TMI Blog2001 (2) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... follows. 2. First, we take up grounds Nos. 5 to 9 because the main addition has been challenged in these five grounds and our decision on these grounds will also have effect on other grounds. During the course of assessment proceedings, the AO scrutinised the two diaries, i.e., diaries Nos. 27 and 31 and noted that the assessee had given loans to many persons. The contention of the assessee before the AO was that he had acted only as a finance broker for arranging the finance for the borrowers from the lenders. Accordingly, he submitted that this money involved in the finance business was not his, but belonged to third parties, i.e., the lenders and he had received only the brokerage as per diary No. 31. The AO rejected the contention of the assessee. He asked the assessee to prove the lenders and because the assessee did not submit the details of the lenders and their confirmations, the AO held that the entire finance as per the diary belonged to the assessee and accordingly, he made an addition of Rs. 2,52,17,000 in the hands of the assessee on account of unexplained credits in the diary. According to the AO, the burden of proving the creditors was on the assessee and as he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had received interest, this amount of interest would have been around 18 per cent (normal market rate of interest) on the total money lent as per diary (determined by the AO at Rs. 2.5 crores approximately) which would have been about Rs. 40 lakhs. Thus, according to the learned counsel, the cash book No. 31 which is seized is itself an evidence in favour of the assessee that he was receiving only the brokerage and not the interest and this fact itself indicates that as a broker he arranged the finance for the borrowers from the lenders and accordingly, the money did not belong to him. 5. The learned counsel thereafter drew our attention to diary No. 27 and submitted that this diary is a ledger giving the accounts of various borrowers. In these accounts, the assessee has written the initials of the lenders, the amounts borrowed from them and also the due dates of repayments. If he had not taken these amounts from the lenders, there was no reason from him to write these initials of the lenders in these accounts. This fact, according to the learned counsel, itself indicates that he had borrowed money from these various persons. 6. According to the learned counsel, both thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has received only the brokerage indicating thereby that he acted only as a broker and not a financer. 8. The learned counsel further submitted that the fact that the assessee acted only as a broker is also accepted by the AO in the sense that in the assessment order he has taxed only the brokerage as per diary No. 31. If he has considered this money as belonging to the assessee, the entire interest on the finance provided to the borrowers should have been considered as the assessee s income. But, on the other hand, the AO has taxed only the brokerage in the hands of the assessee and, therefore, the learned counsel submitted that it was totally incorrect on the part of the AO, or for that matter the CIT(A), to hold a view that this finance provided as per diary No. 27 was actually belonging to the assessee. The learned counsel further drew our attention to the statements given by the assessee at the time of search, wherein he himself had admitted that the figures in the ledger are coded, that he acted only as a broker and his commission was to the tune of 10 to 15 paisa. The learned counsel further pointed out that if this entire money belonged to the assessee, he would have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124 : (1995) 214 ITR 801 (SC) and submitted that all surrounding circumstances should be taken into consideration and if that exercise is done, the entire addition in the hands of the assessee is justified. The learned Departmental Representative submitted that the reliance placed by the learned counsel for the assessee on the decisions of this Tribunal in the cases of Chander Mohan Mehta, Shri Mahavir Nagari Sahakari Pat Sanstha, Kolhapur and Hotel Kiran was not relevant as those cases pertained to block assessments under Chapter XIV-B of the IT Act. Lastly, he submitted that the assessee had filed petition to the Settlement Commission in which he himself had disclosed some income from this business and the petition was rejected by the Settlement Commission on the ground that the assessee had not divulged the details about the credits. Thus, if the assessee himself had accepted particular addition before the Settlement Commission, there was no reason as to why the addition made by the AO on the same facts be deleted. 10. We have considered the rival submissions and perused the facts on record. The whole case of the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in code form (for example, 100 indicates Rs. 1 lakh). The due dates on which the borrowers have to repay the amounts are also mentioned and if there are extensions sought by the borrowers, the extended dates also are mentioned clearly. Some of such accounts which have been fully settled have been scratched. If the assessee had not taken these amounts from the lenders, there was no reason for him to write these initials of the lenders in these accounts. This fact itself indicates that he had borrowed the money from these various persons. 12. It is noted that both these diaries are considered by the Department as true, genuine and correct documents under s. 132(4A) and if that be so, the diary No. 27 gives, on one hand, the ledger accounts of the borrowers and in the same accounts, the amounts taken from the lenders are mentioned. When the Department considers the diary as genuine, there is no reason for the Department to doubt these entries in the diaries regarding the lenders. The principle of law is that under s. 132(4A) the document found in search is genuine vis-a-vis the entire contents thereof and the Revenue is not justified in holding a view that only a part of the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarified the coded form of transactions in the diary No. 27, the Revenue would not have been able to decipher the exact amounts of transactions from diary No. 27 and hence additions could not have been made to the tune of Rs. 2,52,17,000 on account of the notings in the diary. As held by this Tribunal in the case of Chander Mohan Mehta, the statement has to be considered and accepted as a whole and Revenue could not be permitted to use that part of the statement which was beneficial to it and reject other part of the statement which was detrimental to it. 14. In ITO vs. Ghanshyambhai R. Thakkar, the Ahmedabad Bench of the Tribunal has held that the statement of the assessee during survey under s. 131 has to be read in its entirety. Since the Department has capitalised on the statement of the assessee, then the entire statement must be considered and not part thereof, because in the same statement the assessee had mentioned that he was acting only as a finance broker and the finance was arranged by him for the borrowers from the lenders. 15. As regards the application of s. 68, we are of the view that on the facts of the case, addition cannot be made under s. 68 in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partmental Representative we find that the case law relied upon by him were in the context of cash credits in general and the principle laid down in these case law that it is the burden on the assessee to prove the identity, capacity of the creditor and the genuineness of the transaction is not disputed. But, the moot point in this case is that the diaries which the Department has made the basis for making the addition themselves reveal these creditors and also the fact that the assessee is only a broker. Thus, if the AO has relied on these diaries for making the addition, then the reliance should be on the complete contents thereof and not only a portion of these diaries and as the diaries themselves reveal that the assessee has provided money to the borrowers by taking it from the lenders, this fact must be accepted because the diaries are considered as genuine documents under s. 132(4A). 18. As regards the reliance placed by the learned Departmental Representative on the decision in the case of Pushkar Narain Saraf, it may be stated that this decision has already been considered by this Tribunal in the case of Mahavir Nagari Pat Sanstha and it has been properly distinguished. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. These certificates were found along with the blank transfer forms. When called upon to explain, the assessee submitted that these shareholders had given these shares to the assessee for sale. They were assessee s friends and because the assessee was in the finance business, they had handed over these shares for sale through the sharebrokers known to the assessee. The confirmations to this effect from these persons were submitted to the AO but he did not accept the contention of the assessee and made the above addition of Rs. 18,900 in the hands of the assessee on the reasoning that the assessee purchased these shares from these persons. 22. After hearing both the parties, we do not find any justification for the impugned addition. The AO has no evidence to show that the assessee purchased these shares from these persons. Simply having the share certificates along with transfer forms did not indicate that the assessee had acquired these shares. There is no evidence with the Revenue to show that what these persons contended was wrong. All these persons had specifically given confirmations that they had handed over the shares to the assessee for sale in the market and these s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sider it worthwhile to make an inventory, I am in total disagreement with the same. The Department did not obviously make an inventory, because the appellant made a disclosure of Rs. 2 lakhs in this regard. The appellant cannot be allowed to get away in these matters by first making a disclosure, so as to prevent the Department from making investigation in the manner and then retract the disclosure. It is not known what was in the mind of the appellant, when he made the disclosure of Rs. 2 lakhs in respect of these items. The AO s action of restricting the addition to the amount of disclosure made by the appellant, in these circumstances, cannot be considered to be unreasonable. There being definite evidence of investment in furniture and the appellant having himself disclosed a sum of Rs. 2 lakhs earlier, I find no reason to interfere with the action of the AO in this regard and confirm the addition made by him. The grounds of appeal are accordingly dismissed." 24. Dr. Sunil Pathak, the learned counsel for the assessee, submitted that because the assessee had declared investment in furniture and fixture of Rs. 2 lakhs, the quantum of such investment is not disputed at this stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 438 (MP) and CIT vs. Tyaryamal Balachand (1987) 65 CTR (Raj) 328 : (1987) 165 ITR 453 (Raj)]. In the present case, the assessee is asking for set off against income of the current year which cannot be allowed because it cannot be presumed that by the time the assessee put furniture and fixtures he had earned undisclosed income to the tune of Rs. 3,52,000. This ground accordingly fails and is dismissed. Ground No. 4: 27. This ground relates to addition of Rs. 96,620 on account of interest payable to various parties. Diary No. 31 which is in the form of a cash book revealed the total receipts of Rs. 4,77,512 as against which the assessee had shown broker-age income of Rs. 3,52,869. The assessee was asked to reconcile these figures and the reconciliation is reproduced by the CIT(A) in para 19 of his order. He accepted all these contentions except that interest of Rs. 95,620 was received by the assessee on account of the lenders and the same was credited in his diaries. Accordingly, he sustained an addition of Rs. 95,620. 28. The learned counsel for the assessee submitted that in his finance business, the assessee sometimes has to collect the interest payable by the borrowers to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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