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TMI Blog2017 (12) TMI 1470X X X X Extracts X X X X X X X X Extracts X X X X ..... ny addition, if circumstances so arise, the Assessing Officer shall grant opportunity of hearing to the assessee, in accordance with law. Hence, the impugned order is set aside and appeals of assessee are allowed in principle, subject to the aforesaid directions. Alternate plea of allowing benefit of telescopy - In case the Assessing Officer during re-examination of seized material comes across any cash transaction recorded in the name of assessee, as has been specified above, the issue of telescopy may arise. In that eventuality, the alternate plea of the assessee would not be tenable as the date on which cash ₹ 40 Lacs is seized is subsequent in time vis-a-vis the time of investment. Moreover, the assessee has already offered ₹ 40 lacs cash seized in the names of his various concerns, now adjusting the same against cash transactions with Soni Group, if any, would not arise. - ITA Nos. 1008 to 1012, 1334 And 1335/PUN/2011 - - - Dated:- 8-12-2017 - SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Neelesh Khandelwal For The Revenue : Smt. Nirupama Kotru, CIT ORDER PER BENCH These bunch of seven appeals have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade u/s. 143(3) of the Act. The assessee made declaration of the cash seized in the following manner: Assessment year Nanchand Co. Swati Automobiles Danendrakumar Co Total 1998-99 3,10,000 30,000 3,10,000 6,50,000 1999-00 3,10,000 30,000 3,10,000 6,50,000 2000-01 3,10,000 30,000 3,10,000 6,50,000 2001-02 3,10,000 30,000 3,10,000 6,50,000 2002-03 3,10,000 30,000 3,10,000 6,50,000 2003-04 3,10,000 30,000 3,10,000 6,50,000 2004-05 40,000 20,000 40,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in various assessment years starting from 1998-99 to 2004-05 in the name of three concern i.e. M/s. Nanchand Company, M/s. Swati Automobiles and M/s. Danendrakumar Company. During search, the Department also found jewellery worth ₹ 7,48,867/-. The said jewellery was not seized. The 2004-05 - 17,91,000 Total 71,00,000 87,39,000 Revenue on the basis of some documents and entries in the books of Soni seized during search on Soni Group is trying to link that the assessee is engaged in money lending business and had advanced unaccounted cash loans to Soni Group. The ld. AR submitted that document seized from the premises of Shriram M. Soni does not mention the name of assessee. In the documents seized, there are certain names such as Nanchandani , Namchandani and Namchand Bhai . The allegation of Department is that aforesaid names have been used by Soni to represent the assessee in its book. The ld. AR submitted that the assessee is not engaged in any business transactions with Shriram M. Soni. Therefore, there is no question of advancing cash loans to Shriram M. Soni. The ld. AR further submitted that assessee has some business transactions with Jugalkishor Soni, broth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions made by the DR during the course of hearing before ITAT it has been an accepted fact that no promissory notes has been found in respect of the appellant. None of the undated cheques found belong to the appellant. 4. Distorted/ Abbreviated names : 4.1 . Printed ledger extracts has been found from the premises of Shri Sriram Soni wherein the transactions pertaining to Investors/borrowers are reflected. As per the AO the said transactions include the cheque transactions as well as the cash transactions. 4.2. It has been submitted by the AR that the names appearing in the said ledger extracts do not belong to the appellant. 4.3. The name of the appellant is Nanchand Bhogilal Shah whereas the names appearing in the ledger extracts are Nanchandani , Namchandani , Nanchand Bhai , etc. 5. Statement of Shri S.W. Ratnakar (Accountant of Shri Sriram Soni) 5.1. Shri S W Ratnakar, while giving his statement during the search proceedings, stated that Shri Nanchand Bhogilal Shah is one of the main investors with Soni concerns. It is an admitted fact that the appellant has invested amounts in cheques with Jugalkishore Soni. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other of Shri Sriram Soni). But the said transactions are in cheque only and no cash transactions have been entered into by him. 6 .3. During the course of hearing it was submitted that appellant had no connection with Shri Sriram Soni, though he had entered into few cheque transactions with Shri Jugalkishore Soni. It was also submitted that the transactions entered into with Shri Jugalkishore Soni were completely separate transactions on his personal account which had no connection with Shri Sriram Soni by any means. 6.4. During the course of hearing, the Ld DR had stated that appellant denied the cash transactions appearing in the ledger extracts of Shri Soni and accepted the cheque transactions. This conclusion of DR was arrived at on the perusal of reply of appellant to question no. 18 of the statement. It is submitted that on perusal of the ledger extracts it can be observed that there are no cheque transactions in the said ledger extracts. And what the appellant meant to state in the answer was that he has done only cheque transactions with the Soni Group. 6.5 The department has wrongly relied on the paper of Shri Sriram Soni to make additions. 6.6 Als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee as the person who has advanced loan to him nor gave the identity, genuineness or credit worthiness of the loan creditors. 9.1.3. Para 6, page 9 of the order refers to the submission by the assessee categorically stating that he is not the same person as appearing in the seized documents. The assessee also submitted that no promissory note or security in the name of the assessee was found from the premises of Shri Soni. Also, no confirmation or any other document was found from the premises of Mr. Soni so as to confirm that the name appearing in the seized document in fact belonged to the assessee. 9.1.4. The distorted/abbreviated names referred to by the department in this case were: Jagusheth Lati (pg 4,5,11, 13 of PB), J.R. Lati , Jagannath Lahoti (in Hindi at pg 88 of PB), Jagannathji Lahoti (In Hindi at pg 98 of PB), J Lahotiji (in Hindi at pg 111 of PB) 9.1.5. Para 6.1, page 9 of the order refers to a judgment given by Pune Tribunal in case of ITO Vs Ashok Keshvlal Oswal (ITA no 307/pn/2012) for AY 2001-02 wherein similar issue was under consideration and the addition made was deleted. 9.1.6. Para 8.2, page 12 of the order cites concl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rashmi G (in Hindi at pg 90, 98, 103, 105 of PB), Rashmi Gandhiji Kejals (in Hindi at pg 88 of PB), kejals Ushicover or Kejals Rashmi Gandhi (in Hindi at pg 87 of PB), Kajals Rashmi (pg 4 of PB) 9.5 Nandkishor Hiralal Birla HUF Vs. ITO (ITA 53/pun/2011) (ITAT Pune) 9.5.1. This case, with exactly similar set of facts including distorted names, was allowed completely in favour of assessee relying on the decision of Shri Ashok Keshvlal Oswal Vs ITO (ITA no. 357/PN/2012) (ITAT Pune). 9.5.2. The distorted / abbreviated names referred to by the department in this case were: Nandusheth Birla (in Hindi at pg 92, 111 of PB), BIRA NK (pg 91,93 of PB), Bira H.NANDK (pg 2, 3, 6, 7, 8 of PB), Birla Nandusheth (in Hindi at pg 81,91,93 of PB). Ground No. 3 : Alternate claim for telescopic effect of the undisclosed income found and offered. 10. Telescopic Effect: 10.1. Cash of ₹ 40 lakhs was found and seized from the premises of the appellant during the course of search proceedings. 10.2. The said amount was offered as income of the appellant and sister concerns as undisclosed income from the business activity carried on by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper book. The ld. D.R pointed that in response to question No. 10, Ratnakar admitted that major cash money lender/investor who use to lend/invest money to Soni Brothers include Shri Nanchand Bhogilal Shah. The ld. DR pointed that a diary seized during survey at the premises of Shriram M. Soni was written by Ratnakar. Ratnakar decoded the entries in diary. Therefore, the statement of Ratnakar admitting that assessee was one of the investor/money lender to Soni Group is credible piece of evidence and thus, cannot be ignored. The ld. DR further submitted that Nanchand in his statement recorded u/s.131(1)(b) on 04.12.2003, in reply to question No. 17, admitted that he had business transactions with Jugalkishor Soni. Shriram Hiralal Soni and Jugalkishor Soni, both are brother and are engaged in common business. The ld. DR to further strengthen her contentions and to controvert the submissions made on behalf of assessee, filed written submissions. The written submissions filed by ld. DR are reproduced herein below: Search Seizure action under section 132 of the Income Tax Act was carried out by the Investigation with, Pune on the residential premises as well as on the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... INENT TO HIGHLIGHT THAT IN BUNDLE NO 98 99 the name Nanchandani Nandchand is used. But the name of borrowers amounts are same which are mentioned in documents in bundle 100. Few examples to highlight same are Page No. 123 of paper book of Assessee 1) Page 67 of Bundle No. 98 Ledger of Nandchandani- Skyline account is detailed- Same borrowers and amount mentioned under name NANDCHAND BHAI in Bundle No.100 2) Page No 126 Paper Book of Assessee Ledger Account of Nanchandani This is interest account of Nanchandani which reveals borrowers as Bohra Transport, Skyline, Vinod Jain- same borrowers amount mentioned under name Nanchand Bhai is Bundle no.100 The AO on Page 9, 10, 11 of his order has extracted ledger account of Nandchadani Nanchand to highlight that the name of borrowers are same and amount is same which is mentioned under name Nanchand Bhai (N/3) in Bundle 100. THIS HOLISTIC COMPARISON OF SPECIFIC ENTRIES IN BUNDLE NO. 98, 99,100 CLEARLY WITHOUT ANY DOUBT ESTABLISHED THAT THESE ENTRIES BELONG TO ONE PERSON FOR WHOM NAMES NANCHANDANI, NANCHAND, NANCHAND BHAI, OR CODE N/3 HAS BEEN USED INTER CHANGEBLY. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement submitted vide letter dated 30.12.2013 by Department to the Honble Tribunal). In his statement he has stated that the investors used to invest their money borrowers used to take money as loan through Soni Brothers. In Q No.3 of statement he states that whenever certain cash is to be received by Soni Brothers, he is keeping the accounts similarly he maintains account of all cash distributed. In Q. 5 of statement he states that he maintained the daily cash transactions on papers paper was then handed over to shri Shriram H. Soni. In Q. 10 of statement he states that Sh. Nanchand Bhogilal Shah is one of the investors. The analysis of statement reveals that Sh. Ratankar is in full knowledge of modus operandi and details of investors borrowers and in fact he admits he made notings on paper (Which letter has supposedly been incorporated in seized ledger no. 98,99,100 from Soni Brothers) He has identified only one NANDCHAND BHOGILAL SHAH as investors not many persons having names like Nanchand Bhai, Nanchandani, Nandchand etc. The learned AR during course of hearing had vehemently said that this ledger is not written by She Ratankar h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous decisions and documents on which rival sides have placed reliance. The assessee in all appeals has assailed the additions made on account of unaccounted interest income. In appeals for assessment years 2000-01 to 2002-03, the assessee has also impugned addition on account of unexplained investment in money lending business. 8. During search operation carried out at the premises of assessee except cash of ₹ 40,00,000/-, no other document was found or seized. The assessee has offered ₹ 40,00,000/- to tax in the names of his three concerns in a period spread over assessment year 1998-99 to 2004-05. The Department has accepted the same. Over and above the cash seized, the Revenue has made impugned additions in the hands of assessee relying on certain documents found and seized during the course of search in the case of Soni group. On the basis of some entries in the books of Soni group, the Department has drawn nexus between the money lending activities carried on by Soni group and the assessee. The contention of ld. DR is that there are certain entries in the ledger of Shriram H. Soni in the names of Nanchandani , Namchandani and Nanchandbhai . All these are pse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself admits that the assessee has specifically denied. Law is well settled that burden is on the Revenue to establish the identity if any person is to be charged under the Act. The action of the AO examining the different persons having the same name prima-facie establishes that Assessing Officer himself is not sure that the assessee is the same person whose name was found noted in the seized document. Moreover, nothing is on record to show that Shriram H.Soni has stated about the assessee that whatever the notings found were in respect of the assessee. No corroborative material is found. In our opinion, the Ld.CIT(A) has rightly deleted the entire addition as there is no evidence against the assessee. We find no merit in the appeal filed by the Revenue. Accordingly, the same is dismissed. 11. Similarly the Tribunal in the case of Jagannath Eknath Lahoti (HUF) Vs. ITO (supra) deleted the additions in the hands of aforesaid assessee, where the additions were made on the basis of names Jagannath Lahoti and Jaguseth Lati appearing in the diaries/papers seized from the premises of Shriram H. Soni. The relevant extract of the findings of Tribunal in the case of Jagannath Ek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rroborative evidences to link the parties with Soni group. In the present case as well, we find that no document such as promissory note, signed blank cheque, property document in the form of security, etc were found in name of assessee during course of search either at the premises of Soni group or in the premises of assessee. 13. The ledger entries in the name of Nanchandani , Namchandani and Nanchandbhai in the books of Soni group, may give arise to suspicion that these pseudonyms refer to assessee. However, it is a well settled law that addition cannot be made merely on suspicion howsoever strong it may be, unless supported by corroborative evidence. In the present case, there is no document on record that would show that Nanchandani , Namchandani and Nanchandbhai and the assessee are one and the same person. The Tribunal in the case of M/s. Pooja Bhatt Vs. Assistant Commissioner of Income Tax reported as 73 ITD 205 (Mumbai) has held that : ........... There may be a strong suspicion of payment of on-money in respect of the property deals but no addition can be made on the basis of mere suspicion. It is established principle of law that suspicion however s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR does not support the cause of Department and hence, no reliance can be placed on them. 16. In view of the facts of the case and various decisions discussed above, we are of considered view that no addition can be made in the hands of assessee in absence of any corroborative evidence to link some suspicious entries found in the books of third party. As has been pointed earlier that mere recording of names closely resembling to the name of assessee in the books of Soni group does not give rise to presumption that the said names are pseudonym/coded names of assessee unless live connection is drawn by way of supporting evidence. Here, we would like to mention that before absolving the assessee completely from the additions made on basis of alleged cash transactions, we direct the Assessing Officer to re-examine the seized material. If the Assessing Officer finds that any transaction in cash is recorded in the name of assessee i.e. Nanchand B Shah or Nanchand Bhogilal Shah, the Assessing Officer may make addition of the same, in accordance with law. Before making any addition, if circumstances so arise, the Assessing Officer shall grant opportunity of hearing to the assessee, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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