Shri Nagjibhai Jasmatbhai Patel, Surat V. The Income tax Officer,Ward-9(3), Surat

CO 7/AHD/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7898 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-09-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 05-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R SHANKAR
• Assessee Lawyers: R N VEPARI
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 143(3); 133A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI G. C. GUPTA, VP AND SHRI A. MOHAN ALAN KAMONY, AM) ITA NO. 2588/AHD/2011 A. Y.: 2003-04 THE INCOME TAX OFFICER, WARD 9 (3), ROOM NO.420, 4 TH FLOOR, AAYAKAR BHAVAN, MAJURA GATE, SURAT VS SHRI NAGJIBHAI JASMATBHAI PATEL, PROP. M/S. JEM CO. FABRICS, A/12, TRIKAM NAGAR SOCIETY, L. H. ROAD, SURAT 395 006 P. A. NO. ADSPP 3434 C (APPELLANT) (RESPONDENT) C. O. NO.7/AHD/2012 (IN ITA NO. 2588/AHD/2011: A. Y.: 2003-04) SHRI NAGJIBHAI JASMATBHAI PATEL, PROP. M/S. JEM CO. FABRICS, A/12, TRIKAM NAGAR SOCIETY, LAMBE HANUMAN ROAD, SURAT 395 006 P. A. NO. ADSPP 3434 C VS THE INCOME TAX OFFICER, WARD 9 (3), ROOM NO.420, 4 TH FLOOR, AAYAKAR BHAVAN, MAJURA GATE, SURAT (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY SHRI R. SHANKAR, SR. DR ASSESSEE BY SHRI R. N. VEPARI, AR DATE OF HEARING: 24-09-2012 DATE OF PRONOUNCEMENT: 31-10-2012 O R D E R PER A. MOHAN ALANKAMONY: THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A )-V, SURAT IN ITA NO.2588/AHD/2011 (AY: 2003-04) ITO, WARD-9(3), SURAT VS SHRI NAGJIBHAI JASMATBHAI PATEL C. O. NO.7/AHD/2012 (IN ITA NO.2588/AHD/2011 (AY: 2 003-04) SHRI NAGJIBHAI JASMATBHAI PATEL VS ITO, WARD-9(3), SURAT 2 APPEAL NO. CAS-V/224/2010-11 DATED 23-06-2011, FOR ASSESSMENT YEAR 2003-04 PASSED U/S 250 READ WITH SECTION 147 O F THE ACT. 2. THE LONE EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER: (1). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS.21,07,446/- ON ACCOUNT OF UNACCOUNTED INCOME MAD E BY THE A. O. 3. THE ASSESSEE, PROPRIETOR OF M/S. JEMCO FABRICS F ILED HIS RETURN OF INCOME FOR AY 2003-04 ON 24-11-2003 DECLARING TO TAL INCOME OF RS.2,38,381/-. THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT. THE CASE WAS REOPENED U/S 147 OF THE ACT ALONG WITH COP Y OF THE REASONS. THE LEARNED AO REJECTED THE EXPLANATION OF THE ASSE SSEE AND ASSESSMENT WAS FINALIZED U/S 143(3) READ WITH SECTI ON 147 OF THE ACT ON 30-12-2010, WHEREIN THE LEARNED AO HAS MADE ADD ITION OF RS.21,07,446/- ON ACCOUNT OF UNACCOUNTED INCOME IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS. THE RELEVANT PARA IN THE PAGE BEFORE THE LAST PAGE OF THE SAID ORDER IS REPRODUCED HEREU NDER FOR REFERENCE: THE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT TENABLE. IT IS SEEN FROM THE RECORDS THAT WHILE PREPARING THE LIST OF ASSESSEE AND THEIR BENEFICIARIES BY THE ADIT (INV) II SURAT DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A PF THE ACT AT THE OFFICE PREMISES OF PANKAJ DANAWALA ON 11/03/2005, AGAINST THE NAMES OF THREE ASSESSEE I.E. SMT. ALPABEN S. PATEL, SHRI SANJEEVKUMAR R PATEL INDIVIDUAL AND SANJEEVKUMAR R PATAL HUF, THE NAME OF NAGJIBHAI PATEL GROUP WAS WRITTEN. WITHOUT ITA NO.2588/AHD/2011 (AY: 2003-04) ITO, WARD-9(3), SURAT VS SHRI NAGJIBHAI JASMATBHAI PATEL C. O. NO.7/AHD/2012 (IN ITA NO.2588/AHD/2011 (AY: 2 003-04) SHRI NAGJIBHAI JASMATBHAI PATEL VS ITO, WARD-9(3), SURAT 3 ANY SUBSTANCES FOUND IN THOSE CASES, THE AUTHORITY COULD NOT BE MENTIONED NAGJIBHAI PATEL GROUP IN THE LIST. THE AU THORITY HAD SOME CONCRETE DETAILS REGARDING YOUR GROUP AND YOUR S BENEFICIARIES PERSONS. THERE MAY BE SOME BUSINESS R ELATION OR SOCIAL RELATION WITH THOSE PERSONS WITH YOU, AND YO U MIGHT HAVE TOLD THEM TO FURNISH THE RETURN OF INCOME IN THEIR NAMES AND BY FILING THE RETURN, YOU MIGHT HAVE CREATE BOGUS CAPI TAL AND CASH CREDIT ENTRY FOR YOUR BENEFIT ALSO. AS PER REPORT O F ADIT-II, SURAT, THAT THE ALL SUCH CASH WAS PROVIDED BY THE BENEFICI ARIES OF THE CASH CREDIT. THEREFORE, IN SUCH CASES, IT IS CLEAR THAT SUCH CREDIT ENTRIES ARE REQUIRED TO BE TAXED IN THE HANDS OF TH E BENEFICIARIES IN THE A. Y. WHEN THE ENTRIES HAVE BE EN BROUGHT INTO BOOKS BY THEM OR WHEN THE FICTIOUS ASSETS WERE LIQUIDATED AND CASH WAS PROVIDED FOR THE SAME BY THE BENEFICIA RY. FURTHER, IF THE SEARCH ACTION WAS NOT CARRIED OUT B Y THE DEPARTMENT, THE UNEXPLAINED INVESTMENT IN THE JEWEL LERY COULD NOT BE UNEARTHED IN THIS CASE. FURTHER THE ASSESSEE HAS NOT OFFERED THE SAME AMOUNT SUO-MOTO BUT DURING THE ASS ESSMENT WHILE VERIFICATION THE UNEXPLAINED INVESTMENT WAS D ETECTED. MOREOVER, DURING THE ASSESSMENT PROCEEDINGS, THE AS SESSEE HAD NOT VOLUNTARILY OFFERED THE SAID AMOUNT AND BRO UGHT THE SAME TO THE NOTICE OF THE AO. THEREFORE, THE ASSESS EE HAS MADE WILLFULLY ATTEMPT TO CONCEAL HIS INCOME AND FU RNISHED INACCURATE PARTICULAR OF TRUE INCOME. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THER EFORE AS PER MY OPINION AN AMOUNT OF RS.21,07,446/- IS BELONGS T O NAGJIBHAI PATEL WHO IS THE BENEFICIARIES OF THE ABOVE MENTION ED THREE ASSESSEE AND IT IS TREATED AS ASSESSEES UNACCOUNTE D INCOME. PENALTY PROCEEDINGS U/S 274 RWS 271 (1) (C) BEING I NITIATED SEPARATELY FOR CONCEALMENT OF INCOME. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARN ED CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ORDER OF THE LEARNED AO, THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE BY THE LEARNED AO BY OBSERVING AS UNDER IN PARA 6 OF H IS ORDER: ITA NO.2588/AHD/2011 (AY: 2003-04) ITO, WARD-9(3), SURAT VS SHRI NAGJIBHAI JASMATBHAI PATEL C. O. NO.7/AHD/2012 (IN ITA NO.2588/AHD/2011 (AY: 2 003-04) SHRI NAGJIBHAI JASMATBHAI PATEL VS ITO, WARD-9(3), SURAT 4 6. I HAVE CONSIDERED ASSESSMENT ORDER AS WELL AS T HE SUBMISSIONS OF THE APPELLANT. THE FIRST GROUND OF APPEAL IS REGARDING OBJECTION TO THE REOPENING OF THE ASSESSMENT. I AM OF THE VIEW THAT THE A. O. HAS REOPENED THE ASSESSMENT ON THE BASIS OF INFORMA TION RECEIVED, HENCE, HE WAS VERY MUCH RIGHT IN REOPENIN G THE ASSESSMENT AND HAS NOT ACTED BEYOND THE PROVISIONS OF LAW, THEREFORE, THE FIRST GROUND OF APPEAL IS HEREBY DISMISSED. SO FAR AS THE SECOND GROUND OF APPEAL IS CONCERNED, I AM OF THE VIEW THAT THE ABOVE ADDITION MADE BY THE A. O. IS NOT PROPER. THIS ADDITION CANNOT BE MADE BECAUSE THE A . O. HAS FAILED TO BRING ANYTHING ABOUT ANY TRANSACTION BETW EEN THE APPELLANT AND THREE PERSONS IN WHOSE CASES PROTECTI VE ASSESSMENTS WERE MADE. THE OBSERVATION OF THE A.O. IS VERY RIDICULOUS. THE A. O. WRITES IN THE ASSESSMENT ORDE R THAT WITHOUT ANY SUBSTANCES FOUND IN THOSE CASES, THE A UTHORITY COULD NOT BE MENTIONED NAGJIBHAI PATEL GROUP IN THE LIST . (AS GIVEN IN PARA 4 OF ABOVE IN BOLD LETTER). SUCH ADDITION ON BASIS OF PRESUMPTION WITHOUT ANY BASIS/FINDINGS/EVI DENCES IS NOT ALLOWED TO BE MADE. HENCE, THE ADDITION MADE IS HEREBY DELETED AND THE GROUND OF APPEAL IS ALLOWED. 5. THE LEARNED DR RELIED ON THE ORDER OF THE LEARN ED AO AND SUBMITTED THAT THE SAME MAY BE UPHELD. 6. THE LEARNED AR REITERATED HIS SUBMISSIONS MADE BEFORE THE AUTHORITIES AND PRAYED THAT THE ORDER OF THE LEARNE D CIT(A) MAY BE UPHELD. IT WAS SUBMITTED IN THE WRITTEN STATEMENT O F THE ASSESSEE THAT THE REASONS ASSIGNED FOR MAKING SUBSTANTIVE ADDITIO N OF INCOME OF THE THREE PROTECTIVE ASSESSEES ARE NOT COGENT AND A RE ALL ON THE BASIS OF SURMISES AND CONJECTURES. THE HYPOTHETICAL REASO NS AND ITA NO.2588/AHD/2011 (AY: 2003-04) ITO, WARD-9(3), SURAT VS SHRI NAGJIBHAI JASMATBHAI PATEL C. O. NO.7/AHD/2012 (IN ITA NO.2588/AHD/2011 (AY: 2 003-04) SHRI NAGJIBHAI JASMATBHAI PATEL VS ITO, WARD-9(3), SURAT 5 APPREHENSIONS BROUGHT OUT IN THE ASSESSMENT ORDER C LEARLY ESTABLISH THE SAME AND THEY ARE LISTED HEREUNDER: (A) WHILE PREPARING THE LIST OF ASSESSEE AND THEI R BENEFICIARIES BY THE ADIT (INV) II, AGAINST NAMES OF THREE ASSESSEE I.E. .. THE NAME OF NAGJIBHAI PATEL GRO UP WAS WRITTEN. WITHOUT ANY SUBSTANCES FOUND IN THOSE CASE S, THE AUTHORITY COULD BE MENTIONED NAGJIBHAI PATEL GROUP ON THE LIST. IT WAS SUBMITTED THAT THE ABOVE OBSERVATION OF THE LEARNED AO MAKES IT AMPLY CLEAR THAT THE ADDITION MADE BY HIM IS WIT HOUT ANY SATISFACTION AND CONVICTION. (B) THE AUTHORITY HAD SOME CONCRETE DETAILS REGARDING YOUR GROUP AND YOURS BENEFICIARIES PERSONS. THE ADDITION MADE ON THE ABOVE REASON IS TOO VAGUE TO WITHSTAND THE TEST OF LAW SINCE THE AO HAS NOT BROUGHT OUT THE CO NCRETE DETAILS RELIED BY HIM. (C ) THERE MAY BE SOME BUSINESS RELATION OR SOCIAL RELATION WITH THOSE PERSONS WITH YOU, AND YOU MIGHT HAVE TOLD THEM TO FURNISH THE RETURN OF INCOME IN THEIR NAMES AND BY FILING THE RETURN, YOU MIGHT HAVE CREATE BOGUS CAPITAL AND CAS H CREDIT ENTRY FOR YOUR BENEFIT ALSO. THE ABOVE REASON IS HYPOTHETICAL, NOT BASED ON ANY GENUINE CONCRETE EXPLAINABLE EVIDENCE. (D) AS PER REPORT OF ADIT-II, SURAT THAT ALL SUCH CASH WAS PROVIDED BY THE BENEFICIARIES OF THE CASH CREDIT . THEREFORE IN SUCH CASES, IT IS CLEAR THAT SUCH CREDIT ENTRIES ARE REQUIRED TO BE TAXED IN T HE HANDS OF THE BENEFICIARIES IN THE A. Y. WHEN THE ENTRIES HAS BEEN BROUGHT INTO BOOKS BY THEM OR WHEN THE ITA NO.2588/AHD/2011 (AY: 2003-04) ITO, WARD-9(3), SURAT VS SHRI NAGJIBHAI JASMATBHAI PATEL C. O. NO.7/AHD/2012 (IN ITA NO.2588/AHD/2011 (AY: 2 003-04) SHRI NAGJIBHAI JASMATBHAI PATEL VS ITO, WARD-9(3), SURAT 6 FICTITIOUS ASSETS ARE LIQUIDATED AND CASH WAS PROVIDED FOR THE SAME BY THE BENEFICIARY. THE ABOVE REASONS OF THE LEARNED AO ARE NOT BASED O N ANY DOCUMENTARY EVIDENCE BUT BASED ON SURMISES AND CONJ ECTURES. THE ASSESSEE HAD NEITHER AVAILED DEPOSITS NOR HAD ADVANCED MONEY TO ANY OF THOSE THREE PROTECTIVE ASSESSED ASS ESSES AND FURTHER NO COMMERCIAL OR FINANCIAL TRANSACTION EXIS TED BETWEEN THEM. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, CAREFULLY P ERUSED THE ORDERS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIAL ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASSESSEE BEFO RE US. FROM THE FACTS AS WELL ON PERUSAL OF THE ORDERS OF THE AUTHO RITIES BELOW, WE FIND THAT THE LEARNED AO HAS MADE THE ADDITION BASED ON PRESUMPTIONS WITHOUT BRINGING ANY MATERIAL EVIDENCE ON RECORD RE GARDING ANY TRANSACTION BETWEEN THE ASSESSEE AND THE THREE PART IES VIZ. (I) SMT. ALPABEN S. PATEL, (II) SHRI SANJEEVKUMAR R PATEL, A ND (III) SANJEEVKUMAR R. PATEL-HUF AGAINST WHOM THE NAME OF NAGJIBHAI PATEL GROUP WAS FOUND TO BE WRITTEN AS BENEFICIARIE S WHILE PREPARING THE LIST OF ASSESSEES AND THEIR BENEFICIARIES BY TH E ADIT (INV.) II, SURAT DURING THE COURSE OF SURVEY PROCEEDINGS U/S 1 33A OF THE ACT IN THE OFFICE PREMISES OF PANKAJ DANAWALA ON 11-03-200 5. IT IS AN UNDISPUTED LEGAL PROPOSITION THAT ADDITIONS CANNOT BE MADE PURELY ON THE BASIS OF SURMISES AND CONJECTURES. THE REVENUE HAS TO BRING OUT SUFFICIENT RELIABLE MATERIALS ON RECORD FOR MAKING SUCH ADDITIONS. SINCE, THE REVENUE HAS FAILED TO DO SO, WE DO NOT F IND ANY REASON TO ITA NO.2588/AHD/2011 (AY: 2003-04) ITO, WARD-9(3), SURAT VS SHRI NAGJIBHAI JASMATBHAI PATEL C. O. NO.7/AHD/2012 (IN ITA NO.2588/AHD/2011 (AY: 2 003-04) SHRI NAGJIBHAI JASMATBHAI PATEL VS ITO, WARD-9(3), SURAT 7 INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). ACC ORDINGLY, WE CONFIRM HIS ORDER AND DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ASSESSEES C. O. NO.7/AHD/2012 (IN ITA NO.2588/AHD/2011: AY 2003-04) 9. IN THE CROSS OBJECTION, THE ASSESSEE HAS CHALLE NGED REOPENING OF THE ASSESSMENT. SINCE, WE HAVE CONFIRMED ORDER O F THE LEARNED CIT(A) ON MERIT AND THEREBY DELETED THE ADDITION MA DE AGAINST THE ASSESSEE AND DISMISSED THE APPEAL OF THE REVENUE IN ITA NO.2588/AHD/2011, WE DO NOT FIND IT NECESSARY TO AD JUDICATE THE CROSS OBJECTION OF THE ASSESSEE AS IT HAS BECOME ON LY A MATTER OF ACADEMIC INTEREST. 10. IN THE RESULT, REVENUES APPEAL AS WELL AS THE ASSESSEES CROSS OBJECTION, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31-10-2012. SD/- SD/- (G. C. GUPTA) VICE PRESIDENT (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT LAKSHMIKANT LAKSHMIKANT LAKSHMIKANTA AA A DEKA DEKA DEKA DEKA / // / COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGIS TRAR, ITAT, AHMEDABAD ITA NO.2588/AHD/2011 (AY: 2003-04) ITO, WARD-9(3), SURAT VS SHRI NAGJIBHAI JASMATBHAI PATEL C. O. NO.7/AHD/2012 (IN ITA NO.2588/AHD/2011 (AY: 2 003-04) SHRI NAGJIBHAI JASMATBHAI PATEL VS ITO, WARD-9(3), SURAT 8 1. DATE OF DICTATION: 03-10-2012/30-10-12 (DIRECT ON COMPUTER) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 04-10-12/30-10-12 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: