9911796707
TMI Blog2025 (4) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... arned lower authorities action adding unexplained loans extended to Shri Rajpal Panghal of Rs.25 lakhs in former and Rs.4,02,05,000/- to Shri Tanaji Jagtap in latter assessment year 2006-2007, in the course of assessments dated 31st December 2019, as upheld in the learned CIT(A)'s detailed discussion. We note from a combined perusal of both these case files that this is the second round of proceedings before the tribunal u/sec.143(3) r.w.s.153A r.w.s.254 of the Act. The department has admittedly carried out section 132 search action in assessee's and other cases on 24th October 2007. All this lead to initiation of section 153A proceedings which finally culminated in the Assessing Officer's first round assessment dated 31st December 2009 making these additions in the assessment years in question. The same admittedly stood affirmed in the CIT(A)'s first round common order dated 30th December 2013. The assessee thereafter preferred his appeals ITA.Nos.186 & 187/PUN./ 2014. Learned coordinate bench's earlier common order dated 17th October 2018 appears to have restored the same back to the Assessing Officer thereby accepting the said cases for statistical purposes. 3. It is in this fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter assessment year 2006-2007; respectively. Our attention is invited to the CIT(A)'s "lead" discussion in his impugned common order; followed mutatis mutandis in latter assessment year 2006-2007, reading as under : "7.4. As regards to the other additions of Rs.1,55,00,000/- and Rs.52,50,000/- being unexplained loan given to and interest received from Shri Chetan Mehta, the appellant has submitted that the AO has erred in making these additions only on the bases of the statements given by Shri Chetan Mehta. The appellant has further argued that on similar set of facts the case of Shri Vishal Prakash Malhotra another searched person from the same group was also set aside by the Honible ITAT Pune and the same Ld. AO has accepted the view taken by the Hon'ble ITAT Pune that the FIR stands quashed by the judgment of 16th First Class Magistrate Pune on 09.09.2016 and the AO has passed the order u/s 143(3) r.w.s.254 of the Act on 28.12.2018 in the case of Shri Vishal Prakash Malhotra without making any addition. The same Ld. AO while accepting the income returned by the said assessee held as under : "During the course of hearing various details were called for and submitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment addition of Rs.1,55,00,000/- and Rs.52.50 lakhs (supra) in A.Y.2005- 2006 reading as under: "7. Unaccounted loan given to Sri Chetan Mehta and interest received (Rs.1,55,00,000 & Rs.52,50,000/-) : 7.1. During the search, it was found that Shri Habibullah Chaudhary is also actively engaged in the activity of money lending apart from dealing in purchase and sale of industrial steel scrap. He advances cash loans to the petty as well as corporate entrepreneurs at a huge rate of interest ranging from 2% per month to even 20% per month depending upon the repayment ability of a person. During the search and seizure action u/s 132 of the L.T. Act at his residence and the residences of his associates and counterparts engaged in this money lending business, various incriminating documents have been seized which clearly indicate that Habibullah is dealing in money lending activity in a big way. From the residence of Shri Tanaji Jagtap, a close associate of the assessee, vital incriminating documents were seized. 7.2. Amongst many persons, Shri Chetan Mehta is one of the persons to whom Habibullah had lent 1.55 crores of rupees and by charging a phenomenal rate of interest, even u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signed by Shri Mehta were given to Shri Habibullah's custody and similar 10 cheques to Shri Malhotra which were recovered by police authorities, from them. In the statement before the police, Shri Habibullah has stated that still a part of the money (Rs.38 lacs) is due from Shri Mehta out of the loan given to him. 7.3. From the perusal of the return of income for the relevant year i. e. AY 2005-06, it is observed that no such transaction of paying loan or receiving any interest in money lending activity has been accounted for by Habibullah. During the search as well as during the assessment-proceedings, Shri Habibullah has denied the above loan transactions. However, his denial cannot be accepted in view of the facts mentioned above as well as further evidences gathered during the search as discussed in subsequent paras. 7.4. During the search, Shri Chetan Mehta in his statement u/s.132(4) once again confirmed all the above facts. The documents as per page no.5 & 6 of bundle no.1 seized from the residence of Chetan Mehta reveals the fact of loan given by Habibullah. These papers show the repayment schedule which is duly signed by Habibullah and Chetan Mehta. 7.5. Loos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second entry, from 19/5/04 to 25/2/05 Rs.20,00,000/- have been given. Above this entry, "2,00,000/- per month is written. A word 'Monthly' is written after this entry. As per the third entry, on 20/4/04 Rs.15,00,000/- have been given. A word 'fix" is written after this entry. As per the fourth entry, on 5/5/04 Rs.20,00,000/- have been given. A word 'fix' is written after this entry. As per the fifth entry, on 12/5/04 Rs.10,00,000/- have been given. A word 'fix' is written after this entry. 7.6.3. Beneath each entry, the amount given is written in words also. At the end, a sentence "Habib ne Chetan ko diya" (Habib gave Chetan) is written and the noting is signed by both Shri Chetan Mehta and Shri Habibullah. When asked to explain this page, Shri Chetan Meht in his statement dated 24.10.2007 stated that this noting is in respect of loan of Rs.90,00,000/- given by Habibullah to him up to the date mentioned in the noting i.e. 22.02.2005. Shri Mehta further stated that he had borrowed some more loan from Habibullah after it and in total he had borrowed Rs.1.55 crores. 7.6.4. Both these papers from the Loose paper bundle No.1 need to be seen and an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residing at Somran apartments, Pimpri Pune-411018, a sum of Rs.1.5 crores in the year 2004 at the rate of interest of 5% which increased to 20% per month. The loan of Rs.1.5 crores was received by me in installment in cash only from Habibullah Chowdhary, I have repaid this loan of Rs.1.5 crores with interest which comes to Rs.5.68 crores [5 crores 68 lakhs only] in period of 2 years from 2004 to 2006. Even after repayment of 5.68 crores to Habibullah Choudhary, he is still claiming additional sum of Rs.88.50 lakhs from me and my company. For the same additional amount he has filed a case vide No. 861/07 against my company and as a director me anul my wife both are attending the court. For the repayment of Habibullah Choudhary's loan, we have withdrawn money from our company account, personal account and hand loan from friends. Also I have availed loan from Bangdia Finance company, Pimpri to the tune of Rs.40 lakhs in the year 2006 for the repayment to Habibullah Choudhary. Q14:- Please go through the contents of Page No.5 of bundle No.1 and give your say ? Ans. This is a paper in the handwriting of Habibullah Choudhary In this paper Habibullah has categorically mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h June 2006. At that time he made us sign a document which stated that if we could not pay him by 10 June, we would have to pay him Rs.87 lakhs by October 2006. We then paid him an additional Rs.48 lakhs by end of September 2006. From his reply to question No.19,it is also clarified that the loose paper No.6 of Bundle No.1 which is discussed above pertains to the said transaction of cash loan of Rs.1,55,00,000/-only. 7.9. What transpires from the documents, related evidences and statements deposed by Chetan Mehta is that a cash loan transaction had taken place between Chetan Mehta and Habibullah Chaudhary whereby Habibullah had given a total cash loan of Rs.1,55,00,000/- to Chetan in F.Y.2004-05 in mutually convenient installments. 7.10. Even at the residence of Vishal Malhotra who is a close associate of Habibullah, an agreement has been seized as per page 27 to 43 of bundle no 9 between Chetan Mehta, Habibiullah and Vishal malhotra. A criminal complaint has been lodged against them by Shri Chetan Mehta with Chatushringi Police Station. The police authorities. have filed a charge-sheet in the case wherein he was also booked under Sec.32 and 33 of Money Lending Act. Not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n stated by Chetan Mehta that the money of 5.68 crores (principal plus interest) has been repaid to Habibullah out of the withdrawals of 6.42 Crores from the bank a/c as mentioned above. As stated by Chetan Mehta he has repaid the principal plus interest of Rs 5.66 crores as under : A.Y.2005-06 Rs.75,00,000/- A.Y.2006-07 Rs.3,25,00,000/- A.Y.2007-08 Rs.1,66,00,000/- Total Rs 5,66,00,000/- 7.15. As per the agreement dated 10.04.2006 between Mehta and Habibullah and Civil suit filed by Habibullah which are annexed as Annexure-III, Mehta had executed a power of attorney in respect of his immovable properties viz. Factory with plant & machinery at S.No.254 Tirumalla Industrial Estate, Hinjewadi, Pune, Factory with plant & machinery at H-block, 824, Pimpari MIDC, Morewadi, Pune and a flat at 601, Mantri lawn, Anand Park, Aundh, Pune. The total value of all these properties is in excess of Rs.15 crores. It means the claim of Habibullah on Mehta was more than 1.55 crores. It substantiates Mehta's claim of charge of huge interest by Habibullah. 7.16. As discussed in para 7.5.1, Loose Paper No.6 of Bundle No.1 seized from the residence of Shri Chetan Mehta shows that the & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to show cause as to why unaccounted loan given by him to Shri Mehta should not be treated as unexplained investment and interest received as unaccounted income. The assessee vide letter dated 24.12.2009 denied of being indulged in any money lending activity. He asked for the copies of relevant documentary evidence as discussed above. The same were given to the assessee. However, no detailed submission rebutting the contents of "Those documents has been made by the assessee. 7.19. In view of the statements of Chetan Mehta given during the search confirming the receipt and repayment of loan, the statement of Habibullah given before Police authorities and suit filed by Habibullah against Chetan Mehta, admitting the fact of giving loan to Chetan Mehta, it is proved beyond doubt that Shri Habibullah had given a cash loan of Rs.1.55 Crores in FY 2004-05 relevant to AY 05-06. Since the loan has been given in cash and the source has not been explained by Habibullah, therefore the sum of Rs.1.55 Cr is added as unexplained investment u/s 69 of the IT Act for AY 2005- 06 whereas the interest of Rs.52,50,000/- is added as undisclosed interest income. Since the assessee has concealed part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in making assessment. Absence of any incriminating evidence seized from the premises of the assessee, does not alter the incriminating nature of the said documents. Accordingly, the question of document not belonging to the transaction of the assessee does not arise. Considering the admitted position of the nature of incrimination, we are of the opinion that the assessment made based on the documents relied by the Assessing Officer constitutes a validity of assessment. Therefore, additional ground No.(a) raised in appeal by assessee stands dismissed." 9. There is again no dispute between the parties that the learned Assessing Officer's consequential assessment framed herein in second round dated 31.12.2019 took note of all the relevant facts whilst reiterating the impugned addition(s) as under : "The Search action u/s.132 of I.T. act, 1961 was conducted on 24.10.2007 at the residential premises of the assessee located at S. No. 99, Plot No. 6, Yeshwantnagar, Telco - Bhosari Road, Pimpri, Pune 18 which was part of the Search setion conducted in the cases of Habibullah Chaudhary, Chetan Mehta Jand Vishal Malhotra Group of Pune consisting of its various business enterprises Shame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 and Para No.9 (c) of the ITAT's appellate order Nos.ITA Nos.186 to 188/PUN/2014 for A.Y. 2005-06 to 2007-08 and another appeal No. ITA.No.498/PUN/2014 for A.Y. 2009-10 dated 17.10.2018, the ITAT has adjudicated the appeals and has remanded the issue to the file of the Assessing Officer for the A.Y.2005-06 to 2007-08 and also for 2009-10 in the case of the assessee. While setting aside the order in para-9(c) the ITAT has observed that it has fond the order of the 1st Class Magistrate is relevant for the impugned additions made u/s.69 of the Act. The said order is delivered in the month of September 2016 in connection with the registration of appeal in 2007 before the 1st Class Magistrate. Further it has found that CIT(A) passed the order in the month of December 2013 regarding the assessment order dated 31.12.2009 which was much earlier to the date of the order of the 1st Class Magistrate. On going through the said relevant facts, it has found that the facts discussed in the order of the 1st Class magistrate was relevant, did not exist at the relevant point of time. The relevant para of the court's order is reproduced as under : "It is the firmed arguments of the Ld. Counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- (iv) 12.05.2004 Rs. 10,00,000/- (v) 19.05.2004 Rs.20,00,000/- (vi) 19.06.2004 Rs.25,00,000/- (vii) 4.08.2004 Rs.50,00,000/- Together an amount of Rs.1,50,00,000/- were paid by Habibulah to Chetan Mehta. 2. It is stated that Rs.1 Crores was taken on 2% interest and Rs.50,00,000 wert taken at 5% interest per month. This amount is used for factory at Hinjewadi. At times of borrowing money no mortgage of any property and for Rs. 1 crore no document has been done. Transaction done orally and mutually. After the above facts narrated in the decision there is discussion in Para 4 to 7 about the repayment of amount to assessee by Chetan Mehta during the period 2004-06 in aggregate amount of Rs.1,22,50,000/-, Thereafter, there is discussion about mode of recovery used by the assessee. The discussion about use of revolver for recovery and words of threatening is discussed in para No.4 and discussion about the registration of the complaint in the police and investigation about the charges were made by the authority. The discussion about the proceeding in the court has been discussed in the paras No.6 & 7 of the decision on page 3 of the order. The discussion about exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 9 of the said order the discussion about the receipt of the amount of Rs.1,50,00,000 and there is no denial of such receipt of the amount by Chetan Mehta. There is discussion about repayment of Rs.4,50,00,000 and demand of additional amount of Rs.68,00,000/- and threat to shoot with revolver. Hence Mehta had filed complainant in Police Station However in witness statement in the cross examination it is found that this transaction was money transaction and they are settled their problems mutually. Subsequent discussion in the order is about denial of fact by wife of complainant who has denied about any coercive action by the accused. Thus, it is to be noted that the decision of the Hon. Court is about the different actions as alleged by Shri Chetan Mehta and the assessee and 3 others are free from crime and free from charges levelled by Mr. Mehta for coercive action for recovery of the amount. It is worth to note that in the order of the courts deciding the issue there is no doubt or complaint against the payment/ advancing of loan amount by the assessee to Chetan Mehta and the complaint was about subsequent actions for recovery of the amount after payment of Rs.4,50,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -up the matter before the Hon. ITAT A Bench, Pune. In the appellate proceedings before ITAT, he has produced the copy of courts order wherein the assessee has been released from the charges leveled against him by Chetan Mehta for various actions taken by him for recovery of the amount, however, in the order of the ITAT the case is set aside without discussion on merits of the case about advancing of loan and the fate about the loans given to Chetan Mehta amounting of Rs.1.50 Crs and receipt of interest from him by the assessee during the different years as discussed in Para 5 above has not been considered while setting aside the order. 7] At this stage it is important to note that findings out of the documents seized in search has elaborately been discussed in the original assessment order and on the basis of that, the income has been determined. The assessee was given an opportunity to file his submission however, in the current proceeding no new facts or submission has been made and hence no further discussion on the findings is repeated herein again. The assessee has fled the copies of Miscellaneous application for A.Y. 2005-06 and A.Y 2006-07 are filed on record. As such the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le reason for granting relief to the assessee/respondent herein. We thus reject learned counsel's vehement contentions that we must follow the findings in the criminal court so as to delete the impugned addition since the provisions of Income Tax Act 1961 are in the nature of a complete code in itself and therefore, section 292C herein presuming the contents of the seized documents in a search to be correct which have nowhere been rebutted; seal the fate of the assessee's contentions in very terms. 12. Learned counsel lastly reiterated the fact that this assessee has nowhere been granted an opportunity to crossexamine the concerned loan recipients which violates principles of natural justice. We again see no substance in assessee's instant technical argument as the impugned addition is indeed based on the incriminating material only which has already been decided in departments favour by this tribunal. Rejected accordingly. 13. We conclude in these facts and circumstances that the learned CIT(A)'s lower appellate findings reversing the Assessing Officer's action herein making section.69 unexplained investment(s) vis-à-vis interest income addition(s) (supra), are not sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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