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TMI Blog2011 (10) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA Nos. 16 and 17 of 2004 involve the same question of law and facts, thus, they are being considered and decided by this common order. 2. The instant appeals i.e. IT Appeal Nos. 16 and 17 of 2004 arise from the orders dt. 22nd Sept., 2003 and 22nd Sept., 2003 passed by the Tribunal in IT(SS)A No. 47/Nag/2000 (Block period 1st April, 1987 to 14th Nov., 1997) and IT(SS)A No. 46/Nag/2000 (Block period 1st April, 1987 to 14th Nov., 1997), respectively. 3. IT Appeal Nos. 16 and 17 of 2004 were admitted on 23rd April, 2009 on the following substantial questions of law : Whether on the facts and in the circumstances of the case, learned Tribunal was justified in upholding CIT(A)'s order whereby the CIT(A) deleted addition mentioned in the incriminating documents seized during search operations, particularly, disregarding statement of the assessee recorded under s. 132(4) of the Act ? Whether, in law, in respect of hundies/promissory notes recovered and seized during the course of search the onus is cast on the AO to prove that the amount shown in such hundies/promissory notes was actually advanced by the assessee ? 4. The facts, in brief, in IT Appeal No. 17 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade outstanding of ₹ 5,99,104.50. Affidavit enclosed. 4. Shri Sunil Kr. Grover 1,50,000 No financial involvement. Promissory note was drawn as counter-guarantee against loan of ₹ 75,000 given to Shri Balvinder Singh Bhatia alias Pinki. Letter of Sunil Grover addressed to ADL, Raipur enclosed 6. It was submitted before the AO that all the hundies/promissory notes were identical in nature. The assessee had surrendered the investment in promissory notes/hundies to the extent of ₹ 8.90 lakhs, which was actually advanced by the assessee on hundies, whereas, no surrender in respect of the remaining amount reflected in the promissory notes/hundies was made, as according to the assessee, these hundies were obtained either as securities or counter-guarantees against the some trade/loan transactions duly appearing in the regular books of account. Affidavits of the concerned persons were also filed in support of the above stated explanation. The AO held that the promissory notes and hundies were not recorded either in the books of the assessee or that in the books of the concerned persons. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee at the relevant time and the persons executing the promissory notes/hundies as guarantee/security were closely associated with the said parties and the same was also affirmed by them on oath in the affidavits filed before the AO. It was further held that the AO had neither cross-examined the deponents nor given any opportunity to the assessee for producing the said persons. 11. Thus, the AO was not justified in rejecting the evidence produced by the assessee in the form of affidavits and in drawing adverse inference against the assessee on the basis of surmises and presumptions. In case of M/s Maruti Automobiles, he was examined before the ADI during the course of search wherein the said party had clearly stated that the relevant promissory notes/hundies were executed merely as a security against the loan obtained by cheque and that there were no financial dealings in cash involved on the execution of the said promissory notes/hundies. 12. The CIT(A) further held that the promissory notes/hundies were guarantee/collateral security for continuing the transactions with the concerned parties, no evidence was found and recorded. Infact, the assessee had given the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties, perused the pleadings and the documents appended thereto. 15. Shri Rajeev Shrivastava, learned counsel with Shri Sameer Shrivastava, learned advocate appearing for the appellant/Department, would submit that the authorities below laid strong emphasis on the fact that the AO did not examine the concerned party again and did not bring any evidence on record to show that the statement made by the said party was incorrect, and that even after extensive search operation, nothing incriminating was found or seized to establish that the amount reflected in hundies were actually advanced in cash to the concerned parties, or had received interest thereon as presumed by the AO and the CIT(A)'s order has been upheld by the Tribunal. The Tribunal has not at all given any cognizance to the human probabilities and to the controversies in the averments in affidavits. 16. Shri Shrivastava would further submit that no addition can be made under s. 158BC without any documentary evidences related to the search and seizure proceedings and in the same time no deduction or benefits can also be given to the assessee without any supporting documents related to the search and seizure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tary and the same was extracted under duress and coercion. Learned Division Bench of this Court found that the assessee voluntarily surrendered the undisclosed income during the course of search in the statement recorded under s. 132(4) when he could not explain the seizure of cash and jewellery. The onus of proving that confession made by him under s. 132(4) was as a result of intimidation, duress and coercion was on the assessee. In view of that, it was held that the AO was justified in assessing the income of the assessee on the basis of surrender of undisclosed income made by the assessee under s. 132(4). It was also held as under : 24. From the principles of law laid down in the aforesaid judgments, it may be deducted that, admission is one important piece of evidence but it cannot be said that it is conclusive. It is rebuttable. It is open to the assessee who made admission to establish that confession was involuntary and the same was extracted under duress and coercion. The burden of proving that the statement was obtained by coercion or intimidation lies upon the assessee. Where the assessee claims that he made the statement under the mistaken belief of fact or law, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the High Court should not have interfered with the said finding. Further, the above two judgments lay down that the concept of deemed dividend under s. 2(22)(e) of the Act postulates two factors, namely, whether payment is a loan and whether on the date of payment there existed 'accumulated profits'. These two factors have to be correlated. This correlation has been done by the Tribunal coupled with the fact that all withdrawals were debited in the capital account of the firm leading to the debit balance of ₹ 8.18 crores. The High Court has erred in disturbing the findings of fact. 25. In P. Mohanakala (supra), the Supreme Court observed as under : The findings of fact arrived at by the authorities below are based on proper appreciation of the facts and the material available on record and surrounding circumstances. The doubtful nature of the transaction and the manner in which the sums were found credited in the books of accounts maintained by the assessee have been duly taken into consideration by the authorities below. The transactions though apparent were held to be not real ones. May be the money came by way of bank cheques and was paid through the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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