The ACIT, Central Circle-2, Baroda V. Shri Bhupendra R.Patel, Bharuch

ITSSA 261/AHD/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9062 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-03-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 22-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Keywords: Unexplained investment; Search and seizure; Opportunity of being heard; Opportunity of cross examination; Third party statement; Retraction
• Section: 143(3); 142(1); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. (SS) A NOS. 259, 260 & 261/AHD/2010 (ASSESSMENT YEAR:2001-02, 2004-05, 2005-06) THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIR-2, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA (APPELLANT) VS. SHRI BHUPENDRABHAI R. PATEL M/S. MUKTANAND REAL ESTATE CO., B/H, VRUNDAVAN SOCIETY, ZADESHWAR ROAD, BHARUCH (RESPONDENT) PAN: AEUPP 6881 L APPELLANT BY : SHRI SHELLEY JINDAL, CIT-D R RESPONDENT BY : SHRI MUKUND BAKSHI, AR ( )/ ORDER DATE OF HEARING : 11-03-20 13 DATE OF PRONOUNCEMENT : 17 -05-2013 PER SHRI ANIL CHATURVEDI,A.M. THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS OF LD. CIT (A)-IV, AHMEDABAD IDENTICALLY DATED 07-0 1-2010 PASSED FOR ASSESSMENT YEARS 2001-02, 2004-05 & 2005-06. SINCE THE FACTS OF THE GROUNDS ARE IDENTICAL IN ALL THREE APPEALS, THEREFO RE FOR THE SAKE OF CONVENIENCE, THE SAME ARE DISPOSED OF BY A COMMON O RDER. IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 2 2. THE FACTS AS CULLED OUT FROM THE ORDERS OF THE L OWER AUTHORITIES ARE AS UNDER. 3. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. MUKTANAND REAL ESTATE COMPANY. A SEARCH U/S 132 OF THE I.T. ACT W AS CARRIED OUT IN THE CASE OF ASSESSEE ON 17.01.2007. CONSEQUENT TO THE SEARCH ACTION AND BASED UPON SUCH MATERIAL FOUND DURING THE COURSE OF SEARCH, THE PROCEEDINGS U/S 153A OF THE ACT WERE INITIATED AGAI NST THE ASSESSEE. IN RESPONSE TO THE NOTICE U/S 153A , THE ASSESSEE FILE D ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02 ON 10.12.2007, DECLARIN G TOTAL INCOME AT RS.6,94,810/- AND AGRICULTURAL INCOME AT RS.4,49,04 0/- AS AGAINST RS.92,860/- AND AGRICULTURAL INCOME AT RS.4,49,040/ - DECLARED IN THE ORIGINAL RETURN FILED U/S 139(1). THE CASE WAS SEL ECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 153A (B) R .W.S. 143(3) OF THE ACT VIDE ORDER DATED 31.12.2008 AND THE TOTAL INCOME WA S DETERMINED AT RS.18,47,838/- FOR A.Y. 2000-01. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A). THE LD. CIT(A) VIDE ITS ORDER DATED 07.01.2010 DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER AND HENCE THE REVENUE IS NOW IN A PPEAL BEFORE US. ITA NO. 259/A/2010:- 4. BEFORE US, THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUND OF APPEAL (EXTRACTED FROM A.Y. 2001-02):- IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 3 (I) THE CIT (A) HAS ERRED IN LAW AND FACTS AND CIRCUMST ANCES OF THE CASE IN DELETING THE ADDITION OF RS.11,53,028/- ON ACCOUNT OF ON MONEY RECEIPTS ON SALE OF PLOTS OF CO.OP. HOUSING S OCIETIES. 5. DURING THE COURSE OF SEARCH PROCEEDINGS, THE ASS ESSEE HAD SUBMITTED THAT HE HAD DEVELOPED VARIOUS CO-OPERATIV E HOUSING SOCIETIES IN THE PAST, BUT THE ASSESSEE WAS STILL HAVING CONTROL OVER ALL THE SOCIETIES. DURING THE COURSE OF SEARCH, VARIOUS BOOKS OF ACCOU NTS, REGISTERS, LIST OF MEMBERS AND BANK ACCOUNTS WERE FOUND FROM THE RESID ENCE OF THE ASSESSEE WHICH LED TO THE CONCLUSION BY THE ASSESSI NG OFFICER THAT THE ASSESSEE IS ASSOCIATED WITH THE SOCIETIES AND HAS C ONTROL OVER THEM. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF PURCHA SE AND SALE OF PLOTS OF THE SOCIETIES FOR THE LAST SIX YEARS. ON THE BASI S OF THE DETAILS SUBMITTED BY THE ASSESSEE AND ON THE BASIS OF THE STATEMENT RECO RDED DURING THE COURSE OF SEARCH, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE WAS RECEIVING ON MONEY ON THE SALE OF PLOTS. THE ASSESSEE WAS ASKED TO EXPLAIN AND SUBMIT HIS EXPLANATION. THE ASSESSEE INTER-ALIA S UBMITTED THAT AS PER THE REGULATIONS OF THE CO-OPERATIVE HOUSING SOCIETIES, THE MEMBERS ARE THE OWNERS OF THE RESIDENTIAL HOUSE/PLOTS ALLOTTED TO T HEM AND ONCE THE PERSON IS REGISTERED AS A MEMBER, ANY TRANSFER OF PROPERTY ALLOTTED TO HIM CAN BE EFFECTED BY THE SOCIETY ONLY AND THE SOCIETY GENERA LLY IS ENTITLED TO COLLECT OR RECEIVE THE NOMINAL FEES FOR EFFECTING SUCH TRAN SFERS. IT WAS THUS SUBMITTED THAT THE TRANSFERS WHICH HAS TAKEN PLACE IN THE SOCIETY, THE ASSESSEE HAS NOTHING TO DO WITH TRANSFER. THE ASSE SSEE FURTHER SUBMITTED THAT THE STATEMENTS OF THIRD PARTY RECORDED BY THE ASSESSING OFFICER ARE UNRELIABLE AND CANNOT BE TAKEN AS EVIDENCE AS THE S AME WERE NEVER IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 4 CONFRONTED BY THE ASSESSEE . HE FURTHER SUBMITTED THAT THE ASSESSEES CONFIRMATION OF RECEIVING ON-MONEY OF RS.89/- PER S Q. FT. ON SALE OF 2 PLOTS IN DHARAMNAGAR SOCIETY, PERTAINING TO FY 2006-07- RELEVANT TO ASSESSMENT YEAR 2007-08, AND FOR THAT YEAR THE ASSESSEE HAS MA DE A DISCLOSURE OF RS.43.25 LACS AND THE TOTAL ON-MONEY BASED ON THE E VIDENCES CAN BE DETERMINED AT AN AMOUNT OF RS.5,55,360/-. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE. HE, BASED ON THE STATEMENTS RECORDED AT THE TIME OF SEARCH AND MATERIAL FOUND A ND SEIZED, CONCLUDED THAT THE ASSESSEE HOLDS CONTROL OVER THE CO-OPERATI VE SOCIETIES BY APPOINTING HIS OWN EMPLOYEES AS KEY OFFICE BEARERS AND THUS THE ASSESSEE CONTINUES TO HAVE ADMINISTRATIVE POWERS OF THE CO-O PERATIVE SOCIETIES. HE FURTHER CONCLUDED THAT THE ON-MONEY RECEIVED FROM T HE SALE OF PLOTS OF CO- OPERATIVE SOCIETIES, IS NOT PASSED TO THE MEMBERS O F THE CO-OPERATIVE SOCIETIES BUT RETAINED BY THE ASSESSEE. HE THEREUP ON CONCLUDED THAT THE ASSESSEE HAS RECEIVED ON-MONEY AT THE RATE OF RS.89 /- PER SQ. FT., AFTER DEDUCTING THE LEGITIMATE EXPENDITURE. CONSIDERING THE ASSESSMENT YEAR 2007-08, HE WORKED OUT THE ON-MONEY RATE BY REDUCIN G 12% FROM EARLIER ASSESSMENT YEARS AND WORKED OUT THE ON-MONEY TRANSA CTION OF VARIOUS YEARS AND WORKED OUT THE FIGURES AS UNDER:- ASSESSMENT YEAR ON MONEY RATE PER SQ. FT. SQ. FT. ON MONEY RECEIVED 2001-02 39 43752 1706328 2002-03 45 11056 497520 2003-04 51 16018 816918 2004-05 58 25213 1462354 IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 5 2005-06 69 0 0 2006-07 78 0 0 2007-08 89 8498 756322 TOTAL 29 104537 5239442 HE, AFTER CONSIDERING THE ON-MONEY RECEIVED BY THE ASSESSEE AND AFTER GIVING THE CREDIT FOR DISCLOSURE AND CASH DEP OSITION IN THE BANKS, WORKED OUT THE NET ADDITION OF RS.11,53,028/- AND A DDED TO THE INCOME. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A). THE LD. CIT (A) AFT ER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE DELETED THE ADDITI ONS BY HOLDING AS UNDER:- 2.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION O F THE LEARNED COUNSEL AS WELL ALSO GONE THROUGH THE FINDING RECOR DED IN THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED THE CASE LAWS RELIED UPON BY THE LD. COUNSEL. THE ASSESSING OFFICER HAD ADOP TED A VERY CASUAL APPROACH IN ESTIMATING THE INCOME FROM ON-MO NEY RECEIPTS FOR THE YEARS OTHER THAN A.Y. 2007-08. SHE HAD NOT TRI ED TO COLLECT AND BROUGHT ON RECORD ANY MATERIAL TO JUSTIFY THE ESTIM ATION OF ON-MONEY RECEIPTS. SHE HERSELF HAD NEITHER MADE ANY ENQUIRI ES FROM THE MEMBERS OF THE VARIOUS SOCIETIES REGARDING GIVING O F ON-MONEY TO THE ASSESSEE NOR COLLECTED ANY MATERIAL JUSTIFYING ANY RECEIPT OF ON- MONEY BY THE ASSESSEE FOR THE YEARS OTHER THAN THE A.Y. 2007-08. THE MATERIAL COLLECTED AND THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH RELATING TO THE A.Y. 2007-08 WERE THE ONL Y BASIS OF IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 6 ESTIMATION ON ON-MONEY RECEIPTS FOR EARLIER YEARS. THE ASSESSING OFFICER MADE THE ESTIMATION ON ON- MONEY RECEIPTS F OR ALL THE SEVEN YEARS ONLY ON THE BASIS OF EVIDENCE RELATING TO A.Y . 2007-08 OF TWO PLOTS ALLOTTED BY THE SOCIETY AND FOR WHICH THE ASS ESSEE HAD ADMITTED FOR THE RECEIPT OF ON-MONEY @RS.89/- PER SQ FT. T HERE IS NO ANY OTHER DOCUMENT REGARDING RECEIPT OF ON-MONEY RELATI NG TO OTHER YEARS EXCEPT FOR THE A.Y. 2007-08. SHE HAD IGNORED AT AL L THE SUBMISSION MADE BY THE APPELLANT WHILE FURNISHING REPLY TO SHO W CAUSE NOTICE U/S 142(1) OF THE ACT. DETAILED EXPLANATION WAS GIVEN VIDE PARA 8 OF THE SAID WRITTEN SUBMISSION. I AGREE WITH THE CONTENTI ON OF THE LD. COUNSEL THAT THE ASSESSING OFFICER HAD ESTIMATED TH E ON-MONEY PURELY ON HYPOTHETICAL AND IMAGINARY MANNER AND SHE HAD ALSO EXTRAPOLATED THE EVIDENCES FOUND FOR THE A.Y. 2007- 08 IN RESPECT OF TWO PLOTS SOLD AND RECEIPT OF ON-MONEY ADMITTED BY THE APPELLANT. THESE PLOTS WERE SOLD DURING THE A.Y. 2007-08 IN RE SPECT OF WHICH THE TOTAL ON-MONEY RECEIVED WAS ONLY RS.5.57 LACS AGAIN ST WHICH THE TOTAL DISCLOSURE OF INCOME MADE WAS AS HIGH AS RS.43.25 L ACS. THE ASSESSING OFFICER HAD PRESUMED THAT THE APPELLANT H AD RECEIVED ON- MONEY FOR ALL THE SEVEN YEARS INVOLVED WITHOUT ANY BASIS. APART FROM IT, SHE HAD ALSO ESTIMATED THE RATE OF ON MONEY REC EIVED IN THE EARLIER YEARS BY REDUCING @12% PER YEAR FROM THE ON-MONEY R ATE OF 2007- 08 FOR RS.89 PER SQ. FT. THERE IS NO BASIS OF IT. SHE HAD STATED IN THE ORDER THAT THE APPELLANT HAD ADMITTED THAT THE RATE IN EARLIER YEARS WAS RANGING FROM RS.15 TO 30 PER SQ. FT. BUT THE LD. CO UNSEL DENIED ABOUT SUCH ADMISSION. HE HAS SUBMITTED THAT NEITHER IT IS AVAILABLE IN ANY STATEMENTS NOR IN ANY OF THE SUBMISSIONS FILED BEFO RE THE ASSESSING OFFICER. I HAVE ALSO GONE THROUGH THE STATEMENTS S O RECORDED AND THE IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 7 SUBMISSIONS FILED BEFORE THE ASSESSING OFFICER BUT COULD NOT LAY HAND ON SUCH ADMISSION OR SUBMISSION OF RECEIPT OF ON-MO NEY RANGING FROM RS.15 TO 30 PER SQ. FT. IN EARLIER YEARS. IN MY VI EW, A PRESUMPTION CAN BE MADE FOR RECEIPT OF ON-MONEY IN OTHER YEARS ON T HE BASIS OF EVIDENCE COLLECTED DURING THE COURSE OF SEARCH FOR A.Y. 2007-08 BUT FOR ESTIMATING THE RECEIPTS OF ON-MONEY IN EARLIER YEARS, THE ASSESSING OFFICER HAD TO PROVE BY EVIDENCE THE SAID PRESUMPTION AND FOR WHICH THE ASSESSING OFFICER FAILED. THE APPELL ANT MAY HAVE CONTROL ON THE ADMINISTRATION OF THE SOCIETIES BY T HROUGH HIS OWN PERSONS BUT THAT IS NOT SUFFICIENT TO ESTIMATE THE RECEIPT OF ON-MONEY FOR ALL THE SEVEN YEARS. THERE SHOULD BE SUFFICIEN T MATERIAL ON RECORD INDICATING RECEIPT OF ON-MONEY FOR OTHER YEARS. TH E ESTIMATION OF ON- MONEY CANNOT BE MADE IN OTHER SIX YEARS ON THE BASI S OF A SINGLE EVIDENCE RECOVERED DURING THE COURSE OF SEARCH FOR A.Y. 2007-08. THE APPELLANTS CASE IS SQUARELY COVERED BY THE DEC ISION OF THE HONBLE AHMEDABAD TRIBUNAL IN THE CASE OF DY. CIT V S. ROYAL MARWAR TOBACOO PRODUCT (P.) LTD. [2009] 29 SOT 53 (AHD.) ( URO) WHEREIN IT WAS HELD THAT IT WAS UNDISPUTED THAT DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS NO EVIDENCE AND/OR M ATERIAL, INDICATING ANY SUPPRESSED SALES MADE BY THE ASSESSE E DURING THE ASSESSMENT YEARS 2000-01, 2001-02, 2002-03 AND 2003-04, WAS FOUND. NO MATERIAL WAS ALSO FOUND TO INDICATE T HAT THERE WAS ANY SUPPRESSED PRODUCTION IN THE AFORESAID ASSESSME NT YEARS. THE ASSESSING OFFICER ON FINDING THAT MATERIAL WAS SEIZED RELATING TO THE ASSESSMENT YEAR 2004-05 IN THE ABOV E SEARCH, INDICATING SUPPRESSED PRODUCTION AND SALES EXISTED IN THE ASSESSMENT YEAR 2004-05, PRESUMED THAT THERE MIGHT HAVE BEEN IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 8 SUPPRESSED PRODUCTION AND SALES IN THE ASSESSMENT Y EARS 2001- 02 TO 2003-04 ALSO. HENCE, HE TOOK THE CONSUMPTION OF ELECTRICITY AS BASIS AND ON FURTHER ASSUMPTION AND PRESUMPTION ARRIVED AT SOME SUPPRESSED PRODUCTION AND SALES FOR THE SAID ASSESSMENT YEARS. IT WAS NOT IN DISPUTE THAT NO DE FECT IN THE BOOKS OF ACCOUNT MAINTAINED FOR THE AFORESAID YEARS WAS FOUND. IN ABSENCE OF ANY MATERIAL BEING FOUND DURING THE S EARCH, RELEVANT TO THE AFORESAID ASSESSMENT YEARS, THE COM MISSIONER (APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION MA DE FOR THESE YEARS, ONLY ON THE BASIS OF ASSUMPTION AND SURMISES . IN THE CASE OF THE APPELLANT ALSO, NO MATERIAL RELATING TO RECEIPT OF ON-MONEY IN A.Y. 2001-02 TO A.Y.2005-06 WAS FOUND AND THEREF ORE, THE ESTIMATION ON ON-MONEY MADE BY THE ASSESSING OFFICE R FOR THE AFORESAID YEARS ON THE BASIS OF THE EVIDENCE OF SAL E OF TWO PLOTS AND RECEIPT OF ON-MONEY IN A.Y. 2007-08 IS PURELY ON AS SUMPTION AND SURMISES. THE EXTRAPOLATION OF THE EVIDENCE OF A.Y . 2007-08 TO THE AFORESAID YEARS AND ALSO THE PER SQ. FT. RATE AT WH ICH IT WAS ESTIMATED ARE WITHOUT ANY BASIS AND ON ANY MATERIAL. SIMILAR ISSUE WAS ALSO DECIDED BY ME IN THE CASE OF SMT. JAYABEN RATILAL S ORATHIA WHERE THE ADDITION MADE IN EARLIER YEAR WAS DELETED BY FOLLOW ING THE ABOVE DECISION VIDE ORDER DATED 21.10.2009 IN APPEAL NO.C IT(A)-IV/429- R/CENTRAL CIRCLE-1/0809. THE LD. COUNSEL HAS ALSO SUBMITTED THAT THE APPELLANTS TWO PERSONS THOUGH ELECTED BY THE MEMBE RS AS PRESIDENT AND SECRETARY, ARE ONLY RELATED TO DHARAMPUR AND VA SUDEV CO- OPERATIVE SOCIETIES. THE ASSESSING OFFICER WAS THU S NOT JUSTIFIED IN HOLDING THAT THE LAXMINARAYAN COOPERATIVE HOUSING S OCIETY WAS ALSO CONTROLLED BY THE APPELLANT BECAUSE THE TWO PERSONS AS ABOVE ARE NOT IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 9 ANY HOW RELATED TO ANY OTHER SOCIETIES. THE ASSESS ING OFFICER HAD IGNORED THIS FACT WHILE ESTIMATING THE ON-MONEY OF PLOTS SOLD BY THIS SOCIETY WITHOUT ASSIGNING ANY REASON. THE ASSESSIN G OFFICER HAD RELIED UPON THE STATEMENTS OF SHRI THAKURBHAI AND S HRI PRAVINBHAI BUT NO OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN T O THE APPELLANT EVEN ON REQUEST. THE THIRD PARTY STATEMENTS CANNOT BE USED AGAINST THE ASSESSEE WITHOUT GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELLANT. THE FACTS STATED BY THESE ABOVE PER SONS WERE NOT EVEN CORRECT BUT THE ASSESSING OFFICER HAD IGNORED THIS FACT IN HER ORDER. RELIANCE IS PLACED ON THE DECISIONS AS RELI ED UPON BY THE LEARNED COUNSEL AS ALSO ON THE DECISION OF THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. EMRALD CONSTRUCTI ON (P) LTD. 291 ITR 59 (RAJ.) 2.3 IN VIEW OF THE ABOVE DISCUSSION AND RESPECTFU LLY FOLLOWING THE DECISION OF THE HONBLE AHMEDABAD TRIBUNAL AS A LSO MY OWN FINDING IN THE CASE OF SMT. JAYABEN RATILAL SORATHI A AS REFERRED TO IN PARA 2.2 ABOVE, I AM OF THE OPINION THAT THE ASSESS ING OFFICER WAS NOT JUSTIFIED IN ESTIMATING THE RECEIPT OF ON-MONEY FOR THE YEAR UNDER CONSIDERATION AS NO ANY MATERIAL INDICATING THE REC EIPT OF ON-MONEY WAS AVAILABLE IN THE SEIZED MATERIAL NOR ANY SUCH M ATERIAL WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER. THE AS SESSING OFFICER WAS NOT HAVING ANY BASIS FOR ESTIMATING THE INCOME FROM ON-MONEY INCOME RECEIPTS BY APPLYING A RATE OF RS.39 PER SQ. FT. ON ALL THE PLOTS SOLD BY THE THREE SOCIETIES ON PAGE 11 OF THE ASSES SMENT ORDER. THE ESTIMATION OF INCOME FROM ON-MONEY RECEIPT AT RS.17 ,06,328/- WAS MADE ONLY ON THE BASIS OF ASSUMPTION AND SURMISES A ND THE SAME IS IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 10 HEREBY DELETED. THE ADDITION MADE FOR RS.11,53,028 IS THUS DELETED. THE FIRST, SECOND AND THIRD GROUNDS OF APPEAL ARE A CCORDINGLY ALLOWED. 6. AGGRIEVED BY THE AFORESAID ORDER OF THE LD. CIT (A), THE REVENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, THE LD. D.R. POINTED OUT TO THE STATE MENT OF THE ASSESSEE, WHICH WAS RECORDED DURING THE COURSE OF SEARCH, AND THE ASSESSMENT ORDER WHEREIN THE ASSESSEE IS ADMITTED TO RECEIVED ON-MON EY OF RS.120/- PER SQ. FT. ON THE SALE OF PLOT AND AFTER DEDUCTING THE PLO T MAINTENANCE EXPENSES, THE NET ON-MONEY INCOME WAS AT RS.89/- PER SQ. FT. HE FURTHER POINTED OUT TO THE STATEMENT OF PERSONS RECORDED AND STATED IN THE ASSESSMENT YEAR WHEREIN THOSE PERSONS HAD ADMITTED TO HAVE PURCHASE D THE PLOTS FROM THE ASSESSEE AT THE RATE OF RS.189/- PER SQ. FT. AND AT RS.170/- PER SQ. FT. WHICH PROVES THAT THE ASSESSEE WAS SELLING THE PLOTS AT A HIGHER PRICE. HE FURTHER SUBMITTED THAT SINCE THE ASSESSEE IS HAVING SUBSTAN TIAL INFLUENCE IN CONTROL AND MANAGEMENT OF THE CO-OPERATIVE SOCIETIES, THE A SSESSEE WAS ENJOYING OFFICE OF PROFIT AND THE ON-MONEY RECEIVED FROM THE SALE OF PLOT WAS TO THE ACCOUNT OF ASSESSEE. HE FURTHER SUBMITTED THAT THE RETRACTION OF THE ASSESSEE WAS NOT PROPERLY SUPPORTED AND FURTHER THE ASSESSEE NEVER ASKED FOR AN OPPORTUNITY TO CROSS-EXAMINE THE OTHER PERSONS WHOSE STATEMENTS WERE RECORDED AT THE TIME OF SEARCH. THE LD. D.R. HAS ALSO PUTS RELIANCE ON THE JUDGMENT IN THE CASE OF HOTEL KUMAR PALACE VS CIT (2006) 283 ITR 110 AND RAJNIK & CO. VS ACIT (2001) 251 IT R 561 (AP). IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 11 8. ON THE OTHER HAND, THE LD. A.R. SUBMITTED TH AT THE ADDITIONS HAVE BEEN MADE ONLY ON THE BASIS OF THE ESTIMATION OF ON MONEY RECEIVED FROM THE EARLIER YEARS. THE ASSESSING OFFICER HAS NOT B ROUGHT ON RECORD ANY TANGIBLE EVIDENCE FOR SUPPORTING THE ADDITIONS MADE . HE THUS SUPPORTED THE ORDER OF LD. CIT (A) AND FURTHER PLACED RELIANC E ON THE DECISION OF AHMEDABAD TRIBUNAL IN ITA NO.1945 OF 2007 IN THE CA SE OF M/S. DHARA ASSOCIATES. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORDS. IN THE PRESENT CASE, THE ASSESSING OFFICE R HAS MADE THE ADDITIONS ON THE BASIS OF MATERIAL COLLECTED AND ST ATEMENT RECORDED DURING THE COURSE OF SEARCH RELATING TO ASSESSMENT YEAR 2007-08. BEFORE A.O., THERE WAS NO OTHER DOCUMENTS TO SUPPOR T THE RECEIPT OF ON- MONEY EXCEPT FOR THE ASSESSMENT YEAR 2007-08. THE LD. CIT (A), WHILE DELETING THE ADDITIONS, HAS GIVEN THE FINDING THAT THE ASSESSING OFFICER HAS NOT COLLECTED AND BROUGHT ON RECORD ANY MATERIA L TO JUSTIFY THE ESTIMATE OF ON-MONEY RECEIPT. FURTHER NO ENQUIRIES WERE MADE FROM THE MEMBERS OF THE VARIOUS SOCIETIES REGARDING THE GIVI NG OF ON-MONEY TO THE SOCIETIES FOR THE YEARS OTHER THAN ASSESSING YE AR 2007-08. HE FURTHER HELD THAT THE ASSESSING OFFICER HAS ESTIMAT ED THE ON-MONEY PURELY ON HYPOTHETICAL AND IMAGINARY MANNER AND HAS EXTRAPOLATED THE EVIDENCE FOUND FOR ASSESSMENT YEAR 2007-08 IN RESPE CT OF 2 PLOTS SOLD AND ON RECEIPT OF THE ON-MONEY RECEIVED BY THE ASSE SSEE. HE FURTHER HELD THAT THE ASSESSING OFFICER HAS PRESUMED THAT T HE ASSESSEE HAS RECEIVED ON-MONEY FOR ALL THE SEVEN YEARS IN ALL WI THOUT ANY BASIS. HE HAS FURTHER NOTED THAT THE ASSESSING OFFICER HAD RE LIED UPON THE STATEMENTS OF SHRI THAKURBHAI RAMCHANDRA AND SHRI P RAVINBHAI IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 12 BAKORBHAI PATEL BUT NO OPPORTUNITY OF CROSS-EXAMINA TION WAS GIVEN TO THE ASSESSEE EVEN THOUGH THE ASSESSEE HAD MADE A RE QUEST. NOTHING HAS BEEN BROUGHT ON RECORD BY REVENUE TO CONTROVERT THE FINDINGS OF THE CIT (A). THE CASE LAWS RELIED BY REVENUE ARE DI STINGUISHABLE ON FACTS. IN VIEW OF THE FOREGOING WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). THUS THIS GROUND OF APPE AL OF THE REVENUE IS DISMISSED. ITA NO. 260/A HD/2000 THE EFFECTIVE GROUNDS OF APPEAL RAISED BY REVENUE READS AS UNDER:- [I] THE CIT(A) HAS ERRED IN LAW AND FACTS AND CIRC UMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 10,62,354/ - ON ACCOUNT OF MONEY RECEIPTS ON SALE OF PLOTS OF CO. OP. HOUSI NG SOCIETIES. [II] THE CIT(A) HAS ERRED IN LAW AND FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 5,00,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN FDRS WITH ICICI BANK. 10. AT THE OUTSET , BEFORE US BOTH THE PARTIES SUBM ITTED THAT THE FACTS AND DISPUTE RAISED IN GROUND NO. 1 IS IDENTIC AL TO THAT OF GROUND NO. 1 OF ITA NO. 259/AHD/2010 (A.Y. 2001-02 ) THE SUBMISSIONS MADE BY THEM FOR A.Y. 2001-02 ARE ALSO APPLICABLE TO THE GROUND BEFORE US. WE HAVE HEARD T HE RIVAL SUBMISSIONS. SINCE ADMITTED BY BOTH THE PARTIES BE FORE US THAT THE FACTS OF THE CASE UNDER APPEAL ARE IDENTIC AL TO THAT A.Y. 2001-02 EXCEPT FOR THE AMOUNTS WE FOR THE REAS ONS GIVEN WHILE DECIDING THE APPEAL FOR ASSESSMENT YEARS 2001 -02 (ITA IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 13 NO. 259/AHD/2010) ALSO DISMISS THIS GROUND OF APPEA L OF THE REVENUE. GROUND NO. (II) : ASSESSMENT YEAR 2004-05 IS WITH RESPECT TO INVESTMENT IN FDRS:- 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF BOOKS OF ACCOUNTS, THE ASSESSING OFFICER NOTICED TH AT THE ASSESSEE HAS SHOWN INVESTMENT IN FIXED DEPOSIT WITH ICICI BA NK OF RS.5 LACS FOR A.Y. 2004-05. HE FURTHER SUBMITTED THAT THERE WAS NO SUCH INVESTMENT IN THE IMMEDIATE PROCEEDING YEAR AND THE REFORE, THE ASSESSEE HAS MADE INVESTMENT FOR THE FIRST TIME. T HE ASSESSEE WAS, THEREFORE, ASKED TO EXPLAIN THE SOURCE OF INVESTMEN T OF RS.5 LACS. IN THE ABSENCE OF ANY EVIDENCE, THE ASSESSING OFFICER HELD THAT THE FIXED DEPOSIT OF RS.5 LACS WAS AN UNEXPLAINED INVE STMENT AND ACCORDINGLY MADE AN ADDITION OF RS.5 LACS. 12 AGGRIEVED BY THE AFORESAID ORDER OF ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). BEFORE L D. CIT(A), THE ASSESSEE INTER-ALIA SUBMITTED THAT THE INVESTMENTS WERE RECORDED IN THE BOOKS OF ACCOUNTS AND WAS ALSO DISCLOSED IN TH E WEALTH TAX RETURN AND AS SUCH THE SAME CANNOT BE CONSIDERED AS UNEXPLAINED INVESTMENT. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITIONS BY HOLDING AS UNDER :- 3.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION O F THE LD. COUNSEL AS WELL AS THE FACTS OF THE CASE. THIS ADDITION OF RS.5,00,000, WAS MADE FOR THE FDR DISCLOSED IN THE BALANCE-SHEET AND PART OF THE REGULAR BOOKS OF ACCOUNT. THE ASSESSING OFFICER HA D PICK UP AND IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 14 CHOOSE ONE ITEM OF RS.5,00,000/- AND MADE THE ADDIT ION WITHOUT EXAMINING THE BALANCE-SHEET AND THE CAPITAL ACCOUNT . IT IS EVIDENT FROM THE BALANCE-SHEET THAT AMOUNT IN CERTAIN ITEMS OF BALANCE-SHEET WERE DECREASED WHICH HAD INCREASED THE FIGURES OF I NVESTMENT. THE INVESTMENT WAS INCREASED DUE TO THE DECREASE IN THE FIGURES OF INVESTMENT OF UTI NOT APPEARING IN THIS YEAR AND ON ACCOUNT OF ACCRETION TO CAPITAL. THUS, IT IS CLEAR THAT THE N EW INVESTMENT IS THE SUBSTITUTION OF OLD INVESTMENTS AND THE ADDITION IN THE CAPITAL. SINCE, ALL THE TRANSACTIONS ARE RECORDED IN THE BOOKS OF A CCOUNTS, IT WAS WRONG ON THE PART OF THE ASSESSING OFFICER TO TREAT THE INVESTMENT AS UNEXPLAINED. THE APPROACH OF THE ASSESSING OFFICER WAS NOT CORRECT AND CONTRARY TO THE PROVISIONS OF LAW. IF ADDITION HAD BEEN STARTED ON THE BASIS OF INCREASE IN ANY ITEM OF THE BALANCE-SH EET, THEN THERE IS NO NEED TO EXAMINE THE PROFIT AND LOSS ACCOUNT OR T HE BOOKS OF ACCOUNT. JUST PICK UP THE ITEMS FROM THE BALANCE S HEET WHERE THERE IS AN INCREASE COMPARED TO EARLIER YEAR AND MAKE TH E ADDITION TREATING THE SAME AS UNEXPLAINED. THE ADDITION WAS THUS NOT MADE BY PROPERLY APPRECIATING THE FACTS AND THE SAME IS HEREBY DELETED. THE FOURTH GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 13. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE R EVENUE IS NOW IN APPEAL BEFORE US. BEFORE US, THE LD. D.R. SUBMITTE D THAT NO EXPLANATION WAS SUBMITTED BEFORE THE ASSESSING OFFI CER WITH RESPECT TO THE INVESTMENT. FURTHER NO FUND FLOW STATEMENT WAS ALSO SUBMITTED BY THE ASSESSEE TO PROVE ITS CONTENTION THAT THE IN VESTMENTS WERE OUT OF THE REALIZATION OF OTHER DEPOSITS AND ADVANCES. HE THUS SUPPORTED THE ORDER OF ASSESSING OFFICER. IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 15 14. THE LD. A.R., ON THE OTHER HAND, SUBMITTED TH AT THE FIXED DEPOSITS WERE ALREADY DISCLOSED IN THE WEALTH TAX RETURNS AN D WERE INCLUDED IN THE BOOKS OF ACCOUNTS AND THEREFORE CANNOT BE TERME D AS UNEXPLAINED INVESTMENTS. HE PLACED ON RECORD AT PA GE 112 OF THE PAPER BOOK, THE DETAILS OF INVESTMENTS TO DEMONSTRA TE THE DISCLOSURE OF FIXED DEPOSITS WITH ICICI BANK. HE THUS SUPPORT ED THE ORDER OF THE LD. CIT (A). 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORDS. THE LD. CIT(A), WHILE DELETING THE ADD ITIONS, HAS GIVEN THE FINDINGS THAT THE FDR OF RS.5 LACS WAS DISCLOSE D BY THE ASSESSEE IN THE BALANCE-SHEET AND WAS ALSO PART OF THE REGUL AR BOOKS OF ACCOUNT. HE HAS FURTHER HELD THAT THE NEW INVESTME NTS WERE THE SUBSTITUTION OF OLD INVESTMENTS AND THE ADDITION IN THE CAPITAL ACCOUNT. NOTHING HAS BEEN BROUGHT ON RECORD BY REVENUE TO CO NTROVERT THE FINDING OF THE LD. CIT(A) AND WE, THEREFORE, FIND N O REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). THUS WE UPHOLD THE O RDER OF LD. CIT (A) AND ACCORDINGLY THIS GROUND OF THE REVENUE IS DISMI SSED. ITA NO. 261/AHD/2010 THE EFFECTIVE GROUNDS RAISED IN THIS APPEAL READ A S UNDER:- [1] THE CIT(A) HAS ERRED IN LAW AND FACTS AND CIRC UMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 13,11,650/- ON ACCOUNT OF ON MONEY RECEIPTS/CASH DEPOSITS OUT OF RS. 14,01,650/- [II] THE CIT(A) HAS ERRED IN LAW AND FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 13,00,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN FDRS. IT (SS) NOS.259, 260, 261OF 2010 . A.Y. : 2001 -02, 04-05, 05- 06 16 16. AT THE OUTSET ,BEFORE US BOTH THE PARTIES SUBMI TTED THAT THE FACTS AND DISPUTE RAISED IN ABOVE GROUND IS IDENTICAL TO THAT OF GROUND NO. 1 OF ITA NO. 260/AHD/2010 (A.Y. 2004-05) THE SUBMI SSIONS MADE BY THEM FOR A.Y. 2004-05 ARE ALSO APPLICABLE TO THE GR OUND BEFORE US. WE HAVE HEARD THE RIVAL SUBMISSIONS. SINCE ADMITTE D BY BOTH THE PARTIES BEFORE US THAT THE FACTS OF THE CASE UNDER APPEAL ARE IDENTICAL TO THAT A.Y. 2004-05 EXCEPT FOR THE AMOUNTS WE FOR THE REASONS GIVEN WHILE DECIDING THE APPEAL FOR ASSESSMENT YEARS 2004 -52 (ITA NO. 260/AHD/2010) ALSO DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 17. THUS ALL THE THREE APPEALS OF REVENUE ARE DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 17 -05 - 2013. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY BIJU COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD