Income Tax Appellate Tribunal - Ahmedabad
Shri Prahladray M. Shah,, Nadiad vs The Acit, Kheda Cicle,, Nadiad on 30 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA Nos. 1785 to 1796/Ahd/2015
(Assessment Years: 1998-99 to 2003-04)
Prahladray M. Shah
23, Shyamkunj Society,
B/h. Vaishali Cinema
Nadiad, District Kheda Appellant
Vs.
The Asstt. Commissioner of
Income-Tax, Kheda Circle, Nadiad Respondent
PAN: AGTPS8575P
&
ITA Nos. 1820 to 1825, 2072, 2243/Ahd/2013 to 2246/Ahd/2015 & 2020 to
2024/Ahd/2014
(Assessment Years: 1998-99 to 2005-06)
Yashodadevi Prahladray Shah
23, Shyamkunj Society,
B/h. Vaishali Cinema
Nadiad, District Kheda Appellant
Vs.
The Asstt. Commissioner of
Income-Tax, Kheda Circle, Nadiad Respondent
PAN: AGIPS2324K
ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] -2-
&
ITA Nos. 2025 to 2027, 1563 & 1564/Ahd/2014, 983 & 984/Ahd/2016
(Assessment Years: 2000-01 to 2002-03 & 2004-05)
Durgesh Prahladray Shah
23, Shyamkunj Society,
B/h. Vaishali Cinema
Nadiad, District Kheda Appellant
Vs.
The Asstt. Commissioner of
Income-Tax, Kheda Circle, Nadiad Respondent
PAN: ASQPS4586B
&
ITA No. 2028/Ahd/2014
(Assessment Year: 2005-06)
Tejal Prahladray Shah
4, Gurukrupa Society, Opp. Municipal
School no. 32, I. G. Marg,
Nadiad, District Kheda 387001 Appellant
Vs.
The Asstt. Commissioner of
Income-Tax, Kheda Circle, Nadiad Respondent
PAN: BGBPS3381Q
आवेदक क ओर से/By Assessee : Shri G. C. Pipara & Alfaq Saiyad, A.R.
राज व क ओर से/By Revenue : Shri Surendra Kumar, CIT. D.R.
Shri Prasoon Kabra, Sr. D. R.
सन
ु वाई क तार ख/Date of Hearing : 28.12.2017
घोषणा क तार ख/Date of
Pronouncement : 30.01.2018
ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] -3-
ORDER
PER BENCH This batch of 36 cases pertains to four assessees namely Prahladray M. Shah (self), Yashodadevi Prahladray Shah (wife), Durgesh Prahladray Shah (son) and Tejal Prahladray Shah (daughter); respectively. There are total 12 cases relating to the above first assessee. They pertain to assessment years. 1998-99 to 2003-04. Six of them each are quantum and penalty appeals. All these appeals emanate from the CIT(A)-2, Vadodara's separate orders. This assessee has filed quantum appeal ITA Nos. 1785/Ahd/2015 in assessment year 1998-99 against the CIT(A)'s order dated 24.04.2015 in case no. CAB/(A)-2/324/14-15 inter alia confirming Assessing Officer's action making various disallowances/additions on merits of Rs.2.5lacs out of total addition of Rs.35,27,200/- in the nature of non-operative finance, operative finance addition of Rs.4,04,38,563/- after rejecting peak theory plea directions issued for re-computing estimated and hypothetical addition of Rs.24,64,985/- on account of alleged interest income accrued on non-operative and operative finance @15% for a period of six months instead of 9% followed and yet another addition of Rs.1,75,000/- qua investments made in FDRs out of income from undisclosed sources; respectively.
ITA No.1786/Ahd/2015 is his corresponding penalty appeal arising from theCIT(A)'s order dated 27.04.2015 in case no. CAB/(A)-2/330/14-15, upholding Assessing Officer's action levying Section 271(1)(c) penalty of Rs.1,47,29,204/-.
2. Second assessment year 1999-2000 involves assessee's quantum appeal ITA No.1787/Ahd/2015 directed against the CIT(A)'s order dated 24.04.2015 in case no. CAB/(A)-2/331/14-15, upholding Assessing Officer's action making non operative finance addition of Rs.5lacs out of Rs.29.25lacs, operative finance addition of Rs.3,13,44,122/- thereby rejecting his plea of peak credits from alleged undisclosed bank accounts, cheque return entries of Rs.23,25,120/- despite the alleged cash available in fresh deposits during the year after considering all the entries is to the ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] -4- tune of Rs.3,11,12,132/- whereas peak balance thereof comes to Rs.2,32,824/- only after giving credit for cash available, alleged estimated and hypothetical addition of Rs.22,00,834/- qua interest income on accrual basis as pertaining to non-operative and operative finance & investments in immovable assets of Rs.9.8lacs; respectively.
Related penalty appeal is ITA No. 1788/Ahd/2015 wherein both the lower authorities have invoked Section 271(1)(c) of the Act for penalizing the assessee to the tune of Rs.1,12,87,486/- as upheld in CIT(A)'s order dated 27.04.2015 in case no. CAB/(A)-2/325/14-15.
3. Third assessment year 2000-2001 contains assessee's quantum appeal ITA No.1789/Ahd/2015 arising against the CIT(A)'s order dated 24.04.2015 in case no. CAB/(A)-2/326/14-15, upholding Assessing Officer's action making addition of Rs.5lacs out of Rs.34,05,600 on account of non-operative finance, operative finance addition of Rs.1,71,58,026/- after allegedly ignoring assessee's plea for taxing peak credit only, cheque return entries of Rs.28,91,600/-, fresh deposits addition of Rs.3,78,97,548/- and alleged notional interest income of non-operative and operative finance of Rs.10,17,812/-; respectively.
Corresponding penalty appeal ITA No. 1790/Ahd/2015 emanates from the CIT(A)'s order dated 27.04.2015 in case no. CAB/(A)-2/332/14-15, upholding Assessing Officer's action levying penalty of Rs.72,21,958/-.
4. Next assessment year 2001-2002 comprises assessee's quantum appeal ITA No.1791/Ahd/2015 arising against the CIT(A)'s order dated 24.04.2015 in case no. CAB/(A)-2/327/14-15, upholding Assessing Officer's action adding non-operative finance addition of Rs.5lacs instead of the total addition amount of Rs.54,96,700, operative finance addition of Rs.97,70,222/- without giving peak credit benefit, cheque return entries aggregation figure of Rs.50,10,700/-, fresh deposit amount of Rs.4,29,23,765/-, notional interest income addition of Rs.7,53,932/- and Rs.1,95,000/- on account of FDRs investments from undisclosed sources; respectively.
ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] -5-Corresponding penalty appeal in the impugned assessment year ITA No. 1792/Ahd/2015 emanating from the CIT(A)'s order dated 27.04.2015 in case no. CAB/(A)-2/347/14-15, affirming Assessing Officer's action levying penalty of Rs.56,91,764/- in question.
5. Next assessment year 2002-2003 comprises assessee's quantum appeal ITA No.1793/Ahd/2015 emanates from the CIT(A)'s order dated 24.04.2015 in case no. CAB/(A)-2/328/14-15, upholding Assessing Officer's identical action adding Rs.5lacs out of total addition of Rs.13,97,000 under the head non-operative finance, operative finance addition of Rs.1,08,76,765/- without considering peak credit benefit, cheque return entries amount of Rs.9.09lacs, fresh deposits addition of Rs.4,82,40,765/-, notional interest income of Rs.7,97,550/- and cash deposited in bank accounts of Rs.15,00,750 out of gross amount of Rs.24,67,294/-; respectively.
Related penalty appeal in the impugned assessment year is ITA No. 1794/Ahd/2015 directed against the CIT(A)'s order dated 27.04.2015 in case no. CAB/(A)-2/348/14-15, upholding penalty of Rs.48,31,314/- in question.
6. Last assessment year in instant assessee's case in 2003-04 contains assessee's quantum appeal ITA No.1795/Ahd/2015 emanates from the CIT(A)'s order dated 24.04.2015 in case no. CAB/(A)-2/329/14-15, upholding Assessing Officer's action making various additions of operative finance of Rs.14.10lacs without accepting peak theory, followed by notional interest income addition of Rs.10,25,000/- in view of multi folded pleadings therein; respectively.
Assessee's corresponding penalty appeal in the impugned assessment year is ITA No. 1796/Ahd/2015 directed against the CIT(A)'s order dated 27.04.2015 in case no. CAB/(A)-2/333/14-15, upholding Assessing Officer's action levying penalty of Rs.29,67,940/- in question.
7. We now advert to second assessee Smt. Yashodadevi Prahladray Shah's cases. First assessment year 1998-99 involves her quantum appeal ITA ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] -6- No.1820/Ahd/2013 preferred against the CIT(A)-IV, Baroda's order dated 28.03.2013 in case no. CAB/IV-N-108/2009-10, inter alia upholding Assessing Officer's action taking recourse to Section 148 proceedings followed by additions on merits of Rs.11,36,186/- on account of peak credit of various FDRs in multiple accounts comprising with FDRs in question.
Her corresponding penalty appeal is ITA No. 1821/Ahd/2013 directed against the CIT(A)-IV, Baroda's order dated 28.03.2013 in case no. CAB/IV-N-95/11-12 challenging correctness of both the lower authorities' action levying penalty of Rs.3,15,857/- under challenge.
8. Next assessment year 1999-2000 involves assessee's quantum appeal ITA No.1822/Ahd/2013 preferred against the CIT(A)-IV, Baroda's order dated 28.03.2013 in case no. CAB/IV-N-91/2011-12, upholding Assessing Officer's action in both initiating Section 148 proceedings as well as adding various fixed deposits account amounting to Rs.1,28,092/-.
Her penalty appeal is ITA No. 1823/Ahd/2013 arising against the CIT(A)-IV, Baroda's order dated 28.03.2013 in case no. CAB/IV-N-96/11-12 wherein both the lower authorities have levied the penalty in question of Rs. 28,327/-.
9. Next assessment year 2000-2001 contains assessee's quantum appeal ITA No.1824/Ahd/2013 preferred against the CIT(A)-IV, Baroda's order dated 28.03.2013 in case no. CAB/IV-N-92/2011-12, upholding Assessing Officer's action initiating Section 148 proceedings followed by multiple FDRs accounts addition of Rs.2,93,283/-.
Her penalty appeal is ITA No. 1825/Ahd/2013 arising against the CIT(A)-IV, Baroda's order dated 28.03.2013 in case no. CAB/IV-N-97/11-12 confirming Assessing Officer's action levying penalty of Rs.78,083/- in question.
ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] -7-We further find that her latter penalty appeal ITA No. 2071/Ahd/2013 for the very assessment year is directed against the CIT(A)-IV, Baroda's order dated 28.03.2013 in case no. CAB/IV-N-92/2011-12, upholding Assessing Officer's action imposing penalty of Rs.40,167/- under challenge.
10. Next assessment year 2001-2002 indicates that the assessee has filed her quantum appeal ITA No.2243/Ahd/2015 preferred against the CIT(A)-2, Vadodara's order dated 07.05.2015 in case no. CAB/(A)-2/286/2014-15, upholding Assessing Officer's action initiating Section 148 proceedings as well as making addition of Rs.3,67,853/- on account of multiple fixed deposits in question; respectively.
Her penalty appeal therein is ITA No. 2244/Ahd/2015 arising against the CIT(A)-2, Vadodara's order dated 08.05.2015 in case no. CAB/(A)-2/284/2014-15, confirming Assessing Officer's action levying penalty of Rs.1,25,600/- under challenge.
11. Next assessment year 2002-2003 involves assessee's quantum appeal ITA No.2245/Ahd/2015 preferred against the CIT(A)-2, Vadodara's order dated 07.05.2015 in case no. CAB/(A)-2/287/2014-15, confirming Assessing Officer's action inter alia taking recourse to Section 148 proceedings as well as adding an amount of Rs.9,14,969/- pertaining to multiple fixed deposits; respectively.
Her penalty appeal is ITA No. 2246/Ahd/2015 arising against the CIT(A)-2, Vadodara's order dated 08.05.2015 in case no. CAB/(A)-2/285/2014-15, wherein CIT(A) has upheld the Assessing Officer's order levying penalty of Rs.2,75,997/- under challenge.
12. Next assessment year 2003-2004 involves assessee's quantum appeal ITA No.2021/Ahd/2014 arising against the CIT(A)-IV, Baroda's order dated 11.03.2014 in case no. CAB/IV-N-50/2007-08, upholding Assessing Officer's action in both initiating Section 148 proceedings as well as addition of Rs.4,93,740/- on account of credits appearing in bank deposits, accrued interest on FDRs of Rs.2,77,500/-
ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] -8-followed by lower appellate directions to the Assessing Officer to verify various aspects pertaining to interest income in multiple FDRs's taxation; respectively.
Her penalty appeal is ITA No. 2020/Ahd/2014 arising against the CIT(A)-IV, Baroda's order dated 11.03.2014 in case no. CAB/IV-N-82/2007-08, upholding Assessing Officer's action levying penalty of Rs.1,28,230/- under challenge.
13. Next assessment year 2004-2005 involves assessee's quantum appeal ITA No.2022/Ahd/2014 arising against the CIT(A)-IV, Baroda's order dated 11.03.2014 in case no. CAB/IV-N-49/2007-08, upholding Assessing Officer's action in both initiating Section 148 proceedings followed by addition of Rs.5,24,238/- being made pertaining to credits appearing in bank account(s); respectively.
Her penalty appeal is ITA No. 2023/Ahd/2014 emanating from the CIT(A)- IV, Baroda's order dated 11.03.2014 in case no. CAB/IV-N-81/2007-08, affirming Assessing Officer's order levying penalty of Rs.1,34,270/- under challenge.
14. Next assessment year 2005-2006 involves assessee's quantum appeal ITA No.2024/Ahd/2014 arising against the CIT(A)-IV, Baroda's order dated 11.03.2014 in case no. CAB/IV-N-159/2007-08, upholding Assessing Officer's action in both initiating Section 148 proceedings followed by additions of Rs.5lacs and Rs.5,24,238/- being made pertaining to FDRs given to Kajal Developers in lieu of purchase consideration for Flat No.A/7 Jainam Towers; respectively.
15. We now advert to third assessee Durgesh Prahladray Shah's cases now. He has filed his quantum appeal ITA No.2025/Ahd/2014 for assessment year 2000- 2001 arising against the CIT(A)-IV, Baroda's order dated 11.03.2014 in case no. CAB/IV-N-101/2011-12, affirming Assessing Officer's action in both initiating reopening proceedings u/s. 148 of the Act as well as making addition of Rs.51,107/- to the extent of Rs.40,656/- being interest on FDRs; respectively.
ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] -9-His penalty appeal is ITA No. 2026/Ahd/2014 arising against the CIT(A)-IV, Baroda's order dated 11.03.2014 in case no. CAB/IV-N-106/2011-12, affirming Assessing Officer's order levying penalty of Rs.8,615/- under challenge.
16. Next assessment year 2001-02 comprises assessee's quantum appeal ITA No. 1563/Ahd/2014 arising against the CIT(A)-IV, Baroda's order dated 27.02.2014 in case no. CAB/IV-N-102/2011-12, confirming Assessing Officer's findings in both initiating reopening proceedings u/s. 148 of the Act as well as adding an amount of Rs.2,74,750/- pertaining to peak amount in various bank accounts; respectively.
His penalty appeal is ITA No. 1564/Ahd/2014 directed against the CIT(A)- IV, Baroda's order dated 26.02.2014 in case no. CAB/IV-N-107/2011-12, affirming Assessing Officer's action levying penalty of Rs.86,795/- under challenge.
17. Assessment Year 2002-03 comprises assessee's quantum appeal ITA No.983/Ahd/2016 being directed against the CIT(A)-2, Vadodara's order dated 18.01.2016 in case no. CAB/(A)-2/288/14-15, in both initiating re-assessment proceedings followed by peak amount addition of Rs.18,27,921/- being upheld to the tune of Rs.13,50,420/-; respectively.
His penalty appeal is ITA No. 984/Ahd/2016 arising against the CIT(A)-2, Vadodara's order dated 19.01.2016 in case no. CAB/(A)-2/289/14-15, upholding penalty of Rs.5,42,003/- under challenge.
18. Last assessment year 2004-05 in this third assessee's case is ITA No.2027/Ahd/2014 directed against the CIT(A)-IV, Baroda's order dated 11.03.2014 in case no. CAB/IV-N-61/2007-08 affirming assessment findings in both initiating Section 148 proceedings as well as credits entries in multiple bank accounts of Rs.10,52,329/- being added as unexplained and Section 68 addition of unexplained cash credit to the tune of Rs.2.54lacs; respectively.
ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] - 10 -19. Last assessee Ms. Tejal Prahladray Shah has preferred ITA No. 2028/Ahd/2014 in assessment year 2005-06 against the CIT(A)-IV, Baroda's order dated 11.03.2014 in case no. CAB/IV-N-162/2007-08 inter alia upholding Assessing Officer's action adding unexplained investments of Rs.5lacs to the extent of Rs.2.5lacs in question.
We make it clear that all quantum proceedings hereinabove are u/s.144 r.w.s. 147 of the Income Tax Act, 1961; in short "the Act" whereas corresponding penalty cases involve proceedings u/s. 271(1)(c) of the Act.
Heard both the parties. Case files perused.
20. Learned counsel representing assessee Shri G. C. Pipara invites our attention towards assessee's pleadings summarized hereinabove to the effect that the authorities below have not afforded them adequate opportunity of hearing in original as well as remand proceedings. He then states that some of the above quantum cases involve an identical issue of correctness of Section 148 proceedings (supra). Learned counsel very fairly informs us that these assessees no more wish to press for their instant technical and legal substantive grounds. Learned Departmental Representative does not offer any objection. We therefore reject assessees' corresponding abovesaid technical and legal substantive grounds raising issues of violation of principles of natural justice as well as validity of reopening to be not pressed in their respective appeals.
21. We advert to all remaining issues on merits now. Learned counsel submits that this is not the department's case that the latter three assessees do have any independent source(s) of income. Their sole substantive plea throughout is that it is the first assessee who has earned all the income assessed in all these different assessees' hands since the same had been deposited/invested in their names in the nature of bank FDRs and other assets in question. We refer to Smt. Yashodadevi's quantum cases in support of our observation that she had been having a joint account with the first assessee regarding most of the investments in FDRs etc. The question ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] - 11 - as to whether such an addition is sustainable or not in view of the fact that there is no independent source of income; already stands answered in a co-ordinate bench's decision in IT(SS)A No.33 & 231/Ahd/2005 decided on 18.09.2009 Mrunalini Gandhi vs. ACIT against the Revenue as under:
"5. The assessee is in further appeal, We have considered the facts and the rival contentions. The assessee's statement recorded on the date of search is at page
22 of the paper book. We do not find any question having been asked about the deposits. What she has stated which is of some relevant is that her income consists of monies given by her husband and that she is a trustee of an educational institution in Junagadh from which she is not in receipt any income. At page 33 - 34 of the paper book is a copy of the statement of the assessee's husband made during the search. In answer to question no.2 he has stated that he was filing income tax return at Junagadh but at present he was not filing any returns since he had no income. His family consisted of himself and wife. In answer to question no.6 he has stated that he and his wife had jointly invested Rs.6,00,000/- to Rs.7,00,000/- in post-office MIS two years back which represented his savings from the professional income as medical practitioner at Junagadh. He also stated that after coming to Baroda he lost his practice gradually. He also stated that he had for some time kept the cash in his house before depositing it in the post office or banks. Again in answer to question no.22 he has stated that the MIS deposit for Rs.6,00,000/- represents his savings. The I earned representative for the assessee has also filed before us an English translation of the assessee's account in M/s.Shree Shroff and in a tabular statement explaining the cash flow for investment made and source thereof, has sought to match the withdrawals from the firm and the deposits. It seems to us on a consideration of the facts and the submissions of both the sides that what the assessee wants is that we should accept either of the two fact - situations and that both the situations point to the only conclusion viz. that the deposits and investments are explained. The first scenario is that the assessee's husband has stated in the course of the search that the investments came from his saving out of the professional income. If this is accepted as correct, then no addition can be made in the assessment of the assessee under Section 69B. The second scenario is that the assessee has led evidence to show that the investments in post office and bank deposits came from the drawings made by her as partner in the firm at Jungadh. It is the submission of the assessee that in either scenario there is no scope for making any addition under Section 69B in her block assessment. Having given the matter our serious consideration, we are of the view that the addition is not justified. Even if the assessee's claim that the investments were made by utilising her drawings from the firm is rejected on the ground that the firm's books of account were not produced, that leaves us with the statement of the assessee's husband that the investment came out of his savings from the professional income as medical practitioner in Junagadh. The assessee i s a housewife. The deposits stand in the joint names of the assessee and her husband. She has stated that her income is whatever money her husband gives her. The probability of the assessee, being a housewife, earning substantial ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] - 12 - income of Rs.6,00,000/- to Rs.7,00,000/-is very low. In CIT Vs. Smt. P.K. Noorjahan, (1999) 237 ITR 570, it has been held with reference to section 69 of the Act that the question whether the source of the investment should be treated as income or not has to be considered in the light of the facts of the each case and the discretion conferred on the AO by the use of the word" may" in the said section has to be exercised keeping in view the facts and circumstances of the each case. In our humble view the ratio of the judgment applies to section 69B which also uses the word " may". Further, sections 69, 69A, 69B and 69C are all of the same genre and deal with deemed income. Therefore, there is good reason to think that the principles governing them should be uniform. Respectfully applying the ratio of the judgment to the facts of the case we are of the view that it may not be proper exercise of discretion to hold that the assessee earned undisclosed income to the extent of Rs.6,65,000/- and invested the same in post office MIS and fixed deposits in bank. The addition is accordingly deleted."
22. Case records before us sufficiently indicate that the entire income in all four assessees' hands has been derived by Shri Prahladray Shah/first assessee from "Vishnu Vasan Bhandar" and from carrying finance activity in all these assessment years. Lower authorities have also added the very sum in more than one assessee's hands. Take for instance assessment year 2000-01. There is an addition of Rs.3,03,283/- pertaining to bank FDRs in both husband's and wife's hands. Same analogy appears to have been adopted in assessment year 2002-03 involving an identical addition of Rs.24,67,294/- pertaining to investments in bank FDRs and bonds being made in both assessees' cases. This factual position is no different in other assessment year as well. Third assessee (son) Durgesh Prahladray Shah pleads in assessment year 2000-01 that both the lower authorities have already assessed interest amount of Rs.25,665/- in his mother's case. Mr. Pipara also expresses first assessee's concession to be assessed qua the entire income that has been assessed in latter three assessees' cases. Learned Departmental Representative fails to controvert all these facts with the help of case records. We therefore deem it appropriate to observe that all the unaccounted income of these four family members has in fact been earned by the first assessee only. We accordingly are of the opinion that such an assessment in remaining assessees' hands is prejudicial to the Revenue only as each assessee is separately entitled for all standard deductions assessment year-wise; available in the Act. We therefore direct the Assessing Officer to finalize consequential assessments in first assessee Shri Prahladray M. Shah's case only by ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] - 13 - adding all the impugned sums as per law. Ordered accordingly. The latter three assessees' quantum and penalty cases ITA Nos. 1820 to 1825, 2072, 2243/Ahd/2013 to 2246/Ahd/2015 & 2020 to 2024/Ahd/2014 in case of Yashodadevi Prahladray Shah, ITA Nos. 2025 to 2027, 1563 & 1564/Ahd/2014, 983 & 984/Ahd/2016 in case of Durgesh Prahladray Shah and ITA No. 2028/Ahd/2014 in case of Tejal Prahladray Shah are therefore accepted for statistical purposes.
23. We now proceed to deal with first assessee Shri Prahladray M. Shah's cases from assessment years 1998-99 to 2003-04. Case records reveal that this is third round of litigation between the parties before the tribunal since followed by two earlier remand orders on various technical issues. We treat first assessment year assessment year 1998-99 involving ITA No.1785/Ahd/2015 as the lead case. The assessee pleads four substantive grounds herein in challenging the CIT(A)'s order partly affirming Assessing Officer's action making non-operative finance addition of Rs.2.5lacs out of Rs.35,27,200/-, operative finance amount addition of Rs.4,04,38,563/-, cheque return entries addition of Rs.31,22,200/-, notional interest income addition of Rs.24,65,985/- and investment in FDRs of Rs.1,75,000/-; respectively. There is no dispute that the remaining quantum appeals in succeeding assessment years also raise the same very substantive grounds. We notice in this backdrop that the leading two issues as arising from these quantum cases are non operative and operative finance addition. The CIT(A) appears to have followed estimation method qua the former addition whereas he has made the latter addition on account of the corresponding figures noticed in assessees' four unaccounted bank accounts whose statements form part of records before us from pages 100 to 154.
23(A). It further comes to our notice that the Assessing Officer had added non-operative finance amount of Rs.35,27,200/-, Rs.29,25,000/-, Rs.34,05,600/-, Rs.54,96,700/-, Rs.13,97,000/- & Rs.55,19,000/- in assessment years 1998-99 to 2003-04 whereas the CIT(A) has confirmed the same to the tune of Rs.2.5lacs in said first assessment year, Rs.5lacs each in next four assessment years and ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] - 14 - proceeded to delete entire figure in last assessment year; respectively. The same sufficiently indicates that the impugned estimation rate in all assessment years is non uniform. We therefore deem it appropriate in this backdrop of facts that the Assessing Officer shall finalize consequential computation adopting the rate as in lower appellate proceedings in assessment year 1998-99 only as pertinent to the instant issue in all corresponding years. The assessee shall file consequential computation before the Assessing Officer as per law.
23(B). Mr. Pipara invites our further attention to the fact that the lower authorities have erred in holding that Flat no. A/7 Jainam Towers (supra) had been purchased in assessment year 2005-06 whereas the said transaction had not been finalized in the impugned assessment year. We deem it appropriate without going into merits of the issue that the Assessing Officer shall conduct necessary verification qua the instant grievance in consequential proceedings.
24. Learned counsel representing assessee states first of all that our forgoing discussion pertaining to remaining three assessees has already directed the Assessing Officer to assess the entire income in first assessee's hands. He then submits that neither the lower authorities have granted Shri Prahladray M. Shah peak credit benefit regarding all of his four bank accounts in first assessment year 1998-99 nor have they considered "telescoping" of the said peak amount addition finalized in first assessment year to be source of his unaccounted income in latter assessment year and so on. Learned CIT-DR is very fair in not disputing this crucial plea that both the lower authorities have not followed peak credit addition as well as telescoping as pleaded hereinabove. We observe in these facts that the assessee has admittedly shown multiple bank accounts numbering four whose credits form subject matter of the impugned additions. It is in this backdrop of facts that we are of the view that the possibility of the very amount withdrawn followed by its re- deposit in other accounts cannot be completely ruled out. Our forgoing discussion makes us to observe that the applicability of similar re-deposits in other assessee's accounts cannot be ignored since it has come on record that it is the first assessee ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] - 15 - only who has earned the entire income. We accordingly are of the view that the Assessing Officer needs to finalize a comprehensive computation of income in first assessee's case in all assessment years before us after considering peak theory and telescoping principle as per law. The assessee is directed prepare his consolidated financial statement(s) in all these impugned assessment years including the assessment years in latter three assessees' statements to be ultimately assessed in his hands only. We accept Shri Prahladray M. Shah's twelve quantum and penalty appeals (supra) for statistical purposes in view of above terms. It is expected that the learned Assessing Officer would finalize consequential assessments as early as possible keeping in mind the fact that the first assessment year is 1998-99. Much water has flowed down the strain thereafter till date in a span of two decades.
25. Learned counsel representing assessee submits before parting that the CIT(A) has applied 15% rate of interest on estimation basis for six month regarding the operative finance issue (supra). His only plea is that the same is on much higher side as the very addition made on annual basis terms out to be a very hefty interest rate of 30%. We find that there is no material in the case file which could justify such an exorbitant interest rate and that too on estimation basis. Learned CIT-DR also does not indicate basis of such a higher rate of interest estimation. We therefore partly accept assessee's instant plea to reduce the said rate of interest from 15% on six months basis to 9% only to be subject to final computation in consequential proceedings.
26. Learned CIT-DR submitted at this stage that the above facts and circumstances sufficiently indicate that all these assessees and more particularly the first one of them Shri Prahladray M. Shah has admittedly concealed his income from being assessed by furnishing inaccurate particulars. His case therefore is that the corresponding penalties imposed u/s.271(1)(c) of the Act need to be confirmed. We do not see any unreasonableness in Revenue's instant plea in principle. The fact however remains that the Assessing Officer is yet to finalize consequential computation in view of our quantum directions. We accordingly observe that there is no basis for the impugned penalties as of now. We make it clear that it shall be ITA Nos. 1785/Ahd/15 & 35 Ors. [Prahladray M. Shah & 3 Ors.] - 16 - very much open for learned Assessing Officer to take a call on the instant penalty issue as well after finalizing consequential assessments as per law.
27. All these four assessees' thirty six appeals ITA Nos. 1785 to 1796/Ahd/2015 in case of Prahladray M. Shah, ITA Nos. 1820 to 1825, 2072, 2243/Ahd/2013 to 2246/Ahd/2015 & 2020 to 2024/Ahd/2014 in case of Yashodadevi Prahladray Shah, ITA Nos. 2025 to 2027, 1563 & 1564/Ahd/2014, 983 & 984/Ahd/2016 in case of Durgesh Prahladray Shah and ITA No. 2028/Ahd/2014 in case of Tejal Prahladray are partly allowed for statistical purposes.
[Pronounced in the open Court on this the 30th day of January, 2018.] Sd/-
(S. S. GODARA) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad: Dated /01/2018
True Copy
Order pronounced on 30.01.2018 at Ahmedabad
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:- Sd/- Sd/-
1. राज व / Revenue (A.M.) (J.M.)
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।