URMILA M GALA,MUMBAI vs. DCIT CEN CIR 12, MUMBAI

order s of the CIT(A)- 48,Mumbai,the Assessee has filed the appeals for the above mentioned assessment years (AY.s).The assessee,an individual, derives income from salary, business/profession and other sources.The details of the date of filing of return of income,returned income, income assessed, etc. are tabulated below:- AY. ROI filed on Returned Income Assessment dt. Assessed Income CIT(A)order dt 2004-05 30.03.2011 Rs.8,29,210/- 20.03.2013 (Rs.1.16 crores) 23/12/2015 2005-06 30.03.2011 Rs.9,52,770/- 20.03.2013 (Rs.38.36 lakhs) 24/12/2015 2006-07 30.03.2011 Rs.7,85,840/- 20.3.2013 (Rs.10.77 lakhs) 25/04/2016 2.An action u/s. 132(1) was carried out in the case of the M/s. Reliable Paper Group on 23/2/2010.The residential premises of the assessee were also covered.During the assessment proceedings, as per the AO none appeared on behalf of the assessee. Invoking the provisions of section 145 (3) of the Act, he rejected the books of account of the assessee and completed the assessment u/s.144 of the Act.So,while completing the assessment, he made an addition of Rs.1.04 crores(i. Rs.3.36 lakhs-expenses disallowed +ii.Rs.74.13 lakhs-unexplained credits+iii.Rs.30.80 lakhs-unexplained loan received by the assessee) to the total income of the assessee. 3.Aggrieved by order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA)and made elaborate submissions.He called for remand report after considering the available,material he upheld the additions of Rs.3.34 lakhs(on account of

ITA/905&ITA/906/Mum/2016, (04-05) /&(05-06) and ITA/4681/Mum/2016,(06-07) Smt. Urmila M. Gala interest paid on loans),Rs.1.07 lakhs (for loan received from M/s.Maru Corporation) and Rs.17,000/-(interest paid on loan and professional tax).

4.During the course of hearing before us,the Authorised Representative(AR) stated that no incriminating material was found or seized during the search or seizure proceedings carried out at the residential premises of the assessee,that the addition made in absence of seized material had to be deleted.He referred to the case of Allcargo Global Logistics Ltd. (18 ITR (Trib) 106) and stated that in the case of Darshak Gala, a family member of the assessee,the Tribunal had (ITA No.4143/M/16-A.Y.2008-09,dated.19/6/2017)allowed the appeal of the assessee.The Departmental Representative (DR) left the issue to the discretion of the Bench. 5.We have heard the rival submissions.We find that search and seizure proceedings were carried out in the case of the assessee. The order of the AO is not based on any of the seized material, that in the case of Shri Darshak Gala (supra), the Tribunal on similar facts had allowed the appeal. We would like to reproduce the relevant portion of the order of the Shri Darshak Gala (supra ), and it reads as under :- “2. The effective ground of appeal taken by the assessee is in relation to the confirmation of addition of Rs.2,04,264/-. The short facts of the case are that the assessee was covered under search and seizure operation under section 132 of the Act. The Assessing Officer (hereinafter referred to as the AO) has made addition of Rs.2,04,264/- on account of opening balance capital by invoking provisions of section 68 of the Act. The AO, on perusal of the balance sheet, observed that assessee had capital balance of Rs.2,04,264/- and accordingly, asked the assessee to give the details and evidences from where the opening capital was arrived. Since the assessee did not provide the details and could not correlate the figures appearing in the balance sheet with the books of accounts, the AO added the amount of Rs.2,04,264/- under section 68 of the Act.

3. Matter carried to the Ld. CIT(A) and the Ld. CIT(A) dismissed the same.

4. During the course of hearing, the Ld. A.R. submitted that during the search and seizure action no incriminating evidence relating to the assessee more particularly related to capital amount was found for the year under consideration. The AO has not mentioned any incriminating evidence relating to the assessee and more particularly related to capital accounts was found in the year under consideration. The AO has not mentioned any such incriminating evidence in the assessment order based on which he has arrived at addition on account of opening balance capital. The assessee has relied upon the decision of Special Bench of Mumbai ITAT in the case of All Cargo Global Logistics Ltd. and he has also relied upon the decision of Hon’ble Bombay High Court in the case of CIT vs. Murli Agro Products Ltd. and prayed for deletion of addition.

5. The Ld. D.R. has relied upon the order of the Revenue authorities.

6. We have heard the rival contentions of both the parties. Looking into the facts and circumstances of the case, we find from the Ld. CIT(A)’s order that the assessee was covered search and seizure operation conducted on 22.03.2010. The assessee was served with the notice and assessee filed the return for A.Y. 2008-09 and AO has made the addition on account of opening balance of Rs.2,04,264/- being an opening capital from earlier years’ capital. It was shown in the balance sheet but assessee was unable to produce any evidence, therefore addition was made. We find that the assessee was covered under section 153A and assessee has filed the return as per the provisions of section 153A and assessment was made.

ITA/905&ITA/906/Mum/2016, (04-05) /&(05-06) and ITA/4681/Mum/2016,(06-07) Smt. Urmila M. Gala