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TMI Blog2025 (1) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 2,50,00,000/- is further vitiated in law as it is without proper opportunity and without supporting by any independant evidence in view of specific denial by Assessee. 4. That the Addition of 2,50,00,000/- is maintained in inappropriate appreciation of evidence and is maintained on surmises and conjectures. 5. That on facts the learned CIT Appeals erred in maintaining the addition of 2,50,00,000/- in as much as the Assessee has filed duly confirmed letter from Govindraja Group Mills accepting the account statement and no Cash Payment by said Govindraja Group and further in rejecting the explanation of Assessee that 2,50,00,000/- represents 2 L.C.'s of 1.25 Cr. each Feb 2013 for which it was claimed that double deduction was wrongly claimed. Therefore the addition maintained at 2,50,00,000/- is liable to be allowed." 3. During the course of hearing, the Registry has pointed out a delay of 702 days in filing the present appeal before the Tribunal. The learned Counsel, Shri Kapil Hirani, appearing for the assessee, at the very outset, invited attention of the Bench to the Affidavit filed seeking condonation of delay and took us through the contents of the Affidavit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that having filed the copy of the appeal with the office of the D.R., the procedure filing of the appeal stood completed and consequently the copy of the appeal remained to be filed with the Registry, as was required to complete filing process. The cause of delay in filing of the appeal thus seems to be reasonable and on a conspectus of the facts and the affidavit so filed by the Counsel of the assessee, we are inclined to condone the delay in filing of the appeal in the interest of natural justice. In our view, the assessee should not suffer due to latches on the part of his legal advisor. We thus condone the delay of 702 days in filing of the appeal and proceed to adjudicate the appeal on merits. 5. The sole dispute involved in this appeal relates to addition sustained by the learned CIT(A) amounting to Rs. 2,50,00,000, allegedly held to have been received by the assessee in cash. 6. The assessee is engaged in the business of running a Ginning Mill and dealing in cotton. A search and seizure action under section 132(1) of the Income Tax Act, 1961 ("the Act") was conducted on the assessee on 12/02/2015. During the course of search, it is the case of the Revenue that certain f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer is nothing but the balance pertaining to entities of Govindraja Mills Group and books of accounts of the assessee against sales made by the assessee the said entities. He vehemently averted that no defect or deficiencies were found in the books of account. 10. That with respect to the amount of Rs. 2,50,00,000, appearing in the said document, the contention of the assessee is that the said amount pertains to two Letter of Credits (L.C.) of Canara Bank of Rs. 1.25 crore each dated 04/02/2013 and 07/02/2023 received by the assessee and which were reflected in the books of accounts in earlier financial year. 11. Our attention was invited to Page-115 of the compilation having submissions made before the learned CIT(A) wherein the extract of statement recorded of Shri Ramesh Rander, Director of assessee is placed wherein the assessee in response to specific query raised has denied receiving any amount in cash and further that the said amount was received by way of L.C. which according to the assessee was also stated in the statement recorded during the time of search. It is further submitted by the assessee that the said sum of Rs. 2.5 crore was received by way of tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition has been made by the Assessing Officer pertaining to the same amount of Rs. 2.5 crore and consequently the learned Counsel for the assessee argued that considering that the Assessing Officer made identical addition in the assessment year 2014-15 as well, it is very clear that the Assessing Officer himself was not certain with respect to the date of receipt of this amount and as such proceeded on a witch hunt and made the addition in both the years i.e., in assessment year 2014-15 and 2015-16. Thus, the Assessing Officer made the addition in both the years presumably that even if one addition is ultimately negated, still the Department will not be a loser. The learned Counsel for the assessee further argued that under any case the documents referred to and relied upon by the Assessing Officer has to be referred to in full and not in part as is the trite law. The balance as mentioned in the said document, as stated hereinabove, pertains to the balance as appearing in the books of accounts of the assessee with respect to the sales made to companies pertaining to Govindraja Mills Group and consequently the said amount has already been offered for taxation as the same has been inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 of "The BSA 2023", in the assessment Proceedings, when notice is given to the assessee to produce the books of account, in support of the return submitted the books of account maintained in the regular course of business, thus produced, insofar as their contents are concerned, constitute evidence, and thus the entries afford prima facie proof of correctness and thus are of evidentiary value. If the Assessing Officer does not find specific defects in the books of account, the entries in such books of account, are conclusive as to their evidentiary value. In other words, all the entries in the books of account must be proved that they are in accordance with facts. The entries in the books of account can be considered correct and authentic, when they are supported by independent evidence. In the course of assessment if the circumstances suggest that the books are not reliable based on the information collected by the Assessing Officer, pursuant to the verification made by him, the information must be put to the assessee for his explanation. Based on rejection of accounts if assessment is made, such assessment will be sustained only when there is nexus to the material on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount of Rs. 2,50,00,000, as alleged by the Assessing Officer. 16. It is further undisputed that the balance of Rs. 5,10,19,465, appearing in the said document is the sum total of the recoverables as appearing in the books of accounts of the assessee pertaining to the balance against sales made to companies belonging to Govindraja Mills Group. The Assessing Officer thus proceeded to make the addition solely on the basis of this particular document, ignoring the statement recorded of the assessee and without examining the party who has allegedly paid the cash or the party who has allegedly prepared the said document and without bringing on record any independent evidence to suggest that the assessee in fact received the said amount of Rs. 2.5 crore. What is very important is that, as rightly pointed out by the learned Counsel for the assessee that the Assessing Officer also made identical addition in assessment year 2014-15 which itself makes it very clear that the Assessing Officer himself was not clear as to when this alleged amount was actually received by the assessee and as such he proceeded to make identical addition in both the years. This stand of the Assessing Officer c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Dhakeshwari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) and Chuharmal V. CIT (1998) 172 ITR 250 (SC) the Court held that although strict rules of the Evidence Act do not apply to income tax proceedings, assessment cannot be made based on imagination and guesswork. The substantive and normal rule of evidence applies together with the principle of natural justice. The Hon'ble Supreme Court in the case of Umacharan Shaw & Bros v. CIT (1959) 37 ITR 21 (SC), the Court held that suspicion, however strong cannot take the place of evidence. In the case of Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 (SC) the Court held that, when an affidavit is filed the averment therein is assumed to be correct unless the same is proved otherwise. The Hon'ble Supreme Court in the case of Kishan Chand Chellaram v. CIT [1980] 125 ITR 713 (SC), the Court held that though the proceedings under the Income are not governed by the strict rules of evidence, the department is bound to afford an opportunity to controvert and cross- examine the evidence on which the department places its reliance on. The Hon'ble Supreme Court in the case of Andaman Timber Industries v. CCE (2015) 127 DTR 241 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis for making any addition much less the addition of Rs. 2,50,00,000, as has been made by the Assessing Officer in the present case and more particularly when it has not been established that the assessee actually received the said sum and further when the entire balance, as mentioned in the impugned document, is duly accounted for in the books of accounts of the assessee and the entire sales having been duly recorded in the books of accounts and no sales have been found to have been made outside the books and no other evidence having been established to prove the assessee having actually received the said sum. It is excruciating to note that the addition of Rs. 2.5 crore has been made without any charging provision so as to fall within the four squares of law. Nothing can be more painful to note that such order has passed the muster of section 153 of the Act. Considering the totality of the evidence on record and the arguments made, we are of the considered view that the Assessing Officer grossly erred in making the addition of Rs. 2,50,00,000, and which was wrongly confirmed by the learned CIT(A). Accordingly, we set aside the impugned order passed by the learned CIT(A) and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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