TaxTMI 
TaxTMI 
2015 (12) TMI 958
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....he learned CIT(A) ought to have appreciated that the reopening u/s 148 is bad in law and hence, the reasst. u/s 147 be declared null and void for the following reasons - a. There was no evidence to show that the loose papers seized from the third party related to the assessee. b. There was no corroborative evidence to indicate that the assessee had received any amount from the RMD Gutkha Group. c. Thus, the reopening was based on mere suspicion and surmises, without any concrete incriminating evidence and therefore, it was illegal and void. Without prejudice to the above ground, the assessee submits the following grounds - 2] The learned CIT(A) erred confirming the addition of Rs. 5.10 Crs. made by the learned A.O. u/s 69A on the ground that the assessee had received the said amount from RMD Gutkha Group on the basis of papers seized in the course of search action "on the said Group. 2.1The learned CIT(A) erred in holding that the addition was justified for the following reasonsa. Shri Sohanraj Mehta, the C & F agent of RMD Gutkha Group had admitted in the statement recorded u/s 132(4) that the seized papers were written by him and hence, the same carried great evide....
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....e same are not applicable to the case of the assessee. 4] The learned CIT(A) ought to have appreciated that no addition could be made on the basis of documents found with third parties and hence, the addition made should have been deleted. 5] The learned CIT(A) erred in placing reliance on section 114 of the Indian Evidence Act without appreciating that it had no relevance to the facts of the present case. 6] The learned CIT(A) failed to appreciate that the assessee had not carried out any transaction with RMD Gutkha Group and hence, the addition made on presumptions and surmises may kindly be deleted. 7] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. At the outset of hearing, the learned Authorized Representative has not pressed the ground Nos.1 and 1.1 which pertain to reopening, so they are dismissed as not pressed. The assessee is an individual. The original return of income declaring the total income of 3,12,974/- was filed on 01.11.2004. The Assessing Officer thereafter received information from ACIT, Central Circle-1(2) that a search and seizure action u/s.132 was carried on 21.01.2010 in the case of Shri Sohan....
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....the seized paper were explained by the author, Shri Mehta which clarified the modus operandi of the dealings of the RMD group and hence, the said papers could not be regarded as dumb documents. c. The amounts noted against the name 'Pradeep Runwal' were accepted by Shri Mehta to be in the nature of unaccounted payments made by the RMD Group and hence, it was clear that the said amounts were received by the assessee. d. No documents could reasonably be expected to be maintained in respect of unaccounted dealings and hence, in such cases, the corroborative evidence has to be seen in the documents seized whereas the inference is to be drawn based on the statements recorded post search action. e. The assessee has not offered a satisfactory explanation in respect of the alleged receipt as per the notings in the seized papers and hence, the addition made by the learned A.O. was justified. The CIT(A) failed to have appreciated that - a. The assessee had not received any amount from RMD Gutkha Group in cash. b. The presumption u/s 132(4A) if at all applicable could be applied only in the case of RMD Gutkha Group and not in the case of the assessee. c. No addition ....
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....tal receipts due to the sale of unaccounted production carried by RMD Gutkha Group through Shri Sohanraj Mehta alone who is over seeing Karnataka region is of Rs. 355.51 crores for the period April 2003 till February, 2008. This amount received has either been remitted back to RMD Gutkha group or handed over as per the instructions of RMD Gutkha Group to the various suppliers of raw materials, to other businessmen etc. For the purpose of ascertaining the business connection of RMD Gutkha group with the parties whose names figured in the said incriminating documents, extensive discreet enquiries were carried out. These enquiries revealed that Malikarjun Group of Shimoga, Bholenath Radhakishan Group of Delhi, P.C. Jain Group of Mumbai, Mukesh Garg Group of Delhi, Vineet Ranawat Group of Mumbai, S. Balan Group of Pune, Malu Group of Pune, Champion Packaging Group of Bangalore, etc. are closely connected with the business activity of RMD Gutkha group related to the unaccounted production and sale of gutkha and pan masala products. Accordingly, these business groups were also covered alongwith RMD Gutkha Group on 20/01/2010. b) The modus operandi revealed in course of the search acti....
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....ciates. However, they refused to accept the de-coding explained by Shri Sohanraj Mehta that the amounts mentioned in lakhs actually stands for crores of rupees and the word 'packet' stands for a lakh of rupees. d) The said incriminating documents seized by the Investigation wing of Bangalore on 9/10/2009 had details of the unaccounted sales of Gutkha carried out by Mr. Sohanraj Mehta, C&F of RMD Gutkha Group for Karnataka Region. As per these seized documents, the sale proceeds from this unaccounted sale were being deployed to a number of entities which included Shri S. Balan (Director of M/s Sai Constructions Pvt. Ltd.) to whom an amount of Rs. 1435 lakhs was paid. Shri S. Balan was confronted on this transaction in course of the search action on 20/1/2010. In course of the statement on oath, he admitted that he was custodian of around Rs. 14 crores on behalf of RMD Gutkha Group. Though subsequently under influence of M/s. Dhariwal Industries Ltd., has retracted his statement on 25.11.2011 by filing an affidavit. e) Similarly, as per the said documents seized by the Investigation wing of Bangalore on 9/10/2009, an amount of Rs. 4656 lakhs was paid to Shri Mallikarjun....
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....ble perfume, cardamom, menthol and packaging pouches, some prominent builders of Pune, etc. With most of these parties their association with RMD Gutkha Group was very old, in fact in most of the cases more than 10 years old. This shows that the documents seized by the Investigation wing of Bangalore are clearly related to the RMD Gutkha Group itself. iii) It was initially being claimed by RMD Gutkha Group that Shri Sohanraj Mehta is a man of dubious character and therefore the records found from him cannot be relied upon. In course of the post search inquiries, it was revealed that Shri Sohanraj Mehta has been the C&F of RMD Gutkha Group for more than 15 years and during this period no cases etc. of any wrong doings have been filed against him by RMD Gutkha Group. It was further revealed that RMD Gutkha Group does not have the faith and confidence to give instructions in the form of signed chits to any other person other than Shri Sohanraj Mehta. Moreover, it was also revealed that in a number of agreements signed by RMD Gutkha Group for properties acquired at Bangalore, Shri Sohanraj Mehta has signed in the capacity of a witness. All these facts clearly prove that the claim of....
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....sed with DCIT, Central Circle 1(1), Pune and additions were also made in the case of assessee i.e. Shri Pradeep Runwal, Shri Kantilal Lunkad & Shri Pravin Lunkad which were assessed with Circle-3, Circle-2 & Ward 1(1) respectively. The issue of Shri Pradeep Runwal is before us and we will concentrate the same on merits in its facts and circumstances. It is pertinent to mention here that every case is decided in its facts and circumstances, so we will decide the case of assessee in its facts and circumstances which are without prejudice to other similarly placed cases. It is not appropriate for us to comment on other parties which are not before us. So, this case is being decided in its facts and circumstances. 4.2 Further, with regard to the assessee's observation that the Assessing Officer has neither provided copies of statements of seized persons i.e. Sohanraj Mehta nor any opportunity to cross examination given to the assessee. The learned Departmental Representative stated that the Assessing Officer has not relied on statement of Shri Sohanraj Mehta while making the addition. There is no discussion of the said statement in the assessment order. When the Assessing Officer is....
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.... 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 are in the form of two loose papers wherein amounts of 4.80 Crores and 30 lacs were noted against the name "Mr. Pradeep Runwal". Apar....
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.... 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 and is not produced would, if produced be unfavourable to the person who withholds it. It is pertinent to mention this rule applies to the cases wherein it is....
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....(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 in the cases relied by the Assessing Officer. This fact has not been established in the case of assessee, therefore, the case laws relied by the Assessing Officer are clearly....
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....erred 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 tallying with the books and therefore, it was held that cash was paid as noted on the paper. Mr. Tanna had also accepted the fact that cash was paid to the assessee. In these facts, ITAT held....
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....ized 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 seized documents. The A.O. was not justified in rejecting the contents of the affidavit as mentioned above. The A.O. further relied on the presumptions u/s 132(4A) of the Act on the ground that this section was v....