The ACIT, Circle-5, Surat V. Nilesh H.Vakilna, Surat

ITSSA 5/AHD/2008

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9332 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-05-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-05-2010
• Assessment Year: misc
• Appeal Filed On: 11-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIDDHARTH MUK HERJEE
• Assessee Lawyers: B S TALA TI
• Keywords: Unexplained investment; Income from undisclosed sources; Peak credit; Block assessment; Documents seized
• Section: 133(6); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.(S.S.)A. NO. 05/AHD./2008 ASSESSMENT YEAR : BLOCK ASSESSMENT 1989-1990 TO 199 8-1999 ASSISTANT COMMISSIONER OF INCOME TAX, -VS.- SHR I NILESH H. VAKILNA, SURAT CIRCLE-5, SURAT (PAN : AAMPV 1243 L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SIDDHARTH MUK HERJEE, SR. D.R. RESPONDENT BY : SHRI B.S. TALATI O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 30.11.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-III, SURAT REST RICTING THE ADDITION MADE BY THE ASSESSING OFFICER TO RS.3,67,667/- INSTEAD OF RS.13,73,705/- FOR THE BLOCK PERIOD 1989-90 TO 1998-99. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF CARS. FOR THE ASSESSMENT YEAR UNDER APPEAL, SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT WAS CARRIED ON 13.10.1998. THE ORIGI NAL ASSESSMENT UNDER SECTION 158BC WAS MADE ON 31.10.2000 DETERMINING TOTAL INCOME OF RS.1 3,73,705/-. ON APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE EN TIRE ADDITION MADE BY THE ASSESSING OFFICER. ON FURTHER APPEAL BY THE REVENUE AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), TRIBUNAL VIDE ORDER DATED 13.10.2005 IN IT(SS)A NO. 101/AHD/2001 FOR THE BLOCK PERIOD 1989-90 TO 1998-99 SET ASIDE THE ORDER TO TH E FILE OF ASSESSING OFFICER FOR VERIFICATION OF FACTS FROM THE RECORD AFTER GIVING REASONABLE OPPOR TUNITY TO THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICER PASSED FRESH ORDER UNDER SECTION 158BC READ WITH SECTION 254 OF THE INCOME TAX ACT ON 27.12.2006 COMPUTING UNDISCLOSED INCOME AT RS.13,73,705/-. DURING FRESH ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE WAS HAVING FIVE BANK 2 IT(SS)A NO.05/AHD/20 08 ACCOUNTS IN BENANI NAMES, WHICH WERE NOT SHOWN IN T HE BOOKS OF ACCOUNTS. THESE ACCOUNTS WERE USED FOR SALE AND PURCHASE OF CARS BY MAKING HIS OW N INVESTMENT, SINCE THERE WAS A PREMIUM ON MARUTI CARS DURING THE PERIOD. THE ASSESSING OFFICE R CONSOLIDATED ALL THE BANK ACCOUNTS AND WORKED OUT THE PEAK OF CREDIT AT RS.10,60,252/- AFT ER IGNORING ENTRIES OF RS.25,000/- FROM CREDIT AS WELL AS DEBIT SIDES. THE A.O. TREATED THE AMOUN T OF RS.10,60,252/- AS UNEXPLAINED INVESTMENT OF THE ASSESSEE AS ON 16.07.1997. THE A.O. ALSO WOR KED OUT UNEXPLAINED INVESTMENT AS ON 13.10.1998 ON THE GROUND THAT THIS INVESTMENT WAS M ADE IN PURCHASE OF FOUR CARS BOOKED IN THE NAMES OF N. PATEL, M.N. KUMAR, RAJU PATEL AND GOVIN D PARIWAL TOTALING RS.8,38,780/- AND THE BANK BALANCE AS ON THIS DATE AT RS.5,34,925/-. THE SUM OF THESE TWO AMOUNTS WAS TREATED AS UNEXPLAINED INVESTMENT ON THIS PARTICULAR DATE BY T HE A.O. FURTHER, THE A.O. OBSERVED THAT THE ASSESSEE HAD MADE INVESTMENT OF RS.8,92,000/- IN BO OKING OF FIVE CARS ON 31.7.98 AND TREATED THE SAME AS UNEXPLAINED INVESTMENT ALONG WITH BANK BALA NCE OF RS.3,52,753/- AS ON THAT PARTICULAR DATE. THE AO ALSO COMPUTED THE UNEXPLAINED INVESTME NT AS ON 30.6.98 ON THE GROUND THAT THE ASSESSEE HAD ADMITTED THAT SHRI VINAY BAID OF M/S. SHREYANS LEASE AND FINANCE CO. HAD GIVEN HIM RS.12 LACS IN CASH WHICH WAS DEPOSITED WITH DHR UV MOTORS FOR CAR BOOKING. THE SAID PERSON IN HIS STATEMENT RECORDED BY DDIT DENIED HAVING GIV EN MONEY TO THE ASSESSEE AND ALSO DID NOT PRODUCE SHRI BAID WHEN HE WAS GIVEN OPPORTUNITY OF CROSS EXAMINING. THE AO TREATED THIS AMOUNT OF RS.12 LACS AS ALSO THE BANK BALANCE AS ON 30.6.98 AT RS.1,15,012 AS UNEXPLAINED INVESTMENT OF THE ASSESSEE ON THAT PARTICULAR DATE. THE AO ON THE BASIS OF SEIZED MATERIAL INVENTORISED AS BS-1 FURTHER HELD THAT INVESTMENT M ADE FOR FOUR VEHICLES IN THE NAMES OF MAHESH PATEL, MIHIR PATEL, HASMUKHBHAI AND NILESH SHAH ADD ING UP TO RS.6 LACS WAS UNEXPLAINED INVESTMENT IN FINANCIAL YEAR 1995-96. HOWEVER, NO S EPARATE ADDITION ON THIS ACCOUNT WAS MADE, SINCE THE PEAK INVESTMENT WORKED OUT BY THE AO WAS MORE THAN THIS AMOUNT. ON THE BASIS OF ABOVE OBSERVATIONS, THE AO WORKED OUT PEAK INVESTME NT AT RS.13,73,705/- AS ON 13.10.98 AND MADE AN ADDITION OF RS.10,73,705/- BEING THE DIFFER ENCE BETWEEN THE PEAK INVESTMENT AND UNDISCLOSED INCOME OF RS.3 LACS SHOWN BY THE ASSESS EE. 3. ON APPEAL, AGAINST THE FRESH ASSESSMENT ORDER UN DER SECTION 158BC READ WITH SECTION 254 OF THE INCOME TAX AC T DATED 27.12.2006, IN THE IMP UGNED ORDER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE ADDITION TO RS. 3,67,667/- BEING THE PEAK OF CREDITS ON 3 IT(SS)A NO.05/AHD/20 08 26.5.98 WHICH IS WORKED OUT AFTER EXCLUSION OF CHEQ UES RECEIVED FROM THE FINANCE COMPANIES AND CREDIT AND DEBIT ENTRIES BELOW RS.25,000/-. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENU E IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF R EVENUE SHRI SIDDHARTH MUKHERJEE, SR. D.R. APPEARED AND TOOK UP THROUGH THE RELEVANT PORT ION OF VARIOUS ORDERS OF A.O., CIT(A) AS WELL AS EARLIER ORDER OF THE TRIBUNAL. THE LD. D.R. POINTED OUT THAT THE VIEW TAKEN BY THE LD. CIT(A), SURAT IS NOT ACCEPTABLE BECAUSE THE A.O. WO RKED OUT THE PEAK INVESTMENT OF RS.13,73,705/- BEING UNACCOUNTED INVESTMENT OF RS.8 ,38,780/- MADE BY THE ASSESSEE IN CARS BOOKED IN THE NAME OF OTHER PERSONS AND UNEXPLAINED BANK BALANCE AS ON 13.10.98 OF RS.5,43,925/-. THESE ADDITIONS WERE MADE BECAUSE BE FORE THE A.O., THE ASSESSEE FAILED TO FURNISH THE CONFIRMATION LETTERS FROM THE PARTIES FROM WHOM MONEY WAS CLAIMED TO HAVE BEEN RECEIVED. SECONDLY, THE LD. CIT(A), SURAT HAD ACCEPTED THE FR ESH EVIDENCES IN VIOLATION OF RULE 46A BEFORE ACCEPTING THE PEA OF THE ASSESSEE THAT INVESTMENT W AS MADE IN THE NAME OF ASSESSEE PERTAINS TO OTHER PERSONS, HE SHOULD HAVE GIVEN THE OPPORTUNITY TO PRESENT THE CASE TO THE A.O. THE LD. D.R. SUGGESTED THAT THE ACTION OF A.O. IN MAKING THE ADD ITION OF RS.13,73,705/- IS IN ORDER AND THE ORDER OF LD. CIT(A) BE SET ASIDE AND THE ADDITION M ADE BY THE A.O. BE RESTORED. 6. ON THE OTHER HAND, SHRI B.S. TALATI APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF LD. COMMISSIONER OF INCOME T AX (APPEALS). THE LD. COUNSEL OF THE ASSESSEE EXPLAINED THAT EARLIER, THE LD. CIT(A)-IV, BARODA DELETED THE ADDITION AFTER OBTAINING THE REMAND REPORT FROM THE ASSESSING OFFICER. THE SECON D APPEAL WAS FILED BY THE REVENUE BEFORE THE ITAT AND THE MATTER WAS SET ASIDE TO THE FILE O F ASSESSING OFFICER WITH THE DIRECTION TO MAKE FRESH ASSESSMENT AFTER ALLOWING OPPORTUNITY TO THE ASSESSEE. CONTINUING HIS ARGUMENT, THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THE ASSESS EE ONCE AGAIN FILED ALL THE CONFIRMATIONS FROM FINANCE COMPANIES ALONG WITH PEAK BALANCES WORKING. CONFIRMATIONS FROM DHRU MOTORS IN SUPPORT OF CAR BOOKED BY PERSONS OTHER THAN THE ASS ESSEE AND XEROX COPIES OF INVOICES, GATE PASSES AND RECEIPTS WERE ALSO FILED VIDE LETTER DAT ED 19.10.2006. FULL ADDRESSES OF FINANCE COMPANIES ALONG WITH NEW ADDRESSES IF THERE WAS ANY CHANGE IN THE ADDRESS, WERE ALSO FILED VIDE LETTER DATED 4.12.2006. THE ASSESSEE HAD ALSO REQUE STED THE AO TO ISSUE NOTICE UNDER SECTION 4 IT(SS)A NO.05/AHD/20 08 133(6) OR TO ISSUE SUMMONS OR TO TAKE APPROPRIATE A CTION SO THAT THE MATTER WOULD COME TO AN END ONCE AND FOR ALL VIDE LETTER DATED 15.12.2006. THE A.O. DID NOTHING, NO LETTERS WERE WRITTEN, NO INQUIRIES WERE MADE AND PASSED THE SAME ASSESSMENT ORDER AS IT WAS PASSED BY THE THEN A.O. IGNORING THE EVIDENCES ADDUCED BY THE ASSESSEE BEFO RE HIM AND AGAIN MADE THE ADDITION. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT BEFO RE THE LD. CIT(A), THE ASSESSEE HAS NOT FURNISHED ANY FRESH EVIDENCE, WHATEVER EVIDENCES, F URNISHED WERE CONSIDERED BY THE LD. CIT(A) IN ITS EARLIER ORDER, ARE AVAILABLE ON RECORD, WHIC H IS EVIDENT FROM THE REMAND REPORT SUBMITTED BY THE AO TO THE LD. CIT(A). HE SUBMITTED THAT THE ADD ITION MADE BY THE A.O. ON DOUBTS AND SUSPICION IS RIGHTLY DELETED BY THE LD. CIT(A). THE REFORE, THE VIEW TAKEN BY THE LD. CIT(A) BE UPHELD. 7. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND PERUSED THE MATERIAL PLACED BEFORE US. IT IS PERTINENT TO NOTE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 08.3.99 DECLARING UNDISCLOSED I NCOME OF RS.3 LACS. THE ASSESSEE FILED ALL THE CONFIRMATIONS FROM FINANCE COMPANIES ALONG WITH PEA K BALANCES WORKING. CONFIRMATIONS FROM DHRU MOTORS IN SUPPORT OF CAR BOOKED BY PERSONS OTH ER THAN THE ASSESSEE AND XEROX COPIES OF INVOICES, GATE PASSES AND RECEIPTS WERE ALSO FILED VIDE LETTER DATED 19.10.2006. FULL ADDRESSES OF FINANCE COMPANIES ALONG WITH NEW ADDRESSES IF THERE WAS ANY CHANGE IN THE ADDRESS, WERE ALSO FILED VIDE LETTER DATED 4.12.2006. BEFORE THE A.O. IN THESE CIRCUMSTANCES, AFTER CONSIDERING THE MODUS OPERANDI OF THE ASSESSEE AND THE DIRECTION OF THE TRIBUNAL VIDE ORDER DATED 13.10.2005 IN IT(SS)A NO. 101/AHD/2001 FOR THE BLOCK PERIOD 1989- 90 TO 1998-99, IN OUR CONSIDERED OPINION, THE LD. CIT(A) RIGHTLY RESTRICTED THE ADDITION TO R S.3,67,667/- BEING THE PEAK ON 26.5.98 WHICH IS WORKED OUT AFTER EXCLUSION OF CHEQUES RECEIVED FROM THE FINANCE COMPANIES OF THE CREDIT AND DEBIT ENTRIES BELOW RS.25,000/-. 8. WITH REGARD TO THE ADDITION OF RS.12,44,787/- MA DE BY THE ASSESSING OFFICER AS UNEXPLAINED INVESTMENT AS ON 31.7.98, IT IS PERTINE NT TO NOTE THAT THIS ADDITION WAS MADE ON THE BASIS OF BOOKING OF CARS IN THE NAMES OF THIRD PART Y AND BANK BALANCE AS ON THAT DATE. THE LD. CIT(A) DELETED THIS ADDITION ON THE GROUND THAT IT IS NOT SUSTAINABLE BY THE SAME LOGIC AS IN THE PRECEDING PARAGRAPHS. IN OUR CONSIDERED OPINION, TH E LD. CIT(A) HAS GIVEN COGENT REASON. WE, THEREFORE, DECLINE TO INTERFERE. 5 IT(SS)A NO.05/AHD/20 08 8.1. IN THE IMPUGNED ORDER, THE LD. CIT(A) ALSO HE LD THAT FURTHER ADDITION OF RS.13,21,012/-, THE ADDITION OF RS.6,00,000/- AND FURTHER ADDITION OF RS.4,60,577/- CANNOT BE MADE FOR THE DETAILED REASONS GIVEN ON PAGES 4-5 OF THE IMPUGNED ORDER, WHICH READS AS UNDER :- A FURTHER ADDITION OF RS.13,21,012/- AS UNACCOUNTE D INVESTMENT BY THE APPELLANT ON ACCOUNT OF UNEXPLAINED BOOKING OF CARS IN JUNE, 1998 AND BANK BALANCE AS ON 30.6.98 HAS BEEN MADE BY THE A.O. IN THIS CONTEXT THE APPELLANT SUBMITTED THAT HE HAD FILED AN AFFIDAVIT CATEGORICALLY STATING THAT H E HAD NOT RECEIVED ANY AMOUNT FROM SHRI VINAY BAID AND A SUM OF RS.10 LACS WAS PA ID BY SHRI BAID TO M/S. DHRU MOTORS, IN THE PRESENCE OF THE APPELLANT. THIS WAS ALSO STATED BY SHRI BAID IN HIS STATEMENT RECORDED BY THE DDIT ON 4.1.1999 AND THER EFORE, THE ADDITION HAS BEEN MADE WITHOUT ANY COGENT EVIDENCE. AFTER GOING THROU GH THE DETAILS I FIND THAT THE APPELLANTS CONTENTION IS IN ORDER. WHEN SHRI BAID HIMSELF STATED THAT HE HAD NOT PAID ANY MONEY TO THE APPELLANT AND THE CARS WERE A LSO BOOKED BY HIM, THERE IS NO REASON OR JUSTIFICATION FOR TREATING THIS AMOUNT AS UNEXPLAINED INVESTMENT FOR BOOKING OF CARS IN THE HANDS OF THE APPELLANT. AFTER ADDITION OF RS.6 LACS ON THE BASIS OF BOOKS S EIZED AND INVENTORIZED AS BSI FOR UNACCOUNTED INVESTMENT IN FOUR VEHICLES WAS MADE BY THE AO. HOWEVER, IT IS SEEN THAT THE INVESTMENTS WERE MADE B Y MAHESH PATEL, MI HIR PATEL, HASMUKHBHAI AND NILESH SHAH. A PERUSAL OF THE REGISTER SHOWS THAT T HESE CARS WERE OLD CARS AND THE REGISTER WAS MAINTAINED AS PART OF THE BROKERAGE BU SINESS. THE REGISTER DESCRIBES THE SELLER AND PURCHASER OF CAR AND THE BROKERAGE I NCOME WAS DECLARED BY THE APPELLANT IN HIS REGULAR R4ETURNS. THEREFORE, THERE IS NO JUSTIFICATION IN TREATING THIS AMOUNT AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE APPELLANT. THE A.O. FURTHER MADE AN ADDITION OF RS.4,60,577/- AS UNACCOUNTED COMMISSION INCOME ON THE BASIS OF DOCUMENTS SEIZED FROM THE PR EMISES OF M/S. DHRU MOTORS, HOWEVER, A PERUSAL OF THE DOCUMENT SHOWS THAT THE C OMMISSION WAS IN THE NAMES OF NAHAR LEASING, NIKIBEN, HEMANT VAKILNA, M.M. PAT EL, NIKI DHANSUKHIA, ETC. THE AO HAS NOWHERE MADE ANY CASE THAT THESE PERSONS WERE IN ANYWAY RELATED TO THE APPELLANT OR THAT THE COMMISSION REPORTEDLY PAI D TO THESE PERSONS FLOWED BACK TO THE APPELLANT IN ANY FORM. THIS CONCLUSION OF TH E AO BASED ON A CHART SEIZED FROM THE PREMISES OF THE THIRD PARTY, HAVING NO CON NECTION WITH THE APPELLANT, IS WITHOUT ANY BASIS AND NO ADDITION ON THIS ACCOUNT C AN BE MADE. 9. TO SUM UP, WE ARE OF THE VIEW THAT THE LD. CIT(A ) HAS GIVEN COGENT REASONS FOR COMPUTING THE UNACCOUNTED INCOME OF THE ASSESSEE ON THE BASIS OF PEAK OF CREDITS IN CONSOLIDATED BANK ACCOUNTS IN BENAMI NAMES AS DISCUSSED BY HIM I N THE IMPUGNED ORDER. THIS COMPUTATION IS IN CONSONANCE WITH THE DIRECTION OF THE TRIBUNAL IN ORDER DATED 13.10.2005 IN IT(SS)A NO. 6 IT(SS)A NO.05/AHD/20 08 101/AHD/2001 FOR THE BLOCK PERIOD 1989-90 TO 1998-9 9(SUPRA). WE, THEREFORE, DECLINE TO INTERFERE. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 21.05.2010 . SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 / 05 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.