JAYESH D. VALIA, MUMBAI v. DCI T 9(3), MUMBAI

ITSSA 8/MUM/2012 | misc
Pronouncement Date: 30-09-2016

Appeal Details

RSA Number 819916 RSA 2012
Assessee PAN AAFPV5698G
Bench Mumbai
Appeal Number ITSSA 8/MUM/2012
Duration Of Justice 4 year(s) 7 month(s) 19 day(s)
Appellant JAYESH D. VALIA, MUMBAI
Respondent DCI T 9(3), MUMBAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Bench Allotted J
Tribunal Order Date 30-09-2016
Date Of Final Hearing 16-02-2015
Next Hearing Date 16-02-2015
Assessment Year misc
Appeal Filed On 10-02-2012
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE SHRI R. C. SHARMA A CCOUNTATNT MEMBER AND SHRI SANDEEP GOSAIN J UDICIAL MEMBER IT(SS)A NO. 8 /MUM/201 2 BLOCK PERIOD : 1987 - 88 TO 1 9 - 07 - 1996 SHRI JAYESH D VALIA VS. D CIT 9(3) COURT CHAMBERS 4 TH FLOORS 4 TH FLOOR S. V. ROAD S.V. ROAD BORIVALI (W) MUMBAI - MUMBAI - 4000 92 PAN NO. AA FPV5698G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI. M. SUBRAMANIAM AR REVENUE BY : SHRI. K. KRISHNAMURTY DR DATE OF HEARING : 11 /0 7 /2016 DATE OF PRONOUNCEMENT : 3 0 / 0 9 /2016 ORDER PER R.C.SHARMA(A.M.) THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS BLOCK PERIOD 1987 - 88 TO 19 TH JULY 1996 . T HE APPEAL IS DIRECTED AGAINST THE ORDER DATED 19 TH DECEMBER 2011 OF THE ASSESSING OFFICER (AO) COMPLETED U/S 158BC R.W.S 254 OF THE INCOME TAX ACT 1961(IN SHORT THE THE ACT) . 2. IT IS RELEVANT TO MENTION HERE THE PROCEEDINGS SO FAR. THE ASSESSEE IS THE MANAGING DIRECTOR OF M/S VASPARR FISCHERS LTD. FORMERLY KNOWN AS VASPARR ENGINEERING LTD. SEARCH AND SEIZURE PROCEEDINGS U/S 132 OF THE ACT WAS CARRIED OUT BY THE DEPARTMENT IN THE ASSESSEES PREMISES ON 19 TH JULY 1996. THE ORIGINAL ASSESSMENT ORDER (WE MAY CALL IT THE 1ST ASSESSMENT ORDER) WAS COMPLETED BY THE AO ON 30 TH JULY 1997 U/S 143(3) R.W.S. 158BC DETERMINE THE TOTAL UNDISCLOSED INCOME AT RS.1 96 90 888/ - . THE SAID ORDER OF 2 THE AO WAS SET ASIDE BY THE ITAT A BENCH MUMBAI ON 3 RD FEBRUARY 2006 [IT(SS)A NO. 151/MUM/1997] WITH THE FOLLOWING OBSERVATION: IN THESE FACTS OF THE CASE WE HOLD THAT IN THE INTEREST OF NATURAL JUSTICE IT SHALL BE JUSTIFIED TO SET ASIDE THE ASSESSMENT TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO FRAME A DE NOVO ASSESSMENT ON MERITS IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND ALSO AFTER PROVIDING THE COPIES OF THE RELEVANT DOCUMENTS IN POSSESSIO N OF THE REVENUE TO THE ASSESSEE. IN PURSUANCE TO THE ORDER OF THE ITAT THE AO MADE AN ASSESSMENT U/S 158BC R.W.S. 254 ( WE MAY CALL IT 2 ND ASSESSMENT ) ON 22 ND DECEMBER 2006 ARRIVING AT TOTAL UNDISCLOSED INCOME OF RS.1 96 90 888/ - . THIS ORDER PASSED BY THE AO WAS SET ASIDE BY THE ITAT J BENCH MUMBAI ON 25 TH AUGUST 2010 [ IT(SS)A NO. 10 (MUM)/2007) ] WITH THE FOLLOWING OBSERVATION: LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS DEPRIVED OF ADEQUATE OPPORTUNITY AND THEREFORE PRAYED THAT AN OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE TO EXPLAIN ITS CASE BEFORE THE ASSESSING OFFICER. LEARNED DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION FOR REMITTING THE MATTER TO THE ASSESSING OFFICER. 3. HAVING CONSIDERED THE MATTER WE ARE OF THE OPINIO N THAT IN THE INTERESTS OF JUSTICE THE MATTER SHOULD GO BACK TO THE ASSESSING OFFICER FOR AFFORDING AN OPPORTUNITY TO THE ASSESSEE. WE THEREFORE SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND DIRECT HIM TO DECIDE THE MATTER AFRESH AFTER AFFORDING REAS ONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN PURSUANCE TO THE ABOVE ORDER OF ITAT THE AO AGAIN MADE AN ASSESSMENT U/S 158BC R.W.S. 254 (WE MAY CALL IT THE 3RD ASSESSMENT ORDER) ON 29 TH DECEMBER 2011 DETERMIN ING THE TOTAL UNDISCLOSED INCOME AT RS.1 96 87 068/ - . THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ABOVE ORDER DATED 29 TH DECEMBER 2011 PASSED BY THE AO. 3 . THE 1 ST 2 ND 3 RD 14 TH & 15 TH GROUND S RAISED BY THE ASSESSEE ARE GENERAL IN NATURE. NOW WE COME TO THE 4 TH GROUND RAISED BY THE ASSESSEE WHICH IS THAT THE AO HAS ERRED IN MAKING ADDITION OF RS.1 68 302/ - ON ACCOUNT OF UNEXPLAINED EXPENDITURES ON RENOVATION. 3 3 .1 THE AO ON THE BASIS OF PAGE N O. 1 2 AND 3 TO 1 7 OF FILE NO. A - 1 SEIZED FROM THE PREMISES OF THE ASSESSEE CAME TO A FINDING THAT THE ASSESSEE HAD NO EVIDENCE TO DISPROVE THE FACT THAT THE BALANCE AMOUNT OF RS.1 68 302/ - OUT OF TOTAL EXPENDITURE OF RS.12 68 302/ - WAS INCURRED ON RENOVA TION FURNITURE AND FIXTURE. ON THE BASIS OF ABOVE THE AO MADE AN ADDITION OF RS.1 68 302/ - AS UNEXPLAINED EXPENDITURE. 3.2 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED BEFORE THE AO ON 23 RD AUGUST 2011 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE LOOSE PAPERS DO NOT INDICATE EXPENSE OF RS.12 68 302/ - . 3.3 THE LD. DR RELIED ON THE ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER DATED 29 TH DECEMBER 2011 . 3.4 WE HAVE CAREFULLY CONSIDERED THE MAT TER. WE FIND THAT THE AO HAS RELIED ON VARIOUS PAPERS CONTAINED IN FILE N O. A - 1 TO ARRIVE AT AN ADDITION OF RS.1 68 302/ - . THE AO HAS MENTIONED IT AT PARA 9.1 (A) OF THE ASSESSMENT ORDER. IN THE CASE OF CBI V S. V.C. SHUKLA (1998) 3 SCC 410 IT HAS BEEN HELD BY THE HONBLE SUPREME COURT THAT FILE CONTAINING LOOSE SHEETS OF PAPERS ARE NOT BOOKS AND HENCE ENTRIES THEREIN ARE NOT ADMISSIBLE U/S 34 OF THE EVIDENCE ACT 1872. THE ABOVE DECISION HAS BEEN FOLLOWED BY THE ITAT HYDERABAD BENCH ON SIMILAR ISSUE IN THE CASE OF SRI K. BABU RAO & SMT K. RANI [ ITA NOS. 329 - 335/HYD/2012 ] . WE FOLLOW THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE ABOVE CASE AND DIRECT THE AO TO DELETE THE ADDITION OF RS.1 68 302/ - 4. THE 5 TH GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS THAT THE AO ERRED IN MAKING ADDITION OF RS.98 100/ - BEING UNEXPLAINED CASH DEPOSIT IN THE BANK. 4.1 THE AO FOUND THAT THE ASSESSEE HAD MADE A DECLARATION OF RS.10 00 000/ - IN HIS PRELIMINARY STATEMENT RECOR DED DURING THE COURSE OF SEARCH ON ESTIMATE BASIS. OUT OF THE ESTIMATED AMOUNT OF CASH DEPOSIT OF 4 RS.10 00 000/ - A SUM OF RS.9 01 900/ - HAVE BEEN DECLARED IN THE HANDS OF THE FOLLOWING PERSONS: I ASSESSEE RS.5 68 900/ - II PARESH VALIA RS.64 000/ - III PRATIBHA KANAKIA RS.2 69 000/ - RS.9 01 900/ - THE AO MADE AN ADDITION OF THE BALANCE AMOUNT OF RS.98 100/ - (RS.10 00 000/ - ( - ) RS.9 01 900/ - ) AS THE ASSESSEES UNDISCLOSED INCOME. 4.2 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF SEARCH THE ASSESSEE IN PRELIMINARY STATEMENT OFFERED TO DISCLOSE RS.10 00 000/ - ON ACCOUNT OF CASH DEPOSITED IN BANKS ON ESTIMATE BASIS. ON ACTUAL VERIFICATION THE CASH DEPOSITED IN BANK S WERE FOUND TO BE RS.9 01 900/ - ONLY. IT WAS SUBMITTED THAT THE DISCLOSURE WAS MADE ON ESTIMATE BASIS DURING SEARCH BUT FINALLY WAS OFFERED IN THE RETURN INCOME FOR THE BLOCK PERIOD ON THE BASIS OF ACTUAL FIGURE THEREFORE THE ADDITION OF RS.98 100/ - MAD E BY THE AO BE DELETED. 4.3 THE LD. DR RELIED ON THE ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER DATED 29 TH DECEMBER 2011 . 4.4 WE HAVE CAREFULLY CONSIDER ED THE MATTER. WE FIND THAT THE ASSESSEE HAD MADE A DECLARATION OF RS.10 00 000/ - IN HIS PRELIMI NARY STATEMENT RECORDED DURING THE COURSE OF SEARCH ON ESTIMATE BASIS. THIS HAS BEEN MENTIONED BY THE AO AT PARA 9.2 (C) AT PAGE 5 OF THE ASSESSMENT ORDER. HOWEVER ON ACTUAL VERIFICATION THE CASH DEPOSITED IN THE BANKS WERE FOUND TO BE RS.9 01 900/ - . THE RE IS NO GAINSAYING THE FACT THAT ONE SHOULD BE GUIDED BY THE ACTUAL DEPOSIT OF CASH. THEREFORE THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 98 100/ - . 5. THE 6 TH GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS THAT THE AO HAS ERRED IN MAKING ADDITION OF RS.4 37 500/ - ON ACCOUNT O F ON MONEY PAYMENT FOR FLAT. 5 5.1 THE AO FOUND THAT ON PAGE NO.1 OF THE SEIZED ANNEXURE A - 3 DESCRIPTION OF AN AMOUNT OF RS.8 75 000/ - I S APPEARING. THIS AMOUNT HAS BEEN PAID TO KARMA TRADING AND INVESTMENTS P. LTD. AS ON MONEY FOR THE PURPOSE OF ACQUIRING RESIDENTIAL PREMISES. THE AO WAS NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE THAT THE PAYMENTS DETAILS SHOWN BY CHEQUE ARE DULY REFLECTED IN THE BOOKS. AS 50% OF IT HAS BEEN BROUGHT TO TAX IN THE HANDS OF THE ASSESSEES BROTHER SHRI PARESH VALIA THE AO MADE AN ADDITION OF RS.4 37 500/ - (50% OF RS.8 75 000 / - ) AS ASSESSEES SHARE AND T REATED IT AS UNDISCLOSED INCOME. 5.2 THE LD. CO UNSEL OF THE ASSESSEE SUBMITTED THAT THE AO HAS MADE AN ADDITION ON THE BASI S OF STATEMENT OF THE ASSESSEE AND THAT THE SAME CANNOT BE MADE ON THE BASIS OF STATEMENT. IT IS STATED BY HIM THAT IN BLOCK ASSESSMENT PROCEEDINGS THE ADDITION CAN BE MADE ONLY IN RESPECT OF EVIDENCE FOUND DURING THE COURSE OF SEARCH AND UP TO THE DATE OF SEARCH. 5.3 THE LD. DR RELIED ON THE ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER DATED 29 TH DECEMBER 2011 . 5.4 WE HAVE CAREFULLY CONSIDERED THE MATTER. WE FIND THAT THE AO HAS RELIED UPON PAGE NO. 1 OF SEIZED ANNEXURE A - 3 WHEREIN DESCRIPTION OF AN AMOUNT OF RS. 8 75 000/ - IS APPEARING. ALSO THE AO HAS RELIED UPON THE STATEMENT RECORDED FROM THE ASSESSEE ON 15 TH JULY 1997. IT HAS BEEN HELD IN THE CASE OF ITO VS. M.A. CHIDA MBARAM [1997] 63 ITD PAGE 203 (MAD - TRIB - TM) AND IN THE CASE OF ACIT VS. SHAILESH S. SHAH [1 997] 63 ITD PAGE 153 (MUM - TRIB) THAT NO ADDITION IS JUSTIFIED ON THE BASIS OF PAPERS ALONE IN THE ABSENCE CORROBORATIVE EVIDENCE. THE AO HAS NOT MADE ANY ATTEMPT TO JUSTIFY HIS ADDITION ON THE BASIS OF CORROBORATIVE EVIDENCE. THEREFORE WE DIRECT THE AO TO DELETE THE ABOVE ADDITION OF RS.4 37 500/ - . 6. THE 7 TH GROUND RAISED BY THE ASSESSEE IS THAT THE AO ERRED IN MAKING ADDITION OF RS.1 50 000/ - ON ACCOUNT OF INVESTMENT IN SHARES . 6 6.1 THE AO OBSERVED THAT DURING THE COURSE OF SEARCH PROCEEDINGS SHARES CERTIFICATES WORTH RS.4 27 000/ - WERE SE IZED FROM THE RESIDENTIAL PREMISES OF THE ASSESSEE. HE NOTED THAT IN THE ORIGINAL ASSESSMENT THE AO HAD TREATED AN AMOU NT OF RS.1 50 000/ - AS UNEXPLAINED INVESTMENT. THE AO REJECTED THE SUBMISSION MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND MADE AN ADDITION OF RS.1 50 000/ - WHICH WERE ALLEGEDLY PAID IN CASH FOR ACQUIRING THE SHARES AND TREATED THE SAME AS UNEXPLAINED INVESTMENT. 6.2 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE SAID SHARES BELONG TO FAMILY MEMBERS WHO ARE ASSESSED TO TAX SEPARATELY AND THEREFORE NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. ALSO IT WAS STATED THAT THE SHARES BELONGING TO THE ASSESSEE ARE DULY REFLECTED IN ASSESSEES BOOKS PRIOR TO THE SEARCH AND HENCE NO ADDITION CAN BE MADE IN THIS REGARD ON AD HOC BASIS IN BLOCK ASSESSMENT IN RESPECT OF SHARES OF FAMILY MEMBERS. 6.3 THE LD. DR RELIED ON THE ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER DATED 29 TH DECEMBER 2011 . 6.4 WE HAVE CAREFULLY CONSIDERED THE MATTER. WE FIND THAT THE AO HAS RELIED UPON THE SAME ADDITION MADE BY HIS PREDECESSOR - IN - OFFICE. THE AO HAS MENTIONED IT AT PARA 9.4 (A) AT PAGE 7 OF HIS ASSESSMENT ORDER. AS WE MENTIONED EARLIER THE 1 ST ASSESSMENT DATED 30 TH JULY 1997 MADE BY THE AO HAS BEEN SET ASIDE BY THE ITAT ON 3 RD FEBRUARY 2006. THE 2 ND ASSESSMENT DATED 22 ND DECEMBER 2006 MADE BY THE AO HAS BEEN AGAIN SET ASIDE BY THE ITAT ON 25 TH AUGUST 2010. THIS IS THE 3 RD ASSESSMENT DATED 29 TH DECEMBER 2011 MADE BY THE AO. WE COME ACROSS THAT THE AO HAS REPEATED THE FINDING OF HIS PREDECESSOR - IN - OFFICE. HE HAS NOT FOUND OUT ANY MATERIAL FACTS. IN VIEW OF THE ABOVE THE ADDITION OF RS.1 50 000/ - MADE BY THE AO ON ESTIMATE IS DELETED. 7. THE 8 TH GROUND RAISED BY THE ASSESSEE IS THAT THE AO ERRED IN MAKING ADDITION OF RS.1 58 671/ - ON ACCOUNT OF INVESTMENT IN JEWELLERY. 7 7.1 THE AO NOTED THAT DURING THE COURSE OF SEARCH PROCEEDINGS JEWELLERY WORTH RS.1 58 671/ - WAS SEIZED FROM THE LOCKER. HE WAS N OT CONVINCED WITH THE RELIANCE PLACED BY THE ASSESSEE ON BOARDS INSTRUCTION NO.1916 DATED 11 TH MAY 1994. THE AO MADE AN ADDITION OF RS.1 58 671/ - AS UNDISCLOSED INCOME OF ASSESSEE BEING INVESTMENT IN JEWELLERY. 7.2 THE LD. COUNSEL OF THE ASSESSEE SUBMITTE D THAT THE JEWELLERY (OLD ORNAMENTS 379.800 GMS . ) BELONGS TO THREE LAD Y MEMBERS IN THE FAMILY AND IT IS EVIDENT AS PER PANCHANAMA OF SEIZED PAPER BOOK 1(PAGE 201/202). HE ALSO STATED THAT HE HAD FILED THE CONFIRMATIONS BY THE THREE LADY MEMBERS DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. 7.3 THE LD. DR RELIED ON THE ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER DATED 29 TH DECEMBER 2011 . 7.4 WE HAVE CAREFULLY CONSIDERED THE MATTER. WE FIND THAT THE AO HAS SUMMARILY REJECTED THE CONFIRMATION FILED BY THE THREE LADY MEMBERS OF THE FAMILY OF THE ASSESSEE. WE HAVE TAKEN INTO ACCOUNT THE PANCHANAMA DATED 4 TH SEPTEMBER 1996 AND THE CONFIRMATIONS FILED DURING THE ASSESSMENT PROCEEDINGS. WE FEEL THAT THERE WAS NO MATERIAL BEFORE THE AO TO MAKE THE AB OVE ADDITION. THEREFORE WE DIRECT THE AO TO DELETE THE ABOVE ADDITION OF RS.1 58 671/ - . 8. THE 9 TH GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS THAT THE AO ERRED IN MAKING ADDITION OF RS.4 01 102/ - ON ACCOUNT OF INTEREST PAID FOR NON - BUSINESS PURPOSE. 8.1 THE AO RELIED UPON THE FINDINGS OF HIS PREDECESSOR - IN - OFFICE AND CAME TO A FINDING THAT THE ASSESSEE HAS DIVERTED HIS INTEREST BEARING BORROWED FUNDS FOR THE PURPOSE OF MAKING BENAMI INVESTMENT IN THE PUBLIC ISSUE OF SHARES OF M/S VASPARR FISCHERS LTD. HOLDING SUCH INTEREST EXPENSE CLAIMED BY THE ASSESSEE AS NOT FOR BUSINESS PURPOSE THE AO MADE AN ADDITION OF RS. 4 01 102/ - AS ASSESSEES UNDISCLOSED INCOME. 8 8.2 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE AO HAS DISALLOWED IN BLOCK ASSESSMENT INTEREST CLAIMED AS EXPENDITURE IN REGULAR RETURN OF INCOME FOR A.Y. 1993 - 94 TO 1996 - 97 FILED BY THE ASSESSEE BEFORE THE DATE OF SEARCH. HE TOOK US TO HIS SUBMISSION DATED 23 RD AUGUST 2011 FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS . IT WAS THUS SUBMITTED THAT THE INTEREST WAS CLAIMED IN THE RETURN INCOME FILED BEFORE THE DATE OF SEARCH AND THEREFORE NO ADDITION CAN BE MADE IN THE BLOCK ASSESSMENT. 8.3 THE LD. DR RELIED ON THE ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER DATED 29 TH DECEMBER 2011 . 8.4 WE HAVE CAREFULLY CONSIDERED THE MATTER. WE FIND THAT THE AO HAS RELIED UPON THE FINDINGS OF HIS PREDECESSOR - IN - OFFICE WHICH HE HAS EXTRACTED AT PAGE 14 OF THE ASSESSMENT ORDER. WE HAVE MENTIONED EARLIER THAT THE ITAT HAS SET ASIDE TWICE THE ASSESSMENT ORDER PASSED BY THE AO. STILL THEM THE AO IN THE PRESENT ASSESSMENT DATED 29 TH DECEMBER 2011 HAS RELIED UPON THE FINDINGS IN THE ORIGINAL ASSESSMENT WITHOUT TRYING TO ESTABLISH THE FACTS. ALSO WE FIND THAT THE CLAIM OF THE ASSESSEE THAT INTEREST WAS REFLECTED IN THE RETURN OF INCOME FILED BEFORE THE DATE OF SEARCH HAS NOT BEEN REFUTED BY THE AO . IT HAS BEEN HELD IN SUNDER AGENCIES VS. DCIT [1997] 63 ITD 245 THAT THE PROVISIONS OF SEC. 158BA DO NOT PROVIDE A LICENSE TO THE REVENUE TO MAKE ROVING ENQUIRIES CONNECTED WITH COMPLETED ASSESSMENTS. IN VIEW OF THE ABOVE WE DIRECT THE AO TO DELETE THE ADDITION OF RS.4 01 102/ - . 9. THE 10 TH GROUND RAISED BY THE ASSESSEE IS THAT THE AO ERRED IN MAKING ADDITION OF RS.8 18 303/ - ON ACCOUNT OF CAPITAL GAIN ON SALE OF SHARES OF MRS. PRATIBHA KAN A KIA. 9.1 THE AO FOUND THAT SEARCH AND SEIZURE PROCEEDINGS U/S 132 WERE ALSO CARRIED OUT IN THE CASE OF HARSHAD KANAKIA THE BROTHER - IN - LAW OF THE ASSESSEE . SHRI HARSHAD KANAKIA IN HIS STATEMENT RECORDED ON OATH STATED THAT ALL SUCH INVESTMENTS IN HIS NAME AND IN THE NAM E OF HIS FAMILY MEMBERS WERE DONE BY THE ASSESSEE. FURTHER THE SHARES ALLOTTED TO MRS. PRATIBHA KANAKIA 9 WAS SOLD IN THE PERIOD RELEVANT TO A.Y. 1996 - 97. THEREFORE THE AO BROUGHT TO TAX THE CAPITAL GAINS OF RS.8 18 303/ - AS UNDISCLOSED INCOME OF THE ASSES SEE SINCE HE IS THE BENEFICIAL OWNER OF SUCH SHARES. 9.2 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ADDITION ONLY ON THE BASIS OF STATEMENT OF MRS. PRATIBHA KANAKIAS HUSBAND THAT SHARES BELONG TO THE ASSESSEE CANNOT BE SUSTAINED AS INVESTMENTS AS WEL L AS CAPITAL GAINS ARE DULY REFLECTED IN THE INCOME FILED BY MRS. PRATIBHA KANAKIA . A LSO IT WAS STATED THAT ADDITION IS U NWARRANTED AS IT WOULD AMOUNT TO DOUBLE TAXATION. 9.3 THE LD. DR RELIED ON THE ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER DATED 29 TH DECEMBER 2011 . 9.4 WE HAVE CAREFULLY CONSIDERED THE MATTER . WE HAVE GONE THROUGH THE RETURN OF INCOME FILED BY MRS. PRATIBHA KANAKIA FOR THE A.Y. 1996 - 97 WHICH IS AT PAGE NO. 149 - 151 OF THE PAPER BOOK FILED BY THE ASSESSEE. WE FIND THAT THERE IS NO MATERIAL TO TAX IT IN THE HANDS OF THE ASSESSEE WHEN MRS. KANAKIA HAS FILED THE RETURN OF INCOME FOR THE A.Y. 1996 - 97 DISCLOSING THE CAPITAL GAINS OF RS.8 18 303/ - . THIS WOULD LEAD TO DOUBLE TAXATION. IN VIEW OF THE ABOVE WE DIRECT THE AO TO DELETE THE A DDITION OF RS.8 18 303/ - . 10. THE 13 TH GROUND RAISED BY THE ASSESSEE IS THAT THE AO ERRED IN MAKING ADDITION OF RS.20 00 000/ - ON ACCOUNT OF UNEXPLAINED CASH ADVANCES. 10.1 THE AO NOTED THAT AS PER THE SEIZED DOCUMENTS AT PAGE 143 TO 148 (ANNEXURE A - 11) THE ASSESSEE HAS ADVANCED THE FOLLOWING AMOUNTS IN CASH TO PERSONS WHOSE NAMES ARE MENTIONED BELOW: I YOGINI BHATT RS.3 LAKHS II RAMABEN BHATT RS.2 LAKHS III BHARAT BHATT RS.3.5 LAKHS IV SHASHIKANT KHATRA RS.5 LAKHS V VIJAY KHARA RS.5 LAKHS VI VIMALADEVI KEDIA RS.1.5 LAKHS 10 THE AO RELIED ON THE STATEMENT RECORDED ON OATH OF SHRI BHARAT BHATT AND THE SUBMISSION MADE BY THE ASSESSEE ON 1 ST JULY 1997 ACCEPTING THAT THE AMOUNT OF RS.20 00 000/ - WAS ADVANCED BY HIM OUT OF SALE PROCEEDS OF SHARES OF VASPARR FISCHERS LTD. THE AO TREATED THE ABOVE AMOUNT OF RS.20 00 000/ - AS ASSESSEES UNDISCLOSED INCOME. 10.2 THE LD. COUNSEL OF THE ASSESSEE SUB MITTED THAT THE ADDITION IN BLOCK ASSESSMENT SHOULD BE MADE ON ACCOUNT OF EVIDENCE FOUND DURING SEARCH. THE ADDITION OF RS.20 00 000/ - HAS BEEN MADE BY THE AO ON THE BASIS OF INVENTORY OF BOOKS AND DOCUMENTS FOUND DURING THE SURVEY OF HIS OFFICE PREMISES A T C OURT C HAMBERS ON 8 TH AUGUST 1996 U/S 133A OF THE ACT. THUS IT WAS SUBMITTED THAT THE ADDITION OF RS.20 00 000/ - MADE BY THE AO BE DELETED. 10.3 THE LD. DR RELIED ON THE ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER DATED 29 TH DECEMBER 2011 . 10.4 WE HAVE CONSIDERED RIVAL CONTENTION AND FOUND FRO M RECORD THAT DU RING THE COURSE OF SEARCH PROCEEDINGS INCRIMINATING RECORDS WERE SEIZED. ON SUCH SEIZED MATERIAL AS PER ANNEXURE A - 11 CONTAINS FEW PAGES WHEREIN IT HAS BEEN MENTIONED THAT DIFFERENT PERSONS H AVE RECEIVED CASH FROM THE ASSESSEE. AS PER PAGES 143 TO 148 IT IS SEEN THAT THE ASSESSEE HAS ADVANCED THE FOLLOWING AMOUNTS IN CASH TO PERSONS WHOS E NAMES ARE MENTIONED AS BELOW : - I) YOGINI BHATT RS. 3 LAKHS (II) RAMABEN BHATT RS. 2 LAKHS (III) BHARAT BHATT RS. 3.5 LAKHS (IV) SHASHIKANT KHATRA RS.5 LAKHS (V) VIJAY KHARA RS.5 LAKHS (VI) VIMALADEVI KEDIA . RS.1.5 LAKHS THUS TOTAL AMOUNT OF RS.20 00 000/ - BY WAY OF CASH WAS ADVANCED TO THE ABOVE PERSONS BY THE ASSESSEE. IN THIS CONNECTION STATEMENT ON OATH OF SHRI BHARAT BHATT WAS RECORDED. HE IN HIS STATEMENT RECORDED ON OATH ON 8.7.97 11 HAS ADMITTED THAT HE AND HIS WIFE YOGINI BHATT AND MOTHER RAMABEN BHATT HAVE RECEIVED AN AMOUNT OF RS.2 LAKHS RS.3.5 LAKHS AND RS.2 LAKHS RESPECTIVELY FROM THE ASSESSEE. THIS AMOUNT WAS STATED TO HAVE BEEN RECEIVED BY THEM AGAINST AN EQUAL AMOUNT OF CHEQUE ISSUED TO THE ASSESSEE. THE CHE QUES WERE RECEIVED BY THE ASSESSEE IN DECEMBER 1994 WERE UTILIZED FOR THE PURPOSE OF INVESTMENT IN SHAREHOLDING OF THE ASSESSEE'S COMPANY. VIDE LETTER DATED 20.6.97 THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THIS AMOUNT OF RS.20 LAKHS SHOULD NOT BE TAXES AS UNDISCLOSED INCOME IN THE LIGHT OF ADMISSION MADE BY BHARAT BHATT AND OTHERS. THE ASSESSEE VIDE HIS SUBMISSION DATED 1.7.97 HAD ACCEPTED THAT THE AMOUNT OF RS.20 LAKHS WAS ADVANCED BY HIM OUT OF SALE PROCEEDS OF SHARES OF VASPARR FISCHERS LTD. THE REFORE IN THE LIGHT OF ADMISSION MADE BY THE AS SESSEE RS.20 LAKHS WAS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. 11. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ACTION OF AO BY OBSERVING THAT CASH HUNDI (SIX IN NUMBER) TOTALLING TO RS.20 00 000/ - IN THE NAME OF SHRI JAYESH VALIA IS TREATED AS THE ASSESSEES UNDISCLOSED INCOME. IN VIEW OF THE ASSESSEE'S OWN ADMISSION MADE BY HIS LETTER DATED 01.07.1997 AND NO NEW EVIDENCES TO' CONTRADICT THE SAME HAVING BEEN MADE BEFORE HIM THE SUM OF RS.20 00 0 00/ - WAS TREATED AS THE ASSESSE E'S UNDISCLOSED INCO ME. 12. THE DETAILED FINDING RECORDED BY THE LOWER AUTHORITIES HAVE NOT BEEN CONTROVERTED BY BRINING ANY POSITIVE MATERIAL ON RECOR D. ACCORDINGLY WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LOWER AUTHORITIES CONFIRMING ADDITION OF RS.20 LAKHS. 1 3 . NOW WE TAKE UP TOGETHER GROUND NO. 11 & 12 OF THE APPEAL FILED BY THE ASSESSEE AS THEY ADDRESS A COMMON ISSUE. THE ASSESSEE HAS RAISED IN GROUND NO. 11 THAT THE AO HAS ERRED IN MAKING ADDITION OF R S.56 69 500/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARES IN FICTITIOUS NAMES. THE ASSESSEE HAS RAISED IN GROUND NO. 12 THAT THE AO HAS ERRED IN MAKING ADDITION OF RS.1 01 34 680/ - ON ACCOUNT OF PROFIT ON SALE OF SHARES IN FICTITIOUS NAMES. 12 14. THE AO REPRODUCED THE FINDINGS OF HIS PREDECESSOR - IN - OFFICE IN THE ORIGINAL ASSESSMENT AND MADE AN ADDITION OF RS.56 69 500/ - AND RS.1 01 34 600/ - AS UNDISCLOSED INCOME. HE HELD RS.56 69 500/ - AS UNEXPLAINED INVESTMENT IN SHARE APPLICATION AND ALLOTMENT MONEY AND RS.1 01 34 680/ - AS PROFIT ON SALE OF SHARES HELD IN FICTITIOUS NAMES. 15. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD BEEN REQUESTING THE AO TO PROVIDE COPIES OF THE WORKING FROM DATA OBTAINED FROM THE REGISTRAR AND TRANSFER AGENTS (RTA) ON THE BASIS OF WHICH THE ALLEGED WORKING IS STATED TO HAVE BEEN MADE BUT THE SAME HAS NOT BEEN PROVIDED TO THE ASSESS EE BY THE AO. 16. THE LD. DR RELIED ON THE ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER DATED 29 TH DECEMBER 2011 . 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. A PERUSAL OF PAGE 14 - 25 OF ASSESSMENT ORDER DATED 29 TH DECEMBER 2011 PASSED BY THE AO INDICATE S THAT HE HAS PRODUCED THE FINDINGS OF HIS PREDECESSOR - IN - OFFICE IN THE ORIGINAL ASSESSMENT ORDER. WE FIND THAT THE SAME NARRATION HAS BEEN REPEATED BY THE AO IN SP ITE OF THE TWO ORDERS OF THE ITAT SETTING ASIDE THE ASSESSMENT ORDER. WE DIRECT THE AO TO PROVIDE THE ASSESSEE COPIES OF WORKING FROM DATA OBTAINED FROM REGISTRAR AND TRANSFER AGENTS (RTA) . WE ALSO DIRECT THE ASSESSEE TO PRODUCE BEFORE THE AO THE RELEVANT TRANSFER FORM / CONTRACT NOTE. 18. IN VIEW OF THE ABOVE WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE THE ISSUE OF ADDITION OF RS.56 69 500/ - AND RS.1 01 34 600/ - SHOULD GO BACK TO THE AO FOR AFFORDING AN OPPORTUNITY TO THE ASSESSEE. WE THEREFO RE SET ASIDE THE ORDER OF THE AO ON THE ABOVE TWO ISSUES AND DIRECT HIM TO DECIDE THE ABOVE TWO ISSUES AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS GROUND NO. 11 & 12 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 19 . IN THE RESULT THE APPEAL IS PARTLY ALLOWED . 13 ORDER PRONOUNCED IN THE OPEN COURT 3 0 / 0 9 / 2016 S D / - S D / - ( SANDEEP GOSAIN ) ( R. C. SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 3 0 / 0 9 / 2016 AKV (ON TOUR) /KARUNA SPS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE . BY ORDER //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT MUMBAI