TaxTMI 
TaxTMI 
2022 (3) TMI 1018
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....as culled out from the record are that the assessee is an individual who derives his income from Consultancy and Interest Income. Return of income was submitted declaring income at Rs. 10,33,110/- and the said return was accepted u/s 143(1). Search & seizure operation was carried out in the premises of one Shri Satish Sawhney of Delhi on 05.01.2012 and during the course of search, 10 receipts of Rs. 38 Lacs each were found signed by Shri Sukhwant Singh Babbar. With these receipts, there was a paper with headline as 'promissory note' dated April 2007 under which name of Shri Sukhwant Singh Babbar was written, however, unsigned. On receipt of information from CIT(C)-III, New Delhi by CIT-I, Indore, proceedings were initiated u/s 153C for A.Ys. 2006-07 to 2011-12 vide notices dated 26/08/2013. Shri Satish Sawhney approached the Hon'ble Settlement Commission who taxed Rs. 3.8 crores pertaining to the purported Hundies in the year of the search i.e. A.Y. 2012-13 in the final order u/s 245D(4) dated 24.09.2014. The assessments u/s 153C for A.Ys. 2006-07 to 2011-12 were completed on 27.03.2015. During the course of proceedings u/s 153C, the copy of the order passed by Hon'ble ITSC u/s 245....
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.... evidences explained the said 10 receipts, therefore, the addition made by the Assessing Officer was wrong and the order of the learned CIT(A) deserves to be upheld. 5. We have considered rival contentions and gone through the material available on record. We find that Search & seizure operation was carried out in the premises of one Shri Satish Sawhney of Delhi on 05.01.2012. During the course of search, 10 type written receipts of Rs. 38 Lacs each were found signed by the assessee. These receipts do not show the date of issue of receipt. Due date has also been left blank. Learned counsel for the assessee explained that it may be perused on the lines that these receipts are on letter pad of the assessee which show mono as 'The Shri Ishar Group' and below the mono is address as 314, Bhaghirathpura Indore 452003 whereas below the address are two telephone numbers and one fax number. These telephone numbers are six-digit numbers. It is pertinent to mention here that six digits phone numbers have been dispensed with more than a decade back. With these receipts, there is a paper with headline as 'promissory note' under which name of Shri Sukhwant Singh Babbar has been typed written, b....
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....he period relevant to the concerned assessment year. We find that in the instant case, the Revenue has not brought on record any material establishing that the assessee has actually received the sum of Rs. 3,80,00,000/- during the period relevant to assessment year 2012-13. Therefore, we find from the perusal of the receipts & promissory note (unsigned) that the receipts relied upon do not fall in the category of 'hundis' in any manner for the reasons discussed herein below. Further, another aspect worth consideration in this regard is the theory of probability adopted by the investigation wing of Delhi. The relevant part of appraisal report supplied to the assessee by the department is reproduced herein below: "From the above, it appears that Shri Satish Sawhney had given loan of Rs. 3.80 crores to Shri Sukhwant Singh Babbar and got the undated signed receipts and made a promissory note in April 2007 stating that "Sukhwant Singh Babbar confirmed of having a sum of Rs. 3.80 crores from Satish Sawhney and repayment thereof is executed in 10 Hundis for Rs. 3.80 crores along with interest within 2 years from the date of execution of this promissory note". While going through the doc....
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....were not applicable in the case of the assessee. 10. We further find that Hon'blee Madras High Court had occasion to examine the issue relating to hundi vis-a-vis promissory note in the case of CIT vs K.P. Abdullah 240 ITR 947 (Mad) wherein the Hon'ble High Court decided the issue as under: "The assessee borrowed from four lenders the sums of Rs. 10,500, Rs. 12,400, Rs. 7500 and Rs. 7500. The repayments were not made by cheque but by cash. The Departmental authorities held that these amounts fell within the mischief of section 69D of the Income Tax Act,1961 and accordingly, added these amounts to the income of the assessee. On appeal by the assessee, the Appellate Tribuna deleted these additions as no hit by section 69D of the Act. On a reference: Held, affirming the decision of the Appellate Tribunal, that the language in which the instrument is written is not decisive. Though normally hundis are written in the vernacular language as the traders who used hundis in the past by and large were illiterate in English, that does not lead to the conclusion that if a document which is otherwise a hundi is written in the English language, such a document cannot be regarded as a hu....
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....h Sawhney as a consequence of the order of the Hon'ble Settlement Commission, the same amount cannot be again taxed as appellant's income. The provisions of section 69D are attracted if the amount is borrowed or repaid otherwise through an account payee cheque drawn on a bank during the aforesaid previous year. From the order of the Hon'ble ITSC passed in the case of Shri Satish Sawhney it is seen that the Hon'ble ITSC has clearly stated that the period to which the said hundies of Rs. 3.8 crores belong to cannot be ascertained due to the peculiar facts in the case and to settle the matter they brought to tax the amount pertaining to hundies i.e. Rs. 3.8 crores in the year of search, which is A.Y. 2012-13. The powers conferred on the Settlement Commission are entirely different. The Assessing Officer has taxed Rs. 3.8 crores u/s 69D on account of loan borrowed in cash through hundies in A.Y. 2012-13 merely on the basis of the above observations of the Settlement Commission as discussed above in paras 3.2 and 3.3 without any concrete evidence to show that the said loan was taken in the period relevant to the Assessment Year under consideration. In fact, the evidence in terms of ....