TaxTMI 
TaxTMI 
2011 (7) TMI 1336
X X X X Extracts X X X X
X X X X Extracts X X X X
....of alleged unexplained capital investment by the appellant. (5) The Assessing Officer has erred on facts and in law in making an addition of Rs. 2,25,000 on account of alleged unexplained capital. (6) The Assessing Officer has erred on facts and in law in making an addition of Rs. 3,20,000 being the alleged profit. (7) The Assessing Officer has erred on facts and in law in making an addition of Rs. 5,57,000 on account of alleged profit. (8) The Assessing Officer has erred on facts and in law in making an addition of Rs. 54,000 on account of alleged profit. (9) The Assessing Officer has erred on facts and in law in making an addition of Rs. 2,16,56,000/- in the hands of the appellant on account of alleged profit on the basis of seized page 10. (10) The Assessing Officer has erred on facts and in law in making an addition of Rs. 10,85,125 on account of alleged profit on the basis of seized page 8. (11) The Assessing Officer has erred on facts and in law in initiating penalty proceedings u/s.158FA(2). 3. The ground of Appeal No.51/Rjt/2003 are re-produced as below:- (1) The learned Dy. Commissioner of Inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (8) That the appellant begs to rely upon his detailed submissions dated 29.1.2003 made to the learned Assessing Officer both on law as well as on facts. The learned Assessing Officer has erroneously referred to various order sheet entries, adjournments granted both the sides for good reasons in support of unsustainable order determined to be passed. Thus, the assessment order is predetermined and prejudicial and therefore deserves to be annulled. (9) That even though the assessment order was not getting barred by limitation on 31.3.2003 in view of section 153(3) of the Act, the learned Assessing Officer has erred in passing the assessment order under reference hastily which was rightly disapproved and hence no consequential prejudicial order substantive or protective could have been passed against the appellant. (10) Apart from the voluminous evidence relied on by the appellant referred in its submission dated 29.1.2003, the learned Assessing Officer has grievously erred in not taking into account the submissions made by the appellant in its letter dated 28.3.2003 accompanied with Medical Certificate of Shri Dhanraj Jethani, Affidavit in compliance w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibunal vide order dated 20-06-2000 gave certain adverse findings against Shri M. N. Patel which is reproduced as follows:- "It is mentioned by the A.O. that such names are also written in the pages 8 and 10 seized from the resident of Shri M. N. Patel. The above names are appearing in books of the assessee because they must be having some dealings with the company. Therese names appearing on the seized papers do not establish any nexus with the assessee and the seized papers. Shri M. N. Patel is having his independent construction business and the possibility of these persons having business relations with Shri M. N. Patel also cannot be ruled out. Therefore, this cannot be used as an evidence against the assessee company. The A.O. has not examined the persons mentioned above. He has also not given any opportunity to the assessee company to rebut his findings. We fail to understand why the A.O. has not examined these persons to find out their transactions with Shri M. N. Patel and the assessee company. The A.O. has also held that the assessee was having bank account with Oriental Bank of Commerce and the name of the bank is also appearing on No.8 and 10 of the seized paper....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ggrieved by the above findings of the Tribunal in the case of M/s. Ambica Realities Pvt. Ltd. filed a petition before the Hon'ble Gujarat High Court. His main contention being that adverse findings had been given by the Tribunal against him without giving him an adequate opportunity of being heard. The Hon'ble Gujarat High Court accepted the contentions made by Shri M. N. Patel by its order dated 17.4.2001. The Hon'ble High court quashed paras 21 to 28 of the order of the Tribunal dated 20.6.2000 and directed the Tribunal to decide the matter afresh. It further directed that both the appeals i.e. that of the assessee Shri M. N. Patel and that of Ambica Realities Pvt. Ltd. be heard together. Pursuant to the directions of the Hon'ble High Court, the Income Tax Appellate Tribunal heard the appeal of the assessee Shri M. N. Patel and the company Ambica Realities Pvt. Ltd. together. The orders were passed on 10.10.2001 in appeal No.IT(SS)A No. 11/Rjt/98 and in appeal No. IT(SS)A No.7/Rjt/98 pertaining to the cases of Ambica Realities Pvt. Ltd and Shri Mansukhlal N. Patel respectively. In the said order the Tribunal restored back the issue to the Assessing Officer to decide the matter af....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6. Accordingly, set aside proceedings in the case of the assessee was initiated. Simultaneous hearings in the case of the assessee and in the case of Ambica Realities Pvt. Ltd. was conducted. A showcase was issued by the AO to the assessee vide letter No. DCIT. Cir.1/142(1)/02-03 dated 31.12.2002. The contents of the said letter is reproduced below: 2. Please refer to the appellate order of the Hon'ble Income Tax Appellate Tribunal, Rajkot Bench, Rajkot in your case having No.IT(SS) A No.7/RJT/98 dated 10.10.01. The Hon'ble ITAT has set aside the block assessment to be decided afresh at the level of Assessing Officer. In this context, you are hereby informed that hearing in your case has been fixed on 27.12.2002 at 11.30 AM. 3. The issues under considerations are: (a) The additions of Rs. 6,92,820/- made in the block assessment on the basis of notings on page 8 of Annexure-A seized during the course of search. (b) The addition of Rs. 34,25,000/- made in the block assessment on the basis of the notings on page No.10 seized during the course of the search. 4. In this regard you are requested to file your detailed submissions in duplicate ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... before discussing the evidentiary value of the seized documents page No.8 & page No.10 he reproduce the form in English of the notings made on the said documents in Gujarati as under: -- - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - -- - - -- - - - Page No.8. B.P. 2,95,375 P.P. 1,25,000 R.S. 39,000 Bank 9,61,000 Amarkumar B.P.10/- 90,000 1.5 month 1.25% 18,750 O.B.C. 8,000 15,37,125 Less : D.P. 4,52,000 --------------- 10,85,125 ---------------- M.P. 6,25,000 Capital 67,820 6,92,820 Page 10 M. P. 2.2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion is not known. Bank - Interest income of Rs. 9,61,000/- has been received from R.C.C. bank. This interest income has been with reference to the deposits made in the bank. This interest has been earned with reference to deposits made in the R.C.C. bank. This money belongs to Ambica Realities Pvt. Ltd. which Dhanrajbhai has given to me. Amarkumar - Amarkumar had booked a flat in Indraprasth Apartment and accordingly he gave me cash of Rs. 90,000/- as booking amount which I accepted in the capacity of the director of Ambica Realities Pvt. Ltd. B.P. - stands for Batukbhai Patel who had paid interest of Rs. 18,750/- to Ambica Realities Pvt. Ltd. on the sum received as a loan by him from the said company. O.B.C. - The sum of Rs. 8000/- represents bank interest. This money is the income of Ambica Realities Pvt. Ltd. The total of the above receipts of Ambica Realities Pvt. Ltd. comes to Rs. 15,37,125/-. Less: D.P. stands for Dilip Patel. The sum of Rs. 4,52,000/- has been paid to Shri Dilip Patel by Ambica Realities Pvt. Ltd. the net profit is Rs. 10,85,125/- M.P. - stands for Mansukbhai Patel Rs.6,25,000/- capital ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce, the said amount has been deducted from my account. Rs.23,30,000/- Total Rs.1,750/- represents the balance amount which I have received in cash from Shri Dhanrajbhai Jethani." 10. The A.O. has also taken statement of Shri N.C. Pandya. the facts highlighted by Shri N.C. Pandya in his statement were discussed by the AO as below: "(i) During the period of search, I was silent director in Ambica Realities Pvt. Ltd. and Shri Dhanrajbhai Jethani was managing the affairs of the company. (ii) Ambica Realities had made the profit of Rs. 13,53,500/- (as discussed on page 10) from three to four projects viz. Yoginagar, Indraprasth and Ambica project. My share of profit is 6.25% (iii) Survey No.73/75(as discussed on page 10) has been sold to around 50 to 60 parties plotting the same. The details are available in the books of Ambica Realities Pvt. Ltd. (iv) The new fund (as discussed on page 10) was created for the purpose of a new project. (v) Shri Rajubhai Shukla is a share holder in our company and also the Income Tax Practitioner. Page No.8 & 10 has been written by him. (vi) Amarkumar Jadeja has a shop next to my ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ingly. Q.5 Were you required to explain these papers during the course of block assessment proceedings. If yes, what was the explanation given by you. A. I do not know what is block assessment. Q.6 During the course of block assessment proceedings vide your letter dated 31.10.97, 09.12.97, 15.12.97 & 22.11.97, you have informed that you do not exactly know about page No.8 & 10 as it might pertain to Ambica Realities Pvt. Ltd. or it might pertain to Dhanraj Builders Pvt. Ltd. or it may pertain to Shri Dhanrajbhai or it may pertain to any of the persons or their accounts whose names have been mentioned in the said papers. Today you are saying with confidence that these papers relate to the account of Ambica Realities Pvt. Ltd. In this regard if you have any evidence then the same may be furnished. A. Earlier during the course of assessment I did not have complete information thereafter I made inquiries and I came to know the compete truth and accordingly, I gave the replies. The details of which are as under: (i) There is a flat in Raghukul Apartment for which there is the bill of Rajkot Municipal Corporation. (ii) There ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... confidence that company has received interest income. Do you have any evidence in that regard then please produce. A. In the above context, I do no have any evidence right now. I would inquire with the bank and let you know. Q.11 You have stated in your statement today that Amarkumar has purchased a flat in Indraprasth apartment, however as per our books of accounts, we have not sold any flat in Indraprasth. Further, I would like to bring to your attention that before the Tribunal you had stated that Shri Amarkumar has purchased a flat in Raghukul Project.S Please recall and state as to where Amarkumar has purchased a flat and give evidence in that regard. A. Shri Amarkumar Jadeja has purchased a flat No.12 on 3rd floor of Indraprasth apartment, but the document regarding the flat has been executed in the name of his son Shri Dharmendrasinh. Before the Tribunal it was mentioned by mistake that the flat has been purchased in Reghukul Apartment. Q.12 You have stated that you have purchased an office in Dhanrajni building, but our company Ambica Realities Pvt. Ltd. has not done any project in the name of Dhanrajni. You give your explanation in that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n page No.10 you have stated that the said sum is regarding the transactions of the company. That is why it is asked from you whether you have purchased any land in survey No.73/75 in you name or in the name of your family members. If so, please produce the documents in that pretext. A. I have not purchased any plot in Survey No.73/75 in my name or in the name of any of my family members from my personal capital. I have purchased a plot in the name of my son Jitesh from the amount given by Ambica Realities Pvt. Ltd.. After the same of the plot the sum was returned back to Ambica Realities Pvt. Ltd. In support of which I will produce copies of account and copy of sale deed." 12. The A.O. noted that the main issue highlighted by the advocate of the assessee during the course of cross examination of Shri M. N. Patel was as to how Shri Patel could say with surely and confidence that the contents of page No.8 & 10 pertained to the transactions of the assessee company. In this regard Shri M. N. Patel in his answer to Q. No.6 of cross examination (on page 11 of his statement dated 28.03.03) has given the list of evidences on which he would like to rely to come to the judgment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (iii) During the course of cross examination Shri M. N. Patel has stated that he has not purchased any plot of land in survey No.73/75 from his personal fund. He had however stated that a plot was purchased in the name of his son Shri Jitesh M. Patel. It is seen from the statement of bank account of Ambica Realities Pvt. Ltd. bearing No.305 with the Coop. Bank of Rajkot Ltd. that cheque No.56326 of Rs. 2,50,000/- was issued to Shri Jitesh M. Patel. Further, Shri M. N. Patel in his statement has already stated that this money was used to buy a plot in survey No.73/75. Later this plot was sold for a consideration of Rs. 5,13,500/- to Shri Chetankumar Jayantilal the said amount has been credited in the bank account of Ambica Realities Pvt. Ltd. on 01.06.1994. (iv) The list of person in the name of whom Ambica Realities Pvt. Ltd. has purchased land in surveyNo.73/75 has also been submitted. The list contains the name of 34 parties. (v) The assessee has submitted a copy of the sale deed of flat to Shri Dharmendrasin Amarkumar Jadeja. Copy of the bank pay order dated 21.03.95 for the amount of Rs. 1,20,000/- has also been enclosed. Further, the receipt issued by Ambic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ca Realities Pvt. Ltd. Further, he has also confirmed that his transactions with the company Ambica Realities Pvt. Ltd. has been reflected on page Nos. 8 & 10. Further, he has also stated that he having control and possession of flat in the Raghukul Apartment and office in Dhanrajni Building in view of the profits that had accrued to him because of the activities of the company Ambica Realities Pvt. Ltd. He has stated on oath that all the activities and transactions reflected on the seized papers bearing No.8 & 10 pertain to Ambica Realities Pvt. Ltd. in which he has beneficial interest of 6.25%. Therefore, all the financial transactions reflected in the said paper, as per his statement, is considered true and correct. Accordingly the said unexplained transactions are brought to tax. After considering all the evidences on record and the statement given by the assessee the AO Observed as under:- 11.1 As per seized document page 10, the new capital of Rs. 9,15 lacs was contributed by him towards the affairs of Ambica Realities Pvt. Ltd. The nature and source has not been adequately explained and the same is taxed in the hands of the assessee. 11.2 As per seized docu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to Rs. 23,30,000/-. Finally, the balance amount of Rs. 1750/- has been paid to the assessee by Shri Dhanraj V. Jethani in cash and the account has been adequately settled. Therefore, the contention of the assessee that no dividend has been received from the company is not acceptable. The details of cash or assets received by the assessee from the company is itself mentioned on the said paper and same is treated as the income received by the assessee from the company. This settlement is totally outside the books of accounts. Accordingly the share of profits of Rs. 13,53,500/- and Rs. 67,820/- is brought to tax in the hands of the assessee as income received from the company. Even otherwise the said transactions are not accounted for, therefore, they cannot be received as regular dividends. 11.7 As regards the share capital of Rs. 6.25,000/- evidenced from page 8 the assessee has submitted as follows:- "Regarding the capital of Rs. 6,25,000/- I have to state that the said amount is given from my personal S.A/c. from the firm M/s. Satya Vijay Soda Factory and from A/c. of my son Jitesh Patel. However, we have not specified in our books as share capital but we have sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n respect of transactions with Ambica Realities Ltd. He has also stated that he is not remembering on what context the same has been written. Shri M.N.Patel in his statement has clarified the whole seized papers which he had not done during the course of search on 24.12.96. He has stated that he earned profit of Rs. 13,53,500/- from 3 to 4 projects viz. Yoginagar, Indraprasth Ambica Nagar etc. Mansukhbhai Patel's share holding in the Co. i.e. Ambica Realities Ltd. is only 3.7% as such it seems that he had other profits from some other projects belonging to him. The loose papers in file A-1 found from the residence of Mansukhbhai Patel shows that he was in the construction business. One of the calculation on page No.74 shows calculation of built up area and rates of different floors the total of which comes to Rs. 33796600/-. A.O. has not inquired about this paper found from him. Assessing Officer has not taken statement of all the persons for e.g. Amarkumar, Bhodarbhai, N. C. Pandya, Batukbhai Patel, Prafulbhai Patel etc. on oath and examine them whose names appear in these seized papers. In this circumstances, the addition can be made on the basis of seized papers in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he A.O. did not carry out the direction given by the ITAT in first round of the litigation. The ld. A.R. submitted that neither in the seized paper nor any material pointed out the basis on which it can be said that the transaction or income pertaining to the assessee-company. The ld. A.R. has also raised objection that the A.O. did not take approval of the C.I.T. (A) as required u/s. 158BC(a) of the Act but ld.D.R. furnished a copy of the approval of draft assessment order of C.I.T. dated 31-03-2003 which has been placed on record. It is also submission of the ld. A.R. that the A.O. alleges that undisclosed income is of assessee-company. The burden of proof is on the department to so prove it. In the absence of same have been supplied to the assessee though the evidence could not be used against the assessee especially when nothing is found from the assessee-company at the time of search. The ld. A.R. submitted that the assessee has made detailed submission vide several letters and the A.O. himself has noted this fact in order sheet entry dated 30-01- 2003. The ld. A.R. submitted that none of the contentions of the assessee have been dealt with by the A.O. at all, much less discus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....person can be examined when the details were not filed in respect of name, address, contact no. and others. The ld. D.R. submitted that at the relevant time, Mr. M.N. Patel was Director of Ambica Realities Pvt. Ltd. The ld. D.R. submitted that the paper was found from the premises of the Patel. Therefore, it is the duty of Mr. Patel to produce material and necessary explanation. The ld. D.R. submitted that in spite of number of opportunity, Mr. Patel did not produce the material. The ld. D.R. while referring page-4 of A.O.'s order submitted that right from the first year, the A.O. asked both the parties to produce material in this regard but in spite of number of opportunity, no details were filed. The ld. D.R. further submitted that when nobody appeared on behalf of the assessee-company then how cross examination is to be given. The ld. D.R. submitted that the substantive addition made in the hands of assessee M. N. Patel because the loose papers were found in his possession during the course of search. He further submitted that the A.O. has examined the details and documents filed by the parties. The order of the A.O. is based on the documents found at the time of search and subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to be judicious in appreciating the evidence before him. Let us examine the case before us in this backup". 22 (1) The ITAT has also referred section 132(4A) and observed that what is requirement of the section is that the A.O. cannot proceed simply on the basis of presumptions but has to utilize that piece of evidence by investigating deed into it. The ITAT put question themselves - has the A.O. undertaken such exercise ? - the answer given No. The ITAT examined the contentions and some related facts and gave guidance to A.O. putting a relevant facts on record e.g. It was contention of Mr. Patel that papers 8 & 10 were not in the writing of Mr. Patel. The ITAT observed that under these circumstances the A.O. should have carried out further investigation to find out in whose hand the writing are. As regards contention Mr. Patel was holding aggregate to 3.75% only in the company whereas in loose paper, profit rate is 6.25% - No enquiry - Without jumping to any conclusion and needs to probe further into it. 22(2) The ITAT in case of Mr Patel has summaries the disputed amount at page 5 of their order which is reproduced as under:- "Thus, summarising the position of addition....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and source has not been adequately explained and the same is taxed in the hands of the assessee. 11.2 As per seized document page 10, the capital of Rs. 2.25 lacs was contributed by hi towards the affairs of Ambica Realities Pvt. Ltd. The nature and source has not been adequately explained and the same is taxed in the hands of the assessee. 11.3 As per seized document page 10, the profit of Rs. 3.20 lacs has been generated by the transactions of the assessee along with Shri Dhanrajbhai Jethai of Ambica Realities Pvt. Ltd. The said profit has been confirmed by the assessee that it has arisen to him and accordingly the same is brought to tax. 11.4 Profit of Rs. 5,57,500/-, as evidenced from the seized document page No.10 has arisen on account of land transaction in survey No.73/75. The said profit has not been reflected in the regular accounts of the assessee. 11.5 Profit of Rs,54,000/-, as evidenced from the seized document page No.10 has arisen on account of one transaction the assessee and Dhanrajbhai Jethani had undertaken as partners. The assessee in his statement has confirmed that his share of profit was Rs. 54,000/-. The same is accordingly brought to tax. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... son Jitesh Patel. However, we have not specified in our books as share capital but we have shown ass amount paid to Ambica Realities Pvt. Ltd. and they have bifurcated the said amount as share capital and loan deposits." The assessee has not furnished any supporting evidence. The assessee has not filed any document or copy of return to show that the nature and source of the said capital of Rs. 6.5 lacs has been explained. Further, the details regarding the name of the company in which the said capital has been invested has also not been furnished. The assessee himself says that they have not specified the amount of Rs. 6.25 lacks as share capital in their books. In the loose paper it is clearly mentioned as capital. Therefore, the same is treated as unexplained capital and taxed in the hands of the assessee. The two issues i.e. addition of Rs. 6,92,820/- based on page 8 and addition of Rs. 34,25,000/- based on page 10 is, in view of the facts discussed above, is decided against the assessee and added to the total income. The said additions are individually discussed in para 11 (11.1 to 1.7) above." 22(4) The order of the A.O. has been approved by the concerned C.I.T. date....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he AO and record we find that In respect of some of the entries, certain cogent material evidences come to notice of the A.O. but he has not extended his investigation and examination to find out the complete facts of those entries. Even, the draft order sent by AO to the C.I.T. on 27-03-2003, the C.I.T returned back the A.O. with the direction to carry out the directions given by the ITAT. The same could not be carried out by the AO on the ground that time left with AO was only one day to carry out such directions. What the AO has done is that he simply restricted his examination/onus to ask Mr Patel regarding loose papers and noted the contents, whereas the procedure should be that the Ao have to extend his investigation and examination to find out complete facts. Thus, the admitted facts of the case are that the A.O. failed to carry out some of the important normal procedure of investigation and directions of the ITAT barring on the items of additions. So, under the circumstances, now question arose how to decide the matters at this stage when the A.O. failed to carry out directions of the ITAT and also failed to put the complete facts on record after necessary investigation and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- on the basis of page No.8 and Rs,2,16,56,000/- on the basis of page No.10) are the same amount which are in the original assessment and fresh order on direction of ITAT. The difference only is that, in original assessment, the amount has been added on substantive basis in the hand of the assesseecompany and in the fresh assessment, the amount is taken on protective basis. In respect of Shri M. N. Patel (hereinafter referred to as "assessee") , in first round of litigation Rs. 26,97,000/- (Rs.6,25,000/- on the basis of page No.8 and Rs. 20,72,000/- on the basis of page No.10) has been taken in his hands on substantive basis and Rs. 14,21,320/- (Rs.67,820/- on the basis of page No.8 and Rs. 13,53,500/- on the basis of page No.10) was taken on protective basis. In fresh assessment, the A.O. has assessed the following amount as substantive basis from page No.10 :- Unexplained capital Rs. 9,16,000 ( Typography mistake in A.O.'s order. He has taken Rs. 9,15,000/-) Unexplained capital Rs. 2,25,000 Profit Rs. 3,20,000 Profit Rs. 5,57,500 Profit Rs. 54,000 Total Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee failed to file any document or copy of return to show that the nature and source of the said capital of Rs. 6,25,000/-. Further, the details regarding the name of the company in which the said capital has been invested has also not been furnished. The assessee did not show this amount in his/their books. In absence of proper evidence and material, the A.O. made the addition. In the light of detailed discussion made in this order, we find that the assessee has failed to explain the amount of capital in spite of admitting before the A.O. that the amount was from his personal savings account and from the firm-Satiya Vijay Soda Factory and from account of his son Jitesh Patel. It is settled principle of Law of Evidence that if the best evidence is not produced, an adverse inference can be taken. Since the assessee has failed to furnish the necessary details, we therefore, the addition of Rs. 6,25,000/- made by A.O. on substantive basis is confirmed. 22(10) (ii) Rs. 67,820/- profit on the basis of page No.8 : Before the A.O. in the statement, the assessee stated that Rs. 67,820/- is 6.25% share of profit of Rs. 10,85,125/-. The A.O. in para-11.6 in respect of page No.8 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t there is owner of balance amount of profit but merely saying by M. N. Patel, it cannot be held that the owner of profit of balance amount was Ambica Realities Pvt. Ltd. In absence of proper investigation and after verification putting the relevant complete facts by A.O. and failure to carry out a specific direction of the ITAT, the issue relating owner of balance amount of profit is required to be decided in favour of Ambica Realities Pvt. Ltd. It is onus on the revenue to assess the income in the hand of the real owner. The revenue is lacking in discharging this onus regarding the balance profit. Therefore, we are of the view that this balance amount of profit cannot be assessed in the hands of Ambica Realities Pvt. Ltd., to that extent the protective addition from the hands of Ambica Realities Pvt. Ltd. is also deleted. 22(11) Second amount in dispute is Rs. 34,25,000/-, which is total of two amount, (a) Rs. 20,72,000/- on substantive basis and (b) Rs. 13,53,500/- on protective basis ( both amount on the basis of page No.10.) The amount of Rs. 20,72,000/-is the total amount of various additions of which is discussed as below :- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rotective basis. Therefore, same are deleted. 22(11) (iii) Rs. 3,20,000/- profit page No.10 : The assessee in his statement dated 28-03-2003 in reply to question No.2 clearly stated that Rs. 3,20,000/- is profit. The A.O. made the addition of Rs. 3,20,000/- stating that this profit has been generated by the transaction of the assessee along with Shri Dhanrajbhai Jethani of Ambica Realities Pvt. Ltd. The assessee has confirmed the said profit. There is no other material on record. Keeping in view the discussion made in above Para, we find that there is no dispute that the amount of Rs. 3,20,000/- is profit. In absence of the complete detailed filed by the assessee, the addition of Rs. 3,20,000/- is confirmed in the hands of the assessee Shri M. N. Patel as the assessee has failed to explain the source of profit. Further, merely on the basis of assessee's contention, the amount of Rs. 3,20,000/- cannot be added in the hands of the company Ambica Realities Pvt. Ltd. Therefore, the protective addition to the extent of Rs. 3,20,000/- is deleted. 22(11) (iv ) Rs. 5,57,500/- survey No.73/75 : The assessee in his statement in reply to question No.4 stated t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s also submitted. The list contains the name of 34 parties. A copy of sale deed of flat to Shri Dharmendrasinh Amarkumar Jadeja, copy of the bank pay order dated 21-03-1995 for the amount of Rs. 1,20,000/- has also been furnished. Further, the receipt issued by Ambica Realities Pvt. Ltd. dated 25-03-1995 for the amount of Rs. 1,20,000/- was also enclosed. The sale deed was signed on 23-03-1995. Rs,5,57,500/- was on account of land transaction in survey No.73/75. The contention of ld. A.R. of Ambica Realities Pvt. Ltd. is that the A.O. did not treat this income in the hands of the company neither on protective basis nor on substantive basis. After considering the totality of the facts of the case, it is true that this amount has been added in the hands of M. N. Patel and such addition was not made in the hands of the company either as substantive or protective basis. Now question remain to be seen whether under the facts and circumstances, this amount be added in the hands of M. N Patel. We find that the A.O. made the addition without extracting complete facts though; there was sufficient material before the A.O. for his further examination and investigation. The ITAT has c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t share of 6.25%. In fresh assessment, this entire 100% amount has been added in the hands of M. N. Patel on substantive basis. The A.O. made this addition in the hands of assessee on substantive basis. It appears that the AO added this amount in compliance to the direction of C.I.T., Rakot and Addl. C.I.T. by stating that these directions are statutory and binding nature. The total profit Rs. 2, 16, 56,000/- was taxed on substantive basis as the relevant page No.8 and 10 were found and seized from the premises of the assessee M. N. Patel. It is admitted facts that and as discussed in various Para of this order that in spite of availability of the sufficient material , documents and explanation for examination and investigation by A.O. to put on record the complete facts but he failed to do so. He has also failed to comply with the directions of the ITAT. Further, this 100% profit has been added by A.O. in the hands of the assessee M. N. Patel on the basis of direction which were without examination of the facts of the case. In absence of complete material facts and in absence of complete verification and examination, the 100% amount cannot be added in the hands of assessee M. N. P....