Shri Suresh C.Patel, Anand V. The ACIT.,Circle-2, Baroda

ITSSA 842/AHD/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9260 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-05-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 30-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M P SINGH
• Keywords: Income from undisclosed sources; Corroborative evidences; Onus to prove; Condonation of delay; Bonafide mistake
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER SURESH CHHAGANBHAI PATEL HARIDARSHAN BUNGLOW, OPP. VAIBHAV TOWER, ANAND PAN: AERPP 2183 A (APPELLANT) VS ACIT CC-2 BARODA (RESPONDENT) REVENUE BY: SRI M.P. SINGH, CIT-D.R. ASSESSEE BY: SRI TEJ SHAH, A.R. DATE OF HEARING : 28-05-2013 DATE OF PRONOUNCEMENT : 28-06-20 13 / ORDER PER : PER BENCH:- OUT OF THIS BUNCH OF SIX APPEALS, THREE APPEALS AR E IN QUANTUM PROCEEDINGS FOR A.Y. 2000-01, 2003-04, 2004-05 AND REMAINING APPEALS ARE IN PENALTY PROCEEDINGS FOR THE SAME THREE ASSESSMEN T YEARS. ALL THESE APPEALS ARE FILED BY THE ASSESSEE. ALL THESE APPEA LS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. ALL THESE THREE APPEALS OF THE ASSESS EE IN QUANTUM PROCEEDINGS ITA NOS.1726,1733 1734 /AHD/2008, 3477/ AHD/10 & IT(SS)A NOS. 841, 842/AHD/ 2010 A. Y. 2003-04,2000-01,2004-05 2004-05,2000-01 &20 03-04 RESPECTIVELY I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 2 ARE FILED AFTER DELAY OF 317 DAYS AND ASSESSEE MADE AN APPLICATION FOR CONDONATION OF DELAY ALONG WITH AFFIDAVIT. IN THE AFFIDAVIT, IT IS STATED BY THE ASSESSEE THAT HIS FATHER SRI SAKIR AGED 75 YEARS WA S LOOKING AFTER ENTIRE INCOME TAX MATTERS OF HIS ENTIRE FAMILY. HE ALSO S UBMITTED THAT HIS FATHER WAS KEEPING GOOD HEALTH UP TO THE YEAR 2006 BUT BEC AUSE OF OLD AGE AND DUE TO PARALYTIC ATTACK TO HIS WIFE I.E. ASSESSEES MOT HER, HE BECAME BUSY IN HER TREATMENT AND ALSO GOT MENTAL STRESS AND THEREFORE, COULD NOT ATTEND INCOME TAX PROCEEDINGS IN A PROPER MANNER AND BECAUSE OF I T, THERE WAS DELAY IN FILLING OF THESE APPEALS BEFORE THE TRIBUNAL. UNDE R THESE CIRCUMSTANCES, WE ARE SATISFIED THAT IN THE PRESENT CASE, CONDONATION OF DELAY IS JUSTIFIED AND HENCE, WE CONDONE THE DELAY AND ACCEPT THE APPEALS. FIRST WE TAKE UP THE QUANTUM APPEAL FOR A.Y. 2000-0 1 IN ITA NO. 1733/AHD2008 2. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITIONS OF RS. 928 000/- AS UNDISCLOSED INVESTMENT IN LAND. THE PAYMENT OF RS. 928000/- FOR INVESTMENT IN LAND , MADE OUT OF UNDISCLOSED INCOME WAS MADE FOR THE ENTIRE LAND OF WHICH HALF PORTION BELONGED TO THE UNCLE OF YOUR APPELLANT SHRI NAGINB HAI C. PATEL. THE LEARNED CIT(A) ERRED IN NOT DELETING HALF PORTION O F ADDITIONS MADE. YOUR APPELLANT HEREBY PRAYS THAT THE ADDITION MADE BY THE A.O. BEIGN VEHEMENTLY DENIED THE SAME BE DELETED. 3. IT WAS SUBMITTED BY LD AR OF THE ASSESSEE THAT T HIS LAND IN QUESTION IS IN JOINT NAME OF THE ASSESSEE AND HIS UNCLE NAGINBH AI PATEL. IN THE SUPPORT OF THIS CONTENTION, HE FURTHER SUBMITTED THAT THE C OPY OF 7/12 IS AVAILABLE ON I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 3 PAGE 11 OF PAPER BOOK WHERE THE PROPERTY IS SHOWN I N THE JOINT NAME OF THE ASSESSEE AND HIS UNCLE NAGINBHAI PATEL. HE SUBMITT ED THAT UNDER THESE CIRCUMSTANCES, THE ENTIRE AMOUNT CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE AND ONLY 50 % OF THIS AMOUNT CAN BE ADDED IN THE CASE OF THE ASSESSEE. AS AGAINST THIS, LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. HE ALSO SUBMITTED THAT IN THE S TATEMENT OF THE ASSESSEE RECORDED ON 16-01-2004 IN COURSE OF SEARCH THE COPY OF WHICH IS AVAILABLE ON THE PAGE 9 OF THE PAPER BOOK, IT HAD BEEN STATED BY THE ASSESSEE THAT HE ACCEPTS THIS AMOUNT OF 9.28 LAKHS AS UNDISCLOSED IN COME OF THE ASSESSEE AND THE SAME WAS OFFERED BY HIM FOR TAXATION AND HE ALS O AGREED TO PAY TAX THEREON AND THEREFORE, ENTIRE ADDITION IS RIGHTLY M ADE BY THE A.O. IN HIS HANDS. HE SUPPORTED THE ORDER OF AUTHORITIES BELOW . 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THIS STATEMENT WAS MADE BY THE ASSESSEE BEFORE THE A.O. AND ALSO BEFORE THE AO AS HAS BEEN NOTED BY THE A.O. ON PAGE NO. 4 OF THE ASSESSMENT YEAR. A.O. HAS PRODUCED THE SUBMISSION OF ASSESSEE ON THIS ISS UE MADE BY THE HIM VIDE SUBMISSION DATED 17-03-2006. THE SAME IS REPRODUCE D BLOW FOR THE SAKE OF READY REFERENCE. AGRICULTURAL LAND CASH PAYMENT OF RS. 9,78,000/- W AS MADE FROM UNACCOUNTED MONEY JOINTLY BY ME AND NAGINBHAI PATEL . HALF THE LAND BEING OWNED BY ME AND HALF THE LAND OWNED BY NAGINB HAI PATEL, OUR CLIENT HAS DISCLOSED A SUM OF RS. 4,89,000/- IN HIS I.T. RETURN FOR A.Y. 2000-01. BALANCE RS. 4,89,000/- NEED TO BE TAXED I N THE HANDS OF ANOTHER OWNER. BY MISTAKE THIS DISCLOSURE IS MADE BY OUR CLIENT IN A.Y. 2002-03 AT RS. 3,00,000/- IN PLACE OF A.Y. 200 0-01 IN ABSENCE OF EXACT DETAILS AVAILABLE WHILE FILING 153A RETURN ON OVERALL BASIS. I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 4 5. THIS SUBMISSION OF THE ASSESSEE WAS REJECTED BY THE A.O. ON THIS BASIS THAT THE AGREEMENT IN QUESTION HAS BEEN EXECUTED IN THE NAME OF THE ASSESSEE AND THE VENDOR. BUT NOW IN THE LIGHT OF THIS FACT THAT AS PER 7/12 EXTRACT, THE LAND IN QUESTION IS HELD BY THE ASSESSEE JOINTLY WI TH HIS UNCLE NAGINBHAI IT CANNOT BE ACCEPTED THAT THAT FOR A PROPERTY OWNED B Y THE ASSESSEE JOINTLY WITH HIS UNCLE, THE ASSESSEE WILL MAKE THE ENTIRE P AYMENT OF UNACCOUNTED ON MONEY PAID IN CASH. HENCE, WE ARE OF THE CONSIDERE D OPINION THAT IN THE FACTS OF THE PRESENT CASE, ONLY HALF OF THE AMOUNT CAN BE ASSESSED IN THE CASE OF THE ASSESSEE. WE DELETE BALANCE ADDITION OF RS . 4.64 LAKHS BEING 50 % OF THE RS. 9.28 LAKHS. IN THE RESULT, THE APPEAL OF T HE ASSESSEE IS PARTLY ALLOWED. WE TAKE UP THE SECOND APPEAL OF THE ASSESSEE IN QUA NTUM PROCEEDINGS FOR A.Y. 2003-04 IN ITA NO. 1726/AHD/2008 6. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD CIT(A) ERRED IN CONFIRMING THE ADDITIONS OF RS. 20,00,00/- AS DEPOSITED IN CASH FROM HIS UNEXPLAINED SOURCES WHICH REPRESENTED HIS UNACCOUNTED AND UNDISCLOSED INCOME. THE LD. CIT(A) FAILED TO APPRECIATE THE FACTS AND P RESUMED THAT THE SUM OF RS. 2000000/- HAS BEEN DEPOSITED IN CASH WIT H M/S. H.G. PANDYA WITHOUT ANY BASIS. IN FACT ALL THESE ALLEGE D TRANSACTIONS ARE SUCH WHERE FUNDS ARE FLOWN FIRST TO APPELLANT FROM THE ACCOUNT OF SHROFFS AND REPAID OUT OF THE SAID FUND RECEIVED. THE ACTION OF THE A.O. BEING UNCALLED FOR AND UNWAR RANTED AND BASED ON ASSUMPTION AND NOT BASED ON FACTUAL FINDING, THE ADDITIONS MADE IS REQUESTED TO BE QUASHED. I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 5 YOUR APPELLANT THEREFORE PRAYS THAT THE ADDITION MA DE BY THE A.O. BEING VEHEMENTLY DENIED THE SAME BE DELETED. 7. IT IS SUBMITTED BY LD. A.R. OF THE ASSESSEE THAT THE ADDITION HAS BEEN MADE BY THE AO ON THE BASIS OF ENTRIES IN THE BOOKS OF ACCOUNTS OF OTHER PERSONS I.E. G.R. SHROFF, M/S N.R. PANDAYA HUF AND M/S H. G PANDYA. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS NO CONNECTI ON WITH THESE ENTRIES IN THE BOOKS OF ACCOUNTS OF THESE PERSONS AND THEREFOR E, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF ENTRIES IN THE BOOKS OF ACCOUNTS OF A THIRD PERSON. HE ALSO SUBMITTED THAT EVEN IF IT IS ACCEPTED THAT HE HAS TO EXPLAIN THESE ENTRIES IN THE BOOKS OF ACC OUNTS OF OTHER PERSONS, HE SUBMITTED THAT NO ADDITION IS JUSTIFIED EVEN IN THA T SITUATION. HE DREW OUR ATTENTION TO PAGE 20 OF PAPER BOOK WHERE THE EXTRAC T FROM THE BOOKS OF HUF IS AVAILABLE SHOWING ACCOUNT OF H.G. PANDYA. HE SU BMITTED THAT THE EXPLANATION GIVEN BY THE ASSESSEE BEFORE LD. CIT(A) IS AVAILABLE ON PAGES 29-30 OF PAPER BOOK IN WHICH IT IS EXPLAINED BY THE ASSESSEE THAT AS PER THESE TRANSACTIONS, THE FUNDS HAVE FLOWN FIRST TO THE ASS ESSEE FROM THE ACCOUNT OF SHROFF AND THE SAME WAS REPAID OUT OF SAID FUNDS RE CEIVED AND NO CASH HAS BEEN PAID BY THE ASSESSEE AND THEREFORE, NO ADDITIO N IS JUSTIFIED EVEN AS PER THESE ENTRIES IN THE BOOKS OF ACCOUNTS OF OTHER PER SONS. AS AGAINST THIS, LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORI TIES BELOW. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FEEL IT PROPER THAT THE SUBMISSIONS OF THE ASSESSEE MADE BEFORE LD. CIT(A) AS AVAILABLE ON PAGE 30-31 OF PAPER BOOKS SHOULD BE CO NSIDERED IN A PROPER I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 6 MANNER AND HENCE, THE SAME ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE. THE ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF RS. 2000000/- TOWARDS THE VARIOUS TRANSACTIONS WITH SHROFFS WITHO UT ANY SUPPORTING EVIDENCES SO AS TO ESTABLISH THAT IT BELONGS TO THE APPELLANT. IN DOING SO THE ASSESSING OFFICER HAS PRESUMED THAT THE SUM OF RS. 2000000/- HAS BEEN DEPOSITED IN CASH WITH M/S. H.G. PANDYA WI THOUT ANY BASIS. IN FACT ALL THESE ALLEGED TRANSACTIONS ARE SUCH WHE RE FUNDS ARE FLOWN FIRST TO THE APPELLANT FROM THE ACCOUNT OF SHROFFS AND REPAID OUT OF THE SAID FUND RECEIVED. NO CASH HAS BEEN PAID BY DEPOS ITED BY THE APPELLANT. APPELLANT STATES THAT THE TRANSACTIONS WITH SRI H.G . PANDYA ARE NEVER IN CASH. THE COPY OF ACCOUNT GIVEN BY ACIT, CENTRA L CIRCLE-2, READ AS UNDER (COPY ENCLOSED): IT MAY BE NOTED THAT THE APPELLANT SURESH CHAGANLAL A PATEL HAS NEVER ACCEPTED HAVING GIVEN ANY CASH TO H.G. PANDYA/N.R. SHROFF-HUF FOR ISSUE OF CHEQUES. IT IS UNBELIEVABLE THAT ACCOUNT GET SETTLED BY HUNDI OF G.R. SHROFF WHEN THERE IS A CASH TRANSACTION AT FIRST STAGE. IT MEANS THAT OR TRANSACTIONS WHICH ARE SURESH C. PATEL IS B Y ACCOUNT PAYEE CHEQUES OR ACCOUNT PAYEE LEGAL HUNDIES AND THEREFOR E THERE IS NO ELEMENT OF ANY UNACCOUNTED MONEY. IF H.F. PANDYA/N .R. PANDYA- HUF RECEIVES ANY CASH FORM SURESH C. PATEL AND UNLE SS THAT IS CONFIRM BY SURESH C. PATEL THE SAME CANNOT BE ADDED IN THE CASE OF SURESH C. PATEL. INSTEAD, IT NEEDS TO BE ADDED IN THE CASE OF H.G. PANDYA/N.R.PANDYA-HUF CASE PARTICULAR WHEN SURESH C . PATEL DENIED SUCH TRANSACTIONS. EVEN AT THE STAGE OF INI TIAL STATEMENTS THE SAME WAS DENIED AS CASH PAYMENTS BY THE APPELLANT B EFORE ADI. ONUS TO PROVE THE RECEIPT OF CASH TRANSACTION OF TH E APPELLANT IS ON OPPONENT WHICH IS NOT DISCHARGED IN THE PRESENT CAS E AND THEREFORE THE CHEQUE PAYMENT RECEIVED BY THE APPELLANT AND AC COUNT PAYEE HUNDI PAYMENT MADE CANNOT BE TREATED AS UNDISCLOSED INCOME. THE ABOVE TRANSACTIONS ARE OF FINANCIAL NATURE AND ARE NOT RELATED TO UNACCOUNTED INCOME. YOUR APPELLANT THEREFORE PRAYS THAT ADDITIONS MADE IS UNWARRANTED AND REQUIRED TO BE DELETED. I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 7 9. FROM THE ABOVE WRITTEN SUBMISSIONS OF THE ASSESS EE BEFORE LD. CIT(A), WE FIND THAT THE COPY OF ACCOUNT OF H.G. P ANDAY APPEARING IN THE BOOKS OF ACCOUNTS OF HUF AS AVAILABLE ON PAGE 20 OF PAPER BOOK IS REPRODUCED IN ABOVE WRITTEN SUBMISSIONS OF ASSESSEE FILED BEFORE LD. CIT(A). FROM THE SAME, WE FIND THAT FOUR CHEQUES O F RS. 5,00,000/- EACH WERE ISSUED FROM BANK OF BARODA FROM THE ACCOUNT H. R PANDYA HUF AND IT IS STATED IN THE NARRATION COLUMN THAT THESE CHEQUE S WERE ISSUED IN LIEU OF CASH RECEIVED FROM THE ASSESSEE. THEREAFTER, THE R EPAYMENT HAS BEEN MADE BY WAY OF HUNDIS NOS. 692 TO 695 OF RS. 5,00,000/- EACH OF DATED 13-03- 2003, 15-03-2003, 23-03-2003 AND 24-03-2003. THE ARGUMENT OF ASSESSEE IS THIS THAT NO CASH WAS EVER PAID BY THE ASSESSEE TO N.R. PANDYA, HUF. THIS ARGUMENT OF ASSESSEE FINDS SUPPORT FROM THESE ENTRI ES IN THE BOOKS OF ACCOUNTS OF SHRI N. R. PANDYA HUF BECAUSE IN THOSE BOOKS OF ACCOUNTS, THE AMOUNT IS CREDITED BY N.R. PANDYA HUF IN THE NAME O F H.G. PANDYA IN THE MONTH OF DECEMBER 2002 AND THE SAME WAS REPAID BY N .R. PANDYA HUF IN MARCH, 2003 AND THIS RESULTED INTO IN NIL BALANCE I N THIS ACCOUNT. NOW, THE QUESTION IS THAT IF THE ASSESSEE HAS PAID CASH AND CHEQUES WERE ISSUED IN LIEU THEREOF THEN IT WILL NOT RESULT ANY DEBIT OR CREDIT BECAUSE THE NET RESULT WILL BE NIL. IF HE HAS RECEIVED CASH FROM THE ASSESSEE AND ISSUED CHEQUE OF THE EQUAL AMOUNT RESULTING INTO NEITHER ANY ASSET NOR ANY LIA BILITY. BUT AS PER THE COPY OF ACCOUNT AVAILABLE ON PAGE 20 OF PAPER BOOK, THE AMOUNT IS SHOWN AS CREDIT IN THE NAME OF H.G. PANDYA IN THE BOOKS OF N.R. PAN DYA, HUF. IT MEANS THAT NO CASH WAS RECEIVED ON THIS ACCOUNT. IT MAY BE AN ARGUMENT THAT CASH WAS RECEIVED FROM THE ASSESSEE BY H.G. PANDAYA AND HE ISSUED CHEQUES IN THE NAME OF N.R. PANDYA HUF BUT EVEN IN THAT SITUAT ION ALSO, HOW THERE WILL BE AN OBSERVATION IN THE BOOKS OF N.R. PANDYA HUF T HAT CASH WAS RECEIVED I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 8 FROM THE ASSESSEE BECAUSE IN THAT SITUATION, CASH C ANNOT BE RECEIVED BY N.R. PANDYA HUF. WHEN NO ENTRY IN BOOKS OF ACCOUNTS HAS BEEN FOUND REGARDING ANY CASH RECEIPT FROM THE ASSESSEE BY ANY PERSON AN D ON THE BASIS OF MERE NARRATION AGAINST AN ENTRY IN THE BOOKS OF ACCOUNT OF N.R. PANDYA HUF IN THE ACCOUNT OF H.G. PANDYA THAT CHEQUE IS RECEIVED BY N.R. PANDYA HUF FROM H.G. PANDYA AND THE CHEQUE WAS ISSUED BY H.G. PANDYA IN LIEU OF CASH RECEIVED FROM THE ASSESSEE, IT CANNOT BE ACCEPTED T HAT THIS IS A SUFFICIENT EVIDENCE TO HOLD THAT SOME CASH WAS PAID BY THE AS SESSEE TO SRI H.G. PANDYA AND IT IS NOT A CASE OF WRONG REPRESENTATION BY SRI H.G. PANDYA TO N.R. PANDYA HUF. IN THE LIGHT OF ABOVE DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT NO CASE COULD BE MADE OUT B Y THE REVENUE TO ALLEGE THAT THE ASSESSEE HAS MADE CASH PAYMENT OF RS. 20,0 0,000/- TO SHRI M/S H.G. PANDYA. AS PER PARA 2.1 OF THE ORDER OF LD. CIT(A) , WE FIND THAT HE HAS CONFIRMED THE ADDITION ON THIS BASIS THAT CASH WAS PAID BY THE ASSESSEE TO M/S H.G. PANDYA WHICH WAS SUBSEQUENTLY TRANSFERRED THROUGH HUNDIES TO THE CREDIT OF ASSESSEES ACCOUNT IN THE BOOKS OF M /S G.R. SHROFF BUT AS PER PAGE 20 OF THE PAPER BOOK, WE FIND THAT IN THE BOOK S OF N.R. PANDYA HUF, ACCOUNT IS CREDITED ON ACCOUNT OF RECEIPT OF FOUR C HEQUES OF RS. 5,00,000/- FROM H.G. PANDAYA AND MERELY IN THE NARRATION COLUM N, IT HAS BEEN NOTED THAT THESE CHEQUES WERE ISSUED BY H.G. PANDYA TO N. R. PANDYA HUF IN LIEU OF CASH RECEIVED FROM THE ASSESSEE. HENCE THIS DEC ISION OF LD. CIT(A) THAT AGAINST THE CASH GIVEN BY THE ASSESSEE TO H.G. PAND YA, THE AMOUNT WAS TRANSFERRED TO THE CREDIT OF THE ASSESSEES ACCOUNT IN THE BOOKS OF G.R. SHROFF IS NOT SUPPORTED BY ANY EVIDENCE ON RECORD. RATHER THE EVIDENCE ON RECORD SHOWS SOMETHING DIFFERENT THAT THERE IS NO CREDIT A PPEARING IN THE BOOKS OF N.R. PANDYA HUF IN THE NAME OF ASSESSEE. INSPITE O F THIS SUBMISSION BEFORE I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 9 LD. CIT(A) THAT NO CASH HAS BEEN PAID BY THE ASSESS EE AND THE FUNDS HAVE FIRST FLOWN TO THE ASSESSEE AND THE REPAYMENT WAS M ADE OUT OF SAME FUNDS, NO PROPER FINDING HAS BEEN GIVEN BY LD. CIT(A) TO C ONTROVERT THESE SUBMISSIONS OF THE ASSESSEE. WE, THEREFORE, FEEL T HAT ADDITION MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) IS NOT PROPERL Y SUPPORTED BY ANY COGENT EVIDENCE AND THEREFORE, SUCH ADDITION IS NOT JUSTIFIED. WE, THEREFORE, DELETE THE SAME. 10. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS A LLOWED. NOW, WE TAKE THE THIRD APPEAL OF THE ASSESSEE IN QU ANTUM PROCEEDINGS FOR A.Y. 2004-05 IN ITA NO. 1734/AHD/2008 11. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITIONS OF RS. 5,81,059/- ON THE ACCOUNT OF ESTIMATED GROSS PROFIT. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT N O SUCH PROFIT WAS EARNED BY THE APPELLANT AND THE NET PROFIT CANNOT B E MORE THAN 1% OF TURNOVER, AND THEREFORE THERE WOULD NOT BE ANY ADDI TIONS ON THIS ACCOUNT BY THE A.O. THE ACTION OF A.O. BEING UNCALLED FOR AND UNWARRANT ED AND BASED ON ASSUMPTION AND NOT BASED ON FACTUAL FINDING, THE AD DITIONS MADE IS REQUESTED TO BE QUASHED. YOUR APPELLANT THEREFORE PRAYS THAT THE ADDITION MA DE BY THE A.O. BEING VEHEMENTLY DENIED THE SAME BE DELETED. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITIONS OF RS. 2,55,510/- ON ACCOU NT OF DIFFERENCE I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 10 BETWEEN CLOSING STOCK ON TOBACCO AND DISCLOSURE MEN TIONED BY THE ASSESSEE IN THE RETURN OF INCOME RS. 10,00,000/- THE LD. CIT(A) FAILED TO APPRECIATE THE FACT OF THE CASE. THE ACTION OF THE AO BEING UNCALLED FOR AND UNWARRA NTED THE ADDITIONS MADE IS REQUESTED TO BE QUASHED. 12. IT WAS SUBMITTED BY LD. A.R. OF THE ASSESSEE TH AT IN THE INCOME TAX RETURN FOR A.Y. 2005-06, DISCLOSURE WAS MADE BY THE ASSESSEE OF RS. 10,00,000/- TO COVER UNACCOUNTED PROFITS, OUT OF BO OKS SALES REALISATION AND EXTRA STOCK FOUND. HE SUBMITTED THAT G.P. ADDITIO N MADE BY THE A.O. OF RS. 5,81,059/- IS LESS THAN THIS AMOUNT OF RS. 10,00,00 0/- AND HENCE, NO SUCH ADDITION IS JUSTIFIED. REGARDING THE ADDITION MADE BY THE A.O. OF RS. 2,55,510/- ON ACCOUNT OF EXCESS STOCK FOUND OF RS. 12,55,510/- AFTER REDUCING RS. 10,00,000/- BEING THE INCOME DISCLOSE D BY THE ASSESSEE, IT WAS SUBMITTED THAT THIS SET OFF RS. 10,00,000/- OUT OF EXCESS STOCK FOUND, IS STILL AVAILABLE TO THE ASSESSEE EVEN AFTER SETTING OFF A GAINST G.P. ADDITION OF RS. 5,81,099/- BECAUSE SUCH G.P. ADDITION IS ON ACCOUNT OF INCOME AND THE ADDITION ON ACCOUNT OF EXCESS STOCK FOUND IS ON ACC OUNT OF INVESTMENT OF SUCH INCOME. REGARDING THE BALANCE AMOUNT OF RS. 2 ,55,510/-, IT WAS SUBMITTED THAT THIS ADDITION IS ALSO UNJUSTIFIED BE CAUSE THERE WERE UNPAID CREDITORS ALSO ON THE DATE OF SEARCH. AS AGAINST T HIS, LD. D.R. OF THE REVENUE SUPPORTED THE ORDER OF LD. CIT(A). 13. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. REGARDING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF G.P. IN RES PECT OF UNACCOUNTED I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 11 SALES, WE FIND FORCE IN THE SUBMISSION OF LD. A.R. OF THE ASSESSEE THAT THE DISCLOSURE MADE BY THE ASSESSEE OF RS. 10,00,000/- HAS TO BE FIRST CONSIDERED AGAINST GP ADDITION MADE BY THE A.O. AND THE G.P. ADDITION MADE BY THE A.O. IS OF LESSER AMOUNT AS COMPARED TO THE DISCLOS URE MADE BY THE ASSESSEE, NO SEPARATE ADDITION IS CALLED FOR IN RESPECT OF TH IS G.P. FOR UNACCOUNTED SALES. WE ALSO FIND FORCE IN THE SUBMISSION OF LD . A.R. OF THE ASSESSEE THAT THIS DISCLOSURE AMOUNT OF RS. 10,00,000/- HAS ALSO TO BE ADJUSTED AGAINST EXTRA STOCK FOUND AT THE TIME OF SEARCH. SUCH SET OFF IS ALLOWED BY THE A.O. ALSO AND THE A.O. HAS ALSO MADE ADDITION OF THE BAL ANCE AMOUNT OF RS. 2,55,510/- ONLY. THE ONLY MISTAKE COMMITTED IS THI S THAT HE HAS NOT ALLOWED SET OFF OF THIS DISCLOSURE AMOUNT AGAINST G.P. ADDI TION MADE BY HIM OF RS. 5,81,059/-. THIS IS NOT JUSTIFIED BECAUSE BOTH THE SE ADDITIONS ARE OF DIFFERENT NATURE. G.P. ADDITION IS ON ACCOUNT OF INCOME AND THE ADDITION ON ACCOUNT STOCK IS ON ACCOUNT OF INVESTMENT AND THEREFORE, TH E DISCLOSURE AMOUNT OF RS. 1,00,000/- COVERS UP THE G.P. AS WELL AS EXCESS STO CK FOUND, TO THE EXTENT OF RS. 10,000,00/- 14. NOW FOR THE BALANCE EXCESS STOCK FOUND OF RS. 2,55,510/-, IT WAS SUBMITTED BEFORE THE A.O. ALSO AS NOTED BY THE A.O. ON PAGE NO. 4 OF THE ASSESSMENT ORDER THAT OUT OF STOCK OF RS. 12,55,510 /- A SUM OF RS. 9,97,079/- IS UNPAID SUPPLIERS. AO HAS REJECTED THIS CONTENTI ON ON THE BASIS THAT THERE IS NO EVIDENCE IN SUPPORT OF ASSESSEES CLAIM REGARDIN G OUTSTANDING PAYMENT TO FARMERS AND THEREFORE, THE SAME IS REJECTED. WE AR E OF THE CONSIDERED OPINION THAT EVEN IN THE ABSENCE OF ANY EVIDENCE, I T CANNOT BE RULED OUT THAT A SMALL AMOUNT OF RS. 2,55,510/- MAY BE OUTSTANDIN G AS PAYABLE TO FARMERS AT THE TIME OF SEARCH AS AGAINST THE CLAIM OF THE A SSESSEE THAT AN AMOUNT OF I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 12 RS. 9,97,079/- IS UNPAID TO FARMERS ON THE DATE OF SEARCH. THIS SUBMISSION WAS GIVEN BY THE ASSESSEE AT THE TIME OF SEARCH ALS O THAT PURCHASES UNACCOUNTED ARE PARTLY PAID AND PARTLY UNPAID. CON SIDERING THESE FACTS, WE FEEL THAT IN THE FACTS OF THE PRESENT CASE, THIS CL AIM OF THE ASSESSEE CANNOT BE REJECTED OUT RIGHTLY THAT OUT OF TOTAL UNACCOUNTED PURCHASES, THERE IS SAME UNPAID SUPPLIER ALSO AND HENCE, WE FEEL THAT THIS ADDITION OF RS. 2,55,510/- IS ALSO NOT JUSTIFIED IN THE FACTS OF THE PRESENT C ASE. WE, THEREFORE, DELETE THIS ADDITION. BOTH THE GROUNDS ARE ALLOWED. IN THE RE SULT, THIS APPEAL OF THE ASSESSEE IS ALLOWED. 15. NOW, WE TAKE UP PENALTY APPEALS FILED BY THE AS SESSEE FOR THESE THREE YEARS I.E. 2000-01 2003-04 AND 2004-05. WE FIND T HAT SINCE THE ENTIRE QUANTUM ADDITION HAS BEEN DELETED BY US IN QUANTUM APPEALS IN TWO YEARS I.E. A.Y. 2003-04 & 2004-05 AS ABOVE, PENALTY HAS N O LEGS TO STAND IN THESE TWO YEARS AND THEREFORE, THE PENALTY IN BOTH THESE YEARS IS ALSO DELETED. NOW, WE TAKE UP THE PENALTY APPEAL IN A.Y. 2000-01 IN ITA NO. 841/AHD/2000 16. IN THIS YEAR, ONLY PART ADDITION HAS BEEN DELET ED BY US. THE ADDITION OF RS. 4.64 LAKHS STANDS CONFIRMED AS PER OUR ORDER IN QUANTUM PROCEEDINGS. 17. IT WAS SUBMITTED BY LD. A.R. OF THE ASSESSEE TH AT EVEN FOR THIS PART ADDITION UPHELD IN THIS YEAR, PENALTY IS NOT JUSTIF IED. HE SUBMITTED THAT THE ASSESSEE HAS DISCLOSED RS. 3 LACS ON THIS ACCOUNT B UT THE SAME WAS DISCLOSED BY MISTAKE IN A.Y. 2002-03 IN PLACE OF A.Y. 2000-01 IN THE ABSENCE OF I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 13 ACCOUNT DETAILS AVAILABLE WHILE FILING 153A RETURN ON OVERALL BASIS. HE SUBMITTED THAT THIS IS NOTED BY A.O. ALSO IN THE AS SESSMENT ORDER ITSELF THAT THIS CONTENTION OF THE ASSESSEE IS VERIFIED AND FOU ND CORRECT AND ACCORDINGLY, SET OFF OF RS. 3 LACS IS BEING GIVEN IN THE ASSESSM ENT YEAR FOR A.Y. 2002-03. AS AGAINST THIS, LD D.R. SUPPORTED THE ORDERS OF AU THORITIES BELOW. 18. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER OF AUTHORITIES BELOW. WE FIND THAT OUT OF TOTAL ADDITION MADE BY THE A.O. OF RS. 9.28 LACS , WE HAVE ALREADY DELETED THE PART ADDITION TO THE EXTENT OF 50 % IN QUANTUM PROCEEDINGS TO THE EXTENT OF RS. 4.64 LACS AND THE ADDITION CONFIRMED BY US I S ONLY RS. 4.64 LACS AND THEREFORE, PENALTY CANNOT BE IMPOSED FOR ANY ADDITI ON IN EXCESS OF RS. 4.64 LACS. REGARDING PENALTY FOR THIS PART ADDITION CON FIRMED BY US AT RS. 4.64LACS, WE FIND THAT ASSESSEE HAD ALREADY DISCLOS ED AMOUNT OF RS. 3 LACS BUT BY MISTAKE THE SAME WAS DISCLOSED IN A.Y. 2002- 03 IN LIEU OF 2000-01 AND HENCE, IN OUR CONSIDERED OPINION, PENALTY IS NO T JUSTIFIED EVEN FOR THIS ADDITION OF RS. 3 LACS. FOR REMAINING AMOUNT OF RS . 1.64 LACS, WE FEEL THAT FOR THIS ADDITION OF RS. 1.64 LACS ALSO PENALTY IS NOT JUSTIFIED BECAUSE WHEN THE ASSESSEE CAN COMMIT A MISTAKE IN DECIDING THE Y EAR OF DISCLOSURE OF RS. 3 LACS IN A.Y. 2002-03 IN STEAD OF A.Y. 2000-01, THER E MAY BE A BONAFIDE MISTAKE IN THE AMOUNT OF DISCLOSURE ALSO AND HENCE, ALTHOUGH ADDITION IS JUSTIFIED BUT PENALTY IS NOT JUSTIFIED IN THE FACTS OF THE PRESENT CASE. WHILE TAKING THIS VIEW OF DELETING PENALTY, WE FIND SUPPO RT FROM THE PROVISIONS OF EXPLANATION -5 & EXP-5A. IN THE PRESENT CASE, THE ADDITION IS ADMITTEDLY ON THE BASIS OF AN ENTRY IN A DOCUMENT I.E. MONY RECEI PT AND NOT ON THE BASIS OF FINDING OF VALUABLE ARTICLE OR THING. HENCE, EXPLA NATION 5 IS NOT ATTRACTED. I.T.A NOS.1726,1733,1734/AHD/08 3477/AHD/10 PAGE NO & IT(SS)A NO. 841,842 /AHD/2010 SURESH CHHAGANBHAI PATEL VS. ACIT 14 EXPLN.5A IS ATTRACTED WHICH IS INSERTED BY FINANCE (M.C) ACT, 2009 W.E.F. 1- 6-2007. HENCE, IN THE PRESENT CASE, ASSESSMENT YEAR BEING 2000-01, EXPLN 5A CANNOT BE APPLIED. INCOME IS DECLARED BY THE AS SESSEE IN THE RETURN FILED U/S 153A ALTHOUGH THE SAME IS DECLARED IN A WRONG A SSESSMENT YEAR I.E. 2002-03 AND LESSER AMOUNT OF RS. 3 LACS. THEN MIST AKES ARE EXPLAINED BECAUSE OF UNAVAILABILITY OF SEIZED MATERIAL. HENC E, IN THESE FACTS, PENALTY IS NOT JUSTIFIED. 19. IN THE COMBINED RESULT, THE APPEAL OF THE ASSES SEE IN QUANTUM PROCEEDINGS FOR A. Y. 2000-01 IS PARTLY ALLOWED WHE REAS REMAINING 5 APPEALS (2 IN QUANTUM AND 3 IN PENALTY PROCEEDINGS) ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (G.C. GUPTA) ( A.K. GARODIA) VICE PRESIDENT A CCOUNTANT MEMBER AHMEDABAD : DATED 28/06/2013 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/ , ( / ' ) ! , '#