The ITO, Ward-2(4), Ahmedabad V. Abhishek Trade Corporation, Ahmedabad

ITA 623/AHD/2004

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9055 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-08-2009
• Assessment Year: 1995-1996
• Appeal Filed On: 01-03-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S GHELOT
• Assessee Lawyers: V R CHOKSHI; S N SOPARKAR
• Keywords: Bogus purchase; Competent authority; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.623/AHD/2004 & C.O.NO.5/AHD/2009 ASSESSMENT YEAR:1995-96 DATE OF HEARING:12.8.09 DRAFTED:20.8.09 INCOME TAX OFFICER, WARD-2(1), AHMEDABAD ABHISHEK TRADE CORPORATION, 43, FIFTH FLOOR, SHREE KRISHNA CENTRE, NR. MITHKALI SIX ROADS, NAVRANPURA, AHMEDABAD PAN NO. NOT FOUND. V/S . V/S . ABHISHEK TRADE CORPORATION, WARD-2(1), AHMEDABAD, BUNGLOW-2, NR. TEXTILE TRADERS BANK, MITHKALI, SIX RD. NAVRANGPURA, AHMEDABAD INCOME TAX OFFICER, WARD-2(1), AHMEDABAD (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI S.N. SOPARKAR & SHRI V.R. CHOKSHI, AR REVENUE BY:- SHRI B.S. GHELOT, CIT, DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE AND CROSS OBJECTION (CO ) BY THE ASSESSEE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME- TAX (APPEALS)-VI, AHMEDABAD IN APPEAL NO. CIT(A)-VI/WD.2(1)/43/2003-04 DATED 17-12 -2003. THE ASSESSMENT WAS FRAMED BY THE ITO, WARD-2(1), AHMEDABAD U/S.143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VI DE HIS ORDER DATED 26-03-2003 FOR THE ASSESSMENT YEAR 1995-96. ITA NO.623/AHD/2004 & CO 5/AHD/2009 A.Y. 1995-96 ITO WD-2(1) ABD V. ABHISHEK TRADE CORPN. PAGE 2 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AS R EGARDS TO THE ORDER OF CIT(A) IN DELETING THE ADDITION OF RS.1,16,05,250/- MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION. 3. THE BRIEF FACTS RELATING TO THE ABOVE ISSUE ARE THAT IN RESPONSE TO NOTICEU/S.148 OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME ON 13.3.2003 DECLARING TOTAL INCOME OF RS.NIL. THE FIRM NAMELY, ABHISHEK TRADE EXPORTS CONSISTED OF THE FOLLOWING 5 PARTNERS: SHARE 1. SHRI DHIREN RAMANLAL SHAH 60% 2. TEJAL DHIREN SHAH 10% 3. SAMIR RAMANLAL SHAH 10% 4. VAISHALI SAMIR SHAH 10% 5. RAJENDRA NEMCHAND SHAH 10% WE FIND THAT THIS. A.O.P. CONSISTING OF SHRI DHIREN R. SHAH AND SHRI DILIP R. SHAH HAVING 50% SHARE EACH OPERATED SEVERAL BANK ACCOUNT S IN DIFFERENT TRADE NAMES. M/S. ABHISHEK TRADE EXPORTS IS ONE OF THE TRADE NAM ES USED BY THE SAID A.O.P. AND A/C. NO.2017 WITH CORPORATION BANK WAS OPERATED BY THE SAID A.O.P. THE FIRM CONSISTING OF FIVE PARTNERS HAS NO CONCERN WITH THE OPERATION OF ANY SUCH BANK ACCOUNTS AND THE FIRM HAS NOT EARNED ANY INCOME. T HE RETURN OF INCOME IS, THEREFORE, FILED SHOWING TOTAL INCOME AT RS.NIL THE ASSESSING OFFICER, HOWEVER, ASSESSED THE TOTAL INCOME AT RS.1,16,05,250/- VIDE ORDER U/S.143(3) R.W.S. 147 OF THE ACT DATED 26.3.2003. FOR THE PURPOSE OF ASSESSING THE TOTAL INCOME, THE ASSESSING OFFICER OBSERVED THAT THE FACTS OF THIS CASE AND OF M/S. AIDS CHEM ARE IDENTICAL INVOLVING THE ELEMENT OF HAWALA BILLS ISSUED BY THE ASSESSEE FIRM. ACCORDINGLY, THE PERCENTAGE AS ADOPTED IN THE CASE OF M/S. AIDS CHEM IS ALSO TAKEN AT 2.5% OF THE CREDITS IN THE AFORESAID BANK ACCOUNT. THE ASSESSI NG OFFICER HAS FURTHER OBSERVED THAT THE TOTAL CREDIT INTRODUCED UNDER THE BANK ACC OUNT NO.2017 OF THE CORPORATION BANK WAS RS. 58,02,62,257/-. WE FIND THE FOLLOWING FACTS FROM THE RECORDS:- (I) THERE WAS A SEARCH IN SHAH BHIMANI GROUP OF CAS ES ON 29.12.94 AND SURVEY U/S.133A AT THE PREMISES OF M/S. AIDS CHEM, WHEN NO BOOKS OF ACCOUNT, BILL FILE, CHEQUE BOOK, ETC. WERE FOUND. (II) STATEMENTS OF SHRI DHIREN R. SHAH WERE RECORDE D U/S.131 ON 1.2.95, 15.2.95, 23.2.95, 29.3.95, ETC., WHEN HE ADMITTED T HAT HE AND SHRI DILIP R. SHAH WERE ENGAGED IN THE (HAWALA) BUSINESS HAVIN G 50% SHARE ITA NO.623/AHD/2004 & CO 5/AHD/2009 A.Y. 1995-96 ITO WD-2(1) ABD V. ABHISHEK TRADE CORPN. PAGE 3 EACH AND DECLARED THE INCOME FROM COMMISSION AT RS. 1.01 CRORES FROM F.Y.1991-92 TO F.Y.1995-96. (III) THE AOP OF SHRI DHIREN R. SHAH AND SHRI DILIP R. SHAH USED TO ROUTE THEIR PURCHASE & SALE TRANSACTIONS THROUGH VARIOUS BANK ACCOUNTS. THE PAYMENTS FOR THE PURCHASE WERE THROUGH THESE ACCOUN TS AND THE SALE PROCEEDS WERE DEPOSITED EITHER THROUGH CHEQUES OR B ANK DRAFTS OR CASH IN THESE ACCOUNTS. M/S. ABHISHEK TRADE EXPORT S IS ONE OF THE TRADE NAME USED BY THIS AOP FOR OPERATING BANK ACCO UNTS. THEY OPERATED BANK A/C. NO.2017 WITH CORPORATION BANK IN THE NAME OF M/S. ABHISHEK TRADE EXPORTS. ALL THE BANK ACCOUNTS WERE EXCLUSIVELY FOR THE BENEFIT OF THESE TWO PERSONS AND BOTH THESE PER SONS IN THE STATUS OF AOP HAVE DECLARED THE INCOME OF RS.7 CRORES U/S. 65(1) OF THE FINANCE ACT, 1997 UNDER VDIS-97 AND HAVE PAID DUE T AXES THEREON. THUS, THE INCOME EARNED IN THE NAME OF M/S. ABHISHE K TRADE EXPORTS HAS BEEN CONSIDERED IN THE CASE OF AOP CONSISTING O F THESE TWO PERSONS. THE DEPARTMENT HAD ACCEPTED THE VDIS-97 AN D A CERTIFICATE HAS ALSO ISSUED BY THE COMPETENT AUTHORITY VIZ. THE CIT. THUS, THE NAME OF M/S. ABHISHEK TRADE EXPORTS WAS USED BY THE AOP OF THESE TWO PERSONS FOR A.Y.95-96 AND THE INCOME EARNED THE REFROM FOR THE EXCLUSIVE BENEFIT OF THESE TWO PERSONS HAS BEEN DEC LARED BY THEM UNDER VDIS-97. THE FIRM CONSISTING OF THE FIVE PER SONS HAS NO CONCERN WITH OR INTEREST IN THIS AOP OR THE BANK ACCOUNTS O R THE INCOME EARNED THEREFROM. 4. IN VIEW OF THE ABOVE FACTS, WE FIND THAT THE FIR M M/S. ABHISHEK TRADE EXPORTS CAME INTO EXISTENCE BY VIRTUE OF A PARTNERSHIP DEED 19.12.99. A/C. NO.2017 WAS OPENED WITH CORPORATION BANK, BUT THE SAID ACCOUNT WAS NOT OPERATED BY THE PARTNERSHIP FIRM. IN FACT, AFTER EXECUTING THE PART NERSHIP DEED AND OPENING THE BANK A/C., NO BUSINESS WAS CARRIED ON BY THE PARTNERSHIP FIRM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS SHRI RAJENDRA N. SHAH ONE OF THE PARTNERS FILED AN AFFIDAVIT STATING THAT HE OR ANY PARTNER NAMED IN THE PARTNER SHIP DEED EXCEPT SHRI DHIREN R. SHAH HAD NO CONCERN WITH THE BANK ACCOUNT NO.2017 W ITH CORPORATION BANK AND SHRI DHIREN R. SHAH AND SHRI DILIP R. SHAH JOINTLY ADDRESSED A LETTER TO THE ITO VIDE LETTER DATED 13.3.03 THAT THE BANK A/C. IN THE NAME OF M/S. ABHISHEK TRADE EXPORTS WAS USED BY THE AOP CONSISTING OF SHRI DHIREN R. SH AH AND SHRI DILIP R. SHAH. THE CONTENTS OF THE SAID LETTER ARE REPRODUCED HERE BEL OW FOR THE SAKE OF READY REFERENCE:- 1. SHRI RAJENDRA N. SHAH, ONE OF THE PARTNERS OF TH E ABOVE DEFUNCT FIRM HAS INFORMED US THAT YOU HAVE ISSUED A NOTICE U/S.148 OF THE ACT, IN THE CASE OF THE SAID FIRM FOR A.Y.95-96 AND SINCE NO BUSINESS WAS CARRIED ON BY THE SAID FIRM A RETURN O F INCOME DECLARING TOTAL INCOME AT RS.NIL HAS BEEN FILED IN COMPLIANCE TO ITA NO.623/AHD/2004 & CO 5/AHD/2009 A.Y. 1995-96 ITO WD-2(1) ABD V. ABHISHEK TRADE CORPN. PAGE 4 THE NOTICE ISSUED U/S.148 OF THE ACT. SHRI RAJENDR A N. SHAH HAS ALSO PLACED IN OUR HAND A COPY OF STATEMENT OF ACCO UNT NO.2017 OBTAINED BY YOU FROM THE CORPORATION BANK IN THE NA ME OF M/S. ABHISHEK TRADE EXPORTS AND SENT BY YOU WITH YOUR LE TTER DATED 31.1.2003. 2. IN THAT CONNECTION, IT IS SUBMITTED THAT M/S. AB HISHEK TRADE EXPORTS IS ONE OF THE TRADE NAMES USED BY THE AOP O F SHRI DHIREN R. SHAH AND SHRI DILIP R. SHAH. WE BOTH STA RTED JOINTLY THE BUSINESS ON A LARGE SCALE INVOLVING MANY TRANSA CTIONS OF COMPLEX NATURE AND, THEREFORE, WE BOTH JOINTLY DECI DED TO USE THE NAMES OF OTHER FIRMS/CONCERNS AND/OR PROPRIETAR Y CONCERNS TO CARRY ON OUR JOINT BUSINESS. BOTH OF US WERE HA VING 50% SHARE IN THE INCOME JOINTLY EARNED BY US IN THE STA TUS OF AOP. WE BOTH OPERATED BANK ACCOUNTS EITHER SEVERALLY OR JOINTLY FOR CARRYING OUT OUR TRADE TRANSACTIONS. THIS AOP USED THE NAME OF ALPINE CHEMICALS WHILE OPERATING BANK ACCOUNTS NOS. 1512, 1806 AND 1917 WITH CORPORATION BANK, 1117 WITH STAT E BANK OF TRAVANCORE, 7180 WITH LAXMI CO.OP. BANK, 9048 WITH BANK OF BARODA, ETC. SIMILARLY, THIS AOP WHILE CARRYING OUT TRADING TRANSACTIONS IN THE NAME OF AIDS CHEM USED THE BANK ACCOUNTS NO.1918, 1617 AND 1444 WITH CORPORATION BANK, 1118 WITH STATE BANK OF TRAVANCORE, 7181 WITH LAXMI CO.OP. B ANK, 9047 WITH BANK OF BARODA. WE ALSO USED SEVERAL OTHER TR ADING NAMES; SUCH AS R. SEVANTILAL & CO., AMEE AGENCY, M/ S. ABHISHEK TRADE EXPORTS, POOJA EXPORT AND SEVERAL OT HER NAMES FOR CARRYING OUT TRADING TRANSACTIONS AND OPENED AN D/OR OPERATED BANK ACCOUNTS WITH SEVERAL BANKS IN THE NAME OF THA T PARTICULAR TRADE NAME. M/S. ABHISHEK TRADE EXPORTS IS ONE OF THE TRADE NAMES USED BY THIS AOP FOR OPERATING BANK ACCOUNTS. THE AOP OPERATED BANK ACCOUNT NO.2017 WITH CORPORATION BANK AND 27865 WITH BANK OF BARODA IN THE NAME OF M/S. ABHIS HEK TRADE EXPORTS. ALL THESE BANK ACCOUNTS WERE EXCLUSIVELY FOR THE BENEFIT OF WE TWO PERSONS VIZ. SHRI DHIREN R. SHAH AND SHRI DILIP R. SHAH AND BOTH OF US IN THE STATUS OF AOP HAVE DE CLARED THE ENTIRE INCOME OF RS.7 CRORES U/S.65(1) OF THE FINAN CE ACT, 1997 UNDER VOLUNTARY DISCLOSURE INCOME SCHEME-1997 (VDIS -97) AND HAVE PAID DUE TAXES THEREON. THUS, THE INCOME EARNED IN THE NAME OF M/S. ABHISHEK TRADE EXPORTS HAS BEEN DU LY TAXED IN THE STATUS OF AOP. 3. THE AOP OF THE TWO PERSONS USED TO ROUTE THEIR P URCHASE & SALES TRANSACTIONS THROUGH VARIOUS BANK ACCOUNTS AS DESCRIBED ABOVE. THE PAYMENTS FOR THE PURCHASES WERE THROUGH THESE ACCOUNTS AS WELL AS THE SALE PROCEEDS WERE DEPOSITE D EITHER THROUGH CHEQUES OR BANK DRAFTS OR CASH IN THESE ACC OUNTS. THE NATURE OF THE TRANSACTIONS WERE BROADLY AS FOLLOWS: - (1) INDIGENOUS PURCHASES AND INDIGENOUS SALES (2) DIRECT IMPORT AND INDIGENOUS SALES ITA NO.623/AHD/2004 & CO 5/AHD/2009 A.Y. 1995-96 ITO WD-2(1) ABD V. ABHISHEK TRADE CORPN. PAGE 5 (3) HIGH SEAS PURCHASES AND INDIGENOUS SALES (4) IMPORT THROUGH PREMIUM PURCHASE AND INDIGENOUS SALES 4. THE MAIN ITEMS TRADED AND/OR IMPORTED BY THE A.O .P. WERE OF THE FOLLOWING NATURE:- (1) PHARMACEUTICAL RAW-MATERIALS (BULK DRUGS) (2) AEROMATIC CHEMICALS (3) POLYMERS AND THEIR ARTICLES & HDPE / LDPE ETC. (4) PVC (5) H.L. CHEMICALS & PETRO CHEMICALS (6) PREMIUM NOTE (TRADING) (7) METALS, SCRAP ETC. 5. FOR THE REASON THAT THE AOP HAS NOT MAINTAINED A NY BOOKS OF ACCOUNT AS SUCH, THERE WAS NO ALTERNATIVE BUT TO AR RIVE AT THE QUANTUM OF THE ITS UNDISCLOSED INCOME PRIMARILY ON THE BASIS OF ITS APPLICATION INCLUDING FOR ADDITIONAL HOUSEHOLD AND SIMILAR EXPENSES OF ITS MEMBERS AND ON THE BASIS OF SUCH IN FORMATION AS COULD BE GATHERED FROM THE BANKS AFORESAID IN RE SPECT OF THE BANK ACCOUNTS OUTSIDE THE BOOKS OF ACCOUNT. THE IN COME HAS BEEN LIBERALLY ESTIMATED ON HIGHER SIDE. 6. AS ALREADY STATED ABOVE, NO PERFECT RECORDS ARE MAINTAINED. HOWEVER, ON THE BASIS OF WHATEVER LITTLE INFORMATIO N WE HAVE, WE HAVE MADE AN ATTEMPT TO OFFER THE INCOME ASSESSMENT YEARWISE. HOWEVER, THERE IS POSSIBILITY FOR OVERL APPING OF ONE ASSESSMENT YEAR TO OTHER ASSESSMENT YEAR, THE TOTAL INCOME REMAINS THE SAME. 7. THUS, THE ENTIRE INCOME WAS JOINTLY EARNED BY TH ESE TWO PERSONS VIZ. SHRI DHIREN R. SHAH AND SHRI DILIP R. SHAH IN THEIR CAPACITY OF AOP HAVING 50% SHARE OF BOTH OF THEM IN INCOME. NO OTHER PERSON HAD ANY BENEFICIAL INTEREST IN SUCH TRANSACT IONS. ACCORDINGLY, WE HAVE DECLARED THE INCOME IN THE STA TUS OF AOP AND PAID TAXES AND THE DEPARTMENT HAS ALSO ACCEPTED THE VDIS- 97 ISSUING CERTIFICATE BY THE COMPETENT AUTHORITY I .E. THE CIT. THUS, THE NAME OF M/S. ABHISHEK TRADE EXPORT WAS U SED BY THE AOP OF THESE TWO PERSONS IN A.Y.95-96 AND THE I NCOME EARNED THEREFROM HAS BEEN DECLARED UNDER VDIS-97. THE ENTIRE INCOME EARNED IN THE NAME OF M/S. ABHISHEK TRADE EX PORT HAS BEEN DECLARED BY THE AOP OF THESE TWO PERSONS AND T HE DEFUNCT FIRM M/S. ABHISHEK TRADE EXPORTS HAS NOTHING TO DO WITH THESE TRANSACTIONS WHICH MAY KINDLY BE NOTED AND THE PROC EEDINGS INITIATED IN THE CASE OF THAT ASSESSEE MAY BE DROPP ED. 5. THE ABOVE FACTS WERE ALSO BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS TAKEN NOTE OF IT AS MENTI ONED BY HIM IN PARA 5 OF THE ITA NO.623/AHD/2004 & CO 5/AHD/2009 A.Y. 1995-96 ITO WD-2(1) ABD V. ABHISHEK TRADE CORPN. PAGE 6 ASSESSMENT ORDER. THE ASSESSING OFFICER, HOWEVER, DID NOT TAKE THE COGNIZANCE OF THE AFFIDAVIT AND A LETTER DATED 13.3.2003 JOINTLY SIGNED BY SHRI DHIREN R. SHAH AND SHRI DILIP R. SHAH AND STATED THAT THE REQUIREMENT OF PROVISIONS OF SECTION 184(1) & (2) WERE NOT FULFILLED BY THE ASSESSEE FIRM AND, TH EREFORE, THE STATUS OF THE ASSESSEE WAS TAKEN AS AOP. THE ASSESSING OFFICER FURTHER S TATED THAT THE BANK HAD SUPPLIED A COMPUTERIZED COPY OF ACCOUNT FROM 16.1.95 T0 24.3 .95 AND THE CREDIT SIDE OF WHICH WAS RS.35,44,58,551/-. HOWEVER, DURING THE COURSE OF INVESTIGATION AFTER THE SEARCH IT WAS FOUND THAT THE A/C. NO.2017 WAS OPENED ON 7. 10.93 IN THE NAME OF M/S. ABHISHEK TRADE EXPORTS AND THE TOTAL CREDITS THEREI N WERE OF RS.58,02,62,257/-. HE, THEREFORE, HELD THAT THE SAID ACCOUNT BELONGED TO T HE FIRM. HE FURTHER OBSERVED THAT DURING THE INVESTIGATION THE STATEMENT OF SHRI DHIR EN R. SHAH WAS RECORDED UNDER WHICH HE STATED THAT WHATEVER THE TRANSACTIONS APPE ARED IN THE AFORESAID BANK ACCOUNT WERE PERTAINING TO THE BUSINESS DONE BY HIM ALONG WITH SHRI DILIP R. SHAH AS 50%-50% PARTNER AND THE INCOME EARNED FROM THESE HAWALAS BELONGED TO THAT AOP. HOWEVER, IGNORING THE STATEMENT ON OATH HE ES TIMATED PROFIT AT 2.5% AT RS.1,16,05,250/- ON THE TOTAL CREDITS OF RS.58,02,6 2,257/- IN THE CASE OF THIS FIRM ON SUBSTANTIVE BASIS ALTHOUGH IN THE CASE OF M/S. AIDS CHEM HE HAD TAXED THE INCOME ON IDENTICAL GROUNDS ON PROTECTIVE BASIS. IN THE CASE OF M/S. AIDS CHEM THE LD. CIT(A) VIDE ORDER DATED 21.09.2000 HAS DELETED THE PROTECTIVE ADDITION MADE VIDE PARA 4 OF THE APPELLATE ORDER. THE LD.CIT(A) HAS, WHILE D ELETING THE ADDITION FOR ASSESSMENT YEAR 1995-96 IN THE CASE OF M/S. AIDS CH EM REFERRED TO THE DISCUSSION MADE BY HIM IN THE APPELLATE ORDER FOR ASSESSMENT Y EAR 1992-93. WE FURTHER FIND THAT IN THE CASE OF M/S. AIDS CHEM FOR ASSESSMENT Y EAR 1992-93 THE APPELLATE ORDER HAS BEEN PASSED ON 21.9.2000 AND HE HAS DISCUSSED T HIS POINT IN PARA 4.3 OF THE SAID ORDER. SINCE THE SAME IS RELEVANT FOR THE PUR POSE OF THE ASSESSMENT FOR ASSESSMENT YEAR 1995-96 IN THIS CASE ALSO THE SAME IS REPRODUCED HEREBELOW:- 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE APPELLANT AND THE ARGUMENTS ADVANCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. IT WAS CONSISTENTLY STATED BY THE ASSESSEE BEFORE THE ADI AND THE ASSESSING OFFICER THAT THE BANK ACCOUNTS WITH CORPO RATION BANK PERTAIN TO THE TWO INDIVIDUALS VIZ. SHRI DHIREN SHA H AND SHRI DILIP SHAH. THIS FACT IS FURTHER RECORDED BY THE ASSESSI NG OFFICER WITH REFERENCE TO THE BANK ACCOUNT OPENING FORMS. IT IS SEEN THAT SIMILAR ASSESSMENT WAS MADE IN THE CASE OF M/S. ALP INE CHEMICALS AND THE SAID ASSESSMENT WAS SET ASIDE BY THE LD.CIT(A). THE SAID CASE WAS ALSO RELATING TO THE BUSINESS ITA NO.623/AHD/2004 & CO 5/AHD/2009 A.Y. 1995-96 ITO WD-2(1) ABD V. ABHISHEK TRADE CORPN. PAGE 7 TRANSACTIONS WITH CORPORATION BANK BY SHRI DHIREN S HAH AND SHRI DILIP SHAH. 4.3(I) THAT CASE WAS RELATING TO THE BUSINESS TRANSACTIONS WITH CORPORATION BANK BY SHRI DHIREN SHAH AND SHRI DILIP SHAH. IN THE SAID CASE, THE ASSESSING OFFICER HAS ALSO COME TO THE CONCLUSION THAT THE INCOME OF THE BANK ACCOUNTS OPE RATED BY SHRI DHIREN SHAH AND SHRI DILIP SHAH WAS ACTUALLY BELONG ING TO SHRI DHIREN SHAH AND SHRI DILIP SHAH, 50%-50%, JOINT AOP . IN FACT, THE AOP HAS ALREADY DISCLOSED SUBSTANTIAL INCOME OF RS.7 CRORES WHICH HAS BEEN DULY ACCEPTED BY THE COMMISSIONER OF INCOME- TAX. IT IS ALSO UNDISPUTED FACT THAT THE BANK ACCO UNTS HAVE NEVER BEEN OPENED OR OPERATED IN THE NAME OF THE FIRM AND THIS IS WHAT ACTUALLY THE ASSESSING OFFICER HAS ALREADY ACCEPTED IN THIS CASE ALSO. HE HAS ALREADY STATED THAT THE FOLLOWING THR EE ACCOUNTS ARE NOT AT ALL OPENED IN THE NAME OF M/S. AIDSCHEM, T HE PARTNERSHIP FIRM. SR.NO. ACCOUNT NO. & DATE TITLE OF ACCOUNT 1. CA-1444 21.6.91 TO 20.1.92 AIDS CHEM 2. CA-1617 31.1.92 TO 24.8.92 AIDS CHEM 3. CA-1918 6.4.94 TO 3.1.95 AIDS CHEM 4.3(II) THE STATEMENTS OF SHRI DHIREN SHAH, S HRI DILIP SHAH AND SHRI RAJENDRA SHAH WERE RECORDED ON OATH FROM T IME TO TIME FROM WHICH IT BECOMES VERY CLEAR THAT THEY HAV E ADMITTED THESE TRANSACTIONS AS BELONGING TO THEIR AOP WHICH HAS ALREADY BEEN ASSESSED AND SUBJECTED TO TAX. IN OTHER SIMIL AR CASE, THE ASSESSING OFFICER HAD ALSO TAKEN THIS VIEW AND HELD THAT THE INCOME DOES NOT BELONG TO THE FIRM BUT IT BELONGS T O THE AOP. 4.3(III) CONSIDERING THE ABOVE FACTS AND ALSO CONS IDERING THE FACT THAT THE AOP WAS ALREADY ASSESSED, I HEREBY HOLD TH AT THE INCOME FROM THE AFORESAID ACCOUNT IS BELONGING TO T HE AOP AND NOT THE APPELLANT-FIRM. THIS FACT HAS BEEN DISCUSS ED BY THE ASSESSING OFFICER, IN DETAIL, IN THE ASSESSMENT ORD ER IN THE CASE OF M/S. ALPINE CHEMICAL AND HE HIMSELF HAS NOT MADE ANY ADDITION ON THIS ACCOUNT AFTER DETAILED ENQUIRY AND VERIFICATION. THEREFORE, THE ADDITION OF RS.6,29,490 MADE BY THE ASSESSING OFFICER ON PROTECTIVE BASIS IS DIRECTED TO BE DELET ED. 6. BUT THE ASSESSING OFFICER HAS NOT ACCEPTED THE C ONTENTIONS OF THE ASSESSEE AND MADE ADDITION VIDE PARA-15 OF HIS ASSESSMENT ORDER AS UNDER:- 15. THE BASIS FOR ASSESSING THE INCOME RELATING T O THE TRANSACTIONS WITH THE AFORESAID BANK ACCOUNT IS TAKEN AT 2.5% OF THE TOT AL CREDITS OF RS.58,02,62,257/- WHICH COMES TO RS.1,16,05,245/ -. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS INITIATED FOR CONCEAL ING PARTICULARS OF ITS INCOME. ITA NO.623/AHD/2004 & CO 5/AHD/2009 A.Y. 1995-96 ITO WD-2(1) ABD V. ABHISHEK TRADE CORPN. PAGE 8 HERE IT IS WORTH TO RELY THE JUDGEMENT IN THE CASE OF CIT VS. MOTOR GENERAL FINANCE LTD. (254 ITR 449) DELHI. IT IS HELD UNDER THE SAID PRONOUNCEMENT THAT IF THE ASSESSEE HAS NOT PROVED THE CONTENTS OF RET URN OF INCOME THEN THE A.O. IS RIGHT IN DRAWING AN ADVERSE INFERENCE. THIS IS A CASE WHERE THERE ARE NO CONTENTS UNDER THE RETURN OF INCOME BUT THE ASSESSM ENT IS FRAMED ON THE BASIS OF AVAILABLE MATERIALS AND EVIDENCES GATHE RED DURING THE COURSE OF INVESTIGATION FOR WHICH NO SATISFACTORY EXPLANATI ON ARE OFFERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE A O LEF T WITH NO ALTERNATIVE BUT TO ESTIMATE THE INCOME EARNED THROUGH THE HAWALA T RANSACTIONS REFLECTED UNDER THE AFORESAID BANK A/C. AS DISCUSSED IN FORE GOING PARAGRAPH. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT (A) AGAINST THE ADDITIONS. 7. THE CIT(A) DELETED THE ADDITION VIDE PARA-4.1 OF HIS APPELLATE ORDERS ON MERITS AS UNDER:- 4.1. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE LEARNED COUNSEL AND I HAVE ALSO PERUSED THE DETAILS ON RECORD. I HAVE A LSO GONE THROUGH THE APPELLATE ORDERS FOR THE A.YRS. 1992-93 AND 1995-9 6 IN THE CASE OF M/S. AIDES CHEM. I HAVE ALSO PERUSED THE DECLARATION FILED BY THE AOP COMPRISING OF S/SHRI DHIREN R. SHAH AND DILIP R. SHAH U/S.65 OF THE FINANCE ACT, 1997 I.E. UNDER THE VDIS, 1997 ON 8.9.1997 AS ALSO THE CERTIF ICATE ISSUED BY THE CIT, GUJARAT-III, AHMEDABAD U/S.68(2) OF THE FINANCE AC T, 1997 ON 5.12.1997. THE LEARNED COUNSEL AT THE TIME OF HEARING DID NOT PRES S THE ISSUE REGARDING ASSESSMENT OF THE APPELLANT IN THE STATUS OF THE AO P. THEREFORE, THE STATUS OF THE APPELLANT TAKEN IN THE ASSESSMENT AS AOP IS UPH ELD. FROM A PERUSAL OF THE DECLARATION FILED BY THE AOP COMPRISING OF S /SHRI DHIREN R. SHAH AND DILIP R. SHAH UNDER THE VDIS, 1997, IT CLEARLY EME RGES THAT THE INCOME FROM COMMISSION EARNED ON THE TRANSACTIONS ROUTED THROUG H BANK ACCOUNTS NO.2017 IN THE CORPORATION BANK AND NO.27865 IN TH E BANK OF BARODA OPENED IN THE NAME OF THE APPELLANT M/S. ABHISHEK TRADE EXPORTS HAS ALSO BEEN INCLUDED IN THE INCOME OF RS.7 CRORES DECLAR ED BY THE SAID AOP. THE INCOME FOR THE A.Y. 1995-96 HAS BEEN DECLARED AT R S.3.75 CRORES BY THE SAID AOP AS AGAINST THE INCOME CLAIMED TO HAVE BEEN EA RNED AT RS.1.01 CRORES FROM THE COMMISSION BY SHRI DHIREN R. SHAH IN HIS STATEMENT RECORDED U/S.131. THE REMAINING FOUR PARTNERS S/SHRI TEJAL DHIREN SHAH, SAMIR RAMANLAL SHAH, VAISHALI SAMIR SHAH AND RAJENDRA NE MCHAND SHAH IN THEIR AFFIDAVITS PLEADED IGNORANCE ABOUT THE TRANSACTION S REFLECTED IN THE BANK ACCOUNT NO.2017 IN THE CORPORATION BANK OPENED IN THE NAME OF THE APPELLANT. SHRI DHIREN R. SHAH, THE MAIN PARTNER IN THE APPELLANT FIRM, IN HIS STATEMENTS RECORDED U/S.131 CLEARLY ADMITTED THAT H E AND SHRI DILIP R. SHAH WERE ENGAGED IN THE BUSINESS OF ISSUE OF BILLS AND THE OTHER PARTNERS OF THE APPELLANT FIRM HAD NO CONCERN WITH SUCH TRANSACTION S. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE OTHER FOUR PARTNERS NAMELY S/SHRI TEJAL DHIREN SHAH, SAMIR RAMANLAL SHAH, VAISHALI SAMIR SHAH AND RAJEND RA NEMCHAND WERE, IN ANY MANNER, INVOLVED IN SUCH TRANSACTIONS. THE B ANK ACCOUNT NO. 2017 IN THE CORPORATION BANK WAS EXCLUSIVELY OPERATED BY SH RI DHIREN R. SHAH FOR THE PURPOSE OF ROUTING THE TRANSACTIONS OF BOGUS PURCHASES AND SALES AND NOT BY ANY OF THE REMAINING FOUR PARTNERS OF THE APPELLANT FIRM. SINCE THE ITA NO.623/AHD/2004 & CO 5/AHD/2009 A.Y. 1995-96 ITO WD-2(1) ABD V. ABHISHEK TRADE CORPN. PAGE 9 INCOME EARNED FROM THE TRANSACTIONS REFLECTED IN T HE AFORESAID BANK ACCOUNT NO.2017 IN THE CORPORATION BANK WAS DECLARED BY TH E AOP COMPRISING OF S/SHRI DHIREN R. SHAH AND DILIP R. SHAH UNDER THE VDIS, 1997 WHICH IS CLEAR FROM THE DECLARATION MADE U/S.65 OF THE FINA NCE ACT, 1997 ON 8.9.1997, THE SAME INCOME CANNOT BE ASSESSED AGAIN THE HAND S OF THE APPELLANT FIRM. TAKING INTO ACCOUNT THE TOTALITY OF FACTS AND CIR CUMSTANCES OF THE CASE, THE ADDITION OF RS.1,16,05,250/- MADE IN THE INCOME OF THE APPELLANT FIRM ON ACCOUNT OF COMMISSION CALCULATED @ 2.5% ON THE TRA NSACTIONS OF RS.58,02,62,257/- REFLECTED IN THE APPELLANTS BAN K ACCOUNT NO.2017 WITH THE CORPORATION BANK, NAVRANGPURA BRANCH, AHMEDABAD IS HELD NOT JUSTIFIED AND THE SAME IS, ACCORDINGLY, DELETED. 8. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. TH E LD. DR COULD NOT DISPUTE BEFORE US THAT THE AMOUNT OF PROFIT ADDED BY THE AS SESSING OFFICER AT RS.1,16,05,250/- IS NOT INCLUDED IN THE DECLARATION MADE UNDER VDIS, 1997, AS MADE U/S.65 OF THE FINANCE ACT, 1997 ON 08-09-1997 BY SH RI DHIEN R SHAH AND DILIP R SHAH. EVEN THE LD. DR COULD NOT CONTRADICT THAT TH E AOP OF SHRI DHIREN R SHAN AND DILIP R SHAH HAS NOT MADE DECLARATION UNDER VDIS, 1 997 DECLARING AN AMOUNT OF RS.7 CRORES, WHICH INCLUDES THE PROFIT ADDED BY THE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE FULLY RELIED ON THE ORDER OF CIT(A). 9. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AS THE PROF IT ADDED BY THE AO AT RS.1,16,05,250/- IS INCLUDED IN THE AMOUNT OF RS.7 CRORES DECLARED UNDER VDIS, 1997 BY THE AOP OF SHRI DHIREN R SHAH AND DILIP R SHAH. ACCORDINGLY, WE CONFIRM THE FINDINGS OF CIT(A) AND THIS APPEAL OF THE REVENUE I S DISMISSED. 10. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THE C.O. RAISED BY THE ASSESSEE. ACCORDINGLY, THE SAME IS D ISMISSED AS NOT PRESSED. 11. IN THE RESULT, REVENUES APPEAL AS WELL AS ASSESSEE S CO ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 11/09/2009 SD/- SD/- (P.K.BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED :11/09/2009 *DKP COPY OF THE ORDER FORWARDED TO : ITA NO.623/AHD/2004 & CO 5/AHD/2009 A.Y. 1995-96 ITO WD-2(1) ABD V. ABHISHEK TRADE CORPN. PAGE 10 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-VI, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD