TaxTMI 
TaxTMI 
2025 (3) TMI 1490
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....or the A.Y. 2015-16 but on 04.10.2017 assessee was issued and served with the notice u/s. 148 of the Act. After duly recording the reasons to which necessary compliance was made, all the transactions for the year, i.e. A.Y. 2015-16 were examined by the Assessing Officer along with verification of bank statements and other details submitted by the assessee and the assessment was completed u/s. 143(3) r.w.s. 147 of the Act on 27.12.2018 assessing income at Nil. Prior to completion of the assessment proceedings u/s. 143(3) r.w.s. 147 of the Act on 27.12.2018, a survey action was conducted u/s. 133A of the Act by ADIT(Investigation), Aurangabad on 24.08.2018 at the office premises of M/s. Raaj Kasliwal and certain loose papers were found and impounded containing 67 pages. These documents included a statement given by the assessee before the police authority in reference to the complaint filed by one Mr. Pankaj Radheshyam Agrawal on 23.06.2017 in Kranti Chowk Police Station, Aurangabad. As per the police complaint, assessee was alleged to have received a sum of Rs. 8,61,80,284/- from Late Shri Radheshyam Agrawal during F.Y. 2014-15 towards purchase of immovable properties from assessee/....
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....ch huge cash was deposited in his bank account nor there is purchase of any land or other asset in cash which could corroborate the receipt of such a huge amount. Further it was requested that to verify the veracity of the claim made by Mr. Pankaj Radheshyam Agrawal before the police authorities the Assessing Officer should call for the income-tax return, financial statements, books of account and other details of Mr. Pankaj Radheshyam Agrawal and his father about the source of cash available with them in their books and the proof of the said cash being given to the assessee. However, the reply of the assessee did not find any merit in the view of the Assessing Officer and he concluded the reassessment proceedings observing that the assessee has taken loan against Hundi and thus invoked section 69D of the Act and made addition of the alleged sum and assessed the income at Rs. 8,61,80,284/-. 4. Aggrieved assessee preferred appeal before the ld.CIT(A) and apart from challenging the grounds on merit, the assessee challenged the validity of the reassessment proceedings on the ground that no actual reasons recorded were supplied; reasons were based on wrong assumption of facts; no pr....
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....n the body of the assessment order and after duly considering the comments of the assessee ld.CIT(A) finally dismissed all the legal grounds. So far as the merits of the case are concerned, the ld.CIT(A) after elaborately discussing the submissions of the assessee as well as the complaint given by Shri Pankaj Radheshyam Agrawal and the statement recorded by the assessee before the police authorities as well as during the course of survey finally came to conclusion that the statement recorded by the police authorities is not an admissible evidence as per the provisions of section 25 of the Indian Evidence Act, 1872 and that the Assessing Officer did not bring any cogent material on record to prove that the assessee has accepted the cash loan against Hundi giving rise to invocation of the provisions of section 69D of the Act and further held that the transaction between the assessee and late Shri Radheshyam Agrawal was in the nature of a business transaction. 8. Aggrieved Revenue is now in appeal before the Tribunal challenging the finding of the ld.CIT(A) deleting the addition on merits by raising the following grounds: "1. On the facts and in the circumstances of the ca....
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....the action of the Ld. AO despite pre-conditions required for initiating the reassessment proceedings has not been fulfilled. 1.3 In the facts and circumstances of the case and in law, the initiation of reassessment proceedings in the present case is bad in law and therefore the notice issued u/s 148 deserves to be quashed. WITHOUT PREJUDICE TO THE ABOVE 2. THE ASSESSMENT ORDER OASSED IN VIOLATION TO CIRCULAR No. 19/2019 DATED 14.08.2019 2.1 The Ld. CIT(A) has erred in affirming the legality of the assessment order, demand notice u/s 156 passed by the Ld. AO which is contrary to the CBDT Circular No. 19 /2019 dated 14.08.2019. 2.2 In the facts and circumstances of the case and in law, the assessment order passed deserves to be quashed. 3. LIBERTY The Appellant craves leave to add, alter, amend, delete or substitute any of the above grounds of appeal." 10. Since legal issues have been raised by the assessee in the Cross Objection, we will first take up the legal issues and then while dealing with the Revenue's appeal we will deal with the merits of the case. Summarily, the legal issues raised by the assessee in the Cro....
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....erned, arguments of the assessee along with placing reliance on various judicial pronouncements read as under : Sr. No. Proposition Facts Judicial Precedents 3.1.1 The assessment order passed without supplying the actual reasons recorded for reopening of the assessment vitiates the entire reassessment proceeding. (Abridged reasons supplied during the assessment proceeding or the actual reasons supplied after the assessment order is passed does not mitigate the jurisdictional defect) (i) There appears to be two sets of reasons, one provided to SK along with the communication dated 27.01.2022 and the other, which was given at the time of remand proceeding (Refer 159 to 161 of the OPB). This gets evident from the following differentiations: (i) CIT v. Videsh Sanchar Nigam Limited (Bom)] [(2012) 340 ITR 66 (ii) CIT v. Trend Electronics - [(2015) 379 ITR 456 (Bom)] (iii) PCIT v. Shodiman Investments P. Ltd. [(2018) 93 taxmann.com 153 (Bom)] (iv) CIT v. IDBI Ltd. [(2016) 76 taxmann.com 227 (Bom)] (v) PCIT v. Hexaware Technologies Ltd.((2020) 191 DTR 73 (Bom)] (vi) PCIT v. V. Ramaiah - [(2019) 103 taxmann.com 201 (Kar)] Sr. No. Purported reason....
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....f the Act is PCIT (Central), Pune, if the correct sanctioning authority to the admission of both the authorities was PCIT(Central), Nagpur. (v) Thus, issuance of the notice u/s. 148 of the Act with the approval of the wrong sanctioning authority vitiates the reassessment proceeding. (vi) In any case, the approval was granted mechanically and without application of mind. (vii) It is a well settled legal position that the notice issued u/s. 148 without obtaining appropriate sanction of the concerned authority u/s. 151 of the Act is invalid. Consequently, it makes the entire re-assessment proceedings u/s. 147 bad in law. Further, while according sanction u/s. 151 of the Act, due application of mind on the part of the sanctioning authority is also must. (i) Chhugmal Rajpal v. S. P. Chaliha - [(1971) 79 ITR 603 (SC)] (ii) German Remedies Ltd. v. DCIT -[(2006) 287 ITR 494 (Bom)) (iii) CIT v. Suman Waman Chaudhary - [(2010) 321 ITR 495 (Bom)] (iv) Sharvah Multitrade Company P. Ltd. V. ITO - [(2022) 134 taxmann.com 134 (Bom)] (v) Nirmal Bang Securities P. Ltd. v. ACT-[W.P. No. 671 of 2022, Order dated 08.02.2022 (Bom HC)] (vi) United Electrical Co. P. Ltd. v. CIT....
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....ormation of reason to believe was based on erroneous and misleading facts. All the documents consistently proved that the dispute between SK and PRA is regarding acceptance or nonacceptance of advance (ii) against the investment in properties and not regarding cash loan on hundi. In any case, SK had denied having received any cash against any investment in properties. Therefore, there was no question of recording any entry in the books of accounts or declaring income in the return of income. Therefore, there was no failure on the part of SK to fully and truly disclose any material facts. It is a well-settled legal position that no reassessment can be made unless the alleged escapement of income is due to failure on the part of the assessee to disclose fully and duly all material facts necessary for its assessment. (i) IPCA Laboratories Ltd. v. DCIT - [(2001) 251 ITR 416 (Bom)] (ii) Hindustan Lever Ltd. v. CIT [(2004) 268 ITR 339 (Bom)] (iii) Grindwell Norton Ltd. v. CIT - [(2004) 267 ITR 673 (Bom)] (iv) German Remedies Ltd. v. DCIT - [(2006) 287 ITR 494 (Bom)] (v) Aventis Pharma Ltd. v. ACIT - [(2014) 368 ITR 498 (Bom)] 3.2.1 (i) CBDT Circular No. 19/2019 da....
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....ng Officer and also stated that in the statement given before the police authorities the assessee has specifically accepted to have received the sum against Hundis and also the cheques given by the assessee supports the statement and these were material information which were sufficient enough to carry out the reassessment proceedings by issuance of notice u/s. 148 of the Act and further stated that proper approval u/s. 151 of the Act has been taken and therefore reassessment proceedings are valid and not liable to be quashed. In support of contentions of Revenue, ld. Departmental Representative further referred to the following written submissions : "Subject - Written submission in the above case. 1. Brief facts of the case : The assessee is an individual and a proprietor engaged in the business of builders and developers. He is one of the partners in various firms engaged in the same business. He is also proprietor of M/s Kasliwal Construction. A Survey action u/s 133A of the I.T.Act, 1961 was carried out by the ADIT(Inv.), Aurangabad on 24/08/2018 at the office premise of M/s Raaj Kasliwal at 215-216, Apna Bazar, Jalna Road, Aurangabad. During....
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.... the IT Act, 1961 as the assessee had borrowed the said amount on hundi in cash. Aggrieved by the assessment order the assessee filed appeal before the CIT(A). The Ld. CIT(A) has deleted the entire addition and held that the addition cannot be sustained as the amount received was not a hundi loan but an advance against the investment in property. The Ld. CIT(A) has deleted the addition only on the basis of the nature of the transaction. In this regard it is submitted that the assessee has issued 15 Hundis and 15 post dated cheques under his own name and signature in favour of Shri Radheyshyam R. Agarwal who is the father of the complainant. The assessee has nowhere denied that he has not issued these hundis and post dated cheques. In the statement before the police authorities he has stated that he received loan on interest against these hundis and he has repaid the loan. Therefore, there is no outstanding amount to be paid to Mr. Pankaj Agarwal. However, before the Income Tax Authorities the assessee has stated that he never received any loan and has given the hundis and post dated cheques in anticipation of loan. This is clearly a contradictory statement and it is self s....
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....not filed his return of income. Accordingly, assessment has been completed u/s 143(3) r.w.s 147 of the Act on 27/12/2018 assessing total income at Rs. nil. 2. Brief details of information received: A Survey action u/s 133A of the I.T.Act, 1961 was carried out by the ADIT(Inv.), Aurangabad on 24/08/2018 at the office premise of M/s RaajKasliwal at 215-216, Apna Bazar, Jalna Road, Aurangabad. During the course of survey proceedings some loose papers documents have been impounded as Annexure-'A' containing total pages 1 to 67. The loose papers numbered at page number 54 to 56 are a copy of the statement given by Shri Sanjay Suganchand Kasliwal before the Police against the complaint filed by Shri Pankaj Radheshyam Agrawal on 23/06/2017 in Kranti Chowk Police Station, Aurangabad. On perusal of the statement it is seen that Shri Sanjay Suganchand Kasliwal had taken loan against hundi from father of Shri Pankaj R. Agrawal Shri Radheshyam Agrawal to the tune of Rs. 8,61,80,284/- on different dated during financial year 2014-15 and on behalf of this amount Hundis issued to Shri Pankaj R. Agrawal by Shri Sanjay Suganchand Kasliwal. 3. Analysis of information collec....
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....ny amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount. Explanation. For the purposes of this section, the amount repaid shall include the amount of interest paid on the amount borrowed." In view of the above, this office has also examined the facts of the case independently and it is found that, there is failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment for the year under consideration. Therefore, I have reason to believe that the income chargeable to tax under the provisions has escaped assessment to the extent of Rs. 8,61,80,284/-. 6. Basis of forming reason to believe and details of escapement of income: In this case assessee was a non-filer for the year under consideration and assessment has been completed u/s 143 r.w.s 147 of the Act on 27/12/2018. This fact of acceptance and repayment of cash loan against hundi was not brought before the AO during earlier assessment proceedings. Acco....
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....d by the AO and could not have been discovered except with due diligence, accordingly attracting provisions of explanation 1 of section 147 of the Act. In this case more than four years have lapsed from the end of the assessment year under consideration. Hence, necessary sanction/approval to issue notice u/s 148 is required from the Pr. Commissioner of Income-tax(Central), Nagpur as per the provisions of section 151 of the Act." 15. Now the reopening is beyond four years and proviso to section 147 clearly provides that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return u/s. 139 or in response to a notice issued under sub-section (1) or section 142 or section 148 had to disclose fully and truly all material facts necessary for his assessment for that assessment year. We note that the assessee though did not file the return of income but has been served with the notice u/s. 148 of the Act during the year 2017 and after carrying out the detailed scrutiny....
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....an from Shri Radheshyam Agrawal against Hundi. Now inspite of having recorded the statement of the assessee u/s. 131 and there being no proof of any cash loan taken by the assessee from Shri Radheshyam Agrawal in the complaint filed by Shri Pankaj Radheshyam Agrawal and also that the AO while carrying out the first round of reassessment proceedings was not aware about the survey proceedings also creates a doubt about the correctness of reasons recorded and the independent application of mind by ld. AO. But the fact remain that after the conclusion of the survey proceedings, first round of reassessment proceedings concluded on 27.12.2018 and no addition was made in the hands of assessee. It means that till that date, no information was available with the AO about the alleged transaction of assessee having taken loan from Shri Radheshyam Agrawal. 17. Now turning to the reasons recorded for the second round of reassessment proceedings, ld. AO should have taken note of the fact that this is not a general enquiry but it is a case where first round of assessment proceedings have been carried out u/s143(3) r.w.s. 147 of the Act and now to again assess the income of the assessee by serv....
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....ssessment year had been alleged and as such the notice was hit by the proviso to section 147 and the same being beyond the period of four years from the end of the assessment year was unsustainable in law. Further in the case of Grindwell Norton Ltd. vs. CIT (20024 247 ITR 673 (Bom) it was held that nowhere in the reasons recorded by the AO it was stated that there was failure on the part of the assessee to disclose material facts in the return of income filed by the assessee. Similar view was also taken in the case of German Remedies Ltd. vs. DCIT (2006) 287 ITR 494 (Bom.) where it was held that while granting approval it was obligatory on part of Commissioner to verify whether there was any failure on the part of the assessee to disclose full and true facts in the return of income. Similarly in the case of Aventis Pharma Ltd. Vs. ACIT (2014) 368 ITR 498 (Bom.) the Hon'ble Jurisdictional High Court held that the while admittedly the reopening carried out after four years there was no facts which would indicate failure on the part of the assessee to submit truly and fully all material facts. 19. In the light of the above judgments and also considering the facts of the case, we f....
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....enders the assessment proceedings void but as we have already quashed the reassessment proceedings holding them as invalid and bad in law on the two legal grounds firstly that there was no proper reasons to believe with ld. AO for reopening the proceedings and therefore issuing of notice u/s. 148 of the Act is invalid and illegal and secondly that no proper approval u/s. 151 of the Act, we therefore refrain from dealing with other legal issues raised by the assessee challenging the reassessment proceedings and they are rendered infructuous. Accordingly, grounds of appeal raised by the assessee in the Cross Objections are partly allowed as per terms indicated above. 20. Now we take up the grounds of appeal raised by the Revenue on merits. On going through the grounds, it emerges that the only issue raised for our consideration is that whether ld.CIT(A) erred in holding that ld. AO was not justified in invoking section 69D of the Act and further erred in holding that the alleged sum of Rs. 8,61,80,284/- was not received in cash as loan against Hundi by the assessee from Late Shri Radheshyam Agrawal. 21. Ld. Departmental Representative vehemently argued referring to the detailed....
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....iven an advance of Rs 8,61,80,284/- to Shri Sanjay Kasliwal. Please state whether the amount was advanced by you and also state the purpose of the same along with necessary detail and evidence in support of the allegation you have made against Shri Sanjay Kasliwal. Ans: I confirm that I have made advance payment of Rs. 8,61,80,284/- for purchase of row houses and twin bungalows from Shri Sanjay Kasliwal the sale price was fixed in a meeting orally and accordingly I have received sale deed draft on my email ([email protected]) on 29.03.2015 from email address of Sanjay Kasliwal ([email protected]) at 09.03 pm. I have also paid franking amount (stamp duty) Rs. 49.85 Lakhs on 27.03.2015, on confirmation by SMS at my mob number on 9325002909 sent by Mr. Sanjay Kasliwal dated 25.03.2015 from his number 9326361555. The copies of stamp duty challans, email and SMS will be submitted within two days in support of my say.' 4. From the aforesaid statement it is clearly evident that the allegation leveled against me by Mr. Agrawal is of advance given against the purchase of the properties and nowhere he has stated and neither confirmed that the cash loan was....
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....ng such huge addition. 11. It is apposite to mention that such statement recorded by the police authorities has no evidentiary and provision in that regard is provided in Section 25 of Indian Evidence Act, 1872. Further, support to the same can be taken from the charge sheet filed by the police authorities before the MPID Court. In the chargesheet filed by the police authority there is no copy of my statement recorded by police authority and neither there is any reference to the same and further in the description of the facts by the police authorities in charge sheet the allegations levelled against me is that the cash was given against the investment in properties. 12. Further a reference is made to the communication by police station, Kranti Chowk, Aurangabad, addressed to the Ld. AO, in response to notice u/s 133(6) of the Act vide letter dated 28.03.2022. In the said communication also the police authority- has stated that the allegation against me is of the cash given against the investment in properties. There is absolutely no mention about the cash loan against the hundi. Therefore, neither the police authorities have any findings that there is ca....
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....loan. As he has not deposited the cheques, it clearly shows that he has not given any loan to me. Also, it was pointed out that the said matter is pending before the Court. 18. In the said statement during survey, I have not acceded to the fact that I have received cash loan from father of Mr. Agrawal. In fact I clarified that I have not received cash in any form from them. The Ld. AO without pointing out on which basis or on the basis of which statement he concluded that I have accepted the fact of taking cash loan. This shows that there is completely non-application of mind by the Ld. AO and without appreciating the documents available on the record in right spirit, the Ld. AO has made such huge addition mechanically without justifying his stand. 19. Despite I filed various documents to prove that the allegation of Mr. Agrawal against me is not of the cash loan given but the allegation is about cash given for the investment in immovable property purpose, the Ld. AO has not dealt with these documents much less not even referred to these documents and has completely ignored those documents. 20. In the above circumstances. I humbly submit that I have prove....
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....connection with providing accommodation entries to the companies of Shri. Y S Jagan Mohan Reddy and the noticed that the appellant has provided a sum of Rs. 60 crores to Shri. Navneet Kumar Singhania which was deposited in the accounts of 2 companies viz. M/s. Sugam Commodeal Pvt. Ltd., and M/s. Chandelier Tracon Pvt. Ltd. It was ultimately invested as share capital into M/s. Jagati Publications Pvt. Ltd. In the statement recorded by the CBI the appellant deposed that he had supplied cash of Rs. 60 crores through local cash carrier Shri. Navneet Kumar Singhania, whose statement was also recorded. The CBI forwarded the information collected to the AO. On the basis of this information, the AO reopened the assessment under section 147 of the Act, by issuing notice under section 148 of the Act. In the case of addition of Rs 60 crore the ITAT held that the sole basis for making an addition in the hands of the Assessee is a statement of the Assessee as well as Shri Navneet Kumar Singhania recorded by the CBI. The ITAT observed that the settled position of law is that the statements recorded by the CBI or police authorities/investigating authorities cannot be made the sole basis ....
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....es, it is humbly submitted before Your Honour that I have not received any amount from Agrawal or his father in any form and civil case in this regard is pending before the Civil Court (S.D.) and the Court after considering my submission has granted me unconditional leave to defend by making observation in my favour. It is more than five years that the petition has been filed by Mr. Agrawal and still the court has not concluded that whether any cash was given to me and the Ld. AO merely on the basis piece of paper which has no evidentiary value has concluded that I have taken cash that too in the form of loan. 24. It is once again submitted that the addition made by the Ld. AO of Rs. 8,61.80,284/- u/s 69D on the basis of mere statement is baseless and without bringing any corroborative material on record and without appreciating the documents filed by me before him and therefore, in the above circumstances, the huge addition made deserves to be deleted as illegal. These are our preliminary submissions. If Your Honour still intends to confirm the action of the A.O., we request Your Honour to grant us a further opportunity of being heard to enable us to put further ....
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.... additional ground: there is no reasonable formation of belief of escapement of income. This shows that the Ld. AO had nothing to controvert the submission made in that regard. In the aforesaid circumstances, it is humbly submitted before Your Honour, the Ld. AO has mechanically drafted the present remand report without going through the submission and documents filed. Therefore, it is prayed to quash the notice issued u/s 148 and/or delete the addition made of Rs. 8,61,80,284/- on the grounds raised in the submission filed before Your Honour." 3.3 The appellant made further submission on 8.3.2024 as under. "With reference to the above appeal, and in addition to the previous submissions, I submit as follows: 1. The short issue raised to be decided by Your Honour in the present case is that whether addition u/s 69D can be made merely on the basis of a statement recorded by the police authority? 2. The Ld. AO has reopened my case merely by relying on the statement recorded by the police authority wherein under duress and tremendous pressure I have been compelled to accept that I have obtained a cash loan against hundi from Mr. Pankaj Agraw....
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....rder various misstatements have been made. 6. Interestingly, in Para 8 of the assessment order the Ld. AO stated that on the basis of documents in possession and statement recorded of the assessee and Mr. Agrawal, it is clear that I have borrowed loan against hundi and therefore the same is liable to be taxed u/s 69D of the Act. Accordingly, the Ld. AO made the addition of Rs. 8,61,80,281/-. 7. Despite filing the documents of the Judicial Court, the police authorities and a person who has made the allegations against me, the Ld. AO neither rejected the same and not even dealt with the same. The Ld. AO by merely relying on the statement before the police authority which has no evidentiary value in the eyes of law and court and by ignoring the documents filed during the assessment has made the addition. 8. Further, in the last hearing Your Honour had raised a question that what is the development of the case pending before the Civil Court. In this regard, I humbly submit a copy of the statement recorded by the Hon'ble Court of Mr. Agrawal on 26.02.2024. The said statement is attached herewith is Annexure tAl Even in the statement recorded by the Court, ....
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....ained after the death of the father of Mr. Agrawal there is no mention about such a huge amount allegedly given to the Assessee. This fact has been admitted by Mr. Agrawal during the cross examination. 7. Importantly, it is not known, nor it is brought on record, how the corresponding income is taxed in the hands of Mr. Agarwal / his father, as the same transaction should have corresponding implications in the hands of both the parties involved. The Department cannot have different stand/ standard for treatment of the same transactions in the hands of the two assesses involved. 8. Mr. Agarwal again lied and mislead the Income Tax Department by claiming that he had accounted these transactions in his books of the account. In the cross-examination on oath, he admitted that nothing was accounted. 9. It is also impossible/highly improbable that a lender, who had lent such a huge amount of money (Rs. 8.61 crores) would not present the cheques for clearance or present the hundi for clearance. 10. It is also impossible highly improbable for such a lender to not to even request, much less give reminder / notice, to the borrower for return of the alleged ....
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....his statement is not found in the police records. (ii) Pertinently, there is not even a reference to this statement in the criminal proceeding (including in the Charge Sheet) or in the civil proceeding launched by Mr. Agarwal. (iii) There are inconsistencies in the signed and the unsigned statement. (iv) In any case, such a statement even otherwise has no evidentiary value in the eyes of the law. 15. Not loan but investment against purchase (i) It has been the consistent claim of Mr. Agarwal that the amount was not given as loan, but was given towards investment in the immovable properties, as reiterated in his civil and criminal complaint, as well as in his statement of oath before the Income Tax Department. (ii) Nothing is brought on record by the Department to rebut this crucial fact, as affirmed by its own star witness. 16. Collateral security (i) Strictly, without prejudice to the above, admittedly also, the hundis were given purely as collateral security, which has been the consistent stand of Mr. Agarwal himself. (ii) Here also, nothing is brought on record by the Department to rebut this crucia....
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.... 4. CIT v. Intraven Pharmaceuticals (P.) Ltd.- [(1995) 219 ITR 225 (AP)] 5. CIT v. Prithivi Fire Works Industries [(1999) 239 ITR 230 (Madras)] 6. CIT v. Madura Devakottai Transports (P.) Ltd.- [(1999) 238 ITR 1003 (Madras)] 7. CIT v. K.P. Abdullah - [(2001) 240 ITR 947 (Madras)] 8. CIT v. Yamuna Digital Electronics (P.) Ltd.- [(1999) 238 ITR 717 (AP)] 9. CIT v. Jaya Stores - [(1999) 107 Taxman 612 (Madras)] 10. CIT v. Ram Niwas - [(2008) 170 Taxman 5 (Delhi)] 11. Bombay Engineering & Metal Works Pvt Ltd v. ITO. [1986] 24 ITJ 341 (Bom) 12. ACIT v. Bissheshwarlal Mannalal & Sons - [(2002) 80 ITD 69 (Calcutta Trib.)] 13. Himalaya Distributors v. ITO - [2009] 125 TTJ 705 (Pune)] 25. Some legal propositions have also been summarised in the paper book running into 29 pages referring evidenctiary value of a statement retraction, presumption u/s. 132(4A)/292C, legal propositions regarding deeming provisions of section 68 to 69C to be strictly construed, onus/burden for the undisclosed income and that the discharge of burden by the Revenue, no addition merely on the basis of suspicion, opportunity of cr....
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....f the assessee was recorded u/s. 131 of the Act wherein he stated that the statement given before the police authority was under undue pressure and coercion and no such loan has been taken. Thereafter even the matter travelled before the lower courts about the very same issue as to whether the assessee has received the alleged sum from Late Shri Radheshyam Agrawal. 27. Now before us, the points raised by the Revenue are based on two evidences, firstly the statement given by the assessee before the police authorities accepting the alleged transaction and secondly copies of cheques and the document referred to as Hundi. On the other hand, the assessee has been contending that no such amount was received as loan from Late Shri Radheshyam Agrawal and there is no evidence putforth by Shri Pankaj Radheshyam Agrawal before the police authorities as well as before the court to prove that such sum was actually received in cash by the assessee. As far as cheques and the document alleged as Hundi, they were merely given as collateral security to Late Shri Radheshyam Agrawal when he asked the assessee for selling of the properties against some consideration to be given in advance. Based on ....
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.... of the Indian Evidence Act, 1872 and deleted the impugned addition by holding that the ld. AO erred in invoking section 69D of the Act and there being no evidence to prove that the assessee has received cash loan of the alleged sum during the year from Shri Radheshyam Agrawal and that no cash loan was taken against hundi. The relevant observation of the ld.CIT(A) reads as under : "4.1.1 The contention of the appellant in the aforesaid submission is that the sole basis of initiation of the reassessment proceedings is the copy of the unsigned statement recorded by the police authority which was impounded during the course of survey action. Further, the appellant submitted that while recording the reasons for reopening, in Para 3, the AO has mentioned wrong facts. The AO in the said para stated that Shri Pankaj Radheshyam Agrawal has filed an FIR against Shri Sanjay Kasliwal on the issue that Shri Sanjay Kasliwal has taken loan from Late Radheshyam Agrawal to the tune of Rs. 8.61 crore but he has failed to repay it. Whereas, the contention of the appellant is that as per the FIR filed against him by Shri Agrawal, the allegation levelled is that the cash was given against the....
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....a wrong fact recorded by the AO in the reasons to believe. As per the appellant, in none of the documents available before the AO relating to Shri Agrawal, there is allegation that appellant had taken loan from Shri Agrawal. 4.1.5 For better appreciation of the submission of the appellant and AO, the relevant contents of the aforesaid documents are reproduced hereunder. xxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxx 4.1.6 The relevant portion of the statement recorded u/s 131 by the DDIT (Inv) of Shri Agrawal is as under. "Q. 7 On verification of the document it is it is found that found that you have given an advance of Rs. 8,61,80,284/- to Shri Sanjay Kasliwal. Please state whether the amount was advanced by you and also state the purpose of the same alongwith necessary detail and evidences in support of the allegation you have made against Shri Sanjay Kasliwal. Ans. I confirm that I have made advance payment of Rs. 8,61,80,284/- for purchase of row houses and twin bunglows from Shri Sanjay Kasliwal. The sale price was fixed in a meeting orally and accordingly I have received sale deed draft on my email ( [email protected]....
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....en to the appellant. In the FIR and statement recorded u/s 131 of the Act of Shri Agrawal, the allegation is only about advance of Rs. 8.61 crores given to the appellant for investment in immovable properties. 4.1.10 Further, the appellant submitted the copy of the charge sheet filed by the police authority before the Hon'ble MPID Court, Aurangabad which was also produced before the AO during the assessment proceedings and explained that there is no reference to such statement recorded by the police authority in the said charge sheet and further invited attention to the relevant facts mentioned in the said charge sheet, the same are reproduced as follows (translated in English): xxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxx 4.1.11 Further, during the assessment proceedings the appellant had filed the copy of the petition filed by Shri Agarwal against the appellant before the Civil Court, Senior Division, Aurangabad. It is clear that in the said suit as well the allegation levelled against the appellant is that Rs. 8.61 crores were given by the father of the appellant towards investment in immovable properties and the said properties have no....
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..... In response, the Police Authority vide letter dated 28.03.2022 submitted as follows (translated in English): xxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxx 4.1.14 On perusal of the aforesaid response from the Police Authority it is clear that the complaint filed against the appellant by Shri Agrawal is that the amount of Rs. 8.61 crores was given to the appellant towards investment in immovable properties. 4.1.15 The appellant further argued that the confession statement recorded before the Police Authorities has no evidentiary value as per section 25 of the Indian Evidence Act, 1872. To buttress his submission, the appellant also relied on the following case laws relating to the Income Tax Act: i) CIT v. S. Khader Khan Son - [(2012) 25 taxmann.com 413 (SC)] ii) PCIT v. Nageshwar Enterprises [(2020) 122 taxmann.com 41 (Guj)) iii) Shri Ratan Babulal Lath v. DCIT - [(I.T.A. No. 355 / Bang /2017, Order dated 15.06.2018)] iv) Ajay sharma v. ACIT - [(2006) 101 TTJ 1065 (Delhi)] v) DCIT v. NIBR Bullion Pvt. Ltd - [I.T.A. No. 6320 / Mum /2011, Order dated 05.12.2022, (Mumbai Trib)] 4.1.16 Further,....
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....sistently prove that the dispute between the appellant and Shri Agrawal is regarding the acceptance or non acceptance of advance against the investment in properties. It is not the case that the appellant has accepted cash loan against hundi from Shri Agrawal and his father. iv) The sole basis of making addition by the AO of Rs. 8,61,80,284/- is a statement of the appellant recorded by the Police Authority. It is well settled position of law that the statement recorded by the Police Authorities cannot be the sole basis for making additions. Moreover, the statement recorded by the Police Authority is not admissible evidence as per the provisions of Section 25 of the Indian Evidence Act, 1872. In the present case, the AO did not bring any cogent material on record to prove that the appellant has accepted the cash loan against the hundi violating the provision of section 69D. 5. In view of the above discussion and based on the judicial pronouncements relied upon by the appellant, the impugned addition of Rs. 8,61,80,284/- made u/s 69D by the AO cannot be sustained as the amount received was not a hundi loan but an advance against the investment in properties. The add....
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....t the receipt was not of income nature, the department cannot act unreasonably and reject that explanation to hold that it was income. The Hon'ble Apex Court in the case of Dhokeshwari Cotton Mills Ltd. v. CIT, 26 ITR 775 (SC) held that ITO is not entitled to make a pure guess and make an assessment without reference to any evidence for any material at all. There must be something more than mere suspicion to support the assessment. 31. Now in the instant case, the AO has held that section 69D of the Act is attracted as the assessee has borrowed the funds from Shri Radheshyam Agrawal against Hundi. Before us, the contention of the ld. Counsel for the assessee has been that there is no transaction of borrowing the funds from Late Shri Radheshyam Agrawal and this fact has also been admitted by the complainant Shri Pankaj Radheshyam Agrawal. Reference is made to the statement of Shri Pankaj Radheshyam Agrawal recorded on 02.11.2018 we find that the copy of the statement has been filed in the paper book given by ld. DR on 05.12.2024 and the statement is placed at pages 10 to 13. We would like to take note of few replies given by Shri Pankaj Radheshyam Agrawal to the questions asked b....
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.... 100 acres. I will submit the 7/12 extracts and other details relevant to agricultural land holding and income from agriculture within two days. Q. 12 Please state as to whether the sale deed in respect of row houses for which you have given advance has been executed. Ans. Sir, sale deed in respect of row houses for which I have given advance has not been executed till date. Q. 13 In reply to above question, you have stated that sale deeds have not been executed till date. Then please state whether the said advance has been returned by Shri Kasliwal. If yes, please furnish the mode of receipt. Ans. Sir, the said advance of Rs. 8.61 crore has not been returned by Shri Sanjay Kasliwal till date. Therefore I have filed complaint against him." 32. Going through the replies given by Shri Pankaj Radheshyam Agrawal to the ADIT (Investigation), Aurangabad, we notice that the consistent stand of Shri Pankaj Radheshyam Agrawal is that advance payment of the alleged sum was given to Sanjay Kasliwal (assessee) for purchase of row houses and twin bunglows. Even the sale price was orally fixed in a meeting and even draft sale deed was also received through ....
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....atement of Shri Pankaj Radheshyam Agrawal properly because it was stated by him that the payment was made in cash and that the cash advance is reflected in books of account. Such details which were agreed to be provided within two days has not been provided till date. Further it was claimed that Shri Pankaj Radheshyam Agrawal owns agricultural land and he has 7/12 extracts and other details to prove that it is having income from agricultural land but again no details/evidence were filed from the date of statement till date. It is also not evident as to whether any addition has been made in the hands of Shri Pankaj Radheshyam Agrawal for the alleged cash available with him/his father Late Shri Radheshyam Agrawal for allegedly giving it to the assessee. It seems that the department is only working on the complaint of Shri Pankaj Radheshyam Agrawal but not taking into consideration the facts of the case where there is no concrete evidence that the assessee has borrowed the money from Shri Radheshyam Agrawal/Shri Pankaj Radheshyam Agrawal on interest. The reasons of the complainant Shri Pankaj Radheshyam Agrawal has been observed by the Hon'ble Jurisdictional High Court in the Criminal....
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....be called as Hundi. In support, we place reliance on the decision of Hon'ble Madras High Court in the case of CIT vs. Paranjothi Salt Co. (1995) 211 ITR 141 and CIT Vs. K.P. Abdullah (2001) 240 ITR 947 (Madras). Therefore, unless and until there is borrowing of funds, the documents referred in the instant appeal alleged to be Hundi cannot be considered as Hundi for the purpose of attracting section 69D of the Act. 34. In view of the above discussion hereinabove, we are inclined to hold that the transaction if any which has happened between the assessee and Shri Radheshyam Agrawal/Shri Pankaj Radheshyam Agrawal that too not being supported by any credible evidence filed by Revenue authorities, is of the nature of business transaction of sale of immovable properties by M/s. Kasliwal Empire to Shri Radheshyam Agrawal/Shri Pankaj Radheshyam Agrawal but by no means can be termed as transaction of borrowing funds in the form of cash loan against Hundi. The Revenue authorities have merely acted on the basis of the statement given by the assessee before the police authorities and it is judicially settled that such statement given before the police authorities is not an admissible eviden....