DCIT, Central Circle-1(3), Ahmedabad V. Shri Sureshbhai U Gadhecha, Ahmedabad

ITSSA 90/AHD/2021

AI Insights

The case involves six appeals filed by the Deputy Commissioner of Income Tax, Central Circle-1(3), Ahmedabad against Shri Sureshbhai U. Gadhecha concerning the assessment years 2011-12 to 2016-17. The appeals were based on additions made by the Assessing Officer under sections 68 and 153C of the Income Tax Act, following a search and seizure operation. The CIT(A) had partly allowed the assessee's appeal, leading to the Revenue's challenge in the Tribunal. The Tribunal found that the CIT(A)'s decision was supported by the absence of incriminating material directly linked to the assessee and that the additions were not justifiable.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131436 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-09-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 01-07-2021
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure
• Section: 68; 132; 133A; 153A; 153C

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Ms. Suchitra Kamble, Judicial Member and Shri Waseem Ahmed, Accountant Member Th e DCIT, Central Circle-1(3), Ah medabad (Appellant) Vs Shri Sureshbhai U. Gadhecha, 1/A Dip awali Centre, Op p. Hig h Co urt, Inco me Tax, Ah med abad-3800 14 PAN: AAZPG9 771D (Resp ondent) Asses see b y : Shri Aseem L. Thakka r, A. R. Revenue by : Shri Kamlesh Makw ana, CIT-D. R . Date of hearing : 06-09 -2 023 Date of pronouncement : 27-09 -2 023 आदेश/ORDER PER BENCH:- These are six appeals filed against the order dated 09-04-2021 (for A.Ys. 2011-12 to 2015-16) & 29-07-2021 (for A.Y. 2016-17) passed by ld. CIT(A) for assessment years 2011-12 to 2016-17 respectively. 2. At the time of hearing ld. Departmental Representative as well as ld. Authorized Representative submitted that assessment year 2016-17 have IT(SS)A Nos. 88,89,90,91,92 & 151/Ahd/2021 A.Ys. 2011-12,2012-13,2013-14,2014-15, 2015-16 & 2016-17 I.T(SS).A Nos. 88 to 92 & 151/Ahd/2021 A.Ys. 2011-12 to 2016-17 Page No. DCIT vs. Sureshbhai U. Gadhecha 2 been taken as a lead matter as all the other assessment years are identical. Therefore, grounds incorporated in IT(SS)A No. 151/Ahd/2021 for assessment year 2016-17 are reproduced hereunder:- “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s.153C has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153C of the Act. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec.153C requires a notice to. be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or reassess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. The ld. CIT(A) erred in not considering the fact that the assessee has never questioned the validity of issue of notice u/s 153C during assessment proceedings whereas the assessment u/s 153C is made based on facts brought out by the Assessing Officer from the verification of the bank accounts statements of the assessee's concerns that the funds were mainly transferred from bank accounts of SVP Corporation in which the fund has been transferred from the accounts of MSP concerns such as Fairdeal Sales Corporation, Sai Enterprise, Shreeji Marketing etc. in which cash has been deposited. Thus, the assessment made u/s 153C is based on incriminating documents found during the search conducted in these cases and the Ld. CIT(A) erred in quashing the assessment u/s 153C. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period U/S.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 3 1/5/2003. 5. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if I.T(SS).A Nos. 88 to 92 & 151/Ahd/2021 A.Ys. 2011-12 to 2016-17 Page No. DCIT vs. Sureshbhai U. Gadhecha 3 the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A/153C proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that addition on account of unexplained cash deposit of Rs.5,75,86,820/- and addition on account of unexplained sales of Rs.9,94,31,274/- are beyond the scope of section 153A / 153C of the Act. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made overlooking the facts that the AO has taken into cognizance of seized/impounded material for making additions on the above issues. 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 9. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 3. Since both the parties are stating that issues involved in all these appeals are identical, we are taking the facts of assessment year 2016-17. 4. In this case, return of income for assessment year 2016-17 was filed on 16-10-2016 declaring total income at Rs. 5,18,900/-. A notice u/s. 153A r.w.s. 153C of the Income Tax Act was issued on 29-08-2018. In response to the aforesaid notice u/s. 153C of the Act, the assessee filed his return of income for assessment year 2016-17 on 17-10-2018 declaring total income at Rs. 5,18,900/-. The Assessing Officer noted in the assessment year that a search and seizure action was carried out in the case of Mahendra Shantilal Patel and his group on 06-02-2017 wherein his statement u/s. 132(4) of the Income Tax Act was recorded. During the search various evidences were collected thereby observing that the said Mahendra Shantilal Patel is I.T(SS).A Nos. 88 to 92 & 151/Ahd/2021 A.Ys. 2011-12 to 2016-17 Page No. DCIT vs. Sureshbhai U. Gadhecha 4 engaged in providing accommodation entries of various nature prominently accommodation entries of bogus bills. In assessee’s case, survey u/s. 133A was conducted at M/s Anmol Traders and the Assessing Officer found that the assessee deposited huge cash in his bank accounts. In his statement u/s. 131, Mr. Sureshbhai U Gadhecha i.e. assessee stated that the cash deposits in his bank accounts were proceeds of cash on sale of bullion. The Assessing Officer observed that the assessee claimed that he purchased gold from various parties. After taking cognizance of the seized material found in the case of Shri Mahendra Shantilal Patel and his group, the Assessing Officer observed that there are transactions between the assessee as well as with the Mahendra Shantilal Patel and his group. Thus, the Assessing Officer made addition of Rs. 5,75,86,820/- as unexplained cash credits u/s. 68 of the Act and the Assessing Officer also made addition of Rs. 9,94,31,274/- as unexplained credit entries u/s. 68 of the Act. 5. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 6. The ld. Departmental Representative submitted that the CIT(A) was not right in holding that any objection during the assessment u/s. 153C has to be confined to the incriminating materials found during the course of proceedings u/s. 132(1) of the Act. Even though, there is no such stipulation u/s. 153C of the Act. The ld. Departmental Representative further submitted that section 153C requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within the six assessment years and to assessee or to reassess the total income of I.T(SS).A Nos. 88 to 92 & 151/Ahd/2021 A.Ys. 2011-12 to 2016-17 Page No. DCIT vs. Sureshbhai U. Gadhecha 5 those six assessment years and that the scheme of assessment or reassessment of the total income of a person will be brought to notice if no addition is allowed to be made for those six assessment years in the absence of incriminating material. The ld. Departmental Representative further submitted that the assessee never questioned the validity of issue of notice u/s. 153C during assessment proceedings whereas the assessment u/s. 153C is made based on facts brought out by the Assessing Officer from the verification of the bank account statements of the assessee’s concern that those were mainly transferred from bank account to SVP Corporation in which the fund has been transferred from the accounts of MSP Concerns such as Fair Deal Sales Corporation, SM Enterprise, Shriji Corporation etc. in which cash has been deposited. Thus, ld. Departmental Representative submitted that the assessment made u/s. 153C is based on incriminating documents found during search conducted in the cases and the CIT(A) was not right in quashing assessment u/s. 153C. The ld. Departmental Representative further submitted that while computation of undisclosed income of the block period u/s. 158BB shall be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation u/s. 153A and section 153BI specifically states that the provisions of chapter XIV under which section 158BB falls would not be applied where search was initiated u/s. 132 after 31-05-2013. The ld. Departmental Representative further submitted that assessment in relation to certain issues not related to the search and seizure may arise in any of the six assessment years after search u/s. 132 is conducted in the case of the assessee. If the interpretation of the CIT(A) were to be held, it will not be possible to assess such income u/s. 153A/153C proceedings, while no other I.T(SS).A Nos. 88 to 92 & 151/Ahd/2021 A.Ys. 2011-12 to 2016-17 Page No. DCIT vs. Sureshbhai U. Gadhecha 6 material found during search to assess income and other proceedings can be initiated, leading to no possibility of assessing such other income which could not have been the intention of the legislature. The ld. Departmental Representative further submitted that the ld. CIT(A) in holding that no incriminating documents were found relating to additions made overlooking the facts that the Assessing Officer has taken cognizance of seized/incriminating material were making addition the above issues. The ld. Departmental Representative therefore submitted that the additions on account of unexplained cash deposits of Rs. 5,75,86,820/- and addition on account of unexplained sales of Rs. 9,94,31,274/- are distinguishable. The ld. Authorized Representative relied upon the order of ld. CIT(A) and further submitted that in fact in assessee’s case, the survey took place and the assessee has explained all the cash deposits made in the account as well as the unexplained sales as alleged by the Department. In respect of cash credits, the ld. Authorized Representative submitted that the CIT(A) has categorically mentioned the assessment order is based on ITS/AIIMs modules and the cash deposit entries in the bank statements which were available before the assessee and was duly placed during the assessment years and not during the search and seizure operation carried out in case of M/s. M.S. Patel. The ld. Authorized Representative submitted that the CIT(A) has categorically decided the issue on the legal aspect as there was no incriminating material found in assessee’s case from the third party. As relates to unexplained credit entries, the ld. Authorized Representative submitted that the assessee has purchased from sale of jewelry and the quantitative details are explained in the books of accounts of the assessee. I.T(SS).A Nos. 88 to 92 & 151/Ahd/2021 A.Ys. 2011-12 to 2016-17 Page No. DCIT vs. Sureshbhai U. Gadhecha 7 7. The ld. Authorized Representative relied upon the order of ld. CIT(A). 8. We have heard both the parties and perused the material on record. The contention of the ld. Departmental Representative that there was incriminating materials during the search and seizure operation found in case of Shri Mahendra Shantilal Patel and his Group appears to not correct as the reproduction in the assessment order about the seized material is not co- related with the assessee’s name/proprietorship firm of assessee. The only aspect of the name Anmol found in MX Excel Sheet in the premises of Shri Bharat Popat is not incriminating material but in fact Excel Sheet entries. Besides this, the Assessing Officer has not made any addition in respect of these details of Excel Sheet assuming that the ld. Departmental Representative’s contention that 153C never describes incriminating material still when the search parties has called for certain kind of documents relating to the transactions which are not explained the addition has to be made into that expenditure and not the sphere of the addition will go beyond the same. Thus, the ld. CIT(A) was right in holding that section 68 additions made in assessee’s case are not justifiable and in fact on merit also, the ld. CIT(A) has commented that the cash deposits made by the assessee are explained through bank statements as well as the transactions conducted by the assessee. As relates to addition in respect of unexplained credit entries, the assessee has co-related the sale of gold jewerlly/bullion and has maintained purchase register, sale register, cash book, bank book and stock register in voices for purchase, sale invoices and all relevant documents which has explained the credit entries. Therefore, the CIT(A) has rightly deleted this addition. Therefore, the appeal being IT(SS)A No I.T(SS).A Nos. 88 to 92 & 151/Ahd/2021 A.Ys. 2011-12 to 2016-17 Page No. DCIT vs. Sureshbhai U. Gadhecha 8 151/Ahd/2021 for assessment year 2016-17 filed by the Revenue is dismissed. As relates to IT(SS)A Nos. 88, 89, 90, 91 and 92/Ahd/2021 for assessment year 2011-12, 2012-13, 2013-14, 2014-15 and 2015-16 respectively concerned are identical to the appeal for assessment year 2016- 17 and therefore the observations made in the assessment year 2016-17 is applicable in those appeals as well. Hence, IT(SS)A Appeal Nos. 88 to 92/Ahd/2021 filed by the Revenue are dismissed. 9. In the result, all the six appeals filed by the Revenue are dismissed. Order pronounced in the open court on 27-09-2023 Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 27/09/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद