The ITO, Ward-12(1), Ahmedabad V. Shri Narayanbhai S.Patel, Ahmedabad

ITA 793/AHD/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9088 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-12-2010
• Assessment Year: 1993-1994
• Appeal Filed On: 12-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHALINI VERMADR
• Assessee Lawyers: S N DIVATIA
• Keywords: Unexplained investment; Principle of natural justice; Peak credit; Deemed to accrue or arise in india; Set aside
• Section: 143(3); 69A; 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.793/AHD/2009 (ASSESSMENT YEAR:-1993-94) INCOME-TAX OFFICER, WARD- 12(1),FIRST FLOOR,NARAYAN CHAMBERS, AHMEDABAD V/S SHRI NARAYANBHAI S PATEL, 73-74, CHIRAG INDUSTRIAL ESTATE, CTM CHAR RASTA, AMRAIWADI, AHMEDABAD PAN: ACNPP 3492 N [APPELLANT] [RESPONDENT] REVENUE BY :- SMT. SHALINI VERMA,DR ASSESSEE BY:- SHRI S N DIVATIA, AR O R D E R A N PAHUJA: THIS APPEAL BY REVENUE AGAINST AN ORDER DATED 10- 11- 2008 OF THE LD. CIT(APPEALS)-XX, AHMEDABAD, RAISES THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITION OF RS.8,06,446/- MADE ON ACCO UNT OF UNEXPLAINED INVESTMENT BY THE AO, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON R ECORD BY THE AO. 1.2 IN DOING SO, THE LD. CIT(A)-XX, AHMEDABAD HAS E RRED IN LAW AND ON FACTS IN NOT CORRECTLY APPRECIATING THE DIRECTIONS GIVEN BY THE HON'BLE TRIBUNAL IN THEIR ORDER DATED 22.12.2006 AC CORDING TO WHICH THE HON'BLE ITAT HAD FOUND NO MERIT IN THE ASSESSEE 'S CASE AND THE MATTER WAS SENT BACK TO THE AO FOR RECTIFICATION OF ARITHMETICAL ERROR, IF ANY, IN THE WORKING OF THE PEAK AMOUNT. 1.3 IN DOING SO, THE LD. CIT(A)-XX, AHMEDABAD HAS F AILED TO APPRECIATE THAT SINCE NO ARITHMETICAL ERRORS WERE POINTED OUT BY THE ASSESSEE BEFORE THE AO IN THE SAID WORKING DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AFORESAID ADDITION OF RS.8,06,446/ - WAS RIGHTLY MADE BY THE AO WHILE GIVING EFFECT TO THE ORDER OF THE HON'BLE TRIBUNAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF AO BE RESTORED TO THE ABOVE EXTENT. ITA NO. 793/AHD/09 2 2 FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.91,676/- FILED ON 26-10-1993 BY THE AS SESSEE, DERIVING INCOME FROM SHARE TRANSACTIONS BESIDES BEING PARTNE R IN TWO FIRMS, WAS PROCESSED ON 22.2.1994 U/S 143(1)(A) OF THE INC OME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT]. SUBSE QUENTLY, THE ADIT (INV), UNIT.2(4), AHMEDABAD COMMUNICATED TO THE ASS ESSING OFFICER[AO IN SHORT] VIDE HIS LETTER NO. CONFIDENTI AL /ADIT.2(4) /NSP/CIB-150/95-96 DATED 06-03-1996 THAT THE ASSES SEE SHRI NARAYAN S. PATEL IN HIS STATEMENT ADMITTED THAT THE DEPOSITS IN HIS BANK ACCOUNT CA NO.7053 IN UCO BANK, BHADRA BRANCH, AHMED ABAD, BELONG TO HIM AND WERE NOT DISCLOSED TO THE I.T. DEPARTMENT. IN H IS SECOND STATEMENT RECORDED ON 1-12-1995, THE ASSESSEE STATED THAT TRANSFER ENTRI ES IN THE BANK ACCOUNT NO.CA-7053 WERE COMING FROM HIS OTHER FIVE ACCOUNT S IN THE SAME BRANCH WHICH TOO WERE UNDISCLOSED TO THE DEPARTMENT. ACCOR DINGLY, THE ASSESSEE ADMITTED PEAK UNACCOUNTED INVESTMENT OF RS.16,20,0 00/- AND PAID TAX OF BS.6.4 LAC. THEREFORE, ASSESSMENT IN THIS CASE WAS REOPENE D U/S 147 OF THE ACT ON THE BASIS OF AFORESAID ADMISSION OF THE ASSE SSEE BEFORE THE ADIT. CONSEQUENTLY, A NOTICE U/S 148 OF THE ACT WAS SERVED ON THE ASSESSEE ON 22-3-1996. HOWEVER, NO COMPLIANCE WAS M ADE TO THIS NOTICE. SUBSEQUENTLY, THE ASSESSEE FILED RETURN DEC LARING INCOME OF RS.7,19,925/- ON 25-03-1996, DISCLOSING ADDITIONAL INCOME OF ONLY RS.6,28,249/-[7,66,750-INITIAL CAPITAL CONTRIBUTION OF RS.1,38,501] ON THE BASIS OF PEAK AMOUNT OF FUNDS INVOLVED AND UTI LIZED IN THE INVESTMENT AND REALIZATION IN SHARES AND SECURITIES UNDER THE HEAD CAPITAL GAIN. TOTAL INCOME REFLECTED IN THE SAID RETURN WAS WORKED OUT AS UNDER:- TOTAL INCOME (DISCLOSED IN THE ORIGINAL RETURN) R S.91,676 ADD: UNDISCLOSED INCOME AS PER PEAK OF BANK ACCOUNTS RS.7,66,750 LESS: INITIAL CAPITAL CONTRIBUTION RS.1,38,501 RS.6,28,249 ---------------- TOTAL TAXABLE INCOME RS.7,19,925 ITA NO. 793/AHD/09 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED ANOTHER BANK ACCOUNT IN THE NAME OF M/S GAYATRI INV ESTMENTS. SINCE THE METHOD ADOPTED BY THE ASSESSEE IN WORKING OUT T HE AFORESAID PEAK AMOUNT OF UNDISCLOSED INCOME DID NOT REFLECT THE UNEXPLAINED INVESTMENT SEPARATELY FOR EACH OF THE FIVE YEARS DU RING WHICH THE ASSESSEE OPERATED THESE BANK ACCOUNTS, THE AO WORKE D OUT THE PEAK OF INVESTMENT IN DIFFERENT YEARS SEPARATELY AF TER ANALYZING THE TRANSACTIONS IN THE SEVEN BANK ACCOUNTS, AS UNDER:- (IN RS.) AY 1991-92 AY 1992-93 AY 1993-94 AY 1994-95 AY 1995-96 DATE OF PEAK 16-2-91 9-7-91 21-11-92 5-2-94 6-5-94 P* 260101 833683 766754 310533 375055 I** 22500 6875 880250 311150 1188009 TOTAL 282601 840558 1647004 621783 1563064 *PEAK OF BANK BALANCES OF THE SEVEN BANK ACCOUNTS FOR THE ENTIRE YEAR UNDER CONSIDERATION **TOTAL OF SHARE INVESTMENTS MADE BY THE ASSESSEE F ROM HIS SEVEN BANK ACCOUNTS DURING THE PERIOD OF 60 DAYS IMMEDIATELY PRECEDING THE DATE OF PEAK 2.1 ACCORDINGLY, UNEXPLAINED INVESTMENT PERTAIN ING TO THE YEAR UNDER CONSIDERATION WAS WORKED OUT AT RS.8,06,446/- [RS.16,47,004 RS.8,40,558]. APPARENTLY, THE AO HIMSELF ALLOWED SET OFF OF PEAK UNDISCLOSED INVESTMENT WORKED OUT FOR THE PRECEDING YEAR. TOTAL INCOME WAS, THEREFORE DETERMINED AT RS.8,98,120/- I NSTEAD OF RS.7.19.925/- RETURNED BY THE ASSESSEE IN HIS RETUR N FILED ON 25.3.1996. ITA NO. 793/AHD/09 4 3. ON APPEAL, THE ASSESSEE CONTENDED THAT THE METHO D OF WORKING OF UNDISCLOSED INVESTMENT ADOPTED BY THE AO IN ITS SHARE ACTIVITIES WAS BASED ON THE PREMISE OF RECYCLING OF FUNDS AND NO FURTHER ADDITION FOR INVESTMENT DURING THE 60 DAYS PERIOD P RIOR TO THE PEAK DATES WAS REQUIRED TO BE MADE FOR THE PURPOSE. THE ASSESSEE CONTENDED THAT THIS WOULD LEAD TO DOUBLE TAXATION. BESIDES, SOME OTHER DEFICIENCIES WERE ALSO POINTED OUT BEFORE THE LEARNED CIT(A). ACCORDINGLY, THE LEARNED CIT(A) DELETED THE ADDITIO N IN THE ABSENCE OF AVAILABILITY OF SUFFICIENT DATA TO WORK OUT THE PERIOD FOR WHICH THE SHARE APPLICATIONS OUTSTOOD, OR OF THE SALES MADE S UBSEQUENT TO THEIR ALLOTMENT. THUS, THE LEARNED CIT(A) ACCEPTED THE PEAK BALANCE METHOD FOLLOWED BY THE ASSESSEE. HOWEVER, THE LEAR NED CIT(A) ALSO MENTIONED THAT THE WITHDRAWAL OCCURRING ON THE LAST DAY OF EACH OF THREE PREVIOUS YEARS, THOUGH WITHDRAWN, FORMING PAR T OF THE ASSESSEES FUNDS, WOULD NOT GET INCLUDED IN THE WOR KING OF THE PEAK AMOUNT AND THUS WAS LIABLE TO BE SEPARATELY ADDED. IT WAS ALSO CLARIFIED THAT THE ADDITION IN RESPECT OF LAST DAY S WITHDRAWAL WOULD ONLY BE, FOR THE SUBSEQUENT TWO YEARS, FOR THE INCR EMENTAL WITHDRAWAL. 4. HOWEVER, THE REVENUE DID NOT ACCEPT THE AFORESAI D FINDINGS OF THE LEARNED CIT(A). ON FURTHER APPEAL, THE ITAT VID E THEIR ORDER DATED 22-12-2006 IN ITA NOS.2438 TO 2440/AHD/2002 F OR THE THREE ASSESSMENT YEARS CONCLUDED IN THE FOLLOWING TERMS:- 6.1 THE LEARNED AR WAS SPECIFICALLY CALLED UPON BY THE BENCH TO SHOW IF THE PERIOD OF 60 DAYS AS ADOPTED BY THE AO IS NO T CORRECT (OR HIGHER); THE FUNDS BEING RECYCLED WITH A SHORTER FREQUENCY OF TI ME. AND TO WHICH HE REPLIED IN THE NEGATIVE, STATING THAT THERE WAS NO MATERIAL EITHER WITH THE ASSESSEE TO CONTEND SO, AND IN FACT, NEITHER WITH T HE AO; THE ASSESSEE'S OBJECTION BEING TO THE PRINCIPLE, WHEREBY A SEPARAT E ADDITION IS BEING MADE IN RESPECT OF WITHDRAWAL / INVESTMENT MADE OVER A P ARTICULAR PERIOD OF TIME PRIOR TO THE PEAK DATE, CONSIDERING THE ADMITTED PO SITION OF THE SAID WITHDRAWAL / INVESTMENT AS SUBJECT TO ROTATION AND, THUS DEPOSIT IN THE BANK ACCOUNTS THE PEAK BALANCE OF WHICH IS UNDER RECKONI NG. THE SAID METHOD THUS LEADS TO A DOUBLE TAXATION. THE I'D CIT(A)S M ETHOD, IT WAS ASSERTED, ITA NO. 793/AHD/09 5 THOUGH NOT APPEALED AGAINST, IS ALSO NOT CORRECT, A S IT AFFIRMS THE AO'S METHOD AT-LEAST IN PART. 6.2 WE FIND OURSELVES TO BE IN DISAGREEMENT WITH TH E ASSERTIONS OF THE LEARNED AR. ANY RECYCLING PERIOD WOULD NECESSARILY ENTAIL A LOCK-IN OF FUNDS FOR A PARTICULAR PERIOD OF TIME, AND THIS IS PRECISELY WHAT THE AO HAS SOUGHT TO CAPTURE BY ASSUMING THE PERIOD AS 60 DAYS , AND WHICH, AGAIN, WE FIND AS NOT UNREASONABLE, CONSIDERING THAT THE S HARE ALLOTMENT PROCESS CONSUMED A MINIMUM OF 45 DAYS. ADD TO THAT, THE POS TAL/TRANSIT TIME. BESIDES, THIS TIME PERIOD, IN THE PRESENT CASE, WOU LD ALSO INCLUDE THE LENGTH OF TIME, ON AN AVERAGE, THE ALLOTTED SHARES ARE HELD PRIOR TO THEIR DISPOSAL, AND FOR WHICH NO FIXED TIME CAN POSSIBLY BE ASCRIBED. ALSO, THE ASSESSEE HIMSELF IS COMPLETELY SILENT IN THE MATTER , SO THAT ANY REASONABLE ESTIMATE SHOULD SUFFICE, AND NEITHER HAS HE RAISED, EVEN AS POINTED OUT BY THE ID AR, ANY OBJECTION THERETO, HAVING NO MATERIA L WITH HIM TO DO SO, SO THAT THE SAME SHOULD BE CONSIDERED AS OUT OF THE BO UNDS OF DISPUTE. THAT LEAVES US WITH THE QUESTION OF DECIDING ON THE INCL USION OF THE INVESTMENT OVER THE SAID PERIOD, THE FACTOR (I), IN THE COMPUT ATION OF THE ASSESSEE'S TOTAL UNEXPLAINED INVESTMENT IN SHARE TRADING ACTIV ITY, AND THUS, DEEMED INCOME, IN TERMS OF SEC. 69 / 69A OF THE ACT FOR TH E RELEVANT PREVIOUS (FINANCIAL) YEAR, I.E., IN PRINCIPLE, CONSIDERING T HAT THE SAME ARE LIABLE TO BE RECYCLED THROUGH THE IMPUGNED BANK ACCOUNTS. ONCE T HE FACTUAL FINDING OF SOME AMOUNT REMAINING INVESTED IN THE APPLIED FOR / ALLOTTED SHARES AT ANY GIVEN POINT OF TIME, INCLUDING THE PEAK DATES, WE C ONSIDER THIS TO BE ONLY A NATURAL COROLLARY THERETO. NO DOUBT, THE AMOUNT AND CONFIGURATION OF THE SAID FUNDS WOULD CHANGE ON A DAY TO DAY BASIS, WITH THE OUTSTANDING INVESTMENT BEING RECYCLED, BUT WOULD, AT THE SAME T IME, GET REPLACED, BY ANOTHER SET OF SHARES/SHARE APPLICATION MONEY(S). W HY, EVEN IN THE PEAK BALANCE AMOUNT, IT IS NOT NECESSARILY THE SAME FUND S THAT OUTSTAND ON EACH OF THE PEAK DATES; THERE BEING A CONSTANT FLOW OF F UNDS, BOTH WAYS, AND THUS A SHAKE-UP OF FUNDS, SO THAT THE SAME IS IMMAT ERIAL. IN FACT, THERE IS A DISTINCT POSSIBILITY OF SOME WITHDRAWAL BEING MADE FOR THE .PURPOSE OTHER THAN THE SHARE APPLICATION, OR OF SOME ALLOTTED SHA RES BEING FOUND WORTHY OF HOLDING ON LONG-TERM BASIS, BY THE ASSESSEE, SO THAT THESE GO OUT OF THE WORKING CAPITAL FUND, AND THIS NOT SUBJECT TO ROTAT ION. HOWEVER, THESE WOULD ONLY BE IN ADDITION TO THE 60-DAY (ROTATION PERIOD) WITHDRAWAL FOR WHICH THE ADDITION STANDS MADE, AND BEING NOT A SUBJECT MATTE R OF ADDITION/CONSIDERATION BY THE AO, THE SAME ASSUMES AN ACADEMIC NATURE, AND FINDS MENTION ONLY TO HIGHLIGHT AN ASPECT OF TH E MATTER. WE FURTHER FIND THAT THE ID. CIT(A), IN ADOPTING ONE DAY PERIOD (LA ST DAY OF THE PREVIOUS YEAR), FOLLOWS ONLY A VARIANT OF THE AO'S METHOD, A CCEPTING, IN PRINCIPLE, THAT SOME FUNDS REMAIN OUT OF RECKONING PER THE ASS ESSEE'S METHOD, AND WHICH,MOST OBVIOUSLY, ARE OF THE LAST DAY'S WITHDRA WAL. BUT THEN, SO WOULD BE THAT FOR THE LAST BUT ONE DAY, AND SO ON; THE RE CYCLING INVOLVING A HIGHER TIME PERIOD, SO THAT ONE CAN GO ON, AND WOULD BE RE QUIRED TO STOP ONLY ON REACHING THE TIME PERIOD WHICH IS CONSIDERED AS REP RESENTING THE RECYCLE PERIOD, TERMED (VARIOUSLY AS 'WORKING CAPITAL CYCLE ' OR 'CASH TO CASH CYCLE' IN FINANCIAL PARLANCE,: INVESTMENT OVER WHICH PERIO D (CALLED WORKING CAPITAL) REPRESENTS AN ESSENTIAL PART OF THE OPERATING FUNDS OR COMPONENT OF THE ITA NO. 793/AHD/09 6 CAPITAL STRUCTURE; OF ANY BUSINESS/ENTERPRISE. CLEA RLY, THERE IS NO DOUBLE TAXATION (WITH ONLY THE ACCRETION TO, OR THE INCREM ENTAL AMOUNT, BEING SUBJECT TO TAX FOR THE SUBSEQUENT PERIODS), AS APPR EHENDED BY THE ASSESSEE, AND WHICH IS ITS PRINCIPAL OBJECTION TO T HE AO'S METHOD. THE RECYCLED FUNDS GET RECYCLED ONLY AFTER A TIME-GAP, I.E., THE OPERATING/WORKING CYCLE, SO THAT THE SAME HAS NECES SARILY TO BE FINANCED. IN FACT, THE I'D CIT(A)'S METHOD, BY PART-ACCEPTING THE AO'S METHOD, EXPOSES THE ANOMALOUS NATURE OF HIS OWN METHOD. THE RE IS, RATHER, IN HIS ACCEPTANCE, AN ADMISSION THAT TO THE EXTENT, AND FO R THE PERIOD FOR WHICH, THE FUNDS DO NOT ENTER THE ASSESSEE'S BANK ACCOUNT( S), THEY ESCAPE BEING RECKONED AS PART OF THE ASSESSEE'S UNEXPLAINED INVE STMENT IN HIS SHARE BUSINESS AND, CONSEQUENTLY, BEING BROUGHT TO TAX. 6.3 IN VIEW OF THE FOREGOING, WE FIND NO MERIT IN T HE ASSESSEE'S CASE. HOWEVER, HE HAS POINTED OUT SOME ARITHMETICAL ERROR S IN THE AO'S WORKING. WE ALSO OBSERVE THAT WHILE THE AO SPEAKS OF SEVEN S UCH BANK ACCOUNTS (DETAILED AT NOTE 1 OF THE OFFICE NOTE OF THE ASSES SMENT ORDER FOR AY 1993- 94), AND WHICH FACT IS NOT DISPUTED, THE I'D CIT(A) REFERS TO SIX SUCH ACCOUNTS. SUBJECT TO THE CORRECTION OF SUCH MISTAKE S, ON VERIFICATION, IF FOUND IN ORDER BY THE AO, PER A SPEAKING ORDER, AFT ER ALLOWING A REASONABLE OPPORTUNITY TO THE ASSESSEE IN THE MATTER, WE UPHOL D HIS ORDER, SETTING- ASIDE THAT OF THE I'D CIT(A). WE DECIDE ACCORDINGLY . 5. IN TERMS OF THE AFORESAID DIRECTIONS OF THE TRIB UNAL, THE AO ALLOWED OPPORTUNITY TO THE ASSESSEE VIDE HIS LETTER S DATED 3-10-2007 AND 16-11-2007 TO CORRECT ARITHMETICAL MISTAKES. I N RESPONSE, THE LEARNED REPRESENTATIVE OF THE ASSESSEE FURNISHED WR ITTEN SUBMISSIONS POINTING OUT THAT THERE WAS NIL INCOME. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE O N THE GROUND THAT THE ASSESSEE DID NOT POINT OUT ANY ARITHMETICA L MISTAKES DESPITE SUFFICIENT OPPORTUNITY ALLOWED TO HIM. ACCORDINGLY, THE AO ASSESSED THE INCOME AS PER THE ORIGINAL ASSESSMENT ORDER DAT ED 31-03-1998. 6. ON APPEAL BEFORE THE LEARNED CIT(A), THE ASSESSE E SUBMITTED ITS WORKING OF PEAK UNDISCLOSED INVESTMENT, MENTIO NED HEREUNDER:- ITA NO. 793/AHD/09 7 AY 1991-02 AY 1992-93 AY 1993-94 DATE PEAK DATE PEAK DATE PEAK 19-02-91 231000 09-07-91 717407 21-11-92 633007 (P.NO.47) (P.NO.2) (P.NO.9) PRIOR TO 60 DAYS 19-12-90 22500 07-05-91 255875 22-09-92 283808 (P NO.45) (P NO.1) (P NO.6) TOTAL 253500 973282 916815 TAXABLE AMOUNT 253500 719782 (973282- 253500) NIL AS PER AO 2,82,604 5,57,937 8,06,446 IN THE LIGHT OF THE AFORESAID WORKING, THE LEARNED CIT(A) CONCLUDED AS UNDER:- 3.3 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE APPELLANT AND HAVE ALSO CAREFULLY GONE THRO UGH THE ORDERS PASSED BY THE AO U/S. 143(3) READ WITH SECTION 254 FOR ALL THE ABOVE THREE YEARS. IT IS SEEN THAT THE AO HAS NOT TAKEN THE CORRECT PEAK BALANCE DURING THE PERIOD OF 60 DAYS BEFORE THE ORIGINAL PEAK DAYS INS PITE OF SPECIFIC DIRECTION ISSUED BY THE HON'BLE TRIBUNAL AND HAS PASSED THE O RDER U/S. 143(3) R.W.S. 254 OF THE ACT (ORDER AGAINST THE APPEAL) AND DETER MINED THE TAXABLE BALANCE AS PER THE ORIGINAL ASSESSMENT ORDER. IN TH E ORDER OF A.Y. 1993-94 (MAIN ORDER), THE AO HIMSELF CONFIRMED THAT THE BAN K ACCOUNT OF M/S. GAYATRI INVESTMENT WAS NOT ORIGINALLY INCLUDED IN T HE ASSESSEE METHOD ESTIMATING PEAK OF BANK BALANCES. HOWEVER, THE CALC ULATION OF THE PEAK AMOUNT WAS INCORPORATED DURING THE COURSE OF ASSESS MENT PROCEEDINGS AND ALL THE SEVEN BANKS' STATEMENTS HAVE BEEN INCLU DED IN THE WORKING OF PEAK AMOUNT. AS REGARDS THE CONFUSION REGARDING THE SIX OR SEVEN BANK IS SETTLED AND THE PEAK AMOUNTS SUBMITTED BY THE APPELLANT ARE OF SEVE N BANK ACCOUNTS. IN RESPECT OF ARITHMETICAL MISTAKE, THE LEARNED A.R HA S SUBMITTED IN DETAIL THE WORKING REFERRED IN ABOVE AND THEREFORE. I HOLD THE SAME AS CORRECT AS AGAINST THE WORKING OF THE AO. ITA NO. 793/AHD/09 8 THE PEAKING WORKING FILED FOR A.Y. 1991-92 BEFORE M E BY THE LEARNED COUNSEL INCLUDING THE PEAK AMOUNT DURING 60 DAYS PE RIOD PRIOR TO THE DATE OF PEAK BALANCE IS AS UNDER: DATE PEAK AMOUNT PRIOR TO 60 DA YS TOTAL DATE AMOUNT 19.02.91 2,31,000/- 19.12.90 22,50 0/- 2.,53,500/- IN VIEW OF THE FACTS AS CLARIFIED BY THE LEARNED CO UNSEL. I HOLD THE FIGURE TO BE CORRECTED AS SUBMITTED BY THE LEARNED COUNSEL VI DE HIS SUBMISSION DATED 07-11-2008 INCLUSIVE OF FIGURE OF PEAK AMOUNT OF 60 DAYS PERIOD PRIOR TO THE DALE OF PEAK BALANCES, I, THEREFORE, D IRECT THE AO TO LAKE THE TAXABLE PEAK AMOUNT OF RS.2,53,000/-. THUS, THE APP ELLANT GETS RELIEF OF RS.29,101/-. THE APPEAL IS, THEREFORE, PARTLY ALLOW ED IN THIS YEAR ON THIS ISSUE. AS REGARDS, THE PEAKING WORKING FILED FOR A.Y. 1992 -93 BEFORE ME BY THE LEARNED A.R. INCLUDING THE PEAK AMOUNT DURING 60 DA YS PERIOD PRIOR TO THE DATE OF PEAK BALANCE WILL BE AS UNDER: DATE PEAK AMOUNT PRIOR TO 60 DAYS TOTAL DATE AMOUNT 09-07-91 7,17,407/- 7-5-91 2,55,875/- 973 282 IN VIEW OF THE FACTS AS CLARIFIED BY THE LEARNED AR , I HOLD THE FIGURE TO BE CORRECTED BY THE LEARNED A.R. VIDE HIS SUBMISSION D ATED 07.11.2008 INCLUSIVE OF THE FIGURE OF THE PEAK AMOUNT OF SIXTY DAYS PERIOD PRIOR TO THE DATE OF PEAK BALANCES. I. THEREFORE, DIRECT THE AO TO TAKE THE ABOVE PEAK AMOUNT FOR THE PURPOSE OF TAXABLE BALANCE. THEREFOR E, I HOLD THAT THE NET TAXABLE PEAK BALANCE IN THIS YEAR WOULD BE RS.7,19, 782/- (RS.9,73,282 - RS.2,53,500). THE APPELLANT IS NOT ENTITLED FOR ANY RELIEF IN THIS YEAR. THE APPEAL FOR THIS YEAR ON MERITS IS, THEREFORE, DISMI SSED. AS REGARDS THE A.Y. 1993-94. (HE PEAK WORKING FILED BEFORE ME BY THE LEARNED COUNSEL INCLUDING PEAK AMOUNT DURING 60 DAY S PERIOD PRIOR SO THE DALE OF PEAK BALANCE IS AS UNDER : DATE PEAK AMOUNT PRIOR TO 60 DAYS TOTAL DATE AMOUNT 21.11.92 RS.6,33,007/- 22.09.92 2,83,808 916815 ITA NO. 793/AHD/09 9 IN VIEW OF THE FACTS CLARIFIED BY THE LEARNED COUNS EL. I HOLD THE FIGURE TO BE CORRECT AS SUBMITTED BY THE LEARNED COUNSEL VIDE HI S SUBMISSION DATED 07- 11-2008 INCLUSIVE OF THE FIGURE OF PEAK AMOUNT OF S IXTY DAYS PERIOD PRIOR TO THE DATE OF PEAK BALANCES. I, THEREFORE, DIRECT THE AO TO TAKE THE ABOVE PEAK AMOUNT FOR THE PURPOSE OF TAXABLE BALANCE. THE REFORE, I HOLD THAT THE NET TAXABLE PEAK BALANCE IN THIS YEAR WOULD BE RS. NIL (RS.9,16,816 RS.9,73,282). THUS, THE APPELLANT IS ENTITLED TO GE T A RELIEF OF RS.8,06,447/- IN THIS YEAR. THE APPEAL FOR THIS YEAR IS, THEREFOR E, ALLOWED ON THIS ISSUE. 7. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A) FOR THE AY 1993-94. THE LEARNED DR CONTENDED THAT THE ASSESSEE DID NOT POINT OUT ANY A RITHMETICAL MISTAKES BEFORE THE AO AND IT WAS ONLY BEFORE THE L EARNED CIT(A) THAT THE DEFICIENCIES WERE POINTED OUT. SINCE THE L D. CIT(A) DID NOT CONFRONT THE SUBMISSIONS FILED BY ASSESSEE BEFORE HIM TO THE AO NOR ALLOWED ANY OPPORTUNITY, THE LD. CIT(A) WAS NOT JUSTIFIED IN ACCEPTING THE WORKING FILED BY THE ASSESSEE BEFORE HIM ,ESPECIALLY WHEN THE ASSESSEE HIMSELF OFFERED AN AMOUNT OF RS.7 ,66,750/- TOWARDS UNDISCLOSED INCOME IN HIS RETURN FILED ON 2 5.3.1996. ON THE OTHER HAND, THE LEARNED AR ON BEHALF OF THE ASSESSE E WHILE INVITING OUR ATTENTION TO THE ORIGINAL ASSESSMENT ORDER CONT ENDED THAT THE AO HAD ACCEPTED THE WORKING OF PEAK INVESTMENT FILED B EFORE THE LEARNED CIT(A) FO THE PRECEDING TWO YEARS. THEREFOR E, NO ADDITION WAS WARRANTED IN THE YEAR UNDER CONSIDERATION. TO A QUERY BY THE BENCH, THOUGH THE LD. AR SUBMITTED COPIES OF LETTER S FILED BEFORE THE AO & THE LD. CIT(A), HE DID NOT SPECIFY ARITHMETIC AL MISTAKES POINTED OUT TO THE AO. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE FACTS NARRATED IN THE IMPUGNED ORDERS, THE ITAT VIDE THEIR AFORESAID ORDER DATED 2 2.12.2006 CONCLUDED THAT THEY DID NOT FIND ANY MERITS IN THE ASSESSEES CASE BUT DIRECTED THE AO TO VERIFY ARITHMETICAL MISTAKE S IN HIS WORKING AND PASS A SPEAKING ORDER AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. IN TERMS OF THE DIRECTIONS OF THE ITAT, T HOUGH THE AO ITA NO. 793/AHD/09 10 ALLOWED SUFFICIENT OPPORTUNITY, THE ASSESSEE DID NO T POINT OUT SPECIFIC ARITHMETICAL MISTAKES IN THEIR SUBMISSIONS BEFORE THE AO. ON APPEAL, THE LD. CIT(A) ,WITHOUT CONFRONTING THE SUBMISSIONS FILED BY THE ASSESSEE BEFORE HIM ,ALLOWED RELIEF TO THE A SSESSEE, EVEN WHILE BEING AWARE THAT THE ASSESSEE DID NOT POINT O UT ANY ARITHMETICAL MISTAKES IN THE WORKING OF PEAK UNDIS CLOSED INCOME BEFORE THE AO AND IGNORING THE FACT THAT THE ASSE SSEE HIMSELF HAD OFFERED AN AMOUNT OF RS.7,66,750/- TOWARDS UNDISCL OSED INCOME IN THE RETURN FILED BY HIM ON 25.3.1996. THIS APPROACH OF THE LD. CIT(A) IS NOT IN ACCORDANCE WITH LAW AND ESTABLISHED PRINCIPLES O F NATURAL JUSTICE. IN THESE CIRCUMSTANCES AND IN THE INTEREST OF NATURAL JUSTIC E, ESPECIALLY WHEN THE LD. CIT(A) DID NOT ALLOW SUFFICIENT OPPORTUNIT Y TO THE AO NOR CONFRONTED THE WORKING OF UNDISCLOSED INCOME ON THE BASIS OF SEV EN BANK ACCOUNTS SUBMITTED BY THE ASSESSEE BEFORE HIM NOR EVEN CALLED FOR ANY REMAND REPORT, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF T HE LD. CIT(A) AND RESTORE THE ISSUES RAISED BEFORE US TO HIS FILE WITH THE DIRECT IONS TO READJUDICATE THESE ISSUES IN ACCORDANCE WITH LAW IN THE LIGHT OF OUR A FORESAID OBSERVATIONS , AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES . . NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LEARNED CIT(A) SHALL PAS S A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6) OF THE ACT. SUBJECT TO THESE DIRECTIONS, AFORESAID GROUND NOS. 1,1.2 & 1. 3 RAISED IN THE APPEAL BEFORE US, ARE DISPOSED OF. 9. GROUND NOS.2 AND 3 BEING MERE PRAYER, DO NOT REQ UIRE ANY SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED . 10. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 24-12-2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 24-12-2010 ITA NO. 793/AHD/09 11 COPY OF THE ORDER FORWARDED TO: 1. SHRI NARAYANBHAI S PATEL, 73-74, CHIRAG INDUSTRI AL ESTATE, CTM CHAR RASTA, AMRAIWADI, AHMEDABAD 2. ITO, WARD-12(1), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XX, AHMEDABAD 5. DR, ITAT BENCH-C, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD