Nilkanth Specific Family Trust, v. The ACIT., Mehsana Circle,, Mehsana

ITSSA 3/AHD/2007 | misc
Pronouncement Date: 31-10-2013 | Result: Allowed

Appeal Details

RSA Number 320516 RSA 2007
Bench Ahmedabad
Appeal Number ITSSA 3/AHD/2007
Duration Of Justice 6 year(s) 9 month(s) 26 day(s)
Appellant Nilkanth Specific Family Trust,
Respondent The ACIT., Mehsana Circle,, Mehsana
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 31-10-2013
Date Of Final Hearing 25-10-2013
Next Hearing Date 25-10-2013
Assessment Year misc
Appeal Filed On 05-01-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SRI D.K TYAGI JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTAN T MEMBER NILKANTH SPECIFIC FAMILY TRUST BLOCK NO. 1074B 1075TO 1078 KADI KALOL ROAD CHHATRAL DIST. MEHSANA (N.G.) (APPELLANT) VS ASSISTANT COMMISSIONER OF INCOME-TAX MEHSANA CIRCLE MEHSANA (RESPONDENT) REVENUE BY: SRI O.P. VAISHNAV CIT-D.R . ASSESSEE BY: SRI S.N. SOPARKAR A.R. DATE OF HEARING : 25-10-2013 DATE OF PRONOUNCEMENT : 31-10-20 13 / ORDER PER : D.K. TYAGI JUDICIAL MEMBER:- THIS IS THE REVENUES APPEAL AGAINST THE ORDER OF LD. CIT(A)-XXI AHMEDABAD DATED 30-11-2006. IT(SS)A NO. 03/AHD/2007 ASSESSMENT YEAR: BLOCK PERIOD (01-04-1995 TO 27-09-2001) I.T.(SS)A. NO. 03/AHD/2007 A.Y. BLOCK PERIO D PAGE NO NILKANTH SPECIFIC FAMILY TRUST VS. ACIT 2 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPE AL:- 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANT'S CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) HAS GROSSLY ERRED IN POINTS OF LAW AND FACTS. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) HAS GROSSLY ERRED IN CONFIRMING ISSUE OF NOTICE U/S.158BD OF I. T. ACT. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) HAS GROSSLY ERRED IN CONFIRMING OF PASSING ORDER U/S.158BC RWS 158 BD OF I.T ACT. 4. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS. 96 00 000 IN TH E ASSESSMENT FOR THE BLOCK PERIOD. 5. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPE ALS) HAS GROSSLY ERRED IN NOT APPRECIATING APPELLANT'S CONTENTI ON THAT LD. A.O. HAS UNJUSTIFIABLY RELIED UPON PRESUMPTIONS U/S.132(4A ) OF I.T. ACT. 6. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) HAS GROSSLY ERRED IN NOT JUSTIFYING THE FACT THAT ISSUE OF NOTI CE U/S.158BD OF I.T. ACT ON 11.11.03 WAS MUCH DELAYED FROM THE DATE OF S EARCH AT THE RESIDENCE OF SHRI KANTILAL U PATEL I.E. ON 27.09.01 WHICH SHOWS THAT NOTICE IS MALAFIDE. 7. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) HAS GROSSLY ERRED IN NOT APPRECIATING APPELLANT'S CONTENTION TH AT LD A.O. HAS TOTALLY MISINTERPRETED THE EVIDENCE AND STATEMENT O F SHRI KANTILAL U. PATEL SO AS TO ESTABLISH HIS CONNECTION WITH THE BU SINESS OF KARAN PAPER MILLS. I.T.(SS)A. NO. 03/AHD/2007 A.Y. BLOCK PERIO D PAGE NO NILKANTH SPECIFIC FAMILY TRUST VS. ACIT 3 3. IN THIS CASE TRIBUNAL HAS PASSED AN ORDER DATED 27-03-2012 AGAINST WHICH ASSESSEE FILED MA NO. 134/AHD/2001. WHILE DI SPOSING THIS MA TRIBUNAL VIDE ITS ORDER DATED 04-01-2013 RECALLED I TS EARLIER ORDER TO THE LIMITED EXTENT OF GROUND NO. 4 & 7 WITH REGARD TO THE ISSUE OF ADDITION OF RS. 96 LACS ONLY. 4. THE AO WHILE MAKING THE ADDITION OF RS. 96 LACS HAS OBSERVED AS UNDER IN HIS ASSESSMENT ORDER. 12.1 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRC LE 6 AHMEDABAD HAS PASSED THE ORDER U/S. 158BC RWS 158BD OF THE IT ACT IN RESPECT OF SHIVASHAKTI SPECIFIC FAMILY TRUST PRO P: NIRAV LAMINATION ON 28/09/2005. THIS ORDER WAS FORWARDE D TO THIS OFFICE VIDE THE LETTER NO. CIRCLE 6/158BD/SSFT/05-06 DATED 11/11/2005. THE SAID ORDER THE ASSESSING OFFICER HAS NOTED THA T: THE ASSESSEE HAS TOTALLY DENIED RECEIPT OF RS. 96 0 0 000/- BY WAY OF CREDIT NOTE AS APPEARING ON SECOND HALF OF P AGE NO. 75. THE TRANSACTION IS NOT REFLECTED IN THE BOOKS OF TH E ASSESSEE ALSO. SEPARATE PROCEEDINGS ARE INITIATED U/S. 158B D OF THE I.T. ACT IN THE CASE OF KARAN PAPER MILLS CHHATRAL ON T HE BASIS OF NOTHINGS RECORDED ON PAGE NO. 75. THE PROCEEDINGS ARE NOT YET FINALIZED. FROM THE SIZED PAGE NO. 75 IT IS VERY C LEAR THAT KARAN PAPER MILLS HAS SUPPLIED PAPER TO NIRMA GROUP WORTH RS. 1 20 24 823/- AND THE AMOUNT HAS BEEN DISPATCHE D WAY OF CREDIT NOTE TO VARIOUS PARTIES AS UNDER:- NIRAV LAMINATION 96 00 000/- BHOOMI PRINT PACK 18 74 657/- -DO- 7 11 913/- BHOOMI PACKAGING 12 59 805/- NAVDEEP PACK INDS 10 57 725/- ----------------------- --- 1 40 04 100/- IT HAS BEEN CONFIRMED THAT THE RECEIPT OF AMOUNT BY WAY OF CREDIT NOTE IS FOUND REFLECTED AND NOTED AND DULY A CCOUNTED FOR I.T.(SS)A. NO. 03/AHD/2007 A.Y. BLOCK PERIO D PAGE NO NILKANTH SPECIFIC FAMILY TRUST VS. ACIT 4 BY OTHER FOUR PARTIES EXCEPT NIRAV LAMINATION. IT IS A POINT TO NOTE THAT THE ASSESSEE IS A ASSOCIATED CONCERN OF N IRMA GROUP AND THERE ARE INTERNAL TRANSACTION BETWEEN THE BUSI NESS CONCERNS OWNED BY THE GROUP. ON THE BASIS OF THIS PAPERS IT CAN BE ASCERTAINED THAT NIRAV LAMINATION HAS RECEIV ED RS. 96 00 000/- FROM KARAN PAPER MILLS CHHATRAL DIRECTL Y FROM SOME OTHER CONCERNS RUN BY THE NIRMA GROUP ON ACCOU NT OF TRANSACTION BETWEEN THE ASSESSEE AND THE OTHER CONC ERNS. IT IS ALSO PERTINENT TO NOTE THAT KARAN PAPER MILLS CHHA TRAL CONFIRMED THE DISPATCH OF 6991741 KGS OF CRAFT PAPE R TO NIRMA LTD. INVOLVING AN AMOUNT OF RS. 1 20 24 823/-. ALL OTHER TRANSACTIONS EXCEPT THE TRANSACTION OF NIRAV LAMINA TION IS FOUND REFLECTED IN THE BOOKS OF ACCOUNTS OF OTHER C ONCERNS INVOLVED IN THE TRANSACTION. THEREFORE THERE IS N O REASON WHY THE CREDIT ENTRIES OF RS. 96 00 000/- PERTAINING TO NIRAV LAMINATION TO BE HELD AS SHAM OR BOGUS. LOOKING TO ALL THESE FACTS OF THE CASE I AM CONVINCED THAT NIRAV LAMINA TIONS HAS RECEIVED AN ACCOUNT OF RS. 96 00 000/- OUT OF BOOKS OF ACCOUNTS FOR CERTAIN JOB WORK UNDERTAKEN BY IT FOR SOME OTHE R CONCERNS BELONGING TO NIRMA GROUP. THE RECEIPT OF RS. 96 00 000/- IS NOT REFLECTED IN THE BOOKS OF ACCOUNTS AND IS THERE FORE CONSIDERED TO BE OVER AND ABOVE TRANSACTION REFLECT ED IN THE BOOKS OF ACCOUNTS. BASED ON THE DISCUSSION AND ANALYSIS OF THE FACTS A T HAND AND THE POSITION OF LAW IN THIS RESPECT I AM OF THE CONVIN CED THAT KARAN PAPER MILLS HAS ENTERED IN TRANSACTIONS WITH M/S. NIRAV L AMINATIONS AND AS SUCH THIS TRANSACTION HAS NOT BEEN ACCOUNTED IN THE BOOKS. THUS THE UNACCOUNTED CREDIT NOTE OF RS. 96 00 000/- IS CONSI DERED AS THE ASSESSEES UNDISCLOSED INCOME OF THE BLOCK PERIOD A ND ASSESSED ACCORDINGLY. 5. THIS ACTION OF THE AO WAS CONFIRMED BY LD. CIT(A ). 6. FURTHER AGGRIEVED NOW THE ASSESSEE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING LEARNED COUNSEL OF THE AS SESSEE SUBMITTED THAT ADDITION MADE IN THE CASE OF M/S. NIRAV LAMINATION OF RS. 96 LACS WHICH I.T.(SS)A. NO. 03/AHD/2007 A.Y. BLOCK PERIO D PAGE NO NILKANTH SPECIFIC FAMILY TRUST VS. ACIT 5 WAS THE ONLY BASIS FOR MAKING ADDITION IN ASSESSEE S CASE WAS DELETED BY THE TRIBUNAL AND THE TRIBUNALS ORDER HAS BEEN CONFIRME D BY HONBLE JURISDICTIONAL HIGH COURT BY OBSERVING AS UNDER: 7. THE ASSESSING OFFICER WAS OF THE OPINION THAT T HE ASSESSEE NIRAV LAMINATION RECEIVED A SUM OF RS.96 LAKHS OUT OF THE BOOKS OF ACCOUNT. HOWEVER THE BASIS OF SUCH CONCLUSION WA S A PIECE OF PAPER ADMITTED BY THE THIRD PARTY IN RELATION TO THE ASSE SSEE RESPONDENT. THERE WAS NO INDEPENDENT PROOF THAT COULD BE ADDUCE D TO SUSTAIN SUCH ADDITION. TRIBUNAL THEREFORE WAS RIGHT THAT THE MAT ERIAL GATHERED DURING THE SEARCH FROM THE PREMISES OF THIRD PARTY OUGHT TO HAVE BEEN SUBSTANTIATED BY CREDIT-WORTHY EVIDENCE TO HOLD TH AT THE ASSESSEE HAD RECEIVED CREDIT NOTE OF RS. 96 LAKHS FROM KARAN PAP ER MILLS WHO SUPPLIED THE PAPERS TO NIRMA GROUP OF INDUSTRIES WH EN BOTH KARAN PAPER MILLS AND NIRMA DENIED OF HAVING ISSUED ANY C REDIT NOTES TO NIRAV LAMINATION OUT OF ITS BOOKS OF ACCOUNT FOR DOING JOB WORK ALLEGED TO HAVE BEEN UNDERTAKEN. AGAIN THESE LOOSE PAPERS INDICATED INVOLVEMENT OF FOUR PARTIES AND DURING THE INT ERROGATION SHRI KANTIBHAI PATEL HAD ADMITTED AND CONNECTED THESE PA RTIES AND THREE OUT OF FOUR HAD ADMITTED THEIR CONNECTION WITH THE SAID GROUP THAT IPSO FACTO CANNOT PROVE ANYTHING QUA THIS ASSESSEE. TRIB UNAL WAS JUSTIFIED IN DELETING SUCH ADDITIONS IN ABSENCE OF ANY SU PPORTING PROOF WORTH THE NAME. MERE REFLECTION OF ENTRIES IN THE WRITING OF THE THIRD PARTY WITHOUT SUBSTANTIATING PROOF CANNOT PERMIT ANY ADDI TION TO THE INCOME OF ASSESSEE. THEREFORE BY THE SAME ANALOGY THE ADDITION MADE IN THE CASE OF ASSESSEE MAY ALSO BE DELETED. LD. DR ON THE OTHER HAND RELI ED ON THE ORDER OF LOWER AUTHORITIES. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT AO HAS MADE ADDITION OF RS. 96 LACS IN THE HANDS OF ASSESSEE BY HOLDING THAT ASSESSEE HAS ENTERED INTO A TRANSACTION WITH M/S. N IRAV LAMINATIONS AND THIS TRANSACTION WAS NOT REFLECTED BY EITHER PARTIES IN THEIR BOOKS OF ACCOUNTS. THE ADDITION OF SAME AMOUNT WAS MADE IN THE HANDS O F M/S. NIRAV I.T.(SS)A. NO. 03/AHD/2007 A.Y. BLOCK PERIO D PAGE NO NILKANTH SPECIFIC FAMILY TRUST VS. ACIT 6 LAMINATIONS ON THE GROUND THAT A SUM OF RS. 96 LACS WAS RECEIVED BY THEM FROM THE ASSESSEE. IN THE CASE OF NIRAV LAMINATION S THE HONBLE JURISDICTIONAL HIGH COURT HAS UPHELD THE ORDER OF T RIBUNAL DELETING THE ADDITION IN THE ABSENCE OF ANY SUPPORTING PROOF WOR TH THE NAME TO SHOW THAT MONEY WAS RECEIVED BY THEM FROM THE ASSESSEE. APPL YING THE SAME ANALOGY IN ASSESSEES CASE WE HAVE NO HESITATION IN HOLDIN G THAT THERE WAS NO EVIDENCE TO JUSTIFY THE ADDITION IN THE HANDS OF AS SESSEE ON THE GROUND THAT ASSESSEE PAID A SUM OF RS. 96 LACS TO NIRAV LAMINAT IONS. THEREFORE THE ADDITION MADE BY AO AND SUSTAINED BY LD. CIT(A) IS HEREBY DELETED. 9. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 31/10/2013 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER/ /