Principal Commissioner Income Tax, Surat-2 v. Shri Jagdishbhai T Hapani

C/TAXAP/680/2018 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 680 of 2018 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH Sd/- and HONOURABLE MR.JUSTICE A.Y. KOGJE HONOURABLE MR.JUSTICE A.Y. KOGJESd/-=============================================1 Whether Reporters of Local Papers may be allowed to see Nothe judgment ?2 To be referred to the Reporter or not ?No3 Whether their Lordships wish to see the fair copy of the Nojudgment ?4 Whether this case involves a substantial question of law as Noto the interpretation of the Constitution of India or any order made thereunder ? ============================================= ============================================= PRINCIPAL COMMISSIONER INCOME TAX, SURAT-2 Versus SHRI JAGDISHBHAI T HAPANI ============================================= Appearance: MRS KALPANA K RAVAL(1046) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ============================================= CORAM: HONOURABLE MR.JUSTICE M.R. SHAH andHONOURABLE MR.JUSTICE A.Y. KOGJE Date : 10/07/2018 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] Feeling aggrieved and dissatisfied with the impugned order dated 12.07.2017 passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as "Tribunal") in ITA No.2165/Ahd/2014 for Assessment Year 2000-01 by which the learned Tribunal has dismissed the said appeal preferred by the Revenue confirming the deletion made by the learned CIT(A) deleting the addition of Rs.97,00,997/- made by the Assessing Officer, the Revenue has preferred the present Tax Appeal with the following proposed questions of law. “(A)Whether on the facts and circumstances of the case and in law the Hon’ble ITAT was justifying in deleting the addition made by the AO ignoring the modus operandi of the assessee group of creating bogus capital by inflating the capital balance without any basis found during the course of survey action and same was admitted by Shri Pankaj Danawala, Chartered Accountant u/s 131(1A)? (B) Whether on the facts and circumstances of the case and in law the Hon’ble ITAT erred in upholding the order of the ld. CIT(A) without appreciating the fact that Shri Jagdish Hapani must have been having unaccounted income at the time of creation of capital in the name of group, which was intended to be brought for their benefit as and when it is needed? (C) Whether on the facts and circumstances of the case and in law the Hon’ble ITAT erred in upholding the order of the ld. CIT(A) without appreciating the fact that the assessee did not submit required details despite giving number of opportunities during the set-aside assessment proceedings, the AO had rightly made the addition in absence of any details submitted by the assessee? (D)On the facts and circumstances of the case and in law, the Hon’ble ITAT ought to have set-aside the order of the ld. CIT(A) and restored the order of the Assessing Officer?” [2.0] The facts leading to the present Tax Appeal in nut-shell are as under: [2.1] That the assessee filed the return of income for AY 2000-01 declaring total income of Rs.72,3281/-. That thereafter a survey under Section 133A of the Income Tax Act was carried out in the case of one Shri Pankaj Danawala (Chartered Accountant) by the Department on 11.03.2005. During the course of survey, he was found to have created large number of capital build up cases for the benefit of his various clients, assessee was one of them. During the search, number of paper (D)On the facts and circumstances of the case and in law, the Hon’ble ITAT ought to have set-aside the order of the ld. CIT(A) and restored the order of the Assessing Officer?” [2.0] The facts leading to the present Tax Appeal in nut-shell are as under: [2.1] That the assessee filed the return of income for AY 2000-01 declaring total income of Rs.72,3281/-. That thereafter a survey under Section 133A of the Income Tax Act was carried out in the case of one Shri Pankaj Danawala (Chartered Accountant) by the Department on 11.03.2005. During the course of survey, he was found to have created large number of capital build up cases for the benefit of his various clients, assessee was one of them. During the search, number of paper entries were found out. On the basis of such paper entries and the statement of the aforesaid searched person the Assessing Officer made the addition of Rs.97,00,997/- as unexplained capital introduction. It is required to be noted that assessment was framed under Section 147/148 of the Income Tax Act. [2.2] Feeling aggrieved and dissatisfied with the assessment order and the addition made by the Assessing Officer of Rs.97,00,997/- on account of unexplained capital introduction, the assessee preferred appeal before the learned CIT(A). The learned CIT(A) deleted the aforesaid addition mainly on two grounds viz. (1) that the statement of the searched person viz. Pankaj Danawala was not on oath and the same was not admissible in evidence and that the paper entries were not even utilized by the assessee in the later years. [2.3] Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A), the Revenue preferred appeal before the learned Tribunal and by impugned order the learned Tribunal has dismissed the said appeal preferred by the Revenue and has confirmed the order passed by the learned CIT(A) deleting the addition made by the Assessing Officer. [2.4] Feeling aggrieved and dissatisfied with the impugned order passed by the learned Tribunal, the Revenue has preferred the present Tax Appeal with the aforesaid proposed questions of law. [3.0] We have heard Mrs. Raval, learned Counsel appearing on behalf of the Revenue. We have considered and gone through in detail assessment order by which the Assessing Officer made the addition of Rs.97,00,997/- on account of unexplained capital introduction and the order passed by the learned CIT(A) as well as the learned Tribunal. [3.1] One of the grievance made by the learned Counsel appearing on behalf of the Revenue is the finding recorded by the learned CIT(A) that the statement of the searched person was not on oath. However, keeping that question aside, what is required to be considered is the finding recorded by the learned CIT(A) as well as the learned Tribunal that nothing is on record and/or there was no material before the Assessing Officer that infact the assessee utilized / taken advantage of the paper entries in the later years. In absence of any such material and/or finding that the assessee utilized / taken advantage of the paper entries which were found during the search of the aforesaid searched person, as rightly observed by the learned CIT(A) as well as the learned Tribunal, no such addition could have been made by the Assessing Officer on account of unexplained capital introduction. No error has been committed by the learned Tribunal in dismissing the appeal and confirming the order passed by the learned CIT(A) deleting the addition made by the Assessing Officer on account of unexplained capital introduction. No substantial question of law arise in the present Tax Appeal. [4.0] Under the circumstances, present Tax Appeal deserves to be dismissed and is, accordingly, dismissed. Sd/- (M.R. SHAH, J.) Sd/- (A.Y. KOGJE, J.) Ajay**