9911796707
TMI Blog2004 (9) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... o payment from Shri Prem and yet the assessee recorded phrases like payment received . This, in our opinion, is not conclusive to frame an opinion that the assessee had undisclosed investments in the transactions. The assessee claims that he did not receive any money and the opposite party concerned also confirms the version of the assessee and under such circumstances, in our opinion, the Assessing Officer could not have given much significance to the scribbling in the loose papers. It has been held by many courts that entries found on a loose paper cannot have any authenticity or evidentiary value in itself. In the circumstances, we are of the opinion that there was no reason to disbelieve the statement given by Shri Prem, consequently, to make the impugned additions. It is, therefore, we have to agree with the contention of the learned counsel for he assessee that if the papers seized show that the assessee was not benefited in any manner, then it has to be accepted even if it results into no taxability because no tax can be thrusted on him if it is not due from him. In this view of the matter we delete the addition. This ground of the assessee succeeds. In the premises of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the opinion that the assessee has successfully explained the amount appearing as opening capital balance in the said undisclosed business activities. The addition is therefore, deleted. Unexplained receipts - We do not see any merit in the addition firstly because, the said loose paper was not seized from the premises of the assessee. The loose paper does not specifically mentions the name of the assessee, nor the person, from whom the paper was seized admitted to have paid any money to the assessee. Accordingly we delete the addition. Ground 8 of the appeal is allowed. Unexplained gold jewellery - In our opinion, the assessee is still liable to explain the source of acquisition of the jewellery, which has not been done in the case before us. The instruction No. 1916 of the CBDT also cannot come to the help of the assessee for the simple reason that the instruction nowhere states that such jewellery found should be treated as explained and no addition towards the same should be made. The instruction only speaks that ornaments to the extent of 250 gms. in the hands of an unmarried lady and 100 gms. in the case of male person should not be seized. We, therefore, hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the basis of some loose papers seized from the residence of Mr. Sudhir Thakran though the said page does not indicate the name of the appellant. The addition should be deleted. 9. The learned Assessing Officer erred in law and on facts in making an addition of Rs. 1,84,400 on account of unexplained investment in jewellery and stones for the assessment year 1997-98 ignoring the submissions and records/status of the family of the assessee. Thus, this addition should be deleted. 10. The learned Assessing Officer erred in law and on facts in making an addition of Rs. 91,163 as unexplained cash found at the time of search though full evidence and source of its possession in respect thereof was submitted. Thus, the addition should be deleted. 11. The learned Assessing Officer erred in law and on facts in making an addition of Rs. 2,78,037 as suppression of profits in the profit and loss account prepared on the basis of seized Annexures A-1 to A-6 stating it to be not purchases but withdrawals as holati (Uchant). The addition has been made ignoring the facts and thus, it should be deleted." 2. The facts of the case are that the assessee is an individual and was carrying on the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to the Assessing Officer that Shri N.C. Daga (Hol) account funnels money into this unaccounted business, when there is a shortage of funds and surplus money generated from this unaccounted business is siphoned off through this account. In the seized cash books, the assessee carried forward cash balance to the following dates of the amount in the range of Rs. 45,000 to Rs. 50,000 and the surplus is taken out of the business through N.C. Daga (Hol) account. The Assessing Officer felt unusual and suspicious about this narration of account as N.C. Daga (Hol). Accordingly, the assessee was asked to explain the same, to which the assessee explained as under, vide letter dated 13-11-1997 : "The said 6 cash books were written by the personal accountant- cum -clerk of the assessee. The assessee never wanted to disclose the names of certain buyers and sellers to anybody. Therefore, such transactions were asked to be recorded in the books as Holayati Account N.C. Daga. This was necessary to keep his trade secret because as per the past experience of the assessee, employees have the tendency to pass on information to the competitors. Specially, in the case of the assessee, his brother s so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Annexures A-13 and A-16 it transpired that the assessee was in the business of lending money on interest and in the business of sales and purchase of shares. A large number of share certificates were also seized from the premises of the assessee, marked as Annexures O-1 to O-12. The assessee was asked to reconcile the value of shares reflected in the wealth tax return and balance sheet with the total number of shares found during the search. From the reconciliation filed it was revealed that the assessee made purchases of certain shares out of his unaccounted money. Further, evidence filed in support of entries found in the loose papers showed that the assessee had advanced loan to persons which were not reflected in the books of account. The assessee filed following chart showing undisclosed income rotationally on the basis of entries on loose papers as well as on the basis of unexplained investment in purchase of shares : N.C. DAGA UNDISCLOSED INCOME ROTATIONAL CHART Date Particulars Amount Balance 31-3-1992 Loan given (4,22,145) (4,22,145) 15-6-1992 Shares (42,820) (4,64,965) 22-6-1992 Shares (9,000) (4,73,965) 11-8-1992 Shares (5,000) (4,78,965) 2-1-1993 Shares (10,000) (4,88, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of shares and advancement of loans, which was considered in different assessment years. 7. Page 64 of Annexure A-13 reflected interest account in the name of one Shri Prem and the investment shown is Rs. 19,15,304, the details of which are as under : Amount Period (Rs.) 3,00,000 9-3-1991 to 30-3-1991 1,50,000 7-1-1991 to 1-4-1991 4,65,304 16-3-1993 to 15-4-1993 10,00,000 One Month. The assessee was accordingly asked to produce Shri Prem and explain the source of investment and interest accrued thereon. Shri Prem, in his statement, before the Assessing Officer agreed to have done business with Shri N.C. Daga for purchase and sale of shares of various companies, however, stated that as there was loss on these transactions, no money was paid to Shri Daga. The Assessing Officer, however, disbelieved the statement of Shri Prem for the reasons - 1. Shri Prem has neither denied the business association with the assessee nor has not accepted that these entries relate to actual transactions. The entries on page 64 of A-13 showed that these pertained to money advanced on loan on which interest has been earned by the assessee; 2. A perusal of the entries recorded on page 63 showed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on regarding repetition of transactions on pages 60 to 63 was also not found acceptable. He found that the final accounts of the sale and purchase of shares and money lent out on interest to Mr. Prem is given on the back of page 63. The total of this account written on the back of page 63 stood at Rs. 10,64,335 and the assessee was to receive Rs. 12,51,500. Therefore, the debit balance has been mentioned at Rs. 1,87,165. As Rs. 2,00,000 was paid, credit balance has been mentioned at Rs. 12,835. The Assessing Officer, therefore, concluded that in all the assessee has received Rs. 12,51,500 in respect of share transactions and interest transaction with Mr. Prem which have not been reflected in the books of account. This amount reflected the profit generated from buying and selling of shares and money lent out on interest. He accordingly treated the amount of Rs. 12,51,500 as unaccounted profit and added the same as undisclosed income for the financial year 1990-91. He has also added an amount of Rs. 56,260 as interest from Shri Prem which was reflected on back of page 63 of Annexure A-13 - interest Account from 16-3-1992 to 31-3-1992, as undisclosed income of the assessee. 9. Pages 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash of Rs. 1,13,000 found at the time of search from the assessee, it is stated that as per Annexures A-1 to A-6, the cash in hand on the said date was Rs. 21,837 and the balance Rs. 90,000 belong to my daughter, Prerna Daga and my son, Rahul Daga. As per books of account of Rahul Daga he has sufficient cash in hand as on the date of search to give to me Rs. 20,000. Similarly on instruction from my daughter Prerna, I gave a sum of Rs. 60,000 each to her on two occasions as per those cash books. She gave to my wife before the date of search in cash a sum of Rs. 70,000 and, therefore, it was lying in the house and found at the time of search. Since, it was not received by me, it was not recorded in my cash book. My daughter, Prerna had sufficient cash available with her to return it to me before 6-11-1996. The said amount is duly explained from her personal income tax return and books of account from which the said transactions is verifiable." The above explanation of the assessee was not accepted by the Assessing Officer. According to him, the explanation that there was cash in hand of Rs. 21,887 in the unaccounted cash books in respect of which addition has already been made was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he pages mentioned in the assessment order have not been correctly mentioned in the assessment order leaving the important page No. 63 (front side) where references necessary for correct appreciation of the facts were mentioned. He argued that page 63 (front and back) is the basic total account drawn by the assessee for the amounts which were due from Mr. Prem not to the assessee, but to an independent person, with whom the assessee undertook share transactions for and on behalf of Mr. Prem. He stated that since these pages were written by assessee himself, it cannot be said that Mr. Prem, whose name is appearing on top of the page, could have sent these pages to the assessee. The margin and profit on each transaction was shown as payable in favour of the addressee as per details given on the back of the page and therefore, it clearly shows that the assessee never paid these amounts to the said person because sale consideration of Reliance Industries share mentioned therein was retained by the addressee as could be seen from the noting kept by you on the said sheet. This is clearly an indication to show that no benefit was accrued to the assessee. Further, as per the trade practice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the cost of shares shown on page 63. However, he fairly conceded that the amount of loans so shown is not independent of the share transactions amount. He further contended that enquiries revealed that the assessee was not a registered share broker and, therefore, could not have undertaken such share transactions as intermediatory. 15. In the rejoinder, the learned counsel for the assessee contended that it is not necessary to be a registered share broker to work as an intermediatory in such transactions particularly when the transactions were being recorded outside the books of account. The alleged margin money was not paid by the assessee but was payable to the beneficiary as it has been added in the summary column for the amounts payable. He strongly contended that as has been admitted by the learned DR that the transactions recorded were not for actual delivery, it should be presumed that no investment was made particularly when, the person, whose name appears on the paper categorically refused to have made any payment. On a query from the Bench, whether these facts were brought to the notice of the Assessing Officer, the learned counsel for the assessee contended that when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under such circumstances, in our opinion, the Assessing Officer could not have given much significance to the scribbling in the loose papers. It has been held by many courts that entries found on a loose paper cannot have any authenticity or evidentiary value in itself. In the circumstances, we are of the opinion that there was no reason to disbelieve the statement given by Shri Prem, consequently, to make the impugned additions. It is, therefore, we have to agree with the contention of the learned counsel for he assessee that if the papers seized show that the assessee was not benefited in any manner, then it has to be accepted even if it results into no taxability because no tax can be thrusted on him if it is not due from him. In this view of the matter we delete the addition of Rs. 34,00,771. This ground of the assessee succeeds. 17. In the premises of the above decision, we do not find any merit in the addition of Rs. 56,250 being interest accrued on Rs. 12,51,500 which has been presumed to have been received by the assessee. Accordingly, we delete the same and ground 3 of the assessee also succeeds. 18. Grounds fourth, fifth and sixth challenge the action of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Reliance Industries, the learned counsel for the assessee contended that there is no presumption that when a declared asset is not found at the time of search, could not have been believed to have sold. It is, true that no evidence was found, but in the given circumstances, the only possible presumption that could be drawn is that the assessee might have sold the same, as the asset found missing was disclosed asset. He stated that in such transactions outside the books, no broker s note is issued. The learned counsel also contended, had the Assessing Officer was in serious doubt, he could have very well ascertained the factual position from the company, viz. , Reliance Industries Ltd., itself. The learned counsel finally contended that with the discovery mistakes in the totalling of the figures in the chart adopted by the Assessing Officer, the genuineness of the addition itself is in serious doubt. The learned counsel, therefore, pleaded that the addition of Rs. 33,251, Rs. 3,06,450 and Rs. 6,05,129 should be deleted. 19. The learned departmental representative contended that the assessee is duty bound to file evidence in support of his claim, which is not discharged with. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to recognize the entry only because no documentary evidence such as broker s note is filed. Here, we find merit in the contention of the assessee that for such cash transactions, no broker s note is issued. In view of these, we do not see any merit in the addition made by the Assessing Officer. Accordingly, we delete the additions of the amount of Rs. 33,251, Rs. 3,06,450 and Rs. 6,05,129. Grounds 4, 5 6 are allowed. 22. The seventh ground pertains to addition of Rs. 6,57,129 as undisclosed investment in the capital of undisclosed activities of business appearing in the cash books marked Annexures A-1 to A-6 for the period from 1-6-1996 to 5-11-1996. The assessee was asked to prepare a balance-sheet on the basis of the said cash books and which was drawn and submitted to the Assessing Officer as per which an investment of Rs. 6,57,129 emerged as opening capital investment in the said business. The Assessing Officer, however, considered the same as undisclosed investment out of undisclosed sources and assessed it accordingly. 23. The learned counsel for the assessee contended that the Assessing Officer did not appreciate the source of the said investment and made the addition wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order does not speak whether the assessee was confronted with the proposed addition or the Assessing Officer called for any explanation in this regard. It is a fact that the assessee had offered an undisclosed income of Rs. 5,39,622 upto 31-3-1996 which was available for rotation in the undisclosed activities undertaken from 1-6-1996. The learned DR did not seriously challenge the admission of the consolidated balance sheet for consideration nor the contents therein. We, therefore, admit the same for consideration. Upon consideration of the same, we are of the opinion that the assessee has successfully explained the amount of Rs. 6,57,129 appearing as opening capital balance in the said undisclosed business activities. The addition of Rs. 6,57,129 is therefore, deleted. 25. The next ground pertains to addition of Rs. 40,000 on account of unexplained receipts made on the basis of some entry recorded in the loose papers seized from the residence of Shri Sudhir Thakran wherein a sum of Rs. 40,000 was shown as paid to some Mr. Daga. The learned counsel for the assessee contended that the addition has been made on pure surmises and conjectures. There can be any person by the n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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