The DCIT, Central Circle-1, Surat V. Shri Upendra Ramjibhai Rai, Vapi

ITSSA 191/AHD/2010

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8283 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Unexplained investment; Loose papers; Reason to believe
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.(SS). NO.191 / AHD/2010 (ASSESSMENT YEAR 2006-07) DCIT, CC-1, SURAT VS. UPENDRA RAMJIBHAI RAI, PROP M/S. GANGOTRI CONST. SHRAM, PLOT NO.3&7, NEAR MOHID TOWER, DAMAN ROAD, CHALA, VAPI PAN/GIR NO. : ABEPR9318Q (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI B L YADAV, SR. DR RESPONDENT BY: NONE DATE OF HEARING: 12.07.2012 DATE OF PRONOUNCEMENT: 31.08.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A) II, AHMEDABAD DATED 20.11.2009 FOR THE ASSESSMENT Y EAR 2006-07. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: I) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION AT RS.28,72,800/- MADE ON ACCOUNT OF U NRECORDED INVESTMENT BASED ON THE LOOSE PAPERS SEIZED DURING THE COURSE OF SEARCH & SEIZURE, WHICH SHOWS THE INVESTMENT OF THE ASSESSEE. II) THE LD. CIT(A) HAS ERRED IN LAW AND ON F ACTS IN ACCEPTING THE CONTENTION OF THE ASSESSEE THAT NONE OF THE ENT RIES IS CO-RELATED TO HIS BUSINESS IGNORING THAT ASSESSEE HAD DENIED A NY BUSINESS CONNECTION WITH MAHENDRA KATARIA IN HIS STATEMENT A T ONE PLACE, BUT AT ANOTHER PLACE IN THE SAME STATEMENT HE STATE D THAT HE HAD I.T.A.NO.191 /AHD/2010 2 MADE INVESTMENT IN 'OM SURYA PROJECT' IN WHICH SHRE E MAHENDRA KATARIA IS ONE OF THE PARTNERS. III) THE LD. CIT(A) HAS ERRED IN LAW AND ON F ACTS IN ACCEPTING THE CONTENTION OF THE ASSESSEE THAT NONE OF THE ENT RIES IS CO-RELATED TO HIS BUSINESS IGNORING THAT IN THE STATEMENT RECO RDED U/S 132(4) SHREE MAHENDRA KATARIA HAD ADMITTED THAT THE ENTRIE S OF RS.55,72,800/- BELONGS TO THE INVESTMENT OF THE ASS ESSEE IN 'OM SURYA 'PROJECT IN WHICH HE IS A PARTNER. IV) THE LD. CIT(A) HAS ERRED IN LAW AND ON FA CTS IN NOT APPRECIATING THE RATIO LAID DOWN IN THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF SUMATI DAYAL VS CIT 214 I TR 801, WHEREIN THE APEX COURT HAS OBSERVED THAT THE APPARE NT MUST BE CONSIDERED THE REAL UNTIL IT IS SHOWN THAT THERE AR E REASON TO BELIEVE THAT THE APPARENT IS NOT THE REAL AND THAT THE TAXI NG AUTHORITIES ARE ENTITLED TO LOOK IN TO THE SURROUNDING CIRCUMSTANCE S TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPL YING THE TEST OF HUMAN PROBABILITIES. V) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THAT THE A.O. BE RESTORED TO THE ABOVE EX TENT. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE A PPOINTED DATE OF HEARING BUT WRITTEN SUBMISSIONS OF THE LD. A.R. ARE AVAILABLE ON RECORD AND HENCE, WE PROCEED TO DECIDE THIS APPEAL OF THE REVENUE AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF THE LD. A.R. OF THE ASSESSEE AND AFTER HEARING THE LD. D.R. 3. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 4. BRIEF FACTS TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 3 OF HIS ORDER WHICH ARE REPRODUCED BELOW: THERE WAS A SEARCH IN THE CASE OF MAHENDA KATARIA WHERE SOME PAPERS WERE FOUND WHERE THE NAME OF THE ASSESSEE WA S MENTIONED. IN HIS STATEMENT, SHRI MAHENDRA KATARIA SAID THAT T HE AMOUNT MENTIONED IN THE LOOSE PAPER (ANNEXURE A, PAGE 41), IS THE AMOUNT GIVEN BY UPENDRA RAI HENCE, ON THAT BASIS, THE A.O. HAS MADE THE ADDITION OFRS.28,72,800/- ON THE BASIS THAT IN THIS PAPER THE AMOUNT INVESTED IS RS.55,72,800/- WHEREAS THE ASSESSEE HAS SHOWN ONLY RS.27,00,000/- AS UNACCOUNTED INVESTMENT AND OFFERE D AS INCOME IN THE RETURN. I.T.A.NO.191 /AHD/2010 3 5. WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A ) AS PER PARAS 5 & 5.1 OF HIS ORDER WHICH ARE REPRODUCED BELOW: 5. I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS . I FIND THAT THE ASSESSING OFFICER HAS PROPERLY ISSUED NOTICE U/S.15 3C OF THE ACT HENCE, THE FIRST GROUND OF APPEAL IS REJECTED. HOWE VER, ON THE MERIT OF THE CASE, ON THE POINT OF ADDITION, I AGREE WITH THE APPELLANT'S VIEW. THE ADDITION IS MADE ON THE BASIS OF LOOSE PA PER WHICH IS FOUND AT THE RESIDENCE OF THIRD PARTY AND NOT ON TH E APPELLANT'S PLACE HENCE, PRESUMPTION U/S.132(4JF) IS NOT APPLI CABLE TO THE APPELLANT'S CASE. FURTHER, THE ADDITION CANNOT BE M ADE ON THE BASIS OF THE STATEMENT OF THIRD PARTY UNLESS THE APPELLAN T IS ALLOWED OPPORTUNITY OF CROSS EXAMINE THE THIRD PARTY. FURTH ER, NONE OF THE ENTRIES IS CO-RELATED TO THE APPELLANT'S BUSINESS W ITH ANY CORROBORATIVE EVIDENCE HENCE, THE ENTIRE PAPER CANN OT BE SAID TO BE BELONGING TO THE APPELLANT. EVEN THE NAME OF OM SUR YA DEVELOPERS IS NOT MENTIONED IN THE PAPER TO SAY THA T THE APPELLANT IS PARTNER IN THAT AND THE ENTRIES ARE BINDING ON T HE APPELLANT. THE APPELLANT HAS ADMITTED RS.27,00,0007- AS HIS UNDISC LOSED INCOME BUT HE NEVER ACCEPTED THE FACT THAT THIS PAPER BELO NG TO HIM OR THE ENTRIES BELONGED TO HIM. THE SAME WAS CATEGORICALLY SAID IN Q.NO.6 OF HIS STATEMENT RECORDED ON 22.02.2007 U/S. 131 OF THE I.T. ACT WHERE HE EXPLAINED THAT THIS PAPER DOES NOT BEL ONG TO HIM. 5.1 RELYING ON THE DECISION OF HONBLE SUPREME COUR T IN THE CASE OF KISHANCHAND CHELARAM VS CIT 125 ITSR 713 AN D IN VIEW OF THE FACTS STATED ABOVE, IT IS HELD THAT THE A.O. IS NOT JUSTIFIED IN MAKING THE ADDITION. HENCE, THE ADDITION IS DELETE D. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT LD. CIT(A) HAS GIVEN THIS FINDING THAT ALTHOUG H THE ASSESSEE HAS ADMITTED RS.27 LACS AS HIS UNDISCLOSED INCOME BUT H E NEVER ACCEPTED THE FACT THAT THE SEIZED PAPERS BELONG TO HIM AND THE E NTRIES BELONG TO HIM. HE HAS ALSO GIVEN A FINDING THAT NONE OF THE ENTRIE S IS CORRELATED TO THE ASSESSEES BUSINESS WITH ANY CORROBORATIVE EVIDENCE AND, THEREFORE, THE ENTIRE PAPERS CANNOT BE SAID TO BE BELONGING TO THE ASSESSEE. HE ALSO I.T.A.NO.191 /AHD/2010 4 GIVEN A FINDING THAT NAME OF OM SURYA DEVELOPERS IS NOT MENTIONED IN THE PAPERS TO SAY THAT ASSESSEE IS PARTNER IN IT AN D ENTRIES ARE BINDING ON THE ASSESSEE. THESE FINDINGS OF LD. CIT(A) COULD N OT BE CONTROVERTED BY THE LD. D.R. AND CONSIDERING THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A). WE, THEREFORE, UPHOLD THE SAME. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 28/08/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 31.08/2012 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 31/08/2012 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.31/8/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31/08/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .