The ACIT, Circle-7,, Ahmedabad v. M/s. Gayatri Building Material Suppliers,, Ahmedabad

ITSSA 57/AHD/2007 | misc
Pronouncement Date: 17-09-2010 | Result: Dismissed

Appeal Details

RSA Number 5720516 RSA 2007
Assessee PAN NPAGE3840O
Bench Ahmedabad
Appeal Number ITSSA 57/AHD/2007
Duration Of Justice 3 year(s) 6 month(s) 1 day(s)
Appellant The ACIT, Circle-7,, Ahmedabad
Respondent M/s. Gayatri Building Material Suppliers,, Ahmedabad
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 17-09-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 17-09-2010
Date Of Final Hearing 08-09-2010
Next Hearing Date 08-09-2010
Assessment Year misc
Appeal Filed On 16-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI MUKUL KUMAR SHRAWAT JUDICIAL MEMBER AND N.S. SAINI ACCOUNTANT MEMBER) IT(SS)A.NO.57/AHD/2007 [BLOCK PERIOD 1.4.94 TO 27-9-2001] ACIT CIR.7 AHMEDABAD. VS. M/S.GAYATRI BUILDING MATERIAL SUPPLIERS 3 UMIYA SHOPPING CENTRE SATELLITE ROAD AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.M. MAHESH ASSESSEE BY : SHRI S.N.SOPARKAR O R D E R MUKUL KUMAR SHRAWAT JUDICIAL MEMBER : THIS APPEAL IS AT THE BEHEST OF THE REVENUE WHICH HAS EMANATED FROM T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XIII AHMEDABA D DATED 19-12-2006. THE SUBSTANTIVE GROUND IS REPRODUCED BELOW: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF UNDISCLOSED INCOME OF RS.39.25 LAKH BEI NG THE CASH PAYMENT MADE AS PER NOTINGS IN THE SEIZED DIARY BY SHRI J.O. SHAH PURCHASE MANAGER OF NIRMA LIMITED ON BEHALF OF THE SAID COMPANY TO SHRI JITENDRA N. PATEL THE MANAGING PARTNER OF THE ASSESSEE FIRM. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDIN G ASSESSMENT ORDER PASSED UNDER SECTION 158BD READ WITH SECTION 158BC AND 143 DATED 18-8- 2006 WERE THAT THE SEARCH UNDER SECTION 132(1) WAS CONDUCTED IN NIRMA GROUP OF CASES ON 27-9-2001 AND THE ASSESSEE COMPANY. A PURCHASE MANAGER WAS ALSO COVERED BY THE SAID SEARCH. IN RESPECT OF THE ADDITION AS MENTIONED IN THE AFORESAID GROUND WAS THAT A PAYMENT WAS STATED TO H AVE BEEN MADE BY THE SAID PURCHASER MANAGER VIZ. SHRI J.O. SHAH TO THE ASSESS EE FIRM THROUGH ITS PARTNER SHRI JITENDRA M. PATEL. AFTER A DETAILED DISCUSSIO N THE AO HAS HELD THAT ON IT(SS)A.NO.57/AHD/2007 -2- ACCOUNT OF THE NOTING IN THE DIARY MAINTAINED BY SH RI J.O. SHAH THE PURCHASE MANAGER OF THE NIRMA LIMITED A PAYMENT WAS SHOWN T O HAVE BEEN MADE TO SHRI JITENDRA PATEL PARTNER OF M/S.GAYATRI BUILDIN G MATERIAL SUPPLIERS TO THE TUNE OF RS.38.83 LAKHS. THEREFORE THE SAME WAS AN UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE FIRM. HOWEVER IT IS ALSO PE RTINENT TO MENTION THAT THE AO HAS ACKNOWLEDGED THE FACT THAT IN THE CASE OF TH E SAID PURCHASE MANAGER SHRI J.O. SHAH IT WAS HELD BY LEARNED CIT(A) VIDE ORDER DATED 24-9-2004 THAT THE SAID UNDISCLOSED INCOME WAS TO BE ASSESSED IN T HE HANDS OF SHRI J.O.SHAH ON SUBSTANTIVE BASIS. HOWEVER EVEN RECORDING THAT FINDING THE AO THEN NOTED THAT SINCE THE REVENUE HAS NOT ACCEPTED THE SAID FI NDING AND PREFERRED AN APPEAL BEFORE THE TRIBUNAL THEREFORE THE SAID FIN DING IS NOT FINAL FINDING AND THE INCOME HAD TO BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE-FIRM. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY THE LEARNED CIT(A) HAS RELIED UPON THE FINDINGS OF HIS PREDECESSOR MADE IN THE CASE OF SHRI J.O.SHAH AND ON THAT BASIS DELETED THE ADDI TION FROM THE HANDS OF THE ASSESSEE FIRM. 4. WITH THIS BRIEF FACTUAL BACKGROUND NOW BEFORE U S TWO JUDGMENTS OF THE TRIBUNAL HAVE BEEN PLACED ON RECORD AS FOLLOWS: I) IT(SS) A.NO.325/AHD/2004 AND IT(SSA) A.NO.325/AHD/2 004 IN THE CASE OF SHRI JYOTINDRA O. SHAH VS. ACIT ITAT A BENCH ORDER DATED 23-7-2010. THE RELEVANT PORTION OF THE ORDER READS AS UNDER: 17. THE DETAILS OF TRANSACTIONS ARE GIVEN BY LD. A O AND CIT(A) IN THEIR ORDERS. THE AO TREATED THIS INCOME AS THA T OF NIRMA LTD. AND PROPOSED TO MAKE SUBSTANTIVE ASSESSMENT IN THAT CASE WHEREAS HE PROPOSED PROTECTIVE ASSESSMENT IN THE CA SE OF THE ASSESSEE. THE LD.CIT(A) DID NOT AGREE WITH THE AO AND HELD THAT INCOME DID NOT PERTAIN TO NIRMA LTD. AND THEREFORE ONCE THE ASSESSEE HAS DECLARED THE SAME AS HIS INCOME IN THE LOCK RETURN IT(SS)A.NO.57/AHD/2007 -3- THERE IS NO CAUSE FOR UPHOLDING IT AS INCOME OF NIR MA LTD. THE LD. CIT(A) BASED HIS REASONING AS UNDER: XXXXX 18. WE HAVE HEARD THE PARTIES CAREFULLY AND PERUSE D THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF THE LD. CIT(A). THE R EASONS ARE (I) THAT NO EVIDENCE IS FOUND IN THE SEARCH SO AS TO SH OW THAT THE TRANSACTION WAS THAT OF NIRMA LTD. THE INFERENCE H AVE BEEN DRAWN MERELY BY PRESUMPTION AND SURMISES. (II) T HERE IS NO MATERIAL TO CONTRACT THE STATEMENT OF THE ASSESSEE AND TO BELIEVE THAT INCOME DID NOT BELONG TO HIM. (III) WHETHER I NCOME WOULD PERTAIN TO NIRMA LTD. OR NOT CAN ONLY BE DECIDED I N THE CASE OF NIRMA LTD. IN CASE IT IS HELD THAT INCOME BELONGE D TO NIRMA LTD. THEN A RECTIFICATION CAN BE CARRIED OUT IN TH E CASE OF THE ASSESSEE. (IV) SIMPLY BECAUSE THE ASSESSEE IS A PU RCHASE MANAGER AND M/S.GAYATRI BUILDING MATERIAL SUPPLIERS IS A REGULAR SUPPLIER TO NIRMA LTD. IT CANNOT BE INFERR ED THAT TRANSACTION RECORDED BY SHRI J.O. SHAH PERTAINED TO NIRMA LTD. THERE HAS TO BE COGENT MATERIAL TO LINK NIRMA LTD. WITH THE TRANSACTIONS FOUND ON THE DOCUMENTS RECOVERED FROM THE PREMISES OF THE ASSESSEE. II) IT(SS) NO.98/AHD/2005 AND IT(SS)NO.50/AHD/2005 IN T HE CASE OF ACIT VS. NIRMA LTD. ITAT C BENCH ORDER DATED 27-8- 2010. THE RELEVANT PORTION OF THE ORDER READS AS U NDER: 55. THE LD. CIT(A) DELETED THE ADDITION OF RS.38 8 3 000/- AND CONFIRMED THE ADDITION OF RS.42 000/-. WHILE DELETI NG THE ADDITION OF RS.38 83 000/- THE LD. CIT(A) RELIED ON HIS ORDE R IN THE CASE OF SHRI JO SHAH WHERE THESE PAYMENTS WERE TREATED AS I NCOME OF SHRI JO SHAH HIMSELF. IN THIS REGARD LD. CIT(A) HAS MADE ELABORATE DISCUSSION ON PAGE 38 40 OF HIS ORDER. THE MAIN REASONS GIVEN BY HIM ARE THAT AO HAS NOT BROUGHT O UT ANY MATERIAL TO SHOW THAT TRANSACTIONS PERTAINED TO NIR MA LTD. WHEREAS SHRI JO SHAH HAS CLEARLY ADMITTED THAT THIS INCOME IS HIS UNDISCLOSED INCOME WHICH WERE DECLARED IN THE BLOCK PERIOD. SHRI JO SHAH HAS STATED THAT TRANSACTIONS NOTED IN THE S EIZED DOCUMENT PERTAINED TO A PROPOSED PURCHASES LAND FRO M SHRI JITU PATEL OF GAYATRI BUILDING MATERIAL SUPPLIERS TO WHO M PAYMENT OF RS.25 33 000/- WAS MADE AND FURTHER TRANSACTION OF RS.13 10 000/- PERTAINED TO A PROPOSED DEAL FOR PUR CHASE OF FLAT FOR WHICH ADVANCE WAS GIVEN. SINCE THEY WERE HIS UN ACCOUNTED IT(SS)A.NO.57/AHD/2007 -4- INCOME IT WAS SO DECLARED IN THE BLOCK RETURN. ACCE PTING THE ABOVE FINDING THE LD. CIT(A) DELETED THE ADDITION. HOWEVER HE CONFIRMED THE ADDITION OF RS.42 000/- ON THE GROUND THAT THIS WAS NOT SATISFACTORILY EXPLAINED. 56. WE HAVE HEARD THE PARTIES. ONCE THE MAJOR TRANS ACTION OF RS.38 83 000/- WAS TREATED AS OF SHRI JO SHAH THEN OTHER TRANSACTION FOUND ON THE SAME DOCUMENT CANNOT BE TR EATED AS BELONGING TO ASSESSEE COMPANY. IF IT IS UNEXPLAINED THEN ADDITION IS CALLED FOR IN THE HANDS OF JO SHAH ONLY. ACCORDI NGLY WE DELETE THE ADDITION OF RS.42 000/- CONFIRMED BY LD. CIT(A) . REVENUES APPEAL: 70. IN DEPARTMENTAL APPEAL THE ONLY ISSUE INVOLVE D IS ABOUT RELIEF OF RS.38 83 000/- GIVEN BY LD. CIT(A) TO ASS ESSEE IN RESPECT OF ADDITION MADE ON THE BASIS OF STATEMENT OF SHRI J.O. SHAH AND DOCUMENT FOUND FROM HIS PREMISES. 71. ON THE BASIS OF DIARY (ANNEXURE A-18) OF THE PU RCHASE MANAGER SHRI J.O. SHAH THE AO NOTED THAT SEVERAL PA YMENTS HAVE BEEN MADE BY HIM WHICH WERE NOT ACCOUNTED FOR SUCH AS PAYMENT OF RS.13.5 LAKHS MADE TO ONE SHRI AMAR WHO IS STATE D TO BE AN ASSISTANT OF SHRI J.O. SHAH AND PAYMENT OF RS.25 L AKHS TO GAYATRI BUILDING MATERIAL SUPPLIERS. IN ADDITION TO THIS THERE WERE PAYMENTS OF RS.25 000/- AND RS.17 000/- WHICH WERE ALSO RECORDED AND WHICH WERE CONFIRMED BY THE LD. CIT(A) AS ADDITION IN THE CASE OF THE ASSESSEE. WHILE DISCUSSING THIS ISSUE CONTAINED IN GROUND NO.9 IN ASSESSEES APPEAL WE HAVE HELD T HAT THE MAJOR ADDITION OF RS.38 83 000/- HAS BEEN CONSIDERED IN T HE CASE OF SHRI J.O. SHAH WHICH HAS BEEN DECLARED BY SHRI J.O. SHAH AND ACCEPTED BY THE DEPARTMENT. THIS ISSUE WAS ALSO DIS CUSSED BY THE TRIBUNAL IN THE CASE OF SHRI J.O. SHAH IN IT(SS)A 3 25 & 321/AHD/2004 IN PARA 17 & 18 THEREOF AS UNDER:- XXXXX 72. SINCE THERE IS NO MATERIAL TO HOLD THAT INCOME ARISING FROM SUCH PAYMENTS AS RECORDED IN ANNEXURE-A18 BELONGED TO THE ASSESSEE COMPANY AND IT HAS BEEN DECLARED BY SHRI J .O. SHAH IN HIS PERSONAL ASSESSMENT AND THUS CONFIRMED BY THE T RIBUNAL THE ADDITION CANNOT BE MADE IN THE HANDS OF ASSESSEE CO MPANY. ACCORDINGLY LD. CIT(A) WAS JUSTIFIED IN DELETING TH E ADDITION. THIS GROUND OF REVENUE IS ACCORDINGLY DISMISSED. IT(SS)A.NO.57/AHD/2007 -5- IN THE LIGHT OF THE ABOVE TWO JUDGMENTS OF THE RESP ECTIVE CO-ORDINATE BENCHES WHEREIN ON FACTS IT HAS BEEN FINALLY HELD THAT THE IMPUGNED UNDISCLOSED INCOME WAS THE INCOME OF SHRI J.O.SHAH AND THAT THE ASSESS EE-FIRM HAS RETURNED THE AMOUNT AND THAT TRANSACTIONS COULD NOT BE COMPLETED THEREFORE WE FIND NO REASON TO REVERSE THE FINDING OF THE FIRST APPELLAT E AUTHORITY MADE ON THE BASIS OF THE ENTIRETY OF THE FACTS ON THE ISSUE. WE HERE BY UPHOLD THIS FINDING ON FACTS AND DISMISS THIS GROUND OF THE REVENUE. 5. IN THE RESULT THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON 17 TH SEPTEMBER 2010. SD/- SD/- (N.S. SAINI ) ACCOUNTANT MEMBER (MUKUL KUMAR SHRAWAT) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 17-09-2010 COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD