Shri Rohit C.Shah, Ahmedabad V. The Income tax Officer,Ward-10(1), Ahmedabad

ITA 2854/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73147 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-03-2014
• Assessment Year: 1985-1986
• Appeal Filed On: 12-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS SRDR
• Assessee Lawyers: M G PATEL
• Keywords: Unexplained investment; Opportunity of being heard

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BENCH, AHMEDABAD .., ! '# '# '# '# $ %&, ! BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. #./ I.T.A. NO.2854/AHD/2010 A.Y. 1985-86 2. #./ I.T.A. NO.2855/AHD/2010 A.Y. 1986-87 SHRI ROHIT C.SHAH 53, LAVNYA SOCIETY NAVA VIKAS GRUH ROAD VASNA AHMEDABAD / VS. THE ITO WARD-10(1) NARAYAN CHAMBERS ASHRAM ROAD AHMEDABAD !( #./)* #./ PAN/GIR NO. : ADKPSS 5853 L ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI M.G. PATEL A.R. ,-(+ / . / RESPONDENT BY : SHRI K.C. MATHEWS, SR.D.R. $'0 / & / / / / DATE OF HEARING : 10/03/2014 123 / & / DATE OF PRONOUNCEMENT : 19/03/2014 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : BOTH THESE APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST THE COMMON ORDER OF THE LD.COMMISSIONER OF INCOME TAX(A PPEALS)-XVI, AHMEDABAD (CIT(A) FOR SHORT) DATED 12/08/2010 PE RTAINING TO ASSESSMENT YEARS (AYS) 1985-86 & 1986-87. SINCE CO MMON ISSUES ARE INVOLVED, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONV ENIENCE. ITA NOS.2854 & 2855/AHD/ 2010 ROHIT C.SHAH VS. ITO ASST.YEARS 1985-86 & 1986-87 RESPECTIVELY - 2 - 2. WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.2854/ AHD/2010 FOR AY 1985-86 AS LEADING CASE. THE ASSESSEE HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL:- 1.1. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIR MING THE ADDITION OF RS.22,50,000 MADE BY THE ASSESSING OFFI CER ON PROTECTIVE BASIS. IN RESPECT OF UNEXPLAINED INVEST MENT IN THE SHARE CAPITAL OF THREE COMPANIES. 1.2 THAT THE VARIOUS REASONS ADVANCED BY THE LEARNED CIT(APPEALS) IN CONFIRMING THE DISALLOWANCE ARE CON TRARY TO THE FACTS OF THE CASE AND EVIDENCE ON RECORD. 1.3 THE APPELLANT RESPECTFULLY SUBMITS THAT ON FACTS OF THE CASE AND EVIDENCE ON RECORD, NO SUCH ADDITION CAN BE MAD E IN THE CASE OF APPELLANT. 1.4 THE APPELLANT FURTHER SUBMITS THAT HE IS NOT THE DI RECTOR IN ANY OF THE COMPANIES, NOR ATTENDED ANY MEETING, HE DOES NOT HAVE ANY POWER TO OPERATE THE BANK ACCOUNT. FURTHE R HE HAS NOT BEEN FURNISHED COPY OF STATEMENT OF SHAREHO LDERS RECORDED BY THE DEPARTMENT. FURTHER NO INCRIMINATI NG MATERIAL HAS BEEN FOUND OUT FROM THE APPELLANT DURI NG SEARCH. THE APPELLANT THEREFORE SUBMITS THAT HE HI S IN NO WAY CONNECTED OR ASSOCIATED WITH THE MANAGEMENT OF THE COMPANIES. FURTHER HE WAS NOT IN SPEAKING TERMS WI TH HIS BROTHERS AND THERE WERE SEVERAL CIVIL LITIGATION GO ING ON BETWEEN THE APPELLANT AND HIS BROTHERS. THE APPELL ANT THEREFORE SUBMITS THAT NO ADDITION CAN BE MADE IN H IS CASE IN RESPECT OF SHARE CAPITAL OF THE COMPANIES. 1.5 THE APPELLANT THEREFORE SUBMITS THAT ADDITION OF RS.22,50,000 MADE IN HIS CASE ON PROTECTIVE BASIS B E DELETED. 2.1. IN ASSESSEES APPEAL, I.E. ITA NO.2855/AHD/201 0 FOR AY 1986-87, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1.1. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING TH E ADDITION OF RS.15,00,000 MADE BY THE ASSESSING OFFICER ON PROTE CTIVE BASIS. IN RESPECT OF UNEXPLAINED INVESTMENT IN THE SHARE C APITAL OF THREE COMPANIES. ITA NOS.2854 & 2855/AHD/ 2010 ROHIT C.SHAH VS. ITO ASST.YEARS 1985-86 & 1986-87 RESPECTIVELY - 3 - 1.2. THAT THE VARIOUS REASONS ADVANCED BY THE LEARNED CI T(APPEALS) IN CONFIRMING THE DISALLOWANCE ARE CONTRARY TO THE FAC TS OF THE CASE AND EVIDENCE ON RECORD. 1.3. THE APPELLANT RESPECTFULLY SUBMITS THAT ON FACTS OF THE CASE AND EVIDENCE ON RECORD, NO SUCH ADDITION CAN BE MADE IN THE CASE OF APPELLANT. 1.4. THE APPELLANT FURTHER SUBMITS THAT HE IS NOT THE DI RECTOR IN ANY OF THE COMPANIES, NOR ATTENDED ANY MEETING, HE DOES NO T HAVE ANY POWER TO OPERATE THE BANK ACCOUNT. FURTHER HE HAS NOT BEEN FURNISHED COPY OF STATEMENT OF SHAREHOLDERS RECORDE D BY THE DEPARTMENT. FURTHER NO INCRIMINATING MATERIAL HAS BEEN FOUND OUT FROM THE APPELLANT DURING SEARCH. THE APPELLAN T THEREFORE SUBMITS THAT HE HIS IN NO WAY CONNECTED OR ASSOCIAT ED WITH THE MANAGEMENT OF THE COMPANIES. FURTHER HE WAS NOT IN SPEAKING TERMS WITH HIS BROTHERS AND THERE WERE SEVERAL CIVI L LITIGATION GOING ON BETWEEN THE APPELLANT AND HIS BROTHERS. T HE APPELLANT THEREFORE SUBMITS THAT NO ADDITION CAN BE MADE IN H IS CASE IN RESPECT OF SHARE CAPITAL OF THE COMPANIES. 1.5. THE APPELLANT THEREFORE SUBMITS THAT ADDITION OF RS .15,50,000 MADE IN HIS CASE ON PROTECTIVE BASIS BE DELETED. 2.2. THIS IS THE SECOND INNING. IN THE EARLIER ROUND, THE MATTER TRAVELLED UPTO THE HONBLE ITAT AND THE TRIBUNAL ( ITAT C BENCH AHMEDABAD) IN ITA NOS.4088 & 4089/AHD/2002 FOR AYS 1985-86 & 1986-87 RESPECTIVELY IN ASSESSEES OWN CASE VIDE OR DER DATED 16/11/2007 WAS PLEASED TO SET ASIDE THE ASSESSMENT TO THE FILE OF AO. ALL THE GROUNDS ARE INTER-CONNECTED AND ARE IN RESPECT OF THE ADDIT ION MADE ON PROTECTIVE BASIS. 2.3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE ADDITION ON PROTEC TIVE BASIS. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT IN THE EARLIER OC CASION, THE HONBLE ITA NOS.2854 & 2855/AHD/ 2010 ROHIT C.SHAH VS. ITO ASST.YEARS 1985-86 & 1986-87 RESPECTIVELY - 4 - ITAT WAS PLEASED TO RESTORE THE MATTER TO THE FILE OF AO TO TAKE APPROPRIATE ACTION IN CASE THE ADDITION HAS BEEN DE LETED IN THE HANDS OF THE COMPANY. HE SUBMITTED THAT THE ISSUE HAS BEEN DECIDED BY THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO.457 OF 1999 DATED 09/08/2010 IN THE CASE OF ASST.CIT VS. TARUJYOT INV ESTMENT LTD. HE SUBMITTED THAT THE ISSUE HAS NOW BEEN SETTLED IN RE SPECT OF THE SHARE CAPITAL FUNDS. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE HONBLE TRIBUNAL IN ITA NOS.4088 & 4089/AHD/2002 IN ASSESSEES OWN CASE PERTAINING TO AYS 1985-86 & 198 6-87 HAD RESTORED THE ASSESSMENT TO THE FILE OF AO. WHILE DOING SO, THE HONBLE TRIBUNAL HAD OBSERVED AS UNDER:- 4. AT THE OUTSET, IT IS SEEN THAT IN ASSESSMENT Y EAR 1985-86 THE ADDITION OF RS.22,50,000 WAS MADE IN THE HANDS OF T ARUNJYOTI INVESTMENT LTD. ON SUBSTANTIVE BASIS AND THE LEARNE D DR COULD NOT PROVIDE ANY INFORMATION WHAT HAPPENED TO THE SUBSTA NTIVE ADDITION IN THE HANDS OF THE COMPANY BEFORE THE TRIBUNAL. I N VIEW OF THESE FACTS, WE FAIRLY FEEL THAT WE HAVE NO OTHER ALTERNA TIVE EXCEPT TO SET ASIDE THIS ASSESSMENT TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER WILL TAKE APPROPRIATE ACTION IN C ASE THE ADDITION HAS BEEN DELETED IN THE HANDS OF THE COMPANY TARUNJ YOTI INVESTMENT LTD., AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. 5. IN ASSESSMENT YEAR 1986-87, THE SUBSTANTIVE ADD ITIONS WERE MADE IN THE HANDS OF TARUNJYOTI INVESTMENT CO.LTD., RAJRADHE FINANCE CO.LTD. AND GIRA FINANCE LTD. HERE ALSO TH E LEARNED DR COULD NOT PROVIDE ANY INFORMATION WHAT HAPPENED TO THE SUBSTANTIVE ADDITIONS IN THE HANDS OF THOSE COMPANI ES BEFORE THE TRIBUNAL. IN VIEW OF THESE FACTS, WE FAIRY FEEL TH AT WE HAVE NO ITA NOS.2854 & 2855/AHD/ 2010 ROHIT C.SHAH VS. ITO ASST.YEARS 1985-86 & 1986-87 RESPECTIVELY - 5 - OTHER ALTERNATIVE EXCEPT TO SET-ASIDE THIS ASSESSME NT TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER WILL TAKE APPROPRIATE ACTION IN CASE THE ADDITION HAS BEEN DELETED IN THE HANDS OF THE COMPANY TARUNJYOTI INVESTMENT LTD., AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3.1. IN PURSUANCE OF THAT, THE AO MADE ADDITION ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. AGAINST THE ORDER OF TH E AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO ALSO DID NOT ACCEPT THE EXPLANATION GIVEN BY THE ASSESSEE AND HE DISMISSED THE APPEALS OF THE ASSESSEE. THE ASSESSEE HAD FILED FURTHER APPEALS BEFORE THIS TRIBUNAL. THE HONBLE TRIBUNAL WHILE RESTORING THE MATTER TO THE FILE OF AO OBSERVED THAT IN THE CASE PERTAINING TO AY 1985-86, THE ADDITION OF RS.22,50,000/- WAS MADE IN THE HANDS OF THE TARUNJY OTI INVESTMENT LTD. IN AY 1986-87, THE HONBLE TRIBUNAL OBSERVED THAT T HE DR COULD NOT PROVIDE ANY INFORMATION WHAT HAPPENED TO THE SUBSTA NTIVE ADDITIONS IN THE HANDS OF THE COMPANY BEFORE THE TRIBUNAL. IT I S THE CONTENTION OF THE LD.SR.DR THAT THE MATTER TRAVELLED UPTO THE HONBLE GUJARAT HIGH COURT AND THE HONBLE HIGH COURT DELETED THE ADDITION MAD E IN THE HANDS OF THE ASSESSEE. AN ORDER DATED 09/08/2010 PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASST.CIT V S. TARUJYOT INVESTMENT LTD. IN TAX APPEAL NO.457 OF 1999 HAS BEEN PLACED ON RECORD. THE AO IN THIS CASE, IN PURSUANCE OF THE ORDER OF THE HON BLE ITAT, HAS MADE ADDITION ON PROTECTIVE BASIS IN THE HANDS OF THE AS SESSEE. IT WAS OBSERVED BY THE AO THAT THE HONBLE TRIBUNAL IN ITA NOS.323 & 324/AHD/1996 VIDE ORDER DATED 11/04/2005 HAS CONFIRMED THE ADDIT ION OF RS.12.5 LACS. IT IS ALSO OBSERVED THAT A REFERENCE APPLICATION BE FORE THE HONBLE GUJARAT HIGH COURT IS PENDING. IN VIEW OF THE ORDER OF THE HONBLE GUJARAT HIGH ITA NOS.2854 & 2855/AHD/ 2010 ROHIT C.SHAH VS. ITO ASST.YEARS 1985-86 & 1986-87 RESPECTIVELY - 6 - COURT RENDERED IN THE CASE OF ASST.CIT VS. TARUJYO T INVESTMENT LTD. (TAX APPEAL NOD.457 OF 1999), THIS ISSUE REQUIRES FRESH ADJUDICATION, THEREFORE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND T HE MATTER IS RESTORED BACK TO THE FILE OF AO FOR DECISION AFRESH. THE AO IS ALSO DIRECTED TO VERIFY AS TO WHAT HAPPENED IN THE CASE OF RAJRADHE FINANCE CO.LTD. AND GIRA FINANCE LTD. NEEDLESS TO SAY THAT THE AO SHOU LD AFFORD REASONABLE OPPORTUNITY TO THE ASSESSEE FOR REPRESENTING HIS CA SES. THUS, GROUNDS OF THE ASSESSEES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. 4. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) ($ %&) ! ! ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 19/03/2014 7.., '.../ T.C. NAIR, SR. PS 4 / ,&8 983& 4 / ,&8 983& 4 / ,&8 983& 4 / ,&8 983&/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. ## & $: / CONCERNED CIT 4. $:() / THE CIT(A)-XVI, AHMEDABAD 5. 8'%; ,& , , / DR, ITAT, AHMEDABAD 6. ;< =0 / GUARD FILE. 4$ 4$ 4$ 4$ / BY ORDER, -8& ,& //TRUE COPY// > >> >/ // / #) #) #) #) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD