SHRI ATUL N.PATEL,AHMEDABAD V. THE DY.CIT., CIRCLE-7, AHMEDABAD

ITSSA 69/AHD/2010

AI Insights

The case revolves around a block assessment conducted by the ACIT, Circle-7, Ahmedabad, which accused Shri Atul N Patel of undisclosed income amounting to Rs.22,09,83,524 over a significant period. The Tribunal's decision came after multiple rounds of appeals and assessments, where it was established that the assessee was involved in a cheque discounting business, and certain documents seized during a search operation did not pertain to him but to other entities. The Tribunal's ruling acknowledged the complexity of the assessee's business operations and the inadequacy of some of the additions made by the Assessing Officer, leading to a partial relief for the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28686 (ITAT-AHMEDABAD)
• Duration Of Justice: 14 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 20-09-2024
• Assessment Year: misc
• Appeal Filed On: 02-02-2010
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: S. N DIVATIA; SAMIR
• Keywords: Set aside; Business income; Unexplained cash credit; Unexplained investment; Salary income; Income from undisclosed sources; Document seized; Documents seized; Principle of natural justice; Search and seizure; Block assessment; Loose papers; Deemed to accrue or arise in india
• Section: 143(3); 143(2); 22; 13; 142(2A); 158BC; 20

Judgement Text

" आयकर अपील\tय अ धकरण, अहमदाबाद \u0014यायपीठ , अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “ D ” BENCH, AHMEDABAD ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER And SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./IT(SS)A No. 69/AHD/2010 \u0017नधा\u0019रण वष\u0019/Asstt. Years: (01.04.1986 to 01.08.1996) Shri Atul N Patel, 404, Sahajanand Complex, Nr. Saptak Party Plot, 132 ft Ring Road, Naranpura, Ahmedabad. PAN: ACYPA9796R बनामVs . A.C.I.T, Circle-7, Ahmedabad. (अपीलाथ\u0010 /Appellant ( \u0011\u0012यथ\u0010 /Respondent) Assessee by : Shri S. N Divatia, with Shri Samir Vora, ARs Revenue by : Shri Rignesh Das, Sr. DR सुनवाई क\u0016 तार\u0018ख/Date of Hearing : 20.06.2024 & 20/09/2024 घोषणा क\u0016 तार\u0018ख /Date of Pronouncement: 09/10/2024 आदेश/O R D E R PER SUCHITRA KABLE, JUDICIAL MEMBER: This appeal is filed by the Assessee against order dated 30.12.2009 passed by the ACIT, Ahmedabad for the Block Period 01.04.1986 to 01.08.1996. 2. The assessee has raised the following grounds of appeal :- IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 2 “1.1 The order of block assessment passed u/s.158BC r.w.s. 254 on 30.12.2009 by ACIT, Cir-7. Ahmedabad determining undisclosed income at Rs.22.09,83,524 is wholly illegal, unlawful and against the principles of natural justice. 1.2 That in the facts and circumstances of the case as well as in law, the Ld. AO has passed the impugned order in gross violation of the principles of natural justice and equity. The Ld. AO had not discussed with the appellant or his tax consultant, the impugned additions at any time during the course of hearing with took place before him. The appellant was never called upon to explain the same by issuing show cause notice in respect of impugned additions. 1.3 The Ld. AO has grievously erred in law and or on facts in failing to consider even the evidence produced in the proper books and other documents filed before him. The AO has also failed to give opportunity to cross examine Shri Kalpesh Thakkar and various other parties whose statement/evidence have been relied upon by him and thus the AO has failed to comply with the directions given by Hon'ble Tribunal in its order dated 14.12.2009. 2.1 Without prejudice to the above, the Ld. AO has grievously erred in law and or on facts in making following additions by way of undisclosed income of the appellant :- (a) Unexplained cash credit (para-5) 2,09,810/- (b) Unexplained cash credit (para -7.3) 1,25,000 (c) Cash deficiency (Para 9) 1,00,000 (d) Swati Sales Agency (Para 10) 11,24,77,973 (e) Unexplained Deposits in Bank A/c (Para 11) 7,40,712 (f) Unexplained Deposit in Jayshree Ambe Bank A/c. (Para 12) 9,25,310 (g) Cash credit of Poonambhai (Para 15) 15,000 (h) Unexplained deposit in bank A/c (A.Y. 87-88 to 94-95 (Para 11) 11,78,288 (i) Unexplained investment on p.26 (Para 14) 31,100 (j) Unexplained cash credit (Para 5) 3,00,000 (k) Unexplained cash credits (Para 7.3) 39,03,356 (l) Addition to capital (Para 7.4) 3,00,000 (m) Profit on sales (Para 7.5) 24,875 (n) Income reflected in A/3 & A/4 (Para 7.6) 3,62,237 (o) ATIRA Interest A/c. (Para 7.7A) 5,83,770 (p) ATIRA CHD A/c. (Para 7.7B) 89,745 (q) Investment in ATIRA A/c. (Para 8.3) 35,25,000 (r) Investment in Harekrishna A/c. (Para 8.4) 3,55,000 (s) Negative cash balance (Para 9) 10,35,856 (t) Swati Sales Agency (Para 10) 8,29,38,750 (u) Unexplained deposit in Bank (Para 11) 57,793 (v) Unexplained deposit in Jayshree Ambe A/c. (Para 12) 2,84,180 IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 3 (w) Unexplained deposits with LT (Para 13) 19,000 (x) Unexplained cash deposits (Para 7.3) 38,76,834 (y) Addition to Capital (Para 7.4) 1,51,000 (z) Profits on shares (Para 7.5) 12,500 (aa) Business income in A/3 & A/4 (Para 7.6) 2,48,869 (ab) ATIRA CHD A/c. (Para 7.7B) 21,31,223 (ac) Investment in ATIRA A/c. (Para 8.3) 21,75,000 (ad) Harekrishna A/c. with LT (Para 8.4) 17,42,000 (ae) Negative Cash balance (Para 9) 10,60,503 (af) Unexplained deposit in bank A/c. (Para 11) 544 2.2 That in the facts and circumstances of the case, the Ld. AO ought not to have held the aforesaid items as undisclosed income of the appellant. 2.3. The Ld. AO grievously erred in law and or on facts in holding aggregate of Rs.22.09,83.520 as undisclosed income of the appellant for the block period. 3.1 The Ld. AO has grievously erred in law and or on facts in holding that: (a) the seized material at Annexure A-3, A-4 and A-5 belong to the appellant and relates to the unaccounted business carried on by the appellant. (b) The appellant had not furnished explanation whatsoever about the contents of A-3 and A-4. (c) The burden was cast upon the appellant to prove the credits relating to the parties whose cheques were discounted. (d) The business and transactions appearing in A-3 and A-4 belong to the appellant as per para 6.4 of the impugned order. (e) The page 35 of loose paper file A-5 being a pay-in-slip proved that the account of Swati Sales Agency was a benami account of the appellant and therefore all deposits appearing in said account belong to the appellant and chargeable to tax as undisclosed income of the appellant. 3.2 That in the facts and circumstances of the case, the observations made and conclusion reached by AO for determining undisclosed income at Rs.22.09.83,524 are wholly unjustified and not admitted by the appellant. 3.3 The Ld. AO has erred in law and or on facts in relying upon the statements of Kalpesh Thakker and S.M. Pari etc. as well as further erred in holding that the same were confronted to the appellant. 3.4 The Ld. AO has failed to appreciate that when the business as well as transactions as recorded in the ledger marked Annexure A-3 and A-4 did not belong to the appellant, the additions based on such record was wholly bad-in-law, unlawful and uncalled for. 4.1 The Ld. AO has grievously erred in holding that the salary income for Α.Υ. 87-88 to 97-98 was undisclosed income of the appellant in spite of amendment to law. IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 4 It is therefore prayed that the undisclosed income of Rs.22,09,83,520 determined by the AO may please be deleted.” 3. The assessment under Section 158BC read with Section 143(3) of the Income Tax Act, 1961 was passed in this case on 23.02.1998 determining total undisclosed income at Rs.22,09,83,524/-. The assessee filed appeal before the Tribunal wherein the Tribunal set aside the Assessment Order vide order dated 04.06.2003. The assessment was made denovo making the same additions at the undisclosed income of Rs.22,09,83,524/- as the assessee failed to furnish any evidences. 4. Aggrieved by the said set-aside Assessment Order, the assessee again preferred appeal before the Tribunal and vide order dated 14.12.2007 the Tribunal again restored back the matter made under Section 158BC read with Section 143(3) of the Act. Thereafter, the Assessing Officer took the proceedings and issued notice under Section 143(2) of the Act on 22.09.2008 but nobody appeared. A letter was served on 12.10.2009 subsequently but again the assessee did not respond the same, however, before reaching the final conclusion the assessee was again reminded through his AR to attend and receive the copies relating to seized material. In response to the same, letter dated 09.11.2009 was received from the AR of the assessee requesting to provide copy of statement of assessee and Kalpesh L Thakkar. On 01.12.2009 notice under Section 143(2) of the Act was issued and subsequently assessee furnished letter dated 15.12.2009. The IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 5 Assessing Officer, after taking cognisance of the said letter as well as the material available on record including the seized material, made addition in respect of block period commencing from 01.04.1986 to 01.08.1996 thereby making addition of Rs,.22,09,83,524/- as undisclosed income by passing Assessment Order under Section 158BC read with Section 254 and 143(3) of the Act dated 30.12.2009. 5. Being aggrieved by the Assessment Order under Section 158BC read with Section 254 and 143(3) of the Act dated 30.12.2009, the assessee is before us. 6. The Ld. AR submitted through written note as under : The appellant is an Individual and has studied upto Sy. B. Com. He started his services as an Accountant with Pari Tulsidas Narsidas in about 1973 with meagre salary of Rs.80/- p.m. and afterwards he joined Pari Laxminarayan Tulsidas (Popularly known as Pari LT Shroff). Thereafter, he served with M/s. Bhagwati Kima Stores of Manek Chowk, Ahmedabad during the period 01.04.1990 to 28.02.1991 when his last drawn salary was Rs.1800 p.m. He once again joined Pari LT Shroof from 01.03.1991. He was paid Salary of Rs.11,000/- p.m. from 01.01.1996. Thereafter, he left the services and joined various concerns from time to time with a meagre salary of about Rs.2,900/- to Rs.3,500/- p.m. 2.1 There was a search at the business and residential premises of said Pari LT Shroff group on 01.08.1996 when even the residence of the appellant was covered. The appellant was serving as a Manager at the Manek Chowk Br., of said LT Shroff Group and he used to write books of account and documents apart from such other work as may be entrusted to him by his employer. 2.2 During the course of search at his residence, the books of accounts such ledger and cash book of his proprietary concern, viz., Jay Ambe Shroff were found and inventoried as Ann-A/1 and A/2. Similarly, ledger marked as A/3 and IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 6 A/4 pertaining to the business of said Pari LT Shroff were found and seized alongwith loose papers of this business marked as A/5. The appellant understands that similar record were found from the residence of Shri Naresh Shah, Accountant of Modasa Branch of said LT Shroff group. 2.3 The appellant was issued notice u/s.158BC on 08.05.1997 and the original block assessment was completed by the then AO, Central Cir 2(1). Abad on 23.02.1998 on undisclosed income of Rs.22,09,83,524/-. But, on appeal, before Hon'ble Tribunal, being ITA No. IT(SS) 43/A/98, the order was restored back to the file of AO with a direction to make fresh order after giving opportunity of hearing. Accordingly, the fresh assessment was completed by DCIT, Cir-7, Abad vide order dated 28.03.2005 on the same income as assessed originally. The appellant preferred appeal against the said asstt. to Hon'ble Tribunal, being ITA No. IT(SS) No.170/A/05 which was disposed of by order dated 14.12.2007 by restoring once again to the file of AO with the directions to supply the copy of statement and other documents/papers relied upon by him. 2.4 Now, the fresh assessment has been completed by AO wherein it is claimed that the compliance to the directions of Hon'ble Tribunal has been made as under :- 22.9.2008 Notice u/s.143(2) issued and served on 24.09.08 which is claimed to be non-complied. 12.10.2009 Letter issued by DCIT, Cir-7, Abad to collect the copy of statement dt. 28.02.2005 and further documents as may be required. 11.11.2009 Reply dt. 09.11.09 in response to AO’s letter dt. 12.10.09 filed. 16.11.2009 Letter issued to submit reply/submission within 3 days. 23.11.2009 Letter given to AO seeking time and case adjourned to 30.11.2009. 01.12.2009 Notice u/s.143(2) issued fixing hearing on 08.12.09 but served on 11.12.09, so date changed to 15.12.2009. AO has given incorrect facts in order as nobody attended though there was no service of notice before 08.12.2009. 16.12.2009 Reply dt. 15.12.2009 filed with AO alongwith paper books and other materials. 2.5 The appellant submits that initially though AR of the appellant attended before Shri N.S. Hattimare, DCIT, Cir-7, Abad from time to time but neither the copy of documents were being given and AR was told that IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 7 since he was retiring on 30.11.2009, he was busy with time barring asstt. Later on, the charge was handed over to the present AO, ACIT. Cir-7, Abad who issued for the first time notice u/s.143(2) on 01.12.2009 to appear on 08.12.2009 which was served late and the hearing took place on 15.12.2009. Since then, nothing was heard from him and the impugned asstt, has been completed by reproducing the original order of block asstt. Though the appellant has filed available evidence with him in the paper books etc., it is not correct to observe that \"assessee has in fact not produced or brought out any material evidence before the dept., as well as the before the appellate authorities, hence its seems his only interest is to pass time before AO or/and the appellate authority………….. It is mentioned here that nothing has been furnished nor explained till the date of passing of the order beyond the submissions made above.\". The appellant is deeply aggrieved by the factually incorrect observations made by AO in para 3 to 5 of the impugned order and hence the same are not admitted by him. The appellant craves liberty to produce additional evidence/explanation during the course of appellate proceedings. 2.6 The AO has repeated the findings and the conclusion reached in the original block asstt. made on 23.02.1998. It is also noticed that present AO has neither considered nor discussed the material produced in the paper books and simply repeated the first order verbatim. Thus, the impugned order is misconceived, arbitrary and lacks application of mind and judicious approach so that the same should be quashed. 2.7 The observations made and the conclusion reached by AO with regard to various items held as undisclosed income of the appellant are not admitted insofar as they are contrary to the evidence and prejudicial to the interest of appellant. For the sake of brevity, the appellant has not reproduced here all such observations and conclusions, but the same shall be pointed out during the course of hearing of this appeal. Since the impugned additions by way of undisclosed income made in this order are identical.” 7. The Ld. AR further submitted that the Assessing Officer erred in law and in facts thereby not taking into account evidence produced in the Paper Books and other documents filed before the Assessing Officer. The Assessing Officer has also failed to give opportunity to cross-examine Shri Kalpesh Thakkar and various other parties whose statement/evidence have been relied upon by him and thus the Assessing Officer has failed to comply with the directions given by IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 8 Hon'ble Tribunal vide order dated 14.12.2009. The Ld. AR further submitted that the main component of the addition in respect of undisclosed income is that of income from Swati Sales Agency amounting to Rs.11,24,77,973/- (Paragraph no.10 of the Assessment Order) and also that of Rs.8,29,38,350/- from the same entity and also reflected in the same paragraph of the Assessment Order. The Ld. AR submitted that there was Special Audit and in respect of the said Special Audit, the assessee already taken view, so, most of the addition should be remaining to 21,00,000/- approximately only. The Ld. AR further submitted that the Trial Balance and the documents seized does not belong to the assessee but that of Swati Sales Agency. The assessee was merely Shroff employee and, therefore, no evidence or no subsequent observation in support of the Revenue’s case was made out by the Assessing Officer that the said seized documents are that of the assessee. In fact, the assessee has categorically denied that these papers were forcibly kept in assessee’s custody and that should not be taken against the assessee who is merely an employee. In fact, these documents belonged to Kalpesh Thakkar (relatives of Kalpesh Thakkar). The Ld. AR further submitted that the assessee did not receive anything from all these parties and in fact the documents seized cannot be stated as belonging to/relate to or pertaining to assessee. The Ld. AR further submitted that the salary component of the assessee which was shown was never in dispute either by the Assessing Officer or at any point by any of the Revenue Authorities. IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 9 8. The Ld. DR submitted the written synopsis of which the relevant portion is extracted hereinbelow: 3.1 A search action was carried out on 1.8.1996 at the business premises of L T Shroff Group and residence of the assessee Shri Atul N. Patel. The assessee was one of the important persons of the group holding key position of Manager of Manek Chowk Office. The assessee started his proprietary business in the name of Shree Ambe Shroff in the F.Y. 1995-96. The assessee’s residence premises was also covered u/s 132(1) of the Act. From the residence of the assessee four books of accounts marked as A-1 to A-4 and loose paper filed marked as A-5 were seized. A-1 & A-2 were ledger and cash book respectively of business of Shree Jai Ambe Shroff while A-3 & A-4 were ledger of a regularly carried out unaccounted business of the assessee. Certain loose papers in file A-5 were also relating to unaccounted business reflected in A-3 & A-4. 3.2 During the course of search and seizure operation at the residence and business premises of LT Shroff Group various records corresponding to unaccounted business being carried out by LT Shroff Group were seized from number of premises. When confronted, they admitted at all stages that all such records pertain to unaccounted business of their group. However, none of the seized records from residence of Shri Atul N Patel, the assessee was related to LT Shroff Group business as found out during the course of search. 3.3 Statement of Shri Atul N Patel was recorded by the ADIT on 11.9.1996 and was confronted in detail about the contents of A-3 & A-4. It was stated by the assessee that he was also carrying out an unaccounted sharafi business besides his regular sharafi business being carried out in the name and style of Shree Jay Ambe Shroff and A-3 & A-4 are relevant papers in A-5 represents the transactions of such business. However, the assessee has changed his stand when the return of income was filed after expiry of 10 months from the statement recorded. The assessee made notes stating that in respect of business transactions appearing in A-3 & A-4 and corresponding loose papers in A-5 reflect unaccounted business of LT Shroff Group where he was serving and he was keeping these documents as per their directions. 3.4 The contention of the assessee about A-3, A-4 & A-5 was categorically denied by Shri Kalpesh Thakkar (main persons of LT Shroff Group) who otherwise had admitted about existence of their own unaccounted sharafi business and had also accepted, when confronted with the corresponding documents seized from all other places, that they represent their unaccounted business which was much more in volume than the business appearing in A-3, A-4 & A-5. 3.5 Since seized records of Shri Atul N Patel were involved complexities as the ledger A-3 & A-4 were just ledger without cash book and importantly the assessee was not turned up with any explanation, therefore he was asked to get his accounts audited by the same auditor who were appointed as auditors for carrying out special audit work u/s 142(2A) for LT Shroff Group. 3.6 During the original assessment proceedings the assessee was given sufficient opportunities of being heard to clarify the transactions as appearing in the seized documents A-3 & A-4 & A-5. However, the assessee was failed to substantiate his claim that the transactions are reflected in the seized IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 10 documents were of LT Group and not of his. Since the assessee has admitted in his statement recorded on 11.09.1996 that such transaction were reflects of his unaccounted sharafi business. Further, the assessee had admitted in the statement recorded on 17.07.1997 i.e. during the assessment proceedings u/s 158BC of the Act that notes made accompanying with the return of income is made by mistakenly. Accordingly assessment u/s 158BC r.w.s. 143(3) of the Income Tax Act finalized on 23.02.1998 determining to total undisclosed income at Rs. 22,09,83,520/-. ……… 3.7 The appellate proceedings, the ITAT vide order dated 4.6.2003 has set aside assessment order with a direction to make fresh order after giving opportunity of being heard to the assessee. It was submitted before the Tribunal by the assessee that the reply to the questionnaire dated 8.2.1998 which was sent by the assessee by RPAD vide letter dated 13.2.1998 was refused by the Assessing Officer. Accordingly, ITAT has directed to the Assessing Officer to reframe the assessment after considering the reply sent by the assessee by RPAD and other evidence which the assessee may like to produce. During the set aside assessment proceedings, the assessee had submitted a letter dated 14.9.2014 alongwith a copy of letter dated 13.2.1998 alleged to be sent by RPAD during the original assessment proceedings. Also filed a copy of notarized affidavit dated 23.07.1997. As per letter dated 13.2.1998, the assessee has stated that Annexure A-3, A-4, A-5 etc. do not belong to him nor his business and that these books have been written by him as an employee of LT Group. 3.8 The then AO not considered the said letter observing that it is nothing but a self serving statement devoid of any merit in law and does not operate to rebut the legal presumption postulated in Section 132(4A) of the Income Tax Act. …… 3.9 Similarly, the affidavit filed by the assessee also rejected holding that the same is also a self serving affirmation made by the assessee which is contrary to the facts of and evidences gathered during the course of search. Since the seized document written by the assessee in his handwriting which admitted by himself in the statement recorded on 28.02.2005, same were found and seized from the residence of the assessee, stands taken by the assessee that the seized books of accounts and documents do not pertains to him but pertain to the business of his employer is not considered by the then AO and rejected accordingly. Since the stands taken by the assessee that the seized documents are pertains to his employer though the same were written by his hand writing and found from his residence no satisfactory compliance or any material brought to the record by the assessee to substantiate his claim. In absence of any evidence/ material brought by the assessee, the set-aside assessment completed on 28.03.2005 and total undisclosed income determined at Rs. 22,09,83,524/- after making additions are determined in original assessment. 3.10 Being aggrieved with the order, the assessee was in appeal before the Tribunal. The Tribunal vide order dated 14.12.2007 has restored back the matter with the direction to pass the denovo assessment. …….. 3.11 As per the directions of the ITAT, the Assessing Officer initiated the proceedings thereby issuing notice u/s 143(2) of the Act dated 22.09.2008, but no compliance made by the assessee. Therefore, further opportunity was given vide letter dated 12.10.2009 and requested the assessee to collect the copy of his IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 11 statement recorded on oath by the DCIT, Cir-7, Ahmedabad on 28.02.2005 and specifically stated in the letter, to ask for copy of any other seized material which may required to explain particularly the facts. The said letter also not complied by the assessee and not turned up for collecting such materials by 26.10.2009 as requested to the assessee in the letter. The assessee was again remained present through his AR Shri K C Patel. However, authority letter in the name of Shri K C Patel and Shri Y M Rajput was sent on 11.11.2009 thereby requested to provide copy of statement of Shri Atul Patel and Kalpesh Thakkar and whatever details required by the assessee. The assessee was provided the details as requested and asked to submit explanation along with evidences. The assessee had filed letter dated 15.12.2009 containing bunch of papers containing of Tribunals order, his earlier submission made before the AO and the Tribunal in previous proceedings u/s 158BC and reply filed before the AO at the time of Original assessment etc. 3.12 Since no evidence or any fresh material brought on the record by the assessee, the denovo assessment was finalized on 30.12.2009 u/s 158BC r.w.s 143(3)of the Act determining undisclosed total income of the assessee for the block period 1.4.1986 to 1.8.1996 at same figure as determined in earlier orders u/s 158BC of the Act. …… 4.2 ………….the assessee filed letter dated 11.04.2014 to the office of the Revenue which was received on 15.04.2014 which contain the details in tabular format which consists of additions made in the assessment and contentions of the assessee. The same is as follows: Sr. No. Additions Details of additions Details of evidences Assessee’s contention 1 19,54,16,323/- Additions were made credit in bank account with Mankek Chowk Co.Op. Bank Ltd. (Swati Sales) Agency One Bank Pay in slip which was not mine I have not been knowing the party who was he? The said Bank account is in the name of Kanaiyalal Sambhav Patel. Who has got his accounts audited u/s 44AB of the Act Even I have not operated said Bank account or I have not signed any cheque as said account is not mine. Your good self is humbly requested to consider the facts and evidence and give social justice on the same grounds. 2 91,81,081 Additions were made in the name of ATIRA Account A/3 & A/4 Seized material Said account is not mine but it belonged to My ex-employer LT Pari Group. Your good self IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 12 is humbly requested to consider the facts and evidence and give social justice on the same grounds. 3 29,97,000/- Additions were made in the name of Hare Krishna Account A/3 & A/4 Seized material Said account is not mine but it belonged to My ex-employer LT Pari Group. Your good self is humbly requested to consider the facts and evidence and give social justice on the same grounds. 4 70,05,190/- Additions were made in the name of deposits A/3 & A/4 Seized Material Said deposits not mine but it belonged to My ex-employer LT Pari Group. Your good self is humbly requested to consider the facts and evidence and give social justice on the same grounds. 5 12,10,637/- Additions were made on account of cheque discounting A/3 & A/4 seized material Said cheque discounting entries are not mine but it belonged to My ex- employer LT Pari Group. Your good self is humbly requested to consider the facts and evidence and give social justice on the same grounds. 6 21,96,459/- Additions were made on account of cash deficiency as per account A/3 & A/4 seized material There was no cash deficiency. Your good self is humbly requested to consider the facts and evidence and give social justice on the same grounds. 7 38,76,834/- Additions were made on account of Credit Entries in Bank accounts Housing loan received from M/s LT Pari Group and paid to Ruchik Builders and remaining This is not a income but housing loan received from employer M/s LT Pari Shroff. Salary shown in income Tax return. IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 13 cheques were deposited of salary received 4.3 From the submission made above it appears that the assessee made routine contention as made in the earlier original assessment, denovo assessment and set-aside assessment. However no fresh evidence/material brought to the record to substantiate the claim of the assessee. The assessee has produced nothing in support of his claim, though he has acquired the copy of all statements required before the Tribunal and for that purpose the case was again set aside and remanded back to the Revenue office. The submission made as above is not considerable and acceptable because these objections were nothing but the repetition of the facts and same arguments made before. Therefore, no relief should be given to the assessee as far as computation of undisclosed income in the block assessment order dated 30.12.2009.” The Ld. DR further submitted that this is the fourth round of the present assessee’s case and till date no evidence has been produced by the assessee to establish that the documents seized were not that of the assessee or has not explained also as to why these documents were found at the premises of the assessee. Further, the assessee at no juncture asked for the cross-examination of Shri Kalpesh Thakkar and, therefore, cannot state that the cross-examination was denied. The Ld. DR submitted that the additions were rightly made by the Assessing Officer. The documents were found which is valid, in fact, when the assessee say that he was an employee of the company. The Ld. DR relied upon the Assessment Order. 9. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Special Auditor in the present case has already taken view which was not taken into consideration either at the earlier occasion or that of the present Assessment Order. From the perusal of the records, it can be IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 14 seen that search at the residential premises of Pari Laxminarayan Tulsidas (Popularly known as Pari LT Shroff Group) conducted on 01.08.1996 also covered the residence of the assessee. As being the Manager of the said Pari LT Shroff Group, the said group had kept all the documents at the premises of the assessee. As per the assessee’s statement though assessee states that the assessee’s involvement is to extent of an employee, but the records states otherwise as the assessee is also the proprietor of Jay Ambe Shroff. Books of account, in fact, ledger and cash book of the proprietary concern Jay Ambe Shroff which was found also pertains to the person at Pari LT Shroff and this fact clearly emerges from the said documents. The assessee though has not asked for the cross-examination but while taking cognisance of statement of Kalpesh Thakkar, it can be seen that the assessee was not actually at any juncture accepted or transacted with the said entity or person in respect of transaction amounting to Rs.22,09,83,524/-. In fact the assessee admitted that the Annexure A-1 to A-5 found during the search was that of the assessee only and after going through the same it appears to be that of assessee only. Thus, the document found during the search was that of assessee only. From the facts as discussed in para 6 of the assessment order, we hold that the assessee only was carrying on the sarafi and cheque discounting business and the document seized vide Annexure A-1 to A-5 from the residence of the assessee, belonged to the assessee only. The assessee has not brought on record any evidence to controvert the findings as given in the assessment order. IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 15 10. Our findings in respect of various additions as made by the AO in the course of assessment are as under. We have taken into account the arguments of the Ld. AR as well as the Ld. Sr. DR while deciding these matters. 11. Unexplained cash credit (para 5 of Assessment Order) This addition was made on the basis of seized documents A1 and A2 which were ledgers and cash book of unaccounted business of the assessee in the name of ‘Shree Jay Ambe Shroff’ that was found in the course of search. The AO had required the assessee to furnish the confirmation for various credit entries appearing in these books. The assessee had furnished the confirmation of certain person on 11.07.97 but confirmation in respect of 22 parties could not be furnished. The assessee had submitted he was in the business of cheque discounting and the account pertained to this business only and the credits were not in the nature of deposit. Therefore, he was not required to furnish the confirmation and that in such line of business activity it is not possible to obtain confirmation of all the parties. It was also pointed out that the commission or vatav in the name of the parties were also entered in ledger A1 which established that the transaction in documents A1 and A2 were in support of cheque dis-accounting only. However, the AO did not accept the explanation of the assessee and unconfirmed credit entries appearing in the books of account A1 and A2 were treated as unexplained cash credit. Accordingly, addition of IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 16 Rs.2,09,810/- in AY 1995-1996 and of Rs.3,00,295/- in the AY 1996-97 were made. 12. The addition as made by the AO is not found to be correct and on sound footings. The AO had himself given the findings that the assessee was carrying business of sharafi and cheque discounting, and the seized document A1 and A2 pertained to this business only. Further, the commission received from this business was also recorded in the document A1 and A2. Thus, from the nature of entries as appearing, there was no doubt to the fact that the transactions appearing in the seized documents A1 and A2 were in respect of cheque discounting business of the assessee. As per the nature of this business the cheques were received by the assessee and payment was made in cash after retaining the commission. Once it was established that the credit entries appearing in these books of accounts were in respect of cheque discounting business, the AO was not correct in treating part of the credit entries, for which the confirmation could not be produced, as unexplained. It was not the case of the AO that only credit entries in respect of these 22 parties were received which were not followed by cash payments. Since all the credit entries were pertaining to cheque discounting business, the AO should have verified whether the commission earned by the assessee in respect of these credit entries were accounted or not. Under the circumstances, the additions in respect of credit entries of Rs.2,09,810/- and 3,00,295/- in the AY 1995-96 and 1996-97 respectively, on account of unexplained IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 17 cash credits of cheque discounting business, are deleted. The AO is directed to estimate the commission income @5% in respect of these transactions, if the same is not already accounted for. Accordingly, the ground taken by the assessee is partly allowed. 13. Unexplained cash credit (para 7.3 of Assessment Order) The next objection of the assessee is in respect of additions of Rs.1,25,000/-, Rs.39,03,356/- and Rs.38,76,834/- in the AY 1995-96, 1996-97 and 1997-98 respectively in respect of cash credits as per para 7.3 of the assessment order. These additions have been made on the basis of entries appearing in the seized documents A3 and A4. The AO had treated all the credit entries appearing in the seized documents as deemed income of the assessee. The approach of the AO in treating all the credits as income of the assessee without taking into account the debit entries cannot be held as correct. The AO had himself given a finding that the seized documents A3 and A4 pertained to unaccounted cheque discounting business of the assessee. Therefore, for the reason as discussed earlier the total addition of Rs.79,05,190/- cannot be held as correct. The credit entries were undoubtedly in respect of cheque discounting business of the assessee and AO should have added the commission income in respect of this business. Accordingly, the addition of Rs.79,05,190/- in respect of credit entries appearing in the seized documents A3 and A4 are deleted and AO is IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 18 directed to make addition of commission income @ 5% of the credit entries. The ground is allowed in part. 14. Addition to capital (para 7.4 of Assessment Order) In the seized ledger account A3 and A4 capital account of the assessee was appearing in which credit entries were appearing on different dates. On the basis of entries appearing in the capital account the AO made addition of Rs.3,00,000/- in the AY 1996-97 and Rs.1,51,000/- in the AY 1997-98. In the absence of any explanation for the source of capital, the AO was justified to make addition in respect of initial capital contribution of Rs.2,50,000/- on 01.12.1995 as no explanation had forth-come from the assessee. However, the subsequent addition to capital account can be covered by the unaccounted income generated by the assessee in the cheque discounting business and the commission income as already earlier directed to be added. Therefore, the addition made by the AO in respect of capital contribution to unaccounted business is confirmed to the extent of Rs.2,50,000 for AY 1996-97. The balance addition of Rs.50,000/- in AY 1996-97 of Rs.1,51,000/- in AY 1997-98 in respect of credit to capital account is deleted. 15. Profit on sale of shares (para 7.5 of Assessment Order) In the seized documents A3 and A4 shares purchase and sales account were found. The AO did not make addition in respect of investment of IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 19 Rs.2,15,375/- in this account, as the same was held to be explained out of other additions as made. The AO had made addition in respect of sale of shares, dividend etc. which has been discussed in detail in para 7.5 of the Assessment Order. The assessee has not submitted any explanation as to why the addition made by the AO was wrong. We, therefore, do not have any reason to interfere with the additions as made by the AO in respect of profit on sale of shares. Accordingly, the additions made by the AO in para 7.5 of the order are confirmed. 16. Computation of profit as per the seized documents A3 and A4 (para 7.6 of Assessment Order) The seized documents A3 and A4 were in respect of unaccounted Sharafi business of the assessee. Entries in the books of account were found to be incomplete. Therefore, these documents were subjected to special audit u/s. 142(2A) of the Act. The AO has discussed in detail as to why the exact profit cannot be deduced from A3 and A4 and it was necessary to estimate the profit of the business from this document. Accordingly, the AO has given findings that the difference in credit side and debit side in trial balance prepared by the Special Auditor was treated as advance made during the year which was not appearing in the A3 and A4 and accordingly interest earned on such advance was computed @ 20% to estimate the income of the assessee. Accordingly, additions of Rs.3,62,237/- and Rs.2.48,869/- were made for AY 1996-97 and 1997 -1998 respectively. The assessee has not IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 20 brought on record any fact or submission to controvert the findings of the AO. We therefore, do not have any reason to interfere with the estimation of the income as made by the AO. Accordingly, the additions made as per para 7.6 of the order are confirmed. 17. ATIRA interest account (para 7.7(A) of Assessment Order) In the seized documents A3 and A4 two types of AITRA account were found, one was ATIRA Vyaj account and another ATIRA Ch.D account. From page no.1 of document A-5 it was evident that ATIRA account was benami account of the assessee with LT shroff group on which interest was earned by him. On the basis of these documents AO had made additions of Rs.5,83,770/- in AY 1996-1997 and Rs.6,76,243/- in AY 1997-98. 17.1 It is found that this addition is based on entries appearing in the seized documents and the assessee has not brought on record any material or argument to controvert the working of ATIRA interest account on the basis of the seized documents. In the absence of any explanation on the part of the assessee, we do not find any reason to interfere with the order of the AO. The addition as made by the AO in respect of ATIRA interest account vide para 7.7 of the order is confirmed. 18. ATIRA CH.D. A/C (para 7.7(B) of Assessment Order) IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 21 An addition of Rs.89,845 in AY 1997-98 and Rs.21,31,223/- in AY 1997- 98 was made on the basis of seized documents A3, A4 and A5. The AO had given a detailed working of the addition in para 7.7(b) of the order. The assessee has not made any submission in this regard and has not disputed the working of the AO. Therefore, the addition made in respect of ATIRA CH.D. A/C is confirmed. 19. Unaccounted Investment in ATIRA Account with L.T. Shroff Group (para-8.3 of Assessment Order) The AO has made addition of Rs.35,25,000/- in AY 1996-97 and Rs.21,75,000/- in AY 1997-98 on the basis of entries appearing in the seized documents A5. The assessee had admitted that this document represented account of two persons in cash maintained at Maneckchowck office. The documents were in own handwriting of the assessee but the person to whom these pertained was never identified by the assessee, though he had identified the other entries of this document. The AO, therefore, treated these entries as belonging to the assessee only. The AO had given a detailed working of addition based on this document in para 8.3 of the order. The assessee has not brought on record anything to controvert the findings and the working of the AO. Since the addition is based on the seized documents found from the premises of the assessee in the course of search, we do not find any reason to interfere with the order of the AO. Accordingly, the addition IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 22 in respect of investment in ATIRA account as per para 8.3 of the assessment order is confirmed. 20. Addition in respect of Hare Krishna Account (para 8.4 of Assessment Order) Harekrishna A/c (a code name) was part of seized documents in the handwriting of the assessee and found from his own premises, which was not explained. The addition of Rs.3,55,000/- in AY 1996-97 and Rs.17,42,000/- in AY 1997-98 is found to be on the basis of the seized document A-3. The detailed working of the addition has been given in para 8.4 of the assessment order. The assessee has not pointed out any defect in the working of the income as made by the AO on the basis of the seized documents. Under the circumstances, we do not find any reason to interfere with the working of the AO. The addition of Rs.20,97,000/- in respect of Hare Krishna account in AY 1996-97 and 1997-98 is confirmed. 21. Negative cash balance (para-9 of Assessment Order). On the basis of ledger of unaccounted business marked as A-3 and A-4 the Special Auditor had prepared a cash flow statement while carrying out special Audit u/s.142(2A) of the Act. The Auditor had pointed out certain negative/deficiency in cash flow in respect of which assessee was required to submit his explanation. The deficiency as pointed by IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 23 the Auditor is reproduced in para 9.4 of the assessment order. The highest cash deficiency was added on incremental basis and accordingly additions of Rs.1,00,000/- in AY 1995-96, Rs.10,35,956/- in AY 1996-97 and 1,06,503/- in AY 1997-98 were made. In the course of present appeal as well, no explanation has been given by the assessee in respect of these negative cash balances. We therefore, do not find any reason to interfere with the findings of the Special Auditor based on which the AO has made this addition. Accordingly, the additions made by the AO in respect of cash deficiency/negative cash balance as discussed in para 9 of the order is confirmed. 22. Addition in respect of Swati Sales Agency (para-10 of Assessment Order) In the course of search a pay slip was found at page no.35 of the seized documents A-5, as per which cash of Rs.2,00,000/- was deposited in bank account of Swati Sales Agency with Manek Chowk Co-operative Bank Ltd., and the assessee was required to explain this cash deposit. The assessee had denied complete ignorance in respect of Swati Sales Agency. Thereafter, the AO had conducted inquiry with the bank and on the address given in the bank opening form, no party was found to be in existence. Therefore, the AO had treated Swati Sales Agency as benami account of the assessee. The Bank statement of Swati Sales Agency was obtained and the total amount of Rs.19.54 crores was found deposited in the account. The AO had treated the entire credit IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 24 entries in the bank account as deemed income of the assessee and accordingly additions of Rs.11,24,77,973/- in AY 1995-96 and Rs.8,29,38,350/- in AY 1996-97 were made. 22.1 It is found that the genesis of this addition is single pay-in-slip of Rs.2,00,000/- found from the premises of the assessee. The AO has not brought on record any evidence to link bank account of Swati Sales Agency with the assessee. Merely because one pay slip was found at the premises of the assessee, it cannot be lead to the conclusion that the bank account belonged to the assessee. If the bank account had really belonged to the assessee, then the assessee should have maintained all the cash deposits slips of the bank account. A single cash deposit slip might have been brought at the premises by any customer/client of cheque discounting business and left there. Therefore, no conclusion can be drawn in respect of ownership of the bank account on the basis of single pay-in-slip of Rs.2,00,000/- found from the premises of the assessee. The AO had made inquiry with the bank and it was found that the said bank account was opened by one Kaniyalal Sambav Patel. No evidence was found in the course of search at the premises of the assessee that the assessee was also operating in the name of Kaniyalal Sambav Patel. The firm Swati Sales Agency was not found in existence at the address given in the bank account opening form. The AO did not make any inquiry from the introducer of the said bank account. As mentioned earlier, no evidence was brought on record to establish any link between the assessee and IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 25 Shri Kaniya Lal Sambav Patel who had opened the account. Under the circumstances and in the absence of any correlation, the conclusion drawn by the AO that the bank account of Swati Sales Agency belonged to the assessee, cannot be held as correct. The documents in respect of unaccounted business of the assessee was found from the premises and seized under identification A1 to A5. The name of the Swami Sales Agency was not found appearing in any seized documents and under the circumstances the conclusion drawn by the AO in respect of Swati Sales Agency being unaccounted business of assessee cannot be held as correct. There was no correlation between the name of parties appearing in the bank account of Swati Sales Agency with the name of parties appearing in seized documents A-1 to A-5 from the premises of the assessee. In the absence of any evidence that the assessee was actual owner and operating the bank account of Swati Sales Agency, the addition in respect of credit entries of Swati Sales Agency, in the hands of the assessee, cannot be held as correct. Accordingly, the addition of Rs.11,24,77,973/- in AY 19,95,096/- and Rs.8,29,38,350/- in AY 1996-97 in respect of credit entries of Swati Sales Agency is deleted. 23. Unexplained deposit in bank account (para-11 of Assessment Order). In the course of assessment the AO has called for bank account statement of the assessee and required him to explain the source of IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 26 deposits. The AO considered the deposits in respect of salary, and LT- Loan amount, cheque returns as recorded in the accounts as explained. After taking into account the explained deposits, the balance credit for which no explanation was given, was treated as unexplained and accordingly addition was made in different assessment years. The assessee has challenged the additions as made in this respect. However, no materials have been brought on record by the assessee even before us to explain the source of these unexplained credits in the bank account. Under the circumstances, we do not find any reason to interfere with the order of the AO. The additions in respect of unexplained deposits in the bank account as per para 11 of the assessment order are confirmed. 24. Unexplained deposit in M/s. Jayshree Ambe Shroff bank account (para-12 of Assessment Order) The assessee was maintaining an account with Manekchowk Co- operative Bank Ltd. in the name of M/s Jay Ambe Shroff to carry out his business. From the copy of the bank statement of this account it was found that certain credit entries by clearing were appearing corresponding to which cash was withdrawn. However, such entries were not recorded in the seized books of accounts A1 and A2. Though it was explained that these entries were in respect of cheque discounting, the corresponding commission entries was also not found entered. Therefore, the AO had treated these deposit as income of the IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 27 assessee and made additions of Rs.9,25,310/- in AY 1995-96 and Rs.2,84,180/- in AY 1996-97. 24.1 We do not find any convincing reason on the part of the AO to treat these deposits in the bank account of the assessee as deemed income of the assessee. The fact that the assessee was carrying cheque discounting business was acknowledged by the AO. The corresponding cash withdrawal to the credit entries by the cheques, corresponded to the business model of the assessee that these entries were in respect of cash discounting only. Therefore, the AO was not correct in making addition in respect of credit entries in the bank account. If the commission in respect of these credit entries were not disclosed, the AO should have made addition in respect of commission income and not treated the entire credit entries as income of the assessee. Therefore, the addition of Rs.9,25,310/- and 2,84,180/- in the AY 1995-96 and 1996-97 respectively in respect of deposit in Jayshree Ambe account is deleted. The AO is directed to treat 5% of the deposit as commission income of the assessee and accordingly the addition is restricted to that extent. 25. Unaccounted Deposit (para-13 of Assessment Order) In the course of search counter copy of pay-in- slip of cheque deposited by the assessee amounting to Rs.3,17,985/- was seized. The assessee was required to explain the source of this deposit, but no explanation was given. It was found that the assessee had purchased IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 28 banker’s cheque in cash from SBI Mithakhali Branch but no explanation regarding the source thereof was provided. Accordingly, the AO had made addition in different years in this regard. In the course of present appeal as well, no material has been produced nor the source of these credit entries have been explained. Therefore, the addition made by the AO in respect of credit entries as discussed in para 13 of the order is confirmed. 26. Unexplained deposit (para-14 of Assessment Order) In the course of search a document at page no.26 of A5 was seized which reflected account of the assessee with some other person with details of opening balance, withdrawal, deposit and the closing balance and no explanation was given by the assessee in this respect. Therefore, the total credit of Rs.45,000/- as per this document was added for the AY 1989-90 and 1990-91. In the course of present appeal as well, the assessee has not given any explanation in respect of this document and source of deposits have not been explained. Therefore, addition as made by the AO is confirmed. 27. Cash credit of Poonambhai (para-15 of Assessment Order) The Special Auditor has pointed out calculation of interest in respect of 5 person from the loose paper seized vide A-5. One of the person referred in the document was Poonambhai from whom an amount of Rs.15,000/- was taken on 23.11.1994 but was not found reflected in the ledgers seized vide A3 and A4. Therefore, the AO had doubted the IT(SS)A No.69/Ahd//2010 Asst. Years: (01.04.1986 to 01.08.1996) 29 genuineness of the credit and required the assessee to furnish confirmation from Poonambhai. In the absence of any confirmation the amount of Rs.15,000/- was treated as unexplained cash credit and added in the AY 1995-96. In the case of present appeal also no explanation has been given by the assessee in this regard. Therefore, we do not find any reason to interfere with the order of the AO in respect of this addition. 28. In result, appeal of the assessee is partly allowed. Order pronounced in the Open Court on 9th October, 2024 at Ahmedabad. Sd/- Sd/- Sd/- (NARENDRA PRASAD SINHA) ACCOUNTANT MEMBER (SUCHITRA KAMBLE) JUDICIAL MEMBER (True Copy) अहमदाबाद/Ahmedabad, दनांक/Dated 09/10/2024 PBN/Manish, Sr. PS आदेश क\u0016 \u0011#त$ल%प अ&े%षत/Copy of the Order forwarded to : 1. अपीलाथ\u0010 / The Appellant 2. \u0011\u0012यथ\u0010 / The Respondent. 3. संबं(धत आयकर आयु*त / Concerned CIT 4. आयकर आयु*त ) अपील ( / The CIT(A)-(NFAC) 5. %वभागीय \u0011#त#न(ध , अ(धकरण अपील\u0018य आयकर , राजोकट/DR,ITAT, Ahmedabad, 6. गाड4 फाईल / Guard file. आदेशानुसार/ BY ORDER, स\u0012या%पत \u0011#त //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपील\u0018य अ(धकरण, ITAT, Ahmedabad "