SHRI DINESH I.GANDHI, SURAT. v. THE ACIT.,, SURAT.

ITSSA 344/AHD/2003 | misc
Pronouncement Date: 29-10-2010 | Result: Partly Allowed

Appeal Details

RSA Number 34420516 RSA 2003
Bench Ahmedabad
Appeal Number ITSSA 344/AHD/2003
Duration Of Justice 7 year(s) 1 month(s) 12 day(s)
Appellant SHRI DINESH I.GANDHI, SURAT.
Respondent THE ACIT.,, SURAT.
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 29-10-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 29-10-2010
Date Of Final Hearing 19-10-2010
Next Hearing Date 19-10-2010
Assessment Year misc
Appeal Filed On 17-09-2003
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD (BEFORE HONBLE SHRI G.D. AGRAWAL V.P. (AZ) & HON 'BLE SHRI T.K. SHARMA J.M.) I.T.(S.S.)A. NO. 340/AHD./2003 ASSESSMENT YEAR : 1991-1992 TO 2000-2001 & UPTO 17. 04.2001 ASSISTANT COMMISSIONER OF INCOME TAX -VS.- SHRI DINESH I. GANDHI SURAT CENTRAL CIRCLE-3 SURAT (APPELLANT) (RESPO NDENT) & I.T.(S.S.)A. NO. 344/AHD./2003 ASSESSMENT YEAR : 1991-1992 TO 2000-2001 & UPTO 17. 04.2001 SHRI DINESH I. GANDHI SURAT -VS.- ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-3 SURAT (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.G. PATEL DEPARTMENT BY : SHRI K.R. MEGHWAL CIT D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THESE CROSS APPEALS ARE AGAINST THE ORDER DATED 10 .07.2003 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II AHMEDABAD FOR THE BLOCK PE RIOD FROM 1991-1992 TO 2000-2001 & UPTO 17.04.2001. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL ENGAGED IN THE BUSINESS OF COMMISSION AND DALALI. A SEARCH & SEIZURE ACTION UN DER SECTION 132 OF THE INCOME TAX ACT 1961 TOOK PLACE ON 17.04.2001 AT THE PREMISES OF TH E ASSESSEE. IN RESPONSE TO NOTICE UNDER SECTION 158BC OF THE I.T. ACT THE ASSESSEE FILED T HE RETURN OF INCOME FOR THE BLOCK PERIOD ON 28.08.2001 DECLARING UNDISCLOSED INCOME AT NIL. T HE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 158BC(C) OF THE I.T. ACT ON 29.04.200 3 WHEREIN HE WORKED OUT THE TOTAL UNACCOUNTED INCOME AND UNACCOUNTED INVESTMENT/ EXPE NDITURE AS UNDER :- PARTICULARS INCOME INVESTMENT/EXPENDITURE VALUABLES RS. 57 000 UNACCOUNTED SHARES RS. 21 500 UNACCOUNTED BANK ACCOUNT RS.4 07 596 VEHICLES RS.2 50 000 HOUSEHOLD EXPENDITURE RS.2 00 000 2 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 SALARY INCOME WORKED ON SEIZED PAPERS RS. 30 000 RS.7 31 000 OUTSTANDING OF FLAT AMOUNT TO BE RECEIVED AS PER ACCOUNT RS. 81 450 CASH BALANCE WITH THE BANK ON DATE OF SEARCH RS. 451 RS.11 68 596 RS.6 10 401 3. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER H AS ALSO MENTIONED THAT OUT OF INCOME AND INVESTMENT/ EXPENDITURE THE INCOME SIDE IS MORE AN D THEREFORE HE DETERMINED THE TOTAL UNACCOUNTED INCOME AT RS.11 68 596/- AND TAXED THE SAME AND ALSO LEVIED THE SURCHARGE @ 17% U/S. 113 OF THE INCOME TAX ACT 1961. 4. ON APPEAL IN THE IMPUGNED ORDER THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) ALLOWED PARTIAL RELIEF AND ALSO DELETED THE SURCHAR GE LEVIED UNDER SECTION 113 OF THE I.T. ACT 1961 HOLDING THAT SURCHARGE IS NOT LEVIABLE IN RESP ECT OF SEARCH CONDUCTED PRIOR TO 01.06.2002. AGGRIEVED WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BOTH SIDES ARE IN APPEAL BEFORE THE TRIBUNAL. 5. VARIOUS GROUNDS RAISED BY THE REVENUE ARE AS UND ER :- (1) THE CIT(A.) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS.57 000/- MADE ON ACCOUNT OF UNEXPLAINED INVESTME NT IN VALUABLES FOUND DURING THE COURSE OF SEARCH. (2) THE CIT(A.) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS.2 50 000/- MADE ON ACCOUNT OF UNEXPLAINED INVEST MENT IN THE PURCHASE OF VEHICLE (CAR). (3) THE CIT(A.) HAS ERRED IN LAW AND ON FACTS IN RE STRICTING THE ADDITION OF RS.4 08 017/- MADE ON ACCOUNT OF TRANSACTIONS NO T RECORDED IN THE REGULAR BOOKS TO RS.32 640/-. (4) THE CIT(A.) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS.2 00 000/- MADE ON ACCOUNT OF UNEXPLAINED HOUSEH OLD EXPENSES. (5) THE CIT(A.) HAS ERRED IN LAW AND ON FACTS IN RE STRICTING THE ADDITION OF RS.7 31 000/- MADE ON ACCOUNT OF UNACCOUNTED ENT RIES NOTED IN THE LOOSE PAPERS TO RS.58 480/-. (6) THE CIT(A.) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS.30 000/- MADE ON ACCOUNT OF UNDISCLOSED SALARY I NCOME. 3 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 (7) THE CIT(A.) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE SURCHARGE LEVIED U/S. 113 OF THE INCOME TAX ACT BY HOLDING TH AT SURCHARGE IS NOT LEVIABLE IN RESPECT OF SEARCHES CONDUCTED PRIOR TO 1.6.2002 THOUGH THE PROVISO TO SECTION 113 OF THE ACT SPECIFICALLY PROV IDES THAT SURCHARGE IS LEVIABLE IN THE CASE OF SEARCHES U/S. 132 INITIATED ON OR AFTER 1.4.99. 5.1. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPE AL ARE AS UNDER :- (1) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) -II AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIR MING ADDITION OF RS.21 500/- MADE BY THE ASSESSING OFFICER IN RESPEC T OF UNEXPLAINED INVESTMENT IN SHARES. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) -II AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIR MING ADDITION TO THE EXTENT OF RS.32 640/- OUT OF RS.4 08 017/- MADE BY THE ASSESSING OFFICER IN RESPECT OF CERTAIN TRANSACTIONS NOTED IN THE SEI ZED DIARY. (3) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) -II AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIR MING ADDITION OF RS.58 480/- OUT OF RS.7 31 000/- MADE BY THE ASSESS ING OFFICER IN RESPECT OF TRANSACTIONS NOTED IN THE SEIZED PAPERS. 6. WE HAVE HEARD SHRI M.G. PATEL LD. COUNSEL APPEA RED ON BEHALF OF THE ASSESSEE AND SHRI K.R. MEGHWAL LD. CIT D.R. APPEARED ON BEHALF OF T HE REVENUE. 7. WITH REGARD TO GROUND NO. 1 OF REVENUES APPEAL THE LD. D.R. POINTED OUT THAT THE ASSESSING OFFICER MADE THE ADDITION ON THE BASIS OF ESTIMATION OF VALUABLES FOUND DURING THE COURSE OF SEARCH. THE LD. D.R. SUBMITTED THAT IN TH E IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION BY ACCE PTING THE EXPLANATION OF THE ASSESSEE THAT THESE ALL ITEMS PERTAINED TO THE PERIOD PRIOR TO SE ARCH AND THE ADDITION WAS MADE SIMPLY BECAUSE EVIDENCE REGARDING GIFTS COULD NOT BE LOCATED. THE LD. D.R. SUBMITTED THAT DURING THE COURSE OF SEARCH VALUABLES AS PER ANNEXURE-VF TO THE PANCHNA MA DATED 17.04.2001 WERE FOUND VALUING RS.57 000/-. BEFORE THE ASSESSING OFFICER THE ASSE SSEE SUBMITTED TRHAT THESE WERE ACQUIRED BEFORE 10 YEARS. WITH REGARD TO SERIAL NO. 1 PHILI PS T.V. MAY BE IN THE STATEMENT RECORDED ON 15.05.2001 BY THE DDIT (INV.)-1 SURAT IN REPLY TO QUESTION NO. 3 THE ASSESSEE STATED THAT EXCEPT SERIAL NO. 1 PHILIPS T.V. ALL THE VALUABLES ARE OF 10/12 YEARS OLD AND THEY WERE RECEIVED AS GIFT AT THE TIME OF MARRIAGE. WITH REGARD TO SER IAL NO. 1 PHILIPS T.V. DURING THE COURSE OF SEARCH ITSELF THE ASSESSEE HIMSELF ADMITTED THAT P HILIPS T.V. WAS PURCHASED WITHIN THE BLOCK PERIOD THEREFORE THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) IS LEGALLY AND FACTUALLY 4 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 INCORRECT IN DELETING THE ADDITION OF RS.57 000/-. THE LD. D.R. FURTHER SUBMITTED THAT PHILIPS T.V. IS OF 29 INCHES. BEFORE THE ASSESSING OFFICER THE ASSESSEE COULD NOT PRODUCE THE EVIDENCE OF LOAN TAKEN FROM BAJAJ FINANCE THEREFORE THE ASSESSING OFFICER WAS HAVING NO OPTION BUT TO MAKE THE ADDITION. HE ACCORDINGLY SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE CONFIRM THE ADDITION MADE BY THE ASSE SSING OFFICER IN RESPECT OF PHILIPS T.V. 8. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSESS EE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 9. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF BOT H THE DEPARTMENTAL AUTHORITIES. IT IS PERTINENT TO NOTE THAT IN REPLY TO QUESTION NO. 3 T HE ASSESSEE HAS CLEARLY ADMITTED THAT T.V. WAS ACQUIRED DURING THE BLOCK PERIOD BY TAKING LOAN FRO M BAJAJ FINANCE. SINCE BEFORE THE ASSESSING OFFICER NO EVIDENCE WAS FURNISHED WE ARE OF THE V IEW THAT THE ADDITION IN RESPECT OF LOAN OF RS.30 000/- WAS RIGHTLY MADE BY THE ASSESSING OFFIC ER. IN RESPECT OF REMAINING ITEMS WE ARE OF THE VIEW THAT THE ADDITION WAS RIGHTLY DELETED BY T HE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). WE THEREFORE DECLINE TO INTERFERE. RESULTANTLY THE ADDITION OF RS.30 000/- MADE BY THE ASSESSING OFFICER IN RESPECT OF PHILIPS T.V. IS RESTORED. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 10. THE FACTS RELATING TO CONTROVERSY INVOLVED IN G ROUND NO. 2 OF REVENUES APPEAL IS THAT DURING THE COURSE OF SEARCH PROCEEDINGS THE WIFE O F THE ASSESSEE WAS QUESTIONED ABOUT ONE CAR AND SHE STATED THAT THE SAME WAS GIVEN BY SHRI JITE NDRA MODI FOR USING THE SAME FOR BUSINESS PURPOSES. THE ASSESSING OFFICER MADE ADDITION OF RS .2 50 000/- FOR THE DETAILED REASONS GIVEN IN PARA 7 ON PAGE-5 OF THE ASSESSMENT ORDER AS UNDER : - DURING THE COURSE OF SEARCH PROCEEDINGS STATEMENT OF SMT. AASHA D. GANDHI WAS RECORDED ON 15.05.2001 BY THE DDIT(INV. )-1 SURAT. VIDE QUESTION NO. 18 SHE WAS REQUESTED TO STATE WHETHER THE VEHICLES ARE OWNED BY THE FAMILY. IN REPLY TO QUESTION NO. 18 S HE HAS STATED THAT THEY OWNED ONE MARUTI VAN AND ONE TWO WHEELER. THE ASSES SEE IN REPLY TO QUESTION NO. 5 HAS STATED THAT THE FAMILY DO NOT PO SSESSES ANY MOVABLE OR IMMOVABLE PROPERTY AND THE FLAT IN WHICH THEY ARE R ESIDING WAS GIVEN BY SHRI JITENDRA H. MODI AND CAR IS ALSO GIVEN BY SHRI JITENDRA H. MODI MY BROTHER-IN-LAW. IN VIEW OF THIS THE ASSESSEE VIDE THIS OFFICE SHOW CAUSE DATED 15.4.03 WAS REQUESTED TO FURNISH THE NUMBER O F CARS AND THE DETAILS SINCE WHEN THE CAR HAS BEEN USED BY YOU. THE ASSESS EE SUBMITTED HIS REPLY DATED 22.4.03 VIDE WHICH HE HAS STATED THAT CAR BE ING NO. GJ-5-AR-2410 5 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 IS OWNED BY ME AND THE ASSESSEE HAS PRODUCED THE PH OTO COPY OF REGISTRATION BOOK ISSUED BY THE REGIONAL TRANSPORT OFFICE SURAT WHICH SHOWS THAT THE CAR WAS PURCHASED ON 12.12.2000. THE ASSESSEE HAS ALSO STATED THAT THE SAID CAR WAS PURCHASED BY LOAN. THE ASSESSEE WAS REQUESTED TO FURNISH THE EVIDENCE IN RESPECT OF CAR PURCHASE ON LOAN. THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN SUPPORT OF HIS CLAIM. THE ASSESSEE HAS ALSO NOT PRODUCED ANY EVIDENCE WHICH SHOWS THAT THE CAR WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS. IN VIEW OF THIS THE VALUE OF RS.2.50 LAC IS CONSIDERED AS UNDISCLOSED INVESTMENT OF THE ASSESSEE AND ACCORDINGLY THE SAME IS ADDED TO THE TOTAL UNDISCL OSED INCOME OF THE BLOCK PERIOD. 11. IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE AFORESAID ADDITION OBSERVING THAT THE ASSESSING OFF ICER HAS NOT CONDUCTED PROPER ENQUIRY. 12. THE LD. D.R. RELYING ON THE REASONING GIVEN BY THE ASSESSING OFFICER CONTENDED THAT ONUS WAS ON THE ASSESSEE TO PROVE THAT THE CAR WAS GIVEN BY SHRI JITENDRA H. MODI BROTHER-IN-LAW OF THE ASSESSEE. THE ASSESSEE WAS USING THE CAR BUT CO ULD NOT PRODUCE THE REGISTRATION BOOK ISSUED BY THE REGIONAL TRANSPORT OFFICE SURAT WHICH SHOW S THAT THE CAR WAS PURCHASED ON 12.12.2000. BEFORE THE ASSESSING OFFICER THE ASSESSEE SUBMITTE D VIDE REPLY DATED 22.4.03 IN WHICH HE STATED THAT THE CAR BEARING NO. GJ-5-AR-2410 IS OWNED BY H IM AND THE ASSESSEE PRODUCED THE PHOTOCOPY OF REGISTRATION BOOK ISSUED BY THE REGION AL TRANSPORT OFFICE SURAT WHICH SHOWED THAT THE CAR WAS PURCHASED ON 12.12.2000. HE ALSO S TATED THAT THE CAR WAS PURCHASED ON LOAN BUT NO EVIDENCE IN SUPPORT OF HIS CLAIM WAS FURNISHED. IN THESE CIRCUMSTANCES THE ASSESSING OFFICER WAS HAVING NO OPTION BUT TO ESTIMATE ITS VALUE AND MAKE THE ADDITION. THE ADDITION MADE WAS FAIR AND REASONABLE KEEPING IN VIEW THE FACT THAT THE AS SESSEE HAS NOT DISCHARGED HIS ONUS THEREFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDITION. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSESSEE VEH EMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS). HE POINTED OU T THAT IT IS THE DUTY OF ASSESSING OFFICER TO FIND OUT IN WHOSE NAME THE CAR WAS REGISTERED W HO PURCHASED THE CAR. THE ASSESSING OFFICER HAS NOT MADE PROPER ENQUIRY THEREFORE THE ADDITIO N WAS RIGHTLY DELETED. 13. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT DURING THE COUR SE OF SEARCH THE CAR WAS FOUND AT THE RESIDENCE OF THE ASSESSEE. ONUS IS ON THE ASSESSEE TO PROVE T HAT IT IS NOT OWNED BY HIM. BEFORE THE SEARCH PARTY IT WAS CLAIMED THAT THE CAR WAS GIVEN BY SHR I JITENDRA H. MODI WHEREAS DIFFERENT STORY 6 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 WAS NARRATED VIDE LETTER DATED 22.04.2003. NO EVIDE NCE OF LOAN TAKEN TO BUY THE CAR WAS FURNISHED EITHER BEFORE THE ASSESSING OFFICER OR LE ARNED COMMISSIONER OF INCOME TAX (APPEALS). EVEN BEFORE US THE ASSESSEE HAS NOT PRO DUCED THE REGISTRATION BOOK DETAILS OF LOAN ETC. IN THESE CIRCUMSTANCES IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT CONDUCTED PROPER ENQUIRY. SINCE THE CAR WAS FOUND DURING THE COURSE OF SEARCH AT THE RESIDENCE OF THE ASSESSEE IT WAS REGISTERED IN HIS NAME ON 12.12.2000. NO EVIDEN CE OF LOAN WAS FURNISHED BEFORE BOTH THE DEPARTMENTAL AUTHORITIES BELOW. IN THESE CIRCUMSTAN CES THE ADDITION OF RS.2 50 000/- WAS RIGHTLY MADE BY THE ASSESSING OFFICER AND LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) IS NOT JUSTIFIED IN DELETING THE SAME. RESULTANTLY THIS A DDITION IS RESTORED AND GROUND NO. 2 OF REVENUES APPEAL IS ALLOWED. 14. WITH REGARD TO GROUND NO. 3 OF REVENUES APPEAL AND GROUND NO. 2 OF ASSESSEES APPEAL THE LD. D.R. POINTED OUT THAT IN THE ASSESSMENT ORD ER THE ASSESSING OFFICER MADE ADDITION OF RS.4 07 596/- AND RS.421/- TOTALING TO RS.4 08 017/ - IN RESPECT OF UNRECORDED TRANSACTIONS. THE LD. D.R. POINTED OUT THAT THE FACT THAT THE TRANSAC TIONS WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS WAS ADMITTED BY THE ASSESSEE. HOWEVER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER RESTRICTED THE ADDITION TO RS.32 640/- I.E. @8% OF UNACCOUNTED TRANSACTIONS AMOUNTING TO RS.4 08 017/-. HE SUBMITTED THAT THERE IS NO QUESTION OF ESTIMATING INCOME FROM UNRECORDED TRANSACTIONS TO THE TUNE OF RS.4 08 017/ - BECAUSE THE ASSESSEE IS NOT A CONTRACTOR. AS AGAINST THIS THE LD. COUNSEL OF THE ASSESSEE SUPPO RTED THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS). ALTERNATIVELY HE SUBMITTED T HAT ONLY PEAK AMOUNT CAN BE ADDED AND NOT THE ENTIRE UNRECORDED TRANSACTIONS AMOUNTING TO RS. 4 08 017/-. 15. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AU THORITIES BELOW ON THIS ISSUE. ADMITTEDLY THE ASSESSEE IS NOT A CONTRACTOR. THEREFORE THERE IS NO QUESTION OF ESTIMATING INCOME BY APPLYING 8% NET PROFIT RATE. HOWEVER WE FOUND CONSIDERABLE FORCE IN ALTERNATIVE SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE THAT ONLY PEAK AMOUNT O F UNRECORDED TRANSACTIONS CAN BE ADDED. TO WORK OUT THE PEAK AMOUNT THIS ISSUE IS RESTORED TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT HE WILL MAKE THE ADDITION ONLY TO THE EXTENT O F PEAK AMOUNT AND NOT ENTIRE UNRECORDED TRANSACTIONS AMOUNTING TO RS.4 08 017/-. RESULTANTL Y GROUND NO. 3 OF REVENUES APPEAL IS ALLOWED AND GROUND NO. 3 OF ASSESSEES APPEAL IS PA RTLY ALLOWED. 7 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 16. WITH REGARD TO GROUND NO. 4 OF REVENUES APPEAL IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS ESTIMATED THE HOUSEHOLD EXPENSES AT RS. 6 00 000/- AGAINST RS.3 35 600/- SHOWN BY THE ASSESSEE AND HIS WIFE. IN THE ASSESSMENT ORDER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE SAID ADDITION ON THE GROUND T HAT SUCH ADDITION IS AGAINST THE SPIRIT OF WELL DEFINED PROVISION OF CHAPTER-XIV-B OF THE INCO ME TAX ACT 1961. HE ACCORDINGLY DELETED THE ADDITION. THE LD. D.R. POINTED OUT THAT ITAT D BENCH AHMEDABAD IN IT(SS)A NOS. 342/AHD/2003 & 343/AHD/2003 IN THE CASE OF SRI JITE NDRA H. MODI VIDE ORDER DATED 21.05.2010 HAS HELD THAT THE ADDITION ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWAL CAN BE MADE. HE ACCORDINGLY SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS). ALTERNATIVELY HE SUBMITTED THAT THE ASSESSING OFFICER ESTIMATED THE HOUSEHOLD WITHDRAWAL ON THE BASIS OF STATEMENT MADE AT THE TI ME OF SEARCH. THE FIGURE OF WITHDRAWING MADE FOR HOUSEHOLD EXPENSES WAS BASED ON WITHDRAWAL MADE AT THE TIME OF SEARCH AND NOT IN THE EARLIER YEARS. IN THE EARLIER YEARS HOUSEHOLD EXPE NSES WERE LOWER THAN THESE WERE AT THE TIME OF SEARCH THEREFORE ESTIMATE MADE BY THE ASSESSING OF FICER IS ON THE HIGHER SIDE. 17. IT IS PERTINENT TO NOTE THAT TRIBUNAL IN THE CA SE OF SRI JITENDRA H. MODI (SUPRA) HAS HELD THAT ADDITION ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWA L CAN BE MADE IN BLOCK ASSESSMENT. THEREFORE THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) IS NOT JUSTIFIED IN DELETING THE ENTIRE ADDITION. HOWEVER WE FOUND SOME FORCE IN TH E CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE THAT IN THE EARLIER YEARS WITHDRAWALS WERE NOT SAME AS WERE IN THE YEAR OF SEARCH. WE ARE THEREFORE OF THE VIEW THAT IT WILL MEET THE E ND OF JUSTICE IF THE ADDITION ON ACCOUNT OF HOUSEHOLD WITHDRAWAL IS RESTRICTED TO RS.1 50 000/- . WE DIRECT ASSESSING OFFICER ACCORDINGLY. 18. THE FACTS RELATING TO CONTROVERSY INVOLVED IN G ROUND NO. 5 OF REVENUES APPEAL AND GROUND NO. 3 OF ASSESSEES APPEAL ARE THAT IN THE A SSESSMENT ORDER THE ASSESSING OFFICER MADE ADDITION OF RS.7 31 450/- ON ACCOUNT OF UNACCOUNTED ENTRIES NOTED IN LOOSE PAPERS. THESE LOOSE PAPERS VIDE ANNEXED AT ANNEXURE BS-4 PAID NO. 46-49 AND CONTAINED DETAILS OF UNACCOUNTED CONSTRUCTION ACTIVITIES EITHER IN DALALI OR IN UNOF FICIAL PARTNERSHIP. PAGE 49 OF ANNEXURE IS ACCOUNT OF THE ASSESSEE I.E. SHRI DINESH GANDHI AN D IT STARTS WITH THE CREDIT IN THE NAME OF ASSESSEE FOR KRISHNA NAGAR AND CASH RECEIVED FROM S HRI DINESH GANDHI OF RS.4 03 000/-. A SUM OF RS.2 50 000/- IS ADDED ON THIS CREDIT WITH A NAR RATION THAT IT IS FOR THE PROFIT OF SILVER PARK AND 8 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 THE SAME IS ADDED UP. THEREFORE THE TOTAL OF RS.6 63 000/- HAS BEEN ARRIVED. THE DETAILS OF TRANSACTIONS CONTAINED ON PAGE NO. 49 ARE REPRODUCE D HEREUNDER :- 4 03 000 CREDIT FOR KRISHNAGAR + CASH RECEIVED 2 50 000 PROFIT EARNED FROM SILVER PARK (@12.5%) 6 53 000 5 000 DALALI MAHARAJ VADIANAGAR 8 000 RAJESH FARSHAN (5 + 3) 6 86 000 JAMMA 3 000 CORPO LINE KRISHNAGAR 20 000 RAJESH FARSHAN 10 000 CASH 23/10 10 000 VINNY MARKETING 5 750 PANCHMADHI EXPENDITURE 1 500 DOCUMENTS KRISHNAGAR HIMANSU 6 15 750 (-)12 300 SAREE ASHABEN 6 13 450 JAMMA THE BALANCE OF AFORESAID PAGE IS PAGE NO. 49 I.E. O F RS.6 13 450/- HAS BEEN TAKEN TO PAGE NO. 46 AGAIN THE NAME OF THE ASSESSEE IS WRITTEN UP ON THI S PAGE ALSO. PAGE NO. 46 OF ANNEXURE BS-4 IS REPRODUCED AS UNDER :- 6 13 450 ADDED TO SANJAYBHAI 1 00 000 DALALI SAIYEDPURA 18 000 7 31 450 50 000 OUTSTANDING OF FLAT TO BE RECOVERED 6 81 450 JAMMA 6 00 000 CREDITED TO PARTNERSHIP FIRM 81 450 JAMMA UDDHAR 2 14 000 UGHARANI BAKKI 202 + 203 1 05 000 COLLECTION OF FLAT 202/80 + 105/25 3 19 000 YET TO PAY TO SHAILESHBHAI 9 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 (-)81 450 EXCESS CREDIT IN RESPECT OF ACCOUNT 2 37 550 YET TO PAY TO SHAILESH IN RESPECT OF SAIYE DPURA FLAT 19. FROM THE ABOVE THE ASSESSING OFFICER OBSERVED THAT MAXIMUM CREDIT IN THE NAME OF THE ASSESSEE AS PER THIS PAPER COMES TO RS.7 31 450/- WHICH INCLUDES DALALI INCOME AND ORIGINALLY INVESTMENT IN VARIOUS PROJECT AND PROFIT OF VARIOUS PROJECT. OUT OF THIS RS.7 31 450/- AN AMOUNT OF RS.6 00 000/- IS ALSO SHOWN INVESTED IN PARTNERS HIP FIRM WHICH IS MENTIONED THAT BHAGIDAR KHATE JAMMA AND RS.50 000/- IS THE RECEIPT ON ACCO UNT OF BOOKING OF FLAT BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSEE WAS ASKED VIDE THIS OFFICE SHOW CAUSE DATED 24.2.03 TO EXPLAIN THE CONTENTS OF THIS PAPER . THE ASSESSEE WAS SPECIFICALLY ASKED TO EXPLAIN THE ACCOUNT OF PAGE NO. 49 WHICH SHOWS THE CREDIT OF KRISHNA NAGAR AND THE CASH RECEIVED OF RS.4 03 000/- AND THE PROFIT OF SILVER PARK PROJECT . THE ASSESSEE WAS ALSO REQUESTED TO EXPLAIN THE AMOUNT OF RS.6 50 000/- DALALI AMOUNT OF RS.5 000/ - AND RS.8 000/- RECEIVED FROM RAJESH FARSAN MART. THUS THE ASSESSEE WAS REQUESTED TO EX PLAIN THE TOTAL ACCOUNT OF THE PAPERS. THE ASSESSEE HAS NOT SUBMITTED HIS REPLY DATED 21.4.03 IN RESPONSE TO SHOW CAUSE DATED 24.02.03. THE ASSESSEE HAS STATED THAT REGARDING PAGE NO. 46 TO 4 9 PAGE NO. 46 CONSIST THE SAME DETAILS OF BACKSIDE OF PAGE OF DIARY BS-2 I.E. FLAT NO. 202 & 203 PAGE NO. 47 CONTAINED DETAILS OF FLAT NO. 105 AND PAGE NO. 49 CONTAINED TRANSACTIONS WITH SUB -BROKER AND FINAL SUMMARY OF BROKERAGE ONLY. THE CONTAINS OF BS-2 AND PAGE NO. 47 & 48 ARE ALMOST SAME. BEFORE THE ASSESSING OFFICER THE ASSESSEE REPLIED THAT BS-2 TOTAL PAGES 9 CONSI STS DETAILS OF PAYMENT RECEIVED AGAINST FLAT SOLD ON BROKERAGE BASIS AT SAIYEDPURA. EACH FLATS WERE S OLD APPROXIMATELY @ RS.2 75 000/- AND THE TOTAL AMOUNT OF RS.1 LAKH WAS TRANSACTED AND CHARGE D @ 1% BROKERAGE AND EARNED RS.11 000/- BROKERAGE IN AY 2000-01 AND 2001-02 AND AS THE INCO ME WAS BELOW TAXABLE LIMIT NO RETURN OF INCOME WAS FILED. 20. THE ASSESSING OFFICER DID NOT FOUND THE AFORESA ID REPLY OF THE ASSESSEE CONVINCING BECAUSE TRANSACTIONS ON PAGE NO. 46 & 49 ARE REPROD UCED AS ABOVE WHICH SHOWS THAT THE DETAILS OF THE ASSESSEE INCOME FOR THE PERIOD 2000-01 AS IN BS-2 THERE IS DATED 21.1.2000 AND 15.3.2000 FOR TRANSACTION OF FLAT NO. 105. THE ASSESSEE HAS I NVESTED RS.6 LAKHS IN THE PARTNERSHIP FIRM OUT OF THE INCOME EARNED. THE CREDIT SIDE OF THE TOTAL SHO WS RS.7 31 450/-. THEREFORE THE INCOME OF THE 10 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 ASSESSEE ON ACCOUNT OF THE NOTING OF THESE PAPERS I S COMPUTED AT RS.7 31 450/- AS UNDISCLOSED INCOME OF THE BLOCK PERIOD. 21. ON APPEAL IN THE IMPUGNED ORDER THE LEARNED C OMMISSIONER OF INCOME TAX(APPEALS) RESTRICTED THE AFORESAID ADDITION TO RS.58 480/- I .E. 8% OF RS.7 31 000/-. AGGRIEVED WITH THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) BOTH SIDES ARE IN APPEALS BEFORE THE TRIBUNALS. 22. THE LD. D.R. POINTED OUT THAT LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) GROSSLY ERRED IN APPLYING 8% AND ESTIMATED THE INCOME ONLY AT RS.58 480/-. HE SUBMITTED THAT VARIOUS ITEMS POINTED OUT BY THE ASSESSING OFFICER IN THE A SSESSMENT ORDER ARE NET INCOME THEREFORE THERE WAS NO NECESSITY TO ESTIMATE THE INCOME FROM THOSE ENTRIES. HE ACCORDINGLY SUBMITTED THAT THE ADDITION OF RS.7 31 000/- MADE BY THE ASSESSING OFF ICER BE RESTORED. AS AGAINST THIS THE LD. COUNSEL OF THE ASSESSEE VEHEMENTLY SUPPORTED THE OR DER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 23. WE HAVE CAREFULLY GONE THROUGH THE REASONING GI VEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR MAKING THE ADDITION OF RS.7 31 000/-. IT IS PERTINENT TO NOTE THAT THE NATURE OF INCOME HAS BEEN DULY EXAMINED BY THE ASSESSING O FFICER. IN OUR CONSIDERED OPINION RS.7 31 000/- IS NET INCOME WHICH IS NOT DISCLOSED BY THE ASSESSEE AND THE ENTIRE INCOME IS TAXABLE. THERE IS NO EVIDENCE ON RECORD WHICH INDI CATES THAT ENTRIES CONTAINED IN THE LOOSE PAPERS ARE OF JITENDRA H. MODI RELATING TO HIS INCO ME. WE THEREFORE RESTORE THE ADDITION OF RS.7 31 000/- MADE BY THE ASSESSING OFFICER. RESULT ANTLY GROUND NO. 5 OF REVENUES APPEAL IS ALLOWED AND GROUND NO. 3 OF ASSESSEES APPEAL IS RE JECTED. 24. THE FACTS RELATING TO CONTROVERSY INVOLVED IN G ROUND NO. 6 OF REVENUES APPEAL ARE THAT IN THE ASSESSEES STATEMENT RECORDED BY DDIT(INV.)- 1 SURAT ON 15.06.2001 IN REPLY TO QUESTION NO. 4 THE ASSESSEE HAS ADMITTED THAT HE IS GETTING SALARY OF RS.5 000/- PER MONTH AND IS ALSO DOING DALALI WORK. IT WAS ALSO STATED THAT SALARY HAS BEE N STARTED FROM THE LAST SIX MONTHS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN HOW THE SALARY INCOME IS REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS. NO REPLY WAS FURNISHED BEFORE TH E ASSESSING OFFICER. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02 SHOWING INCOME BELOW TAXABLE LIMIT BUT HAS NOT SHOWN THE SALARY INCOME. THE 11 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 ASSESSING OFFICER TOOK THE VIEW THAT SALARY OF RS.3 0 000/- (I.E. @RS.5 000/- X 6 MONTHS) IS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PE RIOD AND ADDED THE SAME TO THE UNDISCLOSED INCOME OF THE ASSESSEE. ON APPEAL IN THE IMPUGNED O RDER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE SAID ADDITION OBSERVING T HAT SUCH INCOME FROM PART OF REGULAR INCOME THEREFORE HE DIRECTED THE ASSESSING OFFICER TO ALL OW SET OFF OF THIS INCOME AGAINST THE INCOME OF BLOCK PERIOD. 25. BEFORE US RELYING ON THE REASONING GIVEN BY TH E ASSESSING OFFICER IN THE ASSESSMENT ORDER THE LD. D.R. POINTED OUT THAT THE ADDITION O F RS.30 000/- WAS RIGHTLY MADE. AS AGAINST THIS THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT IN COME OF THE ASSESSEE WAS NOT TAXABLE OF THE RELEVANT ASSESSMENT YEAR THEREFORE THE ASSESSEE HA S NOT FILED REGULAR RETURN OF INCOME. THE SALARY INCOME IS BELOW EXEMPTION LIMIT THEREFORE THE VIE W TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 26. IT IS PERTINENT TO NOTE THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS ACCEPTED THAT ASSESSEE WAS RECEIVED SALARY ONLY FOR LAST SIX MONT HS. THE SEARCH OPERATION WAS CONDUCTED ON 17.04.2001. THE ASSESSEE HAS FILED THE RETURN OF IN COME FOR THE ASSESSMENT YEAR 2001-02. IN THE SAID RETURN SALARY INCOME HAS NOT BEEN DISCLOSED. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ASSESSING OFFICER RIGHTLY TREATED THE SALARY IN COME OF RS.30 000/- AS UNDISCLOSED INCOME OF THE BLOCK PERIOD. RESULTANTLY GROUND NO. 6 OF REVEN UES APPEAL IS ACCORDINGLY REJECTED. 27. WITH REGARD TO LEVY OF SURCHARGE IN GROUND NO. 7 OF REVENUES APPEAL THE LD. D.R. POINTED OUT THAT ITAT D BENCH AHMEDABAD IN IT(S S)A NOS. 342/AHD/2003 IN THE CASE OF SRI JITENDRA H. MODI VIDE ORDER DATED 21.05.2010 FO LLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF SURESH N. GUPTA REPORT ED IN 297 ITR 322 (SC) HELD THAT SURCHARGE UNDER SECTION 113 OF THE INCOME TAX ACT IS LEVIABLE EVEN SEARCH IS CONDUCTED PRIOR TO 1.6.2002 . WE THEREFORE FOLLOWING THIS DECISION SET ASIDE THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND RESTORE TH AT OF ASSESSING OFFICER LEVYING SURCHARGE UNDER SECTION 113 OF THE ACT. RESULTANTLY GROUND N O. 7 IS ALLOWED. 28. COMING TO THE GROUND NO. 1 OF ASSESSEES APPEAL AFTER HEARING BOTH THE SIDES WE ARE CONVINCED THAT THE ADDITION OF RS.21 500/- BEING VA LUE OF SHARES WHICH WERE PURCHASED FROM OUTSIDE THE BOOKS OF ACCOUNTS WAS RIGHTLY MADE AND THE LEARNED COMMISSIONER OF INCOME 12 IT(SS)A NOS.340/AHD/2003 & 344/AHD/2003 TAX(APPEALS) IS LEGALLY AND FACTUALLY CORRECT IN CO NFIRMING THE SAME. NEITHER BEFORE ANY OF THE DEPARTMENTAL AUTHORITIES BELOW NOR BEFORE THE TRIBU NAL ASSESSEE HAD FURNISHED THE EXPLANATION. THIS ADDITION WAS MADE ON THE BASIS OF SEIZED DOCUM ENTS AFTER ALLOWING ADEQUATE OPPORTUNITY TO THE ASSESSEE. IN THE IMPUGNED ORDER THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ADDITION OBSERVING THAT THIS BEING INVESTMENT I S SET OFF AGAINST INCOME. THEREFORE WE DECLINE TO INTERFERE. RESULTANTLY THIS GROUND OF APPEAL IS REJECTED. 29. BEFORE PARTING WITH WE MAY OBSERVE THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER WORKED OUT THE TOTAL UNACCOUNTED INCOME AND UNACCOU NTED INVESTMENT/ EXPENDITURE AND THEREAFTER WORKED OUT THE UNDISCLOSED INCOME AS MEN TIONED IN PARA 11 ON PAGE 12 OF THE ASSESSMENT ORDER. KEEPING IN VIEW OUR FINDING (SUPR A) ASSESSING OFFICER WILL RE-COMPUTE THE UNDISCLOSED INCOME OF THE ASSESSEE AND ALSO LEVY TH E SURCHARGE UNDER SECTION 113 OF THE INCOME TAX ACT 1961 AND RECOMPUTE THE UNDISCLOSED INCOME OF THE ASSESSEE. 30. IN THE RESULT THE APPEAL FILED BY THE REVENUE AS WELL AS THE APPEAL FILED BY THE ASSESSEE BOTH ARE PARTLY ALLOWED AS INDICATED ABOVE. THE ORDER WAS PRONOUNCED IN THE COURT ON 29.10.201 0 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 29/ 10/ 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.