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2014 (11) TMI 1123 - AT - Income TaxAddition u/s 69 - Held that - From the assessment order as well as the order of the Ld.CIT(A), we find no such opportunity whatsoever was granted to the assessee to cross examine Mr. Soni. From the seized documents, we find at one place it is written Kajal s Rashmi G (pages 33 & 34 of paper book). Similarly, at another place, it is written Rashmi Gandhi G.Kejals in Hindi. Similarly, in another place, it is written Kejals Ushicover partly in English and partly in Hindi at page 62. From the above, it is seen that the seized document clearly show different names. The submission of the Ld. Counsel for the assessee that the assessee does not deal with Pillow covers (i.e. Ushicover in Hindi) could not be controverted by the Ld. Departmental Representative. The Assessing Officer has also not summoned Mr. Rashmikant Gandhi to find out the veracity of the submission of the assessee firm that it has not lent any money to Mr. Sony. The notings in our opinion, do not clearly indicate that the firm has advanced any money. It may at best be that of one individual Mr. Rashmi Gandhi in whose hands addition could have been made. However, the Assessing Officer has not examined that person. Thus we hold that no addition is called for in the instant case.
Issues Involved:
1. Validity of reopening of assessment under section 148. 2. Addition of unexplained investment under section 69 based on seized documents from a third party. Issue-wise Detailed Analysis: 1. Validity of Reopening of Assessment under Section 148: The assessee challenged the reopening of the assessment under section 148, arguing that the reasons recorded were based on presumptions and surmises, making the reopening invalid. However, the CIT(A) upheld the validity of the reassessment proceedings, stating that the reopening was justified based on the information obtained during the search and seizure action in the case of Sri Shreeram H. Soni. The assessee did not press this ground during the appeal, and it was dismissed as 'not pressed'. 2. Addition of Unexplained Investment under Section 69: The main contention was the addition of Rs. 1,04,500 for the A.Y. 2000-01 and Rs. 33,18,000 for the A.Y. 2001-02 as unexplained investments under section 69 based on documents seized from the premises of Shreeram H. Soni. The AO argued that the documents indicated the assessee had carried out money lending activities through Shreeram H. Soni, which were not disclosed in the return of income. The assessee contended that the documents did not pertain to them and that the name "Kejal's Rashmi G." mentioned in the documents did not refer to their firm, Kejals Furnishings. They argued that the presumption under section 132(4A) applies only to the person from whom the documents were seized and not to third parties. The CIT(A) upheld the addition, relying on the authenticity of the seized documents and the corroborative evidence provided by the statements of Shreeram H. Soni and his accountant. However, the Tribunal found merit in the assessee's arguments. It noted that the seized documents did not clearly indicate that the firm had advanced any money and that the notings could at best refer to an individual, Rashmi Gandhi, not the firm. The Tribunal also highlighted the lack of opportunity for the assessee to cross-examine Shreeram H. Soni and the absence of any corroborative evidence directly linking the assessee to the transactions noted in the seized documents. The Tribunal referenced a similar case, Jagannath Eknath Lahoti (HUF), where under identical circumstances, the Tribunal had deleted the addition made by the AO. It emphasized that the burden of proof was on the Revenue to establish the identity of the person and the correctness of the entries in the seized documents. Conclusion: The Tribunal concluded that the addition of Rs. 1,04,500 for A.Y. 2000-01 and Rs. 33,18,000 for A.Y. 2001-02 was not justified. It set aside the order of the CIT(A) and directed the AO to delete the additions, allowing the appeals filed by the assessee.
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