Shri Bharat R. Choksi, Baroda V. The ACIT., Circle-1(2), Baroda

ITSSA 151/AHD/2005

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7916 (ITAT-AHMEDABAD)
• Duration Of Justice: 18 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-04-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 26-02-2024
• Assessment Year: misc
• Appeal Filed On: 28-04-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Block assessment
• Section: 132; 142(1); 274; 143(2); 139(1); 158BC(c); 158BC; 13; 158BD

Judgement Text

IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 1 of 19 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Bharat R. Choksi, 86/87, Ambalal Park, Opp. Petrol Pump, Karelibaug, Baroda. [PAN – ABIPC 0953 D] Vs. The Assistant Commissioner of Income Tax, Circle – 4, Baroda. (Appellant) (Respondent) Assessee by Shri Sakar Sharma, A.R. Revenue by Dr. Darsi Suman Ratnam, CIT (DR) Da t e o f He a rin g 27.02.2024 Da t e o f P ro n o u n ce m e n t 10.04.2024 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER: This appeal is filed by the assessee against order dated 30.03.2005 passed by the Assistant Commissioner of Income Tax, Circle-4, Baroda for the Block Period Assessment Year 1986-87 to 15.12.1995. 2. This is a recalled matter from the order dated 22.06.2022 passed by the Tribunal. The Tribunal has recalled the order dated 17.11.2017 in respect of the first preliminary issue regarding notice under Section 143(2) of the Income Tax Act, 1961 whether served upon within one year from the date of filing the block return. In view of the decision Hon’ble High Court in case of ACIT vs. Hotel Bluemoon, 321 ITR 362, these assessment years are not sustainable as observed by the Tribunal. The Tribunal further observed that despite the fact that notice was issued under Section 158BC of the Act on 19.03.1996, no return of income for the block period was filed till 25.11.1996. Thus, office reminders were ignored IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 2 of 19 by the assessee and the Tribunal’s attempt for compliance and co-operation from the assessee failed. The Tribunal, thereafter, held that as the Tribunal saw the notice which was issued within one year but the assessee has brought wrong facts before the Tribunal and mislead the Tribunal. Therefore, the order was recalled. 3. The facts of the case are that the return of income for the block period of 01.01.1985 to 15.12.1995 was filed on 26.11.1996 declaring undisclosed income at Rs.9,45,028/-. The block assessment was finalised under Section 158BC(c) read with Section 158BG on 23.12.1996 and the total undisclosed income was computed at Rs.3,16,07,410/-, out of which an amount of Rs.1,80,95,552/- was on protective basis and Rs.1,35,11,858/- was on substantive basis. 4. Being aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the Tribunal and the Tribunal vide common order dated 17.07.2003 restored back the appeal to the file of the Assessing Officer for making fresh block assessment and to compute the undisclosed income of the assessee in accordance with the provisions of Section 158BB of the Income Tax Act, 1961 with the direction to afford reasonable opportunity to the assessee for presenting facts and figures before making fresh assessment. The decision of the Tribunal was followed by the Tribunal in assessee’s own group of companies M/s. Kailash Finstock Pvt. Ltd. for block period 1986-87 to 15.12.1995, Rainbow Housing Development and Finance Corporation Limited, M/s. Boby Lease Finance Limited. On receipt of the Tribunal’s order, notices under Section 143(2) and 142(1) of the Act dated 22.11.2004, the Assessing Officer called for the details and the assessee was given additional opportunity to furnish explanation along with cogent material evidences to support his claim, if any. In response to the same, the Representative of the assessee attended the proceedings from time to time and made submissions as well as filed the details. The Assessing Officer observed that at the time of search and seizure operation, cash of Rs.1,76,970/- was found at the assessee’s residence. Out of this, an amount of Rs.1,40,000/- was seized. The assessee was asked to explain the source of cash found. In support of withdrawal from Bank of NLFL and RHDFCL the assessee produced copy of Bank statement of Neelkanth Lease Finance Limited (NLFL) with Punjab IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 3 of 19 National Bank, showing withdrawal of Rs.1,50,000/- on 13.12.1995 and Bank statement of Rainbow Housing Development Finance Company Limited (RHDFCL) with State Bank of Saurashtra showing withdrawal of Rs.35,000/- on 13.12.1995. After taking cognisance of the same, the Assessing Officer held that out of total cash of Rs.1,78,970/- found, an amount of Rs.78,970/- was explained and balance of Rs.1,00,000/- should be treated as undisclosed income for the Assessment Year 1995-97. During the search carried out at assessee’s residence and locker, jewellery and ornaments were found which are as under :- Gold (2266 grams) : Rs.10,24,800/- Silver (12.5 Kgs.) : Rs. 87,500/- Diamond : Rs. 85,960/- 5. In the statement of the assessee recorded at the time of search the assessee submitted that apart from the gold ornaments which were reflected in the Wealth Tax Return of himself and wife, remaining items were unaccounted. The assessee submitted a chart of gold ornaments and silver utensils purchased by the assessee stating that source of the same were mainly withdrawals out of Rainbow Agency. The Assessing Officer observed that the purchases made after 31.03.1991 has to be added and after giving credit of the two entries, total accounted gold ornaments and silver articles comes to 1714.728 grams and 10.969 Kgs. respectively. Thus, the balance was treated as unexplained which is gold ornaments weighing 551.27 grams at the value of Rs.2,49,284/-, silver 1.53 Kgs. at the value of Rs.10,710/- and Diamond at the value of Rs.85,916/-. Thus, the total of Rs.3,45,954/- was added to the undisclosed income for Assessment Years 1996-97. The Assessing Officer further observed that in the statement dated 15.12.1995, recorded under Section 132(4) of the Act during the search action, the assessee stated in reply to quest6ion no.29 that monthly expenditure of the house hold was of about Rs.16,000/- per month. On this point, the assessee contended that the house hold expenses were made by withdrawals from M/s. Rainbow Agencies where the assessee was a partner. The Assessing Officer has made addition of Rs.6,56,841/- which was a deficit for the respective assessments and added the same as undisclosed income. The Assessing Officer IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 4 of 19 also made addition regarding immovable properties and the unaccounted expenditure in construction/renovation of bungalow amounting to Rs.50,000/- for Assessment Years 1986-87 to 1996-97. The Assessing Officer also made substantive addition of Rs.35,000/- in the case of assessee for Assessment Year 1990-91 and corresponding protective addition was made in case of Smt. Daxaben Choksi. The Assessing Officer also made addition of Rs.2,43,700/- treating the same as unexplained, related to house hold valuables for Assessment Year 1996-97. The Assessing Officer made addition of Rs.2,00,000/- on fixed deposits as undisclosed income for the Assessment Year 1996-97. In respect of investment in shares, the Assessing Officer made addition of Rs.30,000/- for Assessment Year 1993-94 and Rs.50,000/- for Assessment Year 1991-92 as substantive addition. The Assessing Officer made protective addition related to investment in wife’s name as well as the Assessing Officer made addition of Rs.9,00,000/- each related to investments in NMHL Construction for Assessment Years 1993.94 and 1994-95. The corresponding protective addition was also made in the case of Neelkant Motels & Hotels Limited since the investment was made in asset belonging to NMHL. The Assessing Officer also treated income of Rs.96,800/- for the Assessment Year 1994-95 and Rs.2,15,800/- for Assessment Year 1995-96 relating to the capital gain income which was not covered by the disclosure. The Assessing Officer made addition of Rs.2,50,000/- on substantive basis in assessee’s case and on protective basis in the case of Smt. Daxaben Choksi related to investment in 2 nd & 3 rd floors of Rainbow House for the Assessment Year 1989-90 as the said investment was made prior to 01.04.1989. In the order passed under Section 158BC read with Section 254 of the Act, the following additions have been made on substantive basis :- I Cash deposits in Vijaya Bank and J&K Bank A.Y. 95-96 Rs.14,29,500/- II Cash deposits in the name of different persons A.Y. 93-94 A.Y. 94-95 Rs.3,60,000/- Rs.9,10,000/- III Deposits in books of accounts A.Y. 95-96 A.Y. 96-97 Rs.26,50,052/- Rs.1,00,000/- IV Promoters Quota A.Y. 95-96 Rs.4,39,350/- V Profit on shares A.Y. 96-97 4,00,000/- IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 5 of 19 6. The Assessing Officer also made protective addition in respect of addition made in case of Neelkant Motels & Hotels Limited and in the order passed under Section 158BC read with Section 274 of the Income Tax Act, following additions have been made on substantive basis :- I Cash deposits in Vijaya Bank A.Y. 96-97 Rs.8,40,598/- II Cash deposits in the bank book of SBS A.Y. 95-96 Rs.22,34,000/- III Cash Deposits in OBC A.Y. 96-97 Rs.60,000/- 7. Being aggrieved by the Assessment Order, the assessee filed appeal before us. 8. As the Tribunal while recalling the order has decided the additional ground filed in the present appeal, therefore, we will be directly dealing with the grounds on merit which are as follows: “1. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.1,00,000/- by considering the same as unaccounted/ undisclosed cash out of. total cash of Rs.1,78,970/- found on the date of search at the resident of the appellant ignoring bank withdrawals from entities controlled/belonging to the appellant. 2. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.3,45,954/- by considering the same as unaccounted/undisclosed out of jewellery and silver found on the date of search at the residence of the appellant ignoring explanations and submissions of the appellant. 3. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.6,56,841/- on account of unaccounted/undisclosed household expenses for the block period based on estimation and based on the statement of the appellant but without any incriminating material noticed in the course of search action on the appellant. 4. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.5,50,000/- for the block period @ Rs.50,000/- per year based on the statement of the appellant but without any incriminating material noticed in the course of search action on the appellant. 5. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.35,000/- on substantive basis on account of acquisition of rights in Flat at Prasad Chamber by Shri Brijesh IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 6 of 19 Choksi through guardian Daxaben Bharatkumar Choksi but without any incriminating material noticed in the course of search action on the appellant. 6. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.2,43,700/- out of total household valuables found of Rs.4,93,700/- during search at the residence of the appellant by treating the same to be unexplained/unaccounted. 7. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.2,00,000/- on account of fixed deposit made with Punjab National Bank in the year of search. 8. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.5,90,500/- on account of investment in shares of Neelkanth Motels & Hotels Ltd. by treating the same to be unexplained/undisclosed but without any incriminating material noticed in the course of search action on the appellant. 9. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.80,000/- on account of investment in shares of M/s Neelkanth Motels & Hotels Ltd held by appellant's wife Smt. Daxaben Choksi who was separately. assessed for block assessment. 10. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.18,00,000/- on account of investment in construction and development of Neelkanth Motels and Hotels on the basis of statement of appellant but without any incriminating material noticed in the course of search action on the appellant evidencing such investment. 11. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.3,12,600/- equivalent to the income computed in returns of income prepared but not filed for AYs 1994-95 and 1995- 96 and found in the course of search action u/s 132 at Rainbow House for which no warrant of search was issued in the name of appellant. 12. The Ld. Assessing Officer erred on facts and in law in making addition of Rs.2,50,000/- being investment in 2 nd and 3 rd Floor of Rainbow House made by Smt. Daxaben Choksi and Smt. Kokilaben Choksi who were separately assessed for block assessment. 13. The Ld. Assessing Officer erred on facts and in law in making protective addition of Rs.62,88, 902/- for the transactions recorded in the books of Neelkanth Lease & Finance Ltd which was separately assessed for block assessment. 14. The Ld. Assessing Officer erred on facts and in law in making protective addition of Rs.31,34,598/- for the transactions recorded in IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 7 of 19 the books of. Neelkanth Motels & Hotels Ltd which was separately assessed for block assessment. 15. The Ld. Assessing Officer erred on facts and in law in making additions for A.Y. 1996-97 i.e. for the year of search overlooking the fact that the said year is outside the purview of block assessment as return of income was not due on the date of search.” 9. The Ld. AR during the hearing submitted that no addition of undisclosed income was permissible in the hands of the assessee with reference to issues in respect of which there was no seizure in the name of the assessee and, therefore, undisclosed income computed in order passed under Section 158BC read with Section 254 of the Act are beyond the scope of provisions of Section 158BC of the Act. From the copies of Panchnama read together with its Annexures, it is evident that except items referred in ground nos.1, 2, 6 & 7, nothing was seized in the name of the assessee, the premises searched were not owned by the assessee, therefore, the assessment under Section 158BC in the case of the assessee was not permissible for the remaining items. Even if the Assessing Officer detects any undisclosed income qua the assessee from the documents seized from other search persons, such income was to be assessed under Section 158BD of the Act but certainly not under Section 158BC of the Act. The Ld. AR relied upon the decision of Ahmedabad Tribunal in case of Bombay Estate Agency (one of the group case) in IT(SS)A No.148/Ahd/2005, order dated 17.11.2017 and more particularly relied upon paragraph no.29 of the said order. The Ld. AR further relied upon the Tribunal order in one of the group case of Sanjay A. Choksi in IT(SS)A No.147/Ahd/2005 vide order dated 21.10.2022 and more particularly paragraph No.30. The Ld. AR submitted that the assessee maintained regular books of account but were not scrutinised. Memorandum of balance sheet as on 31.03.1995 was not actual balance but was a containing compilation of major assets and liabilities. It did not contain any cash or bank balance which itself is indicative of the fact that it was not a final balance sheet but was a compilation of broad assets and liabilities of assessee on that date. Provisions of Section 158BC apply only with reference to undisclosed income noticed in the course of search action on the assessee. It does not apply to the search action on others in the course of which undisclosed income qua assessee is noticed. For this purpose, legislature is provided separate provisions in Section 158BD of the Act. IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 8 of 19 Undisclosed income under Section 158BC is based on evidence gathered during the course of search. In view of the provisions of Section 158BB(c) to (d), income is not required to be considered with reference to the previous year for which due date for filing of return of income under Section 139(1) has not expired. The Ld. AR relied upon the decision of Tribunal in case of Kailash Finstock P. Ltd., IT(SS) No.48/Ahd/1999, order dated 07.08.2001). The Ld. AR further submitted that the scheme of taxation under block provision is also explained in the recent judgement of Hon’ble Supreme Court in Civil Appal No.6580 of 2021 in case of PCIT vs. Abhisar Buildwell P. Ltd. & Others (2023) 149 taxmann.com 399 (SC). 10. The Ld. DR submitted that the block assessment under Section 158 BC is to be made with reference to the person who is subjected to search action under Section 132 of the Act which is evident from the provisions of Section 158BA of the Act. The Ld. DR submitted that the additions related to ground nos.8 to 13 are based on the returns seized from Rainbow House was part of assessee’s group covered in the same search operation and, therefore, the Assessing Officer has rightly invoked Section 158BC of the Act. The assessee has given his statement also and during the search operation related to the assessee’s group which is part and parcel of the conclusions of undisclosed income from the documents and books of accounts found and seized. The assessee is the main person who is running the business of NLFC and, therefore, the statement and comparison with the entry in the seized material was rightly done by the Assessing Officer while invoking Section 158BC of the Act. 11. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the search operation took place in assessee’s house as well as the assessee who is the main person running the business and its premises related to the assessee’s group. The assessee has given the statement in respect of all aspects and, therefore, Section 158BC of the Act was rightly invoked on the present assessee’s case. The reliance of the decision by the Ld. AR in respect of the Tribunal decisions in case of Bombay Estate Agency (supra), Sanjay A. Choksi (supra) and Kailash Finstock P. Ltd. (supra), in all these cases factual aspect will be varying as in assessee’s case the assessee himself is the main person who is running the business group where IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 9 of 19 search has been conducted and, therefore, the Assessing Officer has rightly invoked Section 158BC of the Act. The contention of the Ld. AR that no addition of undisclosed income are permissible in the hands of the assessee in respect of which there was no seizure in the name of the assessee and, therefore, undisclosed income computed in order passed under Section 158BC read with Section 254 of the Act are beyond the scope of provisions of Section 158BC of the Act is not a correct proposition as the group entities are directly coming under the assessee‘s working as well as its involvement in those premises. Thus, this contention of the assessee is not justifiable and hence dismissed. 12. As regards ground no.1 relating to unaccounted cash of Rs.1,00,000/- out of total cash of Rs.1,78,970/- found on the date of search at the residence of the assessee, the Ld. AR submitted that the Assessing Officer ignored the bank withdrawals from entities control/belonging to the assessee. The Ld. AR further submitted that the addition is purely on suspicion and surmises and without any basis. The Ld. AR submitted that withdrawal of cash by Neelkant Lease & Finance Limited, Neelkant Motels & Hotels Limited & Rainbow Housing Development Finance Limited was not disputed during the assessment proceedings. The explanation for the cash found was offered by the assessee in his statement recorded under Section 132(4) of the Act dated 15.12.1995. 13. The Ld. DR submitted that the Assessing Officer has rightly made the addition as in the absence of personal books of account it is not possible to conclusively say as to how much of money withdrawn was utilised and the balance amount remained on the date of search. The Ld. DR relied upon the Assessment Order. 14. We have heard both the parties and perused all the relevant material available on record. From the perusal of the records, it can clearly be seen that the assessee has in fact withdrawn the said amount from the entities and the same was reflected in the bank statements of those three entities. The Assessing Officer without taking cognisance of the said withdrawal has treated the same as IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 10 of 19 undisclosed income which was rightly shown by the assessee during the assessment proceedings. Hence, ground no.1 is allowed. 15. As regards addition of Rs.3,45,954/- as unaccounted jewellery and silver found on the date of search which is ground no.2, the Ld. AR submitted that the assessee during the proceedings furnished a chart of gold ornaments and silver utensils purchased by the assessee thereby stating source of the same which was from the withdrawals out of Rainbow Agency. The Ld. AR also submitted the due Wealth Tax return of himself and his wife. The Ld. AR submitted that Annexure- J4 should not have been taxed separately as the Assessing Officer has not given any evidence as to how the assessee has not quantified the said jewellery. The Ld. AR further submitted that as per the CBDT Circular, the assessee has properly obtained the said gold ornaments and it is within the parameters of the CBDT Circular. 16. The Ld. DR relied upon the Assessment Order. 17. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that after giving credit for the gold which was originally of 2266 grams and silver which is 12.5 kgs., the total accounted gold ornaments and silver articles comes to 1714.728 grams and 10.969 kilograms respectively. The Assessing Officer has given the quantification in consonance with the CBDT Circular and therefore, the Assessing Officer has rightly made the addition of Rs.3,45,954/- which was not disclosed by the assessee. Hence, ground no.2 is dismissed. 18. As regards ground no.3, relating to addition of Rs.6,56,841/- on account of unaccounted house hold expenses for the block period based on estimation and based on the statement of the assessee, the Ld. AR submitted that the same are without any incriminating material observed in the course of search made on the assessee conducted by the Revenue. The Ld. AR submitted that the assessee has given year-wise chart showing withdrawals and also has given aggregate household withdrawal for the block at Rs.14,27,550/-. The Ld. AR submitted that IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 11 of 19 for the earlier years return when filed prior to the date of search the figures of withdrawals for household expenses were accepted by the Department. The Ld. AR submitted that the estimation of household expenditure should have not been done when the assessee has provided year-wise chart. The deficit calculated by the Assessing Officer is not justified. 19. The Ld. DR relied upon the Assessment Order. 20. We have heard both the parties and perused all the relevant material available on record. The contention of the Ld. AR that Section 158BD of the Act should have been invoked in this addition has already been dealt with by us in paragraph no.11 hereinabove. It is pertinent to note that the assessee has given monthly household expenses while giving answer to question no.29 and in fact the assessee has given the chart-wise explanation. The estimation of the household expenses was not justified as the assessee has shown the earlier year to that of search also the household expenses which were accepted by the Revenue. Thus, ground no.3 is allowed. 21. As regards ground no.4 in respect of addition of Rs.5,50,000/- for the block period at Rs.50,000/- per year based on the statement of the assessee but the same is without any incriminating material noticed in the course of search action on the assessee. The Ld. AR submitted that the Assessing Officer totally ignored the fact that the Assessing Officer has made this addition without any evidence gathered during the course of search and thus this is outside the ambit of block assessment proceedings. The Ld. AR further submitted that no evidence was pointed out that the aforesaid/expenses given in answer no.44 incurred during the block period. The Ld. AR submitted that the addition is only based on the statement of the assessee but not on comparative or incriminating material. No valuation was done in assessee’s case to determine value of construction so as to quantify the alleged undisclosed investment. 22. The Ld. DR submitted that the addition was based on the actual construction observed during the search and same countered to him through his IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 12 of 19 statement and entries made in actual books of account. The Ld. DR further submitted that the assessee was not able to file any proof of such expenditure. The Ld. DR relied upon the Assessment Order. 23. We have heard both the parties and perused all the relevant material available on record. The contention of the Ld. AR that Section 158BD of the Act should have been invoked in this addition has already been dealt with by us in paragraph no.11 hereinabove. The details of the expenses related to construction of Bungalows the assessee has given a chart-wise details of the expenses and in fact the assessee has given corroborative evidences in consonance with these expenses amounting to Rs.7,75,000/- which was categorically mentioned to the Answer No.44. From the perusal of the records the assessee has given copy of the deed dated 21.10.1989 in the name of Shri Brijesh Choksi C/o. Smt. Daxaben Choksi and also explained the source of amount which was inherited through the Mother of wife of the assessee. Thus, the explanation offered was extensive and established the case of the assessee but the same was ignored by the Assessing Officer. Hence, ground no.4 is allowed. 24. As regards ground no.5 relating to addition of Rs.35,000/- on substantive basis on account of acquisition of rights in flat at Prasad Chamber by Shri Brijesh Choksi through guardian Daxaben Bharatkumar Choksi is also without any incriminating material, the contention of the Ld. AR to that of ground no.4 are identical in this context. The Ld. AR further submitted that the assessee’s wife Smt. Daxaben Choksi was separately assessed under Section 158BC of the Act and the issue was covered in favour of the assessee by the decision of Tribunal in case of Chandravadan Jayantilal Choksi vs. ACIT (2007) 16 SOT 41 (Ahd). Thus, the same observations as given hereinabove for ground no.4 will be applicable in this ground. Thus, ground no.5 is allowed. 25. As regards Ground no.6 relating to addition of Rs.2,43,700/- out of total household valuables found of Rs.4,93,700/- during search at the residence of the assessee by treating the same to be unexplained/unaccounted, the Ld. AR submitted that the Household valuables found during the course of search was not IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 13 of 19 of Rs.4,93,700/-. The assessee has admitted unaccounted investment in household valuables in Rs.92,00,500/- and Rs.2,40,081/- by his wife Rs.1,24,125/- by Neelkant Lease and Finance of Rs.61,500/- which have not been considered. 26. The Ld. DR relied upon the Assessment Order. 27. We have heard both the parties and perused all the relevant material available on record. The assessee has given details regarding source of purchase of valuable items during the search including that of the admitted unaccounted investment in household valuables amounting to Rs.92,00,500/- invested by the assessee as well as by his wife and Neelkant Lease & Finance was not at all taken into account. Therefore, the valuables amounting to Rs.2,43,700/- was properly explained by the assessee which was totally ignored by the Assessing Officer. Hence ground no.6 is allowed. 28. As regards ground no.7, the Ld. AR submitted that the addition of Rs.2,00,000/- on account of fixed deposit made with Punjab National in the year of search, the assessee has given his statement more categorically for question no.46 under Section 132(4) of the Act thereby stating that the assessee has disclosed all his bank accounts and in fact the assessee received substantial amount from Pooja Creators before the date of FDR which is verifiable from the account. In fact, the assessee offered income in block return furnished under Section 158BC at Rs.4,73,635/- which included additional income of Rs.1,55,000/- offered to cover shortfall, if any. In fact, the investment in FDR is outside the scope of block assessment in the case of the assessee in view of the decision of the Tribunal in the case of Kailash Finstock P. Ltd., IT(SS) No.48/Ahd/1999, order dated 07.08.2001 29. The Ld. DR relied upon the Assessment Order. 30. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has given the IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 14 of 19 categorical statement that the assessee has disclosed all his bank accounts and in fact received substantial amount from Pooja Creators before the date of FDR. This aspect was not at all verified by the Assessing Officer and, therefore, the Assessing Officer was not right in making the addition of Rs.2,00,000/-. Thus, ground no.7 is allowed. 31. As regards ground no.8, the Ld. AR submitted that the addition of Rs.5,90,500/- on account of investment in shares of Neelkant Motels & Hotel Limited by treating the same to be unexplained/undisclosed, the Assessing Officer has made this addition without any incriminating material noticed in the course of search action on the assessee. The Ld. AR further submitted that the assessee furnished confirmation of the parties being the source of investment from which investment in shares was made. The Ld. AR submitted that no falsity in confirmation was found by the Assessing Officer and in fact the assessee has established the creditworthiness of the lenders. 32. The Ld. DR relied upon the Assessment Order. 33. We have heard both the parties and perused all the relevant material available on record. The contention of the Ld. AR that Section 158BD of the Act should have been invoked in this addition has already been dealt with by us in paragraph no.11 hereinabove. From the perusal of the records, it can be seen that the assessee has filed the confirmations of all the parties and also explained the source of investment along with creditworthiness of the lenders through various other documents. The observation of the Assessing Officer that the confirmation does not contain any details appears to be not correct and, therefore, the addition made is not justifiable. Hence, ground no.8 is allowed. 34. As regards ground no.9, relating to addition of Rs.80,000/- on account of investment in shares of Neelkant Motels & Hotels Limited held by the assessee’s wife Smt. Daxaben Choksi who was separately assessed for block assessment. The Ld. AR submitted that no share application forms seized in the name of the assessee and in fact the said documents were not in the possession of the IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 15 of 19 assessee. In fact, the block assessment order on the same issue under Section 158BC of the Act was made in the case of Smt. Daxaben Choksi and hence this is a double addition. 35. The Ld. DR relied upon the Assessment Order 36. We have heard both the parties and perused all the relevant material available on record. The contention of the Ld. AR that Section 158BD of the Act should have been invoked in this addition has already been dealt with by us in paragraph no.11 hereinabove. It is pertinent to note that the very same addition was already done in the hands of the wife of the assessee in separate block assessment order and, therefore, when no documentary evidence was showing that these investments was in the name of assessee, the Assessing Officer cannot make the said addition. Hence, ground no.9 is allowed. 37. As regards ground no.10, the Ld. AR submitted that the addition of Rs.18,00,000/- on account of investment in construction and development of Neelkanth Motels & Hotels on the basis of statement of the assessee is not justifiable as without any incriminating material during the course of search action the same addition cannot be made. In fact, no valuation was done to determine the value of the construction so as to quantity the alleged undisclosed investment. 38. The Ld. DR relied upon the Assessment Order. 39. We have heard both the parties and perused all the relevant material available on record. The contention of the Ld. AR that Section 158BD of the Act should have been invoked in this addition has already been dealt with by us in paragraph no.11 hereinabove. It is pertinent to note that no incriminating material was found by the Assessing Officer in respect of assessee’s investment in the construction and development of Neelkanth Motels & Hotel. The Assessing Officer has totally ignored the fact that there is no investment by the assessee and no documentary evidence separately and the assessee has made investment in construction of Neelkanth Motels & Hotel. Thus, ground no.10 is allowed. IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 16 of 19 40. As regards ground no.11, the Ld. AR submitted that the addition of Rs.3,12,600/- equivalent to the income computed in returns of income prepared but not filed for Assessment Years 1994-95 & 1995-96 and found during the course of search action under Section 132 of the Act at Rainbow House for which no search warrant was issued in the name of the assessee. The Ld. AR further submitted that the income disclosed by the assessee is covered by the income disclosed in block period return for the Assessment Year 1994-95 at Rs.4,31,695/- and there was no evidence of earning capital gain by the assessee was found during the search action. 41. The Ld. DR relied upon the Assessment Order. 42. We have heard both the parties and perused all the relevant material available on record. The contention of the Ld. AR that Section 158BD of the Act should have been invoked in this addition has already been dealt with by us in paragraph no.11 hereinabove. It is pertinent to note that the assessee categorically mentioned during the assessment proceedings that the said returns of income which was not filed should not be relied upon as they were not based on the actual fact/case of the assessee. The assessee has already disclosed income of Rs.4,31,695/- for Assessment Year 1994-95 and that should have been taken into account by the Assessing Officer. Once the assessee has disclosed then cognisance of undisclosed income will not come in the picture and the Assessing Officer should have taken the return/income disclosed by the income disclosed in block return. Besides this, the assessee’s name was also not mentioned in the warrant of search and, therefore, the addition is not justifiable. Ground no.11 is thus allowed. 43. As regards ground no.12, the Ld. AR submitted that the addition of Rs.2,50,000/- being investment in second and third floor of Rainbow House made by Smt. Daxaben Choksi and Kokilaben Choksi cannot be treated as income (undisclosed) as the same were separately assessed for block assessment in the cases of Smt. Daxaben Choksi and Kokilaben Choksi. Besides this, the Ld. AR IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 17 of 19 submitted that second and third floor of Rainbow House does not belong to the assessee. 44. The Ld. DR relied upon the Assessment Order. 45. We have heard both the parties and perused all the relevant material available on record. From the perusal of the records, it can be seen that the assessee has filed the confirmations of all the parties and also explained the source of investment along with creditworthiness of the lenders through various other documents. The observation of the Assessing Officer that the confirmation does not contain any details appears to be not correct and, therefore, the addition made is not justifiable. It is pertinent to note that in the case of Smt. Daxaben Choksi and Kokilaben Choksi the separate block assessment order has been passed and in fact the said second and third floor was not belonging to the assessee and from the perusal of records, it can categorically be seen that the investment in the said property is mainly out of disposal of Rainbow Agency, assessee filed the details to that extent. Hence, the Assessing Officer totally ignored the evidences and the addition made is not justified. Hence, ground no.12 is allowed. 46. As regards ground no.13, related to protective addition of Rs.62,88,902/- for the transactions recorded in the books of Neelkant Lease & Finance Limited the same was separately assessed for the block period in that case and the Tribunal has quashed this addition as the transactions recorded in the books were outside the ambit of block assessment. The Ld. AR further submitted that the assessee was not found beneficiary of the transactions with reference to which protective addition was made in the hands of the assessee. 47. The Ld. DR relied upon the Assessment Order. 48. We have heard both the parties and perused all the relevant material available on record. The contention of the Ld. AR that Section 158BD of the Act should have been invoked in this addition has already been dealt with by us in IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 18 of 19 paragraph no.11 hereinabove. It is pertinent to note that there is a separate block assessment order passed in the case of Neelkant Lease & Finance Limited which was contested before the Tribunal and the very basis of substantive addition has been quashed by the Tribunal, will make the protective addition. The Revenue should have taken into account that the assessee was not the beneficiary of the transactions and, therefore, the addition cannot be either in the way of protective or substantive basis when the transactions recorded in the tax has contemplated by the assessee are outside the block assessment provision. Thus, ground no.13 is allowed. 49. As regards ground no.14 related to protective addition of Rs.31,34,598/- for the transactions recorded in the books of Neelkant Motels & Hotels Limited which was separately assessed for block assessment. The Ld. AR relied upon the argument/contentions that was taken for ground no.13. The factual matrix for this ground is identical to ground no.13 and, therefore, ground no.14 is allowed. 50. As regards to ground no.15, related to addition for Assessment Year 1996- 97 i.e. for the year of search overlooking the fact that the said year is outside the purview of block assessment as the return of income was not due on the date of search. From the perusal of records, it appears that the block assessment for Assessment Year 1996-97, the search took place on 15.12.1995 and was concluded on 19.01.1996 and therefore, the contention of the Ld. AR is accepted. Hence, ground no.15 is allowed. 51. In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on this 10 th April, 2024. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 10 th day of April, 2024 PBN/* IT(SS)A No.151/Ahd/2005 Block Period Assessment Year: 1986-87 to 15.12.1995 Page 19 of 19 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad