Shri Vali Ahmed Cold-Drink, Dist.Bharuch V. The Income tax Officer, Cent.Ward-1, Baroda

ITA 2299/AHD/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9258 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-07-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 31-05-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV AGARWALA
• Assessee Lawyers: NIMESH VAYAWADA
• Keywords: Unexplained expenditure; Income from undisclosed sources; Loose papers; Peak credit; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NOS.2299-2305/AHD/2007 ASSESSMENT YEARS:1998-99 TO 2004-05 DATE OF HEARING:8.7.09 DRAFTED:9.7.09 VALI AHMED COLD-DRINK, MAIN BAZAR, PALEJ, DIST. BHARUCH, PAN NO.ABRPC2349C V/S . INCOME TAX OFFICER, CENTRAL WARD-1, BARODA (APPELLANT) .. (RESPONDENT) ITA NOS.2306-2312/AHD/2007 ASSESSMENT YEARS: 1998-99 TO 2004-05 YAKUB AHMED COLD- DRINK, MAIN BAZAR, PALEJ, DIST. BHARUCH, PAN NO.ABRPC2348C V/S . INCOME TAX OFFICER, CENTRAL WARD-1, BARODA (APPELLANT) .. (RESPONDENT) ASSESSEE BY:- SHRI NIMESH VAYAWADA, AR REVENUE BY:- SHRI RAJEEV AGARWALA, DR O R D E R PER BENCH:- THESE FOURTEEN APPEALS BY TWO DIFFERENT ASSESSEE A RE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-IV, AHMEDAB AD IN APPEALS NO. CIT(A)- ITA NO.2299-2312/AHD/2007 A.Y.S 1998-99 TO 2004-05 VALI & YAKUB AHMED COLD DRINK V. ITO C.WD-1, BARODA PAGE 2 IV/9-22.B/C/WARD.1/06-07 DATED 14-02-2007. THE ASSE SSMENTS WERE FRAMED BY THE INCOME-TAX OFFICER, CENTRAL WARD-1, BARODA U/S.153A (B) R.W.S. 143(3) OF THE INCOME- TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDERS DATED 24-03-2006. 2. AT THE OUTSET, IN AL THESE FOURTEEN APPEALS OF T WO DIFFERENT ASSESSEE, THE MAIN PLEA OF THE ASSESSEE IS THAT THE CIT(A) AND THE ASS ESSING OFFICER HAS NOT CONSIDERED THE PLEA OF PEAK CREDIT OFFERED BY THE ASSESSEE ON THE BASIS OF LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH. 3. THE BRIEF FACTS ARE THAT A SEARCH U/S.132 OF THE ACT WAS CARRIED ON THE BUSINESS AND RESIDENTIAL PREMISES OF SHRI YAKUB A C OLD DRINK, C/O. BHARAT GINNING & PRESSING FACTORY, PALEJ ON 29-08-2003. DURING THE COURSE OF SEARCH AT THE SITE OF BUSINESS AND RESIDENTIAL PREMISES INCRIMINATING PAP ERS IN THE FORM OF LOOSE PAPERS, DIARIES / NOTE BOOKS CONTAINING NOTES OF UNRECORDED AND UNDISCLOSED TRANSACTIONS WERE FOUND AND SEIZED. ON THE BASIS OF ABOVE SEIZE D MATERIALS, THE ASSESSEE HAS ADMITTED UNDISCLOSED INCOME TO THE TUNE OF RS.1.18 CRORES DURING THE COURSE OF POST SEARCH VERIFICATIONS AND IN THE STATEMENT RECORDED U/S.132 OF THE ACT. IN RESPONSE TO THE NOTICE U/S.153A(I), BOTH THE ASSESSEE FILED RET URNS OF INCOME FOR THE ASSESSMENT YEARS 1998-99 TO 2003-04 FOR ADMITTING UNACCOUNTED INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S.153A OF THE ACT, THE ASS ESSEE PRODUCED CASH BOOK PREPARED ON THE BASIS OF SEIZED MATERIALS TO PROVE THE CASH BALANCES AND ACCUMULATED OPENING CASH AND UNACCOUNTED TRANSACTIO NS. THE ASSESSING OFFICER POINTED OUT MISTAKES IN THE CASH BOOK AS WELL AS IN OTHER BOOKS OF ACCOUNT. THE MAIN PLEA OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES W AS THAT ASSESSEE HAS SHOWN THE RECEIPTS AND PAYMENTS PERTAINED TO THE ASSESSMENT Y EARS CONCERNED IN THE BOOKS OF ACCOUNT. IT WAS STATED THAT IF A PROPER RECORDING WAS MADE OF THOSE LOOSE PAPERS, IT WAS APPARENT THAT OPENING CASH BALANCE WAS AVAILABL E WITH THE ASSESSEE. AS THERE WERE RECEIPTS AND PAYMENTS OF CASH AS EVIDENCED BY THE LOOSE PAPERS, SUCH AMOUNT WAS TAXABLE ONLY ON THE PEAK BASIS AS THE RECEIPT W ERE AVAILABLE FOR MAKING THE PAYMENT, THE EXPENDITURE CANNOT BE ADDED AS THIS WI LL AMOUNT TO DOUBLE ADDITION. ON THIS THE LD. COUNSEL FOR THE ASSESSEE STATED THAT T HE ASSESSEE, FIRST OF ALL, WAS NOT PROVIDED OPPORTUNITIES TO EXPLAIN THE LOOSE PAPERS AND ALSO PEAK CREDIT WAS NOT ITA NO.2299-2312/AHD/2007 A.Y.S 1998-99 TO 2004-05 VALI & YAKUB AHMED COLD DRINK V. ITO C.WD-1, BARODA PAGE 3 ALLOWED IN RESPECT OF CASH CREDITS AND EVEN UNEXPLA INED EXPENDITURE ALONG WITH INCOME WHICH WAS ADDED. THE ASSESSEE STATED THAT IN RESPECT OF THE UNEXPLAINED EXPENDITURE, NO ADDITION CAN BE MADE BECAUSE THE RE CEIPTS WERE ALREADY OFFERED TO TAX AND SUCH RECEIPTS WERE AVAILABLE FOR MAKING THE PAYMENTS. THESE FACTS ARE EXACTLY IDENTICAL IN BOTH THE ASSESSEES CASE FOR A LL SEVEN ASSESSMENT YEARS. FROM THE RECORDS, IT IS NOTICED THAT THE LOOSE PAPERS DE NOTED THE TRANSACTIONS WITH THE VARIOUS PERSONS. IT SHOWED AMOUNTS RECEIVED FROM RE LATIVES SETTLED IN USA / UK, AND THE AMOUNT SPENT AS PER THEIR DIRECTIONS THAT FOR K HERAT ETC. AND AMOUNTS RETURNED TO THEM AND THE FACT OF AMOUNT WERE ACTUALLY RECEIVED BY THE ASSESSEE FROM FOREIGN COUNTRIES IS BORNE OUT FROM THE FACT THAT THE LOOSE PAPERS TRANSACTIONS WITH VARIOUS PERSONS, WHICH SHOWED THE AMOUNT RECEIVED FROM MANY PARTIES HAVE NOT CO-RELATED WITH THE BOOKS OF ACCOUNT AND EVEN NO OPPORTUNITY W AS PROVIDED TO THE ASSESSEE BY THE REVENUE TO EXPLAIN THE NATURE OF TRANSACTIONS. EVEN THE PLEA OF THE ASSESSEE HAS NOT BEEN CONSIDERED AS REGARDS TO PEAK CREDIT, WITH TELESCOPING OF THE AMOUNTS TAKEN AS UNSECURED LOAN BY THE ASSESSEE. IN VIEW O F THESE ARGUMENTS, THE LD. COUNSEL FOR THE ASSESSEE REQUESTED THE BENCH THAT A LL THESE APPEALS BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDIC ATION DE NOVO ON ALL THESE ISSUES. 4. ON THE OTHER HAND, LD. DR FAIRLY AGREED THAT IN CASE THESE ASSESSMENTS ARE SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR FRAM ING FRESH ASSESSMENTS DE NOVO AND WITHOUT ANY EMBARGO ON THE ASSESSING OFFICER, THE S AME CAN BE SET ASIDE. HE FURTHER STATED THAT AO SHOULD BE FREE TO DECIDE ALL THESE ISSUES EMERGING OUT OF THE SEIZED MATERIALS AFRESH AS PER THE PROVISIONS OF TH E ACT AND ALSO TO CONSIDER THE PEAK CREDITS AS CLAIMED BY THE ASSESSEE. 5. WE FIND FROM THE RECORDS THAT THE LOWER AUTHORIT IES HAVE NOT RECORDED CATEGORICALLY FINDING AS REGARDS EXPLANATION OF THE ASSESSEE AND IN RESPECT OF SUCH BUSINESS TRANSACTIONS, CASH CREDITS AND UNEXPLAINED EXPENDITURE AND MADE ADDITION WITHOUT CONFRONTING THE SAME TO THE ASSESSEE. THE CIT(A) SIMILARLY REPEATED THE SAME MISTAKE. ITA NO.2299-2312/AHD/2007 A.Y.S 1998-99 TO 2004-05 VALI & YAKUB AHMED COLD DRINK V. ITO C.WD-1, BARODA PAGE 4 6. IN VIEW OF THESE DEFECTS, WE SET ASIDE THESE APP EALS OF THESE TWO ASSESSEE, TO THE FILE OF THE ASSESSING OFFICER TO DECIDE AFRE SH ALL THE ISSUES, DE NOVO , AFTER CONSIDERING AND CONFRONTING THE LOOSE PAPERS TO THE ASSESSEE AND PROVIDING REASONABLE OPPORTUNITIES OF BEING HEARD TO THE ASSE SSEE. NEEDLESS TO SAY, THE ASSESSING OFFICER WILL DECIDE THESE ISSUES DE NOVO AS PER THE PROVISION OF THE ACT. THE AO WILL ALSO CONSIDER THE PLEA OF THE ASSESSEE AS REGARDS TO PEAK CREDIT. ACCORDINGLY, ALL THESE APPEALS OF THE ASSESSEE ARE SET ASIDE TO THE FILE OF ASSESSING OFFICER. 7. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED FOR S TATISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN OPEN COURT ON 28/08/2009 SD/- SD/ (D.C.AGRAWAL) (MAHAVI R SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED :28/08/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-IV, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD