ACIT CENT. CIR. - 18 & 19, MUMBAI V. Sri. SUNIL M. THAKKAR, MUMBAI

ITSSA 173/MUM/2006

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2279 (ITAT-MUMBAI)
• Duration Of Justice: 10 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 08-09-2015
• Assessment Year: misc
• Appeal Filed On: 23-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Accommodation entries; Block assessment
• Section: 142(1); 133A; 148; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH J,MUM BAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER IT(SS)A NO.173/MUM/2006 (BLOCK PERIOD : 01.04.1988 TO 13.02.1999) ACIT- CC-18 & 19, 4 TH FLOOR, R.NO. 402, AAYAKAR BHAVAN, MUMBAI-20 VS. SHRI SUNIL M. THAKKAR, B-161, CHINAR BUILDING, 16 TH FLOOR, R.A. KIDWAI ROAD, WADALA, MUMBAI-400031. PAN: (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ALOK JOHRI (DR) ASSESSEE BY : SHRI VIJAY MEHTA (AR) DATE OF HEARING : 29.04.2016 DATE OF PRONOUNCEMENT : 05.07.2016 O R D E R PER PAWAN SINGH, JM: 1. THIS APPEAL FILED BY REVENUE AGAINST THE ORDER OF C IT(A)-VIII, MUMBAI, DATED 14.03.2006 FOR BLOCK PERIOD 01.04.1988 TO 13. 02.1999. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT (A) ERRED IN NOT APPRECIATING THE FINDING GI VEN IN THE ASSESSMENT ORDER AND THAT THE IMPOUNDED DOCUMENTS ONLY SUGGEST ED ASSESSEE'S PERSONAL INVOLVEMENT ILL THE DEALS ESTABLISHED DURI NG SEARCH WHILE DIRECTING TO DELETE THE ADDITION ON ACCOUNT OF SALE OF PREMIUM ON NAPTHA AMOUNTING TO R. 12,48,61,834/-. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING TO DELETE THE ADDITION ON ACCOUNT OF SALE OF DELIVERY ORDERS AMOUNTING TO RS. 36,38,634/- WITHOU T APPRECIATING THE FACT 2 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR THAT THE IMPOUNDED DOCUMENTS ONLY STRENGTHENED INVO LVEMENT OF THE ASSESSEE IN THE SALE OF NEPTHA ON PREMIUM. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING TO DELETE THE ADDITION OF RS. 4,99,36,28/- MADE ON PROTECTIVE BASIS ON THE BASIS OF STATEMENT OF SHRI NARESH VORA, WITHOUT PROPER APPRECIATION OF THE FACTS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT A DDITION OF RS. 2,00,000/- WAS MADE AS THE ASSESSEE FAILED TO EXPLAIN THE SOUR CE OF FOREIGN TOUR EXPENSES, THE EVIDENCE OF FOREIGN TOUR BEING FOUND IN THE COURSE OF SEARCH. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS. 21, 83,010/- MADE ON ACCOUNT OF HOUSEHOLD EXPENSES OUT OF UNDISCLOSED IN COME AS PER DIARY FOUND DURING THE COURSE OF SURVEY IN ASSESSEE'S BUS INESS PREMISES. 2. THE BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE RECORD OF THE CASE ARE THAT ON THE BASIS OF INFORMATION AVAILABLE WITH INVESTIG ATION WING OF THE DEPARTMENT IN CASE OF M/S GALAXY PLASTO O-CHEN INDU STRY LTD., DISCRETE ENQUIRIES WERE MADE TO IDENTIFY THE PARTY IN NATURE OF ITS BUSINESS. IN ENQUIRY, IT WAS REVEALED THAT M/S GALAXY PLASTO O-C HEN INDUSTRY LTD. BELONGS TO VORA FAMILY COMPRISING OF THREE BROTHERS NAMELY SHRI NARESH B. VORA, SUDHIR B. VORA & NITIN B. VORA. THEREAFTER , A SURVEY U/S. 133A ON 24.09.1998 WAS CONDUCTED AT THE BUSINESS PREMISE S OF SAID CONCERN AND BOOKS OF ACCOUNT AND OTHER DOCUMENTS WERE IMPOUNDED U/S. 133(A) OF THE ACT, ON 25.09.1998. STATEMENT OF NITIN B. VORA AND SUDHIR B. VORA WAS RECORDED ON 25.09.1998, 15.11.1998 AND 16.11.1998. IN STATEMENT OF NITIN B. VORA ADMITTED CONCEALMENT OF RS. 1.35 CRORES ON 25.09.1998. THE DOCUMENTS IMPOUNDED DURING THE SURVEY ACTION AND TH E STATEMENT RECORDED FROM NITIN V. BORA REVEALED THAT HE WAS IN HAWALA BUSINESS AND THAT HE WAS PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PART IES. AS PER STATEMENT OF NITIN B. VORA, HE WAS HOLDING A QUOTA OF NAPHTHA WHICH HE USED TO SALE IN THE OPEN MARKET FOR CASH AT A HIGH PREMIUM AND W OULD ISSUE BOGUS BILL TO THE SELLER OF NAPHTHA AND DEALERS OF OTHER PETRO CHEMICALS, HE WOULD ALSO RECEIVED CASH FROM BANK AND ISSUED CHEQUE ON C OMMISSION BASIS. THE PARTIES INVOLVED IN THE HAWALA TRANSACTION WITH THE VORAS GROUP TO 3 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR PROCURE USED CHEMICAL FROM PUBLIC SECTOR COMPANIES FOR SPECIFIED PURPOSE BUT WERE SOLD TO A PARTY ON ALL SUPPLIED IN CASH OR PREMIUM. THE PREMIUM ON THE SALE OF THE PETRO CHEMICAL WAS NOT REFLECTED IN THE BOOKS OF ACCOUNT OF THOSE PARTIES. ONE OF THOSE PARTIES DOING THE S AID BUSINESS WAS THAKKAR FAMILY. THAKKAR FAMILY CONSISTS OF MANOJ THAKKAR AN D HIS THREE SONS NAMELY ATUL M. THAKKAR, MAYUR M. THAKKAR AND SUNIL M. THAKKAR (ASSESSEE), THESE PERSONS WERE IDENTIFIED AS INDIVI DUAL TO SEND CASH FOR OBTAINING ENTRIES. MAYUR THAKKAR WAS ONE OF THE DIR ECTOR OF RAM REMIDIES PVT. LTD. (RRPL) AND WAS HOLDING 33% AS SH ARE IN THE COMPANY, THEREAFTER A SEARCH U/S. 132(1) OF THE ACT WAS CARR IED OUT AT THE RESIDENTIAL AND BUSINESS PREMISES OF THAKKAR FAMILY ON 20.01.19 99. DURING THE SEARCH STATEMENT OF MANOJ M. THAKKAR, ATUL M. THAKKAR AND MAYUR M. THAKKAR WAS RECORDED. A SUM OF RS. 69 LAKHS WAS SEIZED DURI NG THE SEARCH PROCEEDING WHICH INCLUDES 41.05 LAKHS IN CASH AND J EWELLRY OF RS. 22.05 LAKHS. OUT OF THIS CASH AMOUNTING TO RS. 23.11 LAKH S WAS SEIZED FROM THE PREMISES OF MANOJ M. THAKKAR AND SUNIL M. THAKKAR W HERE THEY LIVED JOINTLY. FURTHER, CASH OF RS. 11.03 LAKHS AND 11.06 LAKHS WERE SEIZED FROM THE RESIDENCE OF MAYUR M. THAKKAR AND LOCKER O F SMT. USHA M. THAKKAR WIFE OF MAYUR M. THAKKAR. MAYUR M. THAKKAR ADMITTED UNDISCLOSED INCOME OF RS. 81.09 LAKHS AND ATUL M. T HAKKAR OFFERED 25 LAKHS AS THEIR UNDISCLOSED INCOME IN POST SEARCH IN VESTIGATION, IT WAS REVEALED THAT CASH SALES WERE BEING MADE BY THAKKAR GROUP AND PART OF SALE CONSIDERATION WAS BEING ROOTED IN THE BOOKS OF ACCOUNT OF RRPL AND M/S B. R. INDUSTRIES BY ACCOMMODATION ENTRIES PROVI DED BY THE VORA GROUP, IT WAS FURTHER FOUND THAT BR INDUSTRIES WAS A PARTNERSHIP CONCERN OF SHRI SURESH KANKARIYA AND NITIN KOTECHA, WHO WERE A LSO SHAREHOLDER OF RRPL AND B.R. INDUSTRY . B.R. INDUSTRY WAS NEITHER MAINTAINING BOOKS OF ACCOUNT NOR FILING RETURN OF INCOME, IT WAS ALSO FO UND THAT MOST OF THE GOODS FOR WHICH TRANSACTION HAD TAKEN PLACE BETWEEN RRPL ON ONE SIDE 4 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR AND THE CONCERN OF VORA GROUP ON THE OTHER SIDE WER E ALLEGEDLY TRANSPORTED BY MEHTA BULK CARRIERS. CONSEQUENT UPON THE AO ISSU ED NOTICED U/S 158BC ON 13.12.1999 AND ASKED ASSESSEE TO FILE BLOC K RETURN COVERING THE PERIOD FROM 01.04.1988 TO 21.01.1999. ASSESSEE FILE D RETURN OF INCOME FOR BLOCK PERIOD SHOWING UNDISCLOSED INCOME OF RS. 12,5 8,739/-. AFTER FILING THE RETURN OF INCOME, NOTICE U/S 142(1) WITH DETAIL ED QUESTIONNAIRE WAS SERVED WHICH WAS REPLIED BY THE ASSESSEE AND THE AO FRAMED ASSESSMENT ORDER IN RESPECT OF BLOCK PERIOD AND MADE A NUMBER OF ADDITION/DISALLOWANCE IN THE ASSESSMENT ORDER DATED 28.02.2001. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE P ARTLY ALLOWED THE APPEAL OF THE ASSESSEE VIDE IMPUGNED ORDER DATED 14 .03.2006. AGAINST THE DELETION OF CERTAIN ADDITIONS BY LD CIT (A), THE RE VENUE HAS CHALLENGED THE DELETION OF FIVE ADDITIONS AS MENTIONED IN THE GROUNDS OF APPEALS BEFORE US. 4. WE HAVE HEARD THE DEPARTMENTAL REPRESENTATIVE (DR) OF THE REVENUE AND AUTHORIZED REPRESENTATIVE (AR) FOR THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD CAREFULLY. WE HAVE FURTHER GONE THROUGH THE WRITTEN SUBMISSIONS FILED BY PARTIES AND CONSIDERED THERE O RAL SUBMISSIONS. DR FOR THE REVENUE ARGUED THAT IT IS NOT NECESSARY THAT IN CRIMINATING MATERIAL TO BE FOUND AT THE RESIDENCE OF PERSON ONLY TO LINK HI M BUT THERE WAS SUFFICIENT MATERIAL SEIZED AT THE TIME OF SURVEY ON THE VORA FAMILY ON 24.09.1998, AND FURTHER ON THE STATEMENT OF NITIN B . VORA AND SUDHIR VORA RECORDED ON 25.09.1998, 15.11.1998 AND 16.11.1998. FURTHER WHEN A SEARCH WAS CONDUCTED AT THAKKAR FAMILY ON 20.01.199 9 AND A SUM OF RS. 69 LAKHS WAS SEIZED DURING THE SEARCH PROCEEDING WH ICH CONSIST OF CASH AND JEWELLERY. FURTHER CASH WAS SEIZED FROM THE PRE MISES OF MANOJ M. THAKKAR WITH WHOM SUNIL M. THAKKAR, ASSESSEE (MANOJ M. THAKKAR) WERE 5 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR LIVED JOINTLY. DR FURTHER ARGUED THAT FURTHER A CAS H OF RS. 11.03 LAKHS AND 11.06. LAKHS WERE SEIZED FROM THE RESIDENT OF MAYUR M. THAKKAR AND LOCKER OF SMT. USHA M. THAKKAR (WIFE OF MAYUR M. TH AKKAR). IT WAS FURTHER ARGUED THAT DURING THE INVESTIGATION, IT WA S REVEALED THAT CASH SALES WERE BEING MADE BY THAKKAR FAMILY AND PART SALE CON SIDERATION WAS BEING ROOTED IN THE BOOKS OF ACCOUNT OF RRPL AND B.R. IND USTRIES BY ACCOMMODATION ENTRIES PROVIDED BY VORA GROUP. DURIN G THE STATEMENT RECORDED AFTER PAST SEARCH INVESTIGATION NARESH VOR A MADE AN INCRIMINATING STATEMENT AGAINST THE ASSESSEE AND DI SCLOSED HIS INVOLVEMENT IN THE SALE OF NEPTHA. NARESH M. VORA MADE THE STAT EMENT THAT DURING THE TRANSACTION WITH THAKKAR FAMILY HE RECEIVED MONEY A LONG WITH BANK COMMISSION, AGAINST WHICH HE USED TO SHOW CHEQUE/DD /PAY ORDER TO THE EMPLOYEE OF SUNIL M. THAKKAR AND MAYUR M. THAKKAR W HO WERE DIRECTOR OF RRPL AND FURTHER A NUMBER OF INVOICES, TRANSPORT SLIP WERE SEIZED FROM THE PREMISES OF VORA FAMILY WHICH CLEARLY ESTABLISH /CORROBORATE THE INVOLVEMENT OF ASSESSEE IN HAWALA TRANSACTION IN TH E SALE OF NEPTHA. LD. AR OF THE ASSESSEE MADE EMPHASIS THAT IN FACT NO MA TERIAL, WHAT TO TALK ABOUT THE INCRIMINATING MATERIAL WAS RECOVERED/SEIZ ED FROM THE POSSESSION OF ASSESSEE. ASSESSEE WAS NOT PRESENT THROUGHOUT TH E PROCEEDINGS CONDUCTED BY THE REVENUE AT THE THAKKAR FAMILY. THE ASSESSEE WAS LIVING SEPARATELY FROM LAST SEVERAL YEARS AND HAS NO CONCE RN EITHER WITH THE SALE OF NEPTHA OR DAY TO DAY BUSINESS OF RRPL. DURING TH E APPELLATE PROCEEDING, LD. CIT(A) CALLED THE REMAND REPORT WHE REIN THE AO HAD ADMITTED THAT NOTHING WAS SEIZED FROM THE PREMISES OF ASSESSEE. AO WHILE MAKING THE ASSESSMENT, THE SIMILAR ADDITION WAS MAD E AGAINST THE ASSESSMENT ORDER OF RRPL. ASSESSEE NEITHER PURCHASE D NOR SOLD NEPTHA NOR HAVING ANY LINK WITH THE TRANSPORTER WHOSE NAME WAS ALLEGEDLY DISCLOSED BY VORA FAMILY. LD. AR OF THE ASSESSEE FU RTHER ARGUED THAT RRPL FILED APPEAL BEFORE THE ITAT PUNE, WHEREIN THE ASSESSMENT ORDER 6 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR MADE IN RESPECT OF BLOCK PERIOD WERE QUASHED BY ITA T, PUNE IN ITA NO. 479/PN/2004 TITLED AS RAM RAMEDIES PVT LTD VS DCIT (COPY OF WHICH IS ALREADY PLACED ON RECORD). NO ADDITION CAN BE MADE AGAINST THE ASSESSEE EITHER ON SUBSTANTIVE OR PROTECTIVE BASIS. IN ADDIT ION TO ORAL ARGUMENTS LD DR OF REVENUE FILED HIS WRITTEN SUBMISSION DATED 26 TH MAY 2016 AND AR FOR ASSESSEE FILED HIS WRITTEN SUBMISSION ON 1 ST JUNE 2016. LD DR RELIED UPON THE FOLLOWING DECISIONS OF APEX COURT AND DECI SION OF ITAT MUMBAI. CIT VS. MUKUNDRAY K. SHAH 290 ITR 433 (SC) CIT VS. CALCUTTA KNITWEARS (2014) 43 TAXMANN.COM 44 6(SC) THE DECISION OF CO-ORDINATE BENCH IN IT (SS) A. NO. 63/MUM/2003 DCIT VS USHA MAYUR THAKKAR & TWO SONS DATED 29.01.2 014 AR FOR ASSESSEE IN HIS WRITTEN SUBMISSIONS RELIED U PON THE FOLLOWING DECISIONS. MORARJI GOKALDAS SPINNING AND WEAVING CO. LTD VS DC IT(95 ITD1(BOM). DCIT VERSUS SANMUKDAS WADWANI (85 ITD 734 NAGPUR) CIT VERSUS VIKRAM A DOSHI(256 ITR 129(BOM) CIT VERSUS VINOD DANACHAND GODAWAT (247 ITR 448 BOM BAY) CIT VERSUS RAJENDRA PRASAD GUPTA (248 ITR 350 RAJ) CIT VERSUS SMT. USHA TRIPATHI (249 ITR 4 ALL) CIT VERSUS RAVI KANT JAIN(250 ITR 141 DELHI) SUNDER AGENCIES VERSUS DCIT( 63ITD 245MUM) NAGINDASS M GARADIA VERSUS DCIT(83 TTJ 151 , MUMBAI ) RAJKUMAR JAIN VERSUS ACIT (120 CTR 143 ALL) LAXMI JEWELLERY VS CIT (73 TTJ 1) MADRAS) 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE WE MAY DIS CUSS THE FACTS OF THE PRESENT CASE, LET US EXAMINE THE PROVISIONS REL ATING TO THE 7 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR COMPUTATION OF UNDISCLOSED INCOME OF THE BLOCK PERI OD AS PROVIDED IN CHAPTER XIVB OF THE ACT, WHICH IS READ AS UNDER: PROCEDURE FOR BLOCK ASSESSMENT . 158BC. WHERE ANY SEARCH HAS BEEN CONDUCTED UNDER SE CTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS ARE REQUISITIONE D UNDER SECTION 132A, IN THE CASE OF ANY PERSON, THEN, (A) THE ASSESSING OFFICER SHALL (I) IN RESPECT OF SEARCH INITIATED OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED AFTER THE 30TH DAY OF JUNE , 1995, BUT BEFORE THE 1ST DAY OF JANUARY, 1997, SERVE A NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH TIME NOT BEING LESS THAN FIFTEE N DAYS; (II) IN RESPECT OF SEARCH INITIATED OR BOO KS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED ON OR AFTER THE 1ST DAY OF JANUARY, 1997, SERVE A NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITH IN SUCH TIME NOT BEING LESS THAN FIFTEEN DAYS BUT NOT MORE THAN FORTY-FIVE DAYS, AS MAY BE SPECIFIED IN THE NOTICE A RETURN IN THE P RESCRIBED FORM 30 AND VERIFIED IN THE SAME MANNER AS A RETURN UNDER CLAUS E (I) OF SUB-SECTION (1) OF SECTION 142, SETTING FORTH HIS TOTAL INCOME INCL UDING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD : PROVIDED THAT NO NOTICE UNDER SECTIO N 148 IS REQUIRED TO BE ISSUED FOR THE PURPOSE OF PROCEEDING UNDER THIS CHAPTER: PROVIDED FURTHER THAT A PERSON WHO HAS FURNISHED A RETURN UNDER THIS CLAUSE SHALL NOT BE ENTITLED TO FILE A REVISED RETU RN; (B) THE ASSESSING OFFICER SHALL PROCEED TO DETER MINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PROVISIONS OF SECTION 142, SUB-SECTIONS (2) AND (3) OF SECTION 143 31[, SECTION 144 AND SECTION 145] SHALL, SO FAR AS MAY B E, APPLY; (C) THE ASSESSING OFFICER, ON DETERMINATION OF TH E UNDISCLOSED INCOME OF THE BLOCK PERIOD IN ACCORDANCE WITH THIS CHAPTER, SHALL PASS AN ORDER OF ASSESSMENT AND DETERMINE THE TAX PAYABLE BY HIM ON THE BASIS OF SUCH ASSESSMENT; [(D) THE ASSETS SEIZED UNDER SECTION 132 OR REQUI SITIONED UNDER SECTION 132A SHALL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIO NS OF SECTION 132B.] 6. ON CLOSE READINGS OF THE PROVISIONS CLAUSE (B) OF S ECTION 158BC, WE MAY FIND THE AO HAS TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD, IN THE MANNER PROVIDED IN SECTION 158BB. AND AS PER SUB SECTION (1) OF SECTION 158BB, THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL BE THE AGGREGATE OF THE TOTAL INCOME OF THE PREVIOUS YEAR S FALLING WITHIN THE BLOCK PERIOD COMPUTED, IN ACCORDANCE WITH THE PROVI SIONS OF THIS ACT, ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE, AS 8 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR REDUCED BY THE AGGREGATE OF THE TOTAL INCOME, OR AS THE CASE MAY BE, AS INCREASED BY THE AGGREGATE OF THE LOSSES OF SUCH PR EVIOUS YEARS. THUS WHILE DETERMINING / COMPUTING THE UNDISCLOSED INCOME OF B LOCK PERIOD THE AO SHALL COMPUTE THE INCOME ON THE BASIS OF EVIDENCE F OUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT. THIS IS SO, BECAUSE, THE CORRECTNESS OR OTHERWISE THE RETURN FILED IN PURSUA NCE OF A NOTICE U/S 158BC (A) HAS TO BE EXAMINED WITH REFERENCE TO THE MATERIAL IN POSSESSION OF THE AO HAVING NEXUS TO THE ASSESSMENT OF UNDISC LOSED INCOME WHICH IS WITH THE ASSESSING AUTHORITY. SO THE BLOCK ASSES SMENT HAS TO BE FRAMED IN THE LIGHT OF MATERIAL CAME IN TO THE POSSESSION OF THE ASSESSING AUTHORITY DURING THE SEARCH, WHICH IS THE FOUNDATION OF THE P ROCEEDINGS. THE LD DR FOR REVENUE FURTHER RELIED UPON THE CAS E OF CIT VERSUS CALCUTTA KNITWEARS AND CIT VERSUS MUKUNDRAY K SHAH (SUPRA). MOST REGARD TO THE DECISION OF HONBLE APEX COURT, WHERE IN, IN BOTH THE CASES THE MAIN ISSUE BEFORE THE APEX COURT WAS WHETHER AS SESSING OFFICER CAN RECORD HIS SATISFACTION FOR ISSUING NOTICE UNDER SE CTION 158BD IN CASE OF PERSON OTHER THAN SEARCHED PERSON. AND IN BOTH CASE S INCRIMINATING DOCUMENTS PERTAINING TO THE ASSESSEE FIRM ARE SEIZE D IN THE SEARCH. THUS THE FACTS OF THE PRESENT CASE ARE AT VARIANCE WITH THOSE OF FACTS IN CALCUTTA KNITWEARS AND IN MUKUNDRAY K SHAH. REVENUE HAS FURT HER RELIED UPON THE DECISION OF COORDINATE BENCH AND DCIT VERSUS USHA M AYUR THACKAR & TWO SONS (SUPRA), THE FACT OF THIS CASE IS ALSO AT VARIANCE WITH THE FACT OF PRESENT CASE. IN USHA MAYUR THAKKAR THERE WAS SUFFI CIENT DOCUMENTARY MATERIAL SEIZED DURING THE SEARCH. LD. AR FOR ASSESSEE RELIED ON THE DECISION OF RAJA STHAN HIGH COURT IN CIT VERSUS RAJENDRA PRASAD GUPTA (2001) 248 ITR 350 (RA J) AND FURTHER DELHI HIGH COURT IN CIT VERSUS RAVIKANT JAIN 250 ITR 141( DELHI) WHEREIN IT WAS HELD THAT A BLOCK ASSESSMENT SHOULD BE WITH RE FERENCE TO THE MATERIAL IN POSSESSION OF THE ASSESSING OFFICER, SINCE IT IS AN ASSESSMENT OF 9 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR UNDISCLOSED INCOME, IT SHOULD BE BASED ON THE MATER IAL GATHERED DURING THE SEARCH. THE SIMILAR VIEW WAS EXPRESSED BY SPECIAL B ENCH OF THIS TRIBUNAL IN ALL CARGO (SUPRA). NOW WE SHALL DISCUSS WITH THE VARIOUS GROUNDS RAISED BY REVENUE IN THIS APPEAL. 7. GROUND NO.1 FOR OUR CONSIDERATION IS DELETION OF AD DITION ON ACCOUNT OF SALE OF PREMIUM ON NEPTHA AMOUNTING TO RS. 12,48,61 ,834/-. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PARTIES AND ALSO PERUSED THE FINDING OF LD. CIT(A). LD. CIT(A) WHILE CONSIDERING THE ADD ITION ON ACCOUNT OF SALE OF NEPTHA OBSERVED THAT THE ADDITION TO THE IN COME OF ASSESSEE ON ACCOUNT OF SALE OF NEPTHA HAS BEEN MADE ON THE BASI S OF STATEMENT OF NARESH B. VORA, THE DOCUMENT IMPOUNDED FROM HIS BUS INESS PREMISES AND SOME OTHER FACTOR. HERE WE MAY APPRECIATE THAT NOT A SINGLE WORD HAS BEEN WRITTEN SPECIFICALLY WHAT EVIDENCE WAS COLLECTED DU RING THE COURSE OF SEARCH, THE DETAILS GATHERED DURING THE BLOCK ASSES SMENT PROCEEDING. THE AO HAS NOWHERE REFERRED THAT ANY STATEMENT OF ASSES SEE WAS RECORDED. NEPTHA IS A BUY PRODUCT CRUDE OIL WHICH IS SOLD BY THE PSU FOR THE LICENSE HOLDER, WHO IS ACTUAL USER I.E. MANUFACTURER OF PET RO CHEMICALS FOR WHICH EXPLOSIVE LICENSE IS MANDATORY. DURING THE ENTIRE P ROCEEDING U/S 132, NO INCRIMINATING MATERIAL WAS FOUND OR SEIZED WHICH MA Y SHOW OR PROVE THAT ASSESSEE WAS QUOTE HOLDER OF NEPTHA OR THAT HE OWNE D A FACTORY HAVING MANUFACTURING OF PETRO CHEMICALS, THE STATEMENT OF ASSESSEE WAS RECORDED ON 22.01.2001 EXACTLY SIX DAYS BEFORE THE DATE OF A SSESSMENT ORDER. THE ASSESSEE WAS NOT CONFRONTED WITH THE ALLEGED MATERI AL AND THE STATEMENT OF SHRI NARESH B. VORA WHICH HAS BEEN USED AGAINST HIM , NOT A SINGLE QUESTION WAS ASKED ABOUT THE SALE OF NEPTHA OR HIS RELATIONSHIP WITH AHMADABAD AND BARODA PARTIES. LD. CIT(A) REFERRED T HE STATEMENT OF NARESH B. VORA DATED 15.10.1998 AND PARTICULAR THE QUESTION NO.3, 4 & 5 AND THEIR ANSWERS AND FURTHER REFERRED PAGE 30 OF A SSESSMENT ORDER. LD. CIT(A) SPECIFICALLY REFERRED THE PAGE NO. 53 OF ASS ESSMENT ORDER, WHEREIN 10 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR THE AO MENTIONED/OBSERVED THAT NUMEROUS EVIDENCE COLLECTED DURING THE COURSE OF SEARCH AND FURTHER DETAILS GATHERED DURIN G THE BLOCK ASSESSMENT PROCEEDINGS CLEARLY ESTABLISHED THE FACT THAT ASSES SEE WAS ENGAGED IN THE SALE OF NEPTHA AND OTHER PETRO CHEMICAL IN THE OPEN MARKET BY COLLECTING THE ENTIRE SALE PROCEED IN CASH AND PROFIT EARNED O N SUCH SALE WAS NEVER RECORDED. AFTER ANALYZING THE FACT AND THE ALLEGED CORROBORAT IVE EVIDENCE A BASIC QUESTION HERE ARISES AS WHETHER TH E ADDITION OF INCOME OF THE ASSESSEE CAN BE MADE ON THE BASIS OF THE ABOVE REFERRED MATERIAL. LD. CIT(A) FIND ITS ANSWER IN NO. THUS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF CIT(A) IN DELETING THE AD DITION ON ACCOUNT OF SALE OF NEPTHA, THUS, THIS GROUND OF APPEAL RAISED BY RE VENUE IS DISMISSED. 8. GROUND NO.2 FOR OUR CONSIDERATION IS DELETION OF AD DITION ON ACCOUNT OF SALE OF DELIVERY ORDERS AMOUNTING TO RS. 36,38,634/ -. WHILE MAKING THIS ADDITION AO OBSERVED THAT DURING THE SURVEY OF VORA BROTHERS, A FILE CONTAINING BILLS OF RELIANCE INDUSTRY LTD. IN FAVOU R OF GALAXY PETROCHEM WAS FOUND AND IN SOME OF THE BILLS THE NAME OF SUNI L THAKKAR, SURESH MAYUR ETC. WERE FOUND. MR. VORA INFORMED THAT SUNIL THAKKAR HAD OBTAINED CHEMICALS IN THE NAME OF GALAXY PETROCHEM AND SOLD IT IN THE MARKET. THE ASSESSEE HAS TOTALLY DENIED HIS INVOLVE MENT AND ARGUED THAT NO PAPER WERE FOUND AT THE PREMISES OF THE ASSESSEE NOR WERE FOUND DURING THE SURVEY OF PREMISES OF NARESH VORA. LD. CIT(A) W HILE CONSIDERING THIS GROUND CONCLUDED THAT THE ADDITION CANNOT BE SUSTAI NED U/S. 158BC IN ABSENCE OF INDEPENDENT, PRIMARY EVIDENCE FOUND AND SEIZED DURING SEARCH OPERATION. THE NAME APPEARING ON THE BACKSIDE OF TW O BILLS SUNIL BHAI IS NOT PROVED AND AO HAS NOT GIVEN ANY REASONING AS TO HOW HE ARRIVED AT THE CONCLUSION THAT THE SIGNATURE WERE OF THE ASSESSEE. THUS, WE ARE IN AGREEMENT WITH THE FINDING OF LD. CIT(A). THIS GROU ND OF APPEAL RAISED BY REVENUE IS ALSO DISMISSED. 11 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR 9. GROUND NO.3 FOR OUR CONSIDERATION IS DELETION OF AD DITION OF RS. 4,99,36,298/- MADE ON PROTECTIVE BASIS ON THE STATE MENT OF NARESH VORA. LD. DR FOR REVENUE ARGUED THAT THE ADDITION WAS MAD E ON PROTECTIVE BASIS ON THE STATEMENT OF NARESH VORA AS ASSESSEE WAS WOR KING ON BEHALF OF SEVERAL CONSENT OF AHMADABAD AND BARODA LIKE ATLAS PETROCHEMICALS, ANKINI PETROCHEMICALS AND AVNI PETROCHEMICALS. THE ADDITION WAS MADE BY AO BY APPRECIATING THE FACT WHICH WAS CORROBORAT IVE BY THE STATEMENT OF NARESH VORA. AR FOR ASSESSEE ARGUED THAT THE ADD ITION WAS MADE WITHOUT ANY BASIS OR EVIDENCE AND THE SAME WAS DELE TED BY LD. CIT(A) AFTER APPRECIATING THE FACT. THE ASSESSEE HAS NO CO NNECTION WITH ANY OF THE CONCERN IN AHMADABAD OR BARODA. THE AO MADE ENQUIRI ES WITH THOSE PARTIES AND THEY HAVE CONFIRMED THAT THEY HAVE NO C ONNECTION AT ALL WITH ASSESSEE. WE HAVE CONSIDERED THE CONTENTION OF BOTH THE PARTIES AND PERUSED THE ORDER OF AUTHORITIES BELOW. THE AO MADE THE ADDITION MERELY ON THE STATEMENT OF NARESH VORA DATED 09.02.2001. L D. CIT(A) WHILE CONSIDERING THE CONTENTION OF ASSESSEE CONCLUDED TH AT THE ADDITION MADE BY AO IS NOT AS PER THE PROVISION OF LAW. EXCEPT TH E STATEMENT OF NARESH VORA, NO OTHER DOCUMENT SEIZED DURING THE SEARCH HA S BEEN REFERRED BY AO FOR MAKING THE ADDITION AND DELETED THE ADDITION. W E HAVE NOTICED THAT MR. VORA HAS NOT ALLEGED ANYWHERE THAT ASSESSEE WAS WOR KING ON BEHALF OF ATLAS, AVANI OR ANKINI. WITH THESE OBSERVATIONS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF LD. CIT(A), THUS THIS GROUND OF APPEAL OF REVENUE IS ALSO FAILED. 10. GROUND NO. 4 IS OUR CONSIDERATION IS ABOUT DELETING THE ADDITION OF RS. 2,00,000/- ON ACCOUNT OF FOREIGN TOUR EXPENSES. DR FOR REVENUE ARGUED IN SUPPORT OF ORDER OF AO AND PRAYED THAT ORDER OF AO MAY BE RESTORED. LD. AR OF ASSESSEE ARGUED THAT DURING THE SEARCH & SEIZURE PROCEEDINGS, NO INCRIMINATING DOCUMENTS WERE FOUND WHICH COULD B E LINKED WITH THE FOREIGN TRIP OF ASSESSEE. WE HAVE CONSIDERED THE CO NTENTION OF BOTH THE 12 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR PARTIES AND PERUSED THE FINDING OF AUTHORITIES BELO W. THE ASSESSMENT ORDER IS SILENT ABOUT THE EVIDENCE WHICH MAY PROVE THAT A SSESSEE SPEND RS. 2,00,000/- ON FOREIGN TRIP IN AY-1998-99 AND/OR THE SAID MONEY WAS UNACCOUNTED INCOME OF THE ASSESSEE. IN FACT, DURING THE ASSESSMENT PROCEEDING, THE ASSESSEE FILED SOME DETAILS ABOUT T HE FOREIGN TRAVEL/TRIP, ON THE BASIS OF WHICH THE ADDITION HAS BEEN MADE AND T HE SAME WAS DELETED BY THE LD. CIT(A). DR FOR REVENUE FAILED TO DISCLOSE T HAT THERE WAS ANY MATERIAL TO MAKE ANY ADDITION. SINCE THERE WAS NO M ATERIAL IN RESPECT OF UNACCOUNTED INCOME FOR FOREIGN TRAVEL DURING THE SE ARCH PROCEEDING, HENCE, THE SAME WAS DELETED BY LD. CIT(A). WITH THI S OBSERVATION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). HENC E, THIS GROUND OF APPEAL IS ALSO DISMISSED. 11. GROUND NO.5 FOR OUR CONSIDERATION IS DELETION OF AD DITION OF RS. 21,83,010/- ON ACCOUNT OF HOUSEHOLD EXPENSES. LD. D R FOR REVENUE ARGUED THAT ADDITION WAS MADE ON THE BASIS OF ONE G ANDHI DAIRY IN THE PREMISES OF SUNIL CHEMICALS. LD. AR OF ASSESSEE ARG UED THAT NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE SEARC H, AND NO ADDITION CAN BE MADE IN BLOCK ASSESSMENT. THE DAIRY RELIED B Y AO WAS NOT FOUND AT THE TIME OF SEARCH. THE DAIRY IS NOT IN HANDWRIT ING OF THE ASSESSEE OR ANY OF HIS FAMILY MEMBER, THE SAID DAIRY WAS OF THE ACCOUNTANT AND WAS WRITTEN BY THE ACCOUNTANT. THE ASSESSEE HAS NO CONC ERN WITH THE SAID DAIRY. THE ADDITIONS WERE MADE ON CONJECTURE AND SU RMISES. AS PER LAW FOR BLOCK ASSESSMENT PERIOD, THE ESTIMATED ADDITION CANNOT BE MADE. LD. CIT(A) WHILE CONSIDERING THIS GROUND CONCLUDED THAT DURING THE COURSE OF SEARCH AND SEIZURE ACTION, NO INCRIMINATING DOCUMEN T OR EVIDENCE WAS FOUND THAT MAY PROVE THE WITHDRAWALS MADE BY ASSESS EE OR HIS FAMILY MEMBERS WERE INADEQUATE TO RUN THE HOUSEHOLD. THE A O HAS NOT MENTIONED THAT THE TOTAL WITHDRAWAL MADE BY MEMBERS OF THE ASSESSEES FAMILY, WHEREAS THE ASSESSEE HAD STRONGLY EMPHASIZE D THE POINT. AO HAS 13 IT(SS)A NO. 173/M/2006- SHRI SUNIL M. THAKKAR NOT DONE THIS EXERCISE OTHERWISE HE WOULD NOT HAVE REACHED TO THE CONCLUSION THAT HOUSEHOLD EXPENDITURE INCURRED BY F AMILY WAS SUFFICIENT AND DELETED THE ADDITION. THE FINDING OF CIT(A) DEL ETING THE ADDITION ARE QUITE REASONABLE AND DOES NOT REQUIRE ANY INTERFERE NCE, THUS, THIS GROUND OF APPEAL RAISED BY ASSESSEE IS ALSO FAILED. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON T HIS 5 TH JULY, 2016. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 05/07/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/