The ACIT, Central Circle-2,, Baroda v. Shri Jayendra R.Shah,, Baroda

ITSSA 312/AHD/2004 | misc
Pronouncement Date: 29-10-2010 | Result: Partly Allowed

Appeal Details

RSA Number 31220516 RSA 2004
Assessee PAN AFOPS8122A
Bench Ahmedabad
Appeal Number ITSSA 312/AHD/2004
Duration Of Justice 5 year(s) 11 month(s) 10 day(s)
Appellant The ACIT, Central Circle-2,, Baroda
Respondent Shri Jayendra R.Shah,, Baroda
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 29-10-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 29-10-2010
Date Of Final Hearing 21-10-2010
Next Hearing Date 21-10-2010
Assessment Year misc
Appeal Filed On 19-11-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI T K SHARMA JM & SHRI A N PAHUJA AM IT(SS)A NO.312/AHD/2004 WITH C O NO.346/AHD/2004 [BLOCK PERIOD: 01-04-1995 TO 20-09-2001] ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE- 2 BARODA V/S SHRI JAYENDRA R SHAH 41 CHAROTAR SOCIETY OLD PADRA ROAD BARODA [PAN: AFOPS 8122 A] [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI K R MEGHWAL DR ASSESSEE BY:- SHRI MILIN MEHTA AR O R D E R A N PAHUJA: THIS APPEAL FILED BY THE REVENUE AND CROSS- OBJECTION[CO] BY THE ASSESSEE DIRECTED AGAINST AN O RDER DATED 23 RD AUGUST 2004 OF THE LD. CIT(APPEALS)-IV AHMEDABAD RAISE THE FOLLOWING GROUNDS:- IT(SS)A NO.312/AHD/2004 1. THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.15 00 000/- MADE ON AC COUNT OF UNACCOUNTED INVESTMENT IN RESIDENTIAL HOUSE AT 8-9 MEGHDHANUSH SOCIETY. 2. THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.20 00 000/- MADE ON AC COUNT OF UNACCOUNTED INVESTMENT IN RESIDENTIAL BUNGALOW AT 4 1 CHAROTTAR SOCIETY. 3. THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.15 00 000/- MADE ON AC COUNT OF UNDISCLOSED INCOME RECEIVED FROM BOPAL LAND. AFTER CONFIRMING THE ADDITION TELESCOPING IS POSSIBLE. 4 THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON THE FAC TS OF THE CASE IN DELETING THE SURCHARGE LEVIED IN SPITE OF THE SPECI FIC PROVISION CONTAINED IN PARAGRAPH-A OF PART -I OF THE FIRST SC HEDULE RELATING TO/ SURCHARGE ON INCOME TAX OF THE FINANCE ACT 2000. IT(SS)A NO.312/AHD/04 WITH CO NO.346/AHD/04 2 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. C.I.T.(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. ON THE A BOVE POINT. 6. IT IS THEREFORE PRAYED THE ORDER OF THE LD. C. I.T.(A) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. C O NO.346/AHD/2004 1 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN FACT AND IN LAW IN REJECTING THE CONTENTION OF THE APPEL LANT THAT THE AO HAS ERRED IN FACT AND IN LAW IN INVOKING THE PROVIS IONS OF CHAPTER XIV B OF THE INCOME TAX ACT 1961 (THE ACT) BY VI RTUE OF A NOTICE U/S 158 BC WHICH IS DEFECTIVE IN ITS FORM AND CONTE NTS. IT IS MOST RESPECTFULLY SUBMITTED THAT THE NOTICE I SSUED U/S 158 BC OF THE ACT IS DEFECTIVE IN ITS FORM AND CONTENTS AND T HEREFORE THE ENTIRE PROCEEDINGS UNDER CHAPTER XIV B INITIATED BY THE DE FECTIVE NOTICE IS VOID AB INITIO AND IT MAY BE SO HELD AND THE ASSESS MENT BE ANNULLED. 2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FACT AND IN LAW IN CONFIRMING AN ADDITION OF RS.5 00 000 /- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN RESIDENTIAL PREMISES. THE AO HAD MADE THE ADDITION PURELY ON THE BASIS OF ASSUMPTIONS SU RMISES AND CONJECTURES. 3 YOUR RESPONDENT CRAVES RIGHT TO ADD TO OR ALTER AMEND SUBSTITUTE DELETE OR WITHDRAW ALL OR ANY OF THE ABOVE GROUNDS CROSS OBJECTION. 2 ADVERTING FIRST TO GROUND NOS.1 TO 3 IN THE APPEA L OF THE REVENUE AND GROUND NO.2 IN THE CO FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT A SEARCH U/S 132(1) OF THE INCOME T AX ACT 1961 [HEREINAFTER REFERRED TO AS THE ACT] WAS CONDUCTE D IN THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE ON 20-09-2001 WHEREIN CERTAIN INCRIMINATING DOCUMENTS WERE SEIZED. CONSEQ UENTLY A NOTICE U/S 158BC OF THE ACT WAS SERVED ON THE ASSESSEE O N 06-05-2002 ASKING HIM TO FILE HIS RETURN FOR THE BLOCK PERIOD WITHIN 30 DAYS OF RECEIPT OF THE NOTICE. HOWEVER THE ASSESSEE FILED THE RETURN DECLARING UNDISCLOSED INCOME OF RS.1 00 000/- ON 19 -06-2002. THE AO NOTICED THAT THE ASSESSEE IN HIS STATEMENT RECO RDED ON 21-09- IT(SS)A NO.312/AHD/04 WITH CO NO.346/AHD/04 3 2001 U/S 132(4) OF THE ACT DECLARED UNDISCLOSED INC OME IN THE FOLLOWING TERMS:- ' I ADMIT THAT MY FAMILY HAS EARNED UNACCOUNTED INCOM E WHICH IS NOT DISCLOSED IN OUR REGULAR BOOKS OF ACCOUNTS. THE MODUS OPERANDI OF EARNING SOURCE OF UNDISCLOSED INCOME WAS/IS MAINLY FROM LAND DEALINGS BRIGHT PLAY CENTRE/CONSTRUCTION AC TIVITIES ETC. BASED ON THE ABOVE I ADMIT ON OATH THAT APPROX. RS.54 LACS IS T HE AMOUNT OF UNDISCLOSED INCOME IN WHICH I AM READY TO PAY DUE T AXES IN MY/OUR BLOCK RETURN OF UNDISCLOSED INCOME. THE UNDISCLOSED INCOME OF RS.54 LACS ARE/WERE INVES TED IN THE UNACCOUNTED INVESTMENT IN OUR TWO RESIDENTIAL PROPE RTIES SITUATED AT 41 CHAROTTAR SOCIETY & 8-9 'SUR' MEGHDHANUSHA SOCIET Y AGG. RS.35 LACS TOWARDS COST OF CONSTRUCTION FURNITURE 7 FIXTURES FARM HOUSE ETC. WHICH ARE NOT ACCOUNTED FOR IN THE REGULAR HOOKS. MOREOVE R RS.19 LACS IS THE UNACCOUNTED INVESTMENTS/EXPENDITURES NOT RECORDED I N THE BOOKS INCLUDING THOSE LYING AS PER SEIZED PAPERS/BOOKS. I THEREFORE ADMIT UNDISCLOSED INCOME OF RS.54 LAC S. THERE ARE NO LIABILITIES OR OTHER THING TO BE DEBITED/CREDITED A GAINST THE INCOME OF RS.54 LACS AS UNDISCLOSED INCOME.' 2.1 SINCE THE ASSESSEE DID NOT HONOUR HIS AFORESAI D STATEMENT GIVEN ON OATH BEFORE THE AUTHORIZED OFFICER WHILE D URING THE SEARCH VERY COSTLY FITTINGS AND FURNITURES/FIXTURES WERE N OTICED IN THE RESIDENTIAL HOUSES OWNED BY THE ASSESSEE AND HIS FA MILY MEMBERS AS REVEALED FROM VIDEOGRAPH OF THE RESIDENTIAL HOU SES AT 41 CHAROTTAR SOC. AND 8-9 MEGHDHANUSH SOC. OLD PADR A RD BARODA AND AS PER INVENTORY PREPARED BY REGISTERED VALUER A COPY OF WHICH WAS ALSO PROVIDED TO THE ASSESSEE VIDE LETTER DATED 17-10-2003 THE AO SOUGHT INTER ALIA DETAILS OF PURCHASE OF PROPE RTY AND COST OF CONSTRUCTION ETC. ALONG WITH SUPPORTING BILLS. IN R ESPONSE THE ASSESSEE SUBMITTED THAT SINCE RESIDENTIAL PROPERTY AT 8-9 MEGHDHANUSH SOCIETY WAS OWNED BY SHRI SMIT J. SHAH AND SAUMIL J. SHAH THE RELEVANT DETAILS WOULD BE PROVIDED IN THEIR ASSESSMENTS. RE GARDING 41 CHAROTTAR SOCIETY THE ASSESSEE SUBMITTED THAT THE ASSESSEE AND HIS S POUSE WERE CO-OWNER OF THIS HOUSE WHICH WAS PURCHASED BY THEM WITH FURNITURE/FI XTURES AT A TOTAL COST OF RS.38 65 530/-. OVER AND ABOVE THE ASSESSEE DECLAR ED UNDISCLOSED INCOME OF RS.20 LACS TOWARDS THIS HOUSE . HOWEVER THE AO DI D NOT ACCEPT THE SUBMISSIONS IT(SS)A NO.312/AHD/04 WITH CO NO.346/AHD/04 4 OF THE ASSESSEE ON THE GROUND THAT DISCLOSURE OF R S. 20 LACS WAS CONFIRMED BY THE ASSESSEE BEFORE THE DDIT(INV.) IN HIS STATEMENT RECORDED ON OATH U/S. 131(1A) OF THE ACT ON 09.11.2001 IN THE FOLLOWING TERMS:- '..Q-10 1 AM SHOWING YOU ANN.A-24. PLEASE EXPLAIN. ANS. THIS CONTAINS PAPERS PERTAINING TO MY RESIDENT IAL HOUSE AT 41 CHAROTTAR SOC. AND ARE DISCLOSED IN MY RETURN. BES IDES THE EXTRA INVESTMENT MADE BY ME OF RS.20 LACS TOWARDS FURNITU RE / FIXTURE ETC. HAVE ALREADY BEEN SURRENDERED BEFORE YOU IN MY EARL IER STATEMENT.' ACCORDINGLY RELYING UPON DECISIONS IN V. KUNHAMBU AND SONS VS. CIT (1996) 219 ITR 235(KERALA) AND RAMESHCHANDRA & CO. VS.CIT 168 ITR 375(BOM.) THE AO ADDED AN AMOUNT OF RS.20 LACS TOWARDS UNDISCLO SED INCOME. 2.2 AS REGARDS UNDISCLOSED INVESTMENT IN 8-9 ME GHDHANUSH SOC. THE AO OBSERVED THAT EVEN WHEN THE OFFICIAL OWNER OF THE HOUSE WERE THE SONS OF THE ASSESSEE AND EVEN IF THE HOUSE / PLOT WAS PURCHASED BEFORE THE BLOCK PERIOD THE UNDISCLOSED INVESTMENT IN THE RENOVATION/RECONSTRUC TION OF THE HOUSE HAS TO BE TAXED IN THE HANDS OF THE ASSESSEE. ACCORDINGLY TH E AO ADDED ANOTHER AMOUNT OF RS. 15 LACS TOWARDS UNDISCLOSED INCOME INTER A LIA IN VIEW OF STATEMENT OF THE ASSESSEE U/S. 132(4) OF THE ACT 2.3 MOREOVER SINCE THE ASSESSEE ADMITTED UNACCOUNT ED RECEIPT OF RS.15 LACS IN CASH IN THE LAND TRANSACTION BEFORE T HE DDIT (INV.) IN HIS STATEMENT RECORDED ON OATH U/S 131(1A) OF THE A CT ON 09-11- 2001 THE AO ADDED THE SAME TO THE INCOME OF THE AS SESSEE OBSERVING THAT EVEN IF THE SAID PROPERTY IS OFFICIA LLY IN THE NAME OF HIS SONS STILL IT CAN BE HELD WITHOUT ANY DOUBT THAT HE WAS THE BE NEFICIARY OF ANY UNDISCLOSED RECEIPTS 3. ON APPEAL THE LD. CIT(A) DELETED THE ADDITIONS IN THE FOLLOWING TERMS:- 4.4 THE SUBMISSION OF THE APPELLANT AND THE REASON ING OF THE AO IS DULY CONSIDERED. WITH REGARD TO THE ADDITION OF RS.15 00 000/- IN THE RESIDENTIAL HOUSE I.E. 8-9 MEGHDHANUSH SOCIETY THE APPELLANT HAS MAINLY CONTENDED (A) THAT THE PROPERTY IN QUESTION HAS BEEN PURCHASE D PRIOR TO BLOCK PERIOD IT(SS)A NO.312/AHD/04 WITH CO NO.346/AHD/04 5 AND THEREFORE OUTSIDE THE PURVIEW OF DEFINITION OF UNDISCLOSED INCOME (B) THAT THE HOUSE IN QUESTION BELONGS TO SHRI SIMIT SH AH AND SHRI SAUMIL J SHAH SONS OF THE APPELLANT AND ARE INDEPENDENTLY A SSESSED TO TAX HAVING INDEPENDENT SOURCE OF INCOME DISCLOSED EXPENDITURE OF RS.9 80 627/- IN RESPECT OF RENOVATION AND INVESTMENT IN FURNITURE I N THEIR REGULAR BOOKS OF ACCOUNT AND ALSO IN VDIS THEREFORE NO ADDITION IN THE HANDS OF THE APPELLANT IS CALLED FOR. 4.5 I FIND FORCE IN THE ARGUMENT OF THE APPELLANT THAT SINCE THE PROPERTY BELONGS TO THE SONS OF THE APPELLANT WHO ARE INDEPE NDENTLY ASSESSED TO TAX NO ADDITION IS JUSTIFIABLE IN THE HANDS OF THE APPELLANT. THE AO IS THUS DIRECTED TO DELETE AN ADDITION OF RS.15 00 000/-. 4 .6 WITH REGARD TO ANOTHER ADDITION OF RS.20 00 000/ - IN 41 CHAROTAR SOCIETY THE APPELLANT'S MAIN CONTENTION I S THAT THERE IS NO RETRACTION FROM THE STATEMENT GIVEN BY. THE A PPELLANT. HE EMPHASIZED THAT IN THE ASSESSMENT PROCEEDINGS SOUR CE OF INVESTMENT IN THE SAID PROPERTY WAS EXPLAINED AS U NDER:- PARTICULARS ADVANCE RECEIVED ON ACCOUNT OF SALE OF LAND AT BAPOD AMOUNT (RS.) 1500 000 EVIDENCE FOUND AT THE TIME OF SEARCH ANNEXURE A- RECEIVED FROM THE FIRM M/S. ANKUR PRINTERV 300 000 PAGE 41 OF ANNEXURE A- RECEIVED FROM SPICA FINKOSE PVT. LTD. ON ACCOUNT OF SALE OF BUILDING 200 000 PAGE 2 OF ANNEXURE A-19 TOTAL 20 00 000 4.7 AS CAN BE SEEN FROM THE SUBMISSION OF THE A PPELLANT THAT IN PRINCIPLE THE APPELLANT HAS ACCEPTED THE UNACCOUNT ED INVESTMENT IN THE SAID PROPERTY BUT HE CONTENDS THAT THE SOURCE IS EX PLAINED FROM THE UNDISCLOSED INCOME. WITH REGARD TO SOURCE INVESTMEN T OF RS.15 00 000/- IT IS EVIDENT FROM SEIZED MATERIAL THAT THE CASH OF RS.15 LACS WAS RECEIVED BY THE APPELLANT ON 5/12/99 ON ACCOUNT OF SALE OF L AND AT BAPOD. THOUGH THERE IS NO DIRECT EVIDENCE AVAILABLE WITH THE APPE LLANT TO PROVE THAT THE SAID AMOUNT OF RS.15 LACS WAS INVESTED IN THE SAID PROPERTY HOWEVER PREPONDERANCE OF PROBABILITIES HAS TO BE SEEN. IT I S SEEN THAT THE DISCLOSED PAYMENTS IN THE SAID PROPERTY ARE AS UNDER: 15/9/99 5 00 000 CHEQUE IT(SS)A NO.312/AHD/04 WITH CO NO.346/AHD/04 6 29/12/99 10 00 000 -DO- 8/2/2000 3 00 000 -DO- 4.8 AS CAN BE SEEN FROM THE ABOVE THAT THE APPELLAN T HAD RECEIVED CASH OF RS.15 LACS ON 5/12/99 AND THE DISCLOSED PA YMENTS HAVE ALSO BEEN MADE DURING THE SAME PERIOD THEREFORE THE CL AIM OF THE APPELLANT CAN BE ACCEPTED. IT MAY ALSO BE NOTED HERE THAT THE AO HAS NO WHERE ESTABLISHED THAT THE SAID RS.15 LACS HAVE BEEN INVE STED BY HIM SOMEWHERE ELSE THEREFORE THE CLAIM OF THE APPELLANT THAT KS. 15 LACS IS FINDING PLACE IN THE UNDISCLOSED INVESTMENT OF THE SAID PROPERTY HAS TO BE ACCEPTED. THE A.O. IS DIRECTED TO TREAT INVESTMENT TO THE EXTENT OF RS.15 LACS AS EXPLAINED. 4.9 WITH REGARD TO INVESTMENT OF RS.3 00 000/- AND RS.2 00 000/- THE CLAIM OF THE APPELLANT DOES NOT APPEAR TO BE IN ORD ER IT IS ADMITTED BY THE APPELLANT THAT THE CASH OF RS.3.00.000/- AND RS.2 0 0 000/- WAS RECEIVED BY HIM IN AUGUST 98 THE ACCOUNTED PAYMENTS HAVE BEEN MADE IN THE SAID PROPERTY DURING 1999-2000 [SEPT.99 TO 8/2/2000] IT IS DIFFICULT TO PRESUME THAT THE CASH RECEIVED IN AUG.98 COULD HAVE BEEN U SED FOR UNDISCLOSED INVESTMENT IN THE PROPERTY DURING SEPT. 1999 OR AFT ERWARDS. DUE TO SUBSTANTIAL TIME GAP IN THE DATES OF CASH RECEIVED AND DATE OF PROPERTY PURCHASED THE CREDIT CAN NOT BE GIVEN. AN ADDITION OF RS.3 LACS IS THUS CONFIRMED. SINCE THE CLAIM OF THE APPELLANT IS NOT SUBSTANTIATED WITH THE SUPPORTING EVIDENCE THE ADDITION TO THE EXTENT OF RS.5 LACS IS UPHELD. THE A.O. IS DIRECTED TO DELETE RS.15 LACS OUT OF THE A DDITION OF RS.20 LACS. TO SUM UP OUT OF THE TOTAL ADDITION OF RS.35 LACS AD DITION TO THE EXTENT OF RS 5 LACS IS UPHELD. THE AO IS DIRECTED TO DELETE T HE BALANCE ADDITION OF R.30 LACS. 5.4 THE SUBMISSION OF THE APPELLANT AND THE REASONI NG OF THE AO IS DULY CONSIDERED AND I FIND FORCE IN THE SUBMISSION OF THE APPELLANT THAT THE SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE APPE LLANT. THE APPELLANT DREW MY ATTENTION TO THE FACT THAT IN THE A.Y. 2003 -04 BOTH THE SONS OF THE APPELLANT I.E. SHRI SIMIT SHAH AND SHRI SAUMIL SHAH HAVE DISCLOSED CAPITAL GAIN ON THIS TRANSACTION BY INCLUDING THE ON-MONEY OF RS.15 LACS. I FIND FORCE IN THE ARGUMENT OF THE APPELLANT THAT SINCE HE IS NOT THE OWNER OF THE SAID LAND THE AMOUNT RECEIVED IN WHATEVER MANNER CAN NOT FORM PART OF HIS TAXABLE INCOME. IT MAY BE MENTIONED HERE THAT W HILE DECIDING THE ISSUE OF APPLICATION OF THIS AMOUNT IT HAS BEEN HELD BY ME THAT THE SAME IS INVESTED IN THE PROPERTY OWNED BY THE APPELLANT I.E . 41 CHAROTAR SOCIETY. HOWEVER SO FAR AS TAXABILITY OF THIS AMOUNT IS CON CERN I AGREE WITH THE APPELLANT THAT IT CANNOT BE THE INCOME OF THE APPEL LANT. THE AO IS THUS DIRECTED TO DELETE AN ADDITION OF RS.15 LACS. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LD. DR SUPPORTE D THE FINDINGS OF IT(SS)A NO.312/AHD/04 WITH CO NO.346/AHD/04 7 THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE REITERATED THEIR SUBMISSIONS BEFORE THE LEARNED CIT(A). THE LD. AR ADDED THAT THE AO COULD NOT ADD BOTH INCOME AS WELL ITS APPLICATIO N AND THE LD. CIT(A) RIGHTLY ALLOWED SET OFF OF RS. 15 LACS RECEI VED AS ADVANCE ON SALE OF LAND AT BOPAD. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE LD. CIT(A) AFTER ANALYZ ING THE FACTS OF THE CASE FOUND THAT TWO ADDITIONS OF RS. 15 LACS EACH C OULD NOT BE MADE IN THE HANDS OF THE ASSESSEE SINCE THE PROPERTIES I N RELATION TO WHICH ADDITIONS HAD BEEN MADE BELONGED TO THE SONS OF TH E ASSESSSEE WHO WERE INDEPENDENTLY ASSESSED TO TAX WHILE IN THEIR ASSESSMENT PROCEEDINGS FOR THE A.Y. 2003-04 BOTH THE SONS SHRI SIMIT SHAH AND SHR I SAUMIL SHAH DISCLOSED CAPITAL GAIN ON THIS TRANSACTION BY INCLUDING THE O N-MONEY OF RS.15 LACS IN RESPECT OF LAND AT BOPAD. SINCE THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL CONTROVERTING THESE FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) WE ARE NOT INCLINED TO INTERFERE. 5.1 AS REGARDS ADDITION OF RS. 20 LACS THE LD. C IT(A) CONCLUDED THAT SINCE THE CASH OF RS.3.00.000/- AND RS.2 00 000/- W AS RECEIVED BY THE ASSESSEE IN AUGUST 98 WHILE THE ACCOUNTED PAYMENTS HADE BEEN MADE IN THE SAID PROPERTY DURING 1999-2000 [SEPT.99 TO 8/2/2000] IT COULD NO T BE PRESUMED THAT THE CASH RECEIVED IN AUG.98 COULD HAVE BEEN USED FOR UNDISC LOSED INVESTMENT IN THE PROPERTY DURING SEPT. 1999 OR AFTERWARDS. THEREFORE WHILE SUSTAINING THE ADDITION OF RS.5 LACS THE LD. CIT(A) CONCLUDED THAT THE AMOUNT OF ON-MONEY OF RS.15 LACS HAVING BEEN INVESTED IN THE PROPERTY OWNED BY THE ASSESSEE AT 41 CHAROTAR SOCIETY NO FURTHER ADDITION CAN BE MADE. IN THE L IGHT OF THESE FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) AND THE REVENUE HAVING N OT PLACED ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VI EW IN THE MATTER WE HAVE NO ALTERNATIVE BUT TO UPHOLD THE FINDINGS OF THE LD. C IT(A). 5.2 IN VIEW OF THE FOREGOING WE HAVE NO HESITATI ON IN REJECTING GROUND NOS. 1 TO 3 IN THE APPEAL OF THE REVENUE AS ALSO GROUND NO.2 IN THE CO. IT(SS)A NO.312/AHD/04 WITH CO NO.346/AHD/04 8 6. GROUND NO.4 IN THE APPEAL OF THE REVENUE RELATES TO DELETION OF THE SURCHARGE. WHILE COMPLETING THE BLOCK ASSESS MENT THE AO LEVIED SURCHARGE @ 2% ON THE TAX LIABILITY DETERMIN ED U/S 113 OF THE ACT. ON APPEAL THE LD. CIT(A) ACCEPTED THE SUBMISS IONS OF THE ASSESSEE THAT SEARCH HAVING BEEN CONDUCTED ON 20.9. 2001 PRIOR TO AMENDMENT OF SEC. 113 OF THE ACT W.E.F 1.6.2002 SUR CHARGE CAN NOT BE LEVIED. T HE LD. AR ON BEHALF OF THE ASSESSEE DID NOT MAKE AN Y SUBMISSIONS ON THIS ISSUE AND AGREED THAT ISSUE MAY BE DECIDED IN THE LIGHT OF HONBLE SUPREME COURT DECISION IN THE CASE OF SURESH N. GUP TA [2008] 297 ITR 322 (SC). IN THE SAID DECISION HONBLE APEX COURT OBSERVED AS UNDER : WE FIND NO MERIT IN THE ABOVE ARGUMENTS. BOTH THE FINANCE ACTS OF 2000 AND 2001 INDICATED THAT A SUBSTANTIVE CHARGE WAS C REATED IN RESPECT OF THE INCOME-TAX TO BE LEVIED. BOTH THESE ACTS PRESCRIBED THE RATES OF SURCHARGE. THE SAID SURCHARGE DID NOT DEPEND FOR ITS LEVIABILITY O N THE ASSESSEE'S LIABILITY TO PAY INCOME-TAX BUT ON THE ASSESSED TAX. THE ASSESSEE HA S RELIED UPON THE ABOVE ANOMALIES IN SUPPORT OF THEIR CONTENTION THAT SUCH ANOMALIES MADE THE CHARGE INEFFECTIVE. IN OUR VIEW SUCH SUBMISSION AMOUNTS T O BEGGING THE QUESTION. ACCORDING TO THE ASSESSEE PRIOR TO JUNE 1 2002 TH E POSITION WAS AMBIGUOUS AS IT WAS NOT CLEAR EVEN TO THE DEPARTMENT AS TO WHICH YEAR'S FINANCE ACT WOULD BE APPLICABLE. TO CLEAR THIS DOUBT PRECISELY THE PROV ISO HAS BEEN INSERTED IN SECTION 113 BY WHICH IT IS INDICATED THAT THE FINANCE ACT O F THE YEAR IN WHICH THE SEARCH WAS INITIATED WOULD APPLY. THEREFORE IN OUR VIEW THE SAID PROVISO WAS CLARIFICATORY IN NATURE. IN TAXATION LEGISLATION O F THE TYPE INDICATED BY THE PROVISO HAS TO BE READ STRICTLY. THERE IS NO QUESTION OF RE TROSPECTIVE EFFECT. THE PROVISO ONLY CLARIFIES THAT OUT OF THE FOUR DATES PARLIAME NT HAS OPTED FOR THE DATE NAMELY THE YEAR IN WHICH THE SEARCH IS INITIATED WHICH DA TE WOULD BE RELEVANT FOR APPLICABILITY OF A PARTICULAR FINANCE ACT. THEREFOR E WE HAVE TO READ THE PROVISO AS IT STANDS. THERE IS ONE MORE REASON FOR REJECTING THE ABOVE SUBMISSION. PRIOR TO JUNE 1 2002 IN SEVERAL CASES TAX WAS PRESCRIBED SOMETIME S IN THE 1961 ACT AND SOMETIMES IN THE FINANCE ACT AND OFTEN IN BOTH. THI S MADE LIABILITY UNCERTAIN. IN THE PRESENT CASE HOWEVER THE RATE OF TAX IN CASE OF BLOCK ASSESSMENT AT 60 PER CENT. WAS PRESCRIBED BY SECTION 113 BUT THE YEAR OF THE FINANCE ACT IMPOSING SURCHARGE WAS NOT STIPULATED. THIS RESULTED IN THE ABOVE FOUR AMBIGUITIES. THEREFORE CLARIFICATION WAS NEEDED. THE PROVISO WA S CURATIVE IN NATURE. HENCE THE PROVISO INSERTED IN SECTION 113 MERELY CLARIFIE S THAT OUT OF THE ABOVE FOUR DATES THE RELEVANT DATE FOR APPLICABILITY OF THE F INANCE ACT WOULD BE THE YEAR IN WHICH THE SEARCH STOOD INITIATED UNDER SECTION 158B C. IT(SS)A NO.312/AHD/04 WITH CO NO.346/AHD/04 9 6.1 SUBSEQUENTLY HONBLE APEX COURT IN THE CAS E OF CIT VS. RAJIV BHATARA 310 ITR 105(SC) HELD THAT THE PROVISO TO SECTION 113 WAS CLARIFICATORY IN NATURE AND SURCHARGE IS LEVIABLE ON THE TAX DETERM INED IN PURSUANCE TO BLOCK ASSESSMENT. IN THIS VIEW OF THE MATTER ESPECIALLY WHEN THE LD. AR DID NOT POINT OUT ANY INFIRMITY IN THE LEVY OF SURCHARGE WE HA VE NO ALTERNATIVE BUT TO REVERSE THE FINDINGS OF THE LD. CIT(A) AND ACCORDINGLY UPH OLD THE LEVY OF SURCHARGE BY THE AO. THEREFORE GROUND NO. 4 IN THE APPEAL OF THE RE VENUE IS ALLOWED. 7. GROUND NOS. 5 & 6 IN THE APPEAL OF THE REVENUE BEING MERE PRAYER AND GENERAL IN NATURE DO NOT REQUIRE ANY SE PARATE ADJUDICATION WHILE GROUND NO.1 IN THE CO HAVING NOT BEEN PRESSED BEFORE US AND NO ADDITIONAL GROUND HAVING BEEN RAIS ED IN TERMS OF RESIDUARY GROUND NO.3 IN THE CO ALL THESE GROUNDS ARE DISMISSED.. 8. IN THE RESULT APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED WHILE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 29-10-2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 29-10-2010 MRVALERA COPY OF THE ORDER FORWARDED TO: 1. SHRI JAYENDRA R SHAH 41 CHAROTAR SOCIETY OLD PADRA ROAD BARODA 2. ACIT CC-2 BARODA 3. CIT CONCERNED 4. CIT(A)-IV AHMEDABAD 5. DR BENCH-D ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD