Shivshakti Consultancy Pvt. Ltd., Ahmedabad V. The ACIT, Cent.Circle-1(4), Ahmedabad

ITSSA 107/AHD/2005

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0010 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-02-2014
• Assessment Year: misc
• Appeal Filed On: 07-04-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Assessee Lawyers: P M PATEL AR
• Keywords: Search and seizure
• Section: 142(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , , , , BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND .., SHRI T.R. MEENA, ACCOUNTANT MEMBER !.. , ' # $ # $ # $ # $ IT(SS)A NO. 107/AHD/2005 BLOCK PERIOD: 1/4/1995 TO 31/3/2001 & 1/4/2001 TO 13/12/2001 SHIVSHAKTI CONSULTANCY PVT. LTD. 10, SULAY APARTMENT, OPP. VAIBHAV BUNGALOWS, NEAR SUN & STEP CLUB, THALTEJ, AHMEDABAD V/S . ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(4), AHMEDABAD. PAN NO. A ACCS6240B (APPELLANT) .. (RESPONDENT) %& ' ( / BY APPELLANT SHRI P. M. PATEL, A.R. )%& ' ( /BY RESPONDENT SHRI O. P. VAISHNAV, CIT.D.R. *+, ' -' /DATE OF HEARING 19.02.2014 ./0 ' -' /DATE OF PRONOUNCEMENT 26.02.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF ASSESSEE WHICH H AS EMANATED FROM THE ORDER OF CIT(A)-I, AHMEDABAD, DATED 21.12.2004 FOR BLOCK PERIOD: 1/4/1995 TO 31/3/2001 & AND UP TO DATE OF SEARCH 13 .12.2001 THE EFFECTIVE GROUNDS OF ASSESSEES APPEAL ARE AS U NDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)- I, HAS TOTALLY ERRED IN CONFIRMING THE VIEW TAKEN BY THE L EARNED ASSESSING OFFICER THAT ALL TRANSACTIONS MADE BY VIR TUE OF AN AGREEMENT DATED 13/12/1995 BETWEEN VAIKUNTH PARK CO - IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 2 OPERATIVE HOUSING SOCIETY LIMITED AND SHIVSHAKTI CO NSULTANCY PVT. LTD. ONLY BELONGED TO SHIVSHAKTI CONSULTANCY P VT. LTD. AND THERE WAS NO LEGAL EXISTENCE OF VAIKUNTH PARK CO-OP ERATIVE HOUSING SOCIETY LTD. WITHOUT CONSIDERING AMPLE CONT EMPORARY EVIDENCES PRODUCED BEFORE ASSESSING OFFICER. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THOU GH THE AMOUNT OF RS.2413301 (OUT OF RS.5758301) MEMBERS CONTRIBUTION CREDITED IN THE AUDITED BOOKS OF ACCOU NTS OF VAIKUNTH PARK CO-OPERATIVE HOUSING SOCIETY LTD., TH E LEARNED CIT(APPEALS) WAS NOT JUSTIFIED IN CONFIRMING ADDITI ON OF SAID AMOUNT IN THE HANDS OF ASSESSEE COMPANY. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THOU GH RS.10000 RECEIVED FROM TIRUGNANM CHANDULAL MUDLIAR ANNEXURE A-11/21, RS. 11000/- RECEIVED FROM SMT. INDUMATI CHUNILAL PA REKH ANNEXURE A-11/24 AND RS. 11000 FROM SHRI RAJENDRA PANDURANG PATIL ANNEXURE A-11/35, AND CREDITED IN T HE BOOKS OF ACCOUNTS, THE LEARNED CIT (APPEALS) WAS NOT JUSTIFI ED IN CONFIRMING ADDITION OF RS.3200000 (OUT OF RS.575830 1) IN THE HANDS OF THE ASSESSEE COMPANY. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THOU GH RS. 55000 ANNEXURE A/2 FOUND FROM OFFICE OF THE SOCIETY AND R S.38000 A- 5/1 AND A-5/2 OF OFFICE OF THE SOCIETY, THE LEARNED CIT(APPEALS) WAS NOT JUSTIFIED IN MAKING ADDITION IN THE HANDS O F THE ASSESSEE COMPANY. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) WAS NOT JUSTIFIED IN CONFIRMING ADDITI ON OF RS.914000/-, RS.307000/-, RS.10000/-, RS.415000/-. RS. 193458/- AND RS.15000/- AMOUNTING TO RS. 1854458 IN THE HANDS OF ASSESSEE COMPANY AS SAID AMOUNT NEITHER AC CRUED NOR RECEIVED BY THE ASSESSEE COMPANY. IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 3 2. THERE WAS A SEARCH AND SEIZURE OPERATION IN CAS E OF ASSESSEE ON 13.12.2001. THE ASSESSEE COMPANY IS IN BUSINESS OF CONSTRUCTION OF RESIDENTIAL FLATS, TENEMENTS AND BUNGALOWS. AS PER SEARCH PROVISION, THE A.O. GAVE NOTICE U/S. 142(1) OF THE IT ACT ON VARIO US DATES. AFTER CONSIDERING THE ASSESSEES REPLY, THE A.O. OBSERVED THAT THE ASSESSEE HAD RECEIVED ON MONEY WHILE BOOKING OF THE FLAT, WH ICH WAS AVAILABLE IN VARIOUS SMALL DIARIES SEIZED FROM THE OFFICE AND AN NEXURE A-11, SEIZED FROM THE RESIDENCE OF SAME, THE ANNEXURE 1 HAD BEEN PREPARED WHICH SUMMARIZED THE ON MONEY RECEIVED BY COMPANY WHILE D OING ITS BUSINESS FOR THE CONSTRUCTION AND DEVELOPMENT OF THE VAIKUNT H SCHEME. THE DETAILS OF ON MONEY RECEIVED WAS NARRATED BY THE A.O. ON PA GE NOS. 2 TO 5 IN TOTAL RS.57,58,301/-. THE A.O. GAVE REASONABLE OPPORTUNI TY OF BEING HEARD ON THIS ISSUE, WHICH WAS RESPONDED BY THE ASSESSEE AND SUBMISSION OF THE ASSESSEE, IS REPRODUCED AS UNDER: 2.3 THE ASSESSEE SUBMITTED REPLIES ON VARIOUS DATE S AND THE SAME ARE REPRODUCED AS BELOW FOR PERUSAL: (1) CONTRIBUTION RECEIVED FROM THE MEMBERS. AMOUNT OF RS.57,58,301.00 RECEIVED FROM VARIOUS FLA T HOLDERS ON VARIOUS DATES MENTIONED IN ANNEXURE 1 OF ABOVEME NTIONED NOTICE HAVE BEEN ACCOUNTED FOR IN THE BOOKS OF VAIK UNTH PARK CO-OP HOU SOC. LTD. WE HEREWITH PRODUCE THE BOOKS OF ACCOUNTS OF SAID SOCIETY FOR YOUR PERUSAL. (2) EXPLANATION FOR MONEY RECEIVED BY THE COMPANY ANNEXURE A-17 TO A-21, A-23, A-25 AND A-28 ARE RECE IPT OF THE COMPANY WHICH HAVE BEEN ISSUED TO THE VARIOUS MEMBE RS OF THE ABOVEMENTIONED SOCIETY. IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 4 IN ANNEXURE A-17 THERE ARE CERTAIN RECEIPTS FOR WHI CH NO AMOUNT ACTUALLY HAVE BEEN RECEIVED BUT THE RECEIPTS ARE PR EPARED FOR VISA PURPOSE. (3) EXPLANATION REGARDING PAGE NO.3/24 OF ANNEXURE A-34. WE WOULD GIVE THE EXPLANATION REGARDING PAGE 3 TO 2 4 OF ANNEXURE A-34 AFTER VERIFYING THE DETAILS OF SAID A NNEXURES. EXPENDITURE REGARDING PAGE NO. 3 TO 24 OF ANNEXURE A-34 ON PERUSAL OF ANNEXURE A-34 PAGE NO.3 TO 24. IT IS FOUND THAT RECEIPTS HAVE BEEN ISSUED BY THE SHIVSHAKTI CONSULTANCY PRIVATE LIMITE D TO VARIOUS MEMBERS OF THE VAIKUNTH PARK AND VAIKUNT COMPLEX. THE SAID RECEIPTS ARE ENTERED IN REGULAR BOOKS OF THE COMPAN Y. THE DETAILS ARE AS UNDER: PAGE NO. CASH BOOK RECEIPT NO. DATE AMOUNT FLAT NO. MODE 24 29/09/00 75,000 C/4/2 BY CHEQUE 17 2/08/00 75,000 C/4/12 BY CHEQUE 30 22/01/01 1,54,000 -- BY CHEQUE 7 16/03/00 2,00,000 B/4/13 BY CHEQUE 6 10/03/00 1,00,000 C/4/11 BY CHEQUE 2 7/02/00 1,00,000 C/4/1 BY CHEQUE 19 8/08/00 95,000 C/4/1 BY CHEQUE 9 6/04/00 1,00,000 B/4/1 BY CHEQUE 13 30/05/00 1,21,000 C/4/14 BY CHEQUE 26 20/10/00 1,20,000 C/4/34 BY CHEQUE 27 25/10/00 50,000 C/2/31 BY CHEQUE ALL ABOVE CHEQUES HAVE BEEN ENTERED IN THE BANK BOO K OF THE COMPANY WHICH WERE ALSO REFLECTED IN THE BANK STATEMENT ISS UED BY THE BANK. IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 5 THE A.O. AFTER CONSIDERING THE ASSESSEES REPLY OBS ERVED THAT THE RECEIPTS HAD BEEN ISSUED BY THE SHIVSHAKTI CONSULTANCY PVT. LTD. & OTHERS, WHICH HAS BEEN REFLECTED IN ANNEXURE A-17 TO A-21, A-23, A-25 & A-28. THE ASSESSEES ARGUMENT IS THAT RECEIPTS INDEED WERE IS SUED BY THE SOCIETY, THEN THESE RECEIPTS WERE NOT PART OF THE RECEIPTS O F THE COMPANY. ACTUALLY RECEIPTS WERE ISSUED BY THE COMPANY AND ACCORDINGLY , IT SHOULD BE ACCOUNTED FOR IN THE BOOKS OF COMPANY. THE COMPANY BROUGHT THE BOOKS OF ACCOUNT OF NTC AND TRIED TO EXPLAIN THE SAME AS RECEIPTS OF THE SOCIETY, WHICH WERE NOT FOUND ACCEPTABLE BY THE A.O. ON THE GROUND THAT IN THE BANK ACCOUNT OF THE SOCIETY, THERE IS NO MUCH TRANS ACTION FROM 1994 TO 97. THIS WAS POINTER TO THE FACT THAT THE ASSESSEE WAS TAKING MONEY AND NOT THE SOCIETY AS SUCH. FURTHER HE HELD AS UNDER: THE BOOKS OF THE SOCIETY IS NOTHING BUT A RUSE TO EXPLAIN THE UNEXPLAINABLE. IT CAN BE SEEN THAT THE COMPANY IS M OSTLY ONE MAN SHOW. JANAKBHAI AS DIRECTOR HANDLES ALL THE BUSINES S AND STRATEGIC DECISIONS ARE TAKEN BY HIM. HE AS BUILDER AND DEVEL OPER TAKES THE DECISION REGARDING THE ACCEPTANCE OF THE ON MONEY R ECEIPTS WHICH ARE RAMPANT IN THIS LINE OF BUSINESS. IT CAN BE SEEN TH AT THE PROJECT IS TOTALLY HANDLED BY JANAK PATEL. IT CAN BE SEEN THAT IN THE GROUP CASE OF SHREEJI CORPORATION WHERE THE JANAKBHAI IS A PARTNE R THE COLLECTION OF THE ON MONEY HAS BEEN IN FACT ACCEPTED. IT CAN NOT BE THE CASE OF THE ASSESSEE THAT AT ONE PLACE THE ON MONEY ARE ACCEPTE D AND IN THE OTHER INSTANCE NO UNACCOUNTED ON MONEY HAS BEEN TAK EN. AT THE TIME OF THE SEARCH NO BOOKS OF ACCOUNTS WERE FOUND OR NO R WERE THEY PRODUCED BEFORE THE REVENUE AUTHORITIES. THE EXPLAN ATION AFTER TWO YEARS THAT ON MONIES ARE ACCOUNTED FOR IN THE NTC I S CONTRADICTORY AND AFTER THOUGHT. THE ASSESSEE HAS SQUARELY FAILED TO DISCHARGE HIS ONUS IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 6 UNDER SECTION 132(4A) OF THE IT ACT, 1961. THE PROV ISIONS OF SECTION 132(4A) SPELT OUT THE PRESUMPTION CAN BE SAID TO AR ISE WHEN IT IS ESTABLISHED THAT THE ARTICLE OR THING IS FOUND IN T HE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH. IT IS ONLY AFTER THIS ASPECT IS ESTABLISHED, THE STATUTORY PROVISION OF SECTION 132 (4A) RAISES A PRESUMPTION WITH REGARD TO THE THREE ASPECTS SPECIF IED IN CLAUSES (I), (II) AND (III) OF THAT SECTION [CIT V. K,K. ABDUL K AREEM, (1996) 88 TAXMAN 323, 332-33 (KER)]. IN FT. BHARATHAN V. ITO[ (1990) 182 ITR 146, 149 (KER)], CERTAIN AMOUNT WAS RECOVERED FROM A ROOM WHICH WAS A BEDROOM OF THE PETITIONER ASSESSEE, THE SAME BEIN G KEPT AND LOCKED BY HIM, EVEN THOUGH THE HOUSE BELONGED TO HIS ONLY DAUGHTER. IT WAS HELD THAT THERE WAS NO IRREGULARITY IN APPLYING THE PRESUMPTION UNDER SECTION 132(4A) FOR TREATING THE AMOUNT SO SEIZED A S BELONGING TO THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE A SSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAS ALSO DISMISSED THE ASSESSEES APPEAL BY OBSERVING THAT THERE CAN BE NO DOUBT THAT THE SO CIETY HAS BEEN VALIDLY REGISTERED AND HAS INDEPENDENT MEMBERS AND MANAGING COMMITTEE WHO ARE DISTINCT FROM THE DIRECTORS OF THE APPELLANT CO MPANY. BUT, AT THE SAME TIME, THERE CAN BE NO DOUBT ALSO THAT THE APPELLANT COMPANY WAS HAVING TOTALLY A CLEAR HAND IN REGARD TO THE TRANSACTIONS RELATING TO COLLECTIONS OF FUNDS WHICH WERE BEING ACCOUNTED FOR TO SOME EXTENT IN THE BOOKS OF ACCOUNTS OF THE SOCIETY. THE APPELLANT COMPANY IS ADMITTING TO RECEIVING MONEY BOTH IN CASH AND IN CHEQUE FROM THE ALLEGED M EMBERS OF THE SOCIETY AND DIRECTLY CREDITING MAJORITY OF SUCH REC EIPTS IN THEIR OWN BOOKS OF ACCOUNT. IT IS ONLY AT THE CLOSE OF THE YEAR TH AT THE APPELLANT COMPANY CLAIMS TO BE SETTING OFF THE RECEIPTS AGAINST EXPEN SES AND TRANSFERRING IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 7 SOME NET AMOUNT TO THE SOCIETY. IT HAS NOT BEEN EX PLAINED WHAT IS THE QUANTUM OF SUCH TRANSFER AT THE CLOSE OF EACH YEAR COVERED IN THE BLOCK PERIOD. AS PER ACCOUNTING PROCEDURE, MONEY RECEIVE D WOULD BE BELONGING TO THE PERSON IN WHOSE ACCOUNTS, IT IS CREDITED. I N THE PRESENT CASE, ADMITTEDLY A LARGE AMOUNT OF MONEY IS DIRECTLY RECE IVED AND CREDITED IN THE BOOKS OF ACCOUNT OF THE APPELLANT COMPANY BUT IS NO T TAKING INTO ACCOUNT AS PART OF THE THEIR INCOME BECAUSE IT IS ALLEGEDLY CLAIMED TO BE BELONGING TO THE SOCIETY. THERE IS INTER-MINGLING OF THE MON EY RECEIVED WITH THE FUNDS OF THE APPELLANT COMPANY, AND RECEIPTS ISSUED DO NOT INDICATE ON FACE THAT THE MONEY IS BEING RECEIVED ON BEHALF OF SOME OTHER PARTIES I.E. THE SOCIETY. THEREFORE, EVEN IF ACCOUNTS OF THE SO CIETIES ARE SPECIFICALLY AUDITED AS PER REQUIREMENTS OF LAW, THERE IS NO CON CLUSIVE EVIDENCE THAT THE TRANSACTIONS REFLECTED IN THOSE BOOKS OF ACCOUN TS ARE THE GENUINE TRANSACTION OF THE SOCIETY AND NOT OF THE APPELLANT COMPANY WHICH IS THE MAIN AUTHORITY IN MAKING OF COLLECTION FOR CARRYING OUT THE CONSTRUCTION WORK. MERELY BECAUSE THE SOCIETY IS SEPARATELY REG ISTERED, DOES NOT LEAD TO THE CONCLUSION THAT THE TRANSACTIONS FOR WHICH E NTRIES ARE MADE IN ITS BOOKS OF ACCOUNTS WERE GENUINE TRANSACTIONS OF THE SOCIETY AND NOT TRANSACTIONS OF THE APPELLANT COMPANY. NOR IS IT P ROVED THAT ENTRIES MADE THEREIN ARE A REGULARLY KEPT RECORD, AND NOT A RECO RD PREPARED AT A LATER DATE. THE APPELLANT COMPANY HAS NOT PRODUCED ANY S UCH AGREEMENT WITH THE SOCIETY AS WOULD GIVE IT THE AUTHORITY TO RECEI VE MONEY AND DIRECTLY CREDIT IT IN ITS OWN ACCOUNT AND ONLY DRAW UP A DEB IT AND CREDIT BALANCE AS IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 8 PER ALLEGED EXPENSES OWN CONSTRUCTION WHICH IS STAT ED TO BE ON BEHALF OF THE SOCIETY. THEREFORE, LD. CIT(A) HELD THAT THERE WAS NO CONCLUSIVE EVIDENCE IN FAVOUR OF ITS CLAIMS AND FURTHER HELD T HAT DOCUMENTARY EVIDENCES SPEAK TO CONTRARY. THUS, SHE REJECTED TH E GROUND OF APPEAL. 3(I). SHE FURTHER HELD THAT AS REGARDS THE CLAIM TH AT RS.32 LACS WORTH OF THREE RECEIPTS FOR WHICH SEPARATE GROUNDS OF APPEAL HAVE BEEN RAISED, WERE NOT THE INCOME OF THE APPELLANT COMPANY. IT I S ADMITTED FACT THAT THESE ARE THE RECEIPTS RELATED TO AND REFERRED TO C ERTAIN RECEIPTS THAT WERE NOT TRANSFERRED TO THE BOOKS OF THE SOCIETY IN WHAT EVER ACCOUNTING WAS MADE PRIOR TO SEARCH PROCEEDINGS AND AS CLAIMED TO BE DONE BEFORE THE CLOSE OF ACCOUNTING WAS MADE PRIOR TO SEARCH PROCEE DINGS AND AS CLAIMED TO BE DONE BEFORE THE CLOSE OF ACCOUNTING PERIODS, FOR WHICH EVIDENCE IS NOT BEING SPECIFICALLY PRODUCED. ADMITTEDLY, THESE AMOUNTS HAVE NOT BEEN TRANSFERRED TO THE SOCIETY. ACCORDINGLY, SHE CONFI RMED THE ADDITION. 3(II). AS REGARD, RS.24,65,301/-, THIS AMOUNT RECEI VED BY THE COMPANY AND TRANSFERRED TO THE SOCIETY WHICH HAS BEEN AUDIT ED UNDER THE SOCIETY ACT BEFORE THE SEARCH AND SEIZURE OPERATION BUT SUM HAS NOT BEEN ACCOUNTED IN PROFIT OF ITS OWN BOOKS OF ACCOUNT. T HERE WAS NO AUTHORITY THAT THE ASSESSEE TO COLLECT ALL THE PAYMENTS ON BE HALF OF THE SOCIETY. THERE WAS NO FORMAL AGREEMENT BETWEEN THEM. THE AP PELLANT COMPANY THROUGH ITS DIRECTOR SHRI JANAKBHAI PATEL IS FOUND TO BE TAKING THE DECISIONS RELATING TO THE CONSTRUCTION WORK OF THE VAIKUNTH PARK CO-OP. HOUSING SOCIETY LTD. AND TAKING FUNDS AND ISSUING R ECEIPTS FOR THE SAME IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 9 FROM THE MEMBERS DIRECTLY IN IT OWN NAME. THEREFOR E, THE RECEIPTS WERE OBVIOUSLY OF THE APPELLANT COMPANY AND THE SAME HAV E NOT BEEN REFLECTED IN ITS BOOKS OF ACCOUNTS. DRAWING UP ACCOUNTS SHOW ING ALLEGED TRANSFER OF SOME BALANCES WHERE RECEIPTS HAVE BEEN OFF SET LARG ELY BY ALLEGED EXPENSES AND NET AMOUNTS TRANSFERRED ON PAPER TO TH E ACCOUNTS OF THE SOCIETY, WHICH ACCOUNTS HAD BEEN AUDITED, DID NOT E STABLISH THE GENUINENESS OF THOSE TRANSACTIONS. THEREFORE, SHE CONCLUDED THAT ADDITION MADE BY THE A.O. TO THE EXTENT OF RS.24,65 ,301/- IS JUSTIFIED. 3(III). AS REGARDS, ADDING TWO ZERO IN RS.10,000/-, RS.11,000/- & RS.11,000/- AND ASSESSING THE INCOME ON THE ADMISSI ON MADE BY SHRI JANAKBHAI PATEL IN HIS STATEMENT RECORDED DURING TH E COURSE OF SEARCH. THE A.O. RIGHTLY ASSESSED RS.10,000/- AS RS.10 LACS , RS.11,000 AS RS.11 LACS RESPECTIVELY ON THE BASIS OF COPY MAINTAINED B Y SHRI JANAKBHAI PATEL IN THE DIARY. THE AFFIDAVIT GIVEN HAD NOT BEEN SUP PORTED BY PRESENTING THE CONCERNED DEPONENTS FOR CROSS EXAMINATION BY THE A. O. AT ANY TIME AND THEREFORE, THE CONTENTS OF THE AFFIDAVIT CANNOT BE TAKEN AS GOOD EVIDENCES. ALSO, IT CANNOT BE IGNORED THAT THE APPELLANT COMPA NYS DIRECTOR HAD BEEN TAKING MONEY IN CASH AND CHEQUE AND DIRECTLY CREDIT ING THE FUND TO THE APPELLANT COMPANY WHILE NOT ACCOUNTING FOR THE SAME IN THE COMPUTING PROFIT IN THE BOOKS OF THE COMPANY. ALSO THESE WERE RECEIPTS, IF CLAIMED TO BE RELATING TO THE SOCIETY, THE MONEY HAS HOWEVER, NOT BEEN TRANSFERRED TO THE SOCIETY EITHER SO AS TO PROVE THAT THE RECEIPTS WERE ONLY WITH REFERENCE IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 10 TO ISSUE RECEIPTS BY THE APPELLANT COMPANY. THUS, HE CONFIRMED THE ADDITION UNDER THIS HEAD MADE BY THE A.O. 3(IV). SIMILARLY ADDITIONS OF RS.55,000/- AND RS.38 ,000/- ALSO CONFIRMED WHICH WAS INCLUDED IN ADDITION OF RS.57,58,301/-. THE LD. CIT(A) HELD THAT RECEIPTS OF RS.9,14,000/-, RS.3,07,000/-, RS.10,000 /- RS.4,15,000/- , RS.1,93,458/- AND RS.15,000/- AMOUNTING TO RS.18,54 ,418/- WERE DIRECTLY RECEIVED IN CASH OR BY CHEQUE FROM THE MEMBERS OF V AIKUNTH SCHEME CLEARLY POINTED TO ITS BEING THE PARTY IN CONTROL A ND THAT THE SOCIETY IS MERELY SET UP AS A RUSE. THIS WAS CLEARLY BORNE OU T FROM THE VARIOUS FACTS I.E. MANAGED BY SHRI JANAKBHAI PATEL AUTHORITY TO C OLLECT THE FUND. NO DAY-TO-DAY BASIS ACCOUNT OF THE SOCIETY AND ACCOUNT S WERE CASTED ON THE CLOSE OF THE YEAR OF THE SOCIETY. THUS, SHE CONFIR MED THE ADDITION MADE BY THE A.O. 4. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THERE WAS AN AGREEMENT BETWEEN THE C OMPANY AND SOCIETY DATED 13.12.1995, WHICH WAS SIGNED BY SHRI M. S. SHAH ON BEHALF OF COMPANY AS THE MANAGING DIRECTOR OF THE COMPANY. AS PER THIS AGREEMENT, ASSESSEE COMPANY HAD RIGHT TO BE PAID RE MUNERATION 7% ON TOTAL PROJECT COST I.E. LAND CONSTRUCTION. THE CON SULTANT HAD AGREED TO GIVE SERVICES FOR WORK MENTIONED HEREIN AND THE CONSULTA NT WAS AUTHORIZED TO ENLIST REQUIRED MEMBERS OR PERSONS FOR THE COMPLETI ON OF SCHEME AND FURTHER AUTHORIZED TO COLLECT CONTRIBUTION FOR LAND , CONSTRUCTION, ADDITIONAL CONSTRUCTION, EMANATES AND ENROLMENT FEES AS MAY BE ASKED BY THE IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 11 SOCIETY FROM TIME-TO-TIME FOR SUCH PERSONS AND TO I SSUE RECEIPTS FOR THE SAME FOR AND ON BEHALF OF SOCIETY, THE CONSULTANT I S AT LIBERTY TO AUTHORIZE TO ENTER INTO SEPARATE AGREEMENT WITH SUCH PERSON. THE AMOUNTS SO COLLECTED BY CONSULTANT SHALL BE FIRST PAID TO LAND OWNER TOWARDS LAND COST AND SHALL BE ALSO UTILIZED FOR CONSTRUCTION BY THEM . THE CONSULTANT WAS ALSO AUTHORIZED TO PROCURE LOAN OR DEPOSITED IN CAS E OF SCHEME AND INTEREST THERE ON SHALL BE BORNE BY THE SOCIETY. T HE SOCIETY SHALL BE ENTITLED TO MAKE ADDITIONS, ALTERATION AND CHANGE I N THE CONSTRUCTION. THE CONSULTANT SHALL GET ALL SUCH CONSTRUCTIONS AT THE COST AND RISK OF THE SOCIETY AS PER CLAUSE 1 OF THIS AGREEMENT. HE FURT HER ARGUED THAT SOCIETY IS REGISTERED UNDER THE SOCIETY ACT AND ALSO ITS BO OKS OF ACCOUNT AUDITED BY THE GOVERNMENT AUDITOR MUCH BEFORE THE SEARCH AN D SEIZURE OPERATION AND ALL THE RECEIPTS EITHER RECEIVED DIRECTLY BY TH E SOCIETY OR THROUGH THE COMPANY HAD ACCOUNT FOR BY THE SOCIETY. VAIKUNTH P ARK CO.OP. HOUSING SOCIETY LTD. IS LEGALLY ENTITY CREATED HAS AT LEAST 10 PERSONS UNDER GUJARAT CO.OP ACT AND IT IS A HOUSING CO.OP SOCIETY DULY RE GISTERED UNDER THE SAME ACT ON 30.11.1994. THE MANAGING COMMITTEE OF THE SOCIETY ARE DIFFERENT PERSONS FROM THE DIRECTORS OF THE COMPANY . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AUDITED BOOKS OF ACCOUN TS OF THE SOCIETY WERE PRODUCED BEFORE THE A.O. THE ASSESSEE HAD RECO NCILED EACH ENTRY IN THE DIARY WITH BOOKS OF THE SOCIETY AND HAS DRAW N OUR ATTENTION ON ANNEXURE-P ANNEXED WITH REPLY OF THE ASSESSEE FOR T HIS PURPOSE. THE COMPANY HAD ALREADY FILED ITS RETURN FOR 96-97 TO 2 000-01 BY SHOWING ONLY IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 12 SUPERVISION CHARGES RECEIVED FROM VAIKUNTH PARK CO. OP. HOUSING SOCIETY LTD. AND VAIKUNTH COMPLEX CO-OPERATIVE HOUSING SOCI ETY LIMITED AS GROSS PROFIT. AS PER THE AGREEMENT, THE SOCIETY HA D AUTHORIZED TO THE COMPANY TO MAKE PURCHASE OF MATERIAL, TO EMPLOY LAB OUR, TO SUPERVISE THE WORK, TO COLLECT CONTRIBUTION FROM THE MEMBERS OF V AIKUNTH PARK CO.OP. HOUSING SOCIETY LTD. AND VAIKUNTH COMPLEX CO-OPERAT IVE HOUSING SOCIETY LIMITED. WHENEVER THE COMPANY MADE PURCHASE OF MAT ERIAL ON BEHALF OF THE SOCIETY, IT PASSES ENTRY IN THE BOOKS OF ACCOUN TS. IT IS TRUE THAT ASSESSEE COMPANY RECEIVED FROM THE MEMBERS CASH AS WELL AS CHEQUE BUT CHEQUE HAS BEEN SHOWN IN THE BOOKS OF ACCOUNT O F COMPANY AND ISSUED THE RECEIPTS OF THE CASH WHICH WAS CREDITED EITHER DIRECTLY IN THE ACCOUNTS OF THE MEMBERS OR IN THE ACCOUNTS OF THE S OCIETY. THERE IS NOTHING WRONG IN ISSUING THE RECEIPTS EITHER IN THE BOOKS OF COMPANY OR IN THE BOOKS OF SOCIETY. THE LD. A.R. ARGUED THAT DIA RY ANNEXURE A-11 WAS FOUND FROM THE RESIDENTIAL SHRI JANAKBHAI PATEL DUR ING THE COURSE OF SEARCH PROCEEDING IN WHICH ALL THE RECEIPTS FROM TH E MEMBERS CHEQUE AS WELL AS CASH HAS BEEN RECORDED. AS PER SECTION 132 (4A), THESE PAPERS WERE IN POSSESSION AND CONTROL OF THE JANAKBHAI PAT EL AND CONTENTS IN IT ARE TRUE AND BELONGED TO SHRI JANAKBHAI PATEL. BUT THIS PRESUMPTION IS REBUTTABLE WHICH HAS BEEN DISCHARGED BY THE ASSESSE E DURING THE COURSE OF ASSESSMENT PROCEEDING BY PRODUCING THE AUDIT REP ORT AND BOOKS OF ACCOUNT OF THE SOCIETY. THE LD. A.O. HAD NOT CONSI DERED THE EVIDENCE AND EXPLANATIONS SUBMITTED BEFORE THE A.O. DURING THE C OURSE OF ASSESSMENT IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 13 PROCEEDING. THE ASSESSEE HAD ALREADY SHOWN CONSULT ANCY CHARGES RECEIVED IN THE SOCIETY IN THE REGULAR RETURN. THE REFORE, THE A.O. WAS WRONG TO ADD THE ALL RECEIPTS IN THE HANDS OF THE C OMPANY. HE FURTHER SUBMITTED THAT LD. A.R. HAD ADDED TWO ZERO IN THREE PAYMENT OF ACTUAL FIGURE I.E. RS.10,000/-, RS. 11,000/- & RS.11,000/- AS PER ANNEXURE A-11 ON DIFFERENT PAGES AND THE A.O. MADE ADDITION OF RS .32 LACS OUT OF RS.57,58,301/-. HOWEVER, THESE FIGURES WERE ACTUAL FOR THAT ASSESSEE HAD FILED AFFIDAVITS FROM THE PAYER BEFORE THE LD. CIT( A), BUT SAME HAD NOT BEEN CONSIDERED BY HER. HE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF MEHTA PARIKH & CO. VS. CIT 30 ITR 181 (SC) , WHEREIN SIMILAR FACTS WERE CONSIDERED BY THE HONBLE SUPREME COURT THAT THE ASSESSEE FILED THE AFFIDAVIT BEFORE THE A.O. BUT NO ENQUIRY WAS MADE BEFORE THE DEPONENT OF AFFIDAVIT, WHEREIN NO CROSS EXAMINATION OF THE DEPONENTS WERE MADE BY THE AAC OR AO. THUS, HE ARGUED THAT THIS A DDITION DESERVES TO BE DELETED. HE FURTHER ARGUED FOR THE GROUND NOS. 4 & 5 THAT LD. A.O. WAS NOT RIGHT IN MAKING ADDITION OF RS.55,000/- AS PER ANNEXURE A-2 AND RS.38,000/- AS PER ANNEXURE A-5. THESE ARE THE DUM P PAPERS AND NO INFERENCE CAN BE DRAWN ON THAT BASIS. THE A.O. MAD E ADDITION WITHOUT ANY BASIS WHICH DESERVES TO BE DELETED, FOR WHICH H E RELIED UPON IN CASE OF ASHWINI KUMAR VS. ITO 42 TTJ 644 & CIT VS. MAULIKKUMAR K. SHAH REPORTED IN 307 ITR 137 (GUJARAT) . , WHEREIN IT WAS HELD THAT NO ADDITION CAN BE MADE ONLY ON THE BASIS OF SEIZED PAPERS ALON E WITHOUT ANY CORROBORATIVE EVIDENCE. PAGE NO.5 OF ANNEXUE 5/1 & ANNEXURE 5/2 WAS IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 14 FOUND FROM THE OFFICE OF VAIKUNTH PARK CO.OP. HOUSI NG SOCIETY LTD. WHICH CONTAINED THE CONTRIBUTION RECEIPTS FROM MEMBERS AM OUNTING TO RS.38,000/- BUT THERE IS NO OBLIGATION ON THE ASSES SEE TO EXPLAIN THE ENTRY OF RS.38,000/-. HE FURTHER ARGUED FOR GROUND NO.5 THAT LD. A.O. MADE ADDITION OF RS.9,14,000/- OUT OF RS.20,81,880/- ON ACCOUNT OF UNACCOUNTED ON MONEY RECEIPTS, WHICH WAS MADE BY THE A.O. ON FL IMSY GROUND. THE LD. A.R. HAS DRAWN OUR ATTENTION ON ANNEXURE N PAGE N O. 135 THAT THESE RECEIPTS HAVE BEEN ACCOUNTED IN THE BOOKS OF ACCOUN T OF THE SOCIETY. HE AGAIN RETREATED THE SAME ARGUMENT THAT THE ASSESSEE COMPANY ALSO ISSUED RECEIPTS TO THE MEMBERS BUT FINALLY, AMOUNT HAD BEEN TRANSFERRED TO THE SOCIETY. THE ASSESSEE COMPANY HAD RECEIVED CON SULTANCY CHARGES ON CONSTRUCTION. THE BOOKS OF ACCOUNT OF THE COMPANY WERE PRODUCED BEFORE THE A.O. AT THE TIME OF ASSESSMENT PROCEEDING FOR W HICH HE DREW OUR ATTENTION ON PAGE NO.136 OF THE PAPER BOOK AND IN I TEM NO.2, IT HAS BEEN SUBMITTED THAT IN THE BOOKS OF ACCOUNT FOR THE PREV IOUS YEAR 1995-96, 96- 97, 99-00 & 2000-01 WERE PRODUCED BEFORE THE A.O. O N 19.12.2003. SIMILAR ARGUMENT FOR REMAINING ENTRIES WERE ALSO AD VANCED BY THE A.R. AND DREW OUR ATTENTION ON PAGE NOS. 28 TO 31 OF THE PAPER BOOK AND TRIED TO EXPLAIN EACH ENTRY ALONG WITH THE EVIDENCE. TH US, HE FINALLY REQUESTED THAT NO ADDITION CAN BE CONFIRMED IN THE HANDS OF C OMPANY. AT THE OUTSET, LD. SR. D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE AGREEMENT MADE BETWEEN COMPANY AND SO CIETY, WAS NOT IT(SS)A NO. 107/AHD/05 BLOCK PERIOD: 1/4/95 TO 31/3 /01 & 1/4/01 TO 13/12/01, SHIVSHAKTI CONSULTANCY PVT. LTD. VS. A CIT PAGE 15 PRODUCED BEFORE THE LD. CIT(A). IT IS ALSO NOT VER IFIABLE FROM THE ASSESSMENT ORDER WHETHER THIS AGREEMENT WAS IN EXIS TENCE BEFORE THE A.O. AT THE TIME OF ASSESSMENT PROCEEDING OR NOT. AS PER THIS AGREEMENT, THE COMPANY HAD RECEIVED 7% REMUNERATION, WHICH HAS ALSO NOT VERIFIED BY THE A.O. AT THE TIME OF ASSESSMENT PROCEEDING. SINCE THE COPY OF AGREEMENT PRODUCED BEFORE US REQUIRES VERIFICATION IN THE LIGHT OF OUR ABOVE OBSERVATION, MATTER IS SET ASIDE TO THE A.O. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 26.02.2014 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA 1 1 1 1 ' '' ' )-2 )-2 )-2 )-2 320- 320- 320- 320- / COPY OF ORDER FORWARDED TO:- 1. %& / APPELLANT 2. )%& / RESPONDENT 3. - *7 / CONCERNED CIT 4. *7- / CIT (A) 5. 2; )-+ , , / DR, ITAT, AHMEDABAD 6. = >? / GUARD FILE. BY ORDER/ 1 , @/ B , $