The ITO, Ward-9(2), Surat V. Shri Jenish Kantilal Narkani, Surat

ITA 2370/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5923 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-05-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 23-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H P MEENA
• Assessee Lawyers: POONAM JO SHI
• Section: 143(3); 133A; 143(1); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 2370/AHD./2008 ASSESSMENT YEAR : 2002-2003 INCOME TAX OFFICER, WARD-9(2), SURAT VS.- SH RI JENISH KANTILAL NAKRANI, SURAT (PAN : ACTPN 3980 D) (APPELLANT) (RESPONDENT) & C.O. NO. 203/AHD/2008 (ARISING OUT OF ITA NO. 2370/AHD/2008) ASSESSMENT YEAR : 2002-2003 SHRI JENISH KANTILAL NAKRANI, SURAT VS.- INCOME TAX OFFICER, WARD-9(2), SURAT (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SMT. POONAM JO SHI DEPARTMENT BY : SHRI H.P. MEENA, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON BY THE ASSESSEE ARE AGAINST THE ORDER DATED 28.04.2008 OF LEARNED COMMISSIONER OF I NCOME TAX(APPEALS)-V, SURAT FOR THE ASSESSMENT YEAR 2002-03. THE ONLY GROUND RAISED BY THE REVENUE IN ITS APPEAL IS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A.) HAS ERRED IN DELETING THE ADDITION OF RS.15,59,956/- MA DE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED OPENING CAPITAL. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL. IN THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE FILED HER RETURN OF INCOME ON 29.03.2004 DECLARING TOTAL INCOME OF RS.59,810/-. THE SAID RETURN WAS PROCESSED UNDER SE CTION 143(1) OF THE INCOME TAX ACT BY ACCEPTING THE RETURNED INCOME. 2.1. SUBSEQUENTLY, THE ASSESSING OFFICER REOPENED T HE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148. IN RESPONSE TO THE SAID NOTICE, THE AS SESSEE FILED THE RETURN OF INCOME ON 11.06.2007 DECLARING INCOME OF RS.59,810/-. THE REASONS FOR RE OPENING THE ASSESSMENT WAS THAT A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE CASE OF ONE SHRI PANKAJ DANAWALA (C.A.) BY DDIT (INV.)-II, SURAT ON 11.3.20 05. SHRI PANKAJ DANAWALA IS A PRACTICING 2 ITA NO. 2370 & CO-203/AHD/2008 CHARTERED ACCOUNTANT. DURING THE COURSE OF SURVEY, HE WAS FOUND TO HAVE CREATED LARGE NUMBER OF CAPITAL BUILD UP CASES. THE ASSESSING OFFICER FR AMED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 ON 28.12.2007 AT TOTAL INCOME OF R S.16,19,766/- WHEREIN HE OBSERVED THAT ENTIRE INCOME DECLARED BY THE ASSESSEE I.E. RS.15,59,956/- IS REQUIRED TO BE SUBSTANTIVELY ADDED IN THE CASE OF SHRI RAGHAVJI PATEL OR ANY OTHER MEMBER OF THE RAGHAVJI PATEL GROUP AS THE ASSESSEE IS BENAMIDAR OF THE SAID GROUP, AS HE CLARIFIES IN HIS OWN ASSESSMENT. IN THIS ASSESSMENT ORDER, THE ASSESSING OFFICER ALSO OBSERVED THAT IN PARA 12 THA T IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 148, THE ASSESSEE HAS DISOWNED THE CAPITAL AS WELL AS SOURCE OF THE INCOME CLAIMED. ON THE OTHER PART, SHRI KANTIBHAI R. NAKRA NI, IS ALREADY HELD AS BENAMIDAR OF RAGHAVJI PATEL GROUP, THE SOURCE OF INCOME MUST BE FROM THIS GROUP. 3. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS), THE ASSESSEE FILED THE WRITTEN SUBMISSIONS, WHICH READS AS UNDER :- 'THE ORIGINAL RETURN OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION WAS PREPARED AND FILED BY SHRI PANKAJ DANAWALA ON 29.03 .2003 SHOWING THE INCOME FROM OTHER SOURCES AMOUNTING TO RS.59,810/- ALONGWI TH BALANCE SHEET REFLECTING LOANS AND ADVANCES MADE TO NUMBER OF PARTIES. AFTER RECORDING THE REASONS, THE CASE WAS REOPENED BY THE A.O. U/S. 147 OF THE I.T. ACT BY ISSUING NOTICE U/S. 148 OF THE I.T. ACT. IN RESPONSE TO WHICH THE APPELLANT FI LED THE RETURN ON 11.6.2007 SHOWING TOTAL INCOME AT RS.59,810/-. THEREAFTER THE A.O. ISSUED A QUESTIONNAIRE, AGAINST WHICH THE APPELLANT FILED ITS SUBMISSIONS A ND AN AFFIDAVIT. THE LD. A.O. VIDE PARA 5 OF HIS LETTER DATED 12.6.2 007 ASKED FOR INFORMATION REGARDING GENUINENESS OF THE ENTRIES SHOWN IN THE BALANCE SHE ET WHICH IS REPRODUCED IN PARA 10 ON PAGE 16 OF THE ASSESSMENT ORDER. IN RESPONSE TO WHI CH THE APPELLANT SUBMITTED A REPLY ALONG WITH AN AFFIDAVIT DISOWNING THE CAPITAL AND L OANS AND ADVANCES AS APPEARING IN THE BALANCE SHEET PREPARED AND FILED BY SHRI PANKAJ DAN AWALA. THE LEARNED A.O. DID NOT ACCEPT THE SUBMISSIONS OF THE APPELLANT. THE LEARNE D A.O. SHOULD HAVE ACCEPTED THE AFFIDAVIT AS THE APPELLANT DID NOT HAVE ANY OTHER E VIDENCE, BECAUSE SHRI PANKAJ DANAWALA CREATED/ INCREASED THE FUNDS BEHIND THE BA CK OF THE APPELLANT. YOUR HONOUR WILL APPRECIATE THAT THE ASSESSING OFFICER HAS NOT ACCEPTED THE VERSION OF THE AFFIDAVIT NOR HE CROSS EXAMINED THE APPELLANT. THEREFORE, IT IS N O OPEN TO THE REVENUE TO CHALLENGE THE FACTS MENTIONED IN THE AFFIDAVIT. THE APPELLANT IN HIS SUBMISSIONS BROUGHT TO THE NOTICE OF THE A.O. THAT THE THEN CA OF THE APPELLANT PREPARED TWO BALANCE SHEETS FOR THE SAME YEAR, WHICH IS PRESENT THERE IN THE RECORDS IMPOUNDED BY THE DEPARTMENT. THIS FACT WAS ADMITTED BY THE A.O. IN PARA 12 OF THE ASSESSMENT O RDER ON PAGE 17, WHEREIN THE LERANED A.O. MENTIONED THAT NOTICED THAT, THREE WERE TWO B ALANCE SHEETS FOR THE SAME YEAR, THE OPENING BALANCE OF HIS CAPITAL AT RS.239390/-, AND ALSO ANOTHER SET OF BALANCE SHEET FOR THE SAME YEAR WHEREIN THE OPENING BALANCE IN THE CA PITAL ACCOUNT FOR AY 2002-03 IS RS.1763536/- AND THE CLOSING BALANCE OF HIS CAPITAL AT RS.1799346/- WHICH IN TURN BECAME OPENING CAPITAL OF THE NEXT YEAR. THE ASSESS EE HAS ENHANCED HIS CAPITAL BY RS.1559956/- TO THE INCOME OF RS.59,810/-SHOWN BY T HE APPELLANT IN THE ORIGINAL RETURN, 3 ITA NO. 2370 & CO-203/AHD/2008 WITHOUT CONSIDERING THE WELL KNOWN FACT THAT, SHRI PANKAJ DANAWALA HAS PLAYED SUCH TYPE OF MISCHIEF IN NUMBER OF CASES AND FOR THE REASONS BEST KNOWN TO HIM. WITHOUT PREJUDICE TO THE ABOVE, IT MAY BE MENTIONED HERE THAT THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.1559956/- ON ACCOUNT OF UNEX PLAINED PORTION OF NEWLY INTRODUCED CAPITAL WITHOUT MENTIONING ANY PROVISION OF THE IT ACT. THE APPELLANT HAS NOT INTRODUCED ANY CAPITAL DURING THE YEAR OF ACCOUNT NOR MADE ANY NEW INVESTMENT WHICH CAN BE SAID TO BE UNEXPLAINED. THE APPELLANT HAS CONTENDED BEFORE THE ASSESSING OF FICER THAT THE APPELLANT DID NOT PROVIDE ANY LOANS OR ADVANCES TO ANYBODY. THE DETAI LS SO MENTIONED IN THE BALANCE SHEET ARE CREATED BY SHRI PANKAJ DANAWALA CA. THE ENTIRE EXERCISE OF REFLECTING CAPITAL REPRESENTED BY WAY OF ADVANCES THAT TOO WITHOUT PRE PARATION OF ANY BOOKS OF ACCOUNTS WAS CARRIED OUT BY SHRI PANKAJ DANAWALA OF WHICH TH E ASSESSEE WAS NOT AWARE. IT WAS ALSO ARGUED BEFORE THE A.O. THAT THE INCOME SHOWN I N THE RETURN FILED IN RESPONSE TO NOTICE US/. 148 IS THE CORRECT INCOME OF THE APPELL ANT. THE A.O. HAS WRONGLY ADDED THE SAME ON PROTECTIVE BASIS. IN THIS CONNECTION, THE A PPELLANT HAS FILED AN AFFIDAVIT DATED 29.10.2007, THE COPY OF WHICH IS BEING ENCLOSED HER EWITH AS ANNEXURE A FOR YOUR KIND CONSIDERATION. MOREOVER, AS A PART OF JUDICIAL PROCESS THE APPELLA NT SHOULD HAVE BEEN PROVIDED A COPY OF STATEMENT OF SHRI PANKAJ DANAWALA RECORDED BY TH E DEPARTMENT DURING THE SURVEY. IF THIS HAS BEEN DONE BY THE DEPARTMENT WE COULD HAVE EXAMINED/CROSS EXAMINED SHRI PANKAJ DANAWALA, THEREFORE THE ADDITIONS MADE MEREL Y ON THE BASIS OF THE CAPITAL ACCOUNT AND BALANCE SHEET PREPARED BY THE SHRI PANK AJ DANAWALA AND ENCLOSED BY HIM WITH THE ORIGINAL RETURN BEING UNLAWFUL MAY KINDLY BE DELETED AS IT IS A WELL SETTLED LAW THAT, THE ASSESSEE CAN NOT BE PENALIZED FOR THE MIS TAKE/MISCHIEF OF THEIR CONSULTANT. ' 4. AFTER CONSIDERING THE AFORESAID SUBMISSIONS OF T HE LD. COUNSEL OF THE ASSESSEE, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), IN THE IMPUGNED ORDER, DELETED THE ADDITION FOR THE DETAILED REASONS GIVEN IN PAGES 5-8 IN THE IMPU GNED ORDER, WHICH ARE EXTRACTED BELOW :- THE MAIN ISSUE RELATES TO ADDITION OF RS,15,59,956 /- AS ENHANCEMENT OF OPENING CAPITAL IN THE CAPITAL ACCOUNT ON PROTECTIVE BASIS. THE AO HAS ALSO ADDED RS.59,810/- ON PROTECTIVE BASIS, WHICH THE APPELLANT HAS CLAIMED A S HIS SUBSTANTIVE INCOME. THE PAPERS IMPOUNDED FROM THE PREMISES OF SHRI DANA WALA INDICATED AN ENHANCEMENT OF RS.15,59,956/-IN THE OPENING CAPITAL OF A.Y.2002-03 . ACCORDING TO THE AO, THE DIFFERENCE OF RS.15,00,000/- REPRESENTED THE UNEXPLAINED PORTI ON OF NEWLY INTRODUCED CAPITAL. MOST IMPORTANTLY, THE CAPITAL SO CREATED BY SHRI DANAWAL A WAS ONLY IN THE FORM OF ROUGH JOURNAL ENTRIES OR ROUGH ACCOUNTS AND HAD NOT BEEN ENTERED INTO THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO, HOWEVER, TREATED S UCH ENTRIES AS UNEXPLAINED PORTION OF NEWLY INTRODUCED CAPITAL AND ADDED TO THE TOTAL INC OME OF THE ASSESSEE. AS CAN BE SEEN THAT THE CLOSING BALANCE OF PRECEDIN G YEAR HAS BECOME AN ENHANCED OPENING BALANCE IN THE SUBSEQUENT YEAR. THEREFORE T HE CHARACTER OF THE DIFFERENTIAL AMOUNT IS TO BE ASCERTAINED. IT IS NOT THE CASE OF DEPARTMENT THAT THE UNACCOUNTED FUNDS WERE INTRODUCED IN THE BOOKS OF ACCOUNTS OR BANK AC COUNT UNDER THE GARB OF ENHANCED AND INFLATED OPENING BALANCE- IT HAS BEEN ALSO ASCE RTAINED THAT NO MONIES OUT OF SUCH OPENING BALANCE WERE WHOLLY OR PARTIALLY ADVANCED A S INTEREST BEARING LOANS TO ANY ONE. NOR HAS ANY PARTY UTILIZED SUCH FUNDS FOR ANY BUSIN ESS OR PERSONAL PURPOSES. SO THE APPELLANT HAS NOT DERIVED ANY FINANCIAL BENEFIT FRO M MANIPULATION OF OPENING BALANCE. IN 4 ITA NO. 2370 & CO-203/AHD/2008 THIS CASE ONLY THE CA OF THE APPELLANT HAS UNILATER ALLY FABRICATED FIGURES OF OPENING BALANCE ON AN UNSIGNED ALLEGED BALANCE SHEET PERHAP S TO BE READY TO GIVE ENTRIES AS AND WHEN THE OPPORTUNITY ARISES IN THE MARKET. BUT IN R EALITY IT COULD ONLY BE A PREPARATORY STEP WITHOUT ANY ACTUAL ENTRY GIVEN OR INCOME DERIV ED THERE FROM, SHRI PANKAJ DANAWALA VIDE HIS STATEMENT DATED 11/3/05 AS REPRODUCED ON P AGE 8 TO 11 OF THE ASSESSMENT ORDER HAS GIVEN A DETAILED MODUS OPERANDI WHEREIN THE ACT UAL UTILIZATION OF CAPITAL BUILD UP HAS BEEN CONFESSED IN CERTAIN CASES. IN THE APPELLANT'S CASE IT IS NOT SO. THE CIRCUMSTANCES AND FACTS, IN APPELLANT'S CASE RENDER THE DIFFERENT IAL AMOUNT ONLY A FICTIONAL CHARACTER AND LYING IN FICTITIOUS NAMES. THERE IS NO REAL FUN D WHICH IS AVAILABLE WITH THE APPELLANT EITHER IN HIS BOOKS OR BANK ACCOUNT OR STOOD EXPEND ED; INVESTED OR LOANED OUT ANYWHERE. HOW CAN POSSIBLY ANY IMAGINARY FIGURE, GATHERED FRO M ANY WHERE BE TAXED AS APPELLANT'S INCOME. SIMILARLY ALL THE SO CALLED ASSETS SHOWN AG AINST SUCH BOGUS CAPITAL WILL ACQUIRE SIMILAR FICTITIOUS CHARACTER. APEX COURT HAS HELD I N 43 ITR 387 (SC) IN THE CASE OF LALJI HARIDAS THAT, IN CASES WHERE IT APPEARS TO THE INCO ME-TAX AUTHORITIES THAT CERTAIN INCOME HAS BEEN RECEIVED DURING THE RELEVANT YEAR BUT IT I S NOT CLEAR WHO HAS RECEIVED THAT INCOME AND, PRIMA FADE, IT APPEARS THAT THE INCOME MAY HAVE BEEN RECEIVED EITHER BY A OR BY B OR BY BOTH TOGETHER, IT WOULD BE OPEN TO TH E INCOME-TAX AUTHORITIES TO DETERMINE THE QUESTION WHO IS RESPONSIBLE TO PAY TAX BY TAKIN G ASSESSMENT PROCEEDINGS BOTH AGAINST A AND B. THEREFORE THE PRESUPPOSITION AND BASIC REQ UIREMENT IS THE ACTUAL RECEIPT OF INCOME. IN THE INSTANT CASE NOTHING HAS BEEN RECEIV ED. ONLY THE FIGURE STANDS CREATED IN A CLANDESTINE MANNER. SECONDLY IT IS NOT ONLY THE RIG HT, BUT THE DUTY OF THE ASSESSING OFFICER TO CONSIDER WHETHER OR NOT THE BOOKS DISCLOSE THE T RUE STATE OF ACCOUNTS AND CORRECT INCOME CAN BE DEDUCED THEREFROM. THE TERM 'BOOKS OF ACCOUNT' WOULD MEAN THOSE BOOKS OF ACCOUNTS WHOSE MAIN OBJECT IS TO PROVIDE CREDIBL E DATA AND INFORMATION TO FILE THE TAX RETURNS. THE CREDIBLE ACCOUNTING RECORD PROVIDES TH E BEST FOUNDATION FOR FILING RETURN OF BOTH DIRECT AND INDIRECT TAXES. IT CANNOT BE UNDERS TOOD TO MEAN COMPILATION OR COLLECTION OF SHEETS WITH THE APPELLANT'S CA. THE LEGISLATIVE INTENT IS TO ADMIT ONLY THOSE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE ON HIS OWN BEHAL F WHICH BY THEIR VERY NATURE AND CIRCUMSTANCES ARE MAINTAINED FOR THE PURPOSE OF DRA WING THE SOURCE OF INCOME. FOR MAKING ADDITION ON ACCOUNT OF UNEXPLAINED PORTION O F NEWLY INTRODUCED CAPITAL, THE CREDIT SHOULD HAVE BEEN MADE IN THE ASSESSEE'S BOOK S OF ACCOUNT KEPT IN THE REGULAR COURSE OF BUSINESS. SINCE, THE C.A. HAD ADMITTED TO HAVE CREATED THE ACCOUNTS HIMSELF, AND THE COMPLICITY OF THE ASSESSEE IN SUCH CREATION WAS NOT ESTABLISHED, THE CREDIT ENTRIES IN SUCH ACCOUNTS IN LOOSE SHEETS OF PAPER, COULD NO T BE TREATED AS ENTRIES IN THE ASSESSEE'S OWN BOOKS OF ACCOUNT KEPT IN THE REGULAR COURSE OF BUSINESS. IN THE INSTANT CASE INCOME HAS NOT BEEN EARNED IN R EALITY AND THEREFORE, NO TAXABILITY CAN BE FASTENED TO THE APPELLANT FOR UNEARNED INCOME. APPARENTLY THERE IS NO BENEFICIARY HERE IN THIS CAS E. BUT EVEN IF SOME ONE HAS CLAIMED ANY LOANS, EXPENDITURE OR ACQUISITION OF ANY ASSET, WHO SE SOURCE IS THIS FICTITIOUS; ENHANCED AND BOGUS CAPITAL FORMATION IN THE APPELLANT'S HAND S, THE SAME CAN NOT BE ALLOWED TO GO EXPLAINED OR ACCOUNTED FOR AND WILL HAVE TO BE TAXE D IN SUCH BENEFICIARY HANDS. MOST IMPORTANTLY, THE APPELLANT HAS FILED RETURN SHOWING INCOME OF RS.90,060/- AND WHICH HAS NO LINKAGES WITH THE CAPITAL INTRODUCED AS OPENING BALANCE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IT HAS MADE NO CLAIM, SOUGHT RELIEF OR ANY DEDUCTION BEFORE THE IT. DEPARTMENT. THEREFORE REJECTION OF ANY CLAIM OR HOL DING THE DIFFERENTIAL AMOUNT VIS-A-VIS PRECEDING YEAR'S CLOSING BALANCE BEING TAXABLE INCO ME OF THE YEAR UNDER CONSIDERATION INCASE OF THE APPELLANT IS FUTILE. 5 ITA NO. 2370 & CO-203/AHD/2008 HENCE HAVING APPLIED MY MIND TO THE ISSUE, IT IS HE LD THAT, THE AO WAS NOT JUSTIFIED IN RELYING UPON THE FICTITIOUS ENTRIES IN LOOSE SHEETS OF PAPER FOUND FROM THE PREMISES OF THE C.A. SHRI PANKAJ DANAWALA, WHO HAD ADMITTED TO HAVE CREATED SUCH ACCOUNTS HIMSELF. FURTHER, THESE ENTRIES WERE NEITHER SUPPORTED BY AN Y INDEPENDENT CORROBORATIVE EVIDENCE SO AS TO ESTABLISH THEIR GENUINENESS NOR WAS SUCH C APITAL UTILIZED BY ANY ONE, WARRANTING ANY ADDITION IN THE HANDS OF THE APPELLANT. IN THE LIGHT OF DISCUSSION AS ABOVE, THE ADDITION OF THE SUM OF RS.15,59,956/- MADE ON ACCOU NT OF UNEXPLAINED PORTION OF NEWLY INTRODUCED CAPITAL STAND DELETED. IT IS FURTHER HEL D THAT THE RETURNED INCOME OF RS.59,810/- SHOWN BY THE ASSESSEE SHALL BE TAXED AS HIS SUBSTAN TIVE INCOME. 5. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER O F INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF R EVENUE SHRI H.P. MEENA, SR. D.R. APPEARED AND RELYING ON THE REASONING GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER CONTENDED THAT ASSESSING OFFICER RIGHTLY MADE THE A DDITION OF RS.59,810/- UNDER SECTION 68 OF THE INCOME TAX ACT ON PROTECTIVE BASIS AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS NOT JUSTIFIED IN DELETING THE SAME. THE LD. D.R. PO INTED OUT THAT BEFORE BOTH THE AUTHORITIES BELOW, THE ASSESSEE FAILED TO PRODUCE ANY DOCUMENTS TO DIS OWN THE VARIOUS ENTRIES. THEREFORE, THE ADDITION WAS MADE ON PROTECTIVE BASIS ON THE BASIS OF RETURN OF INCOME FILED BY HER (THE ASSESSEE). THE RETURN OF INCOME IS A LEGAL DOCUMENT , WHICH CANNOT BE SAID TO BE ROUGH PAPER AND LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CLEARLY ERRED IN DELETING THE SAID ADDITION OF RS.15,59,956/-. 7. ON THE OTHER HAND, SMT. POONAM JOSHI, LD. COUNSE L APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX(APPEALS). SHE POINTED OUT THAT THE ENTIRE EXERCISE OF REFLECTING CAPITAL REPRESENTED BY WAY OF ADVANCES THAT TOO WITHOUT PREPARATION OF ANY BOOKS OF ACCOUNTS WAS THAT OF SH RI PANKAJ DANAWALA, ABOUT WHICH A LAYMAN IS NOT COMPETENT ENOUGH AND CANNOT BE EXPECTED TO UNDE RSTAND THE IMPLICATION AND CONSEQUENCES OF SUCH AN ACT. THE LD. A.R. SUBMITTED THAT FICTITIOUS ENTRIES WERE NEITHER SUPPORTED BY ANY INDEPENDENT CORROBORATIVE EVIDENCE NOR SUCH CAPITAL WAS UTILIZED, THEREFORE, THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 8. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSING OFFICER HIMSELF WAS NOT SURE W HETHER THIS INCOME OF RS.15,59,956/- IS EARNED AND ACTUALLY BELONGED TO THE ASSESSEE. THIS IS EVIDENT FROM FOLLOWING OBSERVATION OF ASSESSING OFFICER IN PARA 12 OF THE IMPUGNED ORDER :- 6 ITA NO. 2370 & CO-203/AHD/2008 ..THE ASSESSEE HAS FILED RETURN IN RESPONSE TO N OTICE U/S. 148 OF THE I.T. ACT AND DISOWNED THE CAPITAL AS WELL AS SOURCE OF THE INCOME CLAIMED. ON THE OTHER PART, SHRI KANTIBHAI R. NAKRANI, IS AL READY HELD AS BENAMIDAR OF RAGHAVJI PATEL GROUP, THE SOURCE OF IN COME MUST BE FROM THIS GROUP. THE SAID INCOME I.E. RS.15,59,956/- IS REQUIRED TO BE SUBSTANTIVELY ADDED IN THE CASE OF SHRI RAGHAVJI PA TEL OR ANY OTHER MEMBER OF THE RAGHAVJI PATEL GROUP AS HE CLARIFY IN HIS OWN ASSESSMENT. 9. MOREOVER, THE ASSESSEE HAS FILED AN AFFIDAVIT BE FORE THE ASSESSING OFFICER. FROM THE PERUSAL OF THE SAME AND AFTER CONSIDERING THE TOTAL ITY OF THE FACTS AND REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), WE ARE CONVINCED THAT THE ASSESSING OFFICER MADE THE ADDITION OF RS.15,59,956/- ON THE BASIS OF FICTITIOUS ENTRIES IN LOOSE SHEETS OF PAPER FOUND FROM THE PREMISES OF THE C.A. SHRI PANKAJ DAN AWALA, WHO HAD ADMITTED TO HAVE CREATED SUCH AMOUNTS HIMSELF. THEREFORE, THE LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORRECT IN DELETING THE ADDITION OF R S.15,59,956/-, WHICH WAS MADE BY THE ASSESSING OFFICER IN THE HANDS OF ASSESSEE ON PROTE CTIVE BASIS. RESULTANTLY, THE APPEAL OF THE REVENUE IS REJECTED. 10. NOW WE TAKE UP THE CROSS OBJECTION BEING C.O. N O. 203/AHD/2008 FILED BY THE ASSESSEE, IN WHICH THE ASSESSEE HAS RAISED ONLY ONE GROUND, WHICH READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS JUS TIFIED IN DELETING THE ADDITION OF RS.15,59,956/- MADE BY ASS ESSING OFFICER ON ACCOUNT OF UNEXPLAINED OPENING CAPITAL. 11. AS WE HAVE ALREADY DECIDED THE ISSUE IN REVENUE S APPEAL ABOVE, THEREFORE, THIS ISSUE RAISED BY THE ASSESSEE IS RENDERED INFRUCTUOUS AND THE SAME IS REJECTED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WELL AS CROSS OBJECTION BY THE ASSESSEE BOTH ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 18.06.2010 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 / 06 / 2010 7 ITA NO. 2370 & CO-203/AHD/2008 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER D EPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.