TaxTMI 
TaxTMI 
2015 (10) TMI 816
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....71(1)(c) of the Income Tax Act (hereinafter referred to as the "Act"). The issues involved in three quantum appeals are common, therefore, we have heard all the appeals together and deem it appropriate to dispose of them by this common order. 2. First we take three quantum appeals i.e. ITA Nos. 489/Ahd/2005, 562/Ahd/2005 and 591/Ahd/2005. The grounds of appeal taken by the assessee are not in consonance with rule 8 of ITAT Rules, 1963, they are descriptive and argumentative in nature. 3. In brief, the grievance of the appellants revolves around two issues namely; (a) ld. Assessing Officer has erred in issuing notice u/s. 148 for reopening of the assessment (b) ld. Commissioner of Income Tax (Appeals) has erred in confirming the additions of Rs. 7,90,000/- in Assessment Year 1995-96 (ITA No. 489/Ahd/2005), Rs. 14,80,000, Assessment Year 1996-97 (ITA No. 591/Ahd/2005), and addition of Rs. 53,35,700/- in Assessment Year 1995-96 (ITA No. 562/Ahd/2005) 4. Before we embark upon an inquiry on the quality of evidence available on the record for construing, whether any addition can be confirmed in the hands of assessee, we think it appropriate to make reference to the basic dispute....
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...., Javeri Bazar, Mumbai. Subsequently, a search u/s. 132 of the income tax act was also carried out at various business/residential premises of the LT Shroff Group by the income tax department. Statement of Shri Kalpesh Thakkar who was managing business by LT Shroff was recorded u/s. 132(4) on 2nd August, 1996. During the search of FERA authorities, a diary containing entries of cash receipts and payments to various parties for the period 01-11-94 to 28th May, 1995 on day to day basis was found and seized. The LT Shroff Group was found carrying out the business of accepting deposits in cash on interest and advance loans in cash by charging interest on large scale from the four different branches situated at Modasa, Manek Chawk, Ahmedabad, Manhaton Building, Mithakali, Ahmedabad and Zaveri Bazar, Mumbai. Apart from doing this, business of taking money on interest and giving advances on interest in cash, the group was also providing services of courier of cash to various clients by charging nominal sum. Such cash used to be transferred by the group on behalf of the clients between any of its branch situated at Modesha, Ahmedabad and Mumbai. The statements of various persons in this gr....
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....bour a belief that income belonging to the assessee has escaped from taxation. Therefore, he has rightly reopened the assessment and issued notice to both the assessees u/s. 148 of the income tax act. We do not find any merit in this fold of contention. 9. In the next fold of grievance, the appellants are impugning addition of Rs. 7,90,000/- in the case of Ashokbhailal Chokshi, Assessment Year 1995-96, and Rs. 53,35,700/- and Rs. 1,48,000/- in the case of M/s. Chokshi Bhailal Dahyabhai and Co. for Assessment Year 1995-96 and 1996-97. 10. As observed earlier, the FERA authorities have seized a cash book from Mumbai office of LT Shroff Group. This diary was written in the form of cash book in which all the transactions (including courier etc) for the period between 1-11-1995 to 23-05-1995 were recorded. As per the system of maintaining accounts of unaccounted business by LT Shroff group, the transactions with various clients used to be ledgered in the accounts of such clients only, while as far as the courier transactions were concerned, if the cash was received at Mumbai office for any clients to be transferred to Manek Chowk Office then, against the debiting the cash book, th....
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.... has utilized the evidences gathered from the premises of L.T. Thakker Group by the FERA Authorities and also by I.T. Authorities. It is also a fact that cross examination of the persons who wrote the account books and the said diaries of L.T. Thakker Group was not allowed. It may however, be observed that the facts and circumstances brought on record by carrying out search action were extraordinary. The L.T. Shroff Group was engaged in financing business at large scale and the materials brought to light showed that several persons of Ahmedabad deposited unaccounted money with them. The A.O. has stated that Shri Kalpesh Thakker had identified some parties on the basis of the notings in the said diary and some of them disclosed the amounts as their income under VDIS. 10. It may also be necessary to mention here that after the search action the L.T. Thakker Group claimed to have closed down their business and the present A.O. having jurisdiction over the Thakker Group has informed that Shri Kalpesh Thakker is not traceable. The Commissioner of Income Tax, Ahmedabad I, Ahmedabad has informed that he has requested Shri Balkrishna T. Thakker CA.,who represented Shri Kalpesh Tha....
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....ve gone through the record carefully. The sole question for our adjudication is, whether department was able to lay its hands on a conclusive evidence demonstrating the fact the assessee, Ashokbhai/the firm made deposits with L.T. Shroff group which would have given interest income. Before we evaluate the evidence and its reliability according to the Evidence Act, we deem it appropriate to have a look on the quality of evidence. According to the Assessing Officer, the statement of Shri Kalpesh Thakkar of L T Shroff Group was recorded during the course of survey u/s. 132(4) of the Act. In his statement, he explained the modus operandi and also explained the names, addresses, noticed in the abbreviated form in the diary. The photocopy of the diary relevant, assessee has been placed on page 79 of the paper book. Apart from, entries starting 08-11-94 to 3rd May, 1995, consolidating read as under:- B.D. Ashokbhai Sr. No. 79 Transfer Credits Rs. 08-11-1994 150,000/- 09-11-1994 350000/- 19-11-1994 499700/- 23-11-1994 200000/- 25-11-1994 140,000/- 26-11-1994 200000/- 08-12-1994 500000/- 10-12-1994 325000/- 16-12-1994 375000/....
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....cords of the L.T. Shroff Group which are also not signed by anybody and therefore there is no authenticity of the said papers and therefore no cognizance can be taken under the provisions of the Indian Income tax Act and therefore my statement recorded on the basis of the unauthenticated information deserves to be ignored and no assessment against me may please be made. Further, I have also filed a copy of Affidavit dated 18-03-2002 along with the letter of even date. In the aforesaid letter I have also emphatically requested your honour to kindly grant me an opportunity to examine the party who is your witness and without giving me any opportunity for cross examination of your witness, no assessment may please be made against me as I have not done any transaction with the L.T. Group. Thanking you, Yours Faithfully, Sd/- (Ashokkumar Bhailal Chokshi) 15. Similarly, he wrote a letter dated 18th March, 2002. The relevant part of this letter is also worth to note: "From: Ashokkumar Bhailalbhai Chokshi 2342/1 Manek Chowk, Ahmedabad 18-03-2002 To The Income Tax-officer, Ward 3(2) Ahmedabad Dear S....
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....ng the author and give him an opportunity to cross-examine. If that man is not traceable, then it does not mean that assessee would be deprived of his right to verify how his name has been mentioned in the alleged diary. When he has no alleged connection with L.T Shroff, the department ought to have collected some other corroborative evidences which can establish the nexus or link between the assessee and L. T Shroff. The evidence collected by the department is not worthy of credence, more particularly in view of the judgment of Hon'ble Supreme Court in the case of CBI vs. V.C. Shukla & others reported in 1998 35 SSC page 410. There is no independent evidence on the record, therefore, we are of the view that addition with the help of this much information can not be made. We allow all the three appeals and delete the additions. 17. As far as ITA No. 512/Ahd/2006 is concerned, in this appeal, the grievance of the assessee is that Ld. Commissioner of Income Tax(A) has erred in confirming the penalty imposed u/s. 271(1)(c) of the income tax act. 18. With the assistance of Ld. Representatives, we have gone through the record carefully. Section 271(1)(c) of the Act has a direct be....