Shri Anand Kantilal Chokshi(HUF),, Surat v. The Income tax Officer,Ward-9(1),, Surat

ITA 4417/AHD/2007 | 2001-2002
Pronouncement Date: 30-09-2011 | Result: Dismissed

Appeal Details

RSA Number 441720514 RSA 2007
Assessee PAN AABHC6682F
Bench Ahmedabad
Appeal Number ITA 4417/AHD/2007
Duration Of Justice 3 year(s) 9 month(s) 16 day(s)
Appellant Shri Anand Kantilal Chokshi(HUF),, Surat
Respondent The Income tax Officer,Ward-9(1),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-03-2011
Date Of Final Hearing 07-08-2013
Next Hearing Date 07-08-2013
Assessment Year 2001-2002
Appeal Filed On 14-12-2007
Judgment Text
-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' [BEFORE SHRI MUKUL KUMAR SHRAWAT JM] [AND SHRI A K GARODIA ACCOUNTANT MEMBER] ITA NO.4416/AHD/2007 (ASSESSMENT YEAR:-2001-02) SHRI RAJNIKANT VRAJLAL CHOKSHI (HUF) A/53 -54 BHULABHAI PARK LAXMI NARAYAN ASHRAM ROAD SURAT V/S THE INCOME-TAX OFFICER WARD-8(4) SURAT PAN: AABHC 6682 F [APPELLANT] [RESPONDENT] ITA NO.4417/AHD/2007 (ASSESSMENT YEAR:-2001-02) A N D ITA NO.471/AHD/2009 (ASSESSMENT YEAR:-2002-03) SHRI ANAND KANTILAL CHOKSHI (HUF) 4- VISHWAKARMA SOCIETY VASTADEVDI ROAD SURAT V/S THE INCOME-TAX OFFICER WARD-9(1) SURAT PAN: AABHC 5183 M [APPELLANT] [RESPONDENT] ITA NO.4418/AHD/2007 (ASSESSMENT YEAR:-1999-2000) SHRI NAVINCHANDRA V CHOKSHI (HUF) 5 VISHWAKARMA SOCIETY VASTA DEVDI ROAD SURAT V/S THE INCOME-TAX OFFICER WARD-9(3) SURAT PAN: AABHC 5160 M [APPELLANT] [RESPONDENT] 2 ITA NOS.4416/AHD/2007 AN D OTHERS ITA NO.4419/AHD/2007 (ASSESSMENT YEAR:-2001-02) SHRI KAMLESH RAJNIKANT CHOKSHI (HUF) 5 VISHWAKARMA INDUSTRIAL ESTATE VASTA DEVDI ROAD SURAT V/S THE INCOME-TAX OFFICER WARD-8(4) SURAT PAN: AAEHK 2140 R [APPELLANT] [RESPONDENT] ITA NO.4420/AHD/2007 (ASSESSMENT YEAR:-2001-02) SHRI KANTILAL VAJULAL CHOKSHI (HUF) B-51 BHULABHAI PARK LAXMI NARAYAN ASHRAM ROAD KATARGAM SURAT V/S THE INCOME-TAX OFFICER WARD-9(2) SURAT PAN: [APPELLANT] [RESPONDENT] APPELLANTS BY :- NONE RESPONDENT BY:- SHRI A K PATEL SR. DR DATE OF HEARING:- 28-09-2011 DATE OF PRONOUNCEMENT:- 30-09-2011 O R D E R PER BENCH :- THESE ARE SIX APPEALS OF DIFFERENT TAX-PAYERS HAVI NG IDENTICAL FACTUAL BACKGROUND ARISING FROM THE ORDER S OF THE CIT(A)-V SURAT ALL PASSED IN OCTONER 2007 FOR AS SESSMENT YEAR (AY) 2001-02 EXCEPT THE CASE OF SHRI NAVINCHAN DRA V CHOKSHI (HUF) PERTAINING TO AY 1999-2000 ORDER DAT ED 13-10- 2007. THE GROUNDS RAISED BY THESE APPELLANTS ARE AL MOST 3 ITA NOS.4416/AHD/2007 AN D OTHERS IDENTICALLY WORDED AND FOR THE SAKE OF COMPLETENESS REPRODUCED FROM THE FILE OF SHRI RAJNIKANT V CHOKSHI (HUF) AS FOLLOWS:- [1] LEARNED I.T.O HAS ERRED IN LAW AND ON FACTS WH EN ORIGINAL RETURN SHOWING AN INCOME OF RS.49 840/ WAS ACCEPTED U/S 14 3(1) TO INTIMATE ACTION U/S 148 OF I.T. ACT 1961. [2] SOURCE OF INCOME SHOWN BY THE APPELLANT DURING THE YEAR UNDER APPEAL AND WHEN EXISTING IN ALL THE EARLIER YEARS AND WHEN QUANTUM OF INCOME AND ASSETS SHOWN BY THE APPELLANT IN THE EARLIER YEARS WHEN ACCEPTED LEARNED A.O. HAS NO JU RISDICTION TO INITIATE ACTION U/S 147 OF I.T. ACT ON THE VAGUE A ND UNCERTAIN GATHERED FROM PERSON WITHOUT ALLOWING CROSS OF SUCH PERSON. ACTION U/S 148 OF I.T. ACT TAKEN BY ITO BEING NOT LEGAL IS BAD IN LAW AND SUCH ACTION CONFIRMED BY CIT. (APPLS) IS NOT JUST AND LEGAL. [3] LEARNED A.O HAS ERRED IN LAW AND ON FACTS TO I NITIATE ACTION A/S 147 OF I.T ACT 1961. WHEN NO PROCEEDINGS WERE PENDI NG BEFORE HIM AND LEARNED CIT (APPLS)HAS ALSO ERRED IN CONFIR MING ACTION OF ITO. [4] LEARNED A.O HAS NO EVIDENCE TO TREAT THIS ASSE SSMENT AS PROTECTIVE AND NOT SUBSTANTIVE WHEN THERE IS NO EVI DENCE FOR SUCH CONCLUSION OF INCOME WHEN ASSESSED SUBSTANTIAL LY IN THE HANDS OF THE APPELLANT. LEARNED CIT(APPLS) HAS ALSO ERRED IN CONFIRMING LTOS ACTION. [5] WHEN INCOME SHOWS BY THE APPELLANT IN ORIGINAL RETURN IS ACCEPTED AO HAS ERRED IN LAW AND ON FACTS TO ADD A N MOUNT OF RS.15 19 940/- OPENING CAPITA CARRIED DOWN FROM THE EARLIER YEARS IS WRONGLY ADDED AS INCOME OF THE YEAR. [6] LEARNED AO HAS ERRED IN LAW AND ON FACTS TO PAS S ASSESSMENT VIOLATING PRINCIPLE OF NATURAL JUSTICE. LEANED CIT( APPS) HAS ALSO ERRED IN CONFIRMING ITOS ACTION. 2 WE HAVE ALSO NOTED THAT IN THE CASE OF SHRI RAJNI KANT V CHOKSHI (HUF) AN ADDITIONAL GROUND HAS ALSO BEEN R AISED REPRODUCED BELOW:- 4 ITA NOS.4416/AHD/2007 AN D OTHERS THE AO HAS ERRED IN LAW AND FACTS TO SERVE A NOTI CE U/S 148 OF THE ACT. LR. CIT(A)-V SURAT HAS ALSO ERRED IN NOT CONS IDERING THIS VITAL ISSUE ESPECIALLY WHEN THE SAID GROUND IS RAISED AND ARGUED BEFORE HIM AND THE APPELLANT HAS ALSO FILED AFFIDAVIT CONFIRMI NG THIS FACT. 3 THESE APPELLANTS ARE NOT SERIOUS IN PURSUING THEI R RESPECTIVE APPEALS. EARLIER DUE TO NON-APPEARANCE AN EX-PARTE ORDER WAS PASSED BY THE ITAT AHMEDABAD BENCH-D BEARING ITA NO S.4416 4417/AHD/2007 471/AHD/2009 4418 4419 & 4420/AHD/ 2007 ORDER DATED 28-03-2011. ALL THESE APPEALS WERE DISM ISSED IN LIMINE ON THE GROUND OF NON-PROSECUTION FROM THE SI DE OF THE APPELLANTS. LATER ON VIDE APPLICATIONS U/S 254(2) IT WAS PLEADED TO RECALL THE SAID ORDER. ACCEPTING THE REQUEST OF THE APPLICANTS VIDE AN ORDER DATED 29-07-2011 IN MA NOS.66 TO 70/A HD/2011 [ARISING OUT OF ITA NOS.4416 4417/AHD/2007 471/AH D/2009 4418 4419 & 4420/AHD/2007] THE AFOREMENTIONED EX- PARTE ORDER WAS RECALLED AS PER THE FOLLOWING OBSERVATIONS:- 4. AFTER HEARING THE PARTIES AND CONSIDERING THE F ACTS OF THE CASE AS ALSO THE AFORESAID REQUEST FOR ADJOURNMENT FILED ON 28.3.2011 AT 5.10 PM WE ARE OF THE OPINION THAT THE DISPOSAL OF THES E APPEALS WAS IN VIOLATION OF THE PRINCIPLE OF 'AUDI ALTERAM PARTEM' . THE PRAYER IN SUCH A SITUATION FOR REHEARING THESE APPEALS IS NOT A PR AYER TO REVIEW ITS EARLIER DECISION RATHER IT IS TO SET ASIDE AN EX P ARTE ORDER AND FOR AFFORDING AN OPPORTUNITY OF BEING HEARD. THIS POWER IS INHERENT IN THE TRIBUNAL. POWER TO RECALL AN ORDER IS PRESCRIBED IN TERMS OF R. 24 OF THE ITAT RULES 1963 AND THAT TOO ONLY IN CASES WHERE THE ASSESSEE SHOWS THAT IT HAD A REASONABLE CAUSE FOR BEING ABSE NT AT A TIME WHEN THE APPEAL WAS TAKEN UP AND WAS DECIDED EX PARTE. I N THIS CONNECTION HON'BLE GAUHATI HIGH COURT IN THE CASE OF RAJENDRA PRASAD BORAH VS ITAT AND OTHERS 302 ITR 243 RELYING UPON THE DECI SION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS S.CHENNIAPPA MU DDALIAR 74 ITR 5 ITA NOS.4416/AHD/2007 AN D OTHERS 41 AND THEIR OWN DECISION IN THE ASSAM TRIBUNE VS. CIT 285 ITR 452 HELD THAT 'APART FROM THE FACT THAT SECTION 254 (EARLIER SEC TION 33) OF THE ACT MAKES IT INCUMBENT ON THE LEARNED TRIBUNAL TO D ISPOSE OF THE APPEALS ON MERITS AS HAS BEEN ENUNCIATED BY THE APEX COURT IN CIT VS S.CHENNIAPPA MUDALIAR 74 ITR 41 RULE 24 AS IT STANDS PER SE DOES NOT EMPOWER THE LEARNED TRIBUNA L TO DISMISS AN APPEAL FOR DEFAULT IN THE ABSENCE OF THE APPELLA NT. THE LEARNED TRIBUNAL'S RELIANCE ( ON THE DECISION OF THE INCOME- TAX APPELLATE TRIBUNAL DELHI RENDERED IN CIT VS. MULTIPLAN INDIA(P) LTD. 38 ITD 320(DELHI) IS APPARENTLY MISP LACED IN THE TEETH OF THE DECISION OF THE APEX COURT IN CIT VS S .CHENNIAPPA MUDALIAR 74 ITR 41.' 5. IN THE LIGHT OF AFORESAID DECISION OF HON'BLE GA UHATI HIGH COURT AND REASONS GIVEN BY THE AFORESAID APPLICANTS WE R ECALL THE IMPUGNED ORDER DATED ORDER DATED 28.3.2011 OF THE ITAT AND D IRECT THE REGISTRY TO FIX THE MATTER FOR HEARING ON 28.9.2011. BOTH TH E PARTIES WERE INFORMED IN THE OPEN COURT ACCORDINGLY. 3.1 IT IS EVIDENT FROM THE RECALLED ORDER DATED 29- 07-2011 THE RELEVANT PORTION REPRODUCED ABOVE THAT THE DATE OF HEARING WAS GRANTED ON 28-09-2011 AND BOTH THE PARTIES WERE INF ORMED IN THE OPEN COURT. EVEN TO-DAY I.E. ON 28-09-2011 NO ON E HAS APPEARED FROM THE SIDE OF THE APPELLANTS THOUGH THI S DATE WAS DULY COMMUNICATED IN THE COURT WHEN THE SAID ORDER WAS PRONOUNCED. WE HAVE ALSO NOTED ON PERUSAL OF PARA- 5 OF THE MISCELLANEOUS PETITIONS DATED 24-04-2011 THAT THE A PPLICANTS HAVE PLEADED TO ACCORD AT-LEAST ONE MORE OPPORTUNIT Y TO PRESENT THEIR RESPECTIVE APPEALS. EVEN AFTER THE SAID ASSER TIONS IT IS STRANGE THAT NEITHER THE APPELLANTS NOR THEIR REPRE SENTATIVE TODAY APPEARED WHO HAD APPEARED TO REPRESENT THOSE MISCEL LANEOUS PETITIONS AND ON WHOSE ASSURANCE THOSE APPEALS WER E RECALLED 6 ITA NOS.4416/AHD/2007 AN D OTHERS AND AGAIN FIXED FOR HEARING SO THAT THE GRIEVANCE O F VIOLATION OF PRINCIPLES OF NATURAL JUSTICE SHOULD BE REDRESSED. IT IS ALSO WORTH TO MENTION THAT ONE OF US I.E. JUDICIAL MEMBER HA PPENED TO BE ONE OF THE CO-SIGNATORIES IN BOTH THE ORDERS. 3.2 THE TRIBUNAL IS GOVERNED BY THE RULES KNOWN AS APPELLATE TRIBUNAL RULES 1963 AND IN THE ABOVE CONTEXT RULE 24 IS WORTH REPRODUCED:- RULE-24 - WHERE ON THE DAY FIXED FOR HEARING OR O N ANY OTHER DATE TO WHICH THE HEARING MAY BE ADJOURNED THE APPELLAN T DOES NOT APPEAR IN PERSON OR THROUGH AN AUTHORIZED REPRESENTATIVE WHEN THE APPEAL IS CALLED ON FOR HEA RING THE TRIBUNAL MAY DISPOSE OF THE APPEAL ON MERITS AF TER HEARING THE RESPONDENT: PROVIDED THAT WHERE AN APPEAL HAS BEEN DISPOSED OF AS PROVIDED ABOVE AND THE APPELLANT APPEARS AFTERWARDS AND SATISFIES THE TRIBUNAL THAT THERE WAS SUFFICIENT CAUSE FOR HIS NO N- APPEARANCE WHEN THE APPEAL WAS CALLED ON FOR HEARI NG THE TRIBUNAL SHALL MAKE AN ORDER SETTING ASIDE THE EX PART ORDER AND RESTORING THE APPEAL. THE SAID RULE HAS ALSO BEEN CONSIDERED BY THE HONB LE GAUHATI HIGH COURT IN THE CASE OF RAJENDRA PRASAD BORAH VS. ITAT AND OTHERS [302 ITR 243] AND THEREUPON DIRECTED THE TRI BUNAL TO DISPOSE OF THE APPEALS ON MERITS. RESPECTFULLY FOLL OWING THE SAID PRECEDENT WE HEREIN-BELOW PROCEED TO DECIDE THESE APPEALS ON MERITS. 4 FROM THE ORDERS OF THE REVENUE AUTHORITIES WE HAV E NOTED THAT A SURVEY U/S 133A WAS CARRIED OUT IN THE CASE OF SHRI PANKAJ 7 ITA NOS.4416/AHD/2007 AN D OTHERS DANAWALA CA BY DDIT (INV.)-II SURAT ON 11-03-2005 . THE SAID CA SHRI PANKAJ DANAWALA HAPPENED TO BE A PRACTICING CHARTERED ACCOUNTANT. IT WAS FOUND THAT HE HAD CREATED A LARG E NUMBER OF CAPITAL BUILT-UP CASES. THE FACTS ABOUT THE MODUS OPERANDI OF THE SAID CA HAVE BEEN NOTED BY THE LEARNED CIT(A) I N THE FOLLOWING MANNER:- THE BRIEF HISTORY OF THE CASE IS THAT A SURVEY U/S 133A OF THE ACT 1961 WAS CARRIED OUT IN THE CASE OF SHRI PANKAJ DAN AWALA CA BY THE DDIT (INV.)-II SURAT ON 11.03.2005. SHRI PANKAJ DA NAWALA IS A PRACTICING CHATTERED ACCOUNTANT. IT WAS FOUND TO HA VE CREATEDJARGE NUMBER OF CAPITAL BUILD UP CASES. THE MODUS OPERAND I ARE FRAUDULENT AND THEY ARE OF MAINLY TWO CATEGORIES. IN THE FIRST CATEGORY IS INFLATION OF OPENING OF CAPITAL SUBSTANTIALLY FOR EXAMPLE IN THE CLOSING BALANCE OF THE F.Y. ENDING 31.03.2001 IS RS.1 LAC THE OPEN ING CAPITAL BALANCE OF THE BEGINNING OF YEAR I.E. 01.04.2001 IS RS.16 L ACS. IN THIS WAY SHRI PANKAJ DANAWALA CREATED BOGUS CAPITAL IN THE C ASE OF HIS VARIOUS CLIENTS GROUP. IN THE SECOND CATEGORY SHRI PANKAJ DANAWALA C.A. PREPARES PROFIT AND LOSS ACCOUNT CAPITAL ACCOUNT AND BALANCE SHEET WITH EXEMPT INCOME VIZ. AGRICULTURE INCOME SMALL GIFTS AND INC OME FROM INTEREST BROKERAGE COMMISSION ETC. FOR MANY YEARS THUS CR EATING SUBSTANTIAL CAPITAL AND FINALLY HE FILES RETURN AND PAYING MINI MUM AMOUNT OF TAX. IN MOST OF SUCH CASES THIS INCOME RETURNED IS BELO W TAXABLE LIMIT. IN THIS WAY SHRI PANKAJ DANAWALA CREATED HUGE CAPITAL THROUGH FICTITIOUS INCOME IN THE EARLIER YEARS AND THE ACCUMULATED CAP ITAL BALANCE WAS INTRODUCED IN THE CAPITAL ACCOUNT LATER ON AT A SIN GLE STROKE WHILE FILING THE RETURN OF INCOME FOR THE FIRST TIME BEFO RE THE DEPARTMENT. DURING THE SURVEY STATEMENT RECORDED FROM SHRI PAN KAJ DANAWALA CATEGORICALLY ADMITTED THAT BOGUS CAPITAL WAS CREAT ED BY HIM IN THE MANNER AS STATED ABOVE FOR THE BENEFIT OF HIS VARIO US CLIENT GROUPS. AGAINST THE BOGUS CAPITAL SOME FICTITIOUS ASSETS L IKE LOANS AND ADVANCES/SUNDRY DEBTOR/BOGUS INVESTMENT IN PLOTS/FL ATS WERE CREATED IN THE ORIGINATING ACCOUNT. 8 ITA NOS.4416/AHD/2007 AN D OTHERS LATER ON IN THE LATER YEARS ASSETS ARE LIQUIDATED AND PASSED ON TO BENEFICIARIES. THE UNACCOUNTED INCOME OF THE BENEFI CIARY IS BROUGHT IN TO BOOKS THROUGH THIS MODUS OPERANDI. 4.2 IN THE CASES OF THESE APPELLANTS IT WAS GATHERE D THAT THEY WERE PARTIES OF THE SAID BOGUS OPERATIONS AND IN TH IS REGARD THE OBSERVATIONS WERE AS FOLLOWS:- IN THE CASE OF ASSESSEE FOR A.Y. 2001-02 IT WAS GA THERED THAT I THE CAPITAL OF ASSESSEE WAS INCREASED BY INTRODUCING IN TEREST ON LOAN AND ADVANCES GIVEN TO VARIOUS PARTIES WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. AFTER RECORDING THE REASONS U/S. 147 OF THE I. T. ACT A NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE. A NOTIC E U/S. 142(1) WAS ALSO ISSUED ALONG WITH A LETTER FOR FILING THE RETU RN IN RESPONSE TO THE NOTICE ISSUED U/S. 148 OF THE IT. ACT. NOBODY ATTEN DED NOR COMPLIED IN RESPONSE TO THE NOTICE. THE ASSESSEE FAILED TO PROV E THE GENUINENESS OF ADVANCES. THE ASSESSEE WAS ASKED TO PROVE THE GENUI NENESS OF THE ADVANCES/LOANS ETC. HENCE INCOME CLAIMED DURING TH E YEAR IS ACCEPTED BUT THE SOURCE OF INCOME CLAIMED WAS NOT ACCEPTED B Y THE ASSESSING OFFICER. DURING THE YEAR UNDER CONSIDERATION IN TH E CAPITAL ACCOUNT FILED WITH THE RETURN OF INCOME ASSESSEE HAS SHOWN OPENING BALANCE OF RS.14 17 099/- AND CLAIMED TO HAVE RECEIVED INTERES T OF RS.49 840/- ON ABOVE AMOUNT TOTALLING TO RS.15 19 930/-. SINCE THE GENUINENESS IDENTITY AND SOURCE OF THE CAPITAL IS NOT PROVED T HE ENTIRE AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE FOR THE YEAR UN DER CONSIDERATION WITH INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)( C) OF THE I. T. ACT 1961 BY THE ASSESSING OFFICER. 4.3 SINCE THESE APPELLANTS ARE THE PARTIES OF THE S AID MISCONDUCT OF MR. PANKAJ DANAWALA THEREFORE THE ACTION BY TH E REVENUE AUTHORITIES APPEARS TO BE CORRECT. FOR REFERENCE T HE OBSERVATIONS OF THE LEARNED CIT(A) ARE HEREBY REPRODUCED AS FOLL OWS:- IT IS AN UNDISPUTED FACT THAT THE ONLY INCOME SHO WN BY THE APPELLANT IS AN INTEREST INCOME FOR THE CURRENT YEAR. THE CUR RENT YEAR IS ALSO THE FIRST YEAR WHEN THE RETURN HAS BEEN FILED. IN THIS YEAR THE OPENING BALANCE OF CAPITAL IS SHOWN AT RS.1470099. IT IS CL AIMED TO BE 9 ITA NOS.4416/AHD/2007 AN D OTHERS REPRESENTING ACCUMULATION OF PAST EARNINGS FOR WHIC H NO BOOKS OF ACCOUNTS WERE KEPT. THE INTEREST INCOME DISCLOSED I S CLAIMED TO HAVE BEEN RECEIVED FROM VARIOUS PARTIES AND THE SAME HAS BEEN SHOWN IN THE RETURN OF INCOME. THIS CLEARLY ESTABLISHES THAT ACT UAL MONEY HAS COME IN THE BOOKS OF ACCOUNTS AND THERE IS AN INTEREST L INK BACK TO THE APPELLANT. THE BENEFIT OF BRINGING THE CAPITAL IN T HE BOOKS HAVE STARTED TO FLOW BACK TO THE APPELLANT. SOY THE AMOUNT IS NO T ANY FICTIONAL ENTRY THE REAL FUNDS EXIST WHICH HAVE BEEN APPLIED / LOAN ED OR INVESTED. NOW THE NEXT MOOT QUESTION OF RELEVANCE IS WHETHER I THE MONEY ACTUALLY HAS BEEN EARNED BY THE APPELLANT OR SOME O NE ELSE HAS INTRODUCED UNACCOUNTED MONEY. HERE THE DISPUTE BETW EEN THE APPELLANT AND AO BEGINS. 4.4 SINCE THE ASSESSEES HAVE NOT PLACED ON RECORD T HE REQUISITE INFORMATION ABOUT THE IDENTITY GENUINENESS AND THE SOURCE AND WHATEVER WAS FOUND ON RECORD HAPPENED TO BE BOGUS I N NATURE THEREFORE ON MERITS WE HEREBY DISMISS THE GROUNDS RAISED BY THE ASSESSEES. 5 THE ASSESSEE HAS ALSO CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENTS AND IN THIS REGARD IT IS VERY MUCH C LEAR FROM THE ORDER OF THE AO [FOR REF. ASSESSMENT ORDER OF SHRI RAJNIKANT V CHOKSHI (HUF) PASSED U/S 144 R.W.S. 147 DATED 20-1 1-2006] THAT THE ASSESSEE WAS DULY COMMUNICATED ABOUT THE RE-ASS ESSMENT PROCEEDINGS. THE AO HAS ALSO RECORDED THE REASONS A S PRESCRIBED U/S 147 AND THEREUPON ISSUED PRESCRIBED NOTICE U/S 148 OF THE ACT WHICH WERE DULY SERVED ON THE ASSESSEES. THE FIRST APPELLATE AUTHORITY HAS CONSIDERED THIS ASPECT AT LENGTH AND THEREAFTER HELD AS UNDER:- I HAVE GONE THROUGH THE SUBMISSION FILED BY THE AS SESSEE DURING THE APPELLATE PROCEEDINGS AND AFTER DISCUSSIONS HELD WI TH THE A.R. OF THE ASSESSEE. THE FIRST CONTENTION OF THE AR REGARDING ISSUANCE OF NOTICE 10 ITA NOS.4416/AHD/2007 A ND OTHERS U/S 148 THE CONTENTIONS OF THE AR CANNOT BE ACCEPT ED. THE PREMISES OF SHRI PANKAJ DANAWALA A CHARTERED ACCOUNTANT WA S SURVEYED U/S. 133A OF THE I. T. ACT. IN COURSE OF THE SURVEY IT WAS FOUND THAT SHRI DANAWALA HAD FILED RETURNS OF INCOME IN THE NAMES O F SEVERAL PERSONS INCLUDING HIS CLIENTS WHERE HE HAD INTRODUCED HUGE AMOUNTS OF BOGUS CAPITAL. THE METHODOLOGY ADOPTED WAS ACCEPTED IN HI S STATEMENT RECORDED IN COURSE OF THE SURVEY WHEN CERTAIN PAPE RS RELATING TO THE ASSESSEE WERE ALSO FOUND. THE AO THEREFORE HAD SUF FICIENT REASON TO BELIEVE THAT INCOME OF THE ASSESSEE FOR THE YEAR H AD ESCAPED ASSESSMENT. AFTER THIS CAME TO THE NOTICE OF THE AO HE HAD NO OTHER OPTION BUT TO INITIATE PROCEEDINGS U/S. 147. THEREF ORE I DO NOT ACCEPT THE CONTENTION OF THE AR THAT THERE WAS NO EVIDENCE ON RECORD AS FAR AS THE ASSESSEE WAS CONCERNED AND THAT THE AO'S ACTIO N WAS BASED PURELY ON SUSPICION AND SURMISES. THE SURVEY OF THE PREMISES OF SHRI DANAWALA HAD BECOME COMMON KNOWLEDGE. THE FINDINGS IN COURSE OF THE SURVEY HAD ALSO BECOME KNOWN TO ALL ESPECIALLY HIS OWN CLIENTS OF WHOM THE ASSESSEE WAS ONE. THEREFORE THE ASSESSEE WAS QUITE AWARE OF THE GROUNDS ON WHICH THE ASSESSMENT WAS BEING RE OPENED. THE REASONS FOR REOPENING WERE CLEARLY RECORDED IN THE FILE. I DO NOT ACCEPT THE AR'S CONTENTION THAT THE RECORDED REASONS OUGHT TO HAVE BEEN COMMUNICATED ALONG WITH THE NOTICE U/S. 148 SINCE THIS IS NOT A REQUIREMENT UNDER THE ACT. IN THE CASE OF ADDL. CIT VS. LAXMI AGENTS LTD 101 ITR 441 GUJ IT HAS BEEN HELD THAT INFORMATI ON WHICH IS MADE THE FOUNDATION FOR REASSESSMENT MAY WELL BE OBTAINE D FROM MATERIAL ON RECORD WHICH HE HAD NOT APPLIED HIS MIND TO DURI NG ORIGINAL ASSESSMENT PROCEEDINGS. SIMILARLY IN CASE OF SHIVAL IKA CO-OP.HSG. SOC. LTD VS. ITO (DELHI) SMC 391 IT HAS BEEN LAID D OWN IN FOLLOWING MANNER ANSWERING THE RAISED QUESTIONS. WHETHER WHOLE EXISTENCE OF REASONS TO BELIEVE AND R ATIONAL NEXUS OF THOSE REASONS WITH FORMULATIONS OF BELIEF THAT INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT-CAN BE EXAMINED IN APPEL LATE PROCEEDINGS. ADEQUACY OR SUFFICIENCY OF REASONS TO BELIEVE CAN NOT BE CALLED IN QUESTION-HELD YES. (2) WHETHER WHERE A . O. HAS BONAFIDE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND SUCH BELIEF IS BASED ON RELE VANT MATERIAL VALIDITY OF INITIATION OF PROCEEDINGS U/S. 147 CAN NOT BE CHALLENGED. HELD-YES. . IF THE ASSESSING OFFICER HONESTLY COMES TO A CONCLU SION THAT A MISTAKE HAS BEEN MADE IT MATTERS NOTHING SO FAR AS HIS JUR ISDICTION TO INITIATE 11 ITA NOS.4416/AHD/2007 A ND OTHERS THE PROCEEDINGS UNDER SECTION 147 IS CONCERNED THA T HE MAY HAVE COME TO AN ERRONEOUS CONCLUSION WHETHER ON LAW OR O N FACTS. THE COURT WILL NOT IN EXERCISE OF ITS EXTRAORDINARY JUR ISDICTION UNDER THE CONSTITUTION EXAMINE THE SUFFICIENCY OF THE REASON WHICH LED THE ASSESSING OFFICER TO BELIEVE THAT THE INCOME HAD ES CAPED ASSESSMENT AS HELD IN236 ITR 832 (GUJ) PRAFUL CHUNILAL PATEL ( A.Y. 1991-92) AFTER THE AMENDMENT THE ONLY RESTRICTION PUT IN TH E SECTION IS 'REASON TO BELIEVE'. THAT REASON HAS TO BE A REASON OF A PR UDENT PERSON. THAT REASON SHOULD BE FAIR AND NOT NECESSARILY DUE TO FA ILURE OF THE ASSESSEE TO DISCLOSE FULLY OR PARTIALLY SOME MATERIAL FACTS RELEVANT FOR ASSESSMENT.. THUS IN THE LIGHT OF ABOVE DISCUSSION AND TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CA SE I AM OF THE VIEW THAT THE AO'S INITIATION OF PROCEEDINGS U/S. 147 OF THE I. T. ACT ON THE BASIS OF SPECIFIC INFORMATION WAS TOTALLY JUSTIFIED . 6 AFTER HEARING THE SUBMISSIONS OF THE LEARNED SENI OR DR MR. A K PATEL PRESENT TODAY DURING THE COURSE OF HEARI NG WE ARE OF THE VIEW THAT THERE IS NO FORCE IN THE GROUNDS RAIS ED BY THESE APPELLANTS. WE HEREBY CONFIRM THE FINDINGS OF THE F IRST APPELLATE AUTHORITY AND THESE GROUNDS ARE HEREBY REJECTED. I N THIS MANNER ALL THE GROUNDS ARE REJECTED. 7 IN THE RESULT ALL THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 30-09-2011 SD/- SD/- (A K GARODIA) ACCOUNTANT MEMBER (MUKUL KR. SHRAWAT) JUDICIAL MEMBER DATE : 30-09-2011 COPY OF THE ORDER FORWARDED TO: 12 ITA NOS.4416/AHD/2007 A ND OTHERS 1. THE APPELLANT 2. THE RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR ITAT AHMEDABAD BENCH-D AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD