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2015 (3) TMI 608 - ITAT DELHI

2015 (3) TMI 608 - ITAT DELHI - TMI - Unexplained investment - unexplained interest credited to the assessee - unexplained cash credit/debits held as income of the assessee - CIT(A) deleted the addition - Held that:- It does not stand established that the assessee has made the impugned investment. We say so for the reason that the burden to establish the existence of impugned investment was on the Revenue, which, in the present case has not been discharged. Firstly, assessee denied the impugned .....

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mination makes the use of such evidence by the Revenue, as untenable. See CIT Vs. Ashwani Gupta, (2010 (2) TMI 42 - DELHI HIGH COURT), which followed its earlier decision of SMC Share Brokers Ltd. (2008 -TMI - 3387 - DELHI HIGH COURT) to concluded that once there was violation of the principles of natural justice, in as much as seized material was not provided to an assessee nor was cross-examination of the person on whose statement the Assessing Officer relied upon granted, then such deficienci .....

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y corroborative evidence. For the aforesaid proposition, we are fortified by the judgment of Hon’ble Delhi High court in SMC Share Brokers Ltd. (supra) and S.M. Aggarwal (supra) and also Chiranjil Lal Steel Rolling Mills (1970 (11) TMI 30 - PUNJAB AND HARYANA High Court). The information received by the Assessing officer from his investigation Wing, at best, be regarded as a prima-facie material, but could not be construed as conclusive for use against the assessee to fasten any tax liability, b .....

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- Decided in favour of assessee. - ITA No. 3290/Del/2013, ITA No. 3258/Del/2013, ITA No. 4168/Del/2013 - Dated:- 5-3-2015 - Shri S.V.Mehrotra And shri A. T. Varkey JJ. For the Appellant : Sh. Gaurav Dvoeja, Sr. DR For the Respondent : Sh. C.S.Agarwal, Sr. Adv Sh. Ravi Mal, Adv ORDER PER A. T. VARKEY, JUDICIAL MEMBER These three Revenue appeals involve consideration of common issues and therefore heard together and are being disposed off by a consolidate order. 2. To appreciate the facts and issu .....

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dit/debits held as income of the assessee. 4. The factual matrix is that the assessee filed his return of income for the assessment year under consideration declaring a total income of ₹ 5,98,230/-. The return filed by the appellant was processed u/s 143(1) of the Income Tax Act, 1961 (herein after the Act ) which was not taken up for scrutiny and hence no order u/s 143(3) of the Act was passed. Thereafter, the AO received an information from the Assistant Commissioner of Income-tax, Centr .....

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ntity of which was deciphered as Natwar Singh, the assessee. From the printout of the ledger account in which the name N.S. was entered into, which was made available to the AO from the data of the said seized pen-drive, the AO noticed that there were credits/ deposits in the account of N.S. aggregating to ₹ 25 lakhs + ₹ 5.50 lakhs as interest. The details contained in the printout of the ledger account of N.S. were as under:- 17 INT/MAR 1,00,000.00 Apr 28 APR 1,00,000.00 May 31 NS M .....

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otaling to ₹ 30,50,000/- remained un-reflected and unexplained in the return of income filed by the assessee for the assessment year under consideration. As such the AO issued a notice dated 30.03.2010 u/s 148 of the Act after recording reasons as required u/s 147 of the Act and obtaining necessary approval u/s 151 from the Addl. Commissioner of Income-tax, Range-40, New Delhi. In compliance to the said notice, the assessee filed a return of income on 13.09.2010 declaring an income of S .....

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1, the assessee denied having made any deposits with Sh. Chetan Gupta and further denied having received any interest. Thereupon, the AO asked assessee vide letter dt 25.07 2011 to produce Sh. Chetan Gupta for his personal deposition. The assessee however, vide his reply stated that since he had already denied any deposit having made with Sh. Chetan Gupta, the onus of producing him was on the department. 8. The AO, rejected the explanation of the assessee and made the addition of ₹ 30,50,0 .....

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en established to be the investment of appellant In my opinion it was the burden on the ACIT to establish that credits in the books of accounts of Shri Chetan Gupta which were in the shape of a pen drive, a print out of which was placed on record, were the investments made by the appellant. In the instant case the learned A.O. has not recorded any statement of Shri Chetan Gupta who could have deposed that the credits in the pen drive were of the assessee. Further, the learned A.O. has also not b .....

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ell settled rule of law that no addition can be made on the basis of documents found from third party without examining the third party and linking the contents of the documents with him. The aforesaid law laid down is supported by the following judgments: i. Bangodaya Cotton Mills Ltd. v CIT 224 CTR 62 ii. DCIT v Mahendra Ambalal Patel 40 DTR 243 iii. Prakash Chand Nahta v. CIT 301 ITR 134 iv. CIT v. Salek Chand 300 ITR 426 (All) v. SMC Share Broker Ltd. 288 ITR 345 (Del) vi. JMD Computers 20 D .....

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there were certain credits in the pen drive maintained by Shri Chetan Gupta then in law, addition of the credits being un-explained has to be made and could be made only in the hands of Shri Chetan Gupta and cannot be treated to be unexplained credits in the hands of the assessee unless assessee accepts such an amounts which represented credit in the books of Shri Chetan Gupta were the result of amounts provided by him by way of credits. 26. In my opinion having regard to the fact that assessee .....

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r Singh (a parallel and identical case found from List in Pen drive) wherein the High Court in its judgement observed as under:- "there is no evidence in the possession of the revenue authorities to prove that the assessee ever paid cash to Shri Chetan Gupta except the so called report of ADIT Investigation, Ludhiana, which in turn is based on the report of Superintendent of Police, Ludhiana. However, neither the report of the SP, Ludhiana is available to the assessing officer much less to .....

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Shri Chetan Gupta chosen to remain silent. This proves that in the statement of Sh.Chetan Gupta was no adverse factor affecting the tax liability of the assessee." 27. Thus in my opinion, the addition made by the learned A.O. by invoking the provisions of section 69 of the I.T. Act cannot be upheld since the burden which lay upon him has not been discharged. 28. In view of the aforesaid the contention of the assessee that the reopening of the assessment was not tangible, cannot be upheld bu .....

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y that he was looking after the transactions of the assessee. Thus in the face of the aforesaid evidence, ld CIT(A) was not justified to interfere with the addition made by the AO. The ld DR wants us to set-aside the order of the ld CIT(A) and restore the order of the AO. On the other hand the ld Sr. Advocate Shri C.S.Agarwal appearing for the assessee, relied upon the finding of the ld CIT(A) and stated that matter is fully covered by the order of this Tribunal in the case of Capt. Amrinder Sin .....

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ed from Shri Chetan Gupta. According to the Revenue, the seized pen-drive contains computerized accounts of hawala transactions of about 148 people including the account of the assessee, whose identity was denominated as N.S. Based on the said entries retrieved from the pen-drive additions were made also in the hands of Shri Raninder Singh S/o. Capt. Amrinder Singh. In the said case, the co-ordinate bench of this Tribunal had examined similar facts as that of the assessee and held as under:- 7. .....

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trary Sh. Chetan Gupta on his deposition before the Assessing Officer clearly denied having received any cash. Shri Chetan Gupta also denied having given any statement admitting receipt of cash. Therefore, in absence of any evidence on record, the addition was not sustainable. It is strange to note that the Assessing Officer having recorded the statement of Sh. Chetan gupta chosen to remain silent. This proves that in the statement of Shri Chetan Gupta there was no adverse factor affecting the t .....

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aside the order of the Assessing Officer and deleted the addition on the ground that reliance cannot be placed on pen drive. More so, that Mr. Chetan Gupta, had denied payment to assessee in his statement recorded under Section 131, ITAT has upheld this order on the following terms:- As regards merit of the addition, there is no evidence in the possession of the revenue authorities to prove that the assessee ever paid cash to Shri Chetan Gupta except the so called report of ADIT (Investigation) .....

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denied having given any statement admitting receipt of cash. Therefore, in absence of any evidence on record, the addition was not sustainable. It is strange to note that the Assessing Officer having recorded the statement of Sh.Chetan Gupta chosen to remain silent. This proves that the statement of Sh. Chetan was no adverse factor affecting the tax liability of the assessee. Accordingly, the addition was rightly deleted by the learned CIT(A). We find no infirmity or illegality in the aforesaid .....

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ta, in the cases of Maharaja Shri Amarinder Singh and Sh. K. Natwar Singh, the husband of the appellant, where the said additions were also deleted in appeals. 13. Therefore, respectfully following the decision of Hon'ble High Court of Delhi which was rendered Vide order dated 28.02.2011 on identical facts and circumstances in the case of Sh. Raninder Singh, Hon'ble ITAT, Chandigarh 'B' Bench Vide order dated 30.06.2010 in the case of Maharaja Sh. Amarinder Singh in IT Act, 1961 .....

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eleted. This ground of appeal is therefore, allowed. 14. Furthermore, even in the case of Capt. Amrinder Singh, the co-ordinate Bench of this Tribunal had examined this matter and vide order dated 30th June 2010 deleted the additions. In the said order the bench had referred to the statement of Shri Chetan Gupta and noted as under:- The relevant questions put by the Assessing Office and the replies of Shri Chetan Gupta thereto, are as under:- Q3. Please state as to status of your transaction wit .....

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lodged against me at Ludhiana in connection with Ludhiana City Center scam. Nothing was recovered from me. However, the police claimed that a pen-drive recovered from me which is not correct. I have already denied this allegation of police, during the proceeding before IT authorities as well as Distt. Session Judge, Ludhiana. Q.5. I am showing you a letter written to DIT(Inv.) Ludhiana by SP, Vigilance Bureau Unit-II Ludhiana as per which you were maintaining A/cs of about 148 odd people who had .....

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aja Amrinder Singh can be said through me or my company/ concerns. Q6. As stated above, a copy of a/c in the name of Maharaja Amrinder Singh for financial year 200-02 was got printed from the pen drive record by police as per which, In one a/c O/B is shown ₹ 5 lacs and C/B in nill after making transfer entry of ₹ 5 lacs as on 31st July. In the next a/c opening & closing balance are shown as ₹ 2,25,000/-. Similarly, an a/c found is Partiala Post in which opening balance is s .....

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iod under our consideration. 15. In the light of the aforesaid statement, the c-ordinate Bench of the Tribunal was pleased to order as under:- 14. Considering the aforesaid factual matrix. In our considered opinion, it does not stand established that the assessee has made the impugned investment. We say so for the reason that the burden to establish the existence of impugned investment was on the Revenue, which, in the present case has not been discharged. Firstly, assessee denied the impugned t .....

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es the use of such evidence by the Revenue, as untenable. In this connection, we may rater to the Judgment of the Hon'ble Delhi High Court In the case of CIT Vs. Ashwani Gupta, 322 ITR396 (Del), which followed Its earlier decision In the case of SMG Share Brokers Ltd. (supra). As per the Hon'ble High Court, once there was violation of the principles of natural justice, in as much as seized material was not provided to an assessee nor was cross-examination of the person on whose statement .....

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pon without being tested in cross-examination or on the basis of any corroborative evidence. For the aforesaid proposition, we are fortified by the judgment of the Hon ble Supreme Court in the case of Kisan Chand Chella Ram (supra), that of the Hon ble Delhi High court in SMC Share Brokers Ltd. (supra) and S.M. Aggarwal (supra) and, also of the Hon ble Punjab & Haryana High Court in the case of Chiranjil Lal Steel Rolling Mills (supra). The information received by the Assessing officer from .....

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