9911796707
TMI Blog2021 (11) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... n on the part of the assessee in disclosing full and true material facts, he has considered the assessee s assessment records and thereafter, has concluded that there was no necessity to make further inquiries as the information available on record is self-sufficient. Assessing officer has merely relied upon extracts of certain uncorroborated excel sheets, found during the course of search in case of Ramesh Manihar Group. Such excel-sheets do not point out to the fact of assessee having given loans, in cash, to different persons through Ramesh Manihar Group. Nothing concrete is discernible from these excel sheets. AO has failed to corroborate the excel sheets with independent evidences. Unless such corroborative evidences were brought on record, the present additions are not justified. Nowhere in the excelsheets found during the course of search in case of Ramesh Manihar Group and relied upon by the AO, it could be established that PCK as mentioned in those documents stand for the assessee only. No trail of documents or corroborative evidences could be established in this regard. The extracts of the excel sheets on which reliance had been placed were found from the computers of emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Term Capital Gains amounting to 50,05,578/- has been inadvertently brought to tax in the hands of the assessee. The Assessing Officer is hereby directed to delete the said amount of 50,05,578/- and the ground of appeal taken by the assessee is allowed. In the result, appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. CIT(A) has erred in deleting the addition of ₹ 50,05,578/- in spite of the fact the Ld. CIT has not discussed the issue in the appellate order. " 4. The facts of the case are that the assessee filed his original return of income on 29.09.2011 declaring total income of ₹ 1,10,86,623/- which was taken up for scrutiny and thereafter, the assessment was completed u/s 143(3) of the Act vide order dated 31.03.2013 wherein the returned income was accepted. Subsequently, search and seizure operations were carried out u/s 132 in case of Ramesh Manihar Group on 07.01.2016 wherein certain information/documents were seized and basis information received from the office of DCIT, Central Circle-3, Jaipur on 29.03.2018, the Assessing Officer recorded reasons that income has escaped assessment in the hands of the assessee and notice u/s 148 of the Act was issued online on 31.03.2018 after taking requisite approval of the competent authority and duly served on the assessee on the same date. 5. In the reasons so recorded before the issuance of notice u/s 148, the Assessing Officer has stated that information has been received from the office of DCIT, Central Circle-3, Jaipur th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is objections which were disposed off vide order dated 26.10.2018. Thereafter, the assessee was issued a show cause as to why the addition of ₹ 25 crores should not be made as unaccounted income along interest @ 1% per month. 7. In compliance to the said show cause notice, the assessee asked the Assessing Officer to provide all the relevant documents relied upon by the department for making such additions as well as opportunity for cross examination. The copies of documents were provided to the assessee and thereafter, the assessee furnished his reply stating that he, at no point of time, during the relevant previous year or otherwise, has given any amount in cash, as loan or otherwise, through any person, including Sh. Ramesh Chand Maheshwari. Without prejudice, it was further submitted that from the documents so provided, the assessee is unable to understand as to how the Assessing Officer has inferred that he has provided cash loans to different persons through Sh. Ramesh Chand Maheshwari. It was submitted that the statements of Shri Ramesh Chand Maheshwari are full of contradictions and even contradictions persist in the reasons recorded vis-a-vis documents/statements pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. Accordingly, it is proved that the assessee was the only person who has given his unaccounted cash for lending through the Ramesh Manihar Group. On further examination of these pen drives, it was also found that amount of transaction was mentioned after suppressing 'five zeros' i.e. ₹ 25,00,00,000/- was mentioned as 2500 in the form of different entries. In these pen drives, it was also mentioned, as for which period and on what rate of interest, the amount was advanced to the borrowers. The excel sheet notings extracted from the Jagat. XIs from the the PEN drive in possession of Ramesh Manihar (finance broker) as above reveals that name of the person, surname, firm, office address and phone no. (i.e Prakash Chand Ji, Kothari, KGK, Jewellers, 73, Barnala House, 2nd Crossing, Haldiyon Ka Rasta, Johari Bazar, Jaipur respectively) are related to Shri Prakash Chand Kothari (PCK). As per records and phone directory, the said details pertain to the assessee (i.e. Shri Prakash Chand Kothari of KGK Group). Hence all the above transactions of cash loans pertain to the assessee. 10. The Assessing Officer, thereafter, referred to the statement of Sh. Ramesh Chand Maheshwari dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing various grounds of appeal challenging the jurisdiction and legality of the order so passed by the Assessing officer as well as merits of the case. The ld. CIT(A) while disposing off the assessee's grounds challenging the reopening the assessment u/s 147 of the Act stated that the Assessing Officer has rightly assumed jurisdiction u/s 147 of the Act for the reason that the information along with documents collected during search on Sh. Ramesh Manihar could easily result into Assessing officer forming a belief of escapement of income on the part of the assessee. The ld. CIT(A) also dismissed the ground taken on behalf of the assessee relating to issuance of notice u/s 148 without obtaining proper sanction u/s 151 stating that A/R of the assessee has not been able to put forth any cogent reason or evidences leading up to the conclusion that the approval taken by the Assessing Officer u/s 151 of the Act was not proper. Therefore, grounds challenging reopening of the assessment u/s 147 and issuance of notice u/s 148 of the Act without seeking proper sanction were dismissed by the ld. CIT(A) and against the said findings, the assessee is in appeal before us. 14. On merits of the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer to point out which portion of the statement on the basis of which it is concluded as to involvement of the appellant in providing cash loan. The Assessing officer is completely silent on the same. If the Assessing officer wants to draw any adverse inference against any other person based on such statement, it was incumbent upon him to relate such statement to the appellant and also to provide an opportunity of cross examination of such person. 15. The ld. CIT(A) thereafter referred to the decision of Hon'ble Supreme Court in case of Common Cause (A Registered Society) reported in 394 ITR 220 wherein the earlier decision of Hon'ble Supreme Court in case of V. C. Shukla's case has been discussed at length and relying on the said decision, the ld. CIT(A) stated that though these judgments of the Hon'ble Supreme Court were rendered in the context of criminal law, yet what the Hon'ble Supreme Court Court held that merely on the basis of such uncorroborated entries kept by third-party investigation cannot be conducted and applying the principle in the present case which is a civil law, it can be said that though cognizance may be taken in respect of entries by third-party in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notional interest was also directed to be deleted. Against the said findings of the ld CIT(A) deleting the additions, the Revenue is now in appeal before us. 17. In the aforesaid factual matrix of the matter, we find that both the parties are in appeal before us against the findings and order of the ld CIT(A) and have raised respective grounds of appeal. We firstly refer to assessee's grounds of appeal challenging the reopening of assessment and assumption of jurisdiction by the Assessing officer u/s 147 of the Act which has been upheld by the ld CIT(A) and the contentions advanced by the respective parties in this regard. 18. The ld. A/R submitted that elaborate submissions were made before the ld. CIT(A) in this regard, however, he has not appreciated the same in correct perspective and hence the assessee wishes to reiterate the contentions raised before the ld. CIT(A). It was submitted that there is no reason to believe that income has escaped assessment in the hands of the assessee as reopening was done on the basis of borrowed satisfaction and solely on the basis of information received from DCIT, Central Cricle-03, Jaipur. It was submitted that only on the basis of so calle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire re-assessment proceedings were based on the information received from DCIT, Central Circle, 3 during the course of search u/s 132 and Assessing Officer should have taken recourse to section 153C and not section 147, for carrying out impugned re-assessment proceedings in the case of the assessee. In support, the reliance was placed on the Co-ordinate Benches decisions in case of Shri Navrattan Kothari (ITA No. 425/JP/2017), ITO vs. Arun Kumar Kapoor [2011] 140 TTJ 249 (Asr), G. Koteswara Rao [2015] 64 taxmann.com 159 (Visakhapatnam- Trib) and Rajat Shubra Chatterji vs. ACIT (ITA No. 2430/Del/2015). It was submitted that ld. CIT(A) without any cogent basis, dismissed the aforesaid contentions so raised by the assessee. 21. It was further submitted that the original assessment was completed pursuant to search in case of KGK Group to which assessee belongs. During the course of search, only excess jewellery and stock was found which was surrendered. No unaccounted cash was found. The alleged incriminating material relied upon by AO is found from the premises of a third party and not that of the assessee. Hence it cannot be said that the assessee had not made true and full disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons were duly recorded by the Assessing officer prior to issuance of notice u/s 148 and contains detail reasons for firming the belief that income has escaped assessment and also in terms of the compliance of the proviso to section 147 in terms of failure on the part of the assessee to disclose truly and correctly all material facts necessary for the assessment. 24. It was further submitted by ld PCIT/D/R that the reasons so recorded were based on information received from the DCIT Central Circle-3, Jaipur and detailed enquiries were conducted by the Investigation wing as well as examination of the assessment records was undertaken by the Assessing officer and which shows clearly due and independent application of mind on part of the Assessing officer based on appreciation of material on record that the income in the hands of the assessee has escaped assessment. It was submitted that where the Assessing officer basis detailed information and enquiries conducted by the Investigation wing which forms a tangible material forms a reasonable belief that the income in the hands of the assessee has escaped assessment, there is no infirmity in the action of the Assessing officer in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing officer in assumption of jurisdiction u/s 147 instead of section 153C of the Act. In support, reliance was placed on the Coordinate Benches decision in case of Shailesh S. Patel vs ITO Ward-5, Palanpur [2018] 97 taxmann.com 570 (Ahd) and decision of the Hon'ble Madras High Court in case of Karti P. Chidambaran vs Principal DIT(Investigation), Unit 3(2), Chennai [2021] 128 taxmann.com 116 (Mad). 27. It was further submitted that the sufficiency and adequacy of material may not be required to be looked into at the time of recording the reasons and what is relevant is whether there was relevant material on which a reasonable person could have formed a requisite belief that the income has escaped assessment. It was submitted that in the instant case, there was relevant material in possession of the AO for him to proceed with recording of reasons that income has escaped assessment and assumption of jurisdiction u/s 147 of the Act. In support, reliance was placed on the Hon'ble Supreme Court decisions in case of Assistant Commissioner of Income-tax vs. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316 (SC), Yogendra kumar Gupta vs. Income-tax Officer [2014] 51 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, the assessee has challenged the assumption of jurisdiction by the Assessing Officer u/s 147 of the Act and it has been contended that the reopening has been done solely on the basis of information received from DCIT, Central Circle-03, Jaipur and there is no independent application of mind by the Assessing Officer and it is therefore a case of borrowed satisfaction and not his own satisfaction which has been recorded by the Assessing Officer after due application of mind. It was further submitted that there is no tangible material in possession of the Assessing Officer for arriving at the finding that the income has escaped assessment in the hands of the assessee and therefore, no nexus has been established between the material and formation of belief that the income has escaped assessment in the hands of the assessee. It has been further contended that given the fact that the entire reassessment proceedings have been based on the information received from DCIT, Central Circle-03, Jaipur during the course of search u/s 132, the Assessing Officer should have taken recourse to section 153C and not section 147 for carrying out the present reassessment proceedings. 30. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this information, it is found that the assessee has paid amount of ₹ 25,00,00,000/- on account of cash loan and interest applicable accordingly." 31. In the reasons so recorded, the Assessing Officer has further stated that from the perusal of information, it is found that the assessee has paid cash loan of ₹ 25 crores out of his income from undisclosed sources in A.Y 2012- 13 and received interest accordingly. The Assessing Officer has further stated that though the assessee has filed a copy of annual report, audited profit & loss account and balance-sheet along with return of income in the original assessment proceedings wherein various information/material were disclosed, however, requisite full and true disclosure of all material facts necessary for assessment has not been made as the assessee has not furnished the copy of cash book for the year under consideration and source of advance payment of loan in cash and which is not shown in the loans and advances given by the assessee in his balance-sheet attracting Explanation 1 of section 147 of the Act. It was held by the Assessing Officer that the detailed enquiries conducted by the investigation wing and material a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch unrecorded cash transactions. Thereafter, talking specifically about the assessee, it has been stated in the said information that certain transactions have been noticed regarding the assessee, Shri Prakash Chand Kothari wherein the assessee has paid cash loans of ₹ 25 crores to various persons through the said group and has earned interest on the said amount. If we look at the data so provided in form of a table in the information so received from DCIT Central Circle-3 Jaipur and as recorded in the reasons by the Assessing officer, we find that it list down certain transactions on various dates and has various columns with heading "T", "@", "AT" and certain figures have been stated under each heading corresponding to various dates, and thereafter, has two columns with heading "from" and "TO" wherein under column "from", "PCK" has been stated and under column "TO", certain names again in abbreviated form has been stated. On perusal of the said data, it is not discernible as to what kind and nature of transactions the said data depicts as everything is in abbreviated form, what "T" stand for, what "@" stand for, what "AT" stand for, what "PCK" stand for, what is the linkage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not 'reason to suspect'. The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income-tax authorities after the assessment has been completed. The provisions of the Act in this respect depart from the normal rule that there should be, subject to right of appeal and revision finality about orders made in judicial and quasi-judicial proceedings. It is, therefore, essential that before such action is taken the requirements of the law should be satisfied. The live link or close nexus which should be there between the material before the Income-tax Officer in the present case and the belief which he was to form regarding the escapement of the income of the assessee from assessment because of the latter's failure or omission to disclose fully and truly all material facts was missing in the case. In any event, the link was too tenuous to provide a legally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons have been recorded merely basis information received from DCIT Central Circle-3, Jaipur and so called enquiry conducted by the Investigation wing, in a mechanical manner without bringing on record the findings of the Investigation Wing which could have provided the tangible material and its nexus with the formation of belief that the transactions so reflected in the data pertains to the assessee which has escapement assessment. It is therefore a case where there is neither any tangible material in possession of the AO nor any nexus/connection has been established by the AO with the assessee by analyzing the data so collected during the course of search and received by him. The reasons so recorded are clearly silent on this and as we have stated above, the Assessing officer has to speak his mind through the reasons so recorded by him and nothing more can be inferred or supplemented in the reasons so recorded. In this regard, useful reference can be drawn to the decision of the Hon'ble Delhi High Court in case of Meenakshi Overseas Pvt Ltd (supra) wherein the Hon'ble High Court held as under: "19. A perusal of the reasons as recorded by the AO reveals that there are three pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the formation of belief is absent. The reasons must be self evident, they must speak for themselves. The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. However, something therein which is critical to the formation of the belief must be referred to. Otherwise the link goes missing. 24. The reopening of assessment under Section 147 is a potent power not to be lightly exercised. It certainly cannot be invoked casually or mechanically. The heart of the provision is the formation of belief by the AO that income has escaped assessment. The reasons so recorded have to be based on some tangible material and that should be evident from reading the reasons. It cannot be supplied subsequently either during the proceedings when objections to the reopening are considered or even during the assessment proceedings that follow. This is the bare minimum mandatory requirement of the first part of Section 147 (1) of the Act. 25. At this stage it requires to be noted that since the original assessment was processed under Section 143 (1) of the Act, and not Section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing officer has stated as to what analysis he has done with the information so collected/received and he says that "from the perusal of the information, it is found that the assessee has paid cash loan of ₹ 25,00,00,000/- out of his income from undisclosed in A.Y 2011-12 and received interest accordingly." What analysis he has done to arrive at the belief that the information so received pertains to the assessee, the nature of transactions are in nature of cash loans only and not otherwise, who are the persons to whom these alleged cash loans have been provided and their identities and whereabouts, and we find that there is nothing which has been stated in the reasons so recorded and apparently, the basis of such conclusions and not just the reasons is the enquiry conducted by the Investigation Wing and as we have noted above, nothing from the report of the Investigation Wing is set out in the reasons and thus, the crucial link between the information and formation of belief that income has escaped assessment is clearly absent in the instant case and the ratio laid down in the aforesaid decision rendered by the Hon'ble Delhi High Court squarely applies in the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ramesh Manihar Group shows that certain transactions of cash loans have been found which are pertaining to the assessee, the question is what precluded the Assessing Officer from taking action u/s 153C of the Act instead of section 148 of the Act. After the amendment made by the Finance Act with effect from 01.06.2016 where any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to person other the person who has been searched, the action under section 153C can be taken which is notwithstanding anything contained in section 147 and section 148 of the Act. The ld PCIT/D/R has contended that there are conditions specified in section 153C which needs to be fulfilled and only in such cases where the conditions so specified are fulfilled, the Assessing officer can take recourse to section 153C of the Act. It was submitted that in the instant case, the conditions specified in section 153C are not fulfilled and hence, basis receipt of information, the Assessing officer recorded the reasons for escapement of income and initiated the proceedings u/s 147 by issuance of notice u/s 148 of the Act. In this regard, we ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A of the Act. 40. In the instant case, the fact that the Assessing officer has not invoked the provisions of section 153C, it shows that there was no satisfaction which has been recorded by the Assessing officer having jurisdiction over Ramesh Maniar Group that any books of account or documents etc, seized during the course of search pertains or pertain to, or any information contained therein, relates to the assessee and in absence of satisfaction so recorded, the books of account or documents seized during the course of search were not handed over to the Assessing Officer having jurisdiction over the assessee. In absence of satisfaction so recorded and handing over of the seized material by the Assessing officer of the searched person, the Assessing officer could not by himself have invoked the provisions of section 153C of the Act. It is also manifest that in absence of any such satisfaction that documents so found and seized during the course of search pertains to the assessee or any information contained therein re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in cash, and they earned commission on these transactions. It was further submitted that various incriminating documents were found and seized by the Investigation wing of the department, which includes loose papers, pen drives etc. On analysis of the seized documents particularly pen drives, it has been noted by the Assessing officer that one pen drive is having names in short/code word 'Jagat.xlsx' that names of the lenders as well as borrowers were found in code name or maybe say in short name likewise 'Prakash Chand Kothari' the assessee as 'PCK'. This short name is again verifiable with another pen drive namely 'from & to group.xlsx', where name of the assessee 'PCK', is mentioned along with his full name address in the seized documents. Accordingly, it was established that the assessee was the only person who has given his unaccounted cash for lending through the Ramesh Manihar Group. On further examination of these pen drives, it was also found that amount of transaction was mentioned after suppressing 'five zeros' i.e. ₹ 25,00,00,000/- was mentioned as 2500 in the form of different entries. In these pen drives, it was also mentioned, as for which period and on what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such an opportunity and merely on this ground, the additions cannot be deleted and assessment proceedings set-aside. 47. It was accordingly submitted by the ld PCIT that the Assessing Officer has rightly held that the assessee advanced a sum of ₹ 25 crores in cash which is not recorded in his books of accounts through Ramesh Manihar Group and same was brought to tax in the hands of the assessee. Further, considering the period under consideration as well as amount advanced and taking rate of interest @1% per month, addition towards interest of ₹ 90,58,625/- was also made in the hands of the assessee. 48. It was submitted that the ld CIT(A) has not appreciated the entirety of facts and circumstances of the case, the data seized during the course of search, the statement recorded during search and post-search proceedings in right perspective and in a summarily manner has deleted the additions made by the Assessing officer. He accordingly supported the findings of the Assessing officer and submitted that the order of the ld CIT(A) be set-aside and that of the AO be sustained. 49. In his submissions, the ld A/R submitted that firstly, the contention of the ld PCIT/DR tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et, 2610 records have been maintained. It is certainly not the case of the ld. AO that Ramesh Manihar acted as a broker for all of these 2610 individuals for lending money in cash to other persons. What information has been recorded in other worksheets is not clear. The screen shot of the excel sheet, highlighting assessee's name was taken on 22.10.2018, whereas the search was conducted on 07.01.2016. Whether such screenshot was taken by the ld. AO or by Central Circle-3 or by Investigation Wing or by any other person/Department is also not clear. 53. It was further submitted that following references from the statement of Ramesh Manihar recorded during search may be noted which indicate no involvement of the assessee in providing cash loans: Q. No. Averments made by Ramesh Manihar 12 RM acted as a broker in providing loans through cheque and RTGS between the lenders and borrowers. 13 Loans were not given in cash and all the transactions were through banking channels. 15 * Dealings in cash was done by him only on his personal account, out of his own funds. * RM earned interest thereon ranging from 0.8 to 1% per month, in cash, which was applied for the purpose of fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT vs Katrina Rosemary Turcottee [2017] 190 TTJ 681 (Mum) 57. It was further submitted that the fact that the application of Ramesh Manihar Group has been accepted by the Settlement Commission considering him to be a money broker, has no impact on the case of the assessee. It was submitted that admission of Ramesh Manihar's petition by Settlement Commission no way establishes that PCK is no one else but the assessee, Shri Prakash Chand Kothari. In support, reliance was placed on the decision of the Coordinate Mumbai Benches in case of Sh. Anil Jaggi vs ACIT [2018] 168 ITD 612 (Mum.)(Trib.). 58. It was further submitted that authenticity of the data, allegedly contained in the Pen-Drives seized from Ramesh Manihar Group has to be proved independently. Unless the entries are corroborated by independent, credible, tangible and clinching material, the same cannot be used against the assessee, treating the same as "gospel truth". It was submitted that Hon'ble Supreme Court, in the case of Arjun Panditrao Khotkar Vs. Kailash Kushanrao Gorantyal and Ors. (in Civil Appeal Nos. 20825-20826 of 2017, 2407 and 3696 of 2018 vide its order dated 14.07.2020) confirmed its earlier view in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Broker Ltd. (2007) 288 ITR 345 (Delhi), CIT v. JMD Computers & Communications (P.) Ltd.(2009) 180 Taxman 485 (Delhi), Krishna Textiles v. CIT (2009) 310 ITR 0227 (Guj) and CIT v. A.N. Dyaneswaran (2008) 297 ITR 135 (Mad). 61. It was further submitted that the ld. AO has made the addition invoking the provisions of Section 69. For invoking the provisions of Section 69 heavy burden lies on the ld. AO to prove that investment has taken place, and the investment is owned by the assessee. It was submitted that there is the difference of burden under Section 68 vis-à-vis Section 69. If a credit entry is found in books of the assessee, entire burden lies on the assessee to prove identity, credit-worthiness and genuineness of the said creditor. As against this, if any investment is alleged to be in the name of the assessee which as per the Department is not recorded in the books of the assessee, the burden is on the Department to first prove its allegation by way of impeccable evidences. It is well settled that the burden is on the person who makes allegation and to discharge such burden the said person has to lead positive evidences. Mere fact that there were certain entries found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff (1977) 39 STC 478 (SC). Similarly, inspite of specific request, ld. AO did not examine the persons who, according to the ld. AO, had received loans from the assessee through Ramesh Manihar Group. 64. It was submitted that Hon'ble Bombay High Court in the case of CIT v. Lavanya Land (P) Ltd. (2017) 297 CTR 204(Bom.) (HC) held that if the entries on loose sheet of paper, found during search, are not corroborated by any other evidence, no addition can be made. Similarly, in another case of Aarti Colonizers Company, certain incriminating material in the form of data stored in electronic medium was found in search conducted on the partners of the assessee firm. On the basis of such electronic evidences, additions were made in the hands of the assessee firm. Such additions were subsequently deleted by the Raipur Bench of the Tribunal (ITA No. 178 to180/RPR/2014 dated 01.07.2019) and it was observed by the Tribunal that no material was found to show that the amount contained in the data was paid by the assessee firm at any point of time. Resultantly, in the absence of any corroborative evidences no addition can be made. 65. It was further submitted that the ld AO, without any basis, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on such money advanced by way of cash loans has been determined applying rate of interest of 12% and the same has also been brought to tax. 68. Here, first and formost issue that arise for consideration is regarding on whom the initial onus lies which needs to be discharged. Whether it is Revenue or the assessee who has to discharge the initial burden of proof that such unaccounted money belongs to the assessee and secondly, the same has been advanced by the assessee by way of cash loans through Ramesh Manihar Group to third parties and he has earned interest thereon and the same has remain unaccounted in the books of accounts. 69. In this regard, it is noted that during the course of assessment proceedings, the assessee was issued a show cause as to why the addition of ₹ 25 crores should not be made as unaccounted income along interest @ 1% per month. In response to the said show cause notice, the assessee stated that he, at no point of time, during the relevant previous year or otherwise, has given any amount in cash, as loan or otherwise, through any person, including Sh. Ramesh Chand Maheshwari of Ramesh Manihar Group. It was further submitted by the assessee that from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd that money so invested belongs to the assessee and the same has been advanced by way of cash loans through Ramesh Manihar group. And once it is established that these two conditions are satisfied regarding money so invested belongs to the assessee and making investment by way of cash loans and not recording it in his books of accounts, in such a situation, an opportunity may be provided to the assessee calling for his explanation about the nature and source of such investment. And where either no explanation has been furnished by the assessee or the explanation so offered is not found satisfactory in the opinion of the Assessing officer, the said investment may be deemed to the income of the assessee for such financial year. Looking at it from another perspective, we find that where in response to show-cause notice, the assessee had catergorically denied making any such investment through Ramesh Manihar Group and then, in such a scenario, how can the assessee lead any evidence in support of a transaction which he denied having executed and undertaken at first place. Therefore, we agree with the contentions advanced by the ld A/R that the initial onus lies on the Assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Prakash Chand Kothari wherein the assessee has paid cash loans of ₹ 25 crores to various persons through the said group and has earned interest on the said amount. If we look at the data so provided in form of a table in the information so received from DCIT Central Circle-3 Jaipur and as recorded in the reasons by the Assessing officer, we find that it list down certain transactions on various dates and has various columns with heading "T", "@", "AT" and certain figures have been stated under each heading corresponding to various dates, and thereafter, has two columns with heading "from" and "TO" wherein under column "from", "PCK" has been stated and under column "TO", certain names again in abbreviated form has been stated. On perusal of the said data, it is not discernible as to what kind and nature of transactions the said data depicts as everything is in abbreviated form, what "T" stand for, what "@" stand for, what "AT" stand for, what "PCK" stand for, what is the linkage of "PCK" with other persons whose name are again written in abbreviated form, and how this data and so called transactions are related to the assessee and how the figures so depicted represent an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so referred to the statement of Shri Ramesh Chand Maheshwari recorded u/s 131 during the course of his own assessment proceedings and also the application filed by his Ramesh Manihar Group before the Settlement Commission where they surrendered their commission income on such unrecorded and unaccounted transactions and due taxes have been paid. Basis the same, the AO has arrived at a finding that "PCK" stands for the assessee and he has also advanced cash loans worth ₹ 25 crores through Shri Ramesh Manihar Group and has earned interest thereon which has been brought to tax. 75. In this regard, as we have noted earlier, the proceedings have been initiated under section 147 and not under section 153C as no satisfaction has been recorded by the Assessing officer of Ramesh Manihar Group that seized documents pertains to the assessee or any information contained therein relates to the assessee and the original seized pen drives found during the course of search have not been handed over to the Assessing officer by Assessing officer of the Ramesh Manihar Group. Therefore, what has been received by the Assessing officer in the instant case is only the information in form of extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment records. 77. We find that though Evidence Act is not strictly applicable to the income tax proceedings, however the general principles so laid down therein can be applied by leading certain positive evidence which can authenticate the data which has changed hands apparently from the Investigation Wing to the Assessing officer of the searched person and then, finally to the Assessing officer who has placed reliance on the same and has passed the impugned order. It may be an apprehension on part of the assessee that the data while shared/handed over to the Assessing officer might have been either modified, altered or tempered with, however, where such an apprehension has been raised by the assessee and more so, it would also be interest of Revenue where there is heavy reliance placed by the Revenue on such data, such apprehension so raised by the assessee needs to be appropriately addressed by leading positive evidence and recording of satisfaction by the Assessing officer which we find has not happened in the instant case. 78. Having said that, let's examine whether data so found in the pen drives and received by the Assessing officer stand corroborated by the Shri Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly and consistently that loan financing has been done jointly with Manmohan Bangla in their personal capacity where their own money is lent on interest to various parties from time to time and has explained the modalities of such cash financing and how the accounts thereof are maintained in computers and pen drives. Therefore, we are unable to understand as to how the Assessing officer has reached to a conclusion that basis such statement recorded u/s 132(4), which has also been reproduced in the assessment order and relied upon by him, that Shri Ramesh Chand Maheshwari and his partner Shri Manmohan Bagla were involved in cash loan transactions where the amounts were taken in cash from the lenders and the same was advanced to the borrowers in cash and have earned commission income on these transactions, and has recorded a consequential finding that since name of "PCK" is found in the excel sheets, it represent the assessee only and the assessee also made his transactions of lending unaccounted money through the said group and earned interest income thereon. We therefore find that there is a clear disconnect between the findings of the AO and the statement of Ramesh Chand Mahe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his statement recorded u/s 132(4) and the statement subsequently recorded u/s 131 of the Act after a gap of almost 21 months and the Assessing officer in the instant case has effectively placed reliance on the subsequent statement recorded u/s 131 ignoring the earlier statement recorded u/s 132(4) of the Act. 81. Without getting into the background and basis of such change in stand of Shri Ramesh Chand Maheshwari which is a matter for Revenue and appropriate authorities to ponder and examine, and is in any case beyond the scope of impugned matter under consideration, the question that arises for consideration is whether the Assessing officer can be held justified in placing reliance on such shifting stand of Shri Ramesh Chand Maheshwari in his own two statements which put a question mark on reliability of his statements and can it be said that the data so found in the pen drives relates to cash loan financing of various lenders stand corroborated by the statement of Shri Ramesh Chand Maheshwari recorded under Section 131 of the Act. The assessee has also challenged the same stating that such statement was never confronted to him during the course of reassessment proceedings and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any clinching and irrefutable evidence that the money has infact been paid by the assessee and routed through Ramesh Manihar Group for onward lending and without providing an opportunity of cross-examination. The assessee is not privy to the application filed before the Settlement Comission and proceedings before the Settlement Commission and therefore, the findings of the Settlement Commission cannot be said to bind the assessee and for that matter, the Assessing officer who has to record his own independent findings considering the facts and circumstances of the present case. We therefore agree with the findings of the ld CIT(A) that mere admission by one person before the Settlement Commisison cannot bind the another person in absence of any nexus between the person admitting and the other person. 84. We find that similar view has been taken by the Coordinate Mumbai Benches in case of Anil Jaggi vs ACIT (supra). In that case, payment of onmoney by assessee, Anil Jaggi, was noticed in the course of search in the Hiranandani Group in respect of purchase of certain properties. The Coordinate Bench after appreciating the entirety of facts and circumstances held that the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee for purchase of the property under consideration. We find that the information as emerges from the print out of the pen drive falls short of certain material facts, viz. date and mode of receipt of 'on money', who had paid the money, to whom the money was paid, date of agreement and who had prepared the details, as a result whereof the adverse inferences as regards payment of "on money" by the assessee for purchase of the property under consideration remain uncorroborated. We further find that what was the source from where the information was received in the pen drive also remains a mystery till date. We find that Sh. Niranjan Hiranandani in the course of his cross-examination had clearly stated that neither he was aware of the person who had made the entry in the pen drive, nor had with him any evidence that the assessee had paid any cash towards purchase of flat. We have deliberated on the fact that Sh. Niranjan Hiranandani in his statement recorded on oath in the course of the Search & seizure proceedings had confirmed that the amounts aggregating to ₹ 475.60 crore recorded in the pen drive were the on-money received on sale of flats, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribe to the view of the lower authorities and set aside the order of the CIT (A) sustaining the addition of ₹ 2.23 crores in the hands of the assessee." 85. We therefore find that the Assessing officer has merely relied upon extracts of certain uncorroborated excel sheets, found during the course of search in case of Ramesh Manihar Group. Such excelsheets do not point out to the fact of assessee having given loans, in cash, to different persons through Ramesh Manihar Group. Nothing concrete is discernible from these excel sheets. The Assessing officer has failed to corroborate the excel sheets with independent evidences. Unless such corroborative evidences were brought on record, the present additions are not justified. Nowhere in the excelsheets found during the course of search in case of Ramesh Manihar Group and relied upon by the AO, it could be established that "PCK" as mentioned in those documents stand for the assessee only. No trail of documents or corroborative evidences could be established in this regard. The extracts of the excel sheets on which reliance had been placed were found from the computers of employees of Shri Ramesh Manihar. Those employees were never ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discarded, there remain no evidence to hold that the appellant has given any such advance to the tune of ₹ 25 crores. Merely extracts of excel sheet do not provide any evidence of the allegation made by the AO against the assessee. Thus, mere fact that there were certain entries found from record of third party is not sufficient to make addition on the ground that assessee had made unexplained investments. The ld CIT(A) has rightly held that though cognizance may be taken in respect of entries by third-party in the assessment of other person so as to initiate inquiry for assessment, yet when there is no finding that such entries are in fact pertaining to such third person only which should be emanating from the entries itself or from the person who has recorded such entry, no cognizance can be taken so as to fasten tax liability on such third person. 86. In this regard, we find that under similar fact pattern, Coordinate Benches of the Tribunal have taken a similar view and reference can be drawn to decision of the Coordinate Mumbai Benches in case of Katrina Rosemary Turcotte (supra). In this case, on the basis of a print out taken from the computer back-up of Ms. Sandhya R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atrix. In these circumstances, simply relying upon a untested / unverified document and without any other corroborative evidence to demonstrate that the assessee has actually received cash payment of ₹ 2,50,000 for hosting an event in Sidney, the addition, in our view, is unsustainable. Therefore, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the ground raised." 87. Similarly, in case of Aarti Colonizer Company (supra), the matter came up before the Coordinate Raipur Benches of the Tribunal where it was held that the addition has been made by the assessing officer on the basis of the screenshot of journal entry dt. 4-9-2007 taken from the tally data in the pen drive found during the course of search and the printout of the details of land which has been reproduced by the assessing officer and other than these two materials, since no evidence has been brought on record by the Assessing officer and since nothing was found during search establishing any investment/payment made by the assessee, the two evidences relied upon by the Assessing officer, on a standalone basis cannot form the basis for invoking section 69. Therefore, it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 2 and 3 of assessment order as table 1, it merely contains some details about different lands and it does not contain even a whisper about any investment or payment made by anyone. We observe that the inference has been drawn by the assessing officer only on the basis of the three figures mentioned at the end of the table, on page No. 3 of the assessment order. This, in our considered view, cannot be considered to be evidence of payment/investment. It is undisputed that during search or thereafter during the assessment proceedings, no material was found or brought on record evidencing that the three figures referred to above represent any actual investment/payment by the assessee. As rightly contended by the learned Authorised Representative of the assessee, that the details given in the chart are not evidence of any payment/investment. Since no evidence has been brought on record by the assessing officer and since nothing was found during search establishing any investment/payment made by the assessee, the two evidences relied upon by the assessing officer, on a standalone basis, in our considered view, cannot form basis for invoking section 69. Therefore, we hold that provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall" against which Hon'ble Supreme Court observed that it was unable to agree. Hon'ble Supreme Court thereafter held that the use of the word "may" clearly indicates that the intention of Parliament in enacting section 69 was to confer a discretion on the Income Tax Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the Income Tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be satisfactory. The question whether the source of the investment should be treated as income or not under section 69 has to be considered in the light of the facts of each case. In that case, the Tribunal held that the discretion had not been properly exercised by the Income Tax Officer and the AAC in taking into account the circumstances in which the assessee was placed. Hon'ble Supreme Court observed that it did not find any error in the said finding recorded by the Tribunal. In Smt. Rajabai B Kadam v. Asstt. CIT (supra) it was found that the assessee, who was a minor, was found carrying cash of ₹ 1,18,500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details have been reproduced as table 2 in the assessment order, on page Nos. 4 and 5. We observe that apart from this printout found during search, no other corroborative material in the form of cash book ledger etc. was found during search. A perusal of the details shows that the lands were purchased over a period of three years, from different persons. It is not the case of assessing officer that details of payment of individual lands were also found during search. What is to be noted is, apart from the chart found, no other corroborative evidence was found during search. It is not the case of assessing officer that any books of accounts and other details supporting the entries in the printout were found during search or brought on record during the assessment proceedings. It is not also the case of assessing officer that any other details in respect of different lands like details of payment to the persons etc. were found during search. Although it is stated that tally data was found in the pen drive, corresponding books of accounts in such tally data were not found as there is no reference of any such corroborative books in the assessment order. We agree with the argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies found in pen drive are fake. Before us. during the course of hearing, learned Authorised Representative of the assessee filed a summarised form of his explanation in the form of a chart. The explanation given to the assessing officer was to the effect that some of the entries in the pen drive do not match with the entries in regular books in the sense that in some cases, payments are mentioned to be made in cash in the pen drive while such payments are established to have been made through cheque in the regular books; that land situated at Labhandi is shown to have been sold to one Shri Suresh G. Atlani while actually, the land was sold to one Shri Vijay Kumar Motwani through registered sale deed, copy whereof has been placed at page Nos. 161 to 176 of paper book; that likewise, some entries were found in the pen drive which mentions that the payments were made through Bank of Baroda and State Bank of India, Pandri Tarai Branch while the assessee explained that nobody in the group of assessee had any account in any branch of Bank of Baroda and that the cheque number in respect of payment made through State Bank of India did not relate to any bank account held by the concerned p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 are available. No doubt, this is a narration made by Shri Ram Avtar Singla in his handwritings. Shri Ram Avtar Singla has explained what for the latter mentioned in abbreviated form stands for e.g. HD means Hanuman Dass. KMF, Krishan Kumar Manoj Kumar, Karol Bagh, New Delhi. Learned Investigating Offifer at the time of recording the statement of Shri Ram Avtar Singhla almost put every abbreviated letter to Shri Ram Avtar Singhla. He was able to give the complete form but not the address. With regard to the assessee, no question was put. The revenue failed to establish a live link between the information noted in abbreviated form by Shri Ram Avtar Singhla and the assessee. The revenue could not establish that Atul noted in this diary is as Atul Kumar Gupta i.e. the assessee. Thus, neither the diary was found from the premises of the assessee nor it is in the handwriting of the assessee, any third person may right the name of any person at his sweet will then an assessee cannot be burdened with liability on the basis of such writing. That can be starting point of investigation but revenue has to establish that it is the assessee who has paid the money to certain concerns without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm capital gains of ₹ 50,05,578/- and since the assessee has filed separate appeal as well which is registered as ITA No. 66/JP/2020, the same have again become infructious and are not admitted. 91. In the result, the appeal of the Revenue is dismissed. ITA No. 66/JP/2020 92. In this appeal, the assessee has challenged the order passed u/s 154 by the ld CIT(A) for A.Y 2011-12 and has taken the following sole ground of appeal:- "In the facts and circumstances of the case and in law, ld. CIT(A), while passing the order under section 154, has erred in not considering the submissions of the assessee, already placed on record w.r.t the addition made by the ld. AO of ₹ 50,05,578/- on account of Long Term Capital Gain, in the Income Tax Computation Form. The action of the ld. CIT(A) is illegal, unjustified, arbitrary, against the facts of the case and also against the principles of natural justice. Relief may please be granted by deleting the said addition of ₹ 50,05,578/-." 93. The ld. AR submitted that the assessee had filed his return of income on 29.09.2011 declaring total income of ₹ 1,10,86,623/- and assessment was completed vide order passed u/s 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, a report from the Assessing Officer was called and in the said report, the Assessing Officer has stated that the assessee himself while filing the return of income u/s 148 of the Act has taken capital gains of ₹ 50,05,578/- in the computation of total income. Hence, the basis the said report of the AO, in the absence of any further submission by the assessee, the ld. CIT(A) has upheld the action of the Assessing Officer. Accordingly, it was submitted that there was no infirminity in the impugned order so passed by the ld. CIT(A). Hence, the ground of appeal so taken by the assessee be dismissed. 95. We have heard the rival contentions and perused the material available on record. We have gone through the return of income filed by the assessee in response to notice issued u/s 148 and find that in the computation of income filed along with the return of income, the assessee has offered long term capital gains on sale of shares amounting to ₹ 23,19,214/- and has also claimed long term capital loss on transfer of immoveable property amounting to ₹ 23,91,888/-, and after setting off long term capital gains against long term capital loss, the assessee has claimed ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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