TaxTMI 
TaxTMI 
2014 (11) TMI 691
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....he case in deleting the addition of Rs. 27,00,000/- (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 t....
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....espite this fact the addition made has been deleted by the CIT(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 s....
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....d having failed to find any evidence against the assessee in the circumstances, 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 trans....
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.... (PO) 226953 450000 250000 30-7-05 Hamara-SNG (PO) 257803 250000 0 30-7-05 Cash received 10000 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 9....
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.... 26-9-05 Cash Received 500000 26-9-05 Hi bon fin 545463 28-9-05 Cash Received 1000000 30-9-05 SPG Bond finan 165711 3/10/2005 SPG Bond Finan 165712 3/10/2005 DMC Bond 709349 4/10/2005 Cash paid 5/10/2005 Bond Finan North 43678 450000 7/10/2005 Bond Finan North 43678 10/10/2005 Bond Swen 600000 10.3. 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, a document has been seized as per page 25 of Annexure A-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 ....
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....g to the assessee or his family members and concern. The assessee has no concern what so ever in the entries recorded in the said page 30-33 of annexure-A-31 of party A-5 found and seized from the premises of Sh. SK. Gupta. It is submitted further that search was also carried out at the assessee 's residence and office premises. These 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 if the author of this documents is summoned for the cross examination. (emphasis provided by the Bench) 10.3) The assessee has already submitted that the said page 25 of annexure- A-1 found and seized from the premises of Sh. SK. Gupta do not belong to the assessee or his family members and concern. The assessee has no concern what so ever in the entries recorded in the said page 25 of annexure-A-l of party A-5 found and seized from the premises of Sh. S.K. Gupta. It is submitted further that search was also carried out at the assessee 's residence and office premises. Theses entries do not corrobora....
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....nt is worked out on 08.09.2005 at Rs. 27,00,000/- (Rs. 1,00,000/- + Rs. 1,00,000/- + Rs. 6,50,000/- + Rs. 6,50,000 + Rs. 6,85,000/- + Rs. 5,15,000/-) Since assessee has failed to give any specific information alongwith confirmation from his group companies/concerns who have taken accommodation entries from the group companies/concerns of Sh.S.K.Gupta, this peak amount of Rs. 27,00,000/- is added to assessee's income as unexplained cash in the hands of the assessee. 6.1. It is seen that the arguments advanced by the assessee in appeal before the CIT(A) are set out in the para 2.2 of the impugned order on a consideration of which the claim of the assessee has been allowed which has been assailed by the Ld. CIT DR as not relevant. The submissions are extracted hereunder for readyreference :- 2.2. "As against the above action of the AO, the appellant made detailed submissions which are summarized hereunder:- 1. It is submitted on behalf of the appellant that , while rejecting the explanation of the appellant, the AO has made addition based purely on doubts, suspicion, conjectures and surmises, and without bringing in any cogent material on record. The AO alleged in the impugne....
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.... except E - Synergy Infosystems Private Limited. However, it is pertinent to note that M/s E - Synergy Infosystems Private limited is a separate taxable entity and any transactions mentioned on certain pages about the said company cannot be treated as unexplained cash of the appellant. If any transactions related to the said company and any other concern were found recorded in the documents seized from Shri S.K. Gupta, the same cannot be added to the income of appellant merely on the basis that appellant and his family members or relatives are interested in those companies / concerns. 5. It is further contended that the AO himself alleged in the impugned order that transactions are related to Bondwell Insurance Brokers, E - Synergy Infosystems Private Limited and Paradigm Advertising. Hence, the said transactions are not related to the appellant and that can never be considered as evidence that. the appellant is taking accommodation entries in the said companies / concerns. If the said companies / concerns have taken accommodation entries, the same can be added in their respective hands by initiating assessment proceedings under section 153C of the Income tax Act, 1961 as unexpl....
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....1 (iii) CWT vs. Jagdish Prasad Choudhary (1995) 211 ITR 472 (Patna) [F.B.] (iv) Appropriate Authority vs. Vijay Kumar Sharma (2001) 249 ITR 554 (SC) (v) Tin Box Co. Vs. CIT (2001) 249 ITR 216 (SC)." 6.2. The record shows that these submissions were forwarded by the CIT(A) to the AO as is evident from page 10-13 of the order under challenge wherein the Remand Report received by the CIT(A) from the AO has been extracted. For ready-reference, the same is also reproduced hereunder :- 2.2. "The appellant's submissions were forwarded to the AO for eliciting his comments or rebuttal, if any and the AO submitted his report dated 13/03/2012 reiterating the arguments contained in the Assessment Order . Relevant portions of his remand report is extracted hereunder: "During the assessment proceeding, the assessee, vide question no. 10.2 and 10.3 of the questionnaire dated 07.11.2008, was asked to explain the connection with investing companies and investee companies, with reference to the books of account and other documents as per pages 30-33 of Annexure- A-31 and Page 25 of Annexure A-1 found and seized from S.K. Gupta Group of cases at H-108, 2nd Floor, New Asiatic Building, ....
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....e is immaterial. The submission of the appellant that no other corroborative evidences were found, is incorrect in the light of the following:- a) It has been established that Shri. S.K. Gupta was providing accommodation entries with the help of his companies and entities. b) The evidences relied upon were found from the premises of Shri. S.K. Gupta. (c) The evidence relied upon mention the names of companies of Shri. S.K. Gupta which has been established to be bogus/paper companies having no real business activity and being maintained only for the purpose of providing accommodation entries. d) The assessee failed to establish any business connection with the companies of Shri S.K. Gupta nor could the assessee file any evidence to explain as to why the name of his companies appear in the documents maintained by Shri S.K. Gupta who was, admittedly, an entry provider. The contention of the assessee that he, in his individual capacity, had not carried out any audit for Shri S.K. Gupta or companies controlled by him is incorrect, evasive and conceals the fact whether M/s Anil Khandelwal and Associates had carried out such audit of either Shri S.K. Gupta or any of his ....
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....ut by the CIT(A) in para 2.2.1 to 2.2.2 of the impugned order. The same is reproduced hereunder for ready-reference:- 2.2.1 In his rejoinder, the appellant has given detailed para-wise arguments against the observations made by the AO in his remand report. According to the appellant, the addition made by the AO was not justified in view of the facts that the documents on the basis of which the addition has been made was neither seized from the control and possession of the appellant nor belonged to the appellant and that no corroborative evidence was brought on record during the simultaneous search conducted in the case of the appellant himself. The appellant, in his rejoinder, has also mentioned that on being given an opportunity to cross-examine Shri S.K.Gupta, from whose possession and control the impugned seized material was found, Shri S.K.Gupta has categorically denied having entered into any transaction with the appellant or his concerns, which makes it clear that no addition on the basis of the impugned documents could be made in the hands of the appellant. However, the assessing officer has offered no comments on the Cross Examination of Sh. S.K. Gupta on 05.04.2011 whi....
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....ken the ground that Shri S. K. Gupta himself had denied the authorship/ ownership of the impugned documents during his statement on 13/12/2006 and reiterated the same even during his cross examination by the appellant before the AO on 05/04/2012. The appellant has also taken the ground that since Shri S. K. Gupta, during his cross examination by the appellant before the AO, has categorically denied having any transactions in cash with the appellant or his family members, companies or entities owned by him or them, the impugned addition made by the AO is based on no evidence but on presumptions, conjectures and surmises. I have perused copies of the statement of Shri S. K. Gupta recorded during the search operation on 13/02/2006 as well as the Cross- examination statement of Shri S. K. Gupta dated 05/04/2011 which was forwarded by the AO without any comments vide his remand report dated 02/11/2011 in respect of A.Y.2007-0S. It is seen from these statements that Shri *S. K. Gupta has denied having authored the impugned seized material and has also denied that they are part of his books of accounts. He has also denied having made any cash transactions with the appellant or his family ....
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....exure A-5, A-31 or A-33? A3. No I have not given or taken any cash from you and your office. 04. Did I pay or receive any commission out of any transactions referred to in any of the annexure A-1,.A-31 or A-33? A4 .. No, neither I received nor I paid any commission. Q5. Do you know any other person by the name Anil Khandelwal? A5. Yes, I know 2-3 more Anil Khandelwal belongs to my native place. Q6. Did you ever receive or pay cash as per or in lieu of or commission or' any other transaction against any of my family members, companies or entities owned by me/them? A6. No I have never received or paid any cash to above your connected persons." (Emphasis supplied) 2.3.1 A perusal of the above extracts clearly indicates that in the absence of any corroborative evidence found during the search at the premises of the appellant, no adverse inference can be drawn against the appellant merely on the basis of the seized documents as found and seized from the premises of the third party. As has been held in a number of judicial pronouncements relied on by the appellant and extracted in para 2.2.2 hereinabove, presumption u/s 134(4A)/292C is available only in the....
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....us search operation which shows that any amount was transacted in cash by the appellant with the Companies of Shri. S.K.Gupta for getting accommodation entries from them so as to enable the Assessing Officer to draw adverse inference against the appellant on the basis of legal provision available u/s 132(4A)/292C nor the Assessing Officer has been able to bring out any material evidence to the effect that the appellant had actually earned such undisclosed income so as to rebut the denial made by the appellant. Further since on cross-examination by the appellant before the AO, Sh.S.K.Gupta categorically denied having received any cash from the appellant, his family members or entities in which they were interested, and the AO has not brought on record any adverse material to controvert such denial, it would not be justified to fasten the impugned tax liability on the appellant. Accordingly the addition made by the AO cannot be legally justified or upheld. The only ground raised in this appeal is, therefore, decided in favour of the appellant. (Relief of Rs. 27,00,000/-) 7. We have heard the rival submissions and perused the material available on record. On a consideration of t....
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....rded at Home 10-13 03. Statement of assessee recorded at office of assessee 14-30 14-30 04. Panchnama 31-34 05. Statement of assessee recorded on 25.04.2007 35-39 06. Annexure A - 33 of party 5 seized from the premises Of S K Gupta during the course of Search & Seizure operation at his premises on 12.12.2006 40-62 7. Assessment order under section 143(3) of the I.T Act, 1961 of assessee for the assessment year 2007-08 passed by The Asst. Commissioner of Income tax, Central Circle - 9, New Delhi 63-66 8. Statement recorded on Cross Examination of Sh. S.K. Gupta at the office of DCIT, CC-9, New Delhi. 67-68 09. Copy of Remand Report 69-70 10. Appellate order under section 143(3) of the Income tax Act, 1961 of assessee for the assessment year 2007-08 passed by the Commissioner of Income Tax (Appeals) - XXXII, New Delhi 71-87 7.1. We find that no evidence has been placed before us nor any cogent argument has been raised before us so as to show that on facts the view taken by the CIT(A) was not correct. In the absence of any specific infirmity in the impugned order or reliance placed upon any evidenc....