TaxTMI 
TaxTMI 
TaxTMI 
1999 (12) TMI 867
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.... (a) The CIT(A) was not justified in sustaining disallowance of ₹ 1,19,952 out of interest claimed by the appellant on the ground that the relevant borrowals were made from concerns whose name appear in Annexure A-3 seized from the office premises of Eshita Dye Chem (P) Ltd. in December, 1991, in the course of search under s. 132 of the IT Act. 04. (j) The first appellate authority was not justified in upholding in principle the AO's decision to bring to tax in the hands of appellant, the "Peak" of the credits appearing in the bank accounts of the 110 bank accounts whose names appear in Annexure A-3. (The addition sustained by the CIT(A) in this regard is ₹ 2,62,01,981 out of the addition made by the AO of ₹ 12,86,70,053). 3. The assessee has also raised subsequently the following additional grounds: "(A) Without prejudice to the grounds mentioned at 4(a) to 4(k) [only 4(j) reproduced above], the first appellate authority should have directed the AO to deduct the "Peak" worked out and included in the IT assessment for the asst. yr. 1990-91, from the "Peak" arrived at for the asst. yr. 1991-92 and include only the balanc....
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.... M. Khandhar. (2) Shri Praful M. Khandhar. (3) Shri Surendra M. Khandhar. (4) Shri Rajesh M. Khandhar. (5) Shri Bipin M. Khandhar. Shri Praful M. Khandhar is the director of a concern called Eshita Dye Chem (P) Ltd., which is one of the concerns which has been searched along with the residential premises of the assessee. The assessee obtained Bachelor's Degree in Commerce and also appeared for the Chartered Accountants' Examination but he did not obtain the degree. He started practice as an Income-tax Practitioner in October, 1980. It is stated by the learned counsel for the assessee that he discontinued his profession in 1983. The learned counsel for the assessee also explained in a note which may be seen at p. 2 of Volume III of the assessee's paper book (APB) that the assessee started with two other businessmen. Shri S.M. Hussain and Shri Sudershan Kumar, in 1984 a limited company "Suman Motels (P) Ltd.". After obtaining the permission of the Controller of Capital Issues in 1989, this company is stated to have gone public and the shares were issued to the public in April/May, 1990. This company, of which the assessee is a director, has its register....
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....ia, Kakad Bazar. (13) Bank of Baroda, Khand Bazar. (14) Canara Bank, Sion. The Authorised Officer took a statement of the assessee on 20th Dec., 1991 and in the course of his statement he was examined on the bank accounts figuring in the statement termed as Annexure A-3. In a deposition taken from him during the search of Parshva Chambers, the assessee agreed to offer the peak of these bank accounts as his undisclosed income and it is on the basis of this admission that the AO made an addition of ₹ 12,86,70,053. Before we proceed to detail the deposition of the assessee on the bank accounts figuring in Annexure A-3, we may also mention that the statements have been taken from the assessee on different occasions and as per the details given in the APB at p. 1 of Volume-III, the relevant details are as follows : "18th Dec., 1991 At the residence of Shri S.M. Khandhar in Matunga, Bombay, preliminary statement was recorded from him by Shri Atul Pranay, Authorised Officer. 18th Dec., 1991 At the residence of Shri S.M. Khandhar in Matunga, Bombay, final statement under s. 132(4) of the IT Act was recorded from him by Shri Atul Pranay, Authorised Officer. 18th Dec., 1....
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....s. 10. Raj Electricals. 11. Ray Engineering Co. 12. Shekakha & Co. 13. H.P.S. International. 14. Prabhavee. 15. S.M. Khandhar & Co. 16. P.M. Khandhar & Co. 17. Arckay Incorporated. 18. Shah & Khandhar Bros. 19. Gaurav Enterprise'Gaurav Family Trust. 20. Tejas Enterprises'Khandhar Family Trust. 21. Dhaksha P. Khandhar (Personal). 22. Bharti S. Khandhar (Personal). 23. Rajeshree B. Khandhar (Personal). 24. Asha R. Khandhar (Personal). 25. Bipin Khandhar'B.K. Trading Co. (Personal). 26. Snehal P. Khandhar'Minor (Personal). 27. Tejas S. Khandhar'Minor (Personal). 28. Gaurav S. Khandhar'Minor (Personal). 29. Mona P. Khandhar'Minor (Personal). 30. Eshita P. Khandhar'Minor (Personal). 31. Rupa R. Khandhar'Minor (Personal). 32. Kushal S. Khandhar'Minor (Personal). 33. Hiraben M. Khandhar (Personal). Q. 5 As regards the peak amounts referred in the six pages under reference kindly clarify the concept of peak and also the status of Khandhar Family concerns in respect of working of the peak for offering the same for the purpose of taxation. Ans. As regards the concept of peak I have to state that this ....
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....hese will be paid as per tax norms as prescribed in the IT Act, 1961. Q. 8 In respect of the concerns referred in six pages as seized in Annexure A-3 please state whether in respect of concerns not falling under your family concerns also in respect of the persons referred in SB a/cs. whether beneficiary opened a locker and operated the same. Ans. No. Q. 9. Do you wish to say anything further? Ans. No. Please." It may be noticed from the above deposition that the assessee has admitted that the assessee's group consists of as many as 33 concerns which includes even Eshita Dye Chem (P) Ltd. It may also be noticed that the bank accounts figuring in Annexure A-3 are admitted to belong to the Khandhar group and other concerns. It is also admitted that the persons in whose names the accounts figure were physically available but they are not genuine parties. In other words, it was admitted that the assessee was operating the bank accounts in Annexure A-3 in benami names. It may also be observed that at the residence of his brother, Shri Bipin Khandhar, not only the list of bank accounts but the relevant bank pass books, cheque books and pay-in-slips were also located in r....
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....wever following points to be considered with my above referred statement (1) Khandhar group and all Khandhar family members are regularly assessed to him IT Department. (2) All other proprietorship and partnership concerns also regularly assessed to the IT Department. (3) It is general practice in our market that parties are not co-operative to the search party. (4) I was in very much high tension at the time of search action. (5) Considering that parties may not be in a position to give documentary evidence at the time of assessment since I do not have any business transaction with some of the parties and they may not co-operate me. Q. 7. In reply to question No. 4 recorded on 20th Dec., 1991, you had clearly stated that "All partners and proprietors are physically available but these creditworthiness is not linked with the transactions in the concerns under reference and, therefore, I am offering the peak amount as appearing in this bank statement for taxation". Even you had stated that "I undertake to close all bank account and concern as referred in the pages under reference that is Annexure A-3 except Khandhar group". Further you went on recording....
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....o offer for taxation. It is to be noted that my statement is binding for S.M. Khandhar & Co., proprietorship concerns to some extent Suman Motels Ltd., in the capacity of director and partnership concern (to some extent) where I am partner. My statement is not binding to anybody else as they are separately assessed to IT Department. Q. 11. In reply to question No. 7 you have stated that Department could not found cheque books, slip-books any other documents except Khandhar group but in reply to question No. 6 of the statement recorded on 20th Dec., 1991 there are 8 accounts that you have accepted are maintained by you and your family members. bank accounts, cheque-books, slip books was found during the search operation. You have clearly mentioned that accounts are operated by us and, therefore, peak amount is being disclosed for income-tax purpose thus you have given a false statement in response to the question No. 7 of your statement being recorded under s. 131 today that is 23rd Sept., 1993. Please clarify your position. Ans. It is to be noted that documents relating to bank transactions are found at the residence of Shri Bipin M. Khandhar and cheque book of Shaikh Mukhtha....
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....uced by us. Q. 13 Vide question No. 19 of statement recorded on 18th Dec., 1991, you have accepted that you look after the mobilisation of finance of concerns of the group this implies that you are looking after the financial matters of the group do you confirm? Ans. Yes I do confirm." It may be observed from the above statement that the assessee had retracted from his earlier offer to disclose the peak of the bank accounts figuring in Annexure A-3 as his income. 9. Before the AO, various contentions were taken as to why the peak of the amounts figuring in the various bank accounts in Annexure A-3 should not be brought to tax as the undisclosed income of the assessee. Firstly, it was contended that the admission contained in the statement allegedly recorded under s. 132(4) on 20th Dec., 1991 has no validity because the assessee had nothing to do with Eshita Dye Chem (P) Ltd. and while there was a search warrant against this concern there was no search warrant against the assessee and so the statement recorded from him in the course of the search of Eshita Dye Chem (P) Ltd. in 208-210, Parshva Chambers, cannot be regarded as a statement under s. 132(4). It was also conten....
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.... relevant portion of his deposition on 18th Dec., 1991 may be seen at pp. 12 to 27 of the Department's paper book (DPB) and the relevant queries, i.e., question Nos. 20 and 21, put by the AO and the replies given are as follows : "Q. 20. I am showing you page No. 82 of the loose paper file No. A-20 as per which Mr. Bhupendra Chedda was liable to pay ₹ 20 lakhs to you on the dates mentioned therein but this amount which is receivable by you has not been reflected in the account maintained by you. Ans. I have not received any amount from Mr. Bhupendra Chheda that is why it is not reflected in the accounts. Q. 21 On perusal of the accounts maintained by you it is seen that you have accounted for receipts and payments on accrual basis. In the light of this fact you like to revise your answer to the previous question? Ans. No." The AO rejected the contention of the assessee that the assessee had never advanced this amount and included this amount as the unexplained investment of the assessee under the provisions of s. 69 of the IT Act. The AO also made a few other additions. He estimated the professional fees at ₹ 62,500 and disallowed an amount of ....
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....s bank accounts, the CIT(A) held that only the maximum balance in each bank account should be taken for inclusion in the assessment of the assessee and thus he worked out the aggregate of the peaks of these accounts on the basis of the mode of disclosure given by the assessee in his deposition taken from him on 20th Dec., 1991 which we have extracted hereinabove. On this basis, he reduced the addition by way of the deposits of the seized bank accounts from ₹ 12,86,70,053 to ₹ 3,05,40,285, subject to further verification by the AO. He deleted the addition of ₹ 20 lakhs, being the alleged advance by the assessee to Shri Bhupendra Chedda on the ground that there was no evidence at all in support of the said advance and giving certain other reasons which we shall advert to hereinafter. He deleted the addition of ₹ 5,70,000 on the ground that the said credits should be regarded as having emanated from the bank accounts figuring in Annexure A-3 and so, according to him, as a separate addition is made on the basis of the said accounts, there was no justification for making the impugned addition of ₹ 5,70,000. The CIT(A), however, confirmed the disalowance of ....
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.... a statement recorded under s. 132(4), as under this section the statement of only the person who is in possession and control of the searched premises can be recorded. It is claimed that being in the position of only a stranger, the assessee could not have been examined under the provisions of s. 132(4) and in this context reliance is placed upon the following decisions: (1) Nenmal Shankarlal Parmar vs. Asstt. CIT (1992) 102 CTR (Kar) 64 : (1992) 195 ITR 582 : 62 Taxman 529 (Kar); (2) Smt. Sita Devi vs. CIT (1979) 12 CTR (P&H) 108 : (1980) 122 ITR 105 (P&H); (3) ITO vs. Seth Bros (1969) 74 ITR 836 (SC); (4) ITO vs. Mohan Lal Vig (1983) 139 ITR 681 (P&H); (5) ITO vs. Smt. Lajwanti Devi (1998) 62 TTJ (Chd)(TM) 450 : (1998) 66 ITD 95 (Chd)(TM); and (6) Nagesh Thakurdas Khandhari vs. ITO (ITA No. 1324/Bom/1991, dt. 28th April, 1998). It is also claimed that this statement cannot be brought within the purview of any other section under the IT Act. It is explained that under the provisions of s. 131(1A), an authorised officer can record a statement only before a search and not during or after the search. As admittedly, the statement, dt. 20th Dec., 1991, was not recorded before t....
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....J (Bom) 421; and (3) Jagdish Chand Gupta vs. Asstt. CIT (1996) 56 TTJ (Chd) 337. It is also claimed that a statement given under tension cannot be acted upon and it can be retracted or modified and for this proposition, the learned counsel for the assessee has relied upon the following decisions : (1) Asstt. CIT vs. Mrs. Sushiladevi Agarwal's case (supra); (2) Deepchand & Co. vs. Asstt. CIT (supra); (3) Maganbhai Becharbhai Patel & Co. vs. ITO [BCAJ January, 1995, p 810, Ahemdabad Bench of ITAT]; (4) Jagdish Chand Gupta vs. Asstt. CIT case (supra); (5) Asstt. CIT vs. Mewar Garage [BCAJ February, 1998 p 961 Jaipur Bench of ITAT]; (6) Pranav Construction Co. vs. Asstt. CIT (Inv.) [BCAJ February, 1998 p 962 Bombay Bench of ITAT]. It is also pleaded that when a statement given in the course of search is retracted or modified, the AO has to bring in evidence in support of the addition made and in the absence of any such extraneous evidence, apart from the original admission, the addition cannot be sustained. In this context, reliance is placed upon the following decisions : (1) Deepchand & Co. vs. Asst. CIT (supra); (2) Maganbhai Becharbhai Patel & Co. vs. ITO (supra); (....
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....Mad); and (3) Vinayakrao D. Chaudhary vs. ITO (1985) 23 TTJ 233 (Nag) : (1986) 15 ITD 180 (Nag). It is pleaded that assuming, without admitting, that the assessee is answerable for the contents of Annexure A-3, the bank accounts of concerns whose names appear in list A-3 but which are assessed to income-tax are to be excluded in working out the peak, as the genuineness of such concerns is beyond doubt. In the grounds taken before us, it is claimed that the concerns, who are assessees on file, fall into the following categories and the deposits in such accounts are as per the following details : (1) Deposits in bank accounts of concerns in which the members of the family of the assessee and his brothers are interested aggregate to ₹ 39,59,779 and the names of such family concerns are said to be as follows: (1) Shah & Khandhar Bros. Indian Bank, Mandvi Branch. (2) Tej Gaurav International Indian Bank, Mandvi Branch. (3) Eshita Strap Mfg. Co. Indian Bank, Mandvi Branch. (4) K. Bipinkumar & Co. Co-op. Bank of Ahmedabad, Narshi Natha Street Branch. (5) D.K. Investment & Finance Indian Bank, Mandvi Branch. (6) Khandhar Engg. Works Indian Bank, Mandvi Branch. (7) Es....
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....Shailesh Trading Co. Indian Bank, Mandvi Branch. (5) Unique Sales Corpn. Indian Bank, Mandvi Branch. (6) Vikas Sales Corpn. Indian Bank, Mandvi Branch. (7) Kapilesh Corporation Indian Bank, Mandvi Branch. (8) Associated General Agency Indian Bank, Mandvi Branch. (9) Divya International Indian Bank, Mandvi Branch. (10) Shah Sales Corporation Indian Bank, Mandvi Branch. (11) Subh Enterprises Co-op. Bank of Ahmedabad, Narshi Natha Street Branch. (12) Express Commercial Corpn. Co.-op. Bank of Ahmedabad, Narshi Natha Street Branch. (13) United Trading Co. Co-op. Bank of Ahmedabad, Narshi Natha Street Branch. (14) Cristal Inds. Co-op. Bank of Ahmedabad, Narshi Natha Street Branch. (15) Mamta Sales Agencies Co-op. Bank of Ahmedabad, Narshi Natha Street Branch. (16) Supreme Agencies Indian Bank, Mandvi Branch. (17) Meghna Trading Co. Indian Bank, Mandvi Branch. (18) Tushar Enterprises Indian Bank, Mandvi Branch. (19) Vivek Corporation Indian Bank, Mandvi Branch. (20) Namrata Enterprises State Bank of Saurashtra. (21) Harmesh Trading Co. Bank of India, Khand Bazar Branch. (22) Shreeji Corporation UCO Bank, Mandvi Branch. (23) Kalpana Corporation UCO Ba....
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....rietary concerns which are assessed to income-tax in Bombay as per Annexure-D ₹ 1,85,35,562 ₹ 2,62,01,981 Peak amount ₹ 43,38,305 Actually, it is pleaded that the "peak" should be worked out by consolidating and working out the datewise balances. In other words, it is pleaded that the method adopted by the CIT(A) of taking the aggregate of the maximum balance in each account is inherently incorrect even if only the accounts of the concerns which are not assessed to tax are to be considered for making the addition. It is also pleaded on the basis of the additional ground raised by the assessee that the "peak" arrived at in the earlier assessment year should be deducted from the "peak" in the succeeding assessment year. It is mentioned that this claim was allowed by the CIT(A) for the asst. yr. 1992-93 but was not followed for the asst. yr. 1991-92. Regarding the admission of additional grounds, the learned counsel for the assessee pleaded that in view of the decision of the Hon'ble Bombay High Court in the case of Ahmedabad Electricity Co. Ltd. vs. CIT (1992) 106 CTR (Bom)(FB) 78 : (1993) 199 ITR 351 (Bom) (FB), the Appellate....
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....l for including the deposits figuring in those accounts in the assessment of the assessee. In other words, the argument made out is that the admission made by the assessee in the course of his statement dt. 20th Dec., 1991, on the basis of incorrect appreciation of the legal position is invalid. It is further pleaded that the assessee had stated that he would close down all the bank accounts appearing in Annexure A-3 and the said accounts relate to concerns which had already been assessees on file and some of them were even limited companies and the assessee had no interest in any one of them and any person who is aware of his legal rights would not give such a statement as he cannot close down the bank accounts of such other concerns which have an independent status. It is claimed that the said statement was given in ignorance of his legal rights and so cannot be acted upon. In this context, reliance is placed upon the apex Court decision in the case of Shri Krishan vs. Kurukshetra University 1976 AIR SC 376. It is also claimed that the said decision of the apex Court has been followed by the Tribunal in the case of Jagdish Chand Gupta vs. Asstt. CIT (supra). In the above circumst....
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....orities were not justified in effecting this disallowance of ₹ 20,000. 16. Regarding the disallowance of ₹ 1,19,952 out of interest claimed by the assessee, it is explained that this addition had been made on the ground that the relevant borrowals on which interest was paid had been from concerns whose accounts figure in Annexure A-3, on the basis of which the main addition of ₹ 12,86,70,053 had been made by the AO and as it is not established that the said concerns were the benamis of the assessee, the said disallowance of interest is not warranted. 17. Regarding the levy of interest under ss. 234A and 234B, it is claimed that the AO in his order under s. 143(3) dt. 31st March, 1994, only directed his office to "charge interest as per law" and such a direction was not an order charging interest, in the light of the decision of the Hon'ble Patna High Court in the case of Uday Mistanna Bhandar & Complex vs. CIT (1997) 137 CTR (Pat) 376 : (1996) 222 ITR 444. It is also pleaded that the interest under s. 234A should not have been charged as the assessee had voluntarily filed his return of income and no notice under s. 142(1) was served on the assessee....
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....also mentioned that there was only one ingress and egress for the area covered by all the three municipal Nos. in 208-210, Parshva Chambers, and in this context, the learned Departmental Representative has filed a letter dt. 5th Feb., 1999, from Parshva Chambers Premises Co-op.Society Ltd. addressed to the AO may be seen at p. 245 of the DPB and the same reads as follows : "Dear Madam, As per your letter, we are furnishing following details for our "Parshva Chambers, 17/21 Issaji Street, Vadgadi, Mumbai-400003. Our building is constructed and completed in the year 1987. Our building is built as ground plus five floors. 1st floor is having Room Nos. 101 to 110 i.e., 10 rooms 2nd floor is having Room Nos. 201 to 210 i.e., 10 rooms. Out of that 201 to 207 is separate individual rooms and separate entrance is there for each room. Room Nos. 208, 209 and 210 these three rooms have only one entrance and interior decorator has design it in such a way that 3 rooms become one big hall and it has only one entrance not just three entrance, this is the position from 1987 till date." It is claimed that the assessee had been called on 20th Dec., 1991 to 208-210, Parshva Cha....
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....handhar and his family members. The shares are duly reflected and accounted in their personal respective accounts. Shri S.M. Khandhar is assessed to tax with the Asstt. CIT Circle-14(1) (Inv.), Bombay. Hence, the necessary explanation under r. 112-A may be submitted to AC. Cir. 14(1)(Inv.) by Shri S.M. Khandhar only, for the purpose of order under s. 132(5) of the IT Act, 1961. We request you to do the needful in the matter. Thanking you, Yours faithfully, For Eshita Dye Chem. (P) Ltd. Sd/- Director." Further attention is also invited to the letter dt. 29th April, 1992, addressed by the assessee in which he gave explanation about the shareholdings of M/s Eshita Dye Chem. (P) ltd., and signed for S.M. Khandhar & Co. This letter may be seen at pp. 72 and 73 of the DPB and reads as follows : "Dear Sir, Sub. : Search and Seizure Explanation. Reg. : Eshita Dye Chem. (P) Ltd. We refer your letter dt. 7th Feb., 1992 and furnish the following explanation as desired by you. 9,22,050 number of shares amounting to ₹ 95,12,500 :' The above equity shares does not belong to Eshita Dye Chem. We furnish a list of the persons who are the real owners :&#....
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....prises. The amounts were duly shown under the hand Assets. Copy of balance sheet for the year ending 31st March, 1991 (Ann-D) and income-tax acknowledgment (Annexure-E) enclosed. The Item under (iv) Sanjay Dodhiwala :'Mr. Bipin M. Khandhar had entered into a deal for purchase and sale of shares jointly with Mr. Dodhiwala. They incurred a loss of ₹ 1,60,000, which Mr. Dodhiwala. agreed in writing to share to the extent of 50 per cent. It was a speculation loss for the asst. yr. 1991-92. 6. Naheshri Marketing Ltd. :'It is a Ltd. Company. The investment in 95,000 shares was made by the company as under : Date Amount Cheque No. Bank Rs. 25th May, 1990 3,00,000 173 Indian Bank, Mandvi 17th July, 1990 2,50,000 427 Indian Bank, Mandvi 31st Aug., 1990 1,00,000 443 Indian Bank, Mandvi 1st Nov., 1990 36,950 598 Indian Bank, Mandvi 26th Dec., 1990 11,165 532 Indian Bank, Mandvi 9th March, 1991 50,115 722 Indian Bank, Mandvi 29th Dec., 1990 5,075 531 Indian Bank, Mandvi 9th March, 1991 46,288 723 Indian Bank, Mandvi Total 7,99,593 Date Shares Amount (Cr.) Rs. 12th April, 1991 1,200 11,....
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....ssee was an income-tax practitioner and fully aware of his rights and is also used to facing searches because this was not the first time that he had been searched. It is also pleaded that the plea that the assessee had been under tension and so gave a statement which was against himself is also untenable because the search was discontinued on the morning of 19th Dec., 1991 and was resumed only on 20th Dec., 1991 and so the assessee did have a break in which he must have rested and even consulted outside counsels. It is pointed out that in replies to question Nos. 26, 29 and 32 in the statement given even on 28th Dec., 1991, the assessee had stated to be fully fit and claimed not to be exhausted and actually refused to take rest. It is also pointed out that the plea of tension was taken only two years after the search, i.e., in the course of the deposition recorded on 23rd Sept., 1993 and so is clearly an afterthought. It is also claimed that the list of six pages containing the bank accounts in question in Annexure A-3 was not a dumb document but contained the names of the branch and it also contained the names of the holders of the accounts in the handwriting of the assessee. It ....
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.... deposition in question and framed the assessment on that basis. It is also claimed that it is the duty of the Court to get behind the smokescreen created by a tax dodger and discover the true state of affairs. It is pleaded that the Court is not to be satisfied with form and leave alone the substance of the transaction. In support of these propositions, the learned Departmental Representative relied upon the following decisions of the apex Court : (1) Workmen of Associated Rubber Industry Ltd. vs. Associated Rubber Industry Ltd. (1985) 48 CTR (SC) 355 : (1986) 157 ITR 77 (SC); (2) McDowell & Co. Ltd. vs. CTO (supra); and (3) CIT vs. Sri Meenakshi Mills Ltd. (1967) 63 ITR 609 (SC). It is also claimed that under the provisions of s. 132(4A), an irrevocable presumption is cast upon the assessee that the Annexure A-3 seized during the search from the premises of Eshita Dye Chem. (P) Ltd., which was under the control of the assessee, belonged to him and he is answerable for it. In this context, reliance is placed upon the decision of the Delhi Bench of the Tribunal in the case of Ashwani Kumar vs. ITO (1992) 42 TTJ (Del) 644 : (1991) 39 ITD 183 (Del). It is pleaded that the content....
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....k accounts figuring in Annexure A-3 had been reflected in the books of the concerns which are alleged to be on the rolls of the Department. The learned Departmental Representative also requested for permission to file certain additional evidence vide the AO's letter dt. 11th June, 1999 and this letter, after initial narration of facts and reference to the admission of the assessee contained in his statement dt. 20th Dec., 1991 which we have already referred to hereinbefore, reads as follows : "3. The assessee instead of offering the peak credit of these bank accounts as his undisclosed income, he has resorted to delay tactics and has turned totally unco-operative in finalising his tax liabilities. The assessee has not produced parties who are appearing in the A-3 list before the AO but has started making a claim towards the end of the proceedings that he did not know these parties and is not aware of their whereabouts. 4. During the course of hearing before the Hon'ble Members the assessee's authorised representative Shri Bhaskar Rao on 3rd Nov., 1998 has stated that the A-3 list contains several names with whom the assessee has no contacts. In this connection ....
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....in United Western Bank Ltd. is enclosed. (p. 302) (b) The amount transferred by Harmesh Trading Co. to Anilkumar & Sons amounting to ₹ 15,00,000 was transferred to Suman Motels Ltd. on 4th April, 1995, Bank Account No. 1596 of M/s Anilkumar & Co. 279, Samuel Street in the United Western Bank is enclosed. (Page 306). (c) The amount transferred by Harmesh Trading Co. to Rajesh Sales Corpn. was transferred to Suman Motels Ltd. on 4th April, 1995. The Bank Account No. 1600 of M/s Rajesh Sales Corpn. 274, Samuel Street is enclosed. (p 307). (d) Harmesh Trading Co. transferred ₹ 16,00,000 to Patel Construction Co. on 4th April, 1995 and M/s Patel Construction Co. (A-3 list) transferred this amount of ₹ 16,00,000 on the same date to Suman Motels Ltd. The S.B. Account No. 2164 of M/s Patel Construction Co. 278, Samuel Street in United Western Bank is enclosed. (p 303). (e) Harmesh Trading Co. transferred ₹ 18,00,000 on 4th April, 1995 to Super Investment (A-3 concern) and M/s Super Investment Co. transferred the entire amount on the same day to Suman Motels Ltd. SB Account No. 2456 of Super Investment Co. with address at 210, Parshva Chambers in United Weste....
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....of A-3. Therefore, the A-3 concerns are inter-connected which are managed and controlled by Shri Surendra M. Khandhar wherein the funds have ultimately come to the main concern i..e., Suman Motels Ltd. Accordingly, the statement made by the authorised representative for the assessee that the assessee does not know the whereabouts of A-3 concerns is blatantly incorrect. 12. Kapilesh Corporation whose name is appearing in A-3 list has received ₹ 85,28,400 from IDBI on 27/28th Oct., 1995 and on the same day the funds were transferred to Suman Motels S.B. A/c No. 10404 of Kapilesh Corporation in Indian Bank, Mandvi Branch is enclosed. 13. It is the case of Revenue that A-3 concerns were floated by the assessee and the funds were ultimately ploughed back to the assessee. This goes to prove that the statement given by the assessee at the time of search that he wanted to offer the peak of those accounts as income and that he would close down his bank accounts show the degree of ownership of the assessee and has rightly offered the peak as his income. 14. Gaurav Vessels (P) Ltd. is a concern whose name appear in A-3 list which has received ₹ 1,31,02,000 from IDBI on 20th ....
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....esh evidence, while deciding the appeals of Shri S.M. Khandhar for asst. yrs. 1991-92 & 1992-93. Sd/- (S.H. Shirudkar) Deponent Dy. CIT, Central Circle-14, Mumbai." Vide his letter dt. 3rd Aug., 1999 addressed to the Registrar, Tribunal, the AO, Shri S.H. Shirudkar, Dy. CIT, Central Circle-14, Mumbai, filed another petition requesting for admission of additional evidence, and after initial narration of the facts of the case and the admission contained in the statement of the assessee dt. 20th Dec., 1991 which we have already referred to, the AO proceeded to state as follows : "4. During the course of hearing before the Hon'ble Members the assessee's authorised representative, Shri Bhaskar Rao on 3rd Nov., 1998 has stated that the A-3 list contains several names with whom the assessee has no contacts. In this connection the Revenue has filed additional evidence on 11th June, 1999 enclosing the account opening forms of the unaccounted bank account where-in the assessee and his family members and the concerns which were introduced by the assessee have introduced the bank accounts appearing in A-3 list. 5. During the course of the arguments before the H....
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....y members it is seen that Vipko Sales Corporation is a sundry creditor. In this connection the additional evidence which I would like to submit before the Hon'ble Members for their kind consideration is the paper book with pp. 438 to 478. As regards the balance sheet of Shri S.M. Khandhar as appearing at p. 445 the amount of ₹ 7,79,630 was shown to have been received from Vipko Sales Corporation, but the same is not reflected in Vipko Sales Corporation. This shows the fallacity of the facts in the returns filed by the Vipko Sales Corporation which shows that these are the bogus concerns floated by the assessee and his family members. Similarly the balance sheet of Mrs. Bharati S. Khandhar shows an amount of ₹ 13,30,300 as having been received from Vipko Sales Corporation and the same is reflected on page No. 459 but Vipko Sales Corporation does not show this transaction in the balance sheet of Shri P.M. Khandhar as appearing in page No. 465 Vipko Sales Corporation was shown as sundry creditor to the extent of ₹ 94,525. The same is not reflected in the books of account of Vipko Sales Corporation. 8. In the case of Dipali Enterprises as appearing in pp. 275 to....
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....in the 110 bank accounts can be given only if the assessee surrenders the deposits as his income and also he proves that the withdrawals figuring in the bank accounts have not been utilised elsewhere and the funds represented by the withdrawals were available for making the deposits. In other words, the argument is that the benefit of the peak can be given only if the assessee proves the recycling of funds. The same argument is advanced in respect of the claim of the assessee raised in the additional grounds that the peak worked out for the asst. yr. 1991-92 may be deducted from the peak arrived at for the asst. yr. 1990-91 and only the balance may be considered for the asst. yr. 1991-92. 21. Regarding the ground taken by the assessee in respect of the disallowance of ₹ 1,19,952, it is claimed that as the 110 bank accounts figuring in Annexure A-3 are admitted by the assessee in his deposition dt. 20th Dec., 1991, to be owned by him in benami names and as interest is paid on borrowals effected from the concerns holding the said 110 bank accounts, it is argued that the borrowals in question are bogus and so the disallowance of the interest is also justified. 22. Regarding th....
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.... sheet signed by the AO, the levy of interest is valid, and for this proposition, reliance is placed upon the decision of the apex Court in the case of Kalyankumar Ray vs. CIT (1992) 102 CTR (SC) 188 : (1991) 191 ITR 634 (SC). 25. Regarding the estimation of professional income and the disallowance of certain expenditure effected by the AO, the learned Departmental Representative supported the action of the AO on the ground that the assessee did not furnish the relevant details before the AO nor produced the vouchers and bills in support of the claim. 26. In the rejoinder by the learned counsel for the assessee, strong exception is taken to the admission of the additional evidence produced by the Department. It is claimed that the admission of additional evidence at the appellate stage is not referable to any right of the party but is dependent solely on the requirement of the Court. It is claimed that r. 29 of the Appellate Tribunal Rules, 1963, is clear that the parties to the appeal shall not be entitled to produce any additional evidence, either oral or documentary, before the Tribunal. It is also claimed that the additional evidence sought to be filed by the Department befor....
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....assessment for the asst. yr. 1991-92. (iii) The papers at page Nos. 273, 279, 288 and 294 filed by the Departmental Representative show that : (1) Vipco Sales Corporation, (2) Deepali Enterprises, and (3) Kapilesh Corporation Ltd. advanced moneys to others, realised interest thereon and claimed deduction of tax deducted at source from out of such interests received. Similarly, in the later years these and other concerns might have advanced funds to the six persons, in the accounting year relevant for the asst. yr. 1996-97. (iv) The papers filed by Departmental Representative and available at pp. 271 to 295 of his Paper Compilation are incomplete, as balance sheets/list of debtors are not given. It is not proper to say that the details given by S.M. Khandhar for the asst. yr. 1996-97 are incorrect. (v) The additional evidence filed by the Departmental Representative on 28th July, 1999, clearly shows that several of these concerns advanced funds not only to the assessee, but to others as well. (vi) In the IT assessment of the assessee for the asst. yr. 1996-97, no finding is recorded so far by the AO regarding the amounts borrowed by the assessee from the several creditors.&q....
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.... APB under the headings "Financial Control" and "Administrative Matters" but these points were not made in the course of the hearing and the learned Departmental Representative had no opportunity to refute them and so we do not find it fit or necessary to refer to these arguments in detail. The drift of these arguments is that the assessee was not in control of administrative or financial matters of Eshita Dye Chem (P) Ltd. 31. Regarding the working of the peak of the deposits in the bank accounts, it is reiterated that the Department did not locate any investments in the search and so it is to be deemed that the withdrawals were available for making the deposits in the bank accounts and so it is only just that the "peak" worked out on the basis of the datewise arrangement of all the accounts concerned is added and not simply the aggregate of the maximum balances figuring in each account, as done by the CIT(A). As already mentioned, it is also claimed that the peak of the earlier year has to be reduced from the peak of the year relevant for the present assessment year. 32. We have considered the rival arguments in this appeal, which as must be eviden....
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....in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian IT Act, 1922 (11 of 1922), or under this Act." We find that the search warrant was issued in the name of Eshita Dye Chem. (P) Ltd. to search the premises at 208-210. Parshva Chambers, and the search commenced on 18th Dec., 1991. Actually, the entire group of the assessee was searched and there was a separate warrant in the name of the assessee to search his residence at Matunga, and his brothers' premises at 278, Samuel Street. There was also a search warrant in the name of Eshita Dye Chem. (P) Ltd. 208-210, Parshva Chambers, and also another search warrant in the name of Suman Motels (P) Ltd., of which the assessee is the director, in the same premises, i.e., 208-210, Parshva Chambers. The two streets, Samuel Street and Essaji Street, are also adjacent to each other. The assessee and his family own a number of concerns and in answer to Question No. 4 recorded from the assessee on 20th Dec., 1991, which we have extracted at pp. 7 to 9 of this order, he has mentioned as many as 33 family concerns, which included Eshita Dye Chem. (P) Ltd. and Suman Motels ....
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....know for which concern books are maintained here. Shri Surendra will be able to tell you." We have already extracted the letter of the assessee dt. 17th Feb., 1992 addressed to the AO on behalf of the Director of Eshita Dye Chem. (P) Ltd. at p. 36 of this order, explaining the position about the shares of ₹ 95,12,500 held in Suman Motels Ltd. It was explained that these shares did not belong to Eshita Dye Chem. (P) Ltd. but only to the assessee and his family members. In the written arguments filed by the learned counsel for the assessee at the end of the hearing, it is explained that this letter was on the letterhead of the assessee and so the assessee cannot be held to be in control of M/s Eshita Dye Chem. (P) Ltd. We have already mentioned that some of these arguments were not advanced in the course of the hearing, but they figure only in the written submission which were furnished at the end of the hearing and so could not be controverted by the Departmental Representative. At any rate, we fail to see how it makes a difference that the letter is on the letterhead of the assessee when he is signing for the Director of Eshita Dye. Chem. (P) Ltd. He could not have sign....
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....d this argument hereinabove. So we find ourselves in agreement with the stand of the Department that the assessee is the fulcrum of the entire Khandhar group, inclusive of Eshita Dye Chem. (P) Ltd., and he was generally both in administrative and financial control of these concerns and so he cannot be allowed to wriggle out, obviously on second thoughts, from the admission made by him regarding the 110 bank accounts in the statement dt. 20th Dec., 1991. In the view we have taken, we find that the case law cited by the learned counsel for the assessee is distinguishable on facts and is not of much assistance to him. We may, however, refer to some of the important cases cited by the learned counsel for the assessee. The learned counsel for the assessee referred to the decision of the Hon'ble Karnataka High Court in the case of Nenmal Shankarlal Parmer vs. CIT (supra) and mentioned that in this case the Hon'ble High Court held that when the warrant was issued to search the common residential premises of the partners of the firm in connection with the investigation in the case of the firm, assets (other than assets relating to the firm) pertaining to a partner in his individual....
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....rm. The books of account and other documents in respect of other businesses carried on by the partners would certainly be relevant because they would tend to show interrelation between the dealings and supply materials having a bearing on the case of evasion of income-tax by the firm. Merely because the ITOs made a search for and seized the books of account and documents in relation to business carried on in the names of other firms and companies, the search and seizure would not be illegal." We do not see how this decision helps the assessee. Annexure A-3 contained a list of bank accounts and the authorised officer seized it as relevant for the assessment of M/s Eshita Dye Chem. (P) Ltd. He took the deposition of the person who is incharge of the affairs of M/s Eshita Dye Chem. (P) Ltd., i.e., the assessee, and it turned out that on the admission of the assessee himself, the deposits in the bank accounts had to be brought to tax in the hands of the assessee. Simply because it turned out that the seized document was utilised in the assessment of the assessee whose deposition was validly taken in the search of M/s Eshita Dye Chem. (P) Ltd., it does not follow that the seizure ....
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....ossession of the list marked as Annexure A-3. In this context, reliance is placed upon the decision of the apex Court in the case of CIT vs. Tarsem Kumar (1986) 58 CTR (SC) 129 : (1986) 161 ITR 505 (SC). This is a case where certain monies were in the custody of the customs department and so it was held that the money was not in the possession of the assessee as contemplated by s. 132 of the IT Act. We are of the view that this case is altogether inapplicable to the facts of the present case inasmuch as in the present case, the assessee was in both physical and constructive control of the premises of Eshita Dye Chem. (P) Ltd. at 208-210. Parshva Chambers, not only because he has a cabin therein but also because he was in control of its affairs, as already mentioned. He was also at least in constructive possession of the document Annexure A-3 inasmuch as he was overall in control of the premises and so the AO was entitled to take his deposition under s. 132(4) and also in terms of the said section utilise it in any proceedings under the IT Act, which includes proceedings against the deponent himself, i.e., the assessee. We may also mention that the question is not whether there are ....
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....oom or from the table of the typist placed in the computer room during the search on 20th Dec., 1991 and not from the cabin of the assessee which was also searched on that day. But the Tribunal is entitled to go by probabilities in judging an issue in respect of which there is no firm material one way or the other. On probabilities we come to the conclusion that it was seized only from the cabin of the assessee on 20th Dec., 1991, as contended by the Department. We have perused the refutation of the stand of the learned Departmental Representative contained in the written submissions given by the learned counsel for the assessee at p. 7 of the APB (Vol. IV). As already mentioned by us in some other context, some of these arguments were not raised in the course of the hearing and as such we do not deem it fit to deal with them. We are also of the view that we need not go into the niceties of the exact location from where the Annexure A-3 was seized. It is included in the Panchnama dt. 20th Dec., 1991 drawn up in the case of Eshita Dye Chem. (P) Ltd. Even if the seizure of this document is to be held to be illegal inasmuch as it does not relate to Eshita Dye Chem. (P) Ltd. against wh....
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....horisation was not proper as it was given on the basis of a mere rumour against the assessee. However, on a special writ petition filed by the Department against the judgment of the Hon'ble Allahabad High Court, the apex Court held that as the articles and money seized had been released by that time, no useful purpose would be served by entertaining the petition. It still observed that it was open to the Department to resort to other proceedings which were permissible in law and to take into account any information derived from the beneficiaries prepared in the said search and seizure action. So we have to hold that even in Annexure A-3 had not been properly seized, it is good evidence for being utilised in the assessment of the assessee. There are a number of cases on these lines in the Commentary on Income-tax by Chaturvedi & Pithisaria at pp. 3167, 3168 (Vol.3), which may be seen. We have already referred to some of the other decisions cited by the learned Departmental Representative in this regard at pp. 41 & 42 of this order. For these reasons, we are of the view that the recording of the statement under s. 132(4) from the assessee on 20th Dec., 1991 in respect of the 110 ....
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.... in anyway vitiated. 34. Regarding the contention of the learned counsel for the assessee that the presumption contained in s. 132(4A) is restricted to the proceedings under s. 132(5) and is not available in the assessment proceedings, we are of the view that this contention does not deserve to be accepted. In this connection we refer to the decision of the Tribunal in the case of Ashwini Kumar vs. ITO (supra) wherein, while distinguishing the decision of the Hon'ble Allahabad High Court in the case of Pushkar Narain Saraf vs. CIT (supra), the Tribunal proceeded to observe as follows : "21. We may first dispose of the contention of the learned counsel for the assessee that the presumption that is permissible under s. 132(4A) cannot be raised in the proceedings for regular assessment. The Hon'ble Allahabad High Court in the case referred to above was concerned with a different situation. In that case, during the course of search certain account books were seized in which certain cash credits were recorded. In the assessment proceedings the assessee pleaded that by virtue of s. 132(4A) the correctness of those credits, as recorded in the books of accounts, should be p....
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....ase refer to this office letter No. AO.CC.14/1993-94, dt. 17th Feb., 1994, you have not furnished the details as asked for. You are requested to furnish the details as called for within three days of the receipt of this letter failing which it will be taken that you are not interested in furnishing the details and you have nothing to explain. Please refer to this office letter No. AC.CC.14/1993-94, dt. 15th Feb., 1994, you have not furnished the details so far. You are requested to furnish the details as called for within three days of the receipt of this letter. Failing which it will be taken that you are not interested in furnishing the details and you have nothing to explain. Please refer to order sheet noting dt. 4th Jan., 1994. You have failed to furnish the details as called for. You are requested to furnish the details as called for within three days of the receipt of this letter. You are requested to produce M/s Associated General Agencies M/s Shree and Associates along with books of accounts i.e. sales bill, purchase bill, sales register, purchase register, delivery challan, ledger, cash book, bank book, bank statement, etc. and working partner of M/s Associated Gene....
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.... also state that the presumptions under s. 132(4A) of the IT Act are available only for the purpose of passing an order under s. 132(5) of the IT Act. Such presumptions are not available while making an IT assessment under s. 143(3) of the IT Act. I understand that a typed list was seized in the course of the search under s. 132 of the IT Act in the case of Eshita Dye Chem. (P) Ltd. as per the Panchnama in the case of Eshita Dye Chem. (P) Ltd. I have to state here that I was not a director of Eshita Dye Chem. (P) Ltd. at any time. For the above reasons, I state that s. 132(4A) of the IT Act cannot be invoked in my case with reference to the typed list seized from the office premises of Eshita Dye Chem. (P) Ltd. on 18th Dec., 1991. As already stated above, I have separately made an application for furnishing to me a copy of the statement under s. 132(4) of the IT Act, recorded from me on 18th Dec., 1991. After the receipt of the same I shall furnish, if necessary, a further reply to you. Thanking you," It is noteworthy that in the above letter, the assessee has distanced himself from the said Annexure A-3 to the extent of stating that he understood that a typed list wa....
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....t stage nothing prohibits the Department from making the correct assessment in the hands of the correct party in view of the decision of the apex Court in the case of ITO vs. Ch. Atchaiah (supra) relied on by the learned Departmental Representative. That is exactly what has happened in this case. A large number of concerns have been floated and assessments also seem to have been got framed on them. Simply because assessments had already been made, it does not automatically follow that the deposits in the said bank accounts standing in the names of different concerns in Annexure A-3 are not the funds of the assessee, as admitted by him. The additional evidence filed by the learned Departmental Representative proves that there is a flow of funds between the said 110 bank accounts and the other concerns of the Khandhar group, particularly Suman Motels Ltd., of which the assessee is the director, and in which the family members of the assessee hold a large number of shares. The exercise of verification of the genuineness of the concerns has to be undertaken. This can be done only by the AO and not by the Tribunal. It is contended that the additional evidence sought to be filed by the l....
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....om the assessee the particulars of the concerns figuring in Annexure A-3 and the income-tax position of those concerns. To judge the correctness of those particulars, it required the material furnished by the learned Departmental Representative by way of additional evidence. So we see no merit in the contention of the learned counsel for the assessee that the Department should be barred from filing this additional evidence at this stage. We are of the view that the case law cited by him has no relevance to the facts of this case. The assessee has retracted from his admission and has not furnished any evidence in support of his retraction before the AO and has chosen to file some evidence in support of the retraction only before the Tribunal. In the circumstances, the Department is, to our mind, clearly entitled to counter those contentions by adducing whatever evidence is available with it in respect of those concerns, though it came into the possession of such evidence only subsequent to the assessment. The Tribunal should be either call for any particulars from the assessee in respect of the said concerns, or if it chooses to call for such particulars, it should allow the Departm....
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.... vs. CIT (supra), relied on by the learned counsel for the assessee, supports our view because it holds that while the parties to the dispute have no right to produce additional evidence at the appellate stage, it holds that the admission is solely on the requirement of the Court. In the circumstances of the case, we deem it fit to admit the additional evidence filed by the Department, just as we admit the additional evidence filed by the learned counsel for the assessee. However, it is evident that the material furnished by the Department before us has not been put to the assessee at any stage and his explanation sought. In terms of the canons of natural justice, no adverse inference can be drawn against the assessee without putting to the assessee any material in the possession of the AO and on which he wants to rely to the prejudice of the assessee. In the circumstances, we deem it fit to set aside the assessment on the addition of ₹ 3,05,40,285 sustained by the CIT(A) in respect of the 110 bank accounts figuring in Annexure A-3 and remit the matter to the file of the AO who may put the material in his possession and which has been filed before us by way of additional evid....
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.... the apex Court observed that there is an essential distinction between "burden of proof" and "onus of proof" and that burden of proof lies upon the person who has to prove a fact and it never shifts, but the onus of proof shifts and that such a shift of onus is a continuous process in the evaluation of evidence. In the present case, we are of the view that the onus of proving that the 110 bank accounts figuring in Annexure A-3 are not owned by the assessee in benami names lies on the assessee. This is because of firstly, the presumption contained in s. 132(4A) of the IT Act. The document was seized from the premises of Eshita Dye Chem. (P) Ltd. over which according to us, the assessee had control within the meaning of s. 132(4A) and the assessee was in constructive possession of the seized document. Secondly, even apart from the statutory presumption, when the document was put to the assessee and his deposition taken on 20th Dec., 1991, the assessee had admitted the ownership of the bank accounts in benami names and actually offered to disclose the deposits as his income. It is only almost two years after this admission that he retracted and tried to distance h....
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...., the AO will be within his rights to call for the said parties to whom the accounts are alleged to relate and examine them and verify their genuineness in the light of their income-tax numbers and other evidence. This exercise has not been done by the AO evidently because no particulars were forthcoming from the assessee and the assessee did not produce those parties before him. On the other hand, as we have already mentioned, the assessee dissociated himself from the seizure of Annexure A-3 and his original admission that the accounts therein related to him and was stating as though he read from a newspaper report that some paper was seized from M/s Eshita Dye Chem. (P) Ltd. We are of the view that the assessee, who was an erstwhile Income-tax Practitioner, and who has given the particulars of 110 bank accounts, after the admission contained in the statement dt. 20th Dec., 1991 and in the face of evidence of the flow of funds between the 110 bank accounts and the family concerns of the assessee cannot be allowed to get away with a simple denial like that. 38. So far as the working of the peak is concerned, it is again for the assessee to prove that the withdrawals were not utili....
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.... ascertaining such bank accounts, which according to the AO, are owned by the assessee in benami names, he should work out the peak as per our remarks made earlier. 38.1. We may point out that we have to admit the additional grounds raised by the assessee in this appeal because they relate to legal points and do not require any fresh enquiry into facts. 39. In the light of the above remarks, we set aside the orders of the Revenue authorities on the main ground taken by the assessee in this appeal regarding the addition of ₹ 3,05,40,285 sustained by the CIT(A). The AO should frame the assessment afresh after verification of the genuineness of the assessee's subsequent retraction regarding the ownership of the 110 bank accounts in the light of the above available evidence. 40. Regarding the estimation of the professional receipts of ₹ 5 lakhs and the disallowance of expenses on salary and bonus at ₹ 20,000. We deem it fit to set aside the assessment on these issues also, because we are setting aside the assessment on the larger issue of the ownership of the 110 bank accounts. 41. Regarding the disallowance of the interest of ₹ 1,19,952 out of the inter....
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....e, in terms of s. 234A he is no doubt liable to pay interest. He is also liable to pay interest if he commits any default in payment of advance tax under the provisions of s. 234B." In the present case, it is not denied that there has been a delay in the filling of the return. The language of s. 234A is clear that in such a situation, interest has to be levied with reference to the assessed income. 44. The above remarks hold good with reference to the levy of interest under s. 234B and so we reject the additional ground taken by the assessee in respect of the levy of interest under s. 234B. 45. Subject to the above remarks, the assessment is set aside on the main ground taken by the assessee relating to the addition of ₹ 3,05,40,285 out of the addition made by the AO of ₹ 12,86,70,053 on the basis of the 110 bank accounts owned up by the assessee in his statement dt. 20th Dec., 1991. The assessment on other issues, namely, (1) estimation of professional receipts at ₹ 5 lakhs, (2) disallowance of expenses at ₹ 20,000, and (3) disallowance of interest at ₹ 1,19,952, is also set aside in the light of our remarks at paras 39 and 40 above. 46. Befo....
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....s addition made is rather infructuous being in the nature of double taxation of same income in appellant's hands. This is so far the simple reason that the AO has already taxed this amount as an unexplained income of the appellant while making an addition of ₹ 12,86,70,053 under s. 68 which comprises of credits appearing in the bank accounts of all the concerns whose names appear in the 'A-3 list', a document seized from the premises of company belonging to the appellant's group. The AO has made this addition of ₹ 5,70,000 in spite of having recognised the fact that names of both these parties appear in the said 'A-3 document'. Thus, the addition made is seen to be uncalled for and the same is hereby deleted." 50. The learned Departmental Representative argued before us that the CIT(A) was not justified in deleting the addition of ₹ 5,70,000 as the addition was made under s. 68 of the IT Act and the assessee had never discharged the onus of proving the genuineness of the credits standing in the names of the above two creditors. 51. The learned counsel for the assessee on the other hand mentioned that the loans were obtained by cheque....
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....racity of the retraction of the assessee in respect of the ownership of the 110 bank accounts, which has been discussed by us hereinabove. The ground is allowed. 53. Regarding the addition of ₹ 20,00,000, representing loan alleged to have been advanced to Shri Bhupen Chedda, we have reproduced the seized paper dt. 22nd Jan., 1991 at pp. 15 and 16 of this order. We have also reproduced the answers to Question Nos. 20 and 21 given by the assessee on this alleged loan advanced by him to Shri Bhupen Chedda in his statement, dt. 18th Dec., 1991, at p 16 of this order. The AO referred to the replies given by the assessee to questions 20 and 21 in his statement, dt. 18th Dec., 1991 and made the addition of ₹ 20 lakhs with the following remarks which appear at p. 5 of his order : "The above admission made by the assessee clearly shows that the assessee has made a memorandum of understanding for the repayment of loan of ₹ 20 lacs advanced to Shri Bhupen Chedda which he had not accounted in its books. Thus the assessee had made investment out of books and it is not reflected in the books. Hence the sum of ₹ 20 lacs is added under s. 69 as unexplained investmen....
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....r the IT Act, it is for the AO to prove the truth of the contents of the papers seized in the course of the search. As the AC did not bring on record any independent evidence other than the seized paper to show that the sum of ₹ 20,00,000 was advanced by me in the year ended 31st March, 1991 to Shri Bhupendra Chheda, the AC was not justified in making this addition of ₹ 20,00,000." The CIT(A) deleted the addition, inter alia, with the following remarks which may be seen at pp. 8 and 9 of his order : "In this connection vide my predecessor CIT(A)'s letter No. CIT(A) C-III/IT 78/1994-95, dt. 31st March, 1994, the AO was supplied with a copy of the aforesaid written submission dt. 31st Aug., 1994 and was directed to make available the copies of documents mentioned by the appellant and submit a speaking report after taking into consideration the explanation given by the appellant and after affording him reasonable opportunity of being heard. In spite of this fresh opportunity of being heard. In spite of this fresh opportunity given the AO has failed to bring on record any material evidence in support of the case made out by him as is evident from the reply ....
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....evidentiary value of the seized document or of the implicit admission contained in the replies given to the questions on this issue by the assessee in his statement dt. 18th Dec., 1991. 55. The learned counsel for the assessee on the other hand supported the order of the CIT(A). Before us, he further made out the point that the said seized paper reproduced by us at pp. 15 and 16 of this order was not seized from the assessee but was seized only from the office of the premises of Eshita Dye Chem. (P) Ltd. It is also made out that the document is not in the handwriting of the assessee, nor is it signed by the assessee. So it is claimed that when a paper is seized from another person, it is for the Department which should prove the transaction, as laid down in the following Third Member decision of the Tribunal : (1) ITO vs. M.A. Chidambaram (1997) 63 ITD 203 (Mad); and (2) Udeyraja Goliya (HUF) vs. Asstt. CIT (1998) 64 ITD 21 (Bom)(TM). Even assuming that the paper had been seized from the assessee, it is argued that the transaction has to be proved by the Department, as held by the Punjab & Haryana High Court in the case of ITO vs. Mohanlal Vig (supra) and by the Bangalore Bench....
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....ent is, to our mind, very clear. As held by the AO, it only refers to an arrangement for the recovery of the loan of ₹ 20 lakhs. The question of recovery arises only when there had been an advance. It is immaterial that the measures contemplated for the recovery of the advance had not been implemented. Whether the recovery measures as contemplated in the document were actually implemented or not is totally irrelevant. What is relevant is only whether the advance had been made and whether such an advance if made had been reflected in the books. It is not denied that no such advance is reflected in the books. The contention is that the advance itself had not been made. This position, to our mind, goes quite contrary to the plain language of the document. Clause (1) of the document refers to the payment of ₹ 5 lakhs "towards the payment of loan out of twenty lakh rupees", Clause (2) refers to the payment of the balance amount which can only refer to ₹ 15 lakhs (20 lakhs'5 lakhs). It stipulates that the balance of ₹ 15 lakhs will be paid by "50 per cent of collection cheques". In other words, it contemplates that the collection cheques re....