Shri Devendra V.Mehta, Ahmedabad v. The ACIT.,Circle-11,, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI MUKUL SHRAWAT JM & SHRI A N PAHUJA AM ITA NO.723/AHD/2009 (ASSESSMENT YEAR:-1995-96) SHRI DEVENDRA V MEHTA 299 NEW CLOTH MARKET O/S RAIPUR GATE AHMEDABAD V/S ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-11 NARAYAN CHAMBERS ASHRAM ROAD AHMEDABAD PAN: AAPPM 8389 M [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI R T SHAH AR REVENUE BY:- SHRI DILEEP KUMAR DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DAT ED 25-02-2009 OF THE LD. CIT(APPEALS)-XVI AHMEDABAD F OR THE ASSESSMENT YEAR (AY) 1995-96 RAISES THE FOLLOWING GROUNDS: 1 IN THE FACTS OF THE CASE AND IN LAW BUSINESS LOS S OF RS.237082/- BE ALLOWED. 2 IN THE FACTS OF THE CASE AND IN LAW TELESCOPING CLA IMED TO THE EXTENT OF RS.975487/- IN PLACE OF RS.750000/- ALLOWED BY CIT( A) BE ALLOWED AND ADDITION RETAINED AT RS.975487 750000 = RS.225487 /- BE DELETED . 2. FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT A SEARCH U/S 132 OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERR ED TO AS THE ACT] WAS CONDUCTED IN THE PREMISES OF THE ASSE SSEE AND HIS BROTHER ON 14-09-1994 WHEN JEWELLERY CASH AND SHA RES WERE SEIZED. THE ASSESSEE IS A PROPRIETOR OF M/S DEVRAJ TEXTILE & A PARTNER IN M/S DEVENDRAKUMAR VRUNDAVANDAS & M/S RAJ PAL CO.. SINCE THE ASSESSEE DID NOT FILE ANY RETURN WITHIN THE TI ME STIPULATED U/S 139(1) OF THE ACT A NOTICE U/S 148 OF THE ACT WAS SERVED UPON T HE ASSESSEE ON 11.8.1997. IN RESPONSE THE ASSESSEE FILED RETURN DECLARING LOSS OF RS.2 32 342/- ON 07-10-1998.IN THE SAID RETURN THE ASSESSEE DID NO T REFLECT ANY INCOME ON THE BASIS OF SEIZED DOCUMENTS AND VALUABL ES. SUBSEQUENTLY ASSESSMENT WAS COMPLETED U/S 143(3) O F THE ACT ON ITA N O.723/AHD/09 2 31-03-2000 DETERMINING INCOME OF RS.11 34 080/-. I NTER ALIA THE FOLLOWING ADDITIONS WERE MADE:- [I] UNEXPLAINED INVESTMENT IN THE RS.5 12 833/- GOLD ORNAMENTS & JEWELLERY [II] UNEXPLAINED CASH RS.2 00 000/- [III] UNEXPLAINED INVESTMENT IN SHARES RS.3 49 51 3/- [IV] UNEXPLAINED INVESTMENT IN HOUSEHOLD ARTICLES RS. 60 000/- [V] ON MONEY PAID FOR PURCHASE OF CAR RS. 12 000 /- 2.1. ON APPEAL THE LEARNED CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER [AO IN SHORT]. ON FURTHER APPEAL THE ITAT VIDE THEIR ORDER DATED 21-04-2006 IN ITA NO.2477/AHD/200 0 SET ASIDE THE ISSUE OF CLAIM OF BUSINESS LOSS AS ALSO CLAIM FOR SET OFF OF INCOME AGAINST THE GP ADDITION MADE IN THE ASSESSMENTS OF FIRM TO THE EXTENT OF SHARE OF THE ASSESSEE IN THE FIRMS . TH E GROUNDS RAISED BEFORE THE ITAT ON THESE ISSUES BY THE ASSESSEE WER E AS UNDER:- 1. BUSINESS LOSS OF RS.2 37 332/- CLAIMED BE ALLOWED IN ASSESSMENT YEAR 1994-95(U/S143(3) AND IN ASSESSMENT YEAR 1996-97 . 2. FOLLOWING ADDITIONS MADE BE ALLOWED TELESCOPIN G AGAINST APPELLANTS SHARE INCOME INCLUSIVE OF SHARE OF INTANGIBLE ADDIT IONS MADE IN PARTNERSHIP FIRMS VIZ. (1) M/S DEVENDRAKUMAR VRUNDAVANDAS (2) M /S RAJPAL & CO. AND (3) M/S IN APPELLANTS OWN ASSESSMENT IN EARLIER YEARS I .E. FOR ASSESSMENT YEARS 1991-92 TO 1995-96. (1) UNEXPLAINED INVESTMENT IN GOLD AND JEWELLERY ORNAMENTS OUT OF RS.512833 366240 (2) UNEXPLAINED CASH 200000 (3) UNEXPLAINED INV. IN SHARES / F.D. 349513 (4) UNEXPLAINED INV. IN HOUSEHOLD ARTICLES 600 00 ----------- 975753 ADDITION OF RS.975753/- BE DELETED. ITA N O.723/AHD/09 3 2.2 AFTER RECEIPT OF ORDER OF THE ITAT THE AO NOT ICED THAT THE TRIBUNAL DIRECTED ON THE FIRST ISSUE IN THE FOLLOW ING TERMS:- THE LIMITED ISSUE TO BE EXAMINED WHETHER THE BORRO WED FUNDS WERE UTILIZED FOR THE PURPOSE OF BUSINESS OR NOT .. TO A QUERY BY THE AO THE ASSESSEE REPLIED VIDE LET TER DATED 20-03- 2007 AS UNDER :- 'WITH REGARD TO PARA 2 OF YOUR NOTICE/LETTER DID. 1 9.3.2007 WE INVITE ATTENTION TO ASSESSEE'S BALANCE SHEETS FILED YEAR T O YEAR IN THE TRADE NAME 'DEVRAJ TEXTILES'. THE BORROWED FUNDS I.E. LIABILIT IES REPRESENT CLOSING STOCK. WE ALSO INVITE ATTENTION TO RECORDS OF ITAY- 1996-97 TILL THEN EVEN BUSINESS CONTINUED. WE INVITE ATTENTION TO PARA 5 O F IT AT ORDER. THE DEPARTMENT'S CASE FOR DISALLOWANCE OF RS.2 37 332/- WAS ONLY ON THE GROUND THAT THERE IS NO BUSINESS DONE AND THEREFORE BUSINESS EXPENDITURE IS NOT ALLOWABLE. IN FACT AS PER DEPARTMENT'S RECOR DS VIDE ORDER U/S. 143(3) FOR A.Y. 1994-95 AND IN A.Y. 1996-97 IT IS ACCEPTED THAT BUSINESS CONTINUED AND EXPENSES ALLOWED.' 2.3. AFTER CONSIDERING THE ABOVE REPLY OF THE ASS ESSEE THE AO CONCLUDED AS UNDER - I HAVE CONSIDERED THE ISSUE CAREFULLY AND PERUSED THE SUBMISSIONS FILED BY THE ASSESSEE IN THIS CONNECTION. THE ASSESSEE HA S BEEN REITERATING THE SAME FACTS WHICH HAD ALREADY BEEN TAKEN BEFORE THE THEN ASSESSING OFFICER AND APPELLATE AUTHORITIES. THE ASSESSEE HAS NOT BEE N ABLE TO FURNISH EVIDENCES OF UTILIZATION OF THE BORROWED FUNDS FOR THE PURPOSE OF BUSINESS DESPITE OF GIVING HIM MANY OPPORTUNITIES. MERELY SA YING THAT THE POSITION IS CLEAR FROM THE RECORDS WILL NOT SUFFICE THAT IN THE PRESENT SET OF CIRCUMSTANCES. THE ASSESSEE HAS FAILED TO FURNISH A NY EVIDENCES IN SUPPORT OF HIS CLAIM WHICH MAY HAVE STRENGTHENED HI S VIEW POINT. FURTHER DURING THE COURSE OF HEARINGS HE HAS ACCEPTED THAT HE IS NOT ABLE TO FURNISH ANY EVIDENCE IN THIS REGARD. IN ABOVE NARRA TED FACTS AND IN THE CIRCUMSTANCES THE CLAIM O THE ASSESSEE IS DENIED. 3. ON APPEAL THE LD. CIT(A) UPHELD THE FINDINGS O F THE AO AS UNDER:- BEFORE ME THE APPELLANT HIMSELF & SHRI R T SHAH A UTHORIZED REPRESENTATIVE ATTENDED. THEY WERE ASKED TO FURNISH THE INVENTORY OF THE STOCK FOUND AT THE TIME OF SEARCH IN THE CASE OF D EVRAJ TEXTILES. IT WAS ITA N O.723/AHD/09 4 STATED THAT NO INVENTORY OF STOCK OF DEVRAJ TEXTILE WAS TAKEN BY THE SEARCH PARTY. I FIND THAT IN FACT NO STOCK WAS AVAILABLE I N THE CASE OF DEVRAJ TEXTILES AS ON THE DATE OF SEARCH. HAD THERE BEEN A NY STOCK THE SEARCH PARTY MUST HAVE TAKEN THE INVENTORY THEREOF. THIS S HOWS THAT IN FACT THERE WAS NO STOCK BUT JUST TO CLAIM THE BENEFIT OF SET O FF THE APPELLANT HAS SHOWN FICTITIOUS STOCK IN THE BOOKS. FURTHER THE D IRECTIONS OF ITAT WAS TO SHOW FROM THE BANK BOOK & BANK STATEMENT AS TO WHET HER THE BORROWED FUNDS WERE UTILIZED FOR THE PURPOSE OF BUSINESS OR NOT. NO INFORMATION ON THIS POINT WAS EITHER SUBMITTED BEFORE THE AO OR BE FORE ME. THEREFORE I HOLD THAT THE INTEREST EXPENSES ARE NOT PROVED TO B E INCURRED FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. THIS GROUND I S ACCORDINGLY DISMISSED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE MERELY REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A) WHILE THE LD. DR SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE TRIBUNAL VIDE THEIR ORDE R DATED 21.4.2006 IN ITA NO. 2477/AHD./2000 OBSERVED THAT LOSS CLAIME D BY THE ASSESSEE REPRESENTED THE INTEREST CLAIM AND THEREF ORE RESTORED THE LIMITED ISSUE TO THE FILE OF THE AO WITH THE DIREC TIONS TO EXAMINE AS TO WHETHER OR NOT BORROWED FUNDS HAD BEEN UTILIZED FOR THE PURPOSE OF BUSINESS AND THEREAFTER DECIDE THE ISSUE AFRES H. EVEN AFTER A NUMBER OF OPPORTUNITIES WERE ALLOWED BY THE AO T HE ASSESSEE DID NOT FURNISH ANY EVIDENCE OF UTILIZATION OF THE BORR OWED FUNDS FOR THE PURPOSE OF THEIR BUSINESS AND INSTEAD ADMITTED BEFORE THE AO THAT THEY DO NOT HAVE ANY SUCH EVIDENCE. EVEN BEFORE THE LD. CIT(A) NO SUCH EVIDENCE WAS FURNISHED NOR ANY SUCH EVIDENCE HAS BE EN BROUGHT TO OUR NOTICE BY THE LD. AR ON BEHALF OF THE ASSESSEE WHICH WOULD ESTABLISH THAT BORROWED FUNDS HAD INDEED BEEN UTILI ZED BY THE ASSESSEE FOR THEIR BUSINESS. RATHER NO STOCK WAS FO UND DURING THE SEARCH AS POINTED OUT BY THE LD. CIT(A) NOR ANY IN VENTORY OF STOCK IS AVAILABLE ON RECORDS. IN THE ABSENCE OF ANY MATERIA L SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER ESPECIAL LY WHEN THE ASSESSEE FAILED TO ESTABLISH THEIR CLAIM THAT BORR OWED FUNDS WERE ITA N O.723/AHD/09 5 UTILIZED FOR THE PURPOSE OF THEIR BUSINESS WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THER EFORE GROUND NO.1 IN THE APPEAL IS DISMISSED. 6. GROUND NO.2 RELATES TO CLAIM OF TELESCOPING BENE FIT TO THE EXTENT OF RS.2 25 487/-. DURING THE COURSE OF ORI GINAL ASSESSMENT PROCEEDINGS NO SUCH CLAIM APPEARS TO HAVE BEEN MAD E. ON APPEAL THE LD. CIT(A) REJECTED THE GENERAL ARGUMENT OF THE ASSESSEE FOR ADJUSTMENT OF INTANGIBLE ADDITIONS IN THE CASE OF T HE FIRM VIS--VIS UNEXPLAINED INVESTMENT IN SHARES AND ADDITION ON AC COUNT OF UNEXPLAINED CASH IN THE INSTANT CASE. ON FURTHER AP PEAL THE ITAT DIRECTED AS UNDER: 'WE HAVE HEARD THE ID. REPRESENTATIVES OF THE PARTI ES AND PERUSED THE RECORD. THE MAIN ISSUE IN THIS GROUND IS PERTAINING TO SET OFF OF INCOME AGAINST THE IMPUGNED ADDITIONS TO THE EXTENT OF SHA RE OF THE ASSESSEE IN PARTNERSHIP FIRMS. IT HAS BEEN NOTICED THAT THOUGH THE ASSESSEE HAS RAISED THIS GROUND BEFORE THE CIT(A) BUT THE CIT(A) BUT TH E CIT(A) HAS NOT APPRECIATED THE GROUNDS RAISED BY THE ASSESSEE PERT AINING TO SET OFF AND ACCORDINGLY HAS NOT DECIDED THAT GROUND OF APPEAL. APART FROM ABOVE IT IS TO MENTION THAT THE CONTENTION OF THE ID. AR THAT T HE ASSESSEE IS A PARTNER IN TWO FIRMS WHEREIN G.P. ADDITION HAS BEEN MADE AN D SAME HAS BEEN SETTLED IN KVSS. THE SHARE INCOME OF THE ASSESSEE F ROM THE INCOME DECLARED BY THE FIRMS IS REQUIRED TO BE SET OFF AGA INST THE IMPUGNED ADDITION. FOR DECIDING THIS MATTER NECESSARY VERIFI CATION AND EXAMINATIONS ARE REQUIRED FROM THE RECORD. IT IS ALSO TO BE EXAM INED THE RELEVANT PROVISIONS OF THE KVSS IN THE LIGHT OF THE FACTS OF THE CASE UNDER CONSIDERATION WHETHER THE ASSESSEE IS ENTITLED FOR SET OFF AGAINST THE INCOME SETTLED IN KVSS. SINCE THESE FACTS HAVE NOT BEEN EXAMINED BY THE CIT(A) AND AFTER EXAMINATION THE RELEVANT FACTS ARE NOT ON RECORD. UNDER THE CIRCUMSTANCES WE FIND APPROPRIATE TO SEND BACK THIS MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW BY A SPEAKING ORDER AFTER PROV IDING REASONABLE OPPORTUNITY OF HEARING TO BOTH SIDES.' 6.1 IN PURSUANCE TO THE AFORESAID DIRECTIONS OF THE ITAT THE AO ASKED THE ASSESSEE TO SUBMIT RELEVANT DETAILS AS M ENTIONED IN HIS LETTER DATED 19.3.2007. THE ASSESSEE REPLIED ON 20. 3.2007 THEY HAD FUNDS OF RS.1082092 + 360000= 1442092/- ON ACCOUNT OF INTANGIBLE ADDITIONS MADE IN THE CASE OF PARTNERSHIP FIRMS M/S. DEVENDRA KUMAR VRUNDAVANDAS AND M/S. RAJPAL & CO. AND THUS UNEXPLAINED INVESTMENT OF RS.975753/- WAS OUT OF ITA N O.723/AHD/09 6 FUNDS IN THE FORM OF INTANGIBLE ADDITIONS OF RS.144 2092/- .ACCORDINGLY THE ASSESSEE CLAIMED BENEFIT OF TELESCOPING AGAINST TH E INTANGIBLE ADDITIONS IN THE CASE OF THE FIRMS WHEREIN THE ASSESSEE IS PARTNER. HOWEVER THE AO REJECTED THE CLAIM ON THE GROUND THAT THE ASSESSEE FAILED TO PROVE THAT UNEXPLAINED INVESTMENT DECLARED DURING THE COURSE OF SEARCH TO THE EXTENT OF RS.9 75 753 HAD BEEN MADE OUT OF G.P. ADDITIONS AND INCOME DECLARED IN THE CASE OF THE TWO FIRMS M/S DEVENDRAKUMAR VRUNDAVANDAS & M/S RAJPAL & CO.. WHILE RELYING UPON DECISION IN CIT VS. JHAVERBHAI BIHARILAL AND CO. 16 0 ITR 634 (PATNA) AND REFERRING TO PROVISIONS OF SEC. 90 & 94 OF THE KVSS 1998 THE AO CONCLUDED THAT IN THE ABSENCE OF NEXUS BETWEEN THE UNEXPLAINED INV ESTMENT FOUND DURING THE COURSE OF SEARCH AND THE INTANGIBLE ADDITIONS SET OFF IS NOT POSSIBLE AND THAT THE PROVISIONS OF KVSS CLEARLY STATE THAT NO BENEFIT OR CONCESSION CAN BE ALLOWED TO THE DECLARANT IN ANY ASSESSMENT OR PROCEEDINGS. 7. ON APPEAL THE LEARNED CIT(A) ADJUDICATED THE IS SUE IN THE FOLLOWING TERMS:- 4. NEXT GROUND IS REGARDING TELESCOPING OF THE INC OME DECLARED BY THE FIRM AT THE TIME OF SEARCH & THE BENEFIT OF SUBSEQU ENT ADDITIONS MADE IN THE CASE OF FIRMS WHICH WERE SETTLED BY THE FIRMS I N KVSS. DURING THE COURSE OF SEARCH THE FOLLOWING DISCLOSURE OF ADDITI ONAL INCOME WERE MADE:- FY M/S DEVENDRAKUMAR M/S RAJPAL & CO. VRUNDAVANDAS ------- -------------------------- ------------- -------- 1990-91 1 00 000 1 00 000 1991-92 1 50 000 1 50 000 1992-93 1 50 000 1 50 000 1993-94 50 000 2 50 000 1994-95 4 72 000 12 00 000 ------------ -------------- 9 22 000 18 50 000 SHARE OF 30% 1/3 RD APPELLANT SHARE OF 2 76 600 + 6 16 667 = 8 93 267/- THE SHARE OF APPELLANT IS 30% IN M/S DEVENDRAKUMAR VRUNDAVANDAS & 1/3 RD SHARE IN M/S RAJPAL & CO. IN THE STATEMENT THE APP ELLANT HAS ITA N O.723/AHD/09 7 STATED THAT THE INVESTMENT IN CASH JEWELLERY ETC IS MADE OUT OF THE SHARE OF INCOME FROM M/S. DEVENRAKUMAR VRUNDAVANDAS & M/S . RAJPAL & CO. ACCORDING TO THE APPELLANT AT LEAST ASSETS TO THE E XTENT OF RS.8 93 267/- SHOULD BE CONSIDERED AS EXPLAINED IN VIEW OF THE ST ATEMENT RECORDED DURING THE COURSE OF SEARCH. 4.1 I HAVE GONE THROUGH THE VARIOUS SUBMISSIONS FILED BY THE APPELLANT AND PERUSED THE ASSESSMENT ORDER & VARIOU S COPIES OF RETURNS FILED BY THE APPELLANT IN RESPECT OF THE DI SCLOSURE OF ADDITIONAL INCOME DURING THE COURSE OF SEARCH AS WELL AS THE S ETTLEMENT OF DISPUTES OF TAXES BY M/S. DEVENRAKUMAR VRUNDAVANDAS & M/S. RAJPAL & CO. IN RESPONSE TO ANSWER NO.3 RECORDED ON 28-1-199 4 THE APPELLANT STATED THAT RS.3 22 067/-REPRESENTS UNACCOUNTED STO CK OF THE FIRM. THIS MEANS THAT OUT OF TOTAL UNACCOUNTED INCOME OF RS.27 .72 LACS DISCLOSED BY THE FIRMS RS.3 22 067/-IS INVESTED IN UNACCOUNT ED STOCK. THE BALANCE AMOUNT OF RS.24.50 LACS IS AVAILABLE FOR DI STRIBUTION AMONGST THE ASSETS OF THE PARTNERS AS ON THE DATE OF SEARCH . THAT MEANS APPROX. RS.7.50 LACS WAS AVAILABLE FOR APPORTIONMENT IN THE HANDS OF THE APPELLANT. TO THIS EXTENT THE INVESTMENT IN JEWELLE RY & OTHER ASSETS CAN BE TREATED AS EXPLAINED. IN OTHER WORDS OUT OF THE ADDITION OF RS.9 75 753/- RS.7 50 000/- IS TREATED AS EXPLAINED BY WAY OF TELESCOPING. THE BALANCE ADDITION OF RS.2 25 753/- IS THEREFORE SUSTAINED. 4.2 THE APPELLANT TOOK THE PLEA BEFORE THE ITAT & B EFORE THE ASSESSING OFFICER THAT G.P. ADDITIONS WERE MADE IN THE CASE O F THE FIRM M/S. DEVENRAKUMAR VRUNDAVANDAS & M/S. RAJPAL & CO. THESE FIRMS TOOK THE BENEFIT OF KVSS & PAID DISPUTED TAXES. THEREFORE TH E SHARE OF INCOME FROM SUCH FIRMS IS ALSO AVAILABLE FOR THE PURPOSE OF TEL ESCOPING. THIS ISSUE IS ALSO DISCUSSED BY THE ITAT IN PARA 7 OF THEIR ORDER . THE SHARE OF INCOME OF THE APPELLANT FROM THE FIRMS WHO OPTED FOR KVSS COM ES TO RS.10 82 092 + 3 60 000 = 14 42 092. THE APPELLANT CLAIMS THAT THE TELESCOPING OF THIS INCOME SHOULD BE ALLOWED IN RESPECT OF THE ASSETS FOUND / SEIZED AT THE TIME OF SEARCH. I AM NOT CONVINCED ABOUT THIS CONTE NTION OF THE APPELLANT MAINLY ON THE GROUND THAT AT THE TIME OF SEARCH A S PECIFIC QUESTION WAS PUT TO HIM ABOUT THE SOURCE OF INVESTMENTS FOUND AT THE TIME OF SEARCH. IN REPLY THERETO HE STATED THAT THESE ASSETS ARE ACQUIRED OU T OF THE UNACCOUNTED INCOME OF THE TWO FIRMS M/S. DEVENRAKUMAR VRUNDAVAN DAS & M/S. RAJPAL & CO AMOUNTING TO RS.27.72 LACS AS DISCUSSED EARLI ER. NOWHERE IN THE STATEMENT IT WAS STATED THAT THE SAID ASSETS WERE A CQUIRED OUT OF THE OTHER INCOMES RECEIVED FROM THE FIRMS. SECONDLY NONE OF THE FIRM & THE APPELLANT HAVE FILED THEIR RETURN OF INCOME SINCE A Y 1991-92 TILL THE DATE OF SEARCH. THE RETURNS WERE FILED FOR THE FIRST TIME O NLY AFTER THE SEARCH. THIRDLY EVEN THOUGH THE RETURN OF INCOME WERE FILE D AFTER SEARCH IN ALMOST ALL THE CASES RETURN OF LOSSES WERE SUBMITTED. THE NET EFFECT WAS THAT NO ADDITIONAL TAXES WERE PAID BY THE GROUP AS A WHOLE. LASTLY THE BENEFIT OF KVSS CAN BE AVAILED ONLY BY THE DECLARANT OF THE SC HEME AND NOT OTHERS. THE TAXES PAID UNDER KVSS BY THE FIRMS M/S. DEVENRA KUMAR ITA N O.723/AHD/09 8 VRUNDAVANDAS & M/S RAJPAL & CO. ARE DEBITED TO THE CAPITAL ACCOUNT OF THEIR PARTNERS. THEREFORE THE TELESCOPING BENEFIT OF THE GP ADDITION SETTLED BY THE FIRM CANNOT BE GIVEN TO THE APPELLANT. 8. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE MERELY REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A) WHILE THE LD. DR POINTED THAT THE LD. CIT(A) HAS AL READY ALLOWED THE BENEFIT OF TELESCOPING TO THE EXTENT OF RS. 7.50 LA CS AND IN THE ABSENCE OF AN EVIDENCE OR NEXUS NO FURTHER BENEFIT CAN BE ALLOWED TO THE ASSESSEE. 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT ON THE BASIS OF A STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH THAT THE UNACC OUNTED INCOME OF THE TWO FIRMS M/S. DEVENRAKUMAR VRUNDAVANDAS & M/S. RAJ PAL & CO AMOUNTING TO RS.27.72 LACS WAS UTILIZED IN VARIOUS INVESTMENTS AND UNACCOUNTED STOCK OF THE FIRMS THE LD. CIT(A) ALLOWED THE BENEFIT OF TELESC OPING TO THE EXTENT OF RS. 7.50 LACS.. THE LD. CIT(A) FOUND THAT NOWHERE IN THE SAID STATE MENT IT WAS STATED THAT THE SAID ASSETS WERE ACQUIRED OUT OF THE OTHER INCO ME RECEIVED FROM THE FIRMS NOR THE FIRM OR THE ASSESSEE EVEN FILED THEIR RETURN O F INCOME SINCE A Y 1991-92 TILL THE DATE OF SEARCH. EVEN WHEN RETURNS WERE FILED AFTER SEARCH IN ALMOST ALL THE CASES THESE REFLECTED LOSSES. IN THESE CIRCUMST ANCES AND THE FACT THAT THE BENEFIT OF KVSS CAN BE AVAILED ONLY BY THE DECLARAN T OF THE SCHEME AND NOT OTHERS THE LD. CIT(A) REJECTED THE CLAIM OF THE AS SESSEE FOR FURTHER BENEFIT ON ACCOUNT OF TELESCOPING. THE LD. AR DID NOT PLACE AN Y MATERIAL BEFORE US ESTABLISHING THE NEXUS BETWEEN UNEXPLAINED INCOME A ND THE INTANGIBLE ADDITIONS IN THE CASE OF FIRMS AVAILING BENEFIT UNDER KVSS. IT IS WELL ESTABLISHED THAT UNLESS THERE WA S A CONNECTION BETWEEN THE UNEXPLAINED INVESTMENT AND INTANGIBLE ADDITIONS I T WOULD BE DIFFICULT TO ACCORD SET OFF OF THE TWO FIGURES AS HELD IN THE CASE OF CIT V. DEVI PRASAD VISWANATH PRASAD [1969] 72 ITR 194 (SC) AND CIT VS. JHAVERBHAI BIHARILAL & CO.160 ITR 634(PATNA). IN THE INSTANT CASE THE ASSESSEE IS SE EKING BENEFIT OF INTANGIBLE ADDITIONS IN THE CASE OF OTHER ASSESSEES VIZ. FIRM S AVAILING BENEFIT UNDER KVVS . ITA N O.723/AHD/09 9 THE PROVISIONS OF SEC. 90(3) AND 94 OF THE KVSS 1 998 ARE FOR THE BENEFIT OF THE DECLARANT AND NOT OTHER ASSESSEES. IN VIEW OF THE FOREGOING AND IN THE ABSENCE OF ANY NEXUS THE TELESCOPING BENEFIT OF THE GP ADD ITION SETTLED BY THE FIRM UNDER KVVS 1998 CANNOT BE ALLOWED TO THE ASSESSEE. THEREF ORE GROUND NO. 2 IN THE APPEAL IS ALSO DISMISSED. 10. IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 11-02-2011 SD/- SD/- (MUKUL SHRAWAT) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 11-02-2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI DEVENDRAKUMAR V MEHTA 299 NEW CLOTH MARKE T O/S RAIPUR GATE AHMEDABAD 2. THE ACIT CIRCLE-11 NARAYAN CHAMBERS ASHRAM RO AD AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XVI AHMEDABAD 5. DR ITAT AHMEDABAD BENCH-C AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD