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TMI Blog2017 (6) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... interest in the case of assessee on such advancement of loan, had computed the interest for the period of 12 months. In other words, case of Revenue is that the amount was invested for the full 12 months with Shri Soni, on which interest had been worked out at ₹ 7,14,000/-. In case interest of 12 months is added in the hands of assessee, then no addition can be made on account of investment made by the assessee, since the amount would have been advanced in the preceding year and not in the year under consideration. In any case, once we have deleted the addition of ₹ 34 lakhs, consequent addition of interest earned on the said advance of ₹ 34 lakhs also stands deleted. The onus for substantiating that the entries belonged to the assessee was strongly upon the Revenue and the Revenue has failed to discharge its onus and in the absence of the same and in view of various other points / issues, we find no merit in the orders of authorities below. - Decided partly in favour of assessee. - ITA No.53/Pun/2011 - - - Dated:- 30-6-2017 - Ms. Sushma Chowla, JM And Shri Anil Chaturvedi, AM For the Appellant : Shri Kishor Phadke For the Respondent : Shri B.Y. Chav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no papers found in the premises of Shri Soni which were signed by the appellant and hence, it could not be presumed that the appellant had provided this finance to Shri Soni. e. There was no statement of Shri Soni that it was the appellant who provided the finance to him and hence, the addition could not be made in the hands of the appellant. f. Without prejudice, even the presumption about the de-coding of the figures mentioned in the diaries of Shri Soni could not serve as an incriminating evidence against the assessee. g. The addition could not be sustained even by relying on theory of probability. h. There was no cheque / receipt / any document signed by the appellant found in possession of Shri Soni to the effect that the appellant had advanced these funds to him which indicated that no addition is justified on this account. 8] The learned CIT(A) was not justified in relying upon the diaries of Shri Soni statement of Shri Soni, if any statement of Shri Ratnakar, Accountant without affording an opportunity of cross examination of these persons to the appellant. 3. The first issue raised in the present appeal vide grounds of appeal Nos.1 to 3 is ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ikant H. Soni, his brother, also obtained funds from known parties with ready cash, with the promise to pay interest @ ranging from 1.30% to 1.50% paid upfront i.e. at the time of advancing the cash loans to / through Shri Soni. Such finances remained in the business till the investors / depositors desired, on which the investor kept receiving the interest in the cycle of 90 days. The document at Bill Nos.98 and 99 of Panchnama dated 02.08.2003 reflect the amount, to be read as multiple of 1000 of the figure mentioned therein, advanced / invested and outstanding on given date and the rate of interest (per month payable by the borrower) whose names are also indicated. Shri Soni declined to identify such investors or persons and such credits were added as unexplained, on protective basis, in his hands. However, there were other direct and indirect evidences in the form of loose papers, suggesting the identity and actual transaction by such persons. The Assessing Officer noted that the name of assessee appeared as Nanduseth Birla or BIRA NK, Bira H.NANDK in the seized material. The advances were unaccounted and undisclosed investment of the assessee, which had to be taxed in the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in the case of ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 (SC) and upheld the re-assessment order passed in the case of assessee. 6. In respect of addition on merits, the first objection was against the notings on the seized documents not belonging to the assessee. The assessee emphasized that its name was Nandkishore H. Birla and the documents found with Soni Group does not show his name anywhere. This contention of assessee was rejected as the assessee had not produced on record any such entity existing in those names. The second objection raised by the assessee was against working of amount of ₹ 34 lakhs and since the Assessing Officer had given breakup of the amount as per seized documents vide Bundle No.98 of Annexure A of Panchanama dated 02.08.2003 in the case of Shri Shriram H. Soni, the objection of assessee in this regard was rejected. The next objection of assessee was that the entries on the seized documents could not be applied against the third party and the presumption under section 132(4A) of the Act could be used only against the persons from whose premises the documents were seized. This proposition of the assessee was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proprietor of Birla Agency, dealing in cement business, is the person to whom these transactions relate. 7. Thereafter, the CIT(A) referred to the order of the Pune Bench of Tribunal in ITA Nos.474 to 478, 518/PN/2007 in the case of Shri Shriram H. Soni, relating to assessment years 1998-99 to 2003-04, order dated 17.06.2010 and noted the issue before the Tribunal was particularly in respect of seized documents vide Bundle Nos.98 and 99, under the head Investments in the specific name of certain persons could be treated as addition under section 68 of the Act as unexplained credit. The CIT(A) further noted that the Tribunal took note of various entries and the contention of assessee before the Tribunal that the seized documents depict true character as well as true nature of transactions and therefore, in view of the provisions of section 132(4A) of the Act, there was a presumption that the documents seized spoke truth. Further contention of assessee was that the documents found during the course of search had to be read as a whole and not in parts and reliance was placed on various judgments in this regard. During the course of submissions, the learned Authorized Represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized Representative for the assessee pointed out that the allegation against the assessee was that it had invested ₹ 34 lakhs with Shri Shriram Soni. He further pointed out that from borrowers though Shri Soni, was in addition receiving promissory notes, cheques, but from the depositors, nothing was taken. Our attention was drawn to the order of Assessing Officer and it was pointed out that the Assessing Officer had worked out the interest @ 1.75% for period of 12 months in the hands of assessee. The learned Authorized Representative for the assessee referred to the year under consideration i.e. with year ending 31.03.2000 and stressed that where the interest is worked out for a period of 12 months, then the presumption is that the amount was invested in the preceding year, otherwise, how can the addition be made on account of interest for 12 months in the hands of assessee for the year under consideration. He stressed that the first and foremost contention of assessee before the authorities below and even before the Tribunal is that the name written in the seized documents is not that of assessee. The assessee is Nandkishor H. Birla, whereas the names written in the said do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The learned Authorized Representative for the assessee referred to the acknowledgement of filing the return of income, which is placed at page 3 of the Paper Book. He also pointed out that the CIT(A) did not deal with this contention of assessee. The next submissions made by the learned Authorized Representative for the assessee was the observation of CIT(A) in para 3.1, wherein he had pointed out that the Accountant of Shri Soni Ratnakar had identified the father of assessee but it had no relevant to the facts of the case. The learned Authorized Representative for the assessee stressed that onus for substantiating that the entries belonged to the assessee was strongly on the Revenue, who had filed to discharge their onus and hence, no addition could be made in the hands of assessee. He referred to the ratio laid down by the Hon'ble Supreme Court in P.R. Metrani Vs. CIT (2006) 287 ITR 209 (SC), wherein the ratio laid down was that under section 132(4) of the Act, presumption was against searched person. However, since the assessee was not the person who was searched and consequently, no such presumption could be taken against the assessee. The learned Authorized Repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratio laid down by the Pune Bench of Tribunal in Jagannath Eknath Lahoti (HUF) Vs. ITO (supra), wherein the CIT(A) had denied the claim on identical issues as in the present case, wherein the Tribunal has vide para 6.6 at page 7 deleted the addition. 12. We have heard the rival contentions and perused the record. The first issue raised by the assessee against the reopening of assessment has no merit since against the return of income filed by the assessee, no scrutiny assessment was initiated and no order was passed under section 143(3) of the Act. The Assessing Officer after receiving information had recorded reasons for reopening the assessment and thereafter, had issued notice under section 148 of the Act. Following the ratio laid down by the Hon'ble Supreme Court in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra), we uphold the initiation of re-assessment under section 147/148 of the Act. Consequently, the grounds of appeal No.1 to 3 raised by the assessee are dismissed. 13. The next issue on merits is against the addition made of ₹ 34 lakhs under section 69 of the Act and interest earned thereon of ₹ 7,14,000/-. The said addition was made in the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no match of the name of assessee with the notings in the seized documents. The second contention which is vehemently raised by the assessee is that no evidence whatsoever of the entries relating to the year were confronted to the assessee even though the assessee had repeatedly, before the Assessing Officer and the CIT(A) had sought the information as to how the figure of ₹ 34 lakhs was worked out. Another contention which is raised is that whatever evidences which have been confronted to the assessee either in the remand report or in the order of CIT(A) of entries, which were for the period starting from 01.04.2000 onwards and hence, on the basis of such entries, no addition could be made in the hands of assessee in financial year 1999-2000 i.e. period ending 31.03.2000. The case of authorities below on the other hand, is that the entries in seized documents were in the abbreviated form and since the assessee was Nandkishor i.e. NK and he was carrying on the sole proprietary business under the name of Birla Agency, hence, Birla NK was abbreviated name of assessee and the entries under such name belonged to the assessee. The second set of entries in the name of Nandushet Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had also referred to the list of investors and has referred to the entries of investors including Birla in various pages. The assessee on the other hand, has strongly refuted the same pointing out that he had never given such loans to Shri Shriram H. Soni or earned any interest thereon. The Tribunal vide order dated 17.06.2010 had held Shri Soni to be finance broker and has directed the adoption of rate to work out income in his hands. The authorities below have stressed that since the Tribunal had already referred to the name of Nandkishor H. Birla and consequently, the case of Revenue was established and the addition was to be made in the hands of assessee. While deciding the case of Shri H. Soni, the Tribunal relied on the provisions of section 132(4A) of the Act, wherein there is presumption that if any document is found from the possession of searched person, then the same is presumed to belong to such person unless and until he proves otherwise. So, on the basis of document found from the possession of Shri Soni, the addition was worked out in the hands of said person by the Tribunal. However, when the addition has to be made in the hands of assessee before us whose name may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Soni group. It was categorically stated that the notings are relating to one Mr. Rashmi Gandhi and it does not pertain to the assessee firm. It was also stated that no evidence whatsoever was available with the department that the Soni group has accepted that this particular assessee has advanced funds to Soni group. The assessee vide another letter dated 26-12-2007 has also asked the AO to allow him to cross examine Shreeram H. Soni in case Shreeram H. Soni had stated that the assessee has advanced any money to him or some of the notings in seized paper pertain to the assessee. From the assessment order as well as the order of the Ld.CIT(A), we find no such opportunity whatsoever was granted to the assessee to cross examine Mr. Soni. From the seized documents, we find at one place it is written Kajal‟s Rashmi G (pages 33 34 of paper book). Similarly, at another place, it is written Rashmi Gandhi G.Kejals (page 58 of the paper book) in Hindi. Similarly, in another place, it is written Kejals Ushicover partly in English and partly in Hindi at page 62. From the above, it is seen that the seized document clearly show different names. The submission of the Ld. Counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verted by the Ld. Departmental Representative. We, therefore, find merit in the submission of the Ld. Counsel for the assessee that the Department by not reopening the assessment in the subsequent year has accepted that Jagannath Lahoti is different from Jaguseth Lati . Further, the assessee from the very beginning was denying that he is the same person. We find neither any promissory note nor any security in the name of the assessee nor any confirmation or any other corroborative evidence was found from the premises of Mr. Shriram H. Soni so as to prove that the assessee is the same person especially when Mr. Shriram H. Soni in his statement recorded u/s.132(4) has refused to identify each and every investor. 8.1 We find under similar facts the Coordinate Bench of the Tribunal in the case of Ashok Keshvlal Oswal (Supra) has dismissed the appeal filed by the Revenue wherein the CIT(A) has deleted the addition of ₹ 22,02,2000/- made by the Assessing Officer on account of additions made on the basis of documents found from the residence of Shriram Soni during the course of search and seizure operation. The relevant observation of the Tribunal reads as under : 5. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer to delete the addition. 11.2 Since the facts of the instant case are identical to the facts in the case of Jagannath Eknath Lahoti (HUF) (Supra), therefore, following the same ratio, we hold that no addition is called for in the instant case. We accordingly set aside the order of the CIT(A) on this issue and direct the AO to delete the addition of ₹ 1,04,500/-. Grounds raised by the assessee are accordingly allowed. 18. The issue arising before us is identical to the issue before the Tribunal in M/s. Kejals Furnishings Vs. ACIT (supra) and following the same parity of reasoning and in the absence of any seized material found or produced before us relating to the year under appeal, there is no merit in the addition of ₹ 34 lakhs alleged to have advanced by the assessee during the year. It may further be pointed out that the Assessing Officer while computing interest in the case of assessee on such advancement of loan, had computed the interest for the period of 12 months. In other words, case of Revenue is that the amount was invested for the full 12 months with Shri Soni, on which interest had been worked out at ₹ 7,14,000/-. In ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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