J.D.Electronics Pvt.Ltd., Ahmedabad v. The Income tax Officer,Ward-2,, Gandhinagar

ITA 1227/AHD/2010 | 1992-1993
Pronouncement Date: 13-08-2010 | Result: Allowed

Appeal Details

RSA Number 122720514 RSA 2010
Assessee PAN AAACJ5317J
Bench Ahmedabad
Appeal Number ITA 1227/AHD/2010
Duration Of Justice 3 month(s) 24 day(s)
Appellant J.D.Electronics Pvt.Ltd., Ahmedabad
Respondent The Income tax Officer,Ward-2,, Gandhinagar
Appeal Type Income Tax Appeal
Pronouncement Date 13-08-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 13-08-2010
Date Of Final Hearing 16-07-2010
Next Hearing Date 16-07-2010
Assessment Year 1992-1993
Appeal Filed On 19-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND N. S. SAINI AM) ITA NO. 1227 AND 1228/AHD/2010 A. Y.: 1992-93 AND 1993-94 M/S. J. D. ELECTRONICS PVT. LTD. 2 ND FLOOR SAKAR- VII NEHRU BRIDE CORNER ASHRAM ROAD AHMEDABAD VS THE INCOME TAX OFFICER WARD-2 GANDHINAGAR PA NO. AAACJ 5317 J (APPELLANT) (RESPONDENT) APPELLANT BY SHRI U. S. BHATI AR RESPONDENT BY SHRI D. S. CHAUDHARY DR O R D E R PER BHAVNESH SAINI: BOTH THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST ORDER OF THE CIT(A) GANDHINAGAR AHMEDABAD DATED 26 TH JANUARY 2010 FOR ASSESSMENT YEARS 1992-93 AND 1993 -94 CHALLENGING THE ADDITION OF RS.2 51 961/- AND RS.5 68 815/- MAD E BY THE AO. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH THE P ARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD POINTED OUT BY THE PARTIES. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASS ESSMENT ORDERS IN QUESTION WERE PASSED AFTER BEING SET ASIDE BY THE I TAT VIDE ITS ORDER DATED 16-03-2007. ORIGINALLY ASSESSMENTS IN THIS C ASE WERE COMPLETED ON 30-03-2000 INVOLVING MAJOR ISSUE OF ADMITTANCE O F UNACCOUNTED INCOME BY SHRI VIKASH SETHIA U/S 132(4) AT THE ASSE SSMENT STAGE IN A SUM OF RS.2 51 951/- FOR ASSESSMENT YEAR 1992-93 AN D RS.5 68 815/- FOR ASSESSMENT YEAR 1993-94. THE AO MADE THE ADDITI ONS OF THESE AMOUNTS IN THE RESPECTIVE YEARS AND THE SAME WERE C ONFIRMED BY THE LEARNED CIT(A) VIDE HIS COMBINED APPELLATE ORDER DA TED 30-01-2003. THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL CONTE NDING THAT THE ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W2 GANDHI NAGAR 2 ASSESSEE HAS NOT BEEN CONFRONTED WITH THE LOOSE PAP ERS. HOWEVER THE TRIBUNAL SET ASIDE THE MATTER OBSERVING AS UNDER: 11. ON MERITS THE ASSESSEES CONTENTION THAT THE LOOSE PAPERS HAVE NOT BEEN CONFRONTED TO THE ASSESSEE AND THE ADDITION WAS MADE MERELY ON THE BASIS OF DISCLOSURE OF THE DIRECTOR WHICH IS NOT JUSTIFIED. THE CIT(A) HAS H ELD THAT IN VIEW OF THE CATEGORICAL STATEMENT MADE BY THE DIREC TOR OF THE ASSESSEE THE DISCLOSURE OF THE LOOSE PAPER WAS NOT REQUIRED TO BE DONE FOR THE SIMPLE REASON THAT THERE WAS NO DENIAL BY THE ASSESSEE AT ANY STAGE THAT NO SUCH DISCLOSURE W AS MADE. WE DO NOT FULLY SUBSCRIBE THE VIEW TAKEN BY THE CIT (A). THE ASSESSING OFFICER HAS BEEN RELYING UPON THE LOOSE P APERS SEIZED DURING THE COURSE OF SEARCH ALONG WITH THE S TATEMENT OF SHRI VIKASH SETHIA AND THEREFORE THE ASSESSEE IS REQUIRED TO BE CONFRONTED WITH THE LOOSE PAPERS BEFORE MAKING T HE ASSESSMENT. WE ACCORDINGLY SET ASIDE THE TWO ORDER S U9NDER CONSIDERATION WITH DIRECTION TO THE A. O. TO CONFRO NT THE LOOSE PAPERS TO THE ASSESSEE AND REPROCESS THE ASSESSMENT ON THE BASIS OF THOSE LOOSE PAPERS REPLY BY THE ASSESSEE AND THE STATEMENT RECORDED U/S 132(4) BY THE DIRECTOR. AS PER THE ABOVE DIRECTION OF THE TRIBUNAL THE PRE SENT ASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUING NOTICE U/S 14 3(2) OF THE IT ACT DATED 05-02-2008. PARA 2 OF THE ASSESSMENT ORDER S HOWS THAT THE LEARNED COUNSEL FOR THE ASSESSEE ATTENDED THE AO SE VERAL TIMES AND HE WAS PERMITTED TO TAKE PHOTOCOPIES OF THE SEIZED MAT ERIALS AND HE DID NOT DO SO. THE AO ISSUED SHOW CAUSE NOTICE AS TO WHY TH E AMOUNT OF RS.2 51 961 AND RS.5 68 815/- SHOULD NOT BE ADDED T O THE INCOME OF THE ASSESSEE IN VIEW OF THE STATEMENT OF SHRI VIKASH SE THIA RECORDED U/S 132(4) OF THE IT ACT. THE SAID NOTICE WAS NOT REPLI ED BY THE ASSESSEE AND HENCE ASSESSMENT WAS COMPLETED AT THE ORIGINAL LEV EL AFTER GIVING CREDIT OF UNABSORBED DEPRECIATION AND BROUGHT FORWARD BUSI NESS LOSS AS PER DIRECTION OF THE TRIBUNAL VIDE ITS ORDER DATED 16-0 3-2007. 4. BOTH THE ADDITIONS WERE CHALLENGED BEFORE THE LE ARNED CIT(A). THE ASSESSEES SUBMISSIONS HAVE BEEN RECORDED IN THE IM PUGNED ORDER IN WHICH THE ASSESSEE PRECISELY EXPLAINED THAT THE AO HAS NOT SUPPLIED ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W2 GANDHI NAGAR 3 COPIES OF THE SEIZED PAPERS DESPITE DIRECTION OF TH E TRIBUNAL AND THE SEIZED PAPERS HAVE NOT BEEN CONFRONTED TO THE ASSES SEE. IT WAS EXPLAINED THAT THE AO HAS NOWHERE MENTIONED IN THE ASSESSMENT ORDER THAT COPIES OF THE SEIZED PAPERS WERE SUPPLIED TO THE ASSESSEE OR TO HIS REPRESENTATIVE. THE AO HAS SIMPLY MENTIONED THAT AS SESSEES REPRESENTATIVE WAS PERMITTED TO TAKE XEROX COPIES O F THE SEIZED PAPERS BUT THE SAME WERE NOT REQUIRED. IT WAS SUBMITTED TH AT THE AO SHOULD HAVE SUPPLIED THE SEIZED PAPERS TO THE ASSESSEE AS IS DIRECTED BY THE TRIBUNAL. IT WAS THEREFORE SUBMITTED THAT THE ASS ESSEE THEREFORE RIGHTLY DID NOT OFFER THE INCOME IN THE RETURN OF INCOME. T HE SUBMISSION OF THE ASSESSEE SO INCORPORATED IN THE IMPUGNED ORDER WAS REFERRED TO THE AO ALONG WITH HIS COMMENTS ON THE ADDITIONAL GROUND OF APPEAL. THE AO FILED HIS REPORT BEFORE THE LEARNED CIT(A) IN WHICH IT WAS EXPLAINED THAT THE ASSESSEE WAS ASKED TO GIVE LIST OF DOCUMENTS/PA PERS/SEIZED PAPERS FOR WHICH PHOTO COPIES OF THE SAME COULD BE PROVIDE D. IT WAS STATED THAT THE ASSESSEE HAS RECEIVED COPIES OF THE SEIZED MATE RIAL AT THE ASSESSMENT STAGE. THE AO FURTHER EXPLAINED THAT THE ENTIRE SEI ZED MATERIAL WAS OFFERED TO THE ASSESSEE AND THE ASSESSEE WAS ASKED TO ASCERTAIN THE DOCUMENTS FOR WHICH COPIES WERE REQUIRED. BUT THE A SSESSEE DID NOT TAKE COPIES OF THE SEIZED PAPERS. THE AO THEREFORE EXP LAINED THAT THE ASSESSEE WAS ONLY ALLOWED INSPECTION OF THE SEIZED DOCUMENTS AND THE ASSESSEE HAS DECLINED TO TAKE COPIES OF THE SAME. I T IS EXPLAINED IN PARA 10 OF THE REPORT (NOTED AT PAGE 9 OF THE IMPUGNED O RDER) THAT THE ASSESSEE WANTED SPECIFIC LOOSE SHEET/ DOCUMENTS IN WHICH THE FIGURE OF THE DISCLOSURE WAS MENTIONED. IT WAS SUBMITTED ON VERIF ICATION OF THE RECORD FIGURE OF RS.2 51 961/- AND RS.5 68 815/- (UNDER AP PEAL) WERE NOT MENTIONED IN THE LOOSE PAPER EXCEPT IN THE STATEMEN T RECORDED U/S 132(4) OF THE IT ACT. THE THEN AO MIGHT HAVE RELIED UPON THESE FIGURES AS DISCLOSURE AND ON THAT BASIS THE ORDERS MIGHT HAVE BEEN PASSED. THE AO THEREFORE SUBMITTED THAT SINCE THE ASSESSEE DISCLO SED THE ABOVE AMOUNTS IN HIS STATEMENT U/S 132(4) OF THE IT ACT THE SAME MAY BE TAKEN AS ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W2 GANDHI NAGAR 4 EVIDENCE AND THE ADDITION MAY BE CONFIRMED ON SUCH STATEMENT. THE LEARNED CIT(A) ALSO QUOTED THE REPORT OF THE JCIT GANDHINAGAR WHO FORWARDED THE REPORT OF THE AO IN WHICH IT WAS EXPL AINED THAT THE ASSESSEE HAD ALREADY RECEIVED COPIES OF THE DOCUMEN TS AND IT APPEARS THAT THE ASSESSEE WANTED TO KNOW EXACTLY IN WHICH L OOSE SHEET THE FIGURES OF DISCLOSURE WAS MENTIONED. THE AO HAS SUBMITTED H IS REPORT WITH LOOSE SHEET DO NOT REFLECT THE DISCLOSED UNACCOUNTED FIGU RE AND IT IS FOR THE ASSESSEE TO EXPLAIN THE AMOUNT DISCLOSED U/S 132(4) OF THE IT ACT WHICH WAS ALSO EXPLAINED THAT SINCE IT WAS A VOLUNTARY ST ATEMENT OF THE ASSESSEE THEREFORE ADDITION MAY BE CONFIRMED. THE ABOVE REPORTS OF THE AO AND THE JCIT WERE FORWARDED TO THE AO FOR COMMEN TS. THE SUBMISSION OF THE ASSESSEE HAS BEEN FURTHER INCORPO RATED IN THE IMPUGNED ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAI NED THAT THE DOCUMENTS SUPPLIED TO THE ASSESSEE HAVE NO RELEVANC E WITH THE DECLARATION OF INCOME U/S 132(4) OF THE IT ACT AND THAT NO DOCUMENT HAS BEEN CONFRONTED TO THE ASSESSEE IN THE PROCEEDINGS BEFORE THE AO AS PER THE DIRECTION OF THE TRIBUNAL. IT WAS EXPLAINED THA T SINCE NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH THEREFORE THERE WAS NO REASON TO OBTAIN DECLARATION OF THE ASSESSEE. IT WAS FURTHER EXPLAINED THAT STATEMENT OF THE AO IS NOT CORRECT THAT THE DOCUMEN TS WERE SUPPLIED TO THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE DIR ECTOR WAS UNDER MENTAL STRESS ON THE DATE OF SEARCH AND THEREFORE STATEMENT GIVEN ON THE DATE OF SEARCH WAS DIRECTED BY THE TRIBUNAL TO BE TESTED IN THE LIGHT OF THE SEIZED MATERIAL IF ANY ON THE BASIS OF WHICH DE CLARATION HAS BEEN OBTAINED. IT WAS THEREFORE SUBMITTED THAT THE DIR ECTOR DID NOT DECLARE ANY INCOME IN THE RETURN FILED IN THIS REGARD. NOTH ING WAS FOUND AGAINST THE ASSESSEE AND IT WOULD AMOUNT TO RETRACTION OF THE DECLARATION MADE U/S 132(4) OF THE IT ACT. THE ASSESSEE ALSO RE LIED UPON THE CBDT CIRCULAR DATED 10-03-2003 IN WHICH THE BOARD HAD BE EN APPRAISE OF THE FACT THAT DECLARATION OF UNDISCLOSED INCOME WERE B EING OBTAINED FROM THE PARTIES EVEN WHEN THERE IS NO EVIDENCE GATHERE D DURING THE COURSE OF ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W2 GANDHI NAGAR 5 SEARCH OR SURVEY. THEREFORE THE BOARD HAS DIRECTED /ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION OF COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DIS CLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPART MENT. SIMILARLY WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATION NO ATTEMPT SHOULD BE MADE TO OBTAIN CONF ESSION AS TO UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHOU LD BE TAKEN ADVERSELY. IT WAS THEREFORE SUBMITTED THAT THERE WAS NO MATERIAL OR EVIDENCE FOUND DURING THE COURSE OF SEARCH. THEREFO RE THERE IS NO RELEVANCE OF THE STATEMENT AND ADDITION SHOULD BE D ELETED. 5. THE LEARNED CIT(A) CONSIDERING THE SUBMISSION OF THE ASSESSEE AND MATERIAL ON RECORD CONFIRMED BOTH THE ADDITIONS. HI S FINDINGS IN PARA 11 TO 16 ARE REPRODUCED AS UNDER: 11. THE ISSUE HAS BEEN CONSIDERED. NOTWITHSTANDIN G THE PERSISTENT TENDENCY ON THE PART OF THE ASSESSEE TO DRAG THE ISSUE REFLECTED IN ITS STAND OF ASKING FOR INSPECT ION AND SUPPLY OF THE DOCUMENTS BEFORE THE ITAT AND THEN AS SERTING THE KNOWLEDGE OF ALL THE SEIZED MATERIAL IN THE PRO CEEDING BEFORE THE ASSESSING OFFICER THE DISPUTE PRIMARIL Y REVOLVES AROUND THE ISSUE AS TO - 1) WHETHER THE DECLARATION MADE U/S. 132(4) NEEDS TO BE TAKEN ON FACE VALUE OR NEEDS TO BE SUBSTANTIATED FURTHER. 2) WHETHER THE DECLARATION MADE AT CALCUTTA DURING THE SEARCH PROCEEDINGS BY SHRI DHARAMCHAND SETHIA COVERS THE DECLARATION MADE BY VIKAS SETHIA AHMEDABAD. 12. AS FAR AS THE EVIDENTIARY VALUE OF STATEMENT U /S. 132(4) IS CONCERNED THIS IS A STATEMENT MADE UNDER OATH AND IT IS AN ESTABLISHED LEGAL POSITION THAT THE SAME C AN BE UTILIZED FOR ASSESSMENT PURPOSE. THE CIRCULAR OF CBDT QUOTED BY THE APPELLANT PRIMARILY DEALS WITH SURVEY OPERATIONS AN D NOT WITH SEARCH OPERATION. REFERENCE OF THE AUTHORISED REPRE SENTATIVE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE ME T O THE 7 ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W2 GANDHI NAGAR 6 DOCUMENTS IS TOTALLY REDUNDANT EXERCISE BECAUSE THE ASSESSING OFFICER IN THE PRESENT ORDER HAS NOT REFE RRED TO THOSE PAPERS TO MAKE THE ADDITION. 13. IT IS INTERESTING THAT WHILE IN THIS PROCEEDIN GS THE APPELLANT IS OBJECTING TO THE USE OF STATEMENT U/S. 132(4) MADE BY THE LOCAL DIRECTOR BUT IN SIMILAR CIRCUMSTA NCES IS RELYING HEAVILY ON THE STATEMENT U/S. 132(4) MADE A T CALCUTTA ON WHICH CIT WEST BENGAL-IX CALCUTTA HAS PASSED A SORT OF SETTLEMENT ORDER DATED 26/7/1994. IF THE STATEMENT OF SHRI DHARAMCHAND SETHIA HAD VALIDITY BEFORE THE CIT WES T BENGAL IX THE STATEMENT OF SHRI VIKAH SETHIA CANNOT BE I GNORED AS FAR AS THE ASSESSMENTS AT AHMEDABAD ARE CONCERNED. 14. FURTHER SINCE THERE IS NO MATERIAL CHANGE IN THE SITUATION WHICH EXISTED WHEN THE APPELLANT WAS HEA RD BY MY PREDECESSOR IN PASSING THE APPELLATE ORDER DATED 20 /1/2003 EITHER IN TERMS OF PRESENTATION BEFORE THE ASSESSIN G OFFICER OR IN TERMS OF PRESENTATION BEFORE CIT(A) I THINK IT IS IN LINE WITH THE JURIDICAL DISCIPLINE TO CONCUR WITH THE STAND T AKEN BY MY PREDECESSOR. 15. AS FAR AS THE ISSUE CONCERNING THE FACT THAT T HE DECLARATION BY SHRI DHARAMCHAND SETHIA INCLUDES TH E DECLARATION OF SHRI VIKAS SETHIA THE ONUS IS TOTAL LY ON THE ASSESSEE TO COME FORTH AND EXPLAIN IT AS TO HOW AND ON WHAT BASIS SHRI VIKAS SETHIAS DECLARATION CAN BE TELESC OPED INTO THAT DECLARATION. NEEDLESS TO SAY OTHERWISE THE OR DER OF CIT WEST BENGAL-IX WOULD HAVE RELEVANCE ONLY FOR THE JU RISDICTION HE HAD AT THAT RELEVANT TIME WHICH DID NOT INCLUDE EITHER AHMEDABAD OR THE APPELLANT BEFORE ME. 16. THEREFORE CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE IN MY VIEW THE ADDITIONS OF RS.2 51 961/- AND RS.5 68 815/- WHICH IS SUPPORTED BY THE ASSESSEE-DIRECTORS DECLARATION U/S. 132 AND WHICH HAD NOT BEEN RETRACTED TILL THE TIME FRAMING THE ASSESSMEN T IS QUITE JUSTIFIED AND IS CONFIRMED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T NO LOOSE PAPER WAS FOUND DURING THE COURSE OF SEARCH AGAINST THE ASSES SEE. THEREFORE NO RELEVANT LOOSE PAPER WAS SUPPLIED AND CONFRONTED TO THE ASSESSEE IN THE ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W2 GANDHI NAGAR 7 SET ASIDE PROCEEDINGS. HE HAS SUBMITTED THAT THE OR DER OF THE TRIBUNAL HAS THUS NOT BEEN COMPLIED WITH. HE HAS FURTHER SUB MITTED THAT THE AO HAS ADMITTED IN HIS REPLY BEFORE THE LEARNED CIT(A) THAT THE FIGURES OF RS.2 51 961/- AND RS.5 68 815/- IN BOTH THE ASSESSM ENT YEARS IN WHICH ADDITION HAS BEEN MADE ARE NOT PART OF THE LOOSE SH EETS EXCEPT MENTIONING IN THE STATEMENT U/S 132(4) OF THE IT AC T. THE LEARNED COUNSEL FOR THE ASSESSEE THEREFORE SUBMITTED THAT THE ASSESSEE DID NOT DECLARE ANY ADDITIONAL INCOME ON THE BASIS OF THE STATEMENT ONLY AND IT WOULD AMOUNT TO RETRACTION FROM THE EARLIER STATEME NT. HE HAS RELIED UPON THE FOLLOWING DECISIONS: (1) DCIT VS PRAMUKH BUILDERS 115 TTJ (AHD) (T M) 330 (2) ACIT VS JORAWAR SINGH M. RATHOD 94 TTJ (AHD) 867 A ND (3) SMT. RANJNABEN MANSUKHLAL SHAH VS ACIT 83 TTJ (RAJ) 369 7. ON THE OTHER HAND THE LEARNED DR RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT COPIES OF THE LOOSE PAPERS WERE SUPPLIED TO THE ASSESSEE AT THE ASSESSMENT STAGE AN D THAT THE ASSESSEE DID NOT SPECIFICALLY RETRACTED FROM THE STATEMENT. DURING THE COURSE OF HEARING BOTH THE PARTIES WERE DIRECTED TO FILE COPY OF THE STATEMENT OF THE DIRECTOR RECORDED AT THE TIME OF SEARCH. THE LEARNE D DR WAS ALSO DIRECTED TO FILE A SPECIFIC REPLY OF THE AO AS TO WHICH OF T HE SEIZED MATERIALS WAS INCRIMINATING IN NATURE AGAINST THE ASSESSEE FOR TH E PURPOSE OF MAKING THE ADDITION IN BOTH THE APPEALS. THE LEARNED DR IN COMPLIANCE TO THE ORDER DATED 16-7-2010 FILED COPY OF THE STATEMENT O F SHRI VIKAS SETHIA RECORDED U/S 132 (4) OF THE IT ACT DATED 05-11-1993 . THE LEARNED DR HOWEVER DID NOT FILE ANY REPLY OF THE AO AS TO WHI CH OF THE SEIZED MATERIALS WERE INCRIMINATING IN NATURE AGAINST THE ASSESSEE FOR THE PURPOSE OF MAKING THE ADDITION. THE LEARNED DR REFE RRED TO PAGE 9 OF THE IMPUGNED ORDER IN WHICH THE REPORT OF THE AO IN PAR A 10 IS INCORPORATED IN WHICH THE AO ACCEPTED THAT THE FIGURES OF THE IM PUGNED ADDITION ARE NOT MENTIONED IN THE LOOSE SHEETS EXCEPT IN THE STA TEMENT. THE LEARNED ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W2 GANDHI NAGAR 8 DR SUBMITTED THAT REPRESENTATIVE OF THE ASSESSEE SU BMITTED BEFORE THE AO THAT ALL COPIES HAVE BEEN OBTAINED DURING THE AS SESSMENT STAGE. THEREFORE THE ASSESSEE WAS DULY CONFRONTED WITH AL L THE SEIZED MATERIAL AND AS SUCH ADDITION HAS BEEN RIGHTLY MADE ON THE B ASIS OF STATEMENT RECORDED ON OATH U/S 132 (4) OF THE IT ACT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. THE FACTS AS NOTED IN THIS ORDER ARE NOT DISPUTED. DURING THE COURSE OF ARGUMENTS THE TRIBUNAL PASSED ORDER DATE D 16-07-2010 IN ORDER TO GET THE SPECIFIC REPLY OF THE AO WITH REGA RD TO THE SEIZED MATERIALS WHICH WERE INCRIMINATING IN NATURE AGAINS T THE ASSESSEE FOR THE PURPOSE OF MAKING THE ADDITION. BOTH THE PARTIES WE RE ALSO DIRECTED TO FILE COPIES OF THE STATEMENT OF THE DIRECTOR RECORDED AT THE TIME OF SEARCH. THE ORDER DATED 16-07-2010 IS REPRODUCED AS UNDER: ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W-2 GANDH INAGAR 16-07-2010 PRESENT SHRI U. S. BHATI LEARNED COUNSEL FOR THE A SSESSEE AND SHRI D. S. CHAUCHARY LEARNED SR. DR. AFTER HEARING PART ARGUMENTS IN THIS CASE IT IS NE CESSARY TO DIRECT BOTH THE PARTIES TO FILE COPY OF THE STATEME NT OF THE DIRECTOR RECORDED AT THE TIME OF SEARCH. LEARNED DR IS ALSO DIRECTED TO FILE A SPECIFIC REPLY OF THE ASSESSING OFFICER AS TO WHICH OF THE SEIZED MATERIALS WERE INCRIMINATING IN NATURE AGAINST THE ASSESSEE FOR THE PURPOSE OF MAKING THE ADDITIONS IN BOTH THE APPEALS. THE APPEALS ARE ADJOURNED TO 2 8 TH JULY 2010. TREATED AS A PART-HEARD MATTER. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO COPY OF THE STATEMENT OF THE DIRECTOR HAS BEEN SUPPLIED TO HIM WHICH WAS RECORDED AT THE TIME OF SEARCH. HE HAS SUBMITTED THAT COPY O F THE STATEMENT OF SHRI VIKAS SETHIA DATED 05-11-1993 HAS BEEN SUPPLIE D WHICH IS NOT RECORDED AT THE TIME OF SEARCH. THE LEARNED DR FILE D A COPY OF THE ABOVE ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W2 GANDHI NAGAR 9 STATEMENT DATED 05-11-1993 AT THE TIME OF HEARING O F THE ARGUMENTS. HOWEVER NO REPLY OF THE AO IS FILED TO SHOW WHICH OF THE SEIZED MATERIALS WERE INCRIMINATING IN NATURE AGAINST THE ASSESSEE F OR THE PURPOSE OF MAKING THE ADDITION IN BOTH THE APPEALS. THE LEARNE D DR REFERRED TO THE REMAND REPORT OF THE AO MENTIONED AT PAGE 9 OF THE APPELLATE ORDER IN PARA 10 IN WHICH THE AO ADMITTED THAT THE FIGURES O F THE ABOVE ADDITIONS ARE NOT MENTIONED IN THE LOOSE SHEETS. THE SAME IS THE REPLY OF THE JCIT GANDHINAGAR RANGE. THE ABOVE FACTS WOULD SHOW THAT THERE IS NO STATEMENT OF THE DIRECTOR AVAILABLE ON RECORD WHICH WAS RECORDED AT THE TIME OF SEARCH BECAUSE THE SAME IS NOT FILED BEFORE THE TRIBUNAL DESPITE SPECIFIC DIRECTION. THERE IS ALSO NO SEIZED MATERIA L WITH THE REVENUE DEPARTMENT TO SHOW ANY BASIS AS TO HOW BOTH THE ADD ITIONS HAVE BEEN MADE AGAINST THE ASSESSEE. IT THEREFORE APPEARS T HAT ADDITIONS ARE MADE MERELY ON THE BASIS OF STATEMENT OF SHRI VIKAS SETH IA DATED 05-11-1993 IN WHICH BOTH THE ABOVE AMOUNTS OF THE ADDITIONS HA VE BEEN REFERRED IN ANSWER TO QUESTION NO.5. THE HONBLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. VS STATE OF KERA LA 91 ITR 18 HELD THAT THE ASSESSEE SHOULD BE GIVEN OPPORTUNITY TO SHOW T HAT ADMISSION IS INCORRECT OR DOES NOT SHOW CORRECT STA TE OF FACTS. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF KISHAN LAL SHIV CHAND RAJ VS CIT 88 UTR 293HELD THAT IT IS AN ESTABLISHED PRINCIPLE OF LAW THAT A PARTY IS ENTITLED TO SHOW AND PROVE T HAT AN ADMISSION MADE BY HIM WAS IN FACT NOT CORRECT AND T RUE. ITAT AHMEDABAD BENCH IN THE CASE OF DCIT VS PRAMUKH BUIL DERS 115 TTJ 331 HELD AS UNDER: CONCLUSION: THERE BEING NO SPECTRE OF EVIDENCE REGARDING UNDISCLOSED INCOME ADDITION MADE ONLY8 O N THE BASIS OF STATEMENT OF MANAGING PARTNER OF ASSES SEE UNDER S. 132(4) GIVEN IN A STATE OF CONFUSION AND LATER RETRACTED COULD NOT BE SUSTAINED EITHER IN PART OR AS A WHOLE. ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W2 GANDHI NAGAR 10 ITAT AHMEDABAD BENCH IN THE CASE OF ACIT VS JORAWAR SINGH M. RATHOD 94 TTJ 867 HELD AS UNDER: CONCLUSION: ADDITION MADE BY THE AO MERELY ON THE BASIS OF RETRACTED STATEMENT UNDER S. 132(4) COULD NOT BE SUSTAINED IN THE ABSENCE OF ANY EVIDENCE MATERI AL OR RECOVERY OF ANY MOVABLE OR IMMOVABLE ASSETS AT THE TIME OF SEARCH TO CORROBORATE THE DISCLOSURE MADE B Y THE ASSESSEE. ITAT RAJKOT BENCH IN THE CASE OF SMT. RANJNABEN MAN SUKHLAL SHAH VS ACIT 83 TTJ 369 HELD AS UNDER: CONCLUSION: IN THE ABSENCE OF ANY MATERIAL/EVIDENC E COLLECTED BY THE REVENUE DURING THE SEARCH IN SUPPO RT OF THE DISCLOSURE STATEMENTS ADDITIONS MADE SOLELY ON THE BASIS OF SUCH DISCLOSURE STATEMENTS CANNOT BE SUSTAINED ASSESSEES HAVING RETRACTED FROM SUCH STATEMENTS. 9. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE EARLIER ORDER OF THE TRIBUNAL IN THE ABOVE CASE DATED 16-03-2007 FI NDINGS OF WHICH IS REPRODUCED ABOVE WOULD SHOW THAT THE TRIBUNAL WHIL E SETTING ASIDE THE EARLIER ASSESSMENT ORDER DIRECTED THE AO TO CONFRON T THE LOOSE PAPERS TO THE ASSESSEE AND REPROCESS THE ASSESSMENT ON THE BA SIS OF THE LOOSE PAPERS RELIES BY THE ASSESSEE AND STATEMENT RE CORDED U/S 132(4) OF THE IT ACT BY THE DIRECTOR. SINCE THERE IS NO INCRI MINATING SEIZED MATERIAL ON RECORD AGAINST THE ASSESSEE FOR THE PURPOSE OF M AKING THE ABOVE ADDITIONS THEREFORE THERE WAS NO QUESTION OF CONF RONTATION OF ANY LOOSE PAPERS TO THE ASSESSEE. THEREFORE DIRECTION OF THE TRIBUNAL IS NOT COMPLIED WITH IN THE MATTER. FURTHER THE ASSESSEE FROM THE STATEMENT OF THE DIRECTOR HAS BEEN ABLE TO PROVE THAT THE DIRECT OR HAS MADE THE STATEMENT WITHOUT ANY BASIS UNDER SOME CONFUSION IN HIS MIND. THEREFORE THE ASSESSEE WAS JUSTIFIED IN NOT DECLAR ING THE INCOME IN THE RETURN OF INCOME. THE ASSESSEE WAS THEREFORE ABLE TO ESTABLISH THAT THE ADDITION IS CLEARLY UNJUSTIFIED IN THE MATTER. THE ASSESSEE ON THE BASIS OF ITA NO.1227 AND 1228/AHD/2010 M/S. J. D. ELECTRONICS PVT. LTD. VS ITO W2 GANDHI NAGAR 11 THE EXPLANATION AND QUERIES RAISED AT THE STAGE OF ASSESSMENT HAS BEEN ABLE TO SATISFY THAT THE ADMISSION MADE BY THE DIRE CTOR WAS IN FACT INCORRECT AND NOT TRUE BECAUSE HIS DECLARATION WAS NOT BASED UPON ANY INCRIMINATING SEIZED MATERIAL. BOARD CIRCULAR REFER RED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE APPLY TO SEARCH CASES ALSO . NO BASIS IS EXPLAINED AS TO HOW ADDITIONS ARE SUSTAINABLE IN LA W. 10. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE ABOVE DISCUSSIONS WE ARE OF THE VIEW THAT BOTH THE ADDITIONS ARE CLEARLY UNJUSTIFIED AND AS SUCH THE ADDITIONS CANNO T BE SUSTAINED IN LAW AND FACTS OF THE CASE. WE ACCORDINGLY SET ASIDE TH E ORDERS OF THE AUTHORITIES BELOW AND DELETE BOTH THE ADDITIONS. 11. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 13-08-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 13-08-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD