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 ITO vs. Vikram A. Pradhan (ITAT Mumbai)

Yogesh Thakkar,31 Adarsh Coop,Hsg. Soc. Bawan Bunglow Panvel Navi Mumbai 410026 Vs. DCIT Central Circle 4th Floor Aaukar Bhawan MDR, M.K. Road Mumbai
April, 12th 2013
                                               ITA No.3372, 3373 And 5745/Mum 2010




           IN THE INCOME TAX APPELLATE TRIBUNAL
                      "G" Bench, Mumbai

         Before Shri R.K. Gupta Judicial Member and
               Shri R.S. Syal, Accountant Member

            ITA No.3372, 3373 and 5745 /Mum/2010
         (Assessment year: 2007-08, 2008-09 and 2008-09)

Yogesh Thakkar,                           DCIT
31 Adarsh Coop,                 Vs.       Central Circle
Hsg. Soc. Bawan Bunglow                   4th Floor Aaukar Bhawan
Panvel                                    MDR, M.K. Road
Navi Mumbai ­ 410026                      Mumbai
PAN AAHPT2179C

                   Department by:     Shri Pavan Ved
                   Assessee by:       Shri Manish Sanghwani

                   Date of Hearing:       20/3/2013
                   Date of Pronouncement: 09/04/2013

                              ORDER
Per R.K. GUPTA, J.M.

      These are three appeals filed by the assessee as well as by the
department. The assessee filed the appeal for assessment years
2007-08 & 2008-09, respectively whereas the department's appeal is
for assessment year 2008-09. Similar facts are involved in these
appeals, therefore, they are disposed of by this single order.




2.    In appeal of assessee i.e. ITA No.3372/Mum/2010 filed for
assessment year 2007-08, the assessee is objecting the confirming
the addition of Rs. 60 Lakh made on account of unexplained
investment in share of M/s Persian Agro Hot Enterprises.

3.    Brief facts of the case are that search operation under section
132(4) of the Act was conducted on 5.6.2007 at residential and
business premises of the Metro group of cases. The assessee was
inter alia covered in the search operations. Notice u/s 153 (A) was
issued on 10.10.2009 by the Assessing Officer directing the assessee




                                 Page 1 of 7
                                                    ITA No.3372, 3373 And 5745/Mum 2010




to file the return. The return declaring income of Rs. 19,49,580/-
which was the same as declared in the original return filed under
Section 139(1). During the search proceeding it was found that
assessee had purchased shares of Persian Agro Hot Pvt. Limited and
had made payment in cash for acquisition of the shares. Statement
u/s 132(4) was recorded on 5.6.2007. in answer to question no. 21
Shri Yogesh Thakkar stated as under:-

        "Yes I have gone throught all the discriminating paper found
durint he search operations and I have also introspected myself and
on the basis of that I make a declaration of unaccounted income as
under.

     1. Persian Agro Hot Enterprises                     Rs. 60 lakhs
     2. Cash Receipt                                     Rs. 40 lakhs
     3. Unaccounted Investment in Jewellery              Rs. 20 lakhs
     4. Unaccounted income as per loose papers           Rs. 5 lakhs"

4.      During the assessment proceeding Assessing Officer noted
that during the course of search a kaccha cash book marked as
Annexure A -17 was found and seized from the premises of M/s
Thakkar Popatlal Velji     Sales Ltd. The Assessing Officer observed
that the following entries in the said cash book           further supported
the fact that the Assessee had paid cash for acquisition of shares of
M/s Persian Agro Hot Enterprises Pvt. Ltd.

Date                       Narration                              Amount

19.2.2007           Vinod Bhai/Hotel Persian Darbar               Rs. 2,50,000

During the assessment proceeding AO asked the assessee to explain
as to why a sum of Rs. 60 lakhs should not be added to the income
of the assessee on account of unexplained investment in shares of
M/s. Persian Agro Hot Enterprises Pvt. Ltd. It was explained by the
assessee    that   the   deal   for    purchasing    the     share       was      not
materialized upto the date of search. Only a token amount of Rs.




                                      Page 2 of 7
                                              ITA No.3372, 3373 And 5745/Mum 2010




2.50 Lakhs was paid pending negotiations and finalization of terms
and conditions. It was further submitted that the said amount of
Rs. 2.50 lakhs was covered by the declaration made by the group
company M/s Thakkar Popatlal Velji Sales Ltd. It was explained
that M/s Thakkar Velji Sales Pvt. Ltd. had declared the additional
income of Rs. 3 Crore u/s 132(4). 3 crore was declared to cover
amongst the unaccounted income if any arising out of the
unaccounted transactions in the papers, books, registers etc. found
and seized in the couse of search. It was also explained that the
said income is applied for acquiring cash, jewellery, bill of exchange
and other valuables found during the course of search. Accordingly
it was submitted that no addition was warranted. However
Assessing Officer did not accept the contention of the assessee as
one of the directors of the company i.e. Shri. Yogesh Thakkar has
admitted himself that he will declare a sum of Rs. 60 lacs on
account of purchase of share from M/s Persian Agro Hot
Enterprises. Accordingly, he made an addition of Rs. 60 lakhs.
Order of the Assessing Officer was challenged before CIT (A), before
whom detailed arguments were advanced. It was submitted that
only Rs. 2.50 lakhs was given as advance for purchase of shares. It
was also submitted that company has already offered a sum of Rs. 3
crore which covers all the unaccounted money if any invested in
shape of jewellery, cash etc. It was also submitted that no other
incriminating document was found from which it can be said that
assessee has any unexplained investment. Reliance was placed on
the decision of Tribunal in case of Mrs. Shushila Devi Agarwal ( 50
ITD 524), reliance was also placed in case of Maheswari Industries
V. ACIT 81 TTJ 914 (Jodhpur). All these submissions have been
recorded by Ld. CIT (A) in his order at page 4 to 13.

5.    After considering the submissions and facts of the case
learned. CIT (A) found that since, one of the directors has made




                                Page 3 of 7
                                               ITA No.3372, 3373 And 5745/Mum 2010




statement u/s 132(4) in respect to Rs. Rs. 60 Lakh as unaccounted
money. However, the same was not disclosed in the return,
therefore, the Assessing Officer was correct in making the addition.
Accordingly, order of Assessing Officer was confirmed on this issue.

6.    Contentions raised before lower authorities were reiterated by
learned Counsel of assessee. Reliance was also placed on the
decision   in   case   of    Prem   Sons      decided       in      ITR       no
4698/Mum/2006 for assessment year 2003-04 dated 15.01.2009.

7.    On the other hand, learned DR placed reliance on the order of
CIT(A).

8.    After considering the submission and perusing the material
on record, we find that this matter should go back to the file of the
Assessing Officer. No doubt during the course of search statement
u/s 132(4) was recorded of the assessee by which it was admitted
that he will disclose a sum of Rs. 60 Lakh for the year in
consideration and amount of Rs. 65 Lakh for assessment year
2008-09. However while, filing the return no such amount was
declared by the assessee as assessee retracted from the statement,
for the reasons that no such investment was made in shares as only
Rs. 2.50 lakh was given as advance on account of purchase of
share. Neither there was any purchase was made by the assessee
nor any incriminating documents were found. May be, since there
was a search action and assessee may not having any full
knowledge of affairs, therefore amount of Rs. 60 Lakh may have
disclosed. Even and otherwise as stated that in hands of company
already a sum of Rs. 3 Crore has been offered for taxation, tax has
already been paid and the amount surrendered by the assessee
covered by that surrender.

9.    Therefore in our view, if there no shares were purchased and
assessee has paid only 2.50 Lakh in advance then ofcourse,




                                Page 4 of 7
                                              ITA No.3372, 3373 And 5745/Mum 2010




addition should not have been made only on the basis of statement
made u/s 132(4). It is well settled position in law that there should
be some corroborative evidence. As per order of Assessing Officer or
CIT (A). There was no corroborative evidence found from which it
can be said that assessee has made investment of Rs. 60 Lakh.
Only on the basis of statement recorded u/s 132(4) this addition
has been made and sustained.

10.   In case of Prem Sons (supra) the tribunal has recorded a
finding that no addition could be made or sustained simply on the
basis of statement recorded at the time of survey/search. While
holding so the bench has placed reliance on the decision of Kerala
High court in case of Paul Mathew & Sons (263 ITR 101) and in
case of S. Kadir Khan (300 ITR 167) Madras. Though these
decisions were in connection with the survey conducted u/s 133(A).
However, the position could not be changed if statement has been
recorded u/s 132(4) as there should be some corroborative
evidence. Since, Assessing Officer made addition on the basis of
statement recorded and no other enquiry has been made, neither
case has been examined properly, nor the fact that the company in
which the assessee is a director has surrendered additional income.
As per submission of learned AR Rs. 3 Crores covers of investments
found during the search and any investment made in jwellery etc.
Therefore, we restore the issue to the file of Assessing Officer to
examine afresh after affording reasonable opportunity of being
heard.   The Assessing Officer is also directed to take into
consideration the submission that only a sum of Rs. 2.50 lakh were
found given as advance on account of purchase of shares and in
fact no shares were purchased as deal had not finalized.                   The
Assessing Officer will also take into consideration the amount of rs.
3 Crore surrendered by the company and if it is found that there is
no material against the assessee to hold that share has been







                                Page 5 of 7
                                             ITA No.3372, 3373 And 5745/Mum 2010




purchased and if purchased then this purchase amount is covered
by the amount of surrender in the hands of company. Then of
course, there should not be any addition. However, the Assessing
Officer should pass the order afresh after affording the reasonable
opportunity to assessee. We order accordingly.

11.   In ITA No.3373/Mum/2010, for assessment year 2008-09,
the assessee is objecting in confirming the addition of Rs. 45 Lakh
on account of unexplained investment in cash receipt at Rs. 20 lakh
out of total addition of Rs. 45 lakh, on account of unexplained
investment in Jwellery at Rs.20 Lakh and Rs. 5 lakh on account of
unaccounted income as per loose papers, whereas the department
for the same assessment year i.e. assessment year 2008-09, in ITA
No.5745/Mum/2010, has objected in directing the AO to restrict
the addition made on account of cash receipt.

12.   Facts of the case have already been discussed by us while
disposing the appeal for assessment year 2007-08 (i.e. ITA
No.3372/Mum/2010). The addition of Rs. 45 Lakh on account of
unexplained investment in cash receipt at Rs. 20 lakh out of total
addition of Rs. 45 lakh, on account of unexplained investment in
Jwellery at Rs.20 Lakh and Rs. 5 lakh on account of unaccounted
income as per loose papers were made by the AO, which was based
on the basis of statement recorded u/s 132(4) by Shri Yogesh
Thakkar, (the assessee). In appeal, the CIT (A) restricted the
addition on account of cash receipt of Rs. 20 lakh as 20 lakh was
deleted. However, addition on account of jwellery and loose paper
were sustained for simple reason that the assessee agreed to show
the income.

13.   We have already discussed the issue in detail. The assesse's
main argument is that these amounts are covered by the amount of
Rs. 3 Crores surrendered by the company. This aspect was also not




                               Page 6 of 7
                                                  ITA No.3372, 3373 And 5745/Mum 2010




examined by the Assessing Officer for the simple reason that as per
statement of Shri Thakkar the addition was made. We have already
held that only on the basis of statement, addition should not have
been made as there should be some corroborative evidence. And if
the assessee has already surrendered a sum of Rs. 3 Crore, which
covered these amount also, then of course addition should not have
been made as the same will tantamount to double addition. For
examination of these facts, we restore the issues to the file of the
Assessing Officer involved in the appeal of the assessee as well as in
the department. We have already made our observations while
disposing the appeal for the assessment year 2007-08(i.e. ITA
No.3372/Mum/2010).            Therefore,    on     the    same        reasoning
department's appeal is also restored to the file of the Assessing
Officer. We order accordingly,

14.     In the result the appeals of assessee as well as the appeal of
department are allowed for statistical purposes.

        Order pronounced in the open court on 9th April, 2013


            (R.S.Syal)                            (R.K. GUPTA)
        Accountant Member                        Judicial Member

Mumbai, dated            9th April, 2013.
Sunil Kumar Sr. P.S.

Copy to:

   1.   The Appellant
   2.   The Respondent
   3.   The concerned CIT(A)
   4.   The concerned CIT
   5.   The DR, " " Bench, ITAT, Mumbai

                                                      By Order

                                            Assistant Registrar
                                       Income Tax Appellate Tribunal,
                                         Mumbai Benches, MUMBAI




                                  Page 7 of 7
 
 
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