TMI Blog2004 (2) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case and in law, the learned AO is not justified in making the addition of Rs. 46,30,000 as unexplained cash in the hands of the assessee. The entire addition be quashed. 3. That on the facts and in the circumstances of the case and in law, it be held that the assessee is not the owner of cash Rs. 46,30,000 and the provisions of s. 69A are not applicable in his case. The addition of Rs. 46,30,000 is unjustified and unlawful and, therefore, be deleted. 4. That on the facts and in the circumstances of the case and in law, the learned AO erred in relying upon the material which is collected behind the back of the assessee, no addition, therefore, can be lawfully made on the basis of such material. 5. That on the facts and in the circumstances of the case and in law, the learned AO is not justified in not accepting the cash of Rs. 45,00,000 belonging to UNI-SAF Investment (P) Ltd. The same should have been accepted. 6. That on the facts and in the circumstances of the case and in law, the learned AO is not justified for non-accepting a cash of Rs. 1,30,000 belonging to Sandip Brahmankar. The addition be kindly deleted." 3. Vide application dt. 30th Oct., 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tya Setia (1983) 37 CTR (MP) 66 : (1983) 143 ITR 486 (MP) and Steel Ingots (P) Ltd. vs. CIT (1996) 135 CTR (MP) 379 : (1996) 86 Taxman 440 (MP). He also cites the decision of this Bench of the Tribunal in the case of C.K. Khanna (ITA Nos. 121 to 129/Ind/1996). 7. The learned Departmental Representative, on the other hand, opposes the allowability of these additional evidence at this stage. The learned Departmental Representative has, however, also furnished the enquiry report of Dy. DIT (Inv.) Unit-I, New Delhi, statements of Shri G.K. Malhotra recorded on 18th March, 1999, statements of Shri Ramesh Chand Sahu recorded on 19th March, 1999, survey report of Elite Appliances Ltd. dt. 23rd March, 1999, and copy of resignation letters of Shri Ramesh Chand Sahu. 8. The documents furnished are related to the root of the matter which have been issued by one or the other Government authorities. The Hon ble M.P. High Court in the case of CIT vs. Ku. Satya Sethia has held that the Tribunal is the final fact finding body under the scheme of the IT Act. The powers, therefore, have necessarily to be exercised by it for deciding the questions of fact and while exercising its powers if the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited by the parties which we have gone through is that the purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law [NTPC Ltd. vs. CIT ]. The Hon ble Madras High Court in the case of CIT vs. Rayala Corporation (P) Ltd. has held that the Tribunal has got to protect on the one hand the interest of the assessee in the sense that he is not subjected to an amount of tax in excess of what he is bound to pay, and, on the other hand, it has a duty to protect the interest of the Revenue and to see that no one dodged the Revenue and escaped without paying the tax. The Hon ble M.P. High Court in the case of Steel Ingots (P) Ltd. vs. CIT held that eventual destination of every litigation is justice and as such technicality should not be permitted to prevail as speed breaker in the course of dispensation of justice. True it is that the question was not raised before the first appellate authority but it is equaly true that the question was one of law and had material bearing on the order of assessment and, therefore, the Tribunal should have permitted the assessee to raise the question despite the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been stated that on 17th March, 1997 warrant of authorisation under s. 132A of the Act was issued by the CIT, which was executed on S.P. Lokayukta, Jabalpur, on 21st March, 1997. During the course of search the S.P. Lokayukta had found and seized cash and other valuable assets from the premises of the assessee. The contention of the learned Authorised Representative is that till the asset is delivered to the Department, the Department is not empowered to invoke the provisions of s. 158BC of the Act. In this regard, he draws our attention to sub-cl. (c) of sub-s. (1) to s. 132A providing that where the authorised officer of the Department in consequence of information in his possession has reason to believe that any assets represents either wholly or partly income or property which has not been or would not have been disclosed for the purposes of the IT Act, by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then the Director General or Director or the Chief CIT, Asstt. Director or Dy. Director, Asstt. CIT or Dy. CIT or the ITO (referred to as Requisitioning Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lternative, the learned Departmental Representative submits that the objection of the assessee is nothing more than that technical in nature and s. 292 takes care of such technical objection. 10.3 After considering the arguments advanced by the parties in view of the materials available on the record, we find force in the submission of the learned Departmental Representative that s. 158BC is an independent section and the same cannot be confused with the provision of s. 158BE which only talks about the time-limit for completion of block assessment and for that limited purpose only. Explanation 2(b) of s. 158BE defines the word execution of authorisation . The additional ground Nos. 3 and 4 raised vide application dt. 30th Dec., 2002 are, thus, decided against the assessee and rejected. So far as the issue raised in additional ground Nos. 1 and 2 raised in the same application are concerned, it is an administrative action which cannot be questioned before the Tribunal. These grounds are, thus, not maintainable and dismissed as such. 11. Additional ground Nos. 1 to 6 (vide application dt. 12th April, 2002): The facts in brief are that during the course of search conducted by L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of share application and the copy of resolution passed by Elite Appliances Ltd., the assessee further submitted photocopy of memorandum and articles of the company M/s UNISAF Investment (P) Ltd. along with photocopy of certificate of incorporation dt. 29th Sept., 1996, an affidavit dt. 20th Dec., 1998 of Shri Sandeep Brahmankar confirming that Rs. 45 lakhs was received from Elite Appliances, Delhi on 7th and 8th March, 1997 towards share application money for allotment of 4,50,000 shares of Rs. 10 each of UNISAF Investment (P) Ltd. and the same was brought to Jabalpur as there was no bank account of the company at Delhi or Jabalpur, the said cash was kept at the residence of his father. Vide order sheet entry dt. 17th Feb., 1999, the assessee was asked to furnish certified copy of cash book of Elite Appliances Ltd. w.e.f. 1st March, 1997 to substantiate the balance of Rs. 56,47,144 and to justify the receipt of cash of Rs. 20 lakhs on 7th March, 1997 and Rs. 25 lakhs on 8th March, 1997 and evidences, if any, of bringing cash, the assessee could not produce the same and affidavit furnished on 20th Dec., 1998 from Shri Sandeep Brahmankar is a self-serving statement by an interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the newspaper on 17th, 18th and 19th of March, 1997 requires a proper and detailed examination and enquiry. The photo taken by the newspaper agents and other important information, which was published and printed in the newspaper would be examined by the AO before reaching to any conclusion. (viii) The contention from the side of the applicant that a survey has been conducted by the IT Department at the business premises of M/s UNISAF Investment (P) Ltd. and M/s Elite Appliances Ltd., Noida appears baseless, wrong and incorrect as neither the appellant nor any other person has admitted before the AO that he has received documentary evidence or letter from the IT Department in this regard. (ix) The learned CIT(A) directed the AO to take help of the IT Department or any other agency as he may like to conduct a detailed enquiry, survey, and whatever possible as per the provisions of the IT Act, and also examine all bank accounts, movable and immovable properties owned by the appellant and all his family members on the basis of reports published in the newspaper dt. 17th March, 1997. It was also directed by the learned CIT(A) that the AO must take necessary assistance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dip Brahmankar recorded on 22nd April, 1997, and in this statement the said Sandip Brahmankar had specifically requested the Dy. DIT that if they want to check the cash balance of the Elite Appliances Ltd., Noida, they may verify from their books. He had also given in the course of his statement the full address of the company Elite Appliances Ltd. and also of Mr. P.C. Gupta, the managing director of the company who had given money to him for doing the business of real estate development. The learned Authorised Representative further argues that the learned Dy. DIT despite the specific request did not make the inquiry immediately, but the enquiries were made and the survey was conducted at the premises of Elite Appliances Ltd. on 23rd March, 1999, i.e., after the lapse of almost two years, and due to this delayed enquiry and the lapse of the time the said company premises was found closed. The survey report of the Department, however, shows that the company was existing and it was also mentioned in the survey report that the local enquiry indicated that the company was in default in respect of public deposit received and in respect of labour payments. (iii) With regard the observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd., Noida, Delhi who had given the share application money to UNISAF Investment (P) Ltd., so that the truthfulness of the statement could be ascertained. The learned Authorised Representative further submits that the Department did not find it necessary to conduct an enquiry to bring forth the truthfulness of assessee s contention, and instead, after a lapse of about two years, in March, 1999, the Department made enquiry, and according to the said enquiry report dt. 23rd March, 1999, the said unit had become sick and was found closed. The learned Authorised Representative relying on a decision of Allahabad High Court in the case of Nathuram Premchand vs. CIT (1963) 49 ITR 561 (All) states that the assessee should not be penalised for the lapse of the Department to conduct verification even on a specific request. (vi) With regard the findings of the AO that Shri Ramesh Chand Sahu in his statement dt. 19th March, 1999 had declined to have any connection with M/s UNISAF Investment (P) Ltd. the learned Authorised Representative submits that the said statement of Ramesh Chand Sahu should not be admitted as an evidence since the statement was recorded behind the back of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an evidence and no importance should be attached to such document. It was also submitted that Shri G.K. Malhotra had signed the balance sheet, P L a/c for the year ended on 31st March, 1998, and his signature is also appearing on the annual return filed before the Registrar of Companies under s. 159 of Companies Act, 1956. (viii) It was further submitted that Shri Sandip Brahmankar, the director of M/s UNISAF Investment (P) Ltd. in his statement dt. 22nd April, 1997 had stated that the corporate office of the company is located at B-602, Gokul Height, Thakur Complex, Kandivli East, Mumbai, where all the documents are being kept and maintained. Due to this reason, the books and documents were not found at the registered office of the company at B-12, Gupta Tower, Azadpur, Delhi. It was further contended that the company law provides filing of documents within a period fo 30 days without late fee, and the procedural delay by the company UNISAF Investment (P) Ltd. in filing the documents in respect of appointment of director/increase of authorised capital with Registrar of Companies should not be a reason to suspect the contention of the assessee. It was also contended that since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also reflected in the audited balance sheet of the company M/s Elite Appliances Ltd., and also in the balance sheet of M/s UNISAF Investment (P) Ltd., therefore, there is no reason to disbelieve the submission of the assessee with regard the cash found at the premises of the assessee. It was further submitted that Shri Sandip Brahmankar, director of M/s UNISAF Investment (P) Ltd. had explained the source of cash Rs. 46,30,000 found at the residential premises. Our attention was also drawn to page Nos. 30 to 37 of APB Vol. II, where the copy of all documents such as income-tax return, computation, balance sheet, and the affidavit of Sandip Brahmankar filed before the AO in support of his claim that out of Rs. 46,30,000, a sum of Rs. 1,30,000 was his personal cash. The learned Authorised Representative further submits that when valuables are found with an assessee, and he identifies the owner of such assets, and the owner also admits the ownership and produces evidences in support of the claim, then the burden of the assessee stands discharged, and no addition can be made in the hands of the assessee. In the present case, the assessee has fully discharged his onus in identifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is not justified and the provisions of s. 69A cannot be made applicable on presumptions and suspicion. Reliance has been placed on the following decisions: 1. Ms. Reena R. Meerchandani vs. Asstt. CIT (2000) 66 TTJ (Del)(TM) 9 2. Addl. CIT vs. S. Pitchaimanickam Chettiar (1983) 34 CTR (Mad) 139 : (1984) 147 ITR 251 (Mad) 3. Rajinder Paul vs. Director of Enforcement (1988) 40 Taxman 45 (FERAB) 4. Asstt. CIT vs. Milind Mahajan Nagur 30 ITC 381 (Nag) 5. Shankar Bhai Khodabhai 24 ITC 442 6. Harish Kumar vs. Dy. CIT (2003) 80 TTJ (Hyd) 174 : (2003) 85 ITD 366 (Hyd) 7. C.K. Khanna Vimla Khanna 8. Kamtaprasad vs. State AIR 1961 All 438 9. Dani Chand Dhani Ram vs. CIT (1964) 52 ITR 982 (Ker) 10. Raghubar Mandal Harihar Mandal vs. State of Bihar 8 STC 770 (SC) 11. Uma Charan Shaw Bros. vs. CIT (1959) 37 ITR 271 (SC) 12. Hazarilal Roop Chand vs. CIT (1967) 65 ITR 488 (All) 13. Sheo Narain Duli Chand vs. CIT (1969) 72 ITR 766 (All) 14. Dhananjaya Reddy vs. State of Karnataka 2001 4 SEC 9 (SC) 15. Asstt. CIT vs. Shailesh S. Shah (1997) 59 TTJ (Mumbai) 574 : (1997) 63 ITD 153 (Mumbai) 11.5 The learned Departmental Representative, on the other hand justifies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that the statements made by Sandeep Brahmankar referred to in para 8 of the written submissions were not considered by the Department because these did not suit the Department. 11.7 We have considered the arguments advanced by the parties in view of the materials available on record and have gone through the orders of the lower authorities as well as the decisions relied upon by the parties. It is settled position of law that in order to invoke s. 69A, it is necessary to prove that the assessee must be shown to be the owner of the asset. Thus, we have to examine from the facts and circumstances of the case as to whether the Department was able to establish the ownership of the asset found from the official accommodation under occupation of the assessee. A possibility is there that at first instance when money was seized on 16th March, 1997, the assessee was not aware as the money was kept by his son Shri Sandeep Brahmankar who had gone to Bombay and thus, assessee stated that the money did not belong to him or any other members of his family, but when he came to know that money was kept by his son, he made a statement to this effect on 17th March, 1997. Shri Sandeep Brahm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the affidavit was not of the assessee but of the third party and, therefore, it cannot be termed as self-serving statement. The AO observed further that vide reply dt. 8th Dec., 1998 Shri Sandeep Brahmankar submitted that Rs. 45 lakhs belonged to UNISAF Investment (P) Ltd. and the money was received by him as share application money from Elite Appliances Ltd., Noida. On receipt of the above explanation, the Addl. Director of IT (Inv.), New Delhi, was requested to get the enquiries conducted about the genuineness of transaction of Rs. 45 lakhs between Elite Appliances Ltd. and UNISAF (P) Ltd. The submission of the assessee remained that these observations of the AO are very much opposed to the facts. It is wrong to say that the assessee for the first time submitted before the AO vide letter dt. 8th Dec., 1998, that Rs. 45 lakhs was received from Elite Appliances Ltd. as share application money for UNISAF Investment (P) Ltd. The source of money was explained in detail by Sandeep Brahmankar in his statements dt. 22nd April, 1997 and 23rd April, 1997, and also in a written explanation dt. 21st April, 1997. Sandeep Brahmankar in his statement recorded on 23rd April, 1997, made spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany, was retired from the directorship on 4th June, 1997 and, therefore, when his alleged statement was recorded by the Addl. DIT, New Delhi, on 19th March, 1999, Ramesh Chandra Sahu was not the director of the company and he became a hostile person because of the disagreement on investments issue between the directors as explained by Sandeep Brahmankar in his statements recorded on 23rd April, 1997. The Addl. DIT, New Delhi, says that G.K. Malhotra in his statement stated that he accepted to be director of UNISAF Investment (P) Ltd. on the request of Brahmankar Saheb and agreed to give his office address, i.e., B-12, Gupta Tower, Azadpur, Delhi, as the office address of the company. He stated that no transaction whatever has taken place in this company, or from his office address. It was noticed during the course of survey that no documents, books, seal, assets or valuable relating to the company were found at the registered office of the company. He also stated that no employee has ever worked in this company. To these the explanation of the assessee is that Shri G.K. Malhotra was appointed as the director of the company w.e.f. 15th June, 1998 and he retired from the directorsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector of the company M/s UNISAF Investment (P) Ltd. on 7th Oct., 1996 have been submitted with the Registrar of Companies (ROC) only on 6th June, 1997. Similarly, documents in respect of increase of authorised share capital from Rs. 1 lakh to Rs. 50 lakhs have been submitted only on 6th June, 1997. The share capital has been increased by resolution dt. 12th Feb., 1997. As per s. 108 of the Companies Act the intimation is to be made to ROC within 30 days from the date of resolution/date of change of directors. The submission of the assessee remained that the provisions of the Companies Act provide that there would be no additional fee if the documents as required under the statute are furnished within the prescribed time-limit of one month, but if there is a delay in submitting the documents, the company is required to pay additional fee in addition to the nominal fee. Therefore, it is permissible to file documents even after the period of 30 days. The share capital was increased from Rs. 1 lakh to Rs. 50 lakhs by resolution dt. 12th Feb., 1997. Elite Appliances Ltd., Delhi, gave share application money Rs. 45 lakhs to Sandeep Brahmankar on 7th March, 1997 and 8th March, 1997 towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the company was not functioning as it was unable to return public deposits raised by it. Some auction notice was also found affixed on the gate of the company. As the books of accounts could not be located, the entry in respect of Rs. 45 lakhs as share application money to the account of UNISAF Investment (P) Ltd. could not be verified. The assessee explained that Shri Sandeep in his statement recorded on 23rd April, 1997 had made a specific request to the IT authorities that if they want, they can check up the cash balance of Elite Appliances Ltd. from its cash book and they can also verify the payment of Rs. 45 lakhs by Elite Appliances Ltd. to UNISAF Investment (P) Ltd. but the said IT authorities despite the specific request did not take cognisance of the said request and made no verification immediately or thereafter within a reasonable time. However, in support of the contentions that the money was in fact given by Elite Appliances Ltd. to Shri Sandeep all cogent evidence had been furnished before the AO as may be seen from the contents given in paras 9 and 10 of the written submissions filed on behalf of the assessee. The AO has also pointed out that the opening bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Asstt. CIT). A man can be said to acquire something when he gains or gets it as his own. He must have an interest in that something before he can be said to have acquired it. A man by merely being in possession of a thing cannot be said to have acquired it in that sense when for instance he came in possession of it merely as he being an allottee of a house. Of course, there would have been no scope of iota of doubt that the assessee was owner of the money which was found in house allotted to him if there would have been no claimant of it. When a claimant none other than the son of the assessee, who had been residing with him in the said house, came forward to claim the money with explanation of its source, the Department was duty-bound to verify the claim immediately, properly and carefully to arrive at a right conclusion to avoid taxing an innocent person. The burden of proving the ownership in the facts and circumstances of the present case was, thus, entirely on the Department as per the provisions of s. 69A of the IT Act, since presumption under this provision of the Act is not conclusive. The question is as to who is the owner of the money seized, the father who denies own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Act, since the assessee was found in possession of watches, he was presumed to be the owner of them until the ownership of some other person was proved, as the assessee had not taken any step to prove that the watches did not belong to him, the value of watches had to be deemed to be the income of the assessee in view of the fiction created by s. 69A of the Act. This decision has been approved by the Hon ble Supreme Court in Chuharmal vs. CIT (1988) 70 CTR (SC) 88 : (1988) 172 ITR 250 (SC). This Bench of the Tribunal in the case of C.K. Khanna Vimla Khanna wherein it was also a case of search by Lokayukta authorities at the residential premises of executive engineer of the M.P. Government, the cash was found, the Tribunal deleted the addition as the assessee was able to explain the source. The Hyderabad Bench of the Tribunal in the case of Harish Kumar vs. Dy. CIT following the decision of the Hon ble Madras High Court in the case of S. Hastimal vs. CIT (1963) 49 ITR 273 (Mad) has held that it is not the duty of the assessee to prove source of source. 11.9 The judgments relied upon by the learned Departmental Representative do not propose a different ratio whatever laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned companies, the Department has allowed the assessee to raise a bona fide contention against the findings of the Department especially when in the enquiry conducted after the lapse of two years of the request, it has been found that unit was closed for sometime and it had failed to repay the public deposits. The Department in compliance of principles of natural justice should have also afforded opportunity to the assessee to cross-examine the persons whose statements the Department wished to use against the assessee. These lapses on the part of the Department go to the root of the matter to raise question against the findings of the Department. The Hon ble Allahabad High Court in the case of Nathuram Premchand vs. CIT has laid down a principle that if the AO does not do the verification as requested by the assessee, then the assessee should not be blamed. The Hon ble Allahabad High Court in the case of Kamtaprasad vs. State wherein unlicensed arms were found in a house in occupation of several persons held that prosecution unable to prove possession of anyone cannot convict all the persons. Under the facts and circumstances discussed above we find force in the submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 44,394. 11.11 The learned Authorised Representative contends that the affidavits furnished by the assessee are of third persons, though may be related, but the learned AO is not justified in rejecting the same without finding any falsity therein. The learned Authorised Representative further states that there is no material or evidence on record to disbelieve the contentions in the affidavits which have been rejected on conjectures and surmises. The learned Authorised Representative submits that in view of the M.P. High Court decision in the case of Gunvanti Bai Ratilal vs. CIT (1983) 35 CTR (MP) 49 : (1984) 146 ITR 140/144 (MP), and Supreme Court decision in the case of Mehta Parikh Co. vs. CIT (1956) 30 ITR 181 (SC) the contentions of the affidavits are to be accepted, unless these are controverted otherwise. 11.12 We have considered the arguments advanced by the parties and also gone through the orders of the authorities below as well as materials on the record, and we find force in the aforesaid submissions of the learned Authorised Representative and delete the addition made at Rs. 44,394 in the hands of the assessee. The related ground is allowed in favour of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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