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2015 (9) TMI 1182 - ITAT AHMEDABAD

2015 (9) TMI 1182 - ITAT AHMEDABAD - TMI - Disallowance of unexplained investment - CIT(A) deleted the addition - Held that:- In the facts and circumstances of the case, the CIT(A) has rightly observed that the assessee has discharged his onus fully by filing the complete details of bank transactions, name and address, Permanent Account Number, above all declaration on oath in shape of Affidavit wherein the said Party Rakesh Panchal H.U.F. has owned up the entire transactions of the Bank account .....

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himself was owning up all these transaction, there is no question of making addition of ₹ 58,01,339/- as unexplained investment. The addition made was therefore rightly deleted by CIT(A) - Decided in favour of assessee.

Disallowance of unexplained expenditure - CIT(A) deleted the addition - Held that:- We find that CIT(A) has rightly deleted the impugned addition by observing that the law is very clear that when the Assessing Officer has not found any evidence of assessee having .....

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ined the genuineness, capacity and creditworthiness of all the creditors and credits appearing in bank account. After verifying and satisfying themselves, the Auditors had finally given their opinion that income earned in the above 10 concerns/persons from mutual funds, share investment and other income. Thus all other bank entries and credits therein stand clearly explained and could not be considered as unexplained. In view of this, the addition made deserved to be deleted. - Decided in favour .....

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aised by the Revenue are as under :- ITA No.953/Ahd/2011 for Asst. Year 2002-03: 1. The CIT(A)-XIV, Ahmedabad erred in law and on facts in deleting the disallowance of ₹ 58,01,339/-made by the Assessing Officer on account of unexplained investment. 2. The ld. CIT(A) has erred and on facts in deleting the disallowance of ₹ 1,20,670/- made by the Assessing Officer unexplained expenditure. 3. On the facts and in the circumstances of the case, the ld. CIT(A)-XIV, Ahmedabad ought to have .....

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medabad ought to have upheld the order of the Assessing Officer. 3. It is, therefore, prayed that the order of the ld. CIT(A)-XIV, Ahmedabad may be set aside and that of the Assessing Officer be restored. 2. First we take up ITA No.953/Ahd/2011 for AY 2002-03 wherein the first ground relates to disallowance of ₹ 58,01,339/- made by the Assessing Officer on account of unexplained investment. 2.1 The facts of the case are that the assessee company is engaged in the business of manufacturing .....

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sed the particulars of case as detailed at para 3 of his order as under :- "The assessee had filed an application on 22-06-2006 u/s. 245C'before the settlement commission for Assessment Year 2005-06. While doing so the assessee had also requested the commission to re-open proceedings for Assessment Year 2001-02 to 2004-05 u/s, 245E of the Act for the proper disposal of the settlement application. The assessee had disclosed an amount of ₹ 53,00,000/- for the Assessment Year 2002-03 .....

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mmission. The assessee thereafter filed a SCA before the Hon'ble Gujarat High Court. The Hon'ble Gujarat High Court vide order dated 08-05-2008 directed the Assessing- Officer not to proceed with the assessment 'proceedings to the extent of income, which was surrender before the settlement. In view of the order of the Hon'ble Gujarat High Court assessment proceedings to the extent of income surrendered before the Settlement Commission is not being proceeded with.". . Thereaf .....

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department Accordingly the assessee was asked to show cause as to why this entire deposit should not be added back to the hands to the company as unexplained investment/money of the assessee. The assessee vide letter dated 18-08-2010 furnished its reply. The assessee stated that the bank account was never operated by the assessee directly or indirectly. The assessee furnished a copy of the PAN card of Shri Rakesh I. Panchal HUF. The assessee also furnished the return of income of the HUF for Ass .....

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basis Shri Panchal would act as conduit of the assessee but would not act so through the HUF." After considering the detailed submission given by the assessee including Affidavit filed by the said person, the Assessing Officer by producing various decisions observed as under: "After going through the submission made by the assessee, the bank account of the relevant assessment year, the surrounding facts and circumstances of the case and inter alia the decision of the Hon'ble Supre .....

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are made. I have carefully perused the submissions made by the appellant. Based on the details filed it transpires that the Assessing Officer has made the addition based on the fact that the assessee had. filed a Petition before Hon'ble Settlement Commission wherein income. generated from 10 different concerns were owned up by the assessee. Ihe TO names include one Rakesh Panchal & Others.. .The assessee has owned up income of Rakesh Panchal, Individual and his wife Hema Rakesh Panchal a .....

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an Affidavit 'ctearfy mentioning as under: "I, the Undersigned ML RakeshPanchals/o IshwarfatPanchaldo hereby sfafe and confirm that the Bank Account with Catholic Syrian Bank Ltat, Ashram Road Branch, Ahmedabad in the name of Rakesh I. Panchal-HUF having Bonk A/c. Mo, 000400 and' alt the transactions apjiearing in that Bank statement for the period from 01.04.2001 to 31.03.2002 of that Bank account are solely belongs to me in the representative Capacity as Karta of Rakesh I. Pancha .....

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firm that the above referred Bank A/c. No.000400 is purely pertains to my HUF and Unipon( India] Limited is no any way concern with the said Bank Account . 5. Once the Affidavit is sq, clearly confirming that all the transactions belong to the H.U.F. of Rakesh Panchal and not to the appellant, the Assessing Officer had power to issue summons and examine the person if he had still any doubt. However, the Assessing Officer has not considered all these details filed by the appellant company includi .....

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ta of H.U.F. for cross examination. In my view the assessee has discharged his onus fully by filing the complete details of bank transactions, name and address, :P.A; No above all declaration on oath in shape of Affidavit wherein the said Party Rakesh Panchal HUF has owned up the entire transactions of the Bank account. It is for the Assessing Officer of Rakesh Panchal HUF to verify as to why there is no income generated from several transactions in the bank account or for that matter conduct ot .....

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evenue being aggrieved is in appeal before the Tribunal. 2.3 The ld. Departmental Representative relied on the order of Assessing Officer. On the other hand, the ld. Aauthorised Representative supported the order of CIT(A). 2.4 After considering the rival submissions and carefully going through the material on record, we find that in the facts and circumstances of the case, the CIT(A) has rightly observed that the assessee has discharged his onus fully by filing the complete details of bank tran .....

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the books have been owned up before the Settlement Commission and these transactions of Rakesh Panchal HUF are not owned up before the Settlement Commission and before the Assessing Officer the said person himself was owning up all these transaction, there is no question of making addition of ₹ 58,01,339/- as unexplained investment. The addition made was therefore rightly deleted by CIT(A). There is no infirmity in CIT(A) s order. Therefore, we uphold the same. 3. The second ground of the .....

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amp; Investments. The assessee was asked to show cause as to why expenditure incurred on payment to Shroff on cheque discounting should not be treated as unexplained expenditure. The assessee vide letter dated 19.8.2010 stated that it did not deny discounting of cheque by the Shroff but submitted that it had not incurred any additional expenditure on such cheque discounting. The provisions of section 69C are merely clarificatory and embody a rule of evidence which is otherwise quite clear. This .....

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the totality of surrounding facts and circumstances have to be considered. Payment to Shroff is on undisputed practice of cash discounting. Therefore, a sum of ₹ 1,28,670/- i.e. @ 0.5% of the value of recovery from debtors is added back in to the hands to the company as unexplained expenditure u/s 69C. 3.2 Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee made submissions and also relied on the decision of the Tribunal in the case of Shanti Ram Mehta vs. .....

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not be sustained -Held, yes. The CIT(A) after considering the submissions of assessee deleted the addition by observing as follows :- 7. I have carefully gone through submissions made by the appellant company and also the addition made by the Assessing officer. It is apparent from the order that the Assessing Officer has no basis, no material except the presumption that when the assessee has received ₹ 2.57 crores from various Sundry Debtors by way of cheques and drafts which were discoun .....

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ion made only on presumption and suspicion cannot be made u/s 69C. The addition of ₹ 1,28,670/- is accordingly deleted. The Revenue being aggrieved has come in appeal before us. 3.3 The ld. Departmental Representative relied on the Assessing Officer s order whereas the ld. authorized representative supported the CIT(A) s order. 3.4 We have considered the rival submissions and carefully gone through the material on record. We find that CIT(A) has rightly deleted the impugned addition by obs .....

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w we take up ITA No.993/Ahd/2011 for AY 2005-06 where the sole issue is in respect of deletion of disallowance of ₹ 56,61,60,657/- made by the Assessing Officer on account of unexplained cash credits u/s 68 of the Act. 5.1 The facts of the case are that addition of ₹ 56,61,60,657/- was made by the Assessing Officer considering all the entries in all the bank accounts as unexplained cash. This particularly happened because as mentioned in the original submission notice was issued on 8 .....

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d to the assessee. The Assessing Officer had admitted and accepted that the Special Tax Audit had been conducted and Special Auditor had given his report with regard to explanation of all the entries. There was no further adverse comments of the Assessing Officer. The assessing being aggrieved carried the matter before the CIT(A). 5.2 The CIT(A) after considering the submissions of assessee deleted the addition by observing as under :- I have gone through the assessment order, detailed submissio .....

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he entries appearing in different bank accounts of 10 concerns/persons are unexplained income of the appellant company or not. For this there cannot be a better proof and evidence than the exhaustive Audit Report submitted by the Chartered Accountants, Pramod Kumar Dad & Associates, who was appointed u/s 142(2A) of the Income-tax Act. The said Auditors have examined all the bank accounts in great minute details. Such auditors have also examined various books of accounts maintained like cash .....

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uineness, capacity and creditworthiness of all the creditors and credits appearing in bank account. After verifying and satisfying themselves, the Auditors have finally given their opinion on page 22 of the Report that income earned in the above 10 concerns/persons from mutual funds, share investment and other income, are of ₹ 68,55,384/-. Thus all other bank entries and credits therein stand clearly explained and cannot be considered as unexplained. In view of this, the addition made of & .....

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₹ 72,00,000/- inter alia includes such income of ₹ 68,55,384/- suggested by the Special Auditor and therefore, there is not case and justification to make any separate addition in the income of ₹ 68,55,384/-. In view of this, the entire addition made by the Assessing Officer of ₹ 56,61,60,657/- is deleted. 5.3 Being aggrieved with this order of CIT(A), the Revenue is in appeal before us. 5.4 The ld. DR supported the Assessing Officer s order and submitted that CIT(A) has .....

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