DCIT CC -4(1), CENTRAL RANGE-4, MUMBAI V. HITESH S. MEHTA, MUMBAI

ITA 6026/MUM/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6725 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 1992-1993
• Appeal Filed On: 26-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Unexplained investment; Salary income; Opportunity of being heard; Principle of natural justice; Earning of tax free income; Proportionate interest; Question of law; TDS; Set aside; Capital Gains
• Section: 143(3); 142(1); 234B; 14A; 143(2); 264; 13; 22; 32; 69; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO. 6026 /MUM/201 7 ( / ASSESSMENT YEAR: 1992 - 93 ) D CIT, CENTRAL CIRCLE - 4(1) CENTRAL RANGE - 4, MUMBAI. PR. CI T(2), MUMBAI ROOM NO.1916, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021. / VS. HITESH S. MEHTA 32 MADHULI, DR. A.B.RD, WORLI, MUMBAI - 400018. / I.T.A. NO. 5190 /MUM/201 7 ( / ASSESSME NT YEAR: 1992 - 93 ) HITESH S. MEHTA 32 MADHULI, DR. A.B.RD, WORLI, MUMBAI - 400018 . / VS. ACIT, CENTRAL CIRCLE - 4(1) AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021. ./ ./ PAN/GIR NO. : ABAPM4491J ( / AP PELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 31 / 08 / 2020 /DATE OF PRONOUNCEMENT: 31 / 08 / 20 20 / O R D E R PER AMARJIT SINGH, JM: THE REVENUE AS WELL AS ASSESSEE HA VE FILED THE ABOVE MENTIONED APPEAL S AGAINST THE ORDER DATED 29 . 0 6 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 52 , MUMBAI [HEREINAFTE R REFERRE D TO AS THE CIT(A)] RELEVANT TO THE A.Y. 1992 - 93 . ITA. NO.5190/MUM/2017 ASSESSEE BY : SHRI VIJAY MEHTA / SHRI DHARMESH SHAH REVENUE BY: DR. P. DANIEL ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 2 2 . THE ASSESSEE HA S FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 29 . 06 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 52 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A) ] RELEVANT TO THE A.Y. 1992 - 93 . 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO INCOME FROM THE ATTACHED ASSETS CAN BE TAXED IN THE HANDS OF TH E APPELLANT. 2. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN REJECTING THE BOOKS OF ACCOUNTS OF THE APPELLANT. 3. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACT IN CONFIRMING ADDITION OF UNEXPL AINED INVESTMENT OF 38,08,416/ - . 4. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING ADDITION OF UNEXPLAINED DEPOSITS IN BANK ACCOUNT OF THE APPELLANT AMOUNTING TO 85,225/ - . 5. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING ADDITION OF SHARE OF PROFIT OF MIS. SUNRISE ENTERPRISES AMOUNTING TO 252075/ - . 6. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING DISALLOWANCE OF INTEREST E XPENDITURE AMOUNTING TO 2.76,76,843/ - 7. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT CONSIDERING THE CLAIM OF THE APPELLANT RELATING TO DEDUCTION U/S. 80L OF THE ACT AMOUNTING TO RS.12,000/ - . 8. THE LD. COMMISSIONE R OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS THAT IN CONFIRMING THE LEVY OF INTEREST U/S. 234A, 234B AND 234C OF THE ACT. 9. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE INCOME ASSESS ED IN THE HANDS OF THE APPELLANT WERE SUBJECTED TO THE PROVISIONS OF TDS AND HENCE ON THE SAID AMOUNT OF TAX NO INTEREST CAN BE COMPUTED U/S. 234B AND 234C OF THE ACT. ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 3 10. THE APPELLANT CRAVES LEAVE OF YOUR HONOUR TO ADD TO, ALTER, AMEND AND/ OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WAS A NOTIFIED PERSON UNDER THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT, 1992 AND HIS ALL ASSETS INCLUDING BANK ACC OUNTS WERE ATTACHED AND VESTED IN THE HANDS OF THE CUSTODIAN APPOINTED UNDER THE SAID ACT. THE RETURN OF INCOME WAS NOT FILED U/S 139 OF THE ACT AND ALSO IN RESPONSE TO THE NOTICE U/S 142(1) OF THE I. T. ACT. T HE ORIGINAL ASSESSMENT WAS COMPLETED ON 28.02. 1995 AT TOTAL INCOME OF RS.20,38,95,716/ - . NO BOOKS OF ACCOUNTS WERE PRODUCED BY ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE ABSENCE OF BOO KS OF ACCOUNT AND ON ACCOUNT OF NON - CO - OPERATION FROM THE ASSESSEE AND FAILURE TO COMPLY THE TERMS O F NOTICE U/S 142(1), THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 144 DETERMINING TOTAL INCOME TO THE TUNE OF RS. 20,38,95,716/ - . THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE SAID ADDITION. THE HONBLE ITAT VIDE ITS ORDER DATED 31.08.2005 S ET ASIDE THE ASSESSMENT TO BE REFRAMED DENOVO IN ACCORDANCE WITH THE LAW PROVIDING THE ADEQUATE AND PROPER OPPORTUNITY TO THE ASSESSEE IN ACCORDANCE WITH LAW . IN COMPLIANCE OF THE ORDER OF THE HONBLE ITAT, THE PROCEEDING S WERE INITIATED AND ORDER U/S 144 R.W.S. WAS PASSED U/S 254 OF THE I. T. ACT ON 22.12.2006 . THE SAID ORDER WAS COMPLETED BY CARRYING OUT CERTAIN ADDITIONS AND THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.22 , 59,48,341/ - . THEREAFTER, THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ORDE R PASSED ON 22.12.2006. THEREAFTER , THE CIT(A) HAS PASSED THE ORDER DATED 30.12.2011 PROVIDED CERTAIN RELIEF TO THE ASSESSEE. THE ASSESSEE ONCE AGAIN CHALLENGED THE ORDER OF THE CIT(A BEFORE THE HONBLE ITAT AND HONBLE ITAT IN ITS ORDER DATED 01.05.2013, ONCE A GAIN SET ASIDE THE ORDER AND RESTORE D THE ISSUES TO THE ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 4 FILE OF THE AO TO PASS THE ASSESSMENT DE NOVO. IN PURSUANCE OF THE ITAT ORDER, THE RE - ASSESSMENT PROCEEDING WAS INITIATED AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 08.11.2013 WHICH WAS SE RVED UPON THE ASSESSEE. THEREAFTER, THE AO COMPLETED THE ASSESSMENT U/S 144 R.W.S. 254 OF THE ACT DETERMINING THE INCOME TO THE TUNE OF RS. 3,62,50,724/ - AFTER MAKING THE FOLLOWING ADDITIONS.: - (I) UNEXPLAINED INVESTMENT RS.1,16,51,516 / - 2. UNEXPLAINED RECEIPTS RS.1,62,327/ - 3. PROFIT FROM SUNRISE ENT. RS.2,52,075/ - 4. DIVIDEND AND INTEREST INCOME RS.60,61,163/ - 5. SHARE TRADING PROFIT. RS.1,56,9 6,071/ - 6. LONG TERM CAPITAL GAIN RS.23,61,869/ - 7. SALARY INCOME RS.65,703/ - THEREAFTER THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO PARTLY ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, THE A SSESSEE HAS FILED THE PRESENT APPEAL BEFORE US . ISSUE NO . 1 5. THIS ISSUE WAS NOT PRESSED BY THE LD. REPRESENTATIVE O F THE ASSESSEE, THEREFORE, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE BEING NOT PRESSED . ISSUE NO.2 6 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE ISSUE OF REJECTION OF THE BOOKS OF ACCOUNT BY THE AO WHICH WAS CONFIRMED BY CIT(A). IT IS A ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 5 THIRD ROUND OF THE APPEAL BEFORE THE HONBLE ITAT . I NITIALLY ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT ON 28.02.1995. T HE BOOKS OF ACCOUNT S W ERE REJECTED BY AO . THE SAID ISSUE WAS UPHELD BY CIT(A) VIDE ITS ORDER DATED 28.02.2003 . THEREAFTER, THE ASSESSEE HAS CHALLENGED THE ISSUE BEFORE THE HONBLE ITAT AND VIDE ORDER DATED 20.10.2005 , THE ISSUE WAS RESTORE D TO THE FILE OF THE AO TO DECIDE THE MATTER OF CONTROVERSY AFRESH BY GIVING CERTAIN DIRECTIONS. THEREAFTER, THE AO COMPLETED THE ASSESSMENT VIDE U/S 144 R.W.S. 254 OF THE ACT DATED 22.12.2006 AND ONCE AGAIN THE BOOKS OF ACCOUNT WAS REJECTED . THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CON FIRMED THE ORDER OF THE AO VIDE ORDER DATED 30.12.2011 . THE ASSESSEE AGAIN CHALLENGED THE ORDER OF THE CIT(A) DATED 30.12.2011 BEFORE THE HONBLE ITAT IN VIEW OF THE ITA. NO.538/M/2012 . THE HONBLE TRIBUNAL VIDE ORDER DATED 01.05. 2013 AGAIN RESTORE D THE ISSUE BEFORE THE AO TO DECIDE THE MATTER OF CONTROVERSY AFRESH IN VIEW OF THE CERTAIN GUIDELINES. THEREAFTER, THE ASSESSMENT WAS COMPLETED ON 30.03.2015. THEREAFTER, THE MATTER WAS FILED BEFORE THE CIT(A) WHO CONFIRMED THE FINDING O F THE AO. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE BOOKS OF ACCOUNT HAS BEEN REJECTED BY AO AND CONFIRMED BY CIT(A) ON THE BASIS OF THE FINDING IN THE CASE OF LATE SHRI HARSHAD MEHTA WHO IS THE BROKER BUT IN THIS REGARD THE REASON GIVEN F OR NOT ACCEPTING THE BOOKS OF ACCOUNT IN THE CASE OF SHRI HARSHAD MEHTA IS NOT LIABLE TO BE CONSIDERED FOR REJECTING THE BOOKS OF ACCOUNT IN THE CASE OF THE ASSESSEE. IT IS ALSO ARGUED THAT THE ASSESSEE HAS GIVEN THE EXPLANATION FOR ACCEPTING THE BOOKS OF ACCOUNT BY VIRTUE OF LETTER DATED 20.02.2015 WHICH LIES AT PAGE NO.248 - 263 OF THE PAPER BOOK AND THE SAID REASON S WERE NOT CONSIDER ED , THEREFORE, THE ISSUE IS LIABLE TO BE SET RESTORED BEFORE THE AO TO CONSIDER THE SAID REASONS AND TO ACCEPTING THE CLAIM O F THE ASSESSEE. IT IS ALSO ARGUED THAT THE CIT(A) HAS OBSERVED THAT THE ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 6 BOOKS OF ACCOUNT HAS NOT BEEN FILED WHICH IS CONTRARY TO THE RECORD BECAUSE THE BOOKS OF ACCOUNT WERE FILED WHICH LIES AT PAGE NO. 264 - 265 OF THE PAPER BOOK AND THE BOOKS OF ACCOUNT HAS ALSO BEEN FIL ED BEFORE HONBLE ITAT WHICH LIES AT PAGE NO. 136 - 242 OF THE PAPER BOOK. IT IS S PECIFICALLY ARGUED THAT THE CA S E OF THE LATE SHRI HARSHAD MEHTA IS QUITE DIFFERENT FROM THE CASE OF ASSESSEE, THEREFORE, THE FINDING OF THE CASE OF LATE SHRI H ARSHAD MEHTA IS NOT LIABLE TO BE APPLICABLE IN THE CASE OF ASSESSEE. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. THE ASSESSEE HAS GIVEN THE DETAILS EXPL ANATION TO EACH OF THE OBJECTION BY VIRTUE OF LETTER DATED 20.02.2015 WHICH HAS NOT BEEN DISCUSSED AND DECIDED BY THE AO. THE ASSESSEE HAS GIVEN THE FOLLOWING EXPLANATION OF THE OBJECTION.: - A) AS REGARDS NON FURNISHING OF CERTIFIED COPY OF BANK STATEMENT, IT IS SUBMITTED THAT WHILE COMPLETING THE O RIGINAL ASSESSMENT U/S 144 OF THE ACT ON 28.02.1995, THE COPY OF THE BANK STATEMENTS WAS CALLED FROM THE RBI AND WAS AVAILABLE WITH THE ASSESSING OFFICER. [PG. 6 - 7 OF PB]. B) THE OBJECTIONS IN THE SPECIAL AUDIT REPORT DATED 06.02.2002 WERE MAINLY BECAU SE CERTAIN DOCUMENTS WERE NOT SUBMITTED TO THE AUDITORS DUE TO ITS UNAVAILABILITY AT THE RELEVANT POINT OF TIME I.E. IN 2001. THIS WAS MAINLY BECAUSE, LATE SHRI HARSHAD MEHTA HAD EXPIRED ON 31.12.2001 AND THERE WAS COMPLETE IMBALANCE IN THE FAMILY. HOW EVER, LATER IN 2006, COMPLETE, BOOKS OF ACCOUNT AND EXPLANATIONS HAVE BEEN SUBMITTED BEFORE THE ASSESSING OFFICER WITH RESPECT TO THESE DISCREPANCIES AT THE TIME OF ASSESSMENT PROCEEDINGS. HENCE, REFERENCE TO THE OBSERVATIONS OF SPECIAL AUDITOR IS OF N O RELEVANCE AS COMPLETE BOOKS OF ACCOUNT HAVE BEEN FILED SUBSEQUENT TO THE REPORT OF THE SPECIAL AUDITOR. IN ANY CASE, THE REPORT GIVEN BY THE AUDITORS WAS MERELY AN OPINION AND CANNOT FORM BASIS FOR REJECTION OF BOOKS OF ACCOUNT. C) THE CONTRACT NOTE S WERE LIABLE FOR STAMP DUTY WHICH WAS TO BE PAID BY THE BROKERS. THE BROKERS HAD PAID THE STAMP DUTY PERIODICALLY ON CONSOLIDATED BASIS AND NOT ON TRANSACTION TO TRANSACTION BASIS. FURTHER AS REGARDS THE RULES OF CHARGING ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 7 BROKERAGE ETC. AS PER BYE LAW S, IT IS SUBMITTED THAT THE CONTRACT NOTES ARE ACCEPTED BY THE DEPARTMENT AND HENCE SUCH OBSERVATIONS CANNOT LEAD TO ADVERSE INFERENCE. IN ANY CASE, EVEN IF THERE IS ANY DEFAULT ON THE PART OF THE BROKERS IN NOT MAKING PAYMENT OF STAMP DUTY, THAT CANNO T BE REASON TO DOUBT THE BOOKS OF ACCOUNT OF THE ASSESSEE D) AS REGARDS NON PAYMENT/RECEIPT ON PURCHASE/SALE OF SHARES, IT IS SUBMITTED THAT THE ASSESSEE USED TO CARRY OUT TRANSACTION THROUGH FAMILY BROKER FIRMS NAMELY M/S ASHWIN MEHTA, M/S HARSHAD MEH TA AND M/S JH MEHTA. THE PAYMENTS/RECEIPTS WERE MADE WITH THEM ON LUMPSUM BASIS AND NOT ON TRANSACTION TO TRANSACTION BASIS. FURTHER, THE SALE CONSIDERATION IT ALSO ADJUSTED AGAINST THE LIABILITY. THE NET BALANCE PAYABLE TO THESE ENTITIES IS REFLECTED AS LIABILITY AT THE END OF THE YEAR. FURTHER, INTEREST ON THE SAME IS ALSO CHARGED ON SUCH AMOUNTS PAYABLE TO THESE ENTITIES. THE SAME CAN BE SEEN FROM THE LEDGER ACCOUNTS OF BROKER ENTITIES IN BOOKS OF ACCOUNT OF ASSESSEE. E) FURTHER, AS REGARDS DELIVE RY OF SHARES, IT IS SUBMITTED THAT THE DELIVERY OF SHARES HAVE BEEN TAKEN BY THE ASSESSEE. THE SHARES ARE ALSO REGISTERED IN ASSESSEE'S NAME AND THE CAPITAL GAINS AND DIVIDEND INCOME EARNED ON THESE SHARES HAVE ALSO BEEN OFFERED BY THE ASSESSEE AND ACC EPTED BY THE DEPARTMENT IN SUBSEQUENT YEARS U/S 143(3) OF THE ACT. F) AS REGARDS BENAMI AND UNREGISTERED SHARES, IT IS SUBMITTED THAT THE SAID ISSUE AROSE FROM DATE OF NOTIFICATION I.E. 08.06.1992 AND HENCE NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATIO N. G) AS REGARDS WANT OF AUDIT OF BOOKS OF ACCOUNT, IT IS SUBMITTED THAT THE ASSESSEE HAS INCOME IN THE NATURE OF SALARY INCOME, CAPITAL GAINS AND INCOME FROM OTHER SOURCES. THE SAME CAN BE SEEN FROM COMPUTATION OF INCOME FILED AT PG. 131 OF PB. AS THE RE WAS NO INCOME FROM BUSINESS AND PROFESSION, THERE WAS NO REQUIREMENT TO CARRY OUT AUDIT U/S 44A6 OF THE ACT. FURTHER, THE OBSERVATION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS HAVING TENS OF CRORES OF TURNOVER IS ALSO FACTUALLY INCORRECT AS THER E IS NO BUSINESS/PROFESSIONAL CARRIED OUT BY THE ASSESSEE. IN ANY CASE, EVEN PRESUMING THAT AUDIT WAS REQUIRED TO BE CARRIED OUT BUT NOT DONE SO, THE ASSESSING OFFICER SHOULD HAVE VERIFIED THE BOOKS OF ACCOUNTS INDEPENDENTLY AND COULD HAVE REJECTED TH E SAME ONLY IF SPECIFIC DEFECTS WERE FOUND IN THE BOOKS OF ACCOUNT. H) AS REGARDS DAY TO DAY DRAWING OF BOOKS OF ACCOUNT, IT IS SUBMITTED THAT AT THE TIME OF SEARCH, INCOMPLETE BOOKS OF ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 8 ACCOUNT WERE SEIZED. THE BOOKS OF ACCOUNT COULD NOT BE FULLY DRAWN DUE TO NOTIFICATION AND OTHER DIFFICULTIES. THE ASSESSEE COULD DRAW IT'S COMPLETE BOOKS IN 2006. THESE BOOKS OF ACCOUNT WERE FILED BEFORE THE ASSESSING OFFICER AND HENCE OUGHT TO HAVE BEEN EXAMINED BY THE ASSESSING OFFICER AND COULD NOT HAVE BEEN REJE CTED AT THE THRESHHOLD. HENCE, THE AFORESAID OBSERVATION IS NOT RELEVANT NOW. I) AS REGARDS UNIFORM DRAWINGS OF RS. 5,000/ - PER MONTH, IT IS SUBMITTED THAT THE SAME IS FACTUALLY INCORRECT. THERE ARE NO UNIFORM DRAWINGS OF SUCH AMOUNT IN CASE OF THE ASSE SSEE. ON PERUSAL OF LEDGER ACCOUNT OF DRAWINGS AT PAGE 177, IT CAN BE SEEN THAT THERE ARE DIFFERENT AMOUNT OF DRAWINGS BY THE ASSESSEE. J) SINCE THE PURCHASE AND SALE OF SHARES WERE MADE THROUGH CONTRACT NOTES ISSUED BY BROKERS, THE ENTRIES FOR THE SAM E HAVE TO BE MADE BY WAY OF JOURNAL ENTRIES. FURTHER, AS STATED ABOVE, THE PAYMENTS/RECEIPTS FROM THESE PARTIES ARE MADE ON IUMP - SUM BASIS. THE CONTRACT NOTES ARE ALSO ACCEPTED BY THE ASSESSING OFFICER AS EXPLAINED. K) AS REGARDS CROSS VERIFICATION OF CERTAIN ENTRIES RELATING TO VARIOUS PARTIES, MOST OF THE TRANSACTIONS ARE WITH RELATIVES WHO ARE ASSESSED IN THE SAME CHARGE AS THAT OF THE ASSESSEE. HENCE, IN SUCH CIRCUMSTANCES, IT CANNOT BE SAID THAT CROSS VERIFICATION IS NOT POSSIBLE WITH RESPECT TO THESE ENTITIES. 7. ON APPRAISAL OF THE ORDER OF THE AO, WE NOWHERE F IND THAT THE AO HAS DEALT WITH THE EACH AND EVERY EXPLANATION GIVEN BY THE ASSESSEE . MOREOVER , THE CASE OF THE ASSESSEE IS QUITE DIFFERENT FROM THE CASE OF SHRI HARSHAD M EHTA WHO IS THE BROKER. THE CASE OF THE ASSESSEE IS INDEPENDENTLY LIABLE TO BE EXAMINE D AND COMPARISON IF ANY WITH THE CASE OF THE SHRI HARSHAD MEHTA IS NOT JUSTIFIABLE SPECIFICALLY IN THE CIRCUMSTANCES WHEN THE FACT AND FIGURE A RE QUITE DIFFERENT. MOREOVER, THE CIT( A) HAS OBSERVED THAT THE ASSESSEE DID NOT FILE THE BOOKS OF ACCOUNT W HEREAS THE BOOKS OF ACCOUNT WERE FILED PAGE NO. 264 - 265 OF THE PAPER BOOK. UNDER THESE CIRCUMSTANCES , WE ARE NOT IN AGREEMENT WITH THE CONCLUSION OF LD. CIT(A) ON THE ISSUE REJECTION OF BOOKS OF ACCOUNTS AND HENCE WE SET ASIDE THE FINDING OF THE ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 9 CIT(A) ON THIS ISSUE . ACCORDINGLY, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO. 3 8. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ADDITION IN SUM OF RS. 38,08,416/ - THE CIT(A) HAS CONFIRMED THE SAID ADDITION IN FOLLOWING MANNERS.: - SR. NO. NATURE OF ADDITIONS ADDITIONS SUSTAINED BY LD. CIT(A) A BASED ON COMPANY LETTERS 12,38,857 B BASED ON CUSTODIAN LETTERS 24,24,385 C BASED ON DIVIDEND WAR RANTS 82,775 D BASED ON SEIZED ASSETS 62,400 TOTAL 38,08,417 9. THE CIT(A) HAS CONFIRMED THE ADDITION IN SUM OF RS.12,38,857/ - ON THE BASIS OF THE COMPANY LETTER WHICH IS HEREBY MENTIONED BELOW.: - SR. NO. N ATURE OF SCRIP AMOUNT 1 BIHAR ALLOYS & STEELS LTD. 4,175 2 GOA CARBON 53,250 3 ADDITIONS BASED ON SEIZED ASSETS 58,652 4 ISPAT ALLOYS LTD. 4,410 5 MANGLORE CHEMICALS AND FERTILIZERS LTD. 1,638 6 ONIDA 81,763 7 SINGER INDIA LTD. 1,000 8 SOUTHERN PETROCHEMCAL IND. CORP. LTD. 3,05,044 9 RELIANCE CAPITAL AND FINANCE TRUST LTD. 1,24,000 10 MRF LTD. 1,34,625 11 STEEL TUBES OF INDIA LTD. 85,100 ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 10 12 INDO RAMA SYNTHETICS INDIA LTD. 3,84,800 TOTAL 12,38,857 10. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE AO NOWHERE PROVIDED COMPANY LETTER OF SCRIPS CORRESPONDING THE ADDITION OF RS.5,09,932/ - ON ACCOUNT OF FOLLOWING PARTIES.: - SR. NO. NATURE OF SCRIP AMOUNT 1 BIHAR ALLOYS & STEELS LTD. 4,175 2 GOA CARBON 53,250 3 ADDITIONS BASED ON SEIZED ASSETS 58,652 4 ISPAT ALLOYS LTD. 4,410 5 MANGLORE CHEMICALS AND FERTILIZERS LTD. 1,638 6 ONIDA 81,763 7 SINGER INDIA LTD. 1,000 8 SOUTHERN PETROCHEMCAL IND. CORP. LTD. 3,05,044 TOTAL 5,09,932 11. THE BASIC CONTENTION OF THE ASSESSEE IS THAT THE AO NOWHERE PROVIDED COMPANY LETTER OF SCRIPS BEFORE ADDITION, THEREFORE, IN THE INTEREST OF JUSTICE , T HE COMPANY LETTER/MATERIAL SHOULD BE GIVEN BE FOR E RAISING THE ADDITION IN ACCORDANCE WITH LAW, H ENCE ADDITION IS NOT LIABLE TO BE SUSTAINABLE. IT IS AGAINST THE PRINCIPAL OF NATURAL JUSTICE. ACCORDI NGLY, WE ARE OF THE VIEW THAT THE ADDITION IN SUM OF RS. 5,09 ,932/ - IS LIABLE TO BE EXAMINED ONCE AGAIN BY THE NECESSARY DOCUMENTS /OPPORTUNITY TO THE ASSESSEE IN ACCORDANCE WITH LAW. SO FAR AS THE REMAINING ADDITION IN SUM OF RS. 17,76,26,579/ - IS CONCERN, T HE ADDITION WAS RAISED WITHOUT ANY EVIDENCE. THE ADDITION IN SUM OF RS. 24,24,385/ - IS ON THE BASIS OF SCRIPS NAMELY ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 11 RELIANCE CAPITAL & FINANCE TRUST LTD. THE SAID SCRIPS WAS IN RESPECT OF SHARE HOLDER NAMELY HITESH SHA NTILAL MEHTA HAVING RESIDENTIAL ADDRES S AT AHMEDABAD INSTEAD OF HITESH SHANTILAL MEHTA RESIDING AT MUMBAI . O N ACCOUNT OF SIMILAR NAME THE ADDITION WAS RAISED. THE SECOND SCRIPS WAS WITH THE NAME OF MRF LTD WHICH WAS WITH T HE NAME OF OTHER FAMILY MEMBERS SMT. RINA S. MEHTA AND THIRD SCRIPS STEE L TUBES OF INDIA LTD. NOWHERE REFLECTED THE DATA WHEN THE SHARE WAS PURCHASED. THE COMPANY LETTER IS O F THE DATE OF 26.08.1994 WHICH WAS NOT PERTAINING TO THE YEAR UNDER CONSIDERATION. THE LAST SCRIPS PERTAIN S TO INDO RAMA SYNTHETICS LTD. T HERE IS NO COGEN T AND CONVINCING EVIDENCE IS ON RECORD TO WHICH IT CAN BE ASSUMED THAT THE SAME PERTAIN S TO THE ASSESSEE. SINCE ALL THESE CONTENTION ARE NOWHERE MEET OUT BY THE AO, THEREFORE, THESE ADDITION ARE REQUIRED TO BE EXAMINED BY GIVING AN OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE IN ACCORDANCE WITH LAW. THE ADDITION IN SUM OF RS.24,24,385/ - IS ALSO ON THE BASIS OF THE INFORMATION PROVIDED BY THE CUSTODIAN VIDE LETTER DATED 29.10 . 1993 . THE CONTENTION OF THE ASSESSEE IS THAT THE SAID LETTER IS NOT LIABLE TO BE CONS IDERED ON THE BASIS OF THE FOLLOWING GROUNDS.: - A. THE LETTER DOES NOT REFLECT THE DATE AS ON WHICH THE SHAREHOLDING HAS BEEN DETERMINED BY THE CUSTODIAN. B. IT HAS BEEN CLARIFIED BY THE CUSTODIAN THAT THE FIGURES OF HOLDING ARE SUBJECT TO CONSTANT CHAN GES DUE TO SEVERAL REASONS LIKE NON - CONSIDERATION OF SALE OF SHARES BY NOTIFIED PARTIES, THE COMPANIES WHO HAVE NOT YET INDICATED THE HOLDINGS MAY SEND THE INFORMATION IN FUTURE, THE VALUE OF THE SHARES ARE SUBJECT TO PREVAILING MARKET RATE WHICH IS BO UND TO FLUCTUATE. C. THE FIGURES OF SHAREHOLDING CANNOT BE TREATED AS FIRM AND FINAL FIGURES. D. THE FIGURES SO DERIVED BY THE CUSTODIAN ARE ON THE BASIS OF COMPANY LETTERS ARE ITSELF NOT MATCHING WITH THE COMPANY LETTERS. HENCE, THE FIGURES STATED IN T HE CUSTODIAN LETTER CANNOT BE RELIED. ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 12 12. WE OBSERVE THAT THE SAID ADDITION COMPRISED OF VARIOUS AMOUNT S AS HA VE STATED IN PARA 8 ABOVE. THE FIRST AMOUNT OF RS.12,38,857/ - COMPRISED OF TWO COMPONENTS ONE RS.5,09,932/ - IN RESPECT OF WHICH THE ASSESSEE HA S NOT BEEN PROVIDED THE THIRD PARTY EVIDENCES RELIED UPON BY THE AO I.E. COMPANIES LETTER S AND THESE COMPANIES ARE STATED ON SERIAL NO 1 TO 8 IN PARA 9 ABOVE. SINCE THE ASSESSEE HAS NOT BEEN PROVIDED THE COP IES OF THESE LETTER S AT THE TIME OF ASSESS MENT PROCEEDING S AND THE FACT HAS BEEN BROUGHT TO THE NOTICE OF THE AO DURING ASSESSMENT PROCEEDING VIDE LETTER DATED 27.03.2015, THEREFORE, THE ADDITION OF RS.5,09,932/ - CANNOT BE SUSTAINED. THIS HAS BEEN HELD BY THE TRIBUNAL IN THE EARLIER ROUND IN ITA. NO.5 38/M/2012 VIDE ORDER DATED 01.05.2013 IN ASSESSEES OWN CASE . PERTINENT TO THE MENTIONED THAT THE ORDER OF THE TRIBUNAL WAS CHALLENGED OF THE REVENUE BEFORE THE HONBLE HIGH COURT AND HONBLE BOMBAY HIGH COURT VIDE ORDER DATED 07.06.2016 IN ITA. NO. 2490 O F 2013 HAS UPHELD THE VIEWS OF TRIBUNAL AND DISMISSED THE QUESTION OF LAW RAISED BY THE REVENUE. THE CASE OF THE ASSESSEE I S ALSO SUPPORTED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEES BROTHER LATE SHRI HARSHAD S. MEHTA IN ITA. NO.637/M/2007 D ATED 02.01.2008 WHEREIN IT WAS CATEGORICALLY OBSERVED THAT WHEREVER ADDITIONS WERE MADE ON THE BASIS OF SEIZED MATERIAL OR MATERIAL COLLECTED FROM THIRD PARTIES AND COPIES THEREOF WERE NOT PROVIDED TO THE ASSESSE E , IN THAT CASE, THE ADDITION CANNOT BE MADE . I T WAS ALSO HELD THAT IF THE ASSESSEE HAS REQUESTED FOR THE CROSS EXAMINATION , AN OPPORTUNITY MUST BE PROVIDED TO THE ASSESSEE FOR SUCH CROSS EXAMINATION. SO FAR AS, THE SECOND AMOUNT OF 7,28,925/ - REPRESENTING THE ADDITION MADE ON THE BASIS OF LETTER S FILED BY FOUR COMPANIES AS MENTIONED AT SERIAL NO. 9 TO 12 IN PARA NO. 9 ABOVE , W E FIND THAT IN THE SAID LETTER S DETAIL S PROVIDED WERE INCOMPLETE AS IT IS NOT CLEAR WHETHER THE SAME PERT AIN TO THE YEAR UNDER CONSIDERATION. ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 13 FOR EXAMPLE, THE DETAILS AND INFORMATION PROVIDED BY THESE COMPANIES DO NOT EXPLAIN TO WHICH YEAR THESE TRANSACTION RELATE TO AND THERE WERE SEVERAL FLAWS IN THE SAID LETTER S . THUS, THE DETAILS PROVIDED BY ABOVE 4 COMPANIES DO NOT REFLECT THE EXACT DETAILS TO COME TO THE CONCLUSION THE CORRECT HOLDING OF THE ASSESSEE AND THEREFORE, WE FIND MERITS IN THE ARGUMENT S OF THE LD. AR THAT THE ADDITION ON THE BASIS OF SAID LETTERS IS NOT JUSTIFIED AND CAN NOT BE SUSTAINED. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) ON THE ISSUE AND DI RECT THE AO TO DELETE THE ADDITION. 13. THE SECOND AMOUNT OF ADDITION OF RS.24,24,385/ - AS STATED IN PARA 8 ABOVE REPRESENTED THE ADDITION MADE ON THE BASIS OF CUSTODIAN LETTER. WE OBSERVED THAT RS.24,24,385/ - WAS MADE ON THE BASIS OF CUSTODIAN LETTER DAT ED 29.10.1993. THE INFORMATION PROVIDED IN THE SAID LETTER WERE INCOMPLETE. F OR EXAMPLE THE DATE OF DETERMINATION OF THE SHARE HOLDING S WAS NOT MENTIONED, CONSTANT CHANGE OF THE FIGURE OF HOLDING DUE TO REASON S LIKE NON - CONSIDERATION OF SALE OF SHARES BY N OTIFIE D PARTIES, AND THE HOLDING PROVIDED BY THE CUSTODIAN NOT MATCH ING WITH THE COMPANIES LETTER S. T H EREFORE , THE ADDITION MADE BY RELYING ON THE CUSTODIAN LETTER CAN NOT BE CONFIRMED . THE CASE OF THE ASSESSEE IS SUPPORTED BY THE DECISION OF THE COORDIN ATE BENCH IN GROWMORE LEASING & INVE STMENTS LTD. VS. DCIT IN ITA. NO .2192/M/2015 A.Y.1992 - 93 WHEREIN IT WAS HELD THAT WHERE THERE WAS NO EVIDENCE OF THE HOLDING S OF SHARES AND SECURITIES AS ALLEGED BY THE REVENUE , THE ADDITION HAS TO BE DELETED. C ONSIDERIN G THESE FACTS AND CIRCUMSTANCES AND THE COORDINATE BENCH DECISION, WE SET ASIDE THE ADDITION OF RS.24,24,385/ - SUSTAINED BY CIT(A) AND DIRECT THE AO TO DELETE THE SAME. ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 14 14. AS REGARDS, THE ADDITION S ON ACCOUNT OF DIVIDEND WARRANT OF RS.82,775/ - AND SEIZED ASSETS OF RS.62,400/ - AS MENTIONED IN PARA 8 ABOVE, WE FIND THAT THE ASSESSEE HAS NOT BEEN PROVIDED WITH THE DIVIDEND DETAILS AND DETAILS OF SEIZED ASSETS ON THE BASIS OF WHICH THE HOLDING S W ERE DETERMINED AND ACCORDINGLY WE ARE NOT IN AGREEMENT WITH TH E CONCLUSION OF THE LD. OF THE CIT(A) OF SUSTAINING T HE ADDITION OF THESE AMOUNTS IN VIEW OF THE FACT THAT THE ASSESSEE HAS NOT BEEN PROVIDED THESE EVIDENCES DURING THE COURSE OF ASSESSMENT PROCEE DING S . WE WOULD LIKE TO REFER TO THE DECISION OF THE COORD INATE BENCH IN ASSESSEES OWN CASE IN ITA. NO.538/M/2012 DATED 01.05.2013 WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT IF THE MATERIAL ON THE BASIS OF WHICH ADDITION IS MADE IS NOT PROVIDED TO THE ASSESSEE, THEN THE ADDITION HAS TO BE DELETED AND CAN NOT BE SUSTAINED WHICH WAS ALSO AFFIRMED BY THE HONBLE BOMBAY HIGH COURT IN ITA. NO.2490 OF 2013 VIDE ORDER DATED 07.06.2016. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION. THE GROUND NO. 3 IS ALLOWED IN FAVOUR OF THE ASSESSEE. ISSUE NO.4 15 . ISSUE NO. 4 IS IN CONNECTION WITH THE ADDITION OF UNEXPLAINED DEPOSITS OF RS.85,225/ - . INITIALLY AO RAISED THE ADDITION IN SUM OF RS.1,62,327/ - HOWEVER THE CIT(A) DELETED THE ADDITION TO THE TUNE OF RS. 77,102/ - REM AINING IN SUM OF RS.85,225/ - HAS BEEN CONFIRMED. THE ASSESSEE HAS EXPLAINED THE DEPOSITS IN THE BANK ACCOUNT IN THE FOLLOWING MANNERS.: - SR. NO. DATE AMOUNT RECEIVED RS. RELEVANT PG. OF PBK REMARKS 1 13.04.1991 44 PG 155 OF PAPER BOOK RS.175 IS RECEIVED T OWARDS DIVIDEND OF ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 15 PAST YEARS. 2 13.04.1991 44 - 3 13.04.1991 44 - 4 13.04.1991 44 - 5 13.04.1991 44 - NO ENTRY FOUND IN BANK STATEMENTS 6 13.04.1991 44 - NO ENTRY FOUND IN BANK STATEMENTS 7 27.07.1991 12169 PG 419 OF PAPER BOOK OFFERED AS PART OF MISCELLANEOUS INCOME 8 8.81991 15 PG 158 OF PAPER BOOK BANK INTEREST FROM BANK OF INDIA OFFERED BY THE ASSESSEE 9 11.10.191 2100 PG. 157 OF PAPER BOOK RS.9,643/ - DIVIDEND INCOME FROM BCL FORGING LTD. OFFERED BY THE ASSESSEE 10 11.10.1991 7543 11 04. 1.1992 3759 PG. 145 OF PAPER BOOK BANK INTEREST FROM ANZ GRINDLAYS BANK OFFERED BY THE ASSESSEE 12 15.02.1992 600 PG 419 OF PAPER BOOK OFFERED AS PART OF MISCELLANEOUS INCOME 13 15.02.1992 58138 PG 419 OF PAPER BOOK OFFERED AS PART OF MISCELLANEOUS INCOM E 14 31.03.1992 638 PG 143 OF PAPER BOOK BANK INTEREST FROM AMERICAN EXPRESS BANK OFFERED BY THE ASSESSEE TOTAL 85,225 16 . AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MATERIAL ON RECORD , W E FIND THAT THE SAID ADDITION OF RS.85,225/ - WAS MADE BY AO U/S 69 OF THE ACT ON ACCOUNT OF UNEXPLAINED DEPOSITS. HOWEVER, THE ENTRIES QUA THESE AMOUNTS WERE DULY REFLECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 16 OFFERED TO TAX AS PART OF THE INCOME BY THE ASSESSEE IN THE FORM OF DIVIDEND AND BANK INTEREST. THE DETAILED CHART HAS BEEN APPREHENDED IN PARA NO. 1 5 ABOVE . IN OUR OPINION THESE ENTRIES WE RE SUBSEQUENTLY EXPLAINED ON THE BASIS OF THE BOOKS OF ACCO U NTS AND THERE BEING NO MATERIAL TO PROVE TO THE CONTRARY AND THEREFORE, W E ARE INCLINED TO SET ASIDE TH E ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION. ISSUE NO.5 17 . ISSUE NO. 5 IS IN CONNECTION WITH THE ADDITION OF SHARE OF PROFIT FROM PARTNERSHIP FIRM OF RS.2,52,075/ - . THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT TH E ADDITION IN SUM OF RS. 2,52,075/ - WAS RAISED ON THE BASIS OF THE SHARE PROFIT FROM PARTNERSHIP FIRM NAMELY M/S. SUNRISE ENTERPRISES . IT IS SPEC IFICALLY ARGUED THAT THE FINAL FIGURE IS NOT ON RECORD, THEREFORE, THE ISSUE IS LIABLE TO BE RESTORED TO THE FIL E OF THE AO TO DECIDE THE MATTER OF CONTROVERSY AFRESH TO ADOPT THE FINAL FIGURE OF PROFIT DETERMINED IN CASE OF M/S. SUNRISE ENTERPRISES IN THE HANDS OF THE ASSESSEE . ANYHOW WHEN THE PROFIT FIGURE HAS BEEN TAKEN FROM THE M/S. SUNRISE ENTERPRISES, THEREFOR E, IT IS NECESSARY TO DETERMINE THE MATTER OF CONTROVERSY ON THE BASIS OF THE FINAL FIGURE OF PROFIT DETERMINED IN THE CASE OF M/S. SUNRISE ENTERPRISES. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DECIDE THE MATTE R OF CONTROVERSY AFRESH , AFTER OBTAINING THE FINAL FIGURE OF THE PROFIT DETERMINING IN THE CASE OF M/S. SUNRISE ENTERPRISES. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO. 6 ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 17 18 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF INTEREST EXPENDITURE AMOUNTING TO RS.2,76,76,843/ - IT IS ARGUED THAT THE INTEREST EXPENSES HAVE BEEN ALLOWED IN ITA. NO.4430/M/2017 FOR THE A.Y.2012 - 13 DATED 27.12.2017, THEREFORE, IN THE SAID CIRCUMSTANCES, THE INTEREST EXP ENSES IS LIABLE TO BE ALLOWED IN THE INTEREST OF JUSTICE. IT IS ALSO ARGUED THAT IN THE CASE OF BROTHER OF THE ASSESSEE ASHWIN S. MEHTA VS. ACIT IN ITA. NO.2474/M/2015 DATED 07.12.2018 , THE EXPENSES HAS ALSO ALLOWED, THEREFORE, THE CLAIM OF THE ASSESSEE IS LIABLE TO BE ALLOWED IN THE INTEREST OF JUSTICE. IT IS SPECIFICALLY ARGUED THAT THE ASSESSEE NOWHERE EARNED ANY EXEMPT INCOME, HENCE, NO DISALLOWANCE U/S 14A OF THE ACT. IT IS ALSO ARGUED THAT THE ISSUE HAS BEEN CHALLENGED IN THE CASE OF THE ASSESSEE AND SEVERAL OTHER FAMILY MEMBERS WHEREIN ON SIMILAR FACTS, THE INTEREST CLAIMED AS PAYABLE TO LATE SHRI HARSHAD S. MEHTA, SHRI ASHWIN S. MEHTA AND SMT. JYOTI H. MEHTA WAS HELD ALLOWABLE BY THE HONBLE TRIBUNAL SUBJECT TO VERIFICATION OF DISALLOWANCE U/S 14A OF THE A CT, HENCE THE INTEREST EXPENSES IS LIABLE TO BE ALLOWED. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. COPY OF ORDER BEARING ITA. NO. 4430/M/2017 FOR A.Y. 2012 - 13 DATED 27.12.2017 IS ON THE FILE IN WHICH THE RELEVANT FINDING IS HEREBY REPRODUCED AS UNDER.: - 23 GROUND NO. 2 IS SIMILAR TO THE GROUND NO. 1 IN THE CASE OF SHRI SUDHIR 5. MEHTA IN 1TA NO. 5799/MUM/2015. AS AGREED BY BOTH THE PARTIES THAT WHATEVER VIEW MAY BE TAKEN IN THE CASE OF SUDHIR S. MEHTA IN ITA. NO. 5799/MUM/2015, THE SAME VIEW MAY BE TAKEN IN THE CASE OF THE ASSESSEE. WE THEREFORE, RESPECTFULLY FOLLOWING OUR FINDING GIVEN WHILE DISPOSING OF GROUND NO.1 IN THE CASE OF SUDHIR S. MEHTA IN ITA. NO.5799/M/2015 SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW DEDUCTION TO THE U/S 57 IN RESPECT OF INTEREST ACCRUED @ 12% AMOUNTING TO RS.1,10,86,8343/ - OUT OF THE INTEREST EARNED ON TERM DEPOSIT AFTER VERIFYING THE CALCULATION OF THE INTEREST QUANTIFICATION. ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 18 1 9 . THE COPY OF OR DER IN THE CASE OF SHRI SUDHIR S. MEHTA BEARING ITA. NO. 5799/M/2015 IS ALSO ON THE FILE IN WHICH THE RELEVANT FINDING IS HEREBY REPRODUCED AS UNDER.: - '12. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AU THOR/TIES BE/OW. WE HAVE ALSO GONE THROUGH THE CASE LAW AS HAS BEEN CITED BEFORE US THE RELEVANT PROVISIONS OF THE SPECIAL COURT ACT WHICH HAS BEEN REFERRED TO BEFORE US DURING THE COURSE OF HEARING. THIS IS AN UNDISPUTED FACT WHICH WE NOTED THAT THE ASSES SEE IS A NOTIFIED PERSON FROM 08.06.1992 UNDER SECTION 3(2) OF THE SPECIAL COURT ACT AS PER THE PROVISIONS OF THE SPECIAL COURT ACT CONTRACT ENTERED INTO BY A NOTIFIED PERSON PRIOR TO NOTIFICATION MADE UNDER SECTION 3(2) ARE NOT AFFECTED BY THE NOTIFICATIO N. SECTION 4(1) OF THE SPECIAL COURT ACT EMPOWERS THE CUSTODIAN TO CANCEL ANY CONTRACT OR AGREEMENT ENTERED INTO BETWEEN 01.04.1991 TO 06.06.1992 IF THE CUSTODIAN FINDS THAT THESE CONTRACTS HAVE BEEN ENTERED INTO FRAUDULENTLY OR TO DEFEAT THE PROVISIONS OF THE SPECIAL COURT ACT. IN A. Y. 1990 - 91. THE AO IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 26.03.1993 ALLOWED THE INTEREST EXPENSES TO THE ASSESSEE TO THE EXTENT OF F5,86,4041 - . FROM PAGE 75 OF THE PAPER BOOK WHICH CONTAINS THE COMPUTATION OF INCOME FOR A. Y. 1990 - 91, WE NOTED THAT THE ASSESSEE HAS DISCLOSED THE LOAN TAKEN FOR THE PURCHASE OF INVESTMENT THE ASSESSEE IS CONSISTENTLY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING WHICH IS APPARENT EVEN FROM THE ASSESSMENT ORDER OF A. V. 1990 - 91 AS WELL AS FROM THE IMPUGNED ASSESSMENT YEAR THE ORDER FOR A. Y 1990 - 91 IN FACT HAS BEEN PASSED BY THE AO AFTER THE DATE OF NOTIFICATION AND THE ENACTMENT OF THE SPECIAL COURT ACT. WE HAVE GONE THROUGH THE ORDER PASSED BY THE CJT(A) IN THE CASE OF SHRI ASHWIN S MEHTA ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, WHERE WE NOTED THAT THIS ISSUE OF TAXABILITY OF INTEREST INCOME OF THE ASSESSEE AND OTHER PARTIES HAS SPECIFICALLY BEEN DEALT WITH BY THE CIT(A) AND ACCORDINGLY INTEREST INCOME OF RS. 10,68,83,732/ - WAS BROUGH T TO TAX. IN VIEW OF THIS FACT IT IS APPARENT THAT THE ASSESSEE IS LIABLE TO PAY INTEREST ON THE AMOUNT OUTSTANDING. THEREFORE. THE LIABILITY TOWARDS INTEREST GOT ACCRUED. UNDER THE MERCANTILE SYSTEM OF ACCOUNTING INTEREST IS DEDUCTIBLE WHEN IT HAS ACCRUED . THIS ALSO PROVES THAT THERE WAS AN AGREEMENT, MAY BE ORAL, TO PAY THE INTEREST ON THE BORROWED FUNDS BY THE ASSESSEE TO THE OTHER FAMILY MEMBERS. WE, THEREFORE, REJECT THE PLEA OF THE LEARNED D.R. THAT NO LIABILITY TOWARDS INTEREST HAS ACCRUED BUT IT WAS MERELY A CONTINGENT LIABILITY. WE NOTED THAT SECTION 4 OF THE SPEC/AL COURT ACT EMPOWERS THE CUSTODIAN AND THE COURT TO CANCEL ANY CONTRACT OR AGREEMENT IN RELATION TO THE PROPERTY OF A PERSON NOTIFIED UNDER THAT ACT PROVIDED THEY HAVE ENTERED INTO FRAUDU LENTLY. IN THIS CASE NO COGENT MATERIAL OR EVIDENCE HAS BEEN BROUGHT TO OUR KNOWLEDGE OR PLACED BEFORE US WHICH MAY ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 19 PROVE THAT THE CUSTODIAN UNDER SECTION 4(1) OF THE SPECIAL COURT ACT HAS TAKEN ANY ACTION TO CANCEL THE TERMS RELATING TO PAYMENT OF INTERES T. RATHER WE HAVE NOTED FROM THE AFFIDAVIT OF THE CUSTODIAN DATED 01.03.2006 IN AL. P. NO. 41 OF 1999 THAT THE CUSTODIAN SEEKING TO LEVY INTEREST @ 15% TO 18% PER ANNUM. THEREFORE, THE INTEREST ON OUTSTANDING CREDIT BALANCE OF THE BROKERAGE FIRM HAS ACCRUE D AS ACTUAL LIABILITY. THE ISSUE WITH REGARD TO CONTRACT FOR PAYMENT OF INTEREST HAS BEEN RAISED BY THE AO AND THE CIT(A) IN THE CASE OF OTHER NOTIFIED ENTITIES DULY APPROVE THE EXISTENCE OF LIABILITY WE NOTED THAT IN THE CASE OF GROWMORE LEASING & FINANCE LTD. FOR A. V. 2007 - 08 BY ORDER DATED 26.06.2014 THE CIT(A) FOLLOWED THE FINDING IN THE CASE OF OTHER GROUP CONCERNS, I.E. EMINENT HOLDING PVT. LTD. BY OBSERVING AS UNDER: - '6.3 I HAVE GONE THROUGH THE SUBMISSIONS OF THE LD. AR. I FIND THAT THOUGH THERE IS NO EXPRESS DOCUMENT EVIDENCING PAYMENT OF INTEREST TO THE BROKERAGE FIRMS, THE INTENTIONS OF THE PARTIES WERE ALWAYS SO, THIS IS EVIDENT FROM THE FACT THAT IDENTICAL CLAIM WAS ALSO MADE DURING A. V. 1990 - 91 AND THE SAME WAS ALLOWED TO THE APPELLANT AND OTHER CONCERNS. THE CLAIM MADE IN THE AFFIDAVIT OF CUSTODIAN IN MP NO. 41 OF 1999 ALSO SUPPORTS THIS CLAIM. I ALSO AGREE WITH THE APPELLANT THAT THERE NEED NOT BE ANY WRITTEN AGREEMENT AND THAT THE ORAL AGREEMENT COUPLED WITH THE ACTIONS AND INTENTIONS OF THE PARTIES IS SUFFICIENT TO PROVE THE EXISTENCE OF THE LIABILITY.' 20 . THE COPY OF ORDER IN THE CASE OF BROTHER OF THE ASSESSEE IN ASHWIN S. MEHTA VS. ACIT BEARING ITA. NO.2474/M/2015 DATED 07.12.2018 IS ON THE FILE IN WHICH THE RELEVANT FINDING IS HEREB Y REPRODUCED AS UNDER.: - 9. SINCE, THE COORDINATE BENCH HAS ALREADY DEALT WITH THE IDENTICAL ISSUE AND DECIDED THE SAME ON MERITS IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDINGS OF THE COORDINATE BENCH. THE REVENUE HAS NOT BROUGHT ON ANY ORDER PASSED BY THE COURTS OF LAW, CONTRARY TO THE DECISION OF THE COORDINATE BENCH. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH, WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE AND SET ASIDE THE FINDINGS OF THE LD. CIT(A). WE ACCORDINGLY DIRECT THE AO TO DELETE THE ADDITION. 21 . THE COPY OF ORDER IN THE CASE OF CASCADE HOLDING PVT. LTD. VS. ACIT & VICE - VERSA BEARING ITA. NO.937 & 938/M/2017 DATED 04.04.2019 IS O N THE FILE IN WHICH THE RELEVANT FINDING IS H EREBY REPRODUCED AS UNDER.: - ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 20 13. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS OF THE CASE OF SUDHIR MEHTA VS. DCIT, DISCUSSED ABOVE AND THE ISSUES INVOLVED IN BOTH THE CASES ARE IDENTICAL. SINCE, T HE COORDINATE BENCH OF THE TRIBUNAL HAS DEALT WITH THE IDENTICAL ISSUE IN THE AFORESAID CASE AND DIRECTED THE AO TO ALLOW DEDUCTION IN RESPECT OF INTEREST ACCRUED AND CALCULATE @ 12% PER ANNUM AFTER DISALLOWING PROPORTIONATE INTEREST IN RESPECT OF INVESTME NT IN SHARES AFTER VERIFYING CALCULATION OF THE INTEREST QUANTIFICATION, WE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH, SET ASIDE THE FINDINGS OF THE LD. CIT(A) ALLOW THIS GROUND OF APPEAL. SINCE THE ASSESSEE HAD NOT EARNED ANY EXEMPT INCO ME DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, WE DIRECT THE AO TO ALLOW THE DEDUCTION IN RESPECT OF INTEREST ACCRUED AND CALCULATE @ 12% PER ANNUM IN TERMS OF THE ORDER PASSED BY THE COORDINATE BENCH IN THE CASE OF SUDHIR MEHTA V S. DCIT.(SUPRA). 22 . IN VIEW OF THE ABOVE SAID FINDING IN WHIC H THE SAID ADDITION HAS BEEN ALLOWED, WE ARE OF THE VIEW THAT THE SAME IS LIABLE TO BE A LLOWED, HENCE, WE ALLOWED THE INTEREST EXPENSES IN SUM OF RS.2,76,76,843/ - . ACCORDINGLY, THIS ISSUE IS D ECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO. 7 23 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED ABOUT NON CONSIDERATION OF CLAIM OF THE APPELLANT RELATING TO DEDUCTION U/S 80L OF THE ACT AMOUNTING TO RS.12,000/ - . THE CIT(A) HAS REJECTED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THIS FACT THAT THERE IS NO MENTIONED IN THE ORDER OF THE AO IN THIS REGARD. IT IS ALSO OBSERVED BY THE CIT(A) THAT THE ASSESSEE DID NOT CLAIM DEDUCTION U/S 80L OF THE ACT IN HIS COMPUTATION OF HIS INCOME. NO DOUBT, THE AO NOWHERE DISCUSSED AND DECIDED THE ISSUES BUT THE ASSESSEE RAISED THE CLAIM BEFORE THE CIT(A) WHO DECLINED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE DID NOT RAISE THE CLAIM BEFORE THE AO. ANYHOW, THE CLAIM RAISED BEFORE THE CIT(A) IS LIABLE TO BE DECIDED IN ACCORDANCE WITH LAW. THE ASSESSEE EARNED THE DIVIDEND INCOME IN SUM OF RS.12,000/ - . THE ASSESSEE FAILED THE CLAIM OF THE SAID DEDUCTION IN VIEW OF THE NEGATIVE INCOME. ANYHOW, THE CLAIM OF THE ASSESSEE IS LIABLE TO BE SEEN IN ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 21 ACCOR DANCE WITH LAW, THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND RESTORED THE ISSUE BEFORE THE AO TO DECIDE THE MATTER OF CONTROVERSY AFRESH IN ACCORDANCE WITH LAW BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WIT H LAW. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NOS. 8 & 9 24 . UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE LEVY OF INTEREST U/S 234A, 234B & 234C OF THE ACT AND INCORRECT COMPUTATION OF INTEREST UNDER T HESE SECTIONS. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ADMITTED THAT THE ISSUE OF LEVY OF INTEREST HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE ITAT MUMBAI BENCH IN THE RELATED CONCERNS NAMELY CASCADE HOLDINGS ITA. NO.937 & 938/M/201 7 WHEREIN IT HAS BEEN HELD THAT THE PROVISIONS OF SECTIONS 234A, 234B & 234C OF THE ACT ARE MA NDATORY AND APPLICABLE TO NOTIFIED OF ENTITIES. HOWEVER, IN CONNECTION WITH THE OTHER ISSUE, THE ISSUE IS REMITTED TO THE FILE OF THE AO TO COMPUTE THE LIABILITY OF THE INTEREST AFTER REDUCING THE TAX DEDUCTIBLE AT SOURCE. IN THIS REGARD, THE FINDING HAS BEEN GIVEN BY HONBLE ITAT MUMBAI BENCH IN THE CASE OF M/S. CASCADE HOLDINGS PVT. LTD. VS. ACIT AND VICE - VERSA BEARING ITA. NO.937 & 938/M/2017 DATED 04.04.2019 AN D THE RELEVANT PARA 18 IS HEREBY REPRODUCED AS UNDER. '18. SINCE, THE COORDINATE BENCH HAS DEALT WITH THE IDENTICAL ISSUE AND SET ASIDE THE SAID ISSUE TO THE FILE OF AO FOR RE - COMPUTATION AFTER REDUCING THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME EARNED AND SINCE THERE IS NO MATERIAL CHANGE IN THE FACTS OF THE CASE, THERE IS NO REASON TO TAKE A DIFFERENT VIEW OTHER THAN THE VIEW ALREADY TAKEN IN THE SIMILAR MATTER HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH, WE SET ASIDE THIS ISSUE TO THE FILE OF AO FOR RE - COMPUTING THE AMOUNT AFTER REDUCING THE AMOUNT OF TAX ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 22 DEDUCTIBLE AT SOURCE. HENCE, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES.' 25 . WE ALSO FIND SUPPORT OF THE DECISION IN THE CASE OF SUDHIR S. MEHTA VS. DCIT, GROWMORE LEASING & INVESTMENT LTD. VS. DCIT & ASHWIN S. MEHTA VS. ACIT. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) ON THESE ISSUES AND RESTORED THE ISSUE BEFORE THE AO TO RE - COMPUTE THE INTEREST LEVIABLE UNDER THE ACT AFTER REDUCING THE INCOME ON WHICH TAX IS DEDUCTABLE AT SOUR CE. ACCORDINGLY, THESE ISSUES ARE DECIDED. ITA. NO. 6026/M/2017 26 . THE FACTS OF THE PRESENT CASE IS QUITE SIMILAR TO THE FACTS OF THE CASE AS NARRATED ABOVE IN ITA. NO. 5190/M/2017 , THEREFORE, THERE IS NO NEED TO REPEAT THE S AME . 27 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS.: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LDE. CIT(A) HAS ERRED IN NOT APPRECIATING THE FINDING GIVEN BY THE AO IN PARA 4.5 OF THE ASSESSMENT ORDER AND DELETING THE ADDIT ION OF RS.78,43,099/ - BEING UNEXPLAINED INVESTMENT IN SHARES. 28 . WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE REVENUE HAS CHALLENGED THE DELETION OF THE ADDITION TO THE EXTENT OF 78,43,099/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARES. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 14. 1 HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSIONS AND CONTENTIONS THE ASSESSEE AS ALSO THE ORDER OF THE AO. ON PERUSAL OF THE ASSESSMENT ORDER, IT IS CLEAR THAT THIS ADDITION OF RS.1,16,51,515/ - HAS BEEN MADE BY THE AO IN RESPECT OF 38 SCRIPS WHICH IS ANNEXED ALONG - WITH THE PRESENT ORDER. THE ASSESSEE HAS FURNISHED A DETAILED EXPLANATION, IN NATURE OF COMPANY LETT ERS INCLUDING SHARE HOLDINGS OF THE ASSESSEE AT THE RELEVANT POINT OF TIME WHICH ARE APPEARING FROM PAGE 79 TO 132 OF ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 23 THE PAPER BOOK OF THE ASSESSEE, CUSTODIAN LETTER APPEARING FROM PAGE 133 TO 151, AFFIDAVIT FILED BY THE 3 RD PARTIES SHOWING PURCHASES ON B EHALF OF THE ASSESSEE AS APPEARING FROM PAGE 186 TO 211 AND OTHER RELEVANT DETAILS, IN RESPECT OF THE FOLLOWING SCRIPS AS PER WHICH THE DISCREPANCIES AS WORKED OUT BY THE AO EARLIER STANDS EXPLAINED. SCRIP NAME BALANCE UNEXPLAINED INVESTMENT VALUE OF UNEX PLAINED INVESTMENT ALKYL AMINES 550 90063 ANDHRA VALLEY CAPRIHANS 545 850200 GAJRA BEVEL 100 6500 GREAT EASTERN SHIP 213 62137 INDIAN SEAMLESS DEB 540 54000 ITC LTD. 12185 6068130 L&T DEB 110 13200 METALMAN PIPE 3600 343800 MODI CEMENT 1290 62081 MUKUND STEEL - DEB 150 15000 SWARAJ ENGINES 350 47688 UNIVERSAL LUGGAGE 4900 2303000 TOTAL 7843099 THEREFORE, THE BALANCE ADDITION OF RS.38,08,416 IS CONFIRMED IN THE AND OF THE ASSESSEE. THUS, THIS GROUND TAKEN BY THE ASSESSEE IS PARTLY ALLOWED. 2 9 . ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE ASSESSEE HAS FURNISHED THE DETAILED EXPLANATION IN NATURE OF COMPANY LETTER INCLUDING SHARE HOLDINGS OF THE ASSESSEE COMPANY AND THE CUSTODIAN LETTERS AND AFFIDAVIT OF THIRD PARTIES SHOWING T HE PURCHASE ON BEHALF OF THE ASSESSEE. THE DISCREPANCIES HAS BEEN EXPLAINED AFTER DUE VERIFICATION OF THE CLAIM. THE CIT(A) HAS DELETED THE ADDITION TO THE EXTENT OF RS.78,43,099/ - . NOTHING CAME INTO NOTICED THAT WHICH SCRIPS HAS NOT BEEN EXPLAINED BY ASSE SSEE. THE TRANSACTION HAS BEEN EXPLAINED SATISFACTORILY. SINCE THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF SATISFACTORILY ITA NO. 5190/M/2017 6026/M/2017 A.Y.1992 - 93 24 EXPLANATION OF THE ASSESSEE IN CONNECTION WITH THE TRANSACTION IN QUESTION , THEREFORE, WE NOWHERE FOUND ANY GROUN D TO INTERFERE WITH THE FINDING OF THE CIT(A) IN QUESTION. ACCORDINGLY, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 30 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED AND THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 31 /08 /20 20 SD/ - SD/ - ( RAJESH KUMAR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 31 /08 /20 20 V IJAY PAL SINGH / SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / T HE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI