TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 41
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....it of the taxes paid in whose income were clubbed in the hands of the assessee; (3) that the CIT (A) had erred in not excluding the proportionate income also assessed for the AYs 1987-88 and 1988-89 in spite of specific direction of the CIT (A) which was not reversed by the Tribunal. 3. As the issues raised in these appeals being inter-linked pertaining to the same group, they were heard, considered together and disposed off, for the sake of convenience, in this common order. 4. Briefly stated, the synopsis of the issues is as under: - Search operations were conducted on 16-5-1986 at the premises of Patel group. During the course of search, enormous documents, accounts books and other materials unearthed revealed huge income earned by this group from construction and building activities which was diverted in benami names of various entities such as partnership firms, AOPs, family trusts etc. The members of such entities being more than 1100 which have floated in various places like Mehsana, Nadiad, Surendranagar, Mumbai, Ahmedabad etc., and that several entities filed their returns of income at Bombay and assessments made in some of the trusts were considered to be bogus by the ....
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....os. 909 to 915/Ahd/1999 for the assessment years 1980-1981 to 1986-87 and in ITA No.3890/Ahd/1992 and ITA No.2708/Ahd/1995 for the assessment years1987-88 and 1988-99 respectively. The AO while giving effect to the order of the Tribunal dated 31-08-2004 revised the total income of the assessee as per the disclosure made by the assessee incorporated at Para 8.3 of the aforesaid order of the Tribunal, revised the total income year-wise and recalculated the tax payable by the assessee. The findings of the AO in his order dated 04-08-2005 giving appeal effect to the order of the Tribunal is reproduced as under: [PB -1 page 93] "In this case, original assessment u/s. 143(3) was completed on 02.05.1989. The assessee preferred an appeal against the assessment order dated 02.05.1989 before the CIT (A) for various years including the year under consideration, who in turn gave partial relied to the assessee. Subsequently, the I.T.A.T. vide its order in ITA No.2289 to 2296/AHD/90/ A. Y. 80-81 to 86- 87 dated 29.04.1994 set aside the assessment with a direction to re-frame the assessment, which was finally completed u/s. 143(3) on 3.03.1997 by erstwhile ACIT, Cir-6 (2), Ahmedabad. 2. Aggriev....
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....ted on the basis of disclosure of Rs.4.5 crores which is, as aforesaid is, based on accretion of wealth supported by the details of assets and liabilities of the assessee and finalized after discussion with the revenue authorities." Vide para 12 of the order, the I. T. A. T. has also directed the A. O. not to charge interest u/s. 139 and 217 of the Act. 6. On the basis of the above and as per the disclosure made by the assessee, which is incorporated in Para 8.3 of the I. T. A. T.'s order dated 31.08.2004, the total income is revised as under:- A. Y. Income from Other income Total income construction activity 1980-81 60,00,000 - 60,00,000 1981-82 40,00,000 - 40,00,000 1982-83 1,00,00,000 - 1,00,00,000 1983-84 30,00,000 - 30,00,000 1984-85 85,00,000 - 85,00,000 1985-86 35,00,000 - 35,00,000 1986-87 60,00,000 40,00,000 1,00,00,000 Total 4,10,00,000 40,00,000 4,50,00,000 Revised total income Rs.60,00,000/- (Source: PB 93 -94) 4.2. The assessee filed an application dated 28-07-2010 (Refer P 95 - 98 PB) for (i) rectification of the aforesaid appeal effect order of the AO dated 04-08-2005 and (ii) settlement of outstanding demand & release of attached prop....
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.... and not any subsequent year. The synopsis of Hon'ble ITAT order dated 31.8.2004 given in Para 7 above clearly shows that Hon'ble ITAT meant AY 80-81 to AY 86-87 for assessing the income of Rs.4.50 crore. Hon'ble ITAT never stated that this income was to be spread over to AY 87-88 and 88-89 too. Therefore, in my view the order dated 20.8.2010 of the AO rejecting the rectification application of the appellant is fine and the appeal of the appellant deserves to be dismissed." 5. Aggrieved, the assessee has come up with the present appeals against the order of the CIT (A). 6. We have carefully considered the lengthy submissions of the learned AR made during the course of hearings and also the submission of the learned DR who valiantly rebutted the points made on behalf of the assessee. We have also carefully perused the relevant materials on record and the documentary evidences adduced by the learned AR in the shape of voluminous paper books containing, copies of assessment orders of various assessment years, findings of the CIT (A) as well as the findings of the earlier Benches of this Tribunal etc., 6.1. Prima facie, all these appeals are arising on the common appellate order of....
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....s 1987-88 and 88-89, the AOs computed the incomes of the assessee at Rs.2.55 crores and Rs.70 lakhs respectively against the declared incomes of Rs. Nil. On appeal, the assessee got partial relief for the AY 1987-88, but, for the AY 1988- 89 no relief was given by the first appellate authority. 6.4. At this point of time, we revert back to the issue for the AYs 1980-81 to 86-87 that when the assessments for the said assessment years were directed to be framed fresh by the AO as per the directions contained in the Tribunal's order dt.29.4.1994 (supra), the AO reframed the assessments computing the income for the said AYs at Rs.12.39 crores. When the assessee took up the issue before the CIT (A) for relief, the CIT (A), after taking into account all the aspects into consideration, observed, among others, thus: "(On page 25) 19. Decision The assessing officer is, accordingly, directed to discard all other methods of determination of appellant's taxable profits, and compute the net taxable profits @ 21.5% on a gross turnover of the entire construction activity under by the appellant group to the 'period search', computed above atRs.21.5 crores, irrespective of the year in which earne....
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....figures of assessed amounts be taken as correct as those assessments and enhanced figures therein have to be subject to assessee's right of appeal which should be given in either of the proceedings and since the entities are now owned up by the assessee AOP, that opportunity has to be given in these assessments...... 10. The fact, however, remains that these were estimated figures based on some incomplete information, knowledge and belief and partly also on some conjectures. We are, therefore, of the view that the assessments be completed on the basis of disclosures of the assessee at Rs.4.5 crores which is stated to be based on the books of accounts increased in wealth of the assessee from year to year. It is also supported by various statement of assets and liabilities of the assessee over a period of seven years and is also including the 'on money' receipt being the amount of cash premium by the assessee from the prospective customers. This disclosure figure is arrived at by the assessee after going through the detailed and in-depth scrutiny of the accounts, documents and discussion with the Revenue authorities including the CIT and the Member of CBDT from time to time over a p....
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....nt all the facts and circumstances of the issues and also keeping the findings of the first appellate authorities in view, came to the above conclusion. Such being the scenario, the findings of the learned CIT (A) that 'the Hon'ble ITAT never stated that this income to be spread over to AY 87-88 & 88-89 too' to view it mildly, was out of misconception. 7.1. It was an undisputed fact that after the assessee-AOP premises were subjected to action by the Department, the activities of the assessee-AOP ceased to exist and no new projects have been undertaken for execution. This fact is borne out by the assessee's confession in response to notice u/s 139(2) of the Act issued by the AO for the AY 1987-88 [Refer: P 60 of PB]. 7.2. While deciding the issue, the earlier Bench had also taken cognizance of the observation of the CIT (A) vide his order dated 22.2.1999 and observed that "11.......the assessments of the assessee be completed on the basis of disclosure of Rs.4.5 crores which is, as aforesaid, is based on accretion of wealth supported by the details of assets and liabilities of the assessee............". 7.3. This view of the earlier Bench, in our considered view, was in consonan....
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.... section 150 of the Act and accordingly, Ground No.1 raised by the assessee is hereby disposed off:- (A) A.Y 1987-88:- (1) Addition on account of construction activities Rs.1,42,01,312/-:- As pointed out earlier, the assessee had not disclosed any income for the assessment year 1987-88 since income was finally assessed at Rs.4.5 Crores for the period 1980-81 to 1986-87. However, the learned AO added profit of Rs.1,42,01,314/- in respect of various projects for the assessment year 1987-88 and 1988-89. It was the contention of the assessee that, since the income added by the learned AO in the assessment year 1987-88 was due to the construction of projects either on the basis of disclosure of the assessee or on the basis of accretion of wealth for the period 1980- 81 to 1986-87, this amount cannot be added once again in the assessment year 1987-88. This contention of the assessee is quite reasonable. If the amount of Rs.1,42,01,312/- forms part of the disclosure of Rs. 4.5 Crores for the period 1980-81 to 1986-87 based on the principle of accretions of wealth then unless there is a fresh accretion of wealth, during the assessment year 1987-88 the same amount cannot be once again add....
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....ons on account of on-money receipts from Jayshree Narayan Nidhi of Rs.2,47,047/- and from Madhuram Complex of Rs.89,840/- aggregating to Rs.3,36,887/- . It was contended by the assessee that this amount was already included in the disclosure made for the period 1980-81 to 1986-87. Therefore, we remitted back this issue also to the file of the learned AO with similar directions specified in Para 7.5 (A) (1) above. (4) Addition on account of unexplained investment in vehicles Rs.7,00,000/-:- The learned AO had made addition due to investment in certain vehicles owned by the associate concerns of the assessee which are estimated at Rs.7,00,000/-. Since, wealth accretion method is adopted, if this amount is already included while estimating Rs.4.5 Crores as stated above, once again addition is not warranted. Therefore, for the similar reasons cited in the earlier paragraphs, this issue is also remitted back to the file of the learned AO with same directions stipulated in Para 7.5 (A) (1) hereinabove. (5) Addition on account of cash found and seized in various premises during the course of search of Rs.30,871/:- This addition is made for the reason that cash was found and seized in th....