TMI Blog1999 (1) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ose papers were found containing the money lending activities of the assessee. Thereafter, the assessee was summoned u/s 131 and his statement was recorded on 22nd November, 1996. in this statement, it was confirmed by the assessee that money lending activities were being carried on by him for the last 3 to 4 years. Accordingly, the assessee filed the revised return on 9th January 1997 disclosing additional undisclosed income of Rs. 10,00,000 pertaining to A.Ys. 1993-94 to 1996-97. The loose papers found from the premises of the assessee contained the names of the persons from whom the assessee had borrowed money as well as the names of the persons to whom the money was lent. The borrowings amounted to Rs. 79,00,000 while the lending amounted to Rs. 89,00,000. This difference of Rs. 10,00,000 was considered and assessed as income from money lending business. The assessee was asked to furnish confirmations from all the persons from whom the assessee claimed to have borrowed funds for his money lending business. The confirmations were filed by the assessee. To test check the genuineness of the loans, 9 persons were issued notices u/s 131. These persons appeared before the AO. Their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64 and various other Tribunal decisions mentioned below : 1. Tribunal Ahmedabad Bench Decision in the case of Income-tax Officer vs Ghanshyambhai R. Thakkar [1996] 56 TTJ (Ahd) 460. 2. Tribunal Delhi Bench decision in the case of Ashwani Kumar vs Income-tax Officer [1991] 39 ITD 183. 3. Tribunal Jaipur Bench Decision in the case of Kishanchand Sobhrajmal vs Asstt. Commissioner of Income-tax [1992] 41 ITD 97. 4. Tribunal Ahmedabad Bench Decision in the case of Devilal Gherilal Shah vs Dy. Commissioner of Income-tax [1995] 127 CTR (Trib, Ahd) 135. In view of the aforesaid decisions, it was submitted by him that the contents of loose paper found in the course of survey should be accepted in toto and the fact that the assessee has borrowed money from the persons as mentioned in the loose paper should be accepted. Secondly it was contended that the provisions of section 68 cannot be applied to the facts of the present case since the loose papers found in the course of survey cannot be considered as books of account maintained by the assessee in view of the decision of Tribunal Pune Bench in the case of Kantilal Bros. vs Asstt. Commissioner of Income-tax [1995] 52 ITD 412. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rged and the same were shifted to the AO for disproving the stand of the assessee. According to him, not even a single material has been brought on record to suggest that confirmations filed by the assessee were false or bogus. In support of his contention that no addition can be made if primary burden is discharged, the reliance was placed by him on the following decisions : 1. Smt. Narinder Bedi vs Income-tax Officer [1996] 59 ITD 417 (Chd) 2. Commissioner of Income-tax vs Sahibganj Electric Cables (P.) Ltd. [1978] 115 ITR 408 (Cal) 3. Commissioner of Income-tax vs Shyam Sunder Co. [1990] 181 ITR 187 / [1989] 45 Taxman 248 (Cal) 4. Pragati Construction Co. vs Income-tax Officer [1997] 60 ITD 201 (Delhi). Lastly, it was submitted by him that even the draft order proposed by the AO was not disclosed to the assessee and therefore, the question of rebuttal did not arise. 4. The learned senior D.R. has supported the order of the AO by reiterating the reasonings by the AO which need not be repeated since the same have been reproduced by us in earlier paras. Regarding the first legal contention of Mr. Pathak, it was submitted by him that statement of the assessee can be di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax [1995] 52 TTJ (Ahd) 185, in support of his submission. It was further submitted that all the loans were received in cash, though banking facilities were available. He also referred to a pronote appearing on the last page of the paper book to show that assessee was in the habit of borrowing money on the basis of pronotes and therefore, cash transactions could not be believed. It was also pointed out by him that in fact the total borrowings were to the extent of Rs. 65,60,000 while the confirmations were given for Rs. 78,00,000 which shows that the confirmations filed by the assessee were bogus. A query was raised from the Bench as to why all the persons from whom money was borrowed by the assessee were not examined. It was stated by him that assessee had requested in a statement not to make investigations as his business would be ruined. It is because of this reason that all the persons were not examined. The learned D.R. also invited our attention to the notes on confirmations appearing at pages 1 to 4 of the paper book filed by him to show the weaknesses in the statement or the persons who appeared before the AO. Lastly, it was submitted by him that on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us have been considered carefully. At the outset, it would be useful to refer the well-settled legal position, that burden lies on the Revenue to prove. that case of assessee falls within the four corners charging provisions of the fiscal statute. Special provisions have been enacted by the legislature in Chapter XIVB for assessing the undisclosed income. Section 158BA is the charging section which authorises the AO to assess the undisclosed income in accordance with the provisions of Chapter XIVB. What is undisclosed income is defined in section 158B. Section 158BB provides that undisclosed income shall be computed on the basis of evidence found as a result of search and such other materials as are available with the AO. The combined reading of these provisions reveals that AO has to prove, on the basis of the evidence or material found as a result of search or as available with the AO, that assessee had the undisclosed income chargeable to tax under section 158BA. 7. Now the question is whether there is any material or evidence on the record which was available to the Assessing Officer to prove the undisclosed income of the assessee. The perusal of the record shows that onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to it and reject the other part of the statement which is detrimental to it. This view has also been taken by the Tribunal, Ahmedabad Bench in the case of Ghanshyambhai R. Thakkar (supra). The decision of the Supreme Court in the case of Mahendra Manilal Nanavati (supra), also says that admission has to be considered in its entirety. However, the Senior D.R. has also relied on para 213 of the aforesaid decision of the Supreme Court for the proposition that even the part statement can be rejected. We find that para 213 is part of the dissenting judgment. According to the majority judgment, the entire admission was to be acted upon. We therefore reject this submission of the learned senior D.R. 9. In view of the above, it is held that the entire statement of the assessee has to be accepted. If that is so, no addition can be sustained on the basis of the materials mentioned above. The loose papers were maintained and kept by the assessee for his private knowledge and information and not meant for disclosing to the Department. If the statement of the assessee is to be rejected in toto, then no addition can be made on the basis of loose papers since those would be dump papers as disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue to prove that evidences produced by way of confirmations were false. In the absence of any adverse material on the record, the addition cannot be sustained on mere surmises and conjectures. We need not repeat the reasons given by the AO which have been reproduced by us while stating the facts of the case. Therefore, even on this alternative ground, the assessee must succeed. 11. Now we deal with the contention of the learned Senior D.R. to the effect that at least addition of Rs. 18,20,000 should be sustained on account of negative balance on 18th September, 1996. In our opinion, there is no force in such contention of the learned D.R. There is no material available on the record to prove any cash flow in the hands of the assessee. Admittedly, the assessee had been carrying on the business of money lending for the last 4 years i.e. assessment years 1993-94 to 1996-97 as is apparent from page 4 of the assessment order where the AO has accepted the undisclosed income of Rs. 10,00,000 on account of money lending business pertaining to the above 4 years. This amount was therefore available with the assessee for investment for which credit has to be given. Besides this, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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