THE ACIT, Circle-9, V. M/S Virag Associates,

ITA 128/AHD/2003

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1924 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-02-2011
• Assessment Year: 1995-1996
• Appeal Filed On: 09-01-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANISTA
• Keywords: Unexplained investment; Income from undisclosed sources; Principle of natural justice; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) ITA NO.128/AHD/2003 A. Y.: 1995-96 THE A. C. I. T., CIRCLE-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES, 5/1/A, PANKAJ SOCIETY, PALDI, AHMEDABAD PA NO. -- (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI R. K. DHANISTA, DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDER OF THE LEARNED CIT(A)-XIII, AHMEDABAD DATED 11-10-2002 FOR ASSESSMENT YEAR 1995-96, CHALLENGING THE DELETION OF ADDITION OF RS.16,44,850/- ON SALE PROCEEDS OF SHAR ES. 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE FIN DINGS OF THE AUTHORITIES BELOW. NONE APPEARED ON BEHALF OF THE A SSESSEE DESPITE SERVICE OF NOTICE THROUGH AFFIXTURE. SERVICE REPORT IS FILED BY THE LEARNED DR. 3. EARLIER THE DEPARTMENTAL APPEAL WAS DISMISSED FO R NON-SERVICE OF NOTICE UPON THE ASSESSEE. THE SAID ORDER WAS REC ALLED WHILE ALLOWING THE MISC. APPLICATION OF THE REVENUE. THE APPEAL WAS ACCORDINGLY RE-FIXED FOR HEARING. ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 2 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION ACTIVITIES DURING THE YEAR UNDER APPEAL AND THE ASSESSEE HAD UNDERTAKEN THE CONSTRUCTION OF FAC TORY BUILDING OF SHREE NICOSECT LTD. AT DANTALI. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE AO FOUND ON VERIFICATION OF BOOKS OF ACCOUNTS AND BANK PASS BOOKS OF THE ASSESSEE THAT THERE WERE CER TAIN CREDITS IN THE BANK ACCOUNT OF THE ASSESSEE ON ACCOUNT OF DISP OSAL OF SHARES AND THE SAID TRANSACTIONS WERE NOT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT WAS FOUND BY THE AO THAT THE AS SESSEE HAD APPLIED FOR PURCHASE OF 2 LAKH SHARES IN THE PUBLIC ISSUE OF THE COMPANY SHREE NICOSECT CO. LTD. IN THE MONTH OF FEB RUARY, 1994 WHICH WERE SOLD BY THE ASSESSEE AND THE SALE PROCE EDS OF THE SAID SHARES HAD BEEN DEPOSITED IN THE BANK ACCOUNT OF TH E ASSESSEE. THE AO RECORDED THE STATEMENT OF SHRI PAULESH K.VORA AN D SHRI DIPAK JAISWAL, MANAGING DIRECTOR OF SHREE NICOSECT CO. LT D. ON 16-9-1996. IT WAS OBSERVED THAT THE SHARES WERE APPLIED IN THE DIFFERENT NAMES FROM SEVEN ADDRESSES AS DISCUSSED IN PARA 4 OF THE ASSESSMENT ORDER BY DEPOSITING THE MONEY IN CASH. INQUIRIES CO NDUCTED THROUGH THE INSPECTOR REVEALED THAT THE ADDRESSES OF SIX NU MBERS WERE INCORRECT AND THE OCCUPANT OF THE SEVENTH ADDRESS D ENIED HAVING MADE ANY INVESTMENT. THE NUMBERS OF INDIVIDUALS WHO APPLIED FOR SHARES WERE ABOUT 2000. THE SHARES WERE APPLIED BY TYPING ON SINGLE COMPUTER OR TYPE-WRITER AND WERE FILLED IN BY ONE O R TWO INDIVIDUALS. THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN WHY THE SALE PROCEEDS OF THE SHARES SHOULD NOT BE TREATED A S INCOME OF THE ASSESSEE. THE ASSESSEE REPLIED VIDE LETTER DATED 25 -3-1998 THAT SHRI PAULESH VORA, THE PARTNER OF THE ASSESSEE FIRM WAS DOING BUSINESS ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 3 AS SUB-BROKER OF SHARES AND SECURITIES AND HE HAD S OLD THE SHARES FOR HIS CLIENT AND RECEIVED CHEQUE FROM BROKER IN THE N AME OF THE FIRM. IT WAS ALSO POINTED OUT THAT THE REAL OWNER OF SHARES OF NICOSECT LTD. WAS ONE SHRI SUBHASH SHAH AND SHRI PAULESH VORA HAD INVESTED IN THE SHARES OF NICOSECT LTD. ON BEHALF OF SUBHASH SH AH AND HAD SOLD THE SHARES ON HIS BEHALF AND SALE PROCEEDS WERE DEP OSITED IN THE ACCOUNT OF THE ASSESSEE FIRM ON BEHALF OF THE BUSIN ESS ACTIVITY OF PARTNER SHRI PAULESH VORA. IT WAS POINTED OUT THAT SHRI SUBHASH SHAH WAS ASSESSED WITH DCIT, SPECIAL RANGE-9, AHMEDABAD. THE REPLY OF THE ASSESSEE HAS BEEN DISCUSSED IN PARA 4 AND PAGE 2 OF THE ASSESSMENT ORDER. THE AO OF SHRI SUBHASH SHAH OBSER VED THAT SHRI SUBHASH SHAH HAD ORIGINALLY APPLIED FOR 2 LAKH SHAR ES OF NICOSECT LTD., OUT OF WHICH 1,02,400 SHARES WERE SOLD BACK T O SHRI PAULESH VORA. THE TOTAL SUCH DEPOSITS WHICH WERE FOUND CRED ITED IN THE ASSESSEES BANK ACCOUNT WITH AHMEDABAD CO-OPERATIVE BANK LTD. DURING THE PERIOD FROM NOVEMBER, 1994 TO MARCH, 199 5 WAS OF RS.16,44,850/- . THE AO OBSERVED THAT THE ASSESSEE HAD NOT ESTABLISHED THAT THE SAID AMOUNTS WERE NOT RELATED TO THE ASSESSEE AND FURTHER THE ASSESSEE HAD NOT SHOWN ANY WITHDRAW AL FOR ACQUISITION OF THESE SHARES SO THE ENTIRE AMOUNT OF RS.16,44,850/- WAS TREATED AS UNACCOUNTED INVESTMENT OF THE ASSESS EE AND ADDED TO THE INCOME OF THE ASSESSEE. IT WAS ALSO OBSERVED BY THE AO THAT THE TOTAL CASH TRANSACTIONS MADE BY THE APPELLANT D URING THE YEAR WERE RS.42,09,734/- OUT OF WHICH RS.38,52,026/- HAS BEEN SHOWN BY THE ASSESSEE AS PAYMENTS MADE TO MATERIAL SUPPLIERS AND LABOURERS. THE AO ANALYZED THE TOTAL TURNOVER OF THE ASSESSEE FIRM FROM THE CASH TRANSACTIONS AND PAYMENTS FROM THE BANK IN THE FORM OF CLEARING OF ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 4 RS.13,47,440/- AND ARRIVED AT THE TURNOVER OF RS.55 ,00,000/-. THE ASSESSEE HAD SHOWN GROSS RECEIPTS OF RS.43,61,980/- . THEREFORE, THE AO CONCLUDED THAT THE MONEY RECEIVED ON SALE OF SHA RES HAS BEEN BROUGHT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. 5. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED C IT(A) AND IT WAS SUBMITTED THAT THE ASSESSEE HAD SOLD THE SAID S HARES ON BEHALF OF VARIOUS PARTIES AND ACTED AS A SUB-BROKER IN THA T PARTICULAR TRANSACTION. OBVIOUSLY, THE SALE PROCEEDS WOULD TO INTO THE BANK ACCOUNT OF THE ASSESSEE FIRM. HOWEVER, THE SAME HAD NOT BEEN UTILIZED BY THE APPELLANT FOR ITS DAY TO DAY BUSINE SS ACTIVITIES. THE ENTIRE SALE PROCEEDS HAD BEEN RETURNED TO THE VARIO US PRINCIPALS ON BEHALF OF WHOM THE ASSESSEE HAD SOLD THE SAID SHARE S. THE DETAILS OF VARIOUS PERSONS ON WHOSE BEHALF THE ASSESSEE HAD SO LD THE SHARES WERE SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSES SEE AS ANNEXURE IV TO HIS SUBMISSION. IT WAS POINTED OUT THAT IT CO ULD BE SEEN FROM THE ANNEXURE IV THAT THE ENTIRE SALE PROCEEDS HAD BEEN RETURNED TO THE RESPECTIVE PRINCIPALS AND, THEREFORE, THE SAID INVE STMENT IN SHARES COULD NOT BE HELD AS UNEXPLAINED INVESTMENT AND ADD ED IN THE HANDS OF THE ASSESSEE FIRM. SECONDLY, IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE STATEMENTS OF PAU LESH K. VORA AND DIPAK JAYSWAL, WHICH HAD BEEN RELIED BY THE AO, HAV E NEVER BEEN GIVEN TO THE ASSESSEE FIRM AND, THEREFORE, THERE WA S BREACH OF PRINCIPLES OF NATURAL JUSTICE. THIRDLY, IT WAS SUBM ITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT BOGUS ADDRESSES OF TH E SHARE APPLICANTS AND THE PAYMENT OF APPLICATION MONEY IN CASH WERE A MATTER OF NO CONSEQUENCE AS LONG AS THE ASSESSEE FI RM WAS ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 5 CONCERNED. IF THE ADDRESSES OF THE SHARE APPLICANTS WERE FOUND TO BE FICTITIOUS THEN THE SHARE APPLICATION MONEY SHOULD BE ADDED IN THE HANDS OF THE COMPANY WHOSE SHARES HAD BEEN APPLIED FOR. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DE CISION IN THE CASE OF SOPHIA FINANCE. FOURTHLY, IT WAS SUBMITTED BY TH E LEARNED COUNSEL FOR THE ASSESSEE THAT EVEN THE OBSERVATIONS OF THE D. C. I. T., SPECIAL RANGE-9 WERE NOT AGAINST THE ASSESSEE IN AS MUCH AS THE D.C.I.T. HAD OBSERVED THAT THERE WAS NO RECORD TO SHOW THAT THERE WAS A BUY- BACK AGREEMENT BETWEEN SUBHASH SHAH AND PAULESH VOR A. ASSUMING, WITHOUT DENYING THAT THERE INDEED WAS SOM E TRANSACTION OF SHARES BETWEEN SUBHASH SHAH AND PAULESH VORA, THE A SSESSEE FIRM COULD NOT BE HELD LIABLE FOR THE ACTS DONE BY ITS P ARTNER IN HIS INDIVIDUAL CAPACITY. NOWHERE IN THE ENTIRE OBSERVAT ION, IT WAS MENTIONED THAT THE ASSESSEE FIRM HAD PURCHASED ANY SHARES FROM SHRI SUBHASH SHAH. IT WAS ALSO SUBMITTED BY THE LEA RNED COUNSEL FOR THE ASSESSEE THAT THE AO HAD ANALYZED THE TOTAL TUR NOVER OF THE ASSESSEE FIRM AND HAD REACHED A CONVENIENT CONCLUSI ON THAT THE MONEY RECEIVED ON SALE OF SHARES HAS BEEN BROUGHT I N THE BOOKS OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE AO HAD MADE ADDITION ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE SHARES WHILE HE HIMSELF GAVE A FINDING THAT THE SALE PROCEEDS HAVE BEEN BROUGHT IN THE BOOKS OF THE ASSESSEE. ACC ORDING TO THE AO THE TOTAL TURNOVER OF THE ASSESSEE WAS OF RS.55,00, 000/- I.E. THE TOTAL CASH PAYMENTS AND BANK PAYMENTS. THE LEARNED COUNSE L FOR THE ASSESSEE CLARIFIED THAT THE PAYMENTS TOWARDS MATERI AL AND LABOURERS AS SHOWN ABOVE INCLUDED PAYMENTS TO THE PRINCIPALS ON WHOSE BEHALF THE SAID SHARES WERE SOLD. AS A MATTER OF FACT, THE SAID AMOUNT HAS ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 6 ALREADY BEEN CONSIDERED FOR DISALLOWANCE ON ACCOUNT OF CASH PAYMENT AND HAS ALREADY DISALLOWED BY THE AO WHICH HAS BEEN DISCUSSED IN THE SUBSEQUENT PARA. HOWEVER, THE SAME AMOUNT HAS ALSO BEEN DISALLOWED AND TREATED AS UNACCOUNTED INV ESTMENT IN THE SHARES. THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT THE SAME AMOUNT SHOULD NOT BE DISALLOWED AND TAXED TWICE IN THE HANDS OF THE ASSESSEE. IT WAS ALSO ARGUED BY THE LEARNED COUNSE L FOR THE ASSESSEE THAT THE ASSESSEE WAS NOT SUPPLIED WITH CO PY OF THE STATEMENTS OF SHRI PAULESH VORA AND DIPAK JAYSWAL I N SPITE OF REPEATED REQUESTS AND THAT BEFORE RELYING ON THE ST ATEMENT COPY OF THE SAME SHOULD HAVE BEEN GIVEN TO THE APPELLANT AN D OPPORTUNITY OF HEARING SHOULD HAVE BEEN GIVEN SO THAT THE ASSESSEE COULD CLARIFY THE CONTENTS. THE AO HAS HEAVILY RELIED ON THE SAID STA TEMENTS BUT THE RELIANCE PLACED ON THESE STATEMENTS SUFFERS FROM TH E BASIC INFIRMITY IN AS MUCH AS THE SAID STATEMENTS WERE RECORDED BEHIND THE BACK OF THE ASSESSEE AND COPY OF THE SAME WAS NOT GIVEN TO THE ASSESSEE FOR REBUTTAL. IN OTHER WORDS, NONE OF THE PARTIES WHOSE STATEMENTS WERE OBTAINED BY THE AO WERE EITHER CROSS-EXAMINED BY TH E ASSESSEE MORE PARTICULARLY WHEN THE ASSESSEE WAS NOT INVOLVE D IN THE SAID TRANSACTION OF SHARES IN ANY MANNER. THUS, THE CONC LUSION REACHED BY THE AO BASED ON THESE STATEMENTS SUFFERS FROM THE V OICE OF BREACH OF RULE OF NATURAL JUSTICE AND AS SUCH WAS REQUIRED TO BE TREATED AS INADMISSIBLE EVIDENCE. IN THIS CONNECTION, THE LEAR NED COUNSEL FOR THE ASSESSEE CITED THE DECISION OF THE HONBLE SUPREME COURT WHICH CLEARLY STATED ON THE PRINCIPLES OF NATURAL JUSTICE IN THE CASE OF CHOCKALINGAM & M. MEYYAPPAN 48 ITR 34 THAT: ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 7 ASSESSMENT PROCEEDINGS BEFORE INCOME-TAX OFFICERS ARE JUDICIAL PROCEEDINGS AND THE PRINCIPLE OF NATURAL J USTICE ARE APPLICABLE TO SUCH PROCEEDINGS. THE ELEMENTARY PRIN CIPLE OF NATURAL JUSTICE IS THAT THE ASSESSEE SHOULD HAVE KNOWLEDGE OF THE MATERIAL THAT IS GOING TO BE USED AGAINST HIM SO THAT HE MAY BE ABLE TO MEET. THE ASSESSEE HA S A RIGHT TO INSPECT THE RECORDS AND ALL RELEVANT DOCUM ENTS BEFORE HE IS CALLED UPON TO LEAD EVIDENCE IN REBUTT AL. WHERE AN ADDITION OF RS.85,937/-, AS INCOME FROM UNDISCLOSED SOURCES, WAS MADE IN THE ASSESSMENT OF THE ASSESSEE UPON THE BASIS OF STATEMENTS MADE BY TWO WITNESSES BUT PERMISSION TO CROSS-EXAMINE THE WITNE SSES WAS GIVEN TO THE ASSESSEE WITHOUT FURNISHING COPIES OF THE STATEMENTS MADE BY THE WITNESSES OR CONVEYING T HE SUBSTANCE OF THEIR STATEMENTS OR GIVING THE NAMES O F THE WITNESSES AND THE ASSESSEE WAS NOT PERMITTED TO INS PECT THE RECORDS. HELD, THAT THE ASSESSMENT WAS VITIATED BY VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AS THE PERMISSION GIV EN FOR CROSS-EXAMINATION OF WITNESSES WAS ILLUSORY. 6. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE ASSESSEE IN THE LIGHT OF THE FINDINGS OF THE AO DEL ETED THE ADDITION. HIS FINDINGS IN PARA 2.3 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER: 2.3 I HAVE CONSIDERED THE SUBMISSION OF THE AUTHOR ISED REPRESENTATIVE CAREFULLY AND HAVE GONE THROUGH THE IMPUGNED ORDER IN APPEAL. I FIND THAT THE ASSESSING OFFICER HAS RELIED STRONGLY ON THE STATEMENTS TAKEN FROM SHRI PAULESH VORA AND SHRI DIPAK JAYSWAL FOR MAKING THE ADDITION OF SALE PROCEEDS OF SHARE IN THE HANDS OF THE APPELLANT WHEREAS THE COPIES OF THE STATEMENTS HAVE NOT BEEN GIVEN TO THE APPELLANT FOR REBUTTAL. THUS AS A RGUED BY THE AUTHORISED REPRESENTATIVE, I FIND THAT THE P RINCIPLES OF NATURAL JUSTICE HAVE NOT BEEN FOLLOWED. A COPY O F THE WRITTEN SUBMISSION WAS FORWARDED TO THE ASSESSING ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 8 OFFICER VIDE LETTER DATED 20 TH AUGUST, 2002 FOR HIS COMMENTS ON THE CONTENTION OF THE APPELLANT THAT TH E SALE PROCEEDS OF THE SHARES HAVE BEEN RETURNED TO THE VA RIOUS PARTIES ON BEHALF OF WHICH THE APPELLANT HAD SOLD THE SHARES AND THEREFORE, THE SAME CANNOT BE ADDED AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE APPELLAN T FIRM. ALTHOUGH NO REPORT HAS BEEN RECEIVED FROM THE ASSES SING OFFICER, THE ASSESSING OFFICER ATTENDED THE HEARING S ON VARIOUS DATES. IT HAS BEEN THE CONTENTION OF THE AP PELLANT THAT THE SHARES WERE APPLIED BY SHRI PAULESH VORA O N BEHALF OF ONE SHRI SUBHASH SHAH AND THAT THE INVEST MENT OF RS.10 LACS IN THE PURCHASE OF SHARES HAD BEEN AD DED ON PROTECTIVE BASIS IN THE A.Y. 1994-95 IN THE HAND S OF THE APPELLANT AND IN APPEAL THE APPELLANT ARGUED BEFORE THE CIT(A) XIV, AHMEDABAD THAT THE APPELLANT IS A PARTNERSHIP FIRM COULD NOT APPLY FOR THE SHARES IN COMPANY AS A PARTNERSHIP FIRM CANNOT LEGALLY HOLD S HARES IN A COMPANY. THE APPELLANT HAD ALSO CONTENDED THAT SHRI PAULESH VORA, PARTNER OF THE FIRM HAD SOLD THE SHAR ES ON BEHALF OF SHRI SUBHASH SHAH AND THAT THE REAL OWNER OF SHARES OF SHRE NICOSECT CO. LTD. WAS SHRI SUBHASH S HAH WHO WAS ASSESSED WITH THE DCIT, S. R. 9, AHMEDABAD. I HAVE GONE THROUGH THE BLOCK ASSESSMENT ORDER DATED 30.10.1996 OF SHRI SUBHASH SHAH, HEMKOT BUILDING, ASHRAM ROAD, AHMEDABAD WHEREIN THE DCIT, SR-9, AHMEDABAD HAD HELD THAT SHRI SUBHASH SHAH HAD INVESTED A SUM OF RS.10 LACS IN SHARES BY MAKING APPLICATION FOR 2 LACS SHARES OF SHREE NICOSECT CO. LTD. AND THAT THE 2 LAC SHARES WERE ALLOTTED TO HIM AND CAME INTO HIS POSSESSION. OUR OF THESE, 97,600 SHARES SO LD BY SHRI SUBHASH SHAH AND THE SAID SALE PROCEEDS OF THE SHARES WERE DEPOSITED IN 32 BANK ACCOUNTS DISCLOSED IN THE BLOCK RETURN OF SHRI SUBHASH SHAH AND 1,02,400 SHARES WERE SOLD BY8 SHRI SUBHASH SHAH TO SHRI PAUL ESH VORA IN CASH AND ACCORDINGLY THE INVESTMENT MADE BY SHRI SUBHASH SHAH AS APPLICATION MONEY IN 2 LACS SH ARES AND THE PROFIT MADE BY HIM ON SALE OF SHARES WAS TA XED IN THE HANDS OF SHRI SUBHASH SHAH. THE TOTAL ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT AND THE PROFIT ON SALE OF SHARES WAS RS.24,30,600/-. IT WAS HELD IN T HAT ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 9 ORDER THAT AS REGARDS THE SALE OF 1,02,400 SHARES T O SRI PAULESH VORA PROFIT OF RS.4/- PER SHARE WAS DERIVED BY SHRI SUBHASH SHAH. THUS FROM THE BLOCK ASSESSMENT ORDER OF SHRI SUBHASH SHAH, IT IS CLEAR THAT THE SH ARE TRANSACTIONS WERE CARRIED OUT BY SHRI PAULESH VORA. FURTHER, THE ASSESSING OFFICER HAS NOT FOUND OR BRO UGHT ANY EVIDENCE THAT THE APPELLANT FIRM HAS DONE TRADI NG OF SHARES OF SHREE NICOSECT LTD. IT IS ALSO FOUND THAT THE SALE PROCEEDS OF THE SHARES WERE DEPOSITED IN THE BANK ACCOUNT OF THE APPELLANT FIRM AND THE SAME WERE WITHDRAWN IN CASH AND WERE RETURNED TO THE PARTIES ON WHOSE BEHALF OF SHARE APPLICATIONS WERE MADE AND TH E SHARES WERE SOLD. THE AUTHORISED REPRESENTATIVE HAS FURNISHED ANNEXURE-4 TO HIS WRITTEN SUBMISSIONS SHO WING THE ACCOUNTS OF THE DEPOSITORS AND SHOWING THE DETA ILS OF CASH PAYMENTS MADE TO THE DEPOSITORS ON SALE OF SHA RES AND THE TOTAL SUCH DEPOSITORS WERE 91 IN NUMBERS TO WHOM CASH PAYMENTS HAVE BEEN MADE. THE CIT(A) XIV, AHMEDABAD WHILE DEALING WITH THE ISSUE IN THE A.Y. 1994-95 FOR THE APPELLANT, VIDE HIS ORDER DATED 26. 9.2002 HAS ALSO DELETED THE UNEXPLAINED INVESTMENT OF RS.1 0 LACS IN PURCHASES OF 2 LAC SHARES OF SHREE NICOSECT LTD. AS THE ADDITION WAS MADE ON PROTECTIVE BASIS. THERE FORE, AS THE PURCHASE AND SALE OF THE SAID SHARES HAVE NO T BEEN CARRIED OUT BY THE APPELLANT FIRM BUT BY SHRI PAULESH VORA, THE ADDITION TOWARDS SALE PROCEEDS OF SHARES CANNOT BE SUSTAINED ACCORDINGLY THE ADDITION OF RS.16,44,850/- IS DELETED. EVEN OTHERWISE, THE ASSE SSING OFFICER COULD NOT HAVE ADDED THE ENTIRE SALE PROCEE DS IN THE HANDS OF THE APPELLANT AND HE COULD HAVE ONLY A DDED THE PROFIT ON THE SALE OF THE SHARES. HOWEVER, AS T HERE IS NO EVIDENCE THAT THE APPELLANT FIRM HAD PURCHASED A ND SOLD THE SHARES, THE ENTIRE ADDITION OF RS.16,44,85 0/- IS DELETED. 7. THE LEARNED DR SUBMITTED THAT THE SUBMISSIONS OF THE ASSESSEE WERE SENT TO THE AO FOR HIS COMMENTS/REMAN D RECORD, THEREFORE, THE LEARNED CIT(A) SHOULD HAVE WAITED FO R THE REMAND ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 10 REPORT BEFORE PASSING THE IMPUGNED ORDER. THE LEARN ED DR SUBMITTED THAT THE LEARNED CIT(A) WITHOUT WAITING FOR THE REM AND REPORT FROM THE AO DELETED THE ADDITION, THEREFORE, MATTER MAY BE R EMANDED BACK TO THE FILE OF THE LEARNED CIT(A) FOR FRESH ADJUDICATI ON BY CALLING THE REMAND REPORT FROM THE AO. 8. ON CONSIDERATION OF THE FACTS OF THE CASE AND SU BMISSION OF THE LEARNED DR, WE DO NOT FIND IT TO BE A FIT CASE FOR REMANDING THE MATTER TO THE FILE OF THE LEARNED CIT(A). THE LEARNED CIT( A) SPECIFICALLY NOTED THAT THE AO RECORDED THE STATEMENT OF SHRI PAULESH K. VORA AND SHRI DIPAK JAYSWAL WITH REGARD TO THE MATTER IN ISSUE WH ICH WAS RELIED UPON AGAINST THE ASSESSEE. THE LEARNED CIT(A) FURTH ER NOTED THAT THE STATEMENTS OF THESE PERSONS WERE NOT GIVEN TO THE A SSESSEE FOR REBUTTAL. THE DETAILED SUBMISSIONS OF THE ASSESSEE WERE FORWARDED TO THE AO FOR SUBMITTING COMMENTS/FILING REMAND REPORT VIDE LETTER DATED 20-08-2002 BUT TILL THE PASSING OF THE ORDER ON 11- 10-2002 THE AO DID NOT ATTEND THE PROCEEDINGS BEFORE THE LEARNED CIT(A ) AS WELL AS DID NOT SUBMIT ANY REMAND REPORT. SINCE THE AO RELIED U PON THE STATEMENTS OF THESE PERSONS WHICH HAVE NOT BEEN GIV EN TO THE ASSESSEE FOR REBUTTAL, THEREFORE, NO RIGHT TO CROSS EXAMINATION HAS ALSO BEEN GIVEN TO THE ASSESSEE. THUS, THEIR STATEM ENTS CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. THIS ITSELF IS SUFFICIENT GROUND TO DISMISS THE DEPARTMENTAL APPEAL. FURTHER, THE LE ARNED CIT(A) NOTED THAT ON THE SAME ISSUE IN ASSESSMENT YEAR 1994-95 S IMILAR ADDITION HAS BEEN DELETED. THE LEARNED CIT(A) HAS ALSO GONE THROUGH THE ORDER IN THE CASE OF SHRI SUBHASH SHAH WHO HAS MADE INVESTMENTS. THE LEARNED CIT(A) CONSIDERING THE BLOCK ASSESSMENT ORDER OF SHRI ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 11 SUBHASH SHAH FOUND THAT SHARE TRANSACTIONS WERE CAR RIED OUT BY SHRI PAULESH K. VORA. FURTHER, THE AO HAS NOT BROUGHT AN Y EVIDENCE AGAINST THE ASSESSEE FOR TRADING OF SHARE OF SHREE NICOSECT LTD. HAS BEEN DONE BY THE ASSESSEE. IT WAS FURTHER FOUND THA T SALE PROCEEDS OF THE SHARES WERE DEPOSITED IN THE BANK ACCOUNT OF THE FIRM AND THE SAME WERE WITHDRAWN IN CASH AND WERE RETURNED TO TH E PARTIES ON WHOSE BEHALF SHARE APPLICATIONS WERE MADE AND SHARE S WERE SOLD. THE LEARNED CIT(A). CONSIDERING THE ENTIRE FACTS NO TED THAT THE PURCHASES AND SALES OF THE SHARES IN QUESTION HAVE NOT BEEN CARRIED BY THE ASSESSEE FIRM BUT BY SHRI PAULESH K. VORA. T HE LEARNED CIT(A), THEREFORE, GAVE SPECIFIC FINDING OF FACT TH AT THE TRANSACTIONS IN SHARES IN QUESTION HAVE NOT BEEN CARRIED OUT BY THE ASSESSEE FIRM AND IT WAS CONDUCTED BY SHRI PAULESH K. VORA. SHRI PAULESH K. VORA AND SHRI DIPAK JAYSWAL MADE STATEMENTS WHICH WERE U SED AGAINST THE ASSESSEE BUT THE SAME WERE NOT CONFRONTED AND G IVEN TO THE ASSESSEE, THEREFORE, THE SAME CANNOT BE READ IN EVI DENCE AGAINST THE ASSESSEE. THIS FACT WOULD SHOW THAT THE LEARNED CIT(A) ON PROPER APPRECIATION OF THE FACTS AND EVIDENCE ON RECORD RI GHTLY DELETED THE ADDITION. FURTHER, SUFFICIENT OPPORTUNITIES WERE GI VEN TO THE AO TO FILE THE REMAND REPORT ON THE SUBMISSION OF THE ASSESSEE BUT THE SAME WERE NOT FILED TILL THE PASSING OF THE APPELLATE OR DER. THEREFORE, IN OUR VIEW IT IS NOT A FIT CASE EVEN TO REMAND THE MATTER TO THE FILE OF THE LEARNED CIT(A). WE ACCORDINGLY DO NOT FIND ANY MERI T IN THE APPEAL OF THE REVENUE. THE SAME IS DISMISSED. ITA NO.128/AHD/2003 ACIT, CIR-9, AHMEDABAD VS M/S. VIRAG ASSOCIATES 12 9. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 04-03-2011 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 04-03-2011 LAKSHMIKANT/- 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 D Y. REGISTRAR, ITAT, AHMEDABAD