Shri Hitesh Natverlal Shah, Surat V. The Income tax Officer,Ward-3(2), Surat

ITA 4120/AHD/2007

• Counselvise Citation: 412020514 RSA 2007
• Duration Of Justice: 4 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-01-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 13-11-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD GOSWAMI
• Keywords: Unexplained cash credit; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI B. P. JAIN , AM) ITA NO.4119 AND 4120/AHD/2007 AND 1432/AHD/2010 A. Y.: 2003-04, 2004-05 AND 2004-05 SHRI HITSH NATVERLAL SHAH, C-7, SARUVAN SOCIETY, GROUND FLOOR, NEW RANDER ROAD, SURAT PA NO. AMUPS 4536 R VS THE INCOME TAX OFFICER, WARD NO. 3(2), SURAT, MAJURA GATE, SURAT (APPELLANT) (RESPONDENT) APPELLANT BY SHRI HARDIK VORA, AR RESPONDENT BY SHRI VINOD GOSWAMI, SR. DR DATE OF HEARING: 31-01-2012 DATE OF PRONOUNCEMENT: 07-02-2012 O R D E R PER BHAVNESH SAINI: THIS ORDER SHALL DISPOSE OF ALL THE ABOVE APPEALS FILED BY THE ASSESSEE FOR THE ABOVE A SSESSMENT YEARS. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. ITA NO.4119/AHD/2007(AY:2003-04) 3. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II, SURAT DATED 31-08-2007 FOR A SSESSMENT YEAR 2003-04. IN THIS APPEAL, THE ASSESSEE CHALLENGED TH E REOPENING OF ITA NO.4119 AND 4120/AHD/2007 & 1432/AHD/2010 SHRI HITSH NATVERLAL SHAH VS ITO, W-3(2), SURAT 2 THE ASSESSMENT U/S 147 OF THE IT ACT, ADDITION OF R S.3,01,814/- ON ACCOUNT OF CHEQUES DISCOUNTING COMMISSION ON ESTIMA TE BASIS, ADDITION OF RS.3,00,000/- U/S 68 OF THE IT ACT ON A CCOUNT OF UNEXPLAINED CASH CREDIT. 4. ON GROUND NO.1 REGARDING INITIATION OF REASSESSM ENT PROCEEDINGS, IT WAS RECORDED BY THE AO THAT INFORMA TION HAD BEEN RECEIVED FROM INVESTIGATION WING AT SURAT REGARDING LARGE SCALE TAX EVASION BY 100% EXPORT ORIENTED UNITS (EOUS) OF SUR AT. SINCE THE ASSESSEE WAS ONE OF SUCH UNITS, ASSESSMENT WAS REOP ENED U/S 147/148 OF THE IT ACT. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE WAS NOT ENGAGED IN ANY EXPORT ORIENTED BUSINESS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE WA S ENGAGED IN THE BUSINESS OF GARMENT LABOUR WORK AND THERE WAS N O OTHER BUSINESS ACTIVITY INCLUDING CHEQUES DISCOUNTING ACTIVITIES. THE ASSESSEE HAD NOTHING TO DO WITH EVASION OF TAX BY 100% EXPORT OR IENTED UNITS. THE LEARNED CIT(A) HOWEVER, DID NOT ACCEPT THE CONTENTI ON OF THE ASSESSEE AND CONFIRMED THE REOPENING OF THE ASSESSM ENT AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARA 6 OF THE APPELLATE ORDER ARE REPRODUCED AS UND ER: 6. I HAVE CAREFULLY CONSIDERED THE MATTER. I HAVE ALSO EXAMINED THE ASSESSMENT RECORDS FOR THE RELEVANT ASSESSMENT YEAR. IN THE REASONS RECORDED PRIOR TO T HE INITIATION OF PROCEEDINGS U/S. 147 OF THE IT ACT, THE AO HAD NOTED THAT INFORMATION HAD BEEN RECEIVED FROM T HE DIRECTOR OF INCOME-TAX(INVESTIGATION), AHMEDABAD THROUGH THE CIT-I, SURAT WHEREIN IT WAS STATED THAT THERE HAD BEEN WIDE-SPREAD VIOLATION OF VARIOUS SCHEMES INTRODUCED BY THE CUSTOMS DEPTT. THIS INVOLVED CERT AIN ITA NO.4119 AND 4120/AHD/2007 & 1432/AHD/2010 SHRI HITSH NATVERLAL SHAH VS ITO, W-3(2), SURAT 3 EOUS WHICH WAS TREATED AS EXPORT, WHEREAS, IN ACTUA LITY NO GOODS WERE MANUFACTURED OR SOLD. EACH EOU RECEIV ED THE BENEFITS FOR SHOWING PURCHASES AS WELL AS SALES BELOW THE CHAIN. PROFIT WAS EARNED ON SHORTAGES SHOWN IN PRODUCTION SINCE, THE PREMIUM ON SUCH SHORTAGE WAS RETAINED BY THE EOU. MOREOVER, THERE WERE HUGE CASH DEPOSITS IN THE ACCOUNT OF SUCH EOUS AS WELL AS THO SE ENTITIES WHICH WERE USED BY THEM TO ROTATE MONEY. ALLEGEDLY, IN THE LIST OF SUCH EOUS FURNISHED BY TH E DIT (INV.), AHMEDABAD, WAS THE NAME OF THE ASSESSEE AS THE PROPRIETOR OF M/S. TARAK NIDHI WHOSE PAN WAS GIVEN AS AMPUS 4536 R. THE AO FURTHER NOTED THAT FOR THE YEA R UNDER CONSIDERATION, THE ASSESSEE HAD SHOWN VERY NEGLIGIBLE INCOME OF RS.48.320 WHICH MEANT THAT INC OME WHICH WAS CHARGEABLE TO TAX, HAD ESCAPED ASSESSMENT . THE POINT TO NOTE HERE IS THAT, THE INFORMATION WHI CH WAS RECEIVED PERTAINED TO THE MISUSE AND MANIPULATION O F EXEMPTION GRANTED TO THE EOUS UNDER THE CUSTOMS ACT AND ITS CONSEQUENT IMPLICATIONS UNDER THE INCOME-TA X ACT. THE INFORMATION CLEARLY LISTED THE ENTITIES WHICH W ERE ALLEGEDLY ENGAGED IN SUCH MISUSE AND MANIPULATION, AND INCLUDED THE ASSESSEE AS WELL. THE INFORMATION WAS SUCH THAT THE AO HAD SUFFICIENT GROUND TO PRIMA-FACIE HO LD THE BELIEF THAT AS FAR AS THE ASSESSEE WAS CONCERNED, I NCOME CHARGEABLE TO TAX DURING THE YEAR UNDER CONSIDERATI ON HAS ESCAPED ASSESSMENT. IRRESPECTIVE OF THE FACT THAT I N THE RE-ASSESSMENT PROCEEDINGS NO SUCH MANIPULATION WAS EITHER FOUND OR ESTABLISHED . THE FINAL FINDING COULD IN NO MANNER WHATSOEVER NEGATE OR INVALIDATE EITHER THE INFORMATION OF BELIEF OR THE INITIATION OF PROCEEDI NGS U/S. 147 OF THE IT ACT. RELIANCE IS PLACED ON THE DECISI ON OF THE HON. GUJARAT HIGH COURT IN THE CASE OF PRAFUL C HUNILAL PATEL: VASANT CHIMANLAL PATEL VS. ACIT (1999) 236 I TR 832, 840 42. THE ASSESSEES APPEAL ON THIS GROUND IS THEREFORE, REJECTED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT ULTIMATELY NO ADDITION IS MADE AGAINST THE ASSESSEE FOR ANY TAX ITA NO.4119 AND 4120/AHD/2007 & 1432/AHD/2010 SHRI HITSH NATVERLAL SHAH VS ITO, W-3(2), SURAT 4 EVASION. THERE WAS NO NEXUS BETWEEN THE REASONS U/S 148 OF THE IT ACT AND ESCAPEMENT OF INCOME IN THE CASE OF THE ASS ESSEE. ESTIMATED ADDITIONS ARE MADE FOR CHEQUES DISCOUNTIN G BECAUSE OF NON-PRODUCTION OF BOOKS OF ACCOUNTS BY THE ASSESSEE . THEREFORE, REOPENING OF THE ASSESSMENT IS NOT VALID. THE LEARN ED COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF THE REASONS RECORDED FO R REOPENING OF THE ASSESSMENT WHICH IS PLACED ON RECORD. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW AND SUBMITTED THAT SUFFICIENCY OF REASONS OR MATERIAL C ANNOT BE CONSIDERED AT THE STAGE OF REOPENING OF THE ASSESSM ENT AND RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF RAYMOND WOOLEN MILLS LTD. VS ITO AND OTHERS, 236 IT R 34. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF JINDAL PHOTO FILMS LTD. VS DCIT AND ANOTHER , 234 ITR 170 IN WHICH IT WAS HELD THAT MERE FRESH APPLICATION OF MIND BY SAME ITO TO SAME SET OF FACTS AMOUNTED TO MERE CHANGE OF OPINION AND SINCE IN THE CASE OF THE ASSESSEE NO ASSESSMENT WAS FRAMED EARLIER SO THERE IS NO CHANGE OF OPINION. THE LEAR NED DR ALSO RELIED UPON THE UNREPORTED DECISION OF THE HONBLE DELHI H IGH COURT IN THE CASE OF RAJAT EXPORT IMPORT INDIA PVT. LTD. WRIT PETITION (CIVIL) NO.8341/2011 DATED 18-01-2012 AND REFERRED TO REASO NS IN PARA 7 OF THE JUDGMENT IN WHICH THE DIT (INVESTIGATION) DI SCOVERED THE PARTIES WHO HAVE UNACCOUNTED MONEY INTRODUCED IN TH E BOOKS OF ACCOUNT WITHOUT PAYING TAX THROUGH ENTRY OPERATORS AND THE ASSESSEE WAS FOUND ONE OF THE BENEFICIARIES. THE HONBLE DEL HI HIGH COURT, THEREFORE, HELD THAT WHAT IS CONSIDERED AT THE STAG E OF REOPENING IS WHETHER THE MATERIAL BEFORE THE AO RELEVANT FOR FOR MING THE PRIMA ITA NO.4119 AND 4120/AHD/2007 & 1432/AHD/2010 SHRI HITSH NATVERLAL SHAH VS ITO, W-3(2), SURAT 5 FACIE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCA PED ASSESSMENT. SUFFICIENCY OF MATERIAL FOR FORMATION OF THE BELIEF IS NOT NECESSARY AT THIS STAGE. THE LEARNED COUNSEL FOR THE ASSESSEE IN THE REJOINDER SUBMITTED THAT FACTS OF THE CASE OF THE ASSESSEE AN D REASONS RECORDED ARE CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE CASE OF RAJAT EXPORT IMPORT INDIA PVT. LTD. (SUPRA) AS RELI ED UPON BY THE LEARNED DR. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE PLACE ON RECORD COPY OF THE REASONS RECORDED FOR REOPENING OF THE ASSESS MENT U/S 147 OF THE IT ACT WHICH READS AS UNDER: REASONS FOR REOPENING ASSESSMENT U/S.147 OF THE I.T. ACT ============= A STUDY REPORT CONDUCTED BY THE INVESTIGATION WING INTO THE LARGE SCALE EVASION OF TAX BY THE 100% TEXTILE EOUS OF SURAT HAS BEEN RECEIVED FROM THE DIRECTOR OF INC OME TAX (INV). AHMEDABAD VIDE CONFIDENTIAL LETTER NO.DI /V/10- 16/EUOS SURAT 2004-05 DATED 28.3.2005 THROUGH THE CIT-I, SURAT VIDE LETTER DTD. 16.6.2005 2. ON PERUSAL OF SAID REPORT THERE IS WIDESPREAD VI OLATION OF VARIOUS SCHEMES INTRODUCED BY THE CUSTOMS DEPARTMEN T WHICH HAS CONSEQUENTIAL INCOME TAX IMPLICATION. THE MODUS OPERANDI OF THESE EOUS AND LOT OF MARKET INTELLIGENT HAS BEEN INDULGED IN THE SAME. IN BRIEF , THE EOUS HAVE SET UP A CHAIN WHERE ONE EOU SHOWS SALES ON ANOTHER OF EOU, WHICH IS TREATED AS EXPORT WHERE AS IN REALITY NO GOODS ARE MANUFACTURED AND SOLD. EACH EO U RECEIVES PREMIUM FOR SHOWING PURCHASE FROM THE EOU ABOVE IT AND BUYS PREMIUM TO EOU BELOW IT IN THE CH AIN. IN EFFECT, PROFIT IS EARNED ON SHORTAGE SHOWN ON ITA NO.4119 AND 4120/AHD/2007 & 1432/AHD/2010 SHRI HITSH NATVERLAL SHAH VS ITO, W-3(2), SURAT 6 PRODUCTION SINCE THE PREMIUM ON THIS SHORTAGE IS RE TAINED BY THE EOU. MOREOVER, THERE ARE HUGE CASH DEPOSITS IN THE ACCOUNTS OF THE SOME EOUS AS WELL AS ENTITIES U SED BY THEM TO ROTATE MONEY. THE CASE OF TARAK NIDHI, P ROP. SHRI HITESH N SHAHOF SURAT IS ONE OF THE ENTITIES T HE LIST AT SR. NO.20 AND PA NO. IS AMPUS 4536R GIVEN. 3. ON VERIFICATION OF THE RETURN FILED FOR A. Y. 20 03-04 ON 8.3.3004 VIDE RECEIPT NO.302013971, IT IS NOTICED T HAT THE ASSESSEE HAS SHOWN VERY NEGLIGIBLE INCOME OF RS.48,320.00. THEREFORE, IT IS APPARENT THAT THERE IS INCOME CHARGEABLE TO TAX, WHICH HAS ESCAPED ASSESSMENT AND THAT THE ASSESSEE HAS UNDER STATED I TS INCOME FOR THE YEAR IN QUESTION. 3. FOR THE ABOVE REASONS, THE A. Y. 2003-04 IS BEIN G REOPENED U/S. 147 OF THE ACT AND NOTICE U/S. 148 OF THE ACT IS HEREBY ISSUED. DATE: 7.7.2005. 6.1 THE AO IN THE ASSESSMENT ORDER SPECIFICALLY NOT ED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF COMMISSION A GENT AND CHEQUES DISCOUNTING. THEREFORE, THE ASSESSEE WAS NO T FOUND TO BE 100% EXPORT ORIENTED UNIT OF SURAT. THE ASSESSEE AL SO PLEADED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE WAS NOT ENGAGED IN ANY EXPORT ORIENTED BUSINESS AND AS SUCH THE ASSESSEE H AS NOTHING TO DO WITH EVASION OF TAX BY THE 100% EXPORT ORIENTED UNI TS. NO FINDING HAS BEEN GIVEN BY THE LEARNED CIT(A) ON THE CONTENTION OF THE ASSESSEE ON THIS ISSUE. THE ASSESSEE WAS NOT FOUND INVOLVED IN VIOLATION OF ANY SCHEME OF CUSTOMS DEPARTMENT AS IS RECORDED IN THE REASONS FOR REOPENING OF THE ASSESSMENT. NO SALES OR PURCHASES BY THE ASSESSEE HAD BEEN MADE AS IS NOTED IN THE REOPENING OF THE A SSESSMENT. MERE MENTION OF NAME OF THE ASSESSEE IS NOT ENOUGH TO RE CORD REASONS FOR ITA NO.4119 AND 4120/AHD/2007 & 1432/AHD/2010 SHRI HITSH NATVERLAL SHAH VS ITO, W-3(2), SURAT 7 REOPENING OF THE ASSESSMENT IN MECHANICAL MANNER. T HE FINDINGS OF THE LEARNED CIT(A) IN FAVOUR OF THE ASSESSEE THAT I N THE REASSESSMENT PROCEEDINGS NO SUCH MANIPULATION WAS EITHER FOUND O R ESTABLISHED WOULD SUPPORT THE CASE OF THE ASSESSEE. FURTHER, TH E AO MADE THE ADDITION ON ESTIMATE BASIS ON ACCOUNT OF CHEQUES DI SCOUNTING OR BECAUSE THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE AO. FURTHER, THE ADDITION OF UNEXPLAINED CREDIT WAS MADE ALONG WITH ESTIMATED HOUSEHOLD EXPENSES. THESE FACT S WOULD CLEARLY ESTABLISH THAT ASSESSEE HAS NOTHING TO DO WITH THE EVASION OF TAX BY 100% EXPORT ORIENTED UNITS. THUS, THE REASONS RECOR DED BY THE AO FOR REOPENING OF THE ASSESSMENT ARE NOT CONNECTED W ITH THE ASSESSEE AND QUA THE ASSESSEE THE SAME ARE IRRELEVANT OR INV ALID. NO NEXUS BETWEEN THE REASONS U/S 148 OF THE IT ACT AND ESCAP EMENT OF INCOME WERE FOUND IN THE CASE OF THE ASSESSEE. THE REASONS RECORDED IN THE CASE OF THE ASSESSEE FOR REOPENING NOT FOUND TO EXI ST. THE AO DID NOT VERIFY THE CORRECTNESS OF INFORMATION RECEIVED AND ACTED IN MOST MECHANICAL MANNER TO RECORD THE REASONS FOR REOPENI NG OF THE ASSESSMENT. THERE WAS NO MATERIAL TO SHOW ON WHAT B ASIS THE AO HAD FORMED HIS BELIEF THAT INCOME ESCAPED ASSESSMEN T. NO RELEVANT INFORMATION WAS WITH THE AO TO PRIMA FACIE ESTABLIS H ESCAPEMENT OF INCOME OF THE ASSESSEE TO JUSTIFY REOPENING OF THE ASSESSMENT. 6.2 THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS ATLAS CYCLE INDUSTRIES, 180 ITR 319 HELD AS UNDE R: HELD, (I) THAT THE TRIBUNAL WAS RIGHT IN CANCELING THE REASSESSMENT AS BOTH THE GROUNDS ON WHICH THE REASSESSMENT NOTICE WAS ISSUED WERE NOT FOUND TO ITA NO.4119 AND 4120/AHD/2007 & 1432/AHD/2010 SHRI HITSH NATVERLAL SHAH VS ITO, W-3(2), SURAT 8 EXIST, AND, THEREFORE, THE INCOME-TAX OFFICER DID N OT GET JURISDICTION TO MAKE A REASSESSMENT. 6.3 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS (1) ATUL JAIN & (2) SMT. VINITA JAIN, 299 ITR 383 HELD AS UNDER HELD, DISMISSING THE APPEALS, THAT THE ONLY INFORMATION WAS THAT THE ASSESSEE HAD TAKEN A BOGUS ENTRY OF CAPITAL GAINS BY PAYING CASH ALONG WITH SO ME PREMIUM FOR TAKING A CHEQUES FOR THAT AMOUNT. THE INFORMATION DID NOT INDICATE THE SOURCE OF THE CAPI TAL GAINS WHICH IN THIS CASE WERE SHARES. THERE WAS NO INFORMATION WHICH SHARES HAD BEEN TRANSFERRED AND WITH WHOM THE TRANSACTIONS HAD TAKEN PLACE. THE ASSESSING OFFICER DID NOT VERIFY THE CORRECTNESS OF THE INFORMATION RECEIVED BY HIM BUT MERELY ACCEPTED THE TRUTH OF THE VAGUE INFORMATION IN A MECHANICAL MANNER. THE ASSESSING OFFICER HAD NOT EVEN RECORDED HIS SATISFACTION ABOUT THE CORRECTNESS OR OTHERWISE OF THE INFORMATION FOR ISSUING A NOTICE UNDER SECTION 148. WHAT HAD BEEN RECORDED BY THE ASSESSING OFFICER AS H IS REASONS TO BELIEVE WAS NOTHING MORE THAN A REPORT GIVEN BY HIM TO THE COMMISSIONER. THE SUBMISSION OF THE REPORT WAS NOT THE SAME AS RECORDING OF REASONS TO BELIEVE FOR ISSUING A NOTICE. THE ASSESSING OFFICER HAD CLEARLY SUBSTITU4ED FORM FOR SUBSTANCE AND THEREFORE THE ACTION OF THE ASSESSING OFFICER WAS NOT SUSTAINABLE . 6.4 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HI NDUSTAN DORR OLIVER LTD. VS DCIT AND OTHERS, 305 ITR 288 HELD AS UNDER: HELD, THAT THERE WAS NOTHING ON RECORD TO SHOW THA T THE PETITIONERS HAD ALLOWED THE TWO BOGUS FIRMS RUN BY THE JOSHIS TO SELL THE STEEL PROCURED BY THEM AN D THEREBY EARNED ANY INCOME BASED ON WHICH THE NOTICE UNDER SECTION 147 OF THE INCOME-TAX ACT, 196 1, COULD HAVE BEEN ISSUED. THERE WAS NO OTHER MATERIAL ITA NO.4119 AND 4120/AHD/2007 & 1432/AHD/2010 SHRI HITSH NATVERLAL SHAH VS ITO, W-3(2), SURAT 9 TO SHOW ON WHAT BASIS THE AUTHORITY HAD FORMED THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THE NOTICE WAS NOT VALID AND WAS LIABLE TO BE QUASHED. 6.5 ITAT DELHI BENCH IN THE CASE OF ACIT VS O. P. CHAWL A, 306 ITR - (AT) 328 (T M) HELD THAT NO FRESH MATERIAL BEFORE THE AO LEADING TO REASON TO BELIEVE THAT INCOME ESCAPED ASSESSMENT REASSESSMENT IS NOT VALID. 7. CONSIDERING THE ABOVE DISCUSSIONS, IT IS CLEAR T HAT THE AO HAS NOT VALIDLY ASSUMED JURISDICTION U/S 147/148 OF THE IT ACT IN THE CASE OF THE ASSESSEE. THE REASSESSMENT PROCEEDINGS ARE, THEREFORE, LIABLE TO BE QUASHED. THE DECISIONS CITED BY THE LEARNED D R ARE CLEARLY DISTINGUISHABLE AND AS SUCH WOULD NOT SUPPORT THE C ASE OF THE REVENUE. CONSIDERING THE ABOVE DISCUSSION, WE ARE O F THE VIEW THAT THERE WAS NO JUSTIFICATION TO REOPEN THE ASSESSMENT IN THE CASE OF THE ASSESSEE. WE ACCORDINGLY, SET ASIDE THE ORDERS OF T HE AUTHORITIES BELOW AND QUASH THE REASSESSMENT PROCEEDINGS/ORDERS U/S 147/148 OF THE IT ACT. GROUND NO.1 OF THE APPEAL OF THE ASS ESSEE IS ACCORDINGLY ALLOWED. RESULTANTLY, ALL ADDITIONS ON MERIT WOULD STAND DELETED. THEREFORE, THERE IS NO NEED TO DECIDE THE REMAINING GROUNDS OF APPEAL ON MERIT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.4119/AHD/2007 IS ALLOWED. ITA NO.4119 AND 4120/AHD/2007 & 1432/AHD/2010 SHRI HITSH NATVERLAL SHAH VS ITO, W-3(2), SURAT 10 ITA NO.4120/AHD/2007 : (A.Y.2004-05) 9. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A) II, SURAT DATED 31-08-2007 FOR ASSE SSMENT YEAR 2004-05 IN WHICH THE ASSESSEE CHALLENGED REOPENING OF THE ASSESSMENT U/S 147 OF THE IT ACT, ADDITION OF RS.3, 93,047/- FOR CHEQUES DISCOUNTING COMMISSION AND DISALLOWANCE OF INTEREST OF RS.54,400/- ON UNEXPLAINED CASH CREDIT. ON THE ISSU E OF REOPENING OF THE ASSESSMENT, FACTS ARE SAME AS HAVE BEEN NOTED I N THE ASSESSMENT YEAR 2003-04. SINCE THE ISSUE IS IDENTIC AL WHICH IS ALSO SUBMITTED BY BOTH THE PARTIES, WE, THEREFORE, FOLLO WING ORDER FOR ASSESSMENT YEAR 2003-04 ABOVE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE REASSESSMENT PROCEE DINGS. ALL THE ADDITIONS ON MERIT WOULD STAND DELETED AS IS DECIDE D EARLIER. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO .4120/AHD/2007 IS ALLOWED. ITA NO.1432/AHD/2010:A.Y.2004-05 11. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II, SURAT DATED 26-02-2010, FOR ASSE SSMENT YEAR 2004-05, CHALLENGING LEVY OF PENALTY U/S. 271 (1) ( C ) OF THE IT ACT. PENALTY WAS IMPOSED ON DISALLOWANCE OF INTEREST OF RS.54,400/- ON WHICH WE HAVE SET ASIDE AND QUASHED THE REASSESSMEN T PROCEEDINGS AND ADDITIONS HAVE BEEN DELETED IN ITA NO.4120/AHD/ 2007. THEREFORE, NOTHING SURVIVES FOR LEVY OF PENALTY AGA INST THE ASSESSEE. ITA NO.4119 AND 4120/AHD/2007 & 1432/AHD/2010 SHRI HITSH NATVERLAL SHAH VS ITO, W-3(2), SURAT 11 WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORI TIES BELOW AND CANCEL THE PENALTY. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.1432/AHD/2010 IS ALLOWED. 13. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B. P. JAIN) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT 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 D Y. REGISTRAR, ITAT, AHMEDABAD