TMI Blog2016 (8) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... ot form reason to deviate from the specific legislation hereinabove. We are further of the opinion that these FDRs in question have to be treated in the names of the specific investors therein who have already supported the impugned stand instead of holding the assessee as the real owner thereof merely because of the fact that the same have been found/seized from his premises in the course of search. We delete the impugned addition forming subject matter substantive ground. - ITA No.446/Ahd/2010, IT(SS) A Nos.164, 165, 166, 167, 168 & 169/Ahd/2011, ITA No.301/Ahd/2013 - - - Dated:- 22-8-2016 - SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER Appellants by : Shri Rajesh C. Shah Prof. Sampath, AR Respondents by : Dr. Banwari Lal, CIT(D.R.) O R D E R PER BENCH: 1. This is a batch of eight appeals. The assessee has filed IT(SS)A Nos.164 to 169/Ahd/2011 in assessment years 2000-01 to 2005-06 against a common order of the CIT(A)-II, Ahmedabad dated 13.12.2010 in appeal nos.CIT(A)-II/CC.4/387 to 392/2007-08 in proceedings under section 143(3) read with section 143A of the Income Tax Act, 1961 (in short the Act ). 2. Last ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The department was of the view that assessee s group concerns had indulged in unaccounted production and sale of Zari and zari woven fabrics followed by substantial unaccounted investments in high value machinery imported by undervaluing price thereof followed by deriving undeclared rental income therefrom. 6. We come to the relevant paper book filed before us. There is no dispute that this assessee submitted his return declaring additional income of ₹ 67,80,000/- . This declaration came with a caveat reading as under :- II. INCOME FROM OTHER SOURCES: Interest on NSC On ₹ 60,000/- for 6th year 11,586 On ₹ 40,000/- for 5th year 5,640 On ₹ 35,000/- for 4th Year 4,193 On ₹ 30,000/- for 2nd year 2,649 24,068 Interest on Bond 4,128 Interest on F.D. 99,312 Saving Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. We have heard both the parties. Case records and judicial precedents stand perused. We come to admitted facts first. The department commenced the impugned search operation in assessee s business preemies. And concluded the same on 03-10- 2008. This time span of 10 days involves four statements being obtained from Shri Patel (supra) inter alia disclosing unaccounted business income of ₹ 2.25 crores along with deemed dividend of ₹ 4 crores. We have extracted relevant portions thereof in preceding paragraphs. The same do not reveal any specific incriminating material unearthed in the course of search or thereafter highlighting unaccounted business income. The above stated disclosure statements are very much vague ones and conditional as well without verifying necessary books and records. The relevant array of questions forming part of the paper book are found to be not throwing light on any specific material with contents thereof; whatsoever. The same factual position continues in assessment, lower appellate order and in the course of arguments before us. It is not out of place to reiterate that we are dealing with the issue of impugned unaccounted business income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted later on. We hold in these facts the Assessing Officer and the CIT(A) have erred in making the above stated additions in assessee s as its unaccounted income. The same stands deleted. Other arguments narrated in preceding paragraphs have been rendered infructuous. ITA 78/Ahd/2012 succeeds. 9. It transpires that another co-ordinate bench of this tribunal in Suzlon Infrastructure Limited vs. ACIT ITA No.3761/Ahd/2008 decided on 17.04.2009 also adopted the similar view. We come to Revenue s case law now (supra). Hon ble Orissa high court therein dealt with the issue of revision of return by way of a revised statement rather than a revised return under section 139(5) of the Act after filing of the original return. The same is found as not germane to the instant issue. 10. We have given our thoughtful consideration to the Revenue s preliminary objection. It has come on record that assessee s disclosure hereinabove sought to be relied upon at Revenue s behest intends to cover all possible errors/omissions and also seeks refund of any excess sum (supra). We further take into account CBDT Circular itself dated 10.03.2003 as well as precedents hereinabove to reject the Revenue s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit convenience. Such a manufactured cash book cannot be accepted as an explanation. e. The cash book created after the search and seizure operations for the assessment does not mention the name of the party to whom sales have been made. Thus, the entries in the cash book are not verifiable. Therefore, the cash book cannot be accepted as a proper and genuine document in the case of the assessee. . . f. The assessee has failed to furnish his own cash-flow statement showing the cash held in his own hands. From the submission of the assessee, it is apparent that the assessee has failed to produce the personal cash balance. Thus, the explanation offered by the assessee is a considered and advised after-thought and is liable to be rejected. g. The assessee has admitted of having made unrecorded sales. Circumstantial evidences indicate that the found and seized cash pertains to these unaccounted sales made outside the books. The cash has been drawn from undisclosed sources. h. The relied cases of Kasturchand Said vs. ACIT (1997) 58 TTJ (Nag) 253, and Joint Commissioner of Income Tax vs. Budh Kishore (2004) 90 TTJ (Del) 410, are distinct because proper, acceptable and verifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue strongly supports the impugned addition to seek confirmation thereof. 16. We have heard rival submissions. The assessee strongly relies upon the search parties action returning an amount of ₹ 6,38,800/- in seeking to shift ownership of the same on his sister Smt. Rekhaben. He submits that his is a joint family residing in the same house; although on different floors. Smt. Rekhaben is stated to be a married lady. We put a specific question in the course of proceedings to learned authorised representative as to whether Smt. Rekhaben is assessed to tax, any evidence of her separation or receiving permanent alimony paid by her husband or any other material to prove her exclusive possession over the house portion in question. He fails to point out any relevant material on record or satisfy any of these queries. It is evident from panchnama forming part of the case file that the search party observed the sum in question of ₹ 6,38,800/- to be claimed by Smt. Rekhaben since found from her bedroom. There is no finding in this regard apart from this mere claim. We find no reason to interfere with the impugned addition so far as this sum of ₹ 6,38,800/- is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the FDRs do not belong to anyone else; 4. The assessee failed to explain the source of FDRs during the course of search assessment proceedings and kept silent on the issue for a period of more than 4 months; 5. Despite being served with innumerable letters and notices, the assessee did not reply and maintained a dilatory approach; 6. The assessee kept the Department in dark for more than 4 months and obstructed any inquiries into the genuineness and accountability of FDRs worth ₹ 1.76 crores; 7. At the fag-end of assessment proceedings, with less than 15 days left at the disposal of A.O., the assessee claimed that the FDRs did not belong to him, but to 128 different persons; 8. For the sake of fairness and in interest of justice, the assessee was requested to produce certain persons from the long-list of 128 persons ; 9. The persons presented by the assessee have been found to be daily wage labourers and persons of no means, earning near about ₹ 2,000 to ₹ 3,000 pr month. It cannot be accepted that 128 such small persons who find it difficult to meet both ends meet, made investments in FDRs to the tune of ₹ 1.76 crores. In other words, 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search assessment scope. The search party found and seized all the relevant documents from the assessee s residence. Both the lower authorities treated the same as assessee s unexplained investment for the reasons extracted hereinabove. We see no reason to agree with this course of action in view of specific provision in the Benami Transactions (Prohibition) Act 1988 specifically envisaging prohibition of the right to recover or defend any benami property as the finding section 2(c) therein to be a property of any client; moveable or immovable, tangible or intangible including any right or interest in such property. Both the lower authorities ignored operation of this specific legislation. The Assessing Officer admittedly treats the actual investors to be assessee s benamidars. He also relies upon in a catena of case law. We find that none of them deals with the above stated Benami Act hereinabove. We accordingly hold that the Revenue s arguments supporting the impugned addition on the basis of the lower appellate authorities finding, assessee s search statement and the fact that some of the impugned demand stands recovered from the FDRs in question does not form reason to dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 1,38,020/- have been made on construction and repairing. 22. The assessee claimed that the said purchases were made by Shri Nagindas Lapadia being at the helm of affairs using the firm s names. The Assessing Officer rejected this explanation inter alia by holding that the said firm stood directly benefited by the relevant transactions, the above stated plea was not supported by any material on record and the seized material proved aggregate unrecorded sales of ₹ 11,85,758/- to have been undertaken. This made the Assessing Officer to invoke section 69C of the Act for adding the impugned sum hereinabove. The CIT(A) confirms the same. 23. Learned counsel representing the assessee himself concedes that the impugned addition amount of ₹ 6,93,045/- stood unexplained as expenditure in the course of hearing before us. He confines his challenge to the remaining sum of ₹ 4,92,713/- by taking us to page no.541 of the paper book stating that the relevant figure therein amounting to ₹ 1,57,069/- is in the nature of sales and gross profit @ 5% could be estimated there upon. He seeks to make out a case of unrecorded sales being treated as expenses. We ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer in A.Y. 2006-07 on account of various additions i.e. accrued interest on FDRs of ₹ 9,56,181/-, cash sum addition of ₹ 9,48,000/- and ₹ 11,85,758/-; respectively. The AO treated all these additions as an act of concealment of taxable income under the above stated statutory provisions. 27. The CIT(A) relies on Hon ble High Court s decision in Bhagwan Das Naraindas., 98 ITR 194 (Gujarat) holding that FDRs are not assets being valuable things under section 132 of the Act. It has further come on record that we have already deleted this corresponding quantum addition. The impugned penalty qua the same therefore has no legs to stand. 28. We come to the remaining issues of unexplained cash of ₹ 9,48,000 and ₹ 11,85,758/- under unexplained expenditure respectively. It has come on record that the assessee has lead sufficient evidence in support of his claim which ultimately could not be accepted because of the fact that his sister Ms. Rekhaben could not prove to be owner of the cash component amounting to ₹ 6,38,800/-. Remaining sum issue stands remitted back to the Assessing authority for reconciliation. The law is very well settled ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
