TaxTMI 
TaxTMI 
2015 (11) TMI 402
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....5 to adjudicate the issue. 4. The assessee 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 ab....
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....ent on oath under section 132(4) of the Act, that he was effecting unaccounted sale of Gutkha on behalf of M/s.DIL and the sale proceeds were deployed as per 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 th....
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....e day of search, he denied to have received the said sum. The assessee also stated he had already clarified during the course of search that he had not entered 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 R....
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....he said seized documents could not be treated as against him being a third party evidence. The Assessing Officer was of the view that in case the arguments of 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....
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.... statement of actual state of affairs among various parties including the appellant. Therefore, it cannot be said that no additions are called for on the loose papers found at 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 d....
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....Our attention was drawn to the page 2 of the assessment order and also to the show cause notice issued by the Assessing Officer which is reproduced at page 4 of the assessment order, wherein 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 Representat....
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....sessee pointed out that it had raised the grounds of appeal against the application of GP rate @ 35%, which was very excessive and high. 15. The learned Departmental Representative for the Revenue on the other hand, 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....
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.... Shri Sohan Raj Mehta, who was the C&F agent of M/s. DIL. When confronted, Shri Sohan Raj Mehta in his statement recorded under section 132(4) of the Act admitted that he was effecting unaccounted sales of Gutka on behalf 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 ....
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....es, the Assessing Officer deciphered the amount as Rs. 1 crore for A.Y. 2006 -07 and Rs. 20 crores for A.Y. 2007 -08 as received by the assessee Shri Vinit Ranawat. Although Mr. Mehta in his statement recorded u/s.132(4) has stated 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 busines....
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....carried on 09-10-2009 wherein documents maintained by Mr. Sohan Raj Mehta, C&F Agent of M/s. Dhariwal Industries Ltd were found. The assessee's premises was also searched on 20-01-2010, i.e. after a period of about 3 months and 10 days. During the course 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....
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....s not found any evidence whatsoever to substantiate that the assessee has in fact received any amount either from Mr. Sohan Raj Mehta or from Mr/ Rasiklal Manikchand Dhariwal/Mr. Prakash M. Dhariwal or M/s. Dhariwal Industries Ltd. No unaccounted asset, investment or loose paper evidencing such 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 busin....
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....as per the instructions of Mr.Raskilal Manikchand Dhariwal and his son Mr. Prakash Ans : No. It is not required. After receipt of Cash, they leave the slip with me. That is considered as evidence." 43. From the above it is seen that Mr. Sohan Raj Mehta has never identified the assessee. It is also an admitted fact that the 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 handwritin....
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....s sought to assessee certain income as income from undisclosed sources received by the assessee on the basis of statement by 2 persons that they had paid money in black to the assessee and entries in books belonging to them regarding alleged payment to the assessee. The Tribunal examined the statement made by the 2 persons and found that the evidence tendered by them suffered from serious infirmities. 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 : "....
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....ld confine our attention to some of the judgements on which Mr. Sibal relied. In Yesuvadiyan Vs. Subba Naicker [A. I. R. 1919 Madras 132] one of the learned judges constituting the Bench had this to say: S.34, Evidence Act, lays down that the entries in books of account, regularly kept in the course of business are relevant, but such a statement will not alone e be sufficient to charge any person with liability. That 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 obse....
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....not without independent evidence of their trustworthiness, fix a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the other books and loose sheets which we have already found to be not admissible in evidence under Section 34) are admissible under Section 9 of the Act to support an inference about the formers' correctness still those entries 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....
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....written instruction of Prakash Rasikal Dhasriwal and Rasiklal Manikchand Dhariwal as per the Statement of Sri Sohanraj Mehta dated 21.10.2009 [Refer: Page 99 of PB AR]. To a question No.14 Exhibit A/M/8/dated 9.10.2009 which contained a bunch of loose sheets serially numbered from 01 to 58 to explain the contents, Shri Sohanraj Mehta answered thus - "Page 34 records receipt of Gutkha consignment from Dhariwal Industries Ltd., during April 2003 to Jan. 2006 totalling to Rs. 218,00,91,198/- (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 colle....
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.... had also turned down the assessee's request for cross-examination on the ground that - "(On page 53) 2.25................It has also been indicated, as borne out on records, that the appellant had asked for cross examination of the party for the first time only on 14.12.2011. The appellant was also fully aware that the limitation to pass reassessment order in the case expires on 31.12.2011. Thus, between 29.3.2011 till 14.12.2011, the appellant did not make any request to the AO that an opportunity of cross examination is required by him. Fully 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 ha....
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.... by it after appreciation of the evidence on record, it cannot be stated that the impugned order of the Tribunal suffers from any legal infirmity............" (ii) During the course of hearing of a reference application of the Revenue in the case of DCIT (Asst) v. Prarthana Construction Pvt. Ltd [Tax Appeal No.79 of 2000 dated 25.3.2001] before the Hon'ble jurisdictional High Court, the learned Counsel for the assessee submitted that the documents in question have been found from the premises of a third party. The loose papers cannot be stated to be books of account in the 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, su....
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....at he was making purchases through Ambika Distributors who were the C & F Agents for Gujarat Region; (iii) that the total unaccounted sales effected by Shri Sohanraj Mehta C & F of RMD Gutkha on behalf of Dhariwal Industries Limited for the period of April 2003 to Feb 2008 was Rs. 345.72 crores (approx). The unaccounted income for the AY 2004 -05 was arrived at Rs. 40,88,32,514/-, the same was added substantively in the case of M/s. Dharival Industries Limited and concluded the assessment for the AY 2004 -05 u/s 153A r.w.s. 143 (3) of the Act, dated 29.12.2011 by the ACIT, C.C. 1(1), Pune [Courtesy: P 231 - 238 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....
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.... assessee was examined, he had taken the same stand. The details called for in the scrutiny assessment did not call for any specific details on the seized document or receipt of cash based on the seized document. 14. In the light of these circumstances, the CIT(Appeals) was justified in coming to the conclusion that no evidence has been brought on record to prove that the assessee received the sum of Rs. 22.75 lakhs from Sohanraj Mehta. The addition made by the AO was therefore rightly deleted by the CIT(A). We do not find any ground to interfere with the order of the CIT(Appeals)." 51. We find the Lucknow Bench of the Tribunal in the case of M/s. Mohd. Ayub Mohd. Yakub 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-com....
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....t material, the reopening of assessment in the hands of the assessee is not proper. The ld. CIT(A) has given valid reasons while holding that the reopening is bad. The relevant observations of the ld. CIT(A) are extracted hereunder:- "5.1.6 From all the aforesaid correspondence, it is obvious that there is no clue as to how the identity of "MALIK Kannauj" as appearing in the seized document (supra) was interpreted as Shri Abdul Malik, MD of the appellant company. In the statement given by Shri Sohanraj Gupta, there is no mention of any Malik. Further, in his statement under oath before the ADIT(lnv), Kanpur, Shri Abdul Malik, the M.D. of the appellant company had denied such transaction. In these circumstances, 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....
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....ugh the order of the A.O. It was contended by the learned AR before me that mere jottings and notings should not be the basis for making any addition in the returned income, more particularly when A.O has not allowed the opportunity of Cross Examination of Mr. Shobhan Raj Mehta. The material provided/gathered by the department has also been produced before me. In this paper, it is seen that name of assessee is appearing. It was vehemently argued before me that how the department comes into conclusion that name Pawan Agarwal as appearing in the seized material is appellant. The name of appellant is very common and it is possible to be some other Pawan Agarwal instead of appellant. The submissions of the appellant are considered. On examination of the 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 ....
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....ns with Mr. Shobhan Raj Mehta. In view of these factual exigencies, it is held that the addition made by the AO, without any corroborative evidence, was unjustified and accordingly deleted. Accordingly, ground No. 3 to 7 raised by appellant are allowed." 5.1 From the above Para from the order of CIT(A), we find that a categorical finding has been given by him that statement of Shri Shobhan Raj Mehta was not given to the assessee and beyond the belief of presumption on the information supplied by the ADIT(Inv.) -III, Kanpur, further evidences are not found to corroborate the additions. He has also given a finding that Cross-examination of Shri Shobhan Raj Mehta was not allowed and the assessee firm had strongly denied having any financial and business transactions with Mr. Shobhan 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....
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....see specifically requested for allowing opportunity to cross-examine Shri Sohan Raj Mehta also and requested the Assessing Officer to supply the copy of retraction of his statement. The Assessing Officer has reproduced the assessee's letter, paragraph No.11 of which, reads as under:- "11. The assessee had requested your good self to provide the following documents: (a) Copy of the Sworn Statement of Sh. Sohanraj Mehta. (b) Copy of written statements or Affidavits obtained from Sh. Mehta wherein he has mentioned that Rs. 9 crore was payable to the assessee. (c) Copy of subsequent retraction of the statements made at the time of search operation, if any. (d) Copy of receipts obtained from the assessee by Sh. Sohanraj Mehta on payment to the assessee, if any. The assessee has been provided 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....
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....ribunal in the case of Pradeep Amrutlal Runwal reported in 149 ITR 548 while deleting addition under identical facts and circumstances has observed as under : "5. After going through the rival submissions and material on record, we find that the issue before us is regarding the addition of Rs. 5,10,00,000/-. As stated earlier, during the search proceedings in the case of Dhariwal Group, some loose papers were seized wherein certain amounts were written against the name of 'Pradeep Runwal'. Hence, the case of the assessee was reopened u/s 148 of the Income Tax Act. It was explained to the learned Assessing Officer that the assessee had not earned any such income of Rs. 5.10 crs. and therefore, no addition should be made. However, the Assessing Officer has not accep ted the contention of the assessee. 5.1 The Assessing Officer has stated that the papers 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. He....
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....any other corroborative details, the Assessing Officer has assumed that the amounts reflected the income of the assessee himself, while the assessee has no business dealings of his with Dhariwal Group. The Assessing Officer has not brought on record any evidence to suggest that Dhariwal Group has admitted that the amounts were paid to the assessee. Hence, simply because the name of the assessee is noted on the seized papers does not mean that the addition could be made in the hands of the assessee. Since no evidence was found relating to the existence of any transaction between the assessee and Dhariwal Group and in the absence of any corroborative evidence to suggest that the assessee had actually received the said amount, no addition could be made merely on the basis of noting in loose papers found during the search proceedings in the case of Dhariwal Group against the name of the assessee. 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 ....
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.... 5.7 As stated above, it has been consistent stand of the assessee that the assessee has had no business relations whatsoever with the Dhariwal Group. Further, apart from the noting on paper with the name 'Pradeep Runwal, there is no corroborative evidence in this regard against the assessee. In such circumstances, where the assessee has not entered into any transaction with the Dhariwal Group, one certainly could not expect the assessee to be in possession of any evidence to suggest that it has not entered into any such transaction except for his books of account which have already been verified by the concerned Assessing Officer. Hence, the Assessing Officer was not justified in placing reliance on the provision of section 114 of the Indian Evidence Act. 5.8 It was further submitted on behalf of assessee that the Assessing Officer was not justified in making the addition by relying on the provisions 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 ....
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....tion of the assessee that no evidence was found to indicate that the assessee had received the amount, the CIT(A) referred to the fact of acceptance of the paper by Shri Mehta and considering the fact that the modus operandi was clarified by Shri Mehta, the addition was rightly made by the Assessing Officer, has been held by CIT(A). He has referred to various decisions in support of the addition made. Firstly, he has relied upon the decision of ITAT Third Member in the case of Khopade Kisanrao Manikrao [74 ITD 25]. In this regard, the stand of assessee is that the decision in the case before Third Member was not applicable to the facts of the present case. In the said case, the assessee was searched and documents were found indicating on money received on sale of plots. On the basis of the documents found, the Assessing Officer estimated the income from on money which was held to be valid. In that case, the issue that no addition 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 ....
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.... in the case of assessee. 5.13 The CIT(A) has relied on the decision in the case of Vasantibai N. Shah Vs. CIT [(1995) 213 ITR 805 (Bom)]. In this case, the issue was regarding validity of reassessment proceedings. The assessee had made a false disclosure. Subsequently, the case was reopened. Hon'ble High Court held that the reopening was valid since the assessee herself had made a false disclosure. Thus, the facts are totally different from the present case and hence, the ratio of Vasantibai N. Shah (supra) is not applicable to the assessee's case. The CIT(A) further relied on the decision in the case of Green Valley Builder v. CIT [(2008) 296 ITR 225 (Ker)]. In the said case, the assessee was engaged in real estate business and it had sold certain plots. The assessee stated that the plots were sold at Rs. 1750/- per cent while the Assessing Officer on the basis of evidences held that actually the lands were sold at Rs. 4,000/- 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 I....
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....It is held that as per Section 132(4A) where any books of account or document is found in the possession and control of any person in the course of the search, it is to be presumed that they belong to " such person". Thus, clearly the presumption is in respect of the person from whom they were found. The use of the word "to such person" in the said Section means the person from whom the books of account or documents were found. Clause (ii) of Section 132 (4A) provides that the contents of such books of account or documents are true. This presumption can be applied only against the person from whose possession the books of account or the document were found. Therefore, the A.O. was not justified in applying the provisions of Section 132(4'A) to the assessee in the present case who was not searched u/s 132 of the Act nor the document was found and seized from, their possession. Even, otherwise, such presumption u/s 132(4A) of the Act is not conclusive and 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 ag....