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TMI Blog2015 (10) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity to cross-examine the witness upon whose statement reliance is being placed was not granted, then, that statement recorded behind the back of assessee cannot be used in evidence. According to the department, it is possessing a diary which contains names of different individual/office/firms who had either deposited the money with LT Shroff or availed loan facility. Now, the evidence which we have extracted above nowhere gave a pointer towards the assessee in clinching way. We have reproduced the explanation of Kalpesh Takkar given in his assessment proceedings. We find that as far as assessee is concerned, it only say B.D. Abdullal Dhujibhai Manek Chowk. Against all the other concerns, their office telephone no. residence phone no. were being mentioned. There is no corroborative evidence apart from this explanation of L.T. Shroff. This is a diary written by a third person found at the premises of the third person. It was not written by assessee. The assessee repeatedly asked to bring the author and give him an opportunity to cross-examine. If that man is not traceable, then it does not mean that assessee would be deprived of his right to verify how his name has been menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act (hereinafter referred to as the Act ). The issues involved in three quantum appeals are common, therefore, we have heard all the appeals together and deem it appropriate to dispose of them by this common order. 2. First we take three quantum appeals i.e. ITA Nos. 489/Ahd/2005, 562/Ahd/2005 and 591/Ahd/2005. The grounds of appeal taken by the assessee are not in consonance with rule 8 of ITAT Rules, 1963, they are descriptive and argumentative in nature. 3. In brief, the grievance of the appellants revolves around two issues namely; (a) ld. Assessing Officer has erred in issuing notice u/s. 148 for reopening of the assessment (b) ld. Commissioner of Income Tax (Appeals) has erred in confirming the additions of ₹ 7,90,000/- in Assessment Year 1995-96 (ITA No. 489/Ahd/2005), ₹ 14,80,000, Assessment Year 1996-97 (ITA No. 591/Ahd/2005), and addition of ₹ 53,35,700/- in Assessment Year 1995-96 (ITA No. 562/Ahd/2005) 4. Before we embark upon an inquiry on the quality of evidence available on the record for construing, whether any addition can be confirmed in the hands of assessee, we think it appropriate to make reference to the basic dispute in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of Group at Suthar Chal, Javeri Bazar, Mumbai. Subsequently, a search u/s. 132 of the income tax act was also carried out at various business/residential premises of the LT Shroff Group by the income tax department. Statement of Shri Kalpesh Thakkar who was managing business by LT Shroff was recorded u/s. 132(4) on 2nd August, 1996. During the search of FERA authorities, a diary containing entries of cash receipts and payments to various parties for the period 01-11-94 to 28th May, 1995 on day to day basis was found and seized. The LT Shroff Group was found carrying out the business of accepting deposits in cash on interest and advance loans in cash by charging interest on large scale from the four different branches situated at Modasa, Manek Chawk, Ahmedabad, Manhaton Building, Mithakali, Ahmedabad and Zaveri Bazar, Mumbai. Apart from doing this, business of taking money on interest and giving advances on interest in cash, the group was also providing services of courier of cash to various clients by charging nominal sum. Such cash used to be transferred by the group on behalf of the clients between any of its branch situated at Modesha, Ahmedabad and Mumbai. The statements of v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer can reasonably harbour a belief that income belonging to the assessee has escaped from taxation. Therefore, he has rightly reopened the assessment and issued notice to both the assessees u/s. 148 of the income tax act. We do not find any merit in this fold of contention. 9. In the next fold of grievance, the appellants are impugning addition of ₹ 7,90,000/- in the case of Ashokbhailal Chokshi, Assessment Year 1995-96, and ₹ 53,35,700/- and ₹ 1,48,000/- in the case of M/s. Chokshi Bhailal Dahyabhai and Co. for Assessment Year 1995-96 and 1996-97. 10. As observed earlier, the FERA authorities have seized a cash book from Mumbai office of LT Shroff Group. This diary was written in the form of cash book in which all the transactions (including courier etc) for the period between 1-11-1995 to 23-05-1995 were recorded. As per the system of maintaining accounts of unaccounted business by LT Shroff group, the transactions with various clients used to be ledgered in the accounts of such clients only, while as far as the courier transactions were concerned, if the cash was received at Mumbai office for any clients to be transferred to Manek Chowk Office then, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case. It is true that the A.O. has utilized the evidences gathered from the premises of L.T. Thakker Group by the FERA Authorities and also by I.T. Authorities. It is also a fact that cross examination of the persons who wrote the account books and the said diaries of L.T. Thakker Group was not allowed. It may however, be observed that the facts and circumstances brought on record by carrying out search action were extraordinary. The L.T. Shroff Group was engaged in financing business at large scale and the materials brought to light showed that several persons of Ahmedabad deposited unaccounted money with them. The A.O. has stated that Shri Kalpesh Thakker had identified some parties on the basis of the notings in the said diary and some of them disclosed the amounts as their income under VDIS. 10. It may also be necessary to mention here that after the search action the L.T. Thakker Group claimed to have closed down their business and the present A.O. having jurisdiction over the Thakker Group has informed that Shri Kalpesh Thakker is not traceable. The Commissioner of Income Tax, Ahmedabad I, Ahmedabad has informed that he has requested Shri Balkrishna T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,700/-is deleted. 12. With the assistance of Ld. representatives, we have gone through the record carefully. The sole question for our adjudication is, whether department was able to lay its hands on a conclusive evidence demonstrating the fact the assessee, Ashokbhai/the firm made deposits with L.T. Shroff group which would have given interest income. Before we evaluate the evidence and its reliability according to the Evidence Act, we deem it appropriate to have a look on the quality of evidence. According to the Assessing Officer, the statement of Shri Kalpesh Thakkar of L T Shroff Group was recorded during the course of survey u/s. 132(4) of the Act. In his statement, he explained the modus operandi and also explained the names, addresses, noticed in the abbreviated form in the diary. The photocopy of the diary relevant, assessee has been placed on page 79 of the paper book. Apart from, entries starting 08-11-94 to 3rd May, 1995, consolidating read as under:- B.D. Ashokbhai Sr. No. 79 Transfer Credits Rs. 08-11-1994 150,000/- 09-11-1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Shah 7th Floor, Hemkut Building (O) 6584546 (Multiple Cap Stock) Nr. Ghandigram Railway 6580228 Station, Ahmedabad (R) 6620269 417001 Chimanbhai Agrawal Blue Star Building, (O) 46698 High Cort Crossing, erd Floor Ahmedabad 14. When assesssee was confronted with this evidence then he filed a letter dated 21st March, 2002 which is available on the page 60 of the paper book. It is pertinent to take note of this letter.: Ashokkumar Bhailalbhai Chokshi, 21st March, 2002 To, The Income-tax Officer, Ward-3(2), Ahmedabad Sir, Sub: Clarification of certain issues- In compliance of your notices and summons u/s. 131, I have attended your honour s office on 20-03-2002 and my statement was recorded on oath on the basis of alleged mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence vis- -vis the stand of assessee, we are of the view that Hon ble Supreme Court way back 1980 in the case of Kishanchand Chellaram vs. Commissioner of Income Tax reported in 125 ITR 713 dealing with an assessment year 1947-48 has observed that, if the opportunity to cross-examine the witness upon whose statement reliance is being placed was not granted, then, that statement recorded behind the back of assessee cannot be used in evidence. Similar is the exposition by the Hon ble Supreme Court in the case of State of Kerala vs. K.T. Sadala Yusuf 39 ITC 478. According to the department, it is possessing a diary which contains names of different individual/office/firms who had either deposited the money with LT Shroff or availed loan facility. Now, the evidence which we have extracted above nowhere gave a pointer towards the assessee in clinching way. We have reproduced the explanation of Kalpesh Takkar given in his assessment proceedings. We find that as far as assessee is concerned, it only say B.D. Abdullal Dhujibhai Manek Chowk. Against all the other concerns, their office telephone no. residence phone no. were being mentioned. There is no corroborative evidence apart from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefits: Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act, (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income or such person as a result thereof shall, for the purposes of Clause (c) of this subsection, be deemed to represent the income in respect of which particulars have been concealed. 19. Perusal of sub-clause III would indicate that in case it is proved that assessee has concealed particulars of income or furnished inaccurate particulars then, in addition to taxes, if any, payable by him, a sum which shall not be less than but which shall not exceed the three times of the amount of taxes sought to be evaded by reason of concealment of particulars of income w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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