9911796707
TMI Blog2015 (8) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... al end to the proceedings, notice under section 153A dated 7.2.2008 was issued upon the assessee with request to file return within 30 days on receipt of notice. However, the assessee did not file return as required in the notice. The ld.AO, thereafter, issued notice along with questionnaire under section 142(1). The assessee has filed the return in the Asstt.Years 2002-03 to 2004-05 on 09.12.2009. The assessment was to be framed by 31.12.2009. Along with return, the assessee attached a note. This note has been reproduced by the AO in the assessment order as well as by the ld.CIT(A) in the impugned orders. 4. In brief, Ms.Sejal Shah has contended that she had been doing business of trading in shares and commodities, speculation business, real estate transactions, investment in shares for short term and long term gain and brokerage/ commission business. For carrying out these business activities, she has operated bank accounts in her name, in the name of her father, late Shri Gopalbhai Shah, mother Smt. Pareshaben G. Shah, brother Shri Mit G. Shah, her friend Ms. Rajvi Shah as well as in the different trade name entities, proprietorship concerns etc. She has annexed a list Exhibit- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from the Assessee. Despite the odd hour much after office time, all the replies were duly received by the assessee." 7. The ld.counsel for the assessee contended that the contentions of the AO available, in this paragraph indicates that he has passed the assessment order at 12:15 of 31st December, 2009, meaning thereby, the assessment order was not passed before the 31-12-2009. Hence, it is time barred. 8. On the other hand, the learned DR relied upon the findings of the CIT(A) who has specifically dealt with this issue after perusing the order sheet entries in the assessment record. It is pertinent to take note of the findings recorded by the CIT(A) on this issue. "4. I have considered the submissions of the appellant regarding the additional ground raised by the appellant On the perusal of the case records, it is seen that the assessment order has been served on the brother of the appellant Shri Mit Shah on 31.12.009. The fact that the assessment order has been served upon the appellant on 31.12.2009 was also accepted by the AR of the appellant before me If the order was not passed by the AO prior to 31.12.2009, then the same could not have been served upon the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the assessee. 4.2 In view of the above discussion, the additional ground raised by the appellant is factually incorrect and has been raised with an intention to mislead the appellate authorities. The same is therefore, dismissed." 9. The ld.counsel for the assessee further contended that the assessment order has been served upon the assessee on 1st January, which indicates that the assessment order was processed by the AO upto 1st January, and it was not released by him. Therefore, it becomes clear that the assessment order was passed by the AO on 1st January, 2010 after expiry of limitation. On due consideration of the facts and circumstances, we do not find force in the submissions of the ld. counsel for the assessee. Firstly, the ld. AO has mentioned a time at 12:15 am, meaning thereby, it is morning of 31-12-2009. Rather, the CIT(A) has rightly pointed out that instead of expression "night", the ld.AO should have recorded "morning". It is only incorrect use of word at the end of the AO. Otherwise, he has passed the assessment order on 31.12.2009 after 12oclock next day would begin. Had it been 12:15am after 31st January, then the AO would not have mentioned 31.12.2009, rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn at Rs. 10 lakhs only. The AO has confronted the assessee to explain the source of the loan advanced by Shri Sejal Shah and from the members to Hasubhai Thakkar and his concern. Before the AO, the assessee did not file any submission exhibiting the source of funds. Accordingly, the AO has treated the above loans given by the assessee as unexplained and made addition of Rs. 15.00 lakhs in the Asstt.Year 2002-03, Rs. 9.50 lakhs in the Asstt.Years 2003-04 and Rs. 15.50 lakhs in the Asstt.Year 2004-05 respectively. 12. Appeal to the CIT(A) did not bring any relief. 13. Before us, the assessee raised three fold submissions. In the first fold, it was contended that the assessee has disclosed additional income of Rs. 11.80 lakhs in the Asstt.Year 2002-03 on the basis of peak theory. Credit of this amount should be given to the assessee towards this unexplained advancing of loans. In the second fold, it was contended that the property situated at 6, Kaushal Co-op. Hsg. Society was already sold to one Shri Kishorebhai V. Thakkar for Rs. 13 lakhs on 7.2.2005. Therefore, the second sale deed executed by father of the assessee, on the strength of irrecoverable power of attorney, cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Negotiable Instrument Act could be filed against the borrower, and in her third option, she could get the property transferred in her name on the strength of irrecoverable power of attorney. So the efforts at the end of the assessee that since this property was already sold to someone else, therefore, it be construed that no unexplained investment is made by the assessee, is totally meaningless. The addition is not of unexplained investment in the property. The addition is that of advancement of loan and failure to explain the source of the loan. One of the arguments taken before the ld.First Appellate Authority was that the assessee has shown income of Rs. 11.80 lakhs in the Asstt.Year 2002-03. Credit of this income ought to have been given. This aspect has been considered by the ld. CIT(A) and it has been held that the credit of this additional income has already been taken by the assessee in the return itself towards investment in bungalow no.12 at Charankrupa Society. Therefore, this amount was not available with the assessee, out of which, it can be alleged that the loan to this extend was advanced from this amount in the Asstt.Yewar 2002-03. As far as the arguments of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asstt.Years 2002-03 and 2003-04, and hence, both the appeals are rejected. 18. In the Asstt.Year 2004-05, next ground of appeal is that the ld.CIT(A) has erred in confirming the addition of Rs. 12.25 lakhs. 19. Brief facts of the case are that during the course of search, papers inventorised as in Annexure A/73 were found and seized. A perusal of page no.97 of this annexure A/73, indicates that it is an allotment letter dated 21.10.2004 of 1st Floor of Bhagyodaya Plaza by Bhagyodaya Owners' Association. It is mentioned that 1350 sq.ft area at 1st floor excluding lift and stairs is allotted to Shri Gopalbhai N. Shah & Other members of his family for a consideration of Rs. 40 lakhs. The payments have been made during the period of 1.1.2004 to 21.10.2004 in cash. The possession letter of this property to the father and mother of the assessee was given on 21.10.2004. This document was at page no.98 of the Annexure A/73. Apart from these documents, page nos.1 to 22 inventorised as Annexure A/73 were also found. These pages are copies of receipts issued by Bhagyodaya Owners' Association to Shri Gopalbhai Shah. The total receipts are for Rs. 40 lakhs, out of the above, payment of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forty lakhs were advanced for a proposed area in Bhagyodaya Plaza. According to the ld.CIT(A) both these transactions are separate transactions and assessee failed to explain the source of payments. In this way, the ld.CIT() has confirmed the additions. 22. With the assistance of the ld. representative, we have gone through the record carefully. Copies of the receipts from pages 1 to 22 inventorised as Annexure-A/73 are available at page nos.101 to 118 of the paper book. The assessee has compiled the details available in these receipts in tabular form and placed these details at page no.100 of the paper book. We have gone through these details. A perusal of the details would indicate that Shri Gopalbhai Shah has made payment of Rs. 40 lakhs to Shri Hasubhai Thakkar, who had issued the receipt. The charge against the assessee is that she has to explain the source of this payment. The explanation of the assessee is two folds, viz. it is the second alternative security for the loan amount which was given from financial year 2001. The need for execution of these papers was felt because, Plot No.6, Kaushal Co-op. Hsg. Society, though transferred by way of registered sale deed in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of last day transaction, as available in BSE/NSE data, and worked out the value of the investment made by the assessee. The working made by the AO reads as under: "Date Financial Year to which it pertains Assessment Year Value Undisclosed investment for the year A B C D E 31.03.2004 2003-04 2004-05 2405384 2405384 31.03.2005 2004-05 2005-06 3953619 1548235 31.03.2006 2005-06 2006-07 10645153 6691534 31.03.2007 2006-07 2007-08 32100453 21554300 25. The ld.AO in this way made addition of Rs. 24,05,384/- on account of unexplained investment in shares. 26. On appeal, the ld.CIT(A) has confirmed the addition. The findings of the ld.CIT(A) is worth to note in this connection. "6.2 I have considered the submission of the appellant. As per the Annexure attached to the assessment order, the AO has worked out the total investment of Rs. 24,05,384/- in shares in the name of the appellant, her brother Mit Shah, her father Gopalbhai Shah, her mother Mrs.Pareshaben Shah. In the absence of any details whatsoever given by the appellant before the AO, the AO worked out the' investment in shares from the DMAT account of the above mentioned persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies which are listed with the BSE and NSE is disclosed in the said disclosure. In other words, even on the basis of peak theory, the investment in limited company's shares should also have been included in the total unaccounted income of the appellant. As the appellant has worked out the additional income on the basis of the income or the investments, whichever is higher, and for assessment year 2004-2005, the additional income has been worked out on the basis of investments, the investment of Rs. 24,06,389/- should have formed part of the total investments as on 31/3/2004. This means that, the peak theory adopted by the appellant has not considered the investment in the listed companies which has been worked out by the AO at Rs. 24,06,389/- in assessment year 2004-2005. In fact, the appellant has not included any investment in the shares of limited companies in any of the assessment years. I have, therefore, no hesitation in holding that the amount of Rs. 24,06,389/- represent the unaccounted investment of the appellant in the various shares of limited companies. In other words, the AO was justified in making addition of Rs. 24,06,389/-on account of undisclosed investment in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jal Gopalbhai Shah. These payments were shown under the head "loans and advances". The assessee is director in these companies. She is having substantial share holding of more than 10% of voting power. Therefore, the loans and advances were treated as deemed dividend. The addition of Rs. 1,45,293/- in the Asstt.Year 2004-05 has been made with the aid of section 2(22)(e) of the Act. 32. The ld.counsel for the assessee at the very outset submitted that the company was incorporated on 1.9.2003. The first balance sheet was prepared on 31.3.2003. The profit of the company has to be determined at the end of the year, and therefore, the accumulated profit is to be worked out on the date of closing of the accounts. In the Asstt.Year 2004-05, there was no accumulated profit before the close of the accounts i.e. 31.3.2004. If it is presumed that the assessee has taken loan from this company, then these were taken before 31.3.2004, and there was no accumulated profit before this date. Therefore, no addition under section 2(22)(e) of the Act can be made. For buttressing his contention, he relied upon the decision of the ITAT, Ahmedabad Bench in the case of M.B. Stock Holding Pvt. Ltd. Vs. ACI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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