AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 1681
X X X X Extracts X X X X
X X X X Extracts X X X X
....mily members, the AO worked out the unaccounted interest received by the Vallamji Group and the proportionate share of respondent was worked out, which was treated as unaccounted income for the Assessment year 2003­2004. The matter was carried before the CIT (A) which had upheld findings of the AO and dismissed the appeal of the assessee. Thereafter, the matter was carried before the ITAT by assessee and the Tribunal deleted the addition holding that the claim of the respondent has been denied by other group as neither being paid nor received by the respondent relying upon the case of the another assessee, which has given rise to this appeal. 3. While admitting this appeal, following question was framed for consideration of this Court: "Whether on facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in deleting the addition made on the proportionate share of interest and treated by it as undisclosed income of the respondent for the block period?" 4. Learned Counsel for the appellant has submitted that the Tribunal has overlooked the fact that the addition made by the AO based on the documentary evidence seized during the search at the resi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in being separated from business, provided they were paid hondsome amount. Thus all the groups had different interests and way of looking. With these different individual objects in mind every group made calculations that suited them most. On the basis of such individual objects, they made offers to take over the business or to forego their interest. It is obvious that when there are contradictory objects, everybody is bound to make an offer that suits his interest most. Accordingly groups interested in taking over the business made offers estimating a very low value of business showing huge losses or lower profitability. Groups willing to leave the business estimated a very high value of business, goodwill etc. Groups with common interest joined hands and made offers that suited their groups." The findings so recorded by the CIT(A) are not in dispute by the Revenue. It is on this basis, the assessee's contention is that the transactions or accounts note down in these seized material represents projected one and not real. It merely project the interest of the group in Ajanta Industries, for the purpose of valuing the net worth and value of interest of the partners in the busines....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y;Company." In the case of S.K. Gupta v. DCIT (63 TTJ (Del) 532], addition was made on the basis of loose sheet and torn papers found during raid. No corroborating evidence has been brought on record to show that purchase and sale of properties had actually taken place. The ITAT, Delhi Bench as held addition on the basis of seized loose sheets and torn papers was not justified as the entire found thereon were mere estimates and no corroborating evidence has been brought on record to show that purchases and sales of properties had actually taken place and hence, there is no question of any undisclosed income." Similar view has also been taken in the case of Mustag Ahmed v. ACIT (66 TTJ 305). The ITAT, Ahmedabad in the case of Kishore Mohanlal Telwala vs. ACIT 64 TTJ 543 the Tribunal has held that "the assessing officer has not brought on record any unaccounted investment or assets other than those declared by the assessee. In the present case, the impugned addition was made by the Assessing Officer merely basing on the notings in seized loose paper file." The Assessing Officer has never brought any material on record to disprove the claim of the assessee that whatever is written ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sis of statements of Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta for the reasons recorded in Para 12 and 13 of the order of the Tribunal?" 10. Mr. K. M. Parikh, learned Standing Counsel appearing on behalf of the appellant, drew the attention of the court to the impugned order of the Tribunal, to submit that there was sufficient evidence to indicate that the payment of Rs.20 lakhs and Rs.25 lakhs in respect of the aforesaid two deals had been made by the assessee. It was submitted that documentary evidence had been recovered during the course of search proceedings which were supported by the statements of Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta and it was based upon such documentary evidence as corroborated by the statements of the aforesaid persons that the Assessing Officer had made the additions in question, and as such, the Tribunal was not justified in deleting the additions made by the Assessing Officer. 11. On the other hand, Mr. S. N. Divetia, learned advocate appearing on behalf of the respondent assessee has submitted that the documents in question have been found from the premises of a third party. The loose papers cannot be stated to be books of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld that it is true that proceedings under the income-tax law are not governed by the strict rules of evidence and therefore it might be said that even without calling the manager of the bank in evidence to prove the said letter, it could be taken into account in evidence. But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine the manager of the bank with reference to the statements made by him. It was submitted that the facts of the present case are similar to the facts of the said case inasmuch as, in the present case also, the documents recovered from the premises of third party as well as the statements of the said parties have been relied upon for the purpose of making the impugned additions in the case of the assessee without granting any opportunity to the assessee to cross-examine the said persons. 13. Reliance was also placed upon a decision of the Rajasthan High Court in the case of Commissioner of Income Tax v. S.C. Sethi, (2007) 295 ITR 351 (Raj.) wherein, the Court held that in the absence of any oppor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ri Adani. There is nothing on record as to when the money was originally paid. - As per the books of account of the assessee a sum of Rs.25 lakhs has been paid by cheque on 8.5.1995 to Govind C. Patel in respect of Silver Arc Deal. If that be so, the return of Rs.20 lakhs in cash on 20.9.94 does not fit in with the sequence of events. - There appears to be confusion regarding the identity of the parties with whom the Silver Arc deal had been entered into by the assessee. According to Shri Deepakbhai Mehta, the Silver Arc deal was entered into by the assessee company with Shri Adani whereas return of Rs.20 lakhs in cash on 20.9.94 appears to have been made by Shri Govind Patel to the assessee. - The statements of Shri Sureshbhai and Deepakbhai do not bring out full facts with regard to the transactions relating to Silver Arc as well as Kundan Nagar involving the assessee. - In the case of Silver Arc, addition has been made on substantive basis in the case of Shri Manoj Vadodaria and protective basis in the case of Gautam Adani Management & Consulting Services Ltd. - The statement of Shri Manoj Vadodaria which was recorded at the back of the assessee, would not in any manne....