TaxTMI 
TaxTMI 
2015 (11) TMI 402
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.... in ITA No. 1325/PN/2013 has raised the following grounds of appeal :- The below mentioned grounds are independent to each other: 1. Addition on account of third party evidence 1.1. That Ld. CIT (A) has erred in confirming the additions made by the Assessing Officer on account of unaccounted sales. 1.2. That Ld. CIT (A) has further erred in making additions on the basis of third party evidence. 1.3. The Ld. CIT (A) did not appreciate basic fact that there was no corroborative evidence found in the records of appellant. 1.4. That Ld. CIT (A) also erred in ignoring that Mr. Sohan Raj Mehta, (based on whose statement the addition has been made in case of appellant), had subsequently retracted from his statement. 1.5. That Ld. CIT (A) has grossly erred in not accepting fact that Assessing Officer had not provided any opportunity to the appellant to cross examine Mr. Sohan Raj Mehta. 1.6. That Ld. CIT (A) has further erred in not considering the various judicial pronouncements cited by the appellant for deletion of the said additions. 2. Without Prejudice to 1 above taking gross profit ratio @ 35% of unaccounted sales 2.1. That Ld. CIT (A) erred in taking gr....
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.... directions of Shri Rasiklal M Dhariwal / Shri Prakash R Dhariwal. Among the recipients of unaccounted sale proceeds, as per the Assessing Officer, the assessee's name figured prominently at several places. As per the seized pages belonging to Bundle No.A/M/08 seized vide Panchanama dated 09.10.2009, copies of which were duly provided to the assessee during the course of assessment proceedings, the Assessing Officer noted that the assessee had received sum of Rs. 26,91,03,000/- from M/s. DIL through Shri Sohan Raj Mehta, as per the details tabulated at page 3 of the assessment order. Shri Sohan Raj Mehta in his statement recorded on oath under section 132(4) of the Act stated that M/s. DIL had paid the aforesaid amounts to the assessee through him, as per instructions received from Shri Rasiklal M Dhariwal / Shri Prakash R Dhariwal. The assessee was thus, show caused to explain as to why sum of Rs. 26.91 crores should not be added as his undisclosed income. The Assessing Officer in the show cause notice pointed out that from the enquiries and the details submitted by the assessee, it was seen that the assessee was a raw material supplier of M/s. DIL over many years and had transact....
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....ed into any business transaction with Mr. Sohan Raj Mehta ever in his life and further none of these transactions were reflected in his books of account. Referring to the contents of show cause notice, wherein it was alleged that Shri Sohan Raj Mehta effected unaccounted sale of Gutka on behalf of M/s. DIL and in turn had deployed sale proceeds as per the directions, the assessee asked for the cross-examination of M/s. Sohan Raj Mehta as to how he could give such statement when nothing was received by him. Further, the assessee also made enquiries as to what was stated by Shri Rasiklal Dhariwal / Shri Prakash Dhariwal. In reference to the statement of Shri Sohan Raj Mehta, in case they had not given any confirmation on statement of Shri Sohan Raj Mehta, then as per the assessee, the said statement was not reliable and in case they had given any confirmation, then the assessee wanted to understand from them about the basis of said confirmation. He stressed that without giving him an opportunity of cross-examination, Shri Sohan Raj Mehta and obtaining the confirmation from Rasiklal Dhariwal and Shri Prakash Dhariwal, no addition should be made, as there were no unaccounted sales nor ....
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....assessee that third party was no evidence, at all is accepted, the provisions of Evidence Act and section 147, 158BD and 153C of the Act would become redundant. The Assessing Officer admitted that strict rules of evidence were in-applicable to the proceedings under the Income-tax Act, however, that did not mean that the principles of Evidence Act were in-applicable to the proceedings under the Income-tax Act. Reliance in this regard was placed on the ratio laid down by the Hon'ble Supreme Court in Chuharmal Vs. CIT reported in 172 ITR 250 (SC). The Assessing Officer also referred to the retraction by Shri Mallikarjuna of Shimoga and also by Shri S. Balan of Pune and applying the test of human probabilities, held that after reading the seized documents as a whole, sum of Rs. 1.76 crores received by the assessee during the instant year was to be treated as undisclosed income of the assessee and the addition to the extent of Rs. 1.76 crores was made in the hands of the assessee. 8. The CIT(A) after considering factual aspects of the case and legal propositions laid down by the Hon'ble Supreme Court and various other Courts in paras 3.5 to 3.15 held as under:- "3.16 Section 110 of t....
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....the residence of Mithulal Jain at Bangalore. I, therefore, hold that entries indicating to the appellant can lead to addition in the hands of the appellant. These seized documents and statement of Shri Mehta cannot be ignored but are very much relevant and, therefore, the entries related to the appellant can lead to addition in the hands of the appellant. 3.17.4 The Assessing Officer has brought on record and discussed in detail the entire scheme of unaccounted business transactions of M/s. DIL. Considering the enormity of the transaction which was spread over several assessment years it could not have been expected that the assessee would keep details of each and every transaction connected with the activity. Obviously these could find place in a manner which were discovered by the Investigation Wing during the search action. The efforts of the Assessing Officer in linking up these transactions with the evidences of M/s. DIL with the appellant and others, on this basis needs to be appreciated. Any document has to be necessarily read, as a whole. Applying this principle the genuineness of the seized document and a corollary, the appellant's involvement in the unaccounted bus....
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....n there is no mention of any incriminating evidence found from the assessee. The learned Authorized Representative for the assessee further pointed out that the documents relied upon by the Assessing Officer to make the addition in the hands of the assessee were the documents found during the course of search on Shri Sohan Raj Mehta. Our attention was drawn to the said documents placed at pages 73 to 83 of the Paper Book and it was pointed out that the entries were in the name of P.C. Jain of Mumbai, however, there is no evidence available from the said documents that P.C. Jain referred to in the seized documents was the assessee i.e. Prabhat Chandra S. Jain. The learned Authorized Representative for the assessee pointed out that even during the course of assessment proceedings, a query was raised before the Assessing Officer as to his conclusion that name P.C. Jain relates to the assessee. However, n o proper reply has been given by the assessee in this regard. The learned Authorized Representative for the assessee further submitted that even during the course of search, a query was raised with regard to the documents seized from the possession of Shri Sohan Raj Mehta and the asse....
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...., pointed out that admittedly, during the course of search on the assessee on 20.01.2010, nothing was found from the possession of the assessee. However, on 09.10.2009, the said documents were found and seized from Shri Sohan Raj Mehta, in which he admitted that he was carrying on the said business of C&F agent of M/s. DIL. The learned Departmental Representative for the Revenue referred to the order of CIT(A), especially paras 3.2 and 3.3 at pages 14 and 15, wherein there is finding of CIT(A) that the assessee was a regular supplier of raw materials and since the assessee was connected to M/s. DIL, there was preponderance of probabilities. The learned Departmental Representative for the Revenue further pointed out that case laws relied upon by the learned Authorized Representative for the assessee were not relevant, as in the above said decision, the assessee was not dealing in individual capacity with M/s. DIL and the business was being carried out by the partnership concern or the company, in which he was a director / partner. Even in one of the cases, the assessee was not searched. The learned Departmental Representative for the Revenue stressed that the seized documents were c....
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.... of M/s. DIL and sale proceeds were deployed as per the directions of Rasiklal Dhariwal and / or Prakash Dhariwal. As per the seized documents, name of PC Jain of Mumbai was there on various pages and the Assessing Officer tabulated the details from Bundle A/M/08 . The monthly and year-wise details of the amounts against PC Jain are tabulated at page 3 of the assessment order and total to Rs. 26,91,03,000/-. 18. The issue arising before us is that in the absence of any finding that the notings on the said documents in the name of PC Jain having not been established to be of Mr. Prabhat Chandra S Jain i.e. the assessee, no addition could be made in the hands of the assessee. The case of the Revenue on the other hand, was that since the assessee was supplying raw material to M/s. DIL, his association having been established whether M/s. DIL and where M/s. DIL was engaged in sale of Gutka outside books, the entries on the said seized documents were relating to the assessee and since the same were not recorded in the books of account, addition to that extent merited in the hands of the assessee. 19. We find objection of the assessee was that in the absence of any documents having bee....
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....that this amount was paid by Dhariwal Industries to Shri Vinit Ranawat through him, however, the statement appears to have been retracted as per the findings given by the Ahmedabad Bench of the Tribunal in the case of Mustafamiya H. Sheikh. 38. It is the case of the Assessing Officer that the assessee was associated with Dhariwal group for a long time and the assessee's name appearing in the seized document tally with the regular business association with M/s. Dhariwal Industries Ltd. and if test of human probability is applied to the facts of the case it becomes evident that assessee was part of the entire scheme of unaccounted business chain of M/s. Dhariwal Industries Ltd. The role of the assessee was that of a coconspirator. During the course of search and post search proceedings Mr. Sohan Raj Mehta had stated that the seized books of account, loose sheets and other documents, i.e. A/M/01 and A/M/29 were actually belonging to the C&F business of M/s. Dhariwal Industries Ltd. He had categorically stated that page 34 of A/M/08 and other related documents were written by him and most of the pages were in Marwadi language. The statement of Mr. Mehta clearly explains the entire u....
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....urse of search at the premises of the assessee he was questioned about the documents found from the premises of Mr. Mittulal which contain documents maintained by Mr. Sohan Raj Mehta. The assessee at the time of search had completely denied to have received any such amount from Mr. Sohan Raj Mehta. Relevant Question and answer of the assessee recorded during the course of search u/s.132(4) are as under (paper book page 41 and 42) : "Q.33 A search action u/s.132 was carried out on 0-10-2009 in the case of Shri Mittulal by Investigation Wing of Bangalore. In course of the search action certain incriminating documents related to Shri Sohanraj Mehta were found in connection with C&F agency of RMD Group of Pan Masala and Gutkha products. Shri Sohanraj Mehta was also covered by the Investigation Wing of Bangalore and on being confronted with these incriminating documents, Shri Sohanraj stated that the said pages interalia contain the notings regarding handing over of Rs. 21.22 crores to Shri Vinit Ranawat of Mumbai which is C&F agent of RMD group. Shri Sohanraj also stated that the said payments in cash were made as per the direction of Shri R.M. Dhariwal and Shri Prakash Dhariwal. Pl....
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....uch huge receipt has been found. Further, we find from the query raised during the course of search that the authorised officer has treated the same as "short term advance" given to the assessee. Therefore, we find some force in the submission of the Ld. Counsel for the assessee that if the amount is a short term advance the question of the same constituting income in the hands of the assessee does not arise. We find from the statement of Mr. Sohan Raj Mehta recorded during the course of search proceedings u/s.132 on 09-10-2009 where Mr. Sohan Raj Mehta in his answer to Question No.31 has replied as under : "Q.31 Please state how these transactions are unaccounted? Ans: M/s Dhariwal Industries Ltd has a manufacturing unit in Singsandra, Bangalore. Our firm M/s Mehta Associates is a sole C & F agent of the Company for their product RMD Gutka since 1994-95. I have very long business and personal association with Mr. Raskilal Manikchand Dhariwal. He considers me as close confident. As per the requirement of the Distributors, I place order for dispatch of Stock either with Mr. Prashant Bafna or Mr. Jeevan Sancheti, who are incharge of the Factory at Bangalore. To send a dispatch ....
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....he request of the assessee to cross examine Mr. Sohan Raj Mehta was not granted on the ground that the same will not serve any purpose. 44. We further find Mr. Rasiklal Manikchand Dhariwal in his statement recorded u/s.132(4) on 21-01-2010 in reply to Question No. 9, 11 and 12 has answered as under (page 124 of paper book filed by Ld. DR) : "Q9. Similarly, I am showing you page No.34 of Bundle No.A/M/29 seized on 9/10/2009. Kindly go through the contents and please explain. Ans. This is a signed chit in my handwriting dt.20/2/2007 wherein I have instructed Shri Vinit Ranawat to hand over an amount of Rs. 500000-00 (Five Lakhs). Q11. Similarly, I am showing you page no.24 of Bundle No.A/M/29 seized on 9/10/2009. Kindly go through the contents and please explain. Ans. This is a signed chit in my handwriting dt.10/11/2006 wherein I have instructed Shri Vinit Ranawat to hand over an amount of Rs. 500000-00 (Five Lakhs). Q.12 Similarly, I am showing you page no.22 of Bundle No.A/M/29 seized on 9/10/2009. Kindly go through the contents and please explain. Ans. This is a signed chit in my handwriting wherein I have instructed Shri Vinit Ranawat to hand over an amount ....
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....ies. It held that mere entries in the accounts regarding payments to the assessee was not sufficient as there was no guarantee that the entries were genuine. The Tribunal therefore held that there was no proof that the amount in question represented income from undisclosed sources belonging to the assessee. On further appeal by the Revenue, the Hon'ble High Court held that the conclusion of the Tribunal had been reached by it on a proper appreciation of the evidence. This was finding of fact by the Tribunal and no question of law arose and no reference would lie from the decision of the Tribunal. Accordingly, the appeal filed by the Revenue was dismissed. 48. The Hon'ble Supreme Court in the case of CBI Vs. Shri V. C. Shukla reported in 3 SCC 410 has observed as under : "The rationale behind admissibility of parties' books of account as evidence is that the regularity of habit, the difficulty of falsification and the fair certainty of ultimate detection give them in a sufficient degree a probability of trustworthiness (wigmore on evidence $ 1546). Since, however, an element of self interest and partisanship of the entrant to make a person - behind whose back and without w....
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....merely means that the plaintiff cannot obtain a decree by merely proving the existence of certain entries in his books of account even though those books are shown to be kept in the regular course of business. he will have to show further by some independent evidence that the entires represent real and honest transactions and that the moneys were paid in accordance with those entries. The legislature however does not require any particular form or kind of evidence in addition to entries in books of account, and I take it that any relevant fact s which can be treated as evidence within the meaning of the Evidence Act would be sufficient corroboration of the evidence furnished by entries in books of account if true." While concurring with the above observations the other learned Judge stated as under: "If no other evidence besides the accounts were given, however strongly those accounts may be supported by the probabilities, and however strong may be the evidence as to the honesty of those who kept them, such consideration could not alone with reference 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 ....
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....es would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof. In that view of the matter we need not discuss, delve into or decide upon the contention raised by Mr. Altaf Ahmed in this regard. Suffice it to say that the statements of the four witnesses, who have admitted receipts of the payments as shown against them in MR 71/91, can at best be proof of reliability of the entries so far they are concerned and not others. In other words, the statements of the above witnesses cannot be independent evidence under Section 34 as against the above two respondents. So far as Shri Advani is concerned Section 34 would not come in aid of the prosecution for another reason also. According to the prosecution case itself his name finds place only in one of the loose sheets (sheet No. 8) and not in MR 71/91. Resultantly, in view of our earlier discussion, section 34 cannot at all be pressed into service against him. (underline 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....
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....,00,91,198/- (which is recorded on the left hand side of the page). On the right hand side of the page, parties to whom cash payments were made have been recorded, on instructions from Dhariwal Industries Ltd., The instructions were in the form of slips of paper and they contain the signatures of Mr. Rashiklal Manikchand Dhariwal and his son Mr. Prakash Dhariwal. Such payments totaling to Rs. 206,76,54,463/- were made in 2003-2006. The balance of Rs. 11,24,36,739/- was settled by me subsequently over a period of time." 7.2. Considering the statement of the said person, there is strong force in the contention of the assessee that even assuming that the receipt of such amount was merely a collection for on behalf of the company and such amount cannot par take the character of income in the hands of those persons. 7.3. Moreover, according to the assessee, the searched person being a third party had retracted all the statements recorded during the search proceedings in the following words: "1. I referred my aforesaid statement recorded by Deputy Commissioner of Incometax, Central Circle 2(2), Bangalore on 10.8.2011. 2. In this statement dated 10.8.2011 sense conveys that my....
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....ly knowing that it would not be possible for the AO to call a party from distant Bangalore and afford the facility of cross examination during a short period of just 12 working days, the appellant makes request for cross examination. There is no denying the fact that cross examination is an inalienable right of an agreed party but it is also true that there has to be a justifiable time frame in which such right can be exercised. It is as settled principle of law that rights and duties under a statute go hand in hand and cannot be exercised in isolation. The appellant truly had the right to cross examination but at the same time had the duty to ask for it within a reasonable time frame. A right exercised with ulterior motives does not possess the sanction of law. Facts of the case clearly indicate that the appellant had purposefully demanded cross examination at a time when it was considered impractical and unfeasible....." 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....
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.... light of the decision of the Supreme Court in the case of CBI v. V.C. Shukla and others (1998) 3 SCC 410 as obse rved by the Tribunal and submitted that the Tribunal has based its conclusions on the findings of fact recorded by it upon appreciation of the evidence on record; that the Tribunal had examined the facts and circumstances of the case and had come to the conclusion that the Revenue had not been able to establish its case against the assessee and as such, the order of the Tribunal being based upon findings of fact recorded by it, does not give rise to any question of law. It was, further, submitted on behalf of the assessee that the entire case of the revenue was based upon documents recovered during the course of search from the premises of third parties and the statements of the third parties and that the assessee was not granted an opportunity to cross examine the third parties and as such their 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 ....
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....of PB AR]; (iv) that once the alleged sum of Rs. 57.5 lakhs was subjected to tax in the hands of Dhariwal Industries Limited, the same cannot be subjected to suffer further tax. This view has been fairly conceded by the CIT (A) "(On page 54) 2.27.......The appellant is right to the extent that no income can be taxed twice......" (v) that the AO had candidly admitted that during the course of assessment proceeding itself the assessee had sought permission to cross examine Shri Sohanraj Mehta which was summarily rejected by taking refuge ".....Due to paucity of time, the cross examination could not be granted" [Refer: Para 2.8 (Page 10) of the CIT (A)'s order]. This stand of the AO, to view it mildly, is against the spirit of judicial pronouncements; (vi) that the AO had merely come to a conclusion based on a statement 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-examin....
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....ub Perfumers Pvt. Ltd., (Supra) while deleting the addition under identical facts and circumstances as held as under : "2. The facts in brief borne out from the record are that during the course of search conducted upon Shri. Sohanraj Mehta, C&F of RMD Gutkha group in Bangalore, statement of account was seized in which there was an entry of Rs. 50 lakhs in the name of Malik Kannauj. This entry was interpreted by the Revenue as this amount was given to Shri. Abdul Malik, MD of the assessee-company. On the basis of seized documents, the Assessing Officer has formed a belief in the assessee's case that the income chargeable to tax has escaped assessment, as this amount was not shown by the assessee in its books of account. Accordingly a notice under section 148 of the Income-tax 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....
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....cumstances, I fail to understand as to how, the A.O. formed the belief that the entry in the name of "Malik Kannauj" (as appearing in the seized document) referred to Shri 'Malik, M.D. of the appellant company. Further, even for argument sake if "Malik Kannauj" indeed referred to Shri Abdul Malik, the M.D. of the appellant company, there was no evidence/material on record which could link that payment to the assessee company. Just because the ADIT (Inv), Kanpur had informed the A.O. that the entry of payment of Rs. 50 Lakhs (as mentioned in the seized document) to one "Malik Kannauj" related to the Appellant company (without any supporting in this regard), to same could not have been the basis for the A.O. to initiate the reassessment proceedings in the case of the 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 ....
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....assessment record it is seen that the appellant categorically denied having any financial or business transaction with Sh.Shobhan Raj Mehta. A request was also made to provide complete statements on the basis of which addition was being contemplated by the assessing officer. However, the assessing officer did not provide the copies of those statements. During the course of assessment proceedings, the assessing officer did not throw any light on any inquiry/ investigation carried out by him that could justify the additions made by him. That assessee has vehemently stated that the department has not proved that the identity of Shri Pawan Agarwal with the assessee and no slip, letter, document etc. showing any relationship of assessee 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 pur....
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....hobhan Raj Mehta. These findings of CIT(A) could not be controverted by Learned D.R. of the Revenue and moreover, the name of the assessee i.e. Pawan Kumar Agarwal is very common name and merely because this name is mentioned in a seized paper found during the course of search at Bangalore at the premises of Shri Shobhan Raj Mehta, with whom the assessee was not having any direct transaction, it cannot be said that the said Pawan Kumar Agarwal, of whom the name was mentioned in the seized paper is the assessee. Without establishing this aspect that the name mentioned in the seized paper is that of the assessee, no addition can be made in the hands of the present assessee on the basis of such 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....
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....vided statement of Sh.Sohan Raj Mehta. However, it is further submitted that the assessee should be given the opportunity to cross examine the genuineness of the statements of Sh. Sohan Raj Mehta and should be given reasonable opportunity to verify the claims made by him. In the case of Kishan Chand Chelaram (125 ITR) it has been held by the Hon'ble Supreme Court of India that before taking a decision the assessee has to be allowed a chance or an opportunity of rebuttal with respect to the documents which are to be used against the assessee. The assessee has gone through the entire statements of Sh. Sohan Raj Mehta recorded under section 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 ment....
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....ers were seized from Dhariwal Group. The said papers were seized from the residence of Shri Sohanraj Mehta. According to the Assessing Officer, the assessee could not dis own the existence of such documents. The Assessing Officer observed that the money has been passed on by Dhariwal Group through their staff. Hence, the assessee must have received the amount noted on the seized papers. The Assessing Officer has proceeded to make the addition of Rs. 5.10 crs. by stating that as per section 114 of the Indian Evidence Act, it is an accepted rule of evidence that if a person possessing an evidence does not 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 Suma....
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....sessee. 5.4 The presumption u/s 132(4A) is available only in respect of the person from whom the paper is seized. It could not be applied against a third party and hence, no addition could be made on the basis of the evidence found with third party. The presumption u/s. 132(4A) could be used only against the person from whose premises the documents are found and not against the person whose name appears in the seized papers. 5.5 In this case, the addition has been made on the basis of the documents found with Dhariwal Group and thus, the presumption u/s. 132(4A) could not be 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 r....
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....sions of section 80 of the Indian Evidence Act which states that there is a presumption that the documents produced before the court as record of evidence are genuine. In this regard, the stand of the assessee is that in the case of assessee, document produced was merely in the form of a rough noting wherein certain amounts were written against the name 'Pradeep Runwal'. As discussed earlier, there may be many people of that name in Pune and in the absence of any other corroborative evidence to that effect. In such a situation, it cannot be inferred that 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....
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....ion could be made on the basis of documents found with third party was neither raised nor applicable. Thus, according to us, the said decision has no application to the facts of the assessee's case. 5.11 The CIT(A) in para 2.5 has placed reliance upon ITAT, Pune decision in the case of Dhanvarsha Builders and Developers Pvt. Ltd. [102 ITD 375]. In the said case, the assessee was searched and documents were found indicating on money received by the assessee. It was held that the document was found with the assessee and therefore, the A.O. 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 absen....
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....- per cent. Hon'ble High Court held that the additions made were correct. The said decision is not applicable to the facts of the present case. The CIT(A) has further relied upon the decision in the case of Chuharmal Vs. CIT [(1988) 172 ITR 250 (SC)] for the proposition that documentary evidence plays an important part. There is no dispute to the said proposition but in the absence of any corroborative evidence no addition could be made in the hands of the third party. 5.14 We find that in Thakkar Developers Ltd. [IT A 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 w....
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....d rebuttable one". 6. Similar view has been taken by ITAT, Pune in Amit D Irshid [ITA No.988/PN/11] that presumption u/s. 134(4A) is available only against the person from whose possession the document is found and not against the third person. In the absence of clinching evidence against the third person as stated above, no action could be taken against him. In such a situation, the Assessing Officer was not justified to make addition in question in assessee's case. In view of above, we are of the view that 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, therefo....