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D.C.I.T., Central Circle-XXI, Kolkata Versus Sri Niranjan Lal Todi and Vica-Versa

Cash consideration on sale of tenancy rights - Held that:- CIT(A) was that it was highly probable that when a deed of conveyance was executed in favour of the tenant by the trust, consideration paid otherwise than in cash would have been pocketed by the assessee. The CIT(A) in coming to the above conclusion has proceeded on the presumptions without sufficient evidence to justify such conclusion. In our view circumstantial evidence in this case by no stretch of imagination can lead to a conclusio .....

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:- Though the transactions might relate to M/s. BCL Financial Services the assessee in his capacity as Managing Director had received the moneys set out in the form of notings in the seized papers. He has pointed out that when similar situation prevailed in respect of moneys received by the assessee on behalf of Brijlal Todi Charitable Trust, the AO drew an inference that the assessee being in complete control of the activities of the trust ought to have received on money from the transferees. A .....

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ong to BCL and that appropriate proceedings will be initiated against BCL in respect of transactions. Having come to such a conclusion the AO could not have attributed the entries in the seized documents to the assessee. As far as page 34 of the seized document is concerned we find that this contains more of a memorandum of things to be done which is in the form of computer print out. There is nothing brought on record as to who is the author of the documents. Besides the above no adverse infere .....

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self. There is nothing to show that the seized documents actually evidence sale of cars and that these payments had to be received by the assessee. As far as pages 36 to 38 are concerned again these documents seem to record approximate sale price realizable and the course of action to be adopted and time frame within which certain actions are to be taken. This cannot be the basis to come to a conclusion that there was sale and the figures mentioned in the documents were in fact realized by the a .....

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udevan, JM IT(SS)A No.24/Kol/2010 is an appeal filed by the revenue against order dated 19.08.2010 of CIT(A)-Central-II, Kolkata relating to the block period 01.04.1990 to 12.02.2001. The Assessee has filed a Cross Objection against the very same order of CIT(A). 2. Ground No.1 raised by the revenue and grounds raised in the Cross Objection are inter linked and can be decided together. These grounds read as follows :- 1. That on the facts and circumstances of the case and in law the Ld.CIT(A) ha .....

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of ₹ 10 lakhs based on the same documents. C.O.No.4/Kol/2011 1. a) FOR that the Ld. CIT(Appeals) erred in law as well as on facts in retaining the addition to the extent of ₹ 10 lacs on the basis of the seized papers marked NT/1, Pages-20 & 21 on irrelevant considerations. The Ld. CIT(Appeals) erred in not appreciating the fact that the seized documents marked NT/1, Pages-20 & 21 did not relate to the appellant and no addition could be made on the basis of the said seized pa .....

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. He was also the Managing Director of a company by name BCL Financial Services Limited (BCL). There was a search and seizure operation carried out u/s 132 of the Income Tax Act, 1961 (Act) by the Revenue on 12.02.2001 at the residential premises of the assessee at 2, Queens Park, Kolkata. In the course of search, several documents were found and seized. In this appeal and Cross Objection with are concerned only with the seized documents NT/1 at pages 20 & 21 and pages 35 to 38. The assessee .....

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2005 and IT(SS)A.64/Kol/2005, the ITAT by order dated 09.05.2006 set aside the orders of CIT(A) and directed the AO to make assessment fresh. In the assessment proceedings after the order of this Tribunal certain additions were made. On appeal by the assessee certain additions were deleted by the assessee and some of the additions were sustained by CIT(A). 4. Aggrieved by the relief allowed by CIT(A) the revenue is in appeal before the Tribunal. Aggrieved by the additions sustained by CIT(A) the .....

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ms at premises no.32, Ezra Street, Kolkata and 159/A, Rashbehari Avenue, Kolkata. The details as recorded in pages 20 and 21 were as follows :- 6. In the course of assessment proceedings the assessee explained the transactions recorded in the seized documents as follows :- The ground floor of premises no.32, Ezra Street, Kolkata and Premises No.159/A, Rashbehari Avenue, Kolkata belong to a trust by name Brijlal Todi Charitable Trust. The assessee explained that it was a family trust of the asses .....

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sum was reflected. In respect of the remaining ₹ 12.30 lakhs recorded as received by cash in the seized documents, the AO held that the same is undisclosed income of the assessee for the block period 01.04.1990 to 12.02.2001. The said sum was added in the various assessment years as per the details given in the seized documents which are as follows :- Date of Receipt Asst.Year in which to be considered Amount 6-2-1999 1999-2000 Rs.1,50,000/-do-do- Rs.2,50,000/- Rs.4,00,000/- 6-5-1999 2000- .....

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hat the assessee received a sum of ₹ 12.30 lakhs in the form of cash from various persons named in the seized documents. (c) the premises at 159A, Rash behari Avenue does not belong to the assessee and belong to the trust and therefore it was not probable for the assessee to receive the sum in question found recorded in the seized documents. (d) in respect of premises at 32, Ezra Street, Kolkata four rooms had been given on monthly rent by the trust to four tenants. Later the Trust sold th .....

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veyance deed in the name of Rakesh Kr.Garg. The assessee therefore submitted that it had not received cash as referred in the seized documents. 8. With regard to the premises at 159A, Rash Behari Avenue, Kolkata the assessee pointed out that the assessee trust continued to be the owner of the premises and the rooms continued to be in the occupation of tenants of the aforesaid premises. The assessee pointed out that there is no transaction executed by the trust in favour of the tenants. It was no .....

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foresaid submissions came to the following conclusions :- 4.2 There is no dispute that the entries in page no. 20 and 21 of seized paper NT/I refer to sale of rooms at 32, Ezra Street and 159/ A, Rashbehari Avenue. There is no dispute that the consideration of Rs. ₹ 2.5 lakh mentioned as received in cheque in the seized paper in respect of the rooms at 32, Ezra Street were actually received. Appellant has disputed the receipt of balance sum of ₹ 12.30 lacs mentioned as sale considera .....

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n cheque in exactly the same manner as mentioned in the seized paper and therefore the seized paper is partly corroborated by the evidence. If a part of a seized paper is accepted as true then the whole of such seized paper is required to be accepted as true. Therefore the seized papers support the fact that ₹ 12.30 lakh were received in cash over and above the sale consideration of ₹ 2.5 lakh received in cheque. Appellant has further disputed that the properties in question belonged .....

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e the original trustees. The Original trustees appointed new trustees from time to time. In nut shell Brijlal Todi Charitable Trust, earlier known as "Bharat Trust" was a family trust of Todi family and appellant was part of the Todi family. In my opinion, appellant was capable of being control of Brij lal Todi Charitabl Trust. A trust is a taxable person under Income tax Act. However, it is a non living artificial entity. As an artificial entity it can receive only that amount of sale .....

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, show that there is a high probability that appellant received ₹ 12.30 lakh in cash as controller of Brijlal Todi Charitable Trust on sale or contemplated sale of rooms in 32, Ezra Street and 159/ A, Rashbehari Avenue. The seized papers show that wherever Brij lal Todi Charitable Trust had transferred the ownership of Rooms to the purchasers through the conveyance deeds, the cheque amount was received. by the trust and wherever the ownership of rooms was yet to be transferred, only the ca .....

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l das Mimani 50000 250000 23/9/99 200000 Therefore it is highly probable that the cash of ₹ 10 lakh, received in respect of sale of the above mentioned rooms No 56, 43, 9& 1 0 and 19 of the premise at 32, Ezra Street, has been pocketed by the appellant on the basis of circumstantial evidences and on the basis of proximity appellant with Brij lal Todi Charitable Trust and therefore the same is rightly taxed as undisclosed income of the appellant by the Assessing Officer. 4.3 In respect .....

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Devi Shah. on the date of search. Appellant submitted in respect of the three rooms being nos. 7,13 14 at 159/ A, Rash Behari Avenue that the Trust continued to be the owner of the premises and the rooms continued to be in occupation of tenants on the date of the search. These facts have not been contradicted by the Assessing Officer and therefore it cannot be said that the advance. of ₹ 2.3 lakh for contemplated sale represents sale. receipt unless the sale of rooms is actually affected. .....

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ed into sale and therefore no undisclosed income of the appellant can be determined on the basis of such contemplated sale which did not realize. 10. Aggrieved by the relief granted by CIT(A) the revenue has raised ground no.1 before the Tribunal in this appeal. Aggrieved by the order of CIT(A) sustaining the addition of ₹ 10 lakhs the assessee has preferred Cross Objection before the Tribunal. 11. We have heard the rival submissions. The learned DR relied on the order of AO. The learned c .....

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by cheque has not been denied and therefore the receipt of cash of ₹ 12.30 lakhs could also not be denied. The CIT(A) proceeded on the basis that if part of the seized documents is accepted as true then the whole of such seized paper is required to be accepted as true. In our opinion in coming to the above conclusion the CIT(A) has presumed that a sum of ₹ 2.5 lakhs received in cheque was received by the assessee. This presumption is not correct. In this regard we find from the deed .....

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he seized documents cannot be attributed to the assessee. In this regard we find that order of the AO as well as CIT(A) is silent as the statement u/s 132(4) of the Act of the assessee has been recorded at the time of search. In such circumstances it is not possible to attribute the income in the hands of the assessee based on entries in the loose sheet found at the time of search which was admittedly not in the handwriting of the assessee. In this regard the learned DR placed emphasis on the fa .....

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en that both the properties in question do not belong to the assessee and belong to Brijlal Todi Charitable Trust. From the conveyance deed executed in favour of the tenant by the trust it is clear that the assessee was not in control or management of the trust and it was one Shri Anil Kumar Todi, who had executed the deed of conveyance. In fact it was not the case of the AO also that the assessee was managing all the affairs of the trust and was in a position to dominate the affairs of the trus .....

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to justify such conclusion. In our view circumstantial evidence in this case by no stretch of imagination can lead to a conclusion that the assessee would have received the cash consideration on sale of tenancy rights. In this regard it is also seen that none of the transferee were examined with reference to the seized documents. In our view therefore neither the addition of ₹ 10 lakhs nor addition of ₹ 2.30 lakhs which is agitated by the revenue in its appeal can be sustained. For t .....

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pointed out before the AO that pages 22 to 42 of NT/1 are documents belonging to M/s. BCL Financial Services Ltd.of which the assessee is the Managing Director and that BCL will explain the transactions as mentioned in these documents. This contention of the assessee was accepted by the AO and the following are the observations of the AO in this regard : Necessary declarations had been filed by the above persons concerned acknowledging the transaction noted in the above mentioned documents relat .....

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the seized documents page NT/1 page 34, 36, 37 and 38. 15.1. Page 34(NT/1) :As far as NT/1 page 34 the seized documents is concerned there was a noting at sl. No.11 of the entry 2 lakhs from P.Jalan. . The noting has been struck off. The assessee denied having received any money as presumed by the AO based on the seized documents. The assessee also pointed out that the noting was in receipt of a sum of ₹ 2 lakhs repaid by Mr.Jalan by cheque on 19.04.2000 to M/.s. BCL Financial Services Ltd .....

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of BCL Financial Services Ltd. (BCL) . There is one cheque payment entry and two contra entries related to cheque receipt and cheque dishonor and all such entries are ₹ 2 lakhs. Appellant has explained all the entries on behalf of BCL with evidence which the Assessing officer has rejected without any reason even after stating in page no.4 of the assessment order that page no 22 to 42 (which includes page no.34) of the seized document NT/1 belong to BCL Financial Services ltd. . I therefore .....

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ng by itself. The AO, however, rejected the claim of the assessee and made addition of ₹ 12.5 lakhs. On appeal by the assessee the CIT(A) deleted the addition made by AO. The second part of page 35 contained certain notings of transactions. These are listed at pages 8 and 9 of the assessment order. These notings contained detailed amount and payment expected by a certain date. The sum total of the figures recorded in these loose sheet was ₹ 50.85 lakhs. Despite explanation of the ass .....

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re likely to result in receipt of heavy money. The amount of expected receipt is also written and date of expected receipt is also written. The paper appears to be prepared on 11.11.99 and most of the entries written were scored out subsequently. The total amount is ₹ 50.85 lakh. Assessing Officer has not brought, any corroborative evidence in the form of sale of vehicle mentioned in this paper, identity of the owner of the vehicle written in this paper and the reason as how such sale can .....

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Officer as amount realizable from the debtors of "BCL" except the entry of ₹ 2 lakh from Vikram Singh which the appellant was not aware of. The onus is on Assessing Officer to rebut the claim of appellant which the Assessing Officer could have easily done if it was possible because Assessing Officer is the Assessing Officer of "BCL" also. Further, to hold such entries as undisclosed income of appellant, onus is on Assessing Officer to produce supporting evidence to sub .....

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ing to the assessee no inference can be drawn from the notings in the seized paper, as it does not spelt out transactions that had actually taken place. AO, however came to the conclusion that page-36 represent transactions in respect of the sale of car and the assessee received ₹ 3.30 lakhs. As far as page 37 is concerned similar conclusion was drawn by AO and the addition of ₹ 8.05 lakhs were made. In respect of page 38 also similar conclusion were drawn by the AO. Addition of S .....

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s, irrespective of the fact, whether entries are scored out or not, whether entries reflect any debt or income, whether entries pertains to appellant or any other person, is considered by the Assessing Officer at ₹ 3.3 lakh + ₹ 8.05 lakh + ₹ 4.65 lakh . Assessing Officer_has not brought any, corroborative evidence in the form of sale of vehicle mentioned in these papers, identity of the owner of the vehicle, identity of debtor, written in this paper and the reason as how such s .....

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and 38 of NT/l. 18. Aggrieved by the conclusion arrived at by the CIT(A) the revenue has preferred ground nos. 2 and 3 before the Tribunal. 19. We have heard the submissions of the learned DR who primarily submitted that though the transactions might relate to M/s. BCL Financial Services the assessee in his capacity as Managing Director had received the moneys set out in the form of notings in the seized papers. He has pointed out that when similar situation prevailed in respect of moneys recei .....

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relied on the order of CIT(A). 20. We have given a careful consideration to the rival submissions, The first aspect as we have already noticed, is that the AO was convinced that seized documents NT/1 34 to 38 belong to BCL and that appropriate proceedings will be initiated against BCL in respect of transactions. Having come to such a conclusion the AO could not have attributed the entries in the seized documents to the assessee. As far as page 34 of the seized document is concerned we find that .....

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