TaxTMI 
TaxTMI 
2009 (9) TMI 1096
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..... The assessee is stated to be running two petrol pumps one at Makarpura and another at N. H. No. 8, Varnama Village. During the course of search it was noticed that the assessee was also running a petrol pump- Minal Service Station in the name of Shri Pradeep S. Shah, stated to be a benami concern of the assessee. It was also noticed during the search that the assessee was selling petrol and diesel after mixing kerosene and cheaper products to earn extra profits, which was not disclosed in the regular books of account. On searching one locker in the name of the assessee and his wife with Andhra Bank, three loose papers were seized. Page 1, 2 and 3 of the said loose papers reflected unregistered partnership with Shri Pradeep S Shah which revealed as under: "MINAL SERVICE STATION TOTAL - SHARE IS 75% & 25% SHARE IS OURS AND REST SHARE IS OF FAMILY MEMBER". 2.1 During the course of search at the residence of the assessee, certain loose papers were seized as per loose paper file B-6. Page 128 of the said file revealed undisclosed income of Minal Service Station for the period 1-8-1981 to 31-8-1983, amounting to Rs. 19,27,730/-. During the search and even during the assessm....
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....year 1984-85 Rs. 3,85,546/- in the hands of the assessee which was confirmed by the learned CIT(A). The learned AR of the assessee submitted that as the registration to the firm M/s. Minal Service Station was granted by the A O the income evidenced by the seized documents should not be assessed in the hands of the assessee. We find that the income which was assessed on protective basis in the hands of the partnership firm M/s. Minal Service Station on the basis of the seized documents were deleted by the learned CIT(A)-III, Baroda vide his order dated 18-7-1995 in appeal NO.CAB-III/81-82- 83/95-96. Thus, merely because the partnership firm M/s. Minal Service Station was granted registration it cannot be said that the income earned by the assessee cannot be assessed in the hands of the assessee. It is observed that the assessee could not explain the reason for which the seized documents were found from his possession. The assessee also has not provided the name of the other beneficiaries of the said income. In absence of the same, in our considered opinion the learned CIT (A) was justified in confirming the addition in the hands of the assessee of the entire income reflected by....
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....irm. No help can be taken from the seized document to hold so because the said paper was not found from the possession of the assessee and it does not relate to the years under consideration. As against this, right from the beginning according to the statement of the assessee, the said MSS is his proprietary concern. In view of these facts and also in view of absence of any material placed on record by the Revenue to support its conclusions, we are of the opinion that the learned CIT (A) has rightly decided that no addition could be made in the hands of assessee merely on the basis of above mentioned seized documents. There being no infirmity in the order of the CIT(A), we uphold his orders for all the years under consideration and the Department appeals are dismissed". 2.5. In the light of the aforesaid findings of the ITAT in the case of Shri Pradeep S Shah, the assessee contended that no addition can be made on the basis of same loose papers and thus, penalty could not be imposed. However, the AO rejected the contentions of the assessee on the ground that during the search, the assessee tried to snatch the seized papers and tear away the same. Though the assessee in the appell....
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....urther submitted that the assessee had all along taken the plea that the seized document was not in his handwriting. Since the assessee had given the explanation and the issue is disputed, no penalty could be levied. In this connection, the learned AR relied upon the decision in the case of Sarabhai Chemicals Pvt. Ltd. Vs CIT (2002) 257 ITR 355 (Guj), and Badridas Keshavprasad, 79 ITD 26(tm) (Ahd). On the other hand, the learned DR while carrying us through the impugned orders submitted that addition has been made on the basis of same documents, a part of which has been admitted by the assessee. Once, a part of the paper had been admitted, the other part could not be denied, the learned DR argued. Accordingly, he pleaded that the learned CIT (A) was justified in upholding the levy of penalty u/s 271(1) (c) of the Act. 5. We have heard both the parties and gone through the facts of the case. We find that the issue as to whether the income reflected on page 128 of seized loose papers file B-6 belonged to the assessee or to Pradeep S Shah or partly to both, is disputed before the Hon'ble High Court . The ITAT, vide their order dated 26.10.2005 in the case of Shri Pradeep S Shah uphel....