Royale Manor Hotels & Ind. Ltd., Ahmedabad V. Dy. CIT., Cent. Circle-1(3), Ahmedabad

ITSSA 7/AHD/2008

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8601 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-12-2010
• Assessment Year: misc
• Appeal Filed On: 16-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Unexplained cash credit; Unexplained investment; Block assessment
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND D.C. AGRAWAL, ACCOUNTANT MEMBER) IT(SS)A NO.7/AHD/2008 (BLOCK PERIOD FROM 01.04.1985 TO 31.03.1995 & UPTO 05.09.1995) ROYALE MANOR HOTELS & IND. LTD. AIRPORT CROSS ROAD HANSOL, AHMEDABAD. VS. DCIT, CENT.CIR.1(3) AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR REVENUE BY : SHRI ANIL KUMAR O R D E R PER MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED AT THE BEHEST OF THE ASSESSEE, WHICH HAS EMANATED FROM THE ORDER PASSED UNDER SECTION 158BC R.W.S. 143(3) AND 254 OF THE INCOME TAX ACT, 1961. THE SUBSTANTIVE GROUNDS ARE GROUND NO.2 AND 2.1 WHICH ARE REPRODUCED BELOW: 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANTS CASE, THE AO HAS ERRED IN ASSESSING THE AMOUNT OF RS.15,66,000/- AS UNDISCLOSED INCOME FOR THE ALLEGED UNEXPLAINED INVE STMENT IN THE SHARE CAPITAL OF THE APPELLANT COMPANY. 2.1 THE LEARNED AO HAS FAILED TO APPRECIATE - I) THAT SINCE THE CREDITS FOR THE SHARE CAPITAL IN THE NAME OF DIFFERENT PERSONS HAVE ALREADY BEEN ASSESSED ON SUB STANTIVE BASIS AS UNDISCLOSED INCOME OF SHRI UMEDSINGH CHAMPAVAT, THERE CANNOT BE ANY QUESTION FOR TREATING THE SAME AS UND ISCLOSED INCOME OF THE APPELLANT. 2. AS IS EVIDENT FROM THE ASSESSMENT ORDER, THIS CA SE HAS CHEQUERED HISTORY. IN THE PAST, TWICE THIS CASE WAS RESTORED BACK BY T HE TRIBUNAL TO THE FILE OF THE AO FOR RE-ADJUDICATION WITH CERTAIN DIRECTIONS. IT HAS ALSO BEEN NOTICED THAT THE IMPUGNED ADDITION HAS BEEN MADE IN THE CASE OF THE ASSESSEE, ASSESSED AS A PUBLIC LIMITED COMPANY. THAT VERY ADDITION WAS STATED TO BE CONNECTED WIT H AN ANOTHER CASE VIZ. SHRI UMEDSINGH CHAMPAVAT, ALSO PERTAINING TO THE SAME IT(SS)A NO.7/AHD/2008 -2- BLOCK PERIOD. BECAUSE OF THAT REASON, IN PARA-2, T HE AO HAS ALSO MENTIONED THAT IN SET ASIDE BLOCK ASSESSMENT PROCEEDINGS OF S HRI UMEDSINGH CHAMPAVAT VIDE ORDER DATED 29-12-2006, THE ISSUE OF CASH CRED ITS/INVESTMENT IN THE NAMES OF 67 PERSONS HAS BEEN DEALT WITH . THEREAFTER THE RELEVANT PORTIONS OF THAT ORDER WAS REPRODUCED. AFTER NARRATING THE FACTS AS ALSO THE LONG LIST OF SEVERAL PERSONS, THE AO HAS FINALLY MADE AN OBSERVATION THA T,QUOTE ALTHOUGH THE ADDITION OF RS.1,17,12,060/- WAS MADE IN THE CASE O F SHRI UMEDSINGH CHAMPAVAT ON ACCOUNT OF UNEXPLAINED INVESTMENT IN T HE NAMES OF ABOVE MENTIONED BOGUS/NON-GENUINE PERSONS, BUT CREDITS IN THE NAMES OF SOME OF THE PERSONS OUT OF ABOVE PERSONS WERE APPEARING IN THE BOOKS OF ASSESSEE AND HENCE THE SAME WERE REQUIRED TO BE ADDED IN THE CAS E OF ASSESSEE ALSO U/S.68. ACCORDINGLY, ACTION WAS WARRANTED IN THE CASE OF TH E ASSESSEE.UNQUOTE. HOWEVER, THE QUESTION AS RAISED IN THE GROUND OF AP PEAL WAS ONLY IN RESPECT OF AN AMOUNT OF RS.15,66,000/- WHICH WAS IN RESPECT OF 15 PERSONS AS LISTED IN THE ASSESSMENT ORDER AT PAGE NO.7 (FOR THE SAKE OF BREV ITY NO NEED TO REPRODUCE THE NAMES AND THE AMOUNTS), WHEREIN AN OBSERVATION OF T HE AO WAS THAT NO EVIDENCES WERE FILED BY THIS ASSESSEE EXPLAINING TH E INVESTMENT; WHICH HAD BEEN TAXED AS UNEXPLAINED INVESTMENT IN THE CASE OF SHRI UMEDSINGH CHAMPAVAT FOR THE SAME BLOCK PERIOD. AFTER ASSIGNING THE SAID REASON, THE AO HAS THUS CONCLUDED THAT THE SAID AMOUNT OF RS.15,66,000/- HAD BEEN ADDED ON SUBSTANTIVE BASIS IN THE HANDS OF SHRI UME DSINGH CHAMPAVAT AND THEREFORE THE AO HAS PROPOSED TO ADD THE SAID AMOUNT ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. FINALLY, BY INVOKING THE PROVISIONS OF SECTION 68 OF IT ACT, THE IMPUGNED AMOUNT OF RS.15,66,000/- WA S TAXED AS UNEXPLAINED CREDIT IN THE HANDS OF THE ASSESSEE. AGAINST THE S AID BLOCK ASSESSMENT, NOW THE ASSESSEE IS AGAIN IN APPEAL. 3. FROM THE SIDE OF THE ASSESSEE, THE LEARNED AR, M R. S.N.SOPARKAR APPEARED AND FROM THE SIDE OF THE REVENUE, SHRI ANI L KUMAR, CIT-DR APPEARED. NOW BEFORE US, A LATEST DECISION OF THE ITAT A BENCH, AHMEDABAD IN THE CASE OF SHRI UMEDSINGH CHAMPAVAT I N IT(SS)A NO.7/AHD/2008 -3- IT(SS)NO.18/AHD/2007 DATED 29.02.2008 (BLOCK PERIOD 1-4-1985 TO 5.9.1995) IS PLACED ON RECORD. LEARNED AR HAS THEREFORE SUBMI TTED THAT SINCE THE SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF SHRI UMEDSINGH CHAMPAVAT, WHICH WAS DELETED BY THE TRIBUNAL, THEREFORE, THERE IS NO QUESTION OF ASSESSMENT UNDER SECTION 68 IN THE HANDS OF THE ASS ESSEE. FOR READY REFERENCE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL IS RE PRODUCED BELOW: KEEPING IN VIEW THE ABOVE ORDER OF THE TRIBUNAL IN THE INSTANT CASE, WE FIND THAT THE AO HAS MADE THE ADDITION MAINLY ON TH E ADMISSION MADE BY THE ASSESSEE AND HIS ACCEPTANCE IN THE STATEMENT RECORDED U/S.132(4)/131 OF THE ACT. HOWEVER, THE TRIBUNAL HA S ALREADY HELD IN THE INSTANT CASE THAT ADDITION CANNOT BE MADE ON TH E BASIS OF THE SAID ADMISSION FOR THE REASONS MENTIONED IN DETAIL IN TH E SAID ORDER QUOTED ABOVE THE TRIBUNAL DIRECTED TO EXAMINE THE VARIOUS PERSONS AND ONLY ON THE BASIS OF THE MATERIAL GATHERED ON EXAMINATIO N OF THOSE PERSONS AND AFTER CONFRONTING THOSE MATERIALS TO THE ASSESS ES, THE ADDITION COULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. WE FIND THAT IN THE INSTANT CASE, NO ADVERSE MATERIAL COULD BE BROUGHT ON RECORD EXCEPT IN THE CASE OF 15 PERSONS, WHO DENIED THE TRANSACTIONS WITH THE ASSESSEE AND IN RESPECT OF 7 PERSONS IT HAS BEEN STATED THAT SUMMONS COULD NOT BE SERVED BY THE DEPARTMENT. FURTHER IN RESPECT OF THOSE 15 PERSONS, WHO DENIED THE TRANSACTIONS, THE ASSESSES EXPLAINED BEFORE THE AO THAT THESE PERSONS HAVE RIGHTLY STATED THAT THEY DO NOT HAVE ANY FINANCIAL TRANSACTIONS WITH THE ASSESSEE AS THEY HAD INVESTED IN THE VARIOUS GROUP CONCERNS OF THE ASSESSEE AND DID NOT HAVE ANY TRANS ACTIONS WITH THE ASSESSEE AS AN INDIVIDUAL. THUS, THE STATEMENTS OF THESE FIFTEEN PERSONS CANNOT BE READ AGAINST THE ASSESSEE FOR SNAKING ANY ADDITION IN THE HANDS OF THE ASSESSES. WE FIND THAT THE AO COULD NO T CONTROVERT THE ABOVE EXPLANATION OF THE ASSESSEE. WE FIND THAT THE EXPLANATION OF THE ASSESSES WAS THAT THESE PERSONS HAVE DENIED THE TRA NSACTIONS WITH THE ASSESSEE AND NOT WITH THE COMPANIES WHERE THEY HAVE MADE THE INVESTMENT. THE LEARNED DR COULD NOT BRING ANY MATE RIAL ON RECORD TO SHOW THAT THE ASSESSES HAD CLAIMED TO HAVE MADE ANY TRANSACTIONS WITH THESE 15 PERSONS IN HIS INDIVIDUAL CAPACITY. THUS, IN OUR CONSIDERED OPINION, THE AO HAS MADE THE ADDITION WITHOUT PROPE RLY APPRECIATING THE EXPLANATION OF THE ASSESSES AND THE STATEMENTS OF THESE FIFTEEN PERSONS. IN OUR VIEW, NO ADVERSE INFERENCE FROM MER ELY SUCH DENIAL IN THE STATEMENTS CAN BE DRAWN AGAINST THE ASSESSEE. I N RESPECT OF SEVEN PERSONS, ON WHOM THE SUMMONS COULD NOT BE SERVED, T HE ASSESSEE EXPLAINED THAT THESE SUMMONS COULD NOT BE SERVED EI THER BECAUSE OF INCOMPLETE ADDRESS OR CHANGE IN ADDRESS. HE SUBMITT ED THAT THE NEW AND COMPLETE ADDRESS IN RESPECT THREE PERSONS WERE PROVIDED TO THE AO IT(SS)A NO.7/AHD/2008 -4- ON 22.11.2006 BY WAY OF AFFIDAVIT OF THOSE PERSONS AND SIMILARLY COMPLETE ADDRESS OF FURTHER THREE PERSONS WERE PROV IDED TO THE AO BY WAY OF AFFIDAVIT ON 27.11.2006. HOWEVER, AFTER THIS THE AO HAD NOT ISSUED ANY FRESH SUMMONS TO THESE SIX PERSONS. IN R ESPECT OF THE ONE PERSON LEFT, THE ASSESSEE POINTED OUT THAT THIS PER SON APPEARED BEFORE THE A.O. ON 1.3.2006 AND HIS STATEMENT WAS RECORDED AT THAT TIME WHEREIN HE AFFIRMED THE TRANSACTION. WE FIND THAT T HE EXPLANATION OF THE ASSESSEE COULD NOT BE CONTROVERTED BY THE REVENUE. IN SUCH CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE AO WA S NOT JUSTIFIED IN DRAWING AN. ADVERSE INFERENCE AGAINST THE ASSESSEE. THUS, ON PERUSAL OF MATERIAL ON RECORD, WE FIND THAT NO ADVERSE MATERIA L COULD BE BROUGHT ON RECORD BY THE REVENUE AFTER EXAMINING THE PERSON S IN PURSUANCE TO THE TRIBUNAL'S ORDER DT.7.4.1998. IN THESE CIRCUMST ANCES, IN OUR CONSIDERED VIEW, IN VIEW OF THE CATEGORICAL DIRECTI ON OF THE TRIBUNAL CONTAINED IN THE ORDER DT.7.4.1998 THE AO OUGHT NOT TO HAVE MADE ADDITION AGAIN ONLY ON THE BASIS OF THE STATEMENT R ECORDED U/S. 132(4)/131 OF THE ACT. HENCE, WE DELETE THE ADDITIO N OF RS.1,17,12,060 IS DELETED. GROUNDS NO.1 AND 2 OF THE APPEAL AYE AC CORDINGLY ALLOWED. 4. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES AS WELL AS ON CAREFULL READING OF THE ORDER OF THE TRIBUNAL, WE FIND THAT THERE IS A LIST OF 41 PERSONS AS APPEARING ON PAGE NO.5 OF THE ORDER OF THE TRIBUNAL OF THE PERSONS WHICH WERE ALLEGED TO BE THE BENAMI NAMES WHICH WERE DETECTED DURING THE COURSE OF SEARCH. OUT OF ALL THESE 41 PERSONS, THE AO HAS GI VEN THE NAMES OF 15 PERSONS WHICH WERE LINKED WITH THE ASSESSMENT OF THE ASSESS EE-COMPANY AMOUNTING TO RS.15,66,000/-. BEFORE US, THE LEARNED AR HAS MADE A CLAIM THAT BOTH THE LIST, ONE AS APPEARED IN THE CASE OF SHRI UMEDSINGH CHAMP AVAT AND OTHER AS APPEARED IN THE CASE OF THE ASSESSEE CAN BE COMPARE D. HE HAS STATED THAT THE AMOUNTS CAN ALSO BE MATCHED. THOUGH, HE HAS CLARIF IED THAT THE AMOUNTS WRITTEN AGAINST THOSE NAMES IN THE CASE OF SHRI UME DSINGH CHAMPAVAT WERE HIGHER THAN THE AMOUNTS REFLECTED IN THE ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE, BUT HE HAS MADE A STATEMENT THAT ALL THO SE FIGURES HAVE DULY BEEN CONSIDERED IN THE CASE OF SHRI UMEDSINGH CHAMPAVAT AND NONE OF THE FIGURE AS APPEARED IN THE IMPUGNED ASSESSMENT ORDER OF THIS A SSESSEE WILL DIFFER OR BE HIGHER THAN THE FIGURES AS MENTIONED IN THE CASE OF SHRI UMEDSINGH CHAMPAVAT. HE HAS FURTHER CLARIFIED THAT THE FIGUR E AS APPEARED IN THE LIST 41 IT(SS)A NO.7/AHD/2008 -5- PERSONS IN THE CASE OF SHRI UMEDSINGH CHAMPAVAT WER E HIGHER BECAUSE OUT OF THOSE DEPOSITS, THE IMPUGNED ADDITION OF RS.15,66,0 00/- WAS MADE IN THE HANDS OF THE ASSESSEE. CONSIDERING THE BACKGROUND OF THE CASE AND THE PAST HISTORY, WE ARE OF THE OPINION THAT AT PRESENT, WE HAVE NOTH ING MUCH TO CONSIDER EXCEPT TO FOLLOW THE ORDER OF THE RESPECTED CO-ORDINATE BE NCH WHEREIN 15 NAMES HAVE BEEN DULY CONSIDERED AND THEREAFTER RELIEF WAS GRAN TED. MOREOVER, IN THE PRESENT APPEAL OF THE ASSESSEE-COMPANY ONLY PROTECT IVE ASSESSMENT HAS BEEN MADE AND THE SUBSTANTIVE ADDITION WAS MADE IN THE C ASE OF SHRI UMEDSINGH CHAMPAVAT. AT PRESENT THE POSITION IS THAT EVEN TH AT SUBSTANTIVE ASSESSMENT DID NOT STAND AS THE SUBSTANTIAL RELIEF WAS GRANTED BY THE TRIBUNAL. IN CONSEQUENCE THEREOF, THE ASSESSEE SHALL ALSO GET THE RELIEF ACC ORDINGLY. HOWEVER, IT WILL BE JUSTIFIABLE TO DIRECT THE AO TO COMPARE BOTH THE LI STS AND IF ALL THE 15 NAMES PLUS THE RESPECTIVE AMOUNTS, AS APPEARING IN THE A SSESSMENT ORDER, ARE FOUND IN THE LIST OF 41 PERSONS, AS APPEARING IN THE CASE OF SHRI UMEDSINGH CHAMPAVAT, THEN CONSEQUENTIAL RELIEF SHOULD BE GRANTED TO THE ASSESSEE IN THE LIGHT OF THE JUDGMENT OF THE TRIBUNAL REFERRED (SUPRA). WE ORDE R ACCORDINGLY. 5. THE ONLY GROUND LEFT IS GROUND NO.3 WHICH IS IN RESPECT OF LEVY OF SURCHARGE AND THE SAME BEING CONSEQUENTIAL IN NATUR E, NEEDS NO INDEPENDENT ADJUDICATION. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AS P ER THE DIRECTIONS. ORDER PRONOUNCED IN OPEN COURT ON 28 TH FEBRUARY, 2011. SD/- SD/- (D.C. AGRAWAL) ACCOUNTANT MEMBER (MUKUL KR. SHRAWAT) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 28-02-2011 COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT IT(SS)A NO.7/AHD/2008 -6- 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD