Shri Pankaj Pravinchandra Shah, V. The Dy. CIT.,

ITSSA 425/AHD/2003

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9200 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 24-06-2010
• Assessment Year: misc
• Appeal Filed On: 19-12-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDALDR
• Assessee Lawyers: J P SHAH
• Keywords: Unexplained investment; Salary income; Document seized; Period of limitation; Assessment record; Block assessment; Time period of passing order; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' [BEFORE S/SHRI T K SHARMA,JM & A N PAHUJA,AM] IT(SS)A NOS.425&426/AHD/2003 [BLOCK PERIOD:1.4.1990 TO17-08-2000] I) SHRI PANKAJ PRAVINCHANDRA SHAH & II) SMT. DIPIKABEN PANKAJ SHAH 3, SWEET HOME APARTMENT, GHOD DOD ROAD, ATHWALINES, SURAT-395 007 I)PAN: AKIPS8900K & II)PAN: AKIPS8899M V/S DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- 1, SURAT [APPELLANT] [RESPONDENT] ASSESSEES BY :- SHRI J P SHAH, AR REVENUE BY:- SHRI SHELLEY JINDAL,DR O R D E R A N PAHUJA: THESE APPEALS FILED BY THE TWO ASSESSEES AGAINST T WO SEPARATE ORDERS BOTH DATED 05-09-2003 OF THE LD. CI T(APPEALS)-II, AHMEDABAD, RAISE THE FOLLOWING COMMON GROUNDS:- 1. THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF UNDI SCLOSED INCOME OF RS.42,71,000/- IN THE CASE OF SHRI PANKAJ PRAVINCHA NDRA SHAH & RS. 27,16,438/-(ACTUALLY RS. 13,40,000) IN THE CASE SMT. DIPIKABEN PANKAJ SHAH BY THE ASSESSING OFFICER. 2. THE CIT(A) FAILED TO APPRECIATE THAT THE SAID ADDIT ION IS AGAINST THE EVIDENCE ON RECORD, AND THEREFORE, NOT SUSTAINABLE. 3. THE C.I.T.(APPEALS) FAILED TO APPRECIATE THAT 132 A CTION WAS ITSELF INVALID BEING WITHOUT ANY BASIS. 4. THE C.I.T.(APPEALS) FAILED TO APPRECIATE THAT THE A SSESSING OFFICER HAD DONE NOTHING IN REBUTTAL OF THE PAPERS AND PROOF GI VEN AT THE TIME OF ASSESSMENT SHOWING THAT THE ASSESSEE WAS OWNING FLA TS WHICH IS SOLD PRIOR TO THE BLOCK PERIOD AND MONEYS WHICH HE ACQUI RED ON SALE WERE INVESTED IN F DS. AND SHARE CAPITAL, AND THEREFORE, NO UNDISCLOSED INCOME COULD BE TAXED FOR THE BLOCK PERIOD. IT(SS)A NOS.425 AND 426/AHD/2003 SHRI PANKAJ P SHAH & SMT. DIPIKA P SHAH 2 5. THE C.I.T.(APPEALS) ERRED IN NOT GRANTING THE EX CLUSION OF THE INCOME BELOW THE THRESHOLD LIMIT. 6. THE C.I.T.(APPEALS) OUGHT TO HAVE DELETED THE EN TIRE ADDITION AND ALLOWED THE APPEAL IN TOTO. 2 FACTS ,IN BRIEF, AS PER RELEVANT ORDERS ARE THAT A SEARCH U/S 132 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED T O AS THE ACT] WAS CONDUCTED IN THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEES ON 17-08-2000,WHEN A NUMBER OF DOCUMENTS WERE SEIZE D. CONSEQUENTLY, A NOTICE U/S 158 BC OF THE ACT WAS S ERVED ON THESE ASSESSEES ON 5-1-2001. IN RESPONSE, THE ASSESSEES F ILED RETURN DECLARING NIL UNDISCLOSED INCOME ON 19.8.2002.ON TH E BASIS SEIZED DOCUMENTS ,NOTICES ALONG WITH DETAILED QUESTIONNAIR ES WERE ISSUED ON 8-5-2002 AND THESE WERE SERVED ON THE ASSESSEES ON 1/7/2002 BY AFFIXTURE AT THE LAST KNOWN ADDRESS. AFTER A REM INDER ON 15/7/2002 AND ANOTHER LETTER DATED 2/8/2002 , THE AR ON BEHAL F OF THE ASSESSEE MR. KISHORBHAI I MODI, FROM M/S D.G. MERCHANT & CO. , APPEARED AND FILED SUBMISSIONS / DETAILS. THE AO NOTICED THAT IN HIS STATEMENT ON OATH RECORDED DURING THE COURSE OF SEARCH, SHRI PAN KAJ P. SHAH ADMITTED UNDISCLOSED INCOME OF RS.21,00,000. IN HI S SUBSEQUENT STATEMENT DATED 6/9/2000, SHRI PANKAJ SHAH REITERAT ED THE SAID DISCLOSURE OF RS.21,00,000. DESPITE THIS ADMISSION, THE ASSESSEE SHRI PANKAJ P SHAH DID NOT DISCLOSE ANY INCOME. ON PERUSAL OF PAGE 2 & PAGE 5 OF SEIZED DOCUMENTS AS PER ANNEXURE BS-1, THE ASSESSING OFFICER[AO IN SHORT] NOTICED DETAILS OF I NVESTMENT IN SHARES BY SHRI PANKAJ P. SHAH AND HIS WIFE SMT. DIP IKA P. SHAH WHILE PAGE 6 REVEALED DETAILS OF SOME FLATS OWNED BY THE ASSESSEE, AND CLAIMED TO HAVE BEEN SOLD IN THE LAST FEW YEAR S. PAGE 7 & 8 OF BS-1 REVEALED DETAILS OF INVESTMENT OF SHRI PANKAJ P SHAH AND HIS WIFE SMT. DIPIKA P SHAH IN FIXED DEPOSITS. SEIZED D OCUMENTS IN BS-2 TO BS-10 WERE REGISTERS OF SWEET HOME LEASE & HIRE PURCHASE PVT. LTD., A COMPANY OF WHICH THE ASSESSEEE WAS SHA RE HOLDER AND IT(SS)A NOS.425 AND 426/AHD/2003 SHRI PANKAJ P SHAH & SMT. DIPIKA P SHAH 3 DIRECTOR. THE AO ALSO FOUND THAT THESE ASSESSEES H AD NEVER FILED ANY RETURN OF INCOME AND THUS, WERE NOT ASSESSED TO TAX BEFORE TE SEARCH. 2.1 ON THE BASIS OF SEIZED DOCUMENTS, THE AO FOUND THAT THESE TWO ASSESSES HAD MADE THE FOLLOWING INVESTMENTS IN FIXED DEPOSITS: 1 SWEET HOME LAND ORGANIZERS (P) LTD., (RS.1,00,000 X 3) 300,000 2 SHRI PANKAJBHAI PRAVINCHANDRA SHAH [(60,000 X 5) + (50,000 X 4)] 500,000 3 SMT. DIPIKA PANKAJKUMAR SHAH [(65000 X 3) + (50,000 X 3) + 55,000] 400,000 4 SMT. VARSHABEN KIPAKBHAI SHAH (55,000 + 40,000 +45,000 + 50,000 + 60,000) 250,000 5 SHRI SURENDRA ZAVERCHAND SHAH (60,000 + 55,000 + 45,000 + 40,000) 200,000 6 SHRI KALPESH SHANKARBHAI TELAR (55,000 + 60,000 + 45,000 + 40,000) 200,000 7 SMT. JAYSHRIBEN SURENDRAKUMAR SHAH (55,000 + 45,000 + 60,000 + 40,000) 200,000 8 SHRI KIRITKUMAR BALUBHAI MODI (55,000 + 45,000 + 25,000 + 50,000) 175,000 9 SMT. JYOTIBEN ARVINDBHAI SHAH (55,000 +45,000 + 25,000 + 35,000) 175,000 10 SHRI TEJAS ARVINDBHAI SHAH (55,000 + 45,000 + 50,000) 150,000 11 SMT. BEENABEN KIRITBHAI MODI (60,000 + 40,000 + 50,000) 150,000 12 SMT. PREETI DINESHCHANDRA KOTHARI (60,000 + 50,000) 110,000 13 SHRI DINESHCHANDRA KANTILAL KOTHARI (40,000 + 50,000) 90,000 14 SMT. JYOTIBEN SHASHIKANT GANDHI (40,000 + 60,000) 100,000 TOTAL 30,00,000 IT(SS)A NOS.425 AND 426/AHD/2003 SHRI PANKAJ P SHAH & SMT. DIPIKA P SHAH 4 2.2 FURTHER PAGE 1 & 5 OF BS-1 SEIZED FROM THE R ESIDENCE, REVEALED FOLLOWING INVESTMENT IN SHARES OF M/S SWE ET HOME LEASE & HIRE PURCHASE PVT. LTD:- NAMES OF THE ASSESSEE INVESTMENT AS PER PAGE-1 INVESTMENT AS PER PAGE-5 PANKAJ P SHAH 8,30,500 16,71,000 DIPIKABEN P SHAH 4,70,000 9,40,000 2.3 ACCORDINGLY, TOTAL INVESTMENT IN FIXED DEPOSI TS AND SHARES WAS DETERMINED AS FOLLOWS: NAME OF THE ASSESSEE INVESTMENT IN F.D. INVESTMENT IN SHARES TOTAL INVESTMENT PANKAJ P SHAH 26,00,000 16,71,000 42,71,000 DIPIKABEN P SHAH 4,00,000 9,40,000 13,40,000 2.4 SINCE DESPITE SUFFICIENT OPPORTUNITY PROVIDED BY THE AO, THESE TWO ASSESSEES DID NOT EXPLAIN THE SOURCES OF INVEST MENTS IN FIXED DEPOSITS AND SHARES AND FILED RETURN DECLARING NIL UNDISCLOSED INCOME JUST 12 DAYS BEFORE THE EXPIRY OF LIMITATION FOR COMPLETION OF BLOCK ASSESSMENT AND HAD CLAIMED THAT THEY HAD ONL Y INCOME FROM SALARY AND RENT ,BELOW THE TAXABLE LIMITS WHILE FLA TS WERE STATED TO HAVE TRANSFERRED ON THE STRENGTH OF TRANSFER CERTIF ICATE OF THE SOCIETY ON A PLAIN PAPER WITHOUT ANY JUDICIAL STAMP AND RECEIPT S WERE ALSO CLAIMED TO BE IN CASH NOR THE ALLEGED SALE DEEDS ON PLAIN PAPER REV EALED COMPLETE ADDRESS OF THE PURCHASER OF THE PROPERTY , THE AO REJECTED THE CA SH FLOW STATEMENT FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS WITH THE FOLLOWING OBSERVATIONS: (A) THE DETAILS PRODUCED BY THE ASSESSEE WERE NOT PART OF SEIZED MATERIALS NOR THE ASSESSEES INFORMED THE AUTHORIZED OFFICER DURING SEARCH ABOUT THE EXISTENCE OF ANY SUCH MATERIAL. IT(SS)A NOS.425 AND 426/AHD/2003 SHRI PANKAJ P SHAH & SMT. DIPIKA P SHAH 5 (B) THE ADDRESS OF THE INTENDED PURCHASER OF THE P ROPERTY, TO WHOM THE ASSESSEE CLAIMED TO HAVE SOLD THE PROPERTY WAS INCO MPLETE WHILE THE THE DETAILS ITSELF WERE PROVIDED JUST TWO DAYS BEFORE THE LIMITATION . (C) AS PER THE TRANSFER OF PROPERTY ACT, TRANSFER O F EVERY IMMOVABLE PROPERTY EXCEEDING RS.100 IS REQUIRED TO BE REGISTE RED WHILE ASSESSEE CLAIMED TO HAVE SOLD THE PROPERTIES WITHO UT REGISTERING THE SAME UNDER TRANSFER PROPERTY ACT. (D) AS PER PROVISIONS OF SECTION 158BB(1)(CA), WHER E THE DUE DATE FOR FILING A RETURN OF INCOME HAS EXPIRED BUT NO RETURN OF INCOME HAS BEEN FILED, FOR COMPUTATION OF UNDISCLOSED INCOME, THE TOTAL INCOME OF THE PREVIOUS YEAR FALLING WITHIN THE BLOCK PERIO D IS TO BE COMPUTED AS NIL. THE CASE OF THIS ASSESSEE DOES NOT FALL UND ER SECTION 158BB(1)(C) OF THE ACT. SINCE NO BOOKS OF ACCOUNTS WERE MAINTAINED ON THE DATE OF SEARCH, THE CASE OF THIS ASSESSEE FALLS UNDER SECTION 158BB(1)(CA) OF THE I.T. ACT. 2.5 IN THE ABSENCE OF ANY EVIDENCE OF SOURCE OF INVESTMENT IN FIXED DEPOSITS AND SHARES, THE AO DETERMINED UNDISCLOSED INCOME O F SHRI PANKAJ PRAVINCHANDRA SHAH AT RS.42,71,000/- WHILE IN THE CASE SMT. DIPIKABEN PANKAJ SHAH , SUCH UNDISCLOSED INCOME WAS DETERMIN ED AT RS.27,16,438/-. 3. ON APPEAL, THE LD. CIT(A) UPHELD THE ADDITION IN THE CASE OF SHRI PANKAJ PRAVINCHANDRA SHAH IN THE FOLLOWING TE RMS:- 07 GROUND NO.(2) AND (7) ARE IDENTICAL AND RELATIN G TO THE ADDITION OF RS.42,71,000/- ON ACCOUNT OF UNDISCLOSED INCOME. TH E APPELLANT HAS PLEADED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIE D IN MAKING THE ABOVE ADDITION AGAINST FACTS OF THE CASE. THE APPELLANT P LEADED THAT ALL FIXED DEPOSITS AND SHARES WERE SHOWN IN THE BALANCE SHEET OF M/S SWEET HOME LEASE & HIRE PURCHASE PVT. LTD. THE APPELLANT ALLEG ED THAT THE ASSESSING OFFICER WRONGLY ADDED SHARES WORTH RS.16,71,000/- A ND FIXED DEPOSIT RECEIPTS WORTH RS.26,00,000/- (TOTALLING RS.42,71,0 00/-). THE APPELLANT REITERATED THAT SINCE FIXED DEPOSITS AND INVESTMENT S IN SHARES ARE EXPLAINABLE, HENCE, TOTAL ADDITION MADE BY THE AO S HOULD BE DELETED. 6.8 THE AO HAS MADE ADDITION OF RS.42,71,000/- ON ACCOUNT OF UNDISCLOSED INCOME IN THE APPELLANTS HANDS IN THE BLOCK ASSESSMENT. AS AGAINST THE CONTENTIONS RAISED BY THE APPELLANT, FA CTS AS GATHERED FROM THE IT(SS)A NOS.425 AND 426/AHD/2003 SHRI PANKAJ P SHAH & SMT. DIPIKA P SHAH 6 ASSESSMENT RECORDS AND SUBMISSIONS OF THE APPELLANT ARE SUMMED UP AS UNDER: (A) AS PER STATEMENT ON OATH U/S 132(4) OF THE ACT, SHRI PANKAJKUMAR PRAVINCHANDRA SHAH ADMITTED THAT HE FLOATED A COMPA NY NAMED M/S SWEET HOME AND HIRE PURCHASE PVT. LTD. IN 1998 WHERE IN FOLLOWING INVESTMENTS WERE MADE. INVESTMENT IN RS . 1. PANKAJ P SHAH RS.6,72,000/- DIRECTOR 2. ARVIND V SHAH RS. 50,000 3. MANISH H SORATHIA RS.1,01,000/- 4. ABDUL R PATHTHARWALA RS.1,50,000/- 5. HASMUKH MAVANI RS. 1,000/- 6. DIPIKA P SHAH RS.9,40,000/- 7. SANDHYA H SHAH RS. 1,000/- 8. VAJID R PATHTHARWALA RS.1,50,000/- 9. BRIJESH ARVIND SHAH RS. 50,000/- 10. PUSHPA RS. 50,000/- 11. NITIN SORATHIA RS. 50,000/- 12. CHANDRAKANT SORATHIA RS.1,00,000/- ----------------- RS.33,60,000/- (B) IN HIS ANSWER TO Q. 9 SHRI PANKAJ PRAVINCHANDRA SHAH ADMITTED THAT DEPOSIT OF RS.9,00,000/- WAS INVESTED BY HIMSE LF AND WIFE BUT REMAINING RS.21,00,000/- WAS IN OTHER NAMES AND UNA CCOUNTED FOR WHICH THE DETAILS WERE GIVEN AS UNDER:- 1. SWEET HOME LAND ORGANIZERS PVT. LTD. 3,00,000 2. SMT. VARSHABEN DIPAKBHAI SHAH 2,50, 000 3. SURENDRA ZAVERCHAND SHAH 2,00,000 4. JIGNESH SHANKERBHAI TAILOR 2,00,000 5. SMT. JAYSHREEBEN SURENDRABHAI SHAH 2,00,000 6. SHRI KISHORKUMAR BALUBHAI MODI 1,75, 000 7. SMT. JYOTIBEN ARVINDBHAI SHAH 1,75,000 8. TEJASH ARVINDBHAI SHAH 1,50,000 9. SMT. BINABEN KIRTIBHAI MODI 1,50,000 10. SMT. PREETIBEN DINESHCHANDRA KOTHARI 1,10,000 11. SHRI DINESHCHANDRA KANTILAL KOTHARI 90,000 12. SMT. JYOTIBEN SHASHIPAL GANDHI 1,10,000 ----------- TOTAL 21,00,000 (C) SHRI PANKAJKUMAR PRAVINCHANDRA SHAH ADMITTED UN DISCLOSED INCOME OF RS.21,00,000/- IN HIS INDIVIDUAL CAPACITY . IT(SS)A NOS.425 AND 426/AHD/2003 SHRI PANKAJ P SHAH & SMT. DIPIKA P SHAH 7 (D) SHRI PANKAJKUMAR PRAVINCHANDRA SHAH RETRACTED H IS STATEMENT OF DISCLOSURE GIVEN ON 17-08-2000 BUT FILING AN AFFIDA VIT DATED 25-09- 2002 STATING THEREIN THAT ENTIRE INVESTMENT WAS EXP LAINED AND ACCOUNTED FOR. SHRI SHAH PLEADED THAT INVESTMENTS I N FLATS WERE MADE TO SAFEGUARD THE FINANCIAL INTERESTS UNDER COM PULSION. (E) SHRI PANKAJKUMAR PRAVINCHANDRA SHAH AND HIS WIF E MADE INVESTMENTS DURING THE BLOCK PERIOD ESPECIALLY IN 1 997 ONLY. (F) THE APPELLANT DID NOT FILE BLOCK RETURN IN RESP ONSE TO NOTICE UNDER SECTION 158 BC OF THE ACT WITHIN THE PRESCRIBED TIM E. HOWEVER, RETURN FILED 12 DAYS PRIOR TO THE LIMITATION PERIOD IS NO RETURN AT ALL HENCE NOT VALID. (G) THE APPELLANT IS RELYING ON SUCH ACCOUNTS, DOCU MENTS AND DETAILS WHICH WERE COOKED UP AS AN AFTERTHOUGHT AFTER THE S EARCH TOOK PLACE. SINCE THE APPELLANT NEVER FILED A RETURN OF INCOME IN THE PAST SEVERAL YEARS, INFORMATION CONTAINED IN THE DETAILS CAN NOT BE ACCEPTED AS THE SAME IS FABRICATED. (H) THE COMPANY FLOATED BY THE APPELLANT UNDER THE NAME AND STYLE OF M/S SWEET HOME & HIRE PURCHASE PVT. LTD. APPEARS TO BE A CONDUIT FOR CONCEALING THE UNACCOUNTED MONEY WHICH WAS ADMI TTED DURING THE COURSE OF SEARCH PROCEEDINGS. (I) SEIZED DOCUMENTS CONTAINED BS-1 TO BS-10. BS-1 IS A LOOSE PAPER FILE WHEREIN DETAILS OF INVESTMENTS MADE BY SHRI PA NKAJKUMAR PRAVINCHANDRA SHAH AND HIS WIFE MRS. DIPIKA P. SHAH ARE RECORDED AT PAGE 2 AND 5. DETAILS OF FIXED DEPOSITS BELONGIN G TO BOTH THE APPELLANT AND HIS WIFE ARE RECORDED AT PAGE 7 AND 8 OF THE SAME. DETAILS OF FIXED DEPOSITS BELONGING TO THE APPELLAN T IS GIVEN U PARA 6.2 OF THE ASSESSMENT ORDER. (J) THE APPELLANT DID NOT APPRISE THE AUTHORIZED OF FICER OF ANY OTHER BOOKS OR DOCUMENTS THAN SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS. (K) THE APPELLANT CLAIMED TRANSFER OF FIATS BUT THE SAME WERE NOT REGISTERED AS PER THE TRANSFER OF PROPERTY ACT (L) SINCE NO BOOKS OF ACCOUNT WERE MAINTAINED BY TH E APPELLANT PRIOR TO THE SEARCH, HIS CASE FAILS UNDER SECTION 158BB(I)(C A) OF THE ACT. (M) PERUSAL OF EXPLANATION OF THE APPELLANT BEFORE THE ASSESSING OFFICER DATED 30.09.2000 INDICATES THAT OUT OF 30 ACCOUNTS OPENED IN THE BANK 22 WERE CLOSED IN A HUSH HUSH MANNER. IT(SS)A NOS.425 AND 426/AHD/2003 SHRI PANKAJ P SHAH & SMT. DIPIKA P SHAH 8 (N) INCOME-TAX RETURN OF SWEET HOME & HIRE PURCHASE PVT. LTD. WAS ALSO FILEDAFTER THE SEARCH TOOK PLACE. (O) THE APPELLANT AND HIS WIFE WERE RECEIVING RENT INCOME DURING THE BLOCK PERIOD WHICH HAS NOT BEEN QUANTIFIED IN THE A BSENCE OF PROOF. IT CAN BE MORE THAN SUITED AFTER THE SEARCH. PERUSAL OF THE AFORESAID FACTS AND CIRCUMSTANCES RE VEAL THAT THE APPELLANT GROSSLY NEGLECTED TO PAY TAXES DURING THE BLOCK PER IOD. APART FROM THE SEIZED DOCUMENTS, NO BOOKS OR RELEVANT DOCUMENTS WE RE AVAILABLE WITH THE APPELLANT THE APPELLANT IS NOT ENTITLED FOR THE BENEFIT OF INDEXATION FOR THE PURPOSE OF CAPITAL GAINS SINCE THE RELEVANT FAC TS WERE NOT EXPLAINED BEFORE THE SEARCH NOR EVEN BY FILING A VALID RETURN IN RESPONSE TO NOTICE UNDER SECTION 158BC OF THE ACT. IN FACT THE ASSESSI NG OFFICER SHOULD LOOK IN TO THE ORIGINAL INVESTMENTS PRIOR TO THE BLOCK P ERIOD AND TAKE NECESSARY REMEDIAL ACTION. SALE PROCEEDS OF 21 FLATS BELONGIN G TO THE APPELLANT AND HIS WIFE HAVE BEEN RECEIVED DURING THE BLOCK PERIOD FOR WHICH THE ADMITTED RECEIPT IS ROUND 52 LAKH. THE FACTS AND CIRCUMSTANC ES UNDER WHICH FLATS WERE IRREGULARLY TRANSFERRED MAY BE VERIFIED AND FU RTHER NECESSARY ACTION TAKEN ACCORDINGLY. THE CRUX OF THE MATTER IS THAT T HE APPELLANT HAS POCKETED THE ENTIRE MONEY OF SALE PROCEEDS OF FLATS WITHOUT PAYING ANY STAMP DUTY OR INCOME-TAX. THE AO IS JUSTIFIED IN DE TERMINING UNDISCLOSED INCOME OF RS.42,71,000/- IN THE HANDS OF THE APPELL ANT. THUS, ADDITION MADE BY THE AO IS UPHELD. 4. LIKEWISE, IN THE CASE OF DIPIKABEN P SHAH, THE LD. CIT(A) REDUCED THE ADDITION TO RS. 13,40,000/- IN THE FOLL OWING TERMS: 6. GROUND NO.(2) AND (6) PERTAINING TO ADDITION OF RS.27,16,438/- ARE IDENTICAL AND DISPOSED OF ACCORDINGLY. THE APPELLAN T HAS PLEADED THAT FDRS AND INVESTMENTS IN SHARES OF SWEET HOME & HIRE PURCHASES PVT. LTD. WERE EXPLAINED TO THE ASSESSING OFFICER WHO AR BITRARILY MADE THE ABOVE ADDITION, IT WAS SUBMITTED THAT OUT OF 21 FLA TS SOLD DURING THE BLOCK PERIOD ONLY 8 BELONGED TO THE APPELLANT. THE APPELL ANT FURTHER OBJECTED TO THE MANNER IN WHICH RECEIPTS OF RENTAL INCOME AND I NDEXATION OF COST OF FLATS FOR THE PURPOSE OF CAPITAL GAINS WAS REJECTED BY THE ASSESSING OFFICER. IN VIEW OF THESE FACTS THE APPELLANT PLEADED THAT H ER INCOME WAS BELOW THE TAXABLE LIMIT DURING THE ASSESSMENT YEARS CORRESPON DING TO THE BLOCK PERIOD AND HENCE RETURNS; WERE NOT FILED. IT WAS RE ITERATED THAT ADDITION MADE BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME OF THE BLOCK PERIOD BE DELETED. 7. I HAVE PERUSED THE SUBMISSIONS OF THE APPELLANT AND CONTENTIONS RAISED THEREIN. HOWEVER, THE ASSESSING OFFICER APPE ARS TO HAVE MADE ADDITION ON THE BASIS OF SEIZED MATERIAL FOUND DURI NG THE COURSE OF SEARCH IT(SS)A NOS.425 AND 426/AHD/2003 SHRI PANKAJ P SHAH & SMT. DIPIKA P SHAH 9 PROCEEDINGS. IT IS A MATTER OF RECORD AND FACT THAT APPELLANTS HUSBAND ADMITTED IN A STATEMENT UNDER SECTION 132(4) OF THE ACT THAT HE HIMSELF MADE UNACCOUNTED INVESTMENT IN SWEET HOME & HIRE PU RCHASES PVT. LTD. IT WAS CATEGORICALLY STATED BY SHRI PANKAJ PRAVITIC HANDRA SHAH THAT UNACCOUNTED INVESTMENT WAS MADE IN FDRS AND SHARES OF THE AFORESAID CONCERN. IT IS ALSO PROVED FROM THE SEIZED DOCUMENT S AND BANK RECORDS THAT ALL INVESTMENTS WERE MADE BY THE APPELLANT, HE R HUSBAND IN OWN NAME AND IN BENAMI NAMES. ANY EVIDENCE CONCOCTED BY THE APPELLANT IS A CLEAR FABRICATION OF FACTS. PERUSAL OF AFORESAID FA CTS AND CIRCUMSTANCES REVEAL THAT THE APPELLANT GROSSLY NEGLECTED TO PAY TAXES DURING THE BLOCK PERIOD. APART FROM THE SEIZED DOCUMENTS, NO BOOKS O R RELEVANT DOCUMENTS WERE AVAILABLE WITH THE APPELLANT, THE APPELLANT IS NOT ENTITLED FOR THE BENEFIT OF INDEXATION FOR THE PURPOSE OF CAPITAL GA INS SINCE THE RELEVANT FACTS WERE NOT EXPLAINED BEFORE THE SEARCH NOR EVEN BY FILING A VALID RETURN IN RESPONSE TO NOTICE UNDER SECTION 158BC OF THE AC T. IN FACT THE ASSESSING OFFICER SHOULD LOOK INTO THE ORIGINAL INVESTMENTS P RIOR TO THE BLOCK PERIOD AND TAKE NECESSARY REMEDIAL ACTION. SALE PROCEEDS O F 21 FLATS BELONGING TO THE APPELLANT AND HER HUSBAND HAVE BEEN RECEIVED DU RING THE BLOCK PERIOD FOR WHICH THE ADMITTED RECEIPT IS AROUND 52 LAKHS T HE FACTS AND CIRCUMSTANCE UNDER WHICH THE FLATS WERE IRREGULARLY TRANSFERRED MAY BE VERIFIED AND FURTHER NECESSARY ACTION TAKEN ACCORDI NGLY. THE CRUX OF THE MATTER IS THAT THE APPELLANT HAS POCKETED THE ENTIR E MONEY OF SALE PROCEEDS OF FLATS WITHOUT PAYING ANY STAMP DUTY OR INCOME-TAX. 7.1 HOWEVER TO BE FAIR AND REASONABLE THE ASSESSING OFFICER SHOULD HAVE APPLIED THE ANALOGY TO THE PRESENT CASE AS IS DONE IN THE CASE OF THE APPELLANT'S HUSBAND. TOTAL UNACCOUNTED INVESTMENT O R UNDISCLOSED INCOME IS AT RS.13.40.000/- (RS.4,00,000/- + RS.9,40.000/- ) BUT THE ASSESSING OFFICER HAS ADOPTED THE RECEIPT SHOWN BY THE APPELL ANT AT RS.27,16,438/- DURING THE BLOCK PERIOD WHILE WORKING OUT HER INCOM E BELOW TAXABLE LIMIT. IN MY OPINION RECEIPTS ON THE BASIS OF FABRICATED EVID ENCE CANNOT BE TREATED AS INCOME. IN VIEW OF THESE FACTS THE ASSESSING OFF ICER IS DIRECTED TO ADOPT RS.13,40,000/- AS UNDISCLOSED INCOME OF THE APPELLA NT FOR THE BLOCK PERIOD. INCOME OVER AND ABOVE THE SAID AMOUNT FORMING PART OF UNDISCLOSED INCOME- DETERMINED BY THE ASSESSING OFFICER IS DELE TED THUS ADDITION OF RS.13,40,000/- IS UPHELD. 5. THESE TWO ASSESSES ARE NOW IN APPEAL AGAINST TH E AFORESAID FINDINGS OF LD. CIT(A). AT THE OUTSET, THE LD. AR O N BEHALF OF THE ASSESSEE ARGUED THAT MATTER IS REQUIRED TO BE RESTO RED TO THE FILE OF THE AO SINCE SALE PROCEEDS OF FLATS HAVE NOT BEEN C ONSIDERED WHILE DETERMINING THE UNDISCLOSED INCOME ON THE BASIS OF INVESTMENTS, EVEN WHEN EVIDENCE OF SALE OF FLATS WAS FOUND DURIN G THE COURSE OF SEARCH AND THE LD. CIT(A) HAVE ALSO MENTIONED ABO UT SUCH SALE IN IT(SS)A NOS.425 AND 426/AHD/2003 SHRI PANKAJ P SHAH & SMT. DIPIKA P SHAH 10 THE IMPUGNED ORDERS. THE LEARNED DR, ON THE OTHER H AND, SUBMITTED THAT UNLESS NEXUS OF SALE PROCEEDS OF FLATS IS EST ABLISHED WITH THE INVESTMENTS IN FIXED DEPOSITS OR SHARES, NO SUCH BE NEFIT COULD BE GIVEN. TO A QUERY BY THE BENCH, THE LD. AR SUBMITT ED THAT THEY WOULD ESTABLISH NEXUS OF SALE PROCEEDS OF FLATS WIT H THE AFORESAID INVESTMENTS IN THE EVENT MATTER IS RESTORED BACK. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. UNDISPUTEDLY, THESE TWO ASSESSEES NEVER FILED THEIR RETURN OF INCOME PRIOR TO SEARCH. THERE IS NO DISPUTE THAT THE FOLLOWING INVESTMENTS WERE FOUND TO HAVE BEEN MADE BY THE TWO ASSESSEES DURING THE BLOCK PERIOD: NAME OF THE ASSESSEE INVESTMENT IN F.D. INVESTMENT IN SHARES TOTAL INVESTMENT PANKAJ P SHAH 26,00,000 16,71,000 42,71,000 DIPIKABEN P SHAH 4,00,000 9,40,000 13,40,000 THE ONLY DISPUTE BEFORE US IS THAT THE SALE PROCEE DS OF CERTAIN FLATS WERE NOT CONSIDERED WHILE DETERMINING UNDISCLOSED I NCOME. THESE ASSESSEES CLAIMED THAT THEY HAD UTILISED SUCH SALE PROCEEDS IN THE AFORESAID INVESTMENTS WHILE THEY DID NOT ESTABLISH THE NEXUS OF SUCH SALE PROCEEDS WITH THE AFORESAID INVESTMENTS B EFORE THE LOWER AUTHORITIES. SINCE THE ONLY PLEA ON BEHALF OF THESE ASSESSEES NOW IS THAT THEY SHOULD BE ALLOWED OPPORTUNITY TO ESTABLI SH NEXUS OF SALE PROCEEDS WITH THE AFORESAID INVESTMENTS, IN THE INT EREST OF JUSTICE AND FAIR PLAY, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDERS OF THE LD. CIT(A) AND RESTORE THE ISSUE RAISED IN THE GRO UND NOS.1 &4 TO THE FILE OF THE AO WITH THE DIRECTIONS TO ALLOW SUFFICIENT OPPORTUN ITY TO THESE ASSESSEES FOR ESTABLISHING NEXUS OF THE SALE PROCEEDS OF VARIOUS FLATS WITH THE RESPECTIVE INVESTMENTS MADE BY THEM AND THEREAFTER, PASS A SPE AKING ORDER IN ACCORDANCE WITH LAW . WITH THESE OBSERVATIONS, GROUND NOS. 1 & 4 ARE DISPOSED OF. IT(SS)A NOS.425 AND 426/AHD/2003 SHRI PANKAJ P SHAH & SMT. DIPIKA P SHAH 11 7. GROUND NOS. 2 & 6 BEING GENERAL IN NATURE NO R ANY SUBMISSIONS HAVING BEEN MADE BEFORE US ON THESE GROUNDS AS ALSO ON GROUND N OS. 3 &5, ALL THESE GROUNDS ARE DISMISSED. EVEN OTHERWISE THE TRIBUNAL HAVE NO JURISDICTION TO DECIDE THE VALIDITY OF SEARCH AND THEREFORE, THE GROUND NO.3 I NVOLVING THE ISSUE OF VALIDITY OF SEARCH IS LIABLE TO BE REJECTED AS SUCH IN VIEW OF DECISION IN THE CASE OF PROMAIN LTD. V. DY. CIT [2005] 95 ITD 489 (DELHI) (SB) . 8. IN THE RESULT BOTH THESE APPEALS ARE PARTLY ALLO WED, BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 23 -7-2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 23 -7-2010 COPY OF THE ORDER FORWARDED TO: 1. I) SHRI PANKAJ PRAVINCHANDRA SHAH & II) SMT. DIPIKABEN PANKAJ SHAH, 3, SWEET HOME APARTMENT, GHOD DOD ROAD, ATHWALINES, SURAT-395 007 2. DCIT, CENTRAL CIRCLE-1, SURAT 3. CIT CONCERNED 4. CIT(A)-II, AHMEDABAD, 5. THE DR, BENCH-C, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD