Chandansingh P.Champavat, Gandhinagar V. The ACIT.,GNR Circle-, Gandhinagar

ITSSA 30/AHD/2008

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7577 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-02-2012
• Assessment Year: misc
• Appeal Filed On: 01-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B K
• Assessee Lawyers: S N SOPARKAR
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure; Opportunity of being heard; Corroborative evidences; Block assessment
• Section: 68

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , . .!'#$, % & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ./ I.T(SS).A. NO.30/AHD/2008 (BLOCK PERIOD FROM 01.4.1985 TO 31.3.1986 TO 01.4.1 994 TO 31.03.1995 & 01.4.1995 TO 05.09.1995) CHANDANSINGH P.CHAMPAVAT PLOT NO.140, SECTOR-8 GANDHINAGAR ( (( ( / VS. THEACIT GANDHINAGAR CIRCLE GANDHINAGAR ) % ./*+ ./ PAN/GIR NO. : AAHPC 0833 G ( ), / // / APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY : SHRI S.N.SOPARKAR, SR.ADV. -.), 0 / / RESPONDENT BY : SHRI B.K.S.PANDYA, CIT-D.R. (1 0 2% / / / / DATE OF HEARING : 02/02/2012 3'4 0 2% / DATE OF PRONOUNCEMENT : 20/4/12 5 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER OF THE AO PASSED U/S.158BC/250 OF I T ACT DATED 28.12.2007. THE AO HAS NOTED AT THE OUTSET THAT T HE IMPUGNED ASSESSMENT IS A SET ASIDE ASSESSMENT. GROUND-WIS E ADJUDICATION IS AS UNDER. 2. GROUND NOS.1 & 3 READ AS UNDER:- IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 2 - 1) THE BLOCK ASSESSMENT ORDER PASSED U/S.158BC R.W .S. 250 OF I.T. ACT BY THE ASSESSING OFFICER IS BAD IN LAW MOR E SO WHEN THE ASSESSMENT HAS BEEN FRAMED ON THE ISSUES WHICH WERE NOT SUBJECT MATTER OF SET ASIDE BY THE HONBLE TRI BUNAL . THE SAME DESERVES TO BE UNCALLED FOR. 3) THE ASSESSING OFFICER HAS ERRED IN LAW AND FACTS IN MAKING ADDITION OF RS.24,69,854 U/S.68 OF I.T.ACT . THE SAME DESERVES TO BE DEL4ETED. 2.1. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 05/09/1995 . THE APPELLANT IS A MANAGING DIRECTOR IN M/S.SHRI ARAVALI FINLEASE LTD. THE ASSESSEE IS A LSO RUNNING PROPRIETARY BUSINESS OF TWO CONCERNS; NAMELY, M/S.RANSI ROADWAY S AND M/S.RANSI TOURS & TRAVELS. THIS CASE HAS CHEQUERED PAST A S UNDER:- (I) ORIGINALLY AN ASSESSMENT WAS MADE BY DCIT, RANGE-1, AHMEDABAD ON 30/09/1996 ON AN UNDISCLOSED INCOME OF RS.2,16,15,563/-. (II) VIDE ITAT ORDER AHMEDABAD A BENCH BEARING ITA NO.4484/AHD/1996 DATED 29/09/1997 THE MATTER WAS SET ASIDE. (III) AN ASSESSMENT, SECOND TIME, WAS MADE AS PER THE DIRECTIONS OF THE ITAT VIDE AN ORDER DATED 31/03/2000 ON AN UNDISCLOSED INCOME OF RS.57,02,200/-. (IV) THAT SET ASIDE BLOCK ASSESSMENT WAS CHALLENGED BEF ORE ITAT AND VIDE ITAT A BENCH ORDER DATED 04/08/2006 THE MATTER WAS AGAIN RESTORED BACK TO THE FILE OF T HE AO FOR FRESH ADJUDICATION AS PER DIRECTIONS. (V) THE IMPUGNED ORDER , THIRD TIME, DATED 28/12/2007 IS THE CONSEQUENCE OF THE SAID ORDER OF THE TRIBUNAL AND, THEREFORE, THE AO HAS PASSED THIS IMPUGNED ORDER U/S.158BC R.W.S.250 OF IT ACT. IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 3 - 2.2. THE FIRST BLOCK ASSESSMENT WAS MADE U/S.158BC VIDE AN ORDER DATED 30/09/1996. THE ADDITIONS MADE THROUGH THIS ASSESSMENT ORDER ARE SUMMARIZED AS UNDER, ( SIDE BY SIDE, FOR THE SAKE O F CLARITY, THE RESULT OF ITAT ORDER IS MENTIONED):- SR.NO. PARTICULARS TOTAL UNDISCLOSED INCOME ASSESSED U/S.158BC ITAT ORDER DATED 29/09/97 1. INCOME DISCLOSED IN RETURN AS PER PAGE 51 INCOME DISCLOSED IN RETURN AS PER PAGE-52 40290 1082920 1123210 2. ADD.OF UNEXPLAINED INV.IN PURCHASE OF LAND AND OFFICE AS PER PARA 9 (PAGE-28) 1365000 3. UNEXPL.INV IN SHARE OF SAFL PARA 14 (PAGE 47) 13500000 4. INVESTMENT IN SHARE CAPITAL OF RANSI TOUR & TRAVEL AND RANSI ROADWAYS PARA 15 AS PER PAGE 53 AS PER PAGE 53 AS PER PAGE 54 920469 690448 839475 2450392 - SET ASIDE 5. UNEXPLAINED INVESTMENT AS PER PARA 8 (PAGE 22) 1529600 - DELETED 6. ADD.OF UNEXPLAINED INV.IN PURCHASE OF LAND AND OFFICE AS PER PARA 10 (PAGE 31) 825250 - DELETED 7. UNEXPLAINED CASH (PAGE 15) 27947 - DELETED 8. UNEXPLAINED JEWELLERY (PAGE 15) 172244 - DELETED 9. UNEXPLAINED INVESTMENT AS PER PARA 11 (PAGE 34) 121000 - DELETED 10. UNEXP PREMIUM PARA 13 (PAGE 36) 25000 - DELETED 11. UNEXP EXPENSE PARA 12 (PAGE 35) 75920 - DELETED 12. INVESTMENT IN RES.HOUSE PARA 6 (PAGE 13) 400000 - DELETED TOTAL UNDISCLOSED INCOME FOR THE BLOCK PERIOD 2,16,15,563 IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 4 - 2.3. TO DECIDE THE ABOVE REPRODUCED GROUND, WE HAVE ALSO PERUSED THE FIRST ORDER OF THE TRIBUNAL DATED 29/09/1997 , WHEREIN VIDE PARA-12, 12.1 AND 12.2 THE MATTER WAS RESTORED BACK TO THE F ILE OF THE AO AND FOR READY REFERENCE, REPRODUCED BELOW:- 12. THE NEXT TWO GROUNDS OF APPEAL (NOS.11 AND 12 ) RELATE TO ADDITIONS OF RS.10,78,906/- A BEING INVESTMENT IN T HE CAPITAL OF M/S.RANSI TOURS& TRAVELS AND RS.13,71,486/- BEING T HE INVESTMENT IN THE CAPITAL OF M/S.RANSI ROADWAYS. THE ASSESSING OFFICER IN HIS ORDER HAS HIMSELF OBSERVED THAT THE APPELLANT HAD ADMITTED THE INVESTMENTS IN THE TWO FIRMS IN BENAMI NAMES AS HIS OWN AND THAT SUCH INVESTMENTS AND PROFITS THEREON HAVE BEEN SHOWN IN THE REGULAR RETURNS OF THE ASSESSEE BUT HI S BASIS FOR MAKING THESE ADDITIONS ARE THAT SUCH INVESTMENTS AR E NOT RECORDED IN THE BOOKS AND THE ASSESSEE OFFERED NO EXPLANATIO N FOR THE SOURCE OF INVESTMENTS. 12.1. THE ASSESSEES COUNSEL SUBMITTED THAT THE ENT IRE TRANSACTIONS IN THE NAMES OF THE TWO FIRMS WERE CONSIDERED BY TH E ASSESSEE IN HIS REGULAR RETURNS OF INCOME FOR RESPECTIVE YEARS AND THE COPIES OF SUCH PROFIT & LOSS ACCOUNT AND BALANCE SHEET WERE ALSO ENCLOSED WITH THE REGULAR RETURNS AS WELL AS THE RE TURN FOR THE BLOCK PERIOD. IT WAS ALSO SUBMITTED THAT THE ADDITION TO THE CA PITAL ACCOUNT IN FACT WAS ONLY TO THE TUNE OF RS.31,280/- AND NOT AS MUCH AS CLAIMED BY THE A.O. AS FAR AS BALANCE OF AMOUNT S ARE CONCERNED, THE SAME HAVE ALSO BEEN SHOWN BY THE ASS ESSEE IN THE REGULAR RETURN OF INCOME. 12.2. WE FIND THAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE THE INVESTMENTS MADE IN THE NAMES OF TWO FIRMS HAVE ALS O BEEN CONSIDERED AND FROM THE ASSESSMENT ORDER IT APPEARS THAT THE ISSUE HAS NOT BEEN EXAMINED BY THE AO AND A RECTIFICATION APPLICATION U/S.154 IS STILL PENDING BEFORE THE AO . WE ARE TH EREFORE OF THE OPINION THAT THE ISSUE REGARDING THE ADDITION OF RS.10,78,906/- IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 5 - AND RS.13,71,486/- REGARDING THE INVESTMENTS MADE I N M/S.RANSI TOURS & TRAVELS AND RANSI ROADWAYS REQUIRES FRESH INVESTIGATION. THE ASSESSMENTS ON THE ABOVE TWO GROUNDS ARE THEREFORE SET ASIDE AND RESTORED TO THE FILE OF THE AO WITH A DIRECTION TO HIM TO CONSIDER THEM AFRESH AND AN ORD ER MAY BE PASSED AFTER GIVING AN OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. 2.4. THEREAFTER, IN CONSEQUENCE OF THE DIRECTIONS O F THE TRIBUNAL, IN THE SECOND ROUND, A BLOCK ASSESSMENT WAS MADE U/S.158 BC VIDE AN ORDER DATED 31/03/2000. AS PER THIS ASSESSMENT ORDER, FOLLOWING ADDITIONS HAVE BEEN MADE :- SR.NO. PARTICULARS TOTAL ASSESSED INCOME U/S.158BC (SET ASIDE) DATED 31.03.2000 UNEXPLAINED INCOME AS PER ITAT ORDER GIVING EFFECT ORDER DATED 01.01.1998 1947540 ADD: (I) UNEXPLAINED INVESTMENTS IN CONCERNS M/S.RANSI ROADWAYS & RANSI TOUR & TRAVELS PROFITS OF BOTH THE CONCERNS FOR AY 94-95 & AY 95-96 507066 (II) CAPITAL INTRODUCTIONS IN BOTH THESE CONCERNS FOR AY 94-95 & AY 95-96 777739 (III) UNEXPLAINED CREDITS IN THE BOOKS OF ABOVE TWO CONCERNS 2469854 (IV) INVESTMENT IN SHARE APPLICATION OF SAFL - TOTAL 3754659 TOTAL ASSESSED INCOME 5702199 IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 6 - 3. IN THE LIGHT OF THE ABOVE FACTUAL BACKGROUND, TH E VEHEMENT CONTENTION OF THE APPELLANT IS THAT IN THIS ASSESSM ENT ORDER AN ALTOGETHER NEW ADDITION OF RS.24,69,854/- WAS MADE UNDER THE H EAD UNEXPLAINED CASH CREDIT U/S.68 OF IT ACT. THIS ADDITION WAS TOTALLY UNCALLED- FOR DUE TO THE BASIC REASON THAT IN THE F IRST ROUND OF ASSESSMENT NO SUCH ADDITION WAS MADE, THEREFORE IT WAS NOT A S UBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL HAS SET A SIDE THE ISSUE OF INVESTMENT IN CAPITAL OF M/S.RANSI TOURS & TRAVELS OF RS.10,78,906/- AND INVESTMENT IN THE CAPITAL OF M/S.RANSI ROADWAY S OF RS.13,71,486/-. IT WAS CLARIFIED BY THE LD.AR THAT AS FAR AS THE IM PUGNED BLOCK ASSESSMENT ORDER NOW UNDER APPEAL DATED 28/12/2007 IS CONCERNED, THE SAID ADDITION OF RS.24,69,854/- WAS REPEATED IN A M ECHANICAL MANNER AS UNEXPLAINED CREDIT BALANCES, THOUGH IT WAS VERY M UCH BEYOND THE JURISDICTION. LD.AR HAS CITED FOLLOWING DECISIONS :- SL.NO(S). IN THE CASE OF .. REPORTED IN 1. SAHELI SYNTHETICS P.LTD. VS. CIT 302 ITR 126(GUJ .) 2. DY.CIT (ASSTT.) VS. SURAT ELECTRICITY CO.LTD. 337 ITR 271 (GUJ.) 3. DY.CIT VS. TOLLYGUNJ CLUB IN APPEAL NO.1555 (CAL.) OF 1990 (A.Y.1977-78) DATED 28/10/1994 [ITAT CALCUTTA BENCH D] 3.1. LD.AR HAS ALSO CLARIFIED THAT IN BETWEEN AN ANOTHER ORDER WAS PASSED BY THE HONBLE TRIBUNAL DATED 04/08/2006(SUP RA), BUT IN THAT ORDER THE ONLY SHORT ISSUE DECIDED WAS ABOUT THE OB TAINING OF THE IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 7 - APPROVAL BY A COMPETENT REVENUE AUTHORITY, HENCE TH ERE WAS NO OCCASION TO DISCUSS ANY OTHER ISSUE IN RESPECT OF T HE SAID NEW QUANTUM ADDITION. THE TRIBUNAL HAS RESTORED THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION ONLY ON THE BASIS OF THE TECHNIC AL GROUND FOR SEEKING OF CORRECT APPROVAL FROM THE CONCERNED AUTHORITY. 3.2. AT THIS JUNCTURE, IT IS WORTH TO REPRODUCE THE ADDITIONS MADE BY THE AO IN THE IMPUGNED ORDER NOW CHALLENGED BEFORE US D ATED 28/12/2007 AS UNDER:- UNDISCLOSED INCOME AS PER APPEAL EFFECT ORDER DATED 01/01/1998 RS.19,47,540/- ADD PROFIT SHOW IN THE CONCERNS M/S.RANSI ROADWAYS & RANSI TOURS & TRAVELS AS DISCUSSED IN PARAGRAPHS 6 TO 6.4. RS. 5,07,066/- ADDITION TO CAPITAL IN M/S.RANSI ROAD & RANSI TOURS & TRAVELS AS DISCUSSED IN PARAGRAPHS 7 TO 7.3. RS. 7,77,739/- TOTAL UNEXPLAINED CREDIT BALANCES AS DISCUSSED IN PARAGRAPHS 8 TO 8.22 RS.24,69,854/- TOTAL UNDISCLOSED INCOME RS.57,02,199/- OR ROUNDED OFF RS.57,02,200/- 4. FROM THE SIDE OF THE REVENUE, LD.DR MR.B.K.S.PAN DYA, CIT APPEARED AND ARGUED THAT THE ADMITTED FACTUAL POSIT ION WAS THAT THE ASSESSEE WAS RUNNING BENAMI BUSINESS OF TWO CONCERN S; NAMELY, RANSI TOURS & TRAVELS AND RANSI ROADWAYS. THE ASSESSEE HAS ADMITTED THIS FACT THAT THE INVESTMENT IN THE SAID TWO CONCERNS, NAMELY M/S.RANSI IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 8 - TOURS & TRAVELS AND M/S.RANSI ROADWAYS, PROPRIETORS HIP CONCERNS, WAS MADE IN THE NAME OF A BENAMI PERSON SHRI LAKSHMANSI NGH BHATI, HOWEVER IT WAS THE INVESTMENT OF THE ASSESSEE. DU E TO THE SAID REASON, THE AO HAS INITIATED THE ENQUIRY AND ISSUED A SHOW- CAUSE AS TO WHY THE CAPITAL OF ONE SHRI LAKSHMANSINGH IN THE SAID TWO C ONCERNS BE NOT HELD AS UNACCOUNTED INVESTMENT OF THE ASSESSEE. THE TR IBUNAL HAS THEREFORE DIRECTED TO INVESTIGATE THE INVESTMENT IN THE SAID TWO CONCERNS. ACCORDING TO THE ARGUMENT OF THE LD.DR, THE CASH C REDITS WHICH WERE EITHER BOGUS OR UNPROVED WERE NOTHING BUT IN THE NATURE OF INVESTMENT BY THE ASSESSEE. THE HONBLE ITAT HAS SET ASIDE TH E MATTER TO INVESTIGATE THE INVESTMENTS MADE IN THE SAID TWO CO NCERNS. HENCE, THE CASH CREDITS BEING PART OF THE INVESTMENT, THEREFOR E VERY MUCH COVERED BY THE DIRECTIONS OF THE TRIBUNAL AND THE AO HAS NOT A CTED BEYOND HIS JURISDICTION IN ANY MANNER. THE AO HAS IN CONSEQU ENCE THEREOF ENQUIRED YEAR-WISE POSITION OF LOANS AND ADVANCES. IN THE ABSENCE OF REQUISITE EVIDENCES ABOUT THE CREDITWORTHINESS OF T HE DEPOSITORS, THE AO HAS FINALLY ARRIVED AT THE CONCLUSION THAT THE SAID AMOUNT WAS THE ASSESSEES UNDISCLOSED INCOME AND TAXED THE SAME U/ S.68 OF IT ACT. 5. HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE COMPILATION FILED. WE HAVE ALSO PERUSED THE ORDERS OF THE RESPECTED CO-OR DINATE BENCHES PASSED PREVIOUSLY IN THE CASE OF THIS APPELLANT. AT PRESENT, WE ARE ONLY CONCERNED IN RESPECT OF AN ADDITION MADE U/S.68 OF IT ACT OF RS.24,69,854/-. HEREINABOVE, WE HAVE REPRODUCED T HE ADDITIONS MADE IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 9 - BY THE AO IN THE FIRST ASSESSMENT ORDER DATED 30/09 /1996. AS PER THE HEAD-WISE DETAILS OF THE ADDITIONS, WE HAVE NOTED T HAT THERE WAS NO SUCH ADDITION OF RS.24,69,854/- WHICH HAD LATER ON CROP PED UP IN THE SUBSEQUENT BLOCK ASSESSMENT ORDERS, THOSE ARE DATED 31/03/2000 AND 28/12/2007 (UNDER APPEAL). IN THE ORDER DATED 31/ 03/2000, THE AO HAS STARTED THE INVESTIGATION BY ISSUING A SHOW-CAUSE N OTICE DIRECTING THE ASSESSEE TO EXPLAIN THE LIABILITY SIDE OF THE SAID TWO PROPRIETARY-CONCERNS, WHEREIN IT WAS SHOWN NEW LOANS AND ADVANCES FROM CE RTAIN PARTIES, THE AO HAS LISTED THE NAMES OF THOSE PARTIES ON YEAR-WI SE BASIS. THE AO WANTED THE ASSESSEE TO INFORM NAMES, ADDRESSES, MOD E OF LOANS, DETAILS OF BANK, THE PANS OF THE PARTIES, ETC., IN SHORT, THE INFORMATION AS REQUIRED U/S.68 OF IT ACT. THE YEAR-WISE CONSOLIDATED LOAN S AND ADVANCES WERE STATED TO BE AS FOLLOWS:- 1. RANSI TOURS & TRAVELS : A.Y. 1994-95 : RS.2,90,732/- A.Y. 1995-96 : RS.3,32,147/- 2. RANSI ROADWAYS : A.Y. 1994-95 : RS.8,78,219/- A.Y. 1995-96 : RS.9,68,756/- RS.24,69,854 5.1. IN THE OPINION OF THE AO, SINCE THE ASSESSEE H AD NOT PROVED THAT THE SAID MONEY WAS RECEIVED FROM THE CUSTOMERS WITH NEC ESSARY SUPPORTING EVIDENCES, IT WAS HELD THAT THE SAID AMOUNT WAS AN UNEXPLAINED CASH CREDIT U/S.68 OF IT ACT. THAT WAS THE FUNDAMENTAL REASON OF THE VEHEMENT OBJECTION OF THE APPELLANT THAT NO SUCH AD DITION HAD EVER BEEN MADE IN THE PAST BY THE AO WHEN FOR THE FIRST TIME THE BLOCK ASSESSMENT WAS MADE ON 30.9.96 AND THAT NO SUCH DIRECTIONS WER E EVER GIVEN BY THE TRIBUNAL VIDE ITS FIRST ORDER DATED 29/09/1997. T HERE WAS NO JUSTIFICATION OR JURISDICTION ON THE PART OF THE AO TO INITIATE A N ALTOGETHER NEW HEAD OF IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 10 - INCOME TO TAX THE SAME IN THE HANDS OF THE ASSESSEE WHILE PASSING AN ORDER GIVING THE EFFECT OF AN APPELLATE ORDER. 5.2. AT THIS JUNCTURE, IT MAY NOT BE OUT OF PLACE T O MENTION THAT THE BLOCK ASSESSMENT ORDER DATED 31/03/2000 IS NOT THE ASSESSMENT ORDER IN APPEAL BEFORE US, BUT WE HAVE TO GO TO THE ROOT OF THE MATTER AND TO EXAMINE THE START POINT OF THE DISPUTE. THE SAID ORDER WAS CHALLENGED BEFORE THE TRIBUNAL BUT ON A LIMITED ISSUE OF JURIS DICTION BECAUSE AT THAT TIME THE CORRECT APPROVAL FROM THE CORRECT PRESCRIB ED REVENUE AUTHORITY WAS NOT TAKEN BY THE AO. ON THAT LIMITED ISSUE, TH E MATTER WAS RESTORED BACK BY THE TRIBUNAL VIDE ORDER DATED 04/08/2006. HENCE, AT THAT POINT OF TIME, THE APPELLANT HAD NO OCCASION TO CONTEST THE IMPUGNED ADDITION AND THE LEGALITY OF THE SAID ADDITION. AT PRESENT THE IMPUGNED ASSESSMENT ORDER DATED 28/12/2007 HAS NARRATED THE CHEQUERED P AST OF THE CASE AND AS FAR AS THE QUESTION OF LOANS AND ADVANCES AND THE C REDITWORTHINESS OF THOSE PERSONS WERE CONCERNED, THE AO HAS HELD, IN R ESPECT OF EACH OF THE PARTY, THAT THE ASSESSEE HAS NOT PRODUCED THOSE DEP OSITORS FOR EXAMINATION AND ALSO FAILED TO PROVE THEIR CREDITWORTHINESS. T HE AO HAS THUS FINALLY CONCLUDED THAT THE ENTIRE SUMS CREDITED IN THE ASSE SSEES BOOKS OF ACCOUNTS SHOULD BE ADDED U/S.68 SINCE THE ASSESSEE HAD FAILED TO PROVE THE IDENTITY, CREDITWORTHINESS AND THE GENUINENESS OF T HE TRANSACTION. AT THIS POINT, WE AGAIN REVERT BACK TO THE DIRECTIONS OF TH E TRIBUNAL MADE AT THE FIRST INSTANCE VIDE ORDER DATED 29/09/1997 AND HAVE FOUND THAT SUCH A QUESTION OF THE APPLICABILITY OF THE PROVISIONS OF SECTION 68 IN RESPECT OF THE LIABILITIES SHOWN IN THE SAID PROPRIETARY-CONCE RNS WAS ALTOGETHER MISSING. THE LEGAL POSITION IN THIS REGARD IS AS UNDER. IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 11 - 5.3. IN THE CASE OF M/S.SAHELI SYNTHETICS PVT.LTD. 302 ITR 126 (GUJ.), THE HONBLE COURT HAS OPINED, QUOTE SIMILARLY EVEN WHERE AN ASSESSMENT IS SET ASIDE SIMPLICITER, WITHOUT ANY EN HANCEMENT PROPOSAL, IT IS ALWAYS IN THE CONTEXT OF THE APPEAL AGAINST AN O RDER OF ASSESSMENT AND CANNOT BE READ TO MEAN THAT THE APPELLATE AUTHORITY GRANTED POWERS TO THE ASSESSING OFFICER IN RELATION TO ITEMS OF ASSES SMENT WHICH NEVER FORMED PART OF THE APPEAL BEFORE THE APPELLATE AUTH ORITY. UNQUOTE. FOLLOWING THIS LANDMARK JUDGEMENT OF THE HONBLE JU RISDICTIONAL HIGH COURT, AN ANOTHER ORDER HAS ALSO BEEN PASSED RECENT LY BY THIS VERY HIGH COURT IN THE CASE OF DCIT VS. SURAT ELECTRICITY CO. LTD. 337 ITR 271 (GUJ.) AND HELD THAT THE TRIBUNAL WAS RIGHT IN HOLD ING THAT THE AO HAD NO POWER TO CONSIDER A NEW ISSUE. THE AO WAS REQUIR ED TO MAKE FRESH ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS AND CO ULD NOT HAVE TRAVELLED BEYOND THE SPECIFIC ISSUES. WE HAVE ALSO NOTED TH AT WHILE RESTORING CERTAIN ISSUES BACK TO THE STAGE OF THE AO, THE RES PECTED CO-ORDINATE BENCH VIDE ORDER DATED 29/09/1997 HAS NOT SET AT LA RGE THE ENTIRE ASSESSMENT WITH UNLIMITED POWERS TO THE AO. FOR TH E SAKE OF CLARITY, AS ALSO COMPLETENESS, WE HAVE REPRODUCED THE RELEVANT PORTION OF THE DIRECTIONS OF THE TRIBUNAL AND WHAT WE HAVE UNDERST OOD THAT THE TRIBUNAL WANTED TO INVESTIGATE AND ADJUDICATE THE ADDITIONS RELATED TO THE SAID TWO PROPRIETARY-CONCERNS. THERE WAS NO AMBIGUITY ABOUT THOSE DIRECTIONS. THOSE DIRECTIONS WERE IN RESPECT OF CERTAIN SPECIFI C ADDITIONS WHICH WERE MADE BY THE AO AS PER THE FIRST BLOCK ASSESSMENT OR DER DATED 03/09/1996 WHICH WERE EXPLICITLY CALCULATED BY THE AO ON PAGE 49 OF THE SAID BLOCK ASSESSMENT ORDER. THEREFORE, THE INCLUSION OF AN ADDITIONAL HEAD OF IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 12 - INCOME OR AN ADDITIONAL SOURCE OF INCOME IS NOT PER MISSIBLE IN THE EYES OF LAW WHILE GIVING THE APPEAL EFFECT IN A SET -ASIDE PROCEEDINGS. FOR THIS LEGAL PROPOSITION, RELIANCE WAS ALSO PLACE D ON DY.CIT VS. TOLLYGUNJ CLUB 52 ITD 166 (CAL.) . WE THEREFORE CO NCLUDE THAT THE AO HAS TRAVELLED BEYOND HIS JURISDICTION AND WRONGLY T AXED THE IMPUGNED AMOUNT BY INVOKING THE PROVISIONS OF SECTION 68 OF IT ACT. RESULTANTLY, WE HEREBY DIRECT TO DELETE THE AMOUNT OF RS.24,69,8 54/- FROM THE TOTAL INCOME ASSESSED FOR THE BLOCK PERIOD IN THE IMPUGNE D BLOCK ASSESSMENT ORDER. IN THIS MANNER, WE HAVE ALLOWED GROUND NO S.1 AND 3 OF THE GROUNDS OF APPEAL. 6. GROUND NO.2 READS AS UNDER:- 2) THE ASSESSING OFFICER HAS ERRED IN LAW AND ON F ACTS IN TREATING PROFIT AND CAPITAL ACCOUNT BALANCES AMOUNTING RS.507066 & RS.777739 OF PROPRIETARY CONCERNS AS UNDISCLOSED INCOME THOUGH THE SAME WERE ALREADY DIS CLOSED IN THE RETURN OF INCOME. THE SAID ADDITION DESERVE S TO BE DELETED. 6.1. OUT OF THE TWO ADDITIONS, AT THE OUTSET IN RESPECT OF CAPITAL OF RS.7,77,739/- , LD.AR HAS FAIRLY CLARIFIED THAT PRIMA-FACIE THER E WAS NO DISPUTE AS FAR AS THE LEGALITY OF THE ADDITION OR T HE JURISDICTION OF THE AO IS INVOLVED. WE HAVE ALSO NOTICED THAT THE INVE STMENT IN THE SAID TWO PROPRIETORSHIP CONCERNS WAS A SUBJECT MATTER OF DIS PUTE SINCE INCEPTION. THE ONLY GRIEVANCE, WHICH WAS RAISED BY THE ASSESSE E BEFORE THE TRIBUNAL WAS THAT THE ASSESSEE HAD FILED REGULAR RETURNS OF THE RESPECTIVE YEARS AND, THEREFORE, THOSE INVESTMENTS ARE NOT REQUIRED TO BE TAXED IN THE BLOCK IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 13 - ASSESSMENT. THIS ASPECT WAS DULY CONSIDERED BY THE AO IN THE IMPUGNED ORDER NOW BEFORE US AND GIVEN A FINDING AS FOLLOWS: - ADDITION OF RS.7,77,739/- 7.3. THE ABOVE CONTENTIONS OF THE ASSESSEE ARE ALS O NOT ACCEPTABLE AS THE RETURNS FOR THE A.YS.1994-95 AND 1995-96 HAVE BEEN FILED ON 31/03/1996 AND 30/07/1996 RESPECTIVEL Y. THE ASSESSEE HAS FILED THE RETURNS FOR THESE TWO YEARS AFTER THE DATE OF FILING OF RETURN UNDER SUB-SECTION (1) OF SECTION 1 39. ON PERUSAL OF THE ORIGINAL BLOCK ASSESSMENT ORDER DATED 30/09/ 1996, IT IS SEEN THAT THERE IS A SPECIFIC MENTION AT PAGE-5 OF PARAG RAPH 5.1 THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS, NO BOOKS OF ACCOUNT PERTAINING TO THE BUSINESS OF ASSESSEE WERE FOUND IN ANY OF THE PREMISES COVERED UNDER SEARCH. THE ALLEGED BOO KS OF ACCOUNT WERE NEVER PRODUCED BEFORE THE ASSESSING OFFICER UP TO THE FIRST WEEK OF SEPTEMBER 1996. THEREFORE, IN VIEW OF THE FINDINGS IN THE ORIGINAL ASSESSMENT ORDER DATED 30/09/1996, IT IS C LEAR THAT THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNT RE GULARLY AND THE ADDITION TO CAPITAL IN THE ABOVE TWO YEARS IN B OTH THE CONCERNS HAVE BEEN RECORDED AFTER THE SEARCH AND SEIZURE OPE RATION WAS CONDUCTED. IT IS, THEREFORE, CLEAR THAT THE CONDIT ION AS MENTIONED IN SUB-SECTION (3) OF SECTION 158BA, AS REPRODUCED IN THE PRECEDING PARAGRAPHS, THAT SUCH INCOME OR THE TRANS ACTION RELATING TO SUCH INCOME ARE TO BE RECORDED ON OR BE FORE THE DATE OF SEARCH OR REQUISITION IN THE BOOKS OF ACCOUNT OR OT HER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PR EVIOUS YEAR, WHICH IS OF VITAL IMPORTANCE, HAS NOT BEEN FULFILLE D BY THE ASSESSEE. THEREFORE, THE ASSESSEES CONTENTION CANNOT BE ACCE PTED. THEREFORE, THE TOTAL ADDITION OF RS.7,77,739/- MADE TO THE CA PITAL IN THE ABOVE TWO PROPRIETARY CONCERNS SHALL BE ADDE D TO THE UNDISCLOSED INCOME OF THE ASSESSEE. [ADDITION OF RS.7,77,739/-] 6.2. EVEN THE ADDITION ABOUT THE PROFIT OF THE SAID TWO CONCERNS WAS DULY DISCUSSED BY THE ASSESSING OFFICER AS UNDER:- IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 14 - ADDITION OF RS.5,07,066/- 6.4. THE CONDITION, THAT SUCH INCOME OR THE TRAN SACTIONS RELATING TO SUCH INCOME ARE TO BE RECORDED ON OR BEFORE THE DATE OF THE SEARCH OR REQUISITION IN THE BOOKS OF ACCOUNT OR OT HER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PR EVIOUS YEARS, IS OF VITAL IMPORTANCE. A PLAIN READING OF THE ABOVE PROVISIONS MAKES IT CLEAR, THAT THE ASSESSEE HAS TO MAINTAIN HIS BOO KS OF ACCOUNTS IN THE NORMAL COURSE OF HIS BUSINESS. THE ASSESSEE HA S FURNISHED THE RETURNS FOR THE ASSESSMENT YEARS 1994-95, 1995-96 O N 31/03/1996, AND 30/07/1996 RESPECTIVELY. THEREFORE IT IS CLEAR , THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITION OF HAVING MAINTAINED THE BOOKS OF ACCOUNTS IN THE NORMAL COURSE. ON PERUSAL OF THE ORIGINAL BLOCK ASSESSMENT ORDER DATED 30/09/1996, IT IS SEEN THAT THERE IS A SPECIFIC MENTION AT PAGE 5 PARAGRAPH 5.1, THAT DURI NG THE COURSE OF SEARCH & SEIZURE OPERATION, BOOK OF ACCOUNTS PERTAI NING TO THE BUSINESS OF SRI CHANDANSINGH P. CHAMPAVAT WERE NOT FOUND IN ANY OF THE PREMISES COVERED UNDER SEARCH. IT WAS ALSO OBSERVED THAT BOOKS OF ACCOUNTS OF THE COMPANY M/S.SRI ARAVALI FI NALEASE LTD. WERE NOT FOUND EXCEPT AN INCOMPLETE BANK BOOK. THE SAID BOOKS OF ACCOUNTS WERE NOT PRODUCED UP TO THE FIRST WEEK OF SEPTEMBER 1996. THEREFORE IN VIEW OF THESE FINDINGS IN THE O RIGINAL ASSESSMENT ORDER DATED 30/09/1996, IT IS CLEAR THAT THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS REGULARLY AND THE PROFIT IN THE ABOVE TWO YEARS WERE RECORDED AFTER SEARCH & SEIZURE OPERATION WAS CONDUCTED. THEREFORE THE ASSESSEE S CONTENTION CANNOT BE ACCEPTED; AS SUCH THE ADDITIONS TO CAPITAL AND PROFITS SHOWN IN THE BOOKS OF ACCOUNTS OF HIS TWO PROPRIETA RY CONCERNS FOR ALL THE ABOVE TWO ASSESSMENT YEARS SHALL BE ADD ED TO THE ASSESSEES UNDISCLOSED INCOME. 7. THE ADMITTED FACTUAL POSITION AS EMERGED FROM T HE RECORDS AVAILABLE IS THAT THE SEARCH WAS CONDUCTED ON 05/09 /1995. THE RETURNS WERE FILED BY THE ASSESSEE FOR THE IMPUGNED THREE A SSESSMENT YEARS, IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 15 - FORMING PART OF THE BLOCK PERIOD, DATE-WISE AS FOLL OWS (REPRODUCED FROM PAGE 5 OF THE BLOCK ASSESSMENT ORDER DATED 31/03/20 00): A.YS. RECEIPT NO. DATE WARD/CIRCLE 94-95 373 31.3.96 JT .CIT(A)S.R.1 95-96 25 30.7.96 -DO- 96-97 24 30.7.96 -DO- 7.1. THE REVENUE AUTHORITIES HAVE DISCUSSED THE PRO VISIONS OF SECTION 158BA AND THEN CAME TO THE CONCLUSION THAT THE FOLL OWING TWO YEARS SHOULD COME WITHIN THE PURVIEW OF THE BLOCK ASSESSM ENT UNDER CHAPTER XIV-B AND, THEREFORE, COMPUTED THE ADDITION AS UND ER (REPRODUCED FROM PAGE 8 OF THE ASSESSMENT ORDER DATED 31/3/2000:- CAPITAL INTRODU- CTION CAPITAL INTRODUCTION PROFIT AS PER BOOKS 1.RANSI ROADWAYS A.Y.94-95 (4,73,657) RS.4,37,657 RS.1,56,680 A.Y.95-96 3,27,000 RS.1,98,756 2.RANSI TOURS & TRAVELS A.Y.94-95 RS.13.082 (LOSS) RS.NIL A.Y.95-96 RS.NIL RS.1,56,630 (1,51,630) RS.7,77,739 RS.5,12,066 = RS.12,89,805/- 7.2. THESE TWO ADDITIONS THEREFORE HAVE GERMINATED FROM THE FIRST ORDER ITSELF, HOWEVER THE INITIAL ADDITION, I.E. RS.24,50 ,392/-, GOT REDUCED LATER ON BY THE AO HIMSELF CONSEQUENT UPON THE SETTING AS IDE OF THE MATTER BY THE TRIBUNAL. THE LD.AR HAS ALSO FAIRLY EXPLAINE D THE CORRECT LEGAL IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 16 - POSITION AND THEREUPON LEFT THE MATTER OPEN TO BE D ECIDED BY THE BENCH AS PER LAW. IT MAY NOT BE OUT OF PLACE TO MENTION THA T EVEN THE QUESTION OF TAXABILITY OF THE UNDISCLOSED PROFIT OF THE SAID TW O CONCERNS WAS VERY MUCH IN THE MIND OF THIS TRIBUNAL WHILE RESTORING T HE ENTIRE ISSUE ABOUT THESE TWO CONCERNS FOR FRESH ADJUDICATION. THIS AS PECT IS EVIDENT FROM THE PARA-12 OF THE TRIBUNALS ORDER, ALREADY REPRODUCED SUPRA. SINCE THE DISCLOSURE ABOUT THE PROFIT OF INVESTMENT WAS NOT M ADE IN THE REGULAR COURSE PRIOR TO THE DATE OF SEARCH THEREFORE HE HA S CORRECTLY HELD THE SAME AS UNDISCLOSED INCOME FOR ASSESSMENT UNDER CHA PTER XIV OF THE ACT. CONSIDERING THE TOTALITY OF THE FACTS AND CIR CUMSTANCES OF THE CASE AND THE LAW INVOLVED, WE FIND NO FALLACY IN THE IMP UGNED TWO ADDITIONS AS MADE BY THE AO, HENCE HEREBY CONFIRM THE SAME. THIS GROUND IS THEREFORE DISMISSED. 8. REST OF THE GROUNDS ARE ABOUT CHARGING OF INTERE ST OR INITIATION OF PENALTY WHICH ARE EITHER PRE-MATURE OR CONSEQUENTIA L IN NATURE, HENCE NEED NO ADJUDICATION AT THIS STAGE. 9. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. SD/- SD/- ( . .!'#$ ) ( ) % ( A.K. GARODIA ) ( M UKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20/ 04 /2012 62..(, .(../ T.C. NAIR, SR. PS IT(SS)A NO.30/A HD/2008 CHANDANSINGH P.CHAMPAVAT VS. ACIT BLOCK PERIOD FROM 1.4.85 TO 31.3.86 TO 01.4.94 TO 31.3.95 & 1.4.95 TO 05.09.95 - 17 - 5 0 -7 8 74 5 0 -7 8 74 5 0 -7 8 74 5 0 -7 8 74/ COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)-CONCENRED 5. 7 >> >/ // / * * * * ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..11.4.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 11.4.12 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 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 20.4.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.4.12 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