TMI Blog1999 (3) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... eously, a search was conducted at the premises of Shri C. D. Shah also. In the course of the search, 34 hundies of various dates and amounts were found aggregating to ₹ 1,61,72,000. The details of these hundies such as (a) the party who issued it, (b) the party in favour of whom it is issued, (c) the date of issue, and (d) the amount of the hundi in respect of the 34 hundies in question are given by the Assessing Officer at pages 3 to 5 of his order. While they bear the signature of the party who issued it, some of the hundies are blank either in respect of the party in favour of whom it issued or the date of issue, or both. It may also be clarified that in respect of the said 34 hundies aggregating to ₹ 1,61,72,000, what were located during the search were only photocopies and not originals. 4. The search party also located certain documents during the search and one of the documents included in the Panchnama as Sheet 41 of Annexure A-3 read as follows :- R.S. J. Chittarajan and Co. Outstandings 0.72 1-1-199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 to 31-12-1994 @ 18% on 189.94 224.12 40.34 Int. 1-1-1995 to 31-12-1995 @ 18% on 224.12 264.46 Another sheet located and seized during the search inventorised as Sheet 40 of Annexure A/3, reads as follows :- (1) 2,64 - 46000 A. K. Patel (2) 16 - 28000 J. B. Patel (3) 1 - 60-838 H.M.Patel H.U.F (4) 5 - 66-061 Darshana Agencies 2 ,88 - 0-919 3 - 32 661 2,91 - 33 580 Total Up to 31-12-1995 There were other hundies and documents which were seized and they will be referred in due course in this order. The late Shri A. K. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 4 4.00 3 5 4.00 4 6 4.00 5 7 4.00 1-1-1993 6 16 4.55 Kindly state to whom Meghna Enterprise belong and when the amount was advanced. Ans. Meghna Enterprise might belong to Shri C. D. Shah the amount given in these hundies is included in the 48.75 lakhs, stated by me earlier. In his subsequent deposition dated 30-8-1996, which may be seen at pages 100 and 101 of the APB, the late Shri A. K. Patel was questioned on Sheet No. 40 of Annexure A-3 reproduced hereinabove, and his replies in this context were as follows :- Q. 2 I am confronting you with the loose paper folder marked Annexure A-3 seized from your residence vide Panchnama dated 16-7-1996. Please refer Page No. 40 and identify the person who has written it i.e., in whose handwriting is the paper. Also expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . K. Patel by way of Hundies raised in cash, out of loan and interest therefrom ? Ans. You can very well work out the total amount of Hundies issued by me in cash, on account of the above as given to Mr. A. K. Patel from the above data which I have already stated in answer to your question No. 15. But according to me the total amount in cash should not exceed ₹ 2 crores (Rs. 2,00,00,000). However, this is subject to verification. Q. 17 Please state whether you are keeping any record of Hundies which are unaccounted ? Ans. I state that I Have issued those Hundies. But I have not kept any record of them but original Hundies are with Mr. A. K. Patel. Q. 18 Do you have any other transactions with Mr. A. K. Patel ? Ans. Besides above, I do not have any transactions with Mr. A. K. Patel. Q. 19 What is the total amount of latest Hundi have you issued during the last Financial Year and if so when it was issued ? Ans. The latest Hundi was issued in between December 1995 and January 1996. The total amount for which I have issued Hundi in cash to Mr. A. K. Patel and M/s. Central Automobiles Ltd. is more than 2 crores of rupees (Rs. 2,00,00,000). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed that Sheet No. 40 of Annexure-A-3, reproduced hereinabove, was written by him as per the instructions of his father. He mentioned that his father had told him that he had advanced ₹ 25 lakhs to Shri C. D. Shah in the year 1980-82 and that Shri Shah had not paid any interest thereafter, nor, nor returned the principal. He deposed that the amount of interest and the principal put together amounted to approximately ₹ 2,64,46,000 and he also said that this figure was mentioned on the basis of the figure appearing at Sheet No. 41 of Annexure-A-3. There is an unequivocal admission that the contents of sheet No. 41 and 40 of Annexure-A-3 represented the amounts of the principal and the interest receivable from Shri C. D. Shah. In the light of the depositions of the late Shri A. K. Patel, his son Shri D. A. Patel, and of Shri C. D. Shah, the Assessing Officer came to the conclusion that the amount of ₹ 2,64,46,000 figuring on sheet No. 41 of Annexure-A-3 represented the unaccounted principal and interest in respect of the hundies relating to the assessee upto the period 31-12-1995 and, accordingly, he brought to tax the same as income under the head Other source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,89,94,000 Int. for the period - 1-1-1994 to 31-12-1994 34,18,000 2,24,12,000 Int. for the period - 1-1-1995 to 31-12-1995 40,34,000 2,64,46,000 It may be observed that the amount of ₹ 2,64,46,000 figuring in the above statement is the same amount figuring on Sheet No. 41 in Annexure-A-3 which was seized during the search. The Assessing Officer rejected the above claim that the initial advance was only ₹ 25 lakhs and that this advance fell before the commencement of the block period on the ground that it was only a convenient and self-serving back calculation. 6. Before us, the learned counsel for the appellant reiterated the contention that the amount originally advanced was only ₹ 25 lakhs and that it fell beyond the block period and as such it is not taxable. So far as the accumulation of interest on the advance is concerned, it is pleaded that the appellant had not received any interest subsequent to the advance of ₹ 25 lakhs in 1981 and that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had mentioned that he had advanced ₹ 48.75 lakhs in 1985 or 1986 at the time of the search, whereas Shri C. D. Shah in his deposition on the date of the search had referred only to the receipt of ₹ 25 lakhs. It is also mentioned that while the late Shri A. K. Patel had mentioned the rate of interest as 18%, Shri C. D. Shah had mentioned it as 24%. In view of the variation in the statements of the creditor and debtor concerned, it is claimed that these statements, which cannot easily be reconciled, should be ignored, except to the extent that monies had really been advanced by the late Shri A. K. Patel to Shri C. D. Shah and we should go by the documentary evidence located during the search by way of photocopies of hundies and other papers. It is also mentioned that the late Shri A. K. Patel had given coherent answers on the date of the search to all the questions and his admission that he had advanced monies to Shri C. D. Shah cannot be ignored. It is also pleaded that while the late Shri A. K. Patel had mentioned that his son knew the details of the transactions in question and also the location of the original hundies, his son gave only evasive replies when confronte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hundies aggregate exactly to the deficiency of ₹ 24,55,000 : Sr. No. Sheet No. Issued by In favour of Date of issue Amount (1) 3 Meghana Enterprises Blank Blank 4,00,000 (2) 4 -do- -do- -do- 4,00,000 (3) 5 -do- -do- -do- 4,00,000 (4) 6 -do- -do- -do- 4,00,000 (5) 7 -do- -do- 1-1-1993 4,00,000 (6) 16 J. Chittranjan and Co. -do- Blank 4,55,000 24,55,000 The above hundies, for whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and self-serving calculation backwards from ₹ 2,64,46,000 found on Sheet No. 41 of Annexure-A-3. Both the appellant and his son did not come out with the location of the original hundies, even though it is inconceivable that neither of them is aware of their whereabouts. As there is no evidence in support of their explanation that the amount advanced was only ₹ 25 lakhs and that too in the year 1981, we are of the view that it is hit by the said decision of the jurisdictional High Court. We have perused the depositions of Shri A. K. Patel and Shri C. D. Shah at the time of the search and it is evident from their depositions that both of them are men of means and of substance. We may also mention that on the date of the search, Shri D. A. Patel was in London attending a relative's marriage and the son of Shri C. D. Shah was studying in USA in a business school and we are mentioning these facts only to indicate that they are men of substance. As Shri C. D. Shah had acknowledged the debt and had also given fresh hundies to the extent of ₹ 24,55,000 towards interest and the total of these hundies tally with the figure of ₹ 24.55 lakhs mentioned in Sheet No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Annexure-A-2 of Panchanama dated 15/16-7-1996 for the period 1-4-1986 to 1-3-1996 ₹ 18,75,284 Interest on ₹ 23,25,284 for the period 1-3-1996 to 15-7-1996 for the abovementioned sheet of Annexure-A-2. ₹ 1,56,957 Total ₹ 20,32,241 1.2 These additions are based on a seized document which reads as follows :- R.S. (2 + 1 + 1.5) 4,50,000 Int. recd. upto 1-4-1986 1-4-1986 to 31-3-1987 4,50,000 Int. @ 18% 81,000 5,31,000 95,580 1-4-1987 to 31-3-1988 6,26,580 1,12,784 1-4-1988 to 31-3-1989 7,39,364 1-4-1989 to 31-3-1990 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned additions of ₹ 18,75,284 and ₹ 1,56,957. 14. The next objection is to the two additions made by the Assessing Officer as per the following details :- Unexplained investment in undated original hundies ₹ 2,00,000 Interest on unnamed original hundies of prior to the Block period (for the period 1-4-1986 to 15-7-1996) ₹ 24,75,072 Total ₹ 26,75,072 15. The search party located certain original hundies aggregating to ₹ 10,50,000 apart from the photocopies of the hundies aggregating to ₹ 1,61,72,000 discussed hereinbefore. The details of these hundies are given at page 6 of the assessment order and they are reproduced hereinbelow :- Sr. No. Sheet No. Issued by In favour of Date Amount 1 1 J. Chittranjan and Co. J.B.P. 1-10-1986 4,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yond the block period. He appears to have omitted the hundies of ₹ 4,00,000 issued by J. Chittranjan and Co. mentioned at (1) above on the ground that it did not belong to the appellant but belonged to Shri J. B. Patel (JBP) who is separately assessed to tax with the Department, as mentioned by the Assessing Officer in para I.B(iii) at page 14 of his order and Shri J. B. Patel accepted the loan standing in his name. That is how he included only the amount of ₹ 2,00,000 for which an objection is taken in the ground taken before us. He included the interest on the hundies worked out by him at ₹ 24,75,072 for the period 1-4-1986 to 15-7-1996. The working of this interest, it appears, is not available in the order. 16. reliance is placed upon the decision appellant pleaded that neither M/s. Auto Traders India nor M/s. Bhupendra Motors are now traceable and that no interest had been received from it. In other words, the argument made out is that both the principal and the interest are at grave risk so far as recovery is concerned and so the impugned additions should be deleted. 17. We find that there is no evidence in the search material or elsewhere about the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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