Sanghvi Infracon Pvt. Ltd., Ahmedabad V. The Dy.CIT, Central Circle-2(4), Ahmedabad

ITSSA 187/AHD/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1966 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-03-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 22-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A KHAN
• Keywords: Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Peak credit; Diversion of income; Documents seized
• Section: 153A; 234B; 69A; 72; 131; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAPAL YADAV , VICE PRESIDENT AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ IT (SS) A NO. 187/AHD/2015 / ASSTT. YEAR: 2011 - 2012 SANGHVI INFRACON PVT. LTD. , F/6 , DHARABHAI COMPLEX, NAVA VADAJ , AHMEDABAD - 380013. PAN : AAOCS6476P VS. D.C.I.T. , CENTRAL CIRCLE - 2(4) , AHMEDABAD . (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SHRI VARTIK CHOKSHI WITH SHRI BIREN SHAH , A.RS REVENUE BY : SHRI M.S.A KHAN, CIT .D. R / DATE OF HEARING : 21 / 10 / 2020 / DATE OF PRONOUNCEMENT: 03 / 12 /2020 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE A GAINST THE ORDER OF THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) - 12 , AHMEDABAD , DATED 20/03/2015 ( IN SHORT LD.CIT (A) ) ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S.143(3) R.W.S. 153B(1)(B) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER IT (SS) A NO.187/AHD/2015 ASSTT. YEAR 2011 - 12 2 REFERRED TO AS 'THE ACT') DT. 25 / 03/2013 RELEVANT TO THE ASSESSMENT YEAR 2011 - 20 12 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL. 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE THE PRESENT ORDER PASSED BY THE ASSESSING OFFICER IS VOID AB INITIO/INVALID HENCE SUCH ORDER IS REQUIRED TO BE QUASHED. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE A PPELLANT S CASE THE LEARNED CIT( A) HAS E RRED IN CONFIRMING ADDITION OF R S.81,00,000 UNDER SECTION 69A TOWARDS ALLEGED ON - MONEY RECEIPTS WHEN NO SUCH ADDITION IS WARRANTED. 2.1 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, THE LEARNED CIT(A) HAS ERRED UPHOLDING ADDITION EVEN THOUGH ABOVE ON MONEY RECEIPT WAS ALREADY OFFERED TO TAX BY DHIRAJLAL V. SANGHVI IN HIS RETURN OF INCOME FILED IN PURSUANCE TO NOTICE U/ S.153A OF THE ACT. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, EVEN IF IT IS HELD THAT ALLEGED ON MONEY RECEIPT ID REQUIRED TO BE TAXED IN HANDS OF APPELLANT, THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT SUCH ON - MONEY RECEIPT C ANNOT BE TAXED IN THE PRESENT ASSESSMENT YEAR WHICH AS PER SETTLED LAW IS REQUIRED TO BE TAXED IN THE YEAR OF EXECUTION OF SALE DEED. 4. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, THE LEARNED ASSESSING OFFICER HAS GROSSLY ERRED IN ORD ERING FOR THE LEVY OF INTEREST U/S.234A, 234B AND 234C, OF THE ACT. THE APPELLANT ACCORDINGLY CHALLENGES THE VERY LEVY OF INTEREST UNDER THE DIFFERENT PROVISIONS REFERRED TO IN THE IMPUGNED ORDER. 5. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2. THE INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO FOR RS. 81 LAKH UNDER SECTION 69A OF THE ACT. 3. THE BRIEF FACT OF THE CASE ON HAND IS THAT THERE WAS A SEARCH , DATED 9 TH MARCH 2011 UNDER SECTION 132 OF THE ACT AT THE PREMISES OF SANGHVI GROUP INCLUDING THE RESIDENCE OF THE DIRECTORS. DURING THE SEARCH CERTAIN LOOSE PAPERS BELONGING TO THE ASSESSEE WERE FOUND INCLUDING THE ANNEXURE A - 29. THE ASSESSEE DURING THE YEAR HAS PURCHASED A PLOT AT VADAJ AHMADABAD FOR DEVELOPMENT OF COMMERCIAL CO MPLEX NAMELY SHREE R ATNA COMPLEX . ON SCRUTINY OF THE LOOSE PAPERS BEARING PAGE NOS. 9, 11 AND 18 OF ANNEXURE A - 29, THE AO FOUND THAT A SUM OF RS. 81 LAKH WAS RECEIVED BY THE ASSESSEE IN CASH AGAINST THE SALE OF THE NEW SHOP OF ITS COMMERCIAL PROJECT . IT (SS) A NO.187/AHD/2015 ASSTT. YEAR 2011 - 12 3 ACC ORDINGLY, THE AO WAS OF THE OPINION THAT THE IMPUGNED RECEIPT OF RS. 81 LACS BELONGS TO THE ASSESSEE AGAINST THE PROJECT INITIATED AND CONCEPTUALIZED BY IT. THUS THE AO ISSUED SHOW CAUSED NOTICE PROPOSING ADDITION OF THE SAME AS UNACCOUNTED INCOME OF THE A SSESSEE COMPANY. 3.1 THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTICE SUBMITTED THAT IT WAS THE FIRST YEAR OF ITS EXISTENCE AS IT WAS INCORPORATED AS ON 19 - 06 - 2010. THE LAND FOR PROJECT SHREE RATNA COMPLEX WAS PURCHASED AS ON 21 - 09 - 2010 AND PLAN FOR THE PROJECT WAS APPROVED VIDE RAJA CHITTHI DATED 27 - 02 - 2012. HENCE IT HAS NOT STARTED ANY COMMERCIAL ACTIVITY OR CONSTRUCTION TILL THE DATE OF SEARCH I.E. 09 - 03 - 2011. THEREFORE THE PROPOSED ADDITION OF THE CASH RECEIPT OF RS. 81 LAKH ON THE REASONING THAT IT BELONGS TO IT (THE ASSESSEE) IS NOT CORRECT, ESPECIALLY IN CIRCUMSTANCES WHERE THERE WAS NO SPECIFIC INFORMATION REGARDING LOOSE PAPER CONTAINING SUCH CASH RECEIPT THAT IT BELONGS TO THE ASSESSEE. FURTHERMORE IT IS NOT PRACTICALLY VIABLE THAT ANY ONE WI LL GIVE SUCH HUGE MONEY AGAINST A PROJECT WHICH WAS NOT APPROVED DURING THE RELEVANT TIME. ACCORDINGLY THE ASSESSEE CLAIMED THAT CASH RECEIPT NOTED IN LOOSE PAPER DOES NOT BELONG TO THE ASSESSEE. 3.2 BESIDES THE ABOVE, T HE ASSESSEE ALSO CONTENDED THAT TH E ABOVE MENTIONED CASH HAS BEEN INCORPORATED IN THE CASH FLOW STATEMENT OF THE DIRECTOR SHRI DHIRAJLAL SANGHVI AND ACCORDINGLY, THE SAME WAS OFFERED TO TAX IN HIS RETURN OF INCOME. 4. HOWEVER, THE AO REJECTED THE CONTENTION OF THE ASSESSEE BY HOLDING THA T NOTING ON LOSE PAPER READ AS RECEIPT TOWARDS SHOP. THE PROJECT ON WHICH SHOPS ARE TO BE CONSTRUCTED IS REGISTERED IN THE NAME OF THE ASSESSEE. SIMILARLY, THE ASSESSEE IS SEPARATE LEGAL ENTITY AND THEREFORE SUCH CASH RECEIPT REPRESENT UNACCOUNTED MONEY UN DER SECTION 69A OF THE ACT, IN THE HAND OF THE ASSESSEE. ACCORDINGLY, THE AO WAS OF THE VIEW THAT APPROVAL OF THE PROJECT ON THE SUBSEQUENT DATE HAS NO SIGNIFICANCE. IT (SS) A NO.187/AHD/2015 ASSTT. YEAR 2011 - 12 4 4.1 THE AO ALSO FOUND THAT SHRI DHIRAJLAL WHILE RECORDING HIS STATEMENT UNDER SECTION 1 31(1) HAS ADMITTED THAT THE IMPUGNED RECEIPT REPRESENTS THE AMOUNT RECEIVED AGAINST SHOP TO BE CONSTRUCTED BY THE ASSESSEE COMPANY AT NAVA VALDAJ. THUS THE AO IN VIEW OF THE ABOVE ADDED THE RECEIPT OF AS UNACCOUNTED INCOME OF THE ASSESSEE UNDER 69A OF THE ACT. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A). 5. THE ASSESSEE BEFORE THE LEARNED CIT (A) BESIDES REITERATING THE SUBMISSION MADE BEFORE THE AO CONTENDED THAT THE LOOSE PAPER ANNEXURE A - 29 WAS NOT FOUND FROM THE PREMISES OF THE ASSESSEE. AS SUCH THE SAME WAS FOUND FROM THE PREMISES OF AISHWARYA NX WHICH WAS NOT COVERED IN SEARCH PROCEEDING AND ALSO NOT RELATED TO THE ASSESSEE. HENCE SUCH RECEIPTS DOES NOT BELONG TO IT (THE ASSESSEE). 5.1 THE ASSESSEE FURTHER SUBMITTED THAT THE IMPUGNED RECEIPT HAS BEEN OFFERED TO TAX BY THE DIRECTOR OF THE ASSESSEE COMPANY NAMELY SHRI DHIRAJLAL SANGHVI IN HIS RETURN OF INCOME. THEREFORE, FURTHER ADDITION OF THE SAME IN THE HAND OF THE ASSESSEE WILL AMOUNT TO DOUBLE ADDITION WHICH IS UN DESIRABLE. 5.2 THE ASSESSEE ALSO CONTENDED, WITHOUT PREJUDICE TO THE ABOVE THAT THE INCOME AGAINST PROJECT SHO ULD BE INCORPORATED ONLY IT STARTS ITS PROJECT COMMERCIALLY. AS SUCH IT STARTED ITS PROJECT BY MAKING FIRST SALE DEED WHICH WAS EXECUTED IN THE A.Y. 2013 - 14. HENCE ON THIS GROUND THERE CANNOT BE ANY ADDITION IN THE YEAR UNDER CONSIDERATION. THE ASSESSEE I N THIS RESPECT RELIED ON THE JUDGMENT OF THE HON BLE JURISDICTIONAL HC IN CASE OF MOTILAL C PATEL REPORTED IN 176 ITR 666 AND IN CASE CIT V SHIVALIK BUILDWELL (P) LTD. REPORTED IN 40 TAXMANN.COM 2019. 6. HOWEVER, THE LD. CIT - A REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING AS UNDER: 7.1 IT IS SEEN FROM THE SEIZED DOCUMENT THAT DIARY/LETTER PAD - A - 29 PAGE NUMBER 9,11 AND 18 SHOWS CASH RECEIPTS PERTAINING TO VARIOUS SHOPS. DURING THE ASSESSMENT PROCEEDING SHRI DHIRAJLAL SANGHVI , THE MAIN PERSON OF THE GROUP, ADMITTED IN STATEMENT RECORDED UNDER IT (SS) A NO.187/AHD/2015 ASSTT. YEAR 2011 - 12 5 SECTION 131 ON 26.05.2011 THAT THE ABOVE CASH RECEIPT PERTAINS TO NEW PROJECT OF THE APPELLANT COMPANY. SHRI DHIRAJLAL SANGHVI ALSO SUBMITTED THAT RS.81 LACS CASH WAS RECEIVED BY THE APPELLANT COMPANY AND THE PROPERTIES ARE REGISTERED IN THE NAME OF THE APPELLANT COMPANY. DURING THE APPELLATE PROCEEDING IT WAS SUBMITTED THAT THERE IS NO DISPUTE ABOUT THE DECODING OF THE AMOUNT WRITTEN ON PAGE NUMBER 9, 11 AND 18 OF DIARY A - 29. IT IS ALSO SEEN THAT IN THE SEIZED DOCUMENT CHEQUE RECEIPT OF RS.1 LAKH/RUPEES HUNDRED WRITTEN IN THE SEIZED PAPER NUMBER 24 WHICH IS DECODED AS RS.1LAKH/WAS ON IN THE BANK STATEMENT OF THE APPELLANT COMPANY THUS THE AUTHENTICITY OF THE DOCUMENT IS PROVED AND SINCE THE CHEQUE AMOUNT BELONG TO THE APPELLANT COMPANY THEREFORE THE CASH IS ALSO TREATED BELONG TO THE APPELLANT . 7.2 THE APPELLANT COULD NOT SUBMIT ANY EVIDENCE OR MATERIAL WHICH SUGGEST THAT THE CASH RECEIPT OF RS, 81 LACS DID NOT BELONG TO THE APPEL LANT. THEREFORE I T IS LOGICAL COROLLARY THAT WHEN CHEQUE PAYMENT WAS MADE BY THE APPELLANT THEN OBVIOUSLY CASH PAYMENT WAS ALSO MADE BY IT ONLY. THE RECORD AND THE RETURN OF INCOME OF THE APPELLANT ESTABLISH IT BEYOND DOUBT THAT THE APPELLANT WAS INDEPENDENT SEPARATE LEGAL ENTITY THUS THE DOCUMENTS SHOWING CASH RECEIVED BY IT BELONG TO THE APPELLANT ONLY. 7.3 DURING THE APPELLATE PROCEEDING THE APPELLANT HAS CONTENDED THAT THE DOCUMENTS WERE NOT SEIZED FROM THE PREMISES OF THE APPELLANT COMPANY THUS DO NOT BELONG TO THE APPELLA NT. THE ABOVE CONTENTION IS NOT AC CEPTABLE AS THE DOCUMENTS WERE FOUND AND SEIZ ED FROM THE RESIDENCE OF THE MAI N PERSON OF THE GROUP SHRI DHIRAJLAL SANGHVI THUS IT CANNOT BE SAID THAT THESE DOCUMENTS DO NOT BELONG TO THE APPELLANT COMPANY. 7.4 THE APPELLANT SUBMITTED THAT THE CASH FLOW S TATEMENT WAS SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCEEDING AND RS. 81 LACS HAS ALREADY BEEN INCLUDED IN THE CASH FLOW STATE MENT OF SH, DHIRAJ LAL SANGHVI IN N AY 2011 - 12 AND OFFERED FOR TAX. THUS ADDITION MADE BY THE AO IN THE C ASE OF APPELLANT L EAD TO DOUBLE ADDITION AND SAME DESERVES TO BE RS,81 LAKHS BELONGED TO SH RI DHIRAJ LAL SANGHVI, HOWEVER THE DOCUMENT MENTION THE CHEQUE AND CASH PAYMENT ON THE SAME PAGE THEREFORE IT CANNOT BE TREATED THAT THE CASH RECEIPT IS BELONG TO SOMEBODY ELSE AND CHEQUE RECEIPT BELONG TO THE APPELLANT. 7.7 IT IS ALSO IMPORTANT TO NOTE THAT THE AO HAS ALREADY REJECTED THE CASH FLOW STATEMENT SUBMITTED BY SHRI DHIRAJLAL SANGHVI IN HIS CASE. THE ABOVE CASH FLOW HAS ALSO BEEN REJECTED BY THE UNDERSIGNED IN THE CASE OF EARLIER APPEAL OF THE GROUP DECIDED VIDE ORDER DTD. 2 4 - 12 - 2014 IN THE CASE OF KOKI L ABEN SANGHVI IN APPEAL NO. CIT(A) - 12/210/CC - 2(4 }/13 - 14 FOR A,Y. 2011 - 12. THUS I T CAN BE SEEN THAT THERE IS NO MERIT IN THE CONTENTION OF THE APPELLANT THAT THIS AMOUNT HAS ALREADY BEEN OFFERED FOR TAXATION. 7.8. DURING THE SEARCH PROCEEDINGS U/S 132 OF THE ACT EITHER THE APPELLANT OR SH. SHRI DHFRAJLAL SANGHVI NEVER CLAIMED THAT THE CASH RECEIPT OF RS, 81 LACS BELONG TO SHRF DHIRAJFAL SANGHVI. HOWEVER, FIRST TIME DURING THE ASSESS MENT PROCEEDING U/S 153A CASH FL OW STATEMENT OF SHRI DHIRAJLAL SANGHVI WAS SUBMITTED BEFORE THE AO AND RS.81 LAKHS WAS INCLUDED IN THAT WHICH WAS REJECTED BY THE AO. THEREFORE IT WOULD BE LOGICALLY AND FACTUALLY INCORRECT TO INTERPRET THAT THE ABOVE CASH RECEIPT BELONGS TO SH. DHIRAJLAL V SANGHVI AND ADDITION IN THE HAND OF THE A PPELLANT WILL AMOUNT TO BE DOUBL E ADDITION. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. IT (SS) A NO.187/AHD/2015 ASSTT. YEAR 2011 - 12 6 7. THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 475 AND REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 8. ON THE CONTRARY, THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE R IVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE PRIMARY CONTROVERSY NEEDS TO BE ADDRESSED IN THE CASE ON HAND WHETHER THE RECEIPT OF 81 LAKHS AGAINST THE SALE OF SHOPS NEEDS TO BE TAXED IN THE HANDS OF THE ASSESSEE. THE CONTENTION OF THE ASSESSEE IS THAT THE IMPUGNED RECEIPT OF 81 LAKHS HAS ALREADY BEEN INCLUDED IN THE CASH FLOW STATEMENT OF THE DIRECTOR AND THEREFORE THE SAME SHOULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE OTHERWISE IT WILL LEAD TO DOUBLE ADDITION . HOWEVER, THE AO WAS OF THE VIEW THAT THE ASSESSEE BEING A BODY CORPORATE AND SEPARATE LEGAL ENTITY IS LIABLE TO TAX WITH RESPECT TO ITS INCOME. IN OTHER WORDS, THE DIRECTOR OF THE COMPANY CANNOT COME FORWARD FOR THE INCOME TAX LIABILITY OF THE COMPANY FO R THE SIMPLE REASON THAT BOTH ARE SEPARATE ENTITIES/ ASSESSEE IN THE EYES OF LAW. ACCORDINGLY THE AO CONFIRMED THE ADDITION IN THE HANDS OF THE ASSESSEE IN ITS ORDER. ON APPEAL, THE LEARNED CIT (A) WAS PLEASED TO CONFIRM THE ADDITION AS MADE BY THE AO. 9 .1 FIRST OF ALL, WE NOTE THAT THERE WAS A GROUP KNOWN AS SANGHVI GROUP SUBJECT TO SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT. THE CASES OF ALL THE PARTIES WHO WERE PART OF SANGVI GROUP AND SUBJECT TO SEARCH AND SEIZURE OPERATION WERE CENTR ALIZED FOR THE PURPOSE OF THE ASSESSMENT WHICH CAN BE VERIFIED FROM THE FINDING OF THE AO AS DETAILED BELOW: 2. THIS CASE WAS CENTRALIZED WITH CENTRAL CIRCLE - 291), AHMEDABAD BY CIT - IV, AHMEDABAD S ORDER NO.CIT - IV/HQ/CENTRA./SANGHVI GROUP/2011 - 12 DATED 24.01.2012. THEREAFTER THE CIT - (CENTRAL) - II, AHMEDABAD S VIDE ORDER NO.CIT - II/CENT./SANGHVI GROUP/2011 - 12 DATED 22.03.2012 CEN TRALIZED THE CASE WITH UNDERSIGNED. 9.2 AMONG OTHER REASONS, THE CASES ARE CENTRALIZED IN THE CASES OF SEAR CH AND SEIZURE OPERATION FOR FINDING OUT THE UNDISCLOSED INCOME IN THE HANDS OF THE RIGHT PERSONS AND IN THE RIGHT ASSESSMENT YEARS. IT IS BECAUSE, IN THE CASE OF GROUP SEARCH IT (SS) A NO.187/AHD/2015 ASSTT. YEAR 2011 - 12 7 NORMALLY THE SEIZED DOCUMENTS ARE VERY COMPLEX AND UNDISCLOSED INCOME OF THE GRO UP HAS CLOSE CONNECTION/LINK WITH THE PARTIES/MEMBERS OF THE GROUP WHO WERE SUBJECT TO SEARCH. MOREOVER, THE MEMBERS OF THE GROUP WHO WERE SUBJECT TO SEARCH AND SEIZURE OPERATION SHOULD NOT ALSO COMPLICATE THE ACCOUNTS BY DIVERTING THE INCOME TO BE ASSESSE D IN THEIR HANDS EITHER BY MISREPRESENTATION OR OTHERWISE. ONCE THE GROUP CASES ARE SINGLY HANDLED BY THE ASSESSING OFFICER, THEN THE POSSIBILITY OF MANIPULATION, DIVERSION OF INCOME REDUCED SIGNIFICANTLY FOR THE REASON THAT THE OFFICER IN CHARGE HAS COMPL ETE CONTROL ON THE INCOME OF THE GROUP. IN THE CASE ON HAND, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSMENT WAS FRAMED BY ONE OFFICER. THUS WE ARE OF THE VIEW THAT THE AO , AMONG OTHER RIGHTS AND RESPONSIBILITIES, WAS TO ENSURE THAT ANY INCOME OF THE G ROUP SHOULD NOT BE TAXED TWICE IN THE HANDS OF DIFFERENT ASSESSEE. 9.3 IN THE CASE ON HAND, THE ASSESSEE INDEED AT THE TIME OF ASSESSMENT HAS CONTENDED THAT THE RECEIPT OF 81 LAKHS AGAINST THE SALE OF SHOPS HAS ALREADY BEEN OFFERED TO TAX IN THE HANDS O F THE DIRECTOR NAMELY SHRI DHIRAJLAL SANGHVI AND THEREFORE IF SUCH ADDITION IS SUSTAINED IN THE HANDS OF THE ASSESSEE, THEN IT WOULD LEAD TO THE DOUBLE ADDITION. HOWEVER, IN THIS REGARD WE NOTE THAT THE AO IN THE ASSESSMENT OF THE DIRECTOR SHRI DHIRAJLAL S ANGHVI DID NOT ACCEPT THE CASH FLOW STATEMENT, WHEREIN RECEIPT OF 81 LAKHS WAS SHOWN, ON THE REASONING THAT THE IMPUGNED RECEIPT BELONGS TO THE ASSESSEE WHICH IS A SEPARATE AND INDEPENDENT ENTITY IN THE EYES OF LAW. AS SUCH, THE AO IN THE CASE OF SHRI DHI RAJLAL SANGHVI FOUND THAT ALL THE CASH TRANSACTIONS WERE NOT BELONGING TO THE ASSESSEE I.E. SHRI DHIRAJLAL SANGHVI. RATHER THE CASH TRANSACTIONS WERE ALSO BELONGING TO THE OTHER MEMBERS OF THE FAMILY WHO WERE THE INCOME TAX ASSESSEE . THUS SUCH CASH FLOW ST ATEMENT WHEREIN IT WAS CLAIMED THAT ALL THE CASH TRANSACTIONS BELONGED SHRI DHIRAJLAL SANGHVI WAS REJECTED. HOWEVER, ON APPEAL BY THE ASSESSEE NAMELY SHRI DHIRAJLAL SANGHVI, THE PLEA THAT THE CASH TRANSACTIONS BELONGS TO HIM WAS ACCEPTED BY THE LEARNED CIT (A) IN THE APPEAL BEARING NO. CIT(A) - III/232/DCIT/CC - 2(4)/13 - 14 VIDE ORDER DATED 7 - 5 - 2014. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: IT (SS) A NO.187/AHD/2015 ASSTT. YEAR 2011 - 12 8 5.6.1 THE ASSESSING OFFICER IN HER ASSESSMENT ORDER AT PARA NO.5 HAS STATED THAT THE APPELLANT IS THE KEY PERSON OF THE GROUP. THE APPELLANT IN THE COURSE OF ASSESSMENT PROCEEDINGS SUBMITTED CASH FLOW STATEMENT TO THE ASSESSING OFFICER INCORPORATING THEREIN ALL RECEIPTS, PAYMENTS AND CIRCULATING FUND TRANSACTION S OF THE GROUP FOUND AS A RESULT OF SEARCH ACTIO N, WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. 5.7 THE CASH FLOW STATEMENTS ALONG WITH THE DOCUMENTARY EVIDENCES WHICH WERE FILED BEFORE THE ASSESSING OFFICER WERE ALSO FILED DURING THE COURSE OF APPELLATE PROCEEDINGS. A PERUSAL OF THE CASH FLOW STATEMENTS AND THE SEIZED PAPERS SHOW THAT DURING THE COURSE OF SEARCH LOOSE PAPERS/NOTING FOR THE RECEIPTS IN THE NATURE OF INCOME AND THE PAYMENTS/OUTFLOWS IN THE NATURE INVESTMENTS/ EXPENSES WERE FOUND. THERE WERE ALSO TRANSACTIONS IN THE NATURE OF CIRCULATION OF FUNDS DESCRIBED BY THE APPELLANT IN THE STATEMENT AS CURRENT ACCOUNT TRANSACTIONS. ACCORDINGLY, IN ORDER TO ENSURE THAT TRUE AND REAL INCOME BE COMPUTED, A CONSOLIDATED CASH/FUND FLOW STATEMENT WAS NECESSARY TO BE PREPARED AND THAT WAS DONE BY THE APPELLANT AND FILED BEFORE THE ASSESSING OFFICER. PRECISELY, WHAT HAS BEEN OFFERED BY THE APPELLANT IS RECEIPTS WHICH WERE IN THE NATURE OF INCOME AND THE PEAK BALANCE ARISING FROM THE CURRENT ACCOUNT T RANSACTION AS THE INCOME OF THE APPELLANT/GROUP. SINCE THIS INCOME IS APPLIED IN VARIOUS INVESTMENTS/EXPENSES OF THE APPELLANT OR HIS GROUP. IN NUTSHELL, THE APPELLANT HAS TELESCOPED HIS INCOME AGAINST THE APPLICATION AND ALSO OFFERED PEAK BALANCE ON ACCOU NT OF CURRENT ACCOUNT OF TRANSACTIONS. 5.8 THE ASSESSING OFFICER HAS NOT ACCEPTED THE TELESCOPING THEORY MAINLY ON THE GROUND THAT THE APPELLANT CANNOT OVER - WRITE THE APPLICABILITY OF LAW WHEN THE FAMILY MEMBERS HAVE BEEN FILING THEIR RETURNS OF INCOME AND ALSO HAVE INDEPENDENT SOURCE OF INCOME IS NOT ACCEPTED FOR THE REASON THAT THE APPELLANT IS THE KEY PERSON OF THE GROUP AND CARRIES OUT ALL THE FINANCIAL TRANSACTIONS AND HAS ALSO OWNED CASH PAYMENTS INCLUDING PAYMENTS MADE FOR PURCHASE OF PROPERTY MAD E BY THE WIFE AND SON. THIS WAS ALSO ENDORSED IN. THE STATEMENT RECORDED BEFORE THE DEPARTMENTAL AUTHORITIES. THE EXTRACT PF THE STATEMENT ALONG WITH THE REBUTTAL TO THE ASSESSING OFFICER'S CONTENTION FOR REJECTION OF THE CASH FLOW STATEMENT HAS BEEN NARRA TED BY THE APPELLANT IN HIS SOF AND IS THE SAME IS REPRODUCED HEREIN ABOVE. I INTEND TO AGREE WITH THE STAND TAKEN BY THE AR THAT WHEREVER THE INCOME IS SPECIFIC AND BELONGING TO THE SPECIFIC MEMBER OF THE GROUP THE SAME HAS BEEN SHOWN IN HIS/HER, RETURN O F INCOME BUT SINCE THE APPELLANT WAS UNDERTAKING ALL THE FINANCIAL TRANSACTIONS, 'THE APPELLANT WAS CORRECT IN INCORPORATING THE SAME IN THE CASH FLOW STATEMENT AND TELESCOPING THE SAME AGAINST THE PAYMENTS/APPLICATION. 9.4 THE ABOVE FINDING OF THE LD. C IT - A WAS SUBSEQUENTLY CONFIRMED BY THE ITAT IN ITA NO. 302 - 303/AHD/2014 VIDE ORDER DATED 3 - 10 - 2019. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES AND MATERIAL ON RECORD, WE OBSERVE THAT ASSESSEE WA S THE KEY PERSON OF THE GROUP WHO UNDERTAKE ALL THE FINANCIAL TRANSACTIONS AND THIS FACT WAS ALSO ACKNOWLEDGED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AT PARA 5 WHEREIN HE HAS STATED THAT ASSESSEE WAS THE KEY PERSON OF THIS GROUP AND DURING THE CO URSE OF SEARCH, THE ASSESSEE HAS DISCLOSED RS.24.6 CORES AS UNACCOUNTED INCOME, THEREFORE, WE DO NOT FIND JUSTIFICATION IN THE FINDING OF ASSESSING OFFICER THAT ASSESSEE WAS NOT THE KEY PERSON IN RESPECT OF TRANSACTION UNDERTAKEN BY THE OTHER FAMILY MEMBE RS OF THE GROUP. 9.5 HOWEVER, THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADDITION IN I T S HANDS WHICH HAS RESULTED DOUBLE ADDITION. FIRSTLY, IN THE HANDS OF IT (SS) A NO.187/AHD/2015 ASSTT. YEAR 2011 - 12 9 DIRECTOR OF THE COMPANY NAMELY, SHRI DHIRAJLAL SANGHVI HAS INCLUDED THE IMPUG NED AMOUNT FOR WORKING OUT THE UNDISCLOSED INCOME BASED ON SEARCH DOCUMENTS IN HIS INDIVIDUAL CAPACITY. SECONDLY, THE AO HAS ADDED THE SUM OF 81 LAKHS REPRESENTING THE RECEIPT AGAINST THE SALE OF SHOPS IN THE HANDS OF THE ASSESSEE. THUS, THE INFERENCE DRA WN IS THIS THAT THE RECEIPT OF 81 LAKHS HAS SUFFERED TAX 2 TIMES WHICH IS NOT DESIRABLE UNDER THE PROVISIONS OF LAW UNTIL AND UNLESS IT IS SPECIFICALLY PROVIDED. IN OUR CONSIDERED VIEW, ONCE THE AO HAS REACHED TO THE CONCLUSION THAT THE IMPUGNED INCOME BE LONGS TO THE ASSESSEE THAN HE WAS UNDER THE OBLIGATION TO REDUCE THE SAME FROM THE INCOME OF THE DIRECTOR. BUT THE AO HAS NOT DONE SO DESPITE T HE FACT THAT THE RECEIPT OF 81 LAKHS WAS INCLUDED IN THE CASH FLOW STATEMENT OF THE DIRECTOR WAS ALSO ADMITTED BY HIM ( THE AO ) IN HIS ORDER. THE RELEVANT FINDING OF THE ORDER OF THE AO READS AS UNDER: THIS FACT ALSO GAINS CREDENCE AS SHRI DHIRAJLAL SANGHVI HAS ADMITTED THE CASH RECEIPT IN THE CASH FLOW STATEMENT SUBMITTED BY HIM . HOWECVER, THIS RECEIPT PERTAINS TO T HE PROJECT OF SANGHVI INFRACON IN RESPECT OF COMPLEX BEING CONSTRUCTED VADAJ. 9.6 IN VIEW OF THE ABOVE WE HOLD THAT, THE AO WAS UNDER THE OBLIGATION TO REDUCE THE SUM OF 81 LAKHS FROM THE INCOME OF THE DIRECTOR IN THE SITUATION WHERE HE PROPOSED TO ADD TH E SAME IN THE HANDS OF THE ASSESSEE. BUT THE AO HAS NOT DONE SO DESPITE HAVING SUFFICIENT INFORMATION IN HIS HAND. AS SUCH THE ACTION OF THE AO HAS RESULTED THE DOUBLE ADDITION OF THE SAME INCOME. 9.7 WITHOUT PREJUDICE TO THE ABOVE, WE ALSO NOTE THAT IN THE PRESENT CASE, THE ADDITION HAS BEEN MADE BY THE AO WHICH WAS SUBSEQUENTLY SUSTAINED BY THE LEARNED CIT (A) UNDER THE PROVISIONS OF SECTION 69A OF THE ACT. THE P ROVISIONS OF SECTION 69A OF THE ACT READS AS UNDER: [ UNEXPLAINED MONEY, ETC. 69A. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE AND SUCH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME 72 , AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE 69 [ASSESSING] OFFICER, SATISFACTORY, THE MONEY AND THE VALUE OF THE BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME 72 OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. ] IT (SS) A NO.187/AHD/2015 ASSTT. YEAR 2011 - 12 10 THE FOLLOWING ARE THE INGREDIENTS OF SECTION 69A OF THE ACT : ( I ) IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE AND SUCH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE; ( II ) SUCH MONEY, BULLION ETC. IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME; ( III ) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY; AND ( IV ) IF CONDITIONS IN ( I ) TO ( III ) ABOVE ARE SATISFIED, THE MONEY AND THE VALUE OF THE BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEM ED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. 9.8 A READING OF THE PROVISIONS OF SECTION 69A OF THE ACT REVEALS THAT ITS PROVISIONS CANNOT BE INVOKED MERELY ON THE BASIS THAT A PERSON IS FOUND IN POSSESSION OF ANY VALUABLE ARTICLE BUT HE SHOULD ALSO BE THE OWNER OF SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES. APPARENTLY, THE CONDITION PRECEDENT FOR INVOKING SECTION 69A OF THE ACT IS THE FINDING THAT THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY BULLION, JEWELLERY OR OTHER VALU ABLE ARTICLES. FURTHERMORE THERE IS NO PRESUMPTION OF OWNERSHIP OF ANY VALUABLE ARTICLE MERELY ON THE BASIS OF THE ASSESSEE S POSSESSION AS PROVIDED UNDER THE PROVISIONS OF SECTION 69A OF THE ACT. IN OTHER WORDS, IF THE ASSESSEE DISCLAIMS THE OWNERSHIP OF THE VALUABLE ARTICLES THAT SUCH ARTICLES FOUND IN HIS POSSESSION DO NOT BELONG TO HIM, THE BURDEN LIES ON THE REVENUE TO ESTABLISH THE OWNERSHIP OF THE ASSESSEE BEFORE RAISING ANY PRESUMPTION AGAINST HIM. 9.9 IN THE CASE ON HAND, THE ASSESSEE HAS CLAIMED THAT RECEIPT OF 81 LAKHS HAS ALREADY BEEN CONSIDERED IN THE HANDS OF THE DIRECTOR WHICH WAS NOT DISPUTED BY THE AUTHORITIES BELOW. IT IMPLIES THAT OWNER OF THE RECEIPT OF 81 LAKHS WAS THE DIRECTOR OF THE COMPANY AND NOT THE ASSESSEE. ACCORDINGLY, THE AS SESSEE CANNOT BE HELD THE OWNER OF THE RECEIPTS OF 81 LAKHS AND CONSEQUENTLY THE IMPUGNED IT (SS) A NO.187/AHD/2015 ASSTT. YEAR 2011 - 12 11 RECEIPT CANNOT BE MADE SUBJECT TO TAX IN THE HANDS OF THE ASSESSEE UNDER THE PROVISIONS OF SECTION 69A OF THE ACT. 10. BEFORE PARTING, IT IS PERTINENT TO NOTE THAT THE LEARNED AR HAS RAISED OTHER CONTENTIONS IN SUPPORT OF HIS CLAIM THAT THE RECEIPT OF 81 LAKHS DOES NOT BELONG TO THE ASSESSEE. HOWEVER WE NOTE THAT, THE ASSESSEE SUCCEEDS ON THE PRELIMINARY ISSUE THAT THE RECEIPT AGAINST THE SALE OF SHOPS OF 81 LAKHS IS NOT OWNED BY IT, ACCORDINGLY THE ADDITION MADE UNDER SECTION 69A OF THE ACT WAS DELETED BY US IN THE PRECEDING PARAGRAPH. ACCORDINGLY, THE OTHER CONTENTIONS RAISED BY THE LEARNED AR OF THE ASSE SSEE AT THE TIME OF HEARING DO NOT REQUIRE ANY SEPARATE ADJ UDICATION. AS SUCH OTHER CONTENTIONS BECOME INFRUCTUOUS. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE COURT ON 03 /12 / 2020 AT AHMEDABAD. SD / - SD/ - (RAJPAL YADAV ) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 03 / 12 /2020 MANISH