M/S. FORJET LEASING LTD., v. THE ITO 4(2)(3),

ITA 3021/MUM/2008 | 1999-2000
Pronouncement Date: 30-12-2011 | Result: Partly Allowed

Appeal Details

RSA Number 302119914 RSA 2008
Assessee PAN AAACF5354R
Bench Mumbai
Appeal Number ITA 3021/MUM/2008
Duration Of Justice 3 year(s) 7 month(s) 25 day(s)
Appellant M/S. FORJET LEASING LTD.,
Respondent THE ITO 4(2)(3),
Appeal Type Income Tax Appeal
Pronouncement Date 30-12-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 30-12-2011
Date Of Final Hearing 24-02-2011
Next Hearing Date 24-02-2011
Assessment Year 1999-2000
Appeal Filed On 05-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI J.SUDHAKAR R EDDY (A.M) IT(SS)A NO.73/MUM/05 (BLOCK PERIOD 1/4/88 TO 4/3/99 ) ITA NO.1382/MUM/05(A.Y. 1994-95) ITA NO.1383/MUM/05(A.Y. 1996-97) ITA NO.1384/MUM/05(A.Y. 1997-98) ITA NO.3020/MUM/08(A.Y. 1995-96) ITA NO.3021/MUM/08(A.Y.1999-00) FORJET LEASING LIMITED 18 SURTI CHAMBER 2 ND DHOBI TALAO LANE MUMBAI 400 002 PAN:AAACF 5354R (APPELLANT) VS. THE ITO 4(2)(3) AAYKAR BHAVAN MK ROAD MUMBAI 20. (RESPONDENT) ASSESSEE BY : SHRI SUDHIR J. MEHTA ADVOCATE REVENUE BY : SHRI PRAVIN VARMA CIT (DR) DATE OF HEARING : 18/11/2011 DATE OF PRONOUNCEMENT : 30/12/2011 ORDER PER BENCH: IT(SS) 73/M/05:- IT(SS) NO. 73/MUM/2005 IS AN APPEAL FILED AGAINST T HE ORDER OF THE CIT(APPEALS)-IV MUMBAI DATED 25-11-2004 FOR THE BLOCK PERIOD FROM ASSESSMENT YEARS 1989-90 TO 4-3-1999 WHEREIN THE CI T(APPEALS) HAD PARTLY CONFIRMED THE BLOCK ASSESSMENT ORDER PASSED BY THE AO U/S 158BC READ WITH SECTION 143(3) ON 28-3-2001. THE OTHER APPEALS ARE DIRECTED AGAINST SEPARATE ORDERS OF THE CIT(APPEALS) WHEREIN THE CIT (APPEALS) HAD PARTLY CONFIRMED THE ORDERS PASSED BY THE AO U/S 143(3) F OR THE ASSESSMENT YEARS 1994-95 1995-96 1996-97 1997-98 AND 1999-2000. A T THE REQUEST OF THE FORJET LEASING LIMITED 2 ASSESSEE ALL THE APPEALS WERE CLUBBED AND WERE HEAR D TOGETHER FOR THE SAKE OF CONVENIENCE. 2. FACTS IN BRIEF: (RELEVANT TO GROUNDS NO.1 3 4 AND 6) THE ASSESSEE IS A COMPANY WHICH WAS INCORPORATED O N 13 TH MARCH 1987. THE ASSESSEE COMPANY CLAIMS THAT ITS BUSINESS INCLUDES I) TRADING IN CLOTH II) EXPORT OF READYMADE GARMENTS AND III) MA NUFACTURING OF TWISTED/DYED YARN. IT IS THE CLAIM OF THE ASSESSEE COMPANY THAT IT STARTED A PROPRIETARY CONCERN IN THE NAME AND STYLE OF M/S SU N ENTERPRISES IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1994- 95 AT PLOT NO. 214 GAUTHAN NO.2 DHABEL VILLAGE NANI DAMA (U.T.). THE CLAIM OF THE ASSESSEE WAS THAT THIS PROPRIETARY CONCERN OWNED BY IT WAS ENGAGED IN MANUFACTURING OF POLYSTER FILAMENT TEXTURRISED/TW ISTED YARN AT THE ABOVE ADDRESS IN NANI DAMAN. IT ALSO CLAIMED THAT IT RECE IVED SALES TAX REGISTRATION NO. WITH EFFECT FROM 13-12-1993 AND THAT IT WAS REG ISTERED AS A SMALL SCALE INDUSTRY AND THE PROVISIONAL REGISTRATION CERTIFICA TE WAS GRANTED BY THE DEPARTMENT OF INDUSTRIES DISTRICT INDUSTRIAL CENTR E AS WELL AS IT HAD GOT ITSELF REGISTERED WITH THE EXCISE DEPARTMENT. 3. THERE WAS A SEARCH AND SEIZURE ACTION ON THE PRE MISES OF THE ASSESSEE ON 27-2-1999 AND 4-3-1999 AND CONSEQUENTLY THE AO I SSUED NOTICE U/S 158BC WHICH WAS SERVED ON THE ASSESSEE ON 29-9-199 9. THE ASSESSEE DID NOT FILE A RETURN OF INCOME WITHIN THE PERIOD OF 4 5 DAYS STIPULATED IN THE NOTICE. THEREAFTER THE ASSESSEE FILED A NIL RETURN OF INCOME ON 5-1-2001. 4. DURING THE BLOCK ASSESSMENT PROCEEDINGS THE ASSE SSEE DID NOT PRODUCE ANY BOOKS OF ACCOUNT DOCUMENTS PRODUCTION RECORD STOCK RECORD ETC ON THE GROUND THAT THESE HAVE BEEN DESTROYED B Y WHITE ANTS. THE ASSESSEE CLAIMS THAT ALL THESE RECORDS INCLUDING RE GULAR BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE STATUTORY AUDITORS ON THE BASIS OF WHICH THE ASSESSEE CLAIMS TO HAVE FILED A RETURN OF INCOME FO R THE ASSESSMENT YEARS FORJET LEASING LIMITED 3 FALLING IN THE BLOCK PERIOD. THE AO REQUESTED THE A SSESSEE TO RECONSTRUCT THE BOOKS OF ACCOUNT AS THE ASSESSEE WAS CLAIMING THAT THE REGULAR BOOKS OF ACCOUNT PRODUCTION RECORDS PAY IN SLIPS ETC. WERE DESTROYED BY WHITE ANTS. THE ASSESSEE CHOSE NOT TO COMPLY WITH THE REQUEST O F THE AO. 5. THE AO RECORDS AT PAGE 4 PARA 4 OF THE BLOCK ASS ESSMENT ORDER THAT A SURVEY U/S 133A WAS CARRIED ON THE ASSESSEE ON 9-1- 1998. IT IS ALSO RECORDED THAT IT WAS OBSERVED DURING THE COURSE OF SURVEY THAT NO ACTIVITY WAS GOING ON AT THE ABOVE ADDRESS AND THERE WAS NO CONCERN IN THE NAME AND STYLE OF M/S SUNRISE ENTERPRISES EXISTING AT T HE ADDRESS GIVEN IN NANI DAMAN. 6. THE AO ALSO RECORDS THAT THE INCOME-TAX OFFICER WARD-4(1) WHO WAS THE AO ALSO MADE ENQUIRIES ABOUT THE ACTIVITIES IF ANY OF M/S SUNRISE ENTERPRISES AT NANI DAMAN. THE ENQUIRIES WERE MADE FROM I) CHIEF INSPECTOR OF FACTORIES AND BOILERS II) OFFICE OF THE SALES-T AX OFFICER AND III) DIRECTOR OF INDUSTRIES. THE AO OBSERVED AS FOLLOWS : THE I.T.O. WD.4(1) THEN A.O. ALSO MADE ENQUIRI ES FROM FOLLOWING GOVT. OFFICES ABOUT THE ACTIVITIES IF A NY OF M/S. SUNRISE ENTERPRISES AT DAMAN. 1. CHIEF INSPECTOR OF FACTORIES AND BOILERS. 2. OFFICE OF SALES TAX OFFICER. 3. DIRECTOR OF INDUSTRIES. THE CHIEF INSPECTOR OF FACTORIES AND BOILERS DAMAN INFORMED VIDE THEIR LETTER NO.6(1)C.L.F. & B/DMN/MISC./98-68 4 DT. 10.12.98 THAT NO LICENCE WAS ISSUED BY THEM TO M/S SUNRISE ENTERPRISES UNDER THE FACTORIES ACT 1948. IT WAS INFORMED BY THE DEPARTMENT OF INDUSTRIES DI STRICT INDUSTRIES CENTRE DAMAN VIDE THEIR LETTER NO. DMN/DIC/PROV.1033/98-99 DT. 10.12.98 THAT A PROVIS IONAL REGISTRATION WAS GRANTED ON 6.10.93 TO M/S SUNRISE ENTERPRISES FOR THE FACTORY TO BE LOCATED AT THE ABOVE ADDRESS; THE PERIOD OF THE PROVISIONAL REGISTRATION EXPIRED ON 6.10.98 BUT THE ASSESSEE HAD NOT APPLIED FOR PERMANENT REGISTRATION NOR ANY PERM ANENT REGISTRATION HAD BEEN GRANTED TO THE ASSESSEE. IT HAS SPECIFICALLY FORJET LEASING LIMITED 4 MENTIONED IN THE LETTER THAT IF THE PARTY HAS NOT OBTAINED THE PERMANENT REGISTRATION CERTIFICATE THE UNIT IS NOT ENTITLED FOR ANY TAX BENEFIT. THE SALES TAX OFFICER DAMAN INFORMED VIDE HIS LET TER NO. DMN/ST/EST/98-99/369 DT. 10.12.98 THAT PROVISIONAL REGISTRATION WAS GRANTED TO M/S SUNRISE ENTERPRISES IN SALES T AX DEPTT ON THE BASIS OF PROVISIONAL REGISTRATION CERTIFICATE ISSUE D BY THE DEPARTMENT OF INDUSTRIES DAMAN. IT WAS INFORMED BY THE SALES TAX OFFICER THAT M/S S UNRISE ENTERPRISE ENTERPRISES HAD NOT FILED ANY QUARTERLY RETURN SINCE IT WAS GRANTED PROVISIONAL REGISTRATION W.E.F. 13.12.9 3. THE ASSESSEE HAD NEITHER APPLIED FOR PERMANENT SALES TAX REGISTR ATION NOR WAS THE PERMANENT SALES TAX REGISTRATION WAS GRANTED TO M/S SUNRISE ENTERPRISES. IN ORDER TO CONFRONT ALL THESE FACTS TO THE ASSESSE E SUMMONS U/S 131 WERE ISSUED TO THE ASSESSEE BY THE A.O. BUT THE ASSESSEE DID NOT RESPONSE TO THE SUMMONS. 7. THE AO REJECTED THE CLAIM OF THE ASSESSEE FOR D EDUCTION U/S 80IA ON THE GROUND THAT A) THERE WAS NO UNIT IN PLOT NO. 21 4 AS CLAIMED BY THE ASSESSEE B) THERE WAS NO TRACE OF ANY MACHINERY BE ING AVAILABLE AT THE ABOVE SAID PREMISES C) THERE WAS NO SIGN BOARD OF THE C OMPANY AT ALL OF THE PROPRIETARY CONCERN AT PLOT NO. 214 D) THERE WAS N O BUILDING ON THE SAID PLOT E) THERE WAS NO MANUFACTURING ACTIVITY WHICH WAS CARRIED ON IN THE SAID PLOT F) THE PARTY FROM WHOM THE ASSESSEE HAS CLAIM ED TO HAVE PURCHASED THE MACHINES WAS NOT AVAILABLE AT THE ADDRESSES GIVEN B Y THE ASSESSEE AND G) NO BOOKS OF ACCOUNT AND OTHER RECORDS WERE PRODUCED ON THE GROUND THAT THE SAME WERE EATEN BY WHITE ANTS. 8. THE AO RECORDED THE STATEMENT OF THE DIRECTOR SH RI ASHOK GUPTA ON DIFFERENT OCCASIONS. HE CONCLUDED AS FOLLOWS : IN BRIEF IT CAN BE SAID THAT DURING THE COURSE OF SEARCH AND SURVEY ACTION FOLLOWING FACTS CAME TO NOTICE OF THE DEPARTMENT. FORJET LEASING LIMITED 5 I) AT PLOT NO. 214 GAUTHAN NO.2 DHABEL VILLAGE NANI DAMAN THERE WAS NO UNIT IN THE NAME AND STYLE OF M/S SUNR ISE ENTERPRISES. II) THERE WAS NO MACHINERY OF WHATSOEVER NATURE AT THE ABOVE ADDRESS I.E. PLOT NO. 214 GAUTHAN NO.2 NANI DAMAN . III) THERE WAS NO SIGN BOARD OF M/S SUNPRISE ENTERPRISES AT THE ABOVE ADDRESS.. IV) THERE WAS NO BUILDING AT PLOT NO. 214 GAUTHAN DHAB EL NANI DAMAN. V) THERE WAS NO MANUFACTURING ACTIVITIES GOING ON AT P LOT NO. 214 WHERE THE ASSESSEE CLAIMED TO HAVE ITS FACTORY. VI) THE PARTY FROM WHOM THE ASSESSEE IS CLAIMED TO HAVE PURCHASED MACHINERY WHICH ACCORDING TO THE ASSESSEE WAS INST ALLED AT PLOT NO. 214 WAS NOT AVAILABLE AT THE ADDRESS GIVEN BY THE ASSESSEE. THOUGH THE ASSESSEE HAD ADMITTED TO PRODUCE THE PAR TY WITHIN A WEEKS TIME FROM 14.5.99 BEFORE THE DDIT BUT IT WAS NEVER PRODUCED. VII) BOOKS OF ACCOUNT AND OTHER PRODUCTION RECORD WHICH WERE CLAIMED TO HAVE BEEN AUDITED BY THE STATUTORY AUDIT OR AND ON THE BASIS OF WHICH RETURNS OF INCOME WERE FILED WE RE ALSO NOT FOUND AT DAMAN OR MUMBAI ADDRESS OF THE ASSESSEE. T HOUGH THE ASSESSEE PROMISED TO PRODUCE THEM BEFORE THE DDIT BUT THESE WERE NEVER PRODUCED. VIII) THE ASSESSED HAS BEEN CONTINUOUSLY SHIFTING ITS STA ND IN RESPECT OF POSITION OF AVAILABILITY OF BOOKS OF ACCOUNTS OF M/S FORJET LEASING LTD. THE THREE TYPES OF EXPLANATION IN THIS REGARD ARE ENUMERATED AS UNDER :- (A) THE BOOKS OF ACCOUNT HAVE BEEN DESTROYED BY WHITE A NTS AND DUE TO MAJOR REPAIRS. (B) BOOKS OF ACCOUNT OF M/S FORJET LEASING LTD. MIGHT H AVE BEEN MISPLACED BECAUSE OF REPAIRS OF OFFICE. (C) WHILE ANSWERING THE QUESTION NO.9 OF THE STATEMENT DT. 4.3.99 IT HAS BEEN STATED BY SH. ASHOK GUPTA DIRE CTOR OF THE ASSESSEE COMPANY THAT WE DO NOT HAVE FULL SET OF BOOKS OF ACCOUNTS OF M/S FORJET LEASING LTD. WHATEVER REMAIN ING ARE THERE MIGHT BE LYING IN MY OFFICE AT SURTI CHAMBERS DHOBI TALAO MUMBAI-2. FROM THE ABOVE IT IS CLEAR THAT THE FORJET LEASING LIMITED 6 ASSESSEE IS NOT MAINTAINING PROPER BOOKS OF ACCOUNT FOR M/S FORJET LEASING LTD. IF ALL THE EXPLANATIONS OF THE ASSESSEE ARE READ TO GETHER IT IS CLEAR THAT THE ASSESSEE HAS BEEN SHIFTING ITS STAND AND THE TR UTH WAS NEVER DISCLOSED TO THE DEPARTMENT. UNDER THE CIRCUMSTANCE S THE IRRESISTIBLE CONCLUSION IS THAT THE ASSESSEE IS MAKING STORIES I N RESPECT OF ITS BOOKS OF ACCOUNT WITH A VIEW TO PREVENT INVESTIGAT ION FROM BEING CARRIED OUT IN ITS STATE OF AFFAIRS WITH A VIEW TO UNRAVEL TRUTH AND DERIVE JUSTIFIED AND LOGICAL CONCLUSION BASED ON EN TRIES IN BOOKS OF ACCOUNT AND THE FACTS EMERGING FROM THE INVESTIGATI ON IN RESPECT OF THE ENTRIES IN THE BOOKS OF ACCOUNT. SINCE THE ASSESSEE HAS MADE IT IMPOSSIBLE TO INVESTIGATE THE STATE OF AFFAIRS BY R EFERENCE TO BOOKS THE SCOPE OF INVESTIGATION SHALL BE LIMITED TO PROFIT & LOSS ACCOUNT AND BALANCE SHEETS OF THE ASSESSEE. UNDER THE CIRCUMSTA NCES I AM LEFT WITH NO OPTION BUT TO DERIVE ADVERSE INFERENCE FROM NON-AVAILABILITY OF THE BOOKS OF ACCOUNT ON CERTAIN SPECIFIED POINTS WH ICH SHALL BE DISCUSSED DURING THE COURSE OF THIS ORDER. THE AO ISSUED A QUESTIONER DATED 17-10-2000. AFTER RECEIVING THE REPLIES THE AO ISSUED SUMMONS TO M/S POOJA ENGINEERING FRO M WHOM THE ASSESSEE CLAIMED TO HAVE PURCHASED MACHINERY IN THE MONTH OF DECEMBER 1993. THE POSTAL AUTHORITIES RETURNED THE SUMMONS BY OBSERVIN G THAT ADDRESS IS NOT KNOWN. HE ALSO OBSERVED THAT THE ASSESSEE HAS NOT F URNISHED ANY PROOF OF PAYMENT MADE TO M/S POOJA ENTERPRISES. NO PROOF OF HAVING PAID TRANSPORTATION CHARGES WAS ALSO PRODUCED. THE ASSES SEE CLAIMED THAT THE MACHINERY INSTALLED WAS SOLD. WHEN THE AO REQUESTED THE ASSESSEE TO FURNISH NAMES AND ADDRESSES OF THE PERSONS TO WHOM THE ASSESSEE CLAIMED TO HAVE SOLD THE MACHINERY NO EVIDENCE WAS PRODUCE D BY THE ASSESSEE. EVEN THE ASSESSEE DID NOT PRODUCE THE EVIDENCE REGA RDING THE EXPENDITURE INCURRED TOWARDS WAGES OR LABOUR CHARGES. THE ASSES SEE DID NOT FURNISH EVIDENCE TO DEMONSTRATE THAT IT IS THE OWNER OF PLO T NO. 214 GAUTHAN NO.2 DABOL VILLAGE NANI DAMAN. 9. AS THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE A STATEMENT WAS RECORDED FROM SHRI MOHAN JAIN C.A. WHO WAS THE ST ATUTORY AUDITOR OF THE FORJET LEASING LIMITED 7 COMPANY AND WHO IS SUPPOSED TO HAVE AUDITED THE BOO KS OF ACCOUNT AND RECORDS OF THE ASSESSEE. THE FINDINGS EMERGING FROM THE STATEMENT ARE RECORDED BY THE AO AT PAGE 13 OF HIS ORDER ARE EXT RACTED BELOW: I) THE ASSESSEE HAS NOT MAINTAINED ANY RECORD OF I TS FIXED ASSETS. II) THE ASSESSEE HAS NO INTERNAL AUDIT SYSTEM. III) NO MANUFACTURING ACTIVITY WAS CARRIED OUT BY THE ASSESSEE. IV) THE AUDITOR HAS NEVER VISITED ANY OF THE FACTO RY OF THE ASSESSEE AT DAMAN IN THE NAME AND STYLE OF M/S SUNRISE ENTER PRISES OR IN ANY OTHER NAME. V)THE AUDITOR HAS NEVER SEEN OR VERIFIED ANY OF THE MACHINERY THAT WAS CLAIMED TO HAVE BEEN PURCHASED AND INSTALLED AT DAM AN UNIT OF THE ASSESSEE. VI) NO CONFIRMATION FROM CREDITOR & DEBTOR WAS MADE AVAILABLE TO THE AUDITOR. VII) THE AUDITOR REPORT IN FORM NO. 10 CCB DT. 18.9 .95 FILED ALONG WITH THE RETURN OF INCOME OF THE A.Y. 95-96 WAS ISS UED ONLY ON THE BASIS OF BOOKS PRODUCED BY THE ASSESSEE. THE AUDITO R HAS NEVER VISITED ANY INDUSTRIAL UNDERTAKING OF THE ASSESSEE NOR IS H E AWARE OF ANY SUCH INDUSTRIAL UNDERTAKING. IX) NO PRODUCTION RECORD WAS MADE AVAILABLE TO THE AUDI TOR. X) THAT THE ASSESSEE HAS ALTERED THE AUDIT REPORT GIVE N BY THE AUDITOR AND HAS FILED ONLY SUCH ALTERED AUDITNREPO RTS ALONG WITH THE RETURNS. OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO CROSS EXAM INE THE STATUTORY AUDITOR ON 9-3-2001 AT 2.30 PM. COPY OF THE STATEME NT OF SHRI MOTILAL JAIN WAS ALSO PROVIDED TO THE ASSESSEE. AS THERE WAS NO FURTHER COOPERATION FROM FORJET LEASING LIMITED 8 THE ASSESSEE FOR THE VARIOUS REASONS GIVEN IN THE A SSESSMENT ORDER THE AO REJECTED THE CLAIM OF DEDUCTION U/S 80IA BY OBSERVI NG AS FOLLOWS : 5.8 AFTER TAKING INTO ACCOUNT ALL THE FACTS DISCUS SED IN PRECEDING PARAGRAPHS IT IS HELD THAT THE ASSESSEE IS NOT ENT ITLED TO ANY DEDUCTION U/S 80IA FOR ANY OF THE ASSTT. YEAR FALLING IN THE BLOCK PERIOD BECAUSE ASSESSEE HAS FAILED TO PROVE :- I) THAT THERE WAS ANY INDUSTRIAL UNDERTAKING OF THE AS SESSEE AT DAMAN. II) THAT ANY PLANT OR MACHINERY WAS INSTALLED AT DAMAN TO FORM ANY INDUSTRIAL UNDERTAKING. III) THAT THE PLANT & MACHINERY IF ANY INSTALLED AT AL L AT DAMAN WAS NOT PREVIOUSLY USED FOR ANY PURPOSE. IV) THAT MANUFACTURING OF ANY ARTICLE OR THING WAS CARR IED ON AT DAMAN BY ANY INDUSTRIAL UNDERTAKING OF THE ASSESSEE . ACCORDINGLY THE CLAIM OF THE ASSESSEE FOR DEDUCTIO N U/S 80IA FOR ALL THE ASSTT. YEARS INCLUDING A.Y. 95-96 96-97 & 97- 98 FALLING IN THE BLOCK PERIOD IS DISALLOWED. 10. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80HHC. T HE AO WANTED TO VERIFY THAT THE CORRECTNESS OR OTHERWISE OF THE PRO FITS FROM EXPORT IN RESPECT OF WHICH THE ASSESSEE CLAIMED DEDUCTION U/S 80HHC. THE FOLLOWING EVIDENCES WERE REQUIRED TO BE FURNISHED : 1) PROOF OF THE PURCHASES MADE BY THE ASSESSEE WH ICH WERE USED FOR EXPORTING OUT OF INDIA BECAUSE UNLESS THE PUR CHASES ARE VERIFIABLE THE CORRECTNESS OF THE AMOUNT CLAIMED A S DIRECT COST CANNOT BE VERIFIED. 2) PROOF OF GOODS HAVING BEEN EXPORTED OUT OF INDIA BECAUSE UNLESS THE ASSESSEE FURNISHES THE PROOF OF THE EXPORT HAVI NG BEEN MADE IT CANNOT BE VERIFIED WHETHER OR NOT THE ASSESSEE H AS MADE ANY EXPORT. 3) PROOF OF THE SALES PROCEEDS OF SUCH EXPORT HAVIN G BEEN RECEIVED IN OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERT IBLE FOREIGN EXCHANGE. FORJET LEASING LIMITED 9 4) PROOF TO SHOW THAT THE SALES PROCEEDS OF SUCH EX PORT WAS RECEIVED IN OR BROUGHT INTO INDIA BY THE ASSESSEE W ITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE RELEVANT PREVIOUS YEAR. THE ASSESSEE WAS FURTHER REQUESTED TO FURNISH/PROD UCE THE FOLLOWING : I) THE PARTIES FROM WHOM THE GOODS CLAIMED TO HAVE BEE N EXPORTED OUT OF INDIA WERE PURCHASED. II) THE PROOF OF THE GOODS HAVING BEEN EXPORTED OUT OF INDIA WERE PURCHASED. III) THE PROOF OF THE SALES PROCEEDS OF SUCH EXPORT HAVI NG BEEN RECEIVED IN OR BROUGHT INTO INDIA WITHIN A PERIOD O F SIX MONTHS FROM THE END OF THE RELEVANT PREVIOUS YEARS AND IV) TO PRODUCE THE BOOKS OF ACCOUNT OF THE RELEVANT PER IOD. 11. THE ASSESSEE DID NOT PRODUCE ANY OF THE ABOVE D OCUMENTS OR EVIDENCE. AT PARA 6.3 THE AO NOTED AS FOLLOWS : 6.3(I) TILL DATE THE ASSESSEE HAS NOT PRODUCED AN Y PERSONS FROM WHOM THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED THE GOOD S WHICH WERE EXPORTED OUT OF INDIA. NO DETAIL OF THE PERSONS FRO M WHOM THE GOODS USED FOR EXPORTING OUT OF INDIA IS CLAIMED TO HAVE BEEN PURCHASED HAS BEEN GIVEN. DETAILS OF ANY PAYMENT HAVING BEEN MADE TO ANY SUCH SUPPLIER OF GOODS HAVE ALSO NOT BEEN FURNISHED. IN OTHER WORDS THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SHOW THAT ANY GOODS WHICH WERE CLAIMED TO HAVE BEEN EXPORTED WAS PURCHASED B Y THE ASSESSEE. 6.3(II) NO EVIDENCE SHOWING SHIPMENT OF GOODS CLA IMED TO HAVE BEEN EXPORTED OUT OF INDIA HAS BEEN FURNISHED. 6.3(III) NO BOOKS OF ACCOUNTS HAVE BEEN PRODUCED B Y THE ASSESSEE. 6.3(IV) THE ASSESSEE HAS FURNISHED COPY OF ITS BANK ACCOUNT NO. 318159 IN CENTRAL BANK OF INDIA FOR THE PERIOD 29. 5.95 TO 18.4.96. IT WAS CLAIMED BY THE ASSESSEE THAT IN THIS ACCOUNT T HE SALES PROCEEDS OF THE EXPORT MADE HAVE BEEN CREDITED. FROM THE COPY O F THE BANK STATEMENT FURNISHED BY THE ASSESSEE THE NATURE OF THE AMOUNT CREDITED IN THE ACCOUNT CANNOT BE ASCERTAINED. IN N O WAY IT SHOWS THAT THE AMOUNT CREDITED IN THE BANK ACCOUNT OF THE ASSE SSEE IS THE SALES PROCEEDS OF THE EXPORTS MADE BY THE ASSESSEE. IF AT ALL THE AMOUNT FORJET LEASING LIMITED 10 CREDITED IN THIS BANK ACCOUNT IS SALES PROCESS OF T HE EXPORTS MADE BY THE ASSESSEE EVEN THEN THIS STATEMENT DOES NOT SHO W AGAINST WHICH EXPORT THIS SALES PROCEEDS HAVE BEEN RECEIVED. THE ASSESSEE HAS TO PROVE TWO FACTS ONE THAT THE SALES PROCEEDS OF T HE EXPORT HAVE BEEN REALIZED AND TWO- THAT THE SALES PROCEEDS HAVE BEEN RECEIVED IN OR BROUGHT INTO INDIA WITHIN 6 MONTHS FROM THE END OF THE RELEVANT PREVIOUS YEAR. THIS STATEMENT CANNOT BE ACCEPTED AS PROOF TO SHO W THAT THE ASSESSEE HAS RECEIVED IN OR BROUGHT INTO I NDIA SALES PROCEEDS OF THE EXPORT MADE BY THE ASSESSEE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE RELEVANT PREVIOUS YEAR AS IT DOES N OT SHOW AGAINST WHICH EXPORT (IF AT ALL MADE) THE AMOUNT CREDITED IN THE BANK ACCOUNT (IF IT IS SALES PROCEEDS OF EXPORTS) HAVE BEEN RECEIVED. THE ASSESSEE WAS SPECIFICALLY ASKED ON 26.2.2001 TO FUR NISH STATEMENT SHOWING EXPORT INVOICE-WISE DETAIL OF THE EXPORT MA DE AND FOREIGN EXCHANGE RECEIVED AGAINST EACH INVOICE BUT TILL DA TE THE ASSESSEE HAS NOT FURNISHED SUCH STATEMENT OR DETAIL. 12. LATER THE ASSESSEE WAS ASKED TO PRODUCE THE AU DITOR SHRI MOTILAL JAIN WHO HAD ISSUED THE AUDIT REPORT IN FORM NO. 10CCA I N TERMS OF SECTION 80HHC FOR ASSESSMENT YEAR 1996-97 AND ALSO TO PRODU CE THE AUDITOR SHRI SUDHIR M. DESAI FOR THE SAME PURPOSE AS THE AUDIT R EPORT HAD BEEN ISSUED FOR ASSESSMENT YEAR 1996-97. AS THE ASSESSEE DID NO T PRODUCE THE AUDITORS SUMMONS WERE ISSUED U/S 131 TO THE AUDITORS. IN RES PONSE MR. MOTILAL JAIN ATTENDED BUT SUDHIR M. DESAI DID NOT ATTEND. IN THE STATEMENT THE ADMISSIONS OF MR. MOTILAL JAIN ARE RECORDED AS FOLL OWS IN THE ASSESSMENT ORDER : IN HIS STATEMENT SHRI MOTILAL JAIN ADMITTED FOLLO WING FACTS: (I) WHILE ISSUING REPORT IN FORM NO.10CCA HE HAD NOT V ERIFIED THE PROOF OF ANY EXPORT HAVING BEEN MADE AS THE SAME W AS NOT MADE AVAILABLE TO HIM AT THE TIME OF CONDUCTING AUD IT OF THE BOOKS OF THE ASSESSEE. (II) HE HAD NOT VERIFIED THE PROOF OF ANY FOREIGN EXCHAN GE HAVING BEEN RECEIVED BY THE ASSESSEE AS SALES PROCEEDS OF ANY EXPORT MADE BY THE ASSESSEE AS NO SUCH PROOF WAS MADE AVA ILABLE TO HIM AT THE TIME OF CONDUCTING AUDIT OF THE BOOKS OF THE ASSESSEE. FORJET LEASING LIMITED 11 (III) THAT IN THE REPORT IN FORM NO. 10CCAC FILED BY TH E ASSESSEE THE AMOUNT WRITTEN IN VARIOUS COLUMNS HAVE BEEN CHA NGED / ALTERED / RE-WRITTEN BY THE ASSESSEE AFTER THE REPO RT HAVING BEEN SIGNED BY THE AUDITOR. IN OTHER WORDS THE CONTENTS OF THE REPORT FILED BY THE ASSESSE ALONGWITH THE RETURN ARE DIFF ERENT FROM THE CONTENTS OF REPORT SIGNED BY THE AUDITOR. 13. IN VIEW OF THE ABOVE THE AO REJECTED THE CLAI M FOR DEDUCTION U/S 80HHC ON THE FOLLOWING GROUNDS BROUGHT OUT AT PARA 6.5 OF PAGE 23 AND 24 OF THE ASSESSMENT ORDER WHICH ARE EXTRACTED BELOW FOR READ Y REFERENCE: 6.5 FROM THE FACTS DISCUSSED ABOVE FOLLOWING POI NTS BECOME CLEAR: I) THAT THE ASSESSEE HAS FAILED TO PROVE THAT ANY GOOD S WERE PURCHASED BY IT FOR THE PURPOSE OF MAKING ANY EXPOR T OUT OF INDIA. II) THAT THE ASSESSEE HAS FAILED TO PROVE THAT ANY EXPO RT WAS MADE BY IT OUT OF INDIA. III) THAT THE ASSESSEE HAS FAILED TO PROVE THAT SALES PR OCEEDS OF ANY EXPORT IF AT ALL MADE BY THE ASSESSEE WAS RECEIVED BY THE ASSESSEE IN INDIA IN CONVERTIBLE FOREIGN EXC HANGE. IV) THAT ASSESSEE HAS FAILED TO PROVE THAT ANY SALES PR OCEEDS OF THE EXPORT IF ANY MADE BY THE ASSESSEE IF RECE IVED AT ALL WAS RECEIVED WITHIN THE PERIOD OF SIX MONTHS FROM THE END OF THE RELEVANT PREVIOUS YEAR. V) THE ASSESSEE HAS FAILED TO PROVE THAT THE CLAIM FOR DEDUCTION U/S 80HHC MADE BY THE ASSESSEE IS ON THE BASIS OF THE ENTRIES MADE IN THE BOOKS OF ACCOUNT A UDITED BY THE AUDITORS. VI) THAT THE PROOF OF ANY EXPORT HAVING BEEN MADE BY TH E ASSESSEE WAS NOT MADE AVAILABLE TO THE AUDITOR WHO HAS ISSUED THE REPORT U/S 80HHC(4) IN FORM NO. 10CCAC. VII) THAT THE CONTENTS OF THE REPORT GIVEN BY AUDITOR IN FORM NO. 10CCAC HAVE BEEN CHANGED/ALTERED/RE-WRITTEN BY THE ASSESSEE AND ONLY SUCH ALTERED REPORTS HAVE BEEN FI LED BY THE ASSESSEE ALONGWITH THE RETURN OF INCOME. 14. THEREAFTER BASED ON PARA 5 OF THE ASSESSMENT ORDER WHEREIN THE AO CAME TO A CONCLUSION THAT THE ASSESSEE HAS NOT CARR IED OUT ANY FORJET LEASING LIMITED 12 MANUFACTURING ACTIVITY WHATSOEVER AND ON THE GROUND THAT THERE WAS NO MACHINERY PURCHASED OR INSTALLED BY THE ASSESSEE D EPRECIATION U/S 32 WAS DISALLOWED. AT PARA 11 PAGE 39 THE AO HELD AS FOLLO WS : 11. DISALLOWANCE OF DEPRECIATION CLAIMED U/S 32: AS DISCUSSED IN DETAIL IN PARAGRAPH NO.5 OF THIS OR DER THE ASSESSEE HAS NOT CARRIED ON ANY MANUFACTURING ACTIV ITIES NOR THERE WAS ANY MACHINERY PURCHASED OR INSTALLED BY THE ASS ESSEE. THEREFORE NO DEPRECIATION U/S 32 IS ADMISSIBLE TO THE ASSESSE E AS THERE WAS NO MACHINERY AT ALL AND NEITHER ANY MACHINERY WAS PUT TO USE FOR ANY MANUFACTURING OR BUSINESS PURPOSE. ACCORDINGLY THE CLAIM OF THE ASSESSEE FOR DEPRECIATION U/S 32 FOR ALL THE ASSESS MENT YEARS FALLING IN THE BLOCK PERIOD IS DISALLOWED.. 15. CERTAIN OTHER ADDITIONS ON ACCOUNT OF UNEXPLAIN ED CREDITS AND UNEXPLAINED DEPOSITS WERE ALSO MADE. ON 28-3-2001 T HE BLOCK ASSESSMENT ORDER WAS PASSED DETERMINING THE TOTAL UNDISCLOSED INCOME FOR THE BLOCK PERIOD AT RS.10 42 82 490/-. AGGRIEVED THE ASSESSE E CARRIED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. HE CONFIRMED THE DISALLOWANCES OF CLAIMS MADE U/S 80IB AND U/S 80HHC AS WELL AS DISALLOWANCE OF CLAIM FOR DEPRECIATION U/S 32. AGGR IEVED ON THESE THREE FINDINGS THE ASSESSEE IS IN APPEAL BEFORE US. 16. THE LEARNED COUNSEL FOR THE ASSESSEE MR. SUDHIR J. MEHTA RAISED ARGUMENTS BOTH ON LAW AS WELL AS ON FACTS. ON LAW HIS PRIMARY CONTENTION WAS THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND HENCE NO ADDITION CAN BE MADE IN THE BLOCK ASSESSMENT ORDER AND THAT TOO FOR DISALLOWING CLAIM OF EXEMPTION. HE EMPHASIZED THAT THE CIT(APPEALS) HAS WRONGLY CONFIRMED THE DISALLOWANCES OF CLAIMS FOR E XEMPTION U/S 80IA AS WELL AS U/S 80HHC THOUGH NO EVIDENCE WHATSOEVER WA S FOUND BY THE AO DURING THE COURSE OF SEARCH. THE DISALLOWANCE AS P ER THE LEARNED COUNSEL WAS NOT BASED ON MATERIAL DISCOVERED AS A RESULT OF SEARCH. REFERRING TO THE ASSESSMENT ORDER HE SUBMITTED THAT A SURVEY WAS CAR RIED OUT U/S 133A BY FORJET LEASING LIMITED 13 AN I.T.O. ON 9-12-1998 AND THE PURPORTED FINDINGS O F THE SURVEY TEAM IS SOUGHT TO BE MADE A BASIS FOR THE ADDITION IN A BLO CK. HE SUBMITTED THAT IT IS WELL SETTLED THAT THE MATERIAL DISCOVERED DURING TH E COURSE OF A SURVEY OR EVEN IN THE COURSE OF POST SEARCH ENQUIRIES CANNOT BE MATTER OF ADDITION IN A BLOCK ASSESSMENT. HE SUBMITTED THAT THE CLAIMS MADE U/S 80IA AS WELL AS U/S 80HHC WERE EXAMINED IN THE REGULAR ASSESSMENT AND UNDER THOSE CIRCUMSTANCES THE VERY SAME CLAIM CANNOT BE DISALL OWED IN A BLOCK ASSESSMENT. HE RELIED ON A LIST OF CASES WHICH WE WOULD BE DISCUSSING HEREIN AFTER FOR THE PROPOSITION THAT THE DISALLOWA NCES IN QUESTION CANNOT BE MADE IN A BLOCK ASSESSMENT UNDER CHAPTER XIVA. 17. ON MERITS THE LEARNED COUNSEL SUBMITS THAT THE RE WAS NO SURVEY WHATSOEVER AS CLAIMED BY THE AO U/S 133A AND WHAT WOULD HAVE TAKEN PLACE IS JUST A VISIT TO THE FACTORIES SITE. HE SUB MITTED THAT THE ASSESSEE WAS NOT PROVIDED WITH ANY SURVEY REPORT. THE LEARNED CO UNSEL FOR THE ASSESSEE FILED A PAPER BOOK RUNNING INTO 374 PAGES. HE TOOK THIS BENCH THROUGH SOME OF THE PAPERS FILED IN THE PAPER BOOK WITH AN INTEN TION TO DEMONSTRATE THAT THE ASSESSEE HAD IN FACT ESTABLISHED A MANUFACTURIN G UNIT IN DAMAN UNIT. 18. HE REFERRED TO PAGE 117 AND SUBMITTED THAT THE CHARTERED ACCOUNTANT MR. MOTILAL JAIN RETRACTED FROM HIS EARLIER STATEME NT AND FILED AN AFFIDAVIT STATING THAT HE WAS PRESSURIZED BY THE ASSISTANT CO MMISSIONER TO DEPOSE ON VARIOUS ISSUE RELATING TO VERY OLD PERIODS AND THAT HE WAS IN A CONFUSING STATE OF MIND AND HENCE THE STATEMENT GIVEN WAS NOT CONSISTENT WITH THE CORRECT FACTS AND STATE OF AFFAIRS. HE ALSO POINTED OUT THAT THE AUDITOR STATED THAT IN THE NOTES OF ACCOUNT FOR THE FINANCIAL YEAR 1994-95 AND 1996-97 BY MISTAKE THE NOTE OF F.Y. 1993-94 THAT NO MANUFACT URING ACTIVITY WAS CARRIED OUT BY THE COMPANY WAS INADVERTENTLY REPEAT ED AND WHEREAS THE ASSESSEE HAD CARRIED ON MANUFACTURING ACTIVITY AT D AMAN BY M/S SUNRISE ENTERPRISES. HE TOOK THIS BENCH THROUGH PAGES 12 TO 25 OF THE PAPER BOOK WHICH CONSISTS FOR NOC FROM GRAM PANCHAYAT NOC FRO M PHC POLLUTION FORJET LEASING LIMITED 14 CONTROL COMMITTEE PROVISIONAL SSI CERTIFICATE SAL ES-TAX REGISTRATION CERTIFICATE EXCISE REGISTRATION CERTIFICATE AND LE TTER TO COMMISSIONER OF INDUSTRIES REGARDING GRANT OF PERMANENT SSI REGISTR ATION. HE FURTHER TOOK THIS BENCH THROUGH VARIOUS INVOICES AFFIDAVITS PH OTOGRAPH MACHINES ETC. TO DEMONSTRATE THAT THE FACTORY WAS IN FACT EXISTING. HE PRAYED FOR RELIEF. 19. THE LEARNED DR ON THE OTHER HAND VEHEMENTLY C ONTROVERTED THE SUBMISSIONS MADE BY THE ASSESSEE AND SUBMITTED THAT THE CLAIM WAS FRAUDULENT CLAIM AND THIS FACT CAME TO LIGHT DURIN G THE COURSE OF BLOCK ASSESSMENT AND THE AO WAS PERFECTLY JUSTIFIED IN DE NYING THE CLAIM. HE SUBMITTED THAT THE FACT REMAINS THAT THE ASSESSEE N EVER HAD ANY UNIT IN DAMAN AND THIS FACT WAS EVIDENT NOT ONLY FROM THE I NSPECTION CONDUCTED BY THE DEPARTMENT BUT ALSO FROM THE VARIOUS DOCUMENTS THE ASSESSEE SEEKS TO PRODUCE. HE POINTED OUT THAT THE ASSESSEE ON THE ON E HAND CLAIMS THAT ALL THE BOOKS OF ACCOUNT AND RECORDS WAS DESTROYED BY T HE WHITE ANTS AND ON THE OTHER HAND TRIES TO PRODUCE SELECTIVE DOCUMENT S IN SUPPORT OF HIS CLAIM THAT IT HAS IN FACT A FACTORY AT DAMAN. HE DISTINGU ISHED THE CASE LAWS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE AND BA SICALLY RELIED ON THE ORDER OF THE CIT(APPEALS) AS WELL AS THE AO. 20. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPE RS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED WE HOLD AS FOLLOWS. 21. WE FIRST TAKE UP THE ISSUE ON MERITS. ON 4 TH MARCH 1999 THE REPORT OF THE INCOME-TAX OFFICER WARD-4(2) MUMBAI TO THE JO INT DIRECTOR OF INCOME- TAX (INV.) WAS GIVEN WHICH READS AS FOLLOWS : AS DIRECTED THE UNDERSIGNED AND SHRI VIRENDRA SI NGH INSPECTOR UNIT IIQ MUMBAI ALONGWITH SHRI ASHOK KUMAR GUPTA DIRECTOR OF M/S FORJET LEASING CO. LTD. VISITED VILLAGE DHABHEL NA NI DAMAN ON27/2/98. WE REACHED TO THE VILLAGE DHABHEL AT ABO UT 7.30 P.M. ON FORJET LEASING LIMITED 15 27/02/98. THE LOCATION OF PLOT NO. 204 213 & 214 VILLAGE DHABHEL WAS IDENTIFIED BY SHRI ASHOK GUPTA. PRIMA-FACIE IT WAS OBSERVED THAT PLOT NO. 213 IS A VACANT PLOT OF LAND. ON PLOT NO. 204 AND 214 WAS HAVING THE SAME BOUNDARY WALL AND ENTRANCE GATE. TH E MAIN GATE WAS CLOSED AND THERE WAS ONE BUILDING ON EACH FLAT I.E. ON 204 & 214. THERE WAS NO SIGN BOARD OR THE MAIN GATE OR ON THE BOUNDARY WALL OF ABOVE PLOTS AND IT WAS APPEARING THAT NO ACTIVITY W AS BEING CARRIED OUT FROM PLOT NO. 204 & 214. WHEN SHRI ASHOK GUPTA WAS ASKED TO GIVE THE KEY OF THE ABOVE PREMISES HE STATED THAT I HAVE ALREADY SOLD THESE PREMISES TO A BOMBAY PARTY ABOUT ONE AND HALF YEAR BACK AND HE IS NOT HAVING THE KEYS. THE SAME POSITION WAS REPORTED TO THE CONTROL ROOM.-----------OF GUPTA WAS INSTRUCTED BY THE CONT ROL ROOM TO CONTACT THE BOMBAY PARTY AND TO GIVE THE KEYS ON TH E NEXT DAY I.E. 28/02/99. SHRI GUPTA HAS ALREADY GIVEN THE STATEMEN T AT HIS--------- ON 27/02/99 THAT PLOT NO. 213 DOES NOT BELONG TO HI M AND HE HAS ALREADY SOLD PLOT NO. 204 & 214 TO SOME BOMBAY PAR TY. NEXT DAY I.E. 28/02/99 THE KEYS WERE PRODUCED AND THE PREMISES WERE OPENED. ON PLOT NO. 204 THERE WAS A S HED AND A HUGE MACHINERY IS INSTALLED THERE. THE PHOTOGRAPHS OF TH E MACHINERY WERE TAKEN. SHRI ASHOK GUPTA CLAIMED THAT THIS MACHINERY BELONG TO HIM. THERE WAS NO MACHINERY IN THE BUILDING ON PLOT NO. 214. THE PHOTOGRAPHS OF THIS BUILDING WERE ALSO TAKEN. HOWEV ER ON LOCAL ENQUIRY IT WAS FOUND THAT ONE CONCERN M/S SUNRISE E NTERPRISES WAS FUNCTIONING THERE ABOUT ONE AND A HALF YEAR BACK. IT MAY BE MENTIONED HERE THAT NO GOVERNMENT OFFICE AT DAMAN WAS OPEN ON 27.2.99 AND 28.2.99 BEING SATURDAY & SU NDAY RESPECTIVELY. WE TRIED TO CONTACT SHRI MOHAN BHAI SARPANCH OF VILLAGE DHABHEL BUT HE WAS OUT OF VILLAGE AND WAS EXPECTED TO RETURN ON MONDAY. IN THE LIGHT OF THE ABOVE FACTS THE SURVEY ACTION WAS CARRIED OUT ON THE PREMISES IDENTIFIED BY SHRI ASHOK GUPTA AS PLOT NO. 204 & 214. THE ABOVE FACTS HAVE ALREADY INFORMED TO YOU OVER TELEPHONE. SUBMITTED FOR NECESSARY ACTION PLEASE. 22. A PERUSAL OF PAGES 12 TO 25 OF THE PAPER BOOK H IGHLIGHTS THE FOLLOWING : FORJET LEASING LIMITED 16 1) AT PAGE NO. 12 IS A NO OBJECTION CERTIFICATE GI VEN BY THE GRAM PANCHAYAT TO ONE M/S SUNRISE ENTERPRISE. 2) SIMILARLY AT PAGE 13 IS A NO OBJECTION CERTIFI CATE GIVEN TO M/S SUNRISE ENTERPRISES. 3) AT PAGE 14 THE POLLUTION CONTROL COMMITTEE VIDE LETTER 4-10- 1993 ISSUED A CONSENT ORDER TO M/S SUNRISE ENTERPRI SES. 4) AT PAGE 18 THE DIRECTOR OF INDUSTRIES DIC UN IT OF DAMAN AND DIU GRANTED PROVISIONAL REGISTRATION TO M/S SUNRISE ENTERPRISES. IN THIS IT IS STATED THAT SUNRISE ENTERPRISES IS A PARTNERSHIP AS THE OTHER COLUMNS ARE STRUCK OF. THE FACTORY ADDRESS IS STATED AS PLOT N O. 214 GAUTHAN NO.2 DABHEL VILLAGE DAMAN. 5) AT PAGE 21 CENTRAL SALES TAX REGISTRATION IS G IVEN TO M/S SUNRISE ENTERPRISES. MR. ASHOK BANWARILAL GUPTA IS RECORDED AS A PROPRIETOR OF SUNRISE ENTERPRISES. THESE REGISTRATIONS WERE VALID FROM THE YEAR 1993. IN ALL THESE CERTIFICATES GIVEN BY VARIOUS GOVERNMENTAL AUTHORIT IES CONNECTED WITH THE ADMINISTRATION OF DAMAN & DIU HAVE RECOGNIZED SUNRI SE ENTERPRISES ONLY AS A CONCERN BELONGING TO MR. ASHOK BANWARILAL GUPTA. IN NONE OF THESE CERTIFICATES THERE IS EVEN A REMOTE REFERENCE TO T HE ASSESSEE COMPANY. 6) AT PAGE 24 AN APPLICATION IS MADE TO THE SUPER INTENDENT OF CENTRAL EXCISE RANGE-VII DAMAN (UT) ON 21-9-1994. IN THIS APPLICATION M/S SUNRISE ENTERPRISES IS SHOWN AS A PROPRIETARY C ONCERN OF ASHOK BANWARILAL GUPTA. LATER CERTAIN INSERTIONS ARE MAD E WHEREIN FORJET LEASING LTD. NAME IS SOUGHT TO BE BROUGHT IN. 7) AT PAGE 25 THE LETTER HEAD OF SUNRISE ENTERPRI SES DOES NOT DISCLOSE THAT IT IS A UNIT OR PROPRIETARY CONCERN O F M/S FORJET LEASING LTD. FORJET LEASING LIMITED 17 CEMENT BILLS FROM PAGES 26 TO 39 ARE ADDRESSED IN FAVOUR OF SUNRISE ENTERPRISES. SIMILARLY MACHINERY BILLS FROM POOJA ENGINEERING FROM PAGES 45 TO 48 REFERRED TO POOJA ENGINEERIN. IN THESE DOCUMENTS THERE IS NO MENTION OF FORJET LEASING LTD. A PERUSAL OF ALL THESE DOCUMENTS CLEARLY DEMONSTRATE THAT SUNRISE ENTERPRISES IS A PROPRIETARY CONCERN OF ASHOK BANWARILAL GUPTA AND THE COMPANY FORJET LEASING LTD. HAS NOTHING TO DO WITH IT. 23. COMING TO THE STATEMENT OF THE AUDITOR MOTILAL JAIN AND THE AFFIDAVIT FILED BY HIM AT PAGE 118 OF THE PAPER BOOK THE CHA RTERED ACCOUNTANT STATES AS FOLLOWS: I SAY THAT THE TAX AUDIT WAS CARRIED OUT BY ME AF TER VERIFYING ALL THE RECORDS OF MANUFACTURING ACTIVITY AT DAMAN BY M/S SUNRISE ENTERPRISES MY STAFF MEMBERS HAD VISITED THE FACTO RY PREMISES AT DAMAN AND DUE TO OVERSIGHT IN THE F.Y. 1994-95 &199 6--97 A NOTE STATING THAT NO MANUFACTURING ACTIVITIES WAS UNDERT AKEN BY THE COMPANY APPEARED IN THE NOTES TO THE BALANCE SHEET OF THE ABOVE YEARS IN VIEW OF THE FACT THAT IT APPEARED IN THE YEARS PRIOR TO ACCOUNTING YEAR 1993-94 WHEN NO MANUFACTURING ACTI VITY WAS CARRIED BY THE COMPANY. HOWEVER DUE TO INADVERTENCE OF MY STAFF THIS NOTE WAS NOT REMOVED AND IT INCORRECTLY CONTINUED TO APP EAR IN THE BALANCE SHEET FOR 1994-95 AND 1996-97. I THEREFORE SAY HAT THE SAID NOTE DOES NOT REFLECT THE CORRECT FACTS. THIS RETRACTION AND CLARIFICATION IN OUR CONSIDERE D OPINION IS NOT ACCEPTABLE. WHEN ACCOUNTS ARE CERTIFIED BOTH BY THE DIRECTORS AND BY THE AUDITORS AND THE SAME IS PASSED BY THE AGM. STATEME NTS MADE THEREIN CANNOT BE ASKED TO BE IGNORED ON THE GROUND THAT TH E CLERICAL STAFF OF THE AUDITOR MADE AN INADVERTENT MISTAKE. THE NOTES TO T HE ACCOUNT CLEARLY STATES THAT THE ASSESSEE COMPANY HAS NO MANUFACTURING ACTI VITY FOR THE FINANCIAL YEAR 1994-95 AND 1996-97. FORJET LEASING LIMITED 18 24. IN OUR CONSIDERED OPINION THE ASSESSEE HAS NOT LED ANY EVIDENCE TO DISPROVE THE FINDINGS OF THE AO THAT THERE WAS MANU FACTURING ACTIVITY CARRIED ON BY THE ASSESSEE. 25. THERE ARE NUMBER OF INCONSISTENCIES IN THE VARI OUS SUBMISSIONS MADE BY THE ASSESSEE. FOR EXAMPLE IN THE CASE OF SHRI M OTILAL JAIN AUDITOR IT WAS SUBMITTED THAT THE REPLIES GIVEN BY HIM IN A SWORN STATEMENT ARE CONTRARY TO THE FACTS AND ALSO INCONSISTENT WITH HIS OWN ACTION AND HIS AUDIT REPORT. THE REASON CITED BY THE ASSESSEE IS THAT THE CASES ARE OLD AND THE AUDITOR COULD HAVE PROBLEM OF COLLECTING THE CORRECT FACTS AND WAS NDERPHYSIOLOGICAL PRESSURE. 26. ANOTHER EXPLANATION OF THE ASSESSEE IS WORTH TA KING NOTE OF. IN HIS REPLY ON 15 TH MARCH 2001 AT PARA 3 PAGE 2 IT WAS STATED AS FOLL OWS : MR. MOTILAL JAIN WAS NOT AVAILABLE FOR AUDIT DURI NG THAT TIME. WE HAVE CARRIED AUDIT OF OUR BOOKS OF ACCOUNTS BY M/S SUDHIR M. DESAI & CO. AFTER HAVING FILED THE INCOME-TAX RETURN OUR AC COUNTANT WHILE SCRUTINIZING THE ACCOUNTS AND DOCUMENTS FOUND THAT THERE WERE CERTAIN ERRORS AND OMISSIONS IN THE BALANCE SHEET P REPARED BY M/S SUDHIR M. DESAI & CO. WE ASKED M/S MOTILAL & ASSOCI ATES TO READMIT THE ACCOUNTS AND PREPARE THE REVISED AUDITED FINA L ACCOUNTS INCORPORATING THE TRANSACTIONS WHICH WERE INADVERTE NTLY NOT INCLUDED EARLIER. ACCORDINGLY REVISED BALANCE SHEETS AND PRO FIT & LOSS ACCOUNTS WERE PREPARED. HOWEVER SINCE WE HAVE ADVISED THAT THERE WERE NO TAX IMPLICATION OF THESE REVISION OF FINAL ACCOUNTS IN VIEW OF THE FACT THAT THE COMPANY WAS ENTITLED TO DEDUCTION U/S 80HHC & 8 0IA OF THE INCOME TAX ACT IN VIEW OF THIS WE DID NOT FILE RE VISED RETURN OF INCOME AND CONSEQUENTLY REVISED AUDITED BALANCE SHEET ALSO WAS NOT FILED. HOWEVER THESE REVISED FIGURES WERE INCORPORATED IN THE BALANCE SHEET OF THE NEXT YEAR I.E. ACCOUNTING YEAR 1996-97. 27. IN THE AUDITORS REPORT FOR THE YEAR ENDED 31 ST MARCH 1994 AT PARA 5 AND (I) AND (II) IT IS STATED AS FOLLOWS : 5. AS REQUIRED BY THE MANUFACTURING AND OTHER COMP ANIES (AUDITORS REPORT) AMENDED ORDER 1988 ISSUED BY TH E COMPANY LAW BOARD IN TERMS OF SECTION 227(4A) OF THE COMPANIES ACT 1956 AND ON THE BASIS OF CHECK AS WE CONSIDERED APPROPRIATE AND ACCORDING TO THE FORJET LEASING LIMITED 19 INFORMATION AND EXPLANATION GIVEN TO US WE HEREBY REPORT ON THE MATTERS SPECIFIED IN THE APRA 4 & 5 OF THE SAID OR DER :- I) AS INFORMED BY THE MANAGEMENT THERE IS NO FIXED AS SETS WITH THE COMPANY THEREFORE QUESTION OF PHYSICAL VERIFICA TION OF THE FIXED ASSETS DOES NOT ARISE; II) THERE IS NO FIXED ASSETS THEREFORE QUESTION REVALU ATION DOES NOT ARISE. THE AUDITORS REPORTS ARE NOT DATED NOR THE DATE OF CERTIFICATION AND SIGNING OF THE PROFIT & LOSS ACCOUNT IS AVAILABLE. SURPRISI NGLY THE CERTIFICATE OF THE AUDITORS READS AS FOLLOWS : CHECKED AND FOUND CORRECT AS PER BOOKS OF ACCOUNT PRODUCED. 28. NONE OF THE DOCUMENTS PRODUCED BEFORE THE AO AS WELL AS THE CIT(APPEALS) AND WHICH ARE FOUND IN THE FORM OF PAP ER BOOK BEFORE US INSPIRE ANY CONFIDENCE IN THE CLAIM OF THE ASSESSEE THAT IT HAD A PROPRIETARY CONCERN IN THE NAME AND STYLE OF SUNRISE ENTERPRISE S AND THAT IT HAD A MANUFACTURING UNIT WHICH HAD MANUFACTURED CERTAIN P RODUCTS. THUS WE UPHOLD THE FINDINGS OF THE AO AS CONFIRMED BY THE C IT(APPEALS) THAT THE CLAIM IN QUESTION IS A FALSE CLAIM WHICH CANNOT BE ALLOWED. 29. COMING TO THE ARGUMENT OF THE ASSESSEE THAT THE SE ASPECTS CANNOT BE EXAMINED IN A BLOCK ASSESSMENT ORDER WE FIND TH AT A BOGUS CLAIM CANNOT BE ACCEPTED OR ALLOWED. THE DEFINITION OF UN DISCLOSED INCOME U/S 158B(B) HAS BEEN EXPANDED TO INCLUDE ANY EXPENSE D EDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE. UNDISCLOSED INCOME HAS BEEN DEFINED IN THE ACT AS FOLLOWS: 158B. IN THIS CHAPTER UNLESS THE CONTEXT OTHERWIS E REQUIRES - (B) UNDISCLOSED INCOME INCLUDES ANY MONEY BULLI ON JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANS ACTIONS WHERE SUCH MONEY BULLION JEWELLERY VALUABLE ARTI CLE THING ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSA CTION FORJET LEASING LIMITED 20 REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHIC H HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPO SES OF THIS ACT OR ANY EXPENSE DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE. IN CIRCULAR NO.8/02 DT 27-8-02 OF CBDT THESE PROVI SIONS HAVE BEEN EXPLAINED TO HAVE BEEN INTRODUCED FOR THE FOLLOWING PURPOSES: 61.1 THE EXISTING PROVISIONS CONTAINED IN CHAPTER XIV-B OF THE INCOME-TAX ACT PROVIDE FOR A SINGLE ASSESSMENT OF UNDISCLOSED INCOME OF A BLOCK PERIOD OF SIX YEARS IN CASES OF SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTI ON 132A AND LAY DOWN THE MANNER IN WHICH SUCH INCOME IS TO BE COMPUTED AND THE INTEREST OR PENALTY WHICH MAY BE LEVIED IN CERTAIN CIRCUMSTANCES. 61.2 THE EXISTING PROVISIONS OF CLAUSE (B) OF SECTI ON 158B DEFINES UNDISCLOSED INCOME TO INCLUDE INCOME OR PRO PERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF THE ACT AND WHICH IS REPRESENTED BY AN Y MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BY ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR ANY OTHER TRANSACTION. IT HAS BEEN NOTICED THAT IN SOME CASES THE APPELLATE AUTHORITIES HAVE TAKEN A VIEW THAT THIS D EFINITION COVERS ONLY PROPERTY OR RECEIPTS WHICH HAVE NOT BEE N DISCLOSED AND DOES NOT COVER INCOME REPRESENTED BY ENTRIES IN RESPECT OF FALSE CLAIMS OF EXPENSES OR DEDUCTIONS. SUCH VIEW I S CONTRARY TO THE INTENTION UNDERLYING THE PROVISION OF BRINGI NG TO TAX THE ENTIRE UNDISCLOSED INCOME INCLUDING INCOME WHICH H AS BEEN SUPPRESSED BY MAKING FALSE CLAIMS OF EXPENSES OR DE DUCTION WHICH HAVE BEEN DISCOVERED AS A RESULT OF SEARCH OR REQUISITION. 61.2.1 THE FINANCE ACT 2002 HAS AMENDED THE DEFINI TION OF UNDISCLOSED INCOME IN SECTION 158B TO SPECIFICALLY INCLUDE THEREIN INCOME BASED ON ENTRIES IN BOOKS OF ACCOUNT OR OTHER DOCUMENTS WHICH REPRESENT A FALSE CLAIM OF ANY EXPE NSE DEDUCTION OR ALLOWANCE UNDER THE INCOME-TAX ACT. (UNDERLINING BY US FOR EMPHASIS) FORJET LEASING LIMITED 21 EXPLANATION TO SEC. 158 BA (2) INSERTED BY THE FIN ANCE (NO. 2) ACT 1998 WITH RETROSPECTIVE EFFECT FROM JULY 1 1995 READS AS FOLLOWS: EXPLANATION FOR THE REMOVAL OF DOUBTS IT IS HER EBY DECLARED THAT (A) THE ASSESSMENT MADE UNDER THIS CHAPTER SHALL BE IN ADDITION TO THE REGULAR ASSESSMENT IN RESPECT OF EA CH PREVIOUS YEAR INCLUDED IN THE BLOCK PERIOD; (B) THE TOTAL UNDISCLOSED INCOME RELATING TO THE BLOCK PERIOD SHALL NOT INCLUDE THE INCOME ASSESSED IN ANY REGULA R ASSESSMENT AS INCOME OF SUCH BLOCK PERIOD. (C) THE INCOME ASSESSED IN THIS CHAPTER SHALL NOT BE IN CLUDED IN THE REGULAR ASSESSMENT OF ANY PREVIOUS YEAR INCL UDED IN THE BLOCK PERIOD. THE PROVISIONS OF SECTION 158BB(1) OF THE ACT LAYS DOWN THE COMPUTATION OF UNDISCLOSED INCOME OF THE BLOCK PERIOD. THE SAME R EADS AS FOLLOWS: 158BB. COMPUTATION OF UNDISCLOSED INCOME OF THE BLO CK PERIOD.-- (1) THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHAL L BE THE AGGREGATE OF THE TOTAL INCOME OF THE PREVIOUS YEARS FALLING WITHIN THE BLOCK PERIOD COMPUTED **IN ACCORDANCE WITH TH E PROVISIONS OF THIS ACT ON THE BASIS OF EVIDENCE FOUND AS A RE SULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WIT H THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE AS REDUCED BY THE AGGREGATE OF THE TOTAL INCOME OR AS THE CA SE MAY BE AS INCREASED BY THE AGGREGATE OF THE LOSSES OF SUCH PR EVIOUS YEARS DETERMINED -- THE FINANCE ACT 2002 BY THE AMENDMENT TO SECTION 158BB WITH RETROSPECTIVE EFFECT FROM JULY 1 1995 ADDED THE W ORDS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE TO THE METHOD OF MAKIN G ASSESSMENT OF UNDISCLOSED INCOME. IT WAS ONLY IN THE COURSE OF S EARCH THAT THE FACT THAT THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACC OUNTS CAME TO LIGHT. IT WAS ALSO FOUND IN THE COURSE OF SEARCH THAT VOUC HERS RELATING TO FORJET LEASING LIMITED 22 PURCHASES OF GOODS WHICH WERE ALLEGED TO HAVE BEEN EXPORTED WERE NOT FOUND. THEREAFTER SURVEY WAS CONDUCTED AND IT REVE ALED THAT THERE WAS NO MANUFACTURING ACTIVITY UNDERTAKEN BY THE ASSESSE E. THE ASSESSEE IN ITS ARGUMENTS CLAIMS THAT IT WAS JUST A VISIT BY TH E INSPECTOR AND THAT NO SURVEY TOOK PLACE. THUS THE EVIDENCE FOUND IN THE C OURSE OF SEARCH AND POST SEARCH ENQUIRIES REVEALED THAT THERE WAS NO MA NUFACTURING ACTIVITY CARRIED ON BY THE ASSESSEE AND THAT THE CLAIM FOR D EDUCTION U/S.80-IA AND 80-HHC OF THE ACT OUGHT NOT TO HAVE BEEN ALLOWE D. THUS IN OUR OPINION THE AO WAS RIGHT IN TREATING THIS FALSE AN D FICTITIOUS CLAIM FOR DEDUCTION U/S 80IA AS UNDISCLOSED INCOME IN THE BLO CK ASSESSMENT. 30. THE SECOND CLAIM OF THE ASSESSEE IS FOR DEDUCTI ON U/S 80HHC. HERE ALSO THE MAIN ARGUMENT OF THE ASSESSEE IS THAT THE ENTIRE RECORDS ARE EATEN AWAY BY WHITE ANTS AND HENCE HE CANNOT PRODUCE ANY BOOKS OF ACCOUNT. THE LEGAL PROPOSITION RELIED UPON IS THAT THIS CLAIM IS A SUBJECT MATTER CONSIDERED IN THE REGULAR ASSESSMENT AND HENCE CANNOT BE ADJUD ICATED OR CONSIDERED UNDISCLOSED INCOME IN A BLOCK ASSESSMENT. 31. THE LEARNED CIT(APPEALS) AT PARA 6.3 HELD AS FO LLOWS: 6.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT ORDER OF THE A.O. AND OTHER MATERIAL ON RECORD. IT IS DURING COURSE OF SEARCH IT WAS PROVED THAT A PPELLANT IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS. IN COURSE OF SEA RCH BILLS OR OTHER VOUCHERS RELATING TO PURCHASES OF GOODS WHICH WERE ALLEGED TO HAVE BEEN EXPORTED WERE NOT FOUND. THE APPELLANT HAS CLAIMED DEDUCTION U/S 80HHC IN RESPECT OF ITEMS LIKE GARMENT WHICH COMPANY HAD PUR CHASED FROM MARKET AND EXPORTED. AS RELATED BILLS WERE NOT FOUND IN CO URSE OF SEARCH SO COST OF GOODS WHICH WERE EXPORTED COULD NOT BE VERIFIED FOR PURPOSE OF COMPUTING PROFIT WHICH IS ENTITLED FOR DEDUCTION U/S 80HHC. T HUS AS A RESULT OF SEARCH CLAIM OF APPELLANT IS FOUND TO BE FALSE SO A.O. IS JUSTIFIED IN ADDING UNDISCLOSED INCOME IN BLOCK ASSESSMENT ON ACCOUNT O F WRONG CLAIM OF DEDUCTION U/S 80HHC FOR A.YR. 1995-96 AND A.YR. 199 6-97 IN VIEW OF RETROSPECTIVE AMENDED PROVISIONS OF SECTION 158B(B) OF I.T. ACT. THE APPELLANT HAS ALSO FAILED TO PROVE THAT EXPORT SALE PROCEEDS WHICH ARE CREDITED TO BANK ACCOUNT ARE RELATAB LE TO EXPORT BILLS SO AS FORJET LEASING LIMITED 23 TO DETERMINE WHETHER SALE PROCEEDS ARE RECEIVED WIT HIN 6 MONTHS FROM END OF FINANCIAL YEAR. THE FORM NO. 10CCAC WHICH IS OVERTYPED BY APPLYING WHITE INK IS ALSO NOT PROPERLY AUTHENTICATED BY AUDITOR THE AUD ITOR HIMSELF HAS STATED BEFORE A.O. THAT THE FIGURES ARE TEMPERED WITHOUT HIS KNOWLEDGE CAN NOT BE COMMENTED UPON BY HIM. THUS FORM NO.10CCAC GIVING W ORKING OF DEDUCTION U/S 80HHC CAN NOT BE ACCEPTED AS CORRECT WORKING. IN VIEW OF ABOVE FACTS A.O. IS JUSTIFIED IN ADDING UNDISCLOSED INCOME ON ACCOUNT OF WRONG CLAIM OF DEDUCTION U/S 8 0HHC FOR A.Y. 1995-96 AND A.YR. 1996-97 IN ASSESSMENT FOR BLOCK P ERIOD U/S 158BC OF I.T. ACT. THE AO DISALLOWED THE CLAIM FOR THE FOLLOWING REAS ONS : I) THAT THE ASSESSEE HAS FAILED TO PROVE THAT ANY GOOD S WERE PURCHASED BY IT FOR THE PURPOSE OF MAKING ANY EXPOR T OUT OF INDIA. II) THAT THE ASSESSEE HAS FAILED TO PROVE THAT ANY EXPO RT WAS MADE BY IT OUT OF INDIA. III) THAT THE ASSESSEE HAS FAILED TO PROVE THAT SALES PR OCEEDS OF ANY EXPORT IF AT ALL MADE BY THE ASSESSEE WERE RECEIVE D BY THE ASSESSEE IN INDIA IN CONVERTIBLE FOREIGN EXCHANGE. IV) THAT ASSESSEE HAS FAILED TO PROVE THAT ANY SALES PR OCEEDS OF THE EXPORT IF ANY MADE BY THE ASSESSEE IF RECEIVED AT ALL WAS RECEIVED WITHIN THE PERIOD OF SIX MONTHS FROM THE E ND OF THE RELEVANT PREVIOUS YEAR. V) THE ASSESSEE HAS FAILED TO PROVE THAT THE CLAIM FOR DEDUCTION U/S 80HHC MADE BY THE ASSESSEE IS ON THE BASIS OF T HE ENTRIES MADE IN THE BOOKS OF ACCOUNT AUDITED BY THE AUDITOR S. VI) THAT THE PROOF OF ANY EXPORT HAVING BEEN MADE BY TH E ASSESSEE WAS NOT MADE AVAILABLE TO THE AUDITOR WHO HAS ISSUE D THE REPORT U/S 80HHC(4) IN FORM NO. 10CCAC. VII) THAT THE PROOF OF SALES PROCEEDS OF ANY EXPORT MADE BY THE ASSESSEE HAVING BEEN RECEIVED IN INDIA BY THE ASSES SEE WAS NOT MADE AVAILABLE TO THE AUDITOR WHO HAS ISSUED THE RE PORT U/S 80HHC(4) IN FORM NO.10CCAC. VIII) THAT THE CONTENTS OF THE REPORT GIVEN BY AUDITOR IN FORM NO. 10CCAC HAVE BEEN CHANGED/ALTERED/RE-WRITTEN BY THE ASSESSEE FORJET LEASING LIMITED 24 AND ONLY SUCH ALTERED REPORTS HAVE BEEN FILED BY TH E ASSESSEE ALONG WITH THE RETURN OF INCOME. 32. BEFORE US NOTHING NEW IS PRODUCED EXCEPT REITER ATING THE CONTENTIONS RAISED BEFORE THE LOWER AUTHORITIES. WHILE ONE HAND IT IS CLAIMED THAT WHITE ANTS HAVE EATEN AWAY THE BOOKS OF ACCOUNT AND EVIDE NCE ON THE OTHER HAND PHOTO COPIES OF SELECTIVE DOCUMENTS ARE SOUGHT TO B E PRODUCED FOR SUBSTANTIATING THE CLAIM. LOOKING AT THE ENTIRE FAC TS AND CIRCUMSTANCES OF THIS CASE AND TAKING NOTE OF THE FRAUDULENT CLAIMS MADE WE UPHOLD THE FINDINGS OF THE REVENUE AUTHORITIES ON THIS ISSUE A LSO. ON THE LEGAL ISSUE CONSISTENT WITH THE VIEW TAKEN WHILE UPHOLDING THE DISALLOWANCE OF CLAIM U/S 80IA WE HOLD THAT IN VIEW OF THE INSERTION TO SUB -CLAUSE (B) TO SECTION 158B THE FALSE CLAIM HAS RIGHTLY BEEN TREATED AS UNDISCL OSED INCOME OF THE ASSESSEE. 33. THE CLAIM FOR DEDUCTION U/S 80IA HAS BEEN MADE FOR THE ASSESSMENT YEARS 1994-95 1995-96 1996-97 AND 1997-98. THUS T HE ADDITIONS MADE IN ALL THESE YEARS ON ACCOUNT OF REFUSAL OF DEDUCTION U/S 80IA IS HEREBY UPHELD. 34. COMING TO DEDUCTION U/S 80HHC THE ASSESSEE MAD E THE SAME IN TWO ASSESSMENT YEARS I.E. 1995-96 AND 1996-97. THESE TW O CLAIMS HAVE BEEN RIGHTLY REJECTED AND TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THOSE YEARS. 35. THUS THE GROUNDS AGAINST REJECTION OF THE CLAIM MADE U/S 80IA AND REJECTION OF CLAIM MADE U/S 80HHC ARE HEREBY DISMIS SED. 36. THE LAST GROUND IS ON THE REJECTION OF DEPRECIA TION CLAIM FROM THE ASSESSMENT YEAR 1994-95 TO THE ASSESSMENT YEAR 1999 -2000. AS IN ALL THESE YEARS WE HAVE UPHELD THE FINDING OF THE REVENUE AUT HORITIES THAT THE ASSESSEE HAD NO MANUFACTURING UNIT WHATSOEVER WE UPHOLD THE REJECTION OF FORJET LEASING LIMITED 25 DEPRECIATION. THE CIT(APPEALS) HAS AT PARA 11.3 PAG E 23 OF HIS ORDER HELD AS UNDER : 11.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE APPELLANT ORDER OF THE A.O. AND OTHER MATERIAL ON RECORD. DURING COURSE OF SEARCH AT OFFICE PREMISES IN BOMB AY AND SURVEY AT NANI DAMAN A.O. FOUND THAT APPELLANT IS N OT MAINTAINING REGULAR BOOKS OF ACCOUNTS AND NO PLANT AND MACHINER Y WERE FOUND AT NANI DAMAN. DURING SEARCH PROCEEDINGS APPELLANT WAS EXAMINED ON ISSUE OF PLANT AND MACHINERY LIKE THEIR EXISTENCE SALE OF SUCH PLANT AND MACHINERY ETC. AS A RESULT OF SEARCH AND INTERR OGATION AT THE TIME OF SEARCH IT IS PROVED THAT NO PLANT AND MACHINERY AT DAMAN WERE EXISTING. THUS APPELLANTS CLAIM OF DEPRECIATION IS FOUND TO BE FALSE AS A RESULT OF SEARCH. SO A.O. IS JUSTIFIED IN ADDING WRONG CLAIM OF DEPRECIATION AS UNDISCLOSED INCOME IN BLOCK ASSESSM ENT PROCEEDINGS IN VIEW OF RETROSPECTIVE AMENDMENT W.E.F. 1.7.1995 OF PROVISIONS OF SECTION 158B(B) OF I.T. ACT BY THE FINANCE ACT 2002 . AS A RESULT I CONFIRM ADDITION OF RS.8 57 414/- IN ASSESSMENT ORD ER FOR BLOCK PERIOD. THE CLAIM FOR DEPRECIATION WOULD BE ADMISSIBLE ONLY IF THERE WAS USE OF THE MACHINERY FOR THE PURPOSE OF BUSINESS CARRIED ON BY THE ASSESSEEE DURING THE PREVIOUS YEAR. AS WE HAVE ALREADY NOTICED NO E VIDENCE OF PURCHASE OF MACHINERY AND THAT THERE WAS THERE WAS NO MANUFACTU RING ACTIVITY CARRIED ON BY THE ASSESSEE THE CLAIM FOR DEPRECIATION CANN OT BE SUSTAINED. WE THEREFORE UPHOLD THE ORDER OF CIT(A) AS ABOVE. 37. GROUND NO.2 & 5 RAISED BY THE ASSESSEE READ AS FOLLOWS:- 2. THE LD. CIT(APPEAL) HAS ERRED IN CONFIRMING THE FINDING OF THE AO THAT INCOME TAX RETURN FOR THE ASSESSMENT YEAR 1991-1992 AND 1994-1995 WERE NOT FILED WITHOUT PROPERTY APPRECIATING THE FACTS OF THE CASE THAT INCOME TAX RETURN FOR THE RELEVANT ASSESSMENT YEARS WERE PROPE RLY FILED BY THE APPELLANT AND IT MUST BE IN THE RECORDS OF INCOME TAX DEPARTM ENT. 5. THE LEARNED CIT(APPEAL) HAS ERRED IN UPHOLDING THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED CREDIT FOR THE ASSESSMENT YEAR 1994-1995 OF RS. 40 94 188/- ON THE GROUND THAT APPELLANT HAD NOT FI LED THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 1994-95 WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE THAT INCOME TAX RETURN FOR THE ASSESSMENT YEAR 1994-95 WERE PROPERLY FILED BY THE APPELLANT AND IT MUST BE IN T HE RECORDS OF THE DEPARTMENT AND THERE WAS NO UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR 1994-95. FORJET LEASING LIMITED 26 38. IN THE RETURN OF BLOCK PERIOD FILED BY THE ASS ESSEE THE ASSESSEE HAS FURNISHED COMPUTATION OF TOTAL INCOME FOR A.Y 1994- 95 AS UNDER: TOTAL I NCOME INCLUDING RETURNED/ UNDISCL OSED INCOME ASSESSED INCOME COMPUTE D U/S. 158BB AS ON THE DATE OF SEARCH. ------- --------------------- --------------------- GROSS TOTAL INCOME 35 95 571 35 95 751 DEDUCTION U/S. 80IA 35 95 751 35 95 751 TOTAL INCOME : NIL NIL UNDISCLOSED INCOME : N IL AS CAN BE SEEN FROM THE ABOVE THE ASSESSEE HAS MEN TIONED IN THE RETURN OF THE BLOCK PERIOD THAT THE RETURN OF INCOME FOR AY 9 4-95 WAS FURNISHED BEFORE SEARCH. BUT COLUMN OF DATE OF FILING OF RETURN HA S BEEN LEFT BLANK BY THE ASSESSEE IE. THE DATE OF FILING OF RETURN OF THE AY 94-95 HAS NOT BEEN MENTIONED BY THE ASSESSEE IN THE RETURN OF THE BLO CK PERIOD 39. THE AO ON SCRUTINY OF THE RECORDS NOTICED THA T THE RETURN OF INCOME FOR THE AY. 94-95 HAS NOT BEEN FILED BY THE ASSESSEE. T HEREFORE THE ASSESSEE WAS REQUESTED TO FURNISH PROOF OF RETURN OF INCOME OFTHEA.Y.94-95 HAVING BEEN FILED BY THE ASSESSEE. IT WAS ALSO BROUGHT TO THE NOTICE OF THE ASSESSEE THAT IF THE ASSESSEE FAILED TO PRODUCE THE PROOF TO SHOW THAT RETURN FOR THE AY. 94-95 WAS FILED BY THE ASSESSEE WHOLE OF THE I NCOME OF THE ASSESSEE WOULD BE TREATED AS UNDISCLOSED INCOME OF THE ASS ESSEE FOR THE BLOCK PERIOD. THE ASSESSEE DID NOT FURNISH ANY PROOF TO S HOW THAT ANY RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR THE A.Y. 94-95 . THE AO IN VIEW OF THE PROVISIONS OF SEC. 158BB(1)(C) OF THE ACT TREATED T HE WHOLE OF THE INCOME FOR THE A.Y. 94-95 AS UNDISCLOSED INCOME OF THE BLOCK P ERIOD. FORJET LEASING LIMITED 27 40. THOUGH NO RETURN OF INCOME FOR THE A.Y. 94-95 HAS BEEN FILED BY THE ASSESSEE BUT IN THE P & L A/C FOR THE YEAR ENDED O N 3 1.3.95 FILED BY THE ASSESSEE ALONG WITH THE RETURN OF THE AY. 95-96 IN THE COLUMN SHOWING PREVIOUS YEARS FIGURES THE AMOUNT OF PROFIT BEFO RE TAXATION FOR THE F.Y. 93- 94 I.E. PERIOD RELEVANT TO AY 94-95 HAD BEEN SHOWN AT RS.40 94 188/-. PROVISION FOR TAXATION HAD BEEN SHOWN AS NIL. TH E AO THEREFORE WAS OF THE VIEW THAT NO TAX HAS BEEN PAID BY THE ASSESSEE FOR THE A.Y. 94-95. 41. THOUGH AS PER THE P & L A/C. FAR THE YEAR ENDE D ON 31.3.95 FILED ALONGWITH THE RETURN OF INCOME FOR THE AY. 95-96 T HE AMOUNT OF PROFIT BEFORE TAXATION FOR THE PERIOD RELEVANT TO AY. 94-95 HAD BEEN SHOWN AT RS.40 94 188/- BUT IN THE RETURN FLIED FOR THE BLOC K PERIOD THE GROSS TOTAL INCOME OF THE A.Y. 94-95 HAS BEEN SHOWN AT RS.35 95 751/-. THE AO CALLED UPON THE ASSESSEE VIDE ORDER SHEET DT. 26.02.2001 T O EXPLAIN THE DISCREPANCY BUT THE ASSESSCE DID NOT FURNISH ANY R ECONCILIATION OR EXPLANATION ABOUT THE DIFFERENCE IN THE TWO FIGURES . NO BOOKS OF ACCOUNTS OR OTHER DOCUMENTS WERE ALSO FURNISHED. 42. TAKING INTO ACCOUNT ALL THE FACTS DISCUSSED AB OVE WHOLE OF THE INCOME OF THE A.Y. 94-95 WAS TREATED BY THE AO AS UNDISCLOSE D INCOME IN VIEW OF THE PROVISIONS OF SEC.158BB(L) (C) AS NO RETURN OF INC OME FOR THE A.Y. 94-95 HAS BEEN FILED BY THE ASSESSEE. FOR THE PURPOSE OF COMP UTING THE UNDISCLOSED INCOME OF THE AY. 94-95 THE AMOUNT OF PROFIT BEFO RE TAXATION WAS TAKEN BY THE AO AT RS40 94 188/- AS THIS IS THE AMOUNT MENTI ONED IN THE COLUMN OF PREVIOUS YEARS FIGURES M THE P & L A/C. OF THE YEA R ENDED ON 31.3.95 FILED ALONGWITH THE RETURN OF INCOME FOR AY. 1995-96. 43. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORDER OF THE AO. THE CIT(A) ON THIS ISSUE HELD AS FOLLOWS:- FORJET LEASING LIMITED 28 7.3 1 HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT ORDER OF THE A.O. AND OTHER MATERIAL ON RECORD. AS DISCUSSED EARLIER VIDE PARA 5.3 APPELLANT HAS M ADE WRONG CLAIM OF DEDUCTION U/S 801A OF I. T. ACT. THUS EVEN IF IT IS PRESUMED THAT APPELLANT HAS FILED RETURN OF INCOME FOR A.YR. 1994 -95 OR IN VIEW OF VARIOUS DECISIONS CITED BY APPELLANT IF INCOME FOR A.YR. 1994.95 CAN NOT BE TREATED AS UNDISCLOSED INCOME AS SUCH INCOME WAS REFLECTED IN PROFIT AND LOSS ACCOUNT FILED ALONG WITH RETURN FOR A.YR. 1995-96 EVEN THEN CLAIM OF DEDUCTION U/S 801A IS A FALSE CLAIM. SO A.O. IS JUSTIFIED IN TAXING INCOME ON A/C OF WRONG CLAIM U/S 801A OF THE I. T. ACT. IN BLOCK ASSESSMENT. ALTERNATIVELY AS APPELLANT HAS FAILED TO FILE ANY EVIDENCE OF FILING REGULAR RETURN FOR A.YR.1994-95. SO INCOME OF A.YR. 1994-95 HAS TO BE TAKEN AS UNDISCLOSED INCOME FOR ASSESSMENT OF. BLOC K PERIOD. THUS I FIND NO MERIT IN APPELLANTS THIS GROUND OF APPEAL AND SAME IS HEREBY DISMISSED. 44. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSE SSEE HAS RAISED GROUND NO.2 AND 5 BEFORE THE TRIBUNAL. AFTER HEARING THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) ON THIS IS SUE DESERVES TO BE UPHELD. AS RIGHTLY HELD BY THE CIT(A) THE CLAIM FOR DEDUCTI ON OF THE INCOME FOR A.Y 1994-95 UNDER SECTION 80IA OF THE ACT IS NOT CORREC T. CONSEQUENTLY EVEN ASSUMING THAT THE DISCLOSURE OF THE SUM OF RS. 40 9 4 188/- AS PROFIT OF THE A.Y 1994-95 IN THE ANNUAL ACCOUNTS 1995-96 HAS TO BE TAXED AS UNDISCLOSED INCOME AS IT HAS BEEN FOUND AS A RESUL T OF SEARCH THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80IA OF THE ACT. IT IS ALSO NOTICED THE AO IN THE ORDER OF ASSESSMENT HAS GIVEN SPECIFIC FINDING THAT AS PER THE RECORDS AVAILABLE WITH HIM RETURNS FOR A.Y 1994-95 HAS NOT BEEN FILED. IN THE CIRCUMSTANCES IN THE ABSENCE OF ANY EVIDENCE FILED BY THE ASSESSEE SHOW THAT REGULAR RETURN OF INCOME FOR A.Y 1994-95 WAS FILED THE PLEA OF THE ASSESSEE TO THE CONTRARY CANNOT BE ACC EPTED. AS FAR AS A.Y 1991-92 IS CONCERNED NO ADDITION HAS BEEN MADE IN T HE BLOCK ASSESSMENT FORJET LEASING LIMITED 29 AND THEREFORE OBJECTIONS OF THE ASSESSEE RAISED I N GROUND NO.2 IS PURELY ACADEMIC. CONSEQUENTLY GROUND NO.2 & 5 RAISED BY THE ASSESSEE IS DISMISSED. 45. IN THE RESULT THE APPEAL BEING IT(SS) 73/M/0 5 IS DISMISSED. ITA NO.1382/MUM/05 A.Y 1994-95: 46. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DAED 25/11/2004 OF CIT(A)-4 MUMBAI RELATING TO ASSESSMENT YEAR 1994-9 5. 47. IN GROUND NO.1 THE ASSESSEE HAS CHALLENGED TH E JURISDICTION OF THE AO IN PASSING ORDER UNDER SECTION 147/148 OF THE ACT. DURING APPELLATE PROCEEDING THE AO HAD PROVIDED TO THE APPELLANT REA SONS RECORDED FOR REOPENING THE CASE FOR THE ABOVE ASSESSMENT YEARS . FOR THE ASS. YEAR 1994- 95 THE REASON RECORDED BY AO FOR REOPENING THE CA SE WAS THAT INCOME TAX RETURN FOR THE A. YR. 1994 -95 HAD NOT BEEN FILED A ND AO HAS REASON TO BELIEVE THAT INCOME OF RS. 40 94 188/- HAS ESCAPED ASSESSMENT AS THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/S 80 1A OF THE INCOME TAX ACT 1961. THE ASSESSEE CONTENDED BEFORE THE CIT(A) THA T IT HAD FILED THE RETURN FOR A. YR. 1994 -95 ALONG WITH THE BALANCE SHEET A ND PROFIT & LOSS ACCOUNT. IT SHOULD BE IN THE RECORDS OF THE DEPARTMENT. IT W AS ALSO CONTENDED THAT MANY OF THE RECORDS OF THE COMPANY HAD BEEN DESTROY ED PARTLY DUE TO ATTACK OF WHITE ANTS AND PARTLY ON ACCOUNT OF COLLAPSE OF ASSESSEES OFFICE BUILDING WHICH WAS VERY OLD AND WHICH WAS ULTIMATELY TAKEN F OR HEAVY REPAIRS AND RECONSTRUCTION BY HOUSING BOARD AND WHICH FORCED TH E ASSESSEE TO SHIFT OFFICE FOR QUITE SOMETIME. ON ACCOUNT OF THIS THE ASSESSEE LOST MANY OF THE INCOME TAX RECORDS AT THE TIME OF SHIFTING AND HENC E APPELLANT COULD NOT PRODUCE THE ACKNOWLEDGEMENT COPY OF THE INCOME TAX RETURN FOR THE A. YRS. 1994-95. FORJET LEASING LIMITED 30 48. ON THE ABOVE ISSUE WE HAVE ALREADY HELD WHILE DECIDING THE BLOCK ASSESSMENT THAT THE CLAIM OF THE ASSESSEE THAT IT H AD FILED RETURN OF INCOME FOR A.Y 1994-95 IS NOT CORRECT. ANOTHER CONTENTION WAS THAT THE ASSESSMENT WAS REOPENED FOR MAKING DISALLOWANCE FOR CLAIM FOR DEDUCTION U/S.80-IA OF THE ACT BUT NO SUCH DISALLOWANCE WAS MADE. RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JE T AIRWAYS (I) LTD. 331 ITR 236 (BOM) IT WAS CONTENDED THAT WHERE REASSESSM ENT IS INITIATED ON ONE GROUND AND NO ADDITION IS MADE ON THAT GROUND THEN THE AO CANNOT PROCEED WITH REASSESSMENT AND MAKE SOME OTHER ADDITION. WE HAVE CONSIDERED THIS SUBMISSION AND ARE OF THE VIEW THAT THE SAME CANNOT BE ACCEPTED. THE DISALLOWANCE U/S.80-IA OF THE ACT WAS NOT MADE IN T HE RELEVANT AYS COMPRISED IN THE BLOCK PERIOD FOR THE REASON THAT T HE SAME WAS MADE IN THE BLOCK ASSESSMENT PROCEEDINGS. IT CANNOT THEREFORE BE SAID THAT THE REASSESSMENT PROCEEDINGS WERE NOT VALIDLY INITIATED . CONSEQUENTLY GRIEVANCE PROJECTED IN GROUND NO.1 IS REJECTED. 49. GROUND OF APPEAL NO.2 TO 6 RAISED BY THE ASSES SEE READ AS FOLLOWS: 2. THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDING THE VIEW OF AO IN TREATING RS. 60 00 000/- AS UNEXPLAINED BANK DEPOSI T FOR THE ASSESSMENT YEAR 1994-95 ON THE GROUND THAT THE APPE LLANT HAS NOT PRODUCED THE SUFFICIENT DOCUMENTARY EVIDENCES REGAR DING THE SAME WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE THAT THE SAID CHEQUE WAS RETURNED BY THE BANK. 3. THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDING THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED INCREMENTAL LIABILITIE S FOR THE FOLLOWING ASSESSMENT YEARS ON THE GROUND THAT THE APPELLANT H AS NOT PRODUCED THE SUFFICIENT EVIDENCES TO JUSTIFY THE SAME WITHOU T PROPERLY APPRECIATING THE FACTS OF THE CASE THAT PROPER DETA ILS AND EXPLANATIONS WERE FURNISHED BY THE APPELLANT. ASSESSMENT YEAR AMOUNT -------------------- ---------- 1994-95 RS. 1 37 81 217/- 1995-96 RS. 49 24 673/- 1999-00 RS. 37 29 366/- FORJET LEASING LIMITED 31 4. THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDING THE ADDITIONS MADE BY AU ON ACCOUNT OF UNEXPLAINED INCREMENTAL LOANS OF R S.53 58 800/- FOR THE ASSESSMENT YEAR 1994- 95 ON THE GROUND THAT T HE APPELLANT HAS NOT PRODUCED SUFFICIENT EVIDENCES TO JUSTIFY THE SA ME WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE THAT LOAN CONFIR MATIONS OF ALL THE PARTIES AND OTHER RELEVANT DETAILS WERE SUBMITTED B Y THE APPELLANT. 5. THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDING THE ADDITIONS MADE BY AO ON ACCOUNT OF SHARE CAPITAL OF RS. 1 00 00 000/- FOR THE ASSESSMENT YEAR 1995-96 TREATING THE SAME AS UNEXP LAINED WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE THAT AL L THE DETAILS REGARDING SHAREHOLDERS WERE SUBMITTED BY THE APPELLANT AND OR IGINAL ASSESSMENT FOR THE SAME YEAR WAS ALSO COMPLETED BY THE THEN AO U/S 143 (3) AND NO ADDITION WAS MADE ON THIS GROUND AT THAT TIME. 6. THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER OR MODIFY ANY GROUND OF APPEAL EITHER AT THE TIME OF HEARING OR B EFORE. 50. AS FAR AS GROUND NO.2 IS CONCERNED THE AO HAS TAKEN THE HIGHEST PEAK AMOUNT DEPOSIT IN SYNDICATE BANK VILE PARLE BRANCH ACCOUNT NO.2314 IN THE NAME OF THE ASSESSEE AND ADDED THE SAME AS UNEXPLAI NED DEPOSIT IN BANK ACCOUNT. ADMITTEDLY THE ASSESSEE DID NOT GIVE ANY EXPLANATION REGARDING THESE DEPOSITS IN BANK ACCOUNT BEFORE THE AO. AS F AR AS GROUND NO.3 & 4 ARE CONCERNED THE AO MADE THE ADDITION FOR THE FOLL OWING REASONS. UNEXPLAINED CREDIT IN BALANCE SHEET: THE UNSECURED LOAN HAVE BEEN DECLARED AT RS. 53 58 800/- AS ON 31.03.1994. THE SAME WERE DECLARED AT RS. 14 42 500 /- AS ON 3 1.03.1993. THE DIFFERENCE OF RS. 39 16 300/- REMAIN S TO BE PROVED IN ABSENCE OF BOOKS OF ACCOUNTS AND NECESSARY LOAN CON FIRMATIONS THE ACCRETION TO THIS ACCOUNT IS TREATED AS INCOME FROM UNDISCLOSED INCOME AND IT TAXED U/S 68 OF THE 1.T. ACT 1961. THE OUTSTANDING CURRENT LIABILITIES AND PROVISION H AVE BEEN DECLARED AT RS. 1 58 33 851/-. THE SAID FIGURES HAD BEEN DEC LARED AT RS. 20 52 634/- AS ON 3 1.03.1993. IN ABSENCE OF BOOKS OF ACCOUNTS AND NECESSARY VERIFICATION FOR THE EXPENSES / EXPENDITU RE / BILLS FOR FORJET LEASING LIMITED 32 PURCHASES MADE THE ACCRETION TO THIS ACCOUNT IS TR EATED AS INCOME FROM UNDISCLOSED INCOME AND IT TAXED U/S. 69C OF TH E I.T. ACT 1961. AS FAR AS GROUND NO.5 IS CONCERNED THE SAME DOES NO T RELATE TO A.Y 1994-95 AND WE WILL THEREFORE DEAL WITH THE ISSUE WHILE DE ALING APPEAL IN A.Y 1995- 96. 51. ON THE ABOVE ISSUE THE ASSESSEE PREFERRED THE APPEAL BEFORE THE CIT(A). THE CIT(A) DECIDED THE APPEAL EX-PARTE AND ON THE B ASIS OF MATERIAL AVAILABLE ON THE FILE. 6.2 AR. OF THE APPELLANT SUBMITTED AS UNDER: THE A.O. HAS ERRED IN MAKING ADDITION OF RS.60 00 000/- AS UNEXPLAINED DEPOSIT IN BANK ACCOUNT. THE APPELLANT HAS SUBMITTED ALL THE DETAILS AND DOCUMENTS FOR THE ABOVE AND THE ADD ITION MADE BY THE A.O. SHOULD BE DELETED. FURTHER IT IS TO BE NOTED THAT THE CHEQUES OF RS.60 00 000/ RECEIVED FROM THE PARTY WAS DISHONOU RED AND RETURNED BY THE BANKERS. THE SAID SUM OF RS.60 00 000/- WAS NEVER CREDITED IN THE BANK STATEMENT. THEREFORE THE APPE LLANT PRAYS THAT ADDITION MADE BY THE A.O. AS UNEXPLAINED DEPOSITS I S ILLEGAL AND UNJUSTIFIED AND ADDITION OF RS.60 00 000/- MADE BY THE A.O. BE DELETED. 6.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT ORDER OF THE A.O. AND OILIER MATERIAL ON RECORD. THIS ADDITION IS BASED ON STATEMENTS ON BANK ACCO UNTS CALLED FROM BANKS SO ADDITION IS RIGHTLY MADE IN REGULAR ASSES SMENT ORDERS AS IT IS NOT RELATABLE TO SEIZED MATERIAL. THE APPELLANT HAS FAILED TO PRODUCE REGULAR BOOKS O F ACCOUNT FOR RELEVANT PREVIOUS YEAR BEFORE AO DURING ASSESSMENT PROCEEDINGS. THE APPELLANT HAS FAILED TO PRODUCE ANY EVIDENCE OR DOC UMENTS TO EXPLAIN THE SOURCE OF DEPOSITS IN SAID BANK ACCOUNT DURING ASSESSMENT PROCEEDINGS BEFORE A.O. OR EVEN DURING APPELLATE PR OCEEDINGS BEFORE ME. ON GOING THROUGH BANK STATEMENT OF SYNDICATE B ANK ACCOUNT NO.2314 IT IS FOUND THAT RS.60 00 000/- IS DEPOSITE D ON 17.12.1993 AND DEPOSITED CHEQUE WAS PASSED BY CLEARING AND AMO UNTS OF RS.30 00 000/- EACH WERE TRANSFERRED ON 17.12.1993 AND ON 18.12.1993 IN SAME BANK IN THE ACCOUNT NUMBERS 122 2 AND 1877 FORJET LEASING LIMITED 33 RESPECTIVELY. THUS APPELLANTS CONTENTION THAT CHE QUE DEPOSITED OF R. 60 00 000/- WAS RETURNED DISHONOURED IS FOUND TO B E WRONG. 52. BEFORE THE TRIBUNAL THE ASSESSEE HAS RAISED TH E SAME CONTENTION AS WAS RAISED BEFORE THE CIT(A) IN THE APPELLATE PROCEEDIN GS. THE ASSESSEE HAS HOWEVER NOT PRODUCED ANY EVIDENCE TO SHOW THAT A SU M OF RS. 60.00 LACS WAS NEVER CREDITED IN ITS BANK ACCOUNT. THE BASIS FOR MAKING THIS STATEMENT BY THE ASSESSEE AND THE EVIDENCE IN SUPPORT OF THE SAME HAS NOT BEEN FURNISHED. ON THE OTHER HAND THE BANK STATEMENT W ITH SYNDICATE BANK WHICH IS AVAILABLE AT PAGE 8 TO 11 OF THE ASSESSEE S PAPER BOOKS SHOWS HUGE AMOUNT OF DEPOSITS AND WITHDRAWALS IN THE BANK ACCO UNT. IN THESE CIRCUMSTANCES WE REJECT GROUND NO.2 RAISED BY THE A SSESSEE. 53. AS FAR AS GROUND NO.3 & 4 ARE CONCERNED WE FIN D THAT THE CIT(A) HAS HELD AS FOLLOWS. ON GROUND NO.3: 7. UNEXPLAINED INCREMENTAL LIABILITIES IN BALANCE SHEET (A.YR. I 994-95 1995-96 & 1999-2000) THE A.O. HAS ADDED DIFFERENCE IN OPENING AND CLOS ING OUTSTANDING LIABILITIES OF RS.1 37.81 2L7- FOR A.YR.1994-95 R S.49 24 673/- FOR A.YR. 1995-96 AND RS.37 29 366/- FOR A.YR. I 999-2000 IN ABSENCE OF BOOKS OF ACCOUNTS BILLS AND VOUCHERS OF RELEVANT LIABI LITY AND ALSO BECAUSE OF NON FILING OF CONFIRMATION LETTERS OF CONCERN PA RTIES. 7.2 A.R. OF THE APPELLANT SUBMITTED AS UNDER: THE A.O. ERRED IN MAKING ABOVE ADDITION ON ACCOUNT OF SUNDRY CREDITORS. THE APPELLANT HAS SUBMITTED ALL THE DETA ILS AND DOCUMENTS TO SHOW THAT THE CREDITORS ARE ASSESSED TO TAX AND THE RELEVANT AMOUNT SHOWN AS CREDITORS ARE ALSO SHOWN IN THEIR RESPECTI VE BOOKS OF ACCOUNTS. FURTHER LETTER OF CONFIRMATION FOR THE S AME HAS ALSO BEEN SUBMITTED WITH THE A.O. THE APPELLANT PRAYS THAT A DDITION MADE BY THE A.O. AS UNEXPLAINED SUNDRY CREDITORS IS ILLEGAL AND UNJUSTIFIED AND ABOVE ADDITIONS MADE BY THE A.O. HE DELETED. 7.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F APPELLANT ORDER OF THE A.O AND OTHER MATERIAL ON RECORD. FORJET LEASING LIMITED 34 THE ADDITION ON ACCOUNT OF DIFFERENCE IN OUTSTANDIN G LIABILITIES AS ON OPENING BALANCE AND CLOSING BALANCE IS BASED ON FIG URES AVAILABLE IN BALANCE SHEETS FLIED ALONG WITH THE RETURNS OF INCO ME. SO ADDITION ON ACCOUNT OF DIFFERENCE IN SUCH LIABILITY IF ANY HAS TO BE MADE IN REGULAR ASSESSMENT ORDER AS SAME IS NOT RELATABLE TO ANY SE IZED MATERIAL THE APPELLANT HAS FAILED TO PRODUCE BOOKS OF ACCOUN TS AND RELEVANT BILLS TO EXPLAIN OUTSTANDING LIABILITIES AS APPEARI NG IN BALANCE SHEDS OF DIFFERENT ASSESSMENT YEARS. APPELLANT ALSO FAILED T O PRODUCE ANY DOCUMENTS EVIDENCES LIKE CONFIRMATION LETTERS FROM RESPECTIVE PARTIES DULY SIGNED BY THEM CONFIRMING OUTSTANDING LIABILI TIES REFLECTED IN BALANCE SHEET. ON GOING THROUGH CASE RECORDS OF APP ELLANT FOR RELEVANT ASSESSMENT YEARS IT IS FOUND THAT NO CONFIRMATION LETTERS OF VARIOUS PARTIES DULY SIGNED BY THEM FOR OUTSTANDING LIABILI TIES IS FILED DURING ASSESSMENT PROCEEDINGS. HENCE AO IS JUSTIFIED IN ADDING DIFFERENCE IN LIABILITIES AS WORKED OUT BY HIM AS UNEXPLAINED SUN DRY CREDITORS. ON GROUND NO.4: 8.2 AR. OF THE APPELLANT SUBMITTED AS UNDER: THE A.O. ERRED IN MAKING ADDITION OF RS.39 16 300/ - ON ACCOUNT OF UNEXPLAINED LOANS. THE APPELLANT HAS SUBMITTED ALL THE DETAILS AND DOCUMENTS FOR THE ABOVE WERE FILED. FURTHER. APPELL ANT HAS SUBMITTED NAMES AND ADDRESSES TOGETHER WITH GIR NO./PAN NO. TO SHOW THAT ALL OF THEM WERE ASSESSED TO INCOME TAX. LETTER OF CON FIRMATIONS FOR THE SAME WERE ALSO SUBMITTED WITH THE A.O. THE APPELLAN T PRAYS THAT ADDITION MADE BY THE A.O. AS UNSECURED LOANS IS ILL EGAL AND UNJUSTIFIED AND ADDITION OF RS.39 L6 300/- MADE BY THE A.O. BE DELETED. 8.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT ORDER OF THE A.O. AND OTHER MATERIAL ON RECORD. THE ADDITION IS BASED ON ENTRIES OF BALANCE SHEET F ILED IN COURSE OF ASSESSMENT PROCEEDINGS AND IS NOT RELATABLE TO ANY SEIZED MATERIAL SO SUCH ADDITION HAS TO BE MADE IN REGULAR ASSESSMENT ORDER. AS PER CASE RECORDS FOR A.YR.1994-95 THE APPELLANT HAS FAILED TO FILE LOAN CONFIRMATION LETTERS DULY SIGNED BY CONCERN PA RTIES AT THE TIME OF ASSESSMENT PROCEEDINGS BEFORE A.O. OR DURING APPELL ATE PROCEEDINGS BEFORE ME. THE APPELLANT HAS FILED SOME DETAILS OF GIR NUMBERS AND ADDRESSES OF SOME PARTIES BUT SUCH DETAILS ARE NOT DULY SIGNED BY CONCERN PARTIES. THE APPELLANT HAS ALSO NOT FILED D ETAILS OF CHEQUE NUMBER BANK ACCOUNT ETC. OF SUCH PARTIES. THE INIT IAL ONUS OF PROVING FORJET LEASING LIMITED 35 GENUINENESS OF LOAN LIES ON APPELLANT AND SAME IS N OT DISCHARGED BY APPELLANT. AS APPELLANT HAS FAILED TO DISCHARGE THE INITIAL ONUS OF PROVING GENUINENESS OF LOANS SO AO IS JUSTIFIED IN MAKING ADDITION OF RS. 39 16 300/- U/S. 68 OF THE I.T. ACT. 54. BEFORE US THE ASSESSEE HAS REITERATED THE STAN D OF THE ASSESSEE AS PUT FORTH BEFORE THE CIT(A). WE FIND FROM THE PAPER BO OK THAT THE ASSESSEE HAS GIVEN THE DETAILS OF THE PARTIES FROM WHOM LOANS WE RE TAKEN DURING THE A.Y 1994-95. THE SAME IS ATTACHED AT PAGE NO.254 OF TH E ASSESSEES PAPER BOOK. SIMILARLY THE ASSESSEE HAS GIVEN GIR NO. & PAN OF P ERSONS WHO HAVE GIVEN LOANS AND SUNDRY CREDITORS. THIS IS AT PAGE NO.265 OF THE ASSESSEES PAPER BOOK. IT APPEARS THAT NO EFFORTS HAVE BEEN MADE BY THE AO OR THE CIT(A) TO MAKE ENQUIRIES EITHER FROM THE ASSESSMENT RECORDS O F THESE PARTIES OR BY ISSUING SUMMONS TO THESE PARTIES. IN THESE CIRCUMS TANCES WE ARE OF THE VIEW THAT IT WOULD BE JUST AND PROPER TO SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND REMAND THE SAME FOR FRESH CONSIDERATION B Y THE AO. FOR STATISTICAL PURPOSES GROUND NO.3 & 4 ARE TREATED AS ALLOWED. 55. IN THE RESULT ITA NO.1382/M/05 IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ITA NO.3020/M/08 & 3021/M/08 ( A.Y. 1995-96 AND 199 9-2000): 56. THESE ARE APPEALS BY THE ASSESSEE AGAINST THE COMMON ORDER DATED 25/11/2004 OF CIT(A) -4 MUMBAI RELATING TO THE ASS ESSMENT YEAR 1995-96 & 99-00. 57. THERE IS A DELAY OF 3 YEARS AND 77 DAYS IN FIL ING THE APPEALS BEING ITA NO.3020/MUM/08 AND ITA NO.3021/MUM/08 FOR AY 95-96 AND 99-2000 RESPECTIVELY. THE REASONS FOR THE DELAY IN FILING THE APPEALS HAVE BEEN EXPLAINED IN THE AFFIDAVIT OF MR.ASHOK B.GUPTA DIR ECTOR OF THE ASSESSEE. THE CIT(A) PASSED A COMMON ORDER DT.25.11.2004 FOR AY 94-95 95-96 98- FORJET LEASING LIMITED 36 99 AND 99-2000. THE ASSESSEE RECEIVED THE SAME ON 20.12.2004. ON 17.2.2005 THE ASSESSEE FILED ONE APPEAL FOR ALL TH E AY 94-95 95-96 AND 98- 99 AND 99-2000 UNDER THE BONAFIDE BELIEF THAT SINCE THE ORDER OF CIT(A) WAS A COMMON ORDER ONE APPEAL COULD BE FILED DESPITE TH E FACT THAT THERE ARE FOUR A.Y.S FOR WHICH FOUR APPEALS OUGHT TO BE FILED. TH E REGISTRY INTIMATED THE ASSESSEE THAT FOUR SEPARATE APPEALS SHOULD BE FILED . BY THE TIME THE ASSESSEE COULD MAKE COMPLIANCE THE APPEAL FILED BY THE ASSESSEE ON 17.2.2005 WAS LISTED FOR HEARING ON 8.6.2007 AND DI SMISSED FOR DEFAULT. THE ASSESSEE FILED M.A.NO.284/MUM/08 AND THE ORDER DT. 8.6.2007 WAS RECALLED BY ORDER DATED 31.10.2008. IN THE MEANWHILE ON 5.5 .2008 THE ASSESSEE FILED TWO APPEALS BEING APPEAL NO.ITA NO.3020/MUM/0 8 AND 3021/MUM/08 FOR AY 95-96 AND 99-2000 ARISING OUT OF THE COMMON ORDER OF CIT(A) DT. 25.11.2004. THUS A DELAY OF 3 YEARS AND 77 DAYS OCC URRED IN FILING APPEALS BEING ITA NO.3020/MUM/08 AND 3021/MUM/08 FOR AY 95- 96 AND 99-2000 ARISING OUT OF THE COMMON ORDER OF CIT(A) DT. 25.11 .2004. SINCE THE ASSESSEE HAD FILED ORIGINAL APPEAL (WHICH WAS NUMBE RED AS ITA NO.1382/MUM/05) AGAINST THE CONSOLIDATED ORDER WITH IN TIME MENTIONING THAT THAT APPEAL RELATES TO FOUR A.Y.S VIZ. AY 94-95 95-96 98-99 AND 99- 2000 THERE IS TECHNICALLY NO DELAY IN FILING THESE TWO APPEALS. WE HAVE PERUSED THE AFORESAID REASONS GIVEN FOR THE DELAY I N FILING THE APPEALS AND ARE OF THE VIEW THAT THE DELAY WAS OCCASIONED BY RE ASONABLE CAUSE AND THE SAME DESERVES TO BE CONDONED. ACCORDINGLY THE DELA Y IN FILING THE APPEALS BEING ITA NO.3020/MUM/08 AND 3021/MUM/08 FOR AY 95 -96 AND 99-2000 ARISING OUT OF THE COMMON ORDER OF CIT(A) DT. 25.11 .2004 IS CONDONED. ITA NO.3020/M/08 (AY 95-96) 58. THE FIRST GROUND RAISED BY THE ASSESSEE IS WIT H REGARD TO VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS. THIS GROUN D IS IDENTICAL TO THE GROUND (GR.NO.1) RAISED BY THE ASSESSEE IN AY 94-95 IN ITA NO.1382/M/08. FORJET LEASING LIMITED 37 FOR THE REASONS STATED WHILE DECIDING IDENTICAL GRO UND OF APPEAL FOR AY 94-95 IN ITA NO.1382/M/05 WE DISMISS THIS GROUND OF APPE AL. 59. GROUND NO.2 RAISED BY THE ASSESSEE READS AS FO LLOWS: 2. THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDING THE ADDITIONS MADE BY AO ON ACCOUNT OF UNEXPLAINED INCREMENTAL LIABILITIE S OF RS.49 24 673/- ON THE GROUND THAT THE APPELLANT HA S NOT PRODUCED THE SUFFICIENT EVIDENCES TO JUSTIFY THE SAME WITHOU T PROPERLY APPRECIATING THE FACTS OF THE CASE THAT PROPER DETA ILS AND EXPLANATIONS WERE FURNISHED BY THE APPELLANT. 60. THIS ADDITION AHS BEEN MADE ON IDENTICAL BASIS ON WHICH THE ADDITION WAS MADE IN A.Y 1994-95 WHICH WAS CHALLENGED BY THE ASSESSEE IN GROUND NO.3 & 4 IN ITA NO.1382/M/05. IN THIS YEAR THE ASS ESSEE HAS GIVEN THE DETAILS OF PURCHASES AND THE SAME IS AVAILABLE AT P AGE NO.255 OF THE PAPER BOOK. SO ALSO THE DETAILS OF CREDITORS HAVE BEEN G IVEN. WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE THE ORDER OF THE CI T(A) SHOULD BE SET ASIDE AND THE MATTER REMANDED TO THE AO FOR FRESH CONSIDERATI ON. 61. AS FAR AS GROUND NO.3 IS CONCERNED THERE WAS A N INCREASE IN SHARE CAPITAL OF RS. 1.0 CRORES. THE AO MADE THE ADDITIO N OF RS.1 CRORE ARE UNEXPLAINED CASH CREDIT IN THE FORM OF RECEIPT SHAR E CAPITAL. THE CIT(A) CONFIRMED THE ORDER OF THE AO FOR THE FOLLOWING REA SONS. 9. SHARE CAPITAL (A.YR. 1995-96) ON GOING THROUGH BALANCE SHEET FOR A.YR. 1995-96 A .O. FOUND THAT APPELLANT COMPANY HAS RAISED THE SHARE CAPITAL BY A N AMOUNT OF RS. I CRORE. THE APPELLANT FAILED TO PROVE BY WAY OF DOCU MENTARY EVIDENCE ABOUT GENUINENESS OF SHARE CAPITAL OF RS. 1 CRORE. INTRODUCED DURING THE YEAR SO A.O. MADE ADDITION OF RS.1 CRORE U/S. 68 OF I. T. ACT. FORJET LEASING LIMITED 38 9.2 A.R. OF THE APPELLANT SUBMITTED AS UNDER: THE A.O. ERRED IN MAKING ADDITION OF RS.1 00 00 00 0/- ON ACCOUNT OF SHARE CAPITAL. THE APPELLANT HAD SUBMITTED LIST OF NAME AND ADDRESS OF SHAREHOLDERS WHO HAVE SUBSCRIBED TO THE SHARE CAPIT AL OF THE COMPANY ALONG WITH THEIR GIR NO./PAN NOS. AND NUMBER OF SHA RES AND AMOUNT SUBSCRIBED BY THEM. APPELLANT FURTHER SUBMITS THAT AMOUNT FOR SUBSCRIPTION OF SHARE CAPITAL HAS BEEN RECEIVED BY CHEQUES ONLY. IT IS TO BE FURTHER NOTED THAT AT THE TIME OF ORIGINAL AS SESSMENT THIS ISSUE HAS BEEN DEALT BY THE THEN A.O. AND ALL THE QUERIE S IN THIS REGARD WAS EXPLAINED TO HIS SATISFACTION WHICH IS EVIDENT FRO M THE ORIGINAL ASSESSMENT ORDER PASSED BY THE THEN A.O. ULS.143(3) OF THE INCOME TAX ACT. SINCE THE SHARE CAPITAL HAS BEEN FULLY EXP LAINED NO ADDITION IN RESPECT THEREOF CAN BE MADE NOW. THE APPELLANT THEREFORE PRAYS THAT ADDITION MADE ON ACCOUNT OF SHARE CAPITAL OF R S. 1 00 00 000/- SHOULD BE DELETED. 9.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT ORDER OF THE A.O. AND OTHER MATERIAL ON RECORD. THE ADDITION IS BASED ON ENTRIES APPEARING IN BALAN CE SHEET FILED ALONG WITH RETURN OF INCOME AND IS NOT RELATABLE TO ANY SEIZED MATERIAL OR SEARCH PROCEEDINGS AS A RESULT SUCH ADDITION HAS T O BE MADE IN REGULAR ASSESSMENT ORDER. ON GOING THROUGH ASSESSMENT RECORDS OF APPELLANT IT IS FOUND THAT APPELLANT HAS NOT FILED ANY EVIDENCE OR DOCUMENTS O R CONFIRMATION LETTERS DULY SIGNED BY CONCERN PARTIES GIVING DETA ILS OF CHEQUE NO. GIR NO. OF SHAREHOLDERS WHO HAVE CONTRIBUTED THEIR SHA RE CAPITALS. EVEN DURING PRESENT APPELLATE PROCEEDINGS NO CONFIRMATIO N LETTERS DULY SIGNED BY SHAREHOLDERS WERE FILED. THE APPELLANT HA S FAILED TO DISCHARGE ITS INITIAL ONUS OF PROVING GENUINENESS O F SHARE CAPITAL INTRODUCED DURING THE YEAR SO A.O. IS JUSTIFIED IN ADDING UNEXPLAINED SHARE CAPITAL OF RS. 1 CRORE ULS.68 OF I. T. ACT. A CCORDINGLY I CONFIRM THE ADDITION MADE BY A.O. 62. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSE SSEE HAS RAISED THE AFORESAID GROUND OF APPEAL BEFORE THE TRIBUNAL. WE HAVE PERUSED THE PAPER BOOK FILED BY THE ASSESSEE. AT PAGES 276 TO 279 TH E ASSESSEE HAD GIVEN A LIST FORJET LEASING LIMITED 39 OF SHARE HOLDERS AS ON 31/3/1995. THE CIT(A) HAS H OWEVER PROCEEDED ON THE BASIS THAT NO CONFIRMATION LIST HAD BEEN FILED BY THE ASSESSEE. SINCE THE LIST FURNISHED BY THE ASSESSEE GIVES THE COMPLETE A DDRESS OF THE SHAREHOLDERS WE ARE OF THE VIEW THAT IT WOULD BE J UST AND PROPER TO DIRECT THE AO TO MAKE ENQUIRIES AT THE ADDRESSES FURNISHED BY THE ASSESSEE AND DECIDE THE ISSUE AFRESH. 63. IN THE RESULT ITA NO.3020/M/08 IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.3021/MM/2008 A.Y. 1999-2000: 64. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 25/11/2004 OF CIT(A) -4 MUMBAI RELATING TO THE ASSESSMENT YEA R 1999-2000. 65. GROUND NO.1 RAISED BY THE ASSESSEE IS WITH REG ARD TO VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS U/S.148 OF T HE ACT. THE SAID GROUND IS IDENTICAL TO GROUND NO.1 RAISED IN A.Y 1995-96. FOR THE REASONS STATED WHILE DECIDING GROUND NO.1 IN A.Y 1995-96 GROUND NO .1 IS DISMISSED. 66. AS FAR AS GROUND NO.2 IS CONCERNED THE SAME IS IDENTICAL TO GROUND NO.2 IN ITA NO.3020/M/08 FOR A.Y 1995-96. FOR THE REASONS STATED THEREIN THE ORDER OF THE CIT(A) ON THIS ISSUE IS SET ASIDE AND THE MATTER IS REMANDED TO THE AO FOR FRESH CONSIDERATION. ITA NO.1383/M/2005 A.Y.1996-97: 67. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 25/11/2004 OF CIT(A) -4 MUMBAI RELATING TO THE ASSESSMENT YEA R 1996-97. THE ONLY GROUND RAISED BY THE ASSESSEE IS AS FOLLOW S: 1. THE LEARNED CIT (APPEAL)HAS ERRED IN UPHOLDING THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED BANK DEPOSIT OF RS. 61 33 007/ ON THE GROUND THAT THE APPELLANT HAS NOT PRODUCED SUFF ICIENT DETAILS REGARDING THE SAME WITHOUT PROPERLY APPRECIATING T HE FACTS OF THE CASE FORJET LEASING LIMITED 40 THAT BANK ACCOUNTS WERE THE REGULAR BANK ACCOUNTS R EGARDING BUSINESS TRANSACTIONS AND APPELLANT HAS SUBMITTED S UFFICIENT DETAIL REGARDING THE SAME. 68. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE A .O. REQUESTED THE ASSESSEE TO PRODUCE BANK ACCOUNTS FOR VERIFICATION BUT ASSESSEE FAILED TO PRODUCE BANK ACCOUNTS AND BOOKS OF ACCOUNTS FOR VER IFICATION. SO A.O. CALLED COPY OF BANK STATEMENT FROM CENTRAL BANK OF INDIA A /C.NO.31859 AND FROM SYNDICATE BANK VILE BRANCH A/C NO. 1626 AND REQUEST ED THE ASSESSEE TO EXPLAIN DEPOSITS MADE IN SAID BANK ACCOUNTS. THE A SSESSEE FAILED TO FILE ANY DETAILS OR DOCUMENTS TO PROVE GENUINENESS OF SOURCE OF DEPOSIT IN THE SAID BANK ACCOUNT SO A.O WORKED OUT PEAK DEPOSIT OF RS. 61 33 007/- (RS.11 44 423/- + RS. 49 88 584/-) AND ADDED THE SA ME AS UNEXPLAINED CASH CREDIT. 69. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRME D THE ORDER OF THE AO FOR THE FOLLOWING REASONS: 4.2 A.R. OF THE APPELLANT SUBMITTED AS UNDER: THE A.O. HAVE ERRED IN MAKING ADDITION OF RS.61 33 007/- AS UNEXPLAINED DEPOSIT IN BANK ACCOUNT. THE LD. A.O. H AS MADE ADDITION OF RS.61 33 0071/- BEING PEAK OF DEPOSITS IN REGULA R BANK ACCOUNT OF THE APPELLANT. THE APPELLANT SUBMITS THAT THE SAID BANK ACCOUNT ARE REGULAR ACCOUNT FOR THE BUSINESS AND THE TRANSACTIO NS THEREIN WERE REGULAR BUSINESS TRANSACTIONS REFLECTED IN BOOKS OF ACCOUNTS OF THE APPELLANT. THE APPELLANT RESPECTFULLY SUBMITS THAT ALL THE TRANSACTIONS WERE PROPERLY REFLECTED IN THE BOOKS OF ACCOUNTS AN D THE RETURN WAS ALSO FILED FOR THE SAME AND NO ADDITION WAS CALLED FOR ON THE ABOVE GROUND. THE APPELLANT HAS SUBMITTED ALL THE DETAILS AND DOCUMENTS FOR THE ABOVE AND THE ADDITION MADE BY THE A.O. SHOULD BE DELETED. THEREFORE THE APPELLANT PRAYS THAT ADDITION MADE B Y THE A.O. AS UNEXPLAINED DEPOSITS IS ILLEGAL AND UNJUSTIFIED AND ADDITION OF RS.25 18 918/- MADE BY THE A.O. BE DELETED. 4.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT ORDER OF THE A.O. AND OTHER MATERIAL ON RECORD. FORJET LEASING LIMITED 41 THIS ADDITION IS BASED ON STATEMENTS OF BANK ACCOUN TS CALLED FROM BANKS SO ADDITION IS RIGHTLY MADE IN REGULAR ASSES SMENT ORDERS AS IT IS NOT RELATABLE TO SEIZED MATERIAL. THE APPELLANT HAS FAILED TO PRODUCE REGULAR BOOKS O F ACCOUNT FOR RELEVANT PREVIOUS YEARS BEFORE A.O. DURING ASSESSME NT PROCEEDINGS. FURTHER THE APPELLANT HAS FAILED TO PRODUCE ANY EVI DENCE OR DOCUMENTS TO EXPLAIN THE SOURCE OF DEPOSITS IN SAID BANK ACCO UNT DURING ASSESSMENT PROCEEDINGS BEFORE A.O. OR EVEN DURING A PPELLATE PROCEEDINGS BEFORE ME. THE INITIAL ONUS OF PROVING NATURE AND SOURCE OF DEPOSITS LIES ON APPELLANT. IN ABSENCE OF BOOKS OF ACCOUNT AND OTHER DOCUMENTARY EVIDENCE A.O. IS JUSTIFIED IN ADDING PE AK DEPOSIT OF RS.61 33 007/- AS UNEXPLAINED DEPOSITS IN BANK ACCO UNTS AND ACCORDINGLY I HEREBY CONFIRM THE ADDITION MADE BY A .O. 70. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS WERE MADE BEFORE THE AO. WE FIND THAT NEITHER BEFORE TH E REVENUE AUTHORITIES NOR BEFORE THE TRIBUNAL THE ASSESSEE HAS MADE ATTEMPTS TO POINT OUT AS TO HOW THE TRANSACTIONS REFLECTED IN THE BANK ACCOUNTS ARE REGULAR BUSINESS TRANSACTION. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ADDITION MADE IS JUSTIFIED AND CALLS FOR NO INTERFERENCE. C ONSEQUENTLY ITA NO.1383/M/05 IS DISMISSED. ITA NO.1384/M/2005 A.Y.1997-98: 71. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 25/11/2004 OF CIT(A) -4 MUMBAI RELATING TO THE ASSESSMENT YEA R 1997-98. 72. GROUND NO.1 RAISED BY THE ASSESSEE READS AS FO LLOWS: 1. THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDING T HE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED PEAK BANK DEPOSIT OF R S. 25 18918/- ON THE GROUND THAT APPELLANT HAS NOT SUBMITTED SUFFICI ENT DETAILS REGARDING THE SAME WITHOUT PROPERLY APPRECIATING TH E FACTS OF THE CASE THAT THAT WAS THE REGULAR BANK ACCOUNT OF THE APPEL LANT AND ENTRIES WERE PROPERLY REFLECTED IN THE BOOKS OF ACCOUNT. FORJET LEASING LIMITED 42 73. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE A .O. REQUESTED THE ASSESSEE TO PRODUCE BANK ACCOUNTS FOR VERIFICATION BUT ASSESSEE FAILED TO PRODUCE BANK ACCOUNTS AND BOOKS OF ACCOUNTS FOR VER IFICATION. SO A.O. CALLED A COPY OF BANK STATEMENT FROM CENTRAL BANK OF INDIA AT/C.NO.31859 AND REQUESTED THE ASSESSEE TO EXPLAIN DEPOSITS MADE IN SAID BANK ACCOUNT. THE ASSESSEE FAILED TO FILE ANY DETAILS OR DOCUMENTS T O PROVE GENUINENESS OF SOURCE OF DEPOSITS IN THE SAID BANK ACCOUNT SO A.O . WORKED OUT PEAK DEPOSIT OF RS.25 18 918/- AND ADDED THE SAME AS UNEXPLAINED CASH CREDIT. 74. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRME D THE ORDER OF THE AO FOR THE FOLLOWING REASONS: 5.2 A.R. OF THE APPELLANT SUBMITTED AS UNDER: THE A.O. HAS ERRED IN MAKING ADDITION OF RS.25 18 9L8/- AS UNEXPLAINED DEPOSIT IN BANK ACCOUNT THE LD. A.O. HA S MADE ADDITION OF RS.25 18 918/- BEING PEAK OF DEPOSITS IN REGULAR BANK ACCOUNT OF THE APPELLANT. THE APPELLANT SUBMITS THAT THE SAID BANK ACCOUNT IS REGULAR ACCOUNT FOR THE BUSINESS AND THE TRANSACTI ONS THEREIN WERE REGULAR BUSINESS TRANSACTIONS REFLECTED IN BOOKS OF ACCOUNTS OF THE APPELLANT. THE APPELLANT RESPECTFULLY SUBMITS THAT ALL THE TRANSACTIONS WERE PROPERLY REFLECTED IN THE BOOKS OF ACCOUNTS AN D THE RETURN WAS ALSO TILED FOR THE SAME AND NO ADDITION WAS CALLED FOR ON THE ABOVE GROUND. THE APPELLANT HAS SUBMITTED ALL THE DETAILS AND DOCUMENTS FOR THE ABOVE AND THE ADDITION MADE BY THE A.O. SHOUL D BE DELETED. THEREFORE THE APPELLANT PRAYS THAT ADDITION MADE B Y THE A.O. AS UNEXPLAINED DEPOSITS IS ILLEGAL AND UNJUSTIFIED AND ADDITION OF RS.25 L8 918/- MADE BY THE A.O. BE DELETED. 5.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE APPELLANT ORDER OF THE A.O. AND OTHER MATERIAL ON RECORD. THIS ADDITION IS BASED ON STATEMENT OF BANK ACCOUNT CALLED FROM BANK SO ADDITION IS RIGHTLY MADE IN REGULAR ASSESS MENT ORDER AS IT IS NOT RELATABLE TO SEIZED MATERIAL. THE APPELLANT HAS FAILED TO PRODUCE REGULAR BOOKS O F ACCOUNT FOR RELEVANT PREVIOUS YEARS BEFORE A.O. DURING ASSESS MENT PROCEEDINGS. THE APPELLANT HAS FAILED TO PRODUCE ANY EVIDENCE OR DOCUMENTS TO EXPLAIN THE NATURE AND SOURCE OF DEPOSITS IN SAID B ANK ACCOUNT DURING ASSESSMENT PROCEEDINGS BEFORE A.O OR EVEN DURING A PPELLATE FORJET LEASING LIMITED 43 PROCEEDINGS BEFORE ME. THE INITIAL ONUS OF PROVING NATURE AND SOURCE OF DEPOSIT LIES ON THE APPELLANT. IN ABSENCE OF BO OKS OF ACCOUNT AND OTHER DOCUMENTARY EVIDENCE AO IS JUSTIFIED IN ADDIN G PEAK DEPOSIT OF RS. 25 18 918/- AS UNEXPLAINED DEPOSITS IN BANK ACC OUNT AND ACCORDINGLY I HEREBY CONFIRM THE ADDITION MADE BY A .O. 75. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS WERE MADE BEFORE THE AO. WE FIND THAT NEITHER BEFORE TH E REVENUE AUTHORITIES NOR BEFORE THE TRIBUNAL THE ASSESSEE HAS MADE ATTEMPTS TO POINT OUT AS TO HOW THE TRANSACTIONS REFLECTED IN THE BANK ACCOUNTS ARE REGULAR BUSINESS TRANSACTION. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ADDITION MADE IS JUSTIFIED AND CALLS FOR NO INTERFERENCE. C ONSEQUENTLY ITA NO.1383/M/05 IS DISMISSED. 76. GROUND NO.2 &3 READS AS FOLLOWS: 2. THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDING THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED INCREMENTAL LIABILITIE S OF RS. 52 45 195/- ON THE GROUND THAT APPELLANT HAS NOT SU BMITTED SUFFICIENT DETAILS REGARDING THE SAME WITHOUT PROPERLY APPRECI ATING THE FACTS OF THE CASE THAT BALANCE CONFIRMATIONS AND OTHER DETAI LS WERE PROPERLY SUBMITTED BY THE APPELLANT 3. THE LD. CIT (APPEAL) HAS ERRED IN UPHOLDING THE ADDITION MADE BY AO ON ACCOUNT OF DIFFERENCE IN RESERVE & SURPLUS OF RS. 91 09 444/- TREATING THE SAME AS UNEXPLAINED WITHOUT PROPERLY A PPRECIATING THE FACTS OF THE CASE THAT REASONS FOR DIFFERENCES IN T HE FIGURE OF RESERVE & SURPLUS WERE PROPERLY EXPLAINED TO THE AO AND CIT ( APPEAL). 77. THESE GROUNDS ARE IDENTICAL TO GROUND NO. 3 &4 IN ITA NO.1382/M/05. FOR THE REASONS STATED THEREIN THE ORDER OF THE CIT (A) ON THIS ISSUE IS SET ASIDE THE MATTER IS REMANDED TO THE AO FOR FRESH CO NSIDERATION. FORJET LEASING LIMITED 44 78. IN THE RESULT IT(SS) A.NO.73/MUM/05 IS DISMIS SED. ITA NO.1382/MUM/05 TO 1384/MUM/05 AND ITA NO.3020 & 302 1/MUM/08 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DAY OF DEC. 2011. SD/- SD/- (N.V.VASUDEVAN) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED. 30 TH DEC.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RB BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR I TAT MUMBAI BENCHES MUMBAI. VM. FORJET LEASING LIMITED 45 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 8/12/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 9/12/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER