THE ASSISTANT COMMR. OF INCOME TAX, CEN. CIRCLE-1, RAJKOT-GUJARAT V. M/S AKTA TEXTILE PRINTERY, JETPUR

ITA 364/RJT/2015

AI Insights

The case involves the appeal by the Revenue against the order of the CIT(A) which deleted the addition made by the assessing officer on account of unexplained expenditure amounting to Rs.1,99,39,000. The expenditure was linked to investments in properties and other financial transactions by the assessee, M/s. Akta Textile Printery, which were found during a search and seizure operation under section 132 of the Income-tax Act, 1961. The assessing officer had made additions based on a cash flow statement prepared from seized materials, which the assessee contested. The CIT(A) initially sided with the assessee, leading to the Revenue's appeal to the Tribunal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 27274 (ITAT-RAJKOT)
• Duration Of Justice: 9 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-07-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 30-07-2015
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHRAMDEEP SINHA
• Assessee Lawyers: RAJENDRA SINGHAL
• Keywords: Set aside; Business income; Corroborative evidences; Unexplained expenditure; Unexplained investment; Income from undisclosed sources; Onus to prove; Gift; Principle of natural justice; Search and seizure
• Section: 143(3); 142(1); 195; 132; 13

Judgement Text

" Page | 1 ITA No.364/RJT/2015 Akta Textile Printery IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA No.364/RJT/2015 (Ǔनधा[रण वष[ / Assessment Year: (2011-12) (Physical Hearing) The ACIT, Central Circle – 1, Rajkot Vs. M/s. Akta Textile Printery, Shreenathji Udhyognagar, Behind Lions School, Junagadh Road, Jetpur èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AADFA4882F (Appellant) (Respondent) Appellant by : Shri Shramdeep Sinha, CIT-DR Respondent by : Shri Rajendra Singhal, AR Date of Hearing : 29/07/2024 Date of Pronouncement : 08/10/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the Revenue, pertaining to assessment year (AY) 2011-12, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad [in short ‘Ld. CIT(A)’], dated 20.05.2015, which in turn arises out of an assessment order passed by the Assessing Officer (in short ‘AO’) u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 25.03.2013. 2. The grounds of appeal raised by the Revenue are as follows: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and /or on facts in deleting the addition of Rs.1,99,39,000/- made on account of unexplained expenditure. 2. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the AO. Page | 2 ITA No.364/RJT/2015 Akta Textile Printery 3. It is, therefore, prayed that the order of the CIT(A) be set aside and that of the AO be restored to the above extent.” 3. The facts of the case which can be stated quite shortly are as follows: A search and seizure action u/s 132 of the Act, was carried out at the premises of the assessee, on 25.02.2011. The assessee- firm is engaged in the business of printing and dyeing job work. The assessee is a part of the EKTA Group. Therefore, proceedings u/s l53A of the Act, for assessment years (AYs) 2005-06 to 2010-11 was initiated. The case for the year under consideration, was selected for scrutiny, as this is the search relevant assessment year. The return of income showing total income of Rs. 12,280/-was filed on 30.09.2011 by the assessee. A notice u/s 142(1) of the Act was issued on 15.06.2011. Further detailed questionnaire was issued on 08.08.2012, along with a notice u/s 142(1) of the Act. In response to the notices of hearing, the Authorized Representative of the assessee, attended and filed written submissions. During the course of search/survey action carried out in the case of above mentioned assessee, certain incriminating documents/diaries were found and seized/impounded. On going through the seized/impounded materials, it was observed by the assessing officer that the assessee group has made substantive investments in properties, earned hefty income of job-work, rent and fent income. On going through the Page No. 1 to 19 of the Loose Paper File Annexure-FE-1 (A-6)] seized from the business premise of M/s. Ekta Textile, situated at B/h. Lions' School, Kendriya Vidyalay, Shreenathji Udyognagar, Jetpur, it was observed by the assessing officer that these pages record the balances of current assets & liabilities relating to their regular textile business. Apart from the above, it also records the transactions relating to the purchase & sale of properties by this group. In this regard, when Shri Nathalal Lakhabhai Mavani (key person of the group) was confronted, specifically about the contents of the said Pages of the of Loose Paper File, he, in his statement recorded u/s 132(4) of the I. Page | 3 ITA No.364/RJT/2015 Akta Textile Printery T. Act, 1961, stated that these pages record the property transactions amounting to Rs. 5.14 Crores and he had no knowledge about the accounting of this investments in the regular books of accounts. However, after consulting his other business partners, Shri Jatinbhai & Vithalbhai, he offered the above investment for taxation on behalf of his group and promised to pay due tax on Rs. 5.14 Crore. Further, Shri Nathabhai stated that the unaccounted income earned from their business is applied either again in their business or in purchase of property. Shri Nathabhai Mavani enhanced, the above admission of unaccounted income, to Rs. 6 Crores on account of all irregularities, incriminating documents/papers seized or impounded from all the premises of the assessee group. 4. Here it is evident to mention that Shri Vithalbhai Jethabhai, Bhupatbhai Jethabhai, Jatin Vithalbhai & Vijay Jethabhai have given their consent to the disclosure of Rs. 6 Crores made by Shri Nathabhai Mavani. He further stated that the complete bifurcation of disclosure shall be submitted in due course. During the course of post search inquiries, the assessee was requested to furnish the page-wise explanation of the seized or impounded materials along with the source of investments and accounting treatment of the financial transactions recorded on such pages. In this regard, Shri Nathalal Lakhabhai Mavani has furnished a year-wise cash-flow statement. However, since the said cash flow statement covering the entire assessee of the group did not explain / justify the seized materials / documents, on the basis of the seized materials, a cash flow statement was prepared by assessing officer, which was sent to the assessee, along with a show cause notice, asking the assessee to show cause as to why his income should not be determined on the basis of the cash flow statement. Page | 4 ITA No.364/RJT/2015 Akta Textile Printery 5. During the assessment proceedings, the assessee submitted its reply, before the assessing officer. The assessing officer considered the reply of the assessee and noted that the following items are not appearing in the cash flow statement prepared by the assessee. (5a) (i)Investment in the name of one Shri Poshiya. The assessee- group had shown investment in the following properties along with one person named Shri Poshiya. According to the members of the assessee- group, Shri Poshiya was 50% stake holder / investor in the following properties. Date Property Total payment Share of EKTA group Share of Poshiya 3.6.05 Shivam Park Plot NO 193, 194 and 195 Rs. 1114249 Rs. 557125 Rs 557128 21.11.05 Shivam Park Plot No 86 Rs. 1968179 Rs 984090 Rs 984090 17.3.2006 Shivam Park Plot No 122 Rs 3409095 Rs 1704548 Rs 1704548 15.6.10 Pedhla 17/18 vigha Rs. 7875000 Rs 3937500 Rs 3937500 July 2010 Mariyam Manzil Rs. 16600000 Rs. 8300000 Rs 8300000 Total Rs. 30966523 Rs. 15483263 Rs. 15483263 However, it has been verified by the assessing officer, from the registered sale deed of the above properties and it was found that, share of the Poshiya, is only 20%, and that too in only one property, namely Mariyam Manzil. The ownership of the land and value as per registered sale deed and actual value, as evident from the seized document duly admitted by the members of the assessee -group, are given below: Date Property Ownership as Value as per Actual value per sale deed registered sale as per seized deed document 3.6.05 Shivam Park Plot NO 193, 194 and 195 Vithalbhai 75,000 11,14,250 Page | 5 ITA No.364/RJT/2015 Akta Textile Printery 21.11.05 Shivam Park Plot No 86 Bhupathbhai 85,000 19,68,180 17.3.2006 Shivam Park Plot No 122 Rahul; Jatin and 78,000 34,09,095 Bhupath 15.6.10 Pedhla 17/18 vigha Jatin; Vijay; 4,00,000 1,05,00,000 Rahut and Kishorebhai July 2010 Mariyam Manzil Jatin; 4,50,000 1,66,00,000 Vijay; Bhupath; Nathabhai and Priyesh Posia Therefore, the assessee was asked to explain, as to why the members of the group had excluded exact one half of the above investments, in the working of cash flow statement. In reply, the Id. AR of the assessee, vide letter received in this office on 5.2.2013, submitted as under: “In the following (above mentioned) purchase of plot and land made by the AKTA group, Liladhar Ukabhai Posiya or their family members residing at Desai Vadi, Teja Kala Plot, Jetpur holds 50% share along with AKTA group. Hence, out of total purchase of Rs.3,09,66,523/-, Rs.1,54,83,263/- was invested by Liladhar Ukabhai Posiya or their family members. Further, purchase deed No. 3293 dated 7.7.2010 for purchase of Mariyam Manjil Plot shows name of Priyesh Liladharbhai Posiya, who is a son of Liladhar Posiya. Also, we have communicated the details of holding of Liladhar Ukabhai Posiya or their family to Investigating authority on 5.4.2011 and 31.5.2011. Despite this fact, we are surprised that the Investigating authority has considered the full amount of above investment as our share only in cash flow statement prepared by them. On receipt of above stated information from us investigating authority could have initiated investigation / interrogation procedure against Liladhar Ukabhai Posiya and their family members. However, no such action has been taken. Further, when any of the above plot / land sold we have also taken proportionate receipt as cash inflow also capital gain is also calculated accordingly.” Page | 6 ITA No.364/RJT/2015 Akta Textile Printery (ii). On the basis of the above reply of the assessee and for the sake of and interest of natural justice, a summon was issued to the said person Shri Liladhar Ukabhai Posiya. In response to the said summons, he appeared in the office of assessing officer, on 25.02.2013 and on the same date, his statement was recorded. In the said statement, he categorically denied to have any business connection /investment partnership with the assessee members of the Ekta Group. He further admitted that, his son had jointly invested in Mariyam Manjil property along with four other members of the Ekta group and therefore, the share- holding of his son was 20%. In light of the above admission, a summons was issued to his son, Shri Priyesh Liladhar Posiya, and he was asked to remain present on 26.2.2013 along with complete books of accounts, copy of acknowledgement of return and copies of bank statement for the last 7 years. On 26.2.2013, Shri Priyesh Posiya attended and his statement was recorded. He was again asked about his investments in the above mentioned properties. He again clarified that, except for his joint investment in the property called Mariyam Manzil, there were no other investments jointly made by him with the members of the assessee- group. He was asked to specify the quantum of his investment in Mariyam Manzil and his share of investment. In reply to this, he stated that his investment was only to the tune of Rs.95,000/- which is 20% of the documented price and therefore, his stake was only 20% and that the same were duly reflected in his books. (iii). In light of the above development, a show cause notice was issued to the assessee highlighting the above facts and he was asked to show- cause as to why the investment shown in the name of Posiya should not be treated as the unaccounted investment of the members of the assessee group. In reply, the Id. AR of the assessee, vide his reply dated 12.3.2013 submitted as under, gist of which is reproduced below: Page | 7 ITA No.364/RJT/2015 Akta Textile Printery  That it was submitted to the Investigation Wing at the time of search itself but they failed to carry out further investigation in the matter. This aspect was being reiterated right from the date of search.  The cash flow statement was submitted to the Investigation Wing, and thereafter there was no communication from them.  No copy of the statement recorded of Shri Posiya and his son has been forwarded to the assessee.  Posiya and his son admitted 20% stake which worked out to around Rs.95,000/-. In that case, if disclosure has to be made on the basis of documented deed, the share of assessee ground would account for only Rs.3,80,000/- (which is balance 80% of the documented deed).  Though the evidences are found from our premises, however, some of the entries from such seized materials belong to Shri Posiya and family for which the members of the group had provided complete details to the Investigation Wing. Since the seized materials have to be read as a whole and as the members of the assessee group had disclosed all the items as per the seized materials, the investments shown as being made by Posiya should also be taken as such.  There is no collaborative evidence regarding income to source of the said portion of investment belonging to Posiya and his family, allegedly to have been made by the members of the group. (iv) However, the assessing officer rejected the contention of the assessee, observing as follows: “5a.3 The reply of the assessee has been considered but the same is not acceptable in view of the following: a. The contention that the Investigation Wing was appraised of the fact that part of the investments in various properties belonged to Posiya and that, in the cash flow submitted to the Investigation Wing the same has been duly shown, is Page | 8 ITA No.364/RJT/2015 Akta Textile Printery concerned, the same nowhere affects the assessment proceedings as both the investigation proceedings and assessment proceedings are two different proceedings. The above document was found from the premises of the assessee. According to section 132(4A), where any books of account, other documents etc are found in the possession or control of any person in the course of search, it may be presumed that the same belongs to the such person, that the contents of such document is true or that such asset belongs to the such person. Hence, the onus to prove that the same does not belong to the assessee, rests upon the assessee. This office verified the contention of the assessee at length by cross examining Posiya in the matter. However, he denied to have made any investment jointly with the members of the assessee group. Except the deed documents of Mariyam Manzil, in not a single property the name of any members of Posiya family appears. Had that been the case, then the benefit of doubt would have favoured the assessee. But that is not the case here. b. So far as the contention that no copy of statement recorded of Posiyas have been forwarded to the assessee is concerned, it is stated here that, the onus to produce the Posiya and his family was upon the members of the assessee group to establish their contention that the Poshiya family owned 50% of investment in some of the properties. However, in the interest of justice, an initiative was taken by this office to summon the Posiyas and record their statement. It is not a case where a statement of a third person is being utilized against the assessee. Had that been the case, then this office would have provided a copy of the statement. Therefore, the copy was not forwarded to the assessee. In any / case, forwarding of statement would not have discharged the onus cast upon the assessee. Therefore, the copy of statement of Posiyas was irrelevant to the assessee. c. So far as the contention that Posiya's son owned up 20% of the registered deed value as his investment and therefore, the assessee's investment should be taken at 80% of the registered deed only is concerned, the same is not acceptable, because there is a clear mention of investment to the tune of Rs.1.66 crores in the property known as Mariyam Manzil. When there is a clear evidence (which has been owned up fully by the members of the assessee- group), there is no question of adopting the value as per registered deed as the real value of the property. However, taking a judicious view in the matter, and also accepting the assessee's contention that seized materials have to be read as a whole, the share of investment of Posiyas in the property Mariyam Manzil is held at 20% of Rs.1,66,00,000/- i.e., Rs.33,20,000/-. To that extent, credit is given to the assessee. Therefore, the unexplained investment in the hands of the assessee group in Mariyam Manzil is taken at Rs.1,32,80,000/- only. d. However, during the course of assessment proceedings, the assessee also took a plea that, in one property, i.e. land at Pedhla 17/18, the registered document refers to one more person i.e., Shri Kishorbhai Vaghasia. His share is 25%. From the real value of the property as per the seized material, 25% value is attributed to as the investment of Shri Vaghasia, and credit for this should be given to the assessee. However, this contention is false. A scanned copy of page No. 15 is reproduced here below. On going through the cash flow statement vis-a-vis the seized page No. 15 of annexure A-6, it is seen that, the actual purchase price of Pedhla 17/18 was Page | 9 ITA No.364/RJT/2015 Akta Textile Printery Rs.105 lacs and sale price was Rs. 133 lacs, whereas, the same is taken at Rs.78.75 lacs and Rs 99.75 lacs in the cash flow. This means that, the Kishore Vaghasia factor has already been taken care of by the assessee themselves in their cash flow statement. Therefore, no further credit for this property, being investment of a third person outside the assessee group, is being considered. In short, wherever there is clear documentary evidence showing the investment of any third person, the benefit of the same has been given to the members of the assessee- group. d. So far as the contention that there is no corroborative instance of income in the hands of assessee group to fund the investments allegedly belonging to the Posiyas are concerned, it is stated here that, where there is definite evidence of unaccounted investment, there is no requirement to prove that there was unaccounted income. In fact, the onus in this regard is on the assessee to explain the source of investment and as he failed to explain the same, it has to be taken as acquired from unaccounted income. In fact, the admission of income for various years is only out of unexplained investment in properties. Therefore, the contention of the assessee to grant him the credit of investments lying in the name of Posiya is not accepted and it is held that, the entire investment purportedly shown to be belonging to the Posiyas, actually belonged to the members of the assessee group, which is evident from the registered sale deeds of the respective properties. 5b. Movement of cash appearing in the name of Madhavjibhai, Sureshbhai, Vipulbhai and Ajaybhai. (i). The assessing officer noticed that as per the seized materials, there are instances of cash payments to the above four persons. It is the contention of the assessee that, these persons were brokers of various properties in which the assessee group had made investments into and that, the sum of brokerage gets added up with the cost of property, which has been duly considered in the cash flow statement. Therefore, there is repetition. However, this contention was not accepted by the assessing officer, as, (1) it is nowhere gathered from the seized materials that these persons were brokers and (2) it is unbelievable that such a huge sum would portray as brokerage. Therefore, vide show cause notice of the assessing officer, dated 5.3.2013, the assessee was asked to explain, as to why the same was not included in his cash flow statement and that, Page | 10 ITA No.364/RJT/2015 Akta Textile Printery why the same should not be included in the cash flow statement and duly added to his total income. (ii) In reply, the assessee's AR vide letter dated 12.3.2013, submitted as under: “Regarding payment made to / received from persons Madhavjibhai, Sureshbhai, Vipulbhai and Ajaybhai, we once again state that those persons are broker only in the purchase / sale transaction of land / building done by Akta group. Payment made to / received from such person already covered in cost of purchase / sale proceeds. Merely because identity of brokers cannot be known from seized material amount cannot be considered in the cash flow. Further, we are ready to prove the identity of such persons at your satisfaction”. (iii). However, the assessing officer rejected the contention of the assessee and held that firstly, it is not known that these persons are brokers and secondly, it is unbelievable that such a huge sum amounting to Rs.1,74,60,000/-, Rs.16,00,000/-, Rs.8,79,000 and Rs.19,00,000/- shall represent brokerage. The amount of Rs.1,74,60,000/- does not even represent the value of any of the property purchased by the assessee group. Thus, when there are no properties of the value of this magnitude, how can the brokerage be so huge. Therefore, assessee`s contention was not accepted by the assessing officer and the same was held to represent investment of the assessee and hence, treated as income in the hands of the respective individuals. The assessing officer further noticed from page No. 15 of annexure FE-1 (A-6), which is scanned and placed above that, there is mention of both value of property and the payment made to either of the above persons. They are then totaled to work out the 'outflow' of the assessee, during that particular year. Therefore, the assessee's contention that the payment represents brokerage and they are included in the cost of property, was not correct. 5c. Marriage expenses Page | 11 ITA No.364/RJT/2015 Akta Textile Printery (i). During the assessment proceedings, the assessing officer noticed that Page No. 13 of annexure FE-1 (A-6) is a recording of marriage expenses of Rs.12,00,000/-. The assessee was asked to explain the same. The assessee submitted that the same was out of withdrawal in capital accounts of various persons and hence the same is not undisclosed income. However, the contention of the assessee was not accepted by the assessing officer because, the assessee had not stated as to such expenses were incurred for whose marriage, how is he related to various persons of the group, who has made the withdrawal, etc. Therefore, a show -cause notice was issued to the all the members of the assessee group, asking them to show cause as to why the same should not be treated as unexplained. (ii). In reply, the assessee, vide reply dated 12.03.2013, submitted as under: “Regarding marriage expenses of Rs. 12 lacs, we would like to state that the same is for the marriage of following persons. The same was incurred during financial year 2009-10. a. Rahul Vithalbhai Vadaliya b. Ashaben Nathabhai Vadaliya c. Vipulbhai Dhirubhai Harpal Out of the above persons, Shri Vipulbhai Dhirubhai Harpal is working with Akta group. Considering this, Akta group has also contributed for marriage expenses of him. The same is met out of withdrawal by members of the Akta Group from various concerns of the Akta group. Marriage expenses of Rs.12 lacs also includes expenses met out of cash gift received on the occasion of marriage. The list of such gift and withdrawal is enclosed herewith. Copy of capital account has already been submitted to your authority. (iii). However, assessing officer did not accept the contention of the assessee and noted that firstly, the marriage expenses claimed to have been incurred for an employee which is incurred out of withdrawals from Page | 12 ITA No.364/RJT/2015 Akta Textile Printery the capital account of the employer, should not be acceptable. Why would the employer, withdraw money from his capital account and incur marriage expenses of his employee, unless otherwise the source of such expense is from unaccounted sources. At the most, the assessee may give loan to his employee for marriage expenses, but never incur on his behalf. Secondly, on verification of the capital account, it is seen that the withdrawals are not huge enough to justify the household expenses as also take care of marriage expenses. Thirdly, the list of gifts received on marriage is only an afterthought. Therefore, the marriage expenses not included by the assessee in the cash flow is taken into account, into respective hands, and treated as unexplained expenditure and taxed accordingly.In light of the above, the cash flow statement submitted by the assessee was not accepted by the assessing officer and accordingly, necessary additions are made in the hands of the various assessee of the group for various years, on the basis of income or investment or expenditure, whichever is higher, on the basis of the above issues discussed supra, on the basis of their respective shares, as follows: Particulars of addition Income / investment shown by the assessee Addition Payments made to:- 1. Suresh Desai 2. Madhavjibhai 3. Vipulbhai Nil Rs. 1,74,60,000 Rs. 16,00,000 Rs. 8,79,000 Being payment made to various persons, claimed as brokerage expenses by the assessee but not accepted in view of the above discussion. The same is added in the hands of the firm because, the source of payment is the business income of the firm and also, no individual member of the assessee group had owned this up. Therefore, the assessing officer made the addition in the hands of the assessee to the tune of Rs.1,99,39,000/- ( Rs. 1,74,60,000 + Rs. 16,00,000 + Rs. 8,79,000). Page | 13 ITA No.364/RJT/2015 Akta Textile Printery 6. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before Ld. CIT(A), who has deleted the addition made by the assessing officer, observing as follows: “7.1 The facts of the case, submission of the appellant and the findings of the AO have been analyzed. On the basis of the seized material, the assessee group offered Rs.6.00 crore on account of investments in land and buildings during the course of search proceedings. The issue under consideration was related to the payments made to four persons i.e. Shri Madhavjibhai, Sureshbhai, Vipulbhai and Ajaybhai. The AO called for explanation of the assessee regarding nature of these transactions along with cash flow statement. The assessee submitted in his reply that the transactions represented the cost of purchase of land/building which comprised of the value of the property and the element of the brokerage of the brokers. All these persons acted as brokers between the assessee group and the sellers/buyers and charged their remuneration as brokerage. The consideration of the transactions in properties were routed through these persons. It was contented before the AO that the same explanation was submitted before the investigating authorities also in the post search enquiries. A request was made to the investigating authorities to cross verify the veracity of the submission from these persons, if they were not satisfied with the submission of the assessee. It was also communicated in writing to the investigation authority that the assessee group was ready to prove the correctness of their explanation. The same contention was also made, during assessment proceedings, before the AO. Copy of the reply dated 12-03-2013 was enclosed with the submissions. It appears that the AO did not consider the request of the assessee to cross verify his explanation and made addition of these transactions as unexplained expenditure. 7.2 The contents of the assessment order were also examined. The extract of the submission dated 12-03-2013 of the assessee, which the AO re-produced in Para II of Page 11 of the Assessment Order, was analyzed. As a matter of fact, it was observed that the extract was reproduced in a distorted, incoherent and deliberate manner which can be compared with the copy of the submission furnished by the appellant in the appeal proceedings. Both the extracts have been reproduced in para of this order. 7.3 The AO did not place on record any evidence to justify his presumption that the notings did not represent the payments, as claimed by the assessee, made for purchasing of land through these brokers which also included their brokerage. He treated these notings in the seized paper as unexplained investment of the assessee. 7.4 It was an undisputed fact that the contention of the assessee, regarding nature of the transactions mentioned in the seized material related to payments to the four persons as discussed above, was the same before the investigation authorities immediately after search and also before the AO. The assessee also proposed both before the AO as well as the investigation authority that if they were not satisfied with his explanation then the same should be cross verified by conducting enquiries from Shri Sureshbhai, Madhavjibhai, Vipulbhai and Page | 14 ITA No.364/RJT/2015 Akta Textile Printery Ajaybhai. It was revealed from the assessment order, the submissions of the assessee before the AO and also the submissions made in appeal proceedings that the AO did not carry out any enquiry before rejecting the submission of the assessee. It was duty of the AO to conduct further investigation to ascertain the veracity of the depth of truthfulness of the assessee's explanation and the real nature of the notings in the seized papers. Even after conducting such enquiry, the AO was of the view to make the addition the onus should have been shifted on the assessee to rebut the findings of the AO. There was nothing on the record which could indicate that the AO discharged his duty. It seems that the AO adopted a slipshod approach and jumped to a conclusion without gathering any material evidence on the record. The settled position of law is that no addition without any supporting evidence is sustainable in the law. 7.5 The facts of the case, submission to the assessee before the AO and in the appeal proceedings make it evident that the addition was made in a casual and ad hoc manner without controverting the submission of the assessee. He did not conclude it here only but also went to the extent that it was not believable that such a huge amount could be brokerage. The assessee at no stage of assessment proceedings submitted that the notings in the seized papers represented payment of brokerage. These intermingled findings of the AO lead to an unavoidable opinion that his act of making addition was factually and legally not justified. The onus upon the AO was conveniently presumed to be the onus of the assessee. It was a fact on record, which was made as a part of the assessment order also, that the assessee requested the investigation authority in the post search enquiries and also the AO in the assessment proceedings to cross verify his explanation with Shri Sureshbhai, Madhavjibhai, Vipulbhai and Ajaybhai regarding the nature of the transactions / notings in the seized papers. However, neither the investigating authority nor the AO took any step to verify the veracity of the explanation of the assessee which shows that the AO failed to discharge the onus upon him. In view of the above, in my considered opinion, the addition was not sustainable and accordingly deleted.” 7. Aggrieved by the order of Ld. CIT(A), the Revenue is in further appeal before us. 8. Learned Commissioner of Income-tax – Departmental Representative (Ld. CIT-DR) submitted that as per the cash flow statement which was based on seized material, the assessing officer made the addition. There were two cash flow statements, viz: (i) cash flow statement prepared by the assessee, which was submitted before the assessing officer, during the assessment proceedings, and (ii) another cash flow statement, which was prepared by the assessing officer, based on the seized material. Both the cash flow statements were not presented, by the assessee, before the Page | 15 ITA No.364/RJT/2015 Akta Textile Printery Bench, as these cash flow statements, were the foundations for making the addition, however, assessee has failed to produce his own case flow statement and the case flow statement prepared by the assessing officer, which were given to the assessee, during the assessment proceedings by the assessing officer. The ld CIT(A) did not discuss, about these cash flow statements, which were the basis for making addition in the hands of the assessee, however, the ld. CIT(A) adopted a different track and deleted the entire addition made by the assessing officer, without having examined both the cash flow statements and without giving any finding on both the cash flow statements. Therefore, in this situation, the matter may be remitted back to the file of the ld. CIT(A) with the direction to examine the both cash flow statements and then adjudicate the issue in accordance with law. The Ld. CIT-DR for the Revenue also submitted that all the arguments and discussions centered around the differences in the cash flow statements prepared by the Department(Assessing officer) on the basis of seized materials viz-a- viz the cash-flow statements submitted by the assessee ( prepared by the assessee) to the Department, post-Search. It is a matter of record that the assessee is not able to trace such cash-flow statements in its records. The ld DR further stated that there is no finding of ld. CIT(A) about marriage expenses. On merit, Ld. DR submitted that assessing officer has framed a reasoned and speaking order. Therefore, addition made by the assessing officer may be confirmed. 9. On the other hand, Learned Counsel for the assessee, defended the order passed by the learned CIT(A). The Ld Counsel also submitted before the Bench written submission, which we have considered. The ld Counsel stated that assessee has discharged its obligations to prove the transaction, therefore, order passed by the ld CIT(A) may be upheld. Page | 16 ITA No.364/RJT/2015 Akta Textile Printery 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We find merit in the submissions of Ld. DR for the Revenue to the effect that both the cash flow statements were not presented, by the assessee, before the Bench, as these cash flow statements, were the foundations for making the addition, however, assessee has failed to produce his own case flow statement and the case flow statement prepared by the assessing officer, based on seized material, which were given to the assessee, during the assessment proceedings by the assessing officer. The ld CIT(A) did not discuss, about these cash flow statements, which were the basis for making addition in the hands of the assessee, however, the ld. CIT(A) adopted a different track and deleted the entire addition made by the assessing officer, without having examined both the cash flow statements and without giving any finding on both the cash flow statements. We note that there is a finding of the assessing officer, vide para No.(5a) (i) of the assessment order, about investment in the name of one Shri Poshiya. During the assessment proceedings, the assessee was asked to explain, as to why the members of the group had excluded exact one half of the investments, in the working of cash flow statement. During the assessment proceedings, the assessing officer noticed that the cash flow statement, prepared by the assessee, covering the entire group of assessee did not explain / justify the seized materials / documents, on the basis of the seized materials, therefore, a cash flow statement was prepared by assessing officer, which was sent to the assessee, along with a show -cause notice, asking the assessee to show cause as to why his income should not be determined on the basis of the cash flow statement. Therefore, we find that these cash- flow statements, have a bearing on the Page | 17 ITA No.364/RJT/2015 Akta Textile Printery determination of taxable income of the assessee, which have been not considered by the learned CIT(A). 11. As per para No.5b of the assessment order, wherein the movement of cash appearing in the name of Madhavjibhai, Sureshbhai, Vipulbhai and Ajaybhai, were examined by the assessing officer and the assessing officer noticed that as per the seized materials, there are instances of cash payments to the above four persons. It is the contention of the assessee that, these persons were brokers of various properties in which the assessee group had made investments into and that, the sum of brokerage gets added up with the cost of property, which has been duly considered in the cash flow statement. Hence, we find that assessee also took the shelter by stating his own cash flow statement and argued before the assessing officer based on such cash flow statement, which was never examined by the Ld. CIT(A), and there is no finding of the ld. CIT(A), in respect of such case flow statement. Such cash flow statement never submitted before us also. We also find that ld. CIT(A) did not give any finding about marriage expenses also. We note that as per assessing officer the marriage expenses were not included by the assessee in the cash flow statement, therefore, marriage expenses were taken into account, into respective hands, by the assessing officer and treated as unexplained expenditure. In light of the above, the cash flow statement submitted by the assessee was not accepted by the assessing officer and accordingly, necessary additions were made in the hands of the various assessee of the group for various years, on the basis of income or investment or expenditure, whichever is higher, and on the basis of their respective shares. Therefore, we find that both the cash flow statements play a pivotal role, in the assessee`s case under consideration, which were ignored by the ld. CIT(A). The Ld. CIT(A) did not compare both the cash Page | 18 ITA No.364/RJT/2015 Akta Textile Printery flow statement. Considering these facts and circumstances, as narrated above, we are of the view, that entire lis should be remitted back to the file of the ld. CIT(A) for fresh adjudication. Therefore, we direct the ld. CIT(A) to consider both the cash flow statements and adjudicate the issue in accordance with. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the ld. CIT(A) to adjudicate the issue afresh on merits. For statistical purposes, the appeal of the Revenue is treated, as allowed. 12. In the result, the appeal of the Revenue is allowed for statistical purposes. Order is pronounced in the open court on 08/10/2024. Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot Ǒदनांक/ Date: 08/10/2024 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Rajkot "