G.D Agrawal, V.P:— This is Revenue's appeal against the order of the Commissioner of Income-tax (Appeals)-XII, Ahmedabad dated 08.12.2006 arising out of the order of the Assessing Officer under Section 158BD of the Income Tax Act, 1961.
2. The first ground of the Revenue's appeal reads as under:
“The ld. CIT(A) has erred in law and on facts in deleting the additions made of Rs. 15 lacs and Rs. 10 lacs totalling Rs. 25 lacs on account of undisclosed investment in Master Developers and Hotel Rajpath, respectively.”
While other grounds are of general in nature, needs no specific adjudication.
3. The facts of the case are that search proceedings were carried out in the Master Developers cases. One of the documents seized from the business premises of the assessee was loan application furnished by the assessee for taking loan from Gujarat Industrial Co-operative Bank Ltd. In column no. 30 of the loan application form investment in Master Developers and Hotel Rajpath was shown at Rs. 15 lakhs and Rs. 10 lakhs respectively. During the assessment proceedings, it was explained by the assessee that column no. 30 of the application, the investment of the applicant firm and its partners is to be disclosed. That the investment in the firm, Master Developers and Hotel Rajpath was by the partners of the assessee-firm viz. Shri Rajesh Jivrajbhai Desai and not the assessee. It was also explained in the said application itself the details of assets and liabilities of the assessee firm as on 31-3-1999 was given in which no investment by the assessee firm with Master Developers or the Hotel Rajpath was shown. However, the AO did not accept the assessee's explanation and made the addition of Rs. 25 lakhs for unexplained investment by the assessee.
4. On appeal, the CIT(A) accepted the assessee's contention that the investment in the Master Developers and Hotel Rajpath was by the partner Shri Rajesh Jivrajbhai Desai and not the assessee. Therefore, he deleted the addition. The Revenue aggrieved with the order of the CIT(A) is in appeal before us.
5. We have carefully considered arguments of both the sides and perused the material placed before us. We find that the CIT(A) has considered the facts of the case in details and held as under:
“3.2 I have carefully considered the facts of the case, observations of the A.O as well as the arguments forwarded by the learned A.R of the appellant. I find that the seized page No. 74 to 78 pertains to merely an application for loan from The Gujarat Industrial Co-op. Bank Ltd. and the figures mentioned therein were not the exact figures but round figures. It is also a matter of fact that as evident from the balance sheet of Master Developers and Hotel Rajpath as at 31/03/1999, there appears, no such investment by the appellant firm in the said concerns. On the other hand, the evidences furnished by the appellant firm before the A.O as well as before me show that the investment of Rs. 15.00 lacs and Rs. 10.00 lacs stated to be the investment of the appellant firm in Master Developers Hotel Rajpath respectively was in fact the Investment of the partner of the appellant firm namely Shri Rajesh J. Desai and not the appellant firm. A copy of account of Shri Rajesh J. Desai from the books of Master Developers and Hotel Rajpath for F.Y 1998-1999 and 1999-1900 and copy of the balance sheet of Hotel Rajpath and Master Developers as at 1/03/1999 as submitted with me written submissions support the above tact that the investment has been made by: he partner of the appellant firm. I would like to point out at this stage that the appellant had already claimed during the course of assessment proceedings that the investment mentioned in the seized papers pertain to the investment made by the partner of the firm and not the appellant firm. The evidences furnished before me are only in Continuation of and to justify the said claim and hence are only clarificatory in nature and not totally fresh evidences. In this connection, the appellant has relied upon the judgment of Bombay High Court in the case of Smt. Prabbavati S. Shah v. CIT (1998) 231 ITR I (Bom) which appears to be acceptable and relevant in the case of the appellant.
3.3 Further to above, I am also inclined to agree with the arguments of the learned A.R that the tact that the impugned investment in Motel Rajpath and Master Developers has been made by the partner of the appellant firm and not the appellant firm, is also duly supported from the facts and figures of assets and liabilities of the appellant firm as at 31/03/1999 furnished on page-12 of the loan application as appearing on Page No. 73 of seized Annexure A-48 itself wherein interalia no such investment in sister concerns is shown. I also agree with the contention that the appellant firm could not have given such contrary details in 2 different columns of the same loan application since had the appellant firm made the investment, the same would have been mentioned/reflected in the balance sheet of the appellant firm as at 31/03/1999 as appearing on Page No. 73 of Annexure A-48. Thus, the contention of the appellant that the amount mentioned in column No. 30 of the application are pertaining to the approximate investment made by the partner of the appellant firm and not the appellant firm as presumed by the AO appears to be correct and emerging out of seized records itself.
3.4 On perusal of the copy of accounts of Master Developers and Hotel Rajpath appearing in the books of account of Rajesh J. Desai as furnished by the appellant with written submissions dated 05/05/2005, it is seen that the account of Master Developers for F.Y 1999-2000 clearly show that Rs. 5.00 lacs and Rs. 10.00 lacs aggregating to Rs. 15.00 lacs have been given to Master Developers on 27/10/1999 and 11/12/1999 respectively. Similarly on perusal of copy of account of Hotel Rajpath for F.Y 1998-1999, it can be seen that an amount of Rs. 7.50 lacs and Rs. 2.50 lacs aggregating to Rs. 10.00 lacs have been given to the said concern by Shri Rajesh J. Desai on 24/02/1999 and 04/03/1999. I am thus of the opinion that the said undisputed facts are sufficient to prima facie establish the contentions raised by the appellant that on the basis of the said amounts given by Shri Rajesh J. Desai to Master Developers and Hotel Rajpath, the figures were mentioned in the loan application prepared in December, 1999. Accordingly, no addition is warranted in the hands of the appellant on the basis notings in the loan application, the said amounts not being investment of the appellant firm but investment of Shri Rajesh J. Desai. Further, on perusal of the loan application appearing on 74 to 78 of Annex. A-48 on the basis of which the impugned addition has been made, it can be seen that the date of application is not written and is left blank. That apart, the various figures mentioned in the said application pertains to the years till 31/03/1999 only and are in round figures to the best of knowledge and belief of the person preparing the application form. Moreover, the figures mentioned in the loan application form also do not go to establish that the figures mentioned therein are pertaining to a particular date. In my considered opinion, these facts as coming out of the seized records itself also supports the contentions and arguments of the appellant. Accordingly, the additions of Rs. 10,00,000/- and Rs. 15,00,000/- are hereby deleted.”
At the time of hearing before us, the learned DR was unable to controvert the above finding recorded by the CIT(A). In the application form furnished with the bank, the figures of the assets and liabilities of the assessee firm was furnished in which no investment in Master Developers and Hotel Rajpath was shown. That column 30 was for investment in other concern by the applicant as well as partner of the applicant. The CIT(A) has recorded the finding that the investment in the Master Developers as well as in the Hotel Rajpath was by Rajesh J. Desai and the same was duly recorded in his books of accounts. No evidence was brought on record by the Revenue to point out that in the books of Master Developer or Hotel Rajpath, there was any investment by the assessee. Considering the totality of the above facts and circumstances of the case, we do not find any justification to interfere with the order of the CIT(A), the same is sustained.
6. In the result, the Revenue's appeal is dismissed.
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