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2015 (10) TMI 816 - ITAT AHMEDABAD

2015 (10) TMI 816 - ITAT AHMEDABAD - TMI - Validity of reopening of assessment - Held that:- Information in the shape of communication made by DCIT, Central Circle 2(1) is specific and clear demonstrating the modus operandi of L.T. Shroff and Group. The name of B D Ashokbhai is available in the list resemble with the assessee and, therefore, Assessing Officer can reasonably harbour a belief that income belonging to the assessee has escaped from taxation. Therefore, he has rightly reopened the as .....

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ent year 1947-48 has observed that, if the opportunity to cross-examine the witness upon whose statement reliance is being placed was not granted, then, that statement recorded behind the back of assessee cannot be used in evidence. According to the department, it is possessing a diary which contains names of different individual/office/firms who had either deposited the money with LT Shroff or availed loan facility. Now, the evidence which we have extracted above nowhere gave a pointer towards .....

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by assessee. The assessee repeatedly asked to bring the author and give him an opportunity to cross-examine. If that man is not traceable, then it does not mean that assessee would be deprived of his right to verify how his name has been mentioned in the alleged diary. When he has no alleged connection with L.T Shroff, the department ought to have collected some other corroborative evidences which can establish the nexus or link between the assessee and L. T Shroff. The evidence collected by the .....

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lause III would indicate that in case it is proved that assessee has concealed particulars of income or furnished inaccurate particulars then, in addition to taxes, if any, payable by him, a sum which shall not be less than but which shall not exceed the three times of the amount of taxes sought to be evaded by reason of concealment of particulars of income will be payable by the assessee. In the present case, we have deleted the quantum addition, therefore, the charge against the assessee of ev .....

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/Ahd/2005 and ITA No. 591/Ahd/2005 are directed at the instance of Shri Ashokkumar bhailal Chokshi against the orders of Ld. Commissioner of Income Tax (Appeals) dated 29-10-2004 and 14-12-2004 passed for Assessment Year 1995-96 and 196-97. ITA Nos 562/Ahd/2005 and 512/Ahd/2006 are directed by M/s. Chokshi Bhailal Dahyabhai & Co., a firm, wherein Shri Ashokkumar bhailal Chokshi is a partner, against the orders of Ld. Commissioner of Income Tax (Appeals) dated 29-10-2004 and 21-01-2012 passed .....

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re not in consonance with rule 8 of ITAT Rules, 1963, they are descriptive and argumentative in nature. 3. In brief, the grievance of the appellants revolves around two issues namely; (a) ld. Assessing Officer has erred in issuing notice u/s. 148 for reopening of the assessment (b) ld. Commissioner of Income Tax (Appeals) has erred in confirming the additions of ₹ 7,90,000/- in Assessment Year 1995-96 (ITA No. 489/Ahd/2005), ₹ 14,80,000, Assessment Year 1996-97 (ITA No. 591/Ahd/2005) .....

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a diary containing ledger accounts of various parties showing entries of payment from the period 01-04-1994 to 25th May, 1995 was found. On the basis of this diary ld. Assessing Officer has calculated a payment by Shri Ashokbhailal of ₹ 61,25,700/-. This payment is between the dates 08- 11-1994 up to 23rd March, 1995. He made an addition of this amount in Assessment Year 1995-96. In the case of the firm, ld. Assessing Officer made additions of ₹ 61,25,700/- in Assessment Year 1995-96 .....

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,90,000/- in the hands of firm. All these three additions are being impugned in respective appeals. The facts on all vital point are common, therefore, for the facility of reference we are taking up facts mainly from ITA No. 489/Ahd/2005 in the case of Shri Ashokbhailal Chokshi. If we notice any new fact in any other appeal which has a significance, then, we will make a reference to that aspect also at the relevant stage. 6. The brief facts of the case are that Shri Ashokbhailal Chokshi is an in .....

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30/-. This return was processed u/s. 143(1)(a) of the income tax act, 1961 on 28th February, 1996. On first of July, 1995, FERA Authorities (Foreign Exchange Regulation Authorities) had carried a search at LT Shroff of Group at Suthar Chal, Javeri Bazar, Mumbai. Subsequently, a search u/s. 132 of the income tax act was also carried out at various business/residential premises of the LT Shroff Group by the income tax department. Statement of Shri Kalpesh Thakkar who was managing business by LT Sh .....

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ding, Mithakali, Ahmedabad and Zaveri Bazar, Mumbai. Apart from doing this, business of taking money on interest and giving advances on interest in cash, the group was also providing services of courier of cash to various clients by charging nominal sum. Such cash used to be transferred by the group on behalf of the clients between any of its branch situated at Modesha, Ahmedabad and Mumbai. The statements of various persons in this group were recorded at different places and at different times. .....

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issued notice u/s. 148 of the income tax act which was duly served upon the assessee on 23rd January, 2001. The Assessing Officer thereafter issued a notice u/s. 143(2)/142(1). 7. The first fold of the grievance of the assessee is that ld. Assessing Officer has erred in reopening the assessment by issuance of a notice u/s. 148 of the income tax act. With the assistance of ld. counsel for the assessee, we have gone through the record carefully. Section 147 of the income tax act contemplates that .....

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r concerned. The emphasis of the appellant is that Assessing Officer which was not possessing any concrete information which has a direct nexus with the escapement of income in the case of the assessee. The material possessed by the Assessing Officer is of such a nature, which can only give rise to suspicion and, therefore, he was not justified to reopen the assessment. On the other hand, ld. Departmental Representative relied upon the orders of revenue authorities below. 8. On due consideration .....

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s u/s. 148 of the income tax act. We do not find any merit in this fold of contention. 9. In the next fold of grievance, the appellants are impugning addition of ₹ 7,90,000/- in the case of Ashokbhailal Chokshi, Assessment Year 1995-96, and ₹ 53,35,700/- and ₹ 1,48,000/- in the case of M/s. Chokshi Bhailal Dahyabhai and Co. for Assessment Year 1995-96 and 1996-97. 10. As observed earlier, the FERA authorities have seized a cash book from Mumbai office of LT Shroff Group. This d .....

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against the debiting the cash book, the account of Manek Chawk office used to be credited instead of crediting the party. On perusal of seized material, Ld. Assessing Officer formed an opinion that in the financial year 1994-95 relevant to 1995-96, the assessee has deposited a sum of ₹ 61,25,700/- on different dates from 08-11-1994 to 21-03-1995. He confronted the assessee to explain the source of these deposits with LT Shroff Group. The assessee filed reply vide letter dated 18-03-2002. .....

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e was not apprised the author of the diary and he was not allowed to cross examine the author. The ld. Assessing Officer concluded that sufficient evidence was found by the search party demonstrating that LT. Shroff was carrying out this activity in an organized manner. The name of the assessee reflects in the list of persons at serial no. 19. The ld. Assessing Officer has reproduced the statement of Shri Kallpesh Takkar recorded by the income tax authorities u/s. 132. He ultimately made an addi .....

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y has observed that the firm had made a payment of ₹ 53,35,700/- and therefore, to this extent it is to be confirmed in the firm. The relevant finding of the Commissioner of Income Tax (Appeals) in the case of Shri Ashokbhai Chokshi Assessment Year 1995-96 is worth to note. "9. The submissions of the appellant and contentions of the A.O. have been considered along with the facts and circumstances of the case. It is true that the A.O. has utilized the evidences gathered from the premis .....

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eposited unaccounted money with them. The A.O. has stated that Shri Kalpesh Thakker had identified some parties on the basis of the notings in the said diary and some of them disclosed the amounts as their income under VDIS. 10. It may also be necessary to mention here that after the search action the L.T. Thakker Group claimed to have closed down their business and the present A.O. having jurisdiction over the Thakker Group has informed that Shri Kalpesh Thakker is not traceable. The Commission .....

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pellant has primarily raised only technical objections. On the other hand, the person who was a party to the transactions and whose evidence is very important to the issue involved has become untraceable. The Courts including the Apex Court have held that taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by apply the test of human probabilities. [Sumati Dayal vs. CIT, 214 ITR 801 at page No. 805]. 12. From caref .....

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ellant firm. On three dates which are 8.11.1994, 25.11.1994 and 08.12.1994 total amount of ₹ 7,90,000/- was paid to L.T. Thakker by Shri Ashokbhai and not by B.D. or B.D. Ashokbhai. In the circumstances, the argument of the appellant that the payments, if any, were made by B.D. and not by him, is not fully acceptable. Name of the appellant is clearly appearing in respect of payments of ₹ 1,50,000/-, ₹ 1,40,.000/- and ₹ 5,00,000/- on 08.11.1994, 25.11.1994 and 08.12.1994 r .....

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eleted." 12. With the assistance of Ld. representatives, we have gone through the record carefully. The sole question for our adjudication is, whether department was able to lay its hands on a conclusive evidence demonstrating the fact the assessee, Ashokbhai/the firm made deposits with L.T. Shroff group which would have given interest income. Before we evaluate the evidence and its reliability according to the Evidence Act, we deem it appropriate to have a look on the quality of evidence. .....

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Transfer Credits Rs. 08-11-1994 150,000/- 09-11-1994 350000/- 19-11-1994 499700/- 23-11-1994 200000/- 25-11-1994 140,000/- 26-11-1994 200000/- 08-12-1994 500000/- 10-12-1994 325000/- 16-12-1994 375000/- 09-01-1995 800000/- 20-01-1995 240000/- 21-01-1995 270000/- 27-01-1995 300000/- 02-02-1995 300000/- 16-02-1995 220000/- 08-03-1995 500000/- 20-03-1995 266000/- 21-03-1995 290000/- 21-03-1995 200000/- 24-04-1995 280000/- 27-04-1995 500000/- 03-05-1995 700000/- 13. This entry was explained by the r .....

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tel (O) 6421122 Harshadbhai Classic Gold, Navrangpura, (R) 6423837 Ahmedabad P.D. (Abhokbhia, Bhailal Manekchowk Duhjabhai Ahmedabad Subhashbhai Shah 7th Floor, Hemkut Building (O) 6584546 (Multiple Cap Stock) Nr. Ghandigram Railway 6580228 Station, Ahmedabad (R) 6620269 417001 Chimanbhai Agrawal Blue Star Building, (O) 46698 High Cort Crossing, erd Floor Ahmedabad 14. When assesssee was confronted with this evidence then he filed a letter dated 21st March, 2002 which is available on the page 60 .....

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neither any signature on the copy of transactions as alleged by your honour in my name and further your honour have also shown me various papers from the records of the L.T. Shroff Group which are also not signed by anybody and therefore there is no authenticity of the said papers and therefore no cognizance can be taken under the provisions of the Indian Income tax Act and therefore my statement recorded on the basis of the unauthenticated information deserves to be ignored and no assessment a .....

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r Bhailal Chokshi) 15. Similarly, he wrote a letter dated 18th March, 2002. The relevant part of this letter is also worth to note: "From: Ashokkumar Bhailalbhai Chokshi 2342/1 Manek Chowk, Ahmedabad 18-03-2002 To The Income Tax-officer, Ward 3(2) Ahmedabad Dear Sir, Reg: Compliance of notices u/s. 143(2), 142(1) and Show-cause notices dated 08-03-2002 x x x x x x x x x x x x On perusal of your above show cause notice, it is alleged that diary was seized and transactions are noted in the sa .....

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rtment. x x x x x x x x x x x x Thanking you, Yours faithfully Sd/- ( Ashokkumar Bhailalbhai Chokshi ) Encl: As above" 16. On a perusal, the above evidence vis-à-vis the stand of assessee, we are of the view that Hon ble Supreme Court way back 1980 in the case of Kishanchand Chellaram vs. Commissioner of Income Tax reported in 125 ITR 713 dealing with an assessment year 1947-48 has observed that, if the opportunity to cross-examine the witness upon whose statement reliance is being p .....

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assessee in clinching way. We have reproduced the explanation of Kalpesh Takkar given in his assessment proceedings. We find that as far as assessee is concerned, it only say B.D. Abdullal Dhujibhai Manek Chowk. Against all the other concerns, their office telephone no. residence phone no. were being mentioned. There is no corroborative evidence apart from this explanation of L.T. Shroff. This is a diary written by a third person found at the premises of the third person. It was not written by a .....

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artment is not worthy of credence, more particularly in view of the judgment of Hon ble Supreme Court in the case of CBI vs. V.C. Shukla & others reported in 1998 35 SSC page 410. There is no independent evidence on the record, therefore, we are of the view that addition with the help of this much information can not be made. We allow all the three appeals and delete the additions. 17. As far as ITA No. 512/Ahd/2006 is concerned, in this appeal, the grievance of the assessee is that Ld. Comm .....

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. (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the of course of any proceedings under this Act, is satisfied that any person (a) and (b)** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i)and (Income-tax Officer,)** ** ** (iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less .....

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