PCIT Vs Expert Particle Board (Gujarat High Court)
Loose Diary Is Not a Magic Wand: ₹6.77 Crore Cannot Be Taxed in Firm’s Hands When Diary Was Found Elsewhere & Firm Had Not Even Started Business
Summary: The Gujarat High Court has upheld the deletion of substantial additions made in the hands of a newly constituted partnership firm on the basis of a diary and an agreement to sell impounded from the office of one of the persons connected with the firm. The Court held that the conclusions reached by the CIT(A) & ITAT were concurrent findings of fact and gave rise to no substantial question of law.
While the addition of ₹6,77,34,130 in the firm’s hands was deleted, the amount of ₹97.40 lakh specifically appearing in the partner’s name in the diary was treated as his unaccounted investment, subject to permissible telescoping against his share in the unaccounted income of another partnership firm.
Diary & Agreement Found During Survey
A search was conducted in the Coral Group cases and, simultaneously, a survey u/s 133A was carried out at an office associated with Shri Bhagwanjibhai Amrutiya, who was an accountant handling the affairs of several concerns, including Expert Particle Board.
During the survey, a diary and an agreement to sell relating to land at Ravapar Nadi village were impounded.
