Shri Deepak Madanlal Maliwal, Ahmedabad V. The Dy.CIT.,Circle-12, Ahmedabad

ITA 730/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0858 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE SR DR ITA NOS
• Assessee Lawyers: SHAKAR SHARMA
• Keywords: Opportunity of being heard; Principle of natural justice; Source of fund; Additional evidence; Speculation loss
• Section: 133(6); 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 730/AHD/2011 / ASSESSMENT YEAR : 2007-08 SHRI DEEPAK MADANLAL MALIWAL, 5, SAMARTH APARTMENT, OPP. STATE BANK OF HYDERABAD, MANINAGAR, AHMEDABAD PAN : ALOPM 5900 G VS DCIT, CIRCLE-12, AHMEDABAD ./ ITA NO. 794/AHD/2011 / ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE-12, AHMEDABAD VS SHRI DEEPAK MADANLAL MALIWAL, MANINAGAR, AHMEDABAD PAN : ALOPM 5900 G ./ ITA NO. 795/AHD/2011 / ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE-12, AHMEDABAD VS MADANLAL CHITARMAL MALIWAL (HUF), PROP. SHREE KRISHNA SALES CORPORATION & ASHA ENTERPRISE, 222/23, OPP. NAGARWEL, RAKHIAL, AHMEDABAD PAN : AADHM 3775 P ./ ITA NO. 2146/AHD/2011 / ASSESSMENT YEAR : 2008-09 ITO, WARD-12(4), AHMEDABAD VS SHRI DEEPAK MADANLAL MALIWAL, MANINAGAR, AHMEDABAD PAN : ALOPM 5900 G / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SHAKAR SHARMA, AR REVENUE BY : SHRI VILAS V. SHINDE, SR. DR ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 2 / DATE OF HEARING : 02/06/2016 / DATE OF PRONOUNCEMENT: 12/08/2016 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- ITA NOS. 730 AND 794/AHD/2011 ARE THE CROSS-APPEALS FILED BY THE ASSESSEE AND REVENUE RESPECTIVELY AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD DATED 22.11.2010 FOR AY 2007-08 IN THE CASE OF SHRI DEEPAK MADANLAL MALIWAL. ITA NOS. 795 & 2146/AHD/2011 ARE THE REVENUES APPEALS AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD, BOTH DATED 22.1 1.2010 FOR AY 2007- 08 & 2008-09 IN THE CASE OF SHRI MADANLAL CHITARMAL MALIWAL (HUF) AND SHRI DEEPAK MADANLAL MALIWAL RESPECTIVELY. SINCE ALL THESE APPEALS ARE CONNECTED AND RAISE COMMON ISSUES, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR TH E SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED IN THE CASE OF DEEPAK MADANL AL MALIWAL READ AS UNDER:- ASSESSEES APPEAL ITA NO.730/AHD/2011 FOR AY 2007 -08 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRM ING ADDITION OF RS.1,00,000/- IN THE NAME OF RAKESH R. KOSTHI AND R S.6,30,000/- IN THE NAME OF RAMESHBHAI D. BHAGORA U/S 68 OF THE ACT. 2. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN DISALLO WING INTEREST PAID OF RS.52,195/- TO RAMESHBHAI D. BHAGORA. 2. 1 REVENUE APPEAL ITA NO.794/AHD/2011 FOR AY 2007 -08: 1. THE LD.CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS.2,44,40,250/- MADE U/S.68 OF I.T. ACT , AS WELL AS THE INTEREST PAYMENT OF RS.19,93,196/- CLAIMED ON SUCH LOANS. ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 3 1.1 IN DOING SO, THE LD.CIT(A)-XX, AHMEDABAD HAS ERRED I N LAW AND IN FACTS IN RELYING ONLY ON THE SUBMISSIONS OF THE ASSESSEE AND AT THE SAME TIME IGNORING THE FINDINGS OF THE ASSESSING OFFICER. EVEN THOUGH THE ASSESSEE HAD FURNISHED EVIDENCE OF IDENTITY OF THE CREDITORS YET, THEIR CREDITWORTHINESS WAS NOT ESTABLISHED. 1.2 THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN HOLDI NG THAT THE CREDIT WORTHINESS OF THE CREDITORS WAS ESTABLISHED ON THE GROUND THAT THE PAYMENTS WERE MADE BY THEM BY CHEQUES AND THAT, SUCH PAYMENT S HAD BEEN CONFIRMED BY THEM, AND THAT, THEY WERE ALL ASSESSED TO TAX, W ITHOUT TAKING INTO CONSIDERATION THE FACT THAT THE INCOMES SHOWN IN TH E RETURNS BY SUCH CREDITORS WERE SIMPLY NOT SUFFICIENT FOR THEM TO MA KE SUCH SUBSTANTIAL PAYMENTS TO THE ASSESSEE IN THE FORM OF LOANS AND D EPOSITS. 1.3 THE CIT(A) HAS THUS FAILED TO TAKE INTO CONSIDERATIO N THE SURROUNDING FACTS AND CIRCUMSTANCES OF THE CASE AND HAS SIMPLY GONE B Y MERE TECHNICALITIES OF THE CASE. 1.4 THE ADDITION OF THE SUM OF RS.2,44,40,250/- MADE U/ S.68 OF THE I.T. ACT BEING UNEXPLAINED LOANS AND DEPOSITS MAY BE RESTORE D AND THE DISALLOWANCE OF THE INTEREST OF RS.19,93,196/- CLAIMED TO HAVE B EEN MADE AGAINST SUCH LOANS, MAY BE SUSTAINED. 2.2 REVENUES APPEAL ITA NO.2146/AHD/2011 FOR AY 20 08-09:- 1. THE LD.CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.27,21,253/- AND RS.17,77,751/- ( INCLUDING INTEREST) MADE U/S.68 OF THE I.T. ACT IN RESPECT OF UNSECURED LOANS . 1.1 IN DOING SO, THE LD.CIT(A)XX, AHMEDABAD HAS ERRED IN LAW AND IN FACTS IN RELYING ONLY ON THE SUBMISSIONS OF THE ASSESSEE AND AT THE SAME TIME IGNORING THE FINDINGS OF THE ASSESSING OFFICER. EVEN THOUGH THE ASSESSEE HAS FURNISHED EVIDENCE OF IDENTITY OF THE CREDITORS YET , THEIR CREDITWORTHINESS WAS NOT ESTABLISHED. 1.2 THE ID.CIT(A) HAS ERRED IN LAW AND IN FACTS IN HOLDI NG THAT THE CREDITWORTHINESS OF THE CREDITORS WAS ESTABLISHED O N THE GROUND THAT THE PAYMENTS WERE MADE BY THEM BY CHEQUES AND THAT, SUC H PAYMENTS HAD BEEN CONFIRMED BY THEM, AND THAT, THEY WERE ALL ASSESSED TO TAX, WITHOUT TAKING INTO CONSIDERATION THE FACT THAT THE INCOMES SHOWN IN THE RETURNS BY SUCH ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 4 CREDITORS WERE SIMPLY NOT SUFFICIENT FOR THEM TO MA KE SUCH SUBSTANTIAL PAYMENTS TO THE ASSESSEE IN THE FORM OF LOANS AND D EPOSITS. 1.3 THE CIT(A) HAS THUS FAILED TO TAKE INTO CONSIDERATIO N THE SURROUNDING FACTS AND CIRCUMSTANCES OF THE CASE AND HAS SIMPLY GONE B Y MERE TECHNICALITIES OF THE CASE. 2. THE ADDITION OF THE SUM OF RS.27,21,253/- AND RS. 1 7,77,751/- (INCLUDING INTEREST) U/S 68 OF THE ACT BEING UNSECURED LOANS MAY BE RESTORED AND THE DISALLOWANCE OF INTEREST MAY BE SUSTAINED 3. THE BRIEF FACTS ARE THE RESPECTIVE ASSESSEES A RE INDIVIDUALS WHOSE BOOKS OF ACCOUNTS WERE NOT AUDITED FOR THE YEARS UN DER CONSIDERATION. TAKING THE LEAD CASE OF DEEPAK MALIWAL, ASSESSING O FFICER FOUND THAT THE ASSESSEE HAD RECEIVED DEPOSITS FROM 79 DIFFERENT PA RTIES, OUT OF WHICH 64 WERE FRESH DEPOSITS. INTEREST @ 12% WAS PAYABLE TH EREON AND ON ALL THE DEPOSITS, WHICH WAS ONLY CREDITED BUT NOT PAID. UPO N QUESTIONING ABOUT THE IDENTITY, GENUINENESS AND CREDITWORTHINESS ABOUT TH E DEPOSITORS, ASSESSEE FILED ONLY COPIES OF ACKNOWLEDGEMENT OF DEPOSITORS IT RETURNS AND COPY OF THEIR BANK ACCOUNTS. THE ASSESSING OFFICER MADE FUR THER ENQUIRIES AND FOUND THAT THE INCOMES RETURNED BY THESE DEPOSITORS WERE BELOW TAXABLE LIMITS AND THEIR CREDITWORTHINESS WAS SUSPICIOUS. THE BANK STATEMENTS REVEALED THAT IN THE CASES OF ALL THESE DEPOSITORS, PRIOR TO ISSUING RELEVANT CHEQUES, FUNDS WERE INTRODUCED IN BANK ACCOUNTS THR OUGH SOME TRANSFER ENTRIES ONE OR TWO DAYS PRIOR; OTHERWISE THE REMAIN ING BALANCES IN BANK ACCOUNTS WERE NEGLIGIBLE. 3.1 ALL THE BANK ACCOUNTS WERE MAINTAINED IN TWO CO OPERATIVE BANKS - GUJARAT MERCANTILE CO-OPERATIVE BANK LTD, AHMEDABAD AND IN VINAYAK SAHKARI BANK LTD, AHMEDABAD. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ACCOUNTS WERE PART OF A SCHEME TO GIVE SOME OST ENSIBLE COVER TO THE NAME LENDING DEPOSITORS. THE CREDITWORTHINESS OF T HE DEPOSITORS WAS SERIOUSLY QUESTIONABLE AND THE ASSESSEE FAILED TO D ISCHARGE THE ONUS CAST ON ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 5 HIM TO ESTABLISH THE CREDITWORTHINESS OF THE CREDIT ORS IN TERMS OF SEC. 68. NOTICES U/S 133(6) WERE ISSUED TO ALL THE DEPOSITOR S IN THIS BEHALF. 35 PERSONS ENVELOPES CAME BACK AS NOT KNOWN AND THE REMAINING PERSONS THOUGH RECEIVED THE NOTICES BUT DID NOT RESPOND TO THE SAME. THE ASSESSING OFFICER DREW ADVERSE INFERENCE ON THE SILENCE MAINT AINED BY THESE CREDITORS AND IT WAS OBSERVED THAT IT WAS IMPERATIVE TO IDENT IFY THE SOURCE OF FUNDS. NOTICES U/S 133(6) WERE ISSUED ON THE BANKERS ALSO WHO REQUESTED TIME OF 15 DAYS TO FILE PROPER DETAILS. IN VIEW OF THESE A DVERSE FACTS, THE ASSESSEE WAS PROVIDED WITH A COMPLETE INFORMATION IN HIS BEH ALF BY THE LD. AO TO SHOW-CAUSE WHY THE AMOUNT OF RS.2,51,70,250/- AND INTEREST AMOUNTING TO RS.20,45,391/- THEREON SHOULD BE ADDED U/S 68 OF TH E ACT. THE ASSESSEE DID NOT REVERT TO THE ASSESSING OFFICER IN THIS BEHALF. THEREAFTER, AGAIN A REMINDER WAS ISSUED. AT THE END, THE ASSESSING OFF ICER IN ASSESSMENT ORDER PLACED RELIANCE ON THE HONBLE SUPREME COURT JUDGME NT IN THE CASE OF CIT VS. BIJU PATNAIK, REPORTED IN 160 ITR 674 (SC) AND IN RESPECT OF 18 NEW CREDITORS MENTIONED IN PAGE 4 OF HIS ORDER, ADDED T HE ABOVE REFERRED AMOUNT OF RS.2,51,70,250/- U/S 68 OF THE ACT AND AN AMOUNT OF RS.20,45,391/- ON ACCOUNT OF INTEREST THEREON. 4. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL. 5. LD. CIT(A) IN PARAGRAPH 4.3 OF HIS ORDER (PAGE 3 0) HAS OBSERVED THAT THE ASSESSEE HAS FILED ADDITIONAL EVIDENCES DURING THE COURSE OF APPELLATE PROCEEDINGS WHICH WERE SENT TO ASSESSING OFFICER FO R EXAMINATION. 5.1 THE LD. ASSESSING OFFICER JUSTIFIED HIS ACTION OF MAKING THE IMPUGNED ADDITIONS ON THE GROUNDS THAT:- I) THE ASSESSEE WAS GIVEN VARIOUS OPPORTUNITIES OF BEI NG HEARD TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINES S OF THE ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 6 DEPOSITORS AND TO DISCHARGE THE ONUS CAST U/S 68 TO PROVE THESE INGREDIENTS. DESPITE PROVIDING VARIOUS OPPORTUNITI ES, ASSESSEE DID NOT FILE ANY EXPLANATION TO SUBSTANTIATE THE EV IDENCE FILED BY IT. THERE WAS NO JUSTIFICATION IN RELYING ON SUCH E VIDENCE WHICH WAS DELIBERATELY WITHHELD TO AVOID PROPER INQUIRIES . II) IN THE INTEREST OF JUSTICE, THE ASSESSEE WAS ALSO G IVEN A FINAL CHANCE TO PROVE HIS CASE FOR WHICH ALSO THE ASSESSEE DID N OT RESPOND. IT DOES NOT MEAN THAT THE ASSESSEE WAS NOT GIVEN EARLI ER OPPORTUNITIES OF BEING HEARD. III) THE ASSESSEE DELIBERATELY AVOIDED FIELD ENQUIRIES B Y LD. ASSESSING OFFICER AND FILED FURTHER DOCUMENTS BEFORE THE LD. CIT(A). 6. LD. CIT(A) HAS NOT REFERRED TO ANY CONTENTS AND PLEADINGS OF APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCES A ND THE SUFFICIENT CAUSE FOR BEING PREVENTED TO FILE THE EVIDENCE BEFORE THE ASSESSING OFFICER IN TERMS OF RULE 46A. RELYING ON THE ADDITIONAL EVIDEN CE AND ON CERTAIN CASE LAWS, LD. CIT(A) GAVE SUBSTANTIAL RELIEF WITHOUT ES TABLISHING PARITY OF FACTS WITH ASSESSEES CASE. AGGRIEVED THEREON BOTH THE PA RTIES ARE IN APPEAL. 7. THE APPLICATION FILED BY THE ASSESSEE FOR FURTHE R ADMISSION OF ADDITIONAL EVIDENCES BEFORE US ALSO DOES NOT GIVE A NY REASON AS TO WHY THE ASSESSEE WAS PREVENTED BY ANY SUFFICIENT CAUSE IN P RODUCING THEM BEFORE THE LD. ASSESSING OFFICER OR LD. CIT(A). THIS APPLI CATION FOR ADDITIONAL EVIDENCES HAS BEEN WITHDRAWN BY THE ASSESSEE. 8. LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND FURTHER CONTENDS THAT THE REMAINING ADDITIONS CONFI RMED BY LD. CIT(A) AS AGITATED IN ASSESSEES APPEALS HAVE BEEN CONFIRMED WITHOUT JUSTIFICATION. ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 7 RELIANCE IS PLACED ON FOLLOWING JUDGMENTS OF HONBL E JURISDICTIONAL HIGH COURT:- A) CIT VS. RANCHHOD JIVABHAI NAKHAVA, [2012] 208 TAX MAN 35 (GUJ.) B) CIT VS. AYACHI CHANDRASHEKHAR NARSANGJI, [2014] 221 TAXMAN 146 (GUJ.) C) CIT VS. DHARAMDEV FINANCE (P.) LTD, [2014] 43 TA XMANN.COM 395(GUJ) 9. LD. DR, ON THE OTHER HAND, VEHEMENTLY CONTENDS T HAT THIS IS A MYSTERIOUS CASE WHERE THE ASSESSEE HAS KEPT A DELIB ERATE SILENCE BEFORE THE LD. ASSESSING OFFICER IN DISCHARGING ONUS CAST BY S EC. 68 TO DISCHARGE THE ONUS QUA THE IDENTITY, GENUINENESS AND CREDITWORTHI NESS OF THE DEPOSITORS. EXCEPT FILING SOME PAPER DOCUMENTS, NO OTHER EXPLAN ATION WAS OFFERED IN RESPONSE TO AOS QUERIES. IN CASE OF FRESH CASH CR EDITS, ASSESSING OFFICER IS DUTY BOUND TO CONDUCT INQUIRY TO VERIFY THE IDENTIT Y, GENUINENESS AND CREDITWORTHINESS OF THE DEPOSITORS. IN FURTHERANCE OF THE STATUTORY DUTY, LD. ASSESSING OFFICER ASKED THE ASSESSEE TO COME FORWAR D AND ESTABLISH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE H UGE NUMBERS OF FRESH DEPOSITORS. THE ASSESSEE MAINTAINED A VOLTE FACE A ND KEPT DELIBERATE SILENCE AND DID NOT RESPOND TO THE NOTICES ISSUED BY THE AS SESSING OFFICER. THUS IN EFFECTIVE TERMS DID NOT DISCHARGE ITS ONUS IN TERMS OF SECTION 68. THUS, THE ASSESSEES CONDUCT WAS HIGHLY ILLOGICAL, CONTRARY T O LAW AND IN DEFIANCE OF THE ONUS CAST U/S 68. 9.1 BEFORE LD. CIT(A) VOLUMINOUS DOCUMENTS WERE FIL ED AS ADDITIONAL EVIDENCES. IN THE ORDER OF LD. CIT(A), THERE IS NO REFERENCE TO THE APPLICATION OF THE ASSESSEE FOR ADMISSION OF ADDITIONAL EVIDENC ES, CONTENTS THEREOF AND THE MANDATORY PLEADINGS ABOUT BEING PREVENTED BY SU FFICIENT CAUSE IN NOT PRODUCING THEM BEFORE THE LD. ASSESSING OFFICER. ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 8 9.2 THERE IS NO FINDING IN TERMS OF RULE 46A THAT T HE ADDITIONAL EVIDENCE OF THE ASSESSEE WAS ADMITTED ON SATISFACTION OF REQ UIRED MANDATORY CONDITIONS LAID DOWN IN RULE 46A. IN ABSENCE OF SU CH FINDINGS AND IGNORANCE OF BASIC FACTS, THE ORDER OF THE LD. CIT( A) BECOMES CONTRADICTORY TO PRINCIPLE OF NATURAL JUSTICE, FAIR EXAMINATION AND CONFORMING TO STATUTORY REQUIREMENTS AND IS THUS VITIATED AND BAD IN LAW. 9.3 LD. CIT(A) IS VESTED BY I.T. ACT WITH CO-TERMIN US POWER TO THAT OF ASSESSING OFFICER AND FURTHER MORE WHAT ASSESSING O FFICER HAS FAILED TO DO CAN BE DONE BY LD. CIT(A). NO FRUITFUL ENQUIRY WHA TSOEVER HAS BEEN CONDUCTED BY LD. CIT(A) TO VERIFY THE CREDITWORTHIN ESS OF CREDITORS IN THIS CASE. BY TOTALLY ACCEPTING THE ADDITIONAL EVIDENCE AND SPECIOUS PLEAS OF THE ASSESSEE AND BY THEORETICALLY RELYING ON CERTAIN CA SE LAWS WITHOUT ESTABLISHING THE PARITY OF FACTS, THE HUGE RELIEF H AS BEEN GIVEN. THE SAME IS UNJUSTIFIED AND UNTENABLE. 9.4 THERE IS NO REFERENCE OR CLARIFICATION AS TO WH Y THE ASSESSEE DID NOT RESPOND TO THE MATERIAL CONFRONTED TO IT ABOUT THE NON-SERVICE, NON- APPEARANCE AND NOT OBTAINING ALL RELEVANT INFORMATI ON. 9.5. THE LD. CIT(A), WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD DELIBERATELY AVOIDED FIELD INQUIRIES AND BY UNJUSTI FIABLY ACCEPTING THE ADDITIONAL EVIDENCES, HAS ACTED IN CONTRAVENTION O F STATUTORY CONDITIONS OF INCOME-TAX ACT AND WITHOUT APPRECIATING THAT THE AS SESSEE HAD NOT OFFERED ANY JUSTIFIABLE EXPLANATION, HAS GIVEN SUBSTANTIAL RELIEF. RELIANCE IS PLACED ON HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF MANISH BUILD WELL (P) LTD. (2011) 245 CTR 397 (DEL) FOR THE PROPOSITION THAT CONDITIONS OF RULE 46A ARE MANDATORY AND MUST BE STRICTLY ADHERED. THE REL IEF GIVEN BY THE LD. CIT(A) IS WITHOUT ANY JUSTIFICATION, ON SUMMARY ASS UMPTION AND MERE ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 9 REPETITION OF LD. ASSESSING OFFICERS ORDER, REMAND REPORT AND ASSESSEES WRITTEN SUBMISSIONS; THE SAME CANNOT STAND TEST OF SCRUTINY. 9.9 THE OBSERVATIONS MADE BY THE LD. CIT(A) IN SUPP ORT OF THE ASSESSEE AMOUNTS TO MERE THEORETICAL ASSUMPTION, LACK OF FAC T FINDING AND RELEVANT ENQUIRIES AND WITHOUT APPRECIATING THE FACT THAT TH E ASSESSEE DELIBERATELY FAILED TO DISCHARGE ONUS IN TERMS OF SECTION 68. I T IS PLEADED THAT THE ORDER OF THE LD. CIT(A) MAY BE REVERSED. 10. ADVERTING TO REMAINING APPEAL, I.E., ITA NO.795 /AHD/2011 FOR AY 2007-08 IN THE CASE OF MADANLAL CHITARMAL MALIWAL ( HUF) THE EFFECTIVE GROUNDS ARE AS UNDER:- 1. THE LD.CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS.1,22,33,000/- MADE U/S.68 OF I.T. ACT , AS WELL AS THE INTEREST PAYMENT OF RS.2,04,394/- CLAIMED ON SUCH LOANS. 2. THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AND I N FACTS IN DIRECTING THE AO TO ALLOW THE CLAIM OF SPECULATION LOSS OF RS. 19,79,441/- ARISING FROM TRANSACTIONS IN FUTURES AND OPTIONS. 10.1 SIMILAR ARGUMENTS ARE RAISED BY BOTH THE PARTI ES AND IN RESPECT OF GROUND NO.2 IN THE CASE OF MADANLAL MALIWAL, IT HAS BEEN CONTENDED THAT THE CLAIM OF SPECULATION LOSS IN FUTURES AND OPTION S WAS NOT ALLOWABLE. 11. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. IT EMERGES FROM THE RECORD THAT THE ASSESSEES, WHO ARE FATHER AND SON, WERE DELIBERATELY SILENT IN DISCHARGING THEIR ONUS IN TERMS OF SECTIO N 68 TO CORROBORATE THE DOCUMENTARY EVIDENCES FILED BY THEM. SECTION 68 EN JOINS POWERS OF LD. ASSESSING OFFICER TO MAKE NECESSARY ENQUIRIES TO VE RIFY WHETHER THE ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 10 EXPLANATION GIVEN BY THE ASSESSEE IS SATISFACTORY O R NOT. ASSESSEES FILED ONLY DOCUMENTARY EVIDENCES BEREFT OF COOPERATING IN FURT HER VERIFICATION. LD. ASSESSING OFFICER DESIRED TO ENQUIRE INTO THE VERAC ITY OF EVIDENCES FILED BY THE ASSESSEES. IN THE COURSE THEREOF, ASSESSEES WE RE GIVEN REPEATED OPPORTUNITIES. THE ASSESSING OFFICER ISSUED NOTICE S U/S 133(6) OF THE ACT ON THE DEPOSITORS AND THE BANKS. MANY OF THE DEPOSITO RS DID NOT RESPOND AND THE EXISTENCE OF MANY OF THEM COULD NOT BE ASCERTAI NED AS THEY WERE NOT FOUND ON THE GIVEN ADDRESS. IT IS SIGNIFICANT TO N OTE THAT THE ASSESSEES OWNED HUGE SUMS OF AMOUNT TO THESE DEPOSITORS; NO I NTEREST WAS ALSO PAID TO ANY OF THEM AND WAS BEING CREDITED IN THE BOOKS OF ACCOUNTS. IT IS HIGHLY UNLIKELY THAT THE DEPOSITORS WHOSE HUGE AMOUNTS WER E AT STAKE WITH THE ASSESSEE LYING UNPAID WILL DISAPPEAR AND NOT ASK FO R ANY REPAYMENT OR PAYMENT OF INTEREST. THE FACTUAL MATRIX IS MADE MO RE COMPLICATED AND SUSPICIOUS LOOKING AT THE ASSESSEES MAINTAINING A MYSTERIOUS SILENCE ABOUT THE FATE OF 133(6) NOTICES. UNDER THESE CIRCUMSTAN CES, THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE ASSESSEES FAILED TO DISCHARGE ITS ONUS IN TERMS OF SECTION 68 AND ADDING THE CASH CREDITS AND THE INTEREST THEREON U/S 68 OF THE ACT. 12. ADVERTING TO ORDER OF LD. CIT(A), WE FIND THAT NO REASONS WHATSOEVER HAS BEEN GIVEN AS TO HOW THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE IN NOT PRODUCING THE VOLUMINOUS EVIDENCES WHICH WAS IN THEIR POSSESSION BEFORE THE LD. ASSESSING OFFICER, AND WAS FILED BEF ORE THE LD. CIT(A) IN THE FORM OF ADDITIONAL EVIDENCES. THE ORDER OF LD. CIT (A) SUFFERS FROM MANY FACTUAL AND LEGAL INCONSISTENCIES. THERE IS NO CLE AR FINDING ABOUT ASSESSEES SUFFICIENT CAUSE IN FAILING TO PRODUCE THE VOLUMINO US EVIDENCES WHICH WAS IN THEIR POSSESSION. THERE APPEARS TO BE A CLEAR D ESIGN ON THE PART OF THE ASSESSEE WHICH REQUIRED IN DEPTH CLARIFICATIONS. TH E ASSESSEES APPLICATION FOR ADDITIONAL EVIDENCE HAS NOT BEEN DEALT WITH ELU CIDATING CONTENTS OF THE ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 11 APPLICATION AND PROPER FINDING THEREON. NO CONVINC ING REASONS HAVE BEEN GIVEN AS TO WHY THE ADDITIONAL EVIDENCE HAS BEEN AD MITTED IN TERMS OF RULE 46A. MERELY BY CASUAL REFERENCE, IT HAS BEEN HELD THAT THE ADDITIONAL EVIDENCE DESERVES TO BE ADMITTED AND SENT TO ASSESS ING OFFICER AND A REMAND REPORT IS OBTAINED. THE HONBLE DELHI HIGH COURT IN THE CASE OF MANISH BUILDWELL (P) LTD. (SUPRA) HAS HELD THAT SUC H A PERFUNCTORY APPROACH CANNOT BE ADOPTED BY THE APPELLATE AUTHORI TY WHILE ADMITTING ADDITIONAL EVIDENCE. THE APPELLATE POWERS ARE TO B E EXERCISED IN A JUDICIOUS MANNER GIVING PROPER REASONS FOR THE ADMISSION OF A DDITIONAL EVIDENCE. WE FIND MERIT IN THE CONTENTIONS OF THE LD. DR THAT TH E CIT(A) HAS CO-TERMINUS POWER TO THAT OF ASSESSING OFFICER AND CAN DO WHAT ASSESSING OFFICER HAS FAILED TO DO. IT EMERGES FROM RECORD THAT THE ASSE SSING OFFICER DID NOT FAIL TO DO CONDUCT PROPER INQUIRIES IN THIS CASE. IT WAS A SSESSEE WHO WAS AVOIDING THE INQUIRIES AND ENSURED THAT THE DUE PROCESS OF I NQUIRIES HAS BEEN SABOTAGED. THESE CRUCIAL FACTUAL HIGHLIGHTS SHOULD HAVE BEEN DULY APPRECIATED AND ADDRESSED BY THE LD. CIT(A) WHICH H AS NOT BEEN DONE. THE RELIANCE ON CASE LAWS IS BASED ONLY ON THEORETICAL ASSUMPTIONS WITHOUT MEANINGFUL PARITY OF FACTS. BESIDES, BOTH THE PART IES ARE IN APPEALS BEFORE US. 13. IN THE ENTIRETY OF THESE FACTS AND CIRCUMSTANCE S, WE ARE INCLINED TO SET ASIDE THE ISSUES RAISED IN REVENUES AND ASSESSEES APPEALS BACK TO THE FILE OF LD. CIT(A) WITH THE OBSERVATIONS THAT THE LD. CIT(A ) SHOULD TAKE CARE OF THE ABOVE FACTUAL AND LEGAL CIRCUMSTANCES OF THE CASE A ND EXAMINE WHETHER A PROPER APPLICATION FOR ADDITIONAL EVIDENCE IS FILED BY THE ASSESSEES, WHETHER THEY WERE PREVENTED BY SUFFICIENT CAUSE IN NOT FILI NG THESE DOCUMENTS BEFORE THE LD. ASSESSING OFFICER AND THEREAFTER, THE MERIT S OF THE APPEALS SHOULD BE DECIDED IN ACCORDANCE WITH LAW. NEEDLESS TO SAY TH AT BOTH THE PARTIES SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD . ITA NOS. 730, 794, 705 & 2146/AHD/2011 DEEPAK & MADANLAL MALIWAL (CROSS) AY : 2007-08 AND 2008-09 12 14. THE CASE OF SHRI DEEPAK MADANLAL MALIWAL FOR AY 2008-09 AND HIS FATHER SHRI MADANLAL CHITARMAL MALIWAL FOR AY 2007- 08 BEING ON THE SAME FACTS AND LINE, THEY ARE ALSO SET ASIDE WITH SIMILA R OBSERVATIONS. 15. IN THE RESULT, ALL THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 12 TH AUGUST, 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (R.P. TOLANI) JUDICIAL MEMBER AHMEDABAD; DATED 12/08/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD