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TMI Blog2020 (6) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... riod, the Assessing Officer shall compute the income on the basis of evidence found as a result of search or on requisition of books of accounts. This is so because the correctness or otherwise of the return filed in pursuance of notice under Section 158BC (a) has to be examined with reference to the materials in possession of the Assessing Officer having nexus to the assessment of undisclosed income. Hence block assessment has to be framed in the light of material coming in to the possession of the assessing authority pursuant to the search, which is the foundation of the proceedings. On a thorough consideration, we have no reason to believe that the above findings are otherwise incorrect or improper. From the above, it is clear that the findings returned by the Tribunal in respect of the five deletions exhibit due application of mind on the part of the Tribunal and on the basis of the factual evidence on record. We do not find any perversity, much less any ambiguity, in the findings returned by the Tribunal. We find that the CIT (A) has dealt with the related issues in great detail which have been affirmed by the Tribunal. Thus, there is concurrent findings of fact by the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he admitted to concealment of ₹ 1.35 Crores and admitted to providing accommodation entries to various parties. Mr. Nitin B. Vora also stated that, he was holding a quota of Naphtha which he used to sell in the open market for cash at a high premium and would issue bogus bills to the seller of Naphtha and dealers of other chemicals and in return he would receive cash from Bank and cheques on commission basis. 3.3. Further investigation was carried out by the Income Tax Department and it was found that one of the party involved in the aforesaid business was the Thakkar family consisting of Manoj Thakkar and his three sons namely Atul M. Thakkar, Mayur M. Thakkar and Sunil M. Thakkar. Sunil M. Thakkar is the assessee in the present case. The Thakkar family members used to send cash to the Vora family for obtaining accommodation entries. 3.4. Further investigation was done, consequent upon which the Assessing Officer issued notice under Section 158BC on 13th December 1999 and called on the assessee (Mr. Sunil M. Thakkar) to file return covering the block period from 01st April 1988 to 13th February 1999. 3.5. The assessee filed return of income for the block period s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses ignoring the fact that the assessee has failed to adduce documentary evidence to prove the genuineness of the said expenses ? (E) Whether on the facts and in the circumstances of the case and in law, the Hon. ITAT was right in deleting the addition made on account of household expenses ignoring the fact that the assessee has failed to explain the cash withdrawals which were unrecorded in the books of accounts ? 5. Mr. Walve learned counsel appearing for the appellant has laid thrust on the assessment order and emphasized on the modus operandi between the public sector units, industries, illegal users of adulterated petrol, Vijan group, Vora group etc. for ascertaining the role of the assessee. He has drawn our attention to question No.8 and its answer in the statement of Shri. Naresh B. Vora, which was recorded under Section 131 of the Act. Question No.8 and its answer reads thus :- Q.8 . Can you explain the modus operandi as far the sale of Naphtha in open market is concerned ? Ans. The Naphtha is filled from the factory of M/s. RRPL which is located at Sinner, Nashik or at times directly from the refineries of the public undertakings and being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst Atlas (Atlas Petrochemicals). As a matter of fact all the transaction appearing in this note book against Rama and Atlas are transaction related to accommodation entries taken by Sunil Thakkar on behalf of M/s. RRPL Atlas Petrochemicals Ltd. 5.2. Mr. Walve submitted that the assessee was referred to in the books of the Vora group by several names such as Sunilbhai, Sunilbhai (baroda), Sunilbhai Bhanushali, Sunilbhai Bhanushali (baroda), Sunil Carrier, Sunil Transport and Sunil Agrawal and after reading the answers to the questions given by the Vora group members, it was established that, the assessee was involved in giving accommodation entries to various parties. He submitted that there was enough material on record to warrant implication and indictment of the assessee. 6. To appreciate the questions framed and the contentions advanced by the learned standing counsel, it would be necessary to advert to the orders passed by the statutory authorities. 7. During the block assessment proceedings, the modus operandi of the trade as unravelled by the Assessing Officer showed a complex networking between Public Sector Units like; (i) Bharat Petroleum Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross examination of Mr. Naresh B. Vora it was revealed that the assessee had been regularly depositing cash to avail accommodation entries for sale of Naphtha on behalf of M/s. Ram Remedies Pvt. Ltd. On the basis of corroborative evidence obtained from the seized books, documents, loose papers etc, the Assessing Officer concluded that there was a nexus of the assessee with the Vora group on the one hand and with M/s. Ram Remedies Pvt. Ltd. on the other hand. The Assessing Officer further scrutinized and analyzed various dealings between the parties on the basis of the following materials :- (i) Account books from the Thakkar group, Vijan group and Vora group; (ii) Statements recorded of Vora group members; (iii) Facts and circumstances evidencing transactions appearing in Vora group s books as paper transactions only; (iv) Cross examination of Mr. Naresh B. Vora; (v) Analysis of objection / observations, counter reply in the facts available on record made by the assessee; (vi) Corroborative evidences gathered during search and survey operations; (vii) Evidence relating to sale of premium as collected; (viii) Sale on delivery orders p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted income of ₹ 1,96,50,420.00 for remittances on the basis of his residential status being a non resident Indian. For the year 1992 1993 and 1993 1994, the status of the appellant was non resident Indian and from assessment year 1994 1995 onwards for the next eight years, the status was not ordinarily resident and thus the assessee was assessed in regular assessments accordingly. The Assessing Officer held exemption of ₹ 78,31,157.00 being receipt of India Development Bond (IDB) being not exempt and the interest earned on the said IDB for 23 months at the rate of 12% per annum amounting to ₹ 18,02,546.00, as income taxable in the hands of the assessee. The Assessing Officer held that ₹ 1,71,20,932.00 had been actually remitted in the assessee s account. The assesse submitted before the CIT (A) that no addition could be made on this account, since no incriminating document was found during search and that the proceeds of the Bonds could not be added as undisclosed income as the said bonds were issued by State Bank of India and the letter of State Bank of India and folio number of the bonds were made available to the Assessing Officer. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. The CIT (A) therefore deleted this addition made by the Assessing Officer after considering the fact that Mr. Atul Thakkar had paid taxes on the said cash amount as it belonged to him and that there was no evidence on record to link the cash to the assessee. 11.5. In respect of unaccounted initial capital amounting to ₹ 30,00,000.00, the CIT (A) came to the conclusion that, since the addition on account of alleged sale of Naphtha on premium had been deleted, this addition of unaccounted initial capital required for the said transaction could not be upheld. Hence, in the absence of any evidence of sale of Naphtha on premium by the assessee, the question of adding this unaccounted initial capital required to start the business did not arise and the same was deleted. 11.6. In respect of addition of ₹ 4,99,36,298.00 made on protective basis by the Assessing Officer, the CIT (A) came to the conclusion that this addition was made without any material evidence on record. CIT (A) held that this addition was made on the basis of statements recorded by the Assessing Officer which stated that the assessee was working on behalf of certain concerns in Ahmedabad and cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approximately to the income of all the members of the family of the assessee for the same period, and therefore considering these facts, the addition made by the Assessing Officer on account of withdrawal towards household expenses came to be deleted. 12. The revenue being aggrieved by the order passed by the CIT (A) approached the Income Tax Appellate Tribunal with respect to deletion of five additions made by the CIT (A). Before the Tribunal, the revenue pleaded that the deletion of the following five additions was wrongfully done by the CIT (A) namely :- (i) deletion of addition on account of sale of Naphtha on premium amounting to ₹ 12.48,61,834.00; (ii) deletion of addition on account of sale and delivery orders amounting to ₹ 36,38,634.00; (iii) deletion of addition on account of protective basis relying upon the statement of Naresh B. Vora as recorded by the Assessing Officer amounting to ₹ 4,99,36,28.00; (iv) deletion of addition on account of foreign tour expenses by the assessee amounting of ₹ 2,00,000.00 and (v) deletion of addition on account of household expenses on the basis of entry found in one Gandhi diary amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us of the assessee with the alleged Ahmedabad and Baroda parties. Tribunal held that the CIT (A) specifically referred to the statement of Naresh B. Vora dated 15th October 1998 and in particular to question Nos.3,4 and 5 and their answers and the observation made by the Assessing Officer relating to collection of evidence during the the course of search and further details gathered during the block assessment proceedings. However, the Tribunal after scrutinizing the same found that the CIT (A) had correctly analyzed the facts and evidence and returned the finding that there was no illegality or infirmity in the order of CIT (A) in deleting the addition on account of sale of Naphtha on premium and thus this ground of challenge raised by the revenue came to be dismissed by the Tribunal. 15.2. Tribunal considered the second challenge with respect to deletion of addition on account of sale and delivery orders amounting to ₹ 36,38,634.00. After looking into the evidence before the Assessing Officer which pertained to the file containing bills of Reliance Industries Ltd. in favour of Galaxy Petrochemicals and certain other bills in the name of the assessee and one Suresh Mayur, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of ₹ 2,00,000.00 on account of foreign tour expenses on the basis of evidence which was gathered. It was observed by the Tribunal that during the search and seizure proceedings no incriminating documents were found which could be linked with the foreign trips made by the assessee. Further the assessment order was silent about the evidence which could prove that the assessee had spent ₹ 2,00,000.00 on foreign trips in the assessment year 1998 1999 and / or the said money was unaccounted income of the assessee. Tribunal concluded that the revenue failed to disclose that there was any material evidence available / seized in respect of unaccounted income for foreign travel during the search proceedings. Hence the Tribunal returned a finding that there was no infirmity in the order of CIT (A) in deleting the addition of ₹ 2,00,000.00 on account of foreign tour expenses and thus this ground of challenge raised by the revenue also came to be dismissed. 15.5. Tribunal thereafter considered the final ground of challenge with respect to the deletion of addition of ₹ 21,83,010.00 on account of household expenses in the income of the assessee. The sole ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrectness or otherwise of the return filed in pursuance of notice under Section 158BC (a) has to be examined with reference to the materials in possession of the Assessing Officer having nexus to the assessment of undisclosed income. Hence block assessment has to be framed in the light of material coming in to the possession of the assessing authority pursuant to the search, which is the foundation of the proceedings. 17. On a thorough consideration, we have no reason to believe that the above findings are otherwise incorrect or improper. From the above, it is clear that the findings returned by the Tribunal in respect of the five deletions exhibit due application of mind on the part of the Tribunal and on the basis of the factual evidence on record. We do not find any perversity, much less any ambiguity, in the findings returned by the Tribunal. We find that the CIT (A) has dealt with the related issues in great detail which have been affirmed by the Tribunal. Thus, there is concurrent findings of fact by the two lower appellate authorities. We are in agreement with the reasons recorded by the Tribunal in respect of deletion of the five additions made by the CIT (A) and upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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