TaxTMI 
TaxTMI 
2016 (11) TMI 1741
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....essee): 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 for earning such exempt income which the assesse....
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....s 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 any money from M/s. Dhariwal Industries Ltd. (DIL) through Shri Sohan Raj Mehta, However, from the inquiries and th....
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....ssment 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 and A.Y. 2010-11. 10. Such an act on my part though judicious and as per the provisions of Income tax Act, 1961, may be highly prejudicial to your interests. Therefore it is my humb....
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....ined 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 alleged statement and the alleged entry in the books of said Mehta to connect me with the said amount, is illegal and contrary to law relating to evidence. Any copy of said Mehta's statement on oath has not been furnished to me. Moreover, the sa....
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....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. Mehta. (f) Under the circumstances the proposal to tax such alleged receipt of Rs 14.35 Cr, in my hand as unaccounted income is without any basis and illegal, l strongly oppose such action on your part and again request you not to add such amount as unaccounted income. 4. In view of above, it is submitted that no amount either as proposed in t....
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.... 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'ble Bombay High Court dismissed the appeal of the Department on the ground that no substantial question of law was involved. He accordingly held that the above decision relied on by the assessee is distinguishable and not applicable to the facts of the present case. 10. The AO further noted that one of the raw material supplier Shri Mallikarjuna of Shimoga in his ....
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....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 31-12-2011. 13. The disallowance u/s.14A was also challenged on the ground that the AO has made the disallowance by invoking provisions of Rule 8D which was not on the statute book in A.Y. 2004-05. Therefore, the addition is untenable in law. Even otherwise also, it is excessive because expenditure of such magnitude is not required to be incurred for earning dividends which a....
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....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 Mehta. The assessee further stated that the conspiracy theory is totally a figment of the Assessing Officer's imagination. Regarding the Assessing Officer's action of taxing the receipts, the assessee stated that it is not to be based on presumption and guess work and has to be based on concrete evidence. The assessee also stated that the entire addition is based upon....
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.... 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 assessee has been associated with M/s. Dhariwal Industries Ltd for a long time and the assessee's name appearing in the seized document tallied with the regular business association with M/s. Dhariwal Industries Ltd. and if test of human probabilities is applied to the facts of the case it becomes evident that assessee was part of the entire scheme of unaccounted business chain of M/s.....
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....n 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 mentioned therein. It was further explained by Shri Mehta that the total of such stock received from the company as per the sheet worked out to Rs. 2,18,00,91,198/-. It was also stated during the 132(4) statement recorded on 10-10-2009 that the payments received from various distributors, wholesalers and retailers for the supply of RMD Gutkha stock and their names and the amounts received durin....
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....ed, 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 undisclosed activity are maintained in the manner in which the document and loose papers have been found and seized in the present case and no regular books of accounts are maintained for such activity. The detailed statement given by Shri Mehta explaining the entries of the document seized makes the document a speaking one and, therefore, the inference drawn by the Assessing Officer in....
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....cceptable. 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 case of Hotel Kiran Vs ACIT (2002) 82 ITD 453 (Pune) held that statement can only be retracted if involuntary or coercion and given under mistaken belief either on fact or law, both of which facts - the assessee has to prove. The Apex Court in the case of Surjeet Singh Chabbra Vs UOI (1977) 508 SCC (SC) held that confession though retracted is an admission and binds the person. Moreover, the present assessm....
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.... 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 would relate to the company with whom the control lies. 5.9.1 Possession or control may be different from ownership and it is the person who owns the assets will ultimately be liable to be taxed. It is the responsibility of the person from whose possession or control documents or assets are found to explain about the ownership of the same. Courier carrying unaccounted cash is in possession or control of the asset....
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....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. In this case, the money received by the appellant was recorded on the loose papers and seized document and the consideration received was apparent and it was, therefore, for the Assessing Officer to establish the contrary. Further, on the basis of material found during the course of search action u/s 132, it has been established that what is apparent does not reflect the true state of affairs. Therefore, the burden that reste....
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....t 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 the appellant. 5.12 Under the deeming provisions of the I.T. Act, 1961, the position is that the mere existence of a credit entry is sufficient to attract the provisions and once the appellant's explanation is not satisfactory, the cash credits are to be charged to tax in an exceptionable manner. It was so held in one of the most landmark cases of the Hon'ble Supreme Court of Sumati Dayal (1995) 214 ITR 801 (SC). From 'a ....
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....t 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 Builders Vs CIT (2008) 296 ITR 225 (Ker), there were materials constituting circumstantial evidence to prove that land in question had been sold by the assessee at a higher price than that claimed by it and hence addition on account of unaccounted income was justified. 5.12.2 The notings made on the seized document indicating payments made by the Dhariwal group i.e. Shri Rasiklal M. Dhariwal and his son Shri Prakash R. Dhariwal to the appellant through Shri So....
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....comes 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 could find place in a manner which were discovered by the Investigation Wing during the search action. The efforts of the Assessing Officer in linking up these transactions with the evidences of M/s DIL with others, on this basis needs to be appreciated. Any document has to be necessarily read, as a whole. Applying this principle the genuineness of the seized document and a corollary, the appellant's involvement in the unaccounted business chain gets established beyond any doubt. The seized ....
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....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 behind allowing cross examination is to bring out the truth and in the process follow the principles of natural justice. That to me, have been adequately taken care of while finalizing the assessment proceedings. In that context, the Punjab and Haryana High Court in the case of CIT Vs K.D. Bali (2011) 10 Taxmann.com 215 (P & H) has held "No doubt, any quasi judicial authority has to follow principles of natural justice which includes opportunity to cross examine the witness whose statement is relied upon but th....
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.... 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 of Rs. 35,00,000/- was on a sound facts and on legal basis and hence liable to be upheld and the grounds of appeal no. 4 and 5 raised by the appellant are, therefore, liable to be dismissed." 18. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : "1.(i) The Ld CIT(A) erred in sustaining the validity of the assessment order passed under section 153A even though the order was served on the assessee beyond the period of limitation. (ii) The Ld CIT(A) erred in not appreciating that the impu....
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....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 Grounds of Appeal." 19. The assessee has also raised an additional ground which reads as under : "On the facts and circumstances of the case and in law the Ld. Commissioner (Appeals) erred in upholding the validity of the search assessment order passed u/s.153A of the Act for A.Y. 2004-05 even though no incriminating material pertaining thereto were found by the Income Tax authorities in their search action in my case." 20. The Ld. Counsel for the assessee referring to the additional ground submitted that the said ground is purely a legal ground and no fresh facts are required to be investigated. Relying on the decisions of Hon'ble Supreme Court in th....
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....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 assessee on this issue. Under these circumstances we find no merit in the above ground raised by the assessee. Accordingly, the same is dismissed. 26. Identical grounds have been taken in ITA No.1313/PN/2013 for A.Y. 2006-07 and ITA No.1315/PN/2013 for A.Y. 2008-09. Following the same reasoning ground of appeal No.1 by the assessee for the above assessment years are also dismissed. 27. Ground of appeal No.2 by the assessee relates to the order of the CIT(A) in sustaining disallowance of Rs. 1 lakh u/s.14A. 28. The Ld. Counsel for the assessee did not press the above ground for which the Ld. Departmental Representative has no objection. Accordingly, this ground by the....
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....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 are concerned the same applies to unexplained money, amount of investments etc. not fully disclosed in books of account, unexplained expenditure or amount borrowed or repaid on Hundi. None of the above provisions are applicable to the assessee since neither any huge amount was found nor was there any such huge unexplained investment or unexplained expenditure etc. found during the course of search. Therefore, the above provisions are also not applicable. 34. Referring to the decision of the Pune Bench of the Tribunal in the case of Shri Vinit Ranawat Vs. ACIT vide ITA Nos. 1105 & 1106/PN/2013 order dated 12-06-2015 he submitted that identical issue was decided by the Tribunal by foll....
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....or 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 addition cannot be made in the hands of the assessee particularly when there is no business connection between the assessee and that party. For the above proposition the Ld. Counsel for the assessee referred to the following decisions : a. Bombay H.C. Lata Mangeshkar [97 ITR 696] b. Straptex (India) P. Ltd. v. DCIT [84 ITD 320 (Mum)] c. CBI v. V. C. Shukla [3 SCC 410 (SC)] d. Prarthana Construction P. Ltd. v. DCIT [118 Taxman 112 (Ahd.)] e. Unique Organizers & Developers P. Ltd. v. DCIT [118 Taxman 147 (Ahd.)] 38. Referring to the statement of Shri Sohan Raj Mehta recorded during the course of search proceedings u/s.132, a copy of which is placed at pages 100 to 147 of the paper book, the Ld. Counsel for t....
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.... 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 in the instant case a search u/s.132 of the I.T. Act was conducted at the premises of Mr. Mittulal at Bangalore on 09-10-2009 wherein certain incriminating documents were found belonging to the Dhariwal group. Those documents were maintained by one Shri Sohan Raj Mehta, C&F agent of M/s. Dhariwal Industries Ltd. In his statement recorded u/s.132(4) Mr. Mehta had stated that he was effecting unaccounted sales of Gutkha of Dhariwal Industries Ltd. and the sale proceeds were deployed as per the instructions of Shri Rasiklal M. Dhariwal and his son Shri Prakash M. Dhariwal. In some of the seized papers name of certain persons are appearing. On the basis of those names and entries against said names, the Assessing Officer deciphered the amount as Rs. 35 lakhs for....
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....ther, 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 deleted the addition made by the Assessing Officer on the basis of notings found from the premises of Mr. Sohan Raj Mehta. 44. We find some force in the argument of the Ld. Counsel for the assessee. We find identical issue had come up before the Tribunal in the case of Shri Vinit Ranawat. The Tribunal in ITA Nos. 1105 & 1106/PN/2013 order dated 12-06-2015 for A.Yrs. 2006-07 & 200708 deleted the addition of Rs. 1 lakh in A.Y. 2006-07 and Rs. 20 crores in A.Y. 2007-08 by observing as under : "37. 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 in the instant case a searc....
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....ments 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 assessee which has been upheld by the CIT(A). 39. 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 residence of the assessee to show that in fact he has received such huge amount. It is also the case of the Ld. Counsel for the assessee that the Department itself is treating this as "short term advance" during the course of search action. Similarly, the statement of Mr. Rasiklal M. Dhariwal is contrary to the finding of the Department. It is al....
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....nt 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 father Shri Rasiklal Dhariwal as short term advance. I am showing you the relevant portion of the said statement. Please go through the same and state whether the payments in cash received from Sohanraj Mehta at the discretion of Shri R.M. Dhariwal are recorded in your books of account. A.34 I have gone through the statement shown to me of Shri Prakash Dhariwal recorded on 20-01-2010, however, I have never recorded the amount mentioned from Shri Sohanraj Mehta hence the said payment are not recorded in my books. Q.35 The statement of Shri Sohanraj Mehta recorded u/s.132(4) on 0910-2009 has been confirmed by Shri Prakash Dhariwal in the statement recorded u/s.132(4) on 20-01-2010. Thus, both Shri Sohanraj Mehta and Shri Prakash R. Dhariwal have stated on oath that payments in cash of Rs. 21.22 cr has been made t....
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....n 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 Guntka stock received by them. Periodically, I send these Collections to Mr. Rasiklal or his son Mr. Prashant as per their instructions." 42. Similarly, in his answer to Question Nos. 33 and 34 he has replied as under : "Q.33 I am showing you exhibit marked as A/M/29, seized from the residence of Mr. Mitulal, No. 219, 68th, Cross, 5th Block, Rajaji Nagar, Bangalore. Please go through these loose sheets serially numbered 1-61 and state the contents written over these loose sheets? Ans : I have gone through the exhibit marked A/M/29. I have placed my signature on page ho. 24 of this exhibit in confirmation of having seen it. This exhibit contains loose slips serially number 1-61. Slips marked as sl.no. 4 to 8, 49 to 50, 58 arid 59 contain the notings of Mr.Raskilal Manikchand Dhariwal and his son Mr; Mr. Prakash. The notings on these slips contai....
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....010). 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 to whether the Assessing Officer is correct or the Investigation Wing at the time of examining the assessee are correct or the answer of Mr. Rasiklal Manikchand Dhariwal is correct. 46. The Hon'ble Bombay High Court in the case of Aziende Colori Nazionali Affini, Italy (Supra) has held that the agreement had to be considered as a whole and that the different clauses in the agreement could not be considered separately. Therefore, when the Department itself is treating the same at one place as short term advance, therefore, the question of treating the same as income of the assessee does not arise. It is also an admitted fact that the papers were found with Mr. Sohan Raj Mehta at Bangalore. Therefore u/s.132(4A) they can be presumed to be true, genuine and correct only in the case of the searched person, i.e. Mr. Sohan Raj Mehta who has admitted that the papers belong to him. Therefore, we find force in the submission of the Ld. Counsel for ....
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....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. C. R. 898]. That case arose out of a suit filed by Gauhati Bank against Chandradhar (the appellant therein ) for recovery of a loan of Rs. 40,000/- . In defence he contended, inter alia, that no loan was taken. To substantiate their claim the Bank solely relied upon certified copy of the accounts maintained by them under Section 4 of the Bankers' Book Evidence Act, 1891 and contended that certified copies became prima facie evidence of the existence of the original entries in the accounts and were admissible to prove the payment of loan given. The suit was decreed by the trial Court and the appeal preferred against it was dismissed by the High Court. In setting aside the decree this Court observed that in the face of the positive case made out by Chandradhar that he did not ever borrow any sum from the Bank, the Bank had to prove that fact of such payment and could not rely on mere entries in the books of account even if they were regularly kept in the course of business....
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....f 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 who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [ A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that the were in accordance with facts. The evidentiary value of entries relevant under Sect....
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....d 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 direction of RMD Group. As per this version, an amount of Rs. 57.50 lakhs pertained to Shri Sheikh Mustafmiya Hussainmiya of Ahmedabad and page 47 was the monthly summary for the month of January - March 2004 of the unaccounted transaction carried out by Shri Sohanraj Mehta C & F of Karnataka Region of RMD Group. After analyzing the issue exhaustively as detailed in the assessment order as well as in the appellate order under dispute, a sum of Rs. 57.5 lakhs in cash as evidenced by the seized documents was treated as unaccounted receipt in the hands of the assessee and, accordingly, added to the income of the assessee for the period under consideration by the AO which has been subsequently sustained by the learned CIT (A) for the detailed reasons recorded in his appellate order which is under scrutiny. 7.1. Admittedly, the whole proceedings were initiated on the strength of a statement of a third party (Shri Sohanraj Mehta). The purported seizure of slips, loose sheets etc. at the premises of a third party contained only the names, but, not other de....
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....eliefs, inadequate guidance and improper advise, I signed the letter dt. 10.8.2011 in the Income-tax Department, Bangalore which is absolutely wrong and not the correct version of what I wanted to convey to the Income-tax Department at that point of time. 4. With my this letter specifically addressed to you, I once again state that all my statements recorded during the search proceedings on 10.9.2009 and my statement dated 10.8.2011 recorded at Bangalore before Deputy Commissioner of Income-tax, Central Circle 2(2), Bangalore is retracted un- conditionally by me, it being improper."[Refer: Pages 225 - 27 of the assessee's submission dt.12.12.2012]. 7.4. Thus, there is force in the assessee's contention that he should have been afforded an opportunity to cross-examine the third party [ Shri Shohanraj Mehta] since his statements on oath were coupled with inconsistency, he retracted his earlier statements and, thus, not above the board. 7.5. Moreover, the assessee's plea for permission to cross examine Shri Sohanraj Mehta at the assessment stage was not conceded by the AO on the ground that - "[On page 9 CIT (A)] 2.8.....................................................
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....s recorded by the Tribunal it is apparent that though it is the case of Revenue that the land has been sold by the assessee to GC through MV, there is no material on record to indicate that the said land in fact belongs to the assessee. Though the AO has placed reliance upon the statements of MV and GC for the purpose of taxing the amount in the hands of the assessee, despite specific request being made by the assessee for cross- examining both the said persons, the AO has not permitted the assessee to cross-examine them. In the circumstances, no reliance could be placed upon the statements of the said persons as the assessee had no opportunity to cross-examine them. The statements made by the aforesaid persons would have no evidentiary value and as such, would not be admissible in evidence. Further, though the said MV has stated that he has paid Rs. 60 lakhs to the assessee on behalf of one GC, the said amount has not been taxed in the hands of GC. Moreover, no evidence has been adduced to indicate that any transaction in relation to the land in question has actually taken place. The Tribunal has rightly found that the basis for making the addition in the case of the assessee is m....
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....nted out to show that the findings recorded by the Tribunal are in any manner perverse, nor is it the case of the revenue that the Tribunal has taken into consideration any irrelevant material or that any relevant material has been ignored. The conclusion arrived at by the Tribunal on the basis of the findings of fact recorded by it cannot in any manner be said to be unreasonable. In the aforesaid premises, the impugned order of the Tribunal being based upon findings of fact recorded by it upon appreciation of the evidence on record, which findings have not been dislodged by the revenue by pointing out any evidence to the contrary, therefore, does not warrant any interference." 7.9. Taking into account the submissions of the assessee, the stand of the AO, reasoning of the CIT (A) in sustaining the action of the AO and also in conformity with the rulings of the Hon'ble jurisdictional High Court (supra), we are of the considered view that that learned CIT (A) was not justified in sustaining the addition of Rs. 57.5 lakhs made by the AO in the hands of the assessee for the following reasons: (i) that the learned AO had solely depended upon the information received from the Inv....
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....enue to delete the same. Thus, ground No.1 raised by the assessee with respect to reopening of the assessment u/s 148 of the Act is dismissed and ground No.2 with respect to addition on account of undisclosed income is allowed in favour of the assessee." 50. We find the Bangalore Bench of the Tribunal in the case of DCIT Vs. H.S. Chandramouli (Supra) had also an occasion to decide an identical issue and deleted the addition by observing as under : "13. We have considered the submissions of the learned DR. It is seen that the document in question was seized from the possession of one Mr. Sohanraj Mehta. The seized document makes a reference to the name of the assessee and a figure of Rs. 22.75 lakhs appears against his name. As to whether this document evidences payment of Rs. 22.75 lakhs to the assessee is a moot question. There is no basis set out in the order of the AO for coming to the conclusion that the seized document evidences receipt of money by the assessee from Sohanraj Mehta. The presumption u/s. 292C of the Act is only with reference to the person searched and it cannot be extended to the assessee. There is no corroborative evidence or statement of Sohanraj Mehta re....
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....ik. Therefore, the ld. CIT(A) came to the conclusion that in the absence of any evidence involving the assessee to the alleged receipt of Rs. 50 lakhs, reopening in the hands of the assessee under section 147 of the Act is not proper and he accordingly annulled the assessment. 4. Aggrieved the Revenue has preferred an appeal before the Tribunal and reiterated its contentions. During the course of hearing, a specific query was raised from the ld. D.R. as to what evidence they have collected during the course of search or thereafter, on the basis of which the Assessing Officer has formed a belief that the income chargeable to tax has escaped assessment in the hands of the assessee. No satisfactory answer was furnished by the ld. D.R. We have also carefully perused the seized documents and we find that there is a debit entry of Rs. 50 lakhs in the name of Mlik Kannauj, but this entry does not indicate that the amount of Rs. 50 lakhs was given to the Managing Director of the assessee. There may be hundred of Malik in Kannauj but on the basis of this dumb document, the reopening of assessment in the hands of the assessee is not permissible. Moreover, the searched party has also examin....
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....ny asstt. framed pursuant to such illegality cannot be sustained. Thus, the whole asstt. framed u/s 147 is hereby annulled, While taking this view, I am fortified by the decisions of the Hon'ble Apex Court in fie case of CIT vs Daulat Ram Rawat Mull (87 ITR 349) wherein, it was held: 'there should, in our opinion, be some direct nexus between the conclusion of fact arrived at by the authority concerned and the primary facts upon which the conclusion is based. The use of extraneous and irrelevant material in arriving at that conclusion would vitiate the conclusion of facts.............................." In the result, the appeal is allowed." 5. Since we do not find any infirmity in the order of the ld. CIT(A), we confirm his order." 52. Similarly the Lucknow Bench of the Tribunal in the case of DCIT Vs. Pawan Kumar Agarwal (Supra) has held as under : "5. We have considered the rival submissions. We find that the issue in dispute was decided by learned CIT(A) as per para 7 & 7.1 of his order, which is reproduced below for the sake of ready reference:- "7. That vide grounds No. 3 to 7, assessee has challenged the additions of Rs. 1,13,40,000/- made on account of al....
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....ssed by the ADIT(Inv.)- III, Kanpur but evidences are not collected or placed. Copies of the statements, on the basis of which additions has been made, were not provided nor was the opportunity of cross- examination given to the appellant. The assessing officer merely summarized the salient features of the report of the ADIT (Inv.)-III, Kanpur and thereafter summarily rejected the reply of the appellant as not satisfactory. Learned counsel for the assessee, on the other hand, contends that neither the said Shri Shobhan Raj Mehta was allowed to be crossexamined nor a copy of his statement was given despite several requests. The AO's contention to the effect that the contents of the statement were made known to the assessee, is not a compliance of mandatory requirement to provide the assessee incriminating material to defend its own case and therefore it can categorically be held that: (i) Statement of Shri Shobhan Raj Mehta was not given to the assessee. (ii) Beyond the belief of presumption on the information supplied by the ADIT(Inv.)-III, Kanpur, further evidences are not found to corroborate the additions. (iii) Cross-examination of Shri Shobhan Raj Mehta was not allow....
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....mises as well as at the business premises of RMD Group. No evidence of any unrecorded sale by the assessee or unrecorded purchase by RMD Group was found. Thus, when, despite search at the premises of seller and buyer, no evidence of any unrecorded sale or purchase is found, in our opinion, merely because in the chits found at the premises of some third party with whom the assessee has no business dealing, it cannot be presumed that the assessee is making sales outside books. Moreover, as per chits found from Shri Sohan Raj Mehta, the payment made to the assessee is only Rs. 9 lakhs and not Rs. 9 crores. The department has also relied upon the statement of Shri Sohan Raj Mehta. It was pointed out by the learned counsel that Shri Sohan Raj Mehta retracted his statement. However, as per Revenue, Shri Sohan Raj Mehta has retracted his retraction affirming the original statement. On these facts, the learned CIT(A) has come to the conclusion that the statement of Shri Sohan Raj Mehta cannot be relied upon because he is frequently retracting his statement. Moreover, a statement of a third party cannot be used against the assessee unless the assessee is allowed an opportunity to cross-exam....
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.... an opportunity to crossexamine Shri Sohan Raj Mehta. Similarly, he has neither supplied the copy of retraction of his statement nor dealt with the retraction in the 9 ITA-5149/Del/2012 assessment order. It is only in the remand report he has mentioned that Shri Sohan Raj Mehta has retracted his retraction also. Considering the totality of above facts, we entirely agree with the learned CIT(A) that the statement of Shri Sohan Raj Mehta cannot be used against the assessee and, similarly, the chits found from the third party, with which the assessee has no dealing, cannot be used against the assessee in the absence of any corroborative evidence. That merely because some excess stock was found in the survey for which separate addition has already been made, it cannot be further presumed that the assessee made sales outside the books, specially when the survey was followed by the search and neither during the course of survey nor during the course of search, any evidence of sale outside the books was found. In view of the totality of above facts, we do not find any justification to interfere with the order of learned CIT(A). The same is sustained." 54. We find the Pune Bench of the T....
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.... in the facts and circumstances vis-à-vis of the assessee. As discussed earlier, during the course of search in the case of Dhariwal Group, the only documents found on the basis of which the addition u/s 69A has been made in the case of the assessee are in the form of two loose papers wherein amounts of 4.80 Crores and 30 lacs were noted against the name "Mr. Pradeep Runwal". Apart from this, no evidence has been found to suggest that the assessee had actually received the said amount or that the assessee had entered into any transaction with Dhariwal Group. There is no evidence on record to suggest that the assessee has previous business relations with the Dhariwal Group. In the absence of any documentary evidence to suggest the same, it could not be presumed that the amounts reflected in the loose papers were the income of the assessee received from Dhariwal Group. It has been the consistent stand of the assessee that there may be many persons of the name Pradeep Runwal in Pune and there was no specific evidence to suggest that the said notings pertained to the assessee. Hence, it was not justified as to how, in the absence of any other corroborative details, the Assessing....
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....ng the additions by relying on the provisions of section 114 of the Indian Evidence Act. The concerned Assessing Officer has referred the aforesaid section which states that the court may presume that the evidence which could be and is not produced would, if produced be unfavourable to the person who withholds it. It is pertinent to mention this rule applies to the cases wherein it is evident or an established fact that a particular evidence or document was in possession of the assessee. For example, an owner of a land may well be expected to be in possession of a 7/12 extract of the said land in order to check whether the said land was used for agricultural purposes. In the present case, the provisions relied by the Assessing Officer are not applicable, the assessee is not withholding any documents. The case of department is that the amount mentioned on the seized paper found with the Dhariwal Group indicates that the assessee has received the amount, therefore, the burden was on the Assessing Officer to establish the same. The reliance placed on the provisions of section 114 of Indian Evidence Act is misplaced. 5.7 As stated above, it has been consistent stand of the assessee t....
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....hat in the present case, the issue in question itself is whether rough noting on loose paper found in the course of search at the premises of third person could be assumed the income from the assessee as in the cases relied by the Assessing Officer. This fact has not been established in the case of assessee, therefore, the case laws relied by the Assessing Officer are clearly distinguishable on facts and hence, not applicable to the case of the assessee. 5.10 According to CIT(A), the name of the assessee appears on the seized papers and seized documents give a detailed and minute noting of the transactions of Dhariwal Group. He has stated that Shri Sohanraj Mehta has admitted that the documents were written by him and most of the papers were written in marwadi language. The CIT(A) referred to the fact that Shri Mehta had admitted that the papers belonged to Dhariwal Group. In para 4.3, the CIT(A) states that when the author of the paper has accepted the notings made by him, in that event, the document is having great evidentiary value and could not be rejected. As regards, the objection of the assessee that no evidence was found to indicate that the assessee had received the amou....
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....anna. There was search on Mr. Tanna wherein a document was found indicating flat purchased from the assessee firm and the amount of cheque and cash paid. The amount of cheque paid was tallying with the books and therefore, it was held that cash was paid as noted on the paper. Mr. Tanna had also accepted the fact that cash was paid to the assessee. In these facts, ITAT held that since there was transaction between assessee and Shri Tanna and also the fact that the amounts paid by cheque tallied, the addition was rightly made. The assessee rightly submitted that the said decision is not applicable to the facts of the present case. Firstly, there is no transaction between the assessee and Dhariwal Group. Secondly, there is no corroborative evidence found which could suggest that the assessee had received any amount. The Assessing Officer and CIT(A) have also not brought on record any evidence to suggest that the payment was made to the assessee. Accordingly, considering the factual position, the decision in the case of Dhunjibhoy Stud and Agricultural Farm is not applicable in the case of assessee. 5.13 The CIT(A) has relied on the decision in the case of Vasantibai N. Shah Vs. CIT ....
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....jected by confronting the same to the deponent which is missing in this case. Nothing was shown by the A.O. that there was any other material co related to the seized documents. The A.O. was not justified in rejecting the contents of the affidavit as mentioned above. The A.O. further relied on the presumptions u/s 132(4A) of the Act on the ground that this section was very clear that the contents of book of account and other documents may be presumed to be true and presumption can be drawn even on the third person who was not searched u/s 132 of the Act. The A.O. further rejected the submissions given by the assessee in his paper book dated 28.12.2007 reiterating the same stand. The A.O. has drawn inferences and presupposes relying on surmises and conjectures. The ITAT Mumbai Bench in their decision in the case of Straptex (India) Pvt. Ltd. [84 ITD 320 (Mum), clearly held that the presumption u/s 132(4A) is applicable only against the person from whom possession the books of accounts or other documentary were found and not against any other person. It is held that as per Section 132(4A) where any books of account or document is found in the possession and control of any person in t....
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....we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition of Rs. 1 crore for A.Y. 2006-07 and Rs. 20 crores for A.Y. 2007-08. Grounds raised by the assessee on this issue are accordingly allowed. 56. Since the assessee succeeds on merit, therefore, the ground relating to validity of assessment u/s.143(3) r.w.s. 153A become academic in nature and therefore the same is not being adjudicated. 45. Since the facts of the instant case are identical to the facts of the case decided by the Tribunal in the case of Shri Vinit Ranawat (supra), therefore, following the aforesaid decision and in absence of any contrary material or distinguishable feature brought to our notice against the said order, we are of the considered opinion that the CIT(A) is not justified in sustaining the addition of Rs. 35 lakhs in the hands of the assessee for A.Y. 2004-05. Accordingly, the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed. 46. Identical grounds have been taken in ITA No.1313/PN/2013 for A.Y. 2006-07 (at Rs. 2 crores) and in ITA No.1315/PN/2013 for A.Y.2008-09 (at Rs. 12 crores). Following the same reasonings, the grounds for t....
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.... house at Mabaleshwar at Rs. 1,80,000/- as adopted by the Assessing Officer while finalising the assessment order for A.Y. 2008-09 should not be adopted. The assessee submitted that the estimation adopted by the Assessing Officer is not correct and the annual value as disclosed in the computation of income is based on facts. However, the Assessing Officer did not accept the contention of the assessee in absence of any supporting evidence and determined the annual value of Mahabaleshwar property at Rs. 1,80,000/-. After allowing deduction of 30% on repairs u/s.24 and municipal taxes of Rs. 8,0000/- the Assessing Officer determined the annual value at Rs. 1,20,400/-. 56. In appeal the Ld.CIT(A) following his order for A.Y. 2005-06 vide Appeal No. PN/CIT(A)-II/Addl.CIT R-3/778/08-08 dated 28-032012 deleted the addition made by the Assessing Officer and allowed the ground raised by the assessee. 57. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 58. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We find the Assessing Officer, based on his findings ....
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...., certain loose papers, documents were impounded wherein page No 102 of Bundle No. B was a copy of letter dated 4-3-2009 from Under secretary, Ministry of Commerce and Industry, govt. of India to the assessee which stated that on the basis of State Govt's report dated 23-4-2008, the building in which industrial park is being developed by the assessee's proprietary concern M/s. S Balan did not pertain to individual but belonged to a partnership firm M/s S. Balan & Co. Further the said letter mentioned that the building is divided into three different wings and only a part of that building (Central wing) is being developed as industrial park and thus it cannot be said that the industrial park is being developed as a whole and accordingly it informed that the case of the assessee was not eligible under the Industrial Park scheme, 2002. During the course of survey action in the statement recorded on 20-1-2010, the assessee stated that he was withdrawing the claim of deduction u/s 80lA subject to the outcome of the review application filed before the ministry of commerce. 61. The Assessing Officer, however, found that during the return filed u/s 153A for A.Y. 2009-10 and that o....
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....ssessing Officer for opportunity and rebuttal with respect to the claim of deduction u/s.80IA(4) for AY. 2009-10 and 2010-11. The Assessing Officer forwarded his remand report which was controverted to the assessee. 63. The assessee in its reply to the remand report submitted that the observation of the Assessing Officer that the assessee has not completed the industrial park even upto the date of scrutiny assessment is factually not correct as the assessee started earning income from the industrial park from F.Y. 2006-07 relevant to AY. 2007-08 but due to losses incurred did not have positive gross total income for AY. 2007-08 and 2008-09 due to which the said claim was not taken and the assessee took the claim for the first time in A.Y. 2009-10 when positive gross total income was there. As regards the objection of the Assessing Officer that the industrial park is' being developed by the assessee's proprietary concern does not pertain to individual but belongs to the partnership firm M/s. S Balan & Co. is concerned it was argued that the same is factually not correct. It was stated that the Sai Trinity building originally completed the bare shell', i.e. the RCC frame....
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....ing withdrawn as the matter was subjudice before the empowered committee. It is also seen that the appellant has fulfilled the conditions specified u/s 80IA(4)(iii) as per the provision of sec 80IA(5), 80IA(7) and 801A(10). The conditions specified by section 80IA(4)(iii) are: (1) The asessee develops, develops and operates or maintains and operates an industrial park. (2) The industrial park should be noticed by the Central Government. (3) The notification should be in accordance with the scheme framed and notified by the government for the specified period. Sec 80IA(4)(iii) thus provides for a deduction of the profit derived by the assessee from developed or development and operation of an industrial park notified by the Central govt. The eligibility period of development of such an industrial park was initially between 1st April 1997 to 31st March 2006. However, the Finance Act 2006 has extended the period to 31st March 2011. Thus it is apparent that the responsibility of verifying the authenticity of the appellant's claim vests in the concerned ministry of central govt. and the role of the Assessing Officer in that regard is limited. The IPS scheme as notified from ....
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....ial powers, it is incumbent on CIT (Appeals) to exercise the same if the facts and circumstances justify. It appears that due to some genuine reasons the submissions could not be produced during the assessment proceedings, therefore, the evidence produced by the appellant is being taken into consideration for deciding the issue and is accordingly admitted for adjudication. The appellant's prayer for the admission of additional evidence u/r. 46A(1)(c) is, therefore, admitted for A.Y. 2009-10. 6.4 The empowered committee has reconsidered the earlier rejection and granted approval for these units on 11th June 2012 with reference to the date of application 12.5.2006 as is evident from the said letter. The appellant has also clarified the issue regarding the development of the industrial park by an individual and not by the partnership firm as is also evident from the approval granted by the Ministry of Commerce. It is seen from the record that the appellant applied for approval of the 'Industrial Park' in Sai Trinity building under 'non automatic' approval route on 08.12.2005 and received approval on 09.12.2005. The appellant has, thereafter, applied for reduction....
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....ial Park has to be developed in accordance with the scheme framed by the Central Government. In the case of Primal Projects (P) Ltd. Vs DCIT (2011) 56 DTR 291 (Bang), the Bangalore ITAT held that once the projects are approved and notifications are made by the appropriate authorities, the approval and notification run back to the date of commencement of the activities." 65. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 66. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find no infirmity in the order of the CIT(A). We find the Assessing Officer disallowed the claim of deduction u/s.80IA(4)(iii) on the basis of the letter dated 04-03-2009 from the under secretary in the Ministry of Commerce and Industry that the assessee was not eligible for deduction u/s.80IA(4). Further in the statement recorded during the course of survey action u/s.133A the assessee had withdrawn such claim made u/s.80IA(4). According to the Assessing Officer pendency of the review petition before the concern....
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....o hundred per cent of the profits and gains derived from such business for ten consecutive assessment years in accordance with and subject to the provisions of the section. Sub-section (2) of section 80-IA prescribes that the deduction specified in sub-section (1) may, at the option of the assessee, be claimed for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication services or develops an industrial park or develops a special economic zone or generates power or commences transmission or distribution of power or undertakes substantial renovation and modernization of the existing transmission or distribution lines. Shorn of other details, we may now come to sub-section (4) of section 80-IA, which enumerates the various businesses to which the provisions of section 80-IA of the Act are applicable, such business being referred to as the 'eligible business'. For the purpose of the present controversy, we are concerned with the subclause (iii) of sub-section (4) to section 80-IA of the Act, whose relevant portion reads a....
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....nd include roads (including approach roads), water supply, sewerage and effluent treatment facilities, solid waste management facilities, telecom network, generation and distribution of power, air conditioning." 42. Clause 2(f) of the Scheme defines the term 'date of commencement' as under :- "2(f) "date of commencement" means the date of obtaining the completion certificate or occupation certificate, as the case may be, from the relevant local authority, certifying thereby that all the required development activities for the project have been completed." 43. Clause 3 of the Scheme provides for the procedure for approval, which reads as under :- "(1) Any undertaking which develops, develops and operates or maintains and operates an industrial park may make an application for notification under clause (iii) of sub-section (4) of section 80-IA of the Act, in the prescribed form, IPS-I, to the Secretary (ITA-I section), Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, North Block, New Delhi. (2) The Central Board of Direct Taxes shall process the application for approval and notification by the Central Government and for this purpose it may call for....
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....rtment. (6) An industrial park approved under Industrial Park Scheme, 2002 will continue to be governed by the provisions of that Scheme to the extent it is not in contravention with the provisions of Act, as amended from time to time. (7) The undertaking shall electronically furnish an annual report to the Central Board of Direct Taxes in Form IPS-II. Withdrawal approval. 6. The Central Government may withdraw the approval given to an undertaking under this Scheme if the undertaking fails to comply with any of the conditions listed in paragraphs 4 and 5 of this Scheme : Provided that before withdrawal of approval, the undertaking shall be given an opportunity of being heard by the Central Government." 46. Having taken note of the provisions of the scheme, we may also refer to rule 18C of the Income Tax Rules, 1962 (in short "the Rules") which deals with the eligibility of an Industrial Park for benefits of section 80-IA(4)(iii) of the Act. Rule 18C of the Rules, as applicable for the assessment year under consideration reads as under :- "Eligibility of Industrial Parks for benefits under section 80-IA(4)(iii). 18C. (1) The undertaking shall begin to d....
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....e Scheme, which permits the Central Government to withdraw the approval given to the undertaking under the Scheme if it fails to comply with any of the conditions listed in clauses 4 and 5 of the Scheme. Be that as it may, it would be appropriate to infer that so far as the compliance of assessee's undertaking to the requirements of the Scheme are concerned, there is no dispute. 49. Now, the claim of the assessee is that it started the process of development of the Industrial Park somewhere in October, 2004 and the construction was spread over a number of years. As and when the individual units were being completed, assessee sold it to the clients. The assessee was offering and recognizing income on such sales in the respective years, and the income under consideration this year is from the sale of units. During the year under consideration, Assessing Officer has noted that only 21 units were located in the Industrial Park. In other words, only 21 units were operational and not the complete 30 units, i.e. the total number of units which were to be developed in the Industrial Park. The Assessing Officer has referred to clause 2(f) of the Scheme to say that the 'date of commencemen....
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....e rule as applicable for the year under consideration have been reproduced by us in the earlier paragraphs. Sub-rule (1) of rule 18C of the Rules says that the undertaking ought to begin to develop, develop and operate or maintain and operate an Industrial Park at any time during the period beginning on 01.04.2006 and ending on 31.03.2009. Sub-rule (2) of rule 18C of the Rules says that the undertaking of an Industrial Park shall be notified by the Central Government under the IPS, 2008. Sub-rule (3) of rule 18C of the Rules says that the undertaking shall continue to fulfill the conditions envisaged the IPS, 2008. Notably, there is no dispute that the undertaking of the assessee i.e. Industrial Park - Giga Space is duly notified by the Central Government under the IPS, 2008 and it continues to fulfill the conditions envisaged in the IPS, 2008 inasmuch as there is no withdrawal of approval by the Central Government, as provided for in clause 6 of the Scheme. Therefore, to say on the strength of clause 2(f) of the Scheme that the assessee has not complied with the requirements of the Scheme for staking claim u/s 80-IA(4)(iii) of the Act in the face of the fact that the undertaking i....
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....efer to the stand of the Revenue based on the clause 5 of Scheme. As per the condition (2) of clause 5, it is prescribed that the tax benefits under the Act will be available to the undertaking only after minimum number of thirty units are located in the Industrial Park. On the strength of this, it is pointed out that as on 31.03.2007 i.e. before the close of the previous year relevant to the assessment year under consideration, the minimum number of thirty units are not located in the Industrial Park; and, thus as per the Revenue assessee is not entitled to the claim of deduction in this assessment year. The aforesaid condition contained in clause 5(2) of the Scheme have to be understood in the context of condition (3) of clause 4 of the Scheme. The condition (3) of clause 4 of the Scheme prescribes that for obtaining approval, the Industrial Park should have a minimum of thirty industrial units located in it. The General condition contained in clause 5(2) only echoes the criteria for approval prescribed in clause 4 of the Scheme. However, the conditions prescribed in the Scheme are for the purposes of enabling the Central Government to consider an undertaking fit for notification....
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..... We find enough merit in the interpretation put-forth by the assessee. Ostensibly, the conditions in the Scheme have been inserted with an objective that once an undertaking is considered for notification u/s 80-IA(4)(iii) of the Act, there is a mechanism available to check as to whether the conditions prescribed in the Scheme have been complied with. In other words, in the context of the present controversy vis-à-vis clause 5(2) of the Scheme the objective is to ensure that the assessee does not claim deduction without putting the park to use for minimum 30 industrial units in accordance with the Scheme approved but it does not envisage that the location of minimum 30 industrial units be seen for every assessment year for which the claim is lodged, moreso, when the profits are declared by an assessee based on its normal method of income recognition. It may be pointed out that the provisions of section 80-IA(4)(iii) of the Act itself envisages deduction in case of an undertaking which develops, develops and operates or maintains and operates an Industrial Park for the period beginning on the 1st April, 2006 and ending on or before 31st March, 2009. Similarly, the scheme als....
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....is factually true that the minimum number of units have been located in Industrial Park in compliance with period stipulated and approved in the Scheme. Therefore, on this aspect, we find no reason to uphold the objection of the Revenue. 57. In-fact, the controversy before us in relation to the claim of deduction u/s 80-IA(4)(iii) of the Act pertaining to the instant assessment year is similar to what was considered by the Mumbai Bench of the Tribunal in the case of Ferani Hotels Pvt. Ltd. vs. DCIT, vide ITA Nos. 1828 & 1829/Mum/2009 dated 24.02.2012 pertaining to assessment years 2004-05 and 2005-06. The aforesaid decision was relied upon by the assessee in the course of hearing. In the case before the Mumbai Bench of the Tribunal, assessee had claimed deduction u/s 80-IA(4)(iii) of the Act in respect of profits from development of an Industrial Park. The claim was disputed by the Revenue for assessment years 2004-05 and 2005-06. The objection of the Revenue was that the notification issued by the Central Government notifying the Industrial Park was dated 12.07.2006. It was also the case of the Revenue that as on the last day of the relevant assessment years i.e. 2004-05 and 200....
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....vious year is necessary. If due to subsequent events that take place after the last date of the previous year, conditions for grant of deduction are satisfied, then the Assessing Officer can take cognizance of the same. The CBDT in Instruction No.4/2009 dt. 30.06.2009 clarified the position with regard to allowing deduction u/s. 80-18(10) of the Act. U/s. 80-IB(10) of the Act, deduction of 100% profits derived from developing and building housing projects is allowed. One of the conditions to be satisfied for claiming such deduction was that the housing project should have commenced construction on or after 1.10.1998 and completed the construction within 4 years from the financial year in which the housing project is approved by the local authority. The question arose whether the deduction can be claimed by Assessees who follow percentage completion method of accounting by showing part of the profits or the deduction would be available only in the year of completion of the project u/s.80-IB(10) of the Act. The CBDT clarified that deduction can be claimed on a year to year basis where the Assessee is showing profit from partial completion of the project every year. It further clarifi....
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....see and the Revenue with regard to the assessee's claim for deduction u/s 80-IA(4)(iii) of the Act. The moot question is - can the method of accounting followed by the assessee be determinative of assessee's claim for deduction u/s 80-IA(4)(iii) of the Act especially in a situation where assessee is otherwise said to have complied with the requirements of section 80-IA(4)(iii) of the Act read along with the provisions of the IPS, 2008 under which the Industrial Park of the assessee has been notified. In-fact, if the stand of the Revenue is to be accepted, what would happen is that assessee's claim for deduction u/s 80-IA(4)(iii) of the Act shall be denied in the instant year and in the subsequent years also assessee would not be able to claim the benefit because the impugned profits would not have been accounted for by the assessee in the subsequent years. That would mean that the assessee would never get the benefit of section 80-IA(4)(iii) of the Act qua the impugned profits derived from the development of the Industrial Park merely because of the method of accounting followed. In-fact, the Mumbai Bench of the Tribunal in the case of Ferani Hotels Pvt. Ltd. (supra) observed that ....
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.... 80IC(2) it was stated that if an undertaking begins to manufacture or produce any article or thing it becomes an eligible undertaking. On the contrary, section 80IA of the Act specifies that an assessee shall be eligible to claim deduction "in accordance with and subject to the provisions of this section". As stated earlier, sub-clause (2) thereof used the expression "develops" instead of the expression "to develop". Section 80IA (4) (iii) (which was referred to in section 80IA(2)4 specifies that an undertaking which develops an industrial park notified by the Central Government in accordance with the scheme framed and notified by the Government is eligible for deduction. It is relevant to notice here that in section 80(4) (iii) legislature has not used the expression such as "an undertaking which begins to develop". Rule 18C of the I.T. Rules prescribes the procedure to be followed by an industrial park to avail the benefits under section 80IA(4)(iii) of the Act. Rule 18C, as it existed at the relevant point of time, reads as under : "18C, Eligibility of Industrial Park and Special Economic zones for benefits under section 80-IA(4)(iii) - (1) The undertaking shall begin to oper....
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....gins to develop an industrial park any time during the period beginning on the 1st day of April, 2006 and ending on 31st day of March, 2011 was made eligible to claim deduction. Admittedly, it is not the assessee's case that it has commenced the process of development after 1st day of April, 2006 and thus subsequent rule has not application to the instant case." 60. The aforesaid discussion would show that the Hon'ble Third Member was guided by the then relevant provisions of rule 18C of the Rules which have since been amended qua the assessment year before us. In the previously worded rule 18C of the Rules, the wordings were that the "undertaking shall begin to operate an Industrial Park .......". However, the rule 18C(1) of the Rules, which has since been amended and which is relevant for the year under consideration reads to say that "undertaking shall begin to develop, develop and operate or maintain and operate an Industrial Park.........". This distinction has been noticed by the Hon'ble Third Member himself in the above discussion. Rule 18C of the Rules provides the eligibility of Industrial Parks for the benefits u/s 80-IA(4)(iii) of the Act and even an undertaking which ....
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....is in consonance with the issue decided by the Tribunal under identical circumstances, therefore, in absence of any contrary material brought to our notice, we do not find any infirmity in his detailed order on this issue. Accordingly, the same is upheld and the grounds raised by the revenue are dismissed. 69. Grounds of appeal No.6 and 7 being general in nature are dismissed. ITA No.1317/PN/2013 (A.Y. 2010-11) : 70. The Ld. Counsel for the assessee did not press ground of appeal No. 1 for which the Ld. Departmental Representative has no objection. Accordingly, the same is dismissed. 71. Ground of appeal No. 2 by the assessee reads as under : "2. The Ld.CIT(A) erred in sustaining the addition of Rs. 33,000/- on account of cash seized from the appellant ignoring the fact that the Ld.AO had rejected the appellant's sworn affidavit explaining the source of Rs. 22,00,000/- and the evidence supporting withdrawal of Rs. 10,24,000/- from his bank account summarily. The addition of Rs. 33,00,000/- be deleted." 72. Facts of the case, in brief, are that during the course of search action u/s. 132 at the assessee's residential premises at 1121 & 1121A Sai Shraddha, Model Colony Pune o....
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....nt and perused material on record. Section 132 presumes that the books of account, document, money, bullion, jewellery or other valuable article or things found in possession and control of any person in the searched premises belong to such person and that their contents are true. In the absence of satisfactory explanation they may be treated as acquired on that date. These are no doubt presumptions but would place heavy responsibility on the person in possession. The appellant during the search action had not furnished any explanation whatsoever for the cash found and seized of Rs. 28 lacs from the residential premises on 20-12010 and Rs. 5 lacs from the bank locker on 15.03.2010. The explanation for the seized cash has come only after a substantial gap of nearly eight months which prima facie appears to be an 'afterthought' which is difficult to be believed and accepted. A person found in possession of cash will be presumed owner unless he establishes that he is not the owner by furnishing cogent evidence. The appellant it appears from the assessment order had also filed an affidavit in this regard during the assessment proceedings before the Assessing Officer and the Ass....
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....e course of search at the premises of the assessee an amount of Rs. 29,02,670/- was found out of which an amount of Rs. 28 lakhs was seized and thereafter another Rs. 5 lakhs was seized from the locker maintained with Pune People's Cooperative Bank Ltd. It is also an admitted fact that during the course of search action assessee could not explain the source of the cash found and merely submitted that it will be explained later on after verifying the books. We find during the course of assessment proceedings it was submitted before the Assessing Officer that cash amounting to Rs. 22 lakhs was the cash balance entrusted to him by Sadguru Datta Dharmesh Charitable Trust to be deposited in its account at Pune People's Cooperative Bank Ltd. It was explained that the assessee was incharge officer of the said trust. We find although the search took place on 20-01-2010 the trust made a request to the CIT Central, Pune vide letter dated 19-08-2011 requesting to release of the seized amount. The Ld.CIT rejected the claim of the assessee trust on the ground that the same was an afterthought since no explanation was furnished during 132(4) statement. Nothing plausible was brought to our notice....