TMI Blog2003 (3) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... on work-in-progress and on that basis profit is estimated every year showing as a profit in P L a/c and when project is completed, balance result is shown in the year of completion. This method is being followed by the assessee consistently for the last many years and the same is being accepted by the Department. There was a search action in the residential and business premises of the assessee under s. 132 of the Act on the 25th and 26th of October, 1994. During the course of search certain loose papers were seized pertaining to 'Kukreja Group' including "Mehul Note' book A-2" containing 'two written pages' Nos. 1 and 2, which was seized from the residential permises of Mr. Kukreja. Further, a consequential search under s. 132 was conducted in the premises of finance broker Shri Paras Ram Rohera from where certain documents were seized including diaries A-53 and A-54. 3. For the asst. yr. 1992-93, the Department took up the following grounds of appeal: "(i) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs. 41,91,000 made on account of inflated expenses of CIDCO project. (ii) On the facts and in the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and balance work in hand". This set is having details of 16 projects under the head "Ganga Developers" and 19 projects under the head "Kukreja Constructions Company". These papers also contained details of project name, built-up area in sq. meters, total value and progress of the work financial year-wise. In these papers CIDCO mass housing scheme and Abhishek/Krishna/Govinda Gopala have been mentioned and the details of these projects have been given. 5. The AO wanted to determinate income of the assessee on the basis of these seized papers. However, the assessee explained that these seized papers were prepared by Mr. S.S. Gulati, an employee with the group companies, for his future employment opportunities. Mr. Gulati also filed an affidavit to confirm the contention of the assessee. In his statement recorded on 28th March, 1995, Mr. Gulati stated that he was involved only in two projects of Kukreja group and he was not aware about the details of other projects. He stated that he had prepared only one set of paper, i.e., 9, 11, 13, 14 and did not know who had prepared the other papers. He also stated that the figures mentioned in these papers were guess-work and the cost of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is granted by the BMC, the assessee declares the project still in progress and work-in-progress is only shown. The monies received from flat purchases is shown as advance against flats sold and they are not credited to the sale proceeds. This gives assessee the benefit of postponing his tax liabilities and adjust the taxable income as per his convenience. Another advantage the assessee gets is that as he shows work-in-progress only and offers certain percentage of profits for taxation thus, the taxable profits a5re conveniently reduced. Thus, according to the AO most of the assessee's projects are shown to be work-in-progress even though the possession is given to the flat owners and full value of consideration is received from them. 7. After going through the books of account maintained for CIDCO's mass housing scheme and also the year-wise details the AO found that the total cost debited in this project upto asst. yr. 1994-95 is Rs. 8,33,70,407 and sale proceeds received from CIDCO amounts to Rs. 8,10,55,601. The AO also went through the seized papers and noticed that the project cost as per contract of the CIDCO was Rs. 641 lakhs which is correctly reflected in the seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs, has been wrongly taken in place of actual total of Rs. 592 lakhs. Thus, according to the AO, there is inflation of Rs. 304.23 lakhs (correct figure is Rs. 241.23 lakhs) on the whole project. The AO, therefore, came to the conclusion that inflation cost for the asst. yr. 1992-93 is Rs. 41.91 lakhs. Accordingly the AO made the addition of Rs. 41.91 lakhs in the asst. yr. 1992-93 being the expenses debited to the project of this year. 9. After going through the seized papers the AO also found that Abhishek project details were given in two different sets and these sets of details belong to the different buildings. The details on page Nos. 2, 4 and 6 pertain to building No. 'B' and the area of this building upto 7th floor is 65,000 sq. ft. He found that the area of 65,000 sq. feet tallies with the approved area for 'B' building upto 7th floor. The cost mentioned is Rs. 260.2 lakhs. Page No. 2 also gives the similar details which tally with the details as per approved plan. The AO further noticed that page No. 6 is having heading "experience in civil work in last 5 years". This page also gives the work details up to 1992 in case of Abhishek project. The work completed upto 1992, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order as well as in the subsequent report of the AO called for by the CIT(A) as to why at all the assessee would resort to such a self-defeating manipulation of accounts. Thus, the learned CIT(A) observed that on the facts and circumstances of the case, it is highly unlikely that the assessee would first go about inflation of the cost of construction in one project and thereafter, neutralize the effect of the same by suppressing the cost of construction in respect of other project. Thus the second addition of Rs. 28,61,122 in effect goes to reduce the first addition of Rs. 41,91,000. The learned CIT(A) has further stated that the AO has made these two additions separately without convincing himself with the question as to why there should be such a contradiction. The learned CIT(A) thus, observed that neither of the two additions have adequate basis to sustain themselves. The AO has made specific charges for the addition to the declared results based entirely on his own interpretation of the seized documents. For this purpose the AO has given the findings that the Explanation of the assessee in relation to the nature of these seized pages are not acceptable. He has, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o spell out as to why the assessee would resort to any such practice at all. As long as the projects in question belonged to the assessee on his own profit or loss basis, what was there for the assessee to gain by debiting the cost of one project to another. The learned CIT(A) has further stated that the subsequent report of the AO is also silent about this. Regarding the various seized papers, the learned CIT(A) has stated that these seized papers contain considerable amount of wrong facts and same cannot be assumed to record the true state of affairs. The learned CIT(A), therefore, held that no addition can be made to the income declared by the assessee-firm entirely on the basis of these seized documents alone, without being any other material or evidence. 13. Regarding the seized papers, the learned CIT(A) has observed that the order of the AO abounds in several misreadings of the actual contents of the seized documents and that even if it is presumed for the time being that the addition to be assessee's declared income can be justified on the basis of the facts recorded in these documents, it is seen that the impugned addition of Rs. 41,91,000 does not flow from the contents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire B-building up to 7th floor, whereas documents 9, 11, 13 pertained to C-1 building only. The AO has excluded the area of A-building and C-building altogether. Secondly, for the purpose of B-building, the AO has taken into consideration the area of G + 7 floor only. This is done in the face of the fact that it is clearly mentioned in the 'remarks' at seized page No. 4 "G + 7 floor". The assessee pointed to the CIT(A) that even the working of area as given at pp. 8 and 9 of the assessment order was not correct because the area of each floor already included service are and, therefore, there was no justification for the AO to add service area once again. Thus, the learned CIT(A) has observed that even after all these permutations and combinations, the fact remains that the AO has worked out the area of C-1 building at 21,905 sq. feet, whereas as per the seized paper Nos. 9, 11 and 13 the area mentioned is 25,004 sq. feet. The learned CIT(A) has further pointed out that there is a very serious discrepancy and misrepresentation in the amount of additions worked out by the AO. All through he has been labouring to prove that the seized page Nos. 9, 11 and 13 pertain to C-1 building onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ster-concern. The learned Departmental Representative invited out attention to p. 9 of the compilation filed by the assessee and contended that the project CIDCO belonged to Ganga Developers. So far as Abhishek project is concerned the learned Departmental Representative relied on the order of the AO. The learned counsel for the assessee however contended that the assessee's main office is at Chembur and the seized papers were found from the site of the building. These papers were found from the table drawer of Mr. S.S. Gulati, an employee with the group companies. He further brought to our notice that the assessee made a disclosure of Rs. 1 crore during the course of search. He argued that the assessee was not asked any question regarding these papers during the course of search. The assessee was asked to explain these papers only in February, 1995. The learned counsel invited our attention to the affidavit filed by Shri S.S. Gulati dt. 7th Feb., 1995, wherein Mr. Gulati has clearly mentioned that the details were prepared on ad hoc basis and were away from the truth to impress the would be employer. He further explained that these details were found and seized by the IT Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the assessee-group and during the course of search operation certain discriminating papers were seized from different premises of the assessee-group. From assessee's office at Sampada, Vashi, file A-3 containing loose papers was seized. As we have mentioned above, the AO has made the additions on the basis of these seized papers. These papers were found from the site of the building. These papers were in fact found from the table drawer of Mr. S.S. Gulati. During the course of search, it was explained that the seized papers were prepared by Mr. S.S. Gulati, one of the employees of the group concerns. It was also explained that Mr. Gulati prepared these papers on ad hoc and estimated basis. Mr. Gulati was looking for a job and he wanted to show to the prospective employers that he had adequate experience and exposure in the construction activity. The statement of Mr. S.S. Gulati was recorded on 28th March, 1995. Mr. Gulati also filed an affidavit wherein, he has confirmed that the details were prepared on ad hoc basis and were away from the truth and were simply to impress the would-be employer. Thus, the papers were seized from the table drawer of Mr. S.S. Gulati. Mr. Gulati h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been written by Mr. Gulati for his own purpose. Mr. Gulati had also accepted the ownership of these papers and he had also explained the contents of these papers. This fact is further supported that such papers were seized from the table drawer of Mr. Gulati. The Department did not record any statement regarding these papers during the course of search perhaps with the view that these papers had nothing to do with the actual facts of this case. The assessee also made a disclosure of Rs. 1 crore during the course of search and the search party might have not found it necessary to cause any further enquiries regarding these papers after the disclosure. Keeping in view the facts of this case, we do not find any justification on the part of the AO to make such presumption under s. 132(4A) in this case. It appears that the AO has resorted to the provision of s. 132(4A) without judicious application of his mind to the facts of this case. The seized papers do not belong to the assessee. These papers have also not been written by the partners of the firm and moreover, the assessee has discharged the onus of proving the actual ownership of these papers. Therefore, in our opinion, these p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO has made these additions on the basis of his own presumptions and interpretation of the seized documents. The assessee filed full details of the documents at the time of assessment proceedings as well as at the time of remand report called for by the CIT(A). The assessee is maintaining regular books of account. The profit from each project is being disclosed on the basis of work-in-progress and the final profit is shown at the time of completion of the project. The assessee pointed out various discrepancies in the seized pages and the AO did not give any reply to these glaring discrepancies pointed out by the assessee even in his remand report. The learned CIT(A) has also pointed out that there are serious discrepancies and misrepresentation of facts in the chart prepared by the AO. The particulars given do not represent entirely the CIDCO mass housing project belonging to the assessee-firm. According to the CIT(A), the seized page No. 4 and 6 pertain to the assessee-project at sector 26, Vashi, but the seized page Nos. 9, 11, 13 pertain to some other project at sector 8B, CBD Belapur. Thus, these two projects are not one and the same. The assessee explained that the Vashi pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. Thereafter, the AO granted several hearings to the assessee during the course of which the assessee once again made detailed submissions and furnished various documents. The AO submitted his remand report on 15th Sept., 1995, to the learned CIT(A). Thus, the AO got second opportunity to go through the various documents seized during the course of search and made the detailed enquiries. As the AO has already made thorough enquiries before making the additions, therefore, we do not find any reason for restoring back this issue to the file of the AO for fresh adjudication. The assessee submitted its detailed explanation at the time of original assessment. The assessee also explained each and every seized paper to the AO when the learned CIT(A) called for the remand report. Restoring this case back to the file of the AO would only put the assessee again on trial for an indefinite period for no fault on its part. Keeping in view the principles of natural justice, we do not find any force in the arguments of the learned Departmental Representative and, therefore, his request for setting aside this case to the file of the AO is rejected. 20. For the asst. yr. 1993-94, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oans through or from Paras Ram C. Rohera, finance broker, in cash in violation of the provisions of s. 269SS of the IT Act. It is submitted that these remarks were made without appreciating the facts and provisions of s. 269SS of the IT Act and, therefore, they should be expunged. (ii) The learned CIT(A) erred in enhancing the assessment by directing the AO to make the addition on account of alleged brokerage that would have been paid by the appellant for arranging the cash loans through Shri Paras Ram Rohera, which is calculated by the AO at Rs. 70,290." 24. The first ground of appeal taken up by the Department is regarding the restriction to Rs. 8,30,000 the addition of Rs. 13,80,000 on account of annual letting value of the premises used by the partners for their residence. The assessee has also filed the cross appeal on the ground that the learned CIT(A) has erroneously retained the addition of Rs. 6,91,677 on account of occupation of bungalow for the residential purposes of the partners at Pali Hill. The AO in his order has observed that the capital asset of the firm "Pali Hill project' is being utilized by the partners of the "Kukreja family". The AO has stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instead of Rs. 13,80,000 adopted by the AO. 26. The learned counsel for the assessee contended that the assessee is a builder and the bungalow has been partly occupied by the partners and partly used for business. According to him firm and partners are the same. Therefore, the property occupied by the partners infact, has been used for the purpose of the business and, therefore, the annual letting value should be taken at Nil. He argued that the property is in the name of the firm and the same has been shown as work-in-progress. According to him the value of work-in-progress was to the tune of Rs. 59,70,786 and the partners' credit balance was Rs. 64,50,191. The learned counsel argued that under the provisions of s. 23(2)(a) the annual letting value should be taken at Nil. The learned counsel also brought to our notice that in fact the house property was partially used for business purposes and partially used for residential purposes by the partners of the firm. In view of these facts, there was no addition on account of deemed rent under ss. 22 and 23 of the Act in the past for the last several years. He pointed out that the addition has been made for the first time in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and return on the value of property, etc. To support his contentions he relied on the decision of the Gujarat High Court in the case of Bipinbhai Vadilal Family Trust No. 1 vs. CIT (1994) 208 ITR 1005 (Guj). The learned Departmental Representative also referred to the case of CIT vs. Dewan Chand Dholan Dass (1981) 25 CTR (Del) 238 : (1981) 132 ITR 790 (Del), wherein the Hon'ble High Court has laid down that the expression "occupation of the owner for the purpose of his own residence" in s. 23(2) of the IT Act, 1961, refers only to a human owner and not a fictional entity. A firm cannot physically reside and so cannot claim the benefit of the provisions, which is available to an assessable entity only. It is difficult to contemplate residence by some of the partners or even all of them as self-residence by the owner of the firm. In the context of s. 23(2), the dichotomy between the firm and its partners, who are independent assessable entities for the purpose of IT Act, should be given effect to. The nature of the relief under s. 23(2) is such that it is not available in the case of firm just as it is not available in the case of a company. Regarding the contention of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at Rs. 8,30,000 instead of Rs. 13,80,000 adopted by the AO. She therefore, retained the addition of Rs. 6,91,667 after allowing 1/6th for repairs on Rs. 8,30,000. The learned counsel, however, strongly objected to the determination of the annual letting value on the basis of estimation. He argued that the property is self-occupied as the firm and its partners are not separate entities. Thus, the house is in occupation of the owner for the purpose of its own residence, therefore, the benefit of s. 23(2)(a) of the Act, should not be denied to the assessee. In the alternative, he argued that even if the income from the house property is to be determined, the same has to be determined by taking into consideration the rateable value determined by the Bombay Municipal Corporation, the copy of the certificate obtained from the BMC was produced before the AO at the time of assessment. The learned Departmental Representative, however, supported the findings of the tax authorities as we have discussed earlier. 28. The first main point for consideration is whether the assessee is entitled to the benefits of the provisions of s. 23(2)(a) of the Act. The Hon'ble Delhi High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 128 (Mad), the Madras High Court held that it is only in the case of buildings situated in places where there is a prohibition against the charging of rent in excess of the standard rent that the standard rent determined in accordance with the Rent Control Act can be adopted as annual value. It cannot always be assumed that the figure adopted by the local authorities for the purpose of levy of property tax as the annual value will always correspond to the standard rent determinable under the Rent Control Act, which is in force in that area. Further, the submission that the actual rent received can never be regarded as the amount which the landlord can reasonably be expected to receive from his property for purpose of s. 23(1)(a) cannot be accepted. In the case of CIT vs. Bhaskar Mitter (1994) 73 Taxman 437 (Cal), the High Court held that there is a unity of the Municipal Act and the IT Act on the question of annual value and such annual value cannot exceed the standard or fair rent under the Rent Control Act and may in a given case be even lower than the standard or fair rent. In case, where the annual municipal value is available, that itself would be the annual letting value unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red this amount for deduction while computing the income from the house property. The AO is, therefore, directed to verify the contention of the assessee and allow the deduction if the contention of the assessee is found correct. Similarly, the learned counsel for the assessee brought to our notice that 1/3rd of the property is occupied by the assessee for it business purpose. The AO is directed to verify the contention of the assessee and if the same is found correct, 1/3rd of the income so determined should be excluded from the property income. The AO would, thus, recompute the income from house property as per our aforesaid directions. 31. The second ground of appeal taken up by the Department is regarding the addition of Rs. 72,00,000 made by the AO under s. 69D of the Act on account of Hundi loans taken by the assessee otherwise than through account-payee cheques. The learned CIT(A) deleted the addition. The addition of Rs. 72,00,000 under s. 69D is based on documents seized during the course of search conducted at the premises of the assessee and Paras Ram Rohera. One notebook titled "Mehul note book" was seized from the residential premises of the assessee. This note book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial, therefore, the extracts of the diaries were from the seized diaries and xerox copies could not be given to the assessee as the entries pertaining to other parties also existed. The AO also found that the period/tenure of principal amount was quarterly, the renewal too was on a quarterly basis and the cash loans were only against the name of "Om Prakash Co." The AO, therefore, came to the conclusion that in substance, the nature of the loans had all the characteristics of a "Hundi" and it was against the security of a name "Om Prakash Co." and the only thing missing was the "Document of Hundi". The AO had also observed that obviously for a cash loan (maintained in coded documents), the probability and possibility of maintaining a "Duly stamped legal document" would be NIL. He had further observed that there were "Hundis" in the possession of Paras Ram for loans taken by cheques by "Kukreja Guoup". Thus, he treated the cash loans recorded in the seized documents as "Hundi loans" and applied the provisions of s. 69D and made an addition of Rs. 47 lakhs under s. 69D. The AO made another addition of Rs. 25 lakhs in respect of cash loans taken from Madnani, which appeared at p. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93. The slip No. 41 gives a calculation of interest of Rs. 14,106.67 which works out to 14 per cent on Rs. 4 lakhs. The learned CIT(A) further referred to slip No. 41 and noticed another entry for the period 5th July, 1993 to 4th Oct., 1993. The corresponding entry in A-53 diary appears on pages No. 291, 292 of the diary, which is enclosed with the order of CIT(A) as an annexure. According to her the entries are suffixed by No. 57, 57 stands for 5th July and the date in the diary is 4th Oct., 1993. The '+' sign multiplied by 5000 gives a total of 6,50,000. In the slip No. 41,650 is encircled. The interest has been calculated at a figure of 22,514.60. According to her, this again works out 14 per cent per annum. She has further stated that the entries appearing on slip No. 41 are also recorded in the Mehul note book. She referred to entry Nos. 13 and 14 in the said note book and noticed that 400 is written against the date 1st July, 1993 and 650 is written against the date 5th July, 1993. Similarly, she pointed out that the entries in slip No. 39, written in the handwriting of Paras Ram Rohira and found at the premises of the assessee tallies with those in the Mehul note book. The e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paras Ram Rohira does appear on top of seized papers in Mehul note book which according to the assessee proves that the said papers belong to Shri Paras Ram Rohira. 35. The learned CIT(A) thus observed that the transactions recorded in the Mehul note book pertain to M/s Om Prakash Co., where the frequency of the transactions is substantial and large amounts are involved in cash, therefore, it was necessary for both the parties to keep a record of these transactions for purpose of cross-matching. She has, therefore, stated that the denial made by the assessee and Paras Ram Rohira at later stage is of no consequence in the light of its overwhelming circumstantial evidence disclosed during the course of search at the premises of the assessee and the finance broker Shri Paras Ram Rohira. Regarding the contention of the assessee that since the partners of the firm, have an interest in a number of concerns, which run into approximately 20 in number, therefore, it is wrong to presume that the transactions belong to M/s Om Prakash Co., the learned CIT(A) has stated that the same is not correct for the reason that the name of "M/s Om Prakash Co." is clearly mentioned in the slips 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be difficulties in recovering amounts advanced without Hundis, but that in itself does not presupposes the existence of "Hundi". She has further stated that even the discharged Hundis were not found at the premises of the assessee. She, therefore, held that on the basis of the entries as appearing in seized documents one cannot invoke provisions of s. 69D of the IT Act in bringing to tax the said advances under the deeming provisions. According to her the said amounts represent "cash credits" and since the documents found are in actual fact a part of the books of account, not disclosed to the Department, it will have to be analysed as to whether the cash credits represented by these entries can be taken to be explained or not. She has thus, stated that these papers have not been prepared with the object of disclosing them to the Department but have been prepared with the intention of keeping a record for personal use and since they have been kept for personal use, the statement of affairs recorded therein have to be treated as the "real state of affairs". She has also stated that the assessee may not want to disclose the identity of the party from whom it has received the amount, y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the diaries A-53 and A-54 seized from the premises of Shri Paras Ram Rohira. The arguments of the learned Departmental Representative were actually based on the findings of the learned CIT(A), who in her order has stated that the handwriting in loose sheets A-41 and A-39 is identical to the handwriting of Shri Paras Ram Rohira in diaries A-53 and A-54. Thus, the arguments of the learned Departmental Representative are not based on the report of any handwriting expert. The Departmental Representative, therefore, argued that there is a direct nexus between the entries appearing in the diaries A-53 and A-54 found from the premises of the finance broker of the assessee and the Mehul note book and it is also supported by the loose sheets A-41 and A-39 written in handwriting of Paras Ram Rohira which were found from the premises of the assessee. The learned Departmental Representative, therefore, contended that the Department is relying on the principle of "preponderance of probability". He argued that Mehul note book pertains to the assessee with the name of the Shri Paras Ram Rohira, therefore, this diary contains the transactions between the assessee and Mr. Paras Ram Rohira. He fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found from the premises of the assessee. He also took us through the compilation pp. 46 to 124 which pertain to the diary A-53 and A-54 seized form the premises of Shri Paras Ram Rohira. He argued that the learned CIT(A) has decoded these papers on the basis of the figures given therein and also the interest which has been calculated at the rate of 14 per cent. He invited our attention to p. 42 of the compilation filed by the assessee which is a seized paper of Mehul note book seized from the residence of the assessee and contended that the figures mentioned in column No. 1 have to be multiplied by one thousand to determine the exact amount and in column No. 4 the interest amount has been calculated at the rate of 14 per cent. He referred to p. 44 of the compilation which is a loose paper A-39 seized from the residence of the assessee and contended that the figures appearing in this paper are exactly the same which have been shown on the Mehul note book. He stated that the figures (250), (500), (500) and (1000) mentioned on p. 44 of the compilation (seized loose paper A-39) are the same which have been mentioned on compliation p. 42 (Mehul note book). According to him if these figu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5000). This presumption according to him is further supported with the fact that such entries tally with diaries A-53 and A-54 seized from the premises of Shri Paras Ram Rohira with the entries found in Mehal note book seized from the premises of the assessee. 40. The learned Departmental Representative argued that if the learned CIT(A) came to the conclusion that the provisions of s. 69D of the Act were not applicable, she should have made the addition under the provisions of s. 68 of the IT Act. The learned CIT(A) has concluded that the Mehul note book is a document containing entries of loans and advances taken, interest paid which have not been recorded in the books of account of the assessee prepared for income-tax purposes. She also agreed with the AO that the provisions of s. 145(2) are applicable to the facts of this case and the AO was well within his right in resorting to estimate the income of the assessee. She has deleted the addition only on the basis that no Hundi documents were found pertaining to these transactions either at the premises of the assessee or at the premises of Shri Paras Ram Rohira. In the absence of such documents she came to the conclusion that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e new ground was not taken up before the learned CIT(A). The learned Departmental Representative contended that the learned CIT(A), in fact has not passed a proper order. The learned Departmental Representative referred to the decision of the Supreme Court in the case of CIT vs. S. Nelliappan (1967) 66 ITR 722 (SC) and contended that the Tribunal is empowered in hearing an appeal to give leave to the assessee to urge grounds not setforth in the memorandum of appeal and in deciding the appeal the Tribunal is not restricted to the grounds setforth in the memorandum of appeal or taken by leave of the Tribunal. Thus, the learned Departmental Representative argued that the additional ground filed by the assessee can be admitted by the Tribunal, though the issue involved in that appeal has not been decided by the learned CIT(A). The learned Departmental Representative further referred to the decision of the Madhya Pradesh High Court in the case of National News Print and Paper Mills vs. CIT (1997) 141 CTR (MP) 485 : (1997) 223 ITR 688 (MP), wherein it has been held by the High Court that if factual premises are already on record, the legal ground can be raised before the Tribunal. The Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, open to the CIT(A) to reject the assessee's books of account which have been accepted by the AO. The learned Departmental Representative, therefore, contended that the CIT(A) has held that there were cash loans in the seized "Mehul note book" of the assessee, therefore, she should have resorted to the provisions of s. 68 of the Act and should have retained the addition under that section. 42. The learned Departmental Representative argued that the non-exercise of the powers by the CIT(A), can be corrected by the Tribunal. Regarding the issue whether the addition under s. 68 of the Act can be made or not, the learned Departmental Representative referred to the decision of the Delhi High Court in the case of Daya Chand vs. CIT (2001) 167 CTR (Del) 446 : (2001) 250 ITR 327 (Del) and contended that s. 68 of the IT Act, 1961, provides that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered was not in the opinion of the AO satisfactory, the sum so credited may be charged to the income-tax as the income of the assessee of that previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecognize the handwriting of these papers. He also clarified that the handwriting of these papers neither pertains to him nor to any of his family members. He stated that he knew nothing about the names and particulars of these notings. The learned counsel also invited our attention to the statement of Shri Paras Ram Rohira which was recorded under s. 131 on 16th Jan., 1997, especially he referred to questions 13 and 14 which read as follows: Q. 13. I am showing you Annexure A-4 which is a bunch of loose papers seized from the residence of Shri Kukreja. Please refer to pp. 38, 39, 40 and 41 of these annexure. What are these transactions, whether these are recorded in your books and whose handwriting is this? Ans.: To the best of my knowledge all these four papers are not in my handwriting. It will not be possible for me to comment on these papers. Q. 14. It seems to me that pp. 39 and 41 are in the similar handwriting as that of your diaries A-53 and A-54 and the transactions entered on these pages find place in Mehul note book as well as your seized diaries. Please comment? Ans.: I do not remember anything and no comments." The learned counsel, therefore, contended that S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been used against the assessee without providing the copy of the statement to the assessee and also without giving any opportunity of cross-examination of Mr. Paras Ram Rohira. The learned counsel again invited our attention to p. 29 of the compilation which is a statement of Shri Paras Ram Rohira recorded under s. 132(4) of the Act on 8th Dec., 1994, especially he referred to question No. 4 which reads as follows: "Q. 4 What is your procedure in arranging loans for Kukreja group concerns? Ans.: I organize cheques from various investors directly in the name of Kukreja group. We give them a slip showing interest and I collect the cheque from the partners of Kukreja and give it to the lenders. I earned brokerage through cheque on advances." The learned counsel, therefore, argued that Shri Paras Ram Rohira was arranging loans for the assessee and all such loans had been received by cheques and had also been paid by cheques. Such loans were regularly entered in the books of account. He contended that Mr. Paras Ram Rohira never admitted in his statements that he was arranging cash loans for the assessee. The Hundi loans were being arranged by him and they had been fully recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account because he was only a financial broker and lenders directly gave cheques to the borrowers. He further stated that it would not be possible for him to give any authentication regarding evidence because he had only recorded brokerage. He also stated that he never indulged in cash transactions. The learned counsel, therefore, contended that Mr. Paras Ram Rohira never admitted anything against the assessee. He also made it very clear that Mehul note book was not written by him, therefore, the Department has not brought any further evidence on record to rebut the statements given by both the parties. 46. Regarding the addition made under s. 69D of the Act, the learned counsel relied on the findings of the learned CIT(A) and contended that the learned CIT(A) has deleted the addition correctly as per the provision of law. He invited our attention to Circular No. 208, dt. 15th Nov., 1976, of the CBDT. The Taxation Laws (Amendment) Act, 1975, has added a new s. 69D in the IT Act, 1961, w.e.f. 1st April, 1977, which provides that if any amount is borrowed from any person on a Hundi or any amount due on it is repaid to any person, otherwise than through an account-payee cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the onus of proving that he was not its owner was on that person. The Supreme Court further held that "on the facts a legitimate inference could be drawn that the petitioner had income which he had invested in purchasing the wrist watches and could be held to be the owner of the wrist watches and their value could be deemed to be his income by virtue of s. 69A." The learned counsel, therefore, contended that the documents on the basis of which the income is being determined were not seized from his possession, therefore, the onus of proving that he was not the owner of such documents was not on him. Similarly, the Department has not brought any evidence on record to prove that the income earned has been invested in some assets possessed by the assessee. Therefore, according to him the addition has been made without any supporting evidence and on the basis of presumptions and assumptions. The learned counsel also referred to the following cases of Ahmedabad Tribunal to support his contention: (i) Prarthana Construction (P) Ltd. vs. Dy. CIT (2000) 70 TTJ (Ahd) 122 (2) Unique Organisers and Developers (P) Ltd. vs. Dy. CIT (2000) 70 TTJ (Ahd) 331 In the case of Prarthana Constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in s. 114 of the Evidence Act, 1872. It is not a mandate that whenever the books of account are seized, the Court shall necessarily draw such a presumption irrespective of any other facts which may dissuade the Court from doing so. The learned counsel also referred to the decision of the Rajasthan High Court in the case of CIT vs. S.M.S. Investment Corporation (P) Ltd. (1994) 207 ITR 364 (Raj) and contended that the presumption can be rebutted on the basis of findings of fact which have been recorded in the seized documents seized from the premises of the assessee. According to the learned counsel the diaries A-53 and A-54 seized from the premises of Shri Paras Ram Rohira cannot be relied upon unless the writer of these diaries says that he advanced some loans to the assessee. Mr. Paras Ram Rohira never committed that he had advanced loans to the assessee. 48. The learned counsel argued that the Mehul note book was found and seized from the premises of the assessee. The partner of the assessee-firm, however, denied during the course of search that Mehul note book did not belong to him and it had neither been written by him or any of his family members. According to the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it very clear that in case the statement of Mr. Rohira is being used against him, he must be provided a copy of that statement and also an opportunity to cross-examine him. The AO, however, neither provided the copy of the statement to the assessee nor the assessee was given an opportunity to cross-examine Mr. Paras Ram Rohira. So far as the decoding is done by the AO, the learned counsel contended that the same is not correct and is not based on the factual aspects of this case. The learned counsel again invited our attention to the statement of Shri Paras Ram Rohira recorded on 16th Jan., 1997, under s. 131 of the Act, especially to question Nos. 13 and 14, wherein Mr. Rohira has clearly mentioned the four loose papers 38, 39, 40 and 41 seized from the premises of the assessee were not in his handwriting. He also explained that he did not know anything about the transactions entered in loose pp. 39 and 41 and also the Mehul note book seized form the premises of the assessee. He, therefore, contended that the decoding done is erroneous and is not based on the actual figures mentioned in the seized loose papers 39 and 41. He, therefore, contended that the addition has been made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had paid money in "black" to the assessee and entries in the books belonging to them regarding alleged payments to the assessee. The Tribunal examined the statements made by two persons and found that the evidence tendered by them suffered from serious infirmities. It held that mere entries in the accounts regarding payments to the assessee were not sufficient as there was no guarantee that the entries were genuine. The Tribunal, therefore, held that there was no proof that the amounts in question represented income from undisclosed sources belonging to the assessee. The Department sought a reference to High Court. The Hon'ble High Court held that "the conclusion of the Tribunal had been reached by it on a proper appreciation of the evidence. This was a finding of fact by the Tribunal and no question of law arose and no reference would lie from the decision of the Tribunal". According to the learned counsel, s. 68 of the Act would be applicable only if it is admitted that the account was maintained by the assessee. He also contended that Mehul note book was not a book of account maintained by the assessee for the previous year under consideration. The learned counsel referred to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akash Co. Subsequently, a search and seizure action was also conducted at the premises of Paras Ram Rohira, a financial broker. Shri Paras Ram Rohira was acting as the financial broker for some of the Kukreja enterprises. At the premises of Paras Ram Rohira two diaries A-53 and A-54 were seized. These diaries contained details of transactions in the names of a number of parties, including that of M/s Om Prakash Co., the assessee. Shri Paras Ram Rohira in his statement recorded during the course of search under s. 132(4) of the Act on 8th Dec., 1994, admitted that the diaries A-53 and A-54 had been written in his own handwriting. He also admitted that instead of writing the details in numbers, the amounts were entered by putting a '+' sign and each '+' stood for Rs. 5,000. On the basis of this statement, the details of the amounts pertaining to "Om Prakash Co." were worked out by the AO. The AO compared the details so worked out with the details recorded in the name of Paras Ram Bros., in the Mehul note book and he found that if the amount written in the Mehul note book is multiplied by "1000" the total amount tallied in both the accounts on a day-to-day basis. The AO, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rohria and the handwriting in the loose papers 39 and 41 seized from the premises of the assessee is the same. The Department has not brought any evidence on record to support their contention. The Departmental officers are not technically competent to give their findings on the handwriting of the parties. If the AO or the learned CIT(A) observed that the documents seized from both the places were having the same handwriting, they should have obtained the opinion of the handwriting expert on such documents before coming to a definite conclusion. Under the circumstances, we do not find any substance in the findings of the lower authorities that the handwriting of the diaries A-53 and A-54 seized from the residence of Shri Paras Ram is similar to the handwriting of the loose papers 39 and 41 seized from the premises of the assessee. The assessee had made a statement during the course of search that the documents did not belong to the assessee-firm. Shri Paras Ram Rohira disowned these documents in his statement recorded under s. 131 of the Act on 16th Jan., 1997. The Mehul note book was found at the residence from where the business of twenty sister-concerns is being carried on and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also appeared in Mehul note book, but it is not true. Only few transactions as has been stated by the AO are appearing in Mehul note book. This means the assessee does not want to have control over all the transactions which is quite contradictory to the findings of the lower authorities. Thus, the decoding done by the AO does not appear to be logical. Para 1 of the Mehul note book is titled as Paras Ram Bros. According to the Department, this page has also been written by Paras Ram Rohira but Mr. Paras Ram Rohira has not admitted that p. 1 of the Mehul note book is also in his handwriting. The Department has not brought any evidence on record such as report from a handwriting expert to support this contention except stating in their orders that both the documents have been written by Shri Paras Ram Rohira. Therefore, the presumption raised by the Department that the handwriting in the Mehul note book and loose papers 39 and 41 seized from the residence of the assessee is similar to the handwriting in the diaries A-53 and A-54 seized from the premises of Mr. Paras Ram Rohira is without any substance and the same cannot be accepted as an evidence against the assessee. In case the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld indulge in advancing or taking cash loans without any corresponding surety for the recovery of such loans. This factor has not been taken into consideration by the Department before coming to the conclusion that Shri Paras Ram Rohira has arranged Hundi loans in cash for the assessee which have been entered in Muhul note book. Another important factor for consideration is that these loans have been arranged by Shri Paras Ram Rohria through some other parties and he is only a broker in between. Under these circumstances the names of such parties should have appeared either in the documents seized from the premises of the assessee or in the documents seized from the premises of Shri Paras Ram Rohira, but none of the documents are reflecting such names. In our opinion, it is not convincing that the cash loans are advanced without any guarantee in the form of Hundis or in any other form. Moreover the seized documents also do not reflect the identities of the creditors. Under the circumstances it cannot be said that Mr. Paras Ram Rohira arranged the cash loans for the assessee as has been alleged by the Department. Therefore, the decoding done by the AO is without any basis or eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of making the addition. If this interpretation is given which in our opinion is the correct and the only interpretation which is possible as per the provisions of law, it would lead to absurd results as we have mentioned above. Therefore, we do not find any force in the logic applied by the Department in decoding the figures given on p. 1 of the Mehul note book. This view is further supported with the contention of the Department that the Mehul note book contains the cash loans arranged through Mr. Paras Ram Rohira, therefore, if he has written coded amounts on p. 1, he could have written the amounts on p. 3 also in coded amounts. Mr. Paras Ram Rohira is a finance broker and he is not going to adopt two different standards of writing the amounts in the same note book. Under the circumstances, the decoding done by the Department is factually incorrect and without any logical basis, the same therefore, does not require any consideration. 56. The next important issue regarding decoding is the calculation of the interest on the basis of figures given on p. 1 of the Mehul note book. According to the AO, the figures given on Col I are principal amounts and the figures in the fourth c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he diaries A-53 and A-54 ignoring the other figures. According to the Department the Mehul note book contains the cash loans arranged through Paras Ram Rohira. If this is accepted as correct then why Mr. Paras Ram Rohira should write only three figures in Mehul note book, infact he should have written all the amounts appearing in diaries A-53 and A-54 against the name of M/s Om Prakash Co., in Mehul note book also. There does not appear to be any truth in the imagination of the Department. We have also calculated interest at the rate of 14 per cent on other amounts also given on p. 1 of Mehul note book, which also does not tally with the interest given in fourth column of the note book. This clearly proves that the decoding done by the lower authorities is without any proper evidence and the same, therefore, cannot be taken into consideration for deciding this issue. 57. The next important issue pertaining to decoding is regarding the loose papers 39 and 41 seized from the premises of the assessee. According to the learned Departmental Representative the amounts mentioned on these papers are in coded words, i.e., on p. 39 (250) means Rs. 2,50,000, (500) means Rs. 5,00,000 and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the figure of (250) is mentioned for the quarter 16th Aug., 1993 to 15th Nov., 1993, whereas on Mehul note book it is mentioned for the quarter 16th Nov., 1992 to 15th Feb., 1993. The other figures mentioned on Mehul note book also do not pertain to the same periods as mentioned on seized loose papers. The figure of (400) on seized paper 41 is mentioned between the period 1st July, 1993 to 1st Oct., 1993, but on Mehul note book it is between 1st Jan., 1993 to 1st April, 1993. Similarly, other figures mentioned on seized papers do not correspond to the period mentioned on Mehul note book; even the interest determined on these figures on both the documents are different. The interest shown on (250) on seized paper 39 is Rs. 8,720.83, whereas on the Mehul note book the interest shown at one place is 8,720, on the same figure it has also been shown at Rs. 8,730 subsequently. Similarly, on seized paper 41 the interest shown on (400) is Rs. 14,106.76 whereas on the Mehul note book the same is Rs. 13,800. Similar is the condition regarding the interest on other amounts also. Now, the main point for consideration is whether the figures mentioned on seized loose papers 39 and 41 are the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation, it would be quite unjust and against the natural justice to proceed against the assessee on the principle of preponderance of probability. The provision of s. 132 is a complete code in itself and any action against the assessee after the search has to be taken within the provision of that section only. It exists in isolation of other provisions of the Act. It is essentially a procedural section empowering the tax authorities to take action where the income and assets are not voluntarily disclosed. The income of the assessee after search action has to be determined as per the procedure laid down in the Act on the basis of the evidence collected during the course of search. In our opinion, the Department is not empowered to determine the income of the assessee on the basis of the imaginary presumptions and assumptions after the search action. The presumption if any has to be made as per the provisions of s. 132(4A) of the Act, which is also rebuttable. The principle of preponderance of probability applies only when actions is to be taken on the basis of circumstantial evidence. In the search cases the question of circumstantial evidence does not arise as the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied to p. 3 of Mehul note book. The AO has not proved that these figures are also appearing in the diaries A-53 and A-54 seized from the premises of Mr. Paras Ram Rohira. Moreover, "Madnani" has been written on the top of this page which means these transactions pertain to Madnani only and if the contention of the Department is accepted as correct that the loose papers 39 and 41 have been written in the handwriting of Mr. Paras Ram Rohira and the transactions on these loose papers are the same which are reflected in Mehul note book, then these transactions must be between Madnani and Mr. Paras Ram Rohira. The Department has not proved the identity of Madnani. Even Mr. Paras Ram Rohira has disowned this note book. Under the circumstances, the Department has not proved that the transactions of Madnani pertain to the assessee or any of the family members of the partners of the assess-firm. Therefore, the findings that these transactions also pertain to the assessee are without any material on record or logical basis. Therefore, the addition made of Rs. 25,00,000 is simply based on the wild guess of the tax authorities. Under the circumstances this addition is not justified. 59. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 and the handwriting in the loose papers 39 and 41 is the same, i.e., in the handwriting of Shri Paras Ram Rohira, which fact has also been confirmed by the learned CIT(A) though without any report of the handwriting expert. It has been stated by the partner of the firm that the Mehul note book belongs to Paras Ram Rohira. There is a substance in the statement of the partner because the Department has itself accepted that the loose papers belong to Paras Ram. Now, if Paras Ram can leave the loose papers in the premises of the assessee, he could have also very well left the Mehul note book in the premises of the assessee. Therefore, the loose papers and the Mehul note book actually belong to Mr. Paras Ram Rohira and not to the assessee. Though it is not admitted by Mr. Paras Ram Rohira, the fact remains that the Mehul note book and the loose papers 39 and 41 have been written by Mr. Paras Ram Rohira. Thus, the findings of the Department fully support the view that Mehul note book does not belong to the assessee as the same infact belongs to Mr. Paras Ram Rohira. Once it is proved that the seized documents belong to a particular person, the presumption if any under s. 132(4A) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld. 61. The next important issue for consideration is whether the addition can be made under the provisions of s. 68 of the Act. This issue was not before the CIT(A), therefore, she has not considered this issue. She has, however, agreed with the AO that the assessee-firm has taken cash loans of Rs. 72 lakhs which do not find any place in the books of account of the assessee. The learned Departmental Representative, therefore, took up this issue by filing the additional ground of appeal. According to him the learned CIT(A) should have made the addition under s. 68 of the Act once she came to the conclusion that the assessee has taken cash loans of Rs. 72 lakhs which are unaccounted and are in violation of the provisions of s. 68 of the Act. He contended that the CIT(A) has plenary powers in disposing of an appeal. The scope of his powers is co-terminus with that of the AO. He can do what the AO can do and can also direct him to do what he has failed to do. He further contended that the power conferred on the appellate authority by s. 246 and which is exercised in accordance with the procedure in s. 250 indicates an amplitude and width which is no less wider than that of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 20 sister-concerns were carrying on their business activities. One of the partners of the assessee-firm stated in his statement recorded under s. 132(4A) of the Act that Mehul note book did not belong to the assessee-firm. The name of the assessee-firm was also not mentioned on this note book. The Department also did not bring any further material on record to prove that the Mehul note book pertained only to the assessee in exclusion of all the other sister-concerns. The Department has also not proved that the note book was written by any of the partners or any of their family members. Therefore, the presumption drawn by the Department under s. 132(4A) of the Act that the Mehul note book belongs to the assessee only is without any substance. In the aforesaid paragraph, we have also stated that the assessee rebutted the presumption raised by the Department under s. 132(4A) of the Act. Under the circumstances, we do not find any force in the arguments of the learned Departmental Representative that the Mehul note book pertains to the assessee. 62. Another important issue for consideration is whether the addition has been made purely on the basis of the seized Mehul note book or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sheets of paper or other material blank, written or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'Book' for they can be easily detached and replaced. In the present case, the Mehul note book as we have concluded above has not been maintained by the assessee for keeping the accounts of its business. As stated above, this book pertains to Mr. Paras Ram Rohira, therefore, the same has been written by him for keeping his accounts. In this note book only two pages are written, which can also be easily removed. This is a rough note book, the pages of, which can also be easily removed. Therefore, it cannot be considered as a book as the sheets of this note book can be easily detached and replaced. Even if it is considered as a book of account no addition can be made on the basis of the amounts mentioned in this note book as we have discussed above in detail. Thus, the provisions of s. 68 of the Act are not applicable to this case. 64. So far as the contents of the Mehul note book are concerned, the assessee has rebutted the presumption raised by the Department under s. 132(4A) of the Act by stating that this no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he firm nor by any of their family members. Thus, the assessee has not made any admission regarding the cash of Rs. 72 lakhs. Therefore, no addition can be made on this account also. 66. Shri Paras Ram Rohira has not admitted anything against the assessee-firm. He also stated that he was not dealing in any kind of cash transactions. Regarding the Hundi loans, the Hundi documents were not found in the premises of Mr. Paras Ram Rohira. Hundi is a document on the basis of which, the recovery of the loans is ensured and in the case of default, the holder of the Hundi is entitled to sue on its basis without any endorsement in his favour. Hundi once accepted by the donee, could be negotiated without endorsement. In the present case, it is quite surprising that where the loans had been advanced through cheques the Hundi documents had been obtained by Shri Paras Ram Rohira and had been kept in his safe custody but so far as cash transactions are concerned he had not obtained any Hundi documents even though the risk involved in recovering the cash loans is much more than recovering the loans advanced by cheques. Therefore, we find substance in the arguments of the learned counsel that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partmental Representative that in the natural course, if justice has not been done, the case can be sent back to the lower authorities with specific directions for providing the copies of the seized documents to the assessee are also without any substance. The statement of Shri Paras Ram Rohira was not given to the assessee on the basis that the same was recorded in the presence of the assessee. Similarly, the copies of the documents A-53 and A-54 were not made available to the assessee on the basis that such documents contained certain secret names. Even on the specific direction from the CIT(A) such documents were not made available to the assessee except certain slips taken out from such documents. Thus, the lower authorities have already taken a concentitious decision for not providing the copies of the diaries A-53 and A-54 seized from the premises of Paras Ram Rohira. Similarly, the lower authorities have also decided not to provide the copy of the statement of Shri Paras Ram Rohira to the assessee and also denied the opportunity to the assessee for cross-examining Shri Paras Ram Rohira. Therefore, in our considered opinion, no useful purpose would be served in sending back t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of records in the case of the assessee-firm does not arise. He, therefore, argued that the remarks of the learned CIT(A) that the loans have been taken in cash through the finance broker, Mr. Paras Ram Rohira in violation of the s. 269SS of the Act are without appreciating the facts and provisions of s. 269SS of the IT Act. The learned Departmental Representative supported the findings of the tax authorities. In view of our findings in the preceding paragraphs that the assessee-firm has neither borrowed nor paid any cash loans to any party through Mr. Paras Ram Rohira, therefore, the provisions of s. 269SS are not attracted in this case. The assessee has also not given any explanation that the firm had borrowed or received deposits from relatives or friends, therefore, the remarks of the learned CIT(A) are not relevant to the facts of this case. This additional ground which is consequential to the ground pertaining to cash loans of Rs. 72 lakhs is, therefore, decided in favour of the assessee. 68. The second ground of appeal taken up by the assessee is regarding the addition made on account of interest of Rs. 2,68,750 by the AO and enhancing the same to Rs. 5,79,433 by the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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