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TMI Blog2022 (3) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... e to notices issued u/s 153A the assessee / legal heir realized that assessee is not associated with any of the projects viz. Bhoslewadi, Goregaon, Pune and Ladiwala Chawl in his individual capacity. Even during the course of recording of the Statement the assessee clarified that no cash interest was paid to the lenders who had advanced loans to various concerns of Rohan Group. When the jottings in rough sheets are not in themselves capable of expressing or describing the essence of the transaction the way AO has deciphered them especially without corroborative evidence of parties attributed to the transaction, and when there is no material to show nexus between the assessee herein and the alleged transactions, no addition to the income can be justifiably made. In other words, it is held that no addition can be made when there is nothing to establish that such payments as alleged have been received or expended. No enquiry in this direction is seen made by the Assessing Officer. We accordingly hold that the impugned addition of on-money payment and receipts made in assessee s case is on the basis of a mere dumb document and not corroborated by any other evidence and thus, not sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed pages are merely tentative workings of additional interest and there is nothing on record to hold that such workings had materialized and cash payment of interest was actually made. Under the circumstances we are unable to sustain the addition as made. We accordingly direct that the addition made by the Assessing Officer in respect of alleged cash payment of interest be deleted. X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 11,82,89,580/- on account of undisclosed income being negative peak. 2. The appellant craves leave to add to, alter, amend and /or delete all or any of the foregoing grounds of appeal. 3. The appellant prays before the Hon'ble Tribunal to delete the addition made by the AO to the extent confirmed by the Ld. CIT(A). A.Y. 2011-12 1. On the facts and in the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of ₹ 1,94,877/- on account of undisclosed income being negative peak. 2. On the facts and in the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of ₹ 17,20,35,681/- on account of alleged cash interest. 3. On the facts and in the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of ₹ 45,99,142/on account of alleged cash interest (Shivalik). 4. The appellant craves leave to add to, alter, amend and /or delete all or any of the foregoing grounds of appeal. 5. The appellant prays before the Hon'ble Tribunal to delete the addition made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹.4,71,48,962/- to brokers for purchase of Goregaon Property. Further on the basis of Page No. 11 of Annexure A6 the Assessing Officer has made an addition of ₹.4,00,000/- on account of alleged unaccounted payment towards purchase of property at Ladiwala Chawl. On the basis of seized document Page no. 15 of Annexure, A-1 the Assessing Officer has made addition of ₹.65,000/- on account of alleged cash household expenses. Also, a promissory note for ₹.50,00,000/- being document numbered Page No. 5 of Annexure A-5 was seized from the residence of appellant's employee Shri Vijay Jasani. This promissory note was seen to contain the signature of Harresh Mehta on behalf of Rohan Developers Pvt. Ltd. 8. On the basis of afore mentioned seized documents being Page nos. 8,14,10,11&15 of Annexure A1, A5 & A6 the Assessing Officer has held that assessee has made unaccounted investments in purchase of Pune Property at ₹.25,00,000/-, unaccounted payment for brokerage on purchase of Goregaon Property at ₹.4,71,48,962/- and purchase of Ladiwala Chawl at ₹.4,00,000/-. 9. The Assessing Officer has cited the statement recorded under section 132(4) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ans. I submit that if the receipts noted on this page are treated as my unaccounted income, said money should be presumed to be available with me for making the payments as noted on the other seized papers. I have incorporated all such items in the form of books and I am enclosing herewith copy of Profit & Loss Account, Balance Sheet and Cash Book generated as a result of all such transactions (Annexure 1). Based on the above l offer a sum of ₹ 29,66,34,233/- as my unaccounted income for the various assessment years as below. The above amount is computed as total of Unaccounted Income of ₹ 20,80,43,198/ - and peak negative cash balance in the Cash Book of ₹ 8,85,91,035/-. I further request that if any addition on account of any unaccounted income / receipts / expenditure / payments is proposed /made in my group, the same should be incorporated in the cash flow statement and the amount of income / negative cash balance and peak thereof should be reworked accordingly. AY Particulars Amount Amount 2006-07 Negative Peak Cash 23,44,692 23,44,692 2007-08 Unaccounted Income 10,50,00,000 Negative Peak Cash 12,72,672 10,62,72,672 2008-09 Unaccou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h seized material in respect of which the additions are made as he is offering the income in order to buy peace of mind and to avoid litigation. However, the disclosure made by the assessee is not voluntary and has been made only when the search took place and incriminating documents found from there and hence, the admission made by the assessee is purely on the basis of incriminating material and the Assessing Officer has rightly made the additions and confirmed by the Ld.CIT(A). 14. The Ld AR of the assessee submitted that the noting found on the impugned seized material namely Page nos 8,14,10,11 & 15 of Annexure A1, A5 & A6 are nothing but rough noting. Nothing incriminating emanates from these rough noting. The said documents are dumb documents, it does not specify as to who has entered into the transaction and with whom, whether, the said transaction is for purchase or sale of property. She contended that there is absolutely no material evidence with the revenue to link flow of alleged unrecorded transactions with the assessee. The Assessing Officer has not brought anything on record to prove that the transactions appearing in such dumb document has actually materialized. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually related or for what period such papers were drawn. The noting does not even bring clarity as to who paid cash and who received it and thus, no weight can be given on such rough sheets. The Ld AR stated that in the impugned orders passed by the Assessing Officer he has considered unaccounted receipt of cash on sale of Bhoslewadi Property, unaccounted payment of brokerage for Goregaon Property, unaccounted investment in cash for Pune Property, unaccounted interest paid in cash to various parties, unaccounted interest paid in cash by Shivalik ventures Pvt. Ltd in the hands of Late Jitendra Mehta on the basis of his conditional admission in the statement dated 26/27th July 2011 recorded u/s 132(4). The Ld AR argued that the statement recorded u/s.132(4) is not sacrosanct and admission made in the statement recorded u/s 132(4) can be modified/retracted in support of which AR has relied on the principle laid down by the ITAT in the case of Ms. Aishwarya K. Rai vs. Deputy Commissioner of Income-tax, Central Cir. 2, Mumbai reported in [2007] 104 ITD 166 (MUM.) (TM) wherein on second appeal, the Judicial Member, inter alia, held that subsequent retraction was correction of the ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase of Pune Property. Such loose sheets have been seized from the residence of the late assessee and during recording of statement u/s 132 (4) on being confronted with the loose sheets it was declared by late assessee Jitendra Mehta that if the receipts are treated as unaccounted income, said money should be presumed to be available for making payments as noted in the seized papers. What we note with bewilderment is that in the course of statement u/s 132(4) the late assessee though specifically asked to explain the jottings such as "Bhoslewadi & CFO" declined to explain stating that since a disclosure of ₹.100 crores has been made, any further clarification or explanation is not relevant. Apparently, the Revenue being satisfied with the admission as secured, has also not carried out any independent enquiry or investigation to ascertain the veracity of the transactions in movable /immovable properties as per seized material despite the assessee having renegaded from the disclosure made u/s 132(4) while filing the return of income. It is the assertion of the assessee now, as per return of income filed that such transactions never materialized and that the jottings are mere si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous observation that there is not even an iota of evidence to hold that any such transaction has been actually materialized. When the assessee had declined to explain/interpret the noting/ abbreviations, it was incumbent on the Assessing Officer to bring on record independent and corroborative material to prove that the rough noting reveal either unaccounted income or unaccounted expenditure or unaccounted investment of assessee. No addition is sustainable when there is nothing to establish that such payments have been actually received or expended especially in the absence of any enquiry with purported payer/payee of such sums. The Assessing Officer has not collected any independent evidence that could provide an acceptable narration for jottings as seen made in the seized material. We cannot persuade ourselves to agree to the finding of the Ld CIT(A) that because of the presumption available to Revenue u/s 132 (4A) r.w.s. 292C of the Act, there is no necessity of any independent enquiry for corroborating the contents of a document. As per law, the power to presume is not conclusive in that presumption is a rebuttable presumption as laid down by Hon'ble Supreme Court in Pullangode ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the noting in the seized papers reveal the unaccounted on-money receipts of the assessee. " b) As per the decision in the case of Nishan Constructions Vs. ACIT ITA No.1502/Ahd/2015, after considering the Hon'ble Apex Court's landmark decision in Common Cause, Vs. Union of India (2017) 77 taxmann.com 245 (SC) as well as CBI Vs. V.C. Shukla (1998) 3 SCC 410 (SC) it has been held such loose sheets deserves to be treated as a dumb document when full details such as dates, name of the recipient etc. are lacking. c) The Delhi ITAT in the case of SK Gupta V/S DCIT 63 TTJ 532, has held that addition made on the basis of loose sheets cannot be sustained as same does not indicate that any transaction ever took place and when it does not contain any information in relation to nature of transaction and name of the party to the transaction in question. d) In the case of SMC Brokers Limited v/s DCIT 109 TTJ 700, the Delhi ITAT has held when the diary seized does not contain any evidence regarding any receipts of money and also when the diary was not written by assessee or his employees, it cannot be substantiated assessee has earned any undisclosed income hence addition based on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. However, from the record we do not find any evidence that the Late Jitendra Mehta had entered into a transaction for sale of Bhoslewadi property. We also do not find any material on record in support of the allegation that the investment towards the property in Goregaon, Pune and Ladiwala Chawl were made by the assessee Late Jitendra Mehta. It is brought to our notice that at the time of filing the return of income in response to notices issued u/s 153A the assessee / legal heir realized that assessee is not associated with any of the projects viz. Bhoslewadi, Goregaon, Pune and Ladiwala Chawl in his individual capacity. Even during the course of recording of the Statement the assessee clarified that no cash interest was paid to the lenders who had advanced loans to various concerns of Rohan Group. 18. The above facts buttress our finding that when the jottings in rough sheets are not in themselves capable of expressing or describing the essence of the transaction the way Assessing Officer has deciphered them especially without corroborative evidence of parties attributed to the transaction, and when there is no material to show nexus between the assessee herein and the alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by the assessee and thus, the addition made by the Assessing Officer is not sustainable and is directed to be deleted. Accordingly, ground no. 2 is allowed. A.Y: 2008-09 23. For AY 2008-09, the only ground raised by the assessee pertains to the addition made by the Assessing Officer amounting to ₹.11,82,89,580/- in respect of negative peak and unaccounted income on sale of Bhoslewadi Property based on the seized page no. 1 of Annexure A-1. In view of our above findings given in paragraphs 16 to 18, we hereby direct to delete the said addition. Accordingly, appeal for AY 2008-09 is allowed. A.Y: 2011-12 Ground No. 1 24. The first ground raised by the assessee pertains to addition made by the Assessing Officer on account of negative peak & undisclosed income of ₹.1,94,877/-. The said negative peak was arrived at by the assessee after considering the impact of various seized materials as discussed above. The assessee in its statement recorded u/s 132(4) made such disclosure on account of negative peak and undisclosed income. However, while filing its return of income u/s 153A, the said amount was not offered for taxation. Hence, Assessing Officer made this additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,681/-. Having said so, I do not wish any of my associates to be inconvenienced and therefore to buy peace of mind and avoid litigations, I hereby offer the said sum of ₹ 17,20,35,681/-as unaccounted income in my case for the Financial Year 2010-11 relevant to Assessment Year 2011-12. I once again re-iterate that none of the entities have paid such interest and the disclosure of income is made by me only to buy peace of mind and avoid litigations." 27. During the course of hearing, the Ld.CIT(DR) has contended that the incriminating material found from the premises of Samir Shah has been explained by him as interest paid in cash by Rohan Group and that the assessee has also accepted the payment of interest in cash over and above cheque payments. Thus, he relied upon the finding of Assessing Officer and CIT(A) and urged to uphold the additions made by the Assessing Officer and confirmed by CIT(A). 28. The Ld AR of the assessee drew our attention to statement of Samir Shah recorded on 21.07.2011 u/s 132(4) of the Income Tax Act, 1961. The relevant extract is reproduced as under: - "Q.38 During the course of search at your residence at Shiv-Tapi Apartment various loose paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest paid to them. These workings prepared by me were tentative workings for discussions with my clients who were resisting such payment of additional interest. I may further add here that I was in the habit of writing names of persons who had referred the parties to me instead of the parties from whose bank accounts the cheques were actually received. Different parties were demanding much differential interest for various period of time. However, since all the clients had made the interest payments till 31-3-2010, all of them refused to pay such differential interest for any period prior to 31-3-2010 since the demands were made by the lenders subsequent to the year ending 31-3 2010. Further, the clients have even disputed the demand of such differential interest for the period subsequent to 1-4-2010. However, as a broker my duty is to put the lenders demand to the clients and arrive at mutually agreeable solutions. Therefore, to put a claim to the clients all these calculations were made which are found and seized from my residence. Most of these calculations were for the quarter beginning April 2010." 29. In view of the above statement given by Shri Samir Shah, the Ld A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Shah mentioned in above explanation to noting found on page no. 206 of annexure A-1 was correct that it was just a noting and rough working of the interest amount payable to his clients who had invested money through him." 31. Further, the Ld AR also drew our attention to the statements of various lender parties recorded u/s 131 during the course of penalty proceedings of Samir Shah. None of the parties have admitted that they have received any payment of interest in cash. The Ld AR of assessee has also submitted various documents of lenders viz., copy of their PAN, their acknowledgement of return of income and the copy of their bank statements in order to prove the identity & creditworthiness of lenders and genuineness of transaction. 32. We have carefully considered the matter. After hearing both the parties, in our view, the statement of the person who is creator of the document is crucial to understand the nature of transaction emanating from the said document. In the present case, Samir Shah has himself admitted that the amounts appearing in the said seized material are merely rough workings of interest prepared by him in order to present before his clients. Further, it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Shivalik Ventures Pvt. Ltd. of ₹ 45,99,142/·is also offered by me." 35. The Ld CIT(DR) argued that the Assessing Officer has rightly made addition since, the seized page shows the name of the Shivalik Ventures P. Ltd. and interest has been paid by it in cash. The Ld CIT(DR) relied upon the findings of Assessing Officer and CIT(A). However, the Ld AR of the assessee argued that the assessee has completely denied of making any payment in cash by Shivalik Ventures in his statement and that in order to buy peace of mind, he had offered to tax additional interest. Further, the Ld AR of assessee also placed reliance on the statement of Samir Shah, wherein he has stated that he has made tentative workings in respect of additional interest to be claimed by lenders to present it before his clients. Thus, the Ld AR contended that the addition made by Assessing Officer is purely on the basis of rough/tentative workings, hence is liable to be deleted. 36. We have already given our findings in favour of assessee while disposing off similar addition contested in ground no. 2 after considering the facts as per paragraph 25 to 31 above. In view of our findings as per paragraph 32 ..... 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