N.I. Patel & Ors.(AOP), Ahmedabad V. The ACIT.,(OSD)Circle-9, Ahmedabad

ITA 2151/AHD/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0294 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-12-2012
• Assessment Year: misc
• Appeal Filed On: 30-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Keywords: Unexplained investment; Right to appeal
• Section: 143(3); 142(1); 148; 132; 154; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI MUKUL KUMAR SHRAWAT, JM AND SHRI A. MOHAN ALANKAMONY, AM) ITA. NO.2151 TO 2157/AHD/2011 (AY: 1980-81 TO 1986-87) N. I. PATEL & ORS. (AOP), 3, KALPANA COLONY, NAVRANGPURA, AHMEDABAD 380 009 P. A. NO. AEDPP 8877 P VS THE A. C. I. T. (OSD), CIRCLE-9, 1 ST FLOOR, A-WING, PRATYAKSH KAR BHAVAN, OPP. GOVT. POLYTECHNIC, AMBAVADI, AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI TEJ SHAH, AR RESPONDENT BY SHRI Y. P. VERMA, SR. DR DATE OF HEARING: 07-12-2012 DATE OF PRONOUNCEMENT: 15-02-2013 ORDER PER A. MOHAN ALANKAMONY : 1. THESE SEVEN APPEALS INSTITUTED BY THE ASSESSEE ARE DIRECTED AGAINST THE IMPUGNED ORDER OF THE LEARNED CIT (A)-XV, AHMEDABAD IN APPEAL NOS. CIT(A)-XV/ACIT(OSD)/CIRCLE 9/153 TO 159/10-11 DATED 22-6-2011 FOR THE ASSESSMENT YEARS 1980-81 TO 1986-87. 2. THE ASSESSEE HAS RAISED FOUR IDENTICAL GROUNDS FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. GROUND NO.4 BEING 2 GENERAL IN NATURE AND NO SPECIFIC ISSUE INVOLVED, I T BECOMES INCONSEQUENTIAL AND DISMISSED AS SUCH. IN THE REMA INING GROUNDS, THE ISSUES RAISED ARE REFORMULATED AS UNDER FOR THE SAKE OF CONVENIENCE:- (1) THAT THE CIT (A) HAD ERRED IN CONFIRMING THE OR DER OF THE AO WHO HAD REFUSED TO RECTIFY HIS ORDER WHILE GIVING E FFECT TO THE ORDER OF THE TRIBUNAL DATED 31.8.2004; (2) THAT THE CIT (A) HAD ERRED WHILE PASSING THE OR DER IN NOT DEALING/ADJUDICATING THE ASSESSEES CLAIM TO ALLOW CREDIT OF THE TAXES PAID IN WHOSE INCOME WERE CLUBBED IN THE HAND S OF THE ASSESSEE; & (3) THAT THE CIT (A) HAD ERRED IN NOT EXCLUDING THE PROPORTIONATE INCOME ALSO ASSESSED FOR THE AYS 1987-88 AND 1988-8 9 IN SPITE OF SPECIFIC DIRECTION OF THE CIT (A) WHICH WA S NOT REVERSED BY THE TRIBUNAL. 3. AS THE ISSUES RAISED IN THESE APPEALS BEING INT ER-LINKED PERTAINING TO THE SAME GROUP, THEY WERE HEARD, CONS IDERED TOGETHER AND DISPOSED OFF, FOR THE SAKE OF CONVENIENCE, IN T HIS COMMON ORDER. 4. BRIEFLY STATED, THE SYNOPSIS OF THE ISS UES IS AS UNDER: - SEARCH OPERATIONS WERE CONDUCTED ON 16-5-1986 AT THE PREMISES OF PATEL GROUP. DURING THE COURSE OF SEARC H, ENORMOUS DOCUMENTS, ACCOUNTS BOOKS AND OTHER MATERIALS UNEAR THED REVEALED HUGE INCOME EARNED BY THIS GROUP FROM CONSTRUCTION AND BUILDING ACTIVITIES WHICH WAS DIVERTED IN BENAMI NAMES OF VA RIOUS ENTITIES SUCH AS PARTNERSHIP FIRMS, AOPS, FAMILY TRUSTS ETC. THE MEMBERS OF SUCH ENTITIES BEING MORE THAN 1100 WHICH HAVE FLOAT ED IN VARIOUS PLACES LIKE MEHSANA, NADIAD, SURENDRANAGAR, MUMBAI, AHMEDABAD 3 ETC., AND THAT SEVERAL ENTITIES FILED THEIR RETURNS OF INCOME AT BOMBAY AND ASSESSMENTS MADE IN SOME OF THE TRUSTS WERE CON SIDERED TO BE BOGUS BY THE RESPECTIVE ASSESSING OFFICERS. AS THE SCRUTINY OF THE SEIZED MATERIALS WAS UNDERWAY, IT APPEARS THAT THE PATEL GROUP CAME UP WITH A PROPOSAL WITH A VIEW TO AVOID LITIGATION AND IT WAS FINALLY AGREED UPON BY THE ASSESSEE AND THE DEPARTMENT THAT THE GROUP WILL BE ASSESSED IN THE STATUS OF AOP FOR THE ASSESSMENT YEARS 1980-81 TO 1986-87 ON THE BASIS OF ACCRETION OF WEALTH FOR THE PURPOSES FROM 1-4-1979 TO 31-3-1986 AND THE NET WEALTH AS ON 31-3 -1986 WAS TO BE DIVIDED IN PROPORTION TO THE VALUE OF THE WORK DONE (RECEIPTS) DURING THIS PERIOD AND THE DIVIDED RESULTED FIGURES SHALL BE DEEMED AS TAXABLE INCOME OF THE AOP ETC., ACCORDINGLY, THE PA TEL GROUP HAD PREPARED A BALANCE SHEET OF ALL ITS ASSETS AND LIAB ILITIES AS ON 31.3.1986 AND TO WHICH THE ACCRETION OF WEALTH WAS TO THE TUNE OF RS.4.5 CRORES. THE ASSESSEE HAD FILED RETURNS OF I NCOME FOR THE ASSESSMENT YEARS 1980-81 TO 1986-87 ADMITTING ITS I NCOMES, AGGREGATING TO RS.4.5 CRORES. HOWEVER, THE AO ISSU ED NOTICES U/S 143(2) AND U/S 142(1) OF THE ACT AND, FURTHER, SEE KING EXPLANATION FROM THE PATEL GROUP IN RELATION TO THE INCOME EARN ED AND DECLARED BY SEVERAL ENTITIES AND ALSO IN RESPECT OF VARIOUS ENT RIES OF CASH CREDIT AND OTHER RECEIPTS ETC., IT WAS THE CASE OF THE AS SESSEE THAT WHEN THE RETURNS OF INCOME FOR ALL THE ASSESSMENT YEARS UNDER APPEAL WERE FILED ON THE BASIS OF AGREED SETTLEMENT WITH T HE REVENUE, THERE SHOULD BE NO INQUIRY OR ANY FURTHER ADDITION ON THE BASIS OF THE SEIZED MATERIALS AND THAT THE INCOME SHOULD BE ASSESSED O N THE BASIS OF ACCRETION TO NET WEALTH FROM 1-4-1979 TO 31-3-1986 ETC., SINCE THE AO HAD, ACCORDING TO THE ASSESSEE, REFUSED TO RELENT, THE ASSESSEE 4 APPROACHED THE HONBLE JURISDICTIONAL HIGH COURT WI TH A SPECIAL CIVIL APPLICATION NO.1153/89 CHALLENGING THE ISSUE OF NOT ICES U/S 148 AND 139(2) OF THE ACT ETC., AND GOT INTERIM INJUNCTION. THE WRIT PETITION WAS ALLOWED BY THE HONBLE HIGH COURT ETC. 4.1. REVERTING BACK TO THE ISSUES UNDER CONSIDERATION, T HE ASSESSEE HAS COME UP WITH THE PRESENT APPEALS TO TH E EFFECT THAT AS HE HAS BEEN AGGRIEVED BY THE ORDER OF THE LEARNE D CIT (A) IN APPEAL NO. CIT(A)-XV/ACIT(OSD)/CIRCLE-9/153 TO 159/ 10-11 DATED 22-06-2011 FOR THE ASSESSMENT YEARS 1980-81 TO 1986 -87, CONFIRMING THE ORDERS OF THE AO DATED 04-08-2005 G IVING APPEAL EFFECT TO THE CONSOLIDATED ORDER OF THE ITAT AHMEDA BAD C BENCH DATED 31-08-2004 PASSED IN ASSESSEES OWN CAS E IN ITA NOS. 909 TO 915/AHD/1999 FOR THE ASSESSMENT YEARS 1 980-1981 TO 1986-87 AND IN ITA NO.3890/AHD/1992 AND ITA NO.2708 /AHD/1995 FOR THE ASSESSMENT YEARS1987-88 AND 1988-99 RESPECT IVELY. THE AO WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL DATED 31-08-2004 REVISED THE TOTAL INCOME OF THE ASSESSEE AS PER THE DISCLOSURE MADE BY THE ASSESSEE INCORPORATED AT PARA 8.3 OF THE AFO RESAID ORDER OF THE TRIBUNAL, REVISED THE TOTAL INCOME YEAR-WISE AND RE CALCULATED THE TAX PAYABLE BY THE ASSESSEE. THE FINDINGS OF THE AO IN HIS ORDER DATED 04-08-2005 GIVING APPEAL EFFECT TO THE ORDER OF THE TRIBUNAL IS REPRODUCED AS UNDER: [PB -1 PAGE 93] IN THIS CASE, ORIGINAL ASSESSMENT U/S. 143(3) WAS COMPLETED ON 02.05.1989. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ASSESSMENT ORDER DATED 02.05.1989 BEFOR E THE CIT (A) FOR VARIOUS YEARS INCLUDING THE YEAR UNDER CONSIDER ATION, WHO IN TURN GAVE PARTIAL RELIED TO THE ASSESSEE. SUBSEQUEN TLY, THE I.T.A.T. 5 VIDE ITS ORDER IN ITA NO.2289 TO 2296/AHD/90/ A. Y. 80-81 TO 86- 87 DATED 29.04.1994 SET ASIDE THE ASSESSMENT WITH A DIRECTION TO RE-FRAME THE ASSESSMENT, WHICH WAS FINALLY COMPLETE D U/S. 143(3) ON 3.03.1997 BY ERSTWHILE ACIT, CIR-6 (2), AHMEDABA D. 2. AGGRIEVED BY THE ORDER PASSED U/S. 143(3) DATED 31.03.1997, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A)-XIV, AHMEDABAD. THE CIT(A)-XIV, AHMEDABAD VIDE HIS ORDER NO. CIT(A) -XIV/CIR- 6(2)/114-120/97-98 DATED 22.02.1999 DIRECTED TO COM PUTE THE NET TAXABLE PROFIT @ 21.5% ON A GROSS TURNOVER OF RS.21 .5 CRORES AND BRING IT TO TAX ON THE BASIS OF YEAR-WISE PROPORTIO NATE RATIO. THE CIT(A) FURTHER DIRECTED IF A PART OF THIS INCOME FA LLS OUTSIDE THE YEARS OF ACCOUNT UNDER CONSIDERATION I.E. IN SUBSEQ UENT PERIOD, TO THAT EXTENT IT WOULD BE REDUCED FROM THESE YEARS. 3. THE EFFECT TO AFORESAID ORDER OF THE LD. CIT(A) WAS GIVEN IN THE CASE OF THE ASSESSEE FOR A. YS. 1980-81 TO 1986 -87 VIDE RESPECTIVE APPEAL EFFECT ORDERS DATED 26.2.99 WHICH WERE SUBSEQUENTLY RECTIFIED U/S. 154 ON 30.03.2000. AS S UCH, THE TOTAL INCOME OF THE ASSESSEE STANDS PROPORTIONATELY APPOR TIONED IN YEARS 1980-81 TO 1987-87 AS UNDER: - A. Y. PERCENTAGE TOTAL INCOME 1980-81 14.76% RS.56,91,762 1981-82 09.60% RS.37,01,959 1982-83 24.81 RS.95,67,251 1983-84 07.87% RS.30,34,835 1984-85 21.00% RS.80,90,036 1985-86 07.98% RS.30,77,254 1986-87 13.98% RS.53,90,978 TOTAL RS.3,85,54,075 THE AFORESAID DECISION OF CIT(A) WAS DISPUTED BEFOR E I. T. A. T. IN APPEALS FILED BY THE DEPARTMENT AS WELL AS BY TH E ASSESSEE. 6 5. NOW, THE MATTER HAS BEEN DECIDED BY THE I. T. A. T. VIDE ITS ORDER NO. 909/AHD/1999 TO ITA 915/AHD/1999 DATED 31 .08.2004. THE I. T. A. T. HAS STATED IN PARA 10 OF ITS ORDER THAT WE ARE OF THE VIEW THAT THE ASSESSMENT BE COMPLETED ON THE BA SIS OF DISCLOSURES OF THE ASSESSEE AT RS.4.50 CRORES WHICH IS STATED TO BE BASED ON THE BOOKS OF ACCOUNTS INCREASE IN WEALTH O F THE ASSESSEE FROM YEAR TO YEAR. IT IS ALSO SUPPORTED BY VARIOUS STATEMENTS OF ASSETS AND LIABILITIES OF THE ASSESSEE OVER A PERIO D OF 7 YEARS AND IS ALSO INCLUDING THE ON MONEY RECEIPT BEING THE AMO UNT OF CASH PREMIUM BY THE ASSESSEE FROM THE PROSPECTIVE CUSTOM ERS. THIS DISCLOSURE FIGURE IS ARRIVED AT BY THE ASSESSEE AFT ER GOING THROUGH THE DETAILED AND IN DEPTH SCRUTINY OF ACCOUNTS, DOC UMENTS AND DISCUSSIONS WITH REVENUE AUTHORITIES INCLUDING THE CIT AND THE MEMBER OF THE CBDT FROM TIME TO TIME OVER A PERIOD OF TWO YEARS THE DATE OF SEARCH BEING 16.5.1986 AND THE DISCLO SURE PETITIONS GIVEN ON 28.3.1987. IT IS FURTHER HELD BY THE I. T. A. T. IN PARA 11 THAT IT WOULD BE FAIR AND REASONABLE THAT THE A SSESSMENT OF THE ASSESSEE BE COMPLETED ON THE BASIS OF DISCLOSURE OF RS.4.5 CRORES WHICH IS, AS AFORESAID IS, BASED ON ACCRETION OF WE ALTH SUPPORTED BY THE DETAILS OF ASSETS AND LIABILITIES OF THE ASS ESSEE AND FINALIZED AFTER DISCUSSION WITH THE REVENUE AUTHORITIES. V IDE PARA 12 OF THE ORDER, THE I. T. A. T. HAS ALSO DIRECTED THE A. O. NOT TO CHARGE INTEREST U/S. 139 AND 217 OF THE ACT. 6. ON THE BASIS OF THE ABOVE AND AS PER THE DISCLOS URE MADE BY THE ASSESSEE, WHICH IS INCORPORATED IN PARA 8.3 OF THE I. T. A. T.S ORDER DATED 31.08.2004, THE TOTAL INCOME IS REVISED AS UNDER:- A. Y. INCOME FROM CONSTRUCTION ACTIVITY OTHER INCOME TOTAL INCOME 1980-81 60,00,000 - 60,00,000 1981-82 40,00,000 - 40,00,000 1982-83 1,00,00,000 - 1,00,00,000 1983-84 30,00,000 - 30,00,000 1984-85 85,00,000 - 85,00,000 1985-86 35,00,000 - 35,00,000 1986-87 60,00,000 40,00,000 1,00,00,000 TOTAL 4,10,00,000 40,00,000 4,50,00,000 7 REVISED TOTAL INCOME = RS.60,00,000/-. (SOURCE: PB 93 -94) 4.2. THE ASSESSEE FILED AN APPLICATION DATED 28-07 -2010 (REFER P 95 98 PB) FOR (I) RECTIFICATION OF THE A FORESAID APPEAL EFFECT ORDER OF THE AO DATED 04-08-2005 AND (II) SETTLEMEN T OF OUTSTANDING DEMAND & RELEASE OF ATTACHED PROPERTIES. THE ASSES SEE BY REFERRING TO PARA 11 AND 12 OF THE ORDER OF THE TRIBUNAL DATE D 31-08-2004 STATED THAT IT COULD BE CONCLUDED THAT:- (I) THE ASSESSMENT HAS TO BE FRAMED IN THE HANDS OF N. I. PATEL & OTHER (AOP) FOR ENTIRE GROUP IN STEAD OF SE PARATE ASSESSMENT FOR ALL THE ENTITY OF THE GROUP I.E. IND IVIDUALS, FIRMS, AOPS, FAMILY TRUST, ETC. SINCE THE SETTLEMEN T WAS ARRIVED AT TO TAX THE NEW ENTITY IN THE STATUS OF A OP AND NOT IN THE STATUS OF OTHER PERSONS OF THE GROUP, TH E TAXES PAID ON BEHALF OF THE GROUP OF AOP. (II) THE INCOME FOR ALL THESE YEARS, I.E. FROM 1980 -81 TO 1988- 89 WILL BE RS.450 LACS BASED ON THE ORIGINAL RETURN FILED BY THE ASSESSEE. THUS, THE INCOME OF ALL THE NINE YEAR S WILL NOT EXCEED RS.450 LACS FOR THE ENTIRE GROUP. 4.3. THE AO, AFTER DUE CONSIDERATION OF THE SUBMI SSIONS OF THE ASSESSEE, REJECTED THE SAID RECTIFICATION APPLI CATION VIDE HIS LETTER/ORDER DATED 20-08-2010 HOLDING THE SAME VIE W AS TAKEN IN THE APPEAL EFFECT ORDER DATED 04-08-2005 BY OBSERVING A S UNDER: (ON PAGE 3) HONORABLE ITAT HAS NOT DISCUSSED ON OR DER FOR A. Y. 1987-88 AND 1988-89. IN VIEW OF ABOVE, THE UNDER SIGNED IS OF THE OPINION THAT THE EFFECT ORDER OF ITATS ORDER I S ALREADY GIVEN. SINCE THE ITAT HAS NOT GIVEN ANY DIRECTION REGARDIN G THE CALCULATION OR DETERMINATION OF INCOME FOR A. Y. 19 87-88 & 1988- 8 89, NO ORDER IS TO BE PASSED IN ASSESSMENT YEAR 198 7-88 AND 1988-89. IN VIEW OF THE ABOVE FACTS YOUR APPLICATION FOR REC TIFICATION CANNOT BE ENTERTAINED AND THE SAME IS REJECTED HERE WITH. 4.4. AGAINST THESE ORDERS OF THE AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A) WHO, AFTER DETAILE D DELIBERATION ON THE ORDER OF THE TRIBUNAL DATED 31-08-2004 CONFIRM ED GIVING EFFECT ORDERS OF THE AO DATED 04-08-2005. THE RELEVANT POR TION OF THE FINDINGS OF THE CIT (A) IS REPRODUCED AS UNDER: 13. HONBLE ITAT HAS NOT MENTIONED ANYWHERE ANYTHIN G ABOUT ANY ORDER BY ANY AUTHORITY FOR AY 87-88 OR FOR AY 8 8-89. HONBLE ITAT IN (ITS) ORDER DATED 31.8.2004 HAS NOWHERE END ORSED THE FINDING OF CIT(A) ORDER DATED 22.2.1999 THAT PART OF INCOME IF IT FALLS OUTSIDE AY 80-81 TO 86-87 IN SUBSEQUENT PERIO DS, TO THAT EXTENT IT WOULD BE REDUCED FROM THESE YEARS. HONBLE ITAT IN ORDER DATED 31.8.2004 HAS DISCUSSED THE FACTS IN GREAT DETAIL FROM AY 80-81 TO 86-87 AND DIRECTED TH E INCOME TO BE ASSESSED AT RS.4.50 CRORE FOR SEVEN YEARS WHICH MEA N THE AFOREMENTIONED YEARS AND NOT ANY SUBSEQUENT YEAR. THE SYNOPSIS OF HONBLE ITAT ORDER DATED 31.8.2004 GIVEN IN PARA 7 ABOVE CLEARLY SHOWS THAT HONBLE ITAT MEANT AY 80-81 TO AY 86-87 FOR ASSESSING THE INCOME OF RS.4.50 CRORE. HONBLE ITAT NEVER STATED THAT THIS INCOME WAS TO BE SPREAD OVER TO AY 87-88 AND 88-89 TOO. THEREFORE, IN MY VIEW THE ORDE R DATED 20.8.2010 OF THE AO REJECTING THE RECTIFICATION APP LICATION OF THE APPELLANT IS FINE AND THE APPEAL OF THE APPELLANT D ESERVES TO BE DISMISSED. 5. AGGRIEVED, THE ASSESSEE HAS COME UP WITH THE PR ESENT APPEALS AGAINST THE ORDER OF THE CIT (A). 9 6. WE HAVE CAREFULLY CONSIDERED THE LENGTHY SUBMIS SIONS OF THE LEARNED AR MADE DURING THE COURSE OF HEARINGS A ND ALSO THE SUBMISSION OF THE LEARNED DR WHO VALIANTLY REBUTTED THE POINTS MADE ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CAREFULLY PERUSED THE RELEVANT MATERIALS ON RECORD AND THE DOCUMENTARY EV IDENCES ADDUCED BY THE LEARNED AR IN THE SHAPE OF VOLUMINOU S PAPER BOOKS CONTAINING, COPIES OF ASSESSMENT ORDERS OF VARIOUS ASSESSMENT YEARS, FINDINGS OF THE CIT (A) AS WELL AS THE FINDI NGS OF THE EARLIER BENCHES OF THIS TRIBUNAL ETC., 6.1. PRIMA FACIE, ALL THESE APPEALS ARE ARISING ON THE COMMON APPELLATE ORDER OF THE LEARNED CIT (A), DISM ISSING THE APPEALS OF THE ASSESSEE AGAINST THE ORDERS OF THE A O REJECTING TO RECTIFY HIS EARLIER ORDERS GIVING EFFECT TO THE FIN DINGS OF THE EARLIER BENCH OF THE TRIBUNAL DATED 31.8.2004. 6.2. IRONICALLY, THE ASSESSEE HAD PREFERRED I.T. A PPEALS BEFORE THE TRIBUNAL FOR THE AYS 1980-81 TO 1988-89 AND WT APPEALS FOR THE AYS 1980-81 TO 83-84, 85-86 & 86-87 WHEREAS THE REVENUE HAD APPEALED I.T. APPEALS FOR THE AYS 1980- 81 TO 87-88 [SOURCE: ITAT ORDER DT.31.8.2004 - P 82 OF PB]. AL L THESE APPEALS WERE CLUBBED TOGETHER AS THOSE APPEALS INVOLVED BEI NG COMMON AND INTER-LINKED GROUNDS AND DISPOSED OFF BY A COMM ON ORDER. 6.3. AT THIS POINT OF TIME, WE WOULD LIKE TO NARRA TE THE FACTS OF THE ISSUES, BRIEFLY, AS UNDER: THIS CASE HAS A LONG AND UNUSUAL HISTORY. THIS ASSESSEE GROUP WAS ORIGINALLY CARRYING ON THE BUSINESS OF CO NSTRUCTIONS IN THE 10 NAMES OF VARIOUS PARTNERSHIP FIRMS, TRUSTS ETC., AN D RUNNING INTO MORE THAN 1100 ENTITIES. THIS GROUPS PREMISES WERE SUB JECTED TO SEARCH BY THE DEPARTMENT ON 16.5.1986. DURING AND POST OP ERATION OF SEARCHES, THERE WERE EXCHANGE OF CORRESPONDENCES, D ISCUSSIONS ETC., BETWEEN THE ASSESSEE GROUP AND THE DEPARTMENT AND AS PER THE AGREEMENT REACHED ON MUTUAL CONSULTATIONS WITH THE HIERARCHY OF THE REVENUE INCLUDING THAT OF THE JURISDICTIONAL CIT A ND THE MEMBER OF THE CBDT, IT WAS AGREED UPON THAT INSTEAD OF ASSESS ING SEVERAL ENTITIES SUCH AS FIRMS, TRUSTS, INDIVIDUALS, AOPS E TC., A NEW ENTITY WAS CREATED, ACCORDING TO WHICH, THE ASSESSMENTS HAVE T O BE COMPLETED ON THE BASIS OF ACCRETION OF WEALTH OF THE ASSESSE E AND, ACCORDINGLY, N. I. PATEL AND OTHERS AOP CAME INTO EXISTENCE. AS AGREED UPON, THE AOP DECLARED ITS INCOME OF RS.4.5 CRORES TO BE DISTRIBUTED FOR ALL THE AYS FROM 1980-81 TO 1986-87 AND, SUBSEQUENTLY, RETURNS WERE REVISED AND INCOME WAS DISCLOSED FOR THE AY 1980-81 TO 86-87, BUT NO INCOME WAS DECLARED FOR THE AYS 1987-88 AND 88-8 9. HOWEVER, THE AO COMPUTED THE INCOME AT RS.12.47 CRORES FOR T HE AYS 80-81 TO 86-87. 6.3.1. ON APPEAL, THE ASSESSEE GOT PARTIAL RELIEF FROM THE CIT (A). WHEN THE ISSUE TRAVELED TO THE TRIBUNAL, THE EARLIER BENCH OF THIS TRIBUNAL IN ITS ORDER DATED 29.4.1994 RESTORED THE MATTER BACK TO THE AO TO CONDUCT VALID AND PROPER INQUIRY INTO THE WHO LE MATTER ONCE AGAIN AND MAKE DE NOVO AND FRESH ASSESSMENTS FOR TH E AY 1980-81 TO 86-87. [REFER: P 9 OF PB I]. 11 6.3.2. FOR THE AYS 1987-88 AND 88-89, THE AOS COMP UTED THE INCOMES OF THE ASSESSEE AT RS.2.55 CRORES AND RS.70 LAKHS RESPECTIVELY AGAINST THE DECLARED INCOMES OF RS. NI L. ON APPEAL, THE ASSESSEE GOT PARTIAL RELIEF FOR THE AY 1987-88, BUT , FOR THE AY 1988- 89 NO RELIEF WAS GIVEN BY THE FIRST APPELLATE AUTHO RITY. 6.4. AT THIS POINT OF TIME, WE REVERT BACK TO THE ISSUE FOR THE AYS 1980-81 TO 86-87 THAT WHEN THE ASSESSMENTS FOR THE SAID ASSESSMENT YEARS WERE DIRECTED TO BE FRAMED FRESH B Y THE AO AS PER THE DIRECTIONS CONTAINED IN THE TRIBUNALS ORDER DT .29.4.1994 (SUPRA), THE AO REFRAMED THE ASSESSMENTS COMPUTING THE INCOM E FOR THE SAID AYS AT RS.12.39 CRORES. WHEN THE ASSESSEE TOOK UP THE ISSUE BEFORE THE CIT (A) FOR RELIEF, THE CIT (A), AFTER TAKING I NTO ACCOUNT ALL THE ASPECTS INTO CONSIDERATION, OBSERVED, AMONG OTHERS, THUS: (ON PAGE 25) 19. DECISION THE ASSESSING OFFICER IS, ACCORDINGLY, DIRECTED TO DISCARD ALL OTHER METHODS OF DETERMINAT ION OF APPELLANTS TAXABLE PROFITS, AND COMPUTE THE NET TA XABLE PROFITS @ 21.5% ON A GROSS TURNOVER OF THE ENTIRE CONSTRUCTIO N ACTIVITY UNDER BY THE APPELLANT GROUP TO THE PERIOD SEARCH , COMPUTED ABOVE ATRS.21.5 CRORES, IRRESPECTIVE OF THE YEAR IN WHICH EARNED, AND BRING IT TO TAX ON THE BASIS OF YEAR-WISE PROPO RTIONATE TURNOVER RATIO. IF PART OF THIS INCOME FALLS OUTSI DE THE YEARS OF ACCOUNT UNDER CONSIDERATION, I.E., IN SUBSEQUENT PE RIODS, TO THAT EXTENT, IT WOULD BE REDUCED FROM THESE YEARS. [COURTESY: P 10 34 OF PB I] 6.5. AS ALREADY NARRATED, THE ASSESSEE TOOK UP THE ISSUE S FOR THE AYS 1980-81 TO 1988-89 AS WELL AS THE REVEN UE FOR THE AYS 1980-81 TO 1987-88 BEFORE THE TRIBUNAL. THE EA RLIER BENCH OF THIS TRIBUNAL WHILE DISPOSING OFF THOSE APPEALS VID E ITS ORDER 12 DATED 31.8.2004 MADE CERTAIN OBSERVATIONS AND ALSO RECORDED ITS FINDINGS, THE RELEVANT PORTIONS, FOR DISPOSAL OF TH E PRESENT APPEALS, ARE EXTRACTED AS UNDER: PB-I(PAGE 82-91) 2. THE ASSESSEE IS AN AOP CONSIST ING OF 4 PERSONS SHRI NARANBHAI I PATEL, SHRI JIVABHAI A P ATEL, SHRI VITHALBHAI S PATEL AND SHRI AMBALAL P PATE,. THEY HAVE ORIGINALLY CREATED ABOUT 1100 ENTITIES FOR CONTROLL ING THEIR OPERATIONS. THERE WAS A SEARCH ACTION U/S 132 OF T HE ACT ON 16.5.1986. SOME ASSESSMENTS WERE COMPLETED ON THES E ENTITIES AND THEY ARE OWNED UP BY THESE INDIVIDUALS AS AOP W ITH 55%, 20% 15% AND 10% SHARES . 8. ON A READING OF VARIOUS LETTERS OF DISCLOSURES AND SETTLEMENT PETITIONS BY THE ASSESSEE MADE UP-TO MARCH, 1988, W E FIND THAT THERE WAS A SHORT (SIC) SORT OF UNDERSTANDING BETWE EN THE ASSESSEE AND THE DEPARTMENT THAT THE INCOME OF THE ASSESSEE WILL BE ASSESSED ON ACCRETION OF WEALTH BASIS AT THE FIGURE OF RS.4.5 CRORES THAT NO SEPARATE ASSESSMENT WOULD BE MADE IN THE CA SE OF ANY OF THE OTHER ENTITIES; THAT ASSESSMENT WOULD BE MADE W ITHOUT ANY FURTHER INQUIRY AND/ OR HEARING; THAT NO INTEREST O R PENALTY WOULD BE LEVIED AND THAT THE INCOME WAS DIVIDED AMONGST S EVEN DIFFERENT YEARS AND PROPORTION TO BE TURNED OUT. THE LAST OF THE DISCLOSURE PETITION OF RS.4.5 CRORES WAS MADE BY THE ASSESSEE UPON AND AFTER CONSULTATION WITH THE CIT INCLUDING MEMBER OF CBDT.. 8.1. THE ASSESSMENTS HAVE BEEN MADE BY THE AO BASED ON THE ASSESSMENTS OF VARIOUS ENTITIES. THOSE WERE NOT TH E RETURNED INCOME BUT ENHANCED ASSESSED INCOME IN THE RESPECTI VE ENTITIES. IF THE BASIS IS TAKEN AS THE RETURNED INCOME, THERE CANNOT BE A POSSIBILITY OF ANY DISPUTE AND THE ASSESSEE WOULD N OT BE RIGHT IN SAYING THAT THE FIGURES SHOWN IN THE BOOKS OF ACCOU NTS SHOULD NOT BE THE BASIS BECAUSE THOSE WERE INFLATED FIGURES AD OPTED FOR TAX PLANNING. SIMILARLY, ONE WOULD NOT BE JUSTIFIED TO SAY THAT THE FIGURES OF ASSESSED AMOUNTS BE TAKEN AS CORRECT AS THOSE 13 ASSESSMENTS AND ENHANCED FIGURES THEREIN HAVE TO BE SUBJECT TO ASSESSEES RIGHT OF APPEAL WHICH SHOULD BE GIVEN IN EITHER OF THE PROCEEDINGS AND SINCE THE ENTITIES ARE NOW OWNED UP BY THE ASSESSEE AOP, THAT OPPORTUNITY HAS TO BE GIVEN IN T HESE ASSESSMENTS. 10.THE FACT, HOWEVER, REMAINS THAT THESE WERE ESTIM ATED FIGURES BASED ON SOME INCOMPLETE INFORMATION, KNOWLEDGE AND BELIEF AND PARTLY ALSO ON SOME CONJECTURES. WE ARE, THEREFORE , OF THE VIEW THAT THE ASSESSMENTS BE COMPLETED ON THE BASIS OF D ISCLOSURES OF THE ASSESSEE AT RS.4.5 CRORES WHICH IS STATED TO BE BASED ON THE BOOKS OF ACCOUNTS INCREASED IN WEALTH OF THE ASSESS EE FROM YEAR TO YEAR. IT IS ALSO SUPPORTED BY VARIOUS STATEMENT OF ASSETS AND LIABILITIES OF THE ASSESSEE OVER A PERIOD OF SEVEN YEARS AND IS ALSO INCLUDING THE ON MONEY RECEIPT BEING THE AMOUNT O F CASH PREMIUM BY THE ASSESSEE FROM THE PROSPECTIVE CUSTOM ERS. THIS DISCLOSURE FIGURE IS ARRIVED AT BY THE ASSESSEE AFT ER GOING THROUGH THE DETAILED AND IN-DEPTH SCRUTINY OF THE ACCOUNTS, DOCUMENTS AND DISCUSSION WITH THE REVENUE AUTHORITIES INCLUDING T HE CIT AND THE MEMBER OF CBDT FROM TIME TO TIME OVER A PERIOD OF TWO YEARS THE DATE OF SEARCH BEING 16.5.1986 AND THE DISCLO SURE PETITIONS GIVEN ON 28.3.1987. NOTHING WRONG IN THE SUBMISSIO N OF DISCLOSURE WAS FOUND. IT IS SIMPLY IGNORING ON THE PLEA THAT THIS NOT THE CORRECT METHOD OF MAKING ASSESSMENT AND WHI CH HAS TO BE MADE ON THE BASIS OF MATERIAL FOUND IN THE COURSE O F SEARCH. AN INSTANCE OF THE INCOME DETERMINED OF RS.3,85,24,340 /- IS ALSO GIVEN BY THE AO BUT ULTIMATELY THE ASSESSMENTS WERE NOT EXACTLY MADE ON THE BASIS OF MATERIAL FOUND BUT ON TAKING I NTO CONSIDERATION PARTLY THE INDIVIDUAL ASSESSMENTS MAD E EARLIER IN VARIOUS ENTITIES AND PARTLY BY RESORTING TO ESTIMAT E. IT MAY BE TRUE THAT THE ASSESSEE MIGHT BE ENTITLED TO REVISE THE D ISCLOSURE FIGURES BEFORE THE ASSESSMENT IS FINALLY MADE ON THE BASIS OF CORROBORATING MATERIAL AND EVIDENCES ON RECORD FOR REVISION. HOWEVER, IN VIEW OF THE FACT THAT THE EARLIER DISCL OSURES WAS MADE ON DETAILED SCRUTINY OF ACCOUNTS AND AFTER DISCUSSI ON WITH VARIOUS REVENUE AUTHORITIES, ANY REVISION THEREAFTER MAY NO T BE JUSTIFIED, MORE SO WHEN THE ASSESSEES LOWER DISCLOSURE OF RS. 1.25 AND RS.1.05 CRORES WERE NOT SUPPORTED BY ANY MATERIAL O N RECORD 14 WHICH IS ALSO MUCH LOWER TO THE INSTANCE OF THE INC OME MENTIONED IN OF THE PAPERS AT RS.3.85 CRORES. 11. IN VIEW OF THE ABOVE AND LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR OPINION, IT WOULD BE FAIR AND REASONABLE THAT THE ASSESSMENTS OF THE ASSESSEE BE COMPLETED ON THE BASIS OF DISCLOSURE OF RS.4.5 CRORES WHICH IS, AS AFORESAID, IS BASED ON ACCRETION OF WEALTH SUPPORTED BY THE DETAI LS OF ASSETS AND LIABILITIES OF THE ASSESSEE AND FINALIZED AFTER DIS CUSSION WITH THE REVENUE AUTHORITIES. IT IS VERY NEAR TO THE ESTIMA TE ARRIVED AT BY THE CIT (A) WHICH IS ANY CASE IS AN ESTIMATE AND NO T A FACTUAL FIGURE. 6.6. AS COULD BE SEEN FROM THE ORDERS OF THE AO WH ILE GIVING EFFECT TO THE TRIBUNALS ORDER (SUPRA), HE HAD GIVE N EFFECT ONLY FOR THE AYS 80-81 TO 86-87 AND COMPUTED THE INCOME OF THE A SSESSEE AT RS.4.5 CRORES FOR THESE ASSESSMENT YEARS. 6.6.1. IN THE MEANWHILE, THE CIT(A)S FOR THE ASSES SMENT YEARS 1987-88 AND 88-89 HAVE DECIDED THE ISSUES BY PARTLY ALLOWING THE ASSESSEES APPEAL FOR THE AY 1987-88 AND CONFIRMING THE ASSESSMENT ORDER FOR 88-89. 7. AGGRIEVED, THE ASSESSEE HAD APPROACHED THE EARLIER BENCH OF THE TRIBUNAL FOR ALL THE AYS RIGHT FROM TH E AYS 1980-81 TO 1988-89. THE TRIBUNAL, AFTER TAKING INTO ACCOUN T ALL THE FACTS AND CIRCUMSTANCES OF THE ISSUES AND ALSO KEEPING TH E FINDINGS OF THE FIRST APPELLATE AUTHORITIES IN VIEW, CAME TO THE ABOVE CONCLUSION. SUCH BEING THE SCENARIO, THE FINDINGS OF THE LEARNED CIT (A) THAT THE HONBLE ITAT NEVER STATED THAT THIS INCOME TO B E SPREAD OVER TO AY 87-88 & 88-89 TOO TO VIEW IT MILDLY, WAS OUT OF MISCONCEPTION. 15 7.1. IT WAS AN UNDISPUTED FACT THAT AFTER THE ASSE SSEE-AOP PREMISES WERE SUBJECTED TO ACTION BY THE DEPARTMENT , THE ACTIVITIES OF THE ASSESSEE-AOP CEASED TO EXIST AND NO NEW PROJECT S HAVE BEEN UNDERTAKEN FOR EXECUTION. THIS FACT IS BORNE OUT B Y THE ASSESSEES CONFESSION IN RESPONSE TO NOTICE U/S 139(2) OF THE ACT ISSUED BY THE AO FOR THE AY 1987-88 [REFER: P 60 OF PB]. 7.2. WHILE DECIDING THE ISSUE, THE EARLIER BENCH H AD ALSO TAKEN COGNIZANCE OF THE OBSERVATION OF THE CIT (A) VIDE H IS ORDER DATED 22.2.1999 AND OBSERVED THAT 11.THE ASSESSMENTS OF THE ASSESSEE BE COMPLETED ON THE BASIS OF DISCLOSURE OF RS.4.5 CRORES WHICH IS, AS AFORESAID, IS BASED ON ACCRETION OF WE ALTH SUPPORTED BY THE DETAILS OF ASSETS AND LIABILITIES OF THE ASSESS EE. 7.3. THIS VIEW OF THE EARLIER BENCH, IN OUR CONSID ERED VIEW, WAS IN CONSONANCE WITH THE OBSERVATIONS OF THE CIT (A) THAT 19.IF PART OF THIS INCOME FALLS OUTSIDE THE YE ARS OF ACCOUNT UNDER CONSIDERATION I.E., IN SUBSEQUENT PERIODS, TO THAT EXTENT, IT WOULD BE REDUCED FROM THESE YEARS [SOURCE: P 34 OF PB]. 7.4. IT IS ALSO AN UN-DENYING FACT THAT THE APPEALS OF T HE ASSESSEE WERE BEFORE THE TRIBUNAL FOR THE AYS 1980- 81 TO 1988- 89 WHICH HAVE BEEN DULY CONSIDERED AND, ACCORDINGLY DISPOSED OFF. THUS, IT MAKES IMPLICIT THAT THE ASSESSMENTS O F THE ASSESSEE-AOP BE COMPLETED ON THE BASIS OF DISCLOSUR E OF RS.4.5 CRORES WHICH WAS BASED ON THE ACCRETION OF WEALTH S UPPORTED BY THE DETAILS OF ASSETS AND LIABILITIES OF THE ASSESS EE FOR THE AYS UNDER DISPUTE, NAMELY, AYS 1980-81 TO 1988-89 AND N OT ONLY FOR 16 THE AYS 1980-81 TO 1986-87 AS ATTRIBUTED BY THE AO AND THE CIT (A). THUS, IN OUR CONSIDERED VIEW, THE AO AS WELL AS THE CIT (A) OUGHT NOT TO HAVE INTERPRETED THE SAME HARSHLY BUT VIEWED THE SAME JUDICIOUSLY AFTER A REASONABLE ANALYSIS. 7.5. FURTHER, AS COULD BE SEEN FROM THE ASSESSMENT ORDERS FOR THE AYS 1987-88 AND 1988-89, THE ASSESSEE HAD NOT T AKEN UP ANY NEW PROJECTS, BUT, COMPLETED THE ON-GOING PROJECTS WHICH WERE TAKEN UP PRIOR TO SEARCH OPERATION INITIATED IN THE PREMI SES OF THE ASSESSEE- AOP. ON FURTHER ANALYZING THE ASSESSMENT ORDER FOR THE ASSESSMENT YEARS 1987-88 AND 1988-89 THE ADDITION MADE THEREON APPEARS TO BE ALREADY INCLUDED IN THE DISCLOSURE MADE FOR RS.4.5 CRORES FOR THE PERIOD 1980-81 TO 1988-89. FURTHER IT IS INTERESTIN G TO NOTE THAT THE TRIBUNAL IN ITS ORDER DATED 31/08/2004 HAD SUSTAINE D THE ADDITION OF RS.4.5 CRORES BASED ON ACCRETION OF WEALTH WHEREIN THE ASSESSEE WAS ON APPEAL FOR NINE YEARS I.E. FROM ASSESSMENT Y EAR 1980-81 TO 1988-89. SINCE THERE IS NO REFERENCE WITH RESPECT T O ASSESSMENT YEAR 1987-88 AND 1988-89 CONFUSION HAS AROUSED WHETHER T HE ADJUDICATION OF THE APPEAL IS FOR SEVEN YEARS OR FO R NINE YEARS. THE STRONG CONTENTION OF THE ASSESSEE IS THAT THE ENTIR E MATTER HAS TO BE SEEN TOGETHER WHICH WILL LEAD TO THE CONCLUSION THA T THE ADJUDICATION OF THE TRIBUNAL ORDER DATED 31/08/2004 IS FOR NINE YEARS I.E. FOR THE ASSESSMENT YEAR 1980-81 TO 1988-89. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE BEFORE US, IN ORD ER TO THWART MISCARRIAGE OF JUSTICE AND IN THE INTEREST OF JUSTI CE, WE ARE BOUND TO GIVE THE FOLLOWING DIRECTIONS KEEPING IN VIEW OF THE RELEVANT PROVISIONS OF THE ACT INCLUDING SECTION 150 OF THE ACT AND 17 ACCORDINGLY, GROUND NO.1 RAISED BY THE ASSESSEE IS HEREBY DISPOSED OFF:- (A) A.Y 1987-88:- ( 1) ADDITION ON ACCOUNT OF CONSTRUCTION ACTIVITIES RS.1,42,01,312/-:- AS POINTED OUT EARLIER, THE ASSESSEE HAD NOT DISCLOSED ANY INCOME FOR THE ASSESSMENT YEAR 1987-8 8 SINCE INCOME WAS FINALLY ASSESSED AT RS.4.5 CRORES FOR THE PERIO D 1980-81 TO 1986- 87. HOWEVER, THE LEARNED AO ADDED PROFIT OF RS.1,4 2,01,314/- IN RESPECT OF VARIOUS PROJECTS FOR THE ASSESSMENT YEAR 1987-88 AND 1988-89. IT WAS THE CONTENTION OF THE ASSESSEE THAT , SINCE THE INCOME ADDED BY THE LEARNED AO IN THE ASSESSMENT YEAR 1987 -88 WAS DUE TO THE CONSTRUCTION OF PROJECTS EITHER ON THE BASIS OF DISCLOSURE OF THE ASSESSEE OR ON THE BASIS OF ACCRETION OF WEALTH FOR THE PERIOD 1980- 81 TO 1986-87, THIS AMOUNT CANNOT BE ADDED ONCE AGA IN IN THE ASSESSMENT YEAR 1987-88. THIS CONTENTION OF THE ASS ESSEE IS QUITE REASONABLE. IF THE AMOUNT OF RS.1,42,01,312/- FORMS PART OF THE DISCLOSURE OF RS. 4.5 CRORES FOR THE PERIOD 1980-81 TO 1986-87 BASED ON THE PRINCIPLE OF ACCRETIONS OF WEALTH THEN UNLES S THERE IS A FRESH ACCRETION OF WEALTH, DURING THE ASSESSMENT YEAR 198 7-88 THE SAME AMOUNT CANNOT BE ONCE AGAIN ADDED TO THE INCOME OF THE ASSESSEE IN THE ASSESSMENT YEAR 1987-88, WHICH WILL AMOUNT TO D OUBLE TAXATION. THEREFORE IF FROM THE FACTS ON RECORD IF THE REVENU E IS NOT ABLE TO ESTABLISH THAT THERE IS FRESH ACCRETION OF WEALTH O R IT IS THE INCOME GENERATED FROM THE CONSTRUCTION ACTIVITY OR ANY OTHER ACTIVITY BEYOND THE DISCLOSURE MADE FOR THE PERIOD 1980-81 TO 18 1986-87, ADDITION CANNOT BE MADE FOR THE ASSESSMENT YEAR 1987- 88 OR ANY SUBSEQUENT YEAR, SINCE IT WILL AMOUNT TO DOUBLE TAXATION BECAUSE THE AMOUNT OF RS.1,42,01,314/- FORMS PART OF THE INCOME DISCLOSED OF RS. 4.5CRORS FOR THE PERIOD 1980-81 TO 1986-87 . HOWEVER THIS ASPECT REQUIRES VERIFICATION AT THE AOS LEVEL BASED ON THE MATERIALS ON RECORD WITH THE REVENUE I N HAND AND THEREFORE IN THE INTEREST OF JUSTICE WE REMIT BACK THE MATTER FOR SUCH LIMITED PURPOSE. WE FURTHER MAKE IT CLEAR THAT AT T HIS STAGE NO FRESH INVESTIGATION IS WARRANTED IN ORDER TO AVOID ANY UN DUE HARASSMENT TO THE ASSESSEE AS THE CASE HAS ALREADY SUFFERED PROLO NGED LITIGATION, HOWEVER, THE ASSESSEE IS DIRECTED TO FURNISH ANY RE LEVANT DOCUMENTS PROMPTLY BEFORE THE REVENUE AUTHORITIES IF SUCH DOC UMENTS ARE NOT TRACEABLE IN THE FILES OF THE REVENUE WHICH WERE EA RLIER FURNISHED BY THE ASSESSEE BEFORE THE REVENUE. THE LEARNED AO AFTER VERIFYING THE MATERIALS ON RECORD AND AFFORDING ADEQUATE OPPO RTUNITY TO THE ASSESSEE SHALL PASS APPROPRIATE ORDERS AMENDING ANY RELEVANT ASSESSMENT ORDERS ERSTWHILE PASSED. (2) ADDITIONS ON ACCOUNT OF MISC. RECEIPTS RS.84,40,784/- : IT WAS THE STAND OF THE REVENUE THAT THIS AMOUNT WAS A LSO IN RESPECT OF RECEIPT FROM VARIOUS PROJECTS AND NOT THE INCOME EI THER BASED ON DISCLOSURE OF THE ASSESSEE OR ON THE BASIS OF ACCRE TION OF WEALTH. IT WAS, FURTHER, CONTENDED THAT THESE AMOUNTS WERE REC EIVED FOR VARIOUS CLIENTS IN RESPECT OF THE PROJECTS AND IN SOME CASE S ON MONEY RECEIPT FROM THE PROJECT. HOWEVER, THE CONTENTION O F THE ASSESSEE WAS THAT THE INCOME OF RS.4.5 CRORES WAS INCLUSIVE OF THE INCOMES FROM THESE PROJECTS AND ON MONEY RECEIPTS, NO SEP ARATE ADDITION CAN 19 BE RESORTED TO ON SUCH RECEIPTS. THIS CONTENTION O F THE ASSESSEE ALSO REQUIRES VERIFICATION AT THE AOS LEVEL AS INDICATE D ABOVE IN PARA NO.7.5 (A) (1) AND THEREFORE THE MATTER IS HEREBY R EMITTED BACK TO THE FILE OF THE LEARNED AO WITH SIMILAR DIRECTION. (3) ADDITION ON ACCOUNT OF UNACCOUNTED CASH RECEIPT S RS.3,36,887/-:- THE LEARNED AO HAD MADE ADDITIONS ON ACCOUNT OF ON-MONEY RECEIPTS FROM JAYSHREE NARAYAN NIDHI OF RS .2,47,047/- AND FROM MADHURAM COMPLEX OF RS.89,840/- AGGREGATING TO RS.3,36,887/- . IT WAS CONTENDED BY THE ASSESSEE THAT THIS AMOUNT WAS ALREADY INCLUDED IN THE DISCLOSURE MADE FOR THE PERIOD 1980 -81 TO 1986-87. THEREFORE, WE REMITTED BACK THIS ISSUE ALSO TO THE FILE OF THE LEARNED AO WITH SIMILAR DIRECTIONS SPECIFIED IN PARA 7.5 (A ) (1) ABOVE. (4) ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT I N VEHICLES RS.7,00,000/-:- THE LEARNED AO HAD MADE ADDITION DUE TO INVESTMENT IN CERTAIN VEHICLES OWNED BY THE ASSOCIATE CONCERNS OF THE ASSESSEE WHICH ARE ESTIMATED AT RS.7,00,000/-. SINCE, WEALTH ACCRETION METHOD IS ADOPTED, IF THIS AMOUNT IS ALREADY INCLUDED WHIL E ESTIMATING RS.4.5 CRORES AS STATED ABOVE, ONCE AGAIN ADDITION IS NOT WARRANTED. THEREFORE, FOR THE SIMILAR REASONS CITED IN THE EAR LIER PARAGRAPHS, THIS ISSUE IS ALSO REMITTED BACK TO THE FILE OF THE LEAR NED AO WITH SAME DIRECTIONS STIPULATED IN PARA 7.5 (A) (1) HEREINABO VE. (5) ADDITION ON ACCOUNT OF CASH FOUND AND SEIZED I N VARIOUS PREMISES DURING THE COURSE OF SEARCH OF RS.30,871/ :- THIS ADDITION IS MADE FOR THE REASON THAT CASH WAS FOUND AND SEIZ ED IN THE VARIOUS PREMISES OF THE ASSESSEE DURING THE COURSE OF SEARC H. IT IS THEREFORE 20 OBVIOUS THAT IF THIS AMOUNT IS INCLUDED IN THE INCO ME DISCLOSED FOR THE PERIOD 1980-81 TO 1986-87 ON THE METHODS OF ACCRETION OF WEALTH ONCE AGAIN THE SAME AMOUNT CANNOT BE INCLUDED IN AN Y OTHER ASSESSMENT YEAR. THEREFORE, THIS MATTER ALSO REQUIR ES VERIFICATION AT THE AOS LEVEL AS INDICATED IN PARA 7.5 (A) (1) HER EINABOVE. (6) ADDITION ON ACCOUNT OF INCOME OF SIX ENTITIES TAXED SUBSTANTIVELY IN THE HANDS OF THE ASSESSEE RS.18,85 ,000/-:-. THE LEARNED AO HAS SUBSTANTIVELY TAXED IN THE HANDS OF THE ASSESSEE THE INCOME OF THE FOLLOWING SIX ENTITIES AGGREGATING TO RS.18,85,000/-:- SR. NO. NAME OF ASSESSEE ASSESSED INCOME FOR AY 1987-88 1 M/S. PRAVIN CONST. CO. 1,00,000 2 M/S. P. PRAVIN & CO. 80,000 3 M/S. PRAVIN CORPORATION 6,50,000 4 MAHENDRA FAMILY TRUST 1,00,000 5 PRAKASH FAMILY TRUST 6,75,000 6 KAILASH FAMILY TRUST 2,80,000 TOTAL 18,85,000 IT IS THE CONTENTION OF THE ASSESSEE THAT THIS AMOU NT OF RS.18,85,000/- HAS BEEN ALREADY INCLUDED IN THE ESTIMATED FIGURE O F RS.4.5 CRORES BEING THE DISCLOSURE FOR THE PERIOD 1980-81 TO 1986 -87 AND THERE IS NO FRESH ACCRETION OF WEALTH DURING THE SUBSEQUENT ASSESSMENT YEARS. HENCE, WE REMIT BACK THIS ISSUE ALSO BACK TO THE FILE OF THE 21 LEARNED AO WITH SIMILAR DIRECTIONS STATED IN PARA 7 .5 (A) (1) HEREINABOVE. (B) A.Y. 1988-89 : IT WAS THE CASE OF THE ASSESSEE THAT THE ENTIRE INCOME WAS FROM THE ON-GOING PROJECTS DEVELOPED BY THE ASSESSEE AND, THUS, THERE WAS NO BASIS FOR ACCRETION OF WEAL TH. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE ISSUES AS DELIBERATE D UPON (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE FOLLOWING IS SUES SHOULD BE RESTORED FOR LIMITED THE PURPOSES ON THE FILE OF TH E AO FOR VERIFICATION AS DIRECTED IN PARA 7.5 (A) (1) HEREINABOVE. 7.6 LAST BUT NOT THE LEAST; WE MUST MENTION THAT, THE UNDERLINED PRINCIPLE CONSIDERED BY US IN ARRIVING A T THE ABOVE DECISION IS NO INCOME SHALL BE TAXED IN THE HAND S OF THE ASSESSEE TWICE WITHOUT THE OPERATION OF LAW AND IF SUCH CIRCUMSTANCE PREVAILS IT WILL LEAD TO MISCARRIAGE O F JUSTICE. 7.7 IN GROUND NO.2, THE ASSESSEE HAS RAISED THE I SSUE THAT THE LEARNED CIT(A) HAD ERRED IN NOT ADJUDICATING THE AS SESSEES CLAIM TO ALLOW CREDIT OF THE TAXES PAID IN WHOSE INCOME WERE CLUBBED IN THE ASSESSEE. ON OUR PERUSING THE ORDERS OF THE REVENUE AUTHORITIES IT EMERGES THAT THE ASSESSMENT IN THE HANDS OF THE AOP IS A SUBSTITUTED ASSESSMENT FOR ALL THE GROUP ENTITIES. IN THIS CIRCUMSTANCE, THE ASSESSMENT OF ALL GROUP ENTITIES WILL NOT SURVI VE AND OBVIOUSLY TAXES IF ANY PAID BY THOSE ENTITIES FOR THE YEARS U NDER APPEAL HAS TO BE GIVEN CREDIT WHILE COMPUTING THE TAX LIABILITY O F THE ASSESSEE AOP. THE LEARNED AO IS DIRECTED TO PASS SUCH NECESSARY O RDERS FOR GIVING TAX CREDIT TO THE ASSESSEE SUBJECT TO VERIFICATION AND IN ACCORDANCE 22 WITH LAW. GROUND NO.2 RAISED BY THE ASSESSEE IS HE REBY ACCORDINGLY DISPOSED OFF. 7.8 GROUND NO.3 RAISED BY THE ASSESSEE IT WAS STAT ED THAT THE LEARNED CIT(A) HAD ERRED IN NOT EXCLUDING THE PROPO RTIONATE INCOME ALSO ASSESSED FOR THE AYS 1987-88 AND 1988-89 IN SP ITE OF SPECIFIC DIRECTION OF THE CIT(A) WHICH WAS NOT REVERSED BY T HE TRIBUNAL. SINCE WE HAVE DIRECTED TO CONSIDER THE ADDITIONS MADE FOR THE ASSESSMENT YEAR 1987-88 AND 1988-89 BY INVOKING THE PROVISIONS OF SECTION 150 OF THE ACT THIS GROUND RAISED BY THE ASSESSEE HAS B ECOME REDUNDANT. ACCORDINGLY, THIS GROUND IS DISMISSED. 9. IN THE RESULT : THE ASSESSEES APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 TH FEBRUARY, 2013. SD/- SD/- (MUKUL KUMAR SHRAWAT) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANTA DEKA/- 23 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: DIRECT ON COMPUTER 04-2-13 / 06-02-13 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER:06-02-13 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: