TaxTMI 
TaxTMI 
2013 (4) TMI 747
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....ta, who is a carry and forward agent of RMD Group of Pan Masala and Gutkha products, certain chits were found. From those chits, it was ascertained that Shri Sohan Raj Mehta made cash payment to the extent of Rs. 9 crores to the assessee firm for and on behalf of RMD Group. That the assessee is a regular supplier of Supari to RMD Group and Shri Sohan Raj Mehta was the C&F agent for Karnataka region of the RMD Group. Shri Sohan Raj Mehta, in his statement recorded during the course of search at his premises, admitted to have made cash payment to the assessee for and on behalf of RMD Group. Copy of his statement was duly supplied to the assessee during the assessment proceedings. She stated that the learned CIT(A) deleted the addition mainly on the ground that there was no corroborative evidence of the chits found from Shri Sohan Raj Mehta. She stated that during the accounting year relevant to the assessment year under consideration, there was survey at the assessee's business premises in which huge excess stock was found. The assessee also admitted such excess stock and surrendered the same. The huge excess stock corroborated the stand of the Revenue that the assessee was selli....
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....ered the rival arguments. The whole addition hinges on evidence gathered from third party document or statement. Now the issue is can third party statement or entry in absence of any corroborative evidence despite using ultimate action of search, can result in justified addition. The legal provision relating to presumption u/s 132(4A) is applicable to the person from whose possession or control the incriminating material is found and seized. Based on the incriminating material found from third party search but not belonging to the appellant, this presumption will not be applicable unless corroborated by other evidence. Presumption available under section 132(4A) can be drawn against the person in whose case search is authorized and from whose possession or control books of account, diary or documents are found in the course of search. Presumptions regarding correctness of contents of books of account etc. cannot be raised against the third party. Presumption under section 132(4A) is only against the person in whose possession the search material is found and not against any other person. It is further held that the presumption is rebuttable and not conclusive and it cannot be app....
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....e appellant's premises. 6.3 The alleged transactions noted on the loose slips were not handwritten by the appellant nor have his initials or signatures so as to suggest his involvement in the same. Moreover, the A.O. while using the statements of the third party should have allowed the appellant to cross examine such third party in order to use the same as evidence. This was not done despite request from appellant for cross examination. As has been held in the case of Kishin Chand Chela Ram (supra) by the Hon'ble Apex Court that any addition made on the basis of statement by a Third Party without affording an opportunity for rebuttal or cross examination to the assessee is perverse. It was therefore the obligation of the A.O. to allow the appellant to cross examine Sh. Sohan Raj Mehta and head of RMD Group in the interest of natural justice before embarking on a final view in this matter. In Elite Developers Vs. DCIT (2000) 73 ITR 379 (Nag) it was held that where the seized documents evidencing receipt of money by the assessee were not speaking documents as they were ambiguous and did not contain any narration or description about different figures noted thereon and the....
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....ddition 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 whom the assessee has no business dealing, it cannot be presumed that the assessee is making sales outside books. Moreover, as per chits found from Shri Sohan Raj Mehta, the payment made to the assessee is only Rs. 9 lakhs and not Rs. 9 crores. The department has also relied upon the statement of Shri Sohan Raj Mehta. It was pointed out by the learned counsel that Shri Sohan Raj Mehta retracted his statement. However, as per Revenue, Shri Sohan R....