Shri Devang K. Patel, Ahmedabad V. The ACIT., Cent. Circle-1(1), Ahmedabad

CO 221/AHD/2006

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0207 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 4 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 12-01-2015
• Assessment Year: misc
• Appeal Filed On: 11-09-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIMALENDU VERMA
• Assessee Lawyers: KETAN H SHAH
• Keywords: Depreciation; Source of fund; Block assessment

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 0 0 , 0 0 , BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI , ACCOUNTANT MEMBER CO NO. 221 /AHD/20 06 ( IN IT (SS) A NO. 189 /AHD/2 006) ( AY : BLOCK PERIOD 1.4.1995 TO 11.02.2002 ) SHRI DEVANG K. PATEL, C/O. KETAN H. SHAH, ADVOCATE 903, SAPPHIRE COMPLEX, NEAR CARGO MOTROS, C.G. ROAD, NAVRANGPURA, AHMEDABAD PAN : AH MPP 1297 R VS ACIT, CENTRAL CIRCLE 1 (1) AHMEDABAD CROSS - OBJECTIONER RESPONDENT ASSESSEE(S) BY : SHRI KETAN H. SHAH, AR REVENUE BY : SHRI VIMALENDU VERMA, CIT - DR / DATE OF HEARING : 12 / 01 /201 5 / DATE OF PRONOUNCEMENT: 16 / 01/2015 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS THE CROSS - OBJECTION FILED ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - III, AHMEDABAD DATE D 31 .0 3 .20 06 . 2. THE ASSESSEE HAS FILED THE FOLLOWING REVISED CONCISE GROUNDS OF CROSS - OBJECTIONS AND ADDITIONAL GROUNDS OF CROSS - OBJECTIONS: - 1. LEARNED CIT(A) ERRED IN FACTS AND IN LAW IN NOT ACCEPTING THE CONTENTION OF THE ASSESSEE IN NOT CLUBBING THE INCOME OF SHRI SANDEEP PATEL AND THERE VARIOUS CONCERNS WITH THE APPELLANT NAMELY DEVANG PATEL. CO NO.221/AHD/2006 SHRI DEVANG K PATEL BLOCK PERIOD 1.4.1995 TO 11.2.2002 2 2. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN UPHOLDING THE ACTION OF THE AO HOLDING THAT THE INCOME OF PICCOLO PICTURES LTD. IS LIABLE TO BE TA XED INDEPENDENTLY AS A SEPARATE LEGAL ENTITY AND CANNOT BE CLUBBED WITH THE INCOME OF THE RESPONDENT AS CLAIMED IN THE RETURN OF INCOME. 3. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN HOLDING THAT THE RESPONDENT HAS ACCEPTED ENHANCEMENT OF INCOME PROPO SED IN THE COURSE OF APPELLATE PROCEEDINGS. 4. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN HOLDING THAT THE EXPENSES INCURRED BY SHRI SANDIP PATEL ARE NOT ENTITLED TO BE SET OFF AGAINST THE INCOMES EARNED BY THE RESPONDENT. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT SHRI SANDIP PATEL HAD NO INDEPENDENT SOURCES OF INCOME FROM WHICH HE COULD INCUR SUCH EXPENSES. 5. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN HOLDING THAT UNDER THE BLOCK ASSESSMENT INCOME IS LIABLE TO BE ASSESSED SEPARATELY FOR EACH A SSESSMENT YEAR AND THEREFORE RESPONDENT IS NOT E NTITLED FOR SET OFF OF LOSSES PERTAINING TO ONE ASSESSMENT YEAR AGAINST THE INCOMES OF OTHER ASSESSMENT YEAR. 6. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN MAKING THE ASSESSMENT MERELY ON THE BASIS OF AUD IT REPORTS ISSUED U/S.142 (2A) BY THE TAX AUDITOR APPOINTED BY THE AO AND THEREBY IGNORING THE EXHAUSTIVE EXPLANATIONS AND SUBMISSIONS MADE IN THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS. 7. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN HOL DING THAT THE FRESH EVIDENCE FURNISHED IN THE COURSE OF APPELLATE PROCEEDINGS IN RELATION TO THE ADDITION MADE U/S.68 ARE NOT ADMISSIBLE AS PER PROVISIONS OF RULE 46A OF THE INCOME TAX RULES. 8. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN CONFIRMING T HE ADDITION OF RS.26,62,562/ - MADE U/S.68 BY THE AO WITHOUT APPRECIATING THE EXPLANATION GIVEN IN THE COURSE OF APPELLATE PROCEEDINGS. 9. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN CONFIRMING THE 2/3 RD OF THE DISALLOWANCE MADE ON ACCOUNT OF PERSONAL EXPENSES AND FURTHER ERRED IN CONFIRMING THE DISALLOWANCE OF EXPENSES IN THE NATURE OF CAPITAL AND FOR NON BUSINESS USE WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. CO NO.221/AHD/2006 SHRI DEVANG K PATEL BLOCK PERIOD 1.4.1995 TO 11.2.2002 3 10. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN CONFIRMING THE ADDITION OF RS.26,04,278/ - ON ACCOUNT OF NON VERIFIABLE EXPENSES. 11. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN UPHOLDING THE DISALLOWANCE MADE U/S.40A (3) WHILE COMPUTING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD. 12. THE LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN UPHOLDING THE ACTION OF THE AO MAKING ADDITION ON ACCOUNT OF NEGATIVE CASH BALANCE AND IN DIRECTING THE AO TO COMPUTE HIGHEST NEGATIVE CASH BALANCE ON YEAR TO YEAR BASIS. 13. LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN DISALLOWING DEPRECIATION ON THE ASSETS FOR ALLEGED PERSONAL USE BY THE RESPONDENT. 14. LD. CIT(A) ERRED BOTH ON FACTS IN LAW IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION CLAIMED ON TELEVISION SET HOLDING THE SAME TO THE NON BUSINESS ASSETS. 15. THE L D. CIT(A) ERRED BOTH ON FA CTS AND IN LAW IN CONFIRMING 50% OF THE EXPENSES INCURRED IN MAINTAINING THE FLAT AT MUMBAI ON ACCOUNT OF ALLEGED PERSONAL USE BY THE RESPONDENT. 16. THE L D. CIT(A) ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.4,75,050/ - ON ACCOUNT OF AMOUNTS COLLECTED BY SHRI DHARMENDRA BHATT. 17. THE L D. CIT(A) ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.18,461/ - ON ACCOUNT OF WITHDRAWAL FROM THE BANK. 18. THE L D. CIT(A) ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.30,000/ - ON ACCOUNT OF CREDIT ENTRY APPEARING IN ANNEXURE - A66. 19. THE L D. CIT(A) ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.2,10,000/ - ON ACCOUNT OF CERTAIN DEBIT ENTRIES. 20. THE L D. CIT(A) ERRED BOTH ON FACTS AND IN LAW I N CONFIRMING THE ADDITION OF RS.5,05,950/ - ON ACCOUNT OF SALE OF AGRICULTURE LAND. 21. THE ID. CIT(A) ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.69,000/ - BEING INCOME FROM RATLAM SHOW. CO NO.221/AHD/2006 SHRI DEVANG K PATEL BLOCK PERIOD 1.4.1995 TO 11.2.2002 4 22. THE L D. CIT(A) ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION EQUIVALENT TO 50% OF THE RENT PAID FOR THE MUMBAI FLAT. 23. THE L D. CIT(A) ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.20,000/ - ON ACCOUNT OF EXCESS CLAIM OF EXPENSES. 24. THE L D. CIT(A) ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.52,034/ - BEING PAYMENT OF BANK CHARGES AND OVERDRAFT INTEREST. 25. THE L D. CIT(A) ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION TO EXTENT OF RS.8,00,000/ - ON ACCOUNT OF ESTIMATION OF INCOME. 26. THE L D. CIT(A) ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE AO IN ASSESSING THE INCOME UNDER THE BLOCK PERIOD BY TALKING A DIFFERENT TREATMENT OF THE ITEMS WRITTEN AS EXPENSE AS WELL AS THE INCOMES IN THE SEIZED DOCUMENT. ADDITI ONAL LEGAL GROUNDS 27. IN NOT APPRECIATING THE FACTS THAT, THERE IS NO VALID SERVICE OF NOTICE U/S.143(2). IT IS PRAYED THAT AS PER RTI ORDER DATED 06.06.2012, THERE IS NO EVIDENCE OF SERVICE OF NOTICE AND THEREFORE, AS PER CASE LAW AT PAPER BOOK PAGE 954 TO 957, THE SERVICE OF NOTICE IS BAD IN LAW AND VOID. 28. IN NOT APPRECIATING THE FACTS AND/LAW THAT, AS PER ANNEXURE A' TO THE LETTER DATED 10.03.2010, THE ASSESSMENT FRAMED IS TIME BARRED U/S. 1 57BE( 1 )(B). 29. IN NOT APPRECIATING THE FACTS THAT, SEARCH ON 05.03.2002 & THEREFORE IN A NORMAL PROVISION, THE ASSESSMENT IS GETTING TIME BARRED ON 05.03.2 004, HOWEVER THE DIRECTION U/S.1 42(2A) WAS ISSUED ON 16.02.2004 AND THEREFORE AS PER, BAJARANG TEXTILE 83 TTJ 566 ( PAPER BOOK PAGE 913 TO 916 OF LETTER DATED 18.06.2012), THIS DIRECTION AND ASSESSMENT MADE BAD IN LAW AND VOID. 30. THAT IT IS PRAYED THAT, AS PER SUBMISSION DATED 28.01.2004 (LETTER DATED 18.06.2012, PAGE 923 TO 929), THE BOOKS HAS BEEN PREPARED IN A TALLY 5.4 IN THEREFORE AS PER DECISION OF, 332 ITR 115 (GUJARAT) IN ALIDHARA TAXPRO AND ALSO 350 ITR 432 (DEL), IN DELHI DEVELOPMENT AUTHORITY, THE PROVISION OF SEC. 1 42(2A) IS NOT CO NO.221/AHD/2006 SHRI DEVANG K PATEL BLOCK PERIOD 1.4.1995 TO 11.2.2002 5 APPLICABLE AND AS SUCH THE WHOLE PROCEEDINGS IS BAD IN LAW AND VOID. 3. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING GROUND NOS.7, 8, 9, 10, 11, 16, 22 AND 25 O F THE CROSS - OBJECTIONS; HENCE, THEY ARE DISMISSED FOR WANT OF PROSECUTION. 4. REGARDING OTHER GROUNDS OF CROSS - OBJECTIONS I.E. GROUND NOS. 1 TO 6, 12 TO 15, 17 TO 21, 23, 24 AND 26 TO 30; HE SUBMITTED THAT AS THE FACTS IN THE PRESENT CASE ARE IDENTICAL T O THE FACTS IN THE CASE OF SHRI SANDEEP K. PATEL IN IT(SS)A NO.228/AHD/2006 DECIDED BY THIS BENC H OF THE TRIBUNAL ON 22.08.2014 WHEREIN THE MATTER WAS RESTORED BACK TO THE FILE OF THE CIT(A) ; THESE GROUNDS, FOLLOWING THE SAID ORDER SHOULD ALSO BE RESTORED BACK TO THE FILE OF THE CIT(A) WITH THE SAME DIRECTIONS. 5. THE DEPARTMENTAL REPRESENTATIVE HAD NO OBJECTIONS TO THE ABOVE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. 6. WE FIND THAT THE TRIBUNAL IN THE CASE OF SHRI SANDEEP K. PATEL I N IT(SS)A NO.228/AHD/2006, VIDE ITS ORDER DATED 22.08.2014, HELD AS UNDER: - 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US, ASSESSEE HAS RAISED ADDITIONAL GROUNDS WHICH ARE ADMITTED BEING LEGAL IN NATURE. WE ALSO FIND THAT THE ADDITIONAL GROUNDS WERE NOT RAISED BY THE ASSESSEE EITHER BEFORE THE A.O. OR LD. CIT(A) AND THEREFORE FEEL THAT THE ISSUE RAISED IN THE ADDITIONAL GROUNDS NEEDS TO BE EXAMINED AT THE END OF LD. CIT(A). WE THEREFORE REMIT THE ISSUE TO THE FILE OF LD. CIT(A) FOR HIM TO RECORD THE FINDINGS AND THEREAFTER DECIDE THE ISSUE IN AC CORDANCE WITH LAW. LD. CIT(A) SHALL ALSO DECIDE THE GROUNDS RAISED ON MERITS AFRESH AFTER CONSIDERING THE ADMISSIBILITY OF SEIZED MATERIAL. NEEDLESS TO STATE THAT LD. CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. IN THE RESULT, TH E APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. CO NO.221/AHD/2006 SHRI DEVANG K PATEL BLOCK PERIOD 1.4.1995 TO 11.2.2002 6 7. AS BOTH THE PARTIES BEFORE US AGREED THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION WITH THE SAME DIRECTIONS AS GIVEN IN THE ORDER OF THE TRIBUNAL DATED 22.08.2014, PASSED IN IT(SS)A NO.228/AHD/2006, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMAND THE MATTER BACK TO HIS FILE FOR ADJUDICATING THE MATTER AFRESH IN LIGHT WITH THE DIRECTIONS GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 22.08.2014 QUOTED ABO VE. THUS, THESE GROUNDS OF CROSS - OBJECTIONS ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE CROSS - OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON F R I D A Y , THE 1 6 T H OF JANUARY , 201 5 AT AHMEDABAD. SD/ - SD/ - (G.C. GUPTA) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 1 6 / 01 /201 5 *BIJU T, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD