TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 691
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....00/- (in ITA No- 5517/Del/2012 the amount is Rs. 1,14,80,000/-) made on account of peak amount of unexplained cash. 2(a) The order of the CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 2.1. The relevant facts of the case as borne out from the assessment order are that the search & seizure action was conducted on 12.12.2006 at the business and residential premises of Shri. S.K.Gupta alongwith various concerns in which he and his family members were interested. Similarly action u/s 132 of I.T. Act, 1961 is stated to have been conducted in the case of various companies owned or controlled by him and also in the case of different individuals connected with the said companies. The present assessee as per the assessment order is one of these companies covered under search & seizure action. 2.2. Consequent to the search action, notice u/s 153A of the Income Tax Act, 1961 was issued to the assessee on 24.10.2008. A perusal of the assessment order shows that the AO records that the assessee is an individual who had filed return of in....
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....T(A), accepting the arguments advanced on behalf of the assessee and crossexamination referred to by the CIT(A). 4.1. Referring to the same it was her submission that the questions put forth were very vague and full facts have not come out in the order as such it was her submission that the issue should be restored to the AO and the impugned order be set aside. In order to support her assertion that answers to vague questions have been considered, attention was invited to page 16 of the impugned order wherein vague responses to vague questions of Sh. S.K.Gupta have been relied upon in the cross-examination. Specific attention was invited the response given to question No.-14 & 15. Accordingly on the basis of the same it was her submission that infact the addition made by the AO deserves to be upheld as the reasoning taken into consideration for deleting the addition are not relevant. It was also her submission that since the reasons for making the addition and deleting the addition in 2007-08 are identical the arguments advanced in 2006-07 assessment year would fully apply in equal force to 2007-08 A.Year also and no separate arguments are required to be made. 5. The Ld. AR on th....
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....umstances, it was contended that the arguments made without any evidence have no relevance. A perusal of the same shows that it was emphasized that it has been held therein that presumption u/s 132(4A) is only against the person in whose possession the search material is found and not against any other third person. Considering the judicial precedent it was held that the presumption is rebuttable and not conclusive and it cannot be applied to the third party in the absence of corroborative evidence as it goes without saying that the presumption available u/s 132(4A) can be drawn only against the person in whose case search is authorized and from whom and from whose possession or control books of accounts dairy or documents are found and presumption regarding correctness of the contents of the books of accounts etc cannot be raised against the third party. 5.3. Reliance was also placed upon CIT vs Ved Prakash Chaudhary reported in 305 ITR 245 (Delhi). Attention was invited to paras 12 & 13 thereof so as to contend that in the facts of the present case also no case had been made out to show that there was a transfer of money between the assessee and S.K.Gupta Group of Companies. The....
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....190000 1/8/2005 BT (SCB)-SNG- 200000 10000 1/8/2005 Cash received 10000 10000 11/8/2005 Cash received 100000 1000000 12/8/2005 Cash received 500000 1500000 13-8-05 SPG-SNG-002577UTI (PO) 600000 700000 13-8-05 Swen SNG-153999 700000 0 13-8-05 Cash received 484000 484000 13-8-05 Swen 1+ 80285488 + 579231 180000 180000 13-8-05 Swen 080252 180000 180000 13-8-05 Swen-716417 96000 940000 Page-31 17-8-05 Swen-SWG-160110 500000 440000 19-8-05 Era-PBN-SNG (PO)-535102 250000 190000 19-8-05 SPG (HDFC)-SNG-160554 250000 60000 20-8-05 Godde-Swen-094622 96000 36000 20-8-05 V.K.Gadde Swen 0495804 96000 132000 20-8-05 Swen-773190 96000 228000 44XA.5 Chas 71000 3/9/2005 Cash received 250000 1/9/2005 Cash paid 3860 2/9/2005 T&G ABG Bondwell (948929) 150000 1.5 lacs X2% ....
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....-1, in which investment entries of companies controlled by Shri. S.K.Gupta is mentioned. The extract of the same is reproduced hereunder for your explanation and giving nature, details and source of the entries mentioned therein. It is worth mentioning that name of certain companies in which you, your family members and your relatives are interested, are appearing in this account. Extract of page 25 of annexure A-1 of Party A-5, seized during the course of search and seizure operation in S.K.Gupta Group of cases at H-108, 2nd Floor, New Asiatic Building, Connaught Place, New Delhi. Sr. No. Date Company name Cheq. No. Amount 1. 15-01-2005 Era Advertising & mark. Co. 470221 250000 2. 19-01-2005 Hightech Comvision Limited 190634 250000 3. 15-01-2005 North India Securities Pvt. Ltd. 820708 250000 4. 15-01-2005 P.G. Travels 184215 250000 5. 03-04-2005 Glovextech 401442 800000 6. 03.04.2005 Flovextech 401443 500000 7. 03-08-2005 Cell Cell Technology 449110 1200000 8. 03-11-2005 Power Gold Electronics 685071 1200000 9. 19-03-05 Bolni Expenses 561557 750000 10....
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.... residence and office premises. Theses entries do not corroborate with any documents seized or books of accounts found from the assessee's residential or office premises searched by Income Tax Department. Sir, it will be of great help in identifying and explaining the entries of the author of this documents is summoned for the cross examination. (emphasis provided by the Bench) 3.2 The assessee's submissions made in response to the specific questions asked on the basis of seized documents found during course of search in Sh. S.K. Gupta Group of cases, is nothing but an evasive reply for the following reasons: (i) The assessee has claimed to be a friend of Sh. S.K. Gupta, during the course of statements. (ii) The assessee being a chartered accountant is auditor of various companies of the concerns of Sh. S.K. Gupta. (iii) The description of the entries on the seized documents as referred to in question no. 10.3, very well indicates the specific names like Bondwell Insurance Brokers, E- Synergy Infosystems Pvt. Ltd. and Paradigm Advertising, which are the companies/concerns, in which assessee's family members or relatives are interested. (iv) So far as the entries a....
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.... on record. The AO alleged in the impugned order that the appellant has made cash payments on various dates against which the group companies of Sh. S.K. Gupta has issued pay orders, obviously accommodation entries of investment and has added the peak amount of Rs. 27,00,000/- It is quite evident that the AO has treated the alleged cash payments appearing on Page 32 of Annexure - A - 31 on 08.09.2005 as unexplained cash in the hands of the appellant and rebutted the contentions raised by the appellant on the basis that the appellant claimed to be a friend of Shri S. K. Gupta and that the appellant being a Chartered Accountant was the auditor of various companies of Shri S.K.Gupta. The other two reasons are that the seized documents mentioned specific names like Bondwell Insurance Brokers, ESynergy Infosystems Pvt. Ltd. and Paradigm Advertising, which are the companies / concerns in which assessee's family members or relative are interested and that the seized document reflects ledger account in the name of Anil Khandelwal and Bondwell on different dates and also shows numbers of pay orders issued by Swen Group of cases. 2. It is contended by the appellant that the appellant is....
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....he Income tax Act, 1961 as unexplained cash credit and not in the hands of the appellant. Instead of doing that the AO erred in law by making addition in the hands of appellant in respect of transactions related to other assessable persons instead or invoking provision of section 153C of the Income tax Act, 1961. 6. It is further contended that the appellant had categorically requested for photocopies of the pages 31 to 33 of Annexure - A - 31 and A - 25 of Annexure - A - 1 seized from the premises of Shri S.K. Gupta during the course of Search and seizure operation. However, AO did not provide the same and made the impugned addition in violation of principles of natural justice. 7. It is also contended that copies of the said documents and statement of Shri S.K.Gupta was provided by the AO during appellate proceedings in March 2011 from which it is seen that the documents found and seized from the premises of Shri S.K. Gupta did not have such clear cut evidence for making addition in the case of the appellant and evidence relied upon was vague and ambiguous. The alleged evidences are not related to the appellant as the learned assessing officer also failed to bring any evidence ....
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....ic Building, Connaught Place, New Delhi during the course of search and seizure operation under section 132 of the Income Tax Act, 1961. The assessee submitted merely evasive replies devoid of any merits. The assessee failed to furnish any evidence to establish his contention that these transactions does not belong to the' assessee. It is worth mentioning that the names of the companies of the assessee clearly figure in the seized documents that were relied upon by the assessing officer. Further, the assessee failed to establish any business connection with the companies of Shri S.K. Gupta. As far as the entries as per documents referred to in question no. 10.2, is concerned, the same have been mentioned in the ledger account in the name of Shri Anil Khandelwal, assessee and it bears the name of Bondwell on different dates. It also has pay order (P.O.) nos. Clearly mentioned against the name of companies like Swen, Era, Hiiech, DMC, SPG etc. which forms part of Shri S. K Gupta Group of cases. So the assessee's claim, that it has nothing to do with this document, is incorrect. The description of the entries on seized documents referred to in question no. 10.3, very well in....
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....es/entities. The assessee has admitted to be carrying out the profession of Chartered Accountant under this name. There is no material on record to show that M/s Anil Khandelwal and Associates is a separate person in the eyes of the law. The name suggests that it is a partnership firm in which partners have joint and several liability. The contention of the assessee that the addition of unaccounted cash was made only the basis that assessee was a professional friend of Shri S.K. Gupta. is incorrect. Several evidences were gathered during the search to establish that the nexus between Shri S.K. Gupta and the assessee goes beyond a professional friendship. Notwithstanding the close nexus, the addition of unaccounted cash was not made on account of the nexus between the assessee and Shri S.K Gupta, rather, it was the basis of concrete evidences depicting transfer of amounts from bogus entities/companies of Shri S.K. Gupta who was an entry provider. In fact the assessee has taken accommodation entries for his family concerns from companies of Shti. S.K. Gupta Group of cases. For this purpose, assessee has made cash payments and also paid commission @ 2% which is very much evident fro....
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.... the contention of the appellant has been accepted by him. 2.2.2 Besides the above contentions, the appellant has also made detailed submissions regarding non-applicability of legal presumptions contained in section 292C in respect of documents found and seized from a third party. It has been contended that in a number of case laws it has been held that presumption under section 132(4A) is only* against the person in whose possession the search material is found and not against any other person. It is further held that presumption is rebuttable and not conclusive and it cannot be applied in the absence of corroborative evidence. Reliance in this regard has been placed on various case laws as mentioned hereunder:- i. Straptex (India) Private Limited v Deputy Commissioner of Income tax [2003] 841TD 320 (IT AT - Mumbai) ii. Assistant Commissioner of Income tax v Kishore Lal Balwani Rai [2007] 17 SOT 380 (ITAT - Chandigarh) iii. Sheth Akshay Pushpavadan v Deputy Commissioner of Income tax [2010] 130 TTJ 42 (ITTA - Ahmedabad) iv. Rama Traders v First Income tax Officer [1988] 25 ITD 599 (ITAT Patna)(TM) 6.4. In the above background the CIT(A) proceeded to decide the issue in the f....
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....hem and has also denied having received any commission for the alleged accommodation entries given to such entities belonging to the appellant or his family members. The relevant portions of these statement are extracted hereunder for ready reference:- A. Extracts from the statement of Shri S. K. Gupta at the time of search recorded on 13/12/2006 : "Q-13 During the search & seizure operation u/s 132 of IT Act at the above premise certain Books of accounts & loose papers were found and seized and inventoried as Annexure 'A', sr. No, A-29 to A-36 of the said annexure is note books. Please explain the nature of these books and also explain the entries recorded therein. Please also explain as to which concern of your group these note books belong. Ans. I don't know about these rough books and how they are lying in my office premise. Q.14. How do you say these above annexure are rough books? Ans. Apparently looks as rough books. We are maintaining all our books on computer electronically. Q.15. Since the above annexure contain mostly daily record of cash receipts or cash payments and cheque payment, and have been seized from your premise, the onus lies on you to prove th....
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.... found and it is not available in respect of a third party. Even in the case of such a person from whose possession and control any incriminating document is found, the presumption u/s 132(4A)/292C is a rebuttable one. Since in the case of the appellant, no corroborative documents or evidence has been found from the control or possession of the appellant, I hold that the legal presumption as incorporated u/s 132(4A)/292C will not be available to the Assessing Officer in the appellant's case. 2.3.2. Further, the appellant has also denied the contents of the impugned seized documents and the person from whom the impugned documents were seized has also stated during cross-examination that there has been no cash transactions between him and the appellant or his family members or entities in which they are interested. The AO has heavily emphasized on the fact that Shri.S.K.Gupta was an entry provider and since the names of the companies in which the appellant's family members or relatives were interested was found mentioned in the document seized from Shri S.K.Gupta, it is enough to conclude that the appellant must have paid cash to Shri Gupta to receive accommodation entries from his ....
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....at the specific questions put to Sh.S.K.Gupta extracted in the impugned order during the cross-examination cannot be termed to be vague where full facts have not come out. A perusal of the same shows that consistently Sh.S.K.Gupta states that no money has been received or paid by him relatable to the annexures shown. The other objection of the Ld. CIT DR that the questions put forth in the cross-examination specifically question 14 & 15 were also vague. We find that the arguments of the Ld. AR that these are the extracts of the statement of Sh.S.K.Gupta recorded at the time of the search are correct and the Ld. CIT DR is mistaken in her arguments to contend that the questions No-14 & 15 extracted in the impugned order are vague questions put forth during the cross examination. It is seen that the assessee in both the years has filed a Paper Books running into 71 pages and 87 pages respectively and none of the parties have considered it necessary or expedient to refer to any document or fact therein. As an illustration we extract the index from ITA No- 5516/Del/2012 which is more or less identical to the index filed in ITA No- 5517/Del/2012:- IN ITA No-5516/Del/2012 S.No. Particu....