TMI Blog2011 (2) TMI 1432X X X X Extracts X X X X X X X X Extracts X X X X ..... ments under dispute were on protective basis and the appeals against the assessments made substantively in the case of Saravana Constructions were still pending; - that the CIT (A) ought to have appreciated the fact that the assessee had failed to substantiate the claim of finance procured through various financiers by producing necessary material evidence. 3. As the issues raised in these appeals being identical and common, for the sake of convenience, they were heard, considered and disposed off in this common order. 4. The issues, in brief, were that there was a search operation u/s 132 of the Act on 8.10.2003 in the case of L. Sambhasiva Reddy and his associate concern Saravana Constructions Pvt. Ltd [SCPL]. According to the Revenue, during the course of search, incriminating documents indicating a sizable cash loans availed by Sambhasiva Reddy and his associates and repayments made to various parties were unearthed. As the assessee was one of the alleged regular lenders of money to SCPL, he was subjected to an intensive investigation by the Revenue with regard to the transactions appearing in the seized materials and subsequently, the assessee was slapped wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCPL, the AO went ahead in concluding that the unaccounted money lent to SCPL was nothing but unaccounted investment in money lending and, accordingly, assessed the same protectively for the assessment years, the details of which are as under: Asst. year Money advanced 1998-99 ₹ 16,37,500 1999-00 18,92,395 2000-01 18,81,450 2001-02 7,81,470 2002-03 4,43,000 2003-04 13,52,500 5. Assailed by the findings of the AO, the assessee had approached the CIT (A) for relief. Analyzing the spirited arguments put- forth by the assessee s authorized representative and also the facts of the issues placed before him, the Ld. CIT (A) had observed thus (On page 6) It is seen that there is certainly force in the contentions of the appellant, particularly that the AO has examined his books and not rejected the same and these show he is a small financier having very small capital for investment. The Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g very small capital for investment will not hold the fort when there was huge unaccounted loan advanced by the assessee and interest income earned against it was evident from the seized materials; - that the assessee had failed to substantiate the claim of finance procured through various financiers by producing necessary material evidence. 6.1. Placing strong reliance on the above facts, the Ld. D R, during the course of hearing, was of the firm view that the finding of the Ld. CIT (A) is lacking conviction, which requires to be annulled. 6.2. On his part, the Ld. A R submitted that his client had never lent any money during the course of period under challenge to SCPL, however, conceded that he lent services in procuring finance through cheques from various parties as he was only a finance broker. The Ld. A R had also vehement in his insistence that his client was a small financier having very small capital for investment and thus, lent no money or made any investment with SCPL as projected by the Revenue, but, at the same time, he had acknowledged that his client procured finance for SCPL through various financiers. It was, therefore, pleaded that since the Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act in the residential premises of L Sambhasiva Reddy and his associate concern, namely, SCPL, the Revenue purported to have unearthed, among others, documents citing huge cash loan transactions and repayments of loans, interest etc., On examination of the seized materials i.e., books of account of SCPL, the AO had noticed the entries pertaining to the present assessee with regard to payments (investments), interest payments etc., On the basis of which, the assessee was called upon by way of issuance of notice u/s 153C r.w.s 153A of the Act to furnish his returns of income and so on and so forth. The aftermath of the issuance of the said notice has since been discussed/ narrated in the fore-going paragraphs. 8. The crux of the issue before us is - whether the assessing officer was within his realm to call upon the assessee to furnish his returns of income on the sole reasoning that the assessee s name was finding a place [ledger account] in the books of account of SCPL? It may not be out of place to mention here that no books of account or document belonging to the assessee was unearthed during the course of operation u/s 132 of the Act in the premises of SCPL. Such being a gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents showed that all the transactions belonging to the assessee. Such books of account or documents contained the transactions relating to the group concerns of Shri Reddy. No valuable belonging to the assessee has been seized during the course of search. The terms belonging implied something more than the idea of casual association. It involves the notion of continuity and indicates one more or less intimate connection with the person over a period of time. The books of account or documents seized during the course of search have a close association with the group concern of Shri Reddy. It records the transaction carried out by that group. It does not record the transaction carried out by the assessee. Under Wealth-tax Act, assets belonging to assessee were taxable. The expression belonging to the assessee connotes both the complete ownership and limited ownership of interest , of course belonging to is capable connoting, interest, which is less than absolute perfect legal title. However, there should be some limited ownership of interest, if it is to be permitted that the assets belongs to the assessee. In the instant case, documents or books of account found during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial capacity for money lending to the extent as assessed by the AO. (iii) We have also scrupulously perused the reasoning of the AO in his impugned orders wherein he had stated, e.g., that 9.4. (x) The assessee has contended that none of the interest mentioned in the ledger account extract has been received by him. This contention is not acceptable for the reason that the entire money advanced as appearing in the ledger account extract of M/s. Saravana Constructions Pvt. Ltd., has not been disclosed by the assessee to the Department in his regular return of income filed. When the money advanced is totally unaccounted, the interest earned on such advance is also unaccounted interest income earned by the assessee. In this connection, we would like to point out that though the ledger account extract of SCPL had shown with regard to money advanced and interest payments etc., in the name of the assessee, however, the AO had not brought on record any clinching documentary evidence to show that the alleged interest payments found its way to the assessee. Yet again, the AO had further justified his action in bringing to tax net (in the hands of the assessee) the alleged ..... 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