The ACIT, Circle-3, Baroda V. M/s. Ashabhai Shankerbhai Patel & Sons, Tal.Petlad

ITA 2001/AHD/2007

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57078 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-12-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 11-05-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWIJIT RAKSHIT
• Keywords: Business income; Loose papers; Corroborative evidences; Assessment record
• Section: 143(3)

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , .. !', #$ # % BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI B.P.JAIN, ACCOUNTANT MEMBER ./ I.T.A. NO.2001/AHD/2007 ( ' ' ' ' ' ' ' ' / / / / ASSESSMENT YEAR : 2003-04) ASSTT.CIT CIRCLE-3 BARODA ' ' ' ' / VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS MEHLAV TAL: PETLAD ( #$ ./ ) ./ PAN/GIR NO. : AADFA 1360 N ( (* / // / APPELLANT ) .. ( +,(*/ RESPONDENT ) (* - #/ APPELLANT BY : SHRI AWIJIT RAKSHIT SR.D.R. +,(* . - # / RESPONDENT BY : SHRI SURESH THAKKAR, A.R. '/ . 0$/ // / DATE OF HEARING : 29/12/2011 12' . 0$ / DATE OF PRONOUNCEMENT : 31.1.12 #3/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-I, BARODA D ATED 26/02/2007 PASSED FOR A.Y. 2003-04 AND THE GROUNDS RAISED ARE AS FOLLOWS:- 1(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.12,21,689/- MADE IN RESPECT OF 26 FDRS FOUND AT THE ASSESSEES PREMISES AND IN ITS POSSESSION IN THE CO URSE OF SURVEY, WITHOUT APPRECIATING THAT THE CONFIRMATIONS OF THE PERSONS IN WHOSE NAMES THESE FDRS STOOD WERE NEVER ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 2 - FURNISHED BY THE ASSESSEE EITHER IN THE COURSE OF A SSESSMENT PROCEEDINGS OR IN THE COURSE OF REMAND PROCEEDINGS OR IN THE COURSE OF APPELLATE PROCEEDINGS AND HENCE THESE FDRS WERE NEVER OWNED UP BY ANY OTHER PERSON AND THEREFO RE FURNISHING OF ASSESSMENT PARTICULARS OF SOME OF THE PERSONS IN WHOSE NAMES A PART OF THE FDRS STOOD, DID NOT ES TABLISH THE NEXUS OF EVEN THESE FDRS WITH THE SAID PERSONS AND DID NOT DISCHARGE THE ONUS CAST BY SECTION 106 AND 110 OF THE INDIAN EVIDENCE ACT R.W.S. 69A OF THE INCOME-TAX AC T. 1(B) THE LD. CIT(A) FURTHER FAILED TO APPRECIATE T HAT THE FDRS CONSTITUTED VALUABLES AND HENCE THE CASH VALUE OF T HESE FDRS WAS LIABLE TO BE ADDED U/S.69A OF THE ACT IN T HE YEAR IN WHICH THE ASSESSEE WAS FOUND TO BE THE OWNER OF THESE VALUABLES WITHIN THE MEANING OF THIS PROVISION AND NOT IN THE YEAR IN WHICH THESE VALUABLES WERE ACQUIRED. 1(C) WITHOUT PREJUDICE, THE CIT(A) FAILED TO APPREC IATE THAT IN THE LETTER OF THE ASSESSEE DATED 23-12-2005 RELIED UPON BY HIM (PAGE 3 OF HIS ORDER), THE PAN OR ANY OTHER INCOME TAX PARTICULAR IS NOT MENTIONED IN RESPECT OF SIX PERSO NS IN WHOSE NAMES ELEVEN FDRS OF THE CASH VALUE OF RS.4,9 7,374/- STOOD AND THERE WAS NO SUCH LETTER DATED 21-04-2003 AS REFERRED BY THE CIT(A) ON PAGE 9 OF HIS ORDER, WHIC H RENDERED THE AFORESAID AMOUNT OF RS.4,97,374/- AS L IABLE TO ADDITION U/S 69A IN ANY CASE. 2(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE TOWARDS UNEXPLAINED STOCK FOUND IN THE COURSE OF SURVEY AND CLAIMED AS BELONGING TO M/S. AMBICA TRADING CO., ON THE PREMISE THAT THIS PARTY HAD CHANGED ITS ADDRESS FRO M SANHOULA (BHAGALPUR) TO DR. R.P. ROAD, BHAGALPUR BASED ON THE ADDRESS WRITTEN ON A LETTER DATED 11-10-2006 ON PLAIN PAPER SIGNED BY ONE MAHESH KUMAR WITHOUT POINTING O UT THE FACT OF CHANGE IN ADDRESS, WHEREAS THE COMMUNICATIO N ON THE LETTERHEAD OF THIS PARTY DATED 10-03-2003 WAS S IGNED BY SHRI MANOJ KUMAR AND ON-THE-SPOT INQUIRY AT SANHOUL A HAD PROVED THAT THERE WAS NO SUCH PARTY IN EXISTENCE. ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 3 - 2(B) THE LD. CIT(A) FAILED TO APPRECIATE THAT IT WA S AGAINST NORMAL BUSINESS PRACTICE THAT THE GOODS OF THIS PAR TY PURCHASED ON 23-11-2002 WERE LYING WITH THE ASSESSE E ON THE DATE OF SURVEY ON 07-03-2003, WHICH MADE THE ASSESSEES EXPLANATION FALL SHORT OF DISCHARGING IT S ONUS PLACED BY SECTION 106 AND 110 OF THE INDIAN EVIDENC E ACT R.W.S. 69/69C OF THE INCOME-TAX ACT. 3(B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS .68,638/- TOWARDS EXCESS STOCK OF DUST, OF RS.2,65,369/- TOWARDS THE SHORTAGE IN THE STOCK OF KANDI AND RS.4,93,319/- TO WARDS THE SHORTAGE IN THE STOCK OF PASHARI (TOTAL AMOUNTI NG TO RS.8,27,326/-) , MADE ON THE BASIS OF PHYSICAL VERIFICATION AT THE TIME OF SURVEY, WITH THE GENERAL OBSERVATION TH AT THE ASSESSEE, VIDE ITS LETTER DATED 11-03-2003, HAD FIL ED DETAILED WORKING SHEET RECONCILING THE TOTAL STOCK, WITHOUT APPRECIATING THAT THIS WORKING SHEET WAS MERELY AN EXERCISE ON PAPER WITHOUT ANY SUPPORTING EVIDENCE AND WITHOU T CORRELATION WITH THE PHYSICAL STOCK AND DID NOT EXP LAIN THE AFORESAID EXCESS AND SHORTAGE IN THE PHYSICAL STOCK . 4. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR A LTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL THE ORDER OF THE LD.CIT(A) TO THE ABOVE EXTENT MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 2. APROPOS TO GROUND NO.1(A), 1(B) & 1(C), FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S. 143(3) OF THE I.T.ACT DATED 31/03/2006 WERE THAT THE ASSESSEE IS IN THE BUSINESS OF TOBACCO PROCESSING AND TRADING. A SURVEY WAS CONDUCTED ON 7.3.2003 AND AT THAT TIME TWO BUNCHES OF FDRS WERE FOUND RESPECTIVE LY OF RS.12,21,689/- AND RS.20,77,694/- TOTALLING TO RS.3 2,99,383/-. A QUERY WAS RAISED IN RESPECT OF THE SOURCE OF THOSE FIXED DEPOSITS AND IT WAS ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 4 - MENTIONED BY THE AO THAT THOSE FIXED DEPOSITS BELONGED TO FRIENDS AND RELATIVES, CLAIMED TO HAVE BEEN STAYING ABROAD. IT WAS INFORMED TO THE AO THAT THE FDRS WERE PLACED WITH THE ASSESSEE ONLY TO MANAGE THE MONEY. AS PER AO ON ENQUIRY FROM THE BANK THE SAID STATEMENT OF THE ASSESSEE COULD NOT BE CORROBORATED. HE HAS CONCLUD ED THAT; IN THE ABSENCE OF PROOF AND THE IDENTITY OF THE REAL HOLDE RS; THE SAID DEPOSITS WERE THE UNDISCLOSED INCOME OF THE ASSESSEE. THE E NTIRE AMOUNT OF RS.32,99,383/- WAS ACCORDINGLY TAXED. THE MATTER W AS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. AN ELABORATE EXPLANATION WAS FURNISHED TO THE CI T(A) WHO HAS IN TURN CALLED FOR A REMAND REPORT AND THOSE INFORMATI ON WERE SENT FOR REQUISITE CONFIRMATION. LD.CIT(A) HAS CONSIDERED T HE REMAND REPORT AND THE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF FEW CASE LAWS; NAMELY, CIT VS. ROSHANLAL SHETH (1989)178 ITR 660 (P&H) AND CI T VS. LAKSHMAN SWARUP GUPTA & BROS., (1975) 100 ITR 222 (RAJ.) AN D, THEREAFTER, DELETED THE ADDITION AS PER THE FOLLOWING OBSERVATI ONS:- 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS OBSERVED THAT THE ISSUE INVOLVES TWO SETS OF FIXED DEPOSIT RECEIP TS ONE ON THE BASIS OF THE LIST AS PER PAGE-29 OF THE IMPOUNDED D OCUMENTS THAT TOTALED TO RS.20,77,694/- AND THE SECOND RELATING T O THE RELATIVES AND FRIENDS OF ONE OF THE PARTNERS WHO WERE MAINLY STAYING ABROAD. AS REGARDS THE FDRS AS PER PAGE-29 OF THE DOCUMENTS, THE FACTS ARE THAT THIS LIST WAS RECOVERED AT THE T IME OF THE SURVEY BUT NO FDRS WERE RECOVERED. AT THE TIME OF SURVEY, THE STATEMENT OF SHRI VITHALBHAI ASHABHAI PATEL, PARTNER WAS RECO RDED AND WITH REGARD TO THE FDRS ONLY ONE QUESTION NO.16 WAS PUT TO HIM. IN RESPONSE TO THE QUESTION, HE REPLIED WHATEVER FIXE D DEPOSITS ARE FOUND DURING THE COURSE OF SURVEY BELONG TO MY FAMI LY MEMBERS, OUT OF WHICH, SOME OF THEM ARE STAYING OUTSIDE INDI A. I AM ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 5 - MANAGING THEIR FIXED DEPOSITS AND AS SUCH THE ABOVE FDRS ARE FOUND FROM MY OFFICE. SUBSEQUENTLY, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A CONFIRMATION LETTER DATED 31-3-2006 WAS PLACED ON RECORD FROM SMT. KOKILABEN VIKRAMBHAI PATEL AND HER HUSBAND SHRI VIKRAMBHAI MADHAVBHAI PATEL. THEY CONFIRMED THAT THE FDRS BELONGED TO THEM AND THEIR FAMILY MEM BERS AND, THAT THESE HAD BEEN MADE BY THEM FROM THEIR OWN INC OME AND THAT THESE FDRS HAD BEEN RENEWED FROM TIME TO TIME. THE Y HAD BEEN STAYING IN USA AND HAD, THEREFORE, LEFT THE LIST OF THESE FDRS WITH SMT.KOKILABENS BROTHER I.E. SHRI VITHALBHAI A.PATE L FOR MANAGEMENT LIKE RENEWING IT FROM TIME TO TIME AND E NSURING CREDIT OF INTEREST ETC. IT IS FURTHER OBSERVED THAT THEY HAVE RECONFIRMED THIS POSITION AGAIN ON SEPTEMBER 30, 2006 THROUGH A NOTHER LETTER. IT IS PERTINENT TO POINT OUT HERE THAT AT THE TIME OF SURVEY NO SPECIFIC QUESTION WAS ASKED FROM THE PARTNER ABOUT THESE FDRS CONTAINED ON PAGE 29 OF THE IMPOUNDED DOCUMENTS. I T IS ALSO PERTINENT TO NOTE THAT THE ASSESSING OFFICER THROUG H OUT THE ASSESSMENT PROCEEDINGS DID NOT ASK ANY OTHER QUESTI ON FROM THE APPELLANT OR SEEK ANY CLARIFICATION FROM THESE TWO PERSONS. IN OTHER WORDS, THE ASSESSING OFFICER DID NOT RAISE AN Y DOUBT ABOUT THE OWNERSHIP OF THESE FDRS TILL THE END OF THE ASS ESSMENT PROCEEDINGS. IT IS SEEN FROM RECORD THAT IT WAS ON LY ON 30-3-2006 THAT THE ASSESSING OFFICER REQUIRED THE APPELLANT T O EXPLAIN THE LIST OF THESE FDRS. THE APPELLANT IN ITS LETTER DATED 3 1-3-2006 ADDRESSED TO THE ASSESSING OFFICER HAS SPECIFICALLY POINTED OUT THAT THIS PAPER WAS NEVER SHOWN TO US DURING THE COURSE OF PROCEEDINGS TILL LATE 7.30 PM ON 30-3-2006. HOWEVE R, I WAS TOLD TO GIVE EXPLANATION OF THE ABOVE PAPER TOMORROW. W E REGISTERED OUT DISSATISFACTION OF NOT GIVING US COPY OF LOOSE PAPERS FOUND AND IMPOUNDED BY THE SURVEY PARTY EVEN THOUGH WE HAVE R EQUESTED TO SUPPLY PHOTO COPY OF THOSE PAPERS. THIS AMOUNTS TO NOT GIVING PROPER OPPORTUNITY AND TIME TO EXPLAIN OUR STAND ON VARIOUS PAPERS AND ISSUES RAISED ON SUCH PAPERS. THE APPE LLANT FURNISHED THE DETAILS THROUGH THIS LETTER AFTER REC ORDING ITS GRIEVANCE AND DISSATISFACTION IN THE FORM OF TABULA TED INFORMATION SIGNED BY THE SENIOR BRANCH MANAGER, BANK OF BARODA , MEHLAV. THIS INFORMATION WAS SENT TO THE ASSESSING OFFICER ALONG WITH THE APPELLANTS SUBMISSIONS FOR EXAMINATION AND COMMENT S IN THE REMAND REPORT. IT IS OBSERVED FROM THE REMAND REPO RT DATED 16-1- 2007 THAT SMT.KOKILABEN V.PATEL AND SHRI VIKRAMBHAI M.PATEL ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 6 - HAD BEEN SUMMONED BY THE ASSESSING OFFICER ON 10-1- 2007 AND THEIR STATEMENT WAS RECORDED WHEREIN THEY HAVE CATE GORICALLY CONFIRMED THEIR EARLIER EXPLANATION. IT IS FURTHER OBSERVED FROM THE REMAND REPORT THAT THE ASSESSING OFFICER HAS NOT MA DE ANY ADVERSE COMMENTS IN THIS REGARD. THE APPELLANT HAS ARGUED, IN THESE CIRCUMSTANCES THAT THE ASSESSING OFFICER SEEMS TO H AVE ACCEPTED THESE FACTS. IT IS OBSERVED FROM RECORD THAT THE A SSESSING OFFICER HAS ALSO NOT HELD THESE DEPOSITS TO BE BENAMI. IT IS ALSO OBSERVED, IN THESE CIRCUMSTANCES, THAT THE APPELLANT HAS DISC HARGED THE BURDEN OF EXPLAINING THESE FDRS. IT IS ALSO OBSERV ED THAT THE ASSESSING OFFICER HAS FAILED TO BRING ANY MATERIAL ON RECORD TO EVEN REMOTELY SUGGEST THAT THESE FDRS REPRESENTS AP PELLANTS INCOME / INVESTMENT DURING THE YEAR UNDER APPEAL. THE APPELLANTS ARGUMENTS ABOUT THE FAILURE OF THE ASSESSING OFFICE R IN ASSESSING THESE FDRS UNDER ANY PARTICULAR SECTION ASSUMES SIG NIFICANCE IN VIEW OF THE FACT THAT HE DID NOT SEEM TO DOUBT THE GENUINENESS OF THESE FDRS TILL THE LAST DAY OF THE ASSESSMENT PROC EEDINGS. IT IS SEEN FROM RECORD THAT THE ASSESSING OFFICER SUDDENL Y DECIDED TO MAKE THE ADDITION. IN VIEW OF THESE FACTS AND CIRC UMSTANCES, IT IS HELD THAT THE ADDITION MADE BY THE ASSESSING OFFICE R ON ACCOUNT OF THESE FDRS OF RS.20,77,694/- IS WITHOUT ANY BASIS A ND WITHOUT ANY APPLICATION OF MIND. AS A RESULT, THE ADDITION OF RS.20,77,694/- IS DELETED. AS REGARDS THE FDRS AMOUNTING TO RS.12,21,689/-, IT IS OBSERVED FROM THE RECORD THAT THE DETAILS OF THESE FDRS HAD BEEN FURNISHED BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 21-4-2003 GIVING OUT NAMES OF THE PERSONS IN WHOSE NAME THE F DRS EXISTED. IN THE TABULATED INFORMATION FURNISHED, THE NAME OF THE FDR HOLDER, HIS/HER PAN NUMBER, NAME OF THE BANK, FDR N UMBER, AMOUNT, DATE OF DEPOSIT, DATE OF MATURITY AND THE M ATURITY AMOUNT HAD BEEN FURNISHED. THE DATES OF MAKING OF THESE F DRS AND THE AMOUNT HAD ALSO BEEN INDICATED EXPLAINING FURTHER T HAT THE ORIGINAL FDRS HAD BEEN RENEWED FROM TIME TO TIME WI TH INTEREST. IT WAS ALSO EXPLAINED THAT MOST OF THE FDR HOLDERS WERE STAYING ABROAD AND THESE HAD BEEN MANAGED BY SHRI V.A. PATE L AND SHRI JAYANTIBHAI PATEL, THE PARTNERS OF THE APPELLANT FI RM. SUBSEQUENTLY, VIDE LETTER DATED 23-12-2005, COPIES OF DOCUMENTS LIKE THE ACKNOWLEDGEMENTS OF IT RETURNS FILED AND T HE COMPUTATION ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 7 - OF INCOME IN RESPECT OF THE FDR HOLDERS WERE ALSO P LACED ON RECORD. A CONFIRMATION CERTIFICATE FROM THE PARTIC ULAR BANK WITH WHICH THESE FDRS HAD BEEN TAKEN WERE ALSO PLACED ON RECORD. TABULATED INFORMATION FROM THE BRANCH MANAGER OF TH E CONCERNED BANK HAD ALSO BEEN PLACED ON RECORD. THIS HAS BEEN VERIFIED AND CONFIRMED FROM THE ASSESSMENT RECORD. IT IS NOT UN DERSTOOD AS TO WHY AND UNDER WHAT CIRCUMSTANCES THE ASSESSING OFFI CER CHOSE TO MAKE THE ADDITION SINCE THE APPELLANT HAD GIVEN THE NAMES OF THE OWNERS OF THE FDRS, THEIR PAN AND THE PROOF OF FILI NG THEIR IT RETURNS ALONG WITH CERTIFICATE FROM THE BANK AND DE TAILS OF REFERENCE OF THE OLD FDRS REPRESENTING THE SOURCE O F INVESTMENT IN THE FDRS FOUND OUT DURING THE SURVEY. IT IS PERTIN ENT TO POINT OUT THAT IN THE REMAND REPORT ALSO THE ASSESSING OFFICE R HAS NOT MADE ANY REMARK, WHAT TO SAY OF ANY ADVERSE REMARKS. T HE ONLY COMMENTS MADE IN THIS REGARD ARE REGARDING THE RES T OF THE FDRS AMOUNTING TO RS.12,21,689/-, THE ASSESSEE WAS UNABL E TO SUBSTANTIATE ITS CLAIM TO BE CORRECT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, INSPITE OF SUFFICIENT TIME AND OPPORTU NITY BEEN GIVEN BY THE THEN ASSESSING OFFICER. THEREFORE, ASSESSIN G OFFICERS VIEW MAY HOLD AS IT IS. IT IS TO BE NOTED FROM HERE TH AT NO FRESH ENQUIRIES HAVE BEEN MADE. AFTER EXAMINING THE ENTI RE MATERIAL AVAILABLE ON RECORD, THE ASSESSING OFFICER SEEMS TO HAVE ENTERTAINED NO REASON TO DOUBT THE CORRECTNESS AND GENUINENESS OF THE APPELLANTS CLAIM AND HAS, THEREFORE, SIMPLY RE FERRED TO THE PAST PROCEEDINGS. UNDER THE CIRCUMSTANCES, THE APP ELLANTS CONTENTION THAT THE APPELLANT HAS DISCHARGED THE ON US CASE ON IT AND THAT THE ASSESSING OFFICER HAS FAILED TO SHOW T HAT THE DEPOSITS WERE BENAMI, ASSUMES SIGNIFICANCE AND SOUNDS CONVIN CING. IT IS ESTABLISHED THAT THE ASSESSING OFFICER HAS FAILED T O BRING ANY EVIDENCE ON RECORD THAT COULD EVEN REMOTELY DOUBT T HE GENUINENESS OF THE OWNERSHIP OF THESE FDRS. IT IS ALSO NOTED T HAT THE ASSESSING OFFICER HAS FAILED TO MENTION THE PARTICULAR SECTIO N UNDER WHICH HE HAS ASSESSED THESE FDRS AS APPELLANTS INCOME IN TH E YEAR UNDER APPEAL. UNDER THE CIRCUMSTANCES, IT IS HELD THE AP PELLANT HAS DISCHARGED THE ONUS OF EXPLAINING THESE FDRS AMOUNT ING TO RS.12,21,689/- SATISFACTORILY. IT IS ALSO HELD THT THE ASSESSING OFFICER HAS FAILED TO BRING ANY MATERIAL ON RECORD THAT COULD RAISE ANY DOUBT ABOUT THE CORRECTNESS OR GENUINENESS OF T HE APPELLANTS CLAIM. AS A RESULT, THE ADDITION MADE BY THE ASSES SING OFFICER OF RS.12,21,689/- IS DELETED. ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 8 - AS A RESULT, THIS GROUND OF APPEAL IS ACCEPTED AND THE TOTAL ADDITION OF RS.32,99,383/- ON ACCOUNT OF THE FDRS I S DELETED. 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES A ND IN THE LIGHT OF THE EVIDENCES PLACED ON RECORD IN THE COMPILATION F ILED BY THE RESPONDENT-ASSESSEE, WE FIND NO FALLACY IN THE VIEW TAKEN BY THE FIRST APPELLATE AUTHORITY. DURING THE COURSE OF SURVEY, A LIST OF FIXED DEPOSITS WAS FOUND IN POSSESSION OF THE ASSESSEE. AT THAT V ERY TIME, AS PER THE STATEMENT, IT WAS CATEGORICALLY STATED THAT THOSE F DRS BELONGED TO FRIENDS AND RELATIVES WHO WERE CLAIMED TO HAVE BEEN STAYING OUT OF INDIA. IT WAS ALSO INFORMED THAT THE ASSESSEE WAS SIMPLY MANAGING THOSE FDRS. THE ASSESSEE HAS FURNISHED THE LIST OF FDRS ALONG WITH THE NAMES OF THE HOLDERS AND THE BANKS IN WHICH THOSE FDRS WERE MADE . THE ASSESSEE HAS REFERRED THE NAMES, SUCH AS, MS.KOKILABEN PATEL AND MR. V.A. PATEL IN WHOSE NAME THE IMPUGNED TWO FDRS TOTALLING TO RS.20 ,77,694/- WAS STANDING. IN RESPECT OF THE REST OF THE AMOUNT O F RS.12,21,689/- THERE WAS A LIST OF SEVERAL PERSONS; NAMELY, MANGUBHAI CH OTTABHAI PATEL, MS.MADHUBEN MAFATBHAI PATEL, MS. CHANCHALBEN MANGUB HAI PATEL, ETC. CONFIRMATIONS OF THOSE PERSONS WERE PLACED ON RECOR D AND IT WAS STATED THAT THE FDRS BELONGED TO THEM AND THAT THEY ARE ST AYING OUT OF INDIA. WE HAVE NOTICED THAT LD.CIT(A) HAS REFERRED QUESTIO N NO.16 WHICH WAS ASKED FROM ONE OF THE PARTNERS OF THE ASSESSEE AT THE TIME OF SURVEY AND IN REPLY, IT WAS INFORMED THAT THE FDRS BELONGED T O FAMILY MEMBERS OUT OF WHICH SOME OF THEM STATED TO BE STAYING OUTSIDE INDIA. SINCE THE FUNDS OF THOSE RELATIVES ARE MANAGED BY THE ASSESSE E, THEREFORE THE FDRS WERE FOUND IN POSSESSION OF THE ASSESSEE. IT HAS A LSO BEEN NOTED BY THE ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 9 - LD.CIT(A) THAT DURING REMAND PROCEEDINGS SMT.KOKILA BEN V.PATEL AND SHRI VIKRAMBHAI M.PATEL WERE SUMMONED BY THE A.O. AND THE STATEMENT WAS RECORDED. AS PER THE RECORDED STATEMENT, THOSE PERSONS HAVE CATEGORICALLY CONFIRMED THEIR OWNERSHIP ON FDRS. SINCE ON SOME OF THE VITAL POINTS, THE AO REMAINED SILENT IN HIS REMAND REPORT, HENCE THE LD.CIT(A) HAS CONSIDERED THE EXPLANATION AS OFFERED BY THE ASSESSEE. IN RESPECT OF THE OTHER SET OF FDRS OF RS.12,21,689/- DETAILS WERE FURNISHED IN RESPECT OF THE PAN OF THOSE FDR HOLDERS, NAME OF THE BANK, THE ORIGINAL AMOUNT OF DEPOSIT, THE DATE OF MATURITY AN D THE DETAILS OF RENEWAL OF THOSE FDRS. A CLEAR FINDING WAS GIVEN BY LD.CI T(A) THAT THE AO HAD NOT BEEN ABLE TO CONCLUSIVELY PROVE THAT THOSE FDRS WERE IN FACT THE PROPERTY OF THE FIRM. UNDER THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE, WE HEREBY AFFIRM THE FACTUAL AS ALSO LEGAL FINDING OF THE FIRST APPELLATE AUTHORITY AND DISMISS THESE GROUNDS OF THE REVENUE . 5. APROPOS TO GROUND NO.2(A) & 2(B), FACTS WERE TH AT AT THE TIME OF SURVEY EXCESS STOCK OF 1,32,228KGS. OF TOBACCO WAS FOUND. THE APPELLANT HAD EXPLAINED THAT TOBACCO CONSISTING 160 0 BAGS WERE PARTLY LIFTED BY ONE M/S. AMBICA TRADING CO. TO WHOM THE TOBACCO WAS SOLD ON 23.11.2002. IT IS WORTH TO MENTION AT THIS JUNCT URE THAT THE SURVEY WAS CONDUCTED ON 7.3.2003. THE ASSESSEE HAS FURTHER EX PLAINED THAT OUT OF THE SAID SALE OF TOBACCO THE SAID PARTY WAS YET TO LIFT THE BALANCE 1087 BAGS OF TOBACCO WEIGHING 22,887KGS. THE ALLEGATION OF THE AO WAS THAT A SUMMON WAS ISSUED TO THE SAID PARTY U/S.131 OF THE ACT, HOWEVER, NOT RESPONDED. NEVERTHELESS, FROM THE SIDE OF THE ASSE SSEE, A COPY OF CONFIRMATION WAS PLACED ON RECORD FROM THE SAID PAR TY STATING THAT BALANCE 1087 BAGS WERE YET TO BE LIFTED. ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 10 - 5.1. REGARDING ANOTHER DIFFERENCE IN THE STOCK OF T OBACCO, IT WAS EXPLAINED THAT 3915 BAGS CONTAINING 1,09,620 KGS. O F TOBACCO BELONGED TO ONE M/S.PINAK PANI TRADERS AND THAT FIRM WAS YET TO LIFT THE MATERIAL. DUE TO THE ABSENCE OF A CONFIRMATION FROM THE SAID PARTY, THE AO HAD REJECTED THE EXPLANATION. THE TOTAL QUANTITY OF THE STOCK WAS 1,32,228KGS.(1,09,620KGS + 22,887KGS.). THUS THE TO TAL AMOUNT OF RS.39,40,395/- WAS TAXED. THE MATTER WAS CARRIED B EFORE THE FIRST APPELLATE AUTHORITY. 6. LD.CIT(A) HAS EXAMINED THE EVIDENCES AND THEREUP ON CONCLUDED AS FOLLOWS:- 9. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMIS SIONS. IT IS OBSERVED FROM THE RECORD THAT ON THE DAY OF THE SUR VEY SPECIFIC QUESTION HAD BEEN PUT TO SHRI MAHINDRABHAI DHULABHI PATEL, THE ACCOUNTANT REGARDING THE DISCREPANCY IN THE STOCK O F TOBACCO. SIMILARLY, A SPECIFIC QUESTION IN THIS REGARD HAD B EEN PUT TO SHRI VITHALBHAI ASHABHAI PATEL, THE PARTNER. IT IS SEEN FROM THE COPIES OF THE STATEMENT PLACED ON RECORD THAT THEY SUBMITT ED THEIR EXPLANATION ABOUT THE DISCREPANCY IN THE STOCK THEN AND THERE AND THEIR ANSWERS WERE DIRECT, STRAIGHT AND NOT EVASIVE OR VAGUE. THEY ADDRESSED THE ISSUE IN RESPECT OF M/S.AMBICA TRADIN G CO. AD M/S.PINAK PANI TRADER IN SIMILAR WORDS. THEIR VERS ION GIVEN ON THE DAY OF THE SURVEY HAS BEEN CONFIRMED BY BOTH TH E PARTIES SUBSEQUENTLY TO THE ASSESSING OFFICER. THE SECOND CONFIRMATION OF AMBICA TRADING CO. WAS SENT ONLY ON 11-10-2006 I.E. AFTER THE ASSESSMENT WAS OVER. HOWEVER, THE ASSESSING OFFICE R AT THE TIME OF SENDING THE REMAND REPORT HAS NOT RAISED ANY DOU BT ABOUT THE SAME EXCEPT THAT ON PERSONAL VISIT THE INCOME-TAX I NSPECTOR FOUND THAT AMBICA TRADING CO. WAS NOT EXISTING IN SUNHOUL A. HOWEVER, THE APPELLANT HAS CLAIMED THAT HE HAD LEFT SUNHOULA AND WAS OPERATING FROM BHAGALPUR, A FACT WHICH IT HAD CONVE YED TO THE ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 11 - ASSESSING OFFICER THROUGH ITS LETTER DATED 11-10-20 06 SENT BY FAX. BUT IT IS SEEN THAT THE INCOME-TAX INSPECTOR HAS NO T RECORDED ANY WRITTEN CONFIRMATION FROM THE LOCAL RESIDENT/S OF S UNHOULA IN THIS REGARD. IT IS PERTINENT TO POINT OUT IN THIS CONTE XT THAT THE APPELLANT HAS QUESTIONED THE RELEVANCE AND CORRECTNESS OF THE INSPECTORS REPORT IN THESE CIRCUMSTANCES. IT IS THUS SEEN THA T THE CLAIM BY THE APPELLANT OF SALE OF 2687 BAGS OF TOBACCO TO AMBICA TRADING CO., PARTIAL LIFTING OF 1600 BAGS OF TOBACCO BY IT AND T HE FACT OF NOT LIFTING OF BALANCE 1087 BAGS FROM THE MEHLAV GODOWN HAS GONE UNCHALLENGED BY THE ASSESSING OFFICER. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE FACT OF THE TOTAL SALE FIGURE OF 2687 BAGS OF TOBACCO TO AMBICA TRADING CO . IT IS FURTHER NOTED THAT THE ASSESSING OFFICER IN THE REMAND REPO RT HAS NOT QUESTIONED OR DOUBTED THE APPELLANTS CLAIM THAT IN THE TOBACCO TRADE IT IS CUSTOMARY TO TAKE DELIVERY OF THE GOODS AT THE CONVENIENCE OF THE PURCHASER. IT IS ALSO NOTED THA T THE PAYMENTS RECEIVED IN RESPECT OF THESE SALES HAVE NOT BEEN DO UBTED. THE APPELLANTS CLAIM THAT SIMILAR FACTS OF PARTIAL DEL IVERY OR PARTIAL LIFTING OF STOCK IN THE CASE OF PINAK PANI TRADERS BY THE ASSESSING OFFICER IN THE REMAND REPORT ONLY CONFIRM THE EXIST ENCE OF SUCH PRACTICE IN TOBACCO TRADE APPEARS LOGICAL AND REASO NABLE. UNDER THE CIRCUMSTANCES, IT IS HELD THAT THE ADDITION ON ACCOUNT OF THE STOCK DIFFERENCE OF 1087 BAGS OF TOBACCO IN RESPECT OF AMBICA TRADING CO. IS DELETED. AS REGARDS THE PINAK PANI TRADERS, IT IS OBSERVED T HAT THIS PARTY HAD CONFIRMED THE FACT THAT PART OF THE SOLD STOCK WAS STILL LYING IN THE APPELLANTS GODOWN. IT IS FURTHER OBS ERVED THAT THIS CLAIM HAS NOT BEEN RE PUDICATED BY THE ASSESSING OF FICER. IN FACT, ON THE OTHER HAND, THE ASSESSING OFFICER IN THE REM AND REPORT HAS CONFIRMED THAT THE REPLY RECEIVED FROM THE PARTY IN RESPONSE TO NOTICE U/S.133(6) AFTER COMPLETION OF ASSESSMENT TA LLIES WITH THE ASSESSEES STATEMENT. IT IS NOTED THAT THE ASSESSI NG OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL THAT REBUTS THE CLAI M MADE BY THE APPELLANT IN RESPECT OF THE UNSOLD STOCK LYING IN I TS GODWN VIS--VIS SALES MADE TO PINAK PANI TRADERS. UNDER THE CIRCUM STANCES, THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS COUN T IS UNFOUNDED PARTICULARLY AFTER THE RECONCILIATION FURNISHED BY THE APPELLANT VIDE ITS LETTER DATED 11-3-2003. THE CONFIRMATIONS FILE D BY M/S.PINAK ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 12 - PANI TRADERS HAVE NOT BEEN PROVED WRONG BY THE ASSE SSING OFFICER. FURTHER, THE PAYMENTS RECEIVED BY THE APP ELLANT ON ACCOUNT OF TOTAL SALES MADE TO THIS PARTY HAS ALSO NOT BEEN DOUBTED WHICH WOULD INCLUDE THE PAYMENT RECEIVED ON ACCOUNT OF THE UN- LIFTED STOCK OF 3915 BAGS ON THE DATE OF THE SURVEY . UNDER THE CIRCUMSTANCES, I FIND NO JUSTIFICATION IN THE ADDIT ION MADE BY THE ASSESSING OFFICER ON THIS COUNT. THE SAME IS DELET ED. AS A RESULT, THE ADDITION MADE ON ACCOUNT OF THE 10 87 BAGS IN RESPECT OF M/S.AMBICA TRADING CO. AND ON ACCOUNT OF 3915 BAGS IN RESPECT OF PINAK PANI TRADERS TOTALLING TO RS.39,40,395/- IS DELETED. 7. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT THE ASSESSEE HAS PLACED THE CORRESPONDENCE WITH THO SE PARTIES AND THE RESPONSE OF THE ACCOUNTANT OF THE FIRM AS PER HIS S TATEMENT RECORDED. VIDE QUESTION NO.5, AN ENQUIRY WAS MADE IN RESPECT OF THE STOCK LYING IN THE THREE GO-DOWNS BELONGING TO THE ASSESSEE-FIRM. IT WAS STATED THAT STOCK BELONGED TO AMBICA TRADING CO. OUT OF THE T OTAL SALES MADE. IT HAS ALSO BEEN STATED THAT GOODS WERE SOLD TO PINAK PANI TRADERS AND PART OF THE BAGS WERE YET TO BE DELIVERED. LD.CIT(A) HA S SPECIFICALLY STATED THAT IN THE REMAND REPORT THE AO HAD NOT QUESTIONED OR DOUBTED THE ABOVE FACTS. THE APPELLANTS CLAIM OF PARTIAL LIFTING OF STOCK OR PARTIAL DELIVERY OF STOCK WAS NOT CONTRADICTED BY THE AO. THUS, THE TOTALITY OF THE CIRCUMSTANCES WARRANTS TO AFFIRM THE FACTUAL FINDIN GS OF THE CIT(A). THESE GROUNDS OF THE REVENUE ARE, THEREFORE, DISMIS SED. 8. APROPOS TO GROUND NO.3(B), THE FIRST APPELLATE A UTHORITY HAS TAKEN A VIEW AS UNDER:- ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 13 - AS REGARDS THE ADDITION ON ACCOUNT OF EXCESS TOBAC CO DUST OF 68,638 KG, SHORT KANDI STOCK OF 8905 KG AND SHORT P ASHARI STOCK OF 16,655 KG VALUED AT RS.68,638/-, RS.2,65,369/- A ND RS.4,96,319/- RESPECTIVELY, IT IS OBSERVED THAT THE APPARENT DIFFERENCE IN STOCK NOTICED ON THE DAY OF THE SURVE Y HAD BEEN RECONCILED BY THE APPELLANT IN THE FORM OF DETAILED WORKING SHEET FILED ALONG WITH THE LETTER DATED 11-3-2003. AFTER THAT NO FAULT HAS BEEN FOUND WITH THE SAID RECONCILIATION STATEMENT A ND NO OBSERVATIONS OR RESERVATIONS HAVE BEEN RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IN THIS REGARD. TH E APPELLANT HAS STRONGLY ARGUED THAT NO OTHER DEFECTS HAVE BEEN POI NTED OUT BY THE ASSESSING OFFICER IN RESPECT OF THE ENTIRE ITEMS OF STOCKS, PURCHASES, SALES ETC. UNDER THE CIRCUMSTANCES, IT H AS FORCE IN ITS ARGUMENT THAT NO ADDITION CAN BE MADE UNDER ANY CIR CUMSTANCES. I AM IN AGREEMENT WITH THE ARGUMENTS OF THE APPELLA NT. THE ADDITION MADE, THEREFORE, ON THIS COUNT IS HELD TO BE UNFOUNDED AND, THEREFORE, UNREASONABLE AND IS DELETED. 9. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT A RECONCILIATION HAS BEEN FILED IN RESPECT OF THE SHORTAGE OF STOCK AND THAT RECONCILIATION WAS CONFRONTED TO THE AO DURING THE COURSE OF REMAND PROCEEDINGS BUT THAT EXPLANATION WAS NOT CONTROVERT ED. THE ASSESSEE HAS UNDISPUTEDLY MAINTAINED QUANTITATIVE DETAILS OF PUR CHASES AND SALES, AS IS EVIDENT FROM THE CORRESPONDENCE PLACED ON RECORD AD DRESSED TO THE AO. THE ASSESSEE HAS FURNISHED A RECONCILIATION STATEME NT TO THE AO. THE SAID RECONCILIATION WAS DULY CONSIDERED BY LD.CIT(A ) AND, THEREFORE, HELD ITA NO. 2001/AHD/2007 ACIT VS. M/S.ASHABHAI SHANKERBHAI PATEL & SONS ASST.YEAR - 2003-04 - 14 - THAT THE SAID APPARENT DIFFERENCE WAS DULY RECONCIL ED. SINCE THE REVENUE DEPARTMENT HAS NOT EXPRESSED ANY RESERVATIO N IN RESPECT OF THE RECONCILIATION, A COPY OF THE SAME IS ALSO PLACED I N THE COMPILATION, WE ARE LEFT WITH NO OPTION BUT TO AFFIRM THE FINDINGS OF LD.CIT(A). RESULTANTLY, THIS GROUND IS ALSO DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. SD/- SD/- ( .. !' ) ( ) #$ ( B.P. JAIN ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 31 / 01 /2012 40..', .'../ T.C. NAIR, SR. PS #3 . +5 6#5' #3 . +5 6#5' #3 . +5 6#5' #3 . +5 6#5'/ COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 7 / CONCERNED CIT 4. 7() / THE CIT(A)-I, BARODA 5. 5:; +' , , / DR, ITAT, AHMEDABAD 6. ;< =/ / GUARD FILE. #3' #3' #3' #3' / BY ORDER, ,5 + //TRUE COPY// > >> >/ // / ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..18.1.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19.1.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 31.1.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.1.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER