TaxTMI 
TaxTMI 
2016 (9) TMI 1489
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....0/- made by the AO without appreciating the fact that the loose papers were found at the time of search operation in which nature of transactions, name of the party by whom interest was given with date against the advances and name of the recipient party are clearly mentioned. 3. The CIT(A) has erred in heavily emphasizing on nonexistence of corroborative evidences, while ignoring the fact that the incriminating documents were sufficient to evident the unaccounted transactions. 4. The CIT(A) failed to appreciate that there is no point in insisting for proper evidence in the case of unaccounted transaction; because, unaccounted transactions cannot be expected to be properly recorded. 5. The CIT(A) erred in relying on denials of the parties who had taken and given the amounts; because, erring parties cannot be expected to confess their mistakes. 3. Briefly stated, the facts of the case are that a search operation was carried out in the Satellite Group of Cases on 19.11.2009 in which M/s. Phoenix Devcons Private Limited was also covered wherein a loose paper bearing no. LPS-A/4 page 7 containing details of transaction of Shri Pukhraj Soni with Nilesh Ajme....
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....ilesh Ajmera in Order No. CIT(A)-7/IT - 922/11-12 dated 28.03.2013 for the assessment year 2009- 10 by observing as under :- "7.5 In the case of Shri Nilesh Ajmera, in whose case such paper was seized, addition of such amount of Rs. 2.50 crores was made u/s 69D of the Income-tax Act, 1961, and alternatively u/s 68 of the I.T. Act. Shri Nilesh Ajmera challenged such addition before the CIT(A). The CIT(A) vide order no. CIT(A)-7/IT-922/11-12 dated 28.03.2013 for assessment year 2009-10 decided the appeal in favour of Shri Nilesh Ajmera and deleted this addition of Rs. 2.50 crores by relying on his decision for assessment year 2007-08, wherein it was held that Section 68 of the IT Act will not applying this case because diary and loose sheets seized in that case cannot be said by any stretch of imagination to be books of accounts [Relied on Om Prakash & Company,(2004) 87 TTJ MUM 183] and application of Section 69D of the IT Act was also rejected as hundi documents were not found [Relied on M/s. Agrawal Motors, (2000) 65 TTJ (Jab.) 130]. 7.6 - Relying on the facts and case laws discussed above, relying on the decision of the CIT(A) referred in para 7.5 above in case o....
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....s. 92,24,410/-, Rs. 47,00,000/- Rs. 12,50,000/- and Rs. 35,25,000/-. The brief facts relating to the ground are that from the perusal of various documents seized from the premises of M/s. Phoenix Devcons Pvt. Ltd., 434, Orbit Mall, A.B. Road, Indore, a company in which the assessee is one of the directors and shareholder, the AO observed that the assessee had borrowed huge money on 'Hundi' from various persons viz. Shri Manish Kedia, Shri Sushil Golecha, Shri Rohit Sethi, Shri Nitish Doshi, Shri Raju Doshi, K. Goyal etc.. According to the AO, from the various notings on various loose papers, inventorised as LPS-A/23 and a diary inventorised as BS-8, it gets established that the assessee had borrowed huge amount of money on hundi from these persons. Accordingly, the AO required the assessee to explain the notings found in various seized documents. The assessee submitted that the various notings referred by the AO relate to the borrowings made by one of his Mumbai based investors from Mr. Sushil Golecha, Mr. Manish Kedia, etc.. It was further submitted by the assessee before the AO that the borrowings were not made on any 'Hundi' but such borrowings were only made on promiss....
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....the said order herein below: 7.12 In this background, he argued that even on the basis of taxability of these transactions noted in the loose sheets i.e. LPS-A/23 and BS- 8 diary lack its credence being income, as these transactions are merely details of loans which cannot be by any stretch of imagination held to be income of the appellant. To this proposition, the appellant's A/R drawn my attention to the case of Sunil Rathi Alias Jitendra Rathi vs. ACIT reported in 112 TTJ 545. On this discussion and submission made by the appellant's A/R extracted as above, it was submitted and argued that the A.O.'s action of even making addition u/s 69D of the Act is unjustified and incorrect. 7.13 Having taken note of the A.O.'s order and the submission of the appellant extracted as above and also after taking note of judicial pronouncements cited by the appellant's A/R extracted as above, I am of the considered view that for making addition u/s 69D, it is imperative that the A.O. must establish that the appellant has borrowed such loan on 'Hundi'. Merely giving note of the word 'Hundi' as detailed in para-160 to 165 in LPS-A/23 and also in few occasions in BS-8 diary will n....
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....he period from 20.02.2007 to 23.03.2007 which undisputedly pertains to A.Y. 2007-08 only and, therefore, in any circumstances, such receipts cannot be subjected to addition for the assessment year under consideration i.e. A.Y. 2008-09. Thus, on this count alone, the addition made by the AO does not deserve to survive. Thus, taking note of all the factual position of the case, the addition so made by the A.O. is deleted. Accordingly this ground of appeal is allowed. 8.2 I have considered the A.O.'s order as well as the appellant's submission. Having considered the factual position of the case, I find that the similar ground has been decided by me in favour of the appellant vide my order No.CIT(A)-IT-920/11-12 dated 28/03/2013 for A.Y.-07-08. Since the facts of the case are similar to that facts as in A.Y.-07-08, I am of the considered view that the A.O. was not justified in making the aforesaid addition to the income of the appellant. 8.3 Thus, following the rule of consistency, I consider it proper and appropriate to hold that the A.O. was not justified and correct in his action. Thus, the addition so made by A.O. is deleted, as in this ground of appeal raised by ....
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....f in-flow of funds from Shri Manish Kedia, Shri Sushil Golecha, Shri Rohit Sethi, Shri Nitish Doshi/Shri Raju Doshi, Shri K. Goyal, etc. have been stated. It is submitted that during the course of the entire search proceedings, not a single live or expired Hundi was ever found or seized from any of the premises of the assessee or his associates. It is submitted that such assertion has not been contravened either by the AO or by the learned DRs. It is submitted that mere caption of certain transactions cannot conclusively determine the actual character of the transactions. From a perusal of the loose paper inventorized as LPS Page No.160 to 165 of LPS-A/23, as referred to by the ld. AO in the body of the assessment order for making the impugned addition, it may be found that such details are not given in vernacular language but these are in English Language. Further these documents are in the form of excel sheets in which the details such as the name of the lender, start date, amount, duration, renew date, interest, dalali and signatory of the documents etc. have been given. The fact remained that the assessee that he had not borrowed any loan on hundi but....
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....ture to the borrower, directing the borrower to pay a certain sum of money either to a third person or to any other person to the order of the third person or to the bearer of the instrument. Thus, it is apparent that the Promissory Note is always a bilateral transaction whereas a Hundi is always a tripartite transaction. It is further submitted that the CBDT vide its circular No.208, dated 15 November, 1976 points out that 'Hundi' has not been defined under the Income-Tax Act, 1961 and that in common parlance, any indigenous instrument in vernacular which can be used by the holder to collect money due thereon without using the medium of currency is a 'Hundi'. It may also be regarded as an indigenous form of a bill of exchange expressed in vernacular language which has been in use in the mercantile community in India for the purpose of collecting dues. In the same Circular, the CBDT has also given some characteristics of the Hundis. As per these characteristics, in any Hundi transaction, there is always three parties viz. a drawer, a drawee and a payee. The CBDT in its subsequent Circular No.221 dated 6th June, 1977, has reiterated that a hundi in common parlance d....
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...., from a perusal of the excel sheets, on the basis of which additions have been made, it may be observed that there is mention of only two persons i.e. the name of the lender and the name of the assessee as the signatory of the document. In such circumstances, relying upon the judicial pronouncements, it can be safely concluded that the amount was borrowed by the assessee on Promissory Note and not on Hundi. Once it is held that the borrowing was not made on Hundi, the provisions of s.69D cannot be made applicable to such borrowings. Accordingly, there is no infirmity in the CIT(A)'s Order in holding that the borrowings made by the assessee from various persons were not covered by s. 69D of the Act. The BS-8 diary or excel sheets, in which the transactions of the borrowings were noted down, cannot be regarded as books of account as contemplated under the provisions of s. 2(12A) of the I.T. Act. In absence of any books of account the provisions of s. 68 cannot be invoked as finding of credit entries in the books of account of an assessee is a sine-qua-non for invoking the provisions of s. 68 of the Act. For such proposition, we place reliance upon the decision of the Hon'ble Madras ....
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....e, having given such finding of genuineness of the borrowing there does not remain any scope for the AO to make any addition in the assessee's hands by regarding the same as his undisclosed income. For such proposition, we rely on the decision of Hon'ble ITAT Jodhpur Bench in the case of Sunil Rathi Alias Jitendra Rathi vs. ACIT (2007) 112 TTJ (Jd.) 545 holding that receipt of a loan cannot be regarded as an income of an assessee. In view of above discussion, we dismiss this issue of the departmental appeal. " 8. We have considered the facts and materials available on record. On consideration of above facts and circumstances, we find that no search was carried out in the premises of Shri Pukhraj Soni and no loose paper/ hundi/ documents/ promissory note/ cash book or cash flow statement were found or seized, which could prove the movement of cash to & fro between Shri Pukhraj Soni & Shri Nilesh Ajmera with respect to interest and loans. We find that the AO failed to bring on record any corroborative and concrete evidence against the assessee which could prove that the assessee has advanced money to Shri Nilesh Ajmera. The inference of the AO that the assessee has advanced the mo....