9911796707
TMI Blog2024 (7) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... zure operation u/s 132 of the Income Tax Act, 1961 ('Act' for short) was conducted on 16/10/2019 at the residential as well as office premises of various persons including the Assessee. A notice dated 23/03/2021 u/s 153A of the Act was issued after recording the satisfaction note for reopening of case u/s 153A of the Act beyond six years and served upon the assessee require him to file his return of income in respect of the assessment year under consideration. In response, the assessee has not filed the return u/s 153A of the Act. It is found by the A.O. that the assessee had filed his return of income u/s 139 of the Act on 30/07/2012 declaring income of Rs. 12,45,980/-, therefore, notice u/s 142(1) of the Act was issued to the assessee. As the assessee has not complied with the notice, the income of the assessee was assessed u/s 153A(1) (b) read with Section 144 of the Act on total income of Rs. 1,49,85,980/- by making addition of Rs. 1,37,40,000/- u/s 69 of the Act on account of unexplained investment of the assessee. Various additions have also been made against the Assessee for Assessment Year 2013-14 to 2018-19 u/s 153A (1)(b) of the Act. 4. Aggrieved by the assessment orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Sh. Ramesh Kumar Goyal has given his statement on oath u/s 131(1A) of the Act. Based on the statement made u/s 131(1A) of the Act coupled with the diary seized during the search conducted u/s 132 of the Act from the custody of Sh. Ramesh Kumar Goyal, the above addition has been made in the hands of the Assessee which has been confirmed by the Ld. CIT(A). 7. The Ld. Counsels for the assessee vehemently submitted that the Ld. CIT(A) has erred in confirming the addition made on the basis of a diary found at the premises of Shri Ramesh Kumar Goyal by applying peak credit theory without appreciating that the seized diary found from the premises of the 'third party' and was not in the handwriting of the assessee. The assessee has specifically denied having any transaction with Sh. Ramesh Kumar Goyal while giving statement u/s 132(4) of the Act. Apart from the same, no such alleged seized diary as copy was given to the assessee and no opportunity of cross examining of Sh. Ramesh Kumar Goyal has been given to the assessee despite of specific request made by the assessee. Therefore, submitted that the addition made based on the diary found at the premises of 'third party' cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t not u/s 132 of the Act. The assessee has denied having any business transaction either by cash or cheque with said Sh. Ramesh Kumar Goyal. Though the authorities have heavily relied on the statement of the third party i.e. Sh. Ramesh Kumar Goyal, no opportunity of cross examination has been given to the Assessee even though the Assessee has specifically sought for opportunity to cross examine the said Sh. Ramesh Kumar Goyal vide letter dated 12/11/2020 which is placed at Page No. 77& 78 of the paper book. Further while framing the assessment in the case of Sh. Ramesh Kumar Goyal, it has been held that in view of provision of Section 278D read with Section 132(4A) of the Act, the onus was one Sh. Ramesh Kumar Goyal to substantiate the contents of the diary which could not be proved, therefore, entire addition mentioned in the diary has been made in the hands of Sh. Ramesh Kumar Goyal including the amount which is the subject matter of the present addition made in the hands of the assessee. It is well settled law that the same income cannot be taxed twice. As the entire addition has already been made in the case of Sh. Ramesh Kumar Goyal in whose possession the incriminating docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -15) (Revenue) 18. The Ground No. 1 and its sub Grounds of the Assessee's Appeal are regarding addition made by the A.O. based on the diary found at the premises of third party which has been partly confirmed by the Ld. CIT(A) by applying peak credit theory. 19. The Revenue in its Ground No. 1 to 4 challenged action of the Ld. CIT(A) in restricting the addition made on account of unexplained receipts and payment in cash from Sh. Ramesh Goyal by applying the peak credit theory. 20. We have already held in the case of the Assessee for AY 2012- 13 that the addition made on the basis of diary found at the premises of third party cannot be sustained and deleted the addition made by the A.O. Since there is no change of facts and circumstances, by applying the very same findings and conclusions, we allow the Ground No.1 and its sub grounds of the Assessee. 21. Ground No. 1 to 4 of the Revenue are regarding deleting the partial addition made by t he A.O. on account of unexplained receipts and payments in cash from/to Ramesh Goyal by applying the theory of peak credit. 22. In view of deleting the additions made by the A.O. based on the diary found at the premises of third party in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition to Rs. 1,00,000/- for advance paid for vehicle booking and deleted the rest of the addition in following manners:- "The appellant submitted during the appellate proceedings that Innova Car was booked by giving an advance of Rs. 1,00,000/- in cash on 11.07.2014 to M/s Thirty Six Toyota dealer and same is recorded in the books of account. The receipt issued by M/s Thirty Six Toyota dealer was also found and seized at Page 11 of A-1. The appellant dropped the idea for purchase of the said Car and accordingly requested to M/s Thirty Six Toyota dealer to transfer the booking in the name of Mrs. Roma Grover w/o Shri Sanjeev Grover R/o House No.1232, Sector-14, Faridabad (family friend) who was also interested in buying the said vehicle in order to avoid the waiting time. Accordingly, the appellant got the refund of Rs. 1,00,000/- from M/s Thirty Six Toyota on 17.10.2014 through cheque and the said proceeds have been credited to the bank account of the appellant maintained with HDFC Bank Account No.06191000034512. It was contended that AO presumed on the basis of receipt for advance booking, the appellant has purchased the said vehicle and made the addition. Further, it was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said vehicle which has been done in order to avoid the waiting time. It is found that the assessee has also got the refund of Rs. 1, 00,000/- through cheque which has been credited to the HDFC Bank account of the Assessee which can be corroborated from the seized document marked as Page A-1/12 where the application of such transfer of booking of car was made by the assessee and also from the ledger account where the advance of purchase of car have been recorded which is placed at Page No. 27 of the Paper Book. Considering the above facts and circumstances we delete the addition of Rs. 1,00,000/- sustained by the CIT(A) on account of advance booking. 31. In so far as deletion of the addition of Rs. 14,00,000/- is concerned, it is seen from the record that the Ld. CIT(A) while deleting the addition observed that the transaction of Rs. 5,50,000/- on account of purchase of Maruti Car pertaining to Sh. Digvijay Singh son of the Assessee who is a separate assessee and separate proceedings u/s 153C of the Act has been initiated by the A.O. It is not the case of the A.O. that payment of the above transaction pertaining to Sh. Digvijay Khatana has been made by the Assessee, therefore, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .55005678494. The said advance was accounted for in the regular books of account and out of declared bank account of the appellant. The appellant in the assessment proceedings filed the statement of affairs and bank statements on which the said transaction was reflected. The appellant further explained that the appellant has charged interest amounting to Rs. 3,64,380/-in the assessment year 2014-15 and Rs. 4,74,660/- received interest in the financial year 2014- 15 relevant to assessment year 2015-16 which is duly shown in the computation of income and paid the taxes due thereon. It was submitted that interest rate of 2% was nowhere mentioned in any of the seized document and the AO has made addition of Rs. 20,00,000/- purely based upon presumption and without any basis. After looking into facts and circumstances of the case, it is observed that the appellant had given loan of Rs. 50,00,000/- to M/s Supra Finance through his bank account received the same back in his bank account. It was explained during the appellate proceedigns that the appellant has charged interest amounting to Rs. 364,380 for the A.Y. 2014-15 and Rs. 4,74,660/- for the A.Y. 2015-16 which is-duly shown in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration. The Assessee could not furnish any satisfactory explanation in respect of such loan before the A.O. Therefore, the addition of Rs. 22,00,000/- was made by the A.O. on account of unexplained loan u/s 69 of the Act and also added Rs. 2,25,000/- on account of interest income, which has been confirmed by the Ld. CIT(A). 42. The Ld. Counsel for the Assessee vehemently submitted that the addition of Rs. 22,00,000/- made on account of unexplained investment based on the loose paper found during the course of search from the Assessee and Rs. 2.25 lacs made on account of interest on presumption basis on the said investment. The addition has been made purely on surmise and conjunction based on the loose sheets, wherein certain amounts have been jotted and there is no corroborative material/evidence on record to conclude that such document has materialize into transaction giving rise to income of the Assessee which had not been disclosed in the regular books of accounts of the Assessee. The ld. Counsel relying on the several judicial precedents, submitted that the additions made based on the dumb document requires to be deleted. 43. The Departmental Representative relying on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Tribunal wherein it was held that ad-hoc/dumb documents without any corroborative evidence/finding that the alleged documents have materialized into transaction cannot be deemed to be the income of the Assessee. The relevant part of the judgment is reproduced herein under:- "The tribunal returned a finding of fact that there is no corroborative or direct evidence to presume that the notings / jottings had materialized into transactions giving rise to income not disclosed in the regular books of accounts. 4. Consequently, the tribunal upheld the findings of the Commissioner of Income-tax (Appeals) and agreed with the view taken by the latter that the assessee was liable to tax only on those receipts which had been proved to be income in the hands of the recipient. As a result thereof, the tribunal found no reason to interfere with the findings recorded by the Commissioner of Income-tax (Appeals) on the ground that the same were based on valid and cogent materials placed on record and also produced before the Assessing officer during the course of assessment proceedings. The tribunal also noted that all the evidence, materials, explanations were furnished before the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they were in accordance with facts; (vi) The court has to be on guard while ordering investigation against any important Constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence it is not admissible in evidence. 50. Considering the above facts and circumstances and the judicial precedents (supra), in the absence of any corroborative evidence, the loose sheet seized during the course of search from the premises of the Assessee which is nothing but a dumb document which did not contain full details about the dates, parties name, absence of signature and in the absence of any corroborative material, could not have been relied by the authorities below. Accordingly, finding merit in Ground No. 2 of the Assessee, we delete the addition of Rs. 22,00,000/- made on account of unaccounted investment and also delete Rs. 2,25,000/- made on account of interest income. Accordingly, Ground No. 2 of the Assessee is allowed. 51. Ground No. 3 of the Assessee is regarding addition of Rs. 86,000/- made on account of purchase of specta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the addition has been made for AY 2016-17 and the issue has been dealt in detail while deciding Ground No. 2 of Assessee's appeal in ITA No. 1864/Del/2023 and held that in the absence of any corroborative evidence, the loose sheet found during the course of search from the premises of the Assessee which is nothing but a dumb document, which did not contain full details about the dates, parties name, absence of signature and in the absence of any corroborative material, could not have been relied by the authorities below and deleted the addition. Since, there is no change in facts and circumstances by applying the very same finding and the conclusion, we delete the addition of Rs. 2,25,000/- and Rs. 5,72,000/- by allowing Ground No. 2 of the Assessee's Appeal. 57. Ground No. 1 to 4 of the Revenue are regarding deleting the partial addition made by the A.O. on account of unexplained receipts and payments in cash from/to Ramesh Goyal by applying the theory of peak credit. 58. In view of deleting the additions made by the A.O. based on the diary found at the premises of third party in the Ground No. 1 of the Assessee's Appeal, the Ground No. 1 to 4 of the Revenue's Appeal challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the loan extended in cash from unexplained source of income made on the basis of document seized during the search marked as A-1/76 and Ground No.2 is regarding the addition of Rs. 1,78,770/- made on account of interest/commission earned by the Assessee on the loan extended from unexplained sources of income 67. Brief facts of the case are that, a search and seizure operation u/s 132(1) was carried out in the case of the Assessee on 16/10/2019. The Ld. A.O. observed that the loan of Rs. 22,10,000/- along with interest/commission is recorded in the documents found and seized during the course of search proceedings from the Assessee. The Ld. A.O. observed that the onus lies on the Assessee to give satisfactory explanation of the transactions recorded in the seized documents as per the provision of Section 132(4A)/ 292C of the Act, accordingly, the A.O. made the addition which has been confirmed by the Ld. CIT(A). 68. The identical issue regarding the addition based on the loose sheet has been already discussed in detail and deleted the addition for A.Y 2016-17 in ITA No. 1864/Del/2023 while dealing with Ground No. 2 of the Assessee. By relying on the very same adjudication and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of search proceedings, various documents were found and seized from the Assessee. On the perusal of the same, it was found that the Assessee has purchased various jewellery items on 27.12.2018 for Rs. 1,07,24,720/-. The Assessee could not explain source of acquisition of the same. It was claiemd by the Assessee that Assessee's father has given 1.5 kg of gold as gift to the Assessee. To substantiate the said claim, an affidavit of Assessee's father has been filed, but not produced his father before the A.O. Thus, the A.O. was of the opinion that the Assessee has failed to substantiate the contents of the affidavit of father of the assessee in respect of gift of gold of 1.5 kg. Accordingly, the Ld. A.O. made addition of Rs. 1,07,24,720/- on account of unexplained jewellery u/s 69 of the Act. 76. During the course of appellate proceedings, it was reiterated by the Assessee that the jewellery found at the time of search proceedings and documents seized was out of the gift of 1.5 kg of gold by Assessee's father and remaining jewellery were received by the Assessee and his family members on various occasion such as marriage. It was also contended that the old jewellery has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses, the return items have also been considered and the working is not correct. In Page No.A-1/78, (Page No.35 of PB) the figures have been Rs. 19,08,547/- whereas the Ld. AO incorporated Rs. 28,08,547/-. On page No.A-1/77, (Page No.36 of PB) the same amount of Rs. 28,09,125/- have taken twice and including in page No.78 also. On page No.A-1/22, (Page No.37 of PB) the return figure have also been incorporated amounting to Rs. 1,08,269/-, Rs. 1,35,478/- and Rs. 1,16,929/-. Similarly on page No.A 1/68, (Page No.38 of PB) the figure of Rs. 53,625/- has been included twice as the same figure is part of the figure of Rs. 66,702/- as reconciled hereunder:- Page Nos. Figures shown in the seized documents Figures estimated by Ld. A.O. Difference Explanation A-1/78 (Page No. 35 of PB) 19,08,547 28,09,125 9,00,578 As per seized document amount mentioned was 19,08,547/- whereas the A.O adopted 28,09,125 a-1/77 (Page No. 36 of PB) - 28,09,125 28,09,125 Repetition of same figure as shown on page No. A-1/78 A-1/22 (Page No. 37 of PB) 34.380 grams return 1,08,269 1,08,269 Return items have been considered while estimating the addition A-1/22 (Page No. 37 of PB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee on account of list of exchange of jewellery. The Ld. CIT(A) has on wrong facts confirmed the addition without appreciating the fact that jewellery found during search is the same and no fresh purchase have been made. Copy of the valuation report is submitted and is marked as page No. 42 and 43 of PB." 79. Per contra, the Departmental Representative by relying on the findings and conclusion of the Lower Authorities sought for dismissal of Ground No. 4 of the assessee. 80. We have heard the parties perused the material available on record. It is the case of the Assessee that the A.O. has taken the figures twice in some cases and return items have also been in cooperated and included twice and not properly made the working. The Ld. Counsel has reconciled the jewellery in following manners:- Page Nos. Figures shown in the seized documents Figures estimated by Ld. A.O. Difference Explanation A-1/78 (Page No. 35 of PB) 19,08,547 28,09,125 9,00,578 As per seized document amount mentioned was 19,08,547/- whereas the A.O adopted 28,09,125 a-1/77 (Page No. 36 of PB) - 28,09,125 28,09,125 Repetition of same figure as shown on page No. A-1/78 A-1/22 (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arjun Color Lab) have been mentioned. It was clarified before the lower authorities that actually the payment of Rs. 2,41,000/- was made partly through cheque and partly in cash which has recorded in the statement of affairs. The Ledger copy showing the details of the payments to the said person is enclosed and marked as page No.45 of PB. As per seized document A- 1/66 (Page No.46 of PB) amount of Rs. 3,00,000/- plus taxes have been mentioned against FNP Wedding & Events India Pvt. Ltd. It was clarified before the lower authorities that actually the payment of Rs. 5,22,000/- against the tax invoice received from the said company. Entire payments have been made through banking channels from his saving bank account maintained with Axis bank. The said payments have been recorded in the statement of affairs. The Ledger copy showing the details of the payments to the said person and copy of the bank account are enclosed and marked as page No.47 to 64 of PB and statement of affairs is marked as Page No. 65 and 66 of PB." 84. Per contra, the Departmental Representative relied on the findings of the Lower Authorities and sought for dismissal of the Ground No. 5 of the Assessee. 85. Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k and SBI and the payments have been recorded in the statement of affairs and shown as personal drawings. The Ledger copy of account of the said party along with GST invoice is submitted and is marked at Page No. 47 to 64 of PB and statement of affairs is marked as page No. 65 and 66 of PB. Thus, in our opinion, the authorities have committed error in not considering the above documents while making the above addition. Considering the above facts and circumstances, we are of the opinion that the Ld. CIT(A) have committed error in confirming the addition of Rs. 27,17,000/- on account of unexplained marriage expenses, thus, finding the merit in Ground No. 5 of the Assessee the said addition is hereby deleted. 89. In the result, the Appeal of the Assessee in ITA No. 2589/Del/2023 is partly allowed for statistical purpose. ITA No. 2970/Del/2023 (Assessee) (A.Y 2020-21) 90. The Ground No. 1 and its sub Grounds of the Assessee's Appeal are regarding addition made by the A.O. based on the diary found at the premises of third party which has been partly confirmed by the Ld. CIT(A) by applying peak credit theory. 91. We have already held in the case of the Assessee for AY 2012- 13 that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) a) Search and seizure action w/s 132 of the Income Tax Act, 1961 was undertaken against the assessee on 16/10/2019 During the course of search action conducted at the residential premises situated at House No. 453-454, Sector-9, Faridabad, cash amounting to Rs. 29,79,400/- was found out of which cash amounting to Rs 29,00,000/- b) During the course of recording of his statement, he had explained the source of cash found and seized. In his reply, he had stated that the cash found from his premises is the accumulation of following:- (i) Cash amounting to Rs. 22.41.205/- was received as Sagans from relatives on the occasion of his daughter's marriage Charu on 25.06.2018. The entire list of relatives and their sagan amount was also submitted before the DDIT (Inv.), Faridabad on 19.02.2020, a copy of the said letter is also enclosed for your kind perusal. (ii) Further, at the request of DDIT(Inv.), Faridabad during post search proceedings, the assessee had also given addresses of certain persons for verification. On the date of search, the assessee had accumulated cash balance of Rs. 22.01.700/- and the balance cash is belonged to the savings of his wife, father who is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contention of the Assessee taken before the Lower Authorities and further submitted that the additions have been made on presumption basis applying two percent per month interest rate and the same has been made based on the dumb document seized during the course of search. The additions have been made purely on surmise and conjectures without there being any corroborative evidence. 100. Ld. Counsel has made following arguments by explaining the seized document:- "presumed the figures as interest and applied 15% interest and worked out amount of principal amount of loan/ investment but actually the names mentioned in the above document are the names of tenants from whom the assessee and his wife received rental income through banking channels after deducting TDS and charging of service tax or GST. The entire income received through banking channels from, such tenants have been reflected in the return of income of the assessee and his wife and duly reconciled with Form No.26AS. It is pertinent to mention here that:- Shiva" means Shiva Telecom, as per seized documents A- 1/19b, the figure of Rs. 45,000/- has been mentioned which has been shown as rental income on which servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be out of place to mention here that all these documents along with the explanation was filed before the Ld. AO and Ld. CIT(A) but both the authorities, have not considered and the Ld. AO presumed the figures as interest, grossing up the hypothetical principal figure and made high pitched addition without any basis and same is unlawful and illegal which is further confirmed by the Ld. CIT(A) by mentioning wrong facts in his order." 101. Per contra, the Departmental Representative relied on the findings of the Lower Authorities and sought for dismissal of Ground No. 3 of the Assessee. 102. We have heard the parties perused the material available on record. The above addition has been made based on the loose slips found and seized during the course of the search, which are marked as A-1/2 to A-1/8 and A-1/9b placed that 38 to 45 of the Paper Book. 103. From the perusal of the seized document, there are certain amounts have been jotted. The A.O. presumed that the said amount as monthly interest @2% per month and based on the entries jotted therein, worked out the principal amount of loan investment by applying interest @24% per annum. Further considering the rental agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee. 109. We have heard the parties perused the material available on record. During the assessment proceedings, the Assessee give a detailed explanation of each of the seized document marked as Annexure-A1 in following manners:- 110. It is observed that the Serial No. 1 to 12 pertains to assessee for renovation of house property; the payments have been made either through cash or banking channels which are reflected in the statement of affairs which is produced at Page No. 10 of Paper Book. The Assessee has gave explanation to each seized document before the A.O. as well as the Ld. CIT(A) and also produced the cash flow statement and ledger accounts of building renovation, bank account from which the payments have been made. Both the authorities have not looked into the same and gave any findings. 111. Further, the entries recorded in the seized document marked as A-1/25 produced at Page No. 178 of the PB amounting to Rs. 10,27,405/- pertaining to son of the Assessee Sh. Digvijay Singh and he was subject to the assessment u/s 153C of the Act and the said entry/amount has been considered thereon. The copy of the assessment order is also placed at page No. 179 to 187 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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