Vimalbhai Mauljibhai Gabani, Surat V. The Income tax Officer,Ward-9(4), Surat

ITA 491/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6175 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-05-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 11-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KASHYAP SRDR
• Assessee Lawyers: R N VEPARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AT SURAT CAMP, AHMEDABAD BEFORE SHRI T.K. SHARMA, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.491-492 & 494/AHD/2008 ASSESSMENT YEARS :2002-03 TO 2004-05 DATE OF HEARING:18.5.10 DRAFTED:18.5.10 SHRI VIMALBHAI MULJIBHAI GABANAI, 7, TRIKAMNAGA SOCIETY-I, LAMBE HANUMAN ROAD, SUAT- 395006 ITA NO.ABPPG8114P V/S . THE INCOME-TAX OFFICER, WARD-9(4), SURAT (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI R.N. VEPARI, AR REVENUE BY:- SHRI SANJEEV KASHYAP SR-DR O R D E R PER D.C.AGRAWAL, ACCOUNTANT MEMBER:- THESE ARE THE THREE APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 2002-03 TO 2004-05 AGAINST THE ORDER OF LD. CIT(APPEALS) DATED 25-10-2007. SINCE ALL THESE APPEALS INVOLVED COMMON ISSUE, HENCE, THEY ARE TAKEN UP TOG ETHER FOR THE SAKE OF CONVENIENCE. 2. IN THESE APPEALS ONE OF THE COMMON GROUNDS RAISE D IS THAT ASSESSING OFFICER WAS NOT JUSTIFIED AND ACCORDINGLY LD. CIT(APPEALS) ALSO WAS NOT JUSTIFIED IN UPHOLDING THE RE-OPENING ASSESSMENT U/S.147. 3. THE FACTS OF THE CASE ARE THAT A SURVEY U/S.133A WAS CARRIED OUT AT THE PREMISES IN THE CASE OF SHI PANKAJ DANAWALA, CHARTERED ACCOUNTANT W HO WAS FOUND TO HAVE PREPARED PROFIT & LOSS ACCOUNT, CAPITAL ACCOUNT AND BALANCE-SHEET S HOWING BUILDING OF CAPITAL FROM YEAR-TO- YEAR IN THE NAME OF SEVERAL ASSESSEES. THE RELEVANT DOCUMENTS WERE FOUND IN THE SURVEY. SHRI ITA NO.491-92 & 494/AHD/2008 A.YS. 02-03 TO 04-05 SH. VIMALBHAI M GABANI V. ITO WD-9(4) SRT PAGE 2 PANKAJ DANAWALA IS A PRACTICING CA. HE HAS CREATED CAPITAL IN LARGE NUMBER OF CASES. AFTER BUILDING CAPITAL FOR SEVERAL YEARS RETURNS OF INCOM E-TAX WERE FILED SHOWING SUCH ENHANCED OPENING CAPITAL. FURTHER, THERE USED TO BE DIFFEREN CE BETWEEN CLOSING ACCOUNT AS ON 31 ST MARCH OF THE ACCOUNTING YEAR AND OPENING CAPITAL ON THE 1 ST DAY OF APRIL OF THE NEXT ACCOUNTING YEAR. THE DIFFERENCE REMAINED UNEXPLAINE D IN THE CASE OF THE PRESENT ASSESSEE. SUCH DISCREPANCIES WERE NOTICED BY THE ASSESSING OF FICER FROM THE DOCUMENTS FOUND FROM THE PREMISES OF SHRI PANKAJ DANAWALA. CLOSING CAPIT AL IN THE CASE OF PRESENT ASSESSEE FOR THE ASSESSMENT YEAR 2001-02 WAS SHOWN AT RS.5,45,960/-, WHEREAS OPENING CAPITAL ON 01-04- 2001 WAS SHOWN AT RS.29,45,960/-. THUS, CAPITAL BAL ANCE WAS INFLATED BY RS.24 LAKH. THIS ENHANCE CAPITAL OF RS.24 LAKH WAS UTILIZED OR SHOWN TO HAVE BEEN INVESTED IN VARIOUS FIRMS AS UNDER:- SR.NO NAME/PARTICULARS OF OTHER INVESTMENTS DURING THE YE AR AMOUNT RS. 1. LOAN SCHEDULE A (SCHEDULE NOT FILED WITH RETURN) 350000 2. LOAN SCHEDULE B (SCHEDULE NOT FILED WITH RETURN) 237000 3. NARMADA TEXTILE MACHINERY WORKS 280000 4. SAMESHWAR TEXTILE MACHINERY WORKS 640000 5. GANESH ENGINEERING WORKS 463000 6. AMBCA TEXTILES MACHINERY STORES 430000 TOTAL 2400000 SINCE SUCH FICTITIOUS INVESTMENT WAS NOTICED BY THE ASSESSING OFFICER, HE PROCEEDED TO RE- OPENING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2003 -04 ALSO. THE ASSESSEE HAD SHOWN TO HAVE EARNED INCOME OUT OF SUCH INVESTMENTS WHICH MA Y FALL FOR CONSIDERATION IN THE ASSESSMENT YEAR 2004-05. 4. THE LD. CIT(APPEALS) CONFIRMED THE RE-OPENING OF THE ASSESSMENT AS WELL AS ADDITION ON MERITS. 5. BEFORE US LD. AR FOR THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER HAS NOT PROVIDE TO HIM THE COPIES OF THE REASONS RECORDED AND HE HAS N OT BEEN ABLE TO MEET OUT THOSE REASONS AT THE INITIAL STAGE. IN FACT, THE DEPARTMENT HAS NOT FOLLOWED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF G.K.N.DRIVE SHAFT (INDIA) LTD. V. ITO (2003) 259 ITR 90 (SC). ITA NO.491-92 & 494/AHD/2008 A.YS. 02-03 TO 04-05 SH. VIMALBHAI M GABANI V. ITO WD-9(4) SRT PAGE 3 6. LD. SR-DR ON THE OTHER HAND SUPPORTED THE ORDERS OF LOWER AUTHORITIES BELOW. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE REST ORE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR PROVIDING OF THE COPIES OF REASONS RECO RDED TO THE ASSESSEE INVITING HIS OBJECTION THEREON. AFTER RECEIVING OBJECTION, AO WILL PASS A SPEAKING ORDER ACCEPTING OR REJECTING THE OBJECTION. IN CASE OBJECTIONS ARE ACCEPTED THERE NO FURTHER ACTION FOR ASSESSING ALLEGED INCOME-TAX WOULD BE TAKEN. OTHERWISE ASSESSMENT PRO CEEDINGS AS PER LAW WILL BE UNDERTAKEN AFRESH. AS A RESULT, APPEALS FILED BY THE ASSESSEE ARE RESTORED TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH AS INDICATE ABOVE. 8. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 21/05/2010 SD/- SD/- ( T.K.SHARMA ) ( D.C.AGRAWAL ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, DATED : 21/05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-V, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD