The ITO, Ward-3(4), Ahmedabad V. M/s. Dilip R. Prajapati, Ahmedabad

ITA 2967/AHD/2004

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9231 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-07-2009
• Assessment Year: 1993-1994
• Appeal Filed On: 04-10-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C
• Keywords: Unexplained investment; Income from undisclosed sources; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.2967/AHD/2004 & C.O.NO.327/AHD/2004 ASSESSMENT YEAR:1993-94 DATE OF HEARING:8.7.09 DRAFTED:8.7.09 INCOME TAX OFFICER, WARD-3(4), AHMEDABAD SHRI DILIP R, PRAJAPATI, C/O. M/S. KRISHNAJI BAHGWANJI RAJNAGAR VEGETABLE MARKET, DHALGARWAD, AHMEDABAD PAN NO. NOT FOUND V/S . V/S . SHRI DILIP R PRAJAPATI C/O. M/S. KRISHNAJI BAHGWANJI, RAJNAGAR VEGETABLEMARKET, DHALGARWAD, AHMEDABAD ITO, WARD-3(4), AHMEDABAD (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI DHIREN SHAH, CA REVENUE BY:- SHRI M.C. PANDIT, SR. DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE AND CROSS OBJECTION (CO ) BY THE ASSESSEE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME- TAX (APPEALS)-XVIII, AHMEDABAD IN APPEAL NO. CIT(A)-XVIII/5/97-98 DATED 16-07-2004 . THE ASSESSMENT WAS FRAMED BY THE ACIT, CIRCLE-2(1) (INV.) AHMEDABAD U/S.143(3 ) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FO R THE ASSESSMENT YEAR 1993-94. FIRST WE WILL DEAL WITH REVENUES APPEAL IN ITA NO. 2967/AHD/2004. ITA NO.2640/AHD/2006 & CO 30/AHD/2007 A.Y. 2003-04 ITO SKANTHA WD-4, MODASA V. SH. SUBHASHCHANDRA D SONI P AGE 2 2. THE FIRST ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED PROFIT IN DESHAVAR ACCOUNT . FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING GROUND NO.1 :- 1. THE CIT(A) HAS ERRED IN LAW AND ON FATS IN DIRE CTING TO DELETE THE ADDITION OF RS.2,81,746/- MADE ON ACCOUNT OF ALLEGED PROFIT IN DESHVAR A/C. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO PERUSED TH E CASE RECORDS INCLUDING THE ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A) AND ASSESSEES PAPER BOOK CONTAINING PAGES-1 TO 214. THE BRIEF FACTS RELATIN G TO THIS ISSUE ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS NOTICED FROM THE PROFIT & LOSS A/C. OF M/S. DELHI LEMON COMPANY, WHI CH IS A PROPRIETORY CONCERN OF THE ASSESSEE HAD SHOWN COMMISSION INCOME OF RS.3,01,672 /- AND ALSO CLAIMED LOSS OF RS.1,16,085/-. IN VIEW OF THESE, THE AO NOTICED TH AT THE ASSESSEE WAS CHARGING 10% OF ITS COMMISSION ON HIS ROLE AS LEMON COMMISSION AGENT. THE AO FURTHER NOTED IN HIS ASSESSMENT ORDER THAT WHEN ALL THE GOODS ARE NO T SOLD IN THE LOCAL MARKET, THE ASSESSEE PACKED AND TRADES THE GOODS IN DISTANT MAR KETS OF DELHI, JALANDHAR ETC., THE AO FURTHER NOTED FROM THE TRADING ACCOUNT THAT THE ASSESSEE DISPATCHED GOODS WORTH OF RS.32,84,087/-AND, AGAINST THE SAME HE HAS RECEIVED PAYMENT WORTH OF RS.31,68,001/-. ACCORDINGLY, THIS RESULTED INTO LO SS OF RS.1,16,085/- AND THE AO NOTED FROM THE RECORDS THAT THE PRICE OF THE GOODS HAS NOT CORRECTLY BEEN NOTED IN DAY-TO-DAY TRANSACTIONS AS THE PURCHASES HAVE BEEN SHOWN AT A MUCH HIGHER RATE RESULTING INTO HIGHER LOSS. ACCORDINGLY, THE AO MA DE ADDITION OF RS.2,18,746/- IN THE DESHAVAR A/C. AGGRIEVED, THE ASSESSEE PREFERRED AP PEAL BEFORE CIT(A). THE CIT(A) DELETED THE ADDITION BY GOING THROUGH THE EVIDENCES IN THE FORM OF PURCHASE BILLS OF JUNE, 1992 AND ALSO THE PURCHASE RATE AND SALE RATE PER KG AS FURNISHED BY THE ASSESSEE. THE CIT(A) NOTED THAT THE AO WAS NOT JUST IFIED IN WORKING OUT PURCHASE RATE PER KG. AND SINCE THE PURCHASE BILLS CLEARLY S HOWS THAT THE PURCHASE ARE MADE ON 20 KG. BASIS. IT WAS ALSO NOTED BY THE CIT(A) T HAT EACH PACK PURCHASED DOES NOT CONTAIN EQUAL QUANTITY OF LEMON AND EVEN CERTAIN PU RCHASES ARE MADE MUCH LOWER RATE THEN THE RATE PREVAILING ON THE EARLIER DATES. IT WAS ALSO NOTICED THAT THE ASSESSEE HAS EARNED PROFIT ON ACCOUNT OF DESHAVAR T RADING A/C ON CERTAIN DATES AND AO HAS WRONGLY PRESUMED THAT THE ASSESSEE REPEATEDL Y INCURRING LOSSES ON SUCH TRANSACTIONS. ACCORDING TO THE CIT(A), THE PRICES OF THIS COMMODITY, THESE LEMONS ITA NO.2640/AHD/2006 & CO 30/AHD/2007 A.Y. 2003-04 ITO SKANTHA WD-4, MODASA V. SH. SUBHASHCHANDRA D SONI P AGE 3 VARY, BECAUSE THE COMMODITY IS PERISHABLE IN NATURE AND FINALLY HE NOTED THAT THE ASSESSEE HAS EARNED NET PROFIT IN THIS ACCOUNT INCL UDING THE COMMISSION INCOME. ACCORDINGLY, THE CIT(A) DELETED THE ADDITION. BEFO RE US LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ASSESSMENT ORDER. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 4. AFTER HEARING THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT LEMONS WERE PACKED IN BAGS CONTAINING 20 KG. AS PER THE DETAILS FURNISHED BEFORE THE LOWER A UTHORITIES AND EVEN NOW BEFORE US AND FROM THE CHART FOR THE MONTH OF JUNE, 1992, IT IS CLEARLY ESTABLISHED THAT BOTH PROFIT AS WELL AS LOSS TRANSACTIONS ALONG WITH QUAN TITY, RATE, PURCHASE & SALES ARE RECORDED. WE FIND THAT ON MANY DATES, THE PURCHASE PRICE IS LOWER THAN RATE PREVAILING ON EARLIER DATES. ACCORDINGLY, WE ARE O F THE VIEW THAT THE FINDING OF FACT RECORDING BY THE AO IS CONTRARY TO THE FACTS. WE A LSO FIND THAT THE ASSESSEE HAS MADE SUBSTANTIAL PROFIT ON VARIOUS DATES AND IN SOM E MONTHS THE NET RESULT IS ALSO PROFIT, AS THE SAME IS FOUND FROM SAMPLE BILLS OF J UNE, 1992 FURNISHED BEFORE THE LOWER AUTHORITIES AND EVEN NOW IN ASSESSEES PAPER BOOK. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. THIS ISSUE OF THE REVENUES APPEAL IS DISMIS SED. 5. THE NEXT ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE ON ACCOUNT OF MONEY INTR ODUCED IN THE CAPITAL ACCOUNT HAS BEEN TELESCOPING WITH THE PARTNERSHIP FIRM AMOU NT SURRENDERED BY THE ASSESSEE. FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING GROUND NO.2 :- 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO DELETE THE ADDITION OF RS.7,86,830/- MADE ON ACCOUNT OF MONEY INTRODUCE D IN THE CAPITAL A/C. WITH THE PARTNERSHIP FIRMS. 6. THE BRIEF FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSING OFFICER NOTICED FROM THE CAPITAL ACCOUNT OF THE ASSESSEE-FIRM, THAT THE PARTNER HAS MADE ADDITION IN THE CAPITAL ACCOUNT AGGREGATING TO RS.7,86,830/-. THE ASSESSEE EXPLAINED THAT THIS AMOUNT IS INTRODUCED OUT OF THE TOTAL AMOUNT DISCLO SED DURING THE COURSE OF SEARCH AMOUNT OF RS.8.35 LAKHS. THE ASSESSING OFFICER NOT ED THAT ASSESSEE IS A PARTNER IN TWO FIRMS NAMED M/S. KISHOREKUMAR KRISHNAJI AND M/S . BHUPENDRAKUMAR KRISHNAJI AND IN CAPITAL ACCOUNT WITH M/S. KISHOREKUMAR KRISH NAJI, THE ASSESSEE HAD SHOWN A ITA NO.2640/AHD/2006 & CO 30/AHD/2007 A.Y. 2003-04 ITO SKANTHA WD-4, MODASA V. SH. SUBHASHCHANDRA D SONI P AGE 4 DEPOSIT OF RS.60,000/- WHICH IS OFFERED AND DISCLOS ED IN THE AMENDED COMPUTATION OF TOTAL INCOME FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE LETTER DATED 20- 03-1997 OVER AND ABOVE THE DISCLOSURE OF RS.7.75 LA KHS STATING THAT THE SAME WAS NOT OFFERED ON ACCOUNT OF BONA FIDE MISTAKE AND OVE RSIGHT. THE AO HAS FURTHER REJECTED THE EXPLANATION THAT THE CAPITAL INTRODUCE D IN M/S. BHUPENDRAKUMAR KRISHNAJI IS OUT OF RETURN OF ADVANCES GIVEN AND AO HAS HELD THAT RS.7,86,830/- INTRODUCED AS CAPITAL IS OVER AND ABOVE THE AMOUNT DISCLOSED AS AGGREGATING TO RS.8.37 LAKHS. ACCORDINGLY, AO MADE ADDITION OF RS .7,86,830/-. BEFORE CIT(A) THE ASSESSEE CONTENDED THAT THE UNDISCLOSED INCOME EARN ED RELATED IN THE FORM OF ADVANCES AS NOTED ON PAGE-98 OF SEIZED ANNEXURE. ON RETURN OF THE MONEY, IT WAS DEPOSITED IN THE FIRMS AS CAPITAL AS UNDER:- A) M/S. BHUPENDRAKUMAR KRISHNAJI - RS.7,77,000.00 B) M/S. KISHOREKUMAR KRISHNAJI - RS. 60,000.00 RS.8,30,000.00 HE MADE FURTHER SUBMISSIONS WHICH ARE RECORDED IN T HE CIT(A)S ORDER AS UNDER:- A) AT THE OUTSET, IT IS SUBMITTED THAT THE NOTINGS ON PAGE NO.98 AS REGARDS ADVANCES GIVEN IS ONLY FOR THE PERIOD 8-5-92 TO 4/1 2/92 .E. APPROX. 7 MONTHS AND THE NOTINGS ON THE SAME PAGE AS REGARDS ADVANCE S RECEIVED BACK ARE ONLY FOR THE PERIOD 4/12/92 TO 10/12/92 I.E. ONLY 6 DAYS. THUS, IT IS QUITE ILLOGICAL TO CONSTRU9E THAT THE PAGE NO.98 IS A WEL L MAINTAINED DOCUMENT. THIS CONTENTION IS SUPPORTED BY THE FACT THAT IT IS WRIT TEN FOR A VERY SHORT PERIOD AND ADVANCES RECEIVED BACK ON 10/12/1992 ARE WRITTEN AH EAD OF ADVANCES RECEIVED BACK ON 4/12/92. THE NOTINGS ARE OCCASIONA L IN NATURE MADE FOR CONVENIENCE. THE PAGE NOS. 71 TO 77 WERE NOT INTEND ED TO BE USED AS A DOCUMENTARY EVIDENCE AS IS EVIDENT FROM THE NOTINGS WHICH ARE INCOMPLETE. THE A.OS CONCLUSIONS ARE BASED MERELY ON PRESUMPTI ONS. IT MAY BE PERTINENT TO NOTE THAT THE CORRECT FACT IS THAT AS AGAINST AD VANCE OF RS.1,00,000/- GIVEN TO SURESHBHAI ON 1/10/92 RECEIPT OF ONLY RS.5000/- WAS GIVEN AS IT IS NOT A REGULAR PRACTICE TO OBTAIN SUCH RECEIPTS, THE SAID ADVANCES NOT BEING IN THE NATURE OF COMMERCIAL ADVANCES BUT BEING PURELY ON R ELATIONS. THE SAID CONTENTION IS SUPPORTED BY THE VERY FACT THAT RECEI PTS IN CASE OF ALL ADVANCES MADE WERE NOT FOUND FROM ASSESSEES POSSESSION. B) AS REGARDS THE A.OS OBSERVATION IN RESPECT OF RS.1,10,000/- THAT THE SAME ARE PRE-DATED ADVANCES AND ACCORDINGLY COULD NOT HA VE BEEN DEPOSITED IN THE CAPITAL ACCOUNT, IT IS SUBMITTED THAT THE SAID DEPO SIT WAS OUT OF EARLIER ADVANCES TO PARTIES MADE FROM UNDISCLOSED INCOME OF FERED AND HENCE NO NEXUS WITH THE ADVANCES GIVEN AS NOTED IN PAGE 98 T O THE EXTENT OF RS.1 LAKH IS REQUIRED TO BE DRAWN VIS--VIS CREDITS IN THE CA PITAL ACCOUNT OF RS.1,10,000/- (50000/- + 60000/-). HENCE THE QUESTION OF ANY PRE- DATED ADVANCES DOES NOT ARISE. ITA NO.2640/AHD/2006 & CO 30/AHD/2007 A.Y. 2003-04 ITO SKANTHA WD-4, MODASA V. SH. SUBHASHCHANDRA D SONI P AGE 5 C) AS REGARDS THE AO'S OBSERVATION THAT THE OTHER ADVANCES AS PER PART-II & III OF ANNEXURE FORMING PART OF ASSESSMENT ORDER HA VE NOT BEEN RECEIVED BACK EXCEPT RS.1 LAKH AS NOTED IN PAGE 98, IT IS SUBMITT ED THAT THE DETAILED FACTS / CONTENTIONS PUT FORTH HEREINABOVE VIDE POINT NO.5 T O 7 MAY PLEASE BE REFERRED TO FOR THE ISSUE IN QUESTION AS THE SAME ARE SELF-E XPLANATORY. D) AS REGARDS THE AO'S OBSERVATION IN RESPECT OF A DDITION OF RS.1,26,830/-, THE FOLLOWING FACTS / CONTENTIONS REQUIRES DUE CONS IDERATION. THE SAID ADDITION HAS BEEN MADE ON ACCOUNT OF DIFFERENCE BETWEEN RS.9 ,61,830/- I.E. TOTAL OF PAGE NO.74, 77 AND 98 AND RS.8,35,000/- BEING THE A MOUNT DISCLOSED BY THE APPELLANT. IT MAY BE NOTED THAT THE TOTAL OF PAGE N O.74, 77 AND 98 COMES TO RS.9,11,830/- ONLY, THE BREAK-UP OF WHICH IS AS UND ER:- PAGE NO.98 - RS.8,40,000/- PAGE NO.77 - RS. 31,830/- PAGE NO.74 - RS. 40,000.- RS.9,11,830/- ========== THE COPIES OF PAGE NO.74 AND 77 ARE ENCLOSED HEREWI TH VIDE EXHIBIT-I AND THE COPY OF PAGE NO.98 IS SUBMITTED VIDE PAGE NO.52 OF PAPER BOOK FURNISHED ON 12/10/98. THUS, IT IS EVIDENT THAT THE TOTAL OF RS. 9,61,830/- TAKEN AS A BASE BY THE A.O IS CONTRARY TO FACTS AND IS MORE BY RS.50,0 00/- RESULTING IN APPARENTLY WRONG ADDITION TO THIS EXTENT INCLUSIVE IN RS.1,26, 830/- E) AS REGARDS NOTINGS ON AGE NO.98 TO THE EXTENT O F RS.8,40,000/- IT IS SUBMITTED THAT THE ACTUAL ADVANCES COMES TO RS.7,40 ,000/- ONLY (RS.8,40,000/- - RS.1,00,000/- RECEIVED BACK AS NOT ED IN THE SAME PAGE). THAT APART, THE SAME IS COVERED BY THE DISCLOSURE O F RS.8,35,000/- MADE BY THE APPELLANT AS THE SAID ADVANCES WERE CREDITED IN THE CAPITAL ACCOUNTS AS AND WHEN RECEIVED BACK AND FOR WHICH THE A.O HAS AL SO GIVEN CREDIT OF WHILE WORKING OUT THE SAID ADDITION OF RS.1,26,830/-. F) AS REGARDS PAGE NO.74, IT IS SUBMITTED THAT THE EXPLANATION FOR THE NOTINGS MADE ON THE SAID PAGE WAS DULY GIVEN IN THE CHART G IVING PAGE-WISE EXPLANATION IN RESPECT OF SEIZED ANNEXURE A/1 SUBMI TTED TO THE A.O VIDE LETTER DATED 11/2/97. WITHOUT PREJUDICE, IT IS REITERATED THAT THE SAME PERTAINS TO PAYMENT GIVEN TO PREMECHAND KESUMAL, SIDDHPUR AGAIN ST PURCHASE BY THE FIRM M/S. HAKMAJI RAMAJI WHICH IS DULY ACCOUNTED IN THE BOOKS OF THE SAID FIRM WHICH ARE ALSO IN SEIZURE WITH THE DEPARTMENT. THE COPY OF ACCOUNT OF THE PARTY WAS ALSO SUBMITTED TO THE A.O. HOWEVER, THE A O HAS NEITHER CONSIDERED NOR VERIFIED THE SAID EXPLANATION OF THE APPELLANT AND HAS PROCEEDED TO ADD THE SAID AMOUNT IN THE HANDS OF THE APPELLANT MEREL Y ON SURMISES WHILE STATING THAT THE SAME IS AN ASSET IN THE FORM OF IO U GIVEN BY THE PERSON TO WHOM ADVANCES ARE GIVEN BY THE ASSESSEE. G) IT MAY BE PERTINENT TO NOTE HERE THAT NEITHER T HE SAID PAGE REFLECTS THE APPELLANTS NAME NOR IS IT SHOWN OR WRITTEN AS ADVA NCE GIVEN ON PAGE NO.98. HENCE, EVEN OTHERWISE NO ADVERSE VIEW IS WARRANTED AND THE ADDITION OF THE IMPUGNED AMOUNT RS.40,000/- (INCLUSIVE IN RS.1,26,8 30/-) IS WHOLLY UNTENABLE. ITA NO.2640/AHD/2006 & CO 30/AHD/2007 A.Y. 2003-04 ITO SKANTHA WD-4, MODASA V. SH. SUBHASHCHANDRA D SONI P AGE 6 H) AS REGARDS PAGE NO.77, IT IS SUBMITTED AT THE O UTSET THAT THE SAID AMOUNT OF RS.31,830/- WAS GIVEN BY MANISH R. PRAJAPATI AS EVI DENT FROM THE NOTINGS ON THE SAID PAGE ITSELF. WITHOUT PREJUDICE, ASSUMING T HAT THE SAME WAS GIVEN BY THE APPELLANT ON 12/10/92, IT IS TO BE TREATED AS G IVEN OUT OF ROTATION OF ADVANCES DURING A.Y. 93-94 AND ACCORDINGLY REQUIRES TO BE TELESCOPED WITH THE AMOUNT DISCLOSED BY THE APPELLANT IN THE RETURN OF INCOME AND NO SEPARATE ADDITION IS WARRANTED. I) APART FROM THE ABOVE FACTS, IT IS SUBMITTED THA T AS REGARDS THE ADVANCE OF RS.50,000/- TO THAKORELAL CHHAGANLAL PATEL AS NOTED ON PAGE NO.98 ON 16/10/1992, IT IS SUBMITTED THAT THE SAID ADVANCE W AS GIVEN BY CHEQUE AS EVIDENT FROM THE NOTINGS ON PAGE NO.98 ITSELF. AS S TATED IN LETTER DATED 16/10/97 FURNISHED TO THE A.O DURING THE ASSESSMENT PROCEEDINGS (REFER PAGE NO.96 TO 99 OF THE PAPER BOOK), THE SAID ADVAN CE WAS GIVEN FROM THE FIRM M/S. KRISHNAJI BHAGWANJI VIDE CHEQUE NO.94993 ON 28/9/1992. THE NOTING ON PAGE NO.98 HAS BEEN MADE ON 16/10/1992 ON MEMORY WHILE WRITING THE WORD CHEQUE AGAINST THE AMOUNT. A COPY OF ACCOUNT OF THE SAID PERSON FROM THE BOOKS OF M/S. KRISHNAJI BHAGWANJI ALONG WITH RE LEVANT PORTION OF THE BANK ACCOUNT OF THE FIRM REFLECTING THE CLEARING OF THE CHEQUE GIVEN TO THE SAID PARTY IS ENCLOSED HEREWITH VIDE ANNEXURE C. (ENCLOSED WIT H WRITTEN SUBMISSION DATED 16/2/2001). UNDER THE CIRCUMSTANCES, THE ADD ITION ON ACCOUNT OF RS.50,000/- IS EVEN OTHERWISE WHOLLY UNWARRANTED AN D BAD IN LAW. FURTHER TO ABOVE, IT IS SUBMITTED THAT THE ADDITION OF RS.1268 30/- MADE BY THE A.O IS ALSO FACTUALLY INCORRECT AND IN EXCESS BY RS.50,000/-. THE FACT AS REGARDS THE SAID MISTAKE MADE BY THE A.O HAVE BEEN FURNISHED ON PAGE NO.9 & 10 OF THE WRITTEN SUBMISSION DATED 15/3/1999 FURNISHED TO YOU R HONOUR WHICH MAY PLEAS BE REFERRED TO. J) ON THE BASIS OF THE ABOVE FACTS AND ARGUMENTS I T IS CONTENDED THAT THE ADDITION OF RS.7,86,830/- IS UNTENABLE AND DESERVES TO BE DELETED. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY STATING THAT THE CAPITAL INTRODUCED IN THE FIRM S IS OUT OF THE ADVANCE RECEIVED BACK AND THE SAME WAS SURRENDERED TO THE EXTENT OF RS.8. 37 LAKHS. THE CIT(A) ALSO NOTED THAT THE TOTAL ADVANCES OF RS.8.40 LAKHS AND THE CR EDIT IN THE CAPITAL ACCOUNT ARE TOTALLY AT RS.8.30 LAKHS. BUT IT SUPPORTS THE ASSES SEES CONTENTION THAT CREDITS IN THE CAPITAL ACCOUNT WERE OUT OF ADVANCE GIVEN, WHICH IN TURN IS OUT OF UNACCOUNTED INCOME EARNED BY THE ASSESSEE. THE CIT(A) RECORDED THE FINDING THAT THE ASSESSEE HAS ALREADY OFFERED UNDISCLOSED INCOME DURING THE C OURSE OF SEARCH TO THE EXTENT ADVANCES GIVEN AT RS.8.37 LAKHS. THE CIT(A) ACCORDI NGLY ACCEPTED THE CREDITS APPEARING IN THE CAPITAL ACCOUNT TO BE TELESCOPED A GAINST THE ADVANCES RECEIVED BACK. ACCORDINGLY, HE DELETED THE ADDITION. IN VI EW OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT ONCE THE CIT(A) HAS RECORDED THE FINDING OF FACT THAT THE ADVANCES RECEIVED ITA NO.2640/AHD/2006 & CO 30/AHD/2007 A.Y. 2003-04 ITO SKANTHA WD-4, MODASA V. SH. SUBHASHCHANDRA D SONI P AGE 7 BACK HAVE BEEN INTRODUCED AS CAPITAL IN THE FIRM BY THE ASSESSEE AND THE AMOUNT INTRODUCED IN THE CAPITAL ACCOUNT IS AT RS.8.30 LAK HS AS AGAINST THE DISCLOSURE OF RS.8.37 LAKHS. WE FIND THAT THE CIT(A) HAS RIGHTLY ALLOWED THE BENEFIT OF TELESCOPING AND WE CONFIRM THE SAME. THIS ISSUE OF THE REVENUE S APPEAL IS DISMISSED. 7. THE NEXT ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARES, DEBENTURES, DEPOSIT IN BANK O F THE ASSESSEES BROTHER ETC. FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING GROUND NO.3:- 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO DELETE THE ADDITION OF RS.1.30,240/- MADE ON ACCOUNT OF UNEXPLAINED INV ESTMENT IN SHARES, DEBENTURES, DEPOSIT IN BANK OF THE ASSESSEES BROTH ER ETC. 8. WE HAVE HEARD BOTH THE SIDES. THE BRIEF FACTS R ELATING TO THIS ISSUE ARE THAT THE ASSESSEE DEPOSITING THE CHEQUES OF REFUNDS RECE IVED FROM COMPANIES, WHOSE SHARES WERE APPLIED FOR, BY HIM IN CASH OUT OF UNAC COUNTED INCOME. IT IS ALSO A FACT THAT THE BIFURCATION OF THE ENTRIES AS TO WHICH PER TAINS TO THE ACCOUNT HOLDERS AND WHICH PERTAINS TO THE ASSESSEE HAS NOT BEEN GIVEN B Y THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT EXCEPT MANISH PRAJAPATI, THE OTHER TWO PERSONS IN WHOSE NAME THE BANK ACCOUNTS APPEAR ARE ASSESSED TO TAX AND HENCE THE P OSSIBILITY OF DEPOSITS MADE BY THEM OUT OF THEIR INCOME CANNOT BE COMPLETELY RULES OUT. THE EXPLANATION, ABOUT ENTRY OF RS.18,700/- ON 06-02-1993 IN BANK ACCOUNT NO.23071 IN THE NAME OF MANISH PRAJAPATI BY TRANSFER HAS CONSIDERABLE SUBSTANCE. M OREOVER, THE ARGUMENTS THAT THE ENTIRE DEPOSITS IN THE BANK ACCOUNTS SHOULD NOT HAV E BEEN ADDED AND ALSO THAT THE AO SHOULD HAVE DRAWN A PEAK CREDIT ARE FOUND TO BE CONVINCING. AGGRIEVED, THIS REVENUE CAME IN APPEAL BEFORE US. THE CIT(A) DELETE D THE ADDITION BY FINDING IN PARA-17 OF HIS APPELLATE ORDER AS UNDER:- 17. ON THE OTHER HAND, IT IS OBSERVE THAT THE APPE LLANT HAD CONCEDED THAT THESE BANK ACCOUNTS WERE UTILIZED FOR MAKING SHARE APPLICATIONS AND VALUE OF SHARE ACQUIRED IN THIS MANNER DURING THE PREVIOUS Y EAR WAS RS.79,040/-. IT IS QUITE PROBABLE THAT THE APPLICATION MONEY REFUNDED WAS AGAIN UTILIZED FOR MAKING APPLICATION AND THUS THERE WAS ROTATION OF M ONEY. HOWEVER, TO THE EXTENT OF RS.79,040/- THE INVESTMENT WAS FIXED AND THE ADDITION TO THIS EXTENT DOES NOT SUFFER FROM DOUBLE / MULTIPLE ADDITION OF THE SAME AMOUNT. IT IS TRUE, THAT THE SUPREME COURT HAS HELD THAT THE AMOUNT OF ADDITION OF INTANGIBLE INCOME BECOMES AVAILABLE, AFTER ASSESSMENT BECOMES FINAL. IN THIS CASE, HOWEVER, IT IS FOUND THAT THE APPELLANT HAD AGREED TO THE SIMILAR ADDITIONS MADE IN THE PRECEDING THREE ASSESSMENT YEARS WITHOU T SEEKING TELESCOPING. ITA NO.2640/AHD/2006 & CO 30/AHD/2007 A.Y. 2003-04 ITO SKANTHA WD-4, MODASA V. SH. SUBHASHCHANDRA D SONI P AGE 8 ON CONSIDERATION OF THE ENTIRE FACTS AND CIRCUMSTANCES A ND THE APPELLANTS OWN ADMISSIONS MADE DURING SEARCH ACTION, I AM OF THE VIEW THAT ADDIT ION TO THE EXTENT OF RS.79,040/- HAS TO BE RETAINED OUT OF THE TOTAL AMOUNT OF RS.1,30,420/- . ACCORDINGLY, THE AO IS DIRECTED TO RESTRICT ADDITION TO RS.79,040/- OUT OF RS.1,30,420/-. IN VIEW OF THE ABOVE FACTS, FIRST OF ALL, WE FIND THAT ONLY INVESTMENT IN THE NAME OF THE ASSESSEE OF RS.79,040/- IS OUT OF THE ADDITION MADE BY THE ASSESSIN G OFFICER OF RS.1,30,240/-. WE FIND THAT THE AO MADE ADDITION ON THE PRESUMPTION THAT MANISH PRAJAPA TI AND CHUNILAL PRAJAPATI ARE NOT ASSESSED TO TAX AND SHARES IN THE NAME OF THESE TWO PERSONS ARE A CCEPTED TO BE OWNED BY THE ASSESSEE. BUT BEFORE THE CIT(A) AS WELL AS BEFORE US THE ASSESSEE CLARIFIED THAT THERE IS NO DISPUTE THAT THE BANK ACCOUNT OF CHUNILAL PRAJAPATI, MANISH PRAJAPATI AND KANTILAL PRAJAPATI WERE USED BY THE ASSESSEE FOR MAKING APPLICATION IN SHARES AND DEPOSITING CHEQUES RE FUNDS RECEIVED FROM THE COMPANY MADE OUT OF UNACCOUNTED INCOME. WE FIND THAT ASSESSEE HAS ONLY MADE A PLEA THAT THE APPLICATION MONEY REFUNDED WERE AGAIN UTILIZED FOR MAKING APPLICATION FOR SHARES AND THUS THE MONEY WAS ROTATED AND ACCORDINGLY WE ARE IN AGREEMENT WITH THE FINDING OF CIT(A) THAT THE ADDITION TO THE EXTENT OF RS.79,040/- IS THE INVESTMENT BY THE ASSESSEE AND A DDITION TO THIS EXTENT HAS RIGHTLY BEEN SUSTAINED TAKING A TELESCOPING METHOD, THE CIT(A) DELETED THE B ALANCE ADDITION OF RS.51,380/-. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF THE REVEN UES APPEAL IS DISMISSED. NOW COMING TO ASSESSEES CO NO.327/AHD/2004. 9. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE HAS NO T PRESSED THE CO. ACCORDINGLY, WE DISMISS THE CO OF THE ASSESSEE AS NOT PRESSED. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED AND TH AT OF CO OF ASSESSEE IS DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN OPEN COURT ON 28/08/2009 SD/- SD/- (D.C.AGRAWAL) (MAHAVI R SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 28/08/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-IX, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD