The ACIT, Central Circle-3, Surat V. M/s. Jitu Builders Pvt.Ltd., Surat

ITA 3747/AHD/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6220 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-06-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 28-09-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R N PARBATDR
• Assessee Lawyers: M G PATEL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Principle of natural justice; Assessment record; Block assessment; Reassessment proceedings
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI MUKUKL SHRAWAT,JM & SHRI A N PAHUJA,AM ITA NO.3747/AHD/2007 WITH CO NO.367/AHD/2007 (ASSESSMENT YEAR:-2001-02) ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- 3, ROOM NO. 503,AAYAKAR BHAVAN, MAJURA GATE,SURAT V/S M/S JITU BUILDERS PVT. LTD., 3/2267, BALABHAI STREET, SALABATPURA, SURAT PAN: AAACJ 6007 H [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI R N PARBAT,DR ASSESSEE BY:- SHRI M G PATEL, AR O R D E R A N PAHUJA: THE APPEAL BY THE REVENUE AND THE CORRESPONDING CROSS OBJECTION[CO] BY THE ASSESSEE AGAINST AN ORD ER DATED 31-07- 2007 OF THE LD. CIT(APPEALS)-II, AHMEDABAD FOR THE ASSESSMENT YEAR 2001-02, RAISE THE FOLLOWING GROUNDS:- ITA NO.3747/AHD/2007 [1] THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECT ING TO DELETE THE ADDITION OF RS.2.46 CRORE MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE, BY W RONGLY RELYING ON ASSESSEES SUBMISSION AND WITHOUT CONSIDERING THE FACTS THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF THE CREDIT ENTRY IN ITS BANK ACCOUNT. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. [3] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE EXTENT. CO NO.367/AHD/2007 [1] THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II , AHMEDABAD HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CA SE IN HOLDING THAT REOPENING OF THE ASSESSMENT U/S 147 OF TH E INCOME TAX ACT, 1961 WAS VALID AND WAS NOT BAD IN LAW. 2 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 2 [2] YOUR APPELLANT, THEREFORE, PRAYS THAT REOPENING OF THE ASSESSMENT U/S 147 OF THE I.T. ACT, 1961, BE HELD INVALID AND BA D AT LAW. [3] YOUR APPELLANT RESERVES THE RIGHT TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY OF THE ABOVE CROSS OBJECTIONS. 2. AT THE OUTSET, THE LEARNED AR ON BEHALF OF THE A SSESSEE SOUGHT PERMISSION TO WITHDRAW THE CO, RAISING GROUNDS RELA TING TO VALIDITY OF REOPENING OF THE ASSESSMENT. THE LEARNED DR DID NO T RAISE ANY OBJECTION TO SUCH WITHDRAWAL. IN THESE CIRCUMSTANCE S, THE CO FILED BY THE ASSESSEE IS DISMISSED AS WITHDRAWN. 3. NOW ADVERTING TO GROUND NO.1 IN THE APPEAL OF TH E REVENUE, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RE TURN DECLARING INCOME OF RS.4,27,000/- FILED ON 30-10-2002 BY THE ASSESSEE, IN THE BUSINESS OF CONSTRUCTION, WAS TAKEN UP FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT]. THE ORIGINAL ASSESSMENT WAS, LATER, COMPLETED U/S 143(3) OF THE ACT ON 12-03-2004 DETER MINING TOTAL INCOME OF RS.5,56,870/-.SUBSEQUENTLY, DURING THE CO URSE OF ASSESSMENT PROCEEDINGS FOR THE AY 2003-04, BANK ACC OUNTS OF THE ASSESSEE REVEALED A CREDIT ENTRY OF RS.2,46,00,000/ - IN THE ACCOUNT NO. 2637 OF THE ASSESSE WITH THE SURYAPUR CO-OP. BA NK LTD. SINCE THE SAID CREDIT ENTRY WAS NOT REFLECTED IN THE BO OKS OF ACCOUNT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION NOR CO ULD THE ASSESSEE EXPLAIN THE SOURCE OF THE SAID AMOUNT, THE ASSESSM ENT WAS REOPENED U/S 147 OF THE ACT WITH THE SERVICE OF A NOTICE U/S 148 OF THE ACT ON 24-01-2006. IN RESPONSE, THE ASSESSEE, V IDE THEIR LETTER DATED 24-02-2006 SUBMITTED THAT THE RETURN FILED O N 30-10-2002 MAY BE TREATED AS RETURN FILED IN RESPONSE TO THE NOTIC E U/S 148 OF THE ACT. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] ASKED THE ASSESSEE TO EXPLAIN THE DEBIT AND CREDIT ENTRIES IN THE AFORESAID BANK ACCOUNT, WHICH WERE NOT 3 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 3 REFLECTED IN THE BOOKS OF ACCOUNT AND ACCORDINGLY A LETTER WAS ISSUED BY THE AO IN THE FOLLOWING TERMS:- (I) THE COMPANY IS HAVING AN ACCOUNT WITH THE SURYAPU R CO-OP. BANK LTD., HEAD OFFICE SURAT, BEING ACCOUNT NO. 2637. IN T HE SAID ACCOUNT, THERE ARE CREDIT AND DEBIT OF THE FOLLOWING AMOUNTS:- DATE DEBIT CREDIT CLOSING BALANCE 03-04-2000 15000000 -- (-) 11451758 30-09-2000 1362916 -- (-) 12814774 24-03-2001 100 -- (-) 12814874 30-03-2001 -- 24600000 -- 5860643 -- -- 5860643 -- (+) 63840 FROM THE ACCOUNT REPRODUCED ABOVE, IT CAN BE SEEN THA T THERE IS DEBIT BALANCE OF RS.1,14,51,758/- AFTER CLEARING THE CHEQUE OF RS.1,50,00,000/- ON 03-04-2000. PLEASE FURNISH AGAINST WHICH SECURITY THE DEBIT BALANCE HAS BEEN ALLOWED BY THE BANK. (II) SECONDLY, THERE IS A CREDIT OF RS.2,46,00,000/- O N 30-03-2001 BY WAY OF TRANSFER ENTRY. PLEASE EXPLAIN THE SOURCE OF T HE SAME. FURTHER TWO CHEQUES OF RS.58,60,643/- EACH HAVE BEEN DEBITED ON 30- 03-2001. PLEASE EXPLAIN TO WHOM THE SAID CHEQUES HAVE BEEN ISSUED. 3.1 IN RESPONSE THE ASSESSEE SUBMITTED THAT ACT UALLY THERE WAS NO SUCH ENTRY IN THE BANK ACCOUNT AS POINTED OUT IN THE AFORESAID LETTER. THE ASSESSEE ALSO SUBMITTED A COPY OF BANK ACCOUNT UPTO 24- 03-2001 TO SUBSTANTIATE ITS CLAIM. IT WAS PLEADED T HAT THEY WERE IN TOUCH WITH THE BANK AND WOULD SUBMIT FURTHER DETAIL S. DESPITE SEEKING FURTHER TIME TO FURNISH THE DETAILS, THE AS SESSEE DID NOT SUBMIT ANY REPLY. THE AO, ACCORDINGLY, ISSUED A SHO W CAUSE AS UNDER:- '3. IN RESPECT OF CREDIT ENTRY OF RS.2,46,00,000/- ON 30 .03.2001 AND TWO DEBIT ENTRIES OF RS.58,60,643/- EACH ON 30.03.2001, I T HAS BEEN SUBMITTED BY YOU THAT THE ENTRIES ARE NOT REFLECTED IN YOUR ACCOU NT AND YOU HAVE 4 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 4 SUBMITTED THE COPY OF YOUR ACCOUNT NO.2637 WITH SURYAP UR CO-OP. BANK LTD. THIS IS TO BE POINTED OUT THAT YOU HAVE SUBMITTED THE COPY OF BANK STATEMENT UPTO 24.03.2001, WHEREAS THE ENTRIES ARE ON 30.03.2001. THE COPY OF ACCOUNT OBTAINED FROM THE BANK IS ENCLOSED HEREWIT H, WHEREIN THE ENTRIES AS POINTED OUT ABOVE ARE MENTIONED. YOU ARE, THEREFORE, PROVIDED THE FINAL OPPORTUNITY TO EXPLAIN THE ENTRIES, I.E. CR EDIT ENTRY OF RS.2,46,00,000/- AND TWO DEBIT ENTRIES OF RS.58,60,643 /-EACH. IF NO EXPLANATION IS SUBMITTED, IT WOULD BE TREATED AS YOU D O NOT HAVE ANY EXPLANATION TO OFFER AND THE CREDIT OF RS.2,46,00,000 /- IN YOUR BANK ACCOUNT WOULD BE TREATED AS UNEXPLAINED AND WOULD BE T AXED AS YOUR INCOME FROM UNDISCLOSED SOURCES.' 3.2 IN RESPONSE, THE ASSESSEE'S REPRESENTAT IVES SUBMITTED THAT THE COPY OF BANK ACCOUNT SUPPLIED ALONG WITH THE NOT ICE WAS NOT CORRECT STATEMENT OF ACCOUNT AND IT WAS MISTAKENLY PREPARED BY TH E SURYAPUR CO. OP. BANK LTD. WHILE ENCLOSING ANOTHER COPY OF BANK STATEMENT, IT WAS SUBMITTED THAT ACTUALLY THERE WAS NO ENTRY OF RS.2,46,00,000 ON 30.3. 2001 AND THERE WAS ENTRY OF RS.2,34,76,975 ONLY ON 8-6-02. IT WAS EXPLAINED TH AT THEY HAD ENTERED INTO BID FOR PURCHASE OF LAND FROM OFFICIAL LIQUIDATOR OF NUTA N MILLS AND PAID RS.58,00,000 ON 13-1-01 VIDE CHEQUE NO. 553551, FUNDED BY LOAN FR OM SURYAPUR BANK BY OVERDRAFT IN CURRENT ACCOUNT NO.2357. BEING THE HIG HEST BIDDER , THE ASSESSEE PAID FURTHER RS.1,50,00,000/- BY RAISING LOAN FROM S URYAPUR BANK - RS.50,00,000 AS OVERDRAFT IN CURRENT ACCOUNT AND RS.1,00,00,000 AS TE RM LOAN .THE TERM LOAN AMOUNT ALONG WITH INTEREST FOR YEAR 2001-02 AMOUNTED TO RS.1,17,21,286 WHILE THE BALANCE IN THE CURRENT ACCOUNT WITH OVERDRAFT OF RS.1,08,00,000 AMOUNTED TO RS.1,28,14,874 ALONG WITH INTEREST . HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSE ON THE GROUND THAT THE ASSESSEE'S R EPRESENTATIVES TRIED TO CORRELATE THE ENTRY OF RS.2,46,00,000/- ON 30.3.2001 WITH THE ENTRY OF SUBSEQUENT DATE, I.E. ON 08.06.2002. THE ENTRY ON 08. 06.2002 IS OF RS.2,34,76,975/-. THE AO OBSERVED THAT THE SAID ENTRY DID NOT HAVE ANY RELEVANCE TO THE CREDIT ENTRY OF RS.2,46,00,000/-MADE IN THE ACCOUNT NO.2637 WITH THE SURYAPUR CO-OP. BANK LTD. WHILE THE TWO DEBI T ENTRIES MADE OUT OF THE CREDIT OF RS.2,46,00,000/-, TO THE EXTENT OF RS.58,60 ,643/- EACH WERE FOUND TO BE IN RELATION TO LOAN AGAINST PROPERTY ACCOUNT NOS. LAP 2 32 AND LAP 233 HELD BY THE ASSESSEE. THE CREDIT ENTRY OF RS.2,46,00,000/- ALSO SQUARED-UP THE DEBIT BALANCE IN THE ACCOUNT OF THE ASSESSEE TO THE EXTENT OF RS.1,28,14,874/-. THE CLOSING BALANCE AS ON 31.03.2001 WAS RS.63,840/-, WHEREA S THE ASSESSEE HAD 5 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 5 SHOWN THE DEBIT BALANCE OF RS.1,28,14,874/- IN THE BAL ANCE SHEET FILED ALONG WITH THE RETURN OF INCOME. SINCE THE ASSESSEE FAILED TO PROV E THE SOURCE OF CREDIT ENTRY OF RS.2,46,00,000/- ON 30.03.2001, RELYING UPON THE DECISION IN SUMATI DAYAL VS. CIT 214 ITR 801(SC) , THE AMOUNT OF RS.2,46,00,000/ - WAS ADDED AS INCOME OF THE ASSESSEE OUT OF ITS UNDISCLOSED SOURCES . 4. ON APPEAL, THE LEARNED CIT(A) DELETED THE ADDITI ON IN THE FOLLOWING TERMS:- 4.1 THE APPELLANT HAS RAISED THE GROUND THAT THIS ADD ITION HAS BEEN MADE U/S.68 OF I.T. ACT AND IT IS NOT VALID. HOWEVER, T HERE IS NO REFERENCE TO SECTION 68 OF I.T. ACT IN THE ASSESSMENT ORDER WHILE MAKING THE ADDITION. THE APPELLANT HAS IN THE WRITTEN SUBMISSIONS BEFORE ME STATED THE ARGUMENTS WHICH ARE SUMMARIZED AS UNDER: (I) THE BANK ACCOUNT NO..2637 SUBMITTED BY THE BANK TO THE A.O CONTAINED AN ERROR AND THAT THE CORRECT BANK STATEMENT WAS SUBMITTED BY THE APPELLANT WHICH ARE REFLECTED ON PAGE 29 TO 32 OF THE PAPER BOOK SUBMITTED NOW BEFORE ME & BEFORE A.O. ALSO. (II) THE BANK WAS REQUESTED TO GIVE COPY OF ACCOUNT WITH T HE APPELLANT AND CLARIFY THE SAME. HOWEVER, NO REPLY WAS RECEIVED FROM THE BANK AND THAT THE BANK HAD ORALLY INFORMED THAT THEIR RECOR D WAS DESTROYED ON ACCOUNT OF FLOOD IN SURAT IN SEPTEMBER 20 06. (III) THERE ARE THUS TWO SETS OF BANK STATEMENTS AND THAT THE APPELLANT HAD PROVED THAT THE BANK STATEMENT WHICH IS PRODUCED BY THEM VIDE LETTER DATED 20-12-2006 WAS CORRECT. IN SUPPORT OF THIS IT WAS STATED BY THE APPELLANT AS UNDER: (A) M/S. JITU BUILDER PVT. LTD. HAD ENTERED INTO A BI D FOR PURCHASING ONE LAND FROM LIQUIDATOR OF NUTAN MILLS AND PAID RS.58,00,000/- AS BID AMOUNT BY TAKING OVERDRAFT IN A/C. NO.2637 VIDE CHEQUE NO.553551. (B) AS SUCH M/S. JITU BUILDER PVT. LTD. WAS HIGHEST BIDDER AND IT HAS TO PAY RS.1,50,00,000 AS REMAINING BID AMOUNT. SO IT GOT MORE OVERDRAFT OF RS.50,00,000 IN CURRENT ACCOUNT NO.26 37 AND TWO TERM LOAN HAVING OF RS.50 LAC EACH HAVING LO AN A/C. NO.232 AND LOAN A/C. NO.233. 6 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 6 (C) LATER ON THE ABOVE LAND WAS SOLD TO FIVE DIFFERENT P ERSONS AND AS THEY PAID THE SALES CONSIDERATION LATE THEY PAID A LONG WITH INTEREST TO US WHICH IS GIVEN. (IV) IT WAS FURTHER STATED THAT THE SAID PARTIES HAD GIVE N PAYMENT OF RS.2,34,76,975/- BY DEDUCTING TDS FROM THE TOTAL AMOU NT OF RS.2,41,88,580/- AGREED TO BE PAID TO THE APPELLANT WHICH INCLUDED INTEREST ALSO. IT WAS STATED THAT THIS AMOUNT OF RS.2,34 ,76,975/- IS REFLECTED ON 8-6-2002 TOWARDS PAYMENT FOR SALE CONSIDERAT ION OF NUTAN MILLS. IT WAS ALSO CLAIMED THAT THE ENTIRE TRANSAC TION WAS REFLECTED IN THE BOOKS OF THE APPELLANT AND THERE WAS A LOSS OF RS.98,455/- INCURRED BY THEM. (V) THE APPELLANT HAD PAID THE CONSIDERATION OF RS.2,08 ,00,000/- AND INTEREST OF RS.34,87,080/- WAS PAID TO SURYAPUR CO-OP. BANK LTD. AGAINST WHICH THEY RECEIVED RS.2,41,88,625/-. IT IS STATED THAT THE AMOUNT OF RS.2,34,76,975/- RECEIVED BY THE APPELLANT WA S USED FOR SETTLING THE LOAN NO.232, NO.233 AND OVERDRAFT NO.263 7 FROM THE CURRENT ACCOUNT NO.483 AS UNDER : PARTICULARS DEBIT RS. CREDIT RS. CASH (FOR ACCOUNT OPENING) 100 RECEIVED FROM FIVE PERSONS FOR SALES CONSIDERATION FOR NUTAN MILLS PVT. LTD. ALONG WITH INTEREST ON 8-6-02 2,34,76,975 BANK CHARGES 50 TR (LOAN ACCOUNT 232 OF RS.58,60,643, LOAN ACCOUNT NO. 233 OF RS.58,60,643 AND CURRENT ACCOUNT NO. 2637 RS.128,14,874) I.E. LOAN OF RS.2,08,00,000/- WITH INTEREST 2,45,36,160 BALANCE LOAN PAID BY CASH DEPOSIT ON 28-10-2002 10,59,135 IT WAS CLAIMED THAT THEY HAD PRODUCED THE TDS CERTIFICATE S FOR THE INTEREST. (VI) IT WAS CLAIMED THAT THE ABOVE FACTS AND FIGURES ARE REFLECTED IN THE RETURN OF INCOME/AUDITED ACCOUNT FOR A.Y. 2001-02 AND 2000-01. THE LOAN RAISED IS ALSO REFLECTED IN THE AUDITED ACCOUNTS AT RS.1,17,21,286/- AND RS.1,28,14,874/-. IT WAS CLAIMED T HAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS NOTICE WAS ISSUED BY THE A.O. 7 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 7 ASKING THE DETAILS OF ACCOUNT NO.2637. THE APPELLANT'S BO OKS ARE AUDITED AND THUS THERE WAS NO POSSIBILITY THAT THE ENTRY OF RS.2.46 CRORES WAS MISSED WHILE PREPARING THE ANNUAL ACCOUNT. IT W AS ALSO CLAIMED THAT THE APPELLANT WAS SUBJECTED TO SEARCH & SEIZ URE OPERATION U/S.132 OF IT ACT AND THEREFORE, IT WAS NOT POSSIBLE THAT SUCH A BIG ENTRY OF RS.2.46 CRORES WAS MISSED IN THE BLOCK ASSESSMENT. IF SUCH INCOME WAS WITH THE APPELLANT IT MUST H AVE BEEN REFLECTED IN THE APPELLANT'S ASSETS FOUND AT THE TIME OF SEARCH & SEIZURE OPERATION CARRIED OUT BY THE DEPARTMENT. TH E APPELLANT REFERRED TO THE OBSERVATIONS OF THE A.O. AND STATED THA T THOSE OBSERVATIONS ARE NOT CORRECT. (VII) IT IS FURTHER STATED THAT AS PER SECTION 68 OF I.T ACT WHERE ANY INCOME IS FOUND TO BE CREDITED IN THE BOOKS MAINTAINED B Y THE ASSESSEE FOR ANY PREVIOUS YEAR AND THE ASSESSEE DOES NOT OFFER ANY EXPLANATION ABOUT THE SAME OR THE SOURCE THEREOF OR THE EXPLANATION OFFERED IS NOT SATISFACTORY, IT WILL BE CHARGE D TO INCOME TAX AS INCOME OF THE ASSESSEE. IT IS STATED THAT THE BANK STA TEMENT IS NOT THE BOOKS OF THE ASSESSEE. THE ASSESSEE CANNOT BE ASKED TO RECONCILE THE LEDGER OF OTHERS. THUS IT IS THE CLAIM OF T HE ASSESSEE THAT HAVING REGARD TO THE BOMBAY HIGH COURT DECISION RE PORTED IN 141 ITR 67, THE ADDITION WAS NOT JUSTIFIED ON THE BA SIS OF A BANK STATEMENT WHICH IS NOT THE BOOKS OF THE ASSESSEE . HAVING REGARD TO THE ABOVE ARGUMENTS, IT IS REQUESTED T HAT THE ADDITION MADE BE DELETED. IN FURTHER SUBMISSIONS AGAIN SAME ARGU MENTS ARE REPEATED. 4.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE ABOVE SUBMISSIONS. FIRST OF ALL I OBSERVE THAT THE ADDITION MADE IS NOT BY WAY OF SECTION 68 OF I.T ACT AS IS CLAIMED BY THE ASSESSEE. THIS CAN BE SEEN FROM THE BODY OF THE ASSESSMENT ORDER WHEREIN NO WHERE THE A .O. HAS REFERRED TO SECTION 68 OF I.T.ACT. BUT IT IS HELD TO BE INCOME F ROM UNDISCLOSED SOURCE OF INCOME, HENCE THE QUESTION OF APPLICATION OF THE DE CISION OF THE BOMBAY HIGH COURT DOES NOT ARISE. SO FAR AS THE FACTS ARE CONCERN ED, THE ASSESSEE HAS TRIED TO SHOW THAT THE BANK STATEMENT WHICH IS RELIED UPON BY THE A.O. IS NOT CORRECT AND THAT THE BANK STATEMENTS GIVEN BY THEM SU BSEQUENTLY ARE SHOWING THE CORRECT POSITION. IN SUPPORT OF THAT TH EY NAVE GIVEN COPIES OF BANK STATEMENT AS UNDER: I) ACCOUNT NO.483 FOR THE PERIOD JUNE 2002 (WHEN THIS ACCOUNT WAS OPENED) TO OCTOBER 2002 (WHEN THIS ACCOUNT WAS SETTLED). THUS THIS ACCOUNT WAS OPERATIVE ONLY FOR THREE MONTHS . 8 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 8 (II) ACCOUNT NO.0232 IN RESPECT OF LOAN OF RS.50,00,000/ - WHICH WAS INCREASED TO RS.59,60,643/- ON ACCOUNT OF DEBIT OF I NTEREST BY THE BANK ON THE SAID LOAN. (III) ACCOUNT NO.0233 IN RESPECT OF LOAN OF RS.50,00,000 /- WHICH WAS INCREASED TO RS.59,60,643/- ON ACCOUNT OF DEBIT OF INTER EST BY THE BANK ON THE SAID LOAN. (IV) ACCOUNT NO.2637 WHICH IS FOR THE PERIOD FROM APRIL 1999 TO 23-4-01 AND IT REFLECTS ENTRIES UP TO 24-3-2001 SHOWING BALANCE OF RS.1,38,14,874/-. THEY HAVE GIVEN THE POSITION THAT THEY RECEIVED RS.2,34,00 ,000/- ON SALE OF LAND AGAINST WHICH LOAN WAS ADJUSTED AS UNDER: I) AS PER ACCOUNT NO. 232 RS.58.61 LAKH II) AS PER ACCOUNT NO. 233 RS.58.61 LAKH III) AS PER ACCOUNT NO.2378 RS.128.14 LAKH -------------------- RS.245.36 LAKH IT IS CLAIMED THAT THIS REPAYMENT IS MADE IN JULY/OCTOBER 2002 AND BALANCE AMOUNT WAS PAID TO THE BANK BY CASH. 4.3 I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISSIONS A ND REPLY FILED VIDE LETTER DATED 17.7.2007 AND COMMENTS OF THE ASSESSING OFFICER IN ITS REMAND REPORT. FROM THE ABOVE, IT IS OBSERVED THAT - (I) THE ADDITION OF RS.2.46 CRORE MADE U/S.68 OF IT A CT IS BASED ON A CREDIT ENTRY IN BANK ACCOUNT NO.2637 OF SURYAPUR CO.OP . BANK LTD., SURAT. (II) THE ENTRY OF THIS 2.46 CRORE IS NOT APPEARING IN THE BOOKS OF ACCOUNT OF THE APPELLANT. (III) THE APPELLANT CLAIMS THAT THE BANK STATEMENT SUBM ITTED BY THE BANK TO THE ASSESSING OFFICER IS INCORRECT AND SIMULTANEOUSLY PROD UCED THE COPY OF BANK STATEMENT OF ACCOUNT NO.2637 IN WHICH NO CREDIT ENTRY OF RS.2.46 CRORE APPEARS. THE APPELLANT HAS ALSO S UBMITTED THAT BANK ACCOUNT NOS.2637, 232, 233 AND LAND DEAL OF N UTAN MILL LAND IS ALSO CONSIDERED IN DETAIL IN ORIGINAL ASSESSME NT 9 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 9 PROCEEDINGS U/S.143(3) OF IT ACT. THE APPELLANT HAS ALSO SUBMITTED A COPY OF SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER [PAG E NO.143 TO 145 OF SUBMISSION DTD.25.5.2007] DATED 17.2 .2004 WHEREIN IT WAS SPECIFICALLY ASKED IN QUESTION NO.(L) THAT 'DETAIL OF CREDIT AND DEBIT ENTRIES IN A/C NO.2637 WITH SURYAPUR C O-OP. BANK LTD. [PAGE NO.144 PARA-L]. (IV) THUS THERE ARE TWO DIFFERENT BANK STATEMENTS OF SAME ACCOUNT NO.2637 ISSUED BY BANK ON RECORD. (V) THE APPELLANT HAS PLACED HIS ARGUMENT THAT BANK HAS N EVER DENIED THE CORRECTNESS OF BANK STATEMENT ISSUED TO HIM I.E. APPE LLANT. (VI) BANK HAS SHOWN ITS INABILITY TO FURNISH ANY DETAIL DUE TO RECORDS DAMAGED BY FLOOD VIDE HIS LETTER DATED 29.11.2006 IN R ESPONSE TO LETTER OF THE ASSESSING OFFICER HAVING NO.SRT/ACIT/CC.3/133(6)/JB/2006-07 DATED 20.11.2006. (VII) DURING THE COURSE OF HEARING, THE APPELLANT EXPL AINED ENTRIES IN REGARD TO HOW THE LOAN OF RS.2,08,00,000/- CRORE RAI SED IN ACCOUNT NO.2637, 232, 233 FOR PURCHASE OF NUTAN MILL LAND AND HOW THIS LOAN WAS REPAID THROUGH ACCOUNT NO.483 BY SALES CONSIDERAT ION OF LAND.[PAGE NO.13 TO 16 OF SUBMISSION DTD.25.5.2007] AN D THESE FACTS WERE ALSO EXPLAINED IN DETAIL DURING THE ASSESSMENT PROCEEDINGS IN CONNECTION WITH THE ENTRY OF BANK STATEM ENT OF ACCOUNT NO.2637.[PAGE NO.25 TO 27 OF SUBMISSION DTD.25.5 .2007] FROM THE ABOVE FACTS, I HAVE COME TO THE CONCLUSION THAT CO NSIDERING ABSENCE OF BANK RECORD AND FACT THAT THE APPELLANT HAS DU LY EXPLAINED ENTRIES IN HIS BANK STATEMENT WITH SUPPORTING BOOK ENTRIE S, THE ADDITION U/S.68 OF IT ACT OF RS.2.46 CRORE IS HEREBY DELETED. 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR WHI LE REFERRING US TO A STATEMENT OF BANK A/C NO. 2637,IN ORIGINAL, WITH THE SURYAPUR CO- OP. BANK LTD., PLACED IN THE ASSESSMENT RECORDS FOR THE AY 2003-04 AND REFLECTING AN ENTRY ON 30.3.2001 TR 24600 000.00,SUPPORTED THE ORDER OF THE AO. THE SAID STATEMENT IS FOR THE PERIOD 1.4.1999 TO 31.3.2001 AND IS STATED TO HAVE BEEN RECEIVED BY TH E AO ON 4.1.2006. THE RELEVANT ENTRIES ON 30.3.2001 ARE GI VEN HEREUNDER: 10 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 10 DATE TYPE DESCRIPTION DR. CR. BALANCE RS. 30-03-2001 TR. 24600000.00 1 AP-232 96 5860645.00 1 AP-233 96 5860645.00 63840.00 THE LD. DR ARGUED THAT SINCE THE FACTS WERE ADMITTE D THESE WERE NOT REQUIRED TO BE PROVED INDEPENDENTLY IN VIEW OF THE DECISION OF THE ITAT AHMEDABAD BENCH IN THE CASE OF SMT. RAMILABEN RATILAL SHAH & ANR. VS. ACIT 43 ITD 403 AS ALSO THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SRI KRISHNA VS. CIT, 142 ITR 618(ALL.).WHILE REFERRING TO PARA-4.3 OF THE IMPUGN ED ORDER, THE LD. DR CONTENDED THAT THAT THE LEARNED CIT(A) DELETED THE ADDITION WITHOUT CALLING FOR ANY REPORT FROM THE AO ON THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE CIT(A) , EVEN WHEN THE ASSESSEE ATTEMPTED TO CO-RELATE THE CREDIT ENTRY OF RS.2,46,00,000 WITH SUBSEQUENT ENTRY DATED 8-6-2002 FOR AN AMOUNT OF RS.2,34,76,975/-. SINCE THE ASSESSEE DID NOT EXPLAI N THE SOURCE OF AMOUNT OF RS.2,46,00,000/- CREDITED ON 30.3.2001 BY THE BANK IN THE A/C NO. 2637 OF THE ASSESSEE WITH THE SURYAPUR CO-OP. BANK LTD., THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING TH E ADDITION. 5.1 ON THE OTHER HAND, THE LEARNED AR ON BEHALF OF THE ASSESSEE WHILE INVITING OUR ATTENTION TO PAGES 53 TO 56 OF T HE PAPER BOOK, CONTENDED THAT THE BANK HAD ISSUED THEM A COPY OF T HEIR ACCOUNT ON 23-04-2001[PAGE 65 OF THE PAPER BOOK] WHEREIN NO SU CH ENTRY OF RS.2,46,00,000/- ON 30.3.2001 WAS REFLECTED AND CLO SING DEBIT BALANCE OF RS.1,28,14,874/- MENTIONED THEREIN ON 24 .3.2001IS SHOWN IN THEIR BALANCE SHEET AS ON 31.3.2001.. THE LEARNE D AR ARGUED THAT THE AO WAS DUTY BOUND TO ASCERTAIN COMPLETE FACTS F ROM THE BANK ABOUT THE ENTRIES MADE ON 30-03-2001 IN THEIR ACCOU NT. INTER ALIA, THE LEARNED AR RELIED UPON THE DECISIONS CIT VS. BH AICHAND H GANDHI (1983) 141 ITR 67 (BOM),ACIT VS. SMT. KUSUM RAMNIKLAL 11 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 11 SANGHANI (2010) 4 ITR (TRIB) 582 (MUMBAI) AND KISHI NCHAND CHELLARAM VS. CIT (1980) 125 ITR 713 (SC).THE LEARN ED AR ADDED THAT THE BURDEN WAS ON THE REVENUE TO ESTABLISH THA T THE AMOUNT REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE. 5.2 IN THEIR REJOINDER, THE LEARNED DR CONTENDED TH AT THOUGH THE AO HAD ADDRESSED A LETTER TO THE BANK TO ASCERTAIN THE CORRECT FACTS DURING THE ASSESSMENT PROCEEDINGS, THE BANK AUTHORI TIES INFORMED THAT THEIR RECORDS WERE DESTROYED IN FLOODS IN SURA T. HE ADDED THAT THE ASSESSEE DID NOT CHALLENGE THE FINDING OF THE A O REGARDING THE AMOUNT ADDED U/S 68 OF THE ACT. 6. WE HAVE HEARD THE LD. DR AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE AFORECITED FACTS, T HE AO ADDED AN AMOUNT OF RS. 2,46,00,000/- APPEARING IN THE STATEM ENT OF BANK A/C NO. 2637 OF THE ASSESSEE WITH THE SURYAPUR CO-OP. B ANK LTD. FOR THE PERIOD 1.4.1999 TO 31.3.2001,DULY SIGNED BY THE AUTHORIZED SIGNATORY OF THE BANK AND PLACED IN THE ASSESSMENT RECORDS FOR THE AY 2003-04 AND REFLECTING AN ENTRY ON 30.3.2001- TR 24600000.00, ON THE GROUND THAT THE ASSESSE DID NO T EXPLAIN THE SOURCE OF CREDIT OF THE SAID AMOUNT. THE SAID STAT EMENT IS FOR THE PERIOD 1.4.1999 TO 31.3.2001 AND IS STATED TO HAVE BEEN RECEIVED BY THE AO ON 4.1.2006.THIS ENTRY ON 30.3.2001 ALSO APP EARS IN THE STATEMENT FOR THE PERIOD 1.1.2001 TO 31.12.2001 PLA CED ON PG. 95 OF THE PAPER BOOK FILED BY THE LD. AR ON BEHALF OF THE ASSESSEE. THE LD. CIT(A), ON THE OTHER HAND DELETED THE ADDITION ON THE BASIS OF ANOTHER STATEMENT GENERATED FOR THE PERIOD 1.4.1999 TO 23.4.2001 AND REFLECTING DEBIT BALANCE OF RS. 1,28,14,874 AS ON 24.3.2001. THIS AMOUNT ALONE APPEARS IN THE BALANCESHEET OF TH E ASSESSE AS ON 31.3.2001. THE ENTRY OF RS. 2,46,00,000 MADE BY TH E BANK ON 30.3.2001 DOES NOT APPEAR IN THE BOOKS OF THE ASSES SEE FOR THE YEAR UNDER CONSIDERATION AND THE LATTER WHILE DENYING T HE AFORESAID CREDIT ENTRY OF RS.2,46,00,000 AS ON 30.3.2001, TRIED TO E XPLAIN AWAY 12 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 12 ANOTHER ENTRY ON 8.6.2002 FOR AN AMOUNT OF RS.2,34, 76,975/- IN CONNECTION WITH PAYMENT OF CONSIDERATION FOR PURCH ASING LAND OF NUTAN MILLS FROM THE OFFICIAL LIQUIDATOR. THE REASO NS FOR MAKING ENTRY BY THE BANK ON 30.3.2001 HAVE NOT BEEN EXPLAINED B Y THE LD. AR NOR THE LD. DR COULD THROW MUCH LIGHT. INSTEAD IT WAS S UBMITTED THAT THE BANK HAD CLAIMED THAT THEIR RECORDS WERE DESTROYED I N FLOODS. SINCE THE RELEVANT ENTRIES ON 30.3.2001 WERE MADE ONLY BY THE CONCERNED BANK AUTHORITIES IN THE BANK A/C OF THE ASSESSEE W HILE THE BALANCE SHEET AS ON 31.3.2001 OF THE ASSESSEE REFLECTED BAL ANCE AS ON 24.3.2001, APPARENTLY RECONCILIATION OF THESE ENTR IES VIS--VIS BOOKS OF ACCOUNTS OF THE ASSESSE DOES NOT APPEAR TO HAVE BEEN MADE. SINCE THE SAID ENTRY WOULD NATURALLY IMPACT THE ACC OUNTS OF THE ASSESSEE EVEN IN THE SUBSEQUENT YEARS AND THERE IS NOTHING TO SUGGEST THAT THE LD. CIT(A) ATTEMPTED TO RECONCILE THE ACCOUNTS NOR ALLOWED ANY OPPORTUNITY TO THE AO FOR RECONCILING T HE ACCOUNTS BEFORE DELETING THE ADDITION, WE ARE OF THE OPINION THAT THE MATTER REQUIRES RECONSIDERATION BY THE LD. CIT(A) IN CONSU LTATION WITH THE CONCERNED BANK AUTHORITIES . THERE IS NO MATERIAL BEFORE US AS TO WHETHER OR NOT THE WRITTEN SUBMISSIONS OR THE DET AILS FILED BY THE ASSESSE BEFORE THE LD. CIT(A),WERE CONFRONTED TO TH E AO. IN THIS CONNECTION , IT MAY BE POINTED OUT THAT THE RULES OF NATURAL JUSTICE ARE NOT CODIFIED NOR ARE THEY UNVARYING IN ALL SITU ATIONS, RATHER THEY ARE FLEXIBLE. THEY MAY, HOWEVER, BE SUMMARIZED IN O NE WORD : FAIRNESS. IN OTHER WORDS, WHAT THEY REQUIRE IS FAIR NESS BY THE AUTHORITY CONCERNED. OF COURSE, WHAT IS FAIR WOULD DEPEND ON THE SITUATION AND THE CONTEXT. IN THE FACTS AND CIRCUMS TANCES OF THE CASE, WE ARE OF THE OPINION THAT A MERE RITUAL OR E MPTY FORMALITY WILL NOT BE AN OPPORTUNITY AS CONTEMPLATED BY LAW. IT WI LL BE A 'PRETENCE' OR 'MAKE BELIEVE'. THIS IS NOT A CASE OF A MERE ROU TINE OR SIMPLE MATTER.. OVER THE YEARS BY A PROCESS OF JUDICIAL IN TERPRETATION TWO RULES HAVE BEEN EVOLVED AS REPRESENTING THE PRINCIP LES OF NATURAL JUSTICE IN JUDICIAL PROCESS, INCLUDING THEREIN QUAS I JUDICIAL AND ADMINISTRATIVE PROCESS. THEY CONSTITUTE THE BASIC E LEMENTS OF FAIR 13 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 13 HEARING, HAVING THEIR ROOTS IN THE INNATE SENSE OF MAN FOR FAIRPLAY AND JUSTICE. JUSTICE SHOULD NOT ONLY BE DONE BUT SH OULD MANIFESTLY BE SEEN TO BE DONE. 6.1 IN VIEW OF THE FOREGOING, ESPECIALLY WHEN NO A TTEMPT WAS MADE BEFORE US BY ANY OF THE PARTIES FOR RECONCILING THE ACCOUNTS IN THE FACE OF THE AFORESAID ENTRY MADE BY THE BANK ON 30. 3.2001 IN THE ACCOUNT NO. 2637 OF THE ASSESSE NOR THE ORIGIN OF T HIS ENTRY WAS EVEN EXPLAINED, WE HAVE NO ALTERNATIVE BUT TO VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FIL E WITH THE DIRECTIONS TO READJUDICATE THE ISSUE IN ACCORDANCE WITH LAW IN THE LIGHT OF OUR AFORESAID OBSERVATIONS AFTER ALLOWING SUFFICIENT OP PORTUNITY TO BOTH THE PARTIES AS ALSO THE CONCERNED BANK AUTHORITIES. WITH THESE DIRECTIONS, GROUND NO. 1 IN THE APPEAL OF THE REV ENUE IS DISPOSED OF 7. GROUND NOS. 2 & 3 IN THE APPEAL OF THE REVENUE B EING MERE PRAYER NOR ANY SUBMISSIONS HAVING BEEN MADE BEFORE US ON THESE GROUNDS, DO NOT REQUIRE ANY SEPARATE ADJUDICATION A ND ARE, THEREFORE, DISMISSED . 8. NO OTHER PLEA OR ARGUMENT WAS RAISED BEFORE US. 9. IN THE RESULT ,APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES WHILE CO FILED BY THE ASSESSE IS DISMISSED . ORDER PRONOUNCED IN THE COURT TODAY ON 30 -06-2011 SD/- SD/- ( MUKUL SHRAWAT ) JUDICIAL MEMBER ( A N PAHUJA ) ACCOUNTANT MEMBER DATED : 30-06-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S JITU BUILDERS PVT. LTD., 3/2267, BALABHAI ST REET, SALABATPURA, SURAT 14 ITA NO.3747/AHD/07 & CO NO.367/AHD/07 14 2. ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CI RCLE-3, SURAT 3. CIT CONCERNED 4. CIT(A)-II, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTR AR/ ASSISTANT REGISTRAR ITAT, AHMEDABAD