Shri Rasiklal D. Shah,HUF,, Ahmedabad v. The ACIT.,Circle-2,, Ahmedabad

ITSSA 35/AHD/2007 | misc
Pronouncement Date: 13-08-2010 | Result: Allowed

Appeal Details

RSA Number 3520516 RSA 2007
Assessee PAN AAFHS4228H
Bench Ahmedabad
Appeal Number ITSSA 35/AHD/2007
Duration Of Justice 3 year(s) 5 month(s) 24 day(s)
Appellant Shri Rasiklal D. Shah,HUF,, Ahmedabad
Respondent The ACIT.,Circle-2,, Ahmedabad
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 13-08-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 13-08-2010
Date Of Final Hearing 03-08-2010
Next Hearing Date 03-08-2010
Assessment Year misc
Appeal Filed On 19-02-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABA D (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HON'BLE S HRI N.S. SAINI A.M.) I.T.(S.S.)A. NO. 35/AHD./2007 ASSESSMENT YEAR : BLOCK PERIOD 01.04.1995 TO 31.07. 2001 SHRI RASIKLAL DAHYABHAI SHAH HUF -VS.- AS SISTANT COMMISSIONER OF INCOME TAX PROP. R.D. SHAH INVESTMENT CIRCLE-2 AHMEDABAD AHMEDABAD (PAN : AAFHS 4228 H) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.N. DIVETIA RESPONDENT BY : SHRI K.M. MAHESH SR. D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 04.05.2006 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VI AHMEDABAD F OR THE BLOCK ASSESSMENT PERIOD 01.04.1995 TO 31.07.2001. 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL ARE AS UNDER :- 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CIT(A) HAS ERRED IN REJECTING THE CLAIM OF APPELLANT THAT THAT IN THE I NTERVENING PERIOD SHIV GANGA GROUP HAS MADE REPAYMENTS AGAINST AMOUNT OF RS 20 00 000 AND HENCE THE ADDITION FOR DIFFERENTIAL INTEREST FOR THE PERIOD SUBSEQUENT TO SUCH REPAYMENTS COULD BE ONLY ON REDUCED BALANCE. THE DIFFERENTIAL INTEREST ON SUCH REDUCED BALANCE WORKS OUT TO RS. 8 35 297. 1.2 WITHOUT PREJUDICE TO WHAT IS STATED ABOVE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT{A) HAS ERRED ON FACTS AND IN LA W IN NOT REDUCING THE UNDISCLOSED INCOME OF APPELLANT BY RS. 4 80 000 BEING INTEREST PAYMENT COMPUTED @ 18% WHICH COMPRISES OF RS. 3 60 000 PERTAINING TO A.Y. 2001-2 002 AND RS. 1 20 000/- PERTAINING TO A.Y. 2002-2003 AS AGAINST RELIEF GIVEN BY AO FOR RS. 2 40 000/- WHILE PASSING ORDER U/S. 154 OF THE ACT. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) HAS ERRED IN REJECTING THE CALM OF APPELLANT THAT EVEN IF AS PER MILAN PATEL PART OF INTEREST IS ALLEGED TO HAVE BEEN ACCOUNTED FOR IN HIS BOOKS AND PART IS UNACCOUNTED AS HE HAS NEVER PAID INTEREST AFTER JUN-JULY 1998 EITHER ACCOUNTED IN HI S BOOKS OR UNACCOUNTED THERE IS NO QUESTION OF EVEN TAXING ANY PART OF INTEREST AS UNA CCOUNTED INCOME IN THE HAND OF APPELLANT. 2 IT(S.S. )A NO. 35/AHD/2007 3. THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DURING THE COURS E OF HEARING OF THE APPEAL. 3. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN THIS APPEAL ARE THAT AS A RESULT OF SEARCH IN SHIVGANGA GROUP OF CASES OF AHMEDABAD AND ON THE BA SIS OF STATEMENT RECORDED FROM SHRI MILAN S. PATEL PROCEEDINGS UNDER SECTION 158BD WAS INITI ATED AGAINST THE ASSESSEE. THE ASSESSING OFFICER ASSESSED THE LOAN OF RS.20 00 000/- AS UNEX PLAINED INVESTMENT AND AFTER CONSIDERING THE INTEREST @ 27% TO 36% PER ANNUM CHARGED ON SUCH LOA N THE TOTAL UNDISCLOSED INCOME WAS DETERMINED AT RS.50 60 000/-. ON APPEAL THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) VIDE ORDER DATED 04.05.2006 HAS DELETED THE ADDITIO N OF RS.20 00 000/- BEING UNEXPLAINED INVESTMENT. HOWEVER THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS) HELD THAT THE ASSESSEE DID NOT PROVE THAT INTEREST RECEIVED IN EXCESS OF 1 8% IN CASH WAS PASSED ON TO VARIOUS MEMBERS OF GROUP HENCE THE SAME WAS LIABLE TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. THE RELEVANT PARA OF THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX( APPEALS) DATED 04.05.2006 IS AS UNDER :- '5.2. HOWEVER AS MENTIONED BY MR. PATEL THE INTER EST WHICH HAS BEEN CREDITED IN THE ACCOUNTS OF VARIOUS CREDITORS IS ON LY 18% AND THE EXCESS INTEREST WHICH IS RANGING FROM 9% TO 18% HAS BEEN P AID IN CASH IS LIABLE TO BE ADDED EN THE HANDS OF THE APPELLANT AS UNDISCLOSED INCOME BECAUSE INTEREST ABOVE 18% HAS NOT BEEN CREDITED IN THE ACCOUNTS IF THE PERSONS WHO HAVE GIVEN LOANS AND NO EVIDENCE HAS BEEN SUBMITTED BY THE APP ELLANT TO PROVE THAT THIS EXCESS INTEREST HAS BEEN PASSED ON BY THE APPELLANT TO DEPOSITORS. AS PER THE PROVISIONS OF SECTION 158B(B) UNDISCLOSED INCOME ME ANS THE INCOME WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE P URPOSE OF THIS ACT. THE UNDISCLOSED INCOME IN THIS CASE AS PER PROVISIONS OF SECTION 158B(B) I S THE INTEREST ABOVE 16% WHICH IS NEITHER WAS SHOWN IN THE BOOKS OF ACCO UNT NOT WOULD HAVE BEEN DISCLOSED WITHOUT S EARCH.............. CONSIDERING THE ABOVE FACTS AND LEGAL POSITION THE AO IS DIR ECTED TO DETERMINED AND RE COMPUTE THE UNDISCLOSED INCOME IN VARIOUS ASSESSMEN T YEARS OF THE BLOCK PERIOD OF THE APPELLANT WHICH WILL BE ONLY EXCESS I NTEREST ABOVE 16% OF THE TOTAL ADVANCES WHICH HAVE BEEN ARRANGED BY THE APPELLANT TO SHRI MILAN PATEL........... 4. THE ASSESSING OFFICER VIDE ORDER DATED 06.06.200 6 GAVE EFFECT TO THE AFORESAID ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WHEREI N HE RECOMPUTED THE INCOME OF THE ASSESSEE AT RS.18 00 000/-. IN THIS ORDER THE ASSE SSING OFFICER GRANTED THE RELIEF OF RS.32 60 000/- AS UNDER :- A. TOTAL INCOME AS PER ORDER U/S. 158BD R.W.S. 158BCDT. 30.11.2005 RS.50 60 000/- LESS : REDUCTION GRANTED IN APPEAL 3 IT(S.S. )A NO. 35/AHD/2007 (I) UNEXPLAINED ADVANCES/ LOAN OF THE BLOCK PERIOD RS.20 00 000/- (II) INTEREST THEREON @ 18% (AY 98-99) RS. 3 60 000/- (III) INTEREST THEREON @ 18% (AY 1999-2000) RS. 3 60 000/- (IV) INTEREST THEREON @ 18% (AY 2000-2001) RS. 3 60 000/- (V) INTEREST THEREON @ 18% WAS CHARGED IN THE BLOCK ASSESSMENT (HENCE NO REDUCTION)(AY 2001- 2002) NIL (VI) INTEREST THEREON @ 18% WAS CHARGED IN THE BLOCK ASSTT. (HENCE NO REDUCTION) (UPTO 31.07.2001) NIL B. TOTALING MISTAKE RECTIFIED U/S. 154 (RS.50 60 000/- -RS.48 80 000/- RS.1 80 000/- TOTAL REDUCTION RS.32 60 000/- AGGRIEVED WITH THE AFORESAID ORDER DATED 06.06.2006 GIVING APPEAL EFFECT TO THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DATED 4.5.2006 THE ASSESSEE PREFERRED APPEAL. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER DATED 10.11.2006 UPHELD THE ACTION OF ASSESSING OFFICER GIVING APPEAL EFFEC T. THE RELEVANT OBSERVATION OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER DATED 10.11.2006 IS CONTAINED IN PARA 5 WHICH READS AS UNDER :- I HAVE ALSO PERUSED THE FILE OF THE CIT(APPEALS). NOWHERE IN THE SUBMISSIONS MADE BEFORE THE CIT(APPEALS) THE APPELL ANT HAD RAISED THE GROUND THAT THE A.O. WENT WRONG IN COMPUTING FLAT R ATE OF INTEREST TAKING THE PRINCIPAL AMOUNT AS RS.20 00 000/-. DIRECTIONS OF THE CIT(APPEALS) ARE REPRODUCED IN PARA 2 ABOVE. THE CIT(APPEALS) HA S NOT DIRECTED THE A.O.TO CHARGE INTEREST AFTER CONSIDERING THE REPAYM ENTS. IN PRINCIPLE THE APPELLANT MAY BE RIGHT IN CLAIMING THAT THE INTERES T SHOULD BE COMPUTED AFTER TAKING IN TO ACCOUNT THE REPAYMENTS. HOWEVER IT IS TO BE NOTED THAT THE A.O. CANNOT TRAVEL BEYOND THE DIRECTIONS GIVEN BY THE CIT(APPEALS). AS THIS ISSUE OF MANNER OF COMPUTING THE DISALLOWAN CE WAS NOT AGITATED BEFORE THE CIT(APPEALS) NOW AT THE STAGE OF GIVING EFFECT TO THE ORDER OF THE CIT(APPEALS) IT CANNOT BE AGITATED THAT THE A.O . HAS MADE A MISTAKE. THEREFORE THIS GROUND IS REJECTED. 4 IT(S.S. )A NO. 35/AHD/2007 AGGRIEVED WITH THE ORDER DATED 10.11.2006 OF LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING ON BEHALF OF ASSESSEE SH RI S.N. DIVETIA LD. COUNSEL APPEARED AND POINTED OUT THAT AGAINST THE ORDER DATED 04.05.2006 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VI AHMEDABAD THE ASSESSEE FILED AN A PPEAL. ITAT C BENCH AHMEDABAD VIDE ORDER DATED 31.08.2009 IN IT(SS) NO. 188/AHD/2006 F OR THE BLOCK PERIOD 1.4.1995 TO 31.07.2001 VIDE PARA 8 RESTORED THE ISSUE TO THE FI LE OF ASSESSING OFFICER FOR RE-VERIFICATION I.E. WHETHER MSP HAS PAID INTEREST ABOVE 18% PER ANNUM I N CASH AND IN CASE IT IS FOUND THAT HE HAS PAID ABOVE 18% PER ANNUM @ 36% P.A. OR 27% P.A. FOR DIFFERENTIAL PERIODS THE ASSESSING OFFICER WILL DETERMINE THE UNDISCLOSED INCOME. THE RELEVANT PARA 8 OF THE TRIBUNAL ORDER IS EXTRACTED BELOW :- 6. AFTER HEARING THE RIVAL CONTENTIONS AND GOING TH ROUGH THE CASE RECORDS WE FIND THAT NONE OF THE PARTY NEITHER REVENUE NOR ASSESSEE COUL D NOT ADDUCE BEFORE US EXACTLY WHAT HAPPENED IN THE CASE OF SHRI MSP'S BLOCK ASSESSMENT WHETHER THE INTEREST THAT CASE THAT HAS BEEN CHARGED 18% P.A. OR 27% P.A. OR 36% P.A. F OR THE DIFFERENT PERIODS AS THE CASE MAY BE OR NOT. AS SHRI MSP HAS ADMITTED IN HIS STAT EMENT THAT INTEREST @ 36% P.A. WAS CHARGED BY SHRI BHARATBHAI RASIKIAL SHAH IN CHARGE OF R D SHAH INVESTMENT CORPORATION AND LOAN INTEREST WAS REDUCED TO 27% THE YEAR 2000 AND OUT OF THE TOTAL INTEREST PAID @ 18% P.A. HAS BEEN PAID BY AND BALANCE HAS BEEN PAID IN CASH WHICH IS NOT SHOWN IN THE BOOKS OF ACCOUNT THIS NEEDS RE-VERIFICATION AT THE LEGAL OF THE ASSESSING OFFICER WHETHER THE MSP HAS PAID INTEREST ABOVE18% P.A. IN CASH AND IN CASE IT IS FOUND THAT HE HAS PAID ABOVE 18% P.A. I.E. @ 36% P.A. OR 27% P.A. FOR DIFF ERENTIAL PERIODS THE ASSESSING OFFICER WILL DETERMINE THE UNDISCLOSED INCOME. ACCORDINGLY THIS COMMON ISSUE IN BOTH THE APPEALS OF REVENUE AND THAT OF ASSESSEE IS SET ASID E TO THE FILE OF ASSESSING OFFICER AS INDICATED ABOVE. 5.1. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT AFTER CONSIDERING THE DIRECTION OF THE TRIBUNAL IN ORDER DATED 31.08.2009 THE LEARNED COM MISSIONER OF INCOME TAX(APPEALS) BE DIRECTED TO RE-MODIFY HIS ORDER. 6. AS AGAINST THIS THE LD. D.R. POINTED OUT THAT T HE ASSESSING OFFICER GRANTED THE APPEAL EFFECT TO THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) DATED 4.5.2006 VIDE ORDER DATED 6.6.2006. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) PASSED THE IMPUGNED ORDER ON 10.11.2006. THE TRIBUNAL ORDER WHICH THE LD. COU NSEL OF THE ASSESSEE IS REFERRING IS DATED 31.08.2009. ADMITTEDLY THIS WAS NOT AVAILABLE WHEN THE LEARNED COMMISSIONER OF INCOME 5 IT(S.S. )A NO. 35/AHD/2007 TAX(APPEALS) PASSED THE IMPUGNED ORDER. TO SUM UP THE LD. D.R. POINTED OUT THAT THE APPEAL EFFECT TO THE ORDER OF ITAT C BENCH AHMEDABAD D ATED 31.08.2009 IN IT(SS)A NO. 188/AHD/2006 IS YET TO BE GIVEN. TO A QUERY FROM TH E BENCH THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT TILL DATE NO APPEAL EFFECT HAS BE EN GIVEN TO THE ORDER OF ITAT DATED 31.08.2009 (SUPRA). 7. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ORDER GIVIN G APPEAL EFFECT TO THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS DATED 4.5.2 006. IT APPEARS THAT TILL DATE NO APPEAL EFFECT HAS BEEN GIVEN TO THE ORDER OF ITAT C BEN CH AHMEDABAD IN IT(SS)A. NO 188/AHD/2006 (SUPRA). WE THEREFORE SET ASIDE THE IMPUGNED ORDER DATED 10.11.2006 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND DIR ECT THE ASSESSING OFFICER TO PASS FRESH ORDER GIVING APPEAL EFFECT TO THE ORDER DATED 31.08 .2009 OF ITAT C BENCH AHMEDABAD IN IT(SS)A. NO. 188/AHD/2006 AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT FOR STATISTICAL PURPOSES THE APP EAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 13.08.201 0 SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13/ 08 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR ITAT AHMEDABAD LAHA/SR.P.S.