9911796707
TMI Blog1999 (12) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in sustaining disallowance of ₹ 1,19,952 out of interest claimed by the appellant on the ground that the relevant borrowals were made from concerns whose name appear in Annexure A-3 seized from the office premises of Eshita Dye Chem (P) Ltd. in December, 1991, in the course of search under s. 132 of the IT Act. 04. (j) The first appellate authority was not justified in upholding in principle the AO's decision to bring to tax in the hands of appellant, the Peak of the credits appearing in the bank accounts of the 110 bank accounts whose names appear in Annexure A-3. (The addition sustained by the CIT(A) in this regard is ₹ 2,62,01,981 out of the addition made by the AO of ₹ 12,86,70,053). 3. The assessee has also raised subsequently the following additional grounds: (A) Without prejudice to the grounds mentioned at 4(a) to 4(k) [only 4(j) reproduced above], the first appellate authority should have directed the AO to deduct the Peak worked out and included in the IT assessment for the asst. yr. 1990-91, from the Peak arrived at for the asst. yr. 1991-92 and include only the balance. (B) The AO erred in charging interest under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. Khandhar. (3) Shri Surendra M. Khandhar. (4) Shri Rajesh M. Khandhar. (5) Shri Bipin M. Khandhar. Shri Praful M. Khandhar is the director of a concern called Eshita Dye Chem (P) Ltd., which is one of the concerns which has been searched along with the residential premises of the assessee. The assessee obtained Bachelor's Degree in Commerce and also appeared for the Chartered Accountants' Examination but he did not obtain the degree. He started practice as an Income-tax Practitioner in October, 1980. It is stated by the learned counsel for the assessee that he discontinued his profession in 1983. The learned counsel for the assessee also explained in a note which may be seen at p. 2 of Volume III of the assessee's paper book (APB) that the assessee started with two other businessmen. Shri S.M. Hussain and Shri Sudershan Kumar, in 1984 a limited company Suman Motels (P) Ltd. . After obtaining the permission of the Controller of Capital Issues in 1989, this company is stated to have gone public and the shares were issued to the public in April/May, 1990. This company, of which the assessee is a director, has its registered office at 42, Ambedkar Marg, Wadal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of Baroda, Khand Bazar. (14) Canara Bank, Sion. The Authorised Officer took a statement of the assessee on 20th Dec., 1991 and in the course of his statement he was examined on the bank accounts figuring in the statement termed as Annexure A-3. In a deposition taken from him during the search of Parshva Chambers, the assessee agreed to offer the peak of these bank accounts as his undisclosed income and it is on the basis of this admission that the AO made an addition of ₹ 12,86,70,053. Before we proceed to detail the deposition of the assessee on the bank accounts figuring in Annexure A-3, we may also mention that the statements have been taken from the assessee on different occasions and as per the details given in the APB at p. 1 of Volume-III, the relevant details are as follows : 18th Dec., 1991 At the residence of Shri S.M. Khandhar in Matunga, Bombay, preliminary statement was recorded from him by Shri Atul Pranay, Authorised Officer. 18th Dec., 1991 At the residence of Shri S.M. Khandhar in Matunga, Bombay, final statement under s. 132(4) of the IT Act was recorded from him by Shri Atu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Marketing Ltd. 4. Tej Gaurav Industries Ltd. 5. Eshita Dye Chem (P) Ltd. 6. Saffron Surgical Systems (P) Ltd. 7. Tej Gaurav Farms Co. (P) Ltd. 8. Khandhar Engineering Works. 9. Raj Enterprises. 10. Raj Electricals. 11. Ray Engineering Co. 12. Shekakha Co. 13. H.P.S. International. 14. Prabhavee. 15. S.M. Khandhar Co. 16. P.M. Khandhar Co. 17. Arckay Incorporated. 18. Shah Khandhar Bros. 19. Gaurav Enterprise'Gaurav Family Trust. 20. Tejas Enterprises'Khandhar Family Trust. 21. Dhaksha P. Khandhar (Personal). 22. Bharti S. Khandhar (Personal). 23. Rajeshree B. Khandhar (Personal). 24. Asha R. Khandhar (Personal). 25. Bipin Khandhar'B.K. Trading Co. (Personal). 26. Snehal P. Khandhar'Minor (Personal). 27. Tejas S. Khandhar'Minor (Personal). 28. Gaurav S. Khandhar'Minor (Personal). 29. Mona P. Khandhar'Minor (Personal). 30. Eshita P. Khandhar'Minor (Personal). 31. Rupa R. Khandhar'Minor (Personal). 32. Kushal S. Khandhar'Minor (Personal). 33. Hiraben M. Khandhar (Personal). Q. 5 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the persons who are actually signing the cheques will be furnished to you at a later date. Q. 7. As regards quantification of income pertaining to the above concerns/persons under reference and the payment of tax due on them kindly give us a time frame. Ans. As regards quantification we require 21/2 months to work out and tax payment these will be paid as per tax norms as prescribed in the IT Act, 1961. Q. 8 In respect of the concerns referred in six pages as seized in Annexure A-3 please state whether in respect of concerns not falling under your family concerns also in respect of the persons referred in SB a/cs. whether beneficiary opened a locker and operated the same. Ans. No. Q. 9. Do you wish to say anything further? Ans. No. Please. It may be noticed from the above deposition that the assessee has admitted that the assessee's group consists of as many as 33 concerns which includes even Eshita Dye Chem (P) Ltd. It may also be noticed that the bank accounts figuring in Annexure A-3 are admitted to belong to the Khandhar group and other concerns. It is also admitted that the persons in whose names the accounts figure were physically av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted on page No. 3, 18th Dec., 1991 and it was continued upto 20th Dec., 1991. Q. 6. Please refer to the question No. 4 of the statement recorded on 20th Dec., 1991 in your case. Please confirm that you have given the statement as appearing in question No. 4 (Question No. 4 and reply given by him was shown to Shri Surendra M. Khandhar. Ans. Yes, I confirm, however following points to be considered with my above referred statement (1) Khandhar group and all Khandhar family members are regularly assessed to him IT Department. (2) All other proprietorship and partnership concerns also regularly assessed to the IT Department. (3) It is general practice in our market that parties are not co-operative to the search party. (4) I was in very much high tension at the time of search action. (5) Considering that parties may not be in a position to give documentary evidence at the time of assessment since I do not have any business transaction with some of the parties and they may not co-operate me. Q. 7. In reply to question No. 4 recorded on 20th Dec., 1991, you had clearly stated that All partners and proprietors are physically available but these creditw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility to pay the taxes in all the Khandhar group by mentioning that I may have to pay the tax ? Khandhar group here means as stated by you in reply to question No. 4 of your statement recorded on 20th Dec., 1991. Ans. As I have stated earlier in case some of the parties may not co-operate and produce documentary evidence as required by the Department. I have to offer for taxation. It is to be noted that my statement is binding for S.M. Khandhar Co., proprietorship concerns to some extent Suman Motels Ltd., in the capacity of director and partnership concern (to some extent) where I am partner. My statement is not binding to anybody else as they are separately assessed to IT Department. Q. 11. In reply to question No. 7 you have stated that Department could not found cheque books, slip-books any other documents except Khandhar group but in reply to question No. 6 of the statement recorded on 20th Dec., 1991 there are 8 accounts that you have accepted are maintained by you and your family members. bank accounts, cheque-books, slip books was found during the search operation. You have clearly mentioned that accounts are operated by us and, therefore, peak amount is be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t taking any plea by stating repeatedly tense , but I am making my position clear. Regarding closing down accounts except Khandhar group I would like to state that I could not force people to do as I want, they are all assessed to income-tax. I have given my statement and requested parties to close down the bank accounts as these bank accounts most of them are introduced by us. Q. 13 Vide question No. 19 of statement recorded on 18th Dec., 1991, you have accepted that you look after the mobilisation of finance of concerns of the group this implies that you are looking after the financial matters of the group do you confirm? Ans. Yes I do confirm. It may be observed from the above statement that the assessee had retracted from his earlier offer to disclose the peak of the bank accounts figuring in Annexure A-3 as his income. 9. Before the AO, various contentions were taken as to why the peak of the amounts figuring in the various bank accounts in Annexure A-3 should not be brought to tax as the undisclosed income of the assessee. Firstly, it was contended that the admission contained in the statement allegedly recorded under s. 132(4) on 20th Dec., 1991 has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will pay at least rupees five lakhs even though I cannot collect collection to that extent. I further confirm I will pay all loan amount on or before 31st May, 1991. Signed and Delivered Sd/- Bhupen Chheda 22nd Jan., 1991 I, Mahendra P. Shah, stand guarantee for the above matter. During the course of the search, the assessee was examined in respect of the above paper and the relevant portion of his deposition on 18th Dec., 1991 may be seen at pp. 12 to 27 of the Department's paper book (DPB) and the relevant queries, i.e., question Nos. 20 and 21, put by the AO and the replies given are as follows : Q. 20. I am showing you page No. 82 of the loose paper file No. A-20 as per which Mr. Bhupendra Chedda was liable to pay ₹ 20 lakhs to you on the dates mentioned therein but this amount which is receivable by you has not been reflected in the account maintained by you. Ans. I have not received any amount from Mr. Bhupendra Chheda that is why it is not reflected in the accounts. Q. 21 On perusal of the accounts maintained by you it is seen that you have accounted for receipts and payments on accrual basis. In the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respective concerns and their assessments had been made, no separate adition on the basis of the deposits figuring in the said accounts can be made in the individual assessment of the assessee. The method of working out the peak adopted by the AO was also assailed. The CIT(A), however, rejected these contentions but gave partial relief. While the AO brought to tax the aggregate of the deposits figuring in the various bank accounts, the CIT(A) held that only the maximum balance in each bank account should be taken for inclusion in the assessment of the assessee and thus he worked out the aggregate of the peaks of these accounts on the basis of the mode of disclosure given by the assessee in his deposition taken from him on 20th Dec., 1991 which we have extracted hereinabove. On this basis, he reduced the addition by way of the deposits of the seized bank accounts from ₹ 12,86,70,053 to ₹ 3,05,40,285, subject to further verification by the AO. He deleted the addition of ₹ 20 lakhs, being the alleged advance by the assessee to Shri Bhupendra Chedda on the ground that there was no evidence at all in support of the said advance and giving certain other reasons which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e when the Department searched 208-210, Parshva Chambers, and the relevant search warrant was only against M/s Eshita Dye Chem (P) Ltd. and the assessee was not a director or a shareholder on the date of the search of the said concern and his position was only that of a stranger so far as that concern was concerned and so it is pleaded that his statement, dt. 20th Dec., 1991, cannot be regarded by any stretch of imagination as a statement recorded under s. 132(4), as under this section the statement of only the person who is in possession and control of the searched premises can be recorded. It is claimed that being in the position of only a stranger, the assessee could not have been examined under the provisions of s. 132(4) and in this context reliance is placed upon the following decisions: (1) Nenmal Shankarlal Parmar vs. Asstt. CIT (1992) 102 CTR (Kar) 64 : (1992) 195 ITR 582 : 62 Taxman 529 (Kar); (2) Smt. Sita Devi vs. CIT (1979) 12 CTR (P H) 108 : (1980) 122 ITR 105 (P H); (3) ITO vs. Seth Bros (1969) 74 ITR 836 (SC); (4) ITO vs. Mohan Lal Vig (1983) 139 ITR 681 (P H); (5) ITO vs. Smt. Lajwanti Devi (1998) 62 TTJ (Chd)(TM) 450 : (1998) 66 ITD 95 (Chd)(TM); an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prolonged search operation which lasted more than 24 hours and a statement given under such anxiety and tension has no evidentiary value and for this proposition he relied upon the following decisions and certain other unreported decisions which may be seen at pp. 62 to 90 of Volume II of the APB : (1) Asstt. CIT vs. Mrs. Sushiladevi Agarwal (1994) 49 TTJ (Ahd) 663 : (1994) 50 ITD 524 (Ahd); (2) Deepchand Co. vs. Asstt. CIT (1995) 51 TTJ (Bom) 421; and (3) Jagdish Chand Gupta vs. Asstt. CIT (1996) 56 TTJ (Chd) 337. It is also claimed that a statement given under tension cannot be acted upon and it can be retracted or modified and for this proposition, the learned counsel for the assessee has relied upon the following decisions : (1) Asstt. CIT vs. Mrs. Sushiladevi Agarwal's case (supra); (2) Deepchand Co. vs. Asstt. CIT (supra); (3) Maganbhai Becharbhai Patel Co. vs. ITO [BCAJ January, 1995, p 810, Ahemdabad Bench of ITAT]; (4) Jagdish Chand Gupta vs. Asstt. CIT case (supra); (5) Asstt. CIT vs. Mewar Garage [BCAJ February, 1998 p 961 Jaipur Bench of ITAT]; (6) Pranav Construction Co. vs. Asstt. CIT (Inv.) [BCAJ February, 1998 p 962 Bombay Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is invalid in law as it is not supported by any other evidence, except the admission contained in the statement, dt. 20th Dec., 1991. In this context, reliance is placed upon the decision of the Supreme Court in the case of CIT vs. Daulat Ram Rawatmal 1972 CTR (SC) 411 : (1973) 87 ITR 349 (SC) and also other decisions mentioned below : (1) Prakash Narain vs. CIT (1981) 20 CTR (All) 147 : (1982) 134 ITR 364 (All); (2) V. Balasubramanian vs. ITO (1986) 24 TTJ (Mad) 155 : (1985) 14 ITD 35 (Mad); and (3) Vinayakrao D. Chaudhary vs. ITO (1985) 23 TTJ 233 (Nag) : (1986) 15 ITD 180 (Nag). It is pleaded that assuming, without admitting, that the assessee is answerable for the contents of Annexure A-3, the bank accounts of concerns whose names appear in list A-3 but which are assessed to income-tax are to be excluded in working out the peak, as the genuineness of such concerns is beyond doubt. In the grounds taken before us, it is claimed that the concerns, who are assessees on file, fall into the following categories and the deposits in such accounts are as per the following details : (1) Deposits in bank accounts of concerns in which the members of the family of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Deposits figuring in bank accounts of limited companies which are registered with the Registrar of Companies, Maharashtra, and assessed to income-tax are stated to aggregate to ₹ 37,06,640 and the names of such limited companies, which are assessees on file, are stated to be the following: (1) Gaurav Vessels (P) Ltd. UCO Bank, Mandvi Branch. (2) Senior Marketing (P) Ltd. Allahabad Bank, Sion Branch. (3) Amrut Marketing (P) Ltd. Allahabad Bank, Sion Branch. (4) Kapil Marketing (P) Ltd. Allahabad Bank, Sion Branch. (5) Naheshri Marketing (P) Ltd. Indian Bank, Mandvi Branch. (6) Eshita Dye Chem. (P) Ltd. The United Western Bank Ltd. Vadgadi Branch. (7) Mona Traders (P) Ltd. The United Western Bank Ltd., Vadgadi Branch. (8) Namrata Exports (P) Ltd. State Bank of Saurashtra. (9) Eshita Dye Chem. (P) Ltd. State Bank of Saurashtra. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand Bazar Branch. (22) Shreeji Corporation UCO Bank, Mandvi Branch. (23) Kalpana Corporation UCO Bank, Mandvi Branch. (24) Wrightco International UCO Bank, Mandvi Branch. (25) Craft Enterprises UCO Bank, Mandvi Branch. (26) Gayatri Enterprises UCO Bank, Mandvi Branch. (27) Namrata Enterprises UCO Bank, Mandvi Branch. (28) Saraj Sales Corporation UCO Bank, Mandvi Branch. (29) Minaxi Trading Co. UCO Bank, Mandvi Branch. (30) A. Anilkumar UCo. The United Western Bank Ltd., Vadgadi Branch. (31) Shah Engineers Satara Sahakari Bank Ltd. (32) Nagendra Enterprises The Madhavpura Merchant Co-op. Bank Ltd., Mandvi Branch. (33) Mrs. Deepak Desai New Bank of India, Khand Bazar Branch. (34) Bhogilal Sons In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rar of Companies and assessed to income-tax as per Annexure-C. ₹ 37,06,640 (iii) Total of the maximum balances in the bank accounts of the partnership and proprietary concerns which are assessed to income-tax in Bombay as per Annexure-D ₹ 1,85,35,562 ₹ 2,62,01,981 Peak amount ₹ 43,38,305 Actually, it is pleaded that the peak should be worked out by consolidating and working out the datewise balances. In other words, it is pleaded that the method adopted by the CIT(A) of taking the aggregate of the maximum balance in each account is inherently incorrect even if only the accounts of the concerns which are not assessed to tax are to be considered for making the addition. It is also pleaded on the basis of the additional ground raised by the assessee that the peak arrived at in the earlier assessment year should be deducted from the peak in the succeeding assessment year. It is mentioned that this claim was allowed by the CIT(A) for the asst. yr. 1992-93 but was not foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such as upto what assessment year the returns have been filed and who is the relevant AO in respect of the concerns to whom the accounts figuring in Annexure A-3 relate and the relevant details may be seen at pp. 95 to 112 of the APB (Vol. III). From the above statements, the learned counsel for the assessee pleaded that even going by the details furnished by the assessee during the search in respect of the bank accounts figuring in Annexure A-3, a large number of the concerns to whom the accounts relate had already filed their returns before the date of the search and they had also disclosed the said accounts in their books of account and so it is claimed that there is no basis or justification at all for including the deposits figuring in those accounts in the assessment of the assessee. In other words, the argument made out is that the admission made by the assessee in the course of his statement dt. 20th Dec., 1991, on the basis of incorrect appreciation of the legal position is invalid. It is further pleaded that the assessee had stated that he would close down all the bank accounts appearing in Annexure A-3 and the said accounts relate to concerns which had already been asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils of the professional income and the AO had not noticed any understatement receipts and so he was not justified in estimating the professional receipts of the assessee at ₹ 5,00,000 as against the admitted receipts of ₹ 4,37,500. 15. Regarding the disallowance of ₹ 20,000 out of salary and bonus paid, sustained by the CIT(A), it is claimed that the assessee had to rely more on his assistants during this year because he had to devote more time to M/s Suman Motels Ltd., which went public in May, 1990 and so a higher expenditure on salary and bonus was incurred during the year and no overstatement or discrepancies were noticed by the Asstt. CIT and so it is claimed that the Revenue authorities were not justified in effecting this disallowance of ₹ 20,000. 16. Regarding the disallowance of ₹ 1,19,952 out of interest claimed by the assessee, it is explained that this addition had been made on the ground that the relevant borrowals on which interest was paid had been from concerns whose accounts figure in Annexure A-3, on the basis of which the main addition of ₹ 12,86,70,053 had been made by the AO and as it is not established that the said co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts referred to hereinabove were seized, as per the Panchnama dt. 20th Dec., 1991 relating to M/s Eshita Dye Chem. (P) Ltd. 208-210, Parshva Chambers, and a copy of this Panchnama may be seen at pp. 7 to 11 of the Department's paper book (DPB). It is claimed that this document was not found during the search on 18th Dec., 1991 when the rest of the premises, except the cabin of the assessee and the computer room, were searched. It is also explained that the said premises, 208-210, Parshva Chambers, had an area of about 1,500 sq. ft. and a large area of about 1,000 sq. ft. was occupied by the cabin of the assessee and the computer room and only the remaining portion was occupied by the staff. It is also mentioned that there was only one ingress and egress for the area covered by all the three municipal Nos. in 208-210, Parshva Chambers, and in this context, the learned Departmental Representative has filed a letter dt. 5th Feb., 1999, from Parshva Chambers Premises Co-op.Society Ltd. addressed to the AO may be seen at p. 245 of the DPB and the same reads as follows : Dear Madam, As per your letter, we are furnishing following details for our Parshva Chambers, 17/21 Is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd which reads as follows : Dear Sir, Sub :'Your Notice under r. 112-A of the IT Rules dt. 7th Dec., 1992 Ref. :'No. ITO/W-2(2)/32-E/91-92. We refer to your notice under r. 112-A, dt. 7th Feb., 1992. We hereby state that, Shri S.M. Khandhar'Managing Director of Suman Motels Ltd., has also received notice under r. 112-A from A.C. Cir. 14(1) (Inv.) for seizure of share certificates of Suman Motels Ltd., valued at ₹ 95,12,500. We also state that company's and Shri S.M. Khandhar's premises is one and the same. Further we state that the shares of Suman Motels Ltd., valued at ₹ 95,12,500 do not belong to the Company at all. The shares belong to Shri S.M. Khandhar and his family members. The shares are duly reflected and accounted in their personal respective accounts. Shri S.M. Khandhar is assessed to tax with the Asstt. CIT Circle-14(1) (Inv.), Bombay. Hence, the necessary explanation under r. 112-A may be submitted to AC. Cir. 14(1)(Inv.) by Shri S.M. Khandhar only, for the purpose of order under s. 132(5) of the IT Act, 1961. We request you to do the needful in the matter. Thanking you, Yours faithfully, For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 1,500 9,22,050 We furnish photocopy of balance sheet of the persons named above in which investment was duly reflected. We request you to grant about 5 days time to prepare and submit the rest of the details. Thanking you, Yours faithfully, For S.M. Khandhar Co. Sd/- (S.M. Khandhar). Attention is also invited to another letter dt. 5th May, 1992 addressed by the assessee to the AO, which may be seen at pp. 74 to 76 of the DPB and which reads as follows : Dear Sir, Sub. : ESHITA Dye Chem. (P) Ltd. Search seizure explanation Further to our letter dt. 29th April, 1992, we furnish the following : 1. Details of Income-tax Numbers of the persons who are the real owners of equity shares of 'Suman Motels Ltd.' (Ann-A). 2. Copy of acknowledgment of income-tax returns filed, for the above persons, as per Annexures B1 to B3. 3. Family Tree of Khandhar family Annexure 'C'. 4. Cash found and not seized ₹ 78,961'The cash found on 18th Dec., 1991 at the premises belong to Shekhakha Co. a partnership firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch, 1991 50,115 722 Indian Bank, Mandvi 29th Dec., 1990 5,075 531 Indian Bank, Mandvi 9th March, 1991 46,288 723 Indian Bank, Mandvi Total 7,99,593 Date Shares Amount (Cr.) Rs. 12th April, 1991 1,200 11,790 25th April, 1991 1,000 9.890 21st May, 1991 8,400 80,425 4th June, 1991 500 5,060 20th June, 1991 600 5,845 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c., 1991 was given in complete ignorance of the legal rights is totally untenable, because the assessee was an income-tax practitioner and fully aware of his rights and is also used to facing searches because this was not the first time that he had been searched. It is also pleaded that the plea that the assessee had been under tension and so gave a statement which was against himself is also untenable because the search was discontinued on the morning of 19th Dec., 1991 and was resumed only on 20th Dec., 1991 and so the assessee did have a break in which he must have rested and even consulted outside counsels. It is pointed out that in replies to question Nos. 26, 29 and 32 in the statement given even on 28th Dec., 1991, the assessee had stated to be fully fit and claimed not to be exhausted and actually refused to take rest. It is also pointed out that the plea of tension was taken only two years after the search, i.e., in the course of the deposition recorded on 23rd Sept., 1993 and so is clearly an afterthought. It is also claimed that the list of six pages containing the bank accounts in question in Annexure A-3 was not a dumb document but contained the names of the branch and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... testimony cannot be wiped out and does not become non-existent and the AO correctly utilised the evidence of that deposition in question and framed the assessment on that basis. It is also claimed that it is the duty of the Court to get behind the smokescreen created by a tax dodger and discover the true state of affairs. It is pleaded that the Court is not to be satisfied with form and leave alone the substance of the transaction. In support of these propositions, the learned Departmental Representative relied upon the following decisions of the apex Court : (1) Workmen of Associated Rubber Industry Ltd. vs. Associated Rubber Industry Ltd. (1985) 48 CTR (SC) 355 : (1986) 157 ITR 77 (SC); (2) McDowell Co. Ltd. vs. CTO (supra); and (3) CIT vs. Sri Meenakshi Mills Ltd. (1967) 63 ITR 609 (SC). It is also claimed that under the provisions of s. 132(4A), an irrevocable presumption is cast upon the assessee that the Annexure A-3 seized during the search from the premises of Eshita Dye Chem. (P) Ltd., which was under the control of the assessee, belonged to him and he is answerable for it. In this context, reliance is placed upon the decision of the Delhi Bench of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ch. Atchaiah (1996) 130 CTR (SC) 404 : (1996) 218 ITR 239 (SC). It is also pleaded that there is not proof that the bank accounts figuring in Annexure A-3 had been reflected in the books of the concerns which are alleged to be on the rolls of the Department. The learned Departmental Representative also requested for permission to file certain additional evidence vide the AO's letter dt. 11th June, 1999 and this letter, after initial narration of facts and reference to the admission of the assessee contained in his statement dt. 20th Dec., 1991 which we have already referred to hereinbefore, reads as follows : 3. The assessee instead of offering the peak credit of these bank accounts as his undisclosed income, he has resorted to delay tactics and has turned totally unco-operative in finalising his tax liabilities. The assessee has not produced parties who are appearing in the A-3 list before the AO but has started making a claim towards the end of the proceedings that he did not know these parties and is not aware of their whereabouts. 4. During the course of hearing before the Hon'ble Members the assessee's authorised representative Shri Bhaskar Rao on 3rd N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was transferred to Suman Motals Ltd. The bank account No. 1716 of M/s. Best General Agency with address 278, Suman Street, Vadgadi in United Western Bank Ltd. is enclosed. (p. 302) (b) The amount transferred by Harmesh Trading Co. to Anilkumar Sons amounting to ₹ 15,00,000 was transferred to Suman Motels Ltd. on 4th April, 1995, Bank Account No. 1596 of M/s Anilkumar Co. 279, Samuel Street in the United Western Bank is enclosed. (Page 306). (c) The amount transferred by Harmesh Trading Co. to Rajesh Sales Corpn. was transferred to Suman Motels Ltd. on 4th April, 1995. The Bank Account No. 1600 of M/s Rajesh Sales Corpn. 274, Samuel Street is enclosed. (p 307). (d) Harmesh Trading Co. transferred ₹ 16,00,000 to Patel Construction Co. on 4th April, 1995 and M/s Patel Construction Co. (A-3 list) transferred this amount of ₹ 16,00,000 on the same date to Suman Motels Ltd. The S.B. Account No. 2164 of M/s Patel Construction Co. 278, Samuel Street in United Western Bank is enclosed. (p 303). (e) Harmesh Trading Co. transferred ₹ 18,00,000 on 4th April, 1995 to Super Investment (A-3 concern) and M/s Super Investment Co. transferred the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us it would be evident that from one of the A-3 concerns, huge funds from the bank were diverted to Suman Motels Ltd. either directly or through other concerns of A-3. Therefore, the A-3 concerns are inter-connected which are managed and controlled by Shri Surendra M. Khandhar wherein the funds have ultimately come to the main concern i..e., Suman Motels Ltd. Accordingly, the statement made by the authorised representative for the assessee that the assessee does not know the whereabouts of A-3 concerns is blatantly incorrect. 12. Kapilesh Corporation whose name is appearing in A-3 list has received ₹ 85,28,400 from IDBI on 27/28th Oct., 1995 and on the same day the funds were transferred to Suman Motels S.B. A/c No. 10404 of Kapilesh Corporation in Indian Bank, Mandvi Branch is enclosed. 13. It is the case of Revenue that A-3 concerns were floated by the assessee and the funds were ultimately ploughed back to the assessee. This goes to prove that the statement given by the assessee at the time of search that he wanted to offer the peak of those accounts as income and that he would close down his bank accounts show the degree of ownership of the assessee and has righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther family concerns and other than family concerns. 17. It is prayed that the Hon'ble Members of 'C'. Bench, Tribunal may kindly admit and consider the above fresh evidence, while deciding the appeals of Shri S.M. Khandhar for asst. yrs. 1991-92 1992-93. Sd/- (S.H. Shirudkar) Deponent Dy. CIT, Central Circle-14, Mumbai. Vide his letter dt. 3rd Aug., 1999 addressed to the Registrar, Tribunal, the AO, Shri S.H. Shirudkar, Dy. CIT, Central Circle-14, Mumbai, filed another petition requesting for admission of additional evidence, and after initial narration of the facts of the case and the admission contained in the statement of the assessee dt. 20th Dec., 1991 which we have already referred to, the AO proceeded to state as follows : 4. During the course of hearing before the Hon'ble Members the assessee's authorised representative, Shri Bhaskar Rao on 3rd Nov., 1998 has stated that the A-3 list contains several names with whom the assessee has no contacts. In this connection the Revenue has filed additional evidence on 11th June, 1999 enclosing the account opening forms of the unaccounted bank account where-in the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s significance is that in the balance sheet of Vipko Sales Corporation the assessee, and his family members were not shown as sundry debtors. On perusal of the records of the assessee and his family members it is seen that Vipko Sales Corporation is a sundry creditor. In this connection the additional evidence which I would like to submit before the Hon'ble Members for their kind consideration is the paper book with pp. 438 to 478. As regards the balance sheet of Shri S.M. Khandhar as appearing at p. 445 the amount of ₹ 7,79,630 was shown to have been received from Vipko Sales Corporation, but the same is not reflected in Vipko Sales Corporation. This shows the fallacity of the facts in the returns filed by the Vipko Sales Corporation which shows that these are the bogus concerns floated by the assessee and his family members. Similarly the balance sheet of Mrs. Bharati S. Khandhar shows an amount of ₹ 13,30,300 as having been received from Vipko Sales Corporation and the same is reflected on page No. 459 but Vipko Sales Corporation does not show this transaction in the balance sheet of Shri P.M. Khandhar as appearing in page No. 465 Vipko Sales Corporation was show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Rajesh M. Khandhar 81,500 (4) Bipin M. Khandhar 1,20,821 (5) Eshita Dye Chem. (P) Ltd. 95,12,500 Total 1,03,40,044 20. Regarding the claim of the learned counsel for the assessee that the peak of the deposits in the 110 bank accounts has to be worked out datewise, the learned Departmental Representative argued that the benefit of adding the peak of the deposits in the 110 bank accounts can be given only if the assessee surrenders the deposits as his income and also he proves that the withdrawals figuring in the bank accounts have not been utilised elsewhere and the funds represented by the withdrawals were available for making the deposits. In other words, the argument is that the benefit of the peak can be given only if the assessee proves the recycling of funds. The same argument is advanced in respect of the claim of the assessee raised in the additional grounds that the peak worked out for the asst. yr. 1991-92 may be deducted from the peak arrived at for the asst. yr. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Union of India Anr. (supra). Objection is taken even to the raising of additional grounds in respect of the levy of interest under ss. 234A and 234B. 24. Regarding the contention of the learned counsel for the assessee that the direction of the AO to the effect Charge interest as per law is not a valid order and the further contention that where there is no specific order levying interest in the assessment order, interest cannot be levied through notice of demand, it is claimed that where the assessment order is accompanied by ITNS 150, which is the tax calculation sheet signed by the AO, the levy of interest is valid, and for this proposition, reliance is placed upon the decision of the apex Court in the case of Kalyankumar Ray vs. CIT (1992) 102 CTR (SC) 188 : (1991) 191 ITR 634 (SC). 25. Regarding the estimation of professional income and the disallowance of certain expenditure effected by the AO, the learned Departmental Representative supported the action of the AO on the ground that the assessee did not furnish the relevant details before the AO nor produced the vouchers and bills in support of the claim. 26. In the rejoinder by the learned counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31st March, 1991, relevant for the asst. yr. 1991-92, these amounts do not appear. (c) In the assessee's statement dt. 23rd Sept., 1993 recorded by the AC, the assessee clearly stated that whenever he borrowed amounts from the others, he would produce necessary evidence in support of such borrowals made and if he fails to do so he would have to pay tax on such borrowals. Thus, while the onus of approving borrowals for the asst. yr. 1996-97 lies on the assessee, for the asst. yr. 1991-92 there is no such onus. The facts of the case for the asst. yr. 1996-97 cannot be imported into the assessment for the asst. yr. 1991-92. (iii) The papers at page Nos. 273, 279, 288 and 294 filed by the Departmental Representative show that : (1) Vipco Sales Corporation, (2) Deepali Enterprises, and (3) Kapilesh Corporation Ltd. advanced moneys to others, realised interest thereon and claimed deduction of tax deducted at source from out of such interests received. Similarly, in the later years these and other concerns might have advanced funds to the six persons, in the accounting year relevant for the asst. yr. 1996-97. (iv) The papers filed by Departmental Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even in the computer room on 20th Dec., 1991 and not necessarily in the cabin of the assessee. 30. After the hearing was over, the learned counsel for the assessee wanted to file some written submissions and the Bench permitted it with the caution that no fresh argument should be advanced in the written submissions. However, we find that in the written submissions filed by the assessee, marked as Vol. IV of the APB, certain arguments and case law are advanced which were not mentioned in the course of the hearing. Certain points are mentioned on financial control and administrative matters at pp. 38 to 40 of the said APB under the headings Financial Control and Administrative Matters but these points were not made in the course of the hearing and the learned Departmental Representative had no opportunity to refute them and so we do not find it fit or necessary to refer to these arguments in detail. The drift of these arguments is that the assessee was not in control of administrative or financial matters of Eshita Dye Chem (P) Ltd. 31. Regarding the working of the peak of the deposits in the bank accounts, it is reiterated that the Department did not locate any investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian IT Act, 1922 (11 of 1922), or under this Act. Explanation.'For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian IT Act, 1922 (11 of 1922), or under this Act. We find that the search warrant was issued in the name of Eshita Dye Chem. (P) Ltd. to search the premises at 208-210. Parshva Chambers, and the search commenced on 18th Dec., 1991. Actually, the entire group of the assessee was searched and there was a separate warrant in the name of the assessee to search his residence at Matunga, and his brothers' premises at 278, Samuel Street. There was also a search warrant in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that he was looking after the finances of the entire group. Even the brother of the assessee. Shri Praful Khandhar, in the statement recorded on 18th Dec., 1991 in 208, Parshva Chambers, admitted in answer to Question No. 2, that only his brother would be able to tell how the books of account are maintained. A copy of his deposition may be seen at p. 54 of the DPB and is as follows: Q. 2. Please explain way the books of account are maintained and available in this office. A. 2. I do not know. Shri Surendra Khandhar will be knowing about the method of accounting. I do not know for which concern books are maintained here. Shri Surendra will be able to tell you. We have already extracted the letter of the assessee dt. 17th Feb., 1992 addressed to the AO on behalf of the Director of Eshita Dye Chem. (P) Ltd. at p. 36 of this order, explaining the position about the shares of ₹ 95,12,500 held in Suman Motels Ltd. It was explained that these shares did not belong to Eshita Dye Chem. (P) Ltd. but only to the assessee and his family members. In the written arguments filed by the learned counsel for the assessee at the end of the hearing, it is explained that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fairs of the group and he was its manager and mouthpiece. This is not, however, to say that all the members of the group are only his benamis, but that the assessee was generally in control of the affairs of the group, inclusive of M/s Eshita Dye Chem. (P) Ltd. and as such a statement recorded from the assessee during the search of the premises of M/s Eshita Dye Chem. (P) Ltd. at 208-210, Parshva Chambers, is a valid statement, recorded validly under the provisions of s. 132(4). This point need not be laboured further. At p. 37 of this order, we have already extracted another letter dt. 29th April, 1992, wherein again he offered an explanation on behalf of Eshita Dye Chem. (P) Ltd. In the written submission filed by the assessee in Vol. IV of the APB, the learned counsel for the assessee tried to again explain this letter also on the same footing as others, i.e., it is on the letterhead of the assessee. We have already refuted this argument hereinabove. So we find ourselves in agreement with the stand of the Department that the assessee is the fulcrum of the entire Khandhar group, inclusive of Eshita Dye Chem. (P) Ltd., and he was generally both in administrative and financial c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. We have already mentioned that no seizure of assets is involved in the present case and only a deposition taken under s. 132(4) from a person who is in control of the affairs of the premises and so we are of the view that this case is also distinguishable. Next we may refer to the decision of the apex Court in the case of ITO vs. Seth Bros. (supra). In this case, during the execution of a search warrant on Seth Bros. the books of account relating to other concerns in which the partners of Seth Bros., were interested were seized and this action was upheld by the apex Court. The relevant portion of the headnote of this decision reads as follows : Where a warrant is issued in relation to a firm, the officer authorised thereunder is not restricted to searching for and taking possession of only those books of account and other documents which directly relate to the business carried on by the partners in the name of the firm. The books of account and other documents in respect of other businesses carried on by the partners would certainly be relevant because they would tend to show interrelation between the dealings and supply materials having a bearing on the case of evasion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have no option but to ignore this contention which is advanced only in the written submissions and the written submissions were not supposed to go beyond the arguments taken in the course of the hearing as per the caution indicated by the Bench in the course of the hearing itself. At any rate, the learned counsel for the assessee himself has admitted at p. 35 of the said APB (Vol. IV) that as per the Panchnama dt. 20th Dec., 1991, Shri Arvind Kumar, ADIT (Inv.), Unit III(1), was also an authorised officer and there is no reason to think that he was not the authorised officer in the search warrant issued in the case of Eshita Dye Chem. (P) Ltd. in respect of 208-210, Parshva Chambers. The learned counsel for the assessee has also mentioned that the term possession used in s. 132(4) refers to physical possession and not deemed or constructive possession and it cannot be said that the assessee was in physical possession of the list marked as Annexure A-3. In this context, reliance is placed upon the decision of the apex Court in the case of CIT vs. Tarsem Kumar (1986) 58 CTR (SC) 129 : (1986) 161 ITR 505 (SC). This is a case where certain monies were in the custody of the custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs conducted on 18th Dec., 1991, there would normally have been an interrogation of the assessee on the said paper but there is no such indication on this matter in the deposition taken from the assessee on 18th Dec., 1991. The assessee was interrogated only on 20th Dec., 1991 when only the cabin of the assessee and the computer room were searched. The contention of the learned counsel for the assessee before us is that the said paper was seized from the table of a typist. It is not normal to assume that a typist was accommodated in a computer room. It was not the contention of the learned counsel for the assessee before us that it was seized from the computer room during the search on 20th Dec., 1991. So we are of the view that the probabilities are against the assessee even though, as we have already mentioned, no firm conclusion against the assessee can be drawn that it was not seized either from the computer room or from the table of the typist placed in the computer room during the search on 20th Dec., 1991 and not from the cabin of the assessee which was also searched on that day. But the Tribunal is entitled to go by probabilities in judging an issue in respect of which ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s searched were held to be proper evidence for conviction of the owner of the house under s. 63 of the United Provisions Excise Act, 1910. They also referred to the decision of the Privy Council in Kurma vs. Queen (1955) AC 197, at p 526 of the Report wherein it has been held as follows : The test to be applied, both in civil and in criminal cases, in considering whether evidence is admissible is whether it is relevant to the matters in issue. If it is admissible and the Court is not concerned with how it was obtained. In Smt. Kusum Lata Singhal vs. CIT (1990) 86 CTR (SC) 173 : (1990) 185 ITR 56 (SC), it was held that irrespective of the validity of the proceedings, the evidence of testimony cannot be wiped out and does not become non-existent. In CIT vs. Dr. Nandlal Tahiliani (1988) 172 ITR 627 (SC), this proposition has been reiterated. In this case, the Allahabad High Court held that the authorisation was not proper as it was given on the basis of a mere rumour against the assessee. However, on a special writ petition filed by the Department against the judgment of the Hon'ble Allahabad High Court, the apex Court held that as the articles and money seized had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regarding the correct account-holders of 110 banks accounts unless he was in control of all those accounts, as admitted by the assessee himself in the course of his deposition. It is of course true that no supporting evidence like cheque books or pay-in-slips were located in respect of these 110 bank accounts, but such material was available in the premises of his brother and it means that the members of the group are not unfamiliar with the practice of putting their own funds into benami accounts. It is also to be noted that the assessee admitted to be looking after the finances of the entire group. Simply because supporting evidence in respect of the 110 bank accounts were not located during the search, it does not follow that the evidentiary value of the admission of the assessee contained in the statement dt. 20th Dec., 1991 regarding the ownership of the funds in the 110 bank accounts in question is in anyway vitiated. 34. Regarding the contention of the learned counsel for the assessee that the presumption contained in s. 132(4A) is restricted to the proceedings under s. 132(5) and is not available in the assessment proceedings, we are of the view that this contention do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e funds lying in the 110 bank accounts in question in the hands of the assessee in spite of the latter's subsequent retraction solely on the basis of the admission contained in the statement recorded from the assessee on 20th Dec., 1991. For answering this question, it is necessary to consider as to what was the stand taken by the assessee before the AO. The AO repeatedly asked the assessee to offer the undisclosed amounts lying in the said 110 bank accounts on the basis of his admission contained in the deposition dt. 20th Dec., 1991. In the face of the assessee's failure to disclose such amount and in view of his subsequent retraction, the AO asked the assessee to produce certain details regarding those parties, and as a specimen, his letter dt. 4th March, 1994 figuring in p. 209 of the DPB may be seen, which reads as follows: Sir, Sub. : ' IT Assessment for asst. yr. 1991-92 Please refer to this office letter No. AO.CC.14/1993-94, dt. 17th Feb., 1994, you have not furnished the details as asked for. You are requested to furnish the details as called for within three days of the receipt of this letter failing which it will be taken that you are not inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statement under s. 132(4) of the IT Act recorded from me on 18th Dec., 1991, a copy of the same has not been furnished to me so far. As the details of the statement given on 18th Dec., 1991, are not available with me, I am unable to recollect what I have stated. I am separately applying to you for a copy of the same. On receiving a copy of the statement, dt. 18th Dec., 1991, I shall be in a position to answer your query with reference to that statement, dt. 18th Dec., 1991. Regarding s. 132(4A) of the IT Act, mentioned in your above letter I am to state that no list of bank accounts was found in the course of search under s. 132 of the IT Act, in my possession or control. In my case, there was search under s. 132 of the IT Act only at my residence in Matunga, Bombay on 18th Dec., 1991. There is, therefore, no question of invoking the presumptions available under s. 132(4A) of the IT Act in my case. Apart from this I also state that the presumptions under s. 132(4A) of the IT Act are available only for the purpose of passing an order under s. 132(5) of the IT Act. Such presumptions are not available while making an IT assessment under s. 143(3) of the IT Act. I understa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Annexure A-3 in their books and for income-tax purposes. When a contention like that was taken before us we had to obtain the particulars of such concerns with their addresses and their income-tax position, i.e., as to where they are assessed and upto what assessment year returns had been filed, etc. These particulars furnished by the assessee before us were not made available before the AO. Further, mere production of such details is not enough. The correctness of such details has to be verified. To our mind, it is quite clear that it is not sufficient if an assessment has been make on a particular party to hold that that party is genuine. It is common knowledge that in all cases of benami holdings, assessments are got framed in the normal course. It is only when a search is conducted and when incriminating material is found during the search that it becomes evident that wrong assessments had been made on wrong parties and at that stage nothing prohibits the Department from making the correct assessment in the hands of the correct party in view of the decision of the apex Court in the case of ITO vs. Ch. Atchaiah (supra) relied on by the learned Departmental Representative. Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence, such as the assessments framed on the concerns to whom the 110 accounts allegedly relate and the genuineness of such concerns. 36. Rule 29 of the Appellate Tribunal Rules, 1963, reads as follows : The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders for any other substantial cause, or if the IT authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. 37. In the circumstances narrated above, the Tribunal required from the assessee the particulars of the concerns figuring in Annexure A-3 and the income-tax position of those concerns. To judge the correctness of those particulars, it required the material furnished by the learned Departmental Representative by way of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant particulars at that stage, and so the AO could not have verified the correctness of the retraction in the light of any other evidence. If now the additional evidence sought to be filed by the Department is not admitted, it would mean that the retraction has to be accepted simply on the basis of the unilateral statement of the assessee. There is no way of judging whether the retraction is simply self-serving or not if the additional evidence sought to be filed by the Revenue before us is not admitted. We find it necessary to admit this additional evidence sought to be filed by the Revenue to enable the AO to examine, verify and judge the correctness of the retraction in the face of the earlier admission regarding the ownership of the 110 bank accounts in question and the other surrounding circumstances relating to the seizure of Annexure A-3. Even the decision of the jurisdictional High Court in the case of Velji Deoraj Co. vs. CIT (supra), relied on by the learned counsel for the assessee, supports our view because it holds that while the parties to the dispute have no right to produce additional evidence at the appellate stage, it holds that the admission is solely on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lishing a case, the former is fixed as a question of law on the basis of the pleadings and is unchanged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence, i.e., oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumptions of law or fact. The above position about a presumption of law finds a place in s. 103 of the Indian Evidence Act, 1872, which reads as follows : The burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that proof of that shall lie on any particular person. [Emphasis, italicised in print, supplied] In Raghavamma vs. Chennamma AIR 94 SC 136, the apex Court observed that there is an essential distinction between burden of proof and onus of proof and that burden of proof lies upon the person who has to prove a fact and it never shifts, but the onus of proof shifts and that such a shift of onus is a contin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee clearly admitted that the 110 bank accounts related to him and he also volunteered to disclose the maximum balances figuring in these accounts. Subsequently, the assessee retracted from this position. In the circumstances, the onus of proving the correctness of the retraction, according to us, lies clearly on the assessee. For this purpose, he is entitled to produce the parties before the AO for his examination. He is also entitled to produce all relevant particulars like their income-tax assessments. In other words, it is for the assessee to prove the correctness of his retraction. The assessee not only gave the particulars of the concerns to which the 110 bank accounts related but also admitted that the funds lying in those accounts belonged to him. There is also extraneous evidence that there is a flow of funds between these accounts and M/s Suman Motels Ltd. and other family concerns. So, the AO will be within his rights to call for the said parties to whom the accounts are alleged to relate and examine them and verify their genuineness in the light of their income-tax numbers and other evidence. This exercise has not been done by the AO evidently because no particulars we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where and such peak should be brought to tax after reducing the peak already brought to tax, if any, in the earlier year. As already mentioned, it is for the assessee to adduce evidence to the satisfaction of the AO that the said 110 bank accounts figuring in Annexure A-3 do not relate to him. The assessee should also work out the datewise balances and cooperate with the AO in the working out of the peak with reference to the relevant bank accounts. If he is unable to produce any party because of the non-cooperation on the part of the party in question, he is free to request the AO to exercise his powers of summons and enforce his attendance. The AO, in the absence of any such evidence to his satisfaction, is free to draw an adverse inference in respect of any particular bank account or all the banks accounts in question relying on the admission contained in the statement dt. 20th Dec., 1991. After ascertaining such bank accounts, which according to the AO, are owned by the assessee in benami names, he should work out the peak as per our remarks made earlier. 38.1. We may point out that we have to admit the additional grounds raised by the assessee in this appeal because they re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the assessee has also raised an argument that the interest, even if it is to be levied, has to be levied only with reference to the returned income and not with reference to the assessed income. In support of this proposition, the learned counsel for the assessee has relied on the decision of the Hon'ble Patna High Court in the case of Ranchi Club Ltd. vs. CIT (supra). Even though this decision, prima facie, appears to support the stand of the learned counsel for the assessee, on a close look we are of the view that this decision is not applicable in a case where there is a delay in the filing of the return. This is evident from the following remarks of the Hon'ble High Court figuring at pp. 77 78 of the Report : Where the assessee fails to file the return of income either under s. 139(1) or (4) or s. 142(1), pursuant to the notice issued thereunder, or files the same after the due date, in terms of s. 234A he is no doubt liable to pay interest. He is also liable to pay interest if he commits any default in payment of advance tax under the provisions of s. 234B. In the present case, it is not denied that there has been a delay in the filling of the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year, the assessee had taken loan from Rs. M/s. Indian Carrier Freight 1,70,000 M/s. Kapilesh Corporation 4,00,000 Vide letter dt. 4th Nov., 1993, the assessee was asked to give the latest residential and office address which he did not give. Vide letter dt. 10th March, 1994, it was intimated to the assessee. He was requested to produce the parties along with the books but the assessee did not produce the parties. It is to be noted that at no stage of assessment proceedings, the assessee expressed his inability in producing the parties. The two names appear in the list A-3. The examination of the two parties becomes more important in view of the statement of Shri S.M. Khandhar himself recorded on oath under s. 132(4) on 20th Dec., 1991. Thus the assessee fails to prove the genuineness of the loan taken by him, the addition of ₹ 5,70,000 is made under s. 68 of the IT Act as unexplained cash credits. The CIT(A) did not differ from any of the above findings of the AO but he deleted the addition with the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk accounts. There is clearly an onus under s. 68 of the IT Act on the assessee to prove the loan figuring in his books of account. To our mind, the assessee could not have simply rested with the fact that the amounts were received by cheques, particularly when the accounts relating to the creditors were found under the control of the assessee and the assessee has, in fact, admitted that the bank account were owned by him and operated by him in benami names, in his statement dt. 20th Dec., 1991 referred to hereinabove. If the assessee had any difficulty in producing the parties because of their non-cooperation, he should at least have requested the AO to exercise his powers of summons to enforce their attendance, which was not done. In the circumstances, we are of the view that the assessee has not discharged the onus lying on him under s. 68 of proving the credits and we are also of the view that the AO was justified in treating them as unproved credits, in view of the admission contained in the statement of the assessee dt. 20th Dec., 1991. So we set aside the order of the CIT(A) on this issue and restore the addition of ₹ 5,70,000. This is, however, subject to the same add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk also certified that there was also no account in the name of Shri Bhupendra Chheda with that bank. A copy of this certificate was also stated to have been filed by Shri Mahendra P. Shah before the AC. In spite of the denial made by the parties concerned that no such advance of ₹ 20,00,000 was made by me in the year ended 31st March, 1991 to Shri Bhupendra Chheda, the AC has chosen to make this addition ignoring the evidence. I respect the CIT(A) to call for the following papers which were collected by the AC which clearly shows that the transaction did not materialise : (i) The slip of paper seized at the time of search. (ii) The letter filed by Shri Bhupendra Chheda. (iii) The letter filed by Shri Mahendra P. Shah. (iv) The certificate issued by the United Western Bank Ltd. On this point, I rely on the decision of the Bangalore Bench of the Tribunal in the case of Addl. ITO vs. T. Mudduveerappa Sons reported at 45 ITD 12. In giving this decision, the Tribunal relied on the decision of the Allahabad High Court in the case of Pushkar Narain Sarraf vs. CIT reported at (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (All) and ITO vs. Mohan Lal Vig r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial evidence in support of his premises that the money did, in fact, pass hands in this case. He commented as follows, which appears at p. 6 of his order : The AO has nothing to say about how and in what manner the loan can be said to have been advanced; or for that matter during which time period it can be said to have been advanced. The appellant has rightly pointed out that at no point of time in any of his statements, he had admitted having advanced this loan to Shri Bhupen Chheda. On the contrary, he has specifically denied having received any repayment money which fact is cited as conclusive proof that the loan was never advanced even though it might have been stipulated at one point of time as evidenced by the seized letter. It is also submitted before me by the appellant's Authorised Representative that'merely fixing the repayment schedule of a stipulated loan does not go to prove that the transaction has actually taken place. Further, it is argued that any loan given would also be expected to carry interest and the document seized does not mention the same. 54. The learned Departmental Representative argued that even if all the parties had denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Sec. 69 is a deeming provision and should therefore be strictly construed. 9. Addition on the basis of this paper was made under s. 69 of the IT Act. Under s. 69 the onus of establishing that the assessee actually made the investment lies on the Department. 10. Even assuming that the loan of ₹ 20 lacs was advanced by the assessee, as the date on which the advance was made is not available on the paper seized, no addition can be made in the asst. yr. 1991-92. 56. We are of the view that the above contentions of the learned counsel for the assessee have to be rejected. It is immaterial, as contended by the learned Departmental Representative, whether the document was seized from the assessee or from M/s Eshita Dye Chem. (P) Ltd. we have already held that the assessee was in full control of the affairs of M/s Eshita Dye Chem. (P) Ltd. in the context of the assessee's appeal discussed hereinabove. The document was put to the assessee and he did not deny in his statement dt. 18th Dec., 1991 referred to by us hereinabove that the document related to him. Nor did he deny his transaction with Shri Bhupen Chedda. It is also immaterial that the document is not in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther confirmed by the replies given by the assessee to Question Nos. 20 and 21 in his deposition dt. 18th Dec., 1991, which as already mentioned, we have reproduced at p. 16 of this order. In his reply, the assessee had only mentioned that he had not reflected the amount receivable from Shri Bhupen Chedda in his books because it was not actually received. He did not deny that the amount had ever been advanced by him. If that had really been the position, he would simply have said that the transaction does not figure in his books, simply because it never took place. The reply given by him is quite far from the position taken by the assessee during the proceedings before the CIT(A) and before us. Now that leaves us the question of the year in which the amount can be brought to tax. The document is dt. 22nd Jan., 1991, and so falls during the year of account relevant for the asst. yr. 1991-92 and hence we are of the view that the AO was justified in holding that the amount of advance is assessable in the asst. yr. 1991-92 under the provisions of s. 69 of the IT Act. We are also of the view that the CIT(A) was wrong in observing that the AO had not discharged the onus of proving that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
