TaxTMI 
TaxTMI 
2023 (12) TMI 537
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.... on the order passed by the Income Tax Settlement Commission in the case of unrelated third party in the facts and circumstances of the case. 5. A search and seizure action u/s. 132 of the Act was carried out in the Yuvraj Dhamale Group of cases on 26-09-2017. In continuation with the same, a search and seizure was also conducted at the residential premises of Shri Pravin Gawali who is said to be one of the Directors in M/s. Wellbuild Merchants Pvt. Ltd. According to the AO, certain loose papers were found and seized vide Sr. No. 36, 37 and 38 of Bundle No. 55, containing the names of investors etc. The AO reproduced such seized loose papers in the assessment order at pages 3 to 5. Further, taking into account the statement of Shri Yuvraj Dhamale u/s. 132(4) of the Act, who alleged to have admitted that the entries mentioned in the said loose papers containing the details of investments stating that the investment amount contains by cheque and cash. Further, he referred to details of cash by way of a chart which is at page 7 of the assessment order received from investors and held the interest was paid to investors in cash. Further, the AO referred to joint verification report s....
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....t Shri Yuvraj Dhamale stated that the entire amount of investment as mentioned in pages 36 to 38 of Bundle No. 55 received by cheque. Further, it was stated the neither any amount has been received in cash nor repaid in cash. However, the interest on this amount has been paid in cash. The Income Tax Settlement Commission found no clarity in the said two contradictory statements of Shri Yuvraj Dhamale and ordered joint verification from the respondent-revenue. The said joint verification report by a tabular form is reproduced at page 9 of the assessment order shows the breakup of alleged cash expenditure allowed by the Income Tax Settlement Commission at Rs. 7.80 crores in the hands of Shri Yuvraj Dhamale. We note that the said copy of breakup of cash expenditure was not seized material, in fact, which was prepared during the course of proceedings before the Income Tax Settlement Commission, whereby, it shows the AO determined the alleged payment of interest in cash in the hands of assessee by relying on the third party proceedings, wherein, the assessee has no role or participation. Further, it shows the AO determined the alleged payment of interest in cash not based on the seized ....
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.... under the head interest to the said Anand Jain except on 08-06-2016, 15-08-2016 and 16-10-2016 for Rs. 25,00,000/-, 50,00,000/- and Rs. 20,00,000/-, respectively. According to the AO the said payments covering the said three dates were given to Anand Jain is established under Page No. 74 of Bundle No. 14, Page No. 9 of Bundle No. 11, Page No. 98 of Bundle No. 1, Page No. 149 of Bundle No. 1 and Page No. 14 of Bundle No. 5 which are reproduced at pages 11,13, 14, 15 and 15 of the assessment order. 9. Let us examine the said alleged seized documents of Page No. 74 of Bundle No. 14 as relied on by the AO, which shows cash received, given to Raj sir and give to Anand Jain. The said entries on alleged Page No. 74 of Bundle No. 14 suggest no date and purpose of the payment stated to have been given to Anand Jain. 10. Page No. 9 of Bundle No. 11, shows two transactions under Anand Jain Group, one is RTGS to Sheetal Jain on 22-07-2015 and another transaction by narration Rs. 20,00,000/- cash received to Anand Jain by Rohit dated 12-08-2015 here to, we find no description i.e. the nature of transaction and purpose of transaction on 12-08-2015. 11. Page No. 98 of Bundle No. 1 relat....
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....d against the said entries to make additions adversely in the hands of the assessee. A mere entry in the seized documents which were found from the third party does not constitute a conclusive proof to make addition in the hands of the assessee. The AO nowhere discussed or referred evidences showing that the said payments were made in cash towards interest which clearly shows that there was no independent enquiry made by the AO to prove the entries against the assessee. We find no opportunity of cross-examination was given to the assessee. The AO made additions in the hands of the assessee only on the basis of alleged entries in the seized documents and also on the relief of allowance of cash expenditure granted by the authority. For that matter, the AO mainly relied on the seized material of certain loose papers at Sr. No. 36, 37 and 38 of Bundle No. 55 to arrive receipt of interest by the assessee against which the Pr. CIT u/s. 245D(2B) and Rule 9 of Income Tax Settlement Commission Procedure Rule, 1997 reported the claim of interest payment is not verifiable in the absence of mentioned of its payment and also in the absence of conformity of nature of funds before the Income Tax ....