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2015 (5) TMI 86 - DELHI HIGH COURT

2015 (5) TMI 86 - DELHI HIGH COURT - TMI - Addition under Section 69 - ITAT’s confirmation of the CIT (A)’s order cancelling the addition - justification to reference to Section 132 (4A) and Section 292C - Held that:- It is quite evident that what materially persuaded the AO to make the addition were the extracts from documents - in the form of handwritten ledger entries seized from Shri S.K. Gupta. These mentioned Shri Khandelwal’s name as against which certain amounts were indicated. The other .....

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igm Advertising) were all concerns in which the assessee’s family members or relatives were alleged to have been interested.

In the absence of any corroborative evidence found during the search at the premises of the appellant, no adverse inference can be drawn against the appellant merely on the basis of the seized documents as found and seized from the premises of the third party. As has been held in a number of judicial pronouncements relied on by the appellant and extracted in par .....

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t, thus hold that the legal presumption as incorporated u/s 132(4A)/292C will not be available to the Assessing Officer in the appellant's case. - Decided in favour of assessee. - ITA 247/2015 & ITA 248/2015 - Dated:- 21-4-2015 - S. Ravindra Bhat And R.K. Gauba JJ. For the Appellant : Mr. Arjun Harkauli, Advocate. versus For the Respondent : None. S.Ravindra Bhat, J. (OPEN COURT) 1. The Revenue is aggrieved by an order of the Income Tax Appellate Tribunal ( ITAT ) dated 18.07.2014 in ITA Nos .....

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d by him or owned by him or different individuals connected with him. The assessee was one such individual. He was issued with notice under Section 153A of the Income Tax Act, 1961 on 24.10.2008. The assessee had filed return of income on 5.11.2008 showing 1,82,556/-. In further proceedings under Section 143 (3) read with Section 153A, it was asked to respond to a questionnaire dated 7.11.2008 in regard to the transactions concerning his family members and concerns with which they were connected .....

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t the amounts sought to be brought to tax by the AO ought to be deleted. The revenue s appeals were rejected by the ITAT through the impugned order. 3. The ITAT took note of the reasoning of the CIT (A) as well as various Supreme Court decisions on the question as to whether the principle of natural justice had been complied with. It secondly went into the question as to whether the inference drawn on the basis of the materials seized was sustainable. Confirming the reasoning of the CIT (A) in p .....

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money has been received or paid by him relatable to the annexures shown. The other objection of the Ld. CIT DR that the questions put forth in the cross-examination specifically question 14 & 15 were also vague. We find that the arguments of the Ld. AR that these are the extracts of the statement of Sh.S.K.Gupta recorded at the time of the search are correct and the Ld. CIT DR is mistaken in her arguments to contend that the questions No-14 & 15 extracted in the impugned order are vague .....

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e of any specific infirmity in the impugned order or reliance placed upon any evidence upsetting the view taken, we find that the department has failed to offer any meaningful argument in support of its claim. No reasons which can be legally accepted so as to remand the matter have also been placed before us. Thus in the light of the arguments advanced before us being satisfied by the reasoning and finding arrived at in the impugned order, we are of the view that the departmental appeal has no m .....

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onsidered to be a person who could not have any knowledge the other witness who though was a partner in the concerned firm had given a statement that he had made payments to the singer in "black". Their Lordships were pleased to observe in the facts of that case that the statement at best could arouse suspicion but suspicion could not take place of proof and in the absence of proof, the statement was discarded. We also find that the order of the Coordinate Bench dated 07.02.2013 relied .....

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ourse to presumption by the AO under Section 132 (4A) and Section 292C was in the circumstances valid and that both the CIT (A) and ITAT fell into error in holding that such inference could not have been drawn. It was submitted that the AO correctly deduced that the assessee s replies were evasive and unreliable given the determination that he was a friend of Shri S.K. Gupta whose premises were in the first instance searched. It was also submitted that the damaging material in the form of three .....

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handwritten ledger entries seized from Shri S.K. Gupta. These mentioned Shri Khandelwal s name as against which certain amounts were indicated. The other material was the statement of Shri S.K. Gupta recorded on 13.12.2006. Shri S.K. Gupta was further examined on 5.4.2011. The AO took recourse to the presumption permissible under Section 132 (4A) on the basis of these two statements. It is a matter of the record - duly noted by the CIT (A) as well as ITAT that the three companies or business con .....

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AO has made the impugned addition on the basis of documents found and seized from Shri S. K Gupta, a third party. His primary reasoning is that in these papers there are intelligible narrations signifying payments of cash on various dates by appellant to various group companies of Shri S.K.Gupta, who have issued accommodation entries for investment in the companies in which the appellant and his relatives are interested. The appellant on the other hand has contended that no presumption is avail .....

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ground that Shri S. K. Gupta himself had denied the authorship/ ownership of the impugned documents during his statement on 13/12/2006 and reiterated the same even during his cross examination by the appellant before the AO on 05/04/2012. The appellant has also taken the ground that since Shri S. K. Gupta, during his cross examination by the appellant before the AO, has categorically denied having any transactions in cash with the appellant or his family members, companies or entities owned by h .....

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ng authored the impugned seized material and has also denied that they are part of his books of accounts. He has also denied having made any cash transactions with the appellant or his family members or entities owned by them and has also denied having received any commission for the alleged accommodation entries given to such entities belonging to the appellant or his family members. Thereafter the CIT (A) extracted the relevant parts of the statement of Shri S.K. Gupta specifically with respec .....

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had not given or taken cash from the assessee and his office. He also denied having received or paid any commission. He claimed to know two or three other individuals bearing the name of the assessee, i.e., Shri Anil Khandelwal who belongs to his native place. Furthermore, he claimed that he never received or paid any cash to the assessee or those connected with him. In the light of these, the CIT (A) held as follows: - 2.3.1 A perusal of the above extracts clearly indicates that in the absence .....

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d and it is not available in respect of a third party. Even in the case of such a person from whose possession and control any incriminating document is found, the presumption u/s 132(4A)/292C is a rebuttable one. Since in the case of the appellant, no corroborative documents or evidence has been found from the control or possession of the appellant, I hold that the legal presumption as incorporated u/s 132(4A)/292C will not be available to the Assessing Officer in the appellant's case. 2.3. .....

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