The ITO, Ward-10(1),, Ahmedabad v. Shri Ketan B. Thakkar, HUF,, Ahmedabad

ITA 407/AHD/2006 | 1998-1999
Pronouncement Date: 30-04-2015 | Result: Dismissed

Appeal Details

RSA Number 40720514 RSA 2006
Assessee PAN AAAHT1708E
Bench Ahmedabad
Appeal Number ITA 407/AHD/2006
Duration Of Justice 9 year(s) 2 month(s) 8 day(s)
Appellant The ITO, Ward-10(1),, Ahmedabad
Respondent Shri Ketan B. Thakkar, HUF,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-04-2015
Date Of Final Hearing 22-04-2015
Next Hearing Date 22-04-2015
Assessment Year 1998-1999
Appeal Filed On 20-02-2006
Judgment Text
I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 1 OF 15 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S.S. GODARA JM] I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 INCOME TAX OFFICER WARD 10(1) AHMEDABAD .....................APP ELLANT VS. KETAN B THAKKAR HUF ...RESPONDENT 143 MANEKBAUG SOCIETY AMBAWADI AHMEDABAD 380 015 [PAN: AAAHT1708E] APPEARANCES BY: A L KUREEL FOR THE APPELLANT A C SHAH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : APRIL 22 2015 DATE OF PRONOUNCING THE ORDER : APRIL 30 2015 O R D E R PER PRAMOD KUMAR AM: 1. THESE SEVEN APPEALS PERTAIN TO THE SAME ASSESSEE INVOLVE A COMMON ISSUE AND WERE HEARD TOGETHER. AS A MATTER OF CONVE NIENCE THEREFORE ALL THESE SEVEN APPEALS ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. 2. GRIEVANCE OF THE ASSESSING OFFICER IS THAT THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF THE CAS H EMBEZZLEMENTS [OF RS 7 51 000 FOR THE ASSESSMENT YEAR 1993-94 RS 18 68 000 FOR THE ASSESSMENT YEAR 1994-95 RS 17 83 000 FOR THE ASSESSMENT YEAR 1995- 96 RS 34 07 000 FOR THE ASSESSMENT YEAR 1996-97 RS 38 81 283 FOR THE ASSES SMENT YEAR 1997-98 RS I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 2 OF 15 23 56 495 FOR THE ASSESSMENT YEAR 1998-99 AND RS 12 08 800 FOR THE ASSESSMENT YEAR 1999-2000] ON PROTECTIVE BASIS . 3. WHILE THE RELEVANT MATERIAL FACTS SO FAR AS ISS UE REQUIRING OUR ADJUDICATION IS CONCERNED FOR ALL THE ASSESSMENT Y EAR BEFORE US ARE COMMON WE WILL TAKE UP THE FACTS OF THE CASE FOR THE ASSESSME NT YEAR 1993-94 TO SET OUT THE BACKDROP DEVELOPMENTS LEADING TO THESE APPEALS BEFO RE US. 4. IT IS A CASE OF REOPENED ASSESSMENT AND EVEN THE REASSESSMENT PROCEEDINGS WERE DROPPED BY THE ASSESSING OFFICER I N THE FIRST INSTANCE BUT THEN LEARNED COMMISSIONER SUBJECTED THIS ORDER DROPPING THE REASSESSMENT PROCEEDINGS TO REVISION UNDER SECTION 263. IT WAS IN THIS BACKDROP THAT THE FRESH REASSESSMENT WAS DONE. THE REASONS FOR REOPE NING THE ASSESSMENT AS SET OUT AT PAGE 2 OF THE ASSESSMENT ORDER ARE AS FOLLO WS: ENQUIRIES WERE CONDUCTED BY THE DDIT (INV). UNIT 2 (3) AHMEDABAD IN THE CASE OF VAM AIRTEX PVT. 4/5 VASUPUJYA CHAMBERS ASH RAM ROAD AHMEDABAD AND ITS ASSOCIATE CONCERNS. IT WAS FOUND BY THE INVESTIGATION UNIT THAT THE EMPLOYEES/CLOSE ASSOCIATES OF VAM AIR TEX PVT. LTD. WERE RUNNING A NUMBER OF CONCERNS FOR THE PURPOSES OF AC COMMODATING VAM AIREX PVT. LTD. SO THAT THE COMPANY MIGHT BOGUS PUR CHASES IN THEIR NAMES AND ITS BOOKS. MOST OF THE EMPLOYEES/ASSOCIATES WE RE FOUND TO HAVE NOT FILED RETURNS OF INCOME FOR ALL THE YEARS. THESE C ONCERNS WERE CREATED TO SHOW THAT THE PURCHASES WERE MADE FROM THEM IN THE BOOKS OF THE COMPANY. THE BANK ACCOUNTS IN NAME OF SUCH CONCERNS WERE ALS O OPENED. THESE BANK ACCOUNTS WERE MANAGED AND OPERATED BY THE EMPLOYEES . THE CHEQUES AGAINST THE PURCHASES FROM SUCH CONCERNS USED TO BE DEPOSITED IN THEIR BANK ACCOUNTS. LATER ON AS REFLECTED IN THE BANK ACCOUN T CASH WAS WITHDRAWN AND POSSIBLE GIVEN BACK TO SHRI SUNIL SHAH DIRECTO R OF THE COMPANY VAM AIRTEX PVT. LTD. THIS MODUS-OPERANDI HAS BEEN ADMI TTED BY SHRI KETAN THAKKAR IN HIS STATEMENT ON OATH. SHRI KETAN THAKK AR USED TO LOOK AFTER THE TAX MATTERS OF THE COMPANY BEFORE HE LEFT THE C OMPANY. H K ENTERPRISE PROPRIETARY CONCERNS OF SHRI KETAN THAKKAR HUF WAS ONE OF THE CONCERNS WHICH ACCOMMODATED VAM AIRTEX L IMITED TO REDUCE ITS TAX INCIDENCE BY SHOWING THAT PURCHASES WERE MADE F ROM IT IN THE BOOKS OF THE COMPANY. I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 3 OF 15 IT HAS BEEN FOUND THAT VAM AIRTEX PVT. LTD. HAS DEB ITED EXCESS PURCHASES FROM 1993-94 TO 1996-97 AS UNDER :- 1993-94 - RS.2335668/- 1994-95 - RS.3441606/- 1995-96 - RS.3119500/- 1996-97 - RS.4781800/- THE CASE OF SHRI KETAN B. THAKKAR HUF NEED TO BE T AKEN UP FOR SCRUTINY TO TAX ONLY THAT PORTION OF INCOME WHICH A RISES OUT OF THE SALES INDEPENDENT OF THE SALES MADE TO VAM AIRTEX PVT. LT D. SINCE THE SALES MADE TO VAM AIRTEX PVT. LTD. ARE NON-GENUINE IN NATURE. IN THE COURSE OF THE ABOVE PROCEEDINGS SHRI SUNIL SHAH STATED THAT SHRI KETAN THAKKAR USED TO SIPHON OFF AND WITHDRAW CASH FROM THE MANAGEMENT. THE CASH WAS TAKEN AWAY BY HIM FROM TH E COMPANY IN HIS AND IN THE ACCOUNT OF H K ENTERPRISE HIS HUF AND T HEREFORE THE MANAGEMENT HAD LODGED A CRIMINAL COMPLAINT. FURTHE R HE HAS ALSO STATED THAT IN BOOKS VAM AIRTEX PVT. LTD. MISAPPROPRIATION ACCOUNT HAD BEEN CREATED WHEN THE FRAUD WAS DETECTED. THEREFORE ACC ORDING TO HIM THE MONEY HAS BEEN SIPHONED OFF BY SHRI KETANA THAKKAR. THE ABOVE FACTS ALSO NEED TO BE VERIFIED. THE ASSESSEE SHRI KETAN THAK KAR HAS HIMSELF SUBMITTED EVIDENCE TO PROVE THAT H K ENTERPRISES WH ICH IS A PROPRIETARY CONCERN OF SHRI KEAN THAKKAR HUF HAS ALSO ACCOMMOD ATED VAM AIRTEX PVT. LTD. FOR BOGUS PURCHASES. IT IS SETTLED LAW THAT PROCEEDINGS U/S 147 ARE FOR THE BENEFIT OF THE REVENUE AND NOT FOR THE ASSESSEE. THUS TO ENSURE T HAT THE BOGUS PURCHASES MADE BY VAM AIRTEX PVT. LTD. ARE DISALLOWED AND INC LUDED IN THE TOTAL INCOME COMPUTATION OF VAM AIRTEX PVT. LTD. IT IS I MPERATIVE THAT THE FACTS OF THE CASE OF H K ENTERPRISE ARE ANALYSED IN GREAT DETAIL AND CLINCHING EVIDENCES COLLECTED TO PROVE BEYOND DOUBT THAT NO S ALES WERE MADE BY H K ENTERPRISE TO VAM AIREX PVT. LTD. THIS ACTION WILL ENSURE THAT THE BOGUS PURCHASES INDULGED IN BY VAM AIRTEX PVT. LTD. SUFFE R TAX. AND VAM AIRTEX PVT. LTD. IS TAXED CORRECTLY ON ITS CORRECT TOTAL I NCOME. CONCLUSION: IN VIEW OF THE ABOVE FACTS I HAVE REASON TO BELIEVE THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE PROVISION OF SE CTION 147 OF THE I T ACT AND AM SATISFIED THAT THIS IS A FIT CASE FOR INVOKI NG THE PROVISIONS OF SECTION 147 OF THE I T ACT FOR ASSESSMENT YEAR 1993-94. TH E CONDITIONS LAID DOWN IN I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 4 OF 15 SECTION 149(1)(B) ARE SATISFIED AND THE PROVISIONS OF SECTION 151(2) ARE SQUARELY APPLICABLE TO THE FACTS ON THE CASE. 5. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER H AS ALSO SET OUT THE BRIEF CASE HISTORY WHICH IS REPRODUCED BELOW FOR READY RE FERENCE:- DURING INQUIRY PROCEEDINGS IN THE CASE OF VAM AIR EX PVT. LTD. THE DDIT (INV.) UNIT II(3) AHMEDABAD RECORDED THE STATE MENTS OF SHRI SUNIL SHAH DIRECTOR OF VAM AND DIFFERENT EMPLOYEES OF THE COMPANY INCLUDING THAT OF SHRI KETAN B. THAKKAR FROM 1.5.20 01 TO 8.5.2001. FROM THE STATEMENTS RECORDED ON OATH AND INFORMATIO NS/DETAILS SUBMITTED BEFORE THE DDIT BY THOSE PERSONS IT WAS CONCLUDED THAT THE COMPANY VAM WAS DEBITING ITS ACCOUNTS BY NON GENUIN E PURCHASES AND ALSO SUPPRESSING ITS SALES. AFTER THROUGH ENQUIRY BY THE DDIT THE FOLLOWING FACTS WERE NOTICED. A. THAT THE COMPANY HAD DEBITED BOGUS PURCHASES IN THE BOOKS THEREBY SUPPRESSED PROFIT APPEARS TO BE LARGELY TR UE. B. THAT THE CONCERNS RUN AND MANAGED BY THE EMPLOYEES/ASSOCIATES BOGUS PURCHASES WERE DEBITED IN THE BOOKS OF VAM AIR TEX PVT. LTD. WERE NOT FILING RETU RNS OF INCOME. C. THAT THE FEW CONCERNS WERE CREATED TO ROUT UNACC OUNTED SALES OF CAR AIR CONDITIONERS MANUFACTURED/ASSEMBLED BY V AM AIR TEX PVT. LTD. THE DDIT (INV.) HAD RECORDED STATEMENTS OF K.B. THA KKAR DURING THE COURSE OF INQUIRY PROCEEDINGS AND CAME TO THE CONCL USION THAT EMPLOYEES/CLOSE ASSOCIATE OF THE COMPANY WERE ACCOM MODATING THE COMPANY IN DEBITING BOGUS PURCHASES IN THEIR NAMES. THE MODUS OPERANDI ADOPTED BY VAM AIR TEX PVT. LTD. WAS INFLATING THE PURCHASES TO REDUCE ITS TAX LIABILITY PAYMENTS WERE MADE BY VAM AGAINST BOGUS PURCHASES WHICH WERE DEPOSITED IN THE BANK ACCOUNT OF KETAN B. THAKKAR HUF ACCOUNT NO.2202 IN GENERAL C O. OP. BANK. I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 5 OF 15 IN THE LIGHT OF THE INQUIRY PROCEEDINGS CONDUCTED B Y THE D.D.I.T. (INVESTIGATION) AHMEDABAD THE ASSESSMENTS OF VAM AI R TEX PRIVATE LIMITED AND KETAN B. THAKKAR HUF WAS REOPENED U/S. 147 OF THE I.T. ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS I N THE CASE OF THE VAM AIR TEX PRIVATE LIMITED THE ASSESSING OFFICER FOUND THAT IT HAD DEBITED ITS ACCOUNTS BY NON GENUINE PURCHASES SHOWN TO BE MADE FROM DIFFERENT CONCERNS IN THE NAME OF ITS EMPLOYEES. Y EAR WISE NON GENUINE PURCHASES FROM DIFFERENT CONCERNS WERE ALSO GIVEN BY SHRI SUNIL SHAH HIMSELF O THE ASSESSING OFFICER WHO FINA LISED THE ASSESSMENT OF VAM AIRTEX PRIVATE LIMITED. WHILE ADMITTING THE BOGUS PURCHASES SHRI SUNIL V. SHAH ALLEGED THAT THE PAYMENTS MADE IN RESPECT OF BOGUS PURCHASE WAS MISAPPROPRIATED BY SHRI KETAN B. THAKKAR AND CLAIME D DEDUCTION OF RS.7 51 000/- AS EMBEZZLEMENT BY SHRI KETAN THAKKAR . ADDITION ON ACCOUNT OF BOGUS PURCHASES HAVE BEEN MA DE IN THE CASE OF VAM AIRTEX PRIVATE LIMITED BY THE ASSESSING OFFICER. ON APPEAL ALSO THE LD. CIT(A) UPHELD THE DECISION BY THE A.O. ON THE GROUND THAT - 1. IT WAS VERY WELL WITHIN THE KNOWLEDGE OF SHRI SU NIL V. SHAH THAT ACCOUNT WERE BOGUS AND IT WAS OPENED FOR SPECIFIC PURPOSES OF INFLATING THE PURCHASES. 2. THERE WAS NO CLAIM OF EMBEZZLEMENT IN THE ORIGIN AL RETURN FILED BY VAM THAT MEANS ISSUE OF EMBEZZLEMEN T HAS BEEN BROUGHT IN CORRESPONDING TO THE BOGUS PURCHASES IN REASSESSMENT PROCEEDINGS WHICH CANNOT BE ENTERTAINED. CIT VS. SUN ENGINEERING WORKS 1998 IT R 297 (SC). HOWEVER THE HONOURABLE ITAT AHMEDABAD BENCH C AHMEDABAD VIDE ORDER DATED 25.01.2005 SETASIDE THE ORDER OF THE VAM AIRTEX PVT. LTD. TO THE FILE OF THE ASSESSING OFFIC ER HOLDING THAT IT IS SINE QUO OF THE PRINCIPAL OF NATURAL JUSTICE THAT ASSESS EE SHOULD BE GIVEN OPPORTUNITY OF BEING HEARD AND DEFEND HIS CASE WHIC H INCLUDES SUPPLY OF MATERIAL WHICH IS PURPOSED TO BE USED AGAINST HI M AS WITHOUT SUCH MATERIAL ASSESSEE WILL NOT BE IN A POSITION TO DEF END ITS CASE IN PROPER MANNER THIS IS CARDINAL PRINCIPAL OF MAXINI AUDIAL TEM PARTEM. I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 6 OF 15 6. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS SUBMITTED BY THE ASSESSEE THAT BANK ACCOUNT NUMBER 2202 WITH GENERAL COOPERATIVE BANK LIMITED WAS OPENED AT THE INSTANCE OF SHRI SUNIL S HAH DIRECTOR OF VAM AIRTEX PVT LTD TO ACCOMMODATE ITS BOGUS PURCHASES AND THA T THE ASSESSEE HAS NOTHING TO DO WITH THE SAME. THE ASSESSEE ALSO COULD NOT PR ODUCE THE RELEVANT BANK STATEMENT AS WELL. IT WAS IN THIS BACKDROP THAT THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE AMOUNTS CREDIT ED IN THIS BANK ACCOUNT NOT BE TREATED AS INCOME OF THE ASSESSEE PARTICULARLY AS NOT ONLY THE ACCOUNT WAS OWNED BY THE ASSESSEE IT WAS ALSO OPERATED BY THE A SSESSEE. IN RESPONSE TO THIS SHOW CAUSE NOTICE THE ASSESSEE EXPLAINED THAT THE ASSESSEE WAS ONLY A BENAMIDAR OF SUNIL V SHAH DIRECTOR OF VAM AIRTEX P VT LTD THROUGH THE ACCOUNT NO. 2202 OF GENERAL COOPERATIVE BANK LIMITED WHICH WAS OPERATED BY HIM BUT NEVER BELONGED TO HIM. IT WAS SUBMITTED THAT H K EN TERPRISES IN WHICH NAME THIS ACCOUNT WAS OPENED BY THE ASSESSEE AS SOLE PRO PRIETOR WAS ONE OF THE SISTER CONCERNS MANAGED BY SHRI SUNIL V SHAH. IT WAS ALSO EXPLAINED THAT CASH WITHDRAWN FROM THE SAID ACCOUNT WAS DULY HANDED OVE R TO SHRI SUNIL V SHAH. THE ASSESSEE FURTHER POINTED OUT THAT THESE TRANSAC TIONS WERE SPREAD OVER A PERIOD OF SEVEN YEARS AND IT IS CONTRARY TO THE PRE PONDERANCE OF PROBABILITIES THAT A PERSON WILL GO ON ISSUING THE CHEQUES WITHO UT ANY CONSIDERATION FOR SUCH A LONG PERIOD. ON A CONSIDERATION OF ALL THESE SUB MISSIONS AND ON A PERUSAL OF MATERIAL ON RECORD THE ASSESSING OFFICER HELD THAT WHILE ASSESSEE MAY HAVE BEEN IN EMPLOYMENT WITH VAM AIRTEX ONLY FOR A FEW M ONTHS IN 1985 THE ASSESSEE HIMSELF ACCEPTS THAT HE WAS A CONSULTANT T O THIS COMPANY IN THE SUBSEQUENT YEARS. IT WAS ALSO OBSERVED THAT THE AS SESSEE KNOWINGLY OPENED AN ACCOUNT WITH GENERAL COOPERATIVE BANK LIMITED IN TH E NAME OF H K ENTERPRISES AND TRANSACTED THE MONEY THROUGH THIS ACCOUNT WITH HIS OWN SIGNATURES AND THAT IT MAY BE CORRECT THAT A PERSON WILL NOT REMA IN SILENT FOR A PERIOD OF MORE THAN SEVEN YEARS IF HE DOES NOT GET THE MONEY BACK AFTER SIGNING THE CHEQUES AT THE SAME TIME IT IS ALSO TO BE CONSIDERED HERE THAT NOBODY WILL OPERATE A BOGUS OR BENAMI ACCOUNT TO ACCOMMODATE OR DO A FAVOUR TO ANOTHER PERSON WITHOUT ANY ENDURING BENEFIT. THE ASSESSING OFFICER FURTH ER NOTED THAT THE ISSUE OF EMBEZZLEMENT IS SUB JUDICE MATTER. YET HE PROCEEDED TO BRING THIS INCOME OF RS I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 7 OF 15 7 51 000 TO TAX IN THE HANDS OF THE ASSESSEE ON WH AT HE HIMSELF TERMED AS PROTECTIVE BASIS BY OBSERVING AS FOLLOWS: 10. THE ASSESSMENT OF VAM AIRTEX PVT. LTD. FOR A.Y . 1993-94 IS FINALISED ON 12.3.2003 IN WHICH THE CLAIM OF LOSS O F EMBEZZLEMENT BY KETAN B. THAKKAR AMOUNTING TO RS.751000/- WAS REJEC TED AND ADDITION OF THIS AMOUNT IS MADE SUBSTANTIVELY IN THE HANDS O F VAM AIRTEX PRIVATE LTD. WHICH HAD BEEN UPHELD BY THE CIT(A). IN ORDER DTD. 31.5.2004. HOWEVER THE HONOURABLE ITAT SETASIDE TH E ASSESSMENT OF VAM AIRTEX PVT. LTD. TO THE FILE OF THE ASSESSING O FFICER WITH A SPECIFIC DIRECTION TO SUPPLY COPY OF STATEMENT OF KETAN B. T HAKKAR RECORDED BY THE DDIT (INV) UNIT-III AHMEDABAD TO VAM AIRTEX PV T. LTD. TO DEFEND ITS CASE AS A PRINCIPAL OF NATURAL JUSTICE. SINCE HOWEVER LOOKING TO THE NATURE OF BUSINESS ACTIVITIES ENTERED IN TO BETWEEN SHRI KETAN B. THAKKAR HUF AND VAM AIREX PRIVATE LTD. AND THE COMP LEXITIES INVOLVED IN THE CASE AS MENTIONED IN PARA-8 AND ALS O AS A SUBSTANTIVE ADDITION OF RS.751000/- IS ALREADY MADE IN THE CASE OF VAM AIRTEX PRIVATE LIMITED A PROTECTIVE ADDITION OF RS.751000 /- IS MADE IN THE CASE OF THE ASSESSEE FOR A.Y. 1993-94 TO SAFEGUARD THAT THE INTEREST OF REVENUE. 7. AGGRIEVED BY THE ADDITION SO MADE BY THE ASSESSI NG OFFICER ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE ADDITION BY OBSERVING INTER ALIA AS FOLLOWS: 3.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE WRITTEN SUBMISSIONS OF THE LD. A.R. I FIND MERIT IN THIS R EGARD IN THE WRITTEN SUBMISSIONS OF THE LD. A.R. FOR THE FOLLOWING REASO NS. (I) THE HON. SUPREME COURT IN THE CASE OF LALJI HAR IDAS VS. CIT (1961) 43 ITR 387 (SC) [PER GAJENDRAGADKAR J) HAS C LEARLY HELD THAT PROTECTIVE ASSESSMENT CAN BE MADE ONLY IF THER E IS DOUBT IN RESPECT OF OWNERSHIP OF RECEIPTS IN QUESTION. THEY SHOULD BE EITHER BELONG TO A OR B. IF THE RECEIPTS BELONG TO A THEN THE SUBSTANTIVE ADDITION SHOULD BE MADE IN THE CASE OF A. IF THERE IS A DOUBT IT CAN BE MADE ON PROTECTIVE BASIS IN THE CASE OF B. IN THE PRESENT CASE UNDER CONSIDERATION IT IS SEEN FR OM THE RECORDS THAT SUBSTANTIVE ADDITION HAS BEEN MADE IN THE CASE OF VAM AIRTEX PVT. LTD. THIS ADDITION HAS BEEN CONFIRMED BY THE LD. I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 8 OF 15 CIT(A)-XIV AHMEDABAD IN HIS ORDERS REFERRED TO ABO VE. RECENTLY THE HON. ITAT AHMEDABAD BENCH IN THEIR C ONSOLIDATED ORDER DTD. 11.11.2005 (SUPRA) HAVE SET ASIDE THE AD DITION MADE ON SUBSTANTIVE BASIS ONLY ON A TECHNICAL GROUND THA T THERE HAS BEEN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE IN A S MUCH AS STATEMENT RECORDED OF SHRI SUNIL SHAH AND KETAN THA KKAR WERE NOT FURNISHED. ON MERITS THE HON. ITAT HAS APPROV ED THE REOPENING OF THE ASSESSMENTS FOR ALL THE YEARS I.E. FROM A.YR. 1990-91 TO 1998-99 AS SHRI SUNIL SHAH HAD INDULGED IN DEBITING BOGUS PURCHASE THROUGH SISTER CONCERNS. (II) THE CONTESTED ISSUE OF EMBEZZLEMENT OF FUNDS B Y SHRI KETAN THAKKAR HUF I.E. THE APPELLANT IS STILL SUBJUDICE ON THE BASIS OF BOTH CRIMINAL AND CIVIL COMPLAINTS FILED BY BOTH TH E PARTIES AT AHMEDABAD. TILL THE OUTCOME OF THE LITIGATION ON B OTH THE SIDES IT CANNOT BE FINALLY ESTABLISHED THAT THE APPELLANT IS THE ONLY PERSON INVOLVED IN THE EMBEZZLEMENT OF FUNDS OF THE COMPANY. TILL THE FINAL OUTCOME IN THE COURT OF LAW IT CANNO T IN ANY WAY BE ESTABLISHED THAT THE AMOUNT HAS BEEN LOST TO THE COMPANY NAMELY VAM AIRTEX PVT. LTD. ACCORDINGLY MAKING A SSESSMENT IN THE HANDS OF THE APPELLANT ON PROTECTIVE BASIS WOUL D NOT BE JUSTIFIED. (III) IT IS FROM THE ASSESSMENT ORDER THAT THE ASS ESSING OFFICER HAS NOT ADDUCED ANY EVIDENCE OR HAS NOT ESTABLISHED THA T THE ALLEGED EMBEZZLEMENT CONSTITUTED INCOME. THE ASSES SMENT HAS BEEN MADE BY THE ASSESSING OFFICER ON PROTECTIVE BA SIS IN THE HANDS OF THE APPELLANT IN THE INTEREST OF REVENUE O NLY. THE VERY PURPOSE OF MAKING A PROTECTIVE ASSESSMENT IS TO FIN D OUT THAT THE RECEIPTS CONSTITUTE INCOME. BY APPLYING THE TH EORY OF BALANCING OF ASSETS THERE HAVE BEEN NO ASSETS ACQU IRED CORRESPONDING TO THE ALLEGED EMBEZZLEMENT BY THE AS SESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE ASSESSMENT APPEARS TO HAVE BEEN MADE PURELY ON THE BASIS OF SURMISES AND CONJECTURES WITHOUT ANY CORROBORATIVE EVIDENCE IN RESPECT OF THE ALLEGED EMBEZZLEMENT BY THE APPELLAN T. (IV) FOR THE REASONS GIVEN ABOVE I HAVE ALREADY DE LETED THE ADDITIONS MADE ON PROTECTIVE BASIS IN THE CASE OF A SSESSEE FOR A.Y. 1997-98 TO 1999-2000. (V) IT WOULD BE PERTINENT TO REFER TO THE LEGAL MAX IM EX MAJORIE CAUTELA (OUT OF ABUNDANT CAUTION) WHICH HAS BEEN APPLIED B Y HONBLE APEX COURT IN CIT V/S. SIMON CARVES LTD. (1 976) 105 ITR I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 9 OF 15 212 (SC) 1 A JUDGEMENT RENDERED BY A BENCH OF 3 JU DGES. IN THIS REGARD JUSTICE H.R. KHANNA ON PP 218 ADMONISHE S .... THE TAXING AUTHORITIES EXERCISE QUASI JUDICIAL POWERS A ND IN DOING SO THEY MUST ACT IN A FAIR AND NOT A PARTISAN MANNER. ALTHOUGH IT IS PART OF THE DUTY TO ENSURE THAT NO TAX WHICH IS LEGITIMATELY DUE FROM AN ASSESSEE SHOULD REMAIN UN-RECOVERED TH EY MUST ALSO AT THE SAME TIME NOT ACT IN A MANNER THAT MIG HT INDICATE SCALES ARE WEIGHED AGAINST THE ASSESSEE. WE ARE WHO LLY UNABLE TO SUBSCRIBE TO THE VIEW THAT UNLESS THOSE AUTHORIT IES EXERCISE THE POWER IN A MANNER MOST BENEFICIAL TO THE REVENU E AND SUBSEQUENTLY MOST ADVERSE TO THE ASSESSEE THEY SHO ULD BE DEEMED NOT TO HAVE EXERCISED IT IN A PROPER AND JUD ICIOUS MANNER. THE AFORESAID ABUNDANT CAUTION ON THE PART OF A QUA SI JUDICIAL AUTHORITY HAS BEEN REITERATED BY THE HONBLE SUPREM E COURT (PER H.R. KHANNA J AT PP 10) IN PARUSHURAM POTTERY WORKS COMPANY LTD. V/S. ITO (1977) 106 ITR 1 (SC) A JUDGEMENT DELIVERED BY A BENCH OF 2 JUDGES. IT IS TRUE THAT EVERY ASSESSING OFFICER IS EXPECTED TO BE WELL-VERSED IN LAW AND AC COUNTS. IT HAS BEEN SAID THAT THE TAXES ARE THE PRICE WE PAY FOR C IVILISATION. IF SO IT IS ESSENTIAL THAT THOSE WHO ARE ENTRUSTED WI TH THE TASK OF CALCULATING AND REALISING THE PRICE SHOULD FAMILIAR ISE THEMSELVES WITH THE RELEVANT PROVISIONS AND BECOME WELL-VERSED WITH THE LAW ON THE SUBJECT .... (VI) IT WOULD BE WORTHWHILE MENTIONING HERE THAT A CRITICAL ANALYSIS OF THE AFORESAID TWO JUDICIAL PRONOUNCEMENTS REFERR ED TO IN 105 ITR 212 (SC) (SUPRA) AND 106 ITR 1 (SC) (SUPRA) SHO WS THAT THE ABUNDANT CAUTION GIVEN TO A QUASI JUDICIAL AUTHOR ITY LIKE THE ASSESSING OFFICER IS IN THE NATURE OF JUDICIAL OBIT ER DICTA . THE SUPREME COURT OF INDIA BEING THE APEX COURT OF THE LAND NOT ONLY RATIO DECIDENDI BUT ALSO THE OBITER DICTA ARE BINDING UNDER ARTICLE 141 OF THE CONSTITUTION ON ALL OTHER COURTS AND OTHER BODIES DISCHARGING JUDICIAL OR QUASI-JUDICIAL FUNCT IONS. THIS HAS BEEN JUDICIALLY SO NOTICED IN :- (1) MADHAV RAO SCINDIA VS. UNION OF INDIA AIR 1971 SC 530 [ALSO KNOWN AS THE PRIVY PUNE CASE. CONSTITUTION B ENCH OF 5 JUDGES]; (2) ADDL. DIST. MAGISTRATE VS. SHIVAKANT SHUKLA AIR 1976 SC 1207 [ALSO KNOWN AS THE EMERGENCY CASE. CONSTITUTI ON BENCH OF 5 JUDGES]; (3) MUNICIPAL COMMITTEE VS. HAZARA SINGH AIR 1975 SC 1087. I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 10 OF 15 3.4 FOR THE REASONS GIVEN ABOVE THE ADDITION OF RS .7 51 000/- MADE ON PROTECTIVE BASIS IS HEREBY DELETED. 8. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 9. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF T HE APPLICABLE LEGAL POSITION. 10. WE FIND THAT THERE IS NO DISPUTE THAT THE ADDIT ION HAS BEEN MADE IN THIS CASE PURELY ON PROTECTIVE BASIS. THE QUESTION THA T WE MUST THEREFORE FIRST ADDRESS IS AS TO WHAT IS THE NATURE OF PROTECTIVE ADDITIONS UNDER THE SCHEME OF THE LAW AND WHETHER IT WAS INDEED A FIT CASE FOR MA KING OF THE ADDITION ON PROTECTIVE BASIS. AS FOR THE CONCEPT OF PROTECTIVE ASSESSMENT WE FIND THAT IN THE CASE OF LALJI HARIDAS VS ITO [(1961) 43 ITR 387 (SC)] HONBLE SUPREME COURT HAD AN OCCASION TO DEAL WITH THIS ASPECT OF T HE MATTER. WHILE DEALING THIS ISSUE THEIR LORDSHIPS HAVE OBSERVED AS FOLLOWS: IN CASES WHERE IT APPEARS TO THE IT AUTHORITIES THAT CERTAIN INCOME HAS BEEN RECEIVED DURING THE RELEVANT ASSESS MENT YEAR BUT IT IS NOT CLEAR WHO HAS RECEIVED THAT INCOME AND PRIMA FA CIE IT APPEARS THAT THE INCOME MAY HAVE BEEN RECEIVED EITHER BY A OR B OR BY BOTH TOGETHER IT WOULD BE OPEN TO THE RELEVANT IT AUTHO RITIES TO DETERMINE THE SAID QUESTION BY TAKING APPROPRIATE PROCEEDINGS BOTH AGAINST A AND B. 11. IN THE CASE OF BANYAN & BERRY VS CIT [(1996) 222 ITR 831 (GUJ)] HONBLE JURISDICTIONAL HIGH COURT HAD AN OCCASION T O DEAL WITH THE QUESTION I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 11 OF 15 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT EVEN AFTER THE INCOME IS TAXED PROTECTIVELY OR WITH REMARKS TO THAT EFFECT IN THE HANDS OF MEMBERS OF A OP THE SAME INCOME CAN BE VALIDLY TAXED AGAIN IN THE HANDS OF THE FIRM CONSTI TUTED BY SAME MEMBERS AS PARTNERS AND IT WAS IN THIS CONTEXT THAT THEIR LO RDSHIPS OBSERVED AS FOLLOWS: ..IT IS THE SETTLED LAW THAT WHERE THERE IS DOU BT OR AMBIGUITY ABOUT REAL ENTITY IN WHOSE HANDS A PARTICULAR INCOM E IS TO BE ASSESSED THE ASSESSING AUTHORITY IS ENTITLED TO TAKE RECOURS E TO MAKING PROTECTIVE ASSESSMENT IN THE CASE OF ONE AND REGULA R ASSESSMENT IN THE CASE OF OTHER. ..IN JAGANNATH HANUMANBUX VS. ITO (1957) 31 ITR 603 (CAL) CALCUTTA HIGH COURT HELD THAT IT IS OPEN TO THE DEP ARTMENT TO MAKE ASSESSMENTS ON TWO PERSONS IN RESPECT OF THE SAME I NCOME WHERE IT IS DOUBTFUL WHICH ASSESSEE IS REALLY LIABLE TO CHARGE BECAUSE UNLESS SUCH `PROTECTIVE' OR `ALTERNATE' ASSESSMENT IS MADE ASS ESSMENT PROCEEDINGS AGAINST THE PARTY ULTIMATELY FOUND TO BE LIABLE MAY BECOME TIME BARRED; BUT THE DEPARTMENT CANNOT RECOVER THE TAX F ROM BOTH THE ASSESSEES IN RESPECT OF THE SAME INCOME. WE ARE IN RESPECTFUL AGREEMENT. 12. QUITE CLEARLY THEREFORE THE PROTECTIVE ASSESS MENT OF AN INCOME CAN BE MADE WHEN IN THE OPINION OF THE ASSESSING OFFICER AN INCOME HAS DEFINITELY ARISEN IN A PARTICULAR ASSESSMENT YEAR BUT THERE IS ANY DOUBT ABOUT THE ENTITY IN WHOSE INCOME IS TO BE BROUGHT TO TAX. IN THE LIGHT OF THIS LEGAL POSITION WHEN WE REVERT TO THE FACTS OF THE PRESENT CASE WE FIND TH AT EVEN INCOME HAVING ARISEN IS NOT FREE FROM DOUBT SINCE THE ASSESSING OFFICER HIM SELF IS NOT SURE ABOUT THE EMBEZZLEMENT HAVING ACTUALLY TAKEN PLACE. IN THE CO URSE OF ASSESSMENT OF VAM I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 12 OF 15 AIRTEX IT IS AN ADMITTED POSITION THAT THE ASSESSI NG OFFICER HAS DISALLOWED THE EMBEZZLEMENT LOSS AND VAM AIRTEX IS IN APPEAL AGAIN ST SUCH A DISALLOWANCE. WHEN THE FACT OF EMBEZZLEMENT IS NOT ACCEPTED BY TH E ASSESSING OFFICER THERE CANNOT BE ANY OCCASION TO MAKE SUBSTANTIVE ASSESSME NT AND PROTECTIVE ASSESSMENT IN RESPECT OF SUCH AN EMBEZZLEMENT INCOM E. THE QUESTION OF PROTECTIVE ASSESSMENT OF SUCH AN INCOME IN THE HAND S OF THE ASSESSEE ON PROTECTIVE BASIS COULD HAVE ARISEN IN A SITUATION IN WHICH FOR EXAMPLE THE ASSESSING OFFICER WAS TO COME TO A CONCLUSION THAT EMBEZZLEMENT IN VAM AIRTEX HAS TAKEN PLACE BUT HE WAS NOT SURE AS TO WHO HAS D ONE THE EMBEZZLEMENT. OF COURSE EVEN THIS PROCEEDS ON THE ASSUMPTION THAT A N AMOUNT EMBEZZLED BY THE ASSESSEE FORM HIS EMPLOYER EVEN IF THAT BE SO WOU LD CONSTITUTE HIS INCOME NOTWITHSTANDING THE FACT THAT IN SUCH A SITUATION THE FACT OF UNLAWFUL GAINS ARE COUPLED WITH CORRESPONDING OBLIGATION TO RETURN THE SAME TO ITS RIGHTFUL OWNER. 13. WHEN WE PUT THIS PROPOSITION TO THE LEARNED DEP ARTMENTAL REPRESENTATIVE HE SUBMITTED THAT SINCE THE ASSESSI NG OFFICER HAS NOT ACCEPTED THAT ANY EMBEZZLEMENT HAS ACTUALLY TAKEN PLACE IN T HE CASE OF VAM AIRTEX HE HAS DISALLOWED THE SAME. HOWEVER IN THE EVENT OF THIS DISALLOWANCE BEING DELETED IN APPEAL AND THE APPELLATE AUTHORITIES COMING TO THE CONCLUSION THAT THE DEDUCTION IN RESPECT OF THE LOSS IS ADMISSIBLE AS A COROLLAR Y TO THAT FINDING IT HAS TO BE INFERRED THAT SOMEONE HAS BENEFITED FROM THE EMBEZZ LEMENT AND SINCE THE EMBEZZLEMENT ALLEGATION IS AGAINST THIS ASSESSEE T HE PROTECTIVE ADDITION HAS BEEN MADE IN THIS CASE. IT IS ON THIS BASIS THAT TH E LEARNED DR JUSTIFIED THE STAND OF THE ASSESSING OFFICER. 14. WE DO NOT THINK SUCH A COURSE OF ACTION IS PERM ISSIBLE IN LAW. AS WE HAVE NOTED ABOVE THE QUESTION OF INCOME BEING BROUGHT T O TAX IN THE HANDS OF AN ASSESSEE WHETHER ON PROTECTIVE BASIS OR ON SUBSTAN TIVE BASIS CAN ONLY ARISE WHEN THE FACT OF INCOME HAVING ARISEN IS ESTABLISHE D OR IS BEYOND DISPUTE. I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 13 OF 15 15. IT IS ALSO A FALLACIOUS ASSUMPTION THAT A DEDUC TION IN RESPECT OF AN EMBEZZLEMENT CAN ONLY BE ALLOWED WHEN EMBEZZLEMENT HAS ACTUALLY TAKEN PLACE AND SOMEONE HAS BENEFITED FROM SUCH AN EMBEZZLEMENT . AS PRINCIPLE OF CONSERVATISM ESSENTIALLY REQUIRES A DEDUCTION IN R ESPECT OF REASONABLY ANTICIPATED LOSS WHICH CAN BE QUANTIFIED ON A SCIE NTIFIC BASIS CAN BE ALLOWED AS DEDUCTION EVEN BEFORE SUCH A LOSS HAS ACTUALLY TAKE N PLACE. IN SUCH A SITUATION WHILE THE LOSS ON ACCOUNT OF EMBEZZLEMENT CAN INDEE D BE ALLOWED AS A DEDUCTION THERE CANNOT BE AN OCCASION FOR CORRESPO NDING BENEFIT TO ANYONE. THIS DICHOTOMY ARISES DUE TO TIMING DIFFERENCE IN A DEDUCTION BEING ALLOWED AND IN CORRESPONDING INCOME EVEN IF ANY BEING BROUGHT TO TAX IN THE HANDS OF THE BENEFICIARY. THERE CANNOT THEREFORE BE ANY LEGAL LY SUSTAINABLE PROTECTIVE ADDITIONS IN THE HANDS OF AN ASSESSEE ON THE BASIS OF A CORRESPONDING SUBSTANTIVE DISALLOWANCE BEING MADE TO THE INCOME O F ANOTHER ASSESSEE. 16. ON THE FACTS OF THIS CASE IT IS ALSO AN INCORR ECT ASSUMPTION THAT IN THE EVENT OF EMBEZZLEMENT HAVING ACTUALLY TAKEN PLACE I N VAM AIRTEX THE CORRESPONDING INCOME MUST BELONG TO THIS ASSESSEE. EVEN IF ONE IS TO REACH A CONCLUSION THAT EMBEZZLEMENT HAS TAKEN PLACE IN VAM AIRTEX THE ASSESSEE IS NOT THE ONLY PERSON NEEDLE OF SUSPICION POINTS TO. IT I S A MATTER OF RECORD THAT ALLEGATIONS HAVE BEEN RAISED AGAINST SUNIL SHAH ON E OF THE DIRECTORS OF VAM AIRTEX AND THE ASSESSING OFFICER HIMSELF HAS TAKEN NOTE OF THESE ALLEGATIONS. WHEN THE MATTER IS SUB JUDICE AND THERE ARE ALLEGATIONS AND COUNTER ALLEGATIONS BY THE ASSESSEE AGAINST THE VAM AIRTEX AS ALSO AGAI NST ITS DIRECTORS AND VICE VERSA IT IS PREMATURE TO ASSUME THAT THIS ASSESSEE COUL D BE THE ONLY BENEFICIARY OF THE CRIMINAL ACTIVITY OF EMBEZZLEMENT. 17. WE HAVE ALSO NOTED THAT THE ASSESSING OFFICER H AS NOT REJECTED THE ASSESSEES EXPLANATION THAT HE WAS OPERATING THE BA NK ACCOUNT CONCERNED AS A BENAMIDAR OF SUNIL SHAH A DIRECTOR OF VAM ARTEX B UT YET HELD TAXABILITY OF INCOME IN THE HANDS OF THE ASSESSEE THAT THE ASSESS EE COULD NOT HAVING BEEN I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 14 OF 15 DOING SO WITHOUT A CONSIDERATION. AS A COROLLARY TO THE APPROACH SO ADOPTED BY THE ASSESSING OFFICER AT BEST HAWALA COMMISSION CO ULD HAVE BEEN BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AND NOT THE ENTIRE AMO UNT OF BANK ON ACCOUNT OF ALLEGED BOGUS PURCHASES. HOWEVER THE ASSESSING OFF ICER HAS ADDED ENTIRE BANK CREDIT AS INCOME OF THE ASSESSE WHICH BY NO STRET CH OF LOGIC COULD BE ADDED TO THE INCOME OF THE ASSESSEE ON THE BASIS OF FINDINGS SO FAR. THERE IS THUS AN INHERENT CONTRADICTION IN THE APPROACH OF THE ASSES SING OFFICER. 18. IN ANY CASE THERE IS NOTHING MORE THAN AN ALLE GATION OF EMBEZZLEMENT BY THE ASSESSEE AND SUCH ALLEGATIONS BY ITSELF CANNO T BE LEGALLY SUSTAINABLE FOUNDATION FOR THE ADDITION BEING MADE IN THE HANDS OF THE ASSESSEE. 19. IN VIEW OF THE ABOVE DISCUSSIONS IN OUR CONSID ERED VIEW THE IMPUGNED ADDITIONS MADE ON PROTECTIVE BASIS BY THE ASSESSI NG OFFICER IN THE HANDS OF THE ASSESSEE WERE WHOLLY UNSUSTAINABLE IN LAW. NEITHER PROTECTIVE ASSESSMENT OF AN INCOME IN THE HANDS OF AN ASSESSEE IN RESPECT OF A CORRESPONDING SUBSTANTIVE DISALLOWANCE IN THE HANDS OF ANOTHER ASSESSEE IS P ERMISSIBLE UNDER THE SCHEME OF THE LAW NOR SUCH AN EXERCISE IS JUSTIFIED EVEN IF OTHERWISE PERMISSIBLE ON THE FACTS OF THIS CASE. WE THEREFORE APPROVE THE CONC LUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 20. AS WE PART WITH THESE APPEALS WE MAY MAKE IT C LEAR THAT OUR DECISION ON THESE APPEALS IS BASED ON OUR UNDERSTANDING ABOUT T HE SCHEME OF SUBSTANTIVE AND PROTECTIVE ASSESSMENT UNDER THE SCHEME OF THE I NCOME TAX LAW AND ANY OBSERVATIONS MADE IN THIS CONTEXT SHOULD NOT BE CON STRUED AS HAVING ANY BEARING ON THE DEDUCTIBILITY OF ALLEGED LOSS ON ACC OUNT OF EMBEZZLEMENT IN THE CASE OF VAM ARTEX PVT. LTD. I.T.A. NOS.: 1710 1711 1712 1713 406 407 AND 408/AHD/06 ASSESSMENT YEARS: 1993-94 1994-95 95-96 96-97 9 7-98 98-99 AND 99-00 PAGE 15 OF 15 21. IN THE RESULT THE APPEALS ARE DISMISSED. PRONO UNCED IN THE OPEN COURT TODAY ON 30 TH DAY OF APRIL 2015. SD/- SD/- S. S. GODARA PRAMOD KUM AR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD THE 30 TH DAY OF APRIL 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT/DEPUTY REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES AHMEDABAD