The ACIT, Circle-1, Bhavnagar V. Shri Kirit V.Patel, Bhavnagar

ITSSA 45/AHD/2009

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9112 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-02-2013
• Assessment Year: misc
• Appeal Filed On: 20-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLY JINDAL
• Assessee Lawyers: MUKESH M PATEL
• Keywords: Unexplained investment; Income from undisclosed sources; Document seized; Block assessment; Documents seized
• Section: 32; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTA NT MEMBER DCIT CENTRAL CIRCLE 2(2) AHMEDABAD (APPELLANT) VS SRI KIRITBHAI V. PATEL 2233-H, HILL DRIVE, OPP: SANGHVI SADAN TALAJA ROAD, BHAVNAGAR (RESPONDENT) REVENUE BY: SRI SHELLY JINDAL, CIT- D. R. ASSESSEE BY: SRI MUKESH M. PATEL, A. R. DATE OF HEARING : 19-2-2013 DATE OF PRONOUNCEMENT : 05-4-2013 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE REVENUES APPEAL AGAINST THE ORDER OF LD. CIT(A)-III DATED 20-03-2009. THE REVENUE HAS TAKEN FOLLOWING EFFECT IVE GROUNDS:- 1. THE LD. CIT(A)-III, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION OF RS. 17,36,436/- MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INCOME OF THE ASSESSEE TO RS. 8,31,6 45/- ONLY, WITHOUT IT(SS)A NO. 45/AHD/2009 BLOCK ASSTT. 01-04-1989 TO 16-11-1999 I.T.(SS)A NO.45/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. KIRITBHAI V. PATEL 2 PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER. 1.2 IN DOING SO, THE LD. CIT(A)-III, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF TO THE EXTENT O F RS. 9,04,791/- BY SETTING OFF THE UNDISCLOSED INCOME OF EARLIER YEAR ASSESSED IN THE CASE OF THE ASSESSEE AS WELL AS BY TELESCOPING THE UNDIS CLOSED INCOME OF THE GROUP, WITHOUT APPRECIATING THAT THE ASSESSEE COULD NOT ESTABLISH ANY NEXUS BETWEEN THE SAID UNDISCLOSED INCOME AND THE U NEXPLAINED INVESTMENT OF RS. 9,04,791/-ASSESSED BY THE AO AS A SSESSEES INCOME FROM UNDISCLOSED SOURCES . 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S 1 32 WAS CARRIED OUT IN THE MANEK GROUP CASES. THE ASSESSEE BEING A SHAREHOL DER AND DIRECTOR OF THE COMPANIES, GUJRAT MULTI GAS BASE CHEMICALS PVT. LTD (GMGB) AND MANEK CHEMICALS PVT. LTD (MPCL), SEARCH WAS ALSO CONDUCTE D AT HIS RESIDENCE AT BHAVNAGAR. ON THE BASIS OF SEIZED DOCUMENTS AND ST ATEMENTS RECORDED UNDISCLOSED INCOME OF ASSESSEE WAS ASSESSED AT RS. 17,36,546/- ON ACCOUNT OF VARIOUS ADDITIONS. LD. CIT(A) GAVE RELIEF TO TH E ASSESSEE BY OBSERVING AS UNDER:- 12. THE CONTENTION OF THE APPELLANT SEEKING TELESC OPING OF THE UNDISCLOSED INCOME OF THE GROUP FOR ACQUISITION OF THE UNEXPLAINED INVESTMENTS CANNOT BE IGNORED IN THE FACTS OF THE C ASE. THE RATIO LAID DOWN BY THE APEX COURT IN THE CASE OF ANANTHARAM VE ERASANGIAH (SUPRA) DULY SUPPORTS THIS PROPOSITION. IN ITS PET ITION BEFORE THE SETTLEMENT COMMISSION ALSO, FILED BEFORE THE FINALI ZATION OF THE BLOCK ASSESSMENT, THE APPELLANT AND HIS BROTHER HAD SOUGH T TELESCOPING OF THE UNDISCLOSED INCOME FOR THE THREE GROUP CONCERNS , AS BEING THE SOURCE FOR THEIR INVESTMENTS MADE IN CASH. THE STA TEMENT U/S. 131 OF THE GROUP HEAD, SHRI DASHRATHBHAI SUPPORTS THE CONT ENTION OF THE APPELLANT THAT HE AND HIS BROTHER HAD RECEIVED FUND S TO MAKE THE INVESTMENTS, WHICH HAVE BEEN ACCEPTED AS UNDISCLOSE D. I.T.(SS)A NO.45/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. KIRITBHAI V. PATEL 3 13. IN THE APPEALS OF THE THREE GROUP CONCERNS GMGB , MCPL AND SRCI IN APPEAL NO. CIT(A)-III 39,40 & 43/ACIT/CC-2( 2)/08-09 DATED 19-03-2009, THE GROUP HAS ACCEPTED THE DETERMINATIO N OF THE UNDISCLOSED INCOME OF RS. 2.03 CRORES AND PAYMENT O F DUE TAX THEREON. THE YEAR-WISE CASH FLOW CHART (COPY ANNEX ED WITH THIS ORDER AS ANNEXURE A) OF THE THREE GROUP CONCERNS, PREPA RED AND RELIED UPON BY THE APPELLANT ON THE BASIS OF THE AFORESAID INCOME CONFIRMED BY THE GROUP AS ITS UNDISCLOSED INCOME, REVEAL THE NET CASH BALANCE (REPRESENTING THE DIFFERENCE BETWEEN RECEIPTS AND P AYMENTS) OF AROUND RS. 93 LAKHS, WHICH ADEQUATELY EXPLAINS THE FUNDS UTILIZED IN THE PURCHASES AND INVESTMENTS MADE BY THE APPELLANT , HIS BROTHER AND GUJRAT MINECHEM, A PARTNERSHIP FIRM OF THE GROUP, D URING THE BLOCK PERIOD, WHICH IN ANY CASE DO NOT EXCEED RS. 87 LAKH S, EVEN ON THE BASIS OF THE ADDITIONS MADE BY THE A.O. MOREOVER, APPEARED FROM THE YEAR-WISE CHART, OF UNEXPLAINED INVESTMENTS TO THE TUNE OF RS. 9,04,791/-, ADDED BY THE A.O. IN THE CASE OF THE AP PELLANT, WOULD ALSO CONSTITUTE A SOURCE FOR THE UNACCOUNTED RECEIPTS OF RS. 4.55 LAKH. 14. THUS OUT OF THE TOTAL UNDISCLOSED INCOME OF RS. 17,36,436/- ASSESSED BY THE AO, THE APPELLANT IS ENTITLED TO RE LIEF TO THE EXTENT OF RS. 9,04,791/- I.E. THE VALUE OF THE UNEXPLAINED IN VESTMENTS. THEREFORE, THE ADDITION MADE BY THE AO IS THEREFORE RESTRICTED TO RS. 8,31,645/- AS AGAINST THE UNDISCLOSED INCOME OF RS. 7,47,200/- OFFERED BEFORE THE SETTLEMENT COMMISSION. THE RELATED GROU NDS OF APPEAL ARE THEREFORE PARTLY ALLOWED ACCORDINGLY. IT IS CLEAR FROM THE ABOVE THAT LD. CIT(A) HAS GIVE N RELIEF TO THE ASSESSEE BY PLACING RELIANCE ON HIS DECISION IN THE CASES OF TH REE GROUP COMPANIES I.E. GMGB, MPCL & SRCI. SINCE THE ORDER OF THE LD. CIT( A) IN RESPECT OF THOSE COMPANIES HAS BEEN UPHELD BY US VIDE IT(SS)A NOS. 38,39 &40/AHD/2009, WE FEEL NO NEED TO INTERFERE WITH THE ORDER PASSED BY HIM AND THE SAME IS HEREBY UPHELD. I.T.(SS)A NO.45/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. KIRITBHAI V. PATEL 4 3. REVENUES APPEAL DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (T.R.MEENA) ( D.K.TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 05 /04/2013 AK / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# STRENGTHENED PREPARATION & DELIVERY OF ORDERS IN TH E ITAT 1) DATE OF TAKING DICTATION 20-03-2013 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE N.A. 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 21-03-2013 4) DATE OF CORRECTION 01-04-2013 5) DATE OF FURTHER CORRECTION XXXX 6) DATE OF INITIAL SIGN BY MEMBERS 02-04-2013 7) ORDER UPLOADED ON 05-04-2013 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) ORDER SENT TO BENCH CLERK 05-04-2013