COMMISSIONER OF INCOME TAX-I vs. LAXMICHAND P LALWANI

TAXAP/498/2012 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 498 of 2012 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI

HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment? 2 To be referred to the Reporter or not? 3 Whether their Lordships wish  to see the  fair copy of the judgment? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder? 5 Whether it is to be circulated to the civil judge? ========================================================= COMMISSIONER OF INCOME TAX-I Versus LAXMICHAND P LALWANI ========================================================= Appearance : MRS MAUNA M BHATT for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 09/08/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE V. M. SAHAI) We   have   heard   Mr.   M.   R.   Bhatt,   learned   senior   counsel assisted by Ms. Mauna Bhatt, learned counsel appearing for the Revenue in this Tax Appeal.

TAXAP/498/2012 2/4 JUDGMENT 2.0 This Tax Appeal has been filed on the following proposed question of law. “Whether the Appellate Tribunal has substantially erred in deleting the addition made in the form of unexplained cash credit u/s.68 and unexplained investments u/s.69 of the I.T.Act, 1961 despite the fact that these were based on the seized material and   special   audit   u/s.   142(2A)   and   ample opportunities  were   provided   to  the   assessee  for explaining the same during assessment proceeding u/s. 158BC r.w.s. 143(3) of the Act?” 3.0 The CIT (Appeals) as well as the Tribunal has deleted the additions made by the Assessing Officer. The Tribunal has recorded finding of facts which are extracted  below “9.   On a Careful consideration of relevant facts, we notice   that   the   department   has   not   objected   to   the finding   of   the   Ld   CIT   (A)   that   the   impugned   bank account   was   used   for   the   purpose   of   carrying transactions in share market. It is also pertinent to note that   the   department   could   find   only   the   dividend warrants. The corresponding share certificates could not be found. According to the assessee, he has already sold the   relevant   shares.   With   regard   to   the   receipt   of dividend warrants, the assessee explained that he only receive the dividend warrants if the buyers do not get those shares transferred to their respective names. We have carefully considered the record on this issue. The claim   of   the   assessee   with   regard   to   the   dividend warrants was not proved to be wrong. The AO did not carry out any enquiry with regard to the corresponding share certificates.   We also notice that the amount of Rs.5,20,000/­ confirmed by Ld CIT (A) was sufficient enough   to   cover   the   impugned   amount   of Rs.4,80,580/­. Further there is no material to suggest that the impugned investment in shares was not from out of the funds rotated in the above said bank account. Under   these   circumstances,   we   find/no   reason   to

TAXAP/498/2012 3/4 JUDGMENT interfere with the decision of Ld CIT (A) on this issue. 10. The   next   issue   relates   to   the   addition   of Rs.2,50,000/­ relating to the investment in Hundi of Jaydeep Textiles. The assessee's explanation was that the   borrower   intending   to   avail   loan   is   required   to execute a hundi paper and thereafter, he would try to find   the   lender.   Accordingly   he   submitted   that   the transaction pertaining to the impugned hundi did not take   place.   The   Ld   CIT(A)   found   that   the   said explanation   of   the   assessee   is   in   tune   with   the prevailing   practice   and   accordingly   deleted   the impugned   addition.   We   have   considered   the   facts surrounding   this   issue.   We   notice   that   there   is   no material to suggest that the assessee did invest his own money on the strength of the impugned hundi paper. Hence we do not find any infirmity in the decision of Ld. CIT (A) on this issue. 11. The next issue pertains to the addition of gift of Rs.1.00   lakhs   received   by   the   assessee's   wife.   The assessee also received Rs.6.00 lakhs as gift. As per para 17(x) of the assessment order, the assessee did not file any details with regard to these gifts. Hence the AO added the above said sums of Rs.1.00 lakhs and Rs.6.00 lakhs in the hands of the assessee. However, the Ld CIT(A)   has   deleted   both   the   additions   with   the observation that the assessee has filed necessary details before   AO.   The   said   observation   of   Ld   CIT   (A)   is contradictory to that stated in the assessment order. There is no finding by the Ld CIT(A) to the effect that the AO was wrong in stating so. Hence, in our view, these two addition require reconsideration at the end of Ld CIT(A). If the assessee is filing/has filed information with regard to these two gifts before Ld CIT(A) the same should be confronted with the AO. Accordingly, we reverse the order of Ld CIT(A) on this two issues and restore them to his file with direction to dispose them afresh in accordance with law.

TAXAP/498/2012 4/4 JUDGMENT 12. The   next   issue   relates   to   the   addition   of Rs.1,50,000/­   pertaining   to   various   items.   The   Ld CIT(A)   deleted   the   impugned   addition   with   the observation that the AO did not consider the said  items while computing the undisclosed income of the period from 1.4.97 to 19.12.97, though he has discussed the details there of in para 16(xiii). Before us, it was not shown by the department that the AO has included the above said amounts in the undisclosed income of the assessee. Hence, we do not find any reason to interfere with the decision of Ld CIT(A) on this issue. 13. The next issue relates to the addition of gift of Rs.6.00 lakhs received by the assessee. We have dealt with the same in para 11 while disposing of the issue relating to the gift received by the wife of the assessee. Accordingly, we set aside this issue to the file of Ld CIT(A) with direction to dispose of the same afresh in accordance with law. 14. In   the   result,   the   appeal   of   the   assessee   is dismissed and the appeal of the revenue is treated as partly allowed.” 4.0 We   are   in   agreement   with   the   finding   recorded   by   the Tribunal and we do not find any illegality either in the order passed by the CIT(A) or the Tribunal. This tax appeal is concluded finding of facts. No question raised by the department raises any substantial question of law for consideration of this Court. This Tax Appeal is accordingly dismissed. [V.  M. SAHAI, J.] [N. V. ANJARIA, J.] Amit