TaxTMI 
TaxTMI 
2014 (11) TMI 1123
X X X X Extracts X X X X
X X X X Extracts X X X X
....elating to money lending transactions were seized. As per these documents, the assessee M/s. Kejal Furnishings had carried out money lending activity through Shreeram H. Soni for which he was paid commission/brokerage. The interest and principal utilized in the money lending transactions had not been disclosed in the return of income filed by the assessee with the income-tax department. Accordingly, the AO reopened the assessment by issuing notice u/s.148 on 28-03-007. The assessee asked for the reasons for such reopening which were provided to the assessee on 10-10-2007. Subsequently, the assessee also asked for the information/documents on the basis of which notice u/s.148 was issued. 2.1 The AO issued a detailed show cause notice with the copies of the seized documents in the case of Shreeram H. Soni group to the assessee. The Annexure-A to the said questionnaire reads as under : "Annexure-A M/s. Kejal's Furnishings 689, Narayanp Peth Pune - 411 020 S.No. Cheque No. & Date Amount Borrower Investor Per Int Brok 1 11792 BEAERR 3.1.2000 100.00 BACHU BHOY(B) Kajal's Rashmi G. 90 1.50 0.25 The assessee strongly challen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing an inference from non acceptance of the assessee that he is the owner of the funds advanced to borrowers in cash and recorded in books of Shreeram H. Soni. 3.1 As regards the submission of the assessee that no addition can be made on the basis of Third Party, the AO held that as per section 80 of the Indian Evidence Act, there is presumption as to documents produced as record on evidence are genuine, that any statements as to the circumstances under which it was taken, purporting to be made by the persons signing it, are true and that such evidence, statement or confession was duly taken. Relying on various decisions the AO made addition of Rs. 1,04,500/- as unexplained investment u/s.69 of the I.T. Act. for the A.Y. 2000-01 by calculating the same as under : S.No. Borrower Amount (in Rs.) Date of Borrowal Interest Due date Total (Principal +Interest (in Rs.) 1 BACHUBHOY (B) 1,00,000 03-01-2000 4,500 03-01-2000 1,04,500 4. Before CIT(A) the assessee strongly challenged the reopening of the assessment u/s.148 stating that the same is bad in law and therefore it should be declared null and void. So far as the merit of the case is co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....den was on the Department to prove that the notings on the seized documents related to the appellant. However, if this is the appellant's claim, he should have brought on record any such entity existing in these names. It is important to point out that the appellant could not bring on record as to how the combination of Kejals - Rashmi G. can lead to any other identity than the Kejals Furnishings itself. From the submissions of the appellant it can be seen that the appellant admits that Mr. Rashmikant Gandhi is the partner in M/s Kejal Furnishings. He has also admitted that he is not partner in the sister concern M/s Kejal Linen. The argument of the appellant that there is one more entity of the name of Kejals at Camp area also could not be shown that its partner is Mr. Rashmikant Gandhi. In view of the entry available in the seized documents as "Kejals - Rashmi G", the inescapable inference leads to the appellant. The Assessing Officer therefore, can be seen to have correctly arrived at the conclusion to treat the appellant as the investor. The appellant has cited various decisions of Courts and Tribunals for the proposition that the entries on the seized documents cannot be a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y and veracity of these seized documents has been duly discussed, analysed and accepted in the ITAT order dated 17.06.2010 in ITA No.474 to 478 & 518/PN/2007 for Assessment Years 1998-99 to 2003-04, in the case of Shri Shriram H. Soni, which has also upheld the authenticity of the entries made in the documents. Therefore, inference of Assessing Officer is legally correct, more so when it remained rebutted. 6.6. It is noticed that the appellate order in the case of Shri Shriram H. Soni has already been passed by the ITAT, Pune Bench in ITA nos. 474 to 478, 518/PN/2007 for assessment years 1998- 99 to 2003-04, order dated 17.06.2010, in which one important issue before the ITAT was whether the amounts mentioned in these, particular seized documents (vide bundle nos. 98 and 99) under the head 'investors' in the specific names of certain persons could be treated as appellant's (Shri Soni's) income u/s 68 of the I.T. Act as unexplained credit. The Tribunal took note of these various entries in the seized documents along with the arguments of the appellant's A.R. in which he had vehemently relied upon the statements recorded, especially that of Shri Sunil W. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rs for the cash flow for interest payment, repayment of loan etc. Based on this observation, the tribunal accepted that Shri S.H. Soni was a finance broker and it was further held that there were 'investors' names mentioned in the documents seized vide Bundle nos. 98 & 99, which duly showed the heads of 'investors' and 'borrowers'. 6.8. The Tribunal pointed out that A.O. has also mentioned at one place in the order that many of the investors whose names are indicated in the seized documents also found place in the regular bocks of the assessee. The Tribunal held that the statement recorded on 30.07.2003 during the search, of Shri Sunil W. Ratanakar, accountant of the Shri S.H. Soni emphasized that the pages contained in bundle no. 100 (cash book) had got a substantial evidentiary value as per law. He had stated that the investors used to invest their money and the borrowers used to take money as a loan. He has described the modus operandi in detail regarding preparation of promissory notes in duplicate by the borrowers, in which the original was written in ink bearing the details of cheques etc. and a second copy was also prepared. He had also revea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ries in these seized documents were correct, section 68 was not applicable for adding the amount mentioned under the head 'investors' in different names, in the hands of Shri S.H. Soni. For this purpose the Tribunal also repeatedly took note of the summons issued u/s 131 to different investors and the assessment orders passed in their cases. The Tribunal only confirmed the additions as the income of Shri S.H. Soni which were appearing in unidentifiable codes viz. 'Shree SK', 'SRS-3', 'S/3', 'SKS', 'XYZ' etc., which were held to be the own income of Shri S.H. Soni invested in these names. By implication, it was concluded that the amounts mentioned under this head 'Investor' in Bundle nos. 98 & 99 other than these particular abbreviations; were held to be the particular person's investment. 6.10. In view of the above salient findings noticed from the ITAT's order dated 17.06.2010 it was obvious that the ITAT has held that the entries under the head 'investors' in bundle nos. 98 and 99 related to the particular persons mentioned therein i.e. the investors had infact advanced the particular amounts to Shri S.H. So....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was held as under: "In fact, the Tribunal has discussed these entries appearing in the ledger of V and has given substantial reasons as to why it was not inclined to accept the entries as reliable entries for accepting the case of the Department. Inter alia, it pointed out that the ledger containing the said entries had not been produced before it, that no corresponding entries were there in the day-book of the relevant period and that V did not rely on this ledger in the course of its own assessment proceedings but for its own assessment proceedings different set of books had been relied upon as genuine set of books." On the other hand, in the Tribunal's order dated 17.06.2010 in the case of Shri S.H. Soni discussed above, the entries made on seized documents vide bundle nos. 98, 99 and 100 are all held to be authentic and relevant. The Tribunal in this case has not given the finding that these entries are fictitious and cannot be relied upon. Therefore, the judgement in the case of Addl. CIT vs. Ms. Lata Mangeshkar of the hon'ble jurisdictional High Court was dearly distinguishable from that of the appellant's case. 6.13. The claim of the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "3. The learned CIT(A) erred in confirming the addition of Rs. 1,04,500/- u/s. 69 being the principal amount and the interest thereon on the presumption that the assessee had advanced loan from his unexplained sources and had also earned interest thereon." 4. The learned CIT(A) failed to appreciate that the addition was made totally based on presumption and surmises and there was no evidence that the assessee had advanced any such loan. 5. The learned CIT(A) failed to appreciate that - a. The assessee had never advanced any loan to Shri Soni or any person through Shri Soni out of his unaccounted sources. b. The documents found with Shri Soni did not indicate that the assessee had advanced any loan. c. The presumption u/s 132(4 A) if at all applicable could be applied only in the case of Shri Soni and not in the case of the assessee. d. No addition could be made in the hands of the assessee on the basis of some loose documents found with third party. e. Shri Soni had also never admitted that the assessee advanced loan to him out of his unaccounted source. 6. The learned CIT(A) erred in placing reliance on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llowing : "At this juncture, we would also like to submit that in case Mr. Sony has stated that the assessee has advanced any amount to him or some of the notings in seized papers pertain to the assessee, in that case we would like to cross examine Mr. Sony". 9.2 He submitted that despite such request for cross examination of Shreeram H. Soni, no such opportunity was granted to the assessee. He submitted that no promissory note or any other document evidencing money given by the assessee to Shreeram H. Soni was found from the residence of Shreeram H. Soni. Referring to pages 7 to 11 of the paper book he drew the attention of the Bench to the detailed submissions filed before CIT(A) vide letter dated 05-08-2008. Referring to para 4 of the said letter the Ld. Counsel for the assessee drew the attention of the Bench to the following submissions made before the CIT(A) : "First of all, it is submitted that the assessee has never lent any funds to Soni Group. Even the documents found with Soni Group do not pertain to the assessee. The notings on the various documents are relating to "kajal's Rashmi G" which is not pertaining to the assessee at all. The name of the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that under provisions of section 132(4) loose papers found during the search are true and genuine but such presumption is against the person from whom these papers are found and not against third parties. The burden is on the Revenue to prove the meaning of the notings on the loose papers. Referring to the decision of the Pune Bench of the Tribunal in the case of Jagannath Eknath Lahoti (HUF) vide ITA No.453/PN/2012 order dated 11-02-2014 he submitted that under identical facts and circumstances the addition made by the AO and upheld by the CIT(A) was deleted. 10. The Ld. Departmental Representative on the other hand heavily relied on the order of the Ld.CIT(A). 11. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case made an addition of Rs. 1,04,500/- on the basis of certain documents seized from the premises of one Mr. Shreeram H. Soni. We find the AO confronted the notings of the seized documents to the assessee. The assessee vide his reply dated 07-12-2007....
X X X X Extracts X X X X
X X X X Extracts X X X X
....responding interest as well as brokerage on the same on the basis of certain documents seized from the premises of Mr. Shriram H. Soni. It is an admitted fact that during the course of search in the premises of Mr. Shriram H. Soni his statement was recorded u/s.132(4) and he had refused specifically to identify each and every investor/operator. Although credits appearing in the seized diaries in the name of different investors was treated as undisclosed income of Mr. Shriram H. Soni by the CIT(A), however, the Tribunal vide order dated 17-06-2010 has reversed the same by holding that persons are identifiable and all the materials available clearly show that Mr. Shriram H. Soni has only earned commission. Be that as it may be, Mr. Shriram H. Soni had refused to identify each and every person. We find the seized diaries/papers clearly show different names such as "Jagannath Lahoti" and "Jaguseth Lati". However, we find no addition has been made on account of entries appearing in the name of the assessee, i.e. Jagannath Lahoti. Even the entries appearing in the name of the assessee for subsequent years has also not been brought to tax by reopening the assessment, a statement made by L....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urden is on the Revenue to establish the identity if any person is to be charged under the Act. The action of the AO examining the different persons having the same name prima-facie establishes that Assessing Officer himself is not sure that the assessee is the same person whose name was found noted in the seized document. Moreover, nothing is on record to show that Shriram H. Soni has stated about the assessee that whatever the notings found were in respect of the assessee. No corroborative material is found. In our opinion, the Ld.CIT(A) has rightly deleted the entire addition as there is no evidence against the assessee. We find no merit in the appeal filed by the Revenue. Accordingly, the same is dismissed." 8.2 Since identity of the assessee was not proved by Mr. Shriram H. Soni at any point of time nor any corroborative evidence was found from the residence of Mr.Shriram H. Soni so as to prove that the assessee is the same person as per the name appearing in the seized document, therefore, respectfully following the decision of the Coordinate Bench of the Tribunal in the case of Ashok Keshvlal Oswal (Supra) and in absence of any contrary material brought to our notic....