Shri Nagindas T.Kapadia, Surat V. The ACIT.,Cent.Circle-4, Surat

ITSSA 125/AHD/2010

• Counselvise Citation: [2014] 119 COUNSELVISE.COM (IT) 3108 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 10-09-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 11-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIMALENDU VERMA
• Keywords: Unexplained investment; Unexplained expenditure; Gift; Peak credit; Corroborative evidences; Onus to prove
• Section: 69C; 69

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ # ## #. .. .# ## #. . . . % % % %, , , , &' ( & ' &' ( & ' &' ( & ' &' ( & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND N.S. SAINI, ACCOUNTANT MEMBER) IT(SS)A NO.125 AND 126/AHD/2010 [ASSTT.YEAR : 2004-2005 AND 2006-2007] SHRI NAGINDAS T. KAPADIA (PROP: SHIV KRUPA JARI 3/1810, GHAMLAWAD, SHERI NO.1 GHAMLAWAD, SURAT. PAN : AAUPK 4395 E /VS. ACIT, CENT.CIR.4 SURAT. ( (( ( *+ *+ *+ *+ / APPELLANT) ( (( ( ,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ./ 0 1 & / ASSESSEE BY : SHRI RAJESH SHAH ( 0 1 & / REVENUE BY : SHRI VIMALENDU VERMA, CIT-DR 3 0 /4' / DATE OF HEARING : 10 TH SEPTEMBER, 2014 567 0 /4' / DATE OF PRONOUNCEMENT : 17.10.2014 &8 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THESE TWO APPEALS BY THE ASSESSEE FOR THE ASSTT.YEAR 2004-05 AND 2006-07 ARE DIRECTED AGAINST THE ORDER OF THE CIT(A). THESE ARE BEING DISPOSED OF W ITH THIS CONSOLIDATED ORDER. IT(SS)A.NO.125/AHD/2010 (ASSTT.YEAR 2004-2005) 2. THE GROUND NO.1 OF THE APPEAL OF THE ASSESEEE IS AS UNDER: IT(SS)A NO.125 & 126/AHD/2010 -2- 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED EXPENDITURE OF RS.43,07,179/ - WITHOUT CONSIDERING THE FACTS, MERITS AND SUBMISSIONS MADE BY THE APPELLANT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT HEAVY ADDITION OF RS.43.07 LAKHS WAS MADE BY INVOKING THE PROVISIO NS OF SECTIONS 69 AND 69C OF THE ACT, ON ACCOUNT OF UNEXPLAINED EXPENDITU RE. HE SUBMITTED THAT THE FACT REMAINS THAT THE ASSESSEE HAS NEVER INCURR ED SUCH EXPENDITURE, AND THEREFORE, THE VERY BASIS OF THE ADDITION IS WITHOU T ANY BASIS. HE SUBMITTED THAT THE AO HAS WRONGLY OBSERVED THAT THE ASSESSEE HAS MADE PAYMENT OF RS.43.07 LAKHS IN FOREIGN EXCHANGE TO SHRI MUNAVAR KHAN, ALTHOUGH THE ASSESSEE HAS EXPLAINED THAT THE SEIZED PAPER RELATE D TO SETTLING DISPUTE BETWEEN THE PERSONS, WHERE THE ASSESSEE WAS A MEDIA TOR. HE SUBMITTED THAT IT IS WELL SETTLED THAT WHILE MAKING ADDITION UNDER SECTION 69 ETC. THE ONUS WAS ON THE REVENUE TO PROVE THAT THE ASSESSEE HAS MADE THE EXPENDITURE AND THE SAME WAS UNEXPLAINED. HE REFE RRED TO PAGE NO.43 OF ITS COMPILATION WHICH CONTAINED THE REPLY OF SUPERI NTENDENT OF CUSTOMS, SURAT TO THE AO IN CONNECTION WITH THE INQUIRY OF T HE ASSESSEE INTIMATING THAT NO IMPORT/ EXPORT HAVE BEEN MADE BY THE IMPORT ERS/EXPORTERS STATED IN YOUR ABOVE LETTER FROM THIS OFFICE. THE LEARNED CO UNSEL FOR THE ASSESSEE ALSO REFERRED TO PAGE NOS.23 TO 25 CONTAINING THE C ONFIRMATION OF SHRI MONUWAR KHAN, MD OF THE COMPANY, ANEES CORER TRADIN G LLC, DUBAI, UAE THAT THEY HAVE SOME ACCOUNT SETTLEMENT WITH MR. DEWONGBHAI & METRO LLC, DUBAI AND THEY HAVE APPROACHED THE ASSES SEE FOR THIS ACCOUNT SETTLEMENT IN A FRIENDLY WAY. COPIES OF THE BANK D RAFTS IN FAVOUR OF M/S.METRO TRADING AND METRO GENERAL TRADING, ISSUED BY STANDARD CHARTERED BANK AND UNION NATIONAL BANK HAVE ALSO BE EN FILED IN THE COMPILATION BEFORE THE TRIBUNAL. THE LEARNED COUNS EL FOR THE ASSESSEE IT(SS)A NO.125 & 126/AHD/2010 -3- SUBMITTED THAT THE COPIES OF SEIZED PAPERS HAVE BEE N FILED AT PAGE NO.36 OF THE COMPILATION WHEREIN THE NAME OF THE ASSESSEE DO ES NOT APPEAR ANYWHERE. HE SUBMITTED THAT THERE IS NO JUSTIFICAT ION FOR MAKING THE ADDITION WITHOUT BRINGING ANY EVIDENCE ON RECORD TO IMPLICATE THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS REQUESTED THE AO AND THE CIT(A) TO CALL SHRI MONUWAR KHAN FOR PERSONAL APPEARANCE, BUT THEY NEVER DID SO. HE SUBMITTED THAT THE ASSESSEE HAS NO BUSINESS TRAN SACTION OF PURCHASE OR SALE WITH EITHER SHRI MONUWAR KHAN OR SHRI DEWONGBH AI NOR WITH METRO GENERAL TRADING COMPANY. THE LEARNED DR SUBMITTED THAT THE SEIZED MATERIAL WAS FOUND FROM THE POSSESSION OF THE ASSES SEE, AND THE SEIZED MATERIAL RELATES TO THE ASSESSEE, AND THEREFORE, ON US WAS ON THE ASSESSEE TO EXPLAIN THAT THE ENTRIES IN THE SEIZED MATERIAL DO NOT PERTAIN TO HIM. HE REFERRED TO THE RELEVANT PORTIONS OF THE ASSESSMENT ORDER, AND THE APPELLATE ORDER PASSED BY THE CIT(A) IN SUPPORT OF THE CASE O F THE REVENUE. HE REFERRED TO PARA 3.2 OF THE CIT(A)S ORDER, WHEREIN IT HAS BEEN MENTIONED THAT THE NAME OF THE ASSESSEE, SHRI NAGAINBHAI AND HIS GROUP (T.N.KPADIA) APPEARED ON THE TOP OF THE SEIZED MATERIAL. HE SUB MITTED THAT THE LETTER OF THE SUPERINTENDENT OF CUSTOMS, SURAT DATED 23.10.20 07 MIGHT NOT HAVE BEEN FILED BEFORE THE CIT(A) BY THE ASSESSEE. HE R ELIED ON THE ORDERS OF THE AO AND THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY A ND ALSO ORDERS OF THE AO AND THE CIT(A), AND ALSO COPIES OF VARIOUS D OCUMENTS FILED BY THE ASSESSEE IN ITS COMPILATION BEFORE THE TRIBUNAL. W E FIND THAT IN ORDER TO MAKE ADDITION UNDER SECTION 69/69C, THE ONUS IS ON THE DEPARTMENT TO PROVE THAT THE ASSESSEE HAS INCURRED EXPENDITURE WH ICH REMAINED UNEXPLAINED. IN THIS CASE, THE ASSESSEE HAS FILED AN EXPLANATION STATING THAT HE HAS NO RELATION WHATSOEVER WITH THE CONTENTS OF THE SEIZED DOCUMENT, AS IT RELATES TO SETTLING THE DISPUTE BETWEEN SHRI MON UWAR KHAN AND SHRI IT(SS)A NO.125 & 126/AHD/2010 -4- DEWONGBHAI, THE OWNER OF METRO GENERAL TRADING COMP ANY. WE HAVE PERUSED THE COPIES OF SEIZED PAPERS FILED BY THE AS SESSEE IN ITS COMPILATION BEFORE US. WE FIND THAT THE NAME OF THE ASSESSEE I S NOT LEGIBLE ON THE COPIES OF SEIZED PAPERS, AS FILED BEFORE THE TRIBUN AL. WE FIND THAT THERE ARE CERTAIN CUTTINGS ON THE SEIZED PAPER, BUT, IT I S NOT THE CASE OF THE DEPARTMENT THAT THEY DID NOT EXIST AT THE TIME OF S EARCH AND SEIZURE ACTION, WHEN SUCH PAPER WAS SEIZED BY THE DEPARTMENT. MERE LY BECAUSE THERE ARE SOME ROUGH CALCULATIONS ON THE SAID SEIZED PAPERS, WITHOUT ANY CORROBORATIVE EVIDENCE WITH THE DEPARTMENT, IT CANN OT BE SAID THAT THE AMOUNT THEREOF BELONGS TO THE ASSESSEE AND COULD BE ADDED AS UNEXPLAINED EXPENDITURE IN THE HANDS OF THE ASSESSEE. IN THIS CASE, THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS CAST UPON IT, AND THE S AME COULD NOT BE PROVED TO BE FALSE BY THE DEPARTMENT. THE LETTER OF THE SUPE RINTENDENT OF CUSTOMS, SURAT DATED 23.10.2007 SUPPORTS THE CASE OF THE ASS ESSEE. THE ASSESSEE HAS THROUGHOUT CLAIMED THAT IT HAS NO BUSINESS TRANSACT ION OF ANY PURCHASE OR SALES WITH EITHER PARTY NAMELY, SHRI MONUWAR KHAN A ND SHRI DEWONGBHAI, THE OWNER OF METRO GENERAL TRADING COMPANY. THE AS SESSEE HAS ALSO CONFIRMED THAT IT HAS NOT IMPORTED ANY EMBROIDERY M ACHINERY IN WHOLE YEAR OF 2003. THE DEPARTMENT COULD NOT CONTROVERT THE CONFIRMATION DATED 10.7.2007 OF SHRI MONUWAR KHAN, MD OF ANEES CORER T RADING LLC, DUBAI AND THE SUPPORTING EVIDENCE OF COPIES OF VARI OUS DRAFTS ISSUED BY THE STANDARD CHARTERED BANK AND UNION NATIONAL BANK IN FAVOUR OF METRO TRADING/METRO GENERAL TRADING COMPANY. IN THESE FA CTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE COULD N OT PROVE THAT THE ASSESSEE HAS IN FACT INCURRED UNEXPLAINED EXPENDITU RE OF RS.43,07,179/-, AND ACCORDINGLY, WE HOLD THAT NO ADDITION OF THIS A MOUNT COULD BE MADE IN THE HANDS OF THE ASSESSEE, AND THE GROUND NO.1 OF T HE ASSESSEE IS ALLOWED. 5. THE OTHER GROUNDS OF APPEAL NOS.2 TO 4 OF THE AS SESSEE ARE AS UNDER: IT(SS)A NO.125 & 126/AHD/2010 -5- 2. WITHOUT PREJUDICE TO GROUND NO.1 ABOVE, THE LEA RNED CIT(A) ALSO ERRED IN NOT DIRECTING THE AO TO DO TELESCOPIN G OF THE ABOVE UNEXPLAINED EXPENDITURE AGAINST UN-RECONCILED SALES OF RS.38,700/- ON WHICH GP ADDITION HAS BEEN DULY MADE BY THE AO A ND WHICH HAS NOT BEEN CONTESTED BY THE APPELLANT. 3. WITHOUT PREJUDICE TO GROUND NO.1 & 2, THE LD.CIT (A) ALSO ERRED IN CONFIRMING THE ACT OF AO OF NOT TELESCOPIN G THE ADDITION OF RS.42,68,479/- (43,07,179-38,700) AGAINST THE CONDI TIONAL DISCLOSURE MADE BY THE APPELLANT OF RS.1,50,000/- AT THE TIME OF FILING THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S.153A. 4. THAT ON THE FACTS AND CIRCUMSTANCES THE CIT(A) HAS ERRED IN SUSTAINING THE ACT OF THE AO OF NOT CONSIDERING THE CONDITIONS SPECIFIED IN THE NOTES FORMING PART OF REVISED RETU RN INCOME U/S.153A WHEREIN IT HAS BEEN CATEGORICALLY MENTIONED BY THE APPELLANT THAT - THE CONDITIONAL DISCLOSURE MADE IN THE RETURN OF INCOME BE TELESCOPED AGAINST THE TOTAL ADDITIONS/DISALLOWANCE S MADE DURING THE ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PRO CEEDINGS IN THE CASE OF THE APPELLANT OR HIS FAMILY MEMBERS OR HIS GROUP CONCERNS FOR THE PERIOD COVERED UNDER NOTICE ISSUED U/S.153A /153C OR - IF THE SAME IS NOT TELESCOPED, THEN THE TAX REMA INING IF ANY IN RELATION TO THE AMOUNT NOT SPECIFICALLY IDENTIFIED AGAINST THE AMOUNT OF DISCLOSURE MAY KINDLY BE TREATED AS RETRACTED AN D TAX PAID THEREON MAY BE REFUNDED TO THE APPELLANT. 6. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT ADD RESSED ANY ARGUMENTS ON THESE ISSUES, AND ACCORDINGLY, WE DISM ISS THE GROUND NO.2 TO 4 OF THE APPEAL OF THE ASSESSEE. IT(SS)A.NO.126/AHD/2010 (ASSTT.YEAR 2006-2007) 7. THE GROUND NO.1 OF THE ASSESSEES APPEAL IS AS U NDER: 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED CASH OF RS.35,17,155/- WITHOUT CONSI DERING THE FACT IT(SS)A NO.125 & 126/AHD/2010 -6- - THAT THE SAID CASH FOUND IS FROM THE WITHDRAWALS MADE FROM THE BANK ACCOUNT OF VARIOUS CONCERNS OF THE APPELLA NT AND HIS FAMILY MEMBERS FOR MAKING PAYMENT OF SALARY AND OTH ER MISC. EXPENSES. THE BANK ACCOUNTS FROM WHERE THE CASH IS WITHDRAWN ARE DULY REFLECTED IN THE BOOKS OF ACCOUN TS OF VARIOUS CONCERNS OF THE APPELLANT. - THAT THE SAID CASH BELONGS TO VARIOUS CONCERNS IN WHICH THE APPELLANT AND HIS FAMILY MEMBERS ARE PROPRIETOR/ PA RTNERS/ DIRECTORS AND ALL OF THEM STAY JOINTLY TOGETHER IN ONE HOUSE AND AS THE RESIDENCE AND THE REGISTERED OFFICE OF ALL T HE GROUP CONCERNS OF THE APPELLANT IS IN THE SAME BUILDING T HE SAME WAS TAKEN BY THE PROPRIETOR/ PARTNERS/ DIRECTORS AT THE RESIDENCE FOR SAFETY PURPOSE. - THAT NON-UPDATATION OF THE CASH BOOK CANNOT BE GR OUND OF CONSIDERING CASH FOUND AS UNEXPLAINED THAT TOO WHEN THE SAME IS ON ACCOUNT OF THE WITHDRAWALS FROM THE BANK ACCO UNT WHICH IS DULY REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS. 8. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE CASH AMOUNTING TO RS.35,17,155/- WAS FOUND AT THE TIME O F SEARCH ON 14.12.2005 AT THE RESIDENCE AND THE OFFICE PREMISES OF THE ASSESSEE. HOWEVER, THE CASH PERTAINS TO VARIOUS BUSINESS CONC ERNS OF THE ASSESSEE AND WAS FULLY EXPLAINABLE. HE SUBMITTED THAT THE R EVENUE COULD NOT ESTABLISH HOW MUCH CASH WAS FOUND AT A PARTICULAR P LACE. ON QUERY FROM THE BENCH, THE LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE EXPLANATION WITH REGARD TO THE CASH COULD NOT BE FI LED, AS NO SUCH QUERY WAS PUT BY THE AO. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A) AND REFERRED TO THE RELEVANT PORTIONS OF THE ASSESSMENT ORDER IN SUPPORT OF CASE OF THE REVENUE. 9. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IN THE FA CTS OF THE CASE, WE ARE OF THE VIEW THAT A PROPER OPPORTUNITY TO EXPLAI N THE SOURCE OF CASH IT(SS)A NO.125 & 126/AHD/2010 -7- FOUND OF THE VARIOUS BUSINESS CONCERNS OF THE ASSES SEE SHOULD HAVE BEEN PROVIDED TO THE ASSESSEE. ACCORDINGLY, WE RESTORE THIS ISSUE OF ADDITION ON ACCOUNT OF UNEXPLAINED CASH TO THE FILE OF THE AO W ITH DIRECTION TO DECIDE THE SAME DE NOVO AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE SHALL BE AT LIBERTY TO PROV IDE ANY EVIDENCE IN SUPPORT OF ITS CASE. WE DIRECT ACCORDINGLY. 10. THE GROUND NO.2 OF THE ASSESSEES APPEAL IS AS UNDER: 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE - ADDITION MADE BY AO OF RS.20,54,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT OF THE AMOUNT DEPOSITED IN C ENTURION BANK LTD. (WHICH IS WRONGLY CONSIDERED AS PANCHSHEE L MERCANTILE CO-OP. BANK LTD. BY THE AO) AND - TAKING THE PEAK BALANCE WITHOUT CONSIDERING THE F ACT THAT THE AMOUNT DEPOSITED IN THE BANK ACCOUNT COMPRISES OF L OANS RECEIVED FROM FRIENDS AND RELATIVES - THE DOCUMENTARY EVIDENCE OF WHICH HAD BEEN SUBMIT TED SUBSTANTIATING THE IDENTITY AND GENUINENESS OF THE TRANSACTION, AND - THE SAID ADDITION MADE BY THE LEARNED AO WHICH IS BASELESS AS THE SAME HAS BEEN DONE WITHOUT PROVIDING ANY OPPORT UNITY TO THE APPELLANT AND IN UTTER IGNORANCE OF THE ABOVE F ACTS. 11. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE OU TSET, SUBMITTED THAT NO EXPLANATION REGARDING THIS ADDITION ON ACCOUNT OF U NEXPLAINED INVESTMENT IN CENTURION BANK WAS ASKED FOR BY THE AO. THE LEA RNED DR HAS RELIED ON THE ORDERS OF THE AO AND THE CIT(A). WE HAVE CONSI DERED RIVAL SUBMISSIONS. IN THE FACTS OF THE CASE, WE ARE OF TH E VIEW THAT A PROPER OPPORTUNITY TO EXPLAIN THE SOURCE OF AMOUNT DEPOSIT ED IN CENTURION BANK SHOULD HAVE BEEN PROVIDED TO THE ASSESSEE. ACCORDI NGLY, WE RESTORE THIS IT(SS)A NO.125 & 126/AHD/2010 -8- ISSUE OF ADDITION ON ACCOUNT OF UNEXPLAINED INVESTM ENT TO THE FILE OF THE AO WITH DIRECTION TO DECIDE THE SAME DE NOVO AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESS EE SHALL BE AT LIBERTY TO PROVIDE ANY EVIDENCE IN SUPPORT OF ITS CASE. WE DI RECT ACCORDINGLY. 12. THE GROUND NO.3 AND 4 OF THE APPEAL OF THE ASSE SSEE ARE AS UNDER: 3. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY AO NON ACC OUNT OF UNEXPLAINED EXPENDITURE IN JEWELLERY (100.20GRAMS) OF RS.3,99,000/- U/S.69C OF THE ACT WITHOUT CONSIDERING THE FACT THA T - THE SAME HAD BEEN RECEIVED BY THE APPELLANT AS GIFT FROM HIS FRIEND STAYING IN DUBAI ON OCCASION OF ENGAGEMENT C EREMONY OF APPELLANTS DAUGHTER AND DAUGHTER-IN-LAW. - THE AMOUNT OF UNEXPLAINED EXPENDITURE HAS BEEN WRON GLY WORKED OUT BY THE AO TO RS.3,99,000/- INSTEAD OF RS.45,790 /-, AND - AND WITHOUT APPRECIATING THE DOCUMENTARY EVIDENCE S UBMITTED TO HIM IN THE FORM OF CONFIRMATION OF THE PARTY FROM W HOM THE GIFT IS RECEIVED. 4. WITHOUT PREJUDICE TO THE GROUND NO.3, THE LD.CIT (A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY AO WITHOUT GIVIN G SET OFF OF 100.20 GMS OF JEWELLERY AGAINST BALANCE OF 56.00 GR AMS (2800.00 GMS. 2744.00 GM. OF JEWELLERY AS WORKED OUT ON PA GE NO.6 OF CIT(A)S ORDER) AND ACCORDINGLY ADDITION SHOULD HAV E BEEN RESTRICTED TO 44.20 GM. (100.20 56.00) OF JEWELLE RY. 13. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT BILL, ON THE BASIS OF WHICH, ALLEGED ADDITION OF RS.3.99 LAKHS WAS MAD E PERTAINS TO THE FINANCIAL YEAR 2001-02, AND HENCE ADDITION COULD NO T BE MADE DURING THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THE BI LL WAS IN THE CURRENCY OF UAE (DHS.) AND RATE OF CURRENCY IN THAT YEAR, AT TH AT TIME IN FINANCIAL YEAR 2001-02, WAS RS.13.23, BUT THE AO HAS TAKEN THE RAT E OF RS.105.10, AND THE AMOUNT OF BILL COMES TO RS.50,274/- ONLY. HE S UBMITTED THAT THE ASSESSEE HAS RECEIVED A GIFT FROM MR.SUMAN PATEL ON ACCOUNT OF IT(SS)A NO.125 & 126/AHD/2010 -9- ENGAGEMENT OF DAUGHTER OF THE ASSESSEE, MS.LEENA KA PADIA AND MS. NEHA KAPADIA, DAUGHTER-IN-LAW OF THE ASSESSEE WEIGHING J EWELLERY 100.2 GRAMS WORTH 3800 DHS. HE SUBMITTED THAT THE ASSESSEE HAS FILED CONFIRMATION LETTER OF MR.SUMAN PATEL WHO HAS CONFIRMED THE FACT OF GIFT TO THE DAUGHTER AND DAUGHTER-IN-LAW OF THE ASSESSEE. HE SUBMITTED T HAT ALL THE CORROBORATIVE EVIDENCES TO SHOW THE CREDIT-WORTHINE SS OF THE DONOR AND HIS IDENTITY WERE FILED BEFORE THE AO. HE SUBMITTED TH AT THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE SU BMISSIONS OF THE ASSESSEE WHICH WERE SUPPORTED BY DOCUMENTARY EVIDEN CE FILED ON RECORD. 14. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF T HE LEARNED COUNSEL OF THE ASSESSEE. HE REFERRED TO THE RELEVANT PORTI ONS OF THE ASSESSMENT ORDER AND THE APPELLATE ORDER PASSED BY THE CIT(A) IN SUPPORT OF THE CASE OF THE REVENUE. HE SUBMITTED THAT THE CIT(A) HAS C ONCLUDED THAT THERE WAS NO EVIDENCE BROUGHT ON RECORD THAT THE GIFT WAS GIVEN BY SOMEONE ELSE AND NOT THE ASSESSEE. HE SUBMITTED THAT THE CIT(A) HAS OBSERVED THAT THE BILL WAS ISSUED IN THE NAME OF NAGINDASBHAI (THE AS SESSEE). HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 15. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AO AND THE CIT(A), AND ALSO COPY OF CONFIRMATION OF DONOR, MR.SUMAN PATEL AND OTHER DOCUMENTS FILED IN THE COMPILATION BEFORE US. WE FIND THAT THE ASSESSEE HAS GIVEN AN EXPLANATION THAT THE SAID JEWELLERY WEIGHING 100.2 GRAMS WAS GIFTED BY ONE MR.SUMAN PATEL, WHO W AS RESIDING AT DUBAI, UAE. THE CONFIRMATION OF THE DONOR, MR.SUMA N PATEL ALONG WITH SUPPORTING EVIDENCE HAS BEEN FILED BEFORE THE AO. THE CONFIRMATION DATED 3.3.2007 OF MR.SUMAN PATEL HAS THE POSTAL SEAL OF EMIRATES POST, UAE ADDRESSED TO THE ASSESSEE. WE FIND THAT THE COMPL ETE POSTAL ADDRESS OF MR.SUMAN PATEL (DONOR) HAS BEEN MENTIONED IN THE PO STAL ENVELOPE FILED IT(SS)A NO.125 & 126/AHD/2010 -10- BY HIM. THE ASSESSEE HAS EXPLAINED THAT THE OCCASIO N OF THE GIFT WAS THE ENGAGEMENT CEREMONY OF THE DAUGHTER OF THE ASSESSEE . THERE IS NO MATERIAL BROUGHT ON RECORD ON BEHALF OF THE REVENUE TO CONTROVERT THE EXPLANATION OF THE ASSESSEE SUPPORTED BY THE DOCUME NTARY EVIDENCE. WE FIND THAT THE AO HAS NOT MADE ANY FURTHER INQUIRY I N THIS MATTER, AND HAS STRAIGHTWAY REJECTED THE EXPLANATION OF THE ASSESSE E. WE FIND THAT THE CIT(A) HAS ALSO PASSED A CRYPTIC ORDER ON THIS ISSU E, AND HAS CONCLUDED THAT THE BILL WAS IN THE NAME OF THE ASSESSEE, AND THERE WAS NO EVIDENCE THAT IT WAS A GIFT BY SOMEONE-ELSE. HE HAS NOT CON SIDERED THE CONFIRMATION GIVEN BY MR.SUMAN PATEL (DONOR) AND OTHER EVIDENCES FILED BY THE ASSESSEE. IN THESE FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVING THE SOURCE OF ACQUIS ITION OF JEWELLERY WEIGHING 100.2 GRAMS AND IN THE ABSENCE OF ANY MATE RIAL ON RECORD TO DISCREDIT THE CONFIRMATION OF THE DONOR, WE HOLD TH AT NO CASE FOR ADDITION OF RS.3,99,000/- COULD BE MADE OUT BY THE DEPARTMEN T, AND ACCORDINGLY, THE GROUND NOS.3 AND 4 OF THE ASSESSEE ARE ALLOWED. 16. THE GROUND NO.5 OF THE ASSESSEES APPEAL IS AS UNDER: 5. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN - CONFIRMING THE ADDITION OF RS.7,30,733/- MADE BY AO ON ACCOUNT OF UNEXPLAINED FOREIGN CURRENCY - WITHOUT APPRECIATING THE DOCUMENTARY EVIDENCES SUBS TANTIATING THE FACT THAT THE SAID FOREIGN CURRENCY DID NOT BEL ONG TO THE APPELLANT - AND DULY BELONGED TO HIS FRIENDS WHO HAD COME TO DI NNER AT THE RESIDENCE OF THE APPELLANT JUST THE DAY BEFORE THE SEARCH. 17. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FOREIGN CURRENCY VALUING IN INDIAN RUPEES OF RS.7,30,733/- WAS FULLY EXPLAINED BY THE ASSESSEE THAT IT BELONGS TO THE RELATIVES OF TH E ASSESSEE WHO WERE IT(SS)A NO.125 & 126/AHD/2010 -11- RESIDENTS OF AMERICA AND CAME TO THE HOUSE OF THE A SSESSEE AND WERE TO CARRY THEM TO BANK FOR CONVERSION OF US DOLLAR IN I NDIAN CURRENCY. HE SUBMITTED THAT NO FURTHER QUESTION WAS ASKED BY THE INVESTIGATING OFFICER WITH REGARD TO THE CURRENCY. THE ASSESSEE HAS ALSO SUBMITTED THE NECESSARY EVIDENCE IN THE FORM OF CONFIRMATION LETTERS OF THE RELATIVES, COPY OF THEIR PASSPORT STATING THEIR STAY DURING THE RELEVANT TIM E IN INDIA AND COPY OF THE MARRIAGE INVITATION CARD FOR WHICH THE RELATIVES HA VE COME TO INDIA. HE SUBMITTED THAT THE COPIES OF CONFIRMATION LETTERS O F THE RELATIVES HAVE BEEN FILED BEFORE THE AO, COPIES OF WHICH HAVE BEEN FILE D IN THE COMPILATION AT PAGE NO.75 TO 95 BEFORE THE TRIBUNAL. 18. THE LEARNED DR HAS REFERRED TO RELEVANT PORTION S OF THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A) IN SUPPORT OF THE CASE OF THE REVENUE, AND SUBMITTED THAT ONUS WAS ON THE ASSESSEE TO PROV E THE GENUINENESS AND CORRECTNESS OF THE CONFIRMATION LETTERS FILED BY TH E RELATIVES OF THE ASSESSEE. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 19. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS TO PROVE THE SOURCE OF FOREIGN CURRENCY FOUND AT THE TIME OF SEARCH ON 14.12.2005 WITH THE ASSESSEE. THE ASSESSEE HAS EXPLAINED THAT THE FOREIGN CURRENCY BELONGS TO ITS RELATIVES AND HAS GIVEN THEIR NAMES AND COMPLETE ADDRESSES. THE ASSE SSEE HAS EXPLAINED THAT THE NRI RELATIVES HAVE COME TO HIS PLACE TO AT TEND MARRIAGE CEREMONY AND HAS PROVIDED MARRIAGE CARD IN EVIDENCE THEREOF. THE ASSESSEE HAS ALSO FIELD CONFIRMATION FROM ALL THE RELATIVES AND THE C OPIES OF THEIR PASSPORT IN EVIDENCE OF THE CASE OF THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS FILED COPIES OF CONFIRMATION LETTERS FROM THESE NRI RELAT IVES, ALONG WITH THEIR COPIES OF PASSPORT ETC. TO PROVE THEIR PRESENCE IN INDIA AT THE RELEVANT TIME AND THE SAID CONFIRMATIONS WERE SENT FROM ABROAD, D ULY NOTARIZED IN THAT IT(SS)A NO.125 & 126/AHD/2010 -12- COUNTRY. WE FIND THAT NO MATERIAL COULD BE BROUGHT ON RECORD ON BEHALF OF THE REVENUE TO CONTROVERT THE EXPLANATION OR SUPPOR TING EVIDENCES FILED BY THE ASSESSEE IN THIS REGARD. IN THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT NO CASE FOR ADDITION COULD BE MADE OUT BY THE REVENUE, AND ACCORDINGLY, THE GROUND NO.5 OF THE ASSESSEE IS ALL OWED. 20. MODIFIED GROUNDS OF THE APPEAL NOS.6 AND 7 OF T HE ASSESSEE ARE AS UNDER: 6. THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.78,96,412/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT. 7. THE LD.CIT(A) OUGHT TO HAVE TAKEN GP ON ACCOUNT OF PURCHASE IN THE ABSENCE OF ANY EXCESS STOCK FOUND DURING SEA RCH. NO ADDITION CAN BE MADE FOR UNACCOUNTED PURCHASED U/S.69C OF TH E ACT AND THE CIT(A) OUGHT TO HAVE TAKEN GP ON DEEMED SALES FOR U NACCOUNTED PURCHASE. 21. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION HAS BEEN WRONGLY SUSTAINED BY THE CIT(A) UNDER SECTION 69C O F THE ACT, AND IN FACT, AT THE MOST, THE GP ADDITION SHOULD HAVE BEEN MADE BY THE DEPARTMENT. HE SUBMITTED THAT THE ISSUE IN THE GROUNDS OF THE A PPEAL OF THE ASSESSEE WERE NOT CORRECTLY APPRECIATED BY THE CIT(A) AND TH E AMOUNT OF UNACCOUNTED SALES AND PURCHASES WERE WRONGLY WORKED OUT BY DEPARTMENT OFFICERS. HE SUBMITTED THAT THE ASSESSEE HAS MODIF IED ITS CHART AFTER THE EFFECT OF THE APPELLATE ORDER PASSED BY THE CIT(A), WHICH WAS PREPARED FOR EXPLAINING THE ISSUE AND THE SAME HAS BEEN FILED AT PAGE NOS.21 TO 22 OF THE WRITTEN SUBMISSION FILED BEFORE THE TRIBUNAL. IN R EPLY TO A SPECIFIC QUESTION FROM THE BENCH, THE LEARNED COUNSEL FOR TH E ASSESSEE CONCEDED THAT THIS MODIFIED CHART WAS FILED FOR THE FIRST TI ME BEFORE THE TRIBUNAL. THE LEARNED DR SUBMITTED THAT SO-CALLED MODIFIED CH ART WAS NOT FILED AT THE TIME OF FILING OF THE EXPLANATION BY THE ASSESS EE, AND THEREFORE, THE AO IT(SS)A NO.125 & 126/AHD/2010 -13- AND THE CIT(A) HAD NO OCCASION TO CONSIDER THE SAME . HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 22. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AO AND THE CIT(A), AND ALSO THE MODIFIED CHART FILE D BY THE ASSESSEE AT PAGE NOS.21 TO 22 OF ITS WRITTEN SUBMISSIONS BEFORE THE TRIBUNAL. WE FIND THAT THE SAID CHART COULD NOT BE FILED BY THE ASSES SEE BEFORE THE AO AND THE CIT(A), AS IT WAS PREPARED AFTER GIVING EFFECT OF A PPELLATE ORDER OF THE CIT(A). IN THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT IT SHALL BE IN THE INTEREST OF JUSTICE TO SET ASIDE THE ISSUE IN THE M ODIFIED GROUND NOS.6 AND 7 OF THE ASSESSEE TO THE FILE OF THE AO WITH DIRECTIO N TO DECIDE THE SAME DE NOVO IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE O PPORTUNITY OF HEARING TO THE ASSESSEE, AND THE ASSESSEE SHALL BE AT LIBERTY TO GIVE ANY EVIDENCE IN SUPPORT OF ITS CASE BEFORE THE AO ON TH IS ISSUE. WE DIRECT ACCORDINGLY. 23. IN THE RESULT, THE IT(SS)A.NO.125/AHD/2010 IS P ARTLY ALLOWED AND IT(SS)A.NO.126/AHD/2010 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( # ## # . .. . # ## # . . . . % % % % /N.S.SAINI) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD