Asst. Commissioner of Income Tax Central Circle-4, Surat V. Ashish Karamshibhai Koshiya, Surat

ITSSA 86/SRT/2022

AI Insights

The case involves a series of appeals related to different assessment years, where the Revenue challenged the decisions of the CIT(A) that deleted substantial additions made by the Assessing Officer under sections 69C and 69A of the Income Tax Act, 1961. The additions were initially made based on documents seized during a search operation, which the Assessing Officer interpreted as evidence of unexplained expenditures and unaccounted incomes. However, the CIT(A) found that the additions were not substantiated by any corroborative evidence linking the assessee to the expenditures or incomes claimed. The Tribunal agreed with the CIT(A)'s findings, emphasizing that protective assessments cannot stand without substantive assessments, and that the documents used for the additions were not specific or detailed enough to warrant the conclusions drawn by the Assessing Officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301952 (ITAT-SURAT)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-04-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 25-09-2022
• Other Referred Cases: G.K. Consultants Limited vs. ITA No.1502/Del/2013, Suresh K. Jajo vs ACIT (2010) 39 SOT 514 (Mumbai), M.P. Ramachandran vs DCIT (2009) 32 SOT 592 (Mumbai), CIT vs R.N. Thippa Shetty, Signature Hotel vs ITO (2011) 338 ITR 51 (Del), CIT vs. Wipro Finance Ltd. (2008) 10DTR (Kar) 281
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIREN SHAH
• Keywords: Reopening of assessment; Unexplained investment; Unexplained expenditure; Business income; Income from undisclosed sources; Loose papers; Document seized; Valuation report; Accommodation entries; Block assessment; Reason to believe; Documents seized; Reassessment proceedings; Set aside
• Section: 147; 131; 69; 148; 132; 69C; 143(3); 133A; 153A; 69B; 69A; 43; 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं/.IT(SS)A No.49/SRT/2022 Assessment Year: (2019-20) (Physical Hearing) The ACIT, Central Circle-2, Surat. Vs. Rasikbhai Narottamdas Patel, Flat No.9-10, Mahavir Nagar Co.op H.S. Ltd., BLDG-12, Nr. Gayatri Mandir, Udhna Magdalla Road, Surat – 395007. èथायीलेखासं/.जीआइआरसं/.PAN/GIR No.: ADGPP4550M (Appellant) (Respondent) आयकर अपील सं/.IT(SS)A No.86/SRT/2022 Assessment Year: (2015-16) The DCIT, Central Circle-2, Surat. Vs. Ashish Karamshibhai Koshiya, 40, Jivandeep Soceity, Singanpor Road, Katargam, Surat, Gujarat – 395004. èथायीलेखासं/.जीआइआरसं/.PAN/GIR No.: AOJPK1118G (Appellant) (Respondent) आयकर अपील सं/.ITA No.185/SRT/2022 Assessment Year: (2020-21) M/s. Patel Ambalal Hargovandas & Co., 5/725, Haripura, Bhavaniwad, Opp. Dhobi Sheri, Surat – 395003. Vs. The DCIT, Central Circle-2, Surat. èथायीलेखासं/.जीआइआरसं/.PAN/GIR No.: AADFP2517N (Appellant) (Respondent) Appellant by Shri Ashok B. Koli, CIT(DR) Respondent by Shri Vartik Choksi, Shri Biren Shah & Shri Nitin Gheewala, AR Date of Hearing 26/04/2023 Date of Pronouncement 26/05/2023 आदेश /O R D E R PER BENCH: Page | 2 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. This is bunch of three appeals, filed by the Assessee and Revenue, pertaining to different Assessment Years (AYs) 2015-16, 2019-20 and 2020-21, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals), [in short “the ld. CIT(A)”], which in turn arise out of separate assessment orders passed by the Assessing Officer under section 143(3) r.w.s 153A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. Since, the issues involved in these three appeals, are common and identical; therefore, these appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 3. First, we shall take Revenue’s appeal in IT(SS)A No.86-SRT-2022 for AY.2015-16 (Shri Ashish Karamshibhai Koshiya), wherein the grounds of appeal raised by the Revenue are as follows: “(1) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.1,79,99,000/- made by the Assessing Officer on account of unexplained expenditure under Section69C of the Act without appreciating the fact that the assessee has failed to explain the source of expenditure incurred with supporting evidences despite having incurred expenditure reflected in the underlying seized documents. (2) On the facts and in the circumstances of the case and in law. the Ld.CIT(A) has erred in deleting the addition of Rs.1,79,99,000/- made by the Assessing Officer on account of unexplained expenditure under Sec.69C of the Act by observing that an addition is warranted purely on the basis of Page No.36 of Annexure A-3, without appreciating the fact that the said incriminating document was found from the possession of the assessee who has accepted the nature of figures/expense's mentioned therein and omission of certain digits, etc. but failed to furnish any details or evidences to substantiate his claim either during the course of assessment proceedings or during the course of appellate proceedings. (3) On facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition made by the Assessing Officer of Rs.1,79,99,000/- on account of unexplained expenditure u/s.69C of the Act without appreciating the fact that the such addition was made in the hands of assessee on the basis of incriminating documents found and seized during the course of search proceedings and the relief granted by the CIT(A) is de-horse provisions of section 292C of the Act. (4)On the facts and in the circumstances of the case and in law, the Ld. CIT(.A) erred in deleting the addition made by the Assessing Officer of Rs.1,79,99,000/- on account of unexplained expenditure u/s.69C of the Act ignoring the principle; Page | 3 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. of “Human Probability Test” i.e. preponderance of probabilities which is applicable for Income Tax proceedings. (5) It is, therefore, prayed that the order the Ld. CIT(A)-1, Surat may be set aside and that of the A.O mas be restored to the above extent. (6) The assessee craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before during the course of hearing of the appeal.” 4. Ground Nos. 1 to 5 raised by the Revenue are interconnected and mixed, therefore we shall adjudicate them together. 5. The relevant material facts, as culled out from the material on record, are as follows. The assessee filed return of income on 30.09.2015 declaring total, income of Rs.41,27,580/-. Subsequently, the assessee was subjected to search u/s 132 of the Act on 17.08.2016, as part of K-Star Group. In response to notice u/s 153A of the Act, the assessee filed the return of income, on 30.11.2018, declaring the same income as filed earlier. The assessee is engaged in the proprietary business and derives income from other sources. According to the assessing officer, in the seized material marked Annexure A-3 pg.No.36 which is reproduced on the pg. No.5 of the assessment order shows the expenditure incurred, which is written financial year wise and in coded number ignoring zeros from the figures. The assessing officer has observed that the assessee in writing the said paper has ignored three zeros, therefore assessing officer issued a notice to the assessee to explain the transaction. In response to the notice of the assessing officer, the assessee submitted before assessing officer that he has ignored two zeros. However, the assessing officer has rejected the contention of the assessee and held that three zeros should be added to the figures found on the paper and treated the same as unexplained expenditure for each of the assessment year after reducing the withdrawals shown in the books of accounts. Therefore, assessing officer made addition under section 69C of the Act to the tune of Rs.1,79,99,000/-. 6. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has deleted the addition made by the Assessing Officer. The ld CIT(A) after considering the submissions of the Page | 4 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. assessee held that if the assessing officer`s estimation that three zeros have to be added to the figures on the paper, there should have been some evidences in the form of bills, vouchers, investments etc. found in the residential premises, but there were no such evidences were found in the residential premises of the assessee, including that of jewellery, therefore ld CIT(A) deleted the addition. 7. Aggrieved by the order of Ld. CIT(A), the Revenue is in appeal before us. 8. Learned Departmental Representative (Ld. DR) for the Revenue argued that during the course of search at the residence of the assessee, several documents and evidences providing unaccounted expenditure has been found and seized. As per page no.36 of annexure A-3 assessee has recorded unaccounted expenditure for various financial years. Therefore, notices were issued upon the assessee by the assessing officer requesting assessee to furnish certain details including the amount of personal expenditure incurred and recorded against various financial years as per page no.36 of Annexure A-3. In this regard assessee furnished details wherein it has been stated that the expenditure mentioned in annexure A-3 page no.36 has been wrongly interpreted by the Department. As per the assessee's submission the figure mentioned in the said page No.36 is in a coded form where only last two digit of the figure has been removed. However, assessee`s submission is wrong and interpretation made of the assessing officer is correct, therefore addition made by the assessing officer should be sustained. 9. On the other hand, Learned Counsel for the assessee, defended the order passed by the Ld. CIT(A) and argued that the figures noted on the paper have not been corroborated with any other evidences like bills, vouchers, assets, investments etc. and therefore, no addition could be made only on the basis of the paper found which, does not give specific information including the actual amount of expenditure. Thus, ld Counsel submitted that assessing officer made addition based on guess work, surmises and conjecture, hence ld CIT(A) has rightly deleted the same. Page | 5 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. The ld CIT(A) observed that during the course of statement u/s 132(4) of the Act, the assessee though gave the entire details about the investment in the house property at Surat but he did not make any submissions relating to the paper found. As per the assessing officer, the total amount of unexplained expenditure for six assessment years from AY.2011-12 to 2016-17 comes to Rs.2,82,16,000/- by adding three zeros to the figures found on the incriminating paper. The residence of the assessee was subjected to Search. In the Search, all the vouchers, and bills relating to the construction of the house property at Surat were found. However, there were no other evidences relating to expenditure or investment especially to the tune of Rs.2.82 Crores., were found. If the A.O's estimation that three zeros have to be added to the figures on the paper, there should have been some evidences in the form of bills, vouchers, investments etc. found in the residential premises. But there were no such evidences including that of jewellery. There is no jewellery also found during the course of Search. 11. The ld CIT(A) further noted that as per the estimation by the assessing officer, there should have been jewellery worth more than, a crore of rupees, which was not found during the course of Search. Further, there is a loss shown against the AY 2015-16, which cannot be added as income as done by the assessee. Thus, the figures noted on the paper have not been corroborated with any other evidences like bills, vouchers, assets, investments etc. and therefore, ld CIT(A) held that no addition could be made only on the basis of the paper found which, does not give specific information including the actual amount of expenditure. The assessing officer has added three zeros which does not have any basis. Even adding two zeros to the said figures does not give correct picture of the expenditure as in such case in some of the years the expenses shown are more than the figures noted on the paper. Therefore, ld CIT(A) held that no addition is Page | 6 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. warranted purely on the basis of pg.no.36 of Annexure A-3 found during the course of Search and hence the addition so made by the assessing officer was deleted by the assessing officer. We have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue is dismissed. 12. In the result, appeal filed by the Revenue is dismissed. 13. Now, we shall take Revenue’s appeal in IT(SS)A No.49/SRT/2022 for AY.2019-20 (Shri Rasikbhai Narottamdas Patel), wherein the grounds of appeal raised by Revenue are as follows: “[i] On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the protective addition made by the Assessing Officer of Rs.10,74,15,724/- on account of unaccounted income under Sec.69A of the Act, ignoring the provisions of Sec.l32(4) and Section 292C(1) of the Act. [ii] On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the protective addition made by the Assessing Officer of Rs.10,74,15,724/- on account of unaccounted income under Sec.69A of the Act by observing that the Assessing Officer was not able to bring on record the exact nature of transactions as per the images in the mobile phone and the addition was made on the basis of dumb data found from the mobile phone, ignoring the fact that the data was extracted from the mobile phone of the assessee and the assessee has admitted that the same was written by him and hence, the onus was cast upon the assessee to explain the contents of the images and despite providing sufficient opportunities, the assessee has failed to do so. [iii] It is, therefore, prayed that the order of the Ld. CIT(A)-4, Surat may be set aside and that of the assessing officer may be restored to the above extent. [iv] The assessee craves leave to add, alter, amend and/or withdraw any ground(s) of appeal, either before or during the course of hearing of the appeal.” 14. Succinct facts qua the issue are that the assessee is an individual and working as the accountant of M/s Patel Madhavlal Maganlal & Co. The said firm was subjected to search u/s 132 of the Act on 12.04.2019. During the course of the said search, the backup of the mobile phone of the assessee was taken by the Authorized Officer. On verification of the said data; it was found that there were Page | 7 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. four images with different amounts which are reproduced on page no. 6 of the assessment order. The total of amounts of those four images came to Rs.10,74,15,724/-. Therefore, during the assessment proceedings, the assessing officer issued a show cause notice to the assessee to explain the four images which were in the assessee`s mobile phone. 15. In response to the notice of the assessing officer, the assessee replied to the assessing officer stating that said four images were sent by someone to him and he was unable to recollect that from where the data came and to whom these four images pertained to. Therefore, assessee submitted that these four images does not pertain to assessee hence no addition should be made in his hand. 16. However, assessing officer rejected the contention of the assessee and the data from the mobile phone of the assessee was taken for verification by the assessing officer and assessing officer then held that there were four images with different amounts which are reproduced on page no. 6 of the assessment order and the total of amounts of those 4 images came to Rs.10,74,15,724/-, which assessing officer was of the view that these pertained to assessee therefore the amount of Rs.10,74,15,724/-, was added in the hands of the assessee, by the assessing officer on protective basis as unexplained money u/s 69A of the Act. 17. On appeal, ld CIT(A) deleted the addition. Aggrieved by the order of ld CIT(A) the Revenue is in appeal before us. 18. Learned DR for the Revenue, pleaded that according to the assessing officer, during the assessment proceedings, the employer firm of the assessee stated that the data in the mobile phone of the employee was his personal data and not concerned or relevant to the firm, M/s. Patel Madhavlal Maganlal & Co. Therefore addition should be sustained in the hands of the assessee. 19. On the other hand, ld Counsel for the assessee, pleaded that assessing officer has not mentioned in the assessment order as to in which assessee`s case, the substantive assessment was made. No addition on this account has been made Page | 8 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. in the hands of the employer firm M/s. Patel Madhavlal Maganlal & Co. Therefore, protective addition in the hands of the assessee should not be sustained, without substantive addition in the hands of other assessee. 20. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that when the assessing officer did not make substantive addition in the hands of any other person and only one sided protective addition was made in the hands of the assessee under consideration, it means assessing officer did not find out the real owner, therefore only protective addition in the hands of the assessee does not sustain in the eye of law particularly when assessee clearly stated that documents/evidences do not belong to him, then burden shifts on the assessing officer to find out the real owner in whose hand the substantive addition can be made. 21. Under the Income Tax Act though there is no such word as substantive addition/assessment or protective addition/ assessment, however, the courts have held that in case where it appears to the income tax authorities that certain income has been received during the relevant year or for that matter documents/loose papers have been found and it is not clear to whom it pertains or it is not clear who has received that income and prima-facie it appears that the income or/and documents/loose papers pertains to either A or B or by both together and thus it will be open to the relevant income tax authority to determine the said question by taking appropriate proceedings both against A and B. Under the law, it is open for the department to make assessments on two person of the same income where there is some ambiguity as to the liability to charge or to make an addition on the basis of incriminating documents or loose papers or other material or other income in respect where of A says, it pertains to B and B says it pertains to A but in that case, to safeguard the interest of the revenue, the Assessing Officer has liberty to pass order on protective basis or on substantive basis in one hand and Page | 9 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. vise-versa. It is only to protect the interest of the revenue as, if the action is not taken in the case of A who says that it pertains to B and addition is made in the case of B and later on, on the basis of evidence it is found that it pertained to A and if no action is taken in the case of A, then possibly the assessment or the proceedings may get time barred. Therefore, to avoid such eventualities, the revenue has authority and right to make protective assessment as well as substantive assessment in another case, however, with the rider that ultimately and finally, the income/transaction/addition, if at all would be in the hands of A or B but it cannot be sustained in both the hands. 22. In the assessee`s case under consideration, the assessing officer has not been able to bring on record the exact nature of transactions as per the images in the mobile phone. Noting corroborative relating to this data was found during the course of search in the premises of the employer firm, where there was a search u/s 132 of the Act. Even the data found in the mobile phone is not clear as to whether it relates to purchase/sales receipts/payments/investments /deposits/borrowings etc. Nothing is known about the ownership of the data and therefore, an addition cannot be made on the basis of such dumb data found in the mobile phone. Accordingly, the protective addition made in the hands of the assessee of Rs.10,74,15,724/- has been deleted by the ld CIT(A). 23. We note that on identical and similar facts, the Coordinate Bench of ITAT Delhi in the case of G.K. Consultants Limited, ITA No.1502/Del/2013, order dated 27.06.2014 held that there may be a substantive assessment without any protective assessment but there cannot be any protective assessment/addition without a substantive assessment/addition, meaning thereby there has to be some substantive assessment/addition first which enables the AO to make a protective assessment/addition. The findings of the Coordinate Bench are reproduced below: “9. From the above contentions of both the parties, we also observe that admittedly, the survey was conducted on Shri Subodh Gupta, CA on 30.10.2003 by the investigation wing of the department and during the course of survey, statement of Shri Subodh Gupta was recorded on oath which was retracted by Shri Subodh Gupta vide his letter dated 4.11.2003 (PB page no. 62 & 63). From careful perusal of the reasons recorded by the AO prior to issuance of notice u/s Page | 10 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. 148 of the Act, we clearly observe that the AO proceeded on the basis of statement of Shri Subodh Gupta recorded during the course of search proceedings on 30.10.2003 which was retracted on 4.11.2013 by a letter submitted to the department. From the reason recorded, we also observe that the AO proceeded to make protective addition on the basis of retracted statement of Shri Subodh Gupta. We also observe that the AO proceeded to make protective addition on the basis of retracted statement of Shri Subodh Gupta and at the same time, we also observe that at the time of recording reasons, no substantive assessment or addition was made, neither in the case of Shri Subodh Gupta nor in any other case, till and on the date of assumption of jurisdiction u/s 147 of the Act. 10. The main facts recorded in the reasons indicate that all allegations have been made against Shri Subodh Gupta in the second part of reasons recorded without assigning any specific allegation and quantifying the quantum of transactions, the AO has simply mentioned that the assessee had not disclosed any income from the accommodation entries, therefore, this is a clear cut escapement of income. In this situation, we clearly observe that the target of the AO in the reasons recorded was Shri Subodh Gupta, CA and not the assessee company. 11. Coming to the legal proposition and citations relied by the assessee, we observe that in the case of CIT vs R.N. Thippa Shetty (supra), speaking for High Court of Karnataka, their lordships held that if the very basis on which reopening was ordered did not exist, then there was no question for reopening of the case on the basis of withdrawn/retracted statement. The relevant observations of Hon’ble High Court read as under:- “It is further pertinent to mention here that once the statements said to have been recorded u/s 132(4) of the Act were withdrawn, then there existed no material on record to warrant reopening of the case against the assessee u/s 148 of the Act. If the very basis on which reopening was ordered did not exist, there was no question for reopening of the case. This material aspect of the matter has not been considered by the AO, who proceeded to direct reopening of the case, without there being any legally admissible evidence available on record. Thus the very issuance of notice u/s 148 of the Act is found to be illegal and absolutely without jurisdiction.” 12. Ld. Counsel of the assessee has also placed reliance on the decision of ITAT, Mumbai in the case of Suresh K. Jajo vs ACIT (2010) 39 SOT 514 (Mumbai) wherein following the decision of the coordinate bench of ITAT, Mumbai in the case of M.P. Ramachandaran vs DCIT (2009) 32 SOT 592 (Mumbai), it has been held that there may be substantive assessment without any protective assessment but there cannot be protective assessment without there being a substantive assessment. The relevant observations and findings of the Tribunal in the case of M.P. Ramachandran vs DCIT (supra) read as under:- “Though from the reasons recorded by the A.O., it comes up that he had taken the steps for including this amount in the reassessment with a view Page | 11 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. to protect the interest of Revenue, but he had not specifically spelt out his mind that the addition was to be made on protective basis. It is another matter that while passing the order u/s.143(3) r.w.s. 147 addition of Rs.527.85 lakhs was made on protective basis. Be that as it may, we shall proceed to decide the matter with the presumption that the AO reopened the original assessment made u/s 143(3) on this count for the purpose of making the disallowance of advertisement expenses on protective basis. Protective assessment cannot be independent of substantive assessment. Thus protective assessment is always successive to the substantive assessment. There may be a substantive assessment without any protective assessment, but there cannot be any protective assessment without there being a substantive assessment. In simple words there has to be some substantive assessment/addition first which enables the AO to make a protective assessment/addition. Substantive addition/assessment is made in the hands of the person in whose hands the AO prima facie holds the opinion that the income is rightly taxable. Having done so and with a view to protect the interest of the Revenue, if the AO is not sure that the person in whose hands he had made the substantive addition rightly, he embarks upon the protective assessment. Thus the protective assessment is basically based on the doubt of the AO as distinct from his belief which is there is the substantive assessment. Obviously there is no place for "doubt' in the scheme of reassessment, as it has to be belief of the AO about the escapement of income, which is the foundation for assessment or reassessment u/s 147. Even if for a moment we agree with the Id. DR that the protective addition is different from substantive addition and hence the reassessment proceedings be upheld, we find that ultimately the same conclusion will follow if the substantive addition is struck down at a place where it was made. In such a scenario the protective addition will get converted into substantive addition in the reassessment. That will also run contrary to the format of reassessment, being to tax an income which has escaped assessment. In that case again it will tantamount to reopening assessment on the basis of an item of income or disallowance, which has already been made in block assessment of the assessee, thereby leaving no income escaping assessment. Under these circumstances we are satisfied that having made addition of Rs.527.85 lakhs in the block assessment, the Assessing Officer was not justified in forming the belief, either on substantive or protective basis, that the same income has escaped assessment in the instant year. CIT VS. Wipro Finance Ltd. (2008) 10DTR (Kar) 281 relied on.” 13. In the case of Suresh K. Jajo vs ACIT, ITAT, Mumbai reiterated the same legal proposition and held as under:- “In the present case, the observations of the AO while completing assessment for asstt. Year 2001-02 cannot be said to be an expression of his intention to make a protective assessment of the capital gain as long term capital gain. It is an assessment pure and simple. Firstly, the words used by the AO do not express his intention that the long-term capital gain is being brought to tax by way of protective assessment. Secondly, there is no substantive Page | 12 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. assessment already made treating the capital gain as short term capital gain. Therefore, there can be no protective assessment. Thirdly, there has been a demand (without any limitation that it should not have been recovered) raised pursuant to the above assessment which also shows that the said assessment is not a protective assessment.” 14. In the present case, from the reasons recorded by the AO as reproduced hereinabove, we observe that the AO went on to initiate reassessment proceedings u/s 147 and 148 of the Act on the basis of retracted statement of Shri Subhash Gupta without making any further inquiry and investigation. From bare reading of reasons recorded, we also observe that the AO went on to reopen the assessment with a genuine intention to make protective addition pertaining to the accommodation entries alleged to be provided by the appellant company and at the same time, we notice that on a specific query from the Bench, ld. DR was unable to show us that there was a substantive assessment/addition either in the case of Shri Subodh Gupta or in the case of anybody else on the date of assumption of jurisdiction u/s 147 of the Act. 15. In view of above, we clearly hold that the AO had to initiate reassessment proceedings u/s 147 and 148 of the Act only on the basis of retracted statement of Shri Subodh Gupta, CA without making any further inquiry or investigation. We also hold that the AO proceeded to reopen the assessment of the assessee company for making protective assessment/addition but no substantive assessment existed on the date of assumption of jurisdiction u/s 147 of the Act neither in the case of Shri Subodh Gupta nor in the case of any body else. 16. Ld. Counsel of the assessee placing reliance on the decision of Hon’ble Jurisdictional High Court of Delhi in the case of CIT vs Dhingra Metal Works (2010) 328 ITR 384 (Delhi) and submitted that even on the basis of the statement made by the assessee during the course of survey, the AO could not have made addition as the said statement cannot be said to be conclusive and it is open to the person who has made the admission in the statement to show that the same is incorrect. Ld. Counsel of the assessee further submitted that in the present case, the statement of Shri Subodh Gupta was recorded in his individual capacity and not as a director of the assessee company which was also retracted only after four days on 4.11.2003, therefore, the AO was not justified in assuming jurisdiction for initiation of proceedings u/s 147 and in issuing notice u/s 148 of the Act. 17. The counsel of the assessee has also placed reliance on another decision of Hon’ble Jurisdictional High Court of Delhi in the case of Signature Hotel vs ITO (2011) 338 ITR 51 (Del) and submitted that the AO must have “reason to believe” that an income chargeable to tax has escaped assessment and it is mandatory for the AO that the “reason to believe” are required to be recorded by the AO and if the belief is not bona fide or based on vague, irrelevant and non-specific information, then the same cannot be regarded as material evidence which prima facie establishes escapement of income, more so, when the AO did not apply his own mind to the information to arrive at the belief as to whether or not any income had escaped assessment, then initiation of proceeding and notice Page | 13 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. u/s 147 and 148 of the Act deserves to be quashed. Ld. Counsel of the assessee has drawn our attention towards reasons recorded by the AO and submitted that the AO has proceeded to make protective assessment without any substantial assessment on the basis of retracted statement of Shri Saurabh Gupta recorded during the course of survey without making any further investigation and inquiry and without applying his own mind to the material and evidence available before him at the time of recording reasons and assuming jurisdiction u/s 147 of the Act for issuance of notice u/s 148 of the Act. 18. Ld. DR replied that the AO proceeded to initiate proceeding of reopening of assessment u/s 147 of the Act and for issuing notice u/s 148 of the Act on cogent and justified basis because Shri Subodh Gupta, CA who was also a director in the assessee company made a statement that he provided accommodation entries to the various entities through an assessee and other companies managed and controlled by him, therefore, the AO rightly assumed jurisdiction u/s 147 of the Act for issuing notice u/s 148 of the Act. 19. On careful consideration of above contention, we are of the view that there may be a substantive assessment without any protective assessment but there cannot be any protective assessment/addition without a substantive assessment/addition, meaning thereby there has to be some substantive assessment/addition first which enables the AO to make a protective assessment/addition. In the present case, the AO proceeded to make protective assessment by way of reopening of assessment of the assessee appellant company without being a substantive assessment on the date of assumption of jurisdiction u/s 147 of the Act which is not permissible as per decision of ITAT, Mumbai in the case of M.P. Ramachandaran vs DCIT (supra) and Suresh K Jajo vs ACIT (supra).” 24. On the identical facts, our view is fortified by the decision of the Coordinate Bench of ITAT Kolkata in the case of Vikash Iron & Steel Private Limited, ITA Nos. 332-334/Kol/2012, order dated 01.07.2015, wherein it was held as follows: “3. At the outset, the ld. Counsel for the assessee Sr. Advocate Shri R.P.Agarwal submitted the reasons recorded for issuing notice u/s 148 of the Act and almost similar reasons in the impugned assessment years. The relevant reasons as reproduced by CIT(A) for A.Yr. 2005-06 reads as under :- “Return of income was filed on 31.10.2005 showing returned income Nil. A survey operation u/s 133A was carried out in the business premises of the assessee company on 26.02.2008. Later Shri Vikash Agarwal, the Director was examined on oath u/s 131 of the Income Tax Act, 1961 and his statements were recorded. He has confessed that the Company did not carry out any trading activity but only gave accommodation entries to interested parties on which it got commission. Later he has also confessed that the company has offered an additional income of Rs.2,25,000/- for Asst.Year 2005- 06 for taxation. He has also admitted that the assessee company has some undisclosed bank accounts. Page | 14 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. Therefore, this is a clear case of income escaping assessment. Issue notice u/s 148 of the Income tax Act, 1961.” The ld. Counsel for the assessee made a categorical statement that no substantive addition is made only protective assessments are made in the hands of the assessee company. On query from the Bench the ld. JCIT, Sr. DR Shri Prabal Chowdhury fairly conceded that no substantive addition is made in the hands of any person but only protective addition is made. But he relied on the orders of the authorities qua the assessee’s appeal. Qua Revenue’s appeal, he relied on the assessment order. We find that this issue dealt with by CIT(A) vide para 5.1. of his appellate order which reads as under :- “5.1. The argument of the appellant is misplaced in view of the fact that addition has been made on the basis of information collected during the course of survey, enquiry and investigation made by the A.O. The protective addition was made in order to protect the interest of the revenue on the basis of the information received from the A.O. of the persons with whom the appellant has made transactions. Since the addition is protective and subject to outcome of assessment in the case of persons with whom appellant has made transactions, the appellant has no basis to be aggrieved. It amounts to the appellant’s insistence to make the assessment on the basis of its own statement given without allowing for cross verification with the other persons transaction. In fact, the A.O. has resorted to protective addition only when the related persons did not corroborate to the statement given by the appellant on oath. In that case, the statement of the appellant on oath may require further probe. Thus, the addition of the A.O. on protective basis is held to be correct. Thus, the appellant fails to get relief on this issue.” 4. On this issue the ld Counsel for the assessee relied upon the decision of Mumbai E Bench in the case of Suresh K. jajoo Vs. ACIT [2010] 39 SOT 514 (Mum)and argued that the Co-ordinate Bench of this Tribunal relying on another decision of ITAT in the case of M.P.Ramachandran vs D.CIT [IT Appeal No.587 (Mum) of 2005] has laid down the following principles :- “ 23. Before us, both the learned counsel for the assessee and the learned D.R. have relied on the decision of Mumbai Bench of the ITAT in the case of M.P.Ramachandran v. Dy.CIT [IT Appeal No.587(Mum) of 2005]. In the aforesaid case, facts were that in assessment under section 143(3) for assessment year 1997-98 was completed on 25-2- 2000. On 3-22-2000, there was a search and consequent there to, notice under section 148 dated 26-3-2003 was issued to the assessee. Consequent to the search, block assessment order was framed on 30-11-2008 in which, sum of Rs.5.27 crores was held to be expenditure not related to the business of the assessee and considered as undisclosed income for the block period. In the reassessment proceedings under section 148, very same amount was added on a protective basis. When the Assessing Officer made aforesaid addition in the reassessment proceedings under section 148, he noticed that the order of the Assessing Officer in the block assessment making the addition has already deleted by learned CIT(A). The appeal of the revenue before the Tribunal was pending. The Assessing Officer while making addition in the reassessment proceedings under section 148 had observed that the addition Page | 15 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. was being made on protective measure. It is in the aforesaid background of fact, question of validity of initiation of reassessment proceedings had come up for consideration before the Tribunal. 24. The Tribunal firstly explained the concept of Protective assessment, which was judicially recognized in the case of Lalji Haridas v. ITO [1961] 43 ITR 387. The Hon’ble Supreme Court held that where it appears to the income-tax authorities that certain income has been received doing the relevant assessment year; but it is not clear who has received that income and prima facie, it appears that income may have been received either by the A or B or by both together, it would be open to the relevant income-tax authority to determine the said question by taking appropriate proceedings both against A and B. The Supreme Court, however, observed that in the proceedings taken against the one or the other, an exhaustive enquiry should be made and the question as to who is liable to pay the tax in question should be determined after hearing objections and that the proceedings against the other person may also continue and be concluded but until proceedings against the one has been finally determined, no assessment order should be passed. A final determination had, therefore, to be made in one of the proceedings. 25. The Tribunal thereafter opined that a Protective assessment is not confined to making assessment of same income in the hands of two different persons; but can also be made in the case of income of one person where the Assessing Officer is uncertain as to the year in which the income had been earned. The Tribunal thereafter held that protective assessment cannot be independent of substantive assessment but always has to be later in pint of time to the substantive assessment.” Further he drew our attention to the findings of ITAT Mumbai Bench of this Tribunal in the case of M.P.Ramachandran vs DCIT (2009) 32 SOT 592 wherein it has held as under :- “Though from the reasons recorded by the A.O., it comes up that he had taken the steps for including this amount in the reassessment with a view to protect the interest of Revenue, but he had not specifically spelt out his mind that the addition was to be made on protective basis. It is another matter that while passing the order u/s.143(3) r.w.s. 147 addition of Rs.527.85 lakhs was made on protective basis. Be that as it may, we shall proceed to decide the matter with the presumption that the AO reopened the original assessment made u/s 143(3) on this count for the purpose of making the disallowance of advertisement expenses on protective basis. Protective assessment cannot be independent of substantive assessment. Thus protective assessment is 'always successive to the substantive assessment. There may be a substantive assessment without any protective assessment, but there cannot be any protective assessment without there being a substantive assessment. In simple words there has to be some substantive assessment/addition first which enables the AO to make a protective assessment/addition. Substantive addition/assessment is made in the hands of the person in whose hands the AO prima facie holds the opinion that the income is rightly taxable. Having done so and with a view to protect the interest of the Revenue, if the AO is not sure that the person in whose hands he had made the Page | 16 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. substantive addition rightly, he embarks upon the protective assessment. Thus the protective assessment is basically based on the doubt of the AO as distinct from his belief which is there is the substantive assessment. Obviously there is no place for "doubt' in the scheme of reassessment, as it has to be belief of the AO about the escapement of income, which is the foundation for assessment or reassessment u/s 147. Even if for a moment we agree with the Id. DR that the protective addition is different from substantive addition and hence the reassessment proceedings be upheld, we find that ultimately the same conclusion will follow if the substantive addition is struck down at a place where it was made. In such a scenario the protective addition will get converted into substantive addition in the reassessment. That will also run contrary to the format of reassessment, being to tax an income which has escaped assessment. In that case again it will tantamount to reopening assessment on the basis of an item of income or disallowance, which has already been made in block assessment of the assessee, thereby leaving no income escaping assessment. Under these circumstances we are satisfied that having made addition of Rs.527.85 lakhs in the block assessment, the Assessing Officer was not justified in forming the belief, either on substantive or protective basis, that the same income has escaped assessment in the instant year. CIT VS. Wipro Finance Ltd. (2008) 10DTR (Kar) 281 relied on;" 5. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the issue raised by the ld. Sr.Advocate has been answered by the Hon’ble Supreme Court in the case of Lalji Haridas vs ITO [1961] 43 ITR 387 which reads as under :- “The main argument which is urged by Mr.Nambiar in support of this appeal is that respondent No.1, the Income-tax Officer, who has issued the impugned notice, has no jurisdiction to assess the appellant for the income in question, because he contends that even according to respondent No.,1 the said proposed assessment would be in the nature of a precautionary or protective assessment, and Mr.Nambiar’s case is that this concept of a precautionary or protective assessment is not recognised by the Act and as such any attempt to levy such assessment would be illegal. In support of this argument Mr.Nambiar strongly relied on the finding recorded against the appellant’s brother, Lalji, in the ex parte assessment order which had originally been passed against him. It is no doubt true that the said ex parte order had held that Lalji was liable to pay the tax on the amount of income in question; but the said order has been subsequently set aside, and, as we have already seen, fresh proceedings against Lalji have been commenced at Jamnagar. Mr. Nambiar also relied on the admission made by the respondent in his statement of the case before this court, and he contended that the respondent himself seems to concede that the assessment proposed to be made against the appellant is no more than precautionary. It is true that paragraph 3 of the statement avers that “steps are being taken against the appellant for taxation of income in his hands only as a precautionary measure against the eventuality of its being finally held that the income is not liable to be taxed in his brother’s hands”, and it was added that “the appellant’s contention that such a procedure is not warranted under the Act is entirely untenable”; but in appreciating the effect of this statement it would be necessary to consider the other relevant statements made by the respondent in Page | 17 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. his statement of the case. In paragraph 4, for instance, it is added that until the question of liability to pay tax in respect of the income in question is finally determined it may not be possible to safely predicate that it is the income of one and not of the other, and the respondent’s case appears to be that in such circumstances protective assessments have to be made so that the income may not escape taxation altogether. In other words, the respondent’s case clearly is that the notices issued against the two brothers by their respective Income-tax Officers are intended to determine who is responsible to pay tax for the income in question; now though Mr.Nambiar wanted to argue that protective or precautionary assessment of tax is not justified by any of the provisions of the Act he did not seriously contest the position that at the initial stage it would be open to the income-tax authorities to determine by proper proceedings who is in fact responsible for the payment of tax, and that is all that is being done at the present stage. In cases where it appears to the income-tax authorities that certain income has been received during the relevant assessment year but it is not clear who has received that income and prima facie it appears that the income may have been received either by A or B or by both together, it would be open to the relevant income-tax authorities to determine the said question by taking appropriate proceedings both against A and B. That being so, we do not think that Mr.Nambiar would be justified in resisting the enquiry which is proposed to be held by respondent No.1 in pursuance of the impugned notice issued by him against the appellant. Under these circumstances we do not propose to deal with the point of law sought to be raised by Mr.Nambiar. We would, however, like to add one direction in fairness to the appellants. The proceedings taken against both the appellants should continue and should be dealt with expeditiously having regard to the fact that the matter is fairly old. In the proceedings taken against Lalji the Income-tax Officer should make an exhaustive enquiry and determine the question as to whether Lalji is liable to pay the tax on the income in question. All objections which Lalji may have to raise against his alleged liability would undoubtedly have to be considered in the said proceedings. Proceedings against Chhotalal may also be taken by the Income- tax Officer and continued and concluded, but until the proceedings against Lalji are finally determined no assessment order should be passed in the proceedings taken against Chhotalal. If in the proceedings taken against Lalji it is finally decided that it is Lalji who is responsible to pay tax for the income in question it may not become necessary to make any order against Chhotalal. If , however, in the said proceedings Lalji is not held to pay tax or it is found that Lalji is liable to pay tax along with Chhotalal it may become necessary to pass appropriate orders against Chhotalal. When we suggested to the learned counsel that we propose to make an order on these lines they all agreed that this would be a fair and reasonable order to make in the present proceedings.” 6. In view of the factual position that the revenue has not initiated any substantive assessment or no addition has been made on substantive basis in any other hand, there is no question of any protective assessment in the present case from the reasons recorded by the AO as reproduced herein above. We are of the view that the AO has initiated re-assessment proceedings u/s 147/148 of the Act on the basis of the statement of one of the directors of the assessee company that the transactions in the hands of the other parties are not accounted for and this Page | 18 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. may be the income of the assessee. The revenue could not bring on record anything against the other parties or who are the other parties against whom substantive addition is to be made. There is no substantive addition made in any of the hand till date as conceded by the ld. Sr.DR before us now. In view of the above we are very clear that the re-assessment proceedings initiated u/s 147/148 of the Act is invalid and hence quashed. The protective additions made by the A.O. are also quashed accordingly. 7. No other ground on merits was argued by either of the sides and hence we need not adjudicate those issues on merits. Accordingly these appeals of the assessee are allowed and that of the revenue’s appeals are dismissed. 8. In the result the appeals of the assessee are allowed and the appeals of the revenue are dismissed” 25. From the above cited precedents it is abundantly clear that there may be a substantive assessment without any protective assessment but there cannot be any protective assessment/addition without a substantive assessment/addition, meaning thereby there has to be some substantive assessment/addition first which enables the AO to make a protective assessment/addition. Besides, we have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A).Thus, the conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss the grounds of appeal raised by the Revenue. 26. In the result, appeal filed by the Revenue is dismissed. 27. Now, we shall take assessee’s appeal, in ITA No. 185/SRT/2022 (M/s Patel Ambalal Hargovandas & Co.), wherein the grounds of appeal raised by the assessee are as follows: “1. In the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) should have held the assessment as time barred and assessment order should have been held as illegal, void and non-est. The Ld. Commissioner of Income tax should have annulled, quashed the assessment. 2. In the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) is not justified in confirming addition for valuables (Diamonds/Jewellery) of Rs.5,70,162/- found & seized during the course of search belonging to constituents received during the ordinary course of angadia business and assessee was in possession of said valuables as Bailee for specific and limited purpose of transferring and delivering the same at other branches as per the instruction of constituents and the constituents confirmed and claimed Page | 19 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. the ownership vide their statements recorded on oath during the course of search itself. 3. In the facts & circumstances of the case, the addition Rs.5,70,162/- may be deleted. 4. The assessee craves leave to add to, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.” 28. Succinct facts qua the issue are that grounds raised by the assessee in this appeal are relating to addition towards unexplained investment in jewellery/other valuables found in the office of the assessee during the course of search. According to the assessing officer, the partners of the assessee firm Mr Manilal M. Patel and Mr. Mahendrabhai Patel in their statements during the course of search stated that entire jewellery and valuables found during the course of search were unexplained investments of the assessee -firm. During the assessment proceedings, the assessee explained to the assessing officer that the said jewellery and valuables were received by the assessee for transporting form one place to another in the regular course of assessee’s Angadiya business. However, assessing officer rejected the contention of the assessee and made addition for the entire jewellery/other valuables seized to the tune of Rs.5,70,162/- treating as unexplained investments. 29. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has confirmed the action of the Assessing Officer, observing as follows: “7.2 I have gone through the assessment order and the submissions of the AR of the assessee. The evidences produced during appellate proceedings to some extent prove that the said jewellery and valuables were received for transportation at Surat branch to other destinations as the assessee is in the business of Angadiya. At the same time, during the post search proceedings, the assessee did not produce the actual owners of the said jewellery and valuables and hence, the partners confessed that the same be treated as unexplained investment of the firm. It is a fact which is not denied by the AR that the partners have admitted in their statements that the jewellery and valuables found during the course of search were unexplained investments of the assessee- firm. The said statements of the partners were not retracted subsequently. Therefore, the addition made by the assessing officer for Rs.5,70,162/- being the value of jewellery and valuables is upheld in principle. However, considering the nature Page | 20 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. of business of the assessee and the fact that the assessee could not produce the actual owners before the assessing officer/Authorized Officer, the said income is directed to be taxed as regular business income and not u/s 69B of the Act as it is the income incidental to the assessee’s business. Ground No.4 is dismissed.” 30. Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before us. 31. The Ld. Counsel for the assessee submitted written submission before the Bench, which is reproduced below: “Assessee is engaged in the business of Angadiya (Courier Service). A search u/s.132 of the Act carried out on 12.04.2019 at Surat office of the assessee and jewellery/other valuables to the tune of Rs.5,70,162/- was found & seized. In the case of assessee assessment U/s. 143(3) of the Act was completed vide order dtd. 30.09.2021. In the assessment order assessing officer made addition of Rs.5,70,612/- of jewellery/valuables belonging to various constituents received during ordinary course of courier/angadia business. Against the said addition assessee filed the appeal before the Commissioner of Income Tax (Appeals). The learned CIT(A) confirmed the said addition of Rs.5,70,612/- which is not justified and therefore assessee is filing this appeal before Your Honour. In this regard it is most respectfully submitted before Your Honours that addition of Rs.5,70,612/- made by assessing officer is not justified for the following: Assessee firm is doing business of Angadia i.e. courier/carting agent. It transfers cash, valuables, articles, post etc. of the constituents from one branch to another as per the instruction of the constituents for which it receives commission/khep charges from the constituent for the services rendered to them. During the regular course of its angadia business assessee received valuables like gold, diamond, silver ornaments etc. to be transferred from one branch to another as per the instruction of the constituents. On the date of search on 12.04.2019 at Surat office, 46 packets of diamond, jewellery etc. valuing from Rs.30,11,650/- to Rs.3,860/- belonging to different constituents were found which were to be delivered at other branches as per instruction of senders. At the time of receipt of said valuables assessee firm issued acknowledgement receipts to the constituents & all the entries of valuables were duly noted in Bharatia (Daily Sheet). During the course of search assessee also provided to Authorized Officers of Income- Tax department the phone numbers & name of those persons. Authorized Officers obtained the valuation report of said valuables from the Government approved valuer. In the valuation report description of item, name of sender- receiver along with their address/phone numbers & weight of jewelry & their value are mentioned. In short during the course of search itself, concerned DDIT - officers were fully satisfied that jewelry found from the assessee were belonging to constituents received during ordinary course of angadia business and was in possession of assessee firm only for the limited & specific purpose of transferring the same from one station to another as per the instruction of senders/receivers. During the search itself, out of 46 constituents, 44 constituents presented themselves before Authorized officer & claimed their ownership of the valuables by giving supporting documents like their ID card, bills of valuable Page | 21 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. etc. After verification of valuables 38 items were handed over to respective constituents and 8 packets of valuables were seized, valuing total Rs.5,70,612/- as per the Govt. approved valuer's report obtained by the Authorized Officers. For the remaining 8 items 6 persons presented themselves before the Authorized Officers claiming the ownership of the valuables. For 8 packets of valuables which were seized during search, statements of 6 parties were recorded on oath as listed below by which said 6 parties confirmed and claimed their ownership of valuables for their respective packets. Sr No. Description of the article Items claimed to be belonging to Value as per valuation report of Govt. Approved Valuer Their Ownership confirmed by the constituents vide their Statement recorded on oath during search on (date) 1 AsperJF-1/1 ABHAY R GANDHI 2,41,700 14.04.2019 2 AsperJF-2/31 RAJNIKANT C SHAH 1,27,010 14.04.2019 3 AsperJF-2/32 RAJNIKANT C SHAH 1,34,160 14.04.2019 4 As per JF-2/39 DILIP A SHAH 33,020 14.04.2019 5 As per JF-2/42 RAJUBHAI M.KANKOTIYA 13,002 - 6 As per JF-2/43 NAVINBHAI M 7,130 - 7 As per JF-2/44 MANUBHAI K. PATEL 10,280 15.04.2019 8 As per JF-2/46 MANUBHAI K. PATEL 3,860 15.04.2019 Total Value of Seized Article/Items 5,70,162 Thus out of total seizure of 8 packets of total value of Rs.5,70,162/- constituents of 6 packets of total value of Rs.5,50,030/- were confirmed their ownership of packets. Even during the course of assessment by providing following evidences as described below, assessee proved beyond doubt that said packets of valuables were received during ordinary course of angadia business & for delivering the same to other branches as per their instruction. 1. Names of sender & receivers. 2. Their contact numbers. 3. Copies of Receipts issued to them (mentioning therein name of sender and receiver) at the time of receipt of the valuables at Surat to be delivered at other branch as per the instruction of sender constituent. In view of the above detail submitted during the course of the search and recording of statements of constituents by Authorized officers, it is proved beyond doubt that the possession of the said valuables in the hands of assessee as courier i.e. Bailee only for the limited purpose of making delivery as per the instructions of the constituents at other branches and not as an owner. However without considering the above facts assessing officer made addition on wrong facts and only highlighting the primary, general statement of partner recorded during the search proceedings regarding question that if in any circumstances constituents would not present to claim ownership of valuables found during search, then said valuables would be considered as of assessee firm, partner has answered Page | 22 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. “accepted”. Here it is worth noting that as explained & mentioned in above table that out of total eight packets of valuables owners of six packets presented themselves before authorized officer gave the statements on oath. However though the Authorized officers accepted the fact that valuables were in possession of assessee as courier and not owned by the assessee firm, the valuables were seized as they were not satisfied with the explanation submitted by the constituents regarding the source of values in their hands. Thus, Addition made of Rs.5,70,162/- for the valuables is not justified as (1) valuables were received by the assessee firm for limited purpose of transferring the same as per the instruction of constituents during ordinary course of its business as courier and was in possession of the same as Bailee & (2)during the course of search all the valuables were verified as belonging to various constituents by the Investigation wing by recording statements of constituents and (3) found that assessee firm was in possession of the said valuables as courier only, same were fully explained (4) considering legal judgments mentioned above by jurisdictional ITAT bench on similar facts. In view of the above, Your Honours are most respectfully requested to delete the addition of Rs.5,70,162/- and oblige.” 32. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 33. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We find merit in the submission of ld Counsel, as he pointed out that addition made of Rs.5,70,162/- for the valuables is not justified as (1) valuables were received by the assessee firm for limited purpose of transferring the same as per the instruction of constituents during ordinary course of its business as courier and was in possession of the same as Bailee, (2)during the course of search all the valuables were verified as belonging to various constituents by the Investigation wing by recording. We note that Coordinate Bench of ITAT Ahmedabad in the case of M/s Patel Somabhai Kanchanlal & Co., in ITAT No.842/Ahd/1984), an angadia firm, wherein it was observed as follows: “In case of Courier i.e.angadia the provisions of section 68, 69 and 132(4A) are not applicable in the same way as is applicable in respect of loans and deposits as courier service is akin to postal services. Once it is proved that the parcels were received during the ordinary course of angadia business and the claimant also claimed the ownership of the same, no addition can be made” Page | 23 IT(SS)A.49 & 86/SRT/2022 & ITA.185/SRT/2022 Ashish K. Koshiya, Rasikbhai N. Patel & Patel A. Hargovandas & Co. 34. Respectfully following the binding precedent of ITAT Ahmedabad in the case of M/s Patel Somabhai Kanchan lal & Co.(supra), we delete the addition of Rs. Rs.5,70,162/-. 35. In the results, appeal filed by Revenue (in IT(SS)A Nos. 49/SRT/2022 and 86/SRT/2022) are dismissed, whereas the appeal filed by the Assessee (in ITA No.185/SRT/2022) is allowed. Registry is directed to place one copy of this order in all appeals folder / case files. Order is pronounced on 26/05/2023 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 26/05/2023 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat