The ITO, Ward-8(3), Surat V. Shri Rajubhai Vashrambhai Goti,HUF, Surat

ITA 2572/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6786 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 11-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAVAL
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard; Peak credit; Additional evidence; Corroborative evidences
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N. S. SAINI, AM) ITA NO. 2572/AHD/2009 A. Y.: 2005-06 THE INCOME TAX OFFICER, WARD 8 (3), ROOM NO.7, 4 TH FLOOR, AAYAKAR BHAVAN, MAJURA GATE, SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI (HUF), PLOT NO.58-59, NARANMUNIDEV NAGAR CO-OP HOUSING SOCIETY, VED ROAD, NANI VED, SURAT PA NO. AAHFP 3181 N (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ROBIN RAVAL, SR. DR RESPONDENT BY SHRI M. K. PATEL, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-V, SURAT DATED 19 TH JUNE, 2009 FOR ASSESSMENT YEAR 2005-06, CHALLENGING THE DELETION OF ADDITION OF RS.17,56,000/- ON ACCOUNT OF BOGUS GIFT S IN VIOLATION OF RULE 46A OF THE IT RULES. 2. BRIEFLY, THE FACTS OF THIS CASE ARE THAT THE AS SESSEE FILED RETURN OF INCOME SHOWING TOTAL INCOME OF RS.48,309/- AND A GRICULTURAL INCOME OF RS.2,30,530/-. THE AO CALLED FOR THE DETA ILS AND OBSERVED FROM THE CAPITAL ACCOUNT OF THE ASSESSEE THAT HE HA S RECEIVED GIFTS TO THE TUNE OF RS.21,94,000/- DURING THE YEAR. THE ASS ESSEE WAS ASKED TO FURNISH SUPPORTING EVIDENCE OF THE GIFTS AND THE ASSESSEE FURNISHED VARIOUS DETAILS REGARDING THE GIFTS. THE DETAILS CO NTAIN DECLARATION OF ITA NO.2572/AHD/2009 ITO, WARD 8(3), SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI, HUF 2 THE DONORS AND THE XEROX COPIES OF CHEQUES DEPOSITE D BY THE ASSESSEE IN HIS BANK ACCOUNT. THE ASSESSEE ALSO FUR NISHED COPIES OF FORM NO. 8A, FORM 7 AND 12 AND CERTIFICATE OF SURPU NCH OF THE VILLAGE SHOWING INCOME OF SOME OF THE DONORS TO PROVE THEIR CREDITWORTHINESS. THE ASSESSEE HUF HAD RECEIVED GIF TS FROM 29 PERSONS. THE AO IN THE COURSE OF ASSESSMENT PROCEED INGS OBSERVED THAT ALL THE STAMP PAPERS WERE PURCHASED FROM A SIN GLE PARTY OF BOTAD AND DECLARATION WAS SIGNED IN SURAT ON THE SAME DAY . FURTHER ALL THE XEROX COPIES OF PAY-IN-SLIP SHOW THAT THE CHEQUES I SSUED AGAINST THE PAY-IN-SLIP WERE WRITTEN BY THE SAME PERSON. ALL TH E DONORS WERE FARMERS BUT NONE OF THEM WERE ABLE TO PRODUCE SALE BILLS OF SALE OF THEIR AGRICULTURAL PRODUCE. THE AO, THEREFORE, TREA TED THE GIFTS AS BOGUS AND ADDED THE SAME TO THE INCOME OF THE ASSES SEE. IT IS ALSO NOTED IN THE IMPUGNED ORDER THAT THE AO HAD INDEPEN DENTLY CARRIED OUT INQUIRIES U/S 133(6) OF THE IT ACT FROM THE SUR PUNCH OF THE VILLAGE WHO HAD ISSUED INCOME CERTIFICATE TO VARIOUS DONORS BUT THE LETTERS TO THE SURPUNCH REMAINED UN-COMPLIED WITH. THE BANK AL SO DID NOT PROVIDE THE DETAILS REGARDING THE BANK DRAFTS ISSUE D AT THE REQUEST OF THE DONORS IN FAVOUR OF THE ASSESSEE FOR THE GIFTS. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE FURNISH ED BEST OF THE EVIDENCES AVAILABLE WITH HIM AND THEREFORE, INITIAL BURDEN UPON HIM HAS BEEN DISCHARGED. IT WAS EXPLAINED BEFORE THE LE ARNED CIT(A) THAT THE DOCUMENTS WERE SUFFICIENT TO PROVE THE IDENTITY OF THE DONORS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . IT WAS EXPLAINED THAT SINCE THE FARMERS WERE ILLITERATE PERSONS, THE REFORE, THEY COULD NOT FILL UP THE SLIPS AND THE BANK PROVIDED THE SER VICES TO THE ILLITERATE FARMERS. IT WAS FURTHER SUBMITTED BEFORE THE LEARNE D CIT(A) THAT ITA NO.2572/AHD/2009 ITO, WARD 8(3), SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI, HUF 3 DOMINANT INTENTION OF THE ASSESSEE IN THE WHOLE PRO CESS OF TAKING GIFTS WAS TO CREATE NON-EXISTENT CAPITAL TO BE USED WITHOUT PAYMENT OF TAX AT THE FUTURE DATE. THE ASSESSEE USED TO DRAW T HE DRAFTS FROM HIS HOMETOWN OF AROUND RS.2,00,000/- IN DIFFERENT NAMES . THE SAME WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AT SU RAT. ALMOST EQUIVALENT AMOUNT WAS WITHDRAWN ON CLEARANCE OF DRA FTS TO BE USED AGAIN TO REPEAT THE PROCESS OF DRAWING THE DRAFTS. GIFT DEEDS WERE MADE FOR EACH OF THE GIFTS AT A SUBSEQUENT DATE. TH US, THE ASSESSEE ACCUMULATED GIFT RECEIPTS TO THE TUNE OF RS.21,94,0 00/-. IT WAS SUBMITTED THAT THOUGH THE ASSESSEE HAD RECEIVED GIF TS TO THE TUNE OF THE ABOVE AMOUNT, THE PEAK UNACCOUNTED CASH INVOLVE D IN THE PROCESS IS LESS. THE ASSESSEE HAS INVESTED ONLY THE PEAK OF SUCH CREDITS TO CREATE A NON-EXISTENT GIFTED CAPITAL. TH US, THE PEAK OF SUCH AMOUNT SHOULD ONLY BE TAXED, RATHER THE TOTAL OF SU CH GIFTS. IT WAS FURTHER EXPLAINED THAT THE ACTUAL INTRODUCTION OF F UNDS BY THE ASSESSEE MAY BE RESTRICTED TO THE PEAK OF MONEY INVESTED ON SUCH GIFTS AND SUCH PEAK AMOUNT IS RS.4,38,000/-. AFTER RECEIPT OF THE ASSESSMENT ORDER, THE ASSESSEE HAS SUO MOTU RECTIFIED HIS BOOK S OF ACCOUNTS BY NULLIFYING THE AFFECT OF EXCESSIVE CAPITAL AND CASH WHICH WERE NOT EXISTENT. AFFIDAVIT TO THIS EFFECT WAS ALSO SUBMITT ED BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) CONSIDERING THE EXPLANAT ION OF THE ASSESSEE ACCEPTED THE CLAIM OF THE ASSESSEE FOR ADD ITION OF BOGUS GIFTS TO THE PEAK OF SUCH CREDITS AMOUNTING TO RS.4 ,38,000/- AND DELETED THE REMAINING ADDITION. THE APPEAL OF THE A SSESSEE WAS PARTLY ALLOWED. HIS FINDINGS ARE REPRODUCED AS UNDE R: ITA NO.2572/AHD/2009 ITO, WARD 8(3), SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI, HUF 4 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSION OF THE AR. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER. IT IS QUITE EVIDENT THAT THE GIFT S AS RECEIVED BY THE ASSESSEE ARE BOGUS. THE MODUS OPERANDI AS EXPLAINED BY THE AR IN HIS SUBMISSION ALSO SEEMS TO FIND FORCE. I AGREE WITH THE CONTENTI ON OF THE AR THAT THERE EXISTS NON EXISTENT CAPITAL BE ING REPRESENTED BY NON EXISTENT CASH IN THE BOOKS OF ACCOUNT. IT IS QUITE EVIDENT THAT THE WHOLE EXERCIS E MAY HAVE BEEN CARRIED OUT BY THE ASSESSEE ON THE BEHEST OF SOME THIRD PARTY ADVICE WHICH WENT WRONG. I ALSO AGREE WITH THE VIEW OF THE AR THAT TH E CAPITAL FORMATION PROCESS ADOPTED BY THE ASSESSEE WAS TO CREATE NON EXISTENT CAPITAL. THE SAME IS REPRESENTED BY HUGE BUT FICTITIOUS CASH ON THE ASSE T SIDE OF BALANCE SHEET. THUS, I AM OF THE OPINION TH AT THERE SEEMS NO LOGIC IN ADDING THE WHOLE OF THE GIF T RECEIVED BY THE ASSESSEE. MORE SO AFTER SUO MOTU RECTIFICATION ENTRIES PASSED BY THE ASSESSEE SUBSEQUENT TO ASSESSMENT PROCEEDINGS. INCOME TAX IS A TAX ON REAL INCOME AND NOT HYPOTHETICAL INCOME . BASED ON THE ABOVE FINDING AND ON THE JUDGMENT GIVEN IN CASE OF ACIT VS K. A. KUPPUSWAMI CHETTIAR BY HONORABLE MADRAS HIGH COURT I RESTRICT THE ADDITION OF BOGUS GIFT TO THE PEAK OF SUCH CRED IT AMOUNTING TO RS.4,38,000 U/S 68 OF THE ACT. NEEDLESS TO MENTION THAT THE SAID FIGURE OF RS.4,38,000/- HAS BEEN WORKED OUT AS PEAK IN THE BANK ACCOUNT THROUGH WHICH THESE TOXIC GIFTS HAVE BEEN RECEIVED. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 3. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) VIOLATED RULE 46A OF THE IT RULES BY ADMITTING ADDITIONAL EVIDENC ES WITHOUT GIVING OPPORTUNITY OF BEING HEARD TO THE AO. THE LEARNED D R SUBMITTED THAT THE THEORY OF PEAK WAS NOT TAKEN BEFORE THE AO, BOO KS RECTIFIED AFTER ASSESSMENT ORDER AND THE AFFIDAVIT WAS ALSO FILED F OR THE FIRST TIME ITA NO.2572/AHD/2009 ITO, WARD 8(3), SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI, HUF 5 BEFORE THE LEARNED CIT(A), THEREFORE, AS PER RULE 4 6 A OF THE IT RULES THE LEARNED CIT(A) SHOULD HAVE FOLLOWED THE PROCEDU RE PROVIDED IN THE SAME AND SHOULD HAVE GIVEN OPPORTUNITY OF BEING HEARD TO THE AO AT THE APPELLATE STAGE. THE LEARNED DR FURTHER SUBM ITTED THAT THE ASSESSEE CLAIMED GENUINENESS OF THE GIFTS BEFORE TH E AO AND FILED CERTAIN EVIDENCES IN SUPPORT OF THE SAME AND THE AO DISCUSSED EACH AND EVERY EVIDENCES OF EVERY DONOR IN THE ASSESSMEN T ORDER AND CAME TO THE FINDING THAT THE ASSESSEE HAS INTRODUCE D BOGUS GIFTS. THEREFORE, ADDITION WAS RIGHTLY MADE U/S 68 OF THE IT ACT. THE LEARNED DR SUBMITTED THAT SUBSEQUENT RECTIFICATION IN THE B OOKS OF ACCOUNTS AFTER RECEIPT OF THE ADVERSE ASSESSMENT ORDER IS NO T PERMISSIBLE IN LAW, THEREFORE, THE LEARNED CIT(A) SHOULD NOT HAVE DELETED THE SUBSTANTIAL ADDITION ON ACCOUNT OF UNEXPLAINED GIFT S BECAUSE THE ASSESSEE ALSO ADMITTED BEFORE THE LEARNED CIT(A) TH AT THE GIFTS WERE BOGUS. THE LEARNED DR, THEREFORE, SUBMITTED THAT IN CASE ASSESSEE TAKES THE PLEA OF PEAK CREDIT, THE MATTER MAY BE RE MANDED TO THE FILE OF THE LEARNED CIT(A) FOR RECONSIDERATION OF THE IS SUE IN ACCORDANCE WITH LAW. 4. THE LEARNED COUNSEL FOR THE ASSESSEE VERY FAIRLY STATED THAT RULE 46A OF THE IT RULES IS NOT COMPLIED WITH AT TH E APPELLATE STAGE AND THE MATTER REQUIRES RECONSIDERATION AT THE LEVE L OF THE AO. HE HAS SUBMITTED THAT THE ASSESSEE HAS NOT PREFERRED ANY A PPEAL CHALLENGING THE PART ADDITION MADE BY THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S IN THE LIGHT OF THE FINDINGS OF THE AUTHORITIES BELOW. THE ASSES SEE FILED RETURN OF ITA NO.2572/AHD/2009 ITO, WARD 8(3), SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI, HUF 6 INCOME AT NOMINAL AMOUNT AND ON PERUSAL OF THE CAPI TAL ACCOUNT OF THE ASSESSEE HUF, THE AO NOTED THAT THE ASSESSEE HA S RECEIVED GIFTS OF RS.21,94,000/- FROM LARGE NUMBERS OF FARMERS. TH E DETAILS OF THE SAME WERE CALLED FOR FROM THE ASSESSEE AND THE ASSE SSEE IN ORDER TO PROVE GENUINE GIFTS FURNISHED THE DETAILS AND EVIDE NCES BEFORE THE AO. WITH REGARD TO THE CREDITWORTHINESS OF SOME OF THE DONORS, CERTIFICATE OF THE SURPUNCH OF THE VILLAGE WAS FILE D. THE VILLAGE SURPUNCH IN THE INQUIRY U/S 133(6) OF THE IT ACT DI D NOT FILE ANY REPLY BEFORE THE AO. NO EVIDENCE WAS FURNISHED AS TO HOW THE SURPUNCH ARRIVED AT THE FIGURE OF THE INCOME OF THE DONORS. EVEN, SOME OF THE QUERIES OF THE AO WERE NOT COMPLIED WITH BY THE BAN K. THE AO ON EXAMINATION OF THE DETAILS AND EVIDENCES CAME TO TH E FINDING THAT THE ASSESSEE RECEIVED BOGUS GIFTS AND MADE THE ADDITION U/S 68 OF THE IT ACT. THE AO HAS DISCUSSED EACH AND EVERY CASE OF TH E DONORS AND THE EVIDENCE ON RECORD BEFORE ARRIVING AT THE ADVER SE FINDINGS AGAINST THE ASSESSEE. IT IS, THEREFORE, CLEAR THAT THE ASSE SSEE NEVER TOOK THE PLEA OF PEAK CREDIT BEFORE THE AO. NO FACTUAL FOUN DATION HAS BEEN LAID OUT BY THE ASSESSEE BEFORE THE AO TO MAKE CLAI M OF PEAK CREDIT. THE ASSESSEE MADE A CLAIM OF GENUINE GIFTS BEFORE T HE AO WHICH THE ASSESSEE ULTIMATELY FAILED TO PROVE THE SAME. THE A SSESSEE ADMITTED BEFORE THE LEARNED CIT(A) THAT GIFTS ARE BOGUS AND THE LEARNED CIT(A) ALSO HELD THAT GIFTS ARE BOGUS. THE ASSESSEE DID NO T PREFER ANY APPEAL AGAINST THE FINDINGS OF THE LEARNED CIT(A). THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF BHAIYALAL SHYAM BEHARI VS CIT 276 ITR 38 HELD AS UNDER: ITA NO.2572/AHD/2009 ITO, WARD 8(3), SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI, HUF 7 IN ORDER TO ADJUDICATE UPON THE PLEA OF PEAK CREDIT THE FACTUAL FOUNDATION HAS TO BE LAID BY THE ASSESSEE. HE HAS TO OWN ALL CASH CREDIT ENTRIES IN THE BOOKS OF ACCOUNT AND ONLY THEREAFTER CAN THE QUESTION OF PEAK CREDIT BE RAISED. HELD, THAT AS THE AMOUNT OF CASH CREDITS STOOD IN THE NAMES OF DIFFERENT PERSONS WHICH ALL ALONG THE ASSESSEE HAD BEEN CLAIMING TO BE GENUINE DEPOSITS, WITHDRAWALS/PAYMENTS TO DIFFERENT PERSONS DURING THE PREVIOUS YEARS, THE ASSESSEE WAS NOT ENTITLED TO CLAIM THE BENEFIT OF PEAK CREDIT. 5.1 THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS VIJAY AGRICULTURAL INDUSTRIES 294 ITR 610 HELD AS UNDER: THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 1979-80 NOTICED CERTAIN CREDITS IN THE SQUARED UP ACCOUNTS OF THE ASSESSEE-FIRM AND TREATED THEM AS UNEXPLAINED DEPOSITS LIABLE TO BE TREATED AS INCOME FROM UNEXPLAINED SOURCES UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961. THIS WAS UPHELD BY THE APPELLATE ASSISTANT COMMISSIONER. ON FURTHER APPEAL CONTENDING THAT THE PEAK CREDITS ALONE BE CONSIDERED FOR ADDITION UNDER SECTION 68 OF THE ACT AND NOT AS ADDED BY THE ASSESSING OFFICER AND CONFIRMED BY THE APPELLATE ASSISTANT COMMISSIONER, THE TRIBUNAL HELD THAT ONLY THE AMOUNT OF PEAK CREDIT SHOULD BE DETERMINED BY THE ASSESSING OFFICER AND ADDED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. ON A REFERENCE: HELD, THAT IN RESPECT OF THE SQUARED UP ACCOUNTS OF THE TWO DEPOSITORS, THE ASSESSING OFFICER HIMSELF HAD TAKEN THE PEAK CREDIT AS ITA NO.2572/AHD/2009 ITO, WARD 8(3), SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI, HUF 8 UNEXPLAINED DEPOSIT AND ADDED IT UNDER SECTION 68 OF THE ACT. SO FAR AS THE REMAINING DEPOSITS WERE CONCERNED THERE WAS NO TRANSACTION BETWEEN THE DEPOSITORS AND THE ASSESSEE. THE PRINCIPLE OF PEAK CREDIT COULD NOT APPLY IN CASE OF DIFFERENT DEPOSITORS WHERE THERE HAD BEEN NO TRANSACTION OF DEPOSITS AND REPAYMENT BETWEEN A PARTICULAR DEPOSITOR AND THE ASSESSEE. THE TRIBUNAL WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO TAKE THE PEAK CREDIT FOR THE PURPOSE OF SECTION 68 OF THE IT ACT. IN THIS CASE, THE ASSESSEE HAS SHOWN GIFTS IN THE B OOKS OF ACCOUNTS WHICH WERE PRODUCED AT THE ASSESSMENT STAGE ON THE BASIS OF WHICH THE ASSESSEE FILED RETURN OF INCOME. THEREFORE, AFT ER RECEIPT OF ADVERSE ASSESSMENT ORDER FROM THE AO, THE ASSESSEE IS NOT ENTITLED TO MAKE RECTIFICATION IN THE BOOKS OF ACCOUNTS NULL IFYING THE EFFECT OF THE CAPITAL INTRODUCED THROUGH BOGUS GIFTS. SUCH A COURSE IS NOT PERMISSIBLE UNDER THE LAW; OTHERWISE EVERY ASSESSEE AFTER GETTING ADVERSE ASSESSMENT ORDER FROM THE AO WOULD MAKE ENT RIES IN THE BOOKS OF ACCOUNT WHICH SUIT TO THEM IN ORDER TO FRU STRATE THE FINDINGS GIVEN IN THE ASSESSMENT ORDER. THE ASSESSEES SUBMI SSION INITIALLY BEFORE THE LEARNED CIT(A) WAS ALSO THAT THE GIFTS A RE GENUINE. BUT IN FURTHER SUBMISSION THE ASSESSEE EXPLAINED THAT THE DOMINANT INTENTION OF THE ASSESSEE FOR RECEIVING THE GIFTS W AS TO CREATE NON- EXISTENT CAPITAL TO BE USED WITHOUT PAYMENT OF TAX AT A FUTURE DATE. THE ASSESSEE FURTHER EXPLAINED THAT THE DRAFTS OF T HE GIFTS WERE PREPARED OUT OF THE AMOUNT WITHDRAWN FROM HIS OWN B ANK ACCOUNT. THIS SUBMISSION OF THE ASSESSEE WOULD SHOW THAT THE ASSESSEE WAS AWARE OF THE FACT THAT THE GIFTS ARE BOGUS BUT THE THEORY OF PEAK CREDIT WAS NOT TAKEN BEFORE THE AO AT THE ASSESSMENT STAGE . THEREFORE, ITA NO.2572/AHD/2009 ITO, WARD 8(3), SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI, HUF 9 CHANGING THE SUBMISSION AND THE COMPLEX OF THE CASE BEFORE THE LEARNED CIT(A) AND FILING OF MATERIAL AND AFFIDAVIT IN SUPPORT OF THE SAME WOULD DEFINITELY CONSTITUTE ADDITIONAL EVIDENC E AS IS ARGUED BY THE LEARNED DR. EVEN, THERE IS NO DISPUTE BY THE LE ARNED COUNSEL FOR THE ASSESSEE THAT ADDITIONAL EVIDENCES WERE CONSIDE RED BY THE LEARNED CIT(A) IN VIOLATION OF RULE 46A OF THE IT R ULES. RULE 46A OF THE IT RULES PROVIDES THAT THE ASSESSEE SHALL NOT B E ENTITLED TO PRODUCE BEFORE THE COMMISSIONER (APPEALS) ANY EVIDE NCE WHETHER ORAL OR DOCUMENTARY OTHER THAN THE EVIDENCES PRODUC ED BEFORE THE AO EXCEPT IN THE CIRCUMSTANCES NAMELY:- WHERE THE A O HAS REFUSED TO ACCEPT THE EVIDENCE, OR WHERE THE ASSESSEE WAS P REVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE, OR WH ERE EVIDENCES COULD NOT BE PRODUCED BEFORE THE AO DUE TO REASONAB LE CAUSE AND THAT THE ORDER APPEALED WAS PASSED WITHOUT GIVING R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AFO RESAID RULE FURTHER PROVIDES THAT NO EVIDENCE SHALL BE ADMITTED UNDER T HIS RULE UNLESS REASONS ARE RECORDED BY THE COMMISSIONER (APPEALS) FOR ITS ADMISSION AND THAT OPPORTUNITY SHALL BE GIVEN TO TH E AO TO REBUT SUCH EVIDENCES. IN THIS CASE, THE LEARNED CIT(A) ADMITTE DLY CONSIDERED ADDITIONAL EVIDENCES AT THE APPELLATE STAGE WITHOUT FOLLOWING RULE 46A OF THE IT RULES AND NONE OF THE CONDITIONS OF R ULE 46 A OF THE IT RULES NOTED ABOVE HAVE BEEN COMPLIED WITH BY THE LE ARNED CIT(A). THE LEARNED CIT(A) THUS SHOULD NOT HAVE DELETED THE SUBSTANTIAL ADDITION ON THE MATTER IN ISSUE WITHOUT CONSIDERING THE PROVISIONS OF RULE 46A OF THE IT RULES AND WITHOUT FOLLOWING THE PROVISIONS OF LAW. THEREFORE, THE MATTER REQUIRES RECONSIDERATION AT T HE LEVEL OF THE LEARNED CIT(A). AS NOTED ABOVE, EVEN FOR TAKING THE BENEFIT OF PEAK ITA NO.2572/AHD/2009 ITO, WARD 8(3), SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI, HUF 10 THEORY, THE ASSESSEE SHALL HAVE TO OWNED ALL THE CR EDITS IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE SHALL HAVE TO LAID OUT THE FACTUAL FOUNDATION FOR THE SAME WHICH HAVE NOT BEEN DONE IN THE AFORESAID MATTER. WE, THEREFORE, AGREE WITH THE CONTENTION OF THE LEARNED DR THAT THE MATTER REQUIRES RECONSIDERATION BY THE LEA RNED CIT(A). 6. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE LEARN ED CIT(A) AND RESTORE THE MATTER IN ISSUE TO THE FILE OF THE LEAR NED CIT(A) WITH DIRECTION TO RE-DECIDE THE ISSUE OF UNEXPLAINED GIF TS IN THE LIGHT OF THE OBSERVATIONS MADE IN THIS ORDER BY GIVING REASONABL E SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE AO. THE ASSESSEE IS AT LIBERTY TO PRODUCE ANY SUFFICIENT MA TERIAL BEFORE HIM IN SUPPORT OF THE CLAIM OF PEAK CREDIT AND MAY ALSO TA KE ANY LEGAL PLEA BEFORE HIM IN ACCORDANCE WITH LAW. THE LEARNED CIT( A) SHALL FOLLOW RULE 46 A OF THE IT RULES IN CASE OF ADMISSION OF A DDITIONAL EVIDENCE. HE SHALL PASS REASONED ORDER AFTER HEARING THE ASSE SSEE AND THE AO. 7. IN THE RESULT, THE DEPARTMENTAL APPEAL IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21-04-2011 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 21-04-2011 LAKSHMIKANT/- ITA NO.2572/AHD/2009 ITO, WARD 8(3), SURAT VS SHRI RAJUBHAI VASHRAMBHAI GOTI, HUF 11 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 D Y. REGISTRAR, ITAT, AHMEDABAD