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2016 (11) TMI 1741
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.... ITA No.1311/PN/2013 (A.Y. 2004-05) (By Assessee): 2. Facts of the case, in brief, are that the assessee is an individual. A search action u/s.132 of the I.T. Act was conducted in the RMD Gutkha group of cases on 20-01-2010. Warrant of authorization u/s.132(1) of the I.T. Act was executed in the case of the assessee. In response to notice u/s. 153A of the I.T. Act the assessee filed his return of income on 31-12-2010 disclosing total income of Rs. 1,13,88,080/- which is the income as per the original return of income filed on 01-11-2004. In response to notice u/s. 143(2) and notice u/s. 142(1) of the I.T. Act the assessee filed various details. It may be pertinent to mention here that the assessment order u/s.143(3) of the I.T. Act was passed on 15-12-2006 accepting the returned income of the assessee at Rs. 1,13,88,080/-. 3. During the course of assessment proceedings the AO observed that the assessee has claimed dividend income as exempt in accordance with the provisions of section 10 of the I.T. Act. Since the assessee has not attributed any expenditure towards earning of such exempt income and considering the fact that there is always an element of indirect expenditure fo....
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....ent of the said unaccounted cash which is corroborative of and is corroborated by the innumerable evidences contained in the said seized documents seized vide Panchanama dated 09-10-2009. He, therefore, was of the opinion that in view of the categorical admission by Shri Sohan Raj Mehta while explaining the said documents the above amount of Rs. 14,35,00,000/- as mentioned in the seized document was paid by M/s. Dhariwal to the assessee through him as per the instructions received from Sri Rasiklal M. Dhariwal/Sri Prakash R. Dhariwal. In view of the above facts, the AO issued a show cause notice asking the assessee to explain as to why the unaccounted cash receipts of Rs. 35 lakhs for the year under consideration from M/s. Dhariwal Industries Ltd. through Mr. Sohan Raj Mehta should not be treated as his undisclosed income. The relevant show cause notice dated 09-12-2011 by the AO reads as under : "Vide Question No. 5 of questionnaire dated 12/09/2011 duly served upon you on 16/09/2011, you were asked to confirm and explain the details of receipt of the said amount. In response to the query raised vide said questionnaire, it is submitted by you that you have not received an....
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....Act and in view of the above facts, an amount of 14,35,00,000/- is proposed to be taxed in your hands as your unaccounted income for the assessment years as under: Assessment Year Amount (representing your undisclosed income) proposed to be taxed (Rs. ) 2004-05 35,00,000/- 2006-07 2,00,00,000/- 2008-09 12,00,00,000/- TOTAL 14,35,00,000/- 6. Kindly state through cogent evidences, if any expenditure is incurred by you for earning the said undisclosed income of Rs. 14,35,00,000/-, so that set off of expenditure, if any, and if permissible by law, could be given to arrive at actual quantum of your undisclosed income. . . . . . . . . . . 9. Therefore, you are requested to submit your say by 16/12/2011 in the matter so that the same can be considered by me while finalizing your assessment. Kindly note that the matter is time barring and granting further time may not be possible. If nothing is heard from your side by 16/12/2011, kindly note that I may tax the entire amounts as stated above, as your undisclosed income for the respective year (s) and disallow the claim of deduction u/s.80IA(4)(iii) of the I.T. Act for A.Y. 2009-10 ....
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.... establish any connection with the alleged entry in the statement or account allegedly maintained by said Mehta. c. Neither the alleged statement of said Mehta nor the alleged entry in the books allegedly maintained by said Mehta can stand scrutiny of law relating to evidence. Such flimsy, unsubstantiated and uncorroborated statement cannot be used in law to fasten any liability of me. It is impermissible in law. d. There never was any transaction relating to Gutkha by and between myself and Dhariwal Industries Limited. I did not sell any goods to said Mehta or his principals nor offered any services. It is hence, far fetched to connect me with the said amount on the solitary, unsubstantiated, uncorroborated and false statement of said Mehta. e. During the search taken place at my residential premises by Income Tax Department, nothing incriminating of the nature connecting me to the said amount could be found. f. I deny that any such amount was ever received by me from said Mehta at anybody's instruction. The said amount hence, cannot be added to my income for the purposes of levying tax. The same is illegal. g. The reliance on the a....
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....corded on dates 9-10-09, 15-10- 09, 21-10-09,7-11-09,7-12-09 and on 10-8-2011. (b) In the statement recorded on 10-8-2011 before DCIT, Central Circle 2(2), Bangalore, Mr. Mehta stated in answer to question No. 4, "Mr Santhuramappa, M/s Tejaswini Builders, Mis Mantri Developers and others are the parties with which M/s DIL or its directors had transactions .... " (c) Mr. Sohanraj Mehta did not even once mentioned my name in any of his statements recorded in the year 2009 & 2011. My name did not appear anywhere in the said statements of Mr Sohanraj Mehta. (d) I therefore, once again maintain that I was never connected or associated with the Guthka business of Dhariwallndustries Ltd,.or with Mr Sohanraj Mehta. I was not party to the sales effected by Mr Sohanraj Mehta. I did not provide any services or sold any goods to M/s Dhariwal Industries Ltd,. Under the circumstances Mr. Sohanraj Mehta paying me such a huge amount of Rs 14.35 Crore does not arise at all. (e) Moreover, there was never any cause or occasion for said Mr. Mehta for me to have received any such amount, much less Rs. 14.35 crores from Dhariwal Industries Limited through said Mr. Meh....
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....eported in 172 ITR 230 (SC) the AO held that third party evidence has evidentiary value and therefore the same can be used if corroborated by other circumstantial evidence. Since in the instant case the evidence not only proves the authenticity of the said seized document but also proves beyond reasonable doubt regarding assessee's role in the entire design, the AO held that the assessee has to necessarily face the lawful consequences of his unlawful act in the form of deployment of unaccounted cash outside the books. 9. So far as reliance on the decision of Hon'ble Bombay High Court in the case of Lata Mangeshkar reported in 97 ITR 696 is concerned, the AO observed that the Tribunal in the case of Lata Mangeshkar had observed that on the basis of the ledger, which contained payments to Lata Mangeshkar, there were no corresponding entries in the day book. Vasu Films itself did not rely on the ledger in the course of its own assessment proceedings. Furthermore, the testimony of two witnesses was found unreliable. It is under these peculiar circumstances the said decision had been rendered by the Tribunal. When Department filed an appeal against the order of the Tribunal the Hon'b....
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....n in its written submissions as early as 01-09-2011. This according to the AO proves that the said retraction was made by the assessee only at the behest of M/s. DIL, away from the irrefutable evidences contained in the said seized documents and try to save himself and M/s. DIL from the lawful consequences of this unlawful act. Relying on the decisions of the Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More reported in 82 ITR 540, Sumati Dayal Vs. CIT reported in 214 ITR 801 and CIT Vs. Mohan kala reported in 291 ITR 278, the AO made addition of Rs. 35 lakhs as undisclosed income of the assessee for the impugned assessment year. Similarly an amount of Rs. 2 crores was made in A.Y. 2006-07 and Rs. 12 crores was made in A.Y. 2008-09. 12. Before CIT(A) it was argued that the assessment order was received on 03-01-2012 whereas the search took place on 20-01-2010. It was argued that as per section 153B the AO shall make an order of assessment within a period of 21 months from the end of the financial year in which the last of the authorisation for search u/s.132 was executed. In view of the said provision, the order should have been served on the assessee before 31-12-2....
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....at the AO's reliance on the assessee's statement about him being custodian of the money belonging to Dhariwal group is misconceived as that statement was recorded u/s.133A in the case of a survey action against Sai Construction Pvt. Ltd. and it is well settled that a statement u/s 133A unlike 132(4) does not bind the assessee and can be retracted by him at any time. It was argued that the assessee in his affidavit has clarified the retraction. It was submitted that the assessee does not understand English language very well in which the statement was recorded. The assessee also tried to explain that had he received such huge amount of money totalling to Rs. 14.35 crores, the same would have been utilised in some form or other and the same would have surfaced in the search action conducted in his case. However, no unexplained asset, investment or expenditure was found as evidenced by the assessment order passed u/s 153A. There was no addition on such account except cash of Rs. 33 lakhs. The assessee also submitted that he had categorically denied any business relationship with Dhariwal group in his statement recorded u/s 132(4) on 20-01-2010 and that he did not know Mr. Sohan Raj Me....
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....nable. 17. So far as the merit of the case is concerned he also dismissed the same and upheld the addition made by the AO. While doing so, he observed that Shri Sohan Raj Mehta, C&F Agent of M/s. Dhariwal Industries Ltd. in his statement u/s.132(4) has explained the entire modus operandi of unaccounted generation of cash and also regarding its deployment which is corroborative and also corroborated by innumerable evidence contained in the seized documents. Further after decoding of the seized document by Shri Sohan Raj Mehta it has been explained that on the basis of the signed chits either by Shri Rasiklal M. Dhariwal/Shri Prakash M. Dhariwal, Shri Sohan Raj Mehta used to make payments to the parties whose names were mentioned on the chits. The AO has pointed out to the signed chit dated 14-08-2007 by Shri Prakash M. Dhariwal which appears on page 44 of the loose paper Bundle No.A/M/29 where the amount mentioned is Rs. 5 lakhs for which decoding has been explained by Shri Sohan Raj Mehta as Rs. 5 crores and the payments related to the said instructions on the chits have been made by way of number of instalments on different dates. The AO has also found and noted that the assess....
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....ee had received the money. This alone is not relevant in the present context. This is because the seized document itself and more so because of the nature of the entries contained therein does not make it as a 'dumb document'. The author of the said seized documents Shri Sohanraj Mehta, C&F agent of the Dhariwal Group at Bangalore has admitted to have written the said document in his own handwriting and also explained that most of the pages to have been written in 'Marwadi' language matching with the statement and the wordings on the seized document. It was also admitted that they represented purchase and sales of RMD Gutkha during financial years 2003-04 to February 2008. So far as the notings on page 34 is concerned, Shri Mehta had specifically stated that it was consolidated working of stock of RMD gutkha received from the company M/s Dhariwal Industries Ltd., whose factory was at Singsandra, Bangalore for the period April 2003 to August 2006. The C & F agent of the Dhariwal group, Shri Mehta also explained that the figures mentioned on the left side of the page 34 represented the stock of RMD Gutkha boxes received from the company and its value was also mentione....
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.... the payment made to the appellant has been confirmed by Shri Mehta time and again during the course of the statement recorded both during the pre and post search action. The inference thus drawn by the Assessing Officer in taxing the amount in the hands of the appellant is, therefore, based on a sound footing and, moreover, in such situation where the entire dealing itself is undisclosed, the books of account and other related documents are generally not maintained and corroborative evidences has to be seen within the materials found and seized and the inference drawn based on the statement recorded. The C & F agent Shri Sohanraj Mehta had a long association with the Dhariwals and because of such close association the entire C & F of RMD Gutka for Karnataka region was given to him. Moreover, the magnitude of the transaction which was handled by Shri Mehta and the amount of commission earned and also disclosed as income on such transaction clearly indicates that the statement given were not untrue and the same could be believed. The contention of the assessee that there being no evidence that the Dhariwal Group had paid money to the assessee thus gets answered. The records of such ....
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.... does not bind the appellant and can be retracted is not acceptable. Moreover, the retraction has come after a long gap of nearly eleven months and is not backed by any proof or evidence to its contention raised. 5.8.1 In the case of Dr. S.C. Gupta Vs CIT (2001) 248 ITR 782 (All), it was held that the statement made voluntarily can form basis of assessment. Retraction would not make it non-acceptable. Burden of proof lies on the assessee that the statement was wrong. Addition made on the basis of statement during survey - burden lay on assessee to prove that earlier statement was given under duress. In the case of Video Master Vs JCIT (2003) 78 TTJ 264 (Mum), it was held that retraction after one month has to be rejected as burden of proving that the statement was obtained by coercion and by duress not discharged by the assessee. 5.8.2 The Ahmedabad ITAT in the case of M.K. Choksi Vs ACIT held that statement is decisive unless successfully withdrawn or proved erroneous. By retraction assessee made himself untrustworthy and unreliable in the eyes of law. What is admitted by assessee as true must be presumed to be true unless contrary is known. The Pune ITAT in the ....
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.... including the appellant cannot be regarded as a dumb documents and the same has rightly been acted upon by the A.O. No addition could be made on the basis of dumb document. Dumb documents are those documents which are found during the course of search or survey and do not indicate whether the figures mentioned therein refers to anything meaningful or corroborative with the affairs of the assessee. The Courts have held that no addition can be made on the basis of dumb documents. However, in the present case document found and seized are not dumb documents as they confirm specific details of the sales made by Shri Sohanraj Mehta C & F agent of the Dhariwal group and also deployment of money as per the instruction of Shri RMD and his son Shri PRD. The words used under the provisions are 'possession or control'. The possession may with one person and the control with another person with respect to the same item. For example, documents relating to unaccounted sales are found from the possession of an employee of the company but the control of the same would lie upon the owner or management of the company and it can't be said to be unaccounted income of the employee but it w....
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....cally described as evidence in the Indian Evidence Act. It is observed from Sec. 143(3) that the Assessing Officer can base his assessment not only on the evidence found but also on the material gathered by him. It is now well settled that the Assessing Officer is not faltered by technical rules of evidence and the like and that he may act on material which may not strictly speaking be accepted as evidence in a court of law. Such evidence need not necessarily be direct evidence, it may be circumstantial evidence or assessment based on preponderance of probabilities judged by human conduct. If there is material on record to establish that the assessee has charged 'on money' in regard to land deals which is not recorded in the regular books of account, it is permissible for the Assessing Officer to make an assessment on the basis of such material. 5.10 In the present case also the Assessing Officer has based the assessment on the material found during the course of search action and which has also been admitted by the author to be written in his own handwriting and also admitted by the appellant to have been received by him. Apparent is real unless contrary is proved....
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.... they indicate the date, amount and also calculation of interest. Thus in the given set of facts and circumstances of the case and having considered the factual position including the submission of the appellant, seized documents and various statements relied during the two searches, it is difficult to accept the argument of the appellant that no addition could be made. The seized document do show link between M/s DIL and the appellant and the entire modus operandi of out of books sales of M/s DIL has been explained by Shri Sohanraj Mehta, which also gets corroborated by the seized documents. These documents and the accounting records are not dumb document rather are true statement of actual state of affairs among various parties including the appellant. Therefore, it cannot be said that no additions are called for on the loose papers found at the residence of Mithulal Jain at Bangalore. I, therefore, hold that entries indicating to the appellant can lead to addition in the hands of the appellant. These seized documents and statement of Shri Mehta cannot be ignored but are very much relevant and, therefore, the entries related to the appellant can lead to addition in the hands of t....
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....believe that the apparent is not real." The ownership of the documents or the Loose papers is not under dispute as the same has been admittedly stated to be in the handwriting of one of close associate of the Dhariwals. The document clearly reveals the entire modus operandi, definitely concealed and receipt in cash and which has also been corroborated by statements given by its author which clearly connects them with the Dhariwal Group and, therefore, it cannot be said to be irrelevant and just a piece of paper. From the various material brought on record, there was nothing improper on the part of the Assessing Officer in relying on circumstantial evidence in such cases for arriving at the finding. The Assessing Officer is also entitled to take into consideration the totality of facts and circumstances of the case and to draw his / her own inference on the basis thereof, circumstantial evidence in such cases is not impermissible. On similar facts the Bombay High Court in the case of Smt. Vasantibai N. Shah Vs. CIT (1995) 213 ITR 805 (Bom) held that in such cases only circumstantial evidence will be available. No direct evidence can be expected. In the case of Green Valley ....
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.... burden of proof it has rightly been held that the sum was liable to be included as income of appellant from other sources. In such a situation, unless any cogent explanation is given by the person in possession of the cash to show that someone else was the owner of that amount of money, it is reasonable to assume that the cash belonged to the appellant from whose possession it was found. The reasoning given by the A.O. is acceptable as there is no liability against the receipt hence it becomes the income of the appellant. The seized document and the statement recorded clearly suggest that the payment was made to the appellant and in view thereof the liability which is not payable would become income of the appellant i.e. when one of the limb is certain the other limb if denied becomes the income. 5.12.3 Thus, the Assessing Officer has brought on record and discussed in detail the entire scheme of unaccounted business transactions of M/s DIL. Considering the enormity of the transaction which was spread over several assessment years it could not have been expected that the assessee would keep details of each and every transaction connected with the activity. Obviously these....
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....t dumb documents and proved beyond reasonable doubt the entire unaccounted business chain of M/s DIL. The appellant though subsequently after nearly 22 months had retracted the admission made earlier of being the custodian of about 14 crores of money of Dhariwal was without any valid evidence. The material on record clearly indicated that the said retraction was made at the behest of M/s DIL. In the given circumstances of the case, the appellant's ground of appeal of not providing cross examination of Shri Sohanraj Mehta and not providing the copies of statement u/s 132(4) is not a valid ground. It is noticed that the Assessing Officer had provided the copies of the statement of Shri Sohanraj Mehta to the appellant during the assessment proceedings and which has also been admitted by the appellant in the submission filed during the appellant proceedings. Even after that it is not understandable as to why the appellant is insisting on the cross examination of Shri Mehta when he himself admitted to have received Rs. 14 crores from Shri Sohanraj Mehta, either by self or through his Representatives on the directions of Shri RMD and Shri PRD. 5.13.1 After all, the purpose b....
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....ied that in case the explanation offered is not satisfactory the value of the valuable articles shall be deemed to be the income of the assessee. 5.15.1 Section 110 of the Evidence Act is material in this respect which stipulates that when the question is whether any person is owner of anything of which he is shown to be in possession, the onus of proving that he is not the owner, is on the person who affirms that he is not the owner. In other words, it follows from well settled principle of law that normally, unless contrary is established, title always follows possession. Chuharmal vs CIT (1988) 172 ITR 250 (SC). Documentary evidence plays an important part in law. The Courts attach great value for documentary evidence. The Punjab & Haryana High Court in the case of Paramjit Singh Vs ITO (2010) 323 ITR 588 (P & H) pointed out that oral evidence is not conclusive as against documentary evidence under sections 91 and 92 of the Indian Evidence Act, 1872. 5.16 To sum up, on careful consideration of all the evidences and facts cumulatively and also the submission of the appellant, in my considered opinion, the decision of the Assessing Officer in making the addition ....
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....lication to the facts of this appellant's case. (v) The Ld CIT (A) further erred in relying on provisions of sections 69 and 69A of the IT Act though the amount added by the ld AO was not found in the appellant's possession and, therefore, he was not required to explain the source thereof. (vi)The Ld CIT (A) has grossly erred in sustaining the addition of Rs. 35,00,000/- made by the ld AO which is not based on any concrete material but only on presumption and guesswork and hence it is illegal. 4. Without prejudice to the above grounds the alleged amount has no features of income to be taxed in the hands of the appellant. 5. Further, without prejudice to the above grounds, assuming without admitting that a parcel received by the appellant's security staff at the reception of the building which remained in temporary custody of the such security staff does not become income chargeable to tax in the hands of the owner of the building. 6. The above Grounds of Appeal are without prejudice to one another. 7. The Appellant craves leave to revise, modify, alter or delete any of the above Grounds of Appeal or to add new Ground....
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....ssee. Accordingly, the additional ground raised by the assessee is dismissed. 24. Grounds of appeal No. 1 (i) to (iv) by the assessee relates to the validity of the assessment order passed u/s.153A on the ground that the same was served on the assessee beyond the period of limitation. 25. After hearing both the sides, we find the Ld.CIT(A) while adjudicating this issue at Para 3.2 of the order has observed that search action u/s.132 against the assessee was conducted on 20-01-2010 and the assessment order has been passed on 30-12-2011. The assessee has filed return in response to notice u/s.153A dated 14-09-2010 on 31-12-2010. He has also given a finding that the order has been made prior to the end of 21 months period as envisaged in section 153(1)(a) of the I.T. Act. The assessee has failed to demonstrate during the appeal proceedings that the said assessment order has not been made prior to 30-12-2011. No concrete evidence in this regard was produced before the CIT(A) to justify that the despatch of the order have been made after 30-12-2011. Nothing was brought before us to take a contrary view than the view taken by the Ld.CIT(A) while dismissing the ground raised by the ....
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....idence. He submitted that the Assessing Officer in the instant case has gone on mere presumptions without bringing any cogent material or evidence. So far as the application of provisions of section 68, 69 and 69A to 69D are concerned he submitted that these provisions are not applicable to the assessee. 32. So far as the application of provisions of section 68 is concerned he submitted that the same applies to any sum found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory according to the Assessing Officer, then the sum so credited may be charged to income tax on the income of the assessee of that previous year. However, no such credit in the books of the assessee was found. Therefore, this provisions is not applicable. 33. So far as the application of provisions of section 69 is concerned the same relates to unexplained investment. There is no such investment either made by the assessee nor found during the course of search. Therefore, section 69 is also not applicable. So far as application of provisions of section 69A to 69D....
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....ta had retracted from the statement. He submitted that although the assessee does not have such retraction statement, however, in view of the decision of the Ahmedabad Bench of the Tribunal it has to be held that when the same person has retracted from his statement, his original statement cannot be used against the assessee. Further, if such unaccounted money was received from Dhariwal Group then during the course of search on the assessee, some evidence would have been found in the form of loose papers or unaccounted assets, etc. However, no such things were found. This clearly indicates that there is no justification to hold that the assessee has received the payments from Dhariwal Group. 37. The Ld. Counsel for the assessee submitted that the papers were found from one Mr. Mithulal of Bangalore which were maintained by Shri Sohan Raj Mehta, C&F Agent of M/s. Dhariwal Industries Ltd. Referring to the provisions of section 132(4A) he submitted that these papers can be presumed to be true, genuine and correct in the case of the person searched, i.e. Shri Sohan Raj Mehta and he has admitted that the papers belong to him. On the basis of the papers found with some third parties a....
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....statement of Shri Sohan Raj Mehta recorded u/s.132(4) on 10-10-2009 and his statement recorded u/s.131 on different dates, copies of which are placed at pages 100 to 147 he submitted that Mr. Mehta had categorically stated that on the basis of instructions given by Shri Rasiklal M. Dhariwal/Shri Prakash M. Dhariwal cash has been handed over to the bearers of the slips. Therefore, under these circumstances, when things are clear that money has been given by Dhariwal group to the assessee amounting to Rs. 35 lakhs for A.Y. 2004-05, Rs. 2 crores for A.Y.2006-07 and Rs. 12 crores for A.Y. 2008-09, the Assessing Officer was justified in making the addition and the Ld.CIT(A) was justified in confirming the addition. He submitted that the various decisions relied on by the Ld. Counsel for the assessee are not applicable to the facts of the present case and are distinguishable. He accordingly submitted that the order of the CIT(A) be upheld. 41. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find ....
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....knowledged and substantiated the fact that the seized documents belong to M/s. Dhariwal Industries Ltd. and therefore his statement has immense evidentiary value. Based on the above and on the basis of various other observations in the assessment order the Assessing Officer made addition of Rs. 35 lakhs in A.Y. 2004-05, Rs. 2 crores in A.Y. 2006-07 and Rs. 12 crores in A.Y. 2008-09 as undisclosed income of the assessee which has been upheld by the CIT(A). 43. It is the submission of the Ld. Counsel for the assessee that from the very beginning the assessee was denying to have received any such amount from Mr. Sohan Raj Mehta. According to him, no addition can be made in the hands of the assessee on the basis of papers found in the premises of third party. Further, the assessee being a small taxpayer, some evidence should have been found from the office or residence of the assessee to show that in fact he has received such huge amount. Similarly, the statement of Mr. Rasiklal M. Dhariwal is contrary to the finding of the Department. It is also the submission of the Ld. Counsel for the assessee that different Benches of the Tribunal under identical facts and circumstances have del....
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....in of M/s. Dhariwal Industries Ltd. The role of the assessee was that of a coconspirator. During the course of search and post search proceedings Mr. Sohan Raj Mehta had stated that the seized books of account, loose sheets and other documents, i.e. A/M/01 and A/M/29 were actually belonging to the C&F business of M/s. Dhariwal Industries Ltd. He had categorically stated that page 34 of A/M/08 and other related documents were written by him and most of the pages were in Marwadi language. The statement of Mr. Mehta clearly explains the entire unaccounted business chain and unaccounted business transactions of M/s. Dhariwal Industries Ltd. Mr. Sohan Raj Mehta, the author of the seized document in his statement u/s.132(4) has explained true impact of the contents of the seized documents and has also acknowledged and substantiated the fact that the seized documents belong to M/s. Dhariwal Industries Ltd. and therefore his statement has immense evidentiary value. Based on the above and on the basis of various other observations in the assessment order the Assessing Officer made addition of Rs. 1 crore for A.Y. 2006-07 and Rs. 20 crores for A.Y. 2007-08 as undisclosed income of the assess....
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.... Shri Sohanraj Mehta were found in connection with C&F agency of RMD Group of Pan Masala and Gutkha products. Shri Sohanraj Mehta was also covered by the Investigation Wing of Bangalore and on being confronted with these incriminating documents, Shri Sohanraj stated that the said pages interalia contain the notings regarding handing over of Rs. 21.22 crores to Shri Vinit Ranawat of Mumbai which is C&F agent of RMD group. Shri Sohanraj also stated that the said payments in cash were made as per the direction of Shri R.M. Dhariwal and Shri Prakash Dhariwal. Please state whether the said cash of Rs. 21.22 cr received from Shri Sohanraj Mehta on account of RMD group are reflected in your books of accounts. A.33 I have gone through the documents shown to me and say that I have never received this amount from Shri Sohanraj Mehta. Hence, the said payments are not reflected in my books of account. Q.34 A search action u/s.132 was carried out on 26-1-2010 in the case of Dhariwal group. In the course of statement recorded u/s.132(4) Shri Prakash Dhariwal has explicitly stated that the above referred payments have been made by Shri Sohanraj Mehta at the instruction of my fat....
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....ed as under : "Q.31 Please state how these transactions are unaccounted? Ans: M/s Dhariwal Industries Ltd has a manufacturing unit in Singsandra, Bangalore. Our firm M/s Mehta Associates is a sole C & F agent of the Company for their product RMD Gutka since 1994-95. I have very long business and personal association with Mr. Raskilal Manikchand Dhariwal. He considers me as close confident. As per the requirement of the Distributors, I place order for dispatch of Stock either with Mr. Prashant Bafna or Mr. Jeevan Sancheti, who are incharge of the Factory at Bangalore. To send a dispatch with bill or without bill is decided as per their choice and the Stock of Gutka is sent by Matador Van to this office. The stock that comes without bill is immediately dispatched to our customers. We keep only the stock that comes with bill in our office. The stock that comes without bill is dispatched immediately to our customers. I have been involved in these transactions for longtime and I am responsible for all the despatches and also for the collections from our customers; Normally, we extend credit of 7-10 days to our customers. They remit consideration for the Gun....
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....handwriting dt.20/2/2007 wherein I have instructed Shri Vinit Ranawat to hand over an amount of Rs. 500000-00 (Five Lakhs). Q11. Similarly, I am showing you page no.24 of Bundle No.A/M/29 seized on 9/10/2009. Kindly go through the contents and please explain. Ans. This is a signed chit in my handwriting dt.10/11/2006 wherein I have instructed Shri Vinit Ranawat to hand over an amount of Rs. 500000-00 (Five Lakhs). Q.12 Similarly, I am showing you page no.22 of Bundle No.A/M/29 seized on 9/10/2009. Kindly go through the contents and please explain. Ans. This is a signed chit in my handwriting wherein I have instructed Shri Vinit Ranawat to hand over an amount of Rs. 50000-00 (Fifty Thousand)." 45. From the above, it is seen that at one place the Department is treating the amount as short term advance by Mr. Rasiklal Manikchand Dhariwal to the assessee (Question No.34 to assessee u/s.132(4) on 2001-2010). Similarly, Mr. Rasiklal Manikchand Dhariwal in his reply to Question Nos. 9, 11 and 12 recorded u/s.132(4) of the I.T. Act has stated that he has instructed Mr. Vinit Ranawat to hand over the various amounts. Therefore, it is not clear as....
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....finding of fact by the Tribunal and no question of law arose and no reference would lie from the decision of the Tribunal. Accordingly, the appeal filed by the Revenue was dismissed. 48. The Hon'ble Supreme Court in the case of CBI Vs. Shri V. C. Shukla reported in 3 SCC 410 has observed as under : "The rationale behind admissibility of parties' books of account as evidence is that the regularity of habit, the difficulty of falsification and the fair certainty of ultimate detection give them in a sufficient degree a probability of trustworthiness (wigmore on evidence $ 1546). Since, however, an element of self interest and partisanship of the entrant to make a person - behind whose back and without whose knowledge the entry is made - liable cannot be ruled out the additional safeguard of insistence upon other independent evidence to fasten him with such liability, has been provided for in Section 34 by incorporating the words such statements shall not alone be sufficient to charge any person with liability. The probative value of the liability created by an entry in books of account came up for consideration in Chandradhar vs. Gauhati Bank [1967 (1) S....
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....or kind of evidence in addition to entries in books of account, and I take it that any relevant fact s which can be treated as evidence within the meaning of the Evidence Act would be sufficient corroboration of the evidence furnished by entries in books of account if true." While concurring with the above observations the other learned Judge stated as under: " If no other evidence besides the accounts were given, however strongly those accounts may be supported by the probabilities, and however strong may be the evidence as to the honesty of those who kept them, such consideration could not alone with reference to s.34, Evidence Act, be the basis of a decree." (emphasis supplied) In Beni Vs. Bisan Dayal [ A. I. R 1925 Nagpur 445] it was observed tat entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party wh....
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....nts as shown against them in MR 71/91, can at best be proof of reliability of the entries so far they are concerned and not others. In other words, the statements of the above witnesses cannot be independent evidence under Section 34 as against the above two respondents. So far as Shri Advani is concerned Section 34 would not come in aid of the prosecution for another reason also. According to the prosecution case itself his name finds place only in one of the loose sheets (sheet No. 8) and not in MR 71/91. Resultantly, in view of our earlier discussion, section 34 cannot at all be pressed into service against him. (underline provided by us) 49. We further find identical issue had come up before various Benches of the Tribunal on the basis of the notings of Mr.Sohan Raj Mehta found during the course of search. We find the Ahmedabad Bench of the Tribunal in the case of Shri Mustafamiya H. Sheikh (Supra) has observed as under: "7. On a perusal of the seized materials received from the Investigation wing, Pune, the AO had noticed that Page 34 was a summary of the cash payment made by Shri Sohanraj Mehta for the period from April 2003 - August 2006 as per the....
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.... payments totaling to Rs. 206,76,54,463/- were made in 2003-2006. The balance of Rs. 11,24,36,739/- was settled by me subsequently over a period of time." 7.2. Considering the statement of the said person, there is strong force in the contention of the assessee that even assuming that the receipt of such amount was merely a collection for on behalf of the company and such amount cannot par take the character of income in the hands of those persons. 7.3. Moreover, according to the assessee, the searched person being a third party had retracted all the statements recorded during the search proceedings in the following words: "1. I referred my aforesaid statement recorded by Deputy Commissioner of Income-tax, Central Circle 2(2), Bangalore on 10.8.2011. 2. In this statement dated 10.8.2011 sense conveys that my detailed letter dt.23.12.2009 filed with the Asst. Director of Income-tax (Investigation) Unit 2(1), Bangalore is negated which is incorrect and untrue. 3. Today on 3.12.2011, Saturday I depose in the name of Almighty God that under wrong promises, mistaken beliefs, inadequate guidance and improper advise, I signed the letter dt. 10.....
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....able right of an agreed party but it is also true that there has to be a justifiable time frame in which such right can be exercised. It is as settled principle of law that rights and duties under a statute go hand in hand and cannot be exercised in isolation. The appellant truly had the right to cross examination but at the same time had the duty to ask for it within a reasonable time frame. A right exercised with ulterior motives does not possess the sanction of law. Facts of the case clearly indicate that the appellant had purposefully demanded cross examination at a time when it was considered impractical and unfeasible....." 7.7. In essence, the principles of natural justice on the legitimate request of the assessee, to cross examine the third party on the basis of whose statement the impugned addition sought to be added to his income, has been denied on flimsy grounds. 7.8. At this point of time, we shall analyze the judicial pronouncements on a similar issue, as under (PB -184): (i) the Hon'ble jurisdictional High Court in the case of DCIT v. Mahendra Ambalal Patel reported in (2010) 40 DTR (Guj) 243 had held as under: "From the findin....
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....ecord; that the Tribunal had examined the facts and circumstances of the case and had come to the conclusion that the Revenue had not been able to establish its case against the assessee and as such, the order of the Tribunal being based upon findings of fact recorded by it, does not give rise to any question of law. It was, further, submitted on behalf of the assessee that the entire case of the revenue was based upon documents recovered during the course of search from the premises of third parties and the statements of the third parties and that the assessee was not granted an opportunity to cross examine the third parties and as such their statements have no evidentiary value. After due consideration of rival submissions and also taking into account the reliance placed by the assessee's counsel in the cases of (i) Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC) & (ii) CIT v. S.C. Sethi (2007) 295 ITR 351 (Raj), the Hon'ble Court had held thus: "[PB - 174] 16. Thus, it is apparent that the conclusions arrived by the Tribunal are based upon the aforesaid findings of fact recorded by it upon appreciation of the evidence on record. On behalf ....
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....e CIT (A) "(On page 54) 2.27.......The appellant is right to the extent that no income can be taxed twice......" (v) that the AO had candidly admitted that during the course of assessment proceeding itself the assessee had sought permission to cross examine Shri Sohanraj Mehta which was summarily rejected by taking refuge ".....Due to paucity of time, the cross examination could not be granted" [Refer: Para 2.8 (Page 10) of the CIT (A)'s order]. This stand of the AO, to view it mildly, is against the spirit of judicial pronouncements; (vi) that the AO had merely come to a conclusion based on a statement of a third party, without bringing any credible documentary evidence to the contrary on record to nail the assessee; & (vii) No reliance can be placed on the statements of a third person whose premises were subjected to a search since he had retracted his own statement made earlier on oath and precisely the assessee has been denied to cross-examine him to bring out the truth. 7.9.1 For the above said reasons, we hereby hold that the addition made for Rs. 57,50,000/- by the learned AO on account of undisclosed income, which wa....
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....from the record are that during the course of search conducted upon Shri. Sohanraj Mehta, C&F of RMD Gutkha group in Bangalore, statement of account was seized in which there was an entry of Rs. 50 lakhs in the name of Malik Kannauj. This entry was interpreted by the Revenue as this amount was given to Shri. Abdul Malik, MD of the assessee-company. On the basis of seized documents, the Assessing Officer has formed a belief in the assessee's case that the income chargeable to tax has escaped assessment, as this amount was not shown by the assessee in its books of account. Accordingly a notice under section 148 of the Income-tax Act, 1961 (hereinafter called in short "the Act") was issued and assessment was completed under section 147 of the Act read with section 144 of the Act in the hands of the assessee, resulting into an addition of Rs. 10.48 lakhs as profit on this unaccounted sale of Rs. 50 lakhs. 3. An appeal was preferred before the ld. CIT(A) with the submission that no document indicating payment of Rs. 50 lakhs to the assessee- company was found during the course of search. Only dumb documents were found in which there was a debit entry of Rs. 50 lakhks in the....
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....e seized document) referred to Shri 'Malik, M.D. of the appellant company. Further, even for argument sake if "Malik Kannauj" indeed referred to Shri Abdul Malik, the M.D. of the appellant company, there was no evidence/material on record which could link that payment to the assessee company. Just because the ADIT (Inv), Kanpur had informed the A.O. that the entry of paymen of Rs. 50 Lakhs (as mentioned in the seized document) to one "Malik Kannauj" related to the Appellant company (without any supporting in this regard), to same could not have been the basis for the A.O. to initiate the reassessment proceedings in the case of the appellant company. It is a trite law that the "reasons to believe" for reopening the case should be that of the A.O. alone and could not be formed at the dictates of others or on suspicion, conjectures or surmises. 5.1.7 In the instant case, in my considered view, the A.O. had no material before him which could link the said payment to the appellant company. The "reasons to believe" in the case have been recorded on irrelevant material. On the basis of such material, no prudent man could have formed the belief that income had escaped asstt. i....
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....iness transaction with Sh.Shobhan Raj Mehta. A request was also made to provide complete statements on the basis of which addition was being contemplated by the assessing officer. However, the assessing officer did not provide the copies of those statements. During the course of assessment proceedings, the assessing officer did not throw any light on any inquiry/ investigation carried out by him that could justify the additions made by him. That assessee has vehemently stated that the department has not proved that the identity of Shri Pawan Agarwal with the assessee and no slip, letter, document etc. showing any relationship of assessee with Shri Shobhan Raj Mehta were not found from the possession of Shri Shobhan Raj Metha. The A.O has required assessee's copy of accounts in the books of M/s. Dhariwal Industries, Pune and this was found verified from the assessee's books of A/c. It is clear that the assessee has business relationship with M/s. Dhariwal Industries, Pune and not with the Shobhan Raj Mehta. Therefore, it is clear that the addition made by the Assessing Officer purely based on guess work without any evidence, therefore this addition deserves to be deleted. ....
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....roverted by Learned D.R. of the Revenue and moreover, the name of the assessee i.e. Pawan Kumar Agarwal is very common name and merely because this name is mentioned in a seized paper found during the course of search at Bangalore at the premises of Shri Shobhan Raj Mehta, with whom the assessee was not having any direct transaction, it cannot be said that the said Pawan Kumar Agarwal, of whom the name was mentioned in the seized paper is the assessee. Without establishing this aspect that the name mentioned in the seized paper is that of the assessee, no addition can be made in the hands of the present assessee on the basis of such seized paper. Considering these facts, we do not find any reason to interfere in the order of CIT(A)." 53. We find the Delhi Bench of the Tribunal in the case of M/s. Bhola Nath Radha Krishan (Supra) while deleting an identical issue has observed as under : "7. After considering the arguments of both the sides and the facts of the case, we do not find any infirmity in the above order of learned 7 ITA-5149/Del/2012 CIT(A). The addition has been made on the basis of certain chits found from Shri Sohan Raj Mehta and his statement. Admitte....
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.... statement of Sh.Sohan Raj Mehta. However, it is further submitted that the assessee should be given the opportunity to cross examine the genuineness of the statements of Sh. Sohan Raj Mehta and should be given reasonable opportunity to verify the claims made by him. In the case of Kishan Chand Chelaram (125 ITR) it has been held by the Hon'ble Supreme Court of India that before taking a decision the assessee has to be allowed a chance or an opportunity of rebuttal with respect to the documents which are to be used against the assessee. The assessee has gone through the entire statements of Sh. Sohan Raj Mehta recorded under section 132(4) of the Income Tax Act. Nowhere there is any mention of Bhola Nath Radha Kishan or any of its partner in the said statement. The assessee cannot be held liable for any act of the omission or commission done by him. Mr. Sohan Raj Mehta's statement regarding decoding of figures is also not applicable on the assessee since this has no bearing or nexus of connection with the assessee firm or its business transaction. No addition or adverse decisions can be taken on the basis of surmises and/or conjectures. There has to be specific men....
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....s stated that the papers were seized from Dhariwal Group. The said papers were seized from the residence of Shri Sohanraj Mehta. According to the Assessing Officer, the assessee could not disown the existence of such documents. The Assessing Officer observed that the money has been passed on by Dhariwal Group through their staff. Hence, the assessee must have received the amount noted on the seized papers. The Assessing Officer has proceeded to make the addition of Rs. 5.10 crs. by stating that as per section 114 of the Indian Evidence Act, it is an accepted rule of evidence that if a person possessing an evidence does not produce it, the inference is that such evidence if produced is detrimental to him. Accordingly, the Assessing Officer held that the said receipts were the income of the assessee. 5.2 The Assessing Officer has further held that according to the provisions of section 80 of the Indian Evidence Act, there is a presumption as to the documents produced as record of evidence are genuine. Hence, he has held that the documents seized from Dhariwal Group could be relied upon for making addition in the hands of the assessee. The Assessing Officer has placed relianc....
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....ainst the name of the assessee. 5.4 The presumption u/s 132(4A) is available only in respect of the person from whom the paper is seized. It could not be applied against a third party and hence, no addition could be made on the basis of the evidence found with third party. The presumption u/s. 132(4A) could be used only against the person from whose premises the documents are found and not against the person whose name appears in the seized papers. 5.5 In this case, the addition has been made on the basis of the documents found with Dhariwal Group and thus, the presumption u/s. 132(4A) could not be used against the assessee since no incriminating documents were found with it. In the case of ACIT Vs. Lata Mangeshkar (Miss) (1974) 97 ITR 696 (Bom), the addition was made in the hands of the assessee on the basis of the entries in the books of third persons. Hon'ble Bombay High Court held that such addition could not be made only on the basis of the notings in the books of third persons. The facts of the present case are covered by the decision of Lata Mangeshkar (supra). It is a settled legal position that the decision of jurisdictional High Court is binding on a....
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....stified in making the addition by relying on the provisions of section 80 of the Indian Evidence Act which states that there is a presumption that the documents produced before the court as record of evidence are genuine. In this regard, the stand of the assessee is that in the case of assessee, document produced was merely in the form of a rough noting wherein certain amounts were written against the name 'Pradeep Runwal'. As discussed earlier, there may be many people of that name in Pune and in the absence of any other corroborative evidence to that effect. In such a situation, it cannot be inferred that it belongs to the assessee. 5.9 While making the addition of 5.10 crores as stated above, the CIT(A) relied on the following decisions of Sumati Dayal vs. CIT [(1995) 214 ITR 801(SC)], CIT vs. Durga Prasad More [(1969)72 ITR 807(SC], Himmatram Laxminarain vs. CIT [(1986)161 ITR 7(P&H)], CIT vs. Ganapathi Mudaliar [(1964)53 ITR 623(SC)] and CIT vs. Lacchman Dass Oswal [(1980)126 ITR 446(P&H)]. In this regard, the stand of the assessee has been that the case laws relied by the Assessing Officer are differentiable on facts and hence, the same are not applicable to ....
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....ch was held to be valid. In that case, the issue that no addition could be made on the basis of documents found with third party was neither raised nor applicable. Thus, according to us, the said decision has no application to the facts of the assessee's case. 5.11 The CIT(A) in para 2.5 has placed reliance upon ITAT, Pune decision in the case of Dhanvarsha Builders and Developers Pvt. Ltd. [102 ITD 375]. In the said case, the assessee was searched and documents were found indicating on money received by the assessee. It was held that the document was found with the assessee and therefore, the A.O. was justified in making the addition. Even in this case, the issue of no addition can be made on the basis of documents found with third party was not raised. The CIT(A) has further referred to the decision of ITAT, Mumbai in the case of P. R. Patel Vs. DCIT [(2001) 78 ITD 51 (Mum)] for the proposition that seized papers cannot be called dumb paper because they indicate date, amount and calculation. There is no dispute with the above proposition. The papers are found pertaining to Dhariwal Group as admitted by Shri Mehta and therefore, these documents may be relevant for dec....
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....r on the basis of evidences held that actually the lands were sold at Rs. 4,000/- per cent. Hon'ble High Court held that the additions made were correct. The said decision is not applicable to the facts of the present case. The CIT(A) has further relied upon the decision in the case of Chuharmal Vs. CIT [(1988) 172 ITR 250 (SC)] for the proposition that documentary evidence plays an important part. There is no dispute to the said proposition but in the absence of any corroborative evidence no addition could be made in the hands of the third party. 5.14 We find that in Thakkar Developers Ltd. [ITA No. 581/PN/08], ITAT in paras 3 and 4 held as under:- "The above said Shri Kolhe was examined, cross examined and reexamined and no evidence was gathered from him to establish that the contents of the seized documents were correct and true. Thus, in the absence of any corroborative evidence in the present case, the said seized document has to be treated as a dumb document as rightly observed by the CIT(A). The A.O. dismissed the retraction of the statement dated 29.03.2003 by filing an affidavit as an after thought and self serving. The A.O. concluded that the facts m....
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....r possession. Even, otherwise, such presumption u/s 132(4A) of the Act is not conclusive and rebuttable one". 6. Similar view has been taken by ITAT, Pune in Amit D Irshid [ITA No.988/PN/11] that presumption u/s. 134(4A) is available only against the person from whose possession the document is found and not against the third person. In the absence of clinching evidence against the third person as stated above, no action could be taken against him. In such a situation, the Assessing Officer was not justified to make addition in question in assessee's case. In view of above, we are of the view that the addition made by the Assessing Officer is not justified and the same is directed to be deleted. It is pertinent to mention here that this case is being decided in its facts and circumstances; it cannot be applied to other cases as such. 7. In the result, appeal filed by the assessee is allowed." 55. Since in the instant case the assessee from the very beginning has denied to have received any such payment from M/s. Dhariwal group through Mr. Sohan Raj Mehta and since no incriminating material was found from the residence of the assessee during the course....
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.... assessment order passed u/s.153A even though the order was served on the appellant beyond the period of limitation." 51. After hearing both the sides, we find the above ground is identical to ground of appeal No.1 in ITA No.1311/PN/2013. We have already decided the issue and the ground raised by the assessee has been dismissed. Following the same reasoning this ground by the assessee is dismissed. 52. The Ld. Counsel for the assessee did not press ground of appeal No.2 challenging the addition of Rs. 1,18,326/- u/s.14A. The Ld. Departmental Representative has no objection. Accordingly, the ground of appeal No.2 is dismissed as 'not pressed'. 53. Grounds of appeal No.3 and 4 being general in nature are dismissed. ITA No.1306/PN/2013 (A.Y.2009-10) (By Revenue): 54. Ground of appeal No.1 by the assessee reads as under : "1. On the facts and in the circumstances of the case the CIT(A) has erred in deleting the addition made to income from house property (near Mahabaleshwar) at Rs. 1,80,000/- as against Rs. 25,000/- disclosed in the return." 55. Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings observed th....
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.... CIT(A) for A.Y. 2005-06. Therefore, we find no infirmity in the order of the CIT(A) on this issue. Accordingly, the same is upheld and the ground raised by the assessee is dismissed. 59. Grounds of appeal No.2 to 5 by the Revenue read as under : "2. On the facts and in the circumstances of the case the CIT(A) has erred in allowing deduction u/s. 80IA(4) of the Act in respect of the assessee project "Sai Trinity" ignoring the fact that the assessee admitted to withdrawn the claim during search action. 3. On the facts and in the circumstances of the case the CIT(A) has erred in allowing deduction u/s. 80IA(4) although assessee has not fulfilled the preconditions for claiming deduction under Industrial Park Scheme 2002. 4. On the facts and in the circumstances of the case the CIT(A) has erred in allowing deduction u/s. 80IA(4) although the IPS 2002 Scheme talks about Industrial Park as a whole not Industrial Units. 5. On the facts and in the circumstances of the case the CIT(A) has erred in allowing deduction u/s. 80IA(4) although application for approval was filed after 31.3.2006, which is beyond the time limit and no fresh approval was taken a....
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....e assessee had retracted his statement dated 20-01-2010 by filing an affidavit dated 25-11-2011 stating that the admission made was not made by him. However, the Assessing Officer held that though the assessee had retracted the statement, however, the statement bore his signature and that the retraction was not made immediately after the search rather after 22 months and the assessee could not prove any threat or coercion while recording the statement on 20-1-2012. In view of the above fact the Assessing Officer disallowed the claim of deduction u/s.80IA(4) made by the appellant. 62. Before CIT(A) it was submitted that the disallowance of the claim of deduction u/s 80lA(4) was made on the basis of a letter from Secretary, Ministry of Commerce and industry which was found during the survey proceedings and as per the said letter, the assessee's claim for developing the 'Industrial Park' was disqualified as the competent authority felt that the industrial park was not being developed as a whole and, therefore, the assessee's eligibility under the IPS 2002 was denied. The assessee further submitted that he had challenged the decision of the empowered committee of Min....
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....see had already started offering income from the 'industrial park' since F.Y. 2006-07 relevant to A.Y. 2007-08 onwards. The assessee also cited the decision of the jurisdictional Bombay High Court in the case of Silver Land Developers (P) Ltd. and others Vs Empowered Committee (2012) 343 ITR 439 (Bom). 64. Based on the arguments advanced by the assessee the Ld.CIT(A) allowed the claim of deduction by observing as under : "6.2 The submission made by the appellant and material on record has been perused so also the remand report and the reply of the appellant has also been considered. The Assessing Officer during the assessment proceedings has disallowed the claim of deduction u/s 80IA(4)(iii) primarily on the basis of the letter dated 4-3-2009 from the Under secretary, Ministry of Commerce and industry and the appellant's admission of the aforesaid fact during the statement recorded during the survey action u/s.133A. The aforesaid letter has referred to the Registration No 63/S1A/IP/2006 dated 12-5-2006 and noted that on the basis of the state government's reported dated 23-4-2008 the building in which industrial park was located belonged to a partnership....
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....ssee. (2) the assessee must submit Audit Report. (3) Income from eligible business if arising from connected parties, AO can rework the deduction The eligible business as per section 80IA(5) i.e. the industrial park is the only source of income for the assessee: section 80IA(7) i.e. the assessee must submit audit report which the appellant has submitted, and sec 80IA(10) i.e. income of eligible business if arising from connected parties Assessing Officer can rework the deduction, and the Assessing Officer has not disputed these aspects as is evident from the assessment order. In the light of the above fact, the letter of approval dt. 11th June 2012 filed by the appellant u/r 46A assumes importance whereby the empowered committee has accepted the representation made by the appellant and approved the project as an industrial park which prima facie entitles the appellant for the deduction. 6.3 The A.O. in the remand report has stated that the request of the appellant regarding admission of the additional evidence may not be entertained. It is trite law that the powers of the CIT (Appeals) are coterminous with the powers of 'A.O. In the case of S....
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....or to the search and survey action had applied for a review of the rejection to the Empowered Committee on 24.04.2009 as is evident from the documents filed by the appellant. The Empowered Committee after reconsideration of the earlier rejection has granted approval for three units on 11th June 2002 to Shri S. Balan, the appellant which is effective from 12.05.2006. The appellant has also fulfilled the other conditions as envisaged u/s 80IA and which is also not disputed by the Assessing Officer. The objection of the Assessing Officer that the Industrial Park is being developed by the partnership firm is also not factually correct in view of the explanation furnished by the appellant and also the letter issued by the Competent Authority. Thus taking the entire fact in totality it is apparent that the entire responsibility of the assessee about setting up, developing and operating the industrial park vests with the Ministry of Commerce & Industry of the Central Government and thus the A.O. does not have any role in it. The Industrial Park scheme is a code in itself wherein it lays down the criteria of eligibility, procedure of approval, condition to be satisfied and once the Central....
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....IT and vice versa vide ITA Nos. 1411 to 1415/PN/2013 and ITA Nos. 1478 to 1483/PN/2013 for A.Yrs. 2004-05 to 2009-10. The Tribunal after elaborately considering identical issue had decided the issue in favour of the assessee by observing as under : "37. We have carefully considered the rival submissions. Factually speaking, the Industrial park - Giga Space developed by the assessee is notified by the Central Government in accordance with the IPS, 2008. There is also no denying the fact that the Industrial Park - Giga Space approved under the IPS, 2008 has been found to be eligible for deduction u/s 80-IA(4)(iii) of the Act in the subsequent assessment years. In the subsequent assessment years, the profits derived from the development of Industrial Park - Giga Space have been considered for deduction u/s 80-IA(4)(iii) of the Act by the Assessing Officer. In the instant assessment year 2007-08, which is the first year of claim by the assessee, the Assessing Officer as well as the CIT(A) have rejected the claim. The grounds on which the said claim has been denied, have already been enumerated by us in the earlier part of this order. 38. Before we proceed to address t....
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....ains and operates an industrial park, the provisions of this clause shall have effect as if for the figures, letters and words "31st day of March, 2006", the figures, letters and words "31st day of March, 2011" had been substituted;]" 39. In terms of the aforesaid, any undertaking which is engaged in (i) developing; (ii) developing and operating; or (iii) maintaining and operating an industrial park notified by the Central Government in accordance with the scheme framed by the Central Government for the period beginning on 1st day of April, 1997 and ending on 31st March, 2006 shall be eligible for the benefit of section 80-IA of the Act. It may be noted that by the Finance (No.2) Act, 2006, the applicability of subclause (iii) was extended from 31.03.2006 to 31.03.2009. In other words, any undertaking which was engaged in (i) developing; (ii) developing and operating; or (iii) maintaining and operating an industrial park shall be eligible for deduction for the period beginning on 1st day of April, 1997 and ending on 31st March, 2009. 40. Notably, for the period under consideration before us, the Central Government formulated a Scheme in exercise of the powers unde....
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....fter the 1st day of April, 2006 and not later than 31st of March, [2011]; (2) The are allocated or to be allocated to industrial units shall not be less than seventy-five per cent of the allocable area; (2A) The area allocated or to be allocated for commercial activity shall not be more than ten per cent of the allocable area; (3) There shall be a minimum of thirty industrial units located in an industrial park; (4) For the purpose of computing the minimum number of industrial units; all units of a person and his associated enterprises will be treated as a single unit; (5) The minimum constructed floor area shall not be less than 15,000 square meters; (6) No industrial unit, along with the units of an associated enterprise, shall occupy more than twenty-five per cent of the allocable area; (7) The industrial park should be owned by only one undertaking; and, (8) Industrial units shall only undertake activities defined in clause (j) of para (2)." 45. Clauses 5 and 6 of the Scheme pertain to General Conditions and Withdrawal of approval which read as under :- "General Conditions. ....
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....fied by the Central Government under the Industrial Park Scheme, 2008. (3) The undertaking shall continue to fulfill the conditions envisaged in the Industrial Park Scheme, 2008." 47. From a perusal of the aforesaid relevant provisions of the Act, Rules and Scheme, it is noticed as follows. Than an undertaking which is engaged in (i) developing; (ii) developing and operating; or (iii) maintaining and operating an industrial park notified by the Central Government in accordance with the scheme shall be eligible for the benefits of section 80-IA(4)(iii) of the Act. The aforesaid three categories are distinct and so far as the assessee is concerned, it has claimed approval under the scheme on the strength of it being engaged in developing of an industrial park. Therefore, it is in the aforesaid context that one has to determine the requirements which the assessee is called upon to fulfill in order to claim deduction u/s 80-IA(4)(iii) of the Act. 48. Under the scheme, assessee was eligible to be considered for notification under clause (iii) of sub-section (4) of section 80-IA of the Act, if it fulfilled the criteria laid down in clause 4 of the Scheme, which....
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....he Assessing Officer, in this case, the certificate from the local authority has been obtained on 09.05.2007 and therefore in terms of the Scheme, the date of commencement of the Industrial Park is to be understood as 09.05.2007 which falls beyond the previous year relevant to the assessment year under consideration. On this basis, it is said that the Industrial Park of the assessee was not complete as on 31.03.2007, and thus deduction u/s 80-IA of the Act could not be allowed for assessment year 2007-08. 50. It is to be appreciated that clause 2(f) of the Scheme defining the expression 'date of commencement' is relevant in the context of condition (1) of clause 4 of the Scheme which prescribes the criteria for approval of an Industrial Park. Condition (1) of clause 4 of the Scheme prescribes that an undertaking shall be considered for notification under clause (iii) of sub-section (4) of section 80-IA of the Act if the date of commencement of the Industrial Park is on or after 01.04.2006 and not later than 31.03.2009. In this case, date of commencement of 09.05.2007 determined in accordance with clause 2(f) of the Scheme fulfills the condition (1) of clause 4 of the Schem....
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....ght to have been completed by the assessee before 31.03.2007 itself i.e. within the previous year relevant to the assessment year under consideration, before it could claim the benefits of section 80-IA(4)(iii) of the Act. There is no dispute that the undertaking of the assessee is notified by the Central Government in accordance with the IPS, 2008 for the purposes of clause (iii) of section 80-IA(4) of the Act. Moreover, the eligibility conditions prescribed in rule 18C of the Rules, which we have reproduced in the earlier paras and which is relevant for the year under consideration, belies the stand of the Revenue. The opening sentence in sub-rule (1) of rule 18C of the Rules says that the "undertaking shall begin to develop; develop and operate; and, maintain and operate .........". The aforesaid wordings show that the Industrial Park in question is eligible for the benefit of section 80-IA(4)(iii) of the Act in the instant year also. Quite clearly, an undertaking which begins to develop is also eligible for the benefit of section 80-IA(4)(iii) of the Act. In this case, in the instant assessment year, assessee has developed and sold 21 units out of the total 30 units envisaged i....
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.... Revenue that it has been withdrawn in terms of clause 6 of the Scheme. Thus, it is safe to deduce that the Industrial Park of the assessee has complied with the provisions prescribed in clause 5 of the Scheme. 54. Moreover, even if one has to appreciate the condition (2) of clause 5 of the Scheme which uses the words "............ tax benefits ........ will be available ............. only after minimum number of thirty units are located ...........". The implication of the said condition, as understood by the Revenue, is that a minimum number of thirty units should be located before the end of the financial year for which the deduction is being claimed. Quite clearly, the aforesaid condition in clause 5 of the Scheme does not prescribe that the compliance for the location of minimum number of thirty units in the Industrial Park is to be seen in the context of every assessment year in which the assessee is claiming deduction u/s 80-IA of the Act. The compliance has to be seen in the context of the period permissible under the Scheme for development of the Industrial Park. Ostensibly, the period permissible in the Scheme for location of minimum thirty units has been complie....
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....ion in its construction, the period of development may extend beyond one assessment year. Therefore, assessee would be eligible to claim deduction with respect to the profits from Industrial Park over multiple assessment years so long as the dates prescribed in the Act as well as in the Scheme for development of the Industrial Park are adhered to. The assessee would declare profits on the basis of its method of accounting and in our view, in respect of the relevant assessment years, any profits derived from the eligible business categorized in section 80-IA(4)(iii) of the Act shall be entitled for a deduction u/s 80-IA(4)(iii) of the Act. In our view, so long as the profits are derived from the eligible business and the business of the undertaking has been developed in accordance with the Scheme in which it is notified, then assessee shall be eligible for the benefit of section 80-IA(4)(iii) of the Act. 56. In this context, we may mention that a similar controversy had arisen in the context of the claim of deduction u/s 80-IB(10) of the Act, wherein an assessee can claim deduction in the years when it sells some of the residential units although the housing project is stil....
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....ernment on 12.07.2006, which was posterior to the assessment years 2004-05 and 2005-06. The claim of the assessee was that it was following percentage completion method of accounting and was offering income on the basis of the percentage of construction completed. Thus, the profits from the industrial Park were also offered for assessment years 2004-05 and 2005-06 on which claim for deduction u/s 80-IA(4)(iii) of the Act was made. Assessee also submitted that ultimately all the conditions prescribed for deduction u/s 80-IA(4)(iii) of the Act were complied with and that in the subsequent assessment year 2006-07 assessee was indeed allowed the deduction by the Assessing Officer. The Tribunal held that the denial of deduction on the aforesaid grounds in assessment yeas 2004-05 and 2005-06 was not justified. It was specifically noted that because in the first two years the minimum number of units were not located in the Industrial Park was not a valid ground for disallowing the claim especially when in the ultimate analysis the Industrial Park was developed in accordance with the approval granted by the Central Government. The following discussion in the order of the Tribunal worthy of....
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.... years can be withdrawn. We are of the view that there is no reason why similar benefit should not be extended to Assessee claiming benefit u/s.80-IA(4)(iii) of the Act when the conditions for grant of deduction were satisfied by the Assessee even before the AO passed the order of assessment. The facts of the present case justify considering the plea of the Assessee for grant of deduction u/s.80-IA(4)(iii) of the Act in respect of profits declared in AY 04-05 and 05-06 and allowing the same as admittedly the conditions for grant of such deduction were satisfied though at a later point of time but nevertheless before completion of assessment for those assessment years. We direct accordingly. The appeals of the Assessee are accordingly allowed." 58. The aforesaid decision of the Tribunal in the case of Ferani Hotels Pvt. Ltd. (supra), in our view, fully covers the controversy before us. In the present case also it is not in dispute that the assessee has developed and located the minimum number of 30 industrial units in the Industrial Park within the period specified in the Scheme as well as the provisions of section 80-IA(4)(iii) of the Act. It is also not in dispute that in....
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....f the subsequent events after the last date of the previous year show that the conditions for grant of deduction are fulfilled, then the Assessing Officer ought to take cognizance of the same and allow the claim of the assessee. Following the aforesaid parity of reasoning, in our view, in the present case too it is undeniable that assessee has complied with the requirement of locating minimum of 30 industrial units in the Industrial Park within the period prescribed in the Scheme, and therefore its claim for assessment year 2007-08 was unjustly disallowed. 59. Before parting, we may also refer to the decision of the Hon'ble Third Member of the Tribunal in the case of Marigold Premises Pvt. Ltd. (supra) relied upon by the Revenue before us. The issue in the case of Marigold Premises Pvt. Ltd. (supra) was the claim of deduction u/s 80IA(4)(iii) of the Act in the context of the Industrial Park Scheme, 2002. In the case before the Hon'ble Third Member of the Tribunal, assessee had undertaken construction of an Industrial Park approved under the IPS, 2002. Assessee claimed deduction for assessment year 2003-04 which was denied by the Assessing Officer on the ground that as per ....
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....2. (1A) The undertaking shall begin to develop or develop and operate or maintain and operate a special economic zone any time during the period beginning on the 1st day of April, 2001 and ending on 31st day of March, 2006. (2) The undertaking shall be duly approved by the Ministry of Commerce and Industry in the Central Government under the scheme for industrial park or Special Economic Zones notified by that Ministry. (3) The undertaking shall continue to fulfill the conditions envisaged in the scheme. (4) On approval under sub-rule (2), the Central Board of Direct Taxes, shall notify industrial parks for benefits under section 80IA." 31.1 As could be noticed from the aforementioned Rule, in order to avail benefit under section 80IA, an industrial park has to begin its operations which can only be a subsequent event i.e., after it has developed to an extent where it fulfills the minimum criteria to be treated as an industrial park. However, Sub-Rule (1A), which refers to an undertaking set up in a Special Economic Zone, used the expression "shall begin to develop"; if the intention was to give the same treatment to an undertaking which....
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....es place during the period beginning on 01.04.2006 and before 31.03.2009 and fulfills the conditions envisaged in the IPS, 2008. The aforesaid aspect fully covers the controversy before us even if it is assumed that the objection of the Assessing Officer of locating 30 units is required to be seen as on 31.03.2007 also. Undeniably, assessee has operationalized 21 industrial units in the instant assessment year which signifies that its activities are covered within the expression "begin to develop" contained in rule 18C(1) of the Rules. Therefore, the decision of the Third Member in the case of Marigold Premises Pvt. Ltd. (supra) does not help the case of the Revenue qua the instant assessee. Moreover, the claim before the Hon'ble Third Member was with respect to an Industrial Park which was approved under the Industrial Park Scheme, 2002 whereas assessee's case is covered by the Industrial Park Scheme, 2008. 61. Therefore, considering the amendment of rule 18C of the Rules made w.e.f. 01.08.2008 where an undertaking begins to develop an Industrial Park is also eligible for the deduction so long as the development is otherwise complete within the period specified in the Sch....
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....t of which Rs. 28,00,000/- was seized and, thereafter Rs. 5,00,000/- was seized from the assessee's locker No. 73 with Pune People's Cooperative Bank Ltd. on 15-03-2010. During the course of search action the assessee could not explain the sources of the cash found and had submitted that the same will be explained later on after verifying the books of account. 73. During the course of assessment proceedings the assessee explained the source of the same as under : Cash balance of Sadguru Datta Dharmik Trust Rs. 22,00,000/- Cash withdrawals from Cosmos Co-operative Bank Limited, Bangalore Rs. 10,24,000/- Cash with myself and my family members, duly accounted for Rs. 74,000/- 74. However, the Assessing Officer rejected the claim of the assessee that cash amounting to Rs. 22,00,000/- was the cash balance entrusted to him by the Sadguru Datta Dharmesh Trust, a charitable trust to be deposited in its account at Pune People's Cooperative Bank Ltd as the assessee was in charge Officer of the said trust. He noted that the trust had filed a petition before the CIT (Central), Pune on 19-8-2011 requesting release of the seized amount. In the order passed u/s 132B da....
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....nsidering the materials filed by the appellant had held the cash to be unaccounted and unexplained. The appellant has not filed any such evidence or brought on record any such material which could justify its claim. In the case of Ashok Kumar Vs CIT (1986) 160 ITR 497 (M.P) it was held that the presumption of ownership in case of cash found in possession of person is viable because cash is one of the properties of which title is transferable merely by delivery of possession. Therefore, unless any contradictory explanation is given by the person in possession, the presumption is justified. The appellant's contention that his age, lack of formal education and mental stress for not remembering the source of cash is not tenable as the explanation has come at a much later date and after a long gap of nearly eight months. It is also noticed that the cash balance of Rs. 22 lacs claimed to be belonging to Sadguru Datta Dharmik Trust was also subject to examination during the 132B proceedings and the claim of the appellant had been subjected to scrutiny and for detailed reasons recorded in the said order dated 26.09.2011 the appellant's claim was rejected. Moreover, the claim of the....
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....iate with the source of Rs. 33 lakhs so as to take a contrary view than the view taken by the CIT(A). The assessee in our opinion has miserably failed to substantiate with cogent evidence that the amount of Rs. 22 lakhs belong to the trust and the amount of Rs. 10,24,000/- drawn from the Cosmos bank account was available with him. Similarly, nothing was brought to our notice to substantiate the availability of Rs. 74,000/- with the assessee and his family membeRs. We find the Ld.CIT(A) has given valid and cogent reasons while dismissing the ground raised by the assessee on this issue. Under these circumstances and in absence of any contrary material brought to our notice, we do not find any infirmity in his order on this issue. Accordingly, the same is upheld and the ground raised by the assessee is dismissed. 79. Grounds of appeal No. 3 and 4 being general in nature are dismissed. ITA No.1307/PN/2013 (A.Y.2010-11) (By Revenue): 80. Ground of appeal No.1 by the assessee reads as under : "1. On the facts and in the circumstances of the case the CIT(A) has erred in deleting the addition made to income from house property (near Mahabaleshwar) at Rs. 1,80,000/- as aga....