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2015 (6) TMI 608 - ITAT PUNE

2015 (6) TMI 608 - ITAT PUNE - TMI - Undisclosed cash receipt - validity of the assessment u/s.153A - Held that:- The presumption u/s 132(4A) is available only in respect of the person from whom the paper is seized. It could not be applied against a third party and hence, no addition could be made on the basis of the evidence found with third party. In this case, the addition has been made on the basis of the documents found with Dhariwal Group and thus, the presumption u/s. 132(4A) could not be .....

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a settled legal position that the decision of jurisdictional High Court is binding on all authorities below it. Thus, the reliance placed by the Assessing Officer on the loose papers is not justified at all. Therefore, the question of making any addition is not justified in the absence of other corroborative evidence to that effect.

Since in the instant case the assessee from the very beginning has denied to have received any such payment from M/s. Dhariwal group through Mr. Sohan Ra .....

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e same u/s.56(2)(vi) as held by CIT(A) does not arise. In this view of the matter, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition of ₹ 1 crore for A.Y. 2006-07 and ₹ 20 crores for A.Y. 2007-08. Grounds raised by the assessee on this issue are accordingly allowed. - Decided in favour of assessee. - ITA Nos. 1105 and 1106/PN/2013 - Dated:- 12-6-2015 - Shri R. K. Panda And Shri Vikas Awasthy,JJ. For the Appellant : Shri Sunil Pathak For the .....

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. Chains. It is engaged in the business of labour job in gold ornaments. The assessee had filed the original return of income for A.Y. 2006-07 on 31-10-2006 disclosing total income of ₹ 2,80,660/-. The AO had completed the assessment u/s.143(3) vide order dated 30-10-2008 determining the total income at ₹ 3,53,510/- by making the following additions : Expenses incurred in cash - Personal Expenses - ₹ 60,412/- Telephone Charges - Personal use - ₹ 12,438/- (The assessee has .....

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and 142(1) the assessee appeared before the AO and filed the various details as called for from time to time. Since the addition made during the original assessment amounting to ₹ 72,850/- was not offered to tax by assessee while filing its return in response to notice u/s.153A the AO made the aforesaid addition. 4. During the course of assessment proceedings the AO noted that a search action at the residential premises of one Mittulal at Bangalore was conducted at 09-10-2009 during which .....

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rections of Sri Rasiklal M. Dhariwal/Sri Prakash R. Dhariwal. The AO noted that as per the seized pages being Bundle No. A/M/08 of the panchanama dated 09-10-2009 the assessee has received an amount of ₹ 21 Crores from M/s. Dhariwal Industries Ltd. through Shri Sohan Raj Mehta, the details of which are as under : Page no of Bundle no A/M/08 Month of receipt Amount received (Rs.) Assessment Year (AY) AY- wise amount received (Rs.) 50 May 2005 1,00,00,000 2006-07 1,00,00,000 58 Mar 2007 5,00 .....

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w cause notice asking the assessee to explain as to why the unaccounted cash receipts of ₹ 1 crore for the year under consideration from M/s. Dhariwal Industries Ltd. through Mr. Sohan Raj Mehta should not be treated as his undisclosed income. The relevant show cause notice dated 09-12-2011 by the AO reads as under : Vide Question No.5 of questionnaire dated 12/09/2011 duly served upon you on 21/09/2011, you were asked to confirm and explain the details of receipt of the said amount. Howev .....

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bmitted by you in response to the questionnaire, it is seen that you are a C & F agent of M/s Dhariwal Industries Ltd.for Mumbai region over many years and you have transacted with M/s DIL during the said period of 2003 to 2008 as its C & F agent. Further, Shri Sohan Raj Mehta has accepted to have carried out unaccounted sale of Gutka on behalf of M/s DIL between the period 2003 to 2008 as depicted in the documents seized (29 bundles marked as Exhibit A/M/01 to A/M/29 seized vide Panchan .....

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of these unaccounted sales, unaccounted sale proceeds generated in cash and the utilization of the said cash generated. Shri Sohan Raj Mehta has also admitted that he has earned commission on this unaccounted sale of Gutka effected by him on behalf of M/s DIL and he has offered the said commission income to tax while filing 153A returns In his case. 03. Therefore, it is clearly established that the documents-found at Bangalore are not dumb documents and they are authentic accounts of cash gener .....

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Sohan Raj Mehta . This is a revenue receipt without corresponding liability and hence, the said amount of ₹ 21,00,00,000/- is liable for tax. 05. Therefore, keeping in view of the above facts, an amount of ₹ 21,00,00,000/- is proposed to be taxed in your hands as your unaccounted income generated on account of supply of raw material out of books to M/s Dhariwal Industries Ltd. for the assessment years asunder: Assessment Year Amount (representing your undisclosed income) proposed to .....

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zing your assessment. Kindly note that the matter is time barring and granting further time may not be possible. If nothing is heard from your side by 16/12/2011, kindly note that I may tax the entire receipts of ₹ 21,00,00,000/- , as your undisclosed income for the respective year (s) receipt. 08. Such an act on my part though judicious and as per the provisions of Income tax Act, 1961, may be highly prejudicial to your interests. Therefore it is my humble request that you furnish your sa .....

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hains engaged in the business of undertaking labour job in gold ornaments upto A.Y. 2008-09. But for A.Yrs. 2009-10 and 2010-11 he has not carried out any business activity in his individual capacity. He is a partner in the firms Sanghvi Dhanrupji Devaji & & Co., carrying on the business of gold, jewellery, bullion and Shree Mumbadevi Safe Deposits Vaults carrying on business of safe deposit vaults. His uncle Mr. Kiran Mulchand Ranawat is a director of M/s. S.D.D. Agencies Pvt. Ltd. who .....

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of Pan Masala and Gutkha for the Mumbai Region. The assessee strongly denied to have any connection with Shri Sohan Raj Mehta nor any business connection with M/s. Dhariwal Industries Ltd. in his personal capacity. The assessee also objected to the allegation of receipt of ₹ 21 crore in cash from Shri Sohan Raj Mehta on behalf of Dhariwal Industries Ltd. for the supply of raw material to Dhariwal Industries Ltd. The assessee denied to have supplied any form of raw material to Dhariwal Indu .....

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and business premises no incriminating documents were found evidencing receipt of ₹ 21 crores from Shri Sohan Raj Mehta. No unaccounted assets were also found to substantiate that assessee has received any amount from Shri Sohan Raj Mehta. 7. However, the AO was not convinced with the explanation given by the assessee. He observed that the evidences seized during search action u/s.132 are speaking documents and proved beyond reasonable doubt, the entire unaccounted business chain of M/s. .....

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nt issues. The AO reproduced in the assessment order the finding in the case of Dhariwal Industries Ltd. where addition of ₹ 40.88 crore has been made in A.Y. 2004-05. He observed that the irrefutable evidences in the form of seized documents found from the premises of Mr.Mittulal at Bangalore could not be negated by the assessee. 8. As regards the contention of the assessee that the seized documents were not seized from him and he has nothing to do with Shri Sohan Raj Mehta and the same c .....

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isions of section 110 of Indian Evidence Act and the decision of Hon ble Supreme Court in the case of Chuharmal Vs. reported in 172 ITR 230 (SC) the AO held that third party evidence has evidentiary value and therefore the same can be used if corroborated by other circumstantial evidence. Since in the instant case the evidence not only proves authenticity of the said seized document but also proves beyond reasonable doubt assessee s role in the entire design, the AO held that the assessee has to .....

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e has retracted his statement u/s.132(4). The said retraction was in letter only and not in spirit. According to the AO such retraction is superficial and is not based on any evidence whatsoever. The AO further noted that one Shri S. Balan one of recipients of unaccounted sale proceeds of M/s. Dhariwal Industries Ltd is a close family friend and business associate of Shri RMD of M/s. Dhariwal Industries Ltd. He had admitted on 20-01-2010 vide his statement on oath that he was custodian of about .....

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from the lawful consequences of the unlawful Act. 10. In view of the above and relying on the decision of Hon ble Supreme Court in the case of CIT Vs. Durga Prasad More reported in 82 ITR 540 the AO made addition of ₹ 1 crore in the hands of the assessee as undisclosed cash receipt for A.Y. 2006-07. (Similarly, an amount of ₹ 20 crores was added in the hands of the assessee as undisclosed cash receipts for A.Y. 2007-08). 11. Before CIT(A) the assessee challenged the validity of the .....

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ITA Nos. 5018 to 5022 and 5059/Mum/2010. Various other decisions were also relied upon for the above proposition. 12. So far as the merit of the case is concerned it was argued that the assessee has categorically stated that he has never received any such amounts and the assessee had no business connection with either M/s. Dhariwal Industries Ltd or Shri Sohan Raj Mehta. He neither knows Mr. Mittulal nor Mr. Sohan Raj Mehta. Therefore, the observation of the AO that the assessee was a co-conspi .....

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sed if corroborated by other circumstantial evidence. The retraction of the statements given u/s.132(4) by Shri Mallikarjun of Shimoga and Shri S. Balan of Pune who had earlier stated to have accepted receipt of cash from M/s. Dhariwal Industries Ltd. through Shri Sohan Raj Mehta was brought to the notice of the CIT(A). The assessee further argued that the evidence seized from the premises of Mittulal containing notinigs relating to Gutka business of M/s. Dhariwal Industries Ltd. may be relevant .....

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company and hence there is no association of the assessee with M/s. Dhariwal Industries Ltd. It was argued that the document even after being read as a whole does not establish that cash has been received by the assessee and the assessee has proved beyond doubt that no undisclosed cash was received by him through Sohan Raj Mehta. The assessee further submitted that presumptions u/s.132(4) is only against the person in whose possession the search material is found and not against any other person .....

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ome for preceding six years to be assessed or reassessed in pursuance to notice u/s.153A. Total income will include any kind of income and it cannot be restricted to undisclosed income or escaped income. In view of the above he dismissed the above contention of the assessee as misplaced and not tenable. 15. So far as the merit of the case is concerned he also dismissed the same and upheld the addition made by the AO. While doing so, he observed that Shri Sohan Raj Mehta, C&F Agent of M/s. Dh .....

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the parties whose names were mentioned on the chits. The AO has pointed out to the signed chit dated 14-08-2007 by Shri Prakash M. Dhariwal which appears on page 44 of the loose paper Bundle No.A/M/29 where the amount mentioned is ₹ 5 lakhs for which decoding has been explained by Shri Sohan Raj Mehta as ₹ 5 crores and the payments related to the said instructions on the chits have been made by way of number of instalments on different dates. The AO has also found and noted that the .....

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bserved as under : 4.7. It is an undisputed fact that the seized documents including the loose papers No 34 as contained in Bundle A/M/8, A/M/29 found and seized during the course of search and seizure action carried out in the case of Sohanraj Mehta C & F of Dhariwal Group contained the details of the payments of unaccounted money to the persons whose names are appearing on the said document. The name of the assessee appears in the documents seized during the search action A/M/8. The seized .....

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lue than what it would have been otherwise. Thus, the admission of Shri. Mehta of having paid the unaccounted money to the assessee during the years under consideration cannot be wished away lightly. The assessee and the Dhariwal group both are known and reputed business persons in the said business field and the assessee has had a long business association with the Dhariwal group with respect to being the C & F agent for the Mumbai region, a fact also admitted by Shri. RMD and his son Shri. .....

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p at Bangalore has admitted to have written the said document in his own handwriting and also explained that most of the pages to have been written in 'Marwadi' language matching with the statement and the wordings on the seized document. It was also admitted that they represented purchase and sales of RMD Gutkha during financial years 2003-04 to February 2008. So far as the notings on page 34 is concerned, Shri Mehta had specifically stated that it was consolidated working of stock of R .....

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rked out to ₹ 2,18,00,91,198/-. It was also stated during the 132(4) statement recorded on 10.10.2009 that the payments received from various distributors, wholesalers and retailers for the supply of RMD Gutkha stock and their names and the amounts received during April 2003 to August 2006 were mentioned. Shri Mehta also stated regarding the notings on page 34 and other documents that the various expenditure incurred in connection with the business was also written and also admitted that t .....

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further that the persons referred to as 'Seth Saheb' were Mr. Rasiklal Manikchand Dhariwal of Dhariwal Industries Ltd. and his son Mr.Prakash R. Dhariwal and that the aforesaid account on page 34 was submitted to Mr. Prakash. In the detailed statement, Shri Mehta has clearly outlined the entire modus operandi of the business and the manner in which the instructions were received by him from the Dhariwals; father and son duo wherein it was stated that they sent him a slip of paper or chit .....

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ission on the unaccounted turnover of RMD Gutka of M/s. DIL by Shri Mehta. The aforesaid facts were again confirmed by Shri Sohanraj Mehta in his statement recorded u/s. 131 on 15.10.2009 and 21.10.2009, with respect to the notings made on page 34 of the exhibit A/M/8 and other related document. Thus, the payment made to the assessee has been confirmed by Shri Mehta time and again during the course of the statement recorded both during pre and post search action. The inference thus drawn by the .....

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such close association the entire C & F of RMD Gutka for Karnataka region was given to him. Moreover, the magnitude of the transaction which was handled by Shri Mehta and the amount of commission earned and also disclosed as income on such transaction clearly indicates that the statement given were not untrue and the same could be believed. The contention of the assessee that there being no evidence that the Dhariwal Group had paid to the assessee thus gets answered. The records of such undi .....

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without consideration and liable to tax under provisions of section 56(2)(vi) of the I.T. Act. The relevant observation of Ld.CIT(A) at para 4.17 of his order reads as follows : 4.17 It is to be noted and remembered that the amount received AO has held that the amount received by the assessee was a revenue receipt without corresponding liability, hence liable to tax. During the search and seizure action no evidence was found whereby it could be established that the said amount was a loan or a li .....

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ircular No. 5 of 2005 dated 15.07.2005 (2005) 276 ITR (St.) 151 to 158 explained that in order to in order to curb bogus capital-building and money-laundering, a new sub-clause has been inserted in section 56 to provide that any sum received without consideration on or after the 1st day of September, 2004, by an individual or a Hindu undivided family from any person, shall be treated as income from other sources. In the present case neither the appellant nor M/s. DIL has furnished an explanation .....

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e AO in making addition of ₹ 1 crore for A.Y. 2006-07 and addition of ₹ 20 crores for A.Y. 2007-08. 18. Aggrieved with such order of the CIT(A) the assessee is in appeal before us by taking the following grounds : The ground or grounds of appeal are without prejudice to one another. 1.a) On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in not appreciating that the assessment order passed u/s. 143(3) r.w.s. 153A by the AO is without jurisdiction and b .....

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ain notings on papers seized from the third party without allowing any opportunity to cross examine the third party inspite of specific request for the same. b) The Id. CIT(A) failed to appreciated that :- (i) the seized papers relied upon by the AO were found from the possession of the third party, (ii) the seized papers were not in the handwriting of the Appellant; (iii) in recording statement u/s. 132(4) of the Appellant, it was explained in explicit terms that no cash was received by the App .....

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d.CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. The Appellant craves leave to add, alter, amend or delete any or all of the above grounds of appeal. 19. Identical grounds have been taken in A.Y. 2007-08 except for the amount of addition which is ₹ 20,00,000/-. 20. The Ld. Counsel for the assessee strongly opposed the order of the CIT(A). So far as the legal .....

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at the same is to be invoked for making an assessment of the person searched on the basis of the material found during the course of search on that person. Since the assessment for A.Y. 2006-07 was already completed u/s.143(3) prior to the search, therefore, in the course of assessment u/s.153A the scope should have been limited to the incriminating material found in the course of search on the assessee group. He submitted that if the material is found with some third party the assessment ought .....

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siness and has no business connection with M/s. Dhariwal group or Shri Sohan Raj Mehta, C&F Agent of M/s. Dhariwal Industries Ltd. The seized papers indicate payments to one Mr. Vinit and at a few papers the name Vinit Ranawat is mentioned. Referring to pages 143 to 147 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the statement recorded u/s.132(4) of Sri Sohan Raj Mehta where he had stated that he effected the unaccounted sales of Dhariwal Industries .....

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original statement cannot be used against the assessee. He submitted it has been clarified a number of times that the assessee does not have any business connection with Dhariwal Group and therefore the question of assessee receiving any money from Dhariwal Group simply does not arise. Only one of his family concerns namely, M/s. S.D.D Agencies is the C&F Agent of Dhariwal Industries Ltd. During the course of survey on its premises nothing incriminating was found during the survey to indicat .....

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would be required to pay the sale proceeds received from the customers to Dhariwal. There is no reason why Dhariwal Group to pay such a huge amount to M/s.S.D.D Agencies. Further, if such unaccounted money was received from Dhariwal Group then during the course of search on the assessee, some evidence would have been found in the form of loose papers or unaccounted assets, etc. However, no such things were found. Both these clearly indicate that there is no justification to hold that the assess .....

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asis of the papers found with some third parties addition cannot be made in the hands of the assessee particularly when there is no business connection between the assessee and that party. For the above proposition the Ld. Counsel for the assessee referred to the following decisions : a. Bombay H.C. Lata Mangeshkar [97 ITR 696] b. Straptex (India) P. Ltd. v. DCIT [84 ITD 320 (Mum)] c. CBI v. V. C. Shukla [3 SCC 410 (SC)] d. Prarthana Construction P. Ltd. v. DCIT [118 Taxman 112 (Ahd.)] e. Unique .....

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on the loose papers as short term advances given to the assessee . Thus, if this sum is a short term advance the question of the same constituting income of the assessee does not arise. The Ld. Counsel for the assessee referred to the statement of Shri Sohan Raj Mehta wherein Mr. Mehta clarified that this was a short term advance. Hence, by no stretch of imagination the same can constitute income of the assessee. The Ld. Counsel for the assessee referred to the decision of the Hon ble Bombay Hig .....

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u/s.132 a copy of which is placed at pages 138 to 144 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to Question No.33 put to Mr. Mehta. Referring to the reply given by Mr. Mehta the Ld. Counsel for the assessee submitted that Mr. Mehta has clarified that he has given the advances as per the instructions of Shri Dhariwal to the bearer of the chits. He has never identified the assessee. He submitted that when the persons were given the money on the basis of chi .....

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d Shri Prakash Manikchand Dhariwal of M/s. Dhariwal Industries Ltd. Referring to para 4.13 of the order of the CIT(A) he submitted that before Ld.CIT(A) also the assessee has stated that no opportunity to cross examine Shri Sohan Raj Mehta and other persons was granted which was against the principles of natural justice. However, the Ld.CIT(A) has gone a step further and held that no purpose will be served by allowing cross examination and it is a futile exercise. Therefore, once the assessee wa .....

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another alternate contention, the Ld. Counsel for the assessee submitted that there are many persons by such names such as that of the assessee in Mumbai and at other places. Hence it cannot be presumed that it is definitely the assessee who is the recipient of the money as noted in the seized paper. On this logic also, the addition is not justified in the hands of the assessee. 30. The Ld. Counsel for the assessee submitted that on the basis of notings on the seized papers found during the cou .....

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de ITA No.1551/Bang/2012 order dated 30-08-2013 4. M/s. Mohd. Ayub Mohd.Yaqub Perfumers Pvt. Ltd vide ITA No.388/LKW/2013 order dated 10-12-2014 5. M/s. Bhola Nath Radha Krishna vide ITA No.5149/Del/2012 order dated 05-04-2013 6. DCIT Vs. Shri Pawan Kumar Agarwal vide ITA No.413/LKW/2012 and CO No.70/LKW/2012 order dated 26-02-2015. 31. As regards the observation of the Ld.CIT(A) that there can be addition in the hands of the assessee under the deeming provisions of the Income Tax Act, the Ld. C .....

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n he has also held that the receipt of the amount of ₹ 21 crores being without consideration is liable to tax under the provisions of section 56(2)(vi) of the I.T. Act, i.e. ₹ 1 crore for A.Y. 2006-07 and ₹ 20 crores for A.Y. 2007-08. Referring to the provisions of section 56 he submitted that the said provision can be applied only when the sum of money exceeding ₹ 50,000/- or more is received without consideration by an individual from any person or persons on or after t .....

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made in the hands of the assessee. 34. The Ld. Departmental Representative on the other hand strongly supported the order of the CIT(A). He submitted that the papers found from the residence of Mr. Mittulal which was minutely maintained by Shri Sohan Raj Mehta clearly indicates that assessee has received an amount of ₹ 21 crores from the Dhariwal group. All these things are within the exclusive knowledge of the assessee, Shri Sohan Raj Mehta, Shri Rasiklal M.Dhariwal and Shri Prakash Mani .....

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book page 123 he submitted that in his reply to Question No.3 recorded u/s.132(4) on 21-01- 2010 Shri Rasiklal Manikchand Dhariwal has taken the name of Vinit Ranawat, Mumbai who has been appointed as C&F Agent for the State of Maharashtra. Referring to the assessment order in the case of Dhariwal Industries, a copy of which are placed at pages 1 to 79 of his paper book the Ld. Departmental Representative submitted that a thorough discussion was made in the said assessment order containing .....

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cash has been handed over to the bearers of the slips. Therefore, under these circumstances, when things are clear that money has been given by Dhariwal group to the assessee amounting to ₹ 1 crore for A.Y. 2006-07 and ₹ 20 crores for A.Y. 2007-08, the Assessing Officer was justified in making the addition and the Ld.CIT(A) was justified in confirming the addition. He submitted that the various decisions relied on by the Ld. Counsel for the assessee are not applicable to the facts o .....

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o hand over an amount of ₹ 5 lakhs on 20-02-2007 and another ₹ 5 lakhs on 10-11-2006. Therefore, what the Department is stating is contrary to what Shri Rasikal M. Dhariwal has stated. He submitted that the Assessing Officer has not referred to the relevant parts which were favourable to the assessee. He submitted that the Assessing Officer and the CIT(A) are treating what Mr. Mehta says as sacrosanct. However, it is settled proposition of law that provisions of section 132(4) does n .....

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eleted. He also strongly relied on the decision of Hon ble Supreme Court in the case of CBI Vs. V.C Shukla reported in 3 SCC 410 where it has been held that addition cannot be made in the hands of the assessee on the basis of entries in the books of account of third parties in absence of any corroborative evidence. 37. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We ha .....

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wal Industries Ltd. and the sale proceeds were deployed as per the instructions of Shri Rasiklal M. Dhariwal and his son Shri Prakash M. Dhariwal. In some of the seized papers name of certain persons are appearing which contain the name either Vinit or Vinit Ranawat . On the basis of those names and entries against said names, the Assessing Officer deciphered the amount as ₹ 1 crore for A.Y. 2006-07 and ₹ 20 crores for A.Y. 2007-08 as received by the assessee Shri Vinit Ranawat. Alth .....

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iness association with M/s. Dhariwal Industries Ltd. and if test of human probability is applied to the facts of the case it becomes evident that assessee was part of the entire scheme of unaccounted business chain of M/s. Dhariwal Industries Ltd. The role of the assessee was that of a co-conspirator. During the course of search and post search proceedings Mr. Sohan Raj Mehta had stated that the seized books of account, loose sheets and other documents, i.e. A/M/01 and A/M/29 were actually belon .....

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documents and has also acknowledged and substantiated the fact that the seized documents belong to M/s. Dhariwal Industries Ltd. and therefore his statement has immense evidentiary value. Based on the above and on the basis of various other observations in the assessment order the Assessing Officer made addition of ₹ 1 crore for A.Y. 2006-07 and ₹ 20 crores for A.Y. 2007-08 as undisclosed income of the assessee which has been upheld by the CIT(A). 39. It is the submission of the Ld. .....

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that the Department itself is treating this as short term advance during the course of search action. Similarly, the statement of Mr. Rasiklal M. Dhariwal is contrary to the finding of the Department. It is also the submission of the Ld. Counsel for the assessee that different Benches of the Tribunal under identical facts and circumstances have deleted the addition made by the Assessing Officer on the basis of notings found from the premises of Mr. Sohan Raj Mehta. 40. We find some force in the .....

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Agent of M/s. Dhariwal Industries Ltd were found. The assessee s premises was also searched on 20-01-2010, i.e. after a period of about 3 months and 10 days. During the course of search at the premises of the assessee he was questioned about the documents found from the premises of Mr. Mittulal which contain documents maintained by Mr. Sohan Raj Mehta. The assessee at the time of search had completely denied to have received any such amount from Mr. Sohan Raj Mehta. Relevant Question and answer .....

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being confronted with these incriminating documents, Shri Sohanraj stated that the said pages interalia contain the notings regarding handing over of ₹ 21.22 crores to Shri Vinit Ranawat of Mumbai which is C&F agent of RMD group. Shri Sohanraj also stated that the said payments in cash were made as per the direction of Shri R.M. Dhariwal and Shri Prakash Dhariwal. Please state whether the said cash of ₹ 21.22 cr received from Shri Sohanraj Mehta on account of RMD group are reflec .....

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ther Shri Rasiklal Dhariwal as short term advance. I am showing you the relevant portion of the said statement. Please go through the same and state whether the payments in cash received from Sohanraj Mehta at the discretion of Shri R.M. Dhariwal are recorded in your books of account. A.34 I have gone through the statement shown to me of Shri Prakash Dhariwal recorded on 20-01-2010, however, I have never recorded the amount mentioned from Shri Sohanraj Mehta hence the said payment are not record .....

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h the above referred documents/statement and state whether the said cash receipts are reflected and recorded in your regular books of accounts. A.35 As already stated earlier, I have never received any cash from Sohanraj Mehta at the instant of Shri Rasiklal Dhariwal or Prakash Dhariwal. Hence, no such cash is recorded in my regular books of accounts. 41. It is also pertinent to note here that the search party during the course of search at the premises of the assessee has not found any evidence .....

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ubmission of the Ld. Counsel for the assessee that if the amount is a short term advance the question of the same constituting income in the hands of the assessee does not arise. We find from the statement of Mr. Sohan Raj Mehta recorded during the course of search proceedings u/s.132 on 09-10-2009 where Mr. Sohan Raj Mehta in his answer to Questiion No.31 has replied as under : Q.31 Please state how these transactions are unaccounted? Ans: M/s Dhariwal Industries Ltd has a manufacturing unit in .....

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as per their choice and the Stock of Gutka is sent by Matador Van to this office. The stock that comes without bill is immediately dispatched to our customers. We keep only the stock that comes with bill in our office. The stock that comes without bill is dispatched immediately to our customers. I have been involved in these transactions for longtime and I am responsible for all the despatches and also for the collections from our customers; Normally, we extend credit of 7-10 days to our custom .....

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r these loose sheets? Ans : I have gone through the exhibit marked A/M/29. I have placed my signature on page ho. 24 of this exhibit in confirmation of having seen it. This exhibit contains loose slips serially number 1-61. Slips marked as sl.no. 4 to 8, 49 to 50, 58 arid 59 contain the notings of Mr.Raskilal Manikchand Dhariwal and his son Mr; Mr. Prakash. The notings on these slips contain their directions to me to handover the amount mentioned in the slip to the person who brings the slip. So .....

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om you hand over Cash as per the instructions of Mr.Raskilal Manikchand Dhariwal and his son Mr. Prakash Ans : No. It is not required. After receipt of Cash, they leave the slip with me. That is considered as evidence. 43. From the above it is seen that Mr. Sohan Raj Mehta has never identified the assessee. It is also an admitted fact that the request of the assessee to cross examine Mr. Sohan Raj Mehta was not granted on the ground that the same will not serve any purpose. 44. We further find M .....

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am showing you page no.24 of Bundle No.A/M/29 seized on 9/10/2009. Kindly go through the contents and please explain. Ans. This is a signed chit in my handwriting dt.10/11/2006 wherein I have instructed Shri Vinit Ranawat to hand over an amount of ₹ 500000-00 (Five Lakhs). Q.12 Similarly, I am showin you page no.22 of Bundle No.A/M/29 seized on 9/10/2009. Kindly go through the contents and please explain. Ans. This is a signed chit in my handwriting wherein I have instructed Shri Vinit Ran .....

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, it is not clear as to whether the Assessing Officer is correct or the Investigation Wing at the time of examining the assessee are correct or the answer of Mr. Rasiklal Manikchand Dhariwal is correct. 46. The Hon ble Bombay High Court in the case of Aziende Colori Nazionali Affini, Italy (Supra) has held that the agreement had to be considered as a whole and that the different clauses in the agreement could not be considered separately. Therefore, when the Department itself is treating the sam .....

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asis of the papers found with some third party addition cannot be made in the hands of the assessee particularly when there is no business connection between the assessee and that party. 47. The Hon ble Bombay High Court in the case of Addl.CIT Vs. Lata Mangeshkar reported in 97 ITR 696 has held that mere entries in the accounts regarding payment to the assessee was not sufficient as there was no guarantee that the entries were genuine in absence of any corroborative evidence. In that case, the .....

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e was not sufficient as there was no guarantee that the entries were genuine. The Tribunal therefore held that there was no proof that the amount in question represented income from undisclosed sources belonging to the assessee. On further appeal by the Revenue, the Hon ble High Court held that the conclusion of the Tribunal had been reached by it on a proper appreciation of the evidence. This was finding of fact by the Tribunal and no question of law arose and no reference would lie from the de .....

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r, an element of self interest and partisanship of the entrant to make a person - behind whose back and without whose knowledge the entry is made - liable cannot be ruled out the additional safeguard of insistence upon other independent evidence to fasten him with such liability, has been provided for in Section 34 by incorporating the words such statements shall not alone be sufficient to charge any person with liability. The probative value of the liability created by an entry in books of acco .....

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rima facie evidence of the existence of the original entries in the accounts and were admissible to prove the payment of loan given. The suit was decreed by the trial Court and the appeal preferred against it was dismissed by the High Court. In setting aside the decree this Court observed that in the face of the positive case made out by Chandradhar that he did not ever borrow any sum from the Bank, the Bank had to prove that fact of such payment and could not rely on mere entries in the books o .....

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ation before different High Court on a number of occasions but to eschew prolixity we would confine our attention to some of the judgements on which Mr. Sibal relied. In Yesuvadiyan Vs. Subba Naicker [A. I. R. 1919 Madras 132] one of the learned judges constituting the Bench had this to say: S.34, Evidence Act, lays down that the entries in books of account, regularly kept in the course of business are relevant, but such a statement will not alone e be sufficient to charge any person with liabil .....

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s in books of account, and I take it that any relevant fact s which can be treated as evidence within the meaning of the Evidence Act would be sufficient corroboration of the evidence furnished by entries in books of account if true." While concurring with the above observations the other learned Judge stated as under: " If no other evidence besides the accounts were given, however strongly those accounts may be supported by the probabilities, and however strong may be the evidence as .....

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ndependent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [ A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have be .....

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It is further incumbent upon the person relying upon those entries to prove that the were in accordance with facts. The evidentiary value of entries relevant under Section 34 was also considered in Hiralal Mahabir Pershad (supra ) I.D. Dua, ]. (as he then was) speaking for the Court observed that such entries though relevant were only corroborative evidence and it is to be shown further by some independent evidence that the entries represent honest and real transactions and that monies were paid .....

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issible under Section 9 of the Act to support an inference about the formers' correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof. In that view of the matter we need not discuss, delve into or decide upon the contention raised by Mr. Altaf Ahmed in this regard. Suffice it to say that the statements of the four witnesses, who have admitted re .....

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eet No. 8) and not in MR 71/91. Resultantly, in view of our earlier discussion, section 34 cannot at all be pressed into service against him. (underline provided by us) 49. We further find identical issue had come up before various Benches of the Tribunal on the basis of the notings of Mr.Sohan Raj Mehta found during the course of search. We find the Ahmedabad Bench of the Tribunal in the case of Shri Mustafamiya H. Sheikh (Supra) has observed as under: 7. On a perusal of the seized materials re .....

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of RMD Group. After analyzing the issue exhaustively as detailed in the assessment order as well as in the appellate order under dispute, a sum of ₹ 57.5 lakhs in cash as evidenced by the seized documents was treated as unaccounted receipt in the hands of the assessee and, accordingly, added to the income of the assessee for the period under consideration by the AO which has been subsequently sustained by the learned CIT (A) for the detailed reasons recorded in his appellate order which i .....

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to those persons on the instructions of PRD & RD. Moreover, against the names of Mustufa & Taufik, it was specifically written as (PRD) expenditure in respect of PRD was given by Shri Sohanraj Mehta as per the telephonic and written instruction of Prakash Rasikal Dhasriwal and Rasiklal Manikchand Dhariwal as per the Statement of Sri Sohanraj Mehta dated 21.10.2009 [Refer: Page 99 of PB AR]. To a question No.14 Exhibit A/M/8/dated 9.10.2009 which contained a bunch of loose sheets seriall .....

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in the signatures of Mr. Rashiklal Manikchand Dhariwal and his son Mr. Prakash Dhariwal. Such payments totaling to ₹ 206,76,54,463/- were made in 2003-2006. The balance of ₹ 11,24,36,739/- was settled by me subsequently over a period of time." 7.2. Considering the statement of the said person, there is strong force in the contention of the assessee that even assuming that the receipt of such amount was merely a collection for on behalf of the company and such amount cannot par t .....

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-tax (Investigation) Unit 2(1), Bangalore is negated which is incorrect and untrue. 3. Today on 3.12.2011, Saturday I depose in the name of Almighty God that under wrong promises, mistaken beliefs, inadequate guidance and improper advise, I signed the letter dt. 10.8.2011 in the Incometax Department, Bangalore which is absolutely wrong and not the correct version of what I wanted to convey to the Income-tax Department at that point of time. 4. With my this letter specifically addressed to you, I .....

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ri Shohanraj Mehta] since his statements on oath were coupled with inconsistency, he retracted his earlier statements and, thus, not above the board. 7.5. Moreover, the assessee's plea for permission to cross examine Shri Sohanraj Mehta at the assessment stage was not conceded by the AO on the ground that - "[On page 9 CIT (A)] 2.8........................................................................... Comments of the AO: (ii) Opportunity of cross examination of Shri Sohanraj Mehta: .....

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of the party for the first time only on 14.12.2011. The appellant was also fully aware that the limitation to pass reassessment order in the case expires on 31.12.2011. Thus, between 29.3.2011 till 14.12.2011, the appellant did not make any request to the AO that an opportunity of cross examination is required by him. Fully knowing that it would not be possible for the AO to call a party from distant Bangalore and afford the facility of cross examination during a short period of just 12 working .....

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onable time frame. A right exercised with ulterior motives does not possess the sanction of law. Facts of the case clearly indicate that the appellant had purposefully demanded cross examination at a time when it was considered impractical and unfeasible....." 7.7. In essence, the principles of natural justice on the legitimate request of the assessee, to cross examine the third party on the basis of whose statement the impugned addition sought to be added to his income, has been denied on .....

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d in fact belongs to the assessee. Though the AO has placed reliance upon the statements of MV and GC for the purpose of taxing the amount in the hands of the assessee, despite specific request being made by the assessee for cross- examining both the said persons, the AO has not permitted the assessee to cross-examine them. In the circumstances, no reliance could be placed upon the statements of the said persons as the assessee had no opportunity to cross-examine them. The statements made by the .....

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merely a bald statement of MV, which is not corroborated with any documentary evidence found at the time of search, either in the case of S or MV or the assessee. No plea to the effect that the impugned order of the Tribunal suffers from any perversity has been raised. The Tribunal having based its conclusion on findings of fact recorded by it after appreciation of the evidence on record, it cannot be stated that the impugned order of the Tribunal suffers from any legal infirmity............&qu .....

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hukla and others (1998) 3 SCC 410 as observed by the Tribunal and submitted that the Tribunal has based its conclusions on the findings of fact recorded by it upon appreciation of the evidence on record; that the Tribunal had examined the facts and circumstances of the case and had come to the conclusion that the Revenue had not been able to establish its case against the assessee and as such, the order of the Tribunal being based upon findings of fact recorded by it, does not give rise to any q .....

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;s counsel in the cases of (i) Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC) & (ii) CIT v. S.C. Sethi (2007) 295 ITR 351 (Raj), the Hon'ble Court had held thus: "[PB - 174] 16. Thus, it is apparent that the conclusions arrived by the Tribunal are based upon the aforesaid findings of fact recorded by it upon appreciation of the evidence on record. On behalf of the revenue nothing is pointed out to show that the findings recorded by the Tribunal are in any manner perverse, nor .....

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e by pointing out any evidence to the contrary, therefore, does not warrant any interference." 7.9. Taking into account the submissions of the assessee, the stand of the AO, reasoning of the CIT (A) in sustaining the action of the AO and also in conformity with the rulings of the Hon'ble jurisdictional High Court (supra), we are of the considered view that that learned CIT (A) was not justified in sustaining the addition of ₹ 57.5 lakhs made by the AO in the hands of the assessee .....

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Gujarat Region; (iii) that the total unaccounted sales effected by Shri Sohanraj Mehta C & F of RMD Gutkha on behalf of Dhariwal Industries Limited for the period of April 2003 to Feb 2008 was ₹ 345.72 crores (approx). The unaccounted income for the AY 2004-05 was arrived at ₹ 40,88,32,514/-, the same was added substantively in the case of M/s. Dharival Industries Limited and concluded the assessment for the AY 2004-05 u/s 153A r.w.s. 143 (3) of the Act, dated 29.12.2011 by the .....

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sought permission to cross examine Shri Sohanraj Mehta which was summarily rejected by taking refuge ".....Due to paucity of time, the cross examination could not be granted" [Refer: Para 2.8 (Page 10) of the CIT (A)'s order]. This stand of the AO, to view it mildly, is against the spirit of judicial pronouncements; (vi) that the AO had merely come to a conclusion based on a statement of a third party, without bringing any credible documentary evidence to the contrary on record to .....

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leted and accordingly, we hereby direct the revenue to delete the same. Thus, ground No.1 raised by the assessee with respect to reopening of the assessment u/s 148 of the Act is dismissed and ground No.2 with respect to addition on account of undisclosed income is allowed in favour of the assessee. 50. We find the Bangalore Bench of the Tribunal in the case of DCIT Vs. H.S. Chandramouli (Supra) had also an occasion to decide an identical issue and deleted the addition by observing as under : 13 .....

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receipt of money by the assessee from Sohanraj Mehta. The presumption u/s. 292C of the Act is only with reference to the person searched and it cannot be extended to the assessee. There is no corroborative evidence or statement of Sohanraj Mehta relied upon by the AO, to the effect that a sum of ₹ 22.75 lakhs was paid to the assessee. The assessee has categorically denied having received any payment from Sohanraj Mehta. Even in the proceedings before the AO, when the assessee was examined .....

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o not find any ground to interfere with the order of the CIT(Appeals). 51. We find the Lucknow Bench of the Tribunal in the case of M/s. Mohd. Ayub Mohd. Yakub Perfumers Pvt. Ltd., (Supra) while deleting the addition under identical facts and circumstances as held as under : 2. The facts in brief borne out from the record are that during the course of search conducted upon Shri. Sohanraj Mehta, C&F of RMD Gutkha group in Bangalore, statement of account was seized in which there was an entry .....

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the Act") was issued and assessment was completed under section 147 of the Act read with section 144 of the Act in the hands of the assessee, resulting into an addition of ₹ 10.48 lakhs as profit on this unaccounted sale of ₹ 50 lakhs. 3. An appeal was preferred before the ld. CIT(A) with the submission that no document indicating payment of ₹ 50 lakhs to the assessee- company was found during the course of search. Only dumb documents were found in which there was a debit .....

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an appeal before the Tribunal and reiterated its contentions. During the course of hearing, a specific query was raised from the ld. D.R. as to what evidence they have collected during the course of search or thereafter, on the basis of which the Assessing Officer has formed a belief that the income chargeable to tax has escaped assessment in the hands of the assessee. No satisfactory answer was furnished by the ld. D.R. We have also carefully perused the seized documents and we find that there .....

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osed about payment of ₹ 50 lakhs to the assessee. In the absence of any relevant material, the reopening of assessment in the hands of the assessee is not proper. The ld. CIT(A) has given valid reasons while holding that the reopening is bad. The relevant observations of the ld. CIT(A) are extracted hereunder:- "5.1.6 From all the aforesaid correspondence, it is obvious that there is no clue as to how the identity of "MALIK Kannauj" as appearing in the seized document (supra .....

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k, M.D. of the appellant company. Further, even for argument sake if "Malik Kannauj" indeed referred to Shri Abdul Malik, the M.D. of the appellant company, there was no evidence/material on record which could link that payment to the assessee company. Just because the ADIT (Inv), Kanpur had informed the A.O. that the entry of paymen of ₹ 50 Lakhs (as mentioned in the seized document) to one "Malik Kannauj" related to the Appellant company (without any supporting in thi .....

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ot;reasons to believe" in the case have been recorded on irrelevant material. On the basis of such material, no prudent man could have formed the belief that income had escaped asstt. in the hands of the appellant company. Accordingly, I hold that the very assumption of jurisdiction by the A.O. under section 147 of the Act was illegal and, therefore, any asstt. framed pursuant to such illegality cannot be sustained. Thus, the whole asstt. framed u/s 147 is hereby annulled, While taking this .....

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appeal is allowed." 5. Since we do not find any infirmity in the order of the ld. CIT(A), we confirm his order. 52. Similarly the Lucknow Bench of the Tribunal in the case of DCIT Vs. Pawan Kumar Agarwal (Supra) has held as under : 5. We have considered the rival submissions. We find that the issue in dispute was decided by learned CIT(A) as per para 7 & 7.1 of his order, which is reproduced below for the sake of ready reference:- 7. That vide grounds No. 3 to 7, assessee has challenge .....

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hered by the department has also been produced before me. In this paper, it is seen that name of assessee is appearing. It was vehemently argued before me that how the department comes into conclusion that name Pawan Agarwal as appearing in the seized material is appellant. The name of appellant is very common and it is possible to be some other Pawan Agarwal instead of appellant. The submissions of the appellant are considered. On examination of the assessment record it is seen that the appella .....

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assessee has vehemently stated that the department has not proved that the identity of Shri Pawan Agarwal with the assessee and no slip, letter, document etc. showing any relationship of assessee with Shri Shobhan Raj Mehta were not found from the possession of Shri Shobhan Raj Metha. The A.O has required assessee's copy of accounts in the books of M/s. Dhariwal Industries, Pune and this was found verified from the assessee's books of A/c. It is clear that the assessee has business rela .....

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evidences are not collected or placed. Copies of the statements, on the basis of which additions has been made, were not provided nor was the opportunity of cross- examination given to the appellant. The assessing officer merely summarized the salient features of the report of the ADIT (Inv.)-III, Kanpur and thereafter summarily rejected the reply of the appellant as not satisfactory. Learned counsel for the assessee, on the other hand, contends that neither the said Shri Shobhan Raj Mehta was a .....

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y the ADIT(Inv.)-III, Kanpur, further evidences are not found to corroborate the additions. (iii) Cross-examination of Shri Shobhan Raj Mehta was not allowed. (iv) The assessee firm had strongly denied having any financial and business transactions with Mr. Shobhan Raj Mehta. In view of these factual exigencies, it is held that the addition made by the AO, without any corroborative evidence, was unjustified and accordingly deleted. Accordingly, ground No. 3 to 7 raised by appellant are allowed. .....

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iness transactions with Mr. Shobhan Raj Mehta. These findings of CIT(A) could not be controverted by Learned D.R. of the Revenue and moreover, the name of the assessee i.e. Pawan Kumar Agarwal is very common name and merely because this name is mentioned in a seized paper found during the course of search at Bangalore at the premises of Shri Shobhan Raj Mehta, with whom the assessee was not having any direct transaction, it cannot be said that the said Pawan Kumar Agarwal, of whom the name was m .....

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idering the arguments of both the sides and the facts of the case, we do not find any infirmity in the above order of learned 7 ITA-5149/Del/2012 CIT(A). The addition has been made on the basis of certain chits found from Shri Sohan Raj Mehta and his statement. Admittedly, the assessee has no dealing with Shri Sohan Raj Mehta. The assessee is supplying goods (Supari) to RMD Group who are manufacturing Gutkha. Shri Sohan Raj Mehta is C&F agent for Karnataka region of RMD Group. The search had .....

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aking sales outside books. Moreover, as per chits found from Shri Sohan Raj Mehta, the payment made to the assessee is only ₹ 9 lakhs and not ₹ 9 crores. The department has also relied upon the statement of Shri Sohan Raj Mehta. It was pointed out by the learned counsel that Shri Sohan Raj Mehta retracted his statement. However, as per Revenue, Shri Sohan Raj Mehta has retracted his retraction affirming the original statement. On these facts, the learned CIT(A) has come to the conclu .....

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tement. The Assessing Officer has reproduced the assessee's letter, paragraph No.11 of which, reads as under:- "11. The assessee had requested your good self to provide the following documents: (a) Copy of the Sworn Statement of Sh. Sohanraj Mehta. (b) Copy of written statements or Affidavits obtained from Sh. Mehta wherein he has mentioned that ₹ 9 crore was payable to the assessee. (c) Copy of subsequent retraction of the statements made at the time of search operation, if any. .....

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of India that before taking a decision the assessee has to be allowed a chance or an opportunity of rebuttal with respect to the documents which are to be used against hte assessee. The assessee has gone through the entire statements of Sh. Sohan Raj Mehta recorded under section 132(4) of the Income Tax Act. Nowhere there is any mention of Bhola Nath Radha Kishan or any of its partner in the said statement. The assessee cannot be held liable for any act of the omission or commission done by him .....

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phasis by underlining supplied by us) 8. The Assessing Officer has dealt with this letter but he has not given any reason for not allowing the assessee an opportunity to cross-examine Shri Sohan Raj Mehta. Similarly, he has neither supplied the copy of retraction of his statement nor dealt with the retraction in the 9 ITA-5149/Del/2012 assessment order. It is only in the remand report he has mentioned that Shri Sohan Raj Mehta has retracted his retraction also. Considering the totality of above .....

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ally when the survey was followed by the search and neither during the course of survey nor during the course of search, any evidence of sale outside the books was found. In view of the totality of above facts, we do not find any justification to interfere with the order of learned CIT(A). The same is sustained. 54. We find the Pune Bench of the Tribunal in the case of Pradeep Amrutlal Runwal reported in 149 ITR 548 while deleting addition under identical facts and circumstances has observed as .....

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arned any such income of 5.10 crs. and therefore, no addition should be made. However, the Assessing Officer has not accepted the contention of the assessee. 5.1 The Assessing Officer has stated that the papers were seized from Dhariwal Group. The said papers were seized from the residence of Shri Sohanraj Mehta. According to the Assessing Officer, the assessee could not disown the existence of such documents. The Assessing Officer observed that the money has been passed on by Dhariwal Group thr .....

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Assessing Officer has further held that according to the provisions of section 80 of the Indian Evidence Act, there is a presumption as to the documents produced as record of evidence are genuine. Hence, he has held that the documents seized from Dhariwal Group could be relied upon for making addition in the hands of the assessee. The Assessing Officer has placed reliance on the decisions of Sumati Dayal vs. CIT [(1995) 214 ITR 801(SC)], CIT vs. Durga Prasad More [(1969)72 ITR 807(SC], Himmatram .....

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are in the form of two loose papers wherein amounts of 4.80 Crores and 30 lacs were noted against the name "Mr. Pradeep Runwal". Apart from this, no evidence has been found to suggest that the assessee had actually received the said amount or that the assessee had entered into any transaction with Dhariwal Group. There is no evidence on record to suggest that the assessee has previous business relations with the Dhariwal Group. In the absence of any documentary evidence to suggest the .....

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d the income of the assessee himself, while the assessee has no business dealings of his with Dhariwal Group. The Assessing Officer has not brought on record any evidence to suggest that Dhariwal Group has admitted that the amounts were paid to the assessee. Hence, simply because the name of the assessee is noted on the seized papers does not mean that the addition could be made in the hands of the assessee. Since no evidence was found relating to the existence of any transaction between the ass .....

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de on the basis of the evidence found with third party. The presumption u/s. 132(4A) could be used only against the person from whose premises the documents are found and not against the person whose name appears in the seized papers. 5.5 In this case, the addition has been made on the basis of the documents found with Dhariwal Group and thus, the presumption u/s. 132(4A) could not be used against the assessee since no incriminating documents were found with it. In the case of ACIT Vs. Lata Mang .....

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eliance placed by the Assessing Officer on the loose papers is not justified at all. Therefore, the question of making any addition is not justified in the absence of other corroborative evidence to that effect. 5.6 Without prejudice to the above, the learned Authorized Representative submitted that the Assessing Officer was not justified in making the additions by relying on the provisions of section 114 of the Indian Evidence Act. The concerned Assessing Officer has referred the aforesaid sect .....

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r agricultural purposes. In the present case, the provisions relied by the Assessing Officer are not applicable, the assessee is not withholding any documents. The case of department is that the amount mentioned on the seized paper found with the Dhariwal Group indicates that the assessee has received the amount, therefore, the burden was on the Assessing Officer to establish the same. The reliance placed on the provisions of section 114 of Indian Evidence Act is misplaced. 5.7 As stated above, .....

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any such transaction except for his books of account which have already been verified by the concerned Assessing Officer. Hence, the Assessing Officer was not justified in placing reliance on the provision of section 114 of the Indian Evidence Act. 5.8 It was further submitted on behalf of assessee that the Assessing Officer was not justified in making the addition by relying on the provisions of section 80 of the Indian Evidence Act which states that there is a presumption that the documents pr .....

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king the addition of 5.10 crores as stated above, the CIT(A) relied on the following decisions of Sumati Dayal vs. CIT [(1995) 214 ITR 801(SC)], CIT vs. Durga Prasad More [(1969)72 ITR 807(SC], Himmatram Laxminarain vs. CIT [(1986)161 ITR 7(P&H)], CIT vs. Ganapathi Mudaliar [(1964)53 ITR 623(SC)] and CIT vs. Lacchman Dass Oswal [(1980)126 ITR 446(P&H)]. In this regard, the stand of the assessee has been that the case laws relied by the Assessing Officer are differentiable on facts and he .....

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elf is whether rough noting on loose paper found in the course of search at the premises of third person could be assumed the income from the assessee as in the cases relied by the Assessing Officer. This fact has not been established in the case of assessee, therefore, the case laws relied by the Assessing Officer are clearly distinguishable on facts and hence, not applicable to the case of the assessee. 5.10 According to CIT(A), the name of the assessee appears on the seized papers and seized .....

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and could not be rejected. As regards, the objection of the assessee that no evidence was found to indicate that the assessee had received the amount, the CIT(A) referred to the fact of acceptance of the paper by Shri Mehta and considering the fact that the modus operandi was clarified by Shri Mehta, the addition was rightly made by the Assessing Officer, has been held by CIT(A). He has referred to various decisions in support of the addition made. Firstly, he has relied upon the decision of IT .....

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e made on the basis of documents found with third party was neither raised nor applicable. Thus, according to us, the said decision has no application to the facts of the assessee's case. 5.11 The CIT(A) in para 2.5 has placed reliance upon ITAT, Pune decision in the case of Dhanvarsha Builders and Developers Pvt. Ltd. [102 ITD 375]. In the said case, the assessee was searched and documents were found indicating on money received by the assessee. It was held that the document was found with .....

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re found pertaining to Dhariwal Group as admitted by Shri Mehta and therefore, these documents may be relevant for deciding the issue in the case of Dhariwal Group. However, in the absence of any corroborative evidence, the addition could not be made in the hands of the assessee on the basis of the said papers. 5.12 The CIT(A) has further relied upon ITAT Third Member decision in the case of Dhunjibhoy Stud and Agricultural Farm Vs. DCIT [(2002) 82 ITD 18 (PUNE)(TM)], In this case, the assessee .....

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ct that the amounts paid by cheque tallied, the addition was rightly made. The assessee rightly submitted that the said decision is not applicable to the facts of the present case. Firstly, there is no transaction between the assessee and Dhariwal Group. Secondly, there is no corroborative evidence found which could suggest that the assessee had received any amount. The Assessing Officer and CIT(A) have also not brought on record any evidence to suggest that the payment was made to the assessee. .....

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herself had made a false disclosure. Thus, the facts are totally different from the present case and hence, the ratio of Vasantibai N. Shah (supra) is not applicable to the assessee's case. The CIT(A) further relied on the decision in the case of Green Valley Builder v. CIT [(2008) 296 ITR 225 (Ker)]. In the said case, the assessee was engaged in real estate business and it had sold certain plots. The assessee stated that the plots were sold at ₹ 1750/- per cent while the Assessing Of .....

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idence no addition could be made in the hands of the third party. 5.14 We find that in Thakkar Developers Ltd. [IT A No. 581/PN/08], ITAT in paras 3 and 4 held as under:- "The above said Shri Kolhe was examined, cross examined and reexamined and no evidence was gathered from him to establish that the contents of the seized documents were correct and true. Thus, in the absence of any corroborative evidence in the present case, the said seized document has to be treated as a dumb document as .....

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idavit filed by Shri Kolhe remained uncontroverted and which is against the settled legal position on the issue that the contents of the affidavit be rejected by confronting the same to the deponent which is missing in this case. Nothing was shown by the A.O. that there was any other material co related to the seized documents. The A.O. was not justified in rejecting the contents of the affidavit as mentioned above. The A.O. further relied on the presumptions u/s 132(4A) of the Act on the ground .....

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Ltd. [84 ITD 320 (Mum), clearly held that the presumption u/s 132(4A) is applicable only against the person from whom possession the books of accounts or other documentary were found and not against any other person. It is held that as per Section 132(4A) where any books of account or document is found in the possession and control of any person in the course of the search, it is to be presumed that they belong to " such person". Thus, clearly the presumption is in respect of the perso .....

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ssessee in the present case who was not searched u/s 132 of the Act nor the document was found and seized from, their possession. Even, otherwise, such presumption u/s 132(4A) of the Act is not conclusive and rebuttable one". 6. Similar view has been taken by ITAT, Pune in Amit D Irshid [ITA No.988/PN/11] that presumption u/s. 134(4A) is available only against the person from whose possession the document is found and not against the third person. In the absence of clinching evidence agains .....

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