The DCIT, Central Circle-1, Baroda V. Shri Jayantibhai D.Panchal, Baroda

ITSSA 89/AHD/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8620 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-11-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 04-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D P GUPTA WITH SHRI T SANKAR
• Keywords: Unexplained investment; Capital asset; Gift; Business income; Income from undisclosed sources; Document seized; Retraction; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) APPEAL NO. APPELLANT RESPONDENT IT(SS)A.NO.89 TO 94/AHD/2010 (ASSTT.YEAR : 2001-02, 2002- 03, 2003-04, 2004-05, 2005- 06, 2006-07). DCIT, CENT.CIR.1 BARODA SHRI JAYANTIBHAI D. PANCHAL C/O. NARAYAN CHAMBERS STATION ROAD, BHARUCH. PAN : ADXPP 0631 J ITA NO.354/AHD/2010 (ASSTT.YEAR 2007-08) -DO- -DO- ITA NO.693/AHD/2010 (ASSTT.YEAR 2007-2008) SHRI JAYANTIBHAI D. PANCHAL. DCIT, BARODA. IT(SS)A.NO.77 TO 82/AHD/2010 (ASSTT.YEAR : 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006 AND 2006-2007) DCIT, CENT.CIR.1 BARODA. SHRI KARTIK J. PANCHAL C-201, TIMES SQUARE BESIDE PETROL PUMP FATEHGUNJ, BARODA (GUJ) PAN : AEBPP 4052 Q IT(SS)A.NO.171/AHD/2010 (ASSTT.YEAR : 2007-08) DCIT, CENT.CIR.1 BARODA. SHRI KARTIK J. PANCHAL ITA NO.692/AHD/2010 (ASSTT.YEAR : 2007-08) SHRI KARTIK J.PANCHAL ACIT, CENT.CIR.1 BARODA. IT(SS)A.NO.83 TO 88/AHD/2010 (ASSTT.YEAR : 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07) DCIT, CENT.CIR.1 BARODA. SMT.PURNIMA J. PANCHAL C/O. NARAYAN CHAMBERS, STATION ROAD, BHARUCH. PAN : AENPP 3371 G ITA NO.353/AHD/2010 (ASSTT.YEAR : 2007-08) DCIT, CENT.CIR.1 BARODA. SMT.PURNIMA J. PANCHAL IT(SS)A.NO.95 TO DCIT SHRI PRANAV J. PANCHAL JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -2- 98/AHD/2010 (ASSTT.YEAR : 2001-02, 2002-03, 2003-04 AND 2005-06) C-201, TIMES SQUARE BESIDE PETROL PUMP, FATEHGUNJ, BARODA. PAN : ADXPP 0629 C IT(SS)A. NO.168 TO 170/AHD/2010 (ASSTT.YEAR 2004-2005, 2006-2007 AND 2007-2008) DCIT -DO- ITA.NO.691/AHD/2010 (ASSTT.YEAR : 2007-2008) SHRI PRANAV J. PANCHAL DCIT ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI D.P. GUPTA, CIT-DR WITH SHRI T. SANKAR, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI MUKUND BAKSHI 5 1 &(*/ DATE OF HEARING : 13 TH DECEMBER, 2012 678 1 &(*/ DATE OF PRONOUNCEMENT : 04-01-2013 )9 / O R D E R PER BENCH: THIS BUNCH OF 31 APPEALS AND THE CO BY THE REVENUE AND THE ASSESSEES FOR THE DIFFERENT ASSESSMENT YEARS AR E DIRECTED AGAINST THE ORDERS OF THE CIT(A)-IV, AHMEDABAD. FOR THE SAKE O F CONVENIENCE, THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. IT(SS)A NO.89/AHD/2010 : ASSTT.YEAR 2001-2002 (REVE NUES APPEAL) SHRI JAYANTIBHAI D. PANCHAL: 2. THE ONLY GROUND RAISED IN THIS APPEAL READS AS U NDER: JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -3- 1. THE LD.CIT(A) HAS ERRED IN LAW AND FACTS AND CI RCUMSTANCES OF THE CASE TO HOLD THAT PROFIT ON SALE OF LAND TO BE TREATED AS CAPITAL GAIN INSTEAD OF BUSINESS INCOME TREATED BY AO. 3. THE LEARNED DR SUBMITTED THAT A SEARCH OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON THE GROUP OF THE ASSE SSEE ON 31-5-2006 AND CONSEQUENCE THEREOF PROCEEDINGS UNDER SECTION 153A WERE INITIATED. HE SUBMITTED THAT THE ASSESSEE HAS DECLARED A LONG TER M CAPITAL GAIN ON TRANSFER OF TWO PIECES OF LAND AT RS.11,08,133/- AND THE SAM E WAS HELD AS BUSINESS INCOME BY THE AO. HE SUBMITTED THAT THIS IS THE ON LY ISSUE IN THIS APPEAL OF THE REVENUE AND THE CIT(A) HAS HELD THAT THE INCOME FROM SALE OF THESE TWO PLOTS COULD NOT BE CONSIDERED AS BUSINESS INCOM E AND THE INCOME THEREOF HAS BEEN RIGHTLY SHOWN BY THE ASSESSEE UNDE R THE HEAD LONG TERM CAPITAL GAIN. THE LEARNED DR SUBMITTED THAT THE AS SESSEE WAS GIVEN AMPLE OPPORTUNITY TO REPRESENT ITS CASE AND THE ASSESSEE HAS EXPLAINED THAT THE AVERAGE PERIOD OF HOLDING OF INVESTMENT IN LAND WAS MORE THAN FIVE YEARS AND THE INVESTMENT WAS MADE OUT OF THE ASSESSEES O WN FUND AND NO BORROWINGS WERE MADE FOR THE PURCHASE OF THIS LAND. HE SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO FOR THE REASON THAT THE ASSESSEE HAS PURCHASED NUMBER OF BIG CHUNKS OF LAND AT BHARUCH. THE ASSESSEE IS ALSO PARTNER IN M/S.NARAYAN LAND AND ES TATE CO., AND M/S.NARAYAN ASSOCIATES AND THE OTHER FAMILY CONCERN S OF THE ASSESSEE ARE M/S.NARAYAN LAND ESTATE, NARAYAN HOUSING FINANCE CO . PVT. LTD. ETC. AND THESE CONCERNS ARE INVOLVED IN PLOTTING OF THE LAND AND CONSTRUCTION ACTIVITY IN LARGE SCALE. HE SUBMITTED THAT INTENSION WAS TO INCREASE ITS PROFIT BY SALE OF LAND BY PLOTTING IT AND THE ASSESSEE HAS EXECUTE D SEPARATE SALE DEED DIRECTLY WITH THE PURCHASERS FOR THE SALE OF DIFFER ENT PLOTS OF LAND, AND THIS IS A CLEAR CASE OF ADVENTURE IN THE NATURE OF TRADE OF THE ASSESSEE. THE LEARNED DR FAIRLY SUBMITTED THAT SAME ADDITION WAS MADE IN THE ORIGINAL ASSESSMENT FRAMED BY THE DEPARTMENT IN THE CASE OF THE ASSESSEE AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT, AHMEDABAD JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -4- BENCH IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND TH E INCOME FROM SALE OF PLOTS WERE HELD TO BE ASSESSABLE UNDER THE HEAD LO NG TERM CAPITAL GAINS. HOWEVER, THE LEARNED DR POINTED OUT THAT THERE WERE CERTAIN MATERIAL FOUND AT THE TIME OF SEARCH ON 31-5-2006, WHICH JUSTIFIES THE ASSESSMENT OF THE INCOME FROM SALE OF PLOTS UNDER THE HEAD BUSINESS INCOME OF THE ASSESSEE. HE REFERRED TO THE COPIES OF THE SEIZED DOCUMENTS IN THE COMPILATION BEFORE THE TRIBUNAL AT PAGE NOS.48, 49, 61 AND 63 WHEREIN THE COPY OF THE SEIZED MATERIAL HAS BEEN FILED BEFORE T HE TRIBUNAL. THE LEARNED DR HAS RELIED ON THE DECISION OF THE AO AND THE DEC ISION OF THE HONBLE SUPREME COURT IN THE CASE OF VENKATASWAMI NAIDU & C O (G.) VS COMMISSIONER OF INCOME-TAX, 35 ITR 594 (SC). 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT THE ISSUE IN GRO UND OF THE APPEAL OF THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH T HE DECISION OF THE ITAT, AHMEDABAD BENCH IN ASSESSEES OWN CASE FOR THE RELE VANT ASSESSMENT YEAR IN ITA NO.289 TO 292/AHD/2005 DATED 24.10.2008 WHER EIN IT HAS BEEN FINALLY HELD THAT THE LAND IN QUESTION WAS CAPITAL ASSET IN THE HANDS OF THE ASSESSEE AND AS SUCH THE INCOME FROM SALE THEREOF W AS TAXABLE AS LONG TERM CAPITAL GAIN OF THE ASSESSEE. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVENUE HAS PREFERRED AN APPEAL AGAINST THE ORDER OF THE TRIBUNAL HOLDING THE GAINS ON SALE OF LAND AS ASSES SABLE UNDER THE HEAD LONG TERM CAPITAL GAIN BEFORE THE HONBLE JURISDI CTIONAL HIGH COURT AND THE SAME WAS ALREADY DISMISSED BY THE HONBLE JURIS DICTIONAL HIGH COURT. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE REVE NUE HAS ISSUED WEALTH- TAX NOTICES TO THE ASSESSEE TREATING THE LAND IN QU ESTION AS INVESTMENT, AND THEREFORE THE DEPARTMENT SHOULD NOT BE ALLOWED TO T AKE A DIFFERENT STAND IN THE INCOME TAX PROCEEDINGS. HE RELIED ON THE ORDE R OF THE CIT(A). 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE HAVE ALSO PERU SED THE COPIES OF JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -5- VARIOUS DOCUMENTS IN THE COMPILATION FILED BY THE D EPARTMENT AS WELL AS THE ASSESSEE. WE FIND THAT THE ONLY ISSUE BEFORE US IS THAT WHETHER THE GAINS ARISING ON SALE OF PLOTS OF LAND WAS ASSESSABLE UND ER THE HEAD BUSINESS INCOME OR UNDER THE HEAD LONG TERM CAPITAL GAINS . THE ASSESSEE HAS DECLARED THE GAIN UNDER THE HEAD LONG TERM CAPITAL GAIN AND THE DEPARTMENT HAS ASSESSED THE SAME UNDER THE HEAD BU SINESS INCOME. WE FIND THAT THE SAME AMOUNT OF GAINS ARISING OUT OF S ALE OF TWO PIECES OF LAND FOR THE RELEVANT ASSESSMENT YEAR WAS ASSESSED BY TH E AO UNDER THE HEAD BUSINESS INCOME IN THE ORIGINAL ASSESSMENT FRAMED BY HIM. THE MATTER WENT UP TO THE LEVEL OF THE TRIBUNAL AND THE TRIBUN AL VIDE ITS ORDER DATED 24-10-2008 (SUPRA) IN THE ASSESSEES OWN CASE FOR T HE SAME ASSESSMENT YEAR 2001-2002 HAS ADJUDICATED THE MATTER IN FAVOUR OF T HE ASSESSEE AND HAS HELD THAT THE GAIN ARISING OUT OF THE SALE OF THE PLOTS OF LAND IS ASSESSABLE UNDER THE HEAD LONG TERM CAPITAL GAIN. WE FIND THAT TH E TRIBUNAL HAVE DISCUSSED ALL THE ARGUMENTS CANVASSED BEFORE US BY THE LEARNE D DR ON BEHALF OF THE DEPARTMENT, IN ITS APPELLATE ORDER DTD. 24.10.2008 AND HAS PASSED A SPEAKING ORDER. WE ARE IN AGREEMENT WITH THE DECISION OF TH E CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE, AND ACCOR DINGLY THE ORDER OF THE TRIBUNAL DATED 24.10.2008 (SUPRA) COVERS THE ISSUE IN THE GROUND OF THE APPEAL OF THE REVENUE IN FAVOUR OF THE ASSESSEE. H OWEVER, WE ARE AWARE THAT IN A CASE WHERE, AS A RESULT OF SUBSEQUENT SEA RCH OPERATION OR OTHERWISE, THE DEPARTMENT HAS SOME INCRIMINATING MATERIAL OR E VIDENCE TO PROVE THAT THE INCOME ARISING OUT OF THE SALE OF PLOTS OF LAND WAS TAXABLE UNDER A DIFFERENT HEAD OF INCOME OTHER THAN THE HEAD OF INC OME ADJUDICATED BY THE TRIBUNAL IN APPEAL AGAINST THE ORIGINAL ASSESSMENT ORDER, THE TRIBUNAL MAY TAKE A DIFFERENT VIEW AND DECIDE THE MATTER ACCORDI NGLY. IN THIS CASE BEFORE US, WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE CONTENTS OF THE SEIZED MATERIAL, COPY OF WHICH HAS BEEN FILED IN THE COMPI LATION BEFORE US, WHICH HAVE BEEN CITED BY THE LEARNED DR WHILE ARGUING THA T THE TRIBUNAL SHOULD TAKE A DIFFERENT VIEW IN THE MATTER. WE FIND THAT THE SO-CALLED INCRIMINATING JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -6- MATERIAL SEIZED BY THE DEPARTMENT DO NOT JUSTIFY TA KING OF ANY DIFFERENT VIEW FROM THAT OF THE TRIBUNAL DECIDING THE APPEAL OF THE ASSESSEE AGAINST THE ORIGINAL ASSESSMENT ORDER VIDE ITS ORDER DATED 24.10.2008 (SUPRA). WE FIND THAT THE PAPERS SIZED AT THE TIME OF SEARCH ON 31.5.2006 DOES NOT GIVE ANY STRENGTH TO THE CASE OF THE REVENUE TO ASSESS T HE INCOME FROM GAINS ON SALE OF PLOT OF LAND UNDER THE HEAD BUSINESS INCOM E AND IN FACT IS NOT AN INCRIMINATING MATERIAL/EVIDENCE FOUND AGAINST THE A SSESSEE. THE REVENUES APPEAL AGAINST THE ORDER OF THE TRIBUNAL IN THE CAS E OF THE ASSESSEE DATED 24.10.2008 TO THE HONBLE GUJARAT HIGH COURT WAS UN SUCCESSFUL AND THE REVENUES APPEAL HAS BEEN DISMISSED BY THE HONBLE HIGH COURT. IN THE ABSENCE OF ANY INCRIMINATING MATERIAL/EVIDENCE FOUN D AS A RESULT OF SEARCH OPERATION AT THE PREMISES OF THE ASSESSEE, WE ARE B OUND BY THE JUDICIAL DISCIPLINE TO FOLLOW THE DECISION OF THE EARLIER BE NCH OF THE TRIBUNAL, AND ACCORDINGLY, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND THE GROUND OF THE APPEAL OF THE REVENUE BEING WITHOUT ANY MERIT, IS DISMISSED. IT(SS)A.NO.90, 91, 92, 93 AND 94/AHD/2010 (ASSTT.YE AR 2002-2003, 2003-2004, 2004-2005, 2005-2006 AND 2006-2007) AND ITA NO.354/AHD/2010 FOR A.Y.2007-2008 (REVENUES APPEA LS) 6. THE ONLY IDENTICAL GROUND IN ALL THESE APPEALS O F THE REVENUE IS AS UNDER: 1. LD.CIT(A) HAS ERRED IN LAW AND FACTS AND CIRCU MSTANCES OF THE CASE TO HOLD THAT PROFIT ON SALE OF LAND TO BE TREATED AS CAPITAL GAIN INSTEAD OF BUSINESS INCOME TREATED BY THE AO. 7. BOTH THE PARTIES BEFORE US SUBMITTED THAT THE IS SUE IN THESE APPEALS OF THE REVENUE IS IDENTICAL WITH THE GROUND NO.1 OF TH E REVENUES APPEAL IN IT(SS)A.NO.89/AHD/2010 FOR A.Y.2001-2002 IN THE CAS E OF SHRI JAYANTIBHAI D. PANCHAL AND MAY BE DECIDED ACCORDING LY. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PART IES. FOR THE REASONS RECORDED WHILE DISPOSING OF THE APPEAL OF THE REVEN UE IN THE CASE OF SHRI JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -7- JAYANTIBHAI D. PANCHAL, IN IT(SS)A.NO.89/AHD/2010 F OR A.Y.2001-2002 IN THE FOREGOING PARAS OF THIS ORDER, WE DECIDE THE IS SUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, AND ACCORDINGLY T HIS COMMON GROUND RAISED IN THE APPEALS OF THE REVENUE IS DISMISSED. 9. REMAINING GROUNDS OF THE APPEAL OF REVENUE IN IT A NO.354/AHD/2010 A.Y.2007-2008 ARE AS UNDER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.1,50,00, 000/- ON ACCOUNT OF UNACCOUNTED INCOME. 10. THE LEARNED DR SUBMITTED THAT THE ASSESSEE ITSE LF HAS SURRENDERED A SUM OF RS.1.5 CRORES AT THE TIME OF SEARCH AND HAS RETRACTED THE SAME ON THE NEXT DAY. HE SUBMITTED THAT IN ASSESSMENT PROCEEDI NGS UNDER SECTION 153A MERE STATEMENT OF THE ASSESSEE IS SUFFICIENT TO MAK E THE ADDITION AND NO INCRIMINATING MATERIAL IS REQUIRED TO JUSTIFY THE A DDITION. HE RELIED ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CA SE OF V. KUNHIKANNAN & SONS VS. CIT, 219 ITR 235. 11. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSE D THE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT THE PROVISION OF SECTION 153A DOES NOT APPLY TO THE RELEVANT ASSESSMENT YEAR 2007-2008 AND THE ASSESSMENT HAS BEEN FRAMED IN THIS CASE UNDER SECTION 143(3) OF TH E ACT. HE REFERRED TO THE COPY OF THE LETTER DATED 1.6.2006 ALONG WITH COPY O F THE AFFIDAVIT OF THE ASSESSEE, SHRI JAYANTILAL D. PANCHAL RETRACTING THE DISCLOSURE OF UNDISCLOSED INCOME OF RS.1.5 CRORES STATING THAT THE STATEMENT WAS RECORDED AT HIS RESIDENCE IN THE EARLY HOURS AT 2.00AM, WHICH WAS I LLEGALLY RECORDED BY THE REVENUE. HE RELIED ON THE ORDER OF THE CIT(A). 12. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE P ERUSED THE ORDERS OF THE AO AND THE CIT(A). THE REVENUE COULD NOT CO NTROVERT THE SUBMISSIONS OF THE ASSESSEE THAT THE STATEMENT OF T HE ASSESSEE WAS RECORDED JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -8- AT EARLY MORNING HOURS OF 2:00AM OF 1 ST JUNE, 2006 IN CONTINUATION OF THE SEARCH OPERATION AT THE PREMISES OF THE ASSESSEE ON 31.5.2006. WE FIND THAT THE RETRACTION WAS MADE BY THE ASSESSEE ON 1.6.2006 ITSELF. THE ASSESSMENT WAS NOT FRAMED UNDER SECTION 153A OF THE ACT AND WA S FRAMED UNDER SECTION 143(3) OF THE ACT, AND THIS PLEA OF THE LEA RNED DR THAT THE ADDITION CAN BE SUSTAINED, EVEN IF NO INCRIMINATING MATERIAL WAS FOUND AT THE TIME OF SEARCH, IS NOT SUSTAINABLE IN LAW. IT IS WELL SETT LED THAT MERELY ON THE ADMISSION OF THE ASSESSEE AT THE TIME OF SEARCH, TH E ADDITION COULD NOT BE SUSTAINED UNLESS SOME EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION MADE BY THE ASSESSEE. WE FIND THAT IN REPLY TO A SPECIF IC QUERY FROM THE BENCH, THE LEARNED DR FAIRLY SUBMITTED THAT NO INCRIMINATI NG MATERIAL FOUND AT THE TIME OF SEARCH ON THIS ISSUE, WAS MENTIONED IN THE ASSESSMENT ORDER BY THE AO. IN THESE FACTS OF THE CASE, WE FIND NO JUSTIFI CATION TO SUSTAIN THE ADDITION, AND ACCORDINGLY THE ORDER OF THE CIT(A) I S CONFIRMED AND THE GROUND NO.2 OF THE REVENUE IS DISMISSED. 13. THE GROUND NO.3 OF THE REVENUES APPEAL IS AS U NDER: 3. THE LD.CIT(A) HAS ERRED IN LAW AND FACTS AND CI RCUMSTANCES OF THE CASE IN RESTRICTING THE ADDITION OF RS.13,66 ,376/- TO THE EXTENT OF RS.1,76,600/- ON ACCOUNT OF UNEXPLAINED CASH FOU ND DURING THE SEARCH. 14. THE LEARNED DR HAS REFERRED TO PARA-6 OF THE AS SESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. HE SUBMITTED T HAT AT THE TIME OF SEARCH ACTION AT THE RESIDENCE OF THE ASSESSEE CASH OF RS. 16.96 LAKHS WAS FOUND, OUT OF WHICH CASH OF RS.14.09 LAKHS WAS FOUND FROM BED ROOM OF SHRI J.D. PANCHAL, THE ASSESSEE AND SMT.PURNIMA PANCHAL. HE SUBMITTED THAT THE ASSESSEE HAS STATED IN HIS STATEMENT RECORDED AT TH E TIME OF SEARCH UNDER SECTION 132(4), THAT RS.3 LAKHS BELONGS TO THE FAMI LY LADIES SAVING AND REMAINING AMOUNT BELONGS TO THE FIRM, IN WHICH HE W AS MANAGING PARTNER. HE RELIED ON THE ORDER OF THE AO. THE LEARNED COU NSEL FOR THE ASSESSEE HAS JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -9- OPPOSED THE SUBMISSIONS OF THE LEARNED DR AND RELIE D ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE CASH WAS AVAILABLE I N THE BOOKS OF TWO FIRMS IN WHICH THE ASSESSEE WAS A MANAGING PARTNER, AND T HEREFORE NO CASE OF ADDITION COULD BE MADE OUT BY THE REVENUE. 15. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE P ERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT OUT OF RS.1 4.09 LAKHS FOUND FROM THE BED ROOM OF THE ASSESSEE AND SMT.PURNIMA PANCHA L, THE ASSESSEE HAS STATED ON OATH AT THE TIME OF SEARCH ACTION ITSELF IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT THAT RS.3 LAKHS BEL ONGS TO FAMILY LADIES SAVING AND REMAINING AMOUNT BELONGS TO TWO FIRMS IN WHICH HE WAS MANAGING PARTNER. ACCORDINGLY, IT COULD NOT BE SAI D THAT THE EXPLANATION OF THE ASSESSEE IS AFTER-THOUGHT. THE ASSESSEE IS A M ANAGING PARTNER OF THE FIRM M/S.NARAYAN LAND & ESTATE CO. AND SHREE NARAYA N ENTERPRISES AND THIS FACT HAS NOT BEEN DISPUTED BY THE AO. THE A SSESSEE HAS FURNISHED EXTRACT OF THE CASH BOOK OF THESE FIRM DURING THE A SSESSMENT PROCEEDINGS AND ACCORDING TO THESE EXTRACTS, THESE TWO FIRMS HA VE MAINTAINED CASH RESERVE ACCOUNT IN THE NAME OF THE ASSESSEE AND AMO UNT OF RS.4.49 LAKH OF M/S.NARAYAN LAND & ESTATE CO., AND CASH OF RS.6.74 LAKHS OF SHREE NARAYAN ENTERPRISES TOTALING TO RS.11.23 LAKHS WERE LYING WITH THE ASSESSEE. THE CIT(A) HAS OBSERVED THAT KEEPING FIR MS CASH WITH THE PARTNER IS NOT UNUSUAL AND THE CASH BALANCE IN THE REGULAR CLOSING BALANCE OF THE FIRM COULD TO BE TREATED AS UNEXPLAINED. THE C IT(A) HAS FURTHER OBSERVED THAT THE AO HAS NOT DISPUTED THE AUTHENTIC ITY OF THE CASH BOOK OF THE FIRM. THE FINDING OF THE CIT(A) THAT THE CASH BALANCE IN THE ACCOUNTS OF VARIOUS FIRMS SHOWED MORE CASH THAN THE AMOUNT SEIZ ED AND IN THE ASSESSMENTS OF THOSE FIRMS NO ADVERSE FINDING WAS M ADE REGARDING CASH BALANCES AND THERE WERE NO EVIDENCE THAT CASH BALAN CE AVAILABLE WITH VARIOUS CONCERNS HAD BEEN UTILISED ELSEWHERE, AND T HEREFORE THE ADDITION WAS HELD TO BE UNJUSTIFIED. AS REGARDS THE BALANCE CASH OF RS.1,76,600/- THE JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -10- EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED AND TH E ADDITION WAS UPHELD BY THE CIT(A). WE FIND THAT THE ORDER OF THE CIT(A ) IS SELF-EXPLANATORY AND THE CASH BALANCE IS AVAILABLE AS PER THE ACCOUN TS OF THE FIRMS AND CASH FOUND AT THE RESIDENCE OF MANAGING PARTNER CANNOT B E SAID AS UNEXPLAINED, AND ACCORDINGLY THE ORDER OF THE CIT(A) ON THIS ISS UE IS CONFIRMED AND THE GROUND NO.3 OF THE REVENUE IS DISMISSED. 16. THE GROUND NO.4 OF THE REVENUES APPEAL IS AS U NDER: 4. THE LD.CIT(A) HAS ERRED IN LAW AND FACTS AND CI RCUMSTANCES OF THE CASE IN RESTRICTING THE ADDITION OF RS.1,076 ,250/-MTO THE EXTENT OF RS.55,250/- ON ACCOUNT OF UNEXPLAINED JEWELLERY FOUND DURING THE SEARCH. 17. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS NOT RECORDED SILVER UTENSILS/JEWELLERY IN ITS ACCOUNT BOOKS, WHICH WAS FOUND FROM THE RESIDENTIAL PREMISES OF THE ASSESSEE DURING THE SEA RCH PROCEEDINGS, AND THEREFORE THE ADDITION MADE WAS JUSTIFIED. THE LEA RNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE CIT(A) AND SUBMITTED THAT IN FACT NO ADDITION SHOULD HAVE BEEN SUSTAINED BY THE CIT(A). 18. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE P ERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CIT(A) HAS PASSED A WELL- REASONED ORDER ON THIS ISSUE AND HAS RECORDED THAT THE ASSESSEE BELONGS TO AN AFFLUENT CLASS OF FAMILY. THE CIT(A) HAS CONSID ERED THE STATUS OF THE FAMILY AND CUSTOMARY PURCHASE AND GIFTS ON AUSPICIO US OCCASIONS IN THE EARLIER YEARS AND CONSIDERED SILVER UTENSILS OF 3 K G AS EXPLAINED AND INVESTMENT IN BALANCE UTENSILS AMOUNTING TO RS.55,2 50/- WAS HELD AS UNEXPLAINED. THERE BEING NO MISTAKE IN THE ORDER O F THE CIT(A) IN RESTRICTING THE ADDITION TO RS.55,250/- OUT OF THE TOTAL ADDITION OF RS.1,06,250/-, WE CONFIRM THE SAME AND THE GROUND N O.4 OF THE REVENUE IS DISMISSED. JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -11- ITA NO.693/AHD/2010 (A.Y.2007-2008) IN THE CASE OF SHRI JAYANTIBHAI D. PANCHAL (ASSESSEES APPEALS) 19. THE GROUND NO.1 OF THE APPEAL OF THE ASSESSEE I S AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF AN AMOUNT OF RS.1,76,600/- OUT OF THE CASH FOUND OF RS.14,09,030/- FROM THE RE SIDENTIAL PREMISES OF THE APPELLANT DURING THE SEARCH PROCEEDINGS TREA TING THE SAME AS UNACCOUNTED CASH OF THE APPELLANT. THE ADDITION SO CONFIRMED OF RS.1,76,600/- BEING ERRONEOUS IN FACTS AND IN LAW I S PRAYED TO BE DELETED. 20. WE HAVE HEARD BOTH THE PARTIES. FOR THE REASON S RECORDED WHILE DISPOSING OF THE GROUND NO.3 OF THE APPEAL OF THE R EVENUE FOR THE SAME ASSESSMENT YEAR 2007-2008 IN THE CASE OF THE ASSESS EE IN ITA NO.354/AHD/2010 IN THE FOREGOING PARAS OF THIS ORDE R, WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) ON THIS ISSUE , WHICH IS ACCORDINGLY CONFIRMED AND THE GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 21. THE GROUND NO.2 OF THE APPEAL OF THE ASSESSEE I S AS UNDER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF AN AMOUNT OF RS.55,250/- OUT OF TOTAL SILVER FOUND AMOUNTING TO RS.1,06,250/- FR OM THE RESIDENTIAL PREMISES OF THE APPELLANT DURING THE SEARCH PROCEED INGS TREATING THE SAME AS UNEXPLAINED INVESTMENT OF THE APPELLANT. T HE ADDITION OF RS.55,250/- BEING ERRONEOUS IN FACTS AND IN LAW IS PRAYED TO BE DELETED. 22. WE HAVE HEARD BOTH THE PARTIES. FOR THE REASON S RECORDED WHILE DISPOSING OF THE GROUND NO.4 OF THE APPEAL OF THE R EVENUE FOR THE SAME ASSESSMENT YEAR 2007-2008 IN THE CASE OF THE ASSESS EE IN ITA NO.354/AHD/2010 IN THE FOREGOING PARAS OF THIS ORDE R, WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) ON THIS ISSUE , WHICH IS ACCORDINGLY CONFIRMED AND THE GROUND NO.2 OF THE ASSESSEES APP EAL IS DISMISSED JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -12- IT(SS)A.NO.77, 78, 79, 80, 81 AND 82/AHD/2010 (ASST T.YEAR 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006 AND 2006 -2007) AND ITA NO.171/AHD/2010 FOR A.Y.2007-2008 IN THE CASE OF SH RI KARTIK J. PANCHAL (REVENUES APPEALS): 23. BOTH THE PARTIES BEFORE US SUBMITTED THAT THE I SSUE IN THESE APPEALS OF THE REVENUE IS IDENTICAL WITH THE GROUND NO.1 OF TH E APPEAL OF THE REVENUE IN IT(SS)A.NO.89/AHD/2010 FOR A.Y.2001-2002 IN THE CASE OF SHRI JAYANTIBHAI D. PANCHAL AND MAY BE DECIDED ACCORDING LY. 24. WE HAVE CONSIDERED RIVAL SUBMISSIONS. FOR THE REASONS RECORDED WHILE DISPOSING OF THE APPEAL OF THE REVENUE IN THE CASE OF SHRI JAYANTIBHAI D. PANCHAL, IN IT(SS)A.NO.89/AHD/2010 FOR A.Y.2001- 2002 IN THE FOREGOING PARAS OF THIS ORDER, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, AND ACCORDINGLY THIS COMMO N GROUND RAISED IN THE APPEALS OF THE REVENUE IS DISMISSED. 25. ADDITIONAL GROUND RAISED IN THE APPEAL OF REVEN UE IN IT(SS)A NO.78 /AHD/2010 A.Y.2002-2003 IS AS UNDER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.10,000/- ON ACCOUNT OF UNEXPLAINED GIFT. 26. THE LEARNED DR HAS RELIED ON THE ORDER OF THE A O AND THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). 27. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND THAT THE CIT(A) HAS PASSED A REASONABLE ORDER ON THIS ISSUE. WE FIND T HAT THE ASSESSEE HAS RECEIVED A SMALL GIFT OF RS.10,000/- FROM RELATIVE OF THE ASSESSEE, SMT. PRIYAVANDANABEN K. PANCHAL OUT OF LOVE AND AFFECTIO N AND COPY OF THE GIFT DECLARATION WAS FILED AND GIFT AMOUNT WAS GIVEN BY ACCOUNT PAYEE CHEQUE DATED 26.09.2001. IN THESE FACTS, WE HAVE NO HESIT ATION IN CONFIRMING THE JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -13- ORDER OF THE CIT(A) ON THIS ISSUE AND THE GROUND NO .2 OF THE REVENUES APPEAL IS DISMISSED. ITA NO.692/AHD/2010 FOR A.Y.2007-2008 IN THE CASE O F SHRI KARTIK J. PANCHAL (ASSESSEES APPEAL): 1. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF AN AMOUNT OF RS.18,415/- OUT OF THE CASH FOUND OF RS.35,800/- FROM THE RESIDENTI AL PREMISES OF THE APPELLANT DURING THE SEARCH PROCEEDINGS TREATING TH E SAME AS UNACCOUNTED CASH OF THE APPELLANT. THE ADDITION SO CONFIRMED OF RS.18,415/- BEING ERRONEOUS IN FACTS AND IN LAW IS PRAYED TO BE DELETED. 28. WE HAVE HEARD PARTIES. WE FIND THAT THE CIT(A) HAS CONFIRMED THE ADDITION OF RS.18,415/- OUT OF CASH RECOVERED FROM THE BED ROOM OF THE ASSESSEE, FOR THE REASON THAT THERE IS NO EVIDENCE PLACED ON RECORD TO JUSTIFY THE PIN-MONEY OUT OF PERIODICAL WITHDRAWAL. THE CIT (A) HAS FURTHER OBSERVED THAT THE ASSESSEE WAS MAINTAINING PERSONAL ACCOUNT, AND THEREFORE THERE WAS NO QUESTION OF SAVING FROM THE WITHDRAWAL S. IN THESE FACTS, WE ARE OF THE VIEW THAT NO INTERFERENCE IN HIS ORDER O N THIS ISSUE IS CALLED FOR, WHICH IS ACCORDINGLY CONFIRMED AND THE GROUND NO.1 OF THE ASSESSEES APPEAL IS DISMISSED. 29. THE GROUND NO.2 OF THE ASSESSEES APPEAL IS AS UNDER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF AN AMOUNT OF RS.4,81,305/- OUT OF TOTAL JEWELLERY FOUND AMOUNTING TO RS.10,12, 400/- FROM THE RESIDENTIAL PREMISES OF THE APPELLANT DURING THE SE ARCH PROCEEDINGS TREATING THE SAME AS UNEXPLAINED INVESTMENT OF THE APPELLANT. THE ADDITION OF RS.4,81,305/- BEING ERRONEOUS IN FACTS AND IN LAW IS PRAYED TO BE DELETED. 30. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TOTAL JEWELLERY RECORDED IN THE ACCOUNTS OF THE ASSESSEES FAMILY M EMBERS WAS 4180.927 GRAMS WHEREAS THE TOTAL JEWELLERY FOUND AS A RESULT OF SEARCH AT VARIOUS JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -14- ASSESSEES FAMILY MEMBERS WAS 3812.980 GRAMS, AND T HEREFORE NO ADDITION SHOULD HAVE BEEN SUSTAINED BY THE CIT(A). HE REFER RED TO PAGE NO.36 OF THE COMPILATION FILED BEFORE THE TRIBUNAL IN SUPPORT OF THE CASE OF THE ASSESSEE TO SHOW EXTENT OF JEWELLERY FOUND. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL OF THE ASSESSEE. HE SUBMITTED THAT GOLD JEWELLERY OF 1151.400 GRAMS WAS FOUND FROM THE BED ROOM OF THE ASSESSEE AND HIS WIFE AND NO JEWELLERY WAS RECORDED IN THE B OOKS OF THE ASSESSEE AND HIS FAMILY, AND THEREFORE ADDITION WAS RIGHTLY MADE BY THE DEPARTMENT. HE SUBMITTED THAT THE CIT(A) HAS ALLOWED THE BENEFIT O F 500 GRAMS IN THE HANDS OF THE ASSESSEES WIFE AND 100 GRAMS IN THE H ANDS OF THE ASSESSEE AS PER THE CBDT CIRCULAR, WHICH APPLIES ONLY WITH REGA RD TO SEIZURE AT THE TIME OF SEARCH OPERATION AND NOT WITH REGARD TO ANY ADDI TION ON ACCOUNT OF SOURCE OF JEWELLERY. HE RELIED ON THE ORDER OF THE AO. 31. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE P ERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE JEWELLE RY OF 1151.400 GRAMS WERE FOUND FROM THE BED ROOM OF THE ASSESSEE AND HI S WIFE AND NO JEWELLERY WAS RECORDED IN THE ACCOUNT BOOKS OF THE ASSESSEE. THE ASSESSEE COULD NOT SUBSTANTIATE ITS CONTENTION THAT THE GOLD JEWELLERY OF OTHER FAMILY MEMBERS WERE MIXED UP WITH THAT OF THE ASSESSEE AND HIS WIF E, AND THEREFORE THE TOTAL JEWELLERY FOUND AT THE TIME OF SEARCH BEING LESS TH AN THE JEWELLERY RECORDED IN THE ACCOUNT BOOKS OF OTHER FAMILY MEMBERS, NO AD DITION WAS CALLED FOR. HOWEVER, WE FIND THAT THE CBDT CIRCULAR REFERRED IN THE APPELLATE ORDER OF THE CIT(A), ALTHOUGH DEALS WITH THE ISSUE OF SEIZUR E OF JEWELLERY ON ACCOUNT OF SEARCH, BUT CONSIDERING THE ANCIENT CULTURE OF T HE COUNTRY AND THE CUSTOM PREVAILING IN THE SOCIETY, THE SPIRIT OF THE CBDT C IRCULAR APPLIES WHILE DECIDING THE ISSUE OF UNEXPLAINED INVESTMENT IN THE ASSESSEES GOLD JEWELLERY FOUND AT THE TIME OF SEARCH. IN OUR CONS IDERED VIEW, THERE IS NO VALID REASON NOT TO APPLY THE CIRCULAR OF CBDT TO T HE ISSUE OF ASSESSMENT OF GOLD JEWELLERY FOUND AT THE TIME OF SEARCH OF THE A SSESSEE. THE ASSESSEE IN JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -15- THIS CASE BELONGS TO AN AFFLUENT FAMILY, AND THIS F ACT COULD NOT BE DENIED BY THE REVENUE. IT IS QUITE USUAL TO RECEIVE GOLD ORN AMENTS AT THE TIME OF HER MARRIAGE IN THE CASE OF LADY AND ON OTHER AUSPICIOU S OCCASIONS. IN THESE FACTS, WE FIND THAT THE GOLD JEWELLERY TO THE EXTEN T OF 500 GRAMS IN THE CASE OF THE WIFE OF THE ASSESSEE AND 100 GRAMS IN THE CA SE OF ASSESSEE WAS RIGHTLY TREATED AS EXPLAINED BY THE CIT(A) AND THE ADDITION FOR THE VALUE OF THE BALANCE WAS RIGHTLY MADE IN THE CASE OF THE ASS ESSEE, AND ACCORDINGLY ADDITION OF RS.4,81,305/- SUSTAINED BY THE CIT(A) O UT OF JEWELLERY FOUND IS CONFIRMED, AND THE GROUND NO.2 OF THE ASSESSEE IS D ISMISSED. IT(SS)A.NO.83, 84, 85, 86, 87 AND 88/AHD/2010 (ASST T.YEAR 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006 AND 2006 -2007) AND ITA NO.353/AHD/2010 (ASST.YEAR 2007-2008) IN THE CASE O F SMT. PURNIMA J. PANCHAL (REVENUES APPEALS): 32. BOTH THE PARTIES BEFORE US SUBMITTED THAT THE I SSUE IN THESE APPEALS OF THE REVENUE IS IDENTICAL WITH THE GROUND NO.1 OF TH E APPEAL OF THE REVENUE IN IT(SS)A.NO.89/AHD/2010 FOR A.Y.2001-2002 IN THE CASE OF SHRI JAYANTIBHAI D. PANCHAL AND MAY BE DECIDED ACCORDING LY. 33. WE HAVE CONSIDERED RIVAL SUBMISSIONS. FOR THE REASONS RECORDED WHILE DISPOSING OF THE APPEAL OF THE REVENUE IN THE CASE OF SHRI JAYANTIBHAI D. PANCHAL, IN IT(SS)A.NO.89/AHD/2010 FOR A.Y.2001- 2002 IN THE FOREGOING PARAS OF THIS ORDER, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, AND ACCORDINGLY THIS COMMO N GROUND RAISED IN THE APPEALS OF THE REVENUE IS DISMISSED. IT(SS)A.NO.95, 96, 97 AND 98/AHD/2010 (ASSTT.YEAR 2 001-2002, 2002- 2003, 2003-2004 AND 2005-2006) AND IT(SS)A.NO.168, 169 AND 170/AHD/2010 (ASSTT.YEAR 2004-2005, 2006-2007 AND 2 007-2008) IN THE CASE OF SHRI PRANAV J. PANCHAL (REVENUES APPEALS) 34. BOTH THE PARTIES BEFORE US SUBMITTED THAT THE I SSUE IN THESE APPEALS OF THE REVENUE IS IDENTICAL WITH THE GROUND NO.1 OF TH E APPEAL OF THE REVENUE JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -16- IN IT(SS)A.NO.89/AHD/2010 FOR A.Y.2001-2002 IN THE CASE OF SHRI JAYANTIBHAI D. PANCHAL AND MAY BE DECIDED ACCORDING LY. 35. WE HAVE CONSIDERED RIVAL SUBMISSIONS. FOR THE REASONS RECORDED WHILE DISPOSING OF THE APPEAL OF THE REVENUE IN THE CASE OF SHRI JAYANTIBHAI D. PANCHAL, IN IT(SS)A.NO.89/AHD/2010 FOR A.Y.2001- 2002 IN THE FOREGOING PARAS OF THIS ORDER, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, AND ACCORDINGLY THIS COMMO N GROUND RAISED IN THE APPEALS OF THE REVENUE IS DISMISSED. 36. ADDITIONAL GROUND NO.2 RAISED IN IT(SS)A.NO.168 /AHD/2010 (ASSTT.YEAR : 2004-2005) IN THE CASE OF SHRI PRANAV J. PANCHAL IS AS UNDER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CSE IN DELETING THE UNEXPLAINE D GIFT OF RS.7,50,000/- 37. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS NOT FILED ANY DETAILS WITH REGARD TO THE GIFT IN QUESTION, AND THEREFORE THE ADDITION WAS RIGHTLY MADE BY THE AO. HE SUBMITTED THAT IT IS NOT CLEAR FROM THE FACTS OF THE CASE THAT WHETHER THE ASSESSEE IS A DONOR OR A DONEE AND NO DOCUMENTS LIKE CONFIRMATION, GIFT DEED ETC. WAS FILED BY THE ASSES SEE. HE REFERRED TO PARA-6 OF THE ASSESSMENT ORDER AND RELIED ON THE ORDER OF THE AO. 38. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS FACTUALLY INCORRECT TO SAY THAT THE ASSESSEE HAS NOT FILED AN Y EVIDENCE IN SUPPORT OF THE GENUINENESS OF THE GIFT IN QUESTION. HE REFERR ED TO PAGE NO.30 & 31 OF THE COMPILATION FILED BEFORE THE TRIBUNAL IN WHICH COPY OF THE LEDGER ACCOUNT AND ALSO COPY OF THE AFFIDAVIT OF THE ASSES SEE HAS BEEN FILED STATING ON OATH THAT THE ASSESSEE HAS GIFTED A SUM OF RS.7. 5 LAKHS TO SHRI NITESH G. PANCHAL, SON OF SHRI GUNVANT D. PANCHAL VIDE ACCOUN T PAYEE CHEQUE DRAWN ON HDFC BANK LTD., BARODA. THE ASSESSEE HAS ALSO D EPOSED ON OATH THAT HE IS AN EXISTING I.T. ASSESSEE WITH DCIT, CC-1, BA RODA AND HAS MENTIONED JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -17- PAN ALSO. THE CHARTERED ACCOUNTANT OF THE ASSESSEE HAS CERTIFIED THAT THIS AFFIDAVIT WAS FURNISHED WITH THE AO AS WELL AS THE CIT(A). WE FIND THAT THE CIT(A) HAS OBSERVED THAT THE REMAND REPORT OF T HE AO WAS BASELESS. HE HAS OBSERVED THAT THE AO HAS MADE THE ADDITION W ITHOUT APPLICATION OF MIND AND SENT THE REMAND REPORT WITHOUT APPLICATION OF MIND. HE HAS RECORDED THAT THE ASSESSEE IS THE DONOR IN THIS CAS E AND NOT THE DONEE AND THE ADDITION HAS BEEN MADE ON CERTAIN ASSUMPTIONS A ND DELETED THE ADDITION. WE FIND THAT THE ASSESSEE HAS FILED NECESSARY DETAI LS BEFORE THE AO AND WAS CLEARLY A DONOR AND NOT THE DONEE AND HAS FILED AFFIDAVIT BEFORE THE AO AND GIFT WAS MADE PER ACCOUNT PAYEE CHEQUE BY THE A SSESSEE WHO IS THE EXISTING I.T. ASSESSEE AND HIS PAN WAS ALSO MENTION ED IN THESE FACTS OF THE CASE AND IN THE ABSENCE OF ANY MATERIAL TO CONTROVE RT THE SUBMISSIONS OF THE ASSESSEE, WE HOLD THAT THERE IS NO MISTAKE IN THE O RDER OF THE CIT(A) IN HOLDING THAT THE ADDITION WAS MADE ON TOTALLY WRONG PRESUMPTION, AND ACCORDINGLY THE ORDER OF THE CIT(A) ON THIS ISSUE I S CONFIRMED AND THE GROUND NO.2 OF THE REVENUES APPEAL IS DISMISSED. ITA NO.691/AHD/2010 (ASSTT.YEAR 2007-2008) IN THE C ASE OF PRANAV J. PANCHAL (ASSESSEES APPEAL) 39. THE GROUND NO.1 OF THE ASSESSEES APPEAL IS AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE AO IN MAKING AN ADDITION OF RS.5,00,0 00/- IN RESPECT OF AMOUNT RECEIVED AS GIFT FROM THE FRIENDS/RELATIVE T REATING THE SAME AS UNEXPLAINED AS THE APPELLANT HAS FAILED TO ESTABLIS H THE IDENTITY OF THE DONOR AND THE CREDITWORTHINESS OF THE DONOR. T HE ADDITION SO MADE OF RS.5,00,000/- BEING ERRONEOUS IN FACTS AND IN LAW IS PRAYED TO BE DELETED. 40. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION OF RS.5 LAKHS ON ACCOUNT OF GIFT FROM RELATIVE/FRIENDS WAS WRONGLY MADE BY THE AO ALTHOUGH THE ASSESSEE HAS RECEIVED THE GIFT FROM COUSIN SHRI HASITBHAI PANCHAL RESIDING ABROAD AT 7, SHADY MILL LANE, MILFORD, NJ VIA TRANSFER DATED 21.6.2006 OF BANK OF AMERICA. THE D ONOR HAS ALSO FILED JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -18- COPY OF THE FUND TRANSFER REQUEST OF THE BANK OF AM ERICA IN THIS REGARD. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DONOR AND THE DONEE WERE COUSIN BROTHERS AND THERE WERE VALID REASON FO R GIVING GIFT. HE SUBMITTED THAT THE DONOR IS RESIDING IN AMERICA AND GIFT WAS MADE THROUGH BANKING CHANNEL ONLY. 41. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF T HE LEARNED COUNSEL OF THE ASSESSEE. HE SUBMITTED THAT IDENTITY AND CR EDIT WORTHINESS OF THE DONOR WAS NOT PROVED. HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS P. MOHANAKALA, 291 ITR 278 IN SUPPORT OF THE CASE OF THE REVENUE. 42. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE P ERUSED THE ORDERS OF THE AO AND THE CIT(A) AND ALSO COPY OF THE CONFI RMATION OF THE GIFT AND FUND TRANSFER REQUEST OF THE BANK OF AMERICA, A COP Y OF WHICH HAS BEEN FILED IN THE COMPILATION FILED BEFORE US. WE FIND THAT THE DONOR HAS CONFIRMED THE GIFT OF RS.5 LAKHS TO THE ASSESSEE TH ROUGH BANKING CHANNEL ON 21.6.2006. HOWEVER, THE IDENTITY AND CREDIT-WORTHI NESS OF THE DONOR HAS NOT BEEN ESTABLISHED BY THE ASSESSEE. ONUS WAS ON THE ASSESSEE TO PROVE THE IDENTITY AND CREDIT-WORTHINESS OF THE DONOR. CLAI M OF THE ASSESSEE EVEN BEFORE THE CIT(A) WAS THAT THE ADDITION WAS MADE WI THOUT AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE DONOR AND THE DONEE ARE COUSIN BROTHERS. IN THESE FACTS OF THE CASE, W E ARE OF THE VIEW THAT IT SHALL BE IN THE INTEREST OF JUSTICE TO PROVIDE ONE MORE OPPORTUNITY TO THE ASSESSEE TO PROVE IDENTITY AND CREDIT WORTHINESS OF THE DONOR, AND ACCORDINGLY WE RESTORE THIS ISSUE BACK TO THE FILE OF THE AO WITH DIRECTION TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE SHALL BE AT LIBERTY TO PRODUCE EVIDENCE TO PROVE THE IDENTITY AND CREDIT-WORTHINES S OF THE DONOR. WE DIRECT ACCORDINGLY. JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -19- 43. THE GROUND NO.2 OF THE ASSESSEE IS AS UNDER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE LD.AO IN MAKING AN ADDITION OF RS.1,7 6,779/- OUT OF TOTAL CASH FOUND OF RS.2,51,400/- FROM THE RESIDENT IAL PREMISES OF THE APPELLANT DURING THE SEARCH PROCEEDINGS TREATING TH E SAME AS UNACCOUNTED CASH OF THE APPELLANT. THE ADDITION OF RS.1,76,779/- BEING ERRONEOUS IN FACTS AND IN LAW IS PRAYED TO BE DELETED. 44. WE HAVE HEARD THE PARTIES. WE FIND THAT THE CI T(A) HAS PASSED A WELL REASONED ORDER ON THIS ISSUE AND HAS RESTRICTE D THE ADDITION TO THE EXTENT OF RS.1.76 LAKHS BY ALLOWING THE BENEFIT OF CASH AVAILABLE IN THE PERSONAL BOOK OF ACCOUNTS OF THE ASSESSEE AND HIS W IFE. THE CIT(A) HAS RIGHTLY NOT ALLOWED THE BENEFIT OF CASH WITHDRAWAL IN THE PAST AS THESE WERE NOT FOUND SUFFICIENT EVEN FOR HOUSEHOLD EXPENSES BY THE CIT(A). THERE BEING NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE, THE SAME IS CONFIRMED AND THE GROUND NO.2 OF THE ASSESS EE IS DISMISSED. 45. THE GROUND NO.3 OF THE ASSESSEES APPEAL IS AS UNDER: 3. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE LD.AO IN MAKING AN ADDITION OF RS.29, 750/- OUT OF TOTAL SILVER FOUND AMOUNTING TO RS.63,750/- FROM THE RESI DENTIAL PREMISES OF THE APPELLANT DURING THE SEARCH PROCEEDINGS TREA TING THE SAME AS UNEXPLAINED INVESTMENT OF THE APPELLANT.. THE ADDI TION OF RS.29,750/- BEING ERRONEOUS IN FACTS AND IN LAW IS PRAYED TO BE DELETED. 46. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT C ONSIDERING THE FINANCIAL STATUS OF THE ASSESSEE AND THE CUSTOMARY PURCHASE AND RECEIVING OF GIFTS OF SILVER ARTICLES ON AUSPICIOUS OCCASIONS, T HE CIT(A) HAS ALLOWED THE SILVER ARTICLES 2.00 KG AS REASONABLY EXPLAINED BY THE ASSESSEE AND WIFE AND THE REST OF THE SILVER WEIGHING 1.75 KGS WAS TREATE D AS UNEXPLAINED AND THE ADDITION WAS RESTRICTED TO RS.29,750/-. THERE BEIN G NO MISTAKE IN THE ORDER OF THE CIT(A) ON THIS ISSUE, THE SAME IS CONFIRMED AND THE GROUND NO.3 OF THE ASSESSEE IS DISMISSED. JAYANTIBHAI D. PANCHAL (GROUP 31 APPEALS) -20- 47. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED AND THE APPEALS OF ASSESSEES EXCEPT ITA NO.691/AHD/2010 ARE DISMISSED AND THE APPEAL OF THE ASSESSEE IN ITA NO.691/AHD/2010 IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT