TaxTMI 
TaxTMI 
2019 (7) TMI 792
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....are being disposed off by this consolidated order. 2. Brief background of these appeals are that, in case of M/s Tushar Stock & Share Brokers Pvt. Ltd., it was held by the Tribunal by its order dated 31.10.2007 that, there was no valid requisition u/s 132A of the Act by Income Tax Department from FERA authorities and hence it was held that the proceedings u/s 158BC initiated could not be held to have been validly initiated. It was further held that, neither any material or evidence was found during the course of search conducted by the Income Tax Department from the possession of the assessee nor any material was requisitioned by the Income Tax Department from the FERA authorities to form the basis of block assessment proceedings u/s 158BC of the Act. Even otherwise also, on merits it was held that sustenance of addition of Rs. 1,06,23,044/- made on substantive basis in the case of M/s Mittal Consul & Co. and on protective basis in the case of M/s Tushar Stock & Share Brokers Pvt. Ltd., the additions cannot be upheld and all the additions were deleted. 3. In the case of M/s Mittal Consul & Co., the Tribunal vide its order dated 30.05.2005 had held that the condition precedent....
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....As per Annexure 'A' of 'Panchnama' prepared, reflected details of 30 bank account holders detailing the name and branch of the banks and also the number of cheques and serial numbers thereof. The aforesaid details had been prepared on the basis of cheque books found from the aforesaid premises. At the time of search a sum of Rs. 2,41,000/- in cash was also found which was seized. Thereafter, it appears a statement of Shri Ranjit Kumar Mittal, S/o Shri Laxmi Chand Mittal was also recorded on 12.12.1995 by the authorised officer u/s 40 of Foreign Exchange Regulation Act, 1973. That Shri Ranjit Kumar Mittal was one of the directors of M/s Tushar Stock & Share Brokers Pvt. Ltd. and also one of the partners of the firm M/s Mittal Consul & Co, a firm of Chartered Accountants. In the statement, he was required to give the name, address, account nos. of the persons/firms to whom the cheque book belongs and same was provided by him. He was also asked why the cheque books were found with him, and in reply, it was stated by him that some of the cheque books belongs to him and his professional firms whose names were provided in the statement and in respect of the rest of the cheque books, it w....
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.... 22.10.1999. In pursuance to the aforesaid notice, the ACIT, Circle 37(1), New Delhi, the AO of M/s Mittal Consul & Co. framed an assessment computing undisclosed income of the assessee at Rs. 1,46,23,044/-. In making the aforesaid addition, the AO instead of examining 20 bank accounts as has been forwarded alongwith note of satisfaction, again examined 30 bank accounts when it was found that out of 30, three names were repeated, and in respect of the remaining 27 accounts, he made addition of Rs. 1,46,23,044/- on substantive basis as against the addition made of Rs. 86,07,403/- by the AO of M/s Tushar Stock & Share Brokers Pvt. Ltd. The aforesaid addition was made on the ground that the assessee firm was involved in bogus capital formation and it has tried to launder large sums of its unaccounted money by opening bank accounts in fictitious names and filing bogus income tax returns in the names of non-existing individuals. In the case of Shri R. K. Mittal the same very amount of Rs. 1,46,23,044/- on estimate basis, had been brought to tax as undisclosed income but on protective basis by the AO. 10. Aggrieved against the respective orders of assessment, the aforesaid three asses....
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....on of the addition made in the case of the each of the three appellants are as under: Sl. No. Name of the assessee Undisclosed income determined by the AO. Undisclosed income determined by the CIT(A) 1. M/s Tushar Stock & Brokers Pvt. Ltd. Unexplained Deposits in Bank A/c Rs. 86,07,403/- Unexplained Deposits in Bank A/c Rs. 1,06,23,044/- Personal use of Car & Telephone expenses Rs. 78,335/- Personal use of Car & Telephone expenses Rs. 78,335/- IT(SS) No.: 435/Del/2004 Seized dairy Rs. 13,10,000/- Seized dairy Rs. 13,10,000/- Share application/share capital Rs. 10,80,000/- Share application/share capital Rs. 10,80,000/- Total Rs. 1,10,75,738/- Total Rs. 1,30,91,379/- 2. M/s Mittal Consul & Co. IT (SS) No. 434/Del/2004 Rs. 1,46,23,044/- Rs. 1,06,23,044/- 3. Shri R.K. Mittal IT(SS) No. 433/Del/2004 Rs. 1,46,23,044/- Rs. 1,06,23,044/- 14. The learned Counsel for the appellants, Shri. Salil Aggrwal submitted that in this case, a search was conducted by the Enforcement Directorate u/s 37 of the FERA at the premises of M/s Tushar Stock & Brokers Pvt. Ltd., from where 30 Cheque Books....
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....ny such investigation. In such circumstances, it was submitted that addition made in respect of deposits made in the bank account of the persons whose cheque books were found were outside the scope of XIV-B of the Act. 15. In respect of the allegation that most of the account of the individuals were introduced by MC & Co, it was submitted that MC & Co and Mittal Consul & Co. are not same. To demonstrate the same, it was submitted that on behalf of MC & Co, signature was made by Shri Ved Prakash Sharma who is the proprietor of M/s MC & Co. In support of the same, he referred to the computation of income alongwith balance sheet and Profit & loss A/c for the AY 1991-92 filed by Shri. Ved Prakash Sharma and also the order of the assessment for the same assessment year. 16. In the alternative, it was further submitted that in respect of 20 accounts, the CIT(A) has adopted a figure of Rs, 1,06,23,044/- and out of the aforesaid accounts, an account of M/s Khanna Stencils Pvt. Ltd. was also included which has been found genuine by the AO of M/s Tushar Stock & Brokers Pvt. Ltd, as such, same was not referred by him in the satisfaction note. It was submitted that if the account of M/s ....
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....d that cheque books were of his clients who had left for preparation of the IT Returns, whereas the same statement, it was submitted that these persons were no longer his clients and it was not possible for him to produce such account holders for verification. It was submitted that assessee has filed the IT returns of the account holders which reflect very meagre income. It was submitted that since the cheque books were found from the assessee as such, onus was on the assessee to prove that deposits made in such accounts did not belong to the assessee. In respect of the explanation of the assessee that MC & Co was not the assessee, and Shri. Ved Prakash Sharma was the proprietor of MC & Co, it was submitted by the learned CIT DR that assessee could not explain as to what was the relation between Mr Sharma and those persons whose cheque books were found. He submitted that surrounding circumstances lead to the conclusion that the said bank accounts were operated by the assessee in the name of those persons for his money laundering activity. 21. In rejoinder, Shri Aggarwal submitted that statement referred by the learned CIT DR dated 25.10.2001 was recorded almost after six y....
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....e on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the Assessing Officer. Evidence found as a result of search is clearly relatable to sections 132 and 132A." 23. In the instant case, it is seen that no search was conducted u/s 132(1) of the Act but a requisition was made u/s 132A of the Act in respect of the cheque books seized by the Enforcement directorate in a search and seizure operation under section 37 of the Foreign Exchange Regulation Act. On the date of search, statement of Shri Ranjit Kumar Mittal was recorded, who was one of the directors of M/s Tushar Stock & Share Brokers Pvt. Ltd. and also one of the partner of the firm M/s Mittal Consul & Co, a firm of Chartered Accountants. In the statement, he has provided the name, address, account nos. of the persons/firms to whom the cheque book belongs. He also specifically stated that such cheque books pertain to the professional clients for the preparation of their income tax returns. In the course of the assessment proceedings, the assessee also furnished the clients register maintained by it to subs....
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....fiable. It is also relevant to be noted that none of the accountholders have denied the accounts as not belonging to them. That under the statutory provisions, if the document is found, then the presumption is that the contents of the such documents are true. In this case, cheque books found however were not in the name of the appellant assessee, which cheque books had been identified to belong to account holders, who were the clients of the firm M/s Mittal Consul & Co. Further, the appellant had laid evidences to rebut such presumption and hence the burden shifts upon the revenue to establish that accounts belongs to the assessee which burden has not been discharged by the revenue. It is settled law that the apparent is real unless proved to the contrary. The assumption that M/s Mittal Consul & Co is introducing their unaccounted money and were engaged in laundering unaccounted money is unsubstantiated by any material fact found or brought on record. In fact, all the cheque books pertain to the different persons and such persons were income tax assessees and there is no presumption in law that all the accountholders had opened their accounts to accommodate the assessee as su....
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....t and inadmissible as evidence. Such loose papers are not "books of account" and the entries therein are not sufficient to charge a person with liability. Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is incumbent upon the person relying upon those entries to prove that they are in accordance with facts. In such circumstances, addition made solely on the basis of the diary found from the premises of Shri. A. S. Aneja without any corroborative material is unsustainable in law and hence is deleted. ii) Similarly, other two additions, i.e., one of Rs. 10,80,000/-, on account of an amount reflected in the balance sheet as share capital/application money and another of adhoc disallowances of Rs. 78,335/- being 1/10th the expenditure debited by the assessee M/s Tushar Stock & Share Brokers Pvt. Ltd. in its profit and loss account, on the ground that personal element in such expenses, is based on no incriminating material found as a result of search and were duly found recorded in the books of accounts. It is well settled law that ....