The ACIT, Circle-1, RAJKOT-GUJARAT V. Ambica Realities Pvt. Ltd., RAJKOT-GUJARAT

MA 11/RJT/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1213 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-10-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-08-2013
• Assessment Year: misc
• Appeal Filed On: 03-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE
• Assessee Lawyers: D M RINDA
• Keywords: Search and seizure; Loose papers; Principle of natural justice; Question of law; Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTA VA AM M.A. NO. 06/RJT/2012 (ARISING OUT OF ORDER IN IT(SS)A NO.24/RJT/2003) (BLOCK PERIOD 1986-87 TO 24/25-12-1996) ACIT, CIRCLE-1, RAJKOT V. MANSUKHLAL N. PATEL 29, MAHAVIR SOCIETY, SATYA NIRMALA ROAD, RAJKOT M.A. NO.11/RJT/2012 (ARISING OUT OF ORDER IN IT(SS)A NO 51/RJT/2003) (BLOCK PERIOD 1986-87 TO 24/25-12-1996) ACIT, CIRCLE-1, RAJKOT V. M/S. AMBICA REALITIES P VT. LTD 10TH FLOOR, DHANRAJNI COMPLEX DR. YAGNIK ROAD, RAJKOT FOR THE REVENUE : SHRI VILAS V. SHINDE , DR FOR THE ASSESSEE : SHRI VIMAL DESAI, CA; AND SHRI D. M. RINDANI, CA DATE OF HEARING : 22/23.08.2013 DATE OF PRONOUNCEMENT : 04.10.2013 ORDER D K SRIVASTAVA: THE REVENUE HAS FILED A COMMON MISCELLANEOUS APPLICATION IN THE CASES OF BOTH THE AFORESAID ASSE SSEES SEEKING RECTIFICATION OF THE COMMON ORDER PASSED BY THIS TRIBUNAL ON 29.07.2011 BY WHICH APPEAL BEARING IT(SS)A NO.24/RJT/2003 FILED BY SHRI MANSUKHLAL N P ATEL AND APPEAL BEARING IT(SS) NO.51/RJT/2003 FILED BY M/S. AMBICA REALITIES PVT. LTD. WERE DISPOSED OFF. IN ORDER TO APPRECIATE THE ISSUES RAISED IN THE MISCELLANEOUS A PPLICATION FILED BY THE REVENUE, IT IS NECESSARY TO BRIEFLY REFER TO THE RELEVANT FA CTS. 2. M/S. AMBICA REALITIES PVT. LTD., A RAJKOT BASED COMPANY, IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION OF RESIDENTIAL APART MENTS AND HOUSES APART FROM DEALING IN LAND, REAL ESTATE AND PROPERTIES. SHRI D HANRAJBHAI JETHANI IS THE MANAGING DIRECTOR OF THE SAID COMPANY. THE SAID COMPANY BELO NGS TO RAJANI BUILDERS GROUP. THE SAID GROUP IS ALSO ENGAGED IN THE BUSINESS OF C ONSTRUCTION AND REAL ESTATE. SHRI MANSUKHLAL N PATEL IS ONE OF THE DIRECTORS IN M/S. AMBICA REALITIES PVT. LTD. 3. SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE INC OME-TAX ACT WERE CARRIED OUT IN RAJANI BUILDERS GROUP OF CASES INCLUDING THE CASES OF M/S AMBICA REALITIES PVT. LTD. AND SHRI MANSUKHLAL N PATEL. IT IS STATED IN THE ASSESSMENT ORDER OF BOTH THE ASSESSEES THAT INCRIMINATING MATERIALS/DOCUMENT S WERE RECOVERED FROM THEIR 2 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL PREMISES ON THE BASIS OF WHICH PROFITS FROM CERTAIN PROJECTS WERE WORKED OUT AT RS.2,16,56,000/-. FIRST BLOCK ASSESSMENT WAS COMPLE TED U/S 158BC IN THE CASE OF M/S. AMBICA REALITIES PVT. LTD. ON 29.01.1998 BY WH ICH TOTAL UNDISCLOSED INCOME OF THE SAID COMPANY WAS ASSESSED AT RS.3,06,90,138/-, WHICH, INTER-ALIA, INCLUDED, THE AFORESAID PROFITS. FIRST BLOCK ASSESSMENT IN THE CA SE OF SHRI MANSUKHLAL PATEL WAS COMPLETED U/S 158BC ON 29.12.1997 ASSESSING HIS TOT AL UNDISCLOSED INCOME AT RS.50,93,550/-, WHICH, INTER-ALIA, INCLUDED RS.13,5 0,000/- BEING 6.25% OF HIS SHARE IN THE AFORESAID PROFITS OF RS.2,16,56,000/-. BLOCK ASSESSMENTS MADE IN THE CASES OF M/S AMBICA REALITIES PVT. LTD. AND SHRI MANSUKHLAL N PATEL WERE SUBJECT MATTER OF LITIGATION NOT ONLY BEFORE THIS TRIBUNAL BUT ALSO B EFORE THE HONBLE HIGH COURT REPORTED AS MANSUKHLAL NANJIBHAI PATEL V. DCIT, 251 ITR 341 (GUJ.). WE ARE NOT DEALING WITH THOSE LITIGATIONS IN ORDER TO AVOID AD DING BULK TO THIS ORDER. FOR THE PRESENT, WE SHALL CONFINE TO THE ORDER PASSED BY TH IS TRIBUNAL, WHICH HAS GIVEN RISE TO THE PRESENT MA FILED BY THE REVENUE. 4. PURSUANT TO THE DIRECTIONS GIVEN BY THIS TRIBUNA L VIDE ITS COMMON ORDER DATED 20.06.2000 IN APPEAL FILED BY BOTH THE ASSESSEES AG AINST THE ORIGINAL ORDER OF BLOCK ASSESSMENT, THE ASSESSING OFFICER PASSED A FRESH OR DER OF BLOCK ASSESSMENT U/S 158BC/254 ON 25.03.2003 ASSESSING THE UNDISCLOSED I NCOME OF M/S. AMBICA REALITIES PVT. LTD. AT RS.3,06,90,140/-, WHICH, INT ER-ALIA, INCLUDED ADDITION OF RS.2,27,41,125/- (I.E., RS. 2,16,56,000 + RS.10,85, 125), WITH THE FOLLOWING OBSERVATIONS:- 7. FROM THE ABOVE DISCUSSION IT CAN BE SEEN THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CONTENTION REGARDING THE FOLLOW ING TWO ISSUES: (A) THE ADDITION OF RS.10,85,125/- MADE IN THE BLOC K ASSESSMENT DATED 29.01.98 ON THE BASIS OF NOTINGS ON PAGE 8 OF ANNEX URE-A SEIZED DURING THE COURSE OF SEARCH WHICH WAS RESTORED BACK TO THE AO BY THE HONBLE ITAT VIDE THE ORDER DATED 10.10.2001. (B) THE ADDITION OF RS.2,16,56,000/- MADE IN THE BL OCK ASSESSMENT DATED 29.01.98 ON THE BASIS OF THE NOTINGS ON LOOSE PAPER S SEIZED DURING THE COURSE OF THE SEARCH WHICH WAS RESTORED BACK TO THE AO BY THE HONBLE ITAT VIDE THE ORDER DATED 10.10.2001. 3 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL THE HONBLE TRIBUNAL HAD IN ITS ORDER DATED 10.10.2 000 CATEGORICALLY REMARKED THAT THE ASSESSEE COMPANY AND SHRI MANSUKH LAL N PATEL AND ALL OTHER PERSONS SHALL EXTEND UTMOST COOPERATION TO TH E AO FAILING WHICH THE AO WOULD BE FREE TO TAKE ANY ACTION IN ACCORDANCE WITH THE LAW. 8. IN VIEW OF THE FACTS DISCUSSED ABOVE, I HAVE NO OTHER OPTION BUT TO ADOPT THE ORDER DATED 29.01.98 PASSED BY SHRI S. G. KUDAV, DEPUTY COMMISSIONER OF INCOME TAX, S.R.-II, RAJKOT BEARING PAGES SERIALLY NUMBERED 1 TO 19. THE ISSUE REGARDING THE ADDITION OF 10,85,125/- AND RS.2,16,56,000/- BASED ON PAGE 8 AND PAGE 10 SEIZED DURING THE COURSE OF THE SEARCH HAS BEEN DISCUSSED IN DETAIL IN THE SAID ORDER. THE ORDER U/S 158BC DATED 29.01.98 IS TAKEN AS PART OF THIS ORDER AS AN ANNEXURE. PENALTY PROCEEDINGS U/S 158BFA(2) ARE INITIATED SE PARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME REGARDI NG THE ADDITION OF RS.10,85,125/- AND RS.2,16,56,000/- BASED ON PAGE 8 AND PAGE 10. 5. PURSUANT TO SIMILAR DIRECTIONS GIVEN BY THIS TRI BUNAL VIDE ITS ORDER DATED 20.06.2000 IN THE CASE OF SHRI MANSUKHLAL N PATEL, A FRESH ORDER OF BLOCK ASSESSMENT WAS PASSED BY THE ASSESSING OFFICER U/S 158BC/254 ON 31.03.2003 IN THE CASE OF SHRI MANSUKHLAL N PATEL ASSESSING HIS U NDISCLOSED INCOME AT RS.2,57,67,820/- INCLUDING ADDITION OF RS.2,27,41,1 25/- (RS.2,16,56,000 + RS.10,85,125) MADE BY THE ASSESSING OFFICER IN HIS HANDS ON SUBSTANTIVE BASIS, WITH THE FOLLOWING OBSERVATIONS:- THE ORDER HAS BEEN APPROVED BY CIT-I RAJKOT VIDE H IS DO NO. CIT.R.I/HQ/158BC/MNP/2002-03 DATED 31.03.2003 SUBJE CT TO THE DIRECTIONS OF THE ADDL. CIT. RR.1, RAJKOT, CONTAINED IN HIS LE TTER NO. ADDL.CIT/RR.I/SCR.ASSTT/2002-03 DATED 31.03.2003. T HE CONTENTS OF THE LETTER OF ADDL. CIT.R.1, RAJKOT OF HIS LETTER DATED 31.03. 2003 HAVING NO. ADDL.CIT/RR.I/SCR.ASSTT/2002-03 IS REPRODUCED AS FO LLOWS: THIS DRAFT ASSESSMENT ORDER HAS BEEN RECEIVED BY M E TODAY AT 11.00 AM. ORIGINALLY, THOUGH HE HAD GIVEN THE DRAFT ORDER ON 27.03.2003 WHICH WAS SENT TO THE COMMISSIONER OF INCOME TAX, R AJKOT. THE COMMISSIONER OF INCOME TAX HAD RETURNED BACK THE SA ID FILE AND 4 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL ASSESSING OFFICER WAS DIRECTED TO CARRY OUT ITATS DIRECTIONS IN THIS CASE. ASSESSING OFFICER GOT ONLY ONE DAY TO CARRY O UT HIS DIRECTIONS, I.E., ON 28.03.03. IN ONE DAY HE HAD TRIED TO DO WH AT IS POSSIBLE. THE MAIN ISSUE IN THIS CASE IS SEIZED PAPERS NO.8 & 10 AND ASSESSING OFFICER HAD TO FIND OUT INDEPENDENTLY TO WHOM THESE PAPERS BELONG. HE HAS RECORDED STATEMENT OF SHRI MANSUKHBHAI PATEL AT WHOSE PREMISES THESE PAPERS WERE FOUND. HE HAS ALSO RECOR DED THE STATEMENT OF SHRI RAJU SHUKLA IN WHOSE HANDWRITING THE ABOVE PAPERS WERE WRITTEN. SHRI RAJU SHUKLA IN HIS STATEMENT HAS STATED THAT THE NOTINGS ON PAGE NO.8 & 10 WERE NOT IN RESPECT OF TR ANSACTIONS WITH AMBICA REALITEIS LTD. HE HAS ALSO STATED THAT HE IS NOT REMEMBERING ON WHAT CONTEXT THE SAME HAS BEEN WRITTEN. SHRI M. N. PATEL IN HIS STATEMENT HAS CLARIFIED THE WHOLE SEIZED PAPERS WHI CH HE HAD NOT DONE DURING THE COURSE OF SEARCH ON 24.12.96. HE HA S STATED THAT HE EARNED PROFIT OF RS.13,53,500/- FROM 3 TO 4 PROJECT S VIZ. YOGINAGAR, INDRAPRASTH, AMBICA NAGAR ETC. MANSUKHBHAI PATELS SHARE HOLDING IN THE CO. IE. AMBICA REALITIES LTD. IS ONLY 3.7% (*) AS SUCH IT SEEMS THAT HE HAD OTHER PROFITS FROM SOME OTHER PROJECTS BELON GING TO HIM. THE LOOSE PAPERS IN FILE A-1 FOUND FROM THE RESIDENCE O F MANSUKHBHAI PATEL SHOWS THAT HE WAS IN THE CONSTRUCTION BUSINES S. ONE OF THE CALCULATION ON PAGE NO.74 SHOWS CALCULATION OF BUIL T UP AREA AND RATES OF DIFFERENT FLOORS THE TOTAL OF WHICH COMES TO RS. 3,37,96,600/-. A.O. HAS NOT INQUIRED ABOUT THIS PAPER FOUND FROM HIM. A SSESSING OFFICER HAS NOT TAKEN STATEMENT OF ALL THE PERSONS FOR I.G. AMARKUMAR, BAODHARBHAI, N.C. PANDYA, BATUKBHAI PATEL, PRAFULBH AI PATEL TEC. ON OATH AND EXAMINED THEM WHOSE NAMES APPEAR IN THESE SEIZED PAPERS. IN THIS CIRCUMSTANCES, THE ADDITION CAN BE MADE ON THE BASIS OF SEIZED PAPERS IN THE HANDS OF BOTH PERSONS I.E. MANSUKHBHAIS HANDS SUBSTANTIALLY AND IN THE HANDS OF AMBICA REAL ITIES PVT. LTD. PROTECTIVELY. SINCE THE CASE IS GETTING TIME BARRED TODAY I.E. 5 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL 31.03.2003 AND SINCE YOUR STATUTORY APPROVAL IS NEE DED IN THIS CASE, THE SAME IS FORWARDED TO YOU FOR YOUR KIND APPROVAL . IN VIEW OF THE DIRECTIONS OF THE CIT I, RAJKOT AND OF ADDL. CIT.R.I, RAJKOT BEING OF STATUTORY AND BINDING NATURE, THE TOTAL PROFIT T HEREFORE, COMES TO RS.2,16,56,000/- WHICH IS TAXED ON SUBSTANTIVE BASI S AS THE RELEVANT DOCUMENTS PAGE NO.8 & PAGE NO.10 WERE SEIZED FROM T HE PREMISES OF THE ASSESSEE. ACCORDINGLY THE RELIANCE ON THE PAPER IS PLACED AND THE SAME IS TAXED IN HIS HANDS. SIMILARLY THE PROFIT AS SEEN FR OM PAGE NO.8 BEING DERIVED BY THE ASSESSEE IS RS.10,85,125/- SUBSTANTIVE BASIS . THE ABOVE PROFITS ARE ACCORDINGLY TAXED IN THE HANDS OF THE ASSESSEE COMP ANY ON SUBSTANTIVE BASIS. THE HONBLE TRIBUNAL HAD DIRECTED THAT THE A PPEAL OF BOTH THE ASSESSEE AND THAT OF AMBICA REALITIES PVT. LTD. WIL L BE TAKEN UP TOGETHER. THE FACTS REGARDING THE CASE HAVE ALSO BEEN DISCUSS ED IN DETAIL IN THE BLOCK ASSESSMENT ORDER OF AMBICA REALITIES PVT. LTD (AS R EGARDS SEARCH CONDUCTED ON 24.12.96) DATED 31.03.2003. (*) IT SEEMS TO BE A TYPOGRAPHICAL ERROR. THE CORRECT FIGURE IS 6.25% 6. IT IS QUITE APPARENT ON PERUSAL OF THE BLOCK ASS ESSMENT ORDERS PASSED BY THE ASSESSING OFFICER U/S 158BC/254 IN BOTH THE CASES T HAT A SUM OF RS. 2,16,56,000/- BEING PROFITS FROM CERTAIN PROJECTS HAS, INTER-ALIA , BEEN ADDED AND TAXED BY THE ASSESSING OFFICER IN THE HANDS OF SHRI MANSUKHLAL N PATEL ON SUBSTANTIVE BASIS AND IN THE HANDS OF M/S. AMBICA REALITIES PVT. LTD. ON PROTECTIVE BASIS. THE AFORESAID ADDITION WAS MADE ON THE BASIS OF PAPERS (PP. 8 AND 10) SEIZED FROM THE PREMISES OF SHRI MANSUKHLAL N PATEL. BOTH THE AFORESAID BLOC K ASSESSMENT ORDERS WERE SUBJECT MATTER OF APPEAL BEFORE THIS TRIBUNAL, WHIC H WERE DISPOSED OF BY A COMMON ORDER PASSED BY THIS TRIBUNAL ON 29.07.2011. WHILE ADDITION OF RS.13,53,500/- IN THE HANDS OF SHRI MANSUKHLAL N PATEL (BEING HIS 6.25% S HARE IN THE AFORESAID PROFITS OF RS.2,16,56,000/-) HAS BEEN CONFIRMED FOR THE REASON S GIVEN IN PARAGRAPH 22(10)(II) AND 22(12), THE MAIN ADDITION OF RS.2,16,56,000/- H AS BEEN DELETED IN THE CASES OF BOTH THE ASSESSEES FOR THE REASONS GIVEN IN THE AFO RESAID PARAGRAPHS OF THE ORDER PASSED BY THIS TRIBUNAL. ONE THING HOWEVER IS CLEAR THAT WHAT HAS BEEN CONFIRMED BY THIS TRIBUNAL IS A SUM OF RS.13,53,500/- IN THE HANDS OF SHRI MANSUKHLAL PATEL, 6 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL WHICH REPRESENTS 6.25% OF HIS SHARE IN THE PROFITS OF CERTAIN PROJECTS, E.G., YOGINAGAR, INDRAPRASTH, AMBICA NAGAR ETC., UNDERTAK EN BY M/S AMBICA REALITIES PVT. LTD. AS ALREADY STATED EARLIER, THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 2,16,56,000/- ON SUBSTANTIVE BASIS IN THE HANDS OF SHRI MANSUKHLAL PATEL AND SIMILAR ADDITION ON PROTECTIVE BASIS IN THE HANDS OF M/S AM BICA REALITIES PVT. LTD. IT IS FOR THE REASON THAT ADDITION TO THE EXTENT OF 6.25% OF PROFITS AMOUNTING TO RS.2,16,56,000/- ALONE HAS BEEN CONFIRMED BY THIS T RIBUNAL AS ALSO BY THE HONBLE HIGH COURT IN THE HANDS OF SHRI MANSUKHLAL PATEL AS HIS SHARE IN THE PROFITS OF CERTAIN PROJECTS THAT THE REVENUE HAS NOW FILED THE MA BEFORE THIS TRIBUNAL SEEKING RECTIFICATION SO AS TO BRING THE REMAINING AMOUNT O F PROFIT FROM THOSE PROJECTS TO TAX IN THE HANDS OF M/S AMBICA REALITIES PVT. LTD. IN T HE AFORESAID FACTUAL SETTING, THE REVENUE, AS STATED EARLIER, HAS FILED THE PRESENT M ISCELLANEOUS APPLICATION IN BOTH THE CASES WHICH READS AS UNDER:- 2. IN THIS CASE, THE ASSESSEE HAD FILED AN APPEAL BEFORE THE HONBLE INCOME TAX APPELLATE TRIBUNAL, RAJKOT AGAINST THE O RDER U/S 1538BC R.W.S. 254 OF THE ACT, PASSED BY THE DY. CIT, CIRCLE-1, RA JKOT DATED 31.03.2003. THE GROUNDS OF APPEAL WERE AS MENTIONED HERE BELOW: - (I) THE ASSESSMENT ORDER IN APPEAL IS BAD IN LAW. (II) THE ASSESSMENT NOT HAVING BEEN MADE IS ACCORDA NCE WITH THE DIRECTIONS OF THE HONOURABLE INCOME TAX APPELLATE T RIBUNAL IS RENDERED A NULLITY. (III) THE ASSESSMENT ORDER IS IN VIOLATION OF THE P RINCIPLES OF NATURAL JUSTICE AND IS BAD ON THIS COUNT TOO. (IV) THE ASSESSING OFFICER HAS ERRED ON FACTS AND I N LAW IN MAKING AN ADDITION OF RS.9,15,000/- ON ACCOUNT OF ALLEGED UNE XPLAINED CAPITAL INVESTMENT BY THE APPELLANT. (V) THE ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF RS.2,25,000/- ON ACCOUNT OF ALLEGED UNE XPLAINED CAPITAL. (VI) THE ASSESSING OFFICER HAS ERRED ON FACTS AND I N LAW IN MAKING AN ADDITION OF RS.3,20,000/- BEING THE ALLEGED PROFIT. 7 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL (VII) THE ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF RS.5,57,000/- ON ACCOUNT OF ALLEGED PRO FIT. (VIII) THE ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF RS.54,000/- ON ACCOUNT OF ALLEGED PROFI T. (IX) THE ASSESSING OFFICER HAS ERRED ON FACTS AND I N LAW IN MAKING AN ADDITION OF RS.2,16,56,000/- IN THE HANDS OF THE AP PELLANT ON ACCOUNT OF ALLEGED PROFIT ON THE BASIS OF SEIZED PAGE 10. (X) THE ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF RS.10,85,125/- ON ACCOUNT OF ALLEGED PR OFIT ON THE BASIS OF SEIZED PAGE 8. (XI) THE ASSESSING OFFICER HAS ERRED ON FACTS AND I N LAW IN INITIATING PENALTY PROCEEDINGS U/S 158BFA(2). 3. THE HONBLE INCOME TAX APPELLATE TRIBUNAL, RAJKO T VIDE ORDER DATED 29/07/2011 IN IT(SS)A NO.24/RJT/2003 HAS CONFIRMED THE ADDITION TO THE ASSESSEES SHARE IN TOTAL PROFIT OF RS.2,16,56,000/ - @ 6.25%, AS IS POINTED OUT BY THE ASSESSEE HIMSELF, VIDE PARA 22(12). 4. FURTHER, THE HONBLE INCOME TAX APPELLATE TRIBUN AL VIDE PARA 22(13) HAS DELETED THE BALANCE AMOUNT OF RS.2,16,56,000/- @ 93.75%, THE ADDITION WHICH WAS MADE ON SUBSTANTIVE BASIS IN THE CASE OF THE ASSESSEE, I.E., SHRI MANSUKHLAL N PATEL AND ON PROTECTIVE BASIS IN THE C ASE OF THE ASSESSEE- COMPANY, I.E., AMBICA REALITIES PVT. LTD. 5. THE HONBLE INCOME TAX APPELLATE TRIBUNAL IN ITS ORIGINAL ORDER DATED 20.06.2000 VIDE NO.IT(SS)A NO.11/RJT/98 IN THE CASE OF AMBICA REALITIES PVT. LTD., IN PARA 28 (PAGE 27 OF THE IMPUGNED ORDE R) HAS GIVEN A CLEAR FINDING THAT: IN VIEW OF THE DISCUSSION ABOVE, WE ARE OF THE CON SIDERED VIEW THAT BOTH THE SEIZED PAPERS BELONG TO SHRI M. N. PATEL A ND THE ENTIRE PROFIT OF RS.10,85,125/- AND RS.2,16,56,000/- MENTIONED ON SEIZED PAPERS 8 & 10 RESPECTIVELY HAS TO BE ASSESSED IN THE HAND OF SHRI M. N. PATEL FROM WHOSE CUSTODY THE PAPERS HAVE BEEN SEIZED. 8 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL ACCORDINGLY, THE ADDITION MADE IN THE HANDS OF ASS ESSEE-COMPANY, I.E., AMBICA REALITIES PVT. LTD. WAS DELETED. 6. IN THE REVISED ASSESSMENT ORDER, THE SUM OF RS.2 ,16,56,000/- ON ACCOUNT OF THE BALANCE OF 93.75% PROFIT OF THE AMOU NT REFLECTED IN PG 10 OF THE SEIZED MATERIAL WAS ADDED IN THE HANDS OF SHRI MANSUKHLAL N PATEL. WHILE, IN THE REVISED APPELLATE ORDER, THE ADDITION OF RS.13,53,500/- REPRESENTING 6.25% OF THE UNACCOUNTED PROFIT HAS BE EN CONFIRMED IN THE HANDS OF SHRI MANSUKHLAL N PATEL AND THE BALANCE HA S BEEN DELETED; THERE IS NO DIRECTION OR DISCUSSION AS TO IN WHOSE HANDS THE ADDITION OF RS.2,16,56,000/- REPRESENTING THE BALANCE PROFIT @ 93.75% IS TO BE ADDED. THE ADDITION OF RS.2,16,56,000/- WAS MADE ON PROTEC TIVE BASIS IN THE HANDS OF THE OTHER ENTITY INVOLVED IN SEARCH AND SEIZURE ACTION I.E. AMBICA REALITIES PVT LTD. THE SAID ADDITION ON PROTECTIVE BASIS IN T HE HANDS OF AMBICA REALITIES PVT LTD HAS ALSO BEEN DELETED SUMMARILY. 7. THUS, A MISTAKE HAS CREPT IN THE ORDER OF HONBL E INCOME TAX APPELLATE TRIBUNAL IN IT(SS)A NO.24/RJT/2003 IN SO FAR NOT DECIDING THE FATE OF THE REMAINING PART OF PROFIT @ 93.75% OF RS.2,16,56 ,000/- AS TO WHETHER THE SAME HAS TO BE BROUGHT TO THE TAX NET AND IF YES, I N WHOSE HANDS; ON SUBSTANTIVE BASIS. PRAYER IN VIEW OF THE ABOVE, IT IS KINDLY REQUESTED TO PLE ASE RECTIFY THE ORDER DATED 29.07.2011 BY CLARIFYING THE POSITION OF TAXING THE REMAINING PART OF PROFIT @ 93.75% OF RS.2,16,56,000/-. 7. THE CASE OF SHRI MANSUKHLAL N PATEL WAS REPRESEN TED BY SHRI VIMAL DESAI, CHARTERED ACCOUNTANT, BEFORE US. HE FILED A COPY OF THE ORDER PASSED BY THE HONBLE HIGH COURT ON 18.03.2013 IN CIT V. SHRI MANSUKHLAL N PATEL, TAX APPEAL NO.41 OF 2012. HE SUBMITTED THAT THE ORDER PASSED BY THIS TR IBUNAL ON 29.07.2011 WAS CHALLENGED BY THE REVENUE BEFORE THE HONBLE HIGH C OURT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED BY THE HONBLE HIGH COURT BY ITS ORDER DATED 18.03.2013. HE CONTENDED THAT THE ORDER PASSED BY THIS TRIBUNAL ON 29.07.2011 STOOD MERGED 9 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL WITH THE AFORESAID ORDER PASSED BY THE HONBLE HIGH COURT AND THEREFORE THE ORDER PASSED BY THIS TRIBUNAL COULD NOT BE SUBJECT MATTER OF RECTIFICATION IN HIS CASE. 8. SHRI D. M. RINDANI, CHARTERED ACCOUNTANT, APPEAR ED FOR M/S AMBICA REALITIES PVT. LTD. HE OPPOSED THE MISCELLANEOUS APPLICATION ON THE GROUND THAT IT WAS IN THE NATURE OF SEEKING REVIEW OF THE ORDER PASSED BY THI S TRIBUNAL. ACCORDING TO HIM, A CONSCIOUS DECISION TAKEN BY THIS TRIBUNAL CANNOT BE REVIEWED U/S 254(2). 9. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. SECTION 254(2) AUTHORISES BOTH THE ASSESSEE AND THE ASSESSING OFFICER TO SEEK AMENDMENT OF ANY ORDER PASSED BY THIS TRIBUNAL U/S 254(1) WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD. IT ALSO CONFE RS JURISDICTION ON THIS TRIBUNAL TO AMEND SUO SPONTE ANY ORDER PASSED BY IT U/S 254(1) WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD. THE UNDERLYING OB JECT OF SECTION 254(2) IS THREE- FOLD: ONE, TO PREVENT MISCARRIAGE OF JUSTICE WHICH MAY ARISE IF SUCH MISTAKES ARE ALLOWED TO EXIST IN THE ORDERS PASSED U/S 254(1); T WO, TO AVOID ANY PREJUDICE TO THE PARTY ON ACCOUNT OF SUCH MISTAKES IN THE ORDERS PAS SED U/S 254(1); AND, THREE, TO SAVE PRECIOUS JUDICIAL TIME OF SUPERIOR COURTS IN R ECTIFYING SUCH MISTAKES WHICH THIS TRIBUNAL ITSELF IS COMPETENT TO RECTIFY. IT IS THER EFORE IN THE INTEREST OF JUSTICE THAT SUCH MISTAKES ARE RECTIFIED BY THIS TRIBUNAL ITSELF. 10. A MISTAKE EXISTS WHEN A PERSON, UNDER SOME ERRO NEOUS CONVICTION OF LAW OR FACT, DOES, OR OMITS TO DO, SOME ACT WHICH, BUT FOR THE ERRONEOUS CONVICTION, HE WOULD NOT HAVE DONE OR OMITTED. IT MAY ARISE EITHER FROM UNCONSCIOUSNESS, IGNORANCE, FORGETFULNESS, IMPOSITION, OR MISPLACED CONFIDENCE. SUCH MISTAKES ASSUME THE CHARACTER OF BEING APPARENT FROM THE REC ORD WHEN THEY ARE SELF-EVIDENT ON BARE PERUSAL OF THE RECORD. INCONSISTENT FINDING S AND FINDINGS WHICH ARE APPARENTLY SELF CONTRADICTORY ARE SIMPLE AND STRAIG HT EXAMPLES OF MISTAKES APPARENT FROM THE RECORD. 11. A COMPANY INCORPORATED UNDER THE COMPANIES ACT HAS LEGAL PERSONALITY OF ITS OWN. IT IS ALSO A TAXABLE ENTITY UNDER THE INCOME-T AX ACT. SHAREHOLDERS ARE ENTITLED TO A SHARE IN THE PROFIT OF THE COMPANY IN WHICH TH EY HOLD SHARES. ALLOCATION OF PROFITS OF A COMPANY TO A SHAREHOLDER AS IN THE PRE SENT CASE PRE-SUPPOSES AVAILABILITY OF PROFITS IN THE HANDS OF THE COMPANY . A SHAREHOLDER CANNOT HAVE SHARE 10 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL IN THE PROFITS OF A COMPANY UNLESS SUCH PROFITS ARE AVAILABLE WITH THE COMPANY. IN THE MATTER BEFORE US, IT HAS BEEN HELD NOT ONLY BY THIS TRIBUNAL BUT ALSO BY THE HONBLE HIGH COURT THAT SHRI MANSUKHLAL N PATEL HAS 6.25% SHARE IN THE PROFITS OF M/S AMBICA REALITIES PVT. LTD. SUCH PROFITS HAVE BE EN DETERMINED AT RS.2,16,56,000/- OUT OF WHICH 6.25% (I.E., RS.13,50 ,500/-) HAS BEEN ALLOCATED TO SHRI MANSUKHLAL N PATEL AND ACCORDINGLY TAXED IN HI S HANDS. THE ISSUE THAT ARISES FOR CONSIDERATION IS WHETHER THE ALLOCATION OF THE AFORESAID SHARE (6.25%) OF PROFITS IN M/S AMBICA REALITIES PVT. LTD. IN THE HANDS OF S HRI MANSUKHLAL N PATEL REQUIRES CORRESPONDING ADDITION IN THE HANDS OF M/S AMBICA R EALITIES PVT. LTD. IT CANNOT BE A MATTER OF DEBATE THAT ALLOCATION OF PROFITS OF A CO MPANY TO A SHAREHOLDER NECESSARILY ENTAILS CORRESPONDING AVAILABILITY OF PROFITS IN TH E HANDS OF THE COMPANY. NOTHING CAN BE DISTRIBUTED OR ALLOCATED OUT OF VACUUM. TWO ORDE RS OUT OF WHICH ONE SEEKS TO TAX SHARE OF PROFITS IN A COMPANY IN THE HANDS OF A SHA REHOLDER AND THE OTHER WHICH SEEKS TO DELETE SUCH PROFITS IN THE HANDS OF THE CO MPANY CANNOT STAND TOGETHER. SUCH ORDERS WOULD BE COMPLETELY INCONSISTENT WITH E ACH OTHER AND THEREFORE CONSTITUTE A MISTAKE APPARENT FROM THE RECORD REQUI RING RECTIFICATION. THIS IS PRECISELY THE CASE BEFORE US. 12. PERUSAL OF THE BLOCK ASSESSMENT ORDER DATED 31. 03.2003 IN THE CASE OF SHRI MANSUKHLAL N PATEL SHOWS THAT M/S AMBICA REALITIES PVT. LTD. HAS UNDERTAKEN CERTAIN PROJECTS, E.G., YOGINAGAR, INDRAPRASTH, AMB ICA NAGAR, ETC. PROFIT FROM THEM HAS BEEN WORKED OUT AT RS. 2,16,56,000/- ON THE BAS IS OF MATERIALS RECOVERED DURING THE COURSE OF SEARCH OPERATIONS. THE SAID PROFIT HA S BEEN ASSESSED BY THE ASSESSING OFFICER IN THE HANDS OF SHRI MANSUKHLAL N PATEL ON SUBSTANTIVE BASIS AND IN THE HANDS OF M/S AMBICA REALITIES PVT. LTD. ON P ROTECTIVE BASIS. THE AFORESAID WORKING OF PROFIT ON THE BASIS OF SEIZED MATERIALS IS NOT IN DISPUTE, WHICH IS ALSO EVIDENT FROM THE FACT THAT IT IS ON THE BASIS OF TH E WORKING OF THE AFORESAID PROFIT THAT ADDITION TO THE EXTENT OF RS. 13,53,500/- BEING 6.2 5% OF THE AFORESAID PROFITS HAS BEEN ALLOCATED BY THIS TRIBUNAL IN THE HANDS OF SHR I MANSUKHLAL N PATEL, WHICH HAS SINCE BEEN CONFIRMED BY THE HONBLE HIGH COURT BY I TS ORDER DATED 18.03.2013 IN CIT V. SHRI MANSUKHLAL N. PATEL, TAX APPEAL NO. 41 OF 2012. THE OPERATIVE PORTION OF THE SAID ORDER PASSED BY THE HONBLE HIGH COURT READS AS UNDER:- 11 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL 3. FROM THE RECORD, WE NOTICE THAT ALL ALONG CASE OF THE RESPONDENT ASSESSEE HAD BEEN THAT DURING THE RELEVANT PERIOD T HE ASSESSEE WAS TAKING ONLY 6.25% SHARE HOLDING IN AMBICA REALITIES PVT. L TD. (HERE-IN-AFTER TO BE REFERRED TO AS THE COMPANY) AND THAT THEREFORE, E NTIRE ADDITION CANNOT BE SUSTAINED IN THE HANDS OF ASSESSEE. IT IS THIS STAN D OF THE ASSESSEE WHICH THE TRIBUNAL IN THE ABOVE-NOTED PORTION OF THE JUDGMENT HAD UPHELD. 4. WE DO NOT FIND ANY CONTRARY EVIDENCE TO SUGGEST THAT THE TRIBUNAL COMMITTED ANY ERROR IN NOT SUSTAINING 100% ADDITION S IN THE HANDS OF RESPONDENT ASSESSEE. IN ABSENCE OF ANY SUCH REBUTTA BLE EVIDENCE, WE DO NOT FIND THAT THE TRIBUNALS FINDINGS CAN BE STATED TO BE PERVERSE. THE TRIBUNAL IN PARTICULAR OBSERVED THAT THE ASSESSING OFFICER ADDE D 100% PROFIT IN THE HANDS OF THE ASSESSEE WITHOUT EXAMINATION OF FACTS OF THE CASE. WHILE DOING SO, THE TRIBUNAL OBSERVED THAT AS REGARDS THE ASSES SEES SHARE OF 6.25%, THERE WAS NO DISPUTE THAT THIS PROFIT BELONGED TO T HE ASSESSEE AND TO THAT EXTENT ADDITION IS WARRANTED. IT WAS ON THIS BASIS THAT TRIBUNAL SLASHED DOWN PROFIT TO RS.13.53 LAKHS. 5. IN THE RESULT, NO QUESTION OF LAW ARISES. TAX A PPEAL IS DISMISSED. 6. BEFORE CLOSING WE MAY RECORD THAT WE HAVE ADMIT TED TAX APPEAL NO.42/2012 WHICH PERTAINS TO THE REMAINING ADDITION S BEING MADE IN HANDS OF THE COMPANY. NOTHING STATED IN THIS ORDER WOULD COM E IN WAY OF EITHER SIDE IN PURSUING SUCH APPEAL ON ALL CONTENTIONS. 13. IT IS THUS EVIDENT THAT THE VIEW OF THIS TRIBUN AL THAT THE SHARE OF SHRI MANSUKHLAL N PATEL IN THE PROFIT AMOUNTING TO RS.2, 16,56,000/- IS 6.25% HAS ALSO BEEN CONFIRMED BY THE HONBLE HIGH COURT AND IT IS ON THIS BASIS THAT THE HONBLE HIGH COURT HAS CONFIRMED THE ORDER OF THIS TRIBUNAL DELETING THE REMAINING ADDITION MADE BY THE AO IN THE HANDS OF SHRI MANSUKHLAL N PA TEL. SINCE THE SHARE OF SHRI MANSUKHLAL N PATEL HAS ALREADY BEEN QUANTIFIED AT R S.13,53,500/-, BEING 6.25% OF HIS SHARE IN THE AFORESAID PROFITS OF M/S AMBICA RE ALITIES PVT. LTD., THE ENTIRE PROFIT OF RS.2,16,56,000/- WOULD NEED TO BE ASSESSED IN THE H ANDS OF M/S AMBICA REALITIES PVT. LTD. IT IS ONLY THEN THAT SHARE IN THE SAID PR OFITS OF M/S AMBICA REALITIES PVT. LTD. WOULD BE AVAILABLE FOR ALLOCATION TO AND ASSESSMENT IN THE HANDS OF SHRI MANSUKHLAL 12 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL N PATEL. IN THIS VIEW OF THE MATTER, THE REVENUE IS RIGHT IN ITS SUBMISSION THAT ADDITION OF RS.2,16,56,000/- CANNOT BE DELETED IN B OTH THE CASES AS SUCH ACTION WOULD BE COMPLETELY INCONSISTENT AND SELF-CONTRADIC TORY. THE FACT THAT SHARE OF SHRI MANSUKHLAL N PATEL IN THE AFORESAID PROFITS HAS BEE N CONFIRMED AT 6.25% BY THIS TRIBUNAL AND ALSO BY THE HONBLE HIGH COURT SHOWS T HAT THE ORDER OF THIS TRIBUNAL IN DELETING THE ADDITION OF RS.2,16,56,000/- IN BOTH T HE CASES IS COMPLETELY INCONSISTENT AND SELF-CONTRADICTORY. THE ORDER PASSED BY THIS TR IBUNAL ON 29.07.2011 THEREFORE REQUIRES AMENDMENT TO THE EXTENT THAT THE AFORESAID PROFIT NEEDS TO BE ASSESSED NOW ON SUBSTANTIVE BASIS IN THE HANDS OF M/S AMBICA REALITIES PVT. LTD. SO AS TO MAKE IT CONSISTENT WITH THE ORDER PASSED BY THE HON BLE HIGH COURT IN THE CASE OF MANSUKHLAL N PATEL FOR ASSESSING 6.25% THEREOF IN H IS HANDS. THE ORDER PASSED BY THIS TRIBUNAL IN IT(SS)A NO.51/RJT/2003 IN THE CASE OF M/S AMBICA REALITIES PVT. LTD. IS THEREFORE RECTIFIED TO THE EXTENT THAT THE AO SH ALL NOW TAX THE AMOUNT OF PROFIT BEING RS.2,16,56,000/- (OF WHICH 6.25% SHARE HAS BE EN ALLOCATED TO SHRI MANSUKHLAL N PATEL) IN THE HANDS OF M/S AMBICA REAL ITIES PVT. LTD. ON SUBSTANTIVE BASIS. MA NO.11/RJT./2012 FILED BY THE REVENUE IN T HE CASE OF M/S AMBICA REALITIES PVT. LTD. IS ALLOWED TO THE AFORESAID EXTENT. 14. THE REVENUE HAS SOUGHT DIRECTIONS OF THIS TRIBU NAL FOR TAXING ONLY 93.75% OF RS. 2,16,56,000/-. THE AFORESAID PRAYER MADE BY THE REVENUE IS COMPLETELY MISPLACED FOR THREE REASONS: ONE, THE AO HAS ASSESS ED THE ENTIRE PROFIT OF RS.2,16,56,000/- IN THE HANDS OF SHRI MANSUKHLAL N PATEL ON SUBSTANTIVE BASIS AND IN THE HANDS OF M/S AMBICA REALITIES PVT. LTD. ON P ROTECTIVE BASIS AND THEREFORE IT IS THIS ADDITION WHICH IS REQUIRED TO BE TAKEN INTO AC COUNT AND NOT 93.75% THEREOF; TWO, THIS TRIBUNAL HAS ALSO DELETED ADDITION OF RS.2,16, 56,000/- MADE BY THE AO IN THE CASES OF BOTH THE ASSESSEES AND NOT 93.75% THEREOF; AND, THREE, THE ORDER OF THE HONBLE HIGH COURT IS CLEAR THAT 6.25% OF THE AFORE SAID PROFITS IS TO BE ASSESSED IN THE HANDS OF SHRI MANSUKHLAL N PATEL WHICH OBVIOUSL Y ENTAILS ASSESSMENT OF PROFIT OF RS.2,16,56,000/- (OF WHICH 6.25% SHARE HAS BEEN ALL OCATED TO SHRI MANSUKHLAL N PATEL) IN THE HANDS OF M/S AMBICA REALITIES PVT. LT D. ON SUBSTANTIVE BASIS. AS ALREADY STATED EARLIER, THIS TRIBUNAL HAS PLENARY J URISDICTION TO CARRY OUT SUA SPONTE AMENDMENT OF ITS ORDER PASSED U/S 254(1) VIEW A VIE W TO RECTIFYING ANY MISTAKE 13 MA 06 & 11-RJT-2013 AMBICA REALITIES & MANSUKHLAL PATEL APPARENT FROM THE RECORD. IT IS FOR THE AFORESAID R EASONS THAT WE HAVE AMENDED OUR ORDER PASSED U/S 254(1) TO THE EXTENT OF ASSESSING AND TAXING THE ENTIRE PROFIT OF RS. 2,16,56,000/- AND NOT 93.75% THEREOF IN THE HANDS O F M/S AMBICA REALITIES PVT. LTD. ON SUBSTANTIVE BASIS FOR THE REASONS GIVEN EARLIER IN THIS ORDER. 15. MISCELLANEOUS APPLICATION BEARING MA NO.06/RJT/ 2012 FILED BY THE REVENUE IN THE CASE OF SHRI MANSUKHLAL N PATEL IS LIABLE TO BE DISMISSED ON THE GROUND THAT THE VIEW TAKEN BY THIS TRIBUNAL IN THE CASE OF SHRI MANSUKHLAL N PATEL HAS SINCE BEEN CONFIRMED BY THE HONBLE HIGH COURT. THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI MANSUKHLAL N PATEL HAS THUS MERGED IN THE ORDE R OF THE HONBLE HIGH COURT. IT IS THEREFORE NOT AMENABLE TO RECTIFICATION U/S 254( 2). 16. IN VIEW OF THE FOREGOING, MISCELLANEOUS APPLICA TION NO.06/RJT/2012 FILED BY THE REVENUE IN THE CASE OF SHRI MANSUKHLAL N PATEL IS DISMISSED WHILE THE MISCELLANEOUS APPLICATION NO.11/RJT/2012 IN THE CAS E OF M/S AMBICA REALITIES PVT. LTD. IS ALLOWED TO THE EXTENT INDICATED EARLIER IN THIS ORDER. ORDER PRONOUNCED ON 04.10.2013 SD/- SD/- (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEM BER RAJKOT: 04.10.2013 *BT COPY OF ORDER FORWARDED TO:- 1. APPELLANT- ACIT,CIRCLE-1, RAJKOT 2 RESPONDENT 1) MANSUKHLAL N. PATEL & 2) M/S. AMBI CA REALITIES PVT. LTD, RAJKOT 3. CONCERNED CIT-I, RAJKOT 4. CIT (A)-I, RAJKOT 5. DR, ITAT, RAJKOT 6. GUARD FILE BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT