TaxTMI 
TaxTMI 
2019 (1) TMI 196
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....ing survey. The Assessing Officer concluded that the assessee is engaged in unauthorized and illegal money lending business. The Assessing Officer inter-alia made addition of the aforesaid amount on account of undisclosed income. Aggrieved by the assessment order dated 31-12-2007, the assessee filed appeal before Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) rejected the explanation furnished by the assessee and confirmed the addition. Now, the assessee is in second appeal before the Tribunal assailing the findings of Commissioner of Income Tax (Appeals) by raising following grounds : "1. The learned CIT(A)-Aurangabad erred in law and on facts in confirming addition of Rs. 76,00,000; made by the learned AO on the basis of cheques found during the survey u/s 133A, without appreciating that no any loans / advances were given by the appellant against the said cheques and that no any Hundi papers were found as regards these cheques. The addition of Rs. 76,00,000 is arbitrary, excessive and based on mere suspicion. 2. The learned CIT(A)-Aurangabad erred in estimating an amount of Rs. 14,85,000 as alleged undisclosed interest on capital employed in t....
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....s: As per the survey statements, appellant has declared undisclosed income of Rs. 2.51 Crs. Subsequently, appellant realized the errors in the said declaration and accordingly ROI was filed by rectifying the following errors - a) Entries counted twice :During the course of survey proceedings, declaration was made on the basis of documents impounded, which included cheques, Hundies, promissory notes, etc. Summation of the documents was carried out an, declaration was made. Later on, errors of duplication / double were realized wherein, HUNDI was considered as a loan transaction and related security cheque was also counted as loans transaction. In reality, both these are parts of the said loan transaction. As such, entries amounting to Rs. 43 Lakhs, which were doubly counted as loans, were reduced from declaration quantum, and the return of income was filed accordingly. The same was accepted by the learned AO. b) Source explained : Source for advances amounting to Rs. 40 Lakhs was explained and accordingly, declaration quantum was reduced while filing return of income. This reduction was accepted by the learned AO. c) Advance given in subsequent year : Advance amounting to ....
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....re recorded u/s 131 of the ITA, 1961 reconfirmed the fact that no loan was obtained from the appellant. 8. Deletion of Penalty in the case of Mr. Rameshwer Shete by Honorable ITAT: The Honorable ITAT, Pune Bench has deleted the penalty v/s 271D & 271E of the ITA, 1961 in the case of Mr. Rameshwar Shete - ITA No. 2Ql-2Q2/PN/2012 (Copy, attached at Page No. 115 of PB-II). In the said decision, the Honorable Bench has noticed that Department has not brought anything on record to establish that Mr. Shete has received loan from Mr. Mutha (appellant). It is worthwhile to note that during the assessment proceeding of the appellant, Mr. Rameshwar Shete had filed notarized affidavit as to non receipt of the loan and statement of Mr. Shete was also recorded by the learned AO, wherein Mr. Shete reiterated that no loan was obtained for the appellant. However, the learned AO & the learned CIT(A) proceeded to presume that loan was advanced to the parties by the appellant. 9. Belief of appellant as regards non initiation of penalty u/s 2710 & 271E in case of other parties : Appellant believes that no any penalty proceeding u/s 271D & 271E of the ITA, 1961 have been initiated in the case....
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....es amounting to Rs. 76 Lakhs were found. While filing the return of income, appellant excluded the same as no actual loans were advanced and no corresponding HUNDI was found. It was explained that as per the modus operandi of appellant's business money is advanced to parties on the basis of Hundies / Promissory Notes and as a surety, cheques are taken. In this regard, appellant filed affidavit of the persons whose cheques were found viz. Mr. Lalit Zambad, Mr. Deepak Bharuka, Mr. Deepak Bharuka (HUF) and Mr. Rameshwer Shete. (Copy of affidavit placed at Page No. 18 to 22 of Paper Book-l}, All the persons, in their respective affidavits, have confirmed that these persons had not availed loan from the appellant, though cheques were handed over to the appellant in anticipation of loan. Further the learned AO also recorded statement u/s 131 of the ITA, 1961; of most of these persons and in the said statements all the persons confirmed that no loan was advanced to them by the appellant. Appellant also cross examined these persons before the learned AO regarding the alleged loan transactions and it was reconfirmed that no loan was obtained from the appellant (Copy of statement place....
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....}, However, appellant did not receive any such enclosure (Le. backside of Page-42) along with Remand Report. It transpires, reference to the said noting on the back-side of Page-42 was made for the first time, only during the Remand Report Proceeding. Further, learned CIT(A) heavily relied on the said back-side entries of Page-42 while concluding the matter. But the said entries on backside of Page-42 were not put to the appellant and no any explanations were sought for on the same. 7. Letter to AO for copy of Page-42: Appellant on 31/05/2017, requested the learned AO to extend the copy of backside of Page-42 (Copy of letter filed placed at Page No. 141 of Paper Book-VI). Appellant's consultant in Jalna received the copy of backside of Page-42 only in the month of June 17 (Copy of backside of Page-42 placed at Page No. 142 of Paper Book- VI). As such, it transpires till that stage the said paper (Le. backside of Page-42) was not extended to the appellant. 8. Affidavit filed by appellant: Appellant filed specific affidavit explaining the facts that Page-42 was not received prior to June 17 (Copy of affidavit placed at Page No. 143 to 146 of Paper Book-VII). 9. Prayer: ....
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.... and affidavits of all the above persons. 7. One of the person whose cheque was found during survey action is Shete Rameshwar Ganpatro Prop. Om Agro Services, Jalna. The Department in his case levied penalty u/s. 271D and 271E for taking cash loans from the assessee. The Assessing Officer in his case brushed aside his affidavit and his statement recorded in the assessment proceedings of the present assessee. In First Appellate proceedings the Commissioner of Income Tax (Appeals) took cognizance of the affidavit and his statement and deleted the penalty levied u/s. 271D and 271E of the Act. The Department carried the issue in appeal before the Tribunal in ITA Nos. 201 & 202/PN/2012 for assessment year 2005-06. The Tribunal vide order dated 20-06-2013 confirmed the findings of Commissioner of Income Tax (Appeals) by holding as under : "9. As per the Revenue, Shir K.N. Mutha was engaged in financing cash loans by way of hundies/promissory notes, etc. and as a security he would keep signed cheques from the borrowers against the amount advanced in cash. The cheque amounting to Rs. 10,00,000/- issued by the assessee, which was found in possession of Shri K.N. Mutha lead to be inferenc....