9911796707
TMI Blog2015 (3) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... te orders dated 25-03-2011 and 18-11-2011 of the CIT(A) Nashik relating to Assessment Year 2002-03. For the sake of convenience, these appeals were heard together and are being disposed of by this common order. ITA No. 951/PN/2010 (By Assessee-Shri Ratanlal C. Bafna) & ITA No.1050/PN/2010 (By Revenue) (A.Y. 2002-03) : 2. Facts of the case, in brief, are that the assessee is an individual and is engaged in the business of trading in Gold and Silver ornaments and manufacturing of silver ornaments. He filed his original return of income for the impugned assessment year on 28-10-2002 declaring total income of Rs. 37,08,583/- and agricultural income of Rs. 2,53,278/-. 3. This case was reopened by the Assessing Officer u/s.147 by issue of notice u/s.148 of the I.T. Act on 17-03-2009. The assessee in response to the above statutory notice filed a written submission stating to treat the return of income filed by him on 28-10-2002 as return in response to notice u/s.148. The request of the assessee to supply the reasons for issue of notice u/s.148 was accepted by the Assessing Officer by providing reasons for reopening of the case. 4. A search and seizure action u/s.132 of the I.T. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book seized during the course of search action u/s.132. It was replied by Shri Devichand Motilal Chhoriya that all the names mentioned in these books were imaginary names. He further stated that the money received in the various names is income of their group concern on which they would be paying taxes from F.Y. 2002-03 to 2007-08 . 6. During the course of assessment proceedings, the assessee requested for inspection of the seized documents which was allowed by the Assessing Officer. The Assessing Officer specifically asked the assessee as to why on the basis of seized documents addition of Rs. 2.91 crores should not be made to his income on account of unexplained loan given during F.Y. 2001-02. The assessee was also given the working of peak of loan entries, on the basis of which peak amount was worked out at Rs. 2.91 crores. The assessee was also asked to explain as to why the addition of Rs. 82,81,598/- should not be made to his income on account of interest received during the year under consideration as per the seized documents. 7. The assessee in its reply drew the attention of the Assessing Officer to the statement given by Shri Devichand Motilal Chhoriya wherein it has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee, is associated with Chhoriya group as a member of an AOP by name "D.D. Jain-AOP, Chandwad" which has developed a layout in land and sold plots. Further Shri R.C. Bafna is also associated with this group as a member of an AOP under the name of "S.D. Jain-AOP, Bhambhori". Further, the assessee is trading in gold and silver articles and there are entries in the seized cash book showing gold and silver articles purchased by Mr. Chhoriya from the assessee. Therefore, the Assessing Officer held that when these entries of purchase of gold and silver from Shri R.C. Bafna are correct, therefore, the loan and interest entries in which also the name of Shri R.C. Bafna is appearing cannot be treated as the entries in imaginary name. 9. So far as the argument of the assessee that Shri Devichand Motilal Chhoriya in his statement recorded has himself admitted that the said transactions are belonging to his all firms and therefore the amount cannot be added in the hands of the assessee is concerned, the Assessing Officer held that the assessment is finalised not only on the basis of statement of Shri Devichand Motilal Chhoriya but also on the basis of the various documents seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e argument of the assessee that the figure of Rs. 2,80,00,000/- was also not written in full value and it was written as 280 which was wrongly inferred as Rs. 2,80,00,000/-, the Assessing Officer held that at the time of search action it was admitted by Shri Chhoriya that the amounts are to be read in lakhs that is 280 means Rs. 280 lakhs, i.e. Rs. 2,80,00,000/-. The various other entries found in the seized chart also corroborate the same thing. He accordingly rejected the contention of the assessee and held that the assessee had given advances to Chhoriya group which the assessee failed to disclose in his return of income. Since the assessee had given loans, interest on the same will also has to be taxed in assessee's hands. From the various entries found in the seized documents, the Assessing Officer noted that there is a specific trend of giving certain amount every month right from April 2001 to March 2002 by Chhoriya group to Shri R.C. Bafna. This amount is Rs. 7 to Rs. 7.5 lakhs per month. He noted that though for certain amounts the narration is clearly mentioned as interest against the entire amount of Rs. 7 to Rs. 7.5 lakhs, for certain months narration is given as intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onate labour charges to the net increase in the silver of 385.13 kgs. After giving credit to the stock of bullion and old ornaments sold by customers. Since the labour charges are 82 to 225/10 gms the Assessing Officer took the average rate of 2000/kgs and made addition of Rs. 77,026/- to the total income of the assessee on account of valuation of closing stock. The Assessing Officer also made addition of Rs. 10,000/- on estimate basis out of the office expenses and postages in absence of supporting vouchers. 14. Before CIT(A) the assessee challenged the validity of the reopening of the assessment on the ground that the case of assessee is entirely based upon the imaginary alleged papers found in the search and seizure action at the premises of Chhoriya for which separate procedure is laid down for such assessment under the provisions of section 153C which overrides the provisions of section 147 r.w.s. 148. It was submitted that when there is no consistency in the approach of the Department in as much as the amount is sought to be taxed in the hands of the assessee for A.Y. 2002-03 simply because it is not covered in the period laid down for action u/s.153C for assessment, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. As regards the argument of the assessee that procedure under the provisions of section 153C of the I.T. Act should have been followed by the Assessing Officer, the Ld.CIT(A) held that the incriminating material found during the search and seizure action in the case of Chhoriya group was forwarded to the Assessing Officer having jurisdiction over the case of the assessee and the AO had decided to invoke the provisions of section 147 of the I.T. Act as there was escapement of income chargeable to tax for the A.Y. 2002-03. He held that there is no bar under the I.T. Act to take action u/s.147 of the I.T. Act in such circumstances. He further noted that the socalled objection filed by the assessee for the reassessment proceedings clearly indicates that they are not containing any specific objections as provided by the decision of Hon'ble Supreme Court in the case of G.K.N. Drive Shafts (I) Ltd., reported in 259 ITR 19. So far as the argument of the assessee that the Assessing Officer should not have resorted to the reassessment proceedings particularly when Shri Chhoriya accepted the transactions as his own and stating that the names contained in the seized documents were imaginar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments were not sufficient to make additions. vi) The documents seized during the course of the search do not contain any signature of the appellant or the borrower. vii) There was no corroborative evidence to conclude that the entries recorded in the seized documents were representing the real transactions relating to the appellant. 6.3 It is true that Shri Chhoriya himself admitted the transactions contained in the seized documents were related to him and maintained similar stand during the assessment proceeding when he was questioned u/s.131 of the Act. A perusal of the seized documents and the transactions contained therein would reveal that Shri Chhoriya clearly wrote the financial transactions with various pers.ons, including those of the appellant. The other argument of the appellant that the seized documents do not contain any of his signature or the borrower is also not acceptable as the unaccounted transactions are always carried-out based on mutual trust and faith. The seized documents contained the names of the appellant as "Ratanlal C.Bafna", "R.C.Bafna", "Ratanlalji Bafna", "Shri Ratanlal Bafna", etc. in respect of various financial transactions. It is an und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce regarding the unaccounted income of the appellant. Therefore, I have no hesitation in holding that the transactions contained in the seized documents are related to the appellant as far as mentioned against "various names" of the appellant. 6.4 The appellant made an alternative argument that the method of computing the peak credit as per Annexure B of the assessment order was incorrect. He also disputed inclusion of the amount of Rs. 2,80,00,000/- as advance made during April, 2001 while computing the peak credit. The appellant also questioned the treatment of various amounts as taxable receipts like interest, profit, etc. as per Annexure A of the assessment order. It may be mentioned here that Shri Chhoriya was maintaining a daily cash book and month-wise summary balances. The daily cash book contained date-wise details of each and every receipt & payment. On the other hand, the monthly summary balances represented the overall position at the end of the each month regarding the outstanding receipts and payments. While completing the assessment, the A.O. segregated the transactions into two categories. The A.O. considered the interest, profit, etc. as taxable receipts for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce representing the outstanding transactions. The amount of Rs. 2,80,00,000/- could have been advanced by the appellant in the earlier period and was outstanding as on 01/04/2001. The monthly summary balance for the month of March, 2001 not available on record. It is only monthly summary balance for the month of April, 2001 prepared on 01/05/2001. Thus there is a missing link between March, 2001 and April, 2001. In the absence of specific entry in the cash book during April, 2001, it is very difficult to presume that the amount was advanced by the appellant during the month of April, 2001. It is also seen from the seized documents that there are entries on the monthly summary sheets of August, 2001, September, 2001 and other months about outstanding amounts in the name of the appellant. Such amounts have not at all been considered either for income or as unaccounted advance. It is also seen from the seized cash book that an amount of Rs. 2,00,000/- as interest and Rs. 5,00,000/- as profit has been credited on 04/04/2001 indicating that there is substantial outstanding advance even before 01/04/2001. Thus, it clearly proves that the entry made on the monthly summary sheet of May, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rting vouchers were also made available before the Assessing Officer during the course of assessment proceedings in respect of the office expenses. He accordingly confirmed the disallowance of Rs. 10,000/- on estimate basis out of office expenses. 21. Aggrieved with such part relief given by the CIT(A) the assessee as well as the revenue are in appeal before us with the following grounds: Grounds by Assessee : "1] In the absence of conditions precedent for issuance of notice u/s.148 of the I.T Act, 1961, the impugned assessment order is bad in law, null, and void ab initio and without jurisdiction and hence the same may please be vacated / annulled. 2] In the facts and in the circumstances of the case and in law, both the lower authorities have erred in rejecting the sworn statement of Mr. Devichand Motilal Chhoriya recorded by the learned Assessing Officer u/s.131 of the I.T. Act 1961 on 16-12-2009, as untrue, false and misleading. It may please be held that the said statement is true and correct and consequently the various additions sustained by the learned C.I.T(A) on the basis of entries found in the documents seized from Chhoriya Group allegedly in the name of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal." Grounds by Revenue in ITA No.1050/PN/2010 : "1. On the facts and in the circumstances of the case, the CIT(A) erred in working out the revised peak after excluding the entry of loan of Rs. 2,80,00,000. The CIT(A) has failed to appreciate the facts that, the entry of loan of Rs. 2,80,00,000/- was appearing at the end of the cash book in the monthly summary sheet of May 2001 drawn on 01-05-2001 and the amount of Rs. 2,80,00,000/- was not carried forward as on 01-4- 2001. 2. On the facts and in the circumstances of the case, the CIT(A) erred in excluding so called entry of Gift of Rs. 2,26,751/- while working out peak. The CIT(A) has failed to appreciate that the amount of Rs. 2,26,751/- is a gift and not sale transaction. 3. On the facts and in the circumstances of the case, the CIT(A) erred in excluding the entries of certain transaction considered for income as per Annexure A, to the tune of Rs. 23,00,000/-. The CIT(A) has failed to appreciate the facts that, though specific word like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities in regard to assessment or penalty proceedings could not be held to be communications made in official confidence because in law those officers were not entitled to give opinions or advice in regard to judicial proceedings. He accordingly submitted that the order passed by the Assessing Officer u/s.147 of the I.T. Act at the behest of the Investigation Wing should be held as void and therefore the reassessment order passed by the Assessing Officer should be annulled. He also relied on the following decisions : 1. CIT Vs. Salekchand Agarwal reported in 300 ITR 426 (All). 2. State of Kerala Vs. K.T. Shaduli Yusuff Etc. reported in 1977 AIR 1627 (SC). 3. Rajinder Pershad Vs. Smt. Darshana Devi reported in 2001-(088)- AIR -3207-SC. 4. Kishore Samrite Vs. State of U.P. & Others - Criminal Appeal No.1406/2012 order dated 18-10-2012 (SC). 5. Addl.CIT Vs. Miss Lata Mangeshkar reported in 97 ITR 696 (Bom.) 25. The Ld. Departmental Representative on the other hand strongly objected to the admission of the additional ground. He submitted that the Investigation Wing conducts searches and seizure operations, summons different persons, records their statements and prepare app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of NTPC (Supra). However, so far as the merit of the additional ground is concerned, we proceed to adjudicate the same. As per the provisions of the I.T. Act, the Investigation Wing of the Department conducts search and seizure operations to unearth black money/unaccounted income. They examine the seized materials in details and also record statements of different persons by issue of summons. After thorough enquiry they prepare the appraisal report which is sent to the field units for making assessment of the searched person. Sometimes incriminating documents relating to non searched persons are also found in the premises of the searched person. The Assessing Officer of the searched person forwards those documents to the Assessing Officer having jurisdiction of the non searched person after recording satisfaction for escapement of income of the non-searched person. The Assessing Officers during the course of assessment proceedings may require the assistance of the Investigation Wing for supply of further material. Sometimes the Investigation Wing suomoto forwards the documents to the Assessing Officer having jurisdiction over the said person. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal. Under these circumstances, the Hon'ble High Court agreed with the view of the Tribunal that the assessment proceedings and penalty proceedings are judicial in nature and that an officer or authority upon whom jurisdiction has been conferred to make an order judicially has to act independently. He cannot act on the advice given by an outsider even though that stranger may be an authority higher in rank to him in the official hierarchy. 30. However, in the instant case, if we accept the contention of the Ld. Counsel for the assessee that the Assessing Officer has acted at the behest of the Investigation Wing, then in that case he would have made addition of Rs. 9,83,50,000/- which is as per the reasons for issue of notice u/s.148 for the A.Y. 2002-03, a copy of which is placed at page 28 of the paper book. Further, from the letter dated 10-12-2009 by the JCIT, Range-1, Jalgaon to JDIT (Investigation) Jalgaon, we find the JCIT has mentioned that peak determined by the Investigation Wing is incorrect and the peak is coming to negative for which he has requested for further material at the disposal of the Investigation Wing. Therefore it is not a case where the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch to statement given by Shri Devichand Motilal Chhoriya in response to Question No.4 wherein Shri Chhoriya in his reply had categorically stated that he has never taken any loan from Shri R.C. Bafna. In his reply to Question No.5 he had categorically stated that the entire money belongs to different firms and the names are imaginary. Therefore, when the author of the seized documents/diary himself has explained the nature of the entries and has owned up the undisclosed income as his income the Department should have accepted that explanation and no addition should have been made in the hands of the assessee. 34. Referring to the decision of Hon'ble Allahabad High Court in the case of CIT Vs. Salek Chand Agarwal reported in 300 ITR 426 the Ld. Counsel for the assessee submitted that in that case a search was conducted on the business premises of one Kaihaiyalal Om Prakash and Baldev Prasad of Muzaffarnagar in which certain books of account and other documents were seized. There were credit entries of Rs. 2,20,000 standing in the name of the respondent-assessee in the seized books. On being asked to explain the nature and the source of the investment so made with the aforesaid firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 crores. Referring to the above, he submitted that this is the loan for the period 01-01-2001 to 31- 03-2004 to be repaid over a period of 40 months @ Rs. 5 lakhs per month. The interest rate is also mentioned at 2% per month. There is also another entry of 100 lakhs taking the total loan to Rs. 3 crores, i.e., Rs. 200 lakhs +100 lakhs, i.e. Rs. 3 crores. Referring to the above entries in page 70 of the cash book for the period from 01-01-2001 to 31-03- 2001, the Ld. Counsel for the assessee submitted that this document was in possession of department, however, the department was not coming with clean hands inspite of the fact that they have the diary for the period from 01-01-2001 to 31-03-2001. The department did not produce the records despite directions by the Tribunal. The assessee obtained the same by applying under the RTI Act. 37. Referring to paper book page 139 the Ld. Counsel for the assessee drew the attention of the Bench to the monthly summary as on 01-05- 2001 according to which the figure written against "Seth Saheb" is 280, i.e. 280 lakhs. This according to him tallies with the figures and calculation at page 70. 38. The Ld. Departmental Representative on the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. Persons who have deposited amounts have been mentioned in these diaries. How this deposited money has been spent has also been written in the diaries. Presently I cannot give details. However, I will furnish all information well-in-time." 39.1 Referring to above, he submitted that the author of the diary never confessed that the names are fictitious or imaginary. Therefore, the Assessing Officer was justified in making the addition on account of unexplained advances and addition on account of interest on such advances. 40. 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. In the instant case, a search and seizure action u/s.132 of the I.T. Act was conducted at the residential and office premises of the Chhoriya group of Jalgaon on 22-08-2008. During the course of such search operation certain documents as per Annexure-B item No.1 to 40 were seized which are rough cash books of the Chhoriya group. The said diaries contain certain entries according to which Shri Ratanlal C. Bafna had given cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the monthly summary sheet as on 01-05-2001. According to him, the amount of Rs. 2,80,00,000/- could have been advanced by the assessee in the earlier period and was outstanding as on 01-04-2001. He observed that the monthly summary balance in the month of March 2001 is not available on record. It is only monthly summary balance for the month of April 2001 prepared on 01-05-2001. Thus, there is a missing link between March 2001 and April 2001. Therefore, he held that in the absence of any specific entry in the cash book during April 2001, it is very difficult to presume that the amount was advanced by the assessee during the month of April 2001. He accordingly deleted the amount of Rs. 2,80,00,000/-. 40.2 The Ld.CIT(A) further observed that there are certain transactions included in the peak credit/statement actually related to sale of jewellery transactions, the details of which are as under : 04/04/2001 Rs. 26,880/- 04/06/2001 Rs. 2,26,751/- 12/11/2001 Rs. 2,000/- 02/02/2002 Rs. 53,520/- Similarly, he also held that the following amounts representing interest are to be excluded while working out the peak: 22/06/2001 Rs.994/- 14/12/2000 Rs. 260/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs - 31-12-2002 30 lakhs - 31-12-2003 10 lakhs - 30-08-2004 Out of the above entry of 200 +100 the amount of 20 has been paid and the outstanding amount is 280 which tallies with the amount 280 shown in the name of Shrimanseth Saheb at page 139 of the paper book. 40.5 As regards the arguments of Ld. Counsel for the assessee that no addition is called for since the author of the document has denied to have received any advance from persons as noted in the seized document that Shri Kanhailal Chhoriya himself has admitted the transactions as related to family members of their group for which they offered to pay the taxes on the same and that Shri Devichand Motilal Chhoriya has stated the names as imaginary are concerned, we do not find any substance in the above. A perusal of the order of the CIT(A) for A.Y. 2008-09 gives the sequence of events that took place. Admittedly, the search in the instant case took place on 22-08-2008 and in their statements recorded on that day or immediately after the search no member of the Chhoriya group had ever stated that the transactions mentioned in the Annexure B1 to B40 were in fictitious names. In his statement recorded u/s.132(4) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entries in seized documents, which are diaries hand written by the searched person, having entries not only in the name of the assessee, but various other persons also and interest has been received by Sri Ratanlal C. Bafna from the Chhoriyas. Therefore, in absence of any material to prove that the amount has been owned up and offered to tax by the Chhoriyas, the same has to be taxed in the hands of Shri Ratanlal C. Bafna. Therefore, in principle, we uphold the order of the Assessing Officer as well as the CIT(A) for taxation of the unexplained investment and interest thereon in the hands of Shri Ratanlal C. Bafna. 40.7 Now coming to the quantum of addition, we find there are serious calculation mistakes and error of judgment. The assessee has filed the copy of cash book for the period from 01-01-2001 to 31-03-2001 which he has obtained from the department by filing an RTI application. As per page 70 of the said cash book there appears an entry of Rs. 200 in the name of "Srimanseth Saheb". Similarly, there is one more entry of 100 under the same name. As per the version of the department, the same has to be considered as 200 lakhs and 100 lakhs totalling 300 lakhs, i.e. 3 Cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) while computing the interest that has to be added to the total income has also thoroughly analysed the entries item-wise. After thoroughly analysing he considered certain transactions which according to him do not appear to be taxable receipts. Such transactions are without any reference to interest or profit on sale and are just financial transactions involving receipts by the assessee and cannot be considered as income for the impugned assessment year. He therefore added these loans for the purpose of working out the peak credit but did not consider the same as income. Similarly, certain transactions represented sale of jewellery which according to him cannot be said as income as such. According to him, only the profit element can be considered as taxable. He accordingly restricted such interest and other income to Rs. 62,51,754/- as against Rs. 82,81,598/- determined by the Assessing Officer. This reasoned finding given by the CIT(A) in our opinion does not suffer from any infirmity and accordingly the same is upheld. The grounds raised on this issue are accordingly dismissed. 41. In the result, the appeal filed by the assessee as well as the . ITA No.204/PN/2012 (By As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your kind honour has thoroughly verified our audited books of accounts and satisfied yourself that in no way we are having any transaction with Mr. Chhoriya group of case. Neither I have provided him any fund nor received any interest and also not sold out any gold as alleged during the assessment proceedings. It is to be noted that your kind honour has recorded the statement of Mr. Chhoriya on 1-12-2009 in earlier assessment proceedings, wherein he has categorically denied to have any transaction with me. Mr. Chhoriya has also affirm that these all names were imaginary one and offered the same as income of his group. It may not be out of place to mention here that assessment proceedings must have been initiated in Mr. Chhoriya a group of cases for the year under consideration. Thus, for the natural justice, it is absolutely necessary to ascertain what sort of treatment has been given to all transaction noted in above alleged papers in the hands of Mr. Chhoriya group of cases, by the said assessing authority, who assessed to Mr. Chhoriya. Necessary enquiries in this regards may please be conducted with the said assessing authority, as to whether Mr. Chhoriya group of case has con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oriya in his group will not absolve the assessee from explaining the true transactions relating to seized documents. According to the AO, Mr.Chhoriyas would not have written the name of the assessee without really having the transactions with assessee and summary sheets maintained by him. Therefore, such transactions particularly made and interest received on the same have to be brought to tax. As regards the contention of the assessee that cross examination of Shri Devichand M. Chhoriya should be allowed, the AO held that Shri Devichand M. Chhoriya has given the statement on 01-12-2009 u/s.131 of the I.T. Act and the statement is not against the assessee. Therefore, there is no point in cross examining Shri Devichand M. Chhoriya. As regards the contention of the assessee that no such transactions are mentioned in his audited books of account, the AO rejected the same on the ground that these financial transactions were not meant to be disclosed to the department and were secret. Therefore, neither Shri Chhoriya nor the assessee has recorded these transactions in their audited books of account. In view of the above, the AO made addition of Rs. 87,25,360/- as unexplained advances a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ably showed that accounts of business regarding receipt and payments of money during 01-04-2007 to 31-03-2008 were regularly maintained. He observed that Chhoriyas have already admitted in their statements during the search that the said books were in the hand writing of Shri Devichand M. Chhoriya. The dates for each receipts and payments are mentioned. The full names of the persons from whom the receipts were taken and to whom payments were made are available in the seized annexures. Therefore, he had no hesitation in holding that the seized documents were books of accounts kept in the regular course of business and therefore admissible for the purpose of income-tax. The contents of the seized books according to the Ld.CIT(A) are sufficient enough to take cognizance against the assessee who is shown to have advanced huge loans to Chhoriyas on interest outside his regular books of accounts. The seized papers provide complete details of the nature of transactions. The Chhoriyas have written the transactions very minutely and meticulously showing the principal amounts as well as the monthly interest payments to various lenders including the assessee. 48. So far as the contention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Chhoriyas as the business relationship of the assessee and his wife with the Chhoriyas has already been established. Further, Shri R.C. Bafna has purchased plots at Shirdi from the Chhoriyas. Transactions relating to purchase of plots has been accepted by the assessee also. According to the Ld.CIT(A) the circumstantial evidence gathered during the course of search clearly demonstrates that the assessee had made undisclosed investments with the Chhoriyas which was not reflected by him in his books of account. He accordingly held that the AO was justified in relying on the seized material while computing the income of the assessee for the impugned assessment year. The Ld.CIT(A) thoroughly examined the relevant seized documents which are scanned in the order itself and held that the entries in the scanned documents establish beyond doubt the nature of the transaction and the identities/genuineness of the persons and clearly establish that the assessee was indulging in out of books transactions with the Chhoriyas. He observed that the documents clearly establish beyond a reasonable doubt that the assessee had given huge sums to Chhoriya as loan on which he received interest @ 1.5% p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the alleged entries in the alleged seized papers in the Chhoriya Group of cases were binding upon the department particularly when the said assessments had attained finality and in the circumstances the learned CIT[A] ought to have vacated the impugned order passed by the learned Assessing Officer. 5. Mr. Devichand Chhoriya the author of the seized papers, having denied to have accepted any loans / advances from the appellant and having in an unequivocal manner admitted that the name of the appellant was written in the seized documents in a fictitious manner and further having admitted that the unaccounted money of Chhoriya Group was recorded in the seized materials in the names of fictitious persons, all the additions made by the learned CIT[A] on the basis of the impugned seized materials being patently illegal, bad in law, arbitrary, perverse and being legally unsustainable and devoid of merits the same may please be deleted. 6. The learned CIT[A] has grossly erred in drawing a conclusion that the alleged seized material seized in the cases of Chhoriya Group being meticulously maintained the same constituted books of account for which no further corroborative eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground of alleged profits earned by the appellant on alleged unrecorded sales. The addition being patently illegal, bad in law, arbitrary, perverse and being legally unsustainable and devoid of merits the same may please be deleted. 12. Since the appellant was denied the opportunity to cross examine Mr. Devichand Chhoriya the author of the seized documents, the impugned order is bad in law and hence the same may please be annulled. 13. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal". 53. The Ld. Counsel for the assessee at the outset did not press ground of appeal No.11 for which the Ld. Departmental Representative has no objection. Accordingly, ground of appeal No.11 challenging the addition of Rs. 74,404/- is dismissed as 'not pressed'. 54. The Ld. Counsel for the assessee at the outset challenged the validity of the assessment made u/s.143(3) of the I.T. Act. He submitted that since the assessment has been made on the basis of entries found in the books of account maintained by the Chhoriyas which are found during the course of search, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B item Nos. 1 to 4 were seized. These are rough cash books of the Chhoriya group which contain various entries according to which the various lenders had advanced various amounts during the impugned assessment year. The entries in the rough cash books on one hand reflected the receipt of money and simultaneously entries against which the said money was utilised was also mentioned. Meticulous details have been written in the seized diary. Entries relating to the assessee are also found in the seized diaries, which reflect that the assessee Shri Ratanlal C. Bafna had advanced various amounts during the impugned year. No books of account or other documents belonging to the assessee Shri Ratanlal C. Bafna was found from the premises of Chhoriya. 56.1 The provisions of section 153C as it stood at the relevant time read as under : "(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.CIT(A) holding such assessment u/s.147 instead of 153C as void ab-initio. However, in the instant case, no such document belonging to the assessee was found, therefore, this decision in our opinion is not applicable. 56.5 So far as the case of M/s. Kumar Company Vs. Addl.CIT and vice versa vide ITA No. 463/PN/2008 and as relied on by Ld. Counsel for the assessee is concerned, we find in that case the assessee was a land developer and builder. He had transactions with one Raut group of cases who were subjected to search u/s.132. During such search loose papers were seized from their residential premises. Shri Sandip Deo is the TDR Consultant of Raut group and he is thus connected to the assessee. During the said search operations certain loose papers and documents were found and seized which contained certain references involving the assessee firm. On the basis of the same, the AO issued a notice u/s.153C of the I.T. Act. During the assessment proceedings the assessee questioned the initiation of assessment proceedings u/s.153C. The AO rejected such contention of the assessee which were upheld by the CIT(A). On further appeal by the assessee the Tribunal held that the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment are dismissed. 58. The third issue raised by the assessee in the grounds relates to the order of the CIT(A) in confirming the addition of Rs. 20,31,360/- on account of alleged interest received on the unexplained investment and further enhancing the same by Rs. 52,99,835/-. 59. After hearing both the sides, we find the Ld.CIT(A) after thoroughly examining the nature of advances given by the assessee on which he receives of interest @1.5% per month has calculated the details of such receipt of interest including interest received on behalf of his parties and warehouse receipts. The computation of such interest as well as receivable for the impugned assessment year are as under : Sr. No. Annex/ page No Date Receipt Remark 01. B- 18/84 30/05/2007 49,500/- Interest April 02. 98 09/06/2007 91,500/- Interest others 03. 124 29/06/2007 4,95,000/- Interest May 04. B-17/04 09/07/2007 45,000/- Interest others June 05. 06 10/07/2007 19,500/- Interest others June 06. 24 26/07/2007 22,500/- Interest others June 07. 32 31/07/2007 4,95,000/- Interest June 08. 67 27/08/2007 87,000/- Interest others(July) 09. 73 31/08/2007 46,500/- Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ented undisclosed income of the third party entered in bogus names including the names of the appellant. The impugned addition of Rs. 5,45,000/- being arbitrary, perverse and legally unsustainable the same may please be deleted. 3. In the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in sustaining the following additions made by the Ld. Assessing Officer, without any basis : i. Addition of Rs. 25,751/- on account of alleged low G.P. ii. Disallowance of Rs. 6,786/- out of repairing charges iii. Disallowance of Rs. 16,697/- out of interest expenditure All the aforesaid additions being based on surmises and conjecture and being arbitrary and based on no evidence the same may please be deleted. 4. The applicant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal". 61. The assessee at the time of hearing did not press grounds of appeal No.1 & 3 for which the Ld. Departmental Representative has no objection. Accordingly, the above 2 grounds are dismissed as 'not pressed'. Ground of appeal No.4 being general in nature is dismissed. 62. S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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