TaxTMI 
TaxTMI 
2024 (8) TMI 1597
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....take note of the facts of one appeal. We are, accordingly, narrating the facts, as they appear in the appeal in ITA no. 106/Nag./2023, for assessment year 2016-17. ITA no.106/Nag./2023 Assessee's Appeal - A.Y. 2016-17 3. In its appeal, the Revenue has raised following grounds:- "1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 87,00,000/- on account of cash loan u/s 69A of the I.T. Act, 1961, without appreciating the fact that the addition of Rs. 87,00,000/- made by the AO was supported with finding as per the document seized during the search action u/s 132 of the I. T. Act, 1961. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 1,25,25,852/- on account of interest income earned on the cash loan advanced, without appreciating the fact that the addition of Rs. 1,25,25,852/- made by the AO was supported with finding found as per the document seized during the search action u/s 132 of the I.T. Act, 1961. 3. Whether on the fact and in the circumstances of case, Lt. CIT(A) is correct in holding that no evidence has been collected from the borrower, when loan tran....
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....nventorised as Anx. B1 to B 20. The seized documents included Goldy DM Book (Anx B18 to B20) wherein the details of interest on money lent on Hundi/cash Loan to various parties have been recorded. The particulars in the said book indicate the names of the borrowers and lenders in the coded in the form of initials of their names. As against these names are written the amounts again in coded form, for example 100 indicates 1 Lakh, rate of interest and amount of interest and the due dates on which the borrowers have to repay the amounts and if extensions are sought by the borrowers, the extended dates also are mentioned. That the documents seized contain transactions which have been entered either through Cheques / Banking channels or Cash Transactions. The transactions entered through cheques have been verified by the learned assessing officer. The brokerage earned on said cheque transactions has been accounted for in the books of account and offered for taxation. 7. The Assessing Officer has categorically stated in the assessment order that on verification of documents it was found that the hundi were transacted through banking channel, hence the claim of the assessee on these tran....
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....e broker who arranges loans for needy customers on commission basis from the parties having funds to advance on interest. It is also not disputed that during the A.Ys. in consideration, the appellant has arranged loans transacted in cheque mode and cash mode. The transactions transacted in cheque mode have been accepted by the AO to have been recorded in the books of the borrowers and lenders concerned. The only Page 20 of dispute is about the transactions carried out in cash. The AO has not accepted the contentions of the appellant and concluded the sums involved as investments of the appellant and treated the interest accrued thereon as his income of the corresponding periods. The AO has concluded in the assessment order that the appellant was involved in money lending directly in addition to his brokerage business of money lending. The arguments of the AO in his assessment orders in this regard are as under: "During the assessment year concerned the assessee has advanced cash loans and no interest has been shown to had earned during the year. Therefore, the cash loan is treated as unexplained money u/s 69A of the Act and added to the total income of the assessee and interest i....
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....by the appellant towards surety of the funds of the lenders, no conclusion can be drawn about the ownership of the money involved. The appellant's contention is that the lending and borrowing always takes place on principal to principal basis between lender and borrower and it was only for the purpose of keeping track of the entitlement of his brokerage the appellant maintained the said diaries. In this context the proposition of the Ld. Counsel of the appellant referred to the decisions by the Pune Tribunal in the case of Ramanlal P Chordia vs. ACIT, 87 TTJ 713 and by the Mumbai Tribunal in the case of Biren V Sawla vs. ACIT, 100 TTJ 1006 are found squarely applicable to the case of the present appellant. In the cited cases also, the appellant were finance brokers and certain diaries were seized from their possession containing records of cash transactions. It was held by the Hon'ble Tribunals that the amount recorded in the diaries is not the assessee income and cannot be taxed under section 69. Further, there are certain entries which have names common for cheque as well as cash transactions. In the case of lenders, the identity could have been ascertained and claim of t....
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....hat the lenders were entitled for the interest on the loan amount and he was entitled for brokerage only. If the commission earned on the said transactions have been accepted by the AO and brought to tax, there is no reason why interest on principal so advanced be taxed again. No evidence has been collected from the borrowers as to any interest payment to the appellant. Besides, apart from the entries in the diaries, no evidence was found to establish that the sums given on loan were belonging to the appellant. Last but not the least, no cash or asset was detected from the appellant which could be source for the so much of money advanced as loan by him." 9. Before us, the learned A.R. reiterated the above submissions which are reproduced below:- "That during the course of search, cash and jewellery were found and seized as detailed below:- Sr. no. Particulars Amount Remarks 01 Cash seized from Locker Rs. 79,000 That during the course of assessment proceedings the same was explained as forming part of Cash in hand as per books and the same was accepted by the Learned AO. No addition made. 02 Gold Ornaments seized from Locker Rs. 19,75,342 That while recording of s....
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....ent orders passed. 2.2.3 Therefore, the learned AO having accepted brokerage income earned from cash loan transactions between lenders and borrowers, the learned AO erred in making additions on alleged unexplained loan and interest u/s 69A in the hands of the assessee. The learned AO cannot blow hot and cold at the same time. 2.3 Presumption under section 132(4A) applies vis-a-vis entire content of seized document 2.3.1 The provisions of section 132(4A) raise a statutory presumption, that the contents of the seized diaries are true. The learned AO accepted that, transactions recorded in diary which were carried out through banking channels was between lenders and borrowers and the assessee earned only commission income. Thus, the assessee has simultaneously discharged the burden lay on him by submitting that, when from the same diaries hundi/ cheque outgoings are treated as investments of the lenders, the similarly recorded cash outgoings are investments/money of the third parties i.e. the lenders. The onus shifted on the learned AO to rebut the presumption raised u/s 132(4A) with some cogent material. That the document should be read as a whole and the learned AO is preculed....
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....g the meagre capital it is not at all possible for the assessee to make such huge amount of Investments. 2.5.2 The assessee had submitted particulars of household withdrawals for the years under consideration before learned AO. The assessee had submitted that, he belonged to a Middle Class family having a very moderate standard of Living and education of both the Daughters have been from Saint Joseph School, LIC Square, Nagpur under free education scheme of the Government the amount withdrawn towards household expenses is reasonable and sufficient to take care of our expenses. (Refer Para 10, page 6 of assessment order for AY 2016-17) 3. Legal precedents * Copy of Judgment in Biren V. Savla v. Assistant commissioner Of Income-Tax, Central Circle 11 [2006] 155 Taxman 270 (Mumbai) (Mag.)/[2006] 100 TTJ 1006 (Mumbai ITAT) (Refer pages 1-38 of paper book); * Copy of Judgment in Ramanlal P. Chordia v. ACIT -[(2004) 87 TTJ (Pune) 713] (Pune ITAT) (Refer page 39-60 of paper book); * Copy of Judgment in Commissioner of Income-tax v. Indeo Airways (P.) Ltd." [2012] 26 taxmann.com 244 (Delhi HC) (Refer page 61-74 of paper book); * Copy of Judgment in Commissioner of Income Tax, (....
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....d to controvert the same by unearthing some corroborative evidences which he had miserably failed to do so. There are absolutely no credible and reliable evidences to establish that entire loans in cash were from the undisclosed funds whereas loan in cheques were accepted to be that of person other assessee and his role as a conduit or a mere intermediary was established. It is quite natural that the assessee is in a vantage position to mediate for loans in cash also. We further infer that - (i) A document seized in the search should be read as a whole. (ii) No party can pick and choose one part of document for its advantage. (iii) If an explanation relating to a transaction is found in the seized material, the same has to be considered. The onus will shift on to the Department to adduce further material to support its contention that ostensible as appearing from the document is not real. (iv) The initial burden lying on the assessee to explain the transactions (in this case, outgoings) can be discharged either from the statement recorded under s. 132(4) or from other documents found and seized in the search. Once onus shifted from the assessee, it is for the Department to ....