THE INDIAN PLYWOOD MFG CO. P.LTD, MUMBAI v. DCIT (OSD) 1(1), MUMBAI

ITA 3850/MUM/2011 | 1985-1986
Pronouncement Date: 09-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 385019914 RSA 2011
Assessee PAN AAACT2444C
Bench Mumbai
Appeal Number ITA 3850/MUM/2011
Duration Of Justice 2 year(s) 4 month(s) 28 day(s)
Appellant THE INDIAN PLYWOOD MFG CO. P.LTD, MUMBAI
Respondent DCIT (OSD) 1(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted I
Tribunal Order Date 09-10-2013
Date Of Final Hearing 17-09-2013
Next Hearing Date 17-09-2013
Assessment Year 1985-1986
Appeal Filed On 11-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI . . ! ' #'' '$ % ! & BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI VIVEK VARMA JUDICIAL MEMBER . : 3850 TO 3852 / / 2011 : 1985-86 198 7 -8 8 ITAS NO. : 3850 TO 3852/MUM/2011 AYS 1985-86 TO 1987-88 INDIAN PLYWOOD MFG CO PVT LTD COMMERCIAL UNION HOUSE 9 WALLACE HOUSE FORT MUMBAI -400 001 .: PAN: AAACT 2444 C VS DY. COMMISSIONER OF INCOME TAX (OSD)- 1(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI -400 020 (APPELLANT) (RESPONDENT) . : 3853 / / 2011 : 1994-95 ITA NO. : 3853/MUM/2011 AY 1994-95 INDIAN PLYWOOD MFG CO PVT LTD MUMBAI -400 001 VS DY. COMMISSIONER OF INCOME TAX (OSD)- 1(1) MUMBAI -20 (APPELLANT) (RESPONDENT) . : 3846 / / 2011 : 1985-86 ITA NO. : 3846/MUM/2011 AY 1985-86 ASST. COMMISSIONER OF INCOME TAX - 1(3) ROOM NO. 540/564 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD NEW MARINE LINES MUMBAI -20 VS INDIAN PLYWOOD MFG CO PVT LTD MUMBAI -400 001 (APPELLANT) (RESPONDENT) APPELLANT-ASSESSEE BY : S/SHRI K. SHIVARAM PARAG SAVLA RESPONDENT-REVENUE BY : SHRI O.P. SINGH !' #$ /DATE OF HEARING : 23-09-2013 %& !' #$ / DATE OF PRONOUNCEMENT : 09-10-2013 * O R D E R #'' '$ : PER VIVEK VARMA JM: THE CAPTIONED APPEALS IN ITAS NO. 3850 3851 3852 AND 3853/MUM/2011 FOR VARIOUS YEARS PERTAIN TO COMMON GROU NDS. ITA NO. 3846/MUM/2011 IS AN APPEAL FILED BY THE DEPARTMENT AG AINST THE ORDER OF THE CIT(A) DELETING THE PENALTY. THIS APPEAL IS ADJU DICATED SEPARATELY. IN VIEW OF THIS WE ARE ADJUDICATING THE APPEA LS THROUGH INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 2 COMMON AND CONSOLIDATED ORDER FOR THE SAKE OF BREVITY AN D CONVENIENCE. SINCE ASSESSMENT YEAR 1985-86 IS THE FIRST Y EAR HEREABOVE WE ARE TAKING ITA NO. 3850/MUM/2011 AS THE LEAD CASE AND PROCEED ACCORDINGLY. 1. THE INSTANT APPEAL IS FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) 2 MUMBAI DATED 15.02.2011 WHEREIN THE FOLLOWING GR OUNDS HAVE BEEN RAISED: ITA NO. 3850/MUM/2011 AY 1985-86 ASSESSEES APPEA L : THE GROUND OR GROUNDS OF APPEAL ARE WITHOUT PREJUD ICE TO ONE ANOTHER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS 1 09 51 150/- MADE BY THE AO TO THE INCOME OF THE APPELLANT ON ACCOUNT OF UNA CCOUNTED HUNDIES/BILLS OF EXCHANGE ON THE BASIS OF CERTAIN M ATERIALS SEIZED FROM THE RESIDENCE OF SHRI JAYANT VITHALDAS BY CHANGING THE PROTECTIVE ADDITION INTO SUBSTANTIVE ADDITION WITHOUT EXAMININ G THE ISSUE OR FACTS OF THE CASE PROPERLY. 2(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) FAILED TO APPRECIATE THAT:- (I) NO OPPORTUNITY OF HEARING WAS ALLOWED TO THE APPELL ANT BEFORE INCREASING THE TAX LIABILITY BY AMENDING THE ASSESS MENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 WHILE PASSIN G THE ORDER GIVING EFFECT TO THE ORDER OF ITAT MUMBAI. (II) THE AO HAS NOT FOLLOWED THE DIRECTIONS GIVEN BY THE ITAT MUMBAI CORRECTLY AND THEREBY FURTHER ERRED IN CHANG ING THE PROTECTIVE ADDITION OF RS 1 09 51 150/- INTO SUBSTA NTIVE ADDITION; (III) THE AO FAILED TO APPRECIATE THAT THE ITAT VIDE ORDE R DATED 5.5.2009 IN ITA NO. 6125/MUM/2007 ALLOWED THE GROUN D OF APPEAL RAISED BY THE REVENUE TO KEEP THE ISSUE OF P ROTECTIVE ADDITION ALIVE AND NO SPECIFIC FINDINGS ARE GIVEN B Y THE ITAT MUMBAI SO AS THE PROTECTIVE ADDITION CAN BE ASSESSE D AS SUBSTANTIVE ADDITION. (B) IN REACHING TO THE CONCLUSION AND CONFIRMING SU CH ADDITION ON SUBSTANTIVE BASIS IN PLACE OF PROTECTIVE BASIS THE LD. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS CONSIDERATIONS PRINCIPL ES AND EVIDENCES WHILE HE WAS OVERWHELMED INFLUENCED AND PREJUDICED BY IR RELEVANT CONSIDERATIONS AND FACTORS. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE CHARGE OF INTEREST UNDER SECTION 234B OF THE INCOME TAX ACT 1961 IS CONSEQUENTIAL. THE APPELLANT DENIES ITS LIABILITY FOR SUCH INTEREST. 2. THE FACTS ARE THAT ACTION UNDER SECTION 132 OF THE I T ACT WAS UNDERTAKEN ON THE RESIDENTIAL PREMISES OF VISSANJI GROUP O N 02.10.1993. THIS SEARCH INCLUDED ONE MR. JAYANT VITHALDAS FR OM WHOSE POSSESSION PROMISSORY NOTES (HUNDIES) WERE FOUND. T HESE INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 3 HUNDIES WERE EXECUTED BY MR. DILIP SARDESAI ALONG WITH CER TAIN CHEQUES AND DRAFTS. ON THESE HUNDIES THE NAME OF THE PAY ER HAD BEEN LEFT BLANK. 3. CONSEQUENT TO SEARCH SUBSTANTIVE ADDITION ON THE AG GREGATE SUM OF THE HUNDIES WAS MADE ON MR. JAYANT VITHALDAS AS THESE WERE FOUND FROM HIS PREMISES AND POSSESSION. HOWEVER THE PROTE CTIVE ADDITION WAS MADE ON THE ASSESSEE WHICH CAME UP BEFORE THE COORDINATE BENCH IN ITA NO. 4029/MUM/1996 WHEREIN IT WAS OBSERVED WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS A CASE WHERE SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF SHRI JAYANT VITHALDAS AND PROTECTIVE ASSESSMENT .WAS MADE IN THE HANDS OF THE ASSESSEE. BOTH THE PARTIES BEFORE US COULD NOT EXPLAIN THE PO SITION WITH REGARD TO SUBSTANTIVE ASSESSMENT MADE IN THE HANDS OF SHRI JA GANT VITHALCIAS. IN OUR VIEW IT MAY NOT HE APPROPRIATE TO DELETE THE A DDITION MADE ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE WITHO UT ASCERTAINING THE POSITION OF SUBSTANTIVE ASSESSMENT MADE IN THE CASE OF SHRI JAYARTT VITHALDAS. WE THEREFORE CONSIDER IT APPROPRIATE T O SET ASIDE THE ORDERS OF BOTH THE DEPARTMENTAL AUTHORITIES AND RESTORE TH E MATTER BACK TO THE FILE OF THE AD WITH DIRECTION TO FIND OUT AS TO WHE THER THE ADDITION MADE SUBSTANTIVELY IN THE HANDS OF SHRI JAYANT VITHALDAS HAS BEEN CONFIRMED AND IF SO TO DELETE THE ADDITION IN THE HANDS OF T HE ASSESSEE. IF HE HOWEVER FINDS THAT SIMILAR ADDITION MADE ON SUBSTA NTIVE BASIS IN. THE HANDS OF SHRI JAYANT VITHIILDAS HAS NOT BEEN CONFIR MED HE WILL THEN FURTHER RE-EXAMINE AS TO WHETHER THERE IS ANY MATER IAL TO LINK THE UNEXPLAINED HUNDIES/ BILLS OF EXCHANGE WITH THE ASS ESSEE AND THEREAFTER DECIDE THE MATTER ACCORDINGLY AS PER LAW . GROUND NO. IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. IN A CONSEQUENTIAL PROCEEDING IN ITA NO. 4524/MUM/2003 T HE CO- ORDINATE BENCH DISMISSED THE APPEAL OF MR. JAYANT VITHALDAS ON ACCOUNT OF NON PROSECUTION WHICH MEANT THAT SUBSTANTIAL ADDITION GOT CONFIRMED IN THE HANDS OF THE MR. JAYANT VITHALDAS. BUT THIS ORDER WA S RECALLED AND VIDE ORDER DATED 31.01.2008 THE COORDINATE B ENCH DELETED THE ADDITION MADE IN THE HANDS OF MR. JAYANT VITHALDAS. 4. IN ITA NO. 6125/MUM/2007 THE COORDINATE BENCH HOWE VER TO KEEP THE ISSUE ALIVE ALLOWED THE DEPARTMENTS APPEAL. HENC E THE INSTANT THE PROCEEDINGS. 5. IT IS CLEAR FROM THE SEQUENCE OF PROCEEDINGS THAT THE INSTANT PROCEEDINGS HAVE GONE BACK TO THE REVENUE AUTHORITIES AS PER THE INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 4 DIRECTIONS GIVEN IN ITA NO. 4029/MUM/1996 WHEREIN IT WAS HELD THAT IF THE SUBSTANTIVE ADDITION IS NOT CONFIRMED IN THE HANDS OF THE JAYANT VITHALDAS THEN THE AO SHALL RE-EXAMINE AS TO THERE IS AN Y MATERIAL LINK OF UNEXPLAINED HUNDIES WITH THE ASSESSEE. .. 6. THE ISSUE PERTAINING TO HUNDIES WAS BEING CONTESTED IN THE CASE OF MR. JAYANT VITHALDAS WHICH ULTIMATELY WAS DELETED BY T HE COORDINATE BENCH IN ITA NO. 4523 & 4524/MUM/2003 PERTA INING TO ASSESSMENT YEARS 1984-85 & 1985-86 DATED 31.01.2008. T HIS ORDER WAS AGITATED BEFORE THE HIGH COURT WHEREIN THE APPEAL FILE D BY THE DEPARTMENT WAS DISMISSED. 7. IN SO FAR AS THE ASSESSEE IS CONCERNED THE REVENUE AUTHORITIES CAME UNDER OBLIGATION AS PER THE DIRECTIONS GIVEN BY THE COORDINATE BENCH OF THE ITAT IN ITA NO. 4029/MUM/1996 WHICH WAS FO LLOWED IN ITA NO. 6125/MUM/2007 TO RE-EXAMINE AS TO WHETHER THERE IS ANY MATERIAL TO LINK THE UNEXPLAINED HUNDIES/BILLS OF EXCHA NGE WITH THE ASSESSEE AND THEREFORE DECIDE THE MATTER ACCORDINGLY AS PER LAW . 8. THE AO IN THE CONSEQUENTIAL APPEAL EFFECT ORDER REVERS ED THE PROTECTIVE ASSESSMENT TO SUBSTANTIVE ASSESSMENT AS TH E SUBSTANTIVE ADDITION IN THE HANDS OF MR. JAYANT VITHALDAS WAS DELETED B Y THE COORDINATE BENCH OF THE ITAT THEREBY PROCEEDED TO MAKE THE ADDIT ION. 9. THE INITIAL GRIEVANCE OF THE ASSESSEE WAS THAT THE AO DID NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE TO EXPLAIN ITS CAS E. THE CIT(A) EXERCISING THE CO-TERMINOUS POWERS ALLOWED THE ASSESSEE TO EXPLAIN ITS CASE. THE CIT(A) AFTER EXAMINING THE SEIZED MATERIAL AND TH E SUBMISSIONS OF THE ASSESSEE HELD 15. I HAVE PERUSED THE FACTS OF THE CASE. THE DE NIAL IN THE COURSE OF THE SEARCH BY JAYANT VITHALDAS TO THE EFFECT THAT THE P ROMISSORY NOTES HAD NO RELATIONSHIP WITH THE APPELLANT COMPANY DOES NOT CARRY ANY WEIGHT. SUCH A STATEMENT COMING FROM HIM WOULD HAVE CLINCHI NG EVIDENTIAL VALUE ONLY IN A SITUATION WHEN HE WOULD HAVE CATEGO RICALLY COME OUT CLEAN ON THE PROMISSORY NOTES WHICH HE DID NOT. THI S CONTENTION IN THE COURSE OF THE SEARCH WAS THAT IT WAS MR. DILIP SARD ESAI IRONICALLY THE AUTHOR OF THE PROMISSORY NOTES WHO HAD GIVEN THE P ROMISSORY NOTES TO HIM FOR SAFE CUSTODY. THIS WAS RIDICULOUS STAND BEC AUSE WHEN MR. DILIP INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 5 SARDESAI HAD EXECUTED THE PROMISSORY NOTES HE COUL D NOT HAVE THE ORIGINAL PROMISSORY NOTES WITH HIMSELF SO AS TO GIV E THE SAME TO MR. JAYANT VITHALDAS FOR SAFE CUSTODY. AND IF THERE WA S NO EVIDENTIAL VALUE OF THESE PROMISSORY NOTES AT ALL IMPLYING THAT NO MONEY HAD BEEN TAKEN BY MR. DILIP SARDESAI AGAINST THESE PROMISSOR Y NOTES THERE WAS NO QUESTION OF ANY SAFE CUSTODY. THEREFORE ON THE ISSUE UNDER CONSIDERATION THE STATEMENT ON OATH RECORDED FROM J AYANT VITHALDAS IS NOT RELIABLE AND CANNOT BE GIVEN ANY CREDENCE TO. 16. THE CONTENTION OF NO LINKAGE BETWEEN APPELLANT AND THE PROMISSORY NOTES IS MISLEADING. AT THE OUTSET IT MUST BE NOTED THAT THE PROMISSORY NOTES UNDER CONSIDERATION ARE BEARER PROMISSORY N OTES. THE NAME OF THE PERSON LENDING THE MONEY HAVING BEEN LEFT BLANK . THESE HAVE BEEN SEIZED FROM MR. JAYANT VITHALDAS A DIRECTOR AND EM PLOYEE OF APPELLANT DURING THE PREVIOUS YEAR RELEVANT FOR THIS ASSESSME NT YEAR UNDER CONSIDERATION AND ALSO A CLOSE RELATIVE OF THE PERS ONS AT THE HELM OF AFFAIRS OF THE APPELLANT COMPANY. IN HIMSELF MR. J AYANT VITHALDAS IS A PERSON OF A SMALL MEANS AND FOR THE ASSESSMENT YEA R UNDER CONSIDERATION HAS NO SOURCE OF INCOME OTHER THAN WH AT HE IS EARNING FROM APPELLANT COMPANY AND THE GROUP OF ASSESSEE CO VERED UNDER THE SEARCH ACTION. THEREFORE ALL CIRCUMSTANTIAL EVIDEN CE ESTABLISHED BEYOND DOUBT THAT THE ASSETS IN THE FORM OF PROMISSORY NOT ES ARE IN REALITY THE PROPERTY OF APPELLANT. 17. IN REVENUE PROCEEDINGS PARTICULARLY IN INTERP RETATION OF DOCUMENTS AND OWNERSHIP THEREOF CIRCUMSTANTIAL PROBABILITY HAS A GREAT ROLE TO PLAY. IN THE INSTANT CASE THERE IS NO DOUBT ABOUT THE FACT T HAT THE PROMISSORY NOTES REPRESENT MONEY ADVISED AND THE CIRCUMSTANTI AL PROBABILITY IN THE INSTANT CASE SUPPORTS THE CONTENTION THAT THE Q UANTUM OF MONEY ASSOCIATED WITH THE PROMISSORY NOTES COULD HAVE COM E ONLY FROM THE MAIN SOURCE OF INCOME SURROUNDING THE GROUP OF PERS ONS WHO HAVE BEEN THE SUBJECT MATTER OF THE SEARCH ACTION IN E PRESEN T CASE IN SHORT THE APPELLANT. 18. THE CONTENTION THAT ON THE DATE OF SEARCH JAYA NT VITHALDAS HAD NO BUSINESS RELATIONSHIP WITH APPELLANT IS OF CONSEQUE NCE FOR THE PURPOSE AT HAND. DURING THE PERIOD RELEVANT TO THE ASSESSME NT YEAR UNDER CONSIDERATION THERE WAS ACTIVE ASSOCIATION BETWEEN THE TWO. THIS FACT CANNOT BE DENIED. JAYANT VITHALDAS IS CLOSER RELATE D TO THE PERSONS AT THE HELM OF AFFAIRS OF APPELLANT. THIS FACT ALSO CA NNOT BE DENIED. IN SUCH A SITUATION THERE BEING NO PRESENT RELATIONSHIP OF BUSINESS BETWEEN THE TWO IS OF NO CONSEQUENCE. 19. THE LAST ARGUMENT THAT IN THE COURSE OF SEARCH NO INCRIMINATING EVIDENCE OF UNDISCLOSED INCOME AGAINST THE APPELLANT HAS BEE N IDENTIFIED IN THE SEARCH PROCEEDINGS DOES NOT PER SE SUGGESTS THAT AD DITION TO INCOME OF APPELLANT CANNOT BE MADE ON THE BASIS OF INCRIMINAT ING DOCUMENTS IN THE FORM OF PROMISSORY NOTES FOUND IN THE COURSE OF THE SEARCH FROM A PERSON CLOSELY ASSOCIATED WITH THE APPELLANT. 20. THEREFORE TO MY MIND NONE OF THE OBJECTIONS T AKEN UP HAVE ANY SERIOUS IMPLICATION AGAINST THE ADDITION TO INCOME IN THE P RESENT FACTS OF THE CASE. ON THE CONTRARY ALL CIRCUMSTANTIAL EVIDENCES LEAD DIRECTLY TO ONE CONCLUSION THAT LOOKING TO THE HUGE QUANTUM OF MONE Y ASSOCIATED WITH THE PROMISSORY NOTES THE ONLY SOURCE OF FINANCING OF THE PROMISSORY NOTES WAS THE MAIN INCOME EARNING SOURCE OF THE GRO UP IN THE INSTANT CASE THE APPELLANT CORPORATE ENTITY. THIS IS IN THE BACKGROUND FACT OF THE CASE THAT THE PERSON FROM WHOSE HANDS THE PROMISSOR Y NOTES HAVE BEEN SEIZED IS CLOSELY ASSOCIATED WITH APPELLANT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION ASSOCIATED BOTH IN THE CAPACITY OF AN EMPLOYMENT RELATIONSHIP AS WELL AS IN THE CAPACITY AS A CLOSE RELATIVE OF THE PERSONS AT THE HELM OF AFFA IRS OF THE APPELLANT COMPANY. IT IS THEREFORE HELD THAT THE AMOUNT OF MO NEY ADVANCED INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 6 THROUGH THE PROMISSORY NOTES UNDER CONSIDERATION HA S TO BE TAXED AS INCOME OF APPELLANT COMPANY BECAUSE THE SOURCE OF F UNDS OF THE PROMISSORY NOTES IS THE PRIMARY SOURCE OF EARNING OF THE GROUP THE APPELLANT CORPORATE ENTITY. THIS DECISION IS CONTIN GENT UPON AN UNDISPUTED CONCLUSION THAT LOOKING TO THE NATURE OF THE PROMISSORY NOTES PARTICULARLY THE BEARER CHARACTER AND THE M ANNER OF EXECUTION WHERE THE REVENUE STAMPS HAVE BEEN INITIALED ACROSS BY THE AUTHOR OF THE PROMISSORY NOTES MONEY HAS DEFINITELY BEEN ADV ANCED AGAINST THE PROMISSORY NOTES. THE ADDITION MADE TO THE INCOME O F APPELLANT IS THEREFORE CONFIRMED. 10. THE CIT(A) THEREFORE SUSTAINED THE ADDITION MADE BY THE AO. 11. AGGRIEVED THE ASSESSEE IS NOW BEFORE THE ITAT. 12. BEFORE US THE AR THROUGH FACT SHEET/SYNOPSIS SUBMITTED 1. THE HUNDIES/DOCUMENTS WERE FOUND FROM THE PREMI SES OF MR JAYANT VITHALDAS. 2. THERE IS NO REFERENCE OF THE APPELLANT INCOME I N THE SAID HUNDIES/ DOCUMENTS OR ANY OF THE SEIZED DOCUMENTS. 3. SHRI JAYANT VITHALDAS IN HIS AFFIDAVIT DATED 2. 2.1994 HAS MENTIONED THAT THOSE PAPERS HAVE NO RELATION OF ANY NATURE WI TH ASSESSEE AND/OR ITS DIRECTORS MEMBERS ETC. 4. SHRI JAYANT VITHALDAS HAS CATEGORICALLY STATED RIGHT FROM BEGINNING OF THE SEARCH THAT THOSE PAPERS HAVE NO RELATION OF AN Y NATURE WITH ASSESSEE AND/OR ITS DIRECTORS MEMBERS ETC. 5. AT THE TIME OF SEARCH I.E. IN THE YEAR 1993 SHR I JAYANT VITHALDAS WAS NOT ASSOCIATED WITH ANY OF THE GROUP ACTIVITIES OF THE ASSESSEE. IN FACT HE HAS LEFT THE GROUP IN THE YEAR 1986-87. 6. NEITHER ASSESSEE NOR ANY ASSOCIATE COMPANY OR F IRM OR ANY DIRECTOR OR SHAREHOLDER HAVE ANY KNOWLEDGE OR INTEREST IN ANY O F THE AFFAIRS OF SHRI JAYANT VITHALDAS. 7. THE ASSESSEE HAS NO CONNECTION WHATSOEVER REGAR DING THESE HUNDIES/DOCUMENTS. THE SEIZED PAPERS DOES NOT SHOW ANY RELATIONSHIP WITH THE ASSESSEE. NEITHER MR. DILIP SARDESAI NOR R .S. INTERNATIONAL IS CONNECTED WITH THE APPELLANT COMPANY. 8. THE ISSUE HAS BEEN DECIDED BY THE HONBLE ITAT IN THE CASE OF SHRI JAYANT VITHALDAS ON MERITS. THE ORDER HAS BEEN CONF IRMED BY THE HONBLE HIGH COURT. THE TRIBUNAL HAS DELETED THE ADDITION ON THE GROUND THAT THE DOCUMENTS WERE DUMB DOCUMENTS AND HELD THAT NO MONEY WAS RECE IVED UNDER THE SAID HUNDIES. THE HIGH COURT HAS CONFIRMED THIS ORD ER AND WHILE DOING SO HAS CONSIDERED THE FERA ORDER. 9. NEITHER IT DEPT. NOR FERA AUTHORITIES HAVE EVER ASKED A SINGLE QUESTION TO ASSESSEE REGARDING THESE PAPERS AS THEY NEVER FO UND ANY CONNECTION BETWEEN THESE PAPERS AND THE ASSESSEE. 10. THE CIT(A) VIDE ITS ORDER DATED 30.3.1998 HAS DELETED THE PROTECTIVE ADDITION MADE BY THE AO WHILE PASSING AN ORDER UNDE R SECTION 143(3) R.W.S.147. 11. THE 1TAT HAS VIDE ITS ORDER DATED 31.1.2008 AL LOWED THE APPEAL IN FAVOUR OF SHRI JAYANT VITHALDAS ON MERIT OF THE CAS E. 12. THE CIT(A) HAS DELETED THE PENALTY FOR A.Y. 19 85-86. 13. THE HIGH COURT VIDE ITS ORDER DATED 8.8.2011 I N CASE OF SHRI JAYANT VITHALDAS ACCEPTED THE FINDINGS OF THE ITAT AND DIS MISSED THE APPEAL OF THE IT DEPT. INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 7 14. THE FERA APPELLATE TRIBUNAL HAVE ACCEPTED THE CONTENTION OF SHRI JAYANT VITHALDAS AND HELD THAT THE FERA AUTHORITIES HAD FAILED TO PROVE ACTUAL ACQUISITION LENDING OR BORROWING OF ANY FOR EIGN EXCHANGE. 15. THE CIT(A) WHILE PASSING THE ORDER DATED 15.2. 2011 IN CASE OF ASSESSEE HAS NOT SHOWN ANY NEW EVIDENCE OR REASON TO MAKE SU BSTANTIVE ADDITION. 16. THE CIT(A) HAS MENTIONED THAT SHRI JAYANT VITH ALDAS WAS A DIRECTOR IN THE COMPANY. THIS FINDING IS COMPLETELY INCORRECT. HE WAS ONLY AN EMPLOYEE OF THE COMPANY. 17. ACCORDING TO CIT(A) MONEY HAVE BEEN ADVANCED AGAINST SECURITY OF THE HUNDIES HOWEVER THE SAID FACT IS DISAGREED BY THE ITAT AND HIGH COURT IN CASE OF SHRI JAYANT VITHALDAS. 18. IN PARA 15 OF THE CIT(A) ORDER THE AFFIDAVIT OF SHRI JAYANT VITHALDAS WAS CONSIDERED UNRELIABLE. HOWEVER THE ITAT AND TH E HIGH COURT IN CASE OF SHRI JAYANT VITHALDAS HAS ADMITTED THAT NO MONEY WAS ADVANCED AGAINST SEIZED HUNDIES. THE STATEMENT AND AFFIDAVIT OF SHRI DILIP SARDESAI WAS GIVEN DUE CONSIDERATION. EVEN FE RA AUTHORITIES HAVE ADMITTED THAT NO FOREIGN CURRENCIES WERE ALLEG EDLY ADVANCED AGAINST SEIZED HUNDIES. 19. PARA 16 AND PARA 17 ARE PURE ASSUMPTIONS WERE MADE BY THE CIT(A). 20. IN PARA 17 THE CIT (A) HAS MENTIONED THAT ... THE QUANTUM OF MONEY ASSOCIATED WITH THE PROMISSORY NOTES COULD HAVE COM E ONLY FROM THE MAIN SOURCES OF INCOME SURROUNDING THE GROUP OF PER SONS ... IN PARA 20 (CONCLUDING PARA OF THE ORDER) THE CIT ( A) HAS MENTIONED THAT ...THIS DECISION IS CONTINGENT UPON AN UNDISPUTED CONCLUSION THAT LOOKING TO THE NATURE OF THE PROMISSORY NOTES PART ICULARLY THE BEARER CHARACTER AND THE MANNER OF EXECUTION WHERE THE RE VENUE STAMPS HAVE BEEN INIATED ACROSS BY THE AUTHOR OF THE PROMISSORY NOTES MONEY HAS DEFINITELY BEEN ADVANCED AGAINST THE PROMISSORY NOT ES. THIS CONCLUSION IS CONTRARY TO THE ORDER OF THE HIG H COURT IN CASE OF MR. JAYANT VITHALDAS. 21. MR. DILIP SARDESAI FURTHER EXPLAINED THE CIRCU MSTANCES IN WHICH THE HUNDIES WERE ISSUED BY HIM BY FILING AN AFFIDAVIT A ND ALSO BY STATING IN HIS CROSS EXAMINATION AS FOLLOWS: LET ME CLARIFY THAT THERE WERE SOME UNDATED HUNDIE S AND OTHER HUNDIES WERE SIGNED IN THE YEAR 1983 AND 1984. THES E UNDATED HUNDIES ALSO BELONGS TO THE SAME PERIOD. I FURTHER REITERATE THAT I WAS WORKING FOR SHRI JAYANT VITHALDAS FAMILY COMPANY WA LLACE FLOUR MILLS AND I.P.M.L. I WAS HAVING ABSOLUTE TRUST IN SHRI JA YANT VITHALDAS. I WANTED TO RAISE CERTAIN FINANCES TO MY FIRM M/S. R. S. INTERNATIONAL FOR WHICH THESE HUNDIES WERE SIGNED AND GIVEN TO SHRI J AYANT VITHALDAS. SHRI JAYANT VITHALDAS COULD NOT RAISE THE REQUIRED FINANCES AND I VERBALLY TOLD HIM TO TEAR THESE HUNDIES. IN FACT BE CAUSE OF NON RAISING OF THESE FINANCES MY FIRM COULD NOT ENTER INTO ANY CON TRACT. I WAS TAKEN BY SURPRISE WHEN I CAME TO KNOW DURING THE SEARCH THAT THESE HUNDIES WERE STILL LYING WITH SHRI JAYANT VITHALDAS. 22. THE SUPREME COURT IN CASE OF UMACHARAN SHAW & BROS. VS. CIT (1959) 37 ITR 271 (SC) HAS SETTLED THAT SUSPICION HOWEVER STRONG CANNOT TAKE THE PLACE OF PROOF. SIMILAR VIEW HAS BEEN TAKEN IN CASE OF K.P. VARGHEESE VS. CIT 131 ITR 597 (SC). 23. THE AFFIDAVIT OF THIRD PARTY PRESUMED TO BE CO RRECT UNLESS PROVED OTHERWISE. MEHTA PARIKH AND CO V. CIT ( 1956) 30 IT R I8I (SC). 24. THE DOCUMENTS HAVE NO EVIDENTIARY VALUE AND TH E TRIBUNAL HAS GIVEN CATEGORICAL FINDING THE DOCUMENTS HAVE NOT BEEN ACT ED UPON HENCE THERE CANNOT BE ADDITION IN THE ASSESSMENT OF ASSESSEE. INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 8 25. THE ASSESSEE HAS PROVED THAT THE DOCUMENTS SEI ZED FROM THIRD PARTY HAS NO WHERE CONNECTED WITH THE ASSESSEE HENCE ADDI TION CONFIRMED BY THE COMMISSIONER (APPEALS) MAY BE DELETED. 26. AS PER SECTION 132(4) READ WITH SECTION 292C P RESUMPTION IS THAT DOCUMENTS IS PRESUMED TO BE THAT OF OWNER FROM WHOM IT WAS SEIZED. 27. NEITHER SECTION 68 NOR 69 IS APPLICABLE HENCE ADDITION CANNOT MADE IN THE ASSESSMENT OF ASSESSEE. 28. IN BIMAL KUMAR DAMANI V. CIT (2003) 261 ITR 63 5 (CAL) HIGH COURT AMOUNT RECOVERED FROM POSSESSION OF ANOTHER PERSON BURDEN IS ON DEPARTMENT TO PROVE. 29. IN KRISHNA TEXTILES VS. CIT (2009) 310 ITR 227 (GUJ) HELD THAT BURDEN TO PROVE THAT CREDIT SHOWN IN THE NAME OF ASSESSEE IN THE BOOKS OF GMDC CONSTITUTED INCOME OF ASSESSEE FOR PURPOSES OF SEC. 69C IS ON THE REVENUE WHICH THE REVENUE FAILED TO DISCHARGE AND THEREFORE ADDITION UNDER 69C WAS NOT CALLED FOR. 30. CONSIDERING THE SUBSEQUENT DEVELOPMENT OF LAW AND FINALITY BY HIGH COURT IN THE CASE OF JAYANT VITHALDAS ON MERITS TH E ADDITION CONFIRMED BY THE CIT(A) MAY BE DELETE. 13. THE DR ON THE OTHER HAND STRENUOUSLY BUT VEHEME NTLY SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 14. WE HAVE HEARD THE CONTESTING PARTIES AND HAVE PUR USED THE SUBMISSIONS MADE AND EXAMINED IN DETAILS THE EVIDENCES FOUN D IN THE SEARCH OPERATION ON MR. JAYANT VITHALDAS AND ITS DETAILS W HICH HAVE BEEN PLACED BEFORE US IN THE APB. THE ISSUE IN QUESTION IS THE SEIZURE OF HUNDIES ISSUED BY R S INTERNATIONAL A BUSINESS ENTITY O WNED BY MR. DILIP SARDESAI FORMER TEST CRICKETER ACCEPTING THE LOAN AMOUNTS. NONE OF THESE HUNDIES HAVE THE NAME OF THE ASSESSEE INS CRIBED ON THEM. THESE HUNDIES AS ACCEPTED BY THE REVENUE AUTHO RITIES HAVE BEEN FOUND FROM THE PREMISES OF MR. JAYANT VITHALDAS. 15. THIS BEING A PROCEEDING CONSEQUENTIAL TO SEARCH HAVE TO BE EXAMINED THROUGH THE EVIDENCE/MATERIAL GATHERED FROM THE PREMISES SEARCHED OR FROM THE PERSON WHOSE POSSESSION THE EVIDE NCE HAS BEEN FOUND. ON EXAMINATION OF THE EVIDENCE AND MATERIAL FOUND IN T HE SEARCH AND BEING USED SO VOCIFEROUSLY BY THE REVENUE A UTHORITIES DOES NOT CONNECT THE ASSESSEE FROM ANY ANGLE AS SUBMITTED BY THE AR IN THE FACT SHEET/SYNOPSIS AND REPRODUCED HERE ABOVE. NON E OF THE HUNDIES FOUND FROM THE PREMISES AND POSSESSION OF THE MR. JAYANT VITHALDAS BEARS THE NAME OF THE ASSESSEE. THE REVENUE A UTHORITIES HAVE SIMPLY PROCEEDED ON THE PRESUMPTION THAT THE LEN DER NAME COULD INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 9 BE INSCRIBED AT ANY TIME AND THAT SINCE MR. JAYANT VITHALD AS WAS CLOSELY CONNECTED TO THE DIRECTORS OF THE ASSESSEE EVE NTUALLY CONCLUDED THAT IT IS THE ASSESSEE WHO IS THE LENDER. THIS CONCLUSION IN OUR OPINION IS MERELY BASED ON CONJECTURE. THE CLOSE R ELATION OF MR. JAYANT VITHALDAS WITH THE ASSESSEE COMPANY ON WHICH THE ENTIRE EDIFICE HAS BEEN BUILT DOES NOT BEAR ANY FOUNDATION. THE RE VENUE AUTHORITIES HAVE FAILED TO ESTABLISH THE CONNECTION OF THE A SSESSEE AND MR. JAYANT VITHALDAS OR EVEN MR. DILIP SARDESAI. 16. THIS CANNOT LEAD THE REVENUE AUTHORITIES ANYWHERE. NOT ONE PIECE OF EVIDENCE HAS BEEN PLACED ON RECORD IN ANY PROCE EDINGS IN THE SO CALLED CONNECTED PERSONS MR. JAYANT VITHALDAS AND MR. DILIP SARDESAI WHICH COULD LEAD TO EVEN THE FAINTEST CONCLUSION THAT IT WAS THE ASSESSEE WHOSE FUNDS HAD BEEN UTILIZED FOR EXECUTION OF HUNDIES. IT IS ALSO WORTHWHILE TO MENTION THAT THE REVENUE AUTHOR ITIES HAVE NOT STATED ANYWHERE UNDER WHICH SECTION THE ADDITION IS SOUG HT TO BE MADE. 17. WE ARE THUS INCLINED TO AGREE WITH THE SUBMISSIONS MA DE BY THE AR AND REPRODUCED IN THE SYNOPSIS THAT THE ADDITION OF R S. 1 09 51 150/- MERITS TO BE DELETED. 18. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) ON TH IS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 1 09 51 150/- M ADE BY HIM ON ACCOUNT OF AMOUNTS MENTIONED ON HUNDIES. 19. GROUND NO. 1 IS THEREFORE ALLOWED. 20. GROUND NO. 2: SINCE WE HAVE ALLOWED GROUND NO. 1 BY D IRECTING THE AO TO DELETE THE ADDITION OF RS. 1 09 51 150/- ON FACTS GROUND NO. 2 BECOMES ACADEMIC AND NEEDS NO ADJUDICATION. 21. GROUND NO. 3 PERTAINS TO CHARGE OF INTEREST UNDER SECTION 234 B. INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 10 22. ACTUALLY GROUND IS WRONGLY TAKEN BECAUSE IN ASSESS MENT YEAR 1985-86 SECTION 234B DID NOT EXIST AT ALL. INSTEAD SECTIO N 215 WAS THE CORRESPONDING SECTION. 23. AT THE TIME OF HEARING THE MISTAKE IN THE GROUND W AS POINTED OUT. BOTH THE PARTIES AGREED THAT EVEN SECTION 215 WO ULD NOT BE APPLICABLE AS THE CASE HAS BEEN REOPENED UNDER SECTION 147/148 AND THE PROVISIONS OF SECTION 215 DID NOT APPLY ON REASSESSM ENT PROCEEDINGS. SINCE EVEN THE DR ACCEPTED THE PROPOSITION THE GROUN D IS MODIFIED ON WHICH WE CONCLUDE THAT THE PROVISIONS WOULD NOT APPLY . 24. IN THESE CIRCUMSTANCES THE GROUND STANDS ALLOWED. 25. WE THEREFORE SET ASIDE THE OBSERVATION OF THE CIT(A) THAT 234B WOULD BE CONSEQUENTIAL AND DIRECT THE AO TO PASS AN ORD ER IN ACCORDANCE WITH LAW AS THEN PREVAILED. 26. THE GROUND IS THEREFORE HELD TO BE ALLOWED. 27. IN THE RESULT THE APPEAL IS TREATED AS PARTLY ALLOWED. ITA NO. 3851/MUM/2011 FOR AY 1986-87 ASSESSEES APP EAL : 28. THE IMPUGNED APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER O F THE CIT(A) 2 MUMBAI DATED 11.02.2011 FOR AY 1986-87 WHERE IN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: THE GROUND OR GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO ONE ANOTHER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF 9 73 13 824/- MADE BY THE AO TO THE INCOME OF THE APPELLANT ON ACCOUNT OF UNACCO UNTED HUNDIES/BILLS OF EXCHANGE ON PROTECTIVE BASIS ON THE BASIS OF CERTAI N MATERIALS SEIZED FROM THE RESIDENCE OF SHRI JAYANT VITHALDAS PUNE WHO W AS AN EX-EXECUTIVE OF THE APPELLANT COMPANY AND HE FURTHER GROSSLY ERRED IN CHANGING THE PROTECTIVE ADDITION INTO SUBSTANTIVE ADDITION WITHO UT ALLOWING ANY OPPORTUNITY OF HEARING TO THE APPELLANT BEFORE INCR EASING THE TAX LIABILITY BY CHANGING THE PROTECTIVE ADDITION INTO SUBSTANTIV E ADDITION. 2.A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CIT(A) FAILED TO APPRECIATE THAT :- (I) NEITHER THE SEIZED MATERIALS BELONGED TO THE A PPELLANT NOR THERE IS ANY EVIDENCE ON RECORD WHICH SUGGEST THAT THE APPELLANT MIGHT HAVE ADVANCED ANY MONEY ON HUNDIES/BILLS OF EXCHANGE; (II) THE AO HAS NOT FOLLOWED THE DIRECTIONS GIVEN BY THE ITAT MUMBAI CORRECTLY AND THEREBY HE FAILED TO BRING ON RECORD ANY MATERIAL TO LINK INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 11 THE UNEXPLAINED HUNDIES/BILLS OF EXCHANGE WITH THE APPELLANT AS DIRECTED BY THE ITAT; AND (III) THE ITAT VIDE ORDER DATED 5-5-2009 IN ITA NO . 6125/MUM/2007 FOR THE A.Y. 1985-86 ALLOWED THE GROUND OF APPEAL RAISED BY THE REVENUE TO KEEP THE ISSUE OF PROTECTIVE ADDITION ALIVE AND NO SPECIFIC FINDINGS ARE GIVEN BY THE ITAT MUMBAI SO AS THE PROTECTIVE ADDI TION CAN BE ASSESSED AS SUBSTANTIVE ADDITION. B) IN REACHING TO THE CONCLUSION AND CONFIRMING SU CH ADDITION ON SUBSTANTIVE BASIS IN PLACE OF PROTECTIVE BASIS MADE BY THE AO THE LD. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS CONSIDERATIONS PRINCIPL ES AND EVIDENCES WHILE HE WAS OVERWHELMED INFLUENCED AND PREJUDICED BY IR RELEVANT CONSIDERATIONS AND FACTORS. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE CHARGE OF INTEREST UNDER SECTION 215 AND 220(2) OF THE INCOME TAX ACT 1961 IS CONSE QUENTIAL. THE APPELLANT DENIES ITS LIABILITY FOR SUCH INTEREST. 4. THE ID. CIT(A) ERRED IN HOLDING THAT THE GROUND RAISED DISPUTING INITIATION OF PENALTY PROCEEDINGS UNDER SECTION.271(1)(C) IS P REMATURE. THE APPELLANT DENIES HER LIABILITY FOR SUCH PENALTY. 29. GROUND NO. 1 RELATES TO THE ADDITION OF RS. 9 73 13 824/ - MADE BY THE AO TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF UNACCOUNTED HUNDIES/BILLS OF EXCHANGE ON PROTECTIVE BASIS ON THE BASIS OF CERTAIN MATERIALS SEIZED FROM THE RESIDENCE OF SHRI JAYANT VITHALDAS. 30. AN IDENTICAL ISSUE HAS BEEN DEALT WITH AND DECIDED BY US IN PARA 2 TO PARA 19 OF THIS ORDER IN ASSESSEES OWN APPEAL IN ITA NO. 3850/MUM/2011 FOR AY 1985-86 AND WE DEEM IT PROPER TO REPRODUCE THE RELEVANT DECISIVE PARAS BEING 17 18 & 19 AS FAR AS G IST & OUTCOME OF THE ISSUE INVOLVED AS LEAD APPEAL IS CONCERNED WHICH WE DEEM IT PROPER TO REPRODUCE THE SAME HERE FOR THE SAKE OF CLARITY & BREV ITY: 17. WE ARE THUS INCLINED TO AGREE WITH THE SUBMISS IONS MADE BY THE AR AND REPRODUCED IN THE SYNOPSIS THAT THE ADDITION OF RS. 1 09 51 150/- MERITS TO BE DELETED. 18. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A ) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 1 09 51 150/- MADE BY HIM ON ACCOUNT OF AMOUNTS MENTIONED ON HUNDIES. 19. GROUND NO. 1 IS THEREFORE ALLOWED. 31. RESPECTFULLY FOLLOWING OUR DECISION TAKEN IN ITA 3850 ( SUPRA ) GROUND NO. 1 OF THE IMPUGNED APPEAL STANDS ALLOWED. 32. GROUND NO. 2: SINCE WE HAVE ALLOWED GROUND NO. 1 BY D IRECTING THE AO TO DELETE THE ADDITION OF RS. 9 73 13 824/- ON FACTS GROUND NO. 2 BECOMES ACADEMIC AND NEEDS NO ADJUDICATION. INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 12 33. GROUND NO. 3 HAS TWO ELEMENTS FIRST BEING INTEREST UN DER SECTION 215. THE CASE BEING THAT OF REASSESSMENT PROCEE DINGS PROVISIONS OF SECTION 215 BECOME INAPPLICABLE. THE SECOND ELE MENT PERTAINS TO EXIGIBILITY OF INTEREST UNDER SECTION 220(2) THIS B EING CONSEQUENTIAL IN NATURE IT IS MERE ACADEMIC EXERCISE TO AD JUDICATE THIS GROUND WE THEREFORE DIRECT THE AO TO RECOMPUTED THE IN TEREST EXIGIBLE UNDER SECTION 220(2) AS PER LAW WHILE GIVING EFFECT TO THE IN STANT ORDER. 34. GROUND NO. 4 RELATES TO PENALTY PROCEEDINGS UNDER S ECTION 271(1)(C) WHICH IS PREMATURE IN NATURE AND DOES NOT CALL FOR ANY INTERFERENCE FROM EITHER PARTIES AS SUCH WE REJECT THIS GROUND. 35. IN THE RESULT APPEAL IS TREATED AS PARTLY ALLOWED. ITA NO. 3852/MUM/2011 FOR AY 1987-88 ASSESSEES APP EAL : 36. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) 2 MUMBAI DATED 11.02.2011 FOR AY 1987-88 WHEREIN T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: THE GROUND OR GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO ONE ANOTHER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF 4 50 000 /- MADE BY THE AO TO THE INCOME OF THE APPELLANT ON ACCOUNT OF UNACCOUNT ED HUNDIES/BILLS OF EXCHANGE ON PROTECTIVE BASIS ON THE BASIS OF CERTAI N MATERIALS SEIZED FROM THE RESIDENCE OF SHRI JAYANT VITHALDAS PUNE WHO W AS AN EX-EXECUTIVE OF THE APPELLANT COMPANY AND HE FURTHER GROSSLY ERRED IN CHANGING THE PROTECTIVE ADDITION INTO SUBSTANTIVE ADDITION WITHO UT ALLOWING ANY OPPORTUNITY OF HEARING TO THE APPELLANT BEFORE INCR EASING THE TAX LIABILITY BY CHANGING THE PROTECTIVE ADDITION INTO SUBSTANTIV E ADDITION. 2.A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CIT(A) FAILED TO APPRECIATE THAT :- (I) NEITHER THE SEIZED MATERIALS BELONGED TO THE A PPELLANT NOR THERE IS ANY EVIDENCE ON RECORD WHICH SUGGEST THAT THE APPELLANT MIGHT HAVE ADVANCED ANY MONEY ON HUNDIES/BILLS OF EXCHANGE; (II) THE AO HAS NOT FOLLOWED THE DIRECTIONS GIVEN BY THE ITAT MUMBAI CORRECTLY AND THEREBY HE FAILED TO BRING ON RECORD ANY MATERIAL TO LINK THE UNEXPLAINED HUNDIES/BILLS OF EXCHANGE WITH THE APPELLANT AS DIRECTED BY THE ITAT; AND (III) THE ITAT VIDE ORDER DATED 5-5-2009 IN ITA NO . 6125/MUM/2007 FOR THE A.Y. 1985-86 ALLOWED THE GROUND OF APPEAL RAISED BY THE REVENUE TO KEEP THE ISSUE OF PROTECTIVE ADDITION ALIVE AND NO SPECIFIC FINDINGS ARE GIVEN BY THE ITAT MUMBAI SO AS THE PROTECTIVE ADDI TION CAN BE ASSESSED AS SUBSTANTIVE ADDITION. INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 13 B) IN REACHING TO THE CONCLUSION AND CONFIRMING SU CH ADDITION ON SUBSTANTIVE BASIS IN PLACE OF PROTECTIVE BASIS MADE BY THE AO THE LD. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS CONSIDERATIONS PRINCIPL ES AND EVIDENCES WHILE HE WAS OVERWHELMED INFLUENCED AND PREJUDICED BY IR RELEVANT CONSIDERATIONS AND FACTORS. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE CHARGE OF INTEREST UNDER SECTION 220(2) OF THE INCOME TAX ACT 1961 IS CONSEQUENTIAL . THE APPELLANT DENIES ITS LIABILITY FOR SUCH INTEREST. 4. THE ID. CIT(A) ERRED IN HOLDING THAT THE GROUND RAISED DISPUTING INITIATION OF PENALTY PROCEEDINGS UNDER SECTION.271(1)(C) IS P REMATURE. THE APPELLANT DENIES HER LIABILITY FOR SUCH PENALTY. 37. GROUND NO. 1 RELATES TO THE ADDITION OF RS. 4 50 000/- M ADE BY THE AO TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF UNA CCOUNTED HUNDIES/BILLS OF EXCHANGE ON PROTECTIVE BASIS ON THE BASIS OF CERTAIN MATERIALS SEIZED FROM THE RESIDENCE OF SHRI JAYANT VITHALDAS. 38. AN IDENTICAL ISSUE HAS BEEN DEALT WITH AND DECIDED BY US IN PARA 2 TO PARA 19 AND PARAS 29 TO 31 OF THIS ORDER IN ASSESSEES OWN APP EALS IN ITA NO. 3850 OF 2011 FOR AY 1985-86 AND ITA 3851 OF 2011 FOR AY 1986-87 AND WE DEEM IT PROPER TO REPRODUCE THE RELEVA NT DECISIVE PARAS BEING 17 18 & 19 AS FAR AS GIST & OUTCOME OF THE ISSUE INVOLVED AS LEAD APPEAL IS CONCERNED WHICH WE DEEM IT PROPER TO R EPRODUCE THE SAME HERE FOR THE SAKE OF CLARITY & BREVITY: 17. WE ARE THUS INCLINED TO AGREE WITH THE SUBMISS IONS MADE BY THE AR AND REPRODUCED IN THE SYNOPSIS THAT THE ADDITION OF RS. 1 09 51 150/- MERITS TO BE DELETED. 18. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A ) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 1 09 51 150/- MADE BY HIM ON ACCOUNT OF AMOUNTS MENTIONED ON HUNDIES. 19. GROUND NO. 1 IS THEREFORE ALLOWED. 39. RESPECTFULLY FOLLOWING OUR DECISION TAKEN IN ITA 3850 & I TA 3851 ( SUPRA ) GROUND NO. 1 OF THE IMPUGNED APPEAL STANDS ALLOWED. 40. GROUND NO. 2: SINCE WE HAVE ALLOWED GROUND NO. 1 BY DIR ECTING THE AO TO DELETE THE ADDITION OF RS. 4 50 000/- ON FACTS GR OUND NO. 2 BECOMES ACADEMIC AND NEEDS NO ADJUDICATION. 41. GROUND NO. 3 BEING CONSEQUENTIAL IN NATURE IT IS MERE ACADEMIC EXERCISE TO ADJUDICATE THIS GROUND THEREFORE TH E SAME IS DISMISSED AS ACADEMIC. INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 14 42. GROUND NO. 4 RELATES TO PENALTY PROCEEDINGS UNDER SE CTION 271(1)(C) WHICH IS PREMATURE IN NATURE AND DOES NOT CALL FOR ANY INTERFERENCE FROM EITHER PARTIES AS SUCH WE REJECT THIS GROUND. 43. IN THE RESULT APPEAL IS TREATED AS PARTLY ALLOWED. ITA NO. 3853/MUM/2011 FOR AY 1994-95 ASSESSEES APP EAL : 44. THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) 2 MUMBAI DATED 11.02.2011 FOR AY 1994-95 WHEREIN THE ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS: THE GROUND OR GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO ONE ANOTHER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1 02 00 000/- MADE BY THE AO TO THE INCOME OF THE APPELLANT ON ACCOUNT OF UNA CCOUNTED HUNDIES/BILLS OF EXCHANGE ON PROTECTIVE BASIS ON TH E BASIS OF CERTAIN MATERIALS SEIZED FROM THE RESIDENCE OF SHRI JAYANT VITHALDAS PUNE WHO WAS AN EX-EXECUTIVE OF THE APPELLANT COMPANY AND HE FURTHER GROSSLY ERRED IN CHANGING THE PROTECTIVE ADDITION INTO SUBS TANTIVE ADDITION WITHOUT ALLOWING ANY OPPORTUNITY OF HEARING TO THE APPELLAN T BEFORE INCREASING THE TAX LIABILITY BY CHANGING THE PROTECTIVE ADDITION I NTO SUBSTANTIVE ADDITION. 2.A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ID. CIT(A) FAILED TO APPRECIATE THAT :- (I) NEITHER THE SEIZED MATERIALS BELONGED TO THE A PPELLANT NOR THERE IS ANY EVIDENCE ON RECORD WHICH SUGGEST THAT THE APPELLANT MIGHT HAVE ADVANCED ANY MONEY ON HUNDIES/BILLS OF EXCHANGE; (II) THE AO HAS NOT FOLLOWED THE DIRECTIONS GIVEN BY THE ITAT MUMBAI CORRECTLY AND THEREBY HE FAILED TO BRING ON RECORD ANY MATERIAL TO LINK THE UNEXPLAINED HUNDIES/BILLS OF EXCHANGE WITH THE APPELLANT AS DIRECTED BY THE ITAT; AND (III) THE ITAT VIDE ORDER DATED 5-5-2009 IN ITA NO . 6125/MUM/2007 FOR THE A.Y. 1985-86 ALLOWED THE GROUND OF APPEAL RAISED BY THE REVENUE TO KEEP THE ISSUE OF PROTECTIVE ADDITION ALIVE AND NO SPECIFIC FINDINGS ARE GIVEN BY THE ITAT MUMBAI SO AS THE PROTECTIVE ADDI TION CAN BE ASSESSED AS SUBSTANTIVE ADDITION. B) IN REACHING TO THE CONCLUSION AND CONFIRMING SU CH ADDITION ON SUBSTANTIVE BASIS IN PLACE OF PROTECTIVE BASIS MADE BY THE AO THE LD. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS CONSIDERATIONS PRINCIPL ES AND EVIDENCES WHILE HE WAS OVERWHELMED INFLUENCED AND PREJUDICED BY IR RELEVANT CONSIDERATIONS AND FACTORS. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE GROUND RAISED DISPUTING INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) IS P REMATURE. THE APPELLANT DENIES HER LIABILITY FOR SUCH PENALTY. 45. GROUND NO. 1 RELATES TO THE ADDITION OF RS. 1 02 00 000/- MADE BY THE AO TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF UNA CCOUNTED HUNDIES/BILLS OF EXCHANGE ON PROTECTIVE BASIS ON THE BASIS OF CERTAIN MATERIALS SEIZED FROM THE RESIDENCE OF SHRI JAYANT VITHALDAS. INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 15 46. AN IDENTICAL ISSUE HAS BEEN DEALT WITH AND DECIDED BY US IN PARA 2 TO PARA 19 PARAS 29 TO 31 & PARAS 37 TO 39 OF THIS ORDER IN ASSESSEES OWN APPEALS IN ITAS 3850 OF 2011 3851 OF 20 11 & 3852 OF 2011 FOR AYS 1985-86 TO 1987-88 RESPECTIVELY AND WE D EEM IT PROPER TO REPRODUCE THE RELEVANT DECISIVE PARAS BEING 17 18 & 19 AS FAR AS GIST & OUTCOME OF THE ISSUE INVOLVED AS LEAD APPEAL IS CONC ERNED WHICH WE DEEM IT PROPER TO REPRODUCE THE SAME HERE FOR THE SAKE OF CLARITY & BREVITY: 17. WE ARE THUS INCLINED TO AGREE WITH THE SUBMISS IONS MADE BY THE AR AND REPRODUCED IN THE SYNOPSIS THAT THE ADDITION OF RS. 1 09 51 150/- MERITS TO BE DELETED. 18. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A ) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 1 09 51 150/- MADE BY HIM ON ACCOUNT OF AMOUNTS MENTIONED ON HUNDIES. 19. GROUND NO. 1 IS THEREFORE ALLOWED. 47. RESPECTFULLY FOLLOWING OUR DECISION TAKEN IN ITAS 3850 3 851 & 3852 ( SUPRA ) GROUND NO. 1 OF THE IMPUGNED APPEAL STANDS ALLOWED. 48. GROUND NO. 2: SINCE WE HAVE ALLOWED GROUND NO. 1 BY D IRECTING THE AO TO DELETE THE ADDITION OF RS. 1 02 00 000/- ON FACTS GROUND NO. 2 BECOMES ACADEMIC AND NEEDS NO ADJUDICATION. 49. GROUND NO. 3 RELATES TO PENALTY PROCEEDINGS UNDER S ECTION 271(1)(C) WHICH IS PREMATURE IN NATURE AND DOES NOT CALL FOR ANY INTERFERENCE FROM EITHER PARTIES AS SUCH WE REJECT THIS GROUND. 51. IN THE RESULT APPEAL IS TREATED AS PARTLY ALLOWED. ITA NO. 3846/MUM/2011 FOR AY 1985-86 REVENUES APPE AL : 52. THE ABOVE CAPTIONED APPEAL IS AGAINST THE LEVY OF PENA LTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 FOR AY 1985-86. INDIAN PLYWOOD MFG CO PVT LTD ITAS NO. 3850 TO 3853/MUM/2011 ITA NO. 3846 /MUM/2011 16 53. AS WE HAVE DECIDED THE ASSESSEES APPEAL FOR AY 198 5-86 IN ASSESSEES FAVOUR HENCE ITA NO. 3846/MUM/2011 IS CONSE QUENTIAL AND AS SUCH WE DELETE THE LEVY OF PENALTY. 54. REVENUES APPEAL STANDS DISMISSED. TO SUM-UP: ASSESSEES APPEAL IN ITA 3850/MUM/2011 IS PARTLY ALLOWED ASSESSEES APPEAL IN ITA 3851/MUM/2011 IS PARTLY ALLOWED ASSESSEES APPEAL IN ITA 3852/MUM/2011 IS PARTLY ALLOWED ASSESSEES APPEAL IN ITA 3853/MUM/2011 IS PARTLY ALLOWED & REVENUES APPEAL IN ITA 3846/MUM/2011 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH OCTOBER 2013. SD/- SD/- ( . . ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATE: 9 TH OCTOBER 2013 #/ COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) *! *+# ( ) - 2 MUMBAI / THE CIT (A)-2 MUMBAI. 4) *! *+# 1 MUMBAI / THE CIT1 MUMBAI 5) -. #/ * *! $ /! 01 / THE D.R. I BENCH MUMBAI. 6) .2 3 COPY TO GUARD FILE. *4 5 / BY ORDER / / TRUE COPY / / [ 6 / 7! 8! *! $ /! 01 DY. / ASSTT. REGISTRAR I.T.A.T. MUMBAI *:;7 . . * CHAVAN SR. PS