TaxTMI 
TaxTMI 
2011 (11) TMI 457
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....ome Tax Act for the Assessment Year 1992-03? (ii) Whether on the facts and circumstances of the case the Hon'ble Income Tax Appellate Tribunal were justified in law in agreeing that the impugned amount constituted examination of assessee's Hotel project, when in fact, and till date i.e. 11 years after the search of April 1999 no such Hotel was either constructed or existed? (iii) That the order of the Tribunal is liable to be set aside being perverse and contrary to the facts on record." 3. The facts, in brief, relevant for adjudication of the substantial question of law, as aforestated, are that the business and residential premises of the assessee-Naresh Wassan was searched in April, 1995 by the Revenue under section 132(1) of the Income Tax Act, 1961 (for short 'the Act, 1961'). During the course of search, an LIC diary was recovered wherein at page 36 of the said diary, there was a list of persons against whom various amounts were mentioned, as under: (1) Haribhai (Umia Hardware) : 500000/- (2) Nanjibhai : 100000/- (3) Haribhai : 150000/- (4) G.A Swami : 100000/- (5) Manoharlal Lamba : 40000/- (6) Mohan Wassan : 400000/- (7) Romi ....
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....), after having considered all the facts came to the conclusion that the amounts, as aforestated, did not represent the loan given by the assessee and the AO was not justified in holding that the amount of Rs. 19,30,000/- represented the undisclosed investment of the assessee, and thus, deleted the addition of the aforesaid amount. It was further observed that the persons have shown their willingness to participate in the Hotel project but just because they could not intimate the probable source of funds, adverse view cannot be taken. The creditworthiness of these persons cannot be doubted. The CIT(A) has referred not only page 36 but also page 35 of the diary where there was some discussion with regard to preparation of food etc. the application dated 20.01.1993 made to the Chief Executive Officer, S.A.D.A. Korba, also confirmed the contention of the assessee that he alongwith others, was interested in hotel project on a plot owned by M/s. Omprakash Satyapal Contractor, situated in Agroha Road, Korba. The business plan of the assessee was also examined by the CIT(A). Thus, it was finally concluded that the entire addition of Rs. 19,30,000/- was based on assumptions that the entrie....
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....i Shrivastava would rely on a decision of the High Court of Allahabad in Sri Krishna v. CIT [1983] 142 ITR 618/13 Taxman 309. Shri Shrivastava would next contend that in terms of cash credit, the assessee was required to prove identity of the creditor, capacity of such creditor to advance the money and the genuineness of the transaction. In the present case, the assessee miserably failed to discharge any of this burden. Shri Shrivastava would rely on a decision of the High Court of Rajasthan in Rajshree Synthetics (P) Ltd. v. CIT [2002] 256 ITR 331/[2003] 131 Taxman 391. 7. Shri Shrivastava would further submit that there was no explanation offered by the assessee in respect of the undisclosed and unexplained income found by the AO, thus, the AO had rightly added the same to the total income of the assessee. In support of this contention, he would rely on a decision of this Court in M/s. Mahesh Ispat Udyog v. The Commissioner of Income Tax, Raipur. 8. On the other hand, Shri L.L. Sharma, learned counsel with Shri Anand Dadariya, learned Advocate appearing for the respondent/assessee would submit that the findings recorded on the notings of the page 36 of the diary, is a findi....
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....there was involvement if any actual transaction of amount between the parties. It appears to be a mere proposal where other persons, as they have stated in their affidavits expressed their desire to contribute for the hotel proposal. Thus, even if the source of fund have not been given as to how the money would be arranged, the affidavits cannot be held as untrustworthy. The CIT(A) as well as the Tribunal have rightly considered all the facts in detail and came to the conclusion for disallowing the addition of the amount of Rs. 19,30,000/-. 10. The next question as to whether there is no contravention of Rule 46 of the Rules, 1962 raised by the Revenue , has no merit as all the evidences were discussed before the AO and no additional evidence was taken on record at the stage of CIT(A) proceedings or before the Tribunal. Thus, it cannot be held that there was no compliance of statutory requirement of Rule 46 of the Rules, 1962. Further, the Revenue does not get any assistance from the decision of this Court in Hi-tech Abrasives Ltd1. The other decisions cited by the revenue are also not of any relevance in the facts of the case as there was no circumstances which suggest that the....