The ACIT, Mehsana Circle, Mehsana V. Shri Ramanlal D.Patel, Mehsana

ITSSA 177/AHD/2005

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9644 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-12-2012
• Assessment Year: misc
• Appeal Filed On: 10-06-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C PATWARI; SHANKARLAL MEENA
• Keywords: Document seized; Peak credit; Documents seized
• Section: 143(3); 132

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.177/AHD/2005 THE ACIT, MEHSANA CIRCLE, MEHSANA. V/S. SHRI RAMANLAL D. PATEL, C/O, STARLINE TRACTORS PVT. LTD., HIGHWAY MEHSANA. PAN: ABJPP 9626P (APPELLANT) (RESPONDENT) REVENUE BY : S/SHRI D.C. PATWARI AND SHANKARLAL MEENA, D.R. ASSESSEE(S) BY : SHRI SAKAR SHARMA, A.R. / DATE OF HEARING : 19/09/2013 / DATE OF PRONOUNCEMENT: 17/12/2013 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(A)-XXI, AHMEDABAD DATED 29.03.2005. THE GROUND RAISED BY THE REVENUE IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF TH E CASE IN DIRECTING THE ASSESSING OFFICER TO CANCEL THE BLOCK ASSESSMEN T ORDER PASSED U/S.158BD R.W.S. 143(3) OF THE IT ACT. 2. AS PER THE ORDER PASSED U/S. 158BD R.W.S. 143(3) , DATED 30 TH OF DECEMBER, 2004, THE AO HAD MADE AN ADDITION ON P ROTECTIVE BASIS AS PER THE CONCLUSION REPRODUCED BELOW: ON THE BASIS OF ABOVE SUBMISSION AS WELL ON THE B ASIS OF AVAILABLE SEIZED DOCUMENTS IT GOES WITHOUT SAYING THAT THE ASSESSEE WAS HAVING TRANSACTIONS WITH SRI JIVRAMBHAI V. DESAI AGAINST WHOM THE PROCEEDINGS U/S.132 ARE TAKEN. THE CONTENTS OF THE ANNEXURE A-1 AT IT(SS)A NO.177/AHD/2005 ACIT, MEHSANA CIRCLE, MEHSANA VS. SHRI RAMANLAL D. PATEL - 2 - PAGE 134 (PRINTED PAGE NO.197) IS APPLICABLE IN THE CASE OF THE ASSESEEE. AND CONTENTION OF THE ASSESSEE IS THAT EVEN IF SHRI JIVRAJBHAI V. DESAI HAS TAKEN THIS PLEA BEFORE HONBLE ITAT THAT THE AD DITION OF NEGATIVE PEAK CREDIT OF RS.40,17,700/- SHOULD BE DELETED, TH E PROTECTIVE ADDITION SHOULD NOT BE MADE IN THIS HANDS. THIS CONTENTION I S NOT ACCEPTABLE SINCE THIS ACCOUNT REPRESENTS THE TRANSACTION BETWE EN THE ASSESSEE AND MASTER GROUP ONLY. THEREFORE, IF THE SUBSTANTIVE AD DITION MADE IN THE HANDS OF SHRI JIVRAJBHAI V. DESAI DOES NOT SUSTAIN THEN IT IS OBVIOUS THAT THIS INCOME MUST BE ADDED IN THE HANDS OF THE ASSESSEE. THEREFORE, THE PROTECTIVE ADDITION IS JUSTIFIED. 3. THE ABOVE ADDITION WAS CONTESTED BEFORE LEARNED CIT(A), WHO HAS EXAMINED THE PROVISIONS OF THE ACT AND THER EUPON HELD AS UNDER: I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASS ESSING OFFICER AS RECORDED IN THE ASSESSMENT ORDER, WRITTEN SUBMISSIO NS OF THE APPELLANT, APPLICABLE LAW AND THE CASE LAWS RELIED UPON. I FIND THAT THE ASSESSING OFFICER MAKING ASSESSMENT U/S. 158BC ON T HE PERSON ON WHOM THE SEARCH PROCEEDINGS U/S. 132 WERE CONDUCTED OR WHOSE BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS ARE REQUISITI ONED U/S. 132A IS MANDATORILY REQUIRED TO RECORD HIS SATISFACTION FOR THE PURPOSE OF INVOKING SECTION 158BD THAT ANY UNDISCLOSED INCOME BELONGS TO THE PERSON OTHER THAN HIS ASSESSEE AND IN SUCH A CASE H E IS REQUIRED TO TRANSFER SUCH BOOKS OF ACCOUNTS, OTHER DOCUMENTS OR OTHER ASSETS WITH HIS SATISFACTION NOTE TO THE ASSESSING OFFICER HAVI NG JURISDICTION OVER THE OTHER PERSON TO WHOM SUCH UNDISCLOSED INCOME AC TUALLY BELONGS SO THAT PROCEEDINGS U/S. 158BD COULD BE INITIATED ON S UCH OTHER PERSON. ON READING THE PROVISIONS OF SECTION 158BD IT IS VE RY MUCH APPARENT THAT INCOME IN THE HANDS OF THE PERSON OTHER THAN T HE PERSON ON WHOM THE SEARCH WAS MADE U/S. 132 OR WHOSE BOOKS OF ACCO UNTS, ETC. WERE REQUISITIONED U/S. 132A COULD BE ASSESSED U/S. 158B D ONLY WHEN THE ASSESSING OFFICER IS SATISFIED THAT SUCH INCOME DO NOT BELONG TO THE PERSONS COVERED U/S. 132A OF THE IT ACT. ON GOING T HROUGH THE ASSESSMENT ORDER, I FIND THAT THE INCOME THAT HAS B EEN ASSESSED IN THE HANDS OF THE APPELLANT PROTECTIVELY WAS ALREADY ASS ESSED ON SUBSTANTIVE BASIS IN THE HANDS OF SHRI JIVRAJBHAI D ESAI U/S.158BC. THE ACTION OF THE ASSESSING OFFICER MAKING ADDITION ON SUBSTANTIVE BASIS U/S. 158BC IN THE HANDS OF SHRI JIVRAJBHAI DESAI CL EARLY INDICATE THAT SUCH INCOME INDEED BELONG TO HIM AND NOT TO THE APP ELLANT BECAUSE THERE WAS NO SATISFACTORILY BY THE ASSESSING OFFICE R OF SHRI JIVRAJBHAI DESAI THAT SUCH INCOME DO NOT BELONG TO HIM BUT BEL ONG TO THE APPELLANT. HAD IT BEEN SO ADDITION ON SUBSTANTIVE B ASIS WOULD NOT HAVE BEEN MADE IN THE HANDS OF SRI JIVRAJBHAI DESAI. IT HAS BEEN IT(SS)A NO.177/AHD/2005 ACIT, MEHSANA CIRCLE, MEHSANA VS. SHRI RAMANLAL D. PATEL - 3 - CONSISTENTLY HELD BY THE TRIBUNALS THAT PROTECTIVE ADDITIONS CANNOT BE MADE BY INVOKING PROVISIONS OF SECTION 158BD OF THE IT ACT. 4. FROM THE SIDE OF THE ASSESSEE, LEARNED AR SHRI S AKAR SHARMA, HAS PLACED ON RECORD AN ORDER OF ITAT C B ENCH AHMEDABAD IN THE CASE OF NALIN D. SHAH BEARING IT(S S)A NO.23/AHD/2009 FOR BLOCK PERIOD 1991-92 TO 20.10.20 00, ORDER DATED 29.12.2011, WHEREIN IT WAS HELD AS UNDER:- 5. IN THE PRESENT CASE, SINCE SUBSTANTIVE ASSESSME NT WAS MADE IN THE CASE OF JIVRAJ DESAI AND THE ORDER OF THE LEARN ED CIT(A) MAKING OBSERVATION AGAINST THE ASSESSEE WAS NOT ACCEPTED B Y THE REVENUE BY FILING APPEAL BEFORE THE TRIBUNAL, THE IMPUGNED ORD ER OF THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT NO SATISFACTIO N HAS BEEN RECORDED IN THE CASE OF JIVRAJ DESAI FOR INITIATING PROCEEDI NGS U/S 158 BD AGAINST THE ASSESSEE. IN THE ABSENCE OF ANY REASONS RECORDED U/S 158 BD OF THE IT ACT, THERE WAS NO JUSTIFICATION FOR TH E AO TO INITIATE PROCEEDINGS AGAINST THE ASSESSEE. MORE SO, ISSUE OF NOTICE U/S 158 BD OF THE IT ACT AFTER COMPLETION OF ASSESSMENT IN THE CASE OF PERSON SEARCHED I.E. JIVRAJ DESAI, THE PROCEEDINGS WOULD N OT BE JUSTIFIED IN THE MATTER. THE LEARNED CIT(A) ON PROPER APPRECIATI ON OF FACTS AND MATERIAL ON RECORD RIGHTLY ALLOWED THE APPEAL OF TH E ASSESSEE. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE LEARNED CIT(A). WE CONFIRM HIS ORDER AND DISMISS THE DEPARTMENTAL A PPEAL. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED . 5. AS FAR AS THE PROTECTIVE ADDITION MADE IN THE HA NDS OF THE ASSESSEE, WE ARE NOT IN AGREEMENT WITH THE FINDINGS OF THE LEARNED CIT(A). FURTHER THE QUESTION OF PASSING AN ORDER U/ S. 158BD WITHOUT RECORDING SATISFACTION. SINCE THE SAME OFFI CER WAS INVOLVED, THEREFORE, FROM THE SIDE OF THE REVENUE A DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. BI MBI CREAMS AND BAKES, 254 CTR 633 IS CITED WHEREIN IT WAS HELD THAT WHEN THE SAME AO HAD JURISDICTION TO ASSESS THE ASSESSEE SEA RCHED U/S. 158 BC AND THE OTHER PERSON ASSESSED U/S. 158BD THEN TH E UNDISCLOSED INCOME WHICH WAS FOUND DURING THE COURSE OF SEARCH IS TO BE IT(SS)A NO.177/AHD/2005 ACIT, MEHSANA CIRCLE, MEHSANA VS. SHRI RAMANLAL D. PATEL - 4 - ASSESSED U/S. 158BD IN THE HANDS OF THE OTHER PERSO N AND THERE IS NO NECESSITY FOR THE AO TO RECORD SATISFACTION AS R EQUIRED U/S. 158BD BECAUSE THERE IS NO TRANSFER OF FILE FROM ONE OFFICER TO ANOTHER. BECAUSE OF THIS DECISION, THIS PART OF THE ARGUMENT IS TO BE REJECTED. HOWEVER, NOW THE PRESENT POSITION IS THAT THE IMPUGNED ADDITION MADE BY THE AO IN THIS CASE NOW STOOD CONF IRMED IN THE HANDS OF THE PERSON SEARCHED; WHILE DECIDING THE AP PEAL OF THE MAIN PERSON, NAMELY, SRI JIVRAJ V. DESAI BEARING IT (SS) NO.99 & 106/AHD/2004 VIDE AN ORDER DATED 13.12.2013. WE HAV E HELD THAT SRI JIVRAJ V. DESAI IS IN THE BUSINESS OF FINANCING AND DURING THE COURSE OF THE BUSINESS HE HAS FINANCED THE AMOUNT T O SO MONEY PERSONS. EVEN THE PEAK CREDIT WAS ASSESSED IN THE H ANDS SRI JIVRAJ V. DESAI. BECAUSE OF THOSE FINDINGS OF FACTS ONCE T HE UNACCOUNTED ADVANCE OF LOAN WAS HELD AS SHARAFI BUSINESS OF SRI JIVRAJ V. DESAI, THEREFORE, THE AO WAS NOT JUSTIFIED TO ASSESS NEGAT IVE CASH PEAK ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. IN T HE LIGHT OF THE VIEW TAKEN IN THE AFOREMENTIONED MAIN CASE WE HEREB Y HELD THAT ON FACTS THE IMPUGNED ADDITION DOES NOT SURVIVE. RE SULTANTLY, THIS GROUND OF THE REVENUE HAS NO FORCE; HENCE DISMISSED . 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED /12/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT IT(SS)A NO.177/AHD/2005 ACIT, MEHSANA CIRCLE, MEHSANA VS. SHRI RAMANLAL D. PATEL - 5 - 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