TaxTMI 
TaxTMI 
2018 (10) TMI 1499
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Pvt. Ltd. towards refund of loan as undisclosed income, ignoring the fact that the same amount used in purchase of diamonds and the sales proceeds of the said diamonds was declared as income u/s. 132(4) by the appellant and paid taxes thereon. The learned CIT(A) unjustifiable upheld the same amount of Rs. 30 lacs taxed twice. 3. The grounds of appeal are not prejudicial to one another. Your appellant craves leave to add, amend, alter or delete any of the grounds of appeal on or before final hearing." 2. Briefly stated, the assessee had filed his return of income for A.Y. 2007-08 on 31.07.2007, declaring total income of Rs. 83,17,940/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. The case of the assessee was thereafter taken up for scrutiny assessment under Sec. 143(2). 3. Search and seizure proceedings were conducted on 03.08.2006 under Sec.132 of the Act in the case of Euro Group of Companies. As the assessee was an associate person of this group, thus his residential premises were also covered under the search proceedings. Assessment under Sec. 143(3) r.w.s.153A for the A.Ys 2001-02 to 2006-07 were frame....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which was offered to tax in the return of income tax. The assessee further submitted, that though the declaration during the course of the search proceedings was made on the basis of the sale value arrived at by the diamond trader to whom the same were given for sale on approval basis, but as on sale only an amount of Rs. 73,79,868/- was realised, therefore, the disclosure offered in the return of income was restricted to the said amount. 6. The A.O observed, that during the course of the search proceedings at the residential premises of the assessee certain loose papers were found, which were seized and marked as "Annexure-A" containing Page No.1 to 44 of the panchnama, dated 03.08.2006. The A.O noticed that the assessee on being called upon to explain the contents of the aforesaid seized documents viz. Annexure-A Page 1 to 44, had claimed in his statement recorded under Sec.132(4) on 03.08.2006 that Page Nos. 30 to 31 were the cash payments of Rs. 21,00,000/- and Rs. 21,21,000/- made by the assessee on 04.05.2006 and 07.05.2006, respectively, to Shri Vikram Singh Shekhawat of Jaipur. The assessee further explaining the contents of Page No.30 to 36 had stated that the same w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r with the aforesaid claim of the assessee declined to accept the same by observing as under: "8. I have carefully considered the above submissions of the assessee, the same is not acceptable for the following reasons - (i) As regards the cash payment of Rs. 42,21,000/- to Shri Vikram Singh for purchase of diamonds, it is noticed that in the receipts at seized page No.30 dated 4/5/2006 and page No. 31 dated 7/7/2006 nowhere it is mentioned that the amounts were received towards purchase of diamonds by Shri Vikram Singh. (ii) During the course of search proceedings, assessee has never stated that these payments were made towards purchase of diamonds. (iii) The only answer given by the assessee during the course of search proceedings is that these are the cash receipts from the assessee to Shri Vikram Singh. (iv) The extract of the said receipts are as under:- R E C E I P T Received with thanks from Mahesh M. Doshi a sum of Rs. 21,00,000/- (Rupees twenty one lacs only by cash). Rs. 21,00,000/- Dt. 4.5.2006 I say received, Sd/- (Vikram Singh) R E C E I P T Received with thanks from Mahesh M. Doshi a sum of Rs. 21,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... In case the cash amounting to Rs. 30,00,000/-- advanced by the assessee to Vijay Gruh Nirman Pvt. Ltd. Who has issued the 5 (five) promissory note multiple of Rs. 6,00,000/- each has been received back by the assessee then under that circumstances who issues the original promissory note will definitely take the originals promissory notes having acknowledgement of repaid the cash loan. Since the original promissory notes are available with the assessee, therefore it cannot be said that the assessee has received back the cash of Rs. 30,00,000/- which he has utilised for purchasing the diamonds. Assessee has not produced any evidence in respect of the date on which the said amount has been received back from M/s. Vijay Gruh Nirman Pvt. Ltd. Assessee's claim that the amount has been received as mentioned on the reverse side of the receipts of the promissory note is not satisfactory as on the reverse side of the promissory note it is written only "Recd. Back/Dt.6/7". This has not been signed by any of the person or the year in which the same has been received back has also not been mentioned. Further, if the amount has been received back on 6/7/2006 what prevented the assessee to e....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... was invested by the assessee for purchase of diamonds. The ld. A.R rebutting the observations of the lower authorities averred that the latter had erred in not reading the seized documents in totality, and a bare perusal of the reverse side of the same clearly revealed that the amount of Rs. 30,00,000/- was received back by the assessee from the aforementioned concern. It was submitted by the ld. A.R, that as the amount had already been received back by the assessee from M/s Vijay Gruh Nirman Pvt. Ltd., hence for the said reason, nothing as regards the same was stated by the assessee in his statement which was recorded under Sec. 132(4) during the course of the search proceedings. Further, it was submitted by the ld. A.R, that as Mr. Vrajlal T. Gala Director of M/s Vijay Gruh Nirman had in his statement recorded under Sec. 131 stated that the amount of Rs. 30,00,000/- had not been repaid to the assessee till date, then under such circumstances he may be directed to pay the said amount. Per contra, the ld. D.R relied on the orders of the lower authorities. It was submitted by him that in case the assessee would have received the amount of Rs. 30,00,000/- from the aforementioned co....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... arrive at a conclusion that the amount of Rs. 30,00,000/- which was advanced by the assessee to the aforementioned party viz. M/s Vijay Gruh Nirman Pvt. Ltd. was received back by him. We find three peculiar aspects as regards the promissory notes seized during the course of the search proceedings which clearly militates against the explanation of the assessee that the amount of Rs. 30,00,000/- was received back by him on 06.07.2006 from M/s Vijay Gruh Nirman Pvt. Ltd. viz. (i) the noting "Recd Back/Dt. 6/7" on the reverse side of the promissory note is found to be unsigned; (ii) that it is beyond comprehension that M/s Vijay Gruh Nirman Pvt. Ltd. despite having repaid the amount of Rs. 30,00,000/- in cash to the assessee, would have allowed the said promissory notes to remain with him; and (iii). that if this was the factual position, then why it was not so stated by the assessee in his statement recorded under Sec. 132(4) on 03.08.2006. We find that the assessee had neither before the lower authorities, nor before us had furnished any evidence or plausible explanation which could persuade us to subscribe to his aforesaid claim. Rather, we find that the A.O had during the cours....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A) -39, Mumbai may be set aside and that of the Assessing Officer restored." 13. As observed by us hereinabove, the seized Annexure A-11 - Page 30-31 were certain "receipts" which revealed that a cash payment aggregating to Rs. 42,21,000/- was made by the assessee to Shri Vikram Singh Shekhawat. On a perusal of the said seized documents, it emerged that the "receipts" at Page 30 & Page 31 referred to cash payments of Rs. 21,00,000/- and Rs. 21,20,000/- made by the assessee on 04.05.2006 and 07.07.2006, respectively, to Shri Vikram Singh Shekhawat. During the course of the assessment proceedings, the assessee had submitted before the A.O that the said payments were made to Sh. Vikram Singh Shekhawat for purchase of diamonds. On the basis of the said claim, it was the case of the assessee that as the entire sale value of the diamonds of Rs. 73,79,868/-was disclosed as income by the assessee in his return of income, thus no adverse inference as regards the notings on the seized documents viz. Annexure A-11 - Page 30-31 pertaining to the investment made by the assessee for the purchase of said diamonds could be drawn. However, the A.O observing that the assessee as a director of M/s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....regards the payments made by the assessee to Shri Vikram Singh Shekhawat, submitted that the said payments were made for purchase of diamonds and had wrongly been held by the A.O as payment towards "on money" for purchase of property. It was submitted by the ld. A.R, that the view taken by the A.O was divorced from any supporting evidence which could substantiate the same. The ld. A.R relied on the order of the CIT(A), and submitted that he had after rightly appreciating the facts of the case in the right perspective deleted the addition. The ld. A.R in order to fortify his aforesaid claim took us through the affidavit of Shri Vikram Sigh Shekhwat (Page 52 of "APB"), wherein the latter had clearly deposed that no cash payment was received by him from M/s Euro Developers Pvt. Ltd. in respect of the sale of plots to the said company. The ld. A.R further drew our attention to the confirmation of Shri Vikram Singh Shekhawat, wherein the latter had clearly confirmed that the amount of Rs. 42,21,000/- was received by him from the assessee by way of consideration for purchase of diamonds. Per contra, the ld. D.R relied on the orders of the lower authorities. 16. We have deliberated at ....