9911796707
TMI Blog2024 (8) TMI 1536X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 6,20,00,000/- from various parties through Mr. Sachin Nahar, which is not reflected in the return of income and therefore has escaped assessment, reopened the assessment by recording the following reasons: "Reasons recorded for reopening AY 2017-18 reads as follows: "1. Brief Facts of the case: In original return of income for AY 2017-18 was filed by the assessee on 02.02.2018 by declaring Total Income of Rs. 18,16,300/-. The Income was revised on 15.02.2018 by declaring Total Income of Rs. 22,77,170/-. The Income was further revised on 22.07.2018 by declaring Total income of Rs. 31,47,670/-. This case was not subjected to Scrutiny assessment u/s. 143(3) of the Act. 2. Brief details of information collected/received by AO : In this case information in respect of Shri NARENDRA SAMPATLAL BAFNA, being Cash loan of Rs. 6,20,00,000/- was received from DCIT Central Circle 1(1) Pune through the Insight Portal. The Information was passed on by the DCIT Central Circle 1(1) Pune on the basis of the details emerged during the statement recorded u/s. 132(4) of Shri Sachin Nahar during the course of Search and Post Search enquiries in the case of Shri Sachin Nahar by the Investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Sachin Nahar was asked to submit the above said details. On the basis of details provided by Shri Sachin Nahar, particularly name, PAN, mobile No. and other details, efforts have been made to identify various Depositors and Borrowers. In this regards, the details of the following Borrower who has borrowed amount mentioned in table below in CASH. Sl. No. Name PAN Amount Deposited in CASH (Rs.) 1 Narendra Sampatlal Bafna AAVPB7561N 6,20,00,000/- The above transaction took place in cash. In the case of borrowers, since they have borrowed funds in cash, it is violation of provisions of section 269SS & 269T of the Act and the interest amount paid by them in cash is their unaccounted income. Shri NARENDRA SAMPATLAL BAFNA (PAN: AAVPB7561N), has taken cash loan of Rs. 6,20,00,000/- from various parties through Shri Sachin Nahar during the FY 2016-17 relevant to AY 2017-18. During the course of the Search action u/s. 132(4) of the IT Act, statement u/s. 132(4) of the IT Act, 1961 of Shri Sachin Nahar was recorded wherein Shri Sachin Nahar has admitted these facts and submitted the related documents regarding cash loan taken by the party and submitted the details submission c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening of the assessment as requested by the assessee. 4. During the course of assessment proceedings the Assessing Officer asked the assessee to explain as to why the amount of Rs. 6,20,00,000/- received by the assessee as cash loan from various parties through Shri Sachin Nahar should not be added u/s 69A of the Act and brought to tax by invoking the provisions of section 115BBE of the Act. The assessee replied that the provisions of section 69A of the Act are not applicable in the case of the assessee since as per the reasons for reopening, the assessee has received cash loan from various parties through Shri Sachin Nahar i.e. if the money is borrowed, it cannot be considered as the assessee's own money. Further, the assessee also denied the allegation of the Revenue that he has taken any cash loan from Shri Sachin Nahar during the year. The assessee submitted that he does not know Shri Sachin Nahar at all. Apart from the above, the assessee also contended that the proceedings in the case of the assessee should have been initiated and completed u/s 153C of the Act as the information pertaining to the assessee was received during the course of search proceedings. 5. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153C and not u/s 147 of the Act. Further addition also cannot be made u/s 69A of the Act especially when Shri Sachin Nahar has stated that the assessee had taken loan and there is no other corroborative evidence. He also observed that neither copy of the statement was provided to the assessee nor produced or made available during the appellate proceedings and neither any reply was sent in the matter. The relevant observations of the CIT(A) / NFAC deleting the addition as well as cancelling the re-assessment proceedings read as under: "Ground Nos. 2 to 5 relate to challenging the validity of reopening of assessment proceedings carried out under section 147 of the Income Tax Act, 1961 and the addition made of Rs. 6,20,00,000 under section 69A of the Income Tax Act on account of unexplained cash loans availed from various parties through Sh. Sachin M. Nahar. All these grounds of appeal are taken up together for adjudication. An analysis of letter No. Pn/DCIT. Cen. Cir.1(1)/Sharing of Info./2020-21 dated 05.03.202 of ACIT, Central Circle 1(1), Pune and reasons recorded show that the appellant has taken loans amounting to Rs. 6,20,00,000/- through Shri Sachin M. Nahar and that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment, a copy of the standard form/request sent by the Assessing Officer for obtaining approval of the Superior Officer should itself be provided to the assessee. This would contain comment or endorsement of the Superior Officer with his name, designation and date. The Assessing Officer shall not merely state the reasons in the letter addressed to the assessee. (b) If the reasons make reference to any other document or a letter or a report, such document or letter or report should be enclosed to the reasons. Such a portion as it does not bear reference to the assessee concerned could be redacted. (c) The order disposing of the objections should deal with each objection and give proper reasons for the conclusion. (d) A personal hearing shall be given and minimum seven working days advance notice of such personal hearing shall be granted. (e) if the Assessing Officer is going to rely on any judgment/order of any Tribunal or Court reference/citation of these judgments/orders shall be provided along with notice for personal hearing so that the assessee will be able to deal with/distinguish these judgments/orders. During assessment proceedings, the assessee also request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments. There is no Para 13 in the assessment order which has been referred in the Assessment Order and again in Paragraph 20 of the assessment order. Further, there is no dispute as to nature of transaction in question and it has been stated to be loan taken by the appellant (LIABILITY) and the same can by no stretch of imagination be treated as income in the absence of any other corroborative evidences and hence no addition u/s 69A can be made in such a case. In Para 11 also there is mention of seized materials as Bundles No. 1 to 28 but neither the copy of same were provided to the Assessee nor produced / made available during the appellate proceedings and neither any reply was sent in the matter. In view of the above, Ground No. 4 of the appeal is allowed. Neither during the assessment proceedings nor during the appellant proceedings nor in the assessment order, there is disclosure of the evidences based on which assessment has been framed except stating that statement of Sh. Sachin Nahar were recorded u/s 132(4) and 131 of the Act and that there is some material as seized as Bundle No 1 to 28 which contain details of his money lending business in cash and the Notings here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer to assess the income of the assessee under section 153C. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 6,20,00,000/- u/s 69A by holding that no addition can be made u/s 69A being the nature of transaction is loan taken and ignoring the fact that the assessee has denied such transaction during assessment proceedings without supporting evidence and the AO has therefore rightly taxed the said transaction u/s 69A. 3. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the fact that mere mentioning a wrong section by the AO is not fatal as held by the Hon'ble ITAT(SMC)"C" Bench, Bangalore in the case of Shri Arif Vs ACIT in ITA No. 976/Bang/2022 . 4. Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in holding that the assessment should have been made u/s 153C of the Act, when the Hon'ble Bombay High court in the case of CIT Central-III, Mumbai Vs. M/s Arpit Land Pvt. Ltd. with CIT Central-III, Mumbai Vs. M/s Ambit Reality Pvt. Ltd. in Income Tax Appeal No. 83 of 2014 upheld the decision of the ITAT that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the order of the CIT(A) / NFAC quashing the re-assessment proceedings is not correct. So far as the merit of the case is concerned, he submitted that although the CIT(A) / NFAC has called for the remand report from the Assessing Officer, however, without waiting for the report of the Assessing Officer, he has passed the order. Therefore, he has no objection if the matter is restored to the file of the CIT(A) / NFAC for adjudication of the matter afresh after obtaining the remand report. 11. The Ld. Counsel for the assessee on the other hand heavily relied on the order of the CIT(A) / NFAC. Referring to para 22 of page 8 of the assessment order, the Ld. Counsel for the assessee submitted that the Assessing Officer without disclosing the basic documents and without providing the opportunity to cross-examine Shri Sachin Nahar has passed the order, which is not correct. Referring to page 18 of the order of the CIT(A) / NFAC, the Ld. Counsel for the assessee drew the attention of the Bench to the letter written by the DCIT, Central Circle -1, Pune to the Assessing Officer sharing certain information according to which Shri Sachin Nahar, in his statement recorded u/s 132(4) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing decisions, he submitted that under identical circumstances the Co-ordinate Benches of the Tribunal have deleted such additions which were made merely on the basis of third party statements and not based on any credible evidence. i) M/s. Dhananjay Marketing Pvt. Ltd. vs. DCIT vide IT(SS)A No. 65/PUN/2017 for the assessment year 2014-15, order dated 19.05.2021 ii) Prabhat Chandra S Jain vs. ACIT vide ITA Nos.1325 to 1329/PN/2013 for AYs. 2004-05 to 2008-09, order dated 16.09.2015 iii) Atul Tantia vs. DCIT vide ITA No. 492/Kol/2021 for A.Y. 2018-19, order dated 28.03.2023 15. The Ld. DR in his rejoinder drew the attention of the Bench to the provisions of section 250(4) of the Act and submitted that as per the said provisions, the CIT(A) may, before disposing of any appeal, make such further enquiry as he thinks fit or may direct the Assessing Officer to make further enquiry and report the result of the same to him. He submitted that the CIT(A) / NFAC in the instant case has failed in his duty and therefore the order of the CIT(A) / NFAC deleting the addition of Rs. 6,20,00,000/- should be set aside and the order of the Assessing Officer be upheld. 16. We have heard th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of search contained the business details of Shri Sachin Nahar. The provisions of section 153C of the Act read as under: "153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall 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, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to your charge. The copy of statement recorded u/s. 132(4) of the IT Act, 1961 on 04.08.2017 of Shri Sachin Nahar as well as related documents regarding cash loan taken by the party along with the related pages of Shri Sachin Nahar's submission containing name of the above mentioned person and the Assessment Years in which the transactions were made are enclosed herewith for reference and necessary action at your end." 20. We find the Assessing Officer at para 2 of the reasons recorded has mentioned as under: "During search at his residence, various notebooks, notepad and loose papers were found and seized as Bundle No 1 to 28. In his statement recorded u/s. 132(4) of the Act at his residence on 02.08.2017, Shri Sachin Nahar stated that this seized material contain details of his money lending business in Cash and the Notings therein are related to Principal amount lent by lenders & borrowed by borrowers, names of lenders & borrowers, interest component etc. In the said seized registers, there are two types of notings, one which contains the accounts of borrowers and other registers contain notings of names of investors (depositors) in coded words. Here it is important to me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not against the person whose name is appearing in the seized papers. We find an identical issue had come up before the Pune Bench of the Tribunal in the case of Pradeep Amrutlal Ranwal vs. TRO (supra). The Tribunal in the said decision deleted the addition by observing as under: "5.3 According to us, the additions made by the Assessing Officer were not justified in the facts and circumstances vis-à-vis of the assessee. As discussed earlier, during the course of search in the case of Dhariwal Group, the only documents found on the basis of which the addition u/s 69A has been made in the case of the assessee are in the form of two loose papers wherein amounts of Rs. 4.80 Crores and Rs. 30 lacs were noted against the name "Mr. Pradeep Runwal". Apart from this, no evidence has been found to suggest that the assessee had actually received the said amount or that the assessee had entered into any transaction with Dhariwal Group. There is no evidence on record to suggest that the assessee has previous business relations with the Dhariwal Group. In the absence of any documentary evidence to suggest the same, it could not be presumed that the amounts reflected in the loose paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities below it. Thus, the reliance placed by the Assessing Officer on the loose papers is not justified at all. Therefore, the question of making any addition is not justified in the absence of other corroborative evidence to that effect. 5.6 Without prejudice to the above, the learned Authorized Representative submitted that the Assessing Officer was not justified in making the additions by relying on the provisions of section 114 of the Indian Evidence Act. The concerned Assessing Officer has referred the aforesaid section which states that the court may presume that the evidence which could be and is not produced would, if produced be unfavourable to the person who withholds it. It is pertinent to mention this rule applies to the cases wherein it is evident or an established fact that a particular evidence or document was in possession of the assessee. For example, an owner of a land may well be expected to be in possession of a 7/12 extract of the said land in order to check whether the said land was used for agricultural purposes. In the present case, the provisions relied by the Assessing Officer are not applicable, the assessee is not withholding any documents. The case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases relied by the Assessing Officer, the fact that the assessee had actually earned income or received amounts by way of cash credits, unexplained investment etc. was not under dispute. The issue related to whether the receipts were received from genuine lenders or whether the investments or receipts were a part of the disclosed sources of income of the assessee. We find that in the present case, the issue in question itself is whether rough noting on loose paper found in the course of search at the premises of third person could be assumed the income from the assessee as in the cases relied by the Assessing Officer. This fact has not been established in the case of assessee, therefore, the case laws relied by the Assessing Officer are clearly distinguishable on facts and hence, not applicable to the case of the assessee. 5.10 According to CIT(A), the name of the assessee appears on the seized papers and seized documents give a detailed and minute noting of the transactions of Dhariwal Group. He has stated that Shri Sohanraj Mehta has admitted that the documents were written by him and most of the papers were written in marwadi language. The CIT(A) referred to the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, in the absence of any corroborative evidence, the addition could not be made in the hands of the assessee on the basis of the said papers. 5.12 The CIT(A) has further relied upon ITAT Third Member decision in the case of Dhunjibhoy Stud and Agricultural Farm Vs. DCIT [(2002) 82 ITD 18 (PUNE)(TM)], In this case, the assessee was a builder and had sold flat to one Mr. Tanna. There was search on Mr. Tanna wherein a document was found indicating flat purchased from the assessee firm and the amount of cheque and cash paid. The amount of cheque paid was tallying with the books and therefore, it was held that cash was paid as noted on the paper. Mr. Tanna had also accepted the fact that cash was paid to the assessee. In these facts, ITAT held that since there was transaction between assessee and Shri Tanna and also the fact that the amounts paid by cheque tallied, the addition was rightly made. The assessee rightly submitted that the said decision is not applicable to the facts of the present case. Firstly, there is no transaction between the assessee and Dhariwal Group. Secondly, there is no corroborative evidence found which could suggest that the assessee had received any am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on 29.03.2003 was true and correct. The A.O. has not brought on record any material or corroborative evidences to come to these conclusions. The reasons given by the A.O. in this regard are without any basis and support. The affidavit filed by Shri Kolhe remained uncontroverted and which is against the settled legal position on the issue that the contents of the affidavit be rejected by confronting the same to the deponent which is missing in this case. Nothing was shown by the A. O. that there was any other material co related to the seized documents. The A.O. was not justified in rejecting the contents of the affidavit as mentioned above. The A.O. further relied on the presumptions u/s 132(4A) of the Act on the ground that this section was very clear that the contents of book of account and other documents may be presumed to be true and presumption can be drawn even on the third person who was not searched u/s 132 of the Act. The A.O. further rejected the submissions given by the assessee in his paper book dated 28.12.2007 reiterating the same stand. The A.O. has drawn inferences and presupposes relying on surmises and conjectures. The ITAT Mumbai Bench in their decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of section 132(4A) incorporates the rule of evidence relating to material found during course of search. On plain reading of said provision, it is evident that it has application in the case of searched person, in whose hands the material was found and seized. The presumption envisaged under said provision cannot be extended to assessment of third party. The CBDT also recognized the principle that no addition can be made on mere statement made u/s 132(4) without bringing any corroborative evidence. The CBDT Circular reads as under :- "Admissions of undisclosed income under coercion/pressure during search/survey - Instances/ complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
