SHRI HARISH S. PATEL, v. THE DEPUTY CIT SPL. RANGE -1,

ITA 76/AHD/2003 | misc
Pronouncement Date: 31-07-2012 | Result: Partly Allowed

Appeal Details

RSA Number 7620514 RSA 2003
Assessee PAN GHTOF1634G
Bench Ahmedabad
Appeal Number ITA 76/AHD/2003
Duration Of Justice 9 year(s) 6 month(s) 25 day(s)
Appellant SHRI HARISH S. PATEL,
Respondent THE DEPUTY CIT SPL. RANGE -1,
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 12-03-2007
Date Of Final Hearing 28-06-2012
Next Hearing Date 28-06-2012
Assessment Year misc
Appeal Filed On 06-01-2003
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI JUDICIAL MEMBER AND SHRI T.R. MEENA ACCOUNTANT MEMBER ITA NO. 76/AHD/2003 ASSESSMENT YEAR :1987-88 HARISH S. PATEL B-405 4 TH FLOOR PREMIUM HOUSE NEAR GANDHIGRAM RAILWAY STATION AHMADABAD. V/S . DCIT. SR 1 AHMEDABAD PAN NO. NOT FOUND (APPELLANT) .. (RESPONDENT) BY APPELLANT MS. URVASHI SHODHAN A.R. /BY RESPONDENT SHRI S.K. GUPTA CIT D.R. /DATE OF HEARING 02.07.2012 /DATE OF PRONOUNCEMENT 31.07.2012 O R D E R PER : T.R.MEENA ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHI CH HAS EMANATED FROM THE ORDER OF CIT (A)-XV AHMEDABAD ORDER DATE D 18.10.2002 FOR ASSESSMENT YEAR 1987-88. THE MAIN GROUNDS OF APPEA L ARE AS UNDER:- 1. GENERAL 2. & 3. THE LD. CIT (A) HAS ERRED IN NOT TAKING COG NIZANCE OF THE FACT THAT AFTER THE ISSUANCE OF THE NOTICES U/S 139 (2) & 148 NO ASSESSMENT ORDER BEING PASSED THE ASSESSMENT BECAME TIME BARR ED THAT WAS FRAMED AFTER ISSUANCE OF SUBSEQUENT NOTICES. LD. C IT(A) OUGHT TO HAVE HELD THE ASSESSMENT AS NULL & VOID. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 2 4.& 5. THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMI NG ACTION OF AO IN FOLLOWING PROVISIONS OF SEARCH PROCEEDINGS FOR FRAM ING ASSESSMENT OF YEAR UNDER CONSIDERATION. LD. CIT(A) HAS FURTHER E RRED IN CONFIRMING ADDITIONS MADE BY AO ESTIMATING INCOME FROM DIFFERE NT SOURCES ON THE BASIS OF SEARCH & SEIZURE PROCEEDINGS. 6. & 7. THE LD. CIT (A) HAS FURTHER ERRED IN CONFIR MING ADDITION OF RS. 3 00 000/- MADE BY AO ON A/C OF VALUE OF GOLD ORNAM ENTS & JEWELLERY AS UNDISCLOSED INCOME. 8. THE LD. CIT (A) HAS DENIED GRANTING OF BENEFIT O F INSTRUCTION #916 DATED 11/05/1994 ISSUED BY CENTRAL BOARD OF DIRECT TAXES. 9. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTIO N OF AO IN CONSIDERING INVESTMENTS OF RS.28 845/- IS SHARES & SECURITIES TO BE FROM UNDISCLOSED INCOME. 10. THE LD. CIT (A) HAS ERRED IN CONFIRMING ADDITIO N MADE BY AO OF RS. 1 00 000/- ON ACCOUNT OF UNDISCLOSED EXPENDITUR E ON FURNITURE. 11. THE LD. CIT (A) HAS ERRED IN CONFIRMING ADDITIO N MADE BY AO OF RS.30 000/- ON ACCOUNT OF UNDISCLOSED EXPENDITURE O F RELIGIOUS DONATIONS. 12. & 13. THE LD. CIT (A) HAS ERRED IN CONFIRMING A DDITIONS MADE BY AO OF RS.11 000/- & RS. 6 000/- MADE ON A/C OF UNDISCL OSED EXPENDITURE ON TOUR TO SINGAPORE & GOA RESPECTIVELY. 14. & 15. THE LD. CIT (A) HAS ERRED IN CONFIRMING A DDITION MADE BY AO OF UNDISCLOSED HOUSEHOLD EXPENDITURE OF RS.30 00/- & OF RS. 15 000/- ON RENOVATION EXPENDITURE. 16. THE LD. CIT (A) HAS ERRED IN CONFIRMING ADDITIO N OF RS.13 650/- MADE BY AO ON A/C OF STAMP PAPERS BEING PURCHASED F ROM UNDISCLOSED INCOME OF THE ASSESSEE. 17. THE LD. CIT (A) HAS ERRED IN CONFIRMING ADDITIO N OF RS.15 00 000/- MADE BY AO ON THE BASIS OF PAPER FOUND AT THE TIME OF SEARCH OF SPECULATIVE TRADING IN SHARES/DEBENTURES AS UNDISCL OSED INCOME OF THE ASSESSEE. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 3 18. THE LD. CIT (A) HAS ERRED IN CONFIRMING ADDITIO N OF RS.1 50 000/- MADE BY AO ON THE BASIS OF 2 RECEIPTS FOUND AT THE TIME OF SEARCH OF PAYMENT MADE TO MODERN ENGINEERING WORKS BY MS. NEH A H. PATEL 19. THE LD. CIT (A) HAS ERRED IN CONFIRMING ADDITIO N OF ESTIMATION OF PROFESSIONAL INCOME OF RS. 5 33 500/- MADE BY AO O N THE BASIS OF GENERAL CLIENT LEDGER FOUND AT THE TIME OF SEARCH. 2. IN THIS CASE THE ASSESSEES APPEAL WAS DISMISSE D VIDE ORDER NO. ITA NO.76/AHD/03 DATED 12.03.2007. THE ASSESSEE FILED M.A. AGAINST THE DISMISSAL ORDER FOR RECALLING THE ORDER VIDE HIS M. A. NO. 134/AHD/07 WHICH WAS RECALLED BY THE CO-ORDINATE C BENCH VIDE ITS ORDER DATED 14.12.2007. THEREFORE WE HEARD THE CASE AGAIN AND DECISION ON VARIOUS GROUNDS OF APPEAL ON MERIT IS AS UNDER: 3. GROUND NO. 1 IS GENERAL AND GROUND NOS. 2 & 3 HA VE NOT BEEN PRESSED BY THE ASSESSEE. THEREFORE THE SAME ARE DISMISSED . 4. GROUND NOS. 4 & 5 ARE AGAINST CONFIRMING OF ADDI TION BY LD. CIT(A) ON THE BASIS OF SEIZED MATERIALS WHICH ARE ALSO GENERA L GROUNDS OF APPEAL WHICH WILL DISCUSSED AGAINST THE RESPECTIVE ADDITIONS MAD E BY THE A.O. IN FOLLOWING PARAS. THEREFORE THESE GROUNDS OF APPEAL ARE ALSO DISMISSED. 5. GROUND NOS. 6 7 & 8 ARE AGAINST THE ADDITION OF RS.3 00 000/- ON ACCOUNT OF UNDISCLOSED GOLD ORNAMENTS. 6. THE BRIEF FACT IS THAT THE ASSESSEE IS A CHARTER ED ACCOUNTANT. THERE WAS A SEARCH AND SEIZURE OPERATION ON 27.10.86 AT T HE OFFICE AND RESIDENCE PREMISES OF THE ASSESSEE. THE TOTAL JEWELLERY WORT H RS.4 18 616/- WAS FOUND AND OUT OF THIS JEWELLERY WORTH RS.3 55 509/- AND SHARE AND DEBENTURE OF RS.28 545/- WERE SEIZED FROM THE ASSESSEES PREMISE S BY THE AUTHORIZED ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 4 OFFICER. IN THIS CASE U/S. 132(5) OF IT ACT ORDER WAS PASSED IN WHICH THIS JEWELLERY WAS RETAINED BY THE A.O. DURING THE COURS E OF ASSESSMENT PROCEEDING THE ASSESSEE WAS GIVEN REASONABLE OPPOR TUNITY TO EXPLAIN THE JEWELLERY OF RS. 3 55 509/-. THE ASSESSEE DID NOT FILED ANY EXPLANATION ABOUT THE JEWELLERY BEFORE THE A.O. AT THE TIME OF ASSESS MENT PROCEEDING ON 30.12.1993 EXCEPT WRITTEN REPLY SUBMITTED VIDE LE TTER DATED 27.10.1993. NO FAMILY MEMBER WAS ASSESSED TO WEALTH TAX ALONG WITH THE ASSESSEE. THE ASSESSEE HAS DISCLOSED U/S132(4) OF THE IT ACT AN A DDITIONAL INCOME OF RS.3 00 000/- ON ACCOUNT OF UNDISCLOSED JEWELLERY. THE A.O. MADE ADDITION OF RS.3 55 509/- ON ACCOUNT OF UNDISCLOSED JEWELLERY I N YEAR UNDER CONSIDERATION IN THE INCOME OF THE ASSESSEE. 7. BEING AGGRIEVED BY THE ORDER OF THE A.O. THE AS SESSEE FILED FIRST APPEAL BEFORE LD. CIT (A) WHO HAS ADJUDICATED THIS ISSUE ON PAGE 5 IN PARAGRAPH NO.8 AND ALLOWED MARGINAL RELIEF OF RS.55 509/- AND CONF IRMED THE ADDITION OF RS.3 00 000/-. THE LD. CIT(A) HAD GIVEN THIS RELIE F BY CONSIDERING THE INSTRUCTION NO.1916 DATED 11.05.1994 AND STATEMENT RECORDED U/S 132(4) OF THE IT ACT. 8. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD . COUNSEL FOR THE ASSESSEE FILED PAPER BOOK AND CONTENDED THAT THIS J EWELLERY WAS BELONGED TO THEM. THE APPELLANTS DAUGHTER PURCHASED GOLD BOND S WEIGHING 500 GR. WHICH WAS ON CONVERSION GOLD BOND TO GOLD ORNAMENTS WERE 545 GR. THESE FACTS ARE ON RECORD AND DISCLOSED BY HIS DAUGHTER IN HER RETU RN OF INCOME (PAGE REFERENCE 180 TO 196). THE ASSESSEES DAUGHTER HAD CATEGORICALLY ADMITTED ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 5 DURING COURSE OF SEARCH AND SEIZURE PROCEEDING U/S 132(4) OF THE IT ACT IN REPLY TO QUESTION NO.6 (PAGE REFERENCE 22 OF PAPER BOOK) WHICH IS REPRODUCED AS UNDER:- I AM GIVING THE DETAILS HEREINBELOW. (1) ONE SET OF GOLD WITH ONE NECKLACE TWO EARRINGS TWO BANGLES AND ONE RING. (2) ONE SET OF GOLD WITH JAUTAN (KUNDAN) HAVING ONE NECKLACE AND ONE PAIR OF EARRING. (3) ONE SET OF DIAMONDS HAVING ONE NECKLACE OF GOLD WITH DIAMOND PENDANT ONE PAIR OF EAR RING ONE RING AND BRACELET (ONE). (4) ONE SET OF RICE CULTURED PEARLS HAVING ONE NECK LACE PAIR OF EAR RING BANGLES AND ONE TIKA. BOTH THE NECKLACE AND TIKA HAVE PENDANT JADTON BUT NOT OF GOLD. (5) THREE DIAMOND RING WHICH I AM WEARING. (6) ONE MORE DIAMOND RING WITH PEARLS. (7) TWO PAIRS OF DIAMOND EAR-RINGS ONE OF WHICH I AM WEARING. (8) TWO DIAMOND STUD EAR RINGS. (9) ONE DIAMOND AND PEARL EAR RING. (10) ONE GOLD AND PEARL EAR RING. (11) ONE MOLE OF GOLD WITH BEUDI OF TULSI. TOTAL 11 ITEMS HAD BEEN ADMITTED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THE A.R. CLAIMED THAT INVESTMENT IN JEW ELLERY WAS MADE OUT OF DISCLOSED SOURCE. THE APPELLANTS WIFE CLAIMED THA T SHE HAD RECEIVED 50 TO 55 TOLAS ON THE OCCASION OF HER MARRIAGE 10 TO 15 TOL AS ON THE OCCASION OF JIANA (BIRTH OF FIRST CHILD). SHE HAS PURCHASED JEWELLER Y WORTH RS.1 15 419/- DURING THE PERIOD OF 1-4-80 TO 31-3-81 WHICH HAD BEEN DISC LOSED IN HER RETURN OF ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 6 INCOME. THUS INVESTMENTS WERE MADE OUT OF DISCLOS ED SOURCE. THE LD. A.R. ALSO REFERRED THE BOARDS CIRCULAR NO.1916 DATED 11 .05.1994 AND THE BENEFIT OF THIS INSTRUCTION HAD NOT BEEN GIVEN BY THE LD. C IT(A). HE FURTHER CLAIMED THAT NO INVESTMENT IN ORNAMENTS AND JEWELLERY HAD B EEN MADE IN THE YEAR UNDER CONSIDERATION. THE TOTAL JEWELLERY DISCLOSED IN THE RETURN OF ASSESSEE AT PAGE NO.59 OF PAPER BOOK WORTH RS.78 960/- FOR A.Y. 87-88 (RETURN FILED ON 19.10.1993). THE ASSESSEES WIFE HAD SOURCE OF INC OME BEING INSURANCE COMMISSION AND GIFT WHICH CAN BE VERIFIED FROM THE RETURN FOR A.Y. 79-80 AT PAGE NOS. 156-157 OF PAPER BOOK (RETURN FILED ON 16 .01.1981). SHE HAD DAIRY INCOME AS PER THE RETURN FOR A.Y.81-82 AND 82-83 (R EFERRED PAGE NOS. 170 AND 176) WHICH WERE FILED ON 13.03.1985 MUCH BEFORE THE DATE OF SEARCH. THE ASSESSEES WIFE HAD PURCHASED JEWELLERY AND HAD SHO WN IN A.Y.1980-81 AT RS. 12 112/- (REFERRED PAGE NO.168 FOR WHICH RETURN HAD FILED ON 13.08.1982) IN A.Y. 81-82 AT RS.8000/- RS. 18 712/- & RS.19 224/- FOR WHICH PAGE WAS REFERRED 174 OF PAPER BOOK AND RETURN WAS FILED ON 13.03.1985. JEWELLERY WORTH RS.14 400/- AND RS.300/- WAS PURCHASED AND H AD SHOWN IN A.Y.85-86 FOR WHICH HE REFERRED PAGE NO.179 AND RETURN OF SMT . SHARMISTHA H. PATEL WAS FILED ON 13.03.1986. THE ASSESSEES DAUGHTER AS PE R PAGE NO.182 PURCHASED ANOTHER DIAMOND JEWELLERY VALUED RS.4 400/- WHICH H AD BEEN REFLECTED IN RETURN FOR A.Y. 81-82. THE ANOTHER GOLD BOND CERTI FICATE EVIDENCE FROM PAGE NOS. 185 & 196 OF PAPER BOOK DATED 23.07.1980 IN TH E NAME OF NINA HARISH PATEL WHICH HAS BEEN DISCLOSED IN THE REGULAR RETUR N OF THE ASSESSEES DAUGHTER. THE A.R. FURTHER HAS GIVEN RE-CONCILIATI ON OF THE JEWELLERY AS UNDER:- ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 7 13. (A) GOLD JEWELLERY - TOTAL JEWELLERY FOUND 1634.2GMS (A) SHARMISTHA 1072.7 GMS (B) NEENA 561.5 GMS BENEFIT OF INSTRUCTION NO. 916 950 GMS BALANCE JEWELLERY 684.2 GMS (B) DIAMOND JEWELLERY SHARMISTHA RS. 1 99 380/- NEENA RS. 30 290/- TOTAL RS.2 30 670/- (C) SILVER UTENSILS RS.61 000/- THE ASSESSEE RETRACTED WHATEVER DISCLOSURE MADE DUR ING THE COURSE OF U/S 132(4) OF THE IT ACT VIDE HIS LETTER DATED 16.02.19 87 BEFORE THE INCOME TAX OFFICER PROFESSIONAL CIRCLE-I AHMEDABAD AND CLAI MED WHATEVER JEWELLERY FOUND AND SEIZED DURING THE COURSE OF SEARCH WAS PE RTAINED TO HIS WIFE AND HIS DAUGHTER. THE SAME EXPLANATION FOR JEWELLERY W AS GIVEN BEFORE THE CIT(A) VIDE HIS LETTER DATED 25.09.2002 AT PAGE 114. THE A.R. ARGUED THAT WHATEVER JEWELLERY FOUND AND SEIZED IS OUT OF DISCLOSED SOUR CE OF THE ASSESSEE. THE ANOTHER SIDE LD. D.R. VEHEMENTLY OPPOSED THE ARGUM ENT OF THE LD. A.R. BECAUSE OF THE RETRACTION WAS MADE AFTER A LONG PER IOD FROM THE DATE OF SEARCH. FURTHER HE ARGUED THAT THE ASSESSEE WAS CH ARTERED ACCOUNTANT AND HE CONSIDERED ALL THE EVIDENCES AVAILABLE WITH HIM AND KNEW ABOUT THE ACCOUNTING SYSTEM AND RULES AND REGULATIONS OF THE SEARCH PROCEDURE THEN HE HAD DISCLOSED AN ADDITIONAL INCOME U/S 132(4) OF TH E IT ACT. THEREFORE TO THE EXTENT OF ADDITION OF RS.3 LACS SHOULD BE CONFIRMED . ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 8 9. WE HAVE PERUSED THE ORDER OF THE A.O. AS WELL AS CIT(A) AND GONE THROUGH THE PAPER BOOK SUBMITTED BY THE APPELLANT B EFORE US AND HEARD THE ARGUMENTS OF BOTH THE SIDES. UNDISPUTEDLY THE STA TEMENTS OF BOTH THE LADIES WERE RECORDED DURING THE COURSE OF SEARCH. THE ASS ESSEES WIFE HAD NOT ADMITTED ANY JEWELLERY IN HER STATEMENT DATED 27.10 .86 THAT 50 TO 55 TOLA JEWELLERY WAS RECEIVED BY HER ON OCCASION OF HER MA RRIAGE AND 15 TOLA ON OCCASION OF BIRTH OF FIRST CHILD FROM THEIR RELATIV ES. SHE ONLY ADMITTED THAT SHE HAD APPROXIMATELY 50 TO 60 TOLA GOLD ORNAMENTS. TH E DETAILS OF JEWELLERY ADMITTED BY HER DIAMONDS ONE GREEN SET ONE RED SE T TWO RINGS ONE BUTTY KIDIYA SHER ONE PAIR EARRINGS BABYS DIAMOND ORNA MENTS 4 PAIR EARRINGS 3 RINGS ONE BLUE SET AND BABYS GOLD ORNAMENTS APPRO XIMATELY 25 TOLAS. DURING THE COURSE OF STATEMENT U/S 132(4) THE ASSESSEE AD MITTED IN REPLY TO QUESTION NO.59 THAT ALL SILVER UTENSILS ARE OWNED BY HIM IN HIS INDIVIDUAL CAPACITY. SOME OF THE JEWELLERY WAS BELONGED TO HIM APPROXIMATELY RS.15 000/- WORTH OF DIAMOND. THE BALANCE JEWELLERY BELONGED TO HIS WIF E AND DAUGHTER AND SOURCE OF ACQUISITION WAS EXPLAINED FROM INCOME OF RESPECTIVE FAMILY MEMBERS. NEENABEN H. PATEL HAD CATEGORICALLY ADMIT TED HER JEWELLERY IN HER STATEMENT DATED 27.10.1986 IN REPLY TO QUESTION NO. 6 AND ALSO EXPLAINED THE SOURCE OF JEWELLERY WITH EVIDENCE SUBMITTED IN PAPE R BOOK. THE TOTAL JEWELLERY WAS FOUND IN WEIGHT OF 1634 GMS. AS PER BOARD CIRC ULAR NO.1916 DATED 11.05.1994 CREDIT OF 500GMS JEWELLERY IS TO BE GIV EN ON THE BASIS OF HONBLE GUJARAT HIGH DECISION IN THE CASE OF CIT VS. RATANLAL VYAPARILAL JAIN TAX APPEAL NOS. 661 & 662 OF 2009 DECIDED ON JULY 19 2010 IN WHICH THE ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 9 HONBLE GUJARAT HIGH COURT HAS HELD THAT BOARDS INSTRUCTION NO. 1916 DATED 11.05.1994 IS THE GUIDELINE NOT ONLY PROCEDURE BUT EXPLANATION OF SOURCE AS IN HINDU FAMILY JEWELLERY IS GIFTED AT THE TIME OF SOC IAL FUNCTION VIZ. MARRIAGE BIRTH DAY MARRIAGE ANNIVERSARY AND OTHER FESTIVALS. WE ARE OF THE CONSIDERED VIEW THAT TO THE EXTENT OF 600 GMS GOLD JEWELLERY VALUE RS.1 54 200/- (600 GMS. VALUE RS. 1 54 200/- @ 2570 PER 10 GRAMS AS ON 31.0 3.1987) HELD UNEXPLAINED AND CIT (A) IS JUSTIFIED TO THE EXTENT OF RS.1 54 200/- IN CONFIRMING THE ADDITION AND REMAINING ADDITION OF RS.1 45 800/ - IS DELETED. ACCORDINGLY THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 10. GROUND NO.-9 IS AGAINST THE ADDITION OF RS.28 8 45/-. THE A.O. OBSERVED THAT DURING THE COURSE OF SEARCH AND SEIZURE PROCEE DING SHARES AND DEBENTURES WORTH RS.28 845/- WERE FOUND AND SEIZED. THE A.O. HAD GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. THE ASSESSE ES REPLIES WERE CONSIDERED BY THE A.O. AND HELD THAT SHARES AND SEC URITIES AMOUNTING TO RS. 28 845/- AS UNDISCLOSED INCOME OF THE ASSESSEE AND SAME WAS ADDED IN THE INCOME OF THE ASSESSEE (WRONGLY TAKEN IN COMPUTATIO N RS.21 845/- BY THE A.O.). 11. BEING AGGRIEVED BY THE ORDER OF THE A.O. THE A SSESSEE WENT IN FIRST APPEAL BEFORE CIT(A) WHO HAS ALSO CONFIRMED THE ADD ITION ON THE BASIS OF DISCLOSURE U/S 132(4) OF THE IT ACT ON ACCOUNT OF S HARE AND SECURITIES A SUM OF RS.25 000/-. 12. NOW THE ASSESSEE IS BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT ALL THE SHARES AND SECURITIES HAD BE EN DISCLOSED BY THE ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 10 ASSESSEE OR FAMILY MEMBERS IN THEIR RESPECTIVE RETU RNS. HE ALSO REFERRED PAGE NOS. 128 TO 132 OF COPY OF LETTER DATED 25 TH SEPTEMBER 2002 SUBMITTED BEFORE THE CIT(A). PAGE NO.156 SHOWS THAT ASSESSEE S WIFE HAD PURCHASED VARIOUS SHARES DURING THE A.Y.79-80. PAGE NO.165 O F PAPER BOOK SHOWS THAT THE ASSESSEES WIFE HAD PURCHASED NUMBER OF SHARES OF 16 COMPANIES DURING THE A.Y. 81-82 AND SHE HAD DISCLOSED THE DIVIDEND O N PAGE NO.166 AND SHARES HAD BEEN SHOWN IN THE BALANCE SHEET OF A.Y. 81-82. ON PAGE NOS. 172 AND 173 SHOW THAT THE ASSESSEES WIFE HAD DEBEN TURE BONDS OF 23 COMPANIES ON WHICH SHE GOT INTEREST THE SAME HAS B EEN DISCLOSED IN THE RETURN FOR A.Y.82-83. THE BALANCE SHEET FOR A.Y. 8 4-85 ALSO SHOWS THAT THE ASSESSEES WIFE HAD MADE PAYMENT FOR PURCHASE OF SH ARES. THE SAME FACTS WERE GIVEN TO THE A.O. AS WELL AS CIT(A) BUT THEY H AVE NOT CONSIDERED THE EVIDENCE BEFORE DECIDING THE CASE. 13. WE HAVE PERUSED ALL THE EVIDENCE AND ORDER OF T HE AUTHORITIES BELOW. THE ASSESSEES WIFE AS WELL AS HIS DAUGHTER HAD DIS CLOSED ALL THE SHARES AND SECURITIES IN THEIR RESPECTIVE RETURNS WHICH HAD BE EN FILED BEFORE THE DATE OF SEARCH. THEREFORE RETRACTION MADE BY THE ASSESSEE ON ACCOUNT OF SHARES AND SECURITIES FOR RS.25 000/- IS JUSTIFIED AS THE SAME HAS REBUTTED WITH SUPPORTING EVIDENCE WHICH WERE AVAILABLE WITH THE DEPARTMENT. THEREFORE CIT(A) WAS NOT RIGHT IN CONFIRMING THE ADDITION OF RS.28 845/- . THIS GROUND OF APPEAL IS ALLOWED IN FAVOUR OF ASSESSEE. 14. GROUND NOS. 10 11 12 13 14 & 15 ARE AS UNDER:- SL. NO. NATURE OF ADDITION AMOUNT ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 11 10. EXPENDITURE ON FURNITURE RS.1 00 000/- 11. RELIGIOUS DONATIONS RS.30 000/- 12 & 13. EXPENDITURE ON TOUR TO RS.11 000/- & SINGAPORE & GOA RS.6 000/- 14 & 15. HOUSEHOLD EXPENSES RS. 30 000/- & RS.15 000/- 15. THE A.O. OBSERVED IN ASSESSMENT ORDER THAT DURI NG THE COURSE OF SEARCH EXPENSIVE EXPENDITURE ON FURNITURE & FITTING AT THE OFFICE AND AT THE RESIDENCE WAS FOUND. IT WAS NOT RECORDED IN THE RE GULAR BOOKS OF ACCOUNT. SIMILARLY EVIDENCES WERE FOUND ON HAVING INCURRED EXPENDITURE ON RELIGIOUS DONATION EXPENSES ON TOUR TO SINGAPORE & GOA BY TH E ASSESSEES CHILDREN LOW HOUSEHOLD EXPENDITURE AND RENOVATION EXPENDITUR E OF RESIDENCE OF THE ASSESSEE. THE ASSESSEE WAS INTERROGATED DURING THE COURSE OF STATEMENT U/S 132(4) OF IT ACT AND HE ADMITTED HOUSEHOLD EXPENSES PER MONTH RS.1500/- TO 2000/- WHICH ARE NOT MATCHING WITH WITHDRAWAL AND S AME WERE INCURRED FROM HIS UNDISCLOSED PROFESSIONAL RECEIPTS. THE ASSESSE E HAD DISCLOSED RS.30 000/- ON ACCOUNT OF HOUSEHOLD EXPENSES. IN R EPLY TO QUESTION NO.42 OF STATEMENT DATED 27.10.86 HE FURTHER ADMITTED UNDIS CLOSED INCOME OF RS. 1 00 000/- ON ACCOUNT OF FURNITURE AT RESIDENCE AND OFFICE RS.30 000/- ON RELIGIOUS DONATION IN LAST FIVE YEARS RS.11 000/- EXPENDITURE ON SINGAPORE TOUR AND ABOUT 5 TO 6000/- RUPEES ON GOA TOUR AND RS.30 000/- DISCLOSED ON ACCOUNT OF RENOVATION OF RESIDENCE. THUS TOTAL DIS CLOSURE WAS RS.1 92 000/-. THE SOURCE OF THE INVESTMENT WAS EXPLAINED BY THE A PPELLANT FROM UNDISCLOSED PROFESSIONAL RECEIPTS IN HIS STATEMENT DATED 27.10. 1986 IN QUESTION NO.44. LD. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 12 A.O. HAD ALSO GIVEN REASONABLE OPPORTUNITY AT THE T IME OF ASSESSMENT PROCEEDING VIDE HIS LETTER DATED 08 TH OCTOBER 1993. THE APPELLANT REPLIED VIDE HIS LETTER DATED 27 TH OCTOBER 1993. THE ASSESSEE HAD DENIED HAVING BEEN MADE ANY UNEXPLAINED INVESTMENT ON FURNITURE AND RE NOVATION AT RESIDENCE RELIGIOUS DONATIONS AND TOUR TO GOA WAS MADE OUT ON FAMILY WITHDRAWALS. FINALLY AFTER CONSIDERING THE STATEMENT AND REPLY OF THE ASSESSEE THE A.O. MADE ADDITION OF RS.1 92 000/- IN THE INCOME OF THE ASSESSEE. 16. BEING AGGRIEVED BY THE ADDITION THE ASSESSEE F ILED FIRST APPEAL BEFORE CIT(A)-XV AHMADABAD WHO HAD CONSIDERED THESE ISSU ES FROM PAGE NO. 10 TO 17 IN PARAGRAPH NO.10. THE LD. CIT(A) HAS DISCU SSED ALL THE ABOVE ITEMS INDIVIDUALLY IN HIS ORDER DATED 18.10.2002. THE MA IN REASON FOR SUSTAINING ADDITION WAS STATEMENT RECORDED U/S 132(4) OF THE I T ACT. 17. NOW THE ASSESSEE BEFORE US. THE LD. COUNSEL FO R THE ASSESSEE CONTENDED THAT DURING THE COURSE OF SEARCH OPERATIO N THE STATEMENT OF APPELLANT WAS RECORDED AND AS PER STATEMENT HE MAD E THE DISCLOSURE IN TOTAL RS.2 17 000/- WHICH INCLUDES DISCLOSURE OF JEWELLER Y RS.25000/- AND HAD BEEN CONSIDERED ELSEWHERE. THE REMAINING ADDITION OF R S.1 92 000/- HAD BEEN MADE WITHOUT VERIFYING THE FACT AS TO SUCH EXPENSES WERE INCURRED DURING THE PERIOD UNDER CONSIDERATION. THE DISCLOSURE OF RS.1 15 000/- ON ACCOUNT OF FURNITURE AND RENOVATION OF RESIDENCE WHICH WAS MAD E TO BUY PIECE OF MIND ONLY IF ANYTHING IS FOUND DURING THE SEARCH OPERATI ON. NOTHING WAS FOUND IN RELATION OF SUCH EXPENDITURE EITHER RELATING TO THE PERIOD UNDER CONSIDERATION OR OTHERWISE. THEREFORE THE ADDITION WAS NOT WARRANT ED. THE APPELLANT HAD ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 13 RETRACTED THIS DISCLOSURE VIDE LETTER DATED 16.02.1 087 BEFORE THE ITO PROFESSIONAL CIRCLE-1 AHMADABAD (PAPER BOOK PAGE N O.44) AND VIDE HIS LETTER DATED 25 TH SEPETEMEBR 2002 BEFORE THE CIT(A) AS PER PAGE NO.1 36 OF PAPER BOOK. DURING THE COURSE OF SEARCH SOME RECEIPTS OF RELIGIOUS DONATION WAS FOUND BUT THIS WAS MANAGED BY THE ASSESSEES FATHER AND RECEIPTS WERE RELATED TO PREVIOUS YEAR NOT THE YEAR UNDER CONSIDE RATION AND DISCLOSURE WAS MADE BY THE ASSESSEE TO BUY THE PEACE OF MIND IF AN YTHING WAS FOUND OUT DURING THE SEARCH OPERATION. THE APPELLANT HAD DIS CLOSED RS.11 000/- ON ACCOUNT OF SINGAPORE TRIP OF DAUGHTER WHO WAS GROUP LEADER OF SCHOOL TOUR AND ALL THE PARTICULARS MENTIONED IN DIARY RELATED TO SCHOOL TRIP AND ALSO RELATED THE PREVIOUS YEAR NOT THE YEAR UNDER CONSIDERATION. LIKEWISE EXPENDITURE ON GOA TOUR OF RS.6000/- WAS DISCLOSED BY HIM BUT SAME WERE RELATED TO THE PREVIOUS YEAR. THE APPELLANT DISCLOSED AMOUNTING R S. 30 000/- ON ACCOUNT OF HOUSEHOLD EXPENDITURE BUT HOUSEHOLD DURING THE ASSE SSMENT YEAR WAS RS.38 572/-. AS PER SECTION 69C OF IT ACT ANY EXPE NSE INCURRED UNACCOUNTED IT CAN BE ADDED IN WHICH IT HAS BEEN INCURRED. THE REFORE LEARNED COUNSEL ARGUED THAT ALL THE DISCLOSURE WAS MADE TO BUY THE PEACE. ANOTHER SIDE LD. D.R. VEHEMENTLY RELIED ON THE ORDER OF THE A.O. AND CIT(A) AND STATEMENT U/S 132(4) OF THE IT ACT. 18. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND PAPER BOOK AND HEARD THE ARGUMENTS OF BOTH SIDES. THE LD. A.O . HAD NOT BROUGHT ON RECORD ANY INCRIMINATING MATERIAL TO SHOW THAT THE ASSESSEE HAD INCURRED EXPENDITURE ON FURNITURE AND RENOVATION. HE CONSID ERED ONLY STATEMENT ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 14 RECORDED U/S 132(4) OF THE IT ACT. THUS THERE IS NO BASIS OF ADDITION OF RS.1 15 000/- AND CIT(A) WAS NOT RIGHT IN CONFIRMIN G THE ADDITION. DURING THE COURSE OF SEARCH EVIDENCE FOR RELIGIOUS FUNCTIONS WERE FOUND AND SAME HAD BEEN DISCLOSED BY THE ASSESSEE BUT BEFORE THE LOWER AUTHORITY AS WELL AS BEFORE US THE APPELLANT HAD NOT EXPLAINED THE SOUR CE OF EXPENDITURE ON RELIGIOUS FUNCTION. THUS WE HOLD THAT CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION OF RS.30 000/- ON ACCOUNT OF RELIGIOUS FUN CTION. THE APPELLANT HAD NOT FILED ANY EVIDENCE REGARDING SINGAPORE AS WELL AS G OA TOUR FOR EXPLAINING THE SOURCE OF EXPENDITURE. THEREFORE CIT(A) WAS RIGHT IN CONFIRMING THE ADDITION. THE ASSESSEE IS A CHARTERED ACCOUNTANT AND HAD WITH DRAWN RS.38 572/- DURING THE YEAR UNDER CONSIDERATION WHICH WAS NOT F OUND SUFFICIENT DURING THE COURSE OF SEARCH. THEREFORE THE ASSESSEE DISCLOSE D RS.30 000/- ON ACCOUNT OF HOUSEHOLD WITHDRAWAL AS DISCUSSED BY THE A.O. IN ASSESSMENT ORDER THAT ONE DAUGHTER AND ONE SON WHO WERE SCHOOL GOING AND LIVING STANDARD OF THE APPELLANT WAS DESCENT AS CONSIDERED BY THE AUTHORIZ ED OFFICER DURING THE COURSE SEARCH AND ASSESSEE HIMSELF ADMITTED UNDISCL OSED EXPENDITURE FROM THE PROFESSIONAL INCOME DURING THE COURSE OF SEARCH IN HIS STATEMENT U/S 132(4) OF THE IT ACT. THEREFORE CIT(A) WAS RIGHT IN HOLDING THE ADDITION OF RS.30 000/- ON ACCOUNT OF HOUSEHOLD EXPENDITURE. T HUS THE ADDITION OF RS.30 000/- ON ACCOUNT OF RELIGIOUS FUNCTION RS.11 000/- ON SINGAPORE TOUR RS.6000/- ON GOA TOUR AND RS.30 000/- ON HOUSEHOLD ARE CONFIRMED BY US BUT ADDITION ON ACCOUNT OF FURNITURE AND RENOVATION AT RS.1 15 000/- IS DELETED. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 15 19. GROUND NO.16 IS AGAINST THE ADDITION OF RS.13 6 50/- ON ACCOUNT OF STAMP PAPER PURCHASE. THE A.O. OBSERVED IN PARAGRAPH 16 OF PAGE NO.13 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAD PURCHASED ST AMP OF RS.13 650/- AS PER ANNEXURES Y-1 Y-2 & Y-3. THE ASSESSEES REPLY WAS THAT THESE STAMP PAPERS WERE PURCHASED BY THE DIFFERENT CLIENTS OF T HE ASSESSEE AS IT IS CONVENIENT FOR THEM TO PURCHASE THE STAMP IN THE NA ME OF ANY LEGAL REPRESENTATIVE WHICH CAN BE USED BY ANY OF THEM. T HE A.O. DID NOT FIND THE ASSESSEES REPLY CONVINCING THUS HE MADE THE ADDI TION OF RS.13 650/- IN THE INCOME OF THE ASSESSEE. 20. THE CIT(A) ALSO CONFIRMED THE ADDITION ON PAGE 18 OF THE CIT(A) ORDER IN PARAGRAPH NO.11 BECAUSE THE STAMPS WERE FOUND IN THE POSSESSION OF THE ASSESSEE AND NO MATERIAL WAS BROUGHT ON RECORD BY T HE APPELLANT THAT STAMP PAPERS WERE PURCHASED BY OTHER. 21. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT ALL THE STAMPS WERE NOT PERTAINED TO ASSESSEE HIMSELF. THE APPELLANT FILED THE BIFURCATION OF STAMP PURCHASED BEFORE THE CIT(A) AND CLAIMED THAT STAMP VALUED RS.6098/- PURCHASED IN TH E NAME OF ASSESSEE AND REMAINING STAMP VALUED RS.7552/- IN THE NAME OF DIF FERENT PARTIES. HE FURTHER CLAIMED THAT DURING THE YEAR UNDER CONSIDERATION ON LY STAMP RS.710/- WERE PURCHASED. THUS NO ADDITION IS CALLED FOR. WHERE AS LD. CITD.R. VEHEMENTLY ARGUED THAT LD. CIT(A) HAD CONSIDERED ALL THE EVIDE NCE. THEREFORE THE ORDER OF THE CIT(A) MAY BE CONFIRMED. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 16 22. WE HAVE PERUSED THE STATEMENT U/S 132(4) OF THE IT ACT AND ORDER OF THE AUTHORITIES BELOW AND ARGUMENTS AND REPLY FILED BEFORE THE CIT(A). THE ASSESSEE HAD HARDLY PURCHASED STAMPS VALUED RS.710/ - DURING THE YEAR UNDER CONSIDERATION AND REMAINING STAMPS WERE EITHE R PURCHASED BY OTHER PARTIES OR PURCHASED BY THE ASSESSEE IN DIFFERENT Y EARS. THUS THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THE ADDITION OF RS.13 650/ -. WE ALLOW THE APPEAL ON THIS GROUND IN FAVOUR OF THE ASSESSEE. 23. GROUND NO.17 IS AGAINST THE ADDITION OF RS. 15 00 000/- ON ACCOUNT OF SPECULATIVE TRADING IN SHARES/DEBENTURES. LD. A.O. OBSERVED THAT ON PAGE NOS.15 TO 20 OF ASSESSMENT THAT AS PER PAGE NOS. 61 TO 65 OF ANNEXURE Y-1 OF THE PANCHANAMA IT WAS FOUND THAT THERE HAD BEEN AC TIVE TRADING OF SHARES BY THE ASSESSEE. THESE DETAILS WERE GIVEN ON PAGE NOS . 49 TO 60 OF THE SAME ANNEXURES. THE APPELLANT FILED WRITTEN REPLY BEFOR E THE A.O. THAT ALL THE PAPERS OF ANNEXURE Y-1 BELONGED TO DIFFERENT CLIENT S. NONE OF THEM EITHER BELONGED TO HIM OR HIS FAMILY MEMBERS. FURTHER HE CLAIMED THAT TRANSACTION ON PAGE NOS. 49 TO 65 CAN BE EXPLAINED ON THE BASIS OF ENTRIES ITSELF. THE APPELLANT GAVE THE NAME OF PARTNERS/MEMBERS OF POPU LAR GROUP AS PER PAGE NO.59 BUT THE OTHER PAGES CANNOT BE EXPLAINED. THE A.O. FURTHER OBSERVED THAT ON PAGE NO.64 THERE WERE TRANSACTION OF PURCH ASE OF SHARES OF ATUL RELIANCE STANDARD G.N.F.C. ETC. FOR WORTH RS.2 56 455/- ON REVERSE SIDE THERE WAS ANOTHER TRANSACTION OF RS.21 750/- ON WHI CH NO NAME OF COMPANY HAS BEEN MENTIONED. THE APPELLANT HAD CALCULATED T HE PROFIT OF RS.18 295/- ON THE TRANSACTION OF SHARES OF THE STANDARD COMPAN Y ON WHICH BROKERAGE ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 17 HAD BEEN PAID @ 1% FOR A.Y. 87-88. ON PAGE NO.55 O F ANNEXURE THERE WAS CERTAIN 17 COMPANIES NAMES WERE GIVEN AND TOTAL SA LE PURCHASED HAD BEEN SHOWN AT RS.9 76 680/- AND PROFIT WORKED OUT AT RS. 1 23 239/-. THERE WERE CERTAIN SLIPS ISSUED BY VARIOUS SHARE BROKERS AT PA GE NOS.27 TO 92 OF ANNEXURE Y4 WHICH WERE ALSO SUPPORTED THAT THE ASSE SSEE WAS DEALING IN PURCHASE AND SALE OF SHARES AND DEBENTURES. THE AS SESSEES LETTER DATED 31.12.93 WAS CONSIDERED IN WHICH HE HAD DENIED HAV ING BEEN DONE ANY SPECULATIVE TRADING OR DEALING IN SHARE. THE ASSES SEES REPLY WAS NOT FOUND CONVINCING TO THE A.O. THEREFORE HE ESTIMATED INC OME OF RS.15 00 000/- ON ACCOUNT OF UNRECORDED SHARES INCOME ARISING OUT OF INVESTMENT. 24. BEING AGGRIEVED BY THE ORDER OF THE A.O. THE A SSESSEE FILED FIRST APPEAL BEFORE CIT(A) WHO HAD ADJUDICATED THIS ISSUED FROM PAGE NOS. 19 TO 21 AND CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- THE ARGUMENT OF THE APPELLANT AND THE FACTS OF THE CASE HAVE BEEN CONSIDERED. THE MAIN PLEA TAKEN BY THE APPELL ANT IS THAT THE SEIZED PAPERS SHOWING THE TRANSACTIONS OF SHARES DO ES NOT PERTAIN TO HIM. IT PERTAINS TO ITS CLIENTS OF THE APPELLANT W HO BELONG TO POPULAR GROUP. BUT THE APPELLANT HAS NOT PRODUCED ANY EVID ENCE TO SHOW THAT THE TRANSACTIONS DOES NOT PERTAIN TO HIM. A MERE C LAIM THAT IT PERTAINS TO SOMEONE ELSE IS NOT ENOUGH. IF THE DOCUMENTS HAVE BEEN FOUND IN HIS POSSESSION IT IS FOR HIM TO LEAD THE EVIDENCE TO S HOW THAT IT DOES NOT RELATE TO HIM. FURTHER THE A.O. HAS MENTIONED THA T THE ATTENTION OF THE APPELLANT WAS DRAWN TO THE PAGES 27 TO 92 OF ANNEXU RE Y-4 WHICH ARE SLIPS ISSUED BY VARIOUS SHARE BROKERS IN THE NAMES OF FAMILY MEMBERS OF THE APPELLANT AND ALSO TOWARDS OTHER LOOSE PAPERS. THE APPELLANT COULD NOT EXPLAIN IT PROPERLY HENCE THE A.O. CONSIDERED THAT THE TRANSACTIONS WERE CONDUCTED BY THE APPELLANT HIMSELF. A.O. HAS FURTHER MENTIONED ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 18 THAT DURING THE SEARCH DIVIDEND VOUCHERS IN THE NA MES OF VARIOUS FAMILY MEMBERS OF THE APPELLANT WAS FOUND. FURTHER CONSID ERING THE FACT THAT THE PURCHASE AND SALE OF SHARES IS A CONTINUOUS PRO CESS THE A.O. ESTIMATED THE INCOME ARISING OUT OF SUCH INVESTMENT AT RS.15 00 000/-. CONSIDERING THE ABOVE DISCUSSION AND THE MATERIAL F OUND DURING THE SEARCH IT IS QUITE CLEAR THAT THE APPELLANT WAS DE ALING IN PURCHASE AND SALE OF SHARES. HENCE THE ADDITION MADE ON THIS AC COUNT IS CONFIRMED. 25. NOW THE ASSESSEE IS BEFORE US. THE LD. COUNSE L FOR THE ASSESSEE CONTENDED THAT DURING THE SEARCH AND SEIZURE OPERAT ION CERTAIN PAPERS WERE FOUND AS PER PAGE NO.197 TO 202 OF THE PAPER BOOK. PAGE NOS.49 TO 65 OF ANNEXURE Y-1 WERE PERTAINED TO SHARES AND SECURITIE S. THE APPELLANT EXPLAINED THAT THESE SHARES AND SECURITIES WERE NOT BELONGED TO HIM AND HIS FAMILY MEMBERS AS PER STATEMENT U/S132(4) IN QUESTI ON NO.9 TO 27 ( PAGE NO.31 OF THE PAPER BOOK). LD. A.O. MADE THE ADDITI ON OF RS.15 00 000/- ON ESTIMATION FOR DEALING IN SHARE AND DEBENTURES. TH E STATEMENT U/S 132(4) DATED 28.10.1986 IS REPRODUCED AS UNDER: Q.9.. I AM SHOWING YOU PAGE NO.60 OF ANN. Y-1 FOUN D FROM YOUR OFFICE DURING THE COURSE OF SEARCH. FROM THE CALCULATION APPEARING ON THIS PAGE IT APPEARS THAT THESE REFLECT SPECULATION TRAN SACTIONS IN SHARES AND THE RESULTING PROFIT THEREFROM. WHAT HAVE YOU TO S AY IN THIS RESPECT? ANS. AFTER GOING THROUGH THE ABOVE PAGE 9 STATE THA T THIS PERTAINS TO MY CLIENTS SHRI CHHAGANLAL B. PATEL SMT. KOKILA C. PATEL SHRI NATWARLAL B. PATEL AND THEIR FAMILY MEMBERS. Q.10. WHY IS THIS PAPER IN YOU POSSESSION? ANS. THIS PAPER HAD BEEN GIVEN TO ME FOR SEEKING M Y ADVICE. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 19 Q.11. WILL YOU PLEASE SPECIFY THE ADVICE FOR WHICH THIS PAPER HAD COME TO YOU AND THEN LEFT IN YOUR OFFICE? ANS. THE PAPER MIGHT HAVE COME FOR SEEKING ADVICE E ITHER FOR THE SALE OF THE SHARES OR FOR FILING THEIR RETURN OF INCOME. Q.12. KINDLY BE MORE SPECIFIC. IF IT HAD BEEN FOR FILING RETURN IT COULD NOT HAVE BEEN LEFT UNATTENDED? ANS. I CANT BE MORE SPECIFIC BECAUSE I DO NOT KNOW THE FULL DETAIL. Q.1.3 REGARDING SALE OF SHARES WHAT KIND OF ADVICE DO YOU RENDER TO YOUR CLIENTS. ANS. THE ADVICE VARIES FROM CLIENT-TO-CLIENT. HOWE VER MOSTLY IT IS ABOUT THE TIME OF SALE SO AS TO MAXIMIZE THE PROFIT AND ALSO TO MINIMIZE THE TAX-LIABILITIES. Q.14. HOW MANY OF YOUR CLIENTS SOUGHT SUCH ADVICE D URING THE PAST FIVE YEARS? ANS. IT IS NOT POSSIBLE TO GIVE THE EXACT FIGURE. Q.15. IS IT A REGULAR FEATURE THAT YOU RENDER SUCH ADVICE? ANS. NO. OCCASIONALLY I RENDER SUCH ADVICE. Q.16. IN YOUR OPINION HOW MANY CLIENTS SEEK SUCH AN ADVISE IN A YEAR? ANS. VERY FEW. Q.17. WHEN VERY FEW CLIENTS COME FOR SEEKING SUCH A DVICE THEN YOU MUST BE ABLE TO SPECIFY WHETHER THE PERSONS CONNECT ED WITH PAGE 60 OF ANNEXURE Y-1 HAD COME FOR SUCH AN ADVICE OR NOT? ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 20 ANS. YES THEY HAD COME. Q.18. WHAT FEES DID YOU CHARGE FROM THEM FOR THIS P ARTICULAR ADVICE? ANS. NO SPECIFIC FEES IS CHARGED FOR SUCH AN ADVICE FROM REGULAR CLIENTS AND IN THIS CASE NO FEES FOR THIS ADVICE WAS CHARGE D. Q.19. SO ONE THING IS CLEAR THAT PAGE 60 OF ANNEX URE Y-1 CAME TO YOU FOR SEEKING ADVICE FOR SALE OF SHARE. IS THAT CORR ECT? ANS. IT WAS IN RELATION TO SHARE. I AM NOT SURE WH ETHER IT WAS FOR SALE OF SHARE CALCULATION OF CAPITAL GAINS OR PREPARING OF RETURN OF INCOME. Q.20. IN RESPONSE TO Q. NO.17 YOU HAD STATED THAT T HE PERSON CONNECTED WITH THE SAID DOCUMENT HAD COME TO YOU FO R SEEKING ADVICE REGARDING SALE OF SHARE. IN RESPONSE TO Q.19 YOU H AVE CHANGED YOUR STAND. WHAT IS THE REASON FOR THIS? ANS. THE REALITY IS THAT I DO NOT KNOW ABOUT THIS P APER. Q.21. I AM SHOWING TO YOU PAGE 61 OF ANNEXURE Y-1. WHAT ARE THE CALCULATION ON THIS PAGE? CAN YOU LINK UP THE CALC ULATIONS HAVE WITH THOSE ON PAGE 60 OF THIS ANNEXURE? ANS. I AM NOT IN POSITION TO STATE THE NATURE OF TH E CALCULATION. I CAN NOT LINK UP THE FIGURES APPEARING ON PAGE NO.60 AND 61. Q.22. I AM SHOWING TO YOU PAGE 62 OF ANN. Y-1. WH AT ARE THE FIGURES ON THIS PAGE AND CAN YOU LINK UP THIS WITH PAGE NO. 60? ANS. I AM NOT IN POSITION TO STATE THE NATURE OF TH E CALCULATION. I CANT LINK UP PAGE NO.60 AND 62 OF Y-1. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 21 Q.23. I AM SHOWING TO YOU PAGE NO.63 & 64 OF ANN. Y -1. WHAT CALCULATIONS ARE THERE ON THESE PAGES? CAN YOU LIN K THESE WITH PAGE NO.60? ANS. I AM NOT IN POSITION TO STATE THE NATURE OF TH E CALCULATIONS ON THESE PAGES. I CAN NOT LINK UP THESE PAGES WITH 60. Q.24. I AM SHOWING TO YOU PAGE NO.65 OF ANN. Y-1. WHAT ARE THE RECEIPTS ON VARIOUS DATES RELATING TO AS MENTIONED ON THIS PAGE. ANS. I CANNOT SAY ANYTHING IN THIS RESPECT. Q.25. CAN YOU LINK IT UP THIS PAGE WITH PAGE NO.60 OF Y-1. ANS. NO I CAN NOT LINK IT UP WITH PAGE NO.60 OF AN N. Y-1. Q.26. TO WHOM DO THE TRANSACTION RELATE? ANS. I DO NOT HAVE ANY IDEA. Q.27. IN WHOSE HANDWRITING IS PAGE NO.65 OF Y-1 WRI TTEN? ANS. IT IS NOT IN MAY OWN HANDWRITING. Q.28. I AM SHOWING TO YOU PAGE NO.283 AND 284 OF AN N.Y-1. WHAT IS THE NATURE OF NOTING ON THIS PAGE? ANS. THESE PAPERS WERE GIVEN TO ME ABOUT TWO YEARS BACK BY SOMEONE FROM PRAVIN CORPORATION GROUP. THIS IS LIS T OF STAMP-PAPERS WHICH WERE AVAILABLE WITH THAT GROUP. WHATEVER HAS BEEN STATED ABOVE IS TRUE TO THE BEST OF MY KNOWLEDGE AND HAS BEEN STATED WITHOUT ANY COERCION AND/OR INDUCEMENT AND IS FULLY ACCEPTABLE TO ME. AFTER GO ING THROUGH THE STATEMENT I AM SIGNING. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 22 THE COPIES OF PAPER SHOWS THAT THESE ARE PERTAINING TO POPULAR GROUP CASES. THEREFORE PRESUMPTION U/S 132(4)(A) DOES NOT STAND ESTABLISHED BY THE A.O. FURTHER PAPERS WERE SEIZED FROM THE ASSESSEES OFFI CE NOT FROM THE RESIDENCE OF THE ASSESSEE WHICH SUPPORTED THAT THESE PAPERS W ERE PERTAINED TO HIS CLIENT. THE LD. CIT D.R. RELIED UPON THE ORDER OF THE A.O. AND CIT(A) AND PRAYED TO CONFIRM THE ADDITION. 26. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORIT IES BELOW AND SUBMISSION MADE BY THE ASSESSEE AND HEARD THE ARGUM ENTS FROM BOTH SIDES. IT IS EVIDENT FROM THE DOCUMENTS SEIZED THAT SOME O F THE DIVIDENDS SLIPS WERE IN THE NAME OF ASSESSEE AND HIS FAMILY MEMBERS. FU RTHER THE PROFIT ON PURCHASE AND SALE OF THE SHARE HAS CALCULATED BY TH E ASSESSEE ON THOSE SEIZED PAPERS. THE APPELLANT HAD NOT BROUGHT ON RE CORD ANY EVIDENCE THAT THESE PAPERS WERE PERTAINED TO POPULAR GROUPS OR EI THER ASSESSEES CLIENT. THE APPELLANT HAD NOT SUBSTANTIATED HIS CLAIM BEFO RE THE A.O. CIT(A) AND ALSO BEFORE US WITH EVIDENCE THAT THESE PAPERS WERE PERTAINED TO DIFFERENT PERSONS. HOWEVER THE ESTIMATE MADE BY THE A.O. AP PEARS TO HIGHER SIDE FURTHER THE ASSESSEE HAD DISCLOSED SHARES AND SECUR ITIES IN THE NAME OF THE FAMILY MEMBERS IN THEIR RETURN. THEREFORE WE CONF IRM THE CIT(A) ORDER TO THE RS.7 00 000/- INSTEAD OF RS.15 00 000/-. THUS THE ASSESSEE GETS RELIEF OF RS.8 00 000/-. THE ASSESSEES APPEAL IS PARTLY ALL OWED ON THE GROUND. 27. GROUND NO.18 IS AGAINST THE ADDITION OF RS.1 50 000/- ON ACCOUNT OF PAYMENT MADE TO MODERN ENGINEERING AND MOULDING COM PANY BY MS. N.H. PATEL. AS PER PAGE 93 AND PAGE 94 SHE PAID RS.1 LA C AND RS.50 000/- TO ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 23 ABOVE PARTY. THE ASSESSEE WAS GIVEN REASONABLE OPP ORTUNITY TO EXPLAIN THE SOURCE OF RS.1.5 LACS. HE SUBMITTED REPLY VIDE HIS LETTER DATED 27.10.1993 AND ADMITTED THAT SHE HAD PAID RS.1.5 LACS TO THAT COMP ANY FROM HANIUSH TRUST ACCOUNT BY DEBITING TO HER ACCOUNT. THE NECESSARY EVIDENCES WERE NOT FILED BY THE ASSESSEE BEFORE THE A.O. AT THE TIME OF ASSE SSMENT PROCEEDING. THEREFORE HE MADE THE ADDITION OF RS.1.5 LACS IN T HE INCOME OF THE ASSESSEE. 28. THE LD. CIT(A) HAD ALSO CONFIRMED THE ADDITION ON ACCOUNT OF PAYMENT MADE TO ABOVE COMPANY BECAUSE HE DID NOT PRODUCE AN Y EVIDENCE BEFORE THE ASSESSING OFFICER TO EXPLAIN THE SOURCE OF THE INVE STMENT AND ALSO EVEN DURING APPELLATE PROCEEDING THE SOURCE OF DEPOSIT WAS NOT EXPLAINED. 29. NOW THE ASSESSEE IS BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT MS. NINA H. PATEL HAD HER OWN SOURCE OF INCOME AND SAME HAD BEEN PAID OUT OF OWN SOURCE BY DEBITING HER ACC OUNT IN THE BOOK ACCOUNT OF HANIUSH TRUST. THE PAYMENT WAS OUT OF DISCLOSE D SOURCE AND PAID BY BANK DRAFTS. THEY ARE IN THE SEIZED MATERIALS IN A NNEXURE Y-4 AT PAGE NOS. 93 & 94. THE DATES OF PAYMENT WERE 24.05.85 & 27.05.8 5 AND SAME WERE RECEIVED BACK ON 06.09.85. THE ENTRIES PERTAINED T O OTHER THAN YEAR UNDER CONSIDERATION. THE APPELLANT FURTHER ARGUED THAT N O ADDITION CAN BE MADE IN THE HAND OF APPELLANT AS IT DID NOT PERTAIN TO HIM AND ALSO FOR THE YEAR UNDER CONSIDERATION. HE FURTHER RELIED UPON 176 ITR 660 (PUNJAB AND HARYANA HIGH COURT) & 93 ITR 341 (MAD.) THAT THE BURDEN OF PROOF ON THE A.O. TO ESTABLISH THAT PAYMENTS WERE MADE FORM UNDISCLOSED INCOME OF THE ASSESSEE. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 24 30. WE HAVE PERUSED THE ORDER OF THE AUTHORITIES BE LOW AND HEARD THE ARGUMENTS FROM BOTH SIDES. IT IS UNDISPUTED THAT T HIS TRANSACTION IS IN THE NAME OF MS. NINA H. PATEL (ASSESSEDS DAUGHTER) WHO WAS ASSESSED TO TAX AND HAD OWN SOURCE OF INCOME. THE PAYMENTS WERE MA DE THOUGH DRAFTS WHICH WERE NOT PERTAINED TO YEAR UNDER CONSIDERATIO N. THEREFORE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY TH E A.O. ON ACCOUNT OF PAYMENT MADE TO MODERN ENGINEERING AND MOULDING COM PANY AMOUNT TO RS.1.5 LACS. HENCE APPEAL ON THIS GROUND IS ALLOW ED. 31. GROUND NO.19 IS AGAINST ESTIMATING THE PROFESSI ONAL INCOME BY RS.5 33 500/- ON THE BASIS OF GENERAL CLIENT LEDGER FOUND AT THE TIME OF SEARCH. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION C LIENT GENERAL INDEX REGISTER WAS SEIZED FROM PREMISES OF THE ASSESSEE. HE HAD T OTAL NUMBER OF CLIENTS 4875/-. EVEN THEN THE APPELLANT HAD NOT FILED THE RETURN FOR A.Y. 87-88. THE APPELLANT WAS GIVEN REASONABLE OPPORTUNITY BEFORE E STIMATING THE PROFESSIONAL RECEIPTS. THE APPELLANT REPLIED VIDE HIS LETTER DA TED OCTOBER 27 1993 AND TOTAL RECEIPTS HAD BEEN DISCLOSED FROM PROFESSIONAL BUSINESS AT RS.4 41 507/-. HE FURTHER ADMITTED DURING THE COURSE OF RECORDING THE STATEMENT U/S 132(4) THAT AMOUNTS RECEIVED BY ME FROM VARIOUS PERSONS WHICH C OME TO ME FOR PROFESSIONAL ADVICE OTHER THAN MY CLIENTS ARE NOT R ECORDED BY ME IN MY REGULAR BOOKS OF ACCOUNTS. THE A.O. ESTIMATED THE INCOME @ RS.200/- PER CLIENT AT RS.9 75 000/- AND AFTER REDUCING THE DISC LOSED RECEIPTS OF RS.4 41 507/-. THE REMAINING AMOUNT OF RS.5 33 500 /- WAS ADDED IN THE INCOME OF THE ASSESSEE. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 25 32. CIT(A) HAD CONFIRMED THE ADDITION ON PAGE NOS.2 4 AND 25 OF THE CIT(A). THE OBSERVATION MADE BY THE CIT(A) WHICH IS REPROD UCED AS UNDER:- THE ARGUMENT OF THE APPELLANT AND THE FACTS OF TH E CASE HAVE BEEN CONSIDERED. IT HAS BEEN FOUND THAT DURING THE COURSE OF SEARCH THE APPELLANT HIMSELF ADMITTED IN RESPONSE TO QUEST ION NO.44 AMOUNTS RECEIVED BY ME FROM VARIOUS PERSONS WHICH COME TO ME FOR PROFESSIONAL ADVICE OTHER THAN MY CL IENTS ARE NOT RECORDED BY ME IN MY REGULAR BOOKS OF ACCOUNTS. FURTHER IT HAS BEEN MENTIONED BY ASSESSING OFFICER THAT DURING THE SEARCH PROCEEDINGS NO SYSTEMATIC DETAILS ABOUT THE RECEIPT FROM THE CLIENTS WERE FOUND RECORDED. CONSIDERING THE FACT THAT THERE WAS NO SYSTEMATIC RECORD OF THE PROFESSIONAL RECEIPT FOUND DURING THE SEARCH AND IN THE STATEMENT RECORDED U/S.132(4) AT QUESTIO N NO.44 THE APPELLANT HAD ADMITTED THAT AMOUNT RECEIVED FROM VA RIOUS PERSONS ARE NOT RECORDED THE ESTIMATE MADE BY THE ASSESSING OF FICER ON THE BASIS OF CLIENTS GENERAL INDEX REGISTER IS QUITE REASONABLE. FURTHER THE ASSESSING OFFICER HAS TAKEN AN AVERAGE PROFESSIONAL FEE OF RS.200/- ONLY. RS.200/- PER FILE IS A VERY REASONABLE ESTIM ATE AND HENCE THE ADDITION MADE ON THIS ACCOUNT IS QUITE REASONABLE. HENCE IT IS CONFIRMED. 33. NOW THE ASSESSEE IS BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT DURING THE SEARCH PROCEEDING CLIENTS GENERAL INDEX REGISTER WAS FOUND AND SEIZED. AS PER THE REGISTER NUMBER OF CLIENTS WAS SHOWN WHICH HAVE BEEN 4875/-. IT WAS ESTIMATED @ RS. 20 0/- PER CLIENT MULTIPLIED BY THE NUMBER OF CLIENTS AND SAME WAS ARRIVED AT O UT OF WHICH THE RECEIPTS ACTUALLY DECLARED WAS DEDUCTED AND BALANCE WAS ADDE D AS PROFESSIONAL INCOME NOT RECORDED IN THE BOOKS. HENCE THE ADDIT ION OF RS.5 33 500/- WAS MADE. HE FURTHER ARGUED THAT ADDITION WAS MADE ON PURE GUESS WORK NOT ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 26 BASED ON EVIDENCE OR DOCUMENTS. THE APPELLANT HAD ALREADY EXPLAINED BEFORE THE A.O. AS WELL AS CIT(A) THAT NUMBER OF CL IENTS SHOWN IN THE REGISTER ARE NON OPERATIVE CLIENTS WHO WERE CONTINUING FROM THE BEGINNING OF THE REGISTER MAINTAINED EXCEPT THE ASSUMPTION AND PRESU MPTION THERE WAS NO BASE FOR MAKING SUCH ESTIMATED ADDITION HENCE THE SAME SHOULD BE DELETED. THE ASSESSEE HAD RETRACTED FROM HIS STATEMENT BEFOR E THE A.O. AT THE TIME OF 132(5) OF ORDER AS PER PAGE NO.44 OF THE PAPER BOOK . THEREFORE THE ADDITION MADE BY A.O. WAS NOT JUSTIFIED AND CIT(A) HAS WRONG LY CONFIRMED THE ADDITION. FROM THE SIDE OF REVENUE LD. CITD.R. VEHEMENTLY RE LIED ON THE ORDER OF THE A.O. AND CIT(A) AND PRAYED TO CONFIRM THE ADDITION MADE BY THE A.O. 34. WE HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AND HEARD THE ARGUMENTS FROM BOTH SIDES. IT WAS UNDISPUTED THAT EXCEPT CLIENT GENERAL INDEX REGISTER NOTHING INCRIMINATING DOCUMENT WAS FOUND. ANOTHER SIDE THE APPELLANT HAD ADMITTED THAT HE WAS NOT REFLECTED FU LL INCOME IN THE REGULAR BOOKS OF ACCOUNT. THE CLIENT GENERAL INDEX IS RUNN ING ACCOUNT WHICH HAD OLD CLIENTS ALSO. IT IS NOT POSSIBLE THAT WHATEVER NUM BER MENTIONED IN THE CLIENT GENERAL INDEX REGISTER HAD TOOK THE ADVICE FROM THE APPELLANT THE ADDITION MADE BY THE A.O. APPEARS TO HIGHER SIDE THEREFORE WE CONFIRM THE ADDITION UNDER THIS HEAD TO RS.2 00 000/- IN THE INTEREST OF JUSTICE. THE REMAINING ADDITION OF RS. 3 33 500/- IS DELETED. 35. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. ITA NO. 76/AHD/2003 A.Y. 87-88 PAGE 27 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ) ) 12( / DR ITAT AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ 8/ 1 ': ) 12( ; STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 13 & 18.07.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 23.07.2012 4) DATE OF CORRECTION 24.07.2012 5) DATE OF FURTHER CORRECTION 26.07.2012 6) DATE OF INITIAL SIGN BY MEMBERS 31.07.2012 7) ORDER UPLOADED ON 31.07.2012 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 31.07.2012