2020 (12) TMI 653

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....sly, search u/s. 132 was also conducted in the residential premises of Shri Lanka Anil Kumar, employee in M/s. Navaratna Estates and during the course of search, whatsapp messages were found on mobile phone of Shri Lanka Anil Kumar, Executive Director of M/s. Navaratna Estates which was seized vide pages 31-34 of Annexure LAK/01. A statement was also recorded on 24.11.2015, u/s. 132(4) of the Act, from Shri Anil Kumar who had stated that the messages contained on his mobile phone represent the conversation between himself and Shri Manchukonda Shyam, the assessee. Further, he also stated that as recorded in whatsapp messages, the amounts mentioned represent cash loan taken from M/s. Manchukonda Shyam Zaveri on those days for his business purpose. The amounts were noted in digits and the same represent lakhs. For the sake of clarity, we extract relevant part of the assessment order in page No. 16 which reads as under: "Pages 31 to 34 contains the data extracted from my mobile phone Whatsapp messages had with Sri Shyam Zaveri during the period 21.07.2014 to 24.11.2015 Q. 27. Please go through the specific entries from 19.05.2015 to 05.06.2015 wherein certain figures ....

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.... for business purposes. He further stated that the figure mentioned are measured-in lakhs but were intentionally omitted to mention lakhs in the messages. The aggregate amount received from Sri Shyam Zaveri is Rs. 1.05 crores. Please explain. Ans. The above amount only reflects the amount paid from Navaratna Estates for incurring miscellaneous expenses during registration and petty cash expenses." 2.2. Subsequently, the AO issued show cause notice and in response to show cause notice, the assessee submitted his explanation and denied having lent any amount to Shri Lanka Anil Kumar. Since the dates of payments were mentioned in whatsapp messages and Shri Lanka Anil Kumar has confirmed that the said amounts were taken as loan from the assessee in a statement recorded u/s. 132(4) on 13.01.2016, the AO did not believe the contention of the assessee that the amounts were given out of M/s. Navaratna Estates towards miscellaneous and petty cash expenses. On the strength of the statement given by Sri Lanka Anil Kumar u/s. 132(4), the AO viewed that the assessee has not discharged the burden of proof to establish that the amounts were not given by him as advance to Shri Lanka An....

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....of the Ld. CIT(A) and restore the assessment order. 5. Per contra, the Ld. AR submitted that Shri Lanka Anil Kumar, is an employee of M/s. Navaratna Estates, where, the assessee is partner of the firm. To meet the miscellaneous and petty cash expenses, M/s. Navaratna Estates has given the sums within the range of Rs. 5,000/- to Rs. 10,000/- to Shri Lanka Anil Kumar. He further stated that assessee has not given any such amount to Shri Anil Kumar as loans. Subsequently, Shri Lanka Anil Kumar also has retracted from the statement and submitted that no such cash loans were received by him. A survey u/s. 133A was conducted in Navaratna Estates and as discussed earlier search was conducted in the residence of the assessee, but no such evidence was found indicating any amounts advanced by the assessee to Shri Lanka Anil Kumar. Extrapolating messages found in whatsapp in lakhs instead of actual and making addition in the hands of the assessee without any corroborating evidence is unreasonable and unjustified. Ld. AR further argued that since the assessee has not given any amounts as advance to Shri Lanka Anil Kumar and there was no evidence found during the course of search to prove th....

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....ence was found with regard to the investment made by Shri Anil Kumar in his own business out of the loans stated to have given by the assessee. In the above facts and circumstances there is no reason to disbelieve the statement given by the assessee that the payments were given for meeting petty cash or miscellaneous expenses. The Ld. CIT(A) following the decisions of Hon'ble Jurisdictional High Court as well as this Tribunal held that on the basis of notings and loose sheets found from third parties and the statement of third parties, the additions cannot be made without having corroborative/independent evidences. For the sake of clarity and convenience, we extract relevant part of the order of Ld. CIT(A) in para No. 6.2 of page No. 13 which reads as under: "6.2. I have considered the assessment order and submissions of the appellant. It is seen that the addition made by the AO is solely based on the social media (whatsapp) messages exchanged between the appellant and Mr. Anil Kumar, an employee of M/s. Navaratna Estates. A statement u/s. 132 recorded from Mr. L, Anil Kumar during the course of Search during which Mr. L. Anil Kumar was questioned and he explained the ....

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....tracted. Therefore we are of the view that the addition made by the AO is unsustainable and the Ld. CIT(A) rightly deleted the addition. Accordingly, we do not see any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed. 7. Ground No. 2 is related to the disallowance of exemption claimed u/s. 10(38) for an amount of Rs. 1,57,76,500/- on account of sale of shares of M/s. Tuni Textiles Mills Limited. During the appeal hearing, the Ld. Counsel submitted that this was double addition which was deleted by the Ld. CIT(A) in corrigendum order dated 14.12.2019. He further submitted that the assessee had received only the amount of Rs. 1,57,56,500/-, but never received the sum of Rs. 1,87,60,000/-. Since the addition is made twice, the Ld. AR submitted that no interference is called for in the order of the Ld. CIT(A).The Ld. DR relied on the Assessment order. 8. We have gone through the orders of the lower authorities and find that the AO made the addition of Rs. 1,87,60,000/- as discussed in para No. 13 and 13.3 of the assessment order. The entire addition represent the shares sold in respect of Jaisukh De....

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....ere were no holding of Tuni Textile Mills Ltd. shares (copy submitted at page No. 61 to 65). In view of the above, the appellant prays the learned CIT(A) to kindly delete the addition of Rs. 1,57,56,600/-." 3.1. The above specific submissions of the appellant were not adjudicated. On consideration of the facts as mentioned above it is seen that the entire statement of the appellant recorded during the Search and the material brought on record show that the appellant has dealt in the shares of M/s. Jaisukh Dealers Ltd. and not in the shares of M/s. Tuni Textiles Ltd. The investments of the appellant as on 31.03.2014 does not include shares of M/s. Tuni Textiles Ltd. but only includes the shares of M/s. Jaisukh Dealers Ltd. The amounts received (sale proceeds) by the appellant of Rs. 157,76,500/- in his bank account are on sale of share of M/s. Jaisukh Dealers Ltd. In view of the above and in absence of any material except inadvertent mention in the return, showing appellant's transaction in M/s. Tuni Textiles Ltd., the addition of Rs. 1,57,76,500/- made on account of above alleged transaction is not warranted and the same is liable to be deleted, The ground no. 7 be tre....