Shri Rishabh Amritkumar Sanghvi,, Ahmedabad v. The Income Tax Officer, Ward- 5(2)(4),, Ahmedabad

ITA 3399/AHD/2014 | 2006-2007
Pronouncement Date: 26-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 339920514 RSA 2014
Assessee PAN BBPPS5694R
Bench Ahmedabad
Appeal Number ITA 3399/AHD/2014
Duration Of Justice 1 year(s) 10 month(s) 8 day(s)
Appellant Shri Rishabh Amritkumar Sanghvi,, Ahmedabad
Respondent The Income Tax Officer, Ward- 5(2)(4),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 26-10-2016
Date Of Final Hearing 24-10-2016
Next Hearing Date 24-10-2016
Assessment Year 2006-2007
Appeal Filed On 18-12-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER ./ ITA.NO.3399/AHD/2014 / ASSTT. YEAR: 2006-2007 AND ./ ITA.NO.3421/AHD/2014 / ASSTT. YEAR: 2008-2009 RISHABH AMRITKUMAR SANGHVI C/O. MEHTA LODHA & CO. CHARTERED ACCOUNTANTS 105 SAKAR-I ASHRAM ROAD AHMEDABAD 380 009. PAN : BBPPS 5694 R VS ITO WARD - 3(1)(OLD) NEW 5(2)(4) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI P.D. SHAH AR REVENUE BY : SHRI ANTONY PARIATH SR.DR / DATE OF HEARING : 24/10/2016 / DATE OF PRONOUNCEMENT: 26/10/2016 $%/ O R D E R PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST SEPARATE ORDERS OF THE LD.CIT(A)-6 AHMEDABAD DATED 12.11.2014 PASSED FOR THE ASSTT.YEARS 2006-07 AND 2008-09. 2. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN BOTH THE YEARS ARE VERBATIM SAME. THEREFORE FOR FACILITY OF REFERENCE I TAKE NOTE OF GROUNDS FROM THE ASSTT.YEAR 2006-07 WHICH READS AS UNDER: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN LAW AND FACTS BY NOT QUASHING THE PROCEEDINGS U/ S 148 OF THE INCOME TAX ACT AS THE SAME WAS WITHOUT AND BEYOND JURISDIC TION AND THEREFORE THE ORDER PASSED BY THE LEARNED AO IS TO BE QUASHED . ITA NO.3399 AND 3421/AHD/2014 2 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS ERRED IN LAW AND FACTS BY CONFIRMING THE ACTION OF THE LE ARNED AO OF THE ADDITION INCOME OF OTHER PERSON AND ESTIMATING PROF IT @ 4% ON THE SALES THEREOF AND THEREFORE THE LEARNED AO SHOULD B E DIRECTED TO DELETE THE ADDITION MADE BY THE HIM IN FULL. 3. THAT THE APPELLANT CRAVES LIBERTY TO ADD AMEN D ALTER AND DELETE ANY GROUNDS OF APPEAL BEFORE THE FINAL HEARING. 3. BEFORE ADVERTING TO VARIOUS PROPOSITIONS RAISED BY THE LD.COUNSEL FOR THE ASSESSEE IN SUPPORT OF THESE GROUNDS OF APPEAL I W OULD LIKE TO MAKE REFERENCE TO BASIC FACTS. THE FACTS ON VITAL POINTS ARE COMM ON IN BOTH THE ASSESSMENT YEARS. THEREFORE FOR FACILITY OF REFERENCE I TAK E UP FACTS MAINLY FROM THE ASSTT.YEAR 2006-07. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WA S RUNNING A PROPRIETORSHIP CONCERN IN THE NAME AND STYLE OF M/S.ABS TECHNOLOGY . HE WAS TRADING IN WATER PURIFYING SYSTEM AND ITS PARTS. THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR ASSTT.YEAR 2006-07 ON 9.10.2006 DECLARIN G TOTAL INCOME AT RS.85 050/-. THE LD.AO GOT AN INFORMATION EXHIBITI NG THE FACT THAT THE ASSESSEE HAS BEEN INDULGED IN UNDER-INVOICING OF CE RTAIN COMMODITIES WHICH WERE IMPORTED. THEREFORE HE RECORDED REASONS AND REOPENED ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT 1961. A N OTICE UNDER SECTION 148 OF THE ACT WAS ISSUED IN BOTH THE ASSESSMENT YEARS. IN RESPONSE TO THE NOTICE THE ASSESSEE HAS FILED A LETTER DATED 15.4.2013. H E PLEADED THAT RETURN FILED IN ASSTT.YEAR 2006-07 ON 9.10.2006 MAY BE TREATED AS F ILED IN COMPLIANCE TO THE NOTICE RECEIVED UNDER SECTION 148 OF THE ACT. SIMI LARLY FOR THE ASSTT.YEAR 2008-09 IT REVEALED THAT THE ASSESSEE HAS NOT FILE D REGULAR RETURN. HE FILED IT ON 27.2013. THE ASSESSEE HAS DEMAND REASONS FOR RE OPENING OF THE ASSESSMENT WHICH WERE SUPPLIED TO HIM VIDE LETTER DATED 29.5.2013. THE ASSESSEE HAS RAISED OBJECTIONS AND SUCH OBJECTIONS HAVE BEEN DISPOSED OF BY ITA NO.3399 AND 3421/AHD/2014 3 THE AO ON 19.6.2013 IN BOTH THE ASSESSMENT YEARS AN D THESE ORDERS WERE SERVED UPON THE ASSESSEE ON 26.6.2013 IN BOTH THE A SSESSMENT YEARS. 5. LET ME TAKE FIRST FOLD OF SUBMISSION RAISED BY T HE LD.COUNSEL FOR THE ASSESSEE. ON THE STRENGTH OF HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF SAHKARI KHAND UDYOG MANDLI LTD. VS. ACIT 370 IT R 107 THE LD.COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE HONBLE GUJ ARAT HIGH COURT HAS HELD THAT REASONS FOR REOPENING OF THE ASSESSMENT RECORD ED BY THE AO SHOULD BE SERVED UPON THE ASSESSEE WITHIN 30 DAYS OF FILING O F RETURN BY THE ASSESSEE IN RESPONSE TO THE NOTICE RECEIVED UNDER SECTION 148 O F THE INCOME TAX ACT. REASONS ARE TO BE SUPPLIED WITHIN 30 DAYS WITHOUT W AITING FOR THE ASSESSEE TO DEMAND SUCH REASONS. IN THE PRESENT APPEAL THE AS SESSEE HAS FILED RETURN ON 15.4.2013 IN BOTH YEARS. THE REASONS HAVE BEEN SER VED UPON THE ASSESSEE ON 29.5.2013. THUS THESE WERE NOT SERVED UPON THE AS SESSEE WITHIN 30 DAYS OF FILING OF RETURN HENCE ASSESSMENT ORDERS ARE NOT SUSTAINABLE. 6. THE LD.DR ON THE OTHER HAND CONTENDED THAT THE AO HAS DULY SERVED REASONS. 7. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. THE HONBLE GUJARAT HIGH COURT HAS ISSU ED FOLLOWING DIRECTIONS IN THE CASE OF SAHKARI KHAND UDYOG MANDLI LTD. VS. ACI T (SUPRA). (1) ONCE THE AO SERVES TO AN ASSESSEE A NOTICE OF REOPENING OF ASSESSMENT U/S 148 OF THE INCOME-TAX ACT 1961 AND WITHIN THE TIME PERMITTED IN SUCH NOTICE THE ASSESSEE FILES HIS RE TURN OF INCOME IN RESPONSE TO SUCH NOTICE THE AO SHALL SUPPLY THE RE ASONS RECORDED BY HIM FOR ISSUING SUCH NOTICE WITHIN 30 DAYS OF THE F ILING OF THE RETURN BY THE ASSESSEE WITHOUT WAITING FOR THE ASSESSEE TO DE MAND SUCH REASONS. (2) ONCE THE ASSESSEE RECEIVES SUCH REASONS HE WOU LD BE EXPECTED TO RAISE HIS OBJECTIONS IF HE SO DESIRES WITHIN 60 D AYS OF RECEIPT OF SUCH REASONS. ITA NO.3399 AND 3421/AHD/2014 4 (3) IF OBJECTIONS ARE RECEIVED BY THE AO FROM THE A SSESSEE WITHIN THE TIME PERMITTED HEREINABOVE THE AO WOULD DISPOSE OF THE OBJECTIONS AS FAR AS POSSIBLE WITHIN FOUR MONTHS OF DATE OF RECE IPT OF THE OBJECTIONS FILED BY THE ASSESSEE. (4) THIS IS BEING DONE IN ORDER TO ENSURE THAT SUFF ICIENT TIME IS AVAILABLE WITH THE AO TO FRAME THE ASSESSMENT AFTER CARRYING OUT PROPER SCRUTINY. THE REQUIREMENT AND THE TIME-FRAME FOR SUPPLYING TH E REASONS WITHOUT BEING DEMANDED BY THE ASSESSEE WOULD BE APPLICABLE ONLY IF THE ASSESSEE FILES HIS RETURN OF INCOME WITHIN THE PERI OD PERMITTED IN THE NOTICE FOR REOPENING. LIKEWISE THE TIME FRAME FOR T HE AO TO DISPOSE OF THE OBJECTIONS WOULD APPLY ONLY IF THE ASSESSEE RAI SES OBJECTIONS WITHIN THE TIME PROVIDED HEREINABOVE. THIS HOWEVER WOULD NOT MEAN THAT IF IN EITHER CASE THE ASSESSEE MISSES THE TIME LIMIT THE PROCEDURE PROVIDED BY THE SUPREME COURT IN GKN DRIVESHAFTS (I NDIA) LTD WOULD NOT APPLY. IT ONLY MEANS THAT THE TIME FRAME PROVID ED HEREINABOVE WOULD NOT APPLY IN SUCH CASES. (5) IN THE COMMUNICATION SUPPLYING THE REASONS RECO RDED BY THE AO HE SHALL INTIMATE TO THE ASSESSEE THAT HE IS EXPECTED TO RAISE THE OBJECTIONS WITHIN 60 DAYS OF RECEIPT OF THE REASONS AND SHALL REPRODUCE THE DIRECTIONS CONTAINED IN SUB-PARA 1 TO 4 HEREINABOVE GIVING REFERENCE TO THIS JUDGMENT OF THE HIGH COURT. (6) THE CHIEF COMMISSIONER OF INCOME TAX AND CADRE CONTROLLING AUTHORITY OF THE GUJARAT STATE SHALL ISSUE A CIRCU LAR TO ALL AOS FOR SCRUPULOUSLY CARRYING OUT THE DIRECTIONS CONTAINED IN THIS JUDGMENT. SINCE THERE IS NO TIME LIMIT PROVIDED IN THE ACT TIME LIMIT AS LAID DOWN BY THE HONBLE HIGH COURT IS REQUIRED TO BE FOLLOWE D WITHIN THE STATE OF GUJARAT. THE HONBLE HIGH COURT HAS ALSO DIRECTED THE CHIEF COMMISSIONER OF INCOME TAX AND THE CADRE CONTROLLING AUTHORITY O F THE GUJARAT STATE FOR ISSUING A CIRCULAR TO ALL ASSESSING OFFICERS FOR CA RRYING OUT DIRECTIONS CONTAINED IN THIS JUDGMENT. BUT IT IS PERTINENT TO MENTION THAT THESE DIRECTIONS HAVE BEEN ISSUED BY THE HONBLE HIGH COURT ON 31.3. 2014. IN THE PRESENT CASE REASONS WERE SUPPLIED BY THE AO ON 29.5.2013 LONG BACK BEFORE ISSUANCE OF THESE DIRECTIONS. THOUGH THERE IS A L ITTLE DELAY WHEN HE HAS ITA NO.3399 AND 3421/AHD/2014 5 PASSED THE ASSESSMENT ORDER ON 18.3.2014 THIS JUDG MENT WAS NOT AVAILABLE TO HIM. THEREFORE THESE DIRECTIONS COULD NOT BE GIVE N EFFECT BY THE AO. DIRECTIONS BEING PROSPECTIVE IN NATURE REQUIRE TO B E COMPLIED BY THE LD.AO AFTER PASSING OF THIS JUDGMENT AND ISSUANCE OF CIRC ULAR BY THE CHIEF COMMISSIONER/CADRE CONTROLLING AUTHORITY OF THE STA TE OF GUJARAT. THEREFORE THERE IS NO VIOLATION IN THE PRESENT CAS E. I DO NOT FIND ANY MERIT IN THIS FIRST FOLD OF SUBMISSION RAISED BY THE ASSESSE E. 8. IN THE NEXT FOLD SUBMISSIONS IT WAS SUBMITTED T HAT ADDRESS OF THE ASSESSEE MENTIONED IN DEMAND NOTICE DATED 18.3.2014 AND OTHER NOTICES IN THE ASSTT.YEAR 2008-09 WERE SERVED AT C.G. ROAD LAW GA RDEN AHMEDABAD. THIS IS THE OFFICIAL ADDRESS OF THE ASSESSEE AND I TO WARD-8(5) HAS TERRITORIAL JURISDICTION OVER THIS AREA. NOTICE HAS BEEN ISSUE D BY ITO WARD-3(1) HENCE NOTICE WAS WITHOUT JURISDICTION IN BOTH THE YEARS. THE LD.COUNSEL FOR THE ASSESSEE DREW MY ATTENTION TOWARDS COPY OF THE DEMA ND NOTICE IN THE ASSTT.YEAR 2006-07; PENALTY NOTICE IN ASSTT.YEAR 20 06-07; 143(2) NOTICE IN ASSTT.YEAR 2008-09 AND 148-NOTICE IN ASSTT.YEAR 200 8-09. I FIND THAT IN THE COPY OF RETURN FILED FOR THE ASSTT.YEAR 2009-10 TH E ASSESSEE HAS MENTIONED HIS ADDRESS AT C.G. ROAD BUT JURISDICTION OVER HIM WAS WITH ITO WARD-3(1). IN THE PAN DATA THE ADDRESS OF THE ASSESSEE IS SUB JECT TO THE JURISDICTION OF ITO WARD-(3)(1). CONSIDERING THIS ASPECT I AM OF THE VIEW THAT THE AO AT WARD-3(1) HAS TERRITORIAL JURISDICTION OVER THE ASS ESSEE AND HE HAS ISSUED NOTICE. SIMILARLY HE HAS PASSED ASSESSMENT ORDER. THERE IS NO IRREGULARITY IN THE PROCEEDINGS CONDUCTED BY THE DEPARTMENT. THERE FORE I DO NOT FIND ANY MERIT IN THIS CONTENTION ALSO. 9. IN THE NEXT FOLD OF CONTENTION IT WAS SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE THAT M/S.ABS INTERNATIONAL AND M/S.TAURAS INTERNATIONALS HAVE IMPORTED MATERIAL. THEY MIGHT BE INDULGING IN UNDE R-INVOICING OF THE VALUE ITA NO.3399 AND 3421/AHD/2014 6 OF THE IMPORTED STOCKS. CUSTOM AUTHORITIES HAVE CA RRIED OUT INQUIRY WHERE STATEMENT OF THE ASSESSEE WAS ALSO RECORDED. THESE CONCERNS APPROACHED SETTLEMENT COMMISSION UNDER CUSTOM ACT AND FINALIZE D THEIR LIABILITY. THE AO HAS SOUGHT TO ASSESS PROFIT EARNED ON THE ENHANC ED VALUE OF SUCH ITEMS FOR THE PURPOSE OF INCOME-TAX IN THE HANDS OF THE ASSES SEE SIMPLY FOR THE REASONS THAT HE WAS AUTHORIZED SIGNATORY OF M/S.ABS INTERNA TIONAL. THE LD.AO IN PARA-6(A) OF THE ASSESSMENT ORDER HAS OBSERVED THAT M/S.ABS INTERNATIONAL IS A PROPRIETORSHIP CONCERN OF SHRI AMRITLAL SANGHVI FATHER OF THE ASSESSEE AND ASSESSEE WAS AUTHORIZED SIGNATORY. THEREAFTER HE REPRODUCED THE DETAILS IN TABULAR FORM EXHIBITING THE DUTY PAID - ITEM-WISE VALUE SHOWN BY THE ASSESSEE AND RE-DETERMINED BY THE CUSTOM DEPARTMENT. ACCORD INGLY HE MADE AN ADDITION AT THE RATE OF 4% OF SUCH DIFFERENTIAL AMO UNT IN THE HANDS OF THE ASSESSEE IN BOTH THE YEARS. APPEAL TO THE LD.CIT(A ) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 10. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE IS NOT OWNER OR PROPRIETOR OF M/S.ABS INTERNATIONAL OR M/S.TAURA S INTERNATIONALS. THE ASSESSEE HAS SPECIFICALLY PLEADED THAT BY MERELY AN AUTHORIZED SIGNATORY HE COULD NOT BE HELD LIABLE FOR TAXATION. WRITTEN SUB MISSIONS MADE BY THE ASSESSEE BEFORE THE AO WHICH IS COMMON IN BOTH THE ASSESSMENT YEARS READ AS UNDER: ' WITH REFERENCE TO YOUR GOOD OFFICE SHOW CAUSE NOT ICE DT.6-3-2014 FOR THE ASSTT. YEAR 2006-07 FIRSTLY I WOULD REQUEST Y OUR GOOD OFFICE TO CONSIDER MY EARLIER SUBMISSIONS AND FURTHER I WOULD LIKE TO SUBMIT THE FOLLOWINGS: - 1. I WOULD LIKE TO SUBMIT THAT I HAVE NOT REFUSED TO S UBMIT THE SUPPORTING EVIDENCES OF THE EXPENDITURE IN RESPECT OF THE PROFIT AND LOSS ACCOUNT DRAWN IN RELATION TO THE SAID TRAN SACTIONS BUT I HAVE CLARIFIED THE FACTS AND CIRCUMSTANCES OF THE CASE AND FURTHER THE SAID ISSUE HAS BEEN STATED DURING THE C OURSE OF STATEMENT RECORDED ON OATH IN THE SUMMONS U/S 131 O F THE I. TAX ACT ON 21/02/2014. DURING OUR PERSONAL HEARING COPI ES OF SOME ITA NO.3399 AND 3421/AHD/2014 7 OF THE CUSTOM DUTY PAID CHALLANS HAVE ALREADY BEEN SUBMITTED TO YOUR GOOD OFFICE. FURTHER WITH REGARD TO THE BILLS / VOUCHERS I WOULD LIKE TO INFORM THAT DURING THE TIME OF SEARCH OF DRI ALL THE RELEVANT DOCUMENTS WERE SEIZED BY THE DEPARTMENT AN D TILL TODAY I HAVE NOT RECEIVED THE SAID DOCUMENTS. THE SAID FA CT WAS BROUGHT TO YOUR GOOD OFFICE NOTICE VIDE LETTER DATE D 24/01/2014. 2. WITH REGARD TO THE OWNERSHIP OF THE IMPUGNED TRANSACTIONS/CONCERNS I WOULD LIKE TO SUBMIT THAT: - A) THE IEC CODE USED FOR THE IMPUGNED IMPORT OF T HE MATERIAL IS OF M/S. M/S ABS INTERNATIONAL AND M/S. M/S TAURA S INTERNATIONAL AND NOT MINE. B) ALL THE MATERIAL PURCHASED HAD BEEN IMPORTED / PROCURED BY M/S. TARUS INTERNATIONAL & M/S. M/S ABS INTERNATION AL OF WHICH I AM NOT PROPRIETOR. C) JUST HAVING THE KNOWLEDGE THAT THE IMPORTED MA TERIAL PURCHASE HAS BEEN UNDERVALUED DOES NOT MEAN THAT I AM THE OWNER OF THE GOODS. D) THE PAYMENT OF THE DIFFERENTIAL CUSTOM DUTY HA S BEEN MADE BY M/S. TARUS INTERNATIONAL AND M/S. M/S ABS INTERN ATIONAL. E) BY MAKING SOME OF THE PAYMENTS OF THE DIFFEREN TIAL AMOUNT TO SETTLE THE ACCOUNT DOES NOT PROVE THAT THE TRANSACT ION OF PURCHASES AND SALES HAVE BEEN DONE BY ME. F) THERE IS NO EVIDENCE THAT THE ASSESSEE IS THE BENEFICIARY OF THE SAID TRANSACTION OR ENJOYED THE FRUITS OF THE RESUL TS. G) WITH REFERENCE TO THE FURNISHING OF YEAR WISE BREAKUP OF THE TOTAL INCOME OF M/S ABS INTERNATIONALS AND TARUS IN TERNATIONAL ON THE BASIS OF ADDITIONAL CUSTOM DUTY PAID AND UND ER INVOICING OF GOODS IMPORTED I WOULD LIKE TO STATE THAT WITHOUT ACCEPTING THE FACTS OF THE PROCEEDINGS UNDER THE CU STOMS ACT 1962 AND OWNERSHIP OF THE TRANSACTIONS IN ANY CAS E REASONABLE ESTIMATION OF PROFIT OUT OF THE SAID TRANSACTION HA S TO BE MADE A TENTATIVE H) PROFIT WORKING FROM THE SAID TRANSACTION WAS S UBMITTED VIDE LETTER DATED 10/02/2014 AS ANNEXURE 4. ITA NO.3399 AND 3421/AHD/2014 8 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES THE S AID TRANSACTIONS CANNOT BE SAID TO BE RELATED TO ME. HO WEVER THE STATEMENT RECORDED ON THE OATH MAY BE CONSIDERED. 3. IT IS TRUE THAT MY STATEMENT WAS RECORDED ON O ATH ON 21/02/2014 AND WHEREIN ALL THE FACTS WERE CLEARLY S TATED TO YOUR GOOD OFFICE. 4. WITH REFERENCE TO YEAR WISE PURCHASES YEAR WI SE PEAK OF THESE PURCHASES AND 'BILLS OF ENTRY' (WRONGLY STATE D AS 'BILLS OF INVENTORY) I HEREBY SUBMIT DETAILS OF IMPUGNED IMP ORT PURCHASE WHEREIN DETAILS OF CUSTOM DUTY BILL OF ENTRY AND T RANSACTION VALUE AND OTHERS DETAILS ARE STATED IS SUBMITTED A S ANNEXURE 1 AND WITH REGARD TO PEAK OF PURCHASE I WOULD LIKE T O STATE THAT SINCE THE CREDIT PERIOD OF PURCHASE IS MORE THAN (I .E. 45 DAYS) THE CREDIT PERIOD OF SALES (I.E. 15 DAYS) PEAK OF PURCH ASES IS NOT APPLICABLE IN MY CASE. RELEVANT EVIDENCES IN SUPPOR T OF THE SAID CREDIT PERIOD OF PURCHASES AND SALES ARE SUBMITTED HEREWITH AS ANNEXURE 2. 5. ACCORDINGLY THE VERY NOMINAL AMOUNT FOR VARIO US EXPENSE I.E. NOT MORE THAN RS.1.50 LACS IS REQUIRED FOR TH E SAID BUSINESS AND WHICH HAS BEEN MADE OUT OF VARIOUS SOURCES SAV INGS ETC IN THE ASSESSMENT YEAR 2006-07 AND NO FURTHER INVESTME NT IS REQUIRED FOR THE CURANT YEAR. 6. WITHOUT PREJUDICE TO ABOVE FACTS OF THE CASE STATEMENT GIVEN UNDER SECTION 131 OF THE ACT I REQUEST YOUR GOOD O FFICE TO ESTIMATE REASONABLE PROFIT ON THE SAID TRANSACTIONS AND OBLIGE. THE TENTATIVE PROFIT AND LOSS ACCOUNT ON THE BASIS OF CUSTOM DUTY SETTLED ON THE SAID IMPORT OF THE CONCERNS IS GIVEN IN ANNEXURE 3. HOPE YOUR GOOD OFFICE WILL FIND THE ABOVE IN ORDER. IF YOUR GOOD OFFICE REQUIRES ANY FURTHER DETAILS PLEASE INFORM U S...' 11. THE LD.COUNSEL FOR THE ASSESSEE HAS RELIED UPON THIS WRITTEN SUBMISSION. ON THE OTHER HAND THE LD.DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. HE CONTENDED THAT STATEMENT OF THE AS SESSEE WAS RECORDED BY THE AO UNDER SECTION 131 OF THE INCOME TAX ACT AND IN HIS STATEMENT HE HAS NOT DENIED HIS OBLIGATION. ITA NO.3399 AND 3421/AHD/2014 9 12. I HAVE DULY CONSIDERED RIVAL CONTENTION AND GON E THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE IMPUGNED ORDERS WOULD INDICATE THAT FOR THE PURPOSE OF ASSESSING ALLEGED INCOME IN THE HANDS OF THE ASSESSEE THE LD.AO HAS BEEN HARPING UPON TWO FACTS. ACCORDING TO HIM STATEMENT OF THE ASSESSEE HAS BEEN RECORDED BY THE CUSTOM AUTHORITIES AND BY THE AO. IN THE STATEMENT RECORDED BY THE LD.AO THE ASSESSEE HAS ADMITTED TH AT HIS STATEMENT WAS RECORDED BY THE CUSTOM AUTHORITY WHEREIN HE HAS ADM ITTED THAT CERTAIN INVOICES WERE UNDER-VALUED. THEREAFTER AO WORKED OUT NET PROFIT INVOLVED IN THIS IMPORTED ITEMS. HE ESTIMATED 5% OF THE SAL ES AS A PROFIT EARNED BY THE ASSESSEE AND MADE ADDITION. ON APPEAL THE LD.CIT( A) HAS REDUCED THIS ESTIMATION TO 4% BECAUSE ACCORDING TO THE ASSESSE E HAS DISCLOSED PROFIT ELEMENT AT NEAR ABOUT 3% TO 4%. 13. ON DUE CONSIDERATION OF THE ABOVE I AM OF OPIN ION THAT LD.REVENUE AUTHORITIES HAVE FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES. STATEMENT OF THE ASSESSEE BEFORE THE CUSTOM AUTHORITIES COULD BE A SOURCE OF INFORMATION ABOUT INDULGENCE OF M/S.ABC INTERNATIONAL AND M/S.T AURAS INTERNATIONALS IN UNDER-INVOICING OF IMPORTED ITEMS. HOW THE LIABILI TY COULD BE FASTENED UPON THE ASSESSEE ? THE CUSTOM DEPARTMENT HAS FASTENED THE LIABILITY UPON M/S.ABS INTERNATIONAL AND M/S.TAURAS INTERNATIONALS . THE ASSESSEE HAS BEEN SPECIFICALLY PLEADING THAT HE HAS INFORMATION ABOUT THE FUNCTIONING OF ABS INTERNATIONAL BUT NEITHER HE IS BENEFICIARY NOR PR OPRIETOR OF THIS CONCERN. IF A PERSON DISCLOSES MODUS OPERANDI OF A PARTICULAR TRANSACTION OR HAPPENING OF A CIRCUMSTANCES CAN THAT PERSON BE LEGALLY BINDING O F OUTCOME THEREFROM ? PROCEEDINGS COULD NOT HAVE BEEN INITIATED AGAINST T HE ASSESSEE BECAUSE HE WAS NEITHER PROPRIETOR NOR BENEFICIARY. THIS SPECI FICALLY PLEADED BEFORE BOTH THE REVENUE AUTHORITIES BUT NEITHER AO HAS RECORDE D ANY FINDING NOR CIT(A). THEY HAVE SIMPLY PROCEEDED TO QUANTIFY NET PROFIT O UT OF SALES OF IMPORTED ITA NO.3399 AND 3421/AHD/2014 10 ITEMS AT HIGHER ACTUAL VALUE. IN THE ORDERS OF BOT H THE AUTHORITIES WHETHER ASSESSEE CAN BE CONSIDERED AS AN OWNER OF THOSE ITE MS IS TOTALLY SILENT. CONSIDERING THE STAND OF THE ASSESSEE AND SPECIFIC PLEADING BEFORE BOTH THE REVENUE AUTHORITIES I AM OF THE VIEW THAT PROFIT F ROM THE ITEMS WHOSE VALUE HAS NOT BEEN SHOWN BEFORE THE CUSTOM AUTHORITIES CA NNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE BECAUSE THESE ITEMS WERE NO T IMPORTED BY THE ASSESSEE IN HIS INDIVIDUAL CAPACITY OR HIS PROPRIETORSHIP. THESE ARE IMPORTED IN THE PROPRIETORSHIP OF HIS FATHER AND A CONCERN VIZ. M/S .TAURAS INTERNATIONALS. IN VIEW OF THE ABOVE I ALLOW BOTH APPEALS PARTLY AND DELETE ADDITIONS MADE BY THE REVENUE AUTHORITIES IN BOTH THE ASSESSMENT YEAR S. 14. IN THE RESULT APPEALS OF THE ASSESSEE ARE PART LY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 26 TH OCTOBER 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 26/10/2016