The ACIT, Circle-1, JAMNAGAR V. Shri Pravinchandra Chhotalal Mange, JAMNAGAR

ITSSA 70/RJT/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8686 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-01-2013
• Assessment Year: misc
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N R SONI
• Assessee Lawyers: PRASHANT MAHARISHI
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Opportunity of being heard; Block assessment

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBU N AL : RAJKOT BENCH : RAJKOT . . . . BEFORE SHRI T. K. SHARM A JM AND SHRI D. K. SRIVASTAVA AM IT (SS) A . NO . 7 0 /RJ T/201 0 / BLOCK PERIOD FR O M ASSESSMENT YEAR 1996 - 97 TO 17 - 04 - 2002 ACIT V. SHRI PRAVINCHANDRA CHHOTALAL MANGE CIRCLE 1 KHETWANI NIVAS, 2 NAGAR PARA JAMNAGAR JAMNAGAR PAN: AD APM9836F DATE OF HEARING: 0 1 . 0 1 .20 13 DATE OF PRONOUNCEMENT: 11 . 0 1 .2013 FOR THE REVENUE N. R. SONI , DR FOR THE ASSESSEE: PRASHANT MAHARISHI , FCA / ORDER . . / D. K. SRIVASTAVA : THE A PPEAL FILED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PA SSED BY THE CIT (A) , JAMNAGAR ON 13 - 09 - 2010. THE APPEAL RELATES TO BLOCK PERIOD COMMENCING FROM 1996 - 97 AND ENDING O N 17 - 04 - 2002. 2. THE ASSESSEE IS AN INDIVIDUAL. HIS RESIDENTIAL PREMISES WERE SEARCHED BY JAMNAGAR POLICE DURING W HICH CERTAIN ASSETS WERE SEIZED BY THEM. THE ASSETS SO SEIZED BY THEM WERE IN THE FORM OF JEWELLERY AND THE INVESTMENT VALUED AT RS.19,67,824/ - . THEY WERE SUBSEQUENTLY REQUISITIONED BY THE INCOME - TAX DEPARTMENT U/S 132A. PROCEEDINGS U/S.158BC WERE INITIATED AS A RESULT OF WHICH B LOCK ASSESSMENT ORDER WAS PASSED U/S 158BC ON 30 - 04 - 2004 ASSESSING THE UNDISCLOSED INCOME OF THE ASSESSEE AT RS.17,05,129/ - . THE SAID BLOCK ASSESSMENT ORDER WAS SUBJECT MATTER OF APPEAL FIRSTLY BEFORE THE CIT(A) AND THEREAFTER BEFORE THIS TRIBUNAL. PERUSAL OF ORDER PASSED BY THIS TRIBUNAL ON 24 - 01 - 2008 SHOWS THAT THE ASSESSEE HAD CHALLENGED TWO ADDITIONS MADE BY THE AO AND CONFIRMED BY THE CIT(A) . FIRST ADDITION AMOUNTING TO RS.1,99,000/ - RELATED TO HOUSEHOLD WITHDRAWALS WHILE THE SECOND ADDITION AMOUNTING TO RS.5,50,971/ - RELATED TO UNEXPLAINED INVESTMENT IN FDR AND KVP. BY ITS ORDER DATED 24 - 01 - 2008, THE TRIBUNAL RESTORED BOTH THE AFORESAID ADDITIONS TO THE FILE OF THE AO, WITH THE FOLLOWING OBSERVATIONS: - 5. IN GROUND NO.1 IN ASSESSEE S APPEAL, THE LD . CIT (APPEALS) HAS SUSTAINED THE ADDITION OF RS.1,99,000/ - FOR LOW HOUSE HOLD WITHDRAWALS BY ESTIMATING DRAWING AT THE RATE OF RS.5000/ - PER MONTH FOR THE ENTIRE BLOCK PERIOD AS AGAINST THE DRAWINGS ESTIMATED BY THE ASSESSING OFFICER BY TAKING 75% OF THE TOTAL EMOLUMENTS IN VARIOUS YEARS FORMING PART OF THE BLOCK PERIOD 2 IT (SS) A 7 0 /RJT/201 0 AS AGAINST HOUSEHOLD EXPENSES DISCLOSED BY THE ASSESSEE AS UNDER FOR WHICH THE ADDITION MADE BY THE ASSESSING OFFICER AMOUNTED TO RS.276878/ - : F.Y. ESTIMATED HOUSE HOLD EXPENSES @ 75% OF TO TAL EMOLUMENTS HOUSEHOLD EXPENSES DISCLOSED IN BLOCK RETURN OF INCOME ESTIMATED UNACCOUNTED HOUSEHOLD E XPENSES 96 - 97 49264 42000 7264 97 - 98 50258 44000 6258 98 - 99 93089 18000 75089 99 - 00 86984 24000 62984 00 - 01 10489 30000 78489 01 - 02 49794 300 0 46794 437878 161000 276878 6. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. THE ADDITION FOR UNDISCLOSED INCOME HAS TO BE BASED ON THE MATERIAL FOUND AS A RESULT OF SEARCH AND THE EVIDENCE THAT HAS COME IN THE POSSESSION OF ASSESSING OFFICER RELATING TO SUCH MATERIAL. THE ESTIMATION MADE ALSO IS NOT FOUND PROPER AS REFERENCE TO MATERIAL HAS NOT BEEN MADE BY HIM. WE, THEREFORE, SET ASIDE THE DECISION OF THE AUTHORITIES BELOW AND RESTORE THE MATTER BACK TO THE ASSESSING OFFI CER TO ADJUDICATE THE ISSUE AFRESH AND TAKE DECISION IN ACCORDANCE WITH LAW WITH REFERENCE TO MATERIAL THAT HAS BEEN FOUND AS A RESULT OF SEARCH OR THE EVIDENCE THAT HAS COME IN HIS POSSESSION IN RELATION TO SUCH MATERIAL. THE ASSESSING OFFICER SHALL, THE REFORE, AFFORD REASONABLE AND EFFECTIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE TAKING DECISION IN ACCORDANCE WITH LAW. 7. GROUND NO.3 IN APPEAL RELATES TO THE ADDITION OF FDR AND KVP FOR RS.4,50,971/ - AND CONSEQUENTIAL INTEREST IN FDR FOR A PRI NCIPAL SUM OF RS.50,000/ - WAS MADE ON 29.01.1996 WHICH IS BEYOND THE BLOCK PERIOD AND LIKEWISE, CERTAIN OTHER FDRS WERE CONTINUING FROM THE EARLIER YEARS. THE ASSESSING OFFICER, HOWEVER, DID NOT CONSIDER THIS CLAIM IN RIGHT PERSPECTIVE AND ADDED THE WHOLE AMOUNT OF PRINCIPAL ALONGWITH INTEREST ACCRUING THEREON FROM YEAR AS INCOME OF THE BLOCK PERIOD. IT WAS, THEREFORE, CONTENDED THAT THE ISSUE NEEDS TO BE ADJUDICATED AFRESH. 8. THE LD. DEPARTMENTAL REPRESENTATIVE DOES NOT OBJECT IF THE FACTS ON THIS ACCO UNT ARE EXAMINED AFRESH BY THE ASSESSING OFFICER. 9. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IT APPEARS TO US THAT SOME OF THE INVESTMENTS PRIMA FACIE APPEAR TO HAVE BEEN MADE BEYOND THE BLOCK PERIOD, BUT THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY DOCUMENTARY EVIDENCE THEREOF BEFORE THE TRIBUNAL ON THE PLEA THAT THE SAME WAS NEITHER AVAILABLE WITH THE ASSESSING OFFICER NOR AVAILABLE WITH HIM. THAT BEING THE CASE, IT WAS NOT PROPER TO HAVE MADE ADDITION MERELY ON THE BASIS OF HEARSAY. WE ALSO ARE UNABLE TO ALLOW ANY RELIEF TO THE ASSESSEE MERELY ON THE BASIS OF PLEA BEING RAISED BEFORE US. UNDER SUCH PECULIAR FACTS, WE CONSIDER IT PROPER TO SET ASIDE THE DECISION AND RESTORE THE 3 IT (SS) A 7 0 /RJT/201 0 MATTER BACK TO THE ASSESSING OFFICER SO THAT F ACTS ARE EVALUATED AND DECISION TAKEN AFRESH WITH REFERENCE TO MATERIAL ON RECORD. NEEDLESS TO ADD, INVESTMENT MADE BEYOND THE BLOCK PERIOD WOULD NOT FORM PART OF UNDISCLOSED INCOME OF THE BLOCK PERIOD. A REASONABLE AND EFFECTIVE OPPORTUNITY OF BEING HEA RD SHALL BE GIVEN TO THE ASSESSEE. 3. PURSUANT TO THE AFORESAID ORDER PASSED BY THIS TRIBUNAL, THE AO HAS NOW PASSED A FRESH BLOCK ASSESSMENT ORDER ON 30 - 12 - 2008 IN WHICH HE HAS ADDED A SUM OF RS.1,42,564/ - TOWARDS LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES, RS.1,40,000/ - ON ACCOUNT OF UNEXPLAINED CASH CREDITS AND RS.2,82,221/ - ON ACCOUNT OF UNEXPLAINED DEPOSITS IN FDR AND KVP. ON APPEAL, THE LD. CIT (A) HAS DELETED THE AFORESAID ADDITIONS MADE BY THE AO. 4. AGGRIEVED BY THE ORDER PASSED BY THE CIT (A), THE DEPARTMENT IS NOW IN APPEAL BEFORE THIS TRIBUNAL , ON THE FOLLOWING GROUNDS: - 1. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.282221/ - MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN F.D.R./K.V.P. 2. THE CIT (A) FAILED TO APPREC IATE THE FACTS THAT THE INTEREST OF RS.16,667/ - EARNED ON FDR OF RS.50,000/ - DATED 29/01/1996 AND INVESTED ON 20/03/1998 WAS THE INVESTMENT WITHIN THE BLOCK PERIOD. 3. THE CIT (A) FAILED TO APPRECIATE THE FACTS THAT THE AMOUNT OF INTEREST INCOME AVAILABLE FOR MAKING SET OFF AGAINST INVESTMENT DURING F.Y. 1998 - 1999 WAS ONLY RS.393/ - AND DURING F.Y. 2001 - 2002 WAS ONLY RS.38428/ - AS AGAINST ACTUAL INVESTMENT OF RS.100000/ - AND RS.115543/ - IN FDR/KVP RESPECTIVELY IN F.Y. 1998 - 1999 AND F.Y. 2001 - 2002 AND AS SUC H ERRED IN HOLDING THAT INTEREST INCOME OF RS.154995/ - WAS AVAILABLE TO THE ASSESSEE FOR MAKING INVESTMENT IN FDR/KVP. 4. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.142564/ - MADE ON ACCOUNT OF UNEXPLAINED HOUSE HOLD EXPENSES. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 6. IT IS THEREFORE PRAYED THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7. THAT THE REVENUE CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY GROUNDS OF APPEAL. 5. AT THE TIME OF HEARING, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE AO WHILE THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUPPORTED THE ORD ER PASSED BY THE CIT (A). 4 IT (SS) A 7 0 /RJT/201 0 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. ADDITION OF RS.2,21,633/ - MADE BY THE AO HAS BEEN DELETED BY THE CIT (A), WITH THE FOLLOWING OBSERVATIONS: - 9. I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION. I HAVE ALSO CAREFULLY PERUSED THE EARLIER ORDERS OF AUTHORITIES. ON GOING THROUGH THE SAME IN ORIGINAL ORDER AT PAGE NO.14 IN PARA NO. 6.1 AO HAS STATED THAT SOURCES OF INVESTMENT OF FDR OF RS.66,677/ - ON 29/7/2008 IN FDR NO.2339282 WITH DEN A BANK IS OUT OF REINVESTMENT OF FDR NO.8554599 DATED 29.01.1996 WITH HAWAI CHOWK BRANCH OF DENA BANK. AS THE ORIGINAL SOURCES OF FDR ARE BEYOND PERIOD OF AY 1996 - 97 TO 17.04.2002, SAME CANNOT BE ADDED IN THE BLOCK ASSESSMENT. REGARDING OTHER INVESTMENTS SAME ARE OWNED BY THE ASSESSEE AND APPELLANT HAS FAILED TO PROVE THE SOURCES OF THESE ASSETS. BEFORE ME ALSO APPELLANT COULD NOT PROVE THE SOURCES OF OTHER INVESTMENTS AND REITERATED SUBMISSION MADE EARLIER. FURTHER TO THIS IN THE ORIGINAL ASSESSMENT PR OCEEDINGS INCOME OF RS.1,54,995/ - TOWARDS INTEREST INCOME HAS BEEN CONFIRMED BY CIT (A) IN HIS ORDER AT PARA NO. 6.3 AT PAGE NO. 8 OF HIS ORDER DATED 8.12.2004. AS THAT IS THE UNACCOUNTED INCOME OF THE BLOCK PERIOD AND AMOUNT ADDED IS ALSO INVESTMENT OF B LOCK PERIOD, SUCH INVESTMENTS IS APPLICATION OF UNACCOUNTED INCOME. THEREFORE SAME IS REQUIRED TO BE SET OFF AGAINST THE UNACCOUNTED INVESTMENT OF THE APPELLANT. THEREFORE APPELLANT IS ALSO ELIGIBLE FOR FURTHER RELIEF OF RS.1,54,995/ - . THEREFORE APPELLA NT GETS RELIEF OF RS.2,21,633/ - AND BALANCE ADDITION OF RS.60,588/ - IS CONFIRMED. 7. ADDITION OF RS.1,42,654/ - MADE BY THE AO HAS BEEN DELETED BY THE CIT (A), WITH THE FOLLOWING OBSERVATIONS: - 11. I HAVE CAREFULLY PERUSED THE ORDER OF HON ITAT WHEREIN IT HAS BEEN HELD THAT ADDITION FOR UNDISCLOSED INCOME HAS TO BE BASED ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH AND THE EVIDENCE THAT HAS COME IN THE POSSESSION OF AO RELATING TO SUCH MATERIAL. THE ESTIMATION MADE BY AO IS ALSO NOT FOUND PROPER BY HON ITAT AS THE SAME WAS NOT RELATED TO ANY MATERIAL. IN ASSESSMENT ORDER ALSO THERE WAS NO MENTION OF ANY MATERIAL RELATING TO UNDISCLOSED HOUSEHOLD EXPENDITURE OF THE APPELLANT. THEREFORE IN MY OPINION ADDITION CANNOT BE MADE WITHOUT LAYING HANDS ON A NY EVIDENCE DURING THE COURSE OF SEARCH. THEREFORE, I DELETE THE ADDITION OF RS.1,42,564/ - MADE BY AO TOWARDS HOUSEHOLD EXPENSES. 8. THE ORDER PASSED BY THE CIT (A) IS COMPLETELY IN CONFORMITY WITH THE DIRECTIONS GIVEN BY THIS TRIBUNAL. THE LD. DEPARTMEN TAL REPRESENTATIVE HAS NOT PLACED ANY COGENT MATERIAL BEFORE US TO REBUT THE FINDINGS RECORDED BY THE CIT (A). IT MAY BE RELEVANT TO MENTION THAT OUR JURISDICTION AT THIS STAGE IS LIMITED TO SEE AS TO 5 IT (SS) A 7 0 /RJT/201 0 WHETHER THE ORDER PASSED BY THE AUTHORITIES BELOW IS I N CONFORMITY WITH THE DIRECTIONS GIVEN BY US EARLIER AND NOT TO GO BEYOND THOSE DIRECTIONS. IN THIS VIEW OF THE MATTER, THE ORDER PASSED BY THE CIT (A) IS CONFIRMED . 9. T HE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. 11 . 0 1 .201 3 ORDER PRONOUNCED ON 11 . 0 1 - 2013 SD/ - SD/ - ( . . / T. K. SHARMA) ( . . / D. K. SRIVASTAVA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /RAJKOT : 11 - 0 1 - 2013 NVA/ - / COPY OF ORDER FORWARDED TO: - 1. /APPELLANT - ASSISTANT C OMMISSIONER OF INCOME - TAX, CIR - 1 , JAMNAGAR 2 / RESPONDENT - SHRI PRAVINCHANDRA CHHOTALAL MANGE, JAMNAGAR 3. / CONCERNED CIT , JAMNAGAR 4. - / CIT (A) , JAMNAGAR. 5. , , / DR, ITAT, RAJKOT 6. / GUARD FILE / BY ORDER SENIOR PRIVATE SECRETARY, ITAT, RAJKOT 6 IT (SS) A 7 0 /RJT/201 0 1.DATE OF DICTATION : 01 - 0 1 - 2013 2.DATE OF PLACING THE DRAFT. : 0 2 - 01 - 201 3 3.DATE OF APPROVAL OF DRAFT. : 4.DATE OF RETURN FROM JM : 5.DATE OF PRONOUNCEMENT : 6.DATE OF SENDING TO BENCH CLERK : 7.DATE OF RECEIPT BY BENCH CLERK : 8.DATE OF PLACING IT FOR ENDORSEMENT : 9.DATE OF ENDORSEMENT : 10.DATE OF DISPATCH :