The ACIT, Patan Circle, Patan V. Shri Chinubhai Visabhai Patel, Patan

ITSSA 210/AHD/2006

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8599 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-02-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 09-08-2010
• Assessment Year: misc
• Appeal Filed On: 07-08-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Assessee Lawyers: K C THAKER
• Keywords: Unexplained investment; Document seized; Corroborative evidences; Block assessment; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD ( BEFORE HON'BLE SHRI G.D.AGRAWAL, V.P & HONBLE SHRI MUKUL KUMAR SHRAWAT, J.M. ) I.T.A(SS) NO. 210/AHD./2006 BLOCK PERIOD : 01/04/90 TO 26/09/2000 A.C.I.T., CIRCLE-PATAN, N.G. -VS- SHRI CHINUBHAI VISABHAI PATEL, PATAN (PAN : ABZPP 1261A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHELLEY JINDAL, C.I.T., D.R. RESPONDENT BY : SHRI K. C. THAKER, A.R. O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHI CH HAS EMANATED FROM THE ORDER OF THE LD. CIT(A)-XXI, AHMEDABAD DATED 24.05.2006. 2. THE FIRST GROUND IS IN RESPECT OF AN ADDITION OF RS.2 LAKHS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SECURITIES. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED UNDER SECTION 158BC READ WITH SECTION 158BD DATED 30.6.05 WERE TH AT A SEARCH UNDER SECTION 132 WAS CARRIED OUT IN AN ANOTHER CASE OF DR. HEMCHANDRA V. PATEL D ATED 26.09.2000. CERTAIN DOCUMENTS WERE FOUND AND ON THAT BASIS, PROCEEDINGS HAVE BEEN INIT IATED IN THE CASE OF THIS ASSESSEE AS PRESCRIBED UNDER SECTION 158BD OF I.T. ACT. IN RESPECT OF THE ABOVE GROUND, CERTAIN BILLS OF A STOCKBROKER, NAMELY, JAIVIR ASSOCIATES, PATAN, MARKED AS ANNEXUR ES 63,64 AND 66, WERE RECOVERED AT THE TIME OF SEARCH. THOSE BILLS WERE EVIDENCING SALE OF SHARES OF WACKHARDT LTD. AND TORRENT PHARMACEUTICALS LTD. BETWEEN THE PERIOD 15.09.99 AND 06.10.99 AMOUN TING TO RS.1,14,665/-. THE ASSESSEES MAIN OBJECTION WAS THAT THE INVESTMENT DID NOT BELONG TO HIM BUT IT REPRESENTED THE INVESTMENT OF THE HUF OF THE SAID DOCTOR. HOWEVER, THE ASSESSING OFFI CER WAS NOT CONVINCED PRIMARILY BECAUSE OF 2 IT(SS)2 10-AHD-2006 THE REASON THAT THE BILLS WERE ISSUED IN THE SINGLE NAME, THAT TOO, IN THE NAME OF THE ASSESSEE. ACCORDINGLY, THE SAID SUM OF RS.2 LAKHS WAS TAXED A S UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE. 4. BEFORE THE LD. LEARNED COMMISSIONER OF INCOME TA X(APPEALS), IT WAS REITERATED THAT THE SAID INVESTMENT DID NOT BELONG TO THE ASSESSEE BUT THE INVESTMENT WAS RECORDED IN THE ACCOUNTS OF DR. H.V.PATEL (HUF). THE LD. LEARNED COMMISSIONER O F INCOME TAX(APPEALS) HAS GIVEN HIS FINDING IN ASSESSEES FAVOUR VIDE PARA 4 4. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E AS INCORPORATED IN THE ORDER UNDER APPEAL AS ALSO THE WRITTEN SUBMISSIONS END E NCLOSURES FILED THEREWITH ON BEHALF OF THE APPELLANT. AS FOR AS THE FIRST GROUN D REGARDING ADDITION OF RS.2 LACS IS CONCERNED, I AGREE WITH THE APPELLANT'S COUNSEL TH AT THE ASSESSING OFFICER SHOULD HAVE VERIFIED THE CLAIM OF THE APPELLANT WITH THE RELEVANT RECORDS AVAILABLE WITH HIS OFFICE. IT HAS BEEN SPECIFICALLY MENTIONED IN PARA 4 OF THE WRITTEN SUBMISSION DT 20- 6-2005 THAT THOUGH, THE BILLS WERE MADE IN THE NAM E OF THE APPELLANT, WHO USED TO HANDLE SUCH WORK ON BEHALF OF DR. H. V. PATEL, THE SHARES IN QUESTION AND THE TRANSACTIONS RELATING THERETO WERE DULY REFLECTED IN THE RETURNS OF DR. H.V.PATEL, H.U.F. IT IS ALSO TRUE THAT THE GAIN ARISING ON SA LE OF THESE SHARES WAS ALSO DULY ACCOUNTED FOR AND DISCLOSED IN THE RETURN OF INCO ME OF DR. H. V. PATEL, H.U.F., FILED AND DULY ASSESSED IN THE SAME CHARGE OF ASS ESSING OFFICER. CONSIDERING THIS FACTUAL POSITION THE ADDITION OF RS.2 LAKH MADE CA N NOT BE SUSTAINED, AND IS THEREFORE DELETED. 5. ON HEARING THE RIVAL SUBMISSIONS AS WELL AS ON P ERUSAL OF THE COMPILATION FILED BEFORE US, WE ARE OF THE VIEW THAT THE FIRST APPELLATE AUTHORI TY HAS NOT GIVEN A FAIR CHANCE TO THE REVENUE DEPARTMENT TO ASCERTAIN WHETHER IMPUGNED INVESTMENT WAS DULY AND CORRECTLY REFLECTED IN THE HANDS OF DR. H.V.PATEL (HUF). THE LD. LEARNED COMMI SSIONER OF INCOME TAX(APPEALS) HAS IGNORED THE FACT THAT THE BILLS WERE EXCLUSIVELY ISSUED IN THE NAME OF THE AS SESSEE . AS PER OUR UNDERSTANDING OF LAW, ALL DOCUMENTS SEIZED DURING THE COURSE OF SEARCH HA VE TO BE READ AS IT WAS FOUND AND THE PRESUMPTION IS THAT THE DOCUMENT IS TRUE AND CORRECT . HOWEVER, THIS PRELIMINARY PRESUMPTION IS REBUTTABLE, BUT THE ONUS IS ON THE ASSESSEE. IN THE PRESENT CASE, IT WAS REQUIRED TO TALLY THE DISTINCTIVE NUMBER OF SHARES WITH OTHER CORROBORATIVE EVIDENCES SO AS TO ESTABLISH THAT THE BILLS WHICH WERE IN THE NAME OF THE ASSESSEE HAVE ACTUALLY BEEN DISCLOSED IN THE HANDS OF DR. H.V.PATEL (HUF). AT PRESENT, IT IS NOT POSSIBLE TO MATCH THE DETAILS OF THE SHARES, WHICH WERE PRESENTED, STATED TO BE WACKHARDT LTD. A ND TORRENT PHARMACEUTICALS LTD. WITH THE 3 IT(SS)2 10-AHD-2006 DISCLOSURE MADE BY THE HUF. SINCE THIS EXERCISE HAS NOT BEEN DONE, THEREFORE, WE DEEM IT PROPER TO RESTORE THIS GROUND BACK TO THE STAGE OF LD. LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) WHO HAS PASSED A CRYPTIC JUDGEMENT, SO THAT THE INVESTI GATION, AS SUGGESTED HEREINABOVE, SHOULD BE DONE TO VERIFY THE SOURCE AND THE DUE DISCLOSURE OF THOSE SHARES WITH THE FILE OF DR. H.V.PATEL (HUF). WITH THESE REMARKS, SINCE THE MATTER HAS BEE N RESTORED BACK, THIS GROUND OF THE REVENUE MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. GROUND NO.2 IS IN RESPECT OF ADDITION OF RS.2,55,000/- ON ACCOUNT OF A CASH FLOW STATEMENT FURNISHED THROUGH WHICH THE SAID SUM WAS SHOWN AS WITHDRAWN FROM HUF. 7. THE ONLY ALLEGATION OF THE ASSESSING OFFICER WAS THAT WHILE EXPLAINING THE SOURCE OF INVESTMENT, A CASH FLOW STATEMENT WAS PREPARED BY T HE ASSESSEE AND IN THAT CASH-FLOW STATEMENT CERTAIN DISCREPANCIES WERE ALLEGED TO BE OBSERVED. IT HAS ALSO BEEN MENTIONED BY THE A.O. THAT THE WITHDRAWAL FROM HUF AMOUNTING TO RS.2,55,000/- WAS MERELY A RECITAL NOT PROPERLY SUBSTBANTIATD. WITH THESE REMARKS, THE SAID ADDITION WAS MADE. 8. BEFORE THE LD. LEARNED COMMISSIONER OF INCOME TA X(APPEALS), IT WAS VEHEMENTLY CONTESTED THAT THE ASSESSMENT BEING MADE UNDER CHAP TER XIVB, THEREFORE, THE ADDITION SHOULD BE CONFINED TO THE INCRIMINATING MATERIALS SEIZED DURI NG THE COURSE OF SEARCH. THE SAID CASH FLOW STATEMENT WAS NOT DETECTED AT THE TIME OF SEARCH BU T IT WAS SUO MOTU FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BEING CONVINCED BY THE SAID ARGUMENT, THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS GRANTED RELIEF AS FOLLOWS: 4.2 THE NEXT ADDITION DISPUTED BY THE APPELLANT IS OF RS,2,55,000/-, THE AMOUNT OF WITHDRAWALS FROM HUF. I FIND THAT THE APPELLANT HA S SPECIFICALLY MENTIONED IN PARA 3 OF WRITTEN SUBMISSION DT. 29-6-2005 THAT THE ENT RIES IN THE CASH-FLOW STATEMENT HAVE BEEN DULY EXPLAINED WITH REFERENCE TO THE BOO KS OF ACCOUNTS. AS A MATTER OF FACT THE ASSESSING OFFICER HAS ACCEPTED THE EXPLAN ATION BASED ON CASH-FLOW STATEMENT IN RESPECT OF THE INVESTMENTS. CONSIDERI NG THESE FACTS THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 2,55,000/- WITHOUT CITING ANY VALID AND WELL- FOUNDED REASONS, CANNOT BE SUSTAINED. FURTHER, I A LSO AGREE WITH THE APPELLANTS SUBMISSION THAT THE CASH-FLOW STATEMENT WAS NOT A DOCUMENT SEIZED DURING THE SEARCH AND THEREFORE THE ADDITION CANNOT BE MADE ON THE BASIS OF THE SAID CASH- FLOW STATEMENT, IN VIEW OF THE DECISIONS OF THE HO N'BLE TRIBUNALS IN THE CASE OF VIGNESH FLAT HOUSING PROMOTERS V/C. DCIT REPORTED M 77 T.T.J. 873 AND RADHEY 4 IT(SS)2 10-AHD-2006 SHYAM TANWAR V/S. A.C.I.T REPORTED IN 77 T.T.J. 50 5 RELIED UPON BY THE APPELLANTS COUNSEL. IN THE CIRCUMSTANCES IT IS HELD THAT THE ADDITION IS UNSUSTAINABLE M LAW. THE SAME IS THEREFORE DIRECTED TO BE DELETED. 9. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES, WE FIND NO FALLACY IN THE RELIEF GRANTED BY THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BEC AUSE THE IMPUGNED ADDITION OF RS.2,55,000/- WAS NOTHING BUT A PRESUMPTION THAT TH E CASH-FLOW STATEMENT IS NOT CORRECTLY EXPLAINED AND THE SOURCE OF AVAILABILITY OF FUND, A S STATED, TO BE OUT OF WITHDRAWALS FROM DR. H.V.PATEL (HUF). WE HAVE NOTICED THAT THE LD. LEARN ED COMMISSIONER OF INCOME TAX(APPEALS) HAS FOLLOWED FEW DECISIONS OF RESPECTIVE COORDINATE BENCHES FOR THE LEGAL PROPOSITION THAT MERELY ON THE BASIS OF CASH-FLOW STATEMENT FILED DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, NO ADDITION COULD BE MADE IN SEARCH CASE UNDER SECTION 158BC. T HE ADDITION UNDER CHAPTER XIVB SHOULD BE BASED UPON THE MATERIALS SEIZED CONSEQUENT UPON THE SEARCH. IN ADDITION TO THE SAID DECISIONS RELIANCE HAS ALSO BEEN PLACED ON ITAT(DEL.) DR.SURJIT TOSARIA 92 TTJ 338(DEL.) WHEREIN IT WAS HELD THAT THE BALANCE-SHEET AND CASH-FLOW STATEMENT FILED IN THE COURSE OF BLOCK ASSESSMENT CAN NOT BE CONSIDERED EITHER AS EVIDENCE FOUND AS A RESULT OF THE SEARCH OR AS A MATERIAL OR INFORMATION RELATABLE TO ANY EVIDENCE FOUND AS A RE SULT OF THE SEARCH. IT WAS ALSO HELD THAT THOSE WERE FILED ONLY TO EXPLAIN THE OPENING CASH BALANCE BY WHICH INVESTMENT WAS MADE. CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE, MORE SO WHEN THE SOURCE WAS STATED TO BE THE FUNDS OF THE HUF AND THE CASE LAWS CITED, WE ARE ALSO OF THE VIEW THAT THE IMPUGNED ADDITION WAS NOT SUSTAINABLE IN THE EYES OF LAW. WE HEREBY CONFIRM T HE FINDINGS OF THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND THUS DISMISS THIS GROUND OF THE REVENUE. 10. IN THE RESULT, THE REVENUES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28.02. 2011. SD/- SD/- (G.D.AGRAWAL) (MUKUL KUMAR SHRAWAT) VICE PRESIDENT JUDICIAL MEMBER DATED : 28/02 / 2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, 5 IT(SS)2 10-AHD-2006 4) CIT CONCERNED, 5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S.