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2016 (8) TMI 1563 - AT - Income TaxAddition as unexplained capital - assessee(s) contends that both these parties were alleged to be paper-company of M/s. M.D. Patel Group. This information was revealed by survey action on one Shri Pankaj Danawala and M/s. M.D. Patel Group A statement at bar is made by the assessee Shri Hemant Jadia, Advocate to the effect that M/s. M.D. Patel Group has owned up the transactions, investments and income from all the front companies, including these two assessee - HELD THAT - As statement at bar is made by Shri Hemant Jadia, Advocate of Gujarat High Court and some of the orders of the Bombay High Court are on the record in respect of purported litigation between M/s. M.D. Patel Group and Union of India. The facts about Settlement Commission owning up of the income by the kingpin M/s. M.D. Patel Group etc. are not on the record. In view thereof these appeals are set aside and restored back to the file of the Assessing Officer to call the assessee to demonstrate that the subject matter raised in these appeals is covered by the alleged settlement petition of M/s. M.D. Patel Group and the result thereof. It is made clear that the AO will verify necessary records and the assessees will fully co-operate in this matter. In case of non-cooperation by the assessees, the ld. AO will be at liberty to take appropriate view in accordance with law. Accordingly, both the appeals are allowed for statistical purposes.
Issues:
- Addition of unexplained capital in the assessment of two assessees for different assessment years. Analysis: The judgment by the Appellate Tribunal ITAT Ahmedabad pertains to two appeals by separate assessees challenging the orders of the ld. CIT(A)-I, Surat for different assessment years. The appeals were heard together as they raised common grounds. The first issue concerned an addition of ?16,80,000 as unexplained capital in the assessment of Smt. Alkaben Amrutram Guru for AY 2004-05. The second issue involved the addition of ?17,04,370 in the assessment of Shri Kanchanlal Natwarlal Rana for AY 1999-2000. The contention put forth by the ld. Counsel for the assessees was that they were alleged to be paper companies of M/s. M.D. Patel Group, as revealed during a survey action. The counsel stated that M/s. M.D. Patel Group had accepted the transactions, investments, and income from all front companies, including the two assessees. To support this claim, it was requested that the Assessing Officer verify the facts from the settlement petition of M/s. M.D. Patel Group pending before the Hon’ble Bombay High Court. After hearing both sides and examining the available material, the Tribunal noted that certain statements and orders of the Bombay High Court were on record regarding purported litigation involving M/s. M.D. Patel Group and the Union of India. However, crucial facts about the Settlement Commission acknowledging the income by M/s. M.D. Patel Group were not on record. Consequently, the appeals were set aside and remanded to the Assessing Officer for verification. The assessees were directed to demonstrate the connection between the subject matter of the appeals and the alleged settlement petition of M/s. M.D. Patel Group. The Assessing Officer was instructed to verify the records, with the assessees expected to cooperate fully. Non-cooperation would allow the Assessing Officer to take appropriate action within the bounds of the law. Ultimately, both appeals were allowed for statistical purposes. In conclusion, the judgment focused on the necessity of establishing a link between the assessees and M/s. M.D. Patel Group, as well as the need for proper verification of facts to determine the legitimacy of the additions made in the assessments. The decision to remand the matter back to the Assessing Officer underscored the importance of thorough investigation and cooperation in tax matters.
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