The ACIT, Circle-5, Ahmedabad V. Late Shri Rambhai C. Patel, Ahmedabad

ITA 1464/AHD/2006

• Counselvise Citation: 146420514 RSA 2006
• Duration Of Justice: 6 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-06-2012
• Assessment Year: 1993-1994
• Appeal Filed On: 05-06-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K S PANDYACIT
• Keywords: Unexplained investment; Cost of acquisition; Valuation report; Competent authority; Retraction
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NOS. 1464, 1465 AND 1536/AHD/2006 ASSESSMENT YEARS: 1993-94, 1994-95 AND 1993-94, RESPECTIVELY. THE A. C. I. T., CIRCLE-5, AHMEDABAD HASMUKHBHAI R. PATEL & PRAVINBHAI R. PATEL, RAMBAUG BUNGLAW, THALTEJ-SHILAJ RD., THALTEJ, AHMEDABAD VS VS HASMUKHBHAI R. PATEL & PRAVINBHAI R. PATEL, RAMBAUG BUNGLAW, THALTEJ-SHILAJ RD., THALTEJ, AHMEDABAD THE A. C. I. T., CIRCLE-5, AHMEDABAD PAN NO. AA MPP3671J (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI B.K.S. PANDYA,CIT DR /BY ASSESSEE NONE /DATE OF HEARING 14.06.2012 /DATE OF PRONOUNCEMENT 06.07.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER OUT OF THESE THREE APPEALS, TWO CROSS APPEALS, THE REVENUES APPEAL IN ITA NO.1464/AHD/2006 AND THE ASSESSEES APPEAL I N ITA ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 2 NO.1536/AHD/2006, BOTH FOR ASSESSMENT YEAR 1993-94 ARE ARISING OUT OF THE ORDER OF THE LEARNED CIT(A)-XI, AHMEDABAD DATED 27-03-2006 IN APPEAL NO. CIT(A)-XI/CC.2(1)/100/04-05 AND THE REVE NUES APPEAL IN ITA NO. 1465/AHD/2006 FOR ASSESSMENT YEAR 1994-95 IS AR ISING OUT OF THE ORDER OF THE LEARNED CIT(A)-XI, AHMEDABAD DATED 27-03-200 6 IN APPEAL NO. CIT(A)-XI/CC.2(1)101/04-05. ALL THESE APPEALS WERE HEARD TOGETHER AND THEY ARE BEING DISPOSED BY THIS COMMON ORDER FOR TH E SAKE OF CONVENIENCE AS UNDER: ITA NO.1464 AND 1465/AHD/2006 (REVENUES APPEAL FOR A. Y.: 1993-94 AND 1994-95) 2. THE REVENUE HAS RAISED SIMILAR ISSUES IN BOTH TH E ASSESSMENT YEARS AGAINST DELETION OF ADDITIONS OF RS.12,26,132/- AND RS.11,55,287/- MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN FACTORY BUI LDING IN A.Y. 1993-94 AND A.Y. 1994-95 RESPECTIVELY U/S 69 OF THE IT ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SEARCH IN THE GROUP CASES OF RAMDEV MASALA ON 03-03-1993 IN THE RESIDEN TIAL PREMISES AS WELL AS BUSINESS PREMISES OF THE ASSESSEE. THE ASSE SSMENT FOR AY 1993- 094 WAS COMPLETED U/S 143 (3) OF THE ACT. THE ASSES SEE IS OWNER OF SOLA FACTORY PREMISES IN WHICH MANUFACTURING ACTIVITY OF RAMDEV FOOD PRODUCTS PVT. LTD. AND RAMDEV MASALA WAS CARRIED OU T. THE CONSTRUCTION WORK OF THE FACTORY WAS CARRIED OUT FOR THE PERIOD OF MORE THAN FOUR YEARS. HOWEVER, MAJOR PART OF IT WAS COMPLETED IN PREVIOUS YEAR AND ALSO IN THE ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 3 FINANCIAL YEAR 1993-94. THE FACTORY PREMISES WAS RE FERRED TO DVO BY THE ADIT (INV. II AND III). THE DVO ESTIMATED THE COST OF CONSTRUCTION OF THE PROPERTY AT RS.81,31,106/- DURING THE PERIOD APRIL, 1992 TO MARCH, 1993. SINCE, THERE WAS VAST DIFFERENCE BETWEEN THE ESTIMA TED COST OF CONSTRUCTION AS PER VALUATION REPORT AND THE INVEST MENT IN CONSTRUCTION OF THE FACTORY AS PER THE BOOKS OF THE ASSESSEE; THE A SSESSEE WAS GIVEN OPPORTUNITY TO EXPLAIN THE DIFFERENCE. THE ASSESSEE CHALLENGED THE VALUATION MADE BY THE DVO ON VARIOUS COUNTS BEFORE THE AO. THE ASSESSEE HAS TAKEN THE VALUATION REPORT FROM THE GO VERNMENT REGISTERED VALUER SHRI M. C. DALAL AND SHRI D. A. DESAI WHICH WAS SUBMITTED BEFORE THE DVO AT THE TIME OF VALUATION OF THE PROPERTY. T HUS, SAME REPLY WAS GIVEN TO THE AO AT THE TIME OF ASSESSMENT PROCEEDIN GS. THE AO AFTER CONSIDERING THE REPLY OF THE ASSESSEE MADE AN ADDIT ION OF RS.12,26,132/- ON THE BASIS OF DETAILED DISCUSSIONS ON PAGES 31 TO 39 OF THE ASSESSMENT ORDER AS UNACCOUNTED INVESTMENT IN AY 1993-94 AND R S.11,55,287/- IN AY 1994-95. 3. BEING AGGRIEVED BY THE ORDER THE AO, THE ASSESSE E FILED FIRST APPEAL BEFORE THE CIT(A)-XI, AHMEDABAD FOR BOTH THE ASSESS MENT YEARS ON THIS ISSUE. THE LD. CIT(A) AFTER DETAILED DISCUSSIONS MA DE ON PAGES 14 TO 18 FOR AY 1993-094 DELETED THE ADDITION BY CONCLUDING IN PARA 12. 1, 13 AND 31.1 AS UNDER: ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 4 12.1 IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CA SE AND ALSO RELYING UPON THE ABOVE DECISIONS, IT IS SUBMITTED B Y THE A. R. THAT THE IMPUGNED ADDITION OF RS.12,26,132/- ON ACCOUNT OF U NACCOUNTED INVESTMENT IN FACTORY BUILDING IS NOT JUSTIFIED AND PLEADED TO DELETE THE SAME. 13. I HAVE PERUSED THE SUBMISSIONS OF THE A. R. OF THE APPELLANT CAREFULLY AND ALSO GONE THROUGH THE DECIS IONS, REFERRED AS ABOVE, RELIED UPON BY THE A. R. AND THE OBSERVATION S OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 13.1 HAVING CONSIDERED THE SUBMISSIONS OF THE A. R . AND ALSO RELYING UPON THE DECISION OF HONBLE SUPREME C OURT, THE ADDITION MADE BY THE A. O. IS DELETED. THUS THE APP ELLANT GETS RELIEF OF RS.12,26,132/-. WITH THE SIMILAR FINDINGS, THE LEARNED CIT(A) HAD A LSO DELETED THE ADDITION OF RS.11,55,287/- MADE BY THE AO ON THIS ISSUE IN A Y 1994-95. 4. NOW THE REVENUE IS IN APPEAL BEFORE US AGAINST T HE ABOVE FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR VEHEMENTLY ARGUE D THAT THE MATTER WAS REFERRED TO THE VALUATION CELL AND THE OBJECTIO NS RAISED BY THE ASSESSEE HAD BEEN CONSIDERED BY THE DVO AS WELL AS BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, HE REQUESTED TO CONFIRM THE ADDITIONS MADE BY THE AO IN BOTH THE ASSESSMENT YEARS. FROM ASSESSEES SIDE NONE APPEARED DESPITE SERVICE OF NO TICE OF HEARING THROUGH THE DEPARTMENT. SERVICE REPORT IS ON RECORD . SINCE, THE MATTER IS PENDING FOR LONG; THEREFORE, THIS CASE IS DECIDED O N THE BASIS OF THE MATERIALS AVAILABLE ON RECORD. IT IS FOUND FROM THE ASSESSMENT ORDER AS WELL AS FROM THE ORDER OF THE LEARNED CIT(A) THAT THE AS SESSEE POINTED OUT VARIOUS DEFECTS IN THE DVOS REPORT. THE AO HAD TAK EN DIFFERENT VIEW FOR ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 5 AY 1993-94 ON SAME IDENTICAL SET OF CIRCUMSTANCES. THE ASSESSEE PRODUCED TWO VALUATION REPORTS FROM GOVERNMENT APPR OVED VALUER AND ONE FROM INSURANCE COMPANY AND THE OTHER WAS FROM I NDEPENDENT VALUER FOR DETERMINING THE FAIR COST OF ACQUISITION. THE VALUE DETERMINED BY THE GOVERNMENT APPROVED VALUER WAS QUITE LOW AS COMPARE D TO THAT OF THE DVO. THE LEARNED AO HAD NOT REFERRED THE VALUATION MADE BY BOTH THE GOVERNMENT APPROVED VALUER EITHER TO THE DVO OR HAD NOT CONSIDERED IN ASSESSMENT ORDER. EVEN, HE HAD NOT DISAPPROVED THE SAME. THE AO WAS NOT TECHNICAL PERSON; THEREFORE, BOTH THE VALUATION REPORTS SHOULD HAVE BEEN REFERRED TO THE DVO TO DETERMINE THE CORRECT C OST OF ACQUISITION OF THE FACTORY. AS DISCUSSED ABOVE, THERE WAS A SEARCH. DU RING THE SEARCH PROCEEDINGS NO INCRIMINATING DOCUMENT WAS FOUND REL ATING TO THE COST OF CONSTRUCTION OF THE FACTORY. NO INVESTIGATION WAS M ADE BY THE AO ON THIS ASPECT TO BRING ON RECORD ANY INCRIMINATING EVIDENC ES. THE LEARNED AO BLINDLY ACCEPTED THE VALUATION REPORT OF THE DVO. T HE ASSESSEE HAD COMPLETE BOOKS OF ACCOUNT FOR COST OF CONSTRUCTION WHICH WAS PRODUCED BEFORE THE AO ALONG WITH DULY SUPPORTED BILLS AND V OUCHERS. THESE BILLS AND VOUCHERS WERE SEIZED DURING THE COURSE OF SEARC H. THE AO HAD NOT REJECTED THE BOOKS OF ACCOUNT. HE FURTHER ARGUED BE FORE THE AO THAT SECTION 69B OF THE ACT DEALS WITH ACTUAL INVESTMENT AND NOT WITH ESTIMATED INVESTMENT WHICH ALSO DOES NOT ALLOW BIFURCATION OF EXPENSES IN DIFFERENT YEARS. THE ASSESSEE ALSO RELIED UPON VARIOUS CASE L AWS PARTICULARLY IN THE ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 6 CASE OF SMT. AMIYA BALA PAUL VS CIT, 262 ITR 407 (S C) WHEREIN THE HONBLE SUPREME COURT HELD AS UNDER: IT IS NOT OPEN TO VALUATION OFFICER TO ACT IN HIS CAPACITY AS A VALUATION OFFICER OTHERWISE THAN IN DISCHARGE OF TH IS STATUTORY FUNCTION. HE CANNOT BE CALLED UPON NOR WOULD HE HAV E THE JURISDICTION TO GIVE A REPORT TO THE ASSESSING OFFI CER UNDER THE INCOME-TAX ACT EXCEPT WHEN A REFERENCE IS MADE UNDE R AND IN TERMS OF SECTION 55A OR TO A COMPETENT AUTHORITY UNDER SE CTION 269L. WE ARE, THEREFORE, OF THE VIEW THAT THE HIGH COURT INCORRECTLY ANSWERED THE QUESTION REFERRED TO IT IN THE AFFIRMA TIVE. THE TRIBUNAL HA NOT ERRED IN HOLDING THAT THE ASSESSING OFFICER CANNOT REFER THE MATTER TO THE VALUATION OFFICER FOR ESTIMATING THE COST OF CONSTRUCTION OF THE HOUSE PROPERTY. THE ASSESSEE ALSO RELIED UPON NUMBER OF CASES WHICH HAVE BEEN CONSIDERED BY THE LEARNED CIT(A) AND CLAIMED THAT T HE ADDITIONS ARE NOT WARRANTED AND THE ORDER OF THE LEARNED CIT(A) IS RE QUIRED TO BE CONFIRMED IN BOTH THE YEARS. 5. WE HAVE PERUSED THE ORDERS OF THE REVENUE IN BOT H THE ASSESSMENT YEARS AND GONE THROUGH VARIOUS CASE LAWS CITED BY T HE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS BEFORE TH E LEARNED CIT(A). AS DISCUSSED ABOVE, THE HONBLE SUPREME COURT IN THE C ASE OF SMT. AMIYA BALA PAUL VS CIT (SUPRA) HELD THAT THE DVO WOULD NO T HAVE JURISDICTION TO GIVE A REPORT TO THE AO UNDER THE INCOME TAX ACT EX CEPT IN TERMS OF SECTION 55A OR TO COMPETENT AUTHORITY U/S 269L OF T HE ACT.. THE AO HAD CONSIDERED THE VALUATION REPORT FOR THE PURPOSE OF DETERMINING THE COST OF ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 7 CONSTRUCTION OF THE FACTORY BUILDING. THEREFORE, W E DO NOT FIND THE ORDER OF CIT(A) PERVERSE. 6. THE FIRST GROUND IN A.Y. 1993-94 IS AGAINST DELE TING THE ADDITION OF RS.7,01,600/- WHICH MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF LAND. THE A.O. OBSERVED THAT DURING TH E COURSE OF SEARCH U/S 132, IT WAS GATHERED THAT ONE PLOT OF LAND ADMEASUR ING 9680 SQ. YD. NO. 319/2 WAS PURCHASED BY THE ASSESSEE FROM SHRI VIJAY KUMAR HATHEESINGH THROUGH REGISTERED SALE DEED DTD. 23.9.1992. THE AC TUAL CONSIDERATION WAS RS.120 PER SQ.YD. AMOUNTING TO RS.11,61,600/-. BUT THE DOCUMENT WAS MADE AT THE RATE OF RS.49.58 PER SQ.YD. AMOUNTING T O RS.4,80,000/-. SHRI VIJAYKUMAR HATHEESINGH HAS CONFIRMED THAT THE ABOVE FACTS AND ACCEPTED THE FACT OF UNACCOUNTED PAYMENT RECEIVED BY HIM TO THE EXTENT OF RS.6,81,600/- FROM HER IN HIS STATEMENT ON OATH DT. 10-11/3/93. THE ABOVE LAND TRANSACTION WAS DONE THROUGH ONE BROKER NAMELY SHRI DAHYABHAI P. PATEL OF SOLA GAM. HE HAD ALSO ACCEPTED THE CONSID ERATION AT RS.11,61,600/- ( @ RS.120 PER SQ. YD.) AND FURTHER ADMITTED THAT HE RECEIVED RS. 20,000/- AS BROKERAGE FROM BOTH THE PA RTIES. THE ASSESSEE HAS SHOWN INVESTMENT ON PLOT OF LAND AT RS.4,80,000 /-. THE A.O. HAD GIVEN REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEI NG HEARD DURING THE COURSE OF ASSESSMENT PROCEEDING AND FINALLY HELD TH AT THE ASSESSEE HAD MADE ON MONEY PAYMENT OF RS.6,81,600/- OVER AND ABO VE THE DOCUMENTED PRICE OF LAND PURCHASED BY HIM FROM SHRI VIJAYKUMAR ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 8 HATHEESINGH WHICH HAS NOT BEEN INCLUDED IN HIS RETU RN OF INCOME. FURTHER, HE HAD ALSO PAID BROKERAGE OF RS.20,000/- IN CASH T O SHRI DAHYABHAI P. PATEL WHICH HAD ALSO NOT BEEN ACCOUNTED FOR BY THE ASSESSEE. THUS, THE ADDITION OF RS. 7,01,600/- WAS MADE IN THE INCOME O F THE ASSESSEE AS UNEXPLAINED INVESTMENT. 7. BEING AGGRIEVED BY THE ORDER OF A.O., THE ASSESS EE FILED FIRST APPEAL BEFORE LD. CIT(A), WHO HAS DISCUSSED THIS ISSUE ON PAGE NOS.8 TO 12 IN HIS ORDER AND DELETED THE ADDITION IN PARAGRAPH NOS. 10 .1 & 10.2, WHICH ARE REPRODUCED AS UNDER: 10.1 AS IT IS SEEN THAT THE STATEMENTS GIVEN BY TH E SELLER AND THE MIDDLEMEN ARE CONTRADICTORY. FURTHER, IT IS SEEN T HAT THE SIMILAR ISSUE WAS ALSO THERE IN APPELLANTS OWN CASE FOR A. Y. 1990-91 WITH REGARD TO OF ANOTHER PIECE OF LAND WHEREIN SIMILAR DISPUTE AROSE. 10.2 IT IS ALSO SEEN THAT HONBLE ITAT HAD HELD THA T THE ADDITION MADE BASED ON MERE STATEMENTS WITHOUT ANY MATERIAL SUPPORT CANNOT BE SUSTAINED. THEREFORE, CONSIDERING THE FAC TS AND CIRCUMSTANCES OF THE CASE, AND ALSO IN THE LIGHT OF ABOVE DISCUSSION, I AM OF THE OPINION THAT THE ADDITION MADE BY THE A .O. CANNOT BE SUSTAINED. ACCORDINGLY, THE ADDITION OF RS.7,01,60 0/- IS DELETED. 8. NOW THE REVENUE IS BEFORE US. LD. D.R. VEHEMENT LY RELIED UPON THE ORDER OF THE A.O. AND REQUESTED TO CONFIRM THE ADDI TION MADE BY THE A.O. WHO HAD GIVEN DETAILED FINDINGS IN ASSESSMENT ORDER . 9. FROM THE SIDE OF ASSESSEE NOBODY WAS APPEARED. THEREFORE, THE CASE IS DECIDED ON THE BASIS OF FACTS AND EVIDENCE AVAILABLE ON FILE. ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 9 10. WE HAVE GONE THROUGH THE ORDER OF THE AUTHORITI ES BELOW AND ARGUMENT MADE BY THE ASSESSEE BEFORE THE A.O. AS WE LL AS CIT(A) WHICH CAN BE CONSIDERED ON THE BASIS OF FACT MENTIONED IN BOTH THE ORDERS. THE ASSESSEE FILED WRITTEN SUBMISSION DURING THE COURSE OF APPEAL PROCEEDING WHICH HAS BEEN REPRODUCED BY THE CIT(A) IN PARAGRAP H NO. 9.1 AND CLAIMED THAT THE ADDITION WAS MADE ON THE BASIS OF STATEMENTS OF TWO PERSONS ONE WAS SELLER, NAMELY, SHRI VIJAYKUMAR HAT HEESINGH AND ANOTHER WAS BROKER, NAMELY, SHRI DAHYABHAI P. PATEL. THE S TATEMENTS WERE MADE UNDER COERCION WHICH WAS ENDORSED BY BOTH THE PERSO NS BY RETRACTING FROM THEIR STATEMENTS DURING THE COURSE OF CROSS EXAMINA TION HELD LATER ON. THE SIMILAR ADDITION WAS MADE IN A.Y. 1990-91 WHICH WAS IDENTICAL ON THE BASIS OF STATEMENT OF SHRI DAHYABHAI P. PATEL, WHICH WAS DELETED BY THE ITAT, SAME IS REPRODUCED FROM THE ORDER OF LD. CIT (A) AT PARAGRAPH NO.2 OF PAGE NO.10:- THE ADDITION MADE MERELY ON THE BASIS OF STATEMEN TS WHICH ALLEGEDLY GIVEN UNDER PRESSURE. THE ASSESSEE FILED SUFFICIENT MATERIAL IN SUPPORT OF RETRACTION.THERE IS NO OTHER MATERIAL ON RECORD BASIS OF WHICH IT CAN BE SAID THAT ON MONEY WAS PAI D IN TRANSACTION. THE ADDITION CONSIDERED ON ACCOUNT OF ON MONEY IN HANDS OF SELLERS HAVE BEEN DELETED BY ITAT. UNDER THE CIRCUM STANCES, WE DO NOT FIND ANY JUSTIFICATION IN SUSTAINING ADDITION O F RS. 7,33,245/- ON ACCOUNT OF ON MONEY,THEREFORE SAME IS DELETED. 11. BY RESPECTFULLY FOLLOWING THE ITAT ORDER ON SIM ILAR ADDITION IN A.Y. 1990-91 AND VERIFIED THE FACTS WHICH ARE SIMILAR TO A.Y. 90-91 AS ADDITION ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 10 WAS MADE ON THE BASIS OF STATEMENTS OF SELLERS AS W ELL AS BROKER IN THE YEAR UNDER CONSIDERATION. THEREFORE, WE DO NOT FIN D THE ORDER OF THE LD. CIT(A) PERVERSE. 12. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ITA NO.1536/AHD/2006 (ASSESSEES APPEAL FOR A. Y.: 1993-94) 13. THE FIRST GROUND OF APPEAL IS AGAINST THE ADDIT ION OF RS.90,000/- U/S 69A ON ACCOUNT OF UNACCOUNTED CASH MADE BY THE A.O. AND CONFIRMED BY THE CIT(A). AS DISCUSSED ABOVE THERE WAS A SEARCH ON 3.3.1993. DURING THE COURSE OF SEARCH TOTAL CASH WAS FOUND RS. 96,29 8/-. OUT OF THIS RS. 90,000/- WAS SEIZED BY THE AUTHORIZED OFFICER AS PE R ANNEXURE-C OF THE PANCHANAMA DATED 3.3.93. THE A.O. HAD GIVEN REASON ABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AT THE TIME OF PASSING ASSESSMENT ORDER AND OBSERVED THAT CASH FOUND AT RESIDENCE OF THE ASSESS EE AT RS. 90,000/- WAS UNEXPLAINED U/S 69A OF THE IT ACT. 13. THE ASSESSEE WAS IN APPEAL BEFORE CIT (A). THE ASSESSEE FILED CASH FLOW STATEMENT BEFORE THE A.O. BUT THE SAME WA S NOT SUPPORTED WITH THE EVIDENCE. THE ASSESSEE COULD NOT MAINTAIN THE PERSONAL BOOK ACCOUNT AND NO PAST HISTORY WAS FOUND TO KEEP HEAVY CASH BA LANCES AT THE ASSESSEE AT RESIDENCE. THEREFORE, HE CONFIRMED THE ADDITION. 14. NOW THE ASSESSEE IS IN APPEAL BEFORE US. AS DI SCUSSED ABOVE, NO ONE HAS APPEARED BEFORE US EVEN PROPER NOTICE HAS B EEN SERVED ON THE ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 11 ASSESSEES LEGAL HEIR. THEREFORE, WE DECIDE THIS I SSUE ON THE BASIS OF REPLY FILED BY THE ASSESSEE BEFORE THE A.O. AS WELL AS CI T(A). THE ASSESSEE SUBMITTED BEFORE THE A.O. DURING THE COURSE OF ASSE SSMENT PROCEEDING THAT THIS CASH WAS FOUND WITHDRAWAL MADE BY HIM AS A DIRECTOR FROM THE COMPANY. THE A.O. AS WELL AS CIT(A) HAS CONSIDERED THE CASH FLOW STATEMENT. THE ASSESSEE HAD NOT ADMITTED ANY PERSO NAL BOOKS ACCOUNT MAINTAINED U/S 132(4) OF THE IT ACT IN QUESTION NO. 13. AS PER BALANCE SHEET SUBMITTED BEFORE THE A.O., THE ASSESSEE HAD S HOWN HARDLY CASH BALANCES. THEREFORE, WE CONFIRM THE ADDITION MADE BY THE A.O. WHICH WAS CONFIRMED BY THE CIT(A) OF RS. 90,000/-. 15. THE SECOND GROUND OF APPEAL IS AGAINST THE ADDI TION OF RS. 30,000/- ON ACCOUNT OF HOUSEHOLD VALUABLES. THE A.O. OBSERV ED THAT DURING THE COURSE OF SEARCH AS PER ANNEXURE-E OF PANCHANAMA DA TED 3.3.93 LIST OF VALUABLE ITEMS FOUND FROM THE POSSESSION OF RAMBHAI C. PATEL. THE ASSESSEE DID NOT SUBMIT ANY EXPLANATION DURING THE COURSE OF ASSESSMENT PROCEEDING. THEREFORE, THE A.O. CONSIDERED THE REP LY SUBMITTED DURING THE PROCEEDING U/S 132(5) OF THE IT ACT. THE DETAILS O F VALUABLES ARE THAT (I) ONIDA COLOUR TV VALUE OF RS.14,000/-, (II) KELVINAT OR FRIDGE OF RS.13,000/- & (III) DINING TABLE WITH 6 CHAIRS OF RS. 3,000/-. THE ASSESSEE HAD NOT ADMITTED THE OWNERSHIP OF THESE VALUABLE ITEMS. HE ONLY CLAIMED THAT THESE WERE PURCHASED BY SHRI CHIRAG A. PATEL FROM O NE SHRI I.K. PATEL ON 25.11.92 FOR RS. 6,500/- IN CASE OF ONIDA TV AND 13 ,000/- FOR KELVINATOR ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 12 FRIDGE BUT NO EVIDENCE AS WELL AS SOURCE OF INVESTM ENT, HAD BEEN EXPLAINED BY THE ASSESSEE. DINING TABLE WITH 6 CHA IRS WAS PURCHASED FROM THE FUND OF M/S RAMDEV FOOD PRODUCTS PVT. LTD. BUT, NO EVIDENCE WAS FURNISHED BEFORE THE A.O. THEREFORE, HE MADE T HE ADDITION OF RS.30,000/- IN THE INCOME OF THE ASSESSEE. AT THE TIME OF APPEAL, LD. CIT(A) ALSO CONFIRMED THE ADDITION AS THE ASSESSEE EVEN DID NOT FILE ANY EVIDENCE THAT THE TV AND FRIDGE WAS PURCHASED BY TH E CHIRAG A. PATEL AND ALSO DINING TABLE HAS BEEN PURCHASED BY M/S. RAMDEV FOOD PRODUCTS PVT. LTD. 16. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE S EARCH WAS CONDUCTED U/S 132(2) AT THE RESIDENCE PREMISES OF T HE ASSESSEE AS PER SECTION 132. IT IS PRIMARY DUTY OF THE ASSESSEE TO EXPLAIN THE SOURCE OF THINGS/VALUABLES FOUND DURING THE COURSE OF SEARCH AT HIS RESIDENCE. HE SIMILARLY RELIED ON VARIOUS CASE LAWS BEFORE CIT(A) WITHOUT HAVING ANY EVIDENCE EITHER IN THE NAME OF CHIRAG A.PATEL OR IN THE NAME OF M/S. RAMDEV FOOD PRODUCTS PVT. LTD. AND ALSO NOT PRODUC ED ANY EVIDENCE BEFORE US. THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A). 17. THE THIRD GROUND OF APPEAL IS AGAINST THE DISAL LOWANCE OF RS. 42,000/- ON ACCOUNT OF INTEREST EXPENDITURE UTILIZE D FOR THE PURPOSE OF EARNING INCOME. THE BRIEF FACT OF THE CASE IS THAT THE ASSESSEE HAD GIVEN INTEREST FREE ADVANCE AMOUNTING TO RS.35,000/- IN F .Y. 1989-90 TO SHRI VISBHAI JIVABHAI. THE ASSESSEE HAD ALSO RECEIVED C ERTAIN DEPOSITS @ ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 13 12% AND INTEREST PAYMENT WAS MADE TO THEM. THE A.O . DISALLOWED THE INTEREST @ 12% I.E. RS. 42,000/- ON DEPOSITS. 18. THE ASSESSEE WAS IN FIRST APPEAL BEFORE LD. CI T(A) WHO HAD CONFIRMED THE ADDITION AT PAGE NO.20 IN PARAGRAPH NO.15.1. T HE ASSESSEE CLAIMED BEFORE THE CIT(A) THAT HE HAD FILED THE DETAILED EV IDENCE BEFORE THE A.O. THERE WAS NO STIPULATION TO CHARGE INTEREST ON INTE REST FREE ADVANCES. THE IMPUGNED DISALLOWANCE WAS CONTRADICT TO THE LAW AND THE FACT OF THE CASE. THE CIT(A)S FINDING IS REPRODUCED AS UNDER:- 15.1 IT IS SEEN THAT THE ARGUMENTS PUT FORTH FROM THE APPELLANT SIDE IN THIS REGARD ARE NOT SUPPORTING, WHY THE ADDITION S MADE BY THE A.O. ARE WRONG. THE A.O. HAS NOTICED INTEREST FREE ADVANCES WHEREAS THE APPELLANT CLAIMS INTEREST EXPENDITURE A T RS.42,000/-. THEREFORE, IN ABSENCE OF DETAILS LIKE INTEREST EXPE NDITURE UTILIZED FOR THE PURPOSE OF EARNING INCOME, THE SAME CANNOT BE A LLOWED. THEREFORE, THE ACTION OF THE ASSESSING OFFICER IS C ONFIRMED. 19. NOW THE ASSESSEE IN APPEAL BEFORE US. THE ADVA NCES GIVEN IN A.Y. 89-90 BY THE ASSESSEE TO SHRI SHRI VISBHAI JIVABHAI AT RS. 35,000/- AND YEAR UNDER CONSIDERATION IS 93-94. IN PAST, IT APP EARS THAT THERE WAS NO DISALLOWANCE UNDER THIS HEAD MADE BY THE A.O. FURT HER, THE A.O. HAS NOT ESTABLISHED THE NEXUS BETWEEN INTEREST FREE ADVANCE S AND INTEREST BEARING LOANS TAKEN. THEREFORE, THE ADDITION OF RS. 42,000 /- IS NOT JUSTIFIED. ACCORDINGLY, THE ADDITION IS DELETED. ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 14 20. THE FOURTH GROUND OF APPEAL IS AGAINST THE ADDI TION OF RS. 18,000/- ON ACCOUNT OF HOUSEHOLD EXPENSES. THE A.O. OBSERVE D IN ASSESSMENT ORDER AT PAGE NO.40 IN PARAGRAPH NO.9 AND IT IS FOU ND THAT THE ASSESSEE HAD NOT WITHDRAWN ANY AMOUNT FOR HOUSEHOLD PURPOSES AND ADDED RS. 18,000/- IN THE INCOME OF THE ASSESSEE. 21. THE ASSESSEE WAS IN FIRST APPEAL BEFORE LD. CIT (A). THE ASSESSEE CHALLENGED THE ADDITION ON GROUND THAT LD. A.O. EST IMATED HOUSEHOLD EXPENSES WITHOUT BRINGING ON RECORD ANY DATA/EVIDEN CE OR MATERIAL AND CLAIMED THAT A.OS. ORDER WAS WHOLLY ARBITRARY AND PLEADED TO BE DELETED. THE CIT(A) HAD CONFIRMED THE ADDITION IN ABSENCE OF ANY EVIDENCE SUBMITTED BEFORE HIM. 22. NOW THE ASSESSEE IS IN APPEAL BEFORE US. DURIN G THE COURSE OF ASSESSMENT PROCEEDING, THE HOUSEHOLD WITHDRAWAL OF THREE SONS WERE ALSO NOT SUBMITTED WITH EVIDENCE BEFORE THE A.O. OR BEFO RE THE LD. CIT(A). IT IS UNDISPUTED THAT HE WAS HAVING INDEPENDENT ESTABLISH MENT FOR RUNNING THE KITCHEN AT HIS HOUSE. THE ASSESSEE HAD NOT WITHDRA WN A SINGLE PENNY FOR HOUSEHOLD PURPOSES. THERE IS NO EVIDENCE PRODUCED BY THE ASSESSEE THAT HE HAD RECEIVED FOOD FROM FACTORY CANTEEN. THEREFO RE, WE CONFIRM THE ADDITION MADE BY THE A.O. WHICH WAS CONFIRMED BY TH E CIT(A). 23. THE RESULTS OF THE APPEALS ARE SUMMARIZED AS UN DER:- IN ITA NOS. 1464 & 1465/AHD/2006, THE REVENUES APP EALS ARE DISMISSED. IN ITA NO. 1536/AHD/2006, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 15 ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. '#$ / APPELLANT 2. &'#$ / RESPONDENT 3. )*)+ ' ', / CONCERNED CIT 4. ' ',- ' / CIT (A) 5. 01'' +, ' ''' +, 34 * / DR, ITAT, AHMEDABAD 6. 167 89 / GUARD FILE. BY ORDER/ , :/3' )' ' ''' +, 34 * < STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 29.06.2012 & 02.07.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 03.07.2012 4) DATE OF CORRECTION ,, ,, 5) DATE OF FURTHER CORRECTION XXX 6) DATE OF INITIAL SIGN BY MEMBERS 06.07.2012 7) ORDER UPLOADED ON ,, ,, 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 06.07.2012 ITA NO.1464, 1465 AND 1536/AHD/2006(AY: 1993-94 AND 1994-95) LATE SHRI RAMBHAI C. PATEL 16