TaxTMI 
TaxTMI 
2015 (11) TMI 187
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction u/s.132 was initiated in the case of one Shri Chandrakant Kankaria, a real estate broker on 14-02- 2007 during which certain documents belonging to the assessee were seized. Proceedings were initiated u/s.153C in response to which the assessee filed his return of income on 17-11-2008 declaring total income of Rs. 65,21,100/-. The AO vide order dated 31-12-2008 passed u/s.143(3) r.w.s. 153C determined the income at Rs. 65,21,100/-. Subsequently, the investigation wing Bangalore forwarded certain incriminating documents seized during the course of search u/s.132 in the case of Sri Sohanraj Mehta, C&F Agent of RMD Gutkha group Bangalore indicating that the assessee has received an amount of Rs. 2 crores from Shri Sohanraj Mehta. 5. Based on the incriminating documents the assessment for A.Y. 2004-05 was reopened by the AO after recording the following reasons: "There was search action u/s.132 of I.T. Act 1961 in the case of Shri Sonhanraj Mehta, C&F of RMD Gutkha Group conducted by the Investigation Wing, Bangalore on 09-10-2009. Certain incriminating documents were seized during the search. A paper seized at Page No.34 of Annexure A/M/S is on the letter head of All ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the I.T. Act on the business and residential premises of Shri Sohanraj Mehta C&F Agent of RMD Gutkha group, Pune, the paper identified as page 34 of annexure A/M/08 on the letter head of India Swetambar Sthanakwasi Jain Conference Mahila Shakha, Karnataka was seized. The above paper contains the summary of the unaccounted sales carried out by Shri Sohanraj Mehta for the period from April 2003 to August 2006. The left hand side of this paper has details of sales and the right hand side has details of payments made out of the sale proceeds. As per this paper an amount of Rs. 4.50 crores was paid to Shri Kantilal Lunkad. Further, pages 41 and 42 of Annexure A/M/08 gives similar details of some of the months in F.Y. 2003-04 according to which there is payment of Rs. 1 crore during the month of July 2003 and there is a payment of Rs. 1 crore during the month of November 2003, thus the total payment to assessee during F.Y. 2003-04 is Rs. 2 crores. 7. Similarly page 45 of Annexure A/M/08 gives the details for some of the months for F.Y. 2004-05. According to this paper there is payment of Rs. 50 lakhs to the assessee in July 2004 and Rs. 2 crores in the month of August 2004 making a t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re the members of Manik and Giriraj Associates : 1. M/s. Giriraj Associates 2. Shri Girish Gadiya 3. Shri Kantilal Lunkad 4. M/s. D.P. Dhariwal 5. Shri Prakash R. Dhariwal 6. Shri Rasiklal M. Dhariwal 10. Further assessee Shri Kantilal Lunkad was a wellknown dealer and developer in Pune city and very close associate of Rasiklal M. Dhariwal. Both Dhariwal and Lunkad have business and personal relationship. He observed that Mr.Dhariwal and the assessee are Swetambar Jains and are very active in the association of Jains who are the founder members of the JITO (Jain International Trade Organisation). Therefore, the contention of the assessee that he did not have any connection with Rasiklal M. Dhariwal or his business and Shri Sohanraj Mehta is devoid of merit. Further, the name of the assessee has been represented many times in the seized documents. Therefore, once it is mentioned that Kantilal as Pune, it is common not to mention the complete detail name every time. Further the documents are not for public consumption and cannot be expected to have lengthy details of the identity of the persons described in such documents. Therefore, he held that the person menti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee challenged the validity of the reassessment proceedings as well as the addition made by the AO u/s.69A. So far as the validity of the reassessment is concerned, it was submitted that the reopening of the assessment beyond the expiry of 4 years from the end of the relevant assessment year was without jurisdiction, illegal, bad in law and was void ab-initio. It was argued that the reassessment proceedings were initiated on the basis of the documents received from Investigation Wing of Bangalore which was seized during the course of search action conducted on Shri Sohanraj Mehta. In case of search action if documents relating to the person other than the searched person are found the same are handed over to the AO having jurisdiction over such other person and the assessment of income of such other person must be completed u/s.153C. However, instead of doing that the AO has initiated proceedings u/s.148. Therefore, the AO has not correctly followed the procedure as per law. Further, the assessments have been reopened u/s.147 of the I.T. Act beyond the expiry of 4 years of assessment. The assessee also argued that the copy of statement of Shri Sohanraj Mehta was not provided nor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ears on the basis of information in his possession. The AO had sufficient material from which he could form the belief that the income had escaped assessment and the belief of the AO was held in good faith. Further, the AO had recorded reasons showing due application of mind before taking recourse to reassessment proceedings. Further, the assesse's case had already been assessed twice, i.e. once u/s.143(3) and thereafter u/s.143(3) r..w.s. 153C of the I.T. Act. In the instant case, the AO had independently applied his mind and recorded the reasons before issuing the notice u/s.148 and therefore, the same is perfectly in order. 16. So far as the addition u/s.69A is concerned the Ld.CIT(A) upheld the addition made by the AO on the ground that the seized documents found and seized during the course of search and seizure action carried out in the case of Shri Sohanraj Mehta contain the details of payments of unaccounted money to the persons whose names are appearing on the said documents. The name of the assessee also appears on the said document. It gives very detailed and minute notings of the transactions entered into by the Dhariwal group through its business line of M/s. Dhariw....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d distinguishing the various decisions cited before him the Ld.CIT(A) relying on various decisions and provisions of section 110 of the Evidence Act upheld the addition made by the AO. 18. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : "1) In the case of the appellant reassessment of income is taken up on the basis of documents seized in the search action under section 132 of the Income Tax Act 1961 on Mr Sohanraj Mehta, Bangalore. Seized documents have been handed over to the AO of the appellant. Therefore, the assessment of income ought to have been completed under section 153C of the I. T. Act. On the facts and in the circumstances of the case and in law the CIT(A) erred confirming the order passed by the Learned AO under section 143(3) read with section 147 of the I. T. Act in pursuance of the information and documents received in the course of search action carried out on other party. Therefore, the assessment completed by the leaned AO under section 143(3) read with section 147 is nothing but nullity and needs to be quashed. Your honour is requested to consider the facts and the legal position and quashed t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3 to 6 are concerned they relate to the addition of Rs. 2 crores u/s.69A of the I.T. Act. The Ld. Counsel for the assessee at the outset submitted that addition has been made on the basis of documents found during the course of search in the premises of Shri Sohanraj Mehta, C&F Agent of RMD Gutkha group. The assessee was not provided with a copy of the statement recorded by Shri Sohanraj Mehta nor the opportunity to cross examine Shri Mehta was allowed to the assessee. There is no corroborative evidence to prove that the assessee in fact has received the amount of Rs. 2 crores during the year. He submitted that the various issues raised by the assessee during the assessment proceedings and appeal proceedings have been adequately discussed by the Tribunal in an identical case in the case of Shri Vinit Ranawat Vs. ACIT vide ITA No. 1105 and 1106/PN/2013 order dated 12-06-2015. In the said case also additions were made based on the seized documents found during the course of search from the residential and business premises of Shri Sohanraj Mehta, C&F Agent of RMD Gutkha group. The CIT(A) deleted the addition and on further appeal by the revenue the Tribunal dismissed the appeal filed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o figured. Since an amount of Rs. 2 crores was shown to have been paid to the assessee the AO, invoking the provisions of section 69A, made the addition in the hands of the assessee. We find the Ld.CIT(A) upheld the addition made by the AO. 24. It is the submission of the Ld. Counsel for the assessee that the addition was based solely on the notings made on the seized documents found from the premises of Shri Sohanraj Mehta. No corroborative evidence whatsoever was found or brought on record to show that the assessee has infact received the money. Neither the statement of Shri Sohanraj Mehta was given to the assessee nor the request of the assessee to cross examine Shri Sohanraj Mehta was provided to the assessee. 25. We find an identical issue had come up before the Tribunal in the case of Shri Vinit Ranawat (Supra) wherein similar addition was made by the AO which was deleted by the Ld.CIT(A). On further appeal the Tribunal considering the findings of the AO and the CIT(A) as well as the submissions of the assessee dismissed the appeal filed by the revenue by observing as under : "37. We have considered the rival arguments made by both the sides, perused the orders....
X X X X Extracts X X X X
X X X X Extracts X X X X
....business transactions of M/s. Dhariwal Industries Ltd. Mr. Sohan Raj Mehta, the author of the seized document in his statement u/s.132(4) has explained true impact of the contents of the seized documents and has also acknowledged and substantiated the fact that the seized documents belong to M/s. Dhariwal Industries Ltd. and therefore his statement has immense evidentiary value. Based on the above and on the basis of various other observations in the assessment order the Assessing Officer made addition of Rs. 1 crore for A.Y. 2006-07 and Rs. 20 crores for A.Y. 2007-08 as undisclosed income of the assessee which has been upheld by the CIT(A). 39. It is the submission of the Ld. Counsel for the assessee that from the very beginning the assessee was denying to have received any such amount from Mr. Sohan Raj Mehta. According to him, no addition can be made in the hands of the assessee on the basis of papers found in the premises of third party. Further, the assessee being a small taxpayer, some evidence should have been found from the residence of the assessee to show that in fact he has received such huge amount. It is also the case of the Ld. Counsel for the assessee that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d cash of Rs. 21.22 cr received from Shri Sohanraj Mehta on account of RMD group are reflected in your books of accounts. A.33 I have gone through the documents shown to me and say that I have never received this amount from Shri Sohanraj Mehta. Hence, the said payments are not reflected in my books of account. Q.34 A search action u/s.132 was carried out on 26-1-2010 in the case of Dhariwal group. In the course of statement recorded u/s.132(4) Shri Prakash Dhariwal has explicitly stated that the above referred payments have been made by Shri Sohanraj Mehta at the instruction of my father Shri Rasiklal Dhariwal as short term advance. I am showing you the relevant portion of the said statement. Please go through the same and state whether the payments in cash received from Sohanraj Mehta at the discretion of Shri R.M. Dhariwal are recorded in your books of account. A.34 I have gone through the statement shown to me of Shri Prakash Dhariwal recorded on 20-01-2010, however, I have never recorded the amount mentioned from Shri Sohanraj Mehta hence the said payment are not recorded in my books. Q.35 The statement of Shri Sohanraj Mehta recorded u/s.13....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore. To send a dispatch with bill or without bill is decided as per their choice and the Stock of Gutka is sent by Matador Van to this office. The stock that comes without bill is immediately dispatched to our customers. We keep only the stock that comes with bill in our office. The stock that comes without bill is dispatched immediately to our customers. I have been involved in these transactions for longtime and I am responsible for all the despatches and also for the collections from our customers; Normally, we extend credit of 7-10 days to our customers. They remit consideration for the Guntka stock received by them. Periodically, I send these Collections to Mr. Rasiklal or his son Mr. Prashant as per their instructions." 42. Similarly, in his answer to Question Nos. 33 and 34 he has replied as under : "Q.33 I am showing you exhibit marked as A/M/29, seized from the residence of Mr. Mitulal, No. 219, 68th, Cross, 5th Block, Rajaji Nagar, Bangalore. Please go through these loose sheets serially numbered 1-61 and state the contents written over these loose sheets? Ans : I have gone through the exhibit marked A/M/29. I have placed my signature on page ho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iting wherein I have instructed Shri Vinit Ranawat to hand over an amount of Rs. 50000-00 (Fifty Thousand)." 45. From the above, it is seen that at one place the Department is treating the amount as short term advance by Mr. Rasiklal Manikchand Dhariwal to the assessee (Question No.34 to assessee u/s.132(4) on 20- 01-2010). Similarly, Mr. Rasiklal Manikchand Dhariwal in his reply to Question Nos. 9, 11 and 12 recorded u/s.132(4) of the I.T. Act has stated that he has instructed Mr. Vinit Ranawat to hand over the various amounts. Therefore, it is not clear as to whether the Assessing Officer is correct or the Investigation Wing at the time of examining the assessee are correct or the answer of Mr. Rasiklal Manikchand Dhariwal is correct. 46. The Hon'ble Bombay High Court in the case of Aziende Colori Nazionali Affini, Italy (Supra) has held that the agreement had to be considered as a whole and that the different clauses in the agreement could not be considered separately. Therefore, when the Department itself is treating the same at one place as short term advance, therefore, the question of treating the same as income of the assessee does not arise. It is also an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment of self interest and partisanship of the entrant to make a person - behind whose back and without whose knowledge the entry is made - liable cannot be ruled out the additional safeguard of insistence upon other independent evidence to fasten him with such liability, has been provided for in Section 34 by incorporating the words such statements shall not alone be sufficient to charge any person with liability. The probative value of the liability created by an entry in books of account came up for consideration in Chandradhar vs. Gauhati Bank [1967 (1) S.C.R. 898]. That case arose out of a suit filed by Gauhati Bank against Chandradhar (the appellant therein ) for recovery of a loan of Rs. 40,000/- . IN defence he contended, inter alia, that no loan was taken. To substantiate their claim the Bank solely relied upon certified copy of the accounts maintained by them under Section 4 of the Bankers' Book Evidence Act, 1891 and contended that certified copies became prima facie evidence of the existence of the original entries in the accounts and were admissible to prove the payment of loan given. The suit was decreed by the trial Court and the appeal preferred against ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eference to s.34, Evidence Act, be the basis of a decree."(emphasis supplied) In Beni Vs. Bisan Dayal [ A. I. R 1925 Nagpur 445] it was observed tat entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [ A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ine provided by us) 49. We further find identical issue had come up before various Benches of the Tribunal on the basis of the notings of Mr.Sohan Raj Mehta found during the course of search. We find the Ahmedabad Bench of the Tribunal in the case of Shri Mustafamiya H. Sheikh (Supra) has observed as under: "7. On a perusal of the seized materials received from the Investigation wing, Pune, the AO had noticed that Page 34 was a summary of the cash payment made by Shri Sohanraj Mehta for the period from April 2003 - August 2006 as per the direction of RMD Group. As per this version, an amount of Rs. 57.50 lakhs pertained to Shri Sheikh Mustafmiya Hussainmiya of Ahmedabad and page 47 was the monthly summary for the month of January - March 2004 of the unaccounted transaction carried out by Shri Sohanraj Mehta C & F of Karnataka Region of RMD Group. After analyzing the issue exhaustively as detailed in the assessment order as well as in the appellate order under dispute, a sum of Rs. 57.5 lakhs in cash as evidenced by the seized documents was treated as unaccounted receipt in the hands of the assessee and, accordingly, added to the income of the assessee for the peri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....: "1. I referred my aforesaid statement recorded by Deputy Commissioner of Income-tax, Central Circle 2(2), Bangalore on 10.8.2011. 2. In this statement dated 10.8.2011 sense conveys that my detailed letter dt.23.12.2009 filed with the Asst. Director of Income-tax (Investigation) Unit 2(1), Bangalore is negated which is incorrect and untrue. 3. Today on 3.12.2011, Saturday I depose in the name of Almighty God that under wrong promises, mistaken beliefs, inadequate guidance and improper advise, I signed the letter dt. 10.8.2011 in the Income-tax Department, Bangalore which is absolutely wrong and not the correct version of what I wanted to convey to the Income-tax Department at that point of time. 4. With my this letter specifically addressed to you, I once again state that all my statements recorded during the search proceedings on 10.9.2009 and my statement dated 10.8.2011 recorded at Bangalore before Deputy Commissioner of Income-tax, Central Circle 2(2), Bangalore is retracted un- conditionally by me, it being improper."[Refer: Pages 225 - 27 of the assessee's submission dt.12.12.2012]. 7.4. Thus, there is force in the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7.7. In essence, the principles of natural justice on the legitimate request of the assessee, to cross examine the third party on the basis of whose statement the impugned addition sought to be added to his income, has been denied on flimsy grounds. 7.8. At this point of time, we shall analyze the judicial pronouncements on a similar issue, as under (PB -184): (i) the Hon'ble jurisdictional High Court in the case of DCIT v. Mahendra Ambalal Patel reported in (2010) 40 DTR (Guj) 243 had held as under: "From the findings recorded by the Tribunal it is apparent that though it is the case of Revenue that the land has been sold by the assessee to GC through MV, there is no material on record to indicate that the said land in fact belongs to the assessee. Though the AO has placed reliance upon the statements of MV and GC for the purpose of taxing the amount in the hands of the assessee, despite specific request being made by the assessee for cross- examining both the said persons, the AO has not permitted the assessee to cross-examine them. In the circumstances, no reliance could be placed upon the statements of the said persons as the assessee had no oppor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....heir statements have no evidentiary value. After due consideration of rival submissions and also taking into account the reliance placed by the assessee's counsel in the cases of (i) Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC) & (ii) CIT v. S.C. Sethi (2007) 295 ITR 351 (Raj), the Hon'ble Court had held thus: "[PB - 174] 16. Thus, it is apparent that the conclusions arrived by the Tribunal are based upon the aforesaid findings of fact recorded by it upon appreciation of the evidence on record. On behalf of the revenue nothing is pointed out to show that the findings recorded by the Tribunal are in any manner perverse, nor is it the case of the revenue that the Tribunal has taken into consideration any irrelevant material or that any relevant material has been ignored. The conclusion arrived at by the Tribunal on the basis of the findings of fact recorded by it cannot in any manner be said to be unreasonable. In the aforesaid premises, the impugned order of the Tribunal being based upon findings of fact recorded by it upon appreciation of the evidence on record, which findings have not been dislodged by the revenue by pointing out any evid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of a third party, without bringing any credible documentary evidence to the contrary on record to nail the assessee; & (vii) No reliance can be placed on the statements of a third person whose premises were subjected to a search since he had retracted his own statement made earlier on oath and precisely the assessee has been denied to cross-examine him to bring out the truth. 7.9.1 For the above said reasons, we hereby hold that the addition made for Rs. 57,50,000/- by the learned AO on account of undisclosed income, which was further sustained by the learned CIT(A) requires to be deleted and accordingly, we hereby direct the revenue to delete the same. Thus, ground No.1 raised by the assessee with respect to reopening of the assessment u/s 148 of the Act is dismissed and ground No.2 with respect to addition on account of undisclosed income is allowed in favour of the assessee." 50. We find the Bangalore Bench of the Tribunal in the case of DCIT Vs. H.S. Chandramouli (Supra) had also an occasion to decide an identical issue and deleted the addition by observing as under : "13. We have considered the submissions of the learned DR. It is seen th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Act, 1961 (hereinafter called in short "the Act") was issued and assessment was completed under section 147 of the Act read with section 144 of the Act in the hands of the assessee, resulting into an addition of Rs. 10.48 lakhs as profit on this unaccounted sale of Rs. 50 lakhs. 3. An appeal was preferred before the ld. CIT(A) with the submission that no document indicating payment of Rs. 50 lakhs to the assesseecompany was found during the course of search. Only dumb documents were found in which there was a debit entry of Rs. 50 lakhks in the name of Malik Kannauj. Even in the statement of Shri. Sohanraj Gupta, there was no mention of the Director of the assessee-company, Shri. Abdul Malik. Therefore, the ld. CIT(A) came to the conclusion that in the absence of any evidence involving the assessee to the alleged receipt of Rs. 50 lakhs, reopening in the hands of the assessee under section 147 of the Act is not proper and he accordingly annulled the assessment. 4. Aggrieved the Revenue has preferred an appeal before the Tribunal and reiterated its contentions. During the course of hearing, a specific query was raised from the ld. D.R. as to what evidence they have....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he appellant company. It is a trite law that the "reasons to believe" for reopening the case should be that of the A.O. alone and could not be formed at the dictates of others or on suspicion, conjectures or surmises. 5.1.7 In the instant case, in my considered view, the A.O. had no material before him which could link the said payment to the appellant company. The "reasons to believe" in the case have been recorded on irrelevant material. On the basis of such material, no prudent man could have formed the belief that income had escaped asstt. in the hands of the appellant company. Accordingly, I hold that the very assumption of jurisdiction by the A.O. under section 147 of the Act was illegal and, therefore, any asstt. framed pursuant to such illegality cannot be sustained. Thus, the whole asstt. framed u/s 147 is hereby annulled, While taking this view, I am fortified by the decisions of the Hon'ble Apex Court in fie case of CIT vs Daulat Ram Rawat Mull (87 ITR 349) wherein, it was held: 'there should, in our opinion, be some direct nexus between the conclusion of fact arrived at by the authority concerned and the primary facts upon which the conclusion ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee with Shri Shobhan Raj Mehta were not found from the possession of Shri Shobhan Raj Metha. The A.O has required assessee's copy of accounts in the books of M/s. Dhariwal Industries, Pune and this was found verified from the assessee's books of A/c. It is clear that the assessee has business relationship with M/s. Dhariwal Industries, Pune and not with the Shobhan Raj Mehta. Therefore, it is clear that the addition made by the Assessing Officer purely based on guess work without any evidence, therefore this addition deserves to be deleted. 7.1 From the facts enumerated above, it is clear that the assessing officer failed to establish any case against the appellant. Further inquiry/ investigation was required to be carried out on the information passed by the ADIT(Inv.)- III, Kanpur but evidences are not collected or placed. Copies of the statements, on the basis of which additions has been made, were not provided nor was the opportunity of cross- examination given to the appellant. The assessing officer merely summarized the salient features of the report of the ADIT (Inv.)-III, Kanpur and thereafter summarily rejected the reply of the appellant as not satisfac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... seized paper. Considering these facts, we do not find any reason to interfere in the order of CIT(A)." 53. We find the Delhi Bench of the Tribunal in the case of M/s. Bhola Nath Radha Krishan (Supra) while deleting an identical issue has observed as under : "7. After considering the arguments of both the sides and the facts of the case, we do not find any infirmity in the above order of learned 7 ITA- 5149/Del/2012 CIT(A). The addition has been made on the basis of certain chits found from Shri Sohan Raj Mehta and his statement. Admittedly, the assessee has no dealing with Shri Sohan Raj Mehta. The assessee is supplying goods (Supari) to RMD Group who are manufacturing Gutkha. Shri Sohan Raj Mehta is C&F agent for Karnataka region of RMD Group. The search had taken place at the assessee's business premises as well as at the business premises of RMD Group. No evidence of any unrecorded sale by the assessee or unrecorded purchase by RMD Group was found. Thus, when, despite search at the premises of seller and buyer, no evidence of any unrecorded sale or purchase is found, in our opinion, merely because in the chits found at the premises of some third party with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction 132(4) of the Income Tax Act. Nowhere there is any mention of Bhola Nath Radha Kishan or any of its partner in the said statement. The assessee cannot be held liable for any act of the omission or commission done by him. Mr. Sohan Raj Mehta's statement regarding decoding of figures is also not applicable on the assessee since this has no bearing or nexus of connection with the assessee firm or its business transaction. No addition or adverse decisions can be taken on the basis of surmises and/or conjectures. There has to be specific mention of M/s Bhola Nath Radha Kishan, 6377, Naya Bans, Kahri Baoli, New Delhi in order to link any payment to it from Mr. Sohan Raj Mehta or anybody else..........." (emphasis by underlining supplied by us) 8. The Assessing Officer has dealt with this letter but he has not given any reason for not allowing the assessee an opportunity to crossexamine Shri Sohan Raj Mehta. Similarly, he has neither supplied the copy of retraction of his statement nor dealt with the retraction in the 9 ITA- 5149/Del/2012 assessment order. It is only in the remand report he has mentioned that Shri Sohan Raj Mehta has retracted his retr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... produce it, the inference is that such evidence if produced is detrimental to him. Accordingly, the Assessing Officer held that the said receipts were the income of the assessee. 5.2 The Assessing Officer has further held that according to the provisions of section 80 of the Indian Evidence Act, there is a presumption as to the documents produced as record of evidence are genuine. Hence, he has held that the documents seized from Dhariwal Group could be relied upon for making addition in the hands of the assessee. The Assessing Officer has placed reliance on the decisions of Sumati Dayal vs. CIT [(1995) 214 ITR 801(SC)], CIT vs. Durga Prasad More [(1969)72 ITR 807(SC], Himmatram Laxminarain vs. CIT [(1986)161 ITR 7(P&H)], CIT vs. Ganapathi Mudaliar [(1964)53 ITR 623(SC)] and CIT vs. Lacchman Dass Oswal [(1980)126 ITR 446(P&H)]. 5.3 According to us, the additions made by the Assessing Officer were not justified in the facts and circumstances vis-à-vis of the assessee. As discussed earlier, during the course of search in the case of Dhariwal Group, the only documents found on the basis of which the addition u/s 69A has been made in the case of the assessee a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e used against the assessee since no incriminating documents were found with it. In the case of ACIT Vs. Lata Mangeshkar (Miss) (1974) 97 ITR 696 (Bom), the addition was made in the hands of the assessee on the basis of the entries in the books of third persons. Hon'ble Bombay High Court held that such addition could not be made only on the basis of the notings in the books of third persons. The facts of the present case are covered by the decision of Lata Mangeshkar (supra). It is a settled legal position that the decision of jurisdictional High Court is binding on all authorities below it. Thus, the reliance placed by the Assessing Officer on the loose papers is not justified at all. Therefore, the question of making any addition is not justified in the absence of other corroborative evidence to that effect. 5.6 Without prejudice to the above, the learned Authorized Representative submitted that the Assessing Officer was not justified in making the additions by relying on the provisions of section 114 of the Indian Evidence Act. The concerned Assessing Officer has referred the aforesaid section which states that the court may presume that the evidence which could be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it belongs to the assessee. 5.9 While making the addition of Rs. 5.10 crores as stated above, the CIT(A) relied on the following decisions of Sumati Dayal vs. CIT [(1995) 214 ITR 801(SC)], CIT vs. Durga Prasad More [(1969)72 ITR 807(SC], Himmatram Laxminarain vs. CIT [(1986)161 ITR 7(P&H)], CIT vs. Ganapathi Mudaliar [(1964)53 ITR 623(SC)] and CIT vs. Lacchman Dass Oswal [(1980)126 ITR 446(P&H)]. In this regard, the stand of the assessee has been that the case laws relied by the Assessing Officer are differentiable on facts and hence, the same are not applicable to the case of the assessee. In all the cases relied by the Assessing Officer, the fact that the assessee had actually earned income or received amounts by way of cash credits, unexplained investment etc. was not under dispute. The issue related to whether the receipts were received from genuine lenders or whether the investments or receipts were a part of the disclosed sources of income of the assessee. We find that in the present case, the issue in question itself is whether rough noting on loose paper found in the course of search at the premises of third person could be assumed the income from the assessee as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was justified in making the addition. Even in this case, the issue of no addition can be made on the basis of documents found with third party was not raised. The CIT(A) has further referred to the decision of ITAT, Mumbai in the case of P. R. Patel Vs. DCIT [(2001) 78 ITD 51 (Mum)] for the proposition that seized papers cannot be called dumb paper because they indicate date, amount and calculation. There is no dispute with the above proposition. The papers are found pertaining to Dhariwal Group as admitted by Shri Mehta and therefore, these documents may be relevant for deciding the issue in the case of Dhariwal Group. However, in the absence of any corroborative evidence, the addition could not be made in the hands of the assessee on the basis of the said papers. 5.12 The CIT(A) has further relied upon ITAT Third Member decision in the case of Dhunjibhoy Stud and Agricultural Farm Vs. DCIT [(2002) 82 ITD 18 (PUNE)(TM)], In this case, the assessee was a builder and had sold flat to one Mr. Tanna. There was search on Mr. Tanna wherein a document was found indicating flat purchased from the assessee firm and the amount of cheque and cash paid. The amount of cheque paid was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....No. 581/PN/08], ITAT in paras 3 and 4 held as under:- "The above said Shri Kolhe was examined, cross examined and reexamined and no evidence was gathered from him to establish that the contents of the seized documents were correct and true. Thus, in the absence of any corroborative evidence in the present case, the said seized document has to be treated as a dumb document as rightly observed by the CIT(A). The A.O. dismissed the retraction of the statement dated 29.03.2003 by filing an affidavit as an after thought and self serving. The A.O. concluded that the facts mentioned in the seized documents clearly indicated that the statement given on 29.03.2003 was true and correct. The A.O. has not brought on record any material or corroborative evidences to come to these conclusions. The reasons given by the A.O. in this regard are without any basis and support. The affidavit filed by Shri Kolhe remained uncontroverted and which is against the settled legal position on the issue that the contents of the affidavit be rejected by confronting the same to the deponent which is missing in this case. Nothing was shown by the A.O. that there was any other material co related to the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the addition made by the Assessing Officer is not justified and the same is directed to be deleted. It is pertinent to mention here that this case is being decided in its facts and circumstances; it cannot be applied to other cases as such. 7. In the result, appeal filed by the assessee is allowed." 55. Since in the instant case the assessee from the very beginning has denied to have received any such payment from M/s. Dhariwal group through Mr. Sohan Raj Mehta and since no incriminating material was found from the residence of the assessee during the course of search and since the assessee is not dealing with M/s. Dhariwal group in his individual capacity, therefore, respectfully following the decisions cited above and in view of our reasonings given earlier, we are of the considered opinion no addition in the hands of the assessee can be made. Since it is held that the assessee has not received any amount, therefore, the question of taxing the same u/s.56(2)(vi) as held by CIT(A) does not arise. In this view of the matter, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition of Rs. 1 crore for A.Y. 2006-07 and Rs. 20 cror....