TMI Blog2015 (6) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 Raj Mehta and since no incriminating material was found from the residence of the assessee during the course of search and since the assessee is not dealing with M/s. Dhariwal group in his individual capacity, therefore, respectfully following the decisions cited above and in view of our reasonings given earlier, we are of the considered opinion no addition in the hands of the assessee can be made. Since it is held that the assessee has not received any amount, therefore, the question of taxing the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F Agent of M/s. Dhariwal Industries Ltd., on behalf of M/s.DIL. When confronted on this issue Shri Sohan Raj Mehta had categorically stated in his statement recorded u/s.132(4) that he was effecting unaccounted sale of Gutkha on behalf of M/s. DIL and the sale proceeds were deployed as per the directions 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 5,00,00,000 2007-08 20,00,00,000 57 Nov2006 5,00,00,000 58 Feb 2007 5,00,00,000 57 Sep2006 5,00,00,000 Total 21,00,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 generation and deployment of cash generated out of unaccounted sale proceeds of ₹ 345. 75 crs, between the year 2003 to 2008, which were maintained by Shri Sohan Mehta on behalf of M/s DIL. 04. In view of the foregoing facts, the income arising out of the unaccounted sale transactions of ₹ 345.75 crs is being taxed in the hands of M/s DIL for respective years and the payment of ₹ 21,00,00,000/- clearly reflects the cash paid to you by M/s.Dhariwal Industries Ltd. (DIL) through Shri 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is a director of M/s. S.D.D. Agencies Pvt. Ltd. who is trading in shares and securities and packaging drinking water and is also an authorised commission agent of M/s. Dhariwal Industries Ltd. for their products. M/s. S.D.D. Agencies was also trading in pet scrap and waste upto A.Y. 2008-09. The other directors are Mr. Kiran M. Ranawat and Mr. Sachin Mangilal Jain and all the directors are assessed to income-tax. M/s. S.D.D. Agencies Pvt. Ltd. received commission on the sales effected by the company and the same depends upon number of boxes sold 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 Industries Ltd. and denied to have generated income from such supplies. The assessee also requested the AO to provide the copy of statement recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 necessarily face the lawful consequences of his unlawful act in the form of deployment of unaccounted cash outside books. 9. The AO further noted that one of the raw material supplier Mr. Mallikarjun of Shimoga in his statement recorded u/s.132(4) on the date of search has accepted to have supplied raw material outside the books to M/s. Dhariwal Industries Ltd. and confirmed the contents of seized documents. His statement has evidentiary value as it was recorded u/s.132(4) though subsequently he 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. Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as found supporting the cash receipt of ₹ 21 crores from Shri Sohan Raj Mehta. No unaccounted investment or asset was found during the search action against the assessee. It was argued that the seized documents have not been seized from his custody, does not belong to the assessee and not in his hand writing. It was submitted that such third party evidence can be used 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 in their cases but not in the case of the assessee. 13. As regards the allegation of the AO that on the basis of the instructions given in the signed chit either by Shri Rasiklal M. Dhariwal and Prakash M. Dhariwal, Shri Sohan Raj Mehta used to make payments the assessee submitted that no such chits were brought on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned 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 assessee has been associated with M/s. Dhariwal Industries Ltd for a long time and the assessee s name appearing in the seized document tallied with the regular business association with M/s. Dhariwal Industries Ltd. and if test of human probabilities 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. While upholding the addition made by the AO, the Ld.CIT(A) at para 4.7 of his order observed 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany and its value was also mentioned therein. It was further explained by Shri Mehta that the total of such stock received from the company as per the sheet worked 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 the money so received had been sent to his 'Seth' from time to time and the money was handed over to the persons as per the directions of Mr. Rasiklal Manikchand Dhariwal and his son Mr. Prakash, whom he referred to as 'Seth'. The C F agent, Shri Mehta regarding the entry mentioned on the lower left side of the page 34 beginning with '31.08.2006' stated that he had prepared the statement as on 31.08.2006 to submit the account for the 'Seth Saheb'. He clarified further that the persons referred to as &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee thus gets answered. The records of such undisclosed activity are maintained in the manner in which the document and loose papers have been found and seized in the present case and no regular books of accounts are maintained for such activity. The detailed statement given by Shri Mehta explaining the entries of the document seized makes the document a speaking one and, therefore, the inference drawn by the Assessing Officer in taxing the amount prima facie appear to have been rightly done. 16. The Ld.CIT(A) further held that the amount is 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 liability of any other nature. The fact that has been established is that assessee is in receipt of ₹ 21 crores. In the absence of any co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Appellant from Shri Sohan Raj Mehta; (iv) neither copy of such seized papers and statements of the third parties were provided to the Appellant nor any opportunity was allowed to the Appellant to cross examine those third parties; (v) there was no business connection of the Appellant either with M/s.Dhariwal Industries Ltd. or Shri Sohan Raj Mehta; and (vi) the assessment is completed contravening the principles of natural justice. c. In reaching to the conclusion and confirming such addition the Ld.CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. The Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iwal. 22. Referring to the decision of the ITAT, Ahmedabad Bench in the case of Shri Mushtafamia Sheikh he submitted that Shri Sohan Raj Mehta had retracted from the statement. He submitted that although the assessee does not have such retraction statement, however, in view of the decision of the Ahmedabad Bench of the Tribunal it has to be held that when the same person has retracted from his statement, his 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 indicate that the assessee has received the above amounts from Dhariwal Group. Further, there is no question of Dhariwal Group to pay such a huge amount to the assessee. Therefore, it cannot be concluded that simply because the assessee's name figures in the seized papers, he has received th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 High Court in the case of Aziende Colori Nazionali Affini, Italy Vs. CIT reported in 110 ITR 145 wherein it has been held that any statement or document has to be considered wholly and not partly. He accordingly submitted that when Mr. Mehta in his statement has stated that the amount was given as short term advance, the question of treating the same as the income of the assessee does not arise. 26. Referring to the statement of Shri Sohan Raj Mehta recorded during the course of search proceedings 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the assessee relied on the following decisions : 1. Pradeep Amrutlal Runwal Vs. Tax Recovery Officer reported in149 ITD 548 2. Shri Mustafamiya H. Sheikh vide ITA No.2588/Ahd/2012 order dated 15-02-2013 3. Shri H.S. Chandramouli vide 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. Counsel for the assessee submitted that the assessee is engaged in the business of jewellery and earn modest income. The family concern which is engaged in the business of C F Agent earns commission of ₹ 7 to 8 lakhs. Therefore, it is highly improbable even for Dhariwal to give huge amount of ₹ 21 crores to such a person. 32. Referring to para 4.17 of the order of the CIT(A) the Ld. Counsel for the assessee drew the attent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced 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 the modus operandi and additions have been made in the case of Dhariwal Industries Ltd. 35. Referring to the copy of statement of Shri Sohan Raj Mehta recorded u/s.132(4) on 10-10-2009 copies of which are placed at paper book pages 80 to 86 and the statement of Mr.Mehta recorded u/s.131 on different dates, copies of which are placed at pages 87 to 122 he submitted that Mr. Mehta had categorically stated that on the basis of instructions given by Shri Rasiklal M. Dhariwal/Shri Prakash M. Dhariwal 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 of the present case and are distingui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that he was effecting unaccounted sales of Gutkha of Dhariwal 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. Although Mr. Mehta in his statement recorded u/s.132(4) has stated that this amount was paid by Dhariwal Industries to Shri Vinit Ranawat through him, however, the statement appears to have been retracted as per the findings given by the Ahmedabad Bench of the Tribunal in the case of Mustafamiya H. Sheikh. 38. It is the case of the Assessing Officer that the assessee was associated with Dhariwal group for a long time and the assessee s name appearing in the seized document tally with the regular business association with M/s. Dhariwal Industries Ltd. and if test of human probability is applied to the facts of the case it bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee. The assessee in the instant case is an individual and proprietor of M/s. S. Chains which is engaged in the business of job work in gold ornaments. M/s. S.D.D. Agencies is the C F Agent of M/s. Dhariwal Industries Ltd. in the State of Maharashtra for their Gutkha and Pan Masala business. A search and seizure action on the premises of Mr. Mittulal at Bangalore was carried on 09-10-2009 wherein documents maintained by Mr. Sohan Raj Mehta, C F 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 of the assessee recorded during the course of search u/s.132(4) are as under (paper book page 41 and 42) : Q.33 A search action u/s.132 was carried out on 0-10-2009 in the case of Shri Mittulal by Investigation Wing of Bangalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 whatsoever to substantiate that the assessee has in fact received any amount either from Mr. Sohan Raj Mehta or from Mr/ Rasiklal Manikchand Dhariwal/Mr. Prakash M. Dhariwal or M/s. Dhariwal Industries Ltd. No unaccounted asset, investment or loose paper evidencing such huge receipt has been found. Further, we find from the query raised during the course of search that the authorised officer has treated the same as short term advance given to the assessee. Therefore, we find some force in the submission 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s I have standing instructions from Mr.Raskilal Manikchand Dhariwal and his son Mr. Prakash to handover the money to the bearer of the slip. The money is paid out of the collections received from the distributors towards unaccounted sales. Q.34 Do you obtain any receipt from the parties to whom 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 Mr. Rasiklal Manikchand Dhariwal in his statement recorded u/s.132(4) on 21-01-2010 in reply to Question No. 9, 11 and 12 has answered as under (page 124 of paper book filed by Ld. DR) : Q9. Similarly, I am showing you page No.34 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.20/2/2007 wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 incometax authorities sought to assessee certain income as income from undisclosed sources received by the assessee on the basis of statement by 2 persons that they had paid money in black to the assessee and entries in books belonging to them regarding alleged payment to the assessee. The Tribunal examined the statement made by the 2 persons and found that the evidence tendered by them suffered from serious infirmities. It held that mere entries in the accounts regarding payments to the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. The same question came up for consideration 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 liability. That merely means that the plaintiff cannot obtain a decree by merely proving the existence of certain entries in his books of account even though those books are shown to be kept in the regular course of business. he will have to show further by some independent evidence that the entires represent real and honest transactions and that the moneys were paid in accordance with those entries. The legislature however does not require any particular form or kind of evidence in addition to entries in books of account, and I take it that any releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal transactions and that monies were paid in accordance with those entries. A conspectus of the above decisions makes it evident that even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the other books and loose sheets which we have already found to be not admissible in evidence under Section 34) are admissible 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 receipts of the payments as shown against them in MR 71/91, can at best be proof of reliability of the entries so far they are concerned and not others. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 serially numbered from 01 to 58 to explain the contents, Shri Sohanraj Mehta answered thus - Page 34 records receipt of Gutkha consignment from Dhariwal Industries Ltd., during April 2003 to Jan. 2006 totaling to ₹ 218,00,91,198/- (which is recorded on the left hand side of the page). On the right hand side of the page, parties to whom cash payments were made have been recorded, on instructions from Dhariwal Industries Ltd., The instructions were in the form of slips of paper and they contain 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch his statement was recorded. Due to paucity of time the cross examination could not be granted. 7.6. The CIT (A) had also turned down the assessee's request for cross-examination on the ground that - (On page 53) 2.25................It has also been indicated, as borne out on records, that the appellant had asked for cross examination 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 days, the appellant makes request for cross examination. There is no denying the fact that cross examination is an inalienable right of an agreed party but it is also true that there has to be a justifiable time frame in which such right can be exercised. It is as settled principle of law that rights and duties under a statute go hand in hand and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsity 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............ (ii) During the course of hearing of a reference application of the Revenue in the case of DCIT (Asst) v. Prarthana Construction Pvt. Ltd [Tax Appeal No.79 of 2000 dated 25.3.2001] before the Hon'ble jurisdictional High Court, the learned Counsel for the assessee submitted that the documents in question have been found from the premises of a third party. The loose papers cannot be stated to be books of account in the light of the decision of the Supreme Court in the case of CBI v. V.C. Shukla 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j Mehta as the assessee had categorically pleaded before the AO that he was making purchases through Ambika Distributors who were the C F Agents for 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 ACIT, C.C. 1(1), Pune [Courtesy: P 231 - 238 of PB AR]; (iv) that once the alleged sum of ₹ 57.5 lakhs was subjected to tax in the hands of Dhariwal Industries Limited, the same cannot be subjected to suffer further tax. This view has been fairly conceded by the CIT (A) (On page 54) 2.27.......The appellant is right to the extent that no income can be taxed twice...... (v) that the AO had candidly admitted that during the course of assessment proceeding itself the assessee had sought permission to cross examine Shri Sohanraj Mehta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings before the AO, when the assessee was examined, he had taken the same stand. The details called for in the scrutiny assessment did not call for any specific details on the seized document or receipt of cash based on the seized document. 14. In the light of these circumstances, the CIT(Appeals) was justified in coming to the conclusion that no evidence has been brought on record to prove that the assessee received the sum of ₹ 22.75 lakhs from Sohanraj Mehta. The addition made by the AO was therefore rightly deleted by the CIT(A). We do 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 of ₹ 50 lakhs in the name of Malik Kannauj. This entry was interpreted by the Revenue as this amount was given to Shri. Abdul Malik, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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) was interpreted as Shri Abdul Malik, MD of the appellant company. In the statement given by Shri Sohanraj Gupta, there is no mention of any Malik. Further, in his statement under oath before the ADIT(lnv), Kanpur, Shri Abdul Malik, the M.D. of the appellant company had denied such transaction. In these circumstances, I fail to understand as to how, the A.O. formed the belief that the entry in the name of Malik Kannauj (as appearing in the seized document) referred to Shri 'Malik, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the order of the A.O. It was contended by the learned AR before me that mere jottings and notings should not be the basis for making any addition in the returned income, more particularly when A.O has not allowed the opportunity of Cross Examination of Mr. Shobhan Raj Mehta. The material provided/gathered 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 appellant categorically denied having any financial or business transaction with Sh.Shobhan Raj Mehta. A request was also made to provide complete statements on the basis of which addition was being contemplated by the assessing officer. However, the assessing officer did not provide the copies of those statements. During the course of assessment proceedings, the assessing officer did not throw any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 5.1 From the above Para from the order of CIT(A), we find that a categorical finding has been given by him that statement of Shri Shobhan Raj Mehta was not given to the assessee and beyond the belief of presumption on the information supplied by the ADIT(Inv.)- III, Kanpur, further evidences are not found to corroborate the additions. He has also given a finding that Cross-examination of Shri Shobhan Raj Mehta was not allowed and the assessee firm had strongly denied having any financial and business 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 Agar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity to cross-examine Shri Sohan Raj Mehta also and requested the Assessing Officer to supply the copy of retraction of his statement. 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. (d) Copy of receipts obtained from the assessee by Sh. Sohanraj Mehta on payment to the assessee, if any. The assessee has been provided statement of Sh.Sohan Raj Mehta. However, it is further submitted that the assessee should be given the opportunity to cross examine the genuineness of the statements of Sh. Sohan Raj Mehta and should be given reasonable opportunity to verify the claims made by him. In the case of Kishan Chand Chelaram (125 ITR) it has been held by the Hon'ble Supreme Court of India that before taking a decision the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dentical facts and circumstances has observed as under : 5. After going through the rival submissions and material on record, we find that the issue before us is regarding the addition of 5,10,00,000/-. As stated earlier, during the search proceedings in the case of Dhariwal Group, some loose papers were seized wherein certain amounts were written against the name of 'Pradeep Runwal'. Hence, the case of the assessee was reopened u/s 148 of the Income Tax Act. It was explained to the learned Assessing Officer that the assessee had not earned 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 through their staff. Hence, the assessee must have received the amount noted on the seized papers. The Assessing Officer has proceeded to make th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 assessee and Dhariwal Group and in the absence of any corroborative evidence to suggest that the assessee had actually received the said amount, no addition could be made merely on the basis of noting in loose papers found during the search proceedings in the case of Dhariwal Group against the name of the assessee. 5.4 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. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the noting on paper with the name 'Pradeep Runwal, there is no corroborative evidence in this regard against the assessee. In such circumstances, where the assessee has not entered into any transaction with the Dhariwal Group, one certainly could not expect the assessee to be in possession of any evidence to suggest that it has not entered into 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 produced before the court as record of evidence are genuine. In this regard, the stand of the assessee is that in the case of assessee, document produced was merely in the form of a rough noting wherein certain amounts were written against the name 'Pradeep Runwal'. As discussed earlier, there may be many people of that name in Pune an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ITAT Third Member in the case of Khopade Kisanrao Manikrao [74 ITD 25]. In this regard, the stand of assessee is that the decision in the case before Third Member was not applicable to the facts of the present case. In the said case, the assessee was searched and documents were found indicating on money received on sale of plots. On the basis of the documents found, the Assessing Officer estimated the income from on money which was held to be valid. In that case, the issue that no addition could be 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings. The assessee had made a false disclosure. Subsequently, the case was reopened. Hon'ble High Court held that the reopening was valid since the assessee 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 Officer on the basis of evidences held that actually the lands were sold at ₹ 4,000/- per cent. Hon'ble High Court held that the additions made were correct. The said decision is not applicable to the facts of the present case. The CIT(A) has further relied upon the decision in the case of Chuharmal Vs. CIT [(1988) 172 ITR 250 (SC)] for the proposition that documentary evidence plays an important part. There is no dispute to the said proposition but in the absence of any corroborative evidence no addition could be made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, clearly the presumption is in respect of the person from whom they were found. The use of the word to such person in the said Section means the person from whom the books of account or documents were found. Clause (ii) of Section 132 (4A) provides that the contents of such books of account or documents are true. This presumption can be applied only against the person from whose possession the books of account or the document were found. Therefore, the A.O. was not justified in applying the provisions of Section 132(4'A) to the assessee 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 against the third person as stated above, no action could be taken against him. In such a situation, the Assessing Officer was not justified to make addition in q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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