Shri Sanjay P.Mehta, Bhavnagar v. The ACIT.,Cent.Circle-2(1),, Ahmedabad

ITSSA 305/AHD/2012 | 2007-2008
Pronouncement Date: 17-10-2016 | Result: Allowed

Appeal Details

RSA Number 30520516 RSA 2012
Assessee PAN AABPM2719D
Bench Ahmedabad
Appeal Number ITSSA 305/AHD/2012
Duration Of Justice 4 year(s) 3 month(s) 29 day(s)
Appellant Shri Sanjay P.Mehta, Bhavnagar
Respondent The ACIT.,Cent.Circle-2(1),, Ahmedabad
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 17-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 17-10-2016
Date Of Final Hearing 05-10-2016
Next Hearing Date 05-10-2016
Assessment Year 2007-2008
Appeal Filed On 18-06-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUN AL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD JUDICIAL MEMBER) IT(SS)A. NOS: 302 TO 308/AHD/2012 AND 316 & 317/AHD/2012 (ASSESSMENT YEARS: 2004-05 TO 2010-11) SHRI SANJAY P. MEHTA AASHIRWAD 1563-A RUPANI CIRCLE TO SARDAR NAGAR CIRCLE ROAD BHAVNAGAR-364001 PAN NO. AABPM2719D ACIT CENTRAL CIRCLE-2(1) AHMEDABAD V/S V/S ACIT CENTRAL CIRCLE-2(1) AHMEDABAD SHRI SANJAY P. MEHTA AASHIRWAD 1563-A RUPANI CIRCLE TO SARDAR NAGAR CIRCLE ROAD BHAVNAGAR- 364001 PAN NO. AABPM2719D (APPELLANT) (RESPONDENT) IT(SS)A. NOS: 309 TO 312/AHD/201& 315/AHD/12 (ASSESSMENT YEARS: 2005-06 TO 2007-08 & 2009-10) SMT. TRUPTI S. MEHTA AASHIRWAD 1563-A RUPANI CIRCLE TO SARDAR NAGAR CIRCLE ROAD BHAVNAGAR-364001 PAN NO. AIVPM0988M V/S ACIT CENTRAL CIRCLE-2(1) AHMEDABAD IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 2 ACIT CENTRAL CIRCLE-2(1) AHMEDABAD V/S SMT. TRUPTI S. MEHTA AASHIRWAD 1563-A RUPANI CIRCLE TO SARDAR NAGAR CIRCLE ROAD BHAVNAGAR- 364001 PAN NO. AIVPM0988M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY RANJAN WITH MS. IRA KAP POR RESPONDENT BY : MRS. VIBHA BHALLA CIT/DR ( )/ ORDER DATE OF HEARING : 05 -10-201 6 DATE OF PRONOUNCEMENT : 17 -10-2016 PER BENCH: 1. THE AFOREMENTIONED CAPTIONED APPEALS ARE BY TWO APP ELLANTS NAMELY SANJAY P. MEHTA AND TRUPTI S. MEHTA. APPEALS OF SAN JAY P. MEHTA RELATES TO ASSESSMENT YEAR 2004-05 TO 2010-11 AND APPEALS OF T RUPTI S. MEHTA RELATES TO A.Y. 2005-06 TO 2009-10. IN THE CASE OF SANJAY P . MEHTA THE REVENUE IS IN CROSS APPEALS FOR A.Y. 2005-06 & 2006-07 AND IN THE CASE OF TRUPTI S. MEHTA THE REVENUE IS IN CROSS APPEALS FOR A.Y. 200 5-06. 2. RIVAL SUBMISSIONS HAVE BEEN HEARD AT LENGTH. HAVING HEARD THE RIVAL CONTENTIONS WE HAVE CAREFULLY PERUSED THE ORDERS O F THE AUTHORITIES BELOW. IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 3 3. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT THE AT BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE ON 12.01.2010 AND ACCORDINGLY ASSESSMENTS HAVE BEEN MADE U/S. 153A OF THE ACT. 4. IN ALL THE AFOREMENTIONED BUNCH OF APPEALS COMMON ISSUES ARE INVOLVED; THEREFORE THEY WERE HEARD TOGETHER AND ARE BEING D ISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 5. THE ADDITIONS MADE IN ALL THESE APPEALS WHICH ARE I N DISPUTE EITHER BY THE ASSESSEE OR BY THE REVENUE CAN BE CLASSIFIED UNDER THE FOLLOWING HEADS:- (1) ADDITIONS IN RESPECT OF LOW WITHDRAWAL FOR HOUS EHOLD EXPENSES. (2) ADDITIONS ON ACCOUNT OF DEEMED DIVIDEND U/S. 2( 22)(E) OF THE ACT. (3) UNEXPLAINED INVESTMENT IN HOUSE PROPERTY. (4) UNEXPLAINED INVESTMENT IN HOUSE PROPERTY TAKEN ON PAGDI. 6. IT IS SAY OF THE LD. COUNSEL THAT THE ADDITIONS MAD E ON ACCOUNT OF HOUSEHOLD EXPENSES AND DEEMED DIVIDEND HAVE NO REFERENCE TO A NY INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH; THEREFORE TH ESE ADDITIONS ARE OUTSIDE THE PURVIEW OF SECTION 153A. THE CONTENTION OF THE LD. COUNSEL CAN BE UNDERSTOOD BY THE FOLLOWING CHART:- SHRI SANJAY P. MEHTA D ATE OF SEARCH: 12/01/2010 EVENT A.Y. 2004- 05 A.Y. 2005- 06 A.Y. 2006- 07 A.Y. 2007-08 A.Y. 2008-09* A.Y. 2009- 10 A.Y. 2010-11 DATE OF FILLING RETURN 26.10.2004 30.08.2005 13.10.2006 31.07.2007 31.07.2 008 25.09.2009 17.09.2009 IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 4 U/S. 139 TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT 31.10.2005 31.08.2006 31.10.2007 31.07.2008 30.09.2 009 30.09.2010 30.09.2011 TIME LIMIT FOR COMPLETIN G ASSESSME NT U/S. 143(3) OF THEACT. 31.12.2006 31.12.2007 31.12.2008 31.12.2009 31.12.2 010 31.12.2011 31.03.2013 STATUS COMPLETED COMPLETED COMPLETED COMPLETED C OMPLETED* ABATED ABATED SMT. TRUPTI SANJAY MEHTA DATE OF SEARCH: 12/01/2010 EVENT A.Y. 2005-06 A.Y. 2006-07 A..Y. 2007-08 A.Y. 2009-10 DATE OF FILING RETURN U/S. 139 30.08.2005 27.10.2006 31.07.2007 24.09.2009 TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT 31.08.2006 31.10.2007 31.07.2008 30.09.2010 TIME LIMT FOR COMPLETING ASSESSMENT U/S. 143(3) OF THE ACT 31.12.2007 31.12.2008 31.12.2009 31.12.2011 7. A PERUSAL OF THE AFOREMENTIONED CHARTS SHOWS THAT P RIOR TO THE DATE OF SEARCH THE ASSESSMENTS STOOD COMPLETED AND THEREF ORE IF NO INCRIMINATING MATERIAL IS FOUND THEN NO ADDITIONS C AN BE MADE U/S. 153A OF THE ACT IN RESPECT OF ITEMS OF ADDITIONS WHICH HAVE NO CO-RELATION WITH THE INCRIMINATING MATERIAL. THIS VIEW IS NOW SETTLED I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 5 THE CASE OF CONTINENTAL WAREHOUSING CORPORATION 374 ITR 645 WHICH READS AS UNDER:- ONCE IT IS HELD THAT THE ASSESSMENT HAS ATTAINED FINALITY THEN THE AO WHILE PASSING THE INDEPENDENT ASSESSMENT ORDER U/S. 153A R.W. S 143(3) OF THE IT. ACT COULD NOT HAVE DISTURBED THE ASSESSMENT/REASSESSMEN T ORDER WHICH HAS ATTAINED FINALITY UNLESS THE MATERIALS GATHERED IN THE COUR SE OF THE PROCEEDINGS U/S. 153A OF THE INCOME TAX ACT ESTABLISH THAT THE RELIEFS GR ANTED UNDER THE FINALIZED ASSESSMENT/REASSESSMENT WERE CONTRARY TO THE FACTS UNEARTHED DURING THE COURSE OF 153A PROCEEDINGS. IF THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED DURING THE SEARCH OR DURING THE 153A PROCEEDINGS THE AO WHILE PASSING ORDER U/S. 153A R.W.S. 143(3) CANNOT DISTUR B THE ASSESSMENT ORDER.' 10.2. THE HON'BLE HIGH COURT HAD AN OCCASION T O CONSIDER THE FOLLOWING QUESTIONS OF LAW: '1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE HON'BLE ITAT IS CORRECT IN NARROWING DOWN THE SCOPE OF ASSESSMENT U /S. 153A IN RESPECT OF COMPLETED ASSESSMENTS BY HOLDING THAT ONLY UNDISCLO SED INCOME AND UNDISCLOSED ASSETS DETECTED DURING SEARCH COULD BE BROUGHT TO T AX? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE HON'BLE ITAT IS CORRECT IN LAW IN HOLDING THAT THE SCOPE OF SEC. 15 3A IS LIMITED TO ASSESSING ONLY SEARCH RELATED INCOME THEREBY DENYING REVENUE THE OPPORTUNITY OF TAXING OTHER ESCAPED INCOME THAT COMES TO THE NOTICE OF THE AO. ? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE HON'BLE ITAT WAS RIGHT IN LIMITING THE SCOPE OF SEC. 153A ONLY T O UNDISCLOSED INCOME WHEN AS PER THE SECTION THE AO HAS TO ASSESS THE TOTAL INCO ME OF THE SIX ASSESSMENT YEARS?'- AND THE HONBLE HIGH COURT OF BOMBAY FINALLY HELD A S UNDER:- WE THEREFORE DISMISS THE REVENUES APPEAL AND AN SWER THE SUBSTANTIAL QUESTION OF LAW AGAINST THE REVENUE AND IN FAVOUR OF ASSESSE E. IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 6 8. NOW THE OTHER ISSUE WHICH HAS TO BE DECIDED IS WHE THER THE TIME LIMIT OF ISSUE OF NOTICE U/S. 143(2) IF FOUND EXPIRED CAN BE CONSTRUED AS COMPLETED ASSESSMENT. TO THIS QUESTION THE ANSWER IS GIVEN B Y THE CO-ORDINATE BENCH OF THE TRIBUNAL DELHI IN THE CASE OF PACL INDIA LTD . IN ITA NO. 2637/DEL/2010 AND THE SAME READS AS UNDER:- 7.AFTER HEARING BOTH THE SIDES ON THE ISSUE AND TAK ING INTO CONSIDERATION RECORDS AVAILABLE THE FOLLOWING FACTS EMERGES AS UNDISPUTED . THE REGULAR RETURN OF INCOME WAS FILED ON 2.12.2003 AND THE SAME WAS PROCESSED U /S 143(1)(A) OF THE ACT. THE TIME PERIOD FOR ISSUING NOTICE U/S 143(2) OF THE IT ACT FOR SELECTING CASE FOR SECURITY EXPIRED ON 31.12.2004. THE FIRST SEARCH WA S CONDUCTED ON THE PREMISES OF ASSESSEE ON 22.9.2005 AND THE 2ND SEARCH WAS CONDUC TED ON 25.8.2006 AND IN BOTH THE SEARCHES NO INCRIMINATING MATERIAL DOCUM ENT UNACCOUNTED ASSETS AND BOGUS OF ACCOUNTS WERE FOUND AND SEIZED RELATING TO LAND DEVELOPMENT EXPENSES DEBITED IN PROFIT AND LOSS ACCOUNT FOR THE YEAR. TH E BOTH SEARCHES ON ASSESSEE DID NOT YIELD ANY INCRIMINATING MATERIAL ON THE BASIS O F WHICH IT CAN BE SAID THAT ASSESSEE WAS INDULGENT IN DEBITING BOGUS LAND DEVEL OPMENT EXPENSES IN ITS BOOKS OF ACCOUNT. THERE IS NO REFERENCE OF ANY MATERIAL F OUND IN THE SEARCH FOR MAKING ASSESSMENT U/S 153A OF THE ACT. THUS THE BASIC CONT ROVERSY BEFORE US REMAINS ABOUT THE SCOPE OF ASSESSMENT U/S 153(A) WHEN THE R ETURN HAS BEEN ACCEPTED U/S 143(1)(A) AND TIME PERIOD FOR ISSUING NOTICE U/S 14 3(2) HAS ELAPSED. 8. IN OUR CONSIDERED VIEW THERE IS NO DISPUTE WITH REGARD TO THE PROPOSITION THAT A.O HAS THE JURISDICTION U/S 153A OF THE ACT TO INI TIATE ASSESSMENT/ REASSESSMENT PROCEEDINGS FOR ALL THE SIX YEARS TO COMPUTE THE TO TAL INCOME OF THE ASSESSEE INCLUDING THE UNDISCLOSED INCOME WHERE ACTION HAVE BEEN TAKEN AGAINST THE ASSESSEE U/S 132(1) OF THE IT ACT. HOWEVER THE QUE STION REMAINS THAT WHEN RETURN HAS BEEN PROCESSED U/S 143(1)(A) AND THE TIME PERIO D FOR ISSUING NOTICE U/S 143(2) FOR SELECTING RETURN FOR SCRUTINY HAS ELAPSED THEN WHAT NATURE OF PROCEEDINGS COMMENCED AND CONCLUDED U/S 143(1)(A). HOW THESE AR E DIFFERENT FROM THE PROCEEDINGS COMMENCED AND CONCLUDED U/S 143(3) OF T HE ACT. THERE IS NO DOUBT IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 7 THAT ONCE THE PROCEEDINGS U/S 143(3) ARE COMPLETED AND CONCLUDED THEN THERE IS NOTHING WHICH WILL ABATE AS PER PROVISIONS OF SECTI ON 153A OF THE ACT. 9. IN OUR CONSIDERED OPINION SECTION 153A REFERRED TO 'PENDING' 'ASSESSMENT' OR 'REASSESSMENT' AND NOT 'ASSESSMENT ORDERS'. THE ASS ESSMENT MAY NOT BE PENDING EVEN THOUGH THERE IS NO FORMAL ORDER U/S I43(1)(A). THE MOMENT RETURN IS FILED AND ACKNOWLEDGEMENT OR INTIMATION ISSUED THE PROCEEDIN GS INITIATED BY FILING THE RETURN ARE CLOSED UNLESS THEY ARE AGAIN TRIGGERED BY ISSUING NOTICE U/S 143(2) OF THE IT ACT. IN THE CASE UNDER CONSIDERATION THE PE RIOD FOR ISSUING THE NOTICE U/S 143(2) ELAPSED. THE PROCESS HAS ATTAINED THE FINALI TY WHICH CAN ONLY BE ASSAILED U/S 148 OR 263 OF THE IT ACT. SUCH PROCEEDINGS CAN NEVER BE INITIATED U/S 143(2) WHEN THE TIME PERIOD FOR ISSUING NOTICE U/S 143(2) HAS EXPIRED. HON'BLE ITAT MUMBAI C BENCH IN THE CASE OF ACIT VS. PRATIBHA IND USTRIALIST LTD. REPORTED IN 23 ITR TRIBUNAL 766 MUMBAI HAS ALSO HELD AS UNDER : - 'ALTHOUGH BY PROCEEDINGS INITIATED UNDER SECTION 15 3A ALL SIX YEARS SHALL BECOME SUBJECT MATTER OF ASSESSMENT UNDER SECTION 153A THE ASSESSING OFFICER SHALL HAVE A FREE-HAND THROUGH ABATEMENT ONLY ON THE PROCEED INGS THAT ARE PENDING TO FRAME THE ASSESSMENTS AFRESH. BUT IN A CASE WHERE T HE PROCEEDINGS HAVE REACHED FINALITY ASSESSMENT UNDER SECTION 153A READ WITH S ECTION 143(3) AND CERTAIN INCRIMINATING DOCUMENTS HAVE BEEN FOUND INDICATING UNDISCLOSED INCOME THE ADDITION SHALL ONLY BE RESTRICTED TO THOSE DOCUMENT S OR INCRIMINATING MATERIAL AND CLUBBED ONLY TO THE ASSESSMENT FRAMED ORIGINALL Y AS THE LAW DOES NOT PERMIT THE ASSESSING OFFICER TO DISTURB ISSUES ALREADY CON CLUDED. WHERE ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR REQUISITI ON OF BOOKS NO PROCEEDING IS PENDING BUT IN THE SEARCH MATERIAL IS FOUND INDIC ATING INCRIMINATING MATERIAL THE ASSESSING OFFICER EMBARKS ON A JURISDICTION WH EREIN HE HAS TO CLUB THE TWO SAFE OF INCOMES THE RETURNED INCOME AND THE UNEART HED INCOME AND ARRIVE AT THE TOTAL INCOME. 9. IN THE CASE OF KABUL CHAWLA 380 ITR 573 THE HONBL E HIGH COURT HAS SUMMARIZED THE LEGAL POSITION AS UNDER:- IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 8 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT READ WITH THE PROVISOS THERETO AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREM ENTIONED DECISIONS THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT NOTICE UNDER SECTION 153 A(L) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING T HE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAK ES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEAR S. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUG HT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND IT DOES NOT MEAN THAT THE ASSESSMEN T 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATE RIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD REASSESS' TO COMPL ETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EA CH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXIST ING OR BROUGHT ON THE RECORD OF THE AO. IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 9 VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURS E OF ORIGINAL ASSESSMENT. 10. THE AFOREMENTIONED RATIO LAID DOWN BY THE HONBLE H IGH COURT OF DELHI HAS BEEN FOLLOWED BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF LATA JAIN IN INCOME TAX APPEAL NO. 274 & 276 OF 2016 WHEREIN THE HONBLE HIGH COURT HELD AS UNDER:- 5. THE SHORT POINT INVOLVED IS WHETHER THE ITAT WAS CORRECT IN CONCLUDING THAT THERE HAD TO BE INCRIMINATING MATERIAL RECOVERED DU RING THE SEARCH QUA THE ASSESSEE IN EACH OF THE YEARS FOR THE PURPOSES OF F RAMING AN ASSESSMENT UNDER SECTION 153 A OF THE ACT? 6. IT IS NOT IN DISPUTE THAT IN RESPECT OF THE RESP ONDENT ASSESSEE FOR THE AYS IN QUESTION THE INITIAL ASSESSMENT PROCEEDINGS TOOK PL ACE UNDER SECTION 143(3) OF THE ACT. THEREAFTER THEY WERE SOUGHT TO BE REOPENED BY ISSUING NOTICE UNDER SECTION 147 OF THE ACT AND RE-ASSESSMENT ORDERS WERE PASSED UNDER SECTION 147 READ WITH SECTION 143(3) OF THE ACT. DURING BOTH THE AFOREMEN TIONED PROCEEDINGS THE QUESTION WHETHER THE GOLD AND SILVER UTENSILS WERE THE CAPITAL ASSETS OR PERSONAL EFFECTS OF THE ASSESSEE WAS EXAMINED. THEY WERE HEL D NOT TO BE THE PERSONAL EFFECTS. 7. IT HAS BEEN NOTICED BY THE ITAT IN THE IMPUGNED ORDER THAT FOR THE A.YS IN QUESTION NO INCRIMINATING MATERIAL QUA THE ASSESSEE WAS FOUND. 8. IN THAT VIEW OF THE MATTER AND IN LIGHT OF THE DECISION OF THIS COURT IN CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DELHI) THE COURT IS OF THE VIEW THAT THE IMPUGNED ORDER OF THE ITAT SUFFERS FROM NO LEGAL IN FIRMITY AND NO SUBSTANTIAL QUESTION OF LAW ARISES FOR DETERMINATION. IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 10 11. NOW LET US EXAMINE THE AFOREMENTIONED RATIOS LAID D OWN BY THE HONBLE HIGH COURTS IN THE LIGHT OF THE FACTS ON RECORD BEF ORE US. 12. THE ONLY BASIS FOR MAKING ADDITIONS ON ACCOUNT OF L OW HOUSEHOLD WITHDRAWALS RELATES TO QUESTION NO. 9 OF THE STATEM ENT OF SMT. TRUPTI S. MEHTA RECORDED U/S. 132(4) OF THE ACT ON 12/01/2010 WHEREIN SHE HAS DEPOSED THAT HER MONTHLY HOUSEHOLD EXPENDITURE IS B ETWEEN RS. 50 000/- TO RS. 80 000/-. A SIMILAR STATEMENT WAS MADE BY SA NJAY P. MEHTA IN HIS STATEMENT RECORDED U/S. 131 ON 31/03/2010. EXCEPT F OR A REFERENCE TO THESE TWO STATEMENTS NO INCRIMINATING MATERIAL WAS FOUND AT THE TIME OF SEARCH WHICH COULD SUGGEST THAT THE ASSESSEE HAS MA DE EXPENDITURE ON CEREMONIAL FUNCTIONS MARRIAGE FOREIGN TOURS ETC. THERE IS ALSO NO REFERENCE MADE BY THE ASSESSING OFFICER TO ANY INCR IMINATING MATERIAL FOUND AT THE TIME OF SEARCH TO JUSTIFY THE IMPUGNED ADDITION FOR LOW WITHDRAWAL FOR HOUSEHOLD EXPENSES. THE ENTIRE ADDIT ION HAS BEEN MADE ON AD-HOC BASIS. WE THEREFORE DO NOT FIND ANY MERIT IN SUCH ADDITION MADE U/S. 153A OF THE ACT. 13. SIMILAR IS THE CASE FOR THE ADDITIONS MADE ON ACCOU NT OF DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT ON LOANS AND ADVANCES RECE IVED FROM PRIYA BLUE INDUSTRIES PVT. LTD. WHEREIN THE ASSESSEES ARE HAVI NG SUBSTANTIAL SHARE HOLDING. A PERUSAL OF THE ASSESSMENT ORDER SHOWS TH AT THE ADDITIONS HAVE BEEN MADE IN A ROUTINE MANNER WITHOUT THERE BEING A NY INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH. IN THE LIGHT OF THE RATIOS LAID DOWN BY IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 11 THE HONBLE HIGH COURTS (SUPRA) THIS ADDITION IS A LSO OUTSIDE THE PURVIEW OF ORDER MADE U/S. 153A OF THE ACT READ WITH SECTION 1 43(3). 14. WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITIONS MADE ON ACCOUNT OF LOW WITH DRAWAL FOR HOUSEHOLD EXPENSES AND DEEMED DIVIDEND. 15. THE NEXT CONTENTIOUS ISSUE RELATES TO THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HOUSE PROPERTY. 16. DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS A DIARY WAS FOUND WHICH CONTAINED CERTAIN NOTINGS IN RELATION TO FLAT AT MUMBAI. THE NOTINGS PERTAIN TO FOUR FLATS AT LEELA BAUG MATUNGA MUMBA I. TWO FLATS WERE IN THE NAME OF SANJAY P. MEHTA AND TWO FLATS WERE IN THE N AME OF TRUPTI S. MEHTA. THESE FLATS WERE PURCHASED IN FEBRUARY 2005 JOINTLY. THE COST OF THE FLATS DISCLOSED IN THE BOOKS OF ACCOUNTS IS RS. 1.7 0 CRORES. THE EXTRACT OF THE SEIZED DIARY IS AS UNDER:- 8 TH FLOOR LEELABAUG-PURCHASED ON DEC 2004 AGREEMENT SIGNED ON 09/02/2005 2.47 .47 RAMNIWAS PURCHASED ON 20/01/2006 .7 17. THE COPY OF THE SEIZED DOCUMENT CAN BE FOUND AT PAG E 37 OF THE PAPER BOOK AND THE SAME IS EXTRACTED IN THE ASSESSMENT OR DER ALSO. DURING THE IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 12 COURSE OF THE STATEMENT RECORDED AT THE TIME OF SEA RCH THE ASSESSEES WERE ASKED TO EXPLAIN THE AFOREMENTIONED NOTINGS MENTION ED IN THE DIARY. IT WAS EXPLAINED THAT THE NOTINGS REFER TO THE TIME PERIOD OF VARIOUS ACTIVITIES DONE IN THE FLAT AS PER VASTU SASTRA. THIS EXPLAN ATION OF THE ASSESSEE WAS DISMISSED BY THE A.O. WHO WAS OF THE FIRM BELIEF TH AT SANJAY P. MEHTA AND TRUPTI S. MEHTA HAVE PAID TOTAL AMOUNT OF RS. 2.94 CRORE FOR RESIDENTIAL FLAT AT LEELABAUG. THE A.O. FURTHER OBSERVED THAT SANJAY P. MEHTA HAS ALSO PAID RS. 77 LAKHS FOR THE OFFICE AT RAMNIWAS. THE A.O. D ISMISSED THE THEORY OF VASTU TIME AND CONCLUDED BY HOLDING THAT RS. 1.24 C RORE IS THE UNDISCLOSED INVESTMENT IN THE RESIDENTIAL FLAT AT LEELABAUG. TH E COMPUTATION OF RS. 1.24 CRORE WAS ARRIVED AS FOLLOWS:- 2.47 CRORE + .47 CRORE (BEING THE NOTINGS IN THE DIARY) 1.70 CRORE (DISCLOSED IN THE BOOKS) 1.24 CRORE 18. THE A.O. FURTHER DIVIDED 1.24 CRORES EQUALLY AND MA DE ADDITIONS IN THE HANDS OF SANJAY P. MEHTA AND TRUPTI S. MEHTA EQUALL Y. THE A.O. FURTHER MADE ADDITIONS OF RS. 0.77 CRORES TOWARDS THE ACQUI SITION OF THE OFFICE PREMISES AT RAMNIWAS. 19. THE ASSESEEES CARRIED THE MATTER BEFORE THE LD. CIT (A) AND REITERATED WHAT HAS BEEN STATED BEFORE THE ASSESSING OFFICER. IT WA S STRONGLY CONTENDED THAT IN THE IMPUGNED DIARY THERE IS NO MENTION OF RUPEES; THE REFERENCE TO IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 13 THE JOTTINGS IN THE DIARY WAS ONLY IN RESPECT OF TI MINGS AS PER VASTU CONSULTANT. 20. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS TH E LD. CIT(A) OBSERVED AS UNDER:- 8.6 . I MAY AGREE WITH THE CONCLUSION OF THE A.O. THAT THE FIGURES OF 2.47 .47 AND .77 DO NOT REFLECT THE TIME BUT AT THE SAME TIM E I CANNOT ACCEPT THE CONTENTION OF THE AO THAT THESE FIGURES REPRESENT THE TOTAL CO NSIDERATION OF ACQUISITION OF THE PROPERTIES. FOR THIS PURPOSE THE AO HAS TO PROVE T HAT THE APPELLANT HAD MADE TOTAL PAYMENT OF RS. 2.47 .47 CRORES TOWARDS THE A CQUISITION OF RESIDENTIAL FLAT AT LEELA BAUG AND .77 CRORES TOWARDS THE ACQUISITION O F THE OFFICE PREMISES AT RAM NIWAS. IN MY CONSIDERED VIEW THE AO HAS NOT MADE O UT A CASE THAT THE APPELLANTS HAVE PAID TOTAL CONSIDERATION OF RS. 2.94 CRORES TO WARDS THE RESIDENTIAL PREMISES AND RS. 0.77 CRORES TOWARDS THE OFFICE PREMISES. IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCES SUCH AS THE DOCUMENTED PRIC E THE AMOUNTS PAID BY CHEQUE AND CASH THE FIGURES OF 2.47 AND .47 CANNOT BE TREATED AS THE TOTAL COST OF THE RESIDENTIAL FLAT AT LEELA BAUG. IN ORDER TO PRO VE THAT THE 2.47 AND .47 REPRESENT THE TOTAL CONSIDERATION OF THE RESIDENTIA L FLAT AT LEELA BAUG THE AO HAS TO CORROBORATE THESE AMOUNTS WITH THE CHEQUE AMOUNT S ALREADY GIVEN. THERE IS NO MENTION THAT THE AMOUNT OF RS.2.47 AND .47 ARE FIGU RES IN CRORES AND THAT THESE AMOUNTS ARE PAID TOWARDS THE ACQUISITION OF THE RES IDENTIAL FLAT AT LEELA BAUG. DURING THE COURSE OF SEARCH AND SUBSEQUENT TO THE S EARCH TRUPTI S MEHTA WHO HAS WRITTEN THE PAGE IN HER OWN HANDWRITING DID NOT STATE THAT THE TOTAL COST OF THE RESIDENTIAL FLAT AT LEELA BAUG WAS RS.2.47 + .47 = 2.94 CRORES. FURTHER THE AO HAS NOT ESTABLISHED THAT THESE FIGURES REPRESENT TH E AMOUNT PAID BY THE APPELLANTS FOR THE PURCHASE OF THE RESIDENTIAL FLAT AT LEELA B AUG. IT CAN BE ONE OF THE PRESUMPTIONS WHICH IS NOT SUPPORTED BY ANY EVIDENCE . NEITHER THE PURCHASER NOR THE SELLER ADMITTED RECEIPT AND PAYMENT OF THE ON M ONEY. SIMILARLY THE OFFICE PROPERTY AT RAMNIVAS IS A TENANTED PROPERTY AND THE AO HAS NOT BEEN ABLE TO PROVE THAT FOR ACQUIRING THE TENANCY RIGHT OF THE P ROPERTY THE APPELLANT SHRI SANJAY P MEHTA HAD PAID .77 CRORES. HAD THE COUNTER PARTIES ACCEPTED THAT THEY HAVE RECEIVED THE CASH COMPONENT FROM THE APPELLANT S THEN PROBABLY THE ADDITION MADE BY THE AO ON THE BASIS OF THE ENTRIES IN THE S EIZED PAPER COULD HAVE BEEN JUSTIFIED. BUT IN THE PRESENT CASE NEITHER COUNTER PARTIES HAVE ADMITTED NOR THE APPELLANTS HAVE ADMITTED NOR THE A.O. HAD TRIED TO CORROBORATE THE CASH PAYMENT BY MAKING ANY INVESTIGATIONS. AS MENTIONED EARLIER THIS CAN BE ONE OF THE ASSUMPTIONS BUT NOT SUFFICIENT ENOUGH TO MAKE AN AD DITION OF RS. 1.24 CRORES OR IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 14 RS.0.77CRORES. THEREFORE IN VIEW OF THE DETAILED S UBMISSIONS MADE BY THE APPELLANT THE ADDITION MADE ON ACCOUNT OF UNACCOUN TED INVESTMENT IN RESIDENTIAL FLAT OF RS. 1.24 CRORES (RS.62 LAKH EACH IN THE HAN DS OF SANJAY P. MEHTA AND TRUPTI S MEHTA) AND RS.77 LAKHS IN THE OFFICE PREMI SES AT RAMNIVAS IS DIRECTED TO BE DELETED. 21. AGGRIEVED BY THIS THE REVENUE IS BEFORE US IN CROS S APPEALS. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. AND PLA CED RELIANCE ON THE SEIZED MATERIAL. PER CONTRA THE LD. COUNSEL REITER ATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 22. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CAREFULLY PERUSED THE COPY OF T HE SEIZED DOCUMENT PLACED AT PAGE 37 OF THE PAPER BOOK. IT IS AN UNDIS PUTED FACT THAT THERE IS NO REFERENCE TO ANY MONETARY CONSIDERATION PAID IN THE SAID DIARY. THE MENTION OF 2.47 .47 AND .77 CANNOT BE CONSTRUED AS REFERENCE TO MONETARY CONSIDERATION IN CRORES. THIS APPEARS TO BE ONLY A PRESUMPTION/ASSUMPTION. THERE IS NOTHING ON RECORD WHICH COULD SUGGEST THAT ANY VERIFICATION HAVE BEEN MADE FROM THE SELLER/LANDLORD OF THE IMPUGNED PROPERTIES OF LEELABAUG AND RAMNIWAS. INSTEAD OF MAKING ANY VERIF ICATION FROM THE OTHER SIDE THE A.O. HAS SIMPLY ASSUMED THAT THE IMPUGNED JOTTINGS ARE RUPEES IN CRORES. THE ENTIRE ADDITIONS HAVE BEEN MADE WITHOUT BRINGING ANY CORROBORATIVE EVIDENCE ON RECORD. ADDITIONS CANNOT BE SUSTAINED ON SUCH FLIMSY GROUNDS. WE THEREFORE DO NOT FIND ANY REAS ON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). CROSS APPEALS OF THE RE VENUE ON THIS ACCOUNT ARE DISMISSED. IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 15 23. IN THE CASE OF TRUPTI S. MEHTA ASSESSMENT YEAR 2009 -10 ADDITIONS HAVE BEEN MADE AS DEEMED DIVIDEND ON LOANS AND ADVANCES RECEIVED FROM PRIYA BLUE INDUSTRIES PVT. LTD. WHEN THE ASSESSEE WAS ASK ED TO EXPLAIN WHY ADDITIONS SHOULD NOT BE MADE U/S. 2(22)(E) OF THE A CT THE ASSESSEE EXPLAINED THAT THE SAID AMOUNT WAS RECEIVED FOR TAK ING KEYMAN INSURANCE POLICY. IT WAS EXPLAINED THAT THE COMPANY WAS TAKIN G KEYMAN INSURANCE POLICY FOR THE BENEFIT OF ITS DIRECTORS SANJAY P. M EHTA AND TURPTI S. MEHTA BUT LATER ON THE COMPANY WAS ADVISED THAT SUCH POLI CY HAS TO BE TAKEN BY INDIVIDUALS. THEREFORE THE COMPANY ADVANCED THE AM OUNT TO THE INDIVIDUALS AND IN TURN THEY PAID THE INSURANCE PRE MIUM. THIS EXPLANATION OF THE ASSESSEE WAS DISMISSED BY THE A.O. WHO PROCE EDED BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND MADE THE IMPUGNED ADDITIONS. 24. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A) BUT WITHOUT ANY SUCCESS. 25. BEFORE US THE LD. COUNSEL REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES AND THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 26. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW QUA THE ISSUE. WE HAVE ALSO GONE THROUGH THE INSURANCE PREMIUM RECEIPT PLACED BEFORE US DURING THE COURSE OF THE A PPELLATE PROCEEDINGS. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. THE IMPUGNED AMOUNT ADVANCED BY PRIYA BLUE INDUSTRIES PVT. LTD. WAS TOW ARDS THE PAYMENT OF IT(SS)A NOS. 302 TO 312/AHD/2012 & ORS. . A.YS. 2004-0 5 TO 2010-2011 16 INSURANCE PREMIUM OF TWO POLICIES. CONSIDERING THES E FACTS IN OUR CONSIDERED OPINION THE SAID ADVANCE MADE BY PRIYA BLUE INDUSTRIES PVT. LTD. CANNOT BE CONSTRUED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. THE ADVANCE WAS GIVEN FOR THE PAYMENT OF INSURANCE PREMIUM AND THE INSURANCE PREMIUM HAS ACCORDINGLY BEEN PAID AS PER RECEIPTS PLACED ON RECORD. THEREFORE WE DO NOT FIND ANY MERIT IN THE ADDITIONS MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A). WE ACCORDING LY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITIONS MADE U/S. 2(22)(E) OF THE ACT. 27. IN THE RESULT THE APPEALS FILED BY THE ASSESSEE AR E ALLOWED AND THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 17 - 10- 2016 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHME DABAD