The DCIT, Central Circle-1(1), Ahmedabad V. M/s. Jayantilal Ambalal Chokshi, Ahmedabad

ITSSA 125/AHD/2006

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9652 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-12-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 19-12-2012
• Assessment Year: misc
• Appeal Filed On: 23-05-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D C PATWARI; SHANKARLAL MEENA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Gift; Peak credit; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER IT(SS)A NO.125/AHD/2006 THE DCIT, CENTRAL CIRCLE 1(1), AHMEDABAD. V/S. SHRI JAYANTILAL AMBALAL CHOKSI, LIMBOO-NI-POL, RATANPOLE AHMEDABAD PAN: AABFJ 3495J (APPELLANT) (RESPONDENT) REVENUE BY : S/SHRI D.C. PATWARI AND SHANKARLAL MEENA, D.R. ASSESSEE(S) BY : SHRI S.N. SOPARKAR, A.R. / DATE OF HEARING : 19/09/2013 / DATE OF PRONOUNCEMENT: 17/12/2013 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING OUT OF THE ORDER OF ID. CIT(A)-1, AHMEDABAD DATED 28-3-2006 PA SSED FOR BLOCK PERIOD 1991-92 TO 2001-02 AND THE GROUNDS RAI SED ARE AS FOLLOWS:- THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DIREC TING TO DELETE THE ADDITION OF RS.60,00,0007- MADE ON ACCOUNT OF UNACC OUNTED SALE OF INTEREST/RIGHT OVER THE LAND BEARING SURVEY NO.37 & 38 AT MOUJE THALTEJ,TALUKA DASCROI, AHMEDABAD. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S. 158BD OF IT ACT DATED 29.10.2004 WERE THAT CONSEQUENCE UPON A SEARCH ON MASTER GROUP CARRIED OUT ON 20 TH OF OCTOBER, 2000. IT WAS FOUND THAT IN THE IMPUGNED DIARY THERE WAS AN ACCOUNT OF THE ASSESSEE, NAMELY, M/S. JAYANT ILAL AMBALALA IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 2 - CHOKSHI. THE SAID DIARY WAS MARKED AS ANNEXURE A-1 OF THE SEIZED MATERIAL. BECAUSE OF THE SAID DETECTION OF A CCOUNT OF THE ASSESSEE A NOTICE U/S. 158BD WAS ISSUED. THE AO HAS COMMUNICATED TO THE ASSESSEE HAS FOLLOWS: FROM THE PAGE NO.28 AND 36 OF THE DIARY SEIZED AS A NNEX. A-1 FROM THE RESIDENTIAL PREMISES OF SHRI ARVINDBHAI A. SHAH RESIDING AT B-3, SULABH FLAT, NR. MIRAMBICA HIGH SCHOOL, NARANPURA, AHMEDABAD-13, IT HAS BEEN FOUND THAT THERE WERE TWO ACCOUNTS WRIT TEN AS JAC IN PAGE-28 AND AMBALAL JAC IN PAGE 36 IN THIS DIARY. THE COPIES OF THESE PAGES 28-36 WERE DULY PROVIDED TO THE REPRESE NTATIVE OF THE ASSESSEE DATED 11-10-2004. HE WAS ALSO PROVIDED THE COPY OF THE STATEMENT GIVEN BY SHRI ARVIDNBHAI SHAH IN WHICH HE HAS DISCLOSED THAT THIS ACCOUNT IN THE NAME OF JAC RELATES TO JAY ANTILAL AMBALAL CHOKSHI, LIMDI-NI-POLE, RATANPOLE, AHMEDABAD. THE R EPRESENTATIVE OF ASSESSEE WAS ALSO GIVEN THE OPPORTUNITY OF CROSS EX AMINATION OF SHRI ARVINDBHAI SHAH, DATED 26.10.2004. 2.1 THEREAFTER, THE AO HAD REPRODUCED IN THE ASSESS MENT ORDER SOME OF THE ENTRIES OF THE SAID DIARY. THE AO HAS A LSO ISSUE A SHOW CAUSE NOTICE TO THE ASSESSEE IN THIS REGARD. RELEVA NT PORTION IS REPRODUCED BELOW: 2. FROM THE DIARY FOUND FROM THE PREMISES OF SHRI ARVINDBHAI A. SHAH AND SEIZED AS ANN. A-1, TWO ACCOUNTS HAVE BEEN FOUND. FIRST ONE IN THE NAME OF JAC AT PAGE 28 OF THIS ANNEXURE A- 1 AND OTHER ONE AS AMBALAL JAC AT PAGE 36 OF THIS ANNEXURE. SHRI ARV INDBHAI A. SHAH IN HIS STATEMENT DATED 19.09.2002 AND IN HIS PROCEE DING OF CROSS EXAMINATION DATED 26.10.2004 HAS CATEGORICALLY STAT ED THAT JAC MEANS JAYANTILAL AMBALAL CHOKSHI, ANGADIA RATANPOLE , AHMEDABAD. FOR AMBALAL JAC ALSO HE HAS CATEGORICALLY SAID TH AT THIS JAC MEANS JAYANTILAL AMBALAL CHOKSHI, ANGADIA RANTANPLE, AHME DABAD. IN THE PROCEEDING OF CROSS EXAMINATION THE SAME HAS BEEN C ONFIRMED BY HIM IN YOUR PRESENCE. NOW YOUR ARE REQUESTED TO EXPLAIN AS TO WHY THESE ACCOUNTS SHOULD NOT BE CONSIDERED AS YOURS. 3. YOU ARE REQUESTED TO TELL WHO IS AMBALA IN YOU R CONCERN OTHERWISE IT WILL BE CONCLUDED THAT THIS ACCOUNT BELONGS TO Y OU ONLY. SINCE AFTER THE PROCEEDINGS OF CROSS EXAMINATION IT HA BEEN WEL L ESTABLISHED THAT JAC CONNOTES ONLY JAYANTILAL AMBALAL CHOKASI, ANG ADIA RATANPOLE, AHMEDABAD. AND SO ONUS HAS SHIFTED ON YOU TO PROVE AS TO WHO IS AMBALAL. 4. FROM THE SEIZED DIARY IT HAS BEEN FOUND THAT THE RE IS A DIFFERENCE IN BOTH THE ACCOUNTS. IN CASE OF ACCOUNT AT PAGE 28, N O INTEREST HAS BEEN IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 3 - CHARGED WHEREAS IN THE ACCOUNT OF PAGE 36, INTEREST @ 1.50% HAS BEEN CHARGED. YOU ARE REQUESTED TO EXPLAIN THE REAS ON OF THE SAME. 5. FROM THE ACCOUNT AT PAGE NO.28, IT HAS BEEN FOUN D THAT THE OPENING BALANCE IS CREDIT OF RS.84,00,000/-. DURING THE HEA RING DATED 26.10.2004 YOU HAVE SAID THAT IN THIS PAGE AT THE T OP LEFT FOLLOWING DESCRIPTION IS WRITTEN: RS.14,00,000/- OLD REMAINING RS.60,00,000/- MANOJ HAVALA 31.03.1999 REMAINING RS.14,00,000/- 7.11.99 TEMPORARY LOAN REMAINING. YOU HAVE CLAIMED THAT THE SOURCE OF RS.60,00,000 IS EXPLAINED AS PER THIS WRITING AND THAT IS MANOJ VADODARIA, THEREFORE , THIS AMOUNT CAN NOT BE ADDED IN YOUR HANDS. BUT THIS LOGIC IS NOT C ORRECT, SINCE IN THIS CASE YOU HAVE GIVEN THIS SUM TO MANOJ VADODARIA THA T IS WHY YOUR ACCOUNT HAS BEEN CREDITED. NOW IN SUCH CIRCUMSTANCE S YOU NEED TO AGAIN TELL THE SOURCE OF THIS AMOUNT SINCE IT IS ST ILL UNEXPLAINED. 6. DURING THE PROCEEDINGS OF CROSS EXAMINATION YOU HAVE STATED THAT YOU HAVE WORKED AS ANGADIA ONLY I.E. YOU HAVE BEE N TRANSFEROR OF THE MONEY OF JIVRAJBHAI DESAI. BUT THIS ACCOUNT DOES NO T SHOW THIS NATURE AT ALL. THIS ACCOUNT HAS BEEN MADE AS ANNEXURE P-1 OF THIS QUESTIONNAIRE, FROM THIS IT IS CLEAR THAT THE SUMS HAVE NOT TRANSFERRED HANDS ON SAME DAY OR IN THE PERIOD OF 1-2-3 DAYS. R ATHER FROM THIS ACCOUNT IS SEEMS THAT ON ONE HAND THE AMOUNT HAS ST AYED FOR A LONGER PERIOD IN BOTH THE HANDS. YOU BEING AN ANGADIA IT SEEMS THAT YOU HAVE EXTENDED THE MONEY, LYING WITH YOU AS TEMPORAR Y LOANS AND RECEIVED THE SAME AS THE CASE MAY BE ON NEED BASE. THIS IS THE REASON THAT NO INTEREST HAS BEEN CHARGED ON THIS ACCOUNT. EXPLAIN, THEREFORE IN THE LIGHT OF THIS OBSERVATION, THE SOURCE OF THE SUMS GIVEN TO JIVRAJBHAI DESAI. 7. ANOTHER ACCOUNT IN THE NAME OF AMBALAL JAC HAS ANNEXED AS ANN. P-2. EXPLAIN AS TO WHY BOTH THE ACCOUNTS SHOULD NOT BE MERGED AND THE PEAK CREDIT SHOULD BE ADDED SUBSTANTIVELY IN YO UR HANDS. THIS PEAK CREDIT IS COMPUTED AS PER ANN. P-3 AND THE SAME IS RS.1,04,00,000. EXPLAIN AS TO WHY THE SAME SHOULD NOT BE ADDED AS Y OUR UNDISCLOSED INCOME. 8. EXPLAIN ALSO AS TO WHY THE INTEREST @1.50% AS IS WRITTEN IN THIS ACCOUNT AT THE TOP OF THE ACCOUNT OF AMBALAL JAC, S HOULD NOT BE CONSIDERED AS TO HAVE BEEN RECEIVED FROM UNDISCLOSE D SOURCES. 2.2. THE ASSESSEES CONTENTION WAS THAT HE HAD WORK ED ONLY AS A ANGADIA. HIS JOB WAS ONLY TO TRANSFER THE MONEY O F SRI JIVRAJBHAI DESAI. IT WAS STATED BY THE ASSESSEE THA T THE ACCOUNT IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 4 - APPEARED WAS NOTHING BUT THE TRANSFERRING OF PARCEL S ON BEHALF OF SHRI J.V. DESAI. IT WAS ALSO CONTESTED THAT TO VERI FY THE IDENTITY OF THE PERSON AMBALAL THAT SHOULD HAVE BEEN ASKED FR OM J.V. DESAI OR HIS SONS BECAUSE UNDER THEIR INSTRUCTIONS THE SA ID DIARY WAS WRITTEN BY THE ACCOUNTANT, NAMELY, SRI ARVIND SHAH. THE AOS CONTENTION WAS THAT ON THE BASIS OF THE STATEMENT R ECORDED U/S. 132(4) OF IT ACT DATED 20 TH OF OCTOBER, 2000 OF SRI ARVIND SHAH THE TRANSACTIONS RECORDED IN THE SAID ACCOUNT OF TH E ASSESSEE WERE NOTHING BUT IN THE NATURE OF SHARAFI FINANCING BUS INESS. RELEVANT ANSWER FROM THE SAID STATEMENT WAS REPRODUCED BY TH E AO. AS PER AO, A TRANSACTION RECORDED IN THE ACCOUNT OF THE AS SESSEE WAS IN THE NATURE OF A LAND TRANSACTION; HENCE, THE AO HAS REFERRED THE DETAILS OF THE SAID LAND AND THE CONNECTED ACCOUNT AS FOLLOWS: IT IS SUBMITTED THAT FROM THE COPIES OF RECORD OF R IGHTS IN FORM NO.7/12 DATED 21.11.2000 AND 7.10.2000 OF LAND ADME ASURING APPROXIMATELY 21300 SQ. YDS. OF FINAL PLOT NO.73, B EARING SURVEY NO.37 AND 38, SITUATED AT MOJE THALTEJ, TALUKA DASC ROI, THALTEJ HIGHWAY, IS HELD BY SHRI RANCHHODBHAI VISABHAI RABA RI AS ADMINISTRATOR OF VITHTHAL TEMPLE. THE COPIES OF 7/1 2 ACCOUNTS ARE ENCLOSED HEREWITH. (ENCLOSER A, PAGE NO.1 TO 7). SHRI R.V. RABARI ENTERED INTO AGREEMENT FOR SALE OF THE SAID LAND ON 5.7.1998 WITH SHRI NATUBHAI POPULAR AT A SALE RATE OF RS.9.09 + RS..500 = RS. 9.509/- PER SQ. YDS. (TOTAL PRICE RS. 2,02,541.70). THE COPY OF SAID SALE AGREEMENT (SODA CHITHTHI) IS ENCL OSED HEREWITH (ENCLOSER B, PAGE NO.8 & 9) ACCORDING TO THE TERMS OF THE SAID AGREEMENT, INSTA LLMENT AND INTEREST WERE TO BE RECORDED. ACCORDINGLY FINAL ACCOUNT AS O N 30.10.1999 WAS WORKED OUT AND AS PER THAT THE FOLLOWING AMOUNT WAS TO BE RECEIVED ON 30.10.1999 IN FULL CONSIDERATION: (ENCLOSER C, PAGE NO.10 TO 12) (IN CODAID FIGURE) PAYMENT OF LAND BY INSTALLMENTS RS.2,02,541. 70 INT. UPTO 30-10-1999 RS.21,062.00 DALALI @ 1.25% RS.2,531.00 OTHER EXP. (WATCHMAN + LEGAL CHARGES ETC. RS.1, 174.00 JAC RS.6,000.00 RS.2,33,308.70 IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 5 - 2.3 THE AO HAS ALSO MENTIONED THAT IN A STATEMENT D ATED 19.09.2002, SRI ARVIND SHAH HAD STATED THAT THE NAM E OF AMBALAL JAC RELATED TO JAYANTILAL AMBALAL CHOKSHI ANGADI A RATANPOLE, AHMEDABAD. THE AO HAS ALSO MENTIONED THAT THREE ACC OUNTS WERE MENTIONED ON THE TOP LEFT HAND SIDE OF PAGE 22 OF A NNEXURE A-1 ON WHICH THE ACCOUNT OF JAC WAS MAINTAINED. THE FIRS T ACCOUNT WAS OF RS.14 LACS WHICH WAS THE OLD BALANCE OF THE ASSE SSEE REMAINED WITH JAC DESAI. THE SECOND AMOUNT NOTED WAS RS.60 L ACS, HAWALA ENTRY WHICH WAS STATED TO BE AN AMOUNT TO BE PAID BY MANOJ VADODARIA. THE SAID AMOUNT OF RS.60 LACS WAS ALLEGED TO BE PAID TO THE ASSESSEE ON ACCOUNT OF RIGHT OVER THE L AND AT MOJE THALTEJ. THE ASSESSEE HAS CONTESTED THAT IT WAS MER ELY A HAWALA ENTRY WHICH MEANT THAT THE AMOUNT WAS TO BE GIVEN T O SRI JIVRAJ DESAI BY SRI MANOJ VADODARIA. ANOTHER CONTENTION OF THE ASSESSEE WAS THAT THE IMPUGNED AMOUNT WAS NEVER REALIZED AND THAT THE INTEREST WAS STILL CONTINUING ON THE SAID AMOUNT. F URTHER AN ANOTHER CONTENTION OF THE ASSESSEE WAS THAT NO CORRESPONDIN G ENTRY HAD APPEARED IN THE ACCOUNT OF SRI MANOJ VADODARIA. HOW EVER, THE AO WAS NOT CONVINCED AND HELD THAT THE SAID ENTRY WAS RELATED TO THE LAND TRANSACTION BECAUSE THE ASSESSEE HAD RIGHT/INT EREST ON THE LAND SITUATED AT MOJE THALTEJ, AHMEDABAD. THE AO HAS ALS O NOTED THAT SRI J.V. DESAI HAD PLEADED IN HIS STATEMENT PROCEED INGS BEFORE THE AO THAT THE ENTRIES IN THE DIARY WERE IN RESPECT OF THE LAND TRANSACTION AND THEREFORE, THE IMPUGNED AMOUNT OF R S.60 LACS AS APPEAR IN THE ACCOUNT OF JAC WAS IN RESPECT OF TH E LAND TRANSACTION. THEREFORE, THE AO HAD TAXED THE SAID S UM OF RS.60 LACS IN THE HANDS OF THE ASSESSEE AS UNACCOUNTED SA LE OF RIGHT OVER IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 6 - THE LAND SITUATED AT MOJE THALTEJ. BEING AGGRIEVED THE MATTER WAS CARRIED TO THE FIRST APPELLATE AUTHORITY. 2.4 THE ASSESSEE HAS CONTESTED BEFORE LEARNED CIT(A ) THAT THE AMOUNT HAD NEVER BELONGED TO THE ASSESSEE AND THAT AMOUNT HAD APPEARED UP TILL THE DATE OF THE SEARCH AND THE SAM E AMOUNT WAS OUTSTANDING EVEN ON THAT DATE. IT WAS ALSO CONTESTE D THAT HAVALO MEANS JOURNAL ENTRY. THE MAIN POINT CONTESTED OF THE ASSESSEE BEFORE LEARNED CIT(A) ARE AS UNDER: 1. THE LAND TRANSACTION WAS OF RAMBHAI PATEL AND WHICH FACT CAN BE CONFIRMED FROM EITHER MANOJ VADODARIYA OR JIVRAJ DE SAI. 2. THE AMOUNT OF RS.6000 MENTIONED ON THE TOP LEFT HA ND SIDE OF PAGE 28 AS MANOJ HAVALO HAS NOT BEEN RECEIVED BY US AS I S APPARENT FROM THE ACCOUNT ITSELF. 3. THAT THE ACCOUNT AS APPEARING ON PAGE 28 IS ANGADI A TRANSACTION OF JIVRAJ DESAI AS CAN BE VERIFIED FROM THE ENCLOSURE GIVEN ALONG WITH THIS LETTER SHOWING NEXUS OF EACH ENTRY. 4. THAT IF THIS AMOUNT OF RS.60 LACS WAS PAID TO US T HEN THERE WOULD HAVE BEEN A DEBIT ENTRY IN THIS ACCOUNT AS APPEARIN G ON PAGE 28 (AS IN THE CASE OF CHHAGAN KAKA) AND A CORRESPONDING CREDI T ENTRY IN THE ACCOUNT OF MANOJ VADODARIYA WHOSE ACCOUNT ALSO APPE ARS IN THE DIARY. 5. THAT DURING THE COURSE OF CROSS-EXAMINATION AND RE -EXAMINATION OF SHRI ARVIND SHAH IT WAS WELL ESTABLISHED THAT THE T RANSACTION WITH JAC WERE PURELY ANGADIA TRANSACTIONS AND NOT SHARAFI TR ANSACTION. IT IS THEREFORE WRONG ON YOUR PART TO WORK OUT THE PEAK. 2.5 IT WAS ALSO CONTESTED THAT THE IMPUGNED AMOUNT HAS MENTIONED AT PAGE 28 OF THE SAID DIARY AS MANOJ HA VALO MEANS IT WAS MERELY A JOURNAL ENTRY WAS PASSED, BUT DID NOT IMPLY THAT THE SAID AMOUNT HAD ACTUALLY BEEN PAID. ACCORDING TO AS SESSEE, HAD THE SAID AMOUNT BEEN PAID THEN IT SHOULD HAVE BEEN DEBI TED TO THE ACCOUNT AND CORRESPONDINGLY THE AMOUNT OF MANOJ VAD ODARIA SHOULD HAVE BEEN CREDITED. MERELY ON PRESUMPTION, T HE AO HAD TAXED THE AMOUNT IN THE HANDS OF THE ASSESSEE. THER E WAS A IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 7 - REFERENCE OF THE REMAND REPORT OF THE AO, WHEREIN O NE OF THE REPLY WAS AS UNDER: REPLY (IV): THE ASSESSEE HAS SAID THAT THE AMOUNT OF RS.60,00,000/- IS A HAWALA ENTRY AND IT CANNOT FORM PART OF INCOME IN THE HANDS OF THE ASSESSEE SINCE THERE IS NO CORRESPONDING ENTRY IN T HE ACCOUNT OF MANOJBHAI VADODARIYA. THIS CONTENTION IS NOT CORREC T SINCE THE NARRATION OF THIS ENTRY IS 6000 MANOJ HAVALO 31.03 .1999. THIS MEANS THAT THIS ENTRY PERTAINS TO THE DATE PRIOR TO THE DATE FORM WHICH THE DIARY HAS BEEN STARTED TO BE WRITTEN, BEGINNING DATE OF WHICH IS 01.11.1999. THUS THIS AMOUNT MIGHT BE INCLUDED IN T HE OPENING BALANCE OF MANOJBHAI VADODARIYA WHICH HAS BEEN STAR TED WITH A DEBIT BALANCE OF RS.23.43 CRORES AS ON 01.11.1999. 2.6 IT WAS VEHEMENTLY CONTESTED BEFORE LEARNED CIT( A) THAT THERE WAS NO FINANCIAL DEALING OF THE ASSESSEE WITH JIVRAJ V. DESAI. THE CONCLUSION OF THE LEARNED CIT(A) AS UNDER: (I) A PERUSAL OF THE ABOVE SUBMISSIONS INDICATES T HAT THERE IS SOME FORCE IN THE APPELLANT'S STAND THAT THE IT DEPARTME NT HAS BEEN SHIFTING ITS' STAND AND OF BEING INCONSISTENT AT THE TIME OF FINALIZATION OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BD. (II) THE APPELLANT'S OTHER SUBMISSION REGARDING THE AMOUNT OF RS.60 LAKHS BEING ADDED AS UNDISCLOSED INCOME UNDER SECTI ON 158 BD IS ALSO WORTH CONSIDERING. THE APPELLANT HAS STATED THAT 'T HE AMOUNT OF RS.60 LAKHS IS MENTIONED IN THE DIARY AT PAGE-28 AS 'MANO J HAVALO' WHICH MEANS IT IS A JOURNAL ENTRY PASSED ACCEPTING A LIAB ILITY BUT DOES NOT IMPLY THAT THE SAID AMOUNT HAS BEEN PAID. HAD IT BE EN PAID THE AMOUNT WOULD HAVE BEEN DEBITED TO THE ACCOUNT AND CREDITED TO THE ACCOUNT OF MANOJ VADODRIYA. (III) THIRDLY, THE APPELLANT'S SUBMISSION IS WORTH CONSIDERING THAT THE LD. A.O. HAS PRESUMED THAT THE AMOUNT OF RS.60 LAKH S HAS ACCRUED TO THE FIRM AND HENCE IT IS TAXABLE. THE APPELLANT SUB MITS THAT IN BLOCK ASSESSMENT IT IS THE INCOME EARNED WHICH IS TO BE T AXED AND NOT THE INCOME ACCRUED. IN THE CASE OF THE APPELLANT THIS A MOUNT OF RS.60 LAKHS WASNEVER RECEIVED BY THE APPELLANT AS IS APPA RENT FROM THE COPY OF THE ACCOUNT, AND HENCE IT CANNOT BE TAXED.' (IV) THE OTHER ASPECT OF THE APPELLANT'S CONTENTION ABOUT THE ADDITION OF RS.60 LAKHS AS UNDISCLOSED INCOME IS CLOSELY LIN KED TO THE ABOVE SUBMISSION OF THE APPELLANT. IN ITS' SUBMISSION DAT ED 27 TH SEPTEMBER, 2005 THE APPELLANT HAS STATED THAT AS PER THE OFFIC IAL LAND RECORD, THE LAND IN QUESTION TILL DATE CONTINUES TO BE IN THE N AME OF RANCHODBHAI VISALBHAI (TRUSTEE OF THE SAID TRUST) AND AUDA (AHM EDABAD URBAN IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 8 - DEV. AUTHORITY), THE APPELLANT HAS RELIED UPON THE OFFICIAL LAND RECORDS EXTRACT OF 7/12, A COPY OF WHICH WAS ENCLOSED WITH THE APPELLANT'S WRITTEN SUBMISSIONS DATED 27 TH SEPTEMBER, 2005. I DO NOT THINK THAT THIS SUMMARY DISMISSAL OF THE A PPELLANT'S STAND IS JUSTIFIED ON THE PART OF THE A.O., SINCE THE VERY B ASIS OF THE ADDITION MADE BY THE A.O. IN THE ASSESSMENT ORDER UNDER SECT ION 158BD IN THE CASE OF THE APPELLANT, IS THE FACT THAT THE SEIZED DIARY INCLUDES AN ACCOUNT (LEDGER) IN WHICH IT IS MENTIONED AS 'MANOJ HAVALO' WHICH HAS BEEN LINKED BY THE A.O. AS THE AMOUNT BECOMING DUE TO THE APPELLANT FROM MANOJ VADODARIYA ON ACCOUNT OF THE A LLEGED LAND TRANSACTION OF THIS VERY LAND AT THALTEJ, FOR WHICH THE COPY OF THE 7/12 EXTRACTS IS FILED SHOWING THAT THE LAND HAS NOT BEE N TRANSFERRED SO FAR AND CONTINUES TO BE IN THE NAMES OF AUDA (AHMEDABAD URBAN DEV. AUTHORITY) AND THE TRUSTEE (RANCHODBHAI VISHALBHAI) . NOW THE VERY VALID QUESTION THAT ARISES IS - IF THE LAND WAS NOT SOLD OR TRANSFERRED, THEN HOW CAN BE SAID ADDITION OF RS.60 LAKHS BE SUSTAINED IN THE APPELLANT'S HANDS, SINCE THE VERY BASIS OF T HE AO'S ADDITION IS LINKED TO THIS VERY LAND TRANSACTION HAVING ALLEGED LY TAKEN PLACE BEFORE THE ASSESSMENT ORDER UNDER SECTION 158BD WAS PASSED? THERE HAS TO BE SOME TRANSACTIONS FOR WHICH SUCH A HUGE A MOUNT IS BEING TAXED. NO ONE IS OBVIOUSLY GOING TO GIFT THIS HUGE SUMMAND THE A.O. HAS NOT PIN-POINTED, IN THE ABSENCE OF THE ABOVE LA ND TRANSACTION HAVING TAKEN PLACE (AS ADMITTED IN THE REMAND REPOR T) WHY THIS SUM BECOMES PAYABLE AT ALL. 3. LEARNED CIT(A) HAS ALSO PERUSED ONE OF THE CONTE NTION OF THE ASSESSEE THAT IF THE IMPUGNED ENTRY WAS RELATED TO SOME LAND TRANSACTION THEN THE SAME SHOULD HAVE A NOTING ON A CHIT IN THE SEIZED MATERIAL. THE ABSENCE OF THE CHIT IN THE SEIZED MATERIAL, THUS PROVED THAT THERE WAS NO CONNECTED DOCUMENT, S O IT WAS NOT A LAND TRANSACTION. LEARNED CIT(A) HAS DISCUSSED A DE CISION OF PRATHNA CONSTRUCTION 70 TTJ 122, PANNA DEVI CHAUDHA RY, 208 ITR 849, AND FEW OTHER DECISIONS AND HELD THAT THE IMPUGNED ENTRY IN THAT BACKGROUND SHOULD NOT BE RELIED UPON SOLELY ON THE BASIS OF BEING WRITTEN IN THE SAID DIARY IN THE ABSENCE OF A N INDEPENDENT SUPPORTIVE EVIDENCE. THE ACTION OF THE AO WAS REVER SED AND THE ADDITION WAS DELETED. IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 9 - 3.1 WITH THIS FACTUAL BACKGROUND, WE HAVE HEARD BOT H THE SIDES AT SOME LENGTH. WE HAVE PERUSED THE MATERIAL PLACED BEFORE US. AT THE OUTSET, IT IS WORTH TO COMMENT THAT INSPITE OF THE SEARCH PROCEEDINGS, THE REVENUE DEPARTMENT HAS NOT CONDUCT ED THE INQUIRIES SO AS TO ARRIVE AT A LOGICAL CONCLUSION. ON ONE HAND, THE REVENUE DEPARTMENT IS ALLEGING THAT THE IMPUGNED AM OUNT OF RS.60 LACS AS APPEARED ON ONE OF THE PAGE OF THE SA ID DIARY WAS CONNECTED WITH THE LAND TRANSACTION. BUT ON THE OTH ER HAND, THERE WAS NO SUPPORTING DOCUMENT OR EVEN A CHIT TO DEMONS TRATE THAT THE IMPUGNED AMOUNT IN FACT WAS CONNECTED WITH THE LAND TRANSACTION BELONGING TO THE ASSESSEE. WE HAVE NOTED THAT THE O THER ENTRIES WERE IN THE SAID LEDGER ACCOUNT UNDER THE HEAD DEB IT AND CREDIT BUT ON THE SAID ACCOUNT THE IMPUGNED AMOUNT OF RS.6 0 LACS WAS AT THE TOP OF THE PAGE DULY TRANSLATED BY THE REVENUE DEPARTMENT AS FOLLOWS: RS.14,00,000 OLD REMAINING RS.60,00,000 MANOJ HAVALA 31.03.99 REMAINING RS.14,00,000 7.11.99 TEMPORARY LOAN REMAINING 3.2 FROM THE SAID ENTRY, THUS, IT IS APPARENT THAT NEITHER IT WAS IN THE DEBIT SIDE OF THE ACCOUNT NOR IT WAS ON THE CRE DIT SIDE OF THE ACCOUNT. BUT, IT WAS AT THE TOP OF THE PAGE. DUE TO THIS REASON, THE ASSESSEE HAS VEHEMENTLY CONTESTED THAT THE CORRESPO NDING ENTRY SHOULD ALSO HAVE BEEN FOUND IN THE ACCOUNT OF MANOJ VADODARIA, AS ALSO MAINTAINED IN THE SAID DIARY. HOWEVER, THE REV ENUE DEPARTMENT WAS UNABLE TO ESTABLISH THAT LINK WITH T HE ACCOUNT OF SRI MANOJ VADODARIA. AN ANOTHER FACT HAS ALSO BEEN BROUGHT TO OUR NOTICE THAT THERE WAS SOME CONFUSION IN THE MIND OF THE AO BECAUSE DURING THE COURSE OF HEARING AN ANOTHER ACC OUNT WAS IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 10 - MENTIONED AND THEN IT WAS PROPOSED THAT THE IMPUGNE D AMOUNT OF RS.60 LACS WAS RECEIVED BY ONE SRI RAMANBHAI PATEL ALLEGED TO BE PARTNER OF THE ASSESSEE FIRM. IN THIS REGARD, A LET TER WRITTEN BY ACIT CENTRAL CIRCLE-1, AHMEDABAD TO THE ASSESSEE IS WORT H REPRODUCTION: NO.CC-1(1)/158BD/04-05 DATE: 28.10.2004 TO, SHRI JAYANTILAL AMBALAL CHOKASI, LIMBOO-NI-POLE, RATAN POLE, AHMEDABAD. SUB: FINAL SHOW CAUSE NOTICE FOR THE BLOCK ASSES SMENT PROCEEDINGS U/S.158BD- REGARDING. ********** PLEASE REFER TO THE ABOVE. 2. YOUR SUBMISSION DATED 28-10-2004 HAS BEEN DULY C ONSIDERED AND THE SEIZED BOOK IN THE FORM OF DIARY AS ANNEX. A-L FROM THE RESIDENTIAL PREMISES OF SHRI ARVINDBHAI SHAH HAS BE EN DULY PERUSED. FROM THE CAREFUL PERUSAL OF THIS DIARY IT HAS BEEN FOUND THAT THERE IS ALSO ACCOUNT OF SHRI RAMBHAI PATEL TO WHOM YOU HAVE MENTIONED IN YOUR SUBMISSION THAT HE WAS EXPARTNER OF JAC. THE A CCOUNT OF THIS PERSON IS ANNEXED WITH THIS SHOW CAUSE. FROM THIS ACCOUNT IS VERY CLEAR THAT AT THE END OF THE DIARY THERE IS CLOSING BALANCE OF RS.60,00,000/- WHICH IS DEBIT BALANCE. THIS MAKES THE PICTURE VERY DEAR THAT THE AMOUNT OF RS.6 0,00,000/- WHICH WAS DUE FROM SHRI MANOJ VADODARIYA TO JAC HAS BEEN DULY RECEIVED BY SHRI RAMBHAI PATEL. 3. IN THE LIGHT OF THIS OBSERVATION YOU ARE REQUEST ED TO EXPLAIN AS TO WHY THIS AMOUNT OF RS.60,00,000/- SHOULD NOT BE WHICH CONSIDERED AS TO HAVE BEEN PAID TO THE PARTNER OF THE FIRM, WH ICH WAS THE RIGHTFUL CLAIM OF JAC I.E. THE FIRM JAYANTILAL AMBALAL CHOKS HI AND THEREFORE, THIS AMOUNT OF RS.60,00,000/- SHOULD BE ADDED AS YO UR UNDISCLOSED INCOME. 4. YOU ARE REQUESTED TO FURNISH THE ABOVE DETAILS O N 29-10-2004 AT 5- 00 P.M. IN THE OFFICE OF THE UNDERSIGNED, FAILING O N WHICH THE ADDITIONS WILL BE MADE ON MERIT. (SHEODAN SINGH BHADORTYA) ASSISTANT COMMISSIONER OF INCOME-TAX, IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 11 - CENTRAL CIRCLE-1 (1), AHMEDABAD. 3.3 INCIDENTALLY, THE SAID PARTNER HAD EXPIRED ON 1 3 TH OF MAY, 1997. HENCE, THE VEHEMENT OBJECTION OF THE ASSESSEE WAS THAT THE SAID AMOUNT SHOULD NOT BE TAXED IN ITS HAND BECAUSE THE SAME BELONGED TO SOME OTHER PERSON AND NOT TO THE ASSESS EE. APART FROM THE ABOVE EVIDENCES AND THE REASONING GIVEN BY LEAR NED CIT(A), NOW THE PRESENT POSITION IS THAT WHILE DECIDING THE APPEAL OF SRI JIVRAJ V. DESAI, IT(SS) NO.99 AND 106/AHD/2004 FOR THE SAID BLOCK PERIOD, VIDE ORDER DATED 13 TH OF DECEMBER, 2013 WE HAVE TAKEN THE CONSCIENTIOUS VIEW THAT THE SAID DIARY WAS NOTHING BUT THE TRANSACTION OF SHARAFI FINANCE BUSINESS OF MR. DESA I. A DETAILED REASONING HAS ALSO BEEN GIVEN IN THE SAID ORDER WHI CH IS RELEVANT FOR THE PRESENT APPEAL AS WELL. WE HAVE ALSO NOTED THAT WHILE DELETING THE ADDITION LEARNED CIT(A) HAS CALLED FOR A REMAND REPORT FROM REVENUE DEPARTMENT AND IN THAT REPORT IT WAS A DMITTED THAT THERE WAS NO CONNECTED INCRIMINATING DOCUMENT OR A CHIT TO DEMONSTRATE THAT THE ASSESSEE IN FACT WAS HAVING AN Y LAND TRANSACTION WITH MR. DESAI. THEREFORE, LEARNED CIT( A) HAS DISCUSSED PRATHNA CONSTRUCTION, 706 TTJ 102 FOR THE LEGAL PROPOSITION THAT A THIRD PARTY EVIDENCES CANNOT CAS T AN ONUS ON THE ASSESSEE TO THE EXTENT THE CONTENTS OF THE SEIZED M ATERIAL IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE. THROUGH OUT THE PROCEEDING THE ASSESSEE HAS VEHEMENTLY CONTESTED TH AT HIS BUSINESS IS SIMPLY A ANGADIA, AS ALSO NOTED BY THE AO, THE REFORE IF THERE WAS ANY ENTRY IN THE SAID DIARY THEN THAT ENTRY WAS MERELY A COURIER TRANSACTION. THEREFORE, UNDER THE TOTALITY OF THE F ACTS AND CIRCUMSTANCES OF THE CASE, WE HEREBY AFFIRM THE FAC TUAL AS WELL AS IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 12 - LEGAL FINDING OF LEARNED CIT(A) AND DISMISS THIS GR OUND OF THE REVENUE. 4. GROUND NO.2 IS REPRODUCED BELOW: 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO DELETE THE ADDITION OF RS.44,00,000/- MADE ON ACCOUNT OF PEAK CREDIT BALANCE OF LOANS BORROWED THROUGH THE ACCOUNT OF 'AMBALAL JAC' HOLDING THAT 'AMBALAL JAC' WAS A DIFFERENT ENTITY FROM 4 JAC' I.E. THE ASSESSEE, THOUGH THE ASSESSEE COULD NOT PROVE THE IDENTITY OF 'AMBALAL JAC' AS DISTINCT FROM THAT OF THE ASSESSEE NEITHER AT THE A SSESSMENT STAGE NOR AT APPELLATE STAGE. 5. IN RESPECT OF THE IMPUGNED ADDITION, THE AO HAD MERGED THE TWO ACCOUNTS OF THE SAID DIARY WHICH WERE NAMED AS JAC AND ANOTHER ACCOUNT TITLED AS AMBALA JAC THE AO HAD M ERGED THESE TWO ACCOUNTS AND AFTER REMOVING THE ANGADIA BUSINES S ENTRIES FROM THE SAID ACCOUNT ARRIVED AT A PEAK CREDIT BALA NCE OF RS.44 LACS WHICH WAS TAXED IN THE HANDS OF THE ASSESSEE AS UND ISCLOSED INCOME. WHEN THE MATTER WAS CARRIED BEFORE LEARNED CIT(A) AFTER EXAMINING THE EXPLANATION OF THE ASSESSEE AND THE C ONNECTED DOCUMENTS, RELIEF WAS GRANTED AS FOLLOWS: IN PARA 4 OF THE AOS ORDER, THE AO HAS STATED THAT THE ASSESSE COULD NOT PRODUCE THE NAME AND ADDRESS OF AMBALAL , THEREFORE IT IS CONCLUDED THAT THE ACCOUNT IN THE NAME OF AMBALAL JAC WAS THE ACCOUNT OF JAC AND THIS FIRM USED TO RECEIVE THE SHARAFI LOAN THROUGH SOME AMBALAL FROM JIVRAJ V. DESAI AT 1.5%. THIS CONCLUSION OF THE AO IS NOT BORNE OUT BY ANY I NDEPENDENTLY VERIFIABLE CORROBORATIVE EVIDENCE. THE APPELLANTS SUBMISSIONS ABOUT MATERIAL BEING USED AGAINST HIM BASED ON SOME OTHER PERSONS STATEMENTS BEING USED AGAINST HIM WITHOUT GIVING HI M AN OPPORTUNITY OF CROSS-EXAMINATION OF THAT PERSON, ARE RELEVANT I N THE CONTEXT OF ABOVE DISCUSSION AND CASE LAWS DISCUSSED EARLIER IN THIS ORDER. HENCE, AOS ACTION CANNOT BE UPHELD AND ADDITION OF RS.44,00,000/- AS PEAK CREDIT IS DELETED. IN VIEW OF THE ABOVE DIS CUSSION, GROUNDS OF APPEAL NO.3.1, 3.2 AND 3.3 ARE ALLOWED. IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 13 - 6. AFTER HEARING BOTH THE SIDES, WE HEREBY ENDORSE THE VIEW TAKEN BY LEARNED CIT(A), SPECIALLY, UNDER THE CIRCU MSTANCES WHEN THE ADMITTED FACTUAL POSITION WAS THAT THE ASSESSEE IS IN ANGADIA BUSINESS. LEARNED CIT(A) HAS ALSO APPRECIATED THE F ACT THAT THE ACCOUNTS OF SOME OTHER ANGADIA HAVE ALSO BEEN NOTED IN THE SAID DIARY. THOSE ANGADIAS WERE ALSO TRANSFERRING THE M ONEY OF MR. DESAI AS A COURIER. WE, THEREFORE, AFFIRM THE VIEW OF LEARNED CIT(A) AND DISMISS THIS GROUND OF REVENUE AS WELL. 7. GROUND NO.3 IS REPRODUCED BELOW: THE CIT (A) AS ERRED IN LAW AND ON FACTS IN DIREC TING TO DELETE THE ADDITION OF RS. 59,7507- MADE ON ACCOUNT OF INTERES T AT THE RATE OF 1.5% PER MONTH ON THE AMOUNT OF LOANS BORROWED THRO UGH THE ACCOUNT OF 'AMBALAL JAC' THE IDENTITY OF WHICH COULD NOT BE PROVED AS DISTINCT FROM THAT OF THE ASSESSEE NEITHER AT THE ASSESSMENT STAGE NOR AT THE APPELLATE STAGE. 8. FROM THE ACCOUNT OF AMBALAL JAC IT WAS FOUND T HAT THERE WAS A MENTION OF CHARGE OF INTEREST AT 1.5%. THE AO HAS, THEREFORE, COMPUTED THE INTEREST ON THE OPENING BAL ANCE AND THE DATE-WISE ENTRIES THEREAFTER NOTED IN THE ACCOUNT A ND ARRIVED AT A FIGURE OF RS.59,750/- WHICH WAS TAXED AS UNDISCLOSE D INCOME IN THE HANDS OF THE ASSESSEE. LEARNED CIT(A) HAS HELD THAT THE IMPUGNED ADDITION WAS MERELY ON PRESUMPTION AND IN THE ABSENCE OF ANY EVIDENCE OF BORROWING OF FUNDS THE INTEREST WAS WRONGLY TAXED. AFTER CAREFUL CONSIDERATION OF THE FACTS AS WELL THE CIRCUMSTANCES AS DISCUSSED SUPRA, WE FIND NO FORCE IN THIS GROUND OF THE REVENUE, HENCE DISMISSED. IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 14 - 9. GROUND NO.4 IS REPRODUCED BELOW: 4. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE SURCHARGE OF RS. 10,68,2947- LEVIED AS PER THE PROV ISIONS OF THE FINANCE ACT, 1999, BY HOLDING THAT THE SURCHARGE IS NOT LEVIABLE IN RESPECT OF SEARCHES CONDUCTED PRIOR TO 01-06-2002, THOUGHT THE FINANCE ACT, 1999 SPECIFICALLY PROVIDES THAT THE SU RCHARGE IS LEVIABLE IN THE CASE WHERE THE SEARCH U/S.132 OF THE ACT HAS BEEN CONDUCTED ON OR AFTER 01-04-1999. 10. THE PRESENT LEGAL CONTROVERSY NOW STOOD SETTLED BY AN ORDER OF THE HONBLE APEX COURT PRONOUNCED IN THE CASE OF SURESH N. GUPTA, 297 ITR 322 (S.C.), WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 113 ARE APPLICABLE IN RESPECT OF SURCHAR GE IN ADDITION TO INCOME TAX LEVIABLE BEING PRESCRIBED UNDER THE ACT. THEREFORE, THE FINDING OF LEARNED CIT(A) IS HEREBY REVERSED AND TH IS GROUND OF THE REVENUE IS ALLOWED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 17/12/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD IT(SS)A NO.125/AHD/2006 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS. SHRI JAYAN TILAL AMBALAL CHOKSHI, - 15 - 1. DATE OF DICTATION- 12.12.2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.12.2013 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER