The ITO, Ward-6(2), Ahmedabad V. Shri Gandalal M. Patel, Ahmedabad

ITA 1304/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5570 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 06-07-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 30-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Search and seizure; Set aside
• Section: 143(1); 143(2); 68; 6

Judgement Text

IN THE INCOME_TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI BHAVNESH SAINI,JM AND SHRI A.N. PAHU JA,AM ITA NO.1304/AHD/2007 (ASSESSMENT YEAR : 2002-03) INCOME TAX OFFICER,WARD- 6(2), 1 ST FLOOR, C.U. SHAH BUILDING, ASHRAM ROAD,AHMEDABAD. VS SHRI GANDALAL M. PATEL, 25-B GULAB PARK SOCIETY, OPP.GULAB TOWER, SOLA ROAD, AHMEDABAD. [ PAN: AGXPP1541J] (APPELLANT) (RESPONDENT) ( )/ ORDER A.N. PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATED 15-12- 2006 OF THE LD. C.I.T.(A)-XII, AHMEDABAD .RAISES TH E FOLLOWING GROUNDS :- 1. THE LD. COMMISSIONER OF INCOME TAX(A)-XII, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS.1,29,871/- ON ACCOUNT OF DISALLOWANCE OF INTEREST PAID TO GOMTIOB EN GANDALAL PATEL. 2. THE LD. COMMISSIONER OF INCOME TAX(A)-XII, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE O F RS.1,79,707/- ON ACCOUNT OF DISALLOWANCE OF ADMINISTRATIVE EXPENSES CLAIMED AGAINST INTEREST INCOME. 3. THE LD. COMMISSIONER OF INCOME TAX(A)-XII,, AHME RDABAD HAS ERRED IN LAW AND ON FACTS IN ACCEPTING THE AGRICULT URAL INCOME TO THE EXTENT OF RS.60,000/- THEREBY REDUCING THE ADDITION MADE O N ACCOUNT OF TREATING AGRICULTURAL INCOME AS INCOME FROM UNDISCLOSED SOUR CES FROM RS.98,980/- TO RS.38,980/-. 4. THE LD. COMMISSIONER OF INCOME TAX(A)-XII,AHMEDA BAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE O F RS.4,20,630/- ON ACCOUNT OF UNEXPLAINED CASH CREDITS IN SQUARED UP A CCOUNTS. 5. THE LD. COMMISSIONER OF INCOME TAX(A)-XII, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS.3,57,024/- ON ACCOUNT OF UNEXPLAINED CASH CREDITS UNDER SECTION 6 8 OF THE INCOME TAX ACT,1961. REVENUE BY : SHRI K. M. MAHESH, DR. ASSESSEE : SHRI S. N. DIVATIA,AR ITA.1304/AHD/08 A.Y.2002-03. 2 6. THE LD. COMMISSIONER OF INCOME TAX(A)-XII, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS.2,01,524/- BEING THE INCOME OF BENAMI CONCERN M/S. JASMINE FI NANCE, PROP. GANDALAL M. PATEL HUF. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX(A)-XII,AHMEDABAD OUGHT T O HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER 8. IT IS, THEREFORE, PRAYED THAT ORDER OF THE LD. C OMMISSIONER OF INCOME TAX(A)-XII, AHMEDABAD MAY BE SET ASIDE AND T HAT OF THE ASSESSING OFFICER RESTORED. 2. ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL, F ACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.74,50 0/- FILED ON 22.5.2002 BY THE ASSESSEE AFTER BEING PROCESSED U/S 143(1) OF THE IN COME-TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT] WAS SELECTED FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOT ICED THAT THE ASSESSEE HAD DISCLOSED GROSS INTEREST INCOME OF RS.3,26,496/- AN D CLAIMED DEDUCTION OF RS.1,29,870/- ON ACCOUNT OF INTEREST PAID TO HIS W IFE SMT. GOMTIBEN G. PATEL, RS.1,050/- TO K.I. PATEL AND RS. 370/- TO BHAUMIK C ORPORATION. TO A QUERY BY THE AO AS TO WHETHER OR NOT MONEY RECEIVED FROM SMT. G OMTIBEN WIFE OF THE ASSESSEE HAD BEEN EARNING THE INTEREST INCOME, THE ASSESSEE FILED BALANCE SHEET AS ON 31-03-2000,WHEREFROM IT WAS REVEALDED T HAT SMT. GOMTIBEN HAD GIVEN LOAN OF RS.20,05,500/- AND IN THE ASSET SIDE, CASH IN HAND OF RS.34,84,089/- WAS SHOWN. SIMILARLY, IN THE BALANCE SHEET AS ON 31-03-2001,THE LOAN IN THE NAME OF SMT. GOMTIBEN WAS SHOWN OF RS.2 1,25,830/- AND CASH IN HAND WAS RS.37,58,439/-. SINCE THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE THAT MONEY RAISED FROM SMT. GOMTIBEN HAD BEEN USED FOR THE PURPOSE OF EARNING INTEREST, THE AO DISALLOWED INTEREST OF RS.1,29,870 /- PAID TO HER. 3. ON APPEAL, THE ASSESSEE CONTENDED THAT CASH IN H AND OF RS. 37,58,439/- WAS AVAILABLE AS ON 1.4.2001 AND CLOSING CASH BALAN CE AS ON 31.3.2002 WAS ONLY RS.80,710/-. SINCE BORROWED FUNDS HAD BEEN UTI LIZED IN EARNING INTEREST ITA.1304/AHD/08 A.Y.2002-03. 3 INCOME, THE AO WAS NOT JUSTIFIED IN DISALLOWING THE INTEREST OF RS. 1,29,871/-.THE LD. CIT(A) ACCEPTED THESE SUBMISSIONS AND DELETED T HE ADDITION. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR MERELY RELIED UPON THE O RDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. UNDISPUTEDLY, THE ASSESSEE UTILIZED FUNDS BORROWED FROM HIS WIFE IN EARNING INTEREST INCOME FROM VARIOUS PARTIES AND AS CONCLUD ED BY THE LD. CIT(A). THE LD. DR APPEARING BEFORE US DID NOT PLACE ANY MATERIAL I N ORDER TO CONTROVERT THE AFORESAID FINDINGS OF THE LD. CIT(A) SO AS TO ENAB LE US TO TAKE A DIFFERENT VIEW IN THE MATTER. IN THE ABSENCE OF ANY BASIS, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A).THEREFORE, GROUND NO.1 I N THE APPEAL IS DISMISSED. 6. GROUND NO.2 RELATES TO DISALLOWANCE OF ADMI NISTRATIVE EXPENSES OF RS. 1,79,707/-.DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE AO NOTICED THAT THE ASSESSEE HAD ADMITTEDLY DISCONTINUED HIS MONEY LENDING BUSINESS SINCE 1999 AFTER THE SEARCH. ACCORDINGLY, THE AO ASSESSED THE INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND DISALLOWED THE CLAIM FOR ADMINISTRATIVE EXPENSES, BEING ABNORMAL . 7. ON APPEAL, THE ASSESSEE CONTENDED THAT INTEREST HAS BEEN RECEIVED NOT ONLY FROM THE BANK BUT FROM OTHER PARTIES TO WHOM THE FUNDS HAD BEEN ADVANCED. EVEN DURING THE YEAR UNDER CONSIDERATION LOAN HAD BEEN ADVANCED TO A NUMBER OF PARTIES AND RELEVANT BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE AO. IT WAS ARGUED THAT INCOME HAS BEEN EARNED FROM HIS MONEY LENDING BUSINESS AND NOT UNDER THE HEAD OTHER SOURCES. IN THE LIGHT OF THESE SUBMISSIONS, THE LD. CIT(A) CONCLUDED AS UNDER:- ITA.1304/AHD/08 A.Y.2002-03. 4 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE LD. COUNSEL FOR THE APPELLANT. THE FACTS OF THE CASE AND RECORDS OF THE APPELLANT REVEALS THAT THE APPELLANT DID NOT DISCON TINUE HIS MONEY LENDING BUSINESS AFTER SEARCH AND SEIZURE OPERATION CONDUCT ED IN THE APPELLANTS PREMISES. THE APPELLANT HAS SUBMITTED COPIES OF FRE SH LOANS GIVEN TO PARTIES. THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL EVIDENCE TO PROVE THAT THE APPELLANT DISCONTINUED HIS BUSINESS ACTIVITY. HE MERELY PRESUMED THAT AFTER SEARCH AND SEIZURE THE APPELLAN T HAD DISCONTINUED HIS BUSINESS. THEREFORE, THE A.O. WAS NOT JUSTIFIED IN DISALLOWING THE ADMINISTRATIVE EXPENSES OF RS.1,79,707/-. THIS GROU ND OF APPEAL IS, THEREFORE, ALLOWED. 8. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR MERELY RELIED UPON THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF TH E LD. CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. UNDISPUTEDLY, THE ASSESSEE HAS BEEN CARRYING ON THE BUSINESS OF MONEY LENDING IN THE YEAR UNDER CONSIDERATION. THERE IS NOTHING I N THE ORDER OF THE AO TO SUGGEST AS TO HOW THE CLAIM OF ADMINISTRATIVE EX PENSES WAS ABNORMAL NOR EVEN THE NATURE OF SUCH EXPENSES IS EVIDENT. THE L D. DR APPEARING BEFORE US DID NOT PLACE ANY MATERIAL IN ORDER TO CONTROVERT THE A FORESAID FINDINGS OF THE LD. CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIE W IN THE MATTER. IN THE ABSENCE OF ANY BASIS, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A).THEREFORE, GROUND NO.2 IN THE APPEAL IS DISM ISSED. 10. GROUND NO.3 IN THE APPEAL RELATES TO REDUCT ION OF ADDITION BY RS. 60,000/- ON ACCOUNT OF AGRICULTURAL INCOME. THE AO FOUND THA T THE ASSESSEE HAD DECLARED AGRICULTURE INCOME OF RS.98,980/-.TO A QUERY BY THE AO, THE ASSESSEE FILED SALE BILLS OF AGRICULTURAL PRODUCE, FORM NO.7/12 AND 8A. SINCE THE ASSESSEE WAS NOT THE OWNER OF THE LANDS NOR THE LANDS WERE IRRIGATED WHILE THE SALE BILLS WERE NOT PROPERLY SIGNED. THE AO TREATED AGRICULTURAL INCOME OF RS.98,980/- AS INCOME FROM UNDISCLOSED SOURCES. ITA.1304/AHD/08 A.Y.2002-03. 5 11. ON APPEAL, THE LD. COUNSEL ON BEHALF OF THE ASS ESSEE SUBMITTED THAT IT WAS NOT TRUE THAT THE AGRICULTURAL LAND STOOD ONLY IN T HE NAME OF ICHHABEN BUT FROM THE RECORD, IT WAS CLEAR THAT IT ALSO STOOD IN THE NAME OF THREE BROTHERS AND ONE OF THEM WAS THE ASSESSEE. IT WAS FURTHER STATED THAT T HE ASSESSEE HAD APPROXIMATELY 5 BIGHAS OF AGRICULTURAL LAND AND PER BIGHA AGRICULTURE PRODUCE WAS ABOUT RS.20,000 TO RS.50,000/-. IN THE LIGHT OF THESE SUBMISSIONS, THE LD. C.I.T.(A) CONCLUDED AS UNDER :- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE LD. COUNSEL FOR THE APPELLANT. IN VIEW OF THE F ACTS THAT THE APPELLANT WAS HOLDING APPROXIMATELY 5 BIGHAS OF AGRICULTURAL LAND ONLY, THEREFORE, THE LD. COUNSELS CONTENTION THAT INCOME FROM SUCH LAND WAS EARNED RANGING FROM RS.20,000/- TO RS.25,000/- PER BIGHA APPEARS N OT TO BE ACCEPTABLE. CULTIVATION IN LAND ALSO REQUIRES EXPENSES TO BE MA DE TO OBTAIN THE AGRICULTURE PRODUCE AND IT IS SUBSTANTIAL AND DEPEN DS ON CROPS GROWN. SINCE NOTHING IN HIS SPECIFIC TERMS HAS BEEN CLARIF IED BY THIS REGARD, ADOPTING THE PRACTICAL NORMS OF AGRICULTURAL PRODUC E IN INDIA, I HOLD THE INCOME FROM CULTIVATION IN THE CASE OF THE APPELLAN T RS.12,000/- PER BIGHA. THUS, AGRICULTURAL INCOME OF THE APPELLANT DURING T HE YEAR COMES TO RS.60,000/-. THEREFORE, TO THE EXTENT OF RS.60,000/ - THE AGRICULTURE INCOME IS ACCEPTED AND THE BALANCE OF RS.38,980/- IS TREAT ED AS INCOME FROM UNDISCLOSED SOURCES. THIS GROUND OF APPEAL IS PARTL Y ALLOWED. 12. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINS T THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR MERELY RELIED UPON THE O RDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A). 13. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE. WE FIND THAT THE ASSESSEE PRODUCED BEFORE THE AO 7/ 12 & 8A EXTRACTS ,WHICH DID NOT RELATE TO THE YEAR UNDER CONSIDERATION. THE AO FOUND THAT LAND WAS NOT IRRIGATED NOR THE ASSESSE SUBMITTED ANY EVIDENCE OF AGRICULTURAL OPERATIONS ON THE SAID LAND. EVEN NO SUCH AGRICULTURAL INCOME WAS CLAIMED IN THE PAST. THE LD. CIT(A) WITHOUT RECORDING HIS FINDINGS ON THESE ASPE CTS, MERELY REDUCED THE ADDITION ON ESTIMATES. APPARENTLY, THE IMPUGNED ORD ER IS NOT SPEAKING NOR THE LD. CIT(A) RECORDED HIS SPECIFIC FINDINGS ON THE FACTS FOUND BY THE AO. IN THESE CIRCUMSTANCES, IN THE INTEREST OF JUSTICE, WE CONSI DER IT FAIR AND APPROPRIATE ITA.1304/AHD/08 A.Y.2002-03. 6 TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTOR E THE MATTER TO HIS FILE FOR DECIDING THE ISSUES, RAISED IN THIS GROUND IN AC CORDANCE WITH LAW, IN THE LIGHT OF OUR AFORESAID OBSERVATIONS AND OF COURSE AFTER ALLO WING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. INTER ALIA, THE LD. CIT(A) SHALL RECORD HIS SPECIFIC FINDINGS AS TO WHETHER OR NOT THE LAND WAS OWNED BY THE ASSESSEE AND WHETHER ANY AGRICULTURAL OPERATIONS WERE INDEED CARRIED ON THE SAID LAND BY THE ASSESSEE AND THE SOURCE OF EXPENDITURE ON SUCH OPERATIONS, INCLU DING IRRIGATION AND THE NATURE OF PRODUCE AS ALSO TO WHOM SUCH PRODUCE WAS SOLD IN THE MARKET. THE LD. CIT(A) IS FREE TO UNDERTAKE ANY INDEPENDENT ENQUIRES, IF FOUND NECESSARY AND THEREAFTER, MAY PASS SUCH ORDERS AS HE DEEMS PROPER , IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE IN THE PROCEEDINGS BEFORE THE LD. CIT(A) SO THAT MATTER IS EXPEDITIOUSLY DISPOSED OF . WITH THESE OBSERVATIONS, GROUND NO. 3 IN THE APPEAL IS DISPOSED OF. 14. GROUND NO. 4 IN THE APPEAL RELATES TO ADD ITION OF RS.4,20,630/- WHILE GROUND NO.5 RELATES TO ADDITION OF RS. 3,57,024/- U /S 68 OF THE ACT . ON PERUSAL OF THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE AO NOTICE D THE FOLLOWING SQUARED UP ACCOUNTS DURING THE YEAR:- 1. BHAKTIBHAI P. PATEL. RS. 1,86,000/- 2. GOVINDBHAI B. PATEL. RS. 53,800/- 3. ARVIND K. PATEL. RS. 40,000/- 4. JAGDISH K. PATEL. RS. 40,500/- 5. SHAILESH M. PATEL. RS. 38,850/- 6. KANUBHAI K. PATEL. RS. 38,280/- 7. JAYANTIBHAI R. PATEL. RS. 23,400/- ----------------- TOTAL RS.4,20,630/- ========== 14.1 TO A QUERY BY THE AO , THE ASSESSEE SUBMITT ED THAT THESE DEPOSITS WERE NOT ACCEPTED DURING THE YEAR AND HAVE BEEN SHOWN I N THE ACCOUNT OF UNDISCLOSED INCOME DECLARED BEFORE THE SETTLEMENT COMMISSION. HOWEVER, ON PERUSAL OF RECORDS OF THE ASSESSEE FOR THE EARLIER YEARS, THE AO FOUND THAT THESE DEPOSITS WERE NOT ACCOUNTED FOR IN THE EARLIER YEAR S. SINCE THESE AMOUNTS HAD ITA.1304/AHD/08 A.Y.2002-03. 7 BEEN BROUGHT IN THE BOOKS IN THE YEAR UNDER CONSIDE RATION AND WERE SQUARED UP WHILE THE ASSESSEE DID NOT ESTABLISH CREDITWORTHINE SS OF THE DEPOSITORS OR GENUINENESS OF THE TRANSACTIONS, THE AO ADDED THESE AMOUNTS U/S 68 OF THE ACT. 15. LIKEWISE, THE GROUND NO.5 RELATES TO THE ADDIT ION OF RS.3,57,024/- AS CASH CREDIT U/S. 68 OF THE ACT. THE ASSESSING OFFICER IN HIS ORDER STATED THAT ASSESSEE HAD INTRODUCED HIS OWN MONEY IN THE NAME OF FOLLOWI NG PERSONS :- 1) BALDEVBHAI MAGANDAS PATEL. RS. 53,800/- 2) GOVINDBHAI BHIKHABHAI PATEL RS. 50,000/- 3) PRABHUDAS VITHALDAS PATEL. RS.1,00,000/- 4) SAMUBEN BHIKHABHAI PATEL. RS. 50,000/- 5) JASMINEKUMARI PATEL. RS. 1,03,224/- ------------------ TOTAL. RS. 3,57,024/- TO A QUERY BY THE AO, THE ASSESSEE SUBMITTED THAT AMOUNT OF RS.53,800/- WAS OLD BALANCE AND HAD BEEN SHOWN AS UNDISCLOSED INCOM E BEFORE THE SETTLEMENT COMMISSION. REGARDING AMOUNT IN THE NAME OF SHRI GO VINDBHAI BHIKABHAI , THE ASSESSEE PLEADED THAT THE AMOUNT WAS OLD BALANCE IN HIS FATHERS NAME AND HAS NOW BEEN TRANSFERRED IN HIS NAME. SMT. SAMUBEN BHIK ABHAI PATEL SUBMITTED VIDE LETTER DATED 10.3.2005 THAT AMOUNT OF RS. 50,000/- WAS DEPOSITED BY HER LATE HUSBAND OUT OF AGRICULTURAL SAVINGS. FOR THE AMO UNT IN THE NAME OF SHRI PRABHUDAS VITHALDAS PATEL, THE ASSESSEE FILED A COP Y OF ACCOUNT FROM HIS BOOKS SIGNED BY HIS POWER OF ATTORNEY HOLDER. AS REGARDS AMOUNT OF RS. 1,03,224/-, THE ASSESSEE ARGUED THAT AMOUNT OF 2200 US DOLLARS HAD BEEN RECEIVED FROM HER NRI DAUGHTER IN USA. THE SAID AMOUNT HAD BEEN OFFER ED AS UNDISCLOSED INCOME BEFORE THE SETTLEMENT COMMISSION. HOWEVER, THE AO DID NOT ACCEPT THESE SUBMISSIONS AND ADDED THE AMOUNT OF RS.3,57,024/- AS UNEXPLAINED CASH CREDIT. 16. ON APPEAL, THE LD. CIT(A) FOUND THAT ALL THE DEPOSITS EXCEPT RS.1,00,000/- FROM SHRI BHAKTIBHAI P PATEL OUT OF RS. 4,20,630/- WERE OLD AND HAD BEEN DECLARED AS UNDISCLOSED INCOME BEFORE THE SETTLEME NT COMMISSION. ACCORDINGLY, THE LD. CIT(A) DELETED THE ADDITION. F OR THE DEPOSIT OF RS.1,00,000/- ITA.1304/AHD/08 A.Y.2002-03. 8 RECEIVED BY THE ASSESSEE DURING THE YEAR, THE LD. CIT(A) FOUND THAT A CONFIRMATION TO THAT EFFECT HAD BEEN FILED BEFORE T HE A.O AND THE DEPOSITOR WAS ASSESSED TO TAX. COPY OF THE RETURN OF THE DEPOSIT OR WAS ALSO FILED BEFORE THE A.O. THEREFORE, THE LD. CIT(A) ACCEPTED THIS DEPOSI T OF 1,00,000/- RECEIVED FROM BHAKTIBHAI P. PATEL AS EXPLAINED CASH CREDIT. 16.1 IN RESPECT OF ADDITION OF RS. 3,57,024, THE LD. CIT(A) FOUND THAT THE AMOUNT OF RS.53,800/- IN RESPECT OF SHRI BALDEV M. PATEL WAS OLD BALANCE RECEIVED IN THE YEAR 1997-98 AND WAS REFLECTED IN A CCOUNTS OF UNDISCLOSED INCOME DECLARED BEFORE THE SETTLEMENT COMMISSION. A CCORDINGLY, THE LD. CIT(A) DELETED THE ADDITION. AS REGARDS THE ADDITION OF RS.50,000/- OF GOVINDBHAI B. PATEL , RS.1,00,000/ IN THE NAME OF PRABHUDAS V. PATEL,L AND RS.50,000/- IN THE NAME OF SAMUBEN P. PATEL, THE LD. CIT(A) DELETE D THE ADDITIONS ON THE STRENGTH OF THEIR CONFIRMATION LETTERS, EXPLAINING THE SOURCE OF INCOME BY WAY OF CHEQUE, 7/12 UTTARO ETC. AND BEING ASSESSED TO TAX . LIKEWISE FOR THE AMOUNT OF RS.1,03,214/- IN THE NAME OF JASMINEKUMARI PATEL, D AUGHTER OF THE ASSESSEE, THE LD. CIT(A) DELETED THE ADDITION ON THE BASIS OF HER CONFIRMATION LETTER AND XEROX COPY OF CHEQUE. 17. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR MERELY RELIED UPON THE O RDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A). 18. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE. UNDISPUTEDLY, OUT OF THE AFORESAID AMOUNT OF RS. 4,20,630/-, ALL THE DEPOSITS EXCEPT RS.1,00,000/- AND OUT OF DEPOSITS OF RS.3, 57,024/-, AN AMOUNT OF RS. 53,800/- IN THE NAME OF BALDEVBHAI MANGALDAS PATEL, WERE OLD AND HAD BEEN DECLARED AS UNDISCLOSED INCOME BEFORE THE SETTLEME NT COMMISSION. IN THESE CIRCUMSTANCES, WE UPHOLD THE FINDINGS OF THE LD. CI T(A) SO FAR AS THESE ADDITIONS ARE CONCERNED. ITA.1304/AHD/08 A.Y.2002-03. 9 18.1 THE OTHER ADDITIONS NAMELY RS. 1 LAC IN THE NAME OF SHRI BHAKTIBHAI P PATEL AND RS. 50,000/- IN THE NAME OF SHRI GOVIN DBHAI BHIKHABHAI PATEL ,RS. 1 LAC IN THE NAME OF SHRI PRABHUDAS VITHALDAS PATEL, RS.50,000/- IN THE NAME OF SMT.SAMUBEN BHIKHABHAI PATEL AND RS.1,03,224/- IN T HE NAME OF JASMINEKUMARI PATEL, THE LD. CIT(A) DELETED THESE ADDITIONS MEREL Y ON THE STRENGTH OF THEIR CONFIRMATIONS, WITHOUT RECORDING HIS SPECIFIC FINDI NGS AS TO HOW CREDITWORTHINESS OF THESE DEPOSITORS OR GENUINENESS OF THE TRANSACTI ONS WAS ESTABLISHED.MOREOVER, THE ASSESSEE IS STATED TO HAV E ADMITTED BEFORE THE SETTLEMENT COMMISSION THAT ALL THE NRI GIFTS WERE BOGUS AND HAD BEEN OFFERED AS INCOME FROM UNDISCLOSED SOURCES. IN THESE CIRCUM STANCES, IN THE INTEREST OF JUSTICE& FAIR PLAY , WE CONSIDER IT FAIR AND APP ROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FIL E FOR DECIDING THE ISSUES RAISED IN THESE TWO GROUNDS IN RESPECT OF DEPOSITS (OTHER TH AN THOSE WHICH HAD BEEN ALREADY BEEN DECLARED AS UNDISCLOSED INCOME BEFORE THE SETTLEMENT COMMISSION) ASSESSED BY THE AO U/S 68 OF THE ACT ,I N ACCORDANCE WITH LAW, IN THE LIGHT OF OUR AFORESAID OBSERVATIONS AND OF COU RSE AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. INTER ALIA, THE LD . CIT(A) SHALL RECORD HIS SPECIFIC FINDINGS AS TO WHETHER OR NOT THE CREDITWORTHINESS OF THE AFORESAID DEPOSITORS AND GENUINENESS OF THE TRANSACTIONS IS ESTABLISHED. TH E LD. CIT(A) IS FREE TO UNDERTAKE ANY INDEPENDENT ENQUIRES, IF FOUND NECES SARY AND THEREAFTER, MAY PASS SUCH ORDERS AS HE DEEMS PROPER, IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE IN THE PROCEEDINGS BEFO RE THE LD. CIT(A).WITH THESE OBSERVATIONS GROUND NO.4 & 5 ARE DISPOSED OF. 19. GROUND NO. 6 IN THE APPEAL RELATES TO THE ADDIT ION OF RS.2,01,524/- IN RESPECT OF BALANCE IN THE NAME OF JASMINE FINANCE, A PROPRIETORY CONCERN OF SHRI GANDALAL M PATEL,HUF. THE AO DOUBTED THE EXIST ENCE OF HUF AS ALSO FUNDS HELD IN THE NAME OF HUF AND ACCORDINGLY, ADDE D THE AMOUNT IN THE HANDS OF THE ASSESSEE. ITA.1304/AHD/08 A.Y.2002-03. 10 20. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION ON THE BASIS OF ORDER DATED 30.3.2006 OF THE SETTLEMENT COMMISSION, WHERE IN NA ME OF HUF DOES NOT APPEAR AT ALL. 21. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR MERELY RELIED UPON THE O RDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A). 22. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE. WE FIND THAT THE LD. C.I.T.(A) IN HIS ORDER HAS QUOTE D THE FOLLOWING ORDER OF SETTLEMENT COMMISSION WHILE DELETING THE ADDITION: THE SECOND ISSUE ON WHICH WE ARE REQUIRED TO GIVE OUR DECISION IS WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASES, THE THREE APPLICANTS NAMELY SMT. GOMTIBEN PATEL, SHRI AMRUTLAL PATEL AND SHRI KANTIL AL PATEL CAN BE SAID TO BE BENAMIDARS OF THE FIRST APPLICANT SHRI GANDALAL P ATEL. AFTER CONSIDERATION OF ALL THE RELEVANT FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT SMT. GOMTIBEN PATEL, SHRI AMRUTLAL PATEL AND SHRI KANTILAL PATEL CAN NOT BE CONSIDERED AS BENAMIDARS OF SHRI GM PATEL . APPARENTLY, NOWHERE NAME OF GANDALAL M PATEL,HUF AP PEARS IN THE AFORESAID ORDER. THUS, THE LD. CIT(A) WAS NOT JUSTIFIED IN DE LETING THE ADDITION WITHOUT APPRECIATING THE CONCLUSIONS OF THE SETTLEMENT COM MISSION ESPECIALLY WHEN THE AO FOUND THAT THE ASSESSEE HIMSELF OFFERED RS. 1,6 5,000/- AS BOGUS GIFT RECEIVED BY HUF BEFORE THE SETTLEMENT COMMISSION. I N THESE CIRCUMSTANCES, IN THE INTEREST OF JUSTICE AND TO APPRECIATE THE FACTS IN PROPER PERSPECTIVE, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR DECID ING THE ISSUE RAISED IN THIS GROUND IN ACCORDANCE WITH LAW, IN THE LIGHT OF OU R AFORESAID OBSERVATIONS AND OF COURSE AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOT H THE PARTIES. INTER ALIA, THE LD. CIT(A) SHALL RECORD HIS SPECIFIC FINDINGS AS TO WHE THER OR NOT M/S JASMINE FINANCE , A PROPRIETORY CONCERN OF THE HUF OF THE A SSESSEE WAS A BENAMIDAR OF THE ASSESSEE . THE LD. CIT(A) IS FREE TO UNDERTAKE ANY INDEPENDENT ENQUIRES, IF FOUND NECESSARY AND THEREAFTER, MAY PASS SUCH ORDER S AS HE DEEMS PROPER, IN ITA.1304/AHD/08 A.Y.2002-03. 11 ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE IN THE PROCEEDINGS BEFORE THE LD. CIT(A). WITH THESE OBSER VATIONS, GROUND NO.6 IS DISPOSED OF. 23. GROUND NOS. 7 & 8 IN THE APPEAL BEING GENERAL IN NATURE, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED . 24.. IN THE RESULT, APPEAL IS PARTLY ALLOWED, BU T FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 23- 7 -2010 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 23 -07-2010 COPY OF THE ORDER FORWARDED TO: 1. SHRI. GANDAMAL M. PATEL,25-B GULAB PARK SOCIETY, OPP.GULAB TOWER, SOLA ROAD,AHMEDABAD 2. INCOME TAX OFFICER,WARD 6(2),1 ST FLOOR, C.U. SHAH BUILDING, ASHRAM ROAD,AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XII, AHMEDABAD 5. DR, ITAT,C BENCH, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD