The ITO, Ahmedabad Ward-2(3), Ahmedabad V. Shri Vimalchand G. Kothari, Ahmedabad

ITA 2715/AHD/2010

• Counselvise Citation: 271520514 RSA 2010
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-11-2012
• Assessment Year: 1994-1995
• Appeal Filed On: 17-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Retraction; Revised return
• Section: 69; 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND SHRI A. MOHAN ALAN KAMONY, AM) ITA NO.2715/AHD/2010 (AY: 1994-95) THE INCOME TAX OFFICER, WARD 2 (3), 2 ND FLOOR, INSURANCE BUILDING, ASHRAM ROAD, AHMEDABAD VS SHRI VIMALCHAND G. KOTHARI, PROP. OF M/S. VIMALCHAND & CO., 30, CLOTH COMMERCIAL CENTRE, 1 ST FLOOR, SAKAR BAZAR, KALUPUR, AHMEDABAD P. A. NO. ABDPK 9487 H (APPELLANT) (RESPONDENT) C. O. NO 330/AHD/2010 (IN ITA NO.2715/AHD/2010 FOR AY 1994-95) SHRI VIMALCHAND G. KOTHARI, PROP. OF M/S. VIMALCHAND & CO., 30, CLOTH COMMERCIAL CENTRE, 1 ST FLOOR, SAKAR BAZAR, KALUPUR, AHMEDABAD P. A. NO. ABDPK 9487 H VS THE INCOME TAX OFFICER, WARD 2 (3), 2 ND FLOOR, INSURANCE BUILDING, ASHRAM ROAD, AHMEDABAD (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY SHRI Y. P. VERMA, SR. DR ASSESSEE BY SHRI G. C. PIPARA, AR DATE OF HEARING: 20-11-2012 DATE OF PRONOUNCEMENT: 21-12-2012 O R D E R ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 2 PER A. MOHAN ALANKAMONY: THIS APPEAL IS PREFERRED BY THE REVENUE AND THE CROSS OBJECTION PRESSED BY THE ASSE SSEE AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A)- XIV, AHMEDABAD IN APPEAL NO. CIT(A) XIV/WD. 2(3)/93/08-09 DATED 05-07-2010 PASSED U/S 2 50 READ WITH SECTION 144 OF THE IT ACT FOR THE ASSESSMENT YEAR 1994-95. 2. THE REVENUE HAS RAISED TWO GROUNDS IN ITS APPEA L AND THEY ARE BRIEFLY SUMMARIZED HEREIN BELOW FOR ADJUDICATION: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS BY DELETING THE ADDITION MADE BY THE LEARNED AO FOR RS.2,71,300 /- ON ACCOUNT OF UNDISCLOSED SHARE APPLICATION MONEY. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS BY DELETING THE ADDITION MADE BY THE LEARNED AO FOR RS.3,15,000 /- ON ACCOUNT OF UNDISCLOSED RECEIVABLES FROM SALE OF SHA RES. 3. THE ASSESSEE HAS RAISED ONE GROUND IN HIS CROSS OBJECTION RELATING TO TELESCOPING OF THE AMOUNT OF RS.4,17,738/- BEING THE SURPLUS FUNDS CARRIED FORWARD FROM ASSESSMENT YEAR 1993-94 AGAINS T THE ADDITION MADE FOR THE ASSESSMENT YEAR 1994-95. 4. BRIEF FACTS: - THE ASSESSEE IS AN INDIVIDUAL ENG AGED IN THE BUSINESS OF TRADING IN KANTAN, SUTLI AND SHARES. THIS APPEAL HAS COME BEFORE THE TRIBUNAL FOR THE SECOND ROUND SINCE ON THE EARLIER OCCASION THE TRIBUNAL VIDE ORDER NO.ITA/2123/AHD/2000 DATED 31-11-2006 HA D SET ASIDE BOTH THE ISSUES RELATING TO THE ADDITIONS MADE ON ACCOUNT OF SHARE APPLICATION MONEY OF RS.2,71,300/- AND AMOUNT RECEIVABLE AGAINS T SALE OF SHARES RS.3,15,000/- AND REMITTED BACK TO THE FILE OF THE LEARNED AO TO DECIDE THE MATTER AFRESH. ITA NO.2715/AHD/2010 REVENUES APPEAL FOR AY ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 3 5. GROUND NO.1: DELETING ADDITION OF RS.2,71,300/- BEING UNDISCLOSED SHARE APPLICATION MONEY:- DURING THE SEARCH PROCEEDINGS CONDUCTED ON 25-03-1994 THE ASSESSEE HAD DISCLOSED AN AMOUNT OF RS.13,24,900/- AS SHARE APPLICATION MONEY PENDING A LLOTMENT. COMPLETE DETAILS OF THE SAME ARE MENTIONED IN ANNEXURE A/1 OF THE PANCHNAMA DATED 25-4-1994 IN PAGE NO.1 TO 18. THIS AMOUNT OF RS.13,24,900/- WERE FURTHER CONFIRMED BY FURNISHING THE NAME OF THE COM PANIES, NUMBER OF APPLICATIONS AND AMOUNT PAID IN EACH APPLICATION. H OWEVER, AGAINST THIS DISCLOSURE OF RS.13,24,900/- THE ASSESSEE HAD SHOWN ONLY AN AMOUNT OF RS.10,53,600/- IN HIS RETURN OF INCOME. THE ASSESSE E EXPLAINED THAT HE HAD SUBSEQUENTLY RECONCILED HIS BOOKS AND FOUND THA T DRAWINGS WERE MADE FROM THE FOLLOWING CONCERNS OF THE ASSESSEE AS DETAILED BELOW: (I) DRAWINGS FROM M/S. VIMALCHAND & CO. RS.1,16,3 00/- (II) DRAWINGS FROM M/S. KOTHARI SALES CORPN. RS. 45,000/- (III) DRAWINGS FROM M/S. VIMALCHAND & CO. RS.1, 10,000/- TOTAL RS. 2,71,300/- 6. IN THE SECOND ROUND BEFORE THE LEARNED AO THE AS SESSEE DID NOT RESPOND TO ANY OF THE OPPORTUNITIES GRANTED BY NOT BEING PRESENT ON THE DATE OF HEARING AND ALSO DID NOT FURNISH ANY FURTHE R DETAILS TO DECIDE THE ISSUE AFRESH. THEREFORE, THE LEARNED AO PROCEEDED T O ADJUDICATE THE SET ASIDE ISSUES ON THE BASIS OF AVAILABLE MATERIAL ON RECORD AND ARRIVED AT THE FOLLOWING CONCLUSION ON PAGE 5 PARA 3 OF HIS ORDER: THE ASSESSEE HAS DISCLOSED THE ENTIRE AMOUNT OF SH ARE APPLICATION OF RS.1324700/- AND IF SOME OF THE SAID APPLICATION WERE OUT OF THE AMOUNT WITHDRAWN FROM THE REGULAR SOURCE, SUCH DISC LOSURE WOULD NOT HAVE BEEN MADE BY THE ASSESSEE AFTER VERIFICATI ON OF FACTS AND AFTER NEARLY TWO MONTHS FROM THE TIME OF SEARCH ON 31/05/1994. THUS, ON THE BASIS OF ABOVE DISCUSSION, THE ENTIRE INVESTMENT IN ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 4 SHARE APPLICATIONS NOT DISCLOSED IN RETURN OF INCOM E, RS.271300/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 7. BEFORE THE LEARNED CIT(A), THE ASSESSEE HAD ARGU ED IN DETAIL THAT IT WAS A NORMAL PRACTICE TO ALLOT SHARES ONLY FOR A PO RTION OF SHARE APPLICATION MONEY AND NOT FOR THE ENTIRE AMOUNT OF SHARE APPLIC ATION MONEY. THEREFORE, THERE WOULD BE SOME BALANCE AMOUNT WHICH WOULD BE REFUNDED FOR THE SHARES NOT ALLOTTED. THE ASSESSEE FURTHER A RGUED THAT HE HAD UTILIZED SUCH REFUNDED SHARE APPLICATION MONEY FOR FURTHER INVESTMENTS IN SHARE APPLICATIONS WHICH WAS KEPT IN THE OTHER PROP RIETORSHIP CONCERNS BANK ACCOUNT OF THE ASSESSEE AMOUNTING TO RS.2,71,3 00/-. THE LEARNED CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE, OBS ERVATIONS OF THE LEARNED AO, SUBMISSIONS OF THE ASSESSEE, EARLIER ASSESSMENT ORDER AS WELL AS ORDER OF THE LEARNED CIT(A) AND THE ORDER OF THE TR IBUNAL IN THE FIRST ROUND CAME TO THE FOLLOWING CONCLUSION AT PAGE 12 OF HIS ORDER: THERE IS NO FINDING OF THE A. O. THAT THE SAID AMO UNT OF RS.2,71,300/- HAS BEEN INVESTED BY THE APPELLANT SO MEWHERE ELSE AS SHARE APPLICATION MONEY AND CONSIDERING THE OBSE RVATION OF THE HONBLE ITAT THAT THOUGH THE BOOKS OF ACCOUNT MAINT AINED SUBSEQUENT TO THE SEARCH BUT THE MATERIAL AVAILABLE WITH THE ASSESSEE AND ACCEPTED AND FROM THE COPY OF ACCOUNT AS FURNISHED BY THE APPELLANT IT IS VERY CLEAR THAT AN AMOUNT OF RS.1,10,000/- WITHDRAWN FROM VIMALCHAND & CO. IN THE NAME OF M/S. MAHAVIR TEXTILES OF WHICH APPELLANT IS PROPRIETOR AND RS.45 ,000/- WITHDRAWN FROM M/S. KOTHARI SALES CORPORATION IN THE NAME OF M/S. MAHAVIR TEXTILES HAVE BEEN WITHDRAWN BY ACCOUNT PAYEE CHEQU E AND REMAINING AMOUNT OF RS.1,16,300/- WITHDRAWN FROM M/ S. VIMALCHAND & CO. INCLUDES AN AMOUNT OF RS.25,000/- BY CHEQUE A ND REMAINING AMOUNT ARE IN CASH AS APPELLANT IS THE PROPRIETOR O F THE SAID FIRM. THE LD. CIT(A) IN APPELLATE ORDER DATED 3/7/2000 HA S GIVEN A CLEAR CUT FINDING THAT NEXUS HAS BEEN SUBMITTED IN ITS CL AIM AND APPELLANT HAS PRODUCED XEROX COPY OF THE BANK PASS BOOK OF M/ S. MAHAVIR TEXTILES FOR THE PERIOD 20/8/1992 TO 9/4/1994 AND FROM THE SAID OBSERVATION IT IS VERY CLEAR THAT THE SAID AMOUNT H AS BEEN UTILIZED FOR THE PURPOSE OF APPLICATION IN PUBLIC ISSUE. THEREFO RE, CONSIDERING ALL THESE ASPECTS IN VIEW AND THE OBSERVATION OF THE HO NBLE ITAT, THE ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 5 ADDITION OF RS.2,71,300/- MADE BY THE A. O. IS DELE TED AND THIS GROUND OF APPEAL IS ALLOWED. 8. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARNE D AO AND ARGUED STATING THAT THE ASSESSEE HAD NOT COOPERATED BEFORE THE LEARNED AO IN THE SET ASIDE PROCEEDINGS ORDERED BY THE TRIBUNAL AND F URTHER, THE LEARNED CIT(A) HAD PASSED THE ORDER WITHOUT HEARING THE LEA RNED AO AND, THEREFORE, THE ORDER OF THE LEARNED AO MAY BE CONFI RMED. THE LEARNED AR ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED CIT(A ) AND PRAYED THAT HIS ORDER MAY BE SUSTAINED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE THE RE IS NO DOUBT THAT THE ASSESSEE HAD NOT SERIOUSLY PURSUED THE MATTER BEFOR E THE LEARNED AO. FURTHER, HE HAS NOT FURNISHED CASH FLOW STATEMENT D ATE-WISE TO ESTABLISH THAT THE REFUNDED SHARE APPLICATION MONEY WAS FURTH ER INVESTED IN SHARE APPLICATION. UNLESS AND UNTIL SUCH FINANCIAL STATEM ENTS ARE DRAWN THE GENUINENESS OF THE TRANSACTION CANNOT BE DETERMINED . MERE VERBAL STATEMENTS AND ARGUMENTS CANNOT VOUCH THE TRANSACTI ON FOR GRANTING THE BENEFIT OF TELESCOPING. DATES OF PAYMENT AND DATES OF RECEIPTS ARE VERY IMPORTANT TO DETERMINE WHETHER ANY PAYMENT IS MADE OUT OF SUCH RECEIPTS. THESE FACTS ARE NOT ESTABLISHED AND DO NOT COME OUT FROM THE FINDINGS OF THE LEARNED CIT(A). MOREOVER, THE LEARNED CIT(A) HA S OBTAINED STATEMENTS FROM THE ASSESSEE AND WITHOUT GIVING AN OPPORTUNITY TO THE LEARNED AO HAD DELETED THE ADDITION OF RS.2,71,300/- MADE ON ACCO UNT OF UNEXPLAINED INVESTMENT IN SHARE APPLICATION. FURTHER, IT IS PER TINENT TO NOTE THAT THE ASSESSEE HAD BY HIMSELF ADMITTED THIS AMOUNT AS UND ISCLOSED INCOME BY WAY OF WRITTEN STATEMENT DURING THE SEARCH PROCEEDI NGS. THEREFORE, THE ONUS ON THE ASSESSEE IS MORE IMPORTANT TO ESTABLISH THAT THE RETRACTION MADE SUBSEQUENTLY IS CORRECT. EVEN BEFORE US, THE A SSESSEE HAS NOT COME ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 6 OUT WITH ANY CASH FLOW STATEMENTS TO ESTABLISH THES E FACTS, EVEN THOUGH THE ASSESSEE HAS FURNISHED VOLUMINOUS PAPER BOOK RUNNIN G TO 125 PAGES. CONSIDERING THESE FACTS AND CIRCUMSTANCES OF THE CA SE, WE HEREBY CONFIRM THE ORDER OF THE LEARNED AO ON THIS ISSUE. THUS, TH E AMOUNT OF RS.2,71,300/- STANDS CONFIRMED. ACCORDINGLY, THIS G ROUND RAISED BY THE REVENUE IS ALLOWED. 10. GROUND NO.2: DELETING THE ADDITION MADE BY THE LEARNED AO FOR RS.3,15,000/- ON ACCOUNT OF UNDISCLOSED RECEIVABLES :- DURING THE SEARCH PROCEEDINGS THE ASSESSEE HAD DISCLOSED AN AM OUNT OF RS.3,15,000/- TOWARDS RECEIVABLES AGAINST SALE OF S HARES. HOWEVER, IN THE RETURN OF INCOME, THIS AMOUNT WAS NOT OFFERED. THE ASSESSEE STATED THAT WHILE FINALIZING THE RETURN OF INCOME IT WAS FOUND THAT ALL THE SHARES SOLD HAVE BEEN DELIVERED AND PAYMENTS RECEIVED AND, THER EFORE, THERE WAS NOTHING OUTSTANDING ON ACCOUNT OF RECEIVABLES FROM SALE OF SHARES. THE LEARNED AO DISBELIEVED THE SUBMISSIONS OF THE ASSES SEE BECAUSE THE ASSESSEE HAD MADE SUCH DISCLOSURE DURING THE COURSE OF THE SEARCH. FURTHER THE LEARNED AO OPINED THAT THE SHARES WHICH HAVE ALREADY BEEN SHOWN AND DELIVERED COULD NOT HAVE FOUND PART OF TH E INVENTORY AT THE TIME OF SEARCH. THEREFORE, THE CLAIM OF THE ASSESSEE WAS REJECTED SINCE THE ADDITION WAS MADE ONLY ON THE BASIS OF THE SHARES A CTUALLY FOUND AT THE TIME OF SEARCH. FOR THE ABOVE SAID REASONS, AND FRO M THE OBSERVATIONS OF THE LEARNED AO RECORDED HEREIN ABOVE AT PARA 6 AND THE INITIAL ADMISSION OF THE ASSESSEE THE LEARNED AO CONFIRMED THE ADDITI ON OF RS.3,15,000/- IN THE SET ASIDE PROCEEDINGS. 11. THE ASSESSEE CARRIED THE MATTER BEFORE THE LEAR NED CIT(A). THE LEARNED CIT(A) DELETED THE ADDITION, THE RELEVANT P ORTION OF HIS ORDER IS EXTRACTED HEREIN BELOW FOR REFERENCE: ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 7 4.3 I HAVE CONSIDERED THE FACTS AND OBSERVATION OF THE A.O, AS WELL AS THE SUBMISSION OF THE APPELLANT HAS BEEN HE ARD ON THIS ISSUE. THE ADDITION IS PERTAINING TO AN AMOUNT OF R S.3,15,000/- DISCLOSED BY THE APPELLANT DURING THE COURSE OF SE ARCH BUT THE SAME HAS BEEN LATER ON RETRACTED AND NOT SHOWN IN THE RE TURN O INCOME FILED. IN THE ORIGINAL ASSESSMENT PROCEEDINGS ADDIT ION HAS BEEN MADE AS ADMITTED DURING THE COURSE OF STATEMENT U/S . 132(4) DATED 25/3/1994. IN THE ORIGINAL ORDER OF THE CIT(A) THIS ISSUE HAS BEEN DEALT IN PARA -17 AND THE ADDITION CAME TO BE CONFI RMED MERELY BECAUSE IT HAS BEEN DISCLOSED DURING THE COURSE OF SEARCH AND IT HAS BEEN OBSERVED AS UNDER:- THE APPELLANT HAS NOT BEEN ABLE TO SUPPORT ITS RET RACTION WHEN THE DISCLOSURE AS MADE BY HIM EARLIER WAS ABSO LUTELY VOLUNTARY. VOLUNTARY ADMISSION ON THE PART OF THE A SSESSEE DURING THE COURSE OF SEARCH AND EVEN SUBSEQUENTLY I S THE BEST EVIDENCE UNLESS THE SAME IS PROVED TO BE BASED ON I NCORRECT FACTS WHICH MAY COME TO ASSESSEES KNOWLEDGE SUBSEQUENTLY. THE HONBLE ITAT HAS SET-ASIDE THE SAID ADDITION ON THE GROUND THAT GROUND OF APPEAL NO.1 HAS BEEN SENT BAC K TO THE A. O. FOR FRESH DECISION AND A. O. HAS BEEN DIRECTED TO D ECIDE THE SAME IN ACCORDANCE WITH LAW. WHILE GIVING FINDING BY THE HO NBLE ITAT PERTAINING TO ROUND OF APPEAL NO.1 IT HAS CLEARLY B EEN STATED BY THE HONBLE ITAT THAT MERE DISCLOSURE AT THE TIME OF SE ARCH CANNOT BE THE BASE OF ADDITION WITHOUT CONSIDERING EXPLANATIO N OF THE ASSESSEE AND SINCE FIRST ADDITION WAS ALSO BASED ON THE DIS CLOSURE MADE WHICH HAS BEEN SET-ASIDE, THIS ISSUE HAS ALSO BEEN SET-ASIDE BY THE ITAT. THEREFORE, IT IS VERY CLEAR THAT ADDITION CAN NOT BE MADE MERELY ON THE BASIS OF DISCLOSURE. THEREFORE, COMING TO TH E CONTENTION OF THE APPELLANT THAT THERE WERE NO SHARES WHICH HAVE BEEN SOLD PRIOR TO THE DATE OF SEARCH, PAYMENT OF WHICH WAS RECEIVABLE AND THUS, IN ABSENCE OF ANY DOCUMENTARY EVIDENCES NO ADDITION CA N BE MADE. IN BOTH THE ASSESSMENT PROCEEDINGS NO EVIDENCE HAS BEE N BROUGHT ON RECORD BY THE A. O. INDICATING WHICH SHARE HAS BEEN SOLD, ON WHICH DATE IT HAS BEEN SOLD, TO WHOM IT HAS BEEN SOLD ETC . IT HAS ALSO CLAIMED THAT NO SUCH PAYMENT HAS BEEN RECEIVED BY T HE APPELLANT TILL DATE AND EVEN THERE IS NO REFERENCE TO LOOSE PAPER PERTAINING TO SUCH ADDITION. THEREFORE, IN VIEW OF SAID FACTS AND KEEPING IN VIEW THE JUDGEMENT OF THE AHMEDABAD ITAT IN 94 TTJ 867 I N CASE OF ACIT VS JORAWAR SINGH M RATHOD ADDITION CANNOT BE M ADE AND ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 8 THUS, THE SAME HAS BEEN DELETED. THEREFORE, THIS GR OUND OF APPEAL IS ALLOWED. 12. BEFORE US, THE LEARNED DR SUPPORTED THE ORDER O F THE LEARNED AO AND VEHEMENTLY ARGUED THAT THE ADDITIONS WERE MADE BASED ON THE SHARES WHICH WERE FOUND AT THE RESIDENCE OF THE ASSESSEE D URING THE COURSE OF SEARCH. ON THE OTHER HAND, THE LEARNED AR SUPPORTED THE ORDER OF THE LEARNED CIT(A). 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE PAPER BOOK CONTAINING 125 PAGES AND THE CASE LAWS P LACED BEFORE US BY THE LEARNED AR. FROM THE ORDER OF THE LEARNED AO IT IS EVIDENT THAT THE SHARES AMOUNTING TO RS.3,15,000/- WAS FOUND IN THE RESIDENCE OF THE ASSESSEE DURING THE COURSE OF SEARCH FOR WHICH THE ASSESSEE HAD AGREED FOR AN ADDITION STATING THAT THE AMOUNT WAS RECEIV ABLE AGAINST THE SALE OF SHARES THOUGH YET TO BE DELIVERED. HOWEVER, THE LEA RNED CIT(A) HAS DELETED THE ADDITION BY STATING THAT THERE WAS NO D OCUMENTARY EVIDENCE FOR THE LEARNED AO TO MAKE SUCH ADDITION. THE LEARNED C IT(A) HAS MISERABLY FAILED TO TAKE NOTE OF THE FACT THAT THESE SHARES W ERE FOUND AT THE RESIDENCE OF THE ASSESSEE DURING THE COURSE OF SEARCH. NO DIS CUSSION ON THE FINDING OF THE LEARNED AO IS BROUGHT OUT BY THE LEARNED CIT (A) IN HIS ORDER OR ANY COGENT EVIDENCE IS PRODUCED BY THE ASSESSEE/LEARNED AR BEFORE THE LEARNED CIT(A) OR BEFORE US TO SUPPORT THE STAND OF THE ASSESSEE. THE FACTS WHICH EMERGE FROM THE ORDER OF THE LEARNED AO IS THAT DURING THE COURSE OF SEARCH, SHARES AMOUNTING TO RS.3,15,000/- WAS FOUND AT THE RESIDENCE OF THE ASSESSEE FOR WHICH THE ASSESSEE HA D AGREED FOR THE ADDITION, HOWEVER WITH A RIDER, THAT THOSE SHARES W ERE SOLD BY THE ASSESSEE AND AN AMOUNT OF RS.3,15,000/- WAS RECEIVA BLE AGAINST SUCH SALE OF SHARES. THESE ADMITTED FACTS ARE NOT SATISF ACTORILY EXPLAINED OTHERWISE BY THE ASSESSEE BEFORE THE REVENUE AUTHOR ITIES AND FURTHER THE ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 9 ASSESSEE HAS NOT EXPLAINED SOURCE OF INVESTMENT FOR THE SHARES FOUND AT THE TIME OF SEARCH IN THE RESIDENCE OF THE ASSESSEE . THEREFORE, WE DO NOT HAVE ANY HESITATION TO CONFIRM THE ORDER OF THE LEA RNED AO ON THIS ISSUE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) DELETING THE AMOUNT OF RS.3,15,000/- AND RESTORE THE ORDER OF TH E LEARNED AO AND THEREBY, UPHOLD THE ADDITION OF RS.3,15,000/-. THIS GROUND RAISED BY THE REVENUE IS ALSO DECIDED IN ITS FAVOUR. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. C. O. NO.33/AHD/2011 (ASSESSEES C.O. FOR AY: 1994-95) 15. GROUND NO.1:- REJECTING THE GROUND OF APPEAL BY THE LEARNED CIT(A) CLAIMING SET OFF OF SURPLUS FUNDS BROUGHT FO RWARD FROM THE ASSESSMENT YEAR 1993-94 AMOUNTING TO RS.4,17,738/- AGAINST THE INCOME FOR THE ASSESSMENT YEAR 1994-95. 16. THE ASSESSEE HAS CLAIMED EXCLUSION OF RS.4,17,7 38/- BEING CLOSING CASH BALANCE FOR THE ASSESSMENT YEAR 1993-94 FROM T HE INCOME OF THE RELEVANT ASSESSMENT YEAR 1994-95 BEFORE THE LEARNED AO AT THE TIME OF ASSESSMENT PROCEEDINGS THOUGH NOT CLAIMED IN THE RE TURN OF INCOME. THE ASSESSEE HAD SUBMITTED VARIOUS WRITTEN SUBMISSIONS BEFORE THE LEARNED AO AND ALSO RELIED UPON THE CASE ARUN KALA VS. ACIT [2005] 98 TTJ 1046 (JP). HOWEVER, THE LEARNED AO HAD REJECTED THE ARGU MENTS OF THE ASSESSEE AND RECORDED HIS FINDING AS UNDER: THE ISSUE REGARDING AVAILABILITY OF SURPLUS FUNDS OF RS.4,17,738/- OF ASSESSMENT YEAR 1993-94 IN 1994-95 IS NOT VERIFIABL E IN THE ABSENCE OF ANY COMPLIANCE FROM ASSESSEES SIDE. HENCE, IT I S HELD THAT NO SURPLUS FUNDS ARE AVAILABLE FOR CONSIDERING IN THIS YEAR. ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 10 THE LEARNED CIT(A) REJECTED THE GROUND RAISED BY TH E ASSESSEE BY FOLLOWING THE DECISION RENDERED BY THE HONBLE SUPR EME COURT IN THE CASE OF GOETZ (INDIA) LTD. VS CIT [2006] 284 ITR 323 AND HELD THAT SINCE THE ASSESSEE HAD NOT MADE SUCH CLAIM IN THE ORIGINAL RE TURN OR IN THE REVISED RETURN SUCH CLAIM CANNOT BE ENTERTAINED. 17. BEFORE US, THE LEARNED AR PRAYED THAT THE BENEF IT OF TELESCOPING MAY BE GRANTED FOR THE SURPLUS FUNDS FOR ASSESSMENT YEA R 1993-94 OF RS.4,17,738/- AGAINST THE ADDITIONS MADE FOR THE AS SESSMENT YEAR 1994-95 DUE TO THE FOLLOWING REASONS: I) FOR THE ASSESSMENT YEAR 1993-94 THERE WAS A SURP LUS FUND OF RS.2,74,649/- AFTER CONSIDERING THE FINAL POSITION, IN VIEW OF THE ORDER OF THE ITAT DATED 10 TH JUNE 2005 [COMPLETE WORKING IS AVAILABLE IN PARA NO.5 ON PAGE NO.19 OF THE ORDER O F THE PRESET CIT(A)] II) THE SURPLUS IS NOT ON ACCOUNT OF INVESTMENT, BU T ON ACCOUNT OF PROFIT EARNED LESS UTILIZED IN THE ASSESSMENT YEAR 1993-94. III) IN THE ASSESSMENT YEAR 1994-95 ENTIRE ADDITION S ARE ON ACCOUNT OF INVESTMENT AND NOT ON ACCOUNT OF INCOME [PB 4 AND 16 DATED 12-11-12] IV) THE ENTIRE AMOUNT OF ADDITION IN THE ASSESSMENT YEAR 1994-95 ARE ON ACCOUNT OF INVESTMENT FOUND DURING THE COURS E OF SEARCH WHICH HAS BEEN MADE UNDER SECTION 69. THESE INVESTMENTS ARE AS A RESULT OF INCOME WHICH HAS BEE N EARNED IN THE ASSESSMENT YEAR 1993-94 AND 1994-95. V) THEREFORE, THE SET OFF ON ACCOUNT OF UNACCOUNTED INCOME FOR THE ASSESSMENT YEAR 1993-94 IS REQUIRED TO BE GIVEN FOR UNACCOUNTED INVESTMENT AS ADDED IN SECTION 69 IN TH E ASSESSMENT YEAR 1994-95, AS THE SEARCH TOOK PLACE O N 25-03- 1994. VI) THE CIT(A) HAS ACCEPTED THIS POSITION IN PRINCI PLE BY OBSERVING IN PARA NO.5 ON PAGE NO.23 AS UNDER: ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 11 HOWEVER, THE HONBLE ITAT HAS SET-ASIDE THE SAID ISSUE TO THE FILE OF THE A.O. TO DECIDE THE SAME IN ACCORDANCE WITH LAW. IT IS ABSOLUTE TRUE THAT THE N ATURE OF BUSINESS AND THE NATURE ADDITION FOR BOTH THE ASSESSMENT YEARS 1993-94 AND 1994-95 ARE IDENTICAL AS IS CLEAR FROM THE WORKING REPRODUCED HEREINABOVE. VII) HOWEVER, THE SAID CLAIM OF THE APPELLANT WAS R EJECTED IN VIEW OF THE JUDGMENT OF THE SUPREME COURT IN CASE OF GEO TZ(INDIA) LTD. VS. CIT (2006) 284 ITR 323. VIII) THAT THE SAID JUDGMENT OF THE SUPREME COURT H AS BEEN WRONGLY APPLIED IN THE FACTS OF THE CASE, AS IN THE FACTS OF THE APPELLANTS CASE, THE FILING OF THE REVISED RETURN WAS NOT POSSIBLE AS N THE ASSESSMENT YEAR 1993-94 THE ADDIT IONS WERE MADE AS UNACCOUNTED INCOME AND FURTHER IN THE ASSES SMENT YEAR 1994-95 THE ADDITIONS WERE MADE AS UNACCOUNTED INVESTMENT, PURSUANT TO THE SEARCH ON 25-03-1994. M OREOVER, THE HONBLE SUPREME COURT IN THE SAID JUDGMENT HAS CLEARLY OBSERVED ON PAGE 324 AS UNDER: THE DECISION IN QUESTION IS THAT THE POWER OF THE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX AC, 19 61, IS TO ENTERTAIN FOR THE FIRST TIME A POINT OF LAW P ROVIDED THE FACT ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISED BEFORE THE TRIBUNAL. THE DECISION DOES NOT I N ANY WAY RELATE TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY F ILING A REVISED RETURN. IN THE CIRCUMSTANCES OF THE CASE, W E DISMISS THE CIVIL APPEAL. HOWEVER, WE MAKE IT CLEAR THAT THE ISSUE IN THIS CASE IS LIMITED TO THE POWER OF T HE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POW ER O THE INCOME-TAX APPELLATE TRIBUNAL UNDER SECTION 2 54 OF THE INCOME-TAX ACT, 1961. THERE SHALL BE NO ORDE R AS TO COSTS. IX) RELIANCE IS ALSO PLACED ON THE FOLLOWING JUDGME NTS: (A) ARUN KALA VS. ASSTT. CIT [2005] 98 TTJ (JP.) 10 46 HELD THAT ASSESSEE WAS MERELY ASKING FOR THE TELESCOPING BENEFIT OF THE INCOME EARNED FROM SATTA ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 12 BUSINESS AGAINST THE PEAK WHICH WAS SURRENDERED AND DULY ASSESSED BY THE ASSESSING OFFICER. THE BENEFIT OF TELESCOPING OR SET OFF OF SECRET PROFITS OR UNDISCL OSED INCOME OF THE ASSESSEE WAS TO BE GIVEN AS THAT MIGH T CONSTITUTE A FUND FROM WHICH THE ASSESSEE MIGHT DRA W SUBSEQUENTLY FOR MEETING THE EXPENDITURE OR MAKING INVESTMENTS. (B) JAGADAMBA CONSTRUCTION CO. VS. ITO [2004] 3 S OT 670 (JODH.) (C ) RADHEY SHYAM TANWAR VS. ASST. CIT [2002] 77 TTJ (JODH. 505. 18. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARN ED AO AND THE LEARNED CIT(A). 19. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS ON RECORD. IT IS PERTINENT TO NOTE THAT T HE ASSESSEE HAS COME OUT ONLY WITH VERBAL STATEMENTS TO EXPLAIN ITS FINANCIA L TRANSACTIONS. THE ASSESSEE HAS NOT PRODUCED THE FINANCIAL STATEMENTS SUCH AS CASH FLOW STATEMENTS OR RECEIPTS & PAYMENTS ACCOUNTS, CASH B OOK/BANK BOOK, LEDGER ACCOUNT, BALANCE SHEET ETC. TO EXPLAIN ITS F INANCIAL POSITION AT ON A RELEVANT POINT OF TIME. ANY FINANCIAL TRANSACTION I F NOT PRESENTED IN THIS FASHION, THE CORRECT FACTS CANNOT BE DETERMINED. VE RBAL STATEMENTS WILL ONLY SUPPLEMENT TO THE FINANCIAL TRANSACTIONS RECOR DED IN THE BOOKS OF ACCOUNTS. SINCE, THE ASSESSEE HAS NOT PRODUCED THE RELEVANT BOOKS NECESSARY FOR DETERMINING THESE FACTS, IT WOULD BE NOT POSSIBLE TO DECIDE WHETHER SUCH BENEFITS OF TELESCOPING COULD BE GRANT ED OR DENIED. MOREOVER, IT IS EVIDENT THAT THE ASSESSEE HAD NOT C OOPERATED BEFORE THE LEARNED AO AND THE LEARNED AO WAS FORCED TO PASS OR DER U/S 144 OF THE ACT. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY MERITS IN THE PRAYER MADE BY THE ASSESSEE AND, THEREFORE, WE REJECT ITA 2715 & CO 330/AHD/2010(AY: 1994-95) VIMALCHAND G. KOTHARI 13 THE SAME AND CONFIRM THE ORDER OF THE LEARNED AO AN D, THEREBY UPHOLD THE ADDITION OF RS.4,17,738/- MADE BY THE LEARNED AO. 21. IN THE RESULT, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 22. IN THE RESULT, THE APPEAL THE REVENUE IS ALLOWE D AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21-12-2012 SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANTA LAKSHMIKANTA LAKSHMIKANTA LAKSHMIKANTA DEKA/ DEKA/ DEKA/ DEKA/ 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: 13-12-12/19-12-12 (DIRECT ON COMPUTER) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 19-12-12 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: