9911796707
TMI Blog2015 (11) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Chandrakant Kankaria, a real estate broker on 14-02- 2007 during which certain documents belonging to the assessee were seized. Proceedings were initiated u/s.153C in response to which the assessee filed his return of income on 17-11-2008 declaring total income of Rs. 65,21,100/-. The AO vide order dated 31-12-2008 passed u/s.143(3) r.w.s. 153C determined the income at Rs. 65,21,100/-. Subsequently, the investigation wing Bangalore forwarded certain incriminating documents seized during the course of search u/s.132 in the case of Sri Sohanraj Mehta, C&F Agent of RMD Gutkha group Bangalore indicating that the assessee has received an amount of Rs. 2 crores from Shri Sohanraj Mehta. 5. Based on the incriminating documents the assessment for A.Y. 2004-05 was reopened by the AO after recording the following reasons: "There was search action u/s.132 of I.T. Act 1961 in the case of Shri Sonhanraj Mehta, C&F of RMD Gutkha Group conducted by the Investigation Wing, Bangalore on 09-10-2009. Certain incriminating documents were seized during the search. A paper seized at Page No.34 of Annexure A/M/S is on the letter head of All India Shwetamber Sthanakwadi Jain Conference Mahile Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sohanraj Mehta C&F Agent of RMD Gutkha group, Pune, the paper identified as page 34 of annexure A/M/08 on the letter head of India Swetambar Sthanakwasi Jain Conference Mahila Shakha, Karnataka was seized. The above paper contains the summary of the unaccounted sales carried out by Shri Sohanraj Mehta for the period from April 2003 to August 2006. The left hand side of this paper has details of sales and the right hand side has details of payments made out of the sale proceeds. As per this paper an amount of Rs. 4.50 crores was paid to Shri Kantilal Lunkad. Further, pages 41 and 42 of Annexure A/M/08 gives similar details of some of the months in F.Y. 2003-04 according to which there is payment of Rs. 1 crore during the month of July 2003 and there is a payment of Rs. 1 crore during the month of November 2003, thus the total payment to assessee during F.Y. 2003-04 is Rs. 2 crores. 7. Similarly page 45 of Annexure A/M/08 gives the details for some of the months for F.Y. 2004-05. According to this paper there is payment of Rs. 50 lakhs to the assessee in July 2004 and Rs. 2 crores in the month of August 2004 making a total of Rs. 2.50 crores in F.Y. 2004-05. Thus payments as indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sociates 2. Shri Girish Gadiya 3. Shri Kantilal Lunkad 4. M/s. D.P. Dhariwal 5. Shri Prakash R. Dhariwal 6. Shri Rasiklal M. Dhariwal 10. Further assessee Shri Kantilal Lunkad was a wellknown dealer and developer in Pune city and very close associate of Rasiklal M. Dhariwal. Both Dhariwal and Lunkad have business and personal relationship. He observed that Mr.Dhariwal and the assessee are Swetambar Jains and are very active in the association of Jains who are the founder members of the JITO (Jain International Trade Organisation). Therefore, the contention of the assessee that he did not have any connection with Rasiklal M. Dhariwal or his business and Shri Sohanraj Mehta is devoid of merit. Further, the name of the assessee has been represented many times in the seized documents. Therefore, once it is mentioned that Kantilal as Pune, it is common not to mention the complete detail name every time. Further the documents are not for public consumption and cannot be expected to have lengthy details of the identity of the persons described in such documents. Therefore, he held that the person mentioned as kantilal Lunkad, Pune, Kantilal Lunkadji, Lunkadji, Pune are one and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the AO u/s.69A. So far as the validity of the reassessment is concerned, it was submitted that the reopening of the assessment beyond the expiry of 4 years from the end of the relevant assessment year was without jurisdiction, illegal, bad in law and was void ab-initio. It was argued that the reassessment proceedings were initiated on the basis of the documents received from Investigation Wing of Bangalore which was seized during the course of search action conducted on Shri Sohanraj Mehta. In case of search action if documents relating to the person other than the searched person are found the same are handed over to the AO having jurisdiction over such other person and the assessment of income of such other person must be completed u/s.153C. However, instead of doing that the AO has initiated proceedings u/s.148. Therefore, the AO has not correctly followed the procedure as per law. Further, the assessments have been reopened u/s.147 of the I.T. Act beyond the expiry of 4 years of assessment. The assessee also argued that the copy of statement of Shri Sohanraj Mehta was not provided nor the AO allowed cross examination of Shri Sohanraj Mehta. 14. So far as the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h he could form the belief that the income had escaped assessment and the belief of the AO was held in good faith. Further, the AO had recorded reasons showing due application of mind before taking recourse to reassessment proceedings. Further, the assesse's case had already been assessed twice, i.e. once u/s.143(3) and thereafter u/s.143(3) r..w.s. 153C of the I.T. Act. In the instant case, the AO had independently applied his mind and recorded the reasons before issuing the notice u/s.148 and therefore, the same is perfectly in order. 16. So far as the addition u/s.69A is concerned the Ld.CIT(A) upheld the addition made by the AO on the ground that the seized documents found and seized during the course of search and seizure action carried out in the case of Shri Sohanraj Mehta contain the details of payments of unaccounted money to the persons whose names are appearing on the said documents. The name of the assessee also appears on the said document. It gives very detailed and minute notings of the transactions entered into by the Dhariwal group through its business line of M/s. Dhariwal Industries Ltd. Further Shri Sohanraj Mehta in his statement recorded u/s.132(4) has admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and provisions of section 110 of the Evidence Act upheld the addition made by the AO. 18. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : "1) In the case of the appellant reassessment of income is taken up on the basis of documents seized in the search action under section 132 of the Income Tax Act 1961 on Mr Sohanraj Mehta, Bangalore. Seized documents have been handed over to the AO of the appellant. Therefore, the assessment of income ought to have been completed under section 153C of the I. T. Act. On the facts and in the circumstances of the case and in law the CIT(A) erred confirming the order passed by the Learned AO under section 143(3) read with section 147 of the I. T. Act in pursuance of the information and documents received in the course of search action carried out on other party. Therefore, the assessment completed by the leaned AO under section 143(3) read with section 147 is nothing but nullity and needs to be quashed. Your honour is requested to consider the facts and the legal position and quashed the assessment order and oblige. 2) On the facts and in the circumstances of the case and in law, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that addition has been made on the basis of documents found during the course of search in the premises of Shri Sohanraj Mehta, C&F Agent of RMD Gutkha group. The assessee was not provided with a copy of the statement recorded by Shri Sohanraj Mehta nor the opportunity to cross examine Shri Mehta was allowed to the assessee. There is no corroborative evidence to prove that the assessee in fact has received the amount of Rs. 2 crores during the year. He submitted that the various issues raised by the assessee during the assessment proceedings and appeal proceedings have been adequately discussed by the Tribunal in an identical case in the case of Shri Vinit Ranawat Vs. ACIT vide ITA No. 1105 and 1106/PN/2013 order dated 12-06-2015. In the said case also additions were made based on the seized documents found during the course of search from the residential and business premises of Shri Sohanraj Mehta, C&F Agent of RMD Gutkha group. The CIT(A) deleted the addition and on further appeal by the revenue the Tribunal dismissed the appeal filed by the Revenue relying on decisions of various benches of the Tribunal where such additions made on the basis of seized documents from Shri Soh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the hands of the assessee. We find the Ld.CIT(A) upheld the addition made by the AO. 24. It is the submission of the Ld. Counsel for the assessee that the addition was based solely on the notings made on the seized documents found from the premises of Shri Sohanraj Mehta. No corroborative evidence whatsoever was found or brought on record to show that the assessee has infact received the money. Neither the statement of Shri Sohanraj Mehta was given to the assessee nor the request of the assessee to cross examine Shri Sohanraj Mehta was provided to the assessee. 25. We find an identical issue had come up before the Tribunal in the case of Shri Vinit Ranawat (Supra) wherein similar addition was made by the AO which was deleted by the Ld.CIT(A). On further appeal the Tribunal considering the findings of the AO and the CIT(A) as well as the submissions of the assessee dismissed the appeal filed by the revenue by observing as under : "37. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contents of the seized documents and has also acknowledged and substantiated the fact that the seized documents belong to M/s. Dhariwal Industries Ltd. and therefore his statement has immense evidentiary value. Based on the above and on the basis of various other observations in the assessment order the Assessing Officer made addition of Rs. 1 crore for A.Y. 2006-07 and Rs. 20 crores for A.Y. 2007-08 as undisclosed income of the assessee which has been upheld by the CIT(A). 39. It is the submission of the Ld. Counsel for the assessee that from the very beginning the assessee was denying to have received any such amount from Mr. Sohan Raj Mehta. According to him, no addition can be made in the hands of the assessee on the basis of papers found in the premises of third party. Further, the assessee being a small taxpayer, some evidence should have been found from the residence of the assessee to show that in fact he has received such huge amount. It is also the case of the Ld. Counsel for the assessee that the Department itself is treating this as "short term advance" during the course of search action. Similarly, the statement of Mr. Rasiklal M. Dhariwal is contrary to the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat I have never received this amount from Shri Sohanraj Mehta. Hence, the said payments are not reflected in my books of account. Q.34 A search action u/s.132 was carried out on 26-1-2010 in the case of Dhariwal group. In the course of statement recorded u/s.132(4) Shri Prakash Dhariwal has explicitly stated that the above referred payments have been made by Shri Sohanraj Mehta at the instruction of my father Shri Rasiklal Dhariwal as short term advance. I am showing you the relevant portion of the said statement. Please go through the same and state whether the payments in cash received from Sohanraj Mehta at the discretion of Shri R.M. Dhariwal are recorded in your books of account. A.34 I have gone through the statement shown to me of Shri Prakash Dhariwal recorded on 20-01-2010, however, I have never recorded the amount mentioned from Shri Sohanraj Mehta hence the said payment are not recorded in my books. Q.35 The statement of Shri Sohanraj Mehta recorded u/s.132(4) on 09- 10-2009 has been confirmed by Shri Prakash Dhariwal in the statement recorded u/s.132(4) on 20-01-2010. Thus, both Shri Sohanraj Mehta and Shri Prakash R. Dhariwal have stated on oath that payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stock that comes with bill in our office. The stock that comes without bill is dispatched immediately to our customers. I have been involved in these transactions for longtime and I am responsible for all the despatches and also for the collections from our customers; Normally, we extend credit of 7-10 days to our customers. They remit consideration for the Guntka stock received by them. Periodically, I send these Collections to Mr. Rasiklal or his son Mr. Prashant as per their instructions." 42. Similarly, in his answer to Question Nos. 33 and 34 he has replied as under : "Q.33 I am showing you exhibit marked as A/M/29, seized from the residence of Mr. Mitulal, No. 219, 68th, Cross, 5th Block, Rajaji Nagar, Bangalore. Please go through these loose sheets serially numbered 1-61 and state the contents written over these loose sheets? Ans : I have gone through the exhibit marked A/M/29. I have placed my signature on page ho. 24 of this exhibit in confirmation of having seen it. This exhibit contains loose slips serially number 1-61. Slips marked as sl.no. 4 to 8, 49 to 50, 58 arid 59 contain the notings of Mr.Raskilal Manikchand Dhariwal and his son Mr; Mr. Prakash. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee u/s.132(4) on 20- 01-2010). Similarly, Mr. Rasiklal Manikchand Dhariwal in his reply to Question Nos. 9, 11 and 12 recorded u/s.132(4) of the I.T. Act has stated that he has instructed Mr. Vinit Ranawat to hand over the various amounts. Therefore, it is not clear as to whether the Assessing Officer is correct or the Investigation Wing at the time of examining the assessee are correct or the answer of Mr. Rasiklal Manikchand Dhariwal is correct. 46. The Hon'ble Bombay High Court in the case of Aziende Colori Nazionali Affini, Italy (Supra) has held that the agreement had to be considered as a whole and that the different clauses in the agreement could not be considered separately. Therefore, when the Department itself is treating the same at one place as short term advance, therefore, the question of treating the same as income of the assessee does not arise. It is also an admitted fact that the papers were found with Mr. Sohan Raj Mehta at Bangalore. Therefore u/s.132(4A) they can be presumed to be true, genuine and correct only in the case of the searched person, i.e. Mr. Sohan Raj Mehta who has admitted that the papers belong to him. Therefore, we find force in the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the words such statements shall not alone be sufficient to charge any person with liability. The probative value of the liability created by an entry in books of account came up for consideration in Chandradhar vs. Gauhati Bank [1967 (1) S.C.R. 898]. That case arose out of a suit filed by Gauhati Bank against Chandradhar (the appellant therein ) for recovery of a loan of Rs. 40,000/- . IN defence he contended, inter alia, that no loan was taken. To substantiate their claim the Bank solely relied upon certified copy of the accounts maintained by them under Section 4 of the Bankers' Book Evidence Act, 1891 and contended that certified copies became prima facie evidence of the existence of the original entries in the accounts and were admissible to prove the payment of loan given. The suit was decreed by the trial Court and the appeal preferred against it was dismissed by the High Court. In setting aside the decree this Court observed that in the face of the positive case made out by Chandradhar that he did not ever borrow any sum from the Bank, the Bank had to prove that fact of such payment and could not rely on mere entries in the books of account even if they were regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [ A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that the were in accordance with facts. The evidentiary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation wing, Pune, the AO had noticed that Page 34 was a summary of the cash payment made by Shri Sohanraj Mehta for the period from April 2003 - August 2006 as per the direction of RMD Group. As per this version, an amount of Rs. 57.50 lakhs pertained to Shri Sheikh Mustafmiya Hussainmiya of Ahmedabad and page 47 was the monthly summary for the month of January - March 2004 of the unaccounted transaction carried out by Shri Sohanraj Mehta C & F of Karnataka Region of RMD Group. After analyzing the issue exhaustively as detailed in the assessment order as well as in the appellate order under dispute, a sum of Rs. 57.5 lakhs in cash as evidenced by the seized documents was treated as unaccounted receipt in the hands of the assessee and, accordingly, added to the income of the assessee for the period under consideration by the AO which has been subsequently sustained by the learned CIT (A) for the detailed reasons recorded in his appellate order which is under scrutiny. 7.1. Admittedly, the whole proceedings were initiated on the strength of a statement of a third party (Shri Sohanraj Mehta). The purported seizure of slips, loose sheets etc. at the premises of a third party co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghty God that under wrong promises, mistaken beliefs, inadequate guidance and improper advise, I signed the letter dt. 10.8.2011 in the Income-tax Department, Bangalore which is absolutely wrong and not the correct version of what I wanted to convey to the Income-tax Department at that point of time. 4. With my this letter specifically addressed to you, I once again state that all my statements recorded during the search proceedings on 10.9.2009 and my statement dated 10.8.2011 recorded at Bangalore before Deputy Commissioner of Income-tax, Central Circle 2(2), Bangalore is retracted un- conditionally by me, it being improper."[Refer: Pages 225 - 27 of the assessee's submission dt.12.12.2012]. 7.4. Thus, there is force in the assessee's contention that he should have been afforded an opportunity to cross-examine the third party [ Shri Shohanraj Mehta] since his statements on oath were coupled with inconsistency, he retracted his earlier statements and, thus, not above the board. 7.5. Moreover, the assessee's plea for permission to cross examine Shri Sohanraj Mehta at the assessment stage was not conceded by the AO on the ground that - "[On page 9 CIT (A)] 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40 DTR (Guj) 243 had held as under: "From the findings recorded by the Tribunal it is apparent that though it is the case of Revenue that the land has been sold by the assessee to GC through MV, there is no material on record to indicate that the said land in fact belongs to the assessee. Though the AO has placed reliance upon the statements of MV and GC for the purpose of taxing the amount in the hands of the assessee, despite specific request being made by the assessee for cross- examining both the said persons, the AO has not permitted the assessee to cross-examine them. In the circumstances, no reliance could be placed upon the statements of the said persons as the assessee had no opportunity to cross-examine them. The statements made by the aforesaid persons would have no evidentiary value and as such, would not be admissible in evidence. Further, though the said MV has stated that he has paid Rs. 60 lakhs to the assessee on behalf of one GC, the said amount has not been taxed in the hands of GC. Moreover, no evidence has been adduced to indicate that any transaction in relation to the land in question has actually taken place. The Tribunal has rightly found that the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evidence on record. On behalf of the revenue nothing is pointed out to show that the findings recorded by the Tribunal are in any manner perverse, nor is it the case of the revenue that the Tribunal has taken into consideration any irrelevant material or that any relevant material has been ignored. The conclusion arrived at by the Tribunal on the basis of the findings of fact recorded by it cannot in any manner be said to be unreasonable. In the aforesaid premises, the impugned order of the Tribunal being based upon findings of fact recorded by it upon appreciation of the evidence on record, which findings have not been dislodged by the revenue by pointing out any evidence to the contrary, therefore, does not warrant any interference." 7.9. Taking into account the submissions of the assessee, the stand of the AO, reasoning of the CIT (A) in sustaining the action of the AO and also in conformity with the rulings of the Hon'ble jurisdictional High Court (supra), we are of the considered view that that learned CIT (A) was not justified in sustaining the addition of Rs. 57.5 lakhs made by the AO in the hands of the assessee for the following reasons: (i) that the learned AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) requires to be deleted and accordingly, we hereby direct the revenue to delete the same. Thus, ground No.1 raised by the assessee with respect to reopening of the assessment u/s 148 of the Act is dismissed and ground No.2 with respect to addition on account of undisclosed income is allowed in favour of the assessee." 50. We find the Bangalore Bench of the Tribunal in the case of DCIT Vs. H.S. Chandramouli (Supra) had also an occasion to decide an identical issue and deleted the addition by observing as under : "13. We have considered the submissions of the learned DR. It is seen that the document in question was seized from the possession of one Mr. Sohanraj Mehta. The seized document makes a reference to the name of the assessee and a figure of Rs. 22.75 lakhs appears against his name. As to whether this document evidences payment of Rs. 22.75 lakhs to the assessee is a moot question. There is no basis set out in the order of the AO for coming to the conclusion that the seized document evidences receipt of money by the assessee from Sohanraj Mehta. The presumption u/s. 292C of the Act is only with reference to the person searched and it cannot be extended to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no mention of the Director of the assessee-company, Shri. Abdul Malik. Therefore, the ld. CIT(A) came to the conclusion that in the absence of any evidence involving the assessee to the alleged receipt of Rs. 50 lakhs, reopening in the hands of the assessee under section 147 of the Act is not proper and he accordingly annulled the assessment. 4. Aggrieved the Revenue has preferred an appeal before the Tribunal and reiterated its contentions. During the course of hearing, a specific query was raised from the ld. D.R. as to what evidence they have collected during the course of search or thereafter, on the basis of which the Assessing Officer has formed a belief that the income chargeable to tax has escaped assessment in the hands of the assessee. No satisfactory answer was furnished by the ld. D.R. We have also carefully perused the seized documents and we find that there is a debit entry of Rs. 50 lakhs in the name of Mlik Kannauj, but this entry does not indicate that the amount of Rs. 50 lakhs was given to the Managing Director of the assessee. There may be hundred of Malik in Kannauj but on the basis of this dumb document, the reopening of assessment in the hands o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction by the A.O. under section 147 of the Act was illegal and, therefore, any asstt. framed pursuant to such illegality cannot be sustained. Thus, the whole asstt. framed u/s 147 is hereby annulled, While taking this view, I am fortified by the decisions of the Hon'ble Apex Court in fie case of CIT vs Daulat Ram Rawat Mull (87 ITR 349) wherein, it was held: 'there should, in our opinion, be some direct nexus between the conclusion of fact arrived at by the authority concerned and the primary facts upon which the conclusion is based. The use of extraneous and irrelevant material in arriving at that conclusion would vitiate the conclusion of facts.............................." In the result, the appeal is allowed." 5. Since we do not find any infirmity in the order of the ld. CIT(A), we confirm his order." 52. Similarly the Lucknow Bench of the Tribunal in the case of DCIT Vs. Pawan Kumar Agarwal (Supra) has held as under : "5. We have considered the rival submissions. We find that the issue in dispute was decided by learned CIT(A) as per para 7 & 7.1 of his order, which is reproduced below for the sake of ready reference:- "7. That vide grounds No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant. Further inquiry/ investigation was required to be carried out on the information passed by the ADIT(Inv.)- III, Kanpur but evidences are not collected or placed. Copies of the statements, on the basis of which additions has been made, were not provided nor was the opportunity of cross- examination given to the appellant. The assessing officer merely summarized the salient features of the report of the ADIT (Inv.)-III, Kanpur and thereafter summarily rejected the reply of the appellant as not satisfactory. Learned counsel for the assessee, on the other hand, contends that neither the said Shri Shobhan Raj Mehta was allowed to be cross-examined nor a copy of his statement was given despite several requests. The AO's contention to the effect that the contents of the statement were made known to the assessee, is not a compliance of mandatory requirement to provide the assessee incriminating material to defend its own case and therefore it can categorically be held that: i) Statement of Shri Shobhan Raj Mehta was not given to the assessee. (ii) Beyond the belief of presumption on the information supplied by the ADIT(Inv.)-III, Kanpur, further evidences are not found to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for Karnataka region of RMD Group. The search had taken place at the assessee's business premises as well as at the business premises of RMD Group. No evidence of any unrecorded sale by the assessee or unrecorded purchase by RMD Group was found. Thus, when, despite search at the premises of seller and buyer, no evidence of any unrecorded sale or purchase is found, in our opinion, merely because in the chits found at the premises of some third party with whom the assessee has no business dealing, it cannot be presumed that the assessee is making sales outside books. Moreover, as per chits found from Shri Sohan Raj Mehta, the payment made to the assessee is only Rs. 9 lakhs and not Rs. 9 crores. The department has also relied upon the statement of Shri Sohan Raj Mehta. It was pointed out by the learned counsel that Shri Sohan Raj Mehta retracted his statement. However, as per Revenue, Shri Sohan Raj Mehta has retracted his retraction affirming the original statement. On these facts, the learned CIT(A) has come to the conclusion that the statement of Shri Sohan Raj Mehta cannot be relied upon because he is frequently retracting his statement. Moreover, a statement of a third par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer has dealt with this letter but he has not given any reason for not allowing the assessee an opportunity to crossexamine Shri Sohan Raj Mehta. Similarly, he has neither supplied the copy of retraction of his statement nor dealt with the retraction in the 9 ITA- 5149/Del/2012 assessment order. It is only in the remand report he has mentioned that Shri Sohan Raj Mehta has retracted his retraction also. Considering the totality of above facts, we entirely agree with the learned CIT(A) that the statement of Shri Sohan Raj Mehta cannot be used against the assessee and, similarly, the chits found from the third party, with which the assessee has no dealing, cannot be used against the assessee in the absence of any corroborative evidence. That merely because some excess stock was found in the survey for which separate addition has already been made, it cannot be further presumed that the assessee made sales outside the books, specially when the survey was followed by the search and neither during the course of survey nor during the course of search, any evidence of sale outside the books was found. In view of the totality of above facts, we do not find any justification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Oswal [(1980)126 ITR 446(P&H)]. 5.3 According to us, the additions made by the Assessing Officer were not justified in the facts and circumstances vis-à-vis of the assessee. As discussed earlier, during the course of search in the case of Dhariwal Group, the only documents found on the basis of which the addition u/s 69A has been made in the case of the assessee are in the form of two loose papers wherein amounts of Rs. 4.80 Crores and Rs. 30 lacs were noted against the name "Mr. Pradeep Runwal". Apart from this, no evidence has been found to suggest that the assessee had actually received the said amount or that the assessee had entered into any transaction with Dhariwal Group. There is no evidence on record to suggest that the assessee has previous business relations with the Dhariwal Group. In the absence of any documentary evidence to suggest the same, it could not be presumed that the amounts reflected in the loose papers were the income of the assessee received from Dhariwal Group. It has been the consistent stand of the assessee that there may be many persons of the name Pradeep Runwal in Pune and there was no specific evidence to suggest that the said notings p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Without prejudice to the above, the learned Authorized Representative submitted that the Assessing Officer was not justified in making the additions by relying on the provisions of section 114 of the Indian Evidence Act. The concerned Assessing Officer has referred the aforesaid section which states that the court may presume that the evidence which could be and is not produced would, if produced be unfavourable to the person who withholds it. It is pertinent to mention this rule applies to the cases wherein it is evident or an established fact that a particular evidence or document was in possession of the assessee. For example, an owner of a land may well be expected to be in possession of a 7/12 extract of the said land in order to check whether the said land was used for agricultural purposes. In the present case, the provisions relied by the Assessing Officer are not applicable, the assessee is not withholding any documents. The case of department is that the amount mentioned on the seized paper found with the Dhariwal Group indicates that the assessee has received the amount, therefore, the burden was on the Assessing Officer to establish the same. The reliance placed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived from genuine lenders or whether the investments or receipts were a part of the disclosed sources of income of the assessee. We find that in the present case, the issue in question itself is whether rough noting on loose paper found in the course of search at the premises of third person could be assumed the income from the assessee as in the cases relied by the Assessing Officer. This fact has not been established in the case of assessee, therefore, the case laws relied by the Assessing Officer are clearly distinguishable on facts and hence, not applicable to the case of the assessee. 5.10 According to CIT(A), the name of the assessee appears on the seized papers and seized documents give a detailed and minute noting of the transactions of Dhariwal Group. He has stated that Shri Sohanraj Mehta has admitted that the documents were written by him and most of the papers were written in marwadi language. The CIT(A) referred to the fact that Shri Mehta had admitted that the papers belonged to Dhariwal Group. In para 4.3, the CIT(A) states that when the author of the paper has accepted the notings made by him, in that event, the document is having great evidentiary value and cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hoy Stud and Agricultural Farm Vs. DCIT [(2002) 82 ITD 18 (PUNE)(TM)], In this case, the assessee was a builder and had sold flat to one Mr. Tanna. There was search on Mr. Tanna wherein a document was found indicating flat purchased from the assessee firm and the amount of cheque and cash paid. The amount of cheque paid was tallying with the books and therefore, it was held that cash was paid as noted on the paper. Mr. Tanna had also accepted the fact that cash was paid to the assessee. In these facts, ITAT held that since there was transaction between assessee and Shri Tanna and also the fact that the amounts paid by cheque tallied, the addition was rightly made. The assessee rightly submitted that the said decision is not applicable to the facts of the present case. Firstly, there is no transaction between the assessee and Dhariwal Group. Secondly, there is no corroborative evidence found which could suggest that the assessee had received any amount. The Assessing Officer and CIT(A) have also not brought on record any evidence to suggest that the payment was made to the assessee. Accordingly, considering the factual position, the decision in the case of Dhunjibhoy Stud and Agricu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by Shri Kolhe remained uncontroverted and which is against the settled legal position on the issue that the contents of the affidavit be rejected by confronting the same to the deponent which is missing in this case. Nothing was shown by the A.O. that there was any other material co related to the seized documents. The A.O. was not justified in rejecting the contents of the affidavit as mentioned above. The A.O. further relied on the presumptions u/s 132(4A) of the Act on the ground that this section was very clear that the contents of book of account and other documents may be presumed to be true and presumption can be drawn even on the third person who was not searched u/s 132 of the Act. The A.O. further rejected the submissions given by the assessee in his paper book dated 28.12.2007 reiterating the same stand. The A.O. has drawn inferences and presupposes relying on surmises and conjectures. The ITAT Mumbai Bench in their decision in the case of Straptex (India) Pvt. Ltd. [84 ITD 320 (Mum), clearly held that the presumption u/s 132(4A) is applicable only against the person from whom possession the books of accounts or other documentary were found and not against any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not received any amount, therefore, the question of taxing the same u/s.56(2)(vi) as held by CIT(A) does not arise. In this view of the matter, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition of Rs. 1 crore for A.Y. 2006-07 and Rs. 20 crores for A.Y. 2007-08. Grounds raised by the assessee on this issue are accordingly allowed. 56. Since the assessee succeeds on merit, therefore, the ground relating to validity of assessment u/s.143(3) r.w.s. 153A become academic in nature and therefore the same is not being adjudicated. 57. In the result, both the appeals filed by the assessee are allowed." 26. Since the facts of the instant case are identical to that of the case decided by the Tribunal in the case of Shri Vinit Ranawat (Supra), therefore, following the same reasonings we are of the considered opinion that no addition u/s.69A is called for in the hands of the assessee. We accordingly set aside the order of the CIT(A) and direct the AO to delete the addition of Rs. 2 crores made by him in the hands of the assessee for the impugned assessment year. The grounds raised by the assessee are accordingly allowed. ITA No.726/PN/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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