TMI Blog2015 (12) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... peal)-II, [in short CIT(A)] Pune, dated 11.10.2012 for A.Y. 2004-05 on the following grounds. 1) The learned CIT(A) erred in upholding the action of the learned A.O. in reopening the case of the assessee u/s 148 on the following groundsa. The material seized was sufficient enough to form a reasonable opinion that the income of the assessee had escaped asst. b. The correctness of the material seized cannot be considered at the stage of reopening but the same was to be investigated during the asst. proceedings u/s 147. c. The A.O. had much wider powers to reopen the case since the scrutiny asst. u/s 143(3) had not taken place in the case of the assessee. 1.1) The learned CIT(A) ought to have appreciated that the reopening u/s 148 is bad in law and hence, the reasst. u/s 147 be declared null and void for the following reasons a. There was no evidence to show that the loose papers seized from the third party related to the assessee. b. There was no corroborative evidence to indicate that the assessee had received any amount from the RMD Gutkha Group. c. Thus, the reopening was based on mere suspicion and surmises, without any concrete incriminating evidence an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be many people of the name 'Pradeep Runwal' in Pune and hence, the presumption made on the basis of the seized paper was not justified in the absence of any evidence to show that the assessee and the RMD Group had any past business relations. e. Although Shri Mehta had admitted to have written the document, he had never specifically admitted that the RMD Group had advanced any funds to the assessee and hence, in the absence of any corroborative evidence, the learned A.O. is not justified in presuming that the person named in the seized paper was the assessee. f. The various decisions relied upon by the learned CIT(A) are distinguishable on facts and hence, the same are not applicable to the case of the assessee. 4] The learned CIT(A) ought to have appreciated that no addition could be made on the basis of documents found with third parties and hence, the addition made should have been deleted. 5] The learned CIT(A) erred in placing reliance on section 114 of the Indian Evidence Act without appreciating that it had no relevance to the facts of the present case. 6] The learned CIT(A) failed to appreciate that the assessee had not carried out any transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee. As discussed above, the issue of reopening has not been pressed before us, we are confined to adjudicate the issue on merit which is with regard addition of 5,10,00,000/- made by the Assessing Officer u/s.69A on the ground that the assessee has received the said sum from RMD Gutka group. The stand of the assessee has been that the CIT(A) erred in holding that the addition was justified for the following reasons. Shri Sohanraj Mehta, the C F agent of RMD Gutkha Group had admitted in the statement recorded u/s 132(4) that the seized papers were written by him and hence, the same carried great evidential value. b. The notings on the seized paper were explained by the author, Shri Mehta which clarified the modus operandi of the dealings of the RMD group and hence, the said papers could not be regarded as dumb documents. c. The amounts noted against the name 'Pradeep Runwal' were accepted by Shri Mehta to be in the nature of unaccounted payments made by the RMD Group and hence, it was clear that the said amounts were received by the assessee. d. No documents could reasonably be expected to be maintained in respect of unaccounted dealings and hence, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n connection with the C F agency of RMD Group of Pan masala and Gutkha Products. Subsequently, on the next day Shri Sohanraj Mehta was also covered by the investigation wing of Bangalore and confronted on these incriminating documents. Shri Sohanraj Mehta accepted that these documents are related to him and are in connection with the C F agency of RMD Group for pan masala and gutkha products. Since RMD Gutkha Group is based at Pune, information related to this was intimated by the Investigation wing of Bangalore to the Investigation wing at Pune. On analysis of the documents seized by the Bangalore investigation wing, it is observed that the total receipts due to the sale of unaccounted production carried by RMD Gutkha Group through Shri Sohanraj Mehta alone who is over seeing Karnataka region is of ₹ 355.51 crores for the period April 2003 till February, 2008. This amount received has either been remitted back to RMD Gutkha group or handed over as per the instructions of RMD Gutkha Group to the various suppliers of raw materials, to other businessmen etc. For the purpose of ascertaining the business connection of RMD Gutkha group with the parties whose names figured in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Investigation wing of Bangalore related to the unaccounted sales and deployment of the sale proceeds by Mr. Sohanraj Mehta, C F were confronted both to Shri Rasiklal M. Dhariwal and also his son, Shri Prakash R. Dhariwal. Both these persons accepted that the chits giving instructions either to Shri Sohanraj Mehta (C F of RMD Gutkha Group for Karnataka Region) or Shri Jeevan Sancheti (Bangalore factory in-charge of RMD Gutkha Group) which are part of loose paper bundle A/MI/29 seized vide Panchanama dtd.9-10-2009, bear either of their signatures. They also accepted that these are short term advances given by them to their friends and business associates. However, they refused to accept the de-coding explained by Shri Sohanraj Mehta that the amounts mentioned in lakhs actually stands for crores of rupees and the word 'packet' stands for a lakh of rupees. d) The said incriminating documents seized by the Investigation wing of Bangalore on 9/10/2009 had details of the unaccounted sales of Gutkha carried out by Mr. Sohanraj Mehta, C F of RMD Gutkha Group for Karnataka Region. As per these seized documents, the sale proceeds from this unaccounted sale were being deployed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts but a detailed account of the daily, monthly and consolidated summary of the unaccounted sales carried out by Shri Sohanraj Mehta on behalf of M/s Dhariwal Industries Ltd. ii) Shri Rasiklal M. Dhariwal was examined to ascertain the business relation etc. with the various entities whose names were mentioned on the said documents seized by the Investigation wing of Bangalore. This examination revealed that Shri Rasiklal M. Dhariwal is knowing most of the persons whose names are mentioned in the said documents and is having a close business association with them. The names mentioned on the said documents included the suppliers to RMD Gutkha Group of betel nut, kattha, edible perfume, cardamom, menthol and packaging pouches, some prominent builders of Pune, etc. With most of these parties their association with RMD Gutkha Group was very old, in fact in most of the cases more than 10 years old. This shows that the documents seized by the Investigation wing of Bangalore are clearly related to the RMD Gutkha Group itself. iii) It was initially being claimed by RMD Gutkha Group that Shri Sohanraj Mehta is a man of dubious character and therefore the records found from him cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions in the said seized documents relate to the unaccounted as well as accounted transactions of M/s. Dhariwal Industries Ltd. It was also stated that the retraction made earlier was at the behest of M/s. Dhariwal Industries Ltd. However, subsequently clearly under pressure from M/s. Dhariwal Industries Ltd., Shri Sohanraj Mehta submitted letter dated 03.12.2011 requesting to consider his retraction made vide his earlier letter dated 23.12.2009. 4.1 Besides this, the learned Departmental Representative has pointed out that a similar addition has been made in other cases i.e. Shri S. Balan, Shri Binit Ranawat, Shri Vimal Nahar and Shri P.C. Jain who were assessed with DCIT, Central Circle 1(1), Pune and additions were also made in the case of assessee i.e. Shri Pradeep Runwal, Shri Kantilal Lunkad Shri Pravin Lunkad which were assessed with Circle-3, Circle-2 Ward 1(1) respectively. The issue of Shri Pradeep Runwal is before us and we will concentrate the same on merits in its facts and circumstances. It is pertinent to mention here that every case is decided in its facts and circumstances, so we will decide the case of assessee in its facts and circumstances wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the addition of 5.10 crs. by stating that as per section 114 of the Indian Evidence Act, it is an accepted rule of evidence that if a person possessing an evidence does not produce it, the inference is that such evidence if produced is detrimental to him. Accordingly, the Assessing Officer held that the said receipts were the income of the assessee. 5.2 The 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 [(19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 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 Mangeshkar (Miss) (1974) 97 ITR 696 (Bom), the addition was made in the hands of the assessee on the basis of the entries in the books of third persons. Hon'ble Bombay High Court held that such addition could not be made only on the basis of the notings in the books of third persons. The facts of the present case are covered by the decision of Lata Mangeshkar (supra). It is 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 and in the absence of any other corroborative evidence to that effect. In such a situation, it cannot be inferred that it belongs to the assessee. 5.9 While making 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 hence, the same are not applicable to the case of the assessee. In all the cases relied by the Assessing Officer, the fact that the assessee had actually earned income or received amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the assessee and therefore, the A.O. was justified in making the addition. Even in this case, the issue of no addition can be made on the basis of documents found with third party was not raised. The CIT(A) has further referred to the decision of ITAT, Mumbai in the case of P. R. Patel Vs. DCIT [(2001) 78 ITD 51 (Mum)] for the proposition that seized papers cannot be called dumb paper because they indicate date, amount and calculation. There is no dispute with the above proposition. The papers are 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 re-examined 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 rightly observed by the CIT(A). The A.O. dismissed the retraction of the statement dated 29.03.2003 by filing an affidavit as an after thought and self serving. The A.O. concluded that the facts mentioned in the seized documents clearly indicated that the statement given on 29.03.2003 was true and correct. The A.O. has not brought on record any material or corroborati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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