Shri Pradyumanbhai M. Patel, Bhavnagar V. The ACIT, Circle-1, Bhavnagar

ITSSA 351/AHD/2014

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5119 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-02-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 06-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Opportunity of cross examination; Peak credit; Tax effect; Corroborative evidences; Block assessment; Set aside
• Section: 131; 158BC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH (Conducted Through Virtual Court) Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Shri Pradyumanb hai M. Patel, 21 81-A, Waghawad i Ro ad, Bhav nagar-3 64001 PAN: AEG PP8430 B (Appellant) Vs The ACIT Circle-1, Bhavn agar (Resp ondent) Th e ACIT Circle-1 , Bh avnagar (Appellant) Vs Shri Pradyu man bhai M. Patel, 2181-A, Wagh awadi Road , Bhavn agar-36 4001 PAN: AEG PP843 0B (Resp ondent) Revenue by : Shri Vijay kuma r Jaisw al, CIT- D.R. Asses see b y : Shri Sa njay R. S hah, A. R. Date of hearing : 31-01 -2022 Date of pronouncement : 25-02 -2022 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- IT(SS)A No. 351/Ahd/2014 Assessment Year: Block Period IT(SS)A No. 364/Ahd/2014 Assessment Year: Block Period I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 2 These appeals are filed by the assessee and the revenue against the common order of the Commissioner of Income Tax CIT(A), Ahmedabad vide appeal No. CIT(A)-XX/16/2013-14 vide order dated 06-08-2014, passed for the block period 01-04-1988 to 27-07-1998. 2. Since the issues raised in cross appeal are common, we shall proceed to dispose of both these appeals by this common order. 3. There revenue has raised following grounds of appeal: - “1. The Ld.CIT (A)-XX, Ahmedabad has erred on facts and circumstances of the case in restricting addition made on account of opening balance appearing in the TEST ledger seized from the premises of M/s. Prithvi Builders to Rs.20,00,000/- out of the total addition of Rs.67,00,000/- 2. The Ld.CIT (A)-XX, Ahmedabad has erred on facts and circumstances of the case in deleting addition of Rs. 20,94,500/-, Rs.63,15,955/-, Rs. 16,29,520/-, Rs.5,38,000/- & Rs. 20,16,828/- (Total Rs. 1,25,94,803/-) made on account of peak credits in the TEST ledger seized from the premises of M/s. Prithvi Builders.” 3. It is therefore, prayed that the orders of CIT(A) be set aside and that of the Assessing Officer be restored to the above extent. 4. The assessee has raised the following grounds of appeal: - “Your appellant being aggrieved by the order passed dated 06/08/2014 u/s. 158BC of the Income Tax Act, 1961 (hereinafter referred to as the "Act") by the learned Commissioner of Income-tax (Appeals)-XX, Ahmedabad (hereinafter referred to as the "CIT(A)") presents this appeal against the same on the following grounds which are without prejudice to each other:- 1. The order passed by the learned CIT(A) is erroneous and contrary to the provisions of law and facts and therefore requires to be suitably modified. 2. The learned CIT(A) should not have adjudicated in the second round of litigation pursuant to the Hon'ble Gujarat High court's order issues other than the amount of credit of Rs.67 lakhs. I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 3 3. Without Prejudice to the ground No. 2 above, the learned CIT(A) erred in law and facts in confirming the addition of Rs.28,600/- to the total undisclosed income of the appellant as unexplained investment in Diamond tops. 4. Without Prejudice to the ground No. 2 above, the learned CIT(A) erred in law and facts in confirming the addition of Rs.55,000/- to the total undisclosed income of the appellant as unexplained investment in Valuable Articles. 5. The learned CIT(A) erred in law and facts in confirming the addition Rs.20,00,000/- to the Undisclosed income of the appellant with regard to 7 depositors. 5.1 The Learned CIT(A) erred in confirming the additions with regards to 7 depositors on the ground that cross-examination of them could not be made as it was mandatorily directed by Hon'ble Gujarat High Court. 5.2 The Learned CIT(A) erred in confirming the addition with regard to 7 depositors for not attending for cross examination in spite of the fact that death certificate or medical certificate or other supporting evidence as the case may be, of those investors were submitted which made it impossible for the appellant for the reasons beyond his control to produce them for cross examination. 5.3 The Learned CIT(A) erred in confirming the additions with regards to 7 investors even when confirmation, affidavits and examination u/s. 131 about their deposits were on record with learned CIT(A). 6. The learned CIT(A) has erred in charging the interest of Rs.4,65,466/- u/s. l58BFA(i) of the Act. It be so held now. Your appellant prays for leave to add, to alter and/or to amend all or any of the grounds before the final hearing of appeal.” 5. First, we shall take up Revenue’s appeal in IT(SS)A 364/Ahd/2014 for the block period. The issue raised by the Revenue is that Ld.CIT (A)- XX, Ahmedabad has erred in restricting addition made on account of opening balance appearing in the TEST ledger seized from the premises of M/s. Prithvi Builders to Rs.20,00,000/- out of the total addition of Rs.67,00,000 and has also erred in deleting addition of Rs. 1,25,94,803/- I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 4 made on account of peak credits in the TEST ledger seized from the premises of M/s. Prithvi Builders. 6. Briefly stated, the facts are that a search and seizure action was carried out by the Income Tax Department at the premises of the assessee and its concerns on 29-07-1998. During the course of search, various assets were found at the premises of the assessee. Thereafter, notice u/s 158BC of the Income Tax Act was served upon assessee on 18-01-1999. The assessee filed return of income on 03-03-1999 declaring total income of Rs. Nil for the block period. Besides assets, ‘test ledger’ was also seized from the business premises of Prithvi Builders at 2145/A, Waghavadi Road, Bhavnagar, which contained unaccounted transactions of the associate concerns of the assessee, inter-alia Profit and loss account, balance sheet, expenses etc. The Ld. Assessing Officer observed that the assessee introduced capital in the said test ledger of Prithvi Builders and that the assessee had substantial capital which was unaccounted for. The Ld. AO observed that in the said test ledger, assessee had introduced capital in benami names like CK, MGP etc. and the AO merged various accounts known as P.M. (Capital), CK (Direct), M.G.P. (Direct) and asked the assessee to explain the capital in his name and in benami names. The assessee filed time to time submissions and the Ld. Assessing Officer after considering the same and discussions with the assessee, completed assessment u/s. 158BC of the Act determining the total income at Rs. 1,93,94,403/-. The undisclosed income was determined on account of unexplained deposits/capital besides other issues i.e. unexplained cash, unexplained jewellery, valuable articles, unexplained peak credits etc. I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 5 7. Feeling aggrieved with the block assessment, the assessee preferred an appeal before the ld. CIT(A), Ahmedabad. During the course of appellate proceedings, the ld. CIT(A) remanded the case to the Assessing Officer along with the copy of submission made by the assessee. The ld. CIT(A) was not satisfied with the remand report in respect of deposits to the tune of Rs. 67 lakhs made by 24 investors, and thought it fit to hold an inquiry u/s. 250(4) of the Act and asked the assessee to produce the investors who had deposited money with the assessee, which money in turn was given by the assessee to M/s Prithvi Builders as booking amount towards purchase of flat. The CIT(A) personally camped at Bhavnagar and recorded statements of 24 investors. However, no opportunity to cross examine those investors was provided to the Assessing Officer. The ld. CIT(A) deleted the additions in respect of Rs. 67 lacs made by the Assessing Officer by holding that in the statements of the investors, the investors confirmed the fact of making investment in the project of M/s. Prithvi Builders through the assessee. Subsequently, the ld. CIT(A) vide order dated 18-10-2002 allowed the appeal and deleted addition of Rs. 1,92,94,803/- and consequential interest u/s. 158BFA(i) of the Act. 8. Feeling aggrieved with the order passed by ld. CIT(A) dated 18-10- 2002, the Revenue preferred appeal before the ITAT, Ahmedabad. During appeal before the Tribunal, the Revenue raised additional ground for violation of Rule 46A of the Income Tax Rules, 1962 by the CIT(A) and requested to raise following additional ground:- I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 6 The ld. CIT(A) has erred in deleting the additions made by the Assessing Officer on the basis of statements recorded by his office without giving the Assessing Officer an opportunity to examine the statements thereby violating Rule 46A of the Income Tax Rules, 1962. 9. The ITAT vide order dated 14-09-2012 held that as per sub-rule (2) of Rule 46A, the ld. CIT(A) is within his powers to examine any witness and therefore there is no infringement of Rule 46A and by observing so, the Tribunal did not admit the additional ground and proceeded with the hearing of appeal and on merits confirmed the order passed by ld. CIT(A) deleting the addition of Rs. 1,92,94,830/- made by the Ld. Assessing Officer. 10. Against the decision of ITAT Ahmedabad, the Revenue went into appeal before the Hon’ble Gujarat High Court. The Hon’ble High Court vide order dated 10-09-2013 without entering into the merits of the case, held that it is evident that there has been violation of Rule 46A of the Income Tax Rules, 1962. The Hon’ble High Court accordingly quashed and set aside the order of ITAT and remanded the matter to the CIT(A) to decide and dispose of the appeal afresh after giving an opportunity to the Assessing Officer to cross examine those investors whose statements were recorded on 27-09-2002 in presence of CIT(A) at the Income Tax Office at Bhavnagar. While passing the order, the High Court made it clear that it has not expressed any opinion in favour of either of the parties and the impugned orders are being set aside solely on the ground of violation of rule 46A of the Income Tax Rules, 1962. I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 7 11. As per the directions of the Hon’ble Gujarat High Court, the ld. CIT(A) directed the Assessing Officer concerned to avail the opportunity of cross examination. In the second round of proceedings before the CIT(A), the appellant could produce 17 investors and in the cross examination proceedings carried out by the ACIT-Circle-1, they confirmed the deposits given for booking the plot to the appellant for the project launched by Prithvi Builders. The ld. CIT(A) accordingly held that the deposits made by the 17 investors are found to be genuine and thereby deleted the additions in respect of the deposits made by them to the tune of Rs. 47 lacs. However, with respect of the remaining 7 investors, the ld. CIT(A) noted that out of these seven investors four had expired, two were ill (medical reports were submitted) and in respect of one investor, no compliance was made. The CIT(A) accordingly held that in absence of any verification, the genuineness and the creditworthiness of these 7 investors remained unverifiable and therefore the CIT(A) confirmed the additions to the extent of Rs. 20 lacs in respect of aforesaid 7 investors, while allowing relief to the tune of Rs. 47 lakhs in respect of 17 investors which could be produced by the assessee. 12. With respect to additions to the tune of Rs. 1,25,94,803/- as undisclosed income of the appellant on account of peak credit in P.M. (Capital Account), C.K. (Direct Account), MGP (Direct Account) and P.M. (Personal Account) for the year under consideration, during the block period appearing in the test ledger seized from the premises of M/s. Prithvi Builders, the CIT(A) observed these accounts are related to the transactions of the appellant with M/s. Prithvi Builders. The assessee submitted that an amount of Rs. 1.15 crores was withdrawn by the appellant from M/s Ashok Kumar Mohanlal I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 8 Shah, a partnership firm wherein the appellant was one of the partners and also there was movement of funds from M/s. Prithvi Builders to the residence of the assessee and vice versa in respect of P.M. Patel (Personal Account), P.M. Patel (Advance Account) and M.G. Patel (Direct Account). The ld. CIT(A) held that appellant’s explanation with regard to the various credits in the combined accounts as prepared by assessee have been duly explained with supporting evidence and hence there remains no ambiguity about sources of said credit. The ld. CIT(A) further held that then CIT(A) and also the Hon’ble ITAT vide its order while dealing with the issues on merits and considering the explanation of the appellant, these additions were found un-substantiated and both the CIT(A) and ITAT have deleted these additions. In view of the above, the ld. CIT(A) deleted these additions. 13. With regard to charging of interest of Rs. 4,65,000/- u/s. 158BFA(i) of the Act, the CIT(A) held that interest is consequential and mandatory as per the provisions of the Act and hence the appellant does not have right to be heard before imposition of interest. 14. Being aggrieved by the order of ld. CIT(A), both Revenue and assessee are in appeal before us. The Revenue is in appeal before us on the ground that ld. CIT(A) has erred in restricting the addition to Rs. 20 lacs out of total addition of Rs. 67 lacs in respect of amount received from investors for purchase of property to be developed by M/s. Prithvi Builders. The Assessee is in appeal before us on the ground that the entire sum of Rs. 67 lakhs in respect of unexplained capital should be allowed, since all the depositors had been produced before Ld. CI(A) in the first round of appellate proceedings I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 9 and in the second round of appellate proceedings some investors could not be produced for reasons beyond control of the assessee, and in the interests of justice, the addition should be deleted. 15. We shall deal with the grounds of the Revenue and the assessee’s reply in respect of the same before proceeding to the appellant’s grounds in the subsequent paragraphs. 16. In respect of the deposits made by investors to the tune of Rs. 67 lacs, (Revenue Ground No. 1 and Assessee’s Ground No. 5 (5.1 to 5.3), Revenue has pointed out that in the opening balance of P.M. (Capital Account) nowhere is this amount of Rs. 67 lakhs appearing as ‘booking amount’ towards purchase of flats. Further, the Revenue has contended that the entire submission that this amount of Rs. 67 lacs represents deposits made towards booking of apartments to be launched by M/s. Prithvi Builders is a fabricated submission since the assessee could not produce any ‘builder buyer’ agreement for purchase of flats, there is no ‘allotment letter’ to substantiate that the amount was given towards purchase of flat, all the purchases were made in cash and no receipt was given by the builder, no construction in respect of flat has commenced till date and consequently there is no registration done for sale of flat in respect of any of these 24 investors. Therefore, from an analysis of the various documents, it is seen that the explanation given in support of the contention that this sum of Rs. 67 lakhs represent investment towards purchase of flats by these 24 investors is an incorrect submission and the assessee has only produced self-serving documents taken from agriculturists to support its case. In view of these I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 10 facts, the ld. CIT(A) has erred in accepting the contention of the assessee that 47 lacs out of 67 lacs represents investments made by investors towards purchase of flats. 16.1 The assessee on the other hand submitted that the amount of Rs. 67 lacs represents money collected from various parties for booking of flats and it is shown as capital in books of M/s. Prithvi Builders. The assessee further submitted that the Hon’ble Gujarat High Court vide its order dated 10-09- 2013 set aside the order of ITAT in the first round of appeal has not disturbed the finding of ld. CIT(A)/ITAT on merits that this transaction is non-genuine, and the remand was for the limited purpose to allow cross examination of depositors to the assessing officer, which was not done in the first instance and thereby violating Rule 46A of the Income Tax Rules, 1962. Accordingly, the Revenue is precluded from challenging the genuineness of the transaction since this aspect has been examined by ld. CIT(A) twice, first at the time of original appeal and then again in the appeal heard by ld. CIT(A) in the remand proceedings pursuant to orders of Hon’ble Gujarat High Court. The assessee submitted that out of the 24 depositors 17 remained present. Out of the remaining seven, four had expired whereas two could not be present because of their illness and one was not served the summon and hence could not remain present. The assessee has placed reliance on various decisions wherein it was held once the depositors remained present and own up the deposits, no addition can be made in the hands of the assessee. It is not the duty of the assessee to find out from where the depositors got this amount. In any case, the depositors I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 11 have explained their source of income and supported them by land holding, sales & receipts from agriculture etc. 17. We have heard both rival contentions and perused the materials available on record. On the issue of addition to the tune of Rs. 67 lacs made by the Assessing Officer on account of unexplained capital, it is seen that the issue was examined once by the ld. CIT(A) in the first round of appeal where the Assessing Officer was not afforded opportunity of cross examination. The ITAT also decided the issue in favour of the assessee. The Revenue took up issue for the High Court where Hon’ble High Court remanded the matter before the ld. CIT(A) directing the ld. CIT(A) to decide and dispose of the appeal afresh after giving an opportunity to the Assessing Officer to cross examine those investors. In the remand proceedings, the ld. CIT(A) has noted specifically that the assessee has been able to produce only some concerned persons and is unable to produce the balance witnesses. Out of the 7 witnesses, four have since expired whereas the two could not be present because of the illness and one was never served summon. In our considered view, it is seen that in respect of these 7 depositors there is impossibility of performance and we also need to take note of the fact that in the original appellate proceedings before ld. CIT(A), he had personally examined all the depositors and other evidences like confirmations, affidavits, their source of income, which was mainly agricultural income, their agricultural land holding etc. were duly corroborated. It may not be out of place to reiterate that doctrine of impossibility is one of the established principles of law. The Supreme Court in the case of State of MP v. Narmada Bachao Andolan [2011] 7 SCC I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 12 639, applied this maxim and held that thus, where the law creates a duty or a charge and the party is disabled to perform it without any fault on his part and has no control over it, the law will in general excuse him. In our view, in the interest of justice and keeping in view the law of impossibility, this addition of Rs. 20 lakhs made the Ld. CIT(A) as unexplained deposit is liable to be deleted. Accordingly, Ground 5 (5.1 to 5.3) of the assessee’s appeal are decided in favour of the assessee. 18. In respect of 47 lakhs deleted by ld. CIT(A) in remand proceedings, in respect of which the Revenue is in appeal before us (Ground No. 1 of Revenue’s appeal), we note that the issue has been examined by the CIT(A) twice, first during the course of original appellate proceedings where the documentary evidence produced by the investors were examined and duly accepted and again in the second round of appellate proceedings consequent to order of Hon’ble Gujarat High Court, when the 17 depositors appeared before the ld. CIT(A) and assessee cross examined by the Assessing Officer and after taking into consideration the statements of these investors, the ld. CIT(A) deleted the additions. It may also be noted that the ITAT had also examined this issue and adjudicated in favour of the assessee. We therefore find no infirmity in the order of ld. CIT(A) who has accepted the genuineness of these investors on the basis of statements and various documentary evidence produced before them and accordingly we find that the ld. CIT(A) was justified in deleting this addition of Rs. 47 lacs on account of unexplained capital by ld. Assessing Officer. I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 13 18.1 We accordingly hold that the Ld. CIT(A) has not erred in deleting this addition of Rs. 47 lacs on account of unexplained capital by ld. Assessing Officer. Ground No. 1 of the Revenue is hereby dismissed. In the result Ground No. 1 of the Revenue is hereby dismissed. 19. The second ground taken by Revenue is with regards to the addition of Rs. 1,25,94,803/- on account of peak credits in the test ledger seized from the premises of M/s. Prithvi Builders. The Revenue has contended that the ld. CIT(A)-XX Ahmedabad has erred on facts and circumstances of the case in deleting the addition of Rs. 1,25,94,803/- on account of peak credits as mentioned above. In this respect, the Revenue placed reliance on the assessment order and also stated that while deleting the addition the ld. CIT(A) did not taken into consideration the surrounding facts and circumstances before adjudicating on the issue and relied on the decision in the case of Mc. Dowell 154 ITR 148 (SC) and CIT vs. Durgaprasad Mor reported in 82 ITR 540 (SC). 20. The Assessee argued that the issue of peak credit/unexplained investment in the test ledger of M/s. Prithvi Builders amounting to Rs. 1,25,94,803/- could not be adjudicated by the ld. CIT(A) in remand proceedings for the simple reason that this was beyond the scope of directions of Hon’ble Gujarat High Court which had remanded the matter on the specific issue of affording an opportunity to the Assessing Officer to cross examine the investors in respect of addition of Rs. 67 lacs made towards purchase of Akshardham project in M/s. Prithvi Builders. Since the I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 14 above deletions amounting to Rs. 1,25,94,803/- do not require/are not related to cross examination of witnesses by ld. Assessing Officer, hence there was no occasion to decide this point on merits by ld. CIT(A) in remand proceedings. Without prejudice to the above, the Authorized Representative of the assessee submitted that in respect of this amount of Rs. 1,25,94,803/-, the ld. CIT(A) on the basis of submission of the assessee in the second round of appeal got the entries cross verified in the test ledger with the cash book. The assessee before ld. CIT(A) also established the source of such entries as withdrawal by the assessee through M/s. Ashok kumar Mohanlal Shah Rs. 1.15 crores (pages 649 to 653 of paper book no. 3) and also explained that there were entries relating to transfer of cash from office to home and home to office by different persons including the assessee, which were debited or credited whenever they had taken cash from office to home and brought the cash back from home to office in their personal account. Therefore, all details of entries found in the ‘test ledger’ stand duly explained. The assessee submitted that these contentions were accepted in the earlier round of litigation by ld. CIT(A) and then Hon’ble ITAT and again by the CIT(A) in the second round of appellate proceedings pursuant to orders of Gujarat High Court. 21. We have heard the rival contentions and it is seen that the issue of addition on account of peak credits and the test ledger seized from the premises of M/s. Prithvi Builders amounting to Rs. 1,25,94,803/- has been examined in detail and accepted by the ld. CIT(A) both in the original round of litigation and also in second round of appellate proceedings by Ld. CIT(A) pursuant to order of Hon’ble Gujarat High Court, during the course I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 15 of remand proceeding. The Hon’ble ITAT vide its order 14-09-2012 also had accepted the contentions of the assessee on this point. Even before us on merits, the assessee placed reliance on submission dated 22-03-2021 and submitted that the assessee had identified his source of receipt and cash payment which are fully recorded in his books of account which were produced before the ld. Assessing Officer as well as ld. CIT(A). In the said cash book, necessary entries reflected in the test ledger of M/s. Prithvi Builders are cross verifiable. Relevant pages of the paper book explaining various entries in cash have been filed before us on 22-03-2021. We find no infirmity in the order of the ld. CIT(A) which has accepted the contentions of the assessee on appreciation of various evidences placed on record. The Ld. CIT(A) while passing the order observed as under:- “17.9. Since the appellant's explanation with regard to the various credits in the combined account as prepared by the AO at page No. 11 & 12 of the assessment order have been duly explained with supporting evidences and hence their remains no ambiguity about sources of such credits. In this regard the then ld. CIT(A) and also the Hon'ble ITAT vide its order by dealing the issues on merits and considering the explanation of the appellant, these additions were found unsubstantiated and thus both the authorities have deleted these additions. For ready reference the decision of the Hon'ble ITAT 'A' Bench Ahmedabad in appellant's appeal vide order dtd. 14.9.2012 has observed as under:- "The appellant had given PAN No. as well as copy of return of M/s. Ashokkumar Mohanlal Shah which was assessed to tax with ITO, Bhavnagar for which returns have been filed by it on 20.07.1998 whereas the date of search was 29.07.1998. These explanations were submitted to the A.O. at the time of assessment proceeding. Cash amount shown by M/s. Prithvi Builders is the cash taken to residence and brought back to office has been explained by the appellant in his statement in I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 16 reply to question no. 7, dated. 17.08.98 which has been owned by M/s. Prithvi Builders itself who is also assessed to tax. After considering the facts and circumstances of the case, we have considered view that the ld. CIT(A) was right in deleting the addition made by the A. O. of Rs. 1,92,94,830/-. In the result, the Revenue's appeal is dismissed. " 17.10. In view of the above discussion, considering the material available on record and the appellant's explanation the addition made by the AO on account of these credits which were objected by the appellant in Ground No. 10 to 14 of grounds of appeal are found not correct and justified and thus the same are deleted. Thus, these grounds of appeal are allowed.” 21.1 We therefore hold that the ld. CIT(A)-XX has not erred in the facts and circumstances of the case in deleting addition of Rs. 1,25,94,803/- made on account of peak credit in the test ledger seized from M/s. Prithvi Builders. This Ground of Appeal of the Revenue is accordingly dismissed. In the result Ground No. 2 of the Revenue is hereby dismissed. 22. We now come to the appeal of the assessee for the block period in IT(SS)A No. 351/Ahd/2014. The ground no. 1 and 2 are general, ground 5 (ground nos. 5.1 to 5.3) relate to addition of Rs. 67 lacs as unexplained capital for purchase of Askshardham project of M/s. Prithvi Builders and the said ground has been decided in the preceding paragraphs in favor of the assessee. I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 17 23. Ground Numbers 3 and 4 relate to unexplained investment of Rs. 28,600/- as unexplained investment in diamond tops and addition of Rs. 55,000/- as unexplained investment in Valuable Articles. 23.1 Before us the AR of the assessee argued that the Ld. CIT(A) erred in deciding on the issue since scope of proceedings in remand was limited to the additions related to those additions which required opportunity of cross examination to Assessing Officer, which was not granted in the original appellate proceedings and in respect of which there was violation of Rule 46A of the IT Rules. The Ld. DR relied upon the order of CIT(A). 24. Before deciding the issue, it would be useful to analyze the scope of powers of the Revenue in remand proceedings. In our considered view, the Ld. CIT(A) is not permitted to travel beyond the scope of purpose for which the case has been remanded to the lower authorities. The Gujarat High Court, while remanding the case to the CIT(A), noted specifically that order is being set aside to CIT(A) to decide appeal afresh after giving opportunity to cross- examine those investors whose statements were recorded on 27/09/2022 and relied upon by CIT(A) while deleting the addition of Rs. 1,93,94,403/-. A reading of the remand direction indicates that, in relation to the above two additions in relation to unexplained investment to the tune of Rs. 28,600- and Rs. 55,000/- respectively, there is no requirement of granting fresh opportunity to cross examine the investors and thus there has been no violation of Rule 46A of the Income Tax Rules, 1962. Thus, in respect of the above additions, while in the first round of appellate proceedings, CIT(A) deleted the additions (as also confirmed by ITAT, I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 18 Ahmedabad), but the in the remand proceedings, the CIT(A) confirmed the additions on the same set of facts and without pointing out any infirmity in the proceedings conducted by his predecessor (as noted in respect of these additions there has been no alleged violation of Rule 46A). In our considered view, the Ld. CIT(A) in remand proceedings has exceeded the scope in respect of which the matter was remanded for fresh adjudication. The additions in respect of which opportunity of cross examination of witnesses was not required i.e. in respect of those additions in which there has been no violation of Rule 46A, there is no occasion to reconsider the issue afresh in remand proceedings. 24.1 We may consider the following judicial precedents, where scope of power under remand proceedings has been analyzed by various High Courts (including the jurisdictional Gujarat High Court): (1) Whiteline Chemicals v. Income-tax Officer [2013] 33 taxmann.com 37 (Gujrat): In this case the Gujarat High Court held where Tribunal remanded proceedings to Commissioner (Appeals) to consider question of taxing after verifying that whether sales-tax was retained by assessee or deposited with Government, Tribunal set out parameters within which Commissioner (Appeals) had to reconsider issue, and therefore, it was not open for Commissioner (Appeals) to examine entire nature of payment to consider whether same could be considered as taxable in hands of assessee. I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 19 (2) LI & Fung India (P.) Ltd. v Assistant Commissioner of Income- tax [2017] 79 taxmann.com 451 (Delhi): In this case the Delhi High Court held that where Tribunal in course of appellate proceedings remanded matter back with a direction to undertake fresh determination of ALP on basis of correct cost base of assessee, since there was no controversy ever about appropriateness of inclusion or exclusion of any comparable, revenue authorities in remand proceedings could not issue a show cause notice to assessee proposing to reject certain comparables and take into consideration some new comparables. The Delhi High Court while passing the order observed as below: 13. In this view of the matter, the court is of opinion that the impugned show cause notice cannot be sustained. Firstly, when there is a remand on the basis of a specific finding (in this case, the untenability of shifting of the OP/TC to FOB) the TPO could not have travelled beyond it, given that there was no controversy ever about the inclusion of any comparable. Concededly there was no controversy about the appropriateness of inclusion of any comparable for the ALP determination purpose. Nor was there any finding or direction on that score. In the given circumstances, the Revenue could not have seized upon the direction to determine it "afresh" as the basis for going into the merits of inclusion of such comparables. Secondly and more fundamentally, the issue of comparables' inclusion is not one that goes to define I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 20 jurisdiction itself. There is authority for the proposition that invocation of jurisdiction is itself in issue, notwithstanding that being not subject to remand. However, that is not the case here. The remand was essentially consequential to give tax effect to the findings of the ITAT. (3) Deputy Commissioner of Income-tax (Asstt.) v. Surat Electricity Co. Ltd. [2011] 14 taxmann.com 118 (Gujarat): In this case, the Gujarat High Court held that Assessing Officer is only required to make a fresh assessment in accordance with directions given by Commissioner (Appeals) and cannot have travelled beyond specific issues contained in order of remand passed by Commissioner (Appeals). The Gujarat High Court while passing the order observed as below: In the aforesaid premises, following the decision of this High Court in the case of Saheli Synthetics (P.) Ltd. (supra), the question is answered in the affirmative, that is, the Appellate Tribunal was right in law and on facts in holding that the assessing officer was not empowered to travel beyond the two specific issues contained in the order of remand passed by the Commissioner of Income Tax (Appeals) in the proceedings under section 115J of the Income Tax Act, 1961, to cover the tax liability of the assessee. I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 21 24.2 In light of the above, Ground numbers 3 and 4 of the assessee’s appeal are hereby decided in favour of the assessee. In the result Ground No. 3 and 4 of the assessee’s appeal are hereby allowed. 25. Ground Number 6 of the assessee is with regards to charging the interest of Rs. 4,65,466/- u/s 158BFA(i) of the Act. 25.1 Since the additions made have been deleted, adjudication on this point would be academic and hence we are not adjudicating on the merits of the issue whether there was valid justification for delay in filing return of income beyond the period stipulated in the notice issued by the Ld. Assessing Officer. This ground appeal therefore becomes infructuous. 26. In the combined result, the Revenue’s appeal is dismissed and the appeal of the assessee is partly allowed. Order pronounced in the open court on 25-02-2022 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 25/02/2022 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue I.T(SS).A Nos. 351 & 364/Ahd/2014 A.Y. Block Period Page No. Shri Pradyumanbhai M. Patel Vs. ACIT 22 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद