The ACIT,(OSD)Circle-9, Ahmedabad V. M/s. New Arbuda Builders, Ahmedabad

ITA 2494/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1423 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Source of fund; Reason to believe
• Section: 143(3); 148

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.2494/AHD/2012 / ASSTT. YEAR: 2008-2009 ACIT (OSD), CIR.9 AHMEDABAD. VS M/S.NEW ARBUDA BUILDER 601/C, SAHJANANAD COMPLEX SAHIBAUG, AHMEDABAD. PAN : AABFN 7229 H ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SMT.VIBHA BHALLA, CIT - DR ASSESSEE BY : SHRI M.K. PATEL, AR / DATE OF HEARING : 08/04/2016 / DATE OF PRONOUNCEMENT: 08/06/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF T HE REVENUE AGAINST THE ORDER OF THE LD.CIT(A)-XV, AHMEDABAD DA TED 2.8.2012 PASSED FOR THE ASSTT.YEAR 2008-09. 2. SOLE ISSUE INVOLVED IN THE APPEAL IS WHETHER THE ADDITION OF RS.6,00,00,000/- IS REQUIRED TO BE MADE IN THE TOTA L INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PR OPERTY. ITA NO.2494/AHD/2012 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-FI RM IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE HAS F ILED ITS RETURN OF INCOME ON 11.7.2008 DECLARING TOTAL INCOME AT RS.39 ,10,010/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T, AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 23.9.2009. ON SCRUTINY OF THE ACCOUNTS, THE LD.AO HAS OBSERVED THAT ANNUAL INFORM ATION REPORT WING HAS TRANSMITTED AN INFORMATION TO HIM EXHIBITING TH E FACT THAT THE ASSESSEE HAS PURCHASED A PROPERTY FOR A CONSIDERATI ON OF RS.6,00,00,000/- COMPRISED AT 1723, GANDHI NAGAR MA NSA HIGHWAY, MANSA. HE DIRECTED THE ASSESSEE TO EXPLAIN THE NAT URE AND SOURCE OF SUCH INVESTMENT. IN RESPONSE TO THE QUERY OF THE AO, TH E ASSESSEE VIDE LETTER DATED 15.12.2010 HAS SUBMITTED COPY OF THE PURCHASE DEED DATED 14.6.2007, COPY OF MEMORANDUM OF UNDERSTANDING BETW EEN THE ASSESSEE AND M/S.GAYATRI CORPORATION DATED 15.6.2007, LEDGER ACCOUNT OF M/S.GAYATRI CORPORATION FROM ASSESSEES BOOKS, CROS S-ACCOUNT FROM M/S.GAYATRI CORPORATION, COPY OF INCOME-TAX RETURN OF M/S.GAYATRI CORPORATION WITH BALANCE SHEET, PROFIT & LOSS ACCOU NT AND PARTNERSHIP DEED. IT WAS CONTENDED BY THE ASSESSEE THAT OFFICI AL LIQUIDATOR (OL FOR SHORT) OF THE HONBLE GUJARAT HIGH COURT HAS FL OATED A TENDER FOR SALE OF THE PROPERTY OWNED BY ONE M/S.ENERJON TECHNICS C O. LTD. THE ASSESSEE HAS APPLIED FOR THE PURCHASE OF THE PROPER TY AND OL HAS AWARDED THE TENDER FOR THE LAND AND BUILDING OF M/S .ENERJON TECHNICS CO. LTD. FOR A SUM OF RS.6,00,00,000/- TO THE ASSES SEE-FIRM. THE ASSESSEE HAS SUBMITTED DETAILS OF PAYMENT AND ALSO DISCLOSED DETAILS OF BANK THROUGH WHOM DEMAND DRAFTS WERE GOT ISSUED. T HE LD.AO WAS NOT ITA NO.2494/AHD/2012 3 SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE POINTED OUT SEVEN DEFECTS IN THE STORY OF THE ASSESSEE, AND ULTIMATEL Y MADE AN ADDITION RS.6,00,00,000/- IN THE TOTAL INCOME OF THE ASSESSE E ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROPERTY. 4. DISSATISFIED WITH THE ADDITION, THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE THE LD.FIRST APPELLATE AUTHORITY, WHO HAS CALLED FOR REMAND REPORT FROM THE AO, AND THEREAFTER, DELETED THE ADDITION. THE FINDING RECORDED BY THE LD.FIRST APPELLATE AUTHORIT Y READS AS UNDER: 5. I HAVE PERUSED THE FACTS AS ENUMERATED BY A.O. IN THE ASSTT. ORDER AND IN THE REMAND REPORT. I HAVE PERUSED THE FACTS AS SUBMITTED BY APPELLANT DURING APPEAL PROCEEDINGS. I HAVE PERUSED THE DETAILS AS CALLED FOR FROM VARIOUS BANKS U/S 13 3(6) OF THE ACT. AFTER CAREFUL CONSIDERATION OF FACTS, SUBMISSION AN D CONTENTIONS OF THE APPELLANT AS WELL AS A.O., I AM INCLINED TO ACC EPT THE CONTENTION OF THE APPELLANT THAT PURCHASE TRANSACTI ON OF LAND BELONGING TO M/S EVERION TECHNIQUES P. LTD. (ETPL) FOR AN AMOUNT OF RS. 6 CR. IS DULY SUPPORTED BY SOURCE AS INCURRED BY APPELLANT AS WELL AS BY M/S GAYATRI CORPORATION AS EVIDENCED THROUGH DETAILS FROM VARIOUS BANKS AND CANNOT BE HE LD AS UNDISCLOSED INVESTMENT. IT IS ALSO A FACT THAT THE ASSET I.E. LAND IN QUESTION IS THOUGH ACQUIRED BY APPELLANT THROUGH PA RTICIPATING IN AUCTION CUM TENDER PROCESS UNDER TAKEN BY OFFICIAL LIQUIDATOR ON BEHALF OF HON'BLE GUJARAT HIGH COURT AND SALE DEED IS EXECUTED BETWEEN ETPL AND APPELLANT BUT THE ASSET IS SHOWN I N THE BALANCE SHEET OF M/S.GAYATRI CORPORATION, A FIRM WHO IS THE ULTIMATE OWNER ON ACCOUNT OF A MOD BETWEEN APPELLANT AND FIR M. THE A.O. DOUBTED THE EXISTENCES OF THIS FIRM AND IT HAS BEEN HELD THAT THIS IS A SELF CREATED ENTITY WITH DUBIOUS CAPITAL INTRODUC TION TO KEEP THE ASSET OUTSIDE THE PREVIEW OF DEPARTMENT. BUT, THE I TO WARD 9(2) AHMEDABAD UNDER THE JURISDICTION OF A.O. I.E. ADDL. C.I.T. RANGE 9 ITA NO.2494/AHD/2012 4 AHMEDABAD ISSUED NOTICE DT. 16/03/11 U/S 148 OF THE ACT, AFTER RECORDING PROPER REASONS AS FOLLOWS: 'IN THIS CASE, ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2008-09 VIDE ACKNOWLEDGEMENT. NO. 24300863 DATED 14/07/2008 DECLARING TOTAL INCOME AT NIL. ALONG WIT H THE RETURN OF INCOME THE ASSESSEE HAS FILED ITS BALANCE SHEET WHEREIN CAPITAL INTRODUCTION OF RS. 12,20,40,000/- IS REFLECTED. THE PARTNERS IN THE FIRM INCLUDES M/S. N EW ARBUDA BUILDERS, A PARTNERSHIP FIRM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S. NEW ARBUDA BUILDERS, IT WAS SUBMITTED ON BEHALF OF THE SAID FIRM THAT A PROPERTY VALUED OF R S. 6,00,00,000/- WHICH, AS PER AIR INFORMATION AND THE RECORDS AVAILABLE WITH SUB REGISTRAR GANDHINAGAR, WAS REGIS TERED IN THE NAME OF M/S. NEW ARBUDA BUILDERS WAS, IN EXP LICABLY, REFLECTED IN THE ACCOUNTS OF THE ASSESSEE I.E. M/S. GAYATRI CORPORATION. IN SUPPORT OF THE SUBMISSION AN MOD SI GNED BETWEEN M/S. NEW ARBUDA BUILDERS AND M/S. GAYATRI CORPORATION WERE FURNISHED. THE ASSESSING OFFICER - ADD. CIT, RANGE-9, AHMEDABAD, VERIFIED THE SOURCE OF INV ESTMENT IN THE SAID PROPERTY AND FOUND THAT THE SAME WAS NO T EXPLAINED. IT WAS ALSO FOUND BY THE ASSESSING OFFIC ER THAT THE SOURCES OF CAPITAL INTRODUCTION IN THE HANDS OF M/S . GAYATRI CORPORATION WAS ALSO NOT EXPLAINED AND THE PARTNERS WERE NOT FOUND AT THE ADDRESSES MENTIONED IN THE PARTNER SHIP DEED. THE INFORMATION WAS THUS PASSED ON TO THE UNDERSIGNED BY THE ADDL. CIT, RANGE-9, AHMEDABAD. FROM THE FACTS AS NARRATED ABOVE AND THE INFORMATIO N RECEIVED FROM ADDL. CIT, RANGE-9, AHMEDABAD, IT IS APPARENT THAT THE SOURCES OF INVESTMENT IN THE LAND WORTH RS. 6,00,00,000/-ARE NOT EXPLAINED. THE SOURCES OF CAPI TAL INTRODUCTION BY PARTNERS ARE ALSO NOT PROPERLY EXPL AINED. I THEREFORE, HAVE REASON TO BELIEVE THAT INCOME TO TH E TUNE OF ITA NO.2494/AHD/2012 5 RS. 12,20,40,000/- HAS ESCAPED ASSESSMENT AND THERE FORE NOTICE U/S. 148 IS HEREBY ISSUED.' THE I.T.O. VIDE ORDER DT. 09/12/11 U/S 143(3) R.W.S . 147 OF THE ACT COMPLETED THE REASSTT. PROCEEDING IN THE CASE OF M/ S GAYATRI CORPORATION AT RETURNED INCOME OF LOSS OF RS. 3,660 . IT IS THEREFORE THE DOUBT OF A.O. IS UNFOUNDED AND NOT SUBSTANTIATE D AFTER SUCH ORDER AND HENCE NOT JUSTIFIED. FURTHER, AS PER THE VARIOUS INQUIRIES FROM BANK IN RESPECT OF SOURCE OF FOUND FROM M/S.GA YATRI CORPORATION, THE RESPECTIVE BANKS CONFIRMED THE SOU RCES OF FUND FROM VARIOUS NRE & NRO ACCOUNTS OF THE NRI PARTNERS OF M/S GAYATRI CORPORATION. HENCE TRANSACTION THROUGH BAN KING CHANNEL STAND CONFIRMED THE CONTENTION OF THE APPELLANT THA T THE PURCHASES OF ASSET IS DULY SUPPORTED BY DISCLOSED SOURCES OF FUND. CONTENTION RAISED BY A.O. IN THE ASSTT. ORDER AS WELL AS IN TH E REMAND REPORT DT. 29/11/11 WERE DULY REPLIED BY APPELLANT IN REJ OINDER AND FOUND SUBSTANTIATED DURING BANK INQUIRIES. APPELLANT VI DE WRITTEN SUBMISSION DT. 12/10/11 (RECEIVE ON 19/12/11 )GIVEN A CHART TO SHOW THE SOURCE OF FUNDS FOR PAYMENT OF VARIOUS AMO UNTS TOTALING TO RS. 6 CR. INQUIRIES WERE MADE FROM APPELLANT AS WELL FROM BANK FOR CONFIRMATION OF SOURCES OF FUND. THE SAME STAND S CONFIRMED AS CLAIMED BY APPELLANT. BEING THESE DETAILS BEARS AN IMPORTANT BEARING ON THE ISSUE AND A.O. HAS NOT GIVEN SPECIF IC OPPORTUNITY TO APPELLANT TO PRODUCE THESE DETAILS, I ADMIT ALL THESE EVIDENCES. INQUIRIES MADE FROM THE BANK REFLECT THE EVIDENCES OF THESE DETAILS AND ITS SUBSTANTIAL BEARING ON THE ISSUE FURTHER RE QUIRED TO ADMIT SUCH EVIDENCES THOUGH NONE OF THEM ARE ADDITIONAL. IT IS THEREFORE THERE REMAINS NO GROUND FOR TREATING THE ASSET AS U NDISCLOSED INVESTMENT. FURTHER AS EVIDENT FROM THE RETURN OF I NCOME FILED BY M/S GAYATRI CORPORATION FOR A.Y. 14/07/08 WITH I.T.O. WARD 9(2) AHMEDABAD (APPELLANT FILED RETURN OF INCOME FO R A.Y. 08-09 ON 11/07/08 ) THAT AUDITED FINANCIAL ACCOUNTS IN CLUDES IN THE BALANCE SHEET AS ON 31/03/08 'LAND & BUILDING - EN ERJON - MAURA' AT RS. 6,46,61,500 AS APPLICATION OF FUND HE NCE THERE WAS NO INTENTION OF THE APPELLANT TO KEEP AWAY THIS TRA NSACTION OUT OF PREVIEW OF DEPARTMENT. THE MOU CLEARLY PROVIDED THE ACQUISITION OF PREMISES OF ENERJON AT MANSA BY THE APPELLANT ON BEHALF M/S ITA NO.2494/AHD/2012 6 GAYATRI CORPORATION IN WHICH THE APPELLANT IS ALSO A PARTNER OF 11%. IT IS NOT DISPUTED THAT AS PER THIS DEAL AN D REGISTERED DEAD THE APPELLANT IS THE OWNER OF SAID PROPERTY BUT FUR THER REGISTRATION WILL REQUIRE TIME AND PROCEDURE AS THE PROPERTY IS ACQUIRED DURING AUCTION UNDER THE SUPERVISION OF OFFICIAL LIQUIDATO R APPOINTED BY HON'BLE GUJARAT HIGH COURT. BUT, EVEN IF SAID TRANS ACTION IS REFLECTED IN M/S.GAYATRI CORPORATION BOOKS OF ACCOU NT WITH SATISFACTORY SOURCE OF ACQUISITION AS EVIDENT AND D ISCUSSED IN EARLIER PARA, IT WILL BE A TAX NEUTRAL ENTRY. IN VI EW OF THESE REASONS THE A.O. IS DIRECTED TO DELETE ADDITION SO MADE. TH E APPELLANT GETS RELIEF OF RS. 6 CR. IN REFERENCE TO GROUND RELATED TO DISALLOWANCE OF C ERTAIN EXPENSES VIZ. LEVELING AND SAND CARTING EXPENSES, T RANSPORTATION EXPENSES AND OTHER EXPENSES ON ACCOUNT OF VOUCHERS RELATED TO THESE EXPENSES ARE SELF MADE VOUCHERS AND ARE UNVER IFIABLE WHILE DISALLOWANCE OF VEHICLE EXPENSES ON ACCOUNT OF PERS ONAL USE, I AM FIRSTLY INCLINED TO ACCEPT THE CONTENTIONS OF THE A PPELLANT THAT IN THE ABSENCE OF ANY SHOW CAUSE, RATHER NO DISCUSSION IS MADE IN ASSTT. ORDER, SUCH DISALLOWANCE IS ON THE BASIS OF CONJUCT URE AND SURMISES. IT IS CONTENDED THAT THE APPELLANT'S BOOK S OF ACCOUNTS ARE AUDITED AND NO ADVERSE COMMENT ARE MENTIONED IN THE TAX AUDIT REPORT BY THE AUDITOR. THE PREPARATION OF SELF PREP ARING OF VOUCHERS FOR SUCH EXPENSES ARE NOT PROHIBITED RATHE R FOR PROPER ACCOUNTING THE SAME ARE REQUIRED AND APPROVED AS PE R ACCOUNTING STANDARD. THE A.O. HAS NOT SPECIFICALLY POINTED OUT ANY DEFECT OR DISCREPANCY IN ANY OF SUCH VOUCHERS. CONSIDERING AL L THESE REASON, THERE IS NO JUSTIFICATION FOR SUCH DISALLOWANCE AND ADDITIONS. IN THIS REGARD THOUGH THE A.O. HAS NOT DISCUSSED THE D ISALLOWANCES AND HAS NOT GIVEN SHOW CAUSE TO APPELLANT BUT IMPOR TANT FACT REMAINED UNCONTROVERTED THAT APPELLANT ON BEHALF OF M/S GAYATRI CORPORATION ACTED AND PARTICIPATED IN AUCTION PROCE SS FOR ACQUISITION OF LAND BUT AS PER MOU THIS LAND STANDS ASSET ON COST OF ITS ACQUISITION IN THE BOOKS OF M/S GAYATRI CORP ORATION, INDIRECT EXPENSES IN THE FORM OF TRANSPORTATION, COUNSELING AND CONSULTING, USE OF APPELLANT'S ASSET INCLUDING GOODWILL AND PAR TLY INTEREST ON INITIALLY INVESTED BY APPELLANT TILL IT RECEIVED BA NK FROM M/S ITA NO.2494/AHD/2012 7 GAYATRI CORPORATION RELATED TO THIS TRANSACTION ARE INCURRED AND CLAIMED BY APPELLANT. NO SUCH EXPENSES EXCEPT THE S TAMP DUTY AND LEGAL EXPENSES WERE CAPITALIZED AND APPORTIONED BY APPELLANT BEFORE TRANSFERRING THE SAME TO M/S GAYATRI CORPORA TION. IN VIEW OF THIS FACT, SUCH RELATABLE EXPENDITURE HAS TO BE DISALLOWED SINCE NOT WHOLLY AND INCLUSIVELY FOR APPELLANT'S BUSINESS . IN THE ABSENCE OF DIRECT NEXUS (BEING INDIRECT EXPENSES) AND CONSI DERING THE TIME REQUIRED TO BE EMPLOYED FOR SUCH TRANSACTION A LUMP SUM EXPENDITURE OF RS. 1,50,000 CAN BE APPORTIONED AND REQUIRED TO BE DISALLOWED. THE A.O. DISALLOWED RS. 1,74,953 IN TOT AL SUCH EXPENSES (1/4TH VEHICLE EXPENSES DISALLOWED IS MENT IONED AT RS. 6,51,333 INSTEAD OF RS. 65,133 BUT IN TOTAL THE SAM E IS TAKEN CORRECTLY AT RS. 65,133) UNDER VARIOUS HEAD, THE SA ME IS RESTRICTED TO RS. 1,50,000 UNDER 'TRANSPORTATION, VEHICLE AND OTHER EXPENSES' AND BALANCE IS DIRECTED TO BE DELETED. THE APPELLAN T GETS RELIEF ACCORDINGLY. IN REFERENCE TO GROUNDS RELATED TO CHARGING OF INTE REST U/S 234 A, 234 B & 234 C. THE SAME IS NOW CONSEQUENTIAL. CONSI DERING THE MANDATORY NATURE OF SUCH INTEREST, A.O. IS DIRECTED TO CHARGE SUCH INTEREST IF REQUIRED AS PER LAW AFTER APPEAL EFFECT . THE APPELLANT GETS RELIEF ACCORDINGLY. 5. BEFORE US, THE LD.DR RELIED UPON THE ORDER OF TH E AO. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON T HE ORDER OF THE LD.CIT(A). THE LD.COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE DETAILS PLACED AT PAGE NO.330 TO 332 OF THE PAPER BOOK IN T ABULAR FORM. IN THESE DETAILS, THE ASSESSEE HAS DISCLOSED FACT ABOUT THE DATE, SOURCE OF DEPOSITS, PROOF OF DEPOSITS, PURPOSE FOR THE PAYMENT AND OTHE R PARTICULARS. THE LD.COUNSEL FOR THE ASSESSEE RECONCILED THESE AMOUNT S WITH OTHER DETAILS AVAILABLE IN THE PAPER BOOK. IN THIS WAY, HE DEMON STRATED THE SOURCE OF ITA NO.2494/AHD/2012 8 RS.6,00,00,000/- AVAILABLE TO THE ASSESSEE FOR THE PURCHASE OF THE PROPERTY. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD CAREFULLY. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT LAND & BUILDING OWNED BY M/S.ENERJON TECHNICS CO. LTD. WAS PUT TO SALE BY THE OL OF THE HONBLE GUJARAT HIGH COURT. TENDER WAS A WARDED IN FAVOUR OF THE ASSESSEE FOR A CONSIDERATION OF RS.6,00,00,0 00/-. THE ASSESSEE HAS MADE PAYMENT OF RS.6,00,00,000/- AND SALE DEED HAS BEEN REGISTERED IN ITS NAME. THERE IS NO DISPUTE WITH REGARD TO THE F ACT TO THIS EXTENT. THE DISPUTE IS, FROM WHERE THE ASSESSEE HAS MADE INVEST MENT OF RS.6,00,00,000/- ? AND, WHETHER ON THE OBJECTIONS P OINTED OUT BY THE AO, THE TRANSACTION OF THE ASSESSEE CAN BE DOUBTED ? 7. AS FAR AS NATURE OF TRANSACTION IS CONCERNED, IT IS BETWEEN AN INDIVIDUAL AND THE OL, WHO WAS PERFORMING JOB OF CO URT OFFICER IN PERFORMANCE OF HIS PUBLIC DUTY. THEREFORE, THERE C ANNOT BE ANY DISPUTE WITH REGARD TO THE GENUINENESS AND NATURE OF THE TR ANSACTION. THE FIRST OBJECTION POINTED OUT BY THE AO IS THAT THE PROPERT Y HAS NOT BEEN DISCLOSED BY THE ASSESSEE IN THE BALANCE SHEET, DES PITE THE FACT THAT THIS PROPERTY IS IN THE NAME OF THE ASSESSEE. HE ALSO O BSERVED THAT UNDER WHAT CIRCUMSTANCES OR ACCOUNTING LOGIC IT IS DISCLO SED IN THE BALANCE SHEET OF M/S.GAYATRI CORPORATION. AS FAR AS NON-DI SCLOSURE OF PROPERTY IN THE BALANCE SHEET WOULD NOT AUTOMATICALLY BECOME AN UNEXPLAINED INVESTMENT. THIS LOGIC OF THE AO IS NEITHER HERE N OR THERE. EVEN THIS ITA NO.2494/AHD/2012 9 FACT CANNOT BE A CORROBORATIVE CIRCUMSTANCE TO DOUB T THE STORY PUT FORTH BY THE ASSESSEE. THE NEXT OBJECTION REFERRED BY THE AO IS THAT THE ASSESSEE HAS STATED THAT . DUE TO SOME TECHNICAL REASONS M/S.GAYATRI CORPORATI ON WAS NOT ELIGIBLE TO APPLY FOR TENDER.. . BUT THE CAPITAL CONTRIBUTION BY THE PARTNERS OF M/S.GAYATRI CORPORATION IS NOT EXPL AINED NOR IT IS EXPLICITLY EVIDENT IN THE ACCOUNTS OF THE ASSESSEE. AS FAR AS THIS REASONING IS CONCERNED, THE DETAILS SUBMITTED BY TH E ASSESSEE ON PAGE NO.330 TO 332 CLEARLY DEMOLISH THE OBSERVATION OF T HE AO. THESE DETAILS READ AS UNDER: A.Y.2008-2009 DATE SOURCE OF DEPOSIT PROOF OF DEPOSIT- SUBMITTED IN PB OR ENCLOSED HEREWITH & EXAMINED BY AO IN REMAND PROCEEDINGS. PAYMENT MADE BY ASSESSEE FOR PURCHASE OF PROPERTY PARTICULARS 21.12.2006 20,00,000 CONFIRMATION AT PAGE 206, BANK STATEMENT OF NARAYANBHAI B PATEL -AT PAGE 214 OF PB - II RECEIVED FROM NARAYANBHAI BECHARDAS PATEL CH. NO. 142314 BANK, HDFC - NRI PARTNER OF GAYATRI CORPORATION. 21.12.2006 50,70,000 FD STATEMENT ENCLOSED HEREWITH SWEEP TRANSFER FROM FOR NO. 202349110000210 OF NEW ARBUDA BUILERS BANK : BANK OF INDIA, SHAHIBAUG BRANCH. 21.12.2006 BANK STATEMENT OF ASSESSEE AT PAGE 109 OF PB-I 50,00,000 PAID BY DD NO. 13651 WHICH IS PURCHASED BY ISSUING CHEQUE NO.814300OF BOI. ITA NO.2494/AHD/2012 10 07.05.2007 12,24,221 BANK STATEMENT OF ASSESSEE ON PAGE 110 OF PB-I BANK BALANCE IN CURRENT A/C OF ASSESSEE 07.05.2007 10,00,000 CONFIRMATION AT PAGE 206, BANK STATEMENT AT OF NARAYAN B. PATEL AT PAGE216OFPB-LL RECEIVED FROM NARANBHAI BECHARDAS PATEL CH. NO. 181255 HDFC BANK - NRI PARTNER OF M/S. GAYATRI CORPORATION 07.05.2007 50,90,400 COPIES OF A/C ENCLOSED HEREWITH RECEIVED FROM PRAHLADBHAI S. PATEL VIDE CH. NO. : 763067 OF CITI BANK AMOUNT WAS GIVEN AS ADVANCES IN MARCH, 2006 WHICH WAS RECEIVED BACK BY NEW ARBUDA BUILDERS 08.05.2007 35,40,000 FD STATEMENT ENCLOSED HEREWITH 1,50,00,000 SWEEP TRANSFER FROM FOR NO. 202349110000255 OF NEW ARBUDA BUILDER BANK : BANK OF INDIA, SHAHIBAUG PUNCH. 08.05.2007 44,40,000 FD STATEMENT ENCLOSED HEREWITH I SWEEP TRANSFER FROM FDR NO 202349110000252 OF NEW ARBUDA BUILDERS BANK, BOI SHAHIBAUG BRANCH 08.05.2007 39,00,000 BANK STATEMENT OF ASSESSEE AT PAGE 110 OF PB-I 1,50,00,000 DD NO. 13994 PURCHASED BY ISSUING CHEQUE NO 233180 OF BOI IN FAVOUR OF OFFICIAL LIQUIDATOR OF M/S. ENERGEN TECHNICS CO. LTD 28.05.2007 39,00,000 COPY OF BANK A/C & BANK STATEMENT OF GAYATRI CORPORATION ENCLOSED HEREWITH CH NO. 821102 OF BOI RECEIVED FROM M/S. GAYATRI CORPORATION TOWARDS PURCHASE OF PROPERTY. ITA NO.2494/AHD/2012 11 29.05.2007 2,00,00,000 - DO - CH NO. 321103 OF BOI RECEIVED FROM M/S. GAYATRI CORPORATION TOWARDS PURCHASE OF PROPERTY. 01.06.2007 50,00,000 - DO - CH NO. 821104 OF BOI RECEIVED FROM M/S. GAYATRI CORPORATION TOWARDS PURCHASE OF PROPERTY. 02.06.2007 40,00,000 - DO- CH NO. 821105 OF BOI RECEIVED FROM M/S. GAYATRI CORPORATION TOWARDS PURCHASE OF PROPERTY. 04.06.2007 40,00,000 - DO- CH NO. 821108 OF F BOI RECEIVED FROM M/S- GAYAFRI CORPORATION TOWARDS PURCHASE OF PROPERTY. 04.06.2007 9,00,000 FD BANK STATEMENT ENCLOSED HEREWITH SWEEP TRANSFER FROM FDR NO. 202349110000261 OF NEW ARBUDA BUILDERS BOI - SHAHIBAUG. 04.06.2007 4,20,000 -DO- SWEEP TRANSFER FROM FDR NO. 202349110000259 OF NEW ARBUDA BUILDERS BOI - SHAHIBAUG. ITA NO.2494/AHD/2012 12 04.06.2007 23,27,000 -DO- SWEEP TRANSFER FROM FDR NO. 202349110000252 OF NEW ARBUDA BUILDERS BOI - SHAHIBAUG. 04.06.2007 BANK STATEMENT OF ASSESSEE AT PAGE 112 OF PB-I 4,00,00,000/- CH.NO.233217 OF BOI OF ASSESSEE ISSUED TO OFFICIAL LIQUIDATOR OF M/S.ENERGEN TECHNICS CO. LTD. 8. THE AO, THEREAFTER, DOUBTED THE EXISTENCE OR GEN UINENESS OF THE FIRM OF M/S.GAYATRI CORPORATION. THIS FACT HAS BEE N BELIED BY THE ASSESSMENT ORDER PASSED IN THE CASE OF M/S.GAYATRI CORPORATION. THE LD.CIT(A) HAS REPRODUCED THE REASONS RECORDED BY TH E AO FOR REOPENING OF THE ASSESSMENT IN THE CASE OF M/S.GAYATRI CORPOR ATION. WE HAVE TAKEN NOTE OF THESE REASONS WHILE EXTRACTING THE FI NDING OF THE LD.CIT(A) SUPRA. THE NEXT REASON STATED BY THE AO IS THAT EXISTENCE OF THREE PARTNERS OF THE M/S.GAYATRI CORPORATION IS NOT VERIFIED. CO NTRIBUTION OF THE CAPITAL BY THREE PARTNERS TO THE TUNE OF RS.5.4 CRO RES IS A DUBIOUS CAPITAL IN TERMS OF INQUIRY CARRIED OUT BY THIS OFFICE WITH M/S.GAYATRI CORPORATION. WE FAILED TO UNDERSTAND WHAT COURCE O F INQUIRY, THE LD.AO HAS CARRIED OUT ! ON THE OTHER HAND, IN CASE OF M/ S.GAYATRI CORPORATION SOURCE OF INVESTMENT IN THE LAND WORTH RS.6,00,00,0 00/- WAS SOUGHT TO BE INQUIRED BY THE AO BY ISSUANCE OF NOTICE UNDER SECT ION 148 OF THE ACT. AN ASSESSMENT ORDER WAS FRAMED ON 9.12.2011 UNDER S ECTION 143(3) R.W.S. 147 AND THE INCOME WAS ASSESSED AT RS.3,660/ -, MEANING THEREBY, ITA NO.2494/AHD/2012 13 THE ASSESSMENT IN THE CASE OF M/S.GAYATRI CORPORATI ON WAS FINALIZED AFTER THE ASSESSMENT ORDER PASSED IN THE PRESENT CASE. T HE AO HAS NOT DOUBTED THE SOURCE OF RS.6,00,00,000/- IN THE HANDS OF M/S.GAYATRI CORPORATION. IF THAT BE THE CASE, HOW THAT CAN BE A DOUBTFUL ISSUE IN THE PRESENT ASSESSMENT ORDER ? THE OTHER TWO REASONS REFERRED BY THE AO ARE OF PE RIPHERAL NATURE. IN THE FIRST REASON, HE HAS OBSERVED THAT NO REGIST ERED SALE DEED HAS BEEN EXECUTED IN FAVOUR OF THE M/S.GAYATRI CORPORATION. THE ASSESSEE HAS NEVER ALLEGED THAT THE LAND WAS PURCHASED IN THE NA ME OF M/S.GAYATRI CORPORATION. THE STAND OF THE ASSESSEE WAS THAT IT HAS PURCHASED THE LAND IN HIS NAME ON BEHALF OF THE M/S.GAYATRI CORPO RATION. FUNDS WERE MADE AVAILABLE BY M/S.GAYATRI CORPORATION. THE AO HAS POINTED OUT THAT THIS WAS AN ARRANGEMENT AKIN TO NOMINATION WHI CH IS IN CONTRAVENTION WITH THE TERMS AND CONDITIONS SET BY THE OL. HE MADE REFERENCE TO CLAUSE NO.32 OF THE TERMS AND CONDITIO NS OF THE TENDER. WE HAVE DULY CONSIDERED THIS REASONING OF THE AO. IT APPEARS THAT THE LD.AO HAS FAILED TO APPRECIATE THE FACTS IN RIGHT PERSPEC TIVE. AFTER EXECUTION OF THE SALE DEED, IT IS FOR THE ASSESSEE TO MAKE ANY S ORT OF ARRANGEMENT WITH REGARD TO THE PROPERTY OWNED BY IT. THE SALE DEED WAS EXECUTED ON 14.6.2007 AND MEMORANDUM OF UNDERSTANDING WITH M/S. GAYATRI CORPORATION WAS EXECUTED ON 15.6.2007. THE LD.CIT( A) HAS APPRECIATED ALL THESE FACTS IN THE DETAILED FINDING RECORDED BY THE LD.CIT(A). THE ASSESSEE HAS DULY EXPLAINED THE SOURCE OF INVESTMEN T IN THE PROPERTY AND NO ADDITION IN THE HANDS OF THE ASSESSEE CAN BE MAD E ON ACCOUNT OF ITA NO.2494/AHD/2012 14 UNEXPLAINED INVESTMENT. IN VIEW OF THE ABOVE DISCU SSION, AND CONSIDERING WELL REASONED FINDING OF THE LD.CIT(A) ON THIS ISSUE, THIS GROUND IS REJECTED AND THE APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 8 TH JUNE, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER