9911796707
TMI Blog2011 (7) TMI 1336X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer has erred on facts and in law in making an addition of ₹ 2,25,000 on account of alleged unexplained capital. (6) The Assessing Officer has erred on facts and in law in making an addition of ₹ 3,20,000 being the alleged profit. (7) The Assessing Officer has erred on facts and in law in making an addition of ₹ 5,57,000 on account of alleged profit. (8) The Assessing Officer has erred on facts and in law in making an addition of ₹ 54,000 on account of alleged profit. (9) The Assessing Officer has erred on facts and in law in making an addition of ₹ 2,16,56,000/- in the hands of the appellant on account of alleged profit on the basis of seized page 10. (10) The Assessing Officer has erred on facts and in law in making an addition of ₹ 10,85,125 on account of alleged profit on the basis of seized page 8. (11) The Assessing Officer has erred on facts and in law in initiating penalty proceedings u/s.158FA(2). 3. The ground of Appeal No.51/Rjt/2003 are re-produced as below:- (1) The learned Dy. Commissioner of Income Tax, Circle-1, Rajkot has grievously erred in passing the assessment order for the aforesaid period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Assessing Officer has erroneously referred to various order sheet entries, adjournments granted both the sides for good reasons in support of unsustainable order determined to be passed. Thus, the assessment order is predetermined and prejudicial and therefore deserves to be annulled. (9) That even though the assessment order was not getting barred by limitation on 31.3.2003 in view of section 153(3) of the Act, the learned Assessing Officer has erred in passing the assessment order under reference hastily which was rightly disapproved and hence no consequential prejudicial order substantive or protective could have been passed against the appellant. (10) Apart from the voluminous evidence relied on by the appellant referred in its submission dated 29.1.2003, the learned Assessing Officer has grievously erred in not taking into account the submissions made by the appellant in its letter dated 28.3.2003 accompanied with Medical Certificate of Shri Dhanraj Jethani, Affidavit in compliance with requirement, etc. (11) Lastly, in view of the objections dated 31.3.2003 raised by the appellant to the Commissioner of Income-tax - I, Rajkot duly endorsed to him, he ought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 10 seized from the resident of Shri M. N. Patel. The above names are appearing in books of the assessee because they must be having some dealings with the company. Therese names appearing on the seized papers do not establish any nexus with the assessee and the seized papers. Shri M. N. Patel is having his independent construction business and the possibility of these persons having business relations with Shri M. N. Patel also cannot be ruled out. Therefore, this cannot be used as an evidence against the assessee company. The A.O. has not examined the persons mentioned above. He has also not given any opportunity to the assessee company to rebut his findings. We fail to understand why the A.O. has not examined these persons to find out their transactions with Shri M. N. Patel and the assessee company. The A.O. has also held that the assessee was having bank account with Oriental Bank of Commerce and the name of the bank is also appearing on No.8 and 10 of the seized paper in a smuch as there is an amount of ₹ 8000/- written against O.B.C. on that paper. This also cannot be considered as an evidence against the assessee company. The assessee company is having bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dverse findings had been given by the Tribunal against him without giving him an adequate opportunity of being heard. The Hon'ble Gujarat High Court accepted the contentions made by Shri M. N. Patel by its order dated 17.4.2001. The Hon'ble High court quashed paras 21 to 28 of the order of the Tribunal dated 20.6.2000 and directed the Tribunal to decide the matter afresh. It further directed that both the appeals i.e. that of the assessee Shri M. N. Patel and that of Ambica Realities Pvt. Ltd. be heard together. Pursuant to the directions of the Hon'ble High Court, the Income Tax Appellate Tribunal heard the appeal of the assessee Shri M. N. Patel and the company Ambica Realities Pvt. Ltd. together. The orders were passed on 10.10.2001 in appeal No.IT(SS)A No. 11/Rjt/98 and in appeal No. IT(SS)A No.7/Rjt/98 pertaining to the cases of Ambica Realities Pvt. Ltd and Shri Mansukhlal N. Patel respectively. In the said order the Tribunal restored back the issue to the Assessing Officer to decide the matter afresh. The observation of the Tribunal in para 27 is material as it gives directions to the A.O. and is reproduced as follows: "We have considered the rival contentions and the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1/142(1)/02-03 dated 31.12.2002. The contents of the said letter is reproduced below: 2. Please refer to the appellate order of the Hon'ble Income Tax Appellate Tribunal, Rajkot Bench, Rajkot in your case having No.IT(SS) A No.7/RJT/98 dated 10.10.01. The Hon'ble ITAT has set aside the block assessment to be decided afresh at the level of Assessing Officer. In this context, you are hereby informed that hearing in your case has been fixed on 27.12.2002 at 11.30 AM. 3. The issues under considerations are: (a) The additions of ₹ 6,92,820/- made in the block assessment on the basis of notings on page 8 of Annexure-A seized during the course of search. (b) The addition of ₹ 34,25,000/- made in the block assessment on the basis of the notings on page No.10 seized during the course of the search. 4. In this regard you are requested to file your detailed submissions in duplicate alongwith all documentary evidence you would like to place reliance with regard to your contention. In this regard you are also requested to explain as to why the above additions should not be made in your case. In case you want to present witnesses to substantiate your contention then the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,61,000 Amarkumar B.P.10/- 90,000 1.5 month 1.25% 18,750 O.B.C. 8,000 15,37,125 Less : D.P. 4,52,000 --------------- 10,85,125 ---------------- M.P. 6,25,000 Capital 67,820 6,92,820 Page 10 M. P. 2.25,000 Capital. 3,20,000 Profit. 9,15,000 New capital 13,53,500 Profit(6.25%) ------------ 28,14,000 Less: 10,93,750 ------------- 17,20,250 73/75 5,57,500 ------------- 22,77,750 D.P. 54,000 ------------- 23,31,750 ------------- To be c.f. 23,31,750 Less: Amarkumar 90,000 Bhudarbhai 1,10,000 Flat 12,85,000 Office 4,95,000 Cash 3,00,000 N.C. 50,000 -------------- 23,30,000 (+) 1,750 --------------- (In page No 10 the AO has taken amount new capital ₹ 9,15,000/- whereas as per other record it should be ₹ 9,16,000/-) 9. The A.O. noted that Shri Mansukh N. Patel, the assessee during the relevant period was having 6.25% share holding in Ambica Realities Pvt. Ltd. On 24.12.96 a search was conducted on the Group cases of the said company. Therefore, the premises of Shri M. N. Patel was also searched and Page No.8 & 10 was seized from his premises. In his statement on oath Shri M. N. Patel has explained the contents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This is the survey No. of plot of land in front of Gondhia Hospital. A profit of ₹ 5,57,000/- was earned in the said land transaction. The transaction pertaining to the above mentioned land was undertaken by Shri Dhanrajbhai Jethani in the capacity of the director of Ambica Realities Pvt. Ltd. Rs.22,77,750/- sub total D.P. - stands for Diliphbhai Pate. In one transaction Dhanrajbhai & myself were partners and my share of profit in that transaction was ₹ 54,000/-which has been credited to my account. Rs.23,31,750/- sub total Less: Amarkumar - The amount of ₹ 90,000/- was given to me by Shri Amarkumar with respect to booking of flat in Indraprasth Apartment. Accordingly, the said amount has been adjusted from my account. Bhudarbhai - He is my cousin brother. He had earlier taken ₹ 1,10,000/- from Dhanrajbhai. The said amount has been deducted from my account. Flat This pertains to the flat in Raghukul Apartment which is on 10th floor of the 1st block and it is under my possession. My cousin brother Bhudarbhai stays in that flat. On account of possession of this flat a sum of ₹ 12,85,000/- has been deducted from my account. The registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company by cheque. This profit has been shown in the books of the company". 11. The A.O. has also provide opportunity for cross examination to Shri Rajubhai Shukla, advocate and counsel for Ambica Realities Pvt. Ltd. cross examined Shri M. N. Patel and the questions asked and the replies given during the stage of cross examination are reproduced in English by the AO as follows: "Q.1 On what date was a search by the Income Tax authorities conducted at your place. A. The search was conducted on 24.12.96. Q.2 During the course and after the completion of the search proceedings did DDIT(Inv.)I, Rajkot ask your explanation in respect of page No.8 & 10 found from your residence. If yes, what was your explanation given. A. With respect to page No.8 & 10, I told DDIT(Inv.)I, Rajkot that Shri Dhanrajbhai knows about the said papers. Q.3 Other papers alongwith page No.8 & 10 were found at your place. Were any questions asked to you with reference to papers other than page No.8 & 10. If yes, what did you reply. A. I have given adequate reply with reference to other papers. Q.4 I am showing you your statement dated 07.02.97 in which you have given your explanation w.r.t. page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n submission in which I have stated that my share is 6.25%. Further, I am a director in Ambica Realities Pvt. Ltd. and as stated earlier I own an office in Dhanrajni Building and Flat in Raghukul Building, the cost of which has been deducted from my account at the time of settlement. These details have been shown on both the pages. On the basis of the above, I can say with confidence that the accounts pertain to Ambica Realities Pvt. Ltd. Q.8 You have stated that your share belong in the company is 6.25%.S However, it is seen that you own 300 shares in the company and your son Jitesh owns 625 shares in the company and the total share holding of the company is 25000 shares. Therefore, it is seen that you share holding would be much less than 6.25% as you claim. A. I have given my written explanation in this regard in which my share holding is 6.25%. ( The assessee in his submissions dated 28.03.2003 has stated the following regarding his share holding) The share holding of my family in the company was 300 shares in my name. 625 shares in the name of my son Jiteshkumar M. Patel and 625 share in the name of my nephew Raviketan, thus aggregating to about 6.25% of the total shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in page No.8 and 10. In that regard you please recall and state as to whom and when that sum has been given by you. Have you obtained any receipt in that regard. A. As regards the flat and office I have to state that the above sum has been deducted from the account due to me on account of my share of profit in Ambica Realities Pvt. Ltd. and the sums given to the said company by my family members. As I am a director in Ambica Realities Pvt. Ltd. generally no receipts were obtained from each other on account of any 'give' or 'take' transactions. Trust is of utmost importance in the business. Q.17 You have stated that above sum has been accumulated from the profits of the projects of Ambica Realities Pvt. Ltd. You are a director in the said company then please state as to from what project the said profit has been received. A. Shri Dhanrajbhai was looking after the management and all affairs of Ambica Realities & Other projects. I do not know anything about how much profit from what project was made. Q.18 You have stated in you letter dated 24.12.96 that MxP means Manharlal Patel and today you have stated that MxP means Mansukhlal Patel. Please give your clarification. A. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on the sale of land sale price of ₹ 5,13,500/- was return to the company by cheque. The Xerox copy of bank statement of Ambica Realities Pvt. Ltd. are also attached herewith. (iv) List of land 73/75 purchased by Ambica Realities Pvt. Ltd. on the name of Director, share holders and relatives. (v) Flat purchased deed of Shri Amarkumar Jdeja in the name of his son. The copy of bank DD and copy of receipt given by Ambica Realities Pvt. Ltd. are attached. (vi) Xerox copy statement showing the accounts of M. N. Patel in which short signatures have been made by Mr. Dhanrajbhai Jethani as a proof of receiving the amount by Shri M. N. Patel from Mr. Dhanraj Jethani." 13. The evidences submitted by the assessee.Shri M. N. Patel has been discussed by the AO as follows: "(i) The document in support of possession of office No.309 in Dhanrajni building submitted by Shri M .N. Patel is the copy of the bill issued by Rajkot Municipal Corporation towards Property & Education tax for the amount totaling Rs,74,112/-. The said bill has bears the No. 154345 date 07.09.2002 has been issued in the name of Shri M .N. Patel. (ii) The evidence regarding occupation of the Raghukul flat i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f pay order of ₹ 1,20,000/- bearing No. 1018 dated 21.03.95 drawn on Cooperative Bank of Rajkot Ltd. received by Ambica Realities Pvt. Ltd. on account of the sale consideration of flat in Indraprasth Apartment sold to Shri Dharmendrasinh Amarkumar Jadeja. On page 10 it is observed that it is mentioned cash ₹ 3,00,000/-. All the corresponding entries totaling cash of ₹ 3 lacs is highlighted in Annexure A by the letter B. Cash has been received by Mansukhbhai from Shri Dhanrajbhai as follows: 01.06.95 Rs. 35,000/- 01.07.95 ₹ 15,000/- 02.08.95 ₹ 15,000/- 20.09.95 ₹ 35,000/- 21.09.95 Rs.2,00,000/- The total of above amount comes to ₹ 3,00,000/- which also tallies with the narration cash ₹ 3,00,000/- given on page 10 seized from the residence of Shri Mansukhbhai. (vi) The writings on the seized documents page 8 and page No.10 have been made by Shri Rajubhai K. Shukla, the advocate of Ambica Realities Pvt. Ltd." 14. The A.O. stated that Shri M. N. Patel in his statement has confirmed that he is a party to all the transactions shown on page 8 and 10 of Annexure A-4 seized from his premises in the capacity of beneficial shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,85,125/- and the share of profit of the assessee is ₹ 67,820/-. Further as per page No.10 the share of profit being 6.25% of the total is being ₹ 13,53,500/-. In this regard the assessee has submitted that the said profits are profits of Ambica Realities Pvt. Ltd. and the company has not declared any dividend to the share holders. In the case of a private limited company the profit cannot be directly given to the share holders but it can be distributed in the form of dividend. In this regard it is pointed out in his statement the assessee has explained that page No.10 is the details of settlement of his transactions with Ambica Realities Pvt. Ltd. He has also confirmed that after the settlement of the total transaction the net amount due to him of ₹ 1750/- was paid to him by Shri Dhanraj Jethani. Therefore, the details of receipts due to the assessee are shown on page 10. Page 10 gives the details of the settlement of unaccounted transactions and as in the form of copy of account of the assessee in which the credit and debit entries are duly reflected. The total of credit entries after transfer of ₹ 10,93,750/- to a new fund comes to ₹ 23,31,750/-. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02-03 dated 31.03.2003 subject to the directions of the Addl. C.I.T.RR.I, Rajkot, contained in his letter No.Addl./C.I.T./RR/Scr.Asstt/2003-03 dated 31.03.2003. The contents of the letter of Addl. C.I.T.RR.I, Rajkot of his letter dated 31.03.2003 having No.Addl./C.I.T./RR/Scr.Asstt/2003-03 is reproduced by the in his order as follows: "This draft assessment order has been received by me today at 11.00 AM. Originally, though he had given the draft order on 27.03.2003 which was sent to the Commissioner of Income-Tax, Rajkot. The Commissioner of Income-Tax, Rajkot had returned back the said file and Assessing Officer was directed to carry out ITAT's direction in this case Assessing Officer got only one day to carry out his directions i.e. on 28.03.03. In one day he had tried to do what is possible. The main issue in this case is seized papers No.8 & 10 and Assessing Officer had to find out independently to whom these papers belong. He has recorded statement of Shri Mansukhbhai Pate at those premises these papers were found. He has also recorded the statement of Shri Raji Shukla in whose handwriting the above papers were written. Shri Raju Shukla in his statement has stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, submitted that in de novo assessment, the assessment cannot be more than originally undisclosed income assessed. The ld. A.R. in support of his contention relied upon the order of ITAT in ITA No.1941 & 2200/Mum./2004 order dated 2901201997 and ITA No.5371 & 5803/Mum/2005 order dated 29-12- 1997. The ld. A.R. submitted that in original assessment, the assessee has filed a letter dated 24-12-1997 where the assessee has explained the each and every noting of the paper in details. The ld. A.R. submitted that the A.O. has failed to carry out directions numbers 4, 5 and given by the ITAT in first round of litigation. The ld. A.R. submitted that the A.O. is not carrying out the direction of the ITAT therfore, the order is bad in law. He relied upon the judgment of Madras High Court in case of 171 ITR 373. It is also submission of the ld. A.R. that the paper found from the possession of the assessee and as per the provisions, onus is on the assessee to explain the contents of the paper. The ld. A.R. submitted that the assessee has fully discharged his onus in this regard and furnished the necessary details also which A.O. has discussed at page 15 of his order. 18. The ld. A.R. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be anything, even person capital. The ld. A.R. submitted that that the loose papers does not carry any date. Therefore, it cannot even be inferred that the figures are covered by the block period. The ld. A.R. submitted that the so-called page is not shown to be part of seized papers and it is introduced after 7 years for the first time. Hence, it should be considered as an afterthought, not confronted to the company at all by the A.O. and no opportunity of rebutting the same, hence the said page cannot be used against the company and cannot be admitted as evidence forth-coming from Shri M.N. Patel. The ld. A.R. submitted that the assessee-company denies that these are hand writings or initials of Shri Dhanraj Jethani and nothing of the sort is investigated or proved by the A.O. To use of such loose papers against anyone is completely against tenets of natural justice or that of the scheme of search and block assessment and it has been used behind the back of the company and interpreted to suit convenience by reading into it what is not coming out from it. 19. The ld. D.R. filed a copy of the approval of the C.I.T. which has been placed on record. The ld. A.R. while pointing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er making some important observations and with certain directions which are reproduced in para-5 of his order. While sending back matter to the file of A.O. the ITAT in case of Ambica Realities Pvt. Ltd. order dated 10-10-2001 clearly given findings in para-20, page-10 of the order that it is the primary duty of the A.O. to go to the root of the matter and dig out the truth. The relevant finding of ITAT is reproduced from the order reads as under:- "20. We have duly considered the submission of all the three parties and the material on record. At the outset, it may be mentioned that it is the primary duty of the A.O. to go to the root of the matter, dig out the truth and come to a fair and reasonable conclusion. It is he who is primarily determining as to how much tax to be levied on the tax payer. He cannot collect that tax which is not in accordance with law. Hence, the A.O. is under an obligation to see that no person is unduly burdened by a tax which has no legal backing. Therefore, the burden on him is quite heavy to ascertain correct facts and then come to a reasonable conclusion. At times he may have to encounter evidence which is not direct. In such an event, he is place i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 6.25% of Ambica Realities Pvt. Ltd. Further, he has also confirmed that his transactions with the companty Ambica Realities Pvt. Ltd. has been reflected on page Nos. 8 & 10. Further, he has also stated that he having control and possession of flat in the Raghukul Apartment and office in Dhanrajni Buildeing in view of the profits that had accrued to him because of the activities of the company Ambica Realities Pvt. Ltd. He has stated on oath that all the activities and transactions reflected on the seized papers bearing No.8 & 10 pertain to Ambica Realities Pvt. Ltd. in which he has beneficial interest of 6.25%. Therefore, all the financial transactions reflected in the said paper, as per his statement, is considered true and correct. Accordingly the said unexplained transactions are brought to tax. After careful consideration of all the evidences on record and the statement given by the assessee my observations are as follows: 11.1 As per seized document page 10, the new capital of ₹ 9,15 lacs was contributed by him towards the affairs of Ambica Realities Pvt. Ltd. The nature and source has not been adequately explained and the same is taxed in the hands of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of similarly debit entries comes to ₹ 23,30,000/-. Finally, the balance amount of ₹ 1750/- has been paid to the assessee by Shri Dhanraj V. Jethani in cash and the account has been adequately settled. Therefore, the contention of the assessee that no dividend has been received from the company is not acceptable. The details of cash or assets received by the assessee from the company is itself mentioned on the said paper and same is treated as the income received by the assessee from the company. This settlement is totally outside the books of accounts. Accordingly the share of profits of ₹ 13,53,500/- and ₹ 67,820/- is brought to tax in the hands of the assessee as income received from the company. Even otherwise the said transactions are not accounted for, therefore, they cannot be received as regular dividends. 11.7 As regards the share capital of ₹ 6.25,000/- evidenced from page 8 the assessee has submitted as follows:- "Regarding the capital of ₹ 6,25,000/- I have to state that the said amount is given from my personal S.A/c. from the firm M/s. Satya Vijay Soda Factory and from A/c. of my son Jitesh Patel. However, we have not specified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITAT dated 10-10-2001 and the A.O. was to complete assessment by sending draft order dated 27-03- 2003 at the end of the period when it is going to be time barred i.e. 31-03-2003. Finally the AO made the assessment as per the direction as under :- "8. Subject to the above, the total undisclosed income is computed as under: Unexplained cash as per return 50,000 Unexplained ornaments as per return 60,383 Unexplained investment in FDR/shares as per return 25,000 Unexplained investment in other valuables as per 1,13,375 return. Unexplained expenditure on marriage as per return 81,437 Unexplained new capital as discussed in para 11.1 9,15,000 Unexplained capital as discussed in para 11.2 2,25,000 Profit as discussed in para 11.3 3,20,000 Profit as discussed in para 11.4 5,57,500 Profit as discussed in para 11.5 54,000 Profit as per directions(Rs.10,85,125/- and ₹ 2,16,56,000/-) 2,27,41,125 Unexplained capital as discussed in para 11.7 6,25,000 --------------- Total Undisclosed income. 2,57,67,820" 22(5) On perusal of order of the AO and record we find that In respect of some of the entries, certain cogent material evidences come to notice of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot. We find that apart from general discussion, the ITAT has given certain specific directions which are in 10 numbers. The ITAT directed that while deciding the issue afresh, the A.O. will keep in mind these directions. 22(6) The main thrust of arguments of learned representatives of both the parties are that the A.O. did not carry out the direction given by the ITAT particularly direction NO.4 and 5 where it was directed that A.O. shall inquire about the bank transaction particularly mentioned at page-8 under the description of Bank as well as O.B.C. It is also allegation of both the learned representatives of the parties that direction No.5 that A.O. shall examine all persons named in both the papers have not been carried out by the A.O. 22(7) First of all, we see that what are the amount in dispute which have been sent by the ITAT to the file of A.O. in first round of litigation. As regards the amount in dispute in the hands of Company, Ambica Realities Pvt. Ltd.(hereinafter referred to as "assessee-company") is ₹ 2,27,42,125/- ( ₹ 10,85,125/- on the basis of page No.8 and Rs,2,16,56,000/- on the basis of page No.10) are the same amount which are in the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the item wise which has sent back by the ITAT for consideration by the A.O. These h are as under :- 22(10) (i) ₹ 6,92,820/- on substantive basis of page No.8. (This amount includes two items ₹ 6,25,000/- and ₹ 67,820/-).The assessee in his statement recorded on 28-03-2003 by A.O. stated that M. P. stands for Mansukhbhai Patel. ₹ 6,25,000/- is capital. In para-11.7, the A.O. noted the fact that the assessee has submitted regarding capital of ₹ 6,25,000/- reads as "regarding capital of ₹ 6,25,000/-, I have to state that the said amount is given from my personal savings account from the firm M/s. Satiya Vijay Soda Factory and account of my son Jitesh Patel. However, we have not specified in our books as said capital but we have shown as amount paid to Ambica Realities Pvt. Ltd. and they have bifurcated the said amount as share capital and loan deposits". The A.O. held that the assessee failed to file any document or copy of return to show that the nature and source of the said capital of ₹ 6,25,000/-. Further, the details regarding the name of the company in which the said capital has been invested has also not been furnished. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance 93.75%. The contention of the assessee is that this amount of profit is his share profit from Ambica Realities Pvt. Ltd. During the search proceedings, it was stated by the assessee that the assessee was having 6.25% share holding and was Director in Ambica Industries Pvt. Ltd. There is no denial of the Ambica Realities Pvt. Ltd. that Shri M. N. Patel was not the Director of Ambica Realities Pvt. Ltd. Further, the account of page No.10 has been stated to be settled through Dhanraj Jethani who is managing the business of Ambica Realities Pvt. Ltd. In this regard, one of the important admitted fact of the issue is that in spite of cogent material and clues pointed out by Shri M. N. Patel from whose residence these papers No. 8 and 10 were found but to sorry to state that the A.O. did not extend his investigation to examine the person of Ambica Realities Pvt. Ltd. and Shri Dhanraj V. Jethani or other relevant persons and record. It is admitted fact that there is owner of balance amount of profit but merely saying by M. N. Patel, it cannot be held that the owner of profit of balance amount was Ambica Realities Pvt. Ltd. In absence of proper investigation and after verification pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the specific clear direction of the ITAT, the A.O. did not take trouble to examine either persons of Ambica Realities Pvt. Ltd. or Dhanrajbhai. In absence of complete facts on record, this amount of ₹ 9,15,000/- neither can be added in the hands of the assessee, MN Patel or in the hands of the Ambica Realities Pvt. Ltd. Therefore, we deleted this addition of ₹ 9,15,000/- from the hands of the assessee and also from the hands of Ambica Realities Pvt. Ltd. made on protective basis. 22(11) (ii) ₹ 2,25,000/- Capital as per page No.10 :- The A.O. vide para-11.2 of his order on the similar reason given above in respect of ₹ 9,15,000/- made the addition.. The facts of this amount for ₹ 2,25,000/- is similar as discussed above in respect of ₹ 9,15,000/-. In the light of that discussion, this addition of ₹ 2,25,000/- is also neither warranted in the hands of the assessee nor in the hands of Ambica Realities Pvt. Ltd. on protective basis. Therefore, same are deleted. 22(11) (iii) ₹ 3,20,000/- profit page No.10 : The assessee in his statement dated 28-03-2003 in reply to question No.2 clearly stated that ₹ 3,20,000/- is profit. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me has been repaid to Jiteshbhai by Ambica Realities from sale proceeds of the plot. The copies of ledges and agreements were presented. Shri M. N. Patel vide his letter dated 24-12-1997 addressed to the Dy. Commissioner of Income Tax of which copy has been placed at page-25 of the paper book wherein stated that a plot was purchased in the name of his son Shri Jitesh M. Patel. It can be seen from the bank account of Ambica Realities Pvt. Ltd. bearing No.305 with the Co-op. Bank of Rajkot Ltd. that cheque No.56326 of rRs.2,50,000/- was issued to Shri Jitesh M. Patel. Further, Shri M. N. Patel in his statement has stated that this money was used to buy a plot of survey no. 73/75. Later this plot was sold for a consideration of ₹ 5,13,500/- to Shri Chetankumar Jayantilal and the amount was credited in the bank account of Ambica Realities Pvt. Ltd. on01-06-1994. A list of person in the name of whom Ambica Realities Pvt. Ltd. has purchased the land in survey No. 73/75 was also submitted. The list contains the name of 34 parties. A copy of sale deed of flat to Shri Dharmendrasinh Amarkumar Jadeja, copy of the bank pay order dated 21-03-1995 for the amount of ₹ 1,20,000/- has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the transaction with Dhanrajbhai and assessee who were partner. Therefore, this amount of profit is required to be taken an income of the assessee M. N. Patel.The addition of ₹ 54,000/- is confirmed in the hands of the assessee M. N. Patel. 22(12) ₹ 13,53,500/- page No.10. Now coming to second amount which part of total amount ₹ 34,25,000/-, which has been sent back to the file of the AO by the ITAT. Shri M. N. Patel while replying to question No. 2 in his statement dated 28-03-2003, stated that ₹ 13,53,500/- is 6.25% profit share. This is a share of profit of assessee M. N. Patel from 3-4 projects of Ambica Realities i.e. Yoginagar, Indraprasth, Ambica Project and Raiya Road. The A.O. in original assessment this amount ₹ 13,53,500/- has assessed on protective basis in the hands of assessee M. N. Patel, whereas in fresh assessment order, the A.O. made addition of ₹ 2,16,56,000/- being 100% share of profit calculated on the basis of ₹ 13,53,500/- profit share of 6.25%. In fresh assessment, this entire 100% amount has been added in the hands of M. N. Patel on substantive basis. The A.O. made this addition in the hands of assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , same is deleted. 22 (13) Ambica Realities Pvt. Ltd Now coming to the protective additions made in the hands of the assessee-company, Ambica Realities Pvt. Ltd. The A.O. made total addition of ₹ 2,27,41,125/- in original assessment on substantive basis in the hand of the assessee-company Ambica Realities Pvt. Ltd. But in fresh assessment, the A.O. made addition of ₹ 2,27,41,125/- on protective basis. This amount 2,27,41,125/- includes ₹ 10,85,125/- total of page No.8 and ₹ 2,16,56,000/- being balance amount of profit 93.75% calculated on the basis of M. N. Patel's profit share 6.25 of ₹ 13,53,500/- noted on page No.10. A s per the dicusstion made while deciding MN Patel"s share profit in above various Para we do not find any justification of such addition on protective basis in the hands of assessee-company Ambica Realities Pvt. Ltd. Therefore, same are deleted. 22(14) Additions which were not send back by ITAT in case of Shri M. N. Patel. During the fresh assessment proceedings the AO made addition of ₹ 2,27,41,125/- on protective basis in the hands of the assessee , MN Patel and substantive basis in the hands of the assessee company, A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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