Shri Amrutram Guru, Surat V. The Income tax Officer,Ward-6(1), Surat

ITA 883/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9350 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-01-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 01-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Income from undisclosed sources; Bogus loan
• Section: 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 883/AHD/2013 / ASSESSMENT YEAR : 2004-05 AMRUTRAM GURU, 6/519, NAVA RAM DWARA, GALEMANDI MAIN ROAD, SURAT-4 PAN : AJTPM 9222 E VS INCOME-TAX OFFICER, WARD 6 (1), SURAT ./ ITA NO. 884/AHD/2013 / ASSESSMENT YEAR : 2004-05 AMRUTRAM GURU-HUF, 6/519, NAVA RAM DWARA, GALEMANDI MAIN ROAD, SURAT-4 PAN : AAGHM 2126 K VS INCOME-TAX OFFICER, WARD 6 (1), SURAT / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA, AR REVENUE BY : SHRI ASHISH POPHARE, DR DATE OF HEARING : 12 /01/2017 DATE OF PRONOUNCEMENT IN COURT : 20/01/20 17 / O R D E R THESE ARE TWO APPEALS BY THE ASSESSEES ONE IN IND IVIDUAL CASE AND ANOTHER IN HUF CASE; AND BOTH THE APPEALS ARE DIREC TED AGAINST THE SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS)-I, SURAT OF EVEN DATED 17.01.2013 FOR ASSESSMENT YEAR 2004-2005 . 2. THE COMMON GROUND RAISED IN BOTH THE APPEALS IS AS UNDER:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AND IN FACTS IN CONFIRMING ADDITION OF RS.17,00,000/- M ADE AS UNEXPLAINED CAPITAL. 3. BRIEF FACTS OF THE CASE ARE THAT A CAPITAL BUI LDING RACKET WAS ORGANIZED BY ONE SURAT BASED CHARTERED ACCOUNTANT, SHRI PANKAJ DANAWALA, BY ALLURING GULLIBLE LOW INCOME ASSESSEES AND SHOWI NG FICTITIOUS ENTRIES IN SMC-ITA NOS. 883 & 884/AHD/2013 AMRUTRAM GURU & HUF VS. ITO AY : 2004-05 2 THEIR BALANCE-SHEETS FILED WITH THEIR INCOME TAX RE TURNS INCORPORATING FICTITIOUS CAPITAL BUILT UP. 3.1 DEPARTMENT GOT INFORMATION IN THIS BEHALF AND B ASED THEREON, A SURVEY ACTION U/S 133A OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) WAS CARRIED OUT AT THE PREMISES OF SHRI PANKAJ DANAWALA , CA, SURAT. DURING THE COURSE THEREOF, HIS STATEMENT ON OATH WAS RECORDED WHERE HE CATEGORICALLY ADMITTED THAT :- (I) HE HAS CREATED LARGE NUMBER OF FICTITIOUS CAPITAL B Y ALLURING NUMBER OF ASSESSEES, MAINLY BY TWO METHODS. FIRSTLY, BY JU MPING OF CAPITAL, I.E. SHOWING OPENING BALANCE OF CAPITAL SUBSTANTIAL LY MORE THEN AVAILABLE IN IMMEDIATE PREVIOUS YEAR AND SHOWING SU CH INCREASED CAPITAL AS LOANS / ADVANCES ETC. QUA FICTITIOUS SMA LL LOANS OR NON- EXISTENT INVESTMENT TO CAMOUFLAGE FICTITIOUS CASH I N HAND. SECONDLY, SHOWING FALSE INCOME /CAPITAL FROM DIFFERENT SOURCE S LIKE AGRICULTURAL INCOME, GIFTS, INTEREST, BROKERAGE COM MISSION ETC., FOR NUMBER OF YEARS IN ACCOUNT STATEMENTS, ACCUMULATING THE SAME AND INTRODUCING IT IN CAPITAL ACCOUNT WHILE FILING RETU RN OF INCOME FOR THE FIRST TIME BEFORE DEPARTMENT. SUCH FICTITIOUS CAPIT AL / INCOME OF HIS SELECTED CUSTOMERS WERE REFLECTED IN THEIR BALANCE SHEET AS BOGUS LOANS / ADVANCES / SUNDRY DEBTORS, INVESTMENT IN PL OT / FLAT ETC. SUBSEQUENTLY, IN LATER YEARS, THESE FALSE ASSETS WE RE LIQUIDATED AND PASSED ON TO BENEFICIARY. (II) IN THE SIMILAR WAY, THE UNACCOUNTED INCOME OF BENEF ICIARY WAS BROUGHT IN THE BOOKS OF SUCH BENEFICIARY BY USING T HE NAME OF ORIGINATORS OF CAPITAL, WHO WERE MERELY NAME LENDER S. SURVEY ACTION WAS ALSO CARRIED OUT AT ONE AKHAND ANAND CO-OPERATI VE BANK, SURAT AND ONE M. D. PATEL GROUP (THE GROUP), CONSISTING O F 20 PERSONS, SMC-ITA NOS. 883 & 884/AHD/2013 AMRUTRAM GURU & HUF VS. ITO AY : 2004-05 3 INCLUDES FAMILY MEMBERS WHO WERE BENEFICIARY OF SUC H MODUS OPERANDI. IT HAS DONE THROUGH ABOUT 154 DIFFERENT P ARTIES, I.E. ORIGINATORS OF CAPITAL. (III) CONSEQUENT TO THAT SURVEY ACTION ON SAID SHRI PANKA J DANAWALA, A SURVEY ACTION WAS ALSO CARRIED OUT AT THE BUSINESS PREMISES OF THE CONCERNS OF SAID M. D. PATEL GROUP, DURING THE COUR SE OF WHICH A STATEMENT OF ONE MR. KIRITBHAI PATEL (MAIN PERSON H ANDLING THE AFFAIRS OF SAID GROUP), WAS RECORDED. HE CONFIRMED DANAWALAS STATEMENT AND FURTHER STATED THAT FUND OF SAID GROU P HAS BEEN ROUTED THROUGH SAID 154 PARTIES (INCLUDING THE ASSE SSEES), INCOME TAX FILES OF WHICH WERE MAINTAINED AND OPERATED BY SAID PANKAJ DANAWALA AT THE INSTRUCTION OF THE SAID GROUP. THRO UGH SAID 154 FILES, BOGUS CAPITAL WAS CREATED BY SHOWING FICTITI OUS OPENING CAPITAL / INCOME ETC. IT WAS ALSO STATED THAT SAID GROUP HA S CARRIED OUT CASH TRANSACTIONS BY ROTATING CASH OVER AND AGAIN, SEVER AL TIMES IN VARIOUS ACCOUNTS MAINTAINED AND OPERATED WITH THE S AID BANK. (IV) THE SAID M.D. PATEL GROUP FILED SETTLEMENT PETITION S BEFORE HONBLE SETTLEMENT COMMISSION, ADDITIONAL BENCH, MUMBAI, FO R SETTLEMENT OF THEIR CASES. (V) BY CREATING ARTIFICIAL CAPITAL, THE ASSESSEES IN QU ESTION CLAIMED THAT THEY HAVE NOT EARNED ANY REAL INCOME, ONLY FICTITIO US CAPITAL CREATED ON PAPERS BY DANAWAL FOR THE FUTURE BENEFITS OF SAI D M. D. PATEL GROUP. THE ASSESSEE IS MERELY A NAME LENDER MR. PAN KAJ DANAWALA, C.A., ALSO ADMITTED THE FACTUM OF MANIPULATING IN T HIS MANNER. 3.2 THE ASSESSEE(S) FURTHER CLAIMED THOUGH THE ARTI FICIAL CAPITAL APPEARS IN THE BOOKS OF ACCOUNTS THAT WAS NOT EVEN EVER USED F OR M D PATEL GROUP BY SMC-ITA NOS. 883 & 884/AHD/2013 AMRUTRAM GURU & HUF VS. ITO AY : 2004-05 4 DANAWALA AS NEED DID NOT ARISE. THE FACT OF THE MAT TER WAS THE ARTIFICIAL CAPITAL IN BOTH THE ASSESSEES REFLECTED IN THE BALA NCE-SHEET WAS NEVER USED FOR SUCH PURPOSES. SHRI PANKAJ DANAWALA USED TO P REPARE SUCH RETURNS FOR USE OF THE ARTIFICIAL CAPITAL AT APPROPRIATE TIME, WHICH IN THIS CASE COULD NOT BE EVEN UTILIZED BY SHRI PANKAJ DANAWALA AS BEFORE THAT HIS PREMISES WERE SURVEYED. THUS, IN EFFECTIVE TERMS, EXCEPT THE BALA NCE-SHEET ENTRIES WHICH ARE ONLY PAPER ENTRIES, THERE IS NO ALLEGATION OR F INDING THAT FICTITIOUS CAPITAL WAS EVER USED IN ANY MANNER OR ANY CORRESPONDING AS SET THERETO WERE OWNED BY THE ASSESSEE. THUS, THE ASSESSEES FAULT IS TO THE EFFECT THAT - ON THE ALLUREMENT OF A QUALIFIED CHARTERED ACCOUNTANT, SHR I PANKAJ DANAWALA, THE ASSESSEES VOLUNTARILY SIGNED ON THE INCOME-TAX PAPE RS PREPARED BY HIM AND ON THE PAPER BALANCE-SHEET AS PREPARED BY HIM. LD. ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT ASSESSEES CONTENTIONS ON F OLLOWING REASONING: (I) THE AO AWARE ABOUT ANY SETTLEMENT PETITION BY M.D. PATEL GROUP; (II) THE ASSESSEES HAD OBJECTED TO 148 PROCEEDINGS ON TH E GROUND THAT THE CAPITAL IN QUESTION WAS CARRIED OVER FROM EARLI ER YEARS; THEREFORE, THERE WAS NO ESCAPEMENT OF INCOME IN THI S YEAR. 3.3 THE ASSESSING OFFICER REJECTED THESE CONTENTIONS BY FOLLOWING OBSERVATIONS:- 62. THE SUBMISSION FILED BY THE ASSESSEE HAS BEEN CONSIDERED CAREFULLY. THE ASSESSEES ARGUMENT THAT THE CAPITAL RAISED PERTAIN S TO A.Y. 2003-04 IS NOT ACCEPTABLE BECAUSE THE ASSESSEE NEITHER SHOWN THE S AID AMOUNT IN HIS CAPITAL ACCOUNT NOR SHOWN AS CORRESPONDING -ADVANCES IN HIS BALANCE SHEET AS ON 31 03.2003. THE ASSESSEE HAS GIVEN THE SAID AMOUNT TO THE DIFFERENT PARTIES AS ADVANCES IN THE YEAR UNDER CONSIDERATION AS SHOWN B Y HIM IN HIS BALANCE SHEET AS ON 31.032004 ONLY. THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF INCREASE IN CAPITAL AND ALSO FAILED TO EXPLAIN BY G IVING PROPER REASONS AS TO WHY THE SAME SHOULD NOT BE TREATED AS UNEXPLAINED A ND ADDED TO THE TOTAL INCOME. IT IS ALSO NOTICED FROM THE ABOVE SUBMISSI ON OF THE ASSESSEE THAT HIS MAIN OBJECTION IS AGAINST THE YEAR IN WHICH THE UNE XPLAINED INCOME IS TO TAXED WHICH CLEARLY SHOWS ASSESSEE'S ACCEPTANCE OF CAPITAL RAISING IN THE CIRCUMSTANCES THE DIFFERENTIAL AMOUNT OF RS. 17,00, 000/- -IN CAPITAL ACCOUNT SMC-ITA NOS. 883 & 884/AHD/2013 AMRUTRAM GURU & HUF VS. ITO AY : 2004-05 5 REMAINS UNEXPLAINED AND REQUIRE TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE FACT OF INCREASE IN CAPITAL ACCOUNT O F THE ASSESSEE IS APPARENT AND HAS NOT BEEN DENIED. THEREFORE, AN ADDITION OF RS.17,00,000/- IS MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNEX PLAINED CAPITAL. IN VIEW OF THE ABOVE FACTS I AM OF THE CONSIDERED VIEW THAT TH IS IS A FIT CASE FOR INITIATING PENALTY PROCEEDINGS U/S 274 R.W.S. 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS. 6. IN THE RETURN OF INCOME FILED IN RESPONSE TO NO TICE U/S 148 OF THE ACT THE ASSESSEE HAS SHOWN TOTAL INCOME AT RS. NIL WHER EAS IN THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAD SHOWN TOTAL INCOME AT R S.54,495/-. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE HAS N OT FURNISHED ANY REASONS/EXPLANATION FOR SUCH DECREASE IN SHOWING TO TAL INCOME, HENCE THE SAME IS NOT ACCEPTABLE AND THE INCOME SHOWN IN ORIG INAL RETURN IS CONSIDERED WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEES PREFERRED FIRST APPEALS WHERE THE ASSESSEES CONTENDED THAT SHRI PANKAJ DANAWALA HAS CATEGORICA LLY ADMITTED THAT THE ASSESSEES IN QUESTION DID NOT HAVE ANY CAPITAL AND FICTITIOUS ENTRIES WERE CREATED BY HIM BY USUAL PRACTICE AS DONE IN MANY OT HER CASES. BESIDES, RELIANCE WAS PLACED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF SMT. LEELABEN KANTILAL NAKRANI IN ITA NO.2369/AHD/2008 D ATED 18.06.2010, IN WHICH SIMILAR ADDITIONS WERE DELETED IN THE HANDS O F SMT LEELABEN KANTILAL NAKRANI. LD. CIT(A), HOWEVER, HELD THAT THE ASSESS EES VERSION WAS NOT RELIABLE AS THERE WERE ENTRIES IN THE BALANCE-SHEET TO THE EFFECT THAT THE ASSESSEE HAS NOT SHOWN ADVANCE FOR IMMOVABLE PROPER TIES WHOSE LOCATION WAS NOT EXPLAINED BY THE ASSESSEES. BESIDES, SMALL, SMALL LOANS WERE GIVEN TO OTHER PERSONS. THE ASSESSEES EXPLAINED THAT THE VERY FACT THAT THERE WAS NO EXISTENCE OF ANY FLAT/IMMOVABLE PROPERTY AS PURP ORTED IN RETURNS WAS DEMONSTRATED BY THE FACT THAT NEITHER ANY DESCRIPTI ON WAS GIVEN IN THE BALANCE-SHEET NOR FOUND BY THE DEPARTMENT. SIMILAR LY, THE SMALL LOANS HAD NO EXISTENCE AT ALL. SHRI PANKAJ DANAWALA BY HIS FICTITIOUS PLANNING USED TO MAKE FALSE ENTRIES TO AVOID THE QUESTION ABOUT THE HUGE CASH BALANCE. THEREFORE, THE ADVANCE IN PROPERTIES WITHOUT NAMING THE DATE, LOCATION, SMC-ITA NOS. 883 & 884/AHD/2013 AMRUTRAM GURU & HUF VS. ITO AY : 2004-05 6 IDENTIFICATION WERE MADE SO ALSO FICTITIOUS DEBTORS WERE SHOWN WITHOUT THERE BEING ANY EXISTENCE. LD. CIT(A), HOWEVER, HE LD THAT THE ASSESSEE(S) HAS NOT OFFERED PROPER EXPLANATION AND DISMISSED TH E APPEALS. 5. AGGRIEVED, THE ASSESSEES ARE IN SECOND APPEAL BE FORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT:- I. IT IS AN UNDISPUTED FACT THAT SHRI PANKAJ DANAWALA , CA, SURAT WAS A KINGPIN OF THE WHOLE RACKET IN WHICH SMALL TIME ASS ESSEES WERE ALLURED TO SIGN ON THE RETURN FORMS AND BALANCE-SHE ETS ETC. PREPARED BY HIM WITH A DESIGN TO USE THE ARTIFICIAL CAPITAL AT AN APPROPRIATE TIME FOR THE HELP OF THE SAID M.D. PATEL GROUP. II. UNFORTUNATELY, THE ASSESSEES ARE THE VICTIMS OF THE PRACTICES OF THE SAID SHRI PANKAJ DANAWALA. A PERUSAL OF BALANCE-S HEET WILL REVEAL THAT BOTH THE ASSESSEES DID NOT ADVANCE ANY AMOUNT TO THE SAID M.D. PATEL GROUP AND THE FICTITIOUS ENTRIES EMANATING FR OM THEIR BALANCE SHEETS REMAINED ONLY ON PAPER. THERE WAS NO EXISTE NCE OF CAPITAL. THERE IS NO EARNING OF ANY REAL INCOME, NO ADVANCE IN ANY PROPERTY AND THERE WERE NO DEBTORS AT ALL. THERE BEING NO R EAL INCOME OR ASSETS WHICH IS NOT DISPUTED BY THE DEPARTMENT, THE ASSESSEE CANNOT BE MAKE TO PAY TAX ON THE CAPITAL WHICH NEITHER BEL ONG TO THEM NOR SHOWN BY THE DEPARTMENT IN ANY MANNER TO BE OWNED B Y THEM. III. IT IS TRITE LAW THAT ONLY PAPER ENTRIES CANNOT THE BASIS FOR MAKING THE ADDITIONS. THE RECORD DEMONSTRATES THAT THE AUTHOR ITIES BELOW COULD NEVER INDICATE ANY EARNING OR INVESTMENT BY THE ASS ESSEE, EITHER IN THE DESCRIPTION AS SHOWN IN THE BALANCE-SHEETS OR T O M/S. M.D. PATEL GROUP. SMC-ITA NOS. 883 & 884/AHD/2013 AMRUTRAM GURU & HUF VS. ITO AY : 2004-05 7 IV. BOTH THE ASSESSEES WERE CAUGHT BEFORE SHRI PANKAJ D ANAWALA TO OVER UTILIZED THEIR FICTITIOUS ENTRIES. THUS, THIS IS A CASE WHERE USE OF THE FICTITIOUS ENTRIES COULD BE CARRIED OUT BY THE KING PIN OR M/S. M.D. PATE GROUP. THUS, THE ASSESSEE HAS NEITHER ADVANCE D ANY AMOUNT TO M/S. M.D. PATEL GROUP NOR MADE ANY INVESTMENTS IN T HE PROPERTY OR ADVANCED TO LOANEES AS SHOWN IN THEIR BALANCE-SH EET. V. THE LD. COUNSEL FOR THE ASSESSEE THEN ADVERTED TO I TAT JUDGMENT IN THE CASE OF SMT LEENABEN KANTILAL NAKRANI (SUPRA). IN THIS CASE, LD. CIT(A) ACCEPTED THE ASSESSEES CONTENTION AND DELET ED THE ADDITIONS AGAINST WHICH THE REVENUE CAME IN APPEAL. THE ITAT HELD AS UNDER:- 6. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF REVENUE SHRI H.P. MEENA, SR. D.R. APPEARED AND RELYING ON THE REASONI NG GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER CONTENDED THAT ASSESSING OFFICER RIGHTLY MADE THE ADDITION OF RS.15,00,000/- UNDER SECTION 68 OF THE INCOME TAX ACT ON PROTECTIVE BASIS AND THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) IS NOT JUSTIFIED IN DELETING THE SAME. THE LD. D.R. POINTED OUT THAT BEFORE BOTH THE AUTHORITIES B ELOW, THE ASSESSEE FAILED TO PRODUCE ANY DOCUMENTS TO DISOWN THE VARIO US ENTRIES. THEREFORE, THE ADDITION WAS MADE ON PROTECTIVE BASI S ON THE BASIS OF RETURN OF INCOME FILED BY HER (THE ASSESSEE). THE R ETURN OF INCOME IS A LEGAL DOCUMENT, WHICH CANNOT BE SAID TO BE ROUGH PA PER AND LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CLEARLY ERRED I N DELETING THE SAID ADDITION OF RS.15,00,000/-. 7. ON THE OTHER HAND, SMT. POONAM JOSHI, LD. COUNSE L APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORD ER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). SHE POINTED OU T THAT THE ENTIRE EXERCISE OF REFLECTING CAPITAL REPRESENTED BY WAY O F ADVANCES THAT TOO WITHOUT PREPARATION OF ANY BOOKS OF ACCOUNTS WAS TH AT OF SHRI PANKAJ DANAWALA, ABOUT WHICH A LAYMAN IS NOT COMPETENT ENO UGH AND CANNOT BE EXPECTED TO UNDERSTAND THE IMPLICATION AND CONSE QUENCES OF SUCH AN ACT. THE LD. A.R. SUBMITTED THAT FICTITIOUS ENTRIES WERE NEITHER SUPPORTED BY ANY INDEPENDENT CORROBORATIVE EVIDENCE NOR SUCH CAPITAL WAS UTILIZED, THEREFORE, THE VIEW TAKEN BY THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. SMC-ITA NOS. 883 & 884/AHD/2013 AMRUTRAM GURU & HUF VS. ITO AY : 2004-05 8 8. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOT E THAT THE ASSESSING OFFICER, IN THE ASSESSMENT ORDER, HIMSELF OBSERVED THAT 'CONSIDERING THE ADMISSION MADE BY THE MOHANBHAI DHANJIBHAI PATEL GR OUP, THIS IS REQUIRED TO BE TAXED IN THE HANDS OF MOHANBHAI DHAN JIBHAI PATEL SUBSTANTIVELY ALONGWITH THE ENHANCED CAPITAL OF RS. 15,00,000/- ALTOGETHER WHICH WORKS OUT TO RS.15,00,000/- AN ON PROTECTIVE BASIS IN THE CASE OF THE ASSESSEE'. THIS CLEARLY INDICATES T HAT THE ASSESSING OFFICER HIMSELF WAS NOT SURE WHETHER THIS INCOME OF RS.15,00,000/- IS EARNED AND ACTUALLY BELONGED TO THE ASSESSEE. THE A SSESSEE HAS FILED AN AFFIDAVIT BEFORE THE ASSESSING OFFICER. FROM THE PE RUSAL OF THE SAME AND AFTER CONSIDERING THE TOTALITY OF THE FACTS AND REA SONING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), WE ARE CONVINCED THAT THE ASSESSING OFFICER MADE THE ADDITION OF RS.15,00 ,000/- ON THE BASIS OF FICTITIOUS ENTRIES IN LOOSE SHEETS OF PAPER FOUN D FROM THE PREMISES OF THE C.A. SHRI PANKAJ DANAWALA, WHO HAD ADMITTED TO HAVE CREATED SUCH AMOUNTS HIMSELF. THEREFORE, THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORRECT IN DE LETING THE ADDITION OF RS.15,00,000/-, WHICH WAS MADE BY THE ASSESSING OFF ICER IN THE HANDS OF ASSESSEE ON PROTECTIVE BASIS. RESULTANTLY, THE G ROUND OF APPEAL RAISED BY THE REVENUE IS REJECTED. VI. THE LD. COUNSEL FURTHER CONTENDS THAT THE FACTS AND CIRCUMSTANCES ABOUT CREATION OF FICTITIOUS ENTRIES PROMPTED BY SH RI. PANKAJ DANAWALA, ARE SAME BETWEEN THE CASE OF SMT. LEENABE N KANTILAL NAKRANI (SUPRA) AND THE ASSESSEES. HOWEVER, THE AS SESSEES CASES STAND ON BETTER FOOTING IN AS MUCH AS: (I) IN THE CASE OF SMT. LEENABEN KANTILAL NAKRANI, THE CAPITAL WAS USED BY M/S. M.D. PATEL GROUP. STILL THE SAME HAS B EEN DELETED. (II) WHEREAS, IN ASSESSEES CASES, THE CAPITAL HAS NOT AT ALL USED AND IT HAS NOT BEEN DISPUTED THAT SHRI. PANKAJ DANAWALA HA S ACCEPTED THAT THE CAPITAL ENTRIES IN BOTH THE ASSESSEES IN QUESTI ON ARE FICTITIOUS AND MADE BY HIS DESIGN OF KEEPING THE FICTITIOUS CAPITA L IN READINESS. THUS, IN LEENABEN CASE THE FICTITIOUS ENTRY WERE AC TUALLY USED HAVE HAS BEEN DELETED BY LD. CIT(A); WHEREAS IN ASSESSEE S CASES WITHOUT SMC-ITA NOS. 883 & 884/AHD/2013 AMRUTRAM GURU & HUF VS. ITO AY : 2004-05 9 DISPUTING THE FACT THAT FICTITIOUS ENTRIES WERE NOT AT ALL USED, LD. CIT(A) HAS UNJUSTIFIABLY CONFIRMED THE ADDITION. THUS, THE LD. CIT(A)S OFFICE HAS BEEN TAKING A DIV ERGENT STANDARDS ON THE SAME SUBJECT MATTER. IN VIEW OF THESE FACTS , LD. COUNSEL CONTENDS THAT :- A. IT REMAINS UNDISPUTED THAT THE ASSESSEES DID NOT US E THIS CAPITAL FOR M/S. M.D. PATEL GROUP; B. SHRI. PANKAJ DANAWALA HAS ACCEPTED THAT THE ASSESSE E BOGUS ENTRIES WERE CREATED BY HIM TO BE EXPLOITED BY HIM; C. THE ENTRIES WERE NEVER USED; HENCE NEVER EXPLOITED AND NO BENEFIT ACCRUED TO ASSESSEES IN APPEAL. D. THE FICTITIOUS ENTRY ABOUT INVESTMENT IN IMMOVABLE PROPERTY AND GIVING SMALL TIME ADVANCE HAVE NO BASIS AS NONE OF THEM EXISTING AND THE DEPARTMENT HAS NOT INDICATED ANY COGENT MAT ERIAL THAT ANYTHING WAS IN EXISTENCE. VII. IT IS CONTENDED THAT THE ADDITION HAS BEEN MADE ONL Y BASED ON THE BALANCE-SHEET WHICH IS ACCEPTED BY SHRI. PANKAJ DAN AWALA TO BE HIS CREATION AND THE ASSESSEE HAVING NO ROLE AND THE FI CTITIOUS CAPITAL HAVING NEVER BEEN USED, THE ADDITIONS DESERVES TO B E DELETED. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON TH E ORDERS OF THE AUTHORITIES BELOW. 7. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUT HORITIES. I FIND MERIT IN THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT ADDITIONS HAVE BEEN MADE ONLY BASED ON THE FICTITIOUS BALANCE-SHEET ENT RIES WHICH ARE ACCEPTED BY SHRI. PANKAJ DANAWALA TO BE HIS CREATION AND THE ASSESSEES HAD NO ROLE THEREIN. MOREOVER, THE FICTITIOUS CAPITAL HAS NEVER BEEN USED WHICH WERE SMC-ITA NOS. 883 & 884/AHD/2013 AMRUTRAM GURU & HUF VS. ITO AY : 2004-05 10 PAPER ENTRIES ONLY THUS NO BENEFIT EVER ACCRUED TO ASSESSEES. I ALSO FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN THE CASE OF SMT LEENABEN KANTILAL NAKRANI (SUPRA) THE ADDITION WAS DELETED BY LD. CIT(A) AND THE REVENUES APPEAL WAS DISMISSED BY IT AT EVEN WHEN THE FICTITIOUS CAPITAL WAS USED IN THAT CASE BY SAID M/ S. M.D. PATEL GROUP AND A PROTECTIVE ADDITION WAS MADE IN THE HANDS OF SMT LE ENABEN. IN CLEAR DISTINCTION TO THESE FACTS IN THE CASE OF ASSESSEES IN QUESTION, THE FICTITIOUS CAPITAL WAS NOT AT ALL USED OR DERIVED ANY BENEFIT FROM SHRI DANAWALA OR M/S. M.D. PATEL GROUP AND THE DEPARTMENT HAS NOT CO NTROVERTED THESE FACTS. THUS, THE ASSESSEES AT THE MOST ARE GUILTY OF FALLING PREY TO THE DESIGN OF AN UNSCRUPULOUS CHARTERED ACCOUNTANT WHO CREATED NEFARIOUS DESIGN AND ALLURED THE ASSESSEES WITHOUT ANY ADVANTAGE HAV ING ACCRUED TO THEM. IN THE LIGHT OF THESE FACTS, CIRCUMSTANCES, OBSERVA TIONS AND FOLLOWING ITAT JUDGMENT IN THE CASE OF SMT LEENABEN KANTILAL NAKRA NI (SUPRA), I AM OF THE VIEW THAT THERE IS NO JUSTIFICATION IN MAKING ADDIT ION OF RS.17,00,000/- IN EACH CASE, WHICH IS DELETED. THE ASSESSEES APPEAL S ARE THUS ALLOWED. 8. IN THE RESULT, BOTH APPEALS FILED BY THE ASSESSE E(S) ARE ALLOWED. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 20/01/2017 *BIJU T., SR. PS / 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