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TMI Blog2010 (6) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... cer. From the perusal of the same and after considering the totality of the facts and reasoning given by the Learned Commissioner of Income Tax(Appeals), we are convinced that the Assessing Officer made the addition of ₹ 15,00,000/- on the basis of fictitious entries in loose sheets of paper found from the premises of the C.A. Shri Pankaj Danawala, who had admitted to have created such amounts himself. Therefore, the Learned Commissioner of Income Tax(Appeals) is legally and factually correct in deleting the addition of ₹ 15,00,000/-, which was made by the Assessing Officer in the hands of assessee on protective basis. Resultantly, the ground of appeal raised by the Revenue is rejected. - I.T.A. No. 2369/AHD./2008 & C.O. No. 202/AHD/2008 (arising out of ITA No. 2369/AHD/2008) - - - Dated:- 18-6-2010 - HON BLE SHRI T.K. SHARMA, J.M. AND HON'BLE SHRI D.C. AGRAWAL, A.M. For the Assessee : Smt. Poonam Joshi For the Department : Shri H.P. Meena, Sr. D.R. ORDER Per Shri T.K. Sharma, Judicial Member : This appeal filed by the Revenue and Cross Objection by the assessee are against the order dated 28.04.2008 of Learned Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order that, the DDIT (Inv.)-II, Surat in his elaborated report has mentioned the modus operandi adopted in creating bogus capital by Shri Pankaj Danawala which was by way of increasing the opening balance of the capital account with no correlation with the closing balance of earlier year and also by bringing bogus gift of earlier year and also by brining bogus gift of earlier years to capital account in one year . It is further stated by the AO that it was also noticed that, he (Shri Pankaj Danawala) was involved in creating bogus capital and providing bogus cash credit entries to various clients. Shri Danawala has also played such mischief in appellant's case and filed copies of final accounts which he enclosed with the original return of the income without the knowledge of the appellant It is the common practice that, the return is filed from the office of the CA/advocate and a client can never think that a CA can play such a mischief behind his/her back. The appellant is quite unaware about the jumping of capital of ₹ 15,00,000/- in the opening balance of the capital account which the AO has added to the total income. In this connection the appellant had file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ankaj Danawala, Therefore the additions made merely on the basis of the capital account and balance sheet prepared by the Shri Pankaj Danawala and enclosed by him with the Original return being unlawful may kindly be deleted As It is a well settled law that, the assessee can not be penalized for the mistake/mischief of their consultant. 4. After considering the aforesaid submissions of the ld. counsel of the assessee, the Learned Commissioner of Income Tax(Appeals), in the impugned order, deleted the addition for the detailed reasons given in pages 5-8 in the impugned order, which are extracted below :- The main issue relates to addition of Rs,15,00,000/- as enhancement of opening capital in the capital account on protective basis. The AO has also added ₹ 90,060/- on protective basis, which the appellant has claimed as his substantive income. The papers impounded from the premises of Shri Danawala indicated an enhancement of ₹ 15,00,000/-in the opening capital of A.Y.2003-04. According to the AO, the difference of ₹ 15,00,000/- represented the unexplained portion of newly introduced capital. Most importantly, the capital so created by Shri Dan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by B or by both together, it would be open to the income-tax authorities to determine the question who is responsible to pay tax by taking assessment proceedings both against A and B. Therefore the presupposition and basic requirement is the actual receipt of income. In the instant case nothing has been received. Only the figure stands created in a clandestine manner. Secondly it is not only the right, but the duty of the Assessing Officer to consider whether or not the books disclose the true state of accounts and correct income can be deduced therefrom. The term 'books of account' would mean those books of accounts whose main object is to provide credible data and information to file the tax returns. The credible accounting record provides the best foundation for filing return of both direct and Indirect taxes. It cannot be understood to mean compilation or collection of sheets with the appellant's CA. The legislative intent is to admit only those books of account maintained by the assessee on his own behalf which by their very nature and circumstances are maintained for the purpose of drawing the source of Income. For making addition on account of unexplained portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, on behalf of Revenue Shri H.P. Meena, Sr. D.R. appeared and relying on the reasoning given by the Assessing Officer in the assessment order contended that Assessing Officer rightly made the addition of ₹ 15,00,000/- under section 68 of the Income Tax Act on protective basis and the Learned Commissioner of Income Tax(Appeals) is not justified in deleting the same. The ld. D.R. pointed out that before both the authorities below, the assessee failed to produce any documents to disown the various entries. Therefore, the addition was made on protective basis on the basis of return of income filed by her (the assessee). The return of income is a legal document, which cannot be said to be rough paper and Learned Commissioner of Income Tax(Appeals) clearly erred in deleting the said addition of ₹ 15,00,000/-. 7. On the other hand, Smt. Poonam Joshi, ld. counsel appearing on behalf of the assessee vehemently supported the order of Learned Commissioner of Income Tax(Appeals). She pointed out that the entire exercise of reflecting capital represented by way of advances that too without preparation of any books of accounts was that of Shri Pankaj Danawala, about which a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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