ESTIMATION OF UNDISCLOSED INCOME FOR BLOC K ASSESSMENT CANNOT BE MADE ON THE BASIS OF MULTIPLIC ATION FORMULA DERIVED FROM SUPPRESSION PERCENTAGE OF A FEW DAYS. (G) IN THE CASE OF RAJDEEP BUILDERS (52 SOT 62) HON'BLE ITAT CHANDIGARH BENCH HELD THAT AO WAS NOT JUSTIFIED TO MAKE ADDITI ON ON THE BASIS OF STATEMENT OF ONE OF THE PURCHASER WHO SUBSEQUENTLY RETRACTED HIS STATEMENT IN CROSS-EXAMINATION. (H) IN THE CASE OF JAWAHARBHAI ATMARAM HATHIWALA [ 128 TTJ 36] ADDITION ON ACCOUNT OF ON MONEY WAS MADE FOR PURCHASE OF FLAT. IN THIS CASE, DURING THE COURSE OF SEARCH DOCUMENTS WERE SEIZED FROM DEVELOP ER FIRM WHICH INDICATED THAT ASSESSEE HAS MADE PAYMENT OF ON MONE Y FOR PURCHASE OF A FLAT. IT WAS HELD BY HON'BLE ITAT, AHMEDABAD 'C' BE NCH THAT NO EVIDENCE WAS BROUGHT ON RECORD BY REVENUE TO SHOW THAT APPEL LANT HAD ACTUALLY PAID IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 8 - THE ON MONEY. IT WAS FURTHER HELD THAT ASSESSEE'S D ENIAL CANNOT BE BRUSHED ASIDE WITHOUT BRINGING ANY POSITIVE MATERIAL ON REC ORD. THE ADDITION WAS HELD NOT BE JUSTIFIED IN SUCH A CASE. (I) A SIMILAR VIEW WAS HELD IN THE CASE OF BHARA T A MEHTA [86 TTJ 369] BY HON'BLE ITAT, B BENCH. IN THIS CASE ADDITION U/S. 69 WAS MADE ON ACCOUNT OF ON MONEY PAID ON PURCHASE OF BUNGALOW ON THE BASIS OF ADMISSION MADE BY BUILDER DURING THE SEARCH. HOWEVE R, NO DOCUMENT WAS RECOVERED DURING THE SEARCH REGARDING ON MONEY PAID BY ASSESSEE. IN SUCH A CASE, THE ADDITION WAS DIRECTED TO BE DELETED BY HON'BLE ITAT. (J) IN THE CASE OF CIT VS. D KANTA [205 TAXMAN 115(KAR)], ADDITION WAS MADE U/S. 69B R.W.S. 147 ON ACCOUNT OF UNEXPLAINED INVES TMENT IN PURCHASE OF .LAND. SEARCH WAS CONDUCTED IN THE CASE OF SON OF V ENDOR FROM WHOM THE LAND WAS PURCHASED. DURING THE COURSE OF SEARCH, SO N OF VENDOR STATED THAT ASSESSEE HAD RECEIVED CONSIDERATION OF RS.75 LAKHS. AO REOPENED ASSESSMENT AND MADE ADDITION ON THE BASIS OF THIS I NFORMATION. IT WAS HELD BY HON'BLE HIGH COURT THAT FINDING OF AO WAS NOT BA SED UPON MATERIAL FOUND DURING THE SEARCH AND IT WAS BASED ON STATEME NT OF SON OF VENDOR. THEREFORE, ADDITION WAS NOT JUSTIFIED AND THE SAME WAS DIRECTED TO BE DELETED (K) IN THE CASE OF PRARTHANA CONSTRUCTION PVT. LT D., IT WAS HELD BY HON'BLE JURISDICTIONAL HIGH COURT THAT REVENUE IS NOT JUSTI FIED IN RESTING ITS CASE ON THE LOOSE PAPERS AND DOCUMENTS FOUND FROM THE RESID ENCE OF A THIRD PARTY, EVEN IF SUCH DOCUMENTS CONTAIN NARRATION OF TRANSAC TIONS WITH THE ASSESSEE. IT WAS ALSO HELD THAT SUCH LOOSE PAPERS CANNOT BE C ONSTRUED AS BOOKS OF ACCOUNTS REGULARLY KEPT IN THE COURSE OF BUSINESS A ND THEREFORE SUCH EVIDENCE WOULD BE OUTSIDE THE PURVIEW OF SECTION 34 OF THE EVIDENCE ACT, 1872 IN VIEW OF DECISION OF HON'BLE APEX COURT IN T HE CASE OF CBI V/S V.C. SHUKLA & OTHERS (1998) 3 SCC 410, (L) SIMILAR VIEW HAS BEEN HELD BY THE HON'BLE ITAT JAIPUR BENCH IN THE EASE OF SUNITA DHADDHA IN ITA NO. 751/JP/2011. IN THAT EASE , DURING SEARCH IN THE CASE OF A BUILDERS, CERTAIN .DOCUMENTS WERE FOUND R EFLECTING PAYMENTS OF 'ON MONEY' IN CASH TO THE ASSESSEE. AO MADE ADDITIO N IN THE CASE OF ASSESSEE, WHICH WAS DELETED BY HON'BLE ITAT. IT WAS OBSERVED BY HON'BLE ITAT THAT SECONDARY EVIDENCE CANNOT BE RELIED ON AS NEITHER THE WITNESS NOR THE PERSON WHO PREPARED THE DOCUMENTS WERE PROD UCED. THEREFORE, SALE CONSIDERATION AS SHOWN IN THE DOCUMENTS IS TO BE ACCEPTED. (M) IN THE CASE OF BANSAL HIGH CARBONS (P) LTD. (2 23 CTR 179) NOTHING WAS FOUND DURING THE SEARCH WHICH WOULD SUGGEST THAT TH E BOOKS MAINTAINED BY THE ASSESSEE WERE UNREALIABLE. IT WAS ONLY SUBSEQUE NT TO THE SEARCH THAT STATEMENT OF ONE PERSON WAS RECORDED TO VERIFY THE CORRECTNESS OF BOOKS. THIS STATEMENT WAS RECORDED BEHIND THE BACK OF THE ASSESSEE AND SUBSEQUENTLY DURING CROSS EXAMINATION HE RETRACTED FROM HIS STATEMENT. IN SUCH A SITUATION, IT WAS HELD BY HON. HIGH COURT OF DELHI THAT IN THE ABSENCE OF RECOVERY OF ANY INCRIMINATING MATERIAL D URING THE SEARCH, IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 9 - STATEMENT OF A THIRD PARTY COULD NOT BE USED AGAINS T ASSESSEE IN BLOCK ASSESSMENT PROCEEDINGS. 9. WHEN THE PRESENT CASE IS EXAMINED IN VIEW OF THI S LEGAL POSITION, IT IS FOUND THAT THE ENTIRE ADDITION IN THREE YEARS MADE BY AO IS BASED ON STATEMENTS OF EIGHT FARMERS. HOWEVER, SUBSEQUENTLY, DURING CROSS EXAMIN ATION, ALL THE FARMERS RETRACTED FROM THEIR STATEMENTS. FROM THE PERUSAL O F RECORDS IT IS FOUND THAT ONLY THREE FARMERS OUT OF THE SEVEN HAD BANK ACCOUNTS, B UT EVEN IN THE CASE OF THESE THREE FARMERS NO CASH DEPOSITS WERE FOUND IN THEIR BANK ACCOUNTS. 10. NONE OF THE FARMERS (LAND OWNERS) IDENTIFIED TH E APPELLANT AS PURCHASER OF THE LAND. ALL OF THEM STATED THAT THEY DO NOT KNOW TO WHOM THEY HAD SOLD THE LAND. IN SUCH A SITUATION, THE ALLEGATION OF AO REGARDING PAYMENT OF ON MONEY BY APPELLANT REMAINS UNVERIFIABLE. 11. DURING THE COURSE OF SEARCH NO MATERIAL WAS SEI ZED FROM THE PREMISES OF THE APPELLANT WHICH INDICATES PAYMENT OF ON MONEY B Y APPELLANT AND HIS FAMILY MEMBERS. IN SUCH A SITUATION, THE ALLEGATION OF AO THAT APPELLANT PAID ON MONEY IN CASH TO THE FANNERS REMAINS UNSUBSTANTIATED. 12. MOREOVER, THE AO HAS EXTRAPOLATED THE CASH COMP ONENT IN THE ENTIRE TRANSACTION ON THE BASIS OF STATEMENTS OF THESE FAR MERS, WHICH RESULTED IN ESTIMATION OF TOTAL ON MONEY AT RS. 1,63,22,639. FO R THIS EXTRAPOLATION THE AO HAS PRESUMED THAT CASH WAS RECEIVED IN EACH AND EVERY T RANSACTION. FROM THE PERUSAL OF RECORDS, IT IS FOUND THAT IN ONE CASE (SURVEY NO . 162/P) THE SELLER IS MANAN TRIVEDI AND THE BUYER IS M/S. TCPL. IT IS ABSURD TO PRESUME THAT EVEN MANAN TRIVEDI (WHO IS A FAMILY MEMBER OF APPELLANT) PAID ON MONEY TO M/S. TCPL WHICH IS A COMPANY OF HIS OWN FAMILY. 13. IT IS WELL ESTABLISHED PRINCIPLE THAT SUSPICION , HOWEVER, STRONG CAN NEVER TAKE THE PLACE OF EVIDENCE. AT THE BEST, IT CAN ONL Y LEAD TO INVESTIGATION. IN THE PRESENT CASE, THE STATEMENTS OF FARMERS COULD HAVE BEEN REASONS FOR SUSPICION THAT APPELLANT HAS PAID ON MONEY. HOWEVER, THERE IS NO C ORROBORATIVE EVIDENCE BROUGHT ON RECORD BY AO TO PROVE PAYMENT OF ON MONEY BY APP ELLANT IN THIS EASE. I, THEREFORE, HOLD THAT AO IS NOT JUSTIFIED TO CONCLUD E THAT APPELLANT PAID ON MONEY IN RESPECT OF PURCHASE OF THESE PLOTS OF LAND. ADDITIO NS OF RS.47,94,018 FOR A.Y. 2008- 09, RS.30,00,000 FOR A.Y.2009-10 AND RS.87,00,000 F OR A.Y.2010-11 ARE NOT JUSTIFIED, IN SUCH A SITUATION AND THE SAME ARE DIR ECTED TO BE DELETED. GROUND NO.L OF THE APPEAL IS ALLOWED FOR ALL THE THREE YEARS. 10. HEARD BOTH THE PARTIES REITERATING THEIR RESPEC TIVE STANDS. MS. BHALLA QUOTES HONBLE DELHI HIGH COURTS DECISION IN DAYAW ANTI VS. CIT (2017) 390 ITR 496 AND RAMESH G., DDIT VS. PRAKSH V. SANGHAVI (2015) 64 TAXMANN.COM 221 (KARNATAKA). FORMER DECISION HOLDS THAT STATEMENTS RECORDED DURING SEARCH OPERATION COULD BE RELIED UP ON TO MAKE ADDITIONS IN IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 10 - RESPECT OF UNDISCLOSED INCOME FROM THE MATERIAL FOU ND READ WITH SEARCH DEPOSITIONS. WE FIND THE SAID DECISION TO BE TOTAL LY DISTINGUISHABLE ON FACTS AS THE CASE RECORDS IN THE INSTANT APPEALS DO NOT R EFER TO ANY SUCH MATERIAL SO AS TO BUTTRESS THE ASSESSING OFFICERS FINDINGS. L ATTER DECISION HEREINABOVE PERTAINS TO PROCEDURAL ASPECT OF SECTION 131 JURISD ICTION VESTED WITH AN AUTHORIZED OFFICER WHO CAN EITHER SUMMON THE PERSON CONCERN OR HIMSELF VISIT THE SAID PERSON FOR EXAMINATION ON OATH. WE REVERT BACK TO THE FACTS OF INSTANT CASE ONCE AGAIN TO OBSERVE THAT THIS LATTER CASE LAW ALSO DOES NOT APPLY SINCE THERE IS NO SUBSTANTIVE EVIDENCE WHICH RENDER S THIS PROCEDURAL ASPECT AS MERE ACADEMIC. WE WISH TO OBSERVE HERE THAT THE CB DTS CIRCULAR DATED 10.03.2003 ALREADY ADVISES THE SEARCH AUTHORITIES T O COLLECT EVIDENCE POINTING OUT ANY UNDISCLOSED INCOME RATHER THAN RECORDING AD MISSIONS OF THE SEARCHED ASSESSEES. HONBLE JURISDICTIONAL HIGH COURTS JUD GMENT IN KAILASHBEN MANOHARLAL CHOKSI VS. CIT (2010) 328 ITR 411 (GUJA RAT) ALSO ADOPTS THE SAME VERY VIEW. WE THEREFORE DO NOT FIND ANY REASO N TO INTERFERE THE CIT(A)S CONCLUSION HEREINABOVE DELETING THE IMPUGN ED ADDITION OF UNEXPLAINED INVESTMENT IN ALL THREE ASSESSMENT YEAR S IN QUESTION. THE REVENUES SOLE SUBSTANTIVE GROUND AS WELL AS ITS TH REE APPEALS IT(SS)A NOS. 100 TO 102/AHD/2014 ARE DECLINED. THE ASSESSEES C ROSS OBJECTION C.O. NO. 113 TO 115/AHD/2014 SUPPORTIVE OF THE CIT(A) ABOVE EXTRACTED FINDINGS ARE RENDERED ACADEMIC. 11. WE NOW PROCEED TO DEAL WITH LATTER ASSESSEES M /S. TRIVEDI CORPORATION PVT. LTD.S CASES. IT HAS FILED IT(SS )A NOS. 66 TO 69 & ITA NO.266/AHD/2014 IN ASSESSMENT YEARS 2005-06, 2006-0 7, 2009-10 TO 2011- 12 CHALLENGING SECTION 40(A)(IA) DISALLOWANCES/ADDI TION OF RS.64,653/-, RS.42,680/-, RS.105463/-, RS.97,804/- AND RS.2,07,7 57/- AS MADE BY BOTH THE AUTHORITIES ON ACCOUNT OF ITS FAILURE IN DEDUCTING TDS UPON VARIOUS C&F PAYMENTS. BOTH THE LEARNED REPRESENTATIVES VERY MU CH AGREE THAT THIS ISSUE IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 11 - STANDS ON IDENTICAL FOOTING AS IN FORMER ASSESSEES CASE WHEREIN WE HAVE DIRECTED THE ASSESSING OFFICER NOT TO MAKE THE IMPU GNED DISALLOWANCE IF IT IS FOUND THAT THE PAYEES CONCERNED HAVE ALREADY BEEN A SSESSED TO TAX QUA THE PAYMENTS IN QUESTION AS PER 40(A)(IA)(2 ND PROVISO) (SUPRA). WE ADOPT THE VERY COURSE OF ACTION HEREIN AS WELL IN ABSENCE OF ANY D ISTINCTION ON FACTS BEING POINTED OUT IN THE COURSE OF HEARING. THIS IDENTIC AL SUBSTANTIVE GROUND IS ACCEPTED FOR STATISTICAL PURPOSES. SO IS THE OUTCO ME OF ASSESSEES APPEALS IT(SS)A NOS. 66, 67, 69 & ITA NO.266/AHD/2014. 12. WE NOW DEAL WITH ASSESSEES SECOND SUBSTANTIVE GROUND IN ITS APPEAL IT(SS)A NO. 68/AHD/2014 CHALLENGING DISALLOWANCE OF UNEXPLAINED EXPENDITURE OF RS.4,01,435/-; MADE BY THE ASSESSING OFFICER AND UPHELD IN COURSE OF LOWER APPELLATE PROCEEDINGS. 13. IT IS EVIDENT FROM THE INSTANT CASE FILE THAT A DIARY WAS FOUND AND SEIZED FROM RESIDENCE OF SHRI KIRIT K. TRIVEDI (ASSESSEES MANAGER) WHICH WAS INVENTORISED AS A-2. THE SAID MATERIAL CONTAINED E NTRIES RELATED TO SALES MADE IN APRIL TO AUGUST 2008 BY BOTH CHEQUE AND CASH MOD ES. BOTH THE LOWER AUTHORITIES HAVE SCANNED THE SAME IN THEIR RESPECTI VE ORDERS. THE ASSESSEE WAS QUESTIONED AS TO WHY THE RELEVANT CASH RECEIPTS WERE NOT FOUND IN THE CASH BOOK. THE SEARCH AUTHORITIES FURTHER CAME ACR OSS VARIOUS EXPENSES NOT ACCOUNTED IN ASSESSEES BOOKS TOTALING TO RS.4,01,4 35/- IN QUESTION. THE ASSESSEE FAILED TO OFFER ANY SATISFACTORY REPLY. A LL THIS RESULTED IN THE IMPUGNED ADDITION. THE CIT(A) CONFIRMS THE SAME IN HIS LOWER APPELLATE ORDER. 14. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO R IVAL CONTENTIONS. LEARNED COUNSEL REPRESENTING ASSESSEE AGAIN FAILED TO INDICATE ANY EVIDENCE REBUTTING BOTH THE LOWER AUTHORITIES CONCLUSION TH AT IT HAD NOT RECORDED THE EXPENDITURE IN QUESTION IN ITS BOOKS MAINTAINED. W E THUS FIND NO REASON TO IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 12 - INTERFERE WITH IMPUGNED ADDITION. THE SAME IS THER EFORE CONFIRMED. ASSESSEES APPEAL IT(SS)A NO.68/AHD/2014 IS PARTLY ACCEPTED FOR STATISTICAL PURPOSES. 15. THIS LEAVES US WITH REVENUES CROSS APPEAL IT(S S)A NO.19/AHD/2014 ALONGWITH ASSESSEES CROSS OBJECTION RAISING THE IS SUE OF UNEXPLAINED INVESTMENT OF RS.39,69,723/- MADE BY THE ASSESSING OFFICER ON PROTECTIVE BASIS AND DELETED IN LOWER APPELLATE PROCEEDINGS. THE REVENUES SOLE SUBSTANTIVE GROUND SEEKS TO RESTORE THE SAME. THE ASSESSEES CROSS OBJECTION ON THE OTHER HAND SUPPORTS CIT(A)S CONCLUSION UNDE R CHALLENGE. 16. WE HAVE HEARD BOTH THE PARTIES. LEARNED REPRES ENTATIVES STATE THAT WE HAVE ALREADY UPHELD CIT(A)S IDENTICAL CONCLUSION I N FORMER ASSESSEES CASES ADJUDICATED HEREINABOVE RAISING THE VERY ISSUE ON S UBSTANTIVE BASIS BY CONCLUDING THAT THE ADDITION IN QUESTION OUGHT NOT TO HAVE BEEN MADE IN ABSENCE OF ANY SUPPORTIVE MATERIAL; WHATSOEVER APAR T FROM THE VENDORS/FARMERS STATEMENTS RETRACTED LATER ON (SUP RA). WE FOLLOW THE SAID REASONING HEREIN AS WELL TO CONFIRM THE CIT(A)S FI NDINGS UNDER CHALLENGE. THE REVENUES SOLE SUBSTANTIVE GROUND AS WELL AS IT S APPEAL IT(SS)A NO. 99/AHD/2014 FAILS WHEREAS ASSESSEES CROSS OBJECTIO N CO NO.112/AHD/2014 IS RENDERED ACADEMIC. 17. WE ACCORDINGLY ORDER THAT FORMER ASSESSEE MR. K IRAN J. TRIVEDIS APPEAL IT(SS)A NO. 60/AHD/2014 IS ALLOWED. IT(SS)A NOS. 61 & 62/AHD/2014 ARE PARTLY ALLOWED. IT(SS)A NOS. 63 TO 65 & ITA NO.265/AHD/2014 ARE ALLOWED FOR STATISTICAL PURPOSE S. THE REVENUES THREE CROSS APPEALS IT(SS)A NOS. 100 TO 102/AHD/2014 ARE DISMISSED. ASSESSEES CROSS OBJECTIONS THEREIN CO NOS. 113 TO 115/AHD/201 4 ARE DISMISSED AS RENDERED INFRUCTUOUS. LATTER ASSESSEE M/S. TRIVDI CORPORATION PVT. LTD.S APPEALS IT(SS)A NOS. 66, 67 & 69 & ITA NO.266/AHD/2 014 ARE ALLOWED FOR IT(SS)A NOS. 66/AHD/2014 WITH 19 APPEALS ( SHRI KIR AN J. TRIVEDI & M/S. TRIVEDI CORP. PVT. LTD.) - 13 - STATISTICAL PURPOSES. IT(SS)A NO.68/AHD/2014 IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. THE REVENUES APPEAL IT(SS)A NO.99/AHD/2 014 IS DISMISSED WHEREAS ASSESSEES CROSS OBJECTION THERETO CO NO.11 2/AHD/2014 IS DISMISSED AS RENDERED INFRUCTUOUS. [PRONOUNCED IN THE OPEN COURT ON THIS THE 18 TH DAY OF APRIL, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 18/04/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1 + 23 / GUARD FILE. BY ORDER / . // . /0